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171. Transatlantic tools: Harmonizing US and EU approaches to China

Author:
David Barkin and Agatha Kratz
Publication Date:
11-2021
Content Type:
Special Report
Institution:
Atlantic Council
Abstract:
Close cooperation between the United States and the European Union is essential if advanced economies are to develop effective responses to the array of challenges presented by China. Washington and Brussels share concerns regarding competitive distortions arising through the state’s role in the Chinese economy, the use of advanced technologies to repress ethnic minorities and fuel its military, and the spread of authoritarian influence through the Belt and Road Initiative (BRI). However, there has been a lack of coordination and cooperation in recent years between the US and EU when it comes to responding to China’s policies and behaviors. Washington’s focus on risks to US economic and national security contrasts with an emphasis in Brussels on ensuring reciprocity and leveling the economic playing field. But, with the transatlantic relationship back on a better footing under the Biden administration, new structures for transatlantic dialogue being put in place, and a greater focus on the Indo-Pacific in both Washington and Brussels, this paper argues there is now an opportunity for the United States and Europe to learn from each other and harmonize some of their China-related efforts.
Topic:
Human Rights, Markets, Sanctions, European Union, Regulation, Trade, and Transatlantic Relations
Political Geography:
China, Europe, and United States of America

172. Axis of collusion: The fragile Putin-Xi partnership

Author:
Harley Balzer
Publication Date:
12-2021
Content Type:
Special Report
Institution:
Atlantic Council
Abstract:
The close relationship between Russian President Vladimir Putin and Chinese President Xi Jinping is driving what many Russian officials call a developing Sino-Russian alliance. Major achievements have resulted from what the two presidents can accomplish through a top-down approach. However, positive portrayals in official media and some cooperation in diplomatic and military realms have not been accompanied by economic and societal linkages that could produce “thick” connections. Differences over geostrategic, economic, and regional issues and in cultural values have caused some elites and social groups in both countries to express concerns about the growing costs of the partnership. The COVID-19 pandemic has exacerbated these problems, leading a growing number of Russian analysts to say that the Sino-Russian relationship has peaked.
Topic:
International Organization, Bilateral Relations, Sanctions, Economy, Trade, Xi Jinping, and Vladimir Putin
Political Geography:
Russia, China, Central Asia, and Eastern Europe

173. What Do Energy Sanctions Say About the World?

Author:
Aurelie Bros
Publication Date:
08-2021
Content Type:
Journal Article
Journal:
Baku Dialogues
Institution:
ADA University
Abstract:
Statecraft is often under­stood as the art of con­ducting state affairs in order to exert a direct influ­ence on other actors in the in­ternational system in order to get them to do what they would not do otherwise. To achieve their goals, policymakers are able to employ a variety of le­vers such as diplomacy, propa­ganda, military statecraft, and economic statecraft. According to Elizabeth Ellis of the Inter‑ Disciplinary Ethics Applied Centre of the University of Leeds, the latter category encompasses all economic means—including recourse to economic sanctions— that might be used by interna­tional actors with the intention of (i) preventing objectionable policy or behavior, (ii) sending a message, or (iii) punishing unlawful policy or behavior. Princeton University’s David A. Baldwin wrote in 1985 that economic sanctions are divided into two main categories: those with a punitive function and those aimed at encouraging or rewarding. He also noted that they impact trade (e.g. embargo, quotas, and (un)favorable tariff discriminations) as well as cap­ital (e.g. aid suspension, con­trols on imports or exports, and (dis)advantageous taxation), and that they can be used wisely or unwisely, justly or unjustly, de­pending on the situation at hand. Although economic sanctions have a long history, with origins in Antiquity, they are unequally distributed over time. For example, their use greatly increased during the post‑World War II era, especially in the energy sector. This increasing use of energy sanctions has been partic­ularly noticeable since the early 1970s. Over the past several de­cades, they have essentially become a way for energy producers and con­sumers to exert disapproval over one another and to weaken those considered to be morally respon­sible for objectionable policies (not always related to energy issues). En­ergy sanctions, therefore, are often paired with non‑energy economic sanctions targeting a large array of goods and services. For example, an oil embargo can take place in tandem with nuclear‑related sanc­tions aimed at stopping military use of civilian nuclear power tech­nology—as in the Iranian case. Energy sanctions are always deeply rooted in a wider polit­ical and economic environment, reflecting the global order of their time. This essay will focus mainly on the bipolar interna­tional system led by the United States and the Soviet Union between 1947 and 1991, which was followed by a post‑Cold War in­ternational system in which the United States assumed the role of the world’s leading power, sup­ported by Western‑dominated organizations. Nevertheless, this unipolar, rules‑based order is now under pressure, perhaps even du­ress—some argue it is coming to an end.
Topic:
Diplomacy, Energy Policy, Sanctions, and Conflict
Political Geography:
Global Focus

174. Effects of Sanctions on North Korea’s Refined Oil Prices

Author:
Kyoochul Kim
Publication Date:
09-2021
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
During 2016 and 2017, North Korea conducted three nuclear tests and four missile launches, and, in response, the international community strengthened its sanctions against North Korea. The sanctions were aimed at deterring North Korea from developing nuclear weapons; the means to achieve this included blocking the inflow of foreign currency into North Korea and banning the import of goods related to its nuclear development efforts. Specifically, the sanctions against North Korea banned the exports of anthracite, processed garments, and marine products to limit its foreign currency acquisition; they banned the import of machinery; and they limited the amount of oil (crude oil and refined oil products) introduced, thus hurting its economy.
Topic:
Oil, Sanctions, Weapons, and Trade
Political Geography:
Asia and North Korea

175. Imagined Currencies: How the DPRK Uses Cryptocurrency to Blunt Sanctions

Author:
Michael Buckalew
Publication Date:
11-2021
Content Type:
Special Report
Institution:
Pacific Forum
Abstract:
This research provides a contemporary study of how and why the Democratic Peoples’ Republic of Korea (DPRK) chose to integrate cryptocurrency into its sanctions evasion strategy, as well as the US government’s response to this via its financial services regulatory and federal law enforcement agencies. The increased coverage and efficacy of US and international sanctions, especially during and since President Obama’s second term (2013-2017) forced the DPRK to find new sources of revenue to maintain elite domestic support and fund their weapons programs. The creation and proliferation of cryptocurrency, which allows for both a digital store of value and a means of exchange outside of the traditional international finance system, opened up an entirely new means by which the DPRK was able to obtain and move funds. Much the DPRK’s cryptocurrency is obtained by the through the use of illicit methods and their success has blunted the impact of sanctions as a policy tool. As a result, US financial services regulators and law enforcement have moved to regulate cryptocurrency and crack down on illegal activities associated with it, such as ransomware payments. However, US regulations regarding cryptocurrency remain largely fragmented across agencies and various local jurisdictions. This research highlights the underappreciated role played by the US Treasury Department and the semi-independent agencies under its aegis in turning policy goals into enforceable administrative law. It also finds a high degree of continuity in the development and application of sanctions between the Obama and Trump administrations against the DPRK. Furthermore, this study demonstrates the need for policymakers to develop a more comprehensive US legal framework around regulation of cryptocurrency to close off growing illicit revenue generation by hostile actors. The study then briefly touches on the increased importance of the DPRK’s digital activities during COVID-19. Finally, this study outlines three potential methods by which to manage risks posed by cryptocurrency: 1) a public-private partnership to create s standards setting or certification organization to self-police the industry; 2) the US government using its sovereign authority to legislate and regulate; or 3) an outright banning of cryptocurrency activities in the United States.
Topic:
Sanctions, Finance, Cryptocurrencies, and Illicit Financial Flows
Political Geography:
Asia and North Korea

176. More Harm than Good: Why Chinese Sanctions over THAAD have Backfired

Author:
Daniel Mitchum
Publication Date:
12-2021
Content Type:
Special Report
Institution:
Pacific Forum
Abstract:
In 2017 South Korean Moon Jae-in, in response to North Korean ballistics testing, adopted a resolution to implement the THAAD missile interceptor system. Beijing had long been opposed to the system and as a result initiated a series of unofficial, punitive economic sanctions against South Korea which covered a range of industries. However, Beijing’s actions did little to alter Seoul’s decisions and have instead damaged China-South Korea relations. A similar paradigm has since appeared within China-Australia relations. How nations respond and adapt to such tactics in the future is a question of critical importance.
Topic:
International Relations, Sanctions, Weapons, and Economy
Political Geography:
China, Asia, South Korea, and North Korea

177. Iranian Illicit Procurement Scheme to Acquire Controlled Spectrometry Systems Busted

Author:
Spencer Faragasso and Sarah Burkhard
Publication Date:
09-2021
Content Type:
Special Report
Institution:
Institute for Security and International Studies (ISIS)
Abstract:
On September 9, 2021, the German Federal Prosecutors Office issued an arrest warrant for a German-Iranian citizen, Alexander J., who is accused of illegally exporting a multitude of laboratory equipment, including four spectrometers, in three separate cases, exports that appear to have also violated the Joint Comprehensive Plan of Action (JCPOA).1 The total value of all the goods exported to Iran is 1.1 million euros. The defendant, Alexander J., is accused of violating the Foreign Trade Act (AWG) and Regulation (EU) No. 267/2012 of March 23, 2012, as amended in October 2015 in response to the establishment of a special Iranian procurement channel in the JCPOA, which places restrictive measures on certain Iranian entities and equipment for export (and related activities, such as brokering). In the first two cases, Alexander J. is alleged to have exported items to an Iranian national whose Iran-based companies were EU-sanctioned front companies procuring laboratory equipment for Iran’s nuclear and ballistic missile programs at the time. Alexander J. further supplied the sanctioned entity with two spectrometers listed in Annex II of this EU regulation, which lists items that are not on the EU dual-use control list (Regulation (EC) No 428/2009 of 5 May 2009) but that could contribute to sensitive activities, including enrichment-related activities, reprocessing or heavy-water-related activities.2 These items require a license on a case-by-case basis. In addition, Alexander J. violated the regulation by providing goods to an embargoed entity. In the third case, Alexander J. exported two listed spectrometers to a different, unspecified Iranian entity, also without the required license.
Topic:
Security, Nuclear Weapons, Treaties and Agreements, Sanctions, and Procurement
Political Geography:
Iran and Middle East

178. Europe’s last chance: How the EU can (and should) become the indispensable actor in Venezuela’s democratic restoration

Author:
Ryan C. Berg and Jorge González-Gallarza
Publication Date:
03-2021
Content Type:
Special Report
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
The EU’s current policy approach toward Venezuela is insufficient to contribute meaningfully to a political transition in the country and protect human rights. Oftentimes, the EU’s policy has been at odds with the US, having permitted unrelated disagreements to cloud its recognition of its strategic interest in a free, prosperous, and democratic Venezuela. The Nicolas Maduro regime’s illicit investment schemes have found fertile ground in the EU at large, with a particular hotspot in Spain. A torrent of investments and acquisitions has allowed corrupt cronies in Maduro’s entourage to engage in unfathomable kleptocracy and stash their ill-gotten gains in the eurozone, vitiating the rule of law in the process. The EU consistently underappreciates the Maduro regime’s multi-faceted security threat, which intersects with and compounds many of the EU’s greatest geostrategic challenges in the post-COVID-19 landscape. China, Cuba, Iran, and Russia are all at once strategic rivals of the EU and enablers of the Maduro regime’s threat to its security. The Joe Biden administration’s commitment to multilateral engagement in Venezuela offers the EU a chance to reclaim transatlantic cooperation and present a common vision for political transition in the country. Beefing up sanctions and developing a coordination mechanism, as well as drumming up humanitarian aid, would constitute serious progress and potentially thrust the EU into the role of indispensable actor in Venezuela’s democratic restoration.
Topic:
Foreign Policy, Development, Sanctions, European Union, Democracy, Multilateralism, and Hugo Chavez
Political Geography:
Europe, Latin America, Spain, and Venezuela

179. An Ever Closer Union? Ramifications of further integration between Belarus and Russia

Author:
Bob Deen, Sam Roggeveen, and Wouter Zweers
Publication Date:
08-2021
Content Type:
Special Report
Institution:
Clingendael Netherlands Institute of International Relations
Abstract:
The Union State of Russia and Belarus was forged in the 1990s through a series of bilateral treaties but has largely remained a paper tiger – at least until now. For well over two decades Belarusian President Lukashenko has had a complicated love-hate relationship with the Kremlin, milking the Russian Federation for energy subsidies and other economic benefits while simultaneously zealously guarding his country’s sovereignty and shielding its state-owned enterprises from Russian takeovers. Although co-operation in the military domain has advanced considerably, the more far-reaching provisions of the Union State, such as a joint constitution, monetary union and a single energy market, have never materialized. While Belarus has generally aligned its foreign policy outlook with the Russian Federation and acceded to the Russian-led Eurasian Economic Union, at various moments Lukashenko tried to keep his geopolitical options open as his relations with the Kremlin deteriorated. Among other things, he sought closer relations with the European Union following the 2008 Georgia conflict and the 2014 Ukraine crisis. The EU, in turn, has alternated between defending its democratic values by imposing sanctions on Lukashenko and his regime for human rights abuses, and then lifting those again a few years later, hoping to lure Belarus away from Russia’s sphere of influence. These hopes proved to be in vain. The Presidential elections of August 2020 and their repressive aftermath have again led to a turning point in Belarus’ relations with the West and with the Russian Federation. Relying on Russian support to remain in power and facing a series of European sanctions, Lukashenko is now again under pressure by the Kremlin to make far-reaching concessions and to advance the integration of Belarus and Russia within the Union State framework. As both the stability of the Lukashenko regime and the outcome of the integration process remain uncertain, this report identifies six scenarios for the future of Belarus and further elaborates the consequences of four of them.
Topic:
Foreign Policy, Bilateral Relations, Sanctions, Military Affairs, European Union, and Integration
Political Geography:
Russia, Eurasia, and Belarus

180. Unpacking US Cyber Sanctions

Author:
Allison Peters and Pierce MacConaghy
Publication Date:
01-2021
Content Type:
Commentary and Analysis
Institution:
Third Way
Abstract:
Malicious cyber activity poses one of the greatest threats to America’s national, economic, and personal security. Yet, the perpetrators of these crimes largely operate with pure impunity and face little consequences for their actions. This is particularly the case for cybercriminals who cost the US economy anywhere from $57 billion to $109 billion in 2016 alone.1 Since 2015, the United States has imposed targeted sanctions (e.g., asset freezes, travel bans) on over 300 individuals and entities in response to malicious cyber activity.2 Many of these sanctions were issued under the cyber-related sanctions program administered by the Department of Treasury and established by a series of Executive Orders under Presidents Obama and Trump and bills passed by Congress.3 Sanctions have largely been imposed on individuals with ties to Iran, Russia, and North Korea, and, in about half of these cases, sanctions have followed indictments. An overwhelming majority of these sanctions have targeted individuals with suspected links to government entities and, only recently, have cyber sanctions targeted cybercriminals.4 As targeted sanctions increasingly become a tool deployed by the US government to punish malicious cyber actors, it remains unclear whether they are having an impact in changing behavior. Research on the impact of sanctions more broadly indicates that sanctions can be an effective tool to impose consequences on bad actors and change their actions when employed multilaterally, as part of a coherent strategy, and effectively messaged.5 However, imposing sanctions on malicious cyber actors without continuously reassessing their impact and the expected reciprocal actions by the target(s), risks a number of potentially negative outcomes. While Congress introduced legislation in the 116th Congress to impose new or codify existing cyber-related sanctions into law,6 it has not exercised the necessary oversight over the Executive Branch’s strategy in issuing cyber-related sanctions and determining their efficacy. With other countries now following America’s lead in issuing these sanctions, the time is ripe for the new Congress to push for an inter-agency, holistic assessment of the impact of US cyber-related sanctions.7 And with cybercrime increasingly threatening all sectors of the US economy, Congress must call for an evaluation as to whether sanctions on non-state cybercriminals should increasingly be used.
Topic:
Science and Technology, Sanctions, Cyberspace, and Digitalization
Political Geography:
North America and United States of America