Sanctions … the West’s broken policy tool

On paper, Iran and Russia are crushed under a mountain of sanctions that grows daily. In reality, rogue states are running rings around enforcement efforts, prompting questions about whether Western leaders are serious about implementing their own policies.

The kneejerk resort to sanctions as the West’s sole meaningful policy tool in an era when their impact has been fatally compromised is a depressing symptom of the malaise in international leadership.

Despite the Biden administration claiming that “extreme sanctions” had brought Tehran’s energy sector to a halt, the US Department of Energy estimated that Iranian oil sales between 2020 and 2022 mushroomed from $17 billion to $54 billion.

A Financial Times investigation in February showed how a state-owned Iranian petrochemicals company, based in the heart of London, had used two of the UK’s biggest banks for a vast globe-straddling sanctions evasion scheme. A New York Times exposé revealed how a fleet of tankers, operating in plain sight, succeeded in obtaining insurance cover from a US company while running a major operation to smuggle a sizable portion of Iran’s oil overseas. These are part of a “ghost fleet” of about 400 foreign-owned oil tankers illegally transporting Iranian hydrocarbons.

Throughout 2022-2023 the US slow-pedalled on sanctions enforcement as it unsuccessfully sought to entice Tehran back into a nuclear deal. As a sign of goodwill, the US naively released $6 billion in frozen Iranian oil money to facilitate the return of five American hostages. The administration feared that cracking down on illicit sales to China could push up oil prices, at a time when it was trying to reduce inflation and living costs ahead of the presidential elections.

Despite the forest of US Treasury sanctions, Iran sends hundreds of millions of dollars every year to regional proxies, and supplies Russia with Shahed-136 drones. Sanctions have also utterly failed to slow inexorable Iranian progress toward developing nuclear weapons. In recent days there were angry Western reactions to Iran installing new cascades of advanced centrifuges at its nuclear sites: expect obligatory announcements of new sanctions to follow.

Russia today is the most heavily sanctioned country on Earth, but its economy in 2024 is forecast to grow faster than those of most Western countries. Semiconductors, advanced technology and luxury goods from Western companies flood into Russia through intermediaries in Central Asia, Turkiye and the UAE. German vehicle exports to impoverished Kyrgyzstan have increased by more than 5,000 percent since the beginning of the Ukraine conflict. According to a Royal United Services Institute report, over 450 foreign-made components were discovered in Russian munitions in Ukraine.

After the outbreak of the Ukraine war, sanctions on Russian exports impacted Western consumers by driving up oil and gas prices and fueling inflation, while Moscow laughed all the way to the bank as it profited from soaring prices of the oil it sold to other buyers. While Russia has become China’s top oil supplier, Chinese exports to Russia including military dual-use technology soared. Within one year, Chinese vehicle sales to Russia ballooned from $6 billion to $23 billion. 

However, Washington can hardly lecture China about arming Russia’s blood-soaked war machine while it continues to be the biggest arms supplier to a state accused of genocide and crimes against humanity. America’s use of sanctions against a handful of Israeli settlers is another almost comically crass example of the wrong tool for the wrong problem.

In the absence of vigorous, comprehensive enforcement, sanctions are mere bundles of paper in the US Treasury’s archives

Baria Alamuddin

With China, Russia and Iran jointly under sanctions, these states have been drawn closer together,  establishing networks of companies and financial institutions with zero exposure to Western markets, and shunning trade in the dollar. Iran and China recently moved forward with a series of deals for operationalising their 2021 economic cooperation agreement.

So, just as indiscriminate overuse of antibiotics has produced new generations of super-bacteria with immunity to science’s most potent medical weapons, overreliance on under-enforced sanctions has given birth to a bloc of states comprising a substantial proportion of the world’s population and land mass which are largely immune from sanctions. These states have commensurately sought to attract sizable parts of the developing world under their coat tails. Given worsening US-China tensions, this polarizing trend is set to continue.

In the past 20 years there has been a retreat from alternative diplomatic tools that could have allowed Western nations to exert their overseas influence more strategically. For example, development assistance to the world’s poorest nations has plunged while the number of failing states has increased and the number of displaced people globally has tripled to 120 million since 2012.

While the US was enthusiastically supporting its Israeli ally, billions of dollars earmarked for Ukraine were unedifyingly held up by a gridlocked, dysfunctional Congress, enabling jubilant Russian forces to make unprecedented territorial gains. The US State Department scarcely possesses the mental bandwidth to consider the Iranian nuclear threat, the Sudan conflict, and the firestorm of other concurrent global crises. The inability of US and British forces to prevent ragtag Houthi militias menacing one of the world’s busiest shipping lanes is a perfect example of this planetwide haplessness and impotence.

Whereas in the past Western states collaborated to assertively address global challenges, today a sizable proportion of foreign policy efforts and funds are focused on the reductive goal of defending national borders. Failures to defend and uphold the mechanisms of international law and conflict resolution have consigned us to a lawless global arena.

In the absence of vigorous, comprehensive enforcement, sanctions are mere bundles of paper in the US Treasury’s archives: in a deteriorating international environment, they have become an excuse to refrain from taking real action.

For Western democracies, with their rhetoric about enshrining international justice and human rights and halting overseas aggression, it’s time to responsibly practice what they preach and add pragmatic new solutions to their diplomatic toolbox.

• Baria Alamuddin is an award-winning journalist and broadcaster in the Middle East and the UK. She is editor of the Media Services Syndicate and has interviewed numerous heads of state.