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World

Treasury Secretary Jack Lew Defends The 'Smart Power' Of Economic Sanctions

KELLY MCEVERS, HOST:

Economic sanctions - those are two words that might not sound super exciting, but they can be powerful. They have been an important tool for President Obama, and they might be part of his legacy. Today, U.S. Secretary Jack Lew made the case for using sanctions beyond this presidency and urged caution in targeting other nations. NPR's David Welna reports.

DAVID WELNA, BYLINE: Secretary Lew told an audience at a Washington think tank not that long ago, sanctions had a bad name. Countrywide measures such as the trade embargo against Cuba were seen as blunt, ineffective instruments that mostly hurt innocent civilians. Lew said that's changed a lot in the past decade. Targeted sanctions aimed at bad actors are the new norm.

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JACK LEW: Economic sanctions have become a powerful force in service of clear and coordinated foreign policy objectives - smart power for situations where diplomacy alone is insufficient, but military force is not the right response.

WELNA: And nowhere has that been more apparent, Lew said, than in Iran where a decade of economic sanctions persuaded leaders last year to put their pursuit of a nuclear weapon on hold.

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LEW: To achieve its goal of lifting sanctions, Iran had to accept a comprehensive nuclear deal. Lifting nuclear sanctions was an incentive we established to help achieve this profound change in Iran's calculations, and that incentive coupled with tough principle diplomacy worked.

WELNA: The purpose of sanctions, Lew said today in an interview, is not to punish a country's bad behavior; it's to change it.

LEW: It can't be causing pain just for the sake of pain. What you're trying to do is accomplish a result. You're trying to change the policy of another sovereign.

WELNA: To do that, Lew said, you have to ratchet sanctions down when behavior improves, as it appears to have in Iran, and ratchet them up when it gets worse such as last summer when President Obama saddled Russia with more sanctions after the downing of a Malaysian airliner over eastern Ukraine.

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BARACK OBAMA: And building on the measures we announced two weeks ago, the United States is imposing new sanctions in key sectors of the Russian economy - energy, arms and finance.

WELNA: Some who follow sanctions say the ones imposed on Russia have been tough. Gary Hufbauer is with the Peterson Institute for International Economics in Washington.

GARY HUFBAUER: It doesn't hurt Putin personally, and it probably doesn't hurt his political control. But it has hurt the economy a lot.

WELNA: And George Friedman, who chairs the forecasting firm Geopolitical Futures, says Russian President Vladimir Putin has in fact made political hay of those sanctions.

GEORGE FRIEDMAN: Every opportunity he has to demonstrate that he is not bending to these sanctions is one he has to take, and not by accident. His popularity rating in Russia is overwhelming, about 80 percent

WELNA: And Lew concedes that Russia has failed to comply fully with the Minsk accords aimed at ending warfare in eastern Ukraine.

LEW: I don't think that that means that the sanctions have had no effect. I think Russia has made decisions very much aware that what it does will have implications in terms of whether sanctions get tougher or whether they get removed.

WELNA: And then, there's North Korea.

LEW: North Korea is a very difficult nut to crack.

WELNA: Lew says even though North Korea seems intent on pursuing its nuclear ambitions, that's taking a toll on its key relationship with China.

LEW: I think that's why it's so important that the United States and China were able to work together at the U.N. to put pretty tough sanctions in place. Whether it will change North Korea's decision, I don't know.

WELNA: Overall, sanctions expert Hufbauer says, the U.S. has had some success.

HUFBAUER: You know, a good third of the cases we would say are successful, but I would say in diplomacy, you know, a one-third success rate is pretty respectable.

WELNA: And Treasure Secretary Lew for his part gave a surprising warning today. There's a danger, he says, of overusing sanctions.

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LEW: I think that using economic pressure before military force is the right sequence, but one not ought to treat using economic force as costless. It has a cost, and it has to be judiciously.

WELNA: Because what the U.S. does to other nations might also be used against the U.S. David Welna, NPR News, Washington. Transcript provided by NPR, Copyright NPR.