Plurus Foreign Policy Preview: United States Sanctions Outlook

Daniel Breslow contributed to this post.

In the coming weeks, the Biden Administration is expected to complete a “top to bottom” review of U.S. economic and financial sanctions under the leadership of Deputy Treasury Secretary Wally Adeyemo. Since April 1, Adeyemo has held several meetings to solicit input from thought leaders, businesses, non-governmental organizations, and former government officials to develop a strategy to continue using the tools applied with record frequency under the Trump Administration.

Indications from Adeyemo’s engagements and the Treasury Department’s sanctions actions to date paint the broad strokes of the forthcoming framework: the Biden Administration will seek to increase sanctions coordination with allies and partners; apply sanctions authorities more discriminately and alongside complementary foreign policy tools; and minimize collateral damage to U.S. businesses, foreign partners, humanitarian organizations, and civilian populations. Brian Nelson, the administration’s nominee for Under Secretary of the Treasury for Terrorism and Financial Crimes, told the Senate Banking Committee on June 22 he would participate in a Department review to make sure sanctions are as “targeted as possible while managing and mitigating unintended consequences.”

The Biden Administration will also be challenged to live up to the promise of values-driven foreign policy. The “grounding wire of our global policy,” President Joe Biden declared in his first major foreign policy address, would be “defending freedom, championing opportunity, upholding universal rights, respecting the rule of law, and treating every person with dignity.” Coupled with this rhetorical commitment to advancing democratic principles, the administration has directed an interagency review to improve the ability of the federal government to promote good governance and hold corrupt individuals accountable, including through the application of sanctions. 

Announcement of the review, directed to be completed by mid-December, appeared coordinated with the announcement of the bipartisan Congressional Caucus against Foreign Corruption and Kleptocracy, led by Reps. Tom Malinowski (D-NJ), John Curtis (R-UT), Bill Keating (D-MA), and Brian Fitzpatrick (R-PA). The caucus, which plans to initiate new legislation each month, has already introduced H.R.3781/S.2010, the Justice for Victims of Kleptocracy Act; H.R.4142, the Golden Visa Accountability Act; H.R. 3887, the Foreign Corruption Accountability Act; SH.R.4322/S.14, the Combating Global Corruption Act; and H.R.4557/S.2392, the REVEAL Act. Among other provisions, these bills would enable sanctions against foreign persons engaged in corruption against U.S. persons abroad, further encourage the employment of Global Magnitsky sanctions, and empower the U.S. to further coordinate visa bans with international partners.

Below, see our round-up of some of the U.S. sanctions targets capturing Congress and the administration’s attention as we enter the August recess.

SANCTIONS HOT SPOTS

Belarus

Since fraudulent presidential elections on August 9, 2020, Belarus has been characterized by ever-worsening repression against democracy activists and journalists at the hands of Aliaksandr Lukashenka. Exiled opposition leader Sviatlana Tsikhanouskaya, Lukashenka’s main electoral challenger, has spent the last year traveling the circuit of European capitals advocating for the imposition of limited sectoral sanctions. In late July, on her first official visit to the U.S., Tsikhanouskaya held meetings with President Biden, Secretary of State Antony Blinken, National Security Advisor Jake Sullivan, U.S. Agency for International Development (USAID) Administrator Samantha Power, U.S. Agency for Global Media Acting CEO Kelu Chao, and bipartisan congressional leaders. In advance of recent testimony before the Senate Foreign Relations Committee and in her meetings with administration officials, Tsikhanouskaya has provided U.S. policymakers with a list of sanctionable entities in the potash, oil, wood, and steel industries whose beneficiaries are vital to financing the illegitimate Lukashenka regime.

On April 19, in response to the continued detention of political prisoners, the Department of the Treasury announced the revocation of General License No. 2G. Originally issued in 2015 and reauthorized annually, the General License permitted transactions with nine sanctioned Belarusian state-owned enterprises. Following the forced diversion of Ryanair Flight 4978 and the arrest of opposition journalist Raman Pratasevich, additional individuals and entities were designated as part of coordinated action between the U.S., Canada, United Kingdom (U.K.), and European Union (EU). 

In the near future, Lukashenka has shown no signs of interest in pursuing negotiation toward new presidential elections, Tsikhanouskaya’s ultimate goal. In all likelihood, further repression by state security organs will increase pressure on the Biden Administration to demonstrate its real commitment to strengthening democracy abroad. On August 3, exiled Belarusian activist Vital Shyshou was found hanged in a Kyiv park after reporting being followed by strangers. 

Sen. Bob Menendez (D-NJ), Chairman of the Foreign Relations Committee, has proposed the U.S. impose sanctions on the Belarusian state bank, Belarus’ sovereign debt, and the energy and potash industries. On the occasion of the creation of the bipartisan “Friends of Belarus” Caucus on July 21, Rep. Chris Smith (R-NJ) told Voice of America,“Individual sanctions work to some extent, but not as they should. Sectoral sanctions affecting entire industries should also be accelerated.” Cognizant of the effect sectoral sanctions could have on everyday Belarusians—the same ones demonstrating for their fundamental freedoms—Tsikhanouskaya told CNN, “It can be painful in short-term perspective, but people are suffering now because of the regime, not because of the sanctions.”  In addition to possible Congressional action, the coming weeks may see the announcement of a new executive order providing the administration increased sanctions authorities. This executive order has been under development by the Treasury Department since the late-May Ryanair incident. An update to President Bush’s E.O. 13405, issued in response to fraudulent March 2006 presidential elections, would complement expanded authorities in the Belarus Democracy Act of 2004 as amended in 2007, 2012, and 2020.

Nicaragua

Nicaragua’s Sandinista regime under President Daniel Ortega has exercised its own crackdown on political opponents in advance of the November 2021 general elections. On July 24, presidential contender Noel Vidaurre of the Alianza Ciudadanos por la Libertad (CxL) joined the ranks of potential candidates detained under spurious “treason” laws. On June 9, the Department of the Treasury announced designations of four regime officials pursuant to President Donald Trump’s E.O. 13851, issued amid the intensification of 2018 mass protests. In addition, the Nicaragua Human Rights and Anticorruption Act of 2018 requires sanctions on foreign persons responsible for acts of corruption, significant human rights violations, and violence against protesters associated with 2018 demonstrations.

On March 25, Sen. Menendez introduced S.1041, the Reinforcing Nicaragua's Adherence to Conditions for Electoral Reform (RENACER) Act of 2021, obligating the U.S. Government to implement targeted sanctions against persons involved in human rights violations and the obstruction of free, fair, and transparent elections. The bipartisan bill was reported favorably out of committee June 24, amended to express the sense of Congress that the president should review the continued participation of Nicaragua in the Dominican Republic-Central America-U.S. Free Trade Agreement (CAFTA-DR). H.R.2946, an identical bill introduced by Rep. Albio Sires (R-NJ), passed the House Foreign Affairs Committee unamended July 28. H.R.3964, the Nicaragua Free Trade Review Act, a bipartisan bill introducedby Rep. María Elvira Salazar (R-FL) on June 17, would independently require a review of Nicaragua’s compliance with CAFTA-DR.

As Congress moves to finalize a legislative response to Ortega’s most recent repression, the debate will continue whether the high humanitarian costs—particularly of CAFTA-DR expulsion—may outweigh the benefits. During a July 21 hearing of the Tom Lantos Human Rights Commission, Co-Chairman Jim McGovern (D-MA-2) expressed, “I do not support the so-called ‘maximum pressure’ campaigns, the go-to approach for many in Congress. Imposing crushing across-the-board economic hardship on entire populations because of the sins of their leaders is a form of collective punishment that succeeds only in deepening humanitarian crises and increasing forced migration.” At the same time, Ortega has publicly dispelled the idea that further targeted measures can bring him to the table. The long-embattled strongman declared defiantly after the Treasury Department’s most recent action, “They think that with sanctions they will topple Nicaragua. Nicaragua has gone through more difficult times.” 

Cuba 

Widespread, spontaneous anti-government demonstrations this July have shot the Biden Administration’s Cuba policy back into the public conversation. The Department of the Treasury mobilized remarkably quickly to develop designations of two state security entities, members of their senior leadership, and Defense Minister Álvaro López Miera in separate actions on July 22 and 30, pursuant to President Trump’s E.O. 13818. On July 28, Sen. Menendez who has privately counseled Biden on his approach to Cuba—called for the release of a new executive order to sharpen accountability measures for persons involved in human rights abuses and their material supporters. 

The administration now has no choice but to confront an issue that divides both parties and may be increasingly shaped by political calculations. So far in the 117th Congress, Sens. Ron Wyden (D-OR), Jeff Merkley (D-OR), Dick Durbin (D-IL), Patrick Leahy (D-VT), Chris Murphy (D-CT), Elizabeth Warren (D-MA), and Jerry Moran (R-KS) have supported Senate legislation to lift the U.S. trade embargo on Cuba and/or rescind limits on remittances. In the wake of the most recent crackdown by Castro acolyte Miguel Díaz-Canel, President Biden’s own interest in resuming Obama-era rapprochement is less certain. In February, National Security Council (NSC) Senior Director for the Western Hemisphere Juan Gonzalez affirmed President Biden’s commitment to lift limitations on remittances. Following the outbreak of protests, Biden remarked that he was not prepared to allow remittances so long as the business continues to be controlled by companies linked to the Cuban military. In late June, in a continuation of Trump-era policy, the U.S. voted against United Nations (UN) Resolution 289 expressing the necessity of ending the U.S. embargo. The U.S. Mission to the UN (USUN) notably abstained from voting on a condemnation of U.S. Cuba policy during the final year of the Obama Administration.

The Biden White House may also feel pressure to take back Cuba as an animating issue from Republicans, whose significant inroads in South Florida in the 2020 elections are partially attributable to the Cuban American community. Cuban-American Rep. Salazar, who upset incumbent Democrat Donna Shalala in Florida’s Miami-based 27th Congressional District, introduced H.R.287, the FORCE Act, as her first bill in Congress to prohibit the removal of Cuba from the list of state sponsors of terrorism prior to a legitimate government transition. At a July 20 hearing of the House Foreign Affairs Western Hemisphere Subcommittee, Rep. Salazar questioned a witness’ suggestion that the U.S. progressively dismantle its policy of isolation, declaring, “I saw when Obama lifted all restrictions. For two and a half years, he gave the opportunity to the Cuban Government to really join the international community, and they spit on Obama.” In any course of action, President Biden will be keen to avoid a similar characterization. 

Nord Stream 2

Bipartisan, bicameral opposition to the Nord Stream 2 (NS2) pipeline has only grown since the administration waived mandatory sanctions under the “national interest” provision of the Protecting Europe’s Energy Security Act (PEESA). On May 20, Sen. Kevin Cramer (R-ND) introduced S.1764, the POWERS Act, to reinstate sanctions, calling the pipeline “a major geopolitical win” for Russia “that cuts right through the NATO alliance.” On July 28, the House passed the Fiscal Year 2022 (FY22) State, Foreign Operations, and Related Programs funding bill incorporating Rep. Marcy Kaptur’s (D-OH) bipartisan amendment to reinstate sanctions in the coming fiscal year.

On July 21, a joint statement released by the Governments of the U.S. and Germany outlined a package of initiatives to support Ukraine’s energy security, signaling the administration’s acceptance that NS2 would become operational. President Biden later told reporters, “Nord Stream is 99% finished. The idea that anything was going to be said or done was going to stop it was not possible.” State Department Spokesman Ned Price added the administration concluded “that sanctions would not halt the pipeline’s construction.” Meeting immediate resistance in Congress, Senate Foreign Relations Committee Chairman Menendez, Ranking Member Jim Risch (R-ID), Europe and Regional Security Cooperation Subcommittee Chairwoman Jeanne Shaheen (D-NH), and others reaffirmed their belief that the pipeline must not be completed. Writing in the Washington Examiner, PEESA sponsor Sen. Ted Cruz (R-TX) calledthe deal “a generational geopolitical mistake” and underscored that the pipeline should not be treated as an inevitability until 100 percent complete. Critics see Germany’s rhetorical commitment “to limit Russian export capabilities to Europe” in the event of Russian aggression or malign activity as intentionally vague and insufficient. Bloomberg cites Berlin officials’ attestations that potential retaliatory measures would not include shutting off the pipeline.

On July 22, Rada Chairman Dmytro Razumkov called on Congress “to consistently pursue a sanctions policy to prevent the completion and commissioning of the NS2 gas pipeline and, if necessary, to consider additional enhanced restrictions targeting legal entities and individuals involved in the construction.” It is unlikely the deal has emboldened Senate Democrats enough to override the administration’s waiver, however, and stand in the way of President Biden’s priority of maintaining a strong U.S.-German relationship. Sen. Chris Murphy (D-CT) has called the pipeline an inevitability. Addressing the agreement’s shortcomings, Chairman Menendez has urged enhanced security assistance to Ukraine and new sanctions on the Kremlin for its continued military aggression in Donbas. 

The next few weeks may be ripe for such activity. With the administration’s next report on sanctionable construction entities due in mid-August and the completion of pipelaying expected by the end of the month, NS2 will remain at top of mind. Moreover, while high-level participation has yet to be confirmed, the U.S. has supported, in principle, the Crimean Platform, a new international coordination mechanism to resolve the Russian occupation of the peninsula. Its inaugural summit on August 23—and President Volodymyr Zelenskyy’s visit to the White House the following week—will call renewed national attention to Russia’s seven-year violation of Ukraine’s territorial integrity.

Other Russia-Related Sanctions

On March 2, the Chemical and Biological Weapons Control and Warfare Elimination (CBW) Act was applied, among a range of other authorities, in coordinated punitive action between the State, Treasury, and Commerce Departments in response to the poisoning of Russian anti-corruption activist Aleksey Navalny with a Novichok chemical agent. As the Government of Russia has failed to take “specific and effective” actions to terminate its chemical weapons program within 90 days, the CBW Act requires a second round of sanctions to be implemented by June 2. 

In a letter to President Biden on the occasion of his meeting with President Putin, Senate Foreign Relations Committee Ranking Member Risch and House Foreign Affairs Committee Ranking Member Michael McCaul (R-TX) called the president’s failure to meet the deadline “yet another unreciprocated concession that projects weakness.” National Security Advisor Sullivan has since stated that another package of sanctions is being prepared. At her confirmation hearing on July 20, Karen Donfried, the Biden Administration’s nominee for Assistant Secretary of State for European and Eurasian Affairs, affirmed that she would follow the law and “stand up to Russia’s aggressive and reckless behavior.” 

Turkey

Under Secretary of State for Political Affairs Victoria Nuland told the Senate Foreign Relations Committee that Turkish President Recep Tayyip Erdoğan was feeling “buyer’s remorse” on July 21, seven months after the imposition of sanctions on the country’s military procurement agency and its senior officials under the Countering America's Adversaries Through Sanctions Act (CAATSA). Nuland and Assistant Secretary nominee Karen Donfried told the Senate Foreign Relations Committee in separate hearings that CAATSA sanctions—designed, in part, to limit significant transactions with Russia’s defense and intelligence sectors—would remain in place so long as Turkey retained its units of the Russian S-400 air defense system. Nuland further estimated that Turkey’s punitive removal from international co-production of the F-35 joint strike fighter would be complete within the year, if not sooner.

The S-400 is just the first among many disagreements complicating bilateral relations with a key NATO ally. Senate Foreign Relations Committee Chairman Menendez, Europe and Regional Security Cooperation Subcommittee Chairwoman Shaheen, and Sens. Chris Van Hollen (D-MD) and Marco Rubio (R-FL) urged the administration “to pressure Turkey to halt its provocations” following July 20 announcements by Erdoğan and Ersin Tatar, president of the unrecognized Turkish Republic of Northern Cyprus, paving the way for the resettlement of Varosha. UN Security Council resolutions 550 (1984) and 789 (1992) establish that the resort town, abandoned since the 1974 Turkish invasion of Cyprus, should be under the control of the UN peacekeeping forces. Following reports of Turkish gas exploration in Greek and Cypriot territorial waters, Chairman Menendez questioned Under Secretary Nuland whether the U.S. had been behind the March reversal of retaliatory EU sanctions first proposed in December 2020. Menendez told Donfried that the U.S. has taken a passive approach to nefarious Turkish activities over the past several administrations, concluding “Unless we take an assertive role and push back, we are going to find ourselves with a significant challenge.”

Congressional leaders and administration officials continue to weigh these and other points of contention against the country’s value as a long-standing military partner. On July 20, Sen. Ed Markey (D-MA) reintroduced S. 2403, the Turkey Human Rights Promotion Act, expressing the sense of Congress that Global Magnitsky sanctions should be applied to government officials complicit in arbitrary detentions, restrictions of freedom of expression, and other gross violations of internationally recognized human rights. At the same time, Washington and Ankara continue dialogue on the potential Turkish operation of Kabul’s Hamid Karzai International Airport. Protection of the transport hub will be increasingly vital for the safety of diplomatic and humanitarian missions following U.S. troop withdrawals. Time will tell whether Erdoğan’s diplomatic balancing act can continually maximize his flexibility to govern with impunity at home and pursue unilateral interests in the Eastern Mediterranean.

CONCLUSION

As we enter the August recess, the question remains whether the 117th Congress will see meaningful efforts to reform the International Emergency Economic Powers Act (IEEPA), a long-time wish of progressive policy organizations. Today, IEEPA—originally intended to cement Congressional oversight in the sanctions process—empowers broad unilateral presidential action upon determination of an “unusual and extraordinary” threat to the national security, foreign policy, and economy of the U.S. It underpins the executive orders authorizing recent sanctions on Belarus, Nicaragua, and Russia and implements the Global Magnitsky Human Rights Accountability Act.

On February 4, Sen. Mike Lee (R-UT) reintroduced S. 241, the ARTICLE ONE Act, an allusion to Congress’s status as a co-equal branch of government. The bill would terminate authorities made available upon determination of a national emergency after 30 days unless approved by a joint resolution. The bill would effectively enshrine Congress back into the IEEPA-derived sanctions process, overcoming the present requirement of a veto-proof majority to terminate an emergency declaration. In the 116th  Congress, the ARTICLE ONE Act was advanced by the Senate Homeland Security and Governmental Affairs Committee only after being amended to exempt certain national emergencies invoking IEEPA from its approval process. On February 25, Sens. Rand Paul (R-KY) and Wyden introduced the REPUBLIC Act, which would mandate a joint resolution of approval within 72 hours and of renewal 90 days thereafter. If a national emergency declaration is not approved, a president would be barred from subsequent declarations on the same pretext for the remainder of their term of office. However, the REPUBLIC Act includes a carve-out for IEEPA ostensibly to prevent the need for time-consuming continual reauthorization of long-term sanctions programs.

Other congressional foreign affairs leaders have, too, demonstrated reticence over the widening of presidential sanctions authorities. In a March meeting of the Tom Lantos Human Rights Commission to discuss Global Magnitsky Human Rights Accountability Act reauthorization, Co-Chairman Smith expressed concern over President Trump’s E.O. 13818. The implementing executive order expanded Global Magnitsky Human Rights Accountability Act legal language in several ways, including revising “gross violations of internationally recognized human rights” to “serious human rights abuse” and “significant acts of corruption” to simply “corruption.” Further, the executive order expands the class of individuals whose persecution can justify Global Magnitsky Human Rights Accountability Act sanctions and who can be considered complicit in such acts. Alternatively, the executive order was praised by U.S. Helsinki Commission Chairman Ben Cardin (D-MD), who advocated for it as the basis of Senate reauthorization. S.93, the Global Magnitsky Human Rights Accountability Reauthorization Act, was advanced by the Committee on Foreign Relations on June 24 with the expanded language in place. In the meantime, Congress appears largely content to preserve and expand the Article Two branch of government’s wide-ranging sanctions options.

As the Biden Administration continues to calibrate the frequency and scope of its sanctions program, we will continue to keep an eye on growing efforts to reinsert Congress into the conversation