Essay Example on Economic Sanctions

Hufbauer (2007) on the other hand states that only 34% of the sanctions that have been examined resulted as successful, this means that only 40 out of a possible 115 sanctions. However, on further examination, the number was revised down to 4% whereby most of the sanctions have to be accompanied and enforced via indirect or direct use of force in cases where the targeted party fails to meet the demanded concessions. The crisis that had emerged in 2009 and led to the tensions between Russia and the West from the death of the businessman and auditor Sergei Magnitsky resulted in travelling bans to the U.S for the Russian delegates who were related to incidences that arose from the U.S financial system. The sanctions, however, resulted in low and minimally significant impact.

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Putting aside the re-known success behind sanctions there are conditions that should be considered to trigger a considerable economic impact during sanctions. According to Hufbauer (2007) the size of the economy for the target, country can be termed as ceteris paribus meaning there is a negative correlation in the impact and the success of the sanctions. The prescribed negative effect on size goes in line with the economic theory that suggests that larger countries are in a position to in-signify the sanctions imposed easily as they are highly self-sufficient in comparison to the smaller countries. Further, Hufbauer provides that political and economic ties determine the level of effectiveness of sanctions. This is the case that sanctions tend to have huge impacts in cases where the country issuing the sanction is a huge trading and partisan partner. This is hardly surprising since sanctions and restrictions imposed on trading and financial activities tend to impact more on areas that have more economic activity as compared to nations with minor relations; this explains the reason why Russia may feel threatened by sanctions from the European Union in comparison to the United States whose sanctions would impact insignificantly.

In cases of multilateral or unilateral sanctions the impact would result differently; in situations of unilateral sanctions, target states may be in a position to trade for raw materials and goods from third and non-sanctioning states. On the other hand, the multilateral sanctions are coordinated in manners that a few states take economic actions thus resulting in a relatively bigger effect since the loopholes for switching trade partners by the sanctioned states are highly minimized. According to Hufbauer, multilateral sanctions provide the highest economic impacts on the sanctions states. Designing of the sanctions is highly political in accordance to the different parties and the groups to whom the sanctions are directed.

The conditions that were attached to the sanctions against Russia may provide a level of skepticism; the sanctions did not include the necessary restrictions on financial and trading activities except for the United States that issued sanctions against some of the banks, but they were relatively small financial partners in the finance industry and were still directed towards Putins confidants. More so, Russia itself is a big country where the imports and the exports account for only an approximate of 40% of the Gross Domestic Product. It is a common trait for big states to have a lower ratio in trade/GDP since they are highly sufficient. European Union, United States, and Japan as an example reflect even lower trade/GDP ratios that amount to 23% to 26% of the GDP while Belgian reflects an exceedingly high ratio of 180%. This shows that economic sanctions would impact differently and may be not as effective in other states. The European Union is the biggest and most essential trading companion to Russia which implies that sanction threats from the European Union would be more lethal to Russia than those imposed U.S in the year 2013 (Cortright, 2002). A trade turnover between Russia and the European Union approximated at 326 billion euros in comparison to the 21 billion euros turnover from the trade between Russia and U.S.A.

Russia reacted to the trade sanctions in the political tensions from the West by changing their orientation towards the East, for instance, Gazprom entered into a long-term agreement with China on gas delivery that was worth $450 billion as well as infrastructure undertakings. Despite, the weakness on the introduced sanctions, the economic sanctions and the political crisis that arose had significant signs of impact towards the Russian economy. The available means to reflect on the political crisis with the commencement of the sanctions was observable in the yield of the government bond as well as the stock market (Kaempfer, 2007). The crisis greatly influenced the exchange rate, but with the consideration of the inflationary pressures on the monetary activism, there was minimal clarity on the link that existed between the economic sanctions, political crisis, and the exchange rates.

References

Bank, Deutsche. "The economics of sanctions: The West can afford to be tough." (2014).

Biersteker, Cortright, David, and George A. Lopez. Smart sanctions: targeting economic statecraft. Rowman & Littlefield, 2002.Caruso, Raul. "The impact of international economic sanctions on trade: An empirical analysis." Peace Economics, Peace Science and Public Policy 9, no. 2 (2003).

Cortright, David, George A. Lopez, and Linda Gerber. Sanctions and the search for security: Challenges to UN action. Lynne Rienner Publishers, 2002.Hellquist, Elin. "Either with us or against us? Third-country alignment with EU sanctions against Russia/Ukraine." Cambridge Review of International Affairs (2016): 1-25.

Hufbauer, Elliot, Kimberly A., Gary Clyde, Jeffrey J. Schott, and Barbara Oegg. "Economic Sanctions Reconsidered." Institute for International Economics, Washington, DC (2007).

Hufbauer, Gary. "The US Congress and the Chinese Yuan." Peterson Institute for International Economics 19 (2007).Kaempfer, William H., and Anton D. Lowenberg. "The political economy of economic sanctions." Handbook of defense economics 2 (2007): 867-911.

Morgan, T. Clifton, Navin Bapat, and Valentin Krustev. "The threat and imposition of economic sanctions, 19712000." Conflict Management and Peace Science 26, no. 1 (2009): 92-110.