Totalitarian Regime Leaders, Not U.S. Sanctions, Keep Humanitarian Trade from The People in Iran and Cuba

One of many shibboleths tossed about by opponents of U.S. sanctions policy is that it hurts the people, not the intended targets. That is one of the reasons why there have been changes in U.S. law to address this alleged argument. The real reason for changes to sanctions laws in this space: money for certain sectors of the U.S. and global economy.

Opponents of economic sanctions have generally used humanitarian trade policy – the political argument used by dictatorial regimes – as a way to start weakening sanctions as effective policy tools. There were some advocates of this approach who genuinely believe that by lowering trade barriers better relations would follow and the political well-being of the people in countries such as Iran would improve. Yet twenty years after these laws were changed it has not done any of that. Quite the opposite.

The export of food and medicine to sanctioned countries has, for the most part, been made easier since the late 1990s. A process that started during the Clinton Administration and culminated, with bipartisan Congressional support, of the enactment of the Trade Sanctions Reform Act of 2000 (TSRA). The TSRA law does not necessarily make humanitarian trade easier, but rather makes it an exception that affords stakeholders in this space to make market-based decisions about whether or not to engage in humanitarian-based trade with sanctioned nations.

As a result of legal and policy shifts over the last two decades, today the sale of agricultural products, medicines, and medical equipment to sanctioned nations is allowed under very generous exceptions to US sanctions laws and regulations. However, sanctioned countries must never get a free pass on free-market competition, If they want access to American goods and services, they must be transparent with the companies and banks that are using the TSRA exceptions to sell to them. If not, no sale.

No matter the nation subject to sanctions, US policy enforcement, and compliance by companies and financial institutions are essential to ensure that the exceptions are used for intended purposes. This is done for many reasons including protect US security and ensuring, to the extent we can, that the regimes receiving the aid do not benefit from humanitarian trade. It is a tough balancing act but the problems are not the law or the sanctions, but the regime leaders who refuse to cooperate with the companies and financial institutions offering to sell to them. As I shared with the Associated Press this week:

“In most cases, compliance by banks makes it virtually impossible to do business,” said Jason Poblete, a sanctions lawyer in Washington who has represented American citizens held in Cuba, Venezuela, and Iran. The reason? Usually, the target nations refuse to cooperate with companies and provided the necessary documentation and guarantees that allow the company to mitigate sanctions exposure.

“Virus Fuels Calls For Sanctions Relief in Iran and Venezuela,” Associated Press (Mar. 23, 2020).

You can read the entire Associated Press story by following this link. If sanctions nations such as Iran, Cuba, Venezuela, and North Korea want access to American products in the humanitarian trade space, the need to do their part or they will need to find other trade partners. If you’re interested in learning more about the TSRA program at the Treasury, vist the Department’s Office of Foreign Assets Control (OFAC) website.

Bottomline: When economic sanctions are deployed in support of a well crafted and executed policy, sanctions are very effective tools and efficient. The onus is on the target to change behavior and, when it does, the sanctions can be calibrated if indicated.

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