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Do sanctions work?


Amy Pereira

By

October 6th, 2017


Amy Pereira investigates whether economic sanctions are effective, or just the foreign policy equivalent of the naughty corner.


Since the early 1990s, developed economies have employed sanctions on other nations more than 500 times. [1] Economic sanctions in recent history have cut of Iranian oil flows, frozen the bank accounts of top Russian officials and limited trade with North Korea. [2] Yet Iran still has a nuclear program, Russia is still a threat to Ukraine and North Korea is testing nuclear weapons every other week. This all begs the question: are economic sanctions actually effective, or just the foreign policy equivalent of the naughty corner?

 

What are economic sanctions?

National governments and international bodies (such as the EU) impose economic sanctions to coerce, deter or punish entities that endanger their interests or violate international norms of behaviour. Sanctions have been used to advance a range of foreign policy goals, including counterterrorism, counter-narcotics, non-proliferation, conflict resolution, cybersecurity and democracy and human rights promotion. [3]

 

Comprehensive economic sanctions prohibit commercial activity of an entire country, like the sanctions imposed on North Korea last week. [3] Targeted or ‘smart’ sanctions block transactions of and with particular businesses, groups or individuals. [3] These sanctions can take a variety of forms, including travel bans, asset freezes, arms embargoes and capital restraints. The US-led financial sanctions and travel bans on key Russian officials who were instrumental in threatening Ukraine’s sovereignty earlier this year, is an example.

 

Economic sanctions are complex with respect to their downstream effects. The devastating humanitarian impact of the comprehensive trade embargo on Iraq in the 1990s saw a shortage of medical supplies and clean water lead to one of the worst humanitarian crises in modern history. [1] Ethics aside, economic sanctions continue to shape 21st century foreign policy. The question is: are they worth it?

 

Do sanctions work?

Despite the prolific use of economic sanctions, the jury is still out as to whether they are effective in achieving their aims. Academic debate largely centres around a research project conducted by Gary Clyde Haufbauer and colleagues who studied 116 impositions of economic sanctions since 1914. ”[4]

 

For each set of sanctions, the authors considered: officially stated aims; a four-point measure of success achieving them; and a four-point measure of the contribution of those sanctions to achieving success. ”[4] They found that sanctions worked in 34% of cases. Haufbauer’s research has been updated a number of times, and now includes almost 200 case studies. The level success however, remains around the same. ”[4]

 

Haufbauer also found that the transmission mechanism that converts economic harm into politic change – is often weak. ”[4] This is especially the case in authoritarian regimes (think Syria). It follows that economically and politically weak countries like Venezuela are the most vulnerable to the effects of sanctions. [5]

 

Further, the longer sanctions last, the less likely they are to succeed. This is a function of countries fatiguing in imposing sanctions, as well as the target’s experience evading them. Despite the trade embargo on Iraq for example, the government became adept at smuggling oil across its boarders to make revenue. Meanwhile, neighbouring countries grew tired of enforcing the sanctions, which they saw as a “US policy, whose burden within Iraq was primarily borne by the most vulnerable.” [5]

 

Theories behind empirical evidence

One theory behind the low success rates is that actually imposing sanctions signals market failure. [5] In a world of perfect information, a credible threat of the imposition of a sanction would be enough to force a target country to back down. Having to actually impose a sanction suggests that sanctions and their possible consequences, are not sufficient incentives to change a country’s behaviour.

 

Moving on from assumptions of perfect information. Low success rates of sanctions may be attributed to target countries feeling more powerful than those threatening to impose the sanctions, thus not complying when threatened. [5] Such is the case with the Kim regime in North Korea. Only when the sanctoiners’ power is unknown may imposing them signal toughness. In such a case, punishment through sanctions would be an effective mechanism.

 

Another theory is that while imposing economic sanctions are not particularly effective, threatening them is. [2] Researchers analysed the correlation between threatened sanctions and protests, the theory being that threatened sanctions can convince internal dissenters that their protests might succeed because they have foreign support. Internal dissenters are a credible threat to the government, because they can directly threaten the government’s livelihood. The research found that one sanction threat makes significant anti- government protests 77 percent more likely to take place. [6] When one sanction threat is followed closely by another, the probability of a protest goes up by 212 percent. [6] Perhaps even more astounding is that the researchers found that “none of the measures of imposed economic sanctions achieve statistical significance” in causing protests. [6] The caveat? Threatened sanctions don’t work against authoritarian governments.

 

Will the sanctions on North Korea be effective?

The UN Security Council imposed its harshest sanctions yet against North Korea. The sanctions now prohibit the export of North Korean textiles, coal, iron, iron ore, lead, lead ore and seafood. Crude oil exports to North Korea have been capped, and all countries are banned from authorising work permits for North Korean workers. The sanctions are estimated to cost the country over $1 billion, although this will depend on nations’ enforcement of the sanctions. [7]

 

Experts suggest that the sanctions will hurt the North Korean economy, which is already isolated. Whether they will curtail the weapons program is a whole other kettle of fish. From what we know about sanctions however, they are unlikely to be particularly discouraging to the Kim regime.

 

References

 

[1] Cashen, E. (2017, April 20). The impact of economic sanctions. World Finance. Retrieved from https://www.worldfinance.com/special-reports/the-impact-of-economic-sanctions

 

[2] Beauchamp, Z. (2014, April 23). Economic sanctions don’t work. But threatening them does. Vox. Retrieved from https://www.vox.com/2014/4/23/5641538/sanctions-threat-impose

 

[3] Masters, J. (2017, August 7). What Are Economic Sanctions? Council on Foreign Relations. Retrieved from https://www.cfr.org/backgrounder/what-are-economic-sanctions

 

[4] Hufbauer, G.C., Schott, J.J., Elliott, A. & Oegg, B. (2009) Economic Sanctions Reconsidered (3rd ed). Washington D.C. Petersen Institute of International Economics.

 

[5] Rowat, C. (2014, March 31). Explainer: do sanctions work? The Conversation. Retrieved from https://theconversation.com/explainer-do-sanctions-work-24431

 

[6] Grauvogel, J., Licht, A.A., & von Soest, C., (2017) Sanctions and Signals: How international sanction threats trigger domestic protest in targeted regimes. International Studies Quarterly, 61(1), 86-97. doi: https://doi.org/10.1093/isq/sqw044

 

[7] ABC News. (2017, September 14) North Korea: UN Security Council unanimously adopts new sanctions over nuclear test. ABC News. Retrieved from http://www.abc.net.au/news/2017-09-12/north-korea-un-unanimously-adopts-new-sanctions/8894362

 

 

The views expressed within this article are those of the author and do not represent the views of the ESSA Committee or the Society's sponsors. Use of any content from this article should clearly attribute the work to the author and not to ESSA or its sponsors.

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