DIALOGUE SNAPSHOT REPORT
September 2023
Istanbul, Türkiye
Dialogue Summary
In a recent dialogue organized by the Hollings Center in Istanbul, experts discussed the increasing use of economic sanctions as a foreign policy tool. The conversation highlighted concerns over the declining efficacy of sanctions, citing examples like the ongoing sanctions on Russia and Iran. Participants emphasized the need for clearer intent, better design, and ongoing impact studies for sanctions. The complexity of sanctions, coupled with their unintended side effects, especially on businesses and humanitarian efforts, raised questions about their overall effectiveness. The dialogue also delved into the rise of alternative economic systems and the challenges faced by banks and NGOs in enforcing sanctions. As the debate gains momentum globally, calls for reform include improved definitions of purpose, better design, continued impact studies, and cross-sectoral dialogues for a comprehensive understanding of sanctions’ implications.
Key Takeaways on the Efficacy of Economic Sanctions
Declining Efficacy: With the United States alone imposing sanctions on 20 countries since 2000 and the United Nations Security Council managing 15 ongoing sanctions regimes, the efficacy of such measures is under scrutiny. Examples, including sanctions on Russia and Iran, revealed a lack of desired outcomes. The dialogue brought attention to the need for alternatives and a reevaluation of the sanctions’ effectiveness.
Poorly Designed Sanctions: While sanctions have become more targeted, their lack of clarity regarding intent, coupled with a dearth of international standards, has led to unintended consequences. The complexity of sanctions design and planning has resulted in second and third-tier side effects, impacting businesses, NGOs, and ordinary citizens. Sanctions’ collateral damage is now extending beyond the intended targets.
Alternative Economic Systems: As sanctioned countries seek alternatives, discussions focused on systems like China’s Cross-border Interbank Payment System (CIPS) and the use of bilateral trade agreements. However, participants reached a consensus that a true alternative system remains unlikely in the near term, given the dominance of the US financial system.
Challenges in Determining Efficacy: Assessing sanctions’ effectiveness proves challenging due to poorly collected intelligence, lack of information sharing among banks, and the absence of a unified clearinghouse. Researchers emphasized the need for criteria and data sets to track sanctions effects, acknowledging the complexity of creating a baseline for comparison.
Impact on Banks and NGOs: Banks, tasked with sanctions enforcement, face high monitoring costs and false positive identification rates, affecting legitimate customers. NGOs and humanitarian organizations operating in sanctioned countries bear the brunt of sanctions effects and bank de-risking, hindering their critical work.
Calls for Reform: The dialogue concluded with participants advocating for immediate reforms. Calls included better definitions of purpose and intent, improved sanctions design, continued impact studies, exploration of post-sanction effects, and ongoing cross-sectoral dialogue. The need for a comprehensive understanding, involving NGOs, the private sector, academics, regulators, and ordinary citizens, emerged as a crucial aspect of reform.
