What are economic sanctions, and how did they become Washington’s foreign policy tool of choice?

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The Biden administration Thursday imposed a substantial slate of economic sanctions on Russia. The move came as little surprise.

© Eric Baradat/AFP/Getty Images President Biden, left, speaking at the White House on March 15, and Russian President Vladimir Putin speaking at a news conference in Moscow on March 5. (Eric Baradat; Pavel Golovkin/Pool/AFP/Getty Images)

Tensions with Russia have been mounting in the wake of a cyberespionage campaign directed at the United States, election-meddling efforts and a buildup of troops in Crimea.

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Economic sanctions have become a favored tool for responding to such provocations.

Biden administration imposes significant economic sanctions on Russia over cyberspying, efforts to influence presidential election

They drove debates in early April when Iran and the United States met separately with European counterparts to discuss reviving the 2015 nuclear deal — including the repeal of U.S. sanctions. In just the past few months, the Biden administration has also reinstated sanctions against Myanmar for human rights violations, targeted Russia for its jailing of opposition Alexei Navalny and sanctioned Chinese officials for the erosion of democracy in Hong Kong.

Here’s what to know on the evolution of U.S. sanctions.

What are economic sanctions?

Sanctions can be broad, such as the Cuba embargo, or targeted, an approach widely favored in recent decades. When the U.S. sanctions a person or entity, Americans and U.S. companies are barred from transacting with it. In some cases, sanctions go even further, forbidding Americans from doing business with third parties in business with the target.

Sanctions can limit an array of economic and trade opportunities. They often include frozen travel visas and bank accounts. They can be issued against individuals, banks, institutions, governments and other entities, such as ships.

As sanctions have risen in foreign policy prominence, so has criticism of their effectiveness — and concern over their impact on civilian populations.

Why have they become popular in Washington?

Both the U.S. president and Congress have the power to issue sanctions. The International Emergency Economic Powers Act of 1977 allows a president to do so with relative ease.

As a high degree of world trade relies on U.S. dollars and flows through U.S.-based financial institutions, Washington is uniquely posed to wield sanctions and impose “an enormous amount of economic pain” by restricting access to global markets, said Ali Vaez, director of the Iran Project at the Washington-based International Crisis Group.

What are the new sanctions on Russia?

The sanctions imposed Thursday restrict U.S. financial institutions from buying a range of Russian government bonds, target Russian cyberhacking companies, expel Russian intelligence officers in the United States and include an option to broaden the range of measures still further.

They add to a wide range of sanctions already in place, which began to ratchet up under the Obama administration, in response to the 2014 Russian invasion of Crimea. During his term in office, President Donald Trump imposed more than 40 rounds of sanctions on Russia.

How have U.S. sanctions evolved over time?

In recent decades, sanctions have transformed from “old style, countrywide embargoes,” such as those against Apartheid South Africa, to “targeted” ones focused on individual actors, said John E. Smith, former director of the U.S. Treasury Department’s Office of Foreign Assets Control, which enforces trade and economic sanctions.

This shift began following the 9/11 attacks, when Washington started to focus on international financing in counterterrorism, said Brian O’Toole, a nonresident senior fellow at the Washington-based Atlantic Council’s GeoEconomics Center.

It benefited from the United States’ growing dominance in international finance, which along with technical and legal changes made it difficult to “move money around the world without interacting with the United States,” said O’Toole.

Over the last decade, the United States has also begun to rely on secondary or extraterritorial sanctions, which penalize third parties who conduct business with a designee, effectively forcing others to adhere to U.S. policies.

What was Trump’s approach to sanctions?

Trump, who favored unilateral presidential action, imposed a range of economic sanctions, hitting adversaries while also threatening the interests of some allies. His targets ranged from Iran to the International Criminal Court and beyond.

While the Trump administration cut funding to many agencies, including the State Department, it increased the budget of the Treasury Department, which oversees sanctions.

Julia Friedlander, a senior fellow at the Atlantic Council who worked on sanctions policies at the U.S. Treasury under President Barack Obama and Trump, said that the “chaos” that defined Trump’s “very disaggregated policymaking process” helped make sanctions a go-to alternative.

How might Biden differ?

In contrast to Trump, Smith, the former OFAC director, said he expects Biden to take a much more multilateral approach to sanctions and rely on them less frequently than Trump did.

“The Biden administration, like other administrations before it, will be very concerned about trying to coordinate as much as possible their sanctions approach” with other countries, he said. “The more multilateral the sanctions, the more effective it will be.”

One day after his inauguration, Biden signed a flurry of executive orders, including one that called for an evaluation of the impact of U.S. sanctions on global responses to the coronavirus pandemic.

The United States is trying to salvage the Iran deal. Here’s how both countries have broken with the pact.

What are some key countries to watch?

Thursday’s move indicates that further sanctions against Russia could be in the works.

For U.S. policy toward Venezuela and North Korea, where Trump engaged more multilaterally, analysts said they expected Biden to continue to rely on sanctions.

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Biden is expected to take a more adversarial approach to Russia than did Trump, who angered many in Washington with his affinity for Russian President Vladimir Putin. It was Congress who ultimately passed sanctions related to Russian interference in the 2016 U.S. election and curbed the president’s power to repeal them.

After Trump withdrew from the Iran nuclear deal in 2018, he reissued a range of sanctions against Iran. Before leaving office, he added new sanctions and targets to the growing list, complicating Biden’s stated goal of reentering the agreement.

Iran has said it is also ready to return to the deal — if Washington were to repeal all Trump-issued sanctions. The sticking point, said Vaez, is that some of those sanctions are not in direct violation of the 2015 deal but are now a major choke hold for Iran.

What sanctions reforms are under discussion in Washington?

Some experts and advocates want a fundamental overhaul of how U.S. sanctions are deployed.

Vaez said that in practice, U.S. sanctions have rarely achieved their stated foreign policy goals.

This is in part because Washington has no clear framework for evaluating the effectiveness of sanctions and whether the foreign policy aims were achieved, he said. It also does not have a mechanism for following through on the promise of sanctions relief if the target does indeed change its behavior.

“Sanctions are only as effective at the prospect of relieving them in response to policy changes,” Vaez said.

Instead, OFAC, the agency charged with devising and enforcing sanctions, is “a wheel that only moves in one direction,” said Vaez. “It does not have the mandate to make sure that once the sanctions are limited that the target country can normalize relations with the outside world.”

Vaez said Congress could play a role by enacting legislation that sets out clear criteria for sanctions removal and relief.

Human rights groups say U.S. sanctions in countries including Iraq, Iran and Venezuela have exacerbated humanitarian crises by cutting off civilians from vital economic activities, creating shortages of basics such as medicines. While OFAC issues sanctions waivers for humanitarian goods, in practice banks and companies are hesitant to transact with a sanctioned individual or entity because they fear violating broad U.S. regulations.

Some Democrats in Congress have been pushing for legislation to ensure humanitarian exemptions are in place for Iran during the pandemic.

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