The U.S. is Addicted to Sanctions. Do They Work?

Daniel R. DePetris* – Newsweek

If there is one tool policymakers and lawmakers in Washington are almost always predisposed to use, it is the economic stick commonly known as sanctions. Power and predominance in the global financial system gifts the United States an extraordinary amount of leverage over its adversaries and competitors. Washington can essentially turn access to the system on and off in an attempt to cajole, pressure or influence other governments to change their policies.

Whether it involves freezing an entity’s assets in the U.S., blacklisting another country’s energy sector or blocking an individual’s access to U.S. financial institutions, sanctions can have significant economic effects on a target. This is one of the main reasons U.S. officials use sanctions with such frequency; over the last two decades, the number of U.S. sanctions designations has increased 10-fold.

Yet no foreign policy tool is cost-free. Sanctions may seem like a nifty, sharp scalpel at Washington’s disposal, but it too often takes the form of a clumsy hammer. And sooner or later, when you have a hammer at your beck and call, every problem starts looking like a nail.

This week, the Biden administration released the results of a months-long government review of U.S. sanctions policy. The report—which contains interviews with lawmakers, congressional staff, executive branch officials and private stakeholders—is your typical government document, with useful charts, interesting factoids and relatively anodyne observations. It lists recommendations, the most obvious being that sanctions should be tied to a wider strategy and actually contribute to the goal the U.S. is trying to accomplish. It states that any sanctions designations should be explained in clear terms to allies and partners in order to ensure they understand the repercussions of breaching them. And it commits the Treasury Department to carving out humanitarian exceptions for any economic restrictions that are imposed, sparing vulnerable populations from experiencing the negative side effects.

Yet, in a tacit admission that Washington has become addicted to sanctions like a 5-year-old is addicted to candy, the taxpayer-funded review completely sidesteps the most basic question of all: are U.S. sanctions actually working? In other words, is blocking a government from selling coal, importing oil and moving money through U.S. banks forcing the governments in question to change their behavior in accord with U.S. policy goals? The answer is frequently a big, fat “no.”

Iran, Venezuela, North Korea and Russia have all felt the force of the U.S. sanctions hammer. The resulting economic pain has done nothing to push them into considering, let alone accepting, U.S. demands. In fact, history shows that sanctions—particularly if those sanctions cut off an entire economic sector—can make a policy problem far worse by convincing states to double down on their previous behavior.

Sanctions have cut Iran’s oil exports by more than 80 percent between 2017 and the end of 2020, resulting in a cash shortfall of perhaps $150 billion for the Iranian government. Iran, however, continues to increase its stockpile of enriched uranium, install faster centrifuges, upgrade the quality of its enrichment and snub U.S. pleas for a resumption of nuclear negotiations.

The Venezuelan government of Nicolas Maduro can no longer export crude oil to traditional customers, many of whom would rather look for other suppliers than risk being penalized or fined by the U.S. The sanctions are clearly having an impact on Venezuela’s oil exports, which dropped to a 77-year low last year. In terms of a change in Venezuelan government policy, however, the U.S. pressure campaign isn’t accomplishing U.S. objectives. Maduro is still in the presidential palace, his political position intact even as Venezuela’s economy withers on the vine, and his chief opponent, Juan Guaido, is losing international support.

North Korea remains trapped in the world’s most stringent sanctions regime, with oil imports and coal exports capped, Western financial institutions completely closed off to North Korean money, and the number of North Korean workers abroad heavily scrutinized. But nobody can argue with a straight face that the multilateral sanctions have brought the world any closer to complete and verifiable North Korean denuclearization (of course, that goal is fantastical to begin with). North Korean leader Kim Jong-Un is strongly committed to maintaining his nuclear weapons deterrent, just as he is in developing and testing the types of missiles that increase the credibility of that deterrent.

Washington has slapped sanctions on Russia in retaliation for everything from the annexation of Crimea and the targeting of dissidents to cyberattacks on U.S. networks and interference in U.S. elections. Over the past decade, the U.S. has designated more than 740 Russian individuals and entities, making Russia the U.S.’ second-most sanctioned country. Those sanctions have complicated the businesses of Russia’s richest men, forcing them to find increasingly clever ways to hide their money. Even so, Russian foreign policy remains as irritating today as it was before the sanctions. Russian forces remain on the ground in Eastern Ukraine, Russian cyber-operations are about as common as city traffic (58 percent of government-linked hacks originate from Russia), and the Crimean Peninsula is in all practicality a part of Russian territory (even if most of the world doesn’t recognize it as such).

The Treasury Department deserves credit for recognizing that sanctions shouldn’t be running U.S. foreign policy. But it’s not like this is a novel observation. Those of us who have been paying attention to this issue could have told you that years ago—indeed, some already have. 10/21/21

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*Daniel R. DePetris is a fellow at Defense Priorities and a foreign affairs columnist at Newsweek. The views expressed in this article are the writer’s own.