Sanctions are restrictions on trade, investment or travel to a country or groups of people aimed at pressuring them into changing their policies. They can be targeted at specific individuals or whole sectors of a nation’s economy and may impact the value of their currency, affect access to oil and other natural resources and limit the growth of their economy. They can also be comprehensive, such as embargoes which restrict all trade or imposed selectively to target particular products, such as arms sales.
In general, broad-based sanctions tend to cause suffering throughout a nation. They often harm all citizens, including the poorest, and can cause shortages of essential goods like food or medicine. Supporters argue that this makes leaders of sanctioned countries more likely to accede to the demand for policy change because it will be in their own self-interest. But some experts point out that such sanctions can backfire by helping the target government shore up domestic support and making a policy change even more difficult.
Moreover, sanctions can have a negative impact on the sanctions imposing nations too. They can lead to lost revenue and increased competition for companies that are not subject to the restrictions, such as those that supply raw materials and components. As a result, firms should always consider the impacts of sanctions and how they will impact their business before deciding to trade with a sanctioned country. OFSI publishes a range of FAQs and advisories, especially of interest to legal specialists, for businesses trading with sanctioned countries.