From February 2022 to January 2024, approximately 9,300 list-based sanctions were imposed on Russian entities due to the geopolitical tension in Ukraine. Sanctions and embargoes are the economic measures that shape a country’s foreign policy. Such measures are designed to influence the political and economic behaviors of specific countries.
While both tools stimulate political pressure and economic coercion, there is a fine line between the two. Therefore, it is pivotal for governments to identify the key differences between sanctions and embargoes in order to navigate the global economic framework. This article elaborates on how sanctions vs. embargoes fight against financial crimes.
Understanding Sanctions – A Quick Glimpse
Sanctions are the political and economic limitations imposed on different countries to influence their behavior. These restrictions are imposed to hinder the consequences associated with trading of restricted products, human rights violations, and AML law breachings.
The ultimate aim of sanctions is to prompt the targeted countries to comply with international laws and regulations. Moreover, these measures protect an economy’s national security interests and sustain ethical standards within the country.
Methods to Impose Sanction Restrictions
Based on the purpose and target of the potential restrictions, sanctions are classified into four different categories. Some of these are mentioned below:
- The anti-money laundering (AML) sanctions are undertaken to limit the movement of illicitly acquired monetary funds across different countries. These sanctions shatter the money launderer’s illegal activities.
- Economic restrictions limit the volume of trade, investments, and related financial activities with high-profile countries. These sanctions are imposed to mitigate the destructive activities of the targeted countries.
- Military sanctions restrict the trade of armed equipment and assistance in order to deter the exploitative activities of the targeted country.
- The political measures are implemented to restrict ties with political diplomats.
Examples of Sanctions – Explore the Historical Events
Throughout history, the world has experienced numerous events where sanctions were imposed to overcome political and economic instability. In 2006, the United Nations imposed sanctions on North Korea, in which they banned the trade of military equipment while freezing illicit assets. These sanctions were imposed in response to North Korea’s violation of Nuclear Weapon usage.
Another such instance was observed in response to Iran’s nuclear program when the United States imposed economic sanctions against Iran to condemn its illegal activities.
Understanding Embargoes – An Overview
Embargoes are restrictive measures through which countries ban economic trade and investments in specific countries. These measures force the countries to reconsider their policies and address the potential threats as well.
An embargo restricts a country from trading a specific product with targeted economies. These measures limit the financial activities that are considered harmful to an economy.
Methods to Impose Embargo Restrictions
Depending on the targeted country’s goals and intentions, embargoes are classified into three categories, which are discussed below:
- Financial embargoes are the restrictions that encompass the prohibition of transactions across the targeted country. These measures limit the targeted countries from conducting monetary operations across different borders due to high-stake activities.
- Trade embargoes restrict the imports and exports of certain products and services within the targeted country.
- Military restrictions, in contrast, aim to deter the targeted country’s aggressive acts by restricting the trade of military assets.
Examples of Embargoes – Understand the Different Events
Several cases of embargoes have been observed in the world for a very long time. In 1958, the United States imposed a trade and military embargo against Cuba. This was done to restrict the remittances of funds between the US and Cuba.
Additionally, the European Union imposed a military embargo against China in response to China’s pro-democracy protester crackdown in 1989.
Embargo and Sanction Programs – Explore the Key Differences
To understand how sanctions and embargoes influence the behavior of the targeted countries, it is pivotal to examine the critical differences between them, which are discussed below:
| Embargoes | Sanctions |
| Embargoes result in intense measures as they involve a complete restriction of trade with the targeted country. | Sanctions are less intense as they vary from imposing mild travel restrictions to severe economic measures. |
| Embargoes target an entire country by implementing trade restrictions. | Alternatively, sanctions are used to restrict a country or specific entities from exploitative attempts. |
| Embargoes are undertaken to punish the countries that perform illicit activities. | Sanctions are imposed to help the targeted country change its behavior. |
Concluding Remarks
Sanctions and embargoes are taken into place to combat financial crimes. These measures prevent countries from violating human rights, using nuclear weapons for exploitative purposes, and supporting terrorism. The implementation of sanction screening measures helps countries navigate the financial and economic structure of different economies.
The sanctions and embargoes protect the countries from international conflicts and ensure the protection of human rights globally. Furthermore, the violation of these economic measures results in severe consequences for the targeted countries.
