Fri, Feb 12, 2021

The rebirth of the State Department’s Office of Sanctions Coordination: Guidelines for success

New Atlanticist by Daniel Fried, Edward Fishman

Economic Sanctions Economy & Business Politics & Diplomacy United States and Canada

U.S. Secretary of State Antony Blinken addresses reporters during his first press briefing at the State Department in Washington, U.S., January 27, 2021. REUTERS/Carlos Barria/Pool

Buried in the 5,593-page stimulus bill signed into law last December was a significant institutional reform of the State Department: the (re-)creation of an Office of Sanctions Coordination.

The office is modeled on the former Office of the Coordinator for Sanctions Policy, which was established in 2013 by then-US Secretary of State Hillary Clinton and disbanded in 2017 by then-US Secretary of State Rex Tillerson. By enshrining the office in law, Congress is seeking to make it a permanent fixture of the State Department. And by calling for it to be led by an ambassador-level, Senate-confirmed official—who will report directly to the secretary of state—Congress has positioned it well for success. (Full disclosure: Daniel Fried was the first and so far only State Department coordinator for sanctions policy; Edward Fishman worked closely with the coordinator’s office in his roles as lead sanctions adviser on the State Department’s Policy Planning Staff and as Russia and Europe lead in the Office of Economic Sanctions Policy and Implementation.)

While sanctions are (for good or for ill) increasingly a tool of first resort in US foreign policy, the State Department has lacked a disciplined process for coordinating sanctions policy both within the building and externally with allies. Responsibilities for sanctions cut across the State Department’s functional and regional bureaus. The Office of Economic Sanctions Policy and Implementation, which sits in the Bureau of Economic and Business Affairs, plays a prominent role on various sanctions issues, including measures that target key sectors of the Iranian and Russian economies. But other sanctions portfolios are distributed across the Bureau of International Security and Nonproliferation; the Bureau of Democracy, Human Rights, and Labor; the Bureau of International Organization Affairs; the Bureau of Energy Resources; and the Bureau of Counterterrorism, among others, with the relevant regional bureaus also providing input.  

Before the creation of the first coordinator’s office, this dispersion of responsibilities hampered the State Department’s ability to play a constructive or coherent role on sanctions policy. (The joke was that for every State Department official in the Situation Room for an interagency policy coordination meeting there was a different opinion.) The creation of the new Office of Sanctions Coordination presents US Secretary of State Antony Blinken with an opportunity to fix this problem and set up the department for maximum effectiveness on sanctions. This article recommends roles and responsibilities for the new Office of Sanctions Coordination and proposes guidelines for the team that will run it.

Role #1: Internal coordination and policy development

  • The Office of Sanctions Coordination should serve as the central node on sanctions policy at the State Department, bringing together perspectives and expertise from all regional and functional bureaus. The office should resolve internal disputes and give the State Department one voice on critical sanctions-policy issues. To that end, the other senior sanctions official at the State Department, the deputy assistant secretary for counter threat finance and sanctions (who oversees the Office of Economic Sanctions Policy and Implementation), should have a dotted-line reporting relationship with the head of the Office of Sanctions Coordination.
  • Members of the office should include subject-matter experts on all sanctions issues, enabling the office to advise officials across the department on when and how to use sanctions—and when sanctions are not a good option.
  • The office should be lean, consisting of a coordinator, a deputy, and a small team of policy officials to cover all sanctions issues in each major region: Europe and Eurasia (e.g., Russia and Belarus); East Asia and the Pacific (e.g., China and North Korea); Middle East (e.g., Iran and Syria); Africa (e.g., Somalia and Zimbabwe); and Western Hemisphere (e.g., Cuba and Venezuela). Another officer could be added to work on new issues in sanctions evasion, financial transparency, and anti-corruption. Human rights-related sanctions (especially implementation of the Global Magnitsky Act) should be handled by the respective geographic sanctions officers, as would other functional sanctions regimes such as those focused on cybersecurity and election interference. The policy officials would also be responsible for developing new sanctions authorities in response to issues of the day. For instance, the officer covering East Asia and the Pacific would be charged with developing new sanctions related to the situation in Myanmar.
  • The office should include a mix of sanctions experts (with at least one Treasury Department veteran), regional experts (e.g., with experience in China or Iran policy), and ideally someone with congressional experience. Broad expertise will give the office weight and connectivity to other critical interagency stakeholders on sanctions policy.
  • The coordinator does not necessarily have to be a sanctions expert (Fried certainly wasn’t before assuming the role), but the coordinator needs to have sufficient authority and experience to work within the interagency at the deputies’ level and with European and other governments at a similar level.

Role #2: Sanctions diplomacy

  • Sanctions are more effective when levied by many countries in parallel. Multilateral sanctions pack a substantive and political punch, entail fewer costs to alliances, and are much less vulnerable to evasion and workarounds than unilateral measures. Unilateral sanctions are often a sign of diplomatic isolation and thus weakness. They are best avoided.
  • The United Nations Security Council is, in theory, the best venue for negotiating multilateral sanctions. UN Security Council Resolutions (UNSCRs) have the force of law and international legitimacy. The Obama administration relied on them for sanctions against North Korea over its nuclear and ballistic-missile programs and for some Iran sanctions. But as China and Russia, two veto-wielding permanent members of the Security Council, have turned more adversarial—and as both countries themselves have become the target of sanctions—UNSCRs are no longer a viable option in most cases.
  • The best multilateral sanctions alternative to the Security Council is the creation of coalitions of like-minded allies and partners. The Office of Sanctions Coordination should lead the US government’s efforts to build these coalitions and make US sanctions policy multilateral whenever possible.
  • The Office of Sanctions Coordination should build issue-specific coalitions based on a foundation of key democratic allies, including, for most sanctions programs, the European Union (EU), the United Kingdom, and other Group of Seven (G7) governments. Depending on the particular sanctions issue at hand, the office should seek to add other national governments with strong stakes in the matter. For instance, when the United States negotiated sanctions against Russia following its 2014 invasion of Ukraine, the coordinator’s office worked with an informal but effective contact group consisting of members of the G7, the EU, and other critical stakeholders (e.g., Poland and Norway). The new Office of Sanctions Coordination should build similar contact groups (some of which already exist) to coordinate sanctions policy toward North Korea, China, Iran, and Venezuela, as well as on transnational matters such as human rights and corruption.
  • Sanctions coordination with allies must include taking their concerns, red lines, and suggestions into account as the US government develops its sanctions options. The United States should not make firm decisions about sanctions and then seek to push allies into accepting them; negotiating flexibility is key to developing common positions.
  • The purpose of sanctions is to help create conditions that allow for their removal. The Office of Sanctions Coordination should serve as an adviser on US government delegations charged with negotiating agreements that involve the removal of sanctions. For instance, members of the office should support diplomacy with the P5+1 (the Security Council’s five permanent members—the United States, the United Kingdom, Russia, China, and France, plus Germany) on Iran and international efforts to end the conflict in Ukraine.

Role #3: Interagency representation and collaboration

  • The Office of Sanctions Coordination should represent the State Department in all interagency meetings that touch upon sanctions policy. This would not only help the State Department speak with one voice on sanctions, but also enable critical details of allied governments’ positions on sanctions to flow into the Situation Room. Providing this connective tissue between interagency policy deliberations and sanctions diplomacy will be one of the most critical functions of the office.
  • The Office of Sanctions Coordination should work hand in hand with the Treasury Department in general and the Office of Foreign Assets Control (OFAC) more specifically. Importantly, the office should neither duplicate the efforts of nor compete with the Treasury Department on sanctions policy. Instead, it should serve as a link between the rest of the State Department and the sanctions experts at OFAC and among Treasury’s policy leadership (especially the under secretary for terrorism and financial intelligence) so that their respective work advances shared objectives.
  • When the Office of Sanctions Coordination leads international delegations on sanctions diplomacy, it should include representatives from other agencies, including the Treasury Department and (when relevant) the Commerce Department, Energy Department, and Defense Department. National Security Council staff may be part of this team as well. This was the model we used when we coordinated international Russia sanctions from 2014 through 2017, and was key to our effectiveness.

Role #4: Consultation with business, labor, the NGO community, and Congress

  • Because of its role in the enforcement of sanctions regulations, OFAC is properly constrained in its ability to consult with the private sector and Congress. The Office of Sanctions Coordination can fill this void, seeing to it that the voices of US business, labor, NGOs, and Congress are accounted for in consideration of sanctions policy.
  • In support of US President Joe Biden’s call for a “foreign policy for the middle class,” the Office of Sanctions Coordination should endeavor to understand how sanctions policies affect regular Americans—including their impact on employment—and to incorporate that information into interagency deliberations on sanctions policy.
  • The Office of Sanctions Coordination should serve as a liaison to the NGO community, soliciting ideas for human rights-related sanctions, monitoring the humanitarian impact of sanctions programs, and advising on the enactment of general licenses and other humanitarian exemptions.
  • The Office of Sanctions Coordination should also serve as the State Department’s primary point of contact for Congress on sanctions issues. Working closely with OFAC, members of the office should regularly brief the Hill on sanctions issues and advise on the development of new sanctions legislation.

Role #5: International information-sharing and capacity-building

  • The Office of Sanctions Coordination should work with US allies and partners to facilitate the timely sharing of information that can support sanctions by foreign governments and check efforts at evasion. For ongoing sanctions programs, the office should seek to negotiate regular mechanisms for international information-sharing on sanctions issues.
  • The office should also lead the US government’s efforts to build foreign governments’ capacity to implement and enforce sanctions. Building up the capacity of allies and partners on sanctions is essential for multilateral sanctions policy to achieve maximum efficacy.

Guidelines for the Office of Sanctions Coordination

The Office of Sanctions Coordination holds the promise of substantially increasing the effectiveness of US sanctions policy. As the State Department works to set up the office, we propose the following guidelines:

  • Work closely with Treasury. The Office of Sanctions Coordination should be a trusted partner to OFAC. Communications between officials at the two offices should be constant and information should flow freely between them.
  • Avoid duplication of effort. The Office of Sanctions Coordination shouldn’t duplicate the work of OFAC, the State Department’s Office of Economic Sanctions Policy and Implementation, or any other office; rather, it should serve as a strategic synthesizer and force multiplier by bringing the power of international coalitions to US sanctions policy.
  • Serve as a translator between diplomats and sanctions experts. Members of the Office of Sanctions Coordination should strive to be equally fluent in the languages of diplomacy and sanctions, guarding against miscommunication.
  • Build close relationships with allies and partners. It is critical for members of the Office of Sanctions Coordination to build close relationships with their counterparts in foreign governments. These bonds will come in handy when crises occur and multilateral sanctions must be negotiated quickly.
  • Form international contact groups for the major sanctions issues. The Office of Sanctions Coordination should build “diplomatic infrastructure” to facilitate the ongoing implementation of international sanctions regimes. Standing contact groups build the trust and institutional relationships necessary for long-term solidarity on sanctions.
  • Take calls from and meetings with businesses and labor unions. Sanctions can have ripple effects on the US economy. The Office of Sanctions Coordination should seek to forecast those effects so that they can be mitigated on the front end.
  • Consult regularly with Congress on sanctions strategy and options. Congress can play a constructive role on sanctions. Members of the Office of Sanctions Coordination should view Congress as a partner in advancing the goals of sanctions programs and treat it as such.
  • Prioritize setting up the office. Sanctions will inevitably be an early action item for the Biden administration as it revamps US policies toward Iran, Russia, and China. Establishing the Office of Sanctions Coordination in the first six months of the administration would position the State Department to address these issues as effectively as possible.
  • Get out in front of problems. It is difficult to negotiate strong multilateral sanctions rapidly. The Office of Sanctions Coordination should think ahead and develop options for “contingency sanctions” that can be used as a deterrent and triggered if an adversary crosses a red line. 
  • Keep US strategy and objectives top of mind. Members of the Office of Sanctions Coordination should constantly evaluate whether sanctions programs are advancing US strategy and foreign-policy objectives. They should endeavor for sanctions never to become an end in and of themselves.

Edward Fishman is a nonresident senior fellow at the Atlantic Council’s Eurasia Center. He formerly served at the US Department of State as a member of the secretary’s Policy Planning Staff.

Daniel Fried is the Weiser Family distinguished fellow at the Atlantic Council. He was the coordinator for sanctions policy during the Obama administration, assistant secretary of State for Europe and Eurasia during the Bush administration, and senior director at the National Security Council for the Clinton and Bush administrations. He also served as ambassador to Poland during the Clinton administration. Follow him on Twitter @AmbDanFried.

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