A key element of the international community’s response to Russia’s aggression against Ukraine has been the adoption of sanctions.
But what exactly are sanctions and how do they work in practice?
And above all, are they likely to have a significant impact?
What are penalties?
Sanctions are coercive measures that can apply to diplomatic, economic and cultural relations between States. Generally non-military in nature, they are imposed by one state against another (unilateral sanctions) or by an international organization, such as the United Nations (collective sanctions).
Historically, measures have ranged from blanket sanctions to more targeted measures prohibiting trade in particular items, such as weapons, timber or diamonds.
Some sanctions have circumscribed particular activities intended to benefit a target, such as diplomatic, sporting and cultural relations, as well as travel.
They have also targeted particular individuals and groups who pose a threat to peace and security, including political elites, rebel groups or terrorist organizations.
How do economic sanctions work in practice?
Economic sanctions are multidimensional. They tend to include travel bans and financial penalties. Financial sanctions consist of targeted asset freezes and restrictions on a wide variety of financial markets and services.
When the financial sanction is an asset freeze, it is generally prohibited to deal with frozen funds held by a designated person or entity.
Read more: Is international law powerless in the face of Russian aggression in Ukraine?
Funds are defined to include financial assets of any kind: cash, checks, money orders, credit, debt, stocks and shares, interest, dividends or other income from or generated by assets.
The designation of the targeted persons and entities is carried out either on the basis of a national registration procedure (for the United States, see here, for the United Kingdom here, for Australia here).
Or, this designation may arise as a result of a sanctions regime adopted by an international organization, which is then implemented by its members (for current UN sanctions regimes see here, for EU here).
This dual approach is generally reflected in the sanctions practice of states that maintain “consolidated lists”.
Separate “consolidated lists” are maintained for persons and entities listed on the basis of unilateral sanctions and those listed on the basis of collective sanctions.
Some international best practices exist regarding the implementation of sanctions, such as the guidance of the G7 Financial Action Task Force. But compliance will always depend on individual countries and the particular characteristics of national companies.
Financial institutions, such as banks, will have automated procedures in place to screen incoming transactions before entering and outgoing transactions before leaving their internal systems.
Are economic sanctions effective?
They can be.
The impact on listed individuals and entities can be severe, as illustrated by the international cases of Kadi and Al Barakaat International Foundation v. Council of the European Union or Nada c. Switzerland (both cases in the context of sanctions against financial terrorism).
However, the general effectiveness of economic sanctions is uncertain, in particular because it is empirically difficult to measure.
According to Dursun Peksen, a sanctions expert at the University of Memphis, economic sanctions lead to significant behavioral change in the targeted country about 40% of the time.
Yet, as a recent US government study demonstrates, it is impossible to establish clear causality.
For example, a sanctioned country or individual may decide to change their behavior for many reasons. Some of these changes may be unrelated to sanctions.
What sanctions are now applied against Russia?
The international community has imposed a mix of economic and diplomatic sanctions, with countries acting both unilaterally and collectively.
The United States and the United Kingdom have introduced unilateral sanctions targeting the two largest Russian banks, Sberbank and VTB Bank. They also froze the assets and restricted the travel of top Russian oligarchs. Canada and Australia have followed suit.
Germany has indicated it is abandoning the Nord Stream 2 gas pipeline project in the Baltic Sea, designed to double the flow of Russian gas directly to the country. Poland, the Czech Republic, Bulgaria and Estonia have closed their airspace to Russian airlines.
As for collective sanctions, the UN Security Council will remain unable to impose sanctions due to Russia’s veto power as a permanent member. Indeed, Russia has already used this right of veto to block a resolution condemning the invasion of Ukraine.
The EU, on the other hand, was quick to introduce asset freezes and travel bans preventing listed individuals from entering or transiting EU territory.
EU sanctions now apply to 555 Russian individuals and 52 entities, including 351 members of the Russian State Duma who supported aggression against Ukraine.
The EU has since decided to adopt other sets of sanctions, which include the direct targeting of President Putin and Foreign Minister Lavrov.
Along with the United States and the United Kingdom, the EU also agreed to remove some Russian banks from the SWIFT banking system, the financial messaging infrastructure that connects banks around the world.
The Council of Europe in Strasbourg also applied unprecedented diplomatic sanctions. He suspended Russia from its rights of representation in the Committee of Ministers and the Parliamentary Assembly.
Are the sanctions likely to have a significant impact?
Too early to tell, but probably not in the short term.
The unilateral and collective sanctions that have been applied are comprehensive. They were also adopted quickly. Some of the measures, such as the personal targeting of Putin and Lavrov, are unprecedented.
On the other hand, important gaps remain and present a considerable risk of fragmentation.
The example of Switzerland is a good example. The Swiss government has expressed support for supplementing EU sanctions. Yet he has so far been reluctant to apply targeted asset freezes to people listed by the EU, US and other countries.
As a New York Times analysis details, there are also growing concerns that Russian companies are evading sanctions by turning to cryptocurrency tools, including the so-called digital ruble and ransomware.
Christopher Michaelsen, Associate Professor, UNSW Sydney
This article is republished from The Conversation under a Creative Commons license. Read the original article.