Read: America is addicted to sanctions. Time for an intervention
The strength of American sanctions, after all, comes from the centrality of the United States financial system in the global economy, and the dollar’s status as the world’s dominant reserve currency. “Even a company that has basically no trade in the United States, their banks do,” says Jarrett Blanc, a senior fellow in the Geoeconomics and Strategy Program at the Carnegie Endowment for International Peace. “And so they basically can’t be banked if they are trading with a country that has been targeted with these very powerful U.S. sanctions.”
One risk, Blanc says, is that the many banks of the world that “have run their financial plumbing through New York” could, if enough of them decide they can’t rely on the United States, try to run their plumbing elsewhere. “And all of a sudden the power of our sanctions is dramatically reduced,” he says.
At the same time, American willingness to use sanctions unilaterally has irritated some U.S. allies in Europe, who have participated in some U.S. sanctions efforts but objected to sanctions they see as threatening their own economic interests—such as certain restrictions on doing business with Russia and Iran. The dynamic highlights a risk of sanctions that goes beyond their economic impact and strains relations with long-standing partners.
After 9/11, the U.S. accelerated and expanded its use of sanctions to go after terrorist financing; President George W. Bush took a first step in the weeks immediately after the attacks, with an executive order freezing any U.S.-based assets of a range of groups and people, including Osama bin Laden and al-Qaeda.
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“Using financial power and suasion to affect America’s enemies and their budgets—well beyond U.S. borders—provided a form of asymmetric power that the United States could use against non-state networks exploiting the global system,” Juan Zarate, who worked on counterterrorist-financing efforts in the Bush administration, recalled in recent testimony to Congress.
The use of sanctions really picked up around 2010, according to Elizabeth Rosenberg, a former Treasury Department official now at the Center for a New American Security. At that point, Barack Obama’s administration was putting its own pressure on Iran.
“This is a policy instrument of choice,” Rosenberg says. “It feels really muscular. We do not have an institutional culture of evaluating economic costs to ourselves, which makes people believe, I think mistakenly, that it is costless.” Back in 2014, my now-colleague Annie Lowrey reported for The New York Times that the U.S. had some 6,000 sanctions in place.
Now it has almost 2,000 more than that. The Obama administration had lifted hundreds of sanctions on Iranian people and entities after striking the nuclear deal with the Islamic Republic in 2015. Donald Trump’s administration, after getting out of the deal, reinstituted many sanctions and has steadily added more—imposing 700 on a single day last November. Iran is currently by far the largest state target of U.S. sanctions.