January 27, 2025

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Sanctions Will Be Central to Trump’s Regional Policy

(AP Photo/Andrew Harnik)

In its first days in office, the second Trump administration fulfilled widespread expectations that it would use economic sanctions as a key lever with which to effect outcomes and advance U.S. and allied interests. Outside the region, Trump restored Cuba to the list of state sponsors of terrorism, repeating an action he took late in his first term but which President Biden, in his final days in office, notified Congress he would reverse by removing Havana’s designation. The “terrorism list” designation triggers a wide range of U.S. sanctions, including denial of certain exports and requiring the U.S. to vote against loans to Cuba by international financial institutions.

In the region, affirming his support for Israel in its conflict with Hamas and the Iran-backed “Axis of Resistance,” Trump signed an Executive Order, on his first day in office, terminating the sanctions authorized in February 2024 against violent settlers destabilizing the West Bank. The decision affected 17 individuals and 16 entities designated by Biden amid U.S. frustration over Israel’s failure to punish settler violence. Israeli officials also told journalists they expect Trump to soon lift the Biden administration's hold on the supply of 2,000-pound bombs – withheld on the grounds the munitions would cause large numbers of civilian casualties if used in Gaza’s populated areas. The Trump actions might represent an incentive for Israeli leaders to agree to the Gaza ceasefire, which is moving forward, if haltingly.

Trump also restored the Houthi movement (Ansarallah) in Yemen to the list of Foreign Terrorist Organizations (FTO). Trump had designated the group as an FTO at the end of his first term, but the Biden administration quickly reversed the designation in an effort to instill momentum in diplomatic efforts to end the war in Yemen and facilitate the flow of humanitarian aid to the war-torn country. Later, as the Houthis repeatedly attacked commercial ships transiting the Red Sea as a show of support for Hamas’ battle against Israel, Biden named the group a Specially Designated Global Terrorist (SDGT) organization. The two listings carry nearly identical penalties, but the FTO label is a higher-profile designation and might deter European and some Arab diplomats from engaging the group.

All indications are the second Trump administration will, as it did in its first term, see sanctions as a core policy to address the regional and proliferation threat from the Islamic Republic of Iran. Trump officials assert that the first Trump term’s sanctions-based “maximum pressure” policy deprived Iran of the oil and other revenues needed to advance its strategic programs and fund support for its network of armed Axis of Resistance partners. Yet, the maximum pressure policy, which was largely kept in place by President Biden, did not compel China to prevent its smaller oil trading firms from sustaining Iran’s economy by gradually increasing their purchases of Iranian oil – reaching an estimated 1.5 million barrels per day (mbd) through most of 2024. The new Administration believes that in order to apply enough pressure on Tehran to compel it to accept a revised nuclear agreement (JCPOA) - which the first Trump administration abrogated in 2018 as insufficiently comprehensive - U.S. officials must achieve a significant reduction of Beijing’s purchases of Iranian oil.

U.S. efforts to reduce China’s oil buys from Iran have been handicapped by Beijing’s insistence that UN sanctions against such transactions have been suspended since the 2016 implementation of the JCPOA. To counter China’s position, the new Administration appears ready to back the one action most likely to force Beijing’s hand – a “snap back” of U.N. sanctions. U.N. Security Council Resolution 2231, which enshrined the JCPOA in international law, contains a provision enabling any party to the accord to trigger a snap back of sanctions on Iran for violating its nuclear commitments. The provision expires permanently on October 18, 2025, leaving limited time for the Trump administration and its partners to decide whether to implement the snap back.

U.S. officials arguably cannot activate the snap back mechanism, because the first Trump administration withdrew from the JCPOA. However, Germany, France, and the United Kingdom - which are parties to the JCPOA, along with the U.S., China, and Russia - announced in November 2024 that they were ready to activate the mechanism. Their announcement followed a report by the International Atomic Energy Agency (IAEA) about Iran’s expanding production of 60% enriched uranium – levels close to the 90% enrichment needed for nuclear weapons-grade. The European parties also point to the Iranian regime’s military support for Russia to justify their position. At the same time, the three European powers have engaged in nuclear talks with their Iranian counterparts in recent weeks.

With time elapsing before the snap back provision expires in October, Trump officials have stated definitively that they will support the European powers’ invocation of the snap back mechanism. During the Senate confirmation process, the new U.S. Secretary of State, Marco Rubio, told the Senate Foreign Relations Committee in writing that: "I believe it is in our national security interest for the U.N. Security Council to snap back the sanctions that were suspended under the JCPOA." He added: "I will execute the President's guidance and work with our allies to ensure that snapback takes place.” Elise Stefanik, Trump’s nominee to be U.S. Ambassador to the United Nations, also identified the revival of the snap back mechanism as a main goal, emphasizing that broadly countering Iran’s policies will be a priority for her at the U.N. The new Administration is furthermore nearly certain to discontinue the selective release of blocked Iranian assets that the Biden administration pursued as a means of engaging with Iranian leaders.

At the same time, U.S. officials acknowledge that China’s purchases of Iranian oil are not the only transactions between Beijing and Tehran that harm U.S. interests. In recent weeks, according to press reports citing intelligence information, two Iranian ships docked in China were loaded with a critical ingredient to produce propellant for ballistic missiles. Tehran’s growing reliance on Beijing is partly a result of Israel’s attacks in 2024 against Iran’s missile production facilities, but it also points to a larger challenge for Washington. Iran and China have become increasingly aligned with Russia and North Korea, a bloc of authoritarian nations that are united by their interests in undermining the U.S.-led world order. Still, a U.N. sanctions snap back might cause Beijing to exercise greater restraint on proliferation-related transactions with Tehran.

The new Administration also faces key decisions about economic sanctions on post-Assad Syria, as the Trump team tries to fashion its approach to the Islamist-oriented post-Assad rulers there. The overthrow of Assad occurred after the U.S. presidential election, presenting both the Biden team and the new Trump administration with both risks and opportunities. As an initial response to the fall of Assad, which strategically weakened Iran, in early January, the U.S. Treasury Department issued a six-month general license authorizing aid organizations to provide services such as water, sanitation and electricity. The general license also waives the application of U.S. sanctions on entities that engage in certain transactions with the Syrian government, such as energy sales. Those transactions would normally be sanctionable under the Caesar Civilian Protection Act, passed in 2019, which targets foreign companies that facilitate the Assad regime’s acquisition of goods, services, or technologies that support the regime’s military activities or aviation and oil and gas production industries. The Caesar Act, coupled with U.S. and European sanctions that also froze all Syrian Central Bank assets held abroad, deterred almost all rebuilding in Syria as long as the Assad regime was in power.

The Trump decision on whether to seek repeal of the Caesar Act and other U.S. sanctions on Syria will likely consider decisions and actions by U.S. partners in Europe. European leaders share with Trump officials an intent to promote Syria’s stability as well as concerns about the commitment of the new government, led by the Islamist movement and former Al Qaeda affiliate Hayat Tahrir al-Sham (HTS), to respecting the rights of women and ethnic and religious minorities. European leaders are backing a gradual but broad easing of sanctions on Syria, tied to the new government’s performance on human rights issues. European officials see broad Syria sanctions relief as a means of encouraging some of the millions of Syrian refugees who sought shelter in Europe to return.

The Trump administration appears less inclined to ease Syria sanctions until it has more time to evaluate the HTS-led regime’s intent and performance. The Trump administration will likely judge HTS leaders on their willingness to cooperate with U.S. forces against the Islamic State organization (IS), which remains active in some parts of eastern Syria. Trump reportedly seeks to transition the anti-IS mission in Syria to Syrian government forces. That transfer of responsibility would pave the way for the exit of the 900 U.S. forces there that Trump sought in his first term.