Economic Sanctions

Sanctions are used as a tool of foreign policy, often in response to military aggression, human rights abuses, terrorism, nuclear weapons programmes or other actions considered threatening.

They can take many forms, including bans on imports or exports of certain goods, freezing assets held abroad, restricting access to the international financial system, banning investment, and targeting specific individuals or companies with travel bans and asset freezes.

For example, after Russia's invasion of Ukraine in 2022, many countries froze Russian central bank reserves held abroad, restricted major Russian banks from the SWIFT payment messaging system and limited trade in key goods.

Sanctions can impose significant costs on targeted economies, but their effectiveness in changing behaviour is debated. Targets may find ways around them, and sanctions can hurt ordinary citizens and businesses in both the targeted and sanctioning countries. Banks and companies must screen transactions carefully to comply, since breaches can lead to heavy penalties.