From Mises Wire by Hekmat Aboukhater
As the Washington drawbridge lowers for a second Trump administration, the world attempts to glean any insights that might indicate the direction of his second term. At the top of the list of concerns is the topic of sanctions.
As of 2024, the US is actively sanctioning a third of all nations on earth. As the American populace grew more wary of military entanglements and forever wars, consecutive administrations have exponentially escalated the use of the economic weapon. The Obama administration averaged a total of 500 new sanctions a year, while the first Trump administration doubled it to 1,000 a year, and the Biden administration sextupled the figure—imposing more than 12,000 sanctions in 4 years. Now, many wonder whether a second Trump admin will continue or curb this trend.
US Sanctions: Past and Present
Leading a nascent nation, Thomas Jefferson pushed the US congress to pass the Embargo Act of 1807 to punish the United Kingdom for harassing US ships, and impressing American sailors. A century later, shortly after the conclusion of the first world war—in his failed attempt to whip up support for the League of Nations—Woodrow Wilson advocated for its ability to sanction intransigent global actors by stating, “A nation that is boycotted is a nation that is in sight of surrender.” However, the unilateral coercive measures—or financial sanctions, as we know them in the modern era—trace to a much more recent origin.
The story of modern-day sanctions starts—as with many of our modern American experiences—with the USA Patriot Act of 2001. Title III of the act—concerned with money laundering used for the financing of terrorist organizations—gave the Treasury Department a swath of options to dig into the links between domestic and international financial institutions. Borne out of this new mandate, the Office of Foreign Assets Control (OFAC), got its first win by severing BDA Bank—a Macau-based bank that was suspected of facilitating North Korean money laundering operations—from the global financial market. The office was able to destroy the bank’s operations with a simple notice of incoming sanctions.
Today, the list of sanctioned nations includes Cuba, Iran, North Korea, Russia, Syria, Afghanistan, Balkans, Belarus, Myanmar, Central African Republic, the DRC, Ethiopia, Hong Kong, Iraq, Lebanon, Libya, Mali, Nicaragua, Somalia, South Sudan, Sudan, Venezuela, and Yemen among others.
While some are targeted against specific entities or persons, many sanctions indiscriminately target broad sectors of a nation’s economy. Such is the case in Russia, Venezuela, and Iran. Similarly, while some sanctions target heads of states and specific government individuals, others like the ones imposed on Syria target any and all government ministers regardless of complicity in any given crime.
As for their merit, sanctions have rarely, if ever, achieved their stated aims. Cuba and Venezuela remain socialist and Bolivarian socialist regimes; Iran and North Korea have yet to denuclearize; and the Syrian and Yemeni regimes have not yet been ejected from or willingly abdicated power. The sanctions have, however, succeeded in three alternative ways.… Login or Join Now To Read More