US sanctions have expanded their reach — on over three dozen countries, and thousands of individuals — criticism of their humanitarian impact has grown. The US has often justified its many sanctions regimes in moral terms — punishing authoritarian leaders, stopping aggression, responding to human rights violations. Yet it has become increasingly clear that the sanctions themselves present serious threats to human rights, including the right to food and potable water — as well as undermining human security, by compromising access to health care, and worsening situations of conflict and repression. The US government has claimed to address the crises created by its sanctions by providing exemptions and licenses for humanitarian goods. But these have had little impact. Indeed, these ‘solutions’ for the humanitarian crises appear to do little more than create an appearance of humanitarian concern.
In the case of Afghanistan, for example, it was reported last year that ‘Afghanistan sinks deeper into crisis as sanctions take [a] heavy toll on civilians,’ in no small measure because ‘international sanctions and a freezing of the assets of Afghanistan’s Central Bank make it near impossible for the economy to function normally’ (1). With millions at risk of famine, the US Treasury Department scrambled to issue general licenses allowing the delivery of humanitarian goods to Afghanistan. On the surface, it would seem that this would have improved the situation. Whereas ‘specific licenses’ require individuals or companies to submit an application to OFAC — the Treasury Department’s Office of Foreign Assets Control — then receive an actual license, ‘general licenses’ are simply categories of permitted activities, that require no application process or approval from OFAC. But a company or individual, or humanitarian organisation, may still be subject to penalties if OFAC determines afterwards that, in its view, the individual did not comply with the terms of the license, or with some other aspect of the sanctions regime.
Humanitarian exceptions do little to ease the overwhelming pressure on the economy that comes from direct and indirect measures cutting Iran out of the international banking system
In the case of Afghanistan, as Adam Weinstein noted, the general licenses were of little use, since the architecture of the sanctions regime was still in place. The Afghan banking system was still ‘held hostage’ (2) by US sanctions against the Taliban, so there was considerable reluctance on the part of private actors, whether commercial or nonprofit, to engage with Afghanistan. As one commentator noted, ‘Sanctions are intended to have a chilling effect, in that sanctions will always go beyond the face of the text.’ Even with general licenses in effect, ‘banks and businesses don’t want to risk dealing with places or sectors under economic restrictions from the US, for fear that they’ll violate a prohibition and be subject to sanctions themselves.’ Today, there are still 6 million people in Afghanistan who are living on the brink of famine. Even though the Taliban has to some degree stabilised the economy, it remains ‘crushed by banking sanctions [and] international seizures of Afghan central bank assets’, (3)along with other factors.
The same is true with regard to Iran: humanitarian exceptions do little to ease the overwhelming pressure on the economy that comes from direct and indirect measures cutting Iran out of the international banking system, among other things. That is because what isolates countries sanctioned by the US is not only the explicit regulations penalising those who trade with them; but also the ‘overcompliance’, which in effect vastly expands the scope of the sanctions. Overcompliance occurs because two conditions are present. First, the requirements for compliance are not entirely clear. Private actors must exercise ‘due diligence’, which includes ‘Know Your Customer’ requirements. Banks must not only check blacklists of ‘Specially Designated Nationals’, but must also research their customers, and their customers’ transactions, to prevent funds from even inadvertently benefitting someone on a US blacklist. The Treasury Department does not make fully clear exactly what banks must do to meet these expectations. At the same time, the penalties can be catastrophic: the French bank BNP Paribas paid some $9 billion in fines, and several other European banks have paid fines on the order of half a billion dollars. Faced with this dilemma — unclear expectations, and potentially catastrophic penalties — it is not surprising that many banks and other private actors choose to simply withdraw from a market altogether. These penalties apply not only to US nationals, but to foreign nationals as well. Foreign banks, shipping companies, insurers, and other enterprises risk penalties — including exclusion from the US market or financial system — if they do business with someone the US has blacklisted.
What isolates countries sanctioned by the US is not only the explicit regulations penalising those who trade with them; but also the ‘overcompliance’, which in effect vastly expands the scope of the sanctions
Thus, the risk of running afoul of US sanctions is not just limited to the three dozen sanctions regimes found on OFAC’s website. There is a risk even when the country itself is not sanctioned, but some of its nationals are. In the case of Afghanistan, this includes the Taliban; Nicaragua, Daniel Ortega and others; Venezuela, the national oil company; and so on.
It is not surprising that private actors have exited in droves from countries perceived as being ‘high risk’, because, among other things, some of their companies or individuals — even if it is only a handful — are blacklisted by the US. But this triggers a cascade of consequences that is almost limitless in its scope. European banks have terminated or greatly reduced their services, primarily in countries in the Global South, making it costly if not impossible for family members abroad to send urgently needed remittances. Some shipping companies refuse to carry imports or exports to these countries, for fear of facing penalties from the US, even for critical goods such as fuel.
For countries that are already impoverished, or in the midst of conflicts or natural disasters, the sanctions worsen their situations considerably; and the ‘overcompliance’ by private actors then makes the humanitarian crises even worse.
Last December, to much fanfare, OFAC announced that there would be general licenses for humanitarian goods across its sanctions regimes. OFAC’s press release was gushingly self-congratulatory: ‘Treasury Implements Historic Humanitarian Sanctions Exceptions’. (4) Deputy Secretary of the Treasury Wally Adeyemo said, ‘The general licenses released today reflect the United States’ commitment to ensuring that humanitarian assistance (…) continues to reach at-risk populations. (…) The provision of humanitarian support to alleviate the suffering of vulnerable populations is central to our American values.’
However, so far it seems that these licenses, like the others issued in response to public pressure, are unlikely to do anything of the sort Adeyemo is touting. This is certainly evident in the case of Cuba.
As of March, when I was in Havana, almost no one I spoke with for this article had even heard of the new general licences
Since December, those involved in the flow of humanitarian goods, from religious organisations down to shipping companies, report that there has been no discernible increase in the flow of humanitarian goods to Cuba in relation to the new general licenses. Indeed, as of March, when I was in Havana, almost no one I spoke with for this article had even heard of them. Those who had heard of the licenses pointed out that they were really quite meaningless. This was in part because the core components of the US sanctions remained in place — compromising all of Cuba’s major exports, its key sources of revenue such as its major hotel chains, its fuel imports, its purchase of equipment and repair parts for its infrastructure, its ability to utilise major investments such as the port of Mariel, and so on. An increase in donations of food or medicine makes little difference when there are power outages almost every day, and shortages of gasoline are so severe that lines at gas stations stretch for half a mile or more. These, in turn, affect everything from the cold chain necessary to store medicines, to the trucks that deliver food across the country.
There are also structural reasons why the general licenses are largely useless. Among them, Cuba remains on the US’s State Sponsors of Terrorism (SST) list. As a result, a nonprofit organisation may want to purchase and ship educational supplies under the new general licenses; but will find that there is no bank permitted to handle the financial transaction, because the goods are destined for a country on the SST list.
If the US government were genuinely concerned about the humanitarian crises that its sanctions regimes have triggered, or at least worsened, then we would see substantial changes in the core operation of these measures, rather than simply the theatrics of humanitarian concern.