Economic Sanctions: A Disciplinary Tool or a Political

Maneuver? An Analysis of the effectiveness of

Economic Sanctions in the Modern Age

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 Outline
A. Introduction

1. Quote
2. Overview of current situation
3. Thesis

B. Sanctions

I. Types
II. Purpose
III. Popular uses over the past century

C. Literature Review

D. Historical Review

E. Conclusion

i. Analysis conclusion
ii. Reason
iii. Guidelines

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Leslie Stahl, The 60 Minutes reporter, asked the then-secretary of State Albright : "We have
heard that a half-million children [in Iraq] have died. I mean, that's more children than died in
Hiroshima. And, you know, is the price worth it?" Albright responded, "I think this is a very hard
choice, but the price -- we think the price is worth it." 1 This scenario portrays both the painful
costs of economic sanctions and the political nature of their use. This issue is most important
now as the world prepares to impose new sanctions against Iran, hoping to achieve the same
results the 34 nations that imposed sanctions on Iraq in the nineties hoped to achieve but never
did. And as the threat of a new humanitarian disaster looms over the horizon, it is more
important than ever to reconsider this issue and assess its effectiveness. This article suggests that
while economic sanctions inflict economic damages on the target nation and create tension
among its populace, they fail time and again to achieve their crafters’ intentions. Instead of
penalizing the target’s regime and change policies, sanctions harm its population and indirectly
hurt the sender-nations’ economy. Financial sanctions, as opposed to economic, should be used
on case by case basis, with a defined timeline, clear objectives, and with special emphasis on
cost/benefit analysis.

Sanctions, by definition, are tools used by a state to influence a target nation in a certain way, be
it policy change or agreement on a dispute. Sanctions are two types, economic and noneconomic.
While the former aim at inflicting economic damages to the target, the later strive to deny it
legitimacy2. Ultimately, however, both types intend to induce policy change. In the domain of
economic sanctions, the tools used are financial in nature and aim at weakening the target’s
financial potency. Restraining trade, and prohibiting investment and other financial activities, are
examples of these sanctions. Non-economic sanctions are political in nature and tend to inflict
political damage on the target nation. Blocking the target’s entry into an international
organization and cutting the diplomatic ties with the target nation, are some of the forms these
sanctions take3.

Sanctions have been frequently used by states and international organizations alike as a means of
coercion and influence. The United Nations imposed economic sanctions against the Ivory Coast
in 2004 due to the governments poor handling of the its internal affairs and on Afghanistan in
1999 to coerce the then Taliban government into cooperating with the United States. The United
States has used the sanctions against Zimbabwe, Syria, Sudan, North Korea, Cuba, Burma,
Belarus, and Iraq, mainly due to its disagreement with the regimes in power at that time.

In forming an informed opinion on the matter, a thorough analysis of literature on this subject is
necessary. In their research article “Fools Suffer Gladly,” Morgan and Schwebach explain that
economic sanctions do not achieve their purpose in most cases. They argue that sanctions play a
symbolic role and are most effective when used in conjunction with other tactics other than
sanctions. In this sense, they support other, central, efforts, such as war. Few cases where
sanctions were involved have lead to compromise and history demonstrates that the same
outcome is reached regardless of whether sanctions were used or not. In fact, out of 116 cases
involving sanctions, only 40 were successful. Nevertheless, sanctions do work in certain
occasions. When the sender and the receiver have close economic ties and the resulting costs are
substantial, sanctions are more apt to succeed. Furthermore, targeting specific segments of the
1
Global Policy Forum
2
Heritage Foundation
3
Heritage Foundation

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target’s population, especially those of significant political and economic influence, tends to
achieve senders’ policy objectives but at a cost.

Gibson, Davis, and Radcliff explore another dimension of sanctions. In their article “On
Determinants of the Success of Economic Sanctions: An Empirical Analysis,” they stress that
economic sanctions have an impact on the target’s population, rather than the government, and
instead of inducing policy change, they actually aggravate the public’s living conditions, thereby
creating a humanitarian crisis. This situation results in public antagonism towards the sender and
heightens the nationalistic sentiment. Financial sanctions, as opposed to economic ones, are
much more effective in achieving objectives and therefore inducing policy change. They target
the ruling elite who are the actual policy makers by manipulating their finances and threatening
their wealth. The objectives of sanctioning efforts dictate the nature of sanctions used. If the goal
is to destabilize the opponent, short term and high cost economic sanctions are ought to be
applied. This term is conditional upon the economic and political status of the target state. If the
goal is to induce policy change, financial sanctions are needed. Some reliable measures of
success of the sanctioning efforts include whether objectives were reached and the extent of
damage inflicted on the target. Ultimately, however, the success of these efforts is contingent
upon the strength of ties between the adversaries as well as the sanctioning frequency and
duration. For instance, sanctions lose their effectiveness if kept for too long and deprive their
sender of political clout if used frequently.

The Heritage Foundation reports that from 1914 to 1990, sanctions have succeeded only 34% of
the time and this ratio has been declining over time. Sanctions are ineffective for several reasons.
In the age of globalization, competition is an issue confronting businesses in the farthest corners
of the globe and a challenge that only the strongest firms can withstand. When the United States
imposes unilateral sanctions by withholding its products from a target state, this state resorts to
other competitors for the same products. In this case, the target emerges unharmed but the US
loses a customer and suffers financial losses as a result. By doing so, the US loses billions of
dollars in the short run on lost exports, and compromises its relationship with the nation and
potential export revenues in the long run. Sanctions hurt the target’s middle class and impede its
democratization process. They disrupt the relations between the two states and decrease the
competitiveness of the sender in the world market by allowing other nations the opportunity to
enter the target’s market and establishing its brands there. When the US uses sanctions on regular
bases, it is creating a reputation for itself that carries with it high costs in the long run. The
practice undermines US businesses in the fact that consumers in the world market will be
hesitant to deal with American firms if they know that this relationship could be disrupted by
possible sanctions at some point in time. This is especially true in the Asian markets where long
term business relationships are as important as the price and quality of the product. During
President Bill Clinton’s administration, the United States imposed sanctions on 35 countries
comprising 42% of the world population and who consumed 19% of US exports. In the year
1995 alone, sanctions reduced exports by $15 Billion, eliminated 200,000 jobs, and reduced total
wages by $1 Billion in the US.

Sanctions’ success is contingent on several factors. First, the extent of international agreement on
the legality of the sanctions. Second, the nature of the economic relationship between the sender
and the target. Third, the economic potency of the sender and the target. Fourth, the importance
level of the policy change sought. Finally, the extent to which the parties are historically related.

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For instance, sanctions could be effective when the policy change sought is minor, the target is
dependant economically on the sender and they both have historic and cultural ties.

Aside from the academic research and its discoveries, what does history narrate about sanctions
and their effectiveness? Did sanctions succeed in achieving their objectives in the past? History
puts sanctions to the test and the following historical analysis should answer these questions.

From 1948 and until 1994, South Africa was ruled by the National Party and abided by the
Apartheid regime, the legal racial segregation system at that time. Due to its institutionalization
of racism, South Africa became the target of criticism and enormous pressure from the outside
world. Deciding to penalize the regime and induce a change of the Apartheid policy, several
nations have taken action and implemented numerous measures targeting South Africa’s
economy and government. Examples of these measures include economic sanctions and private
actions on the part of corporations and banks. In due course, South Africa succumbed to this
pressure and Apartheid became history. Many in today’s political and academic circles attribute
Apartheid’s fall to sanctions that were applied by the United States, and Britain and its Common
Wealth. While it is true that sanctions did exert pressure on the regime and contribute
significantly to its collapse, the success of the anti-Apartheid’s campaign stems from a
combination of factors. The racist nature of the regime had isolated South Africa from the rest of
the world, with no friends to back it politically, financially, or economically. Abroad, South
Africa didn’t have a powerful, or sympathetic, immigrant community to back it politically and
lobby for it. On a non-governmental and local level, a robust movement, dubbed as the Free
South Africa Movement, led by religious, student, and civil rights activists around the world
fought the regime by lobbying corporate, academic, governmental, and charitable institutions, to
liquidate and withdraw their assets in South Africa. According to the Heritage Foundation, from
1980 to 1991, the number of American corporations in the country fell from 300 to 104. The
major strike against the regime, nevertheless, came about when banks called their current loans
and decided not to renew old ones from South Africa. By 1989, $10.8 Billion in capital left the
country4. Thus, the downfall of Apartheid was due to the country’s isolation from the world, the
unity of nations in their concern and desire, progressive movements’ activism, financial
measures taken by private parties, non-existent immigrant support, and the economic sanctions.
The sanctions’ role in this case was purely supportive of other measures taken.

In the aftermath of the 1979/1980 Hostage crisis, the United States initiated an economic
sanctioning campaign against Iran that endures until the present day. These sanctions aim at
weakening Iran’s military capabilities, halting its nuclear program, and persuading it to cease
sponsoring terrorist groups in the Middle East. Specifically, the sanctions aimed at killing Iran’s
petroleum industry, which constitutes a major pillar of its economy. Even though these sanctions
made the nuclear program a costly and lengthy procedure, they didn’t stop Iran from developing
a nuclear program or supporting terrorists. Moreover, its oil industry saw a modest growth over
the past three decades. The country imported products from other countries like China, Pakistan,
and Russia, and its policies on issues like terrorism and nuclear armament haven’t changed a bit5.

After its transition into the communist camp, Cuba became a target of a prolonged sanctioning
campaign led by the United States aiming at punishing it for its ideology, close ties to the Soviet
4
Heritage Foundation
5
Peterson Institute for International Economics

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Union, expropriation of US corporate properties, and support of the communist movement in
Latin America. Sanctions included a trade embargo, travel restrictions, investment prohibition,
and restrictions on trade of US corporate subsidiaries abroad with Cuba. Over fifty years later,
the communist regime is still in power in Cuba, signalling the failure of sanctions to achieve
their goal. In this case, it is evident that Cuba did suffer from the sanctions; the suffering is
reflected in the living conditions of its population and the country’s standing in the world.
However, the leadership didn’t suffer a bit and the Castro family is in power to this day6.

In conclusion, the literature review and the historical cases presented in this article fail to support
economic sanctions as a means of punishment or persuasion. Instead of achieving their
objectives of exerting influence on the target regime, economic sanctions hit the target
population and damage the sender economy. Financial sanctions, as opposed to economic,
achieve the objectives of the US government at much lower humanitarian, financial, and
economic losses. The following are guidelines for governments to obey if they wish to exert
influence on the world stage.

 Impose sanctions in collaboration with other key nations, but never unilaterally
 Perform a Cost/Benefit analysis. Impose sanctions only if the benefits far outweigh the
costs
 Establish clear and realistic objectives and a reasonable timeline
 Assess the target’s economic strength, international standing on the issue and the extent
of their support, the consequences of the sanctions as they related to home-country
business environment and country’s relations with the target state
 Use sanctions as the last resort. The proper steps should follow this order: Diplomacy,
public appeal, international appeal, non-economic sanctions, and economic/financial
sanctions
 Use sanctions in conjunction with other coercion tools, but never alone

Bibliography
6
Peterson Institute for International Economics

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Dashti-Gibson, Jalesh, Patricia Davis, Benjamin Radcliff. (April 1997). On the Determinants of
the Success of Economic Sanctions: An Empirical Analysis.” American Journal of
Political Science, 41(2), pp. 608-618

Holland, Joshua. (2005, October 5). Iraq and Oil-For-Food: The Real Story. Retrieved November
26, 2009, from http://www.globalpolicy.org/component/component/content/article/
170/42260.html

Hufbauer, Gary C. , Schott, Jeffrey J. , Elliot, Kimberly A. (2009, June 15) Sanctions After the
Cold War. (3rd ed.). Economic Sanctions Reconsidered. (pp. 125-154). Washington DC:
The Peterson Institute for International Economics

Morgan, Clifton, Valerie Schwebach. (1997, March). Fools Suffer Gladly: The Use of Economic
Sanctions in International Crises. International Studies Quarterly, 41(1), pp. 27-50

O’Quinn, Robert. (1997, June 25). A User’s Guide To Economic Sanctions. Retrieved November
26, 2009, from http://www.heritage.org/research/NationalSecurity/BG1126.cfm

United State Department of the Treasury. (2009, November 24). Office of Foreign Assets Control
Sanctions Program. Retrieved November 26, 2009, from http://www.ustreas.gov/
offices/enforcement/ofac/programs/

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