Key Takeways:
- Unilateral sanctions are a favored tool for advancing U.S. hegemonic interests
- Multilateral trading systems are ignored, and domestic law is prioritized
- Unintended consequences affecting developing nations
- Disruption in the global supply chain leading to increased commodity and food prices
- Rise of concepts like “de-dollarization” in response to U.S. economic sanctions
Unilateral sanctions have consistently been a prominent instrument in the arsenal of the United States, strategically wielded to advance its hegemonic interests. In each instance of unilateral action, the driving force is solely the pursuit of America’s strategic objectives, dismissing international laws, ethical principles, and the potential harm inflicted on others.
You can also read: Sanctions Scare Unfounded
The U.S., confident in its might, deliberately sidesteps the multilateral trading system, elevating domestic law above international norms. The deployment of long-arm jurisdiction and economic sanctions against nations like Russia, Iran, and the DPRK has significantly undermined the foundations of a fair and just global trade environment.
Sanctions Raises Questions About True Intentions
The global stage is witnessing a surge in the utilization of sanctions, with the United States and its allies increasingly imposing them on rivals, reciprocated in kind. Some scholars attribute sanctions to domestic political considerations, serving as a display of strength for the electorate or succumbing to the influence of pressure groups. This perspective questions the effectiveness of sanctions, suggesting they may be driven more by domestic optics than a genuine effort to address security concerns.
However, a nuanced perspective emerges when delving into the history of economic sanctions. Foreign policy decisions, including the imposition of sanctions, are intricate outcomes of complex national security matrices that interweave both foreign policy and domestic political considerations.
The glaring hypocrisy of U.S. sanctions is laid bare when scrutinizing their far-reaching impact. From Russian leaders to elites, finance, economy, trade, military, science, arts, sports, and even animals, unprecedented sanctions have left no facet untouched.
The imposition on Chelsea Football Club, owned by Russian billionaire Roman Abramovich, and the confiscation of assets from Russian nationals overseas showcase a stark contradiction to the values championed by the West. The supposed inviolable right to individual property is betrayed as the U.S. and its allies engage in what can only be described as outright “plunder and robbery.” This egregious departure from proclaimed values tarnishes the moral fabric of the West, revealing a disconcerting descent into opportunistic exploitation.
Ripple Effects on the Global Monetary Landscape
Gita Gopinath, the inaugural deputy managing director of the International Monetary Fund, has raised apprehensions regarding the unintended consequences of US sanctions, emphasizing that their impact is proving more pronounced than initially envisioned. Gopinath highlights that the financial sanctions levied by the US against Russia not only represent an immediate threat but also pose a gradual challenge to the dominance of the US dollar, potentially contributing to a more fragmented international monetary system.
Former UK Treasury official Andrew Milligan echoes these concerns, suggesting that the ramifications of the sanctions could extend to a modest decrease in corporate profits within the United States. Milligan anticipates that the growth of the US economy may be curtailed by 0.25 percent to 0.5 percent over the next year compared to what it would have achieved without these sanctions.
The growth of the US economy could be 0.25 percent to 0.5 percent lower than it would have been without these sanctions over the next year.
– Former UK Treasury Official Andrew Milligan
Developed Nations Shielded, Developing Nations Suffer
The repercussions extend beyond the immediate parties involved in the conflict, as most developing countries, not directly part of the current geopolitical tensions, are experiencing collateral damage and paying a substantial price. The unilateral sanctions have disrupted the global supply chain, leading to an increase in commodity and food prices.
India, in particular, has felt the impact of US sanctions against Russia, with the US employing sanctions as a geopolitical tool against various rivals, including Russia, Iran, and Venezuela – all of whom are significant partners for India, as highlighted by Gateway House Indian Council on Global Relations.
It is noted that developed countries are shielding themselves from the severe consequences of these unilateral sanctions, which adversely affect the basic needs of a considerable portion of the global population. Walter Russell Mead, an American academic, had cautioned against this trend in an article for the Wall Street Journal at the time of US’ sanction on Russia, highlighting that sanctions on Russia may be causing a division between the West and the rest of the world.
Developing economies, including China, India, and Brazil, have long resented the dominance of the U.S. dollar in international trade and finance. With the U.S. share of the global economy decreasing significantly since the Second World War, these nations are strategically embracing alternatives like the renminbi, a move that portends a significant and lasting transformation in the dynamics of the international monetary system.
The concept of “de-dollarization” has lingered on the periphery of anti-imperialist discourse for decades, dismissed by economists as more slogan than substance due to the formidable influence of the US currency. However, recent developments, including the broadening scope of US economic sanctions and the advent of advanced technologies for international payments, are beginning to fracture the once-unassailable position of the dollar.
Success rate is only 13 per cent!
Agathe Demarais, author of “Backfire: How sanctions reshape the world against US interests,” identifies three pivotal events that accelerated the shift away from Western financial mechanisms: Iran’s exclusion from the Swift global financial messaging network in 2012, economic sanctions on Russia in 2014, and the US-China trade war commencing in 2018.
Agathe Demarais scrutinizes the efficacy of U.S. sanctions over the years, revealing a sobering reality: targeted countries alter their behavior as desired by the U.S. a mere 13 percent of the time.
The essence lies in the deliberate infliction of pain upon the populace of a targeted country through financial sanctions, a tactical maneuver aimed at kindling discontent and prompting advocacy for political change. The toll exacted on human lives often ignites a backlash, turning the citizens of the sanctioned nation against the very entity wielding the sanctions. The example of Iran (2012) and Venezuela (2018) sanctions can be attest to this, where U.S. sanctions led to profound economic turmoil and public resentment, with citizens resorting to extreme measures, such as queuing up to join the army in Russia amid war and economic isolation.
The limitations of sanctions become more pronounced as they prove susceptible to evasion. Russia, in the face of sanctions during the Ukraine conflict, adeptly sought new markets for its vital exports, engaging in trade with Turkey, a NATO member not imposing sanctions.
Then Why the U.S. Clings to Sanctions Despite ineffectiveness?
However, after all this discussion, a question looms large: if sanctions prove ineffective, backfire frequently, and are increasingly circumvented, why does the United States persist in their application? theorists assert that sanctions, for all their shortcomings, possess an inherent appeal—they are easy to implement, cost-effective, and entail comparatively low risks. Positioned as the intermediary between hollow diplomatic declarations and the extreme measure of military interventions, sanctions occupy a pragmatic middle ground.
Why Sanctions?
- Sanctions as a pragmatic middle ground between diplomacy and military intervention.
- Convenience and appeal of sanctions: Easy implementation, cost-effectiveness, and low risks.
- The swift recourse of sanctions requiring only a night for drafting and implementation.
In the face of undesirable actions by a nation, the U.S. administration faces a spectrum of responses. A mere verbal reprimand may seem inadequate, while the alternative of military intervention is fraught with peril, both in terms of lives and resources. Sanctions, therefore, emerge as a convenient compromise, exacting neither blood nor excessive treasure, particularly from the American perspective.
Sanctions are a swift recourse, requiring only a night for drafting and subsequent rapid implementation. There exists no dedicated “sanctions police”; instead, the imposition is realized through civilian institutions, such as banks, and organizations like Swift, tasked with ensuring compliance in financial transactions.
The allure of sanctions lies in their simplicity—they are conjured and imposed by fiat, while the practical execution is delegated to external entities. This ease of implementation, coupled with the nominal cost, contributes to the fervent utilization of sanctions by U.S. administrations. The externalization of enforcement shields the government from direct involvement, creating an illusion of cost-effectiveness.
