December 07, 2022
In this edition of CEPR Sanctions Watch: the Afghan Fund meets, but relief for Afghanistan remains far as winter draws near; the UN General Assembly condemns the US embargo against Cuba by a vote of 185 to 2; Biden appears to revert to Trump’s “maximum pressure” strategy in Iran; sanctions against North Korea have “abjectly failed,” per Reuters; the EU negotiates terms of Russia oil ban; Biden eases oil sanctions against Venezuela; and more.
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. Around $2 billion in additional reserves have been blocked by European authorities. Along with a cutoff of aid and sanctions on Taliban officials, this has contributed to a collapse of Afghanistan’s economy.
The board of the Afghan Fund — the trust to which the Biden administration has transferred half of Afghanistan’s frozen central bank reserves — met for the first time in Switzerland in November. They agreed to the establishment of an advisory committee and the recruitment of an executive secretary, among other things. While these are minor steps toward operationalization, it has now been three months since the fund was announced, and basic questions about the fund remain: what exactly are the criteria for the eventual release of funds to the Central Bank, who will determine whether these criteria are met, and how will the administration of the trust itself be funded, to name a few. The other $3.5 billion remains effectively frozen for potential compensation in a lawsuit involving some families of 9/11 victims. While a federal magistrate recommended against their use as compensation in August, a final decision has yet to be made.
In the meantime, despite the transitory benefits of a long-awaited delivery of afghani banknotes that had been held up out of fear of violating US sanctions, the economic and humanitarian outlook in Afghanistan remains dire. The World Food Programme reports that 90 percent of Afghans don’t have enough food, warning, “Last winter was difficult, but we have no idea how we will get through the coming winter.” Some Afghan parents have even resorted to medically sedating their hungry children to allow them to sleep through the night. According to NPR, few Afghans see the Taliban government as the primary culprit in the nation’s economic collapse, with most of those interviewed blaming international economic restrictions instead.
- How Afghanistan’s Money Exchangers Have Worked Around the Taliban, Foreign Policy
- October Quarterly Report, Special Inspector General for Afghanistan Reconstruction
- Regional Nations Urge US to Unfreeze Afghan Assets, Voice of America
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 again tightened under Trump — a policy the Biden administration has, for the most part, failed to reverse.
The UN General Assembly voted nearly unanimously in November to condemn the US embargo of Cuba. The resolution, which was approved by a vote of 185-2, describes the economic, commercial, and financial embargo as a violation of national sovereignty and international law, and calls for its elimination. This is the 30th time such a vote has taken place in 30 years, and in that time, only 9 countries have ever opposed the resolution: the United States and Israel (29 times, abstaining in 2016), the Marshall Islands (8 times), Palau (7 times), Uzbekistan (3 times), and Brazil, Albania, Paraguay, and Romania (1 time). These resolutions have become annual reminders of just how deeply unpopular the embargo is across nearly the entire international community.
The week following passage of the UN resolution saw another challenge to the embargo status quo: midterm election results. While the much-predicted “red wave” failed to materialize, Florida was a notable exception, prompting many to suggest that it’s time for Democrats to stop allowing their policies toward Cuba and Venezuela to be held hostage by a hard-line Miami constituency that seems uninterested in rewarding them for it. Since that time, Biden administration officials met with their counterparts in Havana to discuss migration from Cuba, and a bipartisan congressional delegation visited to discuss US agricultural exports to the country — a key point of contention in US sanctions policy. In the meantime, however, Cuba’s economy continues to suffer: this month, the nation cut its 2022 growth forecast in half amid continued power outages and food, fuel, and medicine shortages.
- Florida Is No Longer a Swing State. That’s Good News for U.S. Foreign Policy., The Washington Post
- Why the Hell Haven’t We Ended the Cuba Embargo Already?, The Daily Beast
- Cuba, U.S. to Hold Second Round of Migration Talks in Havana, Reuters
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 United States’ withdrawal. The European Union also maintains certain trade and financial sector sanctions on Iran.
Mass protests sparked by the killing of Mahsa Amini continued in Iran in November, as did repression of the protests — Iranian state officials acknowledged that over 300 had been killed in the unrest. The Biden administration has responded to the demonstrations by incrementally imposing additional sanctions, including against security officials and senior employees at the state media corporation. Unrelated to the protests, the administration also announced sanctions targeting entities accused of helping supply Russia with drones, and Dubai- and Hong Kong-based companies accused of trading with Iran in violation of oil sanctions. The European Union and Canada have followed suit, sanctioning senior officials in response to both the protest crackdown and the alleged drone sales.
While these latest sanctions are not particularly significant when measured against the entire existing sanctions regime targeting Iran, they are signs that the Biden administration and allies are turning away from a more diplomacy-centered approach and toward a full embrace of the Trump-era maximum pressure approach. US Special Envoy for Iran Robert Malley now says that the administration has no immediate plans to “waste time” on negotiations for a return to the Iran nuclear deal. If the intent of this more hostile approach is, indeed, to help the Iranian people, critics argue it is likely to backfire, deepening the economic woes that impact everyday Iranians while giving government hardliners an external foe to blame for dissent.
- Protests in Iran Make Restoring the JCPOA More Urgent Than Ever, Responsible Statecraft
- Solidarity With Iranians Starts With Bringing an End to US Sanctions, Truthout
- Iranian American Arrested on Charges of Sanctions Violations, Voice of America
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 and 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.
Though a much-anticipated seventh North Korean nuclear test has so far failed to materialize, the possibility remains, and tensions continue to simmer. North Korean leader Kim Jong Un expressed his desire to build “the world’s most powerful” nuclear force this month following the country’s latest tests of major new intercontinental ballistic missiles. South Korean president Yoon Suk Yeol reacted to the tests with warnings of an “unprecedented” response, including additional sanctions. The US government called an emergency UN Security Council meeting to condemn the tests, but new UNSC measures were opposed by Russia and China, both of which contend that US measures — such as unilateral sanctions and joint military exercises with South Korea — are partially to blame for mutual escalation.
Against the backdrop of this apparent acceleration of the North Korean weapons program, one former US diplomat who worked on US sanctions policy toward both North Korea and Iran told Reuters, “We’ve had a policy failure. It’s a generational policy failure … now we have to go to the next step, figure out what we do about it.” A Reuters Asia correspondent agreed, asserting: “Economic sanctions, the primary means the United States has used for years to try to exert pressure on North Korea, have abjectly failed to halt its nuclear and missile programs or to bring the reclusive northeast Asian state back to the negotiating table.”
- Analysis: Sanctions Fail to Halt North Korea’s Accelerating Weapons Programs, Reuters
- US, Allies Clash with Russia, China over North Korea Tests, AP
- South Korea to Review Unilateral Cyber Sanctions if North Korea Tests Nuke, NK New
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, Russian oil and gas imports, and freezing of Russian assets abroad, among other measures.
By the end of November, European countries had failed to finalize the details of the planned price cap on Russian oil agreed to in October. Key sticking points in the negotiations included the exact level at which to set the cap, and whether to tie implementation of the price caps to an additional round of sanctions — what would be the EU’s ninth package. Poland, Lithuania, and Estonia had pushed for a more restrictive cap, while G7 countries and those with greater ties to the oil shipping industry like Greece prefer a higher cap that would be less disruptive of global prices. The deadline for an agreement was December 5, when the EU ban on seaborne crude imports was set to go into effect. Russian shipments to the EU were already down 90 percent prior to the deadline, and the global economic reverberations of the policy, particularly as winter sets in, remain to be seen. [At the time of publication, the price cap had been agreed to and put into effect at $60 per barrel.]
Also in November, the Biden administration announced new secondary sanctions aimed at “a range of entities including French real estate companies, a group of Swiss nationals and a Taiwanese microelectronic component purchaser … accused of being financial facilitators or enablers of Russia’s military supply chain.”
- What Price Is Right? Why Capping Russian Oil Is Complicated., The New York Times
- Is Washington Learning Its Lesson on Sanctions Policy?, The New Republic
- Western Sanctions Catch Up with Russia’s Wartime Economy, The Washington Post
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 the country’s economy. In addition, the United States, the United Kingdom, and some other governments have frozen Venezuelan state assets abroad, and transferred others to Venezuelan opposition actors.
The Venezuelan government and opposition leaders reached a deal in Mexico City in November, marking an easing of the long political stalemate. The agreement pertains primarily to over $3 billion in Venezuelan state funds that had been frozen as a result of US sanctions, and calls on the United Nations to establish and administer a fund to use the resources for humanitarian relief. While the sum is substantial — equal to a year’s worth of food and medicine imports at current levels — and may have a meaningful humanitarian impact, the deal arguably represents a significant weakening of Venezuelan sovereignty. Similar to the US government’s seizure and transfer of Afghan central bank assets, the Venezuelan government has had to relinquish control over billions in state-owned assets that were seized unilaterally. Unlike Afghanistan, however, the Venezuelan government has agreed to the transfer of these assets, albeit under the pressure of far-reaching US sanctions.
The Biden administration responded to the talks by granting Chevron Corporation a six-month license to produce Venezuelan crude oil and export it to the United States. If maintained, the license could allow Venezuela to increase its oil production by 200,000 barrels per day, from the current 765,000, within two years — a significant improvement, but a far cry from the nearly two million barrels per day before sanctions were imposed by the Trump administration in 2017. Given the time-bound, conditioned, and limited nature of the license, economist Francisco Rodríguez considers the move only “a minor step in the recovery of market access,” insufficient to actually allowing the country to recover its oil exports and economic independence. As such, the significance of the license may primarily be as a precedent.
- To Halt the Venezuelan Migration Crisis, Stop Banning Venezuelan Oil, Foreign Policy
- Argentinian President Alberto Fernández: Trump’s Sanctions on Venezuela ‘Were Really Brutal’, France 24
- Venezuelan Gov’t and Opposition Sign ‘Social Agreement’, US Approves Chevron License, Venezuelanalysis
US sanctions target and affect a number of countries beyond those listed above, including but not limited to Belarus, Myanmar, Nicaragua, Syria, and Zimbabwe.
UN Special Rapporteur on unilateral coercive measures and human rights Alena Douhan called for the lifting of economic sanctions on Syria this month, following a visit to the country. “With more than half of the vital infrastructure either completely destroyed or severely damaged, the imposition of unilateral sanctions on key economic sectors, including oil, gas, electricity, trade, construction and engineering have quashed national income, and undermine efforts towards economic recovery and reconstruction,” she reported. “In the current dramatic and still-deteriorating humanitarian situation as 12 million Syrians grapple with food insecurity, I urge the immediate lifting of all unilateral sanctions that severely harm human rights and prevent any efforts for early recovery, rebuilding and reconstruction.”
- Is Washington Learning Its Lesson on Sanctions Policy?, The New Republic
- Biden’s New Cold War Against China Could Backfire, New York Magazine
- U.S., Canada Sanction Haitian Politicians, Accuse of Gang Ties, Reuters
- US, EU Add More Sanctions as Myanmar Violence Deepens, Al Jazeera
- Expanding U.S. Sanctions Authorities and Announcement of Visa Restrictions for Nicaraguan Officials, US Department of State
About CEPR Sanctions Watch
Economic sanctions have become one of the main tools of US foreign policy despite little proof of their efficacy, and 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 — including, in some cases, mass fatalities — receive relatively little attention in most US media outlets.
CEPR Sanctions Watch aims to help generate more awareness on the use and impact of sanctions with regular updates on US sanctions policy and its harmful impacts on people around the world. Click here to see past editions of CEPR Sanctions Watch.