Sanctions financières & embargos, mesures & différences

The war in Ukraine has triggered global sanctions and embargoes on an unprecedented scale. Anxious to avoid direct military confrontations at all costs, Western countries have added to their diplomatic arsenal means of impacting the economy of the “aggressors”.

The growing use of embargoes has been particularly notable since the end of the Cold War. Of the 28 mandatory UN arms embargoes , 26 were adopted in or after 1990.

What are penalties?

Sanctions are restrictive measures that can apply either generally to certain markets or countries, or selectively to individuals. Sanctions can be aimed at achieving a whole range of objectives , ranging from blocking trade in certain products to complying with international commitments. Increasingly, states are using them to replace physical struggle with economic struggle to the point that sanctions are now a common tool of foreign relations, peacekeeping and conflict resolution.

Financial institutions that maintain business relations with foreign customers must imperatively refer to the sanctions lists to ensure their compliance with the regulations.

What are embargoes?

While sanctions may target specific individuals or commercial activities, embargoes are usually much more general in application and ban imports or exports or even all trade with a targeted country.

The powerful tools represented by these two devices are usually used in the context of political or economic tensions to limit trade or exchanges with specific persons, entities or countries.

Types of embargoes

There are several types of embargoes. A trade embargo prohibits imports and/or exports of goods to or from a given country.

Embargo policies sometimes limit the import and export of only certain types of defined goods, for example to protect specific animals, people or plants.

Thus, a military or arms embargo prohibits the exchange of military equipment with a given country, just as a fuel embargo only targets trade in oil or other fuels.

International embargo against Russia

After the invasion of Crimea in 2014, Western countries adopted a series of sanctions and embargoes against Russia , including limiting Russian access to Western services and financial markets, as well as embargoes on the export of equipment. state-of-the-art oil production and exploration and military dual-use equipment.

In response, Russia imposed embargoes on the import of several foodstuffs , in particular dairy products, from Western countries.

While the Russian response to the global sanctions triggered by the Ukraine conflict has been limited so far, the scale of these countermeasures could, over time, intensify.

In March 2022, the United States and the United Kingdom announced international embargoes on all imports of Russian oil, an initiative later taken up by Canada and Australia. The EU has proposed to ban Russian oil by the end of 2022 despite tensions with some member states, particularly Hungary , a country which has already been given an extra year to find alternative sources of supply.

“We will work to methodically eliminate Russian oil to increase pressure on Russia while mitigating the impact on our national economies,” said Ursula von der Leyen, President of the European Commission.

Evolution of the use of sanctions

Discover in our global guide the evolving and intersecting universe of sanctions and embargoes.

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Other countries in the world under embargo

Of course, Russia is not the only country to be targeted by global sanctions and embargoes.

Embargo against North Korea

Since 2006, the UN Security Council has passed nine major sanctions resolutions against North Korea in response to that country’s missile and nuclear activities. These measures include embargoes on the import and export of arms , including small arms. However, independent UN advisers revealed in a March 2020 report that North Korea manages to dodge these measures while stepping up its nuclear program.

North Korea is also the main target of unilateral action by Japan , which imposed an embargo on imports in 2006 and an embargo on exports in 2009. In April 2021, Japan extended its measure with a ban on two more years of all trade and banned the docking in its ports of all ships registered in North Korea or boats that have called at a North Korean port.

Embargo against Cuba

Implemented by President Kennedy under the Trading with the Enemy Act of 1917, the Cuban asset control regulations that came into effect on July 8, 1963 consisted of a total trade embargo prohibiting all imports and exports between the United States and Cuba.

This total international embargo has served as a benchmark since the 1960s for the United States program of sanctions regime against Cuba applicable to any person or entity subject to United States jurisdiction. The improvement in relations between the United States and Cuba that began in the 21st century led to an easing of sanctions under the presidency of Barack Obama. But those moves have largely been reversed under the Trump administration. While easing restrictions on wire transfers and free movement , the Biden administration has left the trade embargo unchanged.

Embargo against Iran 

Iran has been subject to decades of global sanctions and embargoes that have broadly taken the form of economic restrictions in response to the Iranian government’s involvement in international terrorism, human rights abuses and its manufacture of nuclear weapons.

In 2015, the five permanent member countries of the UN Security Council plus Germany reached an interim agreement with Iran over its nuclear weapons program. This Joint Comprehensive Plan of Action  (JCPOA) established a framework for lifting most sanctions in exchange for Iran’s commitment to limit its nuclear programs for at least 10 years. Following this agreement, most international embargoes and sanctions against Iran were lifted in early 2016.

In 2018, however, the Trump administration pulled the United States out of the Iran nuclear deal and reimposed measures. The United States has since dropped some sanctions as part of a « good faith strategy » to continue negotiations.

Embargo against Libya

The fall of Muammar Gaddafi and the start of the civil war in 2011 led the UN to impose an arms embargo on the country and a series of travel bans and asset freezes against representatives of the regime.

Embargoes against Syria

The country has been on the US list of States participating in the financing of terrorism since 1979. Since the outbreak of the civil war in 2011, the regime of B. el-Assad has been subject to a total embargo on exports by the United States  ; an embargo on petroleum products decreed by the United States, the EU and other Western countries; large-scale asset freezes and financial sanctions; and travel bans on senior regime officials. In 2021, the EU extended its restrictive measures against Syria for another year.

Sanctions and embargoes: how effective?

Some analysts consider that events such as military parades demonstrate the failure of international arms control embargoes imposed on countries such as Russia and North Korea. Countries under global embargo have sought ways to circumvent restrictions, sometimes relying on illicit networks to evade measures .

The UN recommends using embargoes and sanctions only as part of a broader strategy , making it clear that the intended impact is not always achieved. For example, harm to citizens of targeted countries, loss of revenue for the sending country and its allies, and increased economic isolation are all unintended consequences.

Sanctions risk management 

Institutions can easily focus solely on the highlights of ongoing crises as reported in the media and simply adjust their controls based on headline-grabbing sanction risks.

In fact, they should be careful to control all the potential risks they encounter and use the data and platforms that will reduce their risk of unexpected exposure. Violations remain violations, whether the triggering factor is known or not.

Teams must monitor the increasing number of embargoes and sanctions and assess the human and material resources needed to ensure compliance in the medium and long term.

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