CEPR Sanctions Watch, May-June 2022

07/08/2022 11:30am

Economic sanctions have become one of the main tools of US foreign policy, despite little proof of their efficacy, and widespread evidence that they often target civilian populations, with lethal and devastating effects. Though now a key part of US policy-making, and a defining feature of the global economic order, sanctions, and their human costs, as well as violations of treaties to which the United States is a signatory, receive relatively little attention in most US media outlets.

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

Afghanistan
Cuba
Iran
North Korea
Russia
Venezuela
Other

Afghanistan

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 US. Along with sanctions on government officials and a cutoff of aid, this has contributed to a severe collapse of Afghanistan’s economy.

Almost 10 million children are going hungry in Afghanistan, according to a new report by Save the Children. The United Nations reports that nearly 20 million Afghans — about half the population — face acute food insecurity. Adding to the scale of the tragedy, some 1,000 people died this June when a 5.9 magnitude earthquake hit the southeastern part of the country. Though winter is over, the dire economic and humanitarian catastrophe continues, driven in large part by the ongoing effective freezing of the Afghan central bank’s foreign reserves.

Earlier this year, the Biden administration set aside $3.5 billion of these reserves for potential compensation in lawsuits brought by the families of victims of the September 11 attacks. In May, Afghan diplomats, diaspora organizations, and women’s rights groups filed amicus briefs urging the courts to reject diverting the funds for this purpose, arguing that it is illegal and immoral to seize resources that rightfully belong to the people of Afghanistan as punishment for a crime for which they bear no responsibility. Many families of the victims of the September 11 attacks have, in fact, called for the funds to be returned to the Afghan people in full.

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Cuba

The US embargo of Cuba is one of the oldest and strictest of all US sanctions regimes, prohibiting nearly all trade, travel, and financial transactions 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.

The Biden administration announced in May that it would take steps toward easing certain economic restrictions on Cuba, including removing a cap on family remittances, loosening a ban on nonfamily remittances, easing group travel restrictions, allowing more flights by US carriers (including to cities other than Havana), processing more US visas for Cubans, and reinstating a family reunification program. 

These are long awaited steps in the right direction for the Biden administration, but fall short of a full return to Obama-era policies. These actions come as Cuba faces one of its worst economic crises in decades — a situation greatly exacerbated by the US embargo — and as Cuban migrants arrive at the US-Mexico border in record numbers.

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Iran

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 unilateral withdrawal.

In a visit to Iran in May, the UN special rapporteur on unilateral coercive measures, Alena Douhan, reported: “sanctions have been substantially exacerbating the humanitarian situation in Iran.” Food production and access to pharmaceuticals, in particular, have been undermined, with those suffering from “severe diseases, disabled people, Afghan refugees, women-led households, and children” bearing the greatest burden.

Negotiations for a return to the nuclear deal, which would entail some sanctions relief, meanwhile, remain at a stalemate — with yet another round of discussion having concluded without progress just last week. One sticking point, according to reports, are the sanctions targeting Iran’s Islamic Revolutionary Guard Corps. Following the failure of the talks to make progress, the US imposed a fresh round of sanctions targeting Iran’s oil sector just this week.

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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, the US, EU, and others added more stringent sanctions, which have periodically intensified since. Sanctions now target oil imports, and cover most finance and trade, and the country’s key minerals sector.

After more than two years, North Korea announced its first confirmed COVID-19 case in May. For a country with no vaccinations or antivirals, an inadequate health care system, and an already fragile economy — resulting, in part, from decades of suffocating sanctions — many feared an outbreak would prove catastrophic. Fortunately, despite millions of cases, the government reports few deaths so far — though the exact figures are disputed.

The United States did not respond to this potential disaster with sanctions relief. Quite the contrary, in May, the Biden administration pushed for new UN fuel sanctions on North Korea in response to ballistic missile tests, but China blocked the proposal. As the possibility of new North Korea nuclear tests grows, the US may again push for new sanctions — but given the severity of current restrictions, there may be little of value left to sanction.

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Russia

US-imposed sanctions on Russia targeting the financial, energy, and defense sectors began in 2014 after the annexation of Crimea. This regime was expanded, particularly by the US, UK, and EU, in response to the 2022 invasion of Ukraine, by barring most financial transactions, oil and gas imports, and other activities.

Broad economic sanctions levied on Russia in response to the invasion of Ukraine continue to have global repercussions. “Sanctions imposed on Russia, a major oil and gas exporter,” reports The New York Times, “have constrained the supply of energy, sending prices skyward and limiting economic growth, especially in countries heavily dependent on imports,” and contributing to a “perfect storm” of economic and humanitarian crises facing some of the world’s poorest countries. 

These repercussions extend even to the US, leaving some Biden administration officials reportedly worried that the sanctions are “exacerbating inflation, worsening food insecurity and punishing ordinary Russians more than Putin or his allies.” While financial sanctions have now succeeded in pushing Russia into debt default, the ruble recently hit a seven-year high against the US dollar, and there is little evidence that the punishment has translated into progress toward the goal of dissuading the ongoing invasion. Despite this, as G7 leaders met in Germany, they announced a slew of new sanctions commitments. 

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Venezuela

US sanctions on Venezuela began under the Obama administration, and were expanded significantly under Trump, including broad financial sanctions targeting the state oil company and sanctions targeting Venezuelan oil exports, all of which have contributed to the country’s economic collapse. President Biden has yet to reverse these measures.

The Biden administration announced this May that it would allow Chevron — the major US oil operator in Venezuela — to negotiate directly with Venezuela’s state-owned oil company, but not (yet) to drill or export Venezuelan oil. The move is likely motivated in part by a desire to access oil amid energy disruptions caused by economic sanctions on Russia. It’s a minor step — with further easing reportedly contingent on resumed negotiations between the Maduro government and the opposition — but in the right direction.

This announcement came just days after 18 House Democrats sent a letter to President Biden calling for continued diplomatic engagement with the Venezuelan government, and the lifting of broad economic sanctions which they described as having “failed to achieve their aims” and “[exacerbating] the humanitarian situation in the country.” Weeks later, the administration also announced the lifting of sanctions on former national treasurer Carlos Erik Malpica Flores. 

Last week, two high-ranking members of the Biden administration visited Caracas to meet with officials from the Maduro government for the second time this year.  The visit focused on attempts to obtain the release of American citizens detained in Venezuela, including a former Marine accused of plotting attacks on the country’s electricity grid, and restarting negotiations between the Maduro government and opposition

Finally, a new working paper by CEPR Visiting Senior Economist Francisco Rodríguez finds that Venezuela’s hunger crisis was caused primarily by the collapse of the country’s import capacity — itself driven largely by sanctions. The paper also finds that the government’s food aid program was critical in mitigating the severity of the crisis.

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Other 

US sanctions target and affect a number of countries beyond those listed above, including but not limited to Belarus, Syria, and Zimbabwe. Below you will find additional resources related to these sanctioned countries, and to US sanctions policy in general:

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