Biden's Sanctions Policy. The First Steps

In the coming months, Washington will be calibrating key foreign policy goals, objectives and ways to achieve them. Economic sanctions are one of the most important instruments of US foreign policy. Their adjustment will take place depending on the strategic settings of the policy towards key rivals in the international arena. The rivals themselves are also unlikely to let the grass grow under their feet. China, Russia and other nations will take into account the “bends” of the American policy, laying the groundwork in the event of new extremes.

Regarding Russia, the very logic of relations is unlikely to change. The announced extension of the New START Treaty is a positive development. But it is unlikely to affect the resolution of other contradictions, and the policy of sanctions will continue. Moreover, Russia has accumulated a number of “toxic assets”, which could potentially become a reason for new sanctions. These are primarily the “Navalny case” and incidents in cyberspace. No sanctions have been imposed on the Navalny case yet, although relevant initiatives and calls have already appeared in Congress. Here, it is possible to repeat the algorithm of EU sanctions (the targeted blocking of certain high-ranking officials), or a more stringent approach, depending on the further development of events. Targeted sanctions are also possible for cyber incidents. However, the administration has not yet formulated a final opinion on the recent hacking of government electronic systems and Russia’s role in these events.

The Biden administration has taken the first steps in its sanctions policy. On January 19, the US Treasury imposed financial blocking sanctions against a number of individuals, companies and ships . The largest number of sanctions was issued in connection with Venezuela; the largest number of sanctions were established—3 individuals, 13 companies and 6 courts. The main purpose of the sanctions in this case is to prevent the export of Venezuelan oil. The intermediary companies that fell under the sanctions are based in various countries—in the United States itself, in Italy, in Panama, in Malta, in the UK, Switzerland and Russia. The blocked vessels fly the flags of Cameroon, Russia and Liberia. Regarding Russia, blocking sanctions were introduced in order to stop the Nord Stream 2 project. The SDN list includes the pipe-laying ship Fortuna, as well as its owner, KVT-RUS.

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Such targeted measures are routine, quite expected and likely. The Treasury will routinely expand “black lists” in other key areas of the sanctions policy—Iran, North Korea, Cuba, China, as well as functional topics—terrorism, the fight against drug trafficking, human rights, etc.

However, all these restrictions are based or will be based on already-existing legal mechanisms. Joe Biden and Congress have yet to create new sanctions regimes. And here, in all likelihood, a certain revision of the existing policy lies ahead. It is unlikely to lead to radical qualitative changes in all azimuths, but a correction of important details can be expected.

The most important category is sanctions against China. The Donald Trump administration seriously increased the quality and quantity of restrictive measures against Beijing. The main issues are the containment of the PRC in the field of telecommunications and the defence-industrial complex, the situation in Hong Kong, and the rights of ethnic minorities in China. The American-Chinese contradictions have gained momentum and a radical revision of the existing paradigm will not happen in the near future. At the same time, some progress towards relaxation is possible.

First of all, there may be a decrease in anti-Chinese rhetoric regarding the COVID-19 epidemic. If Trump was an implacable critic of Beijing, then Biden will take a more moderate position. Moreover, the epidemic is declining and there is little sense in escalation. Biden could also revise or relax his predecessor’s most controversial bans: against China’s WeChat, TikTok and other electronic platforms. Moreover, the presidential orders on the first two companies have been suspended by American courts. However, a thaw here will be limited due to the existing legislative framework. Some restrictions against companies like Huawei or ZTE are enshrined in legislation. So far, there are no signs of a change in the American stance on telecommunications, or industrial and technology companies, which Americans consider to be “Chinese communist military companies” or acting on behalf of “Military End Users”. Biden is also unlikely to revise policies on Hong Kong and ethnic minorities. Sanctions in these areas are also provided for by law. In addition, Democrats are more sensitive to human rights issues. Another thing is that individual sanctions are unlikely to do much harm to China and its economy. In any case, the policy of sanctions will be subordinated to the general logic of relations with Beijing. Here, the influence of the existing line will be strong, but a rethinking of the logic of relations cannot be ruled out.

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Regarding Russia, the very logic of relations is unlikely to change. The announced extension of the New START Treaty is a positive development. But it is unlikely to affect the resolution of other contradictions, and the policy of sanctions will continue. Moreover, Russia has accumulated a number of “toxic assets”, which could potentially become a reason for new sanctions. These are primarily the “Navalny case” and incidents in cyberspace. No sanctions have been imposed on the Navalny case yet, although relevant initiatives and calls have already appeared in Congress. Here, it is possible to repeat the algorithm of EU sanctions (the targeted blocking of certain high-ranking officials), or a more stringent approach, depending on the further development of events. Targeted sanctions are also possible for cyber incidents. However, the administration has not yet formulated a final opinion on the recent hacking of government electronic systems and Russia’s role in these events.

Positive progress is possible with respect to Iran. The Trump administration has done everything it can to destroy the brainchild of Barack Obama’s diplomacy—the Iranian nuclear deal. Trump not only returned all previously lifted sanctions against Tehran, but also significantly increased pressure on the financial, metallurgical, energy and a number of other sectors of the Iranian economy. It is likely that Biden will attempt to return America to the JCPOA. This will not be easy. The big question is: what will happen to Trump’s sanctions legacy? Will the sanctions be lifted, suspended or modified? Under what conditions could this be done? For example, will the renewal of the arms embargo become such a condition? In any case, a certain window of opportunity is opening up for Iran.

In the coming months, Washington will be calibrating key foreign policy goals, objectives and ways to achieve them. Economic sanctions are one of the most important instruments of US foreign policy. Their adjustment will take place depending on the strategic settings of the policy towards key rivals in the international arena. The rivals themselves are also unlikely to let the grass grow under their feet. China, Russia and other nations will take into account the “bends” of the American policy, laying the groundwork in the event of new extremes.

First published in the Valdai Discussion Club.