How US sanctions in Sudan will work
President Bush moves this week to squeeze the regime, but what can blacklisting 30 companies achieve?
from the May 31, 2007 edition
Page 2 of 3
The Treasury blacklist – officially a list of "Specially Designated Nationals" (SDNs) – operates in a very different manner from broader forms of economic sanctions that can be imposed on foreign regimes.
A trade embargo, for example, is intended to seal off the target nation from all flows of goods and services. But it often has only a marginal impact, unless most major trading nations form a united front.
The SDN list is not as sweeping, but that can work in its favor as a policy tool. It affects financial flows among banks and other institutions. By focusing on a carefully selected pool of targets, the SDN list has won a broad degree of international cooperation.
"A key, if possibly counterintuitive, lesson that we have learned is that less can be more," Mr. Szubin told the April hearing. "Narrow sanctions against specific individuals or entities that have violated international code, whether they be counterproliferation, counterterrorism, anti-money laundering norms, may have a bigger impact than traditional embargo-type sanctions."
The reason, he says, is simple: "Broad sanctions are often viewed by the private sector as obstacles to be worked around."
Another factor that explains the international acceptance of the SDN list is the central role that Wall Street institutions play in world financial markets. US banks are so large, and the world's financial grid is so interlinked electronically, that it is hard for banks in other nations to know which of its transactions are passing through American entities. Rather than run afoul of the US government, banks in Europe or elsewhere tend to adopt America's SDN list as their own.
"If that foreign institution handles a transaction for one of those barred parties, and the electrons of that transaction pass through New York City, then they have violated US law," says Mr. Baker, who studies the flow of money tied to drug cartels, terrorism, and corruption.
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