Sunday, September 24, 2023

Opinion | The United States needs to rethink its addiction to sanctions. They’re backfiring.

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Last week, the U.S. military released a video of a Chinese jet fighter flying dangerously close to a U.S. Air Force RC-135 surveillance aircraft over the South China Sea. On Saturday, a Chinese destroyer maneuvered perilously close to U.S. and Canadian warships in the Taiwan Strait. Imagine the crisis that would have resulted if either incident had resulted in a collision. These near misses demonstrate why it is so important to establish lines of communication between the U.S. Department of Defense and the Chinese Ministry of National Defense to prevent a dangerous escalation.

Yet Beijing angrily rebuffed a request from Defense Secretary Lloyd Austin to meet his Chinese counterpart, Li Shangfu, on the sidelines of the Shangri-La Dialogue in Singapore this past weekend.The two men shook hands but did not have a substantive discussion. The Biden administration is upset with Beijing for refusing to talk, but it has no one but itself to blame.

In 2018, the U.S. government imposed sanctions on Li, then in charge of weapons procurement, for buying combat aircraft and missile-defense systems from Russia. President Biden could have dropped that designation, but he hasn’t, even though the Financial Times reports that “China had told the U.S. there was little chance of a meeting as long as Washington maintained sanctions on Li.” The sanctions clearly haven’t worked — China-Russia military ties remain close — yet Biden refuses to relax them, presumably for fear of looking insufficiently tough on China.

This is only the latest example of how Washington’s addiction to sanctions has gotten out of control — and is hurting the United States. The Treasury Department estimated in late 2021 that it had sanctions on on 9,421 organizations and individuals, a roughly 900 percent increase over the past 20 years. In 2022, the Treasury Department added 2,549 new designations while delisting only 225. That means nearly 12,000 entities were under U.S. sanctions as of the beginning of this year.

Most of the recent designations relate to Russia, but U.S. sanctions cover countries ranging from Afghanistan to Zimbabwe. Every week seems to bring a fresh slew of designations, with news releases announcing “Treasury Sanctions Military-Affiliated Companies Fueling Both Sides of the Conflict in Sudan,” “Treasury Sanctions Syrian Financial Facilitators Under the Caesar Syrian Civilian Protection Act,” “Treasury Sanctions China- and Mexico-Based Enablers of Counterfeit, Fentanyl-Laced Pill Production,” and the like.

And looking only at Treasury Department designations substantially understates the pervasiveness of sanctions. The U.S. government now increasingly uses export controls, tariffs and foreign investment reviews as a de facto form of commercial sanctions. The Commerce Department, for example, recently imposed tighter controls on exports of advanced microchips to China — to Beijing’s great annoyance. This move might be justified by the need to limit China’s military threat, but the backlash it has provoked in China is heightened by all of the other sanctions and tariffs Washington has imposed on China in recent years.

Nobody can deny that the targets of U.S. sanctions are deserving of censure, but it’s not clear what, if anything, all these sanctions are achieving. A study by the Peterson Institute for International Economics concluded that unilateral U.S. sanctions between 1970 and 1997 had achieved their objectives in only 13 percent of cases while costing the U.S. economy $15 billion to $19 billion annually. In the years since, the cost of sanctions has only grown as their use has expanded, but they are not getting any more successful. In many instances — as in the case of China’s defense minister — they are downright counterproductive.

“Sanctions can be a useful tool of economic statecraft, but the problem is that when you have a hammer, everything looks like a nail, so sanctions become the tool of choice when few good options exist to combat foreign aggression,” Jason Bordoff, a former Treasury Department and White House official who is now the director of Columbia University’s Center on Global Energy Policy, told me. “The problem is that overusing sanctions can backfire, imposing economic pain on ourselves or, over time, encouraging trading partners to seek other allies and alternatives to the U.S. banking system and dollar, which risks undermining America’s geopolitical and economic leverage.”

History is full of examples of U.S. sanctions that proved woefully ineffective. The U.S. government began imposing sanctions on Cuba in 1960 and expanded those to a full trade embargo in 1962. Declassified documents show that the intent was “to bring about hunger, desperation, and the overthrow of [the Castro] government.” Yet more than half a century later, Cuba remains a Communist dictatorship.

The U.S. sanctions on North Korea are even older: They date to the start of the Korean War in 1950. Sanctions were greatly expanded following North Korea’s first nuclear test in 2006. Yet the Kim dynasty remains in control of North Korea, and it has a growing arsenal of nuclear weapons and missiles.

More recent sanctions have failed to foster regime change — or even significant changes in regime behavior — in Myanmar (also known as Burma), Nicaragua, Venezuela, Syria, Yemen and other countries. International sanctions did persuade Iran to conclude an agreement in 2015 restricting its nuclear weapons program, but then-President Donald Trump’s unilateral decision to exit the deal in 2018 and launch a “maximum pressure” sanctions campaign on Iran backfired badly. Nuclear expert David Albright warns that Iran could produce enough nuclear material for seven bombs in the next six months.

The sanctions on Russia, massively (and rightly) expanded last year following the invasion of Ukraine, have inflicted damage but not as much as hoped: The Russian economy contracted by 3 percent last year, but the International Monetary Fund expects a slight recovery this year. More important, sanctions have not deterred Russian President Vladimir Putin from continuing his evil war of aggression. The sanctions might eventually constrain Russia’s war-making ability, but that will take a long time. For now, Putin is still able to procure Western microchips for his weapons.

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The leaders of rogue nations are usually insulated from the impact of U.S. sanctions while ordinary people, who have no say over government policy, are hurt the most. It is difficult to disaggregate the impact of sanctions from the ruinous economic policies pursued by many regimes, but there is little doubt that U.S. sanctions have contributed to the immiseration of Cubans, Iranians, North Koreans, Syrians, Venezuelans and others who have the misfortune to live under anti-American dictatorships.

That’s not an argument for forgoing sanctions altogether — sometimes there is no better alternative — but Washington should be much more cautious and strategic in their application.

In her 2022 book “Backfire: How Sanctions Reshape the World Against U.S. Interests,” Agathe Demarais of the Economist Intelligence Unit concluded that effective sanctions are typically temporary (“If penalties have not yielded results within two years, the target country usually has no intention of giving in”); aim to achieve a narrow goal (i.e., freeing a prisoner rather than overthrowing a regime); target a country that has a substantial trade relationship with the United States; and have the support of the international community.

Unfortunately, most U.S. sanctions have vague and ambitious goals, last a long time and don’t have much international backing. Accordingly, Demarais writes, “Many U.S. sanctions programs are doomed to fail.”

The Biden administration needs to rethink U.S. sanctions policy after decades of exponential growth. It can make a start toward a more rational and effective approach by lifting the sanctions on China’s defense minister to enable badly needed communications with the world’s largest military.

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