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THINKING GLOBALLY,PUNISHING LOCALLY



Subject: THINKING GLOBALLY,PUNISHING LOCALLY:A SPECIAL REPORT ON LOCAL SANCTIONS WORKING TO PUNISH SLORC

Thinking Globally,
                         Punishing Locally

                         States, Cities Rush to Impose Their
                         Own Sanctions, Angering Companies
                         and Foreign Affairs Experts

                         By Paul Blustein
                         Washington Post Staff Writer
                         Friday, May 16 1997; Page G01
                         The Washington Post 

                         Here is a multiple choice question. Foreign policy
is made by: (A)
                         the federal government; (B) state governments; (C)
local
                         governments.

                         To people familiar with the Constitution, "A" might
seem the
                         obvious answer. But lately, "all of the above"
looks like the
                         correct response, in view of the rapid spread of
economic
                         sanctions imposed by state and local governments
against foreign
                         regimes they consider objectionable.

                         This week, the New York City Council approved a ban
on city
                         government purchases from any company doing business in
                         Burma because of human-rights abuses by the Burmese
military
                         government (which calls the country Myanmar). The
bill is
                         subject to Mayor Rudolph Giuliani's signature.
Meanwhile, the
                         City Council's powerful speaker, Peter Vallone (D),
also
                         introduced a bill aimed at China and 14 other
countries in which
                         Christians are allegedly persecuted for their
religious beliefs. That
                         bill would prohibit the city from awarding
contracts to companies
                         that do business in those nations and would shift
city funds out of
                         banks doing business with offending regimes.

                         The developments in New York marked a major
escalation in a
                         movement that has gone far beyond the "nuclear-free
zones"
                         passed years ago by Berkeley, Calif., Takoma Park,
Md., and
                         other relatively small jurisdictions.

                         Massachusetts and San Francisco have banned
official purchases
                         from companies doing business in Burma, and similar
bills are
                         pending in several state legislatures, including
those of California,
                         Texas and Connecticut.

                         The Massachusetts legislature is considering adding
Indonesia to
                         its list of countries that must be eschewed by
companies doing
                         business with the state. Rhode Island also is
weighing an
                         anti-Indonesia bill, and the Oakland, Calif., City
Council is
                         considering similar action against Nigeria.

                         Such laws are raising alarm among foreign affairs
experts and
                         business lobbyists, who fear a crazy quilt of local
legislation that
                         will undermine the coherence of U.S. foreign policy
and damage
                         U.S. economic interests. "This is the
democratization of foreign
                         policy run amok," fumed Richard N. Haass, director
of foreign
                         policy studies at the Brookings Institution.

                         The laws raise the specter of multinational
companies being
                         forced to make costly choices between giving up
lucrative
                         contracts with government agencies or forgoing
business in some
                         of the world's most promising markets. Some firms
have pulled
                         out of Burma in part because of local government
sanctions.
                         While Burma is too poor to matter much to most
multinationals,
                         penalties aimed at fast-growing and large economies
such as
                         China or Indonesia could hurt them badly.

                         Under Vallone's proposed bill, for example, if
PepsiCo Inc.
                         doesn't stop conducting business in China, New York
City would
                         stop buying soft drinks from the company for its school
                         cafeterias, Vallone said. 

                         "The City of New York has the fourth-largest
[government]
                         budget in the country," Vallone said in a telephone
interview. "So
                         you're talking about a lot of money, and we're
going to use what
                         influence we have to try and correct an evil that
we see going on."

                         Vallone, who pointed out that similar local laws
were passed
                         during the last decade against the pro-apartheid
regime in South
                         Africa, said he was stirred to action by tales he
heard about
                         alleged persecution of Christians.

                         "Our preliminary indication is that the PLA -- the
[Chinese]
                         People's Liberation Army -- as recently as last
month was killing
                         thousands of people," he said. Asked what incident
he was
                         talking about, Vallone corrected himself, saying,
"In that case, it
                         was hundreds of people." Aides later conceded that
their boss
                         "misspoke," though they cited several articles and
congressional
                         resolutions asserting that from three to eight
Christian clergymen
                         and evangelicals had been killed by Chinese
authorities over the
                         past year. A Chinese Embassy spokesman called Vallone's
                         allegations "ridiculous" and said the nation's
constitution
                         guarantees freedom of religion.

                         All this poses a multijurisdictional nightmare for
business
                         lobbyists. They already had their hands full trying
to combat a
                         growing tendency by Congress and the Clinton
administration to
                         use trade sanctions as punishment against various
regimes.

                         "We were very concerned about the proliferation of
sanctions at
                         the federal level," said Howard Lewis, vice
president for trade at
                         the National Association of Manufacturers, who
argues that
                         unilaterally cutting off U.S. economic ties with
countries such as
                         Burma simply causes the target nation to switch its
trade to
                         French, German or Japanese companies. "The fact
that we're
                         now beginning to see an explosion of sanctions at
the state and
                         local levels clearly underlines that this thing has
just gone too far."

                         But supporters of sanctions assert that states and
cities have a
                         perfect right to dispense their money as they see
fit, and that they
                         have a moral duty to act when Washington hangs back.

                         "The real threat to effective foreign policy is not
the 50 states,"
                         said Simon Billenness, an analyst at Franklin
Research &
                         Development Corp., a Boston investment firm that
buys shares
                         only in companies it deems socially responsible.
"It's the Fortune
                         500."

                         Many state and local governments are imposing
sanctions -- or
                         are considering them -- against foreign regimes
they consider
                         objectionable. The sanctions usually involve
banning govern-ment
                         purchases from companies that do business in the
offending
                         country.

                         CALIFORNIA

                         Sanctions against Burma:

                         * Alameda County

                         * Berkeley

                         * Oakland

                         * San Francisco

                         * Santa Monica

                         * State of California (pending)

                         Sanctions against Nigeria:

                         * Oakland (pending)

                         COLORADO

                         Sanctions against Burma:

                         * Boulder

                         *State of Colorado (pending)

                         TEXAS

                         Sanctions against Burma

                         (pending)

                         MICHIGAN

                         Sanctions against Burma:

                         * Ann Arbor

                         WISCONSIN

                         Sanctions against Burma:

                         * Madison

                         NORTH CAROLINA

                         Sanctions against Burma:

                         * Carrboro

                         * Chapel Hill

                         * State of North Carolina (pending)

                         MASSACHUSETTS

                         Sanctions against Burma; Sanctions against
Indonesia (pending)

                         NEW YORK CITY

                         Sanctions pending against Burma and countries that
allegedly
                         persecute Christians (Including China, Indonesia,
Saudi Arabia,
                         Egypt, Pakistan )

                         RHODE ISLAND

                         Sanctions against Burma, Indonesia

                         (pending)

                         CONNECTICUT

                         Sanctions against Burma (pending)

                         SOURCE: State and Municipal Sanctions Report