Case # 2

Multilateral economic sanctions have been a popular policy instrument in the post-Cold War era. During the 1990s, the United Nations (UN) imposed sanctions sixtimes as often as in the prior 45 years, leading some scholars to label it the sanctions decade . The heightened use of sanctions has generated enormous scholarly and policy debate over their effectiveness and hu-manitarian consequences. Remarkably little attention, however, has been devoted to their criminalizing consequences and legacy for the post-sanctions period. This article is one of the first efforts to integrate the study of sanctions and transnational crime, and it suggests that the criminalized collateral damage of sanctions and its

post-sanctions legacy should be made a more central part of the evaluation of sanctions. I develop an analytical framework (summarized in Table 1) identifying and classifying the potential political, economic, and societal criminalizing effects of sanctions across place (within and around the targeted country) and time (during and after the sanctions period). At the political level, the most important criminalizing effect of sanctions is that the targeted regime may go into the business of organized crime to generate revenue, secure supplies, and strengthen its hold on power, fostering an alliance with clandestine transnational economic actors for mutual gain. This alliance may, in turn, persist beyond the sanctions period. At the economic level, the most profound criminalizing result of sanctions can be to push economic activity underground and dramatically inflate the profitability of illicit commerce. Aboveground trading relationships can be supplanted by underground trading relationships, creating clandestine region-wide sanctions-evading networks that reshape the political economy of the region and that may endure beyond the sanctions. Sanctions can create an economic opportunity structure that privileges those best positioned in the underground economy, enhancing the value of their smuggling skills and connections. This, in turn, can redistribute wealth and favour, helping to propel the emergence of a nouveau riche elite. Unable or unwilling to shift to legal trading after sanctions are lifted, sanctions evaders may simply engage in substitution strategies, turning to other illegal trading activities. Incentives to enter or continue operating in the underground economy can be reinforced by the devastated condition of the aboveground economy after sanctions. At the societal level, the most significant criminalizing consequence of sanctions is the potential of fostering uncivil society,reflected in a higher level of public tolerance for lawbreaking and an undermined respect for the rule of law. Smuggling may not only become perceived as normal rather than deviant, but it may even be celebrated as patriotic. Even in countries with extreme levels of corruption, there tends to be official disapproval of smuggling, but this may be eroded under sanctions. The result can be a general legal demoralization as society becomes accustomed to practices that do not conform to modern legal standards. Re-establishing societal acceptance of legal norms can be one of the most challenging tasks after sanctions are lifted, as old habits can be difficult to break. Table 1 summarizes these potential political, economic, and societal criminalizing consequences of sanctions. In this article, I apply and evaluate this analytical framework through a detailed examination of sanctions evasion in the case of the Federal Republic of Yugoslavia (FRY, now Serbia and Montenegro). The FRY case represents a particularly important and high profile sanctions episode that featured unprecedented international cooperation in sanctions monitoring and enforcement. As a centerpiece of the post-Cold War upsurge of multilateral sanctions efforts, the 199219952 FRY sanctions experience has weighed heavily in sanctions deliberations and has contributed to the move toward more targeted sanctions. For comparative leverage and to determine the applicability of the analytical framework beyond the FRY case, I also briefly examine two other cases within and outside the Balkans (Croatia and Iraq). As I document in this article, the FRY case closely matches the patterns of criminalization identified in Table 1, while the Croatia and Iraq cases partially match. My focus on the criminalizing effects of the sanctions in the FRY does not suggest that there was little or no criminalization of the state, economy, and society before sanctions, or that criminalization would not have been a problem in the absence of sanctions. Sanctions were part of a larger enabling environment for criminalization. Other variables contributed to criminalization, particularly the challenges of post-Communist transition and the context of prolonged war. The FRYs involvement in the war in Bosnia and Herzegovina (BiH), for example, provided incentives and opportunities for criminal activity, including war profiteering from smuggling and selling looted goods. Given these important contextual variables, it is difficult to precisely measure what part and what proportion of criminalization is attributed to sanctions. The argument here is not that sanctions are the only criminalizing force, but rather that they produce much higher levels of criminalization than would otherwise have been the case in the absence of the sanctions. The limited comparative case extensions help to support this argument. In the absence of comprehensive sanctions, I suggest, the FRY would likely have more closely resembled neighbouring CroatiaFalso a former Yugoslav republic run by a nationalist authoritarian leadership in the midst of post-Communist transition and war, but one not facing comprehensive economic sanctions. The criminalization of the state, economy, and society is a serious problem in both cases, but much more so in the FRY. Slovenia, the former Yugoslav republic that has had the smoothest transition and the fewest problems of criminalization, has also been the least affected by war and sanctions. Finally, the Iraq sanctions case comparison not only shows the applicability of the analytical framework beyond the Balkans but is also a sanctions case involving high criminalization in a non-transition and largely non-war context. In the next section, I briefly review the sanctions debate. I then trace the political economy of sanctions evasion in the Yugoslav case and its regional support structure in the 19921995 period. This is followed by an evaluation of the lifting and legacy of sanctions. For comparative leverage and to evaluate the applicability of the analytical framework beyond the FRY case, I provide a limited extension of the analysis to other cases within and outside the Balkans (Croatia and Iraq). The concluding section points to the broader lessons for sanctions-related research and policy debates. Q4: Highlight the aspects of embargo mentioned in the case above. Explain. (5 Mark)

Q5: Which extrinsic components mentioned in the case are responsible for creating a black environment in international trade? (5 Mark)

Q6: Would a neo-mercantilism approach facilitate the resolution of issues in the case. Explain. (5 Mark)