U.S. Sanction Power May Be Reaching Its Limit

Six years ago, in the course of investigating London-based bank Standard Chartered Plc over suspicions it had flouted U.S. sanctions against Iran, the New York State Department of Financial Services published an email from a senior executive to one of his counterparts in New York. “You f***ing Americans,” the message read. “Who are you to tell us, the rest of the world, that we’re not going to deal with Iranians?”

It’s a sentiment that has echoed through halls of power in recent weeks following President Trump’s May 8 decision to pull out of the 2015 Iran nuclear deal and impose unilateral sanctions, despite all indications that the country was complying. In Year Two of the Trump administration, the number of financial penalties has hit a high after years of increasing use. “The current administration is kind of drunk on the sanctions power,” says Jarrett Blanc, a senior fellow at the Carnegie Endowment for International Peace who was a leading Department of State official in the Obama administration responsible for Iran nuclear issues. “They don’t understand that the tool is limited and fragile.”