ANALYSIS - Effectiveness of U.S. sanctions on China questioned

Reuters ^ | 7-19-02 | Carol Giacomo, Diplomatic Correspondent

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WASHINGTON (Reuters) - The Bush administration's decision to again slap sanctions on Chinese companies accused of arms or technology sales to Iran is sparking new calls for a different, possibly tougher, U.S. approach.

In the past such penalties have failed to persuade Beijing to crack down hard enough on what Washington considers dangerous technology transfers and some are questioning whether the latest round of sanctions will be any more effective.

The new sanctions -- the fifth set imposed by the United States in 19 months -- were authorized under the Iran-Iraq Arms Proliferation Act of 1992 and the Chemical and the 1991 Biological Weapons Control and Warfare Elimination Act.

They involved three cases of advanced conventional arms and chemical and biological weapons components transfers to Iran between September 2000 and October 2001. Previous sanctions involved sales to Iran and Pakistan.

President Bush considers Iran part of an "axis of evil" with Iraq and North Korea. He has warned they could provide extremists with nuclear, chemical and biological arms and missiles, a heightened fear since the Sept 11 attacks.

Under President Bill Clinton, sanctions on China were often waived on national security grounds as his aides negotiated with Beijing on nonproliferation. The Bush administration, saying Beijing has failed to fully meet its commitments, has insisted on invoking, rather than waiving, sanctions.

SOME EFFECT SEEN ON CHINA

One U.S. official told Reuters the Bush approach has had some effect. "There has been some change in China's behavior," he said. "We know there are some transactions and activities that have stopped between August 2001 and this spring."

Beijing has argued that its system is so decentralized the government often does not know about or cannot control arms sales, but the U.S. official said the transfers halted over the past year were stopped because "Beijing acted." He acknowledged, however, that China has still not done enough "and there are still serious transfers going on."

Another U.S. official told Reuters: "It's a myth that these sanctions laws are effective. Plainly they are not.

"They have been imposed year after year against one after another firm and in the end they have negligible or zero impact upon the Chinese except in the realm of symbolism."

The Bush approach has not satisfied Frank Gaffney, a Republican national security expert and ex-Pentagon official.

He described U.S. policy toward China as "more or less a continuation of the Clinton policy, which is to either ignore or behave as though (what China is doing) is not making an appreciable difference."

He said the Bush team's "most troublesome error is that they are maintaining this conceit that the problem arises from individual companies and not high government policy."

Because U.S. sanctions have been targeted at specific companies or individuals "there seems to be no real cost applied to the communist Chinese government," Gaffney said.

TOUGHER SANCTIONS

That view was underscored by the U.S.-China Security Review Commission, a congressional panel which this week issued a year-long security study of Sino-American relations. Since the sanctioned Chinese companies are not engaged with the U.S. government, "sanctions can have little or no deterrent effect on them," the commission concluded.

"Sanctions appear to be more of an irritant to China than a credible obstacle," it said.

The commission wants tougher penalties imposed directly on the Chinese government to force Beijing to act, including limiting China's access to U.S. capital markets and prohibiting transfer of certain science and technology resources.

It argued that a key drive in China's relations with "terrorist-sponsoring governments" is its dependence on foreign fuel oil for its economic development.

But a senior U.S. official rejected that motivation.

Since Sept. 11 China has cooperated more with Washington in backing revised U.N. sanctions on Iraq. And while Chinese firms may sometimes deal with Baghdad, Beijing has moved to halt such deals when Washington has raised the issue, the official said.

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