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Us. Today session is an opportunity to speak on the deterrents and signaling effect of financial sanctions, well and as many of you know well, economic u. S. Sanctions and economic tools which in general terms to those, named people or entities that should have access to the u. S. Financial system of those new people are entities to pose a threat to u. S. National security and the use of sanctions has become central to the exercise of u. S. Foreign policy and National Security over the last decade and in fact i would say, sanctions are a favorite policy tool of this administration in particular the top. The topic for todays session is also the subject of a report and i got jordan good to my left and i cowrote and we are releasing today, those of you here joining us in person will have seen that when you came in. Do not forget to take a copy, of the report includes findings of hours that came out no workshop and signaling and deterrence of sanctions and put it by the Franco Family Foundation and coexist with seen several weve had an association with which jordan says he didnt leadership role. You can be in the session today with the attention of achieving a better understanding of how the u. S. Administration and congress use sanctions for signaling and deterrents and recommendations offer reviews a specific recommendations for how to improve this signaling and determined value for these instruments. Some of you may have seen over the weekend the treasury secretary and the newsroom saying that sanctions are, and i am quoting, an important alternative to World Military conflicts so, i think that its helpful took when it comes to understanding what the Trump Administration is signaling when it uses sanctions and it gives us a lot to think about our sanctions minutes. Our sanctions on our sanctions measures in terms of military conflict . How involved is the military and thinking about their use . Sometimes hes and sanctions have been used both in times of peace and in times of war and relatively recently their views both against competitors, economic competitors, as well as those that might pose a military threat to u. S. National interests. The topic of deterrence and signaling for sanctions is not merely a topic that we found interesting as a matter of Public Policy and research, but its also something that we believe demands serious and careful thinking in order to correct and updates on misconceptions about what sanctions can and cannot do, and therefore to bring greater credibility and utility to the use of this tool. So let me just unpack that for a moment. I will say a couple of things that we will move into conversation with the rest of the panel that we have a right here today. One thing jordan and i offer in the paper that we wrote strong, and something that i feel strongly is that sanctions often have more potential to deter unwanted actions and then to compel policy reversals or regime change, the report that latter point is one that david is made this in a number of written pieces of sanctions. The greatest impact of sanctions sometimes involve the signals, power really the signal, as powerful as they may be that they convey about the likely future policy, its essential, u. S. Policy steps, it is such a u. S. Policy officials clear communicate clearly turned to the targets of sanctions and everyone else who is watching the goal, both the goal and the intent of the measures, so that they are not misunderstood messaging, and when there is a mixed messaging, public to or inadequate public discussions, about changes in sanctions policy, including around the availability and the process for delisting and that something that i hope we will have a chance to discuss in depth in this conversation, the credibility and perhaps even the strength of this policy tool suffers. Also mixed messaging on sanctions can confuse or seriously put off u. S. Security allies, complicating how they engage with the United States over shared National Security and Foreign Policy interests and threats. And for people who have worked in a diplomatic role, that is something that you had to look at front and center and unfortunately, in challenging those relationships, with allies and partners, there can be real effects on political and defense dealings, between the United States, and those, those close counterparts. So by the way, i just want to say, i dont offer that view about credibility problems, associated with sanctions, to diminish the bright and dedicated and clearly very diligent people who work on sanctions, in a Public Policy role, i think it is because of their excellent work that sanctions are as popular and as often used as they have become, rather because this tool is maturing, theres more, and more of a need for thinking about strategy and coordination of sanctions, with other, the foundational military tools of u. S. Deterrents. And now is the right time to discuss the challenges that surround sanctions and give more definition to the theories of use, including for deterrence, the terms for escalation. And for deescalation. And how to signal about the use of sanctions policy. So to do that, we have the people who are with me up here on the stage. These are people who, as we were thinking about, it we particularly respect for their thoughtful and insightful views on this topic, and weve asked them to bring to bear their experience working on sanctions policy, from the Treasury Department, as well as from the Defense Department and in the Intelligence Community, that experience to bear on this conversation. And jordan and i, to speak for both of us, have been very grateful for their feedback and put together the report we are releasing today. So the format for todays conversation, i am about to ask for some thoughts from the panelists up here. Well have the conversation together and then about halfway through the event, ill turn to the in person audience for your questions and your comments and your bright ideas and well explain to you how you can participate in the interactive exercise. You may have seen some of the pieces of paper outside, numbered one through seven, we will explain to you what that means in a minute. And just for a final reminder this event is on the record and it is being recorded. Let me introduce to my immediate left jordan tam, my co writer and friend. Director of the project. And susanna blume, senior fellow and defense director here. My colleague. And former deputy chief of staff for programs and plans for the deputy secretary of defense. Next, david cohen, who is currently a partner at will mer hail, formally the Deputy Director of the Central Intelligence agency and before that the former undersecretary of treasury for financial intelligence. And on the end, eric, director at the financial integrity network, also senior director at the center for economic and financial power, and also, formally a Senior Adviser to the undersecretary of treasury for terrorism and financial intelligence. So we will start with jordan to kick us off. And National Security strategists and Foreign Policy planners face many challenges. They are busy people. Why should National Security and Economic Policy professionals focus on sanctions as a form of deterrence, and what will that do to alter and improve those sanctions as a specific policy tool, and u. S. Deterrence planning more broadly . Well, thanks, first, i also want to thank the Frankel Foundation for its support and thank the center for american security, for hosting and convening this event, and also thanks susanna, david and eric for their really valuable input on this project. So why we thought it was important to focus on this topic, sanctions, as liz has mentioned, have become the tool of choice for addressing Many International problems. From weapons proliferation to human rights violations, violations of territorial integrity, interference in u. S. Elections, and in many cases, as was also mentioned the greatest potential impact of sanctions can be in the area of deterrence. Deterring other countries from engaging in unwanted behavior. For instance, dissuading a country from developing a nuclear weapon, from invading another country, from conducting ethnic cleansing, and to think of many other examples. And when used well, sanctions and sanctions threats can send really important signals that if another country does take a certain action, the u. S. Will impose certain costs on it. And when that signal is clear, it can deter the other country from taking that step. And it is also important to focus on this because economic coercion is central to economic competition in the 21st century, yet the u. S. Isnt integrating economic instruments of power with other instruments of national power, diplomacy, the military, foreign aid, as well as it could, and one area where we think this problem is evident is the relationship between economic and military means of deterrence. And the basic problem here is what we have lacked a clear understanding of how economic and military instruments Work Together, as tools of deterrence. Aspects of the u. S. Military posture are clearly meant to deter aggression by other countries, you can think of troops that the u. S. Has stationed in europe or east asia. Clearly theyre in part to deter potential aggression by russia, north korea or another country, and military strategists have developed clear models of conflict escalation, which sometimes get referred to with the shorthand of an escalation ladder, the basical idea being coercion could start from threats, and go up a ladder, to limited kinds of military action, to various kinds of devastating military action. But economic coercion has remained largely absent from these kinds of conflict escalation and deterrence models, even though it has become so central to u. S. Foreign policy and even though sanctions sometimes are more devastating than acts of military force, as financial sanctions in particular have become more and more powerful, they can wreak havoc on other countrys economies that may be greater than the type of havoc that can be wreaked by certain kinds of military action, and the problem of conflict models not taking economic coercion into account weakens the ability of the u. S. To use sanctions effectively as a tool of deterrence, and we argue it increases the risk of unintentional conflict escalation. So for instance, imagine if it is unclear whether certain acts of military coercion represent escalation from a certain action of economic coercion. The target of course, may misinterpret what the u. S. Is doing, may misinterpret u. S. Actions and perceive escalation when the u. S. Didnt actually intend to be escalating or conversely might fail to perceive escalation when the u. S. Did intend to be escalating in a conflict. And clarifying the relationship between military and economic coercive acts can prevent these kinds of misperceptions. Also clarifying this can help targets understand when the costs of flouting an International Norm are likely to outweigh the benefits of doing so and able to adjust the behavior accordingly. So with that as our rationale, we, in the report, propose what we call a whole of government escalation framework, and we propose that the u. S. Government develop a whole of government escalation framework that incorporates both military and nonmilitary means of coercion. And this is not to suggest that we think economics should become a war fighting domain. Or that we think the u. S. Sha be using sanctions more, in fact we think the u. S. Should be quite judicious in its use of sanctions. But instead, our goal is for deterrents and escalation to catch up to the reality of contemporary International Competition in which economics are being used as a tool of coercion as much as military and other instruments, and so in the report, we sketch a simple version of a whole of government escalation ladder, and weve placed seven rungs on this ladder, going from private threats of coercion on the bottom, all the way up to catastrophic action and intervening steps include public threats, thats the second rung, harassing actions, the third rung on this ladder, damaging actions, highly damaging actions, devastating actions, and then catastrophic actions, are the seven rungs, the labels weve used for them, but the important idea here is that military and nonmilitary threats or actions would be placed on a rung on this ladder, based on their expected impacts with the impacts of military, economic and other nonmilitary actions such as cyberattacks, weighted on a single scale, so they can be compared directly to each other in terms of what kinds of impacts they might have. Now, developing a fully fleshedout whole of government escalation model would be a major undertaking by the u. S. Government, but we think it would be very worthwhile. So we propose that the National Security council establish an interagency review that would be designed to develop a new whole of government escalation framework, and the main task of this review would be to weight the severity of various military and nonmilitary actions, including economic sanctions, based on the full range of their anticipated effects. And the review should solicit input from outside experts and International Allies who think dialogue with important on this to develop a common understanding and approach, and then once this framework is developed, the National Security council could integrate it into National Security planning and the National Security adviser could announce it publicly so that other countries, competitors, could understand it, be aware of it and then be more able to interpret u. S. Actions correctly and be more likely that the signals that the United States is indintending to send to other countries would be received as intended. So, liz mentioned this design exercise, so wed like to get your input on this as well, and so some of you should have received a postit note when you came in, if not, there are more post. Postit notes outside. Wed like you to take a moment during the course of the panel to write down a coercive action or measure and think about where you might place it on a seven rung escalation ladder, and then at the end of the session you can put your postit note on one of the seven large papers outside which represent each of these seven rungs based on where you think it should go, and were interested to see what everyone comes up with on that. Thank you, and i will just say, you dont need to just to add on to this you dont need to sign it, and you can create multiple ones and if you feel torn about whether a particular example should live in one category or another, you could write two and put them in both. This, for us, is actually a way to try and get out a question we have which is really the premise of what were doing here, how do people think about the severity of certain measures . Are we communicating clearly . Rather, is the u. S. Government, and, frankly, observers, communicating clearly about them . Them . Are they understood . And looking out at some of you who are here with us today and knowing some of the issues or concerns with which you deal in your own research or government or business work, i thought of a couple that i might just offer just to get you thinking about this. And that i might write down here. So, for example, one that i thought of, and by the way, these are entirely in my mind realistic examples. Theyre pursuant to existing sanctions authorities or theyve been discussed by congress or by the administration. So one would be sanctions on primary issuance of sovereign debt and secondary trading of sovereign debt, russian sovereign debt pursuant to concerns about russias election interference. This is an idea thats been circulating, exists in congressional draft legislation, would have a meaningful effect on emerging market trading globally. So where would you put that . Heres another one. Sanctions on Chinese Communist Party Officials involved in crackdowns and protests on protesters in hong kong pursuant to authorities human rights authorities, the new hong kong law passed and signed into law by the president a couple weeks ago. So, feel free to think about what concerns you and where youd put that there. Okay. So now were going to move on to susanna who is our resident defense policy expert on this panel. Thank you for being here and speaking to some of these issues based on your experience in defense planning and working with defense policy officials. You are familiar, of course, with the way that that exercise works within some, many defense circles, including thinking about management, escalation management, deescalation when merited. I wonder if youd please talk to us about how, in your experience, the Defense Community thinks about sanctions and talks about sanctions, even thinks about sanctions from a planning perspective, and how you believe defense planners can use fully adapt thinking about conflict escalation to and include appreciation of economic coercion as a tool of u. S. National security. So, in case anyones playing which of these things doesnt long belong belong, ill just cut to the chase. Its me. Thanks for inviting me into your circle. You know, its something that we here at cnas think about a lot is the fact the competition that we find ourselves in, competition with china, competition with russia, has many, many different aspects. Military aspect being only one. Technology, economics, diplomatic, it exists across all of these spheres and yet in the policy community those different spheres are siloed. They dont interact very well. Right . Thats what i was so excited when liz asked me first to look at the paper and be on this panel today. Its a great opportunity, and i would be remiss if i also didnt mention our forthcoming report on competition with china that actually does something a little bit different and addresses all of these different afferent aspects of competition together in one place. So, so the escalation framework when you think about competition, you know, with an adversary should also address all of those things as jordan just outlined. Whole of government approach to thinking about escalation in the competitive skpaspace. The department of defense definitely has an appetite for this. When i was in dod, i cant tell you how many meetings i sat in where the war fighter, person charged with planning for the war, would come into the pentagon and youd spend, you know, twothirds of your time talking about what the state department should be doing or what should be happening over here then youd have, you know, 20 minutes left to talk about the war. You know, the actual use of the military instrument. And as frustrating as that was in the moment, it is an indicator that, you know, there are people a across the Defense Community who are really hungry to have this conversation and eager for an interagency framework to allow us to plan together in how were going to manage these competitions. You know, there are some examples of interagency planning principally between dod and state. I have to tell you, its very, very hard. We speak fundamentally different languages, have very different planning cultures and very different ways of thinking about competition and conflict. So, i dont mean to make it sound easy, but there is definitely a robust constituency on the defense side that wants to talk more about this, and it would be helpful if they were talking to experts in it as opposed to each other only. Right . Ill just say a little bit more about whats happening on the military side in terms of thinking about escalation. You know, our kind of contemporary thinking about escalation has many of its roots in the nuclear space, and so i feel like thats a context i always have to offer, right, when we look at kind of expanding these frameworks to conventional military forces then even further to things like Economic Policy or sanctions. That not everything translates nicely, but it doesnt mean that there arent valuable, interesting kind of concepts or pieces of concepts that you can kind of work into your thinking. The u. S. Military in the postcold war period was used to having escalation dominance, meaning the u. S. Could pursue a maximally aggressive military agenda, visavis many Different Military adversaries. Thats not the case anymore when were looking at competitors like china and to a lesser extent like russia, and another senior fellow at cnas, chris dougherty, has recently done some writing on that if anyones interested, as part of his project on a new american way of war. So theres a need to kind of reinvigorate our thinking about escalation control and escalation dominance, and thats happening in the Defense Space and i think the time is actually right, again, to open the aperture a little further and invite other National Security members, the interagency community, into some of those conversations. The only other kind of framework thing ill mention before we move on is the idea of deterrence by denial versus deterrence by punishment. And, again, because of kind of the changing nature of conflict and the evolution of threats in the military space posed by china and russia, dod is looking very, very carefully about deterrence by denial which means stopping an adversary from achieving its objective or making them believe ahead of conflict that you can do that and, thus, deterring them from trying it. I think when we look at sanctions in the economic space, were more often talking about deterrence by punishment. Right . If you try that, you may succeed but were going to make it hurt, right . You know, its going to be so painful that youre going to rethink making the attempt even though its not a direct kind of blockage or prevention of the adversary goal. And so thats another kind of dynamic that i think is important to keep in mind as were thinking through this in an integrated framework. I cant help but make a couple of comments about the parallels i see, so thinking about in the history of sanctions, some of the first and still most important sanctions, authorities and programs that exist were also born out of a concern about nuclear proliferation, so if were thinking about iran and north korea, these are still some of the oldest authorities, mostused authorities, and the thinking, methodology around their use, such as it is in this domain, has parallels here, thinking about escalation and sending a signal that i think is characterized by much less theoretical work around that which is one of the reasons why we started this project because, for example, when it comes to the Global Financial system, the u. S. Still does have escalation dominance when it comes to using the dollar. However, some needling concerns have caused people to think about whether escalation by punishment, or escalation or rather deterrence. Deterrence by punisment or escalation control may actually be more useful concepts to guide this thinking. Can i just ask you one followup question which is to say, as youre thinking about opening the aperture exercise, particularly with regard to, say, russia and china, thinking about or planning for a challenge with those two strategic competitors, what are some initial ideas you have about what better coordination or communication would look like . Yeah, it was interesting that you mentioned in your opening remarks Steve Mnuchins comment that he views sanctions as an alternative to war which as you say, probably useful of an indication as where the administrations head is on these issues but wrong in my view. And so i think that, you know, for this for this kind of effort to be successful, i think clearly it requires leadership from the nsc. Again, having witnessed firsthand kind of previous attempts at interagency planning planningplanning needs not just leadership from the nsc but, you know, active kind of translation function. Right . And perhaps a willingness on the part of, you know, other federal agencies outside the Defense Department to kind of commit to planning frameworks that dod has used since the fact were always the gorilla in the room trying to impose the way we do business on others, but, you know, when you have decadeslong legacy of multiyear planning and and operational planning and strategic Level Planning that just kind of, theres more of a history, more practice, experience, muscle memory in dod than i think in many of the other agencies. I think those are some of the critical components to making Something Like this work. Thank you. David, i want to come next to you and mindful of the fact youve worked in treasury in digit different capacities, a legal and a policy capacity and a leadership role in the Intelligence Community thinking about many aspects of the work of that community and in the private sector, can you talk a little bit about signaling in particular . So, what that looked like and to the extent there was discipline around what the signal should be and a methodology about how to communicate that. And if you would five us an example or two to ground this in, you know, that the realworld grounding, i would appreciate that. Sure. And thank you to liz and jordan for involving me in this project. And cnas for hosting this. Yeah, i will give you some realworld examples of how we use sanctions for signaling purposes, but can i take a step back first to put this into a conceptual frame which i will admit while i was at treasury, never did. I think the broader theoretical underpinnings of how we were using sanctions in the way were thinking about it today. Escalation ladder, in particular, was, its a little bit of an overstatement to say we never thought about it, but we didnt think about it in a particularly rigorous way tied to a sort of broader framework to guide our actions, and i think this paper, one of the important contributions, is to say that this whole area of whether its sanctions or broader economic coercive tools or even more importantly, all the tools of of the expression of American Power need to be integrated in a more thoughtful fashion i think it as a really important contribution. I will say the so the fundamental idea behind sanctions is coercion. It is to change the behavior of the adversary, and one very effective way to do that, obviously, is to signal what the impact will be to that target if they continue to pursue activity or a policy that is contrary to u. S. National interests, u. S. Foreign policy desires. And for that to be effective, and i think we saw this, and ill talk a little bit about the iran example, i think it was actually the most effective use of sanctions and so you can draw some important lessons out of that. Sort of in retrospect about why sanctions were effective there. But for that signaling effect to be effective, the sanctions, whether you are threatening to impose them or threatening to increase them, need to be need to be clear. You need to be consistent. You need to be credible and you need to have a complement, meaning you have to have others who are saying the same thing. And if you muddle your message, if youre not clear about what it is that is the reason that youre imposing sanctions, then the target doesnt know what it needs to do to change its behavior to get the sanctions lifted. If youre not sending a consistent message that we are going to increase the pressure on you, were going to increase the sanctions on you unless you do x, something very very specific, again, the target doesnt know what it is that it or he or she needs to do to get the sanctions lifted. If youre not credible, if you cant say, not only will we impose these sanctions, but if you do what were asking you to do, we will undo the sanctions, youre not going to get the target to make the change that it needs to make to get the sanctions lifted. And if youre not if there isnt a complemented action, if you dont have others, particularly International Community, sending the same messages clearly, consistently, and credibly, the effect of the sanctions will be minimized so in the to take this from the theoretical into the practical and the historical, in the iran context, we tried to signal that sanctions would be ramped up in a variety of different ways. We did it in a sort of an your first level of your escalation ladder, the private messaging. One of the things that we did at treasury and the folks at treasury still do was essentially financial diplomacy. We would go around the world and we would meet with principally Financial Institutions but others as well in private, you know, behind closed doors and we would say to them, we know what youre doing, heres how we know what youre doing. With some help from the Intelligence Community on this. If you keep it up, this is what were going to do to you. And we did that with large Financial Institutions. We did it with small Financial Institutions. And it was enormously effective because it was a clear, consistent, credible, message that was being also provided by others in the International Community. We did that at a much more macro level with the government of iran. We were saying to the iranian government throughout that episode, were going to increase the sanctions on you, you know, with some help from congress, with some help from sanctions we would devise, but were going to increase the sanctions on you unless you negotiate in a serious manner the nuclear program. The number of times i said that line, essentially in nose exact words, i cant even begin to count because we were it wasnt just me. It was across the administration. Very clear, very consistent, and very credible message being delivered and it had an effect. It had an effect in part because it was also complemented by others in the International Community conveying the same message. That very clear signal about the escalation of sanctions as well as what the target, in this case, the iranian government could do to get the sanction relieved, i think made that whole effort a case study in the effective use of signaling and deterrence and the use of sanctions. Why dont i stop there . I have many other thoughts to add. Thats a Perfect Place to stop because i want to ask you a followup question along the following lines. First im going to ask you this, david, so heres a preview. Were going to fast forward to today and then im going to open it up to the rest of you after which well go to eric. So thanks for your patience. David, as youre thinking you were describing a time period which went through, lets just call that through 2012, 2013, so talking about a period through about that timing. Just go with me here. So now, thinking about where we are today and the kind of activities and messages that the u. S. Government is offering, again, with respect to iran, where are we . And i would be happy to share with you the particular nomenclature to refresh your memory although we were just talking about this, jordan mentioned it, out there, this is not a pop quiz on nomenclature, but if you were to offer a view about between private threats, public threats, all the way up to highly damaging actions, devastating actions, where are we now . Wheres the u. S. Government now on its activities and its signaling to iran . So, where we have been, right, the policy has been, you know, this maximum pressure strategy. It reminds me a little bit of spinal tap, you know, turn it up to 11 and, you know, that will be, you know, that will be great. But it is a maximum pressure strategy that has clearly had an Economic Impact on iran. You can look at, you know, whole series of macroeconomic indicators and the iranian economy is doing terribly in part because of the sanctions. In part, you know, this was always the case, the iranians, you know, are in some respects their own worst enemy when it comes to their economy, but theres no doubt the unilateral sanctions, you know, with the secondary sanction overlay, that the administration has reimposed since they withdrew from the jcpoa, the iran nuclear deal, have had an impact on the iranian economy, but i would argue that we are not nearly as effective in trying to achieve a Foreign Policy or National Security objective because what it is that were trying to do with our sanctions is not clear, consistent, credible, or complemented, and, you know, i wont go through each of those, but everybody, you can all, you know, fill in the blanks there. And that has that means that, you know, the pressure that were putting the iranian economy under, the and the sanctions are being imposed, arent achieving whatever it is that this administrations objective is in iran. I think part of the problem is its not clear what the administrations objective is. So, so i think in some respects you can do a good case study comparison between the iran the sanctions against iran in sort of the 2012, i would take it to 2015, time period, to the sanctions today and look at it through this lens of signaling and deterrence. Yeah. I find it meaningful that, in fact, the points you were making are about economic measures and the signaling associated with them. Obviously, the framework that weve introduced here can i make one other point, im sorry. Yes. You may. And then susanna, can i put this in question to you . Go ahead. So the other point is, and this goes back to secretary mnuchins comment that susanna mentioned, sanctions are also much more effective if they are one tool of a whole range of ways that the u. S. Is expressing its power and projecting power. And i think secretary mnuchins comment is actually, i think, enormously damaging to the u. S. Effort, particularly with iran. If you say, and i dont know if this is exactly what he was saying, but if you say, look, how were going to try to achieve our objective in iran, whatever that might be, is through sanctions and we are taking the military option off the table, its the same as saying were taking diplomacy off the table, were taking aid off the table, were taking Civil Society off the table, were taking, you know, covert action off the table. All of the different ways that the u. S. Can project power, to have an effective policy, sanctions cant be the only thing that youre that you are using to achieve the objective. And if the implication of what secretary mnuchin was saying, look, were going to try to solve this iranian problem just with sanctions and were not going to even think about military action, thats going to make it that much more difficult to achieve whatever the objective is of the administration with iran. So, susanna, let me turn to you then, eric, i was to ask you about effectiveness when it comes to deterrence and no hold sorry, eric. I want to take davids bait. You can do in a moment, but first sure. So im going to come at your question from the other angle and that is actually looking at the iranian reaction, which has actually been the kind of interesting, like, whole of government approach to escalation, right . The sanctions are hurting them, obviously, but, you know, they chose to respond with a military instrument, right, with these kind of very smallscale deniable attacks on commercial shipping, right . And so thats as well as the saudi arabia attack. Right. Exactly. As well as the saudi aramco attack. So, youve got thats interesting, right . You know, interesting that theyre kind of thinking about thinking about it in that way. But i have to agree that i think the administrations message certainly in the military lane as well has been muddled, which is antithetical to an effective deterrent approach, you know, in that you hear these, like, leaked reports of, you know, posturing the theater, resetting the theater, moving Additional Forces in and maybe theyre true, maybe theyre not. The president is something entirely set of considerations that seem to be going on for him, so i would say its pretty ineffective. Okay. Well, so, great setup for you, eric, to talk about effectiveness. So, actually, i have to give credit, if im not mistaken, when we were thinking about original topics here, i think the idea for thinking about deterrence and for signaling when it comes to sanctions may have actually come from you. Yeah. So credit where its due. How do you feel about having made that suggestion at this point . No, but seriously i feel great about it. Leveraging your experience in the private sector as well as within government and in academia, so youve come at this issue from a number of different perspectives. Can you talk a bit about effectiveness . So thinking about effectiveness, grading effectiveness, creating institutionalization around examining that idea when you are in government and now from the outside. Yeah, absolutely. Thank you, liz. Thanks to the panel. If i could respond to davids points first and then jump into that effectiveness signaling conversation, so i think that of the four cs that you mentioned on iran policy, so you had clarity, consistency, credibility, and complementary action, i think actually the administrations done, in my mind, pretty well, probably 3 1 2, maybe 3 of those cs have been fulfilled on iran policy. So, clarity, you did have secretary pompeos speech two weeks after the decision to withdraw from the jcpoa specifying what it expected iran to do in order for sanctions to be lifted. Consistently, consistency, excuse me. There hasnt been that much change from that perspective in over the last year and a half. Credibility, i dont think theres a great credibility gap with what this administration has clarified that its willing to do with economic pressure, anyway, on iran. Now, query whether or not that involves military, i think there is an issue there. Then complementary. Complementary. Yeah. I agree i think its, you know, its been a difficult slog, obviously, i know youve written about this, everyone up here has written about this, to get the europeans and allies and partners on board, but i also think the administrations objectives toward iran are twofold, and this gets to your question of deterrence by punishment and deterrence by denial. So on the one hand i think actually ill lie back and go with compellance. On the question of those 12 points secretary pompeo laid out, i think thats an objective and im not necessarily sure if the Economic Pressure Campaign can actually get us there, but i think theres a second objective which falls much more in the sense of compellance or deterrence by denial, which we worked on when i was at the Treasury Department is disrupting iranian Illicit Networks to make it more difficult for the regime to actually support the activities throughout the broader middle east so i think theres a sense, hey, both of these can work in conjunction. Thats sort of where i how my response would go to the iran question. On the question, the broader question about sort of signaling and effectiveness, i think the administration thinks about this in two camps. Or two parts. The first part is signaling related to actually the private sector because i think one thing we really tried to do to make these sanctions more effective when we impose them, and this is not just iran, this is more generally, is a twofold strategy for signaling to the private sector. One was providing the private sector with as much information as we could about the risks that they faced for doing transactions in particular jurisdictions or in highrisk areas. So, for example, if you ever look at Treasury Department designation press releases, i know, its kind of a nerdy sanctions thing to do, over the last couple year what youve seen about them is theres been an incredible increase in the amount of information provided, including with pictures and with graphics of illicit finance schemes and all these things. That was not an accident. It was very clearly intended to communicate to the private sector whos the front line for all this activity for compliance what types of bad actions we were seeing and tried to make sure that in addition to those press releases we also did or took concurrent actions. So its no accident that when you saw major actions against iran, venezuela, you likewise often have advisories that were issued by ofac, by the financial crimes enforcement network, about venezuela Money Laundering activity, shipping advisories, advisories about supplyside risks in the north korea context. So there was a real effort to signal to the private sector that this is the type of thing that were worried about and so you should, too, be worried about it for impact. The second element with the private sector, anyway, that was a huge focus, was the expectation of compliance. And so here i think sort of the seminal moment, an important moment, was ofacs release of the may 2019 sanctions compliance framework as a way to say to the private soektseconder we laid out all these risks for you, givingen you all this information, heres what we expect you to do. The whole purpose of both fof these same parallel moves was to create a greater degree of effectiveness of the sanctions we were imposing. Because we quickly recognized that its easy to screen names on a sanctions list, but sophisticated sanctions surveyors find a way to get around that. Thats on the private side. On the adversary side, the sanctions designation side, i think one thing the administration has really focused on has big this is not my term so i wont claim patronage over it, or, sorry, paternity for it, is the idea that there was no company that was too big to sanction. And i think that this was a signaling effort undertaken by the Treasury Department where there were conversations about we shouldnt pull our punches for doing after large targets because we dont want to send the signal that some companies are too big or too systemically important if theyre engaged in Illicit Activity that we dont touch them. In fact, the opposite was true. We wanted to send the signal specifically to those companies and to other companies, that we would be willing to touch you if you engage in this activity. You have the oleg designation. You had the petavasa designation. Most recently because it was in september, the costco implication. I think theres been a real focus in the administration on trying to send the signal to bad actors that, hey, theres nothing youre not too big to go after. I will say, you know, it obviously poses challenges in the way the administration has tried to deal with that through aggressive licensing and things like that, but we can talk about that a little later if you want. Im going to make a comment then im going to ask you all a question about turkey so you can start preparing yourself. Interestingly, in what you i think that what you were saying in calling out costco at the end of your list of really big entities to designate, so major shipping company, a subsidiary itself, large, but its a subsidiary of a Major Chinese shipping company, and in the sanctions world, that was a very big deal. Talking to middle east policy people or military folks and recall that that was taken pursuant to violation of iran sanctions, it didnt register. Yeah. No one i mean, and so this is an excellent, i had never heard of this. Yes. My point, specifically. So, this is yet another reason why having a kind of integrated framework because this was, in my mind, coming at this as a sanctions from a sanctions perspective, this was a very big deal in terms of escalating when it came to iran and it was news to me when, in talking with just heres one example, a variety of staff, congressional staffers, who work on middle east policy issues, their perception to the u. S. Response to irans attack on the aramco facilities was that the United States had failed to respond. So we have, to my mind, just an enormous disconnect that i think is a problem when it comes to demonstrating both to the target and to anyone else in the world what the United States is prepared to do about what it perceives as a security threat. Now im going to move on to turkey, and so as i was thinking about the example of turkey, here we have on this escalation ladder private threats so we know that if youve read any of the wikileaks cable you know there were plenty of those when it came to turkey as well as public threats and when you think about the fullscale sanctions imposed on several prominent turkish government ministries recently, that was clearly meant to be quite a significant action, responsive to turkeys incursion into syria and actions there. And theres a whole military history or context im going to ask you to sort of context. Im going to ask you to speak to it a little be it, susanna, there. The threatening language used by the president about well destroy your economy. Criminal indictments related to hulc bank and officials. Tariffs announced on turkey. And i dont to my mind, i think the criminal indictments against the largest state bank, thats systemically significant to the turkish economy as well as the tariffs, i dont think they registered for most defense thinkers. I dont know that sanctions people feel that the particular measures used were particularly welllinked to security or defense concerns. And what i want to ask all of you is to make a comment you can grade the u. S. Administration, if you will, or you can talk about what should be happening. So what kind of signaling or policy actions should be happening . And you can make a recommendation. And this is still live in that congress is still considering potentially very serious sanctions designations and also has quite a lot to say when it comes to oversight of the administration about the military posture in the region. And with regard to iraq and syria in particular. So would anyone like to start . No, you go. Susanna, you start. Forgive me if everyone here understands this, but, you know, turkey is a tough one for those of us in the Defense Community as both an original member of nato and the sworn enemy of a portion of the kurdish demographic that has been an absolutely critical partner in the counterisis fight. So and that this is, like, not a new thing for us. This has been a problem for many, many years. Kind of balancing these equities in the approach. Its very, very hard to do. No doubt. The other dynamic at play in the Defense Space is the turkish acquisition of Russian Missile Defense Systems which got them kicked out of the f35 program, right . And so that was, like, a very clear question of signaling and consequence, right, i mean, we told the turks what would happen if they pursued that weapons acquisition and they did it, anyway, and the thing happened. Although the thing that happened wasnt the sanctions designation that was required under catsa. Right. So, just saying. And, again, thats reflective of this kind of lack of lashup here on the u. S. Side, i think. So ill be honest, i have not thought long and deeply about sanctions as a response to the conflict between the turks and kurds because i think many of us in the Defense Community kind of get stuck at the initial issue which was if u. S. Forces had remained in place there, this would not have come to a head in the way it did, but ill leave it there. I give it a dminus. You wanted a grade, ill give it dminus. The reason is i was actually thinking more of where youd put it on this ladder. Keep going. Keep going. Because it was absurd, right . The sanctions threat, the threat to destroy the turkish economy for doing what the president told erdogan he could do. So to go back to his principles, you want to have a clear policy. Clear, consistent, well articulated, achievable policy that you put out there. The president by all accounts told erdogan ollieollie oxen freed. If you do that, were going to destroy your economy, but sanctions, sanctioned the Defense Ministry and i forget what the other ministry was we sanctioned and the ministers, but it was all for show. It was all bs. We were never going to follow through on those sanctions and it was like an utter misuse of sanctions and not surprisingly, two weeks later we withdrew them. And all that did is tarnish sanctions as a tool of u. S. Foreign policy. Thats my appeal. I would just add this case also underscores the importance of interbranch dialogue and communication. Like many sanctions cases, congress is playing an Important Role here. I think the reason why trump said were going to destroy your economy after turkey went into syria, he was getting criticism from congress from both republicans and democrats so then he adopted much stronger rhetoric toward turkey, but if the administration and congress had been talking beforehand and the administration understood well the point of view of congress, i think some in the Administration Officials probably did, trump, though, may have been freelancing here, but that kind of sudden shift in policy can be avoided if an administration understands where congress is and understands how congress is going to react to certain decisions that the administration might make or that the statements that the president might make. Ill play the contrarian again. Thank you, eric. Yeah, of course. I actually i think there was to davids point, i think there was a failure of deterrence in the first instance. I absolutely agree with that. And its not clear to me if a sanctions threat had been issued prior to the erdogan trump call, whether or not that would have made a difference, but i do think once that call happened, once erdogan went into northeastern syria, the sanctions threat did and the limited designation, so the executive order, itself, was incredibly broad in terms of the authority it confers. You can target anyone operating in any sector of the turkish economy, that includes secondary penalties so its very, very broad. I mean, you did have a ceasefire and there were not the humanitarian atrocities that were roundly thought or widely concerned would happen after the fact. So in that sense, you have initial deterrence failure. You have the threat and imposition of sanctions and demand that the turks cease doing something that you dont want them doing then a few days later, that situation basically comes to pass. So in my mind, theres something of a policy failure that occurred, but i dont necessarily see it as a failure of a sanctions threat or failure of a sanctions deterrence episode. Im going to ask one more question to the group of you and then id like to invite questions and comments from all of you, so you can be thinking about what questions or interventions you want to make. This next question has to do with congress, and as several of you have mentioned on a couple occasions so far, congress has quite a lot to say about sanctions, most of which does not become law, but it has a mouthpiece and the world is listening. And we have seen demonstrable, empirical empirical, evidence that those messages from Congress Move markets and deter investment and i would say though this is not empirical but anecdotal, perhaps, at least so far in my own thinking about this, condition hedging behavior or different Political Behavior when it comes to other countries. Our allies and our competitors. So, two parts to this. The first one for susanna, can you think about or try and analogize in the defense world, do we have a congress that is freelancing with its threats, with its defense threats, which may or may not translate into law or not, which is to say is this just a sort of unique and anomalous area of policy where we see this chorus of mixed signals and threats on Economic Policy, which actually very often does not transpire into actual policy and law. And then actually lets start there then i have another question about the signaling and what this is doing to help or hurt actually ill just put this out there and you can respond, too, how does this help or hurt the signaling that goes along with sanctions so people sometimes hold this up and say its helpful to have Good Cop Bad Cop here for a congress and the administration, or it confuses people and actually its not helpful when were to the extent that we may even be inspiring Certain Companies to remove themselves or other actors to remove themselves from the United States in order to get out of the way which has an effect on our own Economic Health and engine. I would say in the Defense Space we almost a little bit have the opposite problem and that is in the, you know, repeated fact that congress has not taken up a new aumf, authorization use of military force. You know, congress has, i think in a lot of ways really stepped back from its oversight responsibilities when it comes to the military instrument of power and that is also a problem. I would posit its just as big of a problem for our democracy as having an overactive congress as exists as you just described in the sanctions space. Okay. Yeah, i think congress often does play a useful bad cop role and a Good Cop Bad Cop dynamic, there are many, many cases where administrations have been able to point to congress in diplomacy with foreign governments and say, look, you know, we got this pressure from congress, we need you to change your behavior, otherwise congress is going to come down hard and that can be really good for the United States, useful for the executive branch, but congress often overreaches or doesnt provide enough flexibility to the executive branch, especially with regard to lifting sanctions. So when congress does legislate, and youre right, a lot of the legislation doesnt pass, but when congress has legislated, often its been very hard to get the legislation removed later when the target has changed its behavior. This is true especially on iran, cuba, in recent years where those core sanctions laws have remained on the books even when the Obama Administration had negotiated major diplomatic agreements with those countries and sometimes congress doesnt provide enough flexibility. When Congress Passes legislation but provides flexibility to the executive branch, i think theres a good balance there where, you know, its sending a strong signal to other countries but not hamstringing thats not a word, but im going to say it, anyway, hamstringing the can be okay. Right. Jordan has actually done quite a lot of work on congress and Foreign Policy and looking at sanctions in this area, so i appreciate that background. Yeah, i would just jordans 100 right. I mean, from the practitioner standpoint, having had congress as this, you know, looming on the presence of, you know, if you dont, you know, do x, you know, whether were talking to a private sector actor or to a governmental target, congress is going to come behind and will be much, much worse for you. It was an enormously valuable tool in part because it was true. I mean, it had the value being true. But that was but it was a useful, you know, Good Cop Bad Cop thing, and i will say that in theres a whole series, again, in the iran context but in others as well, a series of legislation where congress was prescribing additional sanctions to be imposed, but there was always a little bit of give in the joints so that the executive branch, Treasury Department, in particular, could moderate and calibrate how the sanctions were being applied and i think that that was very useful, but that was in a context where, again, in the iran context, where there was a pretty good alignment between the executive and congress about the strategy of increasing pressure on iran. That fell apart, as you were talking beforehand, at the time that the deal was struck about whether the deal was good enough and all the rest. But in the runup to the negotiations, there was a good alignment between congress and executive branch on increasing pressure on iran and that and Congress Played a very Important Role in that context, but i think it was, again, largely because there was this alignment. Disalignment as there was early in this administration on russia, you get sanctions legislation that is bulkier to implement, but thats my bulkier. Bulkier. Its bulky. Cat says balky. Balk im no longer going to play the contrarian on this one. I agree with that. I would add one more risk congress faces, one more risk that can accrue from significant congressional action, and thats the overemphasis on mandatory sanctions. And the reason congressional mandatory sanctions. And the risk here is that sorry, can you just define that for people, right. So in legislation, congress requires that the president impose sanctions on x, y and z targets basically on a very sort of baseline level, and the risk is in a situation where congress imposes mandatory sanctions but the administration fails to actually followthrough, so they find too much wiggle room to the point where something clearly or very clearly looks like it violates what congress has tried to prescribe, then it actually undercuts, i think, the administrations credibility, potentially even the eyes of foreign adversaries or potential people youre trying to sanction, so, for example, lets say that you, you know, you congress has legislation that requires the president to sanction any entity that knowingly does a significant transaction in the Russian Defense and Energy Sector like the purchase of missiles from turkey, right . I mean, if the administration is going to such lengths to avoid actually imposing those sanctions to the point where theyre trying to, you know, like, really pull legalese to flip the language, and i think that the turks may look at that and say, well, the administration doesnt have any interest in coming after us with these economic authorities, like, whatever theyre going to do is going to be fairly light so we dont have to worry about that. So in a weird way the mandatory sanctions, if there is misalignment, can create a little bit of a lack of credibility in the eyes i think of our adversaries. Okay. So now im going to take some questions from you all. Feel free to ask about specific instances of sanctions, countries, or the 2020 election or whatever you want. So we can bring this we have tried to have a somewhat theoretical conversation so far to try and frame this issue. Im eager to jump in with you to the questions or the instances that really matter to you all, so were going to start here. Do we have a mic . Yes. Thank you so much. Right here with in the coat, then well go back over in blue green, sorry, cant tell. Yep. Okay. Start with you. Liz with voice of america. I have a question for mr. Cohen. Since you have been in the past you worked a lot on north korean sanctions, i was wondering how youre viewing the current state of the north korean sanctions and is it time for the u. S. To strengthen the sanctions or ease the sanctions . And i think well just take a second question there and then well give time for response. Thank you. Can i also make a comment, short comment . But do tell us who you are. Sure. My name is pabal. I am from russia. I joined three months ago university of maryland. So as a person who spent a lot of time as a russian, my comment is that russians dont perceive american sanctions as deterrences. Russians mostly percieve american sanctions as punishment because every time not deterrence by punishment but actual punishment because any time american sanctions were introduced they were because russia already did something not in order to prevent russia from doing something. This is not how deterrence works. And my question is, have when sanctions were discussed and planned, were there any im sorry thought about how russia may retaliate and what kind of retaliation from russia, or from any other country, not specifically russia, of course, would somehow damage the American Economy . Because every time americans introduce sanctions, almost all the times, russia introduced retaliatory sanctions and more and more, there are discussions that the United States are trying to hit russian critical economic infrastructure which might be perceived as an act of war. In this case, the retaliation would not include economic tools but something more dangerous. Thank you. Thank you for that. Its helpful actually that you asked that particular question because we have heard, for example, lavrov the start of the next one okay use the phrase, an act of thank you can just going to tag on to that, though it was a sanctionsspecific question, susanna, if you would talk a little bit about in the defense policy world what it looks like to be thinking about response, retaliation or response in the policy planning context. So in thinking about taking a particular measure that is designed to be disruptive and korea . Sure. So, i think the i think the north korea sanctions policy is dead in the water right now. So let me let me back that up. I think at the beginning of this administration, the administration i think was doing actually quite a good job on two different dimensions. One was it was significantly enhancing the sanctions on north korea. The secondary sanctions, in particular, that were introduced in the fall of17 were i think long overdue and an appropriate use of secondary sanctions. Secondary sanctions i think are should be reserved for those situations where there is a highly significant u. S. National security interest and i think the north Korean Nuclear program fits that bill. In addition to secondary sanctions, the administration was was focusing a good deal of energy on getting china to to get in the game and to and to complement what we were doing by putting pressure on north korea. Pressure was ramping up. Some of it, you know, the fire and fury threats, i think were not terribly helpful, but the pressure was building and then the singapore summit came and the president squandered everything that had been building at that time and declared, essentially, success, that the policy had been achieved, north koreas going to denuclearize, everybody can sleep well at night, the threat is gone, and so what i think the north korea example demonstrates is that sanctions are not a policy unto themselves. They are a tool to achieve a policy goal and if your policy is incoherent or or inconsistent, your sanctions are not going to be effective. So i think where we are today is, you know, we have a whole raft of sanctions on north korea, but i think no reason to think that they are effecting the calculation of the north korean regime on its nuclear program. Its a little bit more complex than that, but thats, like, the version of that. And on russia . So to answer your question, liz, i guess, its one of many, many military cliches, the enemy gets a vote, and so, you know, we think about that a lot in terms of if we do a, what does red do in our parlance, right . One of the ways we work through those issues is through games, right . I mean, these arent things that you want to, like, figure out on the job, generally, and so we invest a lot of time and energy in analysis and simulation and in actually playing games where there is an active red team that is emulating the adversary in any given situation, and i would certainly recommend that analytic tool to, you know, certainly makes sense in this context, to try it out. Right . Try it out in a safe space and see what red does. Totally agree. Yeah, jardenordjordan, then david if you want to Say Something else. On the question does the u. S. Consider the prospect of retaliation . In many cases, yes, the u. S. Government has considered the prospect of retaliation and not just with regard to russia but more generally with regard to sanctions and thats why the executive branch often is relatively cautious in its use of sanctions and with regard to russia, the Obama Administration didnt want to go too far in terms of the type of sanctions that were imposed on russia in part because of concern about what kind of response russia might have. Id say the iran case, the Trump Administrations maximum Pressure Campaign is a case that where it looks like the administration didnt give enough attention to how iran might respond and thinking through, you know, irans response to the maximum Pressure Campaign more would have been helpful. So, you know, this varies, you know, across cases across president s, but in general, it is considered, yeah. Anyone else . Can i, yeah. Actually touch on the north korea question . Yeah. So in the spirit of this conversation, of the project, this is a call for the more academicminded participants in the audience and anyone watching on i think theres a Great Research project here actually looking at not just north korea but looking at sanctions pressure during negotiations. This has come up in multiple contexts. You got dprk in the mid 2000s, dprk now. You have iran from 2011 forward. Theresthy question that always arises when negotiations are occurring, how much pressure should we be putting on the adversary during negotiations versus how much how light a touch should we take on enforcement activity or additional designations . And i as a consumer of academic journalism would love to see from a policy perspective, anyway, hey, whats the logic here, and which side is kind of right in that debate . Well take a couple more questions. We had from right up here and then with the glasses. Thank you, and thank you, all, for this kind of report. George lopez, an academic sort of but also had the privilege of taking u. S. Seat on the north korea panel of experts at the beginning of this decade. Im actually going to forego one of my questions because i think the answer to your good challenge is we have here an esculatory cycle thought out deep in the literature with lots of good examples. We have no deesculatory one for step by change in Nuclear Dynamics or Illicit Networks or the other things that you would bargain with, either in iran or in north korea. George, can i interrupt for one second . Hold on. You finish first. I mean, historically, there are things like a grid or other kinds of things for deescalatory but id like to see us develop that scale which talks about how you move from a singapore summit and a giant declaration to then how each side signals and sees and sets what performed actions in exchange for sanctions relief with occur, and how you hold the other Party Accountable and how far youre even willing to go yourself with one more sanctions relief to say this is the last chance. So, i think its its a marvelous suggestion, a good one. But my original one was going to be, wonderful to see someone finally Say Something about how we do sanctions relief. You talk about it as credible assurances. I wish there was something in here about quick adaptation to changing conditions, because i look at where we are right now with sudan and the model that comes to mind, which was the failed model, is nepal, where we originally imposed sanctions along with some others, that the Chinese Communist excuse me, the Nepalese Communist Party stop its International Exchange and efforts to undermine the existing regime. They stopped final behavior. They participate in a process. They did all of those things and got elected democratically to head the state and were still negotiating within the u. S. As to whether we should take off sanctions but what do you do as a positive incentive to take off sanctions with the fledgling bargain coalition in sudan right now which would be the huge boost to their credibility. The process or strategy for that doesnt exist. So, two things. All i would say, in the and to your question there, the in the iran context, if people remember, there was the jpoa before there was the jcpoa, which was a little bit of sanctions relief while the negotiations were going on, which i think is a an example of how to do sanctions relief in the course of negotiation. Thats all i wanted to say. Go ahead. Anyone else want to say, while we are paused . Yep . Okay. So, well take a second question here. Thank you. I have a iran sanctions question. The policy in effect since may is zero exports or imports from iran. Irans largest customer, china, continues to take iranian crude, you know, until at least last month, you know, even looking at chinese customs. Is that policy designer or is it an enforcement failure . Sorry, what was the was it a what or a policy, was it a policy design error or is it an enforcement failure . Yes, you should answer that. Yeah, i know, im trying to think of how i would best kartize it or characterize it. I wouldnt call it a failure. I mean, the chinese are going to likely continue to import iranian crude to the hopefully lower and lower levels. Even if it is only a couple hundred thousand barrels over whatever period of time. I mean, i think that the argument is that as they continue to reduce, that constitutes a policy success. Now, are the chinese ever going to actually go to zero in the way that under law, under u. S. Law anyway, the secondary sanctions would apply . If i were a betting man, i think the bet would be no, but i do think that you have seen a significant reduction in chinese import of iranian crude, significant reduction, certainly, since november 5th of2018. So, im just going to hop on here and say, so, if youre thinking about policy design error, theres, if you will, at least two schools of thought here. One is that you shouldnt have a policy thats unenforceable so its a failure in design to put in place this policy where you think they will be cheating at some point, at some low level. It may diminish your credibility and its just bad governance. On the other hand, a different methodological approach could be that the attentiongrabbing factor of saying zero tolerance, go to zero, really brought people to attention and itself had a big effect. So, i think one of the reasons we are having this whole conversation is because it would be useful for there to be a kind of maturation and distillation of this thinking so we dont have questions exactly like this one, which have been all the time in all kinds of circles as people are looking at each other and saying, did they mean to do that . Are they not enforcing . Is there a flaw in the process . I mean, i dont in your world or in the defense world, are people constantly sort of looking left and looking right and thinking was that meant to be the way it is . Its scary but i dont really understand what exactly the motivation was behind it, and in fact, there could be multiple motivations. So, now well take two more questions. There was one theres one there. Yep . And then there was someone here if you want to ask it and then well give an opportunity for all of you here on stage to offer some final concluding remarks, and im going to ill tell you a little bit more about that in good afternoon, benjamin, institute of international finance. I have a question. You mentioned the willingness of this administration to sanction large and systemic companies and thats certainly correct. Now, one of the examples was ruseau and that didnt necessarily go completely as planned and my question would be if that maybe had the unintended consequence of demonstrating that there is potentially too systemic to sanction. Its a great question. I think the way that this is being thought of within the administration, when theres a potential target of too big to sanction, is you have to be able to quickly alleviate collateral consequences. And so for example, you did see the concurrent issuance of a general license allowing for a large amount of Economic Activity with them. Now, it wasnt perfect. There were still significant market concerns and market uncertainty about what the scope of that authorization allowed. But i think that, you know, as it goes on, for example, with the designation and the licenses that were issued at the same time, that the licenses that were issued were increasingly complex and covered an increasing number of potential activities in order to give more assurances to the private sector. Again, not perfect. Understood. But at the same time, what you are seeing is this willingness to try to go after big targets while at the same time mitigating, as best you can in the immediate term, some of those collateral consequences and then as time goes on, and additional issues crop up, like in the venezuela context, youve seen issuance of additional licenses to potentially ameliorate any additional unanticipated consequences. Another question. Im im going to ask you all one. And this is where we will close. I want you to look ahead to the 2020 election, and whether we have a reelection of President Trump or a new democratic candidate to take that office, based on the conversation that we have had, the thinking you have done on this topic, the particular experiences that you bring to bear, what is the recommendation that you would offer to that next president or to the president in the next term, whoever that may be, about deterrence and sanctions . Without having told you i was going to ask you this question first, ill nevertheless tell you to go first. You wont be surprised that ill mention something in our report. Go ahead. So, ill go back to the idea we touched on earlier of the National Security Council Creating a more integrated way of thinking and planning for the use of sanctions in a way thats complementary with other tools of u. S. Power. The military but not only the military. Also diplomacy, foreign assistance, and i think doing a interagency review to come up with an escalation ladder would be one piece of that but thats just one piece of it. More generally, there needs to be a clearer understanding about how the Different Things the u. S. Government is doing can Work Together or might be conflicting with each other. It gets back to a number of the cs that david mentioned, clarity, consistency, credibility, all these things are enhanced if the government is working together on the same page and if congress is also somewhat on the same page, that helps too. I dont know how we do that but maybe one of you will take that one on. Ill just add to your comment that along with that, it needs to come, like, an education effort, right . I think that sanctions are not particularly well understood by people in my community in terms of what they are supposed to do and what they cost and what the collateral impacts are. And you know, likewise, i would say that i have definitely had experiences that have indicated to me that there are parts of the interagency who really dont understand certain aspects of the military instrument of power. And that, you know, leadership from the nsc is absolutely necessary but theres a layer that exists below that that i think is also needs to be more developed. So, i will add on to both those comments because i think theyre both exactly right, and would just add to the conversation other tools, of course, of economic power. Trade. Restrictions. Tariffs. Entity listings the whole way that we can leverage our economy, our financial system, our businesses to, as a way to project u. S. Power, which is not to say and to think about all of that in a more coherent fashion with this escalation ladder and with and with thought being given to whether we are using the right tools for the appropriate target. I think as we currently as we sit here today, theres a a lot of these tools are being deployed without, it seems, a lot of sort of forethought on how on whether its the right tool and how it fits with the other tools. I think all of this needs to be brought into a more coherent conceptual framework. I would say, plan for and communicate the threat of sanctions before whoever youre going to impose them on actually takes the action that you dont want them to take. Because so often, you see sanctions as kind of a, oh, turkey invaded northeastern syria, what do we got . Grab for sanctions or figure out, essentially, as a reactionary tool. So we tell china not to pick on anybody else in the nba . I mean, so, as an example, i know give an example. This piece of legislation is very controversial but the deter act in congress, which says, in the situation where there is a determination by the u. S. Intelligence community that russia interferes in a federal election, the president has to impose x, y, and z sanctions. Now, you may have thoughts about what those sanctions should be and you may have real concerns about them, and those are valid, but that construct of saying, this is what will happen if you do x, y, and z and then following through on that, i think, is a useful construct. Thank you. Okay. I want to say two last things while i have your attention still. First, if you have a postit note and you havent already written something on it, i would like to encourage you to do so. Either based on something someone said here or a thought you have about how you would characterize a particular action in the sanctions domain, which is to say, how severe. You can write the number on it for yourself if you want or else just when we get up from here, go and stick it on the labelled the numbered, rather, step in this escalation ladder we have created. And liz, i think it doesnt even have to be a sanctions action, right . It could be another kind of course of action. Absolutely. And particularly, if you come to this conversation knowing very little about that, then do what you know, and do put it in one of those buckets, because as you well point out, of course, this ladder is specific to an array a whole of government set of tools. Thank you for that good point. And also, thank you to you all for coming, and wont you join me in thanking our panelists for their comments today. applause

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