The Washington Post's Big Take on Economic Sanctions

What WaPo gets right and gets wrong on economic sanctions.

Photo by Rob on Unsplash

The hard-working staff here at Drezner’s World was pretty hard on the New York Times editorial staff earlier this week. And, to be perfectly honest, that is not my favorite genre of post. I obviously think the mainstream media has its flaws, but as someone who has seen the inner workings of these outlets, I am keenly aware that they do a lot of first-rate reporting — work that is the raw ore for commentators like myself to refine. After more than twenty years of writing for a public audience, I am sick of the number of times I read someone lamenting, “why doesn’t the MSM cover this story?!” only to find out that the are linking to… a mainstream media news story.

So while I think the Gray Lady’s editors need to do some soul-searching, let’s highlight some exemplary journalism by its competitor the Washington Post. Their White House economics reporter Jeff Stein is anchoring a multi-part series on the U.S. reliance on economic sanctions. The first overview story was released on Thursday, and the hard-working staff here at Drezner’s World wants to break it down. I’ll tackle subsequent stories — so far there are case studies of Syria and Venezuela — early next week.

As someone who has written a fair amount about economic sanctions over the last quarter-century, the overview article by Jeff Stein and Federica Cocco hits most of the highlight regarding the emergence of sanctions as the policy option of first resort for the U.S. government. Even the title, “How Four U.S. Presidents Unleashed Economic Warfare Across the Globe” shows the bipartisan nature of this trend:

Today, the United States imposes three times as many sanctions as any other country or international body, targeting a third of all nations with some kind of financial penalty on people, properties or organizations. They have become an almost reflexive weapon in perpetual economic warfare, and their overuse is recognized at the highest levels of government. But American presidents find the tool increasingly irresistible.

By cutting their targets off from the Western financial system, sanctions can crush national industries, erase personal fortunes and upset the balance of political power in troublesome regimes — all without putting a single American soldier in harm’s way.

But even as sanctions have proliferated, concern about their impact has grown.

In Washington, the swell of sanctions has spawned a multibillion-dollar industry. Foreign governments and multinational corporations spend exorbitant sums to influence the system, while white-shoe law firms and K Street lobbying shops have built booming sanctions practices — in part by luring government officials to cash in on their expertise.

Elsewhere, sanctions have pushed autocratic regimes into black market trade, empowering criminal networks and gangs of smugglers. U.S. adversaries are ramping up their efforts to work together to circumvent the financial penalties. And like military action, economic warfare can leave collateral damage.

That’s a solid opening! And there is a lot in Stein and Cocco’s story that tracks with the expert consensus on U.S. economic statecraft — in particular, the policymaker addiction to imposing sanctions:

Alarm about sanctions’ rise has reached the highest levels of the U.S. government: Some senior administration officials have told President Biden directly that overuse of sanctions risks making the tool less valuable. And yet, despite recognition that the volume of sanctions may be excessive, U.S. officials tend to see each individual action as justified, making it hard to stop the trend. The United States is imposing sanctions at a record-setting pace again this year, with more than 60 percent of all low-income countries now under some form of financial penalty, according to a Washington Post analysis.

“It is the only thing between diplomacy and war and as such has become the most important foreign policy tool in the U.S. arsenal,” said Bill Reinsch, a former Commerce Department official and now the Scholl chair in international business at the Center for Strategic and International Studies, a Washington-based think tank.

The highest compliment I can pay Stein and Cocco is that they serve up some super-interesting tidbits about the 2021 U.S. Treasury Department review of sanctions — tidbits that I had not heard:

In the summer of 2021, five Treasury staffers worked up an internal draft proposing to restructure the sanctions system. It ran roughly 40 pages, according to two people involved, and would have represented the most substantial revamp of sanctions policy in decades.

But like the three previous administrations, Biden’s team found the power difficult to give up.

Treasury staffers watched their bosses take out key parts of their plan, including a provision that would have created a central coordinator, said the people familiar with the document, who spoke on the condition of anonymity to reflect confidential discussions. By the time Treasury publicly released its “2021 Sanctions Review” in October that year, the 40-page draft had dwindled to eight pages and contained the earlier document’s most toothless recommendations, the people said. (Two people familiar with the matter blamed internal disagreements with the State Department for the extent of the changes and said Treasury leadership also opposed the revisions. A State Department spokesman declined to comment.)…

In late 2022, senior White House advisers again held discussions about reforming U.S. sanctions. In closed-door talks that included Biden, aides talked about the need to set guidelines for economic statecraft, including limiting the use of sanctions to moments when “core international principles that underpin peace and security are under threat,” one of the officials said.

But those ideas were shelved in the face of more pressing demands.

That is some legitimately good dirt.

Of course, as any expert experiences when reading even a longform journalistic account, I did have a few cavils about the story. Three things stood out in particular — or rather, their omission stood out in particular:

First, the article was chary in discussing sanctions successes. Stein and Cocco referenced the anti-apartheid sanctions against South Africa and the U.N. sanctions against Yugoslavia in the 1990s. I was surprised to see minimal discussion of more recent successes — in particular, the nonproliferation sanctions against Libya in the early 2000s and the JCPOA negotiations with Iran a decade ago. One can argue that the latter case in particular really helped to turbocharge bipartisan enthusiasm for sanctions.

Second, I think the article underestimated U.S. and scholarly concerns about the humanitarian impact of economic sanctions. Stein and Cocco quote former Obama administration official Ben Rhodes saying, “We don’t think about the collateral damage of sanctions the same way we think about the collateral damage of war. But we should.” With all due respect to Rhodes, that claim is a bit exaggerated. The scholarly focus on collateral damage has been going on for well over a decade, as I noted in my recent review essay. A lot of attention has been paid to this. Furthermore, even Stein and Cocco acknowledge that, “humanitarian groups have praised Biden administration efforts to ensure that critical medical supplies and food can enter countries under sanctions.”

Economic statecraft, like military statecraft, will always create collateral damage. But I do think the U.S. government has been better at incorporating this negative externality into their foreign policy calculus — in no small part because of the shift in scholarly focus.

Finally, the article misses two big and recent sanctions trends that help explain the larger dynamic. One obvious trend, which the Trump administration embraced in particular, has been the conflation of imposing high costs with sanctions success. No doubt, imposing high costs is a key condition for generating successful policy outcomes. For too many policymakers, however, the imposition of costs has become an end in and of itself.

This relates to the second trend — a shift in the purposes of sanctions away from deterrence and coercion and towards containment and punishment. As the United States has started sanctioning bigger powers and as those countries have found assistance from black knights, policy concessions no longer seem to be the goal. And that means measuring the utility and design of these instruments differently.

The important thing is that WaPo devoted significant reporting resources to this issue. And for that, they should be commended —and everyone should read the whole thing.