CEPR Sanctions Watch June 2023

June 30, 2023

In this edition of Sanctions Watch, covering June 2023: 

  • Hunger grows in Afghanistan as Republicans propose tightening sanctions; 
  • Leaders of Caribbean countries, Colombian president Gustavo Petro, Congressman Jim McGovern, and New York City Council call for the lifting of sanctions on Cuba;
  • Indirect talks spur hopes for easing tensions with, and sanctions relief for, Iran;
  • North Korea renews missile tests in response to US-South Korean military exercises, sanctions;
  • The EU unveils its 11th sanctions package on Russia
  • “Anti-normalization” bill would tighten sanctions and exacerbate humanitarian crisis in Syria;
  • Donald Trump says the goal of his “maximum pressure” strategy was Venezuela’s collapse;
  • Liberal, conservative, and libertarian commentators are concerned that sanctions harm everyday people, and more.

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Background: Since the Taliban takeover in 2021, the Biden administration has 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 have also been blocked by European authorities. Along with a cutoff of aid, and sanctions on Taliban officials, this asset seizure has contributed to a collapse of Afghanistan’s economy.

Save the Children has warned that the hunger crisis in Afghanistan may be getting even worse, as a swarm of locusts continues to plague the country, threatening to eat through a quarter of the annual wheat harvest. This tragedy, the organization warns, comes on top of a compounding crisis, for which US policy bears partial blame: “The legacy of decades of conflict, a third consecutive year of drought, the international community’s suspension of development assistance and imposition of sanctions since August 2021, and a worsening economy, are contributing to the suffering of the Afghan people.”

Despite this, Republican members of Congress introduced a new bill that would further expand existing sanctions, authorizing the president to impose sanctions on any foreign person deemed to engage in activities related to terrorism, human rights abuses, or drug trafficking in Afghanistan, and secondary sanctions on anyone that attempts to violate these sanctions. The bill also makes it US policy to support expansion of multilateral sanctions. Meanwhile, no progress has been reported in the returning of the Afghan central bank’s frozen funds.

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Background: The US embargo against Cuba is one of the oldest and strictest 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 Wall Street Journal reported this month that China is building a “spy base” in Cuba, and that the two governments are in discussions to allow a military training facility on the island. As international affairs scholar William Leogrande points out, these allegations are based on highly limited evidence, and appear to significantly overstate the facts, prompting some to liken the allegation to a new “Havana Syndrome.” If the Cuban government is, in fact, strengthening its ties to China, some, including former Obama official Tommy Vietor, argue that US sanctions could be largely to blame: “No surprise that Cuba would look to countries like China for a financial lifeline after decades of brutal US sanctions crippled its economy.”

The US embargo on Cuba continues to undermine US standing in, and relations with, a number of countries. Just this month, leaders of Caribbean nations called for the lifting of sanctions on Cuba and Venezuela, and Colombian president Gustavo Petro reiterated his position that the Cuban presence on the State Sponsors of Terrorism (SSOT) list is a “profound injustice.” Representative Jim McGovern (D-MA) demanded the same during an impassioned speech following a visit from Cuban entrepreneurs who have struggled in the face of US sanctions. Also this month, the New York City Council passed a resolution calling for an end to the embargo, joining DC, Boston, San Francisco, Chicago, and others; and demonstrations calling for the delisting of Cuba from the SSOT list took place across the country.

Following last month’s letter from 21 members of Congress, a number of commentators have pointed out that the United States could help to reduce migration by lifting sanctions on Cuba and Venezuela. And in a Washington Post article, public health experts Achal Prabhala and Vitor Ido argue that easing the embargo on Cuba would help the whole world. During the COVID-19 pandemic, they explain, “Cuba was systematically blocked in its quest to make its own highly effective vaccines widely available” by US sanctions. Preparing for the next pandemic must include ending the embargo, they write.

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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.

The United States and Iran are reportedly in indirect talks regarding a number of long-standing sticking points between the countries, including Iran’s nuclear program, US prisoners held in Iran, billions of dollars in Iranian assets frozen overseas, and sanctions. The negotiations come amid easing tensions between Iran and Saudi Arabia, ongoing economic challenges in Iran, and Iran’s progress toward developing nuclear weapons since the Trump administration’s unilateral withdrawal from the nuclear deal.

New reporting from The Intercept underscores the life-or-death nature of these discussions for many Iranians. Following the death of a 10-year-old boy from a treatable disease, the Iran Thalassemia Society launched a lawsuit against the US government, alleging that US sanctions, despite nominal humanitarian exemptions, have made it nearly impossible to make the transactions needed to import life-saving medicines. “On a visceral level, people are suffering and dying,” noted the plaintiff’s attorney. “We’re talking about little children who need medical dressings and didn’t get them … No one is willing to stand up to the impunity and bullying of the U.S. government on this subject, and particularly [the Office of Foreign Assets Control].”

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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.

Following North Korea’s failed spy satellite launch late last month, the UN Security Council deliberated, but ultimately failed to agree on, a resolution condemning the country’s actions. Opponents of the resolution argued that it failed to consider the role of US policy in stoking tensions. South Korea then imposed new sanctions on an alleged North Korean hacking group accused of participating in the launch. On June 15, the North Korean government launched two short-range missiles, ending a two-month pause in missile testing. The tests were a response to live-ammunition drills being conducted by the US and South Korea, which Pyongyang considers to be a provocation. The US immediately responded with fresh sanctions on two individuals allegedly involved in missile development. The following week, the Biden administration extended the national emergency declaration regarding North Korea, from which it derives certain sanctions authorities.

Meanwhile, the ruling party held a plenary meeting to discuss North Korea’s economic challenges. While data is sparse, concerns have grown about rising hunger in the country.

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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, with the barring of most financial transactions and of Russian oil and gas imports, and the freezing of Russian assets abroad, among other measures.

The European Union announced its 11th package of sanctions against Russia this month. In addition to freezing the assets of 100 new individuals and entities, the package allows the EU to restrict the sale of certain goods and technologies to third countries that might resell them to Russia, bars ships suspected of engaging in ship-to-ship transfers with Russian cargo from entering EU ports, and more. In an attempt to address Russia’s ability to evade existing sanctions, the package marks a significant step in expanding sanctions on third parties, signaling further geopolitical division into rival blocs.

Also this month, the Biden administration announced new sanctions on individuals allegedly linked to Russian intelligence efforts to influence elections in Moldova, and two weeks later, against Russian Federal Security Service officers accused of influence operations in the United States. The Biden administration put a hold on new planned sanctions against the Wagner Group following the latter’s turn against President Putin, but pending legislation in Congress would label the group a Foreign Terrorist Organization.

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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 Assad Regime Anti-Normalization Act (HR 3202) is expected to come to the House floor for a vote in the coming weeks. The bill would extend the Caesar Act’s sunset by eight years, broaden the list of sanctioned activities, and require the US government to use its “full range” of powers to “deter reconstruction activities in any areas under the control of Bashar al-Assad.” In their analysis of the legislation, Syria scholar Joshua Landis and Clinton and Obama administration official Steven Simon contend that it creates no path to unseating or influencing the behavior of Assad, undermines US influence in the region, punishes US allies, and, above all, “[prolongs] the agony of ordinary Syrian civilians, who suffer the major humanitarian impact of sanctions.” Writing in The American Conservative, the Cato Institute’s Doug Bandow agrees, calling US sanctions on the country “ostentatiously cruel yet ineffective.”

Ahead of an EU conference on the country’s humanitarian crisis, the International Committee of the Red Cross noted: “nearly 90% of Syrians live below the poverty line with more than 15 million needing humanitarian assistance.” The “collapse of Syria’s critical infrastructure is a pressing concern,” they add, as maintenance “has been hindered by international restrictive measures and sanctions.”

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Background: While the George W. Bush and Obama administrations adopted sanctions on arms purchases and against Venezuelan individuals, it was under Trump that broad financial sanctions and restrictions on oil exports were implemented, with dramatic effects on Venezuela’s economy. In addition, the United States, the United Kingdom, and some other governments have frozen Venezuelan state assets abroad, and have transferred others to Venezuelan opposition actors.

Following last month’s letter from 21 members of Congress urging President Biden to address the migration crisis by lifting sanctions on Cuba and Venezuela, another group of House Democrats sent a letter on the “on the indiscriminate and counterproductive impacts on the Venezuelan people of the secondary and sectoral sanctions.” Reps. Joaquin Castro (TX-20), Jim McGovern (MA-02), Gregory Meeks (NY-05), Barbara Lee (CA-12), and eight others argue that “to purposefully continue contributing to economic hardship experienced by an entire population is immoral and unworthy of the United States.” The authors had good reason to suggest that the sanctions imposed by President Trump, but kept in place by Biden, are “purposefully” causing hardship; this month, President Trump effectively admitted that the goal of his maximum pressure campaign was to cause Venezuela’s “collapse.”

Also this month, leaders of the Caribbean Community “urged for the removal of sanctions on Venezuela to allow countries in the Region to benefit from the PetroCaribe initiative,” a regional oil procurement agreement between Venezuela and Caribbean countries dating to the mid-2000s. Following a meeting with Venezuelan president Nicolás Maduro, Brazilian president Lula da Silva condemned sanctions on the country, saying, “A blockade is worse than war, because in a war, it’s usually soldiers who die in battle. But a blockade kills children, women, people who have nothing to do with the ideological dispute in play.” Former Obama administration official Ben Rhodes suggested that Lula’s criticism of US sanctions was no surprise: “We’ve exacerbated the humanitarian crisis there [in Venezuela] … that has contributed significantly to people coming to our border … It’s not [just Lula] … it[s all the major Latin American countries. There’s nobody with us in this weird, Miami-driven hard-line policy.”

Finally, following the Justice Department’s sign-off on the sale of the US-based, Venezuelan government-owned Citgo Petroleum Corporation to satisfy Venezuelan creditors last month, which was denounced by the Venezuelan government as the “theft of the century,” a US District Court Judge has begun making preparations for auction for the coming months.

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Skepticism about US sanctions policy is not a partisan matter. While criticism of sanctions is often a progressive talking point, this month, op-eds from authors across the political spectrum expressed serious concern with the humanitarian impacts of economic sanctions.

In The Hill, Adam DuBard of the liberal Friedrich Naumann Foundation for Freedom writes that, despite campaigning on change, “the Biden administration’s approach to sanctions has remained remarkably similar to Trump’s.” Citing the cases of Iran — “The failure to reenter the Iran deal is the most egregious error of Biden’s sanctions policies,” Cuba — “Six decades of maximum pressure on Cuba have failed completely, serving primarily to harm Cuban civilians and exacerbate tensions with allies,” and Venezuela — the “maximum pressure strategy with Venezuela … failed to achieve anything resembling progress,” DuBard argues: “These sanctions are unpopular, ineffective and quite often counterproductive to American interests.”

In The Washington Post, conservative columnist Max Boot argues: “Washington’s addiction to sanctions has gotten out of control.” Boot notes:

Recent sanctions have failed to foster regime change — or even significant changes in regime behavior — in Myanmar (also known as Burma), Nicaragua, Venezuela, Syria, Yemen and other countries…. Ordinary people, who have no say over government policy, are hurt the most. … There is little doubt that U.S. sanctions have contributed to the immiseration of Cubans, Iranians, North Koreans, Syrians, Venezuelans and others.

And in The American Conservative, Doug Bandow of the libertarian Cato institute notes: “Sanctions enthusiasts evidently care little about the human cost,” as “economic sanctions most hurt those with the least.” To those who insist that sanctions would work, if only made tough enough, Bandow responds:

That is the excuse given by every advocate of every sanction. If only we were serious about sanctions on Syria, along with Cuba, Venezuela, Iran, North Korea, Russia, China, and a gaggle of other governments, these malefactors long ago would have crumpled, signed surrender terms, and become loyal American protectorates, carrying out Washington’s every command. Democracy would flourish, human rights would reign … Unfortunately, we are still waiting for the promised victories.

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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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