CEPR Sanctions Watch February 2024

In this edition of Sanctions Watch, covering February 2024:

  • Sanctions have exacerbated Afghanistan’s health care crisis, says Human Rights Watch;
  • Civilians in Cuba brace for price hikes as government responds to sanctions-fueled economic challenges;
  • Diaspora community becomes “collateral damage” of US sanctions on Iran;
  • Poll shows Americans favor engagement with North Korea, lifting sanctions;
  • US and others sanction Russia on two-year anniversary of war in Ukraine;
  • House passes bill to expand and extend Syria sanctions; UN expert condemns;
  • UN expert on food calls sanctions on Venezuela “cruel and vicious”;
  • New poll finds majority of US public opposes sanctions that harm civilians, and more.

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Background: Following the Taliban takeover in 2021, the Biden administration blocked Afghanistan’s central bank from accessing roughly $7 billion of its foreign reserves held in the United States. Half of these assets have since been allocated to a trust fund, largely under US control, that has yet to disburse funds to Afghanistan. Around $2 billion of central bank assets have also been blocked by European authorities. Along with a cutoff of aid, this asset seizure — representing the near totality of Afghanistan’s foreign reserves — has contributed to a collapse of the country’s economy.

On February 7, the White House announced that President Biden decided to extend the executive order authorizing the freezing of $7 billion of Afghanistan’s assets for another year. The Associated Press reports that the freezing of assets and other sanctions “have cut off access to global institutions and the outside money that supported the aid-dependent [Afghan] economy before the withdrawal of U.S. and NATO forces.” At a recent conference in Doha between UN officials and special representatives to Afghanistan from 25 countries, which the Taliban government refused to attend, China’s representative said that, despite consensus on various goals relating to the country, “Some of the members also emphasized the need to unfreeze the overseas assets of $7 billion to Afghanistan – the need to lift the unilateral sanction[s] by United States.”

In a new report, Human Rights Watch (HRW) examines a health care crisis in Afghanistan that has led to a significant lack of sufficient services for its citizens. Among several factors contributing to the crisis, including loss of international aid, loss of staff, and the Taliban’s repressive policies against women and girls, HRW mentions sanctions:

Decisions by governments and international banking institutions not to deal directly with Afghan commercial banks or the Central Bank of Afghanistan because of sanctions imposed by the US and other countries have exacerbated the crisis. Although subsequent clarifications of the sanctions regime explicitly state that humanitarian aid is exempted, as well as most commercial transactions and payment of normal taxes and fees to Afghan government agencies, staff of aid organizations have said that problems with transferring and withdrawing funds have continued. … Because of the fear of sanctions, many international banks have often not covered withdrawals by aid organizations.

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Background: The US embargo against Cuba is one of the oldest and most stringent of all US sanctions regimes, prohibiting nearly all trade and financial transactions between the United States and Cuba since the early 1960s. After a brief loosening under Obama, sanctions were tightened and expanded under Trump — a policy the Biden administration has, for the most part, maintained.

The Cuban government has temporarily delayed implementing a planned fivefold increase in fuel prices, citing a cyberattack on its fuel marketing system. The price hike, part of a range of measures intended to curb inflation and help the economy weather its long-running economic crisis — driven in large part by the US economic embargo — is a source of considerable concern for Cuban civilians. As NBC reports, everything from food to public transportation is likely to get costlier under the plan, which, despite the delay, is expected to go into effect in the coming weeks.

Also this month, the African Union adopted a resolution condemning the US blockade of Cuba and specifically calling for the US to end the designation of Cuba as a State Sponsor of Terrorism (SSOT). Representative Jim McGovern (D-MA) and Senator Peter Welch (D-VT) also criticized the terrorism designation in a letter to the editor in the Wall Street Journal, stating: “Wrongly labeling [Cuba] as a sponsor of international terrorism only furthers a broken status quo.” Similarly, Rep. Steve Cohen (D-TN) said: “Trump put Cuba on the SSOT list simply to spite President Obama. It’s time to reverse it.” And Mexican president Andrés Manuel López Obrador reiterated his long-standing condemnation of the blockade: “They [the US] want the people to suffer so the people rebel against their government … it is a great injustice.” Finally, Congressional Progressive Caucus leaders including Reps. Pramila Jayapal (D-WA) and Ilhan Omar (D-MN) — longtime critics of the embargovisited Cuba this month “to discuss human rights and the U.S.-Cuba bilateral relationship.”

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Background: US sanctions on Iran began during the 1979 hostage crisis, and currently bar US actors — plus some non-US actors — from almost 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 United States’ withdrawal from the agreement. The European Union also maintains certain trade and financial sector sanctions on Iran.

An article published in Bloomberg this month exposes how US citizens — particularly diaspora communities from sanctioned countries, like Iran — are harmed by US sanctions. Citing an Iranian-American man who had his bank account closed for attempting to transfer his inheritance from Iran, the authors write: “Like thousands of Americans of Iranian origin, Salehi says he’s become collateral damage in Washington’s surging use of financial sanctions to punish global enemies. Lawyers and consumer advocates say US banks are increasingly reluctant to handle even seemingly benign transactions for customers with links to countries covered by the restrictions, fearing huge fines from regulators.” As the man says himself: “Many times the sanctions that are imposed by the US on foreign entities and individuals, those individuals aren’t hurt by it. It’s everybody else.”

The United States announced a slew of new sanctions targeting Iran this month: against Islamic Revolutionary Guard Corps (IRGC) officials for their alleged role in cybersecurity attacks on US water infrastructure; against Emirati and Turkish individuals and entities, as well as a subsidiary of Iran’s central bank, for purportedly facilitating the transfer of unnamed “technology” to the bank; and against the Ministry of Defense and Armed Forces Logistics and two shipping companies under new Russia-related sanctions unveiled following the death of Alexei Navalny. The White House also announced plans to soon impose new sanctions in response to Iran’s support for Russia, and threatened an additional “severe” response if the country follows through with allegedly planned ballistic missile sales.

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North Korea

Background: The United States 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 then. US sanctions now target oil imports and cover most finance and trade as well as the key minerals sector. In addition, the UN Security Council has adopted nine major sanctions resolutions since 2006. The European Union has implemented these in addition to its own sanctions.

Recent sanctions by the UK, EU, and US pertaining to Russia have targeted individuals and entities involved in North Korea’s alleged transfer of weapons to Russia for its war in Ukraine (see the Russia section below). Regarding these transfers, John Carl Baker, deputy director of programs at Ploughshares Fund, notes, “North Korean support for Russia’s war in Ukraine has been rightly met with shock and disgust, but it should not be surprising — least of all to the US government. The broad sanctions levied against Russia for its illegal invasion were bound to push it closer to other US adversaries, which share little in common except their status as economic pariahs. North Korea has been under extreme sanctions for years (especially since 2016 and 2017), and while smuggling and hacking soften the blow, they’re hardly a substitute for large-scale arms deals.” Pyongyang’s support to Moscow has also led Russia to reportedly release $9 million in North Korean funds that were frozen in Russian institutions. The New York Times, which reported the story, also notes that “sanctions have choked [North Korea’s] economy.”

According to a recent poll conducted by The Harris Poll, the majority of the US public supports increased diplomatic engagement with, as opposed to “maximum pressure” on, North Korea: 69 percent of Americans believe that the US president should offer to hold meetings with his North Korean counterpart, with another 59 percent agreeing that the US should offer diplomatic and economic incentives to North Korea in exchange for steps toward denuclearizing, for example. As described below, the majority also support lifting sanctions that harm civilians or impact humanitarian aid, as US sanctions on North Korea do.

Also this month, the US announced a minor expansion of exemptions to its North Korea sanctions program.

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Background: US sanctions on Russia’s financial, energy, and defense sectors began after the 2014 annexation of Crimea. This sanctions regime was greatly expanded, particularly by the United States, the United Kingdom, and the European Union in response to the 2022 invasion of Ukraine. It includes the barring of most financial transactions and of Russian oil and gas imports as well as the freezing of Russian assets abroad, among other measures.

To mark the second year of Russia’s invasion of Ukraine on February 24, 2022, and in response to the death of Russian opposition activist Alexei Navalny, the US, UK, Australia, Canada, and the EU announced a barrage of additional sanctions against Russia. Washington’s sanctions were described in the New York Times as “its most extensive package of sanctions on Russia since the invasion of Ukraine two years ago.” They target 500 entities and individuals, both within and beyond Russia, allegedly associated with its Arctic LNG 2 project, other future energy projects, sanctions evasion, metal and mining sectors, automotive industry, weapons sector, military industrial base, and the transfer of weapons from North Korea, among other areas. Furthermore, other than Russian entities and individuals, the EU’s sanctions — its 13th package — for the first time target Chinese and Indian companies doing business with Russia.

The EU has taken its first steps toward its proposed plan of taxing profits generated by Russia’s frozen assets in order to fund the war effort in Ukraine, mandating financial institutions that hold frozen assets of Russia’s Central Bank to separate these assets from the profits they generate in their accounting. In addition, the Financial Times reports that Belgium has submitted a new proposal to the G7 that would allow Ukraine’s allies to “raise debt to fund the war-torn country. … [Then they] would demand that Russia repays the debt and, if it fails to do so, would seize frozen Russian sovereign assets instead.” Citing two G7 officials, the FT states that this is “now a leading option to unlock the frozen funds for Ukraine,” but Reuters reports that “European countries show little enthusiasm for it,” as the plan “suffers from the same legal, economic and financial concerns as” seizing Russia’s assets, according to a European official. Despite these concerns, US Treasury Secretary Janet Yellen offered what the Associated Press calls “her strongest public support yet” for the seizure of Russia’s assets, saying doing so is “necessary and urgent,” and dismissing questions over the potential impact on the US dollar.

A number of economists warn that the Russian economy is facing serious issues, despite its rebounding GDP growth. These include a labor shortage, rising inflation, growth that is largely restricted to the military sector, and an overheating economy that is supported by high levels of war-related government spending. Sanctions have driven up the cost of imports, and the country’s exports to Europe dropped by more than two-thirds in 2023. Sanctions have also contributed to the deterioration of public utilities, infrastructure, and the Russian airline industry, given the difficulty they create in sourcing spare parts.

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Background: As a designated “State Sponsor of Terrorism” since the list’s creation, Syria has faced unilateral sanctions in some form since 1979. These were augmented during the George W. Bush administration, and greatly expanded under Presidents Obama and Trump to bar most financial transactions with Syrian entities. The “Caesar Act,” passed by Congress in 2019, goes even further, imposing secondary sanctions on third-party entities that engage in such transactions, even if they have no connection to the US.

The House of Representatives passed the Assad Regime Anti-Normalization Act of 2023 (H.R. 3202) this month. If enacted, the bill would extend Caesar Act sanctions by eight years, and expand the types of transactions covered by sanctions. The UN Special Rapporteur on the negative impact of unilateral coercive measures warned that the bill “is a flagrant violation of fundamental principles of international law and will lead to a deterioration of the humanitarian situation in Syria, which is already affected by barely functioning critical infrastructure, shortages of food, medicine and other basic necessities.” According to an earlier analysis by former National Security Council senior director for counterterrorism Steven Simon and Syria expert Joshua Landis, the bill would have “disastrous humanitarian impacts”; and writing in The Hill last year, CEPR Senior Research Fellow Francisco Rodríguez remarked that the legislation “will further punish millions of innocent Syrians.” A companion bill has been introduced in the Senate, but it’s unclear whether it will go to a vote in that body.

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Background: While the George W. Bush and Obama administrations adopted sanctions on arms and against Venezuelan individuals, it was under Trump that broad financial sanctions and restrictions on oil exports were implemented. These have caused at least tens of thousands of deaths of Venezuelans, from the resulting economic collapse and loss of essential imports and production, including food, medicine, health care, and health infrastructure. In addition, the United States, the United Kingdom, and others have frozen — and in some cases transferred to opposition actors — Venezuelan state assets.

Following President Biden’s decision to begin reimposing sanctions last month, along with threats to allow the oil sanctions license to expire in April, the Venezuelan government has stopped accepting deportation flights from the US. The response highlights the potential political consequences of US sanctions policy in an electoral year, including, as CEPR’s Alex Main notes, through migration and potentially higher oil prices. Similarly, in an interview with Forbes this month, Congressman Jim McGovern (D-MA) stated: “[Sanctions] were meant to purposefully ramp up the pain on the Venezuelan people in order to force Maduro out of power. Obviously, that did not work, but it worsened poverty and exploded migration.” While Rep. Bill Huizenga (R-MI) does not go so far as to recognize that the civilian harm caused by sanctions is intentional, he did admit this month that sanctions are in part responsible for Venezuela’s economic challenges.

Also this month, Venezuela’s main business group reported that 81 percent of the country’s businesses are directly negatively affected by US sanctions — and even more by indirect effects such as electric grid failures. Opposition presidential candidate Antonio Ecarri told Forbes that US sanctions are “utterly irresponsible,” noting that “the ones paying the price [of sanctions] are the Venezuelan people.” And economist and business consultant Tamara Herrera wrote in Americas Quarterly: “No more U.S. sanctions are needed. They must all be dismantled, allowing the private sector to produce without the enormous costs of over-compliance that hinder daily operations.”

Finally, following a visit to the nation, the UN Special Rapporteur on the right to food reported: “Unilateral coercive measures are cruel and vicious and hinder realization of the right to food,” and called for their immediate cessation.

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A new poll conducted by the Harris Poll and prepared for the American Friends Service Committee finds that the majority of the US public believe that the US should lift sanctions if they violate international law, interfere with humanitarian assistance, or hurt ordinary citizens. According to many experts, these conditions could describe all major US economic sanctions regimes.

Six UN human rights experts released a statement this month condemning the US State Sponsors of Terrorism list, with its attendant unilateral sanctions, as a violation of international law:

The unilateral designation itself goes against the fundamental principles of international law, including the principle of sovereign equality of States, the prohibition to intervene into domestic affairs of states and the principle of peaceful settlement of international disputes. … Fundamental human rights, including the right to food, right to health, right to education, economic and social rights, right to life and right to development, are negatively affected by the additional restrictions and prohibitions triggered by SST designations.

The people of Gaza continue to suffer under the effective blockade enforced by Israel with US backing. According to the World Food Programme, “The latest reports confirm Gaza’s precipitous slide into hunger and disease. Food and safe water have become incredibly scarce and diseases are rife, compromising women and children’s nutrition and immunity and resulting in a surge of acute malnutrition. People are already dying from hunger-related causes.” The deputy director of the UN’s Food and Agricultural Organization said, “There are unprecedented levels of acute food insecurity, hunger, and near famine-like conditions in Gaza.”

On top of the denial of access and increased interference in aid missions, Israel imposed financial restrictions on the United Nations Relief and Works Agency for Palestine, preventing shipments of food. A joint statement by several humanitarian organizations states, “The siege tactics imposed by Israel on Gaza are one of the key factors impeding the delivery of aid.” The director-general of the World Health Organization said Gaza is a “death zone … [malnutrition] will rise the longer the war goes on and supplies [are] interrupted.”

For the third time, the Biden administration vetoed a UN Security Council resolution calling for an immediate cease-fire in Gaza. This decision was harshly criticized by humanitarian organizations, with the executive director of Doctors Without Borders telling the New York Times, “The United States at the U.N. Security Council is effectively sabotaging all efforts to bring assistance. … We see that a cease-fire is the only way to ensure the safe delivery of assistance to the people who need it most.”

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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.

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