The United States is imposing sanctions at a record-setting pace again this year [2024], with more than 60 percent of all low-income countries now under some form of financial penalty, according to a recent analysis.
The United States imposes three times as many sanctions as any other country or international body, targeting a third of all nations with some kind of financial penalty on people, properties or organizations.
“It is the only thing between diplomacy and war and as such has become the most important foreign policy tool in the U.S. arsenal,” said Bill Reinsch, a former Commerce Department official and now the Scholl chair in international business at the Center for Strategic and International Studies, a Washington-based think tank.
The analysis indicates that the U.S. Treasury officials can impose sanctions on any foreign person, firm, or government they deem to be a threat to the U.S. economy, foreign policy, or national security. There’s no requirement to accuse, much less convict, anyone of a specific crime. The move, however, makes it a crime to transact with the sanctioned party.
The country’s currency, the United States Dollar, is highlighted as a crucial element in the deployment of sanctions and control by the United States government.
Today, the dollar buys access to the American economy but also undergirds international trade even when there is no connection to an American bank or business. Commodities like oil are priced globally against the greenback, and countries trading in their own currencies rely on dollars to complete international transactions.
By cutting their targets off from the Western financial system, sanctions can crush national industries, erase personal fortunes and upset the balance of political power in troublesome regimes — all without putting a single American soldier in harm’s way.
Elsewhere, sanctions have pushed ‘autocratic regimes’ into black market trade, empowering criminal networks and gangs of smugglers. U.S. adversaries are ramping up their efforts to work together to circumvent the financial penalties. And like military action, economic warfare can leave collateral damage. Sanctions on Venezuela, for instance, contributed to an economic contraction roughly three times as large as that caused by the Great Depression in the United States.
Sanctions — or even just the threat of them — can be an effective policy tool, a way to punish bad behavior or pressure an adversary without resorting to military force. Sanctions have allowed U.S. governments to take moral, economically meaningful stands against perpetrators of war crimes.
That financial supremacy creates a risk for U.S. adversaries and even some allies.
To deal in dollars, financial institutions must often borrow, however temporarily, from U.S. counterparts and comply with the rules of the U.S. government. That makes the Treasury Department, which regulates the U.S. financial system, the gatekeeper to the world’s banking operations.
And sanctions are the gate.
Coming under U.S. sanctions amounts to an indefinite ban from much of the global economy.
However, as the U.S. has continued to impose sanctions and eventually touching on some of the biggest economies in the world, they have started to affect global markets and economies. As a result, a more existential challenge has emerged, as well: The power of sanctions lie in denying foreign actors access to the dollar. But if sanctions make it risky to depend on dollars, nations may find other ways to trade — allowing them to dodge U.S. penalties entirely.
In March 2016, Obama Treasury Secretary, Jack Lew, warned publicly of ‘sanctions overreach’ and the risk that their ‘overuse could ultimately reduce our capability to use sanctions effectively.’
“The abuse of this system is ridiculous, but it’s not Treasury or OFAC’s fault: They are good professionals who have all this political work being shoved on them. They want relief from this relentless, never-ending, you-must-sanction-everybody-and-their-sister, sometimes literally, system,” said Caleb McCarry, who served as a senior staffer to the Senate Foreign Relations Committee and was the State Department’s lead on Cuba policy during the George W. Bush administration.
“It is way, way overused, and it’s become out of control.”
A Billboard in Venezuela Blames U.S. Sanctions
According to Ben Rhodes, who served as deputy national security adviser in the Obama administration:
“The mentality, almost a weird reflex, in Washington has just become: If something bad happens, anywhere in the world, the U.S. is going to sanction some people. And that doesn’t make sense.
We don’t think about the collateral damage of sanctions the same way we think about the collateral damage of war, but we should.”
Still, the dollar remains the world’s top reserve currency, at least for now.
In a scathing 2023 post denouncing sanctions imposed on other nations globally, the Foreign Minister of China accused the United States of increasingly relying on sanctions to put down other countries.
The Hegemony of the U.S. Dollar is to Blame for Economic Instability, Especially in Emerging Economies, Says Chinese 🇨🇳 Foreign Ministry
The post highlights 5 key areas where the U.S. 🇺🇸 economic hegemony has caused turmoil to the rest of the worldhttps://t.co/CSyYivUmuH pic.twitter.com/vjxjSltjjR
— BitKE (@BitcoinKE) March 5, 2023
According to China, U.S. sanctions against foreign entities increased by 933% from 2000 to 2021:
“So far, the United States had or has imposed economic sanctions on nearly 40 countries across the world, including Cuba, China, Russia, the DPRK, Iran and Venezuela, affecting nearly half of the world’s population.”
The Minister highlighted how the United States uses unilateral sanctions and ‘enacted domestic laws such as the International Emergency Economic Powers Act, the Global Magnitsky Human Rights Accountability Act, and the Countering America’s Adversaries Through Sanctions Act, and introduced a series of executive orders to sanction specific countries, organizations or individuals.’
“‘The ‘United States of America’ has turned itself into ‘the United States of Sanctions.’”
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