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Analysis

Reining in the President’s Sanctions Powers

Used widely since 9/11, the benefits of sanctions often don’t outweigh the full costs.

August 4, 2021
View the entire 9/11 at 20 series

This essay is part of the Bren­nan Center’s series explor­ing new approaches to national secur­ity 20 years after 9/11.

For the U.S. govern­ment, sanc­tions are an attract­ive response to a wide range of foreign policy prob­lems. Support for inter­na­tional terror­ism? Sanc­tions. Inter­fer­ence in U.S. elec­tions? Sanc­tions. Narcot­ics traf­fick­ing? Sanc­tions. As Deputy Secret­ary Treas­ury Wally Adeyemo recently admit­ted, sanc­tions have become Amer­ica’s “tool of first resort.”

But as the use of sanc­tions has increased, so, too, have ques­tions about U.S. reli­ance on them. To be sure, sanc­tions tend to be less costly in both money and lives than milit­ary action, but that does­n’t mean that they are cost-free on either count. Over the past two decades, it has become increas­ingly clear that sanc­tions can cause signi­fic­ant damage both at home and abroad — often with little coun­ter­vail­ing bene­fit to U.S. interests.

Moreover, Congress’s broad deleg­a­tion of sanc­tions author­ity to the pres­id­ent makes it nearly impossible for lawmakers to termin­ate sanc­tions regimes that are ill-conceived or inef­fect­ive. A prin­cipled sanc­tions policy will require signi­fic­ant changes in the law to mitig­ate harms to inno­cent civil­ians abroad, protect consti­tu­tional rights at home, and recal­ib­rate the balance of power between Congress and the exec­ut­ive.

IEEPA: Congres­sional intent versus real­ity

Most U.S. sanc­tions regimes are imposed by the pres­id­ent, not by Congress, under the Inter­na­tional Emer­gency Economic Powers Act (IEEPA). Even when Congress creates sanc­tions programs, it gener­ally does so by direct­ing the pres­id­ent to take action under IEEPA. This law allows the pres­id­ent to declare a national emer­gency with respect to any “unusual or extraordin­ary threat” to national secur­ity, foreign policy, or the economy, as long as that threat has its source in “substan­tial part” from over­seas. The govern­ment can then take sweep­ing economic action to address that threat. When it desig­nates someone as a target of IEEPA sanc­tions, the govern­ment can freeze any assets of the target that come within U.S. juris­dic­tion, and it can prohibit any person or entity under U.S. juris­dic­tion from trans­act­ing with the target.

When Congress passed IEEPA in 1977, it was with the expect­a­tion that national emer­gen­cies requir­ing peace­time sanc­tions programs would be “rare and brief” and would not be “equated with normal ongo­ing prob­lems.” The precip­it­at­ing events would be ones that truly repres­en­ted a threat to the United States. The pres­id­ent would report regu­larly to Congress on the use of sanc­tions, and if Congress felt that the exec­ut­ive branch was misus­ing the stat­ute’s powers, it could termin­ate the emer­gency declar­a­tion and any sanc­tions by legis­lat­ive veto — a law that goes into effect without the pres­id­ent’s signa­ture.

None of this holds true today. IEEPA has become a routine instru­ment of foreign policy, invoked 65 times since the law’s enact­ment. Sanc­tions programs regu­larly last for years or even decades. The pres­id­ent’s reports to Congress are curs­ory, pro forma docu­ments that give Congress no mean­ing­ful basis to eval­u­ate the sanc­tions’ effect­ive­ness. And in 1983, the Supreme Court held that legis­lat­ive vetoes are uncon­sti­tu­tional; to termin­ate sanc­tions, Congress must pass a law that the pres­id­ent signs — or muster a super­ma­jor­ity to over­ride the pres­id­ent’s veto. Today, the United States has over two dozen sanc­tions regimes in place, with thou­sands of people and entit­ies targeted under them.

The human­it­arian costs of sanc­tions

This heavy reli­ance on sanc­tions reflects a widely held view that sanc­tions are a relat­ively cost­less altern­at­ive to milit­ary engage­ment. As the United States attempts to disen­tangle itself from its post-9/11 milit­ary ventures, the appeal of sanc­tions will only increase. As one observer put it, sanc­tions are “sharper than talk­ing, but gentler than milit­ary action.”

It is true that sanc­tions are cheaper, finan­cially, than warfare—at least for the U.S. govern­ment, which merely has to identify and announce the targets. The burden then falls to the private sector, which must ensure it is not trans­act­ing with sanc­tioned persons or entit­ies. The govern­ment does incur costs for enforce­ment, but at least some of these are recouped through fines imposed on U.S. compan­ies and indi­vidu­als who are found to have viol­ated sanc­tions.

Nonethe­less, view­ing sanc­tions as a low-cost altern­at­ive to warfare is misguided. There is a grow­ing body of evid­ence that sanc­tions can impose severe human­it­arian costs on inno­cent civil­ian popu­la­tions over­seas. Stud­ies show that sanc­tions have wreaked signi­fic­ant harm in Cuba, Venezuela, Iran, and Syria, lead­ing to adverse health impacts like malnu­tri­tion and increased infant mortal­ity. Targeted sanc­tions, such as those imposed on human rights offend­ers under the Global Magnit­sky Act, more easily avoid such collat­eral damage. But compre­hens­ive sanc­tions program­s—those that target entire coun­tries or govern­ment­s—can be devast­at­ing; some have labeled them “finan­cial carpet bomb­ing.” By one estim­ate, there have been tens of thou­sands of deaths due to sanc­tions.

The U.S. govern­ment often grants licenses to enable the provi­sion of human­it­arian aid to areas affected by sanc­tions. But these licenses can be narrow in their concep­tion of human­it­arian assist­ance — for instance, by not includ­ing civil­ian energy infra­struc­ture — and delayed in imple­ment­a­tion. Moreover, because the penal­ties for viol­at­ing sanc­tions are so immense, the private sector routinely “over-complies” with sanc­tions and shies away from trans­act­ing with targets even when a license is gran­ted. A recent U.S. Govern­ment Account­ab­il­ity Office report on Venezuela sanc­tions found that all nine of the U.S. Agency for Inter­na­tional Devel­op­ment imple­ment­ing part­ners in that coun­try had banks close their accounts or reject trans­ac­tions, despite being permit­ted to deliver human­it­arian aid.

The costs we pay at home

Although sanc­tions targets are over­whelm­ingly foreign, U.S. citizens and organ­iz­a­tions may be targeted if the govern­ment decides they are contrib­ut­ing to the foreign threat. As a prac­tical matter, a person within the United States who is sanc­tioned cannot rent an apart­ment, buy food, pay for medical care, or hold a job without the permis­sion of the govern­ment. This draconian action can be imple­men­ted by mid-level Treas­ury Depart­ment offi­cials without anything resem­bling what most of us would consider “due process.” Targets are given no notice and are not entitled to see the evid­ence against them. They can attempt to get relief in court, but such chal­lenges rarely prevail because the law requires courts to grant substan­tial defer­ence to the exec­ut­ive branch.

The lack of proced­ural protec­tions increases the like­li­hood of error, some­times with ruin­ous consequences. In the after­math of the 9/11 attacks, the govern­ment desig­nated several Muslim Amer­ican indi­vidu­als and char­it­able organ­iz­a­tions as part of a campaign to demon­strate the nation’s commit­ment to fight­ing terror­ism. Accord­ing to govern­ment offi­cials inter­viewed by the 9/11 Commis­sion, “some of the evid­en­tiary found­a­tions for the early desig­na­tions were quite weak.” The targeted indi­vidu­als lived in a precari­ous and terri­fy­ing limbo for several months before the govern­ment with­drew the desig­na­tions for lack of evid­ence. Many char­it­ies were forced to shut down without the govern­ment ever having to prove that their contri­bu­tions benefited terror­ists.

There is also a finan­cial cost. Although sanc­tions are cheap for the U.S. govern­ment, U.S. busi­nesses must expend signi­fic­ant resources on ensur­ing compli­ance, as well as pay often hefty fees for fail­ures to comply, even when those fail­ures are inad­vert­ent. Moreover, the inab­il­ity to oper­ate in certain areas can have seri­ous impacts on U.S. compan­ies’ revenue. We do not know the full extent of sanc­tions’ impact on the U.S. economy because the govern­ment is under no oblig­a­tion to meas­ure it.

Build­ing a better system for sanc­tions

It is far from clear whether sanc­tions reli­ably produce any bene­fit, let alone one that is suffi­cient to outweigh the down­sides. It may intu­it­ively seem that a sanc­tioned govern­ment would change its ways in order to access funds and avoid losing power as the citizenry turns against it. But in some cases, the reverse happens. In auto­cratic regimes, sanc­tions can bene­fit rulers because they make the general public’s access to goods depend­ent on those in power. At the same time, these regimes can plaus­ibly blame short­com­ings in their coun­tries on the sanc­tions, rather than face consequences for their own fail­ures. Sanc­tions also can push coun­tries towards alli­ances with other auto­cratic regimes that will help them evade the impacts. By some meas­ures, coer­cive sanc­tions result in mean­ing­ful changes in state beha­vior less than 50 percent of the time.

In any event, the U.S. govern­ment is not required to produce the inform­a­tion that Congress would need to perform a thor­ough cost-bene­fit analysis. Such inform­a­tion would include assess­ments of sanc­tions’ human­it­arian impacts, costs to the U.S. economy, and meas­ures of progress against goals.

Fortu­nately, the tide may be turn­ing. Vari­ous devel­op­ments have brought public scru­tiny to the issue, includ­ing Pres­id­ent Trump’s actual and threatened use of sanc­tions powers in novel ways, as well as the highly visible ways that sanc­tions have interfered with some coun­tries’ responses to Covid-19. Politi­cians, civil soci­ety, and the media are all discuss­ing the need for sanc­tions reform.

The Bren­nan Center has proposed a number of common­sense reforms to IEEPA that would improve the way sanc­tions are deployed and controlled. Our recom­mend­a­tions would include due process protec­tions for Amer­ic­ans and others in this coun­try who are swept up in sanc­tions and a broader human­it­arian excep­tion that is more diffi­cult for the pres­id­ent to waive. We also call for addi­tional trans­par­ency with respect to sanc­tions’ imple­ment­a­tion and effects and a require­ment of peri­odic congres­sional approval for any sanc­tions regime to remain in place.

The Treas­ury Depart­ment is currently engaged in what it describes as a “top to bottom review of U.S. economic and finan­cial sanc­tions.” Deputy Treas­ury Secret­ary Adeyemo has stated that the goal is to make sure that sanc­tions “remain a strong, viable option for policy makers in the years and decades to come.”

For that to happen, there needs to be a signi­fic­ant shift in how sanc­tions are used. Mean­ing­ful improve­ment of sanc­tions will require not only more thought­ful applic­a­tion by the exec­ut­ive, but also signi­fic­ant reform by Congress to ensure that reforms are bind­ing on future admin­is­tra­tions as well.