Last Tuesday's confirmation hearings for Treasury Secretary Janet Yellen and Secretary of State Antony Blinken have shed more light on the Biden administration's approach to key sanctions programs. At a high level, human rights considerations are expected to loom larger in sanctions strategy going forward. Other systemic changes may be afoot as well; Yellen plans to direct Adewale Adeyemo, the nominee for Deputy Treasury Secretary, to conduct an overall review of US sanctions policy, and the Biden administration has also ordered a review of sanctions as possible hindrances to COVID-19 response efforts. Below are seven areas of interest along with key takeaways thus far.
1. Iran: Any sanctions relief under the JCPOA will likely take time and depend on Iran's compliance with the agreement as well as its regional conduct.
Yellen indicated at her hearing that the administration plans to weigh how any sanctions relief could affect Iran's capacity to support terrorism. Though national security advisor Jake Sullivan stated at the December 2020 Wall Street Journal CEO Council Summit that the administration hopes for Iran to rejoin the Joint Comprehensive Plan of Action (JCPOA), Blinken and Yellen both suggested such a process may take time and that any JCPOA sanctions relief will depend on verification of Iran's return to compliance with that agreement--in particular, its nuclear constraints. Blinken acknowledged reentry would also require significant multilateral negotiations addressing other salient issues, such as Iran's destabilizing conduct in the region. Deputy Secretary of State nominee Wendy Sherman, who previously led the JCPOA negotiations, has likewise cautioned that resuming the JCPOA status quo ante will be difficult work.
2. Russia: A firmer line on Russia may indicate more sanctions and enforcement.
Following her hearing, Yellen committed to rigorously enforcing sanctions responding to Russian aggression in Crimea and Eastern Ukraine, and Blinken used his hearing to reiterate support for defensive assistance to Ukraine. Blinken also stated that he would consider additional measures under the Countering America's Adversaries Through Sanctions Act (CAATSA) in light of Turkey's recent acquisition of Russian S-400 SAMs, and underscored Biden's strong opposition to Russia's Nord Stream 2 gas pipeline. Although the administration prefers a multilateral approach to blocking Nord Stream 2, Blinken indicated that other options, including sanctions against companies involved in supporting the pipeline, could be on the table.
Blinken noted that the administration would apply conduct-related sanctions under CAATSA, the Magnitsky Act, and other authorities in light of Russia's role in the SolarWinds hack, the Navalny poisoning and detention, and other recent actions.
3. China: The Biden administration agrees with a tough approach to China, but seems inclined to exert pressure using different tools--and with a greater focus on human rights and democratic values--than the prior administration did.
At her hearing, Yellen emphasized that the administration is prepared to use all available tools to combat China's illegal or abusive practices, including product dumping, trade barriers, illegal subsidies, intellectual property theft, forced technology transfers, and low labor and environmental standards. Blinken specifically addressed the situation in Hong Kong, agreeing that the national security law and general media crackdown have left notions of Hong Kong autonomy in tatters. He committed to examining the US position on institutions and entities that continue to operate there and support Hong Kong's status as a commercial and financial center. A State Department press release on Saturday similarly condemned China's intimidation of Taiwan and affirmed the United States' commitment to supporting a free and democratic Taiwan. Consequently, while the new administration may revisit some of the last administration's more unorthodox measures (e.g., prohibitions on WeChat, TikTok, and several Chinese payment apps), the broader sanctions posture towards China will likely remain robust.
OFAC's January 27 issuance of a general license authorizing transactions of certain communist Chinese military companies is consistent with this approach. While the Trump-era prohibitions involving publicly traded securities of listed companies remain, the new license removes ambiguity by authorizing previously prohibited transactions involving entities whose names do not exactly match the name of a listed company.
4. Cuba: The Biden administration is likely to pursue more normalized relations and soften existing sanctions in a return to Obama-era policies.
Though Blinken and Yellen's hearings shed little light on the new administration's approach to Cuba, in a September 2020 talk, Biden's Senior NSC Director for the Western Hemisphere, Juan Gonzalez, criticized the attitude that sanctions should constitute the entire US engagement strategy with Cuba, rather than one tool among many. Gonzalez emphasized that diplomatic engagement with Cuba provides a means to advance US interests, rather than simply a gift to the Castro regime. Biden's remarks on the campaign trail this fall similarly indicate a return to the Obama-era strategy of engagement with Cuba. We expect to see an easing of certain sanctions on Cuba to allow a return to people-to-people travel, more expansive study abroad opportunities, and other non-touristic engagements, while still applying pressure on the regime related to involvement in Venezuela and human rights violations and abuses. It is also likely that the administration will re-suspend the cause of action under Title III of the Helms-Burton Act, which allows US claims holders to sue those using or otherwise benefiting from their confiscated property in Cuba.
5. Venezuela: The new administration supports targeted sanctions to oppose Maduro and supports a return to free and fair democratic processes.
Blinken indicated that sanctions will continue but with the possibility of adjustments to better target the Maduro regime enablers. This is consistent with Gonzalez's previous statements that broad Venezuela sanctions also hurt Maduro's opponents, as Maduro can sometimes shift the brunt of US sanctions to disfavored groups. Gonzalez has also criticized the Trump administration's use of sanctions without corresponding humanitarian aid and suggested the Biden administration will take a more humanitarianfocused approach to the country.
6. North Korea: It remains a top security risk, with sanctions likely to persist, albeit using a more multilateral approach.
Asked in his hearing about the administration's receptiveness to a phased agreement with North Korea, exchanging sanctions relief for a freeze in weapons development, Blinken indicated that the administration will review the US approach in consultation with critical allies like South Korea and Japan. Blinken also emphasized that sanctions must increase the pressure on North Korea to come to the negotiating table while not impeding humanitarian aid.
7. Human rights: Biden has indicated human rights sanctions will be a point of renewed focus in his administration.
A recurring theme throughout Blinken's testimony was that human rights represent a compelling basis for US action. Blinken also affirmed the new administration's commitment to strengthening the Global Magnitsky Sanction regime during his confirmation hearing. Recent State Department press releases likewise reflect a renewed emphasis on democratic and human rights concerns, referencing human rights while condemning Russia's crackdowns on protests of Navalny's treatment and China's efforts to intimidate Taiwan and other neighboring states.
The administration's approach to sanctions will continue to evolve in the coming weeks and months as Treasury finalizes its overall review and additional officials fill out its ranks, the NSC, and the State Department.