The Peterson Institute for International Economics has crafted a document they hope will inform the incoming Trump administration about the future use of ‘sanctions’.
To highlight the often useless nature of these, of all the examples they could have chosen they went with one especially pertinent to readers of this note involving Hong Kong’s former Chief Executive Ms. Carrie Lam.
It’s worth quoting in full. Viz…
“The extraordinary reach and power of sanctions is illustrated by the case of Carrie Lam, the former chief executive of Hong Kong, who was sanctioned for undermining Hong Kong’s autonomy. But the case also reflects the limits of sanctions to change behavior.
OFAC sanctioning of Lam reportedly completely cut her off from the banking system of the territory she was responsible for governing, forcing her to take her salary and pay for everything in cash. Hong Kong’s highly international banks complied because they could not risk being cut off from the US dollar. But Lam’s successor (also sanctioned) has if anything taken an even tougher line on security and integration with Beijing than she did. Thus, although the US sanctions were effective at inconveniencing individuals, it is not clear that they did anything to improve human rights in Hong Kong.”
The work highlights a proprietary database the Institute has compiled informing their comments and contains this nugget.
It seems T-45 were nothing like the China-bashers that followed them.
The main problems identified with the current sanctions-regime are: a) a lack of transparency and oversight in the process, b) lack of an appeals mechanism, c) inability for sanctioned entities to easily get off the list and d) the concern that by sanctioning entities this may cut off competition for similar at-home industries leading to their developmental retardation.
The recommendations?
- Immediately reappraise the current system
- Develop an explicit framework that clarifies the costs and benefits of a particular sanction especially in the context of its business type
- Increase funding for the development of the department currently tasked with this analysis in the Treasury Department
- Avoid the ‘weaponization’ of products, services or goods that could spur greater efforts by others to progress independent development
- Cooperate with ‘partners’ to progress sanctions calibrated appropriately. Blanket bans on products or services (5G?) should be a last resort
It’s now widely acknowledged that tariffs not only don’t work but they’ve actually strengthened China in recent years.
The same realization about sanctions, especially those of the reflexive and indiscriminate type, may now be dawning.
Whether the blowhards about to take over the U.S. government will ‘get it’ or not remains to be seen.
In some ways, it’d be good for China if they didn’t.
You can access the work in full via this link The Rise of US Economic Sanctions on China.
Happy Sunday.