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Thread: Economic Sanctions

  1. #1 Economic Sanctions 
    Forum Junior ArezList's Avatar
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    Is there any example or data to show imposing economic sanctions against other countries or business entities has also sever damage to its own economy?

    Every article I've read on economic sanction is about the possible impact on the target... any of the historical regimes has considered it as an option, even though there might be an intolerable "side effect" ?


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  3. #2  
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    nobody plays with the matches, and got burned?


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  4. #3  
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    Good question. I assume what you mean to ask is whether the country imposing the sanction has ever damaged its own economy by refusing to trade with the country against whom the sanction was being imposed?

    My best guess is that large corporations use sanctions as a way to harm their competitors, (by imposing sanctions on countries their competitors do business with.) so the Senators and Representatives who receive campaign contributions from them are probably very careful not to impose certain sanctions on certain countries.
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  5. #4  
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    Yeah. that is what I'm asking.

    In essence, imposing an economic sanction is motivatied by perceiving potential political objetives. I don't think every or any idividual business entities will have the full incentives to scratch their heads shutting down their business, firing their employees, because whatever Bush said about Iraq, Kennedy said about Cuba.

    So....

    1) Do they/ how do they compensate the damage of business entities.
    --> they don't, for some cases...but any protest or lawsuit? never heard of any.
    I mean in the middle of the recession, just nobody mess up with the gov, becasue they got fired for the new economic sanctions against Iran ?

    2) any cases that those damages are intolerable large ? like the gov decide to loosen it a bit.
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  6. #5  
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    hi All,

    It seems these days the economic embargo becomes the U.S. boomerang.
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  7. #6  
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    My best guess is that large corporations use sanctions as a way to harm their competitors, (by imposing sanctions on countries their competitors do business with.) so the Senators and Representatives who receive campaign contributions from them are probably very careful not to impose certain sanctions on certain countries.
    kojax; Is it possible, the current US Administration is dead set on Union Control of that Corporate Structure, increasing wages (social justice), which will make ALL American products too costly, inside or outside the US?

    Arez; Which embargo are you talking about, outside 'Terrorist States' or Cuba, I'm not aware of any?
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  8. #7  
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    Quote Originally Posted by ArezList
    It seems these days the economic embargo becomes the U.S. boomerang.
    Exactly how? What businesses have been run out of business by US embargoes? China is one of the few financially significant nations the US has imposed sanctions on, and these are mainly military restrictions. It's a small price to pay to send a message to state sponsors of terrorism and human rights violators. It seems you are set on arguing against US embargoes, but haven't provided any specific instances.

    Quote Originally Posted by ArezList
    I don't think every or any idividual business entities will have the full incentives to scratch their heads shutting down their business, firing their employees, because whatever Bush said about Iraq, Kennedy said about Cuba.
    You couldn't be bothered to find out why these embargoes are in place?
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  9. #8  
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    Sanctions are rarely placed on economically important trading partners, otherwise they wouldn't be a very good bargaining chip. What you usually get when too countries both find the trade important is tariff wars. A recent example could be the soft wood lumber tariff the US set on Canadian lumber to pressure Canada into not subsidizing lumber companies. They don't want to stop the import of lumber completely into the USA, they just want to hurt the foreign business enough to exert some pressure.
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  10. #9  
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    Quote Originally Posted by i_feel_tiredsleepy
    Sanctions are rarely placed on economically important trading partners, otherwise they wouldn't be a very good bargaining chip. What you usually get when too countries both find the trade important is tariff wars. A recent example could be the soft wood lumber tariff the US set on Canadian lumber to pressure Canada into not subsidizing lumber companies. They don't want to stop the import of lumber completely into the USA, they just want to hurt the foreign business enough to exert some pressure.
    Lol. So true. Placing an embargo on someone you depend on is kind of like a man trying to pressure his girlfriend by refusing to have sex with her. Good luck winning that battle.

    They're not going to fold because they know you can't keep doing it for long. (Kind of like why insurgents in Iraq and Afghanistan don't fold.)
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  11. #10  
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    Placing an embargo on someone you depend on is kind of like a man trying to pressure his girlfriend by refusing to have sex with her. Good luck winning that battle.
    some say women enjoy sex more than men...
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  12. #11  
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    Quote Originally Posted by kojax
    Lol. So true. Placing an embargo on someone you depend on is kind of like a man trying to pressure his girlfriend by refusing to have sex with her. Good luck winning that battle.
    It depends on who of you two has more need for sex. However, she may just find someone else. (Sorry for OT)
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    There have been several investigations into various harms done to the US by the Cuba embargo - everything from having to prop up the beet sugar agribusiness to loss of baseball talent and Gulf recreation, from the expenses and bad news of Guantanamo to the various side effects in the drug war and domestic organized crime politics.
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    Quote Originally Posted by iceaura
    There have been several investigations into various harms done to the US by the Cuba embargo - everything from having to prop up the beet sugar agribusiness to loss of baseball talent and Gulf recreation, from the expenses and bad news of Guantanamo to the various side effects in the drug war and domestic organized crime politics.
    To be fair though, those are rather minor consequences compared to if US were to turn around and embargo China. Also, much of the same would have occurred simply as a result of the antagonistic relationship between the Castro government and the US; most US assets in Cuba were lost after the revolution, and there was little to lose from the embargo.
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    Quote Originally Posted by i_feel_tiredsleepy
    most US assets in Cuba were lost after the revolution, and there was little to lose from the embargo.
    Yeah, lol. People always get in a huff when the US intervenes to stop communist governments from taking power, but it's really quite unfair to the investors when the new government decides to "nationalize" (which really means "seize without compensation to the owner") assets they've put a lot of money into building.
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    Quote Originally Posted by sleepy
    To be fair though, those are rather minor consequences compared to if US were to turn around and embargo China. Also, much of the same would have occurred simply as a result of the antagonistic relationship between the Castro government and the US; most US assets in Cuba were lost after the revolution, and there was little to lose from the embargo.
    The relatively minor nature of the impact on the US

    - which is not as minor as you guys seem to imply, including as it does everything from the huge deficits of the corn syrup ethanol program and sugar agricultural support generally, to the organized crime expansion in the American West -

    is due mainly to the relative size of the two economies.
    Quote Originally Posted by kojax
    but it's really quite unfair to the investors when the new government decides to "nationalize" (which really means "seize without compensation to the owner") assets they've put a lot of money into building.
    Seizure of stolen assets - including any profits made from them - is routine for properly functioning governments.

    You can't seriously argue that the organized criminal and corporate operations that had moved into Cuba under Batista's kleptocratic regime had any legitimate claim on the resources of Cuba, or the profits from them.
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    Quote Originally Posted by iceaura
    You can't seriously argue that the organized criminal and corporate operations that had moved into Cuba under Batista's kleptocratic regime had any legitimate claim on the resources of Cuba, or the profits from them.
    I'm in full agreement on this, I don't have much sympathy for the American's property losses in Cuba.
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  18. #17  
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    Quote Originally Posted by iceaura

    You can't seriously argue that the organized criminal and corporate operations that had moved into Cuba under Batista's kleptocratic regime had any legitimate claim on the resources of Cuba, or the profits from them.
    I'm thinking of things like oil refineries, that clearly represent an act of creation. You can't call someone a "thug" or "thief" if they built the thing they're mad about losing. I don't disagree as much with seizing natural resources, however. (Though some degree of compensation is usually a good rule here too.) However, I found this interesting article on the issue:

    http://www.hartford-hwp.com/archives/43b/107.html

    It seems the Cuban government did offer to compensate, and the US government simply refused to allow it.

    http://en.wikipedia.org/wiki/Nationalization#Cuba

    On the other hand, according to wiki, the compensation was to be in the form of a bond at 4.5% interest..... which is pretty bad interest for a bond.
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    It would be interesting to balance the books - figure a reasonable compensation, with interest, for the theft and damage from the foreign "investors" in Cuba over the decades of the Batista and prior "governments", and strike that from whatever Cuba actually owed for other people's stuff it actually seized.

    It's kind of revealing that Cuba was so vulnerable and desperate that it was willing to pay compensation to the foreign supporters of Batista. Compare the Okinawans paying the Japanese compensation for the infrastructure the Japs built for them in WWII - I don't think that subject ever came up.

    Haiti was bankrupted, started down its spiral to its present condition, by being so vulnerable it was forced to pay ruinous compensation to the French after evicting them. Cuba would hardly be expected to ruin itself in that fashion voluntarily. It's not something the winners normally do, after a war.
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  20. #19  
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    Quote Originally Posted by iceaura

    Compare the Okinawans paying the Japanese compensation for the infrastructure the Japs built for them in WWII - I don't think that subject ever came up.

    .
    I think it's different when a political entity pays to build something (especially in time of war) than when private citizens fund it. What's the incentive for private investors to spend any money developing infrastructure outside of the already-industrialized world if they are not offered any guarantees that their successful investments will last long enough (before being seized) to pay them back?

    Infrastructure is the single biggest difference between a rich country and a poor country. You need those investors to be motivated, or the money will never change hands, and it will never get built. You can't compel investors to invest, and government funded infrastructure projects only work if they're highly scrutinized to avoid corruption. (Investor funded projects have natural anti-corruption scrutiny attached to them.)

    Whatever abstract notion of "right and wrong" you may have, the bottom line - the thing we must all agree is most important - is that it happen: the infrastructure must be built so that some of the suffering in the third world can be alleviated. That accomplishment has to matter more than the details, or else we'll get caught up in dotting "i" and crossing "t" and never accomplish the bread and butter of our objectives.
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    Quote Originally Posted by kojax
    I think it's different when a political entity pays to build something (especially in time of war) than when private citizens fund it. What's the incentive for private investors to spend any money developing infrastructure outside of the already-industrialized world if they are not offered any guarantees that their successful investments will last long enough (before being seized) to pay them back?
    If propping up dictators and holding millions of people in tyranny is part of their business model, the less guarantee they have of profit the better.

    I don't want such corporate efforts to be protected, and I don't want any incentives for such behavior to exist.

    And I certainly don't want the people who overthrew the tyranny they supported to be treated as if they owed their abusers and tyrants any "compensation". A more reasonable calculation would establish the obligation in the other direction, IMHO.
    Quote Originally Posted by kojax
    Infrastructure is the single biggest difference between a rich country and a poor country. You need those investors to be motivated, or the money will never change hands, and it will never get built
    Cuba did better without them than with them.

    It also did better than Haiti, El Salvador, Guatemala, and several other nearby countries that failed to discourage such "investors". It did this while burdened with severe economic sanctions and 50 years of borderline siege by the world's most powerful economy and military, that controlled its port access and airspace as well as its banking and export business. Without this extraordinary disability, a reasonable estimate puts Cuba as the second or third wealthiest country in the western Hemisphere.

    Motivating the investors in Mexico, as in Haiti but on a much larger scale, appears to have been a serious mistake, to be actually threatening the State, as its economy collapses from various effects of their influence.
    Quote Originally Posted by kojax
    (Investor funded projects have natural anti-corruption scrutiny attached to them.)
    Is that a joke?
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  22. #21  
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    Quote Originally Posted by iceaura
    Quote Originally Posted by kojax
    I think it's different when a political entity pays to build something (especially in time of war) than when private citizens fund it. What's the incentive for private investors to spend any money developing infrastructure outside of the already-industrialized world if they are not offered any guarantees that their successful investments will last long enough (before being seized) to pay them back?
    If propping up dictators and holding millions of people in tyranny is part of their business model, the less guarantee they have of profit the better.

    I don't want such corporate efforts to be protected, and I don't want any incentives for such behavior to exist.

    And I certainly don't want the people who overthrew the tyranny they supported to be treated as if they owed their abusers and tyrants any "compensation". A more reasonable calculation would establish the obligation in the other direction,
    IMHO.
    Just try and be precise about which behavior specifically bothers you. A lot of things can't be built without foreign investment, because they're too technically complicated and require machinery too advanced for the local population to have any hope of building it on their own.

    You have to avoid the fallacy of thinking a group is infinity (purely) bad or infinity (purely) good. If the "really really awful tyrants" you just overthrew physically built you a factory, and you don't repay their backers, then future investors will worry that maybe this new government will be tomorrow's "really really awful tyrant" ,because a lot of 3rd world political systems are cyclical this way. If the cycle repeats too many times then it will start to look like the people are just having revolutions in order to clear out their debts.



    Quote Originally Posted by kojax
    Infrastructure is the single biggest difference between a rich country and a poor country. You need those investors to be motivated, or the money will never change hands, and it will never get built
    Cuba did better without them than with them.

    It also did better than Haiti, El Salvador, Guatemala, and several other nearby countries that failed to discourage such "investors". It did this while burdened with severe economic sanctions and 50 years of borderline siege by the world's most powerful economy and military, that controlled its port access and airspace as well as its banking and export business. Without this extraordinary disability, a reasonable estimate puts Cuba as the second or third wealthiest country in the western Hemisphere.
    The main problem is that most foreign investors aren't building infrastructure. They're either just buying what's already there, or buying land (which does no good at all for the local population.) It is unfortunate that our language/semantics are so corrupted/imprecise that we use the same word to describe both groups of people.

    China is really good about requiring that all foreign investment take the form of building new infrastructure. If a foreign company asks to be allowed to buy and run a hydroelectric dam, for example, the government will say "No. But you may build a new dam and run it, if you would like." And that probably explains why they are the fastest growing economy on Earth.


    Motivating the investors in Mexico, as in Haiti but on a much larger scale, appears to have been a serious mistake, to be actually threatening the State, as its economy collapses from various effects of their influence.
    Quote Originally Posted by kojax
    (Investor funded projects have natural anti-corruption scrutiny attached to them.)
    Is that a joke?
    I mean corruption in the form of the money getting stolen by the people in charge of the project. Yes. If a private investor drops 5 million dollars of his own money into a factory building project, you can be pretty sure they will send someone to watch over their investment for them. If someone working on that project decides to pocket the 5 million, and then leave the country, the investor will take measures to make sure the theft is punished. (Even if that means spending another $50,000 or so to hire an assassin.)

    On the other hand, if the government invests 5 million dollars to build a factory, it is a lot more likely to end up getting embezzled.
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