Economic sanctions are Definition, purpose and effectiveness

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:55

In the last century in the world, one of the most popular instruments of influence on a certain country are economic sanctions. This is considered humane compared to armed conflict. However, it has long been clear that this is not an effective enough method, since not only the country against which the sanctions are directed, but also the initiating country suffers.

Target

The main purpose of economic sanctions is to force a country or several states to take certain actions. If we talk about examples, then there are quite a lot of them:

• The imposition of sanctions to stop aiding terrorists, to change the state of affairs inside the country where human rights are violated or religious freedoms are infringed.
• Mode change, but as a secondary goal. Examples are America's sanctions against Cuba in order to destabilize the Fidel Castro regime or the influence of the USSR on Yugoslav policy, aimed at overthrowing the Tito regime.
• Pressure on a country to stop hostilities. For example, US pressure during the struggle forindependence of Bangladesh to Pakistan and India.
• Forcing a country to join and sign an international treaty on disarmament and non-proliferation of nuclear weapons.
• Achieving other goals, such as forcing Hussein out of Kuwait.

International law

Economic sanctions are a tool to influence the government of a particular state or group of countries. Sanctions can be partial or complete. Most often, they use a ban on imports from states that are on the sanctions list. It can also impose a ban on imports, on international financial transactions, including investment programs and cross-border settlements.

Along with unilateral sanctions, multilateral restrictive measures are widely used in recent years, which are carried out through UN decisions. At the same time, the UN Charter does not contain the concept of “economic sanctions”, “embargo”, but provides for a procedure for breaking economic relations, suspension of transport links, that is, without a clear terminology, the procedure is still described. There is no concept of "sanctions" in other international documents. Therefore, in each case, measures are considered individually in relation to each country.

It may seem that sanctions through UN decisions should be as effective as possible. In fact, the use of restrictive measures, like membership in the UN, are voluntary. Therefore, each country relies on its trade relations with the disgraced state and makes its own decision how toenroll.

Historical background

As history shows, economic sanctions are an instrument of influence that was used in ancient Greece. In 423 BC, the dominant Athenian power in Hellas banned merchants from Megara from visiting their own ports, markets and trading. As a result, such actions led to the Peloponnesian War. Thus, there is a clear negative effect of the sanctions.

And some countries that have worked closely with China have tried to undermine the economy and weaken its influence by banning the wearing of silk robes inside their country.

Napoleon Bonaparte also distinguished himself. To suppress Great Britain, he forbade not only France, but also all controlled states to trade with it.

From the 19th to the 20th century, the United Kingdom used international sanctions the most. If we recall the year 1888, then the population of England was only 2% of the total number of all people on the planet. However, the turnover of industrial goods of the entire planet in the amount of 54% fell on this country. By the way, this indicator has not been surpassed to this day by any country.

Economist John Smith generally put forward the theory that the First and Second World Wars began solely because of trade conflicts. After all, the politicians of that time, in particular France and Great Britain, said that the war with Germany (1914) was only the protection of the economic interests of their own countries.

A little later, in the 20-30s of the last century, the global economic depression begins. Most states are raisingcustoms duties, reduce import quotas. And again there is an economic conflict, and, as a result, the Second World War begins.

An interesting, but little-known fact is that on the eve of the Japanese attack on the United States in 1941, the latter stopped oil supplies to the Land of the Rising Sun, and in fact it has almost no minerals.

In the late 1940s and early 1950s, a new surge in the development of international relations began. And economic international wars were not long in coming. In 1973, oil-exporting countries imposed an embargo on the United States. As a result, gasoline prices are skyrocketing, and as a result, a deep crisis begins in Europe and North America. But the supplier countries themselves are beginning to suffer from the embargo. What is Europe doing? It is heading towards finding alternative energy sources and focusing its economy on savings.

Views

Embargo is the most common type of economic sanctions. Simply put, a ban is introduced on export and import operations. The main goal of such events is that through an export ban, the country should feel a shortage of currency, therefore, it will not be able to make purchases outside the country. But there may be another situation. If the country's economy is focused on domestic production and consumption, then the restriction of exports, especially partial ones, may not even be noticed.

The second type of sanctions is the restriction of the supply of high technology and weapons to a country thatwas included in the sanctions list. Here the situation is the same as with the embargo, if there are serious developments inside the country, then it is impossible to cause tangible harm to the state.

The third type is sanctions not against the state itself, but against certain companies from third countries that cooperate directly with the country they want to take measures against at the international level.

The fourth type is bans on financial transactions with rogue countries. As a rule, the ban is imposed on large transactions. This also includes investment restrictions. A vivid example - in 1996, the US government banned investment in the development of the oil industry in Libya and Iran.

American whip

Since the end of the Cold War, the United States has become much more active in using sanctions in foreign policy. For 84 years (1918-1992), America used sanctions against other countries 54 times, and already from 1993 to 2002, the state resorted to this instrument of pressure 61 times.

The main motive of the government is to prevent the threat of terrorism, to protect against illegal trade in weapons, drugs and precious metals. Although US sanctions are not always associated with economic prohibitions. For example, tough measures were taken against the Gambia and Burundi, but trade with them was not prohibited.

Efficiency

The effectiveness of economic sanctions has been debated for years. The main point that is not taken into account when introducing restrictions is that the goalssuch measures are usually too ambitious, but the efforts are too small, and very often there is no support from other countries.

History also shows that very often, against the backdrop of sanctions within the country, internal forces are mobilized, the population rallies and an active search is underway for solutions to existing problems. This happened under Soviet pressure on Yugoslavia.

It often happens in the world market that a country that has fallen under sanctions has external sponsors who are ready to help solve problems. At the same time, most often, the interested parties establish more profitable economic ties.

And there may be a confrontation at the level of the allied states and the disgraced country. Sympathetic partners may refuse to follow America's mandate.

Trade expert Hufbauer generally believes that the economic sanctions of the West or the United States have little effect, since they do not exceed 2% of the state's GDP. Individual companies or sectors of the economy can have a big effect.

USSR and sanctions

The sanctions against Russia that have been imposed since 2014 are not unique. Before the collapse of the Soviet Union, they were used more than once, one might even say that a permanent economic war was waged against the country. However, due to the low dependence on the foreign market for the USSR, all restrictions were practically insignificant, and for the population they were generally invisible.

One of the most striking examples, when in 1917 the Entente countries imposed a commercial and naval blockade against the Soviets. It was connectedwith the nationalization of enterprises owned by foreigners, and the refusal to make payments on the debts of the Russian Empire.

Then there were many more examples. So, in 1980, America tried to influence the economy of the Soviets due to the introduction of troops into Afghanistan. In addition, there was an impact on investors who invested in the construction of the Urengoy - Pomary - Uzhgorod gas pipeline. However, Germany and France continued to cooperate, and the project was successfully completed in 1982, that is, the USSR again did not feel any consequences of economic sanctions. In that situation, the partners took the side of the disgraced state, since the benefits were obvious.

Anti-Russian economic sanctions

The main goal of all US restrictions in relation to the Russian Federation is to weaken the state's economy and increase public dissatisfaction with the government. Since Trump came to power, it seemed that his policy would be to maintain ties with Putin, but the American president met with huge opposition in Congress on this issue. And it is already clear that the strategy has changed, Trump continues to impose sanctions. And these restrictions are already more aimed at intimidating the Russian elite so that they themselves decide to change power in Russia.

So, the new economic sanctions already consist of a disgraced list of individuals. It has 1759 people. 786 enterprises fell under the sanctions, including even political and public organizations.

EU sanctions

The countries of the European Union have also introduced economic sanctions since 2014 againstRussian Federation, constantly replenishing the list and extending the deadlines. In particular, access to the financial market is closed for many state-owned companies, these are Rosneft, Transneft, Sberbank, Vnesheconombank and others.

And in relation to the enterprises of the military industry, an embargo has been introduced in general. It is even forbidden to import equipment into Russia that allows exploration of the shelf in the Arctic.

Sanctions against Russia have also been introduced at the personal level, in particular against civil servants from the Crimean peninsula.

RF response

The government of our country also did not stand aside. A number of persons from the US, Canada and the EU are banned from entering Russia, in particular, these are public figures and government officials. At the same time, these lists are constantly replenished according to the mirror principle.

When America froze MasterCard and Visa transactions, domestic work intensified to create a national and independent payment system. If MasterCard and Visa payments in Russia are completely stopped, then both companies will suffer big losses, at the level of 160 and 47 million dollars a year, respectively. In any case, the Russian-made Mir payment system has already been launched.

Effectiveness of response and current domestic environment

It is clear that economic sanctions are always bad. Even now, 4 years later, every resident of the country will surely feel the impact of the restrictions. Andmost of all, the negative effect is noticeable in the field of technology transfer.

However, the effect of personal sanctions is negligible. Even if some of the citizens of Russia are now afraid to travel to the EU or America, but against the backdrop of the whole country, this is still not visible. And some politicians and businessmen even took advantage of the situation and now boast about it and believe that they are untouchable, as they suffered for the interests of the country.

We will feel the negative effect in the banking sector. Previously, Russian banks were on-lending in European financial institutions. Now companies and banks themselves do not have access to cheap loans. And European banks are also unhappy with the sanctions, because they receive less than 8-10 billion percent on outstanding loans. But now Russia is opening up the Asian market of banking and credit services.

In terms of restricting export operations for the supply of equipment and technologies in the military industry, Russia has suffered the most from the lack of cooperation with Ukraine. Nevertheless, the import substitution program has already borne fruit. According to the assurances of the Minister of Defense, this year the indicator for the replacement of Ukrainian-made products will be 100%.

Food counter-sanctions initially led to an increase in inflation, but we can already talk about almost complete import substitution.

Therefore, it is not worth saying that Russia will die under economic sanctions.