16 Feb 2024
The entire global economic outlook is bleak, and the financial environment is volatile. In such a scenario, the most affected countries are the low- to middle-income countries (LMICs) whose people then have to travel to developed countries to earn a living and send funds back home for financial support through different global money transfer services.
An issue at a global level can cause millions of expatriates, whose number in 2020 was over 281 million, their jobs and livelihoods abroad.
The fact that different countries have been vying for their survival has initiated wars at different times, which has led to the imposition of sanctions.
Do you know what sanctions are and how they can affect the flow of remittances? What are the implications of sanctions?
Well, this blog is what you seek to find answers to these questions and a lot about sanctions.
Sanctions are the measures certain countries and international bodies impose to pressure nations, countries, and individuals found to be engaging in undesirable actions and behaviors. In most cases, sanctions are imposed by one country on another.
The core aim of sanctions is to halt certain economic activities, such as financial transactions, trade, and investments, in the target countries.
Most of the time, sanctions are imposed to address the breaches and violations of universal human rights, war crimes, terrorism financing, and nuclear proliferation. The imposition of sanctions on a country ensures that the country receiving sanctions adheres to and complies with the internationally set and accepted norms and standards.
If, for some reason, sanctions are imposed on a country that you are working in as a migrant, it can land you in trouble. The biggest casualty in such a scenario would likely be your online money transfer – whether one or many.
There is no uniform sanction type. Different sanctions are imposed to achieve different goals. Certain issues even warrant different sanction types. Listed below are the different types of sanctions that a country can receive.
The most common sanction type is economic sanctions. Economic sanctions are imposed to restrict or prohibit certain functions within the economy. Economic sanctions can halt trade between countries, restrict investments, and create financial limitations.
Another type of global sanctions is the trade embargoes. Remember that every country flourishes economically if it trades and commerce with other countries. So, trade embargoes stop trade and commerce activities altogether, making the economy nosedive.
The third type of economic sanctions is financial restrictions. This is where you are likely to feel the heat as a migrant. Financial restrictions can freeze accounts, stop financial transactions, and also halt access to international systems and services.
As a migrant, you have to use a money transfer service, including banks, that enables you to send funds across borders. It means that a service provider has to operate internationally. But if you cannot access the services of multinational financial institutions, you will not be able to send funds. It will make your family suffer immensely because they depend solely on the financial aid you send them regularly through money transfers. Or aren’t they?
To fully understand the implications of sanctions on international payments, a brief study of the Russian invasion of Ukraine is pertinent here.
The world is interconnected and rightly called the global village. Any development in one country can have grave impacts on another country, directly or indirectly. This could not have been more manifest than the result of sanctions Russia received as a result of invading Ukraine. Let’s have a look below:
About 4 million migrants from Central Asia are working permanently in Russia. These migrants are likely to be severely impacted by the sanctions of different types Russia has received. One of the results can be job losses.
An IOM International Migration report said that around 2 million jobs in Russia are expected to be lost. It will raise the current unemployment rate of 4.4% to a projected 7.8% due to the Ukrainian invasion and ensuing sanctions.
Inward remittances to Uzbekistan from Russia accounted for around 55% of the total remittances in 2021, while for Kazakhstan they accounted for 51%. But now, the inward remittances to these countries are expected to drop to 21% and 17%, respectively.
You travel to foreign countries after thoroughly searching for countries that pay the most to expatriate workers so that you can earn a living and send money back home to offer financial aid. Right? But if you somehow get crushed by the sanctions, you will face the following implications.
One of the first implications you can face as a result of sanctions is the loss of a job you are having in a foreign country. When the economy shrinks, the country's job market shrinks, resulting in the loss of jobs in bulk.
Another implication is the increase in your financial woes. You are already driven by poverty and unemployment in your native country. So, losing a job abroad will only add to your financial misery because you will have to return to your native country as a result.
With you returning to your native country after being rendered jobless as a result of the sanctions, the economy of your country gets more burdened than it already is. Because accommodating one individual in a flailing economy exacta a toll on it.
Remittances to inward countries run into billions of dollars. Not because expatriates earn exceptionally high incomes but because every individual’s separate income adds to the overall quantum. So, a job loss abroad means a decline in money transfer by a degree or half. Since remittances are a lifeline to the economies of developing countries, a decline in remittances can have devastating economic consequences.
Another implication of sanctions is that you return to your country with unmet financial objectives. You travel abroad to support your family and also carry some financial objectives that you can only achieve with the continuity of your work and stay abroad, not otherwise.
The other implication is that you must search for a job, whether in your native country or abroad, from scratch. You might have got a job abroad after much effort and pain. The second time, getting one may not be easy, even though the effort and pain are more intense.
As long as you are living abroad and earning a living, make sure to send money online through a service provider that helps you save money in the process.
Since the process of money transfers is recurring and incurs costs, so ensure savings. Choosing ACE Money Transfer is the best decision for you to get live and market-competitive currency exchange rates, and the firm charges a low fee. Both of these features, along with speed, safety, and 24/7 service access and accessibility, can add to your savings, which will serve you once you fall victim to global sanctions and lose your job abroad!
Sanctions are a set of measures imposed by certain countries or international bodies to exert pressure on the target individual or a country or a nation that engages in undesirable and questionable behavior.
The primary purpose of sanctions the countries or international bodies seek is to ensure that the target countries comply with the agreed and set international norms and practices. This is done by restricting economic activities like trade and commerce, investments, and international financial transactions.
The main and most common types of sanctions are economic sanctions, in which the target country’s overall economic activity stops. It further includes trade embargoes, in which the target country’s trade and commerce activities are paused. Lastly, it includes financial restrictions, in which the target country’s access to international financial services is blocked.
The sanctions imposed on Russia as a result of its invasion of Ukraine have put over 4 million Central Asian migrants at risk of losing their livelihoods, with around 2 million migrants likely to be rendered unemployed. Some of the Central Asian countries have witnessed a steep decline in inward remittances as a result of sanctions imposed on Russia.
Some of the critical implications of global sanctions for international migrants include the risk of job loss, increased financial woes, burdening their native countries, decline in global money transfer, returning home with unmet financial objectives, and renewed job hunting.
Resources
(Interactive World Migration Report 2022 (iom.int)
