• The First Law of International Dynamics: Sanctions May Be Transformed But Never Created or Destroyed
  • February 25, 2015 | Authors: J. Scott Maberry; Cheryl Palmeri
  • Law Firm: Sheppard, Mullin, Richter & Hampton LLP - Washington Office
  • U.S. economic sanctions, by their nature, often change without warning. Since sanctions reflect U.S. foreign and national security policy, they must evolve rapidly with world events. Often, it seems that when one door is closed, another is opened. Most recently, President Obama’s December 17 announcement of an opening to Cuba was followed rapidly by the January 2 announcement of tightening North Korea sanctions. Hence our (mostly facetious) Newtonian law of the conservation of economic sanctions: sanctions may be transformed but never created or destroyed.

    Because sanctions involve issues of national defense, they fall within the shared purview of the Executive and Legislative Branches. In recent history, this arrangement has subjected sanctions to a constant tug of war between Congress and the President, as each seeks to establish control over a legal regime so powerful that it is often compared to military force. If (following Clausewitz) war is the continuation of politics by other means, sanctions are in the middle of that continuum: they can be a powerful tool when war is too blunt and politics too slow.

    But the President’s sanctioneering portends more than just grumblings from Congress that he has overstepped his authority: it also speeds up the legal regime’s ability to react to current foreign policy priorities. Unlike Congress, the President can alter certain sanctions provisions on a dime, with little or no discussion.

    Two recent developments highlight this First Law of International Dynamics. The first was President Obama’s startling announcement December 17 that the United States will take steps to normalize diplomatic relations and permit some trade with Cuba. The President’s announcement was preceded by myriad social and political events. They include Cuba’s release of two American prisoners, the United States’ release of three Cuban agents, and Pope Francis’s appeal to both countries’ leaders, to name a few; no one of which was either necessary or sufficient to bring about the new diplomatic opening.

    But as regulations on Cuba are being written, another development serves as a reminder of the swiftness with which the United States will respond to threats to its national security or holiday movie viewing plans. On January 2, President Obama reacted to North Korea’s alleged hacking of Sony Pictures Entertainment and subsequent threats of violence related to Sony’s slapstick comedy, “The Interview,” by issuing an Executive Order blocking the property of, among others, officials of the North Korean government, its ruling Workers’ Party, and various state-controlled arms dealers. That same day, the Treasury Department blocked the property of 10 individuals and three entities.

    Cuba and North Korea illustrate the carrot and the stick of U.S. sanctions. One the one hand, at a time when Congress is stuck in a bottomless quicksand of political squabbling, it is refreshing to watch sanctions laws jet along with the changing geopolitical winds. On the other, the ease with which the President can modify sanctions laws ensures that those seeking to comply face the perpetual hurdle of relearning the regulatory landscape over and over again.

    For now, order has been restored in the universe. Cuba will have a U.S. embassy, and North Korea’s undeniably weird ruling elites will no longer have access to the U.S. financial system. But as sanctions laws move along at a swift clip, U.S. businesses risk finding themselves a step behind.