Economic Sanctions: Overview for the 117th Congress

Economic Sanctions: Overview for the 117th Congress

January 15, 2021
Economic Sanctions: Overview for the 117th Congress
Economic Sanctions and Authorities
departments, but primarily with the Departments of State,
Economic sanctions in furtherance of foreign policy and
the Treasury, and Commerce:
national security objectives are coercive economic
 the State Department manages arms sales, diplomatic
measures taken against a target to bring about a change in
relations, visa issuance, military aid, and foreign aid;
behavior. In U.S. foreign policy and national security,
sanctions can include such measures as trade embargoes;
 Treasury regulates transactions, access to U.S.-based
restrictions on particular exports or imports; denial of
assets, use of the U.S. dollar and U.S. banking system,
foreign assistance, loans, and investments; blocking of
and the U.S. voice and vote in the international financial
foreign assets under U.S. jurisdiction; and prohibition on
institutions; and
economic transactions that involve U.S. citizens or

businesses. Secondary sanctions are sometimes used to put
Commerce oversees export licensing and compliance
additional pressure on the sanctions target. They penalize
with international obligations primarily associated with
third parties engaged in activities with the primary
nonproliferation.
sanctions target that undermine or evade the purpose of the
To a lesser extent, other agencies have a role particular to
sanctions regime.
their own missions. The Department of Justice prosecutes
sanctions evasion and violations of sanctions and export
The Role of the President
laws. The Department of Homeland Security oversees
Most U.S. economic sanctions imposed for foreign policy
customs affecting importation and has a supporting role to
or national security reasons are based on national
the State Department in visa issuance. The Department of
emergency authorities. The President, for a variety of
Energy has a role in overseeing obligations under
reasons related to constitutional interpretations and related
international nuclear agreements.
legal challenges throughout U.S. history, holds substantial
decisionmaking authority when economic sanctions are
The Role of Congress
used in U.S. foreign policy. If the sanctions are to be a part
Congress has a role in defining the concerns to which
of a policy already identified by Congress in legislation, the
sanctions are applied. As part of this responsibility,
President is to follow the requirements of the relevant
Congress enacts legislation to authorize, or in some
legislation. Thus, for example, sanctions imposed on Russia
instances to require, the President to take action to address
relating to its invasion of Ukraine, the death of Sergei
foreign policy and national security concerns. Congress has,
Magnitsky, government corruption, weapons proliferation,
for example, taken the lead in writing into legislation the
weapons trade with Syria, election interference, and
authority for the President or executive branch to use
sanctions violations relating to North Korea are based on
sanctions to address the rise of military coups d’état,
legislative requirements. It remains, however, the executive
weapons proliferation, international terrorism, illicit
branch’s responsibility to make each determination under
narcotics trafficking, human rights abuses (including
law that forms the Russia sanctions regime. Determinations
trafficking in persons and foreign states’ failure to uphold
are to be based on national emergency, international
religious freedom), regional instability, cyber insecurity,
emergency, and treaty obligations stated in legislation.
corruption and money laundering, or events rising from
specific regions or countries, including Russia, North
The President may also act as a sole decisionmaker by
Korea, and Iran.
determining that a situation poses an “unusual and
extraordinary threat, which has its source in whole or
Most often, however, even when Congress enacts an
substantial part outside the United States, to the national
authority or requirement to use economic sanctions, it refers
security, foreign policy, or economy of the United States.”
back to the national emergency and international
In this process, the President declares that a national
emergency frameworks for implementation.
emergency exists, as provided for in the National
Emergencies Act (50 U.S.C. 1601 et seq.), submits that
Sanctions Regimes in 2021
declaration to Congress, and publishes it in the Federal
The United States maintains an array of economic sanctions
Register to establish a public record. Under this national
against foreign governments, entities, and individuals,
emergency, the President further invokes the authorities
covering
granted to his office in the International Emergency

Economic Powers Act (50 U.S.C. 1701 et seq.).
foreign governments it has identified as supporters of
acts of international terrorism (Cuba, Iran, North Korea,
The Role of the Executive Branch
Syria); nuclear arms proliferators (Iran, North Korea,
In the executive branch, the responsibility to implement and
Syria); egregious violators of international human rights
administer sanctions resides throughout agencies and
norms, democratic governance, or corruption standards
(Belarus, Burundi, Central African Republic, Cuba,
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Economic Sanctions: Overview for the 117th Congress
Democratic Republic of the Congo, Iran, Libya,
Economic Impact on the United States
Nicaragua, North Korea, Russia, Somalia, South Sudan,
Sanctions also impose economic costs for the United States,
Syria, Venezuela, Western Balkans, Yemen, Zimbabwe,
because they restrict economic transactions in which U.S.
and the Hizbollah organization); and those threatening
individuals and firms would otherwise engage. U.S.
regional stability (Iran, North Korea, Russia, Syria);
business groups have at various points raised concerns that

sanctions harm American manufacturers, jeopardize
individuals and entities found to be active in egregious
American jobs, and, when sanctions are implemented
human rights abuses and corruption within the state
unilaterally, cede business opportunities to firms from other
system, international terrorism, election interference,
countries. U.S. sanctions also risk retaliatory measures by
intelligence-sector overreach, illicit narcotics
the target. For example, the Alaskan seafood industry and
trafficking, weapons proliferation, illicit cyber activities,
Washington State apple and pear producers were negatively
conflict diamond trade, and transnational crime; and
affected by Russia’s retaliatory ban on agricultural imports
 individuals and entities to meet the requirements of the
from countries imposing sanctions.
United Nations Security Council (Central African
Republic, Democratic Republic of Congo, Eritrea,
Policymakers have expressed longer-term concerns that
Guinea-Bissau, Iran, Iraq, Lebanon, Libya, North Korea,
extensive use of U.S. sanctions that restrict access to the
Somalia, South Sudan, Yemen, and individuals affiliated
U.S. financial system could erode the status of the U.S.
with the Islamic State [Da’esh], al-Qaida, or the
dollar in the global economy. Since World War II, the U.S.
Taliban).
dollar has been widely used in international economic
transactions, and the United States incurs economic benefits
The Economic Impact of Sanctions
from its widespread use (including lower borrowing rates).
The United States has increasingly leveraged the role of the
Economic Impact on the Target
U.S. dollar for foreign policy goals, including restricting
The intended economic impact of various U.S. sanctions by
access to the U.S. dollar and financial markets for Iran,
design varies widely. Some sanctions are designed to have a
Russia, and Venezuela. Many foreign governments targeted
broad, destabilizing effect on a target country’s economy,
by U.S. financial sanctions and their economic partners are
often in an effort to seek significant changes in the
increasingly exploring and creating ways to reduce their
government’s behavior or a change in government.
reliance on the U.S. dollar. If countries pivot from the U.S.
Sanctions on Iran and Venezuela, for example, target the
dollar to alternative currencies, the United States could face
key revenue-producing sector in the economy (oil) and the
higher borrowing costs, among other economic effects.
central bank, and restrict access to the U.S. financial
market, which is widely used to conduct international
Despite the challenges to crafting an effective sanctions
transactions. Likewise, restrictions on some Russian
regime, most policymakers consider that the tool can be
companies’ access to U.S. financing intend to create a
effective when used in concert with diplomacy, when the
disruption in the availability of credit for Russian state-
right balance of pressure and promise of improved relations
owned or politically connected firms.
is struck, and when used as part of a multinational effort.
Other sanctions are designed to put targeted economic
Issues to Watch for in the 117th Congress
pressure on key decisionmakers while minimizing collateral
With the transition to a 46th office-holder in the White
damage for the target country’s citizens and U.S. economic
House, the 117th Congress may face early deliberations on
interests. Freezing the U.S. assets of the wife of Venezuelan
how sanctions fit in critical foreign policy and national
President Maduro, for example, likely does not have broad
security decisions. Sanctions are central to the debates over
effects on the Venezuelan or U.S. economy, but is intended
how to deter Iran’s missile proliferation activities;
to put pressure on the Maduro government to change its
normalize relations with North Korea while ensuring an end
behavior. Other sanctions’ targets are more symbolic than
to its nuclear and missile programs; convince Russia to
disruptive of ongoing economic activities. It is not clear, for
leave Ukraine; deter multiple foreign adversaries from
example, that the Russian organization Night Wolves (a
disrupting U.S. elections; end the conflicts in Yemen and
pro-Kremlin motorcycle Club) had robust economic
Syria; stabilize and support democratic institutions in
relationships with the United States before it was
Venezuela; approach Cuba as a newly designated state
designated for sanctions.
sponsor of international terrorism; and defend against
China’s use of its private sector to strengthen its military,
The economic impact of a sanction also depends on the
intelligence, and security apparatuses.
extent to which the target is able to circumvent or adapt to
the sanction. The Maduro government of Venezuela, for
Dianne E. Rennack, Specialist in Foreign Policy
example, has sought closer economic ties with China and
Legislation
Russia in the face of U.S. sanctions, and the Russian
Rebecca M. Nelson, Specialist in International Trade and
government used its sizeable foreign exchange reserve
Finance
holdings to support sanctioned firms and focused on
IF11730
creating domestic industries. It is more difficult for the
target to find alternative markets when sanctions are
imposed multilaterally than when sanctions are imposed
unilaterally.
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Economic Sanctions: Overview for the 117th Congress

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