How International Sanctions Work: An Explainer

Sanctions are economic and political restrictive measures aimed at changing the behaviour of another state, organisation, or individual. Three goals are usually distinguished: coercion (pushing the target to change its policy), constraint (reducing its capacity, for example by cutting off arms or money flows), and signalling (expressing disapproval of behaviour deemed unacceptable). Sanctions are considered a tool of pressure that does not use military force (Source: Global Investigations Review; Council on Foreign Relations).

The main types of sanctions

Sanctions come in several forms: trade embargoes (banning trade in certain goods), financial sanctions (asset freezes and blocking transactions), arms embargoes, travel bans (denial of visas), and sectoral sanctions (targeting, say, the energy or banking sector). By scope they fall into two groups: comprehensive sanctions covering an entire country, and targeted or "smart" sanctions aimed only at specific individuals, companies, or sectors. Targeted sanctions are designed to reduce harm to the general population (Source: Global Investigations Review; Better World Campaign).

Who imposes sanctions

Sanctions are imposed in two ways. The first is multilateral: the UN Security Council adopts a resolution under Chapter VII of the UN Charter, and such resolutions are binding on all 193 UN member states. Article 41 of the Charter permits non-forcible measures such as economic sanctions, arms embargoes, travel bans, and asset freezes (Source: Better World Campaign; UN Charter, Article 41).

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The second is unilateral (autonomous) sanctions, imposed independently by individual states or blocs. In the USA these are administered by the Treasury Department's Office of Foreign Assets Control (OFAC). In the European Union, restrictive measures are adopted by a Council decision under Article 29 of the TEU by unanimity of all member states, with the implementing regulation then adopted by qualified majority. After Brexit, the United Kingdom runs its own sanctions independently, administered by the Treasury's OFSI (Source: consilium.europa.eu; Global Investigations Review).

OFAC and the SDN list

OFAC's primary tool is the Specially Designated Nationals and Blocked Persons List (SDN). When a person or company is added to the list, all of their property and property interests within US jurisdiction are "blocked" (frozen), and US persons are prohibited from almost any dealing with them. Under OFAC's "50 percent rule", companies in which an SDN owns, directly or indirectly, 50 percent or more are automatically blocked even if they do not appear on the list themselves (Source: U.S. Treasury OFAC; Cornell Law School LII).

The financial system, SWIFT, and the role of the dollar

The core mechanisms of sanctions are asset freezes, blocking transactions, and export controls (restricting the sale of certain technologies). They act through the global financial system. SWIFT is an international messaging system that transmits payment instructions between banks; being disconnected from it sharply complicates a bank's ability to make international transfers. For example, in 2022 a number of Russian banks were cut off from SWIFT (Source: SWIFT ban against Russian banks, summary; University of Chicago BFI).

Correspondent banking is a system in which one bank holds an account through a bank in another country to make payments in foreign currency. When the USA, the EU, and the UK barred their banks from maintaining correspondent relationships with sanctioned banks, those banks lost the ability to settle in dollars, euros, and sterling. Because the US dollar is so widely used in global trade and reserves, US sanctions have outsized global reach — since almost any dollar payment ultimately passes through the US financial system (Source: University of Chicago BFI; Lexology).

Secondary sanctions and extraterritorial reach

Secondary sanctions mean that a third-country firm or bank can be penalised for dealing with a sanctioned party, even if that firm is not based in the sanctioning state. For example, the USA has warned that foreign banks operating in Russia's financial sector could face sanctions under Executive Order 14024. Such risk leads to "over-compliance" and "de-risking" — banks cutting ties even with legitimate clients out of caution (Source: Lexology; OHCHR).

Enforcement, penalties, licences, and delisting

Breaching sanctions can bring heavy civil and criminal penalties. At the same time, there are licences that grant exemptions for specific transactions — including humanitarian carve-outs covering food, medicine, and other aid. A listed person can request to be removed from the list (delisting) through a set procedure. However, researchers note that humanitarian exemptions often do not work fully in practice (Source: OHCHR; U.S. Treasury OFAC).

Effectiveness and criticism

How effective sanctions are is a matter of debate among researchers. In the well-known analysis by Hufbauer and colleagues, sanctions were assessed as achieving their goal in only about 34 of the hundred cases reviewed; effectiveness was higher against friendly states and lower against hostile ones. Critics stress the humanitarian harm — making it harder for ordinary people to access medicine and food. Methods of evading sanctions also exist: front companies, re-exports, and the use of cryptocurrencies (Source: Cato Institute; OHCHR; World Today Journal).

Relevance for Central Asia and Uzbekistan

Sanctions on Russia affect Central Asia in several ways. Remittances matter: in 2024 remittances sent to Uzbekistan reached a record $14.8 billion, 77 percent of which (about $11.5 billion) came from Russia; according to a World Bank report, remittances make up roughly 14 percent of Uzbekistan's GDP. Because of disruptions in Russia's banking system, banks in Uzbekistan, Kazakhstan, and Kyrgyzstan stopped or limited servicing Russia's "Mir" card due to US Treasury sanctions (Source: The Times of Central Asia; World Bank; Daryo.uz).

Trade routes have also shifted: as Western sanctions expanded, Central Asia became an important transit zone and re-export flows rose. However, analysts note that deeper involvement in these flows raises the risk of secondary sanctions and financial isolation from Western markets for the region's banks and companies (Source: Jamestown Foundation; Caspian Post).