JANUARY 10, 2015 Ryan McMaken

TAGS Global EconomyU.S. HistoryWar and Foreign Policy

In the wake of the Obama administration�s partial normalization of relations with Cuba, proponents of the embargo condemned the move, with National Review publishing an unsigned editorial claiming that allowing Americans to trade freely with the island nation amounts to giving comfort to murderous dictators. NR�s editors concluded with:

The Cuban government is not legitimate, and never has been. It is a one-party dictatorship with a gulag, an archipelago of prisons into which democrats and dissidents are thrown. We hope that the new American policy � Obama�s policy � does not benefit the Cuban dictatorship and harm Cuban democrats. We fear that yesterday was a good day for the Castros and a bad day for the Cuban people, and for American foreign policy.
This is all very interesting from an international relations perspective, and there is no doubt that the Cuban regime is a brutal regime. On the other hand, why does the brutality of the Cuban regime make it alright for the US regime to jail and persecute private American citizens who attempt to trade with people in Cuba?

That is, after all, the position of those who favor the embargo. Embargoes are not something where a magic fairy waves her wand and Cuba suddenly becomes invisible to Americans.

No, supporting an embargo means supporting the government when it fines, prosecutes, and jails peaceful citizens who attempt to engage in truly free trade. Support for an embargo also requires support for a customs bureaucracy that spies on merchants and consumers, and the whole panoply of enforcement programs necessary to punish those who run afoul of the government�s arbitrary pronouncements on what kind of trade is acceptable, and what kind is verboten. Naturally, this is all paid for by the taxpayers.

How the American State Punishes Trade

To get a taste of the reality of embargoes, one need only consult the Treasury Department�s summary of the Cuban embargo as administered by the �Office of Foreign Assets Control.�

For those who think the embargo has something to do with freedom, they might wish to consult the section on punishments for trading with people in Cuba:

Criminal penalties for violating the Regulations range up to 10 years in prison, $1,000,000 in corporate fines, and $250,000 in individual fines. Civil penalties up to $65,000 per violation may also be imposed. The Regulations require those dealing with Cuba (including traveling to Cuba) to maintain records for five years and, upon request from OFAC, to furnish information regarding such dealings.
Nothing says �freedom� like $250,000 fines and mandatory presentation of five years of private records upon demand from the federal government.

Private companies, of course, regard such potentially draconian sanctions as no joke, and companies must spend time and resources training employees and business associates to be sure that they do not find themselves in violation of federal law. This manual from Snap-on Tools is one example of how private companies must stay up to date on details such as this:

The U.S. Treasury Department�s Office of Foreign Assets Control (OFAC) maintains strict embargoes banning, and lesser sanctions limiting U.S companies and their foreign subsidiaries from entering into commercial transactions with specified foreign countries, persons and business entities. Congress recently quintupled the maximum civil fines per violation of many of these sanctions from $11,000 to $50,000 (each unlawful shipment constitutes a violation), and doubled maximum potential criminal penalties assessed willful violations from 10 years to 20 years in prison. Moreover, enforcement is being given a much higher priority�
It�s easy to see why those who favor greater government intervention in the economy would have no problem with such a program, but it�s alleged defenders of free markets like the editors at National Review who appear to be most insistent that the US government keep all its agents armed and ready, and a prison cell open for anyone who violates their federal programs of choice.

Embargoes as Mercantilist Prohibition

At their heart, embargoes are nothing but a specific type of prohibition. Sometimes, the government imposes prohibitions on transactions involving certain goods, such as cannabis. Other times, the prohibition extends to all transactions with people in a certain place. The fundamentals are the same, however, in that they prohibit peaceful exchange, with heavy penalties for violators.

Moreover, embargoes are a throwback to the mercantilism of the days of yore when economic policy was viewed as a tool of international affairs, and should be designed, at least in part, to benefit the regime of the home country.

Historically, the mercantilist regimes of old tightly controlled trade opportunities which were debated as part of armistice agreements, such as the Peace of Utrech (1713) when the British were able to force the Spanish to allow exactly one ship of merchandise annually into Spanish colonies. At home, during the same era, the British state forbade its own citizens with valuable engineering knowledge from leaving the country, lest they emigrate to a foreign land and share their knowledge with foreigners. The economic needs of the state superceded those of the individual.

This is the type of economic policy that precipitated the American Revolution, when Americans in the colonies were allowed to trade with only specified nation-states and territories in such a way that was seen as advantageous to the British Crown. The freedom fighters in that conflict engaged in rampant smuggling throughout eastern North America to avoid taxes and to trade with the French and the Spanish who were hardly paragons of democratic liberalism.

Unfortunately, the Americans did not learn their lesson in the revolution, and got to work erecting their own trade restrictions by the late eighteenth century. The greatest crime of the era, however, was Thomas Jefferson�s embargo against the British which crippled the shipping and shipbuilding industries in the United States. Naturally, it was pointed out at the time that the Constitution did not permit any such action on the part of the federal government. No such quaint considerations restrain the American state or its pro-embargo allies today.

Cuba is not the only country subject to embargoes handed out by the American state, and North Korea, Iran, and Syria are in similar positions. The question is often asked as to whether or not these sanctions work. I would certainly claim that they do not work in accomplishing their stated purposes, but whether or not they work is really beside the point. Those who advocate for such embargoes need to back up a step and first prove that it is moral and legitimate for nation-states to dictate to the people who pay the bills (i.e., the taxpayers) with whom they are allowed to trade. A society that actually respects private property rights, of course, will accept no such proposition and will respect the right of private citizens to dispose of their property as they see fit. On the other hand, those who believe that it�s the prerogative of governments to micromanage private property and throw violators in prison are encouraged to move somewhere that the government can take a robust and active role in such things. Cuba, for instance.

The US Forbids Us, But Sells It Themselves

Turkey
Published in Sabah Gazetesi (Turkey) on 30 March 2012 by S�LEYMAN YAŞAR [link to original]
Translated from Turkish by Matthew Vallo. Edited by Katie Marinello.
Posted on April 10, 2012.

An embargo will be carried out on Iran because they have not stopped development of their nuclear program. European Union nations will stop oil imports from Iran on July 1. In the last few days, the U.S. administration has put nations that have not decreased their oil imports from Iran on a black list. The list contains 12 nations, including Turkey.

China is on the top of the list as the country which imports the most oil from Iran, while India is in second place. Other nations on the list, which have not yet been ranked in terms of their oil imports from Iran, include Indonesia, Malaysia, Pakistan, the Philippines, Singapore, South Africa, Sri Lanka, Taiwan and Turkey.

So what will happen if these nations do not cut their purchases from Iran? They will be subject to various types of sanctions. In short, The U.S. will penalize these countries. Let's look at Turkey's situation. Yesterday, American Ambassador to Turkey Francis Ricciardone said, �Some countries decreased their oil imports from Iran by significant levels. We are waiting similar steps from other countries, including Turkey. We expect from Turkey to have a decision on this.� However, the American ambassador is not giving an answer on how the cost of such a step would be compensated for. Because Turkey is a neighboring country to Iran, it imports both oil and natural gas. In return, it sells products to Iran. In 2011 our exports to Iran totaled $3.6 billion, while our imports were $12.4 billion. Halting imports of oil from Iran will lead to a stop of exports to Iran and a major decrease in trade between the two neighboring nations. Despite this, the U.S. is continuing to pressure Turkey. So, what is America doing while it pressures Turkey to stop importing oil from Iran? It is selling wheat and other agricultural products to Iran. Due to a drought in Iran, there is a decrease in wheat production. According to yesterday's edition of The Wall Street Journal, the price of bread in Iran has gone up 30 percent in the last few months.

According the the U.S. Ministry of Agriculture, Iran will import 2 million tons of wheat by June. In addition, it is in talks to import three million tons of wheat from India. The sanctions imposed on Iran allow food exports. However with the ban on the import of oil, America is cutting off Turkey's ability to sell food to Iran. If Turkey cannot import raw energy from Iran, Iran will struggle to import from Turkey.

So, who will profit from this? The U.S. exports nearly $120 billion of foodstuffs per year. In a sense, by applying sanctions to Turkey, the U.S. will be opening a new market for itself. Iran�s population of 78 million has a large need for food.

This year there is a drought in the Middle East and Iran. In Iran, the wheat harvest will begin in May and crop expectations are low. For this reason, the U.S has its eyes fixed on the Iranian and Middle Eastern food market.

As a result of current tension with Iran, strategic food stocks are being created, and the existing stocks are being increased. Therefore, the purchase of additional food products is also being discussed. Let's look at how America transfers the money from its sold goods. There is an embargo in place on the transfer of money between Iran and the United States and some banks have cut ties with Iran. But Iran, sends money through Middle Eastern and European banks to American companies to pay for the goods it is buying. So you can see there is no problem transferring money. In short, the U.S. is saying, �You stop� to the international world and then itself selling goods to the Iranian market. And this is what is known as an embargo.

It's all about money my friend. It's not about gods , people , terrorism or freedom.

It's all about being a bully, a holier-than-thou bully: I tell YOU what to do but you CAN NOT tell me what to do. And even if I do what I tell you not to so, so what?