Do eco­nomic sanc­tions work?

Financial Mirror (Cyprus) - - FRONT PAGE - By Ken­neth Ro­goff

With Western eco­nomic sanc­tions against Rus­sia, Iran, and Cuba in the news, it is a good time to take stock of the de­bate on just how well such mea­sures work. The short an­swer is that eco­nomic sanc­tions usu­ally have only mod­est ef­fects, even if they can be an es­sen­tial means of demon­strat­ing moral re­solve. If eco­nomic sanc­tions are to play an in­creas­ingly im­por­tant role in twenty-first-cen­tury state­craft, it might be worth re­flect­ing on how they have worked in the past.

As Gary Huf­bauer and Jef­frey Schott note in their clas­sic book on the topic “Eco­nomic Sanc­tions Re­con­sid­ered”, the his­tory of eco­nomic sanc­tions goes back at least to 432 BC, when the Greek states­man and gen­eral Per­i­cles is­sued the so-called “Me­gar­ian de­cree” in re­sponse to the ab­duc­tion of three As­paisan women. In mod­ern times, the United States has em­ployed eco­nomic sanc­tions in pur­suit of di­verse goals, from the Carter ad­min­is­tra­tion’s ef­forts in the 1970s to pro­mote hu­man rights, to at­tempts to im­pede nu­clear pro­lif­er­a­tion in the 1980s.

Dur­ing the Cold War, the US also em­ployed eco­nomic sanc­tions to desta­bilise unfriendly gov­ern­ments, es­pe­cially in Latin Amer­ica, though they do not ap­pear to have played more than a mi­nor role, even where regime change even­tu­ally oc­curred. Eco­nomic sanc­tions on Ser­bia in the early 1990s did not de­ter the in­va­sion of Bos­nia. Cer­tainly, the US gov­ern­ment’s sym­bolic pun­ish­ment of chess legend Bobby Fis­cher (for play­ing a match in Bel­grade that vi­o­lated sanc­tions) pro­vided no re­lief for the be­sieged city of Sara­jevo.

The old Soviet Union played the sanc­tions game as well – for ex­am­ple, against China, Al­ba­nia and Yu­goslavia. It, too, did not have much suc­cess, ex­cept per­haps in the case of Fin­land, which ul­ti­mately bent its poli­cies to gain re­lief from sanc­tions im­posed in 1958.

Most mod­ern cases of sanc­tions pit a large coun­try against a small coun­try, though there are a few cases in­volv­ing coun­tries of equal size, such as the long quar­rel, from the 1950s to the 1980s, be­tween the United King­dom and Spain over Gibraltar.

As Huf­bauer and Schott, among oth­ers, have il­lus­trated, the ef­fects of sanc­tions are of­ten fairly dis­ap­point­ing – so much so that many schol­ars have con­cluded that such mea­sures of­ten are im­posed so that gov­ern­ments can ap­pear to do­mes­tic au­di­ences to be “do­ing some­thing.” Cer­tainly, se­vere US sanc­tions on Cuba failed to bring the Castro regime to heel; in­deed, Pres­i­dent Barack Obama’s move to reestab­lish full diplo­matic re­la­tions may have more ef­fect.

But some­times sanc­tions do work. The strong in­ter­na­tional con­sen­sus to im­pose sanc­tions on South Africa in the 1980s even­tu­ally helped bring an end to apartheid. Like­wise, sanc­tions have helped bring Iran to the bar­gain­ing ta­ble, though it is not clear how long its gov­ern­ment will be will­ing to de­fer its nu­clear am­bi­tions. And the Rus­sian econ­omy to­day is in big trou­ble, though this might be de­scribed as a lucky punch, with the real dam­age be­ing done by an epic col­lapse in global oil prices.

Some in Rus­sia, where the price col­lapse has hit gov­ern­ment rev­enues hard, claim that the US and Saudi Ara­bia are con­spir­ing to bring Rus­sia to its knees. But that gives US strate­gists far too much credit. A more likely cul­prit for the steep price de­cline is a com­bi­na­tion of the shaleen­ergy revo­lu­tion in the US and the sharp slow­down in Chi­nese growth. China’s slow­down has helped pre­cip­i­tate a broad-based fall in com­mod­ity prices that is hav­ing a dev­as­tat­ing ef­fect on coun­tries like Ar­gentina and Brazil, with which the US au­thor­i­ties pre­sum­ably have lit­tle quar­rel.

One of the ma­jor rea­sons eco­nomic sanc­tions have fallen short in the past is that not all coun­tries have com­plied. In­deed, sig­nif­i­cant dif­fer­ences of do­mes­tic opin­ion in the im­pos­ing coun­try of­ten un­der­mine sanc­tions as well.

More­over, coun­tries im­pos­ing sanc­tions must be pre­pared to ad­dress their own vul­ner­a­bil­i­ties. North Korea is per­haps the most nox­ious regime in the world to­day, and one can only hope that its cruel gov­ern­ment col­lapses some­time soon. The Kim regime has clung to power de­spite be­ing sub­ject to se­vere eco­nomic sanc­tions, per­haps be­cause China, fear­ing a united Korea on its bor­der, has not yet been will­ing to with­draw its support.

Yet it is easy to for­get that there are dif­fer­ent view­points in in­ter­na­tional re­la­tions, even in the most ex­treme sit­u­a­tions. Though North Korea’s al­leged at­tack on Sony Pic­tures’ com­put­ers has been rightly con­demned, it must be ad­mit­ted that from the per­spec­tive of the North Korean elite, their coun­try sim­ply ap­plied eco­nomic re­tal­i­a­tion much like any­one else does. Sony Pic­tures had pro­duced a satire pok­ing fun at North Korea’s leader, the “Young Gen­eral” Kim Jongun. This was an in­tol­er­a­ble af­front, to which the elite re­sponded with eco­nomic sab­o­tage rather than mil­i­tary ac­tion.

Let us also not for­get that Rus­sia, too, has de­ployed cy­ber at­tacks in the ser­vice of for­eign-pol­icy goals. In­deed, Rus­sia has far more for­mi­da­ble hack­ers than North Korea (though much of the top tal­ent cur­rently is em­ployed in mafia rings, rather than in strate­gic op­er­a­tions).

In a world where nu­clear pro­lif­er­a­tion has ren­dered global con­ven­tional war un­think­able, eco­nomic sanc­tions and sab­o­tage are likely to play a large role in twenty-first-cen­tury geopol­i­tics. Rather than pre­vent­ing con­flict, Per­i­cles’s sanc­tions in an­cient Greece ul­ti­mately helped to trig­ger the Pelo­pon­nesian War. One can only hope that in this cen­tury, wiser heads will pre­vail, and that eco­nomic sanc­tions lead to bar­gain­ing, not vi­o­lence.

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