June 24, 2017

INSIDE KGB DIRECTORATE S: THE ILLEGALS

https://espionagehistoryarchive.com/2015/05/15/inside-kgb-directorate-s-the-illegals/

Espionage History Archive

Search

PRIMARY MENUSKIP TO CONTENT

TRANSLATIONS

MAY 15, 2015 MARK HACKARD 2 COMMENTS

Directorate S, also known as the Illegals Directorate, was the elite of the KGB’s First Chief Directorate (Foreign Intelligence). Journalist Konstantin Kapitonov was able to interview one of its chiefs, Lt. Gen. Vadim Alekseevich Kirpichenko (1922-2005) about his time at the head of the Illegals Directorate during the 1970s.

In March of 1974 Kirpichenko was called to Moscow to report to KGB Chairman Yuri Andropov. With discretion Andropov asked about what was happening in Egypt and how Soviet-Egyptian relations would unfold.

The briefing took place in the Kuntsevo Hospital, in the very same room where Andropov spent no minor part of his life, and to where Kirpichenko subsequently often had to go for the resolution of ongoing service matters.

Two days later Andropov again requested Kirpichenko, this time to his office at Lubyanka. The call was unexpected, since he had just met with the chairman and given a full briefing on the work of the residency in Egypt, to where he was about to return.

Lt. Gen. Vadim Kirpichenko

“At 12:00 I was invited into Andropov’s office,” Vadim Alekseevich related. “Yuri Vladimirovich shook my hand and proposed that I sit. His handshake was soft, his hand large and warm. The traditional tea with lemon in glass holders was brought in. Andropov became used to economizing on time and that of his interlocutor; he therefore immediately began with the main topic. “We deliberated,” he said, “and made the decision to appoint you the deputy chief of intelligence and the chief of Directorate S.”

In Kirpichenko’s words, for him this was a completely unexpected turn of events. The proposal, it seemed to him, wasn’t connected by any logic to his previous work. Therefore, having thought about it, he began to politely but rather decisively refuse. He thanked the chairman for his trust. he said that this was a major state post. And he emphasized that he had undergone his formation as an intelligence officer and specialist on Arab countries and Africa. He especially emphasized that his conception of illegal intelligence was weak.

Andropov didn’t like Kirpichenko’s answer. After a short pause, he firmly pronounced:

You have no choice. This is our final decision. Therefore, return to Cairo and pass on your cases. In a month begin work.


He made another pause, and then, laughing, he said:

We tested you in conditions of war and crisis situations. You didn’t flinch. You went against the current when in the Politburo we believed in Sadat. And you alone were firing off telegrams that he had sold out to the United States. You’ll endure – you have the ability, and you’ll calmly stand up to the stress.


After the conversation with Andropov, Kirpichenko went to Cairo to transfer his cases and bid farewell to friends.

From Kirpichenko’s diary:

Upon returning from Cairo, I waited a long time for a meeting with Leonid Brezhnev. The visit to the General Secretary took place on April 25th, 1974. The General Secretary was affectionate, languid, not in a hurry, and he unaffectedly told jokes. He clearly spoke at Andropov’s prompting and in his words – about how illegal intelligence is special work, that the most stoic, brave, strong people, without any weaknesses or defects, served there. The Party valued this collective, and I had been entrusted with a great task. Remembering the strict instructions given by Andropov on the way to Brezhnev – “Don’t even think about refusing the position during your meeting with the General Secretary” – I thanked him for the advice and appointment. But I myself was thinking with great apprehension about what I’d have to do, where to start, whether I’d manage, and why such a fate befell me.


Kirpichenko worked over five years in his new position, five years that flew by, in his words, momentarily. These were years of illegal intelligence’s drawing closer to the essential tasks of Soviet intelligence. They were years of tenacious searching for new forms and methods of work, the infusion of youth into the collective, of genuine creativity, humble victories, and also the grief and disappointments inescapable to any intelligence service. But fate in those years was kindly inclined: when Kirpichenko was head of the Illegals, there were no betrayals or major misfires.

***

During one of our meetings I asked Vadim Alekseevich to tell something interesting from the life and work of illegals, or suggest a theme for publications. He was silent for a long time, and then said, as if of something decided long ago:

To speak on concrete matters of illegal intelligence, including in the past, is extremely difficult. This is a specially guarded subject. Preparation of a genuine illegal intelligence officer, supplying him with reliable documents, and sending him abroad for practical work is extremely arduous business and demands unheard-of efforts by specialists of various profiles. And although much about this activity is known to foreign intelligence services, I will nonetheless not risk mentioning concrete names and facts and give them my evaluation. Information that left us and leaked through various channels to the West and the East is one matter, but statements by the former director of the Illegals are another.

And nonetheless, what kind of people were they, the illegals, and where did they come from?

Who is an illegal? What is illegal intelligence? Much is spoken and written about this, and there’s many fantasies and fables here… Illegal intelligence is likely intelligence in its pure form – classic intelligence. If our “legal” intelligence officer goes abroad on his own documents, the documents of our state, an illegal officer goes under foreign documents. Already he is not a citizen of our country; he’s a foreigner. And he has a different citizenship and a different nationality. Overall, over many years of training, he transformed into a person artificially created by us, a different person. He even begins to become unaccustomed to his native Russian language. And returning to Russia years later, he begins to speak with an accent.

This profession is romantic and complex. A heroic profession, I’ll risk saying. We trained illegals and train them, as Andropov liked to say, in a unique way.

Famed KGB illegals Ashot Akopyan, Konon Molody, and Rudolf Abel (William Fisher).

If you can, in more detail…

We search for candidates and find them ourselves, selecting through hundreds and hundreds of people. The work is indeed one-of-a-kind. In order to become an illegal, a person should possess many qualities. Bravery, focus, a strong will, the ability to quickly forecast various situations, hardiness to stress, excellent abilities for mastering foreign languages, good adaptation to completely new conditions of life, and knowledge of one or several professions that provide and opportunity to make a living. Enumeration of personal qualities necessary for an illegal intelligence officer could be continued into perpetuity.

And so, finally, you have found a suitable person. What next?

Even if a person who has the attendant training and the enumerated characteristics to one or another degree, this in know way means that he’ll make an illegal officer. Some certain traits of nature are also needed, ones that are elusive and hard to transmit into words, a special artistry, an ease of transformation, and even a certain well-controlled inclination to adventure, some kind of reasoned adventurism.

The transformation of an illegal into another person is often compared to the role of an actor. How is it in reality?

It’s one thing to become someone else for an evening or a theatrical season. And it’s something totally different to turn into someone who once lived or a specially “constructed” person, to think and dream in another language and not think of oneself in the real dimension. Therefore we often joke that an illegal going out into the operational arena could already be given the rank of people’s artist.

The labor of an illegal intelligence officer is incomparable with the work of an officer in a regular residency. However tense the day of an intelligence officer working, say, under the cover of an embassy might be, in the evening he nonetheless returns to his family and forgets the day’s worries. An illegal has no native “cover,” no place where he can relax and forget himself, and often there’s no family nearby. He is, as the expression has become fashionable, socially unprotected, and unprotected in general. All of his salvation is in his head and in the precise work of the Center.

How is an illegal intelligence officer trained?

Over the time of his training, an illegal acquires much: wide-ranging knowledge, in particular on political and economic matters, a few professions, foreign languages. But he also sacrifices much. In these conditions it’s difficult to arrange family affairs. A wife, children, and parents are the crown of endless complications. And one rarely manages to resolve everything more or less satisfactorily.

There’s still another moment. An illegal is trained for work cellularly by a narrow circle of instructors and trainers. Limited communications are a negative moment. We always tired to compensate the loss of contact of young illegals from remaining officers with the creation of a friendly microclimate where people would be psychologically compatible, as in a space crew on a long flight. And we succeeded in creating a friendly, family atmosphere around our illegals.

Could you name an illegal officer who made a significant contribution, so to say, to the general cause?

I could give the names of many brilliant intelligence officers. Although to calculate the significance of each is extraordinarily difficult.

Rudolf Abel (William Fisher) became well-known. He worked, of course, very hard, both in the acquisition of nuclear weapons secrets as well as collecting political information. Though perhaps some other intelligence officer acquired no less information that Abel. But Abel not only was capable of collecting information; he demonstrated tremendous bravery in prison. He gave nothing away and posed as another person. His stoic behavior in prison multiplied his glory.

There was another illegal, Iskhak Abdulovich Akhmerov. He worked before and during the war and did much. If we were to weigh what he acquired, it may be that it would turn out more than what Abel had.

Foreseeing your question, I composed a small directory on famous intelligence officers. I put Nikolai Kuznetsov in first place. A legendary, heroic person. A full-blooded Russian who mastered German to perfection and posed as a German. That already means something…

Legendary Soviet illegal Nikolai Kuznetsov, who posed as Wehrmacht Lieutenant Paul Siebert.

Other names: Konon Trofimovich Molody, also known as Gordon Lonsdale. He was a resident of our intelligence in England and acquired materials on NATO activity. With Lonsdale-Molody there worked the Kroger spousal pair, the Cohens, that is, Peter and Elena. He was an American Jew with roots somewhere in Belorussia. She was an immigrant from Poland. They also, by the way, worked with Rudolf Abel in the United States.

Maria de las Eras Africa, or as we called her, Maria Pavlovna. She was a Spaniard. She tied her fate to Soviet intelligence back in 1937. After the war, from 1945 to 1967, she was doing illegal work in Latin America. I was familiar with her, and participated in awarding her the Order of Lenin. Until the end of her days she trained our illegals. Colonel Africa passed away in 1988.

And if we go deeper into history, then we can list such names as Dimitry Aleksandrovich Bystroletov, Vasily Mikhailovich Zarubin, Ivan Ivanovich Agayants, Aleksandr Mikhailovich Korotkov.

They always were working “in the field.” Some of them became intelligence chiefs.

Of course, this in no way means that the people I’ve named were the most productive. To say that would mean to unintentionally offend others.

And another very important circumstance. The foreigners who worked in our intelligence service were usually adherents of socialist ideas. In the eyes of these people, even if they saw its shortcomings, the Soviet Union was at that time the one focus of these ideas. After Hitler’s coming to power, there appeared in the West even more people who helped Soviet intelligence.

At the beginning of the discussion you said that in materials on intelligence there are many fantasies and fables…

Yes, there’s a lot of that. Especially in recent years. Including various types of defectors and traitors. These people asserted that illegal intelligence was the structure of the KGB that carried out acts of retribution, killed traitors, poisoned, shot, and stabbed with umbrellas. Indeed, in the far-off 1930s, Soviet intelligence, including the illegals, was charged with actions to destroy opponents of the regime and enemies of the state. These cases are well-known. Take just the assassination of Leon Trotsky, which was prepared and executed by Soviet intelligence. But now there’s nothing like that.

***

Kirpichenko (center) with the leadership of KGB Directorate S. Yuri Drozdov is on the far left.

Heading up illegal intelligence, Kirpichenko often had to see off young spousal pairs to their missions and regularly meet with mature officers and veterans who became educators to their young colleagues. Most of all the worries came with the rookies. Problems of their training, their family affairs, their documentation as foreigners, and employment abroad. Sometimes he had to act in the unusual role of either a priest or director of registry to sanction a marriage.

Young illegals being sent on their missions reminded him of people who, having just learned how to swim, are immediately sent far out to sea. Additionally, it was never known whether they’d have the strength to overcome the long distance. And all those who worked with the young illegal or married pair at the Center could not escape their anxiety and alarm until the illegals sent the signal that they reached their destination and that everything was fine.

“For me the years working in illegal intelligence were a time of the highest moral-psychological tension, when it seemed that your nervous system was on the brink of the impossible,” admitted Vadim Alekseevich to me one time. “Neither before nor after have I experienced such stresses.”

Kirpichenko didn’t have to work in this field for too long. But for his whole life, there remained a great satisfaction from work in an extraordinary unit of Soviet intelligence as well as enormous respect for all of his comrades and colleagues in this difficult trade. And especially, of course, for the illegal apparatus – the golden resource of the KGB.

Work Translated: Капитонов, Константин. Египтолог из внешней разведки. М.: Алгоритм, 2008.

Translated by Mark Hackard

SHARE THIS:

Press ThisTwitterFacebook10Google

Yuri Drozdov: The man who turned Soviet spies into Americans

By Kevin PonniahBBC News

23 June 2017

 From the sectionEurope

These are external links and will open in a new windowShare

Image copyrightSVRImage captionYuri Drozdov had a legendary reputation in Soviet and Russian intelligence circles

Yuri Drozdov once said it could take up to seven years to train an "illegal", the Soviet spies planted abroad under false or assumed identities, sometimes for decades.

As former chief of the KGB intelligence agency's Directorate S, which managed the illegals programme, Drozdov knew more than most about what it took to prepare someone for the task.

He had to train Soviet agents to talk, think and act, even subconsciously, like the regular American, Brit, German or Frenchman they would become from the moment they touched down on foreign soil.

KGB agents in the US and elsewhere would wander around cemeteries in search of children who had died that would have been a similar age as recruits being trained. It was a useful way to steal a real identity in a pre-internet age.

A detailed "legend", or biography, would be devised, and a birth certificate printed. Churches would be paid off to erase the death record.

ADVERTISEMENT

It was expensive, painstaking work. Some would-be illegals were trained for years, but ultimately judged unsafe to deploy.

Speaking Russian in one's sleep was grounds for a promising recruit to be dismissed.

'There should be no contact'

Drozdov died on 21 June at 91 years of age. It was the end of the life of a man who spent decades in the upper echelons of the KGB and carved out a legendary reputation from his time heading one of the most secretive and infamous programmes in Soviet intelligence.

Unlike "legal" spies, who were posted abroad under diplomatic or other official cover, illegals were on their own - working normal jobs, living in suburbs and operating without the diplomatic immunity enjoyed by other agents should they be caught.

Have you got what it takes to be a spy?

The KGB spy who lived the American dream

In a 2010 interview, Drozdov described a pair of illegals - a man and a woman - deployed to the US via West Germany and posing as a couple.

"When I worked in New York, I would sometimes come around their house. I would drive past, look up at their windows," he told the Rossiiskaya Gazeta newspaper.

But he didn't go inside - the risks being too great for such face-to-face meetings. There should be "no contact with illegals", he said. "None."

Media caption"This kind of double life wears on you"

Information gathered by these "deep cover" agents was funnelled back to handlers through clandestine means - including dead-drops, by radio, or covert meetings abroad.

Announcing Drozdov's death, the cause of which was not specified, Russia's Foreign Intelligence Service, the SVR, described him as "a true Russian officer, a decent man, a wise commander".

But much remains unknown about his life and operations he was part of, the details hidden in Russian security archives.

Bridge of Spies

Drozdov was "a legend" in the KGB First Chief Directorate, and still is considered as such in the SVR, says Mark Galeotti, a senior researcher at the Institute of International Relations in Prague and an expert on Russian security affairs.

His father was in the Bolshevik worker militias known as the Red Guards and he served in the Second World War as an artilleryman.

Graduating from the Military Institute for Languages, a key finishing school for Soviet spies, Drozdov joined the KGB in 1956.

Rudolf Abel, the most famous illegal, was arrested in New York in 1957 and later famously exchanged with the USSR in return for the captured US pilot Gary Powers on a Berlin bridge in 1962.

Yuri Drozdov, then a young KGB agent based in East Germany, helped organise the swap, the subject of Steven Spielberg's 2016 thriller Bridge of Spies.

Rudolf Abel: The Soviet spy who grew up in England

Image copyrightAFPImage captionThe 1962 swap took place on the Glienicke bridge, which connects West Berlin and Potsdam

Later, in 1975, after a stint in China, he became the "rezident" - or chief KGB officer - at the Soviet Union's UN office in New York, before taking up his position as head of Directorate S in Moscow four years later. After retiring in 1991, he ran a consulting firm.

The Bridge of Spies episode was not the first time Drozdov would be on the ground for a key moment in Cold War history.

In December 1979, he led KGB forces that stormed the Afghan presidential palace toppling President Hafizullah Amin, paving the way for the Soviet invasion.

"This was a guy who spanned the ultra-cerebral world of the spymaster and the action man world of Spetsnaz [special forces]," Mr Galeotti says.

He would later, in 1981, instigate the creation of a new KGB special forces unit called Vympel.

Behind enemy lines

Drozdov's penchant for "hands-on" work is clear. "I would not give top marks to Nato's Special Forces, nor to the American system of training," he said in a 2011 interview. "What they do is try to carry out their special operations without 'getting their hands dirty', and that, to my mind, is a rather dubious business."

He also described caches of equipment hidden in "a number of countries" for sleeper agents to use behind enemy lines in the event of a crisis.

"Whether they are still there [or not], let that be a headache for foreign intelligence services," he said.

Image copyrightAFPImage captionIllegals operate without diplomatic cover and blend in like ordinary citizens

Much remains secret about the illegals programme, including the number of people involved. It is estimated that hundreds may have been planted in total by the Soviet Union during the Cold War.

Vadim Alekseevich Kirpichenko, Yuri Drozdov's predecessor at the top of Directorate S, described them as agents "artificially created by us", who return to Russia after years of covert service abroad and often speak their native language with an accent.

🔴What recruiters looked for in an illegal was "bravery, focus, a strong will, the ability to quickly forecast various situations, hardiness to stress, excellent abilities for mastering foreign languages, good adaptation to completely new conditions of life, and knowledge of one or several professions that provide an opportunity to make a living," he told the journalist Konstantin Kapitonov, according to the online Espionage History Archive.

But other traits, "ones that are elusive and hard to transmit into words, a special artistry", are also required to be able to forget one's identity and become someone else.

Long read: The spy with no name

While the deployment of deep-cover agents to try and obtain information and get close to powerful people makes much less sense in today's digital world, the demise of the Soviet Union did not signal the end of the illegals programme - and Drozdov's legacy lives on to some extent.

In 2010 a group of 10 Russian "sleeper agents" were arrested in New York. Some lived as couples and had grown-up children.

The story inspired hit US TV show The Americans, which portrays the life of a Russian spy couple working as travel agents in American suburbia by day and setting honey traps and assassinating people by night.

Image copyrightAFPImage captionAnna Chapman was one of the "sleeper agents" sent back to Russia from the US in 2010

The group caught in real-life have been mocked for their ineptitude, however, and were reported not to have actually obtained any secrets.

They were later swapped with Russia for four Russian nationals said to have worked for Western intelligence.

But other alleged modern-day illegals have popped up elsewhere, including in Spain.

"It's certainly a diminishing aspect [of Russian spycraft]," says Mr Galeotti, "but obviously where you have people already in place, unless you have a reason to do so, you leave them there just in case."

Trump administration abruptly shutters diplomatic office on Pakistan and Afghanistan policy

https://www.washingtonpost.com/world/national-security/trump-administration-abruptly-shutters-diplomatic-office-on-pakistan-and-afghanistan-policy/2017/06/23/91f9654e-5843-11e7-b38e-35fd8e0c288f_story.html?utm_term=.0bb2c76fcfcf





Secretary of State Rex Tillerson at the White House on April 20. (Jabin Botsford/The Washington Post)

By Anne Gearan and Carol Morello June 23 at 5:33 PM

The Trump administration has moved to close the stand-alone State Department office devoted to policy on Afghanistan and Pakistan that was the brainchild of diplomat Richard C. Holbrooke, current and former State Department officials said.

The Special Representative for Afghanistan and Pakistan office will be absorbed into the larger State Department division responsible for South and Central Asia, the officials said. The decision was announced to some office staff Thursday evening and took effect Friday, according to the officials, some of whom spoke on the condition of anonymity to discuss a decision that had not yet been announced.

Friday was also the last day of work for the office’s current leader and her deputy.

The closure had been expected as part of Secretary of State Rex Tillerson’s planned downsizing and restructuring of the department, an effort that is also expected to result in the closure of other stand-alone offices or special envoys.

[White House frustration grows with Tillerson over jobs for Trump allies]

But the sudden timing and the lack of permanent, experienced diplomats in the top jobs overseeing policy for both countries leave the State Department without experienced hands for a region where the United States has been at war for 16 years, former employees said.

The State Department did not respond to a request for comment.

The decision to close the office comes as the administration is conducting a lengthy review of policy toward both Afghanistan and Pakistan, and as the Pentagon prepares to send thousandsof additional U.S. forces to the war in Afghanistan.

“Whether by design or mismanagement, it leaves the department with no institutional memory on Afghanistan-Pakistan at the very moment when we are on the cusp of surging militarily,” said Dan Feldman, a former director of the office under President Barack Obama. “It’s a recipe for deeper military involvement with no political strategy.”

But the SRAP office, as it was known, had shrunk to about a dozen employees — from nearly 100 at its height — before the end of the Obama administration. Its mission had narrowed, too, from the main diplomatic player overseeing strategy associated with Obama’s troop surge in Afghanistan and troubleshooting the difficult U.S. relationship with Pakistan to a group of specialists managing ongoing U.S. programs.

Some Obama administration officials and State Department rank and file had considered the office redundant and advocated closing it years ago.

Vikram Singh, who was a deputy of the office under Holbrooke, said it makes sense to fold the position into the South and Central Asia Affairs bureau now. But the timing, he said, betrays a lack of strategy and is symptomatic of a vacuum in critical positions throughout the State Department.

“I don’t think there’s only one way to run a war,” he said. “But you should have a game plan and staff it accordingly.”

Singh and others pointed to vacancies in the top positions at the South and Central Asia Bureau, among other open diplomatic jobs. Meanwhile, an expanded military plan for Afghanistan appears to be going forward separately.

“We’re adding troops, but we’re doing nothing to advance the diplomatic or political steps necessary to find a solution,” Singh said. “This is not just baffling. It’s the height of irresponsibility.”

The office was created during the first year of the Obama administration in 2009 as a perch for Holbrooke, a blustery and talented diplomat who was one of several special envoys named by Secretary of State Hillary Clinton.

Holbrooke had argued that the U.S. relationship with nuclear-armed Pakistan needed an overhaul and that the porous border with Afghanistan and the presence of U.S. forces there necessitated a cohesive strategy for both countries.

In her State Department memoir “Hard Choices,” Clinton wrote that the difficult portfolio “seemed in need of his outsized talents and personality.”

Holbrooke set about recruiting “the best minds he could find from inside and outside of government,” she wrote, including academics, development experts, diplomats and specialists from other federal agencies.

Holbrooke died suddenly in December 2010, after suffering a torn aorta during a meeting with Clinton in her State Department office.

Checkpoint newsletter

Military, defense and security at home and abroad.

Sign up

On Friday afternoon, the small suite of offices housing the special representative looked normal. Two young men sat at desks in the anteroom, a television set was turned to news and no moving boxes were in sight.

One of the men said the acting director, Laurel Miller, was unavailable to talk to a reporter. Miller did not return a phone call to her office later in the afternoon.

James L. Dobbins, a veteran diplomat who ran the SRAP office from 2013 to 2014, said the Obama administration had begun plans to shutter the office after the 2016 presidential election, when the incoming Trump administration indicated it planned to do away with the SRAP and other adjunct special envoys. That decision was later put on hold, but Dobbins said it was no surprise that the office would eventually close.

“It’s absolutely normal for any new administration to do away with ad hoc special arrangements the previous administration had, and then do their own,” said Dobbins, a senior analyst at Rand Corp.

He added, however, that “every administration says it wants to do away with special envoys and they end up having 30 of them by the time they’re through

Will roll out the red carpet for Modi’s US visit, says White House

http://www.thehindu.com/news/international/will-roll-out-the-red-carpet-for-modis-us-visit-says-white-house/article19139377.ece?homepage=true

Varghese K. George

WASHINGTON, JUNE 24, 2017 07:44 IST

UPDATED: JUNE 24, 2017 11:27 IST

MORE-IN

Prime Minister Narendra Modi

Trump and Narendra Modi to spend five hours together; new areas of anti-terrorism cooperation to be announced during the visit.

The White House will “roll out the red carpet” for Prime Minister Narendra Modi on Monday, a senior administration official said on Friday, making it clear that the Donald Trump administration will carry forward the agenda set by the previous Obama administration for U.S.-India relations.

Both leaders will spend nearly five hours on Monday, starting with a one-on-one meeting at 3.30 pm, followed by a delegation level meeting, a cocktail reception and a working dinner, the official said, briefing on background. Mr. Modi will be the first foreign dignitary to be hosted by Mr. Trump for a White House dinner, the official added. Mr. Trump hosted Chinese President Xi Jinping and Japanese Prime Minister Shinzo Abe for state dinners at his private golf resort Mar-a-Lago in Florida.

The President considers India a critical partner in dealing with a variety of global challenges, the official said, adding that defence partnership between the countries will flourish under the Trump administration. “We believe that a strong India is good for the U.S.,” said the official.

“President wants to build on that,” the official said, referring to the previous administration’s measures to promote defence cooperation with India. The Obama administration had designated India as a ‘major defence partner,’ an undefined term. The White House official said there will be some “concrete expression of that description,” during Prime Minister Modi’s visit to the U.S. capital. Mr. Modi will arrive on Saturday evening.

Accelerated defence cooperation

While defence cooperation will be accelerated and enhanced, cooperation in energy, particularly natural gas, will be a new thrust in bilateral ties under the Trump administration, the official said. New areas of anti-terrorism cooperation will be announced during the visit.

The official gave clear indication that the pending Indian request for 22 unarmed Guardian drones would be cleared during the visit, saying no comments could be made before the U.S. Congress is notified on any arms sales.

Meanwhile, the CEO of General Atomics Aeronautical Systems, manufacturers of the UAV, told Defense News that the sale has been cleared. “We are pleased that the U.S. government has cleared the way for the sale of the MQ-9B Guardian to the Indian Government,” said Linden Blue. “Guardian provides the endurance and capability required to significantly enhance India’s sovereign maritime domain awareness in the Indo-Pacific. General Atomics Aeronautical Systems is standing by to support the U.S. and Indian Governments throughout this process.”

Indian defence orders support thousands of jobs in the U.S. and the Indian student population supports another 64,000 jobs in the U.S. The White House official pointed out that Mr. Trump and Mr. Modi were two leaders with a large number of Twitter followers and both were innovative in their thinking.

Both leaders will read out a brief statement each after the one-on-one, but the they would not take questions from the media, a departure from usual White House practice after the President’s meeting with a foreign dignitary. Usually, both leaders take questions from the press.

The official indicated this was done at India’s behest. “Don’t read too much into it,” said the official, when reporters pressed why questions will not be allowed.

The official recalled that the President had expressed his admiration for the Indian American community during his campaign last year. “He had then said India would have a true friend in the White House if he wins,” the official said, referring to Mr. Trump’s speech at a gathering of Indian Americans organised by Shalabh Shalli Kumar, founder of the Republican Hindu Coalition (RHC).

‘Ties with India and Pakistan not a zero sum equation’

America’s ties with India and Pakistan are qualitatively different, and they are not a zero-sum equation, a senior White House official said. The official said America’s defence cooperation with India does not threaten Pakistan. 

“U.S. relationship with India and Pakistan really stand on their own merits. We don’t see a zero-sum relationship when it comes to U.S. relationship with Pakistan and U.S. relationship with India. We are certainly eager to deepen the strategic partnership with India but we are also interested in continuing our co-operation with Pakistan,” the official said.

According to the senior administration official, the Trump administration is concerned about tensions between India and Pakistan and “would like to see the normalisation of relations between the two countries.” At the same time, the official made it clear that it would not offer to mediate between the two. “…we very much encourage India and Pakistan to engage in direct dialogue,” the official said. 

“We seek to have an effective partnership with each country. We see India’s role and influence growing. We like to encourage that. With Pakistan too, we seek to work together but frankly the priorities are very different. The nature of the relationships are different. We would like to move forward in both cases but we understand that the pace and scope in both cases is going to be very different,” said the official

"H1 B visa non-issue at this point"

A discussion on H-1B visa is not likely when Prime Minister Narendra Modi and President Donald Trump meet on Monday. The White House official said a review of the visa programme is underway and nothing has changed materially yet. 

×

“On the visa issue, there is no plan for it to come up specifically. But you know, if it’s raised.... the administration has signed some executive orders related to work visas and immigration which directs the Secretary of State, the Attorney General, the Secretary of Labour and Secretary of Homeland Security to propose potential reforms to the H-1B program. Right now, nothing has changed with respect to application or issuance procedures. We’re not in a position to pre-judge what the outcome of that review might be. There’s really been no changes at this point. There’s no changes that target any specific sector yet,” the official said. 

Though there has been much rhetoric about it, the Congress-mandated visa programme cannot be unilaterally amended by the executive. The review currently underway could make some changes that could be done through executive action, and recommend other changes to Congress. Any radical changes in the programme will have to be undertaken through a legislative process. The Trump administration has also indicated that the larger questions could be added on to the immigration reform debate, in which case, any change would be long drawn and difficult

In Narendra Modi, Donald Trump has a leader he can truly work with: Experts

http://m.economictimes.com/news/politics-and-nation/in-narendra-modi-donald-trump-has-a-leader-he-can-truly-work-with-experts/articleshow/59297538.cms


By PTI | Jun 24, 2017, 01.55 PM IST

" If approved, India will become the first non-NATO country permitted to purchase the high-tech drones."

NEW DELHI: Prime Minister Narendra Modi is a leader, US President Donald Trump can truly work with and the two should communicate in their first meeting the desire to advance bilateral relations while addressing concerns over H1B work visas, experts here have said. 

"The visit of Prime Minister Modi couldn't come at a more opportune time. President Trump badly needs both an opportunity to bolster his presidency and a clear achievement to add to his win column. In India, Trump has a natural partner, and in Modi, he has a leader he can truly work with," Asia Society Policy Institute Assistant Director Anubhav Gupta said on the eve of Modi's visit to the US for his first bilateral meeting with Trump. 

Gupta said Trump and Modi can begin on the right foot by communicating their desire to advance the relationship to new heights. However, the two should also ensure that "legitimate disagreements" on certain issues, including the H1-B work visas and intellectual property rights do not hold the relationship back. 

"There is strong bi-partisan support in the US Congress for a closer partnership with India. India's fast growing and increasingly more open economy are huge opportunities for the United States. Additionally, India can serve as a vital partner for the United States in the Asia-Pacific region. For all of these reasons, pursuing stronger ties with India would be a clear win for the Trump administration," Gupta said. 

He added that Modi, who has steadily moved India closer to the United States in his three years in office, is well positioned to take the relationship further after consolidating political power in India through big victories in recent state elections in India. 

With Modi "strongly situated" to win re-election in 2019, the US should take advantage of his good standing. 

RELATED

Nature of ties with India, Pak different: White House

Narendra Modi's trip to US: India talking to US for strong statement on terror from Pakistan

PM Narendra Modi to be 1st international leader to dine in White House with US President Donald Trump

Indian-Americans gear up to welcome PM Narendra Modi

"The visit's success will depend on whether the Trump Administration has been able to focus enough of its attention on India to decide whether and how it will seek an upgrade in the relationship. It will also depend on whether the White House can reassure India about some of its major concerns," Gupta said. 

The Institute's Director of Asian Security Lindsey Ford said while Trump and Modi may have challenging waters to navigate on the economic front, especially regarding trade deficits and visa issues, a "bright spot" in their conversation is likely to be the security and defence relationship. 

"The most notable deliverable likely to emerge from the visit is the announcement of the US decision to sell India 22 unmanned Guardian drones, a request which had been at the top of Modi's wish list. If approved, India will become the first non-NATO country permitted to purchase the high-tech drones," Ford said. 

The drones deal, combined with Lockheed Martin's recent announcement of a new joint venture with Tata Advanced Systems, signifies the rapid growth of US-India defence ties over the past decade, Ford added. 

Gupta stressed that in his meeting wth Trump, Modi is sure to bring up South Asian stability, in particular US policy toward Afghanistan and Pakistan. 

"India will look for reassurance that the Administration is committed for the longer term in Afghanistan and has a true interest in and strategy for maintaining stability. Modi will also push the administration for a more stern US policy toward Pakistan, which continues to support militancy in Afghanistan and India. Support on these two fronts would reassure India greatly," Gupta said. 

The two leaders can commit to strengthening economic ties by agreeing to a genuine dialogue on enhancing trade or negotiating a bilateral investment treaty, Gupta said. 

Ford added that given the uncertainty surrounding the Trump administration's Asia policy, and in particular, US strategy in South Asia, Modi will also want to remind Trump of the significance of the US-India strategic partnership and of the US commitment to long-term stability in Afghanistan. 

Noting that India is the indispensable country for addressing climate change, Asia Society Policy Institute Director of Asian Sustainability Jackson Ewing said India embodies the core climate debate about how much emerging economies should rely on fossil fuels for their development needs. 

"India will aggressively transition away from fossil fuels only if doing so makes strategic and economic sense to the country's political and economic leadership," Ewing said. 

"Accelerating its transition to a cleaner energy future - as Modi makes clear at every opportunity - will require substantial international support. It remains to be seen if such support is in the offing," Ewing added

Israel And the End of the Two-state Solution

Courtesy of Nina A. J. G./Flickr. (CC BY-ND 2.0)

This article was originally published by the Australian Strategic Policy Institute (ASPI) on 10 June 2017.

Donald Trump entered the White House promising to be ‘the most pro-Israel president ever’. This hyperbolic bombast gratified what is certainly the most right-wing Israeli government ever, which is celebrating the 50th anniversary of Israel’s crushing victory over Arab armies in 1967, and half a century of occupation of the West Bank and Arab east Jerusalem it has no plans to end.

President Trump, the self-described dealmaker, keeps hinting and tweeting he is on course to do ‘the ultimate deal’ that has eluded his predecessors: never spelt out but assumed to mean an Arab-Israeli peace encompassing a deal for the Palestinians, who have sought in vain the state proffered tantalisingly by the Oslo accords of 1993-95.

This most erratic of US presidents, meeting Benjamin Netanyahu, Israel’s prime minister, in February, threw the international consensus on the Israeli-Palestinian conflict since Oslo to the winds, saying that the two-state solution, meant to offer security to Israel and justice to the Palestinians, may not be the way to resolve it. ‘I am looking at two-state and one-state [solutions], and I like the one that both parties like,’ Trump said, to nervous chortles from Netanyahu and general bemusement.

Trump may have got something right: that the extent to which Israel has colonised occupied Arab land with Jewish settlements has placed a Palestinian state beyond physical as well as political reach. Yet nearly all Israeli Jews and most Palestinians oppose a one-state alternative.

Jews see a demographic time-bomb, in which Arabs would eventually outnumber them in the cramped space between the River Jordan and the Mediterranean (the two peoples are now roughly level-pegging at about 6.3m each). Palestinians, fed up with their corrupt and feckless leadership, would only opt for one-state if they got the same rights as Israelis, including the vote. That isn’t going to happen. Remaining as second-class citizens, under occupation in a de facto single entity, holds little appeal.

The Trumpian blur of empirical impressionism—talk of ‘a much bigger deal’ that would ‘take in many countries’—is starting to come into focus, if not feasibility. After last month’s inaugural foreign trip, starting in Saudi Arabia and then Israel, his plan seems to be to get Sunni Arab states to join Israel in an alliance to isolate their shared enemy in Shia Iran, and in passing solve the century-old question of Palestine.

It’s hard to see this “grand bargain” as serious, much less getting very far.

It’s true that Arab leaders have long colluded and collaborated with Israel, despite ritual outpourings of brotherly solidarity with the Palestinians. But an Arab peace initiative, backed by the 22-member Arab League and all 57 states in the Organisation of Islamic Cooperation, has been on the table since 2002. It offers Israel peace treaties with full diplomatic relations in exchange for its withdrawal from all Arab land captured in 1967, and the creation of a sovereign Palestine on the West Bank and Gaza, with east Jerusalem as its capital. Israel has always refused to discuss it.

Things have moved on. The common threat to the rule of Arab autocrats posed by the turmoil of the so-called Arab Spring, which opened new opportunities for jihadi extremism after 2011, and a shared hostility towards an Iran that has hardened its Shia axis since the 2003 US-led invasion of Iraq, extending it through Syria to Lebanon, and branching down into the Gulf—all this has relegated the Palestine issue.

But Arab rulers do care above all about survival, and the mood of their peoples, for whom Palestine—and above all Jerusalem—are emotive issues. Mr Trump’s musings about a single state have encouraged annexationists in the Israeli cabinet such as Naftali Bennett, education minister and leader of the far right Jewish Home party. He’s pushing to foreclose decisively on any two-state option by annexing Ma’ale Adumim, a settlement east of the Holy City whose municipal boundaries exceed those of Tel Aviv, and expand its built-up area to put in place the last ramparts that enclose occupied east Jerusalem and encircle Bethlehem.

Saudi players such as Mohammed bin Salman, the young deputy crown prince in whom King Salman, his ailing father, has invested extraordinary power, will sound conciliatory. But the House of Saud ultimately must look to its legitimacy, and Jerusalem is a ticking bomb. Saudi rulers, who style themselves as the custodians of the holy places of Mecca and Medina, cannot ally openly with an Israel that refuses to share any part of Jerusalem, which contains the third holiest place in Islam—the al-Aqsa mosque in the Noble Sanctuary, on what Jews know as Temple Mount.

The larger point is that the domestic costs to Israel of uprooting its 50-year settler enterprise to make way for a Palestinian state far outweigh the benefits of satisfying the episodic strictures of an international community that isn’t willing to change this cost-benefit equation. Nathan Thrall, an International Crisis Group analyst who makes this case almost irrefutably in his recent book, says: ‘so far Israel has proven quite capable of living with the decades-old label of “pariah”’.

The growing opprobrium of subjugating a people, colonising their territory, and appropriating scarce resources such as water and arable land hasn’t impeded Israel from building a sophisticated and world-class economy. For Israel’s current extremist rulers, talk of a peace dividend is abstract in the extreme.

It’s important to remember that at the halcyon height of the Oslo peace process Israel got a peace dividend, without ending the occupation. Diplomatic recognition of Israel doubled in 1992-96, from 85 to 161 countries, leading to doubled exports and a six-fold increase in foreign investment, while per capita income in the occupied territories fell by 37 per cent and the number of settlers increased by 50 per cent.

President Trump, moreover, is trying to better Barack Obama, who was really ‘the most pro-Israel president ever’. His personal antipathy towards Netanyahu masked this, but Obama was the only US president since 1967 never to have allowed Israel to be condemned at the UN Security Council (last December, as a parting, shot, he abstained on a vote against West Bank settlement policy). Obama also signed the biggest military aid package the US has ever given Israel.

It’s hard to believe Trump can improve on this. But it beggars belief he’s the man who will change the calculus of an Israeli occupation well set to grind on pitilessly.

About the Author

David Gardner is international affairs editor at The Financial Times based in Beirut

Economic Sanctions: Sharpening a Vital Foreign Policy Tool

23 Jun 2017

By John Forrer for Atlantic Council

Why do economic sanctions remain a popular foreign policy tool even though analysts question their ability to create ‘sustained impacts’? According to Jack Forrer, such restrictions are scalable and easily explained; you can design and implement them quickly; and they often yield immediate and tangible results. But what’s really valuable about sanctions, Forrer concludes, is their potential dynamism and versatility, which are well suited for the fluidity of a globalized world.

This article was originally published by the Atlantic Council on 14 June 2017.

Under the leadership of Andrea Montanino, director of the Atlantic Council’s Global Business & Economics Program, and Ambassador Daniel Fried, distinguished fellow at the Atlantic Council and former coordinator for sanctions policy at the US State Department, the Economic Sanctions Initiative is building a platform for dialogue between the public and the private sector to investigate how to improve the design and implementation of economic sanctions. To forge a path toward more effective economic sanctions, the initiative has a focus that goes beyond a purely national security perspective on sanctions to bridge the gap with the broader business perspective.

The recent comments by US Secretary of State Rex Tillerson— “[W]e will continue to hold Russia accountable to its Minsk commitments. The United States sanctions will remain until Moscow reverses the actions that triggered our sanctions.”1— underscore the enduring significance of economic sanctions as a vital foreign policy tool. Whether faced with aggressive military actions by one country against another, interference by one country in another country’s elections, intolerable human rights violations, or the illegal testing of nuclear weapons, economic sanctions are among the first foreign policy options discussed as a response. The United States, for instance, has twenty-six active sanctions programs against other countries, entities, and people.2

Yet, despite economic sanctions’ popularity as a foreign policy tool, their ability to deliver sustained impacts on target countries has been contested. The issues that have been raised to question whether economic sanctions “really work” are even more relevant today: Did they inflict economic losses on the sanctioned country’s economy? Did those economic losses put political pressure on public officials? Did they compel the sanctioned country to change its policies? A rapidly transforming global economy puts markets, trade, and investments in a continual state of adjustment and change. That means assessments of countries’ vulnerability to economic sanctions must be updated regularly, taking into account their interconnectedness within the global economy as the economy changes over time.3 To be effective, it is critical that the design, implementation, and measurement of economic sanctions’ impacts be properly calibrated to the economic realities of the moment, not the past.

In the absence of a comprehensive and contemporary assessment of a target country’s vulnerability to economic sanctions, it is easy to see how their intended impacts and actual consequences could fall badly out of alignment. Poorly designed economic sanctions will have poor prospects of attaining the foreign policy goals they were intended to help achieve. They also amplify the unintended and residual suffering of people and organizations caused by economic sanctions. For instance, citizens with limited political influence in the sanctioned country will suffer economic losses; vulnerable populations may suffer from lack of access to vital imported products; and small business owners located outside the sanctioned country but reliant on its imports and exporters for their own markets may suffer losses. Giving greater attention to what can be learned about a country’s vulnerability to economic sanctions and their likely impact by considering these questions through a business perspective could make an important and significant contribution to keeping sanctions in better alignment.

Drawing on a business perspective when assessing a country’s vulnerability to economic sanctions and their likely unintended and residual effects can reveal important and more nuanced factors that go beyond formal econometric modeling or identifying laws affecting trade and investments. Understanding how business is practiced in a given country and how those practices could be adapted to mitigate the effects of economic sanctions would inform the sanctioning country on better designs, implementation, and measures of the economic sanctions’ true impacts. Using a business perspective would also draw more attention to anticipating how the exit strategy could be executed as sanctions are lifted, making it easier for businesses and investors to reengage business partners in the previously sanctioned country.

Working to ensure a close alignment for economic sanctions between their anticipated and actual impact could be advanced through a public-private partnership. Engaging business leaders to share information about what they have learned about doing business in a given country, the potential impacts of economic sanctions using risk assessment tools and expertise, and the more informal ways in which businesses and investors might adapt to, or evade, the consequences of economic sanctions would be an invaluable resource for sharpening this vital foreign policy tool.

A Vital Foreign Policy Tool

Economic sanctions remain a popular foreign policy tool for several reasons. First, they can be designed and implemented quickly. Second, the initial consequences are immediate and tangible. Third, the rationale justifying their use as a response to unwanted international actions is easy to explain. Fourth, economic sanctions can be calibrated to respond to a relatively small or large international incident. Finally, sanctions provide an invasive yet non-military foreign policy response.

In addition, and perhaps the most compelling reason for their appeal, sanctions can be designed and deployed to achieve many foreign policy goals.4 The most typical foreign policy goals addressed by economic sanctions include:

1. Compelling another country to change unwanted policies by inflicting a level of economic suffering for a sufficient duration of time to make retaining the offending policy, including regime change, intolerable. An example is the sanctions against South Africa to protest its policy of apartheid.

2. Deterring another country from adopting an unwanted policy in the future by inflicting a level of economic suffering for action(s) already taken commensurate with the grievousness of the action. The economic sanctions against Russia for the annexation of Crimea fall into this category.

3. Denying another country and others access to resources and financing that would be used to advance an unwanted policy or practice. A prominent example is the economic sanctions employed against Iran’s nuclear weapons development program.

4. Denying another country access to financial assets that could otherwise be used as reparations for actions of the sanctioned countries. The economic sanctions against Iran that froze Iranian assets housed in the United States is one example of this practice.

5. Making a symbolic gesture to diplomatically isolate the sanctioned country but with no expectations that the economic sanctions will impact the unwanted policies. The recent sanctions against Russia for its interference with the US electoral process is an example.

United States Secretary of State Rex Tillerson chairs a United Nations Security Council meeting on the denuclearization of the Democratic People’s Republic of Korea at the United Nations in New York City, April 2017. Photo credit: US Department of State/Flickr.

Of course, any given economic sanction may be adopted with the intent of achieving more than one of these goals—and groups may interpret the goal of the sanctions, and therefore their ultimate success, differently. For example, the Russian annexation of Crimea provoked the US and European Union to impose economic sanctions. Some may view the sanctions as symbolic and therefore successful by having demonstrated a protest; others may view them as purposeful with the goal of compelling Russia to withdraw from Crimea and would therefore view the sanctions to date as unsuccessful; and others might view the sanctions as a deterrent to future similar ventures, their success being difficult to assess.

Economic Sanctions ‘Out of Alignment’

It is surprising, given the strong enthusiasm for economic sanctions as a foreign policy tool, that their ultimate success is an unresolved topic of debate. Long-term economic sanctions imposed on South Africa in protest of its policy of apartheid are viewed as having been successful, while the decades-long sanctions imposed on Cuba are believed to have failed. Sanctions on North Korea have yet to bring about desired changes, but the sanctions on Iran appear to have been a significant catalyst for the recent agreement meant to prevent it from acquiring nuclear weapons capabilities. The success of sanctions against Myanmar and Russia is contested.

Compiled and designed by Ole Moehr, Assistant Director of the Atlantic Council’s Global Business & Economics Program

Economic sanctions’ greatest asset—their ability to be tailored to advance many foreign policy goals—helps explain, in part, why there exists both such widespread consensus on their usefulness and disagreement over their success. Any given sanction may be supported by different groups, each with its own perspective on what goal(s) is meant to be achieved. An economic sanction may be adopted without a genuine consensus over its goals: supporters agree some action should be taken, but disagree over the intended results. Thus, disputes about the success of any given economic sanction may be embedded in its authorization right from the start. These same disputes can also impede the timely lifting of sanctions. If the sanctioning country cannot adequately demonstrate that the sanctions’ goals have been achieved, ending sanctions is likely to be equated with a defeat for the sanctioning country. As a result, economic sanctions can linger and remain in place even when they no longer advance the sanctioning country’s interests.

In addition, economic sanctions can generate negative results for the sanctioning country: political backlash against the sanctioning country can thereby strengthen, not weaken, the power of the sanctioned country’s leaders; sanctions can prompt new alliances between the sanctioned country and adversaries of the sanctioning country; and sanctioned countries can impose counter-sanctions on the sanctioning country. Finally, economic sanctions can result in economic losses for the citizens and businesses of the sanctioning country and its allies through lost business relationships, trade, and investment.

Efforts to objectively assess the success of any given economic sanction and apply the lessons learned to designing future sanctions is a retrospective undertaking. Typically, such assessments occur many years after sanctions have been imposed and/or terminated. Only then can observations be made about the sanctioned country’s response, the sanctions’ full economic consequences, and the importance sanctions played among all the other factors influencing events and policies. But even the extensive research on the consequences of economic sanctions’ success has produced assessments that are mostly unsatisfying and problematic.5

A key asset of economic sanctions is how quickly they can be put in place. In the rush to design and adopt an economic sanction quickly, however, they can be designed poorly if information about a country’s vulnerabilities is not readily available, easily accessible, and recently updated. There will always be unanticipated consequences and a level of collateral damage that is unavoidable when economic sanctions are deployed. Efforts have been made to make economic sanctions smarter by targeting specific groups and individuals within sanctioned countries and those that live and operate transnationally. Yet there is plenty more to be done to ensure that the intentions and actual impacts of economic sanctions are properly aligned. One good place to focus is on how a globalizing economy is continually redefining countries’ vulnerability to economic sanctions, making it easier for countries to evade the intended consequences of economic sanctions, and making it more likely that the sanctioning country’s own people and firms—and those of its allies—will experience unnecessary losses and suffering.

As nations find themselves increasingly interwoven in an integrated global economy, discerning the success of economic sanctions ex post will become only more difficult. Sorting out what role sanctions played in foreign policy successes and failures and everything in between will be ever more challenging and difficult to discern. A re-emphasis on the importance of well-designed economic sanctions, which instill confidence ex ante that they will perform as intended, is the best way to ensure economic sanctions remain a vital foreign policy tool.

Russian Federation President Vladimir Putin (L), Federal Republic of Germany Chancellor Angela Merkel (C) and Ukrainian President Petro Poroshenko (R) meet in Minsk, Belarus to discuss the Ukrainian crisis and sanctions against the Russian Federation, February 2016. Photo credit: Karl-Ludwig Poggemann/Flickr.

The Global Economy and Economic Sanctions

The basic goal of economic sanctions has not wavered over time: to attempt to deny access to markets, trade, and financing to the sanctioned country so it causes sufficient economic losses to compel a change in policy. For example, the US colonies adopted nonimportation and nonexportation sanctions as a response to the Stamp Act of 1765 and created sufficient suffering from lost trade that English merchants pressured the British Parliament to repeal the offending tax. However, the realities of today’s global economy little resemble eighteenth-century international commerce and trade relations.6

The globalizing economy poses significant challenges to designing and deploying successful economic sanctions. Increased interconnectedness of countries and their economies through markets, regulations, voluntary standards, trade, commerce, and investments has created a complex, integrated global economic network. While some argue globalization is reversing,7 the scale, volume, and efficiency of international trade have all continued to increase since the 1970s. Today, trade volume has regained its pre-2008 crisis peak level, and the World Trade Organization predicts trade growth should accelerate 2.4 percent in 2017.8 It has become increasingly possible and profitable to trade across great distances and in parts of the world that previously had limited access to international transportation systems and distribution networks. In addition, the global economy has ushered in greater volatility of commodity prices, interdependence of nations for economic growth, integrated global supply chains that enwrap the earth, diminished government control over their domestic fiscal and monetary policies, and global corporations operating, partnering, and distributing products and services in markets across the globe.

Fluctuating Vulnerability to Economic Sanctions

Vulnerability to economic sanctions is defined as a country’s susceptibility to sustained economic losses resulting from an economic sanction.9 However, the economic activity disrupted in a sanctioned country does not accurately capture actual impact. Instead, it requires quantification of the economic activity that cannot be recaptured elsewhere at some future time by the sanctioned country. Therefore, countries that can recapture lost economic activity in less time and at lower cost are less vulnerable to economic sanctions. The actual economic losses are determined by the unique circumstances of any given country: its economic size, the types of goods or services it trades, global supply of and demand for its goods and services, elasticity of substitution effects, the structure of its economy, its propinquity to markets, its geographic attributes, and so forth.

It is also important to recognize that under any circumstances, a country’s vulnerability today may change in the future. Clearly, the recent rapid decline in world crude oil prices from about $100 to $50 per barrel over five months changed many countries’ vulnerability to economic sanctions dramatically. In a globalized economy, factors that affect a country’s vulnerability are more volatile and less predictable: commodity prices, recessions, technological breakthroughs, new products and services, interest rates, extreme weather, natural disasters, and public policies are among the factors that fuel a continual recalibration of a country’s vulnerability to sanctions. The consequences of economic sanctions at the time they are issued could be very different five years, one year, or even six months into the future.

More Opportunities to Evade Sanctions

Many sanctioned countries can make adjustments— such as changing trading, investment, and business partners—to avoid the sanctions’ effects or pass them along to others. For example, under the terms of the economic sanctions against Iran starting in 1979, the sanctions’ effects were mitigated by Iran’s expanding trade with other countries. For instance, exports from sanctioning countries were redirected to the United Arab Emirates, which in turn re-exported those same products to Iran. More generally, global products and commodities, banned as exports from the sanctioned country, can be redirected to a secondary country in need of that product, and the exports that were slated to end up in that secondary country can be redirected to the sanctioning country. The more commodified the product, the easier it is to reconfigure global trading networks. The global petroleum market is one good example of where this occurs.

In a globalized economy, sanctioned countries have many more opportunities to evade sanctions. More countries are importers and exporters of more goods and services. This creates more opportunities to expand or create new trading partnerships in response to economic sanctions—some openly and some through black markets. The number of global sources for investments and debt has expanded as well. They can provide financial support to offset the cost of economic sanctions, including through “dark pools” of global financing that exist outside the reach of domestic regulations or international policing.

Greater Likelihood of Unintended and Residual Damage

A country’s economy is the typical unit of analysis for assessing the effects of economic sanctions, but sanctions also affect cross-border commercial transactions conducted by citizens, businesses, and governments outside the sanctioned country. Sanctions are directed at the fortunes of the sanctioned country’s people, businesses, and state-owned enterprises, yet they can have profound effects beyond the economies of target countries. Firms that trade with or own, operate, and/or market their businesses in the sanctioned country but are located in the sanctioning country and its allies will suffer as well. Some of these losses can be projected, and well-designed economic sanctions would minimize these effects where possible.

But economic sanctions cause unintended and residual damage as well. Global commercial interconnections are a complex web of relationships and dependencies. Imposing economic sanctions has consequences beyond those intended in the sanctioned country and their known commercial partners. Over time, adaptations and accommodations are made, responding to economic sanctions that affect business activity well beyond the sanctioned country’s borders. A more robust accounting of potential unintended consequences is needed. Employing a business perspective is one way that could contribute to a more comprehensive assessment of economic sanctions’ potential impacts—both anticipated and unintended.

A Business Perspective on Effective Economic Sanctions

Designing economic sanctions to achieve a specific and sustained economic loss in another country will always be challenging. However, the characteristics of the complex global economy that present so many challenges to designing successful economic sanctions are nonetheless the same ones that offer opportunities to make them a powerful and effective foreign policy tool. The interconnectedness that creates options for evading economic sanctions can also make industries within a country highly dependent on business sectors in other countries. Business partnerships between global corporations and complex global supply chains can generate attractive business value, but they can also put firms at risk—particularly when few or no alternative products are available—when these economic relationships are disrupted.

Examining business relationships—within and across countries—and their interdependencies can reveal a nation’s vulnerabilities to economic sanctions. However, it is not the relative level of trade or investment that reveals vulnerabilities to economic sanctions; it is the sectors within which this economic activity takes place that will describe how many realistic options a sanctioned country has to evade sanctions. Using a business perspective provides a more disaggregated assessment of how to design economic sanctions to exploit a country’s vulnerabilities in a global economy and be more effective. It also helps identify other countries as strategic partners to join in coordinated multilateral sanctions. Recognizing that business relationships will differ between firms in a sanctioned country and firms in other countries allows for precisely designed sanctions—each sanctioning country addressing specific sectors—coordinated across a coalition of countries. Foreign policy considerations will determine which countries may participate in an economic sanction, but using a business perspective could help identify other countries whose participation would increase the effectiveness of the sanctions.

Drawing on a business perspective when designing economic sanctions would direct more attention to building in clean exit strategies from the outset. Of course, when sanctions are adopted, the focus is on blocking economic activity, not stimulating it. However, once the decision is made to revoke an economic sanction—whether it is months, years, or decades after its adoption—it is to the benefit of the sanctioned and the sanctioning countries to reestablish “business as usual” as soon as possible, particularly when the removal of sanctions has been negotiated, and the resulting economic benefits are a rationale used to support the policy changes that lead to an end to sanctions. Actions that will expedite reengaging business activity quickly post-sanctions should be identified and specified in advance as key components of any economic sanction.

Barriers to reestablishing business post-sanctions exist in both the sanctioned and sanctioning countries. While economic sanctions are in place, new business relationships and partnerships will be established to accommodate or evade the impact of sanctions by businesses in the sanctioned and sanctioning countries. Over time, markets and industries will evolve, new leadership will take positions in industry and government, new standards and products will be developed and others discarded, and government economic policies will change. Reengaging in postsanctioned countries is a resource-intensive effort in which success is not guaranteed.

Sanctions may be repealed in part or in whole. Firms wishing to do business in the post-sanctioned country need guidance to ensure business contacts and discussions conform with the new circumstances. Interpretations of the laws and the new rules of engagement need clarification. Timely and unambiguous rulings—formal and informal— by government officials are needed. A business perspective can help highlight and anticipate the potential areas of concern and issues that will arise post-sanctions that could impede swift reengagement.

Retooling Economic Sanctions

Economic sanctions can be an effective tool of foreign policy, but more attention must be given to the sophistication of their design commensurate with the complexity of the global economy they intend to influence. That means having an overall vision for what the optimal economic sanction should accomplish:

Economic sanctions should be designed to inflict a prescribed amount of economic loss, for a specified period of time, affecting specific constituencies at a level sufficient to achieve the identified foreign policy goal(s) with the least amount of unwanted harm on other constituencies;

and then designing each economic sanction to comport as close as possible with that standard.

Given the multiple aspirations for economic sanctions, there will be trade-offs and a balance needs to be struck. Sanctioning countries might tolerate more unwanted but unavoidable economic losses on other constituencies to support an important foreign policy objective. They would be less tolerant of such collateral damage in cases where sanctions are adopted as a symbolic gesture.

Striving to meet this standard for economic sanctions— and having a better idea in advance of the extent of their likely effectiveness—would strengthen support for their adoption. But meeting this standard would require several changes to the conventional approach to designing economic sanctions. First, it would necessitate high-quality and up-to-date information and modelling of a country’s greatest vulnerability to sanctions, including consideration of financial and business assessments, not only economic analyses. Second, it means sanctions need to be designed to be dynamic, not static; as the global economy changes, so should the sanctions, automatically modifying their targets and terms of restrictions to maintain the level of economic losses sought. Third, designing sanctions to follow the rhythms of the global economy may need to be more accommodating of businesses that also need to adjust to changed economic sanctions, allowing for and anticipating the time needed to make such adjustments. Fourth, consideration of the trade-offs of unilateral versus multilateral sanctions and the value of greater coordination and alignment of sanctions among multiple countries will be needed. Fifth, sanctions need to be designed to have their most comprehensive effects felt immediately, not incrementally. Finally, economic sanctions should anticipate an exit strategy so their termination can be done speedily, and include the terms for how businesses can begin to engage in a post-sanctioned country.

Conclusion

A better understanding of the potential efficacy of economic sanctions in any given situation is in everyone’s interest. Key to the success of economic sanctions is a design that results in the level of economic losses needed to accomplish the foreign policy goals of the sanctioning country with as little resulting collateral harm as possible. Poorly designed sanctions weaken the prospects for their success, cause unnecessary and unintended losses, and hinder efforts to reengage business in previously sanctioned countries. Ensuring economic sanctions are properly designed requires a sophisticated understanding of global economic markets, global supply chains, and global business.

With the election of Donald Trump, an opportunity presents itself to take a fresh look at ways to make economic sanctions more effective. Better designed economic sanctions that are more closely aligned with their foreign policy goals are one promising approach. But better designed economic sanctions would be even more successful when considered from both the policy and business perspectives. Building stronger public-private partnerships that can support efforts on behalf of well-designed economic sanctions can make important contributions to achieving this goal.

Economic sanctions are not a foreign policy option; they are a tool for accomplishing foreign policy. Like other tools, if they are blunt or misdirected, their prospects for success are limited and the risks of creating avoidable and/or unintended collateral damage are enhanced. Economic sanctions should be adopted and deployed when they are effective, and rejected when they are not: developing the analytics sophisticated enough to recognize the difference ex ante, not ex post, should be a top priority for those constituencies that affect, and are affected by, economic sanctions. Making economic sanctions a tool of foreign policy with sharper edges allows them to be used more precisely, purposefully, and successfully. 

Notes

1 Laura Smith-Spark, Elise Labott, and Zachary Cohen, “Tillerson: US to Maintain Ukraine-Related Sanctions on Russia until Crimea Is Returned,” CNN, March 31, 2017, http://www.cnn.com/2017/03/31/politics/rex-tillerson-russia-ukraine/.

2 “Sanctions Programs and Country Information,” US Department of the Treasury, https://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx.

3 Vulnerability to economic sanctions is defined as susceptibility to economic loss resulting from an economic sanction. Hossein Askari, John Forrer, Jiawen Yang, and Tarek Hachem, “Measuring Vulnerability to US Foreign Economic Sanctions,” Business Economics 40, no. 2 (2005): 41-55.

4 “While many economic sanctions target organizations and individuals, and much of the discussion is applicable to those instances, country-level sanctions are the focus of this brief.”

5 Johan Galtung, “On the Effects of International Economic Sanctions: With Examples from the Case of Rhodesia,” World Politics: A Quarterly Journal of International Relations 19, no. 3 (1967): 378-416; Gary Clyde Hufbauer, Jeffrey J. Schott, and Kimberly Ann Elliott, Economic Sanctions Reconsidered: History and Current Policy, Volume 1, Peterson Institute, 1990; Robert A. Pape, “Why Economic Sanctions Do Not Work,” International Security 22, no. 2 (1997): 90-136; Robert A. Pape, “Why Economic Sanctions Still Do Not Work,” International Security 23, No. 1 (1998): 66-77; David Cortright and George A. Lopez (eds.), The Sanctions Decade: Assessing UN Strategies in the 1990s, Vol. 1 (Boulder, CO: Lynne Rienner Publishers, 2000); Hossein G. Askari, John Forrer, Hildy Teegen, and Jiawen Yang, Case Studies of US Economic Sanctions: The Chinese, Cuban, and Iranian Experience (Westport, CT: Praeger Publishers, 2003).

6 Hossein G. Askari, John Forrer, Hildy Teegen, and Jiawen Yang, Economic Sanctions: Examining Their Philosophy and Efficacy (Westport, CT: Praeger Publishers, 2003).

7 Noah Smith, “Globalization Goes into Reverse,” Bloomberg, October 26, 2016, https://www.bloomberg.com/view/articles/ 2016-10-26/globalization-goes-into-reverse.

8 “Trade and Tariff Data,” World Trade Organization, https://www.wto.org/english/res_e/statis_e/statis_e.htm.

9 Askari, Forrer, Yang, and Hachem, “Measuring Vulnerability to US Foreign Economic Sanctions.”

About the Author

John Forrer is a nonresident senior fellow at the Atlantic Council’s Global Business & Economics Program. He is the director of the Institute for Corporate Responsibility (ICR), as well as research professor at the School of Business and associate faculty at the School of Public Policy and Public Administration at George Washington University.

Book Release "The Emergency" by Dr.Subramanyan Swamy

Dr Swamy concluding remarks at the Book Release on The Emergency at Gandhi Nagar, Gujarat