World leaders fault U.S. policy in dealing with outlaw nations Barring of investments is criticized at G-7 summit


LYON, France -- World leaders faulted U.S. efforts yesterday to penalize foreign firms that do business with outlaw nations, even as they pledged more international cooperation to combat terrorism.

Meeting here in the 22nd annual summit of seven leading democracies, European leaders refused to follow Washington's lead against investment in Cuba, Iran and Libya.

"I don't think economic retaliation is the most effective. Taking an entire population hostage is not elegant," French President Jacques Chirac told reporters yesterday.

The day before, Chirac had warned President Clinton in a private meeting that Washington risks igniting "a dangerous cycle" of reprisals between the European Union and the United States by insisting upon such measures. British Prime Minister John Major made similar points when meeting Clinton privately, according to John Tarullo, a top White House aide who helped organize this summit.

When European leaders repeated their objections at yesterday's summit lunch, Tarullo said, "the president pushed back fairly hard on the issue of needing to confront terrorist states, to take action against countries that are threats to democracy and to the safety of our citizens."

Senior administration officials played down the rift and said it would be a mistake to focus on it. The major achievement of the summit, they said, was to forge a new political will to energize their law-enforcement bureaucracies to deter terrorism.

"It was not a significant portion of the discussion," said Treasury Secretary Robert E. Rubin, referring to the dispute.

White House press secretary Mike McCurry stressed that all conversations were "amicable" rather than tense and that the leaders long ago recognized that they disagree on these questions and spent little time on them here.

At issue are two measures:

A new law, called the Helms-Burton Act, that seeks to curb foreign investment in Cuba by canceling the visas of foreign executives who trade with Cuba. Clinton had initially expressed reservations about the bill but quickly signed it into law after the downing of two civilian U.S. aircraft by Cuban fighter planes Feb. 24.

A bill moving through Congress that would impose sanctions against foreign companies that aid the oil industries in Iran and Libya, two nations long linked to terrorist activities. Clinton is expected to sign the measure.

The objections to the U.S. legislation came as the world leaders embraced 40 modest steps to coordinate law enforcement efforts against international crime and terrorism. The reforms were in the works before Tuesday's bombing in Saudi Arabia that killed 19 Americans.

"This is the message that will go forth from Lyon: The international community is united and determined to prevail in the fight against terrorism," stressed Secretary of State Warren Christopher after adoption of the 40 reforms by leaders from the United States, France, Britain, Germany, Japan, Italy and Canada. The heads of state are here for the annual Group of Seven (G-7) summit of leading industrialized democracies.

Russia endorsed the package separately, once Prime Minister Viktor Chernomyrdin joined the leaders late yesterday.

Apart from terrorism, much of the leaders' time yesterday was devoted to discussion of points made in a 17-page communique on the global economy.

The communique was notable for two detailed efforts by the leaders to assert direction over the United Nations and its sister agencies.

Pub Date: 6/29/96

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