Trading with the Enemy Act

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The International Emergency Economic Powers Act, commonly known as the Trading with the Enemy Act, is a United States law allowing presidents to prohibit transactions in which a foreign government or national has an interest. The official description of the Act, as part of Public Law, is: "An Act To define, regulate, and punish trading with the enemy, and for other purposes."

Contents

History

The law was passed by Congress in 1917, in order to prevent American citizens from doing business with the German Empire, a nation with which the U.S. was at war.

The most significant use of the law was Franklin Roosevelt's 1933 order that closed all banks by prohibiting transactions in gold. At the same time, Congress amended the act to authorize the president to invoke it for any "national emergency" of foreign origin, thereby setting a precedent for increasingly creative exercises of the act's powers.

Roosevelt used the act later in his presidency to freeze Axis interests in World War II. These included the Union Banking Corporation, directed by Prescott Bush.

The act had no sunset provision for automatically terminating emergencies, so Roosevelt's orders remained in force for decades. President Harry Truman declared another emergency to deal with the Korean War. In the 1970s Congress became concerned about the shift of power to the executive branch. The National Emergencies Act of 1976 established a sunset period of one year, terminated all standing emergencies, and restored congressional oversight.

In the later years of the Cold War, the act became a convenient means for presidents to order embargos of specific countries. More recently presidents have used the act to shut down organizations and cut off support to individuals.

Urban legend

Right wing groups, particularly tax protesters, sometimes claim that the 1933 emergency remains in force and places the United States under a state of emergency that suspends the Constitution. However, the act merely grants the President of the United States the authority to act pursuant to the statute. Although there has been some controversy about presidential interpretations of the phrase "national emergency," no president claimed to suspend constitutional provisions. The Supreme Court made several rulings during the emergency that limited executive authority on constitutional grounds (e.g. Youngstown Sheet & Tube Co. v. Sawyer, United States v. Nixon) indicating that the court did not believe such a suspension had occurred. Furthermore, Congress terminated all existing national emergencies effective September 14, 1978. Some versions of the legend go on to say that U.S. citizens have been declared foreign enemies of the government, but engaging in a prohibited transaction does not make a US citizen a "foreign enemy," just as buying produce does not make someone a farmer.

Alleged and actual violations

In 1983, financier Marc Rich was convicted of violating the act by trading in oil with Iran during the Iran hostage crisis. He was one of many people pardoned by President Bill Clinton in his last days in office.

There have been accusations that Dick Cheney violated the Trading with the Enemy Act when a subsidiary of Halliburton Corporation opened an office in Tehran, Iran, while Cheney was CEO of that company.

More recently, United States Department of Justice has used the act to prosecute "Human shields" who travelled to Iraq in advance of the 2003 invasion, on the basis that they spent money while in Iraq to act as human shields.

The International Emergency Economic Powers Act is Public Law 65-91, 65th Congress, Session I, Chapters 105, 106, October 6, 1917. In the United States Code it is 50 USC 1701-1706.

Current subjects of IEEPA emergencies

States

  • Iran (since 1979 for the Iran hostage crisis and subsequent sponsorship of terrorism)
  • Myanmar (since 1997 for repressing democratic opposition)
  • Russia (since 2000 to prevent export of weapons-grade uranium)
  • Sudan (since 1997 for human rights violations and sponsoring terrorism)
  • Zimbabwe (since 2003 for undermining democratic institutions)

Designated terror organizations

Designated terrorists

Classes

Past subjects of IEEPA emergencies

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