The United States boasts a well-stocked arsenal of weapons, diplomats, and alliances. But there is nothing in the U.S. foreign policy toolbox more popular inside the corridors of Washington, D.C. than economic sanctions.
Popularity doesn’t necessarily correspond with effectiveness. Despite the infatuation with sanctions in the Beltway, they aren’t particularly successful at achieving U.S. policy goals. The Biden administration, no stranger to levying U.S. financial power, is rightly re-examining the entire edifice of U.S. sanctions now on the books.
Without a doubt, sanctions are often the preferred policy option whenever U.S. policymakers face a tricky situation. Hardly a week goes by when the State Department doesn’t announce another round of financial penalties against a foreign government in response to a perceived sin, whether it concerns human rights abuses in Nicaragua or a violent crackdown on dissent in Myanmar. In general, sanctions are thought of as a relatively low-cost, high-impact tool for the United States—a way to brandish U.S. power in defense of U.S. values and chip away at thorny problems. It’s no wonder then why leveraging the U.S. financial system is increasingly unchallenged inside Washington policy circles; the Trump administration averaged an astounding 1,027 sanctions additions per year during its four-year tenure.
At first glance, the Biden administration appears to be following in its predecessors’ footsteps. The U.S. Treasury Department has been quite busy on the sanctions front over the Biden administration’s first six months, with Belarus, Russia and China the three most prolific targets for U.S. financial restrictions. Yet after years of incessant use, those very same sanctions measures have become a kind of crutch for Washington—an automatic, go-to option regardless of how intractable, significant, or minor a problem or may be.
However, sanctions are hardly cost-free — not to the United States itself, and certainly not to the people unlucky enough to live in a targeted country. If the awesome power of the U.S. financial system is not narrowly tailored, sanctions frequently do more harm to civilian populations than they do to adversarial governments. Because banks and other financial institutions are inherently risk-adverse and wary of flouting U.S. rules or guidance, U.S. primary and secondary sanctions centered on one area (oil or coal exports, for example) can easily bleed into other areas like humanitarian deliveries and general commerce. Although U.S. sanctions against Iran were crafted to compel Tehran to stop building its nuclear program and supporting proxies across the Middle East, they have also complicated shipments of medicine and medical equipment to the Iranian people at a time when the country was experiencing a significant covid-19 infection rate.
Governments have the capacity and resources to adapt. Ordinary people, however, typically don’t have that same luxury.
From a practical standpoint, U.S. sanctions also happen to be quite overrated in terms of forcing targeted governments to change their behavior. While sanctions can certainly shrink a government’s revenue, they have a poor track record of forcing those very same governments to align their policies with U.S. preferences. Washington’s targeting of Iran’s oil industry may have scared away customers and plunged Tehran’s crude exports by 70%, but it did nothing to convince Iranian leaders to stop arming proxies, installing more sophisticated centrifuges, or enriching ever-greater quantities of uranium. All of these activities arguably increased, worsening U.S.-Iran relations and heightening the probability of tension resulting in armed conflict.
The same result can be found in Venezuela, another country at the receiving end of U.S. maximum-pressure campaigns. In 2019, the Trump administration sanctioned Venezuela’s state-owned oil giant in a bid to deprive the Maduro government of revenue and force Caracas to respect democratic principles. Venezuela’s oil exports are at their lowest point since the 1940’s. Maduro, however, continues to hold onto power—in fact, he is consolidating his authority and turning to partners like China and Iran to find a way around the U.S. financial system.
Most importantly for the U.S., an over-reliance on sanctions undermines the U.S. financial system over time and can compel other countries to begin exploring alternatives to the U.S. dollar. The United States is already seeing this play out in real time. U.S. allies and partners in Europe are becoming increasingly frustrated with Washington’s infatuation with secondary sanctions, in which countries that transact with U.S. sanctions targets are themselves susceptible to being blocked from accessing U.S. banks and the U.S. market. European policymakers, including European Union High Commissioner Josep Borrell, are openly suggesting that the bloc boost the international power of the euro in order to avoid a situation where the continent is held captive to U.S. laws and regulations. China has gone a step further by passing a law that would theoretically make it illegal for China-based companies to enforce U.S. secondary sanctions, essentially forcing companies around the world to choose between U.S. and Chinese markets.
While the Biden administration’s new sanctions policy review is not finalized, it is a potential big step toward lessening U.S. dependence on a tool whose record is often overstated.
When direct U.S. interests are in jeopardy, U.S. sanctions may very well be necessary and appropriate. But to lean on them reflexively in every circumstance exaggerates their effectiveness and weakens U.S. financial power in the long-run.
Daniel R. DePetris is a fellow at Defense Priorities and a foreign affairs columnist for Newsweek. The views expressed re the author's own.
