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EconoGraphics February 6, 2022

Global Sanctions Dashboard: Groundhog edition

By Julia Friedlander, Michael Albanese, Maia Nikoladze and Castellum.AI

In our previous edition of the Global Sanctions Dashboard, we discussed the growing anti-kleptocracy movement in the United States and dug into designations across Africa. For this month’s Groundhog Edition—as Russia keeps us all in suspense in and around Ukraine—we will review current sanctions against Russia and the potential consequences the Kremlin may face should it decide to invade (again). We will also look at Iran’s sanctions (yes, Iran sanctions too) ahead of negotiations in Vienna. In this little world, it does feel like history is repeating itself, so it’s fitting that the little guy saw his shadow last week. 

Last year, in one map

Looking at this visual summary from last year, something should stand out to you, notably delistings in parts of the world we haven’t discussed in a while. OFAC’s largest sanctions program, Specially Designated Narcotics Trafficking Kingpin (otherwise known as ‘SDNTK’), undergoes periodic batches of large designations and delistings. Last year, OFAC delisted 494 Colombian designees, primarily from its SDNTK list. The largest batch followed the State Department’s November 2021 announcement revoking the terrorism designation of the Revolutionary Armed Forces of Colombia (FARC). Some FARC designees were relisted under OFAC’s Foreign Terrorist Organization (FTO) list for continued engagement in terrorist activities. In case you missed it, the FARC ceased to be a military organization in 2017.

Throughout the course of last year, the United Nations began delistings for Resolution 1518, which in 2003 authorized sanctions targeting the assets of Saddam Hussein. These delistings were made in several tranches, totaling 60 targets. If you take away one lesson here from all of this, it’s that once you’re designated for terrorism, it’s very hard to prove a negative. 

Old is new in the New Year

In January, OFAC designated seven individuals and one entity responsible for advancing North Korea’s ballistic missile programs, notably the DPRK’s testing of six missiles since September 2021. More listings are likely to come as North Korea continues its program in violation of multiple UN resolutions. DPRK is a dead heat with Syria as the most sanctioned jurisdiction in the world, but with backing from China and Russia, respectively, neither shows any prospect of changing course. 

Onto the Balkans. In early January, OFAC re-sanctioned Milorad Dodik and his media company, Alternativna Televizija, for corruption and efforts to undermine the unity of Bosnia and Herzegovina under an updated Balkans executive order. Milorad Dodik is the Serb member of the three-person presidential body governing Bosnia, and has been sanctioned by OFAC since 2017 for his efforts to destabilize the country. Dodik continues to bellow nationalist rhetoric to gain support for secession while handinvg out government contracts to close associates throughout the Republika Srpska. 

Moscow’s gambling dice

Russia has been sanctioned by Australia, Canada, the European Union, France, Switzerland, the United Kingdom, and the United States for its occupation of Ukrainian territory since 2014. The concept was new then–sanctioning a major global economy, and using novel instruments such as limiting the maturity of debt and equity. Things are different now. As the Putin-decoding continues, Western policymakers are debating actions that were off the table eight years ago. Instead of “altering the calculus” of the Russian inner circle, the US and its partners vow to punish the broader Russian economy, spurring capital flight and weakening the ruble.

Options include sanctions on oligarchs, oil and gas, mining sector, and major Russian banks (including Sberbank, VTB, Gazprombank, The Russian Direct Investment Fund). The administration may even invoke the Foreign Direct Product Rule to restrict exports of technical components that are key to Russia’s conventional weapons systems (such as the ​​Elbrus-8CB microprocessor chip), a measure that could have major consequences for governments and firms (remember Huawei?). A signature measure would be to halt the Nord Stream 2 pipeline. Biden has even signaled his willingness to sanction Putin himself. UK Foreign Secretary Liz Truss stated that her government would unveil legislation that would allow Britain to sanction “oligarchs close to the Kremlin,” expanding authorities tied to Russia’s actions on the ground.

Congress too is back in the game. The Defending Ukraine Sovereignty Act of 2022 would enact a slew of mandatory and discretionary measures, including prohibiting transactions on primary and secondary Russian sovereign debt. The draft bill also calls for public disclosure of Putin’s assets and financial practices—an acknowledgement that illicit finance bears direct national security implications for the United States. 

Among all of these conversations, if the Russians downplay the threat of sanctions by saying they’ve seen a lot of this before, they’re stating a fact. Spend some time with this graphic where we have compiled sanctions on Russia from around the world. Yes, even Indonesia has Russia sanctions. From terrorism, to cyberattacks, chemical weapons, human rights violations, and supporting the Asad regime, Maduro and Belarus’ Lukashenko, countries have found a way to express their displeasure with the Kremlin. To us, the data gives some credence to Russia’s perception of sanctions inflation.

Back in Moscow, sanctions continue to mean something different than Western countries think they mean. Russia’s main sanctioning authority—Rosfinmonitoring—designated Alexei Navalny under its ‘Terrorists and Extremists’ list, along with five of his closest aides. One week earlier, Navalny aides Leonid Volkov and Ivan Zhdanov were added to the same list as part of the Kremlin’s attack on those it fears. This is a far cry from the legal basis for Western sanctions. We say rule of law, they say “rule of law”. Our takeaway? Perceptions and misperceptions by Russia, shown here through data, will determine the Biden administration’s success in using sanctions as the cornerstone of its deterrence policy.

Iran’s balancing act

As nuclear talks in Vienna enter their final stage, negotiators are holding out hopes of reviving the 2015 agreement with both Iran and the United States as signatories. Any deal acceptable to Tehran would provide sanctions relief and open up international markets, and the US has begun to reinstate certain waiver provisions. But while much of the attention has been focused on multilateral sanctions against Iran, almost no attention goes to Iran’s own use of sanctions, now part of our database. On the two-year anniversary of the assassination of Iranian General Qassem Soleimani, Tehran sanctioned 51 Americans it suspects were involved. After the Trump administration’s “maximum pressure campaign” failed to bring Iran back to negotiations, Tehran’s political leadership has offered a face-saving response to Soleimani’s assassination, decrying the US military and Trump’s team, while agreeing to negotiate once again with America’s new leadership.

On the radar 

Last week, the European Parliament’s Special Committee on Foreign Interference concluded its 18-month long inquiry into how the European Union can protect itself against foreign interference, with a main focus on Russia and China. One of the chief findings of the report was that the EU should consider sanctions. The United States has sanctioned various targets for spreading disinformation under Executive Order 13848, which was created to counter election interference efforts, but does not have a statutory application to general disinformation operations. Good luck to the European Parliament defining sanctionable disinformation.

Last but certainly not least: Chinese military sanctions. The US Treasury continues to add Chinese entities to its non-SDN list of companies linked to China’s military-industrial complex, which forbids named firms from listing in US stock markets. The use of this authority is likely to expand and become increasingly complicated as the debate heats up around the role US investment plays in the advancement of Chinese technology. Both Congress and the Executive Branch are tabling options to restrict US outbound investment in sensitive sectors, including through capital markets. Navigating this issue promises a complicated intersection of law, financial regulation, and national security prerogative.

Global Sanctions Dashboard

The Global Sanctions Dashboard provides a global overview of various sanctions regimes and lists. Each month you will find an update on the most recent listings and delistings and insights into the motivations behind them.

At the intersection of economics, finance, and foreign policy, the GeoEconomics Center is a translation hub with the goal of helping shape a better global economic future.

Related Experts: Julia Friedlander and Maia Nikoladze

Image: Eyes of George Washington on 1 dollar bill banknote looking through russian paper rubles banknotes.