US economic sanctions prescribed acceleration and restructuring


    The US Treasury Department has published a report on the analysis of the effectiveness of economic sanctions. The authors note that in the new operating conditions of the world economy and financial system, it is necessary to improve the sanctions mechanism, setting specific goals for them and attracting US allies and partners in order to more effectively fight not only terrorists and drug trafficking, but also those who incite regional conflicts.

    Authors report note that “after September 11, 2001, economic and financial sanctions have become the primary mechanism for countering a number of threats to national security, international politics and the US economy.”

    It is noted that since 2000, the scale of sanctions has increased tenfold – from 912 organizations and individuals in 2000 to 9421 – in 2021.

    The geographic scope of the sanctions has also noticeably changed – if in 2000 the main targets of sanctions were such countries as Cuba, Iraq, Libya, Yugoslavia and Iran, now they are Venezuela, Russia, Syria, Iraq, Iran and North Korea.

    Among the successfully completed tasks, the US Treasury Department considers that “Iran prevented the use of the international financial system and commercial markets to profit from oil and other activities to support a nuclear program, ballistic missile development, and support terrorist activities. These sanctions pushed Iran to the negotiating table in 2015. ”

    In addition, “thanks to the coordinated actions of the United States and foreign states, billions of dollars of companies associated with (Colombian.— “B”) the Cali drug cartel, which in 2014 led to the collapse of the drug cartel and the imprisonment of its leaders. ” Another success of the US Treasury Department believes that with the help of sanctions it was possible to “protect tens of billions of dollars of Libyan assets from the waste of former members of the government Libya after the fall of the Gaddafi regime in 2011 ”.

    In addition, the sanctions helped the United States “to identify more than 1,600 terrorist entities and individual terrorists since September 11, 2001, with the aim of disrupting their activities. For example, US sanctions have disrupted Hezbollah’s funding to such an extent that in 2019 the organization had to cut salaries in its military wing, the cost of efforts in the media space, and publicly seek donations. ”

    At the same time, the authors of the report admit that in the conditions of the changing world economic financial system, it is necessary to improve the mechanism of sanctions.

    Among the new conditions and challenges, the US Treasury Department considers the growth of cybercrime, the evolution of the financial system and changes in its structure. “American rivals and some allies are reducing their use of the dollar and their level of participation in the American financial system by becoming more involved in broader cross-border trade. It should be understood that such trends can reduce the effectiveness of sanctions. In addition, the development of technologies such as digital currencies, alternative payment systems and new ways of making cross-border transactions reduce the potential effectiveness of US sanctions, ”the Treasury admits.

    Among the proposed changes, the US Treasury Department, in particular, proposes “to create a sanctions mechanism that would link them to the achievement of a clear goal.” “Economic and financial sanctions must be linked to clear and specific goalscorresponding to the tasks of the president, such as:

    • countering the forces that incite regional conflicts,
    • counteracting certain organizations using violence or carrying out other illegal activities,
    • ending the persecution of any national minority,
    • reducing the unauthorized proliferation of nuclear technology,
    • committing certain actions of an inhuman nature ”.

    The US Treasury emphasizes that in order to improve the sanctions regime, closer cooperation of departments such as the presidential administration, Congress, the National Security Council, the State Department, and the Department of Justice is needed.

    The key characteristics the new sanctions mechanism should be:

    • embedding sanctions in the broader US political strategy, their compliance with specific tasks;
    • conducting a thorough technical and economic analysis of the situation necessary for an accurate understanding of whether a particular sanction instrument will be effective in achieving a specific goal;
    • analysis of possible undesirable consequences of sanctions for the United States itself, its economy, US allies or third countries – to prevent such undesirable consequences;
    • development of multilateral cooperation and coordination of efforts in the implementation of sanctions – with allies, partners, representatives of industry, financial organizations, civil society and the media;
    • development of an operational mechanism for partial or complete lifting of sanctions or their buildup – taking into account changes in the situation or behavior of the object of sanctions.

    “The United States is facing a changing world, where innovations in the financial industry, shifts in global economic activity and new geopolitical challenges are changing the way economic power is used to support national interests … Sanctions policy needs to be modernized and adapted to new conditions. While this will require difficult decisions from the Treasury Department and other US government officials on how and when to apply sanctions, this process will definitely improve the effectiveness of sanctions in the long run, ”the Treasury Department concludes.

    Evgeny Khvostik


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