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Opinion A grim warning against America’s overuse of sanctions

Columnist|
March 29, 2016 at 8:44 p.m. EDT
Treasury Secretary Jacob Lew testifies on Capitol Hill last week. (Jacquelyn Martin/ASSOCIATED PRESS)

Economic sanctions have become the “silver bullet” of American foreign policy over the past decade, because they’re cheaper and more effective in compelling adversaries than traditional military power. But Treasury Secretary Jack Lew warns of a “risk of overuse” that could neuter the sanctions weapon and harm America.

Lew made his unusual case against "sanctions overreach" in an interview last week and in a speech prepared for the Carnegie Endowment for International Peace. His caution against overuse comes as some Republican members of Congress are fighting to maintain U.S. sanctions on the Iranian nuclear program, despite last year's deal limiting that Iranian threat.

By highlighting the strengths and weaknesses of sanctions, Lew is raising an important question about the nature of American power in the 21st century. Sanctions have clout because U.S. financial markets are the central nervous system of the globalized economy. But if so many sanctions are applied that the U.S. system becomes too complicated and cumbersome for foreigners, they will eventually find ways to do business outside U.S. markets — weakening both our sanctions and our underlying economy. The magic bullet will become a poison pill.

Lew notes that U.S. sanctions against Iran’s nuclear program showed how effective this weapon can be when it’s carefully fashioned as part of a broad coalition. America’s program of so-called “secondary” sanctions didn’t just ban U.S. companies from doing business with Iran; they banned any company operating in Iran from using U.S. banks or other financial institutions. That made Iran a no-go zone for most Western companies.

Contrast the success of this coordinated effort in bringing Iran to the table with five decades of unilateral U.S. sanctions against the Castro regime in Cuba, which Lew rightly notes were “ineffective,” to put it mildly.

Lew’s larger point is that sanctions won’t work if countries don’t get the reward they were promised — in the removal of sanctions — once they accede to U.S. demands.

“Since the goal of sanctions is to pressure bad actors to change their policy, we must be prepared to provide relief from sanctions when we succeed. If we fail to follow through, we undermine our own credibility and damage our ability to use sanctions to drive policy change,” Lew explains in his speech.

Congressional opponents of the nuclear deal with Iran want to keep the U.S. financial system off-limits. This case against "Dollarizing the Ayatollahs" was made by Mark Dubowitz and Jonathan Schanzer in a piece with that headline in the Wall Street Journal on Monday.

Lew counters such arguments in his speech: “By following through on our commitment to provide sanctions relief, we sustain the powerful incentive for other malign actors to change their behavior.”

Lew is also wary of casual escalation — and the assumption that if existing sanctions don’t work, just add more. Russia hasn’t yet been forced by Western sanctions to give back Crimea or keep its commitments to the Minsk process, so some critics want to squeeze harder. Lew counsels patience: If Moscow doesn’t comply, “sanctions will continue, as will the pressure they impose over time.”

As for the Islamic State, today’s leading menace, Lew notes that sanctions have limited effect on a terrorist group that “derives most of its revenues from within.”

U.S. power flows from our unmatched military might, yes. But in a deeper way, it’s a product of the dominance of the U.S. economy. Anything that expands the reach of U.S. markets — such as the Trans-Pacific Partnership in trade, for example — adds to the arsenal of U.S. power. Conversely, U.S. power is limited by measures that drive business away from America, or allow other nations to build a rival financial architecture that’s less encumbered by a smorgasbord of sanctions.

Politicians often call for sanctions as a way of sounding tough, when they don’t want to take riskier measures. But they should recognize, Lew stresses, that sanctions aren’t cost-free. They should be imposed when they can get results, not to make U.S. politicians sound good.

Doctors know that even the most effective drugs can be overused — in ways that ultimately render them ineffective. That’s certainly true with the antibiotics used against infectious diseases. Broad-spectrum antibiotics, which kill good bacteria and bad alike, carry risks. The larger danger is that overuse of targeted antibiotics will create drug-resistant strains that survive the medical “sanctions.” These hardy, mutant strains can be nearly untreatable.

Doctors are learning not to overprescribe. So, too, should foreign-policy practitioners.

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