44. EC 7: IR 12

S. HRG. 101-1292
ECONOMIC SANCTIONS AGAINST IRAQ
HEARING
BEFORE THE
SUBCOMMITTEE ON EDUCATION AND
HEALTH
OF THE
JOINT ECONOMIC COMMITTEE
CONGRESS OF THE UNITED STATES
ONE HUNDRED FIRST CONGRESS
SECOND SESSION
DECEMBER 19, 1990
Printed for the use of the Joint Economic Committee
PENNSYLVANIA STATE
UNIVERSITY
FEB 9 1993
PA DOCUMENTS COLLECTION
U.S Depository copy
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 1992
48-137
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-039426-0


CONTENTS
WITNESSES AND STATEMENTS
WEDNESDAY, DECEMBER 19, 1990
Scheuer, Hon. James H., chairman of the Subcommittee on Education and
Health: Opening statement ..........
Hufbauer, Gary, Senior Fellow, Institute for International Economics..........
Prepared statement ....
Luttwak, Edward N., Arleigh Burke Chair in Strategy, Center for Strategic
and International Studies.....
Prepared statement .................
Schuler, G. Henry, Dewey F. Bartlett Chair in Energy Security, Center for
Strategic and International Studies.
Prepared statement ...........
Warnke, Paul C., Partner, Clifford and Warnke, former director of U.S. Arms
Control and Disarmament Agency ...........
Prepared statement ...
POINTS OF INTEREST
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WEDNESDAY, DECEMBER 19, 1990
Effectiveness of sanctions against Iraq .............................
The cost of sanctioning: the cost of war ...........
Smuggling between the borders .....
Creating a world-wide system of controls........
The mechanical not the hypothetical political effects of economic sanctions......
The effect of sanctions on consumables ..............
The paradox of war: do we really want to destroy the Iraqi war machine .........
From experience, we've learned what is required to make sanctions work.
An offensive military threat does not support sanctions ............
Can we wait for economic sanctions to work.....
Why has the administration switched gears ........
Why has the administration is pursuing war instead of sanctions ...........
(III)


ECONOMIC SANCTIONS AGAINST IRAQ
WEDNESDAY, DECEMBER 19, 1990
U.S. CONGRESS,
JOINT ECONOMIC COMMITTEE,
SUBCOMMITTEE ON EDUCATION AND HEALTH,
Washington, DC.
The subcommittee met at 10 a.m. in room 2359 of the Rayburn
House Office Building, Hon. James H. Scheuer (chairman of the
subcommittee) presiding.
Present: Representatives Scheuer and Upton, and Senator Sar-
banes.
Also present: Richard F Kaufman, general counsel.
OPENING STATEMENT OF REPRESENTATIVE SCHEUER,
CHAIRMAN
Representative SCHEUER [presiding]. The last session of the Joint
Economic Committee for 1990 will come to order.
This morning, we're having a hearing on Economic Sanctions
Against Iraq. We will consider the question, are sanctions effective?
What is our goal in establishing sanctions? What is the relation-
ship between sanctions and a quick, perhaps surgical, military
thrust? Are they self-reinforcing? Or, are they intellectually at
odds with each other?
We're fascinated by the fact that economic warfare is playing
such a large role in the United States and in the international
community response to Iraq's brutal, unlawful invasion and takeov-
er of Kuwait.
A principal question that we will want to explore this morning
concerns the purpose and the likelihood for success of economic
sanctions in this case and the degree to which it will pay us to stay
the course with sanctions, fortified by a credible military option.
In the present crisis, in all likelihood, the U.S. presence in the
Persian Gulf will be greater after the crisis than it was before the
crisis. There will be costs to the American taxpayer of whatever ar-
rangements we enter into after this crisis is over.
Sanctions will cost a billion and a half dollars a year, several bil-
lion dollars a year.
How much will war cost?
Is the likelihood of, as they say, a quick military attack consist-
ent with the goal of sanctions, and the goal of stability in the
Middle East? Or, is it fundamentally at odds with the goal of peace
in the Middle East?
What can sanctions be expected to achieve, and how long will it
take to achieve it?


To what degree can we fortify and enhance the likelihood that
sanctions will work?
How can we improve the effectiveness of sanctions with a state
of military preparedness?
What does history tell us about sanctions in coercing change in a
country's major policies?
What does history tell us about the possibility of sanctions de-
grading and reducing the Iraqi economy and especially reducing
and degrading the quality and effectiveness of the Iraqi military
machine?
What should the United States do to induce our rich allies, like
Japan and Germany and Saudi Arabia and Kuwait itself, to accept
more of the financial burden of the Middle East crisis-maintain-
ing sanctions and 270,000 troops, soon to be 400,000 troops, in the
Middle East?
Is there a role for the West Germans and the Japanese in easing
the cost of sanctions to our allies, to Egypt and Turkey, for in-
stance?
Then, a question that I hope we'll be answering is: What will the
role of preemptive purchasing be, preclusive buying as we practiced
it in World War II and since?
What is the role of preclusive buying in reducing the flow of
goods, of spare parts, of replacement parts for the Iraqi economy
generally, and even more important, for the Iraqi military ma-
chine?
How can we further reduce the flow of strategic spare parts and
what-not into Iraq, which we have already reduced almost to the
vanishing point?
What are our long-term goals in the Middle East?
Will sanctions help us achieve them, perhaps more effectively
than a military strike?
All of these are questions that I hope we'll be considering this
morning.
. We have four talented experts with extensive experience and
seemingly unlimited flow of publications about the Middle East
and international security economics.
Taking it in alphabetical order, Gary (Clyde) Hufbauer was for-
merly Deputy Assistant Secretary for International Trade and In-
vestment Policy of the Treasury Department; and he's presently a
professor of International Financial Diplomacy at Georgetown Uni-
versity.
He is coauthor of a book, "Economic Sanctions Reconsidered,"
originally written in 1985 and an updated and expanded version
having just been published this month.
Edward Luttwak is chair of Strategy at the Center for Strategic
and International Studies. He has written numerous books and
studies on military strategy, including “Strategy, The Logic of War
and Peace," and "The Pentagon in the Art of War.”
And he has served as a consultant for several administrations.
Henry Schuler occupies a chair in Emergent Energy Security
Studies at the Center for Strategic and International Studies. He's
been involved with the Middle East for over 30 years as a naval
officer, a member of the Foreign Service, diplomat, an oil industry
executive, and as an energy analyst.


Paul Warnke was formerly an ambassador for the Strategic
Arms Limitation Talks and Director of the U.S. Arms Control and
Disarmament Agency.
Prior to that, he served as general counsel for the Department of
Defense and was Assistant Secretary of Defense for International
Security Affairs.
He's a partner in the law firm of Clifford and Warnke, with the
distinguished Clarke Clifford, adviser to Presidents beyond the
memory of living man. [Laughter.]
We're all grateful to you for sharing your insights and foresights
with us. We'll ask each of you to chat for 8 or 10 minutes, to
present your views, and then we'll have a question and answer
period.
And the Chair reserves the right to intervene at any point to ask
a question along the way.
And when you're all finished, we'll have a question and answer
period. And, at that time, we'll all take the liberty, including the
witnesses, of asking questions.
So, if you have a question of your colleagues, jot it down and
you'll have your chance.
Let me say, as each of you testify, you can feel free to refer to
anything that you've heard from any of your colleagues.
So, those at the end of the alphabet have an advantage over
those at the beginning of the alphabet.
But, for all of you, your time will come, correct.
Representative UPTON. It's about time the end of the alpha-
bet-
Representative SCHEUER. Very good.
Thank you, Congressman Upton, with a “U,” toward the end of
the alphabet. You and I have suffered over the years. Even the "S”
have suffered somewhat. [Laughter.]
OK. We'll start out with Mr. Hufbauer. Please take your 8 or 10
minutes and give us your views, and you don't have to stick rigidly
to anything you've written or prepared before. Pretend we are all
in a living room, so let's keep it as informal as possible.
Mr. Hufbauer, please proceed.
STATEMENT OF GARY HUFBAUER, SENIOR FELLOW, INSTITUTE
FOR INTERNATIONAL ECONOMICS
Mr. HUFBAUER. Thank you very much, Congressman.
The book you mentioned, which we have just updated, takes a
case study approach in the following way:
Every sanction episode has idiosyncratic elements. There is no
exact precedent for any case and, certainly, no exact precedent for
the Iraqi case.
But, out of the individual elements in this mass of cases—some
cases since World War I-we try to distill general precepts.
And will try to apply that analysis to the Iraqi case.
EFFECTIVENESS OF SANCTIONS AGAINST IRAQ
Despite assertions to the contrary, there is considerable evidence
that sanctions can convince Saddam Hussein to leave Kuwait, if
given time. In our analysis of 115 cases, we found that economic


sanctions helped achieve the sought after goals in 34 percent of the
episodes; but using a combination of qualitative and statistical
analysis of those cases, we believe that there is a higher probability
that sanctions, backed by credible military threat, can force
Saddam Hussein to withdraw from Kuwait.
Based on the work of Professor San Ling Lam of Harvard Uni-
versity, we have now constructed a model—and this was done after
we published the revised edition of our book—to analyze the fac-
tors contributing to the effectiveness of sanctions. We have used
the results of this model, which is estimated using an econometric
technique called probit, to predict the outcome in the Iraqi case.
Looking at past cases, the model correctly predicted the observed
outcome in two-thirds of the cases analyzed. For statistical buffs in
this room, if you divide the total population of cases into two parts
and you estimate the parameters of the model on the basis of the
first 79 cases, it predicts the outcome of the remaining cases with
about the same accuracy for the first 79 cases. In other words, the
in-sample and out-of-sample results are very nearly the same.
Since we are interested in the probability of sanctions working in
the Middle East without a military attack, we excluded 18 of the
115 sanction cases that involve military action. The model, using 14
independent variables, correctly predicts the observed outcome in
72 percent of the cases in that sample—that is, cases without mili-
tary action.
The model indicates that the proportion of the target country's
trade covered by the sanctions, and the costs the sanctions imposed
on the target country, are among the most important factors in
reaching a successful outcome.
The embargo of Iraq, as you noted, Congressman, is the most
comprehensive imposed in this century, adhered to by most of the
world and covering close to 100 percent of Iraq's trade and finan-
cial relations. That's three to four times the average proportion of
trade covered in other successful cases.
We have estimated that the cost to Iraq's economy will be nearly
lf of total output, which is about 20 times the average economic
impact in other successful cases, and three times the previous high-
est cost imposed on a target country.
Representative SCHEUER. Let me just elaborate on that.
derstand from your writings, in the average case from
World War II until now where sanctions were considered to be
quite successful, they shrunk the economy of the country affected
by maybe 2.5 or 3 percent.
Mr. HUFBAUER. That is correct.
Representative SCHEUER. And, here, you're estimating, or we've
all estimated that, within a year, perhaps, we will have shrunk the
Iraqi economy by approximately 50 percent.
Mr. HUFBAUER. That is correct.
Representative SCHEUER. And that's where we get the figure “20
times impact.”
If sanctions were successful against a large number of countries
where they suffered a 2.5 or 3 percent increase in their GNP,
wouldn't a 50 percent decrease in the GNP present an overwhelm-
ing probability of success?
Mr. HUFBAUER. Well, that's what our model says.


Representative SCHEUER. Yes.
Mr. HUFBAUER. We could be wrong, but that's what the model
says.
Based on that variable and others, as you said, the model pre-
dicts a near 100 percent probability that sanctions will work. That
outcome is driven primarily by the variable you identified, Con-
gressman, the cost-to-target variable.
Now, of course, we may be wrong on the estimated cost to Iraq.
We think it's based on plausible assumptions, but to allow for the
probability that we have overestimated the cost to the Iraqi econo-
my, or that the Iraqi economy is more resilient than we assume, in
a trial analysis we cut the value of that variable in half, down to
24 percent of GNP.
Representative SCHEUER. Mr. Hufbauer, let me just interrupt by
saying we've been joined by Senator Paul Sarbanes, who will be
the next chairman of the Joint Economic Committee, starting in
January in the 102nd Congress.
We're delighted that you took the time off, Senator Sarbanes.
And I'd be delighted to yield the Chair to you-
Senator SARBANES. No, no, Mr. Chairman. The hearing seems to
be proceeding expeditiously.
Representative SCHEUER. OK.
Senator SARBANES. I'm pleased to join you.
Representative SCHEUER. We're delighted. I don't know what
your time constraints are-
Senator SARBANES. I've got plenty of time. I'm really here to
hear some of these-
Representative SCHEUER. Great. OK. Please, let's keep this on a
very informal basis. And, while the witnesses are testifying, if you
have any questions you'd like to put to them, or any aside you'd
like to make, don't hesitate to break in.
Senator SARBANES. All right.
Representative SCHEUER. All right. Please proceed, Mr. Huf-
bauer.
Mr. HUFBAUER. Thank you.
Well, as I said, in order to play around with the model, we as-
sumed that the cost to Iraq is 24 percent of GNP rather than the
48 percent estimated. And, even at that level, this probit model,
predicts a 99 percent probability that sanctions will succeed. Only
at a cost below 20 percent of GNP does that probability drop below
90 percent. And even if the cost is halved again to a mere 12 per-
cent of GNP, the probability of success remains above 50 percent.
Now, critics of sanctions have argued that Saddam simply
aqı people pay for his ambition be-
cause they are powerless to challenge him.
To reflect Saddam's extraordinary tyrannical control over Iraq,
we increased the value of the variable in our model that measures
the political stability of the country to a level exceeding the high-
est value in all other cases-exceeding the stability that we gave
the Soviet Union at its most powerful.
And this adjustment leaves the probability of success at near 100
percent, if the cost is assumed to be 48 percent of Iraq's GNP. If
that cost variable is reduced to 24 percent, the probability of suc-
cess under this new run remains about 85 percent.


order in the region. Security and stability that cannot be met simply by a return to
the preinvasion border or the status quo there.
He is saying, apart from the rollback of Iraqi forces and the re-
placement of the Saba family, removal of their war-making capabil-
ity, the major source of regional instability, is a major goal of U.S.
policy.
Now, if that is true, then it must be included in your calculus of
what we're trying to achieve through sanctions. So, adding that in,
are you telling us that that goal could be achieved by sanctions?
Mr. HUFBAUER. No, Congressman. This is a qualitative judgment,
but I think that stretches too far. I can see a result, which involved
some sort of broad peace-keeping agreement in the Middle East,
but I defer to my colleagues here on the panel as to that question.
But, thinking that sanctions will decimate the Iraqi military ma-
chine and cause Iraq to remove its chemical and nuclear capabili-
ties seems to me to be going too far.
There's a possibility, and certainly there's a lot of precedent in
prior cases, for Saddam Hussein to be removed from the office.
There are a great many destabilization cases that have been suc-
cessful.
But it's one thing to replace Saddam with another general who is
equally a dictator, and another thing to remove Iraq's military ca-
pability.
Senator SARBANES. It seems to me that it's reasonable for your
methodology to have included as the measure of success the goals
set out in the U.N. resolutions to which the President has adhered
and despite that article, my understanding is continues to adhere.
Now, the higher you make the goals, the more difficult they are
to attain, whether through sanctions and/or other means. And,
therefore, you have to, in effect, have a scale that is proportionate
or correlated with those objectives. I mean, if your goal is to get-
for instance, suppose you set a goal that Saddam is not to be there
any more. I mean, one assumes that, in order to achieve that, you
would have to go to war, since it's hard to envision that he, under
any other circumstances, would be willing to cease being there any
more.
So, you're going to have to actually compel that in a very force-
ful way, it seems to me. So, the more you escalate the goa
more difficult they become of achievement.
I'm a little—I don't quite understand why a continuing embargo
over a sustained period of time would not lead to some deteriora-
tion in his military capacity and in his capacity for weapons of
mass destruction in addition to devastating his economy in a gener-
al economic and industrial sense.
But, since he's dependent on obtaining that technology abroad,
since his military is dependent on spare parts, why wouldn't over
time a successful embargo held in place lead to a deterioration of
those capacities?
Mr. HUFBAUER. Senator, I absolutely agree with that. Sanctions
will deteriorate the capability of the Iraq military. And I think
they will deteriorate the military readiness of Iraq decisively over
a period of time. But, what I can't see, I guess, is sanctions causing
the military strength to collapse from, let's say, a million troops to
e goals, the


200,000 troops. Or, a dismantling of the offensive chemical and nu-
clear factories that Saddam has put in place.
Senator SARBANES. Well, but their capacity will diminish, will it
not?
Mr. HUFBAUER. Yes, correct.
Senator SARBANES. So, the longer you wait, the weaker, to some
extent, the weaker his military becomes, not the stronger, as long
as you maintain a very tight embargo in place.
Isn't that correct?
Mr. HUFBAUER. Absolutely.
Representative SCHEUER. Mr. Webster, the head of the CIA, testi-
fied before the Senate about a week ago, that it might take as long
as 9 months for the Army, for the effectiveness of the Army, to be
reduced because they don't have that much reliance on sop
ed military technology, although he said trucks and transport
would be affected as they ran out of spare parts.
But, he said that the Air Force, which relies far more on high
technology and on expert maintenance, and so forth, would be af-
fected in as little as 6 months.
So, if you take as a rough rule of thumb that, in a year, their
war-making potential, both their air capability and their ground
capability, would be significantly affected, very seriously reduced,
isn't that a clear American goal, perhaps the chief American goal?
Mr. HUFBAUER. First, I would agree with what CIA Director
Vebster said. In fact, we said much the same thing before he was
quoted in print.
Second, I agree with the thrust that you've made, that the state
of Iraq, after a period of time, will be very considerably weakened
and its military readiness will be very considerably weakened, yes.
Representative SCHEUER. Now, I want all the witnesses, if at all
possible, to answer this question:
If you accept what Mr. Hufbauer just said, that the passage of
time and the inexorable result of a tight sanctions policy, a tight
interdiction policy, especially of replacement parts for the Air
Force and the moving vehicles for the Army, will not only reduce
Iraq's war-making potential, but eliminate Iraq as a threat to peace
in the Middle East over a period of 1 or 2 years by sanctions, then
what additional benefit do we get from the act of war, which is
going to see thousands and perhaps tens of thousands of body bags
coming back to this country? What price glory? What additional
advantage do we get from the act of war that we wouldn't get
through simply waiting and watching those sanctions inexorably
take their effect?
We get the benefit perhaps of rolling the Iraqis out of Kuwait
and of restoring the Saba family. From the point of view of our na-
tional interest, I would ask all of you to evaluate the benefit of
that, for which we're paying with human life, against the over-
whelming likelihood of reducing the effectiveness of the Iraqi
Armed Forces and their war-making potential peacefully through
tough, hard, competently enforced sanctions?
What do we get for the war-making exercise?
Please continue, Mr. Hufbauer.
Senator SARBANES. Mr. Chairman, could I add to that so the wit-
nesses can be thinking?


12
Mr. HUFBAUER. That is correct.
Senator SARBANES. Now, is it also correct that, even as limited as
they were and not encompassing oil, that the United States, not
been a member of the League of Nations, refused to participate in
the sanctions?
Mr. HUFBAUER. That is correct.
Senator SARBANES. Is it correct that Mussolini at some point said
to Hitler-I've read this and I'm looking for—I want to ascertain
that it's correct. And, if so, I'd like to get a source for it—that he
said to Hitler that, “If oil had been encompassed within the sanc-
tion, that he would have had to back down in Ethiopia”?
Mr. HUFBAUER. Substantially, he said that, and the statement is
quoted in our case, and I will have to look for the page, and I'll
give you the citation.
Senator SARBANES. Well, if you could and maybe then read it
into the record.
Mr. HUFBAUER. I will do that. It will take me just a few minutes.
Senator SARBANES. But you have a citation, you have a source for
that? Is that correct? I mean, it's not one of these-
Mr. HUFBAUER. It's not one of these made-up things, no.
Senator SARBANES. Yes. OK. Thank you.
Mr. HUFBAUER. Thank you.
Senator SARBANES. And the other question I guess I have: Would
ou regard these sanctions—the current ones that are being ap-
plied to Iraq-as the most comprehensive and firm and far-reach-
ing and tightest of any that we've seen in this century?
Mr. HUFBAUER. Absolutely, and by a large magnitude.
Representative SCHEUER. Before we go ahead, I want to pose an-
other additional question to the entire panel, what can we do to
shrink the admittedly small traffic in replacement parts and spare
parts, the smuggling that's taking place, as Mr. Hufbauer said,
across Iraq's borders in replacement parts for the military ma-
chine?
Does science and technology hold out any possibility of identify-
ing where smuggling is taking place? Where contraband is slipping
into Iraq? Does preclusive purchasing or preemptive buying play a
role?
My first job after getting out of college in 1942 was as a P1, the
lowest professional rating, for the Board of Economic Warfare. I
was a Junior Economist for the Board of Economic Warfare and
paid $2,000 a year—and vastly overpaid. The people around me,
the experts, were engaged in preclusive purchasing.
At that time the noble Swedes were selling high-quality steel ball
bearings to the German military machine. But, they agreed that if
we could come up with the right price, they would sell their entire
output to us.
And that's what happened. We were rolling around in this coun-
try in Swedish ball bearings, up to our kazoo. We didn't have any
particular use for them, but we kept them out of the hands of the
Nazis.
We had purchasing agents roaming around Latin America, par-
ticularly Ecuador, buying up balsa wood-every twig, branch, tree.


14
SPARED
TEMENT.
BAUE
R
PREPARED STATEMENT OF GARY HUFBAUER
The Executive Summary to the second edition of Economic Sanctions Reconsid-
ered is submitted as the core of my testimony. This 2-volume study, just published
by the Institute for International Economics, examines 116 cases of economic sanc-
tions during the 20th century, and tries to distill lessons for policymakers.
Each sanctions episode has unique features: idiosyncracies of personality, geogra-
phy, objectives, and companion policies. Our analysis assumes that the likelihood of
success can best be assessed by studying a large number of historical precedents;
and that these precedents afford the most reliable guide to policymakers who decide
to apply the sanctions weapon.
In the following essay, published in the Washington Post on December 9, 1990, my
co-authors, Kimberly Ann Elliott and Jeffrey Schott, both with the Institute for
International Economics, join me in drawing lessons from the historical record for
the current embargo against Iraq. After the essay, results of a statistical analysis of
relevant cases, using the prohibit technique, are summarized.
[From the Washington Post, December 9, 1990]
THE BIG SQUEEZE: WHY THE SANCTIONS ON IRAQ WILL WORK
A LOOK AT THIS CENTURY'S EMBARGOES SUGGESTS HOW EFFECTIVE THEY CAN BE
(By Kimberly Elliott, Gary Hufbauer and Jeffrey Schott)
Fifty-five years ago, when Mussolini's troops overran Ethiopia, half-hearted sanc-
tions by the League of Nations failed to force Italy to withdraw. Haile Selassie's
futile pleas for help have haunted the world ever since.
This week, President Bush and key members of his administration including the
secretaries of state and defense declared that the United Nation's far stronger sanc-
tions against Iraq cannot be relied on to force a withdrawal from Kuwait. Only mili-
tary power, they warned, is certain to get Saddam Hussein's armies out.
But sanctions can work—and under circumstances far less favorable than those
present in the confrontation with Iraq. In fact, a review of 115 cases since 1914
shows that success was achieved 40 times when economic sanctions were threatened
or imposed against individual countries. Moreover, the current U.N. sanctions are
by far the strongest and most complete ever imposed against any country by other
nations. These comparisons strongly suggest that, given time, the U.N. economic
boycott can achieve by peaceful means what Bush and his advisers say can only be
won by force.
A comparison with the famous case of Ethiopia, one of the 115 we have reviewed
in detail, reveals important differences which apply in the current case. The embar-
go of Iraq is completely different from the League's half-hearted attempt to save
Ethiopia (which was made even weaker when the United States, a non-League
member, refused to join). The current boycott covers virtually 100 percent of Iraq's
trade. This is 3 to 4 times greater coverage than the average in all previous success-
ful sanctions cases. Beyond that, Iraq, geographically isolated and dependent on oil
for 90 percent of its export revenue, is far more vulnerable to economic coercion
than target nations in other sanctions actions.
Because of all these factors, it is likely that if the embargo persists, Iraqi output
will shrink by about half from its 1988 total of $45 billion. This is a decline of gross
national product (GNP) 20 times greater than the average impact in other success-
ful sanction episodes. Meanwhile, the economic costs to the sanctioning countries of
suspended trade with Iraq are being addressed in unusual ways and substantially
mitigated.
There also have been suggestions that the sanctions should be aimed at destabiliz-
ing Saddam. The United States has taken this route before-no less than 10 times
since World War II. In fact, the United States far exceeds all other countries in
threatening or using sanctions 81 attempts since 1917, of which more than 70 cam
after World War II. U.S. goals have varied widely—from curbing or destabilizing
governments perceived to be drifting from the "Western” capitalist sphere, to forc-
ing Britain and France in 1956 to withdraw their troops from the Suez Canal after
Egypt's Gamal Nasser nationalized it. In the 1970s, the United States increased its
use of sanctions, not as successfully, to improve the observance of human rights and
to inhibit the spread of nuclear weapons. In the 1980s, terrorism and drug-smug-
gling have been major targets of U.S. sanctions.
In the 10 cases of U.S. sanctions aimed at dictators, they contributed at least mod-
estly to the downfalls of Rafael Trujillo in the Dominican Republic in the 1960s and
Idi Amin in Uganda and Anastasio Somoza in Nicaragua in the 1970s. Sanctions


19
likely they will be effective (table 3 summarizes the findings for the commandments
that follow).
Without significant cooperation from its allies, a sender country stands little
chance of achieving success in cases involving high policy goals. However, interna-
tional cooperation does not guarantee success even in these cases, as evidenced from
the long history of U.S. and COCOM strategic controls against the Soviet Union and
COMEČON, and by the Arab League's largely futile boycott of Israel. When a
sender country has found it necessary to seek cooperation from other countries, it
was probably pursuing a sufficiently difficult objective that the prospects for ulti-
mate success were not bright.
On the other hand, active noncooperation can sabotage a sanctions effort. Offset-
ting assistance given to the target country by a third country erodes the chances of
sender-country success, particularly in cases where the policy goal is destabilization
of the target government or disruption of a military adventure. Such cases often oc-
curred in the context of East-West rivalry. With the end of the Cold War, such
“black knights” may be less likely to appear on the sanctions scene to rescue target
countries.
III. “The Weakest Go to the Wall.”
For our case sample as a whole, there seems to be a direct correlation between
the political and economic health of the target country and its susceptibility to eco-
nomic pressure. Countries in distress or experiencing significant problems are far
more likely to succumb to coercion by the sender country.
This is most true of the destabilization cases, where successes generally came
against weak regimes. The average health and stability index was also lower in suc-
cessful than in failed cases when disruption of military adventures and other major
policy changes were at stake. In episodes involving modest policy goals and impair-
ment of military potential, the results based on the health and stability of the
target country are less clear-cut–in the former set of cases because a wide variety
of countries have been targeted, and in the latter because countries only attempt
military impairment when the target is strong enough to be a threat.
Senders' economies are also typically much bigger than those of their targets. Size
may be a necessary condition for success, but it is clearly not sufficient. The relative
size of the target economy is less important than other factors that come into play,
such as the extent of trade linkage, the economic impact of the sanctions, and the
warmth of relations between sender and target prior to the imposition of sanctions.
IV. “Attack Your Allies, Not Your Adversaries.”
Economic sanctions seem most effective when aimed against erstwhile friends and
close trading partners. In contrast, sanctions directed against target countries that
have long been adversaries of the sender country, or against targets that have little
trade with the sender country, are generally less successful.
The higher compliance with sanctions by allies and trading partners reflects their
willingness to bend on specific issues in deference to an overall relationship with
the sender country. However, the preservation of political alliances and economic
ties should be equally important to prospective senders as to intended targets.
Likewise, the trade linkage data suggest that success is more often achieved when
the target country conducts a significant portion of its trade with the sender. Over-
all, successful cases exhibit a higher average trade linkage (28 percent) than do
failed cases (19 percent). One corollary: a sender country enhances its potential le-
verage by minimizing restrictions on trade well before the need for sanctions arises.
V. "If It Were Done, When Tis Done, Then Twere Well It Were Done Quickly.”
A heavy, slow hand invites both evasion and the mobilization of domestic opinion
in the target country. Sanctions imposed slowly or incrementally may simply
strengthen the target government at home as it marshals the forces of nationalism.
Moreover, such measures are likely to be undercut over time either by the sender's
own firms or by foreign competitors. The average successful case lasted just under
three years, while failures typically dragged on for 8 years.
However, it is not the passage of time alone that undermines economic sanctions.
Other factors are correlated with the length of an episode. Episodes between erst-
while allies are generally short, to the point, and often successful. Further, the
target country is more likely to receive assistance from another major power if the
episode continues for a number of years. Finally, the greater the latent likelihood of
success, the shorter the sanctions period necessary to achieve results.
In any event, the inverse relationship between success and the duration of sanc-
tions argues against a strategy of “turning the screws” on a target country, slowly
applying more and more economic pressure over time until the target succumbs.


20
without formore often and mcontrols are all for the better ut modest som
Time affords the target the opportunity to adjust: to find alternative suppliers, to
build new alliances, and to mobilize domestic opinion in support of its policies.
VI. “In for a Penny, In for a Pound.”
Cases that inflict heavy costs on the target country are generally successful. The
average cost to the target for all successful cases was nearly 2.5 percent of GNP; by
contrast, failed episodes barely dented the economy of the target country, with costs
averaging only 1 percent of GNP. The conclusion to be drawn from these findings is
that if sanctions can be imposed in a comprehensive manner, the chances of success
improve. Sanctions that bite are sanctions that work. However, there is a “black
knight corollary” to this conclusion: sanctions that attract offsetting support from a
major power may cost the target country little on a net basis and are less likely to
succeed.
VII. “If You Need to Ask the Price, You Can't Afford the Yacht.”
The more it costs a sender country to impose sanctions, the less likely it is that
the sanctions will succeed. The average cost-to-sender index (scored from 1 to 4, with
1 representing a net gain and 4 a major loss to the sender), is generally lower in
successful than in failed cases. The basic conclusion is clear; a country should shy
away from deploying sanctions when the economic costs to itself are high. Countries
that shoot themselves in the foot may not mortally wound their intended targets.
The sanctions episodes that are least costly to the sender are often those that
make use of financial leverage—manipulating aid flows, denying official credits, or,
at the extreme, freezing assets-rather than trade controls. Denial of finance may
also compound the cost to the target country by inhibiting its ability to engage in
trade even without formal trade controls being imposed. In fact, financial sanctions
have been used alone more often and more effectively than trade controls alone.
When financial, export, and import controls are all used in a single episode, it is
often because the goal is ambitious. A major reason for the better track record of
financial sanctions alone is that they typically involve relatively modest goals,
sought through the reduction, suspension, or termination of economic or military
assistance flowing from richer nations (usually the United States) to smaller and
poorer developing countries.
VIII. “Choose the Right Tool for the Job.”
Economic sanctions are often deployed in conjunction with other measures, such
as covert action, quasi-military measures, or regular military operations. Companion
measures are used most frequently in episodes involving destabilization and impair-
ment of military potential. By contrast, companion policies are seldom used in cases
involving modest policy changes, and were used in fewer than half the cases seeking
disruption of military adventures or other major policy changes.
Though our findings reveal no correlation between the use of companion policies
and increased effectiveness, this result is somewhat misleading. Our methodology
only recognizes success in cases where sanctions made a positive contribution to the
policy outcome. In several cases counted as failures for example, the U.S. sanctions
against the Sandinistas in Nicaragua and against Noriega in Panama--the sender
country achieved its goal but military or covert measures swamped the impact of
the sanctions. It may also be unfair to say that sanctions "failed” in other cases
for example, the United States versus Grenada (Case 83-4)where the military
weapon was unsheathed before sanctions had been given a chance to work. Rather
than buttressing a sanctions campaign, companion measures are frequently used
when sanctions are perceived to be either wholly inadequate or simply too slow.
IX. “Look Before You Leap.”
Sender governments should think through their means and objectives before
taking a final decision to deploy sanctions. Leaders in the sender country should be
confident that their goals are within their reach, that they can impose sufficient
economic pain to command the attention of the target country, that their efforts
will not prompt offsetting policies by other powers, and that the sanctions chosen
will not impose insupportable costs on their domestic constituents and foreign allies.
These conditions will arise only infrequently, and even then the odds are against
success.
Sanctions imposed for symbolic purposes—for the benefit of allies or a domestic
audience—should be just as carefully crafted. Although economic sanctions may be
the best or even the only option in some cases where it is necessary to "do some-
thing," not just any sanction will do the sanction chosen must be appropriate to
the circumstances. Senders usually have multiple goals and targets in mind when
they impose sanctions, and coercion is not always at the top of the list. Prudence


29
TABLE 3. SUMMARY OF FACTORS CONTRIBUTING TO EFFECTIVE SANCTIONS
COMMANDMENT
COMMANDMENT NV
COMMANDMENT
COMMANDMENT 11
Average index Percentage of
value for | cases involving
international international
cooperation assistance to
target
| SC FC
Policy goal
Average index
value for health
and stability
Aver-
age
GNP
ratio:
sender
to
target
Average index
value for prior
relations
Average trade
linkage
(percentage of
total trade)
Length of
episode (years)
SC
FC
SC
1.5
1.7
2.4
12
9
12
80
2.3
Modest policy change ......
Destabilization
Disruption of military
adventures...
Military impairment.........
Other major policy
changes.
All cases
2.2
3.0
0
100
SC—Success cases.
FC-failure cases.
* These averages exclude 5 cases where the GNP ratio is over 2,000 because their inclusion would bias the results.
Table 3. Summary of Factors Contributing to Effective Sanctions—Continued
COMMANDMENT
COMMANDMENT VII
COMMANDMENT
Policy goal
Costs to target
(percentage of
GNP)
Average index
value for cost to
sender
Number of cases with:
Financial Financial with
sanctions alone trade sanctions
Trade sanctions
alone
Percentage of
cases involving
companion
policies
SC FC
SC
SC
SC
FC
FC
SC
FC
SC
FC
w
I
2.0
♡o wro
on oo
ง
O w N
Modest policy change ......
6 10 3 10
Destabilization.
L 6 8 1
Disruption of military
adventures.
16
Military impairment.
2 5
Other major policy
changes..
All cases *.
6 | 20 39 34
SC—success cases.
FC—failure cases.
* These averages exclude 5 cases where the GNP ratio is over 2,000 because their inclusion would bias the results.
Representative UPTON. If I might follow up with another ques-
tion for Mr. Warnke.
With your experience in arms control and particularly with mis-
sile technology, is part of the question here how can we shrink the
number of goods that are getting into Iraq? And one of the points
that Mr. Hufbauer made, of course, was the fact that the longer
the sanctions are in place, the less ready the war machine by Hus-
sein is.
One of the concerns that I've had as I've talked to members that
have been to the Persian Gulf—and I have not been there—is the
fact that the Iraqis a number of times are, in fact, putting their
missiles on launchers, raising them aimed at Israel and other
places. And then bringing them back down.
What type of readiness equipment, I mean, we talked a little bit
about the Air Force and spare parts. Of course, those airplanes, I
would imagine, are in operation at least part of the time. Missiles
of course are not.
48–137 0 - 92 - 3


35
the effect of the sanctions on Iraqi military capacities—the readi-
ness, the actual readiness for war, instantaneous war readiness.
Well, that, obviously, is sharply different between different sery-
ices, branches, elements because the inventories are very large. So
they're not going to run out of basic tank chassis. They have so
many tanks that they can cannibalize tank chassis for a long time.
What you have to look at is the consumables. The consumables—
as the military calls them—are things such as tires, shelf life item
of different types-
Now, if you look at the Iraqi array of equipment, the crucial
piece of equipment—not very glamorous perhaps—is tank support-
ers. They need to manuever the armor and move it great distances.
If you move the average Soviet tank of the Iraqi Army 150 miles,
then it has to go straight into a shop for major reconstruction of
transmission.
The only way you can move it is by tank supporters. And the
tank supporter is West-German found. There was several hundred
of these tank supporters one of the biggest arms sales, by the
way—just harmless, seemingly, just trucks. They found tank sup-
porters need spare parts, which they have not been getting.
As they moved the tanks around for the deployments, the
counter deployments of Kuwait, they've been running down that
inventory of tank supporters, which critically affects their ability
to manuever armor.
There's been a shortage of tires for this type of heavy vehicles
that is very crippling in effect.
The Iraqis have Franco-German Roland antiaircraft missiles.
They have a hundred of them. They will be critical. The state of
readiness would govern how many aircraft of ours would be shot
down in an air war.
Senator SARBANES. How many U.S. aircraft?
Mr. LUTTWAK. U.S. aircraft. These are all arms SALT Iraq under
the dispensations of the cold war period, when everybody thought
it quite normal and necessary to sell arms to the Third World, be-
cause, of course, the Soviet Union was there selling arms to its
friends in the Third World.
Representative SCHEUER. It's friends that would include Syria?
Mr. LUTTWAK. Yes. Syria, Iraq, and so on. And Kuwait, by the
way, too.
Senator SARBANES. Iraq was getting its arms from both sides,
wasn't it?
Mr. LUTTWAK. Yes, sir. Iraq—but so was Kuwait. So was Jordan.
Kuwait had Hawk missiles and bought Soviet missiles, and so on.
At any rate, the Franco-German antiaircraft missiles, that's a
very fancy piece of equipment. It's a piece of equipment, by the
way, that was partly developed with U.S. money because, at one
point, the U.S. Army was going to buy this Roland system. And we
invested about a billion dollars to upgrade this system. Then we de-
cided not to buy it.
Some of that technology is now present in Iraq waiting to shoot
down our aircraft.
Be that as it may, the Franco-German Roland is a great eater of
spare parts. It's a very complex system, which they've been getting
from France month by month.


36
Representative SCHEUER. Until how recently?
Mr. LUTTWAK. Well, probably, until a couple of months before
the war, or maybe a week before the war. But, some of these items
they could stock; others they can't because they have very short
shelf lives. Or, because, frankly, it's very expensive to keep large
inventories of them.
Now, they also have Hawk missiles sold by the United States to
Kuwait, captured by the Iraqis, which the Iraqis can operate for
only one reason. And that is because we also sold Hawk missiles to
Jordan.
That was a very controversial sale, but one that could be defend-
ed in cold war conditions when the Soviet Union was supplying
Syria, the threat in Jordan, so that we supplied Hawk missiles to
Jordan.
Now, the Jordanians have Hawk missiles and, if the Iraqis can
operate the Hawk missiles, it's only because they have Jordanian
technicians coming over and probably U.S. spare parts sold to
Jordan going over as well.
I do not know this for a fact, but I'd be surprised if it was not
happening. Some Jordanian authority has already said: “We can't
control the personal employment of retired members of our mili-
tary who happened to have had experience with Hawk missiles.”
That sounds like they know something that I don't know, but it's
a possibility.
So we have a pattern of physical deterioration. We're not talking
about the dissolution of inventories. They have enough tanks to
cannibalize tanks for 20 years. They have lots of aircraft, and air-
craft don't really count in their war plans.
Their artillery is very resilient. They have a lot of high, very
high, quality artillery bought and manufactured in Austria, the
famous and excellent 155 millimeter, which was actually developed
in South Africa by the Canadian, Buehl—that very inventive
man-produced in Austria, as well as South Africa. They have
large numbers of them. They will not deteriorate soon.
But, the economic effect of not being able to import has had two
unambiguous, clear-cut effects.
First, as I mentioned, their growth and development has stopped,
meaning, by the way, that we have now found through these sanc-
tions an answer to a problem that we were unable to deal with oth-
erwise—at all.
And the second thing is that there is a whole pattern of diverse,
narrow, specialized deprivations, which are going to have a lot of
different effects. If you don't have a particular type of battery, the
antiaircraft missile doesn't work, the plane doesn't get shot down.
Very important things, even though they're very small things.
Now, you have already said and a previous witness very expertly
has pointed out how the blockade might work, in what time frame.
There are of course all sorts of objections to just waiting for the
blockade.
Let me just say that I personally see the duration of the blockade
needing a long time to work. I see that not as a defect but as a
positive virtue, because I would like this economic blockade of this
country, which is now causing this problem, to provide the opportu-
nity and the time for us to put into place the system that we now


38
What is the paradoxical outcome here?
The paradoxical outcome of rejecting sanctions, precisely for the
sake of destroying the Iraqi military machine.
A lot of people say, “I don't want sanctions. I don't want sanc-
tions even to work because I don't want them to retreat because it.
won't give me an opportunity to destroy the Iraqi military ma-
chine.'
What are the consequences of destroying the Iraqi military ma-
chine?
The first consequence is, it liberates Iran. There are some Irani-
ans, whose voices we hear, who say that Iran should continue on
its original path of the worldwide-essentially turning the world Is-
lamic by spread of Islam. There are plenty of Iranians who believe
that.
It turns out that the activism of the Iranian revolution has a life
span of 30-40 years and not 5 or 10 years, as we thought.
But they're blocked, and they're forced into behaving like a prag-
matic power, a cooperating pragmatic power by the Iraqi military
machine—that blocks them.
If you remove that Iraqi military machine, there will be nothing
in front of them except the road, as they've said, “The road to Je-
rusalem.”
So I find it particularly strange that people who are concerned
with the security of Israel, as I am myself, very properly, should
want to destroy the Iraqi military machine, which is the fact that
guarantees the inability of Iran to go down the path of their decla-
rations, their constant declarations that all they do against Iraq is
a preclude to their liberation of Jerusalem, as they put it.
The second thing is the destruction of the Iraqi military machine
would release Syria. Syria has been on its best behavior for many
years now because it is threatened by Iraq. And, instantaneously
threatened. The Iraqi—the Syrians could not plan a war against
Israel or a war, for that matter, against Turkey, with which there
have been a whole series of border incidents. But, the Syrians,
among other things, have been supporting the Turkish guerrillas,
and so on. The Syrians were paralyzed because of Iraq.
You remove Iraq and you release the Syrians.
In the realm of strategy, to destroy bad guys is not always a good
ea. Of course, the bad guy had to be contained. The President
was quite right in drawing his line in the sand, preventing an inva-
sion. And as my own previous testimony suggests: We must pre-
vent this bad guy from acquiring further capabilities.
it, that is not different from the same capabilities flowing into
Libya unattended and Pakistan unattended. We are focusing—it is
our duty. We are not children on the playground having picked a
fight with somebody else, we are dealing with the systemic generic
problem.
And I definitely believe and would like to conclude with a very
simple distinction here:
If we now put into place the worldwide controls pursuant to a
reorientation of our entire National Security Policy from a cold
war to these new Third World threats, instead of allowing them to
bloom and blossom, then defend ourselves against it, if we put in


40
PREPARED STATEMENT OF EDWARD N. LUTTWAK
Under the provisions of a series of U.N. Security Council resolutions Iraq has
been subjected to an air and sea blockade of its exports and imports. In addition, the
countries that border on Iraq Jordan, Syria, Turkey, Iran and Saudi Arabia have
variously limited the overland import and export trade of Iraq, with sharply varied
degrees of effectiveness.
Some of Iraq's borders are now virtually sealed, and others are not. The Jordani-
an government is plainly a reluctant participant in the blockade, and while its
border patrols demonstratively intercept some smugglers, it is quite probable that
other trade flows are quietly allowed to continue. The Syrian and Turkish govern-
ments are by contrast trying very hard to prevent any trade at all across their bor-
ders with Iraq, but they are not always successful. In mountain terrain, lines-of-
sight are short and border patrols are often ineffective; moreover, with the same
ethnic minorities on both sides of the border, there are built-in family connections
that facilitate the conveyance of goods to Iraq. Iran for its part was quite unable to
prevent a great deal of smuggling even during the Iran-Iraq war, and it can hardly
be expected to do better now: the border is very long, and much of it cuts across
difficult mountain terrain.
The one measure that could seriously diminish smuggling to Iraq would be pre-
emptive buying: if those who send grains and cooking oil to Iraq over perilous
mountain tracks could instead sell their products legally to buying agents stationed
in each locality, they would often do so. But pre-emptive buying—used very effec-
tively against Nazi Germany during the Second World War-has not been tried in
the present crisis. Whether it is worth creating such a system is another matter.
Arguably, all that is happening is that some Iraqi border populations are eating
rather better than they would otherwise—and these are often minority populations
that the Baghdad regime regards as hostile in any case. Food reaching Kurdish vil-
lages does not strengthen the Iraqi authorities in any way, though there is always
the possibility of course that the same mule trains which carry cooking oil could
also bring in small, high-value military items conveyed to border areas by Iraqi
agents.
The more definite constraint on Iraq's imports is the undoubted effectiveness of
the export blockade. Iraqi crude oil, once delivered by pipelines through Turkey and
Saudi Arabia as well as by tankers, cannot usefully be smuggled out by mule trains,
or even by trucks. Hence Iraq's principal—and most exclusive-source of foreign
currency is now closed off. Regardless of the permeability of some border zones, and
regardless of the connivance of some border authorities, if Iraq has no means of pay-
ment it cannot continue to import once it exhausts its own pre-invasion reserves of
foreign currency and gold, and those looted in Kuwait. If there is evidence that Iraq
still has reserves of hard currency and gold that merely indicates that the totality
of all Iraqi imports since the August invasion has been quite modest.
As we consider the impact of blockade on Iraq, we must first make a fundamental
distinction, between definitive, mechanical, effects and hypothetical political effects.
Much of the debate on this matter has been greatly confused by the failure to make
that distinction.
There has been continuous reporting on the availability of food supplies in the
markets and shops of Baghdad and other localities accessible to newsreporters and
diplomats. The implication is that there is some definite connection between the
availability of food for the population at large and the decisions of the Iraqi Govern-
ment. Actually there is no such cause-and-effect relationship.
To believe that the resolve of the Iraqi regime to remain in occupation of Kuwait
would be diminished by food shortages, or increased by food abundance, implies that
the regime is highly responsive to popular opinion. There is no evidence whatever to
support that hypothesis. By contrast, all the evidence of the 8-year war with Iran
indicates that the Iraqi regime shapes public opinion, or can reliably intimidate
public opinion to accept its chosen policies. What is presented as a straightforward
linkage, is in fact a very dubious theoretical construct. If there were outright mass
starvation, one could speculate on the possibility of a popular uprising—though his-
torical evidence suggests that it is well-fed rather than starving populations that
rise against governments. Also, if Iraqi troops were faint with hunger one could rea-
sonably theorize that the regime might surrender Iraq in order to be able to feed
them. But that is not a matter now worthy of examination, for there is no starva-
tion in Iraq but only specific shortages that affect the palate more than the stom-
ach.
As opposed to these hypothetical political effects, the mechanical effects of the
blockade on Iraqi military capabilities are beyond dispute. Iraq used to import fin-


47
ished weapons in large quantities from several countries, a great deal of machinery
to assemble oi fabricate weapons, and chemical plants, laboratory equipment, sub-
systems and components for its missile, chemical, biological and nuclear programs.
Except for whatever may still be smuggled into its borders in small or very small
quantities, Iraq can no longer add to its vast inventory of weapons, conventional or
not. It was the relentless growth of the Iraqi military arsenal that was the greatest
source of danger for the region, as the Bush administration failed to recognize. Now
by contrast, Iraq can no longer add to its weapon inventories or continue to develop
its non-conventional capabilities. With each passing day, Iraqi inventories are slow-
ing decaying, or becoming obsolete, or both.
That is the perfectly reliable mechanical effect of blockade that should be allowed
to continue, without war, until we have succeeded in redirecting our overall security
efforts from the struggle against the Soviet Union, to a drastically enhanced strug-
gle against nuclear proliferation, the diffusion of other dangerous technologies, and
the entire flow of weapons to the Third World as a whole, and not merely Iraq.
If such controls are put into place by U.S. measures at home and a change in
current policies that include huge arms's sales to lawless and unstable regimes
and if they are extended by negotiations with the other chief suppliers world-wide,
it will not matter much if Iraq's present arsenal is not destroyed in war.
If by contrast, we fail to create an arms' denial coalition, and a new system of
international controls on proliferation that really works, it will gain us little to
have destroyed Iraq's current holdings by war.
In this context, it may correctly be said that the blockade is highly effective, and
that it might serve us even better as the precursor of a “New International Order"
that has real content. After all, it is precisely the envisaged agents of that New
International Order—the 5 members of the U.N. Security Council—that are also the
chief suppliers of weapons to the Third World.


43
These commitments, and I think equally importantly, these com-
mitments are contained in the U.N. Resolution, so that I don't be-
lieve that individual countries, whose will to enforce them flags
over time. I think that the U.N. Resolutions remains in effect,
unless and until the United States agrees to their removal of those
U.N. resolutions.
So there will be a vehicle—a legal vehicle, if you will—that will
be enforceable as time goes along.
There is a lot of smoke, quite candidly, that is put up about how
it's hard to trace oil. And it gets on world markets, and it's fungi-
ble, and who knows where it's gone. And we can't enforce it.
Frankly, that is nothing but smoke. It is extremely easy to iden-
tify the flow of oil. All you need to do is watch the bankers. You
can do that physically from a rowboat off the oil terminals, if nec-
essary. You can do it from the spy satellites. You can read Lloyd's
Shipping. You can do all sorts of things to monitor whether tank-
ers are picking up oil from terminals that previously exported Iraqi
oil.
You can also monitor at the point of arrival in the rest of the
world because it has to have a bill of lading. I've attached a sample
to my testimony that simply demonstrates that no oil can be
landed anywhere without showing a point of origin on a bill of
lading.
Representative SCHEUER. Can that be forged?
Mr. SCHULER. Sure. If anything can be forged. But, if it is forged
and if there is a suspicion of this oil, because somebody spotted it,
the tanker that delivers it, somebody spotted it leaving an Iraqi
terminal, then to prove that it is Iraqi oil, all you need to do is
have an assay of the crude oil.
e attached to my testimony a four-page assay of an Iraqi
crude oil. It is very specific. There is no other crude oil that will
match it in precisely the same way, no other crude oil anywhere in
the world. So that there is no problem with identifying it.
Now, others will say, well, but what about if it gets delivered to
an Anthropo tanker farm in Rotterdam or something and gets
mixed with comparable crude oils?
Yes, you could disguise it if it gets something else blended in it.
But, you make sure that that Anthropo terminal does not receive
the Iraqi crude oil. You make sure that they understand that if
they purchase Iraqi crude oil and you have traced the tanker deliv-
ering to it, that if they purchased that crude oil, then they con-
taminate their entire tank farm. All the crude oil that they ever
want to export is contaminated because they brought Iraqi crude
oil in.
Representative SCHEUER. Well, Mr. Schuler, let me ask you. It's
my understanding that Iraqi oil goes in two directions and two di-
rections only and by pipeline—one pipeline to Turkey and one
pipeline to Saudi Arabia. And that, since Saudi Arabia and Turkey
are cooperating with us totally, that that flow of Iraqi crude oil out
of Iraq and into the outside world markets has been substantially
reduced, if not shut off completely.
Is that true?
Mr. SCHULER. Absolutely true. We have adopted and I think,
again, it's the benefit of past failures that have contributed to this,


44
we have adopted essentially a three-tier line of defense with re-
spect to Iraqi exports.
First of all, there is the boycott. The whole world is boycotting
with the blessing of the U.N. resolution and the legal force of a
U.N. resolution.
We are boycotting it.
Second, we have cut off all of the pipeline. There is a pipeline
through Turkey, there is a pipeline through Saudi Arabia, and
there is a pipeline across Syria, but that is probably inoperable
now. It hasn't been used for many years.
So, the pipelines are shut off, and we can through diplomatic
pressure continue to make sure that the Saudis and the Turks con-
tinue to cut those off.
And the third line of defense is the naval blockade. We blockade
the Turkish terminals. We blockade the Red Sea terminal off Saudi
Arabia, and we blockade the Persian Gulf terminal at Fao, which
is the—the Iraqis did have a waterborne export capability.
So, we have a three-tier line of defense. And there's no question
in my mind that, in every way, we can deny oil revenues to Iraq.
Now, the question becomes: How effective will that be and when
will it achieve its purpose?
That's a difficult question because it depends upon perception in
Iraq: are we doing to be able to maintain this economic blockade?
And it depends upon the extent to which it hurts Iraq.
| that's a very difficult question to judge. But, the one thing
that is clear is that Iraq's exports of oil that would be worth $50
million a day now at the rate of production that they were produc-
ing prior to August 2 and at the target world oil price of $21 a
barrel prior to August 2 would have been making $50 million a
day. That is now cut off. They have-
Representative SCHEUER. That's a third of a billion dollars a
week.
Mr. SCHULER. You're quicker at your numbers. Yes, sir.
Representative SCHEUER. Or more.
Mr. SCHULER. That's right.
Representative SCHEUER. Well over a billion dollars a month.
Mr. SCHULER. That's right.
Representative SCHEUER. Fifteen billion a year perhaps.
Mr. SCHULER. It's on the order of $16–17 billion a year.
Representative SCHEUER. Yes.
Mr. SCHULER. And the Iraqis needed that kind of revenue be-
cause the Iraqis, even during the war years, never suffered depriva-
tion because they had some $50-60 billion worth of financial assist-
ance that came from Saudi Arabia and Kuwait. And I would add,
came out of the windfall to Saudi Arabia and Kuwait. It didn't
come out of Kuwaiti or Saudi pockets in that instance. But, none-
theless
Representative SCHEUER. When you're talking about the wind-
fall, that is oil revenues from the West and the industrialized
world?
Mr. SCHULER. Yes, that's exactly right, Mr. Chairman. To bring
it up to date, we may not be paying for the deployment in the Gulf,
or some of it is being supposedly reimbursed so that it reduces our
tax bill, but that reimbursement is, in fact, being paid by us as mo-


45
torists when we go to the gasoline station and provide a windfall to
Saudi Arabia.
The same situation prevailed during the Iraq-Iran War when the
financial assistance was provided.
Representative UPTON. Excuse me just 1 minute.
In your estimate, Mr. Schuler, what would you say has been ex-
actly the windfall that the Saudis have achieved from the begin-
ning of August, through 6 months?
Mr. SCHULER. Well-
Representative UPTON. Their overproduction that they've done at
inflated price?
Mr. SCHULER. They are currently producing and exporting 342
million barrels a day, more than they were prior to August 2, be-
cause they've helped to make up for the principal care of the boy-
cott of Iraqi and Kuwaiti oil. They've made up.
So that's about 342 million barrels a day.
Senator SARBANES. Three and a half million or 242 million?
Mr. SCHULER. It's close-
Senator SARBANES. I thought they went from 5.5 million to 8 mil-
lion. Is that not correct?
Mr. SCHULER. You're right. It's 5.5 million to 8 million, 242 mil-
lion barrels a day.
Senator SARBANES. Right.
Mr. SCHULER. That's right. I did my sums wrong. Two and a half
million barrels a day.
Senator SARBANES. I mean, I feel strongly about this point in
terms of them paying up, but I do want to get the facts right.
Mr. SCHULER. Don't want to exaggerate. Absolutely.
Senator SARBANES. That's right.
Mr. SCHULER. Two and a half million barrels a day times what
price you want to put on it. Earned price of $25-30 a barrel. And
that $25–30 a barrel is roughly twice what the price was prior to
August 2. In June, it was as low as $13 a barrel.
So let's say they doubled the oil price on the original 412 million
barrels a day that they would have been exporting anyway.
Senator SARBANES. Five and a half.
Mr. SCHULER. No, the original—I'm sorry. Yes, sir. Original 542
million barrels a day—
Senator SARBANES. The Saudi windfall, as I understand it, is the
extra price on the existing production of 5.5 billion.
Mr. SCHULER. Right.
Senator SARBANES. And the total price on the additional produc-
tion of 2.5 billion. That's what you have to put together.
Mr. SCHULER. That's right.
Senator SARBANES. My understanding of that figure comes out on
an annual basis something over $50 billion.
Mr. SCHULER. That's right. That's as good of a back of an envelop
calculation as you can do.
In any event, the Iraqi people never suffered from deprivation,
even during the long war with Iran. They had both guns and
butter. They built a subway system in Baghdad-a showcase kind
of thing—which is obviously a frill that one could do without.


46
So they've never suffered deprivation, and now they are being
forced to do so. So, clearly, directionally, they have to recognize
that they are suffering a good deal of pain.
Also, the Iraqis, as they try to calculate who can outlast the
other guy, recognize that oil markets as such, because the Saudis
and the Venezuelans and the United Arab Bemers have essentially
made up the shortfall of Iraqi and Kuwaiti oil, oil markets are in
balance.
And, absent a lot of war hysteria, there would not, in fact, be a
war premium on oil and the world—whether we're talking about
the United States or the Third World or Eastern Europe—could
easily absorb the oil prices. It's only when there starts to be an ex-
change of belligerent statements between Washington and Bagh-
dad that oil markets react and we get this war premium.
If one could eliminate that war premium, there would be no diffi-
culty for the world's economies to absorb oil prices. In fact, there is
currently in the fundamental oil balance a glut of oil.
But, let me just move on to what I think is a real paradox.
An OFFENSIVE MILITARY THREAT DOES NOT SUPPORT SANCTIONS
The administration has suggested that we need to create an of-
fensive military capability in order to make the sanctions work. In
fact, I think that's entirely wrong. The military capability does not
reinforce sanctions; it, in fact, does not reinforce sanctions in a
number of respects.
First of all, if you want sanctions to work, you have to have pa-
tience. But the one thing that creating this offensive military capa-
bility creates is impatience, which involves ground forces being de-
ployed in desert conditions. So it subverts the sanctions in that re-
spect.
The objective of sanctions is to alienate the Iraqi army and the
Iraqi public from the regime. But any time you have an offensive
military threat to a country, and I don't care whether they're
Iraqis or Americans, you cause a rallying of the people to the
regime. So, once again, it's subversive.
Third, in order to be credible, sanctions have to be perceived to
be inflicting damage on the target, which they are, at no cost to the
imposer. And that would be the case because of the fundamental
oil balance that has been restored, except for this war premium
that is created by the threat.
And, finally, I would suggest that for sanctions to be effective
they must have international support and unanimous international
support. And, in fact, the sanctions do, but the offensive military
threat does not. So, once again, it undermines the kind of unity
that is required.
So, if there's one thing that I would suggest—and I think it's
doable without anybody backing down on anybody's part—is that
what the administration should do is to return to its originally pro-
claimed objectives, which is to have in Saudi Arabia a military
force capable of defending Saudi Arabia, and to rely on the eco-
nomic sanctions to get Saddam out of Kuwait.
And to do that, in order to avoid this subversive effect of the
huge offensive capability, I think that there should be a restoration


47
of the rotation policy, and in the process, we should build down the
ground force capability to as minimal a level that is required to
protect our air bases and supply depots that have been created in
Saudi Arabia.
Leave the air and naval forces that are required in place and
build down the ground forces. That will enable the sanctions to
work, and will achieve our objectives without pain; whereas, going
to war will achieve none of our objectives in the region.
Representative SCHEUER. Mr. Schuler, as I read the study by Mr.
Hufbauer in the first of his two volumes, I get the clear impression
that sanctions can be relied upon almost inexorably to shrink, de-
grade, and demean the Iraqi economy and the Iraqi military.
Mr. SCHULER. Right.
Representative SCHEUER. But, historically, sanctions cannot be
relied upon to change a country's major foreign or military policy.
Historically, they've been able to affect a country's policy at the
margin-treatment of hostages, terrorism, human rights, and so
forth.
But, as to the question of going to war or not going to war, sanc-
tions haven't been that effective.
Can they be effective in this instance in actually inducing
Saddam Hussein to withdraw from Kuwait?
Mr. SCHULER. Inducing the absolute cutoff of oil revenues and oil
revenues account for 95 percent of Iraq's foreign exchange require-
ments, which were very significant prior to August 2 and remain
significant now, and will become more significant as his stockpiles
of spare parts, and so forth, and food is used up.
That foreign exchange will be desperately required. There is no
doubt in my mind that that will either force Saddam to withdraw
from Kuwait or force the Iraqi army to overthrow Saddai
somebody in place who will withdraw from Kuwait.
Never before has anybody, any country, especially one that has
lived high on the hog with very big oil revenues, been faced with a
total cutoff and one that can be maintained ad infinitum, quite
frankly.
[The prepared statement of G. Henry M. Schuler follows:]


48
PREPARED STATEMENT OF G. HENRY M. SCHULER
It is a privilege to participate in this critically important examination of the “Eco-
nomic Sanctions Against Iraq;" however, I must acknowledge at the outset that I
appear as an informed individual rather than as a representative of the Center for
Strategic and International Studies (CSIS), which does not adopt corporate positions.
I would also emphasize that my views have not been formed through academic
study but rather through almost 20 years of hands-on experience with oil related
sanctions, first as managing director of an American oil company that was involved
in quasi-private efforts to boycott Libyan oil that had been illegally expropriated by
the Qadhafi regime in 1971, and later as an adviser to the Departments of State and
Treasury when the Reagan administration imposed unilateral governmental sanc-
tions on Qadhafi in 1981 and 1986.
Unlike the current universal boycott and multilateral blockade of Iraqi oil ex-
ports, those unilateral anti-Qadhafi sanctions suffered from a total absence of coop-
eration from the international community and an only half-hearted commitment
from the U.S. Government. Despite those crippling drawbacks and the admittedly
modest impact of the Libyan sanctions, I had a first hand opportunity to observe
during an authorized April 1988 visit to Tripoli, the points of vulnerability of coun-
tries dependent on oil exports, and more importantly, I have been prompted to re-
flect on the ways and means to impose truly meaningful economic pressure on rene-
gade regimes. Accordingly, I am happy to share those reflections with the commit-
tee.
On the basis of my experience, it seems to me that successful sanctions require 3
essential elements:
1. The political will to impose absolute prohibitions in pursuit of a well-defined
and verifiable goal;
2. The technical ability to monitor compliance and prove violation;
3. The diplomatic, legal and military means to secure cooperation and/or enforce
compliance.
Recognizing that these essential elements involve costly political and economic
commitments that governments have seldom been willing to make even when trig-
gered by Libyan support for terrorism-I must acknowledge that I was truly aston-
ished by the speed, skill and determination with which the Bush administration
moved in the early weeks. It seemed to me that those officials responsible for the
non-military aspects of the Gulf crisis, Secretary Baker and Undersecretary Kim-
mitt, had also learned from their frustrating experience in attempting to cut off Qa-
dhafi's oil revenues when Baker was Secretary of the Treasury and Kimmitt was his
General Counsel. As a result, they have designed and implemented unprecedentedly
tough and extensive sanctions against Saddam Hussein.
I am entirely confident that those sanctions are capable of forcing an Iraqi with-
drawal from Kuwait PROVIDED THAT THE SO-CALLED MILITARY OPTION IS
NOT PERMITTED TO UNDERMINE THEM. I will address that caveat at the end
of my testimony, but first allow me to support my confidence by examining the com-
plex and interactive attitudinal and practical considerations that underlie each of
the essential elements. Since my background is in the oil sector, I will focus on the
oil export barriers, which will, in my judgement, be the determinative sanction.
The Political Challenge
If our Vietnam experience has provided valuable guidelines for the employment
of military force, our Libyan experience has demonstrated the same requirements
for the imposition of economic pressure: a well-defined and realistic obiective; Amer-
ican and international support; and full commitment rather than incrementalism.
Those requirements did not exist during the Reagan administration's campaign
against Qadhafi. Although the stated purpose was to pressure Qadhafi to stop sup-
porting terrorism, that seemed an unrealistic goal to those who knew the messianic
Libyan, and it was in any event impossible of proof, given the clandestine nature of
such support. Not only did the rest of the world refuse to join the United States in
trying to cut-off Libyan oil revenues, but also key sectors of the American business
community-and their champions in Congress-worked to create loopholes. Finally,
the Libyan sanctions provided unmistakable evidence of the folly of incrementalism,
being imposed in 4 phases over a 5 year period starting in December 1981 and
ending in June 1986.
In contrast, the Bush Adminstration's early economic moves against Saddam met
each of those tests with unmatched skill and clarity.
It has been clear from the outset that the objective of the general post-invasion
sanctions (as distinguished from specified pre-invasion barriers to certain technology
General Counsnues when Bakerir frustrating etary Baker ancial responsible foration


50
Any estimate of Iraq's financial position must conclude that an economy, which
has long been dependent upon oil revenues and the foreign goods those revenues
can purchase, cannot long avoid collapse under the weight of sanctions.
Iraq was exporting about 2.3 million barrels of oil per day prior to August 2.
These exports earned Iraq $14.5 billion last year, and would have earned Iraq over
$50 million a day at the $21 a barrel price targeted by OPEC just prior to the inva-
sion. In sum, Saddam's invasion has denied his country almost $7 billion in reve-
nues in the last 442 months.
Since Iraq's total exports last year were valued at only $15.4 billion, it is clear
that oil accounted for almost 95 percent of the country's entire foreign exchange
earnings. It now has none.
Last year, Iraq spent about $10 billion of its foreign exchange on imports, roughly
60 percent for civilian goods and the rest for military. Another $4 billion was spent
servicing external debt. Although Iraq is temporarily relieved of its foreign debt
service, it is denied some $850 million a month in previously required imports.
It is impossible to pin down Iraq's locally held gold and hard currency reserves on
August 2, but they had certainly been drawn down severely during the 8 year war
with Iran. Nor is it clear precisely how much was stolen from Kuwaiti banks, shops
and individuals, but none of the estimates exceed $1 billion. In short, Saddam has
only limited ability to finance sanction-busting by entrepreneurs who typically
charge at least 3 or 4 times the free market price to accept the risks.
Similarly any estimate of Iraqi willingness to accept a cut-off of oil revenues must
start with a recognition that the Iraqi people are not accustomed to such depriva-
tion because some $50-$60 billion in Arab financial assistance and extensive West-
ern credit enabled Saddam to maintain a “guns and butter” policy during the war
with Iran. For example, Iraq built a showcase subway system in Baghdad during the
early years of the war.
On the other hand, Iraqi oil specialists, among the best in the business, know
that, in the absence of war hysteria, the growing glut of oil on world markets should
soon reduce world oil prices to pre-invasion levels and thereby reduce the economic
pressure on the world's oil importers—including the Third World and Eastern
Europe—to put an end to the crisis.
In sum, if the confrontation between the American-led alliance and Iraq were fo-
cused solely on the economic dimension, Iraqis could not avoid concluding that Sad-
dam's foreign opponents will have no difficulty outlasting him and that they there-
fore have no choice but to withdraw to their original borders and start rebuilding.
The Unintended Consequences of the Military Threat
Although President Bush insists that his decision to double American forces and
create an offensive threat is designed to reinforce the economic sanctions, the mas-
sive new build-up actually works to undermine sanctions in a number of presum-
ably unintended ways.
Effective sanctions require a single minded-almost desperate-determination to
make them work as the only alternative to war. If war is portrayed as an acceptable
option, that singleness of purpose and resolve is dissipated.
Sanctions require patience, but the deployment of a huge offensive ground force
in remote desert conditions creates morale and equipment problems that spawn
more impatience than would the deployment of defensive air and naval forces in the
more tolerable conditions of air bases and ships.
Sanctions aim to alienate the Iraqi populace and army from Saddam Hussein, but
foreign military threats invariably prompt people to rally to their leader in defense
of the homeland.
Sanctions will be durable, and therefore credible, only if they are seen to inflict
more pain on Iraq than on the alliance of oil boycotters, but exchanges of bellicose
statementshave undermined that perception by imposing a $10-$15 per barrel "war-
premium” on oil costs even though there is a growing glut.
Sanctions depend upon international and regional solidarity, but threats of unilat-
eral American military action create divisiveness, and the massive American pres-
ence creates friction with the Saudi hosts.
Sanctions must be identified with a carefully defined objective in order to provide
an incentive for policy change, but the creation of capacity and momentum for at-
tacking Iraqi targets raises doubts whether the Bush administration would actually
be satisfied with its announced objective, withdrawal from Kuwait, or whether it
would in any event pursue the objectives put forth by some regional allies, including
“decapitation” of the Saddam regime, elimination of Iraq's nuclear, biological and
chemical warfare infrastructure and even destruction of its conventional military
power.


51
How Long?
Despite my certainty that the denial of oil revenues and the unavoidable erosion
of the civilian and military infrastructure—will force Saddam from Kuwait, it
would be foolish to pretend that anyone knows how long that will take because so
much turns on the Iraqi perception of American resolve and perseverance. But nei-
ther will the advocates of the war option give an unhedged prediction of how long it
will take to drive Iraq out of Kuwait militarily. Gen. Schwartzkopf has recently re-
ferred to a 6 month campaign but admits that timetables can always get bogged
down. In short, neither the economic nor the military campaigns can proceed on a
fully predictable timetable.
More important, it seems to me that the war hawks miss the point when they
argue that we cannot afford to wait for sanctions to work because of their fears that
the international and regional alliances will fall apart.
The international alliance will hold as long as the present oil balance can be
maintained, and the only threat to that balance is war related damages and sabo-
tage.
The non-Gulf countries, e.g., Turkey and Egypt, will remain committed as long as
their financial plight does not worsen, and the al-Sabah family should be willing to
monetarize their foreign investments if necessary to help those who are standing by
them.
The Gulf alliance will hold unless its political will is undermined by Iraqi propa-
ganda and the American military presence, but if that political situation is too frag-
ile to withstand an extended economic confrontation, than surely it will not long
survive the commencement of hostilities.
Finally, having made such a massive commitment of American personnel, re-
sources and prestige to the region, we surely do not want to trade-off our long term
strategic objectives for a short term tactical gain. Yet, that is what we risk in pursu-
ing the hope of ousting Saddam through a military offensive.
Despite our efforts to create a U.N. and Arab veneer, can anyone seriously believe
that a conflict would not be portrayed—and widely perceived—as an American war
against Arabs and Moslems that would unleash an unforeseeable and uncontrollable
wave of instability throughout the region. Would not Arab nationalists, Moslem fun-
damentalists, Syrian or Iranian adventurists, Palestinian radicals, anarchical terror-
ists still unlabeled forces of instability launch themselves against America's friends
and allies? How would this benefit modern Arab regimes or Israel?
How will pursuit of the so called war option assure future oil supplies? Does it not
assure the destruction of Kuwaiti oil facilities that have been wired with explosives
threatened with a scorched earth policy that Saddam is almost certain to implement
if forced to withdraw militarily? How will Iraqi oil facilities survive American
carpet bombing? Can we be certain that Iraqi pilots or saboteurs cannot wreak some
damage on Saudi facilities? Where will the money come from to meet growing
demand for expanded Middle Eastern oil production if so much has to be spent on
rebuilding destroyed facilities?
Conclusion
In light of my confidence in the effectiveness of cutting off Iraqi revenues and my
fear about the consequences of launching an offensive war, I would strongly urge a
recommitment to the administration's original and still espoused objectives of rely-
ing upon economic sanctions to force Saddam from Kuwait while deploying ade-
quate military force to defend Saudi Arabia. This can be accomplished without back-
ing down in any respect, by implementing a rotation policy that maintains existing
naval and air power but builds down ground forces to levels required to protect
American depots and bases.
ing down itary force to defons to force Signal—and stillar, I would stron


54
11/10/90.
2
PAGE_YO
NO.
REPOBE No. C-6-90-3
TROX BOILING POINT DISTILLATION
(UNCORRECTED DATA)
8PECIFIC
GRAVITY
అంబాం
con No.
TEXP.
D-C.
QAS TRAC
moon
10.32
VOLONE
pore
27.41
.5191
IBP-150
5.80
.6388
7.95
2.70
150-185
2.19
.7086
185-220
.77
.7201
6.27
.7447
7.38
4.64
.7741
5.26
6.96
.7945
7.68
6.43
.8294
220-300
300-360
360-450
450-500
500-550
550-600
600-700
RESIDOCX
6.09
4.63
..8468
4.79
4.17
.8591
4.25
8.60
.8888
2.23
8.48
47.88
. 9958
4.53
42.13
HAPETEA MASI
.67
.9958
.59
TOTAL (CALCOLD,
108.99
1733
2.72_
114,99
SULFUR BALANCE
CALCULATED
ACTUAL
2.72
2.82
PCT. RECOVERY
(UNCORRECTED DATA)
GRAVITY BALANCE
CALCULATED
АСТОЛІ
.8233
.8762
93 PCT. RECOVERY
(UXCORRECTED DATA)
CARBON R28. BALANCZ
CALCULATED
ACTUAL
11.25
11.18
100 PCT. RECOVERY
(UNCORRECTED DATA)
BOXE TRACTIONS INCLUDED WITH THE NEXT PRACTION FOR ANALY818


56
4210790
REPORXO. C-8-90-2
PAGE NO.
9.0 PLN
XYDROCARBON ANALYSIS, VOL $
OLI.P-220_NSION
1.5
IRIXX78
PROPANE
IBOBOTANE
1.9
CYONEXUS
XORXH. BUTANZ
3,3-DIXETHYL PENTARE
TOTAL BUTENES
1,1-DIXETEYL CYCLOPENTANE
180PENTAHE
8.7
2-CTHYL ILUUT
:3.7
2,3-DIMETHYL CYCLOPENTANE
NORMAL PENTANE
TOTAΣ ΡΕΝΤΣΝΣΗ
3-KETXYL IEXINE
2,2-DIMETHYL BUTANE
CIB 1,3-DHCP
CYCLOPENTANE
TRANS 1,3-DXCP
2,3-DIYETHYL BUTANE
TRANS 1,2-DMCP
2-METHYL PENTANE
CIB 1,2-DXCP
5.8
14.2
3-ETHYL PESTANE
NORMAL IZPTANE
METHYL CYCLOHEXANE
2.4
3-METHYL PENTANE
NORXAL LEXINE
METHYL CYCLOPENTANE
2,2-DIMETHYL PESTANE
2,4-DIXΣΤΥΣ ΡΣΑΤΑΝΣ
2,2,3-TRIMETHYL BUTANE
TOLUENE
C8+
HYDROCARBON ANALYS18_OF_013. MOL._%
C3-
47.7
хс
16.7
15.1
1
+95
CO2
X2
NCS
2.1
828


57
Consignaciones de Buques
FIRST ORIGINAL
BILL of LADING No. 1
CANEGA
S.A. de C.V
CARGO-DETAILS
SHOPPED Mh öpparént goud briber band conditlon by R.M.I COMERCIO INTERNACIONAL 3.1.06 C.V. '
at the Terminal of DOS BOCAS, TABASCO, MEXICO...on board tho_NT. WELLESPONT FAITI"
(JANRB - 461901_
- whereofLSE SUNG HEE
is Master
for the present voyage or whomever inay act as Mastor on the said ship for carriage to
LAKE CHARLES , LOUISIAM. V.8.n.
--- or as cosignated by chartorers
that the vessel Inny safely discharge suld cargo.
Weighe, quality and quantity unknown.
To be collvered a
on payment of froight at the rate of (as por Charter Pariyl_
Address arrival notice to me
PRODUCT.: 12 ONE_LOT or_
MAYA CRUDE OIL
72,530,104 -
Meulo Tons. (Grosst
72,301.385
12,493.887.
71,318.740
494,660.
494,413..
_0,05
Long Tons. (Gross)
Matric Tons. (Noll
long Toris. (Nant
Gross Bbols. BOUF
All tornis, conditions, excoptions, Ilbarties and exemptions from latuility as par Charler party dated
GOVERNING CHARTER PARTY__
are to be considered cinboclied in this Bill of Lading.
Nor Birls at 600F., Less
%
of water and Sedlmenis.
_Gross Barrels.
Gonorel Avornje lo bo selllod uccording to York/Antwerp Rulos, 1974, the
exswcssion General Average Inckeding for all purposes salvage and/or other cognate .
cxpensos.
IN WITNESS WHEREOF ile Mastor has signed
THREE
- Bilts of Lading oxclusive
of the Master's copy, all of this tenor and date one of which being accomplished
the others to stand vold.
Dated _DOS BOCAS , TABASCO., HEXICO. ON NOVEMBER_29th , 1990
-_ 21,6
XA.P.I.
Specific Gravity 609/009F.
FREICHỊT PAYADI.E as ARRANGED.
JSKS 46490,
RECEIVED ON BOARD LIST
MCLEAN ON BOARD" Tete


59
in any position to stop those transfers. It was their means of trying
to establish some sort of influence in the Middle East, among other
areas.
But that situation, as I say, is now changed. And, certainly, we
ought to utilize the time that we have with the imposition of these
economic sanctions to look at the long-range stability of the Middle
East, including the military threat that Saddam Hussein poses to
the countries in the area and to a peaceful world.
Congressman Upton has said: What kind of a timeframe would it
be before something like the missile capability is significantly
eroded?
I can't put a time measure on it, but I submit that time is on our
side. With regard to the nascent nuclear capability, again, my col-
leagues have pointed out that the economic sanctions, in fact, have
exactly the effect that we'd like to see, that it is going to be much
harder for Saddam Hussein to acquire the nuclear status that he
covets as long as we have these sanctions in place. And these kinds
of blockades, these kinds of arms embargoes ought to survive the
immediate crisis. We ought to see to it that this is something that,
in fact, continues.
And then the other issue is: Whether in terms of humane consid-
erations, we can afford to wait.
Now, certainly, all of us must sympathize very deeply with the
plight of the Kuwaiti people. But, the question is: Will going to war
cause less human suffering, or will it cause more?
I think that anything that rains death and destruction on the
Iraqi people, on the Kuwaiti people, and with the sacrifice of who
knows how many young American lives, certainly is a scenario
that I would not like to see unfold.
And then no one knows what the consequences would be of that
sort of offensive action. As has been pointed out, there is a question
as to how to maintain the present coalition that is behind economic
sanctions. I feel that it's going to be far easier to do that than to
maintain a coalition involving moderate Arab States if primarily
American forces are seen slaughtering Arabs. That's
change the entire situation.
After all, we had a friend in Egypt, Anwar Sadat. We have a
friend in Egypt today, Mubarak. I would hate to see a
which forces internally in Egypt turn against the moderate leader,
and the same in Saudi Arabia; nobody knows where else.
It has been pointed out that we don't want to unleash other bully
boys in the Middle East by eliminating the military potential of
Iraq. We just want to contain that military potential.
General Schwarzkopf, the leader of American forces in Desert
Shield, has made exactly that point. What he has said is: We don't
want to upset the military balance in the Middle East.
Again, what we want is time to try to create a more durable, a
more stable overall situation there. And I think that economic
sanctions are exactly what we need at this point.
After all, we waited 45 years to get the Soviet jackboot off the
throat of the central Europeans. We're still standing by today
while China occupies Tibet, a country whose cultural and national
characteristics are at least as strong as those of Kuwait.
Aino TO
going


60
The question is: Are the objectives that we want to achieve best
achieved by going to war?
You have to have awfully good reasons to go to war. And the
question is: Can we stick it out if we take offensive action at this
point? Or, can we stick it out by following the cautious, controlled,
and effective course that my colleagues have suggested?
Thank you very much.
[The prepared statement of Paul C. Warnke follows:]


61
PREPARED STATEMENT OF PAUL C. WARNKE
Mr. Hufbauer has persuasively outlined the reasons why economic sanctions
against Iraq will, in time, compel compliance with the United Nations' resolutions. I
obviously am not in a position to add to his testimony, and it needs no supplementa-
tion.
What I would like to address briefly is the question whether we can afford to wait
for these sanctions to work or whether there is some time urgency that compels us
to resort to early offensive military action.
It has been suggested by Vice President Quayle and others that the moral cost of
waiting is too great because delay will enable Saddam Hussein to build up his mili-
tary forces. I am persuaded by the statements of the Director of Central Intelli-
gence, William Webster, Chairman of the Joint Chiefs of Staff, General Colin
Powell, and Mr. Hufbauer that the continuation of the blockade of Iraq will instead
seriously debilitate its military strength and lessen the cost of the use of force
should that eventually prove necessary.
It has also been argued that the plight of Kuwait and its citizens is so dire that
humane considerations compel prompt application of massive military force. We all
must sympathize deeply with the Kuwaiti people and lament that misery that un-
provoked aggression has inflicted upon them. But, at the same time, we can also
question whether these wrongs can be best remedied by raining death and destruc-
tion on the Iraqi people and, in so doing, paying a heavy price in the lives of Ameri-
can combatants.
We were compelled reluctantly to accept for 45 years the occupation of Central
Europe by Soviet troops. When Moscow took action in 1968 to crush the beginnings
of democratic change in Czechoslovakia, we protested loudly but refrained from
military intervention. For many years we have sat by while the Communist leaders
of China maintain their brutal occupation of Tibet, a country with claims to cultur-
al and national identity that certainly match those of Kuwait.
It is, of course, obvious that we were not able to take military action to roll back
the Iron Curtain or to free Tibet without precipitating a major war, the cost of
which would be exorbitant even as compared with the benefits to be obtained. But
who can tell us today what may be the consequences of a war in the Middle East, in
which military forces over-whelmingly American-kill thousands of Arab civilians
and the no less innocent young Iraqi soldiers forced to die for a cause they would
not willingly support.
General Schwarzkopf, the military commander of American forces in the Desert
Shield Operation, has noted his concern that the destruction of Iraq as a military
power would disturb the existing balance of power and free other bully boys in the
area to initiate their own aggressive actions. The argument is made that the present
international coalition cannot be held together for the period of time it might take
for economic sanctions to work. I question seriously whether this coalition, includ-
ing now-sympathetic Arab states, can survive while American bombs, tanks and ar-
tillery decimate their fellow Arabs.
As for Iraq's nascent nuclear potential, I am not worried that the nuclear deter-
rent that let us sleep at night when China joined the nuclear club, of which the
Soviet Union was already a member, won't serve to deter Saddam Hussein. Here
too, we have time to try economic pressure.
American engagement in major hostilities in the Middle East might not be the
equivalent of World War III, but it wouldn't bear any resemblance to our brief Car-
ibbean military adventures.
Instead of continuing to voice our impatience, we should talk and act in a fashion
that will persuade Saddam Hussein that we can wait him out, that he cannot retain
the fruits of his aggression and that the price he must continue to pay is not one
that he can continue to bear.
The prompt and proper international response to Saddam Hussein's aggression,
organized by the U.S. Government, successfully deterred any hostile action against
Saudi Arabia. We can continue to contain and punish Iraq with a force deployment
that can be maintained while economic sanctions do their job.
not wine no less inces over-why be the co


63
swarming all over the industrial countries to check out experts,
and so forth.
And then the President could have turned to other business. I
mean, there's a big agenda-Russia, Eastern Europe, GATT, the
U.S. economy. And he could have said: All right, you're contained.
You can't move militarily. We have you completely boxed in with
the presence of this force. We're now squeezing you economically.
This is going to get worse day by day.
You would have defined “success” as the progressive application
of the embargo to impose greater economic harm. The principle
you're establishing is that an aggressor shall not profit from his ag-
gression and, in fact, shall pay a high price for it, which you'd be
in the process of imposing on Saddam, with the ultimate objective
of having him depart from Kuwait pursuant to the U.N. resolu-
tions.
Now, each day then would have been a success for us as long as
the sanctions were working and providing more of a bite. This
thing has been defined in a way that because he's still in Kuwait,
he hasn't gotten out yet, each day is a defeat for us. I, frankly,
don't see it that way.
My speculative question is: Why do you think that a policy that I
think could have very reasonably, justifiably been portrayed as a
success as working, as accomplishing the very purposes you've set
out?
Let me just add one other dimension. It's been asserted that this
is important for collective security in the post-cold war world. And
I agree with that. And I think that's an important objective. But, it
seems to me that, if you have that objective, you really should
want the sanctions to work because in how many instances are you
going to have a situation arise in which aggression takes place in
which the United States is prepared to commit 250,000 or 400,000
troops? I mean, there's a unique dimension here and, very frankly,
it's the economic dimension that has provoked a response world-
wide, which otherwise might not occur in other instances.
It seems to me that the precedent you want to establish, if you
can succeed in doing it, is that economic sanctions, which I think it
would be easier to get out of the U.N. and put into place, can, in
fact, work to deter aggression. And this becomes a part of the, in a
sense, normal response mechanism of the international community
rather than going to war, which is a much more extreme solution,
much more difficult to muster support for.
You have a nation here that's uniquely exposed to the applica-
tion of sanctions, as it turns out, given-I mean, they're a one crop
economy-oil. And you cut that off and that's the end of their, po-
tentially, over time, economy.
Why, in your view, do you think the administration has ended up
portraying a policy that could have been put forth as a success
rather than as a failure, thereby moving them to take a more ex-
treme approach, which has with it many costs and many uncertain-
ties?
I mean, on your point, when you quoted Haereditas, I think, was
it that you quoted?
Mr. SCHULER. Haereditas.


64
WHY HAS THE ADMINISTRATION SWITCHED GEARS
Senator SARBANES. Yes. All right. Now, Admiral Crow said, not
quite as elegantly, but he said when he testified: “I counsel pa-
tients that war is not neat. It's not tidy. It's a mess. You have to be
sure the stakes justify what you're doing.”
And, later in his testimony, he talked about what might come
afterwards in the region and how it would impact.
What's your speculation on why we haven't followed this course
that has been outlined here, which seems to me to make imminent
good sense? It was my perception that the course the administra-
tion was pursuing until the 8th of November, when it then stepped
the forces up, and not only stepped them up but also portrayed
them as having a different capacity; namely, an offensive capacity
capable of driving the Iraqis out of Kuwait.
Ī, at the time, put in a closed briefing to the Secretary of State,
the question: How long, once you have such an offensive force in
the area, do you think you can go without using it without losing
your credibility?
Now, that was compounded, as I see it, by going to the U.N. and
getting this resolution authorizing the use of force with an ultima-
tum date upon it, which now is assuming greater and greater sig-
nificance. It's not even now the date after which you might consid-
er force; it's becoming the operative date, so to speak, and then
compound it even further by the sort of statements that the Presi-
dent has been making?
What is your theory as to why they've gone on this approach?
Mr. LUTTWAK. Let me make a stab at that, and I'm sure you'll
want to hear from the other witnesses.
We seem to be remembering other Greeks besides Haereditas.
I'm afraid that this is one of those typical circumstances that
causes the gods to have pathos for men on earth, because I think it
was an accident of timing drawn-out.
There was one thing wrong with the economic sanction policy
from the perspective of the President of the United States is that a
long, drawn-out strategy of economic sanctions implied a long,
drawn out hostage crisis.
The hostages have now been released, but when the decision was
made, the hostages were still there. I believe that, from a strategic
point of view—not only in regard to Iraq, but globally—the sanc-
tions policy was superior.
But, perhaps, from a political point of view, from the viewpoint
of the politics of the President, the sanctions strategy, however su-
perior it may be in a global scheme, looking forward to the collec-
tive security and all the while the considerations you mentioned,
Senator, politically it was bad, or perceived to be very bad, because
a drawn-out strategy implied a hostage strategy.
Senator SARBANES. Well, what is it about this situation that now
prevents on order countermanning the movement of the trains, as
occurred in August 1914? I mean, you know, there's a wonderful
chapter in Barbara Tuckman's book, “The Guns of August,” that
Mulke went in and he said to the Kaiser, who wanted it shifted
and turned around, “Well, we can't do that. It's all been pro-
grammed and it's got to go forward.”


66
Let's say you're operating three or four major air bases. You
could work out that we're looking at 30,000 or 20,000 or 40,000
troops, we're now looking at 200, 300, 400 thousand.
I believe that the decisions that precipitated the sudden shift in
gears from a slow, successful strategy to a long one was that.
Mr. SCHULER. I'd like to take a stab at your question about why
the administration has not pursued sanctions, which seems to be
the rational, logical approach.
I'd suggest there are four factors that I think bear investigation.
First of all, I wonder if the administration is overreacting now as
a result of having sent mixed signals prior to the invasion.
is evidence from the April Glasbe meeting with Saddam
Hussein that Saddam was being told, for example: “We understand
your desire for higher oil prices, but there is a document-we don't
know the validity of it yet—that was supposedly found in Kuwai-
tan intelligence files that suggested that the Kuwaitis understood
from meetings in Washington in mid-November last year that we
supported a policy of low oil prices to put pressure on Saddam.”
I suspect that we realized we were sending mixed signals and
that, frankly, the administration is overreacting to its earlier fail-
ure to send appropriate signals.
Second-
WHY THE ADMINISTRATION IS PURSUING WAR INSTEAD OF SANCTIONS
Senator SARBANES. I'm interested on that point, that there are
even members of Congress who, when we tried to impose sanctions
earlier on Iraq and were opposed by both the Reagan and Bush ad-
ministrations and some members of Congress took that position,
are now belligerent in their statements about what ought to be
done, even though it can be argued that it's inconsistent with their
earlier positions when there was an effort to send some stronger
messages to Saddam and impose some inhibitions and limitations
on the transfer of this very dangerous technology.
Mr. SCHULER. Absolutely. I think that leads to what I think is
the second contributing factor to this. And that is that the adminis-
tration has been overtaken by its own rhetoric. After all, if you
want to avoid a discussion of what went wrong beforehand, the way
to do that is to label Saddam Hussein Hitler and the issue Czecho-
slovakia and emotionalize it and stop discussing it.
Well, if the man is Hitler-and I'm not suggesting that he's any-
thing other than a brutal thug—you presumably don't respond
with something like economic sanctions. You have to go and clob-
ber him into unconditional surrender.
So, I think they've been overtaken by the rhetoric.
A third element that I think bears consideration-
Representative SCHEUER. Well, now, let me question that.
Wouldn't it have been better if, early on, the world could have
organized a sanctions policy against Nazi Germany and radically
reduced their economy, radically reduced the effectiveness of their
military machine, denied them the balsa wood to build their Mes-
serschmitts, and prevented them from menacing the security of
Europe-regardless of whether Mr. Hitler stayed in power or not?


67
If we could have diffused Hitler in terms of his threat to the
peace of the world, the peace of Europe, it's true he would have
done horrible damage within Germany. He would have eliminated
the Jewish community there, I suppose. But, at least he wouldn't
have done it in Poland and various other places-Rumania and so
forth—and we would have preserved peace in Europe, admittedly,
with a tyrant sitting in one country.
Wouldn't that have been a better result?
Mr. SCHULER. Absolutely, Mr. Chairman. It would have been
better to have applied sanctions and tried to deal with Hitler. But,
now the world knows what Hitler turned into. We didn't do it. And
we know what Hitler turned into.
So, now to say that Saddam is Hitler, you have to deal with
Saddam the way we dealt with Hitler, and that is to declare war
and finish him off. That's the unfortunate implications of the rhet-
oric, of the labeling-
Representative SCHEUER. Right. You're not advocating that.
Mr. SCHULER. No.
Representative SCHEUER. Even if we knew he was a Hitler, aren't
you suggesting that we can defuse him and degrade his war-
making capability; degrade his potential for mischief through his
biological weapons, his chemical weapons, his nuclear potential
only a year or two down the pike, by simply squeezing economical-
ly and denying spare parts, replacement parts and all of that to his
general economy and to his war-making, his military machine?
Isn't that-
Mr. SCHULER. Absolutely. As I said before, I have no doubt that
we can bring him to his knees through economic pressure.
Let me just move quickly on to what I consider a third possibility
to explain this seemingly irrational behavior. And that perhaps re-
lates to the President's great skill at personal contact with foreign
leaders.
In his own background in involvement in international affairs,
he's, frankly, taking no advice from anybody in the U.S. Govern-
ment. And he's taking advice from personal contacts in the area,
like the Sideri Fliq of the El-Sahud family. And like the El-Sabah
family in Kuwait, he is taking advice from them when they have
agendas that are very different from the United States agenda.
And, finally, I would suggest, and I don't like the word "person-
al” on this thing, but the President has personalized the conflict
between the United States and Iraq.
A journalist in whom I have great confidence and knows the
area and knows the people involved suggested to me early on that:
Do not underestimate the fact that this is a President who has to
prove himself.
And I suggest that some of these four things, and I haven't
thought about it before but just here at the table this morning,
may help to explain why we have adopted the policy we have.
Senator SARBANES. Well, I'd just like to hear the panel; then I'll
defer, Mr. Chairman.
Mr. HUFBAUER. Senator, I think you've asked the key question
on which essays and books will be written in the future. You raised
this question at the Senate Foreign Relations, and I answered it


68
then. But, I'll try an elaboration now because it is such a central
question.
I agree with you that, up to November 8, the President's record
was 10 out of 10. And then why did he go wrong after November 8?
I think the first thing, which has been referred to by my col-
leagues, particularly Mr. Schuler, is that the President relies on
too small a group for making key decisions. And in this small
group, which includes the people referenced, they drew the wrong
lessons from history; that is, from the history of sanctions.
They were looking at the Panamanian episode where sanctions
were never imposed decisively and military force was finally used.
They looked at the Nicaraguan episode, which is more of the
same.
They recalled the Iranian episode, which dragged on and clouded
the Presidency of President Carter.
And they probably recall the Grenada episode.
And I think they drew the wrong lessons from all those cases,
particularly in light of the very high and surprising, even astonish-
ing success they had in putting together the sanctions coalition in
the Iraqi case. But, they were looking at those other cases.
I agree with what has been said by Henry Schuler on the psycho-
logical need of a President to prove himself. I won't dwell on that.
But this small group that then came to the decision that they
wanted a resolute approach, and that a military threat, an offen-
sive threat, had to be a big part of the U.S. response.
And then they made their second mistake. And now I digress
briefly, Senator.
You asked me in the Senate Foreign Relations Committee wheth-
er I had been consulted by the administration. I said no. That
answer still stands but, since that hearing, I was invited to speak
at the Secretary's Open Forum in the State Department.
nd this is what I said their second mistake was, at that Forum.
If the President wanted to have a credible military threat, he
should have convened a serious confidential consultation with the
leaders of the Senate and the Congress, so that the strategy would
be aired in the following way:
We are going to go on what could be crudely called an eyeball-to-eyeball strategy.
We are not going to go to war unless we come back and ask you for a congressional
resolution.
I put that proposition to the Secretary's Open Forum. And, of
course, I was told the usual: "Well, everything leaks.”
And I said, “I don't think that's true. And I don't think you're
talking about 500 members of Congress. I think you're talking
about 15.”
And these would have been very responsible individuals who
would have brought the kind of perspective that you brought, Sena-
tor. And I think you're absolutely right on how sanctions could
have been portrayed: Each day as a success, not a failure. This all
n debated in a closed meeting. I don't think the
strategy would have leaked if the congressional leadership had
been persuaded.
I believe that, under this approach, the President might have
had a more effective threat policy, and I emphasize the word
“threat,” than he has now.


69
But, in any event, their second error was not to consult the con-
gressional leaders. And it was the second instance of relying on a
small limited circle, a problem that afflicts this administration and
other administrations.
Now, coming from this point with these two grievous errors,
we've heard from Ed Luttwak and others how we can wind down
from here. Serendipitously, the President can wind down along the
lines Luttwak has said, in terms of rotation, but also the President
could credibly say: “Our threat of war released the hostages.”
They could give zero weight to sanctions in this outcome, if they
wished.
And then the administration could say: "We achieved quite a
bit,” which, indeed, they have. They have achieved not being
trapped in the Iranian-type of hostage situation.
So, despite these two errors, and they are serious errors of judg-
ment by my lights, the administration is not locked into its errors.
Mr. WARNKE. In response to your question, Senator Sarbanes, I
think that history shows that Presidents do tend to personalize
things. I saw, for example, Lyndon Johnson forfeit a domestic pro-
gram that I thought was a brilliant success by becoming preoccu-
pied with Vietnam. And it became a case of Lyndon Johnson
against Ho Chi Min.
A year ago, it was George Bush against Manuel Noriega. And
now it's George Bush against Saddam Hussein.
I think it's necessary to step back from that sort of personal reac-
tion. And I hope that the Congress of the United States could take
a broader view because, as you point out, what's important is to
have a policy here that we can apply repeatedly. And we aren't
going to be able to go to war every time some international scoun-
drel misbehaves. We're not going to be able to bomb every poten-
tial nuclear proliferater.
Instead, I think that President Bush's first reaction was correct,
the very skillful organization of an international group that could
effectively deal with this particular crisis and deal with subsequent
crises.
But, if it's going to turn into a shooting war, I can guarantee
we'll never take that first sensible action again because of the fact
that we will fear it will lead to a shooting war.
Senator SARBANES. I might point out and I'll yield that, in fact,
the costs of a sanctions policy are better distributed more broadly
amongst nations, particularly if you couple with it this recompense
program from the windfalls of the oil producers to compensate
other countries, than the costs of a military option.
The costs of a military option in this context are essentially
American. I mean, the U.N. Security Council voted to use force,
but it's the United States essentially that's going to use the force.
The British have a bit of a force in there and the French, and
that's it. The others are holding our coats while we go and fight.
The sanctions policy, actually, particularly if you have certain
countries—the financially strong countries—come up with money
to help compensate others that have been disproportionately im-
pacted, spreads the costs around in a more reasonable way than
military action.


71
We have the advertisements of television telling us that it's im-
portant to back the President's recourse to military action, specifi-
cally. These are expensive advertisements. Somebody's paying for
them.
I'm not trying to start a witch hunt. I believe, if Congress lays
down certain rules by asking certain questions, we will prevent
that in addition to having thousands of Americans killed, our life
will be further clouded by the trauma and the witch hunt. We can
prevent that precisely.
I will not claim that this is a major strategic phenomenon. It is
an unpleasant, minor side-effect.
But, may I say one comment again about the President's deci-
sion?
I think that everything said—I agree with everything that was
said—I don't want in any way to diminish it. But I think there are
two fundamental factors that did not depend on the President's
sins of omission or commission. One is that there was honest fail-
ure to recognize that a long-term sanction policy, associated with a
build-down of troops to the level needed for sanctions—the modest
level needed for sanctions—would quite naturally be associated
with a reduction in the level of government decision-making at-
tending to that entire problem.
In other words, President Bush sees himself at the center, having
to do this full-time, and reflecting that this is a terribly damaging
thing for the United States. Here, we are positioning from a geopo-
litical era to geoeconomic era. We have to retool ourselves, redirect
ourselves, and here we are fixated on a crisis in the Persian Gulf.
I believe that the President honestly did not conceive how, if he
adopted the long-term sanction policy, he could begin to hand this
over; make not a Presidential crisis management but a Secretary
crisis management, and then an Undersecretary and then a
Deputy Assistant Secretary, while the American Government and
the Congress could attend to other business.
Senator SARBANES. Admiral Crow said that it would be a sad
commentary if Saddam Hussein a two-bit tyrant who sits on 17
million people, possesses a gross national product of $40 billion-
proved to be more patient than the United States, the world's most
affluent and powerful nation.
The President should have put it all together, put it in place, and
said, “All right, Saddam, there you are. You're just going to get-
you're contained. You're now going to be squeezed economically,
and I have other business—important business—to attend to. And
when you finally have been brought so far down that you're pre-
pared to get out, then come around and talk to us.”
Representative SCHEUER. Wasn't President Jimmy Carter's fixa-
tion with Iran a perfect example of the need for that kind of ap-
proach.
Mr. LUTTWAK. Yes.
Representative SCHEUER. Crippled him in his ability to function.
Mr. LUTTWAK. But, admittedly, you know, once again, we have
the cold war haunting us. Any cold war crisis involved th
ity of nuclear escalation. And no President could walk away from
handling a cold war crisis without being accused of irresponsibility.


72
So there is a certain habit of mind, a certain presumption that is
one more thing that needs to be looked at and deconstructed to pre-
pare ourselves.
So I think this is a case where the President is wrong, but under-
standable and, again, needs a mentality change to cope with it.
One other thing. The very last statement of the President once
again shows this personalization, not in the role of President Bush
as an arrogant contender of Hussein, but the opposite. It is a Presi-
dent's personal concern for the plight of the victims of Hussein. He
referred to the Amnesty International Port about the suffering in
Iraq and Saudi.
Let me tell you, to motivate the recourse to war to such evidence
would mean that we are totally closing, shutting our eyes to what
is happening all around Iraq. In Saudi Arabia, the very country we
are defending, hundreds of thousands of Yemenites who have lived
there all their lives are being expelled and robbed and dispossessed
and sent back to their country in a massive human rights viola-
tion. These are the little people of Saudi Arabia that once ran the
garage or something.
While we have been defending Saudi Arabia, Saudi Arabia has
been uprooting, dispossessing, deporting, expelling people merely
because they are of Yemeni descent, and some Yemeni leader over
whom they have no influence whatever made statements that the
Saudis didn't like.
A lawless Saudi Government, the one we protect, has committed
that.
At the same time, the Syrians, our great allies, in re
attacking Oune Hussein in Lebanon went to the office, started kill-
ing hundreds of people. People are being killed right now in Chad,
where, again, a year ago, we were paying attention to Chad, and
now we've had the very regime of harboring Chad. We protect it.
So, in other words, the citizens of Kuwait are suffering, but their
suffering remains by Middle East standards very minor. And if it is
suffering we wish to reduce, there's a long list of places we can
start with before we turn to Kuwait, in this regard.
Representative SCHEUER. You're saying that Kuwait's suffering is
no reason to commit American troops, hundreds of thousands of
them to a ground war?
Mr. LUTTWAK. Yes. Mr. Chairman, if you tell me that you do
wish American troops to be engaged to reduce human suffering,
then we have a long list of places that we can begin before we par-
ticularly save the relative handful of Kuwaitis. There's only per-
haps maybe 200,000 Kuwaitis there who are suffering. There are
millions of people suffering.
Senator ŠARBANES. Well, even if one doesn't agree with that
point, isn't the fact that if you launch a military offensive to,
quote, “free Kuwait,” that, in the course of that offensive, great
damage will occur to Kuwait beyond what's already occurred to it?
Mr. LUTTWAK. Yes.
Senator SARBANES. The destruction and death.
Mr. LUTTWAK. Right. As a matter of reality, there are only two
choices for any military operation, no matter what the specific
plans might be.


74
worth sacrificing thousands of American lives to restore them to
their throne?
Mr. LUTTWAK. Mr. Schuler and others might want to talk about
other aspects of the policy, the Kuwait, over the years. But, going
on memory, I remember that the current Foreign Minister of
Kuwait, the member of the El-Sabah family who has the Foreign
Minister slot, was in the United Nations and was quite famous for
his propensity to be very vituperative about the United States.
I seem to remember that Kuwait voted more often against the
United States up until the time in 1987 when we started—they
turned to us for help and flying in takers—they voted more often
against the United States than the Soviet Union over a period of
many years not only on the Arab-Israeli issues, by no means. On
all issues across the board.
Kuwait is also the country that took the initiative in the Persian
Gulf in turning to the Soviet Union to purchase weapons in order
to blackmail the United States into giving them advance weapons,
which they would then sell.
Some of these weapons were delivered. The F-18s were not deliv-
ered, but the Hawks were delivered. They would now be in the
Iraqi hands.
The El-Sabah family's politics was to be the conservative but
anti-American family in the Gulf. That was one of their stances.
And one way they sustained it was by their very generous funding
of Arafat, of his particular movement, El-Fatal, of the PLO in gen-
eral, of some left wing. The George Habash and the left wing, spe-
cifically anti-American PLO, were also collecting the funds in
Kuwait. It was part of the stance.
Mr. Schuler is an expert in the field, I'm sure. I'd like to defer to
him. Perhaps I'm wrong, though perhaps I'm right. And he can
quote chapter and verse. But I seem to remember that that was the
specific stance of the El-Sabah family.
What is the El-Tani family that owns Gittar? Very quiet family
and the Sheik of Behrain's family; they have always been tremen-
ly pro-American and that is where we have kept Med-Force
out-two ships and a sub—while the family, the Rules Oman,
again, very American, very forthcoming. And the Saudi family has
always seen itself as protected by personal leagues as much as pos-
sible with the American decisionmakers, although at no time have
they had such a link as they have in the inter-personal relations.
I'm quoting Secretary Cheney between King Fahid, even Abdul
Azeez, King of Saudi Arabia, and George Bush going back to his
years in the CIA.
And so the fact is that the El-Sabah family, which now turns to
us and asks us to fight and to die to restore them and not only re-
store them, which is the United Nations' policy, but to restore
them quickly, in their impatience.
The El-Sabah family was specifically the anti-American family or
relatively. But, again, I defer to others
Representative SCHEUER. Before we move to oil, and Mr. Schuler
is our expert, I've been told that the El-Sabah ruling dynasty sup-
ported us less in many cases than the Soviets supported us in the
U.N. during the peak of the cold war years. In 1984, for example,
the El-Sabah family supported us less than 10 percent of the time.


75
At the peak of the harsh confrontation of the cold war, when the
Soviets supported us 13.2 percent, the Kuwaitis voted with us a
paltry 9.4 percent in the U.N.
In 1985, they both supported us 12.2 percent of the time. In 1988,
they both supported us less than 9 percent of the time.
And this at a time when the Soviets were trying to undermine
us, undercut us, and destabilize our international relations with
the entire world, vitriolicly and viciously, and the El-Sabah family
was right in there with them.
Mr. LUTTWAK. Yes. And, in spite of the fact that you will notice
that the President received the visiting Moroccan sons and his fam-
ilies and treated them as friends. They have never been friends of
the United States.
Representative SCHEUER. And it is to return this ruling dynasty
to that throne with that record of opposition to the United States
that we're willing to risk tens of thousands of American lives?
Mr. LUTTWAK. Yes. And if it was a case of being able to relieve
the plight and suffering of the population of Kuwait, I would not
hold against them the misconduct, as I see it, of this ruling family
that owns the country, because people are suffering.
The fact is that, given the military choices before us, we have no
way of helping them without
Representative SCHEUER. Well, as Senator Sarbanes pointed out,
in the event of a war, they would be-
Mr. LUTTWAK. They would be savaged.
Representative SCHEUER. Escalated enormously.
Mr. LUTTWAK. Yes.
Representative SCHEUER. Mr. Schuler, tell us about the El-Sabah
dynasty as members of OPEC. How did they use their influence?
Was it as a moderating, thoughtful influence?
Mr. SCHULER. Let me address that question by suggesting that
there has been too much emphasis in the administration's analysis
of the problem in the Gulf; too much emphasis on who is in control
of the valves; the statement being we cannot permit Saddam Hus-
sein to control the valves, which creates the implication that if
Saddam Hussein doesn't control the valves, then all is well and
good.
That is simply not the case. And the El-Sabahs are one example;
one could cite others as well.
But, certainly, Kuwait during the 1970s was one of the more
hawkish members of OPEC in several respects. In attempting to
drive up oil prices, the Kuwaitis were next behind Qadhafi in cut-
ting back oil production. The Kuwaitis cut their production in half
at one point.
No OPEC quotas. That wasn't an issue. It was an individual
choice. Cut their production in half to drive up and then support
higher prices.
The Kuwaitis also undermined an agreement that Saudi Arabia
had worked out with IranCo with respect to what was called Par-
ticipation, Joint Venturing with American companies. And Shaki
money had negotiated on behalf of the Emerts, Kuwait, and Saudi
Arabia. King Faisal endorsed it and the Kuwaitis refused to en-
dorse, with the result that the agreement was scrapped, and the


76
Saudis, who could not afford to be upstaged, ended up taking 100
percent control.
So, the thrust of my point is not so much to stigmatize the Ku-
waitis as to suggest that this overemphasis on who controls the
valves, it is an overemphasis in my judgment, because the problem
is not who controls the valves but rather that the valves are locat-
ed in an area of the world that is so unstable.
And if it weren't for this particular problem, it will be another
problem that will create the problem for us.
Representative SCHEUER. Congressman Upton.
Representative UPTON. Thank you. Thank you very much.
Mr. Hufbauer, I wanted to disagree with you on one of your mis-
takes that you indicated that the Bush administration did. And
that was consulting with the leaders of Congress.
I would guess that, by the first of the year, I'll bet half of Con-
gress is going to Saudi Arabia and back, in the next couple of
weeks.
I know that the President, of course, took the leaders in both
House and the Senate there with him for Thanksgiving. When we
adjourn for this recess until the next Congress, both leaders have
Senator Mitchell as well as the Speaker, Tom Foley--the authority
to bring us back to specifically discuss this case; it was written into
the law in our German Resolution.
And I would imagine that if, in fact, we do see hostilities in Jan-
uary or at some point thereafter, I would imagine that the Presi-
dent will have been in very close consultation.
And I would imagine would have the support of the majority of
the leaders in the Congress. In this case, probably the big five or
big six, before he would embark on such a mission, looking back at
the lesson certainly of Vietnam.
And that they would have an opportunity to weigh in at that
point, if not before. But, let me go on-
Senator SARBANES. Could I just interject there? I understood your
consultation point to refer specifically to the President's decision to
shift the strategy that took place on the 8th of November, when we
went from Desert Shield to Desert Sword; when we went from a
defensive assignment to an offensive assignment.
And if that's the case, then I think your observation of no or
very little consultation is absolutely correct. I think there has been
considerable consultation at various points. But I think it is fair to
state that on that specific fundamental—what many of us perceive
to be a fundamental shift in approach and strategy—there was not
consultation.
Mr. HUFBAUER. Senator, you have a way with words and you put
it much better than I did, but that's absolutely right. I regard that
date as critical and I regard consultation-my meaning of “consul-
tation”—to mean that there must be a very full give and take
before any announcements have been made in the press, because,
by that time of course, positions are quite solidified.
So I would agree with you, Congressman Upton, that since then
there's been any number of talks and people invited to the White
House and so forth, but my word for those meetings would be
"briefing” not "consultation."


80
which is not faring well in the new geoeconomic competition;
which is not faring well as a trading or industrial nation, or as a
maker of products and developments; with throwing itself with ex-
traordinary enthusiasm into this military engagement; sending a
unit there, a specific unit described as being associated with the
Desert Rats of World War II.
What we have here is one of the true phenomenon of the govern-
ment's international life—it makes war and peace—which is self-
image. The British have been, indeed, very bellicose. Their bellicos-
ity, they have sent their tank division there. They want to relive
1942. They want to relive the glories of World War II. This is, and
the classics has the word, not denigrative, a pathetic phenomenon.
It is all connected to the nature of Britain. It is quite typical that
the British press would make such remarks: If we don't bring the
Tyrant on the Tigris to his knees, we would suffer some humilia-
tion or something.
Yes. And what happens exactly when the tyrant is brought
down? When these tankers have had the chance to relive the
achievements of World War II and play Montgomery and Son what
exactly happens is not important because it's the emotional
moment we seek.
What I'm saying, Senator, is this. We're dealing in a crisis in
which, on the one hand, there is the counting of the number of bar-
rels of oil lifted at various terminals; on the other, there is the
whole emotional question of the personalization of Saddam Hus-
sein; on the other, we have the Japanese Ministry of Finance, the
Oka Rasho, taking the view that the entire engagement is a rather
silly affair, and it doesn't matter really who controls the oil. The
price of oil is governed by the long-term substitution cost of oil.
And if America has become engaged in this, it's because the Ameri-
cans are disposed to this type of adventures. And Japan should not
pay for them.
That is why the Japanese Ministry of Finance has been unwill-
ing to concede . . . I believe their current payout is $600 million, as
of now. That is a fraction, a small fraction, of what the single Japa-
nese electronics company was able to find to purchase a United
States corporation.
Just $7.5 billion dollars. Japan has promised and has not provid-
ed just over half the amount. So, in this, I think we should take
our lead not from the British but from the people; not the people
who were successful 40 years ago, but the people who are success-
ful in today's world, which is the Japanese.
The Japanese view is: If you don't sell weapons to anybody and
they do not sell weapons to anybody, you can stay disengaged from
these affairs.
I would say that we should not let the Daily Telegraph to drum
us into a war. We should not be influenced by that. Let us not
share the entire psychological outlook that's behind the quotations
that you read to us.
Senator SARBANES. Well, I told an Undersecretary in the Foreign
Office, I said, “Let's do this. Why don't we flip the numbers, and
then maybe I'll beat the drum.”
In other words ſlaughter) you put in the 450,000 and we'll put
in the 30,000. Take a different look at it.


Q
Mr. Chairman, I just wanted to ask two very quick questions.
Representative SCHEUER. Please do.
Senator SARBANES. These are questions that are raised in ques-
tioning whether a sanctions policy can be pursued and will be ef-
fective. I'd like to get the response of the panel, of at least some of
its members.
First, can we hold the coalition together over time to keep the
sanctions in place? The assertion that it won't sustain, it will un-
ravel, and, therefore, we won't be able to pursue the sanctions
strategy that we've been talking about.
What's the response to that?
Mr. HUFBAUER. Let me say just a few words.
This case is one of the best for holding the coalition together for
the reasons that have come out.
Oil is so important. It's a one-product economy. It's easy to trace
in blockade oil. And further, this is critical, the parties in the
area-Iran, Saudi Arabia, Oman, Aran—have every interest in not
having oil shipped again soon from Kuwait or Iraq, because there's
every prospect that the price of oil will drop substantially.
So, their economic interest ties in with the alliance interest on
the oil side, which is so critical; as Henry Schuler has emphasized.
I think the greater difficulty is on the import side, and I certainly
take the point. We emphasized that, without the money, it's hard
to buy imports.
Our greater effort will have to be directed toward the Turkish
border-Jordan, Syria and so forth. But, that's really in the nature
of a mop-up operation.
Mr. LUTTWAK. We have a stalwart Turkish ally, which is suffer-
ing great hardship. If one is talking about prolonged sanctions, we
do not need 50 countries to make the sanctions effective. For the
reason just mentioned, namely, to stop oil flows, you just need the
cooperation of a handful of countries, including Turkey.
It is gratuitous in my view—entirely gratuitous—that we are not
able to channel the funding for Turkey. The Saudis, the country
that we protect alone—not to speak of Abu Dabi Kittar and Son-
or you indicated to Senator Sarbanes that the total estimated pro-
jected windfall annualized over 12 months would be about $50 bil-
lion. It is absurd that what is happening so far is the Saudis offer
us $1 billion, and our leaders—in gratitude before this.
We ought to go to the Saudis—ought to have gone months ago, if
not now and say, “Kindly cover the Turkish loss,” which is con-
siderable. Multibillion dollar loss. Which they could do with a frac-
tion of the increment in the oil revenues over a short period of
time.
Once you do that, once you compensate and secure Turkey, no
Turkish pipeline for oil export, Saudi Arabia has no choice but to
stay in the coalition. Because if Saddam Hussein were to survive
this one, his first priority of course will be to deal with the Saudi
Royal Family on a personal basis, if not on a regime basis or a
country basis.
So that's the second big pipeline. As for Fao, which is the Iraqi
terminal, one frigate is enough to stop that.
So I think that the argument that the implication that one needs
to have a worldwide coalition in place, with every member actively


85
that. You're going to get a very strong reaction against that once it
occurs. But, people have difficulty perhaps anticipating it.
Once it occurs, you're going to get a strong reaction. And then
that has a lot of implications for what role you're pr
in this post-cold war period. It may, in fact, just drive us in the op-
posite direction from which people think we're in fact moving.
Mr. WARNKE. I think that certainly is the case, Senator Sar-
banes. That's why I applaud what we did initially because that, it
seems to me, is something that is a model for future action. It's
something the U.S. population will support.
We organized an international coalition against what Saddam
Hussein had done. If we now turn it into a shooting war, which is
largely Americans against Iraqis, against Arabs, then that is not
something that the American public will support this time. And it
will never support it in the future.
So we ought to do something, as you pointed out, constructive;
something which proves durable.
Mr. HUFBAUER. Senator, I agree totally with what Mr. Warnke
has said, and I would add these points.
This case will be for our generation and the next generation
what the League of Nations' case against Abyssinia, Ethiopia was
for that generation. And, as it turns out, all attitudes will be col-
ored on the use of economic sanctions.
Senator SARBANES. If you can't make them work here, where are
you going to make them work? This is a perfect test case, isn't it,
for making sanctions work?
Mr. WARNKE. Couldn't be better.
Mr. HUFBAUER. It couldn't be better. That's absolutely right. A
few scholars will remember_20 cases. I can only remember 115
cases if I turn to my tables. The vast body of informed opinion will
be heavily weighted by this one case.
So, for the precedential reasons that have been so well empha-
sized by my copanelists, it is critical that we let sanctions go their
full course. And I agree with your other point, which is not a sub-
sidiary point in fact, I think is a key point—that going to war will
turn us inward. There will be no end of recriminations, as Mr.
Warnke has said, as Ed has said, as Henry has said.
Now, I would like to just take up two further points that were
put in the record. Congressman Scheuer said some time ago that
our analysis seems to show that sanctions don't work where th
a large goal at stake. And there is a large goal at stake here. I
would like to
Senator SARBANES. Well, historically, they have.
Mr. HUFBAUER. No, no, but I would like to correct that. I would
like to refer you to our table 3.5 on page 56, which has other cases
with comparable large goals, and there are quite a few successes in
that table.
And let me just tick off some of them, which seemed like major
goals at the time. At the time, it seemed very hard to change the
Ian Smith regime in Rhodesia. It seemed very hard to bring democ-
racy to Poland. It seemed very hard for the Indians to change the
Nepalese policy with respect to China.


86
And I submit that the India-Nepal relationship is not so different
than the U.S., European, Japan relationship with respect to Iraq.
And I could name other cases as well.
So there are precedents. Now, if I could-
Mr. LUTTWAK. India, with crushing military superiority, faced
with the very serious challenge from Nepal, deliberately uses eco-
nomic sanctions, even though the Indian army could have walked
over the Nepalese.
And they did it largely because the Indian policy, without receiv-
ing any credit, wanted to establish a precedent, even a very power-
ful country against a much weaker one, if they have to resort to
pressure, let it at least be nonbloody pressure and people not be
killed.
And here we are not being able to follow the Indian example.
Representative SCHEUER. Are you suggesting that thoughtfulness,
responsibility, vision, will and national purpose, the Indian Govern-
ment rates on a scale of 1 to 10, a heck of a lot nearer 10 than our
administration at 1600 Pennsylvania Avenue would rate?
Mr. LUTTWAK. Only since the abrupt switch in policy.
Representative SCHEUER. That's what I mean.
Mr. LUTTWAK. And going from the economic sanctions to the
war, the Desert Sword.
Mr. HUFBAUER. The final point I'd like to make comes back to
what Senator Sarbanes asked. It has to do with the mindset that, if
sanctions suddenly succeed, let's say, in 6 months rather than 9
months or a year, somehow that's a loss for the United States.
And that view was probably best expressed, I should say most
eloquently expressed, by an editorial written by Karen House in
the Wall Street Journal.
Somehow, it was going to be a tragedy, a national defeat for the
United States, if the Iragis suddenly started obeying or
or responding
to the U.N. resolutions. In that very vein, the release of the hos-
tages was seen as the beginning of a Salani defeat for the adminis-
tration.
Well, I couldn't disagree more with that view. I think Ed
Luttwak has put very well the balance of power considerations.
The trip wire is always a possibility. But, this notion of converting
a success into a defeat is strange.
Senator SARBANES. Thank you. You've been a very helpful panel.
I'm very grateful to you.
Mr. WARNKE. May I make one comment?
Representative SCHEUER. Please do.
Mr. WARNKE. In pointing to the deficiencies of Kuwait as a
nation and of its ruling class, I don't think any of us are condoning
the purported annexation of Kuwait by Iraq. I mean, Kuwait may
be, as George Ball used to say of Laos: “Not a nation, but a
notion.”
But, nonetheless, there are a lot of artificial borders in the world,
and we can't have despots arbitrarily and unilaterally redrawing
those borders.
So, I just wanted to make it clear that we are not condoning this
action.
Mr. LUTTWAK. I was questioning the legitimacy of Kuwait's bor-
ders and its territorial entity is a great deal more ancient than


87
that of Iraq as a post-world war creation, or Saudi Arabia, the
dates in the late twenties.
And the only question is: What are the personal linkages here:
that are motivating emotional attitudes and choices that are pre-
cipitating a resort to war. That's all
Representative SCHEUER. Well, there's an immutable law of
nature: The mind cannot absorb what the seat cannot endure.
[Laughter.]
And we've been at it for 3 hours and 25 minutes. And I think
that was a prodigious display of energy and intellectual creativity
on the part of this panel.
There is one thing that I want to say about war, and Senator
Sarbanes hit on it? War is a classic example of the law of unintend-
ed consequences. You never know where it's going to take you. It's
a hell of a lot easier to get into it than it is to get out of it.
Talking about comparative instability from pursuing a relentless
course of sanctions and, on the other hand, pursuing the military
option, how can anybody have any doubt that the instability of the
region, of every single one of those Persian Gulf nations, wouldn't
be an infinity higher as a result of war than it would be as a result
of peaceful but purposeful prosecution of the sanctions.
I don't see how there can be any doubt, if you're planning some
kind of rational evolution of peace and security and logic and ev-
erything that comes from a cerebral consideration of all the com-
peting, inextricably, intertwining factors, that peace would feed
stability?
I also want to say that sanctions aren't going to take all that
long to accomplish a very major goal, and that is to remove
Saddam Hussein and Iraq as credible threats to the peace of the
region.
Saddam Hussein may be quick or slow to withdraw from Kuwait,
but if you're talking about removing him from his position in the
catbird seat as a military power that overwhelms every other mili-
tary power in the Middle East, barring our intervention there, it's
a given that sanctions will act and act reasonably fast.
Mr. Webster said Iraq's ground troops will be affected in 9
months to a year, but Iraq's air capability will be affected in 6
months.
So, within a year or 2, there will be a radical reduction in Iraq's
war-making capability. There's no doubt about it.
As Mr. Luttwak said, do we want to act like the Indian decision-
making apparatus and show that we're able to take the mature,
long-term decision, as they have with their obstreperous neighbor?
It seems to me that part of leadership is not only to know when
to seize an opportunity, but to know when to avoid or defer a
quick, short-term advantage.
We can use the time of a couple of years that we have while the
sanctions bite in deeper and deeper to achieve the rational goal
that Mr. Luttwak has elaborated on, of creating a comprehensive
global program of arms denial to Third World countries? Only a
handful of developed, so-called advanced countries would have to
be in on this firm decision?
It seems to me that all of these goals are a test of our national
will, our national strength of character, our willingness to defer a


quick advantage, the 30-second bite on the 6 o'clock news for the
long-term goals of our country and also for peace in the Middle
East.
It seems to me that's an ineluctable conclusion that one comes to
from listening to the superb testimony that I've been privileged to
hear for the last 342 hours.
Would anybody like to challenge me on that?
Mr. WARNKE. Not I, sir.
Mr. SCHULER. Nor I. [Laughter.]
Representative SCHEUER. All right.
Senator SARBANES. Mr. Chairman, I just want to express my ap-
preciation to the panel. They've been most helpful and have com-
mitted a great deal of their time, and also time and effort in the
preparation. And I appreciate it.
Representative SCHEUER. This meeting is adjourned at the call of
the chair. And the Chair for the 102nd Congress is Senator Paul
Sarbanes.
Let me symbolically hand you the gavel.
Thank you very much for a truly superb morning of testimony.
[Whereupon, at 2:49 p.m., the committee adjourned, to reconvene
subject to the call of the Chair.]





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