1. Demonstration of Resolve:

Many powerful countries impose embargoes to re-assert their positions as leaders of the world economy generally or sometimes in a specific field. Their position as the leading exporters/traders/importers of a particular commodity gives them the bargaining power to affect the target country’s imports/balance of trade/exports by publicly forming coercion with other powerful nations to impose a complete ban on its products (as in the case of an embargo). The effects of the embargo is case-specific depending on various factors such as the politico-economic status of the sender country, the amount of trade between the sender and the target country prior to the embargo and the stance of third-world nations on the proposed ban. For example, U.S.A has frequently imposed trade embargoes on several countries in order to prove its hegemony on the international stage.

2. Deterrence:

Sometimes embargoes are imposed to deter the target country from continuing its questionable policies on the domestic or international stage, policies which violate an international rule or contradicts a moral code of conduct. The aim of such embargoes is to raise the costs for the particular industry of the target nation to a level that renders it non-viable. Many a times, embargoes result in losses for the sender country as well, but the point of the ban is not constrained in a profit-loss statement but in the bigger picture of human rights justification. Recent sanctions against use of sports equipment from Sialkot, Pakistan due to the growing incidence of child labour in the stitching industry is an apt example in this case. U.S.A’s grain embargo imposition and the decision to boycott the 1980 Olympics was a direct reaction to USSR’s invasion of Afghanistan.

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3. Satisfaction of Domestic Concerns:

An imposition of Embargo in this case is a reactive measure to the growing discontent with the workings of a nation and its direct impact on the sender nation’s public. World Trade Organisations or Government-alliances impose such sanctions to re-affirm their control over the international order. The Helms-Burton sanction against Cuba is an important case in this regard.

Cumulatively an Embargo has a three-fold objective in terms of the message conveyed: it publicly stands against a set of policies endorsed by a particular country, it brings about a sigh of relief on the international stage as public’s interests are given paramount importance and re-asserts their position as guardians of the general socio-political rights of the world.

In the next section we are going to explain the mechanism of imposition of an embargo on the target country and how the world economy stands to lose due to the sanction.