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Economic sanctions are domestic penalties applied by one country (or group of countries) on another country (or group of countries). Economic sanctions may include various forms of trade barriers and restrictions on financial transactions. Economic sanctions are not necessarily imposed because of economic circumstances — they may also be imposed for a variety of political and social issues. Economic sanctions can be used for achieving domestic political gain.
Sanctions are penalties “imposed by one nation onto one or more other nations. Sanctions can be unilateral, imposed by only one country on one other country, or multilateral, imposed by one or more countries on a number of different countries” . Jonas Elmerraji states on his article “Countries Sanctioned By The US. - And Why,” that a sanction does not necessarily has to be imposed on a country in general; in fact sanctions can be applied to specific individuals or entities such as citizens or corporations. In addition are used as “instruments of foreign [policies] and economic pressure…. [that generally could deal] with international trade politics. “In March 2014, for example, in response to the Russian annexation of Crimea, the United States and the European Union froze the American and European assets of members of Vladimir Putin’s “inner circle,” which includes politicians, business leaders and one bank. In response, Russia sanctioned several American politicians, including House Speaker John Boehner, Senate Majority Leader Harry Reid, and Arizona Senator John McCain. The impact of Russian sanctions on American politicians was expected to be limited, and was treated humorously: John McCain deadpanned in a March 20 Tweet, "I guess this means my spring break in Siberia is off, Gazprom stock is lost & secret bank account in Moscow is frozen. While the targeted Russians did not all have foreign assets, they faced financial strain. They were unable to carry out dollar-denominated transactions; banks were less willing to help them for fear of angering Western governments; and American businesses weren't able to work with them. In the long term, however, these sanctions were likely to have less impact than broader sanctions on Russian energy exports to Europe. Roughly 53% of Russia’s gas exports go to the EU, worth an estimated $24 billion a year.” (Brent Radcliffe)
- 1 Types of Sanctions
- 2 Trade sanctions
- 3 Politics of sanctions
- 4 When Is It Time To Impose Sanctions?
- 4.1 Effectiveness of economic sanctions
- 4.2 Examples of economic sanctions
- 4.3 Examples of Countries Sanctioned by the USA: Economic Sanctions
- 4.4 Trade Sanctions and its Relation to Climate Change
- 4.5 Integrating Criminal and Administrative Sanctions Over-reliance on the Criminal Law
- 4.6 The Importance of Regulatory Governance
- 5 See also
- 6 Notes
- 7 References
- 8 External links
Types of Sanctions
There are multiple forms of sanctions that can be applied to a country depending on the occurred infraction. The sanctions are used mainly to reinforce foreign polices and to avoid violations of a country’s primary protocols, legislations, security matters, human rights or environmental issues. Some of the sanctions can occur often than other ones but the primary objective of them is to “force or change behavior.” The article “Sanctions Between Countries Pack a Bigger Punch Than You Might Think,” Written by Brent Radcliffe, describes different types of sanctions such as:
- Tariffs – Taxes imposed on goods imported from another country.
- Quotas – A limit on how many goods can be either imported from another country or sent to that country.
- Embargoes – A trade restriction that prevents a country from trading with another. For example, a government can prevent its citizens or businesses from providing goods or services to another country.
- Non-Tariff Barriers (NTBs) – These are non-tariff restrictions on imported goods and can include licensing and packaging requirements, product standards and other requirements that are not specifically a tax.
- Asset freezes or seizures – Preventing assets owned by a country or individual from being sold or moved.
Sanctions can be categorized in different ways. One of them is by describing them by the “number of parties using the sanction.” For example “unilateral” sanction, meaning that only one country is applying the sanction; whereas a bilateral sanctions signifies that there are more than two parties involved and supporting the sanction (Brent Radcliffe).
Some other way of categorizing sanctions described by Radcliffe’s article is by the by understanding the “type of trades they limit.” [For example] “export-sanctions block goods flowing into a country, while import sanctions block goods leaving the country.” The two options are not equal and will result in different economic ramifications…Export sanctions can create an incentive to substitute the blocked goods for something else. A case in which an export sanction could work is the blocking of sensitive technological know-how from entering the target country (think advanced weapons). It is harder for the target country to create this sort of good in-house…For example, on July 31, 2013, the U.S. passed the bill H.R. 850, which basically blocked Iran from selling any oil abroad because of its nuclear program. This bill followed a year in which Iran's oil exports had already been cut in half by international sanctions. If countries don't import the target country's products, the target economy can face industry collapse and unemployment, which can put significant political pressure on the government”
It is necessary to understand that the purpose of a sanction is to change behavior; however, the intensity of a penalty could vary depending on the issue that developed the creation of such. Sanctions can be reinforced in a country as a “whole, as in the case of an embargo on a country’s exports (e.g. U.S. sanctions on Cuba) or They can target specific industries, such as an embargo on the sale of weapons of petroleum. Since 1979, the United States and European Union have prohibited the import or export of goods and services to Iran.” Sanctions could be also implemented on individuals such as politicians or business leaders. The purpose of this individual targeted sanction is to alter and to cause “financial difficulties” to the targets and not to a whole nation. (Radcliffe)
In light of international law, theorists argue, sanctions are not as sanctioned as tariffs, which are subject to "peer review of the WTO." Such a development has been precipitated by e.g. Chinese disapproval of unilateral sanctions against Russia by the West.
Trade sanctions are trade penalties imposed by a country or group of countries on another country or group of countries. Typically the sanctions take the form of import tariffs (duties), licensing or other administrative regulations. They tend to arise in the context of an unresolved trade or policy dispute.There is disagreement about the fairness of some policy affecting international trade (imports or exports)[not specific enough to verify].
Politics of sanctions
Economic sanctions are used as a tool of foreign policy by many governments. Economic sanctions are usually imposed by a larger country upon a smaller country for one of two reasons – either the latter is a threat to the security of the former nation or that country treats its citizens unfairly. They can be used as a coercive measure for achieving particular policy goals related to trade or for humanitarian violations. Economic sanctions are used as an alternative weapon instead of going to war to achieve desired outcomes.
When Is It Time To Impose Sanctions?
“Sanctions may be enacted for several reasons, such as a retaliatory measure for another country's economic activities. For example, a steel-producing country might use a sanction if another country tries to protect a nascent steel industry by putting an import quota on foreign steel. Sanctions may also be used as a softer tool, especially as a deterrent to human rights abuses (e.g. the U.S. sanctions against apartheid-era South Africa). The United Nations might condone the use of bilateral sanctions against a country if it perpetrates human rights abuses, or if it breaks resolutions regarding nuclear weapons. Sometimes the threat of a sanction is enough to alter the target country's policies. A threat implies that the country issuing the threat is willing to go through economic hardship to punish the target country if change does not occur. The cost of the threat is less than that of military intervention, but it still carries economic weight. For example, in 2013 Zimbabwe's President Robert Mugabe and his inner circle were sanctioned by the U.S. because of alleged rights abuses.” (Brent Radcliffe).
Effectiveness of economic sanctions
Regime change is the most frequent foreign policy objective of economic sanctions. There is controversy over the effectiveness of economic sanctions in their ability to achieve the stated purpose. Haufbauer et al. claimed that in their studies 34 percent of the cases were successful  When Robert A. Pape reexamined their study, he claimed that only five of their forty so-called "successes" stood out, dropping their success rate to 4%.
It also affects the economy of the imposing country to some degree. If import restrictions were made, the consumers in the imposing country would have fewer choices of goods. If export restrictions were made or sanction prohibited businesses in the imposing country from doing business with the target country, the imposing country could lose markets and investment opportunities to competing countries.
Jeremy Greenstock suggests that the reason sanctions are popular is not that they are known to be effective, but "that there is nothing else between words and military action if you want to bring pressure upon a government".
Examples of economic sanctions
- Asian economies became more and more effective competitors on the international stage, achieved via export-led growth, many countries imposed import tariffs aimed at protecting domestic industries. The intention was to give the domestic firms time to adjust to a changed competitive context.
- In September 2003, World Trade Organization talks in Cancún between the advanced nations and the developing world were ineffective. Issues included the advanced nations subsidizing their agricultural sectors to the detriment of the developing world.
- Vietnam as a result of capitalist influences over the 1990s and having imposed sanctions against Cambodia, is accepting of sanctions diposed with accountability.
- The European Union's sanctions against Burma (Myanmar) based on lack of democracy and human rights infringements.
- The fifty-year-old United States embargo against Cuba.
- The United Nations imposed economic sanctions upon Iraq after the first Gulf War as an attempt to make the Iraqi government co-operate with the UN weapons inspectors' monitoring of Iraq's weapon program. These sanctions were quoted as being unusually stringent in that very little trade goods were allowed in or out of Iraq during the sanction period.. The sanctions were not lifted until May 2003, after the government of Saddam Hussein was overthrown.
- There is a United Nations sanction imposed by UN Security Council Resolution 1267 in 1999 against all Al-Qaida- and Taliban-associated individuals. The cornerstone of the sanction is a consolidated list of persons maintained by the Security Council. All nations are obliged to freeze bank accounts and other financial instruments controlled by or used for the benefit of anyone on the list.
- The United States has imposed economic sanctions against Iran for years, on the basis that the Iranian government sponsors groups who work against US interests.
- The 2002 United States steel tariff was placed by the United States on steel to protect its industry from foreign producers such as China and Russia. The World Trade Organization ruled that the tariffs were illegal. The European Union threatened retaliatory tariffs on a range of US goods that would mainly affect swing states. The US government then removed the steel tariffs in early 2004.
- In March 2010, Brazil introduced sanctions against the US. These sanctions were placed because the US government was paying cotton farmers for their products against World Trade Organization rules. The sanctions cover cotton, as well as cars, chewing gum, fruit, and vegetable products. The WTO is currently supervising talks between the states to remove the sanctions.
- North Korea has been the subject of international sanctions since the Korean War, which were eased under the Sunshine Policy led by South Korean President Kim Dae Jung and by U.S President Bill Clinton but tightened again in 2010.
- Certain Russians have been subjected to sanctions due to their involvement in the 2014 pro-Russian unrest in Ukraine.
Examples of Countries Sanctioned by the USA: Economic Sanctions
Economic sanctions are one of the most popular ways for governments to expose their disagreement over other governments. The repercussions over an international sanction can be devastating and could last over several years, until polices, agreements and or ideologies matches or fills the needs of the sanction removal required by the government that is implementing the sanction. Find out more in The Power Of Economic Sanctions (Jonas Elmerraji). These are some of the countries sanctioned by the US and the reasons why.
The Southeast Asian nation of Burma – also known as the Union of Myanmar – is one of the countries that the U.S. has placed sanctions on for human rights and political reasons. The country is ruled by a military junta, a committee of military leaders that makes political decisions for the country of 50 million. In charge is Senior General Than Shwe, the head of state who made the number-four spot in Parade Magazine's 2009 list ofWorld's Worst Dictators. U.S. sanctions prohibit investment into Burma, restrict the financial resources of the ruling military junta and disallow U.S. imports of Burmese products, as well as U.S. exports of financial services to the country. However, General License No. 14-B allows not-for-profit humanitarian and religious organizations in Burma to receive U.S. funding.
The West African nation Côte d'Ivoire (or the Ivory Coast, in English) is another country that's being sanctioned by the U.S. government for human rights violations. In the 1970s, Côte d'Ivoire was home to Africa's strongest economies thanks to booming coffee and cocoa exports, but an economic decline through the 1980s and 1990s brought about social problems that eventually lead to civil war in 1999. The country is still in conflict, with both sides of the fight charged with numerous human rights violations. As a result, U.S. sanctions prohibit trade with people or organizations who provide arms or assistance to Côte d'Ivoire. (Learn the contract specifications for a few of the most heavily traded commodities, in The Sweet Life Of Soft Markets.)
One of the U.S.'s longest-standing and most well known sanctions is against one of the U.S.'s neighbors to the south: Cuba. In February, 1959, Fidel Castro became Prime Minister of Cuba, unseating a post-revolution Cuban government that was favored by the United States. (Ironically, the previous Batista regime was defeated in part because of a U.S. imposed arms embargo.) Since the Cuban dictator took power, the U.S. has had trade embargoes in place as a punishment for impediments to democratic rule. While Americans aren't generally allowed to trade with Cuban interests or travel to Cuba, the close geographic proximity (and large Cuban-American population) have ensured that a number of exemptions exist for humanitarian work and visiting relatives.
Following the Iranian Revolution, where the Western-friendly Shah of Iran was deposed in favor of a theocratic government, the Iranian Hostage Crisis and other ensuing events pushed the U.S. to levy a trade embargo on the Middle Eastern nation. With increasingly tenuous political relations right now, Iranian economic sanctions continue to be a hotly discussed topic.
North Korea is arguably the country most brutally affected by U.S. economic sanctions. North Korea's battles with the U.S. started in the 1950s with the United States' entry into the Korean War – a move designed to counter the USSR's support for a unified, communist Korea. Today, North and South Korea continue to technically be at war (albeit under a ceasefire since 1953), and the U.S. maintains stringent trade restriction on the country. (Blitzkrieg? Dawn raids? Sounds like the markets and the battlefield have a few things in common! Find out more inWar's Influence On Wall Street.)
As one of the nations that former U.N. Ambassador John Bolton named as "beyond the axis of evil," Syria has had contentious relations with the United States because of its position as a sponsor of terrorism. As a result, the U.S. has strong trade restrictions on the country, barring major exports as well as financial services for individuals or organizations linked to terror. (The measures in Standard Of Living Vs. Quality Of Life may seem similar, but the reality is an issue of qualitative versus quantitative.)
Trade Sanctions and its Relation to Climate Change
As climate change discussion take place and relevance in the industrialized and free trade world some countries have started to implement polices to reduce and positively contribute to mitigate climate change. The International Comparative Legal Guide to Environment & Climate Change Law 2013 has created a document under the title “Environmental Enforcement and Sanctions – The New Agendas” in collaboration with London College University professor Richard Macrory explaining a set of samples and rules that apply and vary depending on the country. The document focuses on the multiple possibilities of penalties and sanctions that are or could been implemented and applied to a country or an individual on climate change and information distribution of policies applied by different countries.
Richards Macrory report reveals a positive futuristic view “over the next decade” as he mentions that there are “strong signs” that a European level more attention will be delivered towards the creation and fulfillment of enforcement systems or sanctions regarding nature and climate change. There are existent and multiple European network entities responsible for reinforcement. The oldest and most pronounce is the European Union Network for the Implementation and Enforcement of Environmental Law (IMPEL) set up in 1992, focused on industrial pollution control. In 2007, “a parallel network of agencies involved in nature conservation, the European Network of Heads of Nature. Conservation Agencies (ENCA), was established”. In 2004, the European Union Forum for Judges for the Environment was set up with a core aim of promoting the enforcement of national, European and international environmental law by exchanging information on decisions and generally raising awareness amongst national judges. (Richard Macrory)
Integrating Criminal and Administrative Sanctions Over-reliance on the Criminal Law
Taking in consideration the fact that sanctions applied to climate chance is a fairly new discussions for governments, it is clear that every movement towards the implementation of sustainable laws is hard and seems a very slow process due to the lack of solid ground and regulations created. In other words, the economic interest of powerful corporations and public figures overpowers the interest of reducing and mitigate climate change on earth. Macrory explains that “In nearly every area of regulation, the core sanction in England and Wales has been a criminal offence, usually drafted in such a way that no intention needs to be proven, and allowing for companies to be found criminally liable where an employee actually committed the offence. ” As a matter of fact the crime is passed to a specific individual, meaning that the “criminal liability” protects the institution as a whole and focus its criminal charges on an individual. This reduces the chances of actually find guilt over a corporation and instead protecting its internal structure. “The potential harshness of the strict liability approach is tempered in practice by two core factors. First, regulators themselves (rather than the police or a public prosecutor) in England and Wales have discretion whether or not to commence a prosecution for any particular breach, and will normally focus prosecution on what they consider to be the more egregious offences.” (Richard Macrory). Another important point is that regulators have more responsibilities different from prosecutions such as “ variation, suspension or revocation of a license.” Penalties like the mentioned “reinforcements” give the chance to a company to conditioned its structure and come back to the right track. “The second main protection against abuse lies in the sentencing discretion of the criminal courts. However, many of the regulators felt that when matters came to court, sentences were often not severe enough, and research has suggested that defence lawyers can all too easily manipulate courts by arguing that mere technical breaches were involved rather than genuinely criminal activity.” (Richard Macrory) “The Sanctions Review recommended the continued use of the criminal law, but proposed that a richer range of sanctions be made available. It seemed entirely inappropriate that a company who, through an oversight, failed to pay environmental license fees, should be subject to a criminal prosecution, yet under the British system there was no other way than by a prosecution for the regulator to recover the savings made by that company. Proposals therefore included administrative financial penalties which avoided the use of the criminal courts and enforceable undertakings where a business offered its own sanctions to regulators which might include payments to charities and similar bodies to neutralize any profits made from non-compliance. These sanctions would be most appropriate for legitimate industry which had breached regulations through inadvertence or carelessness, and where a criminal sanction would be disproportionate, but a warning for an inadequate response.” (Richard Macrory)
The Importance of Regulatory Governance
The underlying message of the Review was that regulators should have access to a greater range of sanctions, and that the choice of sanction should remain initially a matter of decision for a single regulatory body with responsibility for the relevant field of regulation. The choice of sanction is essentially a question of regulatory judgment. However, it is all too easy for institutions to find choices dictated by other factors that can eventually undermine confidence in the system and its underlying rationale – avoiding a system becoming corrupted in this way became one of the key challenges for the review. Revenue streams were an obvious example, and the legislation prohibits incomes from administrative penalties being paid directly to the regulator. Transparency was also a key principle to lessen the likelihood of abuse by regulators. Some regulators already publish an enforcement policy, indicating in broad terms how they are likely to respond to different categories of regulatory breach. However, this was by no means universal, and the Review recommended that all regulators should be legally required to publish such enforcement policies. These policies would in future have to reflect the broader range of sanctions that would be available. Similarly, where a regulator was proposing the use of administrative financial sanctions, they would be obliged to publish policies as to how they calculate such penalties. Published policies of this type can become useful enforcement tools in their own right in that they give clear signals to the regulated community of what is expected of them and what they can expect. For example, credit can be given in calculating a financial administrative penalty where a company in breach has voluntarily and quickly provided compensation to any victims. The Review recommended that regulators should be obliged to produce detailed annual reports of outputs – i.e. the numbers and types of enforcement action taken. Given the greater range of sanctions that a regulator could now impose, it is important to be able to analyze trends over time. (Richard Macrory)
- United States embargoes
- Political economy
- International sanctions
- Trade war
- Individual and group rights
- Universal Declaration of Human Rights
- Economic freedom
- Economic Sanctions Reconsidered, 3rd Edition, Hufbauer et al. page 67
- Economic Sanctions Reconsidered, 3rd Edition, Hufbauer et al. page 159
- Why economic sanctions still do not work, Robert A. Pape , page 66
- Griswold, Daniel. "Going Alone on Economic Sanctions Hurts U.S. More than Foes." November 27, 2000. http://www.cato.org/pub_display.php?pub_id=10888 (accessed April 28, 2011).
- Howse, Robert L. and Genser, Jared M. (2008) "Are EU Trade Sanctions on Burma Compatible with WTO Law?" Michigan Journal of International Law 29(2): pp. 165–196
- Stanglin, Doug. "Brazil slaps trade sanctions on U.S. to retaliate for subsidies to cotton farmers." March 9, 2010. Retrieved on March 14, 2010.
- (Vietnamese) Hoa Kỳ tăng thêm biện pháp trừng phạt Bắc Hàn
- Investoedia Explains 'Trade Sanction" 
- "Countries Sanctioned By The U.S. - And Why." Investopedia. N.p., n.d. Web. 28 Oct. 2014 
- "Trade Sanction Definition | Investopedia." Investopedia. N.p., n.d. Web. 28 Oct. 2014. 
- "Sanctions Between Countries Pack a Bigger Punch Than You Might Think." Investopedia. N.p., n.d. Web. 28 Oct. 2014. 
- Macrory, Richard. The International Comparative Legal Guide To: Environment & Climate Change Law 2013:A Practical Cross-border Insight into Environment and Climate Change Law 10th Edition. London, United Kingdom: Global Legal Group, in Association with Freshfields Bruckhaus Deringer LLP, 2013. Pdf. 
- "International "International Trade and Climate Change: Economic, Legal, and Institutional Perspectives." Review. n.d.: n. pag. World Bank. The International Bank for Reconstruction and Development / The World Bank. Web. 
- Tamiotti, Ludivine, Robert Teh, Vesile Kulaçoğlu, Anne Olhoff, and Benjamin Simmons. Trade and Climate Change A Report by the United Nations Environment Programme and the World Trade Organization. Rep. no. Hussein Abaza. Switzerland: WTO Secretariat, 2009. World Trade Organization. World Trade Organization, 2009. Web. 
- Ethical Aspects of Sanctions in International Law by Hans Köchler (1994)
- Four Decades of Failure: The U.S. Embargo against Cuba
- Steel Trap: How Subsidies and Protectionism Weaken the U.S. Steel Industry
- The European Union’s sanctions related to Human rights: the case of Burma/Myanmar.
- U.S. Sanctions Against Burma: A Failure on All Fronts
- Article by Steve Charnovitz on WTO trade sanctions
- Article on ineffectiveness of EU trade sanctions
- Elliott, Kimberly Ann; Hufbauer, Gary Clyde; Oegg, Barbara (2008). Sanctions. The Concise Encyclopedia of Economics (2nd ed.). Library of Economics and Liberty. ISBN 978-0865976658. OCLC 237794267.