Today the U.S. Treasury Department announced a general license (read: sanctions exemption) that permits the payment of taxes, fees, import duties, or the purchase or receipt of permits, licenses, or public utility services for all transactions–even commercial ones–so long as they aren’t for luxury goods or services that do not support basic needs.
Ok, why is this a big deal?
In practical terms, General License No. 20 opens up commercial transactions and cross-border trade in Afghanistan by allowing for the kinds of incidental payments listed above that are necessary to conduct business. This allows for commercial transactions related to imports from and exports to Afghanistan, including financial transfers to governing institutions such as Da Afghanistan Bank (central bank of Afghanistan).
Previously these types of payments were only permitted for non-commercial humanitarian activities. For example, General License No. 19 permits certain transactions and activities involving the Taliban so long as they are “ordinarily incident and necessary” to carry out specified humanitarian and development projects which includes the “payment of taxes, fees, or import duties, or the purchase or receipt of permits, licenses, or public utility services.” This implied that similar payments related to commercial activities were still subject to sanctions. This severely reduced critical cross-border trade between landlocked Afghanistan and its neighbors.
Is this going to attract big international banks or projects to Afghanistan anytime soon? Probably not. Afghanistan isn’t that lucrative for them to begin with and now that they’re left with Afghanistan’s real economy, it just doesn’t make sense from a business perspective. But this will be a game changer for regional traders and Afghanistan’s domestic commercial sector. The Biden administration has clearly recognized that Afghanistan cannot stay afloat through aid alone.
U.S. sanctions that were intended to limit the Taliban and Haqqani Network as non-state actors have now extended far beyond this limited scope to effectively sanction the de facto Afghan government. Today’s general license will reduce some of this harm but more still needs to be done to inject liquidity into Afghanistan’s economy and assuage the chilling effect of sanctions that no longer serve a purpose.
Adam Weinstein is Deputy Director of the Middle East program at the Quincy Institute, whose current research focuses on security and rule of law in Afghanistan, Pakistan, and Iraq.
Afghan people walk past a Kabulbank branch in Kabul September 14, 2010. Afghanistan's central bank has stepped in to take control of the troubled Kabulbank, its governor said on Tuesday, after suspected irregularities raised concerns over the country's top private financial institution. REUTERS/Andrew Biraj (AFGHANISTAN - Tags: BUSINESS)
October of 2024 was the most militarily successful month for Russia since July of 2022. After months of sustained pressure, and mostly stagnant front lines, Russian troops have broken through and made significant gains in the Donbas region of Ukraine. According to the New York Times, Russian forces have secured more than 160 square miles there, and are capturing strategic towns along the way.
It seems as though the next goal for Russians in the Donbas is to take the strategic rail town, Pokrovsk, which would seriously inhibit Ukraine’s ability to resupply its forces in the region. Encirclement of this strategic city is likely as Ukraine has likely lost Selydove this week, a city which is only about 20 miles south of Pokrovsk.
Experts say Russia’s advances this past month are due to several factors. Analyst at the French Foundation for Strategic Research, Vincent Tourret, says that Ukraine is losing ground due to Russia’s use of powerful guided missiles, and Ukraine’s lack of fortifications in the region. According to Tourret, “Ukraine’s defenses are more and more battered, the terrain is more and more favorable for Russian offensives and, on top of that, the Russians have a better impact, the three factors combine to explain the increase in Russian gains.”
These losses, combined with reports that Ukrainian forces are overstretched, and the fact that North Korean soldiers are now present in the conflict do not bode well for Kyiv. Additionally, Ukraine is suffering from a lack of manpower, as well as low morale among its existing soldiers. To combat this, Kyiv has introduced a new mobilization drive, hoping to recruit an additional 160,000 soldiers.
Other Ukraine News This Week:
According to Reuters, the Pentagon has declared that Ukraine would not gain additional permissions for the use of American weapons as a result of North Korean soldiers being deployed to Russia. Pentagon officials said on Monday that 10,000 North Korean troops had been deployed to eastern Russia for training, up from an estimate of 3,000 troops last Wednesday.
“In response, allies must scale up military support for Ukraine,” Ukrainian Foreign Minister, Andrii Sybiha said. “Lift restrictions on long-range strikes. Start intercepting Russian missiles and drones over Ukraine. Extend invitation to NATO. Boost investment in Ukraine’s arms manufacturing.”
For its part, the DPRK is defending its decision to assist Russia militarily. At a U.N. Security Council Meeting on Wednesday, DPRK Ambassador Kim Song asserted the nations’ right to “develop bilateral relations in all fields.”
South Korea has begun to strengthen its ties with Ukraine as a response to North Korean support of Moscow. Reuters reports that the countries are stepping up cooperation and intelligence sharing to develop future countermeasures against Pyongyang. This comes after weeks of increased hostility between the two Koreas, with North Korea demolishing connecting roads to its southern neighbor earlier this month. In addition to intelligence sharing, South Korea is contemplating sending weapons to Kyiv for the first time, which could transform the Ukrainian battlefield into a proxy conflict between Pyongyang and Seoul.
The United States unveiled a new round of sanctions on Wednesday, focusing on almost 400 individuals and entities who were accused of aiding Moscow’s war machine. According to the Agence France Presse, Deputy Treasury Secretary Wally Adeyemo said, "the United States and our allies will continue to take decisive action across the globe to stop the flow of critical tools and technologies that Russia needs to wage its illegal and immoral war against Ukraine.”
Spokesperson Matthew Miller was asked about the reports of North Korean soldiers in Russia, and if he knew how close they were to Kursk. Miller said that they were aware of around 10,000 soldiers who were sent to Russia but could not disclose if they knew how close they were to Kursk. He did say, however, that, “we have over the last few days seen a portion of those 10,000 groups move west, closer to Ukraine, In terms of an assessment, we’re concerned that they intend to use them to fight or to support combat operations against Ukrainian forces in Kursk.”
Spokesperson Miller confirmed that the State Department believed that Russia was violating international law by training North Korean troops, even though the nations have a mutual military treaty. Miller said that the United States and its partners will be evaluating the potential for new sanctions and that US delegations will continue to be sent to Kyiv.
A reporter asked Miller if the US had any concerns over China’s lack of response to North Korea’s sending troops to Russia. He said that ultimately Chinese officials can speak for themselves, but that “we have engaged directly with officials with the Government of China to make quite clear our concerns about this deepening military relationship between Russia and North Korea, and to make clear that we think this ought to be a source of concern for China as well as other countries in the region.”
The Spokesperson also said that North Korean troops in Russia did not “complicate the situation” for NATO and its allies, but that that some allies, specifically South Korea, were concerned about the development.
When asked about Ukrainian President Zeleneksyy’s claim that only 10 percent of a promised aid package had arrived, Miller directed reporters to the Pentagon, saying that he could not comment on the topic.
The U.S. and its allies have relied on sanctions as one of the primary tools for curtailing Russia's military operations in Ukraine.
Running the gamut from individual limits against Russian leaders and businesses, to comprehensive restrictions on key sectors like Russian oil and natural gas, these sanctions are intended to impose unacceptable economic costs that directly hinder Russia’s war effort and indirectly incentivize Russia to end its campaign.
However, experts have been debating whether and how well they have worked. Some argue that the comprehensive sanctions, and in particular the widespread restrictions against its oil and gas revenue, are bringing Russia’s economy — and therefore its military campaign — to its knees. Others concede that sanctions may not successfully end the war outright, but contend they at least offer an inexpensive and low-risk way to slow Russian advances and take a public stand against the invasion. And yet, after nearly three years, the war still rages, Russia’s economy has rebounded, and Russian domestic support for Putin and the Kremlin are at an all-time high.
The problem with this solely economic debate is that it overlooks the risk for more serious counterproductive consequences. Sanctions are not just failing to end the war in Ukraine or weaken the Kremlin’s warfighting currency, they’ve also backfired, inadvertently strengthening Moscow’s hardline position, undermining the utility of alternative strategies, and shoring up the Kremlin against future international coercion. As a result, the fallback position that sanctions are at least better than nothing ignores their long-term perverse consequences for regional peace and international stability.
Sanctions against Russia after its invasion of Ukraine have included everything from economic restrictions to information controls. They have grown to include bans on industrial and technology export, bank freezes, restrictions against state-owned media outlets, and targeted sanctions against “high profile individuals and entities” including President Putin. The crown jewel is international bans on Russian oil and gas which account for 60% of Russia’s exports and nearly 40% of its federal budget.
The sanctions arguments
From the outset, Russia in 2022 appeared ready to cave to Western sanctions. Economic size and market diversity are usually good predictors of sanction-sensitivity, and Russia’s GDP is less than a quarter that of the U.S., its GDP-per-capita ranks only 70th globally, and perhaps most importantly, it is a rentier state, highly reliant on oil and gas export revenues for many of its state functions. Russia’s sanctioners, on the other hand, all possess formidable economies and the diversified stable markets necessary for wielding significant clout.
On the surface, these sanctions therefore looked like a good bet. And by naïve criteria they even enjoyed some success. Proponents argue sanctions are workingbecause foreign businesses closed, domestic production nearly halted, and domestic talent fled so that now the Russian economy is a ticking time bomb ready to collapse. But sanctions are a long game that take time to accrue pressure, so proponents argue for waiting it out until Moscow cries “uncle.”
Russia’s economic resistance
But patiently waiting for Russia to run down its reserves and public patience has not panned out as proponents hoped. Targets of persistent sanctions, like Moscow, are not passive recipients. It has shielded critical supporters, built new trade networks, and ultimately earned more from its oil exports in 2023 than 2021. Some critics argue that the sanctions have failed because the U.S. and its allies are not able and willing to impose sufficiently thorough sanctions. Others blame Moscow’s clever domestic fiscal policies. Still others blame BRICS nations for systematically undermining the allies’ sanction efforts.
But whether by external sabotage or Moscow’s growing domestic immunity to sanctions, Russia is now economically less susceptible to sanction pressure than it was in 2022. Its trade flows with China doubled from 2021 to 2023 and exports to India increased ten-fold. Rather than curtailing the war effort, sanctions have catalyzed an economic and political partnership with China, India, Iran, and North Korea, suggesting a worrying geopolitical restructuring. The implication is that this growing network of partners will be more economically sanction-resistant and politically anti-Western.
Public approval
Pro-sanctions hold-outs argue, however, that even if Moscow manages to shield its elites from economic costs, the Russian public is still left holding the bill and will eventually turn on its leaders. But this pathway to policy change is looking increasingly unlikely. While sanctions are meant to undermine public support for the government’s sanctioned behavior, the Russian public has instead reacted to sanctions by rallying behind the government, strengthening Putin and his supporters’ domestic political position. Even before indicators of economic health began to boomerang, public approval ratings of both Putin and his government more generally had already surpassed pre-war levels.
Like many autocracies, Moscow holds tight reins on the spread of information domestically, and has a history of co-opting the information that does come out to its own political advantage. Leaders have used sanctions to rally public support, repurposing them to foment patriotism and resist foreign pressure by controlling the domestic narrative around sanctions and the war. This rally effect is not new. Putin and the Duma enjoyed a slight bump in favorability following the invasion of Georgia in 2008 and a larger increase following Crimea in 2014. What is notable, however, is how long all branches of government have managed to ride the post-Ukraine high. Putin’s approval hovered around 65% for two years, but jumped to over 80% following the invasion and has risen from there.
Without independent fact-checking to muddy the domestic information environment, calls to resist sanctions and rally behind leaders in Moscow can fall on more fertile ground. They see only claims of Russia’s “Responsibility to Protect” citizens in Ukraine, exhibits on NATO and the U.S.’s “chronicle of cruelty,” and claims that “regardless of the situation in Ukraine…[the West has] only one goal – to restrain the development of Russia.” As such, sanctions and unofficial restrictions have inadvertently strengthened Putin and his supporters’ domestic political position.
Counterproductive consequences
The sanctions debate should look beyond simple economic measures to consider the long-term risks. Sanctions are not just a cheap, non-violent way of signaling — however futile — public disapproval. Economic costs are not their only downside. The result of sanctions has been a Moscow with greater incentive and ability to pursue future military incursions, enjoying the unquestioned approval of an isolated domestic public, and the economic resistance to weather future restrictions. As a result, while sanctions may scratch Washington’s itch to resist the invasion, they actually create perverse incentives that undermine future engagement with Moscow on Ukraine and international security more broadly.
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Top photo credit: Indian Prime Minister Narendra Modi and China's President Xi Jinping attend the BRICS summit meeting in Johannesburg, South Africa, July 27, 2018. REUTERS/Mike Hutchings
Right before last week’s 2024 BRICS summit in Russia, the Indian foreign ministry made an announcement — a landmark disengagement deal between India and China.
According to the deal, both sides will reduce the number of troops at the two unresolved friction points at the India-China border and resume their regular pattern of patrolling from before their deadly 2020 border clash. Later, at the summit, Prime Minister Narendra Modi and Chinese President Xi Jingping held a bilateral meeting, which was much more civil than their meeting last year, signaling a thaw in the tense India-China relationship.
This news is especially relevant to the United States, which has been growing closer to India over the past few decades on the assumption that it is a potentially powerful partner to balance China.
India and China have shared a largely peaceful, though sometimes tense, relationship since the mid-20th century, when India attained independence from the British and the Chinese Communist Party established the People’s Republic of China. India was the first non-communist country in Asia to recognize the PRC in 1950. But India-China relations worsened in 1959, when India granted sanctuary to the Dalai Lama and allowed him to establish a Tibetan government-in-exile, in addition to housing thousands of Tibetan refugees.
Later, the two countries fought in the Sino-India war of 1962, which ended when China unilaterally declared a ceasefire in November of that year, and Chinese troops retreated to their pre-war position. Over the years, India has also opposed China’s arming and backing of nuclear-armed Pakistan, New Delhi’s biggest adversary.
In the past half-decade, under Modi’s reign, China-India relations have gone through ups and downs, although the two countries still maintain strong economic ties. (China is India’s biggest trading partner.) When Chinese troops intruded into areas traditionally patrolled by India along their disputed border, called the Line of Actual Control (LAC), a melee broke out between the two sides in the Galwan Valley in June 2020, resulting in the deaths of more than 20 Indian soldiers and at least four Chinese troops.
The Chinese justified their actions by saying they oppose Indian infrastructure projects on their side of the Galwan bend; while the Indians claimed that the bridge they had built was over seven kilometers away from the LAC, well under their designated area.
The clash came at the height of the COVID pandemic, and, when the Chinese intrusion took place, mainstream Indian news media, which typically targets Pakistan as Delhi’s greatest threat, stoked public opinion against another enemy: China. News anchors regularly referred to SARS-CoV-2 or COVID19 as the “Wuhan virus,” despite the dismissal of the term by many medical experts as xenophobic. Within a week, the Indian government banned TikTok, calling the social media app a “threat to India's sovereignty and security.”
The Hindi film industry followed suit: Indian moviemakers promised to not distribute their films in the Chinese market. The same pattern was seen in Chinese media, with the nationalistic outlet Global Times leading the way.
In this context, the new deal, as well as Modi and Xi Jingping’s subsequent meeting at the BRICS summit in Russia, could radically change the dynamic between Asia’s two big superpowers.
Though India has experienced significant economic growth since Modi first came to power, its benefits have been unevenly distributed, and the country’s unemployment rate remains high. This means that if India wants to continue to prosper, it needs Chinese investment, according to Sushant Singh, a lecturer at Yale University’s South Asian Studies department. Singh, who previously served in the Indian military for 20 years, said that growing pressure from India’s corporate giants, such as the Adani group, that want to hire Chinese workers and do more business with the country overall, could have contributed to the Modi-Xi détente.
So how does the U.S. figure into all this? "There is no danger in making too much of this week’s efforts by Modi and..Xi,” per an article published last week by the Atlantic Council. The author, the Council’s CEO, Frederick Kempe, argued that for decades, Washington has erroneously seen the rest of the world through “the prism of its own security ambitions” and that it’s crucial to understand India’s foreign policy on its own terms.
India is a member of both the Quad and the Shanghai Cooperation Organization, and of course, BRICS. That’s in line with the country’s historic position in the Cold War as well, when it opted to join the Non-Aligned Movement, a coalition of developing countries that didn’t want to “pick” either side between the capitalist U.S.-led bloc or the communist Soviet-led bloc.
At the time, India leaned more socialist and, under Prime Minister Indira Gandhi, signed the Indo-Soviet Treaty of Friendship and Cooperation in 1971. “That’s the legacy of today; when Modi goes and embraces Putin, that’s anchored in the Soviet experience,” said Eric Olander, founder of The China Global-South Project, an initiative that documents China’s influence in the Global South. Though the closeness between Putin and Modi might make Washington nervous, given Putin and Xi’s public pronouncements of wanting to challenge Western hegemony and establish a multi-polar world order, it’s important to understand that India marches to its own drum.
“India is non-West and not anti-West,” said Indian Foreign Minister S Jaishankar at a conference earlier this year, adding that India’s relations with the West are getting “better by the day.”
At last’s week BRICS summit in Kazan, Putin unveiled Russia’s proposal for a BRICS payment system, BRICS Pay, as part of China and Russia’s larger efforts to de-dollarize their economies. India, however, doesn’t share exactly the same ambitions: for Modi, it’s not just a desire to target the U.S. dollar, but rather a desire for the Indian rupee to gain hegemony, according to Singh. “A BRICS currency would be yuan, not rupee. If it was the rupee, Indians would lap it up,” he added.
“As Americans we still believe in a simple good-versus-bad narrative, you’re either with us or you’re against us,” said Olander. “But India has a deep strain of strategic autonomy in its blood. I can never see an Indian leader fully aligning with any of the great major powers.”
The Modi-Xi rapprochement, says Singh, will raise questions in Washington about India’s political utility for U.S. grand strategy, which some U.S. sectors were already wondering about. They will ask, “Is India really the poster child, the bulwark against China the U.S. is looking for?” he said.
Or, as the Atlantic Council’s Kempe asserted, “[India] will be neither pro-American nor anti-Chinese. It will act according to how it calculates its own national interests.”
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