International trade is influenced by more than just the exchange of goods and services. It’s shaped by politics, affected by conflict, and swayed by how countries interact with one another.
Governments don’t always see eye to eye. When they need to respond without resorting to force, they often turn to alternative measures. Some of these are diplomatic and peaceful, while others aim to apply pressure or create isolation.
Two of the most common tools in these situations are sanctions and embargoes. Though often mentioned together, they are not the same. They function differently and have distinct impacts.
What Are Sanctions?
Sanctions are legally enforced restrictions imposed by a government or international authority to penalize or deter specific actions by a country, organization, or individual. These restrictions can include bans on trade, freezing of financial assets, travel prohibitions, or limits on diplomatic engagement. Sanctions are used as a tool of foreign policy to enforce international laws or norms without the use of armed force.
Examples of Sanctions:
- Russia: After Russia’s invasion of Ukraine in 2022, the European Union imposed sanctions to reduce the Kremlin’s ability to finance the war and diminish Russia’s economic base. European Commission
- Iran: The United States has imposed sanctions on Iran in response to its nuclear program and support for groups considered terrorist organizations. Wikipedia: United States sactions against Iran
- North Korea: Due to its nuclear weapons development, North Korea faces international sanctions aimed at curbing its nuclear ambitions.
Not all sanctions are identical. Some are comprehensive, affecting entire economies, while others are targeted, focusing on specific sectors or individuals.
Types of Sanctions
Sanctions come in different forms. Each type works in its own way. Some aim to slow down an economy. Others try to block power or influence.
- Economic sanctions are used to stop trade. They might ban imports or exports. They can also limit access to markets or supply chains.
- Financial sanctions freeze money or block access to banks. These often target people, companies, or even whole governments that are seen as a threat.
- Military sanctions are used to stop the sale of weapons. They can also block access to tools or technology used for war or surveillance.
- Diplomatic sanctions cut official ties. This can mean pulling ambassadors out or closing embassies. It is a way to show disapproval without using force.
What Are Embargoes?
An embargo is a government order that restricts commerce or exchange with a specified country, usually as a result of political or economic problems. It represents a complete prohibition of all trade activities between countries. Embargoes can be imposed by individual governments, groups of countries, or international organizations like the United Nations. They are typically broad in scope and can remain in effect for extended periods.
Examples of Embargoes:
- United States Embargo on Cuba: Initiated in 1962, the U.S. imposed a comprehensive trade embargo on Cuba, prohibiting all trade between the two nations. This action was taken in response to geopolitical tensions during the Cold War.
- United Nations Embargo on Iraq: In the 1990s, the UN imposed a trade embargo on Iraq following its invasion of Kuwait. The embargo aimed to pressure Iraq into withdrawing and complying with international laws. (Source: Investopedia – Embaro)
- United States Embargo on Japan: In 1941, the U.S. imposed a comprehensive trade embargo against Japan, freezing Japanese assets and cutting off exports of essential materials like oil. This action was a response to Japan’s expansionist activities in Asia. (Source: The Borgen Project)
Types of Embargoes
Embargoes come in different forms. Each one blocks a specific kind of activity. They are used to isolate a country and limit its options.
- Trade embargoes stop the flow of goods. This means no buying or selling between countries. It can apply to food, fuel, or anything else that moves across borders.
- Financial embargoes block money. They cut off access to global banks and stop new investments. This can freeze a country out of the world economy.
- Military embargoes block weapons and gear. They also apply to dual-use items. These are goods that could be used for both war and peace, like drones or radar systems.
6. Sanctions vs Embargoes: What’s the Difference?
Include a table with the following columns:
| Aspect | Sanctions | Embargoes |
|---|---|---|
| Scope | Targeted restrictions | Full ban on trade or dealings |
| Target | Specific people, groups, or sectors | Whole country or region |
| Goal | Pressure to change a policy or stop an action | Force wider change without military action |
| Impact | Limited to area targeted | Wide impact across the economy |
| Flexibility | Can be lifted or changed over time | Harder to remove, often long-lasting |
| Enforcement | Often by one country or group | Often multilateral or backed by the UN |
Who Imposes Sanctions and Embargoes?
Sanctions and embargoes do not just come from one place. They can be imposed by single countries or by large groups working together. Each has its own way of making these decisions.
United Nations Security Council (UNSC):
The UNSC has the authority to impose sanctions to maintain or restore international peace and security. These sanctions can range from comprehensive economic and trade restrictions to targeted measures like arms embargoes, travel bans, and financial constraints. Decisions on sanctions require an affirmative vote from at least nine of the fifteen council members, including the concurring votes of all five permanent members (China, France, Russia, the United Kingdom, and the United States). (Source: United Nations)
United States – Office of Foreign Assets Control (OFAC):
In the U.S., the Department of the Treasury’s Office of Foreign Assets Control administers and enforces economic and trade sanctions. These sanctions target foreign countries, regimes, terrorists, international narcotics traffickers, and those involved in activities related to the proliferation of weapons of mass destruction. OFAC’s actions are based on U.S. foreign policy and national security goals. (Source: Federal Register)
European Union (EU):
The EU employs restrictive measures as part of its Common Foreign and Security Policy (CFSP). These measures aim to prevent conflicts or respond to emerging crises. EU sanctions are not punitive but are designed to bring about a change in policy or activity by targeting non-EU countries, entities, or individuals responsible for unacceptable behavior. The EU’s restrictive measures are binding on EU nationals and entities and are implemented through regulations and decisions adopted by the Council of the EU. (Source: EUR-lex)
Australia – Department of Foreign Affairs and Trade (DFAT):
Australia implements both United Nations Security Council sanctions regimes and Australian autonomous sanctions regimes. The Australian government decides to implement autonomous sanctions as a matter of foreign policy, which may supplement UN sanctions or be separate from them. These sanctions are enforced under Australian law and are administered by the Department of Foreign Affairs and Trade. (Source: dfat.gov.au About Sanctions)
Frequently asked Questions
What is the difference between a sanction and an embargo?
A sanction is a targeted measure. It blocks something specific. This could be trade with a company or the bank account of one person. It can also stop arms sales or travel for selected officials. The goal is to apply pressure without affecting everyone.
An embargo works on a much larger scale. It is a full stop. It blocks all trade or dealings with a country. Nothing goes in. Nothing comes out. It is often used when a country refuses to change its behaviour over time.
Can both be used at the same time?
Yes, they can. A country might use an embargo to cut off trade completely. At the same time, it might place sanctions on banks or people linked to that government.
Are embargoes legal under international law?
Embargoes can be legal if they follow the rules set by the United Nations. When the UN approves an embargo, all member states are expected to follow it. Countries can also create their own, but these must respect international agreements.
Can sanctions or embargoes be lifted?
Sanctions and embargoes are tools that countries and international bodies use to influence behavior. They can be lifted when the targeted nation changes its policies or meets specific conditions. The duration of these measures varies; some are removed quickly, while others persist for years.
What is the difference between tariffs and a sanction or embargo?
A tariff is a tax placed on goods that are imported or exported. It is used to raise money or protect local industries. The goal is usually economic. Tariffs make foreign goods more expensive, so people buy more local products.
Sanctions and embargoes are not about tax. They are about pressure. A sanction might block trade with one person or group. An embargo might stop all trade with a country.
