The Treasury Department last month released its “Treasury 2021 Sanctions Review,” a report that aims, in the words of Secretary of the Treasury Janet Yellen, to provide a “comprehensive” assessment of U.S. sanctions policy. While the review contains some important recommendations that would improve Washington’s approach to sanctions, its analysis suggests that the Biden administration may seek to limit the use of sanctions as a coercive tool without considering the downsides of tying its own hands in that way.
Sanctions are one of the most important non-military measures that have been used by successive administrations to create the leverage necessary for U.S. diplomacy to succeed. Multiple agencies, including the Departments of the Treasury, State, Commerce, and Justice develop, implement, or play a significant role in sanctions policy.
According to the review, there are currently 37 sanctions programs administered and enforced by the Treasury Department’s Office of Foreign Assets Controls (OFAC), and “over 12,000 OFAC designations and nearly 3,000 OFAC delistings.” These numbers tell only part of the story as other agencies, including the State Department and Commerce Department, have their own sanctions authorities.
Another complicating factor is the overlapping authorities issued by the executive and legislative branches. Each administration must navigate a complex web of discretionary and mandatory sanctions regimes. Sanctions can target specific countries or regions for specific activities, like those against Iran, Syria, or North Korea. Conduct or list-based sanctions address specific prohibited behavior, such as terrorism or counternarcotics sanctions.
The good. The report’s formulation of a fundamental set of principles and guidelines to pursue national security objectives using sanctions is a positive development. The review’s public and official articulation of these overarching tenets, such as the strategic imperative of linking sanctions to clear policy objectives, should constitute the first step in an ongoing, comprehensive review of the government’s use of sanctions. Subsequent administrations should issue their own sanctions reviews and implementation plans to ensure that the tool supports both near-term and long-term national security objectives.
Equally important is that the Treasury Department will develop an analytic construct to review sanctions programs and actions regularly. This construct, the review states, could include “recommendations to augment, adapt, or wind down individual authorities or to list or delist particular individuals or entities.” Institutionalizing this process will enable the Treasury to better refine and adapt sanctions regimes in a timely and efficient manner.
Finally, the review notes Treasury should improve communications with the public through additional outreach and engagement opportunities. Improving communications would also help advance consistent messaging on what specific steps designated individuals or entities must take to have their designations rescinded.
The bad. While the review noted the need for interagency coordination, it also noted that it is not a whole-of-government product. The simple question is: why not? A broader review should have been conducted through an interagency process led by the National Security Council (NSC) and involving not only the Treasury Department, but all other relevant departments and appropriate actors. As a result, its effectiveness will likely be limited to certain offices within the Treasury Department. Congress may want to consider mandating a periodic interagency sanctions review.
While the review stresses that sanctions should support a clear policy objective, it does not describe how sanctions operate within a broader strategic paradigm, and how the application of other elements of national power contributes to their success or failure. As a result, the review barely addresses ways to utilize other coercive economic measures—from export controls to trade promotion—to complement or reinforce sanctions.
The report implicitly claims that Washington overuses sanctions, causing a decrease in the use of the dollar as an international medium of exchange. However, this assertion fails to consider other macroeconomic factors affecting the dollar that are likely far more significant, such as the potential for inflation and the size and scope of the U.S. government’s debt obligations.
Similarly, the review’s claim that sanctions are “most effective” when coordinated with allies and partners fails to consider other factors. Certainly, the support of U.S. allies and partners can enhance the effectiveness of U.S. sanctions, but there are clear limits to that enhancement. In some circumstances, it is more effective for the United States to lead, setting an example for others to follow. While the review cites the successful Iran sanctions campaign that brought Tehran to the negotiating table in 2015, the United States first implemented many of those sanctions unilaterally to complement other sanctions that were multilateral.
The ugly. Perhaps most egregiously, policymakers could use the review as a justification to refrain from enforcing existing sanctions, including those mandated by Congress. For example, the review states that Treasury “will continue to review its existing authorities to consider the unintended consequences of current sanctions regimes on humanitarian activity necessary to support basic human needs, as well as potential changes to address them while continuing to deny support to malicious actors.”
While ensuring humanitarian access to jurisdictions under comprehensive sanctions is critically important, the report fails to recognize that sanctioned regimes themselves are the cause of humanitarian crises. Lifting sanctions would likely only strengthen those governments’ grip on power and exacerbate humanitarian problems. Treasury’s policies have likely already led to a decrease in the enforcement of Syria and North Korea sanctions, at a time when the U.S. needs to be building leverage by targeting senior Syrian and North Korean business elites and regime financiers.
The bottom line. Notwithstanding its good elements, the sanctions review constitutes a missed opportunity. By seeking to limit sanctions, the Biden administration ultimately provides economic benefits to the regimes that least deserve them. In so doing, Washington only helps rogue regimes solidify their grip on power, further enabling them to advance malign policies that run counter to U.S. interests.
Matthew Zweig and Anthony Ruggiero are senior fellows at the Foundation for Defense of Democracies (FDD). Follow Matthew and Anthony on Twitter @MatthewZweig1 and @NatSecAnthony. FDD is a Washington, D.C.-based, nonpartisan research institute focusing on national security and foreign policy.
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