What’s new? Sanctions have become an increasingly prominent tool of U.S. statecraft. As the use of sanctions has increased, so, too, has awareness of their collateral effects. The U.S. government has adopted new policies to mitigate the problems sanctions can cause. While important, these reforms are incomplete.
Why does it matter? While the U.S. looks to sanctions to further its goals in numerous conflicts, sanctions also sometimes obstruct peacemaking – that is, activities in the service of violence prevention and conflict resolution. The more Washington uses sanctions, the more far-reaching the downsides are and the more pressing it is to address them.
What should be done? The U.S. government should better align sanctions policy with peacemaking efforts. It could do so by setting clear objectives for sanctions programs, subjecting them to rigorous periodic review, expanding and making permanent carveouts for peace activities, and addressing private-sector concerns about investment in previously sanctioned jurisdictions.
Executive Summary
The U.S. is using sanctions with greater frequency than ever before. Sanctions are an increasingly prominent tool of U.S. policy in matters of war and peace – whether used to constrain conflict actors’ resources, address their abuses, change their cost-benefit calculations or advance negotiations. Yet sanctions sometimes hinder conflict resolution efforts. They can inhibit peace processes and post-conflict recovery, constrain peace organisations, undercut negotiations and entrench divisions between conflict parties. These downsides are a function of U.S. sanctions’ intractability and increasing complexity, as well as the lack of protocols for assessing their impact. The U.S. has taken steps in recent years toward reforming sanctions practices, but gaps remain when it comes to addressing the negative effects of sanctions on peace efforts. To address these shortfalls, Washington should set clear objectives when imposing sanctions; conduct regular, meaningful reviews of their effects; expand sanctions carveouts for peacemaking; and bolster private-sector confidence in investing in previously or partially sanctioned jurisdictions.
Washington’s use of economic sanctions expanded greatly following the Cold War, intensifying again in the early and mid-2000s following the attacks of 11 September 2001. While the U.S. generally preferred to impose sanctions multilaterally (ideally within a framework created by the UN Security Council), it sometimes proceeded unilaterally. The centrality of the U.S. financial system and the U.S. dollar in global finance and trade gave Washington’s sanctions unique reach and leverage. Innovations in sanctions practice allowed policymakers more precision in applying them.
Against this backdrop, the use of sanctions ballooned. Washington looked to sanctions to pursue its struggles with foes such as North Korea, Iran and antagonists in the war on terror, as well as to press other agendas in the peace and security realm. It relied on sanctions to restrict conflict parties’ ability to acquire and use weapons and resources, hold them accountable for corruption and human rights abuses, raise the cost of destabilising behaviour, and encourage negotiations. U.S. policymakers tended to view sanctions as a low-risk tool – especially compared with military options – and some saw it as a release valve that helped reduce the pressure to resort to force.
As U.S. sanctions proliferated, however, so did concerns about their collateral effects. In the realm of conflict resolution, practitioners – including scholars, members of civil society and U.S. officials – saw evidence of sanctions compromising peace efforts. They sometimes undercut peace negotiations, particularly when conflict parties came to doubt that the U.S. would ever reverse them. They could prove stubbornly intractable, even after conflicts came to an end, and cast a shadow over political transitions, humanitarian operations and stabilisation efforts. They complicated the work of organisations trying to reconcile populations divided by conflict and help former belligerents find their footing in the post-conflict order. The U.S. Treasury authorised the activities of these organisations in certain cases, but these permissions did not fully set things right, in part because its licensing powers did not reach the full range of U.S. sanctions. Also, even when legal constraints were addressed, private companies and NGOs worried about reputational risks and compliance costs.
The reasons why sanctions pose obstacles to peace efforts are multi-faceted, but three main problems stand out. First, U.S. sanctions are sticky: they are hard to change, ease or lift because of domestic politics and bureaucratic inertia. In particular, the political pressures surrounding decisions to ease or rescind sanctions mean that presidents may be loath to incur the costs that such decisions may entail, including fear of alienating members of Congress whose support they need to advance other priorities. Secondly, Washington has no system for comprehensively assessing sanctions’ harms or effectiveness – and thus the U.S. cannot gauge whether they are helping or hurting efforts to achieve the peace and security goals in whose name they have been launched. Thirdly, as sanctions have proliferated, they have become increasingly complex, making them hard to disentangle or reform. Sanctions have become less likely to sway conflict parties, who have no faith that the penalties will be lifted – or the effects alleviated – if they make concessions.
The Biden administration has taken landmark steps to address some of these problems. It commissioned a review of U.S. sanctions policy; co-sponsored a resolution at the UN Security Council to create a carveout for humanitarian activities in some Council sanctions; and through the Treasury Department issued general licences that implemented and expanded on these carveouts – broadening them to cover peacebuilding, conflict resolution and conflict prevention activities in a raft of sanctions programs. But despite these positive steps, the reforms remain incomplete. Meanwhile, the Biden administration shows no sign of taking its foot off the gas when it comes to imposing new sanctions. It has designated far more targets than its predecessors, and massive sanctions form a major part of its response to Russia’s all-out invasion of Ukraine.
Economic sanctions remain an important tool of U.S. foreign policy – one that Crisis Group has supported in many instances (including the Ukraine crisis) – but they are also a highly imperfect instrument that requires further adaptation. More work should be done to understand and mitigate the negative effects that sanctions can have on peacemaking. In particular, the U.S. government should:
- Make it a practice to more precisely clarify which foreign policy objectives sanctions are intended to achieve, what behaviour prompted the sanctions and what targets can do to be considered for removal from the sanctions list. Doing so would bolster Washington’s ability to use sanctions as leverage over conflict parties, including during negotiations, in turn allowing officials to use them more effectively as part of conflict resolution and mitigation strategies.
- Institute systems for meaningfully reviewing sanctions’ performance, including their impact on peacemaking, and recalibrating them as needed. Reviews, informed by clearly defined objectives, would afford policymakers an opportunity to gauge whether sanctions are achieving their goals, so that they have a better sense of when to adjust or wind them down.
- Expand sanctions carveouts and codify them in legislation so that peacemaking activities are comprehensively and permanently permitted. Doing so will facilitate the work of peace organisations in conflict-affected countries.
- Better address private sector reluctance to pursue licensed or otherwise permitted transactions in sanctioned or previously sanctioned countries. This may require the U.S. to conduct deeper outreach and provide stronger assurances to private sector actors so that they are comfortable pursuing authorised activities, and to offer greater support for economic regeneration in previously sanctioned countries.
After decades of relying on sanctions, U.S. policymakers have shown an important interest in the reforms that will make them more effective while managing their downsides. But much more needs to be done. Serious measures to modify the way sanctions are assessed, calibrated and removed – and their after-effects addressed – will be needed in order to put this powerful tool to best use in the service of peace and security.
Washington/Brussels, 28 August 2023
The Reach of U.S. Sanctions
I.Introduction
Today, sanctions are an integral part of Washington’s foreign policy toolkit, used in more settings and at a higher frequency than ever before.1 The U.S. looks to sanctions to help it achieve its national security goals in numerous conflicts, and it employs them to shape the behaviour of states, armed groups, companies and individuals around the world.2 Today, U.S. sanctions are used to address, among other things, human rights violations, corruption, attempts to undermine democracy, peace process spoiling, drug trafficking, illicit trade in natural resources, piracy, weapons proliferation and a dizzying array of other conduct. Sometimes, sanctions programs are intended to serve multiple aims, which evolve over time, and in many cases, individuals, entities and organisations can be sanctioned for more than one reason.3 While sanctions can be useful in certain circumstances, they have downsides, too, with particular implications for peace and security.
As the use of sanctions has increased, U.S. officials have grown more aware of their costs and taken steps to mitigate them. These include a recent review conducted by the U.S. Treasury Department, which articulated a framework to guide future policy, and an uptick in the issuance of licences and guidance documents aimed at mitigating sanctions’ adverse effects.4 Notably, at the end of 2022, the U.S. championed a landmark UN Security Council resolution that established a humanitarian carveout from certain Council sanctions. Soon thereafter, the U.S. Treasury promulgated a series of general licences that not only implemented the Council’s humanitarian carveout in Treasury-administered sanctions programs but also authorised carveouts from those programs for peacebuilding, conflict resolution and conflict prevention activities.5 Yet with U.S. sanctions policy seemingly on a one-way track toward greater use, there is more to be done in understanding and alleviating the effects that sanctions have on U.S. and other peacemaking efforts.6
This report seeks to map the growth of sanctions as a U.S. policy tool in the peace and security realm since the end of the Cold War, as well as to offer suggestions for managing their negative effects. It first explores the main goals of U.S. officials applying sanctions in conflicts and then outlines the primary ways in which experts and practitioners see sanctions as backfiring in those settings.
This report does not seek to reprise the full sweep of arguments attacking and defending the legitimacy and effectiveness of sanctions, which are set forth in an extensive literature.7 Rather it seeks to chronicle their impact on peace and security efforts – both positive and negative – drawing from Crisis Group’s interviews with officials and experts who either found sanctions useful to their work or found their work impeded by them. Giving weight to both perspectives, the report offers recommendations for how the United States and its partners might begin to construct a more tailored sanctions policy that better manages the costs and risks of the sanctions tool as they relate to peacemaking.
The report is based on hundreds of interviews with current and former U.S. officials, diplomats, practitioners, experts, civil society representatives, conflict parties, lawyers, financial service providers and others from February 2020 to August 2023. Interviews were conducted in Ankara, Bogotá, Brussels, Caracas, Dubai, Geneva, Harare, Idlib, Istanbul, Kabul, Kinshasa, London, Mogadishu, New York, Tripoli, Tunis, Washington and elsewhere. The report also draws upon Crisis Group’s prior writings that discuss the application of U.S. and multilateral sanctions amid armed conflicts or in the furtherance of conflict prevention.8
The View from Washington: Why the U.S. Uses Sanctions
Washington’s use of sanctions has grown dramatically since the collapse of the Soviet Union. While East-West tensions kept the UN Security Council from agreeing to more than a handful of multilateral sanctions regimes during the Cold War, that changed once it ended. Sanctions became a prominent multilateral tool for managing peace and security issues around the world in the 1990s, and the U.S. and others ramped them up following the attacks of 11 September 2001, including as a means of countering al-Qaeda and other terrorist organisations. Although the U.S. preferred to apply sanctions through multilateral structures, it sometimes levied them unilaterally or with select partners, especially after growing major-power rivalry diminished cooperation at the Security Council. At present, U.S. reliance on sanctions is only increasing. Sanctions have been a cornerstone of the Western response to Russia’s all-out invasion of Ukraine and a key component of U.S. national security efforts elsewhere.
A. An Evolving Tool
Legal and practical changes over the course of the last century made the expanded use of sanctions possible. The UN Charter adopted in 1945 reformed the international legal system, enabling the UN Security Council to mandate sanctions that might previously have been understood as a violation of neutrality and an act of war.9 While divisions among the veto-wielding members of the Security Council chilled the use of sanctions and other collective response tools for much of the Cold War, that changed with the collapse of the Soviet Union. The Cold War’s end ushered in a period of relative cooperation among the major powers on addressing peace and security crises around the world. During the 1990s, the UN levied sanctions on Iraq, the former Yugoslavia, Libya, Liberia, Somalia, parts of Cambodia, Haiti, parts of Angola, Rwanda, Sudan, Sierra Leone and Afghanistan. Prior to this spate of actions, the UN had only applied sanctions twice, to Rhodesia and South Africa.10
Some of the sanctions imposed by the UN in the 1990s were narrow in scope, such as travel bans, while others were broad, consisting of comprehensive economic measures directed at entire countries. For example, the blanket sanctions on Iraq imposed in 1990 banned the import and export of all commodities and resources to or from the country. But reports of their devastating collateral impact on the civilian population, including spikes in hunger, malnutrition and disease, made policymakers wary of comprehensive sanctions and increasingly favourable to targeted (rather than jurisdiction-wide) measures.11 These “smart” sanctions were designed to pressure select individuals and groups or to rein in specific activities while minimising damage to whole populations.12
These innovations galvanised policymakers to levy sanctions at a higher tempo at the beginning of the twenty-first century. In the wake of the 9/11 attacks, the U.S. pressed for a massive economic and financial response alongside its military efforts. It was a key proponent of applying sanctions under UN Security Council Resolution 1267 (1999) to al-Qaeda and Taliban members and affiliates, while also pioneering other tools intended to constrain financial and other support for terrorists and others posing threats at home or to U.S. interests abroad.13
Although the U.S. preferred to work multilaterally to maximise sanctions’ impact, it did not do so exclusively, and nor did it have to for its sanctions to bite. The U.S. dollar’s position both as the main currency of international trade and as a store of value, along with the central role of U.S. financial institutions in global commerce, gave Washington unique unilateral capacity to inflict pain on its adversaries with economic weapons. These advantages also helped the U.S. deter financial institutions, corporations and individuals in other countries from doing business with sanctions targets. The threat of being cut off from U.S. markets, and of large fines for violations, compelled compliance – and sometimes over-compliance – in the private sector.14 In the late 2000s and early 2010s, the U.S. harnessed its financial dominance to restrict funds for North Korea’s nuclear activities and later to push Iran out of the global financial system, both times buttressing multilateral sanctions with even more robust unilateral measures.15 Presidents most commonly used the International Emergency Economic Powers Act (IEEPA) to issue sanctions, but they also employed other legal authorities described in Appendix A.
As Washington’s militarised counter-terrorism and related counter-insurgency efforts known as the “global war on terror” continued into their second decade, policymakers became increasingly wary of the costs of heavy military engagements. But they still tended to view sanctions as a muscular but low-cost and low-risk means of crisis management. Some framed sanctions as an alternative to war: a way to demonstrate forcefulness without using actual force and perhaps something of a release valve when pressure to turn to the military was heightening.16 Certain officials in the Obama administration worried about their overuse – expressing concerns that they sometimes masked under-developed foreign policies or insufficiently articulated strategies for achieving their stated objectives. Some also fretted that overusing sanctions could provoke a flight from the dollar as a reserve currency and medium of exchange. Yet this apprehension did not result in a trend toward sanctions restraint.17
Nor did such cautious instincts survive into the Trump administration. President Donald Trump launched “maximum pressure” campaigns that combined sabre rattling with sanctions to pursue non-proliferation and political goals in North Korea and Iran as well as to press for regime change in Venezuela. In some cases (Venezuela and North Korea), Trump’s White House worked with allies, and in others (Iran) against them, including by ramping up “secondary sanctions”, an especially aggressive sanctions approach that threatens non-U.S. parties with severe penalties if they engage in transactions with parties disfavoured by the U.S. – even if those transactions have no U.S. touchpoint whatsoever.18 Secondary sanctions essentially force third parties to choose between trading with the U.S. or with parties it does not like.
The Trump White House was widely seen as using sanctions to curry favour with political constituencies, such as Venezuelan émigrés in the electorally significant state of Florida.19 The Trump administration was also criticised for issuing sanctions without thinking through the foreign policy strategies they were meant to further and without evincing concern for the human costs.20 For example, in the administration’s final weeks, it designated Yemen’s Huthi insurgents as a Foreign Terrorist Organization (FTO) – a move that Crisis Group and others criticised as unlikely to be effective as a means of pressuring the Huthis while almost certainly imperilling aid workers’ efforts to address one of the world’s worst humanitarian emergencies.21 Washington insiders said the move was part of an attempt to score a political “win” – one embraced by Saudi officials close to the president’s team – before leaving office, while setting a course that the incoming Biden administration would find politically challenging to reverse.22
Conscious of the Trump administration’s heavy-handedness, and aware of increasing pushback against unilateral sanctions not only from rivals such as Russia and China but also from allies such as European Union members (especially with regard to Iran and Cuba sanctions), the Biden administration came into office prepared to consider changes in approach.23 Some of Biden’s changes reflected a desire to go in a different direction than Trump on matters of foreign policy. For example, in one of his first foreign policy acts in the White House, President Joe Biden reversed the Huthi FTO designation, which – in addition to addressing the listing’s humanitarian and diplomatic fallout – was part of a broader reorientation of U.S. Yemen strategy.24 The president also began negotiations to rejoin the 2015 Iran nuclear agreement, from which his predecessor had withdrawn, and considered scaling back sanctions in exchange for Iranian commitments.25 Closer to home, he eased Venezuela sanctions and promised additional relief to sweeten the prospect of negotiations for Caracas.26
But the new administration also showed interest in taking a more measured approach to sanctions policy in general. President Biden appointed officials who had written extensively and sometimes critically on sanctions’ effectiveness and reform to senior positions.27 These new officials were familiar with the “best practice” considerations that outside experts had long espoused as key to sanctions’ effectiveness. Broadly speaking, these include setting realistic expectations for what sanctions can achieve; ensuring that sanctions are part of a well-defined and communicated policy rather than an end in themselves; establishing clear requirements for sanctions easing so that targets have a motive to change their behaviour – and, relatedly, lifting sanctions when aims are achieved; imposing sanctions multilaterally where possible; and taking steps to mitigate their humanitarian and other collateral effects.28 Indeed, several Biden appointees had led the research from which these guidelines emerged before joining government.29
The administration’s Treasury Department led a review of U.S. sanctions policy that highlighted many of the same concepts.30 Members of President Biden’s cabinet – including his Treasury secretary, Janet Yellen, who had committed to the sanctions review in her confirmation hearing – also put into effect important reforms.31 The most significant of these were the aforementioned UN Security Council humanitarian carveout (which the U.S. championed) and the issuance of even wider-ranging general licences for certain sanctions administered by Treasury’s Office of Foreign Assets Control (OFAC), which represented an historic step forward in the trajectory of sanctions reform.32 But as discussed below, these reforms are far from comprehensive – and do not mitigate sanctions’ negative impact on peacemaking.
Meanwhile, notwithstanding increased attention to sanctions’ undesired consequences, U.S. reliance on economic sanctions is increasing. The 2021 U.S. Treasury review described sanctions as “a tool of first resort” and recorded an increase in its sanctions by nearly 1,000 per cent over the years from 2000 to 2021.33 In his second year in office, President Biden designated nearly 2,500 new groups and individuals, almost double the listings the Trump administration had made at the peak in 2018 (1,474) and four times as many as the Obama administration at its zenith in 2016 (695).34 Multifaceted sanctions have been a pillar of the U.S. approach to backing Ukraine after Russia’s unlawful, all-out invasion in February 2022. (As noted, Crisis Group supports these last measures.)
B.Four Key Purposes
While the U.S. applies sanctions to advance a wide range of goals, policy objectives in the peace and security realm tend to cluster around four key themes. Washington’s affirmative case for sanctions within each of these areas is catalogued here; an exploration of frequently cited negative consequences is set forth in Section III of this report.
1.Restricting resources
An oft-cited purpose of U.S. sanctions is to restrict the access of belligerents and other dangerous actors to weapons, money and other resources. Existing U.S. sanctions aim to deprive groups engaged in terrorism, states pursuing illegal nuclear or other weapons proliferation, governments threatening international peace and security, and other “bad actors” of the means by which they could commit violent acts or develop the means to commit them.35 The sanctions are designed to freeze their assets, limit their access to supplies and technology, and restrict their ability to save, transfer and withdraw funds.
Sanctions became a central component of U.S. efforts to starve terrorist groups of funds in the aftermath of 9/11. The hijackers had used bank accounts in their own names to finance the attacks, and policymakers sought to stop anyone else – whether affiliated with al-Qaeda or another group – from doing the same.36 In late September 2001, President George W. Bush announced asset freezes of and prohibited transactions with entities suspected of ties to terrorism.37 The Bush administration also expanded the legal authorities underpinning sanctions programs, enabling U.S. officials to freeze the assets of individuals and groups who commit, or threaten to commit, acts of terrorism, as well as their supporters, and enhancing prosecutors’ ability to bring charges against foreign individuals and groups.38
Subsequent administrations relied on these authorities, as well as others such as IEEPA, in efforts to deprive other militant groups of funding and to crack down on the industries that helped them make money. For example, U.S. sanctions prohibit charcoal trade from Somalia, the profits of which the Islamist insurgency Al-Shabaab uses to fund its activities.39 U.S. sanctions in the Democratic Republic of Congo (DRC) target extractive industries, as well as other conflict drivers.40 Officials employ similar strategies to restrict governments’ abilities to fund violent campaigns: sanctions on Libyan assets in 2011 aimed to stop President Muammar Qadhafi from getting access to monies they feared would help him slaughter civilians to quash Libya’s revolution.41
Washington has also used sanctions to limit weapons production by its adversaries. U.S. non-proliferation sanctions date back to the 1970s and increased in scope in the 1990s. Today, they encompass extensive programs targeting North Korea (which has built nuclear weapons in contravention of UN Security Council resolutions) and Iran (which has acquired much of the capability it would need to do so).42
More recently, Washington has imposed sanctions, in coordination with robust U.S. export controls, targeting Russia with the explicit aim of hampering Moscow’s war effort in Ukraine, among other goals. U.S. officials note that a central objective of its sanctions program is to constrain the Kremlin’s ability to wage war by restricting its access to advanced technologies, compromising Russia’s attempts to modernise its military and degrading its fighting capability.43
2. Addressing abuses
U.S. policymakers have also long used sanctions to confront corruption and serious human rights abuses, including mass atrocities, which they assess as destabilising, contrary to U.S. values and, in some cases, a threat to global peace and security.44 The Global Magnitsky Human Rights Accountability Act enhanced and greatly expanded their capacity to do so. The law, signed by President Barack Obama in 2016, gave the president authority to impose targeted sanctions on any foreign person who has committed or enabled corruption or gross violations of human rights. A year later, President Trump signed an executive order to implement the Magnitsky Act that went further than the congressional requirements.45
U.S. policymakers contend that sanctions can help break cycles of corruption, abuse and impunity.46 In the absence of other means of bringing “bad actors” to justice, U.S. officials sometimes deploy sanctions with the intent that they serve as “vehicles of accountability”.47 Against this backdrop, Washington’s sanctions related to human rights and corruption often have the overlapping goals of punishing abusers, signalling that their behaviour is transgressive, and deterring them and others from committing future crimes.48 Another impetus for using sanctions in these circumstances is to champion journalists, human rights defenders and others who have risked their lives to shed light on abuses. The idea, in the words of a senior U.S. official, is to “support them in their struggle”.49
U.S. officials often note they use sanctions in this way to respond to calls from civil society and human rights groups. U.S.-based and international human rights organisations, U.S.-based diaspora groups with connections to victims abroad, and local civil society groups in areas where people have experienced mass abuses have regularly called on Washington to sanction wrongdoers.50 Their calls often mirror stated U.S. goals: stigmatising, deterring and holding to account offenders, while signalling U.S. solidarity with victims and their advocates.51
3. Changing the cost-benefit calculations of conflict parties
U.S. policymakers also impose sanctions to signal their priorities in crisis settings and heighten the consequences for those who oppose them.52 U.S. officials have used sanctions to bolster U.S. calls on foreign actors to refrain from or stop stoking violence, undermining democracy or deepening grievances that prolong conflicts by raising the costs of those behaviours. In this way, Washington uses sanctions to complement diplomacy and other measures by creating a consequence that is intended to affect the calculations of foreign actors engaged (or potentially engaged) in conduct that Washington wishes to discourage.53 A Western official told Crisis Group, “A message is forgotten; sanctions stick”.54
Current and former U.S. officials cite several examples of this approach being used amid election turmoil. The U.S. sanctioned Burundian government officials and their opponents to signal growing concern about violence in the lead-up to the country’s 2015 presidential polls.55 They employed a similar strategy in the DRC in 2018, to deter then-president Joseph Kabila from running for an unconstitutional third term, a move that rights groups cautioned would prompt a violent crisis in the country.56 In these instances, U.S. officials maintained that sanctions added weight to their warnings and served a de-escalatory purpose.57
Türkiye is another example that U.S. officials cite. In 2019, the Trump administration sanctioned current and former Turkish officials, as well as two Turkish ministries, after Ankara launched an offensive in north-eastern Syria targeting Kurdish fighters it accused of being an extension of the Kurdistan Workers’ Party (PKK) – its longstanding enemy.58 After President Trump called on President Recep Tayyip Erdoğan to “stop the invasion”, and Vice President Mike Pence travelled to Türkiye to convince Erdoğan to do the same, Ankara halted its assault, and Washington lifted the sanctions.59
When it comes to U.S. efforts to deter Chinese military action against Taiwan, U.S. policymakers are increasingly considering sanctions as an element of their deterrence strategy. In March, U.S. lawmakers introduced a bill in Congress, the Sanctions Targeting Aggressors of Neighboring Democracies with Taiwan Act, which would mandate the imposition of sweeping sanctions on China if it were to invade Taiwan.60
Washington has also used sanctions and the prospect of sanctions relief to encourage reform.61 President Obama eased sanctions on Naypyitaw in 2012 in response to reforms undertaken by the government in Myanmar, including its decision to reach ceasefires with ethnic armed groups, and continued with sanctions easing through the end of his administration in 2017 to push Naypyitaw toward additional reforms. As he noted when visiting Myanmar in 2012, “We will extend a hand if you are willing to unclench your fist”.62 The U.S. then reimposed sanctions, targeting many of the same people and businesses, following the February 2021 coup and the brutal crackdown that followed.63
4. Pushing negotiations forward
U.S. officials have also used sanctions to nudge parties in conflict toward negotiations and to keep talks that are already under way on track.64 They levy them as part of efforts to create momentum toward negotiations, or in existing ones, counting on the idea that parties will be enticed by the reward of sanctions lifting.65 U.S. officials sometimes use the threat of sanctions to prod parties toward negotiations.66
U.S. officials cite several instances where this strategy has been employed. Washington offered Qadhafi’s government in Libya sanctions relief in exchange for dismantling its nuclear program, destroying its chemical and biological weapons stocks, and renouncing terrorism, as it did in late 2003.67 It phased sanctions easing to correspond to the results of weapons inspections in hopes that doing so would entrench commitments made during the negotiations and give Tripoli, Washington and other capitals involved in the negotiations reason (and the comfort) to fulfil the agreement.68
In the case of Sudan, U.S. officials applied sanctions and used other tactics to press then-president Omar al-Bashir to keep participating in discussions on the Darfur conflict and honour the 2005 Comprehensive Peace Agreement – the deal he made with rebels in the south that paved the way for South Sudan’s independence. As a former U.S. official explained, “We wanted to talk to them about making peace. They wanted to talk about sanctions relief. Sanctions kept bringing the Sudanese back to the table”.69
U.S. officials also told Crisis Group that in neighbouring South Sudan, they escalated targeted sanctions and threatened more to spur South Sudanese elites to consider concessions at pivotal moments in negotiations aimed at resolving the civil conflict that has plagued the young country since 2013. These officials said they employed sanctions, and the threat of sanctions, to convince rival South Sudanese leaders to form a unity government in February 2020.70
Finally, U.S. officials often point to the Iran nuclear negotiations as a “gold standard” example of using sanctions to get an adversary to the table and pave the way for an agreement.71 They reflect on how they used sanctions to encourage Iran to join the talks, to remain in the talks and to make concessions during the talks. Thus, they say, sanctions helped pave the way for the Joint Comprehensive Plan of Action in 2015. U.S. officials also explain that they used the prospect of sanctions relief to coax Iran to fulfil commitments it made after the deal was signed.72
III.Practitioner Perspectives: The Darker Side of Sanctions
While sanctions have found favour as a tool that allows the U.S. government to pursue policy objectives in conflict settings without the blood and treasure required for military campaigns, these tools are not cost-free. Some of the downsides manifest themselves as impediments to peacemaking priorities, including Washington’s own. Crisis Group’s interviews with U.S. and foreign diplomats and officials, civil society representatives, and others who have worked in sanctions-affected conflict situations revealed four ways in which sanctions have at times obstructed peace and security efforts.
A.Inhibiting Peace Processes and Post-Conflict Recovery
Lingering sanctions can inhibit peace processes and post-conflict recovery efforts when they outlive the circumstances that prompted their initial imposition. Colombia offers a prominent example. Even though the Revolutionary Armed Forces of Colombia (FARC) signed a peace deal with the Colombian authorities in 2016, the group remained a designated terrorist organisation for five more years. Some U.S. officials said the hurdles involved in lifting the FARC FTO designation were so significant that rescission “only” five years after the peace was signed should be considered a major achievement, especially in light of concerns about political backlash and difficulties navigating the U.S. government bureaucracy to make the delisting happen.73
While they remained in force, the sanctions made it harder for former rebels to reincorporate into society as the 2016 peace deal had envisioned. Because financial institutions wished to steer clear of sanctions and especially the risk of alienating international correspondent banks, former fighters struggled to open bank accounts, get access to credit or loans, or fund campaigns for the parliamentary seats the FARC’s successor party received as a condition of the accord.74 They could not take part in activities designed to make reparations to communities affected by war. For example, 1,500 of the 13,000 demobilised FARC fighters signed up to remove mines they had planted during the war.75 But they did not get the certificates that were legally required for them to begin demining due to the certifying agency’s concerns that vetting former FARC members might constitute prohibited support to an FTO and thus violate U.S. laws. Former combatants told Crisis Group that certification delays pushed several of their peers to leave demining projects, lose hope in the peace process and rejoin armed groups. Landmine removal stalled.76
Some former combatants who had laid down their weapons were so disillusioned by the daily hurdles they faced in integrating into civilian life that, in the words of a former FARC commander, they “decided to go to war again”.77 Former members told Crisis Group that, ironically, sanctions had posed less of a problem for the FARC during its decades-long guerrilla campaign, when it funded itself almost exclusively through black-market activities, than after it demobilised and sought to rely on the formal economy. As a former fighter put it, “We weren’t affected [by sanctions] in the war, but we were affected in peace”.78
Sanctions can ... impede U.S. efforts to encourage private-sector investment in post-conflict settings.
Sanctions can also impede U.S. efforts to encourage private-sector investment in post-conflict settings. Investors often lack the confidence to enter markets where sanctions exist, even when the U.S. Treasury has issued licences specifically authorising certain transactions or when sanctions have recently been lifted, in part or in full. In these situations, sanctions have a “chilling effect” on business activity or, in the words of one former U.S. official, hang over a country “like a black cloud”.79 Private firms often express confusion about the scope of permitted activity and may err on the side of caution by refusing to do business in these places altogether.80 The legal, reputational and financial risks are often deemed too great, and the compliance costs and large potential fines (and possible criminal liability) too high, to consider investment.81 Such have been the calculations of many companies that had been active in Afghanistan before the Taliban takeover, which pulled out of the country despite the general licences published by the U.S. permitting extensive private-sector transactions as part of efforts to stave off state collapse.82
Potential investors may also fear, with good reason given the inherently political nature of sanctions, that eased sanctions will come back in full force – recalling, for example, that the Trump White House withdrew the U.S. from the Iran nuclear deal negotiated by the predecessor Obama administration and reimposed sanctions that the deal had lifted.83 A 2018 study published by Crisis Group found that a combination of concerns about sanctions compliance and fears that the U.S. would reimpose sanctions had proven the main factor slowing trade and investment by multinational companies in Iran even before the Trump administration repudiated the nuclear deal. These concerns were even more determinative than challenges related to the business environment in Iran.84
B.Constraining Peace Organisations
Sanctions can also hamper the work of peace organisations. These organisations, often working out of the limelight, help bring an end to conflicts, for instance by convening belligerents for discussions about ending hostilities, disarming combatants and training conflict parties in peaceful dispute resolution.85 Many are funded by the U.S. government.86 The Biden administration took a major step forward in addressing longstanding concerns of peace organisations by issuing general licences that, as noted above, authorised peacebuilding, conflict resolution and conflict prevention activities for OFAC-administered sanctions programs.87 But these reforms do not fully mitigate the constraints that sanctions have placed on peace organisations – and which they continue to face – for the following reasons.
First, the recent reforms do not address the sanctions that apply when an organisation is designated an FTO – and in particular the criminal statutes that make it unlawful to provide “material support” to such an entity.88 The legal concept of material support extends beyond the provision of money to include (among other things) training, expert advice or assistance. Peace organisations have long been concerned that their work could, if involving an FTO, violate the statute.89 They often point to a 2010 U.S. Supreme Court decision, in which the court ruled that the conflict resolution training the Humanitarian Law Project (an NGO) sought to provide to the PKK in Türkiye, an FTO, constituted prohibited material support.90 Both U.S. and non-U.S. entities and individuals can be held criminally liable for violating the statute, even if the prohibited conduct occurs outside the U.S.91 Violations may entail fines and imprisonment for up to fifteen or twenty years, depending on the specific charge, and life imprisonment when the offence resulted in someone’s death.92
Given the breadth of the statute and the severity of associated penalties, many peace organisations have refrained from providing assistance to populations in areas controlled by FTOs, in addition to steering well clear of engaging those groups in conflict resolution.93 Another reason the above-noted landmine removal in Colombia stalled after the 2016 peace deal was that international organisations stopped training demobilised former FARC combatants out of concern about the implications of training an FTO.94 In north-western Syria, an organisation overseeing disarmament, demobilisation and reintegration activities excluded Hei’at Tahrir al-Sham, an FTO-listed Islamist rebel group, from programming, and worked only with non-listed armed groups for the same reason.95
Concern about falling foul of FTO regulations sometimes leads organisations to end programs that are only tangentially connected to designated terrorists. One U.S.-funded democracy project in Colombia did as much when it stopped publishing information on electoral fraud due to concerns that these reports could end up benefiting the ex-FARC political party – whose members at the time fell under the FTO listing – one of the many political parties running in the 2018 elections for seats in parliament.96
When hosting dialogues among conflict parties, private mediators regularly exclude members of listed terrorist groups from meetings, even if they have been central players in the conflict.97 Others refrain from what would be considered normal operations in other circumstances, such as providing refreshments to dialogue participants, lest doing so makes them criminally liable for providing material support to terrorists.98 The new Treasury licences appear to permit the inclusion of individuals or organisations named under IEEPA as Specially Designated Global Terrorists in conflict resolution activities, provided that, with few exceptions, no funds are transferred to a blocked person.99 But if the group in question is also designated an FTO (many groups are simultaneously designated under both authorities), then any provision of “material support” to those groups nevertheless may constitute a criminal offence. The Treasury licences are promulgated pursuant to statutes that do not reach FTO-related sanctions, which are governed by a different statutory scheme.
Secondly, the above-referenced chilling effect that sanctions have on the private sector has meant that firms deny services to NGOs due to efforts to comply (or over-comply) with sanctions and minimise risk exposure.100 Access to financial services has been a particular hurdle, as banks are reluctant to facilitate transactions involving peace organisations or their partners or contractors in heavily sanctioned countries – even when licences are in place, as has been reported in Afghanistan, Syria, South Sudan and elsewhere (as well as in Sudan before the U.S. lifted sanctions on that jurisdiction).101 The consequences of this forced inaction can be debilitating for peace organisations, which often depend on the private sector to carry out their basic operations, such as remunerating staff, paying utility bills and transporting staff for program delivery.102 Financial institutions may also be unwilling to authorise transactions involving sanctioned service providers such as national airlines or mobile phone carriers – although they may be the only entities offering those services in a given country.103
Thirdly, peace organisations find that their operations in sanctioned places can pose a prohibitively high administrative burden.104 They must lean heavily on legal counsel for guidance on compliance, which can be a significant expense, even where licences are in place.105 Individual staff members sometimes decide to pay out of their own pockets for personal liability insurance.106 Donors such as the U.S. government may impose additional (and often high) compliance requirements, creating delay and time burdens for staff.107 At the same time, available funding sometimes diminishes in heavily sanctioned areas as donors shift aid allocations to lower-risk areas.108 Small, local organisations operating in conflict zones are particularly vulnerable as they do not have the money, resources or know-how that large, well-heeled international NGOs often have to manage risks.109
Such burdens are especially prohibitive for peace organisations funded by USAID, whose regulations make the provision of aid in places where sanctioned actors operate particularly difficult. The agency requires grantees to certify that they have not or will not provide material support (as defined by the so-called material support statute), not only to FTOs, but also to any individual or entity subject to OFAC-administered sanctions or sanctions established by the UN Security Council.110 The certification persists even though recent Treasury licences broadly exempt the activities of U.S. government contractors or grantees, a move made intentionally to clarify that USAID-funded activities are authorised (although they do not apply with respect to FTOs).111
This requirement has several implications for USAID-funded peace organisations. The practical effect is to make FTO-linked prohibitions, which have a broader scope due to material support restrictions, applicable to all programming in sanctioned places. The result is additional administrative requirements, such as intensive vetting procedures.112 Beyond the extra administrative costs they must bear, peace organisations are also exposed to the risk of civil suits brought by private actors on the grounds that they have violated the terms of their agreements with USAID, even if inadvertently.113 The sanctions-linked language in USAID grant agreements also complicates the agency’s ability to fund peace organisations in sanctioned countries.114
C.Undercutting Negotiations
Sanctions can only help bring parties to the table for peace talks, and provide leverage when they get there, if negotiators can credibly promise meaningful and enduring sanctions relief. But too often, U.S. negotiators cannot persuade the parties that such pledges are within their purview – and, indeed, they rarely are.
The consequences of the inability to provide such relief are significant. Iran’s reluctance to re-enter the 2015 nuclear deal after the U.S. reneged on its promises of sanctions relief three years later is an example of this dynamic. Iranian negotiators feared that the benefits of any deal involving sanctions relief would be short-lived given the risk that a future president might exit the agreement once again.115 In Colombia, the National Liberation Army (in Spanish, Ejército de Liberación Nacional, or ELN) told diplomats that Washington’s delays in lifting the FARC’s FTO designation deterred them from re-entering negotiations with the government.116
Moreover, the U.S. does not always make clear what parties can do that will lead to sanctions relief.117 In some cases, Washington has not laid out any such steps or it has outlined steps that are unrealistic.118 In others, the U.S. was never willing to lift sanctions in the first place. Elsewhere, Washington’s communication on sanctions has been vague, leaving targets in the dark about what might lead to reversal.119 Targets can be unsure why they were sanctioned, as members of Venezuela’s electoral authority reported in 2020, or have learned about the designations second- or thirdhand (a former Congolese official found out about his listing from the newspaper and some FARC members learned from listening to the radio).120 Some never see the full evidence underpinning the designations – even if they lobby the Treasury Department.121 Without clarity on why they were sanctioned and what they can do to be delisted, targets have little incentive to make concessions in exchange for relief. For U.S. officials, negotiating without the ability to lift sanctions is, according to one diplomat, like “playing poker with someone else’s money”.122
Finally, U.S. officials are sometimes hamstrung in delivering benefits parties expect from sanctions relief because they cannot compel the private sector to resume the business activities that would reverse sanctions’ effects, even if it is legal to do so.123 Negotiating parties thus know that sanctions relief in principle may not lead to sanctions relief in practice. U.S. officials involved in negotiations with Sudan from 2008 to 2012 found that they could not meet Sudanese requests for access to health and education technologies in exchange for concessions from Khartoum because they could not convince the private sector to offer Sudan the desired goods. Across the negotiating table, Sudanese officials accused U.S. diplomats (correctly) of being powerless to bring about sanctions relief.124
D.Entrenching Divisions
U.S. sanctions also sometimes reinforce tensions with targeted groups, individuals and countries in a way that is difficult to reverse even when the circumstances underlying the sanctions have changed. Frictions are often a purposeful result of the sanctions – the Trump administration’s “maximum pressure” campaigns on Iran, North Korea and Venezuela, for instance, aimed to isolate those countries. But then, as in these cases, the distrust often becomes entrenched, due in part to the sanctions but also due to myriad other factors. Moreover, sanctions are sometimes a factor in locking in the perception among U.S. policymakers and the public that peaceful relations with the target are impossible.125 In situations where the political price of normalisation is already high, sanctions can raise the costs further, making conflict resolution more elusive.
Sanctions can sometimes reinforce the impression that a state or armed group is “frozen in carbonate”, in the words of a U.S. official, regardless of how the target may evolve over the years or whether the U.S. has other interests that require it to work with that adversary.126 The idea of engagement can be an especially difficult pill to swallow when it comes to terrorism-related sanctions. Terrorism designations are powerful legal tools in that they trigger sanctions and are strongly symbolic. The U.S. designates very few states as State Sponsors of Terrorism, generally reserving the distinction for countries it is seeking to cast as beyond the pale. In addition to the stigma, such a designation also often prompts severe sanctions that wind up applying to an entire population and economy of a listed country.127 The FTO label is similarly powerful, both as a signal and in terms of the stringent sanctions it brings to bear, such as the material support restrictions outlined above.128
Sanctions can also complicate U.S. diplomatic overtures to sanctions targets because they end up shaping decisions on whether to engage in such outreach. While the U.S. government has mechanisms for authorising its own activities that might otherwise be prohibited, and there is no legal bar under any sanctions regime to diplomatic exchanges with designated actors, U.S. diplomats sometimes avoid activities that involve designated groups or individuals as a matter of policy.129 They may wish to isolate the group or individual in question, in accordance with the wishes of senior officials, or they may be wary of the reputational costs of association; or they may be unsure which interactions with sanctioned entities are permitted and which are not.130
The effects can seem trivial (some diplomats working on Venezuela in 2019 and 2020 were told to avoid buying anything, even a cup of coffee, for sanctioned members of the Maduro government), but in other cases they can prove a hurdle to dialogue.131 For example, some U.S. officials have expressed regret at the designation of Afghanistan’s Haqqani network as an FTO, which they said made it harder for the U.S. government as a whole to come around to the idea of dialogue with the group on ending the conflict in Afghanistan.132
At the furthest end of the spectrum, sanctions – especially terrorism sanctions – can even go so far as to help cement rationales for the use of force (although, as a legal matter, sanctions are unrelated to force authorisations).133 In the case of Iran, the designation of the Islamic Revolutionary Guard Corps as an FTO by the Trump administration may have played a subtle role in the strike on the Iranian general Qassem Soleimani by further conditioning the national security bureaucracy to think of Corps members in the same vein as ISIS and al-Qaeda, both FTOs, and to use the same military means of countering them.134 The FTO designation of the Nepalese Communist Party (Maoists) helped U.S. officials justify the provision of training and weapons to the Royal Nepalese Army and its sponsoring of civilian militias to fight the Maoists.135
Sanctions targets may understand economic penalties as hostile acts, seeing them as part of military campaigns or as a prelude to war.136 Targets sometimes associate sanctions with physical threats of violence, as former President Kabila of the DRC did when Washington sanctioned members of his inner circle in the run-up to the January 2018 presidential election, according to a Kinshasa-based expert.137 In Afghanistan, the Taliban sometimes spoke in the same breath about sanctions and “kill” lists such as the Joint Prioritized Effects List that marked individuals for coalition forces in Afghanistan to capture or kill.138 Former FARC commanders similarly connected U.S. sanctions with U.S. military support for Colombia’s counter-insurgency campaign.139 Linking sanctions to the threat of force, sanctions targets sometimes respond forcibly, as Iran did when it attacked oil tankers in the Strait of Hormuz and oil processing facilities in Saudi Arabia, apparently in response to the Trump administration’s “maximum pressure” sanctions.140
At the local level, parties sometimes manipulate the prospect of sanctions in the context of destabilising rivalries, deepening them. In Venezuela, individuals linked to Juan Guaidó, whom the U.S. and other countries recognised as interim president from 2019 until 2023, told politicians who were considering entering negotiations with President Nicolás Maduro’s government that they could be put on a U.S. sanctions list.141 U.S. diplomats described receiving regular text messages from Venezuelan opposition interlocutors with names of individuals to add to sanctions lists for a variety of offences.142 Similar dynamics can occur in the business world, for instance in El Salvador, where rivals of one executive framed him as a narco-trafficker, leading to his subsequent placement on a U.S. sanctions list despite his lack of involvement in the drug trade.143
Sanctions also sometimes feed perverse political dynamics that underpin broader instability. For example, they can create openings for leaders to deflect blame for crisis conditions regardless of other, often more significant, factors (which may include their own corruption and mismanagement).144 In Zimbabwe, for example, the government blames the country’s economic decline on Western sanctions.145 In Venezuela, the Maduro government cites sanctions as the leading cause of economic distress.146 Sometimes these dynamics serve to entrench precisely the actors responsible for perpetuating crisis. In Syria, President Bashar al-Assad also blames sanctions for the country’s economic difficulties, while, according to some experts, sanctions appear to have had the counterproductive effect of strengthening networks around the regime, contributing to its survival.147
IV.Three Cross-Cutting Challenges
In analysing the reasons that sanctions tend to create obstacles to peace and security efforts, practitioners frequently point to three challenges. Experts have long noted these problems, pointing to them and others as key factors limiting sanctions’ effectiveness as a whole. The three issues that the following section highlights pertain specifically to the attributes of U.S. sanctions practice that limit their effectiveness in furthering peacemaking.
A.Intractability
A key challenge that hinders U.S. sanctions from serving peace and security goals is that sanctions are very difficult to meaningfully and enduringly lift or ease. As noted above, it can thus be difficult for negotiators to use them as leverage in peace negotiations. Sanctions can also undercut other peace-related policy goals when they backfire or outlive the circumstances that prompted them. There are multiple reasons for the seeming intractability of U.S. sanctions.
First, U.S. domestic politics can create steep obstacles to sanctions relief.148 The portrayal in U.S. politics of sanctions as tough and relief as weak makes administrations wary of the reputational risks and political backlash that lifting sanctions may provoke.149 U.S. policymakers regularly refrain from advocating sanctions easing, or initiating conversations about the pros and cons of doing so, lest they be accused of being “soft” on terrorism, authoritarianism, crime, atrocities or other ills.150 As one U.S. official explained, no time is ever politically convenient for lifting sanctions, leading officials to wheel out ostensibly situational pretexts for delay – for example, a forthcoming meeting with a foreign counterpart, a state funeral, or midterm or presidential elections.151 The political costs of easing or lifting for the executive branch can be especially great if members of Congress oppose the move, even if proponents in Congress lack the ability to pass veto-proof legislation to reverse the executive’s decision.152 The president may also be reluctant to alienate powerful members of Congress he or she is relying on to advance other priorities.
Secondly, bureaucratic inertia and path dependency can hinder policymakers from scaling back U.S. sanctions. Officials across the government echo the adage that imposing sanctions should form part of a broader policy strategy, and not act as a surrogate for having a policy, and yet too often maintaining sanctions becomes an end in itself. This is especially true when sanctions are levied without a political strategy, or the strategy atrophies as sanctions are implemented, policymakers struggle to find rationales for lifting them.153 Current and former U.S. government officials refer to situations where policymakers “dig [their] heels in” and expand existing sanctions programs without analysing whether the sanctions are achieving their goals or forecasting how additional sanctions will move the needle.154 A former U.S. government official described this phenomenon as the “one-way ratchet”.155
Again, the case of Sudan offers an example. In 2016, the Obama administration used the promise of trade sanctions relief to motivate Sudan to cooperate with it in five discrete areas. The tactic was largely effective, in that Khartoum appeared to satisfy most of the conditions that were set for it; yet Washington slow-rolled the sanctions relief that was supposed to be Sudan’s reward. It was not Khartoum’s actions, but rather cold feet on Obama officials’ part that prompted them to defer decisions on permanently lifting sanctions until after Trump had taken office.156 The Trump administration eventually moved ahead with lifting trade sanctions in 2017. Yet it subsequently struggled to lift Sudan’s designation as a State Sponsor of Terrorism even after an enormous protest led in 2019 to the ouster of strongman president Omar al-Bashir, whose abuses (Bashir was charged with genocide by the International Criminal Court) had contributed to the sanctions’ longevity. It took more than eighteen months after Bashir’s removal for rescission to be completed.157
Finally, even when the U.S. lifts sanctions, their effects may linger past the point of rescission because of the private sector’s risk calculus. The hesitancy of firms to invest in partially or previously sanctioned countries, as detailed above, means that sanctions effects can outlive the sanctions themselves; they remain intractable even after they are lifted.158
B.No Impact Assessments
The parts of the U.S. government with responsibility for sanctions policy do not have institutionalised mechanisms for considering what a State Department official called the “downstream” impact of sanctions on peace processes or conflict resolution.159 Other instruments of U.S. power deployed overseas have such mechanisms: the Pentagon, for example, has systems to track whether its weapons hit their mark. Not so with sanctions.
Washington has not developed systems to collect and share data on the impact of its sanctions programs, good or bad, or articulated an analytical framework to examine sanctions’ effectiveness. Nor has it developed a consistent doctrine governing their use by the U.S. government.160 A 2019 study by the Government Accountability Office notes that while the Departments of Treasury, State and Commerce do gauge various effects of sanctions – for example, on a target country’s trade – they do not assess whether sanctions are serving to achieve broader U.S. policy goals, for example in the realm of peace and security.161 While some sanctions regimes require periodic reviews, these are conducted out of the public eye and, by most accounts, are pro forma.162 As a U.S. congressperson reflected, “In Congress we really don’t talk about these things in any detail. … We’re not reviewing methodically and thoughtfully whether sanctions … are working or not”.163
Even the U.S. Treasury’s aforementioned sanctions review, which established a framework to guide sanctions policy, did not establish a mechanism for assessing how U.S. sanctions programs further policy goals, let alone fulfil Treasury’s own framework. Nor did it consider separate sanctions authorities handled by other agencies. With limited processes and capacity in place to review sanctions, programs sometimes outlast the crises they were designed to address and directly conflict with other U.S. peace and security goals.164
C.An Increasingly Complex Sanctions Landscape
Another reason why sanctions sometimes work at cross-purposes with peace and security goals is that the U.S. sanctions policy infrastructure has ballooned, as have the legal mechanisms that underpin it. This issue manifests itself in two ways.
First, the different parts of the U.S. government involved in sanctions policy sometimes find themselves pulling in different directions.165 Multiple entities – such as the Departments of State, Commerce, Treasury, Justice, Homeland Security and Energy, as well as various intelligence agencies – play a role in sanctions policy. Sometimes, their sanctions regulations are misaligned, as when the Treasury Department licences authorise peacebuilding work with sanctioned groups while material support-related restrictions prohibit the very same activities with the very same groups. In other cases, one agency is trying to calibrate sanctions to achieve a certain policy goal, while another is pursuing a wholly different agenda. Such was the case in 2020, when the State Department published a series of steps Venezuelan President Maduro could take in return for phased sanctions removal. At the same time, the Justice Department announced a $15 million bounty for Maduro’s arrest on drug trafficking charges, essentially nullifying the impact of the State Department’s announcement.166
As a former U.S. government official said of inter-agency discussions on sanctions, “Treasury wallops State”.
Competition between Treasury and State, which can be significant, has in the past been an obstacle to harmonising policy. While the two departments may agree in theory that foreign policy is State’s domain – and it is certainly where conflict prevention expertise resides – Treasury often dominates interagency debates given its history and primary role in enforcing sanctions, and its superior grasp, real and perceived, of the penalties’ technical aspects. As a former U.S. government official said of inter-agency discussions on sanctions, “Treasury wallops State”.167
Another point of tension is between the executive branch and Congress. Members of Congress from both parties, including the president’s own, often have their own sanctions-linked agendas that clash with the White House’s goals, which they sometimes pressure the executive branch to pursue. In January, for example, members of Congress introduced (but did not pass) legislation that would require designation of Russia as a State Sponsor of Terrorism and the Russian private mercenary outfit the Wagner Group as an FTO – two moves that the Biden administration opposed because of their potentially detrimental implications for conflict management.168 Moreover, legislative sanctions can only be rescinded by an act of Congress, and as a U.S. official noted, efforts to alter executive sanctions when legislative sanctions are in place can be like “toying at the margins”, a dynamic that applies to most broad sanctions regimes, albeit with notable exceptions.169 In short, legislative sanctions can greatly restrict the executive’s freedom of movement, not just in lifting sanctions but in providing any easing whatsoever.
Secondly, today’s sanctions are so numerous, and grounded in so many different legal authorities, that they can be difficult to understand, untangle, rescind and reform. There are at least 12,000 individuals and entities on U.S. Treasury lists, and more are subject to economic restrictions administered by the State and Commerce Departments.170 Easing sanctions can be time-consuming and complex in the case of the many regimes that involve layers of sanctions imposed variously by the legislative and executive branches, resulting in what a former official referred to as a “crazy web”.171 Reforming them may require several government agencies to take action and Congress to change multiple laws.172 U.S. officials, governments (U.S. allies, partners and foes alike), conflict parties, practitioners and businesses report difficulty understanding sanctions’ scope, especially when it comes to the more extensive U.S. regimes.173
V.Mitigating Consequences, Seizing Opportunities
The U.S. government has taken significant steps to reform sanctions policy in recent years, but key gaps remain when it comes to addressing how sanctions affect peace efforts. Calibrating sanctions to help ensure they do more good than harm should be done on a case-by-case basis, based on the specifics of the crisis at hand. Still, there are structural reforms that the U.S. government could make, several of which have already been proposed by sanctions experts as ways to render sanctions more effective in general, to help manage the costs that U.S. sanctions may exact on peace and security goals.
A.Clear Policy Objectives
When launching sanctions programs, the U.S. government should make clear and specific statements of the foreign policy objectives the sanctions are intended to achieve and how they will help reach those goals. Whether publicly or internally, the U.S. government should ensure that the sanctions are embedded in a well-articulated political strategy, recognising that if they are going to work toward their stated peace and security goals, they cannot function as an end in themselves. U.S. officials should also clarify to the public and to sanctions targets which behaviour prompted the sanctions – and what targets are expected to do to be removed from sanctions lists.
While officials note that the information underpinning some designations is wholly or partially classified and therefore cannot be shared, it would nevertheless behove policymakers to find ways to communicate clear rationales. The leverage that sanctions offer to negotiators and officials is limited if targets do not know why the sanctions were initiated or what needs to occur for the sanctions to be lifted. Conflict parties may also lose faith in negotiations if they make behaviour changes with the expectation of sanctions relief, but relief is not forthcoming or the goalposts have shifted. Greater clarity may also help the U.S. government take the often politically difficult step of dialling back or rescinding sanctions when they have served their purpose or are inhibiting stability efforts.
B.Regular and Meaningful Reviews
To reduce sanctions’ negative effects on conflict resolution, it will be necessary to build better systems for reviewing their performance. As discussed above, the U.S. government does not conduct systematic or comprehensive reviews of sanctions’ costs and the extent to which they are meeting their objectives. Even though several sanctions authorities contain review requirements, they are too often exercises in box-ticking. Washington should fix this problem.
The executive branch should conduct regular reviews of sanctions’ effectiveness and costs. Policymakers would then have the opportunity to consider the impact of sanctions on peacemaking and related policy goals, as well as impetus to recalibrate the measures when needed.174 The Treasury Department made a good start by hiring a chief sanctions economist whose office will study sanctions’ costs and impact.175 Reviews should also be required for sanctions administered by agencies beyond the Treasury and should take into account the views of officials leading on foreign policy matters.176 Consultations with peace organisations, researchers, local experts and others with insight on how the sanctions are affecting crisis dynamics – and how they might be shaped to have a more positive impact – should be built into the process.177 Congress should also put procedures in place to review its own legislative sanctions, for instance by calling on the Government Accountability Office to assist.178
Congress should play a key role in executive branch sanctions reviews by subjecting them to meaningful oversight hearings. Congressional foreign affairs and foreign relations committees could bring in administration and outside witnesses to test the rationale for continuing sanctions and uncover complications for peacemaking and related efforts that could be addressed through either legislative or executive action. Scheduling hearings so that they match the timing of what are usually pro forma reviews and renewals could be a way to make them more consequential.179
Creating review mechanisms that have sufficient rigour will be a challenge given the volume of sanctions programs but concerns about government capacity cannot be an excuse for allowing sanctions programs to go unexamined. Both the executive branch and Congress could develop a list of priority situations for review, in consultation with civil society, looking first at sanctions pertaining to long-running conflicts, situations that have changed substantially since sanctions were imposed, or circumstances where sanctions have a significant, unintended impact on a target country’s population.
Reviews could go a long way toward identifying the challenges that sanctions can pose to peacemaking. But without political will from senior U.S. policymakers to make responsive changes, it is possible that reforms could be made without affecting the status quo. True reform will require that U.S. policymakers seriously consider whether sanctions are working and whether imposing them is worth their costs. Moreover, policymakers will have to make decisions to alter sanctions policies when they are not working even if it is politically unpopular to do so. Continued pressure from civil society may be helpful in generating or bolstering political will, as well as educating the public on why the informed recalibration of sanctions is good policy and not a form of weakness.
C.Expanded Sanctions Carveouts
Washington should build on Treasury’s achievements in issuing general licences that authorise peace activities by expanding sanctions carveouts for the full range of economic restrictions in place.180 Doing so would lessen the obstacles that sanctions pose for organisations undertaking conflict resolution and peace work and send a strong signal of support for their efforts. It would also allay organisations’ concerns that licences can be withdrawn and encourage them to invest in long-term conflict resolution programming in places that need it most.
Such a measure could entail other agencies, such as the Commerce Department, updating their licensing procedures to reflect the spirit of the Treasury general licences.181 They might consider an approach the Commerce and Treasury Departments follow in some programs and deem activities licensed by the other agency as licensed by both agencies without needing additional application or interpretation. Treasury could also issue additional licences and guidance to make clear certain assistance is understood to be authorised, even if pre-existing general licences cover those activities, when peace organisations and the private sector are refraining from conducting authorised activities due to concerns about violating sanctions.182 Another positive step would be for Congress to codify the authorisations for conflict resolution activities contained in the aforementioned general licences in legislation.
Expanded sanctions carveouts will not fully remove the problems sanctions pose for peace organisations if they do not address the sanctions that apply with respect to FTOs – and particularly the statutes that criminalise “material support” to those entities. As noted above, these restrictions can pose significant obstacles to peace efforts in conflict situations where FTOs are active. To do so, Congress should legislate a carveout to the material support statute that would exempt peacemaking activities from the definition of material support. While policymakers are justifiably concerned that advocating for this reform would risk political backlash, especially from members of Congress, there is growing bipartisan understanding that such a move is necessary. In fact, in July the Senate Foreign Relations Committee approved an amendment that would make just such a carveout in one specific case – exempting various peace activities from the definition of material support with respect to the Wagner Group, should it be designated as an FTO.183
Pending a legislative carveout, the Justice Department should publish guidance for peace organisations that explains publicly what U.S. government officials have noted to certain groups in private – that it will not prosecute them for violating the material support statute when they are engaged in bona fide peace activities.184 While future Justice officials could override such guidance, the guidance would serve as a good-faith measure to demonstrate support for peacemaking activities and give NGOs a degree, if imperfect, of confidence until legislation is passed.
D.Private-Sector Confidence
U.S. policymakers should take steps to mitigate the private sector’s concerns about licensed or otherwise permitted activities in countries where sanctions are in place or have just been lifted. Being able to genuinely deliver on lifting sanctions and alleviating their ill effects will allow Washington more potent leverage in negotiations and more powerful tools for post-conflict stabilisation. It is a tall order, given that dissuading firms from investing in sanctioned places is a fundamental feature of the design of sanctions regimes. But a great deal of research has been done recently, including by the U.S. government itself, on how to overcome the challenge of unwanted de-risking, and this research should be augmented, and its findings implemented in a way that furthers peacemaking goals.185
At the outset, the executive branch should deepen its work with private sector actors to identify ways to address concerns about doing business or investing in previously sanctioned countries or countries where sanctions are in place but a range of activities are authorised. The U.S. Treasury’s April de-risking strategy was an important signal of the department’s recognition of and intention to tackle such concerns, but it is limited in its prescriptions for encouraging financial activity in the conflict settings highlighted in this paper.186 The department has been increasingly engaged with non-governmental actors on de-risking; these contacts have also been important, but so far there has been little engagement with the private sector beyond financial institutions or outreach focused on concerns pertaining to conflict or post-conflict countries.187
The U.S. government should build on recent efforts to reach out to the private sector, and understand its concerns, to further consider how it might instil greater confidence about authorised activities. It could also consider issuing additional compliance guidance and organising regular exchanges with a range of private-sector actors to address their concerns.188 Foreign policy adjustments, such as assuring U.S. support for economic regeneration to previously sanctioned countries underscored by aid packages, trade commitments or public-sector investment – as well as strengthened outreach to foreign governments on the aims and mechanics of U.S. sanctions regimes – could also help stimulate the private sector’s confidence and give them reason to re-engage.
A range of technical solutions have been proposed in recent years which should also be the subject of further research and, if merited, be adopted as part of a strategy to address private-sector concerns. These include the creation of alternative payment channels to facilitate funding to NGOs in countries that commercial firms will not service, the development of incentives for financial institutions to engage in sanctioned environments when doing so furthers U.S. priorities, such as written assurances and other “safe harbour” documents attesting that regulators will not act against an institution for facilitating certain transactions.189
VI.Conclusion
Sanctions have enduring importance as an instrument of U.S. foreign policy. As U.S. officials consider Washington’s response to wars and crises, they will almost certainly continue to reach for a powerful lever readily at hand. But the utility of what some describe as a measure of first resort will be undermined if policymakers do not also address the downsides of sanctions as they relate to peacemaking. As it stands, sanctions too often impede talks, hinder conflict resolution efforts and post-conflict recovery, and limit the work of peace organisations, including those working to advance U.S. policy goals, often with U.S. funding. The costs of these failures tend to be most keenly felt in places where the stakes for regional and global peace and security are highest – in war zones and post-conflict settings.
Change is possible, but it will require a concerted commitment to reform. Setting clear objectives for sanctions programs, accompanied by meaningful and regular reviews, would help policymakers weigh the costs and benefits, and provide a basis for calibrating sanctions in line with fresh developments. That flexibility will give policymakers greater leverage in negotiations and enhance their capacity to advance the political strategies that sanctions are meant to further. Expanding and codifying sanctions carveouts for peace organisations would help them do the hard work of mitigating the ravages of war. Addressing the private sector’s concerns about investment in places affected by sanctions would help conflict-affected communities trying to rebuild.
Decades of experience with economic sanctions have lessons to offer today’s policymakers. They teach that sanctions can be useful to policymakers in their efforts to achieve peace and security objectives, and that they can also be a hindrance. Policymakers have begun to pay heed to the latter, but far greater attention – and action – will be required to blunt sanctions’ negative consequences and to help ensure that this tool of U.S. power is most effectively deployed in the service of global peace and security.
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