In Late December, the U.S. Treasury Department issued new regulatory filings as part of what it billed as a “historic” effort to address the humanitarian cost of sanctions. The core of the new regulatory exemptions is an effort to ease sanctions-related obstacles that prevent the work of non-governmental organizations (NGOs) and charities from reaching populations. More broadly, these new measures are part of the Treasury Department’s ongoing effort to address the harm that sanctions often cause.

These concerns are certainly well-founded. As both scholarship and many United Nations reports have made clear, sanctions cause a significant increase in unemployment, inflation, and poverty in targeted states. Sanctions can severely restrict access to essential goods, including food and medicine. They have also often had a negative impact on a variety of other non-economic factors. Scholars largely believe that economic sanctions tend to reduce the level of democracy in states, expand corruption, and undermine human rights. This became a particular cause of concern in the midst of the COVID-19 pandemic as sanctioned countries struggled to acquire vaccines and basic medical necessities. Medical researchers decried these broad sanctions campaigns as a form of collective punishment and as “barbaric.”

The Folly of Smart Sanctions

This isn’t the first time the negative humanitarian effects of sanctions have come into the spotlight. After the disastrous effect of the comprehensive economic embargo on Saddam Hussein’s Iraq during the 1990s and early 2000s, there was a great degree of hesitation, including in the UN and among European countries, to engage in such campaigns. This was a problem for Washington and security-focused elites in major European capitals, who saw broad sanctions efforts as key to a variety of post-9/11 foreign policy goals.

The tattered reputation of sanctions resulted in an effort to devise “smart sanctions.” Smart sanctions should be viewed less as a new form of economic sanctions but as a new strategy of sanctioning. In this context, rather than sanctioning an entire economy, targeted sanctions would be imposed on elites closer to decision-making circles, and the general population would be spared the effects of sanctions. The problem was that this form of sanctioning ultimately proved ineffective in coercive missions. Elites had a greater capacity for circumventing economic sanctions, greater ideological commitment to state goals, or some combination thereof.

But while smart sanctions failed to produce a more humanitarian form of sanctioning, they did rehabilitate the reputation of sanctions, which helped gain support for the new form of “comprehensive” sanctions, where economies would be broadly targeted through a barrage of financial and sectoral sanctions. Even the most aggressive and broad sanctions campaigns, such as the one implemented against Iran between 2010 and 2013, were cloaked under the banner of “smart sanctions.”

Sanctions Objectives and Humanitarian Harm

As many scholars have argued, imposing pain on the population is often the purpose of sanctions. A broad sanctions campaign may be formally designed to reverse a particular policy in the target state, but it often hopes to achieve this by causing instability or regime change.

But even when the formal goals of the sanctions policy can be taken at face value, achieving them requires harming the population. U.S. sanctions architects have specifically pointed to exacerbating unemployment and inflation as key goals for sanctions efforts and have used terms like economic “strangulation” to describe their endeavors.

Arguably, the most frequently sighted goal of sanctions is to deny the target country funds with which to carry out the policies being objected to—for example, a military or proliferation-related policy the sanctioning country finds objectionable. So the policy effectively becomes limiting, as best as the sanctioning country can, the target’s access to necessary financial resources. But it is important to remember that the budget from which the military of a country is financed is the same budget that a variety of other services, such as education, healthcare, and pensions, receive their funds.

Financial Sanctions and Humanitarian Harm

Ultimately, even if the will to protect civilians existed, the fundamental problem is that one cannot impose widespread sanctions while sparing the target country’s population. Central to the twenty-first-century sanctions campaigns pursued by the United States is the imposition of financial sanctions. As financialized globalization makes participation in international value chains and the U.S. dollar increasingly important to any country’s development strategy, Washington can restrict a country’s trade flows without the need for the kind of broad trade embargo imposed on Iraq in the 1990s.

As U.S. sanctions designers have themselves made clear, key to this effort is convincing international banks at the center of interstate trade to sever all lines of interaction, including all financial channels and correspondent banking relationships, with the financial sector of the target country. This means that even medical and food-related transactions (so-called “humanitarian trade”) are usually not possible in large volumes, as the means for such transactions do not exist even when such transactions are statutorily exempted from the sanctions campaign. When small transactions are possible, their financial viability for the bank is overwhelmed by the substantial compliance costs imposed by sanctions measures. As Obama administration sanctions architect Richard Nephew stated while discussing the COVID-19 pandemic in Iran, despite formal exemptions for the commerce of medical equipment, “in reality … [f]or Iranians with almost non-existent commercial and financial ties with the outside world, it is difficult to import spare parts for medical equipment, ventilators, and protective gear.”

Even making the mentioned humanitarian trade exemptions viable would require the re-establishment of banking channels that would, at least to some extent, undermine the financial sanctions at the core of sanctions pressure campaigns. According to Lee Jones, when reacting to the UN’s endorsement of smart sanctions, one UN ambassador rejected any changes to the basic structure of sanctions, noting that they would be “inimical to their basic purpose: to cause civilian suffering. To reform sanctions, he said, would be to weaken them.”

The New ‘Historic’ Measure

The new regulations issued by the Biden administration are far from historic. They are largely focused on extending exemptions to NGOs and multinational institutions of credit and standardizing ineffective existing exemptions around humanitarian trade across different sanctions programs. This does not sufficiently address the many problems with these exemptions. An accompanying FAQ issued by the Treasury Department’s Office of Foreign Assets Control (OFAC)—the agency that issues designations and enforces financial sanctions—reasserts that banks are allowed to facilitate financial transactions involving exempted economic activity, but provides little guidance on how that can be practically done beyond what has already been said in the past.

Ultimately, it is unlikely that the new measures introduced by the Treasury Department will meaningfully alter this dynamic. The fact that these measures are predominantly focused on NGOs and charities is an effective admission that imposing broad sanctions regimes and maximum pressure campaigns that do not immiserate the population or at least endeavor to do so is not a viable notion. NGOs and charities may be able to provide limited relief in countries suffering severe devastation, such as Afghanistan. Still, they have neither the means nor the resources to have a measurable effect in addressing the harm brought about by sanctions in the vast majority of target countries.

The Treasury Department clearly feels no need to go further. Sanctions have long enjoyed a “misleading reputation of harmlessness.” Bombing hospitals attracts scrutiny in a way that depriving them of funding and medicine does not. As the West is now looking to sanctions as the tip of the spear to thwart Russia’s invasion of Ukraine, the humanitarian devastation of sanctions is likely to be further marginalized in the public discourse. Recent concerns about the severe situation in Afghanistan seem to have resulted in pressure on the Treasury Department, leading to the issuance of these recent exemptions. But a more meaningful reckoning with the severe harm sanctions impose on civilians will likely not be on offer anytime soon.

Ali Ahmadi is a scholar of sanctions and geoeconomics. He is currently an Executive Fellow at the Geneva Center for Security Policy (GCSP) and a Research Fellow at the Brussels-based Vocal Europe foreign policy think tank. You can follow him on Twitter and Linkedin.

Image: Flickr/White House.