CEPR Sanctions Watch June 2024

In this edition of Sanctions Watch, covering June 2024:

  • Taliban will attend third UN-hosted Doha conference to discuss Afghanistan’s sanctions-driven economic isolation;
  • House considers bill to prevent removal of Cuba’s terrorism designation;
  • UN atomic agency censures Iran, raising specter of sanctions snapback ahead of election;
  • Russia deepens ties with North Korea over shared sanctions experience;
  • Major new sanctions target Russian financial and liquified natural gas sectors;
  • As Biden announces controversial anti-migrant measures, calls grow to address root causes of migration by lifting sanctions on Venezuela;
  • Famine in Gaza will have “generational” impacts, and more.

Afghanistan (background)

Afghanistan’s Taliban government has agreed to participate in the third UN-convened meeting on Afghanistan, to be held in Doha, Qatar at the end of this month. The Taliban had been excluded from the first, and refused to participate in the second. The country’s economic isolation, driven in large part by the freezing of central bank assets and sanctions, is likely to be high on the agenda. As a new report from the Center for Strategic & International Studies notes, this isolation created “an acute liquidity crisis, the cessation of normal financial transactions with foreign banks, and the immobilization of the country’s commercial banking sector.” While foreign assistance has helped to reduce humanitarian consequences somewhat, donor interest is flagging and, as NPR reports, has been held back by overcompliance with the sanctions regime.

Also this month, the House of Representatives passed H.R. 6586, a bill requiring increased scrutiny on aid and other financial support for Afghanistan that also spreads unfounded fears of Taliban influence over the Afghan Fund. Diaspora organization Afghans for a Better Tomorrow strongly opposed the bill, noting that it threatens the essential financial support on which Afghans rely, and “would hurt the people of Afghanistan.”

Meanwhile, the economic situation in Afghanistan remains dire. According to a top UN official: “Humanitarian needs in Afghanistan remain alarmingly high, with over 50 per cent of the population — some 23.7 million people — requiring humanitarian assistance in 2024, the third highest number of people in need in the world. Half the population lives in poverty and nearly 3 million children are experiencing acute levels of hunger.”

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Cuba (background)

The House of Representatives is considering a State and Foreign Operations appropriations bill that includes language prohibiting the use of appropriated funds for removing Cuba from the State Sponsors of Terrorism (SSOT) list and barring certain funds from being used to support Cuban entrepreneurs. Rep. Joaquin Castro (D-TX) proposed an amendment that would remove the SSOT language and, alongside Rep. Dina Titus (D-NV), another amendment to remove the prohibition on support for entrepreneurs, but neither was accepted for consideration by the Rules Committee, making it likely that the language will pass the House. Rep. Barbara Lee (D-CA) said of the bill: “There is no track record of success nurturing democracy and human rights by punishing regular people.”

This renewed attention to the SSOT designation comes after the State Department declared Cuba to be “fully cooperating” in the fight against terrorism last month, sparking a wave of calls to remove the SSOT designation as well. CEPR Senior Research Fellow Guillaume Long compiled a number of such appeals from Latin American and Caribbean leaders, arguing that “maintaining draconian sanctions on Cuba further erodes the administration’s credibility and standing in the region.” Assistant Secretary of State Brian Nichols, however, noted that the administration is not considering Cuba’s removal from the list at the moment.

Finally, in an article on the Biden administration for Foreign Affairs, former deputy national security advisor Ben Rhodes writes: “Biden maintained … the avalanche of sanctions that Trump imposed on Cuba, including the cynical return of that country to the State Department’s list of state sponsors of terrorism just before leaving office, in January 2021. The result has been an acute humanitarian crisis in which U.S. sanctions exacerbated shortages of basic staples such as food and fuel, contributing to widespread suffering and migration.”

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Iran (background)

The International Atomic Energy Agency (IAEA) voted this month — with US and European support — to censure Iran for failing to fully cooperate with its nuclear oversight, a move that the International Crisis Group’s Ali Vaez considers “more likely to prompt Iranian nuclear escalation rather than cooperation.” As the Center for International Politics’ Sina Toossi points out, Iran’s noncompliance with the IAEA is largely the result of the United States’ unilateral withdrawal from the Iran nuclear deal and its reimposition of economic sanctions. The censure is likely to be seen as an escalatory step, and perhaps as a precursor to a snapback of sanctions from France, Britain, and Germany, which Toossi argues would be “highly counterproductive, dramatically escalating tensions and reducing the chances for diplomatic resolution.”

Toossi also notes that such escalation will likely bolster support for hardliners as Iran prepares for presidential elections. Indeed, Iran’s first presidential debate this month saw the reformist candidate appeal to diplomacy as the solution to the country’s economic woes, while hardliners pointed to the US’s failure to hold up its end of the nuclear deal as evidence of diplomacy’s ineffectiveness. Seyed Hossein Mousavian, a Princeton professor and Iranian diplomat who helped negotiate the deal, urged a return to the diplomatic path this month, writing:

Western nuclear sanctions over the past 45 years have caused hundreds of billions, perhaps trillions, of dollars in damage to Iran’s economy. Meanwhile, the West has not achieved its primary goal—preventing Iran from attaining the capability to make a nuclear weapon quickly. The continuing pressure game in regard to Iran’s nuclear program has been a lose-lose strategy for both Iran and the West.

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North Korea (background)

Russian president Vladimir Putin made his first visit to North Korea in over two decades, resulting in a Treaty on Comprehensive Strategic Partnership that includes, among other things, a mutual defense pact. The meeting was spurred in large part by the two countries’ shared experience of economic sanctions from the West. In a statement ahead of the meeting, Putin proposed to work with Pyongyang to “develop alternative mechanisms of trade and mutual settlements that are not controlled by the west and jointly resist illegitimate unilateral restrictions.” The final treaty commits the countries to “Oppose unilateral coercive measures targeting each side as illegal and in violation of the U.N. Charter and international legal norms, and coordinate efforts to block them.” While Russia had previously endorsed sanctions on North Korea at the UN Security Council, it has increasingly wielded its veto to oppose new sanctions, and in March blocked the extension of the mandate of a UN panel tasked with monitoring North Korea’s sanctions compliance.

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Russia (background)

The Biden administration announced major new sanctions against Russia this month. These include prohibitions on IT support and cloud-based services to any person or entity in Russia; the expansion of the definition of activities that risk secondary sanctions from transactions with specific military-linked sectors to transactions with any sanctioned entity; and the designation of the Moscow Exchange — the country’s main financial marketplace — as a sanctioned entity. The last of these, in particular, is likely to considerably impact the Russian economy in the long term by forcing businesses to convert dollars and euros on the costly interbank market rather than through the centralized exchange. The Exchange responded to the announcement by halting trade in dollars and euros, which briefly sent stocks tumbling.

The European Union agreed to its 14th sanctions package this month, targeting, among other things, Russia’s liquified natural gas (LNG) sector for the first time, but stopping short of prohibiting European countries from importing LNG. Rather, the agreement bans the reexport of Russian LNG through European ports. Also this month, after many months of debate as to the legality of using frozen Russian assets to compensate Ukraine, the G7 agreed to a plan to loan $50 billion to Ukraine to be repaid using “windfall” interest that has accumulated on the assets. Technical details of the plan, including questions of burden sharing if the assets are returned to Russia, remain undecided.

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Venezuela (background)

In response to President Biden’s announcement of new measures cracking down on asylum-seekers arriving at the US border this month, Rep. Greg Casar (D-TX) urged the administration to instead focus on addressing the root causes that spur migration, including economic sanctions. “Look at these outdated Trump-era sanctions policies — that we have against countries like Venezuela — that are starving people,” the congressman noted. “Let people actually economically thrive in their home country.” Casar and a number of colleagues also launched a new global migration caucus this month to reframe the migration debate toward such root causes. Former Obama administration official Ben Rhodes made a similar point, writing in Foreign Affairs: “The ‘maximum pressure’ policy toward Venezuela and Cuba, which sought to promote regime change through crippling sanctions and diplomatic isolation, fueled humanitarian crises that have sent hundreds of thousands of people to the United States’ southern border.”

Meanwhile, Venezuela’s oil production dropped for a second straight month, according to OPEC, following President Biden’s decision to allow an oil sanctions waiver to expire. Exports, however, jumped by 30 percent in May as firms hurried to export remaining stocks of oil ahead of the May 31 expiration. Finally, as Venezuela’s July elections approach, a bipartisan group of sanctions hardliners in the US Congress introduced a resolution condemning the Maduro government and calling for additional sanctions.

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USAID’s Famine Early Warning Systems Network published a report this month declaring that, despite significant barriers to data collection, it is “possible, if not likely” that a full-blown famine is already underway in Northern Gaza — the result of Israel’s mass bombardment campaign and obstruction of humanitarian aid. Oxfam reports that “85 per cent of children did not eat for a whole day” in the three days prior to their survey, and UNRWA found that more than 50,000 children in Gaza require medical treatment for acute malnutrition. Food systems experts at the Center for Strategic & International Studies note that the effects of such severe malnutrition will be felt for “generations,” as childhood malnutrition can lead to stunting, metabolic dysfunction, impaired brain development, immune system suppression, and other chronic issues. The experts also note the profound psychological toll of Israel’s bombardment, to say nothing of the physical violence itself.

The House of Representatives passed legislation this month that would sanction the International Criminal Court (ICC) for issuing arrest warrants for Israeli prime minister Benjamin Netanyahu and Defense Minister Yoav Gallant, alongside three Hamas leaders. Despite Republican pressure, the Senate is unlikely to consider the bill, as the Biden administration ultimately opposed the bill after initially expressing support. The bill has been criticized as an affront to international law, belying supposed US support for a “rules-based international order.”

The Biden administration announced sanctions against Tsav 9, a settler-linked Israeli group that has blocked and attacked humanitarian convoys en route to Gaza. Other extremist settler leaders who were sanctioned in March for alleged attacks on Palestinians claim that the sanctions were “at most, an annoyance” as supporters rallied to raise funds, and the Israeli finance minister himself reportedly intervened to mitigate their impacts. Biden used the same authority — Executive Order 14115 — to impose sanctions on the Nablus-based Palestinian resistance group the Lions’ Den this month. This is the first time the order was used against Palestinians in the West Bank.

Finally, a reminder that CEPR published a US Sanctions Policy FAQ last month. A resource for advocates and policymakers alike, the FAQ provides brief, accessible answers to a range of questions on US economic sanctions and their impacts around the world, such as: What are economic sanctions? How do economic sanctions impact civilians? Are economic sanctions legal? Please feel free to share feedback and questions about the resource with [email protected].

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About Sanctions Watch

Economic sanctions have become one of the main tools of US foreign policy despite widespread evidence that they can cause severe harm to civilian populations (which may, in fact, be the point). Though now a defining feature of the global economic order, sanctions and their human costs receive relatively little attention in most US media outlets.

CEPR’s Sanctions Watch news bulletin aims to generate more awareness on the use and impact of sanctions through monthly round-ups of news and analysis on US sanctions policy.

Click here to see past editions of CEPR’s Sanctions Watch.

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