December 20, 2024
In this edition of Sanctions Watch, covering December 2024:
- World Bank says sanctions, asset freeze are holding back Afghan economy;
- Biden will not lift Cuba terror designation, despite humanitarian and migratory impacts;
- Trump team confirms plans for “maximum pressure 2.0” on Iran;
- Biden administration imposes two new rounds of sanctions on North Korea;
- US disburses first Ukraine loan backed by frozen Russian assets;
- Calls grow to lift Syria sanctions following fall of Assad government;
- Trump urged to lift sanctions on Venezuela in exchange for migration cooperation;
- Winter and famine loom in besieged Gaza, and more.
Afghanistan (background)
The World Bank’s most recent Afghanistan Development Update report described the detrimental effects that sanctions have on Afghanistan’s economy, noting that “liquidity concerns and the central bank’s capacity to manage the economy under international sanctions [remain] key risks. … With international assets frozen, the central bank’s ability to manage currency stability is severely limited, raising concerns about future inflation and exchange rate volatility.” The report notes: “Without broader international engagement and economic reforms, Afghanistan risks prolonged stagnation, with growth remaining dependent on consumption and limited industrial activity.”
Officials expressed similar concerns at a UN Security Council meeting addressing the situation in Afghanistan on December 12. The Kyrgyz ambassador to the UN remarked, “the humanitarian situation in Afghanistan is likely to alleviate when the national economy improves and jobs are created. However, as long as international isolation of Afghanistan remains in place, the prospect of economic growth is limited. In this connection, the release of the frozen assets to Afghanistan may have been very critical to economic development and social stability.” Roza Otunbayeva, head of the UN Assistance Mission in Afghanistan and former president of Kyrgyzstan, also emphasized the importance of engagement. She stated, “engagement is not normalization or recognition. It is a way of consistently communicating the advantages of rejoining the international system. It is a way of preventing Afghanistan’s isolation or, worse, a return to conflict. … Pressure and condemnation do not seem to be working, and if pursued without forward-leaning principled engagement, it will lead to Afghanistan’s isolation.”
The UN Security Council voted on December 13 to extend the mandate of a UN team tasked with monitoring the implementation of the body’s sanctions against the Taliban. A UN press release on the vote noted that the Chinese delegate “called on concerned States to unfreeze and return Afghanistan’s overseas assets and stop imposing unilateral sanctions.”
Read more:
- In Aid-Starved Afghanistan, Relief Workers Fight a Forgotten Hunger Crisis, Reuters
- A Third of Afghanistan’s Population Faces Hunger as Harsh Winter Starts to Bite, The Independent
Cuba (background)
Early this month, Cuba was briefly plunged into darkness as the country’s electric grid collapsed for the third time in less than two months, in part because US unilateral sanctions have greatly limited Cuba’s ability to access crucial spare parts and sufficient fuel. The worst of the island nation’s already dire economic and humanitarian crisis, however, may be yet to come. Speaking with CNN, foreign policy analyst Peter Kornbluh described Trump’s hard-line incoming State Department appointee Marco Rubio as “the final nail in what is already a very deep grave for Cuba.” Mexican president Claudia Sheinbaum warned the incoming Trump administration that sanctions on Cuba and Venezuela cause “people [to] suffer and [lead] to the phenomenon of migration.” And in a House Foreign Affairs Committee hearing, witness Juan Pappier of Human Rights Watch noted: “Any additional general sanctions on Cuba are likely to harm the population — which is already suffering severe deprivations — and to drive even larger migration flows.” The leading Democrat on the Global Health and Human Rights Subcommittee, Rep. Susan Wild (D-PA), said at the same hearing:
Our approach to Cuba, which has remained largely constant for more than six decades now, with the exception of former President Obama’s second term, has not delivered for the Cuban people. This hearing begs the question, what is the end goal of US policy toward Cuba and what has our decades-old policy actually accomplished for the United States, let alone the Cuban people? Today, the Cuban people, not the government, face a devastating humanitarian crisis, which has been exacerbated by the US embargo and other sanctions. … The embargo has imposed indiscriminate hardship … on the Cuban population as a whole and has done nothing to improve the situation of human rights in Cuba.
The Biden administration, however, has shown no signs toward providing relief. This month, former Obama and Bush administration officials; five Democratic senators, led by Senator Welch (D-VT); former Senator Patrick Leahy; and dozens of lawmakers, unions, and civil society organizations all called on the Biden administration to remove Cuba from the State Sponsors of Terrorism list before the end of Biden’s term. Despite these calls, the Biden administration reportedly has no plans to lift the baseless designation.
Read more:
- Why Are Cuba and the U.S. Still Mired in the Cold War?, Foreign Policy
- Biden’s Legacy on Cuba, The Nation
- The Cuban People Deserve Better. Here’s What President Biden Can Do, The Hill
- Analysis: How Marco Rubio Could Raise the Stakes for Cuba If He Becomes Secretary of State, CNN
Iran (background)
Rep. Mike Waltz (R-FL), Trump’s pick for national security advisor, has vowed a return to the so-called maximum pressure policy of Trump’s first administration, stating, “We have to constrain their cash. We have to constrain their oil. We have to go back to maximum pressure, number one, which was working under the first Trump administration.” Waltz did not elaborate on the latter claim, and it is widely recognized that Iran’s nuclear capabilities were constrained under the Iran nuclear deal, and have expanded considerably since Trump’s unilateral decision to withdraw and reimpose sanctions. The Wall Street Journal reports that the Trump transition team is planning both stricter enforcement of existing sanctions and the imposition of new sanctions — alongside possible military strikes. Rising oil prices are reportedly attributable in part to the market’s anticipation of these coming sanctions.
Also this month, the Biden administration imposed unilateral sanctions on 35 entities and vessels alleged to be a part of Iran’s “shadow fleet” that transports Iranian oil internationally in contravention of US sanctions. The administration also confirmed this month that it had extended a waiver allowing Iraq to make oil payments to Iran via a limited account that restricts Iran’s use of the proceeds for humanitarian purposes only. As Sanctions Watch has previously noted, “Despite misrepresentations in the conservative press, the waiver does not grant Iran access to the full $10 billion already owed to it by Iraq.”
Read more:
- Trump Team Weighs Options, Including Airstrikes, to Stop Iran’s Nuclear Program, The Wall Street Journal
- US Imposes New Sanctions on Iran’s ‘Shadow Fleet’ of Oil Tankers, Al Jazeera
- Biden Admin Renewed Iran Sanctions Waiver — But Claims of $10B ‘Grant’ Are Misleading, Snopes.com
North Korea (background)
The US issued two rounds of sanctions on North Korea this month. NK News reported that on December 5, the State Department “announced new sanctions on North Korean and Russian nationals, a Russian firm and a Chinese company, in an apparent attempt to counter increasing military cooperation between Moscow and Pyongyang.” On December 16, sanctions were also issued against nine individuals and seven entities, including North Korean banks, generals, and officials, as well as Russian entities, for their alleged involvement in supporting North Korea’s military and ballistic missile tests. Additionally, North Korean officials linked to the deployment of North Korean troops to Russia, including the minister of defense, were targeted in the EU’s 15th package of Russia sanctions (see below). South Korea also imposed sanctions on North Korean military officers and a missile developer it says were deployed to Russia, along with several Russian entities accused of facilitating military cooperation with North Korea.
Journalist Choe Sang-Hun wrote in The New York Times:
Sending the troops brings a range of benefits for North Korea, including much-needed cash and diplomatic leverage. Mr. Kim is receiving billions of dollars’ worth of food, oil, cash and advanced weapons systems from Russia that will help his regime endure international sanctions. … American-led U.N. sanctions devastated North Korea’s economy by banning all its major exports, including coal, seafood, textiles and workers, as well as sharply curtailing its oil imports. Mr. Kim sought to lift the sanctions through direct diplomacy with former President Donald J. Trump. But the negotiations collapsed without an agreement in 2019.
President-elect Trump has named Richard Grenell, a loyal ally and former ambassador to Germany during his first term, as “envoy for special missions.” This vaguely defined role, created specifically for Grenell, is expected to focus on “special missions” in “some of the hottest spots around the World, including Venezuela and North Korea,” Trump said in a statement. It is not yet clear what Grenell’s appointment will mean for Trump’s approach to North Korean relations in his second term.
Read more:
- US Announces More Sanctions on North Korean and Russian Nationals, Companies, NK News
- US Hits North Korea and Russia With New Sanctions, Treasury Says, Reuters
Russia (background)
US sanctions on Gazprombank, one of Russia’s largest banks and a key player in global energy markets, along with 50 additional banks, are creating ripple effects across the Atlantic. Hungary, Slovakia, and Turkey — countries that rely on Russian gas imports and make payments through Gazprombank — argue that the measures threaten energy security and are requesting a waiver to continue making payments. The EU and US are reportedly discussing ways to mitigate the sanctions’ third-party effects, while observers note that the measures could also impact Central Asian countries like Uzbekistan, whose mining industry is heavily reliant on Russian financing. Furthermore, according to Serbian president Aleksandar Vučić, the country’s main oil company is expected to face US sanctions in January. The company is majority-owned by Gazprom, Russia’s state-owned oil and gas giant, which also partially owns Gazprombank as its financial arm.
This month, Washington disbursed $20 billion to Ukraine via a World Bank fund as part of a broader $50 billion G7 loan backed by Russia’s frozen assets, the culmination of months of discussions about how to utilize the immobilized resources. Some European officials, like European Central Bank President Christine Lagarde, have raised strong concerns about the legality of such an endeavor. Euroclear, the Belgian-based clearinghouse where the majority of Russia’s frozen assets are held, “insisted that using the assets would generate risks to the euro’s role as a reserve currency, as well as the broader stability of Europe’s finances” according to Bloomberg. Former British diplomat Ian Proud also argues that Treasury Secretary Janet Yellen’s “notion that this loan won’t ultimately sit on the shoulders of U.S. taxpayers is highly speculative, and dependent” on “the mercy of EU member states agreeing to extend the Russian asset freeze over the long-term which seems optimistic, at best.” He also notes, “The equivalent EU loan of $20 billion includes a clause that Ukraine may ultimately have to repay the capital if the proceeds from frozen Russian assets or war reparations from Russia are not forthcoming.” Proud has said in an earlier article that the scheme would complicate peace negotiations and prolong the war. Despite this, EU member states, reportedly with US support, are now reconsidering full confiscation of Russia’s assets to provide them to Ukraine — a stance the bloc previously opposed, which is why the G7 loan was developed in the first place. Several member states, however, are concerned about the idea.
On December 16, the EU issued its 15th package of sanctions against Russia in response to its war in Ukraine. The measures primarily focus on Russia’s “shadow fleet” of oil tankers used to evade sanctions, targeting 52 vessels. Additionally, the sanctions include 32 entities and 54 individuals, as well as Chinese companies allegedly aiding Russian firms in developing attack drones. The next day, the UK announced sanctions on oil trading firms and 20 vessels that it says are part of Russia’s shadow fleet.
Read more:
- Russia Blasts US Transfer of $20 bln to Ukraine Backed by Frozen Assets, Reuters
- US, UK Take Aim at Illicit Gold Trade in Sanctions Action, Reuters
- U.S., Britain Say They Target Global Money Laundering Network Used By Russians, Reuters
Syria (background)
The fall of the Assad government at the hands of a rebel coalition led by Hay’at Tahrir al-Sham (HTS) early this month raises new questions about the future of sanctions on Syria. A designated “State Sponsor of Terrorism” since 1979, Syria has become one of the most sanctioned countries in the world since the start of the civil war in 2011, with far-reaching economic and humanitarian consequences for the Syrian people. Delaney Simon, a senior analyst at the International Crisis Group (ICG), told Just Foreign Policy’s Aída Chávez: “I can’t overemphasize the intensity of the effect of the sanctions on the Syrian economy.” New York Times editorial board member Farah Stockman notes: “More than 90 percent of Syrians live in poverty today, and sanctions are one of the reasons. … Meanwhile, people who were in bed with the Assad regime got richer and richer.”
Assad’s overthrow has prompted a wave of calls for these sanctions to be lifted, including from HTS leadership. Reps. Joe Wilson (R-SC) and Brendan Boyle (D-PA) sent a letter to the Biden administration calling for the suspension of sectoral and other sanctions related to reconstruction. UN Envoy to Syria Geir Pedersen urged “a quick end to the sanctions so that we can see really a rallying around building of Syria.” The Vatican’s Apostolic Nuncio to Syria Cardinal Zenari expressed his desire that “the international community also responds, perhaps by abolishing sanctions, as they are a burden that weighs heavily on the poor. I hope that little by little, these sanctions will be lifted.” The ICG’s Delaney Simon said, “Not considering sanctions relief right now is like pulling the rug out from under Syria just when it’s trying to stand.”
Complicating the situation is the fact that the HTS itself has been designated a sanctioned terrorist entity by the UN Security Council since 2014, and by the United States since 2018, due to ties with Al Qaeda that it has since disavowed. Secretary of State Antony Blinken acknowledged that the US has been in contact with HTS since the overthrow, but the administration has clarified that there are no immediate plans for their delisting. UN Security Council members, meanwhile, may be discussing a proposal to delist HTS, but no formal request has yet been made. As some analysts have noted, the fact that the leading faction of the victorious rebels was itself subject to sanctions complicates any simple narratives about the effectiveness of sanctions in contributing to the collapse of the Assad government.
Read more:
- Keeping Sanctions in Force Would “Pull the Rug Out From Under Syria”, The Intercept
- The One Thing the US Can Do to Help Syria Now, The New York Times
- Relax Syria Sanctions to Bring in Western Oil Operators, Gulfsands Boss Says, Financial Times
Venezuela (background)
Late last month, the Biden administration announced new sanctions against over 20 “security and cabinet-level officials aligned with Nicolas Maduro,” while reiterating its position that the “overwhelming majority of Venezuelan voters … elected Edmundo González Urrutia as their next president.” Secretary of State Antony Blinken later suggested that the administration is considering revoking Chevron’s license to do business in the country, which it had granted in late 2022. Also this month, the Venezuelan National Assembly passed a law increasing criminal penalties, including a ban from running for elected office, for individuals who have openly endorsed the use of sanctions against the country.
President-elect Trump named longtime loyalist Richard Grenell to be his “Envoy for Special Missions” this month, citing Venezuela as one priority for the role. Regional analyst James Bosworth speculates that Grenell might be more inclined toward “deal-making,” in contrast to the hard-line ideological commitment to sanctions of secretary of state nominee Rubio. The president-elect is being urged by oil executives and others with financial interests in Venezuela to ease sanctions in exchange for greater cooperation with the Maduro government on migration, and in order to increase the flow of oil. Indeed, Maduro himself recently claimed, “If Venezuela overcomes its challenges and is freed from all economic sanctions, not a single migrant will head to the US within a year.” President Claudia Sheinbaum of Mexico also urged Trump to lift sanctions on Venezuela (and Cuba) in order to mitigate migration this month. And in a panel hosted by Florida International University, the US Institute of Peace’s Mark Feierstein similarly expressed opposition to a return to “maximum pressure,” noting that sanctions left the Venezuelan people “poorer, the opposition weaker, Maduro further ensconced in power and contributed to increased migration.”
Read more:
- The Case for Engagement With Venezuela, Foreign Affairs
- Will Trump Seek Detente With Venezuela in Return for Border Security?, The Hill
- Removal of Sanctions Would Halt Migration to US: Venezuelan President, Anadolu Agency
Other
As winter and famine loom, conditions for civilians in Gaza remain dire. Aid to the besieged Strip hit an all-time low in November, and the Financial Times reports that aid levels in December have remained similarly low, with the humanitarian situation continuing to worsen. A UN Palestinian refugee agency official stated, “It’s been 14 months. People here really are surviving on bread, lentils, food in tin cans. We’re not seeing fruit or vegetables. … In the past four months alone, nearly 19,000 children were hospitalized due to acute malnourishment.” Similarly, the UN Humanitarian Coordinator in Palestine emphasized that, “conditions in Gaza are unfit for human survival. Civilians cannot meet even the most basic human needs — water, shelter, food and healthcare. People are dying and essentials — including through humanitarian aid — are denied. These conditions directly violate international humanitarian law.” The situation in Northern Gaza is especially concerning, as the area has been almost entirely sealed off for over 65 days and UN officials report that, “all UN attempts to reach besieged areas there were either denied or impeded by Israeli authorities.”
Israel’s actions towards Palestinians in Gaza have led Amnesty International to accuse the country of genocide in a nearly 300-page report. Amnesty International called Israel’s restrictions on aid “extreme and deliberate” and said, “In the nine months reviewed for this report, Israel maintained a suffocating, unlawful blockade, tightly controlled access to energy sources, failed to facilitate meaningful humanitarian access within Gaza, and obstructed the import and delivery of life-saving goods and humanitarian aid, particularly to areas north of Wadi Gaza.”
Also this month, the House of Representatives passed the Protecting Americans from Russian Litigation Act of 2024 (H.R. 9563), which, if enacted, would prevent individuals and entities that break contracts as a result of newly enacted sanctions from being sued in US federal courts. The bill was motivated in part by recent suits brought by Russian companies against their US counterparts, and will likely incentivize stricter compliance (or overcompliance) with US sanctions.
A new report by the Charity & Security Network assesses the impacts of United Nations Security Council Resolution 2664 of December 2022, which broadens the humanitarian carve-outs of Security Council asset freezes. Among other things, the report finds that many financial institutions and donors are somewhat more comfortable engaging with sanctioned regions as a result of the measure, but that serious challenges remain in terms of awareness of the resolution and fear of punishment by government actors. As CEPR has previously noted, while humanitarian exemptions do provide benefits for impacted populations, they are often limited and do not negate the significant adverse humanitarian impacts caused by the sanctions themselves.
The Peterson Institute for International Economics published a new dataset and report compiling and assessing US sanctions and export controls against China. Among other things, the researchers find that these tripled during the first Trump administration, a dramatic escalation that was largely continued under President Biden. The electronics, defense, and technology sectors in China were the most targeted. The report also notes: “The US government has not developed a rigorous framework for assessing the tradeoffs between the costs and benefits of trade restrictions” and recognizes the risk that sanctions against third parties may “encourage countries to set up alternative payment and financing systems or turn to the black market.”
Read more:
- Biden Approves National Security Memo on China, Iran, North Korea and Russia Ahead of Trump’s Return, Associated Press
- ‘Appalling’: ICC President Says Threats, Sanctions Put Court in Jeopardy, Al Jazeera
- The Rise of US Economic Sanctions on China: Analysis of a New PIIE Dataset, Peterson Institute for International Economics
- US Hits China Firm for Cyberattack, ‘Burma’ Firms for Bombings, Asia Financial
- Nicaraguan Lawmakers Pass Bill Forcing Local Banks to Ignore Foreign Sanctions, Reuters
- U.S., Britain Target Gold Smuggling Scheme in Zimbabwe With Sanctions, United Press International
- Niger Resists in the Crosshairs of Sanctions and Climate Catastrophe, CounterPunch
- China Bans Exports to U.S. of Key High-Tech Materials in Response to Chip Sanctions, PBS News
- Canada Sanctions 8 Chinese Officials, Citing Human Rights Violations, Reuters
- Panama Cancels More Sanctioned Ships, Marine Link
About Sanctions Watch
Economic sanctions have become one of the main tools of US foreign policy despite widespread evidence that they can cause severe harm to civilian populations (which may, in fact, be the point). Though now a defining feature of the global economic order, sanctions and their human costs receive relatively little attention in most US media outlets.
CEPR’s Sanctions Watch news bulletin aims to generate more awareness on the use and impact of sanctions through monthly round-ups of news and analysis on US sanctions policy.
Previous editions of the Sanctions Watch can be found here. CEPR’s US Sanctions Policy FAQ can be found here.
