The US has seen an explosion in sanctions-related lobbying in recent years as new laws empower advocacy groups to press for government action against alleged “bad actors” while policymakers score political points over who’s toughest.
In the latest episode of The Influencers podcast, we get the other side of the story from a sanctions compliance lawyer who has been in the trenches for more than a decade. In a wide-ranging interview with co-hosts Julian Pecquet of Foreign Lobby Report and Richard Levick of the LEVICK communications agency, the founder and lead attorney at Ferrari & Associates describes a sanctions regime that has become increasingly convoluted and ineffective as advocacy groups and politicians focus on punishment rather than redemption.
“If you really want compliance with US sanctions, it’s just not about naming and shaming people — it’s about identifying what does the US government really need to see to have them removed,” Erich Ferrari argues. “And if [US officials] do that, folks like myself are able to convince [our clients] much more easily to engage in that change in behavior.”
Ferrari launched his firm in 2009 and splits his time between three main tasks: trying to get clients off sanctions lists, advising companies on compliance, and representing clients accused of violations. The bulk of his work focuses on Iran, Russia, Venezuela and the Democratic Republic of the Congo, he said, with drug-related sanctions related to Mexico and the recent sanctions against US ally Turkey rounding things out.
Despite the occasional accusation that he’s representing so-called “malign actors,” Ferrari has long seen himself as helping the US achieve its sanctions goals by helping clients come into compliance.
“I’m not able to trick the US government into doing anything,” he said. “There are no loopholes, there is no way to pull the wool over their eyes so they make a decision to remove somebody from the sanctions list.”
Rather, he said, his firm helps client either change their behavior or convince the US government that it is acting on inaccurate or outdated information — in either case, serving US national security priorities.
“If you don’t have sanctions removals,” Ferrari insists, “it shows that parties aren’t changing their behavior and therefore it shows that the sanctions aren’t actually working.”
That’s exactly what’s happened in recent years, he said, particularly following the 2015 nuclear deal, with the Donald Trump administration and congressional Republicans insisting that sanctions on Iran stay in place. Under Trump he said, delistings were seen “almost as a sign of weakness” while removals from sanctions lists dropped “by orders of magnitude.” In turn, lawsuits from sanctioned individuals and companies shot up.
Following the election of President Joe Biden, he notes, some former government officials have taken to issuing public warnings that sanctions removals — against the Iran-backed Houthis in Yemen for example — may be ephemeral and should be ignored.
“It’s almost as if different administrations are setting up sanctions actions and almost daring the next administration to change it so they can use it to hit them over the head with in some sort of domestic political debate,” Ferrari said. “Sanctions actions are becoming less about policy and more about domestic political advantage.”
“It’s kind of led to this culture where the private sector doesn’t know what’s going to happen anymore; they don’t know who to listen to,” he said.
The result : A culture of sanctions over-compliance, which Ferrari argues is detrimental to US interests because it unintentionally sends the message that “well, there’s nothing you can really do to get these sanctions removed, so don’t bother changing your behavior.”
In turn, actors from the Europe Union to China to Russia have passed their own legal directives not to comply with US sanctions that they view as arbitrary and contrary to their own interests.
The politicization of sanctions, Ferrari says, has been compounded by passage of the Global Magnitsky Human Rights Accountability Act in 2016. The law explicitly requires the Treasury Department to take into consideration “credible information” from nongovernmental organizations that monitor human rights, sparking a cottage industry of lobbying in favor of sanctions by a variety of advocacy groups with varying degrees of transparency.
“When that law came out,” Ferrari said, “what we saw was the organization and coordination by different NGOs to retain parties who had prior sanctions investigation experience [with the Treasury Department] or in other components of the US government to prepare what we call designation packets in order to present to Treasury to recommend the sanctioning of certain parties.”
As a result, Ferrari said, US officials find themselves at risk of suffering blowback if they don’t sanction certain actors — or if they delist them later.
Finally, Ferrari pointed to the influence of US industries threatened by the rise of China as a factor in the recent surge of sanctions against Chinese technology companies.
“US national security has very much become about advancing business interests,” he said. “And the two are kind of inextricably intertwined now, at least in this world of sanctions policy.”
Ferrari said he didn’t foresee “any kind of great departure” under President Biden from the kinds of sanctions and export control measures that targeted China under the Trump administration. He does however expect the US government to once again be more transparent about the end goals of its sanctions.
“Although we might not see any drastic shifts,” Ferrari said, “I think we’ll see perhaps a more traditional approach to the administration of those steps that they [do] take.”
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