By Kimberly Ann Elliott and Gary Clyde Hufbauer and Barbara Oegg
Throughout most of modern history, economic sanctions have preceded or accompanied war, often in the form of a naval blockade intended to weaken the enemy. Only when the horrors of World War I prompted President Woodrow Wilson to call for an alternative to armed conflict were economic sanctions seriously considered. (Wilson claimed that, by themselves, sanctions could be a “deadly force” and a very effective diplomatic tool.) Sanctions were subsequently incorporated as a tool of enforcement in each of the two collective security systems established in this century—the League of Nations between the two world wars and the United Nations after World War II. Following the collapse of the Soviet Union and the end of the cold war, the U.N. Security Council frequently authorized sanctions to quell civil wars and national strife, especially in Africa and Yugoslavia. However, the highest-profile U.N. sanctions were those against Iraq (1990–2003) preceding and following the first Gulf War (1991). In addition to U.N. sanctions, major powers (foremost the United States) continue to deploy unilateral economic sanctions. Since 1990, “targeted sanctions”—aimed at political leaders, drug lords, and terrorists—frequently have been used in an attempt to avoid the humanitarian fallout resulting from broad-brush sanctions.
Purposes of Economic Sanctions
The term “economic sanctions” encompasses the deliberate, government-inspired withdrawal, or threat of withdrawal, of customary trade or financial relations. (“Customary” refers to the levels of trade or financial activity that would probably have occurred in the absence of sanctions.) In this article, we discuss the use of economic sanctions to achieve political goals; in other words, we exclude cases of economic sanctions used to achieve commercial goals, such as the withdrawal of tariff protection.
The motives behind the use of sanctions parallel the three basic purposes of national criminal law: to punish, to deter, and to rehabilitate.
Individual countries, as well as various ad hoc coalitions, frequently impose sanctions to achieve a wide variety of foreign policy goals, even when the probability of forcing a change in the target country’s policy is small. In addition to demonstrating resolve and signaling displeasure to the immediate transgressor, politicians may also want to posture for their domestic constituencies. It is quite clear, for example, that U.S., European, and British Commonwealth sanctions against South Africa (1985–1991), as well as U.S., European, and Japanese sanctions against Burma (1988–), were designed principally to assuage domestic constituencies, to make moral and historical statements, and to send a warning to future offenders of the international order. The effect on the specific target country was almost secondary. Sanctions played only a moderate role in ending South Africa’s apartheid. Economic and political conditions inside South Africa were the most important factors influencing the outcome. Sanctions did not cause the National Party to abandon apartheid, but by adding to the already mounting costs of maintaining apartheid they accelerated the inevitable.
World leaders often decide that the obvious alternatives to economic sanctions are unsatisfactory; military action would be too massive, and diplomatic protest too meager. Sanctions can provide a satisfying theatrical display, yet avoid the high costs of war. This is not to say that sanctions are costless, just that they are often less costly than the alternatives.
Prior to the 1990s, institutionally endorsed sanctions were rare. The League of Nations imposed or threatened to impose economic sanctions only four times in the 1920s and 1930s, twice successfully. But the league faded from history when its ineffectual response failed to deter Benito Mussolini’s conquest of Ethiopia in 1935 and 1936. Freed from the restraints of superpower rivalry, the United Nations played a much bigger role in international affairs in the 1990s. The new activism of the United Nations is reflected in the fact that the Security Council imposed mandatory sanctions thirteen times in response to instances of civil strife, regional aggression, or grave violations of human rights—compared with just twice (against South Africa and Rhodesia) in previous decades.1 In many instances, however, the new threats were not of paramount concern for the major powers, and only weakly enforced arms embargoes were imposed. As a result, U.N. sanctions enjoyed limited success. With the exception of those imposed against Libya in response to Pan Am 103 terrorist attacks and, possibly, those imposed against Yugoslavia over the civil war in Bosnia, U.N. sanctions have failed to achieve their objectives. In fact, the decade-long comprehensive sanctions regime against Iraq generated considerable political backlash.
Types of Sanctions
A “sender” country tries to inflict costs on its target in two main ways: (1) with trade sanctions that limit the target country’s exports or restrict its imports, and (2) with financial sanctions that impede finance (including reducing aid). Governments that impose limits on target countries’ exports intend to reduce its foreign sales and deprive it of foreign exchange. Governments impose limits on their own exports to deny critical goods to the target country. If the sender country exports a large percentage of world output, this may also cause the target to pay higher prices for substitute imports, but only if the sender country also reduces its overall output. When governments impose financial sanctions by interrupting commercial finance or by slashing government loans to the target country’s government, they intend to cause the target country to pay higher interest rates and to scare away alternative creditors. When a poor country is the target, the government imposing the sanction can use the subsidy component of official financing or other development assistance to gain further leverage.
Total embargoes are rare. Most trade sanctions are selective, affecting only one or a few goods. Thus, the economy-wide impact of the sanction may be quite limited. Because sanctions are often unilateral, the trade may be only diverted rather than cut off. Whether import prices paid by (or export prices received by) the target country increase (or decrease) after the sanctions are applied depends on the market in question. If there are many alternative markets and suppliers, the effects on prices may be very modest, and the economic impact of the sanctions will be negligible.
For example, Australia cut off shipments of uranium to France from 1983 to 1986 because of France’s refusal to halt testing of nuclear weapons in the South Pacific. In 1984, however, the price of uranium oxide dropped nearly 50 percent. France was able to replace the lost supply, and at a cost lower than its contract price with the Australian mine. Because Australia was unable to find alternative buyers for all the uranium intended for France, the Australian government ultimately paid Queensland Mines $26 million in 1985 and 1986 for uranium it had contracted to sell to France.
Financial sanctions, in contrast, are usually more difficult to evade. Because sanctions are typically intended to foster or exacerbate political or economic instability, alternative financing may be hard to find and is likely to carry a higher interest rate. Private banks and investors are easily scared off by the prospect that the target country will face a credit squeeze in the future. Moreover, many sanctions involve the suspension or termination of government subsidies to poor countries—large grants of money or concessionary loans from one government to another—which may be irreplaceable.
Another important difference between trade sanctions and financial sanctions lies in the parties that are hurt by each. The pain from trade sanctions, especially export controls, usually is diffused throughout the target country’s population. Indeed, political elites in the target country may benefit from trade sanctions by controlling lucrative black markets. Financial sanctions, on the other hand, are more likely to hit the pet projects or personal pockets of government officials who shape local policy. On the sender’s side of the equation, an interruption of official aid or credit is unlikely to create the same political backlash from domestic business firms and allies abroad as an interruption of private trade. Finally, financial sanctions, especially those involving trade finance, may interrupt trade even without the imposition of explicit trade sanctions. In practice, however, financial and trade sanctions are usually used in some combination with one another.
The ultimate form of financial and trade control is a freeze of the target country’s foreign assets, such as bank accounts held in the sender country. In addition to imposing a cost on the target country, a key goal of an assets freeze is to deny an invading country the full fruits of its aggression. In the 1990 Middle East crisis, the U.S. government and its allies froze Kuwait’s assets to prevent Saddam Hussein from plundering them.
Such measures were also used against Japan just before and during World War II. Increasingly concerned with Japanese military aggression in Southeast Asia, the United States gradually tightened economic sanctions imposed against Japan from July 1940 to July 1941. Initial licensing requirements for the export of arms, ammunition, and aviation fuel were followed by a total ban on exports of iron and steel scrap a few months later, and finally, in July 1941, by a freezing of Japanese assets and a tightening of the licensing requirements that de facto ended all trade with Japan, including oil exports. Despite considerable costs to its economy, Japan did not abandon its policy of expansionism but rather intensified the war efforts in the Pacific and in the end attacked Pearl Harbor in December 1941. While economic sanctions did not deter Japan, they denied vital resources to a potential enemy.
Effectiveness of Sanctions
Senders usually have multiple goals and targets in mind when they impose sanctions, and simple punishment is rarely at the top of the list. Judging the effectiveness of sanctions requires sorting out the various goals sought, analyzing whether the type and scope of the chosen sanction were appropriate to the occasion, and determining the economic and political impacts on the target country.
If governments that impose sanctions embrace contradictory goals, sanctions will usually be weak and, ultimately, ineffective. In such cases, the country or group imposing sanctions will not exert much influence on the target country. Thus, it may be the policy—not the instrument (sanctions)—that fails. For example, the Reagan and Bush administrations began economic sanctions against Panama in 1987 in an effort to destabilize the Noriega regime. But because they wanted to avoid destroying their political allies in the Panamanian business and financial sectors, they imposed sanctions incrementally and then gradually weakened them with exemptions. In the end, the sanctions proved inadequate, and the U.S. military invaded Panama and took Noriega by force.
In many cases, sanctions are imposed primarily for “signaling” purposes—for the benefit of allies, other third parties, or a domestic audience. The intended signal is not always received. Instead, it may be overwhelmed by a cacophony of protests from injured domestic parties, which may force a premature reversal of the policy. For example, American farmers howled with outrage when President Jimmy Carter embargoed grain sales to the Soviet Union following the Soviet invasion of Afghanistan. The protests, buttressed by candidate Ronald Reagan’s promise to lift the embargo if elected (which he did within three months of his inauguration) undermined the seriousness of intent that Carter wanted to convey. Efforts to extend sanctions extraterritorially may produce similar effects abroad. The extraterritorial features of the U.S. Helms-Burton sanctions against Cuba provoked enormous resentment in Europe and Canada, and these features were effectively waived by Presidents Bill Clinton and George W. Bush. Sanctions imposed for symbolic purposes must be carefully crafted if they are to convey the intended signal.
Sanctions intended to change the government of a target country are even more difficult to design. In such cases, sanctions must be imposed as quickly and comprehensively as possible. A strategy of “turning the screws” gives the target leaders time to adjust by finding alternative suppliers or markets, by building new alliances, and by mobilizing domestic opinion in support of its policies. Great Britain, followed by the United Nations, adopted a slow and deliberate strategy in response to Ian Smith’s “unilateral declaration of independence” in Rhodesia in 1965. Aided by hesitation and delays, the Smith regime was able to use import substitution, smuggling, and other circumvention techniques to fend off black majority rule for more than a decade.
Our assessment of nearly two hundred observations of economic sanctions imposed since World War I indicates that economic sanctions tend to be most effective at modifying the target country’s behavior under the following conditions:
The goal is relatively modest: winning the release of a political prisoner versus overthrowing the regime of Saddam Hussein, for example. Less ambitious goals may be achieved with more modest sanctions; this also lessens the importance of multilateral cooperation, which is often difficult to obtain. Finally, if the stakes are small, there is less chance that a rival power will step in with offsetting assistance.
The target is much smaller than the country imposing sanctions, economically weak, and politically unstable. The average sender’s economy in the 198 episodes studied was 245 times as large as the economy of the average target. (Moreover, this calculation excludes 21 instances in which a major power targeted a microstate, and the GDP ratio exceeded 2000.)
The sanctions are imposed quickly and decisively to maximize impact. The average cost to the target as a percentage of GNP in successful cases was 2.6 percent and in failures was only 1.5 percent (excluding Iraq), while successful sanctions lasted an average of only three years, versus eight years for failures.
The sender avoids high economic or political costs to itself.
It is obvious from these prescriptions that effective sanctions, in the sense of coercing a change in target country policy, are achieved infrequently. Economic sanctions were relatively effective tools of foreign policy in the first two decades after World War II: they achieved their stated goals in nearly half the cases (twenty-seven successes out of sixty-one cases). The evolution of the world economy, however, has narrowed the circumstances in which unilateral economic leverage can be effectively applied, and only one in five unilateral U.S. sanctions after 1970 scored as a success (ten successes out of fifty-two cases). For multilateral sanctions, increasing economic interdependence acts as a double-edged sword. It increases the latent power of economic sanctions because countries are more dependent on international trade and financial flows. But it also means wider sources of supply and greater access to markets and, thus, the possibility that a greater number of neutral countries can undermine the economic impact of a sanctions effort should they choose to do so. Since 1970, over a third of multilateral sanctions in which the United States participated scored as a success (twenty successes out of fifty-three cases).
Iraq, the United Nations, and the Future of Sanctions
During most of the 1990s, the Iraqi sanctions regime, the most comprehensive U.N. sanctions to date, dominated the debate about the effectiveness of economic sanctions, their humanitarian impact, and the morality of the “deadly weapon.” Economic sanctions, enforcement of no-fly zones, and occasional use of military force provided leverage for U.N. weapons inspectors to uncover and have destroyed Iraq’s stockpile of weapons of mass destruction (WMD) and related facilities. While the U.S. goal of regime change was achieved only with military force, U.N. inspections and the denial of oil revenues, despite widespread smuggling and manipulation of the oil-for-food program, clearly helped in containing Iraq’s WMD capabilities. However, this success came at a high price in terms of humanitarian effects inside Iraq.2 In fact, the decade-long sanctions regime generated considerable domestic political backlash in most Western nations as well as Arab countries and illustrates how concerns about humanitarian and third-country effects of sanctions can undermine the political unity required for the effective implementation of multilateral sanctions. The effectiveness of a sanctions regime depends partly on how it addresses humanitarian issues. Although virtually all sanctions regimes launched during the 1990s allowed trade in humanitarian goods, the “blunt weapon” of an almost-comprehensive embargo inevitably hurt those at the bottom of the economic heap. In response to these concerns, practitioners and scholars alike have sought ways to fine-tune sanctions to concentrate their force against those in power.
Targeted sanctions such as arms embargoes, travel bans, and asset freezes are intended to focus their impact on leaders, political elites, and segments of society believed to be responsible for the objectionable behavior. The goal is to fashion a more useful foreign policy tool while inflicting smaller economic costs on civilian populations, third states, and sender countries.
In addition, many issues formerly considered internal affairs of the state became legitimate concerns of the international community in the post–Cold War era. U.N. sanctions against Somalia, Liberia, Rwanda, Sierra Leone, and the Federal Republic of Yugoslavia were all linked to instances of civil war and internal strife. As a consequence, U.N. sanctions initiated in the 1990s were frequently targeted against internal actors. In the case of U.S. and U.N. sanctions against Haiti, not only were imports of oil and arms prohibited, but also sanctions were aimed directly at the members of the military junta and their families. Overseas bank accounts and other financial assets of people involved in the coup were frozen, private flights to and from Haiti were banned, and visas of military junta leaders and their families were revoked. U.N. Security Council actions in Angola focus on one particular internal actor—UNITA. When UNITA renounced U.N.-supervised elections and resumed military activities in 1993, the United Nations placed an arms and oil embargo on UNITA. The initial embargo was followed by a travel ban for senior UNITA officials and their families in 1997 and, finally, a ban on all financial transactions with UNITA, a mandated freeze of UNITA financial assets, and an embargo on imports of diamonds not certified by the Angolan government.
Targeted sanctions operate at a level of intervention and discrimination in the internal affairs of states that was unknown in previous decades. No longer is the targeted state seen as a single-purpose unitary actor. Instead, it is seen as a geographic location of discordant groups. Setting aside the question of the effectiveness of targeted sanctions in reaching their stated goals, these measures also depart from the traditional sanctions philosophy that civilian pain leads to political change. Because targeted sanctions focus on certain groups and individuals within the targeted country, they assume that the leaders do not represent the population and can actually be separated from them.
Nevertheless, targeted U.N. sanctions enjoyed only limited success. The U.N. system lacks the formal mechanisms, the technical resources, and the financial capacity to effectively administer and monitor sanctions. U.N. sanctions committees, created to monitor the implementation, are established on an ad hoc basis for each sanctions episode. Sanctions committees vary significantly in extent and effectiveness, depending both on the extent of the cohesion (or division) within the Security Council and on the political and geographic circumstances of the target country. The “Sanctions Assistance Missions” (SAMs) deployed along the borders of Yugoslavia illustrate how U.N. member states can cooperate to better implement comprehensive sanctions. Despite the best efforts, however, Yugoslavia’s geography made evasion relatively easy.
Similarly, the effectiveness of U.N. arms embargoes in ending conflicts remains elusive. U.N. resolutions are often deliberately vague, leaving wide room for diverging interpretations by member states. Weak enforcement, poor monitoring, and dire conditions in bordering countries all work to undermine arms embargoes. Trafficking in small arms is highly profitable, and the chances of being caught are relatively small. The money is especially good when the targeted group controls valuable natural resources—exemplified by UNITA’s control over Angolan diamonds—that are used to finance weapons purchases.
The 1990s saw the emergence of the European Union as an important sender of economic sanctions. The European Union (often joined by the United States) has suspended aid and restricted trade in response to threats to international security and egregious human rights violations, especially in Africa and Yugoslavia. In the process, the European Union has emerged as a political actor with an identity distinct from its member states. However, most EU sanctions involve only minor aid cutoffs and have not been particularly effective.
Since 1990, the U.N. Security Council has mandated sanctions against Iraq (1990), the former Yugoslavia (1991), Liberia (1992), Libya (1992), Somalia (1992), Angola (1993), Haiti (1993), Rwanda (1994), Sudan (1996), Sierra Leone (1997), Federal Republic of Yugoslavia/Kosovo (1998), Afghanistan (1999), and Ethiopia and Eritrea (2000).
In recent years, numerous studies have been conducted on the humanitarian impact of economic sanctions on Iraqi civilians. The United Nations Children’s Fund (UNICEF), the World Food Program (WFP), the Food and Agricultural Organization (FAO), and several research institutions have issued reports drawing attention to the suffering of ordinary Iraqis, in particular of children.