Wed, Apr 14, 2021

Global Sanctions Dashboard: March

EconoGraphics by Julia Friedlander, Michael Albanese and Castellum.AI

Related Experts: Julia Friedlander,

China Economic Sanctions European Union Russia United States and Canada

In the February edition of the Global Sanctions Dashboard, international coordination was improving on a number of issues, ranging from the jailing of Alexei Navalny in Russia to the ongoing democratic crackdown in Belarus. Fortunately, cooperation continued over the past month, as China now faces greater scrutiny from the transatlantic community over its abuses in Xinjiang. In this edition, we focus on the growing international sanctions response to Chinese behavior, the Iran nuclear deal talks in Vienna, and the crisis in Myanmar. 

But First…Dashboard Additions

We’ve now added Qatar, Palestine, India, and Bangladesh to our dashboard. As we continue to fill out the map, we see new patterns emerge, especially how others view sanctions. For the most part, domestic threats predominate. India, for example, focuses on terrorist and extremist groups operating within the country’s borders. Interestingly, this includes many separatist organizations, some with Communist leanings, including the Kangleipak Communist Party, the National Socialist Council of Nagaland, and the Maoist Communist Centre. Qatar, Palestine, and Bangladesh each run modest sanctions programs that also primarily target domestic terrorism. In contrast to Western sanctions that often seek foreign policy goals through financial means, others use sanctions as tools of domestic order—as law enforcement. As we explore the limitations of sanctions and judge our ability to multilateralize them, we should not lose sight of this dichotomy.

Tensions between Brussels and Beijing

Canada, the United Kingdom, and the European Union joined the United States last month in sanctioning Chinese officials over the genocide in Xinjiang—with each designating the same four Chinese individuals and entity on the same day. The transatlantic community is flexing muscle in response to China’s human rights abuses while demonstrating the power of “safety in numbers” to mitigate retaliation. The US Congress also appears unequivocal on the matter, introducing the Strategic Competition Act of 2021, a bipartisan bill aimed at addressing economic competition with China and Xinjiang.

Beijing, however, did not remain silent, issuing a series of countersanctions against think tanks, human rights groups, and politicians. Five members of the European Parliament and ten European national politicians have now found themselves officially sanctioned by the Chinese government.

The PRC’s retaliation appears to signal that China will not tolerate interference in its internal affairs, the same argument it makes on issues related to Hong Kong and Taiwan. As China builds its first sanctions, it remains unclear how the government intends to ensure compliance and what the full financial impact may entail. Personal retaliatory sanctions are not unprecedented, Russia and Iran have in the past pursued a similar course, but what if Beijing moves beyond political signaling? Despite the symbolic nature of these particular designations, China continues to invest in a more advanced economic statecraft, emulating Western tools. 

While not yet officially enforced, Beijing established a legal framework for a blocking statute in January. This would allow the Chinese government to punish companies that comply with US sanctions when they conflict with Chinese policies, putting multinational companies with a Chinese presence in a tough position. For now, it remains unlikely that China will be willing to sever strong commercial ties in order to reap political concessions—nor is it likely that Western entities would abide by such measures. The tradeoff between a more sophisticated sanctions regime and a hostile environment for foreign investment does not yet seem worth it. But China may soon become a more sophisticated sanctioning authority. 

Vienna Talks

In the first issue of the Global Sanctions Dashboard, we covered the Trump administration’s decision in January to designate five individuals and 36 Iranian entities as sanctions options ran dry. Since then, Biden’s team has left the program untouched as it evaluates the prospect of fresh negotiations. Talks began in Vienna last week to discuss both Iran’s recent breaches of the deal and a potential reentry by the United States. The Iranian government continues to insist, at least publicly, that all US sanctions must be lifted as a precondition to Tehran’s recommitment—a move the Biden administration is unlikely to make. Most, if not all, terrorism-related sanctions will surely remain in place, and potentially those on the Iranian central bank. The European Union has also introduced new designations, despite the resumption of talks. After recent attacks on Iran’s nuclear facility in Natanz, Tehran’s leverage in gaining sanctions reprieve as a precondition to its recommitment could be diminished. Either way, all parties remain tangled in a game of sanctions, where the true financial impact may play second fiddle to saving face. 

Pressuring Myanmar 

As the talks in Vienna continue, the ongoing crisis in Myanmar worsens. Since the military seized control of the government earlier this year, over 600 people have died. In the past month, Switzerland and the EU have each designated 11 individuals alongside further measures by the US and UK against the junta. While the global sanctions response builds, it remains uncertain whether the international community can force the junta to release power through financial means. Like with Iran prior to the JCPOA, strong multilateralized sanctions on Myanmar prior to 2016 arguably “worked,” facilitating Aung San Suu Kyi’s leadership of the country. But what happens when you try to reimpose a sanctions regime previously rolled back? Myanmar is a smaller and less sophisticated market than Iran, raising the prospect that new financial measures stand a chance at succeeding. But despite relative financial isolation from western markets, the military may maintain a lifeline thanks to significant economic trade between Myanmar and China, Singapore, and Japan. China has been openly supportive of the junta, while Japan has so far not implemented any sanctions, likely due to commercial ties developed since 2016.

Across the Atlantic

Few decisions that former President Trump made during his tenure hurt the credibility of American sanctions more so than the administration’s decision to sanction the International Criminal Court (ICC) after long lambasting it for investigating potential war crimes by the United States and Israel. In September 2020, Treasury designated ICC prosecutor, Fatou Bensouda, and senior prosecution official, Phakiso Mochochoko and on April 5th, Biden reversed the decision. In the interim period analysts wondered how, exactly, financial institutions should sever ties to a legal body, and few truly did.

Russia on the Radar

In March, Canada joined the EU, US, and UK in sanctioning Russia over the attempted murder and subsequent jailing of Alexei Navalny. The Canadian government designated nine high-ranking Russian officials, mirroring the Magnitsky lists of its closest partners. We can also expect additional sanctions proposals if Alexei Navalny’s health continues to deteriorate in prison. The focus now turns to eastern Ukraine, where Russian forces are amassing at the border—a potential diversion of Western attention from Russian domestic troubles, but one that has also triggered preparations for further sanctions by the West. At the time of this writing, the Biden administration has issued a sweeping executive order on Russia’s behavior writ large, introduced restrictions on Russia’s ability to raise ruble-denominated debt, and sanctioned 32 entities and individuals for 2020 election interference. We will address the impact of this move in our April edition. Maintaining clear messaging how each set of measures is tied to specific Russian behavior may be a challenge, especially if Moscow doesn’t understand (or wish to understand) such distinctions.

Recent Sanctioning Errors

Sometimes even sanctions administrators make mistakes. In going over the data from the past month, our records showed that OFAC sanctioned Myanmar’s 33rd Light Infantry Division on March 22nd pursuant to E.O. 14014, “Blocking Property With Respect to the Situation in Burma.” Three days later, on March 25th, OFAC then delisted the 33rd LID. Upon investigation, it appears that OFAC added the 33rd LID on March 22nd as a new entry, instead of adding a new “list” to the existing entry, which was created back in August 2018. After realizing the error, OFAC provided public notice of the delisting and updated the designation for the original entry for the 33rd LID. 

The European Union made a similar mistake in a recent round of sanctions against the National Security Agency of the Government of Eritrea. On March 22nd, the entity was designated under the EU’s human rights list, and then delisted two days later on the 24th. On that same day, the EU designated the National Security Agency under the same human rights list with a new ID. 

Earlier this year two Italian business owners found themselves and their respective businesses sanctioned by OFAC in a case of mistaken identity. Two Italian men, both named Alessandro Bazzoni, were mistakenly sanctioned after the Trump administration sent out a flurry of designations against Venezuela before leaving office. Both individuals were delisted on March 31st once the mistakes were identified. We know, sanctions are complicated enough the first time around. 

Methodology 

Castellum.AI  obtains global sanctions information from primary sources, and then proceeds to standardize and clean the data, extract key information like IDs and addresses from text blobs, and enrich the entries with additional information. Castellum.AI enriches as many as fifteen separate items per entry. This analysis is based on the enriched primary source data that populates our database. The database consists of over 600 watchlists, covering over 200 countries and six different categories (sanctions, export control, law enforcement most wanted, contract debarment, politically exposed persons and elevated risk). Castellum.AI updates their watchlists every five minutes directly from issuing authorities.  

Canada, France and Russia do not use unique IDs for their list which creates challenges relating to tracking changes over time. Many lists have individuals with the same name, and Castellum.AI uses various formulas and methods to identify unique entries. In addition to our algorithms, for Canada Castellum.AI can cross reference press releases, which announce name changes, additions and removals. France and Russia, however, do not publish press releases and their sanctions lists lack consistent structure. As a result, when either France or Russia change entries, they are often dropped and returned as a new one, potentially leading to higher add / drop numbers than other lists.

Michael Albanese is a Research Consultant for the Atlantic Council’s GeoEconomics Center and recently graduated from the University of Maryland, where he studied geoeconomics with a specialization in Russian foreign policy.

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.

GeoEconomics Center

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.