Mohsen Farshneshani is a U.S. sanctions attorney working with the sanctions nomination initiative team at DAWN.
Sarah Leah Whitson is the Executive Director of DAWN.
On his first day in office, President Donald Trump terminated the first-ever U.S. sanctions program specifically designed to address Israeli abuses against Palestinians. The move drew predictable praise from ultranationalist, hard-line factions in Israel, and condemnation from observers worldwide. But a year after former President Joe Biden issued an executive order to launch the sanctions, it is critical to assess his own administration's role in undermining them.
Biden's executive order was a bold step, giving tangible weight to decades of U.S. foreign policy rhetoric by authorizing targeted sanctions against individuals and entities responsible for destabilizing activities in the occupied West Bank. For the first time, U.S. sanctions policy confronted Israeli actors complicit in settlement expansion, settler violence and Palestinian dispossession—realities that U.S. officials had long described as "an obstacle to peace" but never enforced consequences for, nor officially recognized as violations of international law.
Yet the Biden administration's initial show of resolve was quickly eclipsed by political timidity and a failure of executive will. This retreat pulled the punch of the West Bank sanctions, reducing them from a potent foreign policy instrument to a glancing blow.
The program's unraveling began last March, when the U.S. Treasury's Office of Foreign Assets Control (OFAC), the agency responsible for administering U.S. sanctions, issued a guidance letter to the Bank of Israel that read as if it could have been ghostwritten by Israeli Finance Minister Bezalel Smotrich or his extremist cronies. Following a swiftly mounted pressure campaign against the sanctions, the guidance letter defanged Biden's executive order by shielding sanctioned entities from financial disruption and curbing the strategic ambiguity that gives U.S. sanctions their chilling effect on third-party transactions.
The Biden administration's initial show of resolve was quickly eclipsed by political timidity and a failure of executive will.
- Mohsen Farshneshani and Sarah Leah Whitson
The letter also explicitly permitted transactions sustaining livestock on sanctioned farm outposts. These outposts are not benign agricultural ventures; they are, as Smotrich himself has acknowledged, "a mega-strategic tool" for Israeli expansionism. While the letter claimed alignment with multiple U.S. sanctions programs, it ultimately served as a concession that appeased critics and marked a pivotal moment: it signaled to hard-line factions in Israel's leadership, and their US allies, that even Washington's most powerful foreign policy tool—economic sanctions—could be manipulated when their activities were the target.
The multimillion-dollar sanctions lobbying industry accounts in part for the quiet unraveling of Biden's executive order. Just as sanctioned entities and Gulf allies have found ways to navigate U.S. sanctions policy through well-paid advocates, the American enablers of Israel's most hard-line factions—already well-versed in the workings of Washington's power corridors—were surely steps ahead. In an enforcement system already "stacked against" impartiality, as former McKinsey chief economist James S, Henry put it, pressure from domestic allies, coupled with diplomatic pressure from Tel Aviv, likely ensured the executive order's swift dilution.
Yet, unlike typical sanctions lobbying efforts—which at best result in softened enforcement, preemptive insulation from sanctions, and narrow exceptions for, or delisting of, individual designees—this case stands apart as an unprecedented instance of an entire sanctions program being hollowed out. Never before has a U.S. sanctions framework been so systematically eroded from within, leaving it functionally defective in achieving its intended objectives.
The Biden administration's capitulation to these pressures exposed a troubling lack of resolve to meaningfully address what it had recognized as "high levels of extremist settler violence, forced displacement of people and villages, and property destruction [that] ha[d] reached intolerable levels." This was more than a failure to effectively apply and enforce sanctions; it undermined American sovereignty and emboldened those who were supposed to be targeted by the sanctions.
By caving, the administration debased its ability to cement the policy shift set in motion by the executive order, eroding both its own credibility and the integrity of the West Bank sanctions program. Biden's actions conveyed a clear message: the U.S. would not leverage its immense economic power to truly challenge extremist Israeli abuses in pursuit of territorial conquest, even when those abuses blatantly contradicted official American foreign policy objectives.
By caving, the administration debased its ability to cement the policy shift set in motion by the executive order, eroding both its own credibility and the integrity of the West Bank sanctions program.
- Mohsen Farshneshani and Sarah Leah Whitson
These concessions squandered a critical opportunity to give real weight to decades of official U.S. policy opposing Israeli expansionism. When Biden first imposed sanctions on individual settlers, Israeli banks reportedly froze targets' assets—a prudent, decisive response driven by the significant legal and reputational risks associated with engaging with U.S.-sanctioned entities. Such actions, reflecting the independence of Israeli banks from Smotrich's heavy-handed politics, are typically seen from U.S. banks bound by American law or foreign banks with deep ties to the U.S. financial system. This demonstrated the sanctions' potential efficacy and their capacity to reverberate across Israeli institutions.
But instead of building on this momentum by escalating targeting to the larger actors or entities that finance and facilitate settler violence and the takeover of Palestinian land, the Biden administration not only weakened its most effective tool, but actively diluted its most significant designation.
Zeev Hever, the head of Amana—an operational arm of Israel's settler movement—has long described farm outposts as the movement's "main means" of land acquisition and Palestinian displacement. Amana, sanctioned by Canada and the United Kingdom, appeared poised to face similar action under Biden's executive order and was ultimately sanctioned last November. Yet, even in its most significant designation, the Biden administration immediately undercut its impact. On the very day it sanctioned Amana, the administration issued a general license allowing it a wind-down period that ended on January 10, effectively blunting the designation's consequences. By limiting the sanctions' effects to a mere two-week period—the Trump administration delisted Amana, along with all other designees, upon taking office last month—the administration reduced the designation to little more than a symbolic gesture.
Biden's sanctions order, for all its shortcomings, offered a rare chance to reshape U.S. foreign policy on Israel-Palestine, addressing the core issue of Israel's illegal settlements in the West Bank. Yet Biden's administration failed to fully commit to that course. Trump, who took credit for securing a Gaza cease-fire that Biden could not achieve for 15 months, has signaled no such resolve in the West Bank—rather than sanctions or accountability for settler violence, he has indicated a willingness to green-light Israel's annexation, alongside his talk of a U.S. takeover of Gaza.
While the U.S. wields a unique monopoly on sanctions with extraterritorial reach, other global powers can still make a significant impact by denying abusive Israeli entities access to their markets and financial systems.
With Israel shielded from global accountability and Washington failing to act, extremist Israeli ambitions risk unfolding unchecked––not only at the expense of Palestinian lives and rights, but also U.S. interests. Further Israeli settler violence and Palestinian dispossession will undermine any remaining prospects for peace and strain U.S. alliances with Arab countries.
The Biden administration's failure to follow through on its executive order revealed how fragile and ineffective sanctions programs become without White House resolve. As the Trump administration signals an imminent return to his first-term policy of abandoning the West Bank—and now Gaza—to ethnic cleansing and annexation, other countries must step up, as seen with the formation of The Hague Group, which was established to enforce International Court of Justice and International Criminal Court rulings against Israel. It is essential that those in Israel-Palestine driving expansionist policies designed to dispossess and displace Palestinian civilians face meaningful consequences.
Otherwise, only impunity will prevail.
