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Risk Fraud & Compliance

Are government sanctions successful?

Rabihah Butler  Manager for Enterprise content for Risk, Fraud & Government / Thomson Reuters Institute

· 5 minute read

Rabihah Butler  Manager for Enterprise content for Risk, Fraud & Government / Thomson Reuters Institute

· 5 minute read

Sanctions are a fact of life, but the question is, do they need to be? In a global economy it is important to give consideration to what methods will actually work

As children, we are taught that every negative action has a negative consequence. The logical extension of that concept is that actions that are deemed inappropriate or against a government’s interest can be met with sanctions programs that are intended to cause an undesirable impact to a country in a way that will ultimately coerce a change in its behavior.

However, as sanctions are applied more often and extended over longer periods of time, it is unclear if the sanctions actually have the desired impact on the behavior in question or if the harms ultimately outweigh the good.

The term sanction is often used in a way that would lead one to believe it is just a single action, like stopping trade between businesses. On the contrary, sanctions are generally issued as programs based on the nature of the offending action and the current diplomatic status of the targeted country.

There are seven basic types of sanctions: economic, diplomatic, military, sports, individual, environmental, and United Nation Security Council (UNSC) sanctions. Any of these sanctions can be used to deter or reprimand countries for anything from human rights violations to smuggling drugs or human trafficking. The more egregious the action (or inaction) by the offending country, the more countries and organizations that will utilize their own sanctions program. The idea is that when a country or its economy is isolated by sanctions, it cannot afford to continue the behavior that led other countries to enacting these measures.

Narges Bajoghli, anthropologist and assistant professor of Middle East Studies at Johns Hopkins University’s School of Advanced International Studies, expounds on the two major ways sanctions affect change. “Either they’re supposed to put enough pressure on the regime and targeted state to change its behavior, or they’re supposed to put enough pressure on society to rise up against the state to then topple the state,” Bajoghli explains, adding that in either example, sanctions serve as a passive, but coercive tactic.

“Either [sanctions are] supposed to put enough pressure on the regime and targeted state to change its behavior, or they’re supposed to put enough pressure on society to rise up against the state to then topple the state.”

— Narges Bajoghli

Agathe Demarais, in her book Backfire: How Sanctions Reshape the World Against U.S. Interests stated: “The reality is that sanctions are sometimes effective, but most often not, and it is hard to accurately predict when they will work… on one end of the response spectrum, it could make a strongly worded statement, which might feel like too little, and on the other end of the diplomatic spectrum, you have military interventions, deadly, costly, and unpopular. Sanctions fill the void in between these two extreme options.”

Choosing the type of sanction

The U.S. Treasury Departments’ Office of Foreign Assets Control (OFAC) administers and enforces sanctions programs against target groups. The two main types of sanctions lists maintained by OFAC are the Specially Designated Nationals (SDN) list, a list of individuals and companies in countries targeted by US sanctions; and the Consolidated Sanction Lists, which contain details about restricted parties not covered by the SDN list. In the US, these list help to track the sanctions programs and prevent people from unwittingly doing business with sanctioned actors. They also hold financial institutions accountable and remove financial advantages from doing business with these entities and individuals.

Two of the most recent examples of sanctions are the ones levied against Iran and Russia. These sanctions programs impact the countries and some individuals or entities doing business with or profiting from these countries, whether directly or indirectly. However, these are far from the only active sanctions enacted by the US at this time. The US currently has 32 active programs that sanction organizations or countries (and the individuals associated with them) for infractions like their support of terrorism, narcotics trafficking, weapons proliferation, or human rights abuses, according to the U.S. Government Accountability Office.

To illustrate, the program levying sanctions against Cuba is one of the oldest used by the US, with some iteration of the sanctions being active since 1962. The longevity of Cuban sanctions program suggests it is not achieving its intended goals; moreover, there are concerns that the sanctions actually limit humanitarian aid into the country. By almost any measure, the US sanctions program directed at Cuba has questionable effectiveness, and the longer the program continues, the more it requires review and consideration.

While the sanctions program against Russia was initiated more recently after that country’s invasion of Ukraine in February 2022, the sanctions have not fully curtailed the current military action it sought to cease. The impact of these sanctions has not been as immediate as originally hoped, even though cutting certain aid and restricting trade creates some of the intended immediate reactions. However, this is an example in which the sanctions program appears to be becoming more effective as other nations and multinational companies join in to enact their own sanctions.

It is important to note that the more countries that join in on a sanctions package, the more effective it will be. If countries or humanitarian organizations decline to joins a sanctions program, their continued contribution to the target country’s economy softens the blow to the population and the government, making it more difficult to create a situation that forces change.

You can learn more about government sanctions here.

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