August 29, 2024
In this edition of Sanctions Watch, covering August 2024:
- On third anniversary of US withdrawal, experts reflect on sanctions-fueled humanitarian crisis in Afghanistan;
- Nearly 50 members of Congress call to end Cuba’s Terror designation;
- Fareed Zakaria writes that Trump-Biden “maximum pressure” policy on Iran has failed;
- “North Koreans are battling food shortages, a sanctions-hit economy” writes Wall Street Journal;
- EU releases first tranche of funds in controversial scheme to use frozen Russian assets;
- Disputed presidential elections raise specter of new sanctions on Venezuela;
- Hundreds of legal groups and lawyers say US’s sanctions violate international law, and more.
Afghanistan (background)
August marked the third anniversary of the US withdrawal from Afghanistan and the Taliban’s return to power. With the milestone came reflections on the state of the country since 2021. Former EU Ambassador Jean-François and Sonia Cautain, who ran a medical NGO in Kabul, write:
It is estimated that 85 percent of the population live on less than $1 a day, mainly because of the obstacles to the Afghan economy put in place by certain members of the international community (the freeze on the Central Bank of Afghanistan reserves by the United States and de facto restrictions on banking transactions to and from Afghanistan) and decisions taken by the current regime (the restrictions imposed on women’s work and the manifold other controls put in place by a fussy bureaucracy).
Another article in The Hill states, “Western banks’ hesitation to engage with Afghan financial institutions has severely impeded the country’s economic integration, amplifying the difficulties it faces in reconstructing its financial framework amidst persistent international scrutiny and sanctions. …expecting the Taliban to bow under the pressure of more sanctions and boycotts is futile.”
Numerous Afghans, including a female aid worker writing in The Guardian, and businesspeople interviewed by AFP, have called on the international community to engage with Afghanistan and lift banking restrictions to alleviate the dire humanitarian situation. A joint statement by major aid organizations including the International Rescue Committee and CARE International echoed these sentiments, stating, “The current isolationist approach of most donor countries does not support durable solutions to the challenges faced by the people of Afghanistan, especially children, women, ethnic and other marginalised groups.” Despite Afghanistan’s urgent and significant need for financing, the Special Inspector General for Afghanistan Reconstruction’s most recent quarterly report states that the Afghan Fund — an organization created in 2022 with US backing to hold and disburse, “for the benefit of the Afghan people,” $3.5 billion of the $7 billion in Afghan central bank assets that were frozen by the United States — has yet to make any disbursements as it nears the end of its second year.
Read more:
- Pakistan and the Middle East’s Evolving Approach to Afghanistan, Middle East Institute
- Inside the Taliban’s Afghanistan, The National Interest
- Afghans Continue to Bear the Cost of Two Decades of US Occupation, People’s Dispatch
- Chamber of Commerce Urges Action on Banking Challenges in Afghanistan, TOLO News
Cuba (background)
Bob Menendez, perhaps the Democratic Party’s leading advocate of the embargo on Cuba, resigned from the US Senate this month following his conviction on multiple federal bribery, fraud, and extortion charges. While his departure removed an obstacle to US-Cuba policy reform, it is unclear if key actors in Washington are willing to take advantage of the opportunity. Menendez had already given up his powerful role as Chair of the Senate Foreign Relations Committee last year, without any major policy shifts by the Biden administration. In April, over 100 Maryland constituent groups and voters — including the Baltimore County Young Democrats, Peace Action Maryland, CASA, and dozens of churches and faith leaders — sent a letter urging Menendez’s successor as Chair, Sen. Ben Cardin (D-MD), to use his new position to take action to end the embargo. They did not receive a response.
Kamala Harris’s selection of Governor Tim Walz as her running mate this month fueled speculation that a future Harris administration might depart from the Trump-Biden approach to Cuba, given Walz’s past support for the Obama-era thaw. The candidates have not made any explicit promises, however, and the Biden administration’s record on Cuba makes clear that even campaign promises — in 2020, Biden had promised to return “in large part” to Obama’s policy of engagement and sanctions relief — are not always seen through.
Also this month, nearly 50 members of Congress, led by Rep. Greg Casar (D-TX), called on the Biden administration to remove Cuba from the State Sponsors of Terrorism (SSOT) list. Their demand came as a part of calls for greater US support for the ongoing peace process in Colombia. The Trump administration had used Cuba’s role in hosting parties to the Colombian peace talks as a part of its justification for adding Cuba to the list, but Colombian president Gustavo Petro has repeatedly called the designation an obstacle to peace, and urged its removal. A statement from the heads of state of the Caribbean Community called the SSOT designation “wrong and offensive” and urged “the lifting of the unjust unilateral financial, economic, and trade embargo” that it says is contributing to Cuba’s “deteriorating humanitarian situation.” And Rep. Barbara Lee (D-CA) remarked this month that “U.S. policy is still based on the idea that punishing Cubans is somehow helping them.” Lee also called the embargo “outdated and harmful” and said that President Biden’s Cuba policy reforms amounted to only “token changes.”
Read more:
- Cuba Embargo Backers Lose Advocate with Resignation of Menendez, Roll Call
- Interview with Jeffrey Sachs: US Sanctions’ Impact on Cuba’s Economy, Belly of the Beast
- Washington and Havana Are Stuck at a Diplomatic Impasse, POLITICO
- Senator Robert Menendez and the Corruption of Cuba Policy, The Nation
Iran (background)
In a wide-ranging interview this month, Iran’s foreign minister reiterated the new presidential administration’s openness to nuclear negotiations, despite the potential challenges. Shortly thereafter, Iran’s Supreme Leader gave his tentative blessing to the idea. With this green light for the Pezeshkian administration’s preferred approach, the negotiations ball is now firmly in the US’s court, though it is unlikely that the Biden administration will change course prior to the US presidential elections.
Iran has reportedly expanded its oil shipments to new destinations such as Bangladesh and Oman, pushing its exports to a near five-year high in a context of high prices amid a growing risk of regional war. The State Department has warned that it is considering new measures to clamp down on Iran’s oil exports, but, as POLITICO reports, the White House may be reluctant to follow through on these threats due to the risk of pushing oil prices up ahead of the election. The Treasury Department did, however, impose new sanctions against entities alleged to be involved in shipping Iranian oil and gas on behalf of Ansar Allah in Yemen.
Fareed Zakaria writes in a Washington Post article that the Trump-Biden “maximum pressure” sanctions policy on Iran has failed. Zakaria quotes a Brandeis University researcher whose studies have found that: “The expanded sanctions regime … has had adverse consequences for the Iranian middle classes … causing them to lose faith in the reformist politicians who supported a new round of diplomacy. Iranian hard-liners invoked the U.S. withdrawal from the 2015 nuclear deal to show that they had been right all along to dismiss the negotiations as a sham.”
Read more:
- America’s Failed Approach to Iran Can’t Really Be Called a Strategy, The Washington Post
- Who Benefits from Sanctions?, Phenomenal World
- US Eyes Iranian Oil Exports as Threat of Israel Attack Grows, POLITICO
North Korea (background)
A recent defection by a North Korean soldier to South Korea prompted The Wall Street Journal to write: “A recent rise in defections from North Korea’s protected classes are reinforcing outside assessments that Kim is contending with internal discontent that could ultimately threaten his grip on power. North Koreans are battling food shortages, a sanctions-hit economy and a further backslide in human rights.”
North Korea will reportedly reopen its borders to international tourism in a limited capacity for the first time since the beginning of the COVID-19 pandemic, a sign that the country may be facing a particularly acute lack of foreign currency reserves. Professor Dean Ouellette, an expert interviewed by The Guardian, said, “If there is a return to the heyday of Chinese tourist arrivals … North Korea could possibly earn an [sic] $100m to $175m. For a heavily sanctioned and self-isolating economy like North Korea, that is not an insignificant amount.”
Read more:
- Red Cross Receives Sanctions Exemption to Send Laptops to North Korea, NK News
- North Korea Is Reopening to Tourists After Almost Five Years, But Will Anyone Go?, The Guardian
Russia (background)
Near the end of the month, the US sanctioned nearly 400 individuals and entities, including Chinese firms, “whose products and services enable Russia to sustain its war effort and evade sanctions,” the US Treasury Department announced. Beijing firmly opposed the measures. The US, UK, Canada, and EU also jointly sanctioned Belarusian entities and individuals over “human rights” concerns and for allegedly supporting Russia’s war in Ukraine. Furthermore, the EU announced late last month that it had made a first tranche of €1.5 billion available to support Ukraine as a part of its plan to divert interest earned from the profits generated on Russian frozen assets. The Czech Republic revealed that some of these funds will be used to purchase artillery shells for the country. Meanwhile, Germany is reportedly planning to halve its support for Ukraine in its next budget, hoping that a separate G7 plan to issue $50 billion in loans to Kyiv, backed by Russia’s frozen assets, will cover the shortfall. A German government spokesperson expressed confidence that a system to issue the loans will be in place by the end of the year.
Sanctions on Russia are having a detrimental effect on its economy. Its central bank said the economy was “substantially overheated,” while announcing an interest rate hike of 200 basis points, the highest in two years. She cited difficulties with international payments — a direct consequence of Western sanctions — as a factor contributing to rising inflation. Indeed, reports indicate that 80 to 98 percent of Russian transactions with Chinese banks, including small regional ones, are being rejected due to fears of secondary sanctions from the US amid a continuing campaign of threats from Washington directed at banks in third countries. Additionally, Chinese banks that still process such payments are squeezing Russian banks by increasing currency exchange rates, and Chinese firms seek to ship goods to Russia through third countries as protection against secondary sanctions, even though this will increase transportation costs. In response, Moscow and Beijing are reportedly exploring establishing a bartering system to bypass some of these challenges.
Researchers, analysts, and economists recently wrote in Fortune:
the apparent resilience of the Russian economy is largely illusory, built on a precarious foundation of unsustainable government spending and short-term market factors. … As unsustainable stimulus inevitably fades, Russia faces an unenviable perfect storm of challenges: the exhaustion of foreign exchange reserves, an irreversibly strained labor market, rising inflation outside the control of the central bank, and the heavy burden of military expenditures for years to come. … Russia is set on a long-term trajectory of structural challenges under the weight of sanctions and elevated government spending.
Questions regarding whether and how these economic challenges might lead to sustainable peace in Ukraine, and their potential impact on ordinary civilians, were left unexplored.
Read more:
- Moscow Stock Exchange Considers Legal Action Against US and UK Sanctions, Reuters
- Russian Railway Networks Facing ‘Imminent Collapse’: Report, Newsweek
Venezuela (background)
Venezuela is facing a renewed and dangerous political crisis following the disputed outcome of its July 28 presidential elections, with both the Maduro government and the opposition claiming victory. (For a detailed look at the election outcome and what might come next, see CEPR’s recent report.) While backing the opposition’s claims, the US has yet to impose new sanctions in response to Maduro’s claims of victory — perhaps, as Foreign Policy reports, a reflection of the growing recognition that its “maximum pressure” approach is harmful. However, the Biden administration has reportedly compiled a list of 60 Venezuelan individuals that may soon be subject to sanctions. Some legislators, including Rep. Debbie Wasserman Schultz (D-FL) and her hard-line pro-sanctions Republican colleagues, are preparing new sanctions legislation for when Congress returns to session in September.
Moreover, the existing sanctions regime remains almost entirely in place. While the Biden administration pursued a limited easing starting in October 2023, the sanctions have since been resumed, with the exception of a few licenses granted to specific oil companies. As CEPR’s report notes, US sanctions are responsible for much of Venezuela’s debilitating economic crisis since 2017, and have had a catastrophic humanitarian impact. Crucially, these are themselves an infringement on the electoral process, effectively threatening to harm an entire population if they do not support the US’s preferred candidate. Combined with a long history of US-backed regime change efforts, including coup attempts and repeated false claims of electoral fraud in Venezuela and across Latin America, the United States has little legitimacy with which to intervene in the ongoing dispute, and attempts to tighten sanctions or otherwise meddle are only likely to cause more harm.
The leaders of Brazil and Colombia have led regional calls for a peaceful resolution to the impasse, urging the transparent publication of vote counts, dialogue between the government and opposition aimed at power-sharing, and reportedly suggesting the holding of new elections. The leaders of both countries, however, have clearly stated that they maintain “total opposition to the continued application of unilateral sanctions as a tool of pressure, [which] are contrary to international law and harm the population of the sanctioned countries, especially the most vulnerable sectors.”
Read more:
- Venezuela’s Disputed Election and the Path Forward, CEPR
- U.S. Sanctions Have Devastated Venezuela. How Does That Help Democracy?, The Intercept
- Venezuela’s Maduro Dismisses Power Sharing, New Election Proposals, Venezuelanalysis.com
Other
In a letter sent to President Biden this month, 40 legal groups — including the National Lawyers Guild, International Association of Democratic Lawyers, and Center for Constitutional Rights — and 200 individual lawyers — including top legal scholars from Yale, Princeton, and Johns Hopkins — called on the US to end the use of broad, unilateral economic sanctions, which they described as blatant violations of international law. The letter coincided with the 75th anniversary of the signing of the Geneva Conventions, which, among other things, prohibit the collective punishment of civilian populations. The signers consider broad economic sanctions to constitute such collective punishment, pointing to their devastating impacts on civilian populations, and make the case for the illegality of US sanctions policy.
The Democratic Party’s 2024 policy platform, released this month, references US sanctions policy five times, in each case referring positively to the Biden administration’s use of sanctions. Unlike the 2020 platform, no mention is made of the risks of misuse or overuse of sanctions. The Republican Party platform does not mention sanctions.
Three members of the US Congress — Reps. Greg Casar (D-TX), Chuy García (D-IL), and Delia Ramirez (D-IL) — attended a CEPR-organized conference, the Panamerican Congress, in Bogotá this month that brought together progressive parliamentarians from countries across the Western Hemisphere to discuss common threats to democracy, peace, and climate. One of the repeated themes of the conference was the damage wrought by US unilateral sanctions, particularly those imposed on Cuba and Venezuela, which have not only harmed millions of civilians in the targeted countries, but have had significant spillover effects to the entire region, including through increased oil prices, decreased opportunities for trade, and an explosion in migration.
The Treasury Department imposed sanctions on former Haitian president Michel Martelly for alleged drug trafficking this month. As CEPR’s Haiti expert Jake Johnston told Foreign Policy, the United States had “invested tremendous political capital in [Martelly] after the earthquake and during the reconstruction” — and, in fact, intervened heavily in the 2010/2011 electoral process, which ensured his rise to the presidency. The sudden turn to sanctions against a former ally are likely an attempt to send a signal to those who, like Martelly, might challenge the US-backed transitional government led by Prime Minister Garry Conille.
The Israeli finance minister’s statement, that starving 2 million Gazans to death “might be justified and moral” until the hostages held by Hamas are released, has been condemned by European countries and the UN human rights chief. Several UN agencies said that Israel continues to hamper the delivery of aid by denying deliveries, damaging roads, and closing border crossings. The Financial Times reports: “Food supplies into Gaza have diminished even further in the two months since international experts raised the threat of famine in the enclave, according to the regional director of the World Food Programme.” Save the Children, Oxfam, and other aid agencies say that shortages of sanitation products, Israel’s restrictions on repairs and supplies, mass displacements, and the destruction of water infrastructure have led to the first cases of polio in Gaza in 25 years.
Read more:
- US Surge in Financial Sanctions Called Inhumane by Lawyers, Bloomberg
- Why Is the U.S. Obsessed with Sanctions?, Post Reports (Washington Post podcast)
- U.S. Treasury Sanctions Former Haitian President, Foreign Policy
- Communiqué of the 44th Ordinary Summit of SADC Heads of State and Government 17th August 2024, Harare, Republic of Zimbabwe, Southern African Development Community
- As Repression in Nicaragua Deepened, One Bank Kept the Money Flowing, The Washington Post
- The Democrats Just Erased All of Their Progress on Foreign Policy, The New Republic
- New US Treasury Plan Targets Criminal Groups Profiting from the Destruction of the Amazon, International Consortium of Investigative Journalists
- Reinforcing Sanctions on Former Paraguayan President Horacio Cartes, US Department of State
About Sanctions Watch
Economic sanctions have become one of the main tools of US foreign policy despite 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’s Sanctions Watch news bulletin aims to generate more awareness on the use and impact of sanctions through monthly round-ups of news and analysis on US sanctions policy.
Click here to see past editions of CEPR’s Sanctions Watch.
