US President Donald Trump issued executive orders saying he was sanctioning
individuals such as Iran’s Supreme Leader Ali Khamenei and Shiite militia
commanders in Iraq, some of them beholden to Tehran, many analysts have
dismissed the moves as merely “symbolic.”
Is sanctioning individuals who are unlikely to travel outside areas where they are protected in the Middle East a political jab that only agitates America’s adversaries? Or do sanctions have practical applications and pose an effective foreign policy instrument?
The answer is the latter.
While not apparent on the surface, sanctions on individuals matter.
Even if the United States cannot immediately change an individual’s political behavior, blocking his access to the international banking system produces damaging results.
In Iran and Iraq, the sanctions prompted angry reactions. Some 80 members of Iraq’s parliament signed a petition to pass a resolution to condemn the US sanctions, and they blamed Iraqi Prime Minister Adil Abd al-Mahdi for a lackluster response to the United States. The United States most likely informed Abd al-Mahdi, who is in the unfortunate position of straddling the interests of Iran and the United States as the two rivals battle it out in Iraq. Iran declared that the sanctions against Khamenei could lead to a “permanent closure” of diplomacy with the United States at a time when talks are needed to avert a direct military conflict.
So why would the United States, particularly US Treasury officials who study and assess the effects of sanctions, advise Trump to rattle Washington’s primary foe, Iran, and a regional ally, Iraq?
In the case of Shiite militia commanders in Iraq, where the United States at times works in coordination with the Baghdad government, the move was clearly to address a broader problem: The Iraqi government is struggling to control the militias because some of the commanders are involved in graft and beholden to Iran. Trump’s executive order to sanction four commanders for corruption and human rights violations under the Global Magnitsky Human Rights and Accountability Act was the first time the legislation was applied against Iraqis since the US invasion of that country in 2003.
As a response to the US sanctions on the four commanders, Iraq’s Central Bank issued an advisory to Iraqi banks and non-banking institutions on July 25, warning that they will be penalized if business continues with the individuals the US Treasury called out. As a result of this measure and Trump’s executive order, those commanders will find it difficult to do business not only outside but inside their own country.
“It will frustrate their ability to operate in the Iraqi banking system and… it could be the first step in a broader campaign,” Danny Glaser, former US Treasury assistant secretary, told me, referring to cutting off resources for Iraq’s well-funded militias, some of which receive money from Iran.
In the case of Khamenei, Trump’s executive order freezes all property subject to US jurisdiction that is held by the Supreme Leader or those in his office. Khamenei presides over an estimated $95 billion in assets, including property holdings, according to a Reuters investigation. The United States sanctioned this slush fund in 2013 but did not sanction Khamenei personally until late June. It is inconceivable that all these funds in Iranian banks are completely disconnected from the international banking system, which will limit Khamenei’s avenues for investment. Former President Barack Obama issued an executive order against individual members of the Iranian Revolutionary Guard Corps, who also have vast holdings, for similar reasons.
Another benefit for the United States in sanctioning individuals is that it creates a stigma. Khamenei cares deeply about his standing on the world stage, and sanctioning him personally is bound to damage his public image, yet some experts from the Obama administration dismissed the decision as a sideshow.
The US also sanctioned Iran’s foreign minister, Mohamad Javad Zarif, on Aug. 1. One damaging effect will be that his access to American journalists will be curtailed. Zarif’s great value to Iran was that he speaks eloquent English and regularly articulated the regime’s views on American television networks. When US Treasury Secretary Steven Mnuchin said he planned to designate Zarif for sanctions, Zarif was immediately put on the defensive — during an interview with CNN host Fareed Zakaria, Zarif said he does not care because he has had his fill of sightseeing in the United States and does not wish to travel beyond certain UN buildings when he is on official business in New York. Now that he has been sanctioned, his mobility will be limited to a few blocks in New York.
Trump’s eagerness to sanction individuals may exceed that of other presidents, but it certainly is not unprecedented — and the results are sometimes not known immediately. In 2011, President Obama signed an executive order to freeze former Libyan leader Muammar Gaddafi’s assets, along with those of his family and top Libyan officials. “With Gaddafi, we did not think we would be seizing millions of dollars,” Richard Nephew, a former State Department official who specializes in sanctions, told me.
“Sometimes you don’t know until you try, and the point is that the banks have to be responsive,” said Nephew, now a senior research scholar at the Center for Global Energy Policy at Columbia University.
So, even if executive orders to sanction individuals are fishing expeditions, they still can work.
It is likely that Trump will go down in history as the president who sanctioned the most individuals. His obsession with personality-centric politics aside, such sanctions are a bit easier for the Trump administration because this president is less of a multilateralist than his predecessors; he does not rule by consensus with US allies. Nonetheless, it is easier to impose sanctions on individuals than on entities or countries. It is likely that others will be sanctioned before Trump leaves office and the results will be far more than symbolic.