Treasury Secretary Jack Lew said on Wednesday that the Obama administration has effectively used targeted financial sanctions to achieve its foreign policy goals and encouraged subsequent administrations to follow suit.
“Recent sanctions programs have exposed and disrupted the operations of illicit groups, including terrorists and narcotics traffickers,” Lew said during a speech at the Carnegie Endowment for International Peace in Washington.
Sanctions also put “meaningful pressure” on countries with poor human rights records, such as the Sudan, Myanmar and Libya, he said. “They formed the centerpiece of the international response to Russia’s aggressive actions in Ukraine. And most dramatically … we put in place sanctions that imposed massive costs on Iran, helping to bring it to the negotiating table, and culminating in a comprehensive understanding that rolled back Iran’s nuclear program and ensures that it is, and will remain, exclusively peaceful.”
He said the old, embargo model — such as those Congress has imposed on Cuba for more than 50 years — “provided little flexibility” and took to high of a toll on civilians.
Those employed by the Treasury and State departments now “are informed by financial intelligence, strategically designed, and implemented with our public and private partners to focus pressure on bad actors and create clear incentives to end malign behavior, while limiting collateral impact,” he said.
“Economic sanctions have become a powerful force in service of clear and coordinated foreign policy objectives—smart power for situations where diplomacy alone is insufficient, but military force is not the right response,” he continued.
“They must remain a powerful option for decades to come,” Lew advised, before warning against employing them too frequently, which could undercut the U.S. role as the world’s primary financial system and prompt retaliation.
“We must guard against the impulse to reach for sanctions too lightly or in situations where they will have negligible impact,” Lew said. “And we must be conscious of the risk that overuse of sanctions could undermine our leadership position within the global economy, and the effectiveness of our sanctions themselves.”
He particularly cautioned against imposing too many “secondary” sanctions, which bar individual foreigners and companies from the U.S. financial system merely for doing business with a sanctioned nation or entity.
Even “some of our closest allies” consider such actions “extra-territorial attempts to apply U.S. foreign policy to the rest of the world,” he said.
For example, the French were infuriated when Treasury fined their largest bank, BNP Paribas, $9 billion in 2014 for violating U.S. sanctions against Cuba, Iran and Sudan.
“If foreign jurisdictions and companies feel that we will deploy sanctions without sufficient justification or for inappropriate reasons — secondary sanctions in particular — we should not be surprised if they look for ways to avoid doing business in the United States or in U.S. dollars,” Lew said.
