Revamping US sanctions: Shifting from punishment to persuasion

For the past three decades, economic sanctions have become the most significant tool of economic statecraft wielded by the United States and its Western allies.

The goal has been to address international challenges to peace and security that range from ending internal conflict and territorial aggression to thwarting nuclear proliferation, massive human rights violations and terrorism.

Driven by superpower cooperation in the optimism of the Cold War’s demise in the 1980s, the first decade of these sanctions originated in the United Nations Security Council and led to relative success in ending apartheid in South Africa, and ending wars in the Balkans, and Sierra Leone, Liberia and Angola.

With the US and Great Britain taking the lead at the time, all UN members agreed to implement and enforce these measures. Under these auspices, the US diversified the type of sanctions imposed and expanded dramatically the number of entities and individuals targeted.

When the sanctions era began in the 1990s, less than 10 percent of the world economy was sanctioned. Now nearly one-third of the global economy operates under sanctions.

Moreover, in 2024 sanctions are a structural reality in eight of the worst cases of humanitarian disasters tracked by Concern Worldwide and are operative in 10 of the globe’s violent conflicts listed by the International Crisis Group.

Major critiques

In the past decade, several substantial, valid critiques of international, and especially of the US' autonomous sanctions, have developed. They question the effectiveness of sanctions and their negative effect on human rights and well-being.

One argument maintains that the US has currently imposed sanctions against 38 countries and issues such as terrorism and human trafficking, which illustrates they are overused because they have become too easy to impose by the President or Congress. And they have failed to achieve their objectives in virtually any case of the past decade.

The evidence in support is convincing as stalled and endless sanctions of targets like Cuba, Venezuela, Iran, and North Korea have become intractable disputes.

The second critique identifies the significant negative impact of sanctions on the socioeconomic welfare of innocent civilians within the target nation.

Specifically, imposing sanctions on banks and restricting access to international financial markets can spur inflation and the general deterioration of economic quality of life. This often worsens human rights in a country run by repressive governments.

Additionally, in societies suffering from war, sanctions create major barriers to providing humanitarian relief to innocents trapped in the violence.

These charges present the harsh reality that sanctions failures and severity have had a deleterious effect on US foreign policy generally, hurting its global prestige and power. Their overuse has also contributed to deep divisions in the UN Security Council, ending the era of sanctions effectiveness and global legitimacy.

In addition, sanctions so pervade the international environment that their entanglement with other global trends and crises is shocking.

A way forward

For the next US president and Congress to correct the quagmire of ineffective, ongoing sanctions, and establish new means and structures that improve sanctions success or aid their demise, I offer three recommendations.

The first is to create an independent commission to undertake an all-government review of the role and purpose of sanctions in US foreign policy.

The commission would scrutinise various dimensions and interactions within sanctions agencies, the White House and Congress and then recommend coordinated actions that would make sanctions an effective, legitimate, and just tool of economic statecraft.

The 2021 Treasury review accomplished part of this task for the Treasury. The government model for the sanctions commission is to create an equivalent to the US nuclear policy review.

Secondly, the US must build from previous momentum, in which it has led efforts to harmonise new best practices for sanctions relief within the government and for Western allies. This would increase the prospects for sanctions success in reducing violent conflict.

This momentum includes several reports of new best practices to mitigate the unintended impact of sanctions on civilian populations and the growing problem of banking and private-sector overcompliance.

The US also joined Ireland in spearheading UN Security Council Resolution 2664 in December 2022, which created an unprecedented humanitarian carveout for most UN asset freeze regimes, or governments hit by financial sanctions.

These progressive actions, especially UNSC 2664, create new opportunities for US leadership in economic statecraft.

The third recommendation is that leaders inject a new urgency with regard to US diplomatic engagement with the sanctions target country from the moment sanctions are imposed.

Continued isolation of a target as punishment runs contrary to sanctions as bargaining leverage to produce political change, but it is the modus operandi in too many current cases.

When diplomatic engagement has occurred in a sanction’s case, the usual dynamic is for the US to promise sanctions relief in exchange for concessions, if not full capitulation, of the target government. This appears as the end game of the negotiations.

Since the US essentially "holds all the cards" in such a negotiation, we might be more inventive and make some sanctions relief concessions as an example of goodwill and as an incentive to the target to continue to participate in an ongoing negotiation.

Change assumptions

In addition, the US must change its assumptions and tools to succeed in such diplomacy.

A starting point would be to replace the old and ongoing narratives that have stymied past prospects for sanctions leading to an end to the diplomatic crisis process.

This begins with negotiators and their national leadership rejecting several truisms they often hear within their own domestic environment. These assertions are widely held and heard from Congress and often handcuff US negotiators from the outset.

A common claim made by government officials is that to sit down to negotiate the offences made by the other nation essentially rewards the illegal behaviour of the target.

Closely related are disparaging claims that engaged diplomacy provides the target with legitimacy and a louder platform for the very actions which led to sanctions. Another view demands that the target make various concessions as a condition of the US joining the negotiation.

Taking on new action in sanctions cases demands an intense focus and determination. But in doing so, the US can remedy the embarrassing cases of sanctions on Cuba and the liberated areas of Syria, and move on to other cases, ending what is often called "forever sanctions."