When governments want to punish another country without going to war, they usually reach for sanctions. Here’s how they work, how they’ve been used against Russia, and whether they achieve their goals.
Economic sanctions are penalties that governments impose on other countries, companies, organisations or individuals, usually to pressure them to change their behaviour, or to punish them.
They’re used in response to things like invasions, nuclear weapons programs, human rights abuses, terrorism and cyber attacks.
Types of sanctions
Trade sanctions ban or restrict buying from, or selling to, a country. They can cover everything, or particular goods, such as weapons, oil or advanced technology.
Financial sanctions freeze the assets of governments, companies or people, and stop them from using the banking system. Because so much global trade is done in U.S. dollars, U.S. financial sanctions are particularly powerful.
Travel bans stop named individuals from entering a country.
Secondary sanctions go further. They penalise companies in third countries that do business with a sanctioned country, forcing them to choose between that country and access to the U.S. market.
Russia
After Russia’s full-scale invasion of Ukraine in February 2022, the U.S., Europe, Australia and their allies imposed some of the broadest sanctions ever applied to a major economy.
They froze around US$300 billion of the Russian central bank’s foreign currency reserves, cut major Russian banks off from the SWIFT international payments messaging system, banned exports of advanced technology, and sanctioned oligarchs close to President Vladimir Putin. The G7 also introduced a price cap on Russian oil, aimed at limiting Russia’s revenue while keeping oil flowing.
Australia’s sanctions
Australia applies sanctions imposed by the United Nations Security Council, along with its own autonomous sanctions, managed by the Department of Foreign Affairs and Trade. It has sanctioned hundreds of Russian individuals and entities, along with people and organisations linked to Iran, Myanmar and North Korea, among others.
Breaching Australian sanctions is a serious criminal offence.
Do they work?
The record is mixed. Sanctions can do serious economic damage. They’ve cut Iran’s oil revenue, and they’ve made it harder and more expensive for Russia to buy technology and sell its oil.
But they rarely force a government to change course on their own. Sanctioned countries often find workarounds, such as selling to countries that don’t impose sanctions, or using networks of companies and ships to disguise trade. Russia, for example, has sold more of its oil to China and India.
Sanctions can also hurt ordinary people in the targeted country more than its leaders, and can push up prices around the world, as the energy price shock after the invasion of Ukraine showed.
Supporters argue they remain one of the few options between diplomacy and military force.
