The Exorbitant Privilege of US Extraterritorial Sanctions

Abstract

US extraterritorial sanctions, also called secondary sanctions, are inherently controversial due to the use of the exorbitant privilege of encroaching not only on the target state but also on third states’ jurisdictions and national interests. After surveying the state of the art in the debate on extraterritorial sanctions with a particular focus on the financial industry, this article refers to the major balancing powers’ policies for dealing with the US use of an exorbitant privilege and concludes that, even though the effectiveness of unilateral secondary sanctions has been apparent as demonstrated in the case of the Iran sanctions, the US practices stand out as being increasingly incongruent in the international system, especially in the slow process of distancing from the US-led unipolarity and its manifestations. Thus, the future of secondary sanctions depends on one hand on the US preserving its diminishing credibility and coordination and on the other hand on third countries’ collective actions for voicing to protect their national interests.