As my Washington Post colleague David Ignatius has noted, on Wednesday morning U.S. Treasury Secretary Jack Lew gave an unusual speech about economic sanctions at the Carnegie Endowment for International Peace. It was unusual in that, for the first time that I can recall, a policy principal has articulated some general guidelines about the United States’ use of economic sanctions going forward.

(Full disclosure: I was one of several sanctions experts who met with Lew over the past year to discuss this issue. I also used the opportunity to beg him not to remove Alexander Hamilton from the $10 bill.)

Lew’s speech articulates a few clear guiding principles in the application of sanctions:

1) Multilateral support is best. This is the least controversial part of Lew’s speech. “We have the best chance of success when governments and international bodies align their sanctions.” The contrast between the successful application of multilateral sanctions against Iran with the failed unilateral sanctions imposed against Cuba is a clear and accessible contrast.

2) Sanctions work in the long run only if they are lifted when deals are struck. As Lew puts it:

Since the goal of sanctions is to pressure bad actors to change their policy, we must be prepared to provide relief from sanctions when we succeed.  If we fail to follow through, we undermine our own credibility and damage our ability to use sanctions to drive policy change.

This is very important and often gets forgotten, particularly by a Congress that has yet to meet a sanctions instrument that it didn’t like. It also, by the way, scrambles the way that Washington likes to talk about credibility and resolve. Those terms are usually applied to the carrying out of promised military threats. For sanctions, however, credibility also means that if a deal is struck, the sanctions will actually be lifted. If a sanctioned country does not believe that the United States will actually lift the salient sanctions, why should the target ever make a concession? I guarantee you that the more difficult it is for the U.S government to lift sanctions, the less useful the tool will be.

3) Implementation matters just as much as imposition. This is the nitty-gritty part of sanctions implementation where the United States possesses a decided comparative advantage. Lew notes:

Powerful sanctions require investigators and analysts to track how key actors move and store their money and to build detailed cases drawing on intelligence analysis. And they rely on enforcement officers to investigate violations and levy penalties for significant wrongdoing.
Implementation of targeted sanctions means a commitment to due process. Freezing assets and severing financial access is a powerful step and requires decisions that can be appropriately reviewed and reversed when appropriate. This requires a careful review of evidence and a rigorous legal process.

Financial intelligence is one of those unheralded areas where the United States has made great strides over the past 15 years. Lew’s speech properly notes the need for U.S. partners (cough) the European Union (cough) to improve their capabilities in this area.

4) This sanctions business could get out of control. More important than first three principles, however, is Lew’s warning against the abuse of this instrument:

We need to be cautious of rising expectations in this arena. We must be on guard that the ultimate and extreme steps in our Iran nuclear sanctions, taken after eight years of building international support for tougher action, do not become a starting point when we confront each new crisis. We know that foreign policy and security threats will always exist and it is critical that we have scalable options at our disposal.
Secondary sanctions prompt particular concerns. Unlike primary sanctions, which focus on activities of U.S. individuals and companies, secondary sanctions generally are directed toward foreign people.  These measures threaten to cut off foreign individuals or companies from the U.S. financial system if they engage in certain conduct with a sanctioned entity, even if none of that activity touches the United States directly. As a result, they are viewed, even by some of our closest allies, as extra-territorial attempts to apply U.S. foreign policy to the rest of the world.
The risk that sanctions overreach will ultimately drive business activity from the U.S. financial system could become more acute if alternatives to the United States as a center of financial activity, and to the U.S. dollar as the world’s preeminent reserve currency, assume a larger role in the global financial system.  Global norms are hard to reshape, existing alternatives are not well positioned to fully fill the role of U.S. markets and the U.S. dollar, and there are many factors that will continue to make the United States the most attractive financial system in the world. But our central role must not be taken for granted. If foreign jurisdictions and companies feel that we will deploy sanctions without sufficient justification or for inappropriate reasons — secondary sanctions in particular — we should not be surprised if they look for ways to avoid doing business in the United States or in U.S. dollars. And the more we condition use of the dollar and our financial system on adherence to U.S. foreign policy, the more the risk of migration to other currencies and other financial systems in the medium-term grows.  Such outcomes would not be in the best interests of the United States for a host of reasons, and we should be careful to avoid them. (Emphasis added.)

Lew is not issuing idle warnings here. Both China and Russia are trying to devise ways to hedge their reliance on the dollar. The reckless use of financial sanctions will only exacerbate that trend.

Lew’s deeper point is one that should be noted in some presidential campaigns: Every policy action can trigger reactions that undercut the ability to take action in the future. It is easy, when focusing on crisis bargaining, to forget that there’s a lot more to foreign policy than such crises. Actions that might yield short-term policy gains can undercut the foundation that enables the United States to advance its interests in the long run. An excessive and capricious reliance on financial sanctions would seriously erode U.S. power over time.

On Tuesday, I wrote about how difficult it is for policymakers to craft a strategic outlook when the day-to-day management of foreign policy overwhelms them. So credit where it’s due: Lew’s speech is a good jumping-off point for a serious strategic debate about the trade-offs that come with economic sanctions. There needs to be even more debate about the best guidelines for the conditions under which the United States should apply and lift economic sanctions.