RIAC Handbook
Everything you want to know about how sanctions work
Sanctions are still in the focus of the foreign policy community and the general public. The reasons for this are numerous: the events in Ukraine have set off a series of restrictions on Russia imposed by the U.S.A., the EU and other countries. Moscow responded in kind—Russia also sanctioned Turkey for the incident with the Russian aircraft in November 2015. Moreover, the United States has partially lifted sanctions on Iran and Cuba. The discussion of economic sanctions normally boils down to an assessment of their impact on the affected country's economy, and generally to the effectiveness and acceptability of this foreign policy tool. At the same time, the researchers as well frequently neglect the basic features of sanctions as a foreign policy instrument, the sanctioning mechanisms, and responsibility for their nonobservance.
Economic Sanctions and their Difference from other Restrictions
Economic sanctions amount to the limitation or severance of trade and financial operations in order to reach aims related to security or foreign policy matters. Sanctions may be imposed by individual states or international organisations on individuals and legal entities, as well as organisations and countries. There are three main types of sanctions: comprehensive sanctions sever all trade and financial operations with countries (U.S. sanctions against Cuba), sectoral sanctions cover economic sectors and groups of people, and targeted sanctions limit such operations to certain individuals and/or companies. Sanctions may vary from the denial of entry for certain individuals to the freezing of assets, financial restrictions, bans on a delivery of weapons and military equipment, etc.

As a matter of fact, the discussion of sanctions normally leaves out trade barriers and export controls. The former deals with tariff and non-tariff regulations used to attain purely economic goals for the protection of the domestic market and support for national manufacturers, which certainly would not exclude their use in response to the objectionable behaviour of the other party. The export control regime, in turn, is intended to regulate the dissemination of commodities, materials, technologies, equipment, and services that may enable the creation of the WMD or other weapons systems. These restrictions are permanent irrespective of the international environment, they are based on international agreements, treaties and regimes, and they can also imply close cooperation with international organisations, for example, the NPT accords and the IAEA.
Why Sanctions?
States and international organisations impose sanctions in response to actions of individuals, organisations, or states, which are thought to threaten their interests or international security. Sanctions can be triggered by a military action or armed intervention in the affairs of a sovereign state, as well as a wide range of nontraditional threats to international security, among them drug trafficking, cyber crime, the threat of WMD dissemination, illegal weapons trade, violation of human rights, etc.

Sanctions are seen as a compromise response to objectionable actions by another state. In contrast to diplomatic measures, sanctions are more effective in terms of economics and seem more likely to change the international behaviour of the state in question. At the same time, sanctions are much cheaper than military operations and less risky in terms of conflict escalation because restrictions can be gradually imposed and lifted. There is also a tight linkage with the fulfilment of certain requirements and minimised risks for the civilian population of the sanctioned country.
UN Sanctions
Legal Basics and Imposition Mechanism

As prescribed by Article 39 Chapter VII of the UN Charter, it is the Security Council that determines the existence of threats to peace or international security and takes appropriate steps for their restoration. If such threats have been found, the Security Council may apply Article 41 of the UN Charter and impose restrictive measures on the aggressor (either a state or a non-state actor like al-Qaeda or ISIS) unrelated to the use of military force. The move requires the support of the majority of Security Council members and the absence of a veto on the part of its permanent members.

In order to support and implement the compulsory measures, the UN establishes special sanctions committees, special groups and expert groups that monitor and assess the implementation of the sanctions regime. However, although implementation of sanctions is obligatory for all UN member states, the organisation possesses no mechanisms to make certain the observance of sanctions and consequently has to rely on national governments.

Types of Restrictive Measures

Restrictive measures include the complete or partial discontinuation of economic relations, bans on any types of communications, etc., with the most widespread UN actions including:
  • Asset freezes.
  • Ban on deliveries of weapons and military equipment.
  • Ban on movement.
In addition, the UN may establish international tribunals, for example on former Yugoslavia in 1993 and on Rwanda in 1994, or funds for compensating victims of aggression.

Infographics: UN Sanctions
U.S. Sanctions
Legal Basics and Imposition Mechanism

Because of its immense financial and economic assets, the United States is most active in using economic sanctions for the protection of its interests and international security, guided by the following legal acts:

  • Trading with the Enemy Act of 1917 is the first act to stipulate the exploitation of political causes (an armed conflict) for restricting economic relations with foreign countries. Following the 1933 amendments, the U.S.A. has the right to downsize the circulation of metallic gold (ingots, primitive jewellery, etc.) in case of emergency related to events other than participation in an armed conflict.
  • Foreign Assistance Act of 1961 places economic aid and development assistance in a separate segment of U.S. foreign policy, regulated by the United States Agency for International Development (USAID). The act provides for curtailing or cancelling U.S. aid to states that restrict or violate human rights.
  • National Emergencies Act of 1976 obliges the president to notify Congress about the imposition of new emergency regimes. Such a regime is deemed terminated if it has not been extended after expiration of one year, cancelled by an executive order or by a joint Congress resolution. The President and all executive bodies are obliged to gather and present information on all actions and orders taken within the emergency regime and report possible losses inflicted by such actions.
  • International Emergency Economic Powers Act of 1977 empowers the President to declare a state of emergency only in response to threats emerging beyond U.S. territory.
  • Export Administration Act of 1979 empowers the President to control export operations for the needs of national security and foreign policy.
Actually, there are three more acts that may be employed for imposing sanctions against individuals and legal entities:
  • Antiterrorism and Effective Death Penalty Act of 1996 specifies assistance and compensations to terrorist attack victims, tougher controls of WMD and related materials, stricter migration policies toward persons seeking asylum, and punishment for preparation and participation in acts of terrorism. The act allows for recognising an organisation as a terrorist entity and consequently banning its financing.
  • Foreign Narcotics Kingpin Designation Act of 1999 specifies a ban on drug dealers, companies, and other legal entities under their control from entering into the U.S. financial system, as well as a ban on U.S. individuals and legal entities of U.S. residence from entering into any trade and other economic relations with drug dealers.
  • Clean Diamond Trade Act of 2003 prohibits the import of diamonds from regions seized by armed conflicts.

Certain sanctions regimes may be based on special acts, as one may see from the Cuban Democracy Act of 1992, the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010, etc.

These statutory acts empower the President to declare a state of emergency in response to actions of a state or a non-state actor that may pose a threat to U.S. interests or security. In this case, the President signs an executive order to declare an emergency in relation to the relevant events. This regime allows for actions intended to limit international aid, trade, financial operations, supplies of certain goods and services, as well as denial of entry to the United States, and other non-military measures. In accordance with the National Emergencies Act, the term of sanctions is limited to one year, although they may be extended by an executive order or abolished by Congress if the House of Representatives and Senate vote to lift the emergency. In its turn, Congress may impose restrictive measures or modify the existing sanctions regimes.

Most of the existing U.S. sanctions regimes are coordinated by the Office of Foreign Assets Control (OFAC) of the Treasury Department. Other participants include the Department of State (denial of entry to the United States, recognition of terrorism), Department of Defense, Department of Energy, Department of Justice, Department of Commerce and other government bodies.

Types of Sanctions

  • Normally, the U.S. sanctions programs incorporate the following restrictions:
  • Freezing of assets.
  • Denial of entry to the United States;
  • Limitations on exports of certain groups of goods, including high-tech and dual-use items.
  • Ban on supplies of weapons and military equipment.
  • Limitation of access to the U.S. financial market.
  • Ban on entering into certain types of economic relations with sanctioned entities (individuals and legal entities) for U.S. citizens, as well as companies registered in the United States and their branches.
  • Limitations on rendering development assistance, etc.

Cancellation of Sanctions

Several methods may be used for removal of sanctions. An emergency is imposed by executive order of the U.S. President and suggests the possibility of imposing restrictive measures for a period of 12 months. Extension of the regime also requires a presidential order. If no extension follows, upon the expiration of the period, the emergency regime and related restrictions cease to be effective. The sanctions regime may be also cancelled by a relevant executive order or a joint Congress resolution that also requires the President's signature.

Responsibility for Violation of Sanctions

The United States has developed a detailed system of punishments and fines for violation of sanctions regimes, which is managed by the OFAC. Fines are fixed and may be amended for inflation. In fact, beginning from August 1, 2016, the Trading with the Enemy Act specifies the maximum fine of USD 83,864, while the International Emergency Economic Powers Act puts the maximum fine at USD 284,582 or the double sum of the appropriate transaction.

The sums are meant as reference points, and final fines are calculated proceeding from each violation of the sanctions regime, particularly on the basis of the following criteria:
  • whether the violation is an egregious case;
  • whether the violation has been a voluntary self-disclosure on the part of the violator.

Depending on the combination of these parameters, punishments are assigned up to criminal responsibility and long-term incarceration.

At the same time, the final fines may significantly exceed the prescribed levels. Taking into account the U.S. role in the global financial system and the sanctions regime parameters, frequently many financial institutions, especially banks, receive much more severe penalties. The most vivid example is the largest French bank BNP Paribas that had to pay USD 8.9 billion for violating sanctions regimes imposed on Cuba, Iran and Sudan. In 2012 HSBC was fined USD 1.9 billion for violating sanctions against Myanmar, Cuba, Iran, Sudan and Libya, while the Commerzbank AG was fined USD 1.45 billion for violating sanctions against Iran and Sudan.

Infographics: U.S. Sanctions
The EU Sanctions
Legal Basics and Imposition Mechanism

The European Union widely uses sanctions or restrictive measures in its official terminology both for protection of its interests and international peace and security. Currently, Brussels handles 38 regimes under and beyond the UN resolutions against 4,030 legal entities and 7,902 individuals.
As a matter of fact, the European Union prefers diplomatic action and regards sanctions as a foreign policy tool of last resort. However, Brussels extensively employs restrictive measures for several reasons. Firstly, in contrast to the United States, the EU lacks sufficient military mechanisms and has to rely on NATO. Secondly, the EU market is so large and attractive that potentially sanctioned countries, individuals and legal entities are normally motivated to meet the EU demands. Thirdly, uniting 28 states, the EU can take concerted action and apply effective lobbying on other international platforms, including the UN, G20, etc.

Brussels observes all UN-imposed sanctions and coordinates their observance with the EU members. Besides, the European Union may at its own discretion expand and amplify UN sanctions along with its own measures. Brussels basically resorts to sanctions in the following cases:
  • Countering threats to the key principles of its foreign policy, primarily threats to international peace and security.
  • Countering terrorism.
  • Countering dissemination of WMD, first of all, nuclear weapons.
  • Fighting against violation of human rights.
  • Countering illegitimate annexation of territories and targeted destabilisation of a sovereign state.

The EU defines imposition of restrictive measures by the provisions of its Common Foreign and Security Policy, with a relevant specification contained in Article 215 of the Treaty of the Functioning of the European Union. Observance of restrictive measures is compulsory within the entire EU jurisdiction (the territory of member states), as well as for EU residents – individuals and legal entities including affiliates and branches in third countries.

Types of Sanctions

Mainly, the EU practices the following restrictive measures:
  • Denial of entry to the EU countries.
  • Freezing of assets of foreign states, legal entities and individuals placed in EU territory.
  • Financial restrictions including freezing of assets of the sanctioned country's central bank, ban on crediting private banks and other legal entities, limitations on remittances, etc.
  • Limitations on supplies of certain groups of goods and services, including bans on supplies of weapons and military equipment, equipment usable by the police and punitive bodies, supplies of high-tech and double-use items (also equipment for hydrocarbon and energy sectors), software, gold, precious metals, etc.
  • Ban on imports of certain goods and services including oil and gas, parts and components, etc.
  • Transportation restrictions, etc.
Restrictive measures are adopted unanimously by the European Council upon the recommendation of the High Representative of the Union for Foreign Affairs and Security Policy. Proposals on specific sanctions are developed by regional working groups of the Council (depending on the regional belonging of the targeted entity), the Foreign Relations Counselors Working Party (RELEX), the Political and Security Committee (PSC), and Committee of Permanent Representatives (COREPER II). After the decision on imposition of the restrictive measures has been taken, its text must be published in the Official Journal of the European Union. The European Council must also accordingly inform the European Parliament. Then the EU officially notifies the sanctioned legal entity or individual, who in their turn may officially apply with a request to review the imposed restrictions.

The adopted sanctions are obligatory for implementation by the EU member states. Measures prescribing denial of entry to the EU countries and bans on supplies of weapons and military equipment are realised in absence of further accommodation, while financial and economic measures (freezing of assets, limitations on financial operations, etc.) require an additional regulation of the European Council that should specify the details and mechanisms. These directives are adopted by the Council upon the recommendation of the High Representative of the Union for Foreign Affairs and Security Policy and upon agreement with the RELEX. Normally, these regulations are adopted at the same time with the decision on restrictive measures so that the two documents could have maximum effect.

Cancellation of Sanctions

The EU monitors on a permanent basis the situations related to the imposition of restrictive measures. The European Council decisions on sanctions are effective for 12 months. Depending on the developments, the European Council may decide to extend, expand, amend, suspend or cancel the measures. If the sanctions are lifted or not extended, all of them become ineffective. At the same time, the Council regulations have no time limits, so the EU measures pose as a sufficiently flexible mechanism for responding to objectionable actions of the third countries, legal entities and individuals whose actions threaten the interests of the EU and its member states.

Responsibility for Violation of Sanctions

A union of 28 states, the EU relies on national governments both in observance of restrictive measures and punishing legal entities and individuals who violate the sanctions regimes. Similar to the United States, the penalties may involve fines and imprisonment. Since the responsibility is determined by the laws of each EU member state, the penalties may vary considerably.

Infographics: The EU Sanctions
Russia's Sanctions
Legal Basics and Imposition Mechanism

The main act regulating sanctioning in the Russian Federation is the Federal Law on Special Economic Measures №281-FZ dated December 30, 2006, which stipulates the imposition of sanctions for protecting the security and interests of Russia, as well as the rights and liberties of its citizens. At the same time, the Law regulates the imposition of restrictions against other states, their governments or officials as a result of unfriendly actions or breach of the existing international legal regimes.

Decisions on the imposition of special economic measures are taken by the President of the Russian Federation upon the recommendation of the Security Council, the Government or both chambers of the Federal Assembly. If the President chooses to impose special economic measures, their detailed list will be compiled by the Government that will present them in its executive order.

Types of Sanctions

Special economic measures may include:
  • Total or partial suspension of programs related to economic and technical assistance, as well as military-technical assistance.
  • Prohibition or suspension of financial operations.
  • Prohibition or limitation of foreign trade operations.
  • Cancellation or suspension of foreign trade agreements and other international agreements of the Russian Federation related to foreign economic cooperation.
  • Revision of export and/or import duties.
  • Prohibition or limitation of port calls in the Russian Federation and the use of the airspace of the Russian Federation or its regions.
  • Restrictions on tourism.
  • Prohibition or refusal for participation in international scientific and technical programs and projects, scientific and technical programs and projects of foreign states.
In accordance with the Law, the implementation of measures is compulsory for Russian government bodies, as well as for organisations and individuals under the jurisdiction of the Russian Federation.

Cancellation of Sanctions

The term of these measures is established by the Russian President. The Law prescribes that if the grounds for the imposition of special economic measures have been removed, the restrictions can be lifted before the expiration of the established period. If the grounds remain, the sanctions may be extended. The decision on removing special economic measures is to be taken by the President and may be recommended by the two chambers of the Federal Council or by the Government.

Inforgraphics: Russia's Sanctions
Being one of many foreign policy tools, economic sanctions are in the limelight of academic and expert discourse that normally focuses on the following problems:
  • The Efficiency of sanctions. Since sanctions are intended to make a participant of international relations change its behaviour, this parameter is quite easily traceable. Theoretically, sanctions offer the optimal alternative to diplomatic and military action. However, sanctions often fail to bring the intended result and sometimes generate opposite outcomes, i.e. triggering more objectionable actions of the sanctioned entity.
  • Cost-effectiveness relationship. In June 2016, French think tank Centre d'Etudes Prospectives et d'Informations Internationales (CEPII) published research on losses of countries that have sanctioned Russia in the Ukraine context. The paper said that these countries have suffered export losses worth USD 60.2 billion, bearing in mind that the bulk of the damage has hit groups of goods untouched by Russian retaliatory measures. Similar figures (up to 50 billion euro) are given by the European Commission and the Austrian Institute of Economic Research (up to 92 billion euro in the long-term perspective). There is also a possibility that sanctions may place a handicap on third-party countries, hitting sanctioning countries even harder. Hence, an assessment of one's own losses by the sanctioned state seems critical.
  • Ethics of sanctions. Since sanctions may vary from targeted to comprehensive, politicians and experts widely discuss the ethical aspects. Beginning from the mid 1990s, most experts recognise the importance of targeted sanctions that affect only the elites and the elite groups responsible for violation of international legal norms. However, the biggest effect comes from sectoral and comprehensive sanctions that harm the population of the sanctioned country.
  • Globalisation of sanctions. In contrast to the UN's global sanctions, restrictions imposed by a single country cover only its own individuals and legal entities. However, many of the U.S.-initiated sanctions regimes (for example, against Cuba and Iran) also affect foreign firms (the case of BNP Paribas, etc.). Such sanctions are known as secondary, which is related primarily to the U.S. role in the global economy and finance, as well as the control over the USD, the key global reserve currency, which allows Washington to provide grounds for fining U.S. nonresidents. Of course, such cases are hardly welcomed by the EU and other countries.

Additional reading:

  1. Economic sanctions reconsidered, 3rd edition, Gary Clyde Hufbauer and Jeffrey J. Schott and Kimberly Ann Elliott and Barbara Oegg, Peterson Institute for International Economics, 2009.
  2. Complete List of Individuals and Legal Entities Sanctioned by the United Nations
  3. Infographic by Thomson Reuters.
  4. Robert A. Pape, Why Economic sanctions do not work.
  5. CEPII Working Paper. Collateral Damage: The Impact of the Russia Sanctions on Sanctioning Countries' Exports.
'Leading Countries Sanctions'
By sanctioning actors
By targeted actors
Sanctioning actors
States and international organisations that imposed sanctions against other actors
Libya, Myanmar, Somalia, South Sudan, Sudan, Tunisia, Haiti, Iraq, Lebanon, Liberia, Eritrea, Republic of Guinea, Guinea-Bissau, Iran, Syria, Belarus, Bosnia and Herzegovina, Burundi, CAR, North Korea, China, D. R. Congo, Côte d'Ivoire, Egypt, Russia, Moldova, Yemen, Zimbabwe, Serbia, Montenegro
Libya, Myanmar, Somalia, South Sudan, Sudan, Iraq, Lebanon, Liberia, Iran, Syria, Belarus, Bosnia and Herzegovina, Burundi, Central African Republic, China, D. R. Congo, Côte d'Ivoire, Russia, Moldova, Yemen, Zimbabwe, Cuba, Venezuela, Serbia, Montenegro
Libya, Myanmar, Somalia, South Sudan, Sudan, Tunisia, Iraq, Lebanon, Liberia, Eritrea, Iran, Syria, Belarus, Central African Republic, China, D. R. Congo, Côte d'Ivoire, Egypt, Russia, Yemen, Zimbabwe, Serbia, Montenegro
Libya, Myanmar, Somalia, South Sudan, Sudan, Iraq, Lebanon, Liberia, Eritrea, Guinea-Bissau, Iran, Syria, Bosnia and Herzegovina, Central African Republic, China, D. R. Congo, Côte d'Ivoire, Russia, Yemen, Zimbabwe, Serbia, Montenegro
Iran, North Korea, Norway
Iran, North Korea
Iran, North Korea, Russia, Serbia, Montenegro
North Korea
USA, Canada, Japan, Ukraine, Australia, Norway, EU
Libya, Somalia, South Sudan, Sudan, Iraq, Lebanon, Liberia, Eritrea, Guinea-Bissau, Syria, Central African Republic, China, D. R. Congo, Côte d'Ivoire, Yemen
Targeted actors
States and integrations targeted by sanctioning actors
EU, USA, Canada, Australia, UN SC
EU, USA, Canada, Australia
EU, USA, Canada, Australia, UN SC
EU, USA, Canada, Australia, UN SC
EU, USA, Canada, Australia, UN SC
EU, Canada
EU, USA, Canada, Australia, UN SC
EU, USA, Canada, Australia, UN SC
EU, USA, Canada, Australia, UN SC
The EU, Canada, Australia, UN SC
The EU, Australia, UN SC
EU (removed in 2016), USA, Canada, Australia, India, Indonesia, China, South Korea, Japan, UN SC (removed in 2016)
EU, USA, Canada, Australia, Turkey, UN SC
EU (removed in 2016), Canada
EU (removed in 2016), USA (Republika Srpska)
EU, USA, Canada, Australia, UN SC
EU, USA, Canada, Australia, China, Republic of Korea, Japan, Mexico, UN SC
Russia (removed in 2016)
EU, USA, Canada, Australia, UN SC
EU, USA, Canada, Australia, UN SC (removed in 2016)
EU (removed in 2016), Canada
EU, USA, Canada, Australia, Japan
EU (Transnistria)
EU, USA, Canada, Australia, UN SC
EU, USA, Canada, Australia
EU, USA, Canada, Australia, Japan
EU, USA, Canada, Australia, Japan
China, Russia
Idea: Timur Makhmutov
Author: Vladimir Morozov
Produced by: Maria Smekalova, Roman Maika, Alexander Teslya and Dmitry Puminov
Special thanks to Tatyana Bogdasarova, Anna Antonova, Daria Polosina and Elvira Chislova for data retrieval and systematisation.
Graphics by Infografika studio
© 2017 Russian International Affairs Council,