Secondary sanctions

Definition

Secondary sanctions are punitive measures imposed by one country on entities or individuals from a third country that conduct business with a sanctioned country. These sanctions extend the reach of a primary country's sanctions, discouraging international trade and investment in the targeted state by threatening penalties on those who interact with it, thus serving as a powerful tool of economic diplomacy.

5 Must Know Facts For Your Next Test

1. Secondary sanctions are often used by countries like the United States to reinforce their primary sanctions and exert pressure on countries like Iran or North Korea.
2. These sanctions can target foreign banks, companies, and individuals that engage in trade with sanctioned countries, effectively isolating them from global markets.
3. The threat of secondary sanctions can lead to a chilling effect, where businesses avoid dealings with sanctioned states entirely due to fear of penalties.
4. Secondary sanctions can strain international relations, as they may be seen as an overreach of one country's laws into the sovereign economic activities of others.
5. Countries affected by secondary sanctions often seek to develop alternative trading partnerships or create mechanisms to bypass these sanctions.

Review Questions

• How do secondary sanctions function in relation to primary sanctions, and what impact do they have on international business?
  • Secondary sanctions function by targeting third-party entities that engage in commerce with a sanctioned country, expanding the reach of primary sanctions. This makes it risky for international businesses to interact with the sanctioned state, even if those businesses are not directly subject to the primary sanctions. As a result, secondary sanctions create a deterrent effect, often leading companies to avoid any dealings with the sanctioned country to mitigate potential penalties.
• Discuss the potential diplomatic consequences of imposing secondary sanctions on foreign entities that interact with sanctioned states.
  • Imposing secondary sanctions can lead to significant diplomatic tension between countries. For instance, nations subject to these secondary measures may perceive them as an infringement on their sovereignty and an attempt by the sanctioning state to extend its influence. This can lead to strained relationships between nations that resist compliance and those enforcing the sanctions, complicating international cooperation and trade agreements.
• Evaluate how secondary sanctions shape global economic relations and discuss their effectiveness as a foreign policy tool.
  • Secondary sanctions significantly shape global economic relations by compelling countries and businesses to align with the policies of the sanctioning state or risk losing access to larger markets. While they can be effective in pressuring targeted states, their effectiveness often depends on the willingness of other countries to comply. Furthermore, this approach can backfire by fostering resentment among nations and prompting them to seek alternatives to reliance on economies subject to such coercive measures.

Related terms

primary sanctions: Direct penalties imposed on a country or individual, typically by the country imposing the sanctions, that restrict economic activity with the targeted entity.

sanction relief: The removal or easing of sanctions on a country, often as a result of negotiations or compliance with specific demands.

economic coercion: The use of economic power, including sanctions, to compel another state or entity to act in accordance with certain political demands or objectives.