Implementing or threatening another territory with economic sanctions in order to achieve a nation’s political end is an age-old tactic. In ancient and medieval Europe, trade blockades were put in place to obtain commercial privileges or to compel opponents to surrender. Today, with globalization, territories are more connected and interdependent, and the mechanisms of economic coercion are evolving in these new circumstances.
Common coercive tools in trade include import tariffs, trade remedies and export prohibitions or restrictions affecting specific goods from a particular source or origin. Other methods include cutting foreign aid, freezing financial assets, removing banks from the SWIFT (Society for Worldwide Interbank Financial Telecommunication) clearance system, rejecting regulatory approvals and the boycott of particular products.
The world has become more antagonistic in recent years. Governments are implementing, or threatening to implement, unilateral actions against others to achieve their own objectives. This weaponization of economic policy tools is a challenge to regional and global stability, weakens diplomacy and overrides the multilateral mechanisms available to initiate consultations and resolve disputes.
Yet, in today’s highly interdependent global economy, most of these coercive actions have proven ineffective.