CEPR Sanctions Watch, August 2022

September 02, 2022

Economic sanctions have become one of the main tools of US foreign policy despite little proof of their efficacy, and widespread evidence that they can cause severe harm to civilian populations (which may, in fact, be the point). Though now a defining feature of the global economic order, sanctions, and their human costs, receive relatively little attention in most US media outlets.

CEPR Sanctions Watch aims to help generate more awareness by providing monthly updates on US sanctions policy and its harmful impacts on people around the world. Click here to subscribe

This edition of Sanctions Watch has updates on sanctions and their impact in Afghanistan, Cuba, Iran, North Korea, Russia, and Venezuela, plus other general news and commentary.


Since the Taliban takeover in 2021, the Biden administration has blocked Afghanistan’s central bank from accessing roughly $7 billion in its foreign reserves held in the United States. Around $2 billion in additional reserves have been blocked by European authorities. Along with sanctions on Taliban officials and a cutoff of aid, this has contributed to a collapse of Afghanistan’s economy.

This month marked the first anniversary of the Taliban takeover of Afghanistan, and President Biden’s subsequent decision to effectively freeze the Afghan central bank’s foreign reserves. One year on, and the country that is home to the world’s largest humanitarian catastrophe is only “sinking deeper” into crisis. The World Food Programme warns that impoverishment and the risk of mass starvation is growing, with 6 million people — more than the population of the Republic of Ireland — in near-famine conditions. This, CEPR’s Mark Weisbrot told Axios, “is a form of collective punishment … If there was a war going on, it would be a war crime under the Geneva Conventions.”

To mark the anniversary, over 70 leading economists and academics, including Nobel laureate Joseph Stiglitz, Indian development economist Jayati Ghosh, Harvard professor John Womack, and many others, sent a letter to President Biden urging the immediate release of the frozen central bank funds. Thirty-two Afghan and international NGOs also sent a letter urging action to address the root causes of the crisis, including the unfreezing of reserves. Families of victims of the 9/11 attacks sent their own letter urging that the $3.5 billion in reserves set aside for potential compensation in 9/11-related lawsuits be released to the rightful owners: the Afghan people. This came one step closer to reality this week, when a US federal judge, in a non-binding legal recommendation, stated that the assets could not legally be used to pay off the Taliban’s debts. It is now up to a separate supervising judge to decide whether to accept the recommendation.

Also this month, the Wall Street Journal (mis)reported that the Biden administration had ruled out releasing $3.5 billion of frozen central bank assets that had been the subject of US-Taliban talks, following the assassination of Al Qaeda leader Ayman al-Zawahiri in Kabul. After much vocal outcry against what some commentators called a “shameful” decision, the administration clarified that there had been “no change” in policy, and later recommitted to negotiations. A major US intelligence report, meanwhile, concluded that al-Zawahiri was the exception, not the rule, and that there is no significant Al Qaeda presence in Afghanistan. 

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The US embargo against Cuba is one of the oldest and strictest of all US sanctions regimes, prohibiting nearly all trade, travel, and financial transactions between the US and Cuba since the early 1960s. After a brief loosening under Obama, sanctions were again tightened under Trump — a policy the Biden administration has yet to fully reverse.

On Friday, August 5, lightning struck a major oil storage facility in Matanzas, Cuba. The resulting fire — described by officials as the worst in the country’s history — raged for days, destroying 40 percent of the facility and leaving at least 14 dead and over 100 injured. Experts and activists including Jeremy Corbyn, Noam Chomsky, and Cornel West sent a letter to President Biden highlighting the role of US sanctions in undermining emergency preparedness and relief on the island. Fifteen civil society organizations, including the Florida Council of Churches, the Washington Office on Latin America, and the Presbyterian Church (USA) also sent a letter urging an expansion of technical assistance and disaster relief and the suspension of sanctions. While the US has offered — and the Cuban government requested — technical assistance, US sanctions remain a key obstacle to the provision of disaster relief in the short term, and the strengthening of Cuba’s infrastructure and preparedness in the long term.

This blow to Cuban fuel supplies comes as the country continues to endure what CNN describes as “the worst [power] outages in decades” amid “a perfect storm of economic calamity.” The outages affect all parts of Cuban life, preventing relief from sweltering heat, causing food — already in short supply — to spoil, leaving many without work or schooling, and forcing some to sleep outside, where they face exposure to disease-carrying mosquitoes, to avoid the heat of their homes. These outages, the failing energy infrastructure, shortages of food and fuel, and the wider economic crisis are all directly linked to the US embargo. 

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US sanctions on Iran began during the 1979 hostage crisis, and currently bar US actors — plus some non-US actors — from most all trade and financial transactions with Iran. Though certain sanctions were lifted as a result of the 2015 nuclear deal, the majority have been reimposed since the US’s withdrawal. The EU also maintains certain trade and financial sector sanctions on Iran.

A return to the Iran nuclear deal is closer than ever. Earlier this month, the European Union put forth a proposed “final text,” which has since received comments from Iran described by EU officials as “reasonable.” Fifteen civil society organizations, including Win Without War and the National Iranian American Council, sent a letter applauding the Biden administration for the progress, and urging it to get the negotiations across the finish line. While exact details are not confirmed, the draft deal would reportedly require that sanctions on 17 Iranian banks and 150 economic institutions be lifted on day one, including secondary sanctions that have kept $7 billion in Iranian funds frozen in South Korea. Additional sanctions relief would follow, likely after congressional review of the agreement. Remaining sticking points reportedly also relate to sanctions.

In the meantime, AP reports that Iran’s economy continues to “[crater] under the weight of international sanctions.” Inflation this month hit 50 percent from August of last year, with high food prices in particular harming wide swathes of the country’s population.

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North Korea

The US first imposed sanctions on North Korea during the Korean War in the 1950s. Following the country’s 2006 nuclear test, more stringent sanctions were added, which have periodically intensified since. US sanctions now target oil imports, and cover most finance and trade and the key minerals sector. In addition, the UN Security Council has adopted nine major sanctions resolutions since 2006. The EU has implemented these and its own.

The United States and South Korea began their largest joint military exercises in five years this month. The move is widely seen as provocative toward North Korea, which views the activities involving, as the Washington Post reported, “tens of thousands of troops from both countries and a range of weapons and hardware, including warplanes, warships and tanks” near its borders as a threat. Months-long warnings that North Korea might soon launch its seventh nuclear test have so far failed to materialize, but concerns remain high. Treasury Secretary Janet Yellen warned last month that such a test would be met with a fresh set of sanctions.

Kim Jong Un declared “victory” over COVID-19 earlier this month. Since the start of its outbreak in May, the country recorded nearly 4.8 million suspected cases, with 74 officially reported deaths — a number the World Health Organization has questioned. Sanctions have limited the country’s COVID testing abilities, restricted its access to vaccines, and undermined its health infrastructure. A more recent outbreak of fever cases that prompted concerns of a COVID resurgence has since been labeled as influenza

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US sanctions on Russia’s financial, energy, and defense sectors began after the 2014 annexation of Crimea. This regime was greatly expanded, particularly by the US, UK, and EU in response to the 2022 invasion of Ukraine, with the barring of most financial transactions, Russian oil and gas imports, and freezing of Russian assets abroad, among other measures.

It has now been six months since Russia’s invasion of Ukraine began, and the country continues to withstand US- and EU-led sanctions. Though the economy is set to shrink, the latest figures place the contraction at 4–6 percent, well below the 8–10 percent previously projected. The ruble now stands at its strongest against the US dollar since 2018, with inflation slowing to 12–15 percent from its peak of 18 percent in April. While the Russian people are certainly feeling the economic pain, this is far from the predicted collapse, thanks in large part to soaring oil and gas prices that have benefited Russia’s energy sector (ironically, the higher prices are partially attributable to sanctions). The EU is currently mulling banning all Russian travelers, which some argue unfairly punishes all Russian civilians for the actions of their government.

Some commentators are now speaking of a three to five year timeline for economic and financial sanctions to have their intended results, hinting at a painful, long-term rearrangement of the global economy. “The big question, though,” noted Columbia University’s Eddie Fishman in a recent interview, “is whether all this economic damage is advancing worthy policy goals. And it’s a hard question to answer.”

The unintended consequences of attempts to economically isolate a major world power, meanwhile, continue to be felt around the world. Russia appears to have been driven closer to both Iran (per the Atlantic Council) and North Korea (per the Wall Street Journal). Europe faces the prospect of a winter with limited Russian gas. Hundreds of millions face starvation as the global food crisis is set to go “from bad to worse,” exacerbated by the impact of sanctions on fertilizer production. And the global economy as a whole teeters on disaster, driven not only by Russia’s war, but by also the economic warfare waged in response. 

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While the George W. Bush and Obama administrations sanctioned certain Venezuelan individuals, it was under Trump that sanctions were dramatically expanded to target the entire economy, barring financing and oil trade. In addition, the US, the UK and some other governments have blocked Venezuelan state assets abroad, and transferred others to Venezuelan opposition actors. 

Venezuela reported this month that its economy grew by over 17 percent in the first quarter this year as it benefitted from high oil prices and increased production. This marked the fourth consecutive quarter of growth in a country that has faced years of severe economic troubles driven, in large part, by US sanctions. However, the country’s economy is still approximately half the size that it was before broad US sanctions were implemented.  In addition, more recent developments give reason for caution. Operational disruptions led to a decline in oil output, and the state oil company paused shipments of crude oil to Europe this month, citing a preference for crude-for-refined product swaps over the Washington-authorized oil-for-debt deal. The bolívar, meanwhile, dropped steeply against the US dollar, raising concerns about efforts to control inflation.

President Maduro recently decried “abuses against Venezuela,” responding to a number of cases in which Venezuelan assets have been seized internationally. In late July, the High Court of England and Wales ruled in favor of the US-backed, unelected Juan Guaidó in the battle for control over $1.7 billion in the Venezuelan central bank’s gold that has been effectively frozen in the UK since 2019. A Venezuelan cargo plane owned by the state’s Emtrasur airline remains grounded in Argentina, tied up by US sanctions on both Venezuela and Iran. And last week, a US federal judge ruled in favor of oil corporation ConocoPhillips to collect an $8.5 billion award from Venezuela that had been granted by the World Bank’s controversial International Centre for Settlement of Investment Disputes as compensation for the Chávez government’s nationalization of oil projects. The ruling revived concerns that one subsidiary of Venezuela’s state-owned oil company, CITGO — which was put under Guaidó’s control in 2019 — could be sold for compensation. 

Venezuela’s government made progress in recovering one of its most important international assets when the Barranquilla Chamber of Commerce accepted the appointment of a new board of Monómeros, the Colombia-based fertilizer company owned by the Venezuelan state and which has, since 2019, been under the control of Guaidó appointees. However, the United States will likely respond by rescinding the license currently granted to Monómeros, which would impair its ability to use the US financial system and work with foreign suppliers and clients. This has led to speculation that Colombian president Petro is pushing for Colombia to purchase a 51% stake in the company, which would result in the automatic lifting of sanctions.

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US sanctions target and affect a number of countries beyond those listed above, including but not limited to Belarus, Syria, and Zimbabwe.

Last month, an amendment requiring a report on the humanitarian impacts of sanctions passed the House as a part of the FY 2023 National Defense Authorization Act. This month, nearly 30 civil society organizations, led by the National Iranian American Council and including CEPR, sent a letter urging congressional leadership to include the amendment in the final version of the bill.

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