Harry Clark Weighs in on Future of U.S. Economic Sanctions Policies Under Trump Administration

The Wall Street Journal | 01.06.17

Harry Clark, leader of Orrick’s International Trade & Compliance team, recently spoke with The Wall Street Journal [subscription required] for a series of posts on its Risk & Compliance Journal blog about economic sanctions policies under the incoming Trump administration. Harry noted that while many expect sanctions against Russia to be eased by the Trump administration, it is unlikely, in his view, that the new administration will broadly roll back sanctions on Russia. This is due to congressional opposition associated with factors such as Russian engagement in Syria. Conversely, while President-elect Trump has voiced the desire to implement stronger sanctions against Iran, any move to do so would likely face strong opposition among European allies. Harry also offered insights on the future of sanctions against Cuba, as well as behavioral sanctions.

In regards to Iran, Harry noted, “The conventional wisdom is the new administration will implement more far-reaching sanctions requirements on Iran. That’s possible; it may do that, but I think it real realize there are some obstacles. Before the nuclear agreement, the U.S. had European allies completely on board to implement vigorous sanctions on Iran because there was the consensus of a problem. If you look at where we are now, secondary sanctions are the main area where the administration could expand sanctions, but to the extent that’s proposed, the new administration will get a real earful from Western European allies. They just won’t be willing to put up with it.”

When asked about the potential easing of sanctions against Russia, Harry said, “Given the noises that the incoming administration has made about being more cooperative with Russian leadership, maybe there will be a rollback of sanctions, but given what the Russians have been doing in Syria, that would be a remarkable step to take. Certainly there are steps that can be taken around the edges, more on the level of interpretation of sanctions, that can be helpful to multinational companies rather than just brazenly conducting a rollback.”

Harry continued, “For example, there is a lot of consternation among trading companies about the prohibition in dealing in debt on the basis that holding a receivable longer than 30 days, or 90 days, can constitute dealing in debt. [The Office of Foreign Assets Control] has indicated that it is prepared to interpret the prohibitions in dealing in debt that broadly. The type of thing the new administration can do is issue new guidance saying it won’t consider the idea that if a company is paid in 40 days, instead of 30 days, for a routine transaction that it would be a sanctions violation.”

In regards to Cuba, Harry said he anticipated “the new administration leaving things where they are, by and large. It could roll back some liberalization, and I wouldn’t be surprised if it does so in incremental ways. There won’t be a lot of political cost for sort of keeping things where they are. The fact that Fidel Castro has died made it less likely that there will be a dramatic re-imposition of sanctions.”

He added, “The fact is, we still have an embargo on Cuba. The liberalization hasn’t been that far-reaching. There isn’t a lot of business you can do in Cuba; you can see the changes more in licensing policy. The current administration has adopted a relatively forgiving licensing policy, where it has been willing to license some activity forbidden by the embargo. I can see the administration not changing the rules very much, but they won’t be nearly as willing to give out licenses.”

On behavioral sanctions, Harry noted, “The current administration has generally applied them vigorously. There’s no political argument in favor of less vigorous use of weapons of mass destruction and terrorism sanctions. There’s been a steady application of sanctions on terrorists and narcotics traffickers. Where there’s an enduring political consensus for a role of sanctions, and the right policy is vigorous enforcement, I see that continuing apace.”