Former president Donald Trump’s sanctions offensive against US adversaries will not see a wholesale reversal — nor major changes in the short-term — under the Biden government, experts warn. But new sanctions are expected to target individuals and entities, rather than entire sectors as under the previous administration.
The government is also tipped to tackle shortcomings in previous relief programmes which were not sufficiently feasible for investors and banks, wary of lingering sanctions risks, to confidently re-engage with the target market.
Since taking office two months ago, president Biden has refused to lift sanctions against Iran to revive negotiations on the nuclear deal and has not removed Mr Trump’s controversial measures against the International Criminal Court. This has raised eyebrows among those who expected him to diverge from his predecessor who, according to law firm Gibson Dunn, imposed sanctions at nearly twice the rate of presidents Obama and Bush.
Foreign policy specialists are confident Mr Biden will tread a different path, but also warn that he is unlikely to fully unwind campaigns already in place, and certainly not in the short term. “I do expect to see some changes to various sanctions programmes [but] I don’t expect wholesale changes. In most cases they aren’t going to rollback sanctions in a massive way,” says John Hughes, an adjunct senior fellow at the Center for a New American Security. “It is more about aligning the current sanctions with policy… and the messaging and the sequencing, than a desire to necessarily use them less.”
Fewer sectors, more individuals
In contrast to Mr Trump, who drew criticism for weaponising sanctions, the new president is expected to use them in coordination with allies, and within his broader diplomatic tool kit. “The Biden team has already talked about the role of values in US foreign policy,” says Matt Oresman, a public policy partner at Pillsbury Winthrop Shaw Pittman. “They will ramp up that values and principles side of US foreign policy, along with [using] sanctions themselves.”
Mr Biden is expected to return the tool to its intended use of changing behaviour, and in a way that minimises spillover effects on humanitarian issues and everyday people. “It is more likely moving forward that you will see sanctions that are much more targeted at human rights [and] corruption, and less of these sectoral or economic sanctions,” says Mr Hughes, a former deputy director of the US Office of Sanctions Policy and Implementation.
This tactic is already apparent in Mr Biden’s sanction designations to date, which penalise Chinese officials over oppression in Hong Kong, Russian authorities over the poisoning and imprisonment of opposition leader Alexey Navalny, and Myanmar coup leaders. Mr Hughes noted there was some surprise that military-controlled conglomerates Myanmar Economic Holdings Ltd and Myanmar Economic Corporation were not sanctioned. “But I was not surprised at all — that goes against their goals here,” he says. “Myanmar is a really clear example of the type of approach they will take moving forward.”
Last week the US confirmed its willingness to sanction companies supporting Moscow’s 95%-complete Nord Stream 2 gas pipeline over fears it deprives Ukraine — Europe’s poorest country — of much-needed gas transit fees.
Iran: too early to call
Mr Biden’s refusal to cede to Tehran’s demands to kick-start talks on the Joint Comprehensive Plan of Action (JCPOA) — the nuclear accord which his predecessor withdrew from in 2018 before reinstating sanctions — has led to questions over whether he will ease Mr Trump’s so-called maximum-pressure campaigns.
Esfandyar Batmanghelidj, founder and publisher of Bourse & Bazaar, a media company that supports business diplomacy between Europe and Iran, sees it differently. “Do I feel those hopes that Biden was going to apply sanctions differently [to Trump] have already been dashed? I don’t think so… The reason why we haven’t seen more movement is largely that it is very early and a lot of the key personnel have only recently been put in place.” The government is also conducting a comprehensive review of sanctions across the board; Mr Hughes does not expect major changes to existing programmes until that is complete.
If and when restrictions against Iran and other adversaries are lifted, it will not be unconditional. “The Biden administration inherited a mess from Trump. But at the same time, they did inherit leverage, something they can give away,” says Mr Oresman. “It’s not about whether they can dial it back. They can — but they will only do it for something.”
Private sector guarantees
The foreign policy officials appointed by Mr Biden also indicate a change of course. “To the extent that ‘personnel is policy’, people are being selected to fix problems left by the previous administration,” says Mr Batmanghelidj, who describes National Security Council senior director Peter Harrell as “an outspoken critic” of the Trump administration’s use of sanctions.
He and other new appointees are also mindful that lifting sanctions is only effective if investors and financiers are given the comfort to rebuild formerly off-limit business ties, according to Mr Batmanghelidj. It follows international banks’ hesitancy to support transactions with Iran after the JCPOA took effect in 2016, stopping the the country from receiving the full economic benefits of sanctions relief.
Finding ways to help foreign firms capitalise on sanctions relief is part of the US government’s ongoing review and, according to Mr Hughes, will be “the medium- to longer-term debate that I think the private sector will have a voice in”. He encourages investors to speak with their government and the US about how they re-engage with newly-opened markets.