Here I present more extracts from Saleh Mohsin’ excellent book, ‘Paper Soldiers’ which has helped me understand the history of ‘weak’ or ‘strong’ dollar through the eyes of US Treasury secretaries.

The United States started freezing assets as a method of economic aggression more than eighty years ago when President Franklin Roosevelt sought to keep U.S.-held assets of European governments invaded by Germany out of Nazi hands. As terror spread across Europe, Roosevelt signed an executive order in 1940 to keep billions of dollars out of the grasp of Nazis. OFAC as a unit was created a decade later during the Korean War. For the following fifty years, it was a comparatively quiet part of Treasury (some called it an orphan of the agency), mostly for blunt embargo-based actions against Cuba and others. It was out of tragic necessity after 9/ 11 that the Bush administration expanded sanctions authorities and brought the tiny unit into the center of the battlefield. The power that OFACers, as some in the private sector call them, wield from this unambiguous office is palpable when they emerge from their dusty government building to meet with Wall Street executives in the sheen and shine of fancy conference rooms in Manhattan high-rises. “One visit from someone in that office can leave us in disarray for hours,” shared one New York banking compliance officer. “Running afoul of OFAC is not an option.” Penalties for violating sanctions levied by Gacki and her coterie of investigators are costly. BNP Paribas, a French banking behemoth, faced a record fine of $ 8.9 billion for violating U.S. sanctions against Sudan, Cuba, and Iran. HSBC and JPMorgan Chase have paid tens of millions of dollars in fines in recent years.

From ‘Paper Soldiers: the weaponisation of the dollar, Saleh Mohsin

These are countries which have been sanctioned:

Countries Sanctioned by the U.S. and Why

By 

Jonas Elmerraji

Updated July 06, 2023

Reviewed by 

Michael J Boyle

Fact checked by 

Suzanne Kvilhaug

It’s not a good idea to get on the United States’ bad side. As the wealthiest country in the world, the U.S. also lays claim to the world’s most powerful military. But military might is nothing compared to the repercussions that economic and trade sanctions from the U.S. can bring about.

Economic sanctions are a way for large governments to exert their disapproval over one another. While wars are costly, both economically and politically, economic sanctions tend to be somewhat less tangible, at least for the country doing the sanctioning. For the country being sanctioned, the results can be enormous and long-lasting.

Key Takeaways

• The U.S. tends to sanction countries that violate human rights or sponsor terrorism.
• The U.S. can sanction an entire nation or specific individuals or entities within a nation.
• The countries with the longest-standing sanctions against them are Cuba, Iran, North Korea, and Syria.
• In February of 2022, U.S. President Joe Biden announced economic and trade sanctions against Russia due to Russia’s military aggression against Ukraine.1

Why the U.S. Imposes Sanctions

What does a country need to do to attract the ire of the U. S.? Overwhelmingly, the U.S. sanctions countries that sponsor terrorism or perpetrate human rights violations against their own people and others.

The U.S. also imposes sanctions on countries that threaten its interests, such as with unfair trade practices. Such sanctions are intended to deter bad behavior through economic penalty.

Countries Sanctioned by the U.S.

As of June 2023, active U.S. sanctions programs cover the following countries and regions, or companies and individuals within listed countries:2

• Afghanistan
• The Balkans
• Belarus
• Burma
• Central African Republic
• China
• Cuba
• Democratic Republic of Congo
• Ethiopia
• Hong Kong
• Iran
• Iraq
• Lebanon
• Libya
• Mali
• Nicaragua
• North Korea
• Russia
• Somalia
• Sudan
• South Sudan
• Syria
• Ukraine
• Venezuela
• Yemen
• Zimbabwe

…….

For example, under the Global Magnitsky Act, since December 2017, the United States has imposed targeted visa restrictions and financial sanctions on “perpetrators of atrocities” in Burma (Myanmar).14

See source:

https://www.investopedia.com/financial-edge/0410/countries-sanctioned-by-the-u.s.—and-why.aspx

If we go back to Saleh Mohsin’s book she described how the Trump administration further weaponized the dollar and the backlash that followed, particularly when oligarchs are the target:

Of course, the scene that unfolded in Davos, Switzerland, in 2018—when Mnuchin inadvertently talked up the benefits of a weak dollar—revealed that it wasn’t always Trump who was unsettling markets with loose commentary. One by one, the administration blew up key pillars of dollar governance: to speak about it with care and caution, to project strength, to be stable and predictable with policies, and to refrain from blatantly using it as a cudgel. That final pillar was knocked down in several blows, through economic sanctions levied sloppily but also by Trump’s attempt in the summer of 2019 to actively intervene in foreign exchange markets to control the dollar, a bid that Mnuchin ultimately blocked—not through silence but by vociferous lobbying internally and externally. He didn’t always win those battles. On August 5, 2019, just a few weeks after considering manipulating currency markets itself, the United States finally formally designated China with that charge. (The statement came out after Trump insisted that Mnuchin’s press release have the words Currency Manipulator with a capital “C” and “M.”) The move fell flat. The designation didn’t cause any major market or diplomatic catastrophe—for the first time, the world saw how hollow that charge really was. The Trump presidency showed what happens when U.S. leaders are not cautious with power. But the currency channel wasn’t the only sphere through which Trump moved the dollar further down the path of weaponization. A round of economic sanctions on a Russian entity that may have proved too big to mess with created even more uncertainty around the United States’ ability to manage the dollar.

Then the move on an oligarch:

Early on April 6, 2018, the U.S. Department of the Treasury announced that Oleg Deripaska, and any entity in which he had a majority stake, would be severed from the U.S. financial system. The economic sanctions were intended to be a damaging blow to Moscow for using its oligarchs as conduits to, as Mnuchin said in the sanctions announcement, “engage in a range of malign activity around the globe.” Deripaska owned a massive share in the world’s second-largest aluminum maker, United Company Rusal, meaning that Mnuchin’s sanctions ricocheted across most of the global metals market. Deripaska, a multibillionaire, had a complex business setup, holding a 66 percent stake in a company called En+ Group,which in turn had a 48 percent stake in Rusal. Now that he was on Treasury’s blacklist, both companies were facing sanctions. With Rusal on the brink of becoming a financial pariah, the jobs of thousands of miners and factory workers across Europe’s aluminum industry were at risk. Those trading commodities that Friday morning saw the price of aluminum swing wildly throughout the day. Investors didn’t know what to do. With Rusal producing 6 percent of the world’s aluminum, Treasury had just blown a $10 billion hole in the industry. “With two paragraphs on an eight-by-eleven piece of paper, the U.S. government fucked up a whole corner of the commodities market, and fucked up the world of a Russian multibillionaire,” according to one metals trader based in Canada. Years later, he still refuses to discuss the event on the record and use his name, or even reveal the firm he worked for, because Mnuchin’s sanctions surprise had cost traders like him millions of dollars. It was embarrassing. By the end of the day, commodities markets swung 20 percent, while shares of Rusal closed 18 percent lower. Over the coming weeks, the company’s share price would plummet even further, and the ruble would drop an astounding 8 percent as investors braced for the fallout to hit the Russian economy. Metals traders across Wall Street and financial hubs around the world started watching the Treasury department’s every move related to the sanctions package, looking for openings to recoup their losses from the April 6 surprise. The United States went after Deripaska because of his ties to Putin, contrary to the popular theory that Donald Trump only aimed to please the Russian president (sanctions during his presidency indicate otherwise, in large part due to congressional pressure). Once described as Putin’s “favorite industrialist,” Deripaska was seen as a leading member of a club of billionaires in Russia whose fortunes rise and fall alongside commodity booms and busts. He’d been in Putin’s orbit since the pair first met in 2000. To help do Putin’s bidding, Deripaska allegedly back-channeled with Trump’s campaign adviser, Paul Manafort (contact that was later scrutinized as part of the Mueller investigation into Trump’s ties with Russia). The charge that Mnuchin’s Treasury laid against Deripaska was serious. “Worldwide malign activity,” the agency called it. With the help of the oligarch, plus half a dozen other business tycoons, twelve companies, and seventeen top Russian government officials named in that day’s press release, Putin was able to instigate violence in Ukraine, supply the Syrian dictator Bashar al-Assad with weapons to bomb civilians, and engage in other “malicious” cyber activities to “subvert Western democracies,” per Treasury. “Russian oligarchs and elites who profit from this corrupt system will no longer be insulated from the consequences of their government’s destabilizing activities,” Mnuchin said in a statement announcing the sanctions. The world had just two months to cut ties with Deripaska and his vast holdings before the Treasury department would levy draconian punishments on anyone found violating the sanctions, such as hefty fines and public naming and shaming. It was a tall order for the private sector to figure out. The tentacles of Russian oligarchs, and especially Deripaska’s stake in Rusal, were notoriously hard to track. A back-of-the-envelope survey of the sector would show that dozens of European metals and auto factories had ties to Deripaska. They would all suffer if they couldn’t buy metal from Rusal. If they were forced to close, the impact would be catastrophic. Prices exploded in anticipation of a dearth of supply. It was new terrain for Treasury, since its actions are usually meant to calm markets. This one led to an eruption of skittishness in a key corner of the commodities sector. It went on to become an embarrassing spectacle—Treasury tried to unwind some of the damage, and with each move managed to trigger more volatility in markets. In one episode just seventeen days after the sanctions were announced, the department issued a statement that laid out a path for Rusal to escape being sanctioned, which included Deripaska relinquishing control of the company. The softening of its position on sanctions sparked a record plunge in aluminum prices, with markets reacting to the expectation of more metals supply in global markets. But those first few weeks of chaos in markets persisted throughout 2018 as Treasury tweaked its program and Deripaska moved closer to shedding his massive stake in Rusal. This volatility continued. Being the cause of that much instability was the exact behavior that the Treasury department was supposed to refrain from. Prices for aluminum, palladium, nickel, and more were in disarray, but Mnuchin remained steadfast in his defense of the April 6 actions. “We completely understood in sanctioning Deripaska what the impact would be on Rusal, the aluminum market, and on our allies. . . . This was a very well thought through decision.” But behind closed doors, many Treasury officials were shocked at the market reaction. Multiple accounts from officials who served in the administration in 2018 contradict the secretary’s public statements that the sanctions were well thought out. These officials, who spoke on the condition of anonymity to protect their public reputations, say the department did not undertake enough due diligence, such as liaising with private sector executives and allies to assess the full possible impact of banishing the world’s second-largest aluminum maker from using the U.S. financial system. The consequences, which became quickly apparent, reached far beyond the borders of the intended target in Moscow. The looming financial restrictions on Rusal threatened cash flow and factory operations that would require aluminum refineries to be shut down. Take Aughinish Alumina, a metal refinery located in County Limerick in Ireland. The plant was a vital cog in Rusal’s ability to supply metal to the global auto and tech industry. After Mnuchin’s sanctions were announced, there was speculation that the factory, run by some 450 workers, could become sanctioned and forced to shutter. There were also environmental consequences. Turning off a smelter running at 2,800 degrees Fahrenheit is costly and has to be managed carefully to avoid letting the noxious toxins such as sulfur dioxide pollute air and local water supply. The loss of operating cash from the sanctions would trigger an immediate closure, which had the potential to cause an environmental disaster. In the end, the plant in Ireland remained open, and the worst of the real-world consequences were avoided after officials in Europe lobbied Mnuchin to tweak the sanctions program. In fact, Rusal escaped sanctions altogether after Deripaska reduced his controlling stake in the company before the sanctions were officially imposed. Not that the intended prey didn’t feel the pressure. Deripaska saw 60 percent of his wealth wiped out. But alongside the business tycoon’s pain was a harsh and embarrassing lesson for the United States. The manner in which those sanctions were rolled out was, by some measures, a display of American arrogance. Past administrations had employed tried-and-tested methods of turning to the private sector to investigate the impact of potential sanctions, and took discreet steps to mitigate market turmoil. They also first sought buy-in from key allies around the world, a strategy that maximized impact and curbed mishap. None of that happened in the case of Mnuchin’s attempt to block Deripaska and his companies from to the U.S. financial system. The event instead suggested to the world that perhaps there are some people, like a Russian oligarch with deep ties to the global market, who are too big to be punished, even if they had a hand in trying to interfere with American democracy.