Why the U.S. Must Lead Sanctions on Israel's Illegal Occupation

Mohsen Farshneshani
August 21, 2024

Mohsen Farshneshani is a U.S. sanctions attorney working with the sanctions nomination initiative team at DAWN.

*Published in Foreign Policy on August 14, 2024

With the Middle East on the brink of full-scale war, the international community, led by the United States and its allies, faces a critical choice in addressing the conflict in Gaza: gamble on eventual peace through a belligerent Israeli government or enforce a new landmark legal judgment.

The International Court of Justice (ICJ) issued an advisory opinion just weeks ago declaring Israel's continued occupation of the Palestinian territories unlawful and urging its end "as rapidly as possible."

Israel's illegal actions include the transfer of Israeli civilians into occupied territories, confiscation of Palestinian land, and exploitation of natural resources for the benefit of Israeli settlers. The opinion stated that these practices violate the Fourth Geneva Convention and the Hague Regulations.

Israel is party to the former and bound by customary international law to the latter. The ICJ ruling referred implementation of the ruling to the U.N. General Assembly and Security Council, where Washington holds significant sway.

For the opinion to be a step toward accountability, the United States and its allies must demonstrate respect for the same rules-based order they once helped establish––yet have failed to uphold when it comes to the Israel-Palestine conflict. Washington must employ unilateral or multilateral economic sanctions against the illegal occupation, its settlements, and their institutional underpinnings. Failure to do so risks rendering the ruling a hollow gesture from the highest judicial authority of international law.

The ICJ opinion is the latest indication of a growing global consensus that Israel should not be allowed to act with impunity in the Palestinian territories. A senior Australian government source said the ICJ opinion "can't be ignored", and Australia subsequently initiated targeted sanctions to address settler violence; the foreign minister of Germany, one of Israel's strongest allies, also conceded the gravity of the ruling.

Many countries—including Australia, the United Kingdom, and the United States—voted against the U.N. General Assembly resolution that led to this ICJ advisory opinion. Since then, these nations have initiated their own unprecedented sanctions to address at least some aspects of the Israeli occupation—generally following the United States in targeting "bad apples" directly involved in settler violence.

Thus far, Israel as a whole has seen no serious repercussions for its flagrant violations of international law. Israeli leaders, businesses, and organizations involved in the occupation and proliferation of illegal settlements have enjoyed global relationships while flouting international law and human rights standards. Meanwhile, close ties with U.S. donors and institutions have facilitated significant funding and support for Israeli expansionism.

U.S. state and local governments, for example, have invested billions in Israel Bonds, an investment vehicle that directly supports the Israeli government, while millions of tax-deductible U.S. dollars flow to settler organizations. Since the funds raised by Israel Bonds are deposited into the general Israeli state budget and allocated at the government's discretion, they are fungible with other budgetary resources.

U.S. sanctions targeting settler violence and instability have been slow and performative thus far. On Feb. 1, U.S. President Joe Biden issued Executive Order 14115 to address threats to "peace, security, and stability in the West Bank." The power of U.S. sanctions often lies in the intimidating ambiguity of their scope, which is prohibitive for Americans and imposes a chilling effect on non-Americans dealing with the sanctions' targets. The initial round of sanctions targeted just four people. Immediately, Israeli banks, despite being non-U.S. entities, swiftly halted financial transactions with the sanctions targets. This action prompted backlash in Israel. Then, in late March, the U.S. Treasury Department informed the Bank of Israel in a guidance letter that Israeli banks could facilitate basic living expenses such as food and rent for the violent settlers in question without exposure to sanctions liability.

While humanitarian exceptions are standard across U.S. sanctions programs, this blanket guidance appears to be a concession in response to Israeli pressure. What's more, the letter dilutes the sanctions' impact by setting clear limits on the ambiguity of enforcement and preserving financial normalcy for the targets. For instance, the guidance prioritizes the wellbeing of the sanctioned individuals' livestock, which play a key role in seizing control over Palestinian land. Just two months after the guidance was issued, a private recording revealed Israeli Finance Minister Bezalel Smotrich's plans to continue using farming outposts, which he described as a "mega-strategic tool" for advancing expansionist goals.

Isolated measures that treat violence, land seizures, and human rights abuses as anomalies rather than inherent features of the occupation are inadequate to adhere to the ICJ opinion. An impactful sanctions program must target not only the direct perpetrators of violence but also the broader infrastructure supporting the occupation. The United States must lead or support these efforts because of its monopoly on sanctions, which it derives from the U.S. dollar's dominance in global trade and banking.

In recent months, the sanctions initiative at DAWN, an organization promoting democracy and human rights in the Middle East and North Africa, has made multiple submissions to the U.S. government for sanctions designations and enforcement against entities involved in the most egregious forms of violence and unlawful conduct in the West Bank. These entities include Tzav 9, the group known for attacks on Gaza aid trucks.

Unlike U.S. sanctions programs against Cuba, Iran, and North Korea, which are country-based and harm ordinary civilians, the sanctions DAWN recommends target only specific individuals, entities, and government officials involved in human rights abuses and unlawful conduct in the occupied territories. If these sanctions are met with no change in behavior, an effective program would escalate to target more prominent entities, which could lead to broader economic implications. DAWN's intended goal, however, is to compel a significant policy shift at the highest levels of the Israeli government while the consequences of any sanctions remain targeted.

To act on the ICJ opinion and the official U.S. foreign policy objective of a two-state solution, the Biden administration must explicitly acknowledge that the illegality of Israeli's occupation is the root cause of the West Bank's violence and instability. A meaningful sanctions program would carry the potential to eventually include major entities such as banks that finance or support the illegal settlements.

There is already some movement in this direction. Just over a month ago, Canada imposed sanctions on Amana, a leading West Bank settlement organization. (Israeli nongovernmental organization Peace Now estimates Amana's assets at $160 million and reports that it has established or is advancing more than half of the 146 settlements in the West Bank.) Canada has also singled out Daniella Weiss, a controversial figure who leads the Nachala Movement, which focuses on initiating illegal outposts in the West Bank and reestablishing settlements in Gaza. While initially deferring to its allies' targeted strategies, Canada has demonstrated a more assertive stance by setting a precedent that institutional stakeholders are also targets in the effort to hold Israel accountable.

Canada—which in December 2022 voted against the U.N. General Assembly resolution that led to the ICJ ruling—should be commended for its actions. But the Canadian sanctions' impact is limited due to their lack of extraterritorial reach.

By contrast, U.S. sanctions on anyone tend to have a global impact because of the U.S. dollar's dominance in global trade. As the world's primary reserve currency, the dollar has wide use in international trade and is held by central banks as part of their reserves. This dominance grants the United States significant leverage over global financial activities, enabling its sanctions to disrupt transactions beyond its borders. Additionally, the United States allocates substantial resources to its sanctions programs due to its extensive enforcement capabilities and influence over global financial institutions and commerce.

Only unilateral U.S. sanctions or multilateral sanctions backed by the United States can exert the necessary pressure on Israel to halt its illegal activities across the occupied territories. A meaningful global sanctions effort could achieve this in two ways: U.N. sanctions or multilateral sanctions. The former would require the United States to make the unprecedented move of refraining from vetoing any Chapter VII U.N. Security Council resolution regarding Israel's illegal activities. The latter, an arguably less politically challenging approach, would require the United States to organize multilateral sanctions in coordination with its allies—akin to those initiated in response to Russia's 2022 invasion of Ukraine.

U.S.-enabled Israeli impunity has led us to this point, but U.S.-led sanctions can also be the solution. The United States has a moral responsibility to lead the global sanctions effort against Israel. Together with its allies, the United States should build on Canada's recent actions and intensify coordinated efforts to impose sanctions on individuals and organizations involved in sustaining the occupation and its associated illegal activities.

The goal would be to significantly increase the economic cost of sustaining the occupation and associated apartheid policies, compelling a policy shift at the highest levels of the Israeli government. The ICJ ruling provides the legal and moral foundation for such an effort and may serve as the basis for a just, long-term geopolitical resolution that both the Palestinian and Israeli people deserve.

If Washington ignores the ICJ ruling, it will further entrench a culture of Israeli impunity on the international stage. To maintain its role as the leader of the rules-based order it helped establish, the United States must finally show Israel—one of its closest allies—some tough love.

Photo Credits: Israeli soldiers gather during a protest in the town of Beita in the occupied West Bank on July 26. Wahaj Bani Moufleh/Middle East Images via AFP via Getty IMages

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