CEPR Sanctions Watch March 2023

March 31, 2023

In this edition of Sanctions Watch, covering March 2023: the World Food Programme fears famine is looming in Afghanistan; senators introduce a bill to end trade embargo on Cuba; Yellen admits sanctions on Iran cause economic suffering and don’t work; North Korea faces worst hunger crisis in years, due in part to sanctions; US looks to isolate Russia by sanctioning China; Obama diplomat decries sanctions on Syria as harmful and ineffective; Biden administration has “no plans” to ease sanctions on Venezuela further; and more.

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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. 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.

While Afghanistan appears to have made it through another harsh winter without as much loss of life as feared, the country remains on the brink of a humanitarian disaster. According to the World Food Programme, a drop in donor funding that followed the Taliban’s announcement of additional restrictions on the rights of women and girls could leave 9 million Afghans without the food aid on which they rely, and push Afghanistan into widespread famine. Meanwhile, seven of Afghanistan’s neighbors called on the United States to help confront the economic crisis by releasing Afghanistan’s central bank assets. Both halves of the effectively frozen funds remain in limbo; despite last month’s court ruling that they could not be used to compensate 9/11 victims, one half is tied up in litigation, and the other remains untouched in the recently created Afghan Fund, which (despite a new website) remains inoperative.

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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 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.

Following a lengthy investigation, US intelligence agencies announced this month that it is “very unlikely” that foreign “adversaries” were responsible for “Havana Syndrome.” Beginning in 2016, media outlets and certain US officials began claiming that reports of US diplomats experiencing symptoms such as headaches and dizziness could be due to coordinated attacks by US adversaries, particularly the Cuban government, possibly using unknown microwave technologies. Though the Cuban government and many independent experts rejected the claims, which were not backed by hard evidence, the Trump administration cited the purported attacks as a partial justification for its decision to shutter the US embassy in Havana and tighten sanctions against Cuba. 

Cuban officials responded to this month’s news by pointing to Cuba’s State Sponsor of Terrorism (SSOT) designation as equally unfounded. In recent months, calls have grown to remove Cuba from the SSOT list, including in a new letter from 20 faith groups — prompting some congressional Republicans to introduce legislation that would strip President Biden of the authority to do so. Pressed on the issue by Florida Republicans during a recent congressional hearing, Secretary of State Antony Blinken said the administration has no immediate plans to end the designation.

Also this month, a bipartisan group of senators — Klobuchar, Moran, Murphy, Marshall, and Warren — introduced legislation to end the US trade embargo on Cuba, citing the benefits of trade not only to the Cuban people, but also to US exporters. While the bill would not end all US sanctions against the island, and is highly unlikely to pass, it is a significant marker of the shifting debate. Similarly, Democratic senators Van Hollen and Wyden, and Republican senator Lummis, sent a letter to President Biden remarking: “The U.S. embargo against Cuba has failed,” and calling for a partial lifting of broad sanctions for the benefit of small, private-sector Cuban businesses.

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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 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. The European Union also maintains certain trade and financial sector sanctions on Iran.

Testifying before Congress this month, US Treasury Secretary Janet Yellen admitted that US sanctions on Iran are both responsible for widespread economic hardship, and ineffective at achieving their stated goals: “Our sanctions on Iran have created real economic crisis in the country, and Iran is greatly suffering economically because of the sanctions … Has that forced a change in behavior? The answer is much less than we would ideally like.” Recent events would appear to corroborate these claims: rapid currency depreciation and high inflation continue to harm everyday Iranians, while the government’s continued uranium enrichment and crackdown on last year’s protests suggest that the sanctions-reliant approach has not worked.

Despite this admission, the US and allies announced a slew of additional sanctions this month. The Biden administration “marked International Women’s Day” by sanctioning Iranian military and law enforcement officials allegedly complicit in the repression of women’s protests. The administration also sanctioned companies in Hong Kong, the UAE, and elsewhere that purportedly facilitate sanctions evasion, and a number of individuals involved in the procurement of materials used to build military drones. Finally, the European Union sanctioned a number of Iranian clerics and officials for alleged involvement in human rights violations, and Canada announced new sanctions on individuals and entities.

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North Korea

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. 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 and its own.

Relations on the Korean peninsula continued their familiar trajectory this month. The United States responded to North Korean weapons tests in February by imposing new sanctions on five companies and individuals that allegedly generate revenue for the North Korean government. North Korea reacted to a summit between South Korean and Japanese leaders with an intercontinental ballistic missile test. And, the US and South Korea launched their largest joint military exercise in over five years, to which North Korea responded with more ballistic missile launches.

Speaking to POLITICO, former Obama administration official Van Jackson criticized the Biden administration’s failure to change an evidently unsuccessful strategy: “North Korea is as obstinate as ever, but you can’t separate that from the fact that Biden’s guys have gone out of their way to not even try do something meaningful anyway.” Stimson Center expert Jenny Town added: “We don’t have a real strategy for getting North Korea back to the table, and expecting them to simply stop when the rest of the region is arming up is not realistic.”

Meanwhile, though exact details are hazy, North Korea is reportedly experiencing its worst food shortage in decades — the product, analysts say, of a combination of natural disasters, government-imposed isolation following COVID-19, and decades of economic isolation imposed externally via unilateral and multilateral sanctions.

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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 G7 is reportedly postponing a scheduled review of the price cap on seaborne Russian crude oil that was set at $60 per barrel in December. While analysts disagree on the extent to which this, and a second cap imposed in February, have affected Russia’s revenue, the International Energy Agency reports that Russia’s oil export revenue fell by nearly 20 percent in February. Russia’s economy has proven resilient thus far; an expansion of trade in Asia may partially compensate for the effects of sanctions.

The European Union, meanwhile, threatened new sanctions against Belarus in response to Russian plans to station nuclear weapons in the country, but President Putin announced that the plans would move ahead regardless.

As the United States looks for ways to deepen Russia’s isolation, China is quickly getting entangled in the expanding sanctions regime. Earlier this month, the Biden administration sanctioned five private Chinese companies for allegedly supplying aerospace components to Iran, which were used to produce drones that were then exported to Russia for use in Ukraine. This may be an indication of more to come, as the United States is reportedly speaking with allies to plan for extensive new sanctions against China were it to provide Russia with direct military aid for the war in Ukraine. The Chinese government denies any intention of doing so. Expanding sanctions against China, critics warn, could aggravate an already fraught relationship, and would only serve to drive China and Russia closer together.

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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.

Humanitarian efforts in Syria continued this month in response to February’s devastating earthquake. While the Biden administration eased US sanctions following a public outcry, export controls may still be undermining humanitarian action, and debates over the extent and timeframe of Biden’s general license permitting humanitarian aid continue. Meanwhile, former Obama administration ambassador to Syria Robert Ford condemned US sanctions policy toward Syria in general: “First, the sanctions are not delivering political concessions from Bashar al-Assad. And then the second thing I would say is, it’s disingenuous for those who justify the sanctions to say that they don’t harm ordinary Syrians living in government-controlled territories. They obviously do. All I can say is we’re inflicting pain without getting much for it.”

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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 sanctions 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.

A senior State Department official remarked this month that — following recent, incremental changes in US policy toward Venezuela, such as the granting of a limited oil export license to Chevron — the Biden administration “categorically” has no plans to ease sanctions further. The comment came just days after the Biden administration announced the extension of the US national emergency with respect to Venezuela. Most US sanctions on Venezuela derive their authority from this emergency declaration, which claims that the political situation in Venezuela poses “an unusual and extraordinary threat to the national security” of the United States — an assertion that critics dispute as baseless.

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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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