The issue of sanctions alone is not enough for the Club of Sanctioned to continue its activity and strengthen the bonds between its members. It is, therefore, necessary, in addition to the sanctions, to further examine other commonalities among the sanctioned states such as political ties, ideological, cultural and social affinities, and common economic and security opportunities, and to strengthen cooperation between these countries in all fields.

The necessity of Forming Club of Sanctioned

After the end of the Cold War and the collapse of the Eastern Bloc, the United States, as the world’s only powerful bloc, has taken every measure to maintain a balance of power in favour of its domination and to retain and exploit its interests worldwide: Benefits using which in many cases would have undermined the rights of other countries. In the meantime, states that stood up against US monopoly or hegemony in pursuit of their rights and interests, or adopted policies that contradict US monopoly, were targeted by a military attack or US sanctions – to change their behaviour or face collapse of their political system.

This policy has been pursued in various US governments, but in the recent US administration, due to Trump’s confrontational and expansionist foreign policy, the US government’s efforts to maintain a balance of power in its favour in the world have increased and sanctions have become an instrument of economic warfare with countries. Under the Trump administration, the number of countries sanctioned by the US government has jumped to 23, according to the US Treasury Department.

If Trump is reelected, the list of sanctions will be further going up. Iran, Russia, Turkey, China (US trade war target), Iraq, Lebanon, Syria, Libya, Congo, Balkans, Mali, Nicaragua, Ukraine, Venezuela, Sudan, Somalia, Cuba, Zimbabwe, Yemen, North Korea, Belarus, Burundi and the Central African Republic are on the US sanctions list [1].

Given the economic, political and security implications of US illegal sanctions and its insistence on continuing to dominate the sanctioned states and breach their rights, this trend will continue to be detrimental to the international community.

But what is the solution? Certainly, if the sanctioned countries succumb to the pressure of sanctions and give in to the changes demanded by the US, they will pave the way for deepening American dominance in the world. So the only solution is to counter the sanctions and try to reduce their impacts. Richard Nephew states in his book that what can lead to sanctions failure will be the endurance of the target countries against the sanctions [2].

But the point is that if any of the targeted sanctioned countries are to individually oppose the sanctions, given the American political, economic and technological superiority, they are unlikely to succeed in defeating the sanctions. But if the sanctioned countries unite in the face of US sanctions, they could create another pole in the world, and by changing the balance of power and the decline of American power and global domination, not only will they eliminate the grounds for pressure and sanctions from America but also can turn it into an opportunity for improvement. Just as in a society, one cannot gain political power alone and without participation, in the international system too no country can contribute to the equations of power without convergence with other countries [3].

Certainly, much of the elements of American power and domination in various areas have been due to its role in the international level, acceptance of the US hegemony in various arenas by countries and giving in to this hegemony. Consequently, if the countries affected by the sanctions are united and their power is consolidated through their integration, a new pole will be formed in the world and the balance of power will be changed in favour of the new pole. At the same time with the creation of the new pole, America will lose its elements of power and political and economic influence in the world.

In this regard, the Islamic Republic of Iran, which has been one of the target countries of the US sanctions for the last 40 years, could pursue the idea of forming a club of the sanctioned as a step towards consolidating the capabilities of the sanctioned states and countering US sanctions.

Requirements for Forming Sanctioned Club

The first question that arises is whether it is possible to form such a club by the sanctioned countries.

The most important factor that can help create this club is to serve the interests of its members. In principle, countries in the international arena make kind of decisions that will have the most benefit for them and eliminate threats against them.

  • A coalition can be beneficial if the benefits of joining it are greater than the benefits of not joining [4]. Some sanctioned countries may find the formation of a new pole against the US unlikely and show no interest in joining the coalition. Some countries may have little hope the club would be influential and therefore they may prefer individual negotiations with the United States on sanctions relief. Therefore, there must first be a common belief among the sanctioned states on the necessity of establishing this alliance, which requires active diplomacy and consultation between the authorities and the elites of the countries.
  • The countries that have been sanctioned, while sharing the sanctions issue, have other commonalities and distinctions in different areas. Theories of convergence in international relations and global experience have shown that the greater the cooperation among members of a coalition, the greater the durability and impact of the coalition. So although the membership in the club is a sanctions issue in the first place, due to some differences in various aspects between the sanctioned countries, some members of the club may not continue to focus solely on the sanctions issue. Especially when a big goal such as creating a new front against the US is on the agenda, the issue of sanctions alone is not enough to continue the club’s work and strengthen the bonds between the members. It is, therefore, necessary, in addition to the sanctions, to carefully examine other commonalities such as political ties, ideological, cultural and social affinities, and common economic and security opportunities, and to strengthen cooperation between these countries. In the meantime, political ties between countries can play a greater role in building and advancing this coalition.
  • Due to some differences in some areas such as geographic dispersion, economic growth, technology and cultural issues, a strong coalition with all 23 sanctioned states may not be created in the first place. Therefore, it is necessary to define the club in several stages in a comprehensive program, so that, in the first step, countries with more political power, technology and economic background have superiority over other members and more in common with other members. They can start to form the core of the club and then gradually join other sanctioned countries in the next steps, using economic diplomacy and consulting with the elites, with emphasis on shared opportunities for cooperation.
US Grounds and Tools for Sanctions

To assess the impact of the sanctioned club on US sanctions, we must first understand the US tools for sanctions on various countries and their impact on the global economy. Today, America’s domination of the world economy and the world’s commercial and financial flows has made it possible for the country to sanction non-aligned countries. The main factor that created this economic advantage for the US was the US dollar. Since the USD was adopted as the world trade reference currency and many countries used it as a reserve currency, it has been an advantage for the US to internalize its national currency, trade trends, and financial systems worldwide. One of the tools complementary to the US dollar to strengthen the US economic dominance is an interbank telecommunication message called SWIFT, which is used to send and receive any currency message between currency units of domestic banks and banks abroad [5]. Since most of the financial transactions in this system are based on the US dollar, the US Treasury can control all the dollar transactions made in the system worldwide and even prevent the transmission of messages in some transactions.

Taken together, these tools make it easier for the US to identify the transactions of sanctions target countries by imposing financial sanctions (such as blocking USD  accounts, suspending SWIFT services, banning financial services such as capital transfers, etc.) and trade sanctions (such as banning the sale of oil or arms imports). Thus not only the target country but also the countries, companies and individuals that assist the target country against US sanctions. Therefore, many institutions that are not even part of the dispute between the US and the sanctioned countries, will not provide services to sanctioned states out of sanctions fear. We have seen an example of this non-cooperation of European banks with Iran even after the Iran Nuclear Agreement known as the Joint Comprehensive Plan of Action (JCPOA) [6].

Club of Sanctioned vs. US Sanctions Tools

Realizing the economic power and dominance of the United States in the world and its means of sanctioning and influencing the economies of different countries and imposing economic sanctions on the target countries, the position of the sanctioned club against these sanctions and their effects becomes clear. As mentioned in the introduction, the most important role of the sanctioned club is to create a coalition between the economies of the sanctioned countries and consolidate their economic powers to counter US sanctions.

When, in the international arena, a country becomes a major economic power alongside smaller powers and forms a so-called economic hegemony, the smaller powers can ally with each other and increase their power, which would diminish the power of the dominant state. The role of the Sanctioned Club is, therefore, to create a strong economic coalition to limit the effectiveness of the instruments of economic domination and sanctions imposed by the United States, thereby reducing the economic power of the United States to impose sanctions and affect the economy of the sanctioned states: An act that perhaps no sanctioned country can do alone because of the vast array of US economic power tools.

There are ways for the club of the sanctioned states to strip the United States of the sanctions tools. Although some of these mechanisms have already been applied by different countries to a lesser extent, their implementation at the level of the sanctioned club member states and in the next steps of their trading partners will be a new experience that, if executed, will impact the effectiveness of those ideas against sanctions and limiting the effectiveness of the sanctions tools:

  • Multilateral Monetary Agreements

After the damages caused by the USD in international transactions for various countries of the world became apparent, some countries tried to use other methods of international payments. One of these methods is to conclude bilateral or multilateral monetary treaties. According to this method, the US dollar, which is the intermediary currency in international transactions, is eliminated, and the trade is carried out using the local currencies of the countries of exchange, and eventually, the trade balance surplus is settled using one of the valuable financial assets.

So far, about 50 countries have signed bilateral currency treaties among themselves, eliminating the US dollar from their exchanges. But if the sanctions club is set up and implements the method for international payments, it will be the first time in the world that 23 countries have multilaterally removed USD from their financial transactions. Since non-sanctioned countries also have trade exchanges with the member states of the sanctioned club, the agreement could be extended in the future, eliminating the possibility of the US using the USD to impose financial sanctions in the form of a ban on dollar-denominated trade.

  • Replacing SWIFT with Alternative Financial Messengers

Some countries today are trying to create new messengers and replace SWIFT with these financial messengers. To this end, Russia has launched a messaging system called SPFS. This system transfers financial messages without the need for SWIFT and can handle up to 50 types of financial messages [7]. If a single messenger between the sanctioned club countries and their trading partners replaces SWIFT, the US Treasury Department’s ability to monitor sanctions on trade transactions will be eliminated, and the SWIFT sanctions will not harm their international financial transactions.

  • Creating New Financial Instruments like Common Currency

The strength of the national currency of each country depends on its production capacity, which is reflected in the GDP index. Currently, the share of the sanctioned countries in the world GDP is about 21% and the US share is about 24%. Although the US has used the dollar’s special privilege and injected the USD into the global economy at 3 to 4 times its production capacity, this does not mean that there is no opportunity to create new national currency or enhance the value of the national currency. The European Union is an example of a political-economic union with a single currency that can be used today. Thus, in the long run, sanctions could also create a common currency based on their productive capacity, thereby increasing their share of world currency reserves and financial transactions, reducing the US dollar’s dominance in global financial transactions.

 

  • Creating Synergies to Offset US Trade Sanctions

US-sanctioned countries have diversified production capacities in various industries, and this privilege enables US-sanctioned imports to be reciprocally supplied and exchanged through sanctioning countries themselves. This, of course, requires the creation of a complete business map of the needs and capacities of the sanctioning countries.

Conclusion

By using economic domination tools such as the dollar, the United States has been able to wage a comprehensive trade war against non-aligned countries, and to exploit the vulnerable sectors of the economy of countries and to effectively organize sanctions against these countries.

In case of establishment of the ‘Club of  Sanctioned’ the effectiveness of the sanctions tools, including synergies between the economies of the sanctioned countries, by using techniques such as expanding multilateral pacts, creating alternative financial messengers for SWIFT and initiating new financial platforms make these countries immune from US trade sanctions.

 

Footnotes
  1. https://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx
  2. Nephew, Richard (2013), “The Art of Sanctions”, translated by the Majlis Research Center, 2018
  3. Naghibzadeh, Ahmad (2009), “Iran the Center of Several Regional Sub-Systems”, Central Eurasia Journal, #2
  4. https://www.scfr.ir/fa/?p=379
  5. https://www.yjc.ir/fa/news/5975775
  6. https://www.tasnimnews.com/fa/news/1395/03/29/1107835
  7. https://b2ir/825516