The Foreign Service Journal, March 2005

That action, however, triggered an OFAC investigation into whether Wal-Mart was in violation of the embargo. Caught in the middle, Wal-Mart’s parent company in the U.S. issued an extraordinary public announcement that its Canadian subsidiary had deliberately defied its instructions to comply with the terms of the Cuban embargo, at which point both governments decided not to pursue the matter further. While that resolved the legal and diplomatic issues, Wal-Mart was left with a public relations nightmare, summed up by one letter to the editor that appeared in the Winnipeg Free Press . It read: “My voice is just a small one in the vast wilderness; I hope others will hear it and join in. I will not be shopping in Wal-Mart any- more. It is over pajamas. I feel if Wal-Mart wants to do business in my country, then it must follow our laws. We do not have a trade embargo with Cuba; the United States does. That is its right as a country and I honor its decision. But this is Canada and if you do business here then you go by the rules. Perhaps it is only a small thing, but it can grow to larger issues. The few cents I may save by shopping at Wal-Mart is not worth the price of knowing I must have American laws control me. There is more at stake here than a pair of pajamas. It’s called integrity.” If the Glenfiddich Scotch really were deemed to be derived from Cuban-origin articles, then not only would it require a special license to be imported into this country. U.S. citizens, residents, companies and all their foreign-owned or con- trolled subsidiaries abroad would also be prohibited from purchasing, transporting or “otherwise dealing” in the product anywhere in the world under the letter of the law and regulations. One might well question, however, whether these controls are enforced as rigorously as they are written. Clearly they are not. It is well known that there is a wide gap between the letter of the law, the resources devoted to enforcement, and sometimes even the political will to pursue all but the most egregious sanctions viola- tors. Enforcement is the weak link in all of OFAC’s economic sanctions programs. The perception that Cuban and other sanctions pro- grams are neither enforced uni- formly nor as widely as intended greatly undermines the credibility of all U.S. sanctions. One might also question the way agency resources are allocated to enforcing the cases that are pur- sued. Since OFAC began posting summaries of civil enforcement actions on its Web site in April 2003, 35 percent of the reports — 118 cases — involved the Cuban sanc- tions. These resulted in an average settlement or penalty of a little over $5,000. This compares with only three such cases under the now- expired Taliban sanctions, settled for amounts ranging from $5,500 to $10,000; one case under OFAC’s Weapons of Mass Destruction Trade Control Regulations that led to a $500 settlement; and one case under the Terrorism Sanctions Regulations that resulted in a $2,925 penalty. The World Has Changed Traditionally, economic sanctions like those related to the Cuban embargo are foreign policy tools, used as much to express the U.S. government’s political displeasure with the actions of the sanctions tar- get as to actually affect the target’s economy. As long as economic sanctions are confined to the foreign policy arena, the actual effective- ness and enforcement of the con- trols may well be secondary to the political statement made simply by imposing and maintaining a particu- lar sanctions program. Since the tragic events of 9/11, the world has changed. The tools that once merely augmented foreign poli- cy objectives — such as asset/transac- tion blocking and blacklisting desig- nated agents of sanctions targets — are being redirected. Economic sanc- tions are now among the primary tools being used to combat international criminality, such as narco-trafficking and terrorism. As such, the credibili- ty of these programs, including their enforcement and their practical effec- tiveness, is more important than ever. Political statements alone are not suf- ficient to address these threats; nor are they adequate to deal with new types of sanctions targets that are not defined geographically. The country can no longer afford to maintain failed sanctions policies that focus more on domestic politics than on achieving their stat- ed aims, and expend resources addressing issues no more serious than cigars and the “Cuban Thistle Crisis.” n M A R C H 2 0 0 5 / F O R E I G N S E R V I C E J O U R N A L 53 Differences in foreign policy can easily lead to the imposition of conflicting, and potentially irreconcilable, obligations on companies and commercial interests.