In the early 1700s, a side hustle emerged at European ports…

Between 1701 and 1715, during the War of the Spanish Succession, customs officers “rebranded” French wines and brandy so they could ship to England… and evade government sanctions.

After the death of King Charles II of Spain, France and Spain formed an alliance that threatened Britain’s power. They both implemented sanctions to squeeze each other economically and assert global dominance.

According to an English treasury report from 1702, the import-export business got rather… shall we say… creative in response to those sanctions.

French wine was smuggled into England using a strategic detour… The wine traveled from Bordeaux to Spain where it was repackaged using a Spanish name. It was then shipped to England… in Spanish casks.

By 1703, the English treasury had caught on… The “private gratuities” exchanged between consuls and customs officers had made the pirated alcohol business possible.

In other words, 18th century “workarounds” muted the effects of the sanctions imposed by Britain and France.

Today is no different…

In Venezuela, ships carrying sanctioned oil change flags and paperwork in the Caribbean and then sail to Singapore. There, flags and paperwork are switched before ships reach their final destination… China.

Another example is North Korea… The country developed a complex web of organizations to help it sidestep global sanctions, according to a 2019 United Nations report. North Korea’s techniques (surprise, surprise) included false documents and clandestine ship-to-ship transfers of sea cargo.

The U.S. is now implementing a tough new sanction strategy against Russia… to force President Vladimir Putin to suspend his takeover of Ukraine. In order to succeed, we must enforce these penalties with vigor and vigilance.

At the same time, investors in the U.S. and Europe must prepare for the economic and financial consequences of those sanctions, including persistent inflation, high commodities prices, and greater risk in transacting with emerging-market nations. (The consequences will be significant… but not catastrophic.)

Russia Inches Closer to Default

This week, amid the horrific war-crime images coming out of a Kyiv suburb, the Biden administration (rightly) stepped up its sanctions against Russia. READ THE REST OF MY STORY HERE… 👉https://americanconsequences.com/the-necessary-price-of-sanctions/