Economic sanctions are commercial and financial penalties applied by one or more countries against a targeted self-governing state, group, or individual. Economic sanctions are not necessarily imposed because of economic circumstances—they may also be imposed for a variety of political, military, and social issues. Economic sanctions can be used for achieving domestic and international purposes.
Economic sanctions generally aim to change the behavior of elites in the target country. However, the efficacy of sanctions is debatable and sanctions can have unintended consequences.
An embargo (from the Spanishembargo, meaning hindrance, obstruction, etc. in a general sense, a trading ban in trade terminology and literally "distraint" in juridic parlance) is the partial or complete prohibition of commerce and trade with a particular country/state or a group of countries. Embargoes are considered strong diplomatic measures imposed in an effort, by the imposing country, to elicit a given national-interest result from the country on which it is imposed. Embargoes are generally considered legal barriers to trade, not to be confused with blockades, which are often considered to be acts of war. Embargoes can mean limiting or banning export or import, creating quotas for quantity, imposing special tolls, taxes, banning freight or transport vehicles, freezing or seizing freights, assets, bank accounts, limiting the transport of particular technologies or products (high-tech) for example CoCom during the cold-war. In response to embargoes, a closed economy or autarky often develops in an area subjected to heavy embargo. Effectiveness of embargoes is thus in proportion to the extent and degree of international participation. Embargo can be an opportunity to some countries to develop faster a self-sufficiency. However, Embargo may be necessary in various economic situations of the State forced to impose it, not necessarily therefore in case of war.
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. (in some cases economic sanctions are imposed to ensure the larger country's resource acquisition schemes, e.g. Venezuelan oil reserves) Economic sanctions are used as an alternative weapon instead of going to war to achieve desired outcomes.
According to the data of Hufbauer et al., regime change, the most frequent foreign-policy objective of economic sanctions, accounts for just over 39 percent of cases of their imposition.
Researchers debate the effectiveness of economic sanctions in their ability to achieve their stated purpose. Hufbauer et al. claimed that in their studies 34 percent of the cases were successful. When Robert A. Pape examined their study, he claimed that only five of their forty so-called "successes" stood up, reducing economic sanctions' success rate to 4% in his analysis. Success of sanctions as a form of measuring effectiveness has also been widely debated by scholars of economic sanctions. Success of a single sanctions-resolution does not automatically lead to effectiveness, unless the stated objective of the sanctions regime is clearly identified and reached.
Imposing sanctions on an opponent also affects the economy of the imposing country to some degree. If import restrictions are promulgated, consumers in the imposing country may have restricted choices of goods. If export restrictions are imposed or if sanctions prohibit companies in the imposing country from trading with the target country, the imposing country may lose markets and investment opportunities to competing countries.
British diplomat 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".
Implications for businesses
Companies must be aware of embargoes that apply to the intended export destination. Embargo check is difficult for both importers and exporters to follow. Before exporting or importing to other countries, firstly, they must be aware of embargoes or risk facing unintended punitive measures for violating sanctions. Subsequently, firms need to make sure that they are not dealing with embargoed countries by checking those related regulations. Finally, they probably need a license in order to ensure a smooth export or import business. Sometimes the situation becomes even more complicated with the changing of politics of a country.[example needed]
Embargoes keep changing. In the past,[when?] many companies relied on spreadsheets and manual process to keep track of compliance issues related to incoming and outgoing shipments, which takes risks of these days help companies to be fully compliant on such regulations even if they are changing on a regular basis. If an embargo situation exists, the software blocks the transaction for further processing.[example needed]
An undersupplied U.S. gasoline station, closed during the oil embargo in 1973
The United States Embargo of 1807 involved a series of laws passed by the U.S. Congress (1806–1808) during the second term of President Thomas Jefferson. Britain and France were engaged in a major war; the U.S. wanted to remain neutral and to trade with both sides, but neither side wanted the other to import American supplies. American policy aimed to use the new laws to avoid war and to force both France and Britain to respect American rights. The embargo failed to achieve its aims, and Jefferson repealed the embargo legislation in March 1809.
One of the most comprehensive attempts at an embargo occurred during the Napoleonic Wars of 1803-1815. Aiming to cripple the United Kingdom economically, Emperor Napoleon I of France in 1806 promulgated the Continental System – which forbade European nations from trading with the UK. In practice the French Empire could not completely enforce the embargo, which proved as harmful (if not more so) to the continental nations involved as to the British.
The United States imposed an embargo on Cuba on March 14, 1958, during the Fulgencio Batista regime. At first the embargo applied only to arms sales, however it later expanded to include other imports, extending to almost all trade on February 7, 1962. Referred to by Cuba as "el bloqueo" (the blockade), the U.S. embargo on Cuba remains as of 2018[update] one of the longest-standing embargoes. Few of the United States' allies embraced the embargo, and it apparently has done little to affect Cuban policies over the years. Nonetheless, while taking some steps to allow limited economic exchanges with Cuba, American President Barack Obama reaffirmed the policy in 2011, stating that without the granting of improved human rights and freedoms by Cuba's current government, the embargo remains "in the national interest of the United States".
EU, US, Australia, Canada and Norway (by Russia) since August 2014, beef, pork, fruit and vegetable produce, poultry, fish, cheese, milk and dairy. On August 13, 2015, the embargo was expanded to Albania, Montenegro, Iceland, and Liechtenstein.
Gaza Strip by Israel since 2001, under arms blockade since 2007 due to the large number of illicit arms traffic used to wage war, (occupied officially from 1967 to 2005).
Iran: by US and its allies, notably bar nuclear, missile and many military exports to Iran and target investments in: oil, gas and petrochemicals, exports of refined petroleum products, banks, insurance, financial institutions, and shipping. Enacted 1979, increased through the following years and reached its tightest point in 2010. In April 2019 the U.S. threatened to sanction countries continuing to buy oil from Iran after an initial six-month waiver announced in November 2018 expired. According to the BBC, U.S. sanctions against Iran "have led to a sharp downturn in Iran's economy, pushing the value of its currency to record lows, quadrupling its annual inflation rate, driving away foreign investors, and triggering protests."
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.
In response to cyber-attacks on April 1, 2015 President Obama issued an Executive Order establishing the first-ever economic sanctions. The Executive Order was intended to impact individuals and entities (“designees”) responsible for cyber-attacks that threaten the national security, foreign policy, economic health, or financial stability of the US. Specifically, the Executive Order authorized the Treasury Department to freeze designees’ assets.
In response to intelligence analysis alleging Russian hacking and interference with the 2016 U.S. elections, President Obama expanded presidential authority to sanction in response to cyber activity that threatens democratic elections. Given that the original order was intended to protect critical infrastructure, it can be argued that the election process should have been included in the original order. It can be further argued that democratic elections are our most critical infrastructure.
Bilateral trade disputes
Vietnam as a result of capitalist influences over the 1990s and having imposed sanctions against Cambodia, is accepting of sanctions disposed with accountability.[clarification needed]
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.
Hufbauer, Gary Clyde; Schott, Jeffrey J.; Elliott, Kimberly Ann; Oegg, Barbara (2008). Economic Sanctions Reconsidered (3 ed.). Washington, DC: Columbia University Press. p. 67. ISBN9780881324822. Retrieved 2018-05-10. By far, regime change is the most frequent foreign policy objective of economic sanctions, accounting for 80 out of the 204 observations.
^Economic Sanctions Reconsidered, 3rd Edition, Hufbauer et al. p. 159
^Pape, Robert A (Summer 1998). "Why Economic Sanctions Still Do Not Work". International Security. 23 (1): 66–77. doi:10.2307/2539263. JSTOR2539263. I examined the 40 claimed successes and found that only 5 stand up. Eighteen were actually settled by either direct or indirect use of force; in 8 cases there is no evidence that the target state made the demanded concessions; 6 do not qualify as instances of economic sanctions, and 3 are indeterminate. If I am right, then sanctions have succeeded in only 5 of 115 attempts, and thus there is no sound basis for even qualified optimism about the effects of sanctions.
^A Strategic Understanding of UN Economic Sanctions: International Relations, Law, and Development, Golnoosh Hakimdavar, p. 105
^"Pearl Harbor Raid, 7 December 1941". Washington: Department of the Navy -- Naval Historical Center. 3 December 2000. Retrieved 20 July 2019. The 7 December 1941 Japanese raid on Pearl Harbor was one of the great defining moments in history. A single carefully-planned and well-executed stroke removed the United States Navy's battleship force as a possible threat to the Japanese Empire's southward expansion. [...] The Japanese military, deeply engaged in the seemingly endless war it had started against China in mid-1937, badly needed oil and other raw materials. Commercial access to these was gradually curtailed as the conquests continued. In July 1941 the Western powers effectively halted trade with Japan. From then on, as the desperate Japanese schemed to seize the oil and mineral-rich East Indies and Southeast Asia, a Pacific war was virtually inevitable.