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Facing mounting global crises, Biden risks addiction to sanctions

Whether it's Ethiopia, Belarus, or Nicaragua, economic warfare rarely works and often winds up being counterproductive.

Analysis | Europe

President Biden has a full plate of global problems.

In Ethiopia, a brutal, year-long civil war between the government in Addis Ababa and the Tigray People's Liberation Front has plunged Africa’s second largest country into destitution. Along the European Union’s eastern border with Belarus, up to 2,000 migrants from the Middle East and Africa, some supplied with wire cutters courtesy of the Belarusian government, are camped out in a no-man’s land.

Meanwhile, about 930 miles to the southeast, as many as 100,000 Russian troops are amassed near Ukraine’s eastern border. There are even issues percolating in America’s own hemisphere, like autocrat Daniel Ortega winning a rigged fourth term as Nicaragua’s president after dismantling what was left of his country’s opposition.

The Biden administration, scrambling for a response, has leaned on a familiar tool for each of these disputes: economic sanctions. But will locking high-profile politicians out of their bank accounts and taking away visas do anything productive? Unfortunately, the White House should not get its hopes up.

The Treasury Department’s sanctions warriors have been busy during Biden’s first 10 months on the job. On November 12, the Biden administration blacklisted the Eritrean military in retaliation for its contribution to Ethiopia’s humanitarian disaster. In November, the State Department announced additional sanctions against Belarus were in the works, coming after several earlier rounds in response to the Lukashenko government’s crackdown on pro-democracy protests.

The White House, in partnership with its allies in Europe, is preparing stronger financial restrictions on the Russian economy in the event Moscow green-lights another invasion of Ukraine. And on November 20, President Biden barred entry to the United States of all Nicaraguan government officials, pending certain exceptions, Five days earlier, the U.S. Treasury blocked the assets of nine Nicaraguan officials and its federal prosecutor’s office for shutting down dissent.

All of these actions continue a trend that began early this century. According to the Treasury Department, U.S. sanctions designations have risen by 933 percent since 2000. Dozens of countries today are under some form of U.S. economic punishment, whether it includes Zimbabwe for human rights abuses, politicians in Central America for corruption, or Turkey for purchasing Russia’s S-400 air defense system. It’s not a stretch to argue  sanctions are the go-to tool when Washington wants to express dissatisfaction.

In a way, the fixation makes sense. The United States is still the most integral player in the global financial system. The dollar is still dominant, encompassing 62 percent of the world’s total reserves. U.S. policymakers inevitably hope to translate this financial heft into leverage in pursuit of U.S. foreign policy objectives.

High-minded talk about values and morals aside, power and cut-throat realism remain the hallmarks of global politics. Leverage therefore remains highly valuable in the game of statecraft. Does anyone truly believe China or Russia wouldn’t do the same if their currencies were keeping the international financial system afloat?

Having the capacity to elicit financial harm on a bad guy, however, doesn’t necessarily mean the United States is accomplishing anything. The number of cases where U.S. sanctions have failed to force a foreign government to change its conduct are too numerous to count.

North Korea still possesses nuclear warheads and continues to develop its missile program. Nicolas Maduro still controls Venezuela, even if the United States no longer formally recognizes him. Crimea is still in Russia’s grasp, and Moscow isn’t going to sever its military and financial support to the separatists in Eastern Ukraine anytime soon. Bashar al-Assad, perhaps the 21st century’s most ruthless dictator, has not only won Syria’s decade-long civil war but is now hosting formal delegations from countries that used to arm his opponents. In terms of concrete policy achievements, U.S. sanctions haven’t produced much of anything. The results don’t match the hype.

As former Treasury Secretary Jacob Lew wrote years ago, overusing U.S. sanctions can also have a negative impact on U.S. financial power over the long-term. Countries that find themselves subjected to U.S. penalties have a greater incentive to find workarounds. North Korea, for example, is an expert at sanctions evasion, utilizing ship-to-ship transfers in the middle of the night to export coal and bring in refined oil.

Rising powers like China are retaliating with domestic laws that threaten lawsuits against any entity on Chinese soil that abides by U.S. sanctions. Russia and China have spoken in public about the need to lessen the world’s dependence on the U.S. dollar to counteract whatever sanctions Washington imposes. Even U.S. allies in Europe have attempted (without success, thus far) to construct alternative payment channels to sidestep U.S. sanctions on Iran.

None of this is to suggest that sanctions should never be utilized. In some circumstances, such as when the U.S. attaches sanctions to realistic policy goals rather than maximalist demands, the tool can be successful.  

Sanctions are an easy and popular way to show resolve, but they aren't fool-proof. U.S. policymakers need to be far more judicious about when to employ the financial hammer.

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