Sanctions overuse sapping diplomatic tool’s power, experts fear

September 25, 2018

Announcements of U.S. sanctions and calls from Capitol Hill for more come with numbing regularity, targeting Russian oligarchs, Venezuelan oil executives, Nicaraguan politicians, Chinese coal traders, Iranian bankers, Turkish Cabinet ministers, North Korean shippers, human rights violators in Myanmar and, just this month, any foreigner who tries to “interfere in or undermine public confidence in United States elections,” among others, according to the U.S. Treasury.

Since the start of his term, President Trump has aggressively employed one of the most potent weapons of international statecraft to bolster his “America first” foreign policy, but analysts worry that sanctions have been so overused by Democratic and Republican administrations that their effectiveness is blunted.

The power of the sanctions is obvious, effectively shutting out the sanctioned from the world’s largest economy and America’s globe-spanning financial system.

Trump administration officials credit a U.S.-led campaign for international sanctions for helping bring North Korea to the bargaining table over its nuclear weapons. They are organizing a similar effort using sanctions to pressure Iran.

But skeptics say there is a sense of overkill and that Washington often targets foreign figures and organizations that have minimal or nonexistent ties to the U.S. economy. Lawmakers on Capitol Hill recently complained that the executive branch is failing to enforce many of the sanctions on the books.

Gary Hufbauer of the Peterson Institute for International Economics has studied the global use of sanctions since World War I. He has explored more than 200 cases and has co-authored one of the leading books on the subject, “Economic Sanctions Reconsidered,” which was first published in 1985 and been updated multiple times since.

“Sanctions are a part of diplomacy that wax and wane, and we’re now in a heavy period of their use,” Mr. Hufbauer said in an interview.

It’s not a new concern. Richard Haass, now president of the Council on Foreign Relations, wrote a study for the Brookings Institution 20 years ago warning against the overuse of unilateral U.S. sanctions to achieve foreign policy goals.

“All too often sanctions turn out to be little more than expressions of U.S. preferences that hurt American economic interests without changing the target’s behavior for the better,” Mr. Haass wrote at the time. “As a rule, sanctions need to be less unilateral and more focused on the problem at hand.”

It’s not just America’s major adversaries that have been targeted for sanctions.

Smaller countries, individuals and entities with bull’s-eyes on their backs include Colombian drug traffickers, Libyan oil smugglers, Hezbollah terrorist financiers and Congolese child soldier recruiters.

An analysis by the Washington-based law firm Gibson, Dunn Crutcher shows the increasing willingness of the U.S. government to resort to the sanction tool.

During Mr. Trump’s first year in office, nearly 1,000 people and entities were added to the Specially Designated Nationals and Blocked Persons financial blacklist. That was roughly triple the number President Obama added during his first full year in office.

The Obama and George W. Bush administrations relied on “targeted sanctions” to punish terrorists, smugglers, human rights violators and foreign policy rivals, but the Trump administration has expanded the overall blacklist to an all-time high of roughly 6,500 names, according to the Gibson, Dunn numbers.

Treasury Secretary Steven T. Mnuchin is also taking a far more activist approach to sanctions as a foreign policy tool.

“In prior administrations, the Treasury secretary’s involvement in sanctions policy was intermittent and rare, leaving the day-to-day work and announcements of new sanctions” to the director of [the office of foreign assets control], Gibson, Dunn Crutcher analysts wrote.

“To the best of our knowledge, there has never been a Treasury secretary so clearly enamored with the sanctions tool an assessment supported by Mnuchin’s own September 2017 claim that he spends half of his time on national security and sanctions issues,” the analysis said.

Mr. Hufbauer said Mr. Trump is also blurring long-standing distinctions between sanctions and trade tariffs in pursuit of his foreign policy goals. He noted that the administration cites “national security” concerns to justify tariffs and import quotas on allies and adversaries alike.

“To an extent, he is blending commercial policy with sanctions policy,” Mr. Hufbauer said.

Congress has complied, especially in regard to sanctions against Russia. Lawmakers have extended sanctions imposed by Mr. Obama for the Kremlin’s annexation of Crimea in Ukraine and have approved sanctions for meddling in the 2016 U.S. presidential election.

Republican and Democratic lawmakers said they acted against Russia last year by passing the Countering America’s Adversaries Through Sanctions Act because they didn’t think Mr. Trump was doing enough to counter the Kremlin.

The sanctions make for an effective political talking point and a signal of U.S. displeasure but leave unaddressed a key question: Do they work?

‘Surprising’ Castro brothers

States have been sanctioning other states since the days of feuding cities in ancient Greece and have been employed by Washington virtually since the founding of the country.

But as a go-to tool for international intimidation, sanctions have increased dramatically since the Sept. 11, 2001, attacks, analysts say.

It was then that Treasury Department and other intelligence officials began surgically using sanctions to sever terrorists from financing by banning individuals and groups from the global financial system.

“The Trump administration continued a nearly two-decade bipartisan trend of increasing reliance on sanctions,” according to the Gibson, Dunn study.

Enigma, a New York City-based data startup firm, unveiled an online “sanctions tracker” this year that monitors the policy from 1994 to the present. The data show that “terrorism and narcotics sanctions eclipse country-level sanctions” over this time frame.

Scholars say country-level sanctions designed to change a country’s foreign policy rather than a specific activity have a spotty record of effectiveness, particularly with countries with the will and resources to withstand the lost business with the United States.

Exhibit A: Cuba, which endured more than a half-century of economic sanctions and an embargo aimed at weakening the communist regime of Fidel and Raul Castro. The Castro brothers ultimately survived 11 U.S. presidents.

U.S. and European sanctions after Russia’s annexation of Crimea in 2014 are credited with badly damaging the Russian economy, but the Kremlin has shown little sign of returning the land to Ukraine or dropping its support for pro-Russian separatists battling Kiev in the country’s eastern half.

But even here, the evidence is inconclusive. Daleep Singh, a Treasury official in the Obama administration and now a senior fellow at the Atlantic Council, told a House Foreign Relations Committee oversight hearing this month that U.S. sanctions may have played a role in moderating Russia’s aggression in Ukraine in 2014. Even autocrats are not completely immune to economic pressure, Mr. Singh said.

Russian President Vladimir Putin’s “tolerance for economic pain is demonstrably higher than that of most Western leaders, but I believe there is a threshold above which his calculus is changed,” he said.

Iraq’s Saddam Hussein held on to power more than a decade after U.S. sanctions and an economic blockade were imposed for his 1991 invasion of Kuwait, and President Bashar Assad has survived Syria’s brutal 7-year-old civil war despite a string of sanctions targeting the regime dating back to 2004.

Sanctions have played a more ambiguous role in the Korean Peninsula crisis. The U.S. has long sought to isolate North Korea, and the Trump administration only increased the pressure in its first year.

Mr. Trump and Nikki Haley, U.S. ambassador to the United Nations, said the multilateral sanctions, strongly enforced under Mr. Trump, helped push the regime of Kim Jong-un to the bargaining table, though others say Mr. Kim agreed to talks only after his nuclear and missile programs were securely in place as a guarantee of his regime’s safety.

Even after Mr. Trump’s milestone summit with Mr. Kim in Singapore in June, the U.S. sanctioning machine ground on. The Treasury in August announced sanctions against companies based in China, Singapore and Russia for “facilitating illicit shipments” to North Korea.

The Treasury Department “will continue to implement existing sanctions on North Korea, and will take action to block and designate companies, ports, and vessels that facilitate illicit shipments and provide revenue streams to [North Korea],” Mr. Mnuchin said in a statement.

For domestic consumption

High-profile sanctions usually fail because their underlying policy goals, such as regime change or altering overall economic behavior, are much too ambitious, Mr. Hufbauer said.

More modestly targeted sanctions, especially those supported by multilateral agreements rather than just Washington, can produce better outcomes.

The U.S. had success in the 1990s by cutting aid to the African nation of Malawi to improve democratic standards and the human rights situation and threatening Guatemala with sanctions, leading to major reforms.

But more recently, sanctions are often seen as a signal of U.S. displeasure rather than a tool with a realistic chance of changing the sanctioned party’s behavior. Just this weekend, Chinese officials summoned the U.S. ambassador to formally protest economic penalties for the purchase of Russian fighter jets and surface-to-air missile equipment from a sanctioned Russian arms exporting company.

“We demand that the U.S. immediately correct the mistake and revoke the so-called sanctions, otherwise the U.S. must bear the consequences,” the Chinese Defense Ministry said in a statement.

Despite their major flaws, Mr. Hufbauer said, they will continue to be popular for obvious reasons, especially as a way for politicians to show they are doing something concrete short of military action against such adversaries as Russia, Iran or Venezuela.

“A political leader can announce sanctions to show that they are doing something beyond mere diplomacy,” Mr. Hufbauer said, “even if the action stands little chance of changing behavior.”

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