Introduction

Do economic sanctions negatively impact living conditions in target countries? Are their effects large enough to cause or exacerbate acute suffering among members of vulnerable groups? Do they help produce changes in the conduct of targeted entities, and if so, do their potential benefits in these cases outweigh the costs inflicted on target populations? Has the shift to targeted sanctions observed over the past decades attenuated the negative consequences of coercive measures on living standards?

These questions stand at the center of much of contemporary research on sanctions. An extensive literature that goes back at least to the seminal work of Gary Hufbauer, Jeffery Schott, and Kimberly Elliott has aimed to use quantitative econometric and calibration methods to assess the effects of sanctions on living standards in target countries as well as on the behavior of targeted governments and entities.Footnote ¹ Nevertheless, any attempts to answer these questions through the use of quantitative statistical methods applied to cross-national or country-level data must confront a set of formidable challenges to empirical identification. Both the imposition of sanctions and the evolution of the target country’s living standards are endogenous variables that form part of complex national and supra-national processes and which simultaneously impact and are impacted by a multiplicity of political, social, economic, and cultural variables. Convincingly teasing out the links of causation in these relationships often requires data that satisfy conditions rarely present in nonexperimental settings.

This chapter reviews recent advances in addressing these empirical identification issues in cross-country and country-level studies. I argue that, given the difficulties in assessing causal relationships in cross-national data, country-level case studies can serve as a useful and informative complement to cross-national regression studies. However, I also warn that case studies pose a set of additional potential empirical pitfalls which can obfuscate rather than clarify the identification of causal mechanisms at work. Therefore, the most sensible way to read case study evidence is as a complement rather than a substitute to cross-national research.

Correlation and Its Discontents

Every student who has been through an introductory statistics course will have heard the warning that correlation does not equal causation. With little hint of irony, the same student will then have spent the rest of the semester learning statistical models designed to estimate partial correlations and will have gained little clue as to how to distinguish these from genuine causal effects. Even more advanced students who obtain some familiarity with econometric identification techniques will often only learn methods for identifying causal effects that work under stringent conditions hard to satisfy in many real-world applications.

Classical statistical analysis is based on the idea that researchers know the variables in the model, the functional form of the relationship, and the distribution of the errors prior to estimating a regression. As Edward Leamer once quipped, “this advice could be treated as ludicrous, except that it fills all the econometric textbooks.”Footnote ² The inconvenient truth is that we do not know whether our coefficient estimates are biased, nor by how much, unless we know whether our model includes all relevant variables, omits all irrelevant ones, and has a correctly specified functional form. But this is precisely what we are trying to find out.

There is a fundamental difference between the experimental designs frequently used in natural sciences and the econometric analysis of nonexperimental data ubiquitous to many social science settings. An adequately designed experiment can attempt to hold all other variables except the treatment of interest constant. Doing so is impossible using the nonexperimental data that we have to address many questions of interest in the social sciences.

Leamer’s critique is often credited with spurring the rise of what came to be known as the “credibility revolution” in empirical economics.Footnote ³ Key contributions led to the development of quasi-experimental methods that seek to replicate experimental research designs using nonexperimental methods. A burgeoning literature has mainstreamed the use of designs such as difference-in-differences, matching, regression discontinuity, synthetic controls, and machine learning. Another strand of the literature led to the design of randomized control trials (RCTs) to address causal identification issues in the social sciences.Footnote ⁴

Notwithstanding its impact on many social science fields of study, the credibility revolution has yet to fully conquer cross-country econometric studies. In contrast to microeconomic studies, it is impossible to design randomized control trials to assess the effects of country-level interventions such as economic sanctions. We have yet to see a state sign off its sovereignty to accept being randomly sanctioned, nor, to the best of our knowledge, has any sanctions sender decided to randomize its decisions to freeze assets. Furthermore, the data requirements necessary to apply many quasi-experimental methods are sometimes so stringent as to preclude application in samples that are often limited to several dozen countries.

To illustrate the problems involved, imagine you are interested in studying whether sanctions negatively impact a target country’s economic performance. Your first idea may be to run a regression in which the dependent variable is the target’s GDP growth averaged over a certain period of time, and the explanatory variables include an indicator of whether the economy was sanctioned or not in that same period. Let us assume you also throw in a set of other controls that are known from the cross-national literature to be correlated with growth. An obvious problem with that regression comes from the fact that the countries that are most likely to end up being sanctioned could also be countries that would have seen weaker economic performance even in the absence of sanctions. The evidence that sanctions are correlated with growth could simply indicate that poorly performing economies are more likely to be those that have governments that do things likely to get them sanctioned.

Suppose now that, in response to this problem, you decide to look at whether changes in growth rates are correlated with the imposition of sanctions. Under some conditions this may solve your problem; yet under others it could make it worse. For example, it may be that the countries that are more likely to be sanctioned are also those whose economic policies cause economic growth to deteriorate over time, for example, because the negative productivity effects of those policies increase the longer the policies remain in place.

Imagine now that, to address these concerns, you decide to look at whether changes in target countries’ growth preceded the imposition of sanctions. Satisfied that you have nailed a causal explanation, you decide to proudly present your results at a professional conference. At the end of your talk, a macroeconomist raises her hand and observes that many of the countries that you are looking at suffered collapses in their stock markets just as investors became increasingly concerned that sanctions would be imposed. The fact that growth fell before sanctions were imposed simply shows that markets were able to anticipate what was coming.

Any attempts to infer causal relationships from nonexperimental data must contend with two types of biases. One is that both your dependent and independent variable may be affected by a third variable that explains both. This is the case, for example, when poor policies explain both sanctions and economic performance. Econometricians refer to this phenomenon as “confounder,” or “omitted variable,” bias, because excluding the variable from a regression causes us to attribute a causal effect when there is none. Alternatively, both the dependent and independent variable may impact a third factor; for example, both sanctions and low growth may lead to capital flight. In this case, controlling for capital flight may introduce a spurious correlation between sanctions and growth, even though no such relationship exists. This is known as “collider bias,” in which including a variable that should be excluded from our regression distorts coefficient estimates by absorbing part of the true causal effect that we are trying to estimate.

Attempting to infer causal relationships from cross-national data is an exercise fraught with difficulties. In other areas of economics, cognizance of these difficulties has sparked a preference for the use of randomized control trials that create genuine experimental settings in which confounders can be held invariant and colliders can be safely ignored. In nonexperimental settings, they have led to the use of quasi-experimental methods that attempt to replicate experimental settings by comparing outcomes in exposed units with those of a nonexposed comparison group that can closely replicate the control group of an experiment.

Some recent studies apply quasi-experimental methods to analyze the effect of sanctions on economic growth and poverty. Neuenkirch and Neumeier compare economies that were sanctioned by the UNSC with countries that were “nearly sanctioned,” that is, where a Security Council resolution to impose sanctions failed due to the veto of at least one permanent UNSC member.Footnote ⁵ The basic premise of this strategy is that nearly sanctioned countries can be assumed to be similar to sanctioned countries and thus serve as an adequate control group. The authors find that while UN sanctions that were actually imposed had a negative and significant effect on economic growth, sanctions that failed to be imposed due to a veto have no meaningful correlation with growth. In another paper, Neuenkirch and Neumeier consider the effect of US economic sanctions on poverty by using matching methods to construct a counterfactual control group of countries that are as similar as possible to the sanctioned countries in a set of pre-sanctions characteristics.Footnote ⁶ They find that the poverty gap is 3.8 percentage points of GDP higher when a country is sanctioned by the United States. Gutmann, Neuenkirch, and Neumeier compare sanctioned countries with countries that were threatened with sanctions but where these sanctions were never imposed.Footnote ⁷ They find that the imposition of sanctions leads to a reduction of GDP growth of around 2.8 percentage points in the first two years after the imposition of sanctions, with no indication of a recovery even after sanctions are lifted.

No application of quasi-experimental methods is perfect, as it is always possible to question the plausibility of the premises underlying their estimation. Countries that were able to enlist the help of a powerful ally willing to use its veto power to block a UNSC resolution may be systematically different from those that had no such friends, and it may be the ability and willingness of those allies to continue their economic ties with the nearly sanctioned countries that explains their economic resilience. Similarly, the fact that some countries were threatened with sanctions but never eventually sanctioned may reflect that their leaders altered their behavior because of these threats, and it may be that change in conduct that ultimately explains why their economies did better than those countries that ended up being sanctioned.

Nevertheless, the results of this strand of research are encouraging because they point in the same direction as that of many papers that do not use these quasi-experimental methods and have also found negative effects of sanctions on living standards. They thus add to what, taken together, starts to form a sizable array of evidence consistent with the hypothesis that sanctions have significant adverse negative effects on living conditions in target countries. In a 2024 article, I summarize the results of thirty-one papers that have studied the effect of sanctions on indicators of living standards using quantitative statistical or model calibration methods.Footnote ⁸ Of these, thirty studies found unambiguous negative impacts on the variable of interest, while one study found ambiguous (i.e., some positive and some negative) effects.Footnote ⁹

The Economics of Reasonable Doubt

An old joke in the profession tells of an economist looking for his keys at night under a lamppost. When someone asks him where he lost the keys, the economist responds that he dropped them across the street. Why then is he looking for them under the lamppost, the bystander asks? “Because this is where the light is,” the economist answers.

While the anecdote has been used by economists for decades, it fits quite well as a description of the current state of development economics. A 2015 analysis found that 38 percent of development papers published in the top eight economics journals were randomized controlled trial experiments.Footnote ¹⁰ Roughly over the same period, cross-country studies of the determinants of economic growth fell rapidly out of vogue, with even some of their most prominent users producing scathing critiques.Footnote ¹¹ While, as the examples cited in the previous section show, it is possible to apply quasi-experimental methods to cross-country analysis, it is relatively rare for such studies to figure prominently among the most prominent examples of state-of-the-art research in the profession. Of the thirty-one papers I surveyed, none of them were published in any of the top eight economics journals, and only one of them appeared in a leading field journal.Footnote ¹²

One of the reasons why cross-national studies have proved to be much less fertile ground for the use of quasi-experimental methods is their limited number of observations. While nonexperimental studies in labor or health economics are typically conducted with observations of tens of thousands of individuals, allowing for credible estimation of individual, time, and cohort effects, the typical cross-country study will with luck have data on around 100 economies.

While none of the studies I surveyed use the gold standard of RCT methodology, and only a handful use quasi-experimental methods, they nevertheless constitute the best evidence currently available to us on the human consequences of economic sanctions.Footnote ¹³ Thus, while it is certainly possible to construct alternative hypotheses to explain some of these data patterns and shed reasonable doubt on whether any individual estimation exercise has captured the causal relationships with the confidence that an RCT experiment could have done, it is also true that as of this time, the preponderance of the evidence is strongly consistent with the thesis that sanctions cause significant deteriorations in the living conditions of vulnerable groups in target economies. Given the magnitude of the consequences for the populations potentially affected by sanctions, these results suggest that policymakers need to at the very least exercise extreme caution in the use of this instrument and devote substantial time and resources to understanding how its potential negative effects can be mitigated.

What Role for Case Studies?

Precisely because of the methodological and data limitations of cross-country regression studies, country-level case studies may have a particularly important role to play in this field. Importantly, case studies allow us to study in detail the channels of causation through which the effects of sanctions may propagate through a specific economy or set of economies. Since these channels may be contingent on an economy’s structural characteristics, there may be little hope of being able to capture them effectively in cross-country regression exercises. However, an adequately constructed case study may help us more closely and consistently trace the effect of these causes throughout the economy.

Consider, for example, the evolution of oil revenues and GDP shown in Figure 1.1 for three oil-exporting economies impacted during periods that include the imposition and – in some cases – lifting of sanctions: Iraq (1981–2005), Iran (2008–present), and Venezuela (2008–present). Data on each of these countries is insufficient to carry out a full-fledged regression analysis that adequately addresses the specification concerns highlighted in the previous sections. Yet visual inspection of these figures suggests that there is a strong case to be made for the hypothesis that sanctions negatively affected economic growth via lower export revenues. If we complement this finding with the knowledge that in all three countries oil exports accounted for the bulk of the country’s export and fiscal revenues prior to sanctions, and that revenue shortfalls correlate strongly with decreases in public health and infrastructure spending, we see the contours of a story emerge in which the severing of links with the global economy profoundly affected living conditions in these target countries.

Figure 1.1 Oil production and per capita income in selected countries.

Case studies should not be seen as substitutes for cross-country regression work. They need to be treated as complements, with both types of studies forming part of the body of evidence used to assess the effect that sanctions can have on living conditions. While the evidence arising from a case study can be consistent with specific hypotheses about the effects of sanctions, it will typically also be consistent with multiple other hypotheses. Our judgment on whether to lend plausibility to those alternative hypotheses should be informed by knowledge of how frequently we see support for the same hypotheses emerge in comparable settings drawn from other case studies or cross-country empirical research.

Revisiting the Evidence on Venezuela Sanctions

In August 2017, the Trump administration imposed financial sanctions barring Venezuela or its state-owned companies from issuing or refinancing debt and receiving dividend payments from its offshore subsidiaries. This decision marked one of the initial steps in what would become known as the US government’s “maximum pressure” strategy approach to Venezuela, which would come to include sanctions on the country’s oil, gold, and banking sector, and secondary sanctions on non-US actors involved in dealings with the Venezuelan state.Footnote ¹⁴

As illustrated in Figure 1.1, during this period, Venezuela also saw the largest economic collapse documented outside of wartime in the past seventy years, with per capita income dropping by 71 percent – the equivalent of more than three Great Depressions.Footnote ¹⁵ The poverty rate skyrocketed to 93 percent, and more than 7 million Venezuelans – or nearly a fourth of the country’s population – emigrated during this period.Footnote ¹⁶

The strong temporal coincidence between the imposition of economic sanctions and inflection points in the country’s oil production data suggests that oil sanctions played an important role in accounting for the country’s economic collapse. This result is borne out in the more detailed time-series analysis investigating the effects of oil sanctions.Footnote ¹⁷

Nevertheless, it is always possible to sketch alternative hypotheses about potential drivers of deteriorating outcomes by pointing to phenomena that occurred at roughly the same time as sanctions. For example, Bahar and colleagues point to the appointment of General Manuel Quevedo as president of the state-owned oil company Petróleos de Venezuela, S. A. (PDVSA) in December of 2017 as evidence that changes in management could be the primary driver of the subsequent decline in the country’s oil output.Footnote ¹⁸

In my research, I address this issue by applying the quasi-experimental difference-in-differences method to study the evolution of oil production in joint ventures operating in the country’s Orinoco Basin.Footnote ¹⁹ The method compares changes over time in the evolution of output in a group that was affected by sanctions (firms with prior access to financing) to a control group that was unaffected (firms without prior access). Since both groups of firms were also subject to other shocks that affected the oil industry as a whole, the method allows us to concentrate on the channel of causation of interest (financial access), while sweeping out the effect of other potential causes. The results show that firms that had access to finance in the form of loans from their foreign partners prior to the sanctions were more affected by the closing of access to external finance imposed by financial sanctions than those that lacked that access, confirming the hypothesis that severing the country’s access to international financial markets significantly affected its capacity to generate export revenues.

Another argument that is commonly voiced in attempts to discount the effect of sanctions on the Venezuelan economy points to the fact that the decline in Venezuela’s economic growth began before sanctions were implemented. Therefore, these critics argue, sanctions cannot be the explanation for the country’s economic collapse.Footnote ²⁰

As we have already warned, temporal precedence arguments need to be approached carefully if we want to use them to draw conclusions about causality. One pitfall of using them in a country-level setting is that they presume that the causes of the pre-sanctions deceleration must be the same as those of the post-sanctions deceleration. In other words, using the pre-sanctions trend in output to identify the effect of sanctions implicitly assumes a counterfactual scenario in which the economy would have continued deteriorating at the same rate, even if sanctions had not been imposed.

This is not a reasonable counterfactual for Venezuela because we know that one of the key drivers of the country’s growth, external oil market conditions, was radically different in the pre- and post-sanctions period. There is not much doubt as to what caused Venezuela’s 2014–2016 recession: a 66 percent decline in oil prices. Plummeting oil revenues led to deep cuts in government spending and imports, fueling a decline in real wages and economic activity.

In contrast, oil prices rose by 78 percent between 2016 and 2018. In this period, Venezuela’s economic contraction was not driven by falling oil prices but rather by falling oil production – which, as we have seen, was strongly impacted by sanctions. Had Venezuelan oil-export volumes remained unchanged, this increase in the terms of trade would have generated a boost in revenues equal to nearly one-third of GDP. Under normal conditions, such a positive term of trade shock would have guaranteed a substantial economic recovery.

Given what we know about the evolution of oil prices and the sensitivity of Venezuelan growth to oil market conditions, the reasonable counterfactual for the post-2017 period in the absence of sanctions is not one of a continuing deterioration but rather one of economic recovery or, at the very least, of economic stabilization. That Venezuela suffered a massive economic contraction in a period of rising oil prices suggests that it is necessary to bring in other factors, such as the imposition of economic sanctions, to explain why the historically strong correlation between oil prices and domestic economic conditions broke down precisely around late 2017.

The Way Ahead

Country case studies can play an important role in helping us map the effects that the severing of links to the global economy has on living standards in target countries. In-depth analyses of country experiences can lead to a clearer understanding of how the different channels of causation through which economy-wide intervention can affect living standards operate in practice, often shedding light on phenomena that the cross-national data is not well equipped to assess. If cross-country empirics are like the lamppost that throws light only on part of a sidewalk, case studies can act as the flashlight that allows us to look in more detail in areas in which a wider view is simply not feasible.

For these case studies to help further our understanding of how sanctions work, we must see them as complements rather than substitutes to the cross-national evidence. One way to do so is by ensuring that case studies focus on mapping the causal channels through which economic sanctions impact an economy’s living standards. What role, for example, do reductions in the government’s capacity to pay for public goods and services play in the deterioration of living standards? What are the sectors most impacted by sanctions? How do we separate the effect of sanctions from those of the lack of willingness of international actors to do business with countries that are perceived as higher risk?

The cross-national evidence can also serve as a useful check on the plausibility of alternative hypotheses to explain a country’s deterioration in living standards. For example, poor policies are often put forward as an alternative explanation to account for the deep recessions suffered by many countries impacted by sanctions. One first question to ask is whether the depth of the recession seen in the sanctioned country is comparable to those observed in other countries with similarly poor policies. Alternatively, we can use the coefficient estimates drawn from cross-national empirical growth literature to assess whether the magnitude of a country’s growth deterioration is consistent with the observed changes in policies.

Both experimental and quasi-experimental methods may also be useful in understanding how particular channels of causation work in a country-level setting. One promising area for future research would be to use experimental research designs similar to those in the literature on race and gender discrimination to assess the extent to which the access of firms or persons to financial services is affected by whether their country of origin is the target of sanctions.Footnote ²¹

The UNSC imposed sanctions on the Democratic People’s Republic of Korea (DPRK, commonly known as North Korea) in response to its nuclear tests of 2006, 2009, 2013, 2016, and 2017, and missile development program.Footnote ¹ Initially, economic sanctions targeted individuals and institutions associated with the military, defense, and nuclear sectors. In 2016 and 2017, however, the UN expanded sanctions so they no longer distinguished between the civilian and military economy; they did not exclude food production or the health and education sectors from their remit.Footnote ² The misleadingly termed “humanitarian exceptions” provisions of the sanctions resolutions were not designed to protect the population of 26 million people from the impact of sanctions. The provisions in this regard were restricted to providing a bureaucratic channel through which international humanitarian agencies could filter applications for activities in North Korea. The stringent and time-consuming process, requiring written justification – for example, for every item that contained metal, including every screw and nail – served to further limit what was already, by the mid 2010s, in both absolute and relative terms, a tiny international aid program.Footnote ³ The “humanitarian exceptions” were updated in 2023 after humanitarian organizations had repeatedly complained about the unprecedented restrictive provisions that prevented the provision of aid to attested vulnerable groups in need. The amended version did not, however, repeal the administrative provisions that meant every agency had to argue in writing for why each and every component of a prospective aid project that included metals, that is to say, every box of nails, every screw, every blood pressure monitor, and so on should be exempt from the sanctions.Footnote ⁴ In terms of meeting objectives, the expansion of UN sanctions to the civilian sector did not end the nuclear and missile program, which in fact accelerated.Footnote ⁵

In 2020, as a Covid-19 pandemic prevention measure, the DPRK government closed its border with China, via which the DPRK conducts almost all its trade. Border closures were not causative of food shortages, but they narrowed the mitigation measures available to the government and the population. They inhibited trade, especially imports, and shuttered the gray area trade which, since the late 1990s, had fueled North Korea’s burgeoning marketization and provided an income and food safety net for the population. Border closures also prevented international officials from carrying out the in-country food security surveys and analyses that had been a feature of UN activity in the DPRK since the mid 1990s.Footnote ⁶

Fortunately, lack of access to the country does not mean that we must resort to speculation to evaluate the extent and impact of reduced food availability on the North Korean population. Since the border closures, both the FAO,Footnote ⁷ and South Korea’s respected South Korea’s Rural Development Administration (RDA) continued to produce food supply analyses based on historic data, government supplied information, remote sensing, satellite data, weather pattern analysis, and sophisticated modeling techniques.Footnote ⁸ Standardized international methodologies provide reliable, detailed, and disaggregated crop production data. Demand data is also not difficult to calculate as it derives from a simple multiplication of the population number by a minimum calorific requirement for survival. That is then translated into how much basic grain, the cheapest food, is required to fulfil those basic needs. In North Korea it amounts to around 5.5–6 million metric tons of grain per year.Footnote ⁹

In 2018, domestic food production plummeted and had not recovered by 2022.Footnote ¹⁰ UN agencies, including the FAO and the World Food Programme (WFP), reported that UN sanctions were consequential in the decrease in food production.Footnote ¹¹ What has been little reported, however, is the scale of damage to the DPRK food economy from sanctions. The vast majority of the population of 26 million rely on domestic food production to survive. Without access to essential agro-industrial imports, including oil, fertilizer, and technology, domestic food production cannot recover. This was not a new scenario for North Korea. In the 1990s, Russia and China started to charge market prices for these exports to North Korea. The subsequent decrease in imported inputs was the proximate cause of a rapid fall in domestic food production that resulted in a famine that killed around half a million people.Footnote ¹² The UN sanctions of 2016 and 2017 reproduced the conditions that had generated famine in the 1990s.Footnote ¹³

“The Most Comprehensive, Legally-Binding, Sanctions Program Imposed against a State since Iraq in the 1990s”

Between 2006 and 2016, UN sanctions on North Korea were in line with UN policy of targeted measures, aimed at the military and defense sectors and government institutions tied to the nuclear and missile program. After research that found comprehensive sanctions had contributed – in Iraq (1990–2003) and Haiti (1993–1994) – to increased levels of child malnutrition and child mortality, UN decision-makers had since the early 2000s eschewed the use of comprehensive sanctions in favor of targeted or “smart” sanctions.Footnote ¹⁴ The UN DPRK resolutions of 2016 and 2017, however, expanded sanctions to no longer differentiate between the military and civilian sector economies.Footnote ¹⁵ According to one international legal analyst, even before the implementation of further expansion of the DPRK sanctions regime in 2017, the 2016 UNSC resolutions “created the most comprehensive, legally-binding, sanctions program imposed against a state since Iraq in the 1990s.”Footnote ¹⁶ The DPRK resolutions of 2016 and 2017 marked not just the intensification of sanctions on one country but also a major shift in UN global policy.

The Impact of Sanctions on the DPRK Food Economy

The main impact of sanctions on the food economy was in the domestic food production sector. Food exports to North Korea were not directly prohibited, but were made more difficult as, among other things, ships and vehicles necessary to transport food and the machinery to unload food were sanctioned. Diminished export earnings also reduced the capacity to purchase food imports.Footnote ³²

In North Korea, the agricultural sector is more or less synonymous with food production, unlike the US, for instance, where nonfood crops like cotton are important components of agricultural production. North Korean food production had always been import-dependent.Footnote ³³ The DPRK does not produce natural gas nor oil. Natural gas is a crucial component in the production of nitrogen, which is in turn an essential component of fertilizer.Footnote ³⁴ Oil and refined oil products like diesel and kerosene are essential non-substitutable commodities in food production, not just in North Korea but everywhere in the world.Footnote ³⁵ Oil products fuel agricultural and irrigation machinery, crop drying and storage facilities, provide the means to transport crops, seeds, food and labor, and comprise a necessary component of fertilizer and agricultural chemical production. North Korean farmers were therefore dependent on adequate oil imports as well as imported technology.

The U.S. Department of State reported that prior to the 2017 sanctions, North Korea was receiving 4 million barrels of crude oil and 4.5 million barrels in refined petroleum imports per annum. The December 2017 resolution capped crude oil imports at 4 million barrels per year and refined petroleum imports at 0.5 million barrels a year.Footnote ³⁶ Even prior to oil sanctions, these were already low import levels in world terms and compared to the needs of the economy. The sheer scale of oil poverty in North Korea can perhaps best be illustrated by a comparison with its rich and successful neighbor. In 2021, the annual cap on DPRK refined petroleum product imports was equivalent to less than a fifth of one day’s consumption of those same products in South Korea.Footnote ³⁷

Even before the expansion of sanctions, domestic manufacturing could not provide adequate substitutes, in quantity or quality, for the imported goods required by North Korea’s farming sector, including farm and irrigation equipment, and vehicles, including basic level tractors and trailers. After the expansion of sanctions, domestic agro-industrial manufacturing capacity was further handicapped, as North Korea was no longer allowed to import equipment, spare parts and vehicles, and anything with a metal component, like screws, nails, and hammers, because of the outright UN ban on exports of all these items.

In 2021, agriculture comprised about 23.8 percent of DPRK GDP, up from about 22.4 percent in 2020.Footnote ³⁸ If agro-industries like food processing, the production of fertilizer, agricultural chemicals, spare parts and machinery, as well as transportation are included, the proportion of GDP constituted by the food economy overall increases to probably around a third of DPRK GDP. While direct data is not available, given that all sectors of the food economy rely on banned imports including machinery, spare parts, and vehicles, as well as the heavily restricted oil and oil product imports, and given that the food economy is not exempt from sanctions, it would be defying logic if the food economy had not been negatively impacted by expanded UN sanctions.

The Collapse of Domestic Food Production

The main source of food for North Koreans is domestic production, not imports. Household food security depends, therefore, on the maintenance of enough domestic grain production to meet the nutritional requirements of the 26 million population for physical survival. Food imports provide a secondary source of supply. The exception was in the immediate post-famine years of the very early 2000s, when humanitarian food aid (free food imports) filled the food gap. Between 2008 and 2016, domestic food production recovered, to achieve around 5 million metric tons a year. This had left the DPRK with a manageable grain import requirement of around 0.5 million metric tons, which was procured on both concessional (food assistance) and commercial terms (food purchases).Footnote ³⁹

In 2017, domestic food production fell to 4.72 million metric tons, leaving what was seen at the time as an alarmingly high import requirement, of 802,000 metric tons.Footnote ⁴⁰ In 2018, after the implementation of Resolutions 2371 (August 2017), 2375 (September 2017), and 2397 (December 2017), domestic food production fell substantially again, to just under 4.2 million metric tons.Footnote ⁴¹ To cover basic needs, 5.75 million metric tons of food needed to be produced in 2018 for consumption in 2019. The 2019 food import requirement therefore rose by an enormous 1.55 million metric tons.Footnote ⁴²

Figure 2.1 indicates the existence of a systemic food crisis between 2017 and 2020, with commercial food imports unable to fill persistently high food gaps.Footnote ⁴³

Figure 2.1 Food import requirements (deficit), commercial food imports, and food aid, 2015/2016 to 2019/2020 (in 1,000 metric tons).

1. 1. Grain deficit data from the FAO for 2015–2018. RDA data is used for 2019/2020 because, although the FAO published government figures for 2019/2020 figures, the FAO never confirmed their accuracy.Footnote ⁴⁴

2. 2. FAO marketing year data runs from November to October. The main crop produced in, for example, 2018, is consumed in the following year, that is, 2019. By contrast, U.S. Department of Agriculture reporting uses calendar years. The Department of Agriculture reported crop production attributed to a calendar year is, however, identical to FAO marketing year totals.

3. 3. Commercial food import and food aid data is from U.S. Department of Agriculture. Commercial food import data, 2019, from China is only for the period January–September 2019; from other countries it is for the period January–October 2019. U.S. Department of Agriculture food aid data for 2019 is for January–October 2019.

The food import requirement has remained high, at over a million metric tons in each of the years 2020, 2021, and 2022.Footnote ⁴⁵ One million metric tons is a very large amount of food; it is sufficient to feed 8 million people at a basic calorie intake of around 1,640 calories a day for an entire year.Footnote ⁴⁶ Such a large food deficit is far too big to be filled by nongovernmental organizations (NGOs). The UN WFP and/or countries with very large cereal surpluses, like China or the USA, could potentially fill this level of food gap, but to do so would entail very large commitments and large-scale operations. To put the numbers in perspective, the 2018 grain deficit of 1.5 million metric tons was equivalent to approximately two-thirds of the US’s annual food aid donations for the entire world.Footnote ⁴⁷ Not only was the volume of grain required to fill North Korea’s food gap exceptionally high but the cost was also prohibitive. As an indication, USAID reported that in 2019 it paid $2.3 billion for 1.7 million metric tons of food aid.Footnote ⁴⁸

Sanctions and the Impact on Child Nutrition

In 2019, an FAO in-country assessment, based on household survey data, reported geographically widespread deteriorating food access; North Korean households faced “an overall alarming situation.”Footnote ⁵⁸ These conclusions were disturbing in themselves, but they also reflected a major negative shift in trends in child nutrition. Between 1998 and 2017, the nutritional status of North Korean children and adults had improved substantially, to the extent that from the mid 2000s, no international aid organization considered the DPRK to be facing a humanitarian food emergency.Footnote ⁵⁹ Post-famine nutritional improvements had been a result of the recovery of domestic food production, the growth of gray-area marketization, and a modest economic stabilization, at least until 2016.Footnote ⁶⁰ Child nutritional improvements had taken place in every province, although the aggregate figures masked differentials between rural and urban areas, with the former much worse off than the latter.Footnote ⁶¹ Not surprisingly, malnutrition figures in the capital, Pyongyang, remained lower than in other provinces.Footnote ⁶²

Tables 2.1 and 2.2 demonstrate the large scale of improvements in chronic and acute child malnutrition between 1998 and 2017. Stunting, a sign of chronic malnutrition, decreased from 64 percent to 19 percent between 1998 and 2017. In the same period, wasting, an indication of severe malnutrition that without medical intervention is likely to be fatal, decreased from 21 percent to 2.5 percent.

What is also notable was the scale of improvement in nutritional status of North Korea’s children in comparison to some other countries in Asia. Table 2.2 shows that by 2017, the nutritional status of North Korean children had improved to such an extent that it was, on average, better than for children living in India and other middle-income Asian countries.

In 2019, the FAO reported that “the food security situation is clearly worsening … with poor food consumption rising and acceptable consumption diminishing.”Footnote ⁶³ In 2019, UNICEF also reported that over half of children under two did not have adequate diets in terms of access to diverse food groups, including meat, eggs, fruit and vegetables.Footnote ⁶⁴ Over two-thirds of children did not receive what UNICEF classed as a minimum acceptable diet – calculated as a matrix of amount and type of food eaten by the child.Footnote ⁶⁵

Families coped with food shortages by spending savings, borrowing money, bartering and selling household goods, and sending children to eat at relatives’ homes or in public institutions.Footnote ⁶⁶ Households reported reducing the number of meals, restricting adult intake and portion sizes so children could eat, and borrowing food from neighbors.Footnote ⁶⁷ These coping methods were not elastic. In a contracting economy, savings become depleted, debts need to be paid with interest, household goods are finite, and relatives and public institutions have reduced capacity to feed extra mouths. By 2023, given continued food shortages and that the DPRK economy is in a sixth year of recession, it is likely that these coping methods have been exhausted.Footnote ⁶⁸ In the absence of reporting from international officials in the DPRK, the outside world has had to rely on clandestine reporting from within the DPRK.Footnote ⁶⁹ Since 2019, these outlets have consistently and repeatedly reported instances of starvation.Footnote ⁷⁰

Not every population group suffers equally in periods of food shortage and famine. In 2022, the most vulnerable in North Korea included those who have the least ability to help themselves, including the 3.5 million people over the age of sixty and the 2 million children under the age of five.Footnote ⁷¹ Those who rely completely on government-provided food are the worst off. They include those without family support and living in residential institutions, for example the elderly, people with disabilities, and children.Footnote ⁷² North Korea’s vulnerable population also includes an estimated 150,000–200,000 prisoners and the 700,000 young conscript soldiers living away from home in military camps.Footnote ⁷³ While little direct data is available, it would defy logic if malnutrition had not worsened and child mortality had not risen.

Government Food Security Policies

The major problem with DPRK food policy was that it was founded on the denial of reality; especially that of systemic import dependence. The policy of food self-sufficiency was not of itself strategically illogical or physically unattainable, although it can be criticized as economically suboptimal.Footnote ⁷⁴ It is entirely possible to increase yields in the DPRK to achieve food self-sufficiency, given access to sufficient inputs, including fertilizer, chemicals, modern irrigation and agricultural machinery, and sufficient energy supplies. Nor is it uncommon for countries to regard food (and energy) supply as a strategic good and aim for self-sufficiency as a response to security priorities. As UN sanctions intensified, however, the DPRK government insisted that self-sufficiency was not a goal but was reality; the message was that the DPRK could resist any and all economic pressures from abroad as the entire economy met all its needs from domestic resources.Footnote ⁷⁵

In 2021, the DPRK government had publicly recognized an ongoing food crisis. In April 2021, the North Korea leader, Kim Jong Un, in a speech to the Sixth Conference of Cell Secretaries of the Workers’ Party, reminded Party workers that they faced “another more difficult ‘Arduous March.’”Footnote ⁷⁶ In the DPRK, the term “arduous march” is a synonym for the famine of the 1990s.Footnote ⁷⁷ Yet government pronouncements did not indicate any new policies that might have been able to respond to the scale of the new food crisis. Instead, the government retrenched around its long-standing policy of food self-sufficiency, that is to say, growing enough food at home to minimize reliance on imports.Footnote ⁷⁸

The government continued to rely on extended compulsory mass labor mobilizations, especially during the transplanting and harvesting parts of the agricultural cycle to try to substitute for imports.Footnote ⁷⁹ Increased labor intensity on its own without adequate fertilizer, chemicals, and technology cannot, however, increase yields. Mass-labor activities that were nominally “voluntary” but, in practice, entirely compulsory also had natural limits. The already overextended workforce suffered twice over from the impact of the new sanctions; food security diminished as the physical demands on them increased.

Ideological claims to the contrary, in practice the government made attempts to mitigate the import dependence they denied, providing de facto recognition of the economic importance of imports. It promoted the development of alternative energy resources, including hydropower and solar panels. These efforts might have been useful as part of a realistic energy plan, but the government failed to acknowledge that these projects also relied on imports of technology, machinery, and parts, most of which were banned by sanctions. Solar panels, for example, were imported from China.Footnote ⁸⁰ Small-scale import-substitution projects also could not make much of an inroad into the large problems facing the interrelated energy and agriculture sectors. In 2015, for instance, hydropower provided an ostensibly large 76 percent of DPRK electricity production – but this was in the context of a huge drop in capacity; between 1990 and 2015, electricity consumption fell from 33 billion kilowatt hours (BkWh) to 11 BkWh.Footnote ⁸¹

Other “self-sufficiency” measures included campaigns to collect human waste or “night soil,” as a substitute for commercially produced fertilizer. As with the hydropower projects, even the best case outputs from these small-scale electricity projects and labor-intensive practices could never realistically respond to the large-scale energy requirements of a food production system designed to feed 26 million people.

The government failed to acknowledge how important marketization had been to recovery of the food economy in the post-famine years.Footnote ⁸² Marketized dynamics in North Korea had incentivized households, in urban as well as rural areas, to raise small livestock, like rabbits and chickens, to trade but also for consumption of eggs and meat.Footnote ⁸³ A faltering gray-area economy therefore resulted in decreasing the food supply and dietary diversity, as well as reducing income opportunities.

Sanctions and Starvation

In 2019 and 2020, mass starvation was likely avoided due to the utilization of household food stocks and massive food and fertilizer aid from China.Footnote ⁸⁴ Gray-area economic activities, by their nature, are difficult to quantify but they may have filled some of the food import gap until the border closures of 2020. There is no evidence of further deliveries of the massive food aid that would have been needed to fill the large food gap arising from consecutive shortfalls of around a million metric tons of food in 2021 and 2022. Quantitative and qualitative research over the last nearly thirty years of international organization activity in the DPRK shows, however, that most of the 26 million population have limited resilience to sustained food shortages, with few assets, generally poor living conditions, and precarious income.Footnote ⁸⁵ That the DPRK population is one the poorest in the world is undisputed. In 2021, the UN ranked the DPRK as the 15th poorest of 213 countries in the world, with GDP per capita at $654.Footnote ⁸⁶ Neither is the scale of food insecurity unacknowledged within specialist communities. The U.S. Department of Agriculture, in its authoritative global review, the International Food Security Assessment, 2022–23, reported that 68.6 percent of North Korea’s population – that is 17.8 million people – were food insecure in 2022.Footnote ⁸⁷ U.S. Department of Agriculture reported an increase from already very high totals of 63.1 percent and 16.3 million in 2021.Footnote ⁸⁸

North Koreans are acknowledged throughout the UN system, especially within the humanitarian and human rights agencies, as facing starvation precipitated by UN sanctions. In 2021, the UN Special Rapporteur on human rights in the DPRK, Tomás Ojea Quintana, called for sanctions to be reviewed “and eased when necessary to both facilitate humanitarian and lifesaving assistance and to enable the promotion of the right to an adequate standard of living of ordinary citizens.”Footnote ⁸⁹ Even the UN Panel of Experts for the DPRK sanctions regime, whose main responsibility is to enforce sanctions, noted in a September 2022 report that “there can be little doubt that UN sanctions have unintentionally affected the humanitarian situation.”Footnote ⁹⁰

The Policy Choice

The extensive sanctions of 2016 and 2017 were designed to damage the DPRK economy with the aim of pressuring the DPRK government to give up its nuclear and missile program. UNSC policy has not achieved its aim of stopping DPRK nuclearization, which has instead accelerated since the implementation of the expanded UN sanctions of 2016 and 2017. The Security Council’s sanctions were successful in degrading the economy, including the food production sector that constitutes about a third of the civilian economy. Those who suffer most from UN sanctions, however, are North Korea’s 8 million children. North Korea’s elites do not go hungry; they access imported food and have enough hard currency to buy what they want, when they want. North Korean children do not have any responsibility for the nuclear activities of their government. They have no say in government policies and by definition, as non-adults, have limited capacity to help themselves in terms of obtaining food and health support.

The government of the DPRK has the primary responsibility for the welfare of its people but that does not mean that outside actors, like the UN, do not also have ethical and legal responsibilities to consider the impact of their actions on the most vulnerable, especially North Korea’s 8 million children.Footnote ⁹¹ The UN did not conduct a review of the potential impact of expanded sanctions prior to their implementation, nor has it carried out such a review since. Nevertheless, it would not be difficult to devise a sanctions regime that would exclude food production and health from its remit. It is a policy choice by the UNSC not to do so.

Introduction

This chapter examines how US sanctions, whether applied unilaterally or as part of a multilateral campaign, have impinged on Iranian food security by interfering with Iran’s ability to import wheat, particularly since 2018.Footnote ¹ The interference mirrors the impact of sanctions on other major food sources, and more generally on the imports and exports necessary to sustain the economy. However, wheat imports play a crucial role in meeting the food requirements of the Iranian people – the effects of sanctions on these imports are especially deleterious. US officials insist that sanctions are intended to cut Iranian state revenues, thereby hobbling the country’s military and its nuclear program.Footnote ² But it has long appeared that sanctions could be used to foment protests in Iran, particularly by undermining Iran’s food security. In January 2018, President Trump did away with the pretense, tweeting, “The great Iranian people have been repressed for many years. They are hungry for food & for freedom.”Footnote ³ At that time, the Trump administration was preparing its “maximum pressure” policy against Iran, which openly instrumentalized the immiseration of ordinary people to put political pressure on Iran’s leadership. In the administration’s thinking, people who are hungry for food become hungry for freedom. While insisting that their sanctions do not target the Iranian people, Trump administration officials were candid that hunger was an inherent outcome of their policies. Secretary of State Mike Pompeo stated that Iran’s leadership “has to make a decision that they want their people to eat.”Footnote ⁴ Brian Hook, the Trump administration’s envoy to Iran, claimed that “the Iranian people do not want to eat grass so that the regime can have a nuclear weapon.”Footnote ⁵

Technically, US sanctions do not target trade in food or medicine. US sanctions regulations contain numerous exemptions and general licenses permitting transactions necessary to sell food and medicines to Iran.Footnote ⁶ Even so, US sanctions have made food less affordable, increasing hunger for the country’s poorest citizens. Chronic inflation induced by sanctions has eroded real wages and households have had no choice but to cut back on their expenditures.Footnote ⁷ Between 2010 and 2020, the median household expenditure in Iran declined a staggering 20 percent.Footnote ⁸ Against this backdrop, food prices have risen dramatically. In July 2023, the annual food inflation rate in Iran was 65.7 percent, significantly higher than the general inflation rate of 47.5 percent.Footnote ⁹ The interference of US sanctions with Iranian food security, and specifically its ability to import wheat, began when the Obama administration imposed major financial sanctions on Iran in 2012. Those sanctions were mostly lifted in 2016 but were subsequently reimposed by the Trump administration following the unilateral withdrawal from the Joint Comprehensive Plan of Action in May 2018. Iran is entering its second decade in which US sanctions have made it more difficult to source wheat.

Rising Import Dependence

In the early 2000s, Iranian wheat production frequently matched domestic consumption. But consumption rose as Iran’s population grew – there are approximately 23 million more Iranians to feed today than twenty years ago. In the same period, total annual wheat consumption increased from 15 million metric tons to 18 million metric tons, according to estimates from the U.S. Department of Agriculture. Alongside demographic factors, economic hardship can also increase demand for wheat. During a decade of economic hardship, Iranian households have become more reliant on bread as the mainstay of their meals. Declining real incomes are forcing households to forgo meat and rice, staples of Iranian cuisine that are now prohibitively expensive for many families.Footnote ¹⁰

Meanwhile, Iranian farmers have struggled with their harvests. Wheat yields have become more volatile as Iran’s climate grows hotter and drier. Wheat is grown in Iran’s arid plains and valleys with the help of irrigation, much of it rudimentary. Less than 3 percent of Iran’s landmass can be rated “good” for cropping. In pursuit of “an ambitious plan to achieve food self-sufficiency … irrigated farming has been implemented unbridled, which has devastated the water scarcity problem.”Footnote ¹¹ Recent droughts have strained these irrigation systems, reducing crop yields. In 2020, a major drought saw wheat production drop 20 percent.Footnote ¹² However, droughts are not the underlying cause of Iran’s water crisis. According to a recent study, Iran has received more annual rainfall from 2003 to 2019 than it did between 1983 and 2002. But the overuse of water resources has led to dramatic reductions in the amount of groundwater across the country. The marginal increase in precipitation was insufficient to offset depletion of groundwater through overextraction. Total water storage loss in 2003–2019 is equal to twice Iran’s annual water consumption.Footnote ¹³ Rivers are running dry and farmers are drilling deeper wells to reach the falling water table, exacerbating the problem of overextraction. The prospects for agriculture in Iran are grim. While the implementation of new technologies, such as more efficient drip irrigation, could help bolster yields even as the water shortages grow acute, such systems are too expensive for most Iranian farmers and are difficult to source even for those farmers who can afford to install them, owing to the effects of international sanctions on Iran’s access to even basic agricultural technologies.Footnote ¹⁴ Even if such systems could be rolled out across Iran’s wheatfields, searing temperatures, recurrent sandstorms, and flash floods will continue to interrupt farming operations and destroy crops.

Iranian policymakers and agriculturalists understand that they are fighting a losing battle – the dream of self-sufficiency in wheat production is no longer attainable. A recent article in the Iranian Journal of Public Health points to an emerging crisis: “The negative impact of climate change on agricultural production, intensified inflationary trends, high food prices, increasing food waste, increasing the need for food imports, and, more significantly, ongoing international sanctions make it difficult to access affordable food and pose challenges to Iran’s long-term food security.”Footnote ¹⁵

Iran’s recent dependence on wheat imports likely reflects the beginning of a long-term trend. This is not a unique dilemma. Many countries are increasingly dependent on agricultural imports in the face of demographic shifts and climate pressures. These countries are turning to international markets to source wheat from major producers. Global wheat imports have grown from just $17 billion to $62 billion between 2000 and 2021.Footnote ¹⁶ This trend explains the concerns for food security that emerged following the Russian invasion of Ukraine in February 2022 – with two major wheat exporters at war, import-dependent countries across the Global South feared acute shortages.Footnote ¹⁷ Iran had in recent years responded to falling domestic wheat production by increasing imports from Russia and Ukraine.Footnote ¹⁸

Fragile Supply Chains

Just as climate and demographic pressures are increasing Iran’s dependence on wheat imports, sanctions have disrupted those imports in three ways. First, sanctions led to fragmentation among both traders and the importers on which they rely, disrupting long-standing commercial relationships. Second, sanctions disrupted the payments for wheat imports, by reducing the number of banks willing to process payments and constraining Iran’s access to its foreign exchange reserves. Finally, sanctions disrupted wheat imports by delaying the delivery of cargoes. For over a decade, these disruptions have introduced fragility at each link in the supply chain, making Iran’s wheat imports less reliable and less affordable in ways that directly impact the welfare of ordinary Iranians.

As a globally important wheat buyer, Iran was long served by major commodities trading companies, who either sold wheat directly or relied on agents who bid on tenders on their behalf. But following the imposition of financial sanctions on Iran in 2012, the major traders began to scale back their sales to Iran in response to the imposition of Western sanctions. Suddenly, traders were “running scared.” Even though food trade remained permissible, “banks could turn around and say they are not happy, so the relationship risk” became a “big factor” in compelling trading houses to cut ties with Iran.Footnote ¹⁹ The same situation recurred when the Trump administration completed the reimposition of sanctions on Iran in November 2018. That same month, “Cargill, Bunge and other global traders … halted food supply deals with Iran” because the reimposed sanctions “paralyzed banking systems required to secure payments.”Footnote ²⁰ As the major traders withdrew from the market, a patchwork of smaller traders emerged, who could not provide the same economies of scale.

Similar fragmentation occurred among Iranian importers. The two most significant buyers are government trading companies. The Government Trading Corporation is affiliated with the commerce ministry. The State Livestock Affairs Logistics is affiliated with the agriculture ministry. The two ministries account for about half of Iran’s annual wheat imports. Both ministries receive a budget for the purchase of essential commodities. This is part of the government’s overall import budget, which also includes activities by a growing number of private sector importers. As government trading companies have struggled to procure wheat reliably, space has opened for private or quasi-private traders with their own financial resources and networks to step in.

Despite this fragmentation, Iranian buyers and foreign traders continue to strike deals – the trade continues to be lucrative. But those deals can prove challenging to execute given the effects of sanctions on the second of the three chains, which links the buyer’s bank with the importer’s bank. Today, just a handful of Iranian banks maintain correspondent banking relationships with foreign financial institutions.Footnote ²¹ The banking channels between Iran and Europe, where most of the major wheat traders maintain major subsidiaries, are especially limited. Moreover, Iranian importers cannot use the standard financial facilities. After the imposition of sanctions in 2012, Iranian importers were no longer able to receive letters of credit. As relayed by one European trader when the sanctions first began to bite, “The myriad of sanctions have worked to the point where the Iranian banking system is virtually defunct, thereby not allowing international trade houses to receive workable letters of credit … Their ships are stopped while people figure out how to get payment done, it’s a mess.”Footnote ²² Still today, Iranian wheat importers are forced to work on a cash basis.

Conducting trade on a cash basis is especially problematic, given the volatility in Iran’s foreign exchange markets. Wheat importers depend on foreign exchange allocations from the Central Bank of Iran (CBI) to make payments, but the allocations are only made with a soft commitment, even when a tender has been issued by the Iranian government. In recent years, Iran’s central bank has struggled to access its foreign exchange reserves owing to the impact of US sanctions. As sanctions depressed Iran’s foreign exchange revenues and limited access to reserves, the CBI has struggled to defend the value of the rial. In April 2018, the rial lost 20 percent of its value as expectations rose regarding Trump’s withdrawal from the Iran nuclear deal. In turn, the CBI introduced a higher “official exchange rate” of IRR42,000 to the dollar, which remained significantly below the free-market exchange rate of around IRR60,000.Footnote ²³ All foreign currency allocations were made under the official rate, meaning those allocations were effectively subsidized. But the parallel regimes became unsustainable following the reimposition of US sanctions, under which Iran retained access to just 10 percent of its foreign exchange reserves.Footnote ²⁴

By September 2018, as sanctions sapped Iran’s foreign exchange liquidity, the free-market exchange rate surged to IRR190,000. In response, the CBI changed tack and moved to partially liberalize the exchange rate system. The bank established the Integrated Foreign Currency Trading System, known by its Persian acronym “NIMA.” The CBI obligated Iranian exporters to repatriate foreign exchange earnings, which would be sold through the NIMA exchange, thereby supplying foreign currency to Iranian importers. In parallel, the CBI maintained the subsidized exchange rate of IRR42,000 to the dollar. But only Iranian importers of food products, medical goods, and a limited range of other “essential” products could apply for foreign currency allocations at this subsidized rate. Over time, the list of eligible products was whittled down. From this list, wheat constituted the largest portion of foreign currency expenditures.

This system remained in place until May 2022, when the Raisi administration moved to eliminate the subsidized exchange rate altogether, effectively removing one of the subsidies for the price of bread.Footnote ²⁵ At the time, the Raisi administration claimed that the subsidy reform would enable the government to better meet the needs of vulnerable citizens. Instead of spending billions of dollars to make wheat imports cheaper, the government could reallocate that money directly to the neediest families. In a television interview launching the subsidy reform, then President Ebrahim Raisi declared, “Today, subsidies are being wasted and people are witness to corruption and discrimination in this regard. How can we let this continue?”Footnote ²⁶ Ultimately, the subsidy reform failed. The reform had a negligible impact on the further devaluation – the rial has lost more than 60 percent of its value in the last five years. The reform also led to a sharp increase in the price of bread. Between April 2022 and June 2022, the consumer price index for the price of bread and cereals jumped 28 percent. The government’s failure to cushion the blow of higher prices using targeted cash transfers led to protests, although the rate of bread and cereals inflation did ease somewhat after the initial price shock.Footnote ²⁷

The ongoing crisis of Iran’s dysfunctional foreign exchange markets and the related payment disruptions have in turn led to disruptions in wheat deliveries. With the wheat trade operating on a cash basis, traders will not authorize vessels to unload their cargoes until payment has been received. These payments are frequently delayed. Since 2018, when the Trump administration’s sanctions again throttled Iran’s access to its foreign exchange reserves, there have been regular backlogs of dry bulk carriers at the anchorage point for Bandar Imam Khomeini, Iran’s largest port.Footnote ²⁸ At any given time, dozens of bulk carriers are at anchorage, often waiting several weeks before they receive instructions to move into port and offload their wheat, other grains, or soybeans.Footnote ²⁹ In the first six months of 2023, dry bulk carriers spent an average of forty-one days waiting at anchorage before delivering their cargoes at Bandar Imam Khomeini. By comparison, at Iraq’s Umm Qasr Port, just 80 nautical miles away, dry bulk carriers waited an average of only four days at anchorage.Footnote ³⁰

Weeks waiting in the humid air of the Persian Gulf can cause spoilage, as mold grows in the wheat cargos, but the more important consequence of the delays is financial. Vessel owners charge a demurrage fee for each day their vessel is stuck at anchorage – these fees can be as high as $15,000 per day.Footnote ³¹ Traders pass these costs onto the importer, who will in turn pass the costs onto Iranian flour mills. Eventually, demurrage fees lead to higher prices for ordinary Iranians. Between 2006 and 2012, Iran’s average implied import price (the price calculated by comparing total declared value of wheat imports to volume) was $289 per metric ton. Between 2012 and 2020, that price has risen to $374 per metric ton, a 29 percent increase. Notably, across the same two periods, the Argentina average market price, a commonly used benchmark for global wheat markets, decreased 2 percent.Footnote ³² In short, Iran appears to be paying higher prices for wheat in global markets owing to the effects of sanctions on the wheat supply chain.Footnote ³³ Once the wheat is imported, chronic inefficiencies and rent-seeking in Iran’s agri-food sector further serve to inflate wheat prices.Footnote ³⁴ In the face of inflation and currency devaluation, importers and flour mills are protecting their margins. Grain and flour are even being smuggled out of Iran into Iraq and Pakistan. For those in Iran’s poorest regions, the consequences have been devastating. As described by a resident of Sistan-Baluchistan, a region on the border with Pakistan: “Flour means food for many families here, if they have no flour they have no bread and that literally means that they have nothing to eat.”Footnote ³⁵

Convoluted Solutions

In response to a ruling of the International Court of Justice (ICJ), as well as media pressure, US authorities have taken steps to try and address concerns that sanctions may be disrupting humanitarian trade. But rather than ensure that trade in food and medicine can continue as normal even while Iran is under sanctions, US authorities have created convoluted “trade arrangements.” The Trump administration began work on such an arrangement in late 2018, just a couple of months after the ICJ issued a provisional ruling in which it found that the US sanctions must not prevent the “exportation to the territory of Iran of goods required for humanitarian needs such as medicines, medical devices and foodstuffs and agricultural commodities as well as goods and services required for the safety of civil aviation.”Footnote ³⁶ Iran had filed suit against the US, arguing that the Trump administration’s reimposition of sanctions violated the 1955 Treaty of Amity between the two countries, particularly because of the humanitarian consequences of those sanctions.Footnote ³⁷

While the Trump administration rejected the court’s ruling (and then withdrew from the treaty), increased media attention spurred US policymakers to address concerns that “maximum pressure” sanctions were having negative humanitarian effects. The Trump administration began discussions with the Swiss government around the creation of a special payments channel to ease Iran’s ability to pay for food and medicine.Footnote ³⁸ The so-called Swiss Humanitarian Trade Arrangement (SHTA) would effectively revive a payments channel that had been used to facilitate humanitarian trade during the Obama administration, a period in which the US directly exported wheat to Iran, as major agricultural traders, most of them US companies, took advantage of general licenses permitting humanitarian trade.Footnote ³⁹ During the Obama administration, Swiss banks maintained correspondent banking relations with Iranian private sector banks to facilitate sales by Swiss pharmaceutical giants and Geneva-based international trading houses to Iran.

The Trump administration tapped Banque de Commerce et de Placements (BCP) as the beneficiary bank for SHTA. As during the Obama administration, BCP would receive special assurances from the US government on the permissibility of humanitarian trade with Iran. But these assurances would be provided on strict conditions. Swiss companies using BCP would be obligated to provide significant documentation about the proposed transactions and even to disclose information about “the financial holdings of the Iranian banks from which they expect to receive payment.”Footnote ⁴⁰ Understandably, Iranian authorities were reluctant to endorse a mechanism that gave the US such extraordinary control over its humanitarian trade. Even European officials likened the reporting requirements to a “fishing expedition” for sensitive information about Iran’s financial sector.Footnote ⁴¹ The Trump administration itself was undecided about implementation of the channel, with some officials considering SHTA an unnecessary concession to Iran. In the end, it took more than a year before SHTA processed its first transaction. In January 2020, the Trump administration launched SHTA, facilitating several shipments of cancer medication to Iran.Footnote ⁴² But there would be just one further transaction, which took place later that summer. Even as the Covid-19 pandemic brought further attention to the possible humanitarian harms of sanctions, the SHTA floundered and Iran continued to struggle to import food and medicine.

Despite its failure, the SHTA served as the model for a new humanitarian channel established in Qatar in September 2023. Created as part of a prisoner-swap deal which led to the release of five American citizens wrongfully detained in Iran, the humanitarian channel allowed Iran to access $6 billion of reserves formerly frozen in two South Korean banks and to use these funds for humanitarian trade.Footnote ⁴³ The Qatar humanitarian channel was the first such channel created as part of a formal agreement with Iran. It was also the first channel built around bank accounts in which Iran maintains significant reserves. But just four weeks after its creation, the channel’s future was already in doubt. Reports emerged that the Biden administration had moved to “re-freeze” the funds, as Republican lawmakers argued without providing evidence that money had been used to fund the Hamas attack on Israel in on October 7, 2023.Footnote ⁴⁴

The failure of the SHTA and the Qatar humanitarian channel make clear that special arrangements to facilitate humanitarian trade are inherently vulnerable. For humanitarian exemptions to truly mitigate the harms of sanctions policies, they must ensure that no special arrangements are necessary to conduct food and medicine trade with a sanctioned country. Trade must be conducted on regular terms and on a routine basis. To that end, the Biden administration moved to adopt a set of overarching general licenses permitting agricultural and medical trade across all US sanctions programs. Issued in December 2022 as part of US implementation of UNSC Resolution 2664, which creates similar sanctions exemptions across all UN sanctions programs, the “Ag-Med” general licenses “authorize transactions related to the provision, directly or indirectly, of agricultural commodities” as related to “humanitarian activities or activities to meet basic human needs.”Footnote ⁴⁵ While largely a repackaging of the various preexisting licenses and exemptions, the general licenses reflect a more proactive and practical approach to addressing the humanitarian harms of sanctions, whereby the US government seeks to provide comfort to banks and traders to conduct routine business, without the need to rely on special channels. But banks, shipping companies, and other private actors have long been fearful of engaging with sanctioned countries, even for legal transactions, given the severity of the US penalties for even inadvertent errors. As Trump continues to pressure Iran with sanctions and military action in his second term, it remains to be seen whether the new measures, and any related outreach to traders and banks, will lead to a sustained improvement in Iran’s ability to import wheat reliably and affordably.

Conclusion

For over a decade, US sanctions have made it far harder for Iranian importers to pay traders for wheat, even though such trade is subject to general licenses permitting trade on humanitarian grounds. Moreover, even when a viable payment channel is found, traders struggle to charter vessels to deliver that wheat to port. The challenges inherent in selling wheat to Iran mean that traders extract a higher price from Iranian importers. In this way, sanctions contribute to structurally higher prices for wheat in Iran. Considering that the negative humanitarian effects of sanctions are both persistent and systemic and have long been known to US officials, it is difficult to conclude that the effects are truly unintended. In fact, around 70 percent of Iranians believe that the US is “seeking to prevent humanitarian-related products from reaching Iran,” according to four waves of national representative surveys commissioned by researchers at the University of Maryland between May 2019 and February 2021.Footnote ⁴⁶ Importantly, the same polling shows that most Iranians blame domestic mismanagement over sanctions as the primary cause of the country’s economic malaise. Iranians have a sophisticated understanding of the crisis they continue to endure and know whether to blame callous officials in Washington or Tehran for a given aspect of that crisis. Iranians can rightly blame officials in Washington for the rising price of bread and they can reasonably ask whether those officials intend to sow discord.

On August 2, 1990, the people of Iraq awakened to the disquieting news of their government’s sudden and brazen military occupation of neighboring Kuwait. Just four days later, amidst escalating international tensions, the UNSC passed Resolution 661, inaugurating a regime of near total economic sanctions on Iraq. This measure sought to coerce the Iraqi regime into retreating from Kuwait, paying reparations, and dismantling its arsenal of “weapons of mass destruction.”Footnote ¹ The embargo severed Iraq from the global economy, stifling its vital oil exports and obstructing the flow of essential goods into the country.

Over the ensuing twelve years, these sanctions – referred to in Iraq as al-hisar (the siege) – unleashed a relentless unraveling of the nation’s social and economic fabric. Decades of progress in public health and education were rapidly reversed as the sanctions regime rendered Iraq isolated, impoverished, and rife with corruption. The widespread scourge of disease, environmental degradation, and pervasive suffering foretold the nation’s descent into a protracted humanitarian crisis. Among the most devastated casualties was Iraq’s once admired healthcare system, which crumbled under the dual pressure of infrastructural collapse and the mass exodus of its medical professionals.

This chapter examines the far-reaching and enduring legacies of the Gulf War and sanctions of the 1990s, with a particular focus on their catastrophic impact on Iraq’s healthcare system and medical practices. It contends that the twelve-year sanctions period constituted an “ecological event,” whose ripple effects disrupted the healthcare landscape long after the formal cessation of sanctions.

Bereft of vital supplies and faced with a surge in infections, Iraqi physicians were compelled to improvise, devising unorthodox methods in wound care and antibiotic use. While born out of necessity, these adaptations sowed the seeds of chronic and resistant infections, a crisis that continues to haunt Iraq’s beleaguered healthcare system. These medical challenges transcended Iraq’s borders, reshaping regional healthcare dynamics and aggravating a broader public health crisis.

Sanctions As Warfare

In recent decades, economic sanctions have often been portrayed as a gentler alternative to the overt violence of war, a diplomatic tool designed to exert pressure without resorting to military intervention. Framed within the paradigm of “global governance,” sanctions aim to enforce compliance from states, individuals, or entities by economically isolating them.Footnote ² The underlying assumption is that such measures will compel political actors to align with international norms through the coercive power of economic deprivation.

Yet, a growing body of interdisciplinary scholarship has interrogated the paradoxes and profound consequences of sanctions, challenging the notion that they are a “humane” alternative to warfare.Footnote ³ While ostensibly directed at influencing state behavior on the international stage, sanctions frequently weaken a government’s capacity to shield its citizens from their fallout. The resulting economic and social upheaval disproportionately impacts the most vulnerable, disrupting livelihoods, undermining survival strategies, and corroding the social and political fabric of affected nations.Footnote ⁴

Sanctions, I argue, are not merely an alternative to war but a distinct form of warfare in their own right. Though devoid of direct military engagement, their effects can rival the destruction wrought by conventional armed conflict.Footnote ⁵ Comprehensive economic sanctions dismantle a nation’s socioeconomic infrastructure, precipitating humanitarian crises and inflicting enduring harm on civilian populations. These measures strike hardest at the margins, exacerbating scarcity, inflating process, and unraveling public health, education, and social services.Footnote ⁶

In this sense, sanctions constitute a “silent war,”Footnote ⁷ and their toll can be as widespread and destructive as traditional forms of violence. The long shadow they cast over nations extends far beyond their temporal application, leaving legacies of suffering and disarray that take decades to address. Recognizing sanctions as warfare is critical to evaluating their ethical and policy implications, as their true costs – often obscured in the immediacy of implementation – surface in the form of prolonged human misery.

The sanctions imposed on Iraq in 1990, combined with a devastating military campaign, represent a paradigmatic example of this silent warfare. These measures engendered an unparalleled humanitarian catastrophe, magnified by deliberate bureaucratic obstructions imposed by the US and Britain. These governments manipulated the delivery of humanitarian aid, employing tactics that ranged from outright denial to prolonged delays lasting months or even years to obtain approvals.Footnote ⁸

Joy Gordon’s meticulous research reveals the inner workings of this “invisible” machinery of war.Footnote ⁹ According to Gordon, the US was responsible for close to 90–95 percent of the holds placed on essential goods through “an opaque and arbitrary process in which billions of dollars of urgent goods related to food production, water treatment, road repair, electricity, transportation and telecommunications were prevented from arriving in Iraq for months or years.”Footnote ¹⁰ Billions of dollars’ worth of urgently needed items – ranging from food production inputs to water treatment systems and educational supplies – were withheld for prolonged periods, ostensibly due to concerns over their potential “dual use” for civilian and military purposes. Gordon explains:

These capricious restrictions crippled Iraq’s essential services, creating cascading shortages that extended far beyond legitimate military concerns. Meanwhile, the Iraqi regime’s own actions – including obstructing inspections and exploiting the sanctions for political gain – further exacerbated the crisis. Amidst this maelstrom, the nation’s healthcare system bore the brunt of these compounded failures, standing as a stark emblem of the human cost of economic warfare.

In response to the economic devastation wrought by the sanctions, the Iraqi government implemented an array of measures to mitigate the breakdown of state infrastructure and social order. It prioritized increased agricultural production, established a nationwide food rationing system to stave off famine, and mobilized civilian and military resources for a national “Campaign for Rebuilding and Reconstruction,” which started after the ceasefire in 1991.

However, these efforts were accompanied by harsh, authoritarian policies that deepened the regime’s repression. Travel bans were imposed on government employees, punitive measures against petty crimes were intensified, and draconian punishments were meted out for activities perceived as undermining the national economy. Meanwhile, rampant inflation, the rapid devaluation of the currency, and chronic shortages of essential goods and medicines decimated the public sector, leaving ordinary Iraqis to bear the brunt of this economic siege. Nowhere were the impacts of these measures more acutely felt than in Iraq’s healthcare system.

Infrastructures, Undone

On January 17, 1991, a U.S.-led coalition of 31 nations launched “Operation Desert Storm,” a military campaign aimed at expelling Iraqi forces from Kuwait. Over the course of forty-three days, the coalition unleashed a relentless aerial bombardment and missile offensive on Iraq, targeting both military and civilian infrastructure. Deploying an unprecedented arsenal of advanced weaponry – including laser-guided missiles and depleted uranium artillery – this campaign overwhelmed the already demoralized Iraqi military, weakened from the grueling eight-year war with Iran. By the end of the campaign, Iraq’s military had been forced to withdraw from Kuwait, and a ceasefire agreement was declared on February 28, 1991.

The devastation wrought by Operation Desert Storm was staggering. The US and its allies dropped around 130,000 tons of ordinance – more than double what the Allies dropped over Berlin during World War II. Iraq’s vital infrastructure lay in ruins: Power plants and transmission lines were obliterated, roads and bridges were destroyed, telecommunications networks severed, and water purification and sewage treatment facilities rendered inoperable. A UN envoy described the aftermath as near-apocalyptic, likening the destruction to a regression to the pre-industrial age.Footnote ¹² The cost of rebuilding this shattered infrastructure was estimated at $20 billion, a figure far beyond Iraq’s means in the stranglehold of sanctions.

Among the most critical losses was the decimation of Iraq’s electricity generation capacity. Prior to the war, the country produced approximately 9,000 kilowatts of electricity, sufficient to power its urban centers and industrial sectors.Footnote ¹³ The bombing campaign reduced this output to a mere 4 percent of its original capacity, leaving only two out of the nation’s twenty power plants operational.Footnote ¹⁴ This collapse of electrical infrastructure reverberated across all sectors, compounding the challenges faced by hospitals, water treatment facilities, and agricultural production.

Before the war, Iraq’s water supply infrastructure was a point of pride. The nation produced over 520 million cubic meters of treated water annually, with each Baghdad resident receiving an average of 450 liters per day. In other parts of the country, each person received over 200 liters per day, which were purified and delivered by numerous central water-treatment stations and over 1,000 smaller water projects.Footnote ¹⁵ The bombing campaign destroyed the country’s three primary chlorine production facilities and its sole aluminum-sulphate production site, crippling the ability to purify water. The output of treated water plummeted to 120 million cubic meters per year, while over 6,750 breaches in the water distribution network caused extensive leaks and shortages.Footnote ¹⁶ These disruptions led to an immediate surge in cholera, typhoid, and gastroenteritis.Footnote ¹⁷

Sewage treatment systems fared no better. The bombing disabled 216 sewage pumps, with another 262 rendered nonfunctional due to power shortage.Footnote ¹⁸ Raw sewage overflowed into urban neighborhoods, pooling in open areas and contaminating the Tigris River with an estimated 10 million cubic meters of untreated waste each month. Bacteriological analysis conducted in 1991 revealed that over half of the population tested in fifteen governates was exposed to fecal contamination in their drinking water. The poorest and most vulnerable communities bore the brunt of these public health crisis, which contributed to the alarming rise of infant and child mortality during the early years of the 1990s.Footnote ¹⁹

While considerable research has been devoted to the health effects experienced by US and UK military veterans of the Gulf War, the long-term health consequences for Iraq’s civilian population remain poorly documented.Footnote ²⁰ Local studies, often constrained by limited resources and an exodus of scientific expertise, have struggled to provide a comprehensive picture.Footnote ²¹ However, the environmental and public health toll of the war was undeniable. Land and air pollution from burning oil fields, munitions contamination, and the destruction of chemical weapons facilities left enduring scars on Iraq’s ecosystem.

The bombing of Iraq’s Al-Muthanna State Establishment, once a hub for chemical weapons production, marked the largest ever airstrike on a nerve agent stockpile,Footnote ²² and has been implicated in exposing US troops to sarin gas, contributing to what has come to be known as Gulf War Syndrome.Footnote ²³ This mysterious condition, characterized by a range of chronic health issues among Gulf War veterans, underscores the broader human and environmental toll of these chemical exposures. Within Iraq, toxic pollutants from bombed oil refineries and industrial sites further exacerbated public health challenges. The deliberate destruction of Iraq’s oil infrastructure, which led to the release of 3.5 million tons of crude oil into the environment and 800,000 tons into the Persian Gulf, compounded the environmental crisis.Footnote ²⁴ Additionally, the widespread use of depleted uranium ammunition during the Gulf War and subsequent military campaigns has raised significant concerns about the long-term effects of chemical exposure, including spikes in cancers, birth defects, and other health issues among Iraqi children.Footnote ²⁵ Together, these environmental assaults, amplified by a decade of crippling sanctions, entrenched a legacy of systemic decline in Iraq’s public health and institutional capacities.

Medicine in Crisis

Throughout its modern history, healthcare in Iraq has been instrumental in the consolidation of state authority and the continuity of statecraft.Footnote ²⁶ The foundation of this relationship dates back to the British Mandate period (1920–1932), when medicine became a key vehicle for infrastructure expansion and a tool of socioeconomic development.Footnote ²⁷ British and Iraqi physicians collaborated to establish a centralized public health system, culminating in the founding of Iraq’s first medical school in 1927. This milestone symbolized a commitment to developing a cadre of local doctors who would serve as both nation-builders and instruments of state outreach in urban and rural areas.

By the 1970s and 1980s, Iraq had emerged as a regional leader in healthcare.Footnote ²⁸ The system, modeled on the UK’s National Health Service (NHS), provided free public-sector medical education and care. Medical students followed a rigorous six-year curriculum of studies based on UK standards, which were supplemented by residencies in public hospitals, mandatory rural service, and military postings as a form of reciprocity for state-funded education. This commitment extended to postgraduate training abroad, particularly in British and American institutions, ensuring that Iraqi doctors were equipped with the highest international standards of medical knowledge.

During this period, Iraq’s healthcare indicators showed remarkable progress. Under the Ba’athist rule, the expansion of socialist policies fostered significant improvements in maternal and infant mortality rates, access to healthcare, and nutrition standards.Footnote ²⁹ The estimated per capita daily caloric availability rose from 1,958 in 1961 to 3,400 in the period from 1984 to 1990.Footnote ³⁰ Even amid the grueling Iran–Iraq War (1980–1988), the healthcare system adapted and thrived, with investments in hospitals, medical schools, and primary healthcare.Footnote ³¹ Women’s organizations played an essential role in public health initiatives, driving vaccination campaigns, improving health literacy, and reducing mortality rates.Footnote ³²

By the 1990s, Iraq’s healthcare system had grown into a comprehensive network of 131 hospitals and 851 health centers, serving nearly 90 percent of the population.Footnote ³³ However, the Gulf War and subsequent sanctions shattered this system. Hospitals across Iraq, particularly in the south, were looted or destroyed during the Shi’a rebellion of 1991, while the sanctions inflicted further devastation on the daily operations of the medical sector. The lines between warfare and healthcare blurred, as sanctions exacerbated the collapse of infrastructure critical to public health.Footnote ³⁴

The sanctions period devastated Iraq’s healthcare workforce. Beginning in the 1990s, Iraq experienced a persistent exodus of doctors and nurses, a trend that accelerated after the 2003 US invasion.Footnote ³⁵ Medical professionals cited deteriorating training conditions, financial hardship, and the unsafe work environment as key factors driving their departure.Footnote ³⁶ Compounding this brain drain, the intellectual embargo imposed by sanctions restricted access to updated medical literature, journals, and textbooks, leaving Iraq’s medical education system increasingly isolated from global advancements.Footnote ³⁷

Nursing, a profession long underdeveloped in Iraq, faced a further breakdown under the sanctions.Footnote ³⁸ The healthcare system, historically reliant on foreign nurses, was left with a diminished workforce as many expatriates returned home.Footnote ³⁹ Local nurses, facing paltry wages and grim working conditions, abandoned their roles in favor of better-paying opportunities outside the healthcare sector. By the immediate aftermath of Operation Desert Storm, Iraq’s largest medical complex, Medical City, functioned with less than half of its nursing staff.

Healthcare workers bore the dual burden of enduring the economic collapse, while struggling to care for the vulnerable population under extreme resource constraints. Hyperinflation and the devaluation of the Iraqi dinar reduced healthcare workers’ monthly salaries to an equivalent of $3–$10. This forced many to seek second jobs, compromising their ability to serve the health system effectively.Footnote ⁴⁰

By 2003, Iraq’s healthcare workforce had been decimated. The country had 53 physicians and 46 nurses per 100,000 people, figures that paled in comparison to neighboring countries.Footnote ⁴¹ For instance, Iran boasted 105 physicians and 246 nurses or nursing assistants per 100,000 people, while Jordan’s healthcare force was more than four times as robust. Particularly alarming was Iraq’s nurse-to-doctor ratio, which fell to less than 1 nurse per physician, far below the global standard of 3–6 nurses per doctor.Footnote ⁴²

The Erosion of Care

For twelve years, Iraqi healthcare existed in a state of chronic collapse. The sanctions ushered in a breakdown of sanitation systems, a surge in infectious diseases, and pervasive environmental toxicity. These conditions not only strained the healthcare system but fundamentally altered how Iraqi doctors approached care in their daily practice.

In the immediate aftermath of the Gulf War, hospitals across Iraq operated at a fraction of their previous capacity. Occupancy rates plummeted by 30–50 percent, with some facilities experiencing reductions in laboratory and radiology services exceeding 80 percent.Footnote ⁴³ At Baghdad’s primary teaching hospital, only two-thirds of the medical wards and half of the surgical wards remained functional.Footnote ⁴⁴ Outpatient clinics, meanwhile, faced crippling disruptions. Between 1989 and 1992, the number of major surgeries performed monthly fell from 15,125 to 5,477 – a figure that remained stagnant for the rest of the decade.Footnote ⁴⁵

As the sanctions deepened, conditions in Iraqi hospitals rapidly deteriorated. The economic stranglehold system imposed by the UNSC disrupted the importation of critical medical supplies, undermined preventive and curative services, decimated the infrastructure for controlling infectious diseases, and hampered local drug production. Chronic shortages of medication left patients with long-term illnesses in constant distress, while surgical procedures became increasingly hazardous due to the lack of essential equipment and sterile environments.Footnote ⁴⁶

Despite the escalating need for medical supplies, the Iraq Sanctions Committee systematically put “holds” on medical goods purchased through the OFFP, delaying the import of these goods. The holds on critical goods, particularly those related to the infrastructure, increased throughout the decade. By the early 2000s, the volume of medical items placed on hold had tripled, from $150 million in 2000 to $450 million in 2002.Footnote ⁴⁷ These included air compressors, insecticides, spare medical parts for sterilizers and autoclaves, oxygen concentrators, electrical generators and cables, sprayers, freezers, and accessories for oxygen production plants. Even laboratory materials, medicines, and dental laboratory equipment were not spared, exacerbating an already critical situation in Iraq’s healthcare system.Footnote ⁴⁸ The inability to procure such items left hospitals ill-equipped to provide even rudimentary care.

In 1996, a comprehensive survey of Iraqi hospitals and healthcare centers – covering nearly 20 percent of Iraq’s civilian institutional beds – painted a grim picture.Footnote ⁴⁹ The report revealed that one-third of hospital beds were closed, and the average length of stay was less than half of the pre-Gulf War period. Nearly half of the surveyed hospitals reported that diagnostic and therapeutic equipment was nonfunctional due to a lack of spare parts or maintenance.Footnote ⁵⁰ Basic utilities, such as lighting, clean water, and sewage treatment, were universally compromised, with years of neglect rendering plumbing systems irreparable. The report grimly noted that “every hospital we visited had leaking sewage pipes.”Footnote ⁵¹ Many toilets were broken; those that remained operational were overcrowded, unsanitary, and plagued by infestations of flies, vermin, and insects.

The dire situation extended to hospitals maintenance budget, which had been slashed to unsustainable levels. At one 200-bed hospital, the monthly cleaning budget was reduced to a mere IQD1,500 (approximately $2), sufficient only to purchase hand soap for operating theatres. Without access to disinfectants or antiseptics, cleaning staff were limited to using just water for sanitation. Compounding the issue, staffing levels plummeted; for instance, the number of cleaning staff at this hospital fell from twenty to just two.Footnote ⁵²

Essential medical supplies were similarly scarce. Hospitals reported frequent shortages of intravenous fluids, cannula tubes, urine catheters, sterile gloves, and surgical stitches – items fundamental to routine medical and surgical procedures. The unavailability of anesthetics and surgical material forced hospitals to cut daily elective surgeries drastically. In Mosul, for example, the number of such procedures fell from fifteen to two.Footnote ⁵³ Surgeons were compelled to economize, reusing sutures and rationing painkillers like pethidine, an opioid, which became so scarce that ampules had to be distributed among patients.Footnote ⁵⁴ The breakdown of sterilizers and autoclaves, coupled with delays in obtaining replacement parts due to sanctions, further jeopardized patient safety and postoperative outcomes.Footnote ⁵⁵

Patients bore the brunt of these deficiencies. Many were required to bring their own blankets and heating units during the frigid winter months and to endure sweltering conditions in summer due to nonfunctioning cooling system.Footnote ⁵⁶ Laboratory services also suffered a significant decline, with investigations dropping by 54 percent, during the first four years of the sanctions,Footnote ⁵⁷ and a further 14 percent by 1997.Footnote ⁵⁸ A WHO estimated that by the same year, only 25 percent of the medical equipment in Iraq’s healthcare facilities remained operational, crippled by restrictions on imports and lack of financial resources.Footnote ⁵⁹ Broken refrigeration systems in vaccination centers hindered the preservation of vaccines, undermining immunization programs and leaving vulnerable populations exposed to preventable diseases.Footnote ⁶⁰

The pharmaceutical sector, once a cornerstone of Iraq’s healthcare infrastructure, also collapsed under the combined pressures of war and sanctions. Before the 1991 war, the State Company for Drug Industry and Medical Appliances (SDI), established in 1965, supplied 60 percent of Iraq’s primary care needs, particularly antibiotics, analgesics, antiparasitic agents, local anesthetics, intravenous fluids, insulin, and digoxin.Footnote ⁶¹ However, the sanctions imposed severe limitations on the importation of raw materials and spare parts, crippling production.Footnote ⁶² International monitors repeatedly blocked shipments of essential supplies, citing concerns over potential dual-use applications.Footnote ⁶³ By 2001, SDI’s production capacity had dwindled to a fraction of its former output, leaving hospitals reliant on irregular and inadequate external supplies. A WHO report noted that “holds on chemical and equipment imports are preventing SDI from restarting all its activities, and initial orders for externally manufactured drugs have not sometimes anticipated the resulting gap in supplies.”Footnote ⁶⁴

In 2002, a joint UN team revisiting the SDI facilities highlighted the persistent challenges of unfulfilled contracts. While packaging materials had been approved and delivered, the critical machinery and raw materials necessary for production remained on hold, perpetuating the pharmaceutical shortages.Footnote ⁶⁵ These systematic barriers rendered Iraq dependent on unreliable external supplies and an emerging black market of counterfeit and expired medications, further compounding the nation’s healthcare fallout.

While much of the writing about Iraq’s healthcare under sanctions has focused on external observations, the voices of Iraqi doctors themselves remain scarce in this body of work. One notable exception is Hazim Barnouti, a leading general surgeon and medical educator, who penned a stark appeal to the international medical community in the British Medical Journal in 1996. Reflecting on the grim realities of surgical practice under sanctions, Barnouti wrote, “The six-year blockade of Iraq has left surgery in a state that falls below minimally acceptable standards of safety and efficacy.”Footnote ⁶⁶

In his commentary, Barnouti detailed the cascading consequences of supply shortages: a lack of antibiotics, the unavailability of sutures, the reuse of surgical gloves, and the breakdown of critical equipment. The persistent scarcity of anesthesia and antiseptic solutions severely undermined infection control, leading to a surge in postoperative complications. Without access to proper antibiotics, patients were at greater risk of fatal infections, while shortages of surgical supplies rendered even routine procedures fraught with danger. Barnouti painted a grim picture of the operating theatre, explaining, “Repeatedly reusing sterilized surgical gloves means they have large numbers of holes. Without money to replace them, badly torn surgical gowns and towels compromise aseptic technique and increase rates of wound infection. These have also increased because of shortages of antiseptic solutions for skin preparation.”Footnote ⁶⁷

Operating under these suboptimal conditions, doctors were forced to improvise and economize, often at the expense of patient safety.Footnote ⁶⁸ At a Baghdad teaching hospital, the theatre manager was permitted to issue only three pairs of surgical gloves per operation. In some cases, the same suction tube was used for multiple patients. Orthopedic surgeons were compelled to delay procedures, with one case requiring a patient to wait until a plate and screws could be removed from another patient during surgery.Footnote ⁶⁹ As I have recounted elsewhere, “Doctors reused cannulas to economize, replaced Foley catheters with nasogastric tubes to empty bladders, and sterilized disposable gloves and remains of surgical sutures to be used on the next patient.”Footnote ⁷⁰

The sanctions not only decimated Iraq’s healthcare infrastructure but also reshaped the very ecology of medical practice. Forced to adapt to chronic shortages, Iraqi doctors developed strategies of improvisation and resourcefulness, which, while lifesaving in the short term, entrenched systemic vulnerabilities. These changes – born of necessity – would leave a lasting imprint on Iraq’s healthcare system, sowing the seeds for future problems, including the rise of antimicrobial resistance (AMR) and the collapse of institutional care norms.

Resistance Rising

The sanctions era drastically altered how Iraqi physicians approached wound care and the use of antibiotics. With healthcare systems pushed to the brink, postoperative infection rates soared. By 1997, hospitals reported infection rates for clean wounds rising from 5 percent to an alarming 25–30 percent.Footnote ⁷¹ These heightened risks forced doctors to adopt preventative measures, often involving the indiscriminate use of broad-spectrum antibiotics. Regardless of the procedure, patients were prescribed multiple antibiotics to combat potential bacterial and fungal infections. Yet the unpredictable supply of antibiotics frequently interrupted treatments, leading to suboptimal dosing, reliance on expired drugs, or abrupt changes in medication based on what was available.Footnote ⁷² As hospitals struggled to secure consistent supplies, many patients and their families turned to the black market, which became flooded with counterfeit and expired drugs. Others relied on relatives abroad to send life-saving medications, highlighting the fractured state of Iraq’s pharmaceutical system. Even within hospitals, doctors had to contend with limited resources. Instead of basing prescriptions on laboratory-confirmed diagnoses, they relied on clinical judgment, as laboratories lacked the reagents and equipment needed to conduct sensitivity testing. These conditions created a breeding ground for antibiotic resistance, where partial courses of treatment or ineffective drugs allowed infections to persist and evolve.Footnote ⁷³

The consequences of these practices were devastating. Patients who survived surgery often succumbed to chronic, resistant infections, with septicemia becoming an increasingly common cause of death. Doctors faced heartbreaking decisions as they battled infections with inadequate tools, knowing that even their best efforts might not suffice. Writing about their experience this period, Muhammed Akunjee and Asif Ali explain described the fatal impact of limited medical options:

Writings about the Iraqi healthcare system under the sanctions have captured a grim reality of the collapse of a once functioning system as its material and human infrastructures were undermined. A substantial portion of these portrayals, however, are episodic recollections of that period. Regrettably, comprehensive long-term studies that could have chronicled the progression of these repercussions over time are lacking. Furthermore, the Iraqi government’s assertions about the sanctions’ impact were often disregarded as state-spun propaganda, with allegations that the impact of sanctions was being manipulated by the regime. It is important to note, however, that the realities and the ongoing impacts of the sanctions era did not cease with the lifting of the sanctions. In fact, the biosocial consequences of the health system’s downfall in Iraq have characterized the post-sanctions period, significantly influencing the degradation of the nation’s healthcare for many subsequent years.Footnote ⁷⁵

The overreliance on antibiotics during the sanctions period reflected not just a desperate attempt to save lives but a systemic collapse of infection control and surveillance. These improvised medical practices, while unavoidable at the time, laid the foundation for Iraq’s ongoing crisis of AMR. The ramifications of this silent epidemic would extend well beyond Iraq’s borders, underscoring the far-reaching consequences of a healthcare system under siege.

Afterlife of Sanctions

A month into the 2003 US-led invasion of Iraq, military doctors began reporting a stubborn and alarming infection among wounded soldiers. The cause was the multidrug-resistant Acinetobacter baumannii, a bacterium later nicknamed “Iraqibacter.”Footnote ⁷⁶ This pathogen, resistant to most antibiotics, traveled with returning soldiers to US hospitals, where it infected individuals who had never set foot on a battlefield.Footnote ⁷⁷ Over the next decade, military reports documented the growing resistance of this and other infections during deployment in Iraq. These reports often attributed this crisis to Iraq’s healthcare system, which had been decimated by sanctions, war, and neglect.Footnote ⁷⁸ Neighboring countries’ hospitals, inundated with displaced Iraqi patients, similarly reported heightened rates of AMR,Footnote ⁷⁹ underscoring the regional ripple effects of Iraq’s healthcare collapse.Footnote ⁸⁰

Recent reports from antibiotic stewardship programs in Iraq reveal that AMR has become an endemic problem in the country’s hospitals. Rates of resistance to common antibiotics are alarmingly high, with many healthcare facilities struggling to combat infections that no longer respond to available treatments. A stark example of this problem is seen in the city of Mosul, where a recent Doctors Without Borders report revealed that nearly 86 percent of infections at its trauma hospital were resistant to most antibiotics available on the market.Footnote ⁸¹ Local doctors attribute this alarming figure to practices entrenched during the sanctions era: the overuse of broad-spectrum antibiotics, inadequate sanitation, and a lack of antibiotic stewardship protocols in both public and private hospitals.Footnote ⁸² Compounding this issue, the lifting of the sanctions in 2003 led to the emergence of unregulated drug markets, further undermining efforts to establish effective infection control and antibiotic management. This underscores the long-term effects of the sanctions era, which disrupted infection control protocols and encouraged the overuse of antibiotics as a reactive measure. Yet, within Iraq itself, there has been little systematic study to fully capture the scope and scale of AMR. The absence of comprehensive data leaves critical gaps in understanding how resistant pathogens have proliferated and what measures are most effective in curbing their spread.

As the global community confronts the escalating threat of AMR, Iraq highlights how war and sanctions serve as potent drivers of this global health crisis. The misuse of antibiotics during the sanctions era, compounded by the collapse of healthcare infrastructure and the chaos of war, created an ecosystem where resistant infections could proliferate unchecked. This crisis is not merely a localized issue but a reflection of how conflict and economic warfare disrupt health systems, amplify vulnerabilities, and allow AMR to transcend borders. Addressing this challenge requires not only medical interventions but also a reckoning with the broader historical, social, and political forces that have turned Iraq into a focal point for the global AMR epidemic.

The enduring impact of sanctions on Iraq’s healthcare system cannot be understood in isolation; it is deeply embedded in the broader histories of war, economic blockade, and systemic neglect. These forces not only dismantled healthcare infrastructure but also left behind a fragmented narrative. To fully grasp the afterlife of sanctions, it is necessary to go beyond surface-level accounts and examine how these intersecting pressures reconfigured Iraq’s medical landscape, creating conditions that persist today. This calls for a more rigorous engagement with the ways in which sanctions reshaped not only the material conditions of healthcare but also the social and institutional frameworks that underpin it.

Writings about the Iraqi healthcare system under sanctions have vividly captured the grim reality of a once functional system brought to its knees, as its material and human infrastructures were systematically eroded. However, much of this body of work consists of episodic recollections, offering fragmented snapshots of the crisis rather than comprehensive, long-term analyses of its progression. The absence of sustained studies has left critical gaps in understanding the complex and layered nature of this collapse, obscuring the intricate ways in which sanctions transformed healthcare into a site of systemic failure. The healthcare crisis under sanctions is not merely a story of material deprivation but a profound reconfiguration of Iraq’s medical ecology. It encompasses the disintegration of infection control protocols, the unchecked rise of AMR, and the permanent loss of professional expertise as doctors and nurses fled in waves. These are not just isolated events but are also interlinked processes that have redefined Iraq’s capacity to care for its people. The need to document and study this history more systematically is urgent – not only to capture the full scale of the collapse but also to understand how sanctions reshaped the foundational principles of healthcare delivery and its aftermath.

Studying this history requires moving beyond the immediate context of the sanctions to interrogate their long-term impact on Iraq’s medical and public health institutions. How did sanctions entrench systemic weaknesses? What lessons can be drawn from this protracted medical collapse? Addressing these questions is crucial not only for Iraq but also for global health, as the aftermath of such interventions continues to ripple across borders in the form of antibiotic resistance and fractured regional healthcare systems. By documenting this history, we can begin to understand how the interplay of war, sanctions, and state collapse rewrites the possibilities of care – leaving nations to grapple with the enduring scars of economic warfare.

In conclusion, the repercussions of the sanctions imposed on Iraq extend far beyond the immediate dismantling of its healthcare system. They have created a lasting legacy of biosocial vulnerability, embedding structural weaknesses that continue to destabilize public health in Iraq and the region. The rise of AMR in Iraq is emblematic of these enduring impacts, highlighting the need for a multidisciplinary approach to understanding and addressing the aftereffects of sanctions and war. The long shadow of sanctions underscores a fundamental truth: Even when framed as nonviolent tools of diplomacy, their effects can rival the devastation of war, leaving wounds that endure for generations.

Introduction

The Democratic People’s Republic of Korea is certainly one of the most heavily sanctioned countries in the world. The UNSC first imposed sanctions after North Korea’s first nuclear test in 2006, with Resolution 1718.Footnote ¹ The UNSC has continued to pass increasingly strict sanctions resolutions, the most recent of which, Resolution 2397, was adopted in December of 2017.

In contrast to the UNSC, the US’s unilateral sanctions date back to shortly after the Korean War. Despite moments of hope for reconciliation and negotiation, such as the Agreed Framework or the Singapore Summit, the US has maintained its own sanctions regime in addition to sponsoring UNSC sanctions. South Korea ended all trade with North Korea in 2010 following the sinking of the Cheonan, except for trade through the Kaesong Industrial Complex; however, this industrial complex later closed in 2016 after another North Korean rocket launch.Footnote ² Japan extended its sanctions to 2025, which include a ban on all imports, exports, remittances, travel, and technical ballistic and nuclear intellectual exchange.Footnote ³ Multiple other countries also uphold unilateral sanctions on North Korea.

What is the purpose of these sanctions? First and foremost, the sanctions are meant to dissuade the DPRK’s development of its missile and nuclear weapons program. However, evidence suggests that sanctions have had little to no effect on “denuclearizing” DPRK.Footnote ⁴ On the other hand, sanctions have had a considerable impact in other regards, such as compromising the health of the population and the availability of healthcare. Sanctions have hurt DPRK’s health sector by impeding the import of medical equipment and supplies, burdening humanitarian aid organizations with financial, logistical, and administrative barriers, and by debilitating the country’s economic progress as a whole. This has subsequently weakened multiple health domains, which include, but are not limited to, nutrition, water, sanitation and hygiene services, maternal health, and tuberculosis (TB).

Evaluating the Effect of Sanctions: Is There a Positive Value?

Sanctions, in theory, have the potential positive effect of regional stability by halting North Korea’s nuclear weapons and missile programs. But this has not happened. Since the UNSC first imposed sanctions on North Korea in 2006, the DPRK nuclear program has continued to grow. Besides ongoing production of nuclear materials and testing of weapons technology, according to the Panel of Experts reports, there continues to be illicit exportation of coal, imports of prohibited cargo and petroleum, and illegal cyber activities.Footnote ⁵ In fact, some analysts say that sanctions drive Kim to take more aggressive measures, because sanctions are seen as a threat to the regime’s survival.Footnote ⁶ The notion that sanctions avoided military action against North Korea is highly unlikely, because the potential loss of human lives from a conventional military conflict would likely be seen by international actors as unacceptably high. In addition, some leaders, like Kevin Martin, president of the NGO Peace Action, believe that tougher sanctions could escalate, not ease, military tensions in Northeast Asia.Footnote ⁷ In a petition shortly after the Pyeongchang Olympics in 2018, he remarked that “at a minimum the [sanctions] will exacerbate the misery of ordinary North Koreans and antagonize Russia and China, whose cooperation is needed to resolve the current impasse.”Footnote ⁸

Another possible positive value of sanctions is reducing human rights abuses. However, similar to the nuclear weapons program, sanctions appear to have had little if any effect on improving human rights in North Korea. The UNSC sanctions have never targeted human rights violations, although the US sanctions have. In 2016, the US passed the North Korea Sanctions and Policy Enhancement Act, which made it mandatory for the US president to enforce financial sanctions on individuals involved with North Korean human rights and cybersecurity abuses, and for the State Department to submit reports on key human rights abuses.Footnote ⁹ This targeted sanctions approach was praised by Human Rights Watch.Footnote ¹⁰ Yet not much has changed. Since the passing of the North Korea Sanctions and Policy Enhancement Act and associated Executive Order 13722, those placed on the blacklist are mostly symbolic, as these individuals do not normally engage in US banking, regardless of sanctions.Footnote ¹¹ The US State Department listed twenty-two significant categories of human rights abuses in its 2022 DPRK Report on Human Rights Practices, citing that “there was no indication that the [DPRK] government took steps to prosecute officials who committed human rights abuses.”Footnote ¹² The 2023 report revealed no significant changes in the human rights situation.Footnote ¹³ Instead of these unilateral coercive measures, North Korea appears more receptive to a multilateral, collaborative approach. The DPRK is a member of the UN Human Rights Council (UNHRC) and participates in the universal periodic review (UPR) of the country’s adherence to human rights conventions. During the third UPR cycle in 2019, the DPRK agreed to address 132 out of 262 recommendations (50.4%),Footnote ¹⁴ and has ratified five international human rights instruments.Footnote ¹⁵ Nevertheless, the DPRK government’s current engagement in responding to and addressing human rights abuses has been described as “minimal” according to the reports from the 52nd to 55th sessions of the UNHRC.Footnote ¹⁶ It refuses to recognize the mandate of the Special Rapporteur on the situation of human rights in the DPRK.Footnote ¹⁷ The UNHRC called for renewed engagement and “fresh, creative strategies” to address human rights abuses in North Korea.Footnote ¹⁸ Elizabeth Salmón, the Special Rapporteur since August 2022, set out her mandate using a two-track approach, the first being to hold perpetrators of abuse accountable for their actions, and the second, to seek to secure dialogue and cooperation through trust with the DPRK.Footnote ¹⁹ She emphasizes the need to strengthen engagement with the DPRK in order to improve the human rights situation and hold accountability for violations.Footnote ²⁰ Furthermore, it should be noted that healthcare, a decent standard of living, potable water, and access to sanitation facilities are also part of basic human rights. When sanctions worsen these conditions, they inadvertently exacerbate human rights violations in North Korea.

Alternatively, if the goal of sanctions is to hurt the economy, then sanctions are working. North Korea experienced a macroeconomic shock in 2018 from sanctions,Footnote ²¹ with the most notable pre-pandemic contraction of the GDP in the past two decades (4.1%) occurring in 2018.Footnote ²² In 2018, the total trade volume decreased by 48.8 percent.Footnote ²³ Choking North Korea’s economic activity, by banning the top export sectors and capping the import of refined petroleum to 10 percent of the normal levels, is a de facto economic blockade. The economy recovered slightly (0.4% growth) in 2019, responding to improved weather and crop yields,Footnote ²⁴ but plummeted again in the pandemic era. The loss of the export economy undoubtedly has had a profound negative impact on the North Korean people who were employed by those industries, particularly women.Footnote ²⁵ Sanctions-related economic decline also compromises state expenditures on healthcare. Nevertheless, the sanctions failed to have the desired effect – halting the nuclear weapons and the missile program. This, combined with the DPRK government’s self-imposed Covid-19-era border closure, has created an environment that has made access to healthcare more difficult. Without a stable economy, financing public health-related endeavors becomes an uphill battle.

Current State of Public Health in North Korea

At the turn of the century, North Korea partnered with humanitarian aid organizations to significantly improve the health of its citizens. In 2000, UNICEF Data shows that 54 percent of children exhibited stunting – a major indicator of malnutrition.Footnote ²⁶ But in 2015, this dropped to 28 percent and then to 17 percent in 2020,Footnote ²⁷ which ranks similarly to countries like Sri Lanka or Tajikistan.Footnote ²⁸ The maternal mortality ratio declined from 186 deaths per 100,000 live births in 2000,Footnote ²⁹ to 85 in 2014, and then to 106 in 2019.Footnote ³⁰ Similarly, the infant mortality ratio decreased from 60 deaths per 1,000 live births in year 2000,Footnote ³¹ to 16.8 in 2019,Footnote ³² and the neonatal mortality rate decreased from 26.3 per 1,000 live births in 2000,Footnote ³³ to 7.7 in 2019.Footnote ³⁴ Fatalities from malaria and TB sharply declined in this period as well.Footnote ³⁵ Despite these strides, the current humanitarian situation in North Korea is still dire.

As Hazel Smith discussed in her contribution to this volume, food insecurity is a pressing issue in North Korea. Pre-pandemic, 40 percent of the country’s population (10.1 million people) experience food insecurity.Footnote ³⁶ This likely increased to greater than 60 percent during the pandemic years.Footnote ³⁷ Almost every year during the East Asian monsoon season, at least one typhoon will cause major flooding. Combined with recurrent droughts and record low rainfalls in 2017 and 2019, this often compromises agricultural outputs and further devastates food security.Footnote ³⁸ Since Hazel Smith provided an in-depth analysis on this topic in Chapter 2, we will not touch upon it here. Nevertheless, the health effects of food insecurity are profound. For example, malnutrition leads to increased prevalence of opportunistic infections such as TB and Covid-19. Poor nutritional status is also associated with poor response to medical treatment and recovery from surgery.

In addition, as of 2017, 39 percent of the population (9.9 million people) did not have access to safe drinking water – varying from 29 percent in urban areas to 55.5 percent in rural areas.Footnote ³⁹ The WHO has identified the DPRK as one of twenty countries with the highest incidence of TB and multidrug resistant-TB (MDR-TB) burden. In fact, North Korea had a TB incidence of 131,000 and a mortality rate from TB of more than 20,000 deaths in 2018.Footnote ⁴⁰

The Health Impact of Sanctions on Government-Sponsored Healthcare

According to Article 72 of the DPRK Constitution and Article 9 of the Public Health Law, North Korea provides free universal healthcare for all its people, although informal costs may exist. North Korea is also one of the top spenders on military expenses proportionally,Footnote ⁴¹ but it also spends a relatively large portion of its GDP on health. In the WHO’s most recent Country Cooperation Strategy report, it was reported that the DPRK spent about 6.1 percent of its GDP on healthcare,Footnote ⁴² not including international aid or funding. This is higher than the lower- and middle-income country average of 5.4 percent.Footnote ⁴³ However, because North Korea’s GDP is low, especially during the Covid-19 pandemic, the health system is chronically underfunded.

North Korea has at times proven its dedication and willingness to invest in health. It has co-financed long-standing projects like its vaccination program with the Global Alliance for Vaccines and Immunization (GAVI), the international vaccine alliance. Over the last several years, North Korea has developed a prototype CT scanner, artificial knee joints, and ultrasound machines. Furthermore, North Korea invests a significant amount of capital into the education and training of its health workforce – one of the highest ratios of healthcare workers, relative to the population, in the world. North Korea has a significant mobilization capacity to deploy large scale health efforts, such as mass vaccination campaigns.Footnote ⁴⁴

However, the North Korean government’s efforts to provide healthcare are directly undermined by the sanctions, particularly in regard to the import of medical equipment and supplies. While NGOs may seek exemptions to import goods for DPRK’s health sector, the North Korean government itself has no mechanism to apply for exemption requests. The process it must follow to buy medical equipment supplies is extraordinarily convoluted. The hypothetical steps are shown in Figure 5.1 of what the Ministry of Public Health must do in order to replace a broken motherboard of an X-ray machine.

Figure 5.1 Theoretical roadmap of how the North Korean Ministry of Public Health would go about replacing a broken motherboard for an X-ray machine.

As a result of the many obstacles to the normal purchase of medical goods, the government has little choice but to utilize questionable and sometimes illicit means to procure medical supplies and parts.Footnote ⁴⁵

It is not surprising that the sanctions have had a significant effect on the DPRK’s health sector. They affect the health sector indirectly by undermining the economy as a whole and state revenues. But they also affect the health sector directly as well by delaying or preventing the importation of medical goods, and by impeding or discouraging funding for humanitarian needs. According to the Panel of Experts’ estimate in 2019, delays and lack of funding caused 229,235 people to not have access to clean drinking water (leading to diarrheal diseases). In addition, 35 wells and water systems for 61,284 people were also delayed due to sanctions.Footnote ⁴⁶ Due to medical equipment and supply delays, 150,000 pregnant women did not have access to safe delivery conditions, and 22,000 high-risk women did not have access to blood for blood transfusions.Footnote ⁴⁷ Sanctions also delayed the delivery of nine ambulances and spare parts for five ambulances involved in the distribution of TB and malaria medications and supplies.Footnote ⁴⁸ The construction of the Pyongyang General Hospital demonstrates an investment in health on the part of North Korea; however, the hospital’s opening has been delayed repeatedly because of difficulties importing equipment due to the Covid-19 border closure and sanctions-related shipping delays.Footnote ⁴⁹ Although construction began in 2020, the hospital has not yet been completed.Footnote ⁵⁰ Several NGOs have expressed concerns that prolonged sanctions have kept the health system weak, in that it is less resilient and adaptive, and is unable to effectively mitigate shocks such as the Covid-19 pandemic.Footnote ⁵¹ An analysis from Seoul National University expressed concerns that sanctions have caused unpredictability in the supply of essential medicines and equipment. This has additional consequences as well; because this is an environment lacking official regulation of the price of medicine, the unpredictable supply of medicines bolsters the marketization of healthcare practices and the unofficial health market, leading to socioeconomic disparities and unequal access to healthcare.Footnote ⁵² Researchers state, “Without additional efforts to strengthen the healthcare system in the DPRK, inadequate and unpredictable provision of essential medicines could accelerate the post-socialist transition of the healthcare system.” While there is no clear data about shortages of medications, there is reason to believe that these shortages are substantial. In a 2020 retrospective study amongst 383 DPRK defectors, it was found that 39.5 percent of participants did not seek care due to medication shortages at healthcare facilities.Footnote ⁵³ In 2019, Yoon et al. conducted a systematic literature review of 775 articles in North Korean medical journals. They found that research on drug replacements – for essential antibiotics, opioids/narcotics, and cardiovascular medications – increased after the implementation of economic sanctions in 2005.Footnote ⁵⁴ Thus, we may infer that shortages of imported medication have worsened, given the increased research into drug replacements.

The reduction in fuel has in all likelihood also affected healthcare delivery. Starting in 2017, UNSC sanctions began to ban importation of all natural gas and condensates into North Korea,Footnote ⁵⁵ with a cap of half a million barrels of refined oil products (i.e., diesel and kerosene) – a drastic reduction in prior amounts imported, and far below what is needed to support the economy and public services. This “inflection point,” from 2016 to 2017, was when UNSC sanctions effectively stopped differentiating between the civilian and the military sectors. Fuel restrictions had a profound effect on agricultural production, and while there is little direct data available, its effect on the healthcare sector must certainly be extensive, since the lack of fuel would undermine the capacity to operate a hospital, drive ambulances, and transport patients.

Health Effects of the DPRK’s Border Closure

While the sanctions have had a significant negative impact on the DPRK’s healthcare system and the health of its population, the sanctions also work in tandem with other factors. One of the most significant such factors has been the closure of the DPRK’s borders in response to the coronavirus pandemic.

Given the rates of malnutrition, the North Korean population is particularly vulnerable if a pandemic reaches its borders. In efforts to reduce the spread of Covid-19, North Korea closed its borders and imposed strict lockdown measures in early 2020, as it had successfully done before with the Ebola and SARS virus outbreaks.Footnote ⁵⁶ However, this dramatically halted trade. Virtually all shipments of medical supplies, essential medicines, food items, and personal protective equipment and other Covid-19 relief items were held up at the border, incurring additional costs for humanitarian aid agencies. Aid agencies removed all foreign personnel working in the country. In May 2022, North Korea’s Central News Agency announced that Covid-19 had entered the country with almost 5 million people having potential symptoms of the virus, and 168 testing positive out of the approximately 64,000 tested. They rejected the COVAX offer for vaccinations for unclear reasons.Footnote ⁵⁷ However, later on it appears the government performed a vaccination campaign with vaccines thought to be from China.Footnote ⁵⁸ It is widely feared that this self-imposed border closure has exacerbated a bad situation leading to humanitarian and human rights issues.Footnote ⁵⁹ The exact humanitarian situation is unknown since there are limited observers. Although the DPRK announced “victory” over the virus in August 2022,Footnote ⁶⁰ the DPRK Sanctions Committee approved a humanitarian exemption request from WHO for oxygen concentrators specifically earmarked for Covid-19 patients in critical condition.Footnote ⁶¹ According to Chinese Customs Data, imports from China into North Korea started to rebound, particularly in 2021, although it is unclear if these goods ultimately reached their final destination. The proportion of imports making up medical equipment and medicine has increased; particularly of antibiotics, vitamins, and a CT scanner; which could reflect direct purchases from the North Korean government. North Korea was able to implement a “catch-up” vaccination campaign for its children in March 2023, praised by WHO Representative for the DPRK country office Dr. Mohammed Jamsheed as “another testimony to DPR Korea’s strong leadership and governance of the national immunization program.”Footnote ⁶² However, reopening the borders alongside a firm commitment to addressing this crisis collaboratively is essential to mitigate the health impact of Covid-19 and the accompanying border closures.

Humanitarian Aid Challenges Due to Sanctions

There is little dispute that the sanctions regimes have worsened the urgent problems the DPRK is facing with regard to the basic well-being of the population. In 2022, the Panel of Experts carried out an inquiry on the effect of UN sanctions on the humanitarian sector in the DPRK. They concluded that although it is difficult to independently analyze the effects of UN sanctions, “there can be little doubt that the United Nations sanctions have unintentionally affected the humanitarian situation and the right to development, exacerbating the problems caused by the inward-looking centralized economic mismanagement by the Government of the DPRK.”Footnote ⁶³ They concluded that UN sanctions have led to a decline in currency earnings, with estimates of up to hundreds of millions of dollars lost for those individuals employed in industries impacted by sanctions or overseas work.Footnote ⁶⁴ Additionally, sanctions halt transborder financial transfers and transportation, disrupting the supply of necessities such as agricultural equipment, food, and medicine to the civilian population.Footnote ⁶⁵ Sanctions introduce high-risk legal exposure for private sector entities (including donors) and foreign economic entities, which increase costs for humanitarian work and “contributed to limiting the ability of the country [DPRK] to legally acquire humanitarian necessities and medical commodities, and the degradation of social services including healthcare.”Footnote ⁶⁶

The severity of the current crisis has made humanitarian aid particularly urgent. UN agencies and other organizations have long called for sanctions regimes to incorporate exemptions for such aid. The UN’s Inter-agency Standing Committee, for example, stated in its 1998 letter to the UNSC that “Sanctions should not impede the work of humanitarian organizations providing humanitarian assistance to the civilian population of targeted countries.”Footnote ⁶⁷ These recommendations were, in principle, put in place over twenty years ago, in response to the international community’s universal condemnation of the impact on the ordinary citizens by sanctions.

But while the humanitarian situation is extremely urgent, sanctions make it extraordinarily difficult, if not impossible, for aid organizations to feasibly work in the DPRK. This may seem surprising, as humanitarian aid is explicitly exempted in almost every multilateral or unilateral sanctions regime against the DPRK. But there has nevertheless been a considerable reduction in the flow of humanitarian aid. This can be attributed to three major factors: (1) reduction of funding for aid organizations, (2) the administrative burden on aid organizations seeking to import supplies, and (3) the lack of a banking channel that these international organizations can use. In addition, the DPRK government has not shown much flexibility in working with NGOs, and that has not helped matters.

The Administrative Burden of the Exemption Process

Once the sanctions from Resolution 2397 went into effect, the UN Panel of Experts for the DPRK estimated that sanctions delayed actual delivery of aid by nine to ten months.Footnote ⁸² There was a seven-month delay in the construction of canals against floods, and a nine-month delay in fully equipping hospitals for maternal emergencies as well as refurbishing safe shelters.Footnote ⁸³ There was a ten-month delay in equipment for those with disabilities, including wheelchairs, crutches, walking sticks, walkers, hearing aids, and glasses.Footnote ⁸⁴ In 2018, the average exemption approval took 99 days, with the slowest being 165 days for Concern Worldwide.Footnote ⁸⁵ It is worth noting that these delays were reduced dramatically with Information Assistance Notices (IAN) No. 7, adopted in April 2018, described later. However, that did not resolve the many difficulties that humanitarian organizations have faced while working in DPRK.

Almost all humanitarian aid organizations that want to work in or send aid to North Korea submit a sanctions exemption request to the UNSC’s 1718 Sanctions Committee, the committee charged with overseeing the sanctions against the DPRK. Technically, these exemption requests are not required for unsanctioned items like medications and food. However, since the list of prohibited items is extensive and the description of prohibited items can be broad – such as all metal – most organizations end up submitting requests for all items to avoid the risk of being found noncompliant. To illustrate this point, in a prior analysis done by our group, we found that UN sanctions have blocked fifty-nine total, broad categories of items.Footnote ⁸⁶ Within this group, there are nineteen categories of food and agricultural items, nineteen categories of medical items and fifteen categories of clean water items. The nineteen agricultural items included “stoves, greenhouses, irrigation, harvesting, and processing equipment.” Moreover, the nineteen medical categories of medical items included “medical sterilizers, syringes, needles, ambulances, X-ray machines, microscopes, nail clippers, UV lamps for disinfection, ambulances, ultrasound machines, respirators, reuse intravenous catheters, scalpels, gauze and gloves.” Lastly, the fifteen categories of clean-water items included “well drilling machines, filters, pumps for household water systems, water tanks, pipes, and heaters.”Footnote ⁸⁷ Aid organizations working in the DPRK, as well as the former special rapporteur Tomás Quintana on the situation of human rights in the DPRK,Footnote ⁸⁸ have long called for a “whitelist,” or a detailed list of items that are specifically exempt from sanctions and thus do not require a sanctions exemption application, or at least an explanation as to why specific items within broad sanctioned customs codes are banned.Footnote ⁸⁹

Humanitarian aid organizations have reported that compiling an application is an arduous process.Footnote ⁹⁰ These delays are the net effect of sanction-induced administrative burden and prolonged approval time, as well as logistical barriers (See Figure 5.2). In addition to detailing the project specific aims and partners, the process requires applicants to explain how they will ensure that their assistance will not be diverted for prohibited purposes.Footnote ⁹¹ They must include their import distribution plan, their strategy to evaluate diversion and what measures will be taken if diversion problems are to be uncovered.Footnote ⁹² Many of these procurement and shipping details are difficult to obtain without actually purchasing or outlining a contract with suppliers first, which proves risky if an exemption has not yet been obtained.Footnote ⁹³ The UNSC also requires an explanation of the selection criteria for the organization’s specific beneficiaries within the DPRK and a detailed description of the exact specification, purpose, and designated recipient of every item being transported into the country, as well as all parties involved in transportation and all financial transactions.Footnote ⁹⁴ Any changes must be approved by the UNSC before implementation. Organizations from member states face the additional barrier of having to apply directly to their government, which will then submit an application to the UNSC on their behalf (more options were introduced in the IAN 7).

Figure 5.2 Barriers faced by humanitarian aid organizations working in North Korea.

Source: Adapted from a figure published by Kate Parsons, the Mennonite Central Committee Representative.

After the application is submitted, the UNSC 1718 Sanctions Committee must then review and approve requests. This process can take time. In addition, the committee operates by consensus, meaning that any single member state can reject an exemption request. Given that there are no set criteria for what is considered humanitarian material, requests can be rejected on arbitrary reasoning. Once approved, exemptions become invalid if there are “any changes to planned suppliers, shipping routes, item specifications or quantities,” thus increasing processing times even further.Footnote ⁹⁵

Even if the exemption application is approved in a timely manner, the humanitarian organization faces further logistical challenges. American organizations have the added burden of having to seek licenses from the U.S. Department of the Treasury and U.S. Department of Commerce, a process which lacks transparency and results in additional paperwork and delays. In periods without a travel ban, all American humanitarian aid workers would also have to apply for new special validation passports every time they travel to North Korea.Footnote ⁹⁶ As of September 2021, American aid workers can apply for a multi-visit passport good for up to one year only.Footnote ⁹⁷ The issuance of these passports is not guaranteed, and they have been denied in the past without explanation.

Even before the pandemic-era border closure, shipping to North Korea was a complex process, and there was often a delay at Chinese customs, where goods are often barred, even if UNSC exemption approval documents are provided.Footnote ⁹⁸ Shipping delays are one of the most frequently cited challenges by NGOs working with the DPRK, now mostly due to the DPRK-imposed border closure.Footnote ⁹⁹ These delays and barriers have had consequences. Several NGOs report increased costs due to customs delays and hesitancy on part of suppliers to deal with the complicated and uncertain logistics and regulations, which in turn have caused donors to withdraw support.Footnote ¹⁰⁰ In 2017, the NGO Save the Children left North Korea because it said sanctions had made it too difficult to operate,Footnote ¹⁰¹ thereby leaving a gap of $3.5 million in required funding. In 2022, an NGO reported to the Panel of Experts that it could not procure pipes to build greenhouses due to delays in deliveries, which were estimated to have affected 30,000–45,000 beneficiaries, mostly children.Footnote ¹⁰² Even if goods and equipment do make it into the country, humanitarian organizations may face ongoing challenges for day-to-day operations. For example, one anonymous NGO admitted to using a blacklisted company, the Korean National Insurance Company,Footnote ¹⁰³ for its vehicle insurance out of necessity, as this is the only authorized insurance company in the country.Footnote ¹⁰⁴

IAN No. 7 and Other Strategies to Mitigate the Humanitarian Impacts of Sanctions

The UNSC issued a series of IANs in response to concerns by humanitarian organizations. IAN No. 7, issued on April 6, 2018, streamlined the approval process. It allowed certain organizations to submit requests directly to the Office of the UN Resident Coordinator to the DPRK or to the Secretary of the 1718 Sanctions Committee: UN agencies, International Committee of the Red Cross (ICRC), International Federation of the Red Cross and Red Crescent Societies, the International Olympic Committee, or an organization that had received two or more exemptions during the preceding eighteen months. Other organizations could submit requests directly in cases of urgent humanitarian crisis (such as Covid-19).Footnote ¹⁰⁵ Organizations in member state countries are still encouraged to submit to their home countries, and a specific justification is required if they do otherwise.Footnote ¹⁰⁶ This adds bureaucratic barriers in licensing and approval requirements within their own home country for humanitarian organizations based in member states.

There have been various attempts at streamlining these processes. In the US, Senate Bill S. 690, “Enhancing North Korea Humanitarian Assistance Act,”Footnote ¹⁰⁷ attempted to increase the range of humanitarian items that fall under general licensing from the US OFAC, rather than requiring special and separate licensing. In pandemic-era mid 2021, there were nineteen active UNSC exemption approvals, eight of which were from five different countries on behalf of their own organizations, three were directly from NGOs (two American and one Singaporean), three were from large international humanitarian organizations, and four were from UN organizations (UNICEF, UNFPA). The exemption expiration date was extended from six to nine months, and provisions were made for case-by-case “exemptions from exemption” after review by the UNSC in order to speed up the processing time.Footnote ¹⁰⁸ The Panel of Experts had recommended that responses to requests be time-bound, and that the 1718 Committee should meet on a regular basis to process exemption requests, publish a whitelist, seek feedback, and work to streamline and simplify the exemption application process.Footnote ¹⁰⁹

Furthermore, during the Covid-19 pandemic, IAN No. 7 was updated to mandate a two-day decision-making process for Covid-19-related humanitarian assistance.Footnote ¹¹⁰ The 1718 Sanctions Committee also started granting exemption extensions for up to one year,Footnote ¹¹¹ and even up to eighteen months.Footnote ¹¹² This flexibility on the part of the UN Sanctions Committee has largely been praised by aid organizations working in the DPRK.Footnote ¹¹³

The streamlining was effective in speeding up the approval process, with a reported 71 percent reduction in exemption approval time in the 2019 reporting period (average 15 days).Footnote ¹¹⁴ Humanitarian exemption approvals increased by 137.5 percent (16 approvals in 2018 to 38 approvals in 2019).Footnote ¹¹⁵ However, challenges still remain for humanitarian organizations, including rigid reporting criteria for technical specifications on planned shipments; and organizations are still required to make frequent submissions of additional documentation.Footnote ¹¹⁶ In addition, the sanctions may combine with other factors to worsen the environment for humanitarian operations. For example, the organizations, countries, and UN agencies that received pandemic-era exemption approvals were not allowed to work in North Korea for many months due to North Korea’s border closure. As a result, some humanitarian approvals then expired, requiring the organizations to reapply, if they still wanted to move forward with their projects.

As mentioned previously, these organizations are also subject to the bureaucratic barriers in licensing and approval requirements within their own host member states. These processes as well may be extremely burdensome and expensive, diverting resources from humanitarian operations. The Panel of Expert’s 2022 report noted that, according to one NGO, “The legal expertise required to understand the information involved in the sanction mechanisms and the absence of a direct channel for resident INGOs to communicate with the UNSC Sanctions Committee has, on some occasions proven detrimental to other tasks and responsibilities.”Footnote ¹¹⁷

In December 2022, the UNSC passed Resolution 2664,Footnote ¹¹⁸ proposed by the US and Ireland. This resolution is an attempt to give humanitarian organizations more flexibility in their activities in sanctioned countries by authorizing a broad exemption for their activities. This even permits organizations to engage with entities on list of designated entities, whose assets are frozen, if this engagement is related to the organization’s humanitarian work. This was largely praised by the humanitarian community as a step in the right direction, with the expectation that it will save much needed bureaucratic time in response to crises, and reduce the chance that humanitarian aid workers may be subject to criminal prosecution for their aid activities.Footnote ¹¹⁹ Thus, Resolution 2664’s aim is to create an environment where aid providers do not have to submit a request to the UN sanctions committee before acting.Footnote ¹²⁰ IAN No. 7 was updated to reflect Resolution 2664.Footnote ¹²¹

It is yet to be seen how this resolution will be operationalized in the real world. In the case of the DPRK, sanctions requests are still being submitted to the North Korea Sanctions Committee, suggesting that aid organizations may find the new general licenses unclear. In addition, unilateral sanctions regimes do not always correspond to the UNSC procedures. For example, in conjunction with this resolution, the Biden administration issued or amended general licenses related to specific sanction regimes, but this did not include the DPRK.Footnote ¹²² Technically, the US’s DPRK sanctions regime has a general license built in for humanitarian efforts already. But it is limited; NGOs must still obtain specific licenses from OFAC if they need to work with the DPRK government or other blocked persons in order to provide services.Footnote ¹²³

In addition, several official entities such as the Panel of Experts,Footnote ¹²⁴ the UN Special Rapporteur on human rights in North Korea,Footnote ¹²⁵ and the recent Resolution 2664 have called for the UN to carry out a formal assessment of the humanitarian impact of sanctions in the DPRK. This has yet to be accomplished in a formal manner.

Effects of US Sanctions on Banking

Besides the traditional trade embargos and interdictions, financial sanctions represent one of the powerful ways that the US can economically pressure North Korea.Footnote ¹²⁷ The US is in a singular position of power, given the role of the US dollar in the international financial system. This in turn gives the US the leverage to apply pressure on third party institutions that interact financially with North Korea.Footnote ¹²⁸ In 2002, the US formed the Illicit Activities Initiative (IAI),Footnote ¹²⁹ which gave the U.S. Treasury Department and law enforcement the authority to crack down on North Korea’s illicit financial practices, including in countries outside the US. The US Treasury then seized money from the Banco Delta Asia (BDA), based in Macau, under the Patriot Act,Footnote ¹³⁰ sending the clear message that even foreign banks will be ultimately held responsible for their activities that violate US sanctions. This triggered a series of actions by banks and banking authorities around the world. Following this BDA sanction, the Macau monetary authority froze $25 million linked to North Korean accounts.Footnote ¹³¹ Dozens of banks in Asia and Europe began to limit or shut off accounts with North Korea. US law authorizes the seizure of a bank’s assets – including foreign banks – if they are found to have defied US sanctions.Footnote ¹³² The Obama administration placed additional financial sanctions through executive orders on North Korean banking institutions themselves, including the main North Korean bank for international transactions – the Foreign Trade Bank.Footnote ¹³³ Even if banking is done for humanitarian purposes only, as one senior Treasury Department official stated, “the line between North Korea’s licit and illicit money is nearly invisible,” so the “US Government is urging financial institutions around the world to think carefully about the risks of doing any North Korea-related businesses.”Footnote ¹³⁴ The advent of clandestine cryptocurrency schemes, even recently involving a North Korean Foreign Trade Bank representative, has created an even greater wariness on the part of banks to engage in any transactions involving DPRK.Footnote ¹³⁵

Effects of UNSC Sanctions on Banking

While the US sanctions, following the BDA incident, created an immediate chilling effect throughout the banking world in regard to DPRK, the UNSC sanctions followed a more gradual progression. The UNSC started by banning banking activities only if they were related to nuclear or ballistic missile programs or other prohibited activities. Then the UNSC began prohibiting any new banking activities, regardless of relation to the nuclear program. Finally, it banned any and all new or existing banking activities, no matter the circumstance. For example, in 2013, UNSC Resolution 2094 called upon states to take “appropriate measures” to prohibit DPRK banks from opening new branches, subsidiaries, offices, or participate in joint ventures or relationships if there are reasonable grounds to believe they are involved with prohibited activities.Footnote ¹³⁶ In 2016, Resolution 2270 went one step further by prohibiting these financial transactions, unless approved by the UNSC’s 1718 Committee in advance, regardless of whether or not there is concern of prohibited activities.Footnote ¹³⁷ Analogously, UNSC Resolution 2094 prohibited foreign financial institutions from opening up new offices, subsidiaries, or bank accounts in the DPRK, only if there is reasonable suspicion that these financial services are contributing to prohibited activities.Footnote ¹³⁸ Resolution 2270 then went on to ban existing offices, subsidiaries, and bank accounts with suspicion for prohibited activities, unless the 1718 Committee on a case-by-case basis decides that the “offices, subsidiaries, or accounts are required for the delivery of humanitarian assistance or the activities of diplomatic missions in the DPRK.”Footnote ¹³⁹ All new banking activities are also banned according to paragraph 34, regardless of association with nuclear or other prohibited activity. In 2016, Resolution 2321 finally bans all banking activity, no matter what type, unless for humanitarian assistance (approved case by case).Footnote ¹⁴⁰

Attempts to Create Banking Channels

In August 2016, the UNSC approved an exemption for the Sputnik Bank of Russia in accordance with Resolution 2270’s exemption clause,Footnote ¹⁴¹ to facilitate financial transactions with DPRK for humanitarian and other legal purposes. This established a banking channel whereby funds originating in the UN would first be transferred to the German Commerzbank, then to the Sputnik Bank of Russia, ending with the Foreign Trade Bank (FTB) of DPRK.Footnote ¹⁴² In September 2017, the aforementioned banking channel fell apart when Commerzbank decided it did not want to participate, due to the risk that it might inadvertently violate the sanctions on North Korea.Footnote ¹⁴³ To this date, no bank has stepped up to take Commerzbank’s place as the liaison between the UN and Sputnik Bank. Since then, there have only been a few attempts at transferring money to international agencies working in North Korea. For example, the UN proposed that the DPRK, instead of sending its membership dues to the UN headquarters in New York, could send it directly to the Sputnik Bank, which still holds a sanctions exemption. At least two transfers were successfully completed using this channel, but questions remain about its long term viability.Footnote ¹⁴⁴

In October 2022, the UN performed a one-time transfer of funds valued at $1 million to the UN Federal Credit Union account of the permanent mission of the DPRK in New York, which was then transferred to bank accounts held by UN agencies and the WHO with the Foreign Trade Bank in North Korea, to be used for humanitarian purposes.Footnote ¹⁴⁵ This was mostly to pay outstanding debts by humanitarian aid organizations for their ground operational costs; no foreigner has been able to enter the country with cash since early 2020, so humanitarian organizations were not able to pay for their operational costs in the country.Footnote ¹⁴⁶ There was much skepticism as to whether the funds would go to the intended locations, since no UN personnel were in-country to directly monitor the transactions.Footnote ¹⁴⁷ However, the fact that this transfer took place suggests that this might be a viable means for humanitarian organizations to conduct financial transfers necessary for their in-country work.

Thus, the absence of a reliable banking channel is partly due to the direct strictures of sanctions regimes, both UN sanctions and unilateral sanctions. But it is also due to the secondary impact, whereby the severe enforcement of sanctions measures, as seen in the BDA case, creates a concern within the banking community that even an inadvertent violation may be very costly to them. They determine that it is not worth the risk to engage at all with the DPRK, even for legal humanitarian purposes; thus Commerzbank withdraws and finding a Western bank to replace it has proved to be effectively impossible.

The inability to engage in regular financial transactions through reliable means has significantly affected the work of NGOs in DPRK. For example, since 2017, staff of some international organizations, including humanitarian aid workers, have physically carried cash for the organization with them into North Korea – a risky practice for all concerned.Footnote ¹⁴⁸ In 2019, the lack of banking channels caused the Finnish NGO, Fida International, to end a two decade-long relationship with North Korea.Footnote ¹⁴⁹ With the end of this partnership, vulnerable communities in North Korea lost an annual investment of €414,000 for various food security and healthcare projects. According to the 2022 Panel of Expert’s report, one NGO reported that due to lack of cash in-country (due to the lack of a banking channel) and the Covid-19 border closure, their operational capacity is severely diminished, with over 60 percent of their budget allocations remaining underutilized.Footnote ¹⁵⁰

There are other examples as well of situations where NGOs either reduced their activities in the DPRK or withdrew altogether due to the lack of a banking channel, and sometimes then found themselves facing legal difficulties as well. A New Zealand NGO, New Zealand–DPRK Friendship Society, tried to donate $2,000 to the Red Cross Society in North Korea to buy personal protective equipment for North Korean healthcare workers. The NGO went through an intermediary in Indonesia, which transferred the cash to the North Korean embassy. However, this sparked an investigation because the donation was then flagged as a potential sanctions violation.Footnote ¹⁵¹

Thus, both the US and UNSC sanctions have made it extremely difficult for even UN agencies to conduct the fund transfers needed for humanitarian operations, let alone NGOs. In addition to the direct prohibitions and regulations, there is also a chilling effect, in which international commercial banks like Commerzbank withdraw or refuse to offer financial services, even though they may be permitted to operate; but the fear of inadvertent error and severe penalties drive them to avoid any engagement with the DPRK. Even though there have been efforts of various sorts to establish a banking channel, those have generally not succeeded or not been adequate; and humanitarian organizations find themselves in an untenable position, where they may resort to measures such as carrying cash into the country in person, to meet the needs of the populations they are serving. This relies on the ability for a foreigner to be able to enter into the country, which was not possible during the Covid-19 pandemic and other such times of instability, thus making this an unsustainable solution. The banking channel is cited as one of the largest concerns and barriers for humanitarian organizations currently working in the DPRK.Footnote ¹⁵²

North Korea’s Inflexibility in Working with International Organizations

There are also certain aspects and policies of the North Korean government that undermine the impact of humanitarian aid delivery, regardless of sanctions. North Korea is a highly securitized country; therefore, working with North Korea presents unique challenges. For example, communications with counterpart organizations are severely restricted and often need to go through someone at one of the DPRK missions or embassies. In addition, in-country activities require multiple layers of pre-approval and spontaneity is virtually impossible. Thus, overall, the North Korean government has in some circumstances been slow or inefficient at mitigating the harm done by the sanctions. Given the landscape, decisions on the parts of both international organizations and North Korea are often political, with North Korea prioritizing self-reliance. This ideology is echoed in multiple sectors. In health, for example, there is an emphasis on drug development and manufacturing within the country; and in defense, the continuation of the nuclear program is justified as self-preservation. This ideology also can be seen in the border closure due to Covid-19. The Covid-19 border closure imposed by the DPRK exacerbated already poor conditions causing a likely humanitarian crisis in the DPRK. The sanctions and the ensuing isolation have not changed this ideology, but have instead reinforced it.

There is no doubt that the responsibility of this current humanitarian crisis in North Korea is shared by both sanctions and the decisions and policies imposed by the government of DPRK. This is evident in the many barriers confronting international organizations in their efforts to assist the North Koreans. Regardless of what proportion each of these components contributed, both the international community and North Korea need to come together to resolve the humanitarian crisis.

Conclusion

If we look at the rationale for imposing sanctions on the DPRK – the nuclear program and human rights violations – it is hard to see any real success. North Korea’s nuclear program continues unabated, and human rights violations by the government continue as well. To the extent that the state has improved its human rights record, it has done so not in response to the unilateral sanctions imposed for this reason, but rather in response to bodies such as the UNHRC. In addition, it should not be forgotten that economic rights, such as the rights to food and health, are human rights as well; and by any account, the sanctions imposed on the DPRK have negatively affected these.

But if the success of the sanctions in terms of their stated objectives is questionable, there are other effects of sanctions that are indisputable. The UNSC and other sanctions regimes have certainly disrupted the economy and affected the government’s ability to function. The sanctions explicitly target key sectors of the economy. This affects the state’s ability to fund and deliver healthcare; and other consequences of the sanctions, such as the lack of fuel, then further impede access to nutrition and healthcare.

While there were significant improvements in public health indicators from about 2000 to 2018 – child malnutrition declined, as did maternal mortality, infant mortality, and fatalities from malaria and TB – these positive developments have been undermined as sanctions have been tightened. This is partly due to the broader impact of sanctions on the economy and the state, including access to medical imports. But more specifically, humanitarian aid from the UN and from international aid organizations has played a significant role in meeting needs for nutrition and healthcare, and this aid was severely compromised by the increasing strictures presented by the sanctions. While there are, in principle, humanitarian exemptions, those have not at all been sufficient to allow humanitarian organizations to provide the quantity of aid that is needed, or the specific goods that are required. As the sanctions tightened, maintaining normal operations and accessing humanitarian exemptions have entailed such extensive administrative burdens, financial costs, and legal risks that humanitarian organizations supporting vulnerable populations within DPRK have, in many cases, been compelled to withdraw from the DPRK or to reduce their presence. Because sanctions have targeted the DPRK’s access to the international banking system, it has been virtually impossible for UN agencies and other humanitarian organizations to conduct the financial transfers needed for their operations.

Certainly other factors have complicated the situation: The DPRK has not been particularly flexible in dealing with aid organizations, and the border closures due to the Covid-19 pandemic interfered greatly in the ability of aid organizations to work in North Korea. But there is no question that the sanctions regimes on North Korea are having a profound impact on the health of ordinary people of North Korea and the delivery of humanitarian aid to them. These “unintended” yet real consequences are unethical, morally problematic, and inhumane. These sanctions must be modified immediately to allow the North Korean government to care for its people and to ensure necessary humanitarian aid reaches the most vulnerable populations of the DPRK. The international humanitarian community should never have to ask permission to help those in need.

Following the disastrous effects of the UNSC sanctions regime on Iraq in the 1990s, the academic literature on sanctions has since seen a shift from a narrow emphasis on the “efficacy” of sanctions toward an increased concern with their humanitarian impacts.Footnote ¹ Recognizing that sanctions are likely to have differential impacts on targeted societies, a number of scholars have examined the gendered impact of sanctions, utilizing both quantitative large-N methodologies as well as in-depth country studies.Footnote ² This chapter examines the gendered structure and impact of sanctions on the DPRK, with particular attention to the sanctions imposed by the UNSC amidst the unresolved tensions surrounding Pyongyang’s nuclear weapons and missile program. Indeed, the gendered impact of sanctions on North Korea have largely been neglected in the literature, despite the fact that the country has been subject to sanctions for most of its existence and that the UNSC resolutions passed from 2017 onwards constitute one of the most stringent international sanctions regime in the world today.

No doubt this neglect reflects the difficulty of access to the country and the resultant paucity of substantive data. Furthermore, consistent and reliable gender-disaggregated data is lacking. Nonetheless, key macroeconomic and socioeconomic indicators – provided by national census studies on differential impacts on the population and by UN agencies such as UNICEF on maternal and reproductive health, along with reporting by humanitarian organizations and media outlets – do present a preliminary picture of the gendered impact of sanctions. We begin by examining the history and development of the sanctions regime and its impact on the sectors of the North Korean economy that have been primary employers of women, such as textiles and cross-border trade. We also examine how the impact of sanctions, particularly those imposed by the UNSC, is mediated through the gendered transformation of the North Korean economy since the crisis of the 1990s, whereby marketization has come to play an increasingly central role in social reproduction. As we argue, UN sanctions have served to intensify the burden on women’s role as primary earners by undermining employment and constraining marketized activities. There are secondary consequences as well, whereby women are made to take on additional caretaking work in the home and the community, as an indirect result of the sanctions. Rather than focusing on the efficacy or legality of sanctions as in most sanctions literature, we argue that the North Korean case demonstrates the unrecognized ways in which sanctions can have ripple effects far beyond their intended “target” – unrecognized precisely because debates about sanctions as a form of statecraft often preclude an examination of the kind of gendered violence enacted by sanctions on daily life.

The History of Sanctions and Their Economic Impact

The sanctions regime on North Korea is one of the oldest in the world, beginning with the outbreak of the Korean War in 1950, just two years after the state’s foundation. The war played a key role in establishing the hostile relationship between North Korea and the US, as well as in laying the basis for North Korean ambivalence toward the UN. The UN Command under US leadership intervened in what began as a Korean civil conflict “to restore peace,” only to wage a “scorched-earth” campaign throughout the three-year international war, destroying an estimated 75 percent of North Korean cities and industries.Footnote ³ Thereafter, in violation of Article 2 paragraph 13d of the 1953 armistice prohibiting the introduction of new weapons (except to replace existing ones) into the peninsula, the US deployed nuclear weapons to South Korea between 1958 and 1991.Footnote ⁴ Without a peace settlement to replace the ceasefire agreement, the Korean peninsula technically remained in a state of war. By the 1990s, North Korea had embarked in earnest on its nuclear weapons program as a national security initiative when it could no longer count on Soviet support following the end of the Cold War. This history of the Korean War and the Cold War that has led to the current sanctions stalemate thus makes clear why sanctions have failed to curb the North Korean nuclear weapons program and are unlikely to do so.

Within days of the outbreak of war, comprehensive US unilateral sanctions involved a complete embargo on US exports to North Korea.Footnote ⁵ As with sanctions regimes imposed on other state socialist countries, North Korea was thereafter denied credit or other financing programs, normal trade relations, and non-humanitarian assistance from the West.Footnote ⁶ North Korea’s external trading relations were therefore mostly oriented toward its socialist allies, and in particular, toward the Soviet Union, with the exception of a short-lived expansion of trade with Western Europe and Japan in the 1970s. Much like the case of Cuba, North Korea’s position within the socialist trading bloc meant that US unilateral sanctions had a relatively limited impact on the country’s overall development before the fall of the Soviet Union.Footnote ⁷ But the collapse of the Soviet Union in the early 1990s led to an abrupt end to the favorable trading relations North Korea had with the bloc and led to a severe economic crisis and famine that culminated in the deaths of up to 5 percent of the population.Footnote ⁸ As the economy began to recover by the turn of the century, North Korea was able to increase its external trade with its immediate neighbors of South Korea, China, and Japan. However, the deepening crisis surrounding North Korea’s weapons program subsequently led to a virtual standstill in trade with Japan and South Korea, as they imposed their own unilateral sanctions on North Korea. Still, the sharp drop in this trade was initially more than offset by North Korea’s burgeoning trade with China. By 2018, China accounted for 95 percent of North Korea’s external trade.Footnote ⁹

Some restrictions related to trade and travel had eased with the end of the Cold War. In particular, the 1994 Agreed Framework had led to a suspension of North Korea’s nascent nuclear weapons program in exchange for the promise of normalized diplomatic relations and an agreement by Washington to support the development of Pyongyang’s domestic energy infrastructure. Nonetheless, sanctions related to anti-terrorism and nonproliferation stayed in place, which meant that North Korea remained under heavy restrictions and was effectively unable to apply for membership in global financial institutions such as the World Bank and the IMF, given the US opposition, and its disproportionate influence due to weighted voting.Footnote ¹⁰ Following the resumption of Pyongyang’s nuclear weapons program in the early 2000s, the US imposed yet stricter sanctions. Financial measures, such as the designation of financial institutions servicing North Korean customers as “money laundering concerns” under Section 301 of the Patriot Act, served to isolate North Korea from the dollar-based international financial system, while “secondary sanctions” targeted persons and entities in third countries that had dealings with the country.Footnote ¹¹ Such measures have considerably narrowed the scope of North Korea’s legitimate exchange with the world economy. Humanitarian operations by NGOs and international organizations have also been hindered by the absence of banking channels and the cumbersome exemptions process required under the existing sanctions regime.Footnote ¹² With regards to the broader impact on the country’s economy, however, North Korea was until 2017 largely able to offset US sanctions through trading relations with its closer Northeast Asian neighbors, namely China, South Korea, and Japan.

The booming Chinese economy played a key role in North Korea’s post-1990s recovery and reflected China’s demand for North Korean mineral exports as well as the country’s integration into China-centered regional production networks. This process of steady economic recovery coincided with the imposition of UN collective sanctions following Pyongyang’s first nuclear test in 2006. Over the following decade, the sanctions passed under UNSC Resolutions 1695, 1718, 1874, 2087, and 2094 failed to exert any discernible macroeconomic shocks on the North Korean economy. This was largely for two reasons. First, the sanctions took the form of so-called “smart sanctions.”Footnote ¹³ These were designed to prevent the transfer of weapons and weapons-related material, but also sought to target North Korean elites by prohibiting the export of luxury goods to the country and placing travel bans on key figures associated with the weapons program. The sanctions also included a ban on new grants, financial assistance, or concessional loans to North Korea, though with exemptions for “humanitarian and developmental purposes.”Footnote ¹⁴ The sanctions did not at this time include bans on the economic sectors that were driving North Korea’s recovery and tentative growth, such as minerals, textiles, and seafood exports. The second reason for the failure of targeted sanctions to have a significant economic impact was that due to North Korea’s traditional role as both ally and as geopolitical buffer state vis-à-vis US-allied South Korea, China had little inclination to strictly enforce the sanctions, and thereby played the role of “black knight.” Furthermore, the porous nature of the Sino-Korean border meant that traders in the region were able to make use of informal cash-based methods of trade settlement as well as illicit techniques such as the misreporting of customs declarations. North Korea was thereby able to evade the increasingly stringent unilateral and multilateral financial sanctions.Footnote ¹⁵ In short, the sanctions that might have exerted pressure on the North Korean economy were weakly enforced, and their lack of efficacy confirmed the general pessimism toward “smart sanctions” in the literature.Footnote ¹⁶

From 2017, however, paralleling the onset of the “maximum pressure” strategy of the first Trump administration, UN sanctions were expanded to target the broader North Korean economy. Amongst other measures, UN Resolutions 2270, 2321, 2371, 2375, and 2397 imposed blanket bans on North Korean exports of minerals, seafood, and textiles. In addition, they placed limits on exports to the country of crude oil and petroleum and imposed a ban on the dispatch of North Korean workers overseas, while mandating the repatriation of existing dispatched workers by the end of 2019.Footnote ¹⁷ Despite efforts to improve the design and implementation of targeted UN sanctions with standardized humanitarian exemptions, these ostensibly “targeted sanctions” actually covered such a wide range of sectors that they amounted to a near total economic blockade. Moreover, in contrast to the resolutions of the past, these new stricter sanctions were proactively enforced by China as a result of both Beijing’s increasing impatience with North Korea’s nuclear weapons program, as well as US secondary sanctions aimed at Chinese companies and financial institutions suspected of evading sanctions. As a result, from 2017, UNSC sanctions exerted a sizable macroeconomic shock on the North Korean economy, with North Korean exports to China dropping by 88.2 percent in 2018, and imports declining by 29.9 percent.Footnote ¹⁸ Hundreds of Chinese joint ventures were required to close by the end of 2017, and even those remaining had difficulty operating without the ability to import the necessary materials.

The DPRK has by no means remained passive in the face of sanctions. Recent years have seen a shift from the early Kim Jong Un-era policy of establishing foreign investment zones and decentralizing decision-making rights for state-owned enterprises, toward a reassertion of the role of the state in the economy, alongside increased efforts at import substitution as part of a broader strategy of economic self-sufficiency. Beginning in 2015, Kim Jong Un began to speak of the need to counter what he saw as the “import disease” (suippyŏng), referring to the heavy dependence on Chinese imports in terms of both capital and consumer goods. As sanctions have tightened, the emphasis on domestic production has increased.Footnote ¹⁹ Despite the lack of concrete data to evaluate the success of such efforts, at the very least, there are grounds for skepticism as to whether such efforts at “self-sufficiency” can address the pressures exerted by UN and multilateral sanctions, and Kim Jong Un’s admission in 2021 of the failure of North Korea’s Five-Year Strategy (2016–2020) suggests continued economic challenges.Footnote ²⁰ Indeed, any strategy of import substitution is likely to remain dependent on the import of capital goods and technology and thus the prospects of success seem remote. As such, UN sanctions imposed after 2017 have placed considerable pressure on the North Korean economy.

The Gendered Impact of Sanctions

Given this overall effect, it is likely that UN sanctions have had a broad and disproportionate impact on women’s livelihood in North Korea, as suggested more broadly by cross-country quantitative research. Drury and Peksen argue “women will feel the cost of sanctions most due to their more vulnerable status in the economy.”Footnote ²¹ Women are usually the first to be laid off in times of economic stress, and in the case of North Korea, their positions are especially disrupted by sanctions due to the targeting of export-oriented industries such as textiles in which women tend to dominate.

In the formal sector, although women make up almost half (47.8 percent) of the workforce, economic sectors are segregated by gender, with women dominating several of those most affected by the sanctions regime, such as health and welfare services, fisheries, and textiles. The country’s integration into cross-border production networks, particularly in the apparel sector, which is dominated by women, had been an important part of the post-1990s crisis recovery. The 2008 national census recorded 399,011 workers in the clothing industry, with women accounting for 86 percent of all workers in the sector.Footnote ²² Yet this was well before the expansion of cross-border trade and the growth of consignment-based processing in North Korea, and as such, the total number of female employees in the sector is likely to have grown significantly thereafter, although reliable data on this is not available. On the one hand, the outsourcing of apparel production to North Korea was initially concentrated at the inter-Korean Kaesong Industrial Complex close to the border with the South. Seoul’s closure of the complex in 2016 led to the dismissal of 50,000 female workers, thereby likely having a significant negative impact on the local economy. From the early 2010s, however, Chinese enterprises also outsourced production to North Korea. The sectoral ban on North Korean textile exports led to a decline of 99.5 percent in textile exports, from $585 million to $3.2 million.Footnote ²³ Though there is some scope for previously exported apparel to be redirected toward the domestic market, this is likely to be limited given the decline in the purchasing power of North Korean consumers. As a result, sanctions on North Korean textile exports are likely to have had a significant negative impact on women’s employment and livelihood.Footnote ²⁴

The gendered impact of UN sanctions has been intensified by the socio-economic transformations that have taken place since the 1990s. As with other socialist states, North Korea had originally been established upon the basis of formal equal rights for women and men, as enshrined in the Law of Equal Rights for Men and Women (also known as the Equal Rights Law or Gender Equality Law) passed in 1946. This law declared equal economic, cultural, social, and political rights, including the freedom of marriage and divorce and the abolition of prostitution and concubinage.Footnote ²⁵ As North Korea embarked upon its program of economic recovery and catch-up industrialization following the Korean War, women were encouraged to enter the workplace, though there was a distinctly gendered employment structure with men largely employed in heavy industries and women in light industry and the service sector.Footnote ²⁶

Women’s employment was facilitated by the socialization of reproductive work that served to lighten the burden on women’s domestic labor through, for example, the public provision of nurseries, kindergartens, laundries, and canteens, thereby serving to relieve working women of the “double burden” of family duties and employment.Footnote ²⁷ On paper at least, this concern with gender equality has continued. The 2010 Law on the Protection and Promotion of the Rights of Women specifically targeted issues of discrimination and entrenched gender stereotypes to promote the advancement of women – including rural women – in public life, education, employment, and healthcare access.Footnote ²⁸ Through this law as well as labor protection laws, women were formally guaranteed paid maternity leave, childcare and nursing breaks during work, public laundries, and communal kitchens.

With the economic collapse of the 1990s, however, the state cut provisions of welfare, thereby increasing the care burden on women. The Public Distribution System, which provided basic food to some 60–70 percent of the population, collapsed by 1996, forcing women to turn to other means to provide for their families.Footnote ²⁹ As women lost their jobs in the state sector, they turned toward informal market activities by selling handicrafts or consumer goods acquired through cross-border trade with China. Meanwhile, men, as heads of household, were expected to continue to hold their jobs in official workplaces. Thus, another gendered division of labor emerged whereby men had to turn up for work in state-owned enterprises or the state bureaucracy, often for minimal or nonexistent pay, while women engaged in market activities. At the same time, even though women were increasingly engaged in market activities to support their families, they were still subject to gendered norms regarding family responsibilities. Because of the reductions in state welfare programs, “women’s work” included socially reproductive labor, such as caring for children or elderly parents, or within the community, working as nurses or teachers.

Differences of opinion exist as to the extent to which the process of marketization led to an improvement in the socio-economic status of women in North Korean society.Footnote ³⁰ On the one hand, marketization has indeed led to the emergence of a small but influential entrepreneurial class known as the donju (literally, money-masters), among whom women are a majority. However, focusing solely on this group risks neglecting the fact that with the onset of marketization, there has been increasing economic inequality.Footnote ³¹ As elsewhere, women are by no means a homogenous group in North Korea, and the process of marketization has been one of increasing divergence of experiences.

For women who remained in state employment, discriminatory practices were prevalent, despite the formal legal protections. Surveys carried out by DPRK’s National Committee for Implementing International Human Rights Treaties in the years leading up to its periodic review in 2017 on the status of women in local government and other institutions found a number of discriminatory hiring and employment practices. One such practice was that women were transferred against their wishes while they were on maternity leave.Footnote ³² Furthermore, when women lost their formal employment, they were likely to turn to the informal sector, such as illegal black markets, cross-border trade, and prostitution, or were trafficked into forced marriage or sex work. Those involved in illegal market activities were thereby more likely to be arrested for “economic crimes,” and large numbers of women had to face predatory officials and the penal system.Footnote ³³ In addition, women made up the majority of those who chose to leave the country, and often became victims of trafficking and sexual violence. Several human rights reports noted problems of sexual violence and harassment, domestic violence, and sexual trafficking, as well as cases where state officials forced repatriated women to obtain abortions.Footnote ³⁴ As the stringent multilateral and collective sanctions regime closed off opportunities for formal trade with China, as well as permits for overseas workers, cross-border traders are at increased risk of being trafficked, blurring distinctions between voluntary and forced migration. In the last 2017 periodic review by the UN Committee on the Elimination of All Forms of Discrimination against Women, the DPRK reported that 6,473 women returned to the country after being trafficked or travelling abroad without permits between 2005 and 2016.Footnote ³⁵ While the absolute number may seem proportionally small, this is a significant acknowledgment by the North Korean government of “illegal” travel resulting from economic hardship, since all unofficial travel is strictly prohibited. Thus, the increase in women’s personal freedoms and responsibilities that came with marketization did not on the whole lead to substantial improvement in their social or political status, and indeed, many women remained on the margins of poverty and food insecurity.Footnote ³⁶

While the sanctions resulted in the increase of the informal sector and markets, the strengthening of multilateral and collective sanctions also had a marked impact on their vitality, thereby posing considerable challenges to women’s role as primary earners and caregivers. Reports suggest that the strengthened sanctions led to a sharp reduction in the number of merchants and items available for purchase, even in the capital Pyongyang. In the city’s marketplaces, the scope of available goods was largely reduced to food and beverages rather than the broader range of consumer goods that had been available in the past. Meanwhile, as the economy slowed, there was also a decline in the public’s purchasing power in the markets.Footnote ³⁷ The price of real estate also saw a sharp drop, with apartment prices in the city of Pyongsong, for example, falling by 50 percent during 2019 compared with the previous year. As a result, the construction sector saw declining levels of investment by the donju.Footnote ³⁸ At the same time, surveys of refugees who left North Korea in 2019 found that alongside the absolute decline in the scope of market activities, households’ participation in the official economy had fallen to 71.6 percent, the lowest rate since the survey began in 2012. This is suggestive of the negative impacts that the sanctions have had on the ability of the state-owned enterprises to pay wages to their workers: The enterprises became increasingly reliant on the market and cross-border trade for investment funds and materials, and for sales of output after the 1990s, and as the sanctions impeded cross-border trade, these enterprises foundered.Footnote ³⁹ By extension, their decline is likely to have considerably impeded the state’s efforts to address its own fiscal crisis through the taxation of market activities, and the fiscal crisis in turn would likely force the state to further reduce social services on which women had relied, such as childcare and public education, thereby increasing women’s burdens at home.Footnote ⁴⁰

Conclusion

The DPRK government has frequently been criticized for diverting resources toward its nuclear and other weapons program, resources which could otherwise have been used to provide greater social welfare and security for its people. It is worth emphasizing, however, that the North Korean system was very much one born of a war that remains effectively unresolved to date. Indeed, the country has been threatened with nuclear weapons for longer than any other state in existence. Due to this history of hostility, sanctions not only serve to worsen the precarious situation, but deter the engagement and trust-building that are required for a lasting resolution. In this political context, sanctions have the paradoxical effect of legitimizing and compounding draconian measures taken by the North Korean government in the name of national security. Sanctioned states are typically able to shift the blame for their economic mismanagement onto the international community, and indeed, sanctions, in practice, do often fail to make a distinction between the state and its people.Footnote ⁴¹ North Korea also does not enjoy the kind of external alliances enjoyed by its counterpart, South Korea. It remains one half of a divided country with a unified history going back at least a thousand years, before the division imposed by external forces in 1945. The North therefore competes with the South for legitimacy to represent Korea, a contest in which the North increasingly has found itself on the losing side. The state’s precarious geopolitical environment thus precludes any realistic possibility of Pyongyang accepting demands for full denuclearization in exchange for sanctions relief. Other socialist states in Asia, such as China and Vietnam, were able to improve their relations with the US through concessions that did not impact their overall national security. For North Korea, on the other hand, the key demand made by the US (and by UNSC resolutions), namely the dismantling of its nuclear weapons program, would undermine the very cornerstone of North Korea’s security strategy through nuclear deterrence.Footnote ⁴² North Korea’s steadfast adherence to its nuclear policy is thus a result of its fundamental geopolitical insecurity.Footnote ⁴³

While North Korean militarism may therefore have proved to be a successful deterrent so far, the country’s economic situation, made much worse by the sanctions, presents yet another form of insecurity. At the same time, if the sanctions are intended to force North Korea to halt its nuclear weapons program, they have clearly failed. To the extent that the intent was to provoke public discontent and thereby create pressure against the sanctioned state, we know that sanctions often have the opposite effect, as Dursun Peksen describes in Chapter 15 in this volume. In the case of Iran, rather than opening space for dissent, sanctions and international isolation further closed avenues for women’s organizing.Footnote ⁴⁴ In North Korea, the space to maneuver for women further narrowed, as women lost their jobs in the formal sector and were forced to provide for their families by participating in the informal sector, sometimes at risk to their own safety.

While the advent of targeted sanctions supposedly resolved the problem of indiscriminate harm to the population, that has certainly not been the case with regard to North Korea, where the most recent sanctions explicitly aimed to cripple each of its major economic sectors. For this reason, they effectively function as though they are comprehensive, with the expected consequences, as families and communities struggle with everyday basic needs. Women are particularly impacted, as they shoulder most of the care work needed as doctors, nurses, teachers, managers, and caregivers within the family and within the community. The Covid-19 pandemic has laid bare just how much care burden falls upon women in times of crises, and the extent to which essential services are provided by women and other undervalued persons in society. Mainstream debates on sanctions that revolve around questions of the efficacy and legality of sanctions fail to capture the human experience. The “targets” and intended “effects” that abstractly frame the terms of the debate hide the deeply gendered impact, as the majority of women and girls in North Korea must trek daily to provide clean water for their families, spend time at the marketplace to acquire food, and incur dangers in cross-border contacts for trade.Footnote ⁴⁵

Sanctions against Iran, which were first imposed in 1979, became much more severe when they were intensified in 2010. The sanctions have affected not only Iranians, but also the Afghan migrants living in Iran. Coinciding with the Islamic Revolution in Iran, the Soviet Union invaded Afghanistan in 1979. Subsequently, Afghans started to flee their country, with many moving to Iran, a trend that has continued. A common language, religion, and geographic location made Iran the first host country for Afghans.Footnote ¹ Iran is a host country for around 7 million Afghans;Footnote ² 750,000 of them are refugees, 627,000 are visa holders, and the rest are undocumented.Footnote ³ This study regards them all as migrants, while also considering the different implications of each group’s visa status. In this chapter, I look at how the sanctions imposed on Iran impact the human security of the Afghan migrants residing in Iran.

Economic sanctions are punitive tools that are imposed by states, international organizations, the UN, or a combination of these entities to change the policies and behavior of government in a target country (among other reasons). When a state’s economy is harmed by intensified sanctions, its government faces a significant challenge in ensuring the human security of its citizens and residents. To manage this condition, the government, in providing resources and public services, often prioritizes the needs of certain citizens.

Migrants, in the view of the state, are likely to have a lower priority, which might increase their vulnerability when the state is experiencing comprehensive international multilateral sanctions. However, despite numerous studies on the impact of sanctions on society as a whole, minorities, including migrants, receive little attention. There are three noteworthy studies that do consider the effects on vulnerable groups including migrants in some fashion. An article by Peksen investigated ethnic discrimination in target countries in relation to economic sanctions and found that sanctions typically prompt governments to pursue policies of ethnic discrimination.Footnote ⁴ Kourula addressed the legal issues pertaining to the impact of sanctions on the international protection of refugees in Yugoslavia and recommended closer contact between the UN High Commissioner for Refugees (UNHCR) and the UNSC in the interests of prompting international peace and security.Footnote ⁵ There is a working paper by the World Bank that involved a quantitative study, concerning the macroeconomic consequences of Iran’s nuclear dispute and its impact on Afghan refugees in Iran.Footnote ⁶ The study’s findings reveal that the economic shock of the sanctions led to an escalation in the refugees’ outflows, and disproportionately reduces their consumption expenditures as well as the assistance provided by the host community. However, that study primarily focused on the macroeconomic aspect of Afghans’ condition.

In contrast, the study presented in this chapter explores both the theoretical and practical aspects of the impact of sanctions on two main components of Afghans’ human security: economic security (specifically employment) and access to healthcare. This empirical study is based on primary data collected through fifty-three semi-structured interviews conducted with twenty-eight Afghans, in addition to twenty-five experts (four academics, three social workers, one health-center worker, fifteen NGOs, an international NGO (INGO), and an international organization) between 2015 and 2018 in Tehran and Melbourne. The research utilized NVivo software to analyze the content of the interviews. The Afghan participants of this study are from various socioeconomic classes. Moreover, they represent variation in immigration status and gender.

Economic Security: Employment

To explore people’s economic security, this study focused on their employment and on their conditions resulting from unemployment. When Afghans began moving to Iran in 1979, there were no limitations on the job sectors open to them. However, government policies changed toward Afghans during the intensification of sanctions. In conjunction with government mismanagement, the adverse impacts of multilateral comprehensive sanctions have significantly contributed to the deterioration of the country’s economic condition that led Iran to experience 11.8 percent reduction in GDP, 40 percent inflation, and 200 percent currency depreciation in 2012, the year that sanctions against Iran were severely tightened, with the economic crisis continuing thereafter.Footnote ⁷ This economic condition severely affected the job market. Many firms faced bankruptcy and were forced to close their businesses. Consequently, the country experienced increases in unemployment, at the same time that living costs also increased.

In response, President Ahmadinejad’s administration sent an order in 2012 to limit Afghans’ work options to four categories of jobs: construction, agriculture, kilns (for manufacturing bricks), and other sectors (i.e., menial work, burning garbage, recycling chemical materials, cleaning). Further, the government prohibited Afghans from living and working in border provinces with the highest unemployment rates. There is a lack of research concerning the impacts of sanctions on the employment condition of Afghans. It has been unclear whether their circumstances parallel those of Iranians or differ substantially. The chapter addresses that question. For a better understanding of changes in unemployment facing Afghans, the interviews are presented in two sections, divided by gender. The respective experiences of men and women are further explored on the basis of socioeconomic class.

The Experience of Afghan Men

This section analyzes the work status of Afghan men living in Iran, categorized according to the three major economic classes with they identified. The economic lower class consists mostly of newly arrived Afghans who are unskilled or semi-skilled. In addition, the majority of Afghan men who are not new arrivals but lack formal education or the capacity to become skilled workers have also ranked themselves as lower class. Their employment in Iran is stable, as the government has reserved certain sectors of the economy for Afghan workers, in types of work requiring no skills or very few skills. Ms. Abedi (29) was born in Iran, where her family had settled in 1980. She stated: “My father is a seasonal worker. In the summer, he usually works in kiln factories, and in the winter, he works on cotton farms. Sometimes he works as a shoe shiner on the streets. So, he has never had the experience of being jobless.” Despite the availability of job opportunities, unskilled or low-skilled workers have no secure job; the only work they get is as a daily hire or on a short-term contract. They usually “hustle” for work at intersections or in public squares, particularly downtown. In fact, there is competition between Afghans and people from the ethnic minorities who come from villages or small cities to work in major cities, and this competition increased during the intensified sanctions.

Generally, recession in the construction sector has prompted a decrease in job offers in that sector. Those who lost their jobs in construction immediately found a new source of income, even if it was one that threatened their long-term health. Mrs. Toranj (52) was born in Afghanistan and came to Iran illegally with her family in 2001; she is an undocumented migrant. She described her husband’s experience: “He used to labor as a construction worker, but there has been no job for him there for the past four years. So, he now digs through garbage for recycling and rents one of our rooms out to addicts to use their drugs.”

Iranian employers often prefer Afghan workers because of their attitude and willingness to serve as “cheap labor.” Ms. Sahami (25) was born in Iran after her family settled in the country in 1991. She is an electronics engineer and holds refugee status. She stated: “Afghans who hang around in public squares are never out of work; Iranians prefer Afghans [as workers].” Thus, sanctions, and the government’s policy responses to them, have worsened the conditions of work for those who are unskilled or have few skills. But my research suggests that the overall rate of employment for this demographic group remained unchanged. Most Afghan male participants from the “working class” who participated in this study had not experienced bouts of unemployment. This finding is consistent with the study by Wickramasekara et al. that surveyed the occupants of 1,505 Afghan households in ten selected cities.Footnote ⁸ Their findings indicated that Afghans with a lower level of literacy enjoyed a lower level of unemployment.

By contrast, Afghan men among the first wave of migrants to Iran, with a personal history of more years spent in the country, tend to be skilled workers, master builders, or businessmen. The majority of Afghan children born into the second or third generation in Iran are well educated. Together, the majority of these Afghans are in the middle or upper class. The middle-class experience differs starkly from that of the working class. Ms. Qandehari (26) was born in Iran and is a refugee. According to her: “My brother-in-law, who used to be a master builder, was jobless for around six months. Finally, he found a job in another city and moved there, while my sister and her children continued to live in Kashan.”

The situation was similar in other parts of the labor market. Mr. Qanbari (30) was born in Iran; his family having moved there in 1983. The whole family has refugee status. Mr. Qanbari, who works for electronic appliance retail and repair shops said: “I had never experienced unemployment before the sanctions came in, but I was out of work for seven months last year. And since the New Year (March) until now (September), I have spent four months unemployed.”

With inflation increasing, people had to watch their budgeting, and this led to a decrease in the range of foods they consumed, which in turn had an impact on small businesses. Ms. Sahami (25) recalled the fate of her father’s grocery store: “Due to the worsening economy, my father was forced to close the shop. He has been jobless for a year now, because he is old and is unable to find employment.”

Afghan participants from the upper class had different experiences depending on what job sector they were in. Many of the participants had their own businesses, particularly in textiles and the construction sector. Ms. Azami (25) was born in Iran and lives there as a refugee; her father first came to the country for business in 1977, and she is studying for a master’s degree at Tehran University. She reported:

The financial and shipping sanctions significantly affected the county’s import and exports. The manufacture of bags, shoes, and textiles amounts to one of the most promising sectors for Afghans living in Iran. Ms. Simaei’s (28) father arrived in the country back in 1982. They have refugee status. She mentioned: “We lived in Yasuj [western Iran] for twenty-seven years. My father had a dress factory; we lived well. But due to high inflation [during the increased sanctions], our sales plummeted. And then, due to government policy, we were resettled. My father could not continue his business or find any new job. He is still living off our savings.”

With a broadening of the sanctions to cover banking transactions, the government was unable to transfer its export revenues, particularly the revenue accruing to the state from oil. A large share of the revenues was “frozen” in foreign countries. On the other hand, due to currency depreciation, difficulties in importing raw materials and high inflation, Iranian goods, particularly in the clothing and shoe industries, rapidly became more expensive. Purchasing power declined sharply by 28.6 percent in 2012, followed by a further decline of 35.1 percent in 2013.Footnote ⁹ Consequently, demand for clothing and related goods dropped off.

In these circumstances, China has remained Iran’s main trading partner. When the financial sanctions made it impossible for Iran to transfer funds through the banking system, the government started to barter oil with China to import Chinese products, which were far cheaper than their Iranian counterparts. Soon, the combination of a depreciating currency, high inflation, and the influx of cheap Chinese goods affected Iran’s textile industry. Therefore, many manufacturers and retailers faced with a loss of customers, were driven to “shut up shop” or even declare bankruptcy.

At the same time, due to shipping and financial sanctions affecting oil exportation, government revenues went into a sharp decline. To manage economic conditions, the government abandoned most public-works projects. The country experienced approximately 7.5 percent economic decline, marking the worst economic downturn after the Iran–Iraq War ended in 1988.Footnote ¹⁰ This economic decline sent Tehran housing prices skyrocketing, and the demand for houses decreased. Along with that, private investment decreased as well. This created problems for Afghan master builders in particular. Mrs. Nazari (42) was born in Afghanistan and came to Iran in 1998. She lives as an undocumented Afghan together with her husband and children. She described:

Documented Afghans are eligible to become registered master builders. People with that qualification are permitted to work on contracts with Iranian citizens or the government. In the study, Ms. Qandehari spoke about her father: “He has been a registered master builder for nine years, in charge of many governmental projects, such as the Kashan University development plan. He had never been out of work before, but three months ago the plan management announced that it had run out of funds. So he is without any project now.”

The crisis in the construction sector hit Afghan master builders very hard, and all the projects open to them just vanished. Some of them were forced to take lower-level positions in addition to the indignity of being displaced. Yet some better-off Afghan families escaped the scourge of unemployment. For example, Mrs. Hadisi’s (31) family came to Iran in 1976 and she was born there. She has a bachelor’s degree in chemistry, and is now a medical science student. She mentioned her husband, who runs a computer shop: “He never encountered any change in the amount of customers that were coming his way. In fact, his job continued entirely unchanged.” The specter of unemployment also bypassed some Afghan men participants in this study who were from the upper class with jobs in sectors other than construction or garment manufacturing. But generally the findings of this study agree with Farzanegan et al., who focused on the impact of oil sanctions on microeconomic and household welfare of those living in Iran, and concluded that although both urban and rural households across various income levels affected by the oil sanctions and experiencing decline in their welfare, the middle- and upper-middle class households tend to experience greater losses compared to their less affluent counterparts.Footnote ¹¹

The Afghan participants in my study who were most affected by the sanctions were members of the middle and upper classes who had been kept busy by the demands of the construction sector. Likewise, periods of unemployment became the norm for skilled workers in other sectors. Also, those who had small businesses or whose shops were forced to close also fell victim to the loss of customers due to the economic downturn. The findings show that the difference between the experience of the middle class and the upper class was that the upper class had savings and the potential to restart their business, while the middle class had no savings to sustain them during the crisis. The findings also indicate that about 30 percent of participants from this class, particularly the youth, fell to lower class status and became recipients of aid and/or resettled to third countries in order to survive.

The Experience of Afghan Women

The documented Afghan women formally have the same legal work rights as Afghan men in Iran. However, due to Afghan culture, tradition, and religious beliefs, women are often expected to stay within the home, and thus have limited access to formal paid jobs. The participants’ experiences vary in accordance with their economic class. Many women from the lower economic class have tried to find work that could be done at home, such as carpet weaving or dressmaking, while others are working for Iranian employers. For carpet weaving, in addition to supervising, the employer provides them with the pattern and material. The employer typically visits to see how the work is going and pays a wage based on the quality of the work. Ms. Abedi (29), who has a bachelor’s degree in psychology, told this interviewer: “My mother and sisters have been weaving carpets for twenty-five years. They never experienced any unemployment. This is the job that is always open to Afghans. Now some of our neighbors are undocumented and they have been living in Iran for twenty years. For all these years they have been occupied weaving carpets at home.”

Some women also work with their husbands on farms. As there is a widely held view that Afghans are hard workers with low expectations, many farmers prefer to employ Afghans rather than Iranians, as Ms. Qanbari (30) described: “Some of my relatives are seasonal workers and usually toil on the farm along with their wives. They pick roses in spring for rosewater factories.” For working-class women, there was some job instability as the economy declined. But women who lost their jobs could generally obtain other positions, although these were temporary jobs or less desirable in some other way. For example, Mrs. Toranj (52) had been hired by a cleaning company and stated: “In the last five years, my employer told me there was no work. So, I started to do some embroidery on scarves and sometimes I cut fabric for stores in summer.”

Middle-class Afghan women had different experiences. A high percentage of participants work in the textile industry. Ms. Khavari (33) was born in Iran; her father immigrated in 1973. They live in Iran as refugees, and she is a dressmaker. She noted:

Mrs. Hosseini (47) was born in Afghanistan and crossed into Iran, along with her family illegally in 1985. She used to live with her husband and four children as refugees in Iran until 2012, when they resettled in Melbourne. She explained: “I used to work as a dressmaker for the factories. In the face of economic difficulties, Afghan men entered our domain. When that happened, the number of commissions I was getting fell off, which led to unemployment. That’s when I started making dresses for my neighbors and others.”

As the decline of the building industry caused Afghan men to lose their jobs, a significant number of them transitioned into the dressmaking sector, and effectively took over jobs previously reserved for women. The middle-class women who participated in this study were affected by this trend, but on becoming unemployed they became self-employed, or could find new jobs, even though those jobs were of lesser status.

Upper-class Afghan women usually do not work. The youth of this class are mostly well educated. According to Mrs. Hadisi (31): “I was never supposed to earn money and manage the family expenses. So I followed my dream, which was to study at university.” Because upper-class Afghan families were able to rely on savings to get them through the economic situation, for the most part the employment situation of women in these families was unaffected. But the impact of sanctions on upper-class Afghan women was different than their impact on men of the same social class, who were still expected to hold employment or operate a business to support their families.

To recapitulate, women from the lower socioeconomic class who participated in this study had little fear of unemployment. If they lost their job, they could immediately find another, although it was often much less desirable work. Middle-class participants found themselves unemployed more often or given inferior job responsibilities as time wore on, while upper-class women were largely unaffected, as their families had sufficient resources to weather the economic situation.

Access to Healthcare

The sanctions imposed on Iran are intended in part to cut the Iranian government’s financial resources through their impact on exports, shipping, and financial transactions. Sanctions have indeed had a severe impact on the Iranian government’s budget, and this resulted in part in a reduction of subsidies for essential public services. Government expenditures on health declined after the imposition of UN sanctions in 2006, with a 42 percent reduction in healthcare spending that year. As the UN and multilateral sanctions tightened in 2010, undermining state revenues, government spending on healthcare declined even further, with a 32 percent reduction.Footnote ¹²

As a result, during these years, private spending by individuals for healthcare increased significantly: Private health expenditure per capita increased from $459 in 2006 to $796 in 2010 (although private healthcare expenditures decreased somewhat, to around $620 in 2013, with the change in administration and prospects of success for the JCPOA agreement). Public health expenditures continued to decrease after 2013.Footnote ¹³ This increase in health costs borne by individuals was experienced with particular severity as Iran experienced a sharp depreciation in its currency during this period. The toman, the currency used in everyday transactions, declined from 1,000 toman per $1 in 2010 to around 4,000 toman per $1 in 2012.Footnote ¹⁴ This imposed significant pressure on ordinary people, who had limited access to hard currency.

The government provides free primary health services for all residents, including Afghans in Iran, while Afghans must pay for secondary health costs. However, this arrangement was affected by the economic downturn that took place with the tightening of the sanctions. Dr. Soroush is a general physician and lecturer with expertise on Afghans in Iran. He explained changes during the sanctions era: “Iran’s economy is not good, which has an impact on services. Some primary health parameters changed to secondary health services in hospitals, so they required payments for those.”

In regard to healthcare, the sanctions impacted Afghans differently than Iranians in other ways as well. Iranian people must pay insurance fees monthly to have a pension after retirement and for health insurance as well, which covers secondary health services such as hospital care. Iran’s government provides all international students studying in Iran with access to health insurance. Mrs. Hosseini’s husband and children studied at university, and she mentioned: “We had been covered by free health insurance from the university.” But other segments of Afghans were not eligible for this form of health insurance. As a result, medical expenses were one of the main costs for Afghans in Iran.

The UNHCR used to cover the medical costs for Afghan refugees who were hospitalized in governmental health centers. Ms. Muzaffari worked with the UNHCR on behalf of an NGO. She explained:

Mrs. Kaboli (40) was born in Afghanistan. Her family entered Iran in 1983 and lived as refugees there. She is a student at a seminary. Based upon her experience, she provided more detailed information about receiving health expenses from the UN:

According to participants, the UN stopped this policy in 2013–2014 and started to deal with a governmental insurance company, which provides cheaper and more universal coverage. The negotiation took around two years, from 2014 to 2016, which coincided with the intensification of sanctions. As a result, during the UNHCR negotiation with the new company, patients with chronic diseases were not covered by any insurance, although the UN paid some of their expenses to the hospital directly. Mrs. Noori (37) has kidney failure and needs dialysis three times a week. She disclosed her experience:

Furthermore, the UNHCR limited other financial supports for refugees’ healthcare. Mr. Hamidi (25) used to live as a refugee in Iran and he is a radiologist now. He described his friend’s experience: “The UNHCR used to pay Afghans’ surgery costs to the hospital, but now they only pay for emergency cases. When my friend approached the UNHCR (in Tehran), they told him, ‘Ask your doctor and the head of the hospital to certify that if you did not have surgery, then you would die. Only then we would pay your fees.’”

However, since 2015, coinciding with the JCPOA, all refugees and documented Afghans have been able to register in the Salamat Insurance plan. The plan operated after negotiation between the UNHCR, the Bureau for Aliens and Foreign Immigrants’ Affairs of the Ministry of Interior, and Iran Salamat Insurance. This government-implemented plan provides health insurance for all foreigners, including Afghan refugees. People must pay for the insurance, while it is free for those with certain diseases, including hemophilia, thalassemia, kidney failure, kidney transplants, and multiple sclerosis.Footnote ¹⁵

Dr. Saba, an academic at Tehran University of Medical Sciences with special expertise on Afghans living in Iran, explained the costs for Afghans without insurance: “Medical costs for them are based on the free market rate (without subsidies), not more.” However, it seems to be different in practice. Mr. Hamidi (25) used to work at two public hospitals in Tehran as an intern. He shared his observations about the medical rates for Afghans:

This indicates that although regulations state that Afghans must pay based on the free market rate, hospitals changed their financial policies and charged above that rate, due to the increasing economic difficulties during the sanctions. Further, the number of Afghans who are coming to Iran for healthcare is increasing, so realistically they can be seen as medical tourists, who are subject to higher rates. Because most Afghans in Iran are undocumented, cashiers in hospitals consider them as medical tourists and charge them three and a half times more than those who are documented. However, this varies depending on the type of diseases and immigration status. The increase in medical prices has an impact on people’s access to medical services. Ms. Sahami (25) related her mother’s condition. They are refugees and have insurance:

The situation was even worse for the undocumented participants from the lower classes, although it was unchanged by the sanctions. Afghan migrants from lower income families did not have access to doctors before the intensified sanctions; and thus, their access to medical care did not change when healthcare became more expensive and less available. Mrs. Toranj (52) has some serious gynecological diseases in addition to arthritis and osteoporosis. She stated: “I have no insurance and have never been able to receive any help. So I have never been able to go to a doctor. I must live with this condition till the end of my life.”

NGOs have been a significant source of free healthcare services for Afghan migrants, to supplement the services provided by the Iranian government, or services available on a paid basis. Afghans have a strong and supportive community in Iran. They quickly inform each other about their rights and any free services. Mr. Mani, who heads two NGOs with five branch offices in various cities, offered his observation of Afghans: “Afghans use the maximum number of services and facilities. Under economic pressure, their referral to NGOs for free services sharply increased.” However, due to the economic difficulties, NGOs faced a decrease in donations, and they were often forced to reduce their services. This has further reduced the availability of healthcare to Afghans in Iran.

Mrs. Noori (37) used to receive financial help from the Iranian dialysis center. She elucidated: “They do not provide me with financial help anymore, but sometimes the center or other people give me free medicines.” In corroboration, Mr. Masoodi (35) who is the head of one Afghan NGO, described the changes in NGOs’ services during the sanctions era: “I would say that the NGOs’ free healthcare services to Afghans significantly decreased in the past two years.”

Therefore, the sanctions directly or indirectly caused a decrease in free or low-cost healthcare available from the state for Afghan migrants. While other options were available to them through insurance, that has not been sufficient to meet the need for affordable and adequate healthcare for this population. Afghans increasingly turned to the UNHCR and NGOs; however, those services did not increase to meet the additional demand, but rather decreased due to economic difficulties.

Conclusions

The intensification of sanctions has severely affected the country’s economy. Despite the government’s numerous managerial and policy issues, the sanctions are the primary cause of the changes. Over the last four decades, the government, its structure, and basic economic management methods have largely remained unchanged. Sanctions were a novel phenomenon that caused numerous crises in the country, both directly and indirectly.

Consequently, the sanctions affected the Afghan migrant population in Iran in several regards. In some contexts, Afghans were affected in the same ways as Iranians, but in other contexts, Afghans were affected differently, and more adversely. In the face of its economic limitations, the government changed its policies to be more restrictive toward the Afghan migrant population, reducing employment options for Afghans, in the face of growing unemployment on the part of Iranians. Although those in the working class were still always able to find employment, it was often for lower pay, and under worse conditions. The sanctions had a greater impact on the economic and health security of middle-class participants, through increased unemployment and inability to afford health expenses; and some in the middle class dropped to a lower economic class. The wealthy were not greatly affected in regard to economic security or access to healthcare, although their ability to maintain their businesses was often compromised, due to declining markets and reduced imports.

In regard to healthcare, if the government had responded differently to the sanctions, the harm could have been lessened. Further, if the UNSC and UNHCR provided special support for people, particularly in terms of health, the impact could have been mitigated. If the sanctions had in fact been “smart sanctions,” they would have had a less severe impact on ordinary people. However, it is clear that the sanctions, either directly or indirectly, have been a precipitating cause of the general reduction in healthcare, which disproportionately impacts migrants.

The countries and institutions imposing sanctions on Iran often claim that the sanctions are not intended to harm the civilian population in Iran. In fact, the sanctions have triggered a series of economic crises that affect not only the human security of the Iranian population but also have additional consequences for migrants, who are particularly vulnerable.

Introduction

Unilateral economic sanctions have been used as a foreign policy tool by the US government against Cuba for more than six decades. The US system of economic sanctions on Cuba are the most comprehensive and enduring system of unilateral coercive economic sanctions that the US has ever imposed on an independent state. Every major method of sanctions has been employed: trade control; suspension of aid and technical assistance; freezing of financial assets;Footnote ¹ and most recently, the blacklisting of foreign companies that do business with Cuba. Blacklisting did not begin with Trump’s first administration, but it became an important tool like for no other administration. Consequently, the sanctions bring about broad damage to the country’s economy and its ability to maintain and develop its infrastructure, access technology, and obtain foreign direct investment, among other development requirements.

The economic measures against Cuba began shortly after the Cuban Revolution of 1959. When the Eisenhower administration cut the Cuban sugar quota in the US market in July 1960,Footnote ² it was easy to anticipate what kind of impact a measure like that would have on a small, underdeveloped island, whose main export was precisely sugar, and was heavily dependent on the US’s market for its exports and imports. Successive Cuban governments ever since have sought to diversify the island’s international economic relations, in an effort to move past the model of economic dependence rooted in a history of colonialism and neocolonialism, toward a different model of development. However, Cuba is still unable to meet its needs for investment capital, technology, energy, manufactured goods, and food.

Cuba’s current economic struggles are due to a number of factors. These include an economic structure resulting from colonialism and neocolonialism, characterized by a high dependence on one export crop and mineral resources, and the underdevelopment of Cuba’s industrial capacity. In addition, Cuba’s geopolitical alliance with the Soviet Union had mixed results in terms of economic performance. In the 1970s, Cuba transitioned to a modified Soviet-style economy, with an inefficient centrally planned economic system and deep state dominance over the market and nonstate property. In the twenty first century there have been attempts at market-oriented structural reforms, but they happened very slowly, and without a great deal of success. The reforms were plagued with problems, including disincentives, such as excessive taxes. Thus far, these reforms have not shown any significant macroeconomic effects.

Some government efforts, such as the unification of the currency and exchange rates in early 2021, should in the long-term yield positive results. But in the short term, this has aggravated many of the problems in the economy, including a huge increase in inflation and a notable rise in the price of goods.

However, there is no doubt the US economic sanctions, which in many regards function as a blockade, have been profoundly detrimental to Cuba’s overall economic development.

The US’s UCMs disrupt Cuba’s international economic relations by making it expensive and risky for other countries to do business with the country and causing Cuba’s investment in infrastructure to perform below expectations. Sanctions create obstacles to accessing new technologies and foreign direct investment for key sectors of the Cuban economy, such as biotechnology and tourism, both of which are important elements of Cuba’s development strategy.

Cuba’s Development Strategy and US Economic Sanctions

In the context of the post-World War II international order, the Cold War, and the impact of US unilateral economic sanctions, Cuba strategically turned to the Soviet Union in the early 1960s for economic support, and was fully integrated into the Soviet Bloc in the early 1970s. To some extent, this move helped Cuba mitigate the impact of the US’s economic sanctions, as the needs for energy, technology, and manufactured goods were met by the socialist bloc, and Cuba enjoyed favorable terms of trade and a market for its main exports. In 1989, Cuba exported 63 percent of its sugar, 73 percent of its nickel, and 95 percent of its citrus to the Eastern bloc; and imports from those countries represented 86 percent of Cuba’s total imports: 98 percent of fuel and lubricants, 80 percent of machinery and equipment, and 57 percent of chemical products.Footnote ³ This did, however, generate a high degree of dependence on the Soviet Union and the socialist bloc up to 1991.

In the early 1990s, Cuba lost almost all of its preferential terms of trade with the Soviet Union – led eastern European bloc, and a severe economic crisis ensued. By 1993, GDP had fallen by 35 percent, imports had been reduced by 78 percent, the fiscal deficit reached 33.5 percent of GDP, and fuel consumption was cut in half.Footnote ⁴ Consequently, the Cuban state sought to redefine its development strategy by introducing economic reforms and diversifying its international economic relations through joint ventures with foreign companies and relations with a broad array of new trade partners.Footnote ⁵ However, those efforts have been undermined by the US sanctions.

The “U.S. embargo of Cuba” is a combination of statutes and regulations that have been modified over time.Footnote ⁶ The most important modifications were added in the 1990s, during Cuba’s economic crisis; the economic sanctions came to be the core element of US foreign policy toward Cuba, and the policy of seeking regime change. Two pieces of legislation were passed by the U.S. Congress: the Torricelli Act of 1992 and the Helms–Burton Act of 1996, which codified the sanctions in a way that stripped the president of the right to lift or modify major parts of the system of sanctions. At present, only a vote by Congress can revoke these Acts.

The Cuban Democracy Act (the Torricelli Act), was introduced by New Jersey Democrat Robert Torricelli in 1992.Footnote ⁷ The stated purpose of this bill was to “promote a peaceful transition to democracy in Cuba through the application of appropriate pressures on the Cuban government.”Footnote ⁸ The Torricelli Act incorporated extraterritorial measures, affecting third party relations with Cuba by making clear that the US government would “seek the cooperation of other democratic countries in this policy” and making “clear to other countries that, in determining its relations with them, the United States will take into account their willingness to cooperate in such a policy […]”Footnote ⁹ Torricelli claimed his bill would “wreak havoc on that island.”Footnote ¹⁰ Indeed, the law affects Cuba’s access to shipping; its major exports, such as sugar and nickel; and its global trade with companies that are subsidiaries of US companies. These measures have done much to compromise Cuba’s economic development and ability to meet the basic needs of the population.

One of the most damaging provisions was the elimination of licenses to foreign subsidiaries of US companies that were exporting to Cuba. In 1991, prior to the adoption of this legislation, Cuba imported $719 million worth of goods from US subsidiary companies; 90 percent of this amount was used for food and medicine. But from 1992 to 1995, in response to Cuban government requests to purchase hundreds of millions of dollars’ worth of food and medicine,Footnote ¹¹ a total of only $0.3 million in goods was licensed for sale by the Treasury Department.

In principle, the statute authorizes exceptions for the sale of medical supplies and medicines. But the statute requires end user verification requirements for these goods. In practice, end user verification is almost impossible; and as a result, many medical supply companies avoid doing business with Cuba altogether. This continues to be a significant problem. For example, from January to July 2021, the Cuban state agency charged with importing medical goods, MEDICUBA S.A., contacted sixty-five US companies to inquire about the possibilities of importing medicines, equipment, devices, and other supplies necessary for the care of the Cuban people in the national public health system. Of these, fifty-six companies did not respond to the Cuban entity’s requests, while three responded negatively, even though medical sales are ostensibly permitted under US law.Footnote ¹²

The Helms–Burton law of 1996 is as far reaching as the Torricelli Act. Title I of the Act affects Cuba’s access to international institutions such as the World Trade Organization (WTO) and international financial institutions (IFIs), such as the World Bank: the statute mandates the US representative in the IFIs to oppose the admission of Cuba, and to withhold US payments to the IFIs should they approve assistance to Cuba over US opposition. There are some avenues for Cuba to have a limited engagement with leading IFIs. However, decisions regarding funding and membership are determined by weighted voting, and the US holds far more voting power than any other countries. As a result, the institution effectively reflects the position of the US in the context of Cuba.Footnote ¹³ And development assistance to Cuba from the US government is also denied by US law.Footnote ¹⁴

Title III is deeply consequential for Cuba, and among sanctions regimes, it is also unique. Under Title III, all expropriated and nationalized Cuban property is considered to be “stolen,” and consequently, trading with goods manufactured on or by this property or investing in a “stolen property” is deemed illegal by the US, regardless of the nationality of the “perpetrator.” Under this statute, it is possible for US citizens and Cuban (naturalized US citizens) individuals and companies to bring civil actions for damages before US courts against any person that is doing business with products nationalized during the Cuban Revolution. Thus, in effect, the statute authorizes suit by a (former) foreign national, against a foreign company or person, for an action that took place in a foreign country. This is considered to be “extraterritorial,” in violation of international commercial law, and has consistently been broadly condemned by the international community.

In response to this opposition, the enforcement of Title III was suspended by successive administrations for thirty years. However, it was activated by President Donald Trump on May 2, 2019; and the Biden administration continued to leave this policy in place. This has triggered dozens of lawsuits in the US courts against international companies that conduct business activities in Cuba, with negative consequences for the island’s development plans. Plaintiffs filed roughly forty suits under Title III within the first two years it became operative, including fifteen new suits against a mix of American, European, and Cuban companies operating in industries such as mining, sugar, tobacco, advertising, banking, construction, and ranching. Of all these suits filed, seventeen have already been dismissed in whole, five voluntarily and twelve by court order. However, this does have a chilling effect on potential foreign investors in Cuba.Footnote ¹⁵ For example, there are European companies that have preferred to withdraw from business relations with Cuba rather than fighting potential lawsuits in US courts, even though the EU provides some protections against these suits.

Such is the case of the French–Italian company, Avions de Transport Régional, which had signed a contract with the Cuban government for the sale of two ATR 72–600 turboprop aircraft. Another of the canceled projects has been the renovation of the Cuban railway repair facilities, for which a contract had been signed by the National Society of French Railways and the Union of Cuban Railways, with a value of $46.7 million. The project included the modernization of two large locomotive repair facilities in Havana and Camagüey, as well as restoring passenger cars and putting into operation the one known on the island as the “French train.”Footnote ¹⁶

In addition to the Torricelli and Helms–Burton laws, in 2000 one new piece of legislation was added to the sanction’s regime, the Trade Sanctions Reform and Export Enhancement Act.Footnote ¹⁷ In principle, it provided for humanitarian exemptions, such as food. However, food sales are only allowed on terms that are adverse and costly to Cuba, such as prohibiting the use of US dollars for these transactions. In addition, the statute prohibits vendors from extending credit for these humanitarian sales; Cuba is required pay for these goods in cash and must pay in advance.Footnote ¹⁸ All of these requirements worsen Cuba’s cash flow and impose additional pressure on the country’s economy.

If the US simply adopted a policy of bilateral suspension of trade and aid, it would be less detrimental to Cuba’s development strategies and a lesser infringement on Cuba’s right to development. However, the US’s economic sanctions regime is structured to constrict Cuba’s trade with third countries, in part by generating a chilling effect that creates obstacles to much needed foreign investment, as well as trade and even humanitarian aid, affecting the economic development of the whole nation. In that case, as Joy Gordon rightly points out, the US sanctions of Cuba bring about negative development.Footnote ¹⁹

There are also other measures that are not designated as sanctions proper, but have the same effect, such as designating Cuba as a state sponsor of terrorism. This unilateral designation also makes Cuba a target for additional disruption, especially in the financial sector, and promotes increased scrutiny for US-based companies if they engage in dealings with Cuba. Even for transactions that are clearly permitted under US law, companies and banks can now expect inquiries from the Office of Global Security Risk within the US government’s Securities and Exchange Commission for Cuba transactions.Footnote ²⁰ In addition, the Treasury Department restricts the use of the dollar in targeted states such as Cuba by enforcing strict rules on banks throughout the world. Between August 2021 and February 2022, a total of 100 foreign banks were involved in 261 enforcement actions that included: “closing bank accounts and [terminating] established banking contracts, returning transactions, refusing to create accounts, [and] canceling passwords for the exchange of financial information through the Society for Worldwide Interbank Financial Telecommunication (SWIFT).”Footnote ²¹

The Cuban government estimates that these measures affected some $260 million in transactions within the banking and financial sector.Footnote ²² There were numerous incidents that resulted from these enforcement actions, or from banks and other entities terminating ties with Cuba even for transactions that are legal. For example, in 2021, the Société Générale Bank closed the accounts of the permanent delegation of Cuba to UNESCO and the Cuban Embassy to the French Republic, which has substantially affected the normal functioning of both diplomatic offices.Footnote ²³

Impact of Sanctions on Cuba’s International Trade and Infrastructure

The United Nations Conference on Trade and Development’s (UNCTAD) contribution to the “Report of the UN Secretary-General: Necessity of Ending the Economic, Commercial and Financial Embargo Imposed by the United States of America against Cuba” concludes that:

One clear example of how the economic sanctions imposed by the US government affect Cuban development is the Port of Mariel and the Special Development Zone, where foreign companies, or joint enterprises, may set up manufacturing facilities, warehousing and other logistics on preferential terms. This constitutes the single largest infrastructure investment in Cuba in the last sixty years. The area has a modern container terminal and the capacity to handle super-post-Panamax and neo-Panamax vessels, among the largest commercial ships in the world. A number of major shipping lines offer scheduled services to the Port of Mariel, including Melfi Marine, Maersk Line, MSC, CMA CGM, Hamburg Sud, Hapag Loyd, ZIM Line, COSCO, Evergreen, Crowley Marine, and Nirint Shipping. The position of the port is considered strategic since it is within a 1,000-mile radius of thirty-two ports in eleven countries. The Port of Mariel could become to become a transshipment hub for the region, among other activities. But US sanctions are the biggest hurdle to increasing Mariel’s transshipment business. US law dictates that a vessel, regardless of flag, cannot call at a US port within 180 days of calling in Cuba.Footnote ²⁵ This effectively prevents transshipment from Mariel, because any vessel that loads or unloads cargo would lose the flexibility to enter a US port for several months. More importantly, mainline vessels cannot sail to final destinations in the US after dropping off transshipment cargo (bound for non-US destinations) in Mariel.

In addition to the sanctions measures directly concerning shipping, the impact of the activation of Title III of the Helms–Burton Act has been felt very strongly in the Mariel Special Development Zone (ZEDM), as lawsuits directed against US companies – operating legally in the port – were filed in US courts.Footnote ²⁶

Other Impacts on Cuban International Trade

The US sanctions against Cuba have not only blocked its access to US markets but also intervene in Cuba’s trade with third countries, its international financial transactions, and its access to foreign investment, as well as disrupting exports and imports, impacting the entire Cuban economy.

The Cuban government has developed a method to quantify the cost of disruption of its foreign trade by sanctions.Footnote ²⁷ For example, because of the sanctions, Cuba has had to engage in commerce with trade partners in distant regions. This has caused significant losses. In 2020, the cost overruns for freight and insurance alone were calculated to be $85,108,797.Footnote ²⁸ However, it is not possible to measure the full extent of the time-consuming efforts that Cuban state companies have to go through to find trade partners, and circumvent both the extraterritorial reach of the sanctions and the chilling effect generated additionally by the designation of Cuba as a state sponsor of terrorism.

US sanctions greatly impact Cuba’s exports, including nickel and cobalt. Cuba has one of the world’s largest reserves of nickel and cobalt. According to Global Data, Cuba was the world’s sixth-largest producer of cobalt in 2022.Footnote ²⁹ Cuba’s primary source of cobalt is the nickel mine at Moa, located in Holguín province. The Moa operation is a joint venture undertaken between Sherritt International of Canada (50 percent) and the General Nickel Company of Cuba (50 percent). Combined with a Sherritt refinery in Canada, this facility produces 15 percent of the world’s cobalt, with an extremely high purity rate of 99.98 percent.Footnote ³⁰

Both are strategic goods: nickel is used in producing stainless steel, while cobalt is used to produce batteries. As the world moves more towards electric vehicles and power tools, these exports are major assets for Cuba; Cuba is the ninth largest exporter of nickel in the world. US sanctions not only prevent Cuban nickel from entering the US, but also interfere in Cuba’s exports to non-US countries: the Helms–Burton Act prohibits any foreign company from selling goods in the US that contain even trace amounts of Cuban materials, including nickel and cobalt. Currently, the main destination of nickel exports from Cuba are China and Japan.Footnote ³¹ In July 2018, Tesla, a US electric car-maker, informed Panasonic, their exclusive supplier of batteries, that Tesla could not buy batteries containing cobalt that was mined in Cuba. As a result, the Japanese electronics manufacturer has suspended business with Sherritt.Footnote ³² A Panasonic spokesperson said that Panasonic was unable to discern how much cobalt sourced from Cuba via its Canadian supplier ended up in batteries it provided to the US market. After seeking guidance from the Treasury Department’s OFAC regarding its interpretation of the scope of the ban on Cuban-origin imports, Panasonic withdrew from its business relations with Sherritt.Footnote ³³ This was not only an economic blow to Sherritt, but also to Cuba which, as Sherritt’s partner in the Moa operations, lost 50 percent of the potential profits from sales to Panasonic. This is just one among many examples of how sanctions imposed by the US affect third countries, which cannot buy Cuban raw materials such as nickel and cobalt, two of the country’s major exports, without losing access to the US market or risking severe penalties from the Treasury Department.

The Impact of US Sanctions on Cuba’s Tourism

The Caribbean Sea has become the main hub for cruise tourism in the world. In recent years, the region surpassed the Mediterranean by a wide margin as the most important market for this kind of tourism.Footnote ³⁴ Cuba’s economic development depends upon being able to capitalize on this market. Tourism is Cuba’s second leading source of revenue, totaling $2.645 billion in 2019. This sector constitutes 10 percent of the country’s GDP and generates half a million jobs in the public and private sectors. Thus, tourism has a major role in Cuba’s development strategy. It is also a target of several types of US sanctions.

It has long been the case that US sanctions prohibit US nationals from traveling to Cuba as tourists.Footnote ³⁵ Travel restrictions were loosened under Barack Obama by extending general licenses, and US travelers to Cuba increased from 91,254 in 2014 to 637,907 in 2018.Footnote ³⁶ As travel restrictions were reinstated under the Trump administration, the number of US visitors declined again.Footnote ³⁷

But the most significant recent development regarding the impact of sanctions on Cuban tourism can be seen in the lawsuits under Title III of the Helms–Burton Act in US courts against major hotel chains with investments or joint ventures in Cuba. These include Melia International Hotels and Iberostar from Spain; and lawsuits against companies such as Trip Advisor, Orbitz, Cheap Tickets, and Kayak, as well as the Dutch company Booking.com, have been filed in the federal court in Delaware. The plaintiff in one of these suits claims to be the heir of nationalized land in Varadero, where there are hotels operated by the companies Iberostar, Meliá, Blau, and Starfish. Online reservation companies, such as Trip Advisor and Orbitz, are named as defendants because they list these hotel companies in their databases.Footnote ³⁸

The tourist sector has already been impacted by one of the recent rulings under Title III. On March 2022, a Miami U.S. District Court judge ordered Carnival, Norwegian, Royal Caribbean, and MSC SA, all Florida-based cruise lines,Footnote ³⁹ to pay more than $400 million in damages for the use of Cuba’s port from 2015 to 2018.

In addition to the threat of Title III lawsuits, the Torricelli Act’s extension of the sanctions to foreign subsidiaries of US companies affects Cuba’s tourism sector when there are mergers and acquisitions. As of March 2023, the Be Live hotels of the Spanish chain Grupo Globalia have become the property of the American hotel company Hyatt, including the five Be Live hotels in Cuba, putting that company in violation of US regulations. As a consequence Be Live Hotels pulled out of Cuba.Footnote ⁴⁰

Impact of Economic Sanctions on Cuba’s Biotechnological Sector

US sanctions target each of the areas in which Cuba is positioned to produce goods and services on a par with highly developed countries. Most significantly, the Torricelli Act specifically targets the biotechnological sector, prohibiting the export of medical equipment and goods that can be used in the production of any biotechnological product. In addition, there is a broader rule, issued by the U.S. Department of Commerce’s Bureau of Industry and Security in October 2019, that prohibits the export of goods to Cuba – by companies in third countries – if they have even 10 percent de minimis US-origin contents.Footnote ⁴¹ This also undermines Cuba’s biotech sector.

From its inception, Cuba’s development of biotechnology, mainly to develop and produce pharmaceuticals, has proved innovative and technically sophisticated. Cuba’s biotech industry has several innovative vaccines, including the recombinant hepatitis B vaccine, which received pre-qualification from the WHO in 2001, and the world’s first effective vaccine against meningitis B.Footnote ⁴² The Cuban government established the National Center for Scientific Research in 1965, and has made substantial investment in this area since the 1980s, with the founding in 1986 of the Center for Genetic Engineering and Biotechnology. It is estimated that, in the period 1990–1996, the state invested on the order of $1 billion for biotechnology to emerge as an important branch of the Cuban economy.Footnote ⁴³ Today, the main biotech institutions belong to what is known as the Scientific Pole, which includes ten major centers and more than fifty related research and production institutions, employing more than 1,500 researchers. Cuban biotechnology production provides about 70 percent of Cuba’s domestic need for pharmaceuticals.Footnote ⁴⁴

However, Cuban state companies are systematically blocked from acquiring technologies, raw materials, reagents, diagnostic tools, medicines, devices, equipment, and the necessary spare parts – not only from US companies, but also from companies in third countries. Some companies simply refuse to enter into commercial transactions with Cuba, out of concern that they may run afoul of sanctions; others refuse to update the documentation needed to continue the trade relations; others decline to sell lifesaving drugs in areas such as oncology and pediatrics, or reagents for Cuba’s Covid-19 vaccine candidates.

For example, the purchase of Vitek 2 Compact 15 laboratory equipment for one of the enterprises that manufactures the Cuban vaccine candidates was cancelled when Canadian supplier North World Industry Inc. (NWI) informed its Cuban customer that the company’s supplier, Biomeriux Canadá, had refused to supply the equipment and its consumables, because the components were manufactured in the US. NWI sought to procure the equipment from Spain, through Biomereux’s European subsidiary, and from Panama, through a Latin American subsidiary, to no avail.Footnote ⁴⁵ This forced Cuba’s biotechnology companies to seek alternative suppliers, which in turn added costs to the production.

Once MediCuba finds a supplier, there is also then the difficulty of finding an air carrier to bring the items to Cuba. In 2019, for example, the airline Emirates rejected a shipment of the drug Carbidopa-levodopa, contracted by MediCuba from the Indian manufacturer and supplier Apex Drug House, claiming that they could not transport goods destined for Cuba.Footnote ⁴⁶

There are then parallel problems in finding banks to handle the financial transactions, even for medical goods. Even for transactions that are legal, banks are leery of working with Cuba, given the severity of the penalties that have been imposed. For example, in 2019, the Treasury Department’s OFAC imposed penalties on the financial banking sector companies UniCredit Bank AG (Germany), UniCredit Bank Austria (Austria), and UniCredit Bank SpA (Italy), totaling $1.3 billion, for bank transfers allegedly made in violation of the Cuban Assets Control Regulations.

Thus, US sanctions undermine Cuba’s biotech industry at every juncture. The sanctions interfere in importing components of the drugs the biotech industry is developing and manufacturing, The sanctions make research difficult, since Cuba’s biotech institutes depend on the cross-border exchange of ideas. Once the products are developed, the sanctions hinder their commercialization. US sanctions have even blocked the use of critical software and cyber platforms such as Zoom,Footnote ⁴⁷ that would be employed, among other things, to facilitate training for doctors and telemedicine services not only in Cuba but around the world.

Cuban scientists responded to their relative isolation by becoming increasingly resourceful, imaginative, and thoughtful about their mission, and by working cooperatively rather than competitively. There are several important scientific breakthroughs that have resulted. Cuba has produced five Covid-19 vaccine candidates, and a Covid-19 treatment protocol, 90 percent of which is based on drugs made in Cuba. But even where there are successes, the sanctions have created additional costs and difficulties at every level; and due to the sanctions, Cuba has lost opportunities to market these results.

Conclusion

Cuba’s economic difficulties are a result of a combination of factors; among these are the legacy of colonialism and neocolonialism and economic policies adopted by the Cuban government. However, it cannot plausibly be denied that Cuba’s post-1959 development strategy has been severely impacted by the system of unilateral economic sanctions imposed by the US which target each of the main pillars of the Cuban economy: exports, such as nickel and cobalt; revenue from tourism; and major investments in infrastructure, such as the Port of Mariel. The sanctions also target Cuba’s most dynamic sectors and limit the competitive advantages that Cuba has. This is particularly visible in the case of Cuba’s biotechnology initiative.

It is often claimed that the “embargo” of Cuba is a bilateral issue, in which the US restricts only the actions of its own nationals. On the contrary, the sanctions regime has a strong extraterritorial character, deeply impacting Cuba’s trade with third countries. In addition, the sanctions do not include provisions for any periodic assessment of its impact on Cuba’s most vulnerable populations. By almost any standard, the UCMs on Cuba run counter to human rights concerns, since they indiscriminately affect the whole population of the island; even more so at a time of a global pandemic.

At the same time, this sanctions regime holds a distinction for both longevity and breadth. The intricate, everchanging web of statutes, rules, regulations and blacklists constitute a formidable obstacle for the normal diversification of Cuba’s foreign trade, and generates a significant chilling effect affecting potential foreign investors. This in turn limits the access of Cuban development projects to the capital necessary to grow and to support social development as well, including employment and healthcare.

Taken as a whole, the US sanctions on Cuba have done considerable damage not only to Cuba’s overall economic health but have also inflicted considerable damage on the Cuban population, and have interfered in many ways with the realization of Cuba’s development goals.

Introduction

Economic sanctions have been used as coercive instruments by major international actors for centuries, both during armed conflicts and in peace time. The latter part of the twentieth century registered an increased usage of targeted or smart sanctions. These existed in earlier times,Footnote ¹ but they came to the forefront in the post-Cold War world.Footnote ² Among the most prominent are the asset freezes and other financial sanctions imposed on individuals and entities, sometimes known as “blacklists.”

These listings are often publicly presented as carefully crafted, precise, and humane instruments. They are supposedly oriented toward specific individuals and companies, rather than entire countries. However, there have been debates about their efficacy, their ethical nature, and their actual capacity to avoid or reduce harm for common people. Cuba is one of the targets of these sanctions and an important case study for a better understanding of this instrument in real conditions.

Economic sanctions against the country are in all cases unilateral policies imposed by the US. Neither the UNSC nor any other international organization has sanctioned Cuba. The sole exception, a political sanction, was Cuba’s expulsion from the Organization of American States in January 1962, which was lifted in 2009. These measures have been a key component of US policy towards the island since 1959, as part of a state policy aimed at bringing about regime change and restoring US influence. Prior to the 1990s, American policymakers prioritized comprehensive sanctions, called an “embargo” in the US and “blockade” in Cuba,Footnote ³ that form a multilayered complex system with an intricate legal structure. In the 1990s, the sanctions were expanded significantly through legislation and regulations. The relatively recent expansion of the role of blacklisting adds a layer to the system.

The legitimacy of the US sanctions against Cuba has long been challenged, not only by Cuba and its allies but also by the international community. Since 1992, the UNGA has overwhelmingly adopted resolutions condemning the US measures against Cuba for violating international law, particularly the aspects that are extraterritorial. The most recent vote in the moment of writing these lines, the thirty-second, in October 2024, was 187 votes in favor, with 2 against (US and Israel), and 1 abstention (Moldova).Footnote ⁴ The legality of such measures has been challenged by the UN Special Rapporteur on UCMs as well as other legal scholars.Footnote ⁵ The sanctions have been widely criticized by Amnesty International, the American Association of World Health, and many other organizations.

There are good reasons for these criticisms. The US justifications for its unilateral measures have become increasingly tenuous. From 1959 to1989, sanctions against Cuba were justified mainly on the basis of the threat of Communism. With the end of the Cold War, the discourse shifted towards secondary arguments: Cuba’s alleged support for terrorism, and violations of human rights. The US includes Cuba on its unilateral list of “States Sponsors of Terrorism” for its support of revolutionary groups decades ago.Footnote ⁶ The accusation of human rights violations has appeared constantly in speeches and in the preamble of sanctions legislation since the 1990s, implemented with devastating effect on the country, even though violations recorded by Human Rights Watch in Cuba are minor when compared to those registered in countries such as Saudi Arabia and Colombia, both of which have been traditional Washington allies.Footnote ⁷ Indeed, Amnesty International and others have criticized the sanctions themselves as constituting human rights violations.Footnote ⁸

Nonetheless, the US enforcement of its sanctions against Cuba has continued, largely unabated, and its use of individual listings against Cuban nationals, and against third parties engaged in trade with Cuba, have grown considerably. Much of the blacklisting against Cuban nationals and Cuba-related entities has taken place through the OFAC’s SDNs and Blocked Persons List. It includes natural persons; ships; SDNs; specially designated terrorists; specially designated global terrorists; foreign terrorist organizations and specially designated drug dealers. It includes listings in which all properties and interests of the sanctioned person are blocked, and in which all kinds of transactions with US nationals are forbidden; and third-country parties that deal with those listed can be fined or blacklisted.Footnote ⁹

In gathering data on all those who have been blacklisted by the U.S. Department of the Treasury and the U.S. Department of State, our primary source was the U.S. Federal Register, unless otherwise indicated. The Federal Register serves as the common source, as all modifications to the lists are published there. We verified its reliability by randomly comparing its records to the lists published by OFAC. Aggregate data presented below is a composite of information taken from all lists that include Cuba-related designations. We also used other sources, including materials from the Treasury Department’s OFAC, Cuba’s National Office of Statistics and Information (Oficina Nacional de Estadísticas e Información, ONEI), and the US Congress’ digital archives.

We reviewed all listings related to Cuba from 1994–2021. This time frame encompasses the presidencies from Clinton through the first year of the Biden administration. This period also covers critical events in Cuba, most significantly the crisis of the 1990s and the economic and political reforms that followed. In that period, 961 Cuba-related designations were listed. We categorized the listings as four types: 61.4 percent were entities in Cuba; 23.3 percent were entities outside Cuba; 9.7 percent were natural persons; and 5.6 percent were vessels.

In the following pages, we explore the history of the listings as part of the US’s Cuba policy within that time frame. We explore their scope and their objectives, and we question whether they are in fact “targeted.” This discussion will contribute to a more complete view of a tool increasingly used by the United States in the twenty first century.Footnote ¹⁰

The Rise of the Blacklists: From Bill Clinton to George W. Bush

The 1990s were an extraordinarily difficult period for Cuba. The collapse of the European socialist bloc and the dissolution of the USSR meant the loss of an estimated 85 percent of demand for Cuba’s exports and 70 percent of its imports, and its main sources of credits and technology, as well as the loss of its most important political allies.Footnote ¹¹ This caused a deep crisis and triggered a series of reforms and the search for new markets and business partners.

At the same time, the US was in the position to reconsider its policies in the context of the post-Cold War. In the cases of China and Viet Nam, Washington opted for lifting economic sanctions and normalizing relations. However, the US’s Cuba policy went in the opposite direction. In 1992, Congress passed the Torricelli Act, which codified the sanctions regulations into statutory law,Footnote ¹² removing the president’s discretion to modify or terminate many of the provisions of the sanctions regime. In 1996 Congress passed the Helms–Burton Act,Footnote ¹³ which furthered these efforts. Both of these statutes went well beyond bilateral effects, and intervened extensively in Cuba’s trade with third countries, at the time when establishing new trade relations was critical to Cuba’s ability to address its economic crisis. In addition, these statutes targeted several key sectors of the Cuban economy: shipping; exports of raw materials, including sugar and nickel, Cuba’s leading exports at the time; the rapidly growing sector of biotechnology and medical exports; and foreign investment. These are discussed in Raúl Rodríguez Rodríguez’s chapter in this volume.

The making of that iteration of US’s Cuba policy was shaped by several factors. Neoconservative and other conservative groups with hardline stances in international affairs were increasingly influential both in the 1980s and in the aftermath of the Cold War. The anti-Castro Cuban–American community in Florida was a vocal player in the post-Cold War Cuba policy and the broader policy towards Latin America. In the geopolitical context, unlike China and Viet Nam, Cuba is located in the immediate surroundings of the United States, in an area critical as the pivot of US power in the Americas. In the early 1990s, there was a clear perception of Cuba’s weakness and a subsequent estimation that the Cuban political regime had little likelihood of surviving. Thus, there was a perception that Cuba’s economic crisis presented an opportunity to bring about the end of the Cuban post-revolutionary government.Footnote ¹⁴

The Cuban–American community in Florida heavily influenced each presidential administration, as well as the campaign platforms of presidential candidates. Florida was the largest swing state, where a few thousand votes could decide a presidential election. Indeed, George W. Bush took office in January 2001 after a highly contested and controversial election, decided by 537 votes in Florida and a ruling by the US Supreme Court. The evidence shows that the alliance between the Republican Party and the Cuban–American political elite was a major factor in Florida’s shift from solidly Democratic to a swing state, and in Bush carrying its electoral votes in 2000.Footnote ¹⁵

Meanwhile, Cuban–American representation in Congress grew steadily, with Cuban–Americans gaining positions of influence in both the House and the Senate – for example, Ileana Ros-Lehtinen, former Chair of the House Committee on International Relations, and more recently Marco Rubio, who alternated as chair and ranking member of the Senate Committee on Foreign Relations. Political processes within Florida were heavily influenced by the “Cuban-American political machine,”Footnote ¹⁶ which included a number of hardline “anti-Castro” organizations that consequently gained significant political clout at local, state, and federal levels.

But counter to the expectations of these political actors, the Cuban government did not collapse. It coped with domestic political issues and managed the social and migration crisis of 1994. By 1995, the economy of the island had begun to recover, as the country was slowly rerouting its international trade, opening up to foreign investment, adjusting its management structures, and reorganizing its core sectors.Footnote ¹⁷

In their respective efforts to secure Florida’s electoral votes, George H.W. Bush and Bill Clinton signed into law two major pieces of legislation reinforcing the blockade. Bush signed the Torricelli Act in 1992, and Clinton signed the Helms-Burton Act in 1996. Both did so a few months before their respective general elections.

The following year, the Clinton administration expanded the reach of the sanctions regime considerably through the use of blacklists. In 1997, the administration blacklisted hundreds of Cuba-related persons and entities. These were predominantly (about 85%) vessels and Cuba-owned or Cuba-related companies and offices abroad. The significance of these designations is clear: Cuba’s international trade activities were critical to the retooling of its economy and its new economic relations. Thus, the listings of 1997 functioned as a supplement to the Torricelli and Helms–Burton laws, reinforcing their measures targeting Cuba’s access to shipping, access to new markets for its exports, and access to new international suppliers.

Forty-five vessels were blacklisted in 1997. Four of them were owned by Cuba or had the Cuban flag, and the rest were vessels that had shipped goods to or from Cuba and were owned by foreign parties and sailed under foreign flags. All of these listings came on top of a provision of the Torricelli Act banning any vessel that had docked in Cuba from docking in US ports for 180 days.Footnote ¹⁸ These actions, in combination, sought to undermine Cuba’s access to international maritime trade.

Also in 1997, the Clinton administration dramatically expanded the blacklists concerning Cuba-related entities abroad, adding 195 such entities. By contrast, no such entities were listed in 1996, and only one was listed in 1995. The composition of these listings is also significant: 88.6 percent were classified as commercial, storage and transportation companies and offices.

The sensitivity and complementarity of these two categories are apparent. On the one hand, as an island nation, Cuba’s international trade is dependent on maritime shipping. On the other, commercial offices, shipping companies, foreign commercial companies, and storage facilities are all major components of any country’s foreign commerce. By targeting them, the US was effectively targeting the entirety of Cuba’s international trade in goods. Cuba’s trade is not only a source of revenue, but an indispensable supply line for basic consumption goods for the general population, as well as for capital goods for the operation of the economy at large.

In 1997, the administration also blacklisted sixteen natural persons (Figure 9.1) and twenty-six entities in Cuba (Figure 9.2). Among the natural persons were the representatives of Banco Nacional de Cuba (Cuba’s Central Bank at the time) in Spain, Japan, and Switzerland,Footnote ¹⁹ which affected the bank’s operations abroad, as the signatures of the bank’s representatives were needed to authorize documents for a wide variety of financial transactions and other operations.

Figure 9.1 Natural persons by year of inclusion, 1994–2021.

Source: Elaborated by the authors with data from the Federal Register.

Figure 9.2 Sanctioned Cuban entities by year of inclusion.

Source: Elaborated by the authors with data from the Federal Register.

In 1997, the targeted entities within Cuba were all economic units. All designations referred to state-owned enterprises (SOEs).Footnote ²⁰ Most of them were shipping companies, which again meant additional restrictions for overall exports and imports. Hence, these two categories – natural persons and entities within Cuba – complemented the listings of ships and Cuban entities abroad, all of these undermining Cuba’s efforts to establish new trading partners and sustain its imports, exports, and international financial transactions.

Whatever rationale was used, revenue generated by state-owned companies in Cuba is a direct contribution to the government’s budget and thus is a source of funding for healthcare, education, and social assistance – the main areas of public spending, typically around 60 percent of Cuba’s budget.Footnote ²¹ When the state’s revenues are compromised, this affects the country’s ability to secure food, oil, medicines, and other essential supplies. Hence, measures significantly impacting state revenues would inevitably impact the well-being of the general population. This, along with the targeting of foreign trade, meant that this early surge of listings broadly targeted both the state and the economy, expanding what was already a complex and extensive array of existing sanctions. Importantly, these came in the early stages of Cuba’s recovery after a deep economic crisis, thus hampering its development.

After 1997, the number and frequency of Cuba-related listings declined significantly for several years. While the George W. Bush administration adopted various measures which were adverse to Cuba, these did not include extensive blacklisting during his first term. Rather, the administration adopted a different set of initiatives to undermine Cuba’s economy. The Bush administration made it extremely difficult for Cuban entities and persons to use US dollars by imposing multimillion dollar fines on foreign institutions that offered financial and banking services to Cuban persons and entities, starting with the Swiss bank UBS.Footnote ²² This made it very difficult for Cuba to conduct regular international financial operations, settlements, and deposits. Also, remittances sent by Cuban–Americans to their family members on the island – a major source of revenue to the country that went directly to regular Cubans – were restricted in regard to the amount that could be sent, how frequently remittances could be sent, and the legally permitted recipients.Footnote ²³ The Bush administration also created programs, structures, and offices officially designated to drive regime change in the Caribbean country, such as the Commission for Assistance to a Free Cuba.Footnote ²⁴

In spite of the obstacles, by 2006, the Cuban economy had recovered to a significant degree. Its GDP grew by double digits in 2005 (11.2%) and 2006 (12.1%).Footnote ²⁵ This improvement was met with a new round of targeted sanctions.

In 2007, seventy-nine new Cuba-related designations were included in OFAC’s blacklist in all categories. Forty-six natural persons were listed (Figure 9.1), the majority related to the economy: managers in state-owned companies, economy-related government officials, and foreign investors and owners of foreign companies doing businesses with Cuba.Footnote ²⁶ These included, for example, Julio Imperatori,Footnote ²⁷ at that time the Managing Director of the Havana International Bank, and Guadalupe Ortiz,Footnote ²⁸ representative of Cubanatur, then a Cuban travel agency in Mexico, D.F.

Also in 2007, four vessels and twenty-nine entities were blacklisted. The latter included twenty-two entities outside of Cuba, such as Hola Sun Holidays Limited, a Canadian travel agency specializing in Cuba travel, and seven entities within Cuba, including Cimex, one of Cuba’s largest import–export corporations.Footnote ²⁹ The pattern here suggests the targeting of two major sectors of the Cuban economy: international tourism and, once more, international commerce. It is worth noting that Canada had for decades been the biggest market for Cuba’s tourism industry; hence blacklisting a specialized Canadian travel agency had the potential to directly cause some disruption in the Cuban economy, while serving as a warning to other such agencies to terminate their business with Cuba or face legal and financial consequences.

When government officials or executives in state-owned companies are listed, their ability to perform their work, such as trade or investment negotiations, is undermined, as foreign companies will be wary of transacting business with them, for fear of running afoul of US law. Foreign investors, and foreign companies doing business with Cuba, face similar risks, and would have reasons to withdraw from the Cuban market. These tendencies would cause particular harm in an economy that is mostly state-owned and state-managed, with a limited pool of potential business partners. It is similarly important to note that in many of these cases, sanctions against companies and individuals were not justified by claims that they had engaged or were engaging in unlawful practices against American citizens, the American government, or international law; rather, these were framed as sanctions against the Cuban government.

While the US administration justified these listings by reference to various claims of human rights violations and putative ties to terrorism by the Cuban government, it is clear that, substantively, these listings functioned as measures targeting critical state functions, as well as Cuba’s trade relations and foreign investors.

Back and Forth: From Obama to Biden

The election of Barack Obama in 2008 signaled a new stage in US foreign policy. The international system was drifting away from the unipolar model assumed by the previous administration’s foreign policy, and there had been major political changes in Latin America. An adjustment of US foreign policy was necessary.

In that context, the Obama administration, particularly during its second term, took several steps toward improving relations with Cuba, most notably the restoration of diplomatic relations in 2014, which were severed by the US in 1961; the lifting or softening of some sanctions; and the opening of a series of official negotiations aimed at normalizing bilateral relations. The administration removed 231 Cuba-related designations from the blacklists: 45 vessels, 99 entities abroad, 26 entities in Cuba, and 61 natural persons (Figure 9.3). In 2015, Cuba was removed from the list of State Sponsors of Terrorism.Footnote ³⁰ All of this sent positive signals about the future of US–Cuban relations. This is the only administration in the period addressed in this chapter to reduce the number of designations, and did so by a large margin, with a net of 225 removals.

Figure 9.3 Persons, entities, and vessels removed from the lists, 1994–2021.

Source: Elaborated by the authors with data from the Federal Register.

However, the core of the sanctions regime – the statutes from the 1960s and 1990s – remained in place. Also, a number of the designations that were removed concerned companies that had gone out of business, and deceased individuals, so the delistings were less significant than the numbers would suggest.

The Obama administration did however use listings to create additional pressure on the Cuban state and economy,Footnote ³¹ although at a lower level than Obama’s predecessors and with a twist. The administration added five new designations in the category of natural persons. The last three of them, introduced in 2016, were different from prior ones, as they were groups rather than individuals: members of the Council of Ministers, flag officers of the Revolutionary Armed Forces, and members of the Politburo (Political Bureau of the Communist Party, in its official nomenclature).Footnote ³²

While it may seem on the surface that these listings were minimal and highly targeted at influential government officials, in reality, these three designations directly affected a much larger number of persons than any of the previous listings. Particularly, they include any minister in charge of economic affairs, whoever that person is, regardless of their personal history, without any allegation of personal wrongdoing. What this means is that anyone in those positions will be excluded from any potential negotiation with US counterparts, and their participation in agreements with third country-based companies could be used against the foreign party. This essentially forces structural and operational changes, such as the designation of lower-level officials to carry tasks previously attached to the ministerial office and adds another layer to the decision and supervision process, as those functions will still be under the competence of those ministries and their ministers.

In addition, there was a large increase in the size of the penalties imposed, particularly on banks, for sanctions violations, including transacting business with those who were blacklisted. In several cases, the administration bundled up multiple violations of the regulations in cases against major foreign banks: the Dutch bank ING, the British bank HSBC, and the French banks BNP Paribas and Crédit Agricole. These banks were penalized on the basis of their operations with several sanctioned countries, including Cuba, with penalties in the hundreds of millions or even in the billions of dollars, along with the threat of suspension of their licenses to operate within the US financial system (Table 9.1).

In 2009, OFAC then published a set of enforcement guidelines; in combination with the new maximum for civil penalties, the result was a dramatic increase in fines. Between 2009 and 2014, “mega-fines” were introduced; the largest penalties increased by an astonishing 48,000 percent, from $2 million to $963,619,900.Footnote ³³ The total annual penalties likewise skyrocketed, increasing 27,700 percent from $4,344,686 to $1,209,298,807.Footnote ³⁴ But even without the “mega-fines,” the average fines more than doubled after the changes.Footnote ³⁵

These penalties significantly increased the risk for foreign companies doing business with Cuba and sent a chill throughout the global banking community. This in turn created impediments and additional costs for Cuba’s transnational transactions in general, broadly affecting its imports, exports, and foreign investment.

It would seem that US sanction practice under the Obama administration, specifically in regard to Cuba, was contradictory. On one hand, there were not a great many additional listings under this administration, or at least so it appeared; and the administration granted new licenses to US companies to do business in Cuba. On the other, extraterritorial enforcement against international “violators” of the unilateral sanctions was so severe that it sent shock waves throughout the international business community, particularly the banking industry.

However, this policy was in fact quite coherent and corresponded to Obama’s general approach to foreign policy. Changes in the listings did not represent a significant reduction in their use, but rather their transformation into a tool that gave the US government increased latitude in the interpretation and enforcement. This allowed their application in a more adaptive fashion, so that they could be adjusted to the circumstances. That is, they fit neatly within the framework of the “smart power” approach.Footnote ³⁶

Thus, under the Obama administration, while the listings may have been explained by reference to human rights violations and so forth, they functioned very specifically to weaken Cuban political and social institutions. The application of the sanctions also had the effect of undermining Cuba’s ability to engage in global commerce, by compelling the withdrawal of international banks, such as Banque Nacionale de Paris (BNP Paribas) and Spain’s Banco Sabadell S.A., which occurred in 2013.Footnote ³⁷ As non-American companies were deterred from doing business in Cuba, this allowed American companies to benefit from the license system under the policy changes that were taking place in parallel.

Around the same time that OFAC began imposing large-scale penalties against European companies for engaging with Cuba, the Obama administration started to issue licenses for American companies of different types and sizes interested in doing business in Cuba. For example, in 2015, Florida’s Stonegate Bank secured a license and became the first US corresponding bank for Cuban counterparts.Footnote ³⁸ Also in 2015, Sprint reached an agreement with Cuba’s state-owned telecommunications company ETECSA to offer joint roaming services;Footnote ³⁹ and in 2016, Sheraton began operating a hotel in Havana, as its parent company at the time, Starwood Hotels, negotiated with Cuba’s Habaguanex S.A. for management contracts for other hotels in the city.Footnote ⁴⁰

Thus, the listings, and the huge penalties, undermined Cuba’s trade with third countries, while the expansion of licenses gave US companies an entry point into the Cuban market. However, this development came to a halt and was then reversed under the next administration, thus negating any potential long-term benefit for American companies, while keeping the pressure on third-country based companies.

The Trump administration, which included figures such as Mauricio Claver-Carone and John Bolton, had close ties with the conservative elites within the Cuban–American community, and legislators such as Marco Rubio, Mario Díaz-Balart, and Maria Elvira Salazar, as well as Florida-based Political Action Committees and lobby groups controlled by Cuban–Americans, were important assets for Trump in Congress.Footnote ⁴¹ The new administration ordered a review of the Cuba policy, and starting in June 2017 engaged in increased pressure as well as renewed calls for regime change, thus shifting away from the more nuanced approach espoused by the Obama administration.Footnote ⁴²

In 2017, the Trump administration modified the listings of natural persons added by Obama. The modification eliminated one of the designations (members of the Politburo), replaced the other two with much broader versions, and added ten totally new designations, in order to include in the lists:

These were in addition to other broad listings, such as members and employees of the National Assembly of People’s Power (Cuban Parliament), members of any Provincial Assembly of People’s Power (provincial parliaments), and local sector chiefs of the Committees for the Defense of the Revolution (the largest mass civil organization in the country).

Once again, these were not lists of individuals by name, but rather these were labels denoting groups of variable size and composition. Many of them were not state officials, such as the employees of the ministries or the Supreme Court. This category, for example, encompassed janitors, human resources office workers, receptionists, and other personnel employed by those institutions. These sanctions also meant that these persons could not legally receive gift parcels and communications devices sold by US nationals.Footnote ⁴⁴ In addition, they could not receive remittances from anyone in the United States or sent through American intermediaries.

The collective listing of categories of natural persons effectively targeted much larger numbers of individuals than prior designations. Any of the institutions mentioned employs hundreds or thousands of persons, many of whom are not officials. Also, the vagueness of the language allows for broad interpretation, thus threatening even larger numbers. Thus, the nature of the designations makes even clearer the intention of hurting the state as a whole, rather than specific “wrongdoers.”

This also created risk and uncertainty for those in Cuba involved in government: because the new listings incorporated broadly worded categories whose scope was uncertain, individuals in many cases could not be certain whether they had been designated or not. This also translated as uncertainty for companies doing business with Cuba, since they could not be entirely certain whether a specific government official was or was not covered by the vaguely worded categories. The uncertainty, combined with the severity of the penalties OFAC was imposing, contributed to an adverse risk assessment, and consequently in many cases the withdrawal of foreign companies from the Cuban market.

After the 2018 midterm election, the Trump administration scaled up both its rhetoric and its actions against Cuba. This appeared to respond to three major factors. First, the Cuban economy was slowing down, and opposition groups within and outside Cuba were increasingly active, responding to a perception of weakness of the Cuban government. Second, Florida had shown itself to be an important electoral stronghold for the president. Third, there emerged a camp of political rivals, self-described as socialists, notably Bernie Sanders; associating them with the “horrors” of countries like Cuba and Venezuela could pay off on the campaign trail.Footnote ⁴⁵

The Trump administration took several steps that substantially increased the economic impact of US sanctions. In 2019, the administration began to implement Title III of the Helms–Burton Act – a controversial provision that authorized lawsuits, in US courts, against foreign companies doing business in Cuba involving certain properties – which had been suspended by US administrations since the inception of the law in 1996, due to its extraterritorial nature and the fear of alienating allies. Also, in January 2021, shortly before Biden’s inauguration, Cuba was added once again to the list of State Sponsors of Terrorism.Footnote ⁴⁶

In addition to these measures related to legislation and policy, the Trump administration substantially expanded the use of blacklists, starting early in the administration and increasing the listings in the run-up to the presidential election. These listings were used in a manner that was different from the approach of the Obama administration. The Trump administration policy was unequivocally geared toward maximizing the economic pressure on Cuba, while explicitly calling for regime change. But the administration also utilized the blacklists as a domestic political strategy in a manner that had not occurred before.

One of the significant expansions of the listings took place in 2017, when the administration created the List of Restricted Entities and Subentities Associated with Cuba (Cuba Restricted List). The Treasury Department framed the list as targeting “Cuban military, intelligence, or security services or personnel with which direct financial transactions would disproportionately benefit such services or personnel at the expense of the Cuban people or private enterprise.”Footnote ⁴⁷ However, most of the entities listed are related to the civilian economy, including dozens of hotels across the country, beverage manufacturers, agricultural enterprises, and stores selling consumer goods.

The Trump administration, through the combined use of this and the other lists, added more designations than the Clinton, Bush, and Obama administrations combined – a total of 550. The bulk of these were added in the first year of the administration and in its last year, with the largest number added in the run-up to the presidential election (Figure 9.2). Of these, 544 were state-owned enterprises, state-owned holdings, and other smaller economic units.Footnote ⁴⁸ In the context of the Cuban economy as a whole, the sheer scope of these listings is enormous.

According to Cuba’s ONEI, as of 2020 there were 1795 state-owned enterprises of all types in the country.Footnote ⁴⁹ The state sector, consisting of companies and public institutions, was and is the predominant economic sector. As of 2020, there were no private Cuban companies, and the private sector consisted only of self-employees and family businesses. Thus, listing hundreds of SOEs and other state-owned economic units had a direct large-scale impact on the economy as a whole. Part of the listed entities were military industries, but the majority were civilian SOEs and other economic units.

Entire sectors were profoundly affected. For example, of Cuba’s seven hospitality chains, the five largest ones are blacklisted. Cubanacan had been listed since 2007,Footnote ⁵⁰ but the Trump administration added Habaguanex in 2017,Footnote ⁵¹ and Gaviota in 2020.Footnote ⁵² In September 2020, the Trump administration announced the establishment of the Cuba Prohibited Accommodations List. It prohibits persons subject to US jurisdiction from staying at any of the listed hotels, hostels, rental houses, and other accommodations.Footnote ⁵³ This added nearly 300 designations and an extra layer of difficulty for any US person who visits the island, as finding a permissible accommodation becomes more complicated.

Also in September, AIS Remesas, a Cuban state-owned company that processed remittances sent from abroad, was blacklisted.Footnote ⁵⁴ On October 26, 2020, the administration announced the listing of Fincimex, another Cuban company that serves as a hub to receive remittances.Footnote ⁵⁵ The listing of Fincimex and AIS had a significant impact on the economy at large. These were the counterparts of Western Union in Cuba, and they channeled between $900 million and $1.5 billion per year – equivalent to up to 1.5 percent of the country’s GDP prior to the pandemic – that went to common citizens to support household consumption or the establishment of then emerging private businesses.Footnote ⁵⁶ The actual volume of remittances is unknown, as important amounts are moved through irregular means, mostly carried in person by Cuban–Americans visiting the island. However, the blacklisting of Fincimex and AIS was particularly disruptive, since it forced the suspension of regular financial flows in the midst of the Covid-19 pandemic, when international travel was paralyzed; thus, their listings, along with the border closings due to the pandemic, effectively blocked almost all remittances to Cuba.

The Trump administration removed some designations from the lists, albeit in much smaller numbers – a total of only six (Figure 9.3). In addition, three of those removals were in fact part of the expansion of collective designations of natural persons, hence these are technical removals, not proper delistings. In total, Trump added a net 557 Cuba-related designations and established two additional Cuba-specific lists.

While the blacklists have always been closely tied to foreign policy and domestic politics, the Trump administration politicized them even more, by openly incorporating them into the rhetoric of the electoral process. As mentioned previously, some of the most visible listings occurred in the months and weeks leading to the presidential election of 2020. Also, sanctions can be announced in part or in advance and then again when implemented, to maximize their political effect, both in Cuba and within the US. For example, while the Fincimex listing was not actually implemented until December 2020,Footnote ⁵⁷ it was announced shortly before the election, in October 2020. In the case of Trump, this was clearly intended to cater to the anti-Cuban government Cuban–American political organizations and constituents in the important state of Florida.

And while the ostensible objective of the listings was to target individuals in the government or military who were engaged in wrongdoing, in fact the Trump administration listings were directed at hundreds of state entities and major sectors of the economy, such as tourism, remittances, and access to international banks. In the face of these restrictions – and the actual or perceived risk of doing business with Cuba – hundreds of banks and companies from third countries declined, withdrew, or severed trade relations, impacting employment, public services, and the financial stability of large swaths of the Cuban population.

When Biden assumed the presidency in January 2021, there were expectations of a change in Washington’s Cuba policy. However, all previously existing sanctions were kept in place. The Biden administration, as of this writing, had in substance, if not in rhetoric, remained more in line with Trump’s policy of maximum pressure than with Obama’s more nuanced and flexible approach, albeit without the flurry of new listings and other sanctions measures introduced by Biden’s predecessor.

After incidents involving social unrest in Cuba in the summer of 2021, the administration listed four additional entities, all of them law enforcement agencies and military bodies that belonged to already designated institutions or were formed by personnel already included in collective designations. The administration also added ten individuals, mostly high-ranking military officers. In the same year, two vessels were added to OFAC’s list. In parallel, it delisted one vessel. Hence, by the end of 2021, the Biden administration had added a net fifteen designations.

These listings were mostly political in nature,Footnote ⁵⁸ except for the vessels, and were oriented toward political messaging more than at directly affecting those individuals and entities. However, these listings signaled that the return to engagement policies, closer to Obama’s approach, was unlikely.

Conclusions

While asset freezes and other forms of blacklisting were touted in the early 2000s as the ideal form of targeted sanctions, in regard to the US measures against Cuba, we see that that is not the case. It may well be said that the listings are “targeted,” but not in the sense that they are limited to individual actors engaged in human rights violations or support of terrorism. What can be said is that in crucial aspects they are in fact targeting major sectors of the Cuban economy, specifically imports, exports, investment, and transnational financial transactions, including family remittances.

While the stated justification for the sanctions concerns human rights and terrorism, the nature and the timing of the listings suggest policy objectives that are largely unrelated. The listings were notably increased, or their impact was expanded in some other way, at times of particular vulnerability for Cuba, or to undermine a trajectory of positive growth, or in conjunction with US domestic political agendas and election cycles, or as a means of excluding foreign business in Cuba while giving US companies access to the Cuban market. What becomes apparent is that the listings to a great extent function not as a process concerned with individuals, but rather as a set of policy tools that complement the statutory measures, and correspondingly are aimed at compromising large sectors of the Cuban economy, appeasing an influential US domestic constituency, or seeking to achieve regime change.

In 1997, there were significant increases in listings of vessels as well as Cuban entities operating abroad; the first affected Cuba’s access to maritime shipping and the second concerned its efforts to expand trade relations. Both of these were critical to Cuba’s economic recovery in the 1990s. The 1997 measures came on the heels of the Helms–Burton Act, reinforcing and complementing the explicit sectoral measures found in the statute which targeted shipping, exports, and imports.

From 1998 to 2006, there were not significant large additions to the blacklists. However, there were other measures with broad economic impact that were in place, such as prohibitions on transactions involving US dollars, and restrictions on remittances. The former created significant impediments to Cuba’s foreign trade, and the latter undermined a major source of hard currency flows into the country.

Despite these obstacles, 2005 and 2006 saw significant growth in Cuba’s GDP. In 2007 – in response, it seems, to Cuba’s economic growth – there were seventy-nine new listings, many of which were related to the economy: managers in state-owned companies, economy-related government officials, foreign investors, and owners of foreign companies doing businesses with Cuba.

The Obama administration removed over 200 listings and removed Cuba from the State Sponsors of Terrorism list. This administration added new listings, but they seemed minimal – barely over a dozen. However, the listings were largely framed as categories of persons, rather than lists of named individuals. Given the breadth and vagueness of these categories, alongside drastic increases in the monetary penalties on banks and others doing business in Cuba, the risk assessment of these actors was heightened, and many withdrew from the Cuban market altogether. At the same time that foreign companies with ties to Cuba saw their risks increasing dramatically, US companies were receiving far more licenses to do business in Cuba, suggesting that the listings were motivated less by human rights concerns than by an interest in preserving the Cuban market for US companies.

The Trump administration not only rolled back many of Obama’s initiatives with Cuba, but also blacklisted hundreds more Cuban entities. The specific listings included major actors in the tourism industry and in the transfer of remittances, both of which are critical sectors of the Cuban economy. Also, the Trump administration expanded Obama’s collective designations, sometimes with unclear parameters and ambiguous wording. This created uncertainty on the part of the Cubans who might or might not have been the intended targets; and created uncertainty as well on the part of foreign businesses that would be wary of engaging with government officials who even might be considered listed persons in the eyes of the US.

This administration also introduced a degree of overt politicization that was notable: in the run up to the 2020 presidential elections, the Trump administration announced new listings of major economic players, such as Fincimex, and other measures, such as the establishment of a new list further targeting tourist lodging. While administrations since Clinton had used the sanctions policies to court favor with the Cuban–American community in Florida, Trump not only did this at the level of policy, but also explicitly incorporated the listings in the rhetoric (and the timeline) of the presidential electoral campaign.

The differences among administrations indicate that blacklisting, sanctions at large, and the Cuba policy in general were deeply intertwined with the evolution of US policies and politics, both domestic and international. Far from being “smart” sanctions, the listings impact entire sectors, and create multiple new barriers for an already sanctioned economy. By targeting the state-owned sector primarily, the listings directly affect the foundation of the entire economy and the organizations that employ the vast majority of the labor force. They limit the development of private initiative by reducing the flow of remittances, cutting investment and supplies, and shrinking the customer base. In these ways and in others, the listings drastically reduce the ability of the entire population to access basic services and obtain needed consumer goods, and they worsen the hardship and poverty.

Introduction

The UN 2030 Agenda for Sustainable Development, adopted in 2015, builds upon the Millennium Development Goals of September 2000 and provides the global framework for poverty reduction and development through the end of this decade.Footnote ¹ At the heart of the 2030 Agenda are the seventeen SDGs and their 169 related targets.Footnote ² The “central, transformative promise” of both the 2030 Agenda and the SDGs is the principle of Leave No One Behind (LNOB), a relatively amorphous term, but one that recognizes that factors such as age, sex, disability, race, ethnicity, origin, religion, and economic status contribute to the success or failure of efforts to reduce poverty and provide for basic needs.Footnote ³ Although not specifically named as one of the seventeen SDGs or related targets, the concept of financial inclusion is a key enabler for many of the goals and is the hinge on which many of the LNOB factors turn.Footnote ⁴ Financial inclusion, according to the World Bank, “means that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way.”Footnote ⁵ There is a significant academic literature discussing the contours of financial inclusion and the metrics for measuring it, but for purposes of examining efforts at poverty reduction and sustainable development in the Global South, the degree of access to formal financial services remains a critical measuring stick of progress towards the SDGs.Footnote ⁶

All of this matters because in the discourse surrounding the humanitarian impact of economic sanctions, particularly US sanctions, the effect of those policies on financial inclusion in targeted countries is almost never discussed.Footnote ⁷ Yet these sanctions, combined with US anti-money laundering and countering the financing of terrorism (AML/CFT) legislation, have a considerable “chilling effect.” This affects the risk calculus that banks engage in while deciding whether to do business at all in Africa. As a result, the measures supposedly targeted towards discrete individuals or countries wind up having a continental effect. The withdrawal of banks from Africa, as well as the increasing skittishness of those that remain to broaden their client base, is no trivial matter. This chilling effect works to hamper efforts at poverty reduction and sustainable development in Africa and is entirely driven by policies made in Washington, not in Africa. And while the particular occupant of the White House may have an impact on whom or what the US sanctions, it does not affect the growing propensity of US presidents to wield them as a preferred policy tool.Footnote ⁸

Equally problematic is that economic sanctions are often analyzed as a monolith, even when discussing those imposed by the US.Footnote ⁹ There are key distinctions in terms of transparency, accountability, and due process when the US is imposing multilateral sanctions under the authority and auspices of the UN and when it is acting on its own. US unilateral financial sanctions are one of the most powerful weapons Washington has ever wielded to impose its will abroad, all on account of the strength of the US dollar in the global economy, and it is one of the least understood by the general public. This presents a significant social justice issue that merits much deeper reflection among academics and policymakers, particularly those wedded to the notion that “targeted” or “smart” sanctions have a marginal humanitarian effect, especially when compared with more comprehensive sanctions regimes.Footnote ¹⁰

Africa in the Global Financial Order: All Roads Lead to Washington

Although there are other key players on the economic sanctions stage, the UN and the EU being two of the most important, the global hegemon of the international financial order is the US.Footnote ¹¹ According to Jonathan Kirshner, “[t]he United States has been the dominant power in world politics since World War II and the leading influence on the nuts and bolts of how global economic relations are organized.”Footnote ¹² All roads lead back to Washington and it is impossible to tell the story of how sanctions affect banking and financial inclusion in Africa without beginning there.

The Real-World Impact of the Chilling Effect: Banking in Africa

As of 2021, some 1.4 billion people worldwide were unbanked, meaning that they had no access to an account at a financial institution or a mobile money provider.Footnote ⁵¹ Because most adults in high-income countries have access to these services, the overwhelming majority of the unbanked are in the developing world, with 54 percent of the unbanked globally being women.Footnote ⁵² Globally, the unbanked are also disproportionately the poor, with the poorest 40 percent of households making up nearly half of the world’s unbanked.Footnote ⁵³ Although, as the World Bank noted, there are variations in account ownership among economies, certain areas of the world are much harder hit than others, particularly sub-Saharan Africa, where 74 percent of the unbanked have only a primary education or less.Footnote ⁵⁴

The estimates of unbanked adults show a decline in the last few years. As of 2017, the World Bank put this figure at an estimated 1.7 billion adults, in comparison to the 1.4 billion estimate for 2021.Footnote ⁵⁵ In part, this reflects the increased use of mobile money. Indeed, as mobile money accounts increased in sub-Saharan Africa, during the same period there was an accompanying decrease in financial institution accounts.Footnote ⁵⁶ However, financial institutions are more regulated than mobile money, and have higher requirements for transparency.

Access to formal financial services, particularly for consumer banking, is a concern for African policymakers and has a direct impact on efforts towards sustainable development.

McKinsey & Company estimated in 2017 that approximately 300 million Africans were banked, or had access to retail banking services, up from 170 million in 2012.Footnote ⁵⁷ Although in the aggregate that seems like a sizable figure, that is less than a third of a total population of more than 1.3 billion, and one that is expected to double by 2050.Footnote ⁵⁸

Yet, financial inclusion through the expansion of retail banking is not as simple as opening a branch on every corner, especially when banks themselves increasingly view the risks of retail operations in Africa as unacceptably high. This aversion to working in Africa has nothing to do with the lack of profit opportunities, particularly in light of the continuing growth of a middle class relative to the population.Footnote ⁵⁹ Instead, this aversion to the African retail banking market is driven almost entirely by the fear of running afoul of the US economic sanctions regime and incurring the wrath of OFAC.Footnote ⁶⁰

Far and away, Africa has collectively been the target of more sanctions programs than any other continent.Footnote ⁶¹ However, it important to note that US sanctions, in particular, are not always country-specific, such as those which have targeted Cuba or Iran. Instead, many of the approximately 6,300 names on the SDN list are of individuals and entities listed as part of “targeted” counter-terrorism or counter-narcotics programs.Footnote ⁶² The targeting of individuals, as opposed to countries, has become much more pronounced in the years since the US adopted the legislation creating the Global Magnitsky program. All of this means that the risk calculus for compliance has become much more difficult. Rather than simply having sanctions programs that correspond to discrete countries, when there are more than 6,300 individuals and entities over numerous unrelated programs, compliance becomes exponentially more difficult. For Africa, that problem is magnified in that many of the names on the SDN are of individuals with a marginal nexus to Africa, such as Lebanese nationals connected with Hezbollah, who are alleged simply to have property or interests in African states – quite literally, a form of guilt by association.Footnote ⁶³

All of this matters because the collision between a policy of enforcing US economic sanctions based on an AML/CFT framework and one of fostering financial inclusion in what should be a booming market for retail expansion, results in a no-win situation for financial institutions operating in Africa. The financial risk of miscalculating OFAC’s interpretation of the SDN list or not conducting due diligence to OFAC’s peculiar satisfaction far outweighs the potential rewards the African marketplace can offer or the development goal of greater financial inclusion. The chilling effect on banking services, which US economic sanctions policy engenders, has vast real-world effects.

Conclusion

In passing the Anti-Money Laundering (AML) Act of 2020, Congress required the GAO to produce a study on financial services and de-risking. That report, published in December 2021, specifically addressed the ability of humanitarian organizations to serve their mission, the ease of sending and receiving remittances, and financial inclusion.Footnote ⁸³ Not surprisingly, the GAO found that bank representatives “limit or deny services to money transmitters and nonprofits largely because of their efforts to comply with Bank Secrecy Act/anti-money laundering (BSA/AML) regulations … cit[ing] the high costs of conducting the due diligence necessary to ensure funds distributed in high-risk countries are not used for illicit purposes.”Footnote ⁸⁴ Specifically as to sanctions compliance, the report noted that uncertainty with respect to OFAC’s interpretation of the scope of humanitarian exemptions is a key factor in the unwillingness of banks to offer financial services to nonprofits in sanctioned jurisdictions.Footnote ⁸⁵ Notwithstanding the clarity of the GAO’s findings, it is unclear what effect, if any, they will have on overall US sanctions policy.

The unmistakable reality is that US economic sanctions, despite being sold to the public as targeted or “smart,” have a direct impact on the lives and livelihoods of the people of Africa, even in those states not directly under sanction. As Gordon notes, with US sanctions the combination of ambiguous regulations and very high penalties results is a predictable risk calculus by private actors – resulting in withdrawal from the targeted market.Footnote ⁸⁶ For Africa, this powerful mix of a massive SDN list (that has been widely criticized for its arbitrariness and inconsistency), combined with the risk of multibillion dollar fines and possible debarment from the US financial system, results in a chilling effect on the retail banking industry on the continent. As correspondent banks withdraw their services, connecting to the dollar economy becomes much more difficult and much more expensive for African customers.

As recognized by the UN, financial inclusion is a key enabler for many of the SDGs which are the framework for poverty reduction and development over the remainder of the decade. The chilling effect of the US economic sanctions policy on financial inclusion efforts in Africa is real, and it is the poorest and most vulnerable people who are suffering. Twenty years after the passage of the USA Patriot Act, a re-evaluation of the paradigm linking AML and counter-terrorism is long overdue, as is a comprehensive examination of how, despite “targeting,” US economic sanctions continue to have devastating collateral effects on populations and economies far beyond their stated objective.

Introduction

The use of sanctions as a tool towards achieving a variety of foreign policy objectives has exponentially increased in recent years. From counter-terrorism to political change and progress in the respect for human rights, states and international organizations have developed a complex web of sanctions regimes in the attempt to achieve such objectives.

As the world came to terms with the devastating impact that sanctions regimes imposed on the Former Yugoslavia, Haiti, and Iraq in the 1990s had on the civilian populations, decision-makers shifted away from comprehensive sanctions measures such as trade embargoes and tried to develop more targeted, or “smart,” sanctions. Such sanctions would, for example, target specific individuals or entities, rather than entire governments or territories, or more narrowly target certain types of goods to be embargoed, rather than entire trade sectors.

If this shift was seemingly successful in reducing the impact of sanctions on civilian populations, the scope of sanctions regimes remained in many cases too broad. These more targeted sanctions have had a number of negative consequences that were not necessarily intended when they were designed. Among these, one issue that started to be reported in the late 1990s is the negative impact that overbroad sanctions regimes have had on humanitarian action.Footnote ¹ Furthermore, we may be seeing a move back towards more comprehensive sanctions regimes, such as those imposed by the UN on the DPRK, or by the US and the EU on Syria and Russia, which consequently have more of an impact on both humanitarian actors and the civilian populations humanitarians aim to assist and protect.

The link between the implementation of sanctions and the work of humanitarian actors may not be immediately obvious, but, in fact, there are a multitude of ways in which humanitarian action can be impeded where sanctions regimes are being applied and implemented.

Humanitarian actors, guided by the principles of humanity, neutrality, independence and impartiality, work to provide protection and assistance to persons affected by armed conflict, violence, and disaster.Footnote ² These humanitarian principles have been and remain a key guiding compass for humanitarian actors today.Footnote ³ This chapter will be considering the impact of sanctions regimes on organizations conducting their activities within the framework of the humanitarian principles. Importantly, in times of armed conflict, international humanitarian law (IHL) applies and specifically protects the provision of and access to such principled humanitarian action.

Most sanctions regimes today target countries experiencing armed conflict or serious humanitarian crises, or individuals or entities based in such countries. As a result, they are implemented in contexts in which humanitarian actors operate and form part of the regulatory framework humanitarians need to navigate. Despite efforts to institute more targeted sanctions regimes, an increasing body of evidence has shown that sanctions have impacted the ability of humanitarian actors to protect and assist affected populations in accordance with IHL and the humanitarian principles.Footnote ⁴

This rather niche issue gained prominence in the context of the Covid-19 pandemic, notably following the UN Secretary-General’s public letter to the G20 countries calling for a “waiving of sanctions imposed on countries to ensure access to food, essential health supplies, and COVID-19 medical support.”Footnote ⁵ At the initial stages of the pandemic, there were concerns that humanitarian actors providing crucial responses to the Covid-19 pandemic may face sanctions-related obstacles in contexts in which they were among the few, if not the only, actors able to respond. The increased visibility of this issue also led to its politicization, with a number of sanctioned countries calling to eliminate the use of sanctions altogether, and focusing notably on their impact on humanitarian action and the humanitarian situation in sanctioned countries,Footnote ⁶ which in some ways challenged humanitarian actors’ ability to push their arguments.Footnote ⁷ Nonetheless, a number of sanctioning entities attempted to ensure their sanctions regimes did not hinder the response to the Covid-19 pandemic by accelerating the granting of humanitarian exemptions and issuing guidance containing helpful language.

As of February 2022, the armed conflict between Russia and Ukraine and the consequent imposition of massive sanctions against Russia led to further mediatization of the issue. This contributed to the fact that, in the past several years, and after many years of slow progress, significant strides have been made in ensuring that the possible negative impact sanctions regimes on humanitarian aid is limited.

This chapter will explain the various types of direct and indirect negative impacts that sanctions regimes can and have had on humanitarian action, with examples of concrete instances in which it has been impeded. It will then look at the types of solutions that are being put forward to resolve this issue and recent positive developments. It will conclude by highlighting the continued challenges in and efforts needed to ensuring the preservation of the space for principled humanitarian action.

The Direct and Indirect Impact of Sanctions on Humanitarian Action

Sanctions regimes can adversely impact humanitarian action both directly and indirectly in a number of ways.Footnote ⁸ While in some cases it is relatively easy to point to the direct causal impact a specific sanctions regime has on humanitarian activities, in most cases this is difficult. The difficulty can come from the fact that multiple sanctions regimes coexist in one context, but also from the fact that a sanctions regime may be one among many drivers of the challenges humanitarian actors face.

The different types of impact can be described as fitting into seven categories, with four direct ways in which humanitarian action can be challenged, and three indirect, but more prevalent, challenges.

The first and most direct impact would be for a humanitarian organization, or one of its staff members, to be added to a sanctions list. This would trigger sanctions measures against that individual or organization, meaning that, depending on the sanctions regime, they could be subjected to measures such as an asset freeze, or a travel ban. This seems like an unlikely possibility at the UN, where all fifteen member states of a sanctions committee would have to agree, or at the EU, where twenty-seven member states would have to unanimously agree to make such an addition to a sanctions list. However, individual states can develop their own sanctions regimes and it is not implausible that one might decide to sanction a humanitarian organization or one of its staff members. For example, in 2014, the cabinet of the United Arab Emirates (UAE) approved a list of designated terrorist organizations, which included the well-established and recognized NGO Islamic Relief UK.Footnote ⁹ This was not a sanctions regime, but does highlight the risk of such national-level decisions, as it made it a criminal offence for any individual or group to communicate with the listed entities, engage in their activities, or provide support by any means.Footnote ¹⁰ In a more recent example, Ukraine designated the Russian Red Cross under its own set of sanctions against persons contributing to the Russian aggression against Ukraine.Footnote ¹¹

The second type of impact can occur where sanctions regimes provide for a licensing or derogation (also sometimes referred to as exemptions) procedure for humanitarian activities, whereby an organization may apply for permission from the sanctioning entity to provide goods or services in an area in which sanctions apply. Such procedures are meant to ensure that humanitarian activities can go ahead in spite of the sanctions in place. However, such processes are not compliant with IHL, under which only the consent of states affected by armed conflict is relevant, whereas other states have the obligation to facilitate humanitarian assistance.Footnote ¹² These processes also restrict the right of impartial humanitarian organizations to offer services,Footnote ¹³ as they introduce a precondition that has no legal basis under IHL. Furthermore, derogations are not in line with the humanitarian principles, and can undermine the effectiveness of aid, as well as the security of humanitarian actors. Going through these procedures also requires an investment in time and resources. It can not only increase operational costs, but also create delays in the humanitarian response, thereby hampering its flexibility. Under the UN’s DPRK sanctions regime, for example, humanitarian organizations have faced challenges requesting derogations and delays in receiving them.Footnote ¹⁴ In 2018, the approval of derogations for humanitarian organizations took an average of ninety nine days, although the process later considerably improved.Footnote ¹⁵ This has made planning operations challenging, led to time running out on grants, and to eroding the trust in humanitarian actors of stakeholders on the ground.Footnote ¹⁶ In Syria, derogation processes provided for under both US and EU sanctions have also created challenges for humanitarian actors, notably adding costs not provided for in project funding and restricting the flexibility and timeliness of the humanitarian response.Footnote ¹⁷

These challenges are compounded in contexts where multiple sanctions regimes apply and where humanitarian actors have to request derogations from multiple authorities with different requirements and processes.Footnote ¹⁸ Sanctioning entities have developed guidance on derogations, which has helped clarify and streamline processes to an extent. However, this does not address the challenge inherent to such procedures, which is that they require humanitarian actors to request permission from political entities, thereby compromising their neutrality or at least the perception of their neutrality. Ultimately, the decision to grant or refuse a derogation is likely to be dictated by political and/or other non-humanitarian concerns. This could become an increasing concern if other countries start developing their own sanctions regimes with their own derogation procedures. Seeing that humanitarian actors have complied with UN, US, and EU sanctions and requested derogations, there is no reason why countries like China or Russia may not want to impose similar restrictions. This poses a very real challenge to neutral, impartial, and independent humanitarian action.

A third type of direct impact is the challenge humanitarian organizations face in importing certain types of goods necessary for their work. This is particularly the case when sanctions measures include an embargo on dual-use items, that is to say, products or technology that are primarily used for civil or commercial purposes but can also have military or weapons applications. For example, one humanitarian organization had to remove nail clippers from hundreds of hygiene kits in order for them to be allowed inside the DPRK due to the UN sanctions regime’s ban on the import of metal.Footnote ¹⁹ In Syria, humanitarian organizations have faced challenges in importing medical and other equipment, due to prohibitions on the export of dual-items in US and EU sanctions.Footnote ²⁰ Embargos defined by sanctions regimes can also have an indirect negative impact on the import of goods required for humanitarian activities, as risk-averse transit countries or suppliers can delay or block their import for fear of falling afoul of sanctions.

The fourth type of direct impact would be the prosecution of or imposition of fines on humanitarian organizations or their staff if states find them to have violated sanctions measures. This has not been a widespread issue so far, notably because it would require a proactive decision to enforce a sanctions regime against humanitarians. Humanitarians often hear from government representatives that this is not something their government would do, and some governments have even provided so-called “comfort letters” stating that a particular activity is not illegal and prosecution will not be pursued.Footnote ²¹ However, this is the exception rather than the norm. Where sanctions regimes do not have provisions that protect humanitarian organizations, this remains an extremely concerning eventuality. For example, if sanctions regimes target non-state armed groups that control territory, the provision of humanitarian assistance, such as medicine, to clinics run by those groups or their subsidiaries could be considered to be direct or indirect provision of economic resources to listed entities. This is not a theoretical problem, as it is estimated that 66 million people today are living in areas controlled by non-state armed groups.Footnote ²² Furthermore, in 2018, the Norwegian People’s Aid paid a fine of over $2 million for the organization’s interaction with US-sanctioned groups in the occupied Palestinian territory.Footnote ²³ Indeed, humanitarian organizations remain at risk of criminal prosecution under two US statutes.Footnote ²⁴ This risk came to the fore in January 2021 when the US designated the Houthis in Yemen as a Foreign Terrorist Organization, causing grave concern amongst humanitarian actors.Footnote ²⁵

Beyond what have been previously described as direct impacts, sanctions regimes can also have more indirect negative impacts on humanitarian action. These are the consequence of risk averseness by various stakeholders, notably donors and the private sector, but also humanitarian organizations, who are worried about violating sanctions regimes. This concern is exacerbated by the lack of clarity and difficulties in interpreting sanctions regulations. More generally, the difficulties humanitarian organizations encounter are also due to the complex regulatory environment, including the existence of multiple sanctions regimes, as well as other regulatory measures, notably counter-terrorism measures.

One of the main sanctions-related issues that humanitarian organizations face is de-risking by the private sector, and notably private suppliers of goods and financial institutions. These private sector actors perceive the provision of services to humanitarian actors operating in contexts where sanctions regimes apply as presenting too high of a risk of violating sanctions, and hence of exposing them to fines and potential reputational damage. This has led to restrictions on receiving and transferring humanitarian funds, the freezing or closing of accounts, or declined requests to open new accounts.Footnote ²⁶ A 2017 study showed that two-thirds of US-based nonprofit organizations working internationally experienced banking problems.Footnote ²⁷ In late 2020, a study found that those numbers remained consistent, but that the frequency with which these nonprofits experience financial access challenges nearly tripled between 2017 and 2020.Footnote ²⁸ Certain sections of the humanitarian sector are particularly at risk of financial exclusion, notably Muslim faith-based charities, and smaller, more local, organizations. For example, from January to July 2020, Islamic Relief Worldwide has reported undertaking £42 million worth of international transactions, with 43 percent of those transactions being subjected to compliance queries.Footnote ²⁹ In a particularly drastic example, the only banking channel humanitarian actors could use in the DPRK collapsed following the listing in 2017 by the US and the UN of the DPRK Foreign Trade Bank.Footnote ³⁰ This forced humanitarian organizations to rely on staff to carry large amounts of cash on their person when traveling to the country.Footnote ³¹ They also struggled to pay their national staff and maintain their structures on the ground and had to put operations on hold and even close some projects permanently.Footnote ³² In Iran, given the extensive US sanctions imposed, and despite the exemption for medicine and humanitarian goods, there were challenges in importing medicines and equipment necessary for the Covid-19 response.Footnote ³³ Humanitarian organizations have also experienced problems transferring funds into Syria.Footnote ³⁴ This has, for example, led to devising programs based on access to financial services rather than humanitarian needs. It has delayed programs to the point where they are no longer relevant, and led to debt and consequent security threats due to an inability to pay bills.Footnote ³⁵ A “Risk Management Principles Guide for Sending Humanitarian Funds into Syria and Similar High-Risk Jurisdictions” published in May 2020 gives a good sense of the complexity of the challenge.Footnote ³⁶ It is important to note here that although there are overcompliance issues from the private sector, there are also cases in which there is an objective risk of a sanctions breach, and without humanitarian exemptions in financial sanctions, a cautious approach by private suppliers in those cases is understandable.Footnote ³⁷

Another important challenge humanitarian actors face is the inclusion in donor agreements of sanctions-related clauses. Such clauses impose requirements that donors consider necessary for the work they fund to be in compliance with applicable sanctions regimes.Footnote ³⁸ Not only is complying with these requirements onerous and time-consuming for humanitarian actors,Footnote ³⁹ it also challenges their ability to be flexible, as well as to operate in a neutral and impartial manner. This is especially challenging when humanitarian actors are funded by multiple donors, which can lead to a complex web of restrictions, mandatory checks, and reporting requirements, including competing or even contradictory provisions. Of particular concern are requirements inserted in donor contracts for humanitarians to vet their beneficiaries before providing services. This is a clear red line for many organizations which aim to provide aid solely based on need.Footnote ⁴⁰ Unfortunately, like banks, some donors are increasingly risk averse, and have introduced clauses with increasingly restrictive requirements.Footnote ⁴¹ For example, for an education program for children with disabilities in Syria, one donor requested that the humanitarian organization implementing the program vet all the children’s parents.Footnote ⁴² Another organization has had to refuse funds for a Covid-19 response program in Sudan because one of the clauses in the donor contract required the organization to vet the beneficiaries of the program.Footnote ⁴³

In some cases, donors have gone so far as to pull or threaten to pull funding for programs in areas in which sanctioned entities are present.Footnote ⁴⁴ Following the blast in Beirut, for example, the US threatened to cut funding for the World Food Program if it engaged in the reconstruction of the port, as Hezbollah, a US-sanctioned entity, was likely involved in the business.Footnote ⁴⁵ WFP had to stop its reconstruction work.

These restrictions come despite the fact that humanitarian organizations have become much more professionalized in terms of due diligence and risk management procedures to ensure aid reaches people in need – an objective shared by donors and humanitarian organizations.Footnote ⁴⁶ Many humanitarian organizations have undertaken massive efforts to conduct due diligence and manage risk.Footnote ⁴⁷ In 2019, the Norwegian Refugee Council estimated that it spent over $1 million to comply with counter-terror regulations (of an approximately $540 million total budget).Footnote ⁴⁸ Some have denounced a “technocratic drift” in which the access and support to populations in need appear to be subsidiary to compliance concerns.Footnote ⁴⁹ Furthermore, what appears to often be a zero-tolerance approach is unrealistic in contexts in which humanitarian actors operate, and where there will always be residual risk of aid diversion as well as incidental benefits going to sanctioned entities. A zero-tolerance approach also makes humanitarian activities less flexible in the face of rapidly changing situations, and makes it harder for humanitarian organizations to remain neutral, impartial, and independent.

Finally, complex regulatory frameworks, of which sanctions regimes are a part, including the high risks associated with violating regulations, have an overall chilling effect on humanitarian actors. This means that humanitarians sometimes choose to err on the side of caution and self-regulate beyond what is in fact legally or contractually required.Footnote ⁵⁰ In practice, therefore, an organization may decide not to engage in a particular area, implement certain activities, or engage with certain groups for fear of falling afoul of sanctions. This has been witnessed in countries like Somalia and Afghanistan.Footnote ⁵¹ It challenges the impartiality as well as the fundamental efficacy of their activities, with the direct consequence of depriving populations in need of aid, in particular those who live in areas controlled by sanctioned entities.

How Can We Ensure Sanctions Regimes Do Not Hinder Aid?

Steps that could be taken to address the issues previously described have been put forward, notably by the humanitarian sector, for many years. Chief among these is the long-standing request by humanitarian organizations and experts for the inclusion in sanctions regimes of clauses that explicitly exclude principled humanitarian action from their scope of application. Such clauses have been described as exemptions, exceptions, or carve-outs, and are meant to ensure a safe legal space for principled humanitarian action to be conducted in accordance with IHL, without the risks related to the possible violation of sanctions measures, and without any prior approval needed from sanctioning entities. Until relatively recently, there were limited examples of such clauses being included in a UN sanctions regime, EU sanctions regimes, and national sanctions regimes such as in Canada.Footnote ⁵² However, after over a decade of advocacy, major developments took place at UN, US, EU, UK, and other levels as of 2022. A historical shift in UN sanctions policy came with the adoption in December of 2022 of UNSC Resolution 2664, which provided for a humanitarian exemption to the asset freeze measures imposed by all current and future UN sanctions regimes.Footnote ⁵³ Just a few days later, the US issued or amended its own humanitarian exemptions (or General Licenses), to apply across most of its sanctions regimes.Footnote ⁵⁴ The UK transposed Resolution 2664 into its own legal system in early 2023.Footnote ⁵⁵ In April 2022, the EU had adopted humanitarian exemptions in two of its sanctions regimes related to the conflict in Ukraine, which indicated a promising shift in its sanctions policy.Footnote ⁵⁶ In early 2023, the EU transposed UNSC Resolution 2664 in its UN-based regimes, including those to which it autonomously adds its own restrictions or listings.Footnote ⁵⁷ As of end of 2024, although no consensus had been reached on the adoption of a general humanitarian exemption across EU autonomous regimes, a case-by-case risk analysis for each regime being preferred, the EU had adopted humanitarian carve-outs in thirty-four of its forty-one sanctions regimes, including the EU framework on restrictive measures to combat terrorism.Footnote ⁵⁸

These are more than welcome developments,Footnote ⁵⁹ and the adoption of humanitarian exemptions has been shown to effectively support the delivery of aid.Footnote ⁶⁰ However, many of the challenges previously discussed will and have persisted. The effects of over two decades of sanctions policies that have negatively impacted humanitarian action cannot be reversed overnight. De-risking practices, for example, continue.Footnote ⁶¹ Furthermore, these exemptions do have limits in their scope, and their effectiveness depends on the extent of their implementation in national laws, policy, and practice.Footnote ⁶² More states and regional organizations will need to consider adopting similar humanitarian exemptions in their autonomous sanctions regimes, and preferably with harmonized language, to ensure legal predictability for humanitarian actors, the private sector, and sanctions enforcement authorities. In addition, other efforts, such as providing guidance on the scope and implementation of exemptions,Footnote ⁶³ but also due diligence and risk management measures, will continue to be necessary and are discussed further on.

Prior to the adoption of the previously mentioned landmark humanitarian exemptions, the focus had rather been on developing licenses or derogations for humanitarian actors. But rather than assuring that humanitarian action falls outside the scope of sanctions measures, they require humanitarian organizations to apply for approval from sanctioning entities for their activities. This remains an issue in some sanctions regimes, such as in the UN DPRK sanctions regime, which requires humanitarian organizations to go through an authorization process to send certain commodities into the country.Footnote ⁶⁴ As previously explained, derogations processes are far from ideal, as they are neither compliant with IHL nor in line with the humanitarian principles, and hamper the flexibility of the humanitarian response.Footnote ⁶⁵ During the Covid-19 pandemic, key sanctioning entities were keen to ensure that their derogation processes worked better. For example, the US and the UNSC DPRK Sanctions Committee accelerated the delivery of licenses for the Covid-19 response.Footnote ⁶⁶ However, this does not address the challenge to the ability of humanitarian actors to stay neutral and independent, as they are forced to seek approval for their work from political bodies. Additionally, the sanctioning entities can make constant requests for further evidence justifying the licenses before approving them.

Thus, for humanitarian organizations, derogations and licenses are not an attractive or effective solution. But even these derogations are not always available. This is sometimes due to the lack of political will on the part of sanctioning entities, and their fear of creating loopholes that would open the door to aid diversion and the misuse of the humanitarian sector by nefarious actors. Indeed, humanitarian organizations must contend with the deeply damaging narrative that humanitarian aid is at high risk of being diverted or misused and that humanitarian exemptions would lead to abuse and diversion of aid. However, although there are indeed examples of instances in which aid has been diverted or misused, there is little evidence of the supposed prevalence of the problem or of the fact that it would be exacerbated by the existence of humanitarian exemptions.Footnote ⁶⁷

At the same time, over the years, humanitarian actors have repeatedly been asked to provide evidence that the sanctions are impeding their work,Footnote ⁶⁸ and to find solutions to mitigate their impact. There is, therefore, a rather extensive body of literature that exists on the negative impact of sanctions on humanitarian action,Footnote ⁶⁹ and this despite the challenges of producing such evidence.Footnote ⁷⁰ As humanitarian actors continued to negotiate for better protections, they have faced continued requests for evidence. It forced many organizations to put resources into this and to have to strike the difficult balance between the risks they face in sharing such information with sanctioning entities and those posed by sanctions regimes which threaten the humanitarian space. For a long time, while there was some incremental progress, including a broader awareness of the challenges sanctions can create for humanitarian actors,Footnote ⁷¹ the trend seemed to rather be towards increasing restrictions on the humanitarian sector. Humanitarian organizations therefore had to engage in extremely technical discussions to try to find incremental ways of mitigating the impact of sanctions on their work. With the adoption of UNSC Resolution 2664, there has been a clear recognition of the negative impact UN sanctions can have on humanitarian action. However, states are now requesting evidence from humanitarian actors that the humanitarian exemption Resolution 2664 established is having a positive impact on their operations, hence continuing to lay the burden of proof principally on the humanitarian sector. Conversely, beyond vague fears of supposed loopholes, sanctioning entities do not tend to come forth with convincing evidence that humanitarian action should not be excluded from the scope of sanctions.Footnote ⁷²

Despite more significant progress in recent years, notably on humanitarian exemptions, risk-mitigating measures will remain necessary in order for humanitarian actors to work in areas in which sanctions apply.Footnote ⁷³ Humanitarian organizations have faced substantial risks while operating in contexts in which sanctions regimes apply. As a result, these organizations have deployed considerable investment in compliance and in setting up rigorous systems and controls. Other actors have also developed ways – albeit of varying effect – of supporting the humanitarian sector in better managing risk, such as the production by banks or governments of guidance on risk management, or the setting up by the UN of Risk Management Units.Footnote ⁷⁴ However, in particular for small or local NGOs, finding the resources to apply and implement all of this is a challenge, and donors rarely fund risk management capacity-building.Footnote ⁷⁵ Furthermore, despite these efforts, many in the sanctions, counter-terrorism, and banking spheres continue to consider the humanitarian sector as vulnerable and high risk, leading to the negative impacts previously described. This goes against the recommendation of FATF to adopt a risk-based approach with nonprofit organizations in order to not disrupt or discourage legitimate activities.Footnote ⁷⁶ In addition, the effectiveness of the sector’s systems has been recognized by the FATF, the EU, the US, and several other member states.Footnote ⁷⁷

Developing the best risk management systems, and even providing support for humanitarian organizations to do so, will not be enough to address some of the negative impacts sanctions have on humanitarian activities, and in particular those related to being able to work in a neutral, independent, and impartial manner. Risk management allows humanitarian organizations to ensure that their aid is reaching their intended beneficiaries, and that they are complying to the extent possible with the regulatory framework, including sanctions regimes. However, in some cases, this can lead to decisions to not engage in certain areas or to provide help to certain parts of the population – not because there are no humanitarian needs but because the risks of violating sanctions or other measures are too high.

What is needed is for better risk sharing among humanitarian organizations, donors, governments, and the private sector. There have been positive examples of risk sharing, such as letters from governments stating that a particular activity is not illegal and will not be prosecuted, or governments and banks coming together to set up an effective banking channel for humanitarians to use.Footnote ⁷⁸ Ensuring that donor agreements do not place the burden of complying with sanctions measures entirely on the recipient organization is another way to offload some of the risk from humanitarian organizations. Unfortunately, such approaches remain rather ad hoc, and are often the result of strong advocacy on the part of humanitarian organizations or arduous negotiation. There has been progress in the US in the last several years, with USAID sanctions-related requirements becoming less stringent,Footnote ⁷⁹ but this remains a challenge with other donors, such as some directorates of the European Commission.Footnote ⁸⁰

Better guidance on the scope of sanctions measures and therefore the risks involved can also help ensure that humanitarian organizations, donors, and the private sector do not interpret and implement them to be broader and more restrictive than they actually are. Some entities have developed guidance specifically tailored to the humanitarian sector, which helps organizations have a clearer understanding of how sanctions measures may apply or interact with their work.Footnote ⁸¹ During the Covid-19 pandemic of 2020–2023, both the US and the EU produced specific guidance, including to help ensure that available derogations were better understood and used by humanitarian actors.Footnote ⁸² Since the adoption of UNSC Resolution 2664, the UN has developed guidance on how to apply the Resolution to their respective sanctions regimes,Footnote ⁸³ and some states and the EU have adopted guidance on the humanitarian exemptions they have adopted.Footnote ⁸⁴ Although there are a number of positive examples of useful guidance being produced, there is still space for more and better guidance.Footnote ⁸⁵

Many of the negative impacts on humanitarian action stem from a lack of understanding of sanctions regimes, their scope, and how they can impact the work of humanitarian actors. There is a need to continue building awareness of the issue, and to pursue and strengthen dialogue, especially among governments, the private sector, and humanitarian organizations, in order to build much needed trust. This is an essential first step to the safeguarding of principled humanitarian activities.

Engagement already exists and has developed in the past several years at the UN and EU levels, and in some national contexts.Footnote ⁸⁶ Humanitarian actors have briefed UN sanctions committees, as well as the Council of the EU working party dealing with EU sanctions. The World Bank and the Association of Certified Anti-money Laundering Specialists have sponsored a “Stakeholder Dialogue” on de-risking.Footnote ⁸⁷ Switzerland and the European Commission have also led a dialogue on compliance with sanctions in Syria, bringing together NGOs, the financial sector, donors, and regulatory government agencies.Footnote ⁸⁸ Countries like France, the US, the UK, Kosovo, Norway, and the Netherlands have organized multi-stakeholder dialogues among the government, the private sector, and humanitarian organizations.Footnote ⁸⁹ However, such engagement among the humanitarian organizations, the sanctioning entities, and the private sectors remains somewhat limited and ad hoc. While these are positive developments in terms of creating space for dialogue and relationship-building, they are not necessarily a panacea given the extent and complexity of the issue at hand.Footnote ⁹⁰

The burden has been on the humanitarian sector to engage with what are for them nontraditional interlocutors, and, for a long time, humanitarians insufficiently engaged. This is due to a number of different reasons, including the need for resources to do so, the increased scrutiny and risk that may come with the sharing of specific information, and the difficulties of providing the requested evidence of the challenges they face.Footnote ⁹¹

There is no straightforward, bulletproof solution, as the challenges sanctions pose to humanitarian action are all heavily intertwined, and also the result of other legal and policy measures that international or regional organizations, as well as states, put in place. The impact, in particular when indirect, is very hard to roll back, and, for a long time, efforts to address these challenges, when they were deployed, were almost systematically reactive to crises and criticisms, rather than proactive. Although dynamics have shifted with the adoption of UNSC Resolution 2664, it will take time for decades of de-risking practices and the chilling effect of sanctions to be reversed.Footnote ⁹² Unfortunately, where sanctions measures hinder aid, this has an immediate impact on civilian populations in need. There is a need to proactively and preventively tackle this problem, and to more systematically and coherently implement the different avenues and means previously outlined.

Despite the various avenues for progress and some promising developments, it is clear that states are applying and will continue to apply a security-focused approach to the management of humanitarian action. It is worth noting that as security measures taken by states create increasing restrictions on the humanitarian sector, we are not necessarily seeing the same level of scrutiny for other businesses operating in these complicated contexts, including, notably, in the arms transfer business, which faces well-documented risks of diversion,Footnote ⁹³ with much more drastic consequences.Footnote ⁹⁴

Conclusion

Despite challenging dynamics, there have been some major positive developments in recent years. The adoption of a cross-cutting humanitarian exemption for financial sanctions at the UN level, followed by similar moves at US, EU, and other levels, is a game-changer.

However, humanitarian actors still face and will likely continue to face sanctions-related challenges that hinder their work. Over two decades of sanctions policy with few and inadequate safeguards for principled humanitarian aid have had a damaging effect, notably in terms of de-risking, that will be difficult to reverse and will require further action to effectively address. Furthermore, the challenges discussed in this chapter may also be caused by counter-terrorism laws and policies that are separate and distinct from sanctions, and that also require safeguards for humanitarian action. The full implementation and operationalization of recently adopted humanitarian exemptions will make an important difference. However, humanitarian actors will likely need to keep engaging in technical discussions on how to best mitigate the negative impact of sanctions regimes on their work, notably working with sanctioning entities to ensure exemptions are adopted and operationalized, and that the private sector is encouraged to be less risk averse. There is a need to continue to put the focus on the dramatic needs of millions of people who depend on humanitarian organizations being able to do their work without hindrance and in accordance with IHL.

Introduction

The conflict in Syria has been ongoing for almost twelve years. The largely peaceful uprising of 2011, which demanded democratic and economic reforms after a decade of intense political and economic restructuring programs, soon spun into a deadly conflict and the initial binary struggle between the government of President Assad and a collection of loosely connected opponents expanded into a multifront and multi-actor war, producing a lethal mix of civil and proxy wars.Footnote ¹ The conflict has resulted in one of the worst humanitarian crises in the twenty-first century, effectively fracturing the country, with the various belligerents carving out their own fiefdoms with the support of foreign armies and non-state actors.

International intervention has been rampant in the Syrian conflict, with external actors employing a mixed set of policies and tools to respond to the conflict in an attempt to influence the actions of actors, and to affect changes that are favorable to their own interests and in line with their own agendas. Along with propaganda and diplomatic and military tools, economic coercive policies were heavily deployed against the Syrian government and in support of both the armed and unarmed opposition groups. Unilateral measures were imposed on several targets as early as May 2011, adding to or complementing pre-conflict (mostly US) sanctions. Prior to the outbreak of the conflict in 2011, Syria was under two types of US sanctions: general and Syria-specific. The variety of legislative provisions and executive directives prohibit US aid to Syria and restrict bilateral trade. In addition to being a designated “State Sponsor of Terrorism,” Syria is subject to legislation: the Syria Accountability and Lebanese Sovereignty Act 2003 and the USA Patriot Act 2006,Footnote ² as well as the Caesar Syria Civilian Protection Act of 2019 (Caesar Act).

These sanctions are ostensibly “smart” and “targeted” and were arguably imposed,Footnote ³ at least initially, to address human rights violations. However, as the conflict progressed, and the scale and severity of sanctions increased, several voices, including the Carter Center, Chatham House, and the UN Special Rapporteur on Unilateral Coercive Measures, have asserted that these sanctions have contributed to the overall suffering of civilians, and have created barriers for legitimate actors and businesses. These actors and others are now calling for the reform or abolition of the sanctions on Syria.Footnote ⁴ Importantly, while humanitarian needs continue to grow exponentially, the sanctions have created an arduous operational environment for humanitarian actors, hindering their work and negatively impacting the entire humanitarian response to the crisis.

This chapter draws upon various data to present a cohesive picture of how sanctions impact the operations of humanitarian actors within the Syrian context, and how they impede humanitarian operations directly and indirectly. In addition to a review of available literature on the sanctions on Syria and official UN and INGO reports, the chapter is based on twelve interviews with current and former UN and INGO aid workers who operate, or have done so in the recent past, in Syria and the neighboring countries. Two of the interviewees have held different positions with two different organizations operating within the country. Interviewees included national and international staff with field and HQ experience, who held different levels of seniority, including at the head of programs. With the exception of one interviewee, all other participants asked for their affiliation to remain anonymous for fear of retribution from donors and sanctioners, or because they are not authorized to disclose operational information by their employers. The work of interviewees encompasses activities ranging from emergency support to early recovery and provision of basic services, as well as safety and security monitoring and reporting.

The chapter focuses on the period that extends between the start of the conflict and January 2023. It is worth noting that the period following the earthquake that hit Syria and Türkiye on February 6, 2023 did witness the issuance and adoption of a series of humanitarian carveouts, exceptions, guidance notes, and modifications to some of the international sanctions imposed on the country.Footnote ⁵ However, as indicated by interviewees from the field as well as other research, the impact on humanitarian operations remained limited, and will be discussed in the conclusion. The chapter proceeds as follows. First, it provides a brief overview of the humanitarian situation and current humanitarian response modalities. It then introduces the various sanctions regimes imposed on the country. Subsequently, the chapter discusses the direct and indirect impacts of sanctions.

The Syrian Conflict: Taking Stock of the Humanitarian Toll and Understanding the Humanitarian Response

The consequences of the conflict have been calamitous, and a decade of hostilities have had a profound impact on the humanitarian situation in the country. Half of Syria’s pre-conflict population has been internally and externally displaced, with hundreds of thousands of deaths,Footnote ⁶ and millions of people suffering from injuries and traumas.Footnote ⁷ The poverty-stricken country, where approximately 90 percent of the population is living under poverty line,Footnote ⁸ is at risk of famine according to the UN,Footnote ⁹ and statistics show that 2.5 million people are severely food insecure, while 12.1 million people are food insecure.Footnote ¹⁰ Children, women, and the displaced are among the most vulnerable, and the fact that 800,000 children are chronically malnourished is a testament to this.Footnote ¹¹ In 2023, approximately 75 percent of Syrians inside the country, equivalent to 15.3 million people, are in need of humanitarian assistance, according to the UN.Footnote ¹²

The conflict, which reversed many developmental and other achievements that Syria had made in the preceding decades, has been manifested in several consecutive and interconnected humanitarian crises, with the current crisis being unprecedented in scale and severity. Despite the relative recent calm on the frontlines, humanitarian suffering is increasing compared with earlier years of the conflict, as noted by the UN Special Envoy to Syria.Footnote ¹³ Of course, the crisis is foremost the result of the conflict. However, global and externally induced crises, such as Covid-19, the financial crisis in Lebanon, and the imposition of aggressive sanctions, have gravely exacerbated the situation at a time when resources are falling short and needs are growing. The mounting challenges underline the importance of establishing a more effective and sustainable humanitarian response that adheres to humanitarian principles.

The protracted humanitarian crisis, one of the largest humanitarian operations in the twenty-first century, has necessitated the involvement of various UN agencies, INGOs, as well as civic and faith-based local organizations. Throughout the conflict, different aid-delivery modalities have been deployed with different hubs operating in Syria and across the region. The latter efforts, mostly led by UN aid agencies, catered to Syrian refugees in neighboring countries. They also provided cross-border aid delivery, when that became possible in 2014, with the adoption of UNSC Resolutions 2165 and 2191, authorizing UN aid operations to enter Syria without requiring the consent of the Syrian government. However, as of 2020, aid delivery has been restricted to one entry point, from Türkiye, after other points, namely Iraq and Jordan, were dropped as the UNSC failed to reach agreement for their renewals.Footnote ¹⁴

Sanctions: Structure, Enforcement, and General Impact

In the discussion about sanctions in Syria, there exists an active debate about the underlying motives of sanctioners, their policy choices, and whether their models were used to coerce the government into submitting to sanctioners’ demands, or for other objectives, such as symbolism or constraint. In fact, the four models identified by Crawford and Klotz all seem to be at play.Footnote ¹⁵ Arslanian neatly sums up the motives of sanctioners in his analysis, arguing that the objectives of sanctions varied between “initially aiming at coercing the government to undertake reforms and then forcing it to concede power, which then shifted towards symbolism and constraining.”Footnote ¹⁶

While the debate about motives and models of influence continues, the discussion about the nature of sanctions against Syria seem to have been settled. In the case of the US, the sanctions imposed on Syria are akin to a total embargo on all trade,Footnote ¹⁷ while the sanctions imposed by the EU were unprecedented.Footnote ¹⁸ Furthermore, many would argue that, collectively, sanctions against Syria are one of the “strictest and most complex collective regimes in recent history,”Footnote ¹⁹ or “most complicated and far reaching sanctions regimes ever imposed.”Footnote ²⁰ Along with the US’s primary and secondary unilateral measures,Footnote ²¹ the EU,Footnote ²² and other nations and entities, including Australia, Canada, Japan, Norway, Switzerland, Türkiye, the UK, and the Arab League, impose sanctions on Syria.Footnote ²³ Furthermore, several Jihadist groups operating in the country are subject to UNSC resolutions,Footnote ²⁴ resulting in a very complex compliance environment for anyone involved in the country, including humanitarian actors. Although the US measures on Syria are unilateral, and hence arguably nonbinding internationally, they function effectively as though they are global due to the US’s extraterritorial application of sanctions and the global reach of the US dollar. Further, sanctions on Syria are quite punitive, even in comparison to many other heavily sanctioned contexts. For instance, with regard to medical devices, unilateral measures targeting Syria are much harsher than those targeting Sudan.Footnote ²⁵ Furthermore, Syria does not have anything similar to the “Green List” of Iraq or the “Basic Human Needs” list that can be used to export goods without a license from the U.S government to otherwise embargoed countries, such as Cuba.

The unilateral measures in place are similar and overlapping, though not uniform, and imposes a broad range of restrictions on individuals and government entities. Sanctions outlaw dealing in sectors such as banking and oil and power production, and importantly, particularly the US’s Caesar Act, prohibit engagement in “significant” reconstruction. Simultaneously, all sanctions allow for the work of humanitarian actors and contain provisions for humanitarian exemptions, or the possibility thereof through derogations or general or specific licenses. Nonetheless, the reality is more complex, especially due to the multiplicity of sanctioners and the need to work with and across several national agencies, cross-border, and international authorities.

The enforcement of sanctions varies across the different control zones and hence the challenges vary and are unique to their own contexts. The US- and Turkish-controlled areas were largely shielded from enforcement or enjoyed lax enforcement,Footnote ²⁶ and in May 2022, the US issued a General License No. 22, allowing activities in these areas that would otherwise be prohibited under the Syria sanctions regime.Footnote ²⁷ Meanwhile, sanctions are aggressively enforced against government-held areas. Thus, the impact of sanctions in the government-held areas is naturally more severe, but other areas are not fully insulated from the impact, since internal trading with government-held areas and the use of Syrian currency continue. Meanwhile, in nongovernment-controlled areas, the focus is on anti-terrorism regulations due to the presence of Jihadist groups, namely Hayat Tahrir al-Sham.

Manifestly, sanctions are not solely responsible for the humanitarian crises in Syria; however, as premised in the literature, unintended consequences have proliferated, impacting various aspects of life. Previous research shows, among other things, that sanctions have been found detrimental for the operations of legitimate businesses and actors, and have offered new opportunities for de facto authorities and warlords to indirectly benefit and consolidate their power, allowing the conflict to continue.Footnote ²⁸ Further, scholars argue that sanctions have debilitated the state and its capacity to provide basic services to the population, and materially contributed to the partial failure of the state, making the conflict intractable.Footnote ²⁹

As far as humanitarian needs are concerned, it is admittedly difficult to disaggregate the effect of sanctions from other factors. However, in line with earlier findings,Footnote ³⁰ anecdotal evidence shows that there is a good case to link sanctions with increased humanitarian needs and with currency depreciation. Sanctions contributed to major capital flight,Footnote ³¹ and their imposition on the Syrian banking sector channeled most hard currency dealings away from official banks to unofficial dealers, and thus impinged on the Central Bank’s ability to control and influence the exchange rate.Footnote ³² In 2015/2016, with the imposition of new US and EU sanctions,Footnote ³³ the Syrian economy, infrastructure, and availability of basic goods faltered even more, and the number of people in need surged to 13.5 million.Footnote ³⁴ The numbers then stabilized at 11 million until 2019,Footnote ³⁵ when the US imposed the Caesar Act, further restricting the flow of goods and funds, at which point the number of people in need of humanitarian assistance surged again to 13.4 million people, while the number of food insecure people rose from 6.5 million in 2019 to 12.4 in 2020 and 2021.Footnote ³⁶ In 2022, and with food prices increasing by 532 percent over the course of two years,Footnote ³⁷ 14.6 million people were in need of humanitarian assistance, an increase of 1.2 million from 2021.Footnote ³⁸

Sanctions as Barriers: Impact of Sanctions on the Work of Humanitarian Organizations

Humanitarian operations in Syria are beset with a set of problems and challenges, including, but not limited to, politicization of aid, diversion of aid, restriction of access,Footnote ³⁹ funding shortfalls,Footnote ⁴⁰ and, naturally the subject of this chapter, an unfavorable environment due the proliferation of unilateral measures and counter-terrorism financing regulations. Challenges caused by sanctions fall into three categories: (1) financial challenges related to money transfer due to overcompliance and de-risking; (2) legal challenges linked to due diligence, compliance requirements, and interpretation of sanctions; and (3) operational challenges related to “dual-use” regulations, “State Sponsor of Terrorism” designation, and direct sectoral sanctions. After engaging these challenges, this section will briefly elaborate on the indirect impact of sanctions with regards to oil supplies and currency depreciation and fluctuations.

Dual Use and Direct Sectoral Sanctions

Challenges faced by humanitarian organizations in this category stem from the broad definition of “dual-use” goods, as well as having to deal with and utilize services from sectors under sanctions, such as telecommunication.

The Indirect Impact of Sanctions: Currency Fluctuation and the Humanitarian Response

Conclusion

Despite sanctions on Syria being depicted as “smart” and “targeted,” this chapter joins previous studies showing that the direct and indirect impact of sanctions on humanitarian operations in Syria impede an effective humanitarian response. The chapter exposes the fundamental conflict between the sanctioners’ goal of using sanctions to respond to the human rights violations of the Syrian government, on the one hand, and the human rights violations that are then caused by the sanctions, on the other. It shows that while utilizing sanctions as a tool to protect and promote human rights is an attractive idea, sanctions can be counterproductive and have the potential to make circumstances considerably worse for legitimate actors, such as humanitarian organizations, and subsequently for their beneficiaries, innocent civilians.

In regard to the humanitarian exemptions that are incorporated into the sanctions regime, the chapter shows that they fall short of their intended task, and should not be realistically considered as able to mitigate the negative impact of sanctions. This chapter further shows that these exemptions are of very limited use, without greater clarity from sanctioners on what the exemptions entail or how they could be implemented. Further, the chapter demonstrates that exemptions are often rendered ineffective, where the process to obtain them is not streamlined and the requests are not processed within a reasonable time.

The post-earthquake humanitarian exceptions and carveouts are a case in point. In addition to their delayed introduction, well beyond the crucial three days necessary for successful rescue operations,Footnote ⁸⁷ research and available reports show that the majority of humanitarian organizations continued to report similar problems to those that existed prior to the introduction of these exemptions and carveouts. While sending personal remittances was reported to have become easier and faster, problems faced by NGOs such as financial de-risking and overcompliance continued unabated, while export controls remained an obstacle for the import of lifesaving goods and other important items. Although some improvement has been reported in the time needed for money transfers, especially in the case of money destined to Türkiye, transfers to Syria still need months, in some cases more than six months. The short duration of these carveouts and exemptions, as well as the lack of clarity regarding their renewal, is yet another factor limiting their utility as this does not provide NGOs and humanitarian actors with guarantees to engage in long-term relief efforts.Footnote ⁸⁸

The chapter also highlights the urgent need for action on the part of sanctioning states. Throughout the conflict, sanctioning states have denied that sanctions hinder the work of humanitarian actors, and sanctioners continue to point to the generous aid contributions to humanitarian organizations. While lamenting the damage of sanctions, sanctioners refuse to acknowledge responsibility for the obstruction of humanitarian operation and instead blame the Syrian government.Footnote ⁸⁹ Nonetheless, the sanctions review by the US and several guidance notes released by the EU during and after the outbreak of the Corona virus represent an oblique acknowledgment of the direct harm of sanctions to humanitarian operations and legitimate businesses.Footnote ⁹⁰ In the case of the US, the introduction of a general license for humanitarian goods pursuant to the UNSC Resolution 2664 has only had a very limited impact, with banks still hesitant to engage with organizations operating in Syria.Footnote ⁹¹ Furthermore, and in contrast to what humanitarian practitioners had hoped for following the introduction of the general license, the number of banks providing intermediary services dropped down to only one by early 2024.Footnote ⁹² Other steps by the US were also not sufficient,Footnote ⁹³ and a more proactive approach is needed to protect and insulate the work of humanitarian organizations and other legitimate actors within the war-torn country.

Lastly, and given the extensive and unregulated use of sanctions against Syria and their harm to humanitarian operations, among others, this chapter should motivate questions about accountability for the negative impact of sanctions. It is admittedly a complex matter, due to the extent of the harm and damage caused by sanctions, the multiplicity of actors that could be held responsible, and other contributing factors in the conflict. But the question should nonetheless be seriously entertained. And while legal accountability may be unattainable for the time being, it should not mean that inquiry into this should be shelved or that other forms of political accountability, such as reparations and reforms to the current sanctions regimes, should not be pursued.