September 17, 2021
Global Sanctions Dashboard: Summer edition
The Global Sanctions Dashboard took a vacation, and hopefully you did too. Welcome back. In this edition, we review the summer’s designations and delistings with data visualizations and break down how China has applied its new Anti-Foreign Sanctions Law. We explore the current state of sanctions against the Taliban and the growing effort to combat global corruption and human rights abuses through sanctions policy.
Since the start of this year, China has more than doubled its total sanctions. But Beijing’s expanding regime is no aberration. Since January, Russia, France, Switzerland, Canada, the EU, UK, and U.S. have all seen a substantial increase in their total sanctions. In fact, the only major listing authority that has not seen a total increase has been the United Nations, where the Security Council repeatedly stalls out due to US and western political tensions with Russia and China. Sanctions coordination rather than sanctions multilateralism has taken hold. So please join us on September 24th to discuss the future of UN sanctions.
One country, two sanctions
In July, the PRC sanctioned six individuals and one entity in response to the US business advisory on the PRC’s National Security Law (NSL) in Hong Kong. Under the NSL, businesses face unwarranted electronic surveillance, surrender of corporate and customer data, and restricted access to information. All businesses and individuals operating in Hong Kong are subject to the NSL, and could soon face additional risk under the PRC’s planned expansion of its Anti-Foreign Sanctions Law (AFSL) into the special administrative region. Under the AFSL, individuals and businesses risk punishment if they are found complying with any sanctions imposed by the United States or other countries.
As Hong Kong’s democratic erosion ushers in an evolving legal landscape hostile to individuals and businesses looking to operate freely and with legal clarity, China has put its laws to use on the mainland. In response to the business advisory, Beijing unveiled the first official batch of designations under its AFSL—justifying them as “reciprocal countermeasures.” The designees included the DC-based Hong Kong Democratic Council, former Commerce Secretary Wilbur Ross, and individuals from Human Rights Watch, the International Republican Institute, the National Democratic Institute, the US-China Economic and Security Review Commission (USCC), and the House Foreign Affairs Committee.
In the Dashboard’s previous edition, we cautioned that it was too early to determine whether Beijing’s AFSL is a signaling mechanism or a credible financial threat. After these inaugural designations, we stand by our assessment that the PRC will hold back penalizing foreigners with serious economic interests in China—or for China. These designations mirror previous sanctions against those involved in democracy promotion efforts and human rights advocacy. It’s unsavory politics, but not much more. Additionally, the PRC’s Standing Committee recently halted plans to impose the AFSL in Hong Kong after concerns that it would place too many businesses in a tough position because they would hypothetically have to decide to violate either U.S. or Chinese law. Beijing’s caution is with good measure. Such a move would undoubtedly place Hong Kong’s status as a global financial hub at serious risk, and mainland markets cannot replace the liquidity or capital in the economy.
With the Taliban having returned to power in the aftermath of last month’s withdrawal of U.S. and allied forces from Kabul, sanctions are some of the only remaining leverage over the new government as it seeks international legitimacy. Under UNSC Resolution 1267 from 1999 and 1988 from 2011, the Taliban remains sanctioned by UN member states—meaning Russia and China are legally bound to enforce an asset freeze and refrain from financing the regime. However, both China and Russia have a demonstrated history of violating UN sanctions—which lack an effective enforcement mechanism—opening up the possibility for them to agree to a UNSC resolution, but violate it regardless. Beijing will likely seek a bilateral security relationship that would provide it with its own assurances the Taliban won’t harbor Uyghur militants from bordering Xinjiang—which the Taliban has already nominally agreed to do—while also exploring investment in the extraction of Afghanistan’s natural resources.
To reinforce international obligations, the UNSC should update its guidance on this sanctions program that has largely remained dormant over the years. Counterrorism has historically been a rallying point in getting UNSC sanction resolutions off the ground, but will the Taliban’s behavior now count as terrorism? On what specific grounds will western powers sanction the Taliban, even as they acknowledge, but not officially recognize, the group as the de facto government of the country? In the meantime, UNSC and OFAC guidance is critical to ensure the flow of humanitarian aid to the country. Listing authorities have already begun licensing procedures to reassure international organizations that will attempt to deliver humanitarian aid.
Building upon its post-Brexit boost, the UK has continued to target corrupt actors under its anti-corruption authority. In July—following a report released by The Sentry—the UK sanctioned Zimbabwean business tycoon Kudakwashe Tagwirei “for profiting from misappropriation of property,” and defrauding the country’s Treasury and grossly inflating the price of essential goods. This designation was unveiled along with four other individuals, including Teodoro Nguema Obiang Mangue—the sitting Vice President of Equatorial Guinea, who has also been charged with the misappropriation of significant public assets. Obiang Mangue has been subject to major asset forfeiture actions in the United States and France in the past.
Last month, Australia joined the United States, Canada, the EU and the UK in adopting Magnitsky legislation. The new law could strengthen the power of sanctions in the Indo-Pacific, where Australian industry and banking may reach deeper than its transatlantic partners.
As Nicaragua nears its presidential elections this November, the Ortega regime has continued its crackdown against both protesters and political opponents, including arbitrary detentions of seven prominent candidates in the upcoming presidential race. In response, the EU and Switzerland sanctioned eight Nicaraguan nationals responsible for the government’s heavy-handed response, including Vice-President Rosario Murillo. These sanctions follow similar measures taken in May 2020, and bring total sanctions against the country by both the EU and Switzerland to 14.
While the UK aligns closer to the U.S. in sanctioning global corrupt actors, both are hesitant to sanction influential Russian oligarchs. In a powerful essay written on the eve of the one-year anniversary of his attempted assasination, Alexei Navalny urged policymakers to muster the political will to sanction these individuals, stating that “[t]here is nothing more frustrating than reading the latest sanctions list, replete with the names of intelligence service colonels and generals nobody has ever heard of, but meticulously cleared of the people in whose interests these colonels act.” The following day, the U.S. and UK announced fresh sanctions against additional FSB operatives involved in Navalny’s poisoning. As the Biden administration pursues a more ‘predictable and stable’ relationship with Russia, designations against oligarchs within Putin’s inner circle remain unlikely.
The Biden administration did, however, move forward with additional sanctions against those involved in the construction of the Nord Stream 2 pipeline. In August, OFAC sanctioned 13 vessels and five entities pursuant to PEESA. Arriving at the eleventh hour of the pipeline’s construction, these designations were perhaps a final moment of protest by the United States. In May, the Biden administration waived sanctions on Nord Stream 2 AG, its CEO Matthias Warnig, and Nord Stream 2 AG’s corporate officers.
On the radar
Dmitry Rogozin, Director General of the Russian national space agency—Roscosmos, made headlines in early June after he hinted that Russia may consider pulling out of the International Space Station if the U.S. does not lift its export controls on the Progress Rocket and Space Center and the TsNIIMash rocket and spacecraft scientific center. Rogozin, who himself is sanctioned by OFAC for his role as Russia’s deputy prime minister of defense during the Kremlin’s annexation of Crimea in 2014, subsequently backed down from this threat in early September stating that “divorce within a station is not possible.” Both entities were added to the Commerce Department’s Bureau of Industry & Security’s military end user (MEU) list, which restricts the acquisition of certain US goods and technologies by hostile actors.
On the one-year anniversary of Lukashenka’s fraudulent presidential re-election in Belarus, the U.S., UK, EU, and Canada coordinated actions against the regime—with President Biden also unveiling a new executive order that would open up the possibility for more sectoral sanctions against the Belarusian economy. The U.S., however, stopped short of matching our allies in restricting Belarusian sovereign debt, preserving its escalation options.
While the Biden administration remains hesitant to sanction top Russian oligarchs involved in corruption and human rights abuses, the two co-chairs of the new Congressional Caucus against Foreign Corruption and Kleptocracy are hoping to change that. This week, Representatives Tom Malinowski and John Curtis introduced an amendment to the 2022 NDAA that would force the administration to evaluate potential sanctions against all 35 of Putin’s associates that were singled out by Navalny’s Anti-Corruption Foundation back in January of this year. In a letter addressed to President Biden, the group urged the United States to sanction dozens of oligarchs accused of political persecution, human rights abuses and corruption.
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.
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