By Nick Turner

In recent weeks, companies in industries as diverse as finance, mining, and hospitality have announced their sudden withdrawal from the Cuban market. The catalyst was a single document, Executive Order (EO) 14404, issued by President Donald Trump on May 1, which has fundamentally altered the perception of U.S. sanctions risk for foreign companies operating in Cuba.

While some of the EO’s terms are clear and explicit, others are less so. Meanwhile, the potential penalties are severe. As a result, companies may err on the side of caution and withdraw from the Cuban market, even in cases where the regulations do not expressly require it.

Key Provisions of EO 14404

EO 14404 builds on the “national emergency” first declared by President Trump in EO 14380 on January 29, 2026, citing various “policies, practices, and actions of the Government of Cuba”.

Section 2 of EO 14404 authorizes the U.S. Treasury and State Departments to impose asset freezes (referred to as “blocking sanctions”) on individuals and entities engaged in conduct described in the EO or operating in designated sectors of the Cuban economy. The EO specifically names the energy, defense, metals and mining, financial services, and security sectors; however, the Treasury Department could designate other sectors of the Cuban economy in the future, including, but not limited to, the tourism sector.

The meaning of “operating in” a designated sector is broad and encompasses both Cuban and non-Cuban companies engaged in trade involving one of the named sectors.

Importantly, Section 4 of EO 14404 creates for the first time the risk of “secondary sanctions” on financial institutions under the Cuba program. Section 4 can be applied to any non-U.S. financial institution that “has conducted or facilitated any significant transaction or transactions for or on behalf of any person” sanctioned under the EO. The term “significant transaction” here is not defined. While the Treasury Department’s Office of Foreign Assets Control (OFAC) has previously laid out several factors it could consider in identifying a significant transaction, they include a broad catch-all for “such other factors that the Secretary of the Treasury deems relevant on a case-by-case basis.”

Companies Sanctioned So Far

In a series of tranches beginning in May 2026, the State Department and OFAC have added dozens of names of individuals and entities to OFAC’s List of Specially Designated Nationals and Blocked Persons (the SDN List). These include several entities that play a major role in Cuba’s economy: Grupo de Administración Empresarial S.A. (GAESA), a holding company for enterprises engaged in tourism, among other things; state-owned oil and gas company Unión Cuba-Petróleo (CUPET), state-owned mining company GeoMinera S.A., and numerous individuals associated with these entities and the Cuban government. Two Cuban joint ventures co-owned by Canadian and Australian mining companies were also added to the SDN List.

FAQs 1254 and 1258

OFAC has published a series of Frequently Asked Questions (FAQs) about EO 14404, two of which (numbered 1254 and 1258) warn that non-Cuban persons that transact with persons designated under EO 14404, including the companies named above, could also be added to the SDN List. This also applies to any entity owned 50% or more by any person or entity designated under EO 14404 (even if the owned entities are not specifically named on the SDN List).

In other words, if a designated entity such as GAESA owns 50% or more of another company, then any foreign company, whether based in Canada, Europe, or elsewhere, could be added to the SDN List for transacting with the GAESA-owned entity. This is true regardless of the GAESA-owned entity’s economic sector. GAESA and other designated persons have significant interests throughout the Cuban economy, including the tourism, financial, port operations, and retail industries, so the sanctions risk extends far and wide.

There is no official list of entities owned 50% or more by persons designated under EO 14404. As a result, companies must perform their own due diligence to ascertain their counterparties’ ownership. FAQ 1258 advises companies “to consult all available sources to inform their independent assessment regarding the network of entities” owned by designated persons in Cuba.

The language of EO 14404 does not require the U.S. government to show that a company knew or intended to transact with a sanctioned counterparty before imposing sanctions. Thus, a company may be subject to risk even for inadvertent violations.

IEEPA Versus TWEA

The President issued EO 14404 pursuant to authority granted in the International Emergency Economic Powers Act (IEEPA). IEEPA gives the President broad authority to regulate trade in response to “national emergencies” involving foreign threats to U.S. national security, foreign policy, or the economy.

The U.S. embargo against Cuba, which has been in place since the 1960s, is authorized under a separate and older statute called the Trading With the Enemy Act of 1917 (TWEA). Legally, IEEPA allows for more creativity in the design of sanctions and is subject to fewer procedural constraints than TWEA. By invoking IEEPA to supplement the TWEA-based embargo, the President gains flexibility to ratchet sanctions up or down with the stroke of a pen as part of a wider pressure campaign against the Cuban government.

Consequences of the Sanctions

Persons on the SDN List are generally excluded from receiving services from U.S. persons or transacting through the U.S. financial system. Their property is frozen when under U.S. jurisdiction.

Under Section 4 of EO 14404, foreign financial institutions could either be added to the SDN List or prohibited from opening or maintaining correspondent or payable-through accounts in the United States. The former measure would effectively cut off a financial institution from the U.S. financial system, while the latter would restrict access without eliminating it entirely. Either measure could be severely damaging to a financial institution that relies on the U.S. financial system for clearing U.S.-dollar-denominated payments.

Secondary Sanctions

Legally, EO 14404 is significant because it disrupts a longstanding assumption about OFAC’s Cuba sanctions program. Before EO 14404, companies operating outside of U.S. jurisdiction were mostly beyond the reach of the Cuban Assets Control Regulations (CACR). The CACR were limited to “persons subject to U.S. jurisdiction” and transactions involving the United States. A relatively small number of Cuban persons were added to the SDN List under the CACR. Now, companies anywhere in the world risk being added to OFAC’s SDN List for engaging in conduct described in EO 14404. This is true even if their transactions are otherwise lawful under OFAC regulations.

In practice, OFAC has used its authority to sanction foreign financial institutions sparingly. For example, OFAC has not imposed secondary sanctions on any financial institution under similar provisions of the Russia or Hong Kong programs, although the possibility remains. OFAC has only sanctioned or investigated a handful of large international banks for violating sanctions on Iran.

Commercial Actors and De-risking

For most multinational companies—especially those with ties to the U.S.—the risk of being added to an OFAC list is too much to bear.

Apart from the risk of being sanctioned, companies that commit breaches of OFAC regulations could also be subject to costly investigations and enforcement actions. The risk is highest for U.S. persons, including U.S. nationals and companies incorporated under U.S. law, as well as non-U.S. legal entities owned or controlled by U.S. persons, all of whom are directly subject to OFAC’s enforcement jurisdiction. Non-U.S. companies whose businesses have U.S. touchpoints are also at risk.

Ambiguities inherent in U.S. sanctions rules shift the burden to companies to perform exhaustive due diligence and risk assessments before engaging in Cuba-related transactions.

As noted above, OFAC sanctions apply not only to designated persons, but also any entity owned 50% or more by one or more designated persons. According to FAQs 1254 and 1258, non-Cuban companies that transact with designated Cuban entities or entities owned by them could be exposed to sanctions risk under EO 14404. This means that companies—regardless of where they are based—must carefully scrutinize the ownership structure of their counterparties because failing to identify sanctioned owners could lead to OFAC enforcement, financial penalties, or even exclusion from the U.S. market.

Importantly, OFAC enforces its sanctions on a “strict liability” basis, meaning that OFAC does not need to show knowledge or intent as part of its enforcement proceedings.

Owing to these and other factors, many companies have already chosen to voluntarily “de-risk” from the Cuban market. EO 14404 has had the predictable effect of causing more companies to do so.

Humanitarian Activities and Licensed Transactions

The CACR contains numerous licenses and exceptions that allow persons subject to U.S. jurisdiction to engage in certain activities involving Cuba without breaching U.S. law. This includes, for example, U.S. exports of agricultural goods, medicine, and medical devices to Cuba subject to strict conditions detailed in the CACR and the Commerce Department’s Export Administration Regulations (EAR).

On 7 May 2026, OFAC issued a general license clarifying that activities that were previously licensed under the CACR are also permissible under EO 14404. In theory, this should permit companies to continue ongoing humanitarian trade and other licensed activities. However, recent reports suggest that the withdrawal of banking and logistics providers is hampering these ostensibly lower-risk activities.

Blocking Statutes

A number of jurisdictions have adopted so-called “blocking statutes” that attempt to counter U.S. sanctions by penalizing their own companies that comply with the Cuban embargo. These penalties could come in the form of regulatory enforcement or, in some cases, private litigation from plaintiffs who suffer damages as a result of another person’s compliance with the embargo. Examples of such statutes include the E.U. Blocking Statute (Council Regulation (EC) No 2271/96), the U.K. Protection of Trading Interests legislation, Canada’s Foreign Extraterritorial Measures Act (FEMA), and Mexico’s Law of Protection of Commerce and Investments from Foreign Policies that Contravene International Law. Anti-sanctions legislation in the People’s Republic of China and the Russian Federation could also apply depending on the circumstances.

Both the E.U. and U.K. legislation enumerate the U.S. statutes or regulations within their scope and would therefore require amendments to specifically apply to sanctions adopted under EO 14404. It is uncertain that either jurisdiction would do so.

OFAC does not accept the existence of a blocking statute as a defense against a breach of U.S. sanctions regulations and has brought a number of past enforcement actions against Canadian, Mexican, E.U., and U.K. companies under the CACR. Some companies may decide that it is preferable to risk breaching a blocking statute than to attract the ire of the U.S. government.

Sanctions Relief

The expansion of U.S. sanctions under EO 14404 has had an immediate impact on the Cuban economy and follows a punishing fuel embargo initiated in January 2026. The humanitarian consequences of the U.S. blockade are well reported.

The Trump administration has shown a willingness to offer significant sanctions relief in response to changing circumstances, as recently demonstrated by the lifting of most Syria-related sanctions in June 2025, loosening of Venezuela-related sanctions since January 2026, and licensing of Iranian oil-related payments in June 2026.

EO 14404 was adopted pursuant to IEEPA, so the President retains the discretion to remove the sanctions at any time. The President also has broad authority to modify elements of the U.S. embargo under the CACR, but a full lifting of the embargo would require congressional support due to certain statutory requirements.

Nick Turner is a U.S.-qualified lawyer who advises companies on compliance with sanctions regulations. He is the author of a chapter in Economic Sanctions from Havana to Baghdad: Legitimacy, Accountability, and Humanitarian Consequences, edited by Joy Gordon. The views expressed are the author’s own. Nothing in this article constitutes legal advice.

Section: (all-articles) Photo: Canva

Listen to This Episode

Listen on Spotify

Listen on Apple Podcasts

Listen on Buzzsprout

In late February, the United States and Israel launched a war on Iran—a war that killed the country’s supreme leader, closed the Strait of Hormuz, pushed the global economy to the brink, and brought the Middle East closer to all-out conflagration than at any point in a generation.

Now, amid a ceasefire that has held without ever being formalized, a draft framework for a comprehensive agreement between Washington and Tehran is reportedly taking shape. The deal that emerges—if it emerges at all—will make clear limits of sanctions pressure, the price of war, and whether transformative diplomacy between the U.S. and Iran is even possible.

In this episode, Ali Vaez helps make sense of the ongoing negotiations. Ali is Senior Adviser to the President and Project Director for Iran at the International Crisis Group. He is one of the foremost experts on the Iran nuclear file, having spent the better part of fifteen years in direct contact with Western, regional, and Iranian officials, and among a long list of other achievements he is a co-author of the excellent book How Sanctions Work: Iran and the Impact of Economic Warfare.

Season 3 of The Sanctions Age is produced by media.winter in Berlin.

The rest of this email is for paid subscribers and includes the host Esfandyar's reflections on his conversation with Ali and a full episode transcript. If you would like access to this additional content and want to support the show, please subscribe by clicking the button below.

A huge thank you to our paid subscribers!

Subscribe now

Esfandyar’s Reflections

For more than a decade, I have had the privileged of attending a wide range of public and private meetings alongside Ali. In each of these settings, I have been able to witness his razor sharp thinking on the challenges facing U.S.-Iran diplomacy. Getting a durable deal between Washington and Tehran is like a puzzle, one that evolves and gets harder with time. Few people have proposed more creative solutions to that puzzle than Ali. His policy recommendations are not always heeded, but they do always push policymakers to reconsider the path that they find themselves on. This work is inherent to the mission of the International Crisis Group, which is a foremost a peace-building organization. For Ali and his colleagues, the inherent value of a U.S.-Iran deal is that it forestalls further conflict.

The mission of peace-building and the urgency of a diplomatic solution for the Iran nuclear crisis is even clearer in the aftermath of the Forty Day war. But as Ali explains during our conversation, while the war may make diplomacy more necessary, its fallout has also made negotiations more fraught. I agree with Ali’s assessment that a broader deal is unlikely to materialize, even if the two side can agree on a framework agreement that extends the ceasefire and opens the door to more talks. But I am glad that we could end our discussion with a bit of optimism, pointing to the remarkable role that regional diplomacy has played in staving off a deeper crisis.

Episode Transcript

Esfandyar

Welcome to The Sanctions Age, the podcast that explores how sanctions are changing the world. My name is Esfandyar Batmanghelidj. In late February, the United States and Israel launched a war on Iran, a war that killed the country’s supreme leader, closed the Strait of Hormuz, pushed the global economy to the brink, and brought the Middle East closer to an all-out conflagration than at any point in a generation.

Now, amid a ceasefire that is held without ever being formalized, a draft framework for a comprehensive agreement between Washington and Tehran is reportedly taking shape. The deal that emerges, if it emerges at all, will make clear the limits of sanctions pressure, the price of war, and whether transformative diplomacy between the US and Iran is even possible.

To help us make sense of the ongoing negotiations, I’m joined today by Ali Vaez. Ali is Senior Advisor to the President and Project Director for Iran at the International Crisis Group. He’s one of the foremost experts on the Iran nuclear file, having spent the better part of 15 years in direct contact with Western, regional, and Iranian officials. Among a long list of other achievements, he is a co-author of the excellent book, How Sanctions Work: Iran and the Impact of Economic Warfare.

Ali, welcome to the show.

Ali

Thank you, Yar. It’s great to be with you. I’ve been an avid listener of this podcast, so it’s an honor to be finally on.

Esfandyar

I’m delighted to hear that. There’s a lot to discuss today, and I really couldn’t think of anyone better to give us a run-through of these negotiations. Before we focus the conversation on the talks currently underway between the US and Iran, I wanted to maybe step back and give our listeners a little bit of background on how we arrived at this point.

The Iran nuclear negotiations began in earnest way back in 2003, when the E3: France, Germany, and the United Kingdom, sought a deal to limit Iran’s nuclear development. Can we start by you giving us an overview of what first spurred the concerns of Iran’s nuclear program and how Western governments sought to mitigate that threat? What was it about the nuclear deal that was reached in 2015 that made it such a significant achievement?

Ali

Sure. Happy to do so. In 2003, it was revealed by an Iranian opposition group, probably information that was provided to it by a foreign intelligence organization, that Iran had a secret nuclear weapons program. There were sites that were not declared to the IAEA. There were all sorts of nuclear activities, centrifuge-related, heavy water reactor, heavy water production, and so on, that were not declared. This was around the time that the US had invaded Iraq based on a pretext of Iraq having weapons of mass destruction program.

This sparked an international non-proliferation crisis. Out of fear that the US might, after invading Afghanistan and Iraq, would go to Iran next, the Europeans decided to proactively pursue a diplomatic process to try to resolve this problem.

In October 2003, they reached an understanding with Iran in which Iran agreed to suspend its uranium enrichment program for a period of time until they can get to an agreement in which Iran would be provided with economic incentives in return for restrictions and transparency measures imposed on its nuclear program.

That deal was in place until the spring of 2005, when it fell apart because the Europeans couldn’t really deliver on their end of the bargain. The reason was that the US was not on board with providing Iran with economic incentives for anything less than Iran agreeing to zero enrichment, completely abandoning any access to nuclear fuel cycle technology.

That sparked a period of confrontation that I call the race of sanctions against centrifuges. The US and, in fact, the rest of the global powers started imposing international, multilateral, and unilateral sanctions on Iran, which really peaked around 2012. In that period, Iran started ratcheting up its nuclear program. By the time that we got to serious diplomacy again in 2013, which first led to an interim agreement in November of that year, and then to a comprehensive agreement in July of 2015, Iran already had almost an industrial-scale enrichment program and was enriching to 20%, which is considered pretty close to weapons-grade.

The most important thing about the deal in 2015 was that it was based on the same model of the 2003 Tehran Declaration Agreement, meaning that at its core was this basic formula of restrictions and transparency measures in return for economic incentives.

Of course, the latter end of the bargain had changed because it was no longer about positive economic incentives, but about mostly about removing sanctions. What was really different about this agreement was the degree of detail that went into it. It was a 159-page-long agreement, basically leaving no stone unturned just to make sure that all pathways to nuclear weapons were blocked for a long period of time. Some of the most important restrictions on the program were supposed to remain in place until 2031, when they started to sunset and expire.

Also, sanctions relief was very, very detailed. It was the first time that the US and Iran had negotiated an agreement of this degree of detail and in a win-win manner in direct negotiation. There were lots of things that were new about it. Of course, that agreement also didn’t last because the Trump administration, that came in about a year after this deal went into full implementation, called it one of the worst deals ever negotiated, and eventually, we drew from it in 2018.

Esfandyar

Ali, that was the big fateful decision that basically got us to the crisis point that we’re at today. The Trump administration, despite what you describe as being this very long, technical, detailed, and carefully negotiated deal, calls the deal a bad one and decides to withdraw.

I think even more importantly, they don’t just withdraw from the deal, but they to begin this policy of maximum pressure, so really imposing all of the sanctions that had been removed as part of the nuclear agreement in 2015, 2016, but then also adding new sanctions to try and ratchet up the pressure on Iran’s economy, in addition to other escalatory steps that the administration took.

The crisis that we see today flows directly from that decision. In your view, why was it that the Trump administration walked away from a deal that was widely seen as working? What was it that the architects of this maximum pressure policy expected to achieve by moving away from a diplomatic agreement towards a new phase of pressure?

Ali

Look, the core criticism of the opponents of the JCPOA, the 2015 deal, was that President Obama prematurely removed the pressure. If he had kept Iran under really strangulating pressure that it was on with its currency devaluation, its high inflation, high unemployment rates, Iran would eventually have capitulated to US terms.

Instead of a deal that would allow Iran to have still enrichment on its soil, even though with all the restrictions and transparency measures that I described, it would have agreed to give away the whole program. The concept was that if the Trump administration comes back in and not just restores the pressure, but takes it to new heights, this is why it was called maximum pressure, it would do the magic trick of bringing Iran to its knees.

The JCPOA lifted about 750 sanctions designations. The Trump administration not only restored those designations but added another 750 on top of them. The Biden administration then came in on the promise of lifting those sanctions and restoring the JCPOA, but added another 500 on top of it. The process continues to this day, and Iran still has not capitulated.

If you ask, again, the opponents of the JCPOA, they will still say that we are one screwdriver turned away from Iran, surrendering to US terms. Whereas the entire concept, I think, is flawed and misguided because it’s a weaker party if you validate the pressure tool in the hands of the stronger party, then there is no end to that stronger party using that tool against you. It will become a slippery slope from the perspective of Iranian leadership. That’s why, regardless of the degree of pressure or pain that they’re tolerating, they would never consider capitulation to US terms that they believe is more dangerous than suffering the consequences of US coercion, whether it’s economic or military.

That was the concept. For a while, by the way, I have to admit that the pressure was more effective than many expected. Some of the proponents of diplomacy believe that pressure would only work if it’s multilateral, not just unilateral US sanctions. Iran would have ways to go around sanctions if the rest of the world is not on board with such a pressure campaign. But by May of 2019, the Trump administration had managed to bring down Iranian oil exports from about 2.5 million barrels a day to under 100,000 barrels. Yet, again, Iran didn’t even consider making the concessions that the Trump administration had in mind.

This takes us to this second experience sanctions in which the natural progression of pressure policy. When sanctions don’t work, you’re left only with another course of tool, which is the use of the threat of use of military force, and then the limited use of military force, and then the comprehensive use of military force. All of those things still have not produced the intended result.

Esfandyar

Ali, I want to go back to this discussion of what leverage the two sides are able to bring to bear on one another and how that’s factoring into the negotiations. We’ll do that in the context of discussing the talks that are currently taking place.

You did mention the Biden administration in your response just now, and I think we should maybe expand on that a little bit because that was a moment where it did seem like despite the fact that Biden maintained pressure on Iran, as you described, and despite the concerns on the Iranian side that the US was not really committed to restoring the nuclear deal, they did get very close to an agreement.

In the late summer of 2022, there was a text on the table where basically the technical side of the diplomatic agreement had been agreed by both sets of negotiators that were meeting in Vienna. You’ve written a lot about the difference between having a technically viable agreement and the political will to actually conclude the agreement.

In the end, there wasn’t a deal during the Biden years. Why is it that the US and Iran could converge on the substance of a deal, technically speaking, but still fail to actually get that deal over the line? What does that tell us, let’s say, the experience in the Biden years, about one of these fundamental challenges for this diplomacy that is underway right now?

Ali

That’s a very good question. Look, you need a combination of political will and also technical expertise to get to the finish line in these kinds of negotiations, because we’re talking about an issue that at its core is very technical, but every layer of it is wrapped in politics, domestic politics, both in Tehran and Washington, and also to a degree in European capitals in Jerusalem.

In the case of the Biden administration, I’ve always argued that they’re responsible for the failure of talks in 2021 when they came to office because there was a decision that they’re not going to take any political risk on Iran. They had other priorities at home. They had a laser-thin margin in the Senate and Iran was a controversial issue. They decided to posture and delay.

Of course, for the Iranians who expected the same people who negotiated the JCPOA were the critiques of maximum pressure to get back into the deal. When they didn’t, it really burned through whatever trust remained between the two sides and resulted in the Iranians hardening their position.

There was also a change in the political situation in Iran. The President who had negotiated the 2015 deal, President Rouhani, left office, and a very hard-line President, Raisi, came into office, empowering hard-line negotiators who, again, just like their American counterparts, believe that the reason the deal wasn’t good enough was that their predecessors were too soft on the United States and had made too many compromises, and so they hardened their position.

Then a series of unfortunate things happened, including the war in Ukraine, in which Iran provided military supports to Russia, and that hardened the European position. They no longer were really interested in providing Iran with additional financial resources in the form of sanctions relief. Then the Women Life Freedom protest happened in Iran and made it politically toxic for the Biden administration to do so.

On the technical side, there were also some remaining differences. It’s like where we are right now. The other day, a Trump administration official said about 95% of the text of the agreement that Iran and the US are negotiating is done. The devil is really in that 5%.

I remember I asked one of the French negotiators to send me a copy of the title of what they were negotiating in Vienna to restore the JCPOA, this 27-page document, and he covered it with one of the letterheads of the Quba Palace where the negotiations were taking place, where you can only see the top part. The top part said, “Nothing is agreed until everything is agreed.”

Not everything was agreed to in these negotiations. There were still some differences, key among them, the fact that the Iranians demanded US guarantees. If they get back into the deal, the US would not once again renege on its commitments as Trump did in 2018.

Unfortunately, there was no legal or political mechanism that could provide that guarantee. This remained a contentious issue, and one of the reasons that the parties were not able to cross the finish line until the political ground under their feet basically completely shifted and made it impossible to finalize the agreement.

Esfandyar

The shifting political ground obviously made it impossible for a deal to come together during the Biden years. But it is remarkable that early last year, the Trump administration was engaged in negotiations with Iran, and everything that had happened that created mistrust between the two sides, that was still not in and of itself something that was preventing the idea of diplomatic engagement between the US and Iran.

Thinking back to last year before the June war, and this moment where it did seem like there was some optimism that Trump, despite being the person who tore up the nuclear deal, might finally be ready to strike a new one, what was it about that moment that made things feel optimistic? How close were we to an agreement before Israel decided to launch a military campaign against Iran?

Is the fact that Israel decided to launch that campaign evidence that an agreement was actually pretty close? Or was it, as some figures in Iran have suggested, evidence that US was never really committed to those talks succeeding and was just trying to ratchet up the pressure towards military escalation in the way you described earlier?

Ali

To be honest, my views about this have evolved over the past few months as I’ve learned more and more about it, about what went on at the negotiating table from people who were there and who left the Trump administration or some of the mediators.

It does appear to me that the Trump administration really didn’t know what it was doing. It didn’t have a strategy. It wanted to test the waters to see if it could get a deal, but it really didn’t even know what a deal it wanted. They started on very optimistic terms. Steve Witkoff, the chief negotiator, when he was told that Iran was willing to bring down the level of enrichment from 60%, which is 99% of the way to weapons-grade, to below 3.67%, he thought that was a major achievement.

On an interview he did on US television, which created a major backlash in the US, literally, I think more than 100 Republican members of Congress wrote a letter to the White House demanding that the US should not agree to anything less than zero enrichment or anything more than zero enrichment.

But in any case, that just demonstrated that someone like Witkoff really had no idea what the JCPOA was, what would be acceptable set of criteria for the United States.

I remember in 2013, Wendy Sherman, who was the chief US negotiator, had asked her team to prepare a draft of what an agreement would be acceptable to the United States as the basis from which the US team could negotiate and reach the middle ground. At least you knew in detail what is it that would be acceptable to you.

The Trump negotiators had no idea, really. Was that really all a subterfuge or just the amateurish way that they approach the negotiation? It’s still hard to say, but I do believe that there was a genuine effort to see if they could get a deal, but a deal that could be characterized more or less as zero-sum and simplistic. At some point, Steve Witkoff, for instance, had offered the Iranians to buy out their nuclear program as if this was a real estate deal.

That’s the negotiation that both, I think in 2025 and in 2026, was not going to succeed. I also put some of the blame for this on the Iranian side because they still negotiated as if they were negotiating with the Obama administration or with the Trump administration, not realizing that the technical approach to the negotiation is not going to work with the new crowd, and they needed to engage more in the performance of diplomacy that some other countries in the world had deployed with the Trump administration and had produced much better results. Again, hard to read intentions. I think as one of the members of Witkoff’s team at the time, told me these were not professional negotiations, but they were serious.

Esfandyar

I think that distinction that you can have negotiations that are serious but not professional, that really gets at the heart of the challenge of maybe engaging the Trump administration diplomatically, whether on this issue or any number of issues, many of which we’ve discussed on the podcast. It does sound like, obviously, the two sides struggle to find mutually compatible strategy for the talks, whether we’re looking at the negotiations before the June war last year or the negotiations before the war that started in late February.

Of course, where we are now is the two sides are back in negotiations after roughly 40 days of fighting, in which the US did really take this landmark move, historic move to embark on a major military operation against Iran. Then we’ve had 50 days around this fragile, never formalized ceasefire. Based on everything we’ve discussed so far, this is the fourth time that the two sides are at the negotiating table since maximum pressure resumed in 2018.

Are we in a situation now where, because of the outcomes of this war, there has been a substantive change in either the leverage that both sides are bringing to the table or the motivations for the two sides to engage in these negotiations? Do you see that the conditions now are a little bit more conducive for talks coming together than maybe they had been in the previous attempts?

Ali

Another very tough question. From what I see, I feel the leverage has certainly changed in the sense that Iran’s leverage is no longer just nuclear. It also is the Strait of Hormuz, which was a superpower. The geography had granted Iran, but Iran had never really deployed until this conflict, and that has changed the stakes and has changed the balance of power in these negotiations.

In a way, US leverage has diminished because the threat of use of force, which was always on the table when the Obama administration was negotiating, when the Biden administration was negotiating, even Trump’s first term, has now come to pass. It has materialized, and the Islamic Republic has survived it. It is not as much of a tool to put pressure on Iran as was the case in the past. It is exactly like the threat of use of sanctions. When you threaten, you have leverage, but when you impose, it’s already sunk cost. Then removing it and rolling back the clock becomes so much more difficult. I think this applies to military action as well.

I don’t see necessarily that the US side has now come to the conclusion that, “Okay, we have tried every tool of coercion. It hasn’t produced the outcome that we had in mind. Iran is still not agreeing to zero enrichment, and therefore we need to adopt a different strategy.” I still don’t see it. Part of this, again, is unique to this administration because the Trump administration doesn’t really have a policy process in which lessons could be learned, and the policy direction could be altered. It’s more based on the president’s impulses or mood. I don’t necessarily see that this experience has informed the way the Trump administration is negotiating. It is still allergic to anything that sounds or looks like the JCPOA. It still very much would like to see a zero enrichment.

On the Iranian side, I think it has deepened their cynicism about the possibility of getting an agreement with the United States, and especially with this administration. This is why you see that they prioritize the urgent over the important, the urgent being ending the war and reopening the Strait of Hormuz, along with some degree of economic reprieve. I don’t think that the Iranian government truly believes that it can negotiate a very detailed agreement with the Trump administration. I just give you an example by pointing to one piece of this puzzle, and that’s the fate of the stockpile of highly-enriched uranium, about half a ton of 60 enriched uranium that President Trump calls nuclear dust.

To get this issue resolved, you need to negotiate a deal that would basically outline exactly who goes after and how you basically find this material, which is probably sitting under rubble in one of the sites that were bombed during the Twelve-Day War in 2025, how you excavate it out. Then you need to have a deal between Iran and the UN nuclear watchdog, IAEA, to negotiate how to do oversight over this process. There are some unexposed ordinances in that area. We’re talking about 5,000 pound bombs that would have to be neutralized. It’s a very complicated process.

Then you have to do accountancy. God forbid, if instead of 440 kilograms, you find only 400 kilograms, it’s a major crisis. A lot of the problems Iran has had with the IEA in the past have been about a few grams of unenriched uranium, dating back from pre-2003 when Iran had a nuclear weapons program. If you have about 40 kilograms of 60% enriched uranium missing, it would be a major issue.

Let’s say all of that is accounted for, then probably the agreement would be that part of this stockpile would be diluted in Iran and part of it would be shipped out to a third country. Probably in return for each installment that is disposed of, Iranians would need sanctions relief that is verifiable, very tangible and irreversible up front. All of that probably is going to take weeks to negotiate, months to implement. The Trump administration has repeatedly demonstrated it doesn’t have the patience, the discipline, the focus, the expertise that is required to negotiate this an agreement. This is why I’m afraid if we get some understanding, as both sides call it an MOU, a memorandum of understanding, to end the war and reopen the Strait of Hormuz, even if it might have some outlines of the direction of travel on the nuclear front, it would never really translate into a comprehensive and sustainable nuclear agreement.

Esfandyar

Ali, I to unpack a little bit more about this decision to negotiate a framework agreement or a memorandum of understanding rather than to try and go for the full agreement right now. The one obvious reason might be, as you explained, the technical details of this deal are probably more difficult to hammer out than ever before because of what has transpired in Iran’s nuclear program, especially in the wake of the war, but then also the incredibly complex architecture of US sanctions. The decision that the Trump administration has taken to be open to a framework deal is interesting.

I remember that last year, you and I were involved in a process where we were trying to push regional governments that were trying to mediate between the US and Iran to prioritize a framework deal in order to create an opening for further negotiations. Can we talk a little bit about the logic of an interim agreement? Is it possible that once the two sides, if they’re able to get over their mutual cynicism or skepticism, get a framework agreement in place? Does that actually potentially change the atmospherics around these negotiations in a way that could make the technical side of things easier to handle?

Ali

Look, you negotiate a framework agreement when the issues on the table are so complicated and your positions in them are so far apart that you need a considerable amount of time to figure out where common ground and middle ground, in which the deal could take shape, is located. That’s why you agree to very broad outlines which buys diplomacy, time and space to hammer out the details.

This is not the reason a framework agreement is being negotiated right now. The main reason is that basically there is a very high degree of cynicism, especially on the Iranian side, on the possibility of ever reaching a comprehensive agreement. That’s why a framework deal that would just end a lose-lose dynamic for both sides is attractive, even if that doesn’t translate into a sustainable end game. That’s where the logic is. Of course, last year’s war ended with a ceasefire that was imposed by President Trump on Iran and Israel without any written terms, and obviously it resulted in a second round of hostilities. The Iranians did insist that this time around, they would not agree to a ceasefire unless it has very specific terms. The Iranians did want some a written understanding about ending the war and what would come next.

The Trump administration also now has an interest in some framework primarily because it’s interested in reopening the Strait of Hormuz and bringing down global energy prices. They tried, especially the Trump administration, to see if it was possible to put everything on a single page, an agreement that would very simply deprive Iran of the ability of enriching uranium ever in the future, and they did not succeed. Iran insisted that these things would have to be pursued in two different phases. Again, it’s also partly because from the Iranian perspective, both in June of 2025 and in February of 2026, they had worked on draft detailed proposals on how to resolve the nuclear program, and yet the US decided to bomb them in the middle of negotiation. What’s the point of, once again, pursuing a technical draft on nuclear concessions and sanctions relief if that doesn’t seem to be what satisfies the United States?

This is how the framework and this stage approach has come together. It does make logical sense, and it is the best off-ramp in a road that honestly should not have been taken, but we are where we are.

Esfandyar

Ali, the way you’re describing it, it seems like, to an extent, both sides would use the framework agreement to kick the can down the road. Then the question becomes, why would a framework agreement actually hold if the underlying issues haven’t really been addressed in the form of a much more elaborate diplomatic understanding? That brings us back to this question of leverage.

Let’s look at this from Washington’s perspective. If the Trump administration has had these maximal demands for Iran since its first term, since the policy was instituted 8 years ago to adopt maximum pressure, what is it about the current moment that would lead them to agree a framework deal, and then why would they not just reneg on that deal again and maybe resume the military conflict? Here I’m thinking about, obviously, the closure of the Strait of Hormuz, which you touched on, also something that we discussed in the episode with Eddie Fishman on the podcast last week.

It does seem like the costs of military conflict are maybe more clear to both sides than they have been in previous rounds of negotiation. Is that in and of itself going to be enough to make a framework agreement that doesn’t actually resolve a lot of the major underlying issues hold up for the remainder of Trump’s term or for the coming years in which Iran is going to still face significant political, let’s say, uncertainty domestically?

Ali

Yes. As I said, I think the realization that the current situation is lose-lose, that although both sides have leverage over one another, but they’re also paying a very high cost for the status quo, and it’s not a status quo that is really sustainable in the long run. Yes, the Iranians can reduce the output of their oil production, can survive US naval blockade for a long period of time. Yes, the United States can live with higher energy prices and might not necessarily care much about what the closure of Strait of Hormuz would cause in terms of consequences around the world, food insecurity in East Africa and so on. It is also a very costly status quo for both sides, and they both would welcome the possibility of an off-ramp, but an off-ramp that doesn’t really take away most of their leverage because they still have not resolved anything in a substantive manner.

Now, you’re right in being concerned that if you don’t resolve the problems, you always risk that at some point down the road, tensions will flare up again, and we would end up exactly where we have been in another round of hostilities. That’s completely possible. This is why the framework agreement, as welcome as I think it is, despite all of its shortcoming, is not going to be a long-term solution. Neither side is really thinking long term here.

I think the Iranians would want to see what happens in the midterm elections, whether President Trump would be in a situation that his wings have been clipped next year as a result of the change in the balance of power in Washington, what happens in Israeli elections. The same for Israel and the United States. They want to wait and see what happens to an Iran that doesn’t have enough resources to fully recover and reconstruct after this war. Might have a bit of economic reprieve as part of this framework agreement, but certainly not enough for it to get back on its feet. There’s still a high degree of domestic discontent within the Iranian society. Would the regime be stable? Would it be in a weaker position?

Both sides, I think, will play for time and would see where things are next year. I do agree that the risks of getting into this cyclical conflict pattern is quite high because this framework is not going to resolve anything. Although both sides are giving each other a 60-day renewable window to negotiate the details of a comprehensive agreement, I don’t think we would ever get there.

Esfandyar

Ali, to round out the conversation on the negotiations as they’re unfolding right now, we’ve described this largely as talks between two sides. Of course, one of the very remarkable things about the way these talks are playing out is that pretty much every country in the region is a stakeholder or actually trying to have its influence felt in some ways.

On the spoiler side, the obvious example here is Israel, and we’ve talked a little bit about how Israel could decide to undermine the deal depending on its own priorities and imperatives. There are also countries that are seeking to defend diplomacy or create space for diplomacy. We have Pakistan, which helped broker the ceasefire, Qatar and Oman that have been playing a mediator, facilitator role, and then also regional power such as Saudi Arabia and Turkey that are trying to push the Trump administration towards treating diplomacy seriously. You could also maybe touch on the role of China.

When you look at all of these countries that are weighing in, in different senses on the talks, does that change your prognosis at all? We’ve talked about why, fundamentally, a framework agreement might be insufficient when it’s just the US and Iran. What if it’s bound into this larger regional understanding that this issue really needs to be kept in the box so that you don’t end up with another round of crisis?

Ali

Look, the reason everybody’s involved now is that all the predictions about how we would end up in a regional conflagration if this issue was not resolved in a mutually beneficial way, unfortunately, have come to pass. Everybody has now paid a price for this crisis. The region was, of course, caught in the crossfire, and they know that if this conflict resumes, it could spiral out of control in a way that the cost that the region has already suffered would pale in comparison to what could come next. This is why they’ve been very proactive in trying to bring Iran and the US to a point that they could at least agree to this very basic superficial framework of an understanding.

However, we’ve seen this movie before in Gaza, almost the exact same thing happened. That a lot of these major regional players came together and there was a major signing ceremony for the Gaza ceasefire deal, which never went into phase II, which never really fundamentally resolved the issues. Because at the end of the day, again, you’re dealing with a very peculiar administration that doesn’t have the focus, doesn’t have what it takes to bring issues to a stable and comprehensive solution.

I’m afraid this time around, despite the involvement of the region and countries, we’re not necessarily in a better position to be able to resolve these problems because of the nature of the Trump administration. That does not preclude include the possibility of the region trying to, once the dust settles in this conflict, to start its own initiative of engaging Iran and starting the much overdue conversation about a regional security architecture that is beneficial to all.

For that, you don’t necessarily need the Trump administration to be involved or even to provide a green light. Israel would always be opposed to it. But with so many regional countries more or less on the same page about what they want to get out of this diplomatic track, I think that’s where the real potential lies. It would be a pity if everybody waits for Washington because it will be like waiting for Godot. Washington will not arrive. The Trump administration after this will focus on Cuba, and again, we’ll get to the midterms. There might be political violence in the United.

There are all sorts of distractions that would prevent Washington from being able to play a constructive role. But that shouldn’t stop the region from pushing forward with what it has started, which for the first time is actually promising. I’m saying that clear-eyed with the fact that there are still some regional players like the UAE, for instance, who are not necessarily on board with this mutually beneficial integrated vision for the future of the region. But you don’t need to have everybody on board. The European system also didn’t start with everybody on board. You start with the critical mass and eventually everybody else sees the benefits in this cooperative and inclusive approach, they would join it.

Esfandyar

I’m glad we ended up with a slightly more optimistic outlook for the region. Ali, we’ve reached the end of our time, and I have to ask you the question we ask all first-time guests on the show. When did you realize that sanctions are changing the world?

Ali

I think it was in 2013 when I started talking to Iranian officials about sanctions relief, and I realized that they just don’t understand how complicated the structure of sanctions, especially US sanctions are, and started writing a crisis group report that we entitled the Spider Web. That was an education for myself too, because I just realized how sticky the nature of these sanctions are and how they’re easy relatively to design, but hard to enforce, but almost impossible to remove. That lesson has stayed with me now for almost 13 years.

Esfandyar

Ali, thank you for a brilliant examination of the factors behind these negotiations. I hope that the officials that you’re engaging with at least take on board some of your optimism about trying to find a silver lining here and maybe the region finding a way forward and realizing that the path to peace may not run through Washington.

Ali

Thanks. Fingers crossed.

Esfandyar

I’m Esfandyar Batmanghelidj, and this has been The Sanction’s Age. Our show is produced by media.winter in Berlin. Thanks for listening.

END

Listen to This Episode

Listen on Spotify

Listen on Apple Podcasts

Listen on Buzzsprout

For more than sixty years, the United States has waged an economic war against Cuba. The sanctions first imposed in 1960 were designed, in the words of a secret State Department memorandum, to bring about “hunger, desperation and overthrow of government.”

Six decades later, the sanctions pressure has reached unprecedented levels. In January 2026, the Trump administration signed an executive order blocking oil shipments to the island, which the United Nations has since described as “energy starvation.” President Trump has threatened military intervention. Federal prosecutors have indicted Raúl Castro, including for the charge of murder. But at the same time, Washington is sending envoys to Havana and offering aid, suggesting that Cuban leaders could choose a “new path.”

What is driving this escalation? What does it mean for Cubans already living through a humanitarian crisis? And is there any path out that does not demand further suffering from a population that has already paid an enormous price?

María José Espinosa is the Executive Director of the Center for Engagement and Advocacy In The Americas and a non-resident Fellow at the Center for International Policy. She is a Cuban economist and foreign policy expert with more than twelve years of experience in policy research, advocacy, and international relations. María is also a member of the Bologna Initiative for Sanctions Relief.

Season 3 of The Sanctions Age is produced by media.winter in Berlin.

The rest of this email is for paid subscribers and includes the host Josefine’s reflections on her conversation with María and a full episode transcript. If you would like access to this additional content and want to support the show, please subscribe by clicking the button below.

A huge thank you to our paid subscribers!

Subscribe now

Read more

Listen to This Episode

Listen on Spotify

Listen on Apple Podcasts

Listen on Buzzsprout

It has been an extraordinary year in American economic statecraft and economic warfare. When today’s guest last appeared on the show, it was April 2025. We spoke just days after Trump’s so-called “Liberation Day” tariffs had thrown global markets into chaos. At the time, much of the conversation about economic warfare was speculation about what Trump might do. A year later, we know what Trump’s economic warfare looks like in practice—and it’s not a pretty picture.

This episode features returning guest Edward Fishman. Since his last appearance on the podcast, Eddie has taken up a new position at the Council on Foreign Relations, where he is Senior Fellow and Director of the new Maurice R. Greenberg Center for Geoeconomics. The conversation will unpack Eddie’s new Foreign Affairs essay titled “How to Fight an Economic War: A Field Manual for a Ruptured World.”

Season 3 of The Sanctions Age is produced by media.winter in Berlin.

The rest of this email is for paid subscribers and includes the host Esfandyar’s reflections on his conversation with Eddie and a full episode transcript. If you would like access to this additional content and want to support the show, please subscribe by clicking the button below.

A huge thank you to our paid subscribers!

Subscribe now

Read more

Listen to This Episode

Listen on Spotify

Listen on Apple Podcasts

Listen on Buzzsprout

Debates about sanctions tend to follow a familiar script. Who is being targeted? Will the measures change behavior? What are the economic costs to the sender country? These are legitimate questions. But they have a common blind spot: they describe sanctions from the outside, in the language of strategy and pressure, and rarely address what life is like for the ordinary people who live under them.

This episode examines how scholars are working to put people at the center of sanctions research by studying economic coercion as a form of structural violence, often incorporating a feminist lens. Scholars are addressing persistent gaps in how sanctions policies are debated by changing the focus of sanctions research, by seeking new sources of information and insight, and by pushing back on false or simplified narratives in an ongoing information war.

Lisa Neal is a researcher and journalist. Based at the University of Hamburg, Lisa has a background in feminist security studies and conflict research, and is currently completing her PhD on the intersectional effects of sanctions in Iran.

Season 3 of The Sanctions Age is produced by media.winter in Berlin.

The rest of this email is for paid subscribers and includes the host Josefine’s reflections on her conversation with Lisa and a full episode transcript. If you would like access to this additional content and want to support the show, please subscribe by clicking the button below.

A huge thank you to our paid subscribers!

Subscribe now

Read more

Listen to This Episode

Listen on Spotify

Listen on Apple Podcasts

Listen on Buzzsprout

Since the end of the Second World War, the world economy has operated on a set of shared assumptions: trade is mutually beneficial, interdependence engenders stability, and politics and economics are best kept separate. Germany built one of the strongest economies in the world on the basis of these assumptions. But they may no longer hold true.

In 2020, the COVID-19 pandemic shut down global supply chains and revealed how dependent advanced economies had become on goods produced thousands of miles away. In 2022, the Russian invasion of Ukraine forced Germany to wean itself off its dependence on cheap Russian gas, sending energy prices soaring. In 2025, the Trump administration turned tariffs into a political weapon, threatening Germany’s export machine. And in February of this year, the United States and Israel attacked Iran, triggering the closure of the Strait of Hormuz, leading to yet another crisis energy markets. Four crises in just six years have called into question Germany’s recipe for prosperity.

This episode explores the state of Germany’s economy in the geoeconomic zeitenwende, which has seen sanctions dent German export ambitions. Sascha Lohmann is a Senior Associate at the German Institute for International and Security Affairs. He is an expert on U.S. foreign and national security policy, transatlantic relations, and the intersection of political economy and national security.

Season 3 of The Sanctions Age is produced by media.winter in Berlin.

The rest of this email is for paid subscribers and includes the host Josefine’s reflections on her conversation with Sascha and a full episode transcript. If you would like access to this additional content and want to support the show, please subscribe by clicking the button below.

A huge thank you to our paid subscribers!

Subscribe now

Read more

By Francisco Rodríguez

The extent to which the U.S. embargo of Cuba, which began to be imposed in 1960 and has been significantly strengthened over the past six decades, plays a primary role in explaining the country’s economic underperformance is at the center of a long-standing and contentious policy debate. Critics of the embargo highlight its pervasive effects: it does not just block trade with the U.S.; it also creates significant, often binding, deterrents for many third countries to interact with Cuba. Others claim that socialist economic policies are the main culprit for Cuba’s underperformance and argue that the embargo plays a secondary role.

A recent paper by Bastos, João Pedro, Vincent Geloso, and Jamie Bologna Pavlik claims that the embargo has played at most a minor role. The paper, provocatively titled The Forsaken Road: Reassessing Living Standards Following the Cuban Revolution and the American Embargo, uses a method known as synthetic controls to create a counterfactual scenario that resembles how Cuba would have evolved in the absence of the events that took place around 1959. This counterfactual Cuba behaves similarly to Cuba prior to 1959, but then begins to diverge significantly, showing a much higher rate of GDP growth than Cuba. This result suggests that if Cuba had not experienced the major changes to its economy and political system after 1959, it would have grown much more rapidly than it did.

The authors then take another step, which is to try to disentangle how much of this underperformance is due to the embargo and how much to socialist economic policies. The authors’ idea for how to do this is to consider how much Cuban trade changed in the aftermath of the embargo. The rationale is straightforward: if the embargo hurts the Cuban economy by reducing trade below what it would have otherwise been, then we should be able to estimate the magnitude of that effect by appealing to existing estimates in the literature on the effects of trade on economic growth.

Once Bastos, Geloso, and Bologna Pavlik carry out this calculation, they arrive at a surprising result. The embargo can explain, at most, under optimistic assumptions, 8% of the difference between Cuba’s realized GDP and the GDP it would have had if it had behaved according to the synthetic control group.

Research Shortcomings

When I first read this paper, I found the reported results quite surprising. The authors recognize that Cuba faced a huge trade shock as a result of the embargo. In 1958, Cuba’s trade with the US represented 36% of its GDP, and this was nearly two-thirds of its total trade. Yet they still come up with an effect of a second-order magnitude.

There is, in fact, a vast literature linking trade and growth, and some of the most prominent papers in that literature suggest that trade has a very significant quantitative effect on growth. So how exactly do the authors find that losing access to trade amounting to more than a third of GDP has such a minor effect on income?

This puzzle led me to look more closely at the authors’ results. What I found, in a nutshell, is that their calculations are severely biased against finding an effect of the embargo for three reasons. First, they select a contribution to the literature that estimates a relatively low elasticity of income with respect to trade. Second, they focus on short-term rather than long-term effects. Third, they choose a decomposition that attributes to the embargo only part of the effects that could reasonably be attributed to it.

Bastos, Geloso, and Bologna Pavlik base their calculations on an estimate from a 2003 paper by Yanikkaya, which reports a semi-elasticity of growth with respect to trade of 0.018. That is, a one percentage point increase in trade—say from 55% to 56% of GDP—leads to a 0.018 percentage point increase in the growth rate.

Yanikkaya’s is one of hundreds of papers that have tried to estimate the effect of openness on growth, so the first question one is led to ask is how the authors selected that particular estimate. The authors do not provide a clear explanation. They claim that the estimate is similar to that of another recent paper by Raghutla, but there is a problem: they misread Raghutla’s estimate, which is 0.186, not 0.018, more than ten times larger. In any case, the estimates are not directly comparable: Raghutla estimates a long-run elasticity, while Yanikkaya estimates a short-run semi-elasticity. As a result, Yanikkaya’s specification captures a temporary, transitory effect on growth rather than a permanent one.

So how exactly do the authors find that losing access to trade amounting to more than a third of GDP has such a minor effect on income?

The authors also cite a recent meta-analysis by Heimberger (2022) and claim that their chosen elasticity is higher than those found in the rest of the literature surveyed in that paper. However, Heimberger provides no support for their claim: his analysis focuses on standardized coefficients, which do not provide information about the magnitude of absolute effects.

The other problems with Bastos, Geloso, and Bologna Pavlik’s calculations have to do with the horizon they adopt and their treatment of interaction effects. The authors assume a 12-year horizon for their calculations, which is particularly arbitrary given that they claim to be interested in understanding why Cuba is poor today.

They also adopt a decomposition of growth effects that attributes to socialist policies all of the interaction between policies and trade. To see why this matters, suppose that lifting the embargo doubled GDP, and that ending socialist policies also doubled GDP. If both changes were implemented simultaneously, GDP would quadruple. Yet under the Bastos et al. decomposition, two-thirds of the total effect would be attributed to socialist policies, and only one-third to the embargo.

Earlier Research

What is the result of addressing these problems? That is the question I explore in my recent working paper.

To do so, I chose to investigate estimates from some of the most well-known papers exploring the relationship between trade and growth. I do not claim to have conducted a systematic survey of the literature. There is a very large body of work on this topic, and comparing effect sizes across papers can be difficult, particularly when one is dealing with hundreds or possibly thousands of studies.

But neither am I cherry-picking. The four papers I use are extremely well known, highly cited, and widely accepted as seminal contributions to the field. More importantly, Bastos, Geloso, and Bologna Pavlik are explicitly claiming to establish an upper bound on the effect of the Cuban embargo. To dispute that claim, it is sufficient to show that their calculation yields much higher values when one substitutes their elasticity with those found in some of the most prominent contributions in the literature.

The papers I consider are Sala-i-Martin, Doppelhofer, and Miller (AER, 2004), Frankel and Romer (AER, 1999), Alcalá and Ciccone (QJE, 2004), and Feyrer (AEJ, 2019). The first three have accumulated thousands of citations, while the fourth, though more recent, is widely recognized for addressing key identification issues in the literature.

The results I obtain using these alternative elasticities suggest that the embargo is associated with a much wider and higher range of effects. In their intermediate scenario, Bastos et al. estimate that the embargo can explain only 6.5% of Cuba’s underperformance. In contrast, my estimates vary widely across the four papers, ranging from 34% to 124%. In fact, two of the papers (Alcalá and Ciccone and Feyrer) imply effects greater than 100% of the difference between Cuba and the synthetic control group. This would suggest that, in the absence of the embargo, Cuba would not have underperformed relative to this group, but might in fact have outperformed it.

Bastos et al. also refer to another exercise in their paper, in which they compare Cuban growth with that of formerly socialist economies after the collapse of the Soviet Union. Interestingly, they find that these economies outperform Cuba, but the difference is not statistically significant. Yet to me, it is not clear that the most salient difference between Cuba and former socialist economies is that they maintained different policies. It could also be that the countries of Eastern Europe did not have to contend with a punitive trade embargo from their most natural trading partners.

Think about it the following way: imagine that after the collapse of the Soviet Union, the countries of Western Europe had decided to ban all trade with former Soviet bloc countries, including by applying secondary sanctions to penalize anyone who traded with them. Would countries like Poland, Hungary, and the Czech Republic have experienced the same growth that they did if they had had to face such measures?

Understanding the effect that the embargo has played in Cuba’s economic underperformance relative to other factors (such as the choice of economic institutions) remains an important and relevant research question. Bastos et al. have put forward an interesting idea, which is to assess the embargo’s effects through its impact on the integration of the target economy into global trade.

Regrettably, their work falls short, primarily because of their choice of an elasticity estimate that is neither representative nor a reasonable upper bound of the values found in the literature. Nevertheless, this remains an important area for further research, in which future contributions may allow us to better understand the effects of these competing forces.

Francisco Rodríguez is a Venezuelan economist, who is a Senior Research fellow at the Center for Economic and Policy Research and a Faculty Affiliate at the Josef Korbel School at the University of Denver. He is also a member of the Bologna Initiative for Sanctions Relief.

Section: (all-articles) Photo: Canva

Listen to This Episode

Listen on Spotify

Listen on Apple Podcasts

Listen on Buzzsprout

When sanctions make the news it is usually because new measures are being imposed on a country, company, or individual. But sometimes, the news is that sanctions are being lifted. As discussed in the first episode of this season, the Trump administration has offered Venezuela sanctions relief as part of the arrangement that brought Delcy Rodriguez to power. The second episode examined the impact of the Iran war on Russia, including a surprising general license temporarily rolling back sanctions on Russian oil exports. Last week, the podcast tackled Syria’s economic recovery, which has been spurred by nearly all U.S. and EU sanctions. These recent developments demonstrate the importance of thinking how to remove sanctions when political conditions require.

But what does it mean to lift sanctions? This episode addresses the complex issue of sanctions termination. Drawing on the insights of two pioneers in the study of sanctions termination, the episode explores the political and economic conditions necessary for the successful removal of sanctions.

Julia Grauvogel is a Senior Researcher at the German Institute for Global and Area Studies where she has led several multi-year research projects on the sanctions termination. She is also a professor at Leuphana University in Lüneburg. Hana Attia is a Junior Professor of Security Policy and Peace at Leuphana University and Research Fellow at the German Institute for Global and Area Studies, affiliated with the Middle East Department. She has worked extensively on sanctions issues and is a frequent collaborator with Julia on research projects.

Season 3 of The Sanctions Age is produced by media.winter in Berlin.

The rest of this email is for paid subscribers and includes the host Josefine’s reflections on her conversation with Julia and Hana and a full episode transcript. If you would like access to this additional content and want to support the show, please subscribe by clicking the button below.

A huge thank you to our paid subscribers!

Subscribe now

Read more

Listen to This Episode

Listen on Spotify

Listen on Apple Podcasts

Listen on Buzzsprout

It has been over a year since Syrian dictator Bashar Al Assad fled to Moscow and a new government took power in Damascus. Assad’s ouster triggered one of the most rapid reversals of a sanctions regime in recent history. The European Union and the United States essentially raced to be the first to lift sanctions on Syria and most restrictions on engagement with the Syrian economy were removed by December 2025.

Encouragingly, the Syrian economy is outperforming expectations. But the path to economic recovery and reintegration into the global economy has been far from smooth. Today’s guest today works directly on issues of sanctions relief, banking reform, and economic recovery in Syria.

Vittorio Maresca di Serracapriola is an economic analyst based in Beirut. He works at Karam Shaar Advisory, where he advises companies and institutions trying to re-engage with Syria. He is also a member of the Bologna Initiative for Sanctions Relief.

Season 3 of The Sanctions Age is produced by media.winter in Berlin.

The rest of this email is for paid subscribers and includes the host Josefine’s reflections on her conversation with Vittorio and a full episode transcript. If you would like access to this additional content and want to support the show, please subscribe by clicking the button below.

A huge thank you to our paid subscribers!

Subscribe now

Read more

Listen to This Episode

Listen on Spotify

Listen on Apple Podcasts

Listen on Buzzsprout

A quarter century ago, the United States had sanctioned fewer than 1000 companies, organizations, individuals, and vessels around the world. Today, that total is nearly 17,000. One reason why these measures are being used so expansively is the widespread perception that sanctions are “smart,” designed to be maximally effective while causing minimal humanitarian harm.

The notion of “smart sanctions” has a specific origin. The term dates back to the late 1990s, when a broad coalition of policymakers, academics, and advocates made an earnest effort to reform sanctions. In this episode, we discuss the decades-long campaign to make sanctions smarter and why these efforts have fallen short so far.

Alistair Millar is the President of the Fourth Freedom Forum, a private philanthropy that has pushed for sanctions reforms for nearly 35 years. The Fourth Freedom Forum is a donor to the Bologna Initiative for Sanctions Relief, the project behind this podcast. Alongside his role as a foundation president, Alistair is also an adjunct professor at The George Washington University, where he teaches about international security, violent extremism, and counterterrorism.

Season 3 of The Sanctions Age is produced by Media Winter in Berlin.

The rest of this email is for paid subscribers and includes the host Esfandyar’s reflections on his conversation with Alistair and a full episode transcript. If you would like access to this additional content and want to support the show, please subscribe by clicking the button below.

A huge thank you to our paid subscribers!

Subscribe now

Read more

Listen to This Episode

Listen on Spotify

Listen on Apple Podcasts

Listen on Buzzsprout

February marked the fourth anniversary of the Russian invasion of Ukraine. It also marked the beginning of a new war. U.S. and Israel airstrikes on Iran have thrust the Persian Gulf into a devastating conflict with profound impacts for the global economy. Unprecedented strikes on energy infrastructure and disruptions in maritime traffic through the Strait of Hormuz have led to the price of oil—and a wide range of other commodities—to skyrocket.

Although the fighting is occurring in two different theaters, the wars in Iran and Ukraine may be converging. Rising global energy prices are shifting the trajectory of the Russian economy, giving Russian President Vladimir Putin a much-needed fiscal boost. Meanwhile, Ukraine is responding to events in the Persian Gulf by increasingly targeting Russian energy infrastructure in an attempt to deny Putin a new windfall. In this episode, we explore how Putin stands to benefit from the Iran war, discussing the issue with one of the sharpest observers of the Russian economy.

Alexandra Prokopenko is a Russian economist who is currently a fellow at the Carnegie Russia Eurasia Center in Berlin. Alexandra has spent her career observing the creation of Russian economic policy, first as a journalist and later as an economist at the Central Bank of Russia, where she worked until early 2022. She is also a member of the Bologna Initiative for Sanctions Relief.

Season 3 of The Sanctions Age is produced by Media Winter in Berlin.

The rest of this email is for paid subscribers and includes the host Josefine’s reflections on her conversation with Alexandra and a full episode transcript. If you would like access to this additional content and want to support the show, please subscribe by clicking the button below.

A huge thank you to our paid subscribers!

Subscribe now

Read more

Listen to This Episode

Listen on Spotify

Listen on Apple Podcasts

On January 3 of this year, American special forces captured Venezuelan president Nicolás Maduro and extricated him to the United States. But the operation did not oust the Venezuelan regime. Instead, in the subsequent days, the Trump administration announced its intention to work with Maduro’s deputy, Delcy Rodriguez. President Trump took effective control of Venezuela’s oil industry and Rodriguez obliged, securing some relief from the crushing sanctions that President Trump had imposed during his first term. In this episode we discuss the peculiar arrangement taking shape in Venezuela and examine whether sanctions did help bring about regime change in the country.

Francisco Rodríguez is a Venezuelan economist, who is a Senior Research fellow at the Center for Economic and Policy Research and a Faculty Affiliate at the Josef Korbel School at the University of Denver. He is also a member of the Bologna Initiative for Sanctions Relief. Francisco was on the podcast last year to discuss his research on the humanitarian harms of sanctions.

Season 3 of The Sanctions Age is produced by Media Winter in Berlin.

The rest of this email is for paid subscribers and includes the host Josefine’s reflections on her conversation with Francisco and a full episode transcript. If you would like access to this additional content and want to support the show, please subscribe by clicking the button below.

A huge thank you to our paid subscribers!

Subscribe now

Read more

By Josefine Petrick

The decades-long U.S. embargo of Cuba is now intensifying. Following the removal of Venezuela’s president Nicolás Maduro, the U.S. has taken effective control of the Venezuelan oil industry and blocked oil exports to Cuba.

Cuba covers just 40% of its oil consumption through domestic production, and the loss of access to subsidized Venezuelan crude oil has brought economic activity on the island to a halt. Fuel shortages have led to electricity blackouts of up to 20 hours, jeopardizing food supply chains and the provision of essential services, including health services.

The Cuban public health system has maintained notably high standards of care despite the long embargo. One of the areas where this is most clear is Cuba’s vaccination rates. Cuba’s childhood immunization schedule includes eleven vaccines, eight out of which are produced domestically. For these standard vaccines, the country regularly reached vaccination rates exceeding 98% of the population. But the ongoing fuel blockade is putting Cuba’s public health achievements at risk.

To understand how sanctions can negatively impact access to vaccines, it is necessary to trace effects across the entire vaccine “life cycle.” Sanctions can interfere with processes including financing, selection, research and development, production, procurement, distribution, and monitoring. This kind of life cycle analysis, a methodological approach used in public health studies, reveals what is otherwise masked by high immunization rates. U.S. sanctions have forced Cuba to adapt its health system to fiscal constraints, and isolation from global supply chains. But the domestic vaccine industry may be approaching a breaking point.

Uncomfortable Trade-Offs

Funding a national vaccine immunization program requires significant budgetary resources. When sanctions hit Cuban economic output, it limits the fiscal space of the Cuban government, making even basic public health services more difficult to afford. The primary feature of the U.S. sanctions on Cuba is a near-total ban on bilateral trade. Researchers estimate that a 1% decrease in economic exchange between Cuba and the US produces a 0.76% drop in GDP over the following three years – a compounding drag on public budgets. Remittances from the U.S., responsible for 6.8% of Cuba’s GDP between 2005 and 2020, are explicitly targeted by U.S. sanctions, alongside dollar-denominated trade with third countries.

U.S. sanctions have forced Cuba to adapt its health system to fiscal constraints and isolation from global supply chains. But the domestic vaccine industry may be approaching a breaking point.

Cuba is also largely cut off from foreign investment and loans. U.S. sanctions effectively bar Cuba from accessing international financial institutions like the IMF, and expose foreign firms to litigation in U.S. courts. While sanctions are not the sole cause of budget restraints within Cuba’s health care system, they reduce the government’s fiscal space and force uncomfortable trade-offs.

These trade-offs include decisions about which vaccines Cuba picks for its national immunization program. While standard criteria such as medical necessity and cost-effectiveness remain central, fiscal constraints push Cuba to make selection decisions earlier – before costly R&D – unlike in many other health systems. Some products cannot be considered at all, either because they are expensive or legally restricted due to U.S. content thresholds. Yet even when importation might be possible, Cuba frequently prioritizes domestic production to avoid entire immunization programs hinging on favorable foreign policy decisions in the U.S.

Take Cuba’s COVID-19 response as an example. After six decades of sanctions, the government anticipated it would not be prioritized through COVAX, the international effort to expand access to the COVID-19 vaccine, and might lack the financial means to import vaccines. Cuba instead pursued domestic development, selecting candidates based on safety, efficacy, and similarity to established vaccine platforms to accelerate timelines. Funding came from reallocation away from ongoing products, and grants from international stakeholders like the Central American Bank for Economic Integration and European solidarity organisations.

The successful development of five COVID-19 vaccines demonstrates that U.S. sanctions had not fully eroded Cuba’s capacity to finance immunization campaigns. Yet the emergency reallocation came at a cost. Cervical cancer, often resulting from a sexually transmitted HPV infection, is one of the leading causes of female mortality in Cuba. But the HPV vaccine program was repeatedly de-prioritized as public health officials responded to pandemic using limited budget resources.

The Cost of Circumvention

Many of the materials essential for vaccine research, development, and production are difficult for Cuba to access due to sanctions. U.S. legislation prohibits exports to Cuba if a product contains over 10% American-made parts or ingredients, or is traded by U.S. companies or their subsidiaries. With the United States being not only a close neighbor but also a dominant actor in global pharmaceutical and technological trade, this creates significant barriers. When the Swedish firm Pharmacia, a longstanding supplier of medical equipment and chemicals to Cuba, merged with American company Upjohn, all sales to Cuba were immediately prohibited. As U.S. companies continue to acquire foreign pharmaceutical firms, the number of Cuba’s potential trading partners keeps shrinking.

Overcoming the limitations posed by U.S. sanctions causes delays, higher costs, and lower quality products. Cuba cannot produce cultivation mediums for vaccines, such as calf serum or bovine albumin itself. Shipments from suppliers in Europe or New Zealand take 18 to 24 days, compared to under 24 hours from the U.S. Switching to alternative suppliers also raises costs. When pharmaceutical companies Sartorius, Merck, and Cytiva ceased their sales to Cuba during the first year of the pandemic, prices for alternative inputs rose by 50% to 65%.

Even when transactions are covered by humanitarian exemptions, as is technically the case for the sale of vaccines or related materials and equipment, many international companies disengage anyway. Existing exemptions are frequently tied to unrealistic conditions: the Torricelli Act permits medical exports but requires the U.S. President to verify that all goods benefit only the Cuban people, while a separate exemption to the 180-day port rule requires an entire cargo ship to carry exclusively humanitarian goods, which is rarely economically viable.

Moreover, Cuba’s designation as a State Sponsor of Terrorism thwarts most remaining willingness to engage. When Japanese manufacturer JASCO refused to sell laboratory equipment to Cuba solely because of its State Sponsor of Terrorism designation, it illustrated the pattern of over-compliance among global manufacturers. Thus, humanitarian exemptions have repeatedly failed to protect the development and production of vaccines.

Isolated and Dependent

Vaccine delivery is inherently international engagement: research is conducted across borders, supply chains span continents, and multilateral institutions coordinate delivery. At the most basic level, Cuban scientists face obstacles in accessing and contributing to international academic journals. Taylor & Francis and the American Psychiatric Association ceased their operations in Cuba citing sanctions. Attending international conferences and collaborating with counterparts in the United States is fully off the table since President Trump revoked the Obama administration’s general license for scientific travel.

On the other hand, isolation makes Cuba more dependent on global health initiatives to procure vaccines that it cannot produce domestically. Cuba has relied on UNICEF as its procurement intermediary since 1992, circumventing restricted banking channels and trade barriers to maintain a steady supply. Last year, Cuba also began procuring HPV vaccines through the PAHO Revolving Fund, which pools regional demand to reduce costs. Both mechanisms lower costs and bypass restricted financial channels – but they also deepen Cuba’s dependence on multilateral bodies that rely significantly on U.S. funding, directly undermining Cuba’s ambition for sovereignty in the face of sanctions pressure.

Access Under Pressure

Looking at the life cycle of vaccines in Cuba reveals that more than six decades of U.S. sanctions have not led to the collapse of the country’s health system. Yet sanctions affect the process behind vaccine access, constraining vaccine financing, procurement, and international collaboration. Under the cover of high immunization rates, sanctions have reshaped Cuba’s health system.

The pressure on Cuba’s oil imports is likely to exacerbate these effects and increase the precarity of vaccine access in Cuba. Without access to oil, domestic economic activity will diminish, and tourism, long a driver of growth, will likely come to a standstil. These developments will deepen an economic crisis three decades in the making, reducing the budget available for public health, and forcing increasingly difficult trade-offs between emergency response and preventive care. Fuel shortages will also create further barriers to procurement as planes are unable to refuel in Cuba. Moreover, many vaccines need to be refrigerated, and cold-chain distribution is energy-intensive. Meanwhile, the multilateral organizations that have often stepped in to shield ordinary Cubans from the effects of sanctions are themselves being weakened by reductions in U.S. funding.

The Trump Administration should recognize that eroding Cuba’s vaccine access is not without consequences for the region. Cuba has eliminated diseases like measles through stringent vaccination. If vaccine access were to plummet and measles to break out again, travelers and migrants may carry the disease to shores already under pressure: The United States is currently facing its worst measles outbreak since the 1990s. At a minimum, the US should adjust its sanctions policy to shield the Cuban vaccine sector from its most damaging effects. However, given the sector’s reliance on public budgets, trade, and international collaboration, this isolation seems unrealistic. Instead, the US should facilitate imports of essential vaccines through multilateral channels like UNICEF and the PAHO Revolving Fund. Exemptions that exist on paper but fail in practice are not sufficient.

Josefine Petrick is a Policy Fellow at the Bourse & Bazaar Foundation, where she researches the intersection of sanctions policies and global public health. She is also the coordinator of the Bologna Initiative for Sanctions Relief.

Section: (all-articles) Photo: Unicef

By Anna Cervi

At the heart of the European Union’s foreign policy lies a commitment to promoting and defending gender equality and the full enjoyment of rights by all women and girls. EU policymakers view sanctions as one of the tools to advance this commitment, imposing sanctions when human rights violations or threats to international security occur. The EU’s overarching objective is to introduce targeted restrictions, seeking to minimize adverse effects on the civilian populations.

A recently completed research project, conducted by A World of Sanctions and funded by the Italian Ministry of Foreign Affairs examines how these EU ambitions are reflected in policy. Using literature reviews, expert interviews, and novel quantitative analysis of data related to EU, UN, UK, US, and Australian sanctions regimes, the study maps the first comprehensive picture of gender in sanctions. It examines general sanctions, targeted measures affecting women, and sanctions aimed at protecting women’s rights in countries like Afghanistan, Iran, Russia, and Syria.

The study shows that sanctions often amplify harm to women and vulnerable groups, that motivations for sanctioning women remain underexplored, and that gender perspectives are rarely integrated – even in regimes intended to defend women’s rights. Under this umbrella, Anna Cervi conducted an in-depth analysis of the links between gender and sanctions. Her research highlights a paradox: while European sanctions aim to uphold human rights, their cumulative effects can deepen existing inequalities faced by women and girls, especially in fragile and unstable contexts.

Rethinking Causality

Demonstrating direct and definitive causality between sanctions and outcomes for women and girls is complex. It requires structured and in-depth causal analysis, which remains limited to date. However, the literature suggests three main recurring causal relationships between sanctions and gender. Women faced increased financial isolation, fewer opportunities in the formal labor market, and diminished access to basic public services. These three dimensions profoundly affect women’s quality of life at multiple levels, thereby constraining their capacity to continue being socially and politically active.

First, international sanctions tend to trigger a process of “de-banking” that severely disrupts financial systems, cutting off access to international transactions, banking services, and the SWIFT circuit. The resulting financial isolation deepens gender inequalities and weakens women’s capacity to organize and advocate for their rights. For example, in Afghanistan, Iran, Russia, and Syria, financial isolation has limited women’s and women-led organisations’ access to international funding, obstructed transnational collaboration, threatened the continuity of vital services – like victim support and shelter – and hindered the sustainability of long-term women’s rights movements, such as the Iranian Women, Life, Freedom movement. Systemic banking failures have also restricted women’s independent access to financial resources, increasing their vulnerability and dependence on male counterparts.

Women faced increased financial isolation, fewer opportunities in the formal labor market, and diminished access to basic public services. These three dimensions profoundly affect women’s quality of life at multiple levels, thereby constraining their capacity to continue being socially and politically active.

Second, the impact of sanctions on businesses makes the labour market uncertain and unstable, particularly during severe economic crises. For example, Iran, Syria, and Russia have witnessed a progressive “informalization” of the female labor market. Women’s actual employment has moved to the informal market, remaining statistically invisible, socially unrecognized, and fragmented. This process is often associated with a corresponding increase in inequalities, economic dependence on men within the family, “economic gender-based violence,” and other forms of gender-based violence.

Finally, sanctions frequently target government structures or those controlling them, as in Afghanistan, Iran, Russia, and Syria. This directly impacts the delivery of essential and affordable services, including healthcare, education, electricity, water, social policies, transport, and social safety nets. Sanctions aim to raise costs or limit resources, to prevent repression or conflict escalation. However, governments or armed groups often rely on these resources for survival. This diverts funds from public and welfare services, hitting women the hardest.

Resolving the Paradox

The EU’s ambition to more effectively address global gender inequalities risks remaining symbolic unless it is supported by gender-focused reassessments of sanctions. This also requires a clear political backing. Three complementary trajectories could help reduce tensions in the interplay between gender and sanctions.

First, the EU should acknowledge the existence of causal links between sanctions and gender dynamics to actively qualify, quantify, and monitor these effects and mitigate negative impacts. Policy frameworks lack systematic assessments of pre-existing social structures, gender inequalities, and baseline metrics for ongoing impact evaluation of sanctions on women and girls. Analysis could benefit from formal, systematic consultations with practitioners, academia, gender experts, and local grassroots organizations before the EU formulates or revises sanctions. Further, sanctions design and revisions could refer to checklists developed by experts, which also include parameters related to gender issues to pre-empt unintended negative impacts. Gender-sensitive actions could also include embedding gender expertise within the EU and member states’ sanctions teams and mandating comprehensive training programmes for policymakers. These steps could promote a stronger gender-aware culture in sanction environments, which to date remain predominantly gender-blind.

Second, it is essential to integrate targeted sanctions with other European foreign policy instruments. For example, the EU could strengthen policy coherence by applying a more joined-up and complementary use of humanitarian, development, and stabilization instruments to address gender inequalities. The effectiveness of these and other efforts hinges on diplomatic engagement with local authorities and civil society – even those that are controversial or restricted actors (e.g. sanctioned authorities, armed groups, or entities linked to terrorism). Often, international diplomatic isolation has reinforced existing power structures, further exposing women to discrimination. Developing effective methods of interaction can foster support for gender equality and promote progress on gender rights that adheres to the aspirations of local populations.

Finally, civil society organizations, sectoral experts, and academia should adapt their advocacy strategies to recent transformations in the EU sanctions environment. Throughout the past five years, EU decision-making shifted towards emergency-driven processes that prioritize security and economic considerations. In practice, the European Commission now often drafts sanctions regimes at the initiative of member states, and the Council subsequently endorses them. This process leaves limited room for early-stage advocacy. As a result, gender-related considerations are frequently marginalized, since several member states do not view them as equally urgent as security or economic concerns. Addressing the causal links between gender and sanctions therefore requires advocacy efforts to focus on influencing member states prior to the consolidation of sanctions proposals at the EU level. This necessitates a willingness on the part of civil society organisations, NGOs, and academic experts to engage in shared lobbying space with competing actors – particularly from the private sector – whose interests are often regarded as more immediately aligned with prevailing European priorities in the areas of security and defense.

Gender-blind sanctions can entrench the very inequalities they seek to challenge. By examining Afghanistan, Iran, Russia, and Syria, the AWOS study finds that sanctions amplify pre-existing gender disparities. They increase financial isolation, reduce access to essential services, and marginalize women in the labor market. The findings also reveal systemic gaps in European decision-making, where social and gender impacts are often overlooked in favor of security, economic, or geopolitical priorities. Integrating these findings into EU policymaking is urgent and requires sustained engagement by civil society organizations, NGOs, and academic experts. Beyond gender dynamics, these insights underscore the need for comprehensive impact assessments of sanctions on vulnerable groups and closer alignment between EU foreign policy and the Union’s human rights commitments. This would ensure that sanctions advance human rights without undermining the populations they aim to protect.

Anna Cervi is the co-founder of the Italian Initiative on International Mediation (3IM) and a member of the Mediterranean Women Mediators Network (MWMN).This article is based on the author’s contribution to the AWOS study “Prospettiva di genere e impatto delle sanzioni sulle donne, i minori e altri gruppi vulnerabili”, published by the Italian Ministry of Foreign Affairs and International Cooperation in September 2025. The views expressed in this report are solely those of the author and do not necessarily reflect the views of AWOS, the MWMN, or the Italian Ministry of Foreign Affairs and International Cooperation.

Section: (all-articles) Photo: EEAS

By Alistair Millar

Economic sanctions have long been justified and defended as the humane alternative to military force, and thus offered as an instrument of statecraft that avoids the direct violence of armed conflict. This claim is no longer plausible. With their increased use sanctions have devolved into something far more consequential and oppressive than a “peaceful use of diplomacy.” In most cases, rather than resolving conflicts, sanctions now constitute a form of economic warfare capable of inflicting widespread harm on civilian populations, destabilizing essential infrastructure, and prolonging geopolitical conflicts.

Major sanctions regimes frequently operate with the same structural logic as siege warfare by denying a population access to essential goods, including basic food and essential medical supplies. The use of financial sanctions — especially restrictions on access to banking networks, payment systems for business and remittances, and foreign exchange — can induce long-lasting national economic crises. When applied indiscriminately, sanctions’ consequences inflict a human toll as high as some instances of wartime devastation. Their effects are rarely limited to political elites who often have the means to subvert or avoid significant consequences; rather, they disproportionately harm vulnerable people.

In the absence of a formal treaty that codifies prohibitions on specific sanctions and their means of implementation and enforcement, dysfunctional and inhumane sanctions regimes will continue.

Yet sanctions are deployed with far less scrutiny or oversight than military operations. Following the humanitarian catastrophe of the comprehensive embargo on Iraq, the Interlaken Process (1998) and the Bonn-Berlin Process (2001) were launched to refine sanctions into “targeted” or “smart” tools of economic statecraft. More recently the notion of voluntary “codes of conduct” and technical guidelines in the form of a checklist for relevant staff tasked with imposing sanctions have also been considered. Yet, for the past decade, sanctions have required no multilateral (and in the U.S., scant Congressional) approval and rarely undergo an independent assessment of civilian impact.

Despite these important efforts, these reformulations are often ignored in practice. In the absence of a formal treaty that codifies prohibitions on specific sanctions and their means of implementation and enforcement, dysfunctional and inhumane sanctions regimes will continue.

A “Convention on the Regulation and Prohibition of Coercive Economic Measures” would establish universally recognized norms. Such a convention should not eliminate sanctions entirely. Targeted measures against individuals engaged in terrorism or genocide remain indispensable. Instead, this convention would restrict the collective punishment and broad-based embargoes that disproportionately and indiscriminately harm vulnerable populations. Five key elements should be included in this convention.

First, the convention should mandate humanitarian carve-outs. Protecting basic human needs through mandatory humanitarian carve-outs must be at the core of this new normative framework for economic coercion. The convention should include a ban on sanctions that restrict food, medicine, and water technology, moving these from discretionary exemptions to absolute rights. Importantly, this must be complemented by a ban on sanctions that restrict the critical infrastructure facilitating access to water, access to food, and access to healthcare. But it should also include infrastructure that is not commonly considered humanitarian in nature, such as roads, bridges, ports, railways, airports, power plants, grid connections, and fuel depots. A precedent for this broad understanding of critical infrastructure has been set in Security Council Resolution 2664 (2022), adopting a humanitarian carveout for most UN asset freeze regimes, and S/RES/2761 (2024) which exempts humanitarian aid providers from asset freeze measures imposed on Al-Qaida, Taliban and ISIL (Resolutions 1267/1989/2253).

Second, the convention should establish the principle of distinction in the design and implementation of sanctions. International humanitarian law contains clear principles: distinction, proportionality, and necessity. These prohibit the deliberate targeting of civilians or civilian infrastructure in wartime. But international humanitarian law applies only to armed conflict. An obligation to tailor sanctions as narrowly as possible to avoid civilian harm — applying the Geneva Conventions’ logic to the financial sphere — should therefore be included in the Convention.

Third, the convention should require that countries imposing sanctions avoid undermining economic integrity. Current (and past) sanctions imposed by a state or bloc — no matter how destructive its socioeconomic effects — do not trigger these protections. It is therefore critical that the proposed convention must prohibit measures intended to collapse a nation’s entire currency or public utilities.

Fourth, the convention should mandate that all proposed sanctions undergo rigorous, independent humanitarian impact assessments prior to implementation, as strongly advocated by recent UN Special Rapporteur reports.

Finally, the convention should establish a multilateral oversight body that will enforce its principles and provisions. This organization could be analogous to the Organisation for the Prohibition of Chemical Weapons, empowered to monitor compliance and investigate abuses of economic power. The Financial Action Task Force (FATF) is the global, intergovernmental, standard-setting body for combating money laundering and terrorist financing (CFT) and could also be adapted to inform the substance of compliance measures for a proposed convention on sanctions.

The prospect of a new international legal regime taking root, especially amidst the increasing strain on the United Nations and other fora designed to uphold international norms and laws, may be highly unlikely in the near-term. It will take time to rebuild trust and forge any consensus, as was the case in some of the isolated, but real successes noted above. The urgency of at least taking the first step toward limiting the humanitarian impact of sanctions now is also clear.

It is important to note that even though critics will point to the fact that there are violations of international humanitarian law, these norms are not insignificant. For example, the provision of medical care in war zones, the establishment of civilian evacuation corridors, and the protection of aid delivery simply would not happen without the existence of international humanitarian law.

Allowing sanctions to become akin to all out warfare rather than an extension of diplomacy is already unacceptable. Just as the global community recognized that certain acts of war are too destructive to be tolerated, it must now acknowledge that certain forms of economic coercion are incompatible with the principles of human dignity.

Now is the time to take that first vital step and then push for a legal regime to make all elements of the proposed convention on sanctions enumerated above — including food, medicine, water, and the infrastructure of delivering those goods — permanently exempt from sanctions in any form. Only bold action of this sort will return sanctions to being a legitimate tool of statecraft and diplomacy, rather than a blunt, illegitimate economic weapon.

Alistair Millar is the president of Fourth Freedom Forum and an adjunct professor at the Elliott School of International Affairs at George Washington University. He is a member of the Bologna Initiative for Sanctions Relief.

Section: (all-articles) Photo: Canva

Over the last two years, thousands of people have listened to The Sanctions Age podcast and hundreds of people have subscribed to this Substack. It has been wonderful to see so much engagement around the question of how sanctions are changing the world.

Clearly, people are eager to understand the many ways by which sanctions and other forms of economic coercion are altering the global economy, enflaming geopolitical rivalries, and impacting the lives of ordinary people. But there are so many more stories than we can cover in a ten episode podcast season!

That is why The Sanctions Age will now be publishing articles, written by the world’s most insightful thinkers on sanctions policy.

We are making this push as part of a new international initiative dedicated to understanding how sanctions are changing the world. This initiative, called the Bologna Initiative for Sanctions Relief, launched last November with a conference that brought together thirty of the world’s leading sanctions experts for two days of deliberations.

The conference was hosted by Johns Hopkins University School of Advanced International Studies (SAIS) and the University of Bologna. The initiative is led by the Bourse & Bazaar Foundation, a London-based think tank founded by Esfandyar Batmanghelidj, host of the The Sanctions Age podcast.

The attendees at the conference included several former guests of the show, including Francisco Rodríguez, Nicholas Mulder, Stephon Fallon, and Delaney Simon. So it makes perfect sense for us to open this platform as a place of discussion and deliberation, creating a home for incisive analysis about sanctions and their effects across a wide range of contexts.

We have already published three articles by initiative members, which you can read by clicking the buttons below.

How to Ensure China Doesn’t Spoil Venezuela’s Debt Restructuring

China’s oil-backed loans give it leverage to delay a comprehensive debt restructuring.

By Rachel Lyngaas

Read Article

The Collateral Damage of Sanctions in Afghanistan

Policies designed to pressure the Taliban have left Afghan civilians bearing the heaviest cost.

By Sara Moussavi

Read Article

Understanding Economic Pessimism in Iran

Survey data reveals a political dilemma for Iranian authorities.

By Esfandyar Batmanghelidj

Read Article

While publishing articles, we will continue to produce the podcast as a core component of the initiative. You can expect the launch of Season 3 of the podcast in the coming weeks.

Articles will be free to read, you just need to have a free subscription on Substack. Paid subscribers will enjoy additional benefits including transcripts for the podcast episodes and invitations to exclusive webinars (thanks for your support!). If you think a friend or colleague would be interested in our forthcoming content, please share this newsletter with them.

Share The Sanctions Age

Stay tuned for unique analysis on the latest developments in Venezuela, the efforts to rebuild Syria, the impact of sanctions in Cuba, and so much more.

Esfandyar Batmanghelidj and Josefine Petrick

By Rachel Lyngaas

U.S. officials have framed Venezuela’s post-Maduro path as a three-step process: stabilization, recovery, then political transition, with early emphasis on restoring oil exports. But oil production alone cannot stabilize Venezuela. Decades of hyperinflation, collapsing public services, and the emigration of nearly 8 million people have left the country with acute macroeconomic and humanitarian challenges. Oil revenues are necessary — but without a credible strategy to address Venezuela’s legacy debt, they are not sufficient.

Venezuela and its state-owned oil company, PDVSA, defaulted years ago on roughly $60 billion in bonds. Its total external liabilities likely exceed $150 billion (Figure 1). Absent a credible debt restructuring, sanctions relief and higher oil output will not translate into durable stabilization or sustained investment. Instead, debt overhang and litigation risk will continue to deter the capital that Venezuela needs to rebuild its oil sector and the broader economy. In other words, investors will price in both the sheer scale of Venezuela’s unresolved debt and the risk that repayment disputes or creditor holdouts will disrupt cash flows. This means higher risk premia, limited access to long-term capital, and reluctance by international oil companies to commit fresh investment — regardless of whatever sanctions relief and additional investment guarantees are offered.

Figure 1. Venezuela’s Total External Liabilities

Low-high estimate; includes bonds, accrued interest, arbitration awards, bilateral claims, and arrears in USD billions

Sources: Reuters (Dec. 2025-Jan. 2026), IMF, CFR, public reporting on arbitration awards and Citgo-related claims. Author estimates.

The more acute risk, however, stems from China. Despite holding a relatively modest share of Venezuela’s total external debt — roughly $10-12 billion — much of China’s exposure is collateralized by oil shipments. That structure gives Beijing leverage to delay or complicate a comprehensive debt restructuring, particularly if it prefers continued oil-backed repayments to accepting a haircut.

An IMF-supported program usually serves as the anchor of sovereign debt restructurings: it combines financing and policy conditionality, establishes a debt sustainability framework, and signals to markets that appropriate reforms are underway. That, in turn, helps catalyze external financing and encourages creditor coordination. Without such a program, Venezuela will struggle to unlock broader financing, stabilize its economy, and attract the investment needed to restore oil production.

China’s Spoiler Role

China’s role as the world’s largest bilateral creditor has complicated recent sovereign debt restructurings to the detriment of its borrowers. In Zambia, it took more than two years after the November 2020 default for China to provide the financing assurances required for IMF lending. Comparable delays followed Sri Lanka’s 2022 default and Ghana’s 2022 moratorium. These episodes were driven by protracted negotiations over debt perimeter, demands for comparable treatment, and procedural delays on the Chinese side.

Such delays matter. Protracted post-default restructurings are associated with large output losses and persistently weaker investment outcomes. In addition, Chinese official lending has frequently relied on commodity-linked repayment arrangements that route export proceeds through accounts controlled by the creditor. This effectively grants Chinese lenders seniority over other claims.

In response to such challenges, the IMF has reformed its lending framework to allow programs to proceed even when official creditor assurances are delayed, which limits the ability of a single creditor to veto financing. But the IMF framework also recognizes a practical constraint: when a creditor can exert “significant influence” over the debtor’s repayment capacity, the Fund may still require that creditor’s participation.

Chinese official lending has frequently relied on commodity-linked repayment arrangements that route export proceeds through accounts controlled by the creditor. This effectively grants Chinese lenders seniority over other claims.

In oil-backed cases like Venezuela, China meets that “significant influence” threshold because collateralized oil shipments give it the ability to extract preferential repayment, particularly after the IMF program ends. As a result, unless IMF staff can credibly demonstrate that the program architecture prevents off-terms repayment, China would likely need to be part of any “sufficient set” of creditors providing assurances. This is the channel through which China could act as a spoiler, even under the IMF’s reformed approach.

Export data illustrate how China’s role has evolved into a de facto buyer of last resort for Venezuelan oil. Following default and the imposition of PDVSA and oil sector sanctions, crude oil export volumes collapsed, and destinations narrowed sharply (Figure 2a). When U.S. purchases under Chevron’s license are excluded, China’s share of remaining exports rises markedly, underscoring its outsized role in the post-sanctions period (Figure 2b). While China’s absolute import volumes decline after sanctions, its share of Venezuela’s non-U.S. export market increases — reflecting reduced diversification.

Figure 2a. China’s share of Venezuelan crude exports

Monthly, millions of barrels

Figure 2b. China’s share of Venezuelan crude exports

Monthly, % of total and % of total ex. U.S.

Sources: Trade Data Monitor, EIA, author’s calculations.

Using U.S. Leverage

While the IMF’s engagement with Venezuela has been suspended since 2019, there are signs that its shareholders will greenlight reengagement. Once that occurs, the existing executive order requiring Venezuela’s oil proceeds to be deposited into U.S.-custody Treasury accounts could be used as a temporary transparency and control mechanism during restructuring. Under this approach, proceeds from licensed oil exports would flow through monitored accounts, allowing revenues to be tracked, audited, and safeguarded against preferential creditor repayment. Two steps would make that approach more robust.

First, the U.S. should build oil revenue controls into the licensing regime. Any U.S.-authorized Venezuelan exports should use centralized, auditable payment routing and standardized disclosure of realized prices, discounts, counterparties, and intermediaries. Washington can ban — or tightly circumscribe — advance payments, cargo-financing structures, and opaque swaps that function as off-balance-sheet repayment. Revenue controls are not a substitute for stabilization policy, and if designed poorly they could inadvertently constrain the government’s ability to fund essential imports and basic services. That is precisely why any controls should be paired with auditable payment routing and independent monitoring: to ensure that oil revenues translate into usable foreign exchange for stabilization rather than opaque creditor capture. These controls should include sunset provisions tied to completion of an IMF program or comprehensive debt restructuring.

These revenue controls can be executed largely through existing Treasury authorities. The Office of Foreign Assets Control (OFAC) already requires detailed reporting from authorized persons under Venezuela sanctions, and the Chevron license has included restrictions on payment flows. Independent monitoring adds complexity, but there is precedent in revenue transparency frameworks like the Extractive Industries Transparency Initiative (EITI).

Second, the U.S. should make China’s leverage less valuable by reducing buyer concentration and standardizing a settlement instrument. The fastest way for China to extract preferential repayment is to become the residual buyer of Venezuelan oil — or act as a gatekeeper during a transition. The United States can blunt that by encouraging early diversification of oil exports (where legally and commercially feasible) and by pushing a transparent restructuring template that offers upside without side payments (e.g., long-dated instruments plus contingent value linked to production recovery) available only to participating creditors on comparable terms. Upside participation rather than outright losses gives Beijing a face-saving channel to accept haircuts without preserving special access to the repayment stream.

This second step will require sustained diplomatic coordination. Aligning creditors around a transparent restructuring template demands engagement with bondholders, bilateral creditors, and arbitration claimants with divergent interests. Still, much of Venezuela’s bond stock is governed by New York state law and the U.S. sanctions and licensing regime is a gatekeeper for many transactions — meaning Washington has significant political influence and could convene such a coalition.

These two steps would reduce the scope for hidden repayments and would strengthen debt transparency — both essential for an IMF program anchored on credible macroeconomic parameters. They also would protect Venezuela’s immediate stabilization and recovery by helping ensure that early oil revenues translate into usable foreign exchange for essential imports, rebuild basic fiscal capacity, and support a path to recovery of production — rather than being siphoned off into opaque creditor side-payments that will deter new investment. Absent these safeguards, the United States’ three-step plan risks foundering on the same creditor coordination failures that have plagued other debt restructurings where China holds the cards.

Rachel Lyngaas is a senior policy researcher at RAND and a professor of policy analysis at the RAND School of Public Policy. She was previously Chief Sanctions Economist at the U.S. Department of the Treasury, where she built and led the Sanctions Economic Analysis Division within the Office of Foreign Assets Control (OFAC), and worked as an economist at the International Monetary Fund and in Treasury’s Office of International Affairs. She is a member of the Bologna Initiative for Sanctions Relief.

Section: (all-articles) Photo: Canva

By Esfandyar Batmanghelidj

“A massive armada” is heading to Iran according to President Trump, who warned that “time is running out” for Iranian leaders in a social media post. The Trump administration has evidently given an ultimatum to Iran, demanding talks over the country’s nuclear program, among other issues. If Iran does not comply, Trump has promised that the armada will “rapidly fulfill its mission, with speed and violence.” He explicitly compared Iran’s situation to that faced by Venezuela in advance of the extraordinary operation to capture Venezuelan leader Nicolás Maduro.

In the lead-up to that operation, the United States imposed a naval blockade on Venezuela, intercepting oil tankers in an attempt to squeeze the Venezuelan economy. Some analysts have come to expect that the United States will impose a similar blockade on Iran in an attempt to create an acute economic crisis, which, along with a limited military intervention, would either see the Islamic Republic make far-reaching concessions or be ousted from power.

Iran has been significantly isolated from the global economy since the reimposition of “maximum pressure” sanctions by the Trump administration in 2018. But the country’s economy has not collapsed, in part because Iranian authorities have managed to circumvent sanctions. Today, Iran is producing as much oil as in the pre-sanctions period, with production having averaged around 3.3 million barrels per day in 2025. Around half this volume is sold to refineries in China. Traditional sanctions enforcement has failed to stop these flows, which is why a naval blockade may be appealing to Trump administration officials, who are eager to impose their will on Iran.

The blockade of Venezuela had virtually no impact on the global economy. Commercial vessels transiting through the Panama Canal could easily avoid the Venezuelan coast, and the Venezuela military lacked the ability to strike at vessels in response to the U.S. blockade, limiting the potential for escalation. But undertaking a blockade of Iran presents a very different challenge and Trump administration officials should not underestimate the likely disruptions to the global economy.

While Iran boasts just two major ports, Bandar Abbas and Bandar Imam Khomeini, and one major oil terminal, Kharg Island, any attempt to block vessel traffic to and from these locations will necessarily spill over into the narrow and congested shipping channels of the Persian Gulf. Not only are these shipping channels the conduit for one-fifth of global petroleum liquids and natural gas supplies, but container traffic flowing through the Gulf is also critically important for the economies of the Middle East and Central Asia, which together account for more than 5% of global economic output.

Asymmetric Retaliation

There are two ways in which the U.S. could enforce a blockade. It could seek to place its vessels in close proximity to Iran’s ports, blocking Iranian trade while minimizing disruptions to maritime traffic in the Gulf. But doing so would expose U.S. forces to potential attacks, requiring a much more extensive force posture and increasing the likelihood that the blockade escalates into a direct military confrontation. The second option is for the U.S. to enforce a blockade by interdicting ships far away from Iran’s coast, for example by boarding vessels in the Arabian Sea, thereby keeping U.S. sailors out of harm’s way.

A 2019 assessment of Iran’s military capabilities by the Defense Intelligence Agency notes that Iran’s “swarms of small boats, large inventory of naval mines, and arsenal of anti-ship missiles can severely disrupt maritime traffic.”

In either case, Iran will respond by trying to impose costs on the United States. A blockade is an act of war and Iranian authorities have vowed to retaliate against any such provocation. Of course, targeting U.S. forces directly is risky given that it could strengthen Trump’s resolve to wage a broader military campaign – Iran lacks escalation dominance. More likely, Iran will retaliate by trying to impose costs on the United States indirectly, targeting commercial vessels in the Gulf and thereby threatening major flows of goods and energy. Both Iran’s regular navy and the navy of the Islamic Revolutionary Guard Corps have spent the last four decades developing asymmetric naval weapons systems, such as small vessels armed with cruise missiles, that are designed to target larger vessels, whether military or civilian. Iran would likely use a combination of these assets, naval drones, and limpet mines, to target multiple commercial vessels as the blockade is enforced. A 2019 assessment of Iran’s military capabilities by the Defence Intelligence Agency notes that Iran’s “swarms of small boats, large inventory of naval mines, and arsenal of anti-ship missiles can severely disrupt maritime traffic.”

Iran has experience conducting asymmetric attacks in response to economic pressure. In 2019, Iranian oil exports plummeted due to the Trump administration’s maximum pressure sanctions. In response, Iran carried out two attacks. The first targeted oil tankers off the coast of Fujairah. The second targeted two major oil facilities in Saudi Arabia. By indicating the willingness to create collateral damage, Iran was able to increase the costs of the Trump administration’s policies, pushing policymakers Saudi Arabia and the United Arab Emirates to reevaluate to move towards normalizing relations with Iran as a means of managing tensions. Gulf leaders have recently been pressing Trump to avoid escalation with Iran because they understand that a military conflict could undermine not just regional security, but also regional and global prosperity.

Collateral Damage

American policymakers can weigh a blockade of Iranian ports because they face little direct dependence on the economies surrounding the Gulf. In 2024, the U.S. oil imports from the Gulf totalled just 500,000 barrels per day, less than a quarter of a percent of total U.S. oil consumption. Non-oil trade is also minimal. For example, the Gulf Cooperation Council (GCC) accounts for just 1.5% of total U.S. goods trade.

This lack of dependence contrasts sharply with the situation faced by China, which would be the major loser in any scenario where the Trump administration seeks to enforce a blockade on Iran. If the blockade is successful, China would lose access to around 20% of its crude oil imports, driving up the global price of oil as Chinese buyers seek alternative supply. In the medium-term China would likely purchase more oil from Russia, with counterproductive effects for enforcement of Russian oil sanctions. If the blockade does lead to broader disruptions to maritime trade, China would also face difficulties in sustaining exports not just to Iran, but also to the markets of the GCC and Iraq, which are the destination for around $160 billion of Chinese goods each year, or around 4% of China’s total exports.

Disruptions to routine trade, such as sourcing of Chinese goods, spells trouble for every economy in the Middle East and Central Asia given the growing dependence on China for everything from consumer electronics to industrial equipment. Iraq is especially vulnerable given its proximity to Iran. The river delta that leads to the Iraqi ports of Al Faw and Umm Qasr, which handle around 80% of Iraq’s total trade, lies just 75 kilometers from the bay that leads to Iran’s Imam Khomeini port. Vessel traffic moving to and from Iraq will be especially vulnerable to Iranian attacks.

For neighboring Kuwait, the prospect of disruptions in maritime traffic will bring back memories of the Tanker Wars, the name given to a series of nearly 500 attacks on merchant vessels that occurred during the Iran-Iraq War. The U.S. Navy eventually intervened to protect Kuwaiti oil tankers using convoys. Maintaining a blockade on Iran while also protecting civilian vessels poses a far greater challenge today.

Iran has too many targets in too small a space for U.S. forces to be able to provide definitive protection. Maritime traffic in the Gulf has skyrocketed since the Tanker War ended in 1988. Nowhere is this clearer than in the ports of the United Arab Emirates, which have become among the most active in the world. Total container traffic in the UAE was just 1.3 million twenty-foot equivalent units (TEUs) in 1988. Last year, total traffic in the UAE exceeded 21 million TEUs. Most of this traffic was centered on the port of Jebel Ali, which is the primary logistics hub for the GCC countries. These countries are served by feeder services from Jebel Ali, a vulnerability that was made especially clear in the case of the 2017 embargo of Qatar.

Both the price of oil and the cost of shipping result are determined in part by actuarial models, and this is what gives Iran the means to respond to an American naval blockade.

Along with the GCC, Iraq, and Iran, feeder services also connect Jebel Ali to the economies of Central Asia, mainly through the Iranian port of Bandar Abbas. Authorities in Uzbekistan and Kazakhstan, the two main Central Asian economies, have been seeking to diversify their dependence on Russian transport links since the 2022 invasion of Ukraine. Transport links through Iran are widely recognized as the most cost-effective option because they offer the shortest route to a major port. Sanctions imposed on Iran have prevented the full utilization of southern transport routes and Central Asian authorities have made efforts to boost trade through the so-called “middle corridor” to Europe that runs between the ports of Aktau and Baku. Central Asian authorities have also sought to develop a new southern corridor running through Afghanistan to the port of Gwadar in Pakistan. But dependence on the routes running through Iran persists. According to an analysis of data from 2023 prepared by the OECD, 19 million tonnes of freight passed through the three branches of the southern corridor, all of which run through southern Iranian ports.

Both the price of oil and the cost of shipping result are determined in part by actuarial models, and this is what gives Iran the means to respond to an American naval blockade. To impose indirect costs on the United States, Iran’s leaders merely need to increase the risk premiums related to maritime trade in the Gulf. The Houthis attacked just 30 commercial vessels in the Red Sea over a period of nearly two years, but the impact on global shipping costs was dramatic. Almost immediately, freight prices surged. The cost of shipping goods from Shanghai to Genoa more than tripled by the beginning of 2024, before settling to about double the pre-crisis average at the end of the year. It is also worth noting that U.S. forces performed poorly during Operation Prosperity Guardian, which sought to protect commercial vessels from the Houthi attacks in the Red Sea.

The impact of the Red Sea crisis on global growth and inflation was muted, largely because trade was able to divert to new routes and the crisis had a minimal impact on overall trade volumes. But a crisis in the Gulf would be different, impacting both the ability of energy supplies to reach the global market and the ability of large economies to source critical goods, throwing regional and global supply chains into disarray.

Esfandyar Batmanghelidj is the CEO of the Bourse & Bazaar Foundation and an Adjunct Professor at Johns Hopkins SAIS. He is a member of the Bologna Initiative for Sanctions Relief.

Section: (all-articles) Photo: IRNA

By Sara Moussavi

This article was originally published in The New Humanitarian.

Almost four-and-a-half years after the Taliban returned to power, Afghanistan is still struggling to recover from the seizure of $9.5 billion of Central Bank assets by the United States and the European Union. Alongside reductions in foreign aid and international limitations on the banking system, the asset freeze has led to a strangling of Afghanistan’s economy that has exacerbated one of the world’s worst humanitarian crises.

It hasn’t been for a lack of warnings. Senior humanitarians were quick to raise the alarm. On 16 August 2021, the day after the Taliban took control of Kabul, UN Secretary-General António Guterres urged member states not to “abandon” the Afghan population. A month later, UN special envoy Deborah Lyons warned that the asset freeze would lead to “a severe economic downturn and could push millions more Afghans into poverty and hunger”.

However, the international community reacted swiftly and punitively. On the day the Taliban returned to power, the World Bank-managed Afghanistan Reconstructive Trust Fund (ARTF) – established to provide development assistance, including salaries to teachers and health workers – had its payments cancelled. Other key donors followed suit and suspended aid flows. The asset freeze also initially prevented the UN and other civil society actors from accessing funds due to the revocation of the Central Bank’s credentials to the international banking system. This was until December 2021, when a private bank was put in charge of handling cash shipments for international humanitarian funding.

Teachers and health workers were among those immediately affected, according to the UN: Health facilities across the country were unable to procure much-needed supplies and pay their overworked staff. Banks ran out of cash, while money transfers and remittances slowed.

These immediate job losses and aid cuts led to what the UN called “a new class of hungry in Afghanistan” – educated urbanites, the very people who had previously benefitted from the aid-dependent economy during the US-led occupation.

The US issued the first of several General Licenses in September 2021. These were intended to allow for the provision of humanitarian aid, personal remittances, and to permit limited financial and administrative transactions to keep essential services functioning. A broader UN Security Council-approved exemption came in December 2021.

However, these exemptions proved unreliable and insufficient, especially as they didn’t resolve the banking restrictions, which hampered the overall humanitarian response and led to an economic crisis.

As a result of the asset freeze and aid cuts, an estimated half a million people lost their jobs as NGOs shuttered, local businesses had to downsize. and foreign investment and assistance came to a near-halt.

By October 2021, just two months after the Taliban’s return to power, the World Food Programme reported that only 5% of Afghan households had sufficient food, marking a 15% increase in hunger. By the spring of 2022, nearly 200 media outlets had also shut down, largely due to funding cuts.

Aid Cuts as Sanctions

The overall Afghan economy has seen some modest improvements since 2021 yet fiscal challenges persist, reflected in an increase in the unemployment rate from 11.7% to 13.3%. But, simply put, Afghan families don’t have the domestic resources to make up for the loss in international aid, which constituted 1.3% of Afghanistan’s Gross National Income (GNI).

The initial wave of Afghan aid cuts, which came before most international NGOs started to tighten their purse strings in 2023, were all the more devastating because 75% of the former Western-backed government’s expenditure relied on international grants.

The International Rescue Committee now says their reach in Afghanistan has plummeted by nearly two thirds since US funding cuts took effect last year.

The next round of cuts, as US President Donald Trump’s administration shut down USAID in early 2025, only added to the financial strain faced by international NGOs. They also came as hundreds of thousands of Afghans were being expelled from Iran and Pakistan, adding to the humanitarian strain. Aid workers speaking to the media at the time said Trump’s cuts made a notable difference in their ability to respond to Islamabad’s mass expulsions.

In May 2025, Tom Fletcher, the UN’s top humanitarian, said the Trump administration’s decision to cut the $1.8 billion in assistance, predicated in part by the Islamic Emirate’s intransigence on human rights issues, would “directly result in deaths”.

The International Rescue Committee now says their reach in Afghanistan has plummeted by nearly two thirds since US funding cuts took effect last year.

In a 14 January statement, IRC’s director in Afghanistan, Lisa Owen, described the cuts to aid in Afghanistan as “a potential death knell for millions who are at risk of being left without critical food assistance”.

“World leaders must not look away,” Owen warned. “Humanitarian funding must be scaled up urgently to pull Afghans back from the brink of starvation.”

Collective Punishment

The package of economic statecraft deployed to apply pressure on the Taliban’s Islamic Emirate government amounts to collective punishment on all Afghans. And while the humanitarian crisis persists, US courts have ruled that billions of dollars of the assets cannot be used to compensate 9/11 victims, which was one of the reasons given by former president Joe Biden’s administration when it announced the freeze in the first place.

The last four years in Afghanistan represent a clear example of how sanctions – even those that include humanitarian exemptions – can cause significant civilian harm, particularly in countries dependent on aid. Today, an estimated 23 million Afghans, more than half the population, are in need of urgent humanitarian aid.

The persistent neglect of humanitarian needs compounds vulnerabilities and perpetrates more extreme impoverishment, while sanctions continue to restrict financial transactions, access to aid, and the process of payments due to the asset freeze and exclusion from the global financial market, placing a further burden on the Afghan population.

For many observers, the international community’s actions are even more cynical: Western actors cultivated an economic architecture of dependency for decades and then abruptly withdrew from that role in a way that was reckless and devastating for ordinary Afghans.

Despite the sobering statistics, sanctions and restrictions on the Taliban remain largely unchanged, including the reductions in aid. And they seem to have had little to no effect: The Islamic Emirate appears unfazed in carrying out its policy choices on women’s rights and other restrictions, while forging new relationships with China, India, Iran, and Russia.

Since 2022, humanitarian appeals have been funded at 50%, meaning that millions are left without any assistance. Looking ahead, due to the aid cuts, the UN is only appealing in 2026 for $1.72 billion to provide urgent humanitarian support for 17.5 million people out of the 21.9 million in people in need.

The Trump administration has excluded Afghanistan and Yemen from receiving further aid, reiterating concerns that ‘’funding was benefitting terrorist groups’’ – a decision that further underscores how the withdrawal of humanitarian assistance is being deployed as a political punishment. The cessation or reduction of aid is rarely acknowledged as a form of sanction, but in Afghanistan this has been a key component of the sanctions package.

The persistent neglect of humanitarian needs compounds vulnerabilities and perpetrates more extreme impoverishment, while sanctions continue to restrict financial transactions, access to aid, and the process of payments due to the asset freeze and exclusion from the global financial market, placing a further burden on the Afghan population.

The international community must reach a collective agreement on how to address this dilemma and alleviate Afghanistan’s humanitarian crisis.

This can be achieved by adjusting current sanctions, unfreezing Central Bank resources, and easing restrictions so that financial transactions can resume as they did before 2021, or by committing adequate levels of funding to ensure humanitarian aid reaches those in greatest need; or, ideally, by doing a bit of both.

The Taliban’s dismal record on human rights, particularly women and girls, must be challenged, but this can be done through diplomacy rather than isolation and coercion. Given the alternative we are already witnessing, it is, at the very least, worth a try.

Dr. Sara Moussavi is a development practitioner and lecturer in political science at John Cabot University. She is a member of the Bologna Initiative for Sanctions Relief.

Section: (all-articles) Photo: Mehdi Khoshnejad

By Esfandyar Batmanghelidj

This article was originally published in French by Le Grand Continent.

Much has been written about Iran’s long period of economic malaise, which began in earnest in 2012 when international financial and energy sanctions were imposed on the country. In the thirteen years from 2000 through 2012, the Iranian economy grew at an average annual rate of 4.4%. In the unluckily thirteen years from 2013 through 2025, average economic growth slowed to just 1.9%. Following the initial sanctions shock, the country was gripped by currency devaluation, inflation, and a paralyzing drop in investment. These difficult economic conditions have led to increasingly frequent rounds of national protests, including strikes by truckers, walkouts by oil workers, and the ongoing demonstrations initiated by mobile phone sellers. These protests, often triggered by specific economic frustrations, have become outlets for deeper political grievances as protestors drawn from across social groups challenge the authority and legitimacy of the Islamic Republic.

On one hand, the economic frustrations of ordinary Iranians are completely understandable. The halving of the growth rate represents a profound shift in the country’s economic trajectory. Households that twenty years ago experienced consistent improvements in their standard of living are now barely getting by. But on the other hand, as the economic data demonstrate, Iran is not undergoing an outright economic collapse like those experienced in other sanctioned countries, such as Venezuela and Syria. The year in which the current cycle of national protests began, 2017, was a year of robust economic growth as the country continued to enjoy the benefits of broad sanctions relief. That year, the inflation rate was below 10%, just one-fourth of the current level. Even today, after so many difficulties, Iran has avoided a protracted recession and most Iranians continue to make ends meet in the face of high inflation and stubborn unemployment. Yet, economic pessimism continues to rise.

In 2022, economic commentator Kyla Scanlon coined the popular term “vibecession” to describe a situation when economic conditions remain generally stable, but people continue to report pessimism about the economic outlook. In a vibecession, people feel like a recession is occurring even if such a recession is not an “economic reality.” The term may not capture the gravity of what is happening in Iran, but the persistence of the Iranian version of the vibecession, which has gotten little formal attention, raises serious questions about whether economic reforms, even substantial ones, would fundamentally improve the political situation in the country.

There is a large body of opinion research that sheds light on the attitudes and behavior of ordinary Iranians. This research has garnered relatively little attention, perhaps because of a mistaken belief that it is impossible to conduct robust and reliable surveys in Iran. Over the past year, Kian Tajbakhsh and I have conducted a systematic analysis of the most significant nationally representative surveys conducted in Iran for which data is publicly available. These surveys, which have been implemented in multiple waves using consistent question structures, include global polls fielded by organizations such as Gallup and the World Values Survey Association. They also include surveys uniquely focused on Iran, such as those commissioned by the Center for International and Security Studies (CISSM) at the University of Maryland and those fielded by the research outfit GAMAAN. Finally, there are also major surveys conducted by Iranian institutions that use robust methodologies, such as the Arzesha-ha va Negaresh-ha Iranian survey (“Values and Attitudes of Iranians”) fielded by the Ministry of Culture. Our review of these surveys, which trace key trends in Iranian attitudes and behaviours across 20 years, offers powerful insights into the political, social, and economic situation in Iran. But it is the findings related to economic attitudes that are most instructive for understanding the drivers behind the current wave of protests.

Unsurprisingly given the economic situation, polling in Iran points to a persistent negative perception of the country’s economic conditions. Across eleven survey waves between 2015 and 2024, respondents to CISSM surveys were asked, “In your opinion, how good or bad is our country’s general economic situation?” The proportion of respondents who believed that the economic situation was “good” or “very good” was highest in May 2015 at 54%, possibly reflecting the Rouhani administration’s success in taming inflation. Sentiments were at their lowest level in October 2020, during the pandemic, with just 24% of respondents indicating that the economic situation was good or very good. As of October 2024, sentiments had improved, with the positive responses rising to 31%, possibly reflecting the stabilisation of the economy after the pandemic shock. Even so, a significant majority of Iranians believe the country’s economic situation is “bad.”

These negative sentiments also extend to expectations about the future. Respondents to CISSM surveys have been asked: “Right now, do you think economic conditions in Iran, as a whole, are getting better or getting worse?” This question has been included in eleven survey waves between 2015 and 2024. The most positive sentiments were recorded in May 2015, with 50% of respondents indicating that economic conditions were “getting better,” a notably low proportion considering that the Iranian economy swung from a 1.5% contraction in 2014 to a 5% expansion in the following year. The most negative outlook was recorded in October 2020, the first year of the pandemic, with just 22% of respondents stating that economic conditions were improving. Since 2020, there has been a modest recovery in sentiments, with 30% of respondents reporting that economic conditions were getting better.

Importantly, the CISSM questions on present and future economic conditions were fielded to the same respondents in each wave. Yet, despite periods of improvement in the view of present economic conditions, the proportion of respondents who believed conditions were “getting better” never exceeded 50%. A very similar question is asked in the surveys fielded by Gallup, although the respondents are asked about conditions in the area where they live, rather than in Iran at large. In all but three years between 2006 and 2024, respondents were asked this question: “Right now, do you think that economic conditions in the city or area where you live, as a whole, are getting better or getting worse?” Like in the CISSM survey, the proportion of respondents who believe conditions are “getting better” has never exceeded 50%. As of 2024, 37% of respondents believed that Iran’s economic conditions were getting better, reflecting a modest recovery in sentiment that aligns with the trend captured by the CISSM survey waves.

Negative sentiment regarding Iran’s economic outlook was also captured in the fourth wave of the Arzesh-ha survey, which was conducted in 2020. Respondents were asked to evaluate the recent trajectory of Iran’s economy, by answering “How has the country’s economic situation changed compared to the past 5 years?” Just 10% of respondents reported that economic conditions had improved. Respondents were also asked “How will the country’s economic conditions change in the next 5 years?” Again, just 17% of respondents indicated that economic conditions “will become better.”

Looking across these surveys, we see that sentiments about the current state of the economy do improve during periods of economic recovery, such as the period of sanctions relief between 2013-2018. This suggests that Iranians are mainly forming their opinion of the country’s economic situation through their direct experiences. In this period, foreign and domestic media reported extensively on Iran’s robust economic growth, rising oil exports, falling inflation, and committed inflows of foreign direct investment. Yet the benefits of sanctions relief were slow to trickle down. The improvements in sentiment that could be observed were modest and did not lead to significant shifts in perceptions of future economic performance. As reflected in the Arzesh-ha survey, even during the height of the pandemic, only a small minority of Iranians believed that economic conditions would improve in the medium-term, reflecting a profound degree of pessimism about the country’s capacity for crisis recovery.

Iranians are mainly forming their opinion of the country’s economic situation through their direct experiences.

Alongside negative perceptions about the economy at large, Iranians also report growing pessimism about their standard of living. This trend is reflected in two types of survey questions. First, several surveys have asked Iranians to report economic hardships and their level of satisfaction with their financial situation. Second, several surveys have asked Iranians about whether they believe their standard of living will improve or worsen. Both sets of survey questions indicate that Iranians are increasingly pessimistic about their own economic circumstances.

In all but two years between 2006 and 2024, Gallup surveys in Iran have asked respondents about their ability to afford food and housing. Respondents were asked “Have there been times in the past 12 months when you did not have enough money to buy food that you or your family needed?” The proportion of respondents who replied “no” was highest in 2006 at 84% and lowest in 2015 at 44%. As of 2024, the proportion had risen to 62%. By leaving it up to the respondents to decide what kind of food their family “needs,” the question serves as a measure of whether Iranians feel they can reliably make ends meet considering their standard of living. Similar trends can be seen in housing. The Gallup survey also asked “Have there been times in the past 12 months when you did not have enough money to provide adequate shelter or housing for you and your family?” The highest proportion of “no” responses was recorded in 2007 at 73%. The lowest proportion was recorded in 2013 at 49%. As of 2024, the proportion of “no” responses was 61%.

The proportion of individuals reporting that they face food or housing insecurity has decreased in recent years, correlating with a marginal improvement in Iran’s economic conditions. Today, a majority of Iranians continue to be able to make ends meet, at least according to the perceived needs of their own families. But survey data also suggest that Iranians have adjusted their expectations and are willing to express satisfaction with lower living standards. In the 2020 World Values Survey, respondents were asked to rate financial satisfaction on a 1-to-10 scale. The plurality of respondents (26%) chose a neutral score of 5. Positive responses outweighed negative ones: 47% rated their situation at 6 or above, compared to just 27% who rated it 4 or below. CISSM data from 2021 captures similar sentiments using a 0-to-10 scale where respondents were told the “top of the ladder represents the best possible life for you and the bottom of the ladder represents the worst possible life for you.” There, too, the most frequent response was the midpoint (5), selected by 27% of respondents, with another 34% placing themselves higher on the ladder. In short, most Iranians remain relatively satisfied with their personal circumstances, even as they express deep frustration with the country’s broader economic outlook.

However, even if Iranians are finding ways to cope with economic pressures this has not diminished views that social mobility in Iran is under threat. The Arzesh-ha survey fielded in 2023 asked “Do you think the gap between the rich and the poor has widened or narrowed compared to five years ago?” A significant 88% of respondents reported that the gap had widened. Additionally, in the same survey, 78% of respondents agreed with the statement that “In our society, the rich get richer every day, and the poor get poorer.” The strength of these sentiments suggests that even when Iranians perceive general improvements in the country’s economic situation, they still feel generally unable to improve their own economic circumstances. At the same time, even if Iranians express satisfaction with their own economic situation, they are likely to have negative views of the overall economic situation.

Such seemingly contradictory views of personal circumstances and the state of the national economy have emerged as a major challenge for economic policymakers around the world, including in the United States. A 2024 survey on the economic wellbeing of American households conducted by the Federal Reserve Board found that 73% of adults reported they were financially “doing okay” or “living comfortably,” while only 29% of adults rated the economy as “good” or “excellent.” If U.S. policymakers cannot convince American voters of the health of the economy, even as most Americans feel economically secure, how can Iranian policymakers expect to convince citizens that their economic policies are working?

Even if Iranians express satisfaction with their own economic situation, they are likely to have negative views of the overall economic situation.

Importantly, polling shows that Iranians consistently identify mismanagement as the primary cause of the country’s economic problems. Surveys fielded by CISSM have asked respondents to identify a primary cause of Iran’s economic challenges. Across nine survey waves from 2015 to 2024, CISSM has asked “Which of the following do you think has had the greatest negative impact on the Iranian economy?” The responses have been strikingly consistent across these waves. On average, 60% of respondents cited “domestic mismanagement” as having a more significant impact than “foreign sanctions and pressures” on the Iranian economy. Small fluctuations can be seen in years in which sanctions intensity has changed. For example, the proportion of respondents citing sanctions as having the greatest impact rose from 32% to 36% between the beginning and end of 2018, the year in which the Trump administration reimposed sanctions on Iran. A similar question was asked by GAMAAN in a 2021 survey. The survey asked, “According to you, which of these factors have had the worst impact on the Iranian economy’s current situation?” Just 10% of respondents selected “sanctions and foreign pressures” whereas 86% selected “domestic inefficiency and corruption.”

The consistent identification of mismanagement and corruption as the primary cause of Iran’s economic failings makes sense when one considers that ordinary Iranians directly experience corruption and mismanagement, whereas most economic impacts from sanctions are indirect. The World Values Survey, fielded 2020, asked respondents to rate the level of corruption in Iran on a 10-point scale. A notable 60% of respondents indicated a score of 6 or higher and 34% of respondents indicated the highest score of 10 which corresponded to the statement “corruption is abundant in my country.” In the same survey, 37% of respondents indicated that “most” state authorities are “involved in corruption.” When asked about the level of corruption among business executives, the same figure rose to 43%. These popular sentiments are shared by Iran’s most senior economists, such as Saeed Laylaz, who declared in a recent interview, “the Iranian economy is completely corrupt and out of shape.”

Considering how their management of the economy is perceived, Iranian policymakers face an enormous challenge as they seek to restore public trust through programs such as the recently announced cash transfers, which are intended to shore-up living standards. Not only do improvements in economic circumstances fail to lead to meaningful improvements in sentiments about either current or future economic conditions, but the Iranian public remains highly pessimistic about the fundamental ability of Iranian policymakers to administer economic policies of any kind. Moreover, persistent economic pessimism has shaped consumer and firm behavior, curtailing the consumption and investment that could help Iran escape its economic doldrums. To adapt from Scanlon, when pessimism about the state of the economy combines with pessimism about economic policy, “it seems like everything is falling apart.” Certainly, the pathway for sustained economic development in the country is more obscure than at any point since the Iran-Iraq War. But everything is not really falling apart, at least not yet. Does that mean that the situation is salvageable? Can economic reforms lead to an improvement in economic sentiments, bringing an end to Iran’s period of recurring strikes, walkouts, and protests?

At least in the domain of economic welfare, Iran’s leaders are confronted with a degree of public anger about the general economic situation that is disproportionate to the reality of the economic sentiments of most Iranians. This observation is not meant as a judgement on the protests themselves, which represent real grievances that go far beyond economic frustrations alone. But the observation clarifies the pernicious role that public opinion can play in the pursuit of economic reforms.

At an individual level, many protestors are no doubt motivated by deprivation and economic hardship they have directly experienced—lost jobs, vaporized savings, abject poverty—setting aside the experiences of repression and state violence. But as a societal phenomenon, the protests reflect sentiments about the present and future that are shaped less by personal experiences and more by a kind of socialized pessimism, a pervasive negative “vibe.” To rescue Iran’s economy and possibly their regime, the leaders of the Islamic Republic need to accomplish something far more difficult than modifying economic policies, they need to change how ordinary people perceive the effects of those policies. Unsurprisingly, when it comes to their chances for success, pessimism is warranted.

Esfandyar Batmanghelidj is the CEO of the Bourse & Bazaar Foundation and an Adjunct Professor at Johns Hopkins SAIS. He is a member of the Bologna Initiative for Sanctions Relief.

Section: (all-articles) Photo: IRNA