Prohibiting Transactions With Terrorists Who Threaten To Disrupt the Middle East Peace Process

Background

Prior to its revocation, Executive Order 12947 was a significant legal instrument aimed at curbing financial and material support for foreign terrorists who posed a threat to the Middle East peace process. By freezing the assets of designated individuals and groups that could disrupt the peace process, the order extended the reach of U.S. sanctions legislation. Central to its enforcement was the collaboration between various U.S. agencies, including the Treasury, State, and Justice Departments, which coordinated to identify and designate entities involved in terrorist activities. The Order empowered the Treasury's Office of Foreign Assets Control (OFAC) to block transactions and property belonging to designated individuals, thus providing a financial chokehold on suspect activities.

The broader social impact of this order was observed in the heightened awareness and monitoring of foreign actors perceived as threats. Through imposing stringent penalties on U.S. persons undertaking transactions with designated terrorist entities, the order influenced corporate compliance practices, compelling businesses and financial institutions to enhance their vetting and due diligence processes on international counterparts. This created an environment where businesses, wary of severe repercussions, embraced stricter internal controls to align with federal requirements, thus embedding anti-terrorism measures deeply into operational strategies.

Moreover, on a diplomatic level, the Order served as a clear signal of U.S. commitment to the Middle East peace process, reinforcing American diplomatic efforts by showing tangible steps being taken against those who aimed to sabotage peace talks. It reinforced international collaboration, as other nations were prompted to enhance their own vigilance against enabling terrorist activities, creating a global front against those disrupting peace through violence. This impact was not just confined to U.S. shores but rippled outwards, solidifying partnerships with allies in the region who were equally vested in ensuring the stability and progress of peace accords.

Reason for Revocation

President Donald Trump’s decision to revoke the order in September 2019 can be interpreted within the context of a broader shift in foreign policy and regulatory approaches. The Trump administration often emphasized the removal of what it considered outdated or counterproductive regulations, aiming to streamline and recalibrate U.S. foreign policy and national security frameworks. In this context, the revocation of the order could be seen as an alignment with a strategic pivot towards a more pragmatic and transactional approach to foreign engagements, characterized by an overt focus on direct negotiations and partnerships rather than unilateral punitive measures.

Furthermore, this move can also be considered as part of the administration's broader re-evaluation of U.S. commitments in foreign nations and its expenditure of resources. By revoking the order, the administration perhaps anticipated freeing diplomatic and economic avenues previously constrained by the stringent financial restrictions imposed on numerous entities. This deregulatory approach was part of a larger ideological stance that underscored Trump's preference for de-escalating American overreach and redirecting efforts towards domestic economic priorities and bilateral negotiations, rather than multilateral policing actions.

Moreover, within the geopolitical sphere, the Trump administration appeared to make several strategic recalibrations concerning the Middle East. This included efforts to foster direct peace agreements, such as the Abraham Accords, suggesting a shift from sanctions as a primary tool to more direct dialogue and economic engagement strategies. The revocation could be seen as a move to eliminate legacy protocols that were viewed as potential impediments to fostering these new alliances and ensuring forward movement in peace negotiations.

In addition, the practical effectiveness of the order might have been called into question after more than two decades of implementation, encouraging policymakers to reassess its continued relevance. Over time, the list of designated individuals and entities had grown complicated, potentially limiting its utility in rapidly responding to emerging threats. This administrative burden might have led to questions regarding the cost-efficiency and strategic value of maintaining such an order unchanged since its inception.

Winners

Following the revocation of the order, there are certain groups and entities likely to benefit, particularly those within the financial and business sectors that operate on international scales. Large multinational corporations with operations in the Middle East may find it easier to engage in partnerships without the additional burden of stringent compliance checks previously required under the order. This potentially increases their scope for investment in regions that were formerly high-risk due to legal restrictions, promising better returns and access to markets.

Specifically, banks and financial institutions stand to gain from the reduced compliance costs and the simplification of international transaction processes. By lifting the restrictions that required detailed diligence checks on a wide array of foreign entities, these institutions can streamline operations, enjoy greater freedom in offering services, and potentially explore new business opportunities in previously restricted zones. This increased business fluidity may be particularly advantageous for regions engaging in reconstruction and development projects which formerly faced difficulties due to enhanced scrutiny and slow financial transactions.

Moreover, Middle Eastern nations themselves could experience economic benefits from the revocation as they are relieved from certain constraints that hamper international business and investment. Countries in the region seeking increased foreign direct investment may find the removal of stringent sanctions provides a more conducive environment for growth, thereby enhancing economic stability and encouraging international partnerships supportive of development and economic progress.

Losers

Conversely, the repeal of the order may pose challenges and unintended consequences for other groups. For example, civil society organizations focused on counter-terrorism and those advocating for peace processes might view the revocation as a relaxation of U.S. commitment towards vigilant anti-terrorism measures. This could lead to concerns about increased risks of funding and resources inadvertently reaching organizations with malicious intent.

The potential emergence of financial channels that could be exploited by terrorist organizations may also worry law enforcement agencies. By reducing the regulatory and oversight framework once in place, these agencies could find it more challenging to monitor suspicious activities and financial transactions, potentially making the identification and disruption of terrorist financing efforts more complex and resource-intensive.

Finally, victims and families affected by terrorist activities in the Middle East may perceive this change negatively, fearing a reduction in global momentum toward suppressing terrorism financing. For these individuals, any perception of decreased attention to the threat posed by terrorism could be disheartening, as the symbols of legal recourse and protection previously offered by the U.S. government are perceived to be weakened, diminishing their confidence in international measures aimed at preventing future incidents.