Embargoes Essay ⋆ Business Essay Examples ⋆ EssayEmpire

A nation or group of nations can make trade with a particular country or countries difficult or impossible. The main types of trade restrictions are tariffs, quotas, embargoes, licensing requirements, standards, and subsidies. A trade embargo is a ban on trade with another country (called target country) or group of countries. This restriction can be on exports and/or imports, and it can be a total ban on trade or be limited to specific products. An embargo can restrict exports of certain products to the target country (i.e., a ban on export of defense articles or services, as in U.S. economic sanctions against China imposed as a U.S. response to the Chinese government’s crackdown against a fledgling democracy movement in the spring of 1989).

Usually, embargoes are declared against a specific country to isolate it, pressure its government, and cause it to reverse a specific policy. Embargoes, and other economic sanctions, are widely seen as a less violent alternative to war and as a tool for coercive foreign policy. U.S. president Woodrow Wilson called sanctions a “peaceful, silent, and deadly remedy” that no nation can resist. Embargoes are a tool of economic warfare—the use of economic means against a country in order to weaken its economy and thereby reduce its political and military power.

Embargoes can take shape as either unilateral or multilateral. In the first case, sanctions are imposed by only one country against a target country. In the second case, sanctions are imposed by more than one country. The United States is the country that has most frequently applied unilateral economic sanctions after World War II. Well-known examples include those meted out to punish Cuba (1962), the Iraqi dictatorship, Chinese antidemocratic actions, and the Yugoslavian government in the 1990s. In a parallel way, several measures imposed by the United Nations (UN) Security Council have taken place in recent years. The UN Charter grants the Security Council powers to decide the sanctions that have to be taken in order to maintain or restore international peace and security. These powers are made in the form of Security Council Resolutions under Chapter VII (Action with Respect to Threats to the Peace, Breaches of the Peace, and Acts of Aggression) of the UN Charter. The EU also imposes embargoes consistent with its Common Foreign and Security Policy objectives.

The type of UN sanction most widely used is the arms embargo, such as those imposed on Angola, Ethiopia, Iraq, Liberia, Rwanda, Sierra Leone, Somalia, Côte d’Ivoire, and Sudan. There have also been commodity embargoes, for example, on diamond exports from Angola, Sierra Leone, Liberia, and Côte d’Ivoire; travel bans and asset freezes on individuals in Angola, Sierra Leone, Liberia, Côte d’Ivoire, and Sudan; and a ban on the sale of petroleum products to the Angolan rebel movement UNITA.

Embargoes And Negative-Sum Games

In an increasingly integrated global economy, it is important to have a clear understanding of the costs and benefits of embargoes. The focus of the literature on economic sanctions has been twofold: their effectiveness and their economic impacts on the sender (the sanction-imposing) country, the target country, and the neighbors.

As to the question of effectiveness, most studies conclude that economic sanctions have limited utility for changing the behavior of governments in target countries. Moreover, for these countries, the effects of banning economic exchanges can cause isolation, reduction in trade and investment flows, and deterioration in their overall economic welfare.

As to economic impacts, several studies have focused on the strategic interaction between targets and senders of sanctions, and on quantifying the costs to both parties. The main findings suggest a relatively high cost of economic sanctions to the economies of both parties while sanctions are in place. The evidence that comprehensive sanctions affect bilateral trade flows between the sender and the target countries is strong. Allegedly, sanctions also hurt third countries, neighbors or major trading partners. Research suggests that UN sanctions cut off trading routes, increase transportation and other transaction costs, and disrupt established trading ties with clients and suppliers. This reduces trade flows between land neighbors and the rest of the world.

As embargoes can also lead to serious economic recession, macroeconomic effects in the target country cannot be underestimated. Restrictions on imports and exports reduce overall gross national product and per capita income, employment falls, the decline in state revenue leads to reduced capital investment, and to lower levels and quality of social services. On August 6, 1990, the Security Council imposed economic sanctions on Iraq. Seven years later, the UN Committee on Economic, Social and Cultural Rights noted that the living standard of a large section of the Iraqi population had been reduced to subsistence level since the imposition of the embargo. Per capita income was estimated to have declined by about three-quarter from 1990–93, increasing social inequality.

As we can see, economic sanctions often hurt those people in the target country who are least responsible for the policies that prompted the imposition of sanctions, and who are also least likely to be able to change these policies. The impact of trade sanctions on the citizens of some countries raises the question of the relationship between civil and political, and social and economic rights. This is why, in recent years, the international community has become increasingly concerned about the humanitarian impact of embargoes and other economic sanctions. For example, in the case of worldwide sanctions against South Africa (1977–94), critics argued that the sanctions harmed the group the sanctions were supposed to help. Several researchers have also pointed out the evidence of the impact of sanctions against Cuba, Haiti, and Iraq, specifically on health and health services. Since 1991, international agencies have documented Iraq’s explosion in child mortality rates, waterborne diseases from untreated water supplies, and malnutrition in large sectors of the population.

To mitigate the humanitarian implications, three important international initiatives—the Interlaken, the Bonn-Berlin, and the Stockholm Processes—were launched between 1998 and 2002, with the objective of making UN sanctions more effective by targeting them more precisely on political objectives. The efficacy of embargoes as an instrument of foreign policy is in great doubt. Now the goal is to influence decision makers in the target country while avoiding negative humanitarian effects.

Bibliography:

Garfield, The Impact of Economic Sanctions on Health and Well-being (Overseas Development Institute, November, 1999);
C. Hufbauer, A. E. Kimberly, C. Tess, and E. Winston, U.S. Economic Sanctions: Their Impact on Trade, Jobs and Wages, Working papers (Institute for International Economics, 1997);
C. Hufbauer, J. J. Schott, and K. A. Elliott, Economic Sanctions Reconsidered, 2 vols., 2nd ed. (Institute for International Economics, 1990);
Damien Fruchart and Daniel Strandow, United Nations Arms Embargoes: Their Impact on Arms Flows and Target Behaviour (SIPRI, 2007);
E., Rennack, and R. D. Shuey, “Economic Sanctions to Achieve U.S. Foreign Policy Goals: Discussion and Guide to Current Law,” CRS Report 97-949F (November 1, 1999);
United Nations Office for the Coordination of Humanitarian Affairs, Humanitarian Information Centres and Partners, www.humanitarianinfo.org (cited March 2009);
United Nations Security Council, Resolutions 1946 to Date, www.un.org (cited July 2008);
Yang, H. Askari, J. Forrer, and H. Teegan, “U.S. Economic Sanctions: An Empirical Study,” International Trade Journal (v.18/1, 2004).

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