Financial History 142 Summer 2022 - Page 15

Most significant of all , a long-threatened economic neutron bomb — the ejection of Russian financial institutions from SWIFT , the dollar-based , global interbank payments system — was finally dropped . However , only Russian financial institutions not dealing in energy trade were booted from the network , limiting the full potential impact of the banishment .
The Outlook
In a sense , Russia may be considered a sort of testing ground for a host of neverbefore attempted castigatories . What , then , are the prospects for sanctions targeting Russia bringing an end to the war in Ukraine ?
Unfortunately , they are somewhat dim . The conventional wisdom is that economic sanctions are by and large ineffective diplomatic instruments . In 1998 , Robert Pape estimated successful sanction programs , meaning those which satisfy their stated objectives , amount to roughly 4 – 6 % of those levied . Gary Hufbauer and Barbara Oegg , in 2007 , found that only 34 % of sanction cases reviewed could be deemed successful . The builders of the Global Sanctions Database ( GSDB ), the most recent version of which covers more than 1,100 sanction initiatives between 1950 to 2019 , find that “ the success rate of sanctions ha [ d ] been increasing until 1995 and has fallen since then ; on average , the success rate is about 30 %.”
Andrew Mack and Asif Khan encapsulate their findings in 2000 : “[ T ] he only real disagreement in the contemporary sanctions literature relates to the degree to which sanctions fail as an instrument for coercing changes in the behavior of targeted states .”
Consider the following examples , in light of the time of this writing ( Summer 2022 ).
Where used in the context of trade , the term sanction tends to imply a ban on trading a specific good or array of goods . An embargo , on the other hand , is a sanction policy contemplating a complete prohibition on trade with a specified government and its interests . The US embargo against Cuba is the quintessential example of this and is noteworthy in several respects .
The embargo , put in place by the Eisenhower Administration in 1958 , actually predates the Castro-led revolution . In February 1962 , after the nationalization of US-owned businesses and properties , the embargo was expanded to include food and medicine ; that aspect of the trade ban was relaxed in October 2000 . On several occasions it was suspected that severe external factors might magnify the impact of the US sanctions , driving Havana to embrace long-sought reforms . But the Marxist regime has survived several devastating hurricanes ( over 30 since the year 2000 ), severe flooding and earthquakes . Even the Special Period in the early 1990s , where with the collapse of the Soviet Union massive subsidies and direct aid disappeared , shook but did not topple Cuba ’ s collectivist government .
A detailed account of the nearly 65-year history of the US embargo is beyond the scope of this writing . But while aspects of the trade restriction have been tweaked over the years , two outcomes stand clear . First , that the impact of the embargo has fallen squarely on the citizens of Cuba , missing — if not consolidating and strengthening the position of — the political elites . And second , that the ban on trade has given the Cuban government a potent , if duplicitous , scapegoat for its moribund economy . Indeed , seldom mentioned is that Cuba has full trading relationships with scores of other nations and has been a member of the World Trade Organization since 1995 . As with all centrally planned economies , it is the substitution of bureaucratic guesswork where
President Jimmy Carter announces new sanctions against Iran in retaliation for taking US hostages , April 7 , 1980 .
prices and markets typically function that accounts for misallocations , waste and privation . Nevertheless , despite the embargo Communism endures 90 miles off the coast of Florida , over three decades after the Soviet Union ’ s implosion .
Until Russia ’ s invasion of Ukraine , Iran was the most sanctioned nation on Earth . Since the 1979 seizure of the US Embassy in Tehran and the subsequent hostage crisis , the US and Iran have seen declining relations punctuated by round after round of Presidential Executive Orders and Congressional Acts targeting it . Between 2006 and 2015 , the United Nations additionally passed no less than nine Security Council Resolutions targeting Iran ’ s efforts to develop nuclear weapons . The July 2015 Iran nuclear deal framework ( United Nations Security Council Resolution 2231 , also known as the Joint Comprehensive Plan of Action ) struck between Iran , the permanent members of the UN Security Council ( US , UK , Russia , France and China ), Germany and the broader European Union led to the withdrawal and suspension of many of the sanctions that had been in force against Iran . In return , it agreed to a rigidly structured set of limitations , in particular regarding its uranium enrichment programs . Among many other stipulations , Iran agreed to a tripling of the number of International Atomic Energy Agency ( IAEA ) inspectors , as well
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