Effects of Economic Sanctions on International Trade
Economic sanctions have been used for a long time by powerful governments and the United Nations to punish oppressive governments that disregard international law. While these sanctions have produced positive results in most cases, their effects on the international economy cannot be underestimated. These sanctions have crippled many countries’ economies. This paper will discuss the effects of these international sanctions on international trade and economics.
Trade sanctions as applied in international economics can be viewed from diferring perspectives and viewpoints. These applications include blocking the target government assets held abroad, limiting a country’s access to financial markets, restricting loans and credit access, restricting international trade on property and freezing of development assistance (Bussyt, 10).
When the foreign access to new funds is restricted, a government is unable to pay for its imports. This condition will, in turn, hurt the country’s trade systems leading to undesirable effects such as inflation. In many instances of economic sanctions, the currency value of the target country depletes unceremoniously. The economic sanctions on Russia following the annexation Crimea has seen its Ruble currency value fall from 30 to a dollar to 40 to a dollar. When these sanctions were imposed on Zimbabwe, the entire currency collapsed forcing them to adopt a foreign currency (Rowe 20).
The crippling of regional trade and collapse of financial institutions in the affected countries renders these sanctions ineffectual (Bossuyt 39). Under sanctions, the poor get poorer while the wealthy get wealthier as a result of their monopoly on illegal trade. The top government officials and well-connected businessmen flourish on black-market as they rip millions of dollars from these activities. In turn this denies the governments import tax and duties that affect the provision of important services crucial to business survival such as security (Rowe 67)
When economic sanctions are imposed to a country, it affects the entire regional trade balance since the country is considered as financially challenged and can no longer able to pay for imports from the region. Businesses collapse, thousands lose jobs and poverty levels hike (Rowe 103). Consequently, when people have no jobs, crime increases translating into a hostile environment for trade and business. These sanctions have become a seed of terror when they are imposed to Muslim countries. The economic hardships become a reinforcement to terrorism an international horror that has proved hard to knob. The affected country’s natural resources are under-utilized which means they are not in the position to contribute to the world economic development. The economic sanctions on Iran for example, have made the situation difficult for them to put on sell their fossil energy on the international market.
For the many disadvantages of comprehensive sanctions on international trade, it calls for a more effective way of imposing sanctions that promote development of international economy. Fortunately, targeted economic sanctions have proved more effective on punishing government officials instead of the entire economies of the affected countries (Bossuyt 54). These targeted financial sanctions target personal foreign assets and personal access to international finances. They may also target personal business and their imports and exports. These sanctions when imposed on senior government officials, such as the ministers and military leaders, prove to be more effective and less hurting to the economies of their respective countries.
Many commentators have argued that economic sanctions are a coercive tool used by imperial leaders to bully less powerful governments. Though they have caused more harm than good before, imposing of economic sanctions is the only peaceful way to manage international conflict when diplomacy fails.
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Works Cited
Bossuyt, Marc. “The Adverse Consequences of Economic Sanctions.” Global Policy Forum (2000): 54-57. Digital.
Rowe, David M. . Manipulating the Market: Understanding Economic Sanctions, Institutional Change, and the Political Unity of White Rhodesia. Michigan: University of Michigan Press, 2001. Print.
