he popularity of economic and financial sanctions as a foreign policy tool has grown significantly in both breadth and scope in recent years, particularly by the U.S.—which employs sanctions more than any other country. Correspondingly, the use of sanctions has been met with increasing condemnation. Critics argue that sanctions are ineffective and cite the harm to business and the deleterious consequences that are often suffered by vulnerable and innocent groups.
A recent comprehensive Sanctions Review by the U.S. Treasury highlights how a clear, strategic, and coordinated sanctions approach can improve the current sanctions regime as well as address national security challenges. With its stated commitment to further diplomacy, human rights and democratic values, the Biden Administration is in a distinct position to make good on its word and reform what many see as a broken sanctions program. However, in practice, this will be more complicated than it initially appears due to the fact the global economy is more interconnected and interdependent than ever before with many nations highly reliant on sanctions targets such as Russia, China, Iran, and others. Added to this is the unprecedented struggle that countries continue to face owing to the devastating setbacks of the coronavirus pandemic.
What are sanctions and how are they used?
Sanctions involve the withdrawal of usual trade or financial relations and are based on foreign policy goals and objectives. Sanctions can be comprehensive in scope, such as the enduring U.S. embargo on Cuba, which prohibits commercial activity with the entire country, or they can be more selective, such as the blocking of financial transactions with particular groups, individuals, or businesses. The goals of these measures range from persuasion (to act or refrain from acting), to punishment, for violating an international treaty, for example. Historically, sanctions have been used to effectuate counterterrorism, combat narcotics trafficking and arms proliferation, promote human rights, advance conflict resolution, and further a host of other policies. Sanctions have also been imposed to deter unlawful conduct and prevent military advances by aggressors.
Why is the current sanctions regime ineffective?
Over the past two decades, sanctions have been imposed with ever more rigor and frequency to achieve U.S. objectives. However, this has often been done without sufficient planning prior to their adoption and without adequate analysis and evaluation of their effectiveness during and after their imposition. As a result, sanctions often end up hurting U.S. interests, result in greater costs on U.S. companies, and still do not alter the target’s behavior.
For companies operating internationally, sanctions can be confusing and challenging to navigate and may directly impact business. Because sanctions are a strict liability regime—meaning that a violation can result in civil liability without proof or fault or intent—companies often over-comply out of fear of violation. Not only does this result in the loss of otherwise legitimate business to companies, but consumers also lose out on products and services.
State and non-state actors threatened by sanctions, including powerful terrorist organizations and influential criminal groups, may retaliate by doubling down on unlawful activity, diverting resources, and otherwise increasing repression measures. Despite exemptions for humanitarian aid, such aid often can’t be supplied because of sanctions. Women, children, the elderly, people with disabilities, refugees, indigenous persons, and other at-risk groups are often most impacted.
Although comprehensive sanctions receive the most criticism, selective or targeted sanctions can also have negative consequences when not used properly. For example, although targeted sanctions aimed at a specific individual may be effective in stifling their financial access, sanctions against a particular bank may adversely affect a number of otherwise innocent consumers.
How can sanctions be reformed?
The Treasury’s Sanctions Review made recommendations for reforming the current sanctions program, many of which are in line with what scholars and experts have espoused. According to the Review, to be effective, sanctions must have a “clear policy objective.” Additionally, lawmakers must ensure that the brunt of sanctions fall on designated targets and that potential collateral negative damages be minimized. Furthermore, the Review noted that the intended impact of sanctions can be bolstered when plans are made in coordination with allies and partners, as the coordinated use of sanctions can provide greater leverage against the sanctions target.
Furthermore, countries imposing economic sanctions must also be willing to understand and accept any negative consequences to their own economies, particularly when dealing with potential adversaries such as China, which comprises the world’s second largest economy as well as serves as a major international financial center.
Sanctions programs are a national as well as global security governance tool. As a result, sanctions must inevitably evolve as new threats emerge. There is no doubt that the U.S., which makes the greatest use of sanctions, must modernize its current regime, a measure that would be well in line with the Biden Administration’s vow to bring diplomacy back into U.S. foreign policy.
When used strategically, economic and financial sanctions can be highly effective tools that foster democracy and the rule of law. But sanctions will always be a double-edged sword that require careful planning, collaboration, and extreme caution. It is imperative that policymakers be realistic about the goals that can be reasonably achieved through the use of sanctions. In its Sanctions Review, the U.S. Treasury has already outlined what needs to be done—all that remains is for Washington to act upon it.
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Reforming the Defective U.S. Sanctions Regime
Photo via Pixabay.
January 27, 2022
The popularity of sanctions as a foreign policy tool is on the rise even as condemnation of the practice grows. Compliance Notes founder Ola M. Tucker explores the promise and pitfalls of sanctions - and whether reform can make them an effective foreign policy tool.
T
he popularity of economic and financial sanctions as a foreign policy tool has grown significantly in both breadth and scope in recent years, particularly by the U.S.—which employs sanctions more than any other country. Correspondingly, the use of sanctions has been met with increasing condemnation. Critics argue that sanctions are ineffective and cite the harm to business and the deleterious consequences that are often suffered by vulnerable and innocent groups.
A recent comprehensive Sanctions Review by the U.S. Treasury highlights how a clear, strategic, and coordinated sanctions approach can improve the current sanctions regime as well as address national security challenges. With its stated commitment to further diplomacy, human rights and democratic values, the Biden Administration is in a distinct position to make good on its word and reform what many see as a broken sanctions program. However, in practice, this will be more complicated than it initially appears due to the fact the global economy is more interconnected and interdependent than ever before with many nations highly reliant on sanctions targets such as Russia, China, Iran, and others. Added to this is the unprecedented struggle that countries continue to face owing to the devastating setbacks of the coronavirus pandemic.
What are sanctions and how are they used?
Sanctions involve the withdrawal of usual trade or financial relations and are based on foreign policy goals and objectives. Sanctions can be comprehensive in scope, such as the enduring U.S. embargo on Cuba, which prohibits commercial activity with the entire country, or they can be more selective, such as the blocking of financial transactions with particular groups, individuals, or businesses. The goals of these measures range from persuasion (to act or refrain from acting), to punishment, for violating an international treaty, for example. Historically, sanctions have been used to effectuate counterterrorism, combat narcotics trafficking and arms proliferation, promote human rights, advance conflict resolution, and further a host of other policies. Sanctions have also been imposed to deter unlawful conduct and prevent military advances by aggressors.
Why is the current sanctions regime ineffective?
Over the past two decades, sanctions have been imposed with ever more rigor and frequency to achieve U.S. objectives. However, this has often been done without sufficient planning prior to their adoption and without adequate analysis and evaluation of their effectiveness during and after their imposition. As a result, sanctions often end up hurting U.S. interests, result in greater costs on U.S. companies, and still do not alter the target’s behavior.
For companies operating internationally, sanctions can be confusing and challenging to navigate and may directly impact business. Because sanctions are a strict liability regime—meaning that a violation can result in civil liability without proof or fault or intent—companies often over-comply out of fear of violation. Not only does this result in the loss of otherwise legitimate business to companies, but consumers also lose out on products and services.
State and non-state actors threatened by sanctions, including powerful terrorist organizations and influential criminal groups, may retaliate by doubling down on unlawful activity, diverting resources, and otherwise increasing repression measures. Despite exemptions for humanitarian aid, such aid often can’t be supplied because of sanctions. Women, children, the elderly, people with disabilities, refugees, indigenous persons, and other at-risk groups are often most impacted.
Although comprehensive sanctions receive the most criticism, selective or targeted sanctions can also have negative consequences when not used properly. For example, although targeted sanctions aimed at a specific individual may be effective in stifling their financial access, sanctions against a particular bank may adversely affect a number of otherwise innocent consumers.
How can sanctions be reformed?
The Treasury’s Sanctions Review made recommendations for reforming the current sanctions program, many of which are in line with what scholars and experts have espoused. According to the Review, to be effective, sanctions must have a “clear policy objective.” Additionally, lawmakers must ensure that the brunt of sanctions fall on designated targets and that potential collateral negative damages be minimized. Furthermore, the Review noted that the intended impact of sanctions can be bolstered when plans are made in coordination with allies and partners, as the coordinated use of sanctions can provide greater leverage against the sanctions target.
Furthermore, countries imposing economic sanctions must also be willing to understand and accept any negative consequences to their own economies, particularly when dealing with potential adversaries such as China, which comprises the world’s second largest economy as well as serves as a major international financial center.
Sanctions programs are a national as well as global security governance tool. As a result, sanctions must inevitably evolve as new threats emerge. There is no doubt that the U.S., which makes the greatest use of sanctions, must modernize its current regime, a measure that would be well in line with the Biden Administration’s vow to bring diplomacy back into U.S. foreign policy.
When used strategically, economic and financial sanctions can be highly effective tools that foster democracy and the rule of law. But sanctions will always be a double-edged sword that require careful planning, collaboration, and extreme caution. It is imperative that policymakers be realistic about the goals that can be reasonably achieved through the use of sanctions. In its Sanctions Review, the U.S. Treasury has already outlined what needs to be done—all that remains is for Washington to act upon it.
