Sanctions’ place as a tool in modern politics and global trade is more obvious than ever. Recent events in Eastern Europe have demonstrated the power and effect of sanctions on the world stage like rarely seen before.
As of February 2023, Russia has accumulated sanctions on more than 10,000 entities and individuals due to their war against Ukraine.
But not all sanctions are the same. The target, goal, type, and scope of sanctions vary greatly. To better understand the complexities of global trade, one must also understand the role of sanctions.
The Cause of Sanctions
Sanctions are deployed for three broad reasons.
- To force cooperation with international law.
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- Such as the United Nations Resolution 661, which sanctioned Iraq after its invasion of neighboring Kuwait. The intention was to force Iraq to recognize Kuwait’s sovereignty and right to self-defense, as agreed by international law.
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- To contain a threat.
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- Such as, Resolution 1929 from the United Nations Security Council explicitly sanctions the export of weaponry materials to Iran that could be used offensively in the region.
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- To condemn specific actions.
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- Such as the General Assembly of the United Nations’ condemnation and sanctioning of Rhodesia (an unrecognized state in modern-day Zimbabwe) in 1965 after a white majority (6%) declared independence and attempted to govern without adequately representing the population.
The motivations behind each sanction and sanctioner are complex and don’t always fall neatly into the above categories.
Origin of Sanctions
A sanction can be classified into two groups depending on who is instituting it.
- Unilateral Sanctions originate from a single country, acting independently of any group or alliance.
- Multilateral Sanctions originate from a group of countries that all apply the sanctioning action together.
Target of Sanctions
Sanctions can broadly apply to governments, regions, or institutions or have surgeon-like precision that only applies to specific key individuals.
Governments
The earliest known sanction was against an entire government. Athens attempted to embargo their neighbor Megara in 432 BC for supposed Megarian trespasses on sacred land.
While most sanctions aim to impact a specific nation, a complete end of all trade with an entire country is rare in the modern area. Instead, targeted approaches are more common.
Institutions
Sanctions commonly target industries, businesses, or institutions within a country, like forbidding the sale of lucrative materials such as oil or blocking a bank from doing business in the international community.
Individuals
Even more targeted sanctions are against specific individuals. These sanctions can go so far as forbidding all transactions.
As an example, the United States Bureau of Industry and Security maintains extensive denied persons lists that forbid Americans from doing any sort of business with the listees.
Type of Sanctions
No matter the motivations, sanctions make an effort to limit something beneficial for the target. The most common way to classify sanctions is by what they attempt to limit.
Diplomatic Sanctions
This type of sanction seeks to limit diplomatic avenues to the target nation, usually used to express disapproval in a symbolic way that often doesn’t have long-lasting repercussions beyond damaging diplomatic relationships.
They can range from things as simple as canceling the visit of a high-ranking official to as severe as the closure of embassies.
Example of Diplomatic Sanctions: In 2019, United States President Donald Trump canceled a visit to Denmark after a dispute regarding the purchase of Greenland, a constituent country of the Kingdom of Denmark.
Economic Sanctions
This type of sanction aims to negatively impact the economy of the target nation, usually by closing off potential business markets. They can range from increased tariffs to blockades.
Example of Economic Sanctions: Since 1962, the United States has forbidden all American businesses and individuals from almost all trade with Cuba and motivated its allies to do the same. However, Cuba does business with many countries, including American allies, and companies that do so risk their business relationship with the United States.
Military Sanctions
This type of sanction attempts to limit the military capabilities of the target nation. These sanctions can include arms embargoes, which seek to block military hardware or technology, but in more dire situations, can also mean aggressive military operations aimed at destroying military might or infrastructure.
Example of Military Sanctions: United Nations Resolution 1718, passed in 2006 due to North Korean nuclear research, limits the export of military goods and luxury resources.
Sports Sanctions
This type of sanction limits the target’s participation with other sports teams or in international competitions. While perhaps not as powerful as other sanctions, sports hold a cherished place in many cultures. Thus, limiting a country’s sports activities can have a devastating impact on morale.
Example of Sports Sanctions: In 1980, the United States led a boycott of the Summer Olympics in Moscow to protest the Soviet Union’s invasion of Afghanistan the year before. Of 147 nations that normally participated in the Olympics, only 80 were present that year.
Environmental Sanctions
This type of sanction limits damage to the environment. It can include prohibiting the trade of endangered species or substances harmful to the natural world.
Example of Environmental Sanction: The Montreal Protocol is the only UN Treaty ever to be unanimously ratified by all 198 United Nations members. It cut off and phased out the creation, sale, and use of substances dangerous to the Earth’s ozone layer. It was adopted in September 1987. The Montreal Protocol is estimated to have saved two million people annually from skin cancer alone.
Sanctions and Global Trade
The variety and versatility of sanctions show just how much sway these actions have on the global landscape. Especially with the use of sanctions on the rise, individuals and companies must continue to be vigilant to obey sanctions or risk serious financial consequences.
Over the last two decades, the number of parties sanctioned by the United States Office of Foreign Affairs has gone from 912 in 2000 to 9,421 in 2021.
Many companies rely on automatic screening processes to ensure any transaction they are a party to doesn’t breach a sanction.
Reference Links:
- https://www.statista.com/statistics/1293531/western-sanctions-imposed-on-russia-by-target/
- http://unscr.com/en/resolutions/661
- https://www.un.org/securitycouncil/s/res/1929-%282010%29#:~:text=Establishes%20a%20Panel%20of%20Experts,approved%20export%20control%20list%2C%20in
- https://documents-dds-ny.un.org/doc/RESOLUTION/GEN/NR0/222/88/PDF/NR022288.pdf?OpenElement
- https://www.bis.doc.gov/index.php/policy-guidance/lists-of-parties-of-concern/denied-persons-list
- https://www.un.org/securitycouncil/s/res/1718-%282006%29
- https://www.unep.org/ozonaction/who-we-are/about-montreal-protocol
- https://www.jdsupra.com/legalnews/no-surprises-but-fascinating-statistics-7929959/
- https://www.ocr-inc.com/watch-list-screening/
