Financial sanctions have been used successfully to resolve a number of international disputes. In the 1960s, these tools were effective in securing compensation for expropriated property in Sri Lanka and Peru. In 1980, financial sanctions imposed by the European Community against Turkey helped to moderate the military government's authoritarian policies. Financial sanctions also played a role in pushing Iran, which was eager to regain frozen assets held abroad, to release the American hostages in 1981.

Regardless of the type of sanction contemplated, a few basic rules must be followed. First, sanctions need to be supported by the vast majority of potential suppliers. Near global unity might be necessary in the case of food, while only the industrialized countries would have to support sanctions involving high-tech goods. In the case of certain war materials, the United States could almost do it alone. Financial sanctions can be particularly effective precisely because capital is the one commodity for which most nations cannot substitute domestically. By blocking the flow of capital from the cheaper lenders, through the World Bank and the International Monetary Fund, the cost of capital goes up. That hurts the elite of the target country, who then have to make some hard choices about where to cut spending-or accede to the wishes of the global majority.

Second, if economic sanctions are to work, it follows that the banned goods must not be easily available internally. Banning oil exports to a leading oil producer is sanctions' version of bringing coals to Newcastle-the loss of access to foreign goods, which are also produced domestically, simply won't cause enough pain to modify behaviour. Even countries that do not presently produce the banned product may be able to do so if the stakes are high enough.

Members of the Security Council convene before a March 1992 meeting at which they determined that Iraq was not in full compliance with all of its obligations regarding destruction of weapons, human rights and property restitution consequent on its invasion of Kuwait in 1990. Photograph shows Deputy Prime Minister Tariq Aziz of Iraq (lighting a cigar) shortly before the start of the meeting. UN Photo 179581/M. Grant

Before sanctions were levelled, Iraq was known as a major food importer. In the wake of sanctions, Iraq planted more land with basic cereal crops in the early 1990s and had larger harvests than before the war. In 1991, the grain harvest was 24 per cent larger than the previous season.

No matter what sanction is chosen or how it is imposed, it can only work if the cost of the sanction is greater than the cost of the policy change. For example, when the United States threatened to cut off aid to Peru in the 1960s unless the Government changed its mind about expropriating American property, the sanctions were effective because United States aid mattered more to the Peruvian Government than the value of the property. But, sanctions against Yugoslavia designed to depose President Slobodan Milosevic probably won't work if the Yugoslav ruler knows that by giving in he faces jail or death as a war criminal.

Economic sanctions are a tool that can induce changes at the margins and can be combined with other forms of pressure to exert greater changes. In and of themselves, they only succeed when the goals are modest, the sanctions are chosen properly and they enjoy the support of key countries. If used properly, sanctions will be neither loved nor hated. That realization alone will go a long way towards making them more effective.

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