The Foreign Policy Essay: The Key to U.S. Sanctions Happiness? A Short National Memory

Editor's Note: Sanctions and other economic tools are increasingly the foreign policy instruments of first resort. They seem to harness U.S. economic might and convey strength while avoiding the human and political costs of deploying military force. How did this preference come to be? Jennifer M. Harris, a senior fellow at the Council on Foreign Relations, reminds us of our forgotten history, explaining how attitudes toward sanctions and other economic tools have evolved over the years.

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“[W]e seem to have gotten sanction-happy at a time when we are reducing our foreign assistance to the countries that agree with us…we’re in danger of looking like we want to sanction everybody who disagrees with us and not help anybody who agrees with us.”

— President Bill Clinton, June 19, 1998

When President Clinton put this point to reporters 16 years ago, the United States had just imposed sanctions on India for its series of underground nuclear tests (such sanctions were mandatory under U.S. law). The president was hardly alone in his reservations: his view was echoed by plenty of foreign policy experts and extended even to the right-most pockets of the Senate (for instance, with Senators Ashcroft (R-MO) and Brownback (R-KS) supporting sanctions reform legislation in 1999). Back then, as now, this was about as close to a Washington consensus as one might hope to find. Only fitting, then, that it would all change so dramatically in just a few years. Fast-forward 16 years, and the United States today has about two dozen sanctions programs currently in place—more than double the number in place during Clinton’s time. Today’s sanctions cover countries as far-flung as Cuba, Belarus, and Syria; based on just a cursory scan of the various lists of sanctioned entities, I would be willing to wager that the Obama administration has sanctioned more entities than any other administration (perhaps even several combined). How should we make sense of such a 180-degree shift in U.S. policy, especially given the convergence of elite opinion pushing in the opposite direction? On one level, this reversal isn’t hard to explain: few would doubt the necessity of the sanctions revolution that occurred in the initial months and first years following 9/11. In fact, looking back across the past 13 years of debates and line drawing as to what measures consituted appropriate and unavoidable, if unpleasant, fixtures of U.S. counter-terrorism policy, the debate over sanctions now seems among the least contentious of the lot. Of course, this recognition has been helped along by more than a decade of hindsight, punctuated by the plenty of other debates—over drones, torture, Guantanamo, electronic surveillance by the NSA, etc.—that (understandably) overshadowed the post-9/11 debates on sanctions. But unremarkable as today’s sanctions and terrorist finance measures now seem, and however necessary we have come to understand these measures to be, it is worth remembering that they marked a radical, contentious departure from existing U.S. policy and indeed the national mood at the time. More striking than even the magnitude and pace of this policy shift—which consolidated itself over mere months—is how quickly these new measures became an established, even prized part of the U.S. diplomatic and security lexicon. It was not just that the few holdouts (most of them concentrated in the non-sanctions pockets of the Treasury Department’s International Affairs bureau) had lost; it was almost as if their concerns had never existed. Pivotal as 9/11 was to this about-face on sanctions, there may be more to it. In fact, the episode recalls other similar U-turns in U.S. foreign policy—notably, other instances when the country’s economic first principles (of limited state involvement in markets) have collided with its foreign policy imperatives, putting Washington in the uncomfortable position of having to append asterisks to its liberal economic commitments in the name of national security. The outbreak of World War I in 1914, often regarded as the war that changed everything, certainly brought about its own set of asterisks for the United States, upending what were then deeply-held beliefs on neutral rights to trade during wartime. By WWI, economic denial had become an integral part of British strategic thought, and in its dealings with the United States, Whitehall did everything in its power to convince Washington of the same without forcing a rupture in the alliance. Rupture seemed the likelier outcome until, much to London’s relief, the German unrestricted U-boat offensive in the Atlantic finally brought Washington new perspective, especially after the sinking of RMS Lusitania in May 1915. Ironically, once the Americans entered the war in 1917, the United States adopted even more draconian economic embargo measures than the British to prevent supplies reaching Germany. Historian Alan Dobson recounts how by July 1917, the U.S. embargoed all exports to neutral Scandinavia and shortly afterwards extended the ban to cover the Netherlands as well. For Dobson, “the U.S. experience with the reality and horror of total war in 1917-18 appeared speedily to disabuse it of fond beliefs that the principles of extensive trading rights for neutral nations could be upheld in time of war.” With its entry into World War II, America would once again see fit to redraw its parameters defining acceptable versus less-acceptable shows of economic power. In a transformation led principally by FDR and Vice President Henry Wallace, together with U.S. Treasury Secretary Henry Morgenthau and his assistant Harry White, the United States again developed a zeal for economic techniques of warfare, going well beyond anything the British had contemplated in their sanctions efforts. The U.S. defined contraband in a much broader way and dispensed with the idea that a blockade need be physically enforceable to be a blockade—all in much more moralistic tones than the more legal and technocratic arguments favored by the British. By Dobson’s telling, “[m]oralizing was not abandoned from U.S. decision making; it was simply given a new direction and content.” From the United States’ abandonment of neutral trading in WWI, to its fuller embrace of economic warfare in WWII, to the more recent innovations around sanctions and terrorism finance following 9/11, U.S. policymakers have routinely appended asterisks to the country’s liberal conceptions of laissez-faire market capitalism. Viewed over the years, these asterisks effectively amount to a continuous line-drawing (and re-drawing) exercise revolving around the basic question of when, how, and under what conditions the United States sees fit to use financial and economic instruments to advance its geopolitical objectives. It tends to surface most recognizably in the context of sanctions debates—whether we are indeed too “sanctions-happy,” for instance, or whether a given set of sanctions are “effective” (where, indulge me for a brief tangent, most analysis tends to fall back onto faulty applications of cost-benefit logic, dominated by questions of whether the “costs outweigh the benefits,” for example, or whether “it costs us more than it costs them,” rather than more relevant questions of how sanctions compare to other alternatives. Robert Kahn's April Foreign Affairs piece weighing potential U.S. financial sanctions on Russia, though, is a refreshing exception; in it, Kahn tackles the "will they work?" question far better than most). But the scope of this sort of continuous line drawing around economic techniques of statecraft also goes well beyond sanctions, encompassing numerous cases where U.S. policymakers have been forced to consider various “off-label” uses for a host of economic tools—trade, investment, monetary and financial policy, energy, and various official aid issues, to name a few—in order to advance the country’s geopolitical interests. When it comes to questions of, say, whether the United States may again be getting overly sanctions-happy, it would help to appreciate more fully where, how, and when the United States has revised its baselines around acceptable use, both for sanctions and for the broader array of what I refer to in my forthcoming book as “geoeconomic” tools of statecraft. But the larger reason it matters is that this form of statecraft is on the march globally, with countries like Russia, China, and several Gulf States becoming increasingly comfortable waging geopolitics with capital. Interpreting these trends and fashioning a proper U.S. response begins with developing a more clear-eyed understanding of how fallible the U.S. historical memory seems to be when it comes to these off-label uses of economic tools. As with most things, understanding the nature of the exercise in which one is engaged tends to boost the odds of success—especially when that exercise involves navigating the competing economic and security interests of the world’s most powerful country.

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Jennifer M. Harris is a senior fellow at the Council on Foreign Relations. Prior to joining the council, Jennifer was a member of the policy planning staff at the U.S. Department of State responsible for global markets, geo-economic issues, and energy security. Jennifer is currently writing a book on the modern use of economic and financial instruments as tools of statecraft.