'Ugly American' Is Back: US Slaps Own Friends To Spite Cuba and Iran

Two new US embargoes on "outlaw" nations - one against Cuba and a proposed one against Iran and Libya - are annoying US allies, setting off fireworks on the eve of a Group of Seven summit in France, and raising the image of "the ugly American" in capitals from Ottawa to Brussels.

If the United States persists, high-level diplomats say, a coalition of US allies will try to put sanctions on the US through the newly formed World Trade Organization in Geneva.

Despite what is shaping into an international row, the White House strongly defends the measures - which penalize corporations in Mexico, Canada, and Europe - as a necessary means in the battle against terrorism.

In the US, the measures have attracted little fanfare. The Helms-Burton Act, signed by President Clinton March 15, penalizes overseas corporations and their executives if they "traffic" in American property seized by the Castro regime in 1959.

Last week brought even tougher legislation, first proposed by Sen. Alfonse D'Amato (R) of New York, to penalize foreign companies with more than $40 million invested in Iran and Libya. It breezed through the House 415 to 0. The sanctions would affect a number of European firms.

Mr. Clinton, who had favored an opening to Cuba, reversed course after two small private American aircraft were downed off the Cuban coast, killing four Cuban-Americans. The White House favors the pending Iran-Libya legislation as a way to get its allies to act, rather than just sound tough, against nations that plot violence abroad.

America's allies aren't buying it. They view the bills as US election-year politics. They exhibit an unusual degree of both passion and unity in opposing what they say are arbitrary and unfair steps.

European Union president Jaques Santer says the Helms-Burton Act "threatened" transatlantic relations. The Canadian government has proposed retaliatory legislation. Italy's prime minister and Britain's foreign secretary raised the subject pointedly in recent visits here.

Moreover, Clinton can expect a "barrage" of protests at the June 27 summit of the Group of Seven industrial powers in Lyon, with the US sanctions being the unofficial top priority.

Helms-Burton goes into effect on Aug. 1, although Clinton may exercise an executive option by July 17 to narrow its scope. Under the law, offending overseas companies can be sued in US courts; the executives and major shareholders of the companies and their children can be denied entry visas to the US.

Friendly-nation diplomats say the issue is not so much the loss of funds, which in the case of Cuba is not great, but the highhanded way the US has set what could be a dangerous precedent of dictating rules of commerce.

"It is a blatant example of the US Congress trying to run the world," says one European official. "Imagine how you would react if you were told the CEO and major shareholders of IBM and General Electric were banned from traveling to Berlin?"

State Department spokesman Nicholas Burns responds that US partners "must understand that all of us must sacrifice and must cooperate ... to put pressure on [outlaw] countries."

US assets in Cuba in 1960 were estimated at $1.3 billion; their worth today is $6 billion, say US officials, which includes interest. Some 5,911 American claims are pending.

Privately, many US diplomats disparage the measures. They feel the approach could backfire - resulting in sour relations and a possible decline of overseas investment in the US. At a June 20 Monitor breakfast, Sen. Richard Lugar (R) of Indiana, a leading US internationalist, said "Helms-Burton ... will lead to retaliation among countries we count as friends. The thought of all those lawsuits coming through our courts ... it simply will not work."

British Foreign Secretary Malcolm Rifkin notes that the US opposed the Arab boycott on Israel. Yet it now supports secondary boycotts on Cuba. "The cases," he says, "are precisely comparable."

Thickening the plot considerably, Canada recently proposed laws to fine Canadian companies that comply with Helms-Burton.