For decades, Washington’s favourite means of punishing nations that do not subscribe to its narrative has been through the imposition of economic sanctions. This has become particularly apparent with the ongoing and increasing sanctions against Iran, Russia and North Korea. While sanctions against these governments have garnered headlines for the past few years, in fact, there are far more sanctions that we rarely hear about.
In 1950, the Office of Foreign Assets Control was formed as part of the United States Department of the Treasury. OFAC administers and enforces economic and trade sanctions that are based on U.S. foreign policy and national security goals. Sanctions have been imposed for the following reasons:
2.) international narcotics trade
3.) proliferation of weapons of mass destruction
4.) threats to national security, foreign policy and/or economy of the United States
In the United States, sanctions can originate in either the Executive or Legislative branches of government. Presidents begin the process by issuing an Executive Order or EO which affords the president social powers to regulate commerce with a given entity. Under the EO, the president declares that there is a national emergency in response to “unusual and extraordinary” foreign threats, for instance, the proliferation of weapons of mass destruction and the September 11, 2001 attack on the United States. In addition to Executive actions, Congress can also pass legislation to both modify and impose sanctions. Most sanctions programs are administered by the previously mentioned OFAC, however, other government departments may be involved including Homeland Security, Justice, State and Commerce.
On the OFAC website interested parties can search for information on federally mandated sanctions programs. Under each sanctions program there is an exhaustive listing of changes to the programs, guidelines that must be followed under penalty of law. There is also a listing of “General Licences” which are issued in order to authorize activities that would otherwise be prohibited under law. Here is a list from OFAC showing active sanctions programs and the date of their last update:
OFAC also tracks “Specially Designated Nationals (SDNs) and Blocked Individuals“. This list contains the names of individuals and companies that are owned, controlled by or acting on behalf of targeted nations as well as the names of terrorists and narcotics traffickers that are not affiliated with any nation. The assets of these SDNs are blocked and American citizens and permanent residents are prohibited from doing business with them. Here is a very small sampling of SDNs from the PDF version of the complete listing:
In total, there are 1157 pages listing the names of over 6000 SDNs and blocked individuals.
Here is a specific person showing how difficult it is to ensure that you are not dealing with a SDN with an unknown number of aliases:
In this case, the SDGT following his name indicates that he is sanctioned under the Global Terrorism Sanctions Regulations.
OFAC can impose civil penalties on individuals and organizations that act in contradiction to the imposed sanctions. So far in 2018, there have been two penalties imposed as shown here for doing business with Iran:
…and here for doing business with Sudan:
During 2017, 16 OFAC Enforcement Actions resulted in penalties of $119,527,845, up substantially from penalties totalling $21,609,315 in 2016.
Let’s now look at the sanctions programs that are currently in place from the Council on Foreign Relations. Here is a graphic showing the current U.S. sanctions programs and their year of inception:
“The consequences of this trend are evolving, but they potentially include companies’ “de-globalization”. That is, as companies are increasingly forced to think of themselves as tied to their home governments, they will think twice before investing in certain markets abroad. Other consequences include changes in traditional foreign trade patterns in line with new geopolitical alignments. Faced in 2006 with the Russian wine embargo, Georgia had to look for new markets in the West, where it was headed politically. When in 2014 Russia faced Western sanctions, it accelerated its rapprochement with China, the one major power that refused to condemn its actions and shared Moscow’s opposition to US global dominance.
The outcome of these geo-economic campaigns is not a zero-sum game. The stronger economy backed by other forms of power can incur more damage on the target country than it will sustain in return, but it does not always alter the political behaviour of the government to be “punished”. Sometimes sanctions can make that behaviour even more problematic. Ironically, the true winner may be a third party that jumps into the opening: European countries in the initial phases of US-Iran sanctions; China in the case of current Western sanctions against Russia; Russia in the case of the post-Tiananmen Western weapons ban on China; Turkey in the situation when EU pressure made Russia abandon its South Stream gas pipeline project.” (my bolds)
In many cases (i.e. Iran, Syria and North Korea), the ultimate desired impact of sanctions is to create an atmosphere where the targeted government is subjected to “regime change”. As well, sanctions are generally less effective against nations that are adversaries since the sanctions may create a political climate where there is a stiffening of resolve of the people being punished by an outside power. We need look no further than the example of Vladimir Putin who, despite nearly five years of sanctions, still retains the backing of the majority of Russians as shown here:
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