May 26, 2021
The House Foreign Affairs Subcommittee on Africa, Global Health and Global Human Rights held a hearing May 25, 2021 to hear from experts, including Bridget Moix of Peace Direct and Noah Gottschalk of Oxfam America about the impact of sanctions. Moix and Gottschalk testified about the negative impact sanctions restrictions on peacebuilding and humanitarian programs and what can be done to limit the harmful effects on civilians and support efforts to reduce conflict. Additional witnesses addressed ways to make sanctions more targeted and effective against dictators and human rights abusers.
The hearing transcript is available here
Subcommittee Chair Karen Bass (D-CA) opened the hearing by noting that, “Like most coercive measures, sanctions can and have resulted in unintended consequences such as delayed humanitarian assistance or economic contraction. Studies show that sanctions can lose their effectiveness, especially when they go on for long periods of time without effect or when countries on the continent don’t agree with the objective.” (Transcript, p. 3) She said, “Experts note sanctions are more effective when there is a clear mandate such as a cease fire, broad international support with explicit guidelines and a clear exit strategy.” (Transcript, p. 2)
In his opening statement Ranking member Chris Smith (R-NJ) said, “[W]e need to constantly recalibrate to try to make more effective and more efficient sanctions once they are levied. I’d like to affirm that the load star of any sanctions to a regime is how it helps or conversely hurts people on the ground.” (Transcript p. 4)
The first witness, John Predergrast, co-founder of the Century Project and a former State Dept. official, noted the importance of designing sanctions in a way that targets networks rather than just individuals, in order to give diplomats leverage. He said this is necessary to stop draining resources out of Africa. Eric Lorber of the Foundation for the Defense of Democracies agreed on the need to create leverage through targeted sanctions in his testimony. But the most compelling testimony came from Moix and Gottschalk.
Impacts on peacebuilding, need to fix the material support laws and six criteria for sanctions
Moix opened her testimony by noting that:
First, if there’s one key message I want you to take away from my testimony is that well-intentioned U.S. sanctions often can complicate and even impede locally led efforts for peace, justice and democracy. Sanctioning abusive governments also punishes innocent civilian populations…civil society space and can deepen fragility for years to come. (Transcript p. 10)
She then cited the primary source of this problem: current material support laws, saying:
While these laws may seem reasonable, their ultimate effect has been to hinder vital humanitarian and peacebuilding work that often requires reaching civilian populations in areas controlled by armed groups and engaging all sides of a conflict in dialogue, counter recruitment efforts, trust building and even reconciliation. (Transcript p. 11)
Moix recommended that Congress update the material support law to “provide safeguards or exceptions when sanctions are imposed.” (Transcript p. 11) She then presented six questions for Congress to consider when considering future sanctions:
- Will sanctions harm civilian populations?
- Will sanctions help or hinder those locally-led peacebuilding, justice and reconciliation efforts?
- Will sanctions support or undermine non-violent civil resistance movements?
- Are sanctions part of a comprehensive, coordinate strategy…are they incorporated and aligned with the strategy now required by the Global Fragility Act?
- What is the role of U.S. military assistance in the conflict?
- Do sanctions perpetuate or help undo systemic racism in U.S. foreign policy?
Safeguards needed for humanitarian assistance and protecting NGOs’ access to financial services
Gottschalk emphasized that organizations like Oxfam American “not only work with people who experience the unintended consequences of sanctions but we ourselves are directly affected in ways that undermine our ability to fulfill our life-saving mandate.” (Transcript p. 12)
He noted that the primary sanctions authority, the International Emergency Economic Powers Act (IEEPA) “expressly created a humanitarian exemption within the bill but granted the president power to waive this exception, which successive presidents have done ever since. As a result, rather than a baseline assumption that humanitarian aid should be excluded from sanctions except in the rarest of circumstances, we have the opposite, a situation where delivery of humanitarian aid depends on a license from the Office of Foreign Assets Control or OFAC.” (Transcript p. 13)
Obtaining a license from the complex bureaucracy at OFAC is a “time-consuming challenge” so that, “Time and again we find that humanitarian assistance delayed is humanitarian assistance denied.” (Transcript p. 13) To address the problem Gottschalk recommended that President Biden restore the humanitarian exemption in IEEPA or that Congress pass legislation that would authorize the narrow set of transactions humanitarian groups need to engage in in order to operate.
He then described the difficulties nonprofits and remittance companies have with international bank transfers to areas that banks consider high risk, due to sanctions. He said, “Sanctions may not be the sole cause of this problem but they factor heavily in how banks evaluate risk, including in some African countries….This financial exclusion has severe impacts on nonprofit organizations like Oxfam…” (Transcript p. 14).
- Gottschalk recommended that bank regulators rewrite the Bank Examination Manual, which guides oversight of banks, “to more appropriately assess the risk that NGOs pose…which could reassure banks that their risk could be more manageable, and
- “establish white channels to facilitate money wiring and trade to locations experiencing severe financial exclusion like the Treasury Department did just last year via the Swiss international trade channel with Iran.” (Transcript, p. 14)
Last but not least, Gottschalk warned about the harmful consequences of sanctions can have on civic space and human rights, saying, “Political leaders have been known to blame human rights defenders and humanitarian organizations for sanctions…Restrictions on civic space often follow.”
During the question and answer period both Moix and Gottschalk explained their points in more detail. Rep. Bass told them that “[W]e as members of Congress and members of the Foreign Affairs Committee need to make sure that our sanctions policies are not getting in your way, especially in the places where you work which are places on Earth where you are most needed.” (Transcript p. 22)