How US sanctions work

Money talks. That is the theory, at least, behind a foreign-policy tool used by the US to try to get others to see things its way.

Money talks. That is the theory, at least, behind a foreign-policy tool used by the US to try to get others to see things its way. The US has a toolbox of financial sanctions it can use, from freezing bank accounts and other financial assets to imposing embargoes to cutting banks off from the US financial system.

Sometimes it works in the reverse. As of Tuesday, some 23 million in once-frozen funds have been transferred to North Korea from an Asian bank to try to get stalled nuclear disarmament talks going again.

8226; Why does the US impose financial sanctions?

The US government can have a broad range of reasons 8212; national security, political, economic 8212; to impose sanctions against a country, government or specific people, companies and groups. Cold War tensions, for instance, led the Treasury Department to impose economic embargoes against communist North Korea in 1950 and against Cuba in 1963. Iran8217;s support of terrorism prompted President Ronald Reagan to place economic penalties on the country in 1987.

The government can apply financial sanctions against people, companies and groups suspected of raising money or providing other kinds of support to terrorists, such as al Qaeda. The government also can clamp down financially on those believed to be spreading weapons of mass destruction, trafficking in drugs, laundering money and for other reasons.

8226; In recent years, what are some of the countries that have been affected by financial sanctions?

The US has sought to tighten the noose around North Korea and Iran. Both countries have nuclear ambitions that have generated international concern. One strategy the Bush administration has pursued is identifying specific people, companies or groups it suspects of helping North Korea and Iran spread weapons of mass destruction, bankroll terrorists or engage in other illicit activities. Any bank accounts or other financial assets of those targets found in the US are frozen, and Americans are prohibited from doing business with them. Importantly, the designations can make others outside the US think twice about having relationships with those blacklisted.

8226; Does the US try to disrupt the flow of money to organisations, including those that it brands as supporting terrorism?

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Yes. The US has moved to freeze the financial assets of Hamas, Hezbollah and al-Qaida, and it also has moved to crack down financially on people and entities that have helped to raise money or provide other kinds of support to these terror groups.

8226; How effective are financial sanctions?

Experts say the results are mixed. For instance, despite sanctions in place for more than 40 years against Cuba, Fidel Castro8217;s communist regime is still intact. The broad sanctions against Cuba and those once in place against Iraq before the fall of Saddam Hussein probably hurt the people of the countries more than they modified the governments8217; behavior.

But analysts also point out the Bush administration8217;s successes in persuading bankers across Europe and Asia to choke off some Iranian and North Korean access to the world financial system. Still, the provisions have not persuaded Iran to abandon its nuclear programme.