General overview

By sanctions, it is meant a set of financial, trade, visa and other restrictions imposed for political purposes.

  • These restrictions have been introduced by the sanctioning states on specific industries or sectors of the target country’s economy and/or against certain individuals and companies as well as business partners and contractors abroad.
  • The overall aim of the sanctions is to disrupt the target economy in such a manner that it will cause the country’s leadership to radically change its foreign policy course.
  • The leadership of a state, who is resorting to different type of sanctions, embargos, punitive/ retaliatory tariffs or even trade war- type measures in its relations with other states, usually presupposes that they possess such capabilities or assets that are in one way or other superior and are effective enough to result in estimated changes of target state’s behavior.

In terms of international law, the UN Security Council is the only legitimate body with the legal authority to introduce sanctions. In practice, however, individual countries or coalitions of countries widely use sanctions unilaterally. As a rule, the United States has always been the primary sender of sanctions, although it has been joined by the European Union, since the end of the Cold War.

In general, sanctions are normally imposed by developed countries on developing countries. In the overwhelming majority of cases, the economies of the sender countries are far more affluent than those of the countries placed under sanctions. This allows the sanctioners to apply economic pressure in order to force sovereign states to change their political course, interfere in their affairs or compel them to transform their political systems.

Thus, sanctions are an important instrument of coercion in international relations and in the majority of cases that implies the direct or indirect interference of a country in the decision-making process of another state. Sanctions can be understood as an attempt to limit or influence the sovereignty and sovereign political course of another country through economic measures.

According to Hufbauer (et al. Economic Sanctions Reconsidered, 2007), of the 174 documented cases of sanctions in the 20th century:

  • the United States deployed sanctions on 109 occasions,
  • the United Kingdom on 16 occasions,
  • the European Union on 14 occasions,
  • the USSR / Russia on 13 occasions, and
  • the United Nations on just 20 occasions.

Sanctions seem to be an instrument used by powerful, advanced and developed governments or international associations and it is their economic weight and/or size and their global and regional ambitions that allow them to do so.

Some historically prominent trade wars:

When China attempted to suppress the opium trade in the mid-19th century (an illegal activity enjoyed mostly by British traders) and the cause of widespread addiction and social problems, it led to armed conflicts, The Opium Wars. China burned more than 20,000 chests of opium, leading to an armed conflict, which resulted in the ceding of Hong Kong to the British and an increase in the number of treaty ports where British ships could trade and reside.

A second conflict erupted when the British forces — this time joined by the French — fought again to extend their opium trading rights in the region. The end result was the establishment of more than 80 new treaty ports in China, the legalization of the importation of opium and rights for all foreign traders to travel within the country. From the Chinese point of view, this great national humiliation led finally to the collapse of the Empire of China and plunged the country into tumult for decades. The memory of this humiliating event has greatly impressed in the collective Chinese mind.

Other historical trade wars were Franco-Italian trade war (1880s), US-Canada trade wars (1850-60s), the US Tariff Act (1930s), the US-Europe Chicken war (1960s) and Cuban embargo (since 1960).

According the context of this study, the closer look is now at the relations between the US – China on the other hand and the US – Russia on the other.

Two opposing views on sanctions

The first assumes that sanctions are an effective and perfectly legal instrument of foreign policy. The most fervent proponent of this approach is the United States.

Sanctions are a viable course of action as they allow the sanctioners to avoid using military force and achieve the desired political results by “peaceful means” or to weaken the military potential of the targeted country, which in turn makes it possible to conduct military campaigns with fewer losses. The legitimacy of sanctions is not only linked to national and international law, but also to the ideologies, morals and national interests of the sender country.

The US National Security Strategy 2017 contains an entire section devoted to economic diplomacy, in which sanctions are seen as an important element of “broader strategies to deter, coerce, and constrain adversaries.” It is noteworthy that the “us vs. them” mentality is viewed in the document from a normative point of view. “Us” means free market economies, allies and partners, while “Them” means state-led economies. According to the National Security Strategy, the United States is able to play a central role in global financial affairs and effectively protect its interests. The targeted economic sanctions are defined as an effective policy tool “for imposing costs on irresponsible actors” who do not fulfill their obligations, as well as to help “dismantle criminal and terrorist networks.”

The most important legislative issue has been the new law: Countering America’s Adversaries Through Sanctions Act (CAATSA). On August 2, 2017, the President Trump signed into law the “Countering America’s Adversaries Through Sanctions Act” (Public Law 115-44, CAATSA), which among other things, imposes new sanctions on Iran, Russia and North Korea. This law can be utilized by the US in cases like “meddling in the elections”, “malign behavior”, “illiberal democracy”, “rogue state”, etc.

The importance of sanctions is also mentioned in the doctrinal documents of the European Union. Here, sanctions are seen as an instrument for the deterrence and prevention of conflicts that must be used alongside diplomacy. The legitimacy of sanctions is provided by international law, EU law and the European Union’s international commitments as part of the World Trade Organization (WTO) and other organizations. Unilateral measures are envisioned alongside multilateral measures.

According to the other view, the only legitimate source of sanctions is the UN Security Council. Unilateral measures of economic coercion are unacceptable.

Russia takes this different position. The only legitimate source of sanctions is the UN Security Council. Specifically, this is enshrined in the 2016 Foreign Policy Concept of the Russian Federation: “to continue efforts to improve the UN sanctions mechanism, specifically, proceeding from the premise that decisions to impose such sanctions should be taken by the UN Security Council jointly following comprehensive discussions…; contribute to eliminating from international relations illegal, unilateral coercive measures adopted in violation of the UN Charter and other norms of international law.”

A similar position is taken by China and a number of developing countries. In particular, the Declaration of the Summit of Heads of State and Government of the Group of 77 + China held in Santa Cruz, Bolivia stated that unilateral economic measures of coercion are unacceptable and should be eradicated from the practice of international relations.

In practice, the US having “the unipolar moment” since the end of the Cold War, has been the most prominent sanctioning state on the international scene, mainly due to the status of US dollar as a sole reserve currency and due to the direct impact of the US Treasury to the SWIFT banking system.

However, in the present globalized and interconnected world where “all depend all”, the US initiated trade war may trigger global economic slowdown and far from strengthening the US economy, the punitive tariffs may destroy global supply chains causing even more disorder both to American multinational industry and to the world economy.

In Autumn 2018, Ray Dalio, Chairman of world’s largest hedge fund, Bridgewater Associates LP, reflects on US-China relation that is aggravating to trade war: “A path to a shooting war?” He describes in his article the detailed situation between the US, Germany and Japan since the Great Depression in 1930s which finally led to WWII. His historical and justified comparison with the present situation gives an alarming picture of the potential course of the future.