Sanctions and embargoes are political trade restrictions to change the behaviour of a country or regime, so as to support the peaceful transition, deter non-constitutional changes, constrain terrorism to protect human rights and promote nonproliferation. The primary objectives of imposing sanctions are to maintain or restore international peace and security.
They are a less costly policy than the use of military force and can be applied in a more flexible and targeted manner. Although they are a policy of their own and can be reinforced when used in conjunction with other policies, they are considered a midpoint between diplomacy and military force.
Sanctions work by coercing, constraining or signalling a target (sanctioned country). The goal of coercion is to modify the target’s cost-benefit calculation of pursuing a certain policy, while constraint restricts a target’s capabilities. Both goals are intended to encourage a target to change the direction of a current policy.
The dictionary definition of the word sanction is defined as – an official order, such as the stopping of trade that is taken against a country in order to make it obey international law.
An embargo is defined as an order to temporarily stop something, especially trading or giving information.
Who can impose sanctions and embargoes?
Sanctions can be imposed by the UN Security Council, the European Union, Office of Foreign Assets Control (OFAC) of the US Department of the Treasury and individual states. Usually, sanctions are instituted by the Security Council and later adopted by its member states in the form of legislation and regulations. Individual states can also impose their own sanctions and embargoes.
Difference between Sanction and Embargo
Both sanction and embargo mean the prohibition or restriction of an activity. Particularly, an embargo is commonly used when the restriction is a trade related. Sanctions, on the other hand, are used for all other disciples of prohibitions.
Complying with sanctions
In-force sanctions and embargoes must be complied. Failure to comply with sanctions is a criminal offence. For example, the central bank of Singapore, Monetary Authority of Singapore (MAS), requires a financial institution to:
- Immediately freeze funds, other financial assets or economic resource of designated individuals and entities.
- Not enter into financial transactions or provide financial assistance or services in relation to: (i) designated individuals, entities or items; or (ii) proliferation and nuclear, or other sanctioned activities; and
- Inform MAS of any fact or information relating to the funds, other financial assets or economic resources owned or controlled, directly or indirectly, by a designated individual or entity.
Search through MAS Control List here.
Exceptions to sanctions and embargoes
Depending on the authority that instituted the sanctions, it is noted that exceptions can be made by requesting a license that would be assessed on a case-by-case basis. For example, the Office of Foreign Assets Control has details on how to apply for a specific license.
The downsides of sanctions
The most common critique of sanctions is that they are ineffective and at times even counter-productive. This is because often they do not result in a change in the target’s behaviour. It is well known that sanctions impose a burden on civilian populations. They contribute to economic problems, including inflation, unemployment and a rise in black market trade.