The Effectiveness of Economic Sanctions as a Security Tool
Print Issue: January 2020
These days, when the national security interests of the United States are threatened, U.S. leaders frequently respond not with military might, but with financial weapons—usually in the form of economic sanctions.
“Policymakers in the past decade have embraced the use of sanctions as a tool of U.S. foreign policy. Successive U.S. presidents, as well as both parties in Congress, have seen the use of sanctions against U.S. adversaries as a relatively low-cost, low-risk way to respond to a variety of malign behaviors,” says the Center for a New American Security (CNAS) in a recent report, Grappling with the Growing Use of Sanctions.
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Most recently, the Trump administration treated sanctions slapped on three countries—Iran, Venezuela, and North Korea—as a policy priority, and both the administration and Congress threatened to sanction Turkey for its military incursion into Syria in October 2019.
Smaller scale sanctions have also been popular. In 2018, the last full year of available data, the United States added nearly 1,500 people, companies, and other entities to sanctions programs managed by the U.S. Treasury Department, nearly 50 percent more than in 2017, according to statistics compiled by the law firm Gibson, Dunn & Crutcher.
But popularity aside, are sanctions an effective security tool? Recent research has examined this question, and the bottom line seems to be: only sometimes, when used strategically and under certain conditions.
According to the U.S. Government Accountability Office (GAO), there are currently 20 country-based U.S. sanctions programs, including the ones previously mentioned. These programs may sanction a country’s entire economy or specifically target individual business sectors, corporate organizations, or individuals.
Sanctions’ economic restrictions can include denial of access to the U.S. financial system, freezing assets under U.S. jurisdiction, or the prohibition of certain exports. The punitive reasons for the sanctions vary, including alleged support of terrorism, weapons proliferation, and narcotics trafficking.
Sanctions serve as an intended security tool in different ways. Sometimes, comprehensive economic sanctions are placed against a country, such as Iran, that threatens U.S. security with weapons proliferation or an adversarial foreign policy. In other instances, such as in Somalia, individual actors who threaten the peace and stability of a certain country are targeted.
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The consensus reached in the academic literature on the subject is that conventional trade and financial sanctions result in some meaningful behavioral change in the targeted country about 40 percent of the time, according to Dursun Peksen, a sanctions expert at the University of Memphis in Memphis, Tennessee. (Peksen’s article “When Do Economic Sanctions Work Best?” is published as part of the CNAS report.)
However, trying to assess the effectiveness of the sanctions is a difficult process, according to a recent GAO report, Economic Sanctions: Agencies Assess Impacts on Targets, and Studies Suggest Several Factors Contribute to Sanctions’ Effectiveness. For example, a sanctioned country may decide to change its behavior for many reasons, and some of these changes may be unrelated to the sanctions or other U.S. policy measures. There can also be a lack of reliable data measuring the action being sanctioned, such as weapons purchases or treaty violations.
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Nevertheless, attempts to assess sanctions’ effectiveness are being made. “Sanctions policy is continuously evaluated informally by those implementing the sanctions, as new information comes in and as new targets are developed,” U.S. officials told the GAO in the report, which was issued in October 2019. In addition to interviewing officials, the GAO also reviewed 17 academic studies that examined how different factors contributed to the effectiveness of sanctions in changing behavior.
Overall, the GAO found that sanctions are more likely to be effective, and have more of an impact, when they are implemented through an international organization, such as the United Nations. The report also found that sanctions tend to have more of an impact “when targeted countries had some existing dependency on or relationship with the United States,” such as foreign aid or military support.
In addition, the GAO found “strong evidence that the economic impact of sanctions has generally been greater when they were more comprehensive in scope or severity.” However, this finding came with a caveat—in some instances, larger economic impacts were associated with unintended consequences, such as negative impacts on human rights or public health.
For example, one academic study found that U.N. sanctions had an adverse impact on targeted countries’ economic growth, and this impact increased with the more comprehensive sanctions. In addition, the more comprehensive sanctions could result in another adverse effect—encouraging the sanction targets to develop trade and financial ties that are less dependent on the United States.
Another study found that imposing sanctions alongside other countries led to reductions in both U.S. and other Group of Seven (G7) countries’ bilateral trade with the targeted countries. And other academic analyses found that the negative impact of sanctions on democratic and press freedoms was generally greater with the more comprehensive sanctions.
Moving forward, how can U.S. officials maximize the chances that sanctions will be an effective security tool? Peksen makes five recommendations for policymakers.
First, aim for immediate damage to the targeted country’s economy. The higher the cost of sanctions on the economy, the less likely a government can evade the sanctions through policy adjustments.
Second, seek alliances with other countries and international organizations when making sanctions. The more countries levying a sanction, the greater the economic pain the target will face. Ideally, countries can band together to impose multilateral sanctions under the umbrella of an international organization.
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Third, understand that autocratic regimes will usually be able to resist sanctions more effectively than democracies. Autocracies have better control over the redistribution of public resources, and this increases the chances of surviving economic sanctions.
Fourth, realize that adversaries will be more defiant against sanctions than allies. When countries are sanctioned by their rivals, they have less incentive to alter their behavior because they assume conflict will continue into the future.
Fifth, anticipate that sanctions are more effective in achieving relatively modest security aims than in achieving major policy objectives. Coercive economic sanctions are usually more likely to lead to the release of a wrongfully imprisoned national than to trigger a political regime change.