The first trend is an unprecedented level of aggressiveness. Data compiled by the law firm Gibson, Dunn & Crutcher shows that in 2018 the United States added nearly 1,500 people, companies, and entities to Treasury Department-managed sanctions, nearly 50 percent more than in the second-highest year on record2017, also under Trump.
When I served as a senior sanctions official at the State Department in the Obama administration from 2012 to 2014, the government generally focused on one or two major sanctions programs at a time. Under President Barack Obama, Iran was the clear priority between 2010 and 2015, and Russia was the priority from 2014 to 2016, with other sanctions programs substantially lower on the list. But the Trump administration is aggressively pursuing sanctions programs against three countries as first-tier policy prioritiesIran, Venezuela, and North Koreawhile also expending significant energy on the Global Magnitsky Sanctions program, which targets individual human rights violators, against Cuba, Syria, and Russia.
Equally important, the Trump administration has shown that it will sanction economically significant targets that are deeply enmeshed in global markets. Notable examples include the Russian oligarch Oleg Deripaska and his company Rusal, which produces approximately 6 percent of the worlds aluminum supply, and Venezuelas national oil company, PDVSA, which exported approximately 1.2 million barrels of oil per day in 2018 prior to sanctions being imposed in January.
Trump has also expanded use of so-called secondary sanctions, which are designed to coerce foreign companies into stopping business with U.S. adversaries. These are not new: The Arab Leagues 1970s-era effort to compel international companies to boycott Israel represented the first modern use of secondary sanctions. Before Trump took office, however, the United States had employed only a limited set of secondary sanctions, for example to deter energy investments in Iran. In the Obama administration, for example, we typically prioritized diplomacy to convince foreign governments to join in U.S. sanctions, wielding secondary sanctions only as a backstop if diplomacy failed.
In contrast, Trump has used secondary sanctions as a tool of first priority, notably against Iran, as a way of imposing economic pressure despite global opposition to much of his Iran policy. He has also threatened secondary sanctions against companies doing business with Venezuela and Cuba, among other targets. Unlike past presidents, who generally laid out clear regulatory frameworks for secondary sanctions before imposing them, Trump is increasingly blurring the line between ordinary sanctions and secondary sanctions. For instance, the United States never actually established a separate legal framework to impose secondary sanctions on foreign companies that continue to do business with Venezuela, but then-National Security Advisor John Bolton still publicly threatened to use other U.S. legal authorities to sanction those companies.
The second trend is Trumps increased focus on political and diplomatic signaling surrounding U.S. sanctions. The United States, of course, has long articulated policy rationale when imposing new sanctions on foreign countries. When the Obama administration placed sanctions on Russia in 2014, we publicly and privately communicated to Moscow that sanctions could be lifted if it implemented the so-called Minsk peace agreement between Ukraine and Russia. Sanctioned companies and individuals have always had the ability to quietly petition U.S. regulators to have themselves removed from sanctions lists if they cease their malign activities, meaning companies can get their assets unfrozen and resume business with the United States.
But Trump has increased the focus on signaling, with respect to both broad sanctions targeting countries and those targeting companies and individuals. Secretary of State Mike Pompeo laid out a set of 12 demands of Iran in exchange for complete U.S. sanctions relief. However, the Trump administration has also begun to lay out specific public demands for individuals and companies hit with targeted sanctions. When Trump sanctioned the then-Venezuelan spy chief Manuel Ricardo Cristopher Figuera in February, the Treasury put out a press release stating, the United States has made clear that we will consider lifting sanctions for persons who take concrete and meaningful actions to restore democratic order, refuse to take part in human rights abuses, speak out against abuses committed by the government, and combat corruption in Venezuela.
The administration then removed Figuera from sanctions lists in early May, a week after he defected from the government of Venezuelan strongman Nicols Maduro. In July, the Treasury Department highlighted its rapid removal of sanctions on PB Tankers, an Italian tanker company sanctioned in April, after it agreed to stop transporting Venezuelan crude oil to Cuba. At the beginning of this year, the Treasury Department removed Rusal and several of Deripaskas other Russian companies from U.S. sanctions lists after he brought his ownership stake to below 50 percent.Trumps aggressive use of sanctions has given rise to a growing geopolitical backlash that brings new risks to their effectiveness over the long-term.
The third trend is the growing use of coercive economic measures other than sanctions. In Trumps efforts against Chinese companies including Huawei, ZTE, and several supercomputing firms, Trump has relied on targeted export controls as a coercive tool, rather than Treasury Department sanctions. This allows the United States to impose costs on targets while minimizing the collateral costs to global markets that would have arisen if, for example, it put Huawei on U.S. sanctions lists.
For the United States, the most important question regarding Trumps sanctions is whether they work to advance U.S. national security interests.
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