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Tuesday, May 11, 1999 Effects of sanctions can be felt here
By MICHAEL PAULSON
But it's not just faraway lands such as Iraq that suffer from sanctions -- in an export-dependent state such as Washington, sanctions have a direct cost for local businesses and their employees. Iran was once the largest market for Washington wheat. Sanctions ended that. Cuba was once the largest market for Washington peas. Sanctions ended that, too. Boeing routinely loses plane sales to countries, either because of the direct effect of sanctions or because of the related political debate. And smaller companies have their own horror stories -- the company that is building the retractable roof for Safeco Field lost millions of dollars in potential sales to China because of sanctions. "In 1978 or '79, I was invited to attend a dinner with an Iranian trade team in town, and I heard how much they like white wheat," said Karl Felgenhauer, a fifth-generation wheat farmer from Fairfield, recalling the effect of sanctions on his industry. "But when the ayatollah took those hostages, the wheat market just nose-dived. Six months after that, I was leading a tour of Spokane-area businesspeople, and we saw piles of wheat on the ground" in Eastern Washington. Wheat farmers got a break recently when President Clinton decided that, on a case-by-case basis, food products can be exported to Iran. But other Washington state products are still suffering. Boeing executives believe that there are 70 nations currently sanctioned by the United States, and that they will buy $400 billion worth of airplanes over the next 20 years. About $200 billion of those planes will go to countries where Boeing has virtually no chance of making a sale -- in six countries because the sales are explicitly forbidden, and in 12 others because sanctions prohibit Export-Import Bank loan guarantees, according to company spokesman Tim Neale. The company worries that even in countries where the sanctions do not directly affect airplane sales, Boeing will be hurt by the politics of sanctions. "An airplane sale, particularly to the smaller countries that are (often) targeted by sanctions, is high-profile, and oftentimes the airlines are government-owned," said Paul McNeill, manager of international programs at Boeing's lobbying headquarters in Washington, D.C. "A lot of the baggage that comes from the sanctions activity, although it may not directly influence our ability to place aircraft, touches on our deals, anyway. It sort of poisons the atmosphere for doing good business." Washington's pea and lentil growers are anxious to reclaim the Cuban market, shut off to them by U.S. sanctions policy. "Prior to 1959, Cuba used to be the largest importer of peas from the United States, but then 1959 rolled around, Mr. Castro had his big revolution, and we decided we didn't like Fidel any more," said Tim McGreevy, president and chief executive officer of the Moscow, Idaho-based USA Dry Pea & Lentil Council. "Immediately we lost that market, and as soon as we put on the trade sanctions, Canada, our largest competitor, stepped in and started to fill the role." The pea and lentil sanctions are particularly painful now, when prices for the commodity are low and farmers are struggling. "It's incredible the number of countries we have problems with," said Lee Druffel, a fourth-generation pea farmer in Colton. "Cuba is one of a long list of markets we've been locked out of for political reasons." Unilateral sanctions are particularly distressing to U.S. business in a world where American companies have many global competitors. In case after case, the United States has imposed sanctions that prevent businesses from trading with a country, only to find that one of its allies has taken advantage of the new market. For example, the wheat markets that were closed to U.S. farmers until recently have been seized by Canada and Australia, while Airbus has been willing to sell planes to some countries sanctioned by the United States. Most famously, the United States refused to allow Conoco to enter an oil deal with Iran. The multibillion-dollar deal went to Total, a French concern. "Sanctions are very appealing because they are preferable to many of the alternatives, the principal one being military action," said Stanley Marcuss, a former Commerce Department official in the Carter administration who now has a law practice helping clients find their way through the maze of U.S. sanctions. "The key question is whether unilateral action by the United States in the economic sanctions area accomplishes anything, when other countries readily step in to fill transactions not available to U.S. companies." Diego Veitia, chairman and chief investment officer of International Assets Holding, a Florida investment house, bemoans the competitive advantage gained in Cuba by non-U.S. mining, telecommunications and travel companies. "We have had with Cuba the longest sanctions on any country in the world, and what that does to American investors is puts them at a disadvantage if and when these sanctions are lifted," he said. "Just about every country can invest in Cuba, and we cannot." Ederer, the company that is building the retractable roof for Safeco Field, proposed to build a $1.5 million crane for a commercial nuclear plant near Shanghai in the mid-1980s. But the United States refused to allow the export because the crane would be used in a nuclear facility. Then in 1995, Ederer was again denied permission to export a $6 million crane to China for a similar project. "We couldn't get an export license for this equipment even though it has nothing to do with nuclear material or nuclear fuel technology, because of sanctions against the People's Republic of China," said Jim Nelson, sales director for Ederer. In both cases, China wound up buying the cranes from U.S. allies, first from a company in Germany, and then from a company in Spain. Then the Clinton administration eased the sanctions against China, but it was too late for Ederer. P-I reporter Michael Paulson can be reached at 202-943-9229 or michaelpaulson@seattle-pi.com INSIDE SEATTLEPI.COM
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