Handbook Economic Sanctions

© Editor and Contributors Severally 2021
Cover image: © Peter A.G. van Bergeijk, Broken Links, lithography, 2020.
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system
or transmitted in any form or by any means, electronic, mechanical or photocopying, recording,
or otherwise without the prior permission of the publisher.
Published by
Edward Elgar Publishing Limited
The Lypiatts
15 Lansdown Road
Cheltenham
Glos GL50 2JA
UK
Edward Elgar Publishing, Inc.

William Pratt House
9 Dewey Court
Northampton
Massachusetts 01060
USA
A catalogue record for this book

is available from the British Library
Library of Congress Control Number: 2021947944
This book is available electronically in the

Economics subject collection
http://dx.doi.org/10.4337/9781839102721
ISBN 978 1 83910 271 4 (cased)

ISBN 978 1 83910 272 1 (eBook)
Peter A.G. van Bergeijk - 9781839102721

Contents
List of contributors vii

List of abbreviations x
1 Introduction to the Research Handbook on Economic Sanctions 1

Peter A.G. van Bergeijk
PART I THE VALUE OF LARGE-N DATA SOURCES
2 Economic sanctions in the twenty-first century 26

Gary Clyde Hufbauer and Euijin Jung
3 The Threat and Imposition of Economic Sanctions data project:
a retrospective 44
T. Clifton Morgan, Navin A. Bapat, and Yoshiharu Kobayashi
4 The Global Sanctions Data Base (GSDB): an update that includes the years of the
Trump presidency 62
Aleksandra Kirilakha, Gabriel J. Felbermayr, Constantinos Syropoulos,
Erdal Yalcin, and Yoto V. Yotov
5 UN targeted sanctions: historical development and current challenges 107
Thomas J. Biersteker and Zuzana Hudáková
6 Publication bias of economic sanctions research: a meta-analysis of the
impact of trade linkage, duration and prior relations on sanctions success 125
Binyam A. Demena, Alemayehu S. Reta, Gabriela Benalcazar Jativa,
Patrick B. Kimararungu, and Peter A.G. van Bergeijk
PART II SANCTION MECHANISMS
7 The public choice approach to international sanctions: retrospect and prospect 152
Dennis Halcoussis, William H. Kaempfer, and Anton D. Lowenberg
8 Making sanctions work: promoting compliance, punishing violations,
and discouraging sanctions busting 167
Bryan R. Early
9 Economic sanctions and political stability and violence in target countries 187
Dursun Peksen
10 The internal opposition effect of international sanctions: insights from
a qualitative comparative analysis 202
Julia Grauvogel
v
vi Research handbook on economic sanctions
11 Secondary sanctions mechanism revisited: the case of US sanctions

against North Korea 223
Baran Han
12 Researching firms and sanctions: theoretical and methodological considerations 238
Michal Onderco and Reinout A. van der Veer
PART III APPEARANCES OF SANCTIONS
13 Imposing sanctions versus posing in sanctioners’ clothes: the EU

sanctions against Russia and the Russian counter-sanctions 249
Matěj Bělín and Jan Hanousek
14 Trade preference suspensions as economic sanctions 264
Clara Portela
15 Economic sanctions and the WTO 280
Maarten Smeets
16 Negative and positive sanctions 297
Raul Caruso
17 Economic sanctions within the Graph Model for Conflict Resolution 309
Bader A. Sabtan, D. Marc Kilgour, and Rami Kinsara
PART IV INTENDED AND UNINTENDED IMPACTS
18 The impact of sanctions on the banking system: new evidence from Iran 330
Sajjad Faraji Dizaji
19 Tourism and sanctions 351
C. Michael Hall and Siamak Seyfi
20 FDI and sanctions 369
Irina Mirkina
21 In and out of the penalty box: U.S. sanctions and their effects
on international trade 388
Tristan Kohl
22 Timing the Impact of sanctions on trade 411
Mian Dai, Gabriel Felbermayr, Aleksandra Kirilakha Constantinos
Syropoulos, Erdal Yalcin, and Yoto V. Yotov
23 Sanctioned to starve? The impact of economic sanctions on food
security in targeted states 438
Sylvanus Kwaku Afesorgbor
Index 467

Contributors
Sylvanus Kwaku Afesorgbor is Assistant Professor of Agri-Food Trade and Policy at the
Department of Food, Agricultural and Resource Economics, University of Guelph, Ontario,
Canada.
Navin A. Bapat is Professor of Political Science and Chair of the Curriculum in Peace, War,
and Defense at the University of North Carolina, Chapel Hill, United States.
Matěj Bělín is Ph.D. candidate at CERGE-EI, a joint workplace of Charles University and the
Economics Institute of the Czech Academy of Sciences, Czech Republic.
Gabriela Benalcazar Jativa is Commercial Administrator of JB Representaciones, Quito,
Ecuador.
Thomas J. Biersteker is the Gasteyger Professor of International Security and Conflict
Studies at the Graduate Institute, Geneva, Switzerland.
Raul Caruso is Professor of International Economics/Peace Economics, Department of
Economic Policy of Università Cattolica del Sacro Cuore, Milan, Italy.
Mian Dai is Associate Professor of Economics at the School of Economics of the LeBow
College of Business of Drexel University, Philadelphia, PA, USA.
Binyam A. Demena is Research Fellow at the International Institute of Social Studies of
Erasmus University, The Hague, the Netherlands.
Sajjad Faraji Dizaji is research fellow of Qatar National Research Fund at Qatar University
and Associate Professor of Economics at Tarbiat Modares University, Iran.
Bryan R. Early is Associate Professor of Political Science and Associate Dean for Research
at the University at Albany, SUNY’s Rockefeller College of Public Affairs and Policy.
Gabriel J. Felbermayr is President of the Kiel Institute for the World Economy and Professor
of Economic Policy at Christian-Albrechts-Universität zu Kiel, Germany.
Julia Grauvogel is Senior Research Fellow at the German Institute for Global and Area
Studies (GIGA) in Hamburg, Germany.
Dennis Halcoussis is Professor of Economics at California State University, Northridge, USA.
C. Michael Hall is Professor at Department of Management, Marketing and Entrepreneurship,
University of Canterbury, Christchurch, New Zealand.
Baran Han is Associate Professor of Economics at the KDI School of Public Policy and
Management, Sejong, South Korea.
Jan Hanousek is Professor of Corporate Finance at CERGE-EI, a joint workplace of Charles
University and the Economics Institute of the Czech Academy of Sciences, Czech Republic,
and a research fellow at CEPR, London, UK.
vii
viii Research handbook on economic sanctions
Zuzana Hudáková is postdoctoral researcher at the Center for International Studies (CERI)
at Sciences Po, Paris, France, and a research associate at the Graduate Institute in Geneva,
Switzerland.
Gary Clyde Hufbauer is Non-resident Senior Fellow, Peterson Institute for International
Economics, Washington DC, USA.
Euijin Jung is Research Fellow, Peterson Institute for International Economics, Washington
DC, USA.
William H. Kaempfer is Professor Emeritus of Economics at the University of Colorado,
Boulder, USA.
D. Marc Kilgour is Professor of Mathematics at Wilfrid Laurier University, Canada.
Patrick B. Kimararungu is a Research and Policy Analyst at the Hague Institute for
Innovation of Law (HiiL User Friendly Justice), the Netherlands.
Rami Kinsara is Assistant Professor of the Industrial Engineering Department at King
Abdulaziz University, Saudi Arabia.
Aleksandra Kirilakha is Ph.D. student at the School of Economics of the LeBow College of
Business of Drexel University, Philadelphia, PA, USA.
Yoshiharu Kobayashi is Associate Professor of Global Political Economy and Development
at the School of Politics and International Studies of the University of Leeds, the United
Kingdom.
Tristan Kohl is Associate Professor of International Economics at the University of
Groningen, Faculty of Economics and Business, Groningen, the Netherlands.
Gina Macatangay Ledda is PhD researcher at the International Institute of Social Studies of
Erasmus University, The Hague, the Netherlands.
Anton D. Lowenberg is Professor of Economics at California State University, Northridge,
USA.
Irina Mirkina is Senior Data Scientist at Stena Line in Gothenburg, Sweden.
T. Clifton Morgan is Albert Thomas Professor of Political Science, Rice University, Houston,
Texas, USA.
Michal Onderco is Associate Professor of International Relations at the Department of Public
Administration and Sociology of Erasmus University Rotterdam, the Netherlands.
Dursun Peksen is Professor of Political Science at the University of Memphis, USA.
Clara Portela is Professor of Political Science at the Law Faculty of the University of
Valencia, Spain.
Alemayehu S. Reta is Senior MEAL Officer at Concern Worldwide, Ethiopia.
Bader A. Sabtan is Ph.D. candidate in Systems Design Engineering at the University of
Waterloo, Canada and a faculty member of the Industrial Engineering Department at King
Abdulaziz University, Saudi Arabia.

Contributors ix
Siamak Seyfi is Assistant Professor in Tourism Geographies at the Geography Research Unit
of the University of Oulu, Finland.
Maarten Smeets is an associate professor at St Petersburg State University, Russia; and the
Shanghai University of International Business and Economics, China; a non-resident fellow
at the World Trade Institute (Bern); and a senior associate at the Clingendael Academy,
Netherlands Institute of International Relations, The Hague. At the time of writing, he was
a senior economist at the World Trade Organization, managing the WTO Chairs Program
(WCP).
Constantinos Syropoulos is Trustee Professor of International Economics at the School of
Economics of the LeBow College of Business of Drexel University, Philadelphia, PA, USA.
Peter A.G. van Bergeijk is Professor of International Economics/Macroeconomics,
International Institute of Social Studies of Erasmus University, The Hague, the Netherlands.
Reinout A. van der Veer is Assistant Professor of European Integration at Radboud University,
Nijmegen, the Netherlands.
Erdal Yalcin is Professor of International Economics at the University of Applied Sciences
in Konstanz, Germany.
Yoto V. Yotov is Professor of Economics at the School of Economics of the LeBow College
of Business of Drexel University, Philadelphia, PA, USA.

Abbreviations
ANC African National Congress

CAR Capital Adequacy Ratio
CDA Clustered Data Analysis
CFIUS Committee on Foreign Investment in the United States
CFSP Common Foreign and Security Policy
CIA Central Intelligence Agency
CISADA Comprehensive Iran Sanctions, Accountability, Divestment Act
CNTS Cross-National Time-Series Data Archive
CoCom Coordinating Committee for Multilateral Export Controls
COW Correlates of War
DADM Dynamic Analysis of Dispute Management
DCCEMG Dynamic Common Correlated Effects Mean Group
DMZ Demilitarized Zone
DPRK Democratic People’s Republic of Korea
EBA Everything But Arms
ECRA Export Control Reform Act
EIA Economic Integration Agreement
EPRS European Parliament Research Service
ETUC European Trade Union Confederation
EU European Union
EUGSP European Union’s Generalised Scheme of Preferences
EUSANCT European Union Sanctions
FAO Food and Agriculture Organization
FAT Funnel Asymmetry Test
FDI Foreign Direct Investment
FIRRMA Foreign Investment Risk Review Modernization Act
fsQCA fuzzy set Qualitative Comparative Analysis
FTA Free Trade Area/Agreement
GATT Generalised Agreement on Tariffs and Trade
GDP Gross Domestic Product
GHI Global Hunger Index
GMCR Graph Model for Conflict Resolution
GNI Gross National Income
GSDB Global Sanctions Data Base
GSP General Scheme of Preferences
GTS General to Specific
GVC Global Value Chain
x
Abbreviations xi
HS Harmonized System
HSE Hufbauer, Schott and Elliott
HSEO Hufbauer, Schott, Elliott and Oegg
ICBM Intercontinental Ballistic Missile
ICCPB International Covenant on Civil and Political Rights
ICFTU International Confederation of Free Trade Unions
IFPRI International Food Policy Research Institute
ILO International Labour Organization
INSTEX Instrument in Support of Trade Exchanges
ITUC International Trade Union Confederation
JCPOA Joint Comprehensive Plan of Action
LDC Least Developed Country
MAER-Net Meta-Analysis of Economics Research Network
MEM Mixed-Effects Multilevel Model
MFN Most Favored Nation
MID Militarized Interstate Dispute
MNE Multinational Enterprise
MRA Meta Regression Analysis
MTS Multilateral Trading System
NATO North Atlantic Treaty Organization
NGO Non-Governmental Organization
NKSPEA North Korea Sanctions and Policy Enhancement Act
NPM New Public Management
NSA National Security Agency
NT National Treatment
OFAC Office of Foreign Assets Control
OLS Ordinary Least Squares
PDVSA Petróleos de Venezuela, S.A.
PET Precision Effect Test
PoU Prevalence of Undernourishment
PPML Poisson Pseudo Maximum Likelihood
QCA Qualitative Comparative Analysis
R2P Responsibility to Protect
SALW Small Arms and Light Weapons
SDG Sustainable Development Goal
THAAD Terminal High Altitude Area Defense
TIES Threat and Imposition of Economic Sanctions
TSC Targeted Sanctions Consortium
TSD Trade and Sustainable Development
UAE United Arab Emirates
UNCTAD United Nations Commission for Trade and Development
UNSC United Nations Security Council

xii Research handbook on economic sanctions
UNWTO United Nations World Tourism Organization

USSR Union of Soviet Socialist Republics
VAR Vector Auto Regression
V-Dem Varieties of Democracy
VFR Visiting Friends and Relatives
WCL World Confederation of Labour
WLS Weighted Least Squares
WTO World Trade Organization

1. Introduction to the Research Handbook on
Economic Sanctions
Peter A.G. van Bergeijk1
1.1 THE EXPANDING UNIVERSE OF SANCTION KNOWLEDGE

The contributions to this Handbook demonstrate that the breadth and depth of research on
economic sanctions are expanding faster than ever before—with major implications for theory
and policy. This Handbook shows that several of the divides that characterize the research on
economic sanctions are being bridged. The Handbook brings together the two disciplines that
study sanctions but often talk past each other: Economics and Political Science/International
Relations. Moreover, both Political Science and Economics are crossing the bridge between
quantitative and qualitative approaches, but from opposite sides. In the early years of sanctions
research (i.e., back in the 1950s–1970s), the analysis of sanctions was dominated by qualita-
tive case studies and descriptive statistics. Some analysts in that embryonic stage already
tried to glean general lessons from (selected) collections of cases (Wallensteen, 1968, is an
example). Initially, only a handful of cases was available but as sanctions were used more
often, the sample increased. The breakthrough in the analysis of economic sanctions came with
Economic Sanctions Reconsidered, the seminal data collection and analysis developed by Gary
Hufbauer and Jeffrey Schott at the Peterson Institute. Economic Sanctions Reconsidered ena-
bled analysis to be based on a large sample size and that helped to reduce an important source
of selection bias apparent in the earlier narrative accounts of sanction failures and successes.
Throughout the 35 years since its first publication in 1985, the Peterson Institute’s sanction
case collection has inevitably received a lot of criticism on the measurement of success, selec-
tion bias, and estimation method.2 However, the main point should not be overlooked here:
Economic Sanctions Reconsidered was a major scientific improvement that helped to address
the major weaknesses of the existing literature of the 1980s.
The universe of sanctions data expanded further when sanction threats were included in
the Threat and Imposition of Economic Sanctions (TIES) project run by T. Clifton Morgan,
Navin Bapat, Yoshiharu Kobayashi, and Valentin Krustev. That data set was constructed
not so much to provide a more up-to-date overview but rather to bring new threats and
uncertainties into the equation since new theories required different data. In 2020 Gabriel
J. Felbermayr, Aleksandra Kirilakha, Constantinos Syropoulos, Erdal Yalcin, and Yoto
Yotov at the Kiel Institute for the World Economy published the Global Sanctions Data
Base, enabling research on the trade impact of sanctions. The sample of sanctions cases was
expanded significantly and presently also covers the period of the Trump administration.
Diagram 1.1 shows how these three projects relate and partially overlap. It suggests that
results may be sensitive to the specific data set used (and even which vintage of that data
set was used). The emergence of specialized large-N sources such as the UN targeted data
set developed by Thomas Biersteker, Sue Eckert, Marcos Tourinho, and Zuzana Hudáková
enriched our knowledge further and added to this data complexity. The research teams
1
Peter A. G. van Bergeijk - 9781839102721
2 Research handbook on economic sanctions
TIES GSDB
Imposed
sanctions Imposed sanctions
2000–2005 2005–2019
Threats
1945–2005 and
‘non-political’
sanctions goals
HSEO TSC (UN Sanctions 1991–2013) UN Sanctions App
Imposed
sanctions
1950–2000
Imposed
sanctions
before 1945
Notes: GSDB = Global Sanctions Data Base (Felbermayr et al., 2020 and Chapter 4 of this Handbook).
HSEO = Economic Sanctions Reconsidered (Hufbauer et al., 2007).
TIES = Threats and Impositions of Economic Sanctions (Morgan et al., 2014).
TSC = Targeted Sanctions Consortium (Biersteker et al., 2018).
UN = SanctionsApp (Biersteker et al., 2020).
Diagram 1.1 Relationships and overlaps between the large-N data sets
themselves in Part I of this Handbook discuss this expanding universe of sanctions data.
Soon Big Data and ‘nowcasting’ will enable tracking of the impact of sanctions on groups
of individuals and goods, and often in real time. More and better data hold great promise
for future research as it offers strong incentives for both new research and its replication
(i.e., testing if findings of the established research also hold for different data sets). Irina
Mirkina’s contribution to this Handbook is a best practice methodology for investigating
the robustness of our knowledge.
The expansion of the literature is also increasing the need for research synthesis. Hence,
readers will appreciate excellent reviews that provide coherent overviews of what we (already)
know and what we (still) want to know. In particular, the reviews on sanction mechanisms in
this Handbook show how qualitative, formal, and empirical knowledge can be combined to
understand and appreciate the scientific body of knowledge on economic sanctions. Dennis
Halcoussis, Bill Kaempfer, and Tony Lowenberg review the Public Choice theory of economic
sanctions. Bryan Early discusses research on sanction implementation and ways to improve
compliance and impact. Dursun Peksen, in turn, examines the related complex relationships
between sanctions and political developments. A further effort regarding research synthesis
is provided by the first meta-analysis on economic sanctions co-authored with Binyam
Demena, Alemayehu Reta, Gabriela Benalcazar Jativa, and Patrick Kimararungu. It cogently
demonstrates that, by now, enough empirical primary studies exist for useful generalization.

Introduction to the Research Handbook on Economic Sanctions 3
Table 1.1 Overview of case studies by target in this Handbook
Country Chapter
Cuba 19
Iran 17, 18, 19
North Korea 11
Russia 13, 19
Turkey 19
Meta-analysis holds promise for a better understanding of the heterogeneity of findings

controlling for methodological study characteristics.
It is true that economists have for quite a long time tended to treat economic sanctions—like
other forms of disrupted trade—as a somewhat marginal topic. But the tides may have turned
(Nitsch and Besedes̆ , 2019), as illustrated by the increased interest in measuring the impact of
sanctions on international economic flows. This literature that starts with Caruso (2003) offers
a new important avenue in view of the field’s original focus on effectiveness (i.e., the ability
to change the target’s behavior). Using advanced gravity models, Tristan Kohl investigates
the impact of lifting sanctions and Mian Dai, Gabriel J. Felbermayr, Aleksandra Kirilakha,
Constantinos Syropoulos, Erdal Yalcin, and Yoto V. Yotov deal with the issue of the dynamics
of sanction impact.3 Matěj Bělín and Jan Hanousek pioneer an alternative hybrid approach of
a Vector Autoregressive model with differences-in-differences that—additionally—offers a
tool to test the occurrence of structural breaks that could pinpoint when sanctions start to bite
in the trade data (if at all). Economists have also grown much more aware of the hidden costs
of economic sanctions in relation to health, poverty, and, as discussed by Sylvanus Kwaku
Afesorgbor, food security.
In addition to the analyses and findings from the large-N world, this Handbook presents
advanced case studies that stand out because they develop and innovatively apply advanced
methodologies in an empirically relevant context, potentially bridging the divide between
quantitative and qualitative research Table 1.1. Baran Han develops a game-theoretic model of
secondary sanctions against North Korea. Sajjad Faraji Dizaji uses stochastic frontier analysis
to investigate the impact of the imposition and lifting of sanctions on the efficiency of the
Iranian financial sector. Bader Sabtan, Marc Kilgour, and Rami Kinsara use their graph model
for conflict resolution to visualize the conflict over the Iran nuclear deal. This move toward
specific cases in a sense reflects dissatisfaction with the fact that large-N analysis by its nature
does not allow for the inclusion of case-specific mechanisms and qualitative details that reflect
conditions of time and place.
The use of case studies as a tool to develop empirical methodologies does not undermine the
importance of qualitative work. Michal Onderco and Reinout A. van der Veer argue the case
for small-N research in order to know more about the motivations of firms that are key to both
compliance, adjustment, and resilience. In turn, qualitative work does not exclude quantitative
follow up as shown by Julia Grauvogel’s Qualitative Comparative Analysis that synthesizes
case-based information related to 75 sanctions regimes in sub-Saharan Africa. Transparent
research synthesis methods that analyze comprehensive sets of primary studies (identified
with systematic reviews) will become increasingly important to understand what we know in
an expanding and often contradictory universe of sanctions knowledge.

Table 1.2 Overview of applied methodologies in this Handbook
Subject and method Chapter

Descriptive statistics 4, 5
Discourse analysis 1
Game theory 11, 17
Impact of sanctions
- Common correlated effects 20
- Gravity model 21, 22
- Entropy balancing 23
- Hybrid VAR and differences-in-differences 13
- Stochastic frontier analysis 18
- Synthetic Control Method 20
Research synergy
- Comparative qualitative analysis 10
- Meta-analysis 6
- Narrative review of literature 3, 7, 8, 9, 12, 16, 19, 20
Review of case law and policies 2, 14, 15
Using complex numerical evaluations, such as Qualitative Comparative Analysis or

Meta-Regression Analysis is, however, not a panacea. Therefore, the contributors themselves
warn that a sound understanding of the underlying literature remains the basis. Traditional
narrative reviews can deal with heterogeneous findings based on numerical and non-numerical
findings.4 Traditional narrative analyses will also remain important to understand the legal
context and to recognize new emerging sanctions applications. The Handbook provides four
excellent examples of the utility of such overviews. Maarten Smeets reviews the World Trade
Organization (WTO) case law. Clara Portela analyzes the withdrawal of trade preferences
for developing countries as a sanction tool that is perhaps not new, but has only recently
been recognized. Michael Hall and Siamak Seyfi analyze the emerging impact of sanctions
on tourism. Raul Caruso argues the case of positive sanctions (conditional rewards) that can
sometimes succeed where negative sanctions (conditional punishments) fail.
The remainder of this introductory chapter is organized as follows. The next two sections
provide some context reporting for the increasing use of economic sanctions over time
(Section 1.2) and trends in the economic sanctions discourse (Section 1.3). Section 1.4
discusses the structure of the Handbook and introduces the chapters that have been organized
in four parts on sanctions data, sanctions mechanisms, sanctions images, and (economic)
sanctions impact. The final section reflects on the next steps.
1.2 THE SANCTIONS TSUNAMI
This Handbook was written against the background of a period in which the use of economic
sanctions increased sharply.5 Figure 1.1 illustrates that the average number of imposed eco-
nomic sanctions over the years 2010 to 2019 inclusive almost doubled to 482 per year from an

Average number of sanctions by decade

500 2010s
400
300 2000s
1990s
200
1980s
1970s
100 1960s
1950s
0
0 5 10 15 20 25 30 35 40 45 50
Average index of openness of the world economy
Sources: Calculated from the Global Sanctions Data Base (accessed January 31, 2021, see Chapter 4 of this
Handbook) and van Bergeijk (2019a).
Figure 1.1 Sanctions impositions and openness of the world economy (averages by decade,
1950–2019)
average of about 250 fifty sanctions per year in the 1990s and 2000s. It is important to note that
Figure 1.1 is based on averages per decade and thus conceals that the all-time highs in sanction
application were in 2014 to 2016, well before the erratic US foreign and trade policies of 2017
to 2020.6 The increase in the 2010s makes this Handbook even more relevant, of course, but
it also suggests an important puzzle: Why did the world use sanctions so much more often?
Could history help us to understand the increase in the 2010s? After all, a similar increase
in the use of economic sanctions can also be observed in the 1990s that has been called ‘the
sanctions decade’ (Cortright et al., 2000). The year 1990 marked the end of the Cold War,
the sanctions against the Iraqi occupation of Kuwait, and the start of a significant increase
in the speed of globalization (that can be recognized in the rightward shift of the curve in
Figure 1.1). These three events were readily identified as factors behind the increase in the use
of economic sanctions (van Bergeijk, 1994).7 The three drivers of the increase are, of course,
to a large extent interrelated. Indeed, the end of the superpower conflict enabled UN sanctions
to be implemented quickly and comprehensively: The severe, wide-ranging, and almost
watertight sanctions against Iraq in 1990 were implemented in four days, and for the first time
in history traditionally neutral Switzerland participated (Smeets, 1990). This experience was
the basis for the UN sanctions wave, the emergence of which is discussed by Biersteker and
Hudáková in Chapter 5. Globalization, stimulated by the breakdown of Communism, opened
up many economies that previously could hardly have been hurt by economic sanctions. All
in all, the historical context seemed to be broadly conducive to the increase in impositions in
the 1990s.
In the 2010s, the apparent increase to an average of almost 500 imposed sanctions per
year is, however, from a geoeconomic perspective more difficult to understand. First, the
geopolitical context of the 2010s is a mirror image of the détente and perestroika that led to
the fall of the Berlin Wall and the Iron Curtain. Currently a Cold Trade War—if not a new
Cold War (see Chapter 2 by Hufbauer and Jung)—is emerging. US–Chinese rivalry is one
important driver. Other determinants are the sanctions and counter sanctions between Russia,
the EU, and the USA that are analyzed by Matěj Bělín and Jan Hanousek in Chapter 13 of this

Handbook.8 Second, the other major cases of the 2010s, the sanctions against Iran (discussed
by Bader Sabtan, Marc Kilgour, and Rami Kinsara in Chapter 17 and by Sajjad Faraji Dizaji
in Chapter 18) and North Korea (discussed in Chapter 11 by Baran Han), were protracted and
characterized by unstable sender coalitions. Third, the Financial Crisis in 2008/9 was a turning
point for globalization with global openness decreasing even before the trade wars initiated
by President Trump, the exit of the UK from the EU, and the trade crunch of the COVID-19
pandemic (van Bergeijk, 2019a; 2021). The increase in imposed sanctions is thus actually
coinciding with a deglobalization phase unlike the upswing of globalization that characterized
the 1990s. Indeed, the almost exponential increase in sanctions impositions creates trade uncer-
tainty that is a strong incentive for firms and countries to reduce international specialization. It is
tempting to conclude that the rise in economic sanctions has reduced the extent of international
worldwide exchange. But it is, of course, equally possible that economic sanctions are a
symptom of the underlying disease of deglobalization that started around 2008/9. If so, that may
offer a structural explanation for the stark increase of sanctions implementation in the 2010s.
Figures 1.2 and 1.3 suggest a composition effect (Figure 1.3 focuses on the economic
domain, i.e., excluding military and other sanctions). As discussed by Gary Hufbauer and
Euijin Jung in Chapter 2 of this Handbook, sanctions innovation enabled the expansion of eco-
nomic sanctions. The analysis by Aleksandra Kirilakha, Gabriel J. Felbermayr, Constantinos
Syropoulos, Erdal Yalcin, and Yoto V. Yotov in Chapter 4 points to a strong growth in travel
sanctions and especially financial sanctions (a doubling over the last two decades). One of the
financial innovations is the use of the SWIFT network that de facto cut off Iranian financial
institutions from financial transactions in 2012, discussed by Sajjad Dizaji in Chapter 18,
but the change actually started much earlier. Dennis Halcoussis, William H. Kaempfer, and
Anton D. Lowenberg in Chapter 7, for example, pinpoint the 2001 Al Qaeda attacks on the
USA as a trigger for weaponizing financial instruments (see also Farrell and Newman, 2019).
600
500
400
300
200
100
0
1950 1960 1970 1980 1990 2000 2010
Other Trade Financial Travel
Note: ‘Other’ comprises, among others, arms and military assistance sanctions.
Source: Calculated from the Global Sanctions Data Base (accessed January 31, 2021, see the Appendix of
Chapter 4 of this Handbook).
Figure 1.2 Development of sanctions impositions, by sanction type (1950–2019)

100%
75%
50%
25%
0%
1950 1960 1970 1980 1990 2000 2010
Trade Financial Travel
Source: Calculated from the Global Sanctions Data Base (accessed January 31, 2021; see the appendix of
Chapter 4 of this Handbook).
Figure 1.3 Share of impositions of trade, financial, and travel sanctions in economic
domains (1950–2019)
But while some types of sanctions have clearly grown comparatively stronger, the increase
in the 2010s was also broadly based as it occurred for every type, as illustrated in Table 1.3.9
Therefore, the underlying trend must go beyond the composition effect.
The contributions to this Handbook indicate several reasons for the increasing numbers on
the ‘market’ for economic sanctions. On the ‘demand side,’ the increase appears to be driven
by the combination of a reduced role of armed conflict resolution and the growing importance
of strategic trade policy considerations, as discussed in Chapter 2 by Gary Hufbauer and Euijin
Jung.10 On the ‘supply side,’ the enhanced efficiency and the reduction of collateral damage
may have helped to increase the number of sanctions over time. The former decreases the
costs for the sender; the latter reduces unintended costs for the target’s population. Chapter 5
by Thomas Biersteker and Zuzana Hudáková details the sanctions reform processes of the
Table 1.3 Average number of sanctions impositions by decade
Trade Financial Travel Other Total

1950s 17 6 6 10 38
1960s 25 16 9 35 85
1970s 36 29 8 46 118
1980s 39 49 10 53 151
1990s 49 77 19 96 241
2000s 51 72 41 115 279
2010s 93 138 83 168 482
Note: The category ‘Other’ comprises, among others, arms and military assistance sanctions.
Source: Calculated from the Global Sanctions Data Base (accessed January 31, 2021; see also Chapter 4 of
this Handbook).

UN, US, and EU sanctions in the 1990s and 2000s when sanctions practitioners were on a
steep learning curve. In the same vein, Bryan Early in Chapter 8 discusses how the process of
implementation and compliance regarding US sanctions has been improved thanks to major
investments in staffing, procedures, communication, and monitoring.
In addition to these underlying drivers that work at the national level, the perceived need to
support global public goods by imposing costs on free-riding behavior is a relatively new ele-
ment.11 This issue may be particularly relevant in the context of 2020 and 2021: The COVID-19
pandemic, global warming, and the proliferation of weapons of mass destruction are global public
bads.12 Their solution requires strengthening of global public goods management. However, this
collective action is complicated by fragmentation of the world economy in the wake of deglobali-
zation (basically, the challenge to US hegemony caused by the rise of China). This situation has
threatened the working of global institutions such as the WTO. This trend is strengthened by the
increasing weight that is being put on nationally defined economic security (van Bergeijk, 2019a).
One of the paradoxes of the increase in the number of sanctions is that the availability
of more observations has not led to scientific agreement, but has rather resulted in greater
diversity of views and findings. This is even true for relationships that were initially seen as
the Tables of the Law of economic sanctions. An example is the finding of Rose (2018) that
sanctions are a non-event in terms of trade impact. Using a gravity model and the TIES data
set, Rose finds that soft power, that is, the potential to apply sanctions, influences trade rather
than their actual implementation. The non-event character is in line with the findings of Bělín
and Hanousek for EU sanctions in Chapter 13 of this Handbook, but contrasts with the research
based on the GSDB data set reported in Part IV of this Handbook by Kohl (Chapter 21) and
Dai, Felbermayr, Kirilakha, Syropoulos, Yalcin, and Yotov (Chapter 22).
1.3 THE ACADEMIC DISCOURSE ON SANCTIONS

EFFECTIVENESS13
At the start of the Millennium, David Baldwin (2000, p. 80) observed that ‘the debate over
whether economic sanctions “work” is mired in scholarly limbo.’ Baldwin was certainly not
the first nor the last to observe the heterogeneity of findings and views. The meta-analysis by
Demena et al. in Chapter 6 of this Handbook documents the inconclusiveness and contradic-
tions in the body of primary studies that relate sanctions success to pre-sanctions trade linkage,
sanctions duration, and pre-sanctions sender–target relations, respectively. As illustrated by
Table 6.2, this is even true for peer reviewed articles that appeared in the leading scientific
journals in the field. Indeed, the post–Second World War literature on economic sanctions can
be characterized by an increasing dispersion and inconclusiveness of reported parameters. This
is certainly not because the literature has not dealt with this issue.
Figure 1.4 illustrates both the growth of research on economic sanctions and the role that
the concepts of ‘failure’ and ‘success’ have always played in the academic debate on economic
sanctions.14 This makes the puzzle that the debate on the effect(iveness) of sanctions has not
been resolved even more relevant. It is worth delving a bit deeper into this issue.
Figure 1.5 provides another first rough characterization of the problem at hand. The numbers
are in percent of the total for economic sanctions (that is: the number represented by the line
in Figure 1.4). Thus, the focus in Figure 1.5 is on the relative importance of concepts rather
than on absolute numbers. Over the post–Second World War period, these shares are stable for

25000
success
failure
20000 effectiveness
threat
15000
10000
5000
0
1950s 1960s 1970s 1980s 1990s 2000s 2010s
Note: ‘Total economic sanctions’ reports the number of results returned for (‘economic sanctions’). For a key
concept (e.g., success) the number of returned results relates to searching for (‘“economic sanctions” success’).
Source: Google Scholar, accessed December 31, 2020.
Figure 1.4 Number of Google Scholar hits for ‘economic sanctions’ and two key concepts
by decade (1950–2019)
100%
75%
50%
25%
0%
1950s 1960s 1970s 1980s 1990s 2000s 2010s
success failure effective

ineffective effectiveness ineffectiveness
Note and source: see Figure 1.1.
Figure 1.5 ‘Ineffective’ and ‘ineffectiveness’ have become much more important attributes
in the sanctions literature share in total economic sanctions (Google Scholar hits for key
concepts by decade, 1950–2019)

90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1950s 1960s 1970s 1980s 1990s 2000s 2010s
average *) punishment threat reward
Note: (*) unweighted average of the shares for success, failure, effective, and effectiveness (reported in Figure 1.5).
Source: see Figure 1.4.
Figure 1.6 The concept of ‘threat’ has always been a common element of the economic
sanctions literature, but ‘punishment’ and ‘reward’ have only gained ground since the start
of the millennium (Google Scholar hits for key concepts by decade, 1950–2019)
‘success,’ ‘failure,’ ‘effective,’ and ‘effectiveness’ (the dotted lines in Figure 1.5). ‘Effective’ and
‘effectiveness’ appear to be a common concept in the sanction debate over the whole period (with
a score that is comparable to ‘failure’ and ‘success’). At the same time, we see that ‘ineffective’
and ‘ineffectiveness’ start from a significantly lower share, and since the 1990s these concepts
have been catching up (an increase of 25 percentage points). This observation illustrates that the
concept of (possible) ineffectiveness of economic sanctions plays an increasingly large role in
the debate. The fact that the concepts of ‘ineffective’ and ‘ineffectiveness’ have become more
frequent attributes in the sanctions debate could reflect a more balanced approach, a mere change
in language, or an underlying empirical trend that establishes ineffectiveness more frequently.
Interestingly, these developments in the discourse on economic sanctions appear not to
have been driven by the introduction of new concepts such as threats (Figure 1.6; explicit con-
sideration of punishment and reward since the 2000s is, however, noteworthy). Neither does
the emergence of ‘smart sanctions’ seem to be a driver. As observed by T. Clifton Morgan,
Navin Bapat, and Yoshiharu Kobayashi in Chapter 3 of this Handbook, “the use of targeted
sanctions has dramatically increased in the 1980s and the 1990s, while its usage fell in the
2000s and [that], surprisingly, a large percentage of sanctions were smart before the 1980s.”
Therefore, the emergence of the idea of ineffective economic sanctions (or the realization this
topic requires an explicit discussion) seems to be a stylized fact of the sanctions discourse.
The bottom line is that ineffectiveness is a common element of the sanctions discourse. In
turn, effectiveness that was generally expected by the introduction of the ‘terrible weapon’ by
the League of Nations (de Fiedorowicz, 1936) is not taken for granted anymore.
It is not uncommon to find that the literature on a topic develops in opposite directions and
that seminal results are contested. According to Goldfarb (1995), the time pattern of findings

1 2 3
Diagram 1.2 The sanctions black box
in economics very often starts with a paper that reports a new and exciting statistically
significant result. Consequently, it initiates a stream of skeptical publications that contest the
original result and, in a later round, new papers contest the contestations, and so on, until the
literature converges. In any emerging scientific field, many findings are ‘preliminary’ and often
contradictory due to the process of finding out the true effect.
One particular problem with the discourse is that economic sanctions could be seen as a con-
tainer in which many parcels fit. At first sight, a common language for the analysis of economic
sanctions would seem to exist. After all, scholars of international relations—independent
of their specific economic, political, or legal background—talk about ‘sanctions’ using the
concepts of the ‘sender’ and the ‘target.’ It is a blessing that the language is the same across
disciplines but, as it happens, every element of the sanctions black box is characterized by
underlying heterogeneity.
Consider the three elements in Diagram 1.2. We start with the sender (1). For most scholars it
is obvious that the sender is a state or an international organization such as the United Nations.
Indeed, all contributors to this Handbook seem to work with this conceptual framework in
mind. This, however, excludes all non-state activities that, with similar aims and instruments
(but without government instruction), disconnect from a target economy. Thus, this shared
framework excludes Non-Governmental Organizations in, for example, the aid industry that
limit development cooperation or universities that reduce academic exchange. It also excludes
consumer boycotts that can be organized or based on informally coordinated fuzzy networks
or that can alternatively be aimed at reducing the target’s economic hardship, for example, by
means of remittances.15 Even when the sender is purely in the state domain it may work via
indirect third-party channels. The point is clear: ‘Sender’ is a very heterogeneous concept, and
this may account for the diversity of findings.
On the right-hand side of Diagram 1.2 we find the target. Sanctions initially used to
be seen as measures by states toward states, to be assessed appropriately at a national
macroeconomic, social, and political level. The development of smart, targeted sanc-
tions against elites, individuals, firms, sectors, facilitators, and constituencies is now,
however, common practice in the design of sanctions measures and the heterogeneity
of targets is, accordingly, reflected and discussed in much detail by the contributions to
this Handbook. Relatedly, sanctions are hybrids and often contain both general as well
as targeted aspects. So, also with respect to targets, the heterogeneity of findings in the
literature could be related to the diversity of the content of the applied concept that may
differ by study.
The central element in Diagram 1.2 can truly be seen as a black box, as it was in the initial
empirical research on success and failure of economic sanctions that by and large relied on
quasi-postulated reduced-form equations without proper consideration of conceptual measure-
ment issues and/or theoretical backing. This Handbook shows that science has already come a
long way in understanding sanction mechanisms as illustrated by the contributions in Part II.

Different mechanisms such as imposition versus threat (Afesorgbor, 2019), actual versus
potential costs (van Bergeijk,1989), sanction risk versus trade uncertainty (Golikova and
Kuznetsov, 2017), or deterministic versus strategic (Tsebelis, 1989) will have different results.
This impacts how the literature perceives the efficacy and efficiency of sanctions policies.
Also, the scope of mechanisms that are considered to be relevant has expanded significantly.
It is increasingly being recognized that soft factors such as culture and institutions also play a
role in negative economic interaction. Driscoll et al. (2010) show the importance of cultural
factors for both the choice to use economic sanctions and the outcome of economic sanctions.
In addition, political aspects have to be taken into consideration. For instance, Early and
Peksen (2020) have recently raised the issue that developments in the informal sector may
be drivers of sanctions outcomes especially in democracies. A related issue is that sanctions
application has changed fundamentally throughout the last quarter of a century. As a result,
research dealing with the previous century may not be relevant in the current context (Early
and Cilizoglu, 2020).
The sharp observer may already have noted that the relationship between sanction and
target is not indicated by an arrow in Diagram 1.2. This is not an omission. Sanctions often
generate counter sanctions like in the EU–Russia tit-for-tat discussed by Bělín and Hanousek
in Chapter 13 of this Handbook. Potential targets, moreover, can reduce the impact of sanc-
tions, diminishing their vulnerability and their dependence on foreign markets and increasing
their own resilience both economically and politically (see, for example, Burlone, 2002 on
institutional efficiency and sanctions impact).
All in all, the consensus is that the naïve view of sanctions (i.e., the assumption that a
sender through imposed costs stimulates a change in the target’s behavior) is too simplistic
to understand the complex interactions. In fact, the conditions of time and place need to
play a stronger role in assessments of sanctions, and there is a firm consensus toward this
conclusion. Also, the recognition that the literature is potentially biased due to the sender-
focused, state-centric interpretation of sanctions as a stand-alone instrument, provides a solid
incentive for new and exciting research agendas (see, for example, Peksen, 2019 and Jones
and Portela, 2020). The consequence is, first, that we need to recognize this heterogeneity
and, second, that case-specific methods may need to be used that cannot yet be applied to
large numbers of sanctions cases. The aim of the field has for too long been to reach a general
conclusion, but this has come at the cost of a deeper understanding of often country-specific
relationships. Using the sanctions target as the unit of observation could enable researchers
to bring much needed details on country/economy-specific characteristics into the picture.
Data on trade structure, production, elasticities, political systems et cetera are available for
countries, but bringing such items into the realm of the traditional large-N studies is not
feasible. The large-N data set is not sufficiently large, and we would soon be left without
degrees of freedom. Country case studies could also include the dynamic development of
political and (socio)economic variables that are missing from our current analysis of success
and failure (Peksen, 2019; Dizaji and van Bergeijk, 2013). In conclusion, we need more case
studies for countries that have become the target of economic sanctions. This will help us to
understand differences and communalities between the cases, and once we have sufficient
country case studies we can attempt to synthesize this research by means of a meta-analysis
or a qualitative comparative analysis. Of course, we cannot predict if this research strategy
will provide a consensus, but it will bring new knowledge and perspectives on the sanctions
process that are currently not available.

1.4 ORGANIZATION OF THE HANDBOOK AND INTRODUCTION

TO THE CHAPTERS
The contributions of this Research Handbook have been organized in four parts. Part I, following
this introductory chapter, deals with data collection that constitutes the basis of modern sanctions
research. Part II deals with sanctions mechanisms and dynamics. Part III analyzes the many
appearances of sanctions, both their manifestations and forms and the guises (or perhaps facades)
that characterize sanctions policies. Part IV investigates the intended and unintended impacts of
economic sanctions. This organization into parts is helpful, but the reader is alerted that certain
themes are common to most if not all contributions. A common thread in the articles is their
forward-looking aspect in providing suggestions for further research. Indeed, this is a valuable
aspect of this Handbook in that it shows the potential for new and challenging research agendas.
1.4.1 Data: The Large-N Data Sets
Part I focuses on the large country (case) level data sets that have become the dominant
methodology in the field, demonstrating the tremendous progress that has been made in data
collection since the publication of the seminal study Economic Sanctions Reconsidered by
Hufbauer and Schott in 1985. The chapter also provides overviews of the empirical literature
based on these data sets, as well as new applications, findings, and links to the recent literature.
Part I starts with a contribution by Gary Hufbauer and Euijin Jung of the Peterson Institute
for International Economics, home to Economic Sanctions Reconsidered that is known in the
field by the initials HO (1st edition by Hufbauer and Schott, published in 1985), HSE (2nd
edition by Hufbauer, Schott, and Elliott, published in 1990), and HSEO (3rd edition with
Oegg as the new co-author, published in 2007). New data sources are still based to a large
extent on this seminal study. Hufbauer and Jung discuss the two decades since the start of the
millennium that are not covered by the 3rd edition of Economic Sanctions Reconsidered and
analyze new weapons, new senders and targets, new goals, and new theories. They also reflect
on the perspective and role of sanctions in a post-Trump, post-COVID-19 world. Emerging
technology has diversified sanctions measures from traditional trade restrictions to financial
restrictions, travel bans, and contract cancellation measures. States and non-state actors have
become senders as well as targets of so-called smart sanctions. A new ‘Cold War’ between the
United States and China has dramatically reshaped the landscape of sanctions by blurring the
line between commercial and political diplomacy.
Chapter 3 by T. Clifton Morgan, Navin Bapat, and Yoshiharu Kobayashi discusses their
TIES (Threat and Imposition of Economic Sanctions) data set that also included sanctions
threats. Those threats were sometimes so credible that they did not need to be implemented
and, in this sense, were very efficient. Launched in 2009, TIES covered the years 1971 to
2000 from a strategic interaction perspective (Morgan et al., 2009). An update was published
a few years later covering the period from 1945 to 2005 (Morgan et al., 2014). The chapter
is particularly useful because the authors frankly discuss data collection and coding issues
and critically evaluate what can and cannot be done with their data set, actually identifying
a number of important questions that cannot be addressed, or addressed well, using the data.
But the glass is half full rather than half empty as illustrated by their overview of studies that
use TIES data. Indeed, the wave of research that was enabled by the availability of this data
set holds promise for future generations of the family of large-N data sets.

Chapter 4 by Aleksandra Kirilakha, Gabriel J. Felbermayr, Constantinos Syropoulos, Erdal

Yalcin, and Yoto V. Yotov presents the recent update of the Global Sanctions Data Base that
increases the original sample by 50 percent and extends the research period by three years
to cover 1950 to 2019, inclusive. The chapter introduces and discusses 383 previously unre-
corded sanctions cases among which 77 emerged during from 2016 to 2019, thus raising the
total of sanctions cases recorded there to 1,105. Their descriptive analysis reveals that quite a
number of sanctions were lifted in 2016. In contrast, 2017 witnessed a substantial increase in
the deployment of new—primarily ‘smart’—sanctions of which more than half were imposed
by the United States. As these sanctions cases have not yet been resolved, their evaluation is
an important issue for future research.
Chapter 5 by Thomas Biersteker and Zuzana Hudáková discusses the Targeted Sanctions
Consortium (TSC) data sets on the UN targeted sanctions imposed since 1991. The motivation
for targeted sanctions is to minimize humanitarian suffering and to cease the practice of making
innocent populations bear the costs of the actions of governments. Biersteker and Hudáková
provide an overview of the historical use and development of the UN sanctions and highlight
some of the main challenges faced by UN sanctions today. They point out that the most
common types of targeted sanctions—asset freezes, travel bans, and arms embargoes—were
all the subject to the different sanctions reform processes of the late 1990s and early 2000s.
The chapter is also important because of its comparison of the initial TSC assessment back
in 2013 and the most recent assessments in the UNSanctionsApp (additionally covering 2014
and 2020), illustrating how different vintages of data sets can be used to show the robustness
of original findings.16
The last chapter in this Part by Binyam A. Demena, Alemayehu S. Reta, Gabriela Benalcazar
Jativa, Patrick B. Kimararungu, and Peter A.G. van Bergeijk offers a fresh perspective on the
empirical literature that analyzes the large-N data set by means of the first meta-analysis of
37 primary studies on determinants of the effectiveness of economic sanctions published over
the years 1985 to 2018. Chapter 6 demonstrates that no consensus has emerged on the impact
of key variables that theoretically determine the success of economic sanctions. Although the
descriptive analysis and weighted averages suggest that the impact of trade linkage, sanctions
duration, and prior relations on sanctions success is significant and conforms to a priori
theoretical expectations, Chapter 6 uncovers significant publication bias in the results. Bias in
this literature increases over time. The implication is that methodological alternatives to the
existing large-N data need to be developed.
1.4.2 Sanctions Mechanisms
The key assumption of all sanctions theory is that a reduction of international economic
exchange will reduce the target’s possibilities for international specialization, and that
the ensuing welfare loss acts as (potential) punitive damage that provides an incentive to
change behavior. The standard economic trade model explains that larger trade linkage
generates larger damage and highlights the importance of substitution to reduce this damage,
especially if the time horizon increases (Kemp, 1964; Renwick, 1981; Frey, 1984; see also
Chapter 6 of this Handbook). This neoclassical model allows for two clear exceptions.
Firstly, sanctions may work as the equivalent of a welfare improving infant industry tariff
as they did during the 1966 UN sanctions against the former Rhodesia (Galtung, 1967).
Secondly, the small country assumption (that is typically being used) is inappropriate for

economies, firms, or industries with enough market power that may actually gain economi-
cally from the imposition of sanctions.
The latter mechanism is in a sense related to the public choice approach to sanctions that is
reviewed in Chapter 7 by Dennis Halcoussis, William H. Kaempfer, and Anton D. Lowenberg.
The public choice approach pioneered by Kaempfer and Lowenberg (1986, 1988, 1992) is one
of the most important economic innovations in sanctions research because it looks inside the
sanctions black box (Diagram 1.2) by recognizing the distributional aspects of sanctions.17
Different (interest) groups of the target’s and the sender’s populations will be hit differ-
ently—both in relative and absolute terms. This brings politics into the economy of sanctions,
also drawing attention to the battle between autocracy and democracy. Chapter 7 reviews the
Kaempfer–Lowenberg public choice approach to sanctions and provides a selected survey of
some of the literature published since 2007, demonstrating its continued importance. Looking
to the future, Chapter 7 suggests that recent reversals of globalization and the rise of protection-
ism could potentially compromise the usefulness of economic sanctions as a policy instrument.
Chapter 8 by Bryan Early focuses on ways to make the sanctions mechanism more effec-
tive and to make the bite stronger. To make sanctions work, sender governments must obtain
the compliance of the parties subject to their sanctions’ jurisdiction and prevent third-party
actors from undercutting the sanctions. Focusing on insights from the United States, the
chapter identifies six complementary strategies for improving the effectiveness of sanctioning
efforts: (i) strengthening sanctions capacity building; (ii) extraterritorial sanctions provision;
(iii) building sanctions coalitions; (iv) robust implementation; (v) enforcement that is strict
and severe for deliberate violators; and (vi) coercing external sanction busters. Early’s analysis
demonstrates that the US strategies made its economic sanctions more effective. He notes that
the policies’ costs as well as the sender’s soft power are substantial, thus implying that smaller
countries or entities would not be able to employ all strategies.
Chapter 9 by Dursun Peksen provides a detailed review of possible effects of economic sanc-
tions on the target’s political stability. The mechanism is complex as the implementation and
threat of economic sanctions may increase political violence, state repression, and leadership
stability in target countries. Substantial evidence exists that foreign economic pressure induces
targeted governments to commit more repression to eliminate any potential threats to their
regimes and that sanctions are likely to trigger more anti-government protests and violence.
Studies also find evidence that sanctions could threaten the survival of democratically elected
leaders while having no discernable effect on the stability of autocracies, except personalist
dictatorships. However, instances also exist where sanctions may be beneficial such as a reduc-
tion in the duration of civil wars and a reduction in the intensity of civil conflict and violence.
Julia Grauvogel, in Chapter 10, examines the so-called internal opposition effect of
international sanctions. She argues that anti-regime mobilization in countries under sanctions
constitutes a key transmission belt from external pressure to domestic change. Previous
large-N studies have tended to highlight a single mechanism that links sanctions to domestic
protest, such as economic deprivation or political opportunities, or to see sanctions as signals
that legitimize anti-regime activism. In order to avoid the pitfalls of qualitative research on
only a few high-profile cases, Chapter 10 demonstrates the method of Qualitative Comparative
Analysis (QCA) covering 75 sanctions cases and finding that the simultaneous interplay of
economic deprivation, political opportunities and signaling accounts for opposition mobiliza-
tion under sanctions. QCA clearly expands the toolkit of sanctions researchers, but Grauvogel
also points out the limitations and the need to conduct robustness checks.

The sanctions mechanism is not limited to the internal working of economic pressure; the
external context is also very important, of course. Baran Han, in Chapter 11, provides both a
game-theoretic analysis to explore the mechanism of secondary sanctions (legal grounds to
punish third parties) as well as an application based on the case of the US sanctions against
North Korea in the years 2016 and 2017. This game-theoretic framework captures the sanc-
tions dynamics among a leading sender, target, and a third party with weapons technology
advancing over time. The target’s opportunity costs of the technology (that is the marginal
costs of giving up the weapon innovations) and the third party’s voluntary sanctions level
determine the extent to which the target complies. The case study details the different channels
through which the US secondary sanctions, together with the UNSC Resolutions, coerced
China to ratchet up its sanctions level against North Korea. Ultimately, this contributed to
getting North Korea to the negotiation table in 2019. This chapter provides both an analysis
of the potential usefulness of secondary sanctions in so-called deadlock conflicts and a best
practice illustration of the building blocks of applied game-theoretic modeling.
Michal Onderco and Reinout A. van der Veer, in Chapter 12, focus on the role of firms.
As sanctions are often imposed by states, state-centric data environments dominate research,
eschewing firm-level analysis. Yet, firms are crucial actors for understanding sanctions.
Scholarship has recently started to focus on the role of private actors (such as firms, banks, or
insurance companies). Chapter 18 in this Handbook by Sajjad Faraji Dizaji is an example.18
Onderco and van der Veer outline, theoretically, why firms matter, and how the study of
firms fits the existing scholarship on sanctions developed in the state-centric model. The
chapter discusses many methodological challenges associated with studying the role of private
companies in relation to sanctions (both qualitatively and quantitatively) and with considering
large-N census data surveys as well as small-N research strategies. Again, the implication is
that methodological alternatives to the existing large-N data need to be further developed.
1.4.3 Appearances and Imaging
Sanctions come in different forms. New forms of sanctions have emerged covering, for
example, travel, finance, and increasingly individuals. As will become clear, some measures
are posed as sanctions but are de facto symbolic, while other limitations on international
economic exchange that are currently being applied remain hidden and have only recently been
recognized as sanctions in the literature.
An important issue is that all trade restrictions cause costs to both the sender and the target.
The sender may therefore want to design the sanctions measures in such a way that the loss
for its own businesses is minimized. In practice, this means that the sanctions will be less
effective. Chapter 13 by Matěj Bělín and Jan Hanousek focuses on this issue. They analyze
the different impacts of the 2014 EU sanctions against Russia and the Russian countersanc-
tions providing two methodological innovations: (i) a hybrid approach combining VAR and
difference-in-difference modeling to test the structural breaks at the time of imposition of
economic sanctions; and (b) out of sample predictions to estimate the loss of trade to the
EU and to Russia. Using three different estimation techniques, they show that the 2014 EU
sanctions on exports to Russia were enforced selectively causing only minor disruptions. The
EU sanctions are keeping up appearances and boil down to mere gestures according to their
findings. In contrast, the Russian countersanctions against imports from the EU caused major
losses for the EU trade, indicating comprehensive enforcement. Chapter 13 argues that these

results are consistent with the theoretical literature which emphasizes the difficulty of impos-
ing sanctions on exports and the potential value of sanctions as a signaling device, rather than
an economic weapon.
Chapter 14 by Clara Portela investigates a hidden sanction. The international protection of
human rights and labor standards finds reflection in the General Scheme of Preferences (GSP) that
is subject to a suspension clause in the event of major breaches. Although the largest markets have
repeatedly suspended trade preferences for developing countries on political grounds, this practice
is seldom the object of scholarly inquiry. However, it constitutes a key instrument in the toolbox
for the protection of human rights and labor standards worldwide, with a modest but nevertheless
growing activation record. Reviewing suspension practice and associated controversies, Portela
concludes that GSP withdrawals constitute economic sanctions and function as such.
Chapter 15 by Maarten Smeets focuses on the tension between the use of economic
sanctions as a trade policy instrument to defend national security interests, the fundamental
objectives, and the principles of the WTO. The use of economic sanctions is covered under the
security exceptions in the WTO, more specifically Article XXI, ensuring that WTO Members
can defend their legitimate national security interests, but has generally escaped scrutiny, as
‘self-judgment’ by Members has been the general rule as illustrated by this chapter’s detailed
overview of Article XXI applications under GATT and WTO governance. Recently, the reign
of self-judgment, however, was challenged, when WTO judges reviewed the legality of meas-
ures taken by the Russian Federation against Ukraine, thus, creating a precedent in reviewing
the conditions under which Article XXI can be invoked.
Chapter 16 by Raul Caruso focuses on the costs and benefits of (shifting between) negative
and positive sanctions. Three aspects appear to be crucial. First, a proper consideration of
interest and social groups explains the failure of comprehensive negative sanctions, the suc-
cess of smart sanctions and—more interestingly—the potential success of positive sanctions.
Second, the existence (or the lack) of some institutional arrangement between states explains
the failure of negative sanctions as well as the potential success of positive sanctions. Third,
the credibility of threats and promises that are sender-dependent. On the first aspect, the lack
of institutional coordination explains why sanctions-busting cannot be avoided, whereas the
existence of an institutional setting favors a more peaceful trade integration associated with
a reduction in the military capability of rival parties. Perceptions, time, and conditionality
influence positive and negative sanctions differently. In particular, the costs of implementation
in combination with the prospects for success (and possible side effects, after-effects, and
efficacy) imply that reward and punishment are not merely two sides of the same coin. From
a policy perspective, this analytical distinction has the additional advantage that it enables us
to give a better, more comprehensive analysis of the full range of policy options, which may
also take the questions of legitimacy and basic human rights into account.
The final chapter of Part III deals with an innovative way to visualize the complex strategic
interaction during sanction cases. Chapter 17 by Bader Sabtan, D. Marc Kilgour, and Rami
Kinsara introduces GMCR (Graph Model for Conflict Resolution) and applies it to the 2018
Iran nuclear deal. GMCR is a computer-based system for modeling and analysis of strategic
conflicts that enables a user to understand what can be achieved, given the constraints faced by
the various decision-makers. Since GMCR makes it easy to visualize conflicts, it serves both
an educational and analytical purpose in concrete policy situations. Visualization may thus
increase the understanding of conflicts and possible outcomes with the potential improvement
of policymaking regarding the use of economic sanctions.

1.4.4 Economic Impacts
The focus of research over recent decades has shifted from the success and failure of sanctions
to their impacts. Impact is to be understood broadly: the concept covers the intended and
unintended influence on the economy. Part IV provides a specimen of new research in this
strand of the literature. It covers the intended impact on financial and trade sanctions (both
products and services) as well as collateral damage in the economy (in particular, the impact
on FDI) and health (specifically food safety).
Part IV starts with an investigation of the target’s banking efficiency, a new topic in the eco-
nomic sanctions literature.19 Chapter 18 by Sajjad Faraji Dizaji investigates the performance of
Iranian banks during the different sanctions episodes and partial lifting of financial sanctions
on Iranian banks’ costs and efficiency scores. Deploying a stochastic frontier analysis for
12 Iranian banks over the period of 2006 to 2018, Dizaji finds that the intensity of sanctions is
positively associated with increasing costs for Iranian banks. Cost efficiency scores of Iranian
banks show on average a decreasing trend. The estimated cost functions make a differentia-
tion possible between commercial (private) banks and development and state-owned banks.
Moreover, the results show that although the Joint Comprehensive Plan of Action (JCPOA),
a.k.a. the Iran nuclear deal, has significantly decreased the cost efficiencies of Iranian banks,
it was only effective during the initial imposition of SWIFT sanctions but not after the US
withdrawal.
The point of departure of Chapter 19 by C. Michael Hall and Siamak Seyfi is the increasing
importance of tourism for employment, government revenue, and foreign exchange earnings.
Tourism is also one of the sectors most vulnerable to economic sanctions. Tourism, defined as
short-term voluntary mobility, includes not just leisure/holiday travel, but also the movement
of a country’s diaspora as well as business connectivity. Sanctions can affect tourism directly
through the imposition of limitations on individual mobility and can also substantially affect
investment in the sector. Indirectly, sanctions can affect industry access to equipment and
technology and a destination’s image. Hall and Seyfi discuss two issues that are overlooked:
reverse causality and the target’s coping strategies resulting in a ‘resistive economy.’ The
chapter addresses these issues in relation to Cuba, Iran, Turkey, and Russia.
Chapter 20 by Irina Mirkina investigates the impact of sanctions on FDI. Some theories
postulate that sanctions increase risks, costs, and uncertainty for investors; other theoretical
accounts predict that businesses in an increasingly globalized world use foreign investment to
deflect the negative effects of sanctions. As a result, foreign investment could be an important
reason why sanctions do not work as expected. Due to the conflict of interests between the
political goals of governments and the economic goals of multinational companies, a growing
number of sanctions studies focus on a complex interplay between FDI and sanctions. An
empirical analysis of the effect of sanctions on FDI using a sample of 177 countries over the
period from 1970 to 2018 confirms that sanctions do not have a statistically significant effect
on FDI; however, there is a sizable heterogeneity across the target countries. The chapter advo-
cates the need to use bias-corrected estimators in sanctions studies to deal with heterogeneity,
non-stationarity, and cross-sectional correlation.
Tristan Kohl, in Chapter 21, investigates what happens to trade at the end of sanctions
episodes. Does lifting sanctions cause trade to rebound? If so, how long does such a restoration
take? Looking at the United States over the period from 1989 to 2016, Kohl finds that the
US-imposed trade sanctions have a short-term negative effect of 30–40 percent on US trade

flows to and from targets (relative to non-targets). Financial sanctions decrease US imports by
35 percent. There is no evidence of a rebound effect. Instead, imports from former targets con-
tinue to decline by up to 70 percent relative to non-targets up to 4 years after a trade imposition
has been lifted. Moreover, a non-trivial 7 to 14 percent of US exports is deflected to targets’
geographic neighbors during trade sanctions, pointing to exporters’ agility in reorganizing
regional supply chains and/or ‘sanctions-busting’ behavior.
Chapter 22 by Mian Dai, Gabriel J. Felbermayr, Aleksandra Kirilakha, Constantinos
Syropoulos, Erdal Yalcin, and Yoto V. Yotov uses a state-of-the-art gravity trade model to
investigate the trade impact of sanctions over time. In addition to a detailed discussion regard-
ing the application of the gravity model with a focus on the impact of sanctions on trade,
Chapter 22 deals with the years 1950 to 2016, providing both the longest and most up-to-date
empirical evaluation of sanctions. The contemporaneous effects of sanctions on trade are large,
negative, and statistically significant with anticipatory effects prior to the official imposition
of sanctions. However, the authors also find negative and significant post-sanction effects,
which disappear gradually approximately eight years after the lifting of sanctions. Importantly,
the strength of the negative impact of sanctions tends to rise with the duration of the time that
sanctions are in force. These findings have an important message well beyond the specific field
of economic sanctions: The variation in internationalization due to sanctions (and their lifting)
helps us to better understand the benefits and costs of opening up an economy.
Chapter 23 by Sylvanus Kwaku Afesorgbor focuses on an unintended consequence, namely
the sanctions exacerbating the target’s state of food insecurity. Afesorgbor analyzes the impact on
different measures of food security for 66 countries in the period from 1990 to 2014 and shows
that the imposition of sanctions hurts food security. Sanctions significantly increase the composi-
tion of the global hunger index and also adversely affect the availability and stability dimensions
of food security. In addition, Chapter 23 reports that the simultaneous application of financial and
trade sanctions increases the negative impact on food security compared to their separate use.
The final chapter of this Handbook thus uncovers a negative trade-off between Sustainable
Development Goals by highlighting the negative impact on SDG 2 to ‘End hunger.’ Sanctions
are often implemented with the intention of strengthening and promoting ‘peaceful and
inclusive societies for sustainable development’ (SDG 16) and the reduction of human rights
violations provides a motivation in terms of the global social contract of the SDGs. By
their very design, sanctions carry a negative impact on economic growth and employment
(SDG 8).20 The negative trade-off on SDGs appears to be a general characteristic.21 The lens
of the SDGs can provide a new framework for policymakers and researchers to investigate the
costs and benefits of economic sanctions and to see their success and failure from a different
angle: not from a national but from a global perspective. This will provide new recognition
of the trade-offs between politics and economics, building on the trade-offs and uncertainties
identified in this Handbook. An important issue, however, is the contradictions regarding those
trade-offs that are described in the literature.
1.5 WHAT NEXT?
It is not uncommon that the literature on a topic periodically evolves in opposite directions, and
that seminal results are contested. In any new strand, many findings are ‘preliminary’ and often

contradictory due to the process of scientific discovery. Some strands are dead-ends but others
become new highways. The field of economic sanctions, however, would seem to contradict
the ‘law’ that new results drive out old results until a new consensus emerges, as the literature
does not appear to converge.
Bias occurs in a literature because researchers typically are intrinsically motivated. Economic
sanctions are applied to a great variety of issues, including adherence to human rights, and have—
as all economic activities—external effects. Obviously, economic sanctions are applied in a con-
text of international conflict with different impacts on sender(s) and target(s). For some, sanctions
are an alternative to all-out war. Also, the tension between sanctions and free trade is a relevant
issue. All in all, sanctions have a high societal and political relevance, and therefore, researchers
could be (explicitly or implicitly) driven by their ideals or ideologies to report results that fit their
world view, both in terms of problem identification and solutions, as well as instruments (and,
importantly, may ignore results that contradict their view of the world). If so, political cycles and
geopolitics to a large extent could explain the lack of convergence and absence of a consensus. The
process may also be distorted by publication bias typically introduced into the publication process
by the selection of particular results. Firstly, editors and referees prefer convincing papers and, too
often, they look for papers with large and highly significant coefficients. It is, thus, more difficult
to publish less significant findings, and this distorts what we see published in the journals. In the
same vein, it is easier to publish a paper that contradicts rather than confirms existing knowledge.
Confirmation tells us something that ‘we already know.’ The findings of the meta-analysis of
quantitative sanctions research by Demena et al. in Chapter 6 are in a sense encouraging as they do
not find evidence that the problem is related to the peer review process per se or to the national (US
versus non-US) and scientific (Political Science versus Economics) background of researchers.
Still, the increasing bias is a clear concern that gives a reason to rethink the dominant methodology
based on large-N data collections (Peksen 2019). So, what to do?
There is a clear demand for new ways of looking at the goals, (in)effectiveness, and impact
of economic sanctions (see, for example, Peksen 2019; van Bergeijk 2019b; von Soest 2019;
Early and Cilizoglu, 2020; and Jones and Portela, 2020). The value added of this Handbook
is that it is as much about sanctions research as it is about economic sanctions per se, so
that we can glean where the literature can be strengthened: a revival of country studies
and case studies. Using the sanctions target (this can be a country, a population, a region,
or an elite) as the unit of observation will enable researchers to bring much needed details
into the picture. Detailed data on trade structure, production, elasticities, political systems,
resilience, et cetera are available. It definitely can be developed for cases, but bringing such
items into the realm of the traditional large-N studies is not yet feasible. Our large-N is not
sufficiently large because we typically have many missing observations in cross-sectional
and panel research and a great many explanatory variables. As a result, we end up being left
without degrees of freedom. Country case studies are very useful to develop new methods, as
shown by many contributions to this Handbook. They provide us with a unique opportunity
to understand the dynamic development of political and (socio)economic variables (such as
GDP, inflation, and debt) that is missing from the current analysis of economic sanctions.
Once we have sufficient country studies, new methodologies such as qualitative com-
parative analysis and meta-regression analysis will help us to understand differences and
communalities between the cases. Of course, we cannot predict if this research strategy will
provide a clear consensus, but it will bring new knowledge on the sanction process that is
currently not available.

NOTES
1. Comments by Gina Ledda, Clara Portela, Zuzana Hudáková, Sylvanus Afesorgbor, and Ksenia Anisimova are
gratefully acknowledged.
2. Balanced and constructive reviews include Bull (1994) and Drury (1998).
3. The gravity model is a well-tested, well-established trade model that has often been used at the interface of eco-
nomics and politics (van Bergeijk and Brakman, 2010).
4. See van Bergeijk and Lazzaroni (2015) for a discussion of the strengths and weaknesses of meta-analysis and
traditional narrative review of literature.
5. This project started with an invitation by Caroline Kracunas of Edward Elgar Publishing Inc. in early 2019 and,
while originally planned to appear in 2020, suffered delays due to the outbreak of COVID-19. All chapters were
peer-reviewed.
6. Chapters 3 and 7 discuss the use of sanctions by the Trump administration to some extent, and Chapter 4 provides
a first empirical evaluation.
7. In addition to this structural geoeconomic transformation, some trends were recognizable: the proliferation of
weapons of mass destruction, the greening of trade issues, and the potential for the protectionist use of sanctions
suggested that demand for sanctions would increase (van Bergeijk 1995).
8. See Chapter 2 of this Handbook by Hufbauer and Jung, and van Bergeijk (2014).
9. See, for a contrasting opinion, Weber and Schneider (2020), who use their EUSANCT data set to argue that neither
the US nor not the overall success of sanctions have grown from 1989 to 2015.
10. See also Aggarwal and Reddie (2020) on the New Economic Statecraft approach.
11. See, for example, Cirone and Urpelainen (2013) on the use of sanctions to support global environmental policies.
12. Some, like Caruso (2020), point out the emergence of a new problem emerging with the rise of authoritarianism
and (armed) conflicts threatening world peace.
13. This section is partially based on van Bergeijk (2020).
14. Figure 1.4 provides an (admittedly rough and mechanic, but still useful) characterization of the post–Second
World War literature. Based on my own understanding of the literature that guides the choice of relevant concepts
that characterize the sanctions debate, this section can be seen as a first step in discourse analysis (cf. Hsieh and
Shannon, 2005). The figure uses Google Scholar as a source because it also covers books that have always been
and continue to be important academic outlets for the topic of economic sanctions as well as the gray literature of
policy documents and working papers, which is appropriate for a topic like economic sanctions with significant
societal impact and the need for evidence-based policymaking.
15. See Grosso and Smith (2005) and Basu and Zarghamee (2009) on consumer boycotts.
16. See van Bergeijk and Siddiquee (2017) with respect to the different vintages of Economic Sanctions Reconsidered
and Chapter 20 by Irina Mirkina that provides a comparative analysis of TIES and GSDB data.
17. A similar approach was pioneered in the field of International Relations by Kirshner (1997).
18. See also Crozet et al. (2020) on export behavior toward targeted nations and Gullstrand (2020) on Swedish firms
in the wake of the Crimean Crisis and their decisions at the product level and on all markets, including the national
one.
19. Performance of stock markets of countries targeted by sanctions has recently been investigated by Biglaiser and
Lektzian (2020) who analyzed monthly market data for 66 countries from 1990 to 2005 and found a strong nega-
tive impact for ‘fresh’ targets.
20. SDG 8 is one of the strongest SDG-hubs with many connections to other goals (Le Blanc, 2015).
21. Other basic rights may be violated by the application of economic sanctions. Sanctions tend to increase income
inequality (Afesorgbor and Mahadevan, 2016) and thus, a negative trade-off also exists with SDG 10 (reduction
of inequality). A potentially negative trade-off also exists for such diverse areas as SDG 5 (gender equality; see
for example, Drury and Peksen, 2014), SDG 3 (health, see for example, Gutmann et al., 2021) and SDG 13–15
(environment, see Fu et al., 2020). The debate about the sign and significance is still ongoing (see Gutmann et al.,
2020 for an overview) and research regarding the impact on some SDGs is still in an early phase (for example,
SDG 4 ‘Ensure inclusive and equitable quality education and promote life-long learning opportunities for all’;
see Hwami, 2021).
REFERENCES
Afesorgbor, S.K., 2019, ‘The impact of economic sanctions on international trade: How do threatened sanctions
compare with imposed sanctions?’ European Journal of Political Economy, 56, pp. 11–26.
Afesorgbor, S.K., 2021, ‘Sanctioned to starve? The impact of economic sanctions on food security in targeted states’
in: P.A.G. van Bergeijk (ed.), Research Handbook on Economic Sanctions, Edward Elgar, Cheltenham, Chapter 23.

Afesorgbor, S.K. and R. Mahadevan, 2016, ‘The impact of economic sanctions on income inequality of target states,’
World Development, 83, pp. 1–11.
Aggarwal, V.K. and A.W. Reddie, 2020, ‘New economic statecraft: Industrial policy in an era of strategic competi-
tion’, Issues & Studies, 56 (2), doi: https://doi.org/10.1142/S1013251120400068.
Anderson, J.E. et al., 2018, ‘GEPPML: General equilibrium analysis with PPML’, The World Economy, 41 (10),
pp. 2750–82.
Baldwin, D.A., 2000, ‘The sanctions debate and the logic of choice,’ International Security, 24 (3), pp. 80–107.
Basu, K. and H. Zarghamee, 2009, ‘Is product boycott a good idea for controlling child labor? A theoretical investiga-
tion,’ Journal of Development Economics, 88 (2), pp. 217–20.
Bělín, M. and J. Hanousek, ‘Imposing sanctions versus posing in sanctioners’ clothes’ in: P.A.G. van Bergeijk (ed.),
Research Handbook on Economic Sanctions, Edward Elgar, Cheltenham, Chapter 13.
Biersteker, T., S. Eckert, M. Tourinho, and Z. Hudáková, 2018, ‘UN targeted sanctions datasets (1991–2013),’ Journal
of Peace Research, 55 (3), pp. 404–12.
Biersteker, T. and Z. Hudáková, 2021, ‘UN targeted sanctions: Historical development and current challenges’ in:
P.A.G. van Bergeijk (ed.), Research Handbook on Economic Sanctions, Edward Elgar, Cheltenham, Chapter 5.
Biglaiser, G. and D. Lektzian, 2020, ‘The effects of economic sanctions on targeted countries’ stock markets,’
International Interactions, 46 (4), doi: 10.1080/03050629.2020.176577.
Bull, H., 1984, ‘Economic Sanctions and Foreign Policy,’ The World Economy, 7 (1), pp. 218–22.
Burlone, J.L.B., 2002, ‘Economic sanctions: The institutional factor,’ Canadian Journal of Development Studies, 23
(1), pp. 7–46.
Caruso, R., 2003, ‘The impact of international economic sanctions on trade: An empirical analysis,’ Peace Economics,
Peace Science and Public Policy, 9 (2), Article 1, doi: 10.2202/1554-8597.1061.
Caruso, R., 2020, ‘What post COVID-19? Avoiding a «twenty-first century general crisis»,’ Peace Economics, Peace
Science and Public Policy, doi: 10.1515/peps-2020-9013.
Caruso, R., 2021, ‘Shifting from negative to positive sanctions’ in: P.A.G. van Bergeijk (ed.), Research Handbook on
Economic Sanctions, Edward Elgar, Cheltenham, Chapter 16.
Cirone, A.E. and J. Urpelainen, 2013, ‘Trade sanctions in international environmental policy: Deterring or encourag-
ing free riding?’ Conflict Management and Peace Science, 30 (4), pp. 309–34.
Cortright, D., et al., 2000, The Sanctions Decade: Assessing UN Strategies in the 1990s, Lynne Rienner Publishers: Boulder.
Crozet, M., et al., 2020, Worth the pain? Firms’ exporting behavior to countries under sanctions, Kiel Working Paper
2160, Kiel Institute for the World Economy (IfW): Kiel.
Dai, M., G.J. Felbermayr, A. Kirilakha, C. Syropoulos, E. Yalcin, and Y.V. Yotov, 2021, ‘Timing the impact of
sanctions on trade’ in: P.A.G. van Bergeijk (ed.), Research Handbook on Economic Sanctions, Edward Elgar,
Cheltenham, Chapter 22.
De Fiedorowicz, G., 1936, ‘Historical survey of the application of sanctions,’ Transactions of the Grotius Society,
22, pp. 117–31.
Demena, B.A., A.S. Reta, G. Benalcazar Jativa, P.B. Kimararungu, and P.A.G. van Bergeijk, 2021, ‘Publication
bias of economic sanction research: A meta-analysis of the impact of trade-linkage, duration and prior relations
on sanction success’ in: P.A.G. van Bergeijk (ed.), Research Handbook on Economic Sanctions, Edward Elgar,
Dizaji, S.F., 2021, ‘The impact of sanctions on the banking system: New evidence from Iran’ in: P.A.G. van Bergeijk
(ed.), Research Handbook on Economic Sanctions, Edward Elgar, Cheltenham, Chapter 18.
Dizaji, S.F. and P.A.G. van Bergeijk, 2013, ‘Potential early phase success and ultimate failure of economic sanctions:
A VAR approach with an application to Iran,’ Journal of Peace Research, 50 (6), pp. 721–36.
Driscoll, D., D. Halcoussis, and A.D. Lowenberg, 2010, ‘Economic sanctions and culture,’ Defense and Peace
Economics, 22 (4), pp. 423–48.
Drury, A.C., 1998, ‘Revisiting economic sanctions reconsidered,’ Journal of Peace Research, 35 (4), pp. 497–509.
Drury, A.C. and D. Peksen, 2014, ‘Women and economic statecraft: The negative impact international economic
sanctions visit on women,’ European Journal of International Relations, 20 (2), pp. 463–90.
Early, B.R., 2021, ‘Making sanctions work: Promoting compliance, punishing violations, and discouraging sanctions
busting’ in: P.A.G. van Bergeijk (ed.), Research Handbook on Economic Sanctions, Edward Elgar, Cheltenham,
Chapter 8.
Early, B.R., and M. Cilizoglu, 2020, ‘Economic sanctions in flux: Enduring challenges, new policies, and defining the
future research agenda,’ International Studies Perspectives, 21 (4), pp. 438–77.
Early, B.R., and D. Peksen, 2020, ‘Shadow economies and the success of economic sanctions: Explaining why
democratic targets are disadvantaged,’ Foreign Policy Analysis, 16 (3), pp. 353–72.
Farrell, H. and A.L. Newman, 2019, ‘Weaponized interdependence: How global economic networks shape state
coercion,’ International Security, 44 (1), pp. 42–79.
Felbermayr, G., A. Kirilakha, C. Syropoulos, E. Yalcin, and Y.V. Yotov, 2020, ‘The global sanctions data base,’
European Economic Review, 129, doi: 10.1016/j.euroecorev.2020.103561.
Frey, B.S., 1984, International Political Economics, Basil Blackwell: Oxford.

Fu, Q., et al., 2020, ‘The impact of international sanctions on environmental performance,’ Science of the Total
Environment, 745, doi: 10.1016/j.scitotenv.2020.141007.
Galtung, J., 1967, ‘On the effects of international economic sanctions, with examples from the case of Rhodesia,’
World Politics, 19 (3), pp. 378–416.
Goldfarb, R.S., 1995, ‘The economist-as-audience needs a methodology of plausible inference,’ Journal of Economic
Methodology, 2 (2), pp. 201–22.
Golikova, V. and B. Kuznetsov, 2017, ‘Perception of risks associated with economic sanctions: The case of Russian
manufacturing,’ Post-Soviet Affairs, 33 (1), pp. 49–62.
Grauvogel, J., 2021, ‘The internal opposition effect of international Sanctions: Insights from a qualitative comparative
analysis’ in: P.A.G. van Bergeijk (ed.), Research Handbook on Economic Sanctions, Edward Elgar, Cheltenham,
Chapter 10.
Grosso, J.L. and T. Smith, 2005, ‘From Lord Boycott to Mickey Mouse; A classification model to analyse the impact
of consumer boycotts around the world,’ European Journal of Scientific Research, 9, pp. 51–7.
Gullstrand, J., 2020, ‘What goes around comes around: The effects of sanctions on Swedish firms in the wake of the
Ukraine crisis,’ The World Economy, 43 (9), pp. 2315–42.
Gutmann, J. et al., 2020, ‘Precision-guided or blunt? The effects of US economic sanctions on human rights,’ Public
Choice, 185 (1), pp. 161–82.
Gutmann, J. et al., 2021, ‘Sanctioned to death? The impact of economic sanctions on life expectancy and its gender
gap,’ Journal of Development Studies, 57 (1), pp. 139–62.
Halcoussis, D., W. Kaempfer, and A.D. Lowenberg, 2021, ‘The public choice approach to economic sanctions:
Retrospect and prospect’ in: P.A.G. van Bergeijk (ed.), Research Handbook on Economic Sanctions, Edward Elgar,
Hall, C.M. and S. Seyfi, 2021, ‘Tourism and sanctions’ in: P.A.G. van Bergeijk (ed.), Research Handbook on Economic
Sanctions, Edward Elgar, Cheltenham, Chapter 19.
Han, B., 2021, ‘Secondary sanction mechanism revisited: The case of US sanctions against North Korea’ in: P.A.G.
van Bergeijk (ed.), Research Handbook on Economic Sanctions, Edward Elgar, Cheltenham, Chapter 11.
Hsieh, H.-F., and S.E. Shannon, 2005, ‘Three approaches to qualitative content analysis,’ Qualitative Health Research,
15 (9), pp. 1277–88.
Hufbauer, G.C. and E. Jung, 2020, ‘What’s new in economic sanctions?’ European Economic Review, doi: 10.1016/j
.euroecorev.2020.103572.
Hufbauer, G.C. and E. Jung, 2021, ‘Economic sanctions in the 21st century’ in: P.A.G. van Bergeijk (ed.), Research
Handbook on Economic Sanctions, Edward Elgar, Cheltenham, Chapter 2.
Hufbauer, G.C. and J.J. Schott, 1985, Economic Sanctions Reconsidered. History and Current Policy, Peterson
Institute: Washington DC.
Hufbauer, G.C., J.J. Schott, and K.A. Elliott, 1990, Economic Sanctions Reconsidered: History and Current Policy
(2nd edn), Peterson Institute: Washington DC.
Hufbauer, G.C., J.J. Schott, K.A. Elliott, and B. Oegg, 2007, Economic Sanctions Reconsidered: History and Current
Policy (3rd edn), Institute for International Economics, Washington DC.
Hwami, M., 2021, ‘A comparative scoping review of the impact of international economic sanctions on education,’
Compare: A Journal of Comparative and International Education, doi: 10.1080/03057925.2020.1846120.
Jones, L. and C. Portela, 2020, ‘Evaluating the success of international sanctions: A new research agenda,’ Revista
CIDOB d’Afers Internacionals, 125, pp. 39–60.
Kaempfer, W.H. and A.D. Lowenberg, 1986, ‘A model of the political economy of international investment sanctions:
The case of South Africa,’ Kyklos, 39 (3), pp. 377–96.
Kaempfer, W.H. and A.D. Lowenberg, 1988, ‘The theory of international economic sanctions: A public choice
approach,’ American Economic Review, 78 (4), pp. 768–93.
Kaempfer, W.H. and A.D. Lowenberg, 1992, International Economic Sanctions: A Public Choice Perspective,
Westview Press: Boulder, CO.
Kemp, M.C., 1964, The Pure Theory of International Trade, Prentice Hall, Englewood Cliffs.
Kirilakha, A., G.J. Felbermayr, C. Syropoulos, E. Yalcin, and Y.V. Yotov, 2021, ‘The global sanctions data base:
An update to include the years of the Trump presidency’ in: P.A.G. van Bergeijk (ed.), Research Handbook on
Kirshner, J., 1997, ‘The microfoundations of economic sanctions,’ Security Studies, 6 (3), pp. 32–64.
Kohl, T., 2021, ‘In and out of the penalty box: U.S. sanctions and their effects on international trade’ in: P.A.G. van
Bergeijk (ed.), Research Handbook on Economic Sanctions, Edward Elgar, Cheltenham, Chapter 21.
Le Blanc, D., 2015, Towards integration at last? The sustainable development goals as a network of targets,
Sustainable Development, 23, pp. 176–87.
Meijerink, G. et al., 2020, ‘Covid-19 and world merchandise trade: Unexpected resilience,’ October 2, 2020, available
at https://voxeu.org/article/covid-19-and-world-merchandise-trade.
Mirkina, I., 2021, ‘FDI and sanctions’ in: P.A.G. van Bergeijk (ed.), Research Handbook on Economic Sanctions,
Edward Elgar, Cheltenham, Chapter 20.

Morgan T.C., N.A. Bapat, and V. Krustev, 2009, ‘The threat and imposition of sanctions, 1971–2000’, Conflict
Management and Peace Science, 26, pp. 92–110.
Morgan, T.C., N. Bapat, and Y. Kobayashi, 2014, ‘Threat and imposition of economic sanctions 1945–2005: Updating
the TIES dataset,’ Conflict Management and Peace Science, 31 (5), pp. 541–58.
Morgan, T.C., N. Bapat, and Y. Kobayashi, 2021, ‘The threat and imposition of economic sanctions data project:
A retrospective’ in: P.A.G. van Bergeijk (ed.), Research Handbook on Economic Sanctions, Edward Elgar,
Nitsch, V. and T. Besedes̆, 2019, Disrupted Economic Relationships: Disasters, Sanctions, Dissolutions, MIT:
Cambridge, MA.
Onderco, M. and R. van der Veer, 2021, ‘Researching firms and sanctions—Theoretical and methodological consid-
erations’ in: P.A.G. van Bergeijk (ed.), Research Handbook on Economic Sanctions, Edward Elgar, Cheltenham,
Chapter 12.
Peksen, D., 2019, ‘When do imposed economic sanctions work? A critical review of the sanctions effectiveness
literature,’ Defense and Peace Economics, 30 (6), pp. 634–47.
Peksen, D., 2021, ‘Economic sanctions and political stability in target countries’ in: P.A.G. van Bergeijk (ed.),
Research Handbook on Economic Sanctions, Edward Elgar, Cheltenham, Chapter 9.
Portela, C., 2021, ‘Trade preference suspensions as economic sanctions’ in: P.A.G. van Bergeijk (ed.), Research
Renwick, R., 1981, Economic Sanctions, Center for International Affairs, Harvard University: Cambridge, MA.
Rose, A.K., 2018, ‘Soft power, sanctions and exports: checking the BS in BDS’ in: P.A.G. van Bergeijk and S.J.V.
Moons (eds.), Research Handbook on Economic Diplomacy, Edward Elgar, Cheltenham, pp. 241–57.
Sabtan, B., D.M. Kilgour, and R. Kinsara, 2021, ‘Economic sanctions within the graph model for conflict resolution’
Smeets, M., 1990, ‘Economic sanctions against Iraq: The ideal case,’ Journal of World Trade, 24 (6), pp. 105–20.
Smeets, M., 2021, ‘Economic sanctions and the WTO’ in: P.A.G. van Bergeijk (ed.), Research Handbook on Economic
Sanctions, Edward Elgar, Cheltenham, Chapter 15.
Tsebelis, G., 1989, ‘The abuse of probability in political analysis: The Robinson Crusoe fallacy’, American Political
Science Review, pp. 77–91.
van Bergeijk, P.A.G., 1989, ‘Success and failure of economic sanctions,’ Kyklos, 42 (3), pp. 385–404.
van Bergeijk, P.A.G., 1994, Economic Diplomacy, Trade, and Commercial Policy: Positive and Negative Sanctions
in a New World Order, Edward Elgar: Cheltenham.
van Bergeijk, P.A.G., 1995, ‘The impact of economic sanctions in the 1990s,’ The World Economy, 18 (3), pp. 443–55.
van Bergeijk, P.A.G., 2014, ‘The return of the Cold Trade War?’ October 6, 2014, available at: https://voxeu.org/article
/return-cold-trade-war-0.
van Bergeijk, P.A.G., 2019a, Deglobalization 2.0: Trade and Openness During the Great Depression and the Great
Recession, Edward Elgar: Cheltenham.
van Bergeijk, P.A.G., 2019b, ‘Can the sanction debate be resolved?’ CESifo Forum, 20 (4), pp. 3–8.
van Bergeijk, P.A.G., 2019c, ‘Brexit delay will not postpone deglobalisation,’ March 18, 2019, available at: https://voxeu
.org/article/brexit-delay-will-not-postpone-deglobalisation.
van Bergeijk, P.A.G., 2021, Pandemic Economics, Edward Elgar: Cheltenham.
van Bergeijk, P.A.G. and S. Brakman (eds.), 2010, The gravity model in international trade: Advances and applica-
tions, Cambridge University Press: Cambridge, MA.
van Bergeijk, P.A.G. and S. Lazzaroni, 2015, ‘Macroeconomics of natural disasters: Strengths and weaknesses of
meta-analysis versus review of literature,’ Risk Analysis, 35 (6), pp. 1050–72.
van Bergeijk, P.A.G. and Selwyn J.V. Moons, 2018, ‘Introduction to the Research Handbook on Economic Diplomacy’
in: P.A.G. van Bergeijk and S.J.V. Moons (eds.), Research Handbook on Economic Diplomacy. Edward Elgar,
Cheltenham, pp. 1–29.
van Bergeijk, P.A.G. and M.S.H. Siddiquee, 2017, ‘Biased sanctions? Methodological change in economic sanctions
reconsidered and its implications,’ International Interactions, 43 (5), pp. 879–93.
Von Soest, C., 2019, ‘Individual sanctions: Toward a new research agenda,’ CESifo forum, 20 (4), pp. 28–31.
Wallensteen, P., 1986, ‘Characteristics of economic sanctions,’ Journal of Peace Research, 5 (3), pp. 248–67.
Weber, P.M. and G. Schneider, 2020, ‘Post-Cold War sanctioning by the EU, the UN, and the US: Introducing the
EUSANCT dataset,’ Conflict Management and Peace Science, doi: 10.1177/0738894220948729.

2. Economic sanctions in the twenty-first century1
Gary Clyde Hufbauer and Euijin Jung
2.1 INTRODUCTION
In the early 1980s, when Secretary of State George Shultz deplored “light switch diplomacy,”
and President Ronald Reagan criticized Jimmy Carter for restricting US agricultural exports
to Russia, it seemed that economic sanctions would become a less prominent feature of inter-
national affairs. Quite the contrary happened: Starting ironically in the Reagan administration,
the imposition of sanctions proliferated. Worldwide, there were some 75 on-going sanctions
cases in 1985, but by 2014 the figure had reached 170 cases (Felbermayr et al., 2019). The end
of the Cold War coincided with, and perhaps fostered, a burst of sanctions diplomacy.
The 3rd edition of Economic Sanctions Reconsidered (Hufbauer, Schott, Elliott, and Oegg,
2009) covered episodes through 2000, and that year will serve as our point of departure when
we discuss the outlook for economic sanctions in the twenty-first century. Roughly, this chapter
looks at the evolution of sanctions over the past two decades, but with greater emphasis on
more recent events. New technology and methods have enabled the nature of sanctions to
be expanded from traditional trade restrictions to finance, travel, and contract cancellation
measures. Not only states but also non-state actors have become senders as well as targets of
so-called smart sanctions. New actors and new sanction weapons tend to produce new goals
of sanctions, compared to traditional actors and weapons. Recent sanction analysis and the
potential of recent sanction databases are surveyed to highlight potential venues for future
research on sanctions regimes. Finally, the New Cold War between the United States and China
has dramatically altered the landscape of sanctions by blurring the line between commercial and
political diplomacy.2 The new landscape is now straining the North Atlantic Treaty Organization
(NATO) and the World Trade Organization (WTO). America’s allies in NATO have become tar-
gets of US secondary sanctions, intended to punish Iran and China. WTO commercial rules have
been superseded by ‘national security’ trade restrictions. Indeed, the emergence of sanctions
that combine security and economic spheres challenges core features of those organizations.
We have divided the chapter into five parts: New Weapons; New Actors; New Goals; New Data
and Analysis; and New Cold War. It is more qualitative than quantitative and examines possible
consequences arising from the use of new weapons in the New Cold War context.
2.2 NEW WEAPONS
In the twenty-first century, new weapons have been introduced to affect target behavior. This
section surveys both negative new weapons such as financial restrictions, offers hard to refuse,
and weaponized tariffs, and positive measures such as humanitarian exceptions, diplomatic
exceptions, and monetary rewards. Cyber warfare and private litigation are unconventional
measures. The emergence of new weapons and the growing preference of sender countries to
use them creates fresh concerns, which are discussed at the end of this section.
26
Gary Clyde Hufbauer and Euijin Jung - 9781839102721
Economic sanctions in the twenty-first century 27
2.2.1 Financial Tools
Very early in the post Second World War era, the United States and its European allies used the
International Monetary Fund, the World Bank, and regional development banks—institutions
they controlled—as on-off spigots to block or limit funding to target countries. This was
supplemented by outright denial or slow-walking bilateral grants and loans (military and
economic) to persuade recalcitrant foreign leaders. The Soviet Union did much the same to
coerce wayward satellites during these decades.
Prior to South African sanctions in the late 1980s and early 1990s, private banks headquar-
tered in Western countries were rarely instructed or even cautioned by their home governments
to restrict loans or financial services to target countries (such services as correspondent rela-
tions or floating sovereign debt). Partly this reflected the operations of private banks in that
era: They did relatively little business in countries that were prime candidates for economic
sanctions. But also, it reflected hesitation by Western governments to ‘meddle’ in the affairs
of private banks.
All this changed with the presidency of Barack Obama and the wide-ranging sanctions
against Middle East targets. Private banks based in the West were instructed not to do business
with Iraq or Iran, and heavy fines were imposed on European banks (such as Société Générale
and HSBC) that sought to evade the strictures.3 Equally important, when sanctions against Iran
gathered force in 2010, most Iranian banks were cut off from the world’s financial centers.4
This was achieved both by proscriptions against doing business with Iranian banks and by
denial of their wire transfers through SWIFT or Fedwire. These novel techniques threw sand
into the creaky domain of Iranian finance, hobbling an economy that was already suffering
from severe mismanagement.
Why was President Obama so eager to enlist financial institutions in the conflict with Iran?
Saddled with flagging military ventures in Iraq and Afghanistan, Obama wanted to avoid at
all costs a third military front with Iran. Like multiple leaders before him, Obama searched for
‘silver bullet’ sanctions that would force Iran to the bargaining table. Finance seemed to fit the
bill, and indeed financial pressure was a critical element in creating the Joint Comprehensive
Program of Action (JCPOA), which seemed to end the conflict over nuclear weapons in 2015.
Not so quick. President Trump dismissed the JCPOA as ineffective. Yet he resurrected and
reinforced the financial techniques applied by his predecessors, though European cooperation
became more reluctant than during the Obama years. Many European foreign ministers believe
that the JCPOA was as good a deal as Iran would ever sign and, unlike Trump, hesitated to
blow it up. However, Iran’s threat, publicized on June 17, 2019, to enrich more uranium than
permitted in the JCPOA agreement unless European sanctions are lifted, could alter European
views.5 As well, Iranian progress in missile technology is almost as worrisome as the nuclear
threat. How to deal with Iran, in cooperation with European allies, will be a key issue for the
Biden Administration. Biden indicated an interest in returning to the agreement as a starting
point for follow-on negotiations if Iran returns to compliance with the JCPOA.6
2.2.2 Offers Hard to Refuse
Prior to the twenty-first-century, alliances of willing sender countries were formed under UN
auspices, often with blessings from the Security Council, the Organization of American States,
or ad hoc groups. In earlier decades, the United States enacted statutes (e.g., the Helms–Burton

Law in 1996) and issued regulations designed to force foreign subsidiaries of US firms, and
even foreign firms, not to do business with targets such as Cuba and China. These laws and
regulations sparked nationalist backlashes in Canada, France, and other US allies because US
measures were perceived to intrude on sovereign powers abroad.7
In recent decades, the United States has devised a more direct technique—offer banks and
industrial firms in Europe, Japan, Korea, and elsewhere a choice: Do business in the target
country, or do business in the United States, but not both. This was Obama’s way of imple-
menting broad sanctions against Iran, and Trump did the same. This new approach of making
offers bank by bank and firm by firm achieves results with far less backlash. Moreover, the
surveillance techniques of the National Security Agency (NSA) and the Central Intelligence
Agency (CIA) provide powerful deterrence against ‘cheating.’ Very likely, the offer technique
will be applied widely in the future. As Beijing flexes its economic muscle, China may well
adopt the same technique. As a harbinger, China has extended Belt-and-Road loans to nearly
every country in Latin America except Paraguay—which committed the offense of granting
diplomatic recognition to Taiwan.
2.2.3 Humanitarian Exceptions
Seldom acknowledged but hard to deny, broad economic sanctions are akin to area bombing,
also known as carpet bombing, a technique favored by Sir Arthur ‘Bomber’ Harris during
the Second World War and embraced by Winston Churchill. Carpet bombing inevitably kills
innocent children and other civilians; broad sanctions inevitably inflict privation, disease, and
hunger on the poorer strata of society, often the young and old.8
One answer to the moral dilemma is to make exceptions for exports of food, medicines,
and other arguably humanitarian products. This answer, intended to pacify critical Western
journalists as well as to help the vulnerable, came into vogue in the 1990s and is now a
regular component of nearly every episode. Even President Trump’s renewed sanctions
against Cuba and North Korea have humanitarian exceptions. Critics of Trump’s sanctions
against Venezuela—cutting off US oil purchases and diverting Citgo earnings—were quick to
cite the humanitarian harm to ordinary Venezuelans.
Nevertheless, the overwhelming trend in the past two decades is away from comprehensive
sanctions to ‘smart’ or ‘targeted’ sanctions.9 In the scores of cases unknown to the public,
limited sanctions are the preferred tool—sanctions aimed at specific individuals, companies,
or transactions, without inflicting humanitarian harm on the broader population. However, in
high-profile cases—the ones average readers remember, such as Iran, Cuba, North Korea, and
Venezuela—the flavor is comprehensive sanctions. Humanitarian exceptions thus remain a
key component of sanctions policy.
2.2.4 Diplomatic Exceptions
In pre-twenty-first-century episodes, sender countries were nominally ‘all in’ the sanctions
regime. However, cheating was widespread among senders, even for declared adherents to
a UN Security Council resolution. Less than faithful observance was an informal means of
avoiding burdens. Token compensation was sometimes extended to states neighboring the
target, to mitigate their hardship from diminished trade. The Serbian and Iraq episodes are
examples.

To recruit countries into the ‘sheriff’s posse,’ tailored exceptions were woven into the
Iranian sanctions regime spearheaded by President Obama. Countries heavily dependent on
Iranian oil could maintain traditional, or modestly scaled back, import levels. Such exceptions
enlisted Turkey, India, China, and a few others into the regime. President Trump’s renewed
sanctions against Iran contained similar exceptions, but with flexible time limits that eventu-
ally ran out.10 The new approach anticipates the reality of unenthusiastic posse members by
negotiating diplomatic exceptions in the launch plan.
Whether diplomatic exceptions and humanitarian carve-outs make a difference in assem-
bling a ‘coalition of the willing,’ or the ultimate success of sanctions, remains to be explored.
2.2.5 Weaponized Tariffs
Trump weaponized the US tariff regime, raising selective rates well above maximum (‘bound’)
levels committed both in the WTO and regional and bilateral free trade agreements. During
the Great Depression of the 1930s, many countries raised their tariffs as a retaliatory tool in
response to the Smoot–Hawley Act. But in that era international commitments did not bind
national tariff levels. Trump’s justification for weaponization was simple: “When a country
[USA] is losing many billions of dollars on trade with virtually every country it does business
with, trade wars are good, and easy to win.”11
Contending that Chinese practices of forcing technology transfers and stealing intellectual
property are threats to the US economy and national security, Trump imposed 10 percent and
25 percent tariffs on $350 billion imports from China under Section 301 of the Trade Act of
1974.12 In January 2020, the US and China negotiated a ‘phase one’ deal, committing China to
step up its purchases of US goods and services (a huge increase over two years of $200 billion
compared with 2017) and additional tariffs were put on ice. China’s purchases for 10 months
of 2020 were at 57 percent of its first-year target.13 Biden’s approach to the phase one deal, and
the whole range of US–China trade and security issues, could modestly differ from Trump’s.
While Biden will probably maintain tariffs on Chinese products, he will review the China deal
and work with allies in Asia and Europe to develop a more coherent strategy.14
Trump applied a much smaller version of the same strategy to Mexico, to reduce the
flow of Central American refugees passing through Mexico to the United States. Trump
threatened a 5 percent tariff on all products imported from Mexico, starting June 10, 2019,
unless Mexico took action. Mexico caved and agreed to deploy up to 6,000 national guard
troops to its southern border and take additional measures to slow the refugee flow from
Guatemala.15
In 1960, the percentage of US trade affected by sanctions was under 1 percent. Several
conflicts later, but before Trump entered the White House, still only 5 percent of US trade
was similarly affected.16 Just adding Trump’s tariffs on $250 billion imports from China
and Chinese retaliation against $110 billion of US exports, that percentage has now reached
13 percent, a magnitude of macroeconomic significance.17 One unintended result is to erode
business confidence worldwide and diminish cross-border investment.
With his weaponized approach, Trump has almost erased the distinction between routine
commercial tactics in search of markets abroad, on the one hand, and economic sanctions in
pursuit of foreign policy goals, on the other. The erasure is particularly evident with respect
to China, where Trump’s trade war presages a New Cold War (explored later, and likely to be
pursued by President Biden).

Since the founding of the General Agreement on Tariffs and Trade (GATT) in 1947, the
United States and other members have imposed penalty duties on top of bound tariffs in
retaliation against specific foreign practices—notably countervailing duties against subsidized
imports and anti-dumping duties against imports sold below average cost or prevailing prices
abroad.
But these and other penalty duties are targeted on narrow product categories in response to
individual offenses. Trump’s tariffs were aimed at a wide range of products (all autos, all steel,
everything Chinese) in pursuit of broad goals that mix commerce and foreign policy (e.g.,
slash bilateral trade deficits, restore US manufacturing power, and limit technology exports
that could strengthen China’s military).18
Moreover, Trump’s tariff agenda was buttressed by fresh limitations on foreign investment
in the United States via regulations issued under the new Foreign Investment Risk Review
Modernization Act (FIRRMA). The regulations create a pilot program that will review—in
a secret star chamber process under the auspices of the Committee on Foreign Investment in
the United States (CFIUS)—virtually every foreign acquisition, even of minority interests,
in any US company with a technology flavor.19 New regulations issued under the Export
Control Reform Act of 2018 (ECRA) subject a broad range of technology exports to govern-
ment oversight, another conflation of commercial and foreign policy.
The conflation of commercial policy with sanctions policy has dramatically and adversely
changed the face of world trade and finance. Since the Second World War, the United States
has espoused market principles for trade and finance—a world economy where government
sets the rules, but private firms determine purchases and prices. The new flavor, started in
the Trump era, is managed trade and finance—government both sets rules and determines
outcomes. It seems unlikely that Biden will change course, particularly for China. He has
criticized China’s unfair trade practices without mentioning a removal of Section 301 tariffs,
and he has emphasized multilateral cooperation to deter China.
China has also mixed customary trade policy with economic sanctions since President Xi
Jinping assumed power in 2012.20 If this conflation by the US and China becomes a staple of
sanctions and commercial policy, many customary trade rules will be trampled.
2.2.6 Positive Measures
Every sanction episode contains the seeds of relief, simply from the potential removal of
barriers to trade, investment, and finance. Ever since the Marshall Plan was launched to thwart
Soviet expansion, the United States has conditioned military or economic aid on the behavior
of recipient countries. In the twentieth century, South Korea, Pakistan, Chile, Egypt, and
others have been targets of such positive measures.21 The new twist, in the realm of positive
measures, is the twinning of negative threats with positive incentives. This was done by Europe
to slow the arrival of Syrian and other refugees via Turkey. The negative threat was to harden
the border between Turkey and its European neighbors; the positive measure was money.
The European Union promised to pay about $3.3 billion to Turkey to contain refugees at the
EU-Turkish border in 2016.22 In a similar spirit, President Trump tabled vague offers of loans
and grants, coupled with the threat of stiffer sanctions, to entice North Korea and Iran to curtail
and even eliminate their nuclear arsenals.
Far more massive, China launched its ‘Belt-and-Road’ initiative, offering huge loans, pos-
sibly with a grant element, for infrastructure projects in adjacent and distant friendly countries.

How much will be expended to improve sea, rail, and road ties with China remains to be deter-
mined, but the amounts are likely to run into hundreds of billions. Indeed, one study suggested
the Belt-and-Road initiative could eventually invest as much as $8 trillion in infrastructure
projects.23 Research by Boston University, however, indicates that new Belt-and-Road projects
declined sharply since 2018.24 Nevertheless, China enjoys significant leverage from projects
already funded, especially over countries that seek to reschedule their obligations.
The realm of ‘positive sanctions,’ as they have been called, is potentially broad and ambigu-
ous. We prefer to confine the term to situations where the promise of monetary rewards is
twinned with the imposition or threat of negative sanctions in a quid pro quo fashion. For
example, Belt-and-Road loans are clearly conditioned on the target country not recognizing
Taiwan and establishing friendly trade and investment relations with China. US offers to North
Korea and Iran hinge on their abandonment of nuclear weapons.
2.2.7 Cyber Warfare
Cyber-attacks clearly rate as a twenty-first-century innovation. Through NSA wizardry, the

United States has possessed the capability, for at least a quarter century, to descend chaos on
the banking, telecommunications, and power systems of adversaries. Other countries, not only
China and Russia, but also North Korea and India, and allies like Germany, France, Britain, and
Israel, possess similar if not quite equal capabilities. Moreover, the United States is highly vul-
nerable, still struggling to create a Cyber Command capable of mounting defensive measures.
During Obama’s tenure, the Pentagon and the National Security Advisor eschewed offensive
use of cyber capabilities, arguing that cyber warfare was akin to kinetic warfare. In a classified
Executive Order, President Trump reversed that policy, opening the possibility of offensive
cyber-attacks in future economic sanctions episodes.25 Media reports indicate that cyber meas-
ures have already been deployed against Russia (its electrical grid) and Iran (its financial system).
Russia made its mark with extensive disinformation and hacking activities during the 2016
US presidential election. But influencing foreign elections is nothing new in the sanctions
world; the United States often deployed media campaigns during the Cold War to shift election
results in Europe and Latin America. What is new is posting fake opinions and news on social
media and hacking government and private email accounts. Future episodes seem all but certain.
2.2.8 Private Litigation
In a bygone era, sovereign states were shielded from foreign private litigation by the doctrine of
sovereign immunity. While the doctrine has been gradually eroded, we define private litigation,
when launched in the courts of a hostile country, as a potential new weapon in the sanctions armory.
Thus, in April 2019, a ban on private litigation against Cuban and foreign entities for
‘trafficking’ in Cuban property expropriated from American firms and citizens was lifted.26
Such suits were authorized by the Helms–Burton Law of 1996 but suspended by the Clinton
Administration to settle a case brought against the United States in the WTO by the European
Union. Private litigation holds the potential to unleash claims aggregating to billions of dollars.
Once the cases are filed, it will be beyond the government’s powers to shut them down. Hence,
the cases will not be useful bargaining chips with Cuba or other foreign governments, but they
will inflict punishment on foreign firms (principally European and Canadian corporations).
Blocking statutes and bruised relations between Washington and its allies seem likely.

As another example, using the amended Foreign Sovereign Immunities Act (FSIA) that
allows US victims of terrorism to sue designated state sponsors of terrorism for their terrorist
acts, the US federal courts over the last two decades issued some 92 judgments, finding Iran
liable for terrorist action that claimed American victims, resulting in over $56 billion in dam-
ages against Iranian government entities and officials.27 US courts found Iran—acting through
Hezbollah—liable for Americans killed in the 1983 bombing of the US Marine Corps barracks
in Beirut and other attacks. Recently the US Supreme Court ruled that $2 billion in frozen
Iranian assets can be turned over to the survivors of the bombing.28
Policies with respect to Cuba and Iran may set a precedent for other sanctions cases. Private
litigation could become more common if Congress amends the Foreign Sovereign Immunities
Act of 1976 to broaden existing exceptions to the immunities doctrine to include ‘trafficking’
and other offenses that sanctioned countries and their commercial partners are likely to commit
(for example, canceling contracts or imposing tariffs on US exports). From the standpoint of
US foreign policy, private litigation may serve as deterrent and retribution, but not as a tool
of international negotiation.
2.2.9 Why the Sanction Weapons Race?
New economic weapons have flourished in the past two decades, alongside an amazing array
of battlefield devices, but the economic weapons have had greater use. An overriding reason
for the US preference is the record of murky outcomes and outright failures in military actions
against Somalia, Iraq, and Afghanistan—all reminiscent of Vietnam. Economic sanctions
rarely lead to American deaths, unlike military operations. Whether sanctions succeed in
achieving their goals seems far less important to the public than the outcome of military
conflicts. Moreover, when it comes to challenging Russia or China, sanctions are the only tool:
US military measures would threaten nuclear war.
Parallel concerns can be found in the preference of other great powers for economic weapons.
The Chinese market, like its US counterpart, is big enough that shutting access commands the
attention of an adversary. South Korea is the exemplary case, with implications for Vietnam,
Malaysia, and Thailand. China cannot threaten military strikes against South Korea, Taiwan, or
Japan without triggering a US military response, but China can easily close its market to exports
from offending neighbors. Russia faces the same dilemma with respect to NATO members, but it
has enjoyed a relatively free military hand in Georgia, Ukraine, and Syria—correctly calculating
that the United States would not respond in those theaters. For other theaters, social media and
cyber campaigns are far cheaper than overt or covert Russian military actions. The European
Union lacks a joint military force and has no prospect of acquiring one. Apart from moral suasion,
economic sanctions are the EU’s sole enforcement tool with bearable economic and political cost.
In sum, the growing use of economic sanctions carries adverse implications for the NATO
and WTO. Frictions between the United States and its NATO allies weaken the effectiveness
of sanctions on Iran and other targets and foster dissent between senior officials. The misalign-
ment in Iran sanctions policy became worse when the European Union blocked US attempts to
reimpose UN sanctions on Iran.29 Meanwhile, Trump’s Cuban policy irritated business firms
abroad and seemed pointless to Canadian and European military leaders.
Trump’s broad national security justification for Section 232 tariffs under the 1962 Trade
Act, and his tariff reprisals under Section 301 of the 1974 Trade Act, directly threaten the
rules-based multilateral trading system overseen by the WTO. On their face, US trade

measures conflict with WTO rules, but since collateral US actions have dismantled the
WTO’s Appellate Body, aggrieved foreign countries have no meaningful forum for settling
disputes. Accordingly, they have resorted to retaliatory measures that are equally inconsistent
with WTO rules. Underlying the largest frictions is the New Cold War and the question of
whether the WTO system can house both the United States and China. Given the global trade
and investment reach of both antagonists, a split of the WTO into two domains would inflict
substantial costs on the other 162 member countries. In practice, if not in name, the World
Trade Organization may not survive.
2.3 NEW ACTORS
Until the turn of twentieth century, the United States was the dominant sender country, par-
ticipating in about 80 percent of cases, often with a posse of allies, followed by the erstwhile
Soviet Union, the United Kingdom, and the European Union. After the end of the Cold War
in 1990, the United States sometimes secured UN Security Council resolutions that enlisted
nominally committed sender countries. During that era, US targets dotted the globe, while
Russian targets were concentrated in neighboring countries, and UK and EU targets were
concentrated in Africa (but the UK often joined far-flung US-led episodes). In recent years,
new actors and new targets are changing the traditional landscape of sanctions, reflecting
technological advances and the rise of social media.
2.3.1 European Union
To this day, the United States remains the dominant sender, but starting in the late 1990s and
early 2000s the European Union became much more active, allied with the United Nations,
regional partners, or the United States. EU targets were concentrated in Africa, usually coun-
tries ridden with strife, ruled by despots, or victims of military coups. The European Union
sometimes achieved a modest degree of success in stabilizing these countries or displacing
their political leaders. For example, the European Union introduced restrictive measures against
Zimbabwe in 2002 in relation to the escalating domestic repression against political opponents,
and the violation of human rights. EU sanctions included arms embargos, travel restrictions, and
asset freezes. After the constitutional referendum in Zimbabwe was held, most sanctions were
suspended, but several Congolese individuals are still subject to asset freezes and travel bans.
Entering the twenty-first century, the European Union built a policy framework for more
effective use of targeted sanctions. To this end, the EU updated its guidelines for member
states, calling for timely implementation and evaluation. EU sanctions aim to deter terrorism
(e.g., Iran), delay nuclear proliferation (e.g., Iran and North Korea), reduce human rights viola-
tions (e.g., Nicaragua), reverse annexation of foreign territory (e.g., Russia), and destabilize
foreign leaders (e.g., Ivory Coast). Between 2004 and 2015, the European Union introduced
more than 40 different sanctions against 27 states.30 As a recent case, on March 22, 2021,
EU members agreed to impose travel bans and asset freezes on Chinese officials and entities
responsible for human rights violations in Xinjiang. All designated individuals and entities are
listed in the official EU sanctions database.
One EU concern is coping with US ‘extraterritorial’ sanctions. When the US government
revoked its participation in the Iranian nuclear agreement and imposed secondary sanctions

against firms doing business with Iran (mainly energy deals), third countries became subject
to US sanctions. Some argued that European foreign policy autonomy was at risk because the
EU could be seen as being coerced into following US foreign policy.31 To bypass this percep-
tion, France, Germany, and the UK created the ‘Instrument for Supporting Trade Exchanges’
(INSTEX) as a special vehicle to help EU firms do business with Iran and facilitate non-US
dollar transactions. Despite US criticism of INSTEX, the EU successfully made its first
transaction with Iran using this financial mechanism in March 2020.32
However, this divergence weakened the overall impact of sanctions and lessened the
already small likelihood that Iran would abandon its nuclear goals. When the United States
re-imposed nuclear sanctions, Iran became less compliant with the JCPOA. In 2020 Iran
exceeded a threshold on uranium enrichment agreed in the deal but continued to work with
IAEA inspectors in verification and monitoring of most sites related to the deal, while limiting
IAEA access to certain sites.33
2.3.2 Russia
Shorn of direct control over its erstwhile satellites, Russia turned to active diplomacy toward
the ‘near abroad.’ Economic sanctions accompanied the diplomatic mix, leading to episodes
aimed at discouraging ties with the West, seizing disputed territory, or protecting Russian-
speaking minorities. For instance, Russia imposed economic sanctions on Estonia and Latvia
in response to alleged discrimination against Russian minorities (1992–1999). Restrictions on
oil and gas exports and access to Russian markets are customary tools.
Entering the 2010s, Russia often imposed sanctions as a retaliatory instrument to counteract
Western measures against Russia’s own provocative actions, such as the invasion of Ukraine,
the nerve agent attack on a former Russian spy, and the cyber-attack on US elections.
Responding to US and EU sanctions for the invasion of Ukraine in 2014, Russia imposed travel
bans and food embargos on the two senders. Following annual renewals, these remained in
effect until the end of 2020. Counter sanctions also apply to Ukraine in response to Ukraine’s
decision to expand its own list of prohibited imports from Russia.34 Trade in energy and food
products between Russia and Ukraine has essentially stopped.
2.3.3 China
Under the leadership of Deng Xiaoping, starting in 1978, China claimed that non-interference
in the affairs of other countries was a guiding principle. Subsequent Chinese leaders sang the
same notes, up through Hu Jintao, who stepped down in 2012. President Xi Jinping, apparently
leader for life, has changed the music. Ten sanctions cases can be identified between 2010 and
2018, which is triple the number of cases between 1978 and 2000.35
China’s growing economic power and its integration with the world markets enables China
to influence the foreign policies of neighboring countries and even distant nations. President
Xi’s Belt-and-Road initiative is by far the largest ‘positive sanction’ since the Marshall Plan.
As they embrace Belt-and-Road projects, many countries in Asia and Latin America adopt a
friendly approach to China in the United Nations and other international fora.
Alongside, China deploys negative measures such as trade and investment restrictions,
popular boycotts, limits on Chinese tourism, and informal pressure on business entities.
Unilateral sanctions are typically imposed when China perceives specific threats to its national

security and sovereignty. For example, China cut off diplomatic and trade talks, and curtailed
imports of Norwegian salmon, when Norway awarded the 2010 Nobel Peace Prize to Chinese
dissident Liu Xiaobo. In a similar vein, after South Korea installed its defensive missile system
of US design in 2016–2017, China restricted tourism and imports of cultural products and
used regulatory measures to close almost 90 South Korean–owned retail stores in China.36
While these sanctions did not reverse Norwegian or South Korean policies, both countries sent
conciliatory messages to Beijing, and the sanctions sent a clear warning to other countries that
might consider crossing Chinese ‘red lines.’37
In 2020, China enacted a law authorizing ‘tit-for-tat’ sanctions against foreign countries that
sanction Chinese officials or companies and has now named several US officials—including
former Commerce Secretary Wilbur Ross—as targets. In 2021, Hong Kong and Macao
emulated Chinese ‘tit-for-tat’ sanctions.
The three great powers have different reasons for employing sanctions-related policies. The
European Union prioritizes its own liberal principles, even as it disagrees with US positions
on Iran and other targets. Russia continues to dominate its neighbors, but in addition Russia
has frequently imposed retaliatory sanctions when Russia itself became a target country. As a
newcomer to the offensive use of sanctions, China has specialized in coercive measures that
boldly announce the ‘red lines’ in its relations with foreign powers (namely, China’s national
security and sovereignty).
2.3.4 Non-State Actors
In the United States and Europe, civil society has actively pushed government to impose
sanctions for bad behavior abroad, particularly in the realm of human rights. The first big
campaign took place in the late 1980s when ad hoc groups persuaded US states and private
firms to sever ties with South Africa. More recently, the Kimberly Process, aimed at limiting
the global market for ‘conflict diamonds,’ was embraced by De Beers and other dominant
firms. The Magnitsky Act—retaliation against torture and death suffered by the Russian
lawyer Magnitsky—stemmed from the lobbying efforts of his erstwhile employer to blacklist
the responsible Russian officials.38 Finally, a group of 58 NGOs impelled US sanctions against
senior Burmese military leaders responsible for severe violations of human rights during
episodes of killing Rohingya people.39 Gathering steam today are efforts to punish China for
its harsh treatment of the Uighur population and Hong Kong protestors and—over a longer
time frame—new sanctions against purveyors of coal and other fossil fuels. Civil society has
increased its influence on sanctions processes as its network spreads to the globe via social
networks and helps raise public awareness of new issues.
2.3.5 ‘Specially Designated’ Targets
Fairly recent is the imposition of sanctions against ‘specially designated’ persons or firms.
Terrorists, drug dealers, and money launderers were early targets, but an innovation is black-listing
political and business leaders and select firms. Thanks to advanced technology in communications
and data processing, national intelligence agencies such as the NSA and CIA can identify assets,
travel patterns, families, and commercial contacts of designated firms and individuals.
Since January 2019, significant sanctions have been launched against designated entities.
The European Union imposed its first sanctions in response to a chemical attack, targeting

four Russian military intelligence agents for poisoning a former Russian double agent living
in Britain. Meanwhile, the US sanctioned a state-owned oil company, Petroleos de Venezuela,
S.A. (PdVSA), restricting US firms from buying Venezuelan crude. The US complaint against
PdVSA was its financial support of the Maduro regime. In August 2020, the Trump administra-
tion imposed financial sanctions on individuals who implemented China’s national security
law in Hong Kong, including chief executive Carry Lam. In turn, China retaliated with similar
measures against US politicians who were prominent critics.40
2.4 NEW GOALS
2.4.1 Deterrence
While certainly not a new goal, deterrence has played a large role in recent cases. No analyst
could expect sanctions to diminish Putin’s support of pro-Russian forces in Eastern Ukraine,
much less dislodge Russian occupation of Crimea. But intelligence officers and foreign
ministers could reasonably expect that stiff sanctions in response to Russian adventures would
deter further Russian military expansion—into Moldova, the Baltics, or Central Asia. At this
writing, Putin has not followed Hitler’s playbook, beyond the takeover of Crimea in March
2014 and the subsequent support of pro-Russian forces in Eastern Ukraine. Perhaps deterrence
worked.
Turning to another theater, US and allied sanctions against Iran, even with renewed force
starting in 2010, were unlikely to force the Supreme Leader to abandon his nuclear weapons
project, then in its twentieth year.41 But alongside the threat of a military strike, the sanctions
apparently deterred Iran from either testing any secret bombs or miniaturizing them to fit on
missiles. In turn, restraint helped pave the way for the Joint Comprehensive Plan of Action
(JCPOA).42
Less appreciated is the impact of US and allied sanctions, plus unpublicized on-again,
off-again support from China, in limiting North Korea’s nuclear ambitions. Kim Jong Un
almost certainly could have conducted additional long-distance missile tests and detonated
more powerful bombs. But the coupling of US-led and Chinese sanctions, along with the
high-profile June 2018 and June 2019 meetings with President Trump in Singapore and the
DMZ respectively, may have stayed Kim’s hand.43 Again, perhaps a win for deterrence, though
well short of a win for nuclear disarmament.
Most recently, reciprocal US and Chinese sanctions over Beijing’s absorption of Hong Kong
into the mainland legal regime stand no chance of swaying Chinese policy nor of curtailing US
criticism. Nor is it obvious that these sanctions will deter further episodes in the New Cold War.
But to determine whether deterrence was achieved in these and other cases requires persuasive
counterfactual scenarios, not easy to construct.
2.4.2 Retribution
Again, retribution is not new, but it features prominently in twenty-first-century cases.

Thanks to digital technology, NSA and CIA sleuths, along with their European counterparts,
can identify ‘bad guy’ individuals and firms. In turn, the ‘bad guys’ can be singled out for
‘special designation’ status that hits their wallets and personas. For example, in the wake

of Jared Khashoggi’s murder in Istanbul, the US revoked visas of Saudis connected to the
assassination squad.44 This will inconvenience the designated individuals, even though the
chief instigators, likely including Crown Prince Mohammed bin Salman, will not be brought
to justice.
On a much larger scale, in response to Russia’s annexation of Crimea and intervention in
Ukraine, dozens of well-connected firms and elite Russians were subject to financial, trade,
and travel sanctions. Careful research by Ahn and Ludema (2016) shows that Russian firms
were severely affected, on average losing a quarter of their sales. But their pain will not per-
suade Putin to vacate Crimea or withdraw support from dissidents in Eastern Ukraine. Indeed,
as new research by Ahn and Ludema (2020) shows, Putin shielded some 39 ‘strategic firms’
from the brunt of sanctions, at a cost calculated at nearly a half of the total pain imposed on
Russian firms by the targeted measures.
As a rule, retribution against individuals and firms—a common response—does not
achieve lofty foreign policy goals but it may deter future misdeeds. In fact, severe sanctions
against major powers (Russia and China) and against small countries with entrenched
autocrats (North Korea and Cuba) rarely achieve advertised goals, but they do punish the
targets.
And this is important. In democracies, influential constituents—given voice in parliaments
and congresses—insist on punishing foreign countries for their misdeeds. Retribution is its
own goal, and punishment gives satisfaction. Justice is served. Whether sanctions stand a
chance of altering policies abroad is a secondary matter.
2.4.3 Rehabilitation
‘Mission Impossible’ aptly describes the role of rehabilitation in major episodes of the twenty-
first century. Russia will not abandon imperial aspirations, nor will Cuba and North Korea
transition to democratic states. But by far the most ambitious goals of twenty-first-century
sanctions are to arrest China’s military, economic, and technological rise. If anything, US
trade, investment, and technology sanctions will spur China’s efforts, commercially divorced
from the United States, to deepen cooperation with Russia and a few Western countries, and
to rely on its own ample resources.
Former German Chancellor Helmut Schmidt was scornful of sanctions on Russia, calling
them ‘nonsense.’ Travel bans and asset freezes, he claimed, are symbolic and ‘affect the West
as much as the Russians.’45 If Chancellor Schmidt were still alive, he would probably have still
more scathing words for the current US economic campaign against China.
2.5 NEW DATA AND ANALYSIS
2.5.1 New Theory
This Research Handbook reflects many new theoretical avenues to pursue research on eco-
nomic sanctions. An important element in the literature is that recent studies take the threat
aspect of sanctions more seriously. The literature increasingly distinguishes between threats
and imposition, drawing on insights from Thomas Schelling’s famous canoe trip. Threats are
a bargaining tool, but actual imposition means that diplomacy—in other words, bargaining

between two sovereigns—failed. Another new avenue of research is the use of micro data. This
is an exciting innovation that has become possible as a result of the availability of firm-level
data for a great many countries.
2.5.2 New Databases
New and more comprehensive datasets have been constructed since research in the 1980s and
1990s. The main databases now used for empirical research include:
● Hufbauer, Schott, and Elliott (HSE 2007): covers 174 episodes between 1914 and
2000. Subsequent episodes are summarized on the Peterson Institute for International
Economics website.46
● Threat and Imposition of Sanctions (TIES Version 4.0): covers 1413 episodes between
1945 and 2005. Principal investigators are Cliff Morgan and Navin Bapat.47
● Targeted Sanctions Consortium Database (TSE): covers 63 episodes of United Nations
targeted sanctions on 23 countries between 1991 and 2014. Compiled by the Graduate
Institute Geneva.48
● European Union Sanctions (EUSANCT): covers 325 episodes of EU sanctions between
1989 and 2015. Principal investigators are Patrick M. Weber and Gerald Schneider.49
● Global Sanctions Data Base (GSDB): covers 1045 cases from all parts of the world
between 1950 and 2019. Principal investigators are Gabriel Felbermayr, Constantinos
Syropoulos, Erdal Yalcin, and Yoto V. Yotov.50
Lord Rutherford, the distinguished British scientist at the turn of the nineteenth century,
declared: ‘All science is either physics or stamp collecting.’ Rutherford might have classified
the databases mentioned above as ‘stamp collecting.’ However, a priori hypotheses as to the
impact of sanctions, often held with great conviction by leading statesmen, can only be tested
with the benefit of these collections.
2.5.3 New Analysis
The stamp collections have predominantly been of a macroeconomic nature. Indeed, micro
studies of the impact of sanctions on individual firms are still rare, as argued by Onderco
and van der Veer in this Handbook. In view of the increasing importance of litigation, but
also because the market economy provides resilience against sanctions, sanctions may have
a strong impact on export and import decisions of individual firms, as shown by the study of
Haidar (2017) on Iran. Identifying products identified at the 8-digit level of the Harmonized
System, she found that sanctions exerted a greater impact on the number of importing firms
in the target country (the extensive margin) than on the import flow per affected firm (the
intensive margin). Ahn and Ludema (2020) investigated the cost to Russian firms of US and
EU sanctions in the wake of the Crimean annexation and Ukrainian occupation. In particular,
they examined the fate of 39 sanctioned Russian firms identified as ‘strategic’ by official
agencies. Thanks to offsetting contracts, grants, and loans, these firms fared much better than
other sanctioned firms. However, the calculated cost of official largesse during the 2014 to
2016 period amounted to 45 percent of the overall cost of sanctions to Russia. Not cheap.

2.6 NEW COLD WAR
New financial sanctions with systemic consequences and new trade, technology, and invest-
ment sanctions against China are now more powerful than any previous target of US economic
coercion. Aggressive trade action against China taken by President Trump with bipartisan
support, has been imprinted as a New Cold War by the press, overlooking many differences
with the old Cold War.51 Chinese provocations—in the eyes of US political leaders if not
economists—are the theft of intellectual property rights and appropriation of US technol-
ogy, running an annual bilateral trade surplus of several hundred billion dollars, and, most
importantly, getting a march on technological frontiers such as quantum computing, artificial
intelligence, robotics, and 5G telecommunications.
Economic sanctions targeting China take the form of: high tariffs, both imposed and
threatened, that could eventually cover nearly all US imports from China under Section 301;
a star chamber screening process, under CFIUS auspices, that will deny Chinese investment
in any US firm with a technology flavor; criminal charges against the world’s leading
telecom company, Huawei, and its chief financial officer, Meng Wanzhou, for stealing trade
secrets and evading economic sanctions on Iran; and the forced sale of TikTok assets in the
United States.52 In addition, the Treasury Department imposed visa bans and asset freezes
on Chinese officials involved in the Hong Kong crackdown and forced labor in Xinjiang
province.
Beyond these immediate measures, many Americans are gripped with fear that China
will dominate twenty-first-century technology. The response is to ‘decouple’ (meaning
divorce) US high-technology firms, as well as individual scientists and engineers, from
their Chinese counterparts. The US effort to constrict Huawei’s leadership in 5G tech-
nology—by denying components and markets—is only the first installment of a broad
campaign. In addition, Trump issued executive orders that prevent the use of two Chinese
mobile apps, WeChat and TikTok. Broad restrictions on US technology exports to China,
access to Chinese mobile products, and scientific cooperation with Chinese institutions,
are in the works.
The consequence of blurring the line between commercial and foreign policy objectives
is erosion of the disciplinary effect of international trading rules on major trading countries.
National security issues were rarely discussed at the WTO before the recent panel finding in the
Russia-Ukraine case.53 The European Union, India, and Turkey filed WTO cases against the
United States regarding its Section 232 tariffs on steel and aluminum and, for good measure,
imposed WTO-illegal retaliatory tariffs on US merchandise. Meanwhile, China challenged
US Section 301 tariffs and the WTO panel found that US imposition of Section 301 tariffs
violated WTO rules. The US appeal made this panel ruling ineffective because the Appellate
Body has been out of business since December 2019. A major consequence of these measures
and countermeasures is to degrade the multilateral trading regime.
President Biden’s trade agenda is centered on bringing production of ‘critical’ industries—
such as steel, semiconductors, and pharmaceuticals—back to US shores. Biden promises
huge public investments in infrastructure and high technology, coupled with a strong Buy
America initiative, all wrapped in a package of countering China’s trade and tech dominance.
Concurrently, Biden wants to work with allies to address unfair Chinese trade and tech
practices. This agenda, unfortunately, invites further conflation of commercial policy and
economic sanctions.

2.7 CONCLUSIONS
Twenty-first-century sanctions practice has the flavor of evolution more than revolution.
New weapons reflect in part new technologies (finance and cyber) and in part new statecraft
(offers hard to refuse, weaponized tariffs, and positive measures). As the geopolitical world
shifted from a single hegemon to a system of great powers, players besides the United States
became significant actors, with new target choices. Pinpoint sanctions aimed at ‘bad guys’
are popular, partly because they avoid moral qualms, partly because digital technology makes
them effective. The New Cold War was largely responsible for conflating commercial policy
and sanctions policy.
Evaluated against traditional standards of ‘success’—in other words, was the foreign goal
achieved and did sanctions materially contribute to the outcome?—twenty-first-century
innovations have not made sanctions more effective. Indeed, Weber and Schneider (2019)
conclude that the effectiveness of EU, US, and UN sanctions for concluded episodes did not
change much during the 26 years between 1989 and 2015. These findings echo analysis done
by Hufbauer, Schott, Elliott, and Oegg (2009).
To be sure, measured by traditional standards, sanctions often promote regime change
and humanitarian objectives in small or chaotic countries. But in big cases, goals appear to
be evolving, leading practitioners to stress different metrics. Deterrence, whether actual or
imagined, looms large. As does punishment for its own sake. Rehabilitation, often remote, has
diminished as a measure of success.
After this chapter was written, COVID-19 swept the world, creating the biggest economic
downturn since the Great Depression of the 1930s. A surge of deaths and infection cases made
countries recognize the pandemic as a national health crisis. Initial public health responses
to this crisis were export bans of individual countries on medical supplies and devices, and a
failure of multilateral cooperation. In the realm of economic sanctions, it remains to be seen
whether—unlike the pandemic crisis—there is greater cooperation between the United States,
the European Union, and Japan in selecting targets and methods.
NOTES
1. This is a substantially revised and updated version of our paper “What’s new in economic sanctions?” European
Economic Review 130 (2020), originally presented at the workshop, “Sanctions: Theory, Quantitative Evidence,
and Policy Implication,” in Drexel University, Philadelphia on April 19, 2019.
2. Peter A.G. van Bergeijk (2014) used the term Cold Trade War when Russia and the United States actively imposed
trade/financial sanctions on one another in 2008.
3. Inti Landauro, “SocGen expects around $1.27 billion in U.S. sanctions penalties,” Reuters, September 3, 2018.
4. For the association of sanctions with the Iranian banking system, see the chapter by Sajjad Faraji Dizaji in this
Research Handbook.
5. IAEA, “Verification and monitoring in the Islamic Republic of Iran in light of United Nations Security Council
resolution 2231” (2015), GOV/2020/5, November 11, 202,0 https://www.iaea.org/sites/default/files/20/11/
gov2020-51.pdf
6. Joe Biden, “There’s a smarter way to be tough on Iran,” CNN, September 13, 2020.
7. See Quickenden (1997).
8. See the chapter by Sylvanus Kwaku Afesorgbor, in this Research Handbook.
9. See the chapter by Thomas Biersteker and Zuzana Hudáková in this Research Handbook.
10. Demetri Sevastopulo, Aime Williams, Anjli Raval, and David Sheppard, “US ends sanctions waivers on Iranian
oil imports,” Financial Times, April 22, 2019.
11. Donald Trump’s tweet, March 2, 2018, https://twitter.com/realDonaldTrump/status/969525362580484098

12. In response, China retaliated by imposing tariffs on some $110 billion imports from the United States, and lowering
tariffs to imports from other countries. See Chad Bown, Euijin Jung, and Eva (Yiwen) Zhang, “Trump Has Gotten
China to Lower Its Tariffs. Just Toward Everyone Else,” PIIE Trade & Investment Policy Watch, June 12, 2019.
13. Chad Bown, “US-China phase one tracker: China’s purchases of US goods,” PIIT Chart, December 4, 2020.
14. Thomas L. Friedman, “Biden Made Sure ‘Trump Is Not Going to Be President for Four More Years’” New York
Times, December 2, 2020.
15. Nick Miroff, Kevin Sieff, and John Wagner, “How Mexico talked Trump out of tariff threat with immigration
crackdown pacts,” Washington Post, June 10, 2019.
16. Felbermayr, Syropoulos, Yalcin, and Yotov (2019).
17. ($250 billion + $110 billion)/($1,645.2 billion (US exports to world) + $2,568.4 billion (US imports from world)) *
100 = 8.5%. Based on US merchandise imports in 2019.
18. In 2018, Trump imposed 25 percent and 10 percent tariffs on steel and aluminum imports respectively, and may
import similar tariffs on autos and parts, invoking Section 232 of the Trade Expansion Act of 1962. Trump also
imposed tariffs ranging from 10 to 25 percent on $250 billion of Chinese imports under Section 301.
19. For more details, see Martin Chorzempa, “Is the US Treasury Going Too Far in Protecting US Technology?” PIIE
Trade & Investment Policy Watch, October 23, 2018.
20. Gary Clyde Hufbauer and Euijin Jung, “China plays the sanctions game, anticipating a bad US habit,” PIIE Trade
& Investment Policy Watch, December 15, 2020.
21. See Chapter 7 in Van Bergeijk (2009).
22. James McAuley and Anthony Faiola, “Migrant ‘exchange’: Turkey accepts mass returns but sends Syrians to
Europe,” Washington Post, March 8, 2016.
23. John Hurley, Scott Morris, and Gailyn Portelance, “Examining the Debt Implications of the Belt-and-Road Initia-
tive from a Policy Perspective,” Center for Global Development Policy Paper 121, 2018.
24. Rebecca Ray and Blake Alexander Simmons, “Tracking China’s Overseas Development Finance,” Global
Development Policy Center of Boston University, December 7, 2020, https://www.bu.edu/gdp/2020/12/07/
tracking-chinas-overseas-development-finance/
25. White House, National Cyber Strategy of the United States of America, September 2018. In June 2019, National
Security Advisor John Bolton announced that the United States was expanding its offensive cyber operations,
without revealing details of targets or goals. Warren P. Strobel, “Bolton Says US Is Expanding Offensive Cyber
Operation,” Wall Street Journal, June 11, 2019.
26. Niraj Chokshi and Frances Robles, “Trump Administration Announces New Restrictions on Dealing With Cuba,”
New York Times, April 17, 2019.
27. For details, see Jennifer K. Elsea, “Suits Against Terrorist States by Victims of Terrorism Updated,” Congressional
Research Services, August 8, 2008.
28. Orde Kittrie, “Iran Still Owes $53 Billion in Unpaid U.S. Court Judgments to American Victims of Iranian Ter-
rorism,” FDD Research Memo, May 6, 2016.
29. Carol Morello, “European powers refuse to back U.S. call for escalating sanctions against Iran,” Washington Post,
June 19, 2020.
30. Christian Hörbelt, “A Comparative Study: Where And Why Does The EU Impose Sanctions,” Revista UNISCI /
UNISCI Journal, No. 43 (Enero/January 2017).
31. Ellie Geranmayeh and Manuel Lafont Rapnouil, “Meeting the Challenge of Secondary Sanction,” European
Council on Foreign Relations Policy Brief, June 25, 2019.
32. Laurence Norman, “EU Ramps Up Trade System With Iran Despite U.S. Threats,” Wall Street Journal, March
31, 2020.
33. The Nuclear Threat Initiative provides a comprehensive timeline of sanctions against Iran’s nuclear program.
34. Alexander Bychkove and Vladimir Efremov, “Russia expands sanctions against Ukraine,” SanctionNews, April
23, 2019.
35. Richard Nephew, “China and economic sanctions: Where does Washington have leverage?” Brookings Institute,
September 2019.
36. For more details, see Ethan Meick and Nargiza Salidjanova, “China’s Response to U.S.-South Korean Missile
Defense System Deployment and its Implications,” US-China Economic Security Review Commission, Staff
Research Report, July 26, 2017.
37. Harrell et al, 2018; Gary Clyde Hufbauer and Euijin Jung, “China plays the sanctions game, anticipating a bad
US habit,” PIIE Trade & Investment Policy Watch, December 15, 2020.
38. Alex Horton, “The Magnitsky Act, explained,” Washington Post, July 14, 2017.
39. Daphne Psaledakis and Simon Lewis, “U.S. slaps sanctions on Myanmar military chief over Rohingya atrocities,”
Reuters, December 10, 2019.
40. Sha Hua, “China Sanctions 11 Americans Over U.S. Moves Against Hong Kong,” Wall Street Journal,
August 10, 2020.
41. Joseff, Joff, “Why Iran Will Never Give Up on Nuclear Weapons.” The American Interest, July 12, 2019, https://
www.the-american-interest.com/2019/07/12/why-iran-will-never-give-up-on-nuclear-weapons/

42. A full text is found here: https://www.state.gov/e/eb/tfs/spi/iran/jcpoa/

43. Motoko Rich, “Trump and Kim Arrive in Singapore for Historic Summit Meeting,” New York Times, June 10,
2018, https://www.nytimes.com/2018/06/10/world/asia/kim-jong-un-trump-north-korea-singapore.html
44. Matthew Lee and Susannah George, “US to revoke visas of Saudis implicated in killing of writer,” Washington
Post, October 23, 2018.
45. Quoted by Gerald Schneider at the workshop. Original source is at Derek Scally, “Schmidt attacks Western sanc-
tions on Russia as ‘nonsense’,” Irish Times, May 29, 2014.
46. The summary is found at the Peterson Institute for International Economics website, https://www.piie.com/
commentary/speeches-papers/case-studies-economic-sanctions-and-terrorism
47. See the chapter by Morgan, Bapat, and Kobayashi in this Handbook.
48. See the chapter by Thomas Biersteker and Zuzana Hudáková in this Handbook.
49. “Post-Cold War Sanctioning by the EU, the UN, and the US: Introducing the EUSANCT Dataset,” Conflict
Management and Peace Science (2020).
50. See the chapter by Kirilakha et al in this Handbook.
51. Michael C. Bender, Gordon Lubold, Kate O’Keeffe, and Jeremy Page, “U.S. Edges Toward New Cold-War Era
With China,” Wall Street Journal, October 12, 2018.
52. David E. Sanger, Katie Benner, and Matthew Goldstein, “Huawei and Top Executive Face Criminal Charges in
the U.S.” New York Times, January 28, 2019.
53. Tom Miles, “Russia’s WTO ‘national security’ victory cuts both ways for Trump,” Reuters, April 5, 2018.
REFERENCES
Afesorgbor, S.K., 2021, “Sanctioned to Starve? The Impact of Economic Sanctions on Food Security in Targeted States”
Ahn, D.P. and R.D. Ludema, 2020, “The Sword and the Shield: The Economics of Targeted Sanctions,” European
Economic Review, 130, https://doi.org/10.1016/j.euroecorev.2020.103587.
Besedeš, T., S. Goldbach, and V. Nitsch, 2017, “You’re Banned! The Effect of Sanctions on German Cross-Border
Financial Flows,” Economic Policy, 32(90): 263–318.
Besedeš, T., S. Goldbach, and V. Nitsch, 2018, “Cheap Talk? Financial Sanctions and Non-Financial Activity,” CESifo
Working Paper Series No. 7069. Ifo Institute: Munich.
Biersteker, T. and Z. Hudáková, 2021, “UN Targeted Sanctions: Historical Development and Current Challenges”
Crozet, M. and J. Hinz, 2016, “Collateral Damage: The Impact of Russia Sanctions on Sanctioning Countries’
Exports,” CEPII Working Paper, June. CEPII: Paris.
Dizaji, S.F., 2021, “The Impact of Sanctions on the Banking System: New Evidence from Iran” in: P.A.G. van Bergeijk
Draca, M., J. Garred, N. Warrinnier, and L. Stickland, 2017, “On Target? The Incidence of Sanctions across Listed
Firms in Iran,” University of Warwick Working Paper. Coventry.
Felbermayr, G., C. Syropoulos, E. Yalcin, and Y.V. Yotov, 2019, “On the Effects of Sanctions on Trade and Welfare:
New Evidence Based on Structural Gravity and a New Database,” School of Economics Working Paper Series
2019-3, LeBow College of Business, Drexel University. Philadelphia.
Grauvogel, J. and H. Attia, 2020, “How Do International Sanctions End? Towards a Process-Oriented, Relational, and
Signalling Perspective,” GIGA Working Papers, No. 320, German Institute of Global and Area Studies (GIGA).
Hamburg.
Haidar, J., 2017, “Sanctions and Export Deflection: Evidence from Iran,” Economic Policy, 32(90): 319–355.
Harrell, P., E. Rosenberg, and E. Saravalle, 2018, “China’s Use of Coercive Economic Measures,” Center for New
American Security. Washington DC.
Hufbauer, G.C., J.J. Schott, K.A. Elliott, and B. Oegg, 2009, Economic Sanctions Reconsidered. 3rd edition, Peterson
Institute for International Economics: Washington DC.
Hurley, J., S. Morris, and G. Portelance, 2018, “Examining the Debt Implications of the Belt and Road Initiative from
a Policy Perspective,” Center for Global Development Policy Paper 121. Washington DC.
Joshi, S. and A.S. Mahmud, 2016, “Sanctions in Networks: The Most Unkindest Cut of All,” Games and Economic
Behavior, Elsevier, Amsterdam 97(C): 44–53.
Kirilakha, A., G.J. Felbermayr, C. Syropoulos, E. Yalcin, and Y.V. Yotov, 2021, “The Global Sanctions Data Base:
An Update to Include the Years of the Trump Presidency” in: P.A.G. van Bergeijk (ed.), Research Handbook on
Moret, E., T. Biersteker, F. Giumelli, C. Portela, M. Veber, D. Jarosz, and C. Bobocea, 2016, “The New Deterrent:
International Sanctions against Russia over the Ukraine Crisis,” Institute of International and Development Studies
in Geneva.

Morgan, T.C., forthcoming, “MDs Bury Their Mistakes, We Don’t Have To: Learning from Empirical Findings That
Suggest Your Theory Is Wrong,” April 2019. Paper presented at the workshop “Sanctions: Theory, Quantitative
Evidence, and Policy Implication,” Drexel University, Philadelphia.
Morgan, T.C., N. Bapat, and Y. Kobayashi, 2014, “The Threat and Imposition of Economic Sanctions 1945–2005:
Updating the TIES Dataset,” Conflict Management and Peace Science, 31(5): 541–558.
Morgan, T.C., N. Bapat, and Y. Kobayashi, 2021, “The Threat and Imposition of Economic Sanctions Data Project:
A Retrospective” in: P.A.G. van Bergeijk (ed.), Research Handbook on Economic Sanctions, Edward Elgar,
Onderco, M. and R. van der Veer, 2021, “Researching Firms and Sanctions—Theoretical and Methodological
Considerations” in: P.A.G. van Bergeijk (ed.), Research Handbook on Economic Sanctions, Edward Elgar,
Portela, C. and J.S. Mora-Sanguinetti, 2019, “Aid Sanctions and Autocratic Rule: Does Regime Type Matter?” Paper
presented at the workshop “Sanctions: Theory, Quantitative Evidence, and Policy Implication,” Drexel University,
Philadelphia, April 19, 2019.
Quickenden, C.L., 1997, “Helms-Burton and Canadian-American Relations at the Crossroads: The Need for an
Effective, Bilateral Cuban Policy,” American University International Law Review, 12(4): 733–767.
Schelling, T., 1966, Arms and Influence. New Haven: Yale University Press.
Stone, M., 2016. “The Response of Russian Security Prices to Economic Sanctions: Policy Effectiveness and
Transmission,” U.S. Department of State Office of the Chief Economist Working Paper.
van Bergeijk, P.A.G., 2009, Economic Diplomacy and the Geography of International Trade. Northampton: Edward
Elgar.
van Bergeijk, P.A.G., 2014, “The Return of the Cold Trade War?” October 6, 2014, available at: https://voxeu.org/
article/return-cold-trade-war-0.
Weber, P.M. and G. Schneider, 2019, “Post-Cold War Sanctioning by the EU, the UN, and the US: Introducing the
EUSANCT Dataset.” Conflict Management and Peace Science (2020).

3. The Threat and Imposition of Economic Sanctions
data project: a retrospective
T. Clifton Morgan, Navin A. Bapat, and Yoshiharu Kobayashi
3.1 INTRODUCTION
Economic sanctions have long been used as a coercive instrument of foreign policy, but
the frequency of their use increased dramatically from 1990 onward. This is particularly
curious because scholarly research on sanctions conducted in the 1970s and 1980s led to the
widespread conventional wisdom that sanctions are ineffective. While there were theoretical
reasons to believe that sanctions could not induce targets to change their behavior (Wagner,
1988; Tsebelis, 1990), this conventional wisdom was based almost entirely on case studies of
particularly long-lasting sanctions (see, most notably, Doxey, 1972, on South Africa; Galtung,
1967, on Rhodesia; Baer, 1973, on Italy; von Amerongen, 1980, on the Soviet Union). Scholars
realized fairly quickly that empirical generalizations drawn from such studies suffered from
selection bias—the cases were selected precisely because the sanctions failed to bring about
the desired change; otherwise they would not have been long lasting. To address this issue,
Hufbauer et al. (1990, see also Chapter 2 of this Handbook by Hufbauer and Jung) developed
the first large-N data set of sanctions cases (hereafter HSE). Analyses conducted on the first
version of their data set, which contained 116 cases of sanctions between 1914 and 1990, sug-
gested that sanctions lead to the intended change in the target’s policies around 30 percent of
the time. Most scholars interpreted this as indicating that sanctions “seldom work,” especially
since some argued that HSE’s methodology overstated sanctions success (see, especially, Pape,
1997).1 Thus, the significant increase in sanctions use that began in the 1990s created a puzzle:
Why would more states use sanctions more often when the empirical record indicated they are
seldom, if ever, effective in an instrumental sense?
Some scholars and pundits reconciled this puzzle by arguing that sanctions are actually
intended to serve symbolic, or domestic political, purposes (Galtung, 1967; Lindsay, 1986).
Others were skeptical of such explanations partly because policymakers typically assert,
emphatically, that the goal of sanctions is to induce the target to change its behavior and partly
because sanctions would seem to cost far more than would be necessary for symbolic purposes
(Boutros-Ghali, 1992; Haass, 1997). Others recognized that there is another source of selection
bias involved in empirical studies focusing only on imposed sanctions (Drezner, 2003; Smith,
1996). That is, if a potential target can anticipate that it would back down in the face of sanc-
tions, it would likely alter its behavior before sanctions were imposed. So, considering only
cases in which imposed sanctions were observed might introduce a significant bias toward
the conclusion that sanctions are ineffective (Drezner, 2003; Smith, 1996). Morgan and Miers
(1999) developed a game-theoretic model that captured this selection effect. This incomplete
information model allowed potential senders the option of threatening sanctions before impos-
ing them and potential targets the option of backing down in the face of these threats. In cases
in which the imposition of sanctions would induce a target to acquiesce, most targets will back
44
T. Clifton Morgan, Navin A. Bapat and Yoshiharu Kobayashi - 9781839102721
The Threat and Imposition of Economic Sanctions data project 45
down at the threat stage. Some will bluff, however, so senders do have to impose sanctions
against some recalcitrant targets to sustain the credibility of their threats. This model provided
an answer to the puzzle in that it led us to expect that the use of sanctions threats could be
effective, even though most cases of imposed sanctions would appear to fail.
The Threat and Imposition of Economic Sanctions (TIES) data set was designed specifically
to test hypotheses derived from the Morgan and Miers (1999) model. The intent was to identify
all cases in which sanctions had been threatened and/or imposed in the 1970–1999 period
(Morgan et al., 2009) (since extended to include cases from the 1945–2005 period (Morgan
et al., 2014)). The primary goal was to be able to determine whether sanctions appear to be
more effective instrumentally when we consider the threat stage as well as the imposition of
sanctions. Since the theory also led to a large number of hypotheses identifying the conditions
under which we expect to observe successful threats, imposed sanctions, and successful
impositions, the data set included a large number of variables that would permit the testing
of these hypotheses. Most of these hypotheses pertain to variables that capture the value, to
targets and senders, of the issues at stake, the anticipated costs of threatened sanctions, and the
actual costs of imposed sanctions. Finally, the data set was designed to enable scholars to test
hypotheses derived from other theories, especially those that focus on the politics of coercive
diplomacy. Thus, for example, it identifies who issued the sanctions threats, the extent to which
the threats were explicit or veiled, and the extent to which the accompanying demands were
clear or ambiguous.
Here, we provide a brief retrospective of the TIES project. In the next section, we describe
this data set more fully. We then consider a number of studies that have used the TIES data,
and we summarize the main contributions that have followed from its use. We conclude with
a critical look at the project with an eye toward identifying questions that have not been, and
perhaps cannot be, answered using the data. Our goal in this chapter is to demonstrate that
the TIES project has contributed significantly to the development of our understanding of
economic sanctions. One element of this contribution, however, is that analyses of the data
have led to many new questions, some of which require new, and different, data.
3.2 DATA COLLECTION
For the purpose of collecting the TIES data, we defined economic sanctions as: actions that
one or more countries take to limit or end their economic relations with a target country in an
effort to persuade that country to change its policies. By definition, a sanction must: 1) involve
one or more sender states and a target state; and 2) be implemented by the sender in order to
change the behavior of the target state. There are several restrictions worth mentioning in the
definition. First, we explicitly focused on sanctions as an activity that takes place between
state governments. Although recent sanctions increasingly target individuals and/or firms,
effectively bypassing states, that practice was not commonplace when the TIES project began.
Each case therefore represents a dispute between at least two states. Second, according to our
definition, sanctions cannot be purely symbolic, nor can sanctions represent efforts solely to
protect domestic industry. Thus, we exclude actions that restrict economic relations based on
domestic motivations, such as environmental standards, labor protections, and so forth. We
exclude these cases primarily because of the second part of the definition, which states that
sanctions must be a tool of coercion and that their imposition must be combined with some

demand that the target change some behavior.2 Unlike the HSE and other data sets, we do not
restrict this demand for change to the political realm. A sender’s demands may be for changes
in economic policy, as well as for changes in political, military, or any other type of policy.3
Sanctions may take many forms, including actions such as tariffs, export controls, embargoes,
import bans, travel bans, asset freezes, aid cuts, and blockades. For the purposes of this data
set, all sanctions cases may only include one target state. If the sender(s) state(s) makes threats
against multiple targets, a new case is created for each individual target.
We began the data collection by identifying candidate cases using numerous databases,
including Lexis Nexis, Facts on File, Keesing’s Record of World Events, the New York Times
Index, and the London Times Index. A candidate case was an instance where we believed that
it was possible that sanctions occurred between two states. In the first stage of the process, we
produced a list of candidate cases through a key word search.4 We then researched extensively
each of these candidate cases and prepared written case summaries of those cases believed to
meet our requirements for inclusion in the data set.5 The decision to include some cases seemed
obvious, such as the October 19, 1960, US embargo placed on Fidel Castro’s Cuba. However,
in other cases, more research was needed to determine if sanctions were actually imposed, or
if the behavior we were observing was something else. For example, in 1972, Zambia imposed
a blockade against Rhodesia to punish the white apartheid regime. Based on information from
the candidate list, it was unclear if this blockade was an effort at economic coercion, or part of
a militarized interstate dispute (MID) combined with support for guerrillas.
After assembling the candidate case list, we assigned coders to research and write written
summaries of each possible case.6 In this phase, the coders were able to use historical research
to identify which cases were and which cases were not appropriate for inclusion. If a case was
judged to be appropriate, coders would begin by identifying sanctions episodes. A sanctions
episode is assumed to begin when the sender(s) makes a threat about the possibility of sanc-
tions or imposes sanctions with no previous threat. This threat did not need to be specific; it
only needed to indicate that sanctions were under consideration against the target state in ques-
tion. We identified threats as verbal statements by government officials, legislation directed
against target states, or executive actions and/or declarations that sanctions would be imposed
if certain target behaviors were not changed. The data set includes a variable identifying the
individual issuing the sanctions threat so any users believing that we should only consider
threats made by very senior officials can exclude other cases.7
Each case contains a single target, but there may be several senders. For example, when the
United States and Canada imposed sanctions on Pakistan and India over nuclear proliferation,
we consider that to be two cases, one for India and one for Pakistan, with two senders each. The
episodes in a case must also be related in terms of the issues at stake. There can be multi-issue
episodes, provided that the threats and demands made over the issues are tied together. In
other words, if there is a demand to improve human rights and stop supporting terrorists, that
would comprise a single case. If, on the other hand, sanctions are imposed over human rights
issues and sometime later additional sanctions are threatened over support for terrorism, those
would be separate cases.
In collecting the data, we became aware that some of the restrictions in our definitions may
have caused us to miss several cases. First, we required each of the cases to have an actual
statement that we could characterize as a threat. However, this phase of the project made it
clear that many sanctions threats do not need to be stated. For example, there appeared to be a
general understanding among developing states that detonating a nuclear weapon would likely

trigger US sanctions. Similarly, most states understood that recognizing Jerusalem as the capital
of Israel following the 1967 war would result in Arab sanctions. However, there was no formal
statement by either the United States or Arab states indicating that the threat was present. Yet,
it was well known to all states in the system. Second, in other conditions, policymakers may
have made statements that other policymakers could interpret as threats, but which lacked the
specificity for us to include them in the data set. For example, the US State Department uses its
annual reviews to make ‘threats’ against every country in the world regarding their records on
human rights, proliferation, and support for terrorism. Presumably, if any country did not meet
US expectations, it could impose sanctions. However, it is highly unlikely that the ‘threat’ from
these sanctions is equally applied so that the risk to a state like Israel is the same as it is to a state
such as North Korea. Therefore, while we miss these cases, we believe the overall number of
these instances to be relatively small, and we prefer to avoid including an abundance of cases
as threats lest we bias any results in favor of finding that threats are effective.8
We had initially hoped to release the episode level data to allow the systematic study of the
evolution and unfolding of sanctions cases. We were not satisfied with the level of intercoder
reliability, however, and elected to release only the version of the data in which the episodes
are aggregated into cases. We tested several versions of the codebook and coder instructions in
an effort to achieve a high level of intercoder reliability. In the episode level data, coders too
often disagreed over the precise start and end dates of episodes as well as what activities were
to be included in each episode. These disagreements canceled out as the data were aggregated
to the case level and we were able to achieve high levels of reliability.9 For each case, data
are provided for several variables characterizing the nature of the threats and/or sanctions
that occurred. An abridged list of variables, with some brief descriptions, is presented in the
following section.
3.2.1 Variable List
1. Case Identification Number.

2. Start Date.
3. End Date.
4. Ongoing as of: identifies the month, day, and year of the last reported incident related to
this sanctions case.
5. Senders: lists the Correlates of War (COW) country codes for up to five senders.
6. Primary Sender: the COW country code of the primary sender.
7. Target State: the COW country code for the target government.
8. Institution: indicates if an institution was involved as sender.
9. Institution ID: identifies the institution involved, if any.
10. Target State Institution: indicates if the target is part of the institution that issues a threat
against it.
11. Issue: a set of variables indicating the issues over which sanctions were threatened and/or
imposed. The following categories are available:
a. Contain political influence
b. Contain military behavior
c. Destabilize regime
d. Release citizens, property, or material
e. Solve territorial dispute

f. Deny strategic materials

g. Retaliate for alliance or alignment choice
h. Improve human rights
i. End weapons/materials proliferation
j. Terminate support for non-state actors
k. Deter or punish drug trafficking practices
l. Improve environmental policies
m. Trade practices
n. Implement economic reform
o. Other.
12. Other Issue: presents an explanation if the issue is coded as ‘other.’
13. Threat: Identifies if a threat occurs 0) No 1) Yes.
14. Threat ID:
a. Bureaucracy
b. Individual legislator
c. Legislature
d. Executive staff member
e. Executive
f. Government
g. Head of international institution
h. International institution.
15. Sanction Type Threatened:
a. Unspecific
b. Total economic embargo
c. Partial economic embargo
d. Import restriction
e. Export restriction
f. Blockade
g. Asset freeze
h. Termination of foreign aid
i. Travel ban
j. Suspension of economic agreement/protocol.
16. Other sanction type threatened: identifies sanction types threatened that do not fit previous
categorical definitions.
17. Offending Behavior Specificity:
a. Ambiguous
b. Clear.
18. Sender Commitment:
a. Weak
b. Moderate
c. Strong.
19. Threatened Target Interest:
a. General
b. Regime leadership
c. Business interest
d. Political interest

e. Military
f. Other.
20. Diplomatic Sanctions:
a. Expulsion of ambassador
b. Recall of ambassador
c. Temporary closing of embassies
d. Ending diplomatic contact.
21. Carrots:
a. Economic payments or aid
b. Trade concessions
c. Removal of previous sanctions
d. Military aid
e. Political concessions.
22. Anticipated Target Economic Costs:
a. Minor
b. Major
c. Severe.
23. Anticipated Target Economic Costs Figure: dollar amount of anticipated costs of sanctions
to target.10
24. Anticipated Sender Economic Costs:
a. Minor
b. Major
c. Severe.
25. Anticipated Sender Economic Costs Figure: dollar amount of anticipated costs of
sanctions to sender.
26. Imposition: identifies if sanctions were imposed 0) No 1) Yes.
27. Sanction Start Date: identifies the day, month, and year when sanctions begin.
28. Sanction Identity: identifies the actor(s) responsible for implementing sanctions:
a. Bureaucratic
b. Legislative
c. Judicial
d. Executive
e. Government
f. International Institution.
29. Sanction Type:
a. Unspecific
b. Total economic embargo
c. Partial economic embargo
d. Import restriction
e. Export restriction
f. Blockade
g. Asset freeze
h. Termination of foreign aid
i. Travel ban
j. Suspension of economic agreement/protocol
k. Other.

30. Implementation of Diplomatic Sanctions:

a. Expulsion of ambassador
b. Recall of ambassador
c. Temporary closing of embassies
d. Ending diplomatic contact.
31. Carrot During Sanction: identifies carrot provided:
a. Economic payments or aid
b. Trade concessions
c. Removal of previous sanctions
d. Military aid
e. Political concessions.
32. Carrot Value: an estimate of the economic value of carrots in dollars.
33. Target Economic Costs:
a. Minor
b. Major
c. Severe.
34. Monetary Cost to Target Figure: an estimate in dollars of the economic cost of sanctions
to the target.
35. Sender Economic Costs:
a. Minor
b. Major
c. Severe.
36. Monetary Cost to Sender Figure: an estimate in dollars of the economic cost of sanctions
to the sender.
37. Final Outcome:
a. Partial acquiescence by target to threat
b. Complete acquiescence by target to threat
c. Capitulation by sender in the threat stage
d. Stalemate in the threat stage
e. Negotiated settlement in the threat stage
f. Partial acquiescence by target following sanctions
g. Complete acquiescence by target following sanctions
h. Capitulation by sender after imposition of sanctions
i. Stalemate after imposition of sanctions
j. Negotiated settlement after imposition of sanctions
k. Unknown.
38. Settlement Nature for Sender: a 0–10 scale representing the nature of the settlement for
the sender, with 0 being the worst possible outcome and 10 the best.
39. Settlement Nature for Target: a 0–10 scale representing the nature of the settlement for the
target, with 0 being the worst possible outcome and 10 the best.
3.2.2 Description
In total, TIES includes 1,412 cases in which one or more states threatened and/or imposed
economic sanctions on a single target during the 1945–2005 period.11 Figure 3.1 shows the
number of cases beginning in each five-year period from 1945–2005 and distinguishes cases

300
Imposed-sanction cases
Threat-only cases
200
100
0
9
5
–4
–5
–5
–6
–6
–7
–7
–8
–8
–9
–9
–0
45
50
55
60
65
70
75
80
85
90
95
00
19
19
19
19
19
19
19
19
19
19
19
20
Figure 3.1 The number of sanction cases in TIES over time (1945–2005)
on the basis of whether sanctions were actually imposed or ended at the threat stage. It is clear
from the figure that there has been a substantial increase in the number of cases over time,
especially after 1990, and that this increase has been observed in both the threat-only and
imposed-sanctions cases.
The TIES data set includes a number of variables characterizing these cases. The first
set of variables identifies the target, up to five senders, the primary sender, and whether an
international organization was involved in the threat or imposition of sanctions. If sanctions
are issued under the auspices of an international organization, we also identify the organization
by its abbreviation and specify whether the target was also a member of that organization or
not. We identify both targets and senders using the country codes from the Correlates of War
(COW) data set (Sarkees and Wayman, 2010). These data are traditionally used in quantitative
studies of international relations to identify armed conflict between states, including those
that escalate to interstate wars and those that do not. The COW data identify states using a
set of numerical country codes. Since these codes are used in multiple quantitative data sets,
TIES utilizes the COW country codes to identify targets and senders but makes a couple of
modifications. Most importantly, since a number of more recent sanctions have been imposed
against the European Union (EU) as a single entity, we use code 1000 to represent it.12 Since
the EU adopts a common trading policy, it is also often the case that when an EU state imposes
sanctions, the other members do as well. We therefore identify the EU as the primary sender
in these cases.
In addition, we provide the start and end dates of the sanctions case. The start date is the date
of the first threat, or when sanctions are imposed if there was no preceding threat. A sanctions
case can end in any of several ways. If the target makes sufficient concessions to satisfy the
sender, the case ends when those concessions are made. A case can also end when the sender
ends sanctions or publicly lifts the threat regardless of the target’s behavior. Furthermore, since
our sanctions cases are target specific, we consider sanctions to end if the target state ceases

to exist or changes identity; if sanctions continue against the new political entity, we would
consider that as the start of a new case. Finally, as one might expect, some cases just fade
away. Threats are made, but never carried out even though the target made no concessions.
Sometimes, such threats are issued only once; other times they may be reiterated several times.
In the absence of any evidence that a case was resolved, we code the end date as missing. We
do, however, include a variable that identifies the last date for which we have evidence that
the case was ongoing.
The next set of variables identifies characteristics of the threats. We specify the issue in
dispute with a variable that allows for 14 categories (and a miscellaneous category). We also
identify which political actor within the sender country issued the threat, the specificity of the
demands, and the commitment of the sender defined as the relative ambiguity of the threat.
We identify the type of sanctions threatened, as well as the type, if any, of carrots offered
and the type, if any, of diplomatic sanctions also threatened. Other variables characterize the
anticipated costs of the sanctions to the target and sender. These variables are presented as
trichotomies (minor costs, major costs, severe costs). As noted above, we had hoped to be able
to provide much more refined indicators of costs but were unable to achieve a satisfactory level
of intercoder reliability for finer characterizations. We also provide a variable that identifies
the interests within the target state that are the focus of the threatened sanctions; that is, we
identify whether the sanctions would principally harm the general population, the military, the
regime, business interests, and so forth.
Our next set of variables provides information on any sanctions that were actually imposed.
These variables mirror those for threats, in that they seek to identify the type of sanctions
imposed; whether, and what type, of carrots and diplomatic sanctions accompanied economic
sanctions; what interests within the target were mainly affected by the sanctions; and the
actual costs of the sanctions to the target and sender. We also provide a set of variables
that characterize the outcome of the case. The first of these presents a tenfold categorical
description of the outcome that conveys whether the target or sender partially or completely
acquiesced at either the threat or imposition stage, whether there was a stalemate at either
stage, or whether there was a negotiated settlement at either stage. Two additional variables
specify the nature of the settlement for the sender and target on a 0–10 scale, with zero
representing the worst possible outcome from that actor’s perspective and 10 representing
the best possible outcome.13
3.3 FINDINGS FROM TIES
Over the past decade, the TIES data set has been widely used by scholars studying economic
sanctions, leading to significant improvements in our understanding of sanctions processes.
First and foremost, we now understand that sanctions do often work at the threat stage. The
success rate of sanction threats is about 25 percent.14 This finding has important implications
for policy. If we think only in terms of single cases, it may be easy to conclude that sanctions
should not be imposed. While only slightly more effective than threats, changing target
behavior in about 33 percent of the cases, they are costly to the sender state and can have dire
humanitarian consequences for the civilian populations in target states.15 However, occasional
impositions are necessary to sustain the credibility of future sanctions threats and, when threats
succeed, the costs are quite low.16 Thus, if we evaluate a policy in which threats and sanctions

are used over a number of cases, we might conclude that that policy is a cost-effective instru-
ment of coercion.
The TIES data set has also been used to test a large number of hypotheses related to the use
of economic sanctions. Much of this work serves as robustness checks on existing findings from
the HSE data set, confirming some key results. In other cases, however, researchers using TIES
have discovered novel and unexpected relationships that question the scholarly conventional
wisdom. For example, early studies using the HSE data set generally find costs are related to
success (Drury, 1998; Nooruddin, 2002). That is, the more costly the sanctions to the targets,
the more likely they were to change their behavior. We conduct a sensitivity analysis using TIES
and find robust evidence that sanctions, and threats to impose sanctions, are more effective
when they promise a significant economic cost to the target state (Bapat et al., 2013). Building
on these results, recent studies have proposed novel operationalizations of sanctions’ costs to
targets by linking various aspects of trade and aid relationships to the concept of vulnerability
(Akoto et al., 2019; Early and Jadoon, 2019; Kavakli et al., 2020; Peterson, 2020).
Another hypothesis that is supported using the HSE data set is that democratic states are more
likely to apply sanctions than their non-democratic counterparts (Lektzian and Souva, 2003).
This is corroborated by analyses of both threats and imposed sanctions from TIES (Wallace,
2013; Drury et al., 2014; McLean and Radtke, 2018). Likewise, earlier empirical work suggests
that democracies are less likely to apply sanctions against other democracies, suggesting a
so-called “democratic economic peace.” Using TIES, Wallace (2013) and Drury et al. (2014)
confirm this pacifying pattern of sanction imposition and threat initiation, though this relation-
ship holds only in cases in which the disputes rise from salient issues related to security. Related
to this, earlier results suggest states appear to target those that are economically vulnerable (Cox
and Drury, 2006). Evidence from TIES largely corroborates these findings. Scholars find that
states are more likely to threaten and to impose sanctions against those who are economically
dependent on them and have little ability to redirect their trade to third-party states or access
capital from abroad (Drury, et al., 2014; Peksen and Peterson, 2016; Cilizoglu and Bapat, 2020).
As often happens in scientific research, new data provide evidence that contradicts prior
results, which in turn leads to the discovery of new insights. One of these new results deals
with whether sanctions are imposed unilaterally or by a coalition of senders, and how this
strategy affects success in changing target behavior. One would expect, intuitively, that
multilateral sanctions should be more effective than unilateral sanctions as higher costs would
be imposed on the target when more than one sender is involved. However, earlier work using
the HSE data suggested precisely the opposite relationship (Hufbauer, et al., 1990; Drury,
1998). Researchers drawing on the TIES data dispute this finding and suggest that multilateral
sanctions are indeed more effective and end with success more quickly (Bapat and Morgan,
2009; Dorff and Minhas, 2017). This is especially the case when the sanctions are imposed by,
or through, an existing international organization. Moreover, Bapat and Morgan (2009) subject
multiple existing theories to empirical tests, a check that was previously impossible due to the
small number of sanctions cases in the HSE data set. Using TIES, they find little empirical
support for the argument that focuses on the problem of free riders and strong support for the
spatial explanation that sees the main weakness of multilateral sanctions as an inability of
coalitions to maintain a consistent set of demands.
Another hypothesis that received support from the HSE data set is that sanctions levied
against democratic states are more successful than those brought against autocracies (van
Bergeijk, 1999; Hufbauer, et al., 2007; Lektzian and Souva, 2007). This is consistent with the

claim that autocratic leaders are better equipped to mitigate the negative effects of sanctions by,
for example, encouraging corruption to maintain the loyalty of their core supporters. However,
the evidence from TIES suggests that threats and imposed sanctions against democratic targets
are no more effective than those targeting their autocratic counterparts (Bapat, et al., 2013;
Lektzian and Biglaiser, 2014; Peterson, 2012).17 One potential reason for the lack of clear
evidence here may stem from the rather crude classification of regime types. In fact, autocratic
states are a heterogeneous group with vastly different sets of institutions (Geddes, 1999), and
these institutional differences may have significant consequences on sanctions outcomes.
Further classifying autocratic regimes into military, personalist, and single party regimes,
Peksen (2019) shows that military and single-party dictatorships are better able to resist
sanctions’ pressure. However, personalist regimes appear to be as vulnerable as democratic
regimes, potentially because personalist regimes tend to rely heavily on external rents and
foreign aid (Escriba-Folch and Wright, 2010).18
One pattern found in the HSE data is that sanctions often last for many years—the mean
duration of HSE cases is 6.4 years. This extended duration prompted scholars to theorize
why sanctions are so long-lived. If sanctions occur because senders and targets do not have
complete information about each other’s preferences, we would expect sanctions to be short-
lived. Both the sender and the target would observe sanctions and update their beliefs about
each other’s respective cost tolerance, which in turn would allow both to reach an efficient
bargain and remove costly sanctions. This led scholars to examine why senders and targets
would choose to keep sanctions in place, even after they appear to lose their coercive power.
One explanation proposed by van Bergeijk and van Marrewijk (1995) is that it may take some
time following imposition for the parties to learn about the cost of sanctions relative to the cost
of policy changes. An alternative explanation, corroborated by HSE, is that observed sanctions
are an equilibrium outcome of domestic redistributive politics, and when they serve the interest
of pro-sanction groups, they can end only when there are drastic changes in leadership in the
target or sender states (McGillivray and Stam, 2004). But contrary to HSE, most sanctions
cases in the TIES data set are short-lived—the mean duration is 2.4 years and about half of the
cases end within one year. Krustev and Morgan (2011) contend that these cases of short dura-
tion are inconsistent with the redistributive politics perspective because most sanction cases
start and end before the end of the tenure of the sender and target leaders. Instead, they argue
that different logics underpin short- and long-lived sanctions. That is, changes in domestic
coalitions explain the termination of prolonged episodes, while bargaining theory explains
short-lived sanctions. Using TIES, Krustev and Morgan (2011) find some evidence that both
factors associated with bargaining theory, such as threat specificity and winning coalition
changes, explain when sanctions end.
In addition to testing existing hypotheses, scholars have used TIES to explore new questions
and examine aspects of sanctions processes that were previously overlooked. For example, the
idea of targeted or “smart” sanctions gained popularity among policymakers and scholars. But
given the absence of data on the “targetedness” of sanctions, we knew relatively little about
the prevalence and effectiveness of smart sanctions. The TIES data set includes a variable
identifying which group(s) in the target state was targeted by sanctions impositions. Using this
variable, we find that the use of targeted sanctions increased dramatically in the 1980s and the
1990s, while its usage fell in the 2000s and that, surprisingly, a large percentage of sanctions
were smart before the 1980s (Morgan, et al., 2014).19 This suggests that targeted sanctions are
not a modern innovation but have in fact been a policy tool for a very long time.

Are smart sanctions more effective than non-smart sanctions? A common premise is that
sanctions targeted at elites are more likely to work than sanctions whose effects are felt more
broadly. We find little evidence supporting this belief (Bapat, et al., 2013). This raises a new
question: If smart sanctions are not more effective, why would policymakers advocate them?
One important reason is to minimize the humanitarian consequences of sanctions in target
states. It is well-documented that sanctions produce various adverse effects in target states (e.g.
Weiss, 1999). Recent work employing TIES has contributed to this literature by demonstrating,
for example, that sanctions adversely affect income inequality and poverty (Afesorgbor and
Mahadevan, 2016; Neuenkirch and Neumeier, 2016; see also Chapter 22 by Afesorgbor in this
Research Handbook); human rights (Adam and Tsarsitalidou, 2019; Clay, 2018); and the well-
being of marginalized groups such as women and minority groups (Drury and Peksen, 2014;
Gutmann, et al., 2018; McLean and Whang, forthcoming; Peksen, 2016). Alternatively, smart
sanctions may be a convenient political cover for the sender government when significant
economic interests are at stake. McLean and Whang (2014) pursue this line of argument and
find that as the size of the export sector increases, and thus opposition to sanctions increases,
the sender leader is more likely to choose smart sanctions as opposed to export restrictions and
aid withdrawals that generate domestic costs.
While this study by McLean and Whang (2014) is innovative in examining sender
choices on the design of sanctions, it also contributes to our broader understanding of how
pressures from domestic interest groups influence the decision of how and when to impose
them. Scholars approaching sanctions from the perspective of domestic politics often frame
them as the outcome of a conflict between anti-sanctions groups such as exporting firms
and pro-sanction groups such as import-competing firms. But a less obvious, yet powerful,
pro-sanction group is the general public. In democracies, leaders need to respond to public
demand that they do something about the objectionable behavior of target states, especially
when the public is mobilized. McLean and Whang (2014) find that when voters are aware
of international disputes, sender leaders are more likely to impose sanctions. Likewise,
recent studies find that the US public strongly supports foreign policy to improve the human
rights practices of other governments (e.g. Heinrich and Kobayashi, 2020). By focusing
on US sanctions cases, Peksen et al. (2013) find that voters’ awareness of human rights
violations—operationalized by media coverage—increases the probability of sanctions
threats and imposed sanctions.20 Consistent with this, Murdie and Peksen (2013) also find
that shaming by human rights organizations increases the probability of sanctions against
human rights abusers.
Earlier work assumed that policymakers are either interested in changing the target’s
behavior or catering to these domestic interest groups. This dichotomy neglected a wide array
of alternative foreign policy goals and encouraged an oversimplified view of the sanctioning
process. In practice, a multitude of ends must be protected and/or advanced when making
decisions to use sanctions, and policymakers must weigh pressure from these domestic groups
against foreign policy goals that may be complicated by the imposition of popular sanctions.21
For example, a primary US foreign policy goal is to combat transnational terrorism. But
imposing popular sanctions against unpopular regimes could undermine this long-term
objective by harming the ability of target governments to conduct effective counterterrorism.
Indeed, McLean et al. (2018) corroborate this claim by showing that, when directed at states
that are fighting terrorism, costly sanctions tend to prolong the survival of transnational
terrorist groups. They also elicit evidence suggesting that, when directed at their sponsoring

governments, sanctions can be an effective policy to discourage states from supporting ter-
rorism. Given these findings, we might expect the United States to impose sanctions against
terrorist sponsors while refraining from targeting states that are cooperating in the global war
on terror. However, one problem for the United States is that potential targets have an incentive
to misrepresent their relationship with terrorists. Bapat et al. (2016) examine this problem
and argue that the United States would evaluate targets’ relationships with terrorist groups by
relying on information about the state capacity. Bapat et al. (2016) evaluate their arguments
using TIES and find strong support.
Another important foreign policy goal is to maintain cooperation with friendly regimes.
Sanctions impose costs on the target leader, and they can create domestic pressure for them
to be replaced by a challenger that is less friendly toward the sender. McLean and Radtke
(2018) argue that if a potential target regime is friendly toward the sender, but subject to such
pressures, the sender is less willing to threaten and impose sanctions. By contrast, if a dispute
is with an unfriendly regime, the sender is more likely to use sanctions when the regime is
unstable, presumably to activate just such pressures for regime change. McLean and Radtke
(2018) analyze TIES and find support for these complex relationships between leadership
vulnerability, sender–target relations, and the use of sanctions.
Finally, scholars have also used the TIES data set to advance our understanding of the effect
of sanctions on various aspects of target states. The economic costs of sanctions to the target
have been considered a key determinant of sanctions success, but prior work did relatively
little to discern this impact directly. TIES has changed that. For example, Afesorgbor (2019)
finds that imposed sanctions, in particular total embargoes, lead to a significant reduction
in bilateral trade between the sender and the target. He also demonstrates that sanctions
threats lead to increased trade, presumably because exporting and importing firms react ex
ante to threats of sanctions by stockpiling. This latter evidence suggests that while credible
threats may give a chance to the target and sender to avoid costly trade disruption, they could
undermine the success of sanctions once imposed. This is potentially why many sanctions in
the TIES data set are imposed without prior warning or threat. The effect of imposed sanc-
tions and threats on FDI flows appears similar to the effect on trade (Biglaiser and Lektzian,
2011; Mirkina, 2018; see also Chapter 20 in this Research Handbook). Sanctions lead to
reductions in sender–target FDI flows while firms anticipate the imposition of sanctions and
divest strategically. The economic impacts of sanctions can also be mitigated by smuggling
and informal financial intermediaries by economic actors in target states. Supporting this,
Early and Peksen (2019) illustrate that the size of the “shadow economy” increases under the
pressure of sanctions.
3.4 A RETROSPECTIVE OF TIES
The TIES data set clearly contributed to a greater understanding of sanctions processes. But,
as is often the case, much of what we have learned from using the TIES data comes from the
findings that fail to support our expectations. The theory upon which the collection of the data
was based is a theory of strategic interaction that leads us to expect that senders and targets
would base their decisions on very specific considerations. In particular, the theory suggests
that they should be paying close attention to each other and should be using each other’s
actions to update their beliefs about likely future decisions. The actors might be strategic in

their behavior, but not in the way hypothesized by the theory. For example, when senders
design sanctions, they seem only to care about minimizing sanctions costs to themselves, not
about using sanction design to signal their resolve to the target. Moreover, neither side appears
to take the costs being born by the other, which should be a strong signal about future behavior,
into account. Clearly, something is going on that our existing theory cannot explain.
This, of course, leads to the question of where we go from here. The TIES data set does have a
number of limitations. Some of these have been inherent since its creation. It was designed with
a specific theory in mind, so it does not fit well with some other perspectives. It is, for example,
target and demand focused. Each case can consist of only one target and must identify a particular
demand. That is quite useful from the strategic interaction perspective, but it is less appropriate
for applications focusing on broadly conceived sender policies. Other inherent limitations arise
from constraints encountered in the data collection process. Initially, for example, the intent was
to treat each case as involving, perhaps many, episodes that would enable us to trace the evolution
of cases—perhaps as threats become increasingly specific or shift from being issued by low-level
officials to state leaders. This was abandoned, however, because it was not possible to ensure
an acceptable level of intercoder reliability in identifying such episodes. Other limitations of the
data set have emerged over time as the way sanctions are used and designed have evolved. Over
the past ten years, the emphasis (at least in the United States) has shifted from the use of trade
sanctions toward the use of financial sanctions and from broad-based sanctions to sanctions
targeting individuals. Since the current version of TIES ends in 2005, we cannot use it to evaluate
whether this change has proved more effective, less costly, or both.
The greatest limitation of TIES is a direct result of the fact that the data set is part and parcel
of good science. We have learned a great deal from its use and we know a lot more about
sanctions processes and about which variables contribute to sanctions success; but, the most
important findings might be those that suggest our existing theory is wanting. While that theory
does explain a lot and has led us to novel and important findings, we have to recognize that it
does not capture the causal mechanisms that are at work. We do not yet know what theory will
emerge to account for existing empirical findings. We can speculate that it will have to take into
account the fact that sanctions are not like other foreign policy actions in the sense that states
cannot impose sanctions on others directly. Military attacks can be launched and foreign aid
can be distributed through the state-controlled apparatus. Sanctioning states have to pass laws
requiring private, economically motivated, domestic actors to adjust their behaviors involving
actors in the target state, and sender states have to enforce these laws. If our theory of sanctions
processes does move in this direction, or in any direction away from the strategic interaction
model similar to that applied to other foreign policy actions, TIES, in its present form, will be
of limited value. The design of the next iteration of sanctions data should wait until the next
theoretical perspective is sufficiently developed to identify the questions for which data are
needed. Only then will we be able to develop the next generation of sanctions data that can
continue to advance our scientific understanding of the causal processes governing their use.
NOTES
1. Interestingly, this conclusion seems to be based on comparing the success rate of sanctions to an arbitrary standard
holding that they should work more than half the time to be considered a useful instrument of policy. If, instead,
we compare the success rate of sanctions to that of doing nothing, we would probably conclude that they are
exceptionally effective.

2. On the other hand, if a sender threatened to impose sanctions to compel a target to improve its environmental
standards and labor protections, and if this demand was unmotivated by domestic concerns, we would count this
event as a sanctions case.
3. In addition to identifying the issue in dispute, TIES identifies the nature of each case as related to ‘security’ or
‘economic.’ This makes it straightforward for any scholar to include or exclude cases based on their theoretical
specifications.
4. The key words used to detect potential cases included sanctions, tariffs, export controls, embargoes, import bans,
travel bans, asset freezes, aid cuts, and blockades.
5. Naturally, many of the candidate cases proved not to meet our requirements and many others were merged
into single cases. At this and subsequent stages of the winnowing process, we always tried to err on the side of
inclusiveness.
6. These summaries are currently not publicly available. We hope to make them so sometime in the future.
7. By our definition, we are considering sanctions to be a phenomenon at the level of the nation state. We do
not include threats made by officials of subnational-level officials, nor do we include “sanctions” imposed by
subnational-level units.
8. For example, Canada is probably aware that, were it to detonate a nuclear weapon, the United States and others
would impose sanctions. This implicit threat is not why Canada has chosen not to join the nuclear club, however,
so we chose not to include implicit ‘threats.’
9. Throughout the data collection process, we took great pains to continuously evaluate the reliability of our
work. We had two or more people generate the candidate list for several years to ensure that our processes
were not missing possible cases; we had two or more written case summaries for many of our cases to ensure
consistency in the preparation of these documents; and we had two or more coders code many cases. In most
of the reliability tests we conducted, we had exact agreement between coders over 90 percent of the time. We
dropped a few variables from the data set because we could not achieve exact agreement at least 75 percent of
the time. Thus, for example, we had hoped to include variables that would characterize the costs of sanctions
much more precisely. We found that coders were able to achieve acceptable reliability only for cruder measures
of costs.
10. The dollar amount of anticipated costs is drawn from our source materials. When we tried to identify dollar
amounts, it quickly became clear that these figures were often missing, unreliable, or inconsistent across various
estimations. We therefore believe that the anticipated target/sender costs and target/sender costs scales from 1 to 3
are more reliable measures of the damage caused by sanctions.
11. The data and user’s guide are available at http://sanctions.web.unc.edu/. This version of the TIES data set
addresses several of these issue from our first version of the data and corrects several identified errors. The original
TIES data set includes data on 888 cases in which sanctions were threatened and/or imposed in the 1971–2000
period.
12. When the EU is the sanctions sender, we code the presence of an international organization and list “EU” as the
organization’s abbreviation. In addition, we code Hong Kong as 1001 and Macau as 1002, as these entities have
been targeted by sanctions over trade disputes. In several instances, sanctions were imposed on countries that
COW starts recording in its state list at a later date.
13. Although we took great pains to ensure that the data set is as complete and accurate as possible, there is probably
no question that errors of omission and commission remain. Anyone who believes they have discovered an error
in coding or a missing case should feel free, and even encouraged, to inform us. We will investigate all suggestions
and incorporate changes into a future version of the data set.
14. We define a threat or sanction imposition as successful when the target partially or totally acquiesced to the
sender’s demand(s). When calculating the success rate of threats, we remove cases with missing final outcomes
as well as those in which senders imposed sanctions without issuing threats.
15. See Peksen (2011) and Allen and Lektzian (2013).
16. See Peterson (2013) for evidence that targets pay attention to senders’ previous decisions whether to follow
through with their threats. In a similar vein, Peterson (2014) and Clay (2018) use TIES and find evidence sug-
gesting that threats of sanctions lead to improvement in human rights practices in third-party states.
17. Relatedly, Park (forthcoming) illustrates that sanctions hurt the electoral performance of target leaders, and this
effect is larger in non-democratic states. However, Licht (2017) finds that sanctions destabilize democratic leaders
somewhat more than their autocratic counterparts.
18. Relatedly, Jeong and Peksen (2019) find that regardless of regime type, the size of veto players in target states is
related to the success of sanctions.
19. Since the original TIES data focused on cases from 1971 to 2000, we initially did not observe the use of smart
sanctions from 1945 to 1970. We code a sanction as smart if it targeted the regime leadership, business interests,
or the military.
20. They also report that alliance mediates the effect of this media effect. Nielsen (2013) and Heinrich et al. (2018)
find similar results when they analyze foreign aid flows.
21. See Bapat and Kwon (2015) for a related argument.

REFERENCES
Adam, A. and S. Tsarsitalidou (2019), ‘Do sanctions lead to a decline in civil liberties?’ Public Choice, 180 (3), 191–215.
Afesorgbor, S. K. (2019), ‘The impact of economic sanctions on international trade: How do threatened sanctions
compare with imposed sanctions?’ European Journal of Political Economy, 56, 11–26.
Afesorgbor, S. K. and R. Mahadevan (2016), ‘The impact of economic sanctions on income inequality of target states,’
World Development, 83, 1–11.
Akoto, W., T. M. Peterson, and C. G. Thies (2019), ‘Trade composition and acquiescence to sanction threats,’ Political
Research Quarterly. https://doi.or g/10.1177/1065912919837608
Allen, S. H. and D. J. Lektzian (2013), ‘Economic sanctions: A blunt instrument?’ Journal of Peace Research,
50 (1), 121–135.
Baer, G. W. (1973), ‘Sanctions and security: The League of Nations and the Italian–Ethiopian War, 1935–1936,’
International Organization, 27 (2), 165–179.
Bapat, N. A., L. De la Calle, K. H. Hinkkainen, and E. V. McLean (2016), ‘Economic sanctions, transnational terror-
ism, and the incentive to misrepresent,’ The Journal of Politics, 78 (1), 249–264.
Bapat, N. A., T. Heinrich, Y. Kobayashi, and T. C. Morgan (2013), ‘Determinants of sanctions effectiveness: sensitivity
analysis using new data,’ International Interactions, 39 (1), 79–98.
Bapat, N. A. and B. Kwon (2015), ‘When are sanctions effective? A bargaining and enforcement framework,’
International Organization, 69 (4), 131–162.
Bapat, N. A. and T. C. Morgan (2009), ‘Multilateral versus unilateral sanctions reconsidered: A test using new data,’
International Studies Quarterly, 53 (4), 1075–1094.
Biglaiser, G. and D. Lektzian (2011), ‘The effect of sanctions on US foreign direct investment,’ International
Organization, 65 (3), 531–551.
Boutros-Ghali, B. (1992), ‘An agenda for peace: Preventive diplomacy, peacemaking, and peace-keeping,’
International Relations, 11 (3), 201–218.
Cilizoglu, M. and N. A. Bapat (2020), ‘Economic coercion and the problem of sanctions-proofing,’ Conflict
Management and Peace Science, Vol. 37(4), 385–408.
Clay, K. C. (2018), ‘Threat by example: Economic sanctions and global respect for human rights,’ Journal of Global
Security Studies, 3 (2), 133–149.
Cox, D. G. and A. C. Drury (2006), ‘Democratic sanctions: Connecting the democratic peace and economic sanctions,’
Journal of Peace Research, 43 (6), 709–722.
Dorff, C. and S. Minhas (2017), ‘When do states say uncle? Network dependence and sanction compliance,’
International Interactions, 43 (4), 563–588.
Doxey, M. (1972), ‘International sanctions: A framework for analysis with special reference to the UN and South
Africa,’ International Organization, 26 (3), 527–550.
Drezner, D. W. (2003), ‘The hidden hand of economic coercion,’ International Organization, 57 (3), 643–659.
Drury, A. C. (1998), ‘Revisiting economic sanctions reconsidered,’ Journal of Peace Research, 35 (4), 497–509.
Drury, A. C., P. James, and D. Peksen (2014), ‘Neo-Kantianism and coercive diplomacy: The complex case of
economic sanctions,’ International Interactions, 40 (1), 25–51.
Drury, A. C. and D. Peksen (2014), ‘Women and economic statecraft: The negative impact international economic
sanctions visit on women’ European Journal of International Relations, 20 (2), 463–490.
Early, B. and D. Peksen (2019), ‘Searching in the shadows: The impact of economic sanctions on informal economies,’
Political Research Quarterly, 72 (4), 821–834.
Early, B. R. and A. Jadoon (2019), ‘Using the carrot as the stick: US foreign aid and the effectiveness of sanctions
threats,’ Foreign Policy Analysis, 15 (3), 350–369.
Escriba-Folch, A. and J. Wright (2010), ‘Dealing with tyranny: International sanctions and the survival of authoritarian
rulers’ International Studies Quarterly, 54 (2), 335–359.
Galtung, J. (1967), ‘On the effects of international economic sanctions: With examples from the case of Rhodesia,’
World Politics, 19 (3), 378–416.
Geddes, B. (1999), ‘What do we know about democratization after twenty years?’ Annual Review of Political Science,
2 (1), 115–144.
Gutmann, J., M. Neuenkirch, and F. Neumeier (2018), ‘Sanctioned to death? The impact of economic sanctions on
life expectancy and its gender gap,’ Working Paper.
Haass, R. (1997), ‘Sanctioning madness,’ Foreign Affairs, 76 (6), 74–85.
Heinrich, T. and Y. Kobayashi (2020), ‘How do people evaluate foreign aid to ‘nasty’ regimes?’ British Journal of
Political Science, 50 (1), 103–127.
Heinrich, T., Y. Kobayashi, and L. Long (2018), ‘Voters get what they want (when they pay attention): Human rights,
policy benefits, and foreign aid,’ International Studies Quarterly, 62 (1), 195–207.
Hufbauer, G.C. and E. Jung (2021), ‘Economic sanctions in the 21st century’ in: P.A.G. van Bergeijk (ed.), Research
Handbook on Economic Sanctions, Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing, Chapter 2.

Hufbauer, G. C., J. J. Schott, and K. A. Elliott (1990), Economic Sanctions Reconsidered: History and Current Policy,
Washington, DC: Peterson Institute for International Economics.
Hufbauer, G. C., J. J. Schott, K. A. Elliott, and B. Oegg (2007), Economic Sanctions Reconsidered, Washington, DC:
Peterson Institute for International Economics.
Jeong, J. M. and D. Peksen (2019), ‘Domestic institutional constraints, veto players, and sanction effectiveness,’
Journal of Conflict Resolution, 63 (1), 194–217.
Kavakli, K. C., J. T. Chatagnier, and E. Hatipoglu (2020), ‘The power to hurt and the effectiveness of international
sanctions,’ The Journal of Politics. https://www.journals.uchicago.edu/doi/10.1086/707398
Krustev, V. L. and T. C. Morgan (2011), ‘Ending economic coercion: Domestic politics and international bargaining,’
Conflict Management and Peace Science, 28, 351–376.
Lektzian, D. and G. Biglaiser (2014), ‘The effect of foreign direct investment on the use and success of US sanctions,’
Conflict Management and Peace Science, 31 (1), 70–93.
Lektzian, D. and M. Souva (2003), ‘The economic peace between democracies: Economic sanctions and domestic
institutions,’ Journal of Peace Research, 40 (4), 641–659.
Licht, A. A. (2017), ‘Hazards or hassles: The effect of sanctions on leader survival,’ Political Science Research and
Methods, 5 (1), 143–161.
McGillivray, F. and A. C. Stam (2004), ‘Political institutions, coercive diplomacy, and the duration of economic
sanctions,’ Journal of Conflict Resolution, 48 (2), 154–172.
McLean, E. V., K. H. Hinkkainen, L. De la Calle, and N. A. Bapat (2018), ‘Economic sanctions and the dynamics of
terrorist campaigns,’ Conflict Management and Peace Science, 35 (4), 378–401.
McLean, E. V. and M. T. Radtke (2018), ‘Political relations, leader stability, and economic coercion,’ International
Studies Quarterly, 62 (2), 357–370.
McLean, E. V. and T. Whang (2014), ‘Designing foreign policy: Voters, special interest groups, and economic sanc-
tions,’ Journal of Peace Research, 51 (5), 589–602.
McLean, E. V. and T. Whang (forthcoming), ‘Do sanctions spell disaster? Economic sanctions, political institutions,
and technological safety,’ European Journal of International Relations.
Miers, A. C. and T. C. Morgan (2002), ‘Multilateral sanctions and foreign policy success: Can too many cooks spoil
the broth?,’ International Interactions, 28 (2), 117–136.
Mirkina, I. (2018), ‘FDI and sanctions: An empirical analysis of short-and long-run effects,’ European Journal of
Political Economy, 54, 198–225.
Mirkina, I. (2021), ‘FDI and sanctions’ in: P.A.G. van Bergeijk (ed.), Research Handbook on Economic Sanctions,
Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing, Chapter 20.
Morgan, T. C., N. A. Bapat, and Y. Kobayashi (2014), ‘The threat and imposition of economic sanctions 1945–2005:
Updating the TIES dataset,’ Conflict Management and Peace Science, 31 (5), 541–558.
Morgan, T. C., N. A. Bapat, and V. Krustev (2009), ‘The threat and imposition of economic sanctions, 1971–2000,’
Morgan, T. C. and A. C. Miers (1999), ‘When threats succeed: A formal model of the threat and use of economic
sanctions,’ paper presented at the Annual Meeting of the American Political Science Association, Atlanta.
Murdie, A. and D. Peksen (2013), ‘The impact of human rights INGO activities on economic sanctions,’ The Review
of International Organizations, 8 (1), 33–53.
Neuenkirch, M. and F. Neumeier (2016), ‘The impact of US sanctions on poverty,’ Journal of Development
Economics, 121, 110–119.
Nielsen, R. A. (2013), ‘Rewarding human rights? Selective aid sanctions against repressive states,’ International
Nooruddin, I. (2002), ‘Modeling selection bias in studies of sanctions efficacy,’ International Interactions, 28 (1), 59–75.
Pape, R. A. (1997), ‘Why economic sanctions do not work,’ International security, 22 (2), 90–136.
Park, B. B. (forthcoming), ‘How do sanctions affect incumbent electoral performance?’ Political Research Quarterly.
Peksen, D. (2011), ‘Human security and economic sanctions: The public health impact of economic sanctions,’
Foreign Policy Analysis, 7 (3), 237–251.
Peksen, D. (2016), ‘Economic sanctions and official ethnic discrimination in target countries, 1950–2003,’ Defense
and Peace Economics, 27 (4), 480–502.
Peksen, D. (2019), ‘Autocracies and economic sanctions: The divergent impact of authoritarian regime type on
sanctions success,’ Defence and Peace Economics, 30 (3), 253–268.
Peksen, D. and T. M. Peterson (2016), ‘Sanctions and alternate markets: How trade and alliances affect the onset of
economic coercion,’ Political Research Quarterly, 69 (1), 4–16.
Peksen, D., T. M. Peterson, and A. C. Drury (2014), ‘Media-driven humanitarianism? News media coverage of human
rights abuse and the use of economic sanctions,’ International Studies Quarterly, 58, 855–866.
Peterson, T. M. (2012), ‘Sending a message: The reputation effect of U.S. sanction threat behavior,’ International
Peterson, T. M. (2014), ‘Taking the cue: The response to US human rights sanctions against third parties,’ Conflict
Management and Peace Science, 31, 145–167.

Peterson, T. M. (forthcoming), ‘Reconsidering economic leverage and vulnerability: Trade ties, sanction threats, and
the success of economic coercion,’ Conflict Management and Peace Science, 2020, Vol. 37(4), 409–429.
Sarkees, M. and F. Wayman (2010), Resort to War: 1816–2007, Washington DC: CQ Press.
Smith, A. (1996), ‘The success and use of economic sanctions,’ International Interactions, 21 (3), 229–245.
Tsebelis, G. (1990), ‘Are sanctions effective? A game-theoretic analysis,’ Journal of Conflict Resolution, 34 (1), 3–28.
van Bergeijk, P.A.G. (1999), ‘Economic sanctions; Why do they fail; why do they succeed,’ in: W. van Genugten, and
G.A. de Groot (eds), United Nations Sanctions, Intersentia, Antwerpen, pp. 97–112.
van Bergeijk, P.A.G. and Van Marrewijk, C. (1995), ‘Why do sanctions need time to work? Adjustment, learning and
anticipation,’ Economic Modelling, 12 (2), 75–86.
Von Amerongen, O. W. (1980), ‘Commentary: Economic sanctions as a foreign policy tool?’ International Security,
5 (2), 159–167.
Wagner, R. H. (1988), ‘Economic interdependence, bargaining power, and political influence,’ International
Organization, 42 (3), 461–483.
Wallace, G. P. (2013), ‘Regime type, issues of contention, and economic sanctions: Re-evaluating the economic peace
between democracies,’ Journal of Peace Research, 50 (4), 479–493.
Weiss, T. G. (1999), ‘Sanctions as a foreign policy tool: Weighing humanitarian impulses,’ Journal of Peace Research,
36 (5), 499–509.
Whang T., E. V. McLean, and D. W. Kuberski (2013), ‘Coercion, information, and the success of sanctions threats,’
American Journal of Political Science, 57, 65–81.

4. The Global Sanctions Data Base (GSDB): an update
that includes the years of the Trump presidency*
Aleksandra Kirilakha, Gabriel J. Felbermayr, Constantinos
Syropoulos, Erdal Yalcin, and Yoto V. Yotov
“The Trump administration has imposed sanctions at a record-shattering pace of about three
times a day during the president’s time in office: a slew of measures targeting companies,
individuals and even oil tankers tied to Iran, North Korea, China, Venezuela and Russia.
President-elect Joe Biden’s team is promising a top-to-bottom review of sanctions operations,
but don’t expect a significant slowdown on his watch.”
Bloomberg Businessweek, Dec. 8, 2020
4.1 INTRODUCTION
While, depending on the definition of a sanction, one may question the statement from the
opening quote that the Trump administration has imposed sanctions at a pace of about three
times a day, two parts of this quote are undeniable. The first is that, indeed, President Trump
imposed sanctions at a record-shattering rate, more than any other US president. The second
is that most of the sanctions that were imposed during the Trump presidency would probably
remain in place during the Biden administration. Given the prominence of the United States
in the global economy, it is natural to expect its sanctions to have significant economic and
geopolitical consequences. What is more, the US sanctions during the Trump presidency may
trigger retaliation or, more broadly, elevate the use of sanctions to a commonly accepted norm
that stretches the length of their worldwide reach and magnifies the depth of their impact. For
these reasons, among others, the Trump administration’s sanctions underscore the need to
work to improve our understanding of their effects.
A natural starting point—and our primary objective in this chapter—is to collect data on
sanctions and use these data to describe their key features. Accordingly, our contribution to
the related literature is threefold. First, we have been able to trace 75 publicly reported sanc-
tions that were imposed between 2016 and 2019 (i.e., during most of the years of the Trump
presidency). This allowed us to extend the coverage of the Global Sanctions Data Base (GSDB)
of Felbermayr et al. (2020) to 2019. Second, we have identified 306 additional sanction cases
during the period from 1950 to 2016. These cases have also been recorded in the GSDB. As
a result, the updated version now includes a total of 1,101 publicly traceable, multilateral,
plurilateral, and unilateral sanction cases over the period from 1950 to 2019. Third, in addition
to providing a report on the salient features of the expanded GSDB, in this chapter we offer a
descriptive analysis of the sanctions during the entire sample period with a focus on the most
recent sanctions (2016–2019) and especially on the new US sanctions employed by the Trump
administration.
62
ndra Kirikakha, Gabriel J. Felbermayr, Constantinos Syropoulos, Erdal Yalcin and Yoto V. Yotov - 9781839102721
The Global Sanctions Data Base (GSDB) 63
The inclusion of the newly identified cases in the GSDB was possible for the following
reasons. First, we relied on new sources (e.g., the Sanctions Alert initiative), which were
especially useful for sanction cases during 2013 to 2017. Second, we used the Intrastate
Dispute Narratives of the Dynamic Analysis of Dispute Management (DADM) Project led
by the Political Science Department of the University of Central Arkansas (UCA) to add
cases related to financial and military aid cuts, travel bans, and diplomatic sanctions. Third,
we revisited and cross-checked with existing sanction databases (e.g., Hufbauer et al., 2007
and Morgan et al., 2014) as well as newly constructed datasets (e.g., Weber and Schneider,
2018). Lastly, some of our additions to the GSDB were due to the feedback we received from
researchers who used it.
Exploiting the updated version of the GSDB, in this chapter we conduct a descriptive analy-
sis of the sanctions imposed throughout 1950 to 2019 and arrive at the following conclusions.
First, 2017 was marked by a new and significant rise in sanction impositions across the world.
Second, the intensified sanction activities among nations are accompanied by an increase in
the number of sanctioning states (‘senders’) and sanctioned states (‘targets’). Third, the most
frequent policy objectives associated with the imposition of sanctions are ‘improvements in
human rights’ and ‘restoration of democracy,’ followed by ‘end wars’ and ‘policy change.’
The first two of the above objectives are also prevalent in the most recent sanctions imposed
post-2016. Moreover, the relative use of the latter two objectives over the same period has
risen. Fourth, during the period from 1950 to 2019, increasingly more sanctions have been
classified as partially or fully successful. A possible interpretation of this observation is that
over time sanctions have become more effectual.
Motivated by the fact that the Trump administration has been notorious for frequently using
sanctions as a foreign policy tool, we zoom in on the recent US sanctions. We discern a clear spike
in sanction impositions in 2017 under the Trump presidency, which constituted more than 40% of
all sanctions worldwide by 2019. The increased sanction activities by the United States are also
accompanied by an increase in the impositions of the so-called ‘smart’ (i.e., targeted financial
and travel) sanctions. In terms of the objectives the recent US sanctions aim to attain, there has
also been an increase in the number of sanctions associated with the ‘policy change’ and ‘fighting
terrorism’ objectives. In contrast, the number of sanctions associated with a ‘destabilize regime’
objective decreased. Last, alarmingly, we observe that all US sanctions in 2019 are ongoing.
The rest of the chapter is organized as follows. Section 4.2 offers an overview of the GSDB
(including a descriptive analysis of the newly recorded cases) and details general trends and
characteristics of the new sanctions in the world as a whole. Section 4.3 zooms in on the
sanctions that were imposed by the United States during the period from 2016 to 2019. Section
4.4 concludes.
4.2 THE UPDATED GSDB: A GENERAL OVERVIEW
In recent years, a diverse collection of economic sanctions has been used by a large number
of countries to promote a wide range of international policy objectives. Motivated by these
developments, in 2016 we initiated the creation of the GSDB and published its first version in
2020 (cf. Felbermayr et al., 2020). In this section, we describe the salient characteristics of the
GSDB and explain the new features contained in its first update (GSDB Update 1).1
In the original construction of the GSDB, a number of sanction cases contained therein were
collected from a limited number of sources focusing on the 1950–2016 period. Multilateral
sanctions, which were mostly based on United Nations Security Council (UNSC) Resolutions,
were collected from publicly available UN documents.2 In the cases of the United States
(US) and the European Union (EU), policy orders and corresponding national sources were
screened. Furthermore, for each individual country in the GSDB, national sources were
searched to identify additional cases. Likewise, international newspapers and history books
were screened and keyword web searches in online search engines were consulted to identify
country specific sanctions, especially for older bilateral sanction cases. With this procedure
we were able to identify a total of 729 sanction cases.
The coverage of the first update of the GSDB has improved in two ways. First, due to the
discovery of new sources for sanctions and the improved listings in public databases, we
were able to identify additional cases for the period from 1950 to 2016. Second, we extended
the 1950–2016 period by three more years (i.e., 2016–2019) and included the corresponding
sanction cases in the GSDB. As a result, the new version of the GSDB includes a total of 1,101
publicly traceable, multilateral, plurilateral, and unilateral sanction cases over the period from
1950 to 2019. The Appendix to this chapter provides a list of all newly identified cases that
are contained in GSDB Update 1.
There are several reasons for the increase in the number of sanction cases in GSDB Update
1. First, we relied on new sources. Most notably, we utilized the Sanctions Alert (by https://
www.debevoise.com (n.d.)) for new sanctions imposed between 2013 and 2017. Second, we
managed to record additional sanction cases (primarily related to financial and military aid
cuts, travel bans, and diplomatic sanctions) by relying on the Intrastate Dispute Narratives
of the DADM Project led by the Political Science Department of the University of Central
Arkansas. Third, we revisited existing sanctions databases and, once again, cross-checked
the GSDB cases against them. In particular, we studied in detail each sanction case reported
in Hufbauer et al. (2007) and, within a number of sanctions policies, we identified additional
cases. We also cross-checked with Morgan et al. (2014) for missing cases (mostly for the
1950–1990 period). Fourth, we compared the cases in the GSDB with newly constructed
datasets (i.e., the EUSANCT database by Weber and Schneider, 2018). Lastly, we added
some cases suggested to us by users of the GSDB. As a result, we discovered 306 additional
cases that were imposed up to 2016 and 77 new cases imposed during the period from 2016
to 2019.
The GSDB defines sanctions as restrictive policy measures adopted by individual countries,
groups of countries, the UN, and other international organizations, to address various types of
violations of international norms and conventions. Importantly, in the GSDB, the imposition of
tariffs or anti-dumping duties is not considered a sanction. The motivation for this decision is
that classical trade policy measures are normally used to protect domestic economic interests
within defined rules (e.g., WTO anti-dumping rules) while sanctions are imposed to punish
or compel a targeted nation to conform to the sanctioning state’s political objective(s). We do
recognize, however, that the distinction between sanctions and standard trade policy tools is
increasingly becoming blurred (see Chapter 2 by Hufbauer and Jung in this Handbook). For
datasets on specific trade policy tools, we refer the reader to the WTO and to the UN. For an
excellent dataset that simultaneously accounts for sanctions and tariffs, we refer the reader to
the Threat and Imposition of Economic Sanctions (TIES) by Morgan et al. (2014); see also
Chapter 3 of this Handbook. Finally, we note that trade sanctions take center stage in the
GSDB, which distinguishes between export sanctions, import sanctions, and bilateral trade
sanctions, depending on the direction of trade flows, and between partial and complete trade
sanctions, depending on their coverage.
The GSDB features sanction cases that vary along three dimensions. First, the cases are
classified on the basis of distinct types (e.g., trade sanctions, financial sanctions, travel
restrictions, arms sanctions, military assistance sanctions, and other types of sanctions).
Second, for each sanction case, the GSDB identifies the sanctioning country’s policy
objectives depending on official documents and/or press releases.3 When sanctions have
several policy objectives, the GSDB includes up to three of these objectives (though not
in order of importance). The third dimension of the GSDB aims to assess the success of
each sanction case under consideration. This assessment is based on official government
statements or indirect confirmations in international press announcements, but it still comes
with the caveat that such statements can be subjective or biased. Nonetheless, this is a good
starting point in that the collected information allows a first assessment. Moreover, as the
following descriptive statistic illustrates, we can elaborate on some general trends regard-
ing the success or failure of specific sanction policies.4 Table 4 B.1 and Table 4 B.2 in the
Appendix provide several historical examples of sanction types and sanction objectives that
are documented in the GSDB.
The GSDB complements and extends a number of prominent databases such as the HSE/
HSEO database (Hufbauer et al., 2007), the TIES database (Morgan et al., 2014), the TSC
database (Biersteker and Tourinho, 2016), and the EUSANCT database (Weber and Schneider,
2018). A novel feature of the GSDB is that it records international trade sanctions and differen-
tiates these sanctions on the basis of several desirable characteristics. For example, in addition
to identifying the trade sanctions, the GSDB specifies the direction of affected trade flows
(exports and/or imports) and the type of trade sanction imposed (i.e., partial vs complete).
What is more, the GSDB is available as a case-level version as well as a dyadic version. Thus,
the GSDB is very well suited for analyses that aim to estimate the effects of alternative types
of sanctions (e.g., trade sanctions, financial sanctions, etc.) using models for bilateral flows of
trade, foreign direct investment, and migration.
Panel (a) of Figure 4.1 depicts the evolution of all identified sanctions between 1950 and
2019.5 For each year over this period, we identify the total number of imposed sanctions.
Several distinct time spans with changing trends can be discerned. Between 1950 and 1993,
the number of imposed sanctions rises continuously. Interestingly, in the early 1990s, there
is a marked increase in the number of these sanctions. In the subsequent decade, the trend
changes significantly. Until 2004, both the total number of sanctions in force and the newly
initiated sanction cases drop slightly. However, a large and sustained increase in initiated
sanction policies emerges again and remains in place until the beginning of President
Obama’s second term. At that point, the number of active sanctions starts to drop until 2016
but begins to rise in 2017 till the end of the sample period.6 Overall, the number of sanc-
tions has increased continuously since 1950, and this increase has accelerated since 2018.
We view this trend as evidence of the rising popularity of sanctions as a tool of coercive
diplomacy.7 Consequently, one would expect the economic impact of these sanctions to
rise as well.
Panel (b) of Figure 4.1 displays the number of new sanctions in each year for the period
from 1950 to 2019. This panel captures two patterns. First, the number of new sanction cases
has, on average, increased over time. Second, while the number of new sanction impositions
a) Existing Cases vs. All Active Cases b) New Cases
300 60
Existing Cases
250 50
All Active Cases
(Existing Cases + New Cases)
200 40
150 30
100 20
50 10
0 0
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
2019
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
2019
Note: This figure illustrates: (a) the number of all active sanctions (solid line) and the number of all existing
(i.e., previously imposed and still active) sanctions (dashed line) in each year of the sample coverage (1950–2019).
Thus, the distance between the two lines captures the number of new sanctions recorded in each year of the sample
coverage; and (b) the yearly number of new sanction impositions over the period from 1950 to 2019. A spike in new
sanction cases occurs in 2017, mostly driven by US sanctions.
Figure 4.1 Evolution of Sanctions, 1950–2019
fluctuated in the 2000s, their number has, on average, risen. As we argue next (and as can be
inferred from Figure 4.2 that follows), this is so primarily because of the adoption of ‘smart’
(targeted) sanctions (i.e., sanctions that typically target specific individuals, companies, or
organizations with financial and/or travel restrictions).
The early 2000s were marked by a rise in humanitarian concerns largely in response to the
damage and suffering that comprehensive sanctions inflicted on innocent civilians. This led
to a decrease in the use of these sanctions and to a re-evaluation of their effectiveness as a
foreign policy tool. The new smart sanctions, or targeted sanctions, appeared at that time and
were quickly proclaimed ‘superior’ because they aimed to target entities that were deemed
to be directly involved in the conflict that instigated the initiation of sanctions in the first
a) Frequency by Type b) Share of Different Sanction Types

600 100%
550 Other Sanctions
90%
500 Travel Sanctions
80%
450
Financial Sanctions 70%
400
350 Military Sanctions 60%
300 Arms Sanctions 50%
250 40%
200 Trade Sanctions
30%
150
100 20%
50 10%
0 0%
2019
1950
2019
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
Note: This figure presents the evolution of sanctions by type. Panel (a) depicts the number of imposed sanctions
by type for the period from 1950 to 2019, while panel (b) illustrates the share of sanction impositions by type in
each year for the period from 1950 to 2019. To facilitate readability, the order of different sanction types in the
legend corresponds to the order of the shaded areas in the two panels.
Figure 4.2 Sanction Implementations by Type, 1950–2019
place. The frequent deployment of this novel instrument led to another increase in sanctions
impositions starting in 2010. In 2016, many sanction regimes (i.e., Iran, Liberia, Ivory Coast,
and Myanmar) were revoked. Yet, as indicated by the large gap between the previously exist-
ing cases (captured by the dashed-line curve in panel (a) of Figure 4.1) and all active cases
(captured by the solid-line curve), 2017 was different. That was the year during which the
Trump administration imposed a number of new sanctions (which accounts for the rise in that
year shown in panel (b) of Figure 4.1). We focus on these sanctions in the next section.
Among other things, the two panels in Figure 4.2 illustrate the large and expanding role of
smart sanctions (travel and financial sanctions) throughout the sample period. The same figure
also captures the idea that the frequency and the share of trade sanctions in the total number
of sanctions have decreased over time, while the popularity of arms and military sanctions has
remained relatively stable over the last couple of decades.
The dyadic structure of the GSDB makes it easier to visualize who imposes sanctions and
on whom. Figure 4.3 exhibits two snapshots of chord diagrams by major regions classified
according to the UN Geoscheme. Arrows starting in a specific region and pointing to a particu-
lar region capture the number of imposed sanctions (of all types). Panel (a) of Figure 4.3 refers
to global sanction activities between regions for the year 2019. Accordingly, governments of
North-Western Europe (NW Europe) and African countries imposed the largest number of
sanctions on African countries mostly in response to coups and civil wars that occurred prior
to or during 2019. In contrast, not a single country from Africa imposed a sanction against any
North-Western European state. It turns out that some regions in the world rarely experience
sanctions while others (such as South Asian [S-Asia] and East Asian [E-Asia] countries) are
confronted with sanctions from all over the world. Moreover, sanctions are not imposed in a
symmetric way; that is, in most of the identified sanctions in the GSDB, we do not observe
retaliation.
Panel (b) of Figure 4.3 depicts a chord diagram that illustrates the sanction activities between
regions for the year 1950.8 Panel (b) also ascertains, both qualitatively and quantitatively, the
presence of substantially fewer sanctions across the world. The biggest arrow indicates that
sanctions among Eastern and Western European countries, which are mostly related to the Cold
War events, represent the largest share at the time. A comparison between the two panels of
Figure 4.3 also confirms that sanctions have indeed become a more popular tool, and that the
network of sanctions in the world has become more complex. At the same time, the figure also
reveals that the US and the EU have been the most active users of sanctions, followed by North-
African nations and Canada (cf. Felbermayr et al., 2020), during all years in the sample period.
For each sanction case, the GSDB identifies the sanctioning countries’ policy objectives we
have collected from official documents. Figure 4.4 presents the distribution of nine distinct
objectives that recur in sanction policies. Between 1950 and 2019, several changes can be
observed. First, until 1960, two sanction objectives dominate the field.
Figure 4.5 summarizes the distribution of all sanction objectives over the period from 1950
to 2019 and separates these objectives during the four new years of data (2016–2019) we
introduced to the GSDB. The overall distribution of sanction objectives enables us to classify
them in three broad categories depending on their frequency of use. The most frequently
defined policy objectives of sanctions are improvements in human rights and restoration of
democracy. The second group of most frequently defined sanction objectives aims at ending
wars and changing policies in target countries. Finally, the third group includes sanctions with
objectives to prevent war, fight terrorism, resolve territorial conflicts, and destabilize regimes.
S. A
rope
S. Asia
meri
S. Eu
Oc
sia
ean
ca
.A
SE
ia
NW
.E
uro
pe
A sia
W.
N. Am
erica
E. Europe
E. Asia
b
Cari
s ia
A
C. rica
e
Am
C.
(a) 2019
Afri
ca
S. Ameri
rope
S. Asia
Oce
S. Eu
ania
ca
sia
.A
W
sia
E. A
Africa
C. America
Carib
N.
Am
eric
a
e
op
ur
.E
NW
(b) 1950
Note: The above chord diagrams help visualize sanctions between different regions in the world for the years
1950 and 2019. Regions are classified according to the UN Geoscheme. See the Appendix for a description of the
classification of regions according to the UN Geoscheme.
Figure 4.3 Bilateral Structure of Sanctions
400
Cases with Objective: Other
350 Cases with Objective: Democracy
Cases with Objective: Human Rights
300
Cases with Objective: End War
Number of Cases
250 Cases with Objective: Terrorism
Cases with Objective: Prevent War

200
Cases with Objective: Territorial Conflict
150 Cases with Objective: Destabilize Regime
Cases with Objective: Policy Change

100
50
0
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
2019
Note: This figure depicts the yearly number of observed policy objectives declared in all sanctions listed in the
GSDB (1950–2019). For each sanction considered, up to three objectives are documented (but not ranked in terms
of importance/significance). A visible spike occurs after 2016 in sanctions that aim to restore human rights, fight
terrorism, change policy objectives, solve territorial conflicts, or destabilize regimes. Second, from the mid-1960s
onward, a continuously rising number of sanctions emerges that aim to change policies in targeted countries.
The just noted objectives appear to diminish in importance in the early 1990s, especially after the fall of the Iron
Curtain. Figure 4.4 also depicts a third structural change: Sanctions aiming to address issues related to human rights
and democracy start to rise continuously from the 1970s onward. Similarly, sanction objectives that aim to end wars
start to play an increasing role.
Figure 4.4 Sanctions by Objective—Over Time
Comparison between the frequency of sanction objectives before and after 2016 reveals
several patterns. First, consistent with the pre-2016 trend, most of the post-2016 objectives
of sanctions are improvements in human rights and restoration of democracy. Second, the
post-2016 period witnesses a significant relative (in percentage terms) increase in sanctions
with objectives that aim at terrorism and policy change in the target countries. Third, and also
consistent with the pre-2016 pattern, we see very few new cases that target preventing war or
resolving territorial conflict and, in fact, no new cases that aim at regime destabilization. Finally,
we document a relative increase in the number of sanctions with ‘other’ objectives. A possible
explanation for this trend could be the use of new smart sanctions that do not fit within the
standard definitions of objectives. The implication for the GSDB is that future updates should
pay closer attention to the objectives of new sanctions in an effort to classify them better.
We conclude this section with an analysis of the success of sanctions. While, as noted earlier,
we recognize that the identification and quantification of sanctions’ success is a complex
problem that is inevitably accompanied by numerous caveats, we believe that the trends
we identify and describe here with the help of GSDB are informative. Figure 4.6 presents
the shares of sanctions with different success rates over the entire sample period. Overall,
the average success rate of all identified sanction cases that have been classified as fully
successful over the 1950–2019 period is at around 42%, while sanctions with partial success
account for about 16%. These percentages are calculated without taking into account ongoing
350
300
250
Number of Cases
200
150
100
50
O
En
Po
Te
Pr
Te
th
es
um
em
ev
rro
lic
rri
er
ta
en
oc
to
an
y
ris
bi
ria
tW
ar
Ch
ra
liz
Ri
m
cy
lC
an
eR
gh
ar
ge
on
ts
eg
fli
im
ct
e
Note: This figure depicts the number of observed policy objectives declared in all sanctions listed in the GSDB
for the period from 1950 to 2019. The dark bars capture the cases imposed from 1950 to 2015, while the light bars
show the most recent cases imposed during 2016–2019. For each sanction up to three objectives are documented
(but not ranked by importance/significance). The most common objectives of sanctions imposed during 2016–2019
are: restoring human rights and democracy and fighting terrorism.
Figure 4.5 Frequency of Sanctions by Objective
sanction cases. If the latter were taken into account, the sanctions with at least partial success
would account for about 30%, very much in line with the effectiveness rate of 34% reported
in Hufbauer et al. (2007).
Figure 4.6 unveils several patterns in the evolution of sanctions depending on their success.
First, throughout the period of investigation (and with the exception of the 1990s) the share of
sanctions classified as successful increased steadily. Second, over the same period, the share of
sanctions that were considered unsuccessful (or ‘failed’) declined steadily. Third, we see a clear
decreasing trend in the fraction of sanctions classified under ‘negotiation settlement.’ Finally,
after a decreasing trend until the 1970s, we see a sharp increase in the share of sanctions with
‘partial success’ in the late 1970s and a stable share since then. In sum, Figure 4.6 suggests that
over time increasingly more sanctions have been classified as partially or fully successful, thus
suggesting that, over time, sanctions have become more effectual.
4.3 ECONOMIC SANCTIONS DURING THE TRUMP PRESIDENCY
This section zooms in on the economic sanctions during the period from 2016 to 2019, with
a specific focus on the sanctions imposed by the United Sates. The types of questions we are
100%
90%
80%
Sanctions with Success Rating:
70% Failed
60% Sanctions with Success Rating:
Negotiation Settlement
50%
40% Sanctions with Success Rating:

Partial Success
30%
Sanctions with Success Rating:
20% Total Success
10%
0%
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
2019
1950
Note: This figure depicts the registered yearly policy outcome associated with the declared policy objectives
during during the period from 1950 to 2019. For each sanction case considered, up to three objectives are
documented. To ease readability, the order of sanctions classified by outcome in the legend corresponds to the order
of the shaded areas in the graph. The graph identifies a significant increase in the number of ongoing sanction cases
over time.
Figure 4.6 Success Rate of Sanctions
interested in answering here may be summarized as follows: Did the Trump administration
impose more sanctions than earlier administrations? Did the types of sanctions it used differ?
And if they did, what are the salient differences? Our consideration of the 2016–2019 period
is motivated by two ideas. First, because the original edition of the GSDB included sanctions
up to the year 2016, all cases recorded during the period from 2016 to 2019 constitute new
additions to the GSDB and, as such, deserve attention. The second idea is that these years
coincided with most of Donald Trump’s presidency. Our focus on the US sanctions can be
attributed to the following reasons. First, as motivated by the opening quote to the chapter, it
is widely believed that the Trump administration imposed more sanctions than any other US
administration.9 Second, according to the GSDB, since 1950 the United States has been the
most frequent sanctioning nation, averaging more than one third of all sanction cases in the
world. Third, for various reasons, the US sanctions have been of keen interest to scholars and
analysts in the sanctions literature (e.g., Kohl, 2021). Finally, due to the primacy of the United
States in international affairs, its sanction policies differ substantively from those of other
countries in the world (e.g., Schneider and Weber, 2020; Dai et al., 2021).
We start by considering the fraction of US sanctions over all sanctions imposed in the world
(according to the GSDB) and by commenting on whether there were significant changes
during the Trump presidency. Figure 4.7 plots the fraction of sanctions imposed by the United
States vs. the United Nations vs. the European Union vs. all other countries in the world during
the period from 1950 to 2019. Three key observations stand out upon inspection of this figure.
First, the United States has been the single most frequent user of sanctions throughout this
period: on average, more than 35% of all sanctions during the 1950–2019 period were imposed
by the United States. A noteworthy exception appears in the early 1970s. At that time, we
100%
90%
80%
70% Other Senders
60% EU Sanctions
50% UN Sanctions
40% US Sanctions
30%
20%
10%
0%
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
2019
Note: This figure depicts the yearly percentage of all sanctions imposed by the US vs. the percentage of sanctions
imposed by the UN, the EU, and the rest of the world. The US has been the most frequent imposer of unilateral
sanctions throughout the 1950–2019 period. The percentage of the US sanctions significantly increases during the
Trump administration.
Figure 4.7 US vs. UN vs. EU Sanctions (percentage worldwide)
observe a substantial decrease in this fraction. The primary reason behind this fall is the resolu-
tion of the Indo-Pakistani conflict and the lifting of many sanctions on India and Pakistan.
Second, we detect a significant and steady rise in the EU and UN sanctions since the early
1990s. Finally, we document a clear contrast between the evolution of the fraction of US sanc-
tions under the Obama and the Trump administrations. Specifically, at the end of the Obama
presidency in 2016 and 2017, US sanctions accounted for 30% of all sanctions in the world. In
contrast, in 2019 this fraction rose to more than 40%. In summary, Figure 4.7 documents the
dominant reliance of the United States since 1950 on sanctions to achieve its foreign policy
objectives as well as the increase in the frequency of their use by the Trump administration.
Next, consistent with our analysis in the previous section, we analyze President Trump’s
sanctions across two primary dimensions of the GSDB: type and objective.10 Figure 4.8 depicts
the types of sanctions employed by the US. In addition to confirming the increase in the absolute
number of sanctions imposed by the Trump administration, two clear patterns emerge from panel
(a) of Figure 4.8. First, while trade sanctions appear to have risen significantly during the Obama
years, there is a sharp fall in 2017 due to the lifting of many active Obama era sanctions in 2016. The
Trump administration did not appear to favor trade sanctions. In contrast, though arms sanctions
remained relatively steady during the 2016–2019 period, military sanctions increased marginally.
Second, and more interestingly, the Trump and Obama administrations differ very starkly in
their imposition of smart (i.e., travel and financial) sanctions. Specifically, we observe a sharp
increase in the number of smart sanctions under Trump’s term. This pattern is even clearer
in panel (b) of Figure 4.8, which reports the sanction cases in percentage terms. A possible
explanation for this relative increase in the number of smart sanctions, which is consistent with
a general worldwide trend, is that, by design, smart sanctions aim to influence policymakers
(a) US Sanctions by Type (Number) (b) US Sanctions by Type (%)
160 Other Sanctions 100%
Travel Sanctions 90%
140
Financial Sanctions
Military Sanctions
80%
120
Arms Sanctions 70%
100 Trade Sanctions 60%
80 50%
60 40%
30%
40
20%
20 10%
0 0%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2019
Note: This figure illustrates the evolution of US sanctions by type. Panel (a) depicts the number of imposed
sanctions by type in each year for the period from 2005 to 2019, and panel (b) illustrates the share of sanctions by
type in each year for the same period. To facilitate readability, the order of different sanction types in the legend
corresponds to the order of the shaded areas in the two panels. There has been a significant increase in financial and
travel sanctions during the years of the Trump presidency (2017–2019), followed by a decrease in the share of arms
sanctions during these years.
Figure 4.8 Evolution of US Sanctions by Type, 1950–2019
in sanctioned countries by imposing economic pain on targeted individuals, companies, and/

or sectors in the hope of limiting the negative impact on ordinary people. Of course, some
targeted sanctions (e.g., US visa denials, border rejections, and local currency devaluations)
often still have unintended consequences on civilians.
Next, we ask whether the sanctions of the Trump administration differ in terms of their
objectives. The answer is contained in Figure 4.9, which suggests that this is indeed the case.
Specifically, panel (a) depicts the number of sanctions by objective, while panel (b) converts
these numbers into percentages. Figure 4.9 unveils a significant increase in the sanctions
whose objectives belong to the ‘policy change’ and ‘terrorism’ categories.11 We also detect
a small rise in 2019 in the ‘human rights’ objective. Prominent examples of US sanctions
a) US Sanctions by Objective b) US Sanctions by Objective (%)
160 100%
140 90%
Cases with Objective: Other 80%
120
Cases with Objective: Democracy 70%
Cases with Objective: Human Rights 100
Cases with Objective: End War 60%
Cases with Objective: Terrorism 50%
80
Cases with Objective: Prevent War
Cases with Objective: Territorial Conflict
60 40%
Cases with Objective: Destabilize Regime
Cases with Objective: Policy Change 30%
40
20%
20 10%
0 0%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Note: For clarity, this figure depicts the yearly number of observed policy objectives associated with US sanctions
listed in the GSDB during the period from 2005 to 2019. For each sanction considered, up to three objectives
are documented (not ranked by importance/significance). Clearly, during the Trump presidency, we observed a
significant rise in sanctions whose objectives belong to the ‘policy change’ and ‘terrorism’ categories. The number
of sanctions with a ‘destabilize regime’ objective decreased in the same years.
Figure 4.9 Evolution of US Sanctions by Objective, 1950–2019
targeting ‘policy change’ include the visa sanctions on Cambodia, Eritrea, Guinea, and Sierra
Leone for failing to accept the nationals that were ordered to move out of the United States. As
for the sanctions aiming to fulfill the ‘terrorism’ objective, the Trump administration imposed
travel bans on Iranian nationals, as well as on nationals of numerous other Muslim countries,
to restrict immigration from regions that it viewed as ‘terror-prone.’
The increased use of sanctions with ‘policy change’ and ‘terrorism’ objectives is even
clearer in panel (b) of Figure 4.9. Panels (a) and (b) also reveal a significant decrease in the use
of sanctions aiming to destabilize regime primarily due to the easing of the Cuban sanctions
by the Obama administration.
4.4 CONCLUSIONS
Under the leadership of the United States, the European Union, and the United Nations, the
number of economic sanctions has increased since 1950. As a result, sanctions have become one
of the most popular tools of coercive diplomacy in foreign affairs. Normally, a larger number of
sanctions generates increased economic and political effects. Predictably, this has stimulated the
interest of academics and policymakers in understanding the reasons for the imposition of sanc-
tions and their consequences. In order to analyze and understand sanctions, good data are required.
In this chapter, we described the first update of the Global Sanctions Data Base (GSDB) of
Felbermayr et al. (2020) along two dimensions. First, we extended the original coverage period
(1950–2016) to include four more years (2016–2019) and 75 new sanction cases. Second,
on the basis of various new sources, we were able to identify 306 additional sanction cases
during the 1950–2016 period, which we recorded in the GSDB. As a result, the first update of
the GSDB includes a total of 1,101 publicly traceable, multilateral, plurilateral, and unilateral
sanction cases over the period from 1950 to 2019.
We utilized the new version of the GSDB to document the following stylized facts and
trends related to usage, types, objectives, and outcomes of sanctions in recent years. First, after
a drop in the number of active sanction cases in 2016 (due to the lifting of the sanctions on
Myanmar, Liberia, Ivory Coast, and Iran), the year 2017 was marked by impositions of new
sanctions, and this trend accelerated from 2018. Second, our descriptive analysis reveals that
the increased number of sanctions was accompanied by a larger number of target countries
and especially by an increased number of sender countries. Third, in terms of objectives, we
see that the most frequently defined policy aims of sanctions were ‘improvements in human
rights’ and ‘restoration of democracy,’ followed by the objectives to ‘end wars’ and to ‘change
policies’ in target countries. ‘Improvements in human rights’ and ‘restoration of democracy’
are also the most frequent objectives of sanctions in the post-2016 period. However, during this
period, we also observe a relative increase in the sanctions that aim to address ‘terrorism’ and
‘policy change.’ Fourth, in terms of success, we find that, during the 1950–2019 period, more
and more sanctions have been classified as partially or fully successful, possibly suggesting
that over time sanctions have become more effective in achieving their goals.
Consistent with the general belief that the Trump administration has been notorious for
its imposition of sanctions, we find that the sanctions imposed by the United States indeed
increased (both in absolute and in relative terms) during Trump’s term, reaching more than
40% of all sanctions in the world in 2019. We also observe a sharp increase in the number of
smart (financial and travel) sanctions under Trump’s term. Consistent with the general trend
in recent years, we see a significant rise in the US sanctions with objectives to ‘change policy’
and to ‘fight terrorism,’ and a decrease in the use of sanctions that aim to ‘destabilize regime’
in the target countries. Based on our analysis, we conclude that economic sanctions are indeed
an extremely popular foreign policy tool and that they are here to stay.
NOTES
* We are indebted to numerous scholars for their positive feedback and specific suggestions on the initial release
of the GSDB. We are especially grateful to, and thank, Keenan Kassar, David Gomtsyan, Tobias Weirowski,
James Smith, Matteo Pinna Pintor, Ruth Gibson, Zachary J. Kramer, Thembinkosi Rushwaya, Abhinaba Nandy
and Carla Norloff. We also thank Peter A.G. van Bergeijk for many constructive comments on this chapter. The
development and maintenance of the GSDB require substantial time and effort. In return, we expect researchers
who use it to cite the current paper and Felbermayr et al. (2020). Moreover, if you identify an error or omission
in the GSDB, please notify us at GSDB@drexel.edu, where you can also obtain the latest version.
1. Additional information about the GSDB can be found at https://www.globalsanctionsdatabase.com. The dataset
can be obtained by emailing us at GSDB@drexel.edu.
2. We note that most multilateral sanctions, and UN sanctions in particular, require countries to implement local
legislation to comply with them, and it is the responsibility of the countries to comply with UN sanctions. Thus,
it is possible that sometimes some countries do not implement (in whole or in part) some multilateral sanctions.
Felbermayr et al. (2019) offer empirical evidence for the heterogeneous effects of the EU sanctions on Iran across
EU member states. In light of this uncertainty of countries’ behavior, in the GSDB, multilateral sanctions are
assumed to be implemented by all member states, e.g., if the sanction is imposed by the UN, then all UN members
at that time are recorded as senders of that sanction.
3. It is possible to identify sanction objectives by capitalizing on the fact that related official documents record the
declared objectives associated with specific sanction impositions.
4. In our ongoing data project, we are exploring possible ways to identify the success or failure of sanctions based
on newly developed machine learning techniques that can be used to screen large databases and the internet.
5. The data used to construct Figure 4.1 can be found in Table 4 A.2.
6. It should be noted that, while many sanction regimes were lifted in 2016 (i.e., Myanmar, Liberia, Ivory Coast,
and Iran), the year 2017 was marked by the imposition of new sanctions.
7. In the next section we zoom in on the most recent years in the GSDB with a special focus on the US sanctions
that were imposed under the Trump administration.
8. For comparison purposes, the figure maintains the regional classification of nations fixed (and according to the
UN Geoscheme in 2019).
9. To complement the opening quote: ‘On average, the Trump administration imposed sanctions on more than 900
entities or individuals each year for the last four years, nearly 80% more than the annual number of designations
imposed by the Obama administration from 2009 to 2016.’ (The Wall Street Journal, Oct. 30, 2020).
10. Since these sanctions were imposed recently and are ongoing, it is too early to gauge their success.
11. The GSDB allocates sanction objectives to the ‘policy change’ category when sanctions aim to enforce a domestic
(i.e., an economic, political, or social) policy change in a sanctioned state. The ‘terrorism’ sanction objectives aim
to motivate a sanctioned state to stop supporting or tolerating terrorist groups.
REFERENCES
Attia, H., J. Grauvogel, and C. von Soest, “The Termination of International Sanctions: Explaining Target Compliance
and Sender Capitulation,” European Economic Review 129: doi: 10.1016/j.euroecorev.2020.103565.
Biersteker, T., S. Eckert, and M. Tourinho, 2016, Targeted Sanctions: The Impacts and Effectiveness of United Nations
Action, Cambridge University Press: Cambridge MA.
Dai, M., G.J. Felbermayr, A. Kirilakha, C. Syropoulos, E. Yalcin, and Y.V. Yotov, 2021, “Timing the Impact of
Sanctions on Trade” in: P.A.G. van Bergeijk (ed.), Research Handbook on Economic Sanctions, Edward Elgar:
Dizaji, S.F., and P.A.G. van Bergeijk, “Potential Early Phase Success and Ultimate Failure of Economic Sanctions: A
VAR Approach with an Application to Iran,” Journal of Peace Research, 2013, 50 (6), 721–736.
Felbermayr, G., A. Kirilakha, C. Syropoulos, E. Yalcin, and Y.V. Yotov, 2020, “The Global Sanctions Data Base,” School
of Economics Working Paper Series 2020–2, LeBow College of Business, Drexel University.
https://www.debevoise.com (n.d.).
Hufbauer, G.C., and E. Jung, 2021, “Economic Sanctions in the 21st Century” in: P.A.G. van Bergeijk (ed.), Research
Handbook on Economic Sanctions, Edward Elgar: Cheltenham, Chapter 2.
Hufbauer, Gary C., Jeffrey J. Schott, Kimberly A. Elliott, and Barbara Oegg, 2007, Economic Sanctions Reconsidered
(3rd edition). Peterson Institute for International Economics: Washington, DC.
Kohl, T., 2021, “In and Out of the Penalty Box: U.S. Sanctions and Their Effects on International Trade,” in: P.A.G.
van Bergeijk (ed.), Research Handbook on Economic Sanctions, Edward Elgar: Cheltenham.
Morgan, T.C., N. Bapat, and Y. Kobayashi, “Threat and Imposition of Economic Sanctions 1945–2005: Updating the
TIES Dataset,” Conflict Management and Peace Science, 2014, 31 (5), 541–558.
Morgan, T.C., N. Bapat, and Y. Kobayashi, 2021, “The Threat and Imposition of Economic Sanctions Data Project:
A Retrospective” in: P.A.G. van Bergeijk (ed.), Research Handbook on Economic Sanctions, Edward Elgar:
Schneider, G., and P. Weber, “How Many Hands to Make Sanctions Work? Comparing EU and US Sanctioning
Efforts,” European Economic Review, 2020, 130: doi: 10.1016/j.euroecorev.2020.103595.
van Bergeijk, Peter A.G., and Charles van Marrewijk, “Why Do Sanctions Need Time to Work? Adjustment, Learning
and Anticipation,” Economic Modelling, 1995, 12 (2), 75–86.
Weber, P.M., and G. Schneider, “Making the World Safe for Liberalism? Evaluating the Western Sanctions Regime
with a New Dataset,” 2018.
A. APPENDIX
This Appendix includes: (A) the list of the new sanction cases that were added to the GSDB
(2021 edition) and the table with the yearly number of sanctions by type from the GSDB; (B)
the classification of regions based on UN Geoscheme that has been used to construct Figure 4.3;
and (C) tables with examples of sanctions for each type and objective from the GSDB.
Table 4 A.1 List of Newly Added Cases
Case ID Sanctioned State Sanctioning State Begin End

1 Afghanistan US 1979 1979
2 Afghanistan EU + aligned countries 1999 2001
3 Afghanistan EU + aligned countries 2002 2019
4 Afghanistan UN 2002 2019
5 Albania, Montenegro, Russia 2015 2019
Liechtenstein, Iceland
6 Algeria US 1962 1962
7 Algeria France 1965 1971
8 Algeria US 1992 2002
9 Algeria EU 1992 1994
10 Angola US 1993 2003
11 Antigua and Barbuda US 2001 2003
12 Argentina Iran 2003 2007
13 Argentina New Zealand 1982 1982
14 Argentina Australia 1982 1982
15 Argentina UK 1982 1989
16 Argentina Switzerland 1982 1982
17 Australia Russia 2014 2019
18 Austria EU 2000 2000
19 Austria US 2000 2000
20 Belarus EU + aligned countries 1998 1999
21 Belarus Russia 2010 2010
22 Belarus US 2004 2006
23 Belarus US 1998 1999
24 Belize EU 2014 2014
25 Belize US 1997 2004
26 Belize US 2018 2019
27 Belize EU 2001 2004
(continued)
Table 4 A.1 (continued)

28 Benin US 2003 2005
29 Benin EU 2009 2017
30 Bolivia US 1978 1978
31 Bosnia and Herzegovina FRY (Serbia and Montenegro) 1994 1995
32 Brazil NAFTA 2001 2001
33 Bulgaria US 1950 1966
34 Bulgaria EU 2008 2019
37 Bulgaria Turkey 1985 1992
38 Bulgaria Turkey 1989 1992
40 Burkina Faso US 2018 2019
41 Burundi France 1996 2005
42 Burundi Belgium 2015 2019
43 Burundi Belgium 1996 2005
44 Burundi EU 2016 2019
45 Burundi EU 1997 2001
46 Burundi US 2016 2019
47 Cambodia Japan 1975 1992
48 Cambodia US 2017 2019
49 Cambodia UK 1975 1991
52 Cambodia EU 2017 2018
53 Cambodia Australia 1975 1992
55 Cambodia Germany 1975 1979
56 Cambodia Thailand 1977 1978
57 Cambodia Australia 2018 2019
59 Cameroon US 2019 2019
60 Canada Russia 2014 2019
61 Canada Taiwan 2015 2016
62 Canada Korea (South) 2015 2016
(continued)

63 Canada US 2003 2005
64 Canada Mexico 2003 2016
65 Canada Japan 2003 2006
66 Canada China 2003 2016
67 Canada Spain 1995 1995
68 Canada League of Arab States 1973 1974
69 Central African Republic EU 2013 2019
70 Central African Republic US 2002 2005
73 Central African Republic Kimberly Process Participants 2013 2016
74 Chad Central African Republic 1969 1969
75 Chad US 2017 2018
76 Chile Sweden, Finland, Norway, 1973 1990
Netherlands
77 Chile UK 1974 1980
78 Chile US 1974 1983
79 Chile Germany 1973 1990
80 Chile Denmark 1973 1990
81 Chile Belgium 1973 1990
82 Chile USSR 1973 1990
83 Chile German Democratic Republic 1973 1990
84 Chile Mexico 1974 1990
85 China US 2017 2019
86 China Japan 1952 1954
87 China Hong Kong 1951 1954
88 China UK 1950 1956
89 China Italy, Belgium 1989 1989
92 China US 2019 2019
93 Colombia US 2003 2003
94 Colombia EU 2002 2016
(continued)

98 Congo (Brazzaville) EU 1997 2001
99 Congo (Democratic Republic) Canada 1993 1997
100 Congo (Democratic Republic) US 2006 2019
104 Costa Rica US 2001 2006
105 Costa Rica US 2003 2016
106 Croatia US 2003 2008
107 Croatia US 2003 2006
108 Cuba Organization of American States 1964 1975
109 Cuba US 1958 2019
110 Cuba Germany 1963 1969
111 Cyprus US 1987 2018
112 Denmark League of Arab States 1973 1974
113 Dominica US 2003 2004
114 Dominican Republic Venezuela 1963 1963
115 Dominican Republic US 1963 1963
116 Dominican Republic US 2011 2019
117 Ecuador US 2013 2014
118 Ecuador US 1968 1969
119 Ecuador US 1971 1972
120 Egypt US 2017 2018
121 Egypt US 2013 2015
122 Egypt Saudi Arabia 2016 2017
123 Egypt EU 2013 2019
124 Egypt UK 1951 1954
125 Egypt US 1952 1952
126 Egypt US, UK, France 1956 1957
127 Egypt US 1963 1964
128 Egypt US 1964 1965
129 Egypt Germany 1965 1972
130 Egypt France 1967 1974
131 Egypt USSR 1976 1984
(continued)

132 El Salvador, Honduras US 1969 1969
133 Equatorial Guinea Spain 1977 1979
134 Equatorial Guinea EU 1978 1979
135 Equatorial Guinea US 1992 1997
136 Eritrea US 2017 2019
137 Eritrea US 1977 1993
138 Eritrea US 2007 2019
139 Eritrea Russia 2009 2018
140 Eritrea Russia 2013 2018
141 Estonia Russia 1992 1992
144 Estonia, Latvia, Lithuania USSR 1990 1990
145 Ethiopia Eritrea 1998 2018
146 EU Russia 2014 2019
147 EU Canada 1996 2015
148 Fiji Australia, New Zealand 2009 2012
149 Fiji US 2003 2003
150 Finland USSR 1958 1959
151 France US 1982 1982
152 France US 1998 2017
153 France China 1992 1994
154 France UK 1995 1996
155 France US 1995 1996
156 France US 2003 2003
157 France US 1985 1985
158 France Denmark 1995 1995
159 Gambia US 2017 2019
160 Gambia US 2016 2017
161 Gambia EU 2014 2017
162 Georgia Russia 2009 2011
163 German Democratic Republic Germany 1961 1989
164 German Democratic Republic Germany 1949 1973
165 German Democratic Republic US 1954 1974
166 Germany League of Arab States 1965 1979
(continued)

167 Germany US 1977 1977
168 Ghana US 2018 2019
169 Ghana US 2019 2019
170 Gibraltar Spain 1965 1984
171 Greece US 2013 2019
172 Greece US 1967 1970
173 Greece US 1967 1972
174 Guatemala US 1954 1954
175 Guinea EU 2002 2006
176 Guinea US 2009 2010
177 Guinea US 2017 2019
178 Guinea US 2003 2004
179 Guinea-Bissau ECOWAS 2018 2019
180 Haiti US 1962 1964
181 Haiti France 1991 1994
182 Honduras Venezuela 2009 2009
183 Honduras US 2019 2019
184 Hungary US 1951 1973
185 India UK 1965 1967
186 India US 1974 2008
187 Indonesia Australia 2018 2019
188 Indonesia Malaysia 1963 1967
189 Indonesia US 1999 2010
190 Indonesia US 1964 1966
191 Iran US 1980 1981
192 Iran US 1984 2016
193 Iran UN 2008 2016
194 Iran Korea (South) 2010 2012
195 Iran Korea (South) 2018 2019
196 Iran US 2017 2019
197 Iran US 2019 2019
198 Iran US 1996 2019
199 Iraq US 1997 2009
200 Iraq EU 2004 2019
201 Iraq US 2017 2017
(continued)

202 Iraq US 2019 2019
203 Ireland US 1998 2014
204 Israel France 1950 1955
205 Israel Egypt 1950 1957
206 Israel Egypt 1959 1979
207 Israel France 1967 1974
208 Israel Spain, UK 2014 2019
209 Israel UK 1982 1994
210 Ivory Coast Canada 2005 2017
211 Jamaica USA 2011 2019
212 Japan League of Arab States 1973 1974
213 Jordan Egypt, Syria 1957 1958
214 Jordan France 1967 1974
215 Kenya Norway 1990 2002
216 Korea (North) Korea (South) 2010 2019
217 Korea (North) Burkina Faso 2017 2019
218 Korea (North) Japan 1983 1984
219 Korea (North) US 2017 2019
220 Korea (South) US 1961 1961
221 Kuwait Japan 1990 1991
222 Kuwait US 1990 1991
223 Kyrgyzstan Uzbekistan 2005 2006
231 Laos US 1962 1962
232 Laos US 1975 1995
233 Laos US 1958 1958
234 Laos Thailand 1977 1978
235 Laos Thailand 1975 1976
236 Laos US 2018 2019
(continued)

237 Lebanon US 2018 2019
238 Lebanon Israel 1995 1995
239 Lebanon Israel 2006 2006
240 Lesotho UK 1970 1970
241 Lesotho US 2003 2006
242 Libya Gambia 2011 2012
243 Libya UK 1984 1999
244 Libya US 2017 2019
245 Libya US 1996 2019
246 Lithuania Russia 2013 2014
247 Lithuania Russia 1992 1992
248 Malawi UK 2011 2012
249 Malawi UK 2014 2019
250 Malawi Japan 2018 2019
251 Malawi EU, US, Norway 2001 2003
252 Malawi US 2003 2003
253 Mali UN 2017 2019
254 Mali Algeria 2012 2012
255 Mali US 2019 2019
256 Mauritania EU 2005 2006
257 Mauritania US 2008 2009
258 Mauritania African Union 2009 2009
259 Mauritania EU 2009 2009
260 Myanmar China 1967 1971
261 Myanmar US 2018 2019
262 Myanmar US 2019 2019
263 Myanmar Japan 2007 2008
264 Nepal India 2015 2016
266 Nepal US 2005 2005
267 Nepal UK 2005 2005
269 Nigeria US 2003 2019
270 Nigeria Czechoslovakia 1968 1970
271 Nigeria UN 2014 2019
272 Nigeria US 2013 2019
(continued)

273 Nigeria US 2019 2019
274 Norway China 2010 2017
275 Norway Russia 2014 2019
276 Norway China 2010 2018
277 Pakistan India 1949 1951
278 Pakistan Afghanistan 1961 1963
280 Pakistan Netherlands 2007 2008
281 Pakistan US 2012 2013
284 Pakistan South Africa 1999 2001
287 Pakistan, India UN 1965 1975
288 Pakistan, India US 1965 1975
289 Pakistan, India UK 1965 1975
290 Panama US 1968 1968
291 Paraguay UNASUR 2012 2013
292 Peru Venezuela, Colombia, Costa 1962 1963
Rica, Dominican Republic
293 Peru US 1968 1968
294 Peru US 1962 1962
295 Philippines US 2002 2019
296 Philippines EU 2002 2019
297 Philippines Malaysia 1963 1964
298 Philippines Malaysia 1968 1969
299 Poland, Hungary, US 1961 1991
Czechoslovakia
300 Portugal India 1954 1975
301 Portugal India 1954 1954
302 Qatar Saudi Arabia, UAE, Bahrain, 2017 2019
Egypt
303 Qatar Mauritania, Djibouti, the 2017 2019
Comoros, Jordan, Libya, Yemen,
Niger
304 Qatar Chad 2017 2018
(continued)

305 Qatar Senegal 2017 2017
306 Qatar Maldives 2017 2019
307 Romania US 1957 1960
308 Russia Switzerland 2014 2019
309 Russia Georgia 2008 2011
310 Russia EU + aligned countries 2014 2019
311 Russia EU + aligned countries 2014 2019
312 Rwanda EU 2012 2013
313 Rwanda Germany, Netherlands, Sweden 2012 2013
314 Rwanda UK 2012 2012
315 Rwanda US 2012 2013
316 Saudi Arabia US, France, Germany, Canada 2018 2019
317 Sierra Leone US 2018 2019
318 Sierra Leone US 2017 2019
319 Sierra Leone Commonwealth 1997 1998
320 Singapore Indonesia 1963 1966
321 Somalia US 2012 2019
322 Somalia US 2017 2019
323 South Africa Japan 1964 1994
324 South Africa France 1986 1994
325 South Africa US 2019 2019
326 South Sudan EU 2014 2019
327 South Sudan US 2018 2019
328 South Vietnam China 1978 1991
329 South Vietnam France 1981 1989
330 South Vietnam France 1978 1981
331 Sri Lanka US 2012 2019
332 Sudan US 1992 2019
333 Sudan US 2006 2019
334 Sudan US 2017 2017
335 Suriname Venezuela 1990 1991
336 Suriname Netherlands 1998 2000
337 Sweden US 1968 1970
338 Switzerland US 1951 1951
339 Syria US 2017 2019
340 Syria, Russia, Iran US 2019 2019
(continued)

341 Taiwan US 1994 1995
342 Taiwan US 2013 2019
343 Taiwan US 1950 1953
344 Tajikistan Uzbekistan 2009 2009
347 Tanzania Canada, EU, Japan, Norway 2014 2015
348 Tanzania Denmark 2018 2019
349 Tanzania US 2016 2016
350 Tanzania EU 2018 2019
351 Thailand EU 2014 2017
352 Thailand US 2006 2008
353 Thailand, Vietnam Cambodia 2004 2007
354 Turkey US 2018 2018
355 Turkey US 1974 1978
356 Turkey EU 2019 2019
357 Uganda UK, Norway, Ireland, 2005 2007
Netherlands, Sweden
358 Uganda Sweden 2014 2014
359 UK Spain 1966 1984
360 UK League of Arab States 1973 1974
361 Ukraine Russia 2006 2006
364 Ukraine Vietnam 2015 2018
365 US Japan 2003 2013
366 US Brazil 2003 2016
367 US Canada 2003 2006
368 US Russia 2014 2019
369 USSR EEC 1991 1991
370 USSR Japan 1991 1991
371 USSR UK 1991 1991
372 Venezuela Peru 2017 2019
373 Venezuela US 2017 2019
374 Venezuela Canada 2017 2019
375 Venezuela EU + aligned countries 2017 2019
(continued)

376 Venezuela Switzerland 2018 2019
379 Yemen US 2017 2019
380 Yugoslavia (former) Germany 1957 1968
381 Zimbabwe UK 2002 2009
Table 4 A.2 Evolution of Sanctions by Type
Military
Trade Arms Assistance Financial Travel Other
Year Sanctions Sanctions Sanctions Sanctions Sanctions Sanctions Total
1950 13 1 0 2 2 3 21
1951 15 4 0 4 3 4 30
1952 16 4 0 5 3 4 32
1953 16 4 0 4 3 4 31
1954 19 4 0 5 7 7 42
1955 18 2 0 5 7 7 39
1956 17 2 1 7 7 7 41
1957 18 2 1 10 8 9 48
1958 18 3 1 11 8 9 50
1959 17 3 1 9 8 10 48
1960 20 4 4 10 5 10 53
1961 19 5 4 12 9 11 60
1962 19 5 5 16 9 13 67
1963 24 8 7 19 10 19 87
1964 28 10 4 19 9 15 85
1965 29 16 6 20 9 15 95
1966 31 18 6 17 8 17 97
1967 27 25 6 15 8 15 96
1968 27 28 5 17 9 19 105
1969 29 29 5 17 10 16 106
1970 28 27 5 20 9 15 104
1971 28 22 8 22 9 14 103
1972 27 20 5 17 9 14 92
1973 40 20 4 20 8 16 108
(continued)
Military
1974 45 22 6 22 7 17 119
1975 34 18 7 28 8 18 113
1976 34 16 6 31 7 16 110
1977 37 18 15 37 6 18 131
1978 42 19 16 41 7 20 145
1979 41 20 17 54 6 21 159
1980 33 16 15 43 5 16 128
1981 35 15 14 46 9 17 136
1982 41 20 12 53 15 21 162
1983 37 18 11 50 17 21 154
1984 35 18 9 46 14 20 142
1985 38 18 9 41 6 17 129
1986 41 22 10 48 8 19 148
1987 44 23 14 53 10 25 169
1988 40 24 15 56 8 22 165
1989 44 26 17 58 10 23 178
1990 50 29 25 67 9 24 204
1991 50 35 27 75 10 20 217
1992 55 45 34 85 15 22 256
1993 60 44 35 91 19 21 270
1994 60 49 36 77 22 21 265
1995 49 42 31 64 21 20 227
1996 42 47 33 74 21 20 237
1997 37 45 29 79 26 22 238
1998 43 48 32 78 26 20 247
1999 42 51 34 77 23 20 247
2000 47 55 40 74 29 23 268
2001 47 55 43 75 30 21 271
2002 47 48 38 66 34 22 255
2003 53 48 48 62 35 18 264
2004 44 43 41 56 29 15 228
2005 42 48 45 63 37 18 253
2006 60 48 46 78 50 18 300
2007 55 50 42 81 49 20 297
(continued)
Military
2008 54 53 45 81 51 22 306
2009 59 58 46 88 61 31 343
2010 66 61 48 89 60 34 358
2011 82 70 58 120 72 38 440
2012 91 72 67 137 77 39 483
2013 100 77 66 140 75 36 494
2014 116 84 67 162 91 38 558
2015 111 83 64 153 87 30 528
2016 112 82 63 151 88 29 525
2017 84 70 58 133 92 33 470
2018 88 70 58 144 92 30 482
2019 84 65 54 148 93 29 473
Note: This table shows the number of sanction impositions by type in each year in the period 1950–2019.
Source: GSDB
B CLASSIFICATION OF REGIONS BASED ON UN GEOSCHEME
Africa Algeria, Angola, Benin, Botswana, Burkina Faso, Burundi, Cabo Verde, Cameroon,
Central African Republic, Chad, Comoros, Côte d’Ivoire, DR Congo, Djibouti, Egypt,
Eritrea, Ethiopia, Equatorial Guinea, Gabon, Gambia, Ghana, Guinea, Guinea-Bissau,
Kenya, Lesotho, Liberia, Libya, Madagascar, Malawi, Mali, Mauritania, Mauritius, Mayotte,
Morocco, Mozambique, Namibia, Niger, Nigeria, Réunion, Republic Congo, Rwanda, Saint
Helena, Ascension and Tristan da Cunha, São Tomé and Príncipe, Senegal, Seychelles, Sierra
Leone, Somalia, South Sudan, South Africa, Sudan, Swaziland, Tanzania, Togo, Tunisia,
Uganda, Western Sahara, Zambia, Zimbabwe.
Northern America Bermuda, Canada, Greenland, Saint Pierre and Miquelon, United States
of America.
Central America Belize, Costa Rica, Clipperton Island, El Salvador, Guatemala, Honduras,
Mexico, Nicaragua, Panama, Caribbean Anguilla, Antigua and Bermuda, Aruba, Bahamas,
Barbados, Bonaire, Sint Eustatius and Saba, British Virgin Islands, Cayman Islands, Cuba,
Curacao, Dominica, Dominican Republic, Grenada, Guadeloupe, Haiti, Jamaica, Martinique,
Montserrat, Navassa Island, Puerto Rico, Saint-Barthélemy, Saint Kitts and Nevis, Saint Lucia,
Saint Martin, Saint Vincent and the Grenadines, Sint Maarten, Trinidad and Tobago, Turks and
Caicos Islands, United States Virgin Islands.
Southern America Argentina, Bolivia, Bouvet Island, Brazil, Chile, Colombia, Ecuador,
Falkland Islands, French Guiana, Guyana, Paraguay, Peru, South Georgia and the South
Sandwich Islands, Suriname, Uruguay, Venezuela.
Northwestern Europe Shetland Islands, Austria, Belgium, Bulgaria, Czech Republic,

Denmark, Germany, Estonia, Faroe Island, Finland, France, Germany (Federal Republic),
Guernsey, Hungary, Iceland, Isle of Man, Jersey, Latvia, Liechtenstein, Lithuania, Luxembourg,
Monaco, Netherlands, Norway, Poland, Republic of Ireland, Romania, Sark, Slovakia,
Svalbard and Jan Mayen, Sweden, Switzerland, United Kingdom.
Southern Europe Albania, Andorra, Bosnia and Herzegovina, Croatia, Gibraltar, Greece,
Italy, Republic of Macedonia, Malta, Montenegro, Portugal, San Marino, Serbia, Kosovo,
Slovenia, Spain, Vatican.
Eastern Europe Belarus, Republic of Moldova, Russian Federation, Ukraine.
Western Asia Armenia, Azerbaijan, Bahrain, Cyprus, Georgia, Iraq, Israel, Jordan, Kuwait,
Lebanon, Oman, Qatar, Saudi Arabia, State of Palestine, Syria, Turkey, United Arab Emirates,
Yemen.
Central Asia Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan.
Southern Asia Afghanistan, Bangladesh, Bhutan, India, Iran, Maldives, Nepal, Pakistan, Sri
Lanka.
Southeastern Asia Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar,

Philippines, Singapore, Thailand, Timor-Leste, Vietnam.
Eastern Asia China, Taiwan, Hong Kong, Japan, Macau, Mongolia, DPR Korea, Republic
of Korea.
Oceania Australia Christmas Island, Cocos (Keeling) Island, New Zealand, Norfolk Island,
Fiji, New Caledonia, Papua New Guinea, Solomon Islands, Vanuatu, Guam, Kiribati, Marshall
Islands, Micronesia, Nauru, Northern Mariana Islands, Palau, American Samoa, Cook Islands,
French Polynesia, Niue, Pitcairn Islands, Samoa, Tokelau, Tonga, Tuvalu, Wallis and Futuna.
Table 4 B.1 Different Types of Sanctions. Historical Examples
Trade Sanctions Case Formulation Reference

Multilateral (Partial trade UN sanction against Iran In paragraph 5 of this resolution the UN calls upon all States, in UN Resolution 1696
sanction) (Export sanction) based on resolution 1696 accordance with their national legal authorities and legislation and (2006)
consistent with international law, to exercise vigilance and prevent
the transfer of any items, materials, goods and technology that could
contribute to Iran’s enrichment-related and reprocessing activities
and ballistic missile programmes.
Unilateral (Full trade US sanction against Cuba In paragraphs 2 and 3 the proclamation states that the president does US Proclamation 3447
sanction) (Total trade based on proclamation 2. hereby prohibit, effective 12:01 A.M., Eastern Standard Time, (1962)
sanction) 3447 February 7, 1962, the importation into the United States of all goods
of Cuban origin and all goods imported from or through Cuba; and
I hereby authorize and direct the Secretary of the Treasury to carry
out such prohibition, to make such exceptions thereto, by license
or otherwise, as he determines to be consistent with the effective
93
operation of the sanction hereby proclaimed, and to promulgate such
rules and regulations as may be necessary to perform such functions.
3. and further, I do hereby direct the Secretary of Commerce, under
the provisions of the Export Control Act of 1949, as amended (50
U.S.C. App. 2021–2032), to continue to carry out the prohibition of
all exports from the United States to Cuba, and I hereby authorize
him, under that Act, to continue, make, modify or revoke exceptions
from such prohibition.
Unilateral (Partial trade US sanction against In Section 2, the Executive order states that except to the extent E.O. 13348 of July 22,
sanction) (Import sanction) Liberia based on E.O. provided in regulations, orders, directives, or licenses that may be 2004
13348 issued pursuant to this order, and notwithstanding any contract
entered into or any license or permit granted prior to the effective
date of this order, the direct or indirect importation into the United
States of any round log or timber product originating in Liberia is
prohibited.
(continued)
Table 4 B.1 (continued)
Financial Sanctions Case Formulation Reference

Multilateral UN sanction against Iran In paragraph 6 of the UN resolution 1737 (2006) it is stated that UN Resolution 1737
based on resolution 1737 all States shall also take the necessary measures to prevent the (2006)
provision to Iran of any technical assistance or training, financial
assistance, investment, brokering or other services, and the transfer
of financial resources or services, related to the supply, sale, transfer,
manufacture or use of the prohibited items, materials, equipment,
goods and technology specified in paragraphs 3 and 4 above.
Multilateral EU sanction against 4. Political progress is essential in order to ensure Mali’s long-term European Union Council
Mali based on Council stability. To that end, the EU urges the Malian authorities to adopt Conclusions on Mali from
Conclusions on Mali from and implement a roadmap for the restoration of democracy and January 18, 2013
January 18, 2013 constitutional order in Mali as soon as possible. It encourages a
national inclusive dialogue open to the northern populations and
to all groups which reject terrorism and recognise the country’s
94
territorial integrity. In that context, the Council reiterates its
willingness to gradually resume its development cooperation and
invites the European Commission to prepare the relevant decisions
so that the development funds can be rapidly disbursed as soon
as the conditions are met. It also invites the HR/VP to explore the
possibilities of rapid assistance through the stability instrument.
Unilateral US sanction against Haiti As a result of the election boycott and human right violations that Foreign Operations
happened in Haiti in November 2000, the US withheld government- Appropriations Act for
to-government economic aid to Haiti in 2001 as per the Foreign FY2001
Operations Appropriations Act for FY2001. The aid was resumed
in 2004 when the new parliament was elected and there was
improvement in human rights.
Multilateral SWIFT sanction against In February 2012 the Belgium-based SWIFT, which provides banks
Iran with a system for moving funds around the world, blocked Iranian
banks from using its network to transfer money. This was the first
case of cutting off the country from SWIFT, and it basically shut the
ability of Iran to do business outside the country.
(continued)
Travel Sanctions Case Formulation Reference

Multilateral UN sanction against In paragraph 3 of the UN resolution 1054 (1996) it is stated that all UN Resolution 1054
Sudan based on resolution states shall a) Significantly reduce the number and the level of the (1996)
1054 staff at Sudanese diplomatic missions and consular posts and restrict
or control the movement within their territory of all such staff who
remain; b) Take steps to restrict the entry into or transit through their
territory of members of the Government of Sudan, officials of that
Government and members of the Sudanese armed forces.
Unilateral Russia sanction against As a consequence of tensed relations between Russia and Georgia
Georgia, October 2006 that aggravated in 2006, Russian authorities expelled thousands of
Georgians to Georgia, including those residing legally in Russia. The
act was explained as the illegal immigration prevention procedure.
Georgia subsequently appealed to the Russian Government in the
European Court of Human Rights.
95
Reciprocal Armenia-Azerbaijan The Nagorno-Karabakh War is an ethnic and territorial conflict
border closure, 1989 between Armenia and Azerbaijan. The dispute over the territory of
Nagorno-Karabakh with the majority of Armenian population which
is located in Azerbaijan has not been resolved since 1989. As a
major consequence of the conflict, the border between Armenia and
Azerbaijan has been closed since then.
(continued)
Arms Sanctions Case Formulation Reference

Unilateral Australia sanction against Australian law prohibits the direct or indirect supply, sale or transfer Expanded sanctions
Russia from September to Russia, for use in Russia, or for the benefit of Russia, of the against Russia from
1, 2014 following ‘export sanctioned goods’ for Russia: arms or related September 1, 2014
matériel; and items suited to any of the following categories of (Australian Government
exploration and production projects in Russia, including its Exclusive website-Sanctions
Economic Zone and Continental Shelf: (i) oil exploration and Regimes-Russia)
production in waters deeper than 150 metres; (ii) oil exploration and
production in the offshore area north of the Arctic Circle; (iii) projects
that have the potential to produce oil from resources located in shale
formations by way of hydraulic fracturing (other than exploration
and production through shale formations to locate or extract oil from
non-shale reservoirs), specified in the Autonomous Sanctions (Russia,
Crimea and Sevastopol) Specification 2015, without a sanctions
permit.
96
Unilateral US sanction against The US imposed arms sanction on Afghanistan in June 1996 after 61 FR 33313
Afghanistan, Taliban the Taliban rule was established there. The regime was notorious
regime based on 61 FR for its extremist views and provided home to al-Qaeda and Osama
33313 bin Laden. SUMMARY: The Department of State is amending the
International Traffic in Arms Regulations (ITAR) to reflect that it
is the policy of the United States to deny licenses, other approvals,
exports and imports of defense articles and defense services, destined
for or originating in Afghanistan.
Multilateral UN sanction against In paragraph 15, the Security Council decides further that all States UN Resolution 1701
Lebanon based on shall take the necessary measures to prevent, by their nationals or (2006)
resolution 1701 from their territories or using their flag vessels or aircraft: (a) The
sale or supply to any entity or individual in Lebanon of arms and
related materiel of all types, including weapons and ammunition,
military vehicles and equipment, paramilitary equipment, and spare
parts for the aforementioned, whether or not originating in their
territories.
(continued)
Military Assistance Case Formulation Reference
Unilateral Switzerland sanction 1. The supply, sale and transit of armaments of all kinds, including Verordnung
against Somalia from weapons and ammunition, military vehicles and equipment, über Massnahmen
May 13, 2009 paramilitary equipment and accessories and spare parts therefor, to gegenüber Somalia
Somalia are prohibited. vom 13. Mai 2009
2. The provision of services of all kinds, including financing,
Mediation services and technical training relating to the supply,
sale, transit, production, maintenance and use of goods referred to in
paragraph 1 and to military activities in Somalia shall be prohibited.
Multilateral UN sanction against In paragraph 15, the Security Council decides further that all States UN Resolution 1701
Lebanon based on shall take the necessary measures to prevent, by their nationals or (2006)
resolution 1701 from their territories or using their flag vessels or aircraft: (a) The
sale or supply to any entity or individual in Lebanon of arms and
related materiel of all types, including weapons and ammunition,
military vehicles and equipment, paramilitary equipment, and
spare parts for the aforementioned, whether or not originating in
97
their territories; and (b) The provision to any entity or individual
in Lebanon of any technical training or assistance related to the
provision, manufacture, maintenance or use of the items listed in
subparagraph (a) above;
Other Sanctions Case Formulation Reference
Unilateral Turkey sanction against The Turkish restrictive measures were originally introduced in April Republic of Cyprus
Cyprus from April 1987 1987 and concerned exclusively the prohibition of Cyprus flagged Ministry of Foreign
vessels to call at Turkish ports. In May 1997 Turkey issued new Affairs website,
instructions to its ports and harbours to clarify uncertainties arising Turkish Measures
from the imposition of the restrictions, thus extending them against Against Cyprus’
vessels under a foreign flag (of any nationality) sailing to Turkish Shipping
ports directly from any Cypriot port under the effective control of the
Republic of Cyprus (Limassol, Larnaca), or against vessels of any
nationality related to the Republic of Cyprus in terms of ownership or
ship management. The immediate effect of the May 1997 instructions
was to restrict the use of Cypriot ports for transshipment operations
of shipping lines in the Mediterranean. (from the Republic of Cyprus
Ministry of Foreign Affairs website)
(continued)
Other Sanctions Case Formulation Reference

Multilateral African Union In paragraph 8, the AU Council decides, in the light of the foregoing, to PSC/PR/COMM.
sanction against immediately suspend the participation of the CARin all AU activities, (CCCLXIII)
Central African as well as to impose sanctions, including travel ban and asset freeze, on
Republic from leaders of the Seleka group, as indicated in the attached Annex, pending
March 25, 2013 the submission by the Commission of a more exhaustive list as requested by
Council, in paragraph 6 of communiqué PSC/PR/Comm. (CCCLXII) of 23
March 2013.
Multilateral Commonwealth Fiji Islands’ membership lapsed in 1987, after a military coup imposed The Commonwealth
sanction against Fiji a constitution contrary to Commonwealth principles, and returned to website (Withdrawals
membership in October 1997, when it had embarked on constitutional and Suspensions)
reform. Then following overthrow of the democratically elected
government in May 2000, the country was suspended from the councils
of the Commonwealth. Suspension was lifted in December 2001 when
98
democracy and the rule of law had been restored in accordance with the
constitution, but was then imposed again in December 2006 when the
democratically elected government was again overthrown by the military.
In May 2008 CMAG reiterated that it was essential that elections be held
by the deadline of March 2009, as agreed between the Pacific Islands
Forum and Fiji’s interim government. Elections did not, however, take
place and CMAG subsequently deplored the fact that Fiji remained in
contravention of Commonwealth values and principles. At the end of July
2009, CMAG noted that Fiji’s situation had deteriorated strikingly with
the purported abrogation of its constitution and further entrenchment
of authoritarian rule. It also expressed grave concern at the regime’s
intention to further delay a return to democracy by more than five years.
Fiji was fully suspended from the Commonwealth on 1 September 2009
(only the second such case of suspension of a country’s membership—
Nigeria being the first in 1995). The Commonwealth Secretariat has
nonetheless remained engaged with Fiji Islands to support and promote
inclusive political dialogue and the return to civilian constitutional
democracy.
(continued)
Table 4 B.2 Different Objectives of Sanctions. Historical Examples
Policy Change Case Formulation Reference

Unilateral US sanction against Venezuela SUMMARY: Notice is hereby given that the United States 71 FR 47554
based on 71 FR 47554 will no longer authorize the export of defense articles and
defense services to Venezuela. Furthermore, all licenses and
approvals to export or otherwise transfer defense articles and
defense services to Venezuela pursuant to section 38 of the
Arms Export Control Act (AECA) are revoked.
Unilateral Japan sanction against Russia The Japanese government released this list of new [targeted] sputniknews.com
(2014) sanctions against Russia amid Ukrainian crisis on July 28.
The measures envisage the freezing assets of individuals and
entities “involved in the Crimea annexation and responsible
for destabilizing the situation in Ukraine.” (sputniknews.
com)
99
(continued)
Destabilize Regime Case Formulation Reference

Unilateral US sanction against Niger, 2009 The United States will suspend about 27 million dollars in Agence France Presse
aid to Niger and ban visits by Niger President Mamadou
Tandja’s supporters to force Tandja to step down, []. “We
believe that he should peacefully relinquish power, and allow
transparent elections to take place. He does not want to do
so,” a State Department official told AFP on the condition of
anonymity. “We have decided to announce that we are going
to impose travel restrictions on Tandja supporters and we are
going to suspend assistance to Niger,” the official said. The
official added that the decision concerned roughly 27 million
dollars in non-humanitarian aid. (Agence France Presse)
Territorial Conflict Case Formulation Reference
Unilateral UK sanction against Argentina, On April 3, the British government also broke diplomatic Lisa L. Martin, Institutions
100
1982 relations with Argentina and imposed economic sanctions. and Cooperation: Sanctions
These sanctions, which were clarified over the next few during the Falkland Islands
days, included a freeze on Argentine assets in British banks Conflict, International Security,
(valued at about $1.5 billion), embargo of arms sales to Volume 16, Issue 4 (Spring,
Argentina, suspension of export credit insurance, and a ban 1992), 143–178.
on Argentine imports.
(continued)
Prevent War Case Formulation Reference

Multilateral UN sanction against Liberia Calling upon all States in the region, particularly the UN Resolution 1521 (2003)
based on resolution 1521 National Transitional Government of Liberia, to work
together to build lasting regional peace, including
through the Economic Community of West African States
(ECOWAS), the International Contact Group on Liberia, the
Mano River Union and the Rabat Process, . . . Noting with
concern, however, that the ceasefire and the Comprehensive
Peace Agreement are not yet being universally implemented
throughout Liberia, and that much of the country
remains outside the authority of the National Transitional
Government of Liberia, particularly those areas to which
the United Nations Mission in Liberia (UNMIL) has not yet
deployed, . . .
Determining that the situation in Liberia and the proliferation
101
of arms and armed non-State actors, including mercenaries,
in the subregion continue to constitute a threat to
international peace and security in West Africa, in particular
to the peace process in Liberia, . . . As a consequence the UN
decides that all States shall take the necessary measures to
(a) prevent the sale or supply to Liberia, by their nationals or
from their territories or using their flag vessels or aircraft, of
arms and related materiel of all types, including weapons and
ammunition, military vehicles and equipment, paramilitary
equipment and spare parts for the aforementioned, whether
or not originating in their territories; (b) Decides that
all States shall take the necessary measures to prevent
any provision to Liberia by their nationals or from their
territories of technical training or assistance related to the
provision, manufacture, maintenance or use of the items in
subparagraph (a) above.
(continued)
Terrorism Case Formulation Reference

Unilateral US sanction against Syria based President of the United States of America, determine that E.O. 13399 of April
on E.O. 13399 it is in the interests of the United States to (1) assist the 25, 2006
international independent investigation Commission (the
“Commission”) established pursuant to UNSCR 1595 of
April 7, 2005, (2) assist the Government of Lebanon in
identifying and holding accountable in accordance with
applicable law those persons who were involved in planning,
sponsoring, organizing, or perpetrating the terrorist act in
Beirut, Lebanon, on February 14, 2005, that resulted in the
assassination of former Prime Minister of Lebanon Rafiq
Hariri, and the deaths of 22 others, and other bombings or
assassination attempts in Lebanon since October 1, 2004,
that are related to Hariri’s assassination or that implicate
the Government of Syria or its officers or agents, and (3)
102
take note of the Commission’s conclusions in its report of
October 19, 2005, that there is converging evidence pointing
to both Lebanese and Syrian involvement in terrorist
acts, that interviewees tried to mislead the Commission’s
investigation by giving false or inaccurate statements, and
that a senior official of Syria submitted false information to
the Commission.
(continued)
End War Case Formulation Reference

Multilateral EU sanction against Sudan In paragraph 3, the Council deems it appropriate to maintain Council Common Position
based on 2005/411/CFSP the arms sanction against Sudan. The policy objective of the 2005/411/CFSP
European Union in this regard is to promote lasting peace
and reconciliation within Sudan. In Article 1 of the same
declaration it is stated: In accordance with UNSCR 1591
(2005), restrictive measures should be imposed against those
individuals who impede the peace process, constitute a threat
to stability in Darfur and the region, commit violations of
international humanitarian or human rights law or other
atrocities, violate the arms sanction and/or are responsible
for offensive military overflights in and over the Darfur
region, as designated by the Committee established by
paragraph 3 of UNSCR 1591(2005).
103
(continued)
Human Rights Case Formulation Reference

Unilateral Canada sanction against From the Export Controls to Belarus: 1. This Notice is Government of Canada
Belarus, 2006 to advise exporters that the Government of Canada has
decided to add Belarus to the Area Control List (ACL), the
list of countries to which the exportation of all items is only
permitted with a valid export permit. 2. This Notice reflects
the Government of Canada’s response concerning the
deteriorating human rights situation in Belarus, following the
March 19, 2006 presidential election which was deemed by
international observers to be severely flawed. The campaign
was marred with widespread harassment and detention of
opposition party campaign workers, the physical assault of
senior opposition figures, arbitrary use of state powers to
support the incumbent president, pressure on state workers
and students to support the President, restrictions on the
104
ability of opposition campaigns to communicate with the
electorate, and control of the state media to severely restrict
access by opposition candidates. These elements resulted in
a climate of intimidation and insecurity, further undermining
democracy and the respect of human rights in Belarus. Since
the election Belarusian authorities have continued their
unwarranted imprisonment of democratic supporters. 3. All
applications for permits to export items to Belarus will be
reviewed on a case-by-case basis. Permits for humanitarian
goods, including food, clothing, medicines, medical supplies,
information material, casual gifts and personal effects
belonging to persons leaving Canada for Belarus, will
generally be approved. Permits for other items will generally
be denied. For information concerning the export permit
application process, please contact the Exports Controls
Division at the information provided below.
(continued)
Democracy Case Formulation Reference

Multilateral EU sanction against Guinea- Decision 2012/237/CFSP provides for the adoption of EU Council Regulation
Bissau based on Council restrictive measures against certain persons, entities and No 377/2012
Regulation No 377/2012 bodies who seek to prevent or block a peaceful political
process, or who take action that undermines stability in the
Republic of Guinea-Bissau. This concerns in particular those
who played a leading role in the mutiny of 1 April 2010 and
the coup d’état of 12 April 2012 and whose actions continue
to be aimed at undermining the rule of law and the primacy
of civilian power. These measures include the freezing of
funds and economic resources of the natural or legal persons,
entities and bodies listed in the Annex to that Decision. In
Article 2 of the same regulation specific sanctions are listed
to achieve the defined policy objective: 1. All funds and
economic resources belonging to, owned, held or controlled
105
by natural or legal persons, entities and bodies who, in
accordance with Article 2(1) of Decision 2012/237/CFSP,
have been identified by the Council as either (i) engaging in
or providing support for acts that threaten the peace, security
or stability of the Republic of Guinea-Bissau or (ii) being
associated with such persons, entities or bodies, as listed in
Annex I, shall be frozen.
(continued)
Other Objectives Case Formulation Reference

Multilateral EU sanction against Tunisia In Article 1, it is stated: 1. All funds and economic resources EU Council Decision
based on 2011/72/CFSP belonging to, owned, held or controlled by persons 2011/72/CFSP
responsible for misappropriation of Tunisian State funds, and
natural or legal persons or entities associated with them, as
listed in the Annex, shall be frozen. 2. No funds or economic
resources shall be made available, directly or indirectly, to,
or for the benefit of, natural or legal persons or entities listed
in the Annex.
106
5. UN targeted sanctions: historical development and
current challenges
Thomas J. Biersteker and Zuzana Hudáková
5.1 INTRODUCTION
The United Nations (UN) has had the power to impose sanctions in response to threats to
international peace and security since its inception in 1945. However, this policy instrument
was used only rarely before the end of the Cold War. Blocked by superpower rivalry between
the United States and the Soviet Union, the UN did not become a major sender of sanctions
until the 1990s, when ‘a new consensus’ within the UN Security Council (UNSC) prompted
a dramatic increase in the number of new UN sanctions regimes (Doxey 2009, p. 540). The
change was so spectacular that Cortright and Lopez (2000) dubbed the period ‘the sanctions
decade’. A ‘more interventionist’ approach of the UNSC regarding the use of sanctions
(Weschler 2010, p. 32) was also observed with respect to UN mediation and UN peacekeeping
operations, signalling a renewed focus of the UN on its original function as a collective security
organization. Although the establishment of new UN sanctions regimes has recently declined,
the cumulative application of UN sanctions has not diminished. On the contrary, the last 15
years have witnessed a steady increase in the number of ongoing sanctions regimes, with an
all-time peak of 16 simultaneous UN sanctions regimes in place in 2015 and 2016. There are
15 active UN sanctions regimes at the start of 2021.
Chapter VII of the UN Charter states that the Security Council may decide what measures
not involving the use of armed force are to be employed to give effect to its decisions. This
includes ‘complete or partial interruption of economic relations and of rail, sea, air, postal, tel-
egraphic, radio, and other means of communication, and the severance of diplomatic relations’
(UN Charter, Chapter VII, Article 41). In line with the UN Charter provisions, sanctions have
been used by the UN to address a range of issues, including armed conflict, proliferation of
weapons of mass destruction, acts of terrorism, and non-constitutional changes of government.
As restrictive measures that limit the normal conduct of interstate relations, sanctions can take
a number of different forms. In particular, they can be targeted or comprehensive; threatened,
authorized, or actually imposed; include economic or non-economic measures; and have
voluntary, conditional, or mandatory implementation requirements (Biersteker et al. 2020).
Although sanctions can be authorized by a range of unilateral, regional, as well as multilateral
actors, only sanctions imposed by the UNSC are legally binding on all 193 members of the
UN, as per Article 25 of the UN Charter. As such, UN sanctions are unambiguously legal under
international law and, if they are implemented fully, have the potential to have the greatest
impact on the target. However, even when their implementation remains limited, they can have
symbolic importance and a significant impact by both stigmatizing the target and legitimizing
the imposition of additional sanctions by other actors.
In this chapter, we look back at the use and development of sanctions by the UN, focusing
specifically on mandatory targeted sanctions authorized by the UNSC in the post–Cold War
107
Thomas J. Biersteker and Zuzana Hudáková - 9781839102721
period. To this end, we first trace the historical move towards targeted sanctions that took place
at the end of the 1990s and the beginning of the 2000s. We then describe the Targeted Sanctions
Consortium (TSC) quantitative and qualitative datasets, which capture the development of UN
sanctions between 1991 and 2013. After highlighting the main findings of the TSC project, we
briefly introduce its successor, the UNSanctionsApp, an online analytical tool and interactive
database that can be used by scholars as well as policy practitioners to access information about
UN sanctions imposed from 1991 up to the present. We conclude the chapter by reflecting on
some of the key challenges faced by the UN in its use of sanctions.
5.2 THE HISTORICAL MOVE TOWARDS TARGETED SANCTIONS
Prior to 1989, the UN used sanctions in only two instances, Southern Rhodesia and South
Africa. Both concerned white minority regimes denying social, political and economic rights
to their majority populations in violation of the Declaration on the Granting of Independence
to Colonial Countries and Peoples.1 Immediately following the end of the Cold War, the UN
reacted to political crises with a resort to fairly broad sanctions that were intended to ‘bite’.
Most notably, comprehensive sanctions were imposed on Iraq in August 1990 in response to
the invasion of Kuwait and on the Federal Republic of Yugoslavia (Serbia and Montenegro)
in May 1992 over the civil war in Bosnia and Herzegovina, which followed the breakdown
of the Yugoslav Federation.2 In 1994, the UN also briefly imposed comprehensive sanctions
on Haiti after broad sanctions involving a petroleum imports ban, as well as their temporary
suspension, did not lead to the restoration of the democratically elected government of the
ousted President Aristide.3
The 1990s experience with comprehensive sanctions led some to view sanctions not only
as a ‘blunt instrument, which hurt large numbers of people who are not their primary targets’
(UNSG 2000), but as a tool of ‘mass destruction’ (Mueller and Mueller 1999; Gordon 2002).
Concern over the devastating humanitarian effects of comprehensive sanctions imposed by
the UN on Iraq, Yugoslavia and Haiti spurred a move towards more ‘targeted’ sanctions that
would be able to focus on those responsible for threats to international peace and security
and achieve their political goals without putting civil populations through undue stress and
suffering (Weiss et al. 1997; Brzoska 2003). By the mid-1990s, the permanent members of the
UNSC recognized that ‘any future sanctions regime should be directed to minimize unintended
adverse side-effects of sanctions on the most vulnerable segments of targeted countries’
(UNSC 1995). Mindful of the costs of comprehensive sanctions, in April 1995, UNSC resolu-
tion 986 established the Oil-for-Food Programme to mitigate some of the negative impacts on
the Iraqi population, including a significant increase in child mortality (Ali and Shah 2000;
UNICEF 2003).4 Similarly, in August 1996, the UNSC authorized an aviation ban on Sudan in
response to the country’s failure to hand over suspects in an assassination attempt on Egyptian
President Hosni Mubarak, but the measure was never put it in place due to concerns over its
likely negative humanitarian effects (UNSG 1996).
The development of a range of targeted sanctions measures followed. It was facilitated by a
transnational policy network of individuals with expertise on sanctions design and implemen-
tation, which included representatives of UN Member States, UN Secretariat officials, national
financial regulators, private businesses, and scholars from the fields of International Law
and International Relations (Biersteker 2014). They met in three successive sanctions reform

UN targeted sanctions: historical development and current challenges 109
processes convened between 1998 and 2003 to discuss the potential design, implementation
and likely consequences of replacing comprehensive sanctions with targeted ones.
Each reform process produced a manual for the design and implementation of the category
of targeted sanctions that lay in its field of focus. The first set of meetings, known as the
Interlaken Process, was facilitated by the government of Switzerland and convened over two
years, with one meeting in 1998 and another in 1999. Given Switzerland’s historic role in global
finance, the Interlaken Process concentrated on the development of the instrument of targeted
financial sanctions (Biersteker et al. 2001). The meetings attracted the heads of major regula-
tory authorities from the US, United Kingdom and Europe, the head of the UN sanctions unit,
the UN Secretary-General’s Special Adviser, as well as leading global financial institutions,
law firms and academics. The Interlaken Process was succeeded by the Bonn-Berlin Process,
sponsored by the government of Germany, which focused on arms embargoes, travel bans and
aviation bans and was undertaken in 2000 and 2001 (Brzoska 2001). Finally, the Stockholm
Process, which was supported by the government of Sweden, consisted of four meetings
convened in Sweden during 2002. It devoted its attention to issues of the implementation of
targeted sanctions with a view to increasing their effectiveness (Wallensteen et al. 2003).
It is particularly noteworthy that the three most common types of targeted sanctions applied
by the UN to this day—asset freezes, travel bans and arms embargoes—were all the subject
of focus in the different sanctions reform processes of the late 1990s and early 2000s. The
series of eight meetings that examined technical issues of the sanctions reform contributed to
the development of ideas about the instrument of targeted sanctions not only at the UN, but
also within the European Union (EU) and the United States. Indeed, all EU sanctions, as well
as the vast majority of US sanctions introduced since 2000, have been targeted in some form.
The overall trend was weakened by the adoption of a strategy of imposing ‘maximum pressure’
by the Trump administration, which returned the United States to the practice of imposing
comprehensive sanctions in the high-profile cases of Syria, Venezuela, Crimea, the Democratic
People’s Republic of Korea (DPRK) and Iran. Within the UN, it tends to hold, however. The last
time the UN imposed a comprehensive sanctions regime was in 1994 and, although the UN’s
recent sanctions on the DPRK are approaching comprehensive measures, all UN sanctions have
been targeted in some form since 2003 (Biersteker et al. 2020).
When targeted sanctions were first being developed, one of the concerns expressed by many
policy practitioners was whether targeted sanctions would be inherently less effective than
comprehensive sanctions. This concern was also shared by a number of scholars (Tostensen
and Bull 2002; Drezner 2003, 2011), including by some of those engaged in the development
of the instrument of targeted sanctions (Brzoska 2003). However, beyond the normative
case for the development and application of targeted sanctions—to minimize humanitarian
suffering and cease the practice of making innocent publics bear the costs of the actions of
governments over which, in most instances, they have little control or influence—targeted
sanctions have other potential advantages. Comprehensive sanctions are an all-or-nothing
policy instrument, and any signalling of their relaxation is usually interpreted as a sign of
weakness or as a weakening of commitment on the part of the sanctioning parties. Targeted
sanctions, by contrast, are much more flexible (Biersteker et al. 2016). They can be ratcheted
upward or downward, depending on the response to the measures by a target. Thus, they
are inherently more useful in combination with other policy measures, such as negotiations
between, or mediation involving, sanctions senders and their targets (Biersteker et al. 2019).
Targeted sanctions are also less materially consequential for the trade of the sending countries,

since they do not affect all sectors of an economy. They are therefore less likely to affect the
general population negatively or to provoke strong opposition from the business community
within the sending countries.
5.3 THE TARGETED SANCTIONS CONSORTIUM (TSC) PROJECT
In order to take stock of the UN’s experience with the use of targeted sanctions, a group of
scholars and policy practitioners came together in 2009 to begin a systematic evaluation of
the impacts and effectiveness of UN targeted sanctions. The Targeted Sanctions Consortium
(TSC), which was co-chaired by Thomas Biersteker and Sue Eckert, brought together more
than 50 participants from Africa, Asia, Europe and North and South America, including the
key participants from the three reform processes that facilitated the development of targeted
sanctions at the UN in the late 1990s and early 2000s. They were joined by senior practitioners
active in designing and implementing targeted sanctions.
The project began with the commissioning of detailed case studies of 13 of the most promi-
nent and widely discussed UN sanctions regimes and was later expanded to include all UN
targeted sanctions applied after 1990. The case studies were based on a common template to
ensure comparability of the analysis across cases. The information the cases contained formed
the core for what later became the TSC’s quantitative and qualitative datasets. The quantitative
dataset, which was constructed first, contains detailed information on the background of dif-
ferent sanctions regimes, their objectives, regime details, indicators of political will, purposes
and targets, norms signalled, types of sanctions applied, actors involved, other sanctions and
policy instruments present, as well as UN sanctions implementation and enforcement; eco-
nomic, political, and social-psychological impacts; evasion and coping strategies; unintended
consequences; and effectiveness assessments. Overall, the quantitative dataset contains 296
variables that describe the 23 targeted sanctions regimes imposed by the UN between 1991 and
2013. The qualitative dataset provides an overview of each country case, summary narrative
updates of the case developments, as well as detailed information on the purposes, types of
sanctions, implementation, unintended consequences and effectiveness evaluations for each
sanctions episode. The qualitative dataset is updated annually and is accessible in the form
of an interactive online database that is also available as a phone application (Biersteker et
al. 2020).5 The quantitative dataset can be used separately as well as in conjunction with the
qualitative dataset, which contextualizes the observed variation and provides additional infor-
mation on each case. Both were prepared by the core TSC research team following intensive
background research and internal discussions to establish a consensus understanding of each
case and coding decision.6
There were two main analytical innovations introduced in the research design of the TSC
project. First, because sanctions regimes can change considerably over time, the project
adapted Eriksson’s (2007) concept of sanctions episodes, breaking country cases down
into discrete phases, rather than analysing entire country regimes, as is common practice in
most sanctions research. Dividing cases into sequential, non-overlapping episodes during
which the relationship between the target and sender was relatively stable, a new episode
was created when the purpose, target, or type of sanctions changed. This enabled a more
nuanced understanding of both sanctions effectiveness and development over time. Second,
since policy practitioners routinely apply sanctions with more than one purpose in mind, the

project distinguished between three separate, but often simultaneous, logics through which
sanctions are intended to produce policy outcomes. Building on the work of Giumelli (2011),
the TSC project evaluated the effectiveness of UN sanctions on the basis of whether they were
successful in: (1) coercing a change in behaviour; (2) constraining the target’s proscribed
activities through limiting its access to resources; and/or (3) sending a signal to the target and
the wider international community regarding a violation of an international norm, stigmatiz-
ing the target in the process. This approach to sanctions research is significantly broader than
most others. Indeed, although some authors have also highlighted non-coercive purposes
of sanctions (Doxey 1972; Barber 1979; Schwebach 2000; Giumelli 2011), most scholarly
analyses of sanctions remain focused on their ability to achieve compliance (Galtung 1967;
Wallensteen 1968, p. 249), yield concessions (Drezner 2003: 643; Hovi et al. 2005) or
produce a change in the target’s behaviour (Hufbauer et al. 2007; Morgan et al. 2014; von
Soest and Wahman 2015).
Recognizing that multiple purposes of sanctions might differ in their relative importance to
the sender, evaluations of sanctions effectiveness were conducted separately for each purpose
present in an episode. Adapting the framework developed by Hufbauer et al. (2007), effective-
ness was evaluated in terms of policy outcome and evidence of UN sanctions’ contribution
to that policy outcome. However, unlike the Hufbauer et al. (2007) effectiveness measure,
which multiplies the two components, the TSC used a system of thresholds to categorize the
overall outcome. In particular, the TSC effectiveness evaluation not only introduced a set of
purpose-specific outcomes but also expanded the sanctions contribution by a neutral as well
as a negative option to cover the full range of sanctions’ effects on policy outcomes. It also
explicitly took into account the presence of other sanctions regimes and policy instruments,
including mediation, negotiations, legal referrals, threats of force, uses of force and covert
activities, as UN sanctions are virtually never applied in isolation. Moreover, unlike the
two other major sanctions datasets—Hufbauer et al.’s (2007) ‘Economic Sanctions’ dataset
(introduced in Chapter 2 of this volume) and Morgan et al.’s (2014) ‘Threat and Imposition of
Economic Sanctions’ dataset (presented in Chapter 3)—which focus primarily on economic
sanctions and include both threatened and imposed sanctions measures from multiple senders,
the TSC dataset includes only mandatory sanctions authorized by the UNSC under Chapter
VII of the UN Charter. However, capturing the full range of restrictive measures used by the
UN, the TSC includes a significantly wider range of sanctions types than either Hufbauer et
al. (2007) or Morgan et al. (2013).7
Overall, the more nuanced and differentiated understanding of target sanctions, and their
internal variance, presents one of the most important contributions of the TSC project. Targeted
sanctions, as restrictive measures short of a comprehensive trade and financial embargo on an
entire country, can be targeted in a number of different ways. In the post–Cold War period, the
UN has targeted not only states but also de facto political authorities, individuals, and a range
of non-state actors, which are generally absent from most sanctions analyses. Indeed, as the
variance in UN sanctions demonstrates, sanctions can be targeted not only on (1) individuals
and corporate entities (such as firms, political factions, non-state armed groups or political
regimes), but also on specific (2) items (such as arms or nuclear proliferation-sensitive goods),
(3) sectors of diplomatic or economic activity (ranging from sources of conflict finance to
entire financial sectors) and (4) territories within a country (including those controlled by an
armed group). Targeted sanctions are thus both a potentially more diverse and flexible instru-
ment of policy than they are often thought to be.

5.4 MAIN FINDINGS OF THE TSC PROJECT
The TSC project culminated in the publication of an edited volume (Biersteker et al. 2016),
as well as a practitioner’s guide to targeted sanctions (Biersteker et al. 2013), two new UN
sanctions datasets that cover all 23 UN targeted sanctions regimes—divided into 63 distinct
episodes—imposed between 1991 and 2013 (Biersteker et al. 2018) and an online interactive
UN sanctions database and analytical tool, ‘UNSanctionsApp’ (Biersteker et al. 2020), which
is described in the next section.
A detailed analysis of the 63 episodes covered by the TSC project shows that all UN sanc-
tions contain multiple purposes, but that these are not equally important. Coercing a change in
behaviour was the principal purpose in 35 out of 63 (56 per cent) UN sanctions case episodes
imposed between 1991 and 2013, but present in 50 (79 per cent) of them. Signalling, by con-
trast, was present in all cases, but represented the principal purpose only in two episodes, that
is, 3 per cent of the time. Finally, constraining an actor from engaging in proscribed activities
was present in 59 of the 63 (94 per cent) case episodes, but was the principal purpose of UN
sanctions only in 26 (41 per cent) of them.
Not surprisingly, given its Charter and the main reasons for the founding of the UN in 1945 (i.e.
to end inter-state war), the primary objective of most UN sanctions is to address the use of vio-
lence both within and between member states. Whether the objective is to negotiate a ceasefire,
initiate peace talks, enforce a peace agreement, or support peacebuilding more generally, 37 UN
sanctions episodes (59 per cent) are concerned with situations of armed conflict. Countering the
commitment of acts of terrorism is the second most frequent objective of UN targeted sanctions,
present in nine (14 per cent) case episodes. The counter-terrorism agenda predates the attacks
of 11 September 2001 and was directed against state sponsorship of terrorism in the 1990s in
the sanctions against both Libya and the Sudan. In 2006, the UN introduced its first sanctions to
support the non-proliferation regime, with sanctions applied against Iran and the DPRK. Non-
proliferation is the principal objective in 11 per cent of the case episodes, which corresponds to
seven episodes (four in Iran and three in DPRK). The primary objectives of the remainder of
the case episodes are to reverse non-constitutional changes of government (10 per cent), protect
civilian populations under R2P (3 per cent), support international judicial processes and facilitate
‘good’ governance (2 per cent each). Despite the fact that human rights are mentioned in virtually
every UNSC resolution applying sanctions, they never appear to be the primary objective of
UN sanctions regimes. This is due, in large part, to the absence of agreement among permanent
members of the Security Council on what constitutes a violation of human rights and whether
external intervention is justified in most situations of human rights violations.
There is great variety in the types of targeted sanctions imposed by the UN, particularly
since we define targeted sanctions to include all mandatory restrictive measures applied
under Chapter VII of the UN Charter, short of a comprehensive trade and financial embargo.
Sanctions on individuals typically consist of travel bans and asset freezes, though there are
also occasions when an individual is targeted with an arms embargo, as in the cases of Yemen
and of UN sanctions against Al-Qaida and associates. Corporate entities—including private
firms, vessels, political factions or non-state armed groups—can also be the target of individual
sanctions, typically an asset freeze or limits on their international movement. Sectoral target-
ing consists of arms embargoes, diplomatic restrictions, or bans on the import or export of
particular commodities or services. In some cases, as in the DPRK, the UN places caps on the
amount of a particular good or commodity that can be exported or imported in a given year.

The UN also employs territorial delimitations, such as when it limits its sanctions to a region
of a country or to the areas under the control of a proscribed group.
In most circumstances, the UN applies more than one type of sanction at any given time. The
most common combination, particularly in cases associated with armed conflict, is an arms embargo,
along with a small number of individual travel bans and asset freezes. Different combinations of
targeted sanctions measures are likely to have different effects on the civilian population of targeted
countries. Sanctions regimes limited to individual designations tend to be the most discriminating,
while the addition of diplomatic restrictions or an arms embargo affect only certain sectors of
governmental activity. Commodity sanctions can be more far reaching and can have broader effects
on particular regions of a country. Sectoral sanctions on oil, finance or shipping are the least discrimi-
nating and invariably can affect the entire population of a country. Thus, UN targeted sanctions exist
on a continuum ranging from extremely focused and targeted measures affecting only a handful of
individuals to broad combinations of measures that approximate comprehensive sanctions.
When it comes to effectiveness, UN sanctions were found to be effective, in the aggregate,
only 22 per cent of the time.8 While this number may seem low, it is important to remember
that UN sanctions tend to be applied in some of the most intractable and difficult conflicts in
the world. The results become more interesting, however, when differentiated by purpose, as
illustrated in Table 5.1 below.
Individual sanctions episodes were deemed “effective” when they scored four or five on a
five-point scale evaluating policy outcome and three or more on a six-point scale assessing
sanctions contribution to an outcome.10 The resulting analysis of the TSC data shows that using
UN sanctions to coerce a change in behaviour (10 per cent success rate) is more difficult than
to constrain or send a signal (both successful in 27 per cent of case episodes). This is in line
with many of the findings in the broader sanctions literature. Indeed, Pape’s (1997) focus on
coercive aspects of sanctions yielded only 6 per cent effectiveness, which is not significantly
different from TSC’s 10 per cent, while Hufbauer et al.’s (2007, p. 158) figure of 34 per cent and
Morgan et al.’s (2014, p. 546) range of 27.2 to 37.5 per cent effectiveness, align with TSC’s 27
per cent effectiveness in both constraining and signalling. It is, however, particularly striking to
note how difficult it is to send an effective signal, given that signalling is an essential aspect of
all sanctions. This is likely a product of disagreements among the permanent members of the
Security Council, as well as the increased complexity of UNSC resolutions, discussed in more
detail below. With regard to the effectiveness of different types of sanctions, each case is unique,
but commodity sanctions, when used to limit the source of financing for weapons purchases,
appear to be highly effective in some African armed conflict cases. Similarly, secondary sanc-
Table 5.1 UN targeted sanctions effectiveness by purpose (1991–2013)9
Coerce Constrain Signal

n % n % n %
Effective 5 10% 16 27% 17 27%
Mixed 5 10% 10 17% 18 29%
Ineffective 40 80% 33 56% 28 44%
Total 50 100% 59 100% 63 100%
Source: TSC quantitative dataset (Biersteker et al. 2016, 2018).

tions applied on neighbouring countries due to their alleged systematic evasion of existing sanc-
tions, were highly effective in both cases in which they were applied (i.e., Liberia and Eritrea).
In a subsequent analysis, there were no episodes found in which a single type of targeted
sanctions measure was effective on its own. Indeed, effectiveness was associated with the
presence of three or more types of targeted sanctions simultaneously in place (Biersteker with
Hudáková 2015). Given the fact that UN sanctions are always applied in conjunction with
other policy instruments, sanctions should be understood in relation to their interaction with
those other tools. When effective sanctions episodes are correlated with different policy instru-
ments, some suggestive correlations emerge. Effectiveness in coercing a change in behaviour
is correlated with changes in mediation or negotiations. Effective constraint is associated with
the use of force, and effective signalling is often associated with referrals to international legal
tribunals. These correlations suggest a rich potential research agenda.
More than two-thirds of UN sanctions regimes (68 per cent) are accompanied by, and often
follow, sanctions imposed by regional organizations. EU sanctions, often focusing on human
rights, democracy promotion, and the rule of law, are present in 52 per cent of the 63 UN
sanctions episodes between 1991 and 2013. African Union (AU) sanctions, typically taking
the form of suspensions of membership for countries undergoing a non-constitutional change
of government, are less common, present in only 3 per cent of the episodes, but sub-regional
organizations like Economic Community of West African States (ECOWAS) are more active,
present in 17 per cent of the case episodes.11 Such ‘combined’ sanctions regimes were found
to be more effective than ‘stand-alone’ UN sanctions, suggesting that the additional sanctions
did not decrease states’ willingness to support UN sanctions measures (Brzoska 2015).
The TSC also found that unintended consequences were associated with virtually every UN
sanctions regime, that is, they were present in 94 per cent of the 51 case episodes for which the
information was available. The most common type of unintended consequence was an increase
in corruption or criminality (58 per cent), as observed also by Andreas (2005) in his analysis of
legacies of sanctions in the former Yugoslavia. Despite the fact that all UN sanctions studied
were targeted, 44 per cent of the case episodes exhibited negative humanitarian consequences.
Either because of their design or because of their implementation, UNSC credibility suffered
more than a third of the time (37 per cent), and UN sanctions were associated with the strength-
ening of authoritarian rule more than a third of the time (35 per cent). Although not intended by
the Security Council, it should be expected that authoritarian leaders will find it easy to use the
restrictions to excuse their economic and political failings and to favour their supporters while
undermining their domestic opponents. Not all UN sanctions’ unintended consequences are
negative, however. For example, the significant investment in national capacity to implement
and enforce counter-terrorism sanctions following the attacks on the United States in September
2001 has increased the capability of some governments to regulate criminal financial activity
and enabled others to pursue tax evasion more effectively, while bans on rough diamonds
exports helped institutionalize the Kimberley Process certification scheme.
5.5 UNSANCTIONSAPP
Since 2014, the work of the TSC has been continued and updated in an online analytical tool and
interactive database of UN sanctions, ‘SanctionsApp’, which was re-named UNSanctionsApp
in April 2020. Managed at the Graduate Institute in Geneva, the content of this interactive

policy and scholarly tool presenting the project’s findings is updated on a regular basis by a
three-person team composed of Professor Thomas Biersteker, Dr. Zuzana Hudáková and Dr.
Marcos Tourinho. The most current version of UNSanctionsApp, available for free online as
well on mobile devices, dates from September 2020.12
Originally created in June 2013, UNSanctionsApp presents one of the ways in which the
research findings of the TSC project were communicated beyond the scholarly community.
Easily accessible, they have been of particular use to sanctions practitioners, helping to bridge
the research-policy gap (Biersteker 2018). Most notably, UNSanctionsApp includes an updated
TSC qualitative dataset, which presents a detailed overview of all 26 targeted sanctions regimes
imposed by the UN since 1991, divided into 77 different analytical episodes, each with a range
of qualitative data, including case summaries, assessments of UN sanctions effectiveness and
chronological overviews of UN sanctions developments.13 It also provides an overview of all
types of targeted sanctions imposed by the UN since 1991, divided into eight main categories:
(1) individual travel, (2) asset freeze, (3) diplomatic, (4) arms, (5) proscribed activities, (6)
commodity, (7) transportation and (8) financial sector restrictions. Subdivided into manda-
tory, conditional and recommended (voluntary) provisions, the App includes more than 100
different types of UN sanctions imposed in the last three decades, as well as their particular
modifications. Each mandatory type of sanction is also ranked according to its likely impact
on the civilian population, distinguishing between low, medium and high potential to affect
those who are not the immediate target of the specific measure. In addition to a comprehensive
menu of past UN targeted sanctions, the section also includes sample text for the imposition of
different types of UN sanctions, drawing on language previously used by the UNSC, as well as
a list of cases where the sanctions have been used and the full text of the relevant UN sanctions
resolutions introducing the measures. The App also includes information on UN sanctions’
implementation, scope limitations, exemptions and termination. Building on the original TSC
quantitative dataset, UNSanctionsApp features a filtering tool that enables a quick overview of
UN sanctions cases based on seven sets of criteria: the UN sanctions’ (1) general objectives,
(2) purposes, (3) types of measures, (4) impact on the population, (5) effectiveness, and the
simultaneous presence of (6) other sanctions and (7) policy instruments. UNSanctionsApp
thus goes beyond the original datasets both in terms of the type of information included and
the time period covered.14 The scope of UNSanctionsApp, which builds on the original TSC
research, is outlined in Figure 5.1.
The 2020 version of UNSanctionsApp, which contains information from August 2020, includes
two major analytical innovations compared to the earlier TSC project. First, there is a possibility
to distinguish the scope of the potential impact of the UN sanctions imposed in each sanctions
episode. In particular, 11 episodes from nine different UN sanctions regimes (14 per cent) include
only highly targeted individual sanctions measures, such as travel bans and asset freezes, that are
likely to have little impact beyond the targets. In contrast, 48 episodes from 18 cases (62 per cent)
include sanctions with moderate levels of impact, such as arms embargoes, diplomatic or nuclear
proliferation-related measures, while 18 sanctions episodes from seven different UN sanctions
regimes (23 per cent) also include measures, such as transportation, essential commodities or
financial sector-related restrictions, that are likely to have a broad negative effect on the popula-
tion. Second, the measures of effectiveness have been expanded from those originally conceptual-
ized by the TSC. In particular, in addition to distinguishing between sanctions episodes that are
effective, partly effective or ineffective in coercion, constraint and signalling, UNSanctionsApp
also allows one to categorize sanctions episodes by their overall effectiveness, which takes their

UN targeted sanctions cases
FRY I (Serbia) 1 2
Somalia/Eritrea 1 2 3 4 5 6
Libya I 1 2 3
Haiti 12 3 45
Liberia 1 2 3 4 5
Angola 1 2 3 4
Rwanda 1 2
Sudan I 1 2
Sierra Leone ` 2 3 4 5
FRY II (Kosovo) 1
ISIL (Da’esh)/Al-Qaida/Associates 1 2 3 4 5
Eritrea-Ethiopia 1
Iraq 1 2
DRC 1 2 3 4
Sudan II 1 2
Côte d’Ivoire 1 2 3 4
Lebanon 1
DPRK 1 2 3 4 5 6 78
Iran 1 2 3 4 5 6
1
Libya II 2 3 4
Taliban 1
Guinea-Bissau 1
Central African Republic 1
Yemen 1 2
South Sudan 1 2
Mali 1
J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Primary objectives
Cease hostilities/peace enforcement
Counter-terrorism
Democracy/political transition support
Non-proliferation
Responsibility to protect (R2P)
Comprehensive sanctions episodes
Figure 5.1 Scope of UNSanctionsApp research (August 2020)

Table 5.2 UN targeted sanctions effectiveness by purpose (1991–2020)16
Coerce Constrain Signal

n % n % n %
Effective 6 10% 16 22% 21 27%
Mixed 7 11% 11 15% 23 30%
Ineffective 48 79% 45 63% 33 43%
Total 61 100% 72 100% 77 100%
Source: UNSanctionsApp (Biersteker et al. 2020).
performance on all three sanctions purposes into account, combining the applicable scores into a
single, average effectiveness indicator for each sanctions episode.15 This yields ten episodes from
seven different cases (13 per cent) with overall high effectiveness, 28 episodes from 14 cases (36
per cent) characterized by an overall mixed effectiveness, and 39 episodes from 23 cases (51 per
cent) with a low overall effectiveness. The updated TSC scores for sanctions effectiveness by
purpose are provided in Table 5.2 below. These figures reflect the addition of 14 new targeted
sanctions episodes since the original TSC estimates, published in 2013.
In terms of the frequency with which the UN uses different types of sanctions measures, the
most commonly imposed sanctions remain arms embargoes, used in 81 per cent of the 26 UN
sanctions cases under study, asset freezes, employed in 73 per cent of sanctions regimes, and
individual travel bans, which have been used in 69 per cent of UN sanctions regimes. Together,
the three measures are employed in more than half of post–Cold War UN sanctions regimes.
Finally, with regard to the larger policy objectives, almost three quarters of all 26 UN targeted
sanctions regimes imposed since 1991 have been related to conflict situations, seeking to help
cease hostilities, negotiate an agreement, enforce peace or contribute to peacebuilding. Almost
half of all UN sanctions regimes also aimed to support human rights, a third were intended to
either support democratic transitions or oppose unconstitutional changes of government, and
close to a quarter were imposed in relation to acts of terrorism. Overall, although the last five
years have seen the creation of only two new UN sanctions regimes, more than half of all UN
regimes imposed since 1991 are still in place today.
5.6 CHALLENGES
While the UN uses targeted sanctions for a variety of different purposes and objectives, there
are a number of challenges associated with their use today. The following general, technical,
implementation, legal, political and contemporary policy challenges associated with specific
UN sanctions regimes stand out.
5.6.1 General Challenges
Although targeted sanctions were developed to address the unintended humanitarian costs
associated with the comprehensive sanctions, it is difficult to keep targeted sanctions targeted
in practice. First, targeted sanctions can be broadened through implementation. Individual
member states are required to translate UN sanctions into domestic law, and their regulatory

agencies have to interpret and communicate the requirements of implementation to private

sector institutions. Those institutions, in turn, have to develop internal compliance programs
to avoid violating domestic law. In the process, the sanctions designed in New York to be
targeted are often broadened in scope when they are implemented by private sector institu-
tions worldwide. It is also significantly easier for many institutions to block all transfers to a
particular country than go to the trouble of identifying problematic individual accounts. This
kind of de-risking is rational from the point of view of many financial institutions.
Second, as already described above, UN sanctions are not the only sanctions in play in many
conflicts. They co-exist with sanctions imposed autonomously by other countries and regional
organizations. In most instances, sanctions applied by the United States are more extensive than
those applied by the UN. With the increased willingness of the United States to apply secondary
sanctions and impose large financial penalties on institutions violating its unilateral measures,
it has managed to secure compliance from major financial institutions located outside its terri-
tory, on occasion, even when the home governments of those same institutions explicitly order
them not to comply with US sanctions (Gordon 2016; Restrepo and Winkler 2018; Early and
Preble 2020). As such, US sanctions can be particularly difficult to avoid. For instance, after the
United States withdrew from the Joint Comprehensive Plan of Action (JCPOA), which defines
the current UN restrictive measures on Iran, the EU attempted unsuccessfully to prevent its
companies from complying with the new US sanctions. However, European-based firms had a
greater interest in maintaining access to the US market than they did to entering the Iranian one.
Third, UN sanctions are often broadened because both the EU and the United States add
‘additional measures’ to supplement their interpretations of the goals of UN sanctions, referring
back to UN Security Council resolutions to legitimize the additional measures they impose.
Ironically, since the United States, France and UK hold the pen in drafting more than 90 per cent
of all UN Security Council resolutions imposing sanctions (Biersteker et al. 2020), they
sometimes legitimize their additional measures by invoking the very language they included
when they drafted resolutions ‘calling upon member states to exercise vigilance’ with regard
to potential sanctions violations. Not surprisingly, Russia and China take a dim view of this
practice that has become known as the ‘floor versus ceiling’ debate among permanent members
of the UN Security Council (Biersteker et al. 2016). That is, Russia and, to a lesser degree, China
argue that only UN sanctions are legal under international law and that they should be a ‘ceiling’
beyond which no additional measures should be applied. The United States, France and UK,
meanwhile, argue that UN sanctions are a ‘floor’ upon which additional measures can be added.
5.6.2 Technical Challenges
As mentioned in the preceding section, the private sector is instrumental in the implementation
of targeted sanctions. It is banks and other financial institutions, after all, that freeze assets
and block transfers of funds. Shipping companies and other transportation firms are often
instrumental in enforcement of sectoral sanctions, just as major energy firms are in the enforce-
ment of oil embargoes. While there have been a number of meetings between UN Secretariat
officials and major private sector companies over the years, greater engagement of the private
sector in the design of sanctions is likely to result in more effective measures on the ground.
Indeed, complex, targeted sanctions need to be readily implementable if they are to have the
desired effects. While there is always some risk of bureaucratic capture, many private sector
firms are interested in facilitating effective sanctions.

Many UN sanctions regimes are authorized for specified periods of time and subject to
review and possible extension. The default option is to continue the regimes. Due to the time
and resource constraints of sanctions committee chairs (which are drawn from the ten elected
members of the UNSC), many existing sanctions regimes are continued automatically, without
serious review, adjustment or reconsideration. When there are additional demands placed
on a target, it is common practice to reaffirm all preceding UN sanctions resolutions in the
opening paragraphs of the resolution. This ‘add-on’ effect can both weaken and diffuse the
signal being transmitted by UN sanctions renewals. Hence, although targeted sanctions can be
an extraordinarily flexible instrument, if used effectively, the technical details are often lost
on sanctions committee chairs who inherit the responsibility for ongoing sanctions regimes,
rendering sanctions relatively rigid in practice. Moreover, although until the last five years,
targeted sanctions appeared to be the instrument of choice for many conflict situations, experi-
ence has shown that it is easier to impose sanctions, than it is to lift them. Many UN sanctions
regimes thus remain in place long after their potential utility.
5.6.3 Implementation Challenges
In general, UN Security Council resolutions applying sanctions have become longer and more
complex over time. For instance, the resolution applying sanctions on Southern Rhodesia
(UNSCR 232, 1966) consisted of only ten paragraphs and was a little over a page in length. In
contrast, the most recent substantive sanctions resolution on the DPRK (UNSCR 2397, 2017)
contained nearly three times as many paragraphs and ran to 11 pages. This is due at least in
part to the fact that targeted sanctions are more complex instruments and typically include
exemptions and discussions of implementation. The automatic extension of time-limited
sanctions regimes also leads to a tendency to add additional requirements in response to
recent developments, making each successive resolution longer. UNSC resolutions have also
become more complex. For example, the resolutions applied against the DPRK since 2016
have included not only outright prohibitions (bans), but also a plethora of conditional measures
and recommended additional measures. They introduced caps on the amount of goods that can
be imported or exported into the country, further complicating a number of UN mandatory
sanctions provisions. In addition to creating implementation challenges, conditional measures
also take more text in the resolution because they are more difficult to define, as they are
limited to specific circumstances.
When it comes to monitoring and enforcement, the UN has introduced panels of experts for
most of its sanctions committees, composed of individuals with expertise in monitoring sanc-
tioned activities (such as arms experts, financial specialists, former heads of port authorities
and humanitarian or gender experts). The panels conduct investigations and prepare reports
for the Security Council on impacts and evasion of different sanctions regimes. In some cases,
they are also called upon to make recommendations for additional individual designations.
There is variation in the quality of the panel members and the reports they produce, but they
have become increasingly professionalized over time and the quality of their reporting has
improved. In recent years, however, some of the panels have become politicized to the extent
that the permanent members of the Security Council insist that each has one of its citizens
serving on the panels. This practice is particularly evident in the non-proliferation cases. This
has undercut the authority of expertise required of ‘independent’ panel members and, at times,
politicized the content of their reports, subjecting their release to long delays.

5.6.4 Legal Challenges
When individual targeting of sanctions was first introduced in 2000, there was little attention
given to the due process rights of individuals targeted by the UNSC. Most were highly vis-
ible, politically exposed persons (PEPs), for whom the norms of formal legal due process are
generally relaxed. Following the attacks of 11 September 2001, however, there was a rapid
increase in the number of individuals designated by the UN’s 1267 Al-Qaida/Taliban sanctions
committee, and many of those designated were relatively obscure individuals listed for alleg-
edly financing acts of terrorism. The number designated rose to nearly 500 in the space of a few
years, but there was little consideration as to whether those individuals were properly notified
and informed of why they had been listed, had direct access to their accusers, were able to
secure a fair hearing to rebut the charges or could secure an effective remedy from an independ-
ent authority. Litigation about the violation of individual human rights began in national courts
and was appealed to regional courts like the European Court of Justice and the European Court
of Human Rights. When states began to lose high-profile cases for implementing mandatory
Chapter VII UN Security Council resolutions, most famously in the Kadi decisions by the
European Court of Justice in the 2000s, the practice of targeting individuals for their contribu-
tions to threats to international peace and security faced a crisis of legitimacy. The idea that
European courts were challenging the implementation of UN sanctions resolutions led the
Security Council to adapt its procedures by creating first a Focal Point within the Secretariat
to forward petitions for delisting to relevant sanctions committees, and more significantly, in
2009, to establish an Office of the Ombudsperson, which is responsible for handling delisting
requests for individuals listed under the 1267 counter-terrorism sanctions regime. This has not
proved sufficient for mitigating legal challenges, however. As a recent report, Fairly Clear
Risks (Cockayne et. al. 2019), makes clear, litigation has continued, particularly in sanctions
regimes where individuals do not have access to the services of the Ombudsperson.
Encouraged by the success of individual legal challenges, some states have begun to tie up
courts with legal challenges to the designation of some of their corporate entities (either from
government departments or from state firms). For example, 42 per cent of the legal challenges
to sanctions pending in European courts in 2014 came from Iran (Meister 2015). Although not
all of those cases were resolved in 2015, the EU lost nearly two-thirds of its sanctions-related
cases in that same year.
5.6.5 Political Challenges
On the political front, there is growing evidence of a breakdown of consensus among the five
permanent members of the UNSC about the utility of UN targeted sanctions. China has long been
sceptical about most forms of international intervention, while Russia has become much more
actively opposed not only to new sanctions regimes, but also to the strengthening of existing ones.
The tendency became increasingly noticeable after Russia was subjected to EU and US sanctions
for its annexation of Crimea in 2014. In addition, the Human Rights Council has been used by
some member states both to challenge the legality of unilateral coercive measures (adopted by
some states as additional measures called for in UNSC resolutions) and to draw further attention
to the denial of individual rights described above. The High Commissioner for Human Rights
also appointed a Special Rapporteur to report on the negative human rights effects of unilateral
coercive measures, with a particular focus on measures adopted by the US and the EU.

5.6.6 Contemporary Policy Challenges
The fact that the past two decades have seen UN sanctions become the policy instrument
of choice for so many different conflict situations has made sanctions central to many of
the most important contemporary security policy challenges today. Maintaining the JCPOA
has been a central concern of the EU, and arguably other great powers and Iran, since the
United States unilaterally withdrew from the agreement in 2018. The limited success of
the Instrument in Support of Trade Exchanges (INSTEX), established by the EU to finance
humanitarian relief for Iran to bypass US financial regulatory controls, is but one illustration
of the salience of the policy challenge. The scope and scale of the nearly comprehensive
UN sanctions on the DPRK (Biersteker et al. 2020) have also raised important humanitarian
concerns on the Korean peninsula. The de-risking of financial institutions from ongoing
conflicts in other parts of the world, especially in Yemen, Libya, Iraq, Syria and Venezuela,
has made it difficult for even UN humanitarian actors to finance their relief activities in those
countries. With the outbreak of the COVID-19 pandemic in 2020, these pre-existing trends
have been further exacerbated, sometimes accompanied by national restrictive measures. As
a result, there have been high-level calls, including from the UN Secretary-General, for some
form of relaxation of UN sanctions in a number of different conflict contexts in an effort
to prevent the pandemic from spreading further. In the current context, it is thus fair to say
that the unintended humanitarian consequences of a number of targeted sanctions regimes
are approaching a level comparable to that which delegitimized comprehensive sanctions
in the 1990s.
5.7 CONCLUSION
As we have argued in this chapter, UN sanctions can be a useful policy instrument for deal-
ing with challenges to international peace and security, especially if they are used prudently
and flexibly. Indeed, as Wallensteen (2016) has argued, there is some evidence of increased
effectiveness of UN sanctions over time, specifically with regard to coercing and signalling.
While the increases are slight, the UN often intervenes in some of the most intractable
conflicts in the world and, if we examine in-case variation, there is stronger evidence that
the effectiveness of UN sanctions increases over time in a number of armed conflict cases,
which constitute the majority of UN interventions since its inception. While there are a few
examples of effectiveness when mediators first attempt to negotiate a ceasefire or bring parties
to the table, UN sanctions, effectiveness tends to increase later in the conflict cycle, when
sanctions are used to maintain a signed peace agreement or during the peacebuilding phase of
the conflict (Biersteker with Hudáková 2015). A comparison of the initial TSC assessments
of effectiveness from 2013 and the most recent assessments in UNSanctionsApp in 2020,
which includes the consideration of 14 new episodes added between 2014 and 2020, suggests
that the effectiveness of UN targeted sanctions overall has remained largely stable, with the
effectiveness in constraint decreasing slightly over time.
Whether the evidence of in-case improvement in effectiveness over time indicates some
form of institutional learning within the UN remains to be seen, but there have been a
number of significant instances of reform and institutional strengthening within the UN’s
sanctions architecture over time. The instrument of targeted sanctions was introduced and

developed in the late 1990s and early 2000s to replace the harmful effects of comprehen-
sive sanctions that characterized UN sanctioning practice in the early 1990s. Since then,
humanitarian exemptions have become routine in the design of UN targeted sanctions
regimes, the information on individual designations has improved and been systematized,
the UN panels of experts have been professionalized and given more responsibilities, the
quality of the expert panel reports has improved, and due process considerations have
been partially addressed through the creation of a Focal Point within the Secretariat and
the establishment of the Office of the Ombudsperson. Despite the many improvements,
some of the greatest challenges facing the continued utility of UN targeted sanctions today
stem from limiting sanctions’ unintended negative humanitarian consequences. Others
arise from the increased use of sanctions by other unilateral and regional actors as well as
the weakening of consensus among the permanent members of the UNSC to employ UN
sanctions as an instrument of contemporary global governance. To be effective as tools of
global governance, UN sanctions need not only the right design, but also the recognition
of their legitimacy and the political will to impose and implement measures that have a
potential to achieve desired policy outcomes.
NOTES
1. UN General Assembly resolution 1514 (XV) of 14 December 1960.
2. This followed a UN arms embargo on the Yugoslav Federation imposed in September 1991.
3. For additional information on the individual UN sanctions cases, see Biersteker et al. (2018, 2020).
4. The programme, however, became marred by mismanagement and corruption. See, for example, Gordon (2010).
5. The up-to-date version is available at https://unsanctionsapp.com/.
6. For more information about the two datasets, see Biersteker et al. (2018).
7. For a more detailed comparison between the three datasets, see Biersteker et al. (2018).
8. Valuing the three distinct purposes equally, UN sanctions were effective in 38 case episodes (5 in coercing, 16 in
constraining, and 17 in signalling) out of the total of 172 applicable episodes (50 for coercion, 59 for constraint,
and 63 for signalling).
9. Note that not all purposes are present in each sanctions episode.
10. For details regarding the measurement and outcomes for all 63 episodes of the 23 country cases, see the Appendix
of Biersteker et al. (2016, 2018).
11. For more information on the relationship between UN sanctions and regional sanctions, see Brzoska (2015) and
Charron and Portela (2016).
12. UNSanctionsApp can be accessed at https://unsanctionsapp.com/.
13. In addition, UNSanctionsApp also includes information about three comprehensive UN sanctions episodes.
14. For more information about the App, please consult the App’s ‘User guide’ as well as the ‘About us’ section.
15. For the details of how the overall score is calculated, see the ‘User guide’ section of the App.
16. Note that not all purposes are present in each sanctions episode. The table excludes effectiveness evaluations of the
three comprehensive UN sanctions episodes, which are also included in the interactive UNSanctionsApp database.
REFERENCES
Andreas, P. (2005), ‘Criminalizing consequences of sanctions: embargo busting and its legacy’, International Studies
Quarterly, 49 (2), 335–60.
Barber, J. (1979), ‘Economic sanctions as a policy instrument’, International Affairs, 55 (3), 367–84.
Biersteker, T. (2014), ‘Scholarly participation in transnational policy networks: the case of targeted sanctions’, in
M. Bertucci and A. Lowenthal (eds), Narrowing the Gap: Scholars, Policy-Makers and International Affairs,
Baltimore, MD: Johns Hopkins University Press, pp. 137–54.
Biersteker, T. (2018), ‘SanctionsApp as expertise (and exclusionary ignorance) in a global policy setting’, in A.
Leander and O. Waever (eds), Assembling Exclusive Expertise: Knowledge, Ignorance and Conflict Resolution in
the Global South, London, UK: Routledge Publishers, pp. 153–69.

Biersteker, T., R. Brubaker and D. Lanz (2019), ‘UN sanctions and mediation: establishing evidence to inform
practice’, New York, NY: United Nations University Centre for Policy Research.
Biersteker, T., S. Eckert, P. Romuniuk, A. Halegua and N. Reid (2001), Targeted Financial Sanctions: A Manual
for Design and Implementation, Contributions from the Interlaken Process, Providence, RI: Watson Institute for
International Studies.
Biersteker, T., S. Eckert and M. Tourinho (eds) (2016), Targeted Sanctions: The Impacts and Effectiveness of United
Nations Action, Cambridge, UK: Cambridge University Press.
Biersteker, T., S. Eckert, M. Tourinho and Z. Hudáková (2013), The Effectiveness of United Nations Targeted
Sanctions: Findings from the Targeted Sanctions Consortium, Geneva, Switzerland: The Graduate Institute for
International Studies.
Biersteker, T., S. Eckert, M. Tourinho and Z. Hudáková (2018), ‘UN targeted sanctions datasets (1991–2013)’, Journal
of Peace Research, 55 (3): 404–12.
Biersteker, T. with Z. Hudáková (2015), ‘UN sanctions and peace negotiations: possibilities for complementarity’,
Oslo Forum Papers No. 004, Geneva, Switzerland: Center for Humanitarian Dialogue.
Biersteker, T., Z. Hudáková and M. Tourinho (2020), ‘UNSanctionsApp: an interactive database of UN sanctions’,
August 2020, accessed 8 August 2021 at https://unsanctionsapp.com/.
Brzoska, M. (ed) (2001), ‘Design and implementation of arms embargoes and travel and aviation related sanctions:
results of the “Bonn-Berlin Process”’, Bonn, Germany: Bonn International Center for Conversion.
Brzoska, M. (2003), ‘From dumb to smart? Recent reforms of UN sanctions’, Global Governance, 9 (4), 519–35.
Brzoska, M. (2015), ‘International sanctions before and beyond UN sanctions’, International Affairs, 91 (6), 1339–49.
Charron, A. and C. Portela (2016), ‘The relationship between United Nations sanctions and regional sanctions
regimes’, in T. Biersteker et al. (eds), Targeted Sanctions: The Impacts and Effectiveness of United Nations Action,
Cambridge, UK: Cambridge University Press, pp. 101–18.
Cockayne, J., R. Brubaker and N. Jayakody (2019), Fairly Clear Risks: Protecting UN Sanctions’ Legitimacy and
Effectiveness through Fair and Clear Procedures, New York, NY: United Nations University.
Cortright, D. and G. Lopez (eds) (2000), The Sanctions Decade: Assessing UN Strategies in the 1990s, Boulder, CO:
Lynne Rienner Publishers.
Doxey, M. (1972), ‘International sanctions: a framework for analysis with special reference to the UN and Southern
Africa’, International Organization, 26 (3), 527–50.
Doxey, M. (2009), ‘Reflections on the sanctions decade and beyond’, International Journal, 64 (2), 539–49.
Drezner, D. (2003), ‘How smart are smart sanctions?’, International Studies Review, 5 (1), 107–10.
Drezner, D. (2011), ‘Sanctions sometimes smart: targeted sanctions in theory and practice’, International Studies
Review, 13 (1), 96–108.
Early, B. and K. Preble (2020), ‘Going fishing versus hunting whales: explaining changes in how the US enforces
economic sanctions’, Security Studies, online first (February 2020), DOI: 10.1080/09636412.2020.1722850.
Eriksson, M. (2007), Targeting Peace: Understanding UN and EU Targeted Sanctions, Farnham, UK: Ashgate.
Galtung, J. (1967), ‘On the effects of international economic sanctions, with examples from the case of Rhodesia’,
Giumelli, F. (2011), Coercing, Constraining and Signalling: Explaining UN and EU Sanctions After the Cold War,
Colchester, UK: ECPR Press.
Gordon, J. (2002), ‘Cool war: economic sanctions as a weapon of mass destruction’, Harpers Magazine, November,
43–49.
Gordon, J. (2010), Invisible War: The United States and the Iraqi Sanctions, London, UK and Cambridge, MA:
Harvard University Press.
Gordon, J. (2016), ‘Extraterritoriality: issues of overbreadth and the chilling effect of sanctions in the cases of Cuba
and Iran’, Harvard International Law Journal, 57 (January).
Hovi, J., R. Huseby and D. Sprinz (2005), ‘When do (imposed) economic sanctions work?’, World Politics, 57 (4):
479–99.
Hufbauer, G.C. and E. Jung (2021), ‘Economic Sanctions in the 21st Century’ in: P.A.G. van Bergeijk (ed), Research
Hufbauer, G., J. Schott, K. Elliott and B. Oegg (2007), Economic Sanctions Reconsidered, Washington, DC: Peterson
Institute for International Economics.
Meister, K. (2015), ‘EU sanctions and legal challenges’, Paper presented in the Research Seminar on International
Sanctions taught at the Graduate Institute, Geneva.
Morgan, T., N. Bapat and Y. Kobayashi (2014), ‘The threat and imposition of sanctions: updating the TIES dataset’,
Conflict Management and Peace Science, 31 (5): 541–58.
Morgan, T.C., N. Bapat and Y. Kobayashi (2021), ‘The threat and imposition of economic sanctions data project:
a retrospective’ in: P.A.G. van Bergeijk (ed), Research Handbook on Economic Sanctions, Edward Elgar:
Mueller, J. and K. Mueller (1999), ‘Sanctions of mass destruction’, Foreign Affairs, 78 (3), 49–53.
Pape, R. (1997) ‘Why economic sanctions do not work’, International Security, 22 (2): 90–136.

Restrepo, D. and M. Winkler (2018), ‘U.S. economic sanctions and the corporate compliance of foreign banks’ The
International Lawyer, 51 (3), 487–535.
Schwebach, V. (2000), ‘Sanctions as signals: a line in the sand or lack of resolve’, in S. Chan and A. Drury (eds),
Sanctions as Economic Statecraft: Theory and Practice, London, UK: Macmillan.
Tostensen, A. and B. Bull, (2002), ‘Are smart sanctions feasible?’, World Politics, 54 (3), 373–403.
UN Secretary-General (1996), ‘Report of the Secretary-General pursuant to the Security Council resolution 1070
(1996) of 14 November 1996’, S/1996/940, 14 November.
UN Secretary-General (2000), ‘Secretary-General reviews lessons learned during sanctions decade in remarks to
International Peace Academy Seminar’, Press Release, SG/SM/7360, 17 April.
UN Security Council (1995), ‘Humanitarian impact of sanctions’, S/1995/300, 13 April.
UNICEF (2003), ‘Iraq watching briefs’, Overview Report, July, accessed on 21 July 2020 at https://www.unicef.org
/evaldatabase/files/Iraq_2003_Watching_Briefs.pdf.
von Soest, C. and M. Wahman (2015), ‘Not all dictators are equal: coups, fraudulent elections, and the selective
targeting of democratic sanctions’, Journal of Peace Research, 52 (1), 17–31.
Wallensteen, P. (1968), ‘Characteristics of economic sanctions’, Journal of Peace Research, 5 (3), 247–66.
Wallensteen, P. (2016), ‘Institutional learning in targeting sanctions’, in T. Biersteker, S. Eckert and M. Tourinho
(eds), Targeted Sanctions: The Impacts and Effectiveness of United Nations Action, Cambridge, UK: Cambridge
University Press, pp. 248–64.
Wallensteen, P., C. Staibano and M. Eriksson (eds) (2003), Making Targeted Sanctions Effective: Guidelines for the
Implementation of UN Policy Options, Uppsala, Sweden: Uppsala University.
Weiss, T., D. Cortright, G. Lopez and L. Minear (eds) (1997), Political Gain and Civilian Pain: Humanitarian Impacts
of Economic Sanctions, Lanham, MD: Rowman and Littlefield.
Weschler, J. (2010), ‘The evolution of Security Council innovations in sanctions’, International Journal, 65 (1),
31–43.

6. Publication bias of economic sanctions research:
a meta-analysis of the impact of trade linkage,
duration and prior relations on sanctions success1
Binyam A. Demena, Alemayehu S. Reta, Gabriela
Benalcazar Jativa, Patrick B. Kimararungu and Peter
A.G. van Bergeijk
6.1 INTRODUCTION
Empirical research on economic sanctions started in 1985 with the seminal publication of
Economic Sanctions Reconsidered by Hufbauer and Schott (1985, see also Chapter 2 of this
Handbook).2 This was the first time that a so-called large-N (sample size) data set became
available; until then sanctions research had dealt with (a handful of) individual case studies
(e.g., Wallensteen, 1968). The availability of the HSE data set stimulated numerous articles
that used it to test theories that determine the success and failure of economic sanctions. The
set of sanctions cases was significantly extended with the third edition (Hufbauer et al., 2007).
More importantly, new data sets went beyond the implemented sanctions at the macro level of
the Hufbauer et al. study, notably the Threats and Imposition of Sanctions (TIES, see Morgan
et al., 2009; Morgan et al., 2014; Chapter 3 in this Handbook) and the UN targeted sanctions
data set (Biersteker et al., 2018; see Chapter 5 in this Handbook). This chapter addresses the
research puzzle that despite 35 years of empirical research no consensus has yet emerged on
the sign and size of the impact of some key variables that theoretically determine the success
of economic sanctions. This puzzle is even more striking, because disagreement and incon-
clusiveness, as will become clear later on, increased despite significant improvements in data
collection and analysis. In order to solve our research puzzle, we will perform a meta-analysis
of 37 primary studies published over the years from 1985 to 2018, inclusive. These primary
studies aim to explain empirically the conditions under which economic sanctions succeed.
Our goal is not to cover all approaches to and explanations of economic sanctions; we will
use a sub-sample of empirical studies and will only consider those primary studies that have
included trade linkage, sanction duration and/or prior relations among the explanatory vari-
ables of the success and failure of economic sanctions.3
In the meta-analysis each parameter estimate that is reported in a primary study is an obser-
vation of the dependent variable. In our study this is the reported coefficient of a determinant
of sanction success. The meta-analysis enables us to estimate the ‘true’ underlying meta-effects
and to test for publication bias as a potential explanation for the heterogeneity of findings in the
literature. Publication bias occurs if certain types of statistical results have a higher probability
of being reported than other results. It includes – often unconsciously – a selection of research
findings that satisfy prior beliefs, theoretical expectations or statistical significance (Demena,
2017). This distorts research on our knowledge of sanctions, as large and/or statistically
significant, conventional results would be over-represented whereas controversial, small and/
or insignificant findings are likely to be under-reported.
125
ayehu S. Reta, Gabriela Benalcazar Jativa, Patrick B. Kimararungu and Peter A. G. van Bergeijk - 9781839102721
a) Trade linkage
8
−2
−4
−6
1985 1990 1995 2000 2005 2010 2015 2020
b) Sanction duration
2
−1
−2
−3
−4
−5
1985 1990 1995 2000 2005 2010 2015 2020
c) Prior relations
5
−1
−2
−3
−4
1985 1990 1995 2000 2005 2010 2015 2020
Figure 6.1 Reported t-values for three determinants of sanction success and year of
publication of the primary studies
Publication bias of economic sanctions research 127
Rather than focussing on only one variable of interest, we meta-analyse three variables
simultaneously because by dealing with three meta-analyses on related variables of interest
we are able to investigate whether our findings indicate a common characteristic of this subset
of the literature or a finding that is specific for, e.g., duration only. The literature on economic
sanctions provides a great many potential determinants of sanction success including charac-
teristics of the sanction goal, political characteristics and economic aspects as illustrated by
the diversity of this Handbook. It is for practical reasons impossible to cover all these potential
determinants in one chapter so we have to be selective and we will focus on three key economic
determinants. We analyse three important determinants of the outcome of sanctions episodes.
For each, we provide a meta-analysis:
● pre-sanction trade linkage between sanction sender and target,

● duration of the sanction episode, and
● prior relations between sanction sender and target.
We base our choice for these variables on three factors. Firstly, the findings for these variables
have been shown to be robust with respect to the different vintages of the Hufbauer et al. (1990,
1995 and 2007) data set that has most often been used in empirical sanction research and are
often included in the more recent data sets (van Bergeijk and Siddiquee, 2017). Secondly, we
can unambiguously ground these variables in the theory of international economics. Thirdly,
the pattern of estimated coefficients for each determinant reveals continued disagreement
among the primary studies, and this makes a meta-analysis more valuable. Figure 6.1 illustrates
this disagreement, as it plots on the vertical axis the t-value of the reported coefficients for each
of our three variables of interest and on the horizontal axis the year of publication of the pri-
mary studies. We report t-values, because this helps us to directly focus on sign and statistical
significance and also to see if disagreement is substantial. Note that, as an additional benefit,
t-values are dimensionless parameters and therefore the comparison is not compromised by
differences in operationalization of the variables.
Figure 6.1 provides an overview of the development of the estimated parameters over
time. While the majority of these estimates are in line with our view that successful economic
sanctions are associated with larger trade linkage, shorter sanction duration and better prior
relations, the figure also clearly reveals substantial and persistent controversy with respect to
both the significance and the sign of each of the three parameters.4
Since meta-analysis is a relatively unknown methodology for the study of sanctions, we first
discuss the methodology in Section 6.2. Section 6.3 discusses data collection and our empirical
strategy in the context of the MAER-Net protocol. Section 6.4 provides the meta-analysis and
establishes the extent of bias. Section 6.5 then delves into the determinants of publication
bias. The final section provides a discussion on the implications of our findings and offers
suggestions for methodological changes in the field.
6.2 METHODOLOGY
The sanctions literature mainly relies on so-called narrative evaluations or reviews of litera-
ture. Such reviews may or may not be based on a systematic review, that is, an identification
of all potentially relevant articles based on keywords and typically using search engines
such as the Web of Science or Google Scholar. Part of the systematic review consists of the
long-standing best practice to identify potentially relevant work using citation analysis and an
inspection of authors identified in the references of the primary studies. This body of literature
is summarized and evaluated by an expert (or group of experts) with the aim of identifying the
state of the art regarding a topic. The evaluators consider the quality and reliability of research
findings (in principle including the risks for bias) and often identify promising avenues for
research. These narrative reviews are extremely important and relevant for scientific progress,
also because they can combine and evaluate different forms of knowledge including qualita-
tive, quantitative and formal (mathematical) findings.
Meta-analysis was developed in medicine where it was used to establish the true effect out of
many small-N samples of drug tests. The method quantitatively analyses empirical studies and
statistically cleans for biases. Importantly, a meta-analysis allows one to establish objectively
the central tendency in the empirical literature and to make corrections for bias introduced
by intrinsic motivation, bias of the authors of the primary studies themselves as well as bias
introduced by the referee process and journal editors. The meta-analysis both includes and
goes beyond a traditional systematic review (van Bergeijk and Lazzaroni, 2015). The use of a
meta-analysis adds value to a traditional review of the literature: a meta-analysis is less prone
to subjective bias and more transparent than a traditional literature review because it systemati-
cally analyses sources of (quantitative) variation of earlier primary studies.
Following a preliminary work by van Bergeijk et al. (2019), our meta-analysis is the first to
deal with economic sanctions. This is a relevant topic for meta-analysis in view of the apparent
disagreement on the success of sanctions that not only differs by ‘school’, but also shows
over time significant fluctuation in policy discussions that are often strongly driven by recent
high-profile cases.5 In this context subjectivity can become problematic.
We will focus on three key economic determinants of sanction impact. Underlying our
analysis is the assumption that costs and benefits of considered policies motivate decision
makers and we therefore focus on economic welfare (aggregate utility) as a driver of behaviour
of the sanctions target. (We do not, of course, argue that economic costs and benefits are
the only relevant variables, and we recognize that many other non-economic variables can
determine the outcome of concrete sanctions episodes.) We develop a small model for an open
target economy that consumes, produces and trades two goods x and y.6
The economy derives utility u from consumption Cx of good x and Cy of good y. The utility
∂u > 0 and ∂u
function u(Cx, Cy) is strictly concave and has the usual properties ∂Cx ∂Cy
> 0. Also,
the production possibilities frontier is standard: y = φ(x) with ∂ϕ
∂x
< 0 and ∂2 ϕ
< 0 (the function
∂x 2
is defined for [0, xm] with xm the maximum possible production of x). The small country
assumption allows us to treat the international price level p (that is: the relative price of good
x in terms of good y) as given.7 National income Y is expressed in units of good x and the
production is valued at international prices so that we have by definition Y(x) = x + pφ(x). For
the given international price ratio p and the production possibilities frontier φ, maximization
of profit by firms and utility by consumers provides the production point in the case of trade
(xp,t, φ(xp,t)) and the concomitant consumption point (xc,t, φ(xp,t) + p(xp,t – xc,t)), respectively.
Similarly, we calculate the autarky production and consumption point as (xp,a, φ(xp,a)) = (xc,a,
φ(xc,a)) = (xa, φ(xa)). It is straightforward that stronger specialization (read: larger |(xp,t, φ(xp,t)) –
(xa, φ(xa))|) is associated with a larger welfare loss if trade is distorted: in (xa, φ(xa)) the welfare
loss by definition is zero, and it is at its maximum for (φ’(xa) = p).8 Since the welfare loss of
trade disturbance is strictly increasing in trade, economies with substantial trade at stake are
expected to be more likely to change behaviour. That is, we a priori expect that the more the
target is trading, the more likely a sanction is to succeed.
Duration of the sanction from an economic point of view directly relates to the adjustment
path of an economy.9 Before the sanction consumption happens outside the production
frontier, with (xp,t, φ(xp,t)) on the production frontier and (xc,t, φ(xp,t) + p(xp,t – xc,t)) outside the
production frontier. If trade is no longer possible, consumption will by necessity drop to
domestic production (xc,t, φ(xpc,t) = xp,t, φ(xp,t)): the economy is specialized and it will take time
to de-specialize as the factors of production need to be reallocated from the export sector to the
import (competing) sector of the economy.10 Importantly, the utility u(xp,t, φ(xp,t)) is lower than
the autarky utility level u(xa, φ(xa)) since the autarky point is optimal in case no trade occurs
and as the economy is not in the autarky point, welfare must be lower. The result would be
that the strongest welfare loss occurs directly after the imposition of an economic sanction,
namely u(xp,t, φ(xp,t)) – u(xc,t, φ(xp,t) + p(xp,t – xc,t)) when the economy is still specialized. Once
the adjustment process starts, the loss reduces until it ultimately reaches u(xa, φ(xa)) – u(xc,t,
φ(xp,t) + p(xp,t – xc,t)). From an economic perspective, a sanction that does not succeed on short
notice thus becomes increasingly less likely to change behaviour. That is: we a priori expect
that for longer duration it is less likely that a sanction succeeds.
So far, we have for ease of exposition assumed that a sanction is implemented with certainty.
Uncertainty, however, is a key characteristic of international relations. It is important to realize
that both the sanction sender and the sanction target will lose the gains from trade during an
implemented sanction. For this reason, the sanction sender may not really want to execute a
sanction threat and therefore the analysis cannot be deterministic but needs to take uncertainty
into account. Now let π be the subjective probability that the sender implements the sanction.
This subjective probability is influenced by many variables. In our discussion we focus on
the prior relations between sender and target (better prior relations could be associated with
smaller π). We may thus think about π as a function of prior relations PR so that π = π(PR)
π > 0.
and ∂∂PR
In order to keep the analysis as transparent as possible, we distinguish two extreme states
of the world.11 First, in the no-sanction state of the world, the economy can in principle trade
any quantity at the prevailing international relative price (because it is ‘small’ and thus a price
taker on the world market). The indirect utility free trade function t(x) relates to this world. As
already indicated, t(x) has a global maximum for point t(xc,t). Second, in the sanction case the
economy is isolated and international trade comes to a virtual halt. The direct and indirect no-
trade utility functions s(x) coincide, because no trade takes place in this state of the world. Note
that the no-trade production combination only equals the traditional autarky production point
if individual producers and consumers believe that the sanction will actually be implemented
(π = 1), and themselves opt for a production combination that does not enable trade. The autarky
production point is the global maximum for s(x). The option to trade implies that t(x) > s(x).
The decision problem may now be formalized as a maximization of expected utility with x
(read: the pattern of specialization) as the instrument variable.
max π s(x) + (1– π )t(x) (6.1)

x
∂s (x) + (1− π ) ∂t (x) = 0 with a unique solution

The first order condition of this problem is π ∂x ∂x
for the production combination (x, y). The boundaries of the area of possible solutions are the
autarky production combination (xa, φ(xa)) and the free trade production combination xp,t,φ(xp,t).
If π = 0, then xa, φ(xa) is the solution since π = 0 implies that ∂x
∂s (x )=0. Likewise, if π = 1, then
a
∂t
the solution to the optimization problem is ∂x (x p.t ). So the sanction function s(x) has a global
maximum for xa, and the trade function t(x) is at its global maximum in xp,t. Both functions are
under the usual assumptions strictly concave, increasing to the left of xp,t and decreasing to the
right of xa. Consequently, the expected utility of the chosen product combination (x, φ (x)), that
is a weighted average of these functions (with the subjective probabilities as weights), must
have a global maximum between xa and xp,t. Without loss of generality for a country with a
comparative advantage in the production in good y (implying that xp,t < xa), the total differential
∂x { ∂x ∂x }
of the first order condition becomes π ∂2 t2 + (1− π ) ∂2 s2 dx = ( ∂s − ∂t ) dπ and as the first order
∂x
∂t ( π −1) ∂∂ xs ∂s
condition implies that = , we may rewrite this as dx = ∂x
< 0 so that we have
∂x π dπ
{
π π ∂ t +(1−π ) ∂2 s
2
∂ x2 ∂ x2
}
a strict one-to-one correspondence between the subjective probability π that the sanction is
implemented (and thus of its determinant prior relations) and the extent of specialization which
translates into the welfare loss due to sanctions and ultimately into our a priori expectation that
good prior relations make it more likely that a sanction (threat) will work.
The standard neoclassical model in the context of trade uncertainty can be used to motivate
the choice of the variables of interest for the meta-analysis, and also to derive theoretical
expectations from core economic theory on their signs. Our a priori expectations are that
sanctions are more likely to succeed for larger trade linkage, shorter duration and better prior
relations. Based on a standard economic model we have therefore strong priors regarding the
sign and significance of the variables of interest—and this makes the findings of the meta-
analysis even more challenging.
6.3 DATA AND EMPIRICAL STRATEGY
6.3.1 Methods, Protocols and Data Construction
The construction of the data set strictly follows the guidelines of the Meta-Analysis in
Economics Research-network (MAER-Net); see Stanley et al. (2013). We conducted a
comprehensive literature search using Google Scholar supplemented with the Web of
Science. Moreover, we checked the lists of the references of recent primary empirical
studies and reviews. The search included all potentially relevant published and unpublished
empirical primary studies from 1985 up to and including 2018. We searched using different
broad keyword combinations on the three variables of interest (trade linkage, duration and
prior relations) as illustrated in Table 6.1. Studies are included if they satisfy the following
selection criteria: English language, empirical investigations that are conducted on the
success (failure) of economic sanctions and include at least one of our variables of interest
(either as variable of interest in the primary study or as controlling variable) and that report
regression-based coefficients, sample size, t-statistics or standard errors.12 The application of
these criteria resulted in 33 (trade linkage), 15 (duration) and 24 (prior relations) empirical
studies for coding. The multiple search process ended in February 2019. All authors of this
chapter were involved in the construction of the data set providing for double coding and
consistency check.
Table 6.1 Search list of keywords, selected primary studies and collected observations
Database Categories Keywords Results Observations

returned
(selected)
Google trade linkage Economic sanctions, economic 198 (33) 174
Scholar & Web coercion*, sanction* threat,
of Science success or failure*, work,
(ISI Web of sanction and outcomes*,
Knowledge) episodes, determinant*, cost*,
result*, culture*, effectiveness*
duration economic sanctions, sanctions*, 210 (15) 77
success of economic sanctions,
sanction*outcome*, sanction*
duration, sanction time,
sanctions episode*, sanctions
imposition*, length sanction
episode*
prior relations Economic sanctions, economic 360 (24) 83
coercion, sanction*, episodes,
determinant*, success*, fail*,
effect*, work, outcomes, result*,
cost*, sender state, target state,
foreign, *politic*, democratic*,
autocrat*, *leader*, *stability,
empirical analysis, sensitivity
analysis, approach, econometric
analysis, modelling
We use the so-called all-set, constructed through coding all relevant regressions in all stud-
ies, because the number of available studies is limited and we want to use within-study infor-
mation (using ‘preferred specifications’ would introduce selection bias based on the author’s
preferences that can be avoided by simply taking all reported coefficients, see Demena, 2015;
and Demena and van Bergeijk, 2017).
6.3.2 Meta-data
Our data set consists of 334 observations derived from 37 primary studies for which the
required data (estimated coefficients) are provided. Only two of the 37 studies concern a
country-specific study. All other studies are large-N studies. The earliest study in our sample
was published in 1985 and the most recent in 2018. The median study in our sample appeared
in 2007 so that half of the primary studies were published in the last ten years, illustrating
the topicality of this research field. The median number of parameter estimates taken from
a primary study is five coefficients. The minimum, the mean and the maximum number of
observations (regressions) per study are 1, 9 and 48 coefficients, respectively.
The data set includes 30 peer-reviewed journal articles, illustrating that the primary studies
are predominantly published in peer-reviewed journals.13 In total this literature had received
4,523 citations in Google Scholar14 as of March 2019. The study Economic Sanctions
Reconsidered: History and Current Policy (all editions combined) received most citations
(2,065 citations). The second most cited article is Drezner’s 2000 Bargaining article (310
citations). Slightly more than 40% of the reported coefficients were published in A-journals.15
Table 6.2 provides a summary of the results of the empirical studies published in A-journals
and again illustrates the lack of consensus in the literature—even for the leading journals—
with contradictory significant signs and many insignificant coefficients.
Table 6.2 Qualitative findings of empirical studies published in high quality journals
Study Journal Findings

Trade Prior Duration
linkage relations
Dashti-Gibson et al. (1997) American Journal of Political * *
Science
Drury (1998) Journal of Peace Research * *
Drezner (2000) International Organization + +
Hart (2000) Political Research Quarterly + *
Nooruddin (2002) International Interactions * *
Jing et al (2003) Journal of Peace Research +
Lektzian and Souva (2007) Journal of Conflict Resolution *
Ang and Peksen (2007) Political Research Quarterly * + *
Bapat and Morgan (2009) International Studies Quarterly + * *
Chan (2009) International Political Science – –
Review
Major (2012) International Interactions +
Whang et al. (2013) American Journal of Political +
Science
Woo and Verdier (2014) Journal of Semantics * –
Lektzian and Patterson International Studies Quarterly * + *
(2015)
Bapat and Kwon (2015) International Interactions +
van Bergeijk and Siddiquee International Interactions * + –
(2017)
Kleinberg (2018) Journal of Peace Research * –
Woo and Verdier (2014) Journal of Semantics * –
Peterson (2018) Conflict Management and Peace –
Science
Notes: * variable included but not significant, – negative and significant at the 10% level and better, + positive
and significant at the 10% level and better. Blank cells indicate that this variable is not covered in the primary study.
6.3.3 Empirical strategy
A meta-analysis employs both visual inspection of graphs and statistical analysis, as prescribed
by the MAER-Net protocol. We use funnel plots (scatter diagrams with the effect size on the
horizontal axis and its precision on the vertical axis) to get a first indication about publication
bias. In a non-biased literature, the estimates will vary randomly and symmetrically around the
median: imprecise estimates will show up scattered widely and symmetrically at the lower part
of the funnel and more precise estimates will be compactly distributed at the upper part of the
funnel. An asymmetric funnel plot indicates bias. Next, we will use more objective statistical
procedures to assess publication selection bias.
A powerful statistical method is the meta-regression analysis (MRA), captured by the
bivariate Funnel Asymmetry Test (FAT) and Precision Effect Test (PET):
effectij = β0 + β1Seij + uij (6.2)
effectij is an individual estimate i of study j, Seij is its standard error and uij is the error term. FAT
is used to detect the presence of publication bias by testing the slope of equation (6.2), β1. When
β1 is significant, publication bias exists as the reported effects are correlated with their standard
errors. PET is used to investigate the presence or absence of an underlying genuine empirical
effect (so after correction for publication bias). In equation (6.2), the intercept term β0 is this
genuine effect. Equation (6.2) is often plagued by heteroscedasticity and should therefore be
estimated by weighted least squares (WLS). According to Stanley and Doucouliagos (2012),
a potential heteroscedasticity problem occurs because the error term cannot be expected to be
independently and identically distributed, as the empirical studies deploy various sample sizes,
empirical specifications and econometric techniques. It is important to note that the dependent
variable, effectij, is specified using its standard error, Seij, as its explanatory variable. Therefore,
the variance of effectij is expected to vary from one estimate to the next (Stanley, 2005). Thus,
dividing Eq. (6.2) by the individual standard error, Seij, we can specify the WLS as:
effectij ⎛ 1 ⎞
tij ≡ = β1 + β0 ⎜⎜ ⎟ + eij (6.3)
⎟
Seij ⎝ Seij ⎠
( )
tij is the individual t-value reported in regression i from study j, Se1 the inverse of its standard
( )
u ij
error specified in equation (1) and eij is derived from Seij .
ij
Now estimation of β1 tests for publication bias reported in the literature, and its sign indi-
cates the direction of the bias. The slope (PET) of equation (6.3), can be used to investigate
the presence (both in terms of size and sign) of an underlying genuine effect of the primary
studies. Since we collect multiple reported estimates from each study, we need to control for
within-study dependence in order to avoid introducing potential estimation bias. In our case,
between-study dependence is also important as several studies were published by the same
authors (and are thus less likely to be statistically independent). Indeed, the Breusch-Pagan
Langrange multiplier (BP-LM) test suggests the presence of significant statistical dependence
between studies. The BP-LM test reveals highly significant study-level effects of 106.28,
p < 0.000; 69.17, p < 0.001 and 241.18, p < 0.000 for trade linkage, prior relations and duration,
respectively. Accordingly, we prefer the mixed-effects multilevel model (MEM) that accounts
for both between-study dependence and within-study correlation, unlike, for example, the OLS
standard errors clustered analysis that accounts for within-study correlation only (see Demena
and Afesorgbor, 2020 on the importance of controlling for between-study dependence via the
multilevel model).
6.4 META-ANALYSIS AND BIAS
Figure 6.1 and Table 6.2 already indicated that there is no obvious convergence in the literature
towards a consensus parameter value. In this section we investigate if this is due to publication
bias.
6.4.1 Graphical Inspections
We start our meta-analysis with Figure 6.2 that provides the funnel plots with the inverse of
the standard error (the most commonly used measure of precision) on the vertical axis and
the effect size on the horizontal axis. The funnel plot for prior relations is skewed to the right,
suggesting bias for reporting positive estimates. For duration the funnel plot is skewed to
the left, indicating a preference to report negative estimates. The trade linkage funnel plot is
skewed to the right (this is not directly clear from visual inspection).
Table 6.3 offers an additional perspective by means of the summary statistics of the
unweighted (simple) average and the weighted average (using the inverse variance, that is: se1 )
of the coefficients reported in the primary studies. The simple and weighted averages of dura-
tion are significant at 1% and suggest that longer duration is associated with sanction failure.
The weighted average effect for prior relations is significant at 1% and suggests that better
prior relations are associated with sanction success. Both averages are insignificant for trade
Table 6.3 Estimates of the overall reported coefficients on economic sanctions
Method Effect size Standard Error N 95% confidence interval

Trade linkage
Simple average effect –0.203 0.164 174 –0.527 0.120
Weighted average 0.014 0.016 174 –0.016 0.045
effect
Duration
Simple average effect –0.440** 0.077 77 –0.5948 –0.2852
Weighted average –0.075** 0.028 77 –0.1310 –0.0186
effect
Prior relations
Simple average effect 0.400 0.055 83 0.2916 0.5089
Weighted average 83
0.312** 0.047 0.2192 0.4042
effect
Notes: the simple average is the arithmetic mean of the reported estimates and the weighted average uses inverse
variance as weight. **, * stands for 1% and 5% level of significance, respectively.
Trade-linkage
8
Logarithm of the precision (1/SE)

6
–2
–10 –5 0 5
Estimate of the trade-linkage effect
Sanction Duration
5
0
–2 –1.5 –1 –.5 0 .5
Estimate of the duration effect
Prior-relation
3
0
–1 0 1 2
Estimate of the prior-relations effect
Figure 6.2 Funnel plots of the reported estimates on economic sanctions success
linkage. These findings motivate our next step to move to a more formal method to statistically
test the issue of publication bias.
6.4.2 Meta-regression Analysis
Table 6.4 provides the results of the MRA for each of the three determinants of sanction suc-
cess or failure. The findings of the MRA are consistent: for each variable we find substantial
publication bias. The first column reports the so-called MEM model: the publication bias
is significant at 1% in all cases exaggerating the effect of the variable of interest. In terms
of magnitude, the bias ranges from 0.907 to 1.384 in absolute values, implying substantial
bias. Doucouliagos and Stanley (2013) argue that selectivity is ‘little to modest’ if the bias is
insignificant or less than 1; ‘substantial’ if between 1 and 2; and ‘severe’ if it exceeds 2. Hence
the publication bias in this literature is substantial.
Table 6.4 MRA for FAT-PET: publication bias and true effect
Panel A: Trade linkage

MEM CDA
Variables Coefficient t-value Coefficient t-value
Bias (FAT) 0.907** 3.32 0.727 1.96
Genuine effect (PET) –0.0003 –0.19 0.002 0.66
Observations 174 174
Studies 33 33
Panel B: Duration
MEM CDA
Bias (FAT) –1.384** –3.01 –1.7624* –2.25
Genuine effect (PET) 0.004 0.59 –0.005 –0.51
Observations 77 77
Studies 15 15
Panel C: Prior relations
MEM CDA
Bias (FAT) 0.893** 3.09 0.988* 2.43
Genuine effect (PET) 0.004 1.05 0.043 0.90
Observations 83 83
Studies 24 24
Notes: **, * stands for 1% and 5% level of significance, respectively. All estimates use the inverse variance as
weights and standard errors are clustered at study level. Reported t-values are from cluster-robust standard errors.
MEM is mixed-effects multilevel estimated via restricted maximum likelihood; CDA: clustered data analysis
(robust standard errors clustered at study level).
The clustered data analysis (CDA) in Table 6.4 supports the finding of publication bias
although at a lower level of significance (trade linkage is significant at the 10% level). The
CDA reports a higher magnitude of the publication bias for duration and prior relations and
a lower magnitude for trade linkage. In all cases the verdict is that the literature suffers
from substantial bias. The genuine effect, moreover, is insignificant in all regressions in
Table 6.4. Therefore, the overall simple and uncorrected weighted effects reported in Table
6.3 reflect a publication bias, again implying that the reported estimates of the primary
studies are likely to be exaggerated and to substantially overstate the actual impact of the
determinants. By way of example, van Bergeijk (1989) reports a coefficient of 1.83 for
sanction duration that is significant at a 95% confidence level, but in view of the literature
that developed later this finding needs careful reinterpretation in view of the estimated
bias of 1.38 (MEM) and 1.76 (CDA). Hence the result also remains significant if we take
the bias for the whole empirical literature into account, but it is with hindsight only just
large enough to support the original conclusion of the 1989 article. Our next task is to
explore the potential sources and determinants of the identified substantial publication
bias.
6.5 DETERMINANTS OF PUBLICATION BIAS
This section offers an objective way to test the relevance of characteristics that, at the individual
study level, could be associated with publication bias. A similar approach was employed by
Doucouliagos and Stanley (2013) in their meta-meta-analysis investigating the determinants
of publication bias in economics. We focus of course on a much narrower literature, namely
the success (failure) of economic sanctions.
We define the dependent variable (publication bias) as the absolute value of the estimate-
level of bias. This is the difference between, on the one hand, the underlying genuine meta-
effect estimated with equation 6.3 and, on the other hand, the individual reported coefficients
of each regression of the primary empirical studies. Due to reporting characteristics of the
field, it is not possible to estimate study-level publication bias using the intercept of Eq. (6.3)
because only eight of the 37 studies included in our sample reported more than 10 parameter
estimates per study and the vast majority of studies provided between 1 and 5 estimates.
Importantly, our method does allow us to deal with the heterogeneity of the individual
estimates that may not be uncovered by the study-level approach. We define the general
econometric model as:
| β1 j | = α 0 + α1X j + v j (6.4)
Where β1j is the estimate-level bias, Хj is a vector of characteristics that influence the extent of
publication bias (β1j) at the individual study level. j denotes the jth empirical study and νj is the
error term. With regard to authors’ characteristics of the primary studies, we use a number of
variables that may explain/influence the extent of publication bias (Table 6.5 reports summary
statistics).
Table 6.5 Summary statistics of explanatory variables
Variables Mean Std. Dev. Min Max

Study was published in a peer-reviewed journal 0.689 0.464 0 1
a
No. of citations of the lead or corresponding author 1.815 3.120 0 11.548
a
No. of observations used by the study 0.340 0.537 0.019 3.658
A study is co-authored 0.275 0.447 0 1
A cited author is affiliated with a US-based institution 0.626 0.485 0 1
A cited author is affiliated with an academic institution 0.793 0.405 0 1
A cited author has completed PhD ≥5 years ago 0.602 0.490 0 1
High journal rank, 2017 ISI impact factor 0.425 0.495 0 1
Homogeneous gender (not mixed) 0.907 0.290 0 1
A cited author is a political scientist (base, economist/
0.692 0.463 0 1
others)
The publication year of the study (base, 1985) 23.620 8.393 0 33
Idem squared 628.14 335.14 0 1089
a
Mean, standard deviation min and max are divided by a thousand to make the figures easier to read.
6.5.1 Peer Review
Peer review is often expected to improve the quality and reliability of the reported results, but
it could also be conservative and avoid results that challenge consensus. We test this factor
by means of a binary dummy variable that assumes the value 1 if a study was published in a
peer-reviewed journal (76% of the estimates were published in peer-reviewed studies). We also
include the quality of the outlets using the ISI impact factor of the journals to test if lower and
higher impact factors are systematically associated with the pattern of publication selectivity.
High quality (A-journals) ranked form the top quartile cited outlets of the 2017 ISI impact factor.
6.5.2 Research Team
Research teams are more likely to consider results in a balanced way than single authors
because the team is able to provide within-team peer review. Therefore, we include a binary
dummy variable that assumes the value 1 if the studies are co-authored (69% of estimates
were obtained from single-authorship). We further investigate this issue by considering the
gender composition of the team assuming that single-sex teams are less heterogeneous and
may therefore reach less balanced results (9% of the teams are mixed). Jarrell and Stanley
(2004) provide evidence that gender (composition) is an important factor of bias (see, however,
Medoff, 2003 for a contrary opinion).
6.5.3 Author Characteristics
An important issue could be that differences in academic field may result in different reporting
standards (Moons and van Bergeijk, 2017). We test this assumption with a binary dummy that
assumes the value 1 if the author is a political scientist (as opposed to other professions such
as, economist, sociologist, etc.). In 69% of the reported estimates researchers have a political
science background.
Doucouliagos and Paldam (2010) have shown the importance of the affiliation of research-
ers. Following Stanley (2005), we create binary dummies that assume the value 1 if an author
is affiliated with a US-based institution and if a study author works at an academic institution,
respectively. The former accounted for about two-thirds of the reported estimates, and the latter
obtained in nearly four of the five observations. We collected this from the affiliations provided
by the authors at the moment of the publication of the studies.
Next, we consider the PhD status of the cited authors of the studies at the date of the
publication of a particular study. Authors of the studies are categorized into two groups:
those who have completed their PhD five or more years before the time when their study
was published (60%), and those who have completed their PhD less than five years before,
including those who have not completed a PhD (40%). We expect the reported estimates
published by authors who are at the early stage of their careers to exhibit more selectivity/
publication bias. Finally, we consider the reputation of the lead/corresponding author of the
primary studies by including the log of total citations for each author that we collect from
their Google Scholar profile.
6.5.4 Study Characteristics
We also consider the number of observations of the study to test for systematic variation
between small and large-N. We expect studies with large samples to show less selectivity
bias as these studies are more likely to produce significant estimates without much search for
econometrics specification to support prior belief or expectation.
Finally, we control for the publication year of the study. Goldfarb (1995) formulated the
research-cycle hypothesis related to the issue of novelty and fashion in academic research. The
hypothesis proposes that while seminal studies often produce large and significant estimates,
sceptical studies will follow up implying a downward trend in the bias over time. However,
if this is not the case, we will observe a positive trend, that is, a pattern by which reported
estimates become more biased over time.
6.5.5 Empirical Findings Regarding the Determinants of Publication Bias
Table 6.6 reports the results of the reduced multivariate MRA using general-to-specific (GTS)
modelling. GTS modelling starts with a general specification in which all potential moderator
variables are included. Next, one at a time, the statistically most insignificant variables are
removed, until we arrive at a reduced specification that contains significant variables only.
During GTS, we note that nine of the 13 determinants of publication bias included in Eq.
4 are not statistically significant. The joint insignificance of these variables yields F(9, 319) =
1.07, while the joint test of the four included determinants of publication bias rejects the null
hypothesis of a zero joint effect with F(4, 329) = 8.24.
In Table 6.6, Columns 1 and 2 give the results of the specific model. As in Eq. 3, this model
is then re-estimated using the preferred MEM model (Column 3) and, for comparison and a
robustness check, with robust standard errors (Column 4) and CDA (Column 5). In all the
regressions, we use prior relations as the reference category.16
Table 6.6 Determinants of publication bias (restricted maximum likelihood) dependent
variable = ǀβ1jǀ
Moderator variable (1) (2) (3) (4) (5)

Specific Specific MEM Robust se CDA
Peer-Reviewed –0.467* –0.329* –0.188 –0.329* –0.329
(0.174) (0.172) (0.361) (0.142) (0.277)
Co-authored –0.519* –0.489* –0.468 –0.489** –0.489
(0.180) (0.175) (0.294) (0.154) (0.302)
Journal rank 0.695** 0.487* 0.447 0.487** 0.487
(0.177) (0.178) (0.332) (0.154) (0.287)
Publication year (base 1985) 0.018* –0.181** –0.140* –0.181** –0.181*
(0.009) (0.045) (0.071) (0.046) (0.076)
Idem squared 0.005** 0.004* 0.005** 0.005*
(0.001) (0.001) 0.001 (0.002)
Observations 334 334 334 334 334

Number of studies 37 37 37 37 37
Notes: **, * stand for 1% and 5% level of significance, respectively. Constant term included but not reported.
(Standard errors in brackets).
The dependent variable is the absolute value of the estimate-level bias derived from the difference between the
prediction of regression (3) for PET and the individual reported coefficients of each regression of the primary
empirical studies.
Columns 1 and 2 are the reduced/specific model using the GTS approach without adjusting the standard error.
Column 3 is mixed-effects multilevel model using the restricted maximum likelihood, Columns 4 and 5 give robust
standard error and clustered standard error data analysis at study level.
All columns include dummies (non-reported) of trade linkage and duration with prior relation as a reference
category.
The joint test of the four included variables in column 1 rejects the null hypothesis of a zero joint effect F(4, 329) =
8.24 at any conventional level (p-value = 0.000). The joint test of the other nine excluded variables supports the
joint insignificant of these variables: F(9, 319) = 1.07 with p-value 0.3820.
Columns 1–2 for the specific model show that peer review is always negative, suggesting
at first sight that peer review reduces bias, but we find no significant impact of peer review
when we control the with-in and between-study correlations (Columns 3 and 5). In a sense
this is disappointing, given the efforts of the referees, but – on the positive side – it also
indicates that it is not the peer-review process per se that creates the bias in this literature. The
same is true for most of the other variables that are often considered to be of relevance in the
literature on publication bias. Our most important finding is that bias over time increases in
this literature. In order to test the later conclusion, we also use a non-linear relationship by
including the square of publication year in column 2. The non-linear specification shows a
5
4
Absolute value of publication bias
0
1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018
Publication year of the study
Figure 6.3 Kernel plot of the development of bias 1985–2018
‘U-shaped’ pattern of bias over time: initially bias reduces as suggested by the research-cycle
hypothesis. However, since 2000, the literature moves in a different direction and publication
bias increasingly becomes a serious concern as illustrated in Figure 6.3.
6.5.6 Robustness Checks
In order to test whether the results are influenced by an individual study we performed
a Jack-knife analysis by which we leave out one study at a time and run the MRA with
the remaining studies. Jack-knife analysis is increasingly being used in meta-analysis
to investigate robustness (Afesorgbor, 2017; Floridi et al., 2020). Therefore, we ran 32
alternative meta-analyses regressions for trade linkage, 14 for sanction duration and 23 for
prior relations. Leaving out a primary study implies that the number of observation changes.
Therefore, Figure 6.4 reports the bias (FAT) that is estimated without the study and the
number of observations in that regression (for details, see Appendix A.6). The Jack-knife
analysis confirms that the finding of significant bias (as well as the absence of any significant
meta-effect) is not influenced or driven by an individual primary study. Results are not only
similar and stable in their statistical significance, but also regarding the sign and magnitude
of the estimated coefficients.
We have also run extensive robustness checks for different subsamples, including sub-
samples for studies in the field of international relations versus economics, and for journal
publications that are included in the ISI Web of Science. While small differences sometimes
occur, the main result, namely significant publication bias for each variable of interest is
always confirmed.
1.8
1.6
1.4
1.2
Bias (FAT)
0.8
0.6
0.4
0.2
0
40 60 80 100 120 140 160 180 200 220
Number of observation in the meta-regression analysis
trade linkage duration (absolute value) prior relations
Figure 6.4 Jack-knife experiment for the publication bias
6.6 CONCLUDING REMARKS AND FURTHER RESEARCH
The results of our meta-analysis are sobering. While the descriptive analysis and weighted
averages suggest that the impact of the three variables of interest is significant and conforms
to our a priori expectations, the econometric analysis uncovers significant bias in the results
reported in the primary studies. This bias is so large that we cannot even infer the signs of
the three variables of interest. Based on our meta-analysis the conclusion is therefore that
the primary studies on the whole have not established a significant impact of the variables of
interest on the success and failure of economic sanctions. This is a challenging finding that
goes much further than Pape’s (1997) argument on the classification of (in)effectiveness of
sanctions in the HSE data set.
Does this mean that we do not know anything? First of all, we now know that “we know
less” than we thought we did, and that means that we have actually learned that the studies
published in the 1990s were less convincing than initially thought. The early studies, for
example, suggest a very strong link between trade linkage and sanctions success. Up till 1995
all reported coefficients are positive and most are quite significant, but the new methods and
data sets that have been introduced over time lead to studies that on average tend to report more
negative and/or less significant relationships. This is one reason why publication bias increases
when we expand the time period from which we meta-analyse our studies. In this sense the
research on sanctions has been at least to some extent cumulative.
The topic of the success and failure of economic sanctions fits in the recent trend where
research synthesis and/or replication fail to reproduce well-accepted results in the literature;
the so-called ‘credibility crisis’ that is apparent in many scientific disciplines (Gerber et al.,
2001; Ioannidis, 2005; Christensen and Miguel, 2018).
We reject Goldfarb’s research-cycle hypothesis, as Table 6.6 and Figure 6.3 find that bias
increases over time, especially so in more recent times. Initially only a few studies exist that
appear to provide guidance and establish consensus (up till the mid-1990s the evidence clearly
supports our a priori expectations for the variables of interest). But starting in 2000, and
especially since 2010, the heterogeneity of results has increased sharply. This makes publica-
tion bias an urgent issue for the literature on sanctions. Indeed, our findings suggest that the
credibility crisis has reached sanctions studies and that action is necessary and we would like
to suggest some possible solutions.
First, Doucouliagos and Stanley (2013) argue that publication bias is widespread and
imminent if competition among rival theories is not sufficiently strong. Alternative heterodox
theories of sanctions should therefore get a better chance of publication. More competition
and especially debate between rival/alternative theories could reduce selectivity and improve
inference.
Second, the standard of evidence needs to be increased. Presently the standard is to accept
results at the 90% confidence level and better, but this may not be a sufficiently stringent
statistical test and therefore a higher confidence level should be required.
Third, the literature needs an alternative data source. The empirical literature, as rightly
observed by Peksen (2019), is by and large based on three data collections. The available
large-N studies mainly use the Hufbauer and Schott data base, the Threats and Imposition of
Economic Sanctions data base and their derivatives. The large-N studies are the dominant
research technology in the field, but the sample is still relatively small and empirical studies
typically revisit the existing data sets. An important new data set, the Global Sanctions Data
Base, has recently become available for research (Felbermayr et al. 2019; see also Chapter
4 of this Handbook) and this is already an important improvement, but an alternative meth-
odology would still be very much needed. In order to make progress towards an alternative,
individual country studies should be stimulated. The body of individual country studies
would then provide a methodological alternative for the existing large-N data sets. Meta-
analysis and other forms of research synthesis could be used to determine the meta-effect
based on these studies.
Finally, we suggest that future research needs to carefully understand the issue or pattern
of publication bias and we underscore that policymakers and researchers that use empirical
findings need to consider the extent of bias that we have found.
NOTES
1. A preliminary version of this paper was presented at the 19th Jan Tinbergen Peace Science Conference and a
summary appears as van Bergeijk et al. (2020). Comments by participants of the conference, Selwyn Moons and
Sylvanus Afesorgbor, are gratefully acknowledged.
2. This data set is often referred to with the initials HSE or HSEO.
3. These studies define success as sanctions that ‘result in either full target compliance or at least partial policy
change in line with the stated policy objectives of senders’ (Peksen 2019, p. 637).
4. Bapat et al. (2013), for example, have observed similar inconclusiveness and used a theory-free extreme bounds
analysis of 18 potential determinants of sanctions success to investigate the sensitivity of the empirical findings
regarding the choice of variables in regressions that are used to explain sanctions success.
5. See Wallensteen (2000) on the 30-year cycle of sanction research.
6. The model can easily be generalized to N goods (see the appendix to Marrewijk and Bergeijk, 1990 and van Mar-
rewijk, 1992, for details) and reformulated in dynamic rather than static format (see Di Maio and Valente, 2013).
7. The small country assumption is common in the analysis of economic sanctions (see, for example, Arad and
Hillman, 1979; Porter, 1979; Frey 1984; Bergström et al., 1985; Bhagwati and Srinivisan, 1976; and Dizaji and
van Bergeijk; 2013). Moreover, less than 10% of the cases in the Hufbauer et al. (2007) sanctions database pertain
to situations where the target’s GDP exceeds that of the sender so that this assumption is not unrealistic.
8. For ease of exposition, we do not consider the possibility that the country specializes against comparative advan-
tage. See van Marrewijk and van Bergeijk (1993) for an analysis.
9. See, however, van Bergeijk and Van Marrewijk (1995) for an alternative model that also takes Bayesian learning
by the target into account.
10. Similar results can be derived for partial disturbances of trade.
11. This abstraction can, however, be interpreted as describing the economy’s actual view of the future in terms of an
average of these extreme states of the world.
12. We excluded descriptive and qualitative studies and studies that consider economic sanctions as exogenous vari-
able (e.g., see Afesorgbor, 2019). For missing data, we contacted the authors of the primary studies, enabling us
to include 22 observations.
13. The other studies were five books, one PhD dissertation and one ‘cautionary note’.
14. Google Scholar also covers books and grey literature and thus gives a better indication of impact.
15. An A-journal is here defined as a journal with a listing in the top third of an ISI category in 2017.
16. We included dummy variables for trade linkage studies and duration studies to correct for potential dissimilarity
across variables of interest. Regardless of the reference variable, the coefficients are always insignificant and they
drop out in the GTS procedure in column 5.
REFERENCES (STUDIES INCLUDED IN THE META-ANALYSIS HAVE

BEEN MARKED #)
Afesorgbor, S.K., 2017, ‘Revisiting the effect of regional integration on African trade: evidence from meta-analysis
and gravity mode’, The Journal of International Trade & Economic Development 26 (2), pp. 133–53.
Afesorgbor, S.K., 2019, ‘The impact of economic sanctions on international trade: How do threatened sanctions
compare with imposed sanctions’, European Journal of Political Economy 56 (January), pp. 11–26.
# Allen, S.H., 2008, ‘Political institutions and constrained response to economic sanctions’, Foreign Policy Analysis
4 (3), pp. 255–74.
# Ang, A. U-J. and D. Peksen, 2007, ‘When do economic sanctions work? Asymmetric perceptions, issue salience,
and outcomes’, Political Research Quarterly 60 (1), pp. 135–45.
Arad, R.W. and A.L. Hillman, 1979, ‘Embargo threat, learning and departure from comparative advantage’, Journal
of International Economics 9 (2), pp. 265–75.
# Bapat, N.A. and T.C. Morgan, 2009, ‘Multilateral versus unilateral sanctions reconsidered: A test using new data’,
International Studies Quarterly 53 (4), pp. 1075–94.
Bapat, N.A., T. Heinrich, Y. Kobayashi, and T. C. Morgan, 2013, ‘Determinants of sanctions effectiveness: Sensitivity
analysis using new data’, International Interactions 39, (1) (2013): 79–98.
# Bapat, N.A., and B.R. Kwon, 2015, ‘When are sanctions effective? A bargaining and enforcement framework’,
International Organization 69 (2), pp. 131–62.
# Bergeijk, P.A.G. van, 1989, ‘Success and failure of economic sanctions’, Kyklos 42 (3), pp. 385–404.
# Bergeijk, P.A.G. van, 1994, Economic diplomacy, trade and commercial policy: Positive and negative sanctions in
the new world order. Aldershot, UK and Brookfield, VT, USA: Edward Elgar Publishing.
# Bergeijk, P.A.G. van, 2009, Economic diplomacy and the geography of international trade, Cheltenham, UK and
Northampton, MA, USA: Edward Elgar Publishing.
Bergeijk, P.A.G. van, B.A. Demena, A. Reta, G.B. Jativa and P. Kimararungu, 2019, ‘Could the literature on the
economic determinants of sanctions be biased?’, Peace Economics, Peace Science and Public Policy, 25(4), doi:
10.1515/peps-2019-0048
Bergeijk, P.A.G. van and S. Lazzaroni, 2015, ‘Macroeconomics of natural disasters: Strengths and weaknesses of
meta-analysis versus review of literature’, Risk Analysis, 35 (6), pp. 1050–72.
Bergeijk, P.A.G. van and C. van Marrewijk, 1995, ‘Why do sanctions need time to work? Adjustment, learning and
anticipation’, Economic Modelling 12 (2), pp. 75–86.
# Bergeijk, P.A.G. van and M.S.H. Siddiquee, 2017, ‘Biased sanctions? Methodological change in economic sanctions
reconsidered and its implications’, International Interactions 43 (5), pp. 879–93.
Bergström, C., G.C. Loury and M. Persson, 1985, ‘Embargo threat and the management of emergency reserves’,
Journal of Political Economy 93 (1), pp. 26–42.
Bhagwati, J.N. and T.N. Srinivasan, 1976, ‘Optimal trade policy and compensation under endogenous uncertainty:
The phenomenon of market disruption’, Journal of International Economics 6 (4), pp. 317–36.
Biersteker, T.J., S.E. Eckert, M. Tourinho and Z. Hudáková, 2018, ‘UN targeted sanctions datasets (1991–2013)’,
Journal of Peace Research 55(3): 404–12.
# Bonetti, S., 1998, ‘Distinguishing characteristics of degrees of success and failure in economic sanctions episodes’,
Applied Economics 30 (6), pp. 805–13.
# Chan, S., 2009, ‘Strategic anticipation and adjustment: Ex ante and ex post information in explaining sanctions
outcomes’, International Political Science Review 30 (3), pp. 319–38.
Christensen, G. and E. Miguel, 2018, ‘Transparency, reproducibility, and the credibility of economics research’,
Journal of Economic Literature 56 (3), pp. 920–80.
# Dashti-Gibson, J., P. Davis and B. Radcliff, 1997, ‘On the determinants of the success of economic sanctions: An
empirical analysis’, American Journal of Political Science 41 (2), pp. 608–18.
# Dehejia, R.H. and B. Wood, 1992, ‘Economic sanctions and econometric policy evaluation: A cautionary note’,
Journal of World Trade 26 (1): 73.
Demena, B.A., 2015, ‘Publication bias in FDI spillovers in developing countries: A meta-regression analysis’, Applied
Economics Letters 22 (14), pp. 1170–74.
Demena, B.A., 2017, Essays on Intra-Industry Spillovers from FDI in Developing Countries: A Firm-Level Analysis
with a Focus on Sub-Saharan Africa, PhD diss., Erasmus University, The Hague.
Demena, B. A. and S.K. Afesorgbor, 2020, ‘The effect of FDI on environmental emissions: Evidence from a meta-
analysis’, Energy Policy 138.
Demena, B.A. and P.A.G. van Bergeijk, 2017, ‘A meta-analysis of FDI and productivity spillovers in developing
countries’, Journal of Economic Surveys 31 (2), pp. 546–71.
Di Maio, M. and M. Valente, 2013, ‘Uncertainty, specialization and government intervention’, Metroeconomica 64
(2), pp. 215–43.
Dizaji, S.F. and P.A.G. van Bergeijk, 2013, ‘Potential early phase success and ultimate failure of economic sanctions:
A VAR approach with an application to Iran’, Journal of Peace Research 50 (6), pp. 721–36.
Doucouliagos, C. and M. Paldam, 2010, ‘Conditional aid effectiveness: A meta-study’, Journal of International
Development 22 (4), pp. 391–410.
Doucouliagos, C. and T.D. Stanley, 2013, ‘Are all economic facts greatly exaggerated? Theory competition and
selectivity’, Journal of Economic Surveys 27 (2), pp. 316–39.
# Drezner, D.W., 2000, ‘Bargaining, enforcement, and multilateral sanctions: When is cooperation counterproductive?’,
International Organization 54 (1), pp. 73–102.
# Driscoll, D., D. Halcoussis and A.D. Lowenberg, 2010, ‘Economic sanctions and culture’, Defence and Peace
Economics 22 (4), pp. 423–48.
# Drury, A.C., 1998, ‘Revisiting economic sanctions reconsidered’, Journal of Peace Research 35 (4),
pp. 497–509.
# Early, B.R., 2011, ‘Unmasking the black knights: Sanctions busters and their effects on the success of economic
sanctions’, Foreign Policy Analysis 7 (4), pp. 381–402.
Felbermayr, G., C. Syropoulos, E. Yalcin and Y.V. Yotov, 2019, ‘On the effects of sanctions on trade and welfare:
New evidence based on structural gravity and a new database’, Kiel Working Paper, No. 2131, Kiel Institute for
the World Economy: Kiel.
Floridi, A., B.A. Demena and N. Wagner, 2020. ‘Shedding light on the shadows of informality: A meta-analysis of
formalization interventions targeted at informal firms’, Labour Economics, 67, p. 101925.
Frey, B.S., 1984, International Political Economics, Oxford: Basil Blackwell.
Gerber, A.S., D.P. Green, and D. Nickerson, 2001, ‘Testing for publication bias in political science’, Political
Analysis 9 (4), pp. 385–92.
Goldfarb, R.S., 1995, ‘The economist-as-audience needs a methodology of plausible inference’, Journal of Economic
Methodology 2 (2), pp. 201–22.
# Hart Jr, R.A., 2000, ‘Democracy and the successful use of economic sanctions’, Political Research Quarterly 53
(2), pp. 267–84.
Handbook on Economic Sanctions, Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing,
Chapter 2.
# Hufbauer, G.C. and J.J. Schott, 1985, Economic sanctions reconsidered. History and Current Policy. Washington,
DC: Peterson Institute.
Hufbauer, G.C., J.J. Schott and K.A. Elliott, 1990, Economic sanctions reconsidered: History and current policy
(Vol. 1). Washington, DC: Peterson Institute.
# Hufbauer, G.C., J.J. Schott, K.A. Elliott and B. Oegg, 2007, Economic Sanctions Reconsidered: [in two volumes]
(2nd edition). Washington, DC: Institute for International Economics.
Ioannidis, J.P.A., 2005, ‘Why most published research findings are false’, PLoS medicine 2 (8): e124.
Jarrell, S.B. and T.D. Stanley, 2004, ‘Declining bias and gender wage discrimination? A meta-regression analysis’,
Journal of Human Resources 39 (3), pp. 828–38.
# Jing, C., W.H. Kaempfer and A.D. Lowenberg, 2003, ‘Instrument choice and the effectiveness of international
sanctions: A simultaneous equations approach’, Journal of Peace Research, 40 (5), pp. 519–35.
# Kim, H.M., 2009, ‘Determinants of the success of economic sanctions: An empirical analysis’, Journal of
International and Area Studies 16 (1), pp. 29–51.
Kirilakha, A., G.J. Felbermayr, C. Syropoulos, E. Yalcin, and Y.V. Yotov, 2021, ‘The Global Sanctions Data Base:
An update to include the years of the Trump presidency’ in: P.A.G. van Bergeijk (ed.), Research Handbook on
Economic Sanctions, Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing, Chapter 4.
# Kleinberg, K.B., 2018, Trade, credit, and the effectiveness of sanction threats, http://www.katjakleinberg.com/
uploads/3/7/8/9/37890105/jprsubmission.pdf.
# Lam, S.L., 1990, ‘Economic sanctions and the success of foreign policy goals: A critical evaluation’, Japan and the
World Economy 2 (3), pp. 239–48.
# Lektzian, D. and D. Patterson, 2015, ‘Political cleavages and economic sanctions: The economic and political
winners and losers of sanctions’, International Studies Quarterly 59 (1), pp. 46–58.
# Lektzian, D. and M. Souva, 2007, ‘An institutional theory of sanctions onset and success’, Journal of Conflict
Resolution 51 (6): 848–71.
# Major, S., 2012, ‘Timing is everything: Economic sanctions, regime type, and domestic instability’, International
Interactions 38 (1), pp. 79–110.
Marrewijk, C. van, 1992, ‘Trade uncertainty and the two-step procedure: The choice of numeraire and exact indexa-
tion’, De Economist 140 (3), pp. 317–27.
Marrewijk, C. van and P.A.G. van Bergeijk, 1990, ‘Trade uncertainty and specialization: social versus private plan-
ning’, De Economist 138 (1), pp. 15–32.
Marrewijk, C. van and P.A.G. van Bergeijk, 1993, ‘Endogenous trade uncertainty: Why countries may specialize
against comparative advantage’, Regional Science and Urban Economics 23 (4), pp. 681–94.
Medoff, M.H., 2003, ‘Collaboration and the quality of economics research’, Labour Economics 10 (5): 597–608.
Moons, S.J.V. and P.A.G. van Bergeijk, 2017, ‘Does economic diplomacy work? A meta-analysis of its impact on trade
and investment’, The World Economy 40 (2), pp. 336–68.
Morgan, T.C., N. Bapat and Y. Kobayashi, 2014, ‘The threat and imposition of sanctions: Updating the TIES data set’,
Conflict Management and Peace Science 31 (5), pp. 541–58.
Morgan, T.C., N. Bapat, and Y. Kobayashi, 2021, ‘The threat and imposition of economic sanctions data project: A
retrospective’ in: P.A.G. van Bergeijk (ed.), Research Handbook on Economic Sanctions, Cheltenham, UK and
Northampton, MA, USA: Edward Elgar Publishing, Chapter 3.
Morgan, T. C., N. Bapat and V. Krustev, 2009, ‘The threat and imposition of economic sanctions, 1971–2000’, Conflict
Management and Peace Science 26 (1), pp. 92–110.
# Nooruddin, I., 2002, ‘Modeling selection bias in studies of sanctions efficacy’, International Interactions 28 (1),
pp. 59–75.
Pape, R.A., 1997, ‘Why economic sanctions do not work’, International security 22 (2), pp. 90–136.
Peksen, D., 2019, ‘When do imposed economic sanctions work? A critical review of the sanctions effectiveness
literature’, Defence and Peace Economics 30 (6) 635–47.
# Peterson, T.M., 2018, ‘Reconsidering economic leverage and vulnerability: Trade ties, sanction threats, and the
success of economic coercion’, Conflict Management and Peace Science doi: 10.1177/0738894218797024.
Porter, R.C., 1979, ‘International Trade and Investment Sanctions: Potential Impact on the South African Economy’,
Journal of Conflict Resolution 23 (4): 579–612.
# Shagabutdinova, E. and J. Berejikian, 2007, ‘Deploying sanctions while protecting human rights: Are humanitarian
“smart” sanctions effective?’ Journal of Human Rights 6 (1), pp. 59–74.
Stanley, T.D., 2001, ‘Wheat from chaff: meta-analysis as quantitative literature review’, Journal of Economic
Perspectives 15 (3), pp. 131–50.
Stanley, T.D., 2005, ‘Beyond publication bias’, Journal of Economic Surveys 19 (3), pp. 309–45.
Stanley, T.D., et al., 2013, ‘Meta-analysis of economics research reporting guidelines’, Journal of Economic Surveys
27 (2): 390–94.
Stanley, T.D. and C. Doucouliagos, 2012, Meta-Regression Analysis in Economics and Business, Routledge: Oxford.
Wallensteen, P., 1968, ‘Characteristics of economic sanctions’, Journal of Peace Research 5 (3): 248–67.
Wallensteen, P., 2000, A century of economic sanctions: A field revisited. Department of Peace and Conflict Research:
Uppsala.
# Whang, T., E.V. McLean and D.W. Kuberski, 2013, ‘Coercion, information, and the success of sanction threats’,
American Journal of Political Science 57 (1): 65–81.
Appendix A.6 Meta-Regression Analysis for the FAT-PET: Jack-knife experiment
Dropped individual studies Dropped MEM CDA Total

Trade Linkage observations observations
FAT coefficient PET coefficient FAT coefficient PET coefficient
Drury (1998) 7 0.841** –0.0003 0.686 0.002 164
Ang and Peksen (2007) 2 0.801** –0.00004 0.660 0.002 169
Dashti-Gibson et al. (1997) 2 0.822** –0.00004 0.668 0.002 169
Lektzian and Patterson (2015) 8 0.849** –0.0002 0.712 0.002 163
Lektzian and Souva (2007) 1 0.845** –0.0001 0.674 0.002 170
Dehejia and Wood (1992) 2 0.815** –0.0004 0.666 0.002 169
Shagabutdinova and Berejikian (2007) 2 0.793** –0.00004 0.655 0.002 169
Hufbauer et al. (1985) 1 0.793** –0.00003 0.657 0.002 170
Kim (2009) 1 0.658** 0.0030 0.487 0.005 170
147
Kim (2013) 24 0.818** –0.0006 0.625 0.001 147
Nooruddin (2002) 3 0.816** –0.0001 0.667 0.002 168
Elliott and Uimonen (1993) 3 0.767** –0.0001 0.646 0.002 168
Whang et al. (2013) 1 0.740** 0.00003 0.640 0.002 170
Bergeijk (1989) 3 0.709** 0.0001 0.606 0.002 168
Bergeijk (1994) 11 0.701** 0.0002 0.507 0.002 160
Bergeijk (2009) 5 0.744** –0.00002 0.623 0.002 166
Bergeijk and Siddiquee (2017) 3 0.785** 0.0003 0.626 0.003 168
Hart (2000) 1 0.776** –0.00004 0.652 0.002 170
Lam (1990) 1 0.798** –0.00004 0.659 0.002 170
Bonetti (1998) 3 0.741** 0.0001 0.625 0.002 168
Major (2012) 14 0.713** 0.00001 0.527 0.002 157
Allen (2008) 2 0.732** 0.0001 0.628 0.002 169
(continued)
Appendix A.6 (continued)

Trade Linkage observations observations
Hufbauer et al. (2007) 9 0.771** –0.0001 0.634 0.002 162
Driscoll et al. (2011) 2 0.861** –0.0002 0.686 0.002 169
Kleinberg (2018) 20 0.908** –0.0003 0.954** 0.001 151
Chan (2009) 3 0.889** –0.0002 0.709 0.002 168
Drezner (2000) 2 0.811** –0.0001 0.663 0.002 169
Woo and Verdier (2014) 1 0.810** –0.0001 0.662 0.002 170
Hull (2015) 8 0.847** –0.0001 0.709 0.002 163
Hatipoglu (2010) 5 0.881** –0.0002 0.723 0.002 166
Jankowitsch-Prevor et al. (2015) 1 0.815** –0.0001 0.664 0.002 170
148
Peterson (2016) 10 0.823** –0.0001 0.739 0.002 151
Bapat and Kwon (2015) 3 0.799** –0.00004 0.659 0.002 171
(continued)

Sanction Duration observations observations
Ang and Peksen (2007) 2 –1.499** 0.003 –1.778* –0.005 75
Bapat and Morgan (2009) 2 –1.553** 0.003 –1.803* –0.005 75
Early (2011) 19 –1.486** 0.004 –2.444** 0.002 58
Dashti-Gibson et al. (1997) 3 –1.395* 0.004 –1.747* –0.005 74
Lektzian and Patterson (2015) 4 –1.462** 0.004 –1.816* –0.004 73
Dehejia and Wood (1992) 2 –1.514** 0.004 –1.797* –0.004 75
Hufbauer et al. (1985) 1 –1.479** 0.004 –1.755* –0.004 76
Kim (2009) 1 –1.499** 0.004 –1.755* –0.005 76
Kim (2013) 12 –1.271** 0.006 –1.575* 0.001 65
Bergeijk (1989) 3 –1.181* 0.003 –1.600* –0.006 74
149
Bergeijk (1994) 13 –1.179* 0.002 –1.125 –0.011 64
Bergeijk (2009) 5 –1.203* 0.003 –1.552 –0.006 72
Bergeijk and Siddiquee (2017) 6 –0.939 –0.020 –1.539 –0.019 71
Chan (2009) 3 –1.388** 0.004 –1.755* –0.005 74
Jankowitsch-Prevor et al. (2015) 1 –1.379** 0.004 –1.730* –0.005 76
(continued)
Dropped individual studies Prior Dropped MEM CDA Total

Relations observations observations
Drury (1998) 4 0.969** 0.043 1.010* 0.031 79
Ang and Peksen (2007) 2 0.846** 0.048 0.951* 0.047 81
Bapat and Morgan (2009) 2 0.947** 0.043 1.040* 0.037 81
Early (2011) 11 0.781** 0.065 0.788 0.059 72
Lektzian and Patterson (2015) 4 0.786** 0.051 0.852* 0.056 79
Dehejia and Wood (1992) 2 0.885** 0.046 0.984* 0.043 81
Hufbauer et al. (1985) 1 0.868** 0.047 0.976* 0.045 82
Kim (2009) 1 0.868** 0.047 0.977* 0.044 82
Kim (2013) 12 0.840** 0.045 0.816 0.051 71
Nooruddin (2002) 3 0.940** 0.053 1.010* 0.054 80
Jing (2003) 2 0.831** 0.046 0.947* 0.045 81
150
Lektzian (2003) 1 0.859** 0.046 0.974* 0.044 82
Bergeijk (2009) 2 0.866** 0.046 0.971* 0.044 81
Bergeijk and Siddiquee (2017) 6 1.587** –0.190* 1.767** –0.206 77
Hart (2000) 1 0.916** 0.046 0.998* 0.043 82
Lam (1990) 2 0.877** 0.046 0.980* 0.043 81
Bonetti (1998) 2 0.888** 0.067 1.002* 0.049 81
Allen (2008) 2 0.855** 0.045 0.967* 0.043 81
Hufbauer et al. (2007) 9 0.858** 0.048 0.924* 0.046 74
Kleinberg (2018) 5 1.022** 0.046 1.190** 0.035 78
Drezner (2000) 1 0.867** 0.043 0.984* 0.041 82
Woo and Verdier (2014) 1 0.919** 0.044 1.004* 0.041 82
Hatipoglu (2010) 6 0.969** 0.049 1.109** 0.047 77
Jankowitsch-Prevor et al. (2015) 1 0.922** 0.044 1.009* 0.040 82
Note: **, * stand for 1% and 5% level of significance, respectively. All estimates use the inverse variance as weights and standard robust errors are clustered at study level.
7. The public choice approach to international sanctions:
retrospect and prospect
Dennis Halcoussis, William H. Kaempfer, and
Anton D. Lowenberg
7.1 INTRODUCTION
International economic sanctions have become an increasingly important instrument of foreign

policy in the post–Second World War era, but their use has escalated dramatically since the
September 11, 2001, terrorist attacks. This is notable particularly in the case of unilateral U.S.
sanctions. Traditionally, sanctions were considered to be a less costly alternative to war and,
according to the empirical academic literature, were judged to be successful in attaining their
stated policy goals approximately one-third of the time (Hufbauer, Schott, Elliott, and Oegg,
2007). Sanctions have typically taken the form of trade embargoes, restrictions on investment
flows, or outright disinvestment from target countries. A drawback of such measures is that
they often impose significant costs on the sanctioners as well as the targets, and even in the
target countries their effects are sometimes counterproductive, bolstering political support for
the ruling regime.
After the September 11 attacks, however, the U.S. Treasury discovered that it could weap-
onize the central role of the dollar-denominated international financial system to isolate and
punish foreign firms or individuals: so-called “smart sanctions” were born. The Patriot Act
of 2001 allowed the U.S. Treasury to label foreign banks as threats to financial integrity and
exclude them from the New York-based system for clearing dollar payments (Economist, May
5, 2018, p. 64). At least half of all global cross-border trade is invoiced in dollars, and the dollar
accounts for two-thirds of securities issuance and foreign exchange reserves (Economist,
January 18, 2020, p. 62). Since most international transactions are ultimately cleared in dollars
through New York correspondent banks, the threat to deny foreign firms or banks access to the
system is powerful. Huge fines have been imposed by the United States on foreign banks for
money laundering and sanctions busting. Foreign firms hit by U.S. sanctions find themselves
unable to refinance their dollar debts, while many of their investors are required to sell their
securities. Targeted firms are excluded from international clearing houses and commodity
exchanges. Such financial sanctions have been imposed against Iran, North Korea, Russia,
Turkey, and Venezuela, among others. In addition, “secondary” sanctions have been threatened
or imposed on firms in third-party countries that are accused of doing business with blacklisted
companies (Economist, January 18, 2020, p. 62).
U.S. unilateral sanctions have been implemented in recent decades to counter terrorism,
nuclear proliferation, human-rights abuses, and corruption. The use of sanctions has increased
significantly under the Trump administration. Since President Donald Trump took office,
the United States has placed approximately 1,000 entities on its blacklist, almost 30 percent
more than the total number during President Barack Obama’s final year (Economist, May 19,
2018, p. 55). Recent high-profile sanctions episodes include: a $9 billion penalty against the
152
Dennis Halcoussis, William H. Kaempfer and Anton D. Lowenberg - 9781839102721
The public choice approach to international sanctions 153
French bank, BNP Paribas, for sanctions busting in 2014; measures imposed against Iran after
the United States withdrew from the multilateral nuclear agreement in 2018, and subsequent
threats of secondary sanctions against European firms that violated the Iran sanctions; the U.S.
Treasury’s actions in 2018 that prevented Rusal, Russia’s biggest aluminum producer, from
accessing the dollar-based financial system, which was part of a broader package of measures
against Russia; the 2018 prohibition on the supply of U.S. components to Chinese telecom-
munications equipment manufacturer, ZTE, as punishment for trading with Iran and North
Korea; and more recent measures blocking Huawei, another Chinese telecommunications
company, from using American technology and software, in retribution for Huawei’s ties to
the Chinese government and its alleged violations of U.S. sanctions on Iran (Economist, May
5, 2018, p. 64; January 18, 2020, p. 62; Swanson, 2020).
Along with the proliferation of economic sanctions as a policy tool on the international
stage, there has been a parallel growth in the scholarly literature. Starting with the foundational
political studies of Galtung (1967) and Renwick (1981), and followed by the game theoretic
treatment of Eaton and Engers (1992, 1999), together with the first exercise in data collection
and analysis by Hufbauer and Schott (1985), the literature has blossomed and expanded into
multiple sub-fields and varied methodologies. The public choice approach to sanctions was
initiated by Kaempfer and Lowenberg (1988) and elaborated in their subsequent work. Since
then, a substantial empirical literature has developed, dominated primarily by contributions by
political scientists and international relations scholars.
In the next section, we will describe the public choice approach and its implications. The
ensuing section will briefly survey the sanctions literature published since Kaempfer and
Lowenberg’s (2007) comprehensive survey. We then conclude with some speculation on the
future of sanctions research.
7.2 THE PUBLIC CHOICE APPROACH
7.2.1 Overview of the Model
The public choice approach to sanctions, as conceived by Kaempfer and Lowenberg (1988,
1989, 1992b), is essentially a model of endogenous policy in which the equilibrium level of
some public policy is determined by countervailing political pressures or influence exerted by
opposing interest groups. The policy in question is viewed as a continuous variable measured
in terms of the extent or intensity with which it is applied. Interest groups that benefit from
this policy are willing to allocate resources, in the form of lobbying, protest, mobilization of
supporters, and so forth, in order to exert influence favoring an increase in the supply of the
policy. Likewise, interest groups that are harmed by the policy are willing to expend resources
to bring about a decrease in the quantity of the policy supplied through the political process.
The policy itself is supplied by political support-maximizing politicians up to the point where
the marginal gain in political support from interest groups whose utility is increased by the
policy is equal to the marginal loss in support from interest groups whose utility is reduced
by the policy.
Changes in the equilibrium policy level are caused by changes in certain parameters that
shift the marginal willingness-to-pay functions of the opposing interest groups. For example,
any exogenous shock that increases the effectiveness of the interest group favoring the policy

will boost the marginal increase in political support that the interest group is able to bestow
on politicians supplying the policy. The downward-sloping marginal willingness-to-pay
curve, or “demand curve,” of this interest group will shift upwards, causing an increase in the
equilibrium policy level. On the other hand, if there is an exogenous increase in the political
efficiency of the opposing group, then this group is able to punish politicians supplying the
policy by withdrawing larger amounts of support at the margin for each increment in the
quantity of the policy supplied. The interest group’s upward-sloping marginal disutility curve
will shift upwards, and there will be a decrease in the equilibrium policy level.
Kaempfer and Lowenberg (1988, 1989, 1992b) use this framework to explain both the
level of sanctions applied by the sanctioning country and the level of the objectionable
policy implemented by the target country. In the sanctioning country, there are identifiable
groups that benefit from the sanctions and those that are harmed by them. For example,
in the case of an embargo on the target country’s exports, producers of substitute goods
in the sanctioning country benefit from increased market share and higher prices, while
consumers are hurt, as are producers of goods that use the embargoed products as inputs.
Other groups might incur non-pecuniary benefits or costs. For example, if the target country
is a human-rights violator, groups in the sanctioning country who value respect for human
rights might be willing to trade off losses in income due to sanctions in exchange for gains
in utility obtained from punishing the offending regime. Any exogenous event that increases
the marginal utility of sanctions to the pro-sanctions groups will, ceteris paribus, cause an
increase in the equilibrium level of sanctions applied. Vice versa, any event that increases
the marginal disutility of the anti-sanctions groups will result in a lower equilibrium level
of sanctions.
Similarly, in the target country the level of the objectionable policy is endogenously deter-
mined through the configuration of domestic interest group politics. Importantly, it is here that
the causal mechanisms by which sanctions bring about political effects and policy change in
the target country are revealed. In the context of the Kaempfer–Lowenberg model, sanctions
play the role of exogenous parameters that shift the marginal willingness-to-pay curves of the
opposing domestic interest groups in the target polity.
7.2.2 Countervailing Effects of Sanctions in the Target Country
There are a number of possibilities here. One is based on a threshold model of collective action
developed by Kaempfer and Lowenberg (1992a). Groups with large numbers of individual
members are generally viewed as less effective in mobilizing collective action than smaller
groups, due to free-ridership incentives in the provision of public goods (Olson, 1965).
However, Kaempfer and Lowenberg (1992a) posit a countervailing effect in which large
groups potentially generate greater reputational rewards than smaller groups and provide a
stronger sense of identity for individuals who actively participate and contribute to the group’s
objectives. Once the number of group members or supporters reaches a certain threshold, the
reputational rewards from joining them become so large that they cause a bandwagon effect,
in which the number of individuals throwing in their lot with the group propagates to mass
levels in the population.
Sanctions imposed by foreigners can serve as a powerful signal of support for groups within
the target country that oppose the governing regime and its objectionable policies. Such a
signal might create the perception in the target country that the opposition groups are more

likely to be successful, i.e., to ultimately prevail in their struggle against the regime. This in
turn could trigger the Kaempfer–Lowenberg threshold effect: a greater expectation of success
of the opposition groups induces more individuals to join them as active participants, until
the threshold is reached, after which the number of supporters propagates. The opposition
groups’ political efficiency increases, modeled in terms of an upward shift of the marginal
disutility curve associated with the regime’s objectionable policy. The equilibrium level of the
objectionable policy decreases, and the sanctions are judged to have been effective in bringing
about desired policy change in the target.
But this is not the only possible outcome of the sanctions. An alternative scenario is one in
which the sanctions campaign is portrayed by the target regime as an attack on the sovereignty
of the target nation and an affront to its citizens. Such propaganda might mobilize popular sup-
port for the regime, potentially creating a threshold number of participants in the pro-regime
movement, which then multiplies to much higher levels of support. This so-called “rally-
around-the-flag” effect causes an increase in the political efficiency of the pro-regime groups,
as modeled by an upward shift of the marginal utility curve associated with the objectionable
policy. The equilibrium level of the objectionable policy rises, and the sanctions are deemed
to have been counterproductive.
A similar counterproductive effect could emerge if sanctions rents are captured by the target
regime and its supporters. Sanctions often create profitable opportunities for some residents
of the target country in the form of proceeds from smuggling and sanctions-busting trade, or
expansion of domestic import-substituting industries. If these profits flow disproportionately
to members of the regime or its supporter groups, as in the case of Iran’s Revolutionary Guard,
for example, then the regime is strengthened. The political efficiency of pro-regime groups
is bolstered—an upward shift of the marginal willingness-to-pay curve for the objectionable
policy—and the equilibrium level of the objectionable policy increases. The same effect
would occur if the sanctions were significantly income-reducing for the opposition groups
and their supporters, weakening their ability to exert political resistance against the ruling
regime—a downward shift of the influence-weighted marginal disutility curve associated with
the objectionable policy.
7.2.3 Investment Sanctions
Investment sanctions can be potentially very damaging to a target economy, by staunching

capital inflows and raising the cost of servicing or refinancing public debt. In the case of the
anti-apartheid sanctions against South Africa in the 1980s, investment sanctions, particularly
the withdrawal of private bank credit, were deemed to have been one of the most effective
measures implemented against the Pretoria government (Lowenberg, 1997). However, there
is a danger of investment sanctions backfiring: divestment of physical capital—plant and
equipment—owned by foreign firms in the target country means that those assets may be sold
at fire-sale prices, thereby likely benefiting members of the target-country elite who are in the
best position to acquire them (Kaempfer, Lehman and Lowenberg, 1987a, 1987b).
7.2.4 Applications of the Kaempfer–Lowenberg Model
Clearly, a central theme emerging from the public choice approach is that the main mechanism
by which sanctions impact policy in the target is not so much through the overall level of

e conomic damage as it is through redistributional effects within the target polity, i.e., by
altering the relative influence of contesting interest groups.
Applications of the Kaempfer–Lowenberg model have produced some counterintuitive
results. For example, the conventional view is that multilateral sanctions are more effective
than unilateral sanctions in attaining their political objectives in the target country because
multilateral sanctions are more damaging to the target economy. However, Kaempfer and
Lowenberg (1999) show that the opposite might be true in many cases. Precisely because
multilateral trade sanctions generate greater terms-of-trade effects than unilateral, the sanc-
tions rents are also greater. Members of the governing elite in the target country are usually in
a better position to capture those rents than the citizenry at large. As a case in point, consider
a boycott of Iran’s oil exports imposed by a single nation or a small group of nations. There
would still be plenty of other countries that would continue to buy Iranian oil legally on the
world market. Oil importers in those countries would benefit from this trade. However, if
almost all countries joined the boycott, Iran’s oil would need to be smuggled out of the country,
an undertaking for which the wealthy merchant class, possibly assisted by the government or
the military, would be best suited. Profits from this sanctions-busting trade would be captured
almost entirely within Iran by pro-regime groups, which would strengthen the Iranian govern-
ment’s capacity to pursue its objectionable policies.
In another application of the Kaempfer–Lowenberg public choice approach, Kaempfer,
Lowenberg, and Mertens (2004) adapt Wintrobe’s (1990, 1998) dictatorship model to examine
the impacts of economic sanctions on an autocrat. It is shown that the dictator’s choice of the
level of power, and the quantities of loyalty and repression used as inputs in the production
of power, are affected by the type and magnitude of sanctions and by the impact of sanctions
on the political effectiveness of opposition groups. Sanctions have direct and indirect effects
on the prices of loyalty and repression as well as potentially generating rents that might be
captured either by the dictator or by the opposition.
Regime type is an important variable used in empirical studies of sanctions success. In
particular, it is generally hypothesized that autocratic regimes are less likely to concede to
sanctions than democracies. In non-democracies, Pape (1997, p. 93) points out that unpopular
ruling elites can often protect themselves and their supporters by shifting the economic burden
of sanctions on to disenfranchised groups. According to Bolks and Al-Sowayel (2000), when
the leadership of a state is concentrated in the hands of a few, the leadership is better able to
implement countermeasures that insulate the government from the economic hardships caused
by sanctions. Non-democratic and illiberal regimes find it especially easy to hold out in the
face of damaging sanctions because they can “simply pass on the costs of the sanctions to
the governed and rely on armed forces to deter political opponents who are dissatisfied with
policies” (Nossal, 1999, p. 134). Democratic political leaders, by contrast, are compelled to
take into account their public’s preferences, and therefore it is probable that a democratic target
government would agree to the sanctioners’ demands in order to get the sanctions lifted and
relieve the suffering of its citizens (Nooruddin, 2002, pp. 69–70).
The view that sanctions are more successful when imposed against democracies than
autocracies is controversial, however. According to Fearon (1994), a democracy, given its
high domestic audience costs, is always less likely to back down in a public confrontation
during international crises than a non-democracy, whose audience costs are considerably
lower and which consequently has greater flexibility to alter its policies in the face of foreign
pressure. Galtung (1967) lends further credence to the relative resilience of democratic targets

by pointing out that democracies have greater legitimacy and are therefore more likely than
autocracies to rally their citizens around the flag of resistance to sanctions. However, Bolks and
Al-Sowayel (2000) and Nooruddin (2002, p. 73) find empirical support for the greater success
of sanctions imposed against democratic targets than against autocracies.
Driscoll, Halcoussis, and Lowenberg (2011) show that culture plays an important role in
mediating the political effects of sanctions. They argue that cultural linkages between nations
are an important factor in explaining both the decision to impose sanctions and the political
impact of the sanctions in the target country. Their empirical study reveals that countries that
share significant cultural attributes are less likely to apply economic sanctions against one
another than countries lacking such cultural ties. The most likely explanation for this finding
is that culturally connected countries have alternative avenues of influence as a consequence of
shared historical and cultural heritages. However, it is precisely in the case of culturally similar
sanctioning and target nations that sanctions are most likely to be successful in bringing about
the desired policy change in the target.
In the next section we survey some more recent avenues of research that have emerged in the
literature since the publication of Kaempfer and Lowenberg’s (2007) survey, including further
elaborations of the public choice approach.
7.3 THE RECENT LITERATURE
The public choice approach to sanctions is characterized by the important role of domestic
politics in both sanctioning and target countries in conditioning the choice of sanctions instru-
ments and in determining policy outcomes in the target. This emphasis on domestic politics
and institutions has been carried forward in the sanctions literature in the past decade. Table 7.1
provides a taxonomy of eleven different categories of sanctions research, and Table 7.2 identi-
fies major recent contributions to each of these categories.
Thus, for example, Pond (2017) examines the process by which trade sanctions gener-
ate rents for domestic producers of import-competing goods in the sanctioning country
(Table 7.2, item 5). These rents are then used to lobby for further protectionist policies in
the form of tariffs. As a result, the use of sanctions tends to be accompanied by rising levels
of market protection in the sanctioning country. McLean and Whang (2014) show how
sanctions policies are chosen and designed by policymakers in the sanctioning country as a
response to opposing political pressures exerted by voters and special interests (Table 7.2,
item 21). For voters, sanctions are a means to extract concessions from a target regime and to
demonstrate the competence of their own government in foreign affairs. However, sanctions
impose costs on interest groups that benefit from ties to the target country, such as export
industries, which may be expected to lobby for weaker sanctions. The sanctions measures
ultimately adopted are tailored to satisfy public opinion favoring action on the international
stage while at the same time minimizing costs to domestic special interests. Krustev and
Morgan (2011) study the determinants of the duration of sanctions episodes, in terms of both
international bargaining between sanctioner and target nations and redistributive politics
within each country (Table 7.2, item 37). They find that bargaining between states may be
effective in bringing about the termination of short-lived sanctions episodes, but for more
drawn-out conflicts, domestic political realignments and changes in ruling coalitions are of
more importance.

Table 7.1 Taxonomy of Eleven Different Categories of Sanctions Research
Category Number Description

1 Collateral damage caused by sanctions, e.g., effects on human rights in target
countries, effects on political freedom (democracy), press freedom, public
health, banking and currency crises
2 Effects of institutions (economic and political), both domestically within the
sanctioning countries and international institutions, on sanctions effectiveness
3 The multilateral versus unilateral sanctions debate
4 The role of third parties and sanctions busters
5 Effects of sanctions on regime survival and regime change in target countries
6 Relationship between FDI/trade links and sanctions
7 Efficacy of “smart sanctions” or targeted sanctions
8 Informational/symbolic/signaling role of sanctions
9 Game theoretic treatments of sanctions
10 Public choice approaches (voters, special interest groups, presidential politics)
11 Empirical determinants of sanctions effectiveness, data issues (the TIES
dataset, Hufbauer/Schott data), estimation issues
Much of the empirical work on sanctions in the 1990s and early 2000s utilized the Hufbauer,
Schott, and Elliott (1990) database, which included 170 cases of economic sanctions imposed
since the First World War (see also Chapter 2 of this Handbook). However, more recent
empirical studies have used the Threat and Imposition of Economic Sanctions (TIES) dataset
(Morgan, Bapat, and Krustev, 2009; Morgan, Bapat, and Kobayashi, 2014; see also Chapter 3
of this Handbook), which includes all episodes of sanctions, both applied and threatened, since
1945. The inclusion of threatened, as well as applied, sanctions is a major improvement over
the earlier Hufbauer et al. data, which included only those sanctions actually implemented.
Game theoretic treatments of sanctions, dating back to Eaton and Engers (1992, 1999), suggest
that one of the reasons why relatively few sanctions cases appear to be successful in generating
the desired policy outcomes in target countries is that some of the most successful sanctions are
never actually applied: the mere threat of sanctions is often enough to induce compliance. If
the sanctions are expected to be costly, and the target knows with certainty that the sanctioner
has sufficient resolve to carry them out, then the target will rationally choose to comply with
the sanctioner’s demands without necessitating that the sanctions be implemented. Likewise, if
the sanctioner anticipates that the target has sufficient resolve to hold out against the sanctions,
then the sanctioner will not impose the sanctions in the first place, especially if the sanctions
are likely to prove costly to the sanctioner as well as to the target. According to this perspective,
the only time we would observe sanctions being implemented is when there is incomplete
information available to one or both parties regarding the other’s intentions, or an error in
judgment on the part of either party.
The main characteristic of game theoretic models is interdependence between the decisions
of sanctioner and target: each party’s optimal strategy depends on that of the other party.

Table 7.2 Classification of Literature (57 studies, 2007–2018)
Paper 1 2 3 4 5 6 7 8 9 10 11
1 McLean, et al. (2018) X
2 Webb (2018) X
3 Hultman and Peksen
(2017) X
4 McCormack and
Pascoe (2017) X
5 Pond (2017) X
6 Van Bergeijk and
Siddiquee (2017) X
7 Lektzian and Regan
(2016) X
8 Carneiro and
Apolinário (2016) X X
9 Neuenkirch and
Neumeier (2016) X
10 Bapat and Kwon
(2015) X
11 Drezner (2015) X
12 Early and Spice (2015) X
13 Lektzian and Patterson
(2015) X X
14 Marinov and Nili
(2015) X
15 Miyagiwa and Ohno
(2015) X
16 Neuenkirch and
Neumeier (2015) X
17 Peksen and Peterson
(2016) X
18 Whang and Kim (2015) X
19 Drury, et al. (2014) X X
20 Lektzian and Biglaiser
(2014) X
21 McLean and Whang
(2014) X
22 Oechslin (2014) X
23 Peterson (2014) X
(continued)

Table 7.2 (continued)
Paper 1 2 3 4 5 6 7 8 9 10 11
24 Allen and Lektzian
(2013) X
25 Bapat, et al. (2013) X
26 Choi and Luo (2013) X
27 Clemens (2013) X
28 Kim (2013) X
29 Peterson (2013) X
30 Whang, McLean, et al.
(2013) X X
31 Early (2012) X
32 Lopez (2012) X
33 Biglaiser and Lektzian
(2011) X
34 Drezner (2011) X
35 Early (2011) X
36 Gordon (2011) X
37 Krustev and Morgan
(2011) X X
38 Peksen (2011) X
39 Peterson and Drury
(2011) X
40 Verdier and Woo
(2011) X
41 Whang (2011) X
42 Driscoll et al. (2010) X
43 Escribà-Folch and
Wright (2010) X
44 Langlois and Langlois
(2010) X
45 Peksen (2010) X
46 Peksen and Drury
(2010) X
47 Whang (2010) X X
48 Bapat and Morgan
(2009) X X
(continued)

Paper 1 2 3 4 5 6 7 8 9 10 11
49 Chan (2009) X
50 Early (2009) X
51 Miyagiwa (2009) X
52 Morgan, Bapat, et al.
(2009) X
53 Verdier (2009) X
54 Allen (2008) X
55 Hafner-Burton and
Montgomery (2008) X
56 Yahia and Ali Salman
(2008) X
57 Ang and Peksen (2007) X
Total 11 3 2 6 3 4 8 4 7 5 11
Langlois and Langlois (2010) argue that the nature of the sanctions game is a mix between
bargaining and war of attrition (Table 7.2, item 44), in which the sanctioner must be willing
to incur high enough costs in order to induce the target to acquiesce to its demands rather than
continue to resist the sanctions. Whang, McLean, and Kuberski (2013) show that the key factor
explaining the success of sanctions threats is the existence of a link between sanctioner and
target in terms of common interests, upon which the target is highly dependent but which the
sanctioner can threaten to sever (Table 7.2, item 30).
A major area of focus in the recent empirical literature on sanctions has been the so-called
“collateral damage.” Broad-based sanctions campaigns, such as trade and investment
embargoes, typically impose costs not only on the ruling elite in the target country but also
on the citizenry at large. These costs may come in the form of lower income if the sanctions
reduce the GDP of the target nation. But often the sanctions will have the unintended effect
of causing the regime to become more repressive in order to hold on to political power in
the face of an external threat. In that case, sanctions may have a negative impact on many
dimensions of well-being of the target country’s citizens. Dursun Peksen and his collaborators
have undertaken several empirical studies documenting the harm that sanctions impose in the
areas of civil, political and human rights, press and media freedom, public health, incidence
of currency and banking crises, and access to IMF lending (Peksen, 2009, 2010, 2011; Peksen
and Drury, 2010; Peksen and Son, 2015; Peksen and Woo, 2018; Hatipoglu and Peksen, 2018)
(Table 7.2, items 38, 45, 46).
Yet another theme of the recent sanctions literature has been the effect of third parties on
the effectiveness of sanctions. The role of third parties who provide assistance to a target state
by engaging in sanctions-busting trade has been explored in depth by Early (2009, 2011),
who finds that quite often it is the sanctioner’s close allies who are more likely to come to the

target’s aid than are other states (Table 7.2, items 35, 50). Early (2011) shows that sanctions
are most likely to fail when politically motivated sanctions busters, so-called “black knights,”
join forces with other third parties whose motives for sanctions busting are purely commercial.
The sanctions literature over the past decade or so has diversified into many other fields of
inquiry. Some scholars have investigated whether sanctions are more effective if coordinated
by transnational institutions, such as the UN, regional bodies such as the African Union and
the Organization of American States, or international lenders such as the IMF. Others have
looked at the effects of foreign direct investment and trade linkages on sanctions outcomes
(Table 7.2, items 13, 20, 28, 33), and still others at the efficacy of smart sanctions (Table 7.2,
items 8, 11, 15, 27, 32, 34, 36, 51), symbolic sanctions (Table 7.2, items 18, 23, 29, 41), and
multilateral sanctions.
7.4 CONCLUSIONS AND SPECULATION ON THE FUTURE
There are not very many cases where economic sanctions can be said to have led to significant
regime change in a target country. What we have, instead, are many heralded sanctions epi-
sodes that seem to continue for decades, e.g., Cuba, Iran, North Korea, without fundamental
change in government. The irony of these long-term sanctions episodes is that, decades after
their initial implementation, there no longer remains much in the way of trade or foreign direct
investment left to sanction. If the initial objective was regime change by means of economic
punishment, there is little to achieve in the way of additional punishment. From a public choice
perspective, these innocuous sanctions may be little more than exercises by a sanctioning state
to create a perception that it is taking some sort of action against the target, while doing so at
a very low cost domestically.
But in the target, such innocuous sanctions may create unintended opportunities for the
domestic regime. As we have seen, many sanctions episodes present the opportunity to rally
around the flag in the target, even if the sanction is essentially hollow. Long-term sanctions
can be turned on their ear as in the case of automobiles in Cuba where the remnant 1950s
stock has become an iconic symbol of Communist endurance. In the case of sanctions against
a dictatorship or command economy, even hollow sanctions create opportunities for additional
internal market manipulation. For instance, it has been suspected that North Korea may create
artificial scarcity for some commodities before engaging in potentially sanctionable activity
like missile testing. Then, when the inevitable sanctions are implemented, the scarcity can be
relaxed in a way to show the domestic population just how ineffectual foreign sanctions are.
The international political economy has changed in recent years in ways that might make
academic analysis of sanctions more difficult in the future. Sanctioning countries are blurring
the distinction between “international economic sanctions” and international trade policy, for
instance, recent White House proposals for a punitive 100 percent tariff on French wine. It is
not clear whether measures of this nature are sanctions of some sort or just severe tariffs to
protect specific domestic industries from international competition. In fact, the public choice
approach suggests that, quite often, sanctions are in effect specialized trade policy created to
benefit protectionist special interests.
Moreover, as we have also seen, sanctions use seems to have increased significantly over
the past 20 years. Increasing use of sanctions necessarily weakens the policy as an effective
signal of support to interest groups in a target who might be important agents of change. In

addition, as targets acquire additional experience in reacting to external sanctions, the ability
of sanctions to leverage pressure diminishes.
Finally, it is hard to argue against the conclusion that post-Second World War trade liberal-
ism is ebbing. Most Favored Nation status and the entire World Trade Organization structure is
becoming less important, replaced by some sort of modern protectionism. The role of sanctions
in this new order is surely changing as well. Even if the mechanism by which sanctions might
work is not through imposing maximum economic damage on a target, sanctions in a world
with little trade will not have much of a role in policymaking.
REFERENCES
Allen, Susan Hannah, “Political Institutions and Constrained Response to Economic Sanctions,” Foreign Policy
Analysis, July 2008, 4, 255–74.
Allen, Susan Hannah and Lektzian, David J., “Economic Sanctions: A Blunt Instrument?” Journal of Peace Research,
2013, 50(1), 121–35.
Ang, Adrian U-Jin and Peksen, Dursun, “When Do Economic Sanctions Work?: Asymmetric Perceptions, Issue
Salience, and Outcomes,” Political Research Quarterly, March 2007, 60, 135–45.
Bapat, Navin A., Heinrich, Tobias, Kobayashi, Yoshiharu, and Morgan, T. Clifton, “Determinants of Sanctions
Effectiveness: Sensitivity Analysis Using New Data,” International Interactions, 2013, 39(1), 79–98.
Bapat, Navin A. and Kwon, Bo Ram, “When Are Sanctions Effective? A Bargaining and Enforcement Framework,”
International Organization, 2015, 69(1), 131–62.
Bapat, Navin A. and Morgan, T. Clifton, “Multilateral Versus Unilateral Sanctions Reconsidered: A Test Using New
Data,” International Studies Quarterly, December 2009, 53, 1075–94.
Biglaiser, Glen and Lektzian, David J., “The Effect of Sanctions on U.S. Foreign Direct Investment,” International
Organization, July 2011, 65, 531–51.
Bolks, Sean M. and Al-Sowayel, D’ina, “How Long Do Economic Sanctions Last? Examining the Sanctioning
Process through Duration,” Political Research Quarterly, June 2000, 53, 241–65.
Carneiro, Cristiane Lucena and Apolinário, Laerte, “Targeted Versus Conventional Economic Sanctions: What is at
Stake for Human Rights?” International Interactions, 2016, 42(4), 565–89.
Chan, Steve, “Strategic Anticipation and Adjustment: Ex Ante and Ex Post Information in Explaining Sanctions
Outcomes,” International Political Science Review, 2009, 30, 319–38.
Choi, Seung-Whan and Luo, Shali, “Economic Sanctions, Poverty, and International Terrorism: An Empirical
Analysis,” International Interactions, 2013, 39(2), 217–45.
Clemens, Jeffrey, “An Analysis of Economic Warfare,” American Economic Review, May 2013, 103, 523–27.
Drezner, Daniel W., “Sanctions Sometimes Smart: Targeted Sanctions in Theory and Practice,” International Studies
Review, March 2011, 13, 96–108.
Drezner, Daniel W., “Targeted Sanctions in a World of Global Finance,” International Interactions, 2015, 41(4),
755–64.
Driscoll, Donna, Halcoussis, Dennis, and Lowenberg, Anton D., “Economic Sanctions and Culture,” Defence and
Peace Economics, August 2011, 22, 423–48.
Drury, A. Cooper, James, Patrick, and Peksen, Dursun, “Neo-Kantianism and Coercive Diplomacy: The Complex
Case of Economic Sanctions,” International Interactions, January 2014, 40, 25–51.
Early, Bryan R., “Sleeping With Your Friends’ Enemies: An Explanation of Sanctions-Busting Trade,” International
Studies Quarterly, March 2009, 53, 49–71.
Early, Bryan R., “Unmasking the Black Knights: Sanctions Busters and Their Effects on the Success of Economic
Sanctions,” Foreign Policy Analysis, October 2011, 7, 381–402.
Early, Bryan R., “Alliances and Trade with Sanctioned States: A Study of U.S. Economic Sanctions, 1950–2000,”
Journal of Conflict Resolution, 2012, 56(3), 547–72.
Early, Bryan R. and Spice, Robert, “Economic Sanctions, International Institutions, and Sanctions Busters: When
Does Institutionalized Cooperation Help Sanctioning Efforts?” Foreign Policy Analysis, July 2015, 11(3), 339–60.
Eaton, Jonathan and Engers, Maxim, “Sanctions,” Journal of Political Economy, October 1992, 100, 899–928.
Eaton, Jonathan and Engers, Maxim, “Sanctions: Some Simple Analytics,” American Economic Review, May 1999,
89, 409–14.
Economist, May 5, 2018, p. 64; May 19, 2018, p. 55; January 18, 2020, p. 62.
Escribà-Folch, Abel and Wright, Joseph, “Dealing with Tyranny: International Sanctions and the Survival of
Authoritarian Rulers,” International Studies Quarterly, June 2010, 54, 335–59.

Fearon, James D., “Domestic Political Audiences and the Escalation of International Disputes,” American Political
Science Review, September 1994, 88, 577–92.
Galtung, Johan, “On the Effects of International Economic Sanctions, With Examples from the Case of Rhodesia,”
World Politics, April 1967, 19, 378–416.
Gordon, Joy, “Smart Sanctions Revisited,” Ethics and International Affairs, Fall 2011, 25, 315–35.
Hafner-Burton, Emilie M. and Montgomery, Alexander H., “Power or Plenty: How Do International Trade Institutions
Affect Economic Sanctions?” Journal of Conflict Resolution, April 2008, 52, 213–42.
Hatipoglu, Emre and Peksen, Dursun, “Economic Sanctions and Banking Crises in Target Economies,” Defence and
Peace Economics, 2018, 29(2), 171–89.
Hufbauer, Gary Clyde and Schott, Jeffrey J., Economic Sanctions Reconsidered: History and Current Policy,
Washington, D.C.: Peter G. Peterson Institute for International Economics, 1985.
Hufbauer, Gary Clyde, Schott, Jeffrey J., and Elliott, Kimberly Ann, Economic Sanctions Reconsidered: History and
Current Policy, Second Edition, Washington, D.C.: Peter G. Peterson Institute for International Economics, 1990.
Hufbauer, Gary Clyde, Schott, Jeffrey J., Elliott, Kimberly Ann, and Oegg, Barbara, Economic Sanctions
Reconsidered, Third Edition, Washington, D.C.: Peter G. Peterson Institute for International Economics, 2007.
Hufbauer, G.C. and Jung, E., 2021, ‘Economic Sanctions in the 21st Century’ in: P.A.G. van Bergeijk (ed.) Research
Hultman, Lisa and Peksen, Dursun, “Successful or Counterproductive Coercion? The Effect of International Sanctions
on Conflict Intensity,” Journal of Conflict Resolution, July 2017, 61, 1315–39.
Kaempfer, William H., Lehman, James A., and Lowenberg, Anton D., “Divestment, Investment Sanctions, and
Disinvestment: An Evaluation of Anti-Apartheid Policy Instruments,” International Organization, Summer 1987a,
41, 457–73.
Kaempfer, William H., Lehman, James A., and Lowenberg, Anton D., “The Economics of the Call for Anti-Apartheid
Investment Sanctions,” Social Science Quarterly, September 1987b, 68, 528–38.
Kaempfer, William H. and Lowenberg, Anton D., “The Theory of International Economic Sanctions: A Public Choice
Approach,” American Economic Review, September 1988, 78, 786–93.
Kaempfer, William H. and Lowenberg, Anton D., “The Theory of International Economic Sanctions—A Public
Choice Approach: Reply,” American Economic Review, December 1989, 79, 1304–06.
Kaempfer, William H. and Lowenberg, Anton D., “Using Threshold Models to Explain International Relations,”
Public Choice, June 1992a, 73, 419–43.
Kaempfer, William H. and Lowenberg, Anton D., International Economic Sanctions: A Public Choice Perspective,
Boulder, CO: Westview Press, 1992b.
Kaempfer, William H. and Lowenberg, Anton D., “Unilateral versus Multilateral International Sanctions: A Public
Choice Perspective,” International Studies Quarterly, March 1999, 43, 37–58.
Kaempfer, William H. and Lowenberg, Anton D., “The Political Economy of Economic Sanctions,” in Todd Sandler
and Keith Hartley, eds., Handbook of Defense Economics, Vol. 2: Defense in a Globalized World, Amsterdam:
Elsevier North-Holland, 2007, pp. 867–911.
Kaempfer, William H., Lowenberg, Anton D., and Mertens, William, “International Economic Sanctions Against a
Dictator,” Economics and Politics, March 2004, 16, 29–51.
Kim, Dong-Hun, “Coercive Assets? Foreign Direct Investment and the Use of Economic Sanctions,” International
Interactions, 2013, 39(1), 99–117.
Krustev, Valentin L. and Morgan, T. Clifton, “Ending Economic Coercion: Domestic Politics and International
Bargaining,” Conflict Management and Peace Science, September 2011, 28, 351–76.
Langlois, Catherine C. and Langlois, Jean-Pierre P., “Costly Interference: A Game Theoretic Analysis of Sanctions,”
Peace Economics, Peace Science, and Public Policy, June 2010, 16, 1–34.
Lektzian, David J. and Biglaiser, Glen, “The Effect of Foreign Direct Investment On the Use and Success of U.S.
Sanctions,” Conflict Management and Peace Science, February 2014, 31, 70–93.
Lektzian, David J. and Patterson, Dennis, “Political Cleavages and Economic Sanctions: The Economic and Political
Winners and Losers of Sanctions,” International Studies Quarterly, March 2015, 59, 46–58.
Lektzian, David J. and Regan, Patrick M., “Economic Sanctions, Military Interventions, and Civil Conflict
Outcomes,” Journal of Peace Research, July 2016, 53, 554–68.
Lopez, George A., “In Defense of Smart Sanctions: A Response to Joy Gordon,” Ethics and International Affairs,
2012, 26(1),135–46.
Lowenberg, Anton D., “Why South Africa’s Apartheid Economy Failed,” Contemporary Economic Policy, July 1997,
15, 62–72.
Marinov, Nikolay and Nili, Shmuel, “Sanctions and Democracy,” International Interactions, 2015, 41(4), 765–78.
McCormack, Daniel and Pascoe, Henry, “Sanctions and Preventive War,” Journal of Conflict Resolution, September
2017, 61, 1711–39.
McLean, Elena V. and Whang, Taehee, “Designing Foreign Policy: Voters, Special Interest Groups, and Economic
Sanctions,” Journal of Peace Research, September 2014, 51, 589–602.

McLean, Elena V., Hinkkainen, Kaisa H., De la Calle, Luis, and Bapat, Navin A., “Economic Sanctions and the
Dynamics of Terrorist Campaigns,” Conflict Management and Peace Science, July 2018, 35, 378–401.
Miyagiwa, Kaz, “Saving Dolphins: Boycotts, Trade Sanctions, and Unobservable Technology,” International
Economic Review, August 2009, 50, 883–902.
Miyagiwa, Kaz and Ohno, Yuka, “Nuclear Bombs and Economic Sanctions,” Southern Economic Journal, October
2015, 82, 635–46.
Morgan, T. Clifton, Bapat, Navin A., and Kobayashi, Yoshiharu, “Threat and Imposition of Economic Sanctions
1945–2005: Updating the TIES Dataset,” Conflict Management and Peace Science, November 2014, 31, 541–58.
Morgan, T. Clifton, Bapat, Navin A., and Krustev, Valentin, “The Threat and Imposition of Economic Sanctions,
1971–2000,” Conflict Management and Peace Science, February 2009, 26, 92–110.
Morgan, T.C., Bapat, N., and Kobayashi, Y., 2021, ‘The Threat and Imposition of Economic Sanctions Data Project:
A Retrospective’ in: P.A.G. van Bergeijk (ed.) Research Handbook on Economic Sanctions, Edward Elgar:
Neuenkirch, Matthias and Neumeier, Florian, “The Impact of UN and US Economic Sanctions on GDP Growth,”
European Journal of Political Economy, December 2015, 40, 110–25.
Neuenkirch, Matthias and Neumeier, Florian, “The Impact of US Sanctions on Poverty,” Journal of Development
Economics, July 2016, 121, 110–19.
Nooruddin, Irfan, “Modeling Selection Bias in Studies of Sanctions Efficacy,” International Interactions, January-
March 2002, 28, 59–75.
Nossal, Kim Richard, “Liberal Democratic Regimes, International Sanctions, and Global Governance,” in Raimo
Väyrynen, ed., Globalization and Global Governance, Lanham, MD: Rowman and Littlefield, 1999, pp. 127–50.
Oechslin, Manuel, “Targeting Autocrats: Economic Sanctions and Regime Change,” European Journal of Political
Economy, December 2014, 36, 24–40.
Olson, Mancur, The Logic of Collective Action: Public Goods and the Theory of Groups, Cambridge, MA: Harvard
University Press, 1965.
Pape, Robert A., “Why Economic Sanctions Do Not Work,” International Security, Fall 1997, 22, 90–136.
Peksen, Dursun, “Better or Worse? The Effect of Economic Sanctions on Human Rights,” Journal of Peace Research,
January 2009, 46, 59–77.
Peksen, Dursun, “Coercive Diplomacy and Press Freedom: An Empirical Assessment of the Impact of Economic
Sanctions on Media Openness,” International Political Science Review, September 2010, 31, 449–69.
Peksen, Dursun, “Economic Sanctions and Human Security: The Public Health Effect of Economic Sanctions,”
Foreign Policy Analysis, July 2011, 7, 237–51.
Peksen, Dursun and Drury, A. Cooper, “Coercive or Corrosive: The Negative Impact of Economic Sanctions on
Democracy,” International Interactions, July 2010, 36, 240–64.
Peksen, Dursun and Peterson, Timothy M., “Sanctions and Alternate Markets: How Trade and Alliances Affect the
Onset of Economic Coercion,” Political Research Quarterly, March 2016, 69, 4–16.
Peksen, Dursun and Son, Byunghwan, “Economic Coercion and Currency Crises in Target Countries,” Journal of
Peace Research, July 2015, 52(4), 448–62.
Peksen, Dursun and Woo, Byungwon, “Economic Sanctions and the Politics of IMF Lending,” International
Interactions, 2018, 44(4), 681–708.
Peterson, Timothy M., “Sending a Message: The Reputation Effect of U.S. Sanction Threat Behavior,” International
Studies Quarterly, December 2013, 57, 672–82.
Peterson, Timothy M., “Taking the Cue: The Response to U.S. Human Rights Sanctions Against Third Parties,”
Conflict Management and Peace Science, April 2014, 31, 145–67.
Peterson, Timothy M. and Drury, A. Cooper, “Sanctioning Violence: The Effect of Third-Party Economic Coercion
on Militarized Conflict,” Journal of Conflict Resolution, August 2011, 55, 580–605.
Pond, Amy, “Economic Sanctions and Demand for Protection,” Journal of Conflict Resolution. May 2017, 61,
1073–94.
Renwick, Robin, Economic Sanctions, Cambridge, MA: Center for International Affairs, Harvard University, 1981.
Swanson, Ana, “U.S. Delivers Another Blow to Huawei With New Tech Restrictions,” New York Times, July 14, 2020,
https://www.nytimes.com/2020/05/15/business/economy/commerce-department-huawei.html.
van Bergeijk, Peter A. G. and Siddiquee, Muhammad S. H., “Biased Sanctions? Methodological Change in Economic
Sanctions Reconsidered and Its Implications,” International Interactions, 43(5), 879–93.
Verdier, Daniel, “Sanctions as Revelation Regimes,” Review of Economic Design, September 2009, 13, 251–78.
Verdier, Daniel and Woo, Byungwon, “Why Rewards Are Better Than Sanctions,” Economics and Politics, July 2011,
23, 220–38.
Webb, Clayton, “Power Politics or Public Pandering? An Empirical Investigation of Economic Sanctions and
Presidential Approval,” International Interactions, 2018, 44(3), 491–509.
Whang, Taehee, “Structural Estimation of Economic Sanctions: From Initiation to Outcomes,” Journal of Peace
Research, September 2010, 47, 561–73.

Whang, Taehee, “Playing to the Home Crowd? Symbolic Use of Economic Sanctions in the United States,”
International Studies Quarterly, September 2011, 55, 787–801.
Whang, Taehee and Kim, Hannah June, “International Signaling and Economic Sanctions,” International Interactions,
2015, 41(3), 427–52.
Whang, Taehee, McLean, Elena V., and Kuberski, Douglas W., “Coercion, Information, and the Success of Sanction
Threats,” American Journal of Political Science, January 2013, 57, 65–81.
Wintrobe, Ronald, “An Economic Model of an Apartheid Dictatorship,” Working Paper, Department of Economics,
University of Western Ontario, 1990.
Wintrobe, Ronald, The Political Economy of Dictatorship, Cambridge: Cambridge University Press, 1998.
Yahia, Abdusalam and Saleh, Ali Salman, “Economic Sanctions, Oil Price Fluctuations and Employment: New
Empirical Evidence from Libya,” American Journal of Applied Sciences, 2008, 5, 1713–19.

8. Making sanctions work: promoting compliance,
punishing violations, and discouraging sanctions
busting
Bryan R. Early
8.1 INTRODUCTION
Economic sanctions are coercive tools of statecraft that disrupt economic transactions with a
target actor in order to compel concessions or weaken its capabilities. Sender governments face
challenges in implementing sanctions because private sector actors resent disruptions to their
otherwise profitable transactions and may pursue legal or illegal ways of circumventing the
sanctions’ requirements. Additionally, third-party governments may provide target states with
sanctions-busting support that undercuts the effectiveness of sanctioning efforts. For sanctions
to be effective, sender governments must overcome substantial challenges in obtaining the
compliance of the private sector actors subject to its sanctions’ jurisdiction and discouraging
sanctions busting by third parties. This chapter uses insights from the academic literature on
sanctions and from the United States’ sanctioning strategies to identify and discuss six policies
for making economic sanctions more effective via improved implementation and enforcement.
Sender governments that employ economic sanctions face persistent challenges to their
sanctions policies being undermined by both domestic and foreign actors. Critics bemoan
sanctions’ low success rate of 10–34% (Hufbauer, Schott, Elliot, and Oegg 2007; Morgan,
Bapat, and Kobayashi 2014; Biersteker, Eckert, and Tourinho 2016). But it may be more
surprising that economic sanctions work at all.1 In order to craft successful sanctions, sender
governments must first attempt to convince parties subject to their sanctions’ jurisdiction to
comply with the restrictions on doing business with the target. Then, they have to monitor
whether those parties comply with sanctions, catch any parties that violate them, and apply
meaningful punishments. At the same time, they have to discourage foreign governments and
foreign firms that are not party to the sanctioning efforts from undercutting them. The extent
to which sanctions are capable of imposing meaningful economic disruptions on their targets
depends upon senders being able to be at least partially successful in all three areas.
This chapter begins by explaining the challenges of obtaining compliance with sanctions
policies and preventing sanctions busting, and then maps out the implementation and enforce-
ment strategies sender governments can employ to overcome them. Sanctions busters can be
parties that either are or are not subject to sanctions’ jurisdiction, which affect the range of
options sender governments can employ to prevent the behavior. Sanctions implementation
strategies focus on promoting sanctions compliance by parties subject to their jurisdiction
(Early 2016). Sanctions enforcement strategies relate to the policies that governments adopt to
monitor compliance, punish sanctions violators, and to dissuade sanctions busting by parties
not subject to sanctions’ jurisdiction (Bapat et al. 2020; Early and Preble 2020a). Based on
this analysis of the challenges to adopting successful economic sanctions, I discuss a set of
167
Bryan R. Early - 9781839102721
implementation, enforcement, and counter-sanctions busting policies that senders can leverage
to make their sanctions more effective.
This chapter draws on insights from the United States’ sanctioning strategies, as the U.S.
government has invested more than any country in the implementation and enforcement of
its sanctions and imposes sanctions more than any other countries (Hufbauer et al. 2007;
Morgan et al. 2014; see also Chapters 2 by Hufbauer and Jung and 3 by Morgan et al. in this
Handbook). Despite the United States being an economic hegemon, the U.S. government
struggled for decades with the problems posed by third-party sanctions busters undercut-
ting its sanctions efforts (Early 2015). In the late 2000s, the U.S. government adopted an
aggressive new sanctions implementation and enforcement strategy in response to those
challenges that substantially improved the effectiveness of U.S. sanctions (e.g., Drezner
2011; Rosenberg, Drezner, Solomon-Strauss, and Goldman 2016). The United States appears
to have over-reached with the aggressive use and implementation of economic sanctions
during the administration of President Donald Trump—demonstrating the limits of the new
strategy. I leverage the existing literature and insights from the United States in describing six
policies that senders can employ to enhance their sanctions’ effectiveness and how they can
complement one another. Insights from this analysis can apply to other senders—though no
other countries invest as many resources into their sanctioning efforts as the United States. I
also discuss how targets’ perceptions of senders’ sanctions implementation and enforcement
policies influence their decision-making. My analysis suggests that senders willing to invest
in improving sanctions’ implementation and enforcement can make them more effective. The
costs and difficulty of doing so, however, mean that many senders will often adopt economic
sanctions that underperform their potential rather than maximize it.
8.2 HOW ECONOMIC SANCTIONS ARE SUPPOSED TO WORK AND

MAJOR REASONS WHY THEY FAIL
Economic sanctions are instruments of coercive statecraft that are designed to compel a change
in their targets’ behavior or constrain the targets’ ability to engage in undesirable behaviors.
Sanctions can also be imposed for mainly symbolic or domestic political purposes (e.g.,
Whang 2011; Biersteker et al. 2016), but they are still almost always associated with some
coercive objective. My analysis focuses on commercial sanctions that seek to disrupt the trade,
investment, or financial relationships of their targets.2 The “naïve” view of how economic
sanctions work focuses on the costs that sanctions are capable of imposing on a target versus
the perceived benefits of resisting the sanctions. According to this perspective, the likelihood
of a target government conceding to economic sanctions’ demands should increase as the
economic costs imposed upon the target grow larger (e.g., Gultang 1967; Nephew 2017). This
basic model of how sanctions work is complicated when one takes domestic political factors
into account, such as the regime type of the target and how sanctions affect different constituent
groups in target states (e.g., Kaempfer and Lowenberg 1988; Allen 2005; Lektzian and Souva
2007). The economic costs that sanctions impose upon their targets may thus not directly
translate into political pressure on the target government’s leaders to make concessions.
Despite being central to theories of how sanctions work, measuring the costs sanctions
impose on their targets is surprisingly difficult. For example, is it best to try to measure sanc-
tions costs in terms of the total trade or investment that sanctions are meant to disrupt on paper?
Bryan R. Early - 9781839102721

Making sanctions work 169
What if senders are not effective at implementing their sanctions and most firms and citizens
do not comply with them? What if targets are readily able to find alternative business partners
and foreign patrons who can replace the economic transactions disrupted by sanctions and
what if some of those relationships involve illicit channels? Sanctions can affect the prices at
which their targets can buy and sell their products, so sanctions affect the quantities of goods
traded as well as their overall values. This implies, for example, that exporters may have to
sell greater quantities of goods to match pre-sanctions export value levels because diminished
demand has driven down their prices. And if particular imports are expected to become scarce
in targets, stockpiling behavior may drive up the costs of products. All this suggests that the
net costs that targets experience as a result of economic sanctions are difficult to measure.
Given the challenges that exist for measuring sanctions’ costs, researchers have been forced to
employ blunt, cumulative measures of sanctions-imposed costs that are often estimated after
the fact (Hufbauer et al. 2007; Morgan et al. 2014). Despite their bluntness, when measures
of targets’ economic costs are included in large-N analyses of sanctions success, they have
consistently strong, positive effects on sanctions’ success levels (e.g., Hufbauer et al. 2007;
Bapat et al. 2013; Peksen 2019).
Sender governments face numerous barriers to imposing economic sanctions that are
sufficiently costly to force a target government to make concessions. Senders’ first major
challenge is knowing how costly the sanctions against a target state need to be in order to
make the target concede. Second, many forms of economic sanctions disrupt commerce that is
mutually beneficial between the sender(s) and target. It is disruptive and costly for a sender’s
firms to lose an export market in the target or to have to find alternative suppliers for imports.
The self-harm that sanctions inflict creates incentives for sender governments to try to limit
the costs their constituents bear rather than imposing the most severe set of sanctions possible.
Hufbauer et al. (2007: 168–172; also, see: Van Bergeijk and Siddiquee 2017) find evidence that
sanctioning efforts are more effective when senders slam the hammer down rather than slowly
ratchet up the severity of sanctions over time (“turning the screws”). Instead of following this
advice, however, senders often try to calibrate their sanctions policies to minimize their own
costs by imposing partial sanctions and selecting policies that involve fewer harms to their
constituents. Senders may also limit their enforcement of sanctions to minimize the adverse
economic effects the sanctions have on their own constituents (Bapat and Kwon 2015). So
even if senders have become “very good at designing sanctions that are costly to the target but
not to themselves” (Morgan 2015: 749), they will still often pull their punches in how hard
their sanctions hit targets—and they rarely know how hard they need to punch to begin with.
Once senders have decided upon the type and severity of the sanctions policies, they face a
separate set of challenges in implementing and enforcing them. After sanctions policies have
been adopted, sender governments must convince the parties subject to their jurisdictions to
comply with them. Sender governments have significant control over their national foreign
aid flows to target states since much of it is often controlled by government agencies.3 In
contrast, most of the commercial relationships between a sender and target are conducted by
private sector actors. Governments may adopt sanctions policies that apply both domestically
and abroad through the use of extraterritorial provisions that apply outside their national
borders. Like any form of costly-to-implement regulation, governments will face challenges in
convincing the private sector to comply—challenges that will increase with the cost of imple-
menting sanctions requirements. Second, target states can seek out the support of any number
of third-party actors—across a variety of different mechanisms—to help them mitigate the
Bryan R. Early - 9781839102721

costs imposed by sanctions (Early 2015). If sender governments cannot effectively compel the
parties subject to their sanctions jurisdictions to comply, the disruptive effects of the sanctions
on the target will be minimal. Only when sender governments’ sanctions policies are effective
at disrupting economic ties with the target will there be a need for targets to obtain third-party
assistance. In order to impose economic sanctions capable of inflicting net costs that approach
their hypothetical maximum costs, governments must adopt implementation and enforcement
strategies that maximize compliance by the actors subject to their jurisdictions and minimize
third-party sanctions busting.
8.3 OBTAINING COMPLIANCE FOR SANCTIONS POLICIES
When sender governments adopt economic sanctions, they may not elicit immediate compli-
ance from the parties subject to their jurisdictions. From the perspectives of the private sector,
sanctions are a costly and intrusive form of economic regulation. Commercially oriented sanc-
tions impose restrictions that limit or prohibit otherwise profitable or beneficial economic rela-
tions between firms and individuals within a sender’s jurisdiction with target actors. The rise of
targeted sanctions also coincided with increasingly significant compliance burdens on firms to
ensure that they not doing business with sanctioned entities (Arnold 2016). Governments thus
face challenges in convincing firms to comply with their sanctions obligations that will limit
and/or disrupt their ongoing business activities and create increased compliance burdens. This
section discusses some of existing literature’s perspectives on how to achieve individual- and
firm-level compliance with sanctions (e.g., Morgan and Bapat 2003; Early 2016; Bapat, Early,
Grauvogel, and Kleinberg 2020; Early and Preble 2020a; 2020b).
The first challenge that sender governments face with respect to obtaining compliance with
their sanctions is informational. How do governments inform firms that new parties have been
sanctioned and what particular types of transactions are subject to restrictions? Governments
must develop a strategy for raising awareness about their sanctions policies (Early 2016).
While this sounds simple, the increasing use of targeted sanctions and blacklists by the
United States, European Union, Japan, United Kingdom, and United Nations makes it much
harder for firms to understand with whom they can do business as compared to national-level
sanctions that impose comprehensive sanctions against entire states (Eggenberger 2018).4 The
dynamic nature of these lists means that governments must remain in constant communica-
tion with their constituents about evolving sanctions requirements. For example, the U.S.
Department of Treasury operates an email listserv that provides updates for changes to U.S.
sanctions lists—sometimes sending out multiple notifications a week.5
Beyond just informing companies of their sanctions obligations, governments also face
challenges in educating private sector actors about how to comply. Economic sanctions poli-
cies have grown increasingly more complicated over time, especially as part of targeted sanc-
tions strategies aimed at affecting particular economic sectors or actors. For example, some
sanctions may focus on the export of strategic goods and technologies designed to retard the
weapons programs of target states. Financial sanctions may be crafted to place limitations on
certain state-affiliated financial institutions or to restrict transactions with specific officials and
their families. Even well-intentioned companies may not understand whether or how particular
sanctions obligations apply to the transactions they would like to conduct (Rathbone, Jeydel,
and Lentz 2013). As such, governments need to provide the private sector with educational
Bryan R. Early - 9781839102721

resources and active channels for obtaining feedback about sanctions compliance-related
questions (Early and Preble 2020b).
The final challenge that governments must overcome is how to address noncompliance.
Sanctions violations can be divided into those that are unintentional versus those that are
deliberate. Unintentional violations arise from firms and individuals not being aware of or fully
understanding their compliance obligations. Deliberate violations occur when actors are aware
of sanctions requirements but choose to violate sanctions policies anyway. While unintentional
violations can be addressed via awareness-raising efforts and providing educational resources,
deliberate violations require governments either to catch and punish violators or to deter the
violations from taking place (Early 2016).
Catching and punishing sanctions require governments to make investments in developing
the capacity to monitor sanctions compliance, investigate potential violations, and have capac-
ity to impose meaningful penalties (Morgan and Bapat 2003). Monitoring sanctions compli-
ance can be very difficult given high volumes of international transactions that a country’s
private sector conducts and can be complicated further by the scope and sophistication of the
sanctions that a government employs. For example, monitoring whether U.S. firms conduct
any transactions with businesses owned by a sanctioned Russian oligarch requires highly
specific information about firms’ business activities. Creating a bureaucratic agency with
specialties in business, the law, and conducting investigations; enabling that agency to share
information with law enforcement and intelligence agencies; and empowering that agency to
conduct investigations of firms requires an enormous investment of resources. Even creating
stand-alone statutes that impose meaningful penalties for violating sanctions can be a daunting
task for some countries that have little legal expertise in this area.
At a minimum, deterring violations requires that governments have laws that impose
non-trivial penalties for violating sanctions and some bureaucratic capacity to detect and
punish violators. However, to deter parties that can continue to profit from ignoring sanctions
effectively, governments need to make firms fear the risks associated with being caught for
violations more than the potential gains of ignoring them. Successfully deterring violations
requires that parties understand the requirements of sanctions policies and that they perceive
the risks and potential consequences of violating sanctions as being substantial. For parties to
be effectively deterred, they will need to observe at least some punishments against violators
occurring on a regular basis.
Overcoming the challenges to noncompliance requires governments to make substantial
investments in the implementation and enforcement of their sanctions policies. Simply
enacting sanctions legislation is not sufficient to obtain significant levels of private sector
compliance. If governments want their commercial sanctions to be effective, they have to
create and then sustain the legal and bureaucratic capacity to ensure compliance with them.
8.4 WHAT ARE THE MECHANISMS FOR UNDERCUTTING

ECONOMIC SANCTIONING?
Economic sanctions create powerful incentives for both their targets and third parties to
undercut them via their trade, aid, investments, and remittances. Research has shown that,
while economic sanctions can disrupt their targets’ international trade flows, businesses and
consumers will adjust to sanctions by finding new partners. Economic sanctions can create
Bryan R. Early - 9781839102721

imbalances in target countries’ terms of trade, reducing the price they can charge for their
exports and raising the prices of imported products due to losing market access with sender
state(s) (e.g., Kaempfer and Lowenberg 1999). Beyond that, economic sanctions create a
risk premium on doing business with target actors due to the potential of those transactions
to get disrupted and the possibility that senders will retaliate against the targets (Weber and
Stępień 2020: 3007). For risk acceptant firms in third parties or the sender states, this means
that trading with sanctioned parties can be highly lucrative. With respect to trade, this means
that strong commercial incentives exist for profit-seeking firms to engage in sanctions-busting
trade on behalf of targets (Early 2015).
Both firms and individuals that have been targeted with sanctions will be highly motivated
to find ways of circumventing sanctions, exploiting opportunities in the shadow sector and
black markets when necessary. Being sanctioned has been found to increase the relative
amount of economic activity taking place in target states’ shadow sectors, which encompasses
those economic activities that go untaxed, unmonitored, and unregulated (Early and Peksen
2019). Firms and citizens may resort to cross-border smuggling to help them circumvent eco-
nomic sanctions (e.g., Andreas 2005; Early 2015). Governments may also become involved
in running state-sponsored illicit acquisition networks to obtain products otherwise denied
by economic sanctions (Chestnut 2007; Hastings 2016). South Africa, North Korea, and Iran
developed extensive sanctions-busting networks that rely on deception, fraud, and smuggling
to circumvent sanctions designed to deny them access to strategic and military-related goods.
Government actors may also become involved in extracting rents over sanctions-busting com-
merce that takes place in the shadow sectors (Hastings 2016). Citizens and firms alike may
become adept at breaking both foreign and domestic laws as part of their efforts to survive
sanctions. All these mechanisms help explain why sanctions can leave criminal legacies within
targeted sanctions that last even after sanctioning efforts are removed (Andreas 2005).
With respect to foreign investment, similar incentives exist for targets to find replacement
partners from third parties who can fill the void left by sanctions-imposed disruptions. Third-
party investors will view the opportunities created by sanctions in terms of both risks and
potential rewards, capitalizing on those investment opportunities that appear to be the most
lucrative (Lektzian and Biglaiser 2013). Investors from sender states may also shift their
business activities to third parties that are not participating in sanctioning efforts (Barry and
Kleinberg 2015). Once again, profit-driven motives appear to explain why investment-based
sanctions busting takes place on behalf of target states.
With respect to foreign aid, third-party states may have political incentives to increase the
amount of foreign assistance they provide to targets or to subsidize their trade with target
states. Third-party governments that offer extensive assistance to target states are known as
“black knights” or aid-based sanctions busters (e.g., Hufbauer et al. 2007; Early 2015). These
governments may have alliance ties to target, a rivalry with the sender, or may be opposed to
the sanctions’ objectives, motivating them to provide targets with assistance to mitigate the
costs they imposed. Research has shown that sanctioned states receive more foreign assistance
than non-sanctioned states (Early and Jadoon 2016).
Lastly, target states can use foreign remittances to help undercut some of the adverse eco-
nomic effects of sanctions. Target states who have large expatriate communities can leverage
foreign currency inflows to manage the hardships created by sanctions at both family and
government level. In Cuba, for example, families benefited greatly from remittances sent back
by individuals living abroad, including in the United States, to help them survive periods of
Bryan R. Early - 9781839102721

economic downturn created and/or exacerbated by sanctions (Spadoni 2010). In the case of
North Korea, the government exploited foreign workers’ remittances as a strategy for sustain-
ing itself during harsh international sanctions (Hastings 2016; Haggard and Noland 2017: 87).
Foreign remittances may thus be driven by both political and social-familial network ties.
There are a substantial number of channels that can be exploited by the targets of sanctions
to mitigate the net costs they impose. When a target state has the support of third-party states
willing to provide it with extensive trade-based sanctions-busting support, it dramatically
reduces the likelihood that sanctioning efforts will be successful (Early 2011; 2015). When
third-party states increase their foreign direct investment in target states, it also decreases the
likelihood of sanctioning efforts being successful (Lektzian and Biglaiser 2014). Lastly, target
governments that receive increasing amounts of foreign aid are also less likely to concede
to economic sanctions (Early 2015). To date, research has not systematically explored the
independent impact that foreign remittances have on target states’ ability to resist sanctions,
but such flows appear to have helped Cuba and North Korea survive sanctions (Spadoni 2010;
Hastings 2016). Overall, research indicates that sanctions are substantially more likely to fail
when target states receive the sanctions-busting support from third parties.
8.5 POLICIES FOR PROMOTING MORE SUCCESSFUL ECONOMIC

SANCTIONS
To summarize the conclusions from above, sender governments face two major obstacles to
imposing costly sanctions on targets. First, sender governments must convince the parties sub-
ject to sanctions policies to comply with them. Whereas governments have direct control over
the agencies providing foreign aid to target states, a large portion of the commercial relation-
ships between a sender and target are often conducted by private sector actors. Like any form of
costly-to-implement regulation, governments face challenges in convincing the private sector
to comply. Second, target states can seek out the support of third-party actors—across a variety
of different mechanisms—to help them mitigate the costs imposed by sanctions. If sender
governments cannot effectively compel the parties subject to their sanctions jurisdictions to
comply, the disruptive effects of the sanctions on the target will be minimal. Only when sender
governments’ sanctions policies are effective at disrupting economic ties with the target will
there be need for targets to obtain third-party assistance and only then will there be lucrative
commercial opportunities available for third parties to exploit. Adopting impactful sanctions
requires governments to find ways of mitigating the challenges posed by noncompliance and
external sanctions busting.
Economic sanctions can be made more effective via a multitude of different approaches
(e.g., Peksen 2019; Rosenberg and Tama 2019; Bapat et al. 2020; Jadoon, Peksen, and Whang
2020), including what types of sanctions are employed, their scope, and the multilateral
coalitions built to support them. In this section, I focus on discussing policies related to
sanctions implementation, enforcement, and countering sanctions busting of commercially
oriented sanctions (i.e., trade, investment, and financial). Each of these policies entails dif-
ferent costs and challenges. Some ways that senders can make their sanctions more effective
involve making investments in developing sanctions-related legal-regulatory and bureaucratic
infrastructures. Such investments will benefit all the economic sanctions that the sender
governments adopt. In contrast, other strategies relate to how particular sanctioning efforts are
Bryan R. Early - 9781839102721

designed and enforced (Bapat et al. 2020). Some of the strategies focus on what can be done
to manage compliance with sanctions for parties subject to their jurisdictions versus managing
the threats posed by external parties undercutting sanctioning efforts when the sanctions do
not apply to them.
This section’s analysis relies on examples from the United States, as it has pioneered
numerous approaches for improving the effectiveness of its sanctions. The U.S. Department
of Treasury’s Office of Foreign Asset Control (OFAC) has gained global prominence over the
last decade via the high-profile enforcement actions it has taken against both domestic and
foreign parties for violating U.S. sanctions. OFAC’s success has been linked to its adoption
of a sanctions implementation enforcement strategy that emphasizes robust awareness-raising
and educational efforts, a focus on pursuing major sanctions violations cases that result in
substantial penalties, and generous concessions made for voluntary self-disclosure (Early and
Preble 2020a; 2020b). While OFAC still faces resource limitations, it has substantially more
resources and powers than comparable agencies in other national governments. Other states
may not be able to replicate the United States’ strategy fully, but they can adopt aspects of U.S.
approaches in seeking to improve the effectiveness of their own sanctions.
8.5.1 Sanctions Capacity-Building
To adopt economic sanctions that can achieve high levels of compliance, governments must
invest to develop the capacity to implement and enforce economic sanctions (e.g., Brzoska
2003; Lorber 2017). This entails, at minimum, creating the legislative basis for economic
sanctions that assigns the responsibility for their implementation and enforcement to specific
government agencies. The legislation should empower agencies with the authority to develop
implementing regulations for sanctions and to conduct investigations into violations. Adopting
sanctions on ad hoc basis without clearly assigning oversight responsibility for them will
lead to lackluster implementation and enforcement, if either occurs at all. Governments’
sanctions legislation should also establish penalties for sanctions violations, with civil and
criminal penalties both being options. Sender governments should build flexibility into how
much sanctions violators are punished, depending on whether the violations were deliberate
or unintentional, the scope of violations that are discovered, and the degree to which violators
cooperate with investigators and take remedial action (Early and Preble 2020a). As discussed
further below, adopting measures that encourage parties that violated sanctions to engage
in voluntary self-disclosure can also promote sanctions enforcement efforts. These policies
offer parties the opportunity to receive substantially reduced penalties if they report violations
themselves to enforcement agencies.
Governments can also adopt legislation to facilitate the adoption of international sanctions.
Many countries almost never impose unilateral economic sanctions but are responsible for
adopting mandatory UN Security Council sanctions. In order to fulfil their international
obligations promptly and effectively, governments should adopt legislation that automatically
adopts new UN sanctions and removes sanctions that the UN Security Council rescinds. By
treating UN sanctions more like regulations than stand-alone laws, governments’ sanctions
policies can be adopted far more efficiently. Governments lacking such legislation may
experience significant delays in adopting UN sanctions and sometimes fail to do so. The UN
Security Council’s 1874 (“DPRK”) Sanctions Committee Panel of Experts (2019: 4), for
example, observed that many UN members lagged behind in reporting—or failed to report
Bryan R. Early - 9781839102721

at all—on their implementation of sanctions and that the implementation of sanctions against
North Korea, such as mandatory financial measures, were “poorly implemented.”
Governments also need to invest in employing personnel with expertise on economic
sanctions, either as dedicated staff or as part of their job portfolios. This is important on the
implementation side, as governments need to have staff that can provide the necessary outreach
to the private sector to inform and educate them about sanctions requirements and they need
to be able to answer the private sector’s compliance-related questions. On the enforcement
side, governments should task an interagency group with shared responsibility for monitoring
sanctions compliance and investigating violations. This interagency taskforce should include
representatives from Customs, law enforcement bodies, intelligence bodies, and members of
the agency primarily tasked with implementing sanctions. Governments should also appoint
officials to liaise with the UN Security Council Sanctions Committees to report on and coor-
dinate sanctions enforcement-related issues. Investing resources in detecting and punishing
sanctions violations will help governments create a more credible deterrent against sanctions
violations. If the private sector observes that governments have invested little in implementing
and enforcing sanctions, they have fewer incentives to comply with sanctions requirements.
8.5.2 Extraterritorial Sanctions Provisions
Economic sanctions can be designed in ways that broaden the scope of their jurisdiction,
enabling governments to make legal demands on larger populations to comply with their sanc-
tions (Early 2016). Most countries adopt sanctions that apply to transactions conducted within
their borders. Sanctions requirements can also be adopted that apply to a country’s residents
wherever they are in the world. This can significantly extend the scope of sanctions beyond
a country’s territorial borders. Beyond that, sender governments can adopt extraterritorial
sanctions requirements that apply to transactions conducted by foreign-operated subsidiaries
of a sender state’s firms. The U.S. government’s Iran Transaction and Sanctions Regulations,
for example, requires the foreign-operated subsidiaries of U.S. firms to comply with specific
sanctions policies (Lohmann 2019: 5). Lastly, a sender government can establish terms and
conditions that foreign entities have to comply with in order to do business with it—including
compliance with its sanctions. These extraterritorial sanctions requirements are controversial
but can dramatically expand the scope of sanctions’ legal jurisdiction. They offer a sender
government direct compellent leverage over third-party states’ private sectors even if their
governments refuse to cooperate with sanctioning efforts. Importantly, extraterritorial sanc-
tions provisions can be framed as a legal obligation that foreign entities have to comply with
and violations can be punished via civil and criminal penalties in the sender’s legal system.
The United States has done this with financial sanctions to great effect (Drezner 2015), as
many international businesses rely upon access to the U.S. financial system to conduct com-
mercial transactions. Over the past decade, OFAC has punished dozens of foreign firms that
have violated U.S. sanctions policies, in some cases with penalties amounting to hundreds of
millions of dollars (Early and Preble 2020a).
Expanding sanctions’ jurisdiction beyond national borders presents several challenges.
First, raising awareness and educating the actors who are subject to sanctions’ jurisdiction in
foreign countries poses significant implementation challenges and is difficult and costly to do
effectively. Second, foreign governments may be angered by the use of extraterritorial sanc-
tions that seek to compel their constituents to comply with sanctions. For example, Canada,
Bryan R. Early - 9781839102721

Mexico, and European countries were incensed during the 1990s when the United States
adopted extraterritorial sanctions provisions with respect to its ongoing sanctioning efforts
against Cuba and Iran (Shambaugh 1999; Eizenstat 2004). Disputes over U.S. extraterritorial
sanctions have led foreign governments and the EU to challenge their legitimacy by adopt-
ing blocking legislation that forbids their constituents from complying with extraterritorial
sanctions and exploring ways of helping their citizens circumvent them. The United States’
aggressive adoption of extraterritorial sanctions related to its Iran and Russia sanctions pro-
grams during the Trump administration have angered and alienated many of the United States’
European allies. Part of the political fallout from the Trump administration’s heavy-handed
use of extraterritorial sanctions is that many of its European allies are now exploring ways to
reduce their exposure to U.S. sanctions (Stoll et al. 2020).
For firms potentially caught in the crossfire of political disputes between senders and third-
party states over extraterritorial sanctions, the path of least resistance is to avoid getting caught
up in a sanctions controversy—leading to de facto compliance. That appears to be what has
happened with many major European multinational companies after the United States quit the
nuclear deal with Iran (the Joint Comprehensive Plan of Action, JCPOA) and then re-imposed
sanctions on Iran against the objections of the deal’s EU supporters. The EU adopted blocking
legislation to forbid European companies from complying with U.S. extraterritorial sanctions
imposed to compel European countries to stop doing business with Iran, and it sought to create
a special financial system that could shield European firms’ transactions with Iran from U.S.
retaliation. Despite these steps, most major European firms appear to prefer quietly abiding
by the U.S. sanctions to avoid costly penalties or being embroiled in a transatlantic political
dispute (Brzozowski 2020). These short-term gains in European corporate compliance with
U.S. extraterritorial sanctions have come at the expense of a deterioration in U.S.–European
diplomatic relations, however, that may make European governments less cooperative with
U.S. sanctions in the future.
8.5.3 Building Sanctions Coalitions
Research has shown that sender governments can limit sanctions-busting behavior and make
their sanctioning efforts more effective by getting other governments to join sanctions coali-
tions. While initial research found that multilateral economic sanctions appeared less effective
at achieving their objectives (e.g., Kaempfer and Lowenberg 1999; Hufbauer et al. 2007; see
also Chapters 7 and 2 of this Handbook), further study has shown that international organiza-
tions play a key role in making multilateral sanctioning efforts more effective (e.g., Drezner
2000; Bapat and Morgan 2009). Primary senders will face significant difficulties in building
multilateral sanctions coalitions by individually coercing other states to forgo commercial
sanctions-busting opportunities and participate in sanctions (Martin 1992; Early 2015). Even
when senders succeed in convincing third-party states to join their sanctions coalitions, they
may be prone to backsliding from their commitments. Using international organizations,
primary senders can employ coordinated strategies to gain large-scale support for sanctions,
creating forums that are perceived to be more legitimate by the third-party governments.
International organizations can help monitor their members’ levels of compliance with sanc-
tions obligations, which can help prevent backsliding behavior (Drezner 2000).
There are limits to how helpful even international organizations can be in promoting effec-
tive sanctions. For example, not all members of international organizations that participate in
Bryan R. Early - 9781839102721

sanctioning efforts have the capacity to implement them effectively (Brzoska 2003; Carisch,
Eckert, and Rickard-Martin 2014). Moreover, international organizations’ ability to facilitate
the monitoring and enforcement of sanctions can be stretched thin as the international organi-
zations become larger. This is why smaller international organizations like the EU appear to
be more effective than larger ones like the UN at preventing sanctions busting (Early and
Spice 2015). In the case of the international nonproliferation sanctions against North Korea,
EU members have complied more robustly than countries in Africa, Asia, and Latin America
where numerous countries have lagged behind in implementing the UN sanctions—let alone
actually enforcing them.6 Importantly, the EU adopts its own implementing statutes for UN
sanctions to make their members comply with them and has greater accountability for parties
that violate them. In the case of the UN’s targeted sanctions, recent data collected by Biersteker
et al. (2016) revealed that its sanctions only achieve their coercive goals around 10% of the
time—far less than the general success rates associated with sanctions imposed by other send-
ers. This all suggests that international organizations’ involvement in multilateral sanctions can
be helpful but is not a perfect solution.
8.5.4 Robust Sanctions Implementation
Assuming that governments have invested in bureaucratic capacity to implement economic

sanctions, there are a number of policies that they can implement to promote compliance
with their sanctions. Sender governments should invest in awareness-raising and educational
programs in order to inform the private sector of their sanctions-related compliance obliga-
tions and how to comply with them (Rosenberg and Tama 2019: 12–13). This could include
creating an online resource that consolidates information about all of the government’s
ongoing sanctioning efforts, including links to the relevant laws and regulations and resources
for understanding what the policies entail (such as FAQs or plain language summaries of
compliance obligations).7 Additionally, governments should conduct more active outreach
to industry groups and conduct regular public events to inform and educate the public about
ongoing sanctions. Large, multinational companies are more likely to have corporate compli-
ance departments responsible for ensuring compliance with sanctions and related policies, but
many small and medium-sized enterprises will not have specialized compliance personnel
(Early 2016; Early and Preble 2020b). As such, making sanctions-related resources easily
available and taking steps to help such businesses understand their compliance obligations is
valuable. Governments should also task officials with the responsibility of answering specific
questions from the private sector via in-person consultations, over the phone, or via email.
Importantly, these are not one-time investments. Governments need to continually update
their sanctions-related resources and conduct outreach to reflect changing sanctions policies
and the fact that new actors are continually entering the marketplace and need to be informed
about sanctions. By taking these steps, governments can dramatically reduce the number of
unintentional sanctions violations that occur—as private sector actors should be more likely to
be aware of their sanctions obligations and understand how to comply with them.
8.5.5 Enforcing Sanctions
Building and sustaining the capacity to enforce economic sanctions is necessary to deter
violations, but the policies senders employ in engaging in enforcement actions against
Bryan R. Early - 9781839102721

sanctions violators will also have a big impact on how the private sector perceives the risks
of sanctions violations. Governments can try to influence the cost-benefit analyses of firms
considering engaging in sanctions violations by increasing the perception of how likely they
are to be caught and/or the severity of punishments they could face for violations (Morgan
and Bapat 2003). For many governments, the task of trying to detect and punish sanctions
violations on a large scale would quickly overwhelm the resources available to them. Secondly,
not all sanctions violations are created equal. Given that most governments—including the
United States—are only able to detect a small portion of sanctions violations, even significant
investments in conducting enforcement actions are unlikely to change violators’ perceived
risks of being caught (Early and Preble 2020b).
Governmental policies for promoting sanctions compliance should take the nature of the
sanctions violations being committed into account. There is a significant difference between
a small business engaging in minor, unintentional infractions and a major multinational com-
pany using deceptive practices to violate sanctions policies knowingly as part of thousands of
transactions. The latter will do much more damage to a sanctioning effort. Governments should
adopt penalties for sanctions violations to punish parties that engage in deliberate, extensive
sanctions violations more severely than smaller-scale, unintentional violations. Reflecting this
strategy, OFAC began pursuing cases against foreign financial institutions that were rampantly
violating U.S. sanctions provisions—imposing fines against them that ran into hundreds of
millions of dollars. For example, OFAC reached a $639 million settlement with the United
Kingdom’s Standard Chartered Bank for engaging in more than 9,000 apparent violations of
U.S. financial sanctions against Iran (OFAC 2019).
Governmental enforcement efforts will achieve more if they focus on catching and punish-
ing major violators rather than casting a wide net to catch any violator unlucky enough to
come to their attention. Early and Preble (2020a; 2020b) argue that sanctions enforcement
strategies that focus on imposing large penalties against sanctions violators are more effective
at deterring violators than ones focused on catching lots of violations. According to their
“whale-hunting” logic, imposing substantial punishments for sanctions violations will both
raise awareness about sanctions obligations and evoke fear within risk-averse firms in a way
that will deter them from violating sanctions. This sanctions enforcement strategy relies on
the deterrent effects created by taking sanctions enforcement actions to reduce the number
of deliberate sanctions violations that take place and on the awareness-raising effects of the
publicity generated by enforcement actions to reduce unintentional violations (Early and
Preble 2020b). Enforcement bodies should not focus solely on major violations, as such cases
are more costly and complex; lesser violations need to be deterred as well (Rosenberg and
Tama 2019). Governments should ensure, however, that sufficient resources are devoted to
catching and punishing major sanctions violators to create salient deterrent effects for their
enforcement actions.
While the United States has been able to enforce extraterritorial sanctions remarkably effec-
tively over the past decade, they remain highly controversial, and the enforcement challenges
they entail make them impractical for most governments to adopt. Monitoring and investigat-
ing violations conducted by overseas firms is costly and difficult, especially since senders may
not have authority to conduct investigations in third-party states. In order to enforce extrater-
ritorial sanctions, the United States must have significant leverage over third-party firms in
terms of the U.S. assets they possess, business relationships they have with U.S. partners, or
reliance upon access to the U.S. financial system or technologies (Shambaugh 1999: 13–18).
Bryan R. Early - 9781839102721

If foreign firms lose little by being potentially denied access to the U.S. economy, they may
not cooperate with enforcement investigations or agree to accept penalties. So even while
extraterritorial sanctions provisions can claim broad legal jurisdiction, there are limitations in
terms of the parties against which they can be meaningfully enforced.
Lastly, governments can employ voluntary self-disclosure provisions to enhance their
sanctions enforcement efforts in highly cost-effective ways. If governments can generate
sufficient fear in companies that engage in violations that the consequences of their being
caught would be severe, they may opt to self-report their violations in return for promised
leniency. This makes enforcing sanctions far more cost-efficient for the responsible agencies,
as they do not have to find and investigate potential violations independently (Early and Preble
2020b). Companies that self-report violations are also more likely to be cooperative during
the associated investigations and more focused on adopting remedial measures that could
also potentially reduce penalties imposed against them (Timofeev 2019). Such policies may
be particularly effective for addressing cases of minor unintentional violations, where the
penalties would not be that great to begin with and the focus should be on directing violators
to take corrective actions to avoid future violations. Voluntary self-disclosure policies thus
allow enforcement agencies to take a larger number of enforcement actions than they otherwise
would have the resources to do and allow them to concentrate their efforts on pursuing cases
involving deliberate violations.
8.5.6 Coercing External Sanctions Busters
Sender governments must rely on political measures to stop sanctions-busting behaviors

conducted by foreign governments and firms not subject to sanctions’ jurisdiction. This set of
actions could entail political coercion aimed at governments to discourage them from aiding
or allowing trade with targets, or it could involve the adoption of secondary sanctions directed
at individuals and entities engaging in sanctions-busting trade, investment, or financing. In
both cases, sender governments are trying to force third parties that are not part of or subject
to sanctions requirements to join/comply with them.
Coercing third-party governments to stop sanctions busting can be difficult, especially if
the third-party states have significant political and/or commercial interests motivating their
behaviors. For example, the United States was unable to prevent the Soviet Union from provid-
ing Cuba with extensive sanctions-busting aid and trade during the Cold War (Early 2015:
Chapter 7). Similarly, the United States has been unable to convince the People’s Republic of
China to stop providing North Korea with critical sanctions-busting assistance that has allowed
the regime to survive otherwise crippling U.S. and international sanctions imposed against it
(Haggard and Noland 2017). Both the Soviet Union and China had salient political interests
in preventing the sanctions from working, of which thwarting the foreign policy ambitions of
the United States was a part. When “black knights” like these offer robust sanctions-busting
aid to targets, senders have limited options to prevent it (Early 2015).
In the case of commercially motivated sanctions busting, sender governments can dissuade
third-party governments from supporting such behavior, but it is costly and often not worth
doing. Third-party states that emerge as extensive commercial sanctions busters on behalf of
a target are profiting from those activities in ways that sender states can interfere with. For
example, the sender can adopt restrictions to curb trade with third-party states that pose sanc-
tions diversion risks. The United States threatened to do that with the United Arab Emirates
Bryan R. Early - 9781839102721

(UAE) in 2007 because the country was acting as a major sanctions diversion point for Iran
(Early 2015: 133). The U.S. Department of Commerce’s Bureau of Industry and Security
threatened to create a category for “Designations of Diversion Control” for the UAE that
would restrict its access to economically and strategically valuable dual-use goods (U.S.
Senate 2008). Compelling third-party governments to join sanctioning efforts is politically and
economically costly, and utilizing that strategy against numerous sanctions busters can quickly
become too expensive. In many cases, the goals sought in specific sanctioning efforts against
a target are not worth the cost of inflicting large-scale disruptions on the sender’s relationships
with third-party governments—especially if they are the sender’s allies (Early 2015).
In the recent case of German–Russian Nord Stream 2 natural gas pipeline, U.S. policymak-
ers strongly opposed the project that would undermine American sanctions’ goal of restricting
Russian energy exports and Europe’s reliance on Russian fossil fuels (Congressional Research
Service 2020). U.S. pressure to terminate the project created a serious strain on U.S.–German
relations, but the United States refrained from imposing broad penalties against Germany as
a whole and, instead, began—as part of a tactic discussed below—targeting specific entities
involved in building the pipeline in 2019 (BBC 2019). The Trump administration’s heavy-
handed efforts to convince Germany to forsake the project illustrates the fractious politics
involved in coercing unwilling participants to cooperate with sanctions (Noack 2019). Yet
even though U.S. policymakers resented the gas pipeline project, they refrained from retaliat-
ing against Germany in ways that would jeopardize the U.S.–German alliance.
As opposed to coercing governments, coercing third-party firms directly is less costly for
senders but still controversial. Senders can apply “secondary sanctions” that bypass third-party
governments and place direct pressure on firms to stop undercutting sanctions (Shambaugh
1999). Senders can employ coercive pressure on third-party actors that undercut sanctioning
efforts but are outside their jurisdiction by placing them on blacklists that restrict their ability
to do business in the sender state or with its constituents (Eggenberger 2018). For example, the
U.S. Department of Treasury has a “Foreign Sanctions Evaders” list that imposes restrictions
on foreign entities that have violated U.S. sanctions against Iran and Syria. U.S. policymakers
have also become creative in employing other forms of leverage, such as threatening to desig-
nate entities that facilitate sanctions busting as money laundering risks (Zarate 2013). Having
leverage over foreign sanctions evaders is central to these measures working effectively.
8.5.7 Summarizing How These Policies Work Together
The U.S. has been able to draw on all the policies cited above as part of efforts to improve the
implementation and enforcement of its sanctions. A number of these policies can reinforce one
another. For example, adopting whale-hunting sanctions enforcement strategies that result in
substantial penalties can help increase the private sector’s awareness of sanctions obligations.
Adopting voluntary self-disclosure policies encourages parties that unintentionally violate
sanctions to come clean and work toward adopting remedial policies, and frees up sender
governments to focus their enforcement resources on trying to catch deliberate sanctions
violators (Early and Preble 2020b). Governments that seek to improve their sanctions policies’
effectiveness should thus consider the holistic design of their sanctions programs.
In thinking about the contributions of the various policies for improving sanctions effective-
ness, there are three broad mechanisms to which each one can contribute: improving domestic
compliance; improving foreign compliance; and mitigating external sanctions busting. I draw
Bryan R. Early - 9781839102721

Table 8.1 Summarizing How Sanctions Can Be Made More Effective
Mechanism for Improving Effectiveness

Strategies for Improving Improve Domestic Improve Foreign Mitigate External
Effectiveness Compliance Compliance Sanctions Busting
Sanctions Capacity-Building ü ü
Extraterritorial Sanctions
ü
Provisions
Building Sanctions Coalitions ü ü
Robust Sanctions
ü ü
Implementation
Enforcing Sanctions ü ü
Coercing External Sanctions
ü
Busters
a distinction between improving foreign compliance with sanctions and mitigating external
sanctions-busting categories based on whether a legal obligation exists (however controversial)
for third-party actors to comply with sanctions. Table 8.1 provides an overarching summary of
how each strategy contributes to enhancing effectiveness via these mechanisms. Having more
checks in the column does not mean there are more independent ways to enhance sanctioning
efforts via the particular mechanisms; rather, it tends to mean that there are more policies that
a sender must adopt to realize the mechanism for enhancing sanctions effectiveness.
Improving domestic sanctions compliance is the most straightforward method that govern-
ments can employ to enhance the effectiveness of their sanctioning efforts. Building up
sanctions capacity, investing in robust implementation programs, and engaging in effective
enforcement strategies can promote greater sanctions compliance within a sender’s own
country. For many countries that lack the resources to build sanctions coalitions, employ
extraterritorial sanctions, or coerce external sanctions busters, these policies represent the best
strategies for improving the effectiveness of their sanctions.
Governments that have the power and desire to create legal obligations for foreign firms
to comply with sanctions either need to enlist the cooperation of their governments to
participate in sanctioning efforts or to employ extraterritorial sanctions provisions. Enlisting
the cooperation of foreign governments can be made easier by gaining the support of interna-
tional organizations or working with partner states that share common interests. Employing
extraterritorial sanctions policies that create obligations for foreign parties to comply with
sanctions is difficult and costly. Not only do governments have to overcome challenges to
their policies’ legitimacy, but they also must invest considerably more effort in informing
and educating foreign parties about their sanctions obligations. It is also more challenging to
monitor, investigate, and punish violations conducted by foreign parties. Yet, for great powers
willing to invest significant political capital and resources in implementing and enforcing
their sanctions, adopting extraterritorial sanctions provisions can be effective in obtaining the
compliance of foreign entities.
Bryan R. Early - 9781839102721

Mitigating external sanctions busting involves convincing actors that have no legal obliga-
tion to participate in sanctions to refrain from actively violating them. Convincing third-party
governments that support sanctions busting to join a sender’s sanctions coalition may be very
difficult, even impossible in many cases. If those efforts are successful, fewer third-party states
and firms will exist that do not have a legal obligation to comply with sanctions. Coercing
foreign firms directly is a more pragmatic but still controversial strategy. The line between
a sender’s use of extraterritorial sanctions provisions to justify legal penalties for sanctions
violations versus senders imposing secondary sanctions for sanctions-busting activities that
do not violate existing sanctions provisions can also be blurry.
Only great powers can employ all the policies highlighted above to improve sanctions
effectiveness at the same time. Even the United States faces limitations in the extent it can
leverage extraterritorial sanctions provisions or in coercing third parties to stop sanctions bust-
ing. Indeed, for most of the twentieth century, the United States was not able to employ either
of those mechanisms very effectively. The dramatic improvement in the effectiveness of U.S.
sanctions during the late 2000s resulted from changes to the form, function, implementation,
and enforcement of its sanctions policies (Drezner 2015; Rosenberg et al. 2016; Early and
Preble 2020a). There has been pushback and increasing resentment from the international
community over the United States’ aggressive sanctions policies, especially for its extrater-
ritorial sanctions provisions and enforcement actions during the Trump administration.
Comparing the relative success of the Obama administration to the Trump administration at
receiving international support for U.S. sanctioning efforts, the supplemental use of diplomacy
rather than heavy-handed intimidation also appears to facilitate third-party cooperation. While
the blowback for the Trump administration’s sanctions policies may not be immediate, there
will likely be long-term costs associated with its alienation of third parties with the aggressive
use and enforcement of sanctions (Farrell and Newman 2020).
8.6 EXPLOITING THE VULNERABILITIES OF SANCTIONS

POLICIES: THE TARGET’S PERSPECTIVE
How does the way senders impose sanctions affect target states’ responses? Existing research has
shown that the leaders of target states will behave opportunistically in resisting sanctions, taking
advantage of the powers available to their regimes to resist sanctions (e.g., Escribà-Folch and
Wright 2010; Jones 2015; Peksen 2016). Target states can also readily observe whether sender
governments have invested in building up their capacity to implement and enforce economic
sanctions. When sender governments have not, the likely disruptions caused by trade, financial,
or investment-based sanctions policies will be substantially less than they appear on paper. As
such, targets should be less likely to concede to sanctions threatened and imposed when sender
governments lack the legal-regulatory and bureaucratic capacity to impose sanctions effectively.
Target governments can also observe the strategies that sender governments adopt con-
cerning the implementation and enforcement of sanctions in developing sanctions evasion
strategies. If the sender has weak implementation and enforcement programs, target govern-
ments and businesses may seek options for continuing existing relationships with business
partners in sender states. They may pursue options of brazenly continuing business as usual
despite sanctions, the using of third-party intermediaries, or employing illicit channels. Weak
sanctions implementation and enforcement may mean that sanctions policies add transaction
Bryan R. Early - 9781839102721

costs to continuing business relationships between sender and target partners, but they may
not disrupt those relationships in ways that are costly enough to be meaningful. In contrast,
Early and Peterson (2021) find that when OFAC conducted enforcement actions that imposed
major fines against sanctions violators, they reduced U.S. firms’ subsequent trade with states
sanctioned by the U.S. government.
Target states often have numerous options for finding third parties to provide them with
trade-based sanctions-busting support, but the number of third-party governments willing to
provide them with extensive amounts of foreign aid is often limited. If a sender government
lacks the ability to convince third-party governments to support its sanctioning efforts and
it cannot adopt effective extraterritorial sanctions policies, target governments will leverage
third parties extensively as part of their sanctions survival strategies. In cases where senders
are effective at building sanctions coalitions, target states will tend to rely more heavily
on a few major sanctions busters who are willing to provide them with support and who
will not cooperate with the ongoing sanctioning efforts. Given that the support of even one
extensive sanctions buster can undermine the effectiveness of sanctioning efforts, targets are
significantly advantaged in resisting sanctions if they can forge even a small number of those
relationships (Early 2015). All this suggests that senders face an uphill battle in convincing
target states that they cannot resist sanctions.
8.7 CONCLUSION
Economic sanctions have remained popular tools of economic statecraft despite their checkered
record of success. Innovations in how the United States employs sanctions have made its
sanctions policies more effective in recent years, and at least some of those policies can be
broadly adopted by other countries (Rosenberg et al. 2015). The targets of sanctions can readily
observe the prospective challenges that a sender faces in implementing and enforcing economic
sanctions effectively. When senders lack the resources and strategies necessary to achieve high
levels of compliance with their sanctions and prevent third-party sanctions busting, targets
should be less likely to concede to the sanctions. In order to adopt sanctions with greater chances
of being successful, sender governments should invest in developing the legal and institutional
infrastructure to implement and enforce sanctions, adopt robust implementation and enforce-
ment strategies for promoting sanctions compliance, and discourage sanctions busting by third
parties. Yet, adopting these policies is costly and difficult. Sanctions are also more likely to
succeed when they are supported by adept diplomacy rather than brute-force implementation.
This helps explain why sanctions chronically underperform expectations, as policymakers may
not follow through with the investments needed to maximize their likelihood of success.
This chapter also suggests that the academic community needs to give more attention to
how sender governments implement and enforce sanctions. While evidence suggests that the
economic costs sanctions impose against target states is a leading determinant of their likeli-
hood of success, a lot remains unknown about the pragmatic ways that sender governments
generate those costs on targets. For example, no systematic global data exists on the capacity
that sender governments have to impose sanctions—let alone more nuanced data on the par-
ticular implementation and enforcement strategies they employed. This suggests that studies
exploring the determinants of sanctions success have a major blind spot because they cannot
capture how robustly sender governments implemented their sanctions. Academics would
Bryan R. Early - 9781839102721

also benefit from greater engagement with the policy community involved in implementing
sanctions (Bapat et al. 2020) to learn more about the processes and pathologies that can influ-
ence sanctions’ effectiveness. Beyond the U.S. case, additional analyses of how EU states,
the United Kingdom, Russia, and China implement and enforce their sanctions (Asada 2020)
will also be useful for understanding whether other senders have adopted similar policies and
which ones appear to be broadly effective. These topics promise to be important avenues for
furthering our understanding of why and how economic sanctions work.
NOTES
1. For a critical review of the factors associated with sanctions success, see Peksen (2019).
2. Foreign aid sanctions operate via a differing logic (Early 2015; Early and Jadoon 2020).
3. The extent to which sender governments extend their sanctions policies to their not-for-profit sectors and seek
to influence the aid behavior of international organizations (e.g., Peksen and Woo 2018) can strengthen senders’
ability to cut off aid to target states.
4. See, for example, the U.S. Department of Treasury’s (2021) and the UN Security Council’s (2021) consolidated
sanctions lists that are frequently revised.
5. These email notifications from the U.S. Department of Treasury can be subscribed to at https://service.govdeliv-
ery.com/accounts/USTREAS/subscriber/new.
6. This inference was drawn from overviewing the periodic reports issued by the Panel of Experts for 1718 Commit-
tee that discuss international compliance with the UN sanctions against North Korea and the national implementa-
tion reports compiled by the 1718 Committee (UN 2020).
7. See the OFAC (2020) website for examples of these resources.
REFERENCES
1718 Sanctions Committee (2020). ‘Implementation Reports,’ United Nations: New York. Available at: https://www.
un.org/securitycouncil/sanctions/1718/implementation-reports.
1874 Committee Panel of Experts (2019), Report of the Panel of Experts, New York: United Nations Security Council,
accessed 10 February 2020 at: https://www.undocs.org/S/2019/171.
Allen, S. (2005), ‘The Determinants of Economic Sanctions Success and Failure,’ International Interactions 31 (2),
117–138.
Andreas, P. (2005), ‘Criminalizing Consequences of Sanctions: Embargo Busting and Its Legacy,’ International
Arnold, A. (2016), ‘The True Costs of Financial Sanctions,’ Survival 58 (3), 77–100.
Asada, M. (ed.) (2020), Economic Sanctions in International Law and Practice, New York, NY: Routledge.
Barry, C. and K. Kleinberg (2015), ‘Profiting from Sanctions: Economic Coercion and US Foreign Direct Investment,’
International Organization 69 (4), 881–912.
Bapat, N. and B. Kwon (2015), ‘When Are Sanctions Effective? A Bargaining and Enforcement Framework,’
Bapat, N., B. Early, J. Grauvogel, and K. Kleinberg (2020), ‘The Design and Enforcement of Economic Sanctions,’ Forum
Contribution in B. Early and M. Cilizoglu’s ‘Economic Sanctions in Flux: Enduring Challenges, New Policies, and
Defining the Future Research Agenda,’ International Studies Perspectives. DOI: https://doi.org/10.1093/isp/ekaa002.
BBC (2019), ‘Nord Stream 2: Germany and Russia decry US sanctions,’ Dec. 21, accessed 24 January 2021 at: https://
www.bbc.com/news/world-europe-50879435.
Biersteker, Thomas, Sue Eckert, and Marcos Tourinho (eds) (2016), Targeted Sanctions: The Impacts and Effectiveness
of United Nations Action, Cambridge, UK: Cambridge University Press.
Brzoska, M. (2003), ‘From Dumb to Smart? Recent Reforms of UN Sanctions,’ Global Governance 9, 519–535.
Brzozowski, A. (2020), ‘INSTEX fails to support EU-Iran trade as nuclear accord falters,’ Euractive, Jan. 14, accessed
10 February 2020 at: https://www.euractiv.com/section/global-europe/news/instex-fails-to-support-eu-iran-trade-
as-nuclear-accord-falters/.
Carisch, E., S. Eckert, and L. Rickard-Martin (2014), ‘High Level Review of UN Sanctions Background Paper,’
New York, NY: United Nations, accessed 10 February 2020 at: http://www.hlr-unsanctions.org/main/background.
Congressional Research Service (2020), ‘Russia’s Nord Stream 2 Pipeline: Running in Place,’ Sept. 28, accessed 25
January at: https://crsreports.congress.gov/product/pdf/IF/IF11138.
Bryan R. Early - 9781839102721

Drezner, D. (2000), ‘Bargaining, Enforcement, and Multilateral Sanctions: When Is Cooperation Counterproductive?’
Drezner, D. (2015), ‘Targeted Sanctions in a World of Global Finance,’ International Interactions 41 (4), 755–764.
Early, Bryan (2015), Busted Sanctions: Explaining Why Economic Sanctions Fail, Stanford, CA: Stanford University
Press.
Early, Bryan (2016), ‘Confronting the Implementation and Enforcement Challenges Involved in Imposing Economic
Sanctions,’ in Natalino Ronzitti (ed.), Coercive Diplomacy, Sanctions and International Law, Boston, MA: Brill
Nijhoff, pp. 43–69.
Early, B. and A. Jadoon (2016), ‘Do Sanctions Always Stigmatize? The Effects of Economic Sanctions on Foreign
Aid,’ International Interactions 42 (2), 217–243.
Early, B. and D. Peksen (2019), ‘Searching in the Shadows: The Impact of Economic Sanctions on Informal
Economies,’ Political Research Quarterly 72 (4), 821–834.
Early, B. and T. Peterson. 2021. “Does Punishing Sanctions Busters Work? Sanctions Enforcement and U.S. Trade
with Sanctioned States.” Political Research Quarterly. DOI: 10.1177/10659129211025620
Early, B. and K. Preble (2020a), ‘Going Fishing Versus Hunting Whales: Explaining Changes in How the U.S.
Enforces Economic Sanctions,’ Security Studies 29 (2), 231–267.
Early, B. and K. Preble (2020b), ‘Enforcing US Economic Sanctions: Why Whale Hunting Works,’ Washington
Quarterly 43 (1), 159–175.
Early, B. and R. Spice (2015), ‘Economic Sanctions, International Institutions, and Sanctions Busters: When Does
Institutionalized Cooperation Help Sanctioning Efforts?’ Foreign Policy Analysis 11 (3), 339–360.
Eggenberger, K. (2018), ‘When Is Blacklisting Effective? Stigma, Sanctions and Legitimacy: The Reputational and
Financial Costs of Being Blacklisted,’ Review of International Political Economy 25 (4), 483–504.
Eizenstat, S. (2004), Do Economic Sanctions Work? Lessons from ILSA and Other U.S. Sanctions Regimes,
Washington, DC: Atlantic Council of the United States.
Escribà-Folch, A. and J. Wright (2010), ‘Dealing with Tyranny: International Sanctions and the Survival of
Authoritarian Rulers,’ International Studies Quarterly 54 (2), 335–359.
Farrell, H. and A. Newman (2020), ‘The Twilight of America’s Financial Empire: Washington’s Economic Bullying
Will Erode Its Power,’ Foreign Affairs, Jan. 24, accessed 10 February 2020 at: https://www.foreignaffairs.com/
articles/2020-01-24/twilight-americas-financial-empire.
Gultang, J. (1967), ‘On the Effects of International Economic Sanctions: With Examples from the Case of Rhodesia,’
World Politics 19 (3), 378–416.
Halcoussis, D., W. Kaempfer, and A. D. Lowenberg (2021), ‘The public choice approach to economic sanctions:
Hastings, J. (2016), A Most Enterprising Country: North Korea in the Global Economy, Ithaca, NY: Cornell University
Press.
Hufbauer, G.C. and E. Jung, 2021, ‘Economic Sanctions in the 21st Century,’ in: P.A.G. van Bergeijk (ed.), Research
Hufbauer, G., J. Schott, K. Elliot, and B. Oegg (2007), Economic Sanctions Reconsidered, 3rd Edition, Washington,
DC: Peterson Institute for International Economics.
Jadoon, A., D. Peksen, and T. Whang (2020), ‘How Can We Improve Our Understanding of Sanctions Success?’
Forum Contribution in B. Early and M. Cilizoglu’s ‘Economic Sanctions in Flux: Enduring Challenges, New
Policies, and Defining the Future Research Agenda,’ International Studies Perspectives. DOI: https://doi.org
/10.1093/isp/ekaa002.
Jones, L. (2015), Societies Under Siege, Oxford: Oxford University Press.
Kaempfer, W. and A. Lowenberg (1988), ‘The Theory of International Economic Sanctions: A Public Choice
Approach,’ The American Economic Review 78, 786–793.
Kaempfer, W. and A. Lowenberg (1999), ‘Unilateral vs Multilateral Sanctions: A Public Choice Perspective,’
International Studies Quarterly 43: 37–58.
Lektzian, D. and G. Biglaiser (2013), ‘Investment, Opportunity, and Risk: Do U.S. Sanctions Deter or Encourage
Global Investment?’ International Studies Quarterly 57, 65–78.
Lektzian, D. and M. Souva (2007), ‘An Institutional Theory of Sanctions Onset and Success,’ Journal of Conflict
Resolution 51 (6), 848–871.
Lohmann, S. (2019), ‘Extraterritorial U.S. Sanctions: Only Domestic Courts Could Effectively Curb the Enforcement
of U.S. Law Abroad,’ SWP Comment 5 (February), 1–8, accessed June 20 at: https://www.swp-berlin.org/fileadmin/
contents/products/comments/2019C05_lom.pdf.
Lorber, E. (2017), ‘ISSF Roundtable 9–17 on Busted Sanctions: Explaining Why Economic Sanctions Fail,’ H-Diplo,
June 19, accessed 10 February 2020 at: http://issforum.org/roundtables/9-17-busted.
Martin, L. (1992), Coercive Cooperation, Princeton: Princeton University Press.
Morgan, T.C. (2015), ‘Hearing the Noise: Economic Sanctions Theory and Anomalous Evidence,’ International
Interactions 41 (4), 744–754.
Bryan R. Early - 9781839102721

Morgan, T.C. and N. Bapat (2003), ‘Imposing Sanctions: States, Firms, and Economic Coercion,’ International
Studies Review 5 (4), 65–79.
Morgan, T.C., N. Bapat, and Y. Kobayashi (2014) ‘Threat and imposition of economic sanctions 1945–2005: Updating
the TIES dataset,’ Conflict Management and Peace Science 31, 541–558.
Morgan, T.C., N. Bapat and Y. Kobayashi (2021), ‘The Threat and Imposition of Economic Sanctions Data Project:
A Retrospective’ in: P.A.G. van Bergeijk (ed.), Research Handbook on Economic Sanctions, Edward Elgar,
Nephew, R. (2017), The Art of Sanctions: A View from the Field, New York, NY: Columbia University Press.
Noack, R. (2019), ‘U.S. ambassador in Berlin warns Germans about Russian gas pipeline, triggering applause else-
where,’ The Washington Post, Jan. 14, accessed 25 January at: https://www.washingtonpost.com/world/2019/01/14/
us-ambassador-berlin-warns-germans-over-russian-gas-pipeline-triggering-applause-elsewhere/.
OFAC (2019), ‘Enforcement Information for April 9, 2019,’ Washington, DC: U.S. Department of Treasury, accessed
10 February 2020 at: https://www.treasury.gov/resource-center/sanctions/CivPen/Documents/20190408_scb_web-
post.pdf.
OFAC (2020), ‘Office of Foreign Assets Control—Sanctions Programs and Information,’ Washington, DC: U.S.
Department of Treasury, accessed 10 February 2020 at: https://www.treasury.gov/resource-center/sanctions/pages/
default.aspx.
Peksen, D. (2017), ‘How Do Target Leaders Survive Economic Sanctions? The Adverse Effect of Sanctions on Private
Property and Wealth,’ Foreign Policy Analysis 13 (1), 215–232.
Peksen, D. (2019), ‘When Do Imposed Economic Sanctions Work? A Critical Review of the Sanctions Effectiveness
Literature,’ Defence and Peace Economics 30 (6), 365–647.
Peksen, D. and B. Son (2015), ‘Economic Coercion and Currency Crises in Target Countries,’ Journal of Peace
Research 52, 448–462.
Peksen, D. and B. Woo (2018), ‘Economic Sanctions and the Politics of IMF Lending,’ International Interactions
44 (4), 681–708.
Rathbone, M., P. Jeydel, and A. Lentz (2013), ‘Sanctions, Sanctions Everywhere: Forging a Path through Complex
Transnational Sanctions Laws,’ Georgia Journal of International Law 4: 1055–1126.
Rosenberg, E., D. Drezner, J. Solomon-Strauss, and Z. Goldman (2016), The New Tools of Economic Warfare,
Washington, DC: Center for NewAmerican Security, accessed 10 February 2020 at: https://www.cnas.org/publications/
reports/the-new-tools-of-economic-warfare-effects-and-effectiveness-of-contemporary-u-s-financial-sanctions.
Rosenberg, E. and J. Tama (2019), ‘Strengthening the Economic Arsenal,’ Washington, DC: Center for New
American Security, accessed 10 February 2020 at: https://www.cnas.org/publications/reports/strengthening-the
-economic-arsenal.
Sauerbrey, A. (2020), ‘The Failure of Europe’s Feeble Muscle Flexing,’ The New York Times, Feb. 10, accessed 10
February 2020 at: https://www.nytimes.com/2020/02/10/opinion/europe-iran-nuclear-deal.html.
Shambaugh, G. (1999), States, Firms, and Power: Successful Sanctions in United States Foreign Policy, Albany, NY:
SUNY Press.
Spadoni, P. (2010), Failed Sanctions: Why the U.S. Embargo against Cuba Could Never Work, Gainesville, FL:
University Press of Florida.
Stoll, T., S. Blockmans, J. Hagemejer, C. Hartwell, H. Gott, K. Karunska, and A. Maurer (2020), ‘Extraterritorial
Sanctions on Trade and Investments and European Responses,” Policy Department, Directorate-General for
External Policies. Brussels: European Parliament’s Committee on International Trade. Available at: https://www.
europarl.europa.eu/RegData/etudes/STUD/2020/653618/EXPO_STU(2020)653618_EN.pdf.
Timofeev, I. (2019), ‘Rethinking Sanctions Efficiency,’ Russia in Global Affairs, accessed 10 February 2020 at: https://
eng.globalaffairs.ru/number/Rethinking-Sanctions-Efficiency-20213.
United Nations Security Council (2021), ‘United Nations Security Council Consolidated List,’ New York: United
Nations. Available at: https://www.un.org/securitycouncil/content/un-sc-consolidated-list.
U.S. Department of Treasury (2021), ‘The Consolidated Sanctions List,’ Washington, DC. Available at: https://home.
treasury.gov/policy-issues/financial-sanctions/consolidated-sanctions-list-data-files
U.S. Senate (2008), ‘United Arab Emirates: Political Background and Export Control Issues,’ Congressional Record
(May 22). Washington, DC: 10442. Available at: https://www.govinfo.gov/content/pkg/CREC-2008-05-22/html/
CREC-2008-05-22-pt1-PgS4782.htm.
Whang, T. (2011), ‘Playing to the Home Crowd? Symbolic Use of Economic Sanctions in the United States,’
International Studies Quarterly 55, 787–801.
Weber, P. and B. Stępień (2020), ‘Conform or Challenge? Adjustment Strategies of Sanction-Torn Companies,’ The
World Economy 43 (11), 3006–3024.
Zarate, J. (2013), Treasury’s War: The Unleashing of a New Era of Financial Warfare, New York, NY: Public Affairs.
Bryan R. Early - 9781839102721

9. Economic sanctions and political stability and
violence in target countries
Dursun Peksen
9.1 INTRODUCTION
Economic sanctions are frequently used policy instruments in international politics. They
are employed to deal with a wide range of issues. Policymakers levy sanctions to cope with
disputes over, among others, nuclear proliferation, major human rights abuses, trade conflicts,
transnational terrorism, and drug trafficking. Sanctions often take the form of trade restric-
tions, investment bans, asset freezes, military or economic aid cuts, or travel restrictions on
target government officials. Though sanctions are oft-used tools, they are generally deemed
ineffective in achieving their intended policy objectives. As such, according to the two widely
used databases that cover all major sanctions episodes since 1945 (Hufbauer et al. 2007;
Morgan et al. 2014; also see Chapters 2 and 3 of this Handbook), punitive economic measures
attain their primary goals only about one third of the time.
Academic literature on sanctions has offered significant insights into different aspects of
sanctions use and effectiveness. The two dominant questions that have long motivated sanc-
tions research concern: (1) the factors that drive the use of sanctions (e.g., Hoffmann 1967;
Wallensteen 1968; Barber 1979; Lindsay 1986; Doxey 1987; Cox and Drury 2006; Drury
et al. 2014); and (2) whether and under what circumstances sanctions work (e.g., Baldwin
1985; Kaempfer and Lowenberg 1988; Dashti-Gibson et al. 1997; Drury 1998; Drezner 1999;
Hufbauer et al. 2007; Dizaji and van Bergeijk 2013; Bapat et al. 2013; Peksen 2019a). With the
growing public and media attention on the sanctions-induced economic and human suffering
in Iraq in the 1990s, another strand of research has emerged to examine the major economic,
humanitarian, and political consequences of sanctions in target countries.
Studies find evidence that, mostly conditional on the economic severity of the coercion,
sanctions are likely to: trigger economic contraction (Neuenkirch and Neumeier 2016a; Peksen
and Son 2015; Hatipoglu and Peksen 2017); raise income inequality and poverty (Afesorgbor
and Mahadevan 2016; Neuenkirch and Neumeier 2016b); deteriorate public health conditions
(Gibbons 1999; Allen and Lektzian 2013; Peksen 2011; Weiss et al. 1997); and increase
systematic discrimination against marginalized groups such as women and ethnic minorities
(Drury and Peksen 2014; Peksen 2016).
The consensus in this line of scholarship is that average citizens tend to disproportionately
bear the economic and humanitarian hardships caused by sanctions while political elites
mostly remain insulated from these hardships. Political elites tend to evade the costs of
sanctions by rechanneling public resources and wealth toward themselves and their ruling
coalitions, and away from average citizens. Political leaders might also mitigate the intended
damage of sanctions by transacting with third countries or transnational black-market entities
to generate revenue and gain access to the resources made scarce by sanctions (Andreas 2005;
Early 2009, 2015; Early and Peksen 2019).
187
Dursun Peksen - 9781839102721
Table 9.1 Summary of the Key Findings in the Sanctions and Political Instability Literature
Outcome Variable Key Findings and Representative References

Political Repression (1) Imposed sanctions are likely to increase the extent of political
repression in target countries (Wood 2008; Peksen 2009;
Carneiro and Apolinário 2016; Liou et al. 2020).
(2) Threats of sanctions, particularly human rights-based sanctions,
might help reduce the use of political repression (Clay 2018).
(3) Third countries that share similar political and economic
traits with targets of human rights sanctions might improve
their human rights practices to avoid facing similar sanctions
(Peterson 2014; Clay 2018).
Protest Activity (1) Threats and impositions of sanctions are positively associated
with increased anti-government protests in target countries
(Allen 2008; Grauvogel et al. 2017).
(2) Threats and impositions of sanctions are likely to instigate
protests in support of authoritarian target regimes (Hellmeier
2020).
Terrorism (1) Imposed sanctions are likely to lead to more terror attacks on
domestic and foreign entities and individuals (Choi and Luo
2013; Heffington 2017; McLean et al. 2018).
Civil Wars (1) Imposed sanctions are likely to reduce the length of civil wars
(Escribà-Folch 2010; Lektzian and Regan 2016).
(2) Threats and impositions of economic sanctions are likely to
escalate the level of violence during civil wars (Hultman and
Peksen 2015).
(3) Imposed military-specific sanctions are likely to reduce civil
conflict intensity and violence (Brzoska 2008; Strandow 2006;
Hultman and Peksen 2015).
Leadership Stability (1) Imposed sanctions are likely to pose a major threat to the
survival of leaders, especially in democracies and personalist
autocratic regimes (Marinov 2005; Escribà-Folch and Wright
2010).
In addition to possible economic and humanitarian consequences, another strand of the

literature highlights major political effects of sanctions. The purpose of this chapter is to
provide a detailed discussion of whether and how sanctions might destabilize target countries.
I specifically offer an overview of the key findings in the literature on the extent to which
sanctions affect state repression, political violence, and the survival of political leaders in
target countries. By way of introduction and to help orientation, Table 9.1 summarizes the key
findings and lists representative references. Following the discussion of the major findings in
the literature, I point out a few shortcomings of the current literature and highlight possible
research avenues to further advance the cumulative knowledge on the political consequences
of economic sanctions.

Economic sanctions and political stability and violence in target countries 189
9.2 SANCTIONS AND POLITICAL REPRESSION
Existing research finds substantial evidence that conventional trade and financial sanctions
might induce targeted governments to resort to political repression (Wood 2008; Peksen 2009;
Peksen and Drury 2009, 2010; Adam and Tsarsitalidou 2019; Liou et al. 2020). They are more
prone to employ repression against their citizens to avoid the domestic costs of conceding to
the external policy demands and to maintain their rule. Another strand of the literature explores
whether targeted sanctions—such as asset freezes, bans on international banking activity,
denial of luxury goods sales, and travel restrictions—are more effective than conventional
measures in promoting human rights. Targeted sanctions have replaced conventional sanctions
as the most favored punitive measures over the last three decades. The growing use of targeted
sanctions intends to apply more direct pressure on the target elites, thereby increasing the
likelihood of acquiescence to foreign pressure. Targeted sanctions have also become a more
preferred instrument because they are designed to minimize economic costs and other adverse
effects of sanctions on average citizens. Research on targeted sanctions, however, finds
no significant evidence that they are in general more effective than conventional measures
(Biersteker et al. 2016; see also Chapter 5 of this Handbook). They are also positively associ-
ated with political repression (Carneiro and Apolinário 2016; Rosenberg et al. 2016; Biersteker
et al. 2016) and other humanitarian problems (Gordon 2011; Biersteker et al. 2016; Early and
Schulzke 2019) in target countries.
In the remainder of this section, I first present an alternative perspective based on the “naïve
theory of sanctions” to outline why, in principle, imposed sanctions may weaken target regimes
and subsequently result in better human rights conditions. Then, I discuss how sanctions often
actually operate on the ground and might inadvertently spur more human rights abuses. I also
discuss the relative effectiveness of sanctions threats and the possible effects of human rights
sanctions on third countries’ human rights practices.
9.2.1 The Naïve Theory of Sanctions and Human Rights
“The naïve theory of sanctions” is a succinct way of describing the idea of policymakers in
senders (i.e., sanctioning countries) imposing sanctions with the goal of weakening targeted
governments so that they make policy concessions. The intention of the sanctions is to limit
the targeted leaders’ access to the economic, military, and other resources they need (Galtung
1967, 388; Kirshner 1997, 42). The denial of access to key economic and military resources
would potentially harm a regime’s ability to use repressive tools to maintain the status quo. It
would further diminish the regime’s capacity by causing a loss of support among its key civil-
ian and military supporters. Reduced access to positive inducements and incentives because
of sanctions would reduce the allegiance to the leadership among key groups as their loyalty is
often contingent upon receiving selective rewards and incentives from the regime. As a result,
if sanctions succeed in reducing target regimes’ coercive and financial capabilities, they will
be deprived of the capacity to use repressive means to quell the opposition. This diminished
state capacity to repress would also embolden pro-human rights groups and individuals to
mobilize against the government. More mobilization and support for human rights groups
would subsequently give them more leverage to pressure the government into improving
human rights conditions in target countries.

9.2.2 Sanctions, Regime Consolidation, and Growing State Repression
Sanctions, however, rarely operate in the way portrayed by the naïve theory of sanctions.
Contrary to expectations, sanctions might help the target regimes consolidate their ruling
coalition and exploit foreign pressure to justify more human rights abuses against anti-regime
groups (Wood 2008; Peksen 2009; Peksen and Drury 2009, 2010; Adam and Tsarsitalidou
2019). First, it is unlikely that sanctions would considerably reduce the coercive capacity
of most target governments. Leaders under sanctions might retain access to the military
and financial resources made scarce by sanctions through smuggling and other clandestine
mechanisms (Andreas 2005). They might also seek new third-party trade partners to make
up the economic loss caused by sanctions (Early 2009, 2015). Further, their control over the
redistribution of public funds and resources would help the political elites mitigate the costs
of sanctions on themselves and their supporters. They would do so by disproportionately using
the resources in their favor at the expense of average citizens. The ability of targeted political
leaders to supply economic rents and other privileges would not only maintain the loyalty of
key groups but also enhance the ties between leaders and those groups. It would consequently
reinforce the repressive capacity of target regimes (Wood 2008; Peksen and Drury 2010).
Moreover, sanctions-induced grievances and dissent among the anti-government groups
might spur more repressive behavior by target governments. As discussed in detail below,
studies find evidence that sanctions are likely to prompt citizens who suffer from the economic
burden of sanctions to take to the streets to express their dissatisfaction and discontent (Allen
2008; Grauvogel et al. 2017; Liou et al. 2020). Target governments, especially non-democratic
ones, are likely to respond to growing dissent and violence by using such repressive tactics
as political arrests, torture, and extra-judicial killings. They would be more inclined to use
repressive means under the pressure of sanctions in order to signal their resolve to the domestic
audience that they will not tolerate any potential domestic or international challenges to their
authority (Peksen and Drury 2010). Repression might not be considered a viable option by some
governments to quell dissent, especially in less authoritarian target regimes. However, we might
still observe a rise in repression incidents due to the reduced government capacity and changes
in public spending priorities under sanctions. Specifically, because the target government has
less fiscal capacity and different spending priorities, in seeking to survive the sanctions, it
would be less able to devote the resources necessary to oversee and screen its security agents.
This would ultimately lead to an increase in the use of repression (Liou et al. 2020).
Even in the absence of large-scale protests and other forms of dissent, some target
governments might exploit sanctions as a foreign threat to their sovereignty and integrity to
eliminate anti-regime groups. Sanctions create an opportunity for leaders to lay the blame for
all the internal economic and political instabilities in their countries entirely on the sanctions
themselves. The portrayal of sanctions as a challenge to national unity and the root cause of
internal problems would broaden the target government’s legitimacy (Peksen 2009; Hellmeier
2020). It would thus help them better justify repression and other policies in response to the
external coercion. More specifically, target governments would find it easier to justify the
suppression of opposition while the sanctions are in force in order to maintain stability and
domestic cohesion.
Based on the above scenario, economic sanctions could worsen human rights conditions in
target countries by: (1) enhancing the ruling capacity of target regimes; (2) triggering more
protests and violence against the government; and (3) allowing the exploitation of sanctions as

a threat to national integrity and independence to justify the increased use of repressive means
to maintain stability and order.
9.2.3 Sanctions Threats, Symbolic Value of Sanctions, and Human Rights
The literature covered above on the relationship between sanctions and repression only focuses
on imposed economic sanctions. Clay (2018) also analyzes whether threats of human rights
sanctions have similar effects on the human rights situation in target countries. The author
argues that a threat of sanctions over human rights might be more effective in reducing state
repression than an actual imposition of sanctions. If the targeted leaders intend to respond
positively to the external demands for political reform, they might do so in the threat stage.
Changing their policies in line with the external demands while under threat of sanctions would
help them avoid incurring the economic and other costs of imposed sanctions. Thus, to the
extent that targets perceive a threat of sanctions over human rights to be credible, they might
be inclined to change their repressive policies to avoid any costs associated with the imposition
of sanctions. This finding has significant implications for the use of sanctions as it appears
that sanctions, particularly human rights sanctions, could still help improve human rights if
they occur in the form of threats. Once the threat of human rights sanctions fails, however, the
actual imposition of sanctions might do more harm than good to the human rights situation in
target countries.
Peterson (2014) and Clay (2018) also explore how third countries respond to human rights
sanctions directed at repressive regimes. These studies specifically question whether human
rights sanctions have any symbolic effects on non-sanctioned countries. Both studies suggest
that third countries who share similar political and economic traits with targets of human rights
sanctions might be more inclined to proactively improve their own human rights practices.
The sanctions imposed on countries with similar conditions would convince leaders in third
countries that they were likely to be subject to similar sanctions over their poor human rights
record. They would therefore seek to alter their repressive policies to preempt any external
pressure. This finding on the symbolic effect of human rights sanctions shows that the impact
of human rights sanctions might go beyond target countries by incentivizing better human
rights practices by governments in third countries.
9.3 SANCTIONS AND INTERNAL CONFLICTS
In this section, I refer to the literature on sanctions and internal conflicts. I first cover how
sanctions might affect political protest and anti-government demonstrations. I then discuss
whether sanctions might increase or decrease more violent forms of internal conflicts, includ-
ing terrorism, civil wars, and genocides.
9.3.1 Sanctions and Protest Activity
Studies note that both the threat and imposition of economic sanctions might incite anti-
government demonstrations and violence in target countries (Allen 2008; Grauvogel et al.
2017; Liou et al. 2020). Economic sanctions might prompt the opposition and the population
more broadly to mobilize against the government through two causal mechanisms. The first

mechanism concerns the sanctions-induced economic grievances in the target society, while
the second mechanism mostly concerns how anti-government groups in target societies
perceive sanctions as a signal of international disapproval of the target government.
Economic sanctions, particularly comprehensive sanctions, could lead to substantial
economic downturns and financial crises (Neuenkirch and Neumeier 2016a; Peksen and Son
2015; Hatipoglu and Peksen 2008). The adverse economic effects on the economy could
increase unemployment, poverty, and the greater income gap between the rich and the poor
(Neuenkirch and Neumeier 2016b; Afesorgbor and Mahadevan 2016). The grievance theory
suggests that economic grievances and feelings of inequality are likely to increase political
violence (Gurr 1968, 1970; Muller 1985; Muller and Seligson 1987). Individuals who suffer
significantly from economic hardship and injustice tend to experience more dissatisfaction,
anger, and psychological strain. They would thus be more inclined to express their frustration
and anger in violent ways.
Drawing insight from the grievance theory, Allen (2008) shows that economic hardships
caused by imposed sanctions might trigger anti-government protests and violence in target
countries. The same study, however, finds that the hypothesized effects of sanctions on violence
is conditioned by the institutional make-up of target governments. Specifically, sanctions are
more likely to create violence and instability in mixed political regimes than fully authoritarian
or democratic regimes. Among different political regime types, authoritarian regimes are the
least likely to experience violence following sanctions. The frequent use of repressive means
by autocracies would create less incentive for citizens to protest as it would be perceived as a
highly risky move. Further, because of autocratic regimes’ strict control over the military and
other parts of the coercive state apparatus, citizens would be less able to mobilize against the
government as any overt dissent or protest activity would be suppressed by the government
using the military or other coercive means.
Protest activities might also be less common in target countries under democratic govern-
ments relative to mixed regimes. Political violence and protest are costly and irregular activi-
ties. Citizens in democratic targets would thus be more inclined to use less costly, traditional
mechanisms such as direct contacts with representatives or joining a letter writing campaign to
express their frustration and anger. They would be inclined to use peaceful, traditional channels
to convey their messages as those channels are highly effective in democracies.
Mixed target regimes, on the other hand, are more susceptible to violence and instability
(Allen 2008). People in mixed regimes are more inclined to take to the streets to protest than
those living in autocratic regimes. This is because the extent of state repression that citizens
face in such regimes tends to be considerably lower than under dictatorial rule. Compared
to democracies, traditional political channels in mixed regimes are considered ineffective
and less legitimate for citizens to express their grievances and gain some policy concessions
from the government. They might therefore choose anti-government protest activities over
other political means. Overall, the lack of trust in traditional political mechanisms as well
as relatively low risk of protest activity in mixed regimes would create more incentives for
individuals suffering from the sanctions to mobilize against the government.
Sanctions threats could also be a significant trigger for collective mobilization against
the government (Grauvogel et al. 2017). The grievance-based approach outlined above for
imposed sanctions does not apply to sanctions threats as they are less likely to inflict immedi-
ate economic hardships on the target citizenry. However, both the threat and imposition of
sanctions can be perceived by anti-government groups as a sign of international disapproval

of the regime. The same groups might also interpret the sanctions as a signal that another state
(or states) seek political reforms and thus would support an active opposition movement. This
signaling aspect of threatened sanctions would subsequently encourage opposition groups
to protest. They would thus attempt to take advantage of foreign economic pressure and the
perceived support for themselves in the international community.
The signaling mechanism appears to be conditioned by the issue under dispute and the type
of actors involved in sanctions threats (Grauvogel et al. 2017). Sanctions that aim to advance
more political reforms and human rights could be particularly strong signals of support for
the opposition groups. This is because human rights sanctions would more directly converge
with the opposition’s agenda on seeking more political openness and human rights in target
countries. Further, multilateral sanctions could disseminate a more credible and stronger
message than unilateral sanctions. The involvement of multilateral actors in sanctions threats
is more likely to convince the opposition of the growing disapproval of the sanctioned govern-
ment among the international community. In addition, sanctions threats issued by multiple
foreign actors could be perceived as more legitimate and thus easier to use by the opposition
to mobilize citizens against the government.
Another study shows that economic sanctions might also instigate pro-government protests
in authoritarian regimes (Hellmeier 2020). Foreign economic pressure is likely to create more
incentives for pro-regime groups to display their support for the government through protests
and demonstrations. More willingness to show support by the regime’s supporters coupled
with the regime’s portrayal of sanctions as a foreign attack on the country’s sovereignty will
result in more mobilization on behalf of targeted regimes. Hellmeier (2020), however, further
notes that sanctions are more likely to prompt pro-government mobilization in authoritarian
regimes where the public has very limited access to diverse news and information. The
lack of media freedom enables the regime to better disseminate biased information and use
propaganda to fuel more animosity against sanctioning countries.
9.3.2 Sanctions and the Dynamics of Terrorism
Other research analyzes whether economic sanctions have any significant effect on terror
events in target countries (Choi and Luo 2013; Heffington 2017; McLean et al. 2018). Studies
theorize that the sanctions-induced economic grievances would help with the recruitment of
individuals by terrorist organizations and thus increase the size and strength of such organiza-
tions. Similar to the argument developed in Allen’s (2008) work on sanctions and protest,
Heffington (2017) finds that sanctions are likely to incite domestic terrorism because the public
would blame the government for the economic contraction associated with sanctions and thus
be more inclined to support terror groups that carry out attacks against domestic targets. Choi
and Luo (2013), on the other hand, suggest that some individuals who suffer from the sanctions
might also place the blame on foreign states and their citizens for their economic sufferings.
They would thus be inclined to use terror tactics against foreign entities and individuals active
in their countries. Overall, it appears that economic sanctions could be associated with higher
levels of terror activities directed at both domestic and foreign actors in target countries.
McLean et al. (2018) show that costly sanctions might also disrupt target governments’
ability to combat domestic and transnational terror campaigns. They note that sanctions that
inflict major economic damage on target governments’ financial capacity might diminish
the necessary public resources for counterterrorism activities. Reduced government revenue

following the sanctions might force governments to reconsider their spending priorities. They
might prioritize the immediate needs of the citizenry such as public health and education or
rewards for their key supporters. The allocation of more resources to address more immediate
needs of the public or political elites would result in budget cuts for counterterrorism activities.
The government’s weakened fiscal capacity and the decline in public resources channeled to
counterterrorism would consequently undermine the government’s ability to suppress terror
campaigns.
McLean et al. (2018), however, posit that the possible adverse effects of sanctions on gov-
ernments’ counterterrorism capabilities have different implications for the survival of domestic
and transnational terror organizations. They argue that the hypothesized impact of sanctions
should be minimal for states fighting domestic terrorist organizations. Because domestic
terror groups mainly generate their revenue and resources from the domestic economy, the
contraction of the economy following the sanctions would hurt domestic terrorists’ ability to
raise funds as much as the state’s fiscal capacity. The damage incurred by both actors would
thereby render no major change in the longevity of domestic terror campaigns.
For target governments fighting transnational terror organizations, on the other hand,
the diminished resources for counterterrorism might tilt the balance of power in favor of
transnational terrorists, allowing them to maintain and even expand their terror activities
in target countries. Transnational terror groups are unlikely to be heavily dependent on
the target economy to survive as they often rely on support from foreign governments and
individuals. Since foreign governments and individuals do not directly suffer from the
sanctions directed at the country in which they operate, they are likely to have access to
their funding sources even during the period under sanctions. Consequently, whereas target
governments might experience a decline in their counterterrorism capabilities, transnational
terrorists would be mostly insulated from the economic costs of sanctions. It is therefore
likely that sanctioned governments fighting transnational terrorist groups would be less able
to prevent terror campaigns staged by such groups, and these groups are likely to last longer
in target countries.
9.3.3 Sanctions, Civil Wars, and Genocides
Other studies also analyze how economic sanctions might influence the duration, severity, and
outcome of civil wars. Gershenson (2002) notes that sanctions that inflict significant damage
on the incumbent (targeted) group’s capabilities are likely to result in the surrender of that
group. This suggests that rival groups would benefit from the costly sanctions that are directed
at the incumbent group during a civil war. The study further shows that sanctions with limited
economic costs on the incumbent could instead incite more violent behavior by the incumbent,
thereby escalating the level of violence between the incumbent and challengers.
Escribà-Folch (2010) shows that sanctions are negatively associated with the length of
civil wars. The author argues that sanctions might reduce conflict duration by: (1) changing
the conflict groups’ beliefs about the relative distribution of power; (2) reducing the expected
utility from a military victory and the benefits of continued fighting; and (3) upping the costs
of war due to reduced access to financial and other resources to keep fighting. According to the
same study, while multilateral sanctions under the auspices of international institutions raise
the possibility of conflict resolution, sanctions not involving international institutions increase
the probability of a military victory. Building on Escribà-Folch’s analysis, Lektzian and Regan

(2016) note that sanctions are more likely to shorten the length of civil wars if they are coupled
with other types of intervention, particularly military, in the same conflict. The authors point
out that most sanctions fail to inflict sufficient cost on the warring groups to persuade them
that ceasing a conflict has more benefit than continuing to fight. Thus, sanctions that are used
along with other forms of external pressure are more likely to contribute to increasing the costs
of fighting and thus convincing warring factions to seek negotiation and settlement.
Hultman and Peksen (2015) offer a detailed analysis of how sanctions might affect the
battlefield dynamics of civil wars. The authors posit that threats of economic sanctions might
induce the target government to escalate violence to weaken its rivals and strengthen its rela-
tive power before the imposed sanctions take effect. Similarly, imposed economic sanctions
might fall short of limiting the coercive capacity of warring factions and thereby contribute
to the escalation of violence and battlefield-related deaths. Using the UN sanctions imposed
on two rebel groups, UNITA in Angola and al-Shabaab in Somalia, Radtke and Jo (2018) also
provide evidence that rebel groups would be more willing to cease fighting if sanctions are
designed to disrupt their territory-based and other revenue sources, which would eventually
weaken their ability to fight. Overall, this body of literature suggests that sanctions could
potentially change the severity and length of violent conflicts to the extent that they succeed
in weakening the fighting capabilities of the warring factions.
Scholars also note that sanctions in the form of arms embargoes and other military restric-
tions are considerably more effective in de-escalating intrastate conflicts than economic
measures (Brzoska 2008; Strandow 2006; Hultman and Peksen 2015). Hultman and Peksen
(2015), for instance, find that military-specific sanctions significantly reduce civil conflict
intensity and battlefield-related fatalities. Arms embargoes might work better in conflict
zones since military-related punitive measures would directly curb the fighting capabilities of
the government and could thus alter the local power dynamics. Focusing on the UN targeted
sanctions on civil wars in Liberia and the Ivory Coast, Strandow (2006) finds that most non-
military sanctions are unlikely to have any discernable change on the probability of conflict
resolution. The author notes that military sanctions (i.e., arm embargoes), on the contrary,
tend to have a strong positive influence on convincing the warring factions to move toward
negotiations and conflict resolution.
Finally, Krain (2017) examines whether sanctions have any significant impact on the
severity of genocides and politicides. The author shows that both the threat and the imposition
of economic sanctions are unlikely to change the severity of atrocities. The author also notes
that the extensiveness and costs of sanctions as well as the number of actors involved in the
implementation of sanctions are unlikely to alter the severity of atrocities. According to the
same study, sanctions remain an ineffective tool in stopping mass killings even when they are
used along with foreign armed interventions, economic assistance, or naming and shaming
strategies by international human rights organizations.
In another study, Krain (2014) shows that diplomatic disengagement with target govern-
ments as a form of sanctions also falls short of pressuring repressive regimes into ceasing mass
killings. Krain argues that most diplomatic sanctions are unlikely to slow or stop the killing
as perpetrators often interpret them as a weak commitment of major international actors to the
victims and do not feel challenged by them. Diplomatic sanctions are also unlikely to increase
the costs of committing mass atrocities in comparison to military and economic sanctions.
Overall, Krain’s work denotes that both economic and diplomatic sanctions might fail to serve
as a strong deterrent to the perpetrators of genocides.

9.4 SANCTIONS AND LEADERSHIP STABILITY
Existing research also assesses the degree to which foreign economic pressure affects the
tenure of political leaders in target countries. This body of literature notes that sanctions are
likely to pose a major threat to the survival of leaders when they undermine their coercive
capacity to rule and bolster groups outside the ruling coalition of the regime. Thus, leaders are
more likely to survive in sanctioned countries to the extent that they are able to: (1) avoid the
intended economic and political costs of the coercion on themselves and their ruling base; and
(2) quell the sanctions-induced dissent and opposition using repressive means (Marinov 2005;
Escribà-Folch and Wright 2010; Peksen 2019b).
Studies find considerable difference in the effects of sanctions on the stability of political
leadership across different political regime types (Allen 2005; Marinov 2005; Escribà-Folch
and Wright 2010; 2015; Escribà-Folch 2012; Peksen 2019b). Other factors such as the eco-
nomic severity of sanctions and the number of actors involved in the imposition of the punitive
economic measures (i.e., unilateral vs. multilateral sanctions) appear to have no discernable
effect on the stability of the targeted leadership. Sanctions are more likely to shorten the tenure
of democratically elected leaders than autocrats (Brooks 2002; Allen 2005). Others, however,
point out that not all autocrats are immune to the external threat of sanctions (Escribà-Folch
and Wright 2010; 2015; Escribà-Folch 2012; Peksen 2019b). Specifically, whereas leaders
in single-party and military regimes are unlikely to lose power due to sanctions, personalist
regimes are highly susceptible to them.
Why do democratically elected leaders tend to be more vulnerable to economic sanc-
tions? Leaders in democracies come to power through free, fair, and periodic elections.
Thus, their ability to retain power is contingent upon developing policies that satisfy the
populace. As sanctions inflict major economic damage on the economy, democratic leaders
would seek policies that minimize the adverse effects of sanctions on the electorate. They
might raise public expenditure to provide public goods and services to lessen the costs of
sanctions on their supporters, who are usually broadly spread across the population (Allen
2005). Yet, because of the large size of their support base, democratic leaders would be
unable to mitigate the economic burden of sanctions on their citizens through increased
public spending. This would, in turn, create more frustration and dissatisfaction with the
government among the population. As democratic leaders face increased public criticism
and disapproval of their performance, opposition parties and leaders are likely to gain more
popular support and votes (Brooks 2002; Allen 2005; Marinov 2005; Park 2019; Peksen
2019b). Park (2019), for instance, finds that sanctions reduce incumbent parties’ vote
shares in both democratic and non-democratic countries where competitive elections are
held. The author suggests that incumbents face a decline in their popular support because
the public hold their elected leaders accountable for growing economic hardship under
sanctions.
Further, as opposed to dictatorships, democratic leaders would not be able to avert the
erosion of their popular support through repression and other coercive means against the
opposition (Allen 2005; Peksen 2019b). Because of powerful institutional constraints—such
as strong rule-of-law traditions and systems of checks and balances—democratic leaders tend
to be less able to eliminate the opposition through non-democratic means. Hence, unless they
acquiesce to the sanctions, especially in the early years of the coercion, democratic leaders
would experience a considerable decline in popular support and would be less likely to retain
political office in the long term.

Escribà-Folch and Wright (2010), on the other hand, show that authoritarian leaders tend
be less susceptible to economic sanctions, with the exception of those in personalist regimes.
Political regimes under the control of one dominant political party—as in China, Cuba, and North
Korea—are unlikely to be destabilized by foreign pressure because of the party’s full command
over state institutions. Shared political orientation and ideology among ruling party loyalists
increase cohesion within the party. When they are subject to external coercion, the solidarity
among party members and a well-established party network enable party leaders to provide vari-
ous economic incentives to the loyalists to lessen the intended economic effects of sanctions. The
disproportionate use of public resources and revenue in favor of party members, in turn, prevent
major defections from the party’s ranks. Single-party regimes are also able to make effective
use of repressive tools such as torture and political imprisonment of anti-regime figures thanks
to their tight control over the military and police. Hence, sanctions are less likely to result in the
failure of one-party regimes as the party leadership would be able to supply various inducements
to their ruling coalition and suppress any viable opposition prompted by the sanctions.
Similar to single-party regimes, the leadership in military regimes is likely to remain stable
during the period under sanctions (Escribà-Folch and Wright 2010; Peksen 2019b). The
coherent and hierarchical structure of military rule helps the leadership avoid major defections
from the regime. Leaders would be able to maintain the loyalty of their ruling base through
selective supply of economic inducements and rewards. The full control over the military and
state security apparatus would also aid leaders to heighten the level of repression to eliminate
growing dissent and opposition spurred by sanctions. Thus, the ability of military regimes to
use repressive means and selective inducements will enable them to survive foreign pressure.
Compared to one-party and military regimes, personalist regimes are significantly more
vulnerable to economic coercion (Escribà-Folch and Wright 2010; Peksen 2019b). Personalist
regimes tend to lack strong state institutions and bureaucratic networks that typically exist in
single-party and military regimes. The lack of a strong institutional structure is in part because
personalist regimes are controlled by a small circle of elites gathered around the leader. Thus,
all key decisions and policies are made by leaders and their small ruling coalitions, and most
state institutions exist in name only. Autocratic leaders in personalist regimes also frequently
rotate top civilian and military bureaucrats. They do so to make sure that the same officers
do not hold critical state positions too long, thus avoiding their becoming a threat to their
own political survival. The frequent replacement of top civilian and military officers further
undermines the strength and efficiency of the state bureaucracy. The weak state capacity
and institutions would reduce personalist regimes’ ability to contain the growing opposition
through repressive means. The ineffective bureaucratic structure also weakens the state’s
ability to collect taxes and generate other revenues, making them more dependent on foreign
aid and economic rents relative to other authoritarian regimes. Hence, when aid sanctions and
other economic restrictions disrupt their revenue stream, they lack sufficient funds to provide
incentives to the elites within their ruling coalition. This would, in turn, increase the possibility
of defections from their support base and an eventual leadership change.
9.5 MAJOR SHORTCOMINGS AND FUTURE RESEARCH AVENUES
This chapter provides a thorough analysis of possible effects that sanctions might have on
political stability in target countries. The literature discussed above finds evidence that eco-
nomic sanctions are likely to incentivize target regimes to employ more repression to maintain

order and prolong their rule. Economic sanctions might also incite more anti-government
protest activity and terrorism. Yet they could still be helpful in ceasing ongoing civil wars,
especially when they are initiated along with foreign military interventions. Sanctions might
also have some destabilizing effects on the political survival of leaders, particularly in
democratic regimes and personalist autocracies. Despite considerable progress in the current
understanding of the sanctions and political stability relationship, a few key theoretical and
empirical issues remain mostly overlooked or unanswered in the literature.
Existing research finds that sanctions might ignite more political protest and violence in
target countries. One of the theoretical assumptions is that the sanctions-induced economic
hardships would mobilize people against their governments in target countries. Another
causal link concerns the signaling effect of sanctions. That is, sanctions as an omen of the
international disapproval of the target government would encourage opposition groups and
citizens to participate in anti-government demonstrations and protest. It is thus assumed that
citizens, especially those who disproportionately incur the costs of the sanctions, might blame
the government for their dire living conditions. This causal mechanism, however, received
little support in the literature on sanctions and public opinion. There are studies showing
that sanctions might generate more rather than less popular support for targeted governments
(Grossman et al. 2018; Seitz and Zazzaro 2019). It appears that regime loyalists are the group
least likely to turn against the government in target countries (Frye 2019). It is therefore likely
that target regimes’ blame-shifting strategies might still work, helping them maintain enough
public support to retain power.
Hence, sanctions under some circumstances might backfire politically for sanctioning
countries, rallying citizens in the target country behind the government rather than alienating
them. In such cases, it is unlikely that we would see a rise in protest activity in target countries.
Future research on sanctions and violence could look further into the conditions under which
target elites have been able to shift the blame onto sanctioning countries for all the economic
and other problems in their countries. Additional research could also explore whether the
signaling aspect of sanctions is a stronger predictor of growing political instability than the
grievance-based argument.
Current research on sanctions and internal conflicts examines different types of internal
conflicts in isolation from one another. It is possible that protest and other forms of less violent
anti-government activity associated with sanctions might subsequently be positively associ-
ated with the onset and duration of civil wars and domestic terrorism. In particular, in cases
where target governments respond to protests with military means, protestors might choose to
form or join rebel groups or terrorist organizations, and thus stage more deadly attacks against
government forces. It is therefore necessary to adopt a more wholistic approach to study
how threats and impositions of sanctions might trigger initially non-violent and then violent
mobilization against the government.
Another possible research avenue would be on the micro-dynamics of sanctions in target
countries to further decipher how target leaders and their close associates respond to sanctions
in the hope of surviving them. It is still little understood what types of sanctions would increase
the likelihood of the key social groups deciding to withdraw their support from the political
leadership or to remain loyal. It is possible that more targeted sanctions that directly hurt the
economic and other interests of the elites might induce defections from ruling coalitions. More
targeted sanctions, such as aid cuts, asset freezes, and denial of access to luxury goods, might
also be more effective in curbing the leadership’s ability to offer positive inducements to

maintain the loyalty of their constituencies. Further research on the formation and persistence
of ruling coalitions in target countries would be crucial to offer insight into what types of
punitive measures would disrupt the close ties between the leadership and its support base,
and expedite the failure of autocratic regimes.
Finally, scholars could devote more attention to the possible ethical implications of their
key findings on sanctions-induced repression and violence (Gordon 2011; Early and Schulzke
2019; Peksen 2019c). Studies suggest that sanctions might cause political repression and
violence, even when they are specifically imposed to advance human rights or designed in
a way to minimize major economic and other humanitarian damage on the general public
(Carneiro and Apolinário 2016; Rosenberg et al. 2016; Biersteker et al. 2016). Researchers
could investigate why even targeted sanctions with humanitarian exemptions continue to exact
significant civilian suffering. Considering the ethics of the consequences of sanctions, they
could assess what the poor record of both targeted and conventional sanctions tells us about the
utility and effectiveness of sanctions in foreign policy. More attention to the ethics of sanctions
could also help better guide future policy decisions on whether and when to use sanctions.
REFERENCES
Adam, Antonis and Sofia Tsarsitalidou (2019), ‘Do Sanctions Lead to a Decline in Civil Liberties?’, Public Choice,
180 (3–4), 191–215.
Afesorgbor, Sylvanus Kwaku, and Renuka Mahadevan (2016), ‘The Impact of Economic Sanctions on Income
Inequality of Target States’, World Development, 83 (July), 1–11.
Allen, Susan H. (2005), ‘The Determinants of Economic Sanctions Success and Failure’, International Interactions,
31 (2), 117–38.
Allen, Susan H. (2008), ‘Political Institutions and Constrained Response to Economic Sanctions’, Foreign Policy
Analysis, 4 (3), 255–74.
Allen, Susan H. and David J. Lektzian (2013), ‘Economic Sanctions: A blunt Instrument?’ Journal of Peace Research,
50 (1), 121–35.
Andreas, Peter (2005), ‘Criminalizing Consequences of Sanctions: Embargo Busting and Its Legacy’, International
Baldwin, David A. (1985), Economic Statecraft, Princeton, NJ: Princeton University Press.
Bapat, Navin A., Tobias Heinrich, Yoshiharu Kobayashi, and T. Clifton Morgan (2013), ‘Determinants of Sanctions
Effectiveness: Sensitivity Analysis Using New Data’, International Interactions, 39 (1), 79–98.
Barber, James (1979), ‘Economic Sanctions as a Policy Instrument’, International Affairs, 5 (3), 367–84.
Biersteker, T. and Z. Hudáková (2021), ‘UN targeted sanctions: Historical development and current challenges’, in:
P.A.G. van Bergeijk (ed.), Research Handbook on Economic Sanctions, Edward Elgar, Cheltenham, Chapter 5.
Biersteker, Thomas J., Sue E. Eckert, and Marcos Tourinho (eds.) (2016), Targeted Sanctions, Cambridge, UK:
Cambridge University Press.
Brooks, Risa A. (2002), ‘Sanctions and Regime Type: What Works, and When?’, Security Studies, 11 (4), 1–50.
Brzoska, Michael (2008), ‘Measuring the effectiveness of arms embargoes’, Peace Economics, Peace Science and
Public Policy, 14 (2), article 2.
Carneiro, Cristiane Lucena and Laerte Apolinário Jr. (2016), ‘Targeted versus Conventional Economic Sanctions:
What Is at Stake for Human Rights?’ International Interactions, 42 (4), 565–89.
Choi, Seung-Whan and Shali Luo (2013), ‘Economic Sanctions, Poverty, and International Terrorism: An empirical
analysis’, International Interactions, 39 (2), 217–45.
Clay, K. Chad (2018), ‘Threat by Example: Economic Sanctions and Global Respect for Human Rights’, Journal of
Global Security Studies, 3 (2), 133–49.
Cox, Daniel and A. Cooper Drury (2006), ‘Democratic Sanctions: The Connection Between the Democratic Peace
and Economic Sanctions’, Journal of Peace Research, 43 (6), 709–22.
Dashti-Gibson, Jaleh, Patricia Davis, and Benjamin Radcliff (1997), ‘On the Determinants of the Success of Economic
Sanctions: An Empirical Analysis’, American Journal of Political Science, 41 (2), 608–18.
Dizaji, Sajjad Faraji and Peter AG van Bergeijk (2013), ‘Potential Early Phase Success and Ultimate Failure of
Economic Sanctions: A VAR Approach with an Application to Iran’, Journal of Peace Research, 50 (6), 721–36.
Doxey, Margaret P. (1987), International Sanctions in Contemporary Perspectives, New York, NY: St. Martin’s Press.

Drezner, Daniel W. (1999), The Sanctions Paradox: Economic Statecraft and International Relations, Cambridge,
UK: Cambridge University Press.
Drury, Cooper A. (1998), ‘Revisiting Economic Sanctions Reconsidered’, Journal of Peace Research, 35 (4),
497–509.
Drury, Cooper A. and Dursun Peksen (2014), ‘Women and Economic Statecraft: The Negative Impact International
Economic Sanctions Visit on Women’, European Journal of International Relations, 20 (2), 463–90.
Drury, Cooper A., Patrick James, and Dursun Peksen (2014), ‘Neo-Kantianism and Coercive Diplomacy: The
Complex Case of Economic Sanctions’, International Interactions, 40 (1), 25–51.
Early, Bryan R. (2009), ‘Sleeping with Your Friends’ Enemies: An Explanation of Sanctions-Busting Trade’,
International Studies Quarterly, 53 (1), 49–71.
Early, Bryan R. (2015), Busted Sanctions: Explaining why Economic Sanctions Fail, Redwood, CA: Stanford
University Press.
Early, Bryan R. and Dursun Peksen (2019), ‘Searching in the Shadows: The Impact of Economic Sanctions on
Informal Economies’, Political Research Quarterly, 72 (4), 821–34.
Early, Bryan R. and Marcus Schulzke (2019), ‘Still Unjust, Just in Different Ways: How Targeted Sanctions Fall Short
of Just War Theory’s Principles’, International Studies Review, 21 (1), 57–80.
Escribà-Folch, Abel (2010), ‘Economic Sanctions and The Duration of Civil Conflicts’, Journal of Peace Research,
47 (2), 129–41.
Escribà-Folch, Abel (2012), ‘Authoritarian Responses to Foreign Pressure: Spending, Repression, and Sanctions’,
Comparative Political Studies, 45 (6), 683–713.
Escribà-Folch, Abel and Joseph Wright (2010), ‘Dealing with Tyranny: International Sanctions and the Survival of
Authoritarian Rulers’, International Studies Quarterly, 54 (2), 335–59.
Escribà-Folch, Abel and Joseph Wright (2015), Foreign Pressure and the Politics of Autocratic Survival, Oxford,
UK: Oxford University Press.
Frye, Timothy (2019), ‘Economic Sanctions and Public Opinion: Survey Experiments from Russia’, Comparative
Political Studies, 52 (7), 967–94.
Galtung, Johan (1967), ‘On the Effects of International Economic Sanctions: With Examples from the Case of
Rhodesia’, World Politics, 19 (3), 378–416.
Gershenson, Dmitriy (2002), ‘Sanctions and Civil Conflict’, Economica, 69 (274), 185–206.
Gibbons, Elizabeth D. (1999), Sanctions in Haiti: Human Rights and Democracy under Assault, Westport, CT:
Praeger.
Gordon, Joy (2011), ‘Smart Sanctions Revisited’, Ethics & International Affairs, 25 (3), 315–35.
Grauvogel, Julia, Amanda A. Licht, and Christian von Soest (2017), ‘Sanctions and Signals: How International
Sanction Threats Trigger Domestic Protest in Targeted Regimes’, International Studies Quarterly, 61 (1), 86–97.
Grossman, Guy, Devorah Manekin, and Yotam Margalit (2018), ‘How Sanctions Affect Public Opinion in Target
Countries: Experimental Evidence from Israel’, Comparative Political Studies, 51 (14), 1823–57.
Gurr, Ted R. (1968), ‘A Causal model of civil Strife: A comparative analysis using new indices’, American Political
Science Review, 62 (4), 1104–24.
Gurr, Ted R. (1970), Why Men Rebel, Princeton, NJ: Princeton University Press.
Halcoussis, D., W. Kaempfer, and A. D. Lowenberg (2021), ‘The public choice approach to economic sanctions:
Heffington, Colton (2017), ‘Marked Targets: Coercive Diplomacy and Domestic Terrorism’, Journal of Global
Security Studies, 2 (2), 123–36.
Hellmeier, Sebastian (2020), ‘How Foreign Pressure Affects Mass Mobilization in Favor of Authoritarian Regimes’.
European Journal of International Relations, 1354066120934527.
Hoffmann, Fredrik (1967), ‘The Functions of Economic Sanctions: A Comparative Analysis’, Journal of Peace
Research, 4 (2), 140–60.
Hufbauer, G.C. and E. Jung (2021), ‘Economic Sanctions in the 21st Century’, in: P.A.G. van Bergeijk (ed.), Research
Hufbauer, Gary, Jeffrey Schott, Kimberly A. Elliott, and Barbara Oegg (2007), Economic Sanctions Reconsidered:
History and Current Policy, 3rd ed, Washington, D.C.: Patterson Institute for International Economics.
Hultman, Lisa and Dursun Peksen (2017), ‘Successful or Counterproductive Coercion? The Effect of International
Sanctions on Conflict Intensity’, Journal of Conflict Resolution, 61 (6), 1315–39.
Kaempfer, William H. and Anton D. Lowenberg (1988), ‘The Theory of International Economic Sanctions: A Public
Choice Approach’, The American Economic Review, 78 (4), 786–93.
Kirshner, Jonathan (1997), ‘The Microfoundations of Economic Sanctions’, Security Studies, 6 (3), 32–64.
Krain, Matthew (2014), ‘The Effects of Diplomatic Sanctions and Engagement on the Severity of Ongoing Genocides
or Politicides’, Journal of Genocide Research, 16 (1), 25–53.
Krain, Matthew (2017), ‘The Effect of Economic Sanctions on the Severity of Genocides or Politicides’, Journal of
Genocide Research, 19 (1), 88–111.

Lindsay, James M. (1986), ‘Trade Sanctions as Policy Instruments: A Re-Examination’, International Studies
Quarterly, 30 (2), 153–73.
Liou, Ryan Yu-Lin, Amanda Murdie, and Dursun Peksen (2020), ‘Revisiting the Causal Links between Economic
Sanctions and Human Rights Violations’, Political Research Quarterly, 1065912920941596.
Marinov, Nikolay (2005), ‘Does Pressure from the Outside Destabilize Leaders on the Inside?’ American Journal of
Political Science, 49 (3), 564–76.
McLean, Elena V., Kaisa H. Hinkkainen, Luis De la Calle, and Navin A. Bapat (2018), ‘Economic Sanctions and the
Dynamics of Terrorist Campaigns’, Conflict Management and Peace Science, 35 (4), 378–401.
Morgan, T. Clifton, Navin Bapat and Yoshiharu Kobayashi (2014), ‘Threat and Imposition of Economic Sanctions
1945–2005: Updating the TIES Dataset’, Conflict Management and Peace Science, 31 (5), 541–58.
Muller, Edward N. (1985), ‘Income Inequality, Regime Repressiveness, and Political Violence’, American
Sociological Review, 50 (1), 47–61.
Muller, Edward N. and Mitchell A. Seligson (1987), ‘Inequality and Insurgency’, American Political Science Review,
81 (2), 425–51.
Neuenkirch, Matthias and Florian Neumeier (2016a), ‘The Impact of UN and US Economic Sanctions on GDP
Growth’, European Journal of Political Economy, 40 (A), 110–25.
Neuenkirch, Matthias and Florian Neumeier (2016b), ‘The Impact of US Sanctions on Poverty’, Journal of
Development Economics, 121 (July), 110–19.
Peksen, Dursun (2009), ‘Better or Worse? The Effect of Economic Sanctions on Human Rights’, Journal of Peace
Research, 46 (1), 59–77.
Peksen, Dursun (2011), ‘Economic Sanctions and Human Security: The Public Health Effect of Economic Sanctions’,
Foreign Policy Analysis, 7 (3), 237–51.
Peksen, Dursun (2016), ‘Economic Sanctions and Official Ethnic Discrimination in Target Countries, 1950–2003’,
Defence and Peace Economics, 27 (4), 480–502.
Peksen, Dursun (2019a), ‘When Do Imposed Economic Sanctions Work? A Critical Review of the Sanctions
Effectiveness Literature’. Defence and Peace Economics, 30 (6), 635–47.
Peksen, Dursun (2019b), ‘Autocracies and Economic Sanctions: The Divergent Impact of Authoritarian Regime Type
on Sanctions Success’, Defence and Peace Economics, 30 (3), 252–68.
Peksen, Dursun (2019c), ‘Political Effectiveness, Negative Externalities, and The Ethics of Economic Sanctions’,
Ethics & International Affairs, 33 (3), 279–89.
Peksen, Dursun and A. Cooper Drury (2009), ‘Economic Sanctions and Political Repression: Assessing the Impact of
Coercive Diplomacy on Political Freedoms’, Human Rights Review, 10 (3), 393–411.
Peksen, Dursun and A. Cooper Drury (2010), ‘Coercive or Corrosive: The Negative Impact of Economic Sanctions
on Democracy’, International Interactions, 36 (3), 240–64.
Peterson, Timothy M. (2014), ‘Taking the Cue: The Response to US Human rights Sanctions against Third Parties’,
Radtke, Mitchell and Hyeran Jo (2018), ‘Fighting the Hydra: United Nations Sanctions and Rebel Groups’, Journal
of Peace Research, 55 (6), 759–73.
Rosenberg, Elizabeth, Zachary K. Goldman, Daniel Drezner, and Julia Solomon-Strauss (2016), The New Tools of
Economic Warfare: Effects and Effectiveness of Contemporary US Financial Sanctions, Washington, DC: Center
for a New American Security.
Seitz, William and Alberto Zazzaro (2019), ‘Sanctions and Public Opinion: The Case of the Russia-Ukraine Gas
Disputes’, The Review of International Organizations, 1–27.
Strandow, Daniel (2006) Sanctions and Civil War: Targeted measures for conflict resolution, Uppsala, SE: Department
of Peace and Conflict Research, Uppsala University.
Wallensteen, Peter (1968), ‘Characteristics of Economic Sanctions’, Journal of Peace Research, 5 (3), 248–67.
Weiss, Thomas G., David Cortright, George A. Lopez, and Larry Minear (eds.) (1997), Political Gain and Civilian
Pain: Humanitarian Impacts of Economic Sanctions, Lanham, MD: Rowman and Littlefield.
Wood, Reed M. (2008), ‘“A Hand upon the Throat of the Nation”: Economic Sanctions and State Repression,
1976–2001’, International Studies Quarterly, 52 (3), 489–513.

10. The internal opposition effect of international
sanctions: insights from a qualitative comparative
analysis
Julia Grauvogel
10.1 INTRODUCTION
Sanctions ‘nourished antiapartheid resistance’ (Crawford 1997, 58) in South Africa whereas
they ‘retard[ed] the emergence of potential opposition groups’ in the case of Myanmar (Jones
2015, 11). The effects of international sanctions on anti-regime actors and their activities
thus diverge significantly. While a rapidly growing body of literature examines the impact
of external sanctions pressure on regime or incumbent survival in the targeted countries (for
example Escribà-Folch and Wright 2015; Marinov 2005), there is still a lack of systematic
analysis on how sanctions affect the opposition in those same countries. Previous research
on sanctions’ (in)effectiveness has discussed opposition mobilization as a key transmission
belt from external pressure to domestic compliance (Jentleson 2000; Tostensen and Bull
2002, 397). But comprehensive theoretical explanations and empirical tests are lacking, as
most studies conceive of opposition actors as victims of regime-survival strategies rather than
conceptualizing them as crucial political actors with their own agency.
Emerging large-N research suggests that sanctions can foster opposition activity. A positive
correlation between sanctions and anti-regime protest is most pronounced in mixed regimes
where ‘political constraints are at a moderate level—neither high, as in autocracies, nor low,
as in democracies’ (Allen 2008, 931). Moreover, sanctions threats trigger collective action
against governments if they convey credible signals of regime disapproval and opposition
encouragement—namely, in cases where multiple senders issue them or sanctions senders
demand better protection of human rights (Grauvogel et al. 2017). Hence, there appear to be
different mechanisms that link external pressure in the form of sanctions to opposition mobi-
lization. Yet, existing cross-national research has not compared them in a single study thus far.
Case studies on prominent sanctions regimes—while often focusing on the regime
side—have explored some of these potential pathways from external pressure to gains for the
domestic opposition. Klotz (1995, 1996) shows how the African National Congress (ANC)
benefitted from sanctions against South Africa as they provided legitimation of the fight
against Apartheid (see also, Crawford and Klotz 1999). Jones (2015, 178) sketches different
ways in which sanctions affect opposition forces based on the cases of South Africa, Myanmar
and Iraq: sanctions can undermine the cohesion of the ruling coalition, thereby encouraging
defections to the opposition, and they can alter social structures, which may in turn facilitate
the emergence of new groups. However, we do not know whether these insights based on
high-profile cases are representative of the larger universe of sanctions cases.
In order to fill this gap in the literature, this chapter explores whether Qualitative
Comparative Analysis (QCA)—a still relatively marginal approach in sanctions research—
202
Julia Grauvogel - 9781839102721
The internal opposition effect of international sanctions 203
can help bridge the gap between large-N and case-based work on opposition mobilization
in regimes under sanctions. To do so, the chapter proceeds as follows: the second section
systematically reviews potential explanations for the so-called internal opposition effect
(Lopez and Cortright 1997, 10) of international sanctions. The third section sketches how
QCA can contribute to broadening the methodological toolkit of sanctions researchers
interested in the domestic politics of targeted countries. The fourth section then applies QCA
to study opposition mobilization under sanctions and corroborates key findings with the help
of case-based insights. Finally, the conclusion critically discusses the potential and pitfalls of
QCA for sanctions researchers.
10.2 OPPOSITION MOBILIZATION: A MISSING LINK FOR

RESEARCH ON SANCTIONS EFFECTIVENESS?
While sanctions are often designed with the aim of turning the population away from the
targeted regime, research has pointed to diametrically opposed developments. Contrary to the
expectations of sanctions senders and policymakers alike, sanctions can lead to a rally-round-
the-flag effect (Galtung 1976; Grauvogel and von Soest 2014). Recent research on sanctions
and public opinion found mixed evidence for such a backlash effect. Alexseev and Hale (2020,
344) ‘find no evidence of broad sanctions backfire’. In contrast, both Grossman et al. (2018)
and Frye (2019) show that sanctions can produce a backlash effect that increases support for
the government under sanctions. Yet, they also show that depending on the senders and the
nature of sanctions, certain segments of society may blame the government for sanctions and
increase their support for the political opposition.
Opposition mobilization has been repeatedly discussed as influencing the effectiveness of
sanctions in two major ways. On the one hand, the presence of a ‘worthy’ (Kaplan 2007, 74)
internal opposition prior to the imposition of sanctions should affect their subsequent success.
In this view, economic pressure only translates into political change if a reasonably strong
and coherent opposition to the targeted regime already exists (Jentleson 2000; Jones 2015;
Wallensteen 2000; Weiss 1999). On the other hand, sanctions can foster new opposition to the
regime by mobilizing dissatisfied elements within the population that had not engaged in anti-
regime activity prior to the imposition of sanctions (Blanchard and Ripsman 1999; Kaempfer
and Lowenberg 1999, 48–51).
Policymakers have sought to design their sanctions accordingly. The measures implemented
by the European Union against the Milosevic government in response to its role in Kosovo
between 1998 and 2000, for example, included several exemptions for opposition forces (de
Vries 2002): oil and electricity were still supplied to cities governed by the opposition despite
the energy embargo, while the flight ban excluded Montenegro Airlines—as the Montenegrin
government opposed the regime in Belgrade. More generally, EU restrictive measures regu-
larly aim to nurture domestic dissent and end government repression of opposition groups and
the civilian population (Portela 2005). But how exactly can sanctions affect the leverage of
opposition movements?
According to the conventional ‘punishment theory’ (Lektzian and Souva 2007, 850),
which has also been characterized as ‘the naive theory of the relation between economic
warfare [. . .] and political disintegration’ (Galtung 1967, 388), costly sanctions persuade

the population to pressure its government into compliance as people are ‘unwilling to suffer
economically because of an internationally unpopular policy’ (Lektzian and Souva 2007,
850). Economic pressure can induce opposition mobilization in various ways. Most gener-
ally, sanctions create economic disruptions. A number of studies show that sanctions create
more poverty and income inequality, as well as currency and banking crises (Neuenkirch
and Neumeier 2015, 2016; Peksen and Son 2015; Hatipoglu and Peksen 2016; Afesorgbor
and Mahadevan 2016). Such developments are likely to increase feelings of deprivation that
motivate people to rebel (Gurr 1970).1 Furthermore, Niblock (2001) argues that sanctions
decrease identification with the state if economic shortages created or exacerbated by the
sanctions undermine community structures and the provision of basic social services. Finally,
sanctions can foster grievances as a result of increasingly uneven distributions of economic
resources and opportunities. For instance, attempts to shield key regime supporters from
sanctions’ economic pressure exacerbated existing inequalities between the white minority
and black majority population in Rhodesia (Curtin 1969; McKinnell 1969). In a nutshell,
sanctions can increase the motivation to mobilize against the regime by reducing identifica-
tion with a state that fails to provide basic services, and by creating or exacerbating feelings
of deprivation as well as of grievance.
Yet, actual mobilization is not only a function of motivation but is shaped by opportunity
structures. Sanctions scholars have increasingly acknowledged that domestic responses to
sanctions are moderated by the target state’s political context (Brooks 2002; Kirshner 1997).
Patterns of anti-government mobilization in regimes under sanctions appear to confirm clas-
sical political opportunity structure explanations of protest (Eisinger 1973; Kitschelt 1986;
Kriesi 2004): anti-government activity in countries under sanctions is most pronounced in
hybrid regimes as opposed to democracies, where elections are available as an institutionalized
channel to voice dissent, and to autocracies, where governments repress dissidents harshly
(Allen 2008; Wood 2008). Interestingly, past large-N studies of opposition mobilization under
sanctions have treated political opportunity approaches and deprivation-based explanations
as two competing theories (Allen 2008) whereas scholars of social-movement activism have
highlighted the interplay of both. For example, Schock (1996, 98) proposed a ‘conjunctural
model of political conflict’ that examines how regime structures and political institutions
moderate the translation of grievances into protest.
Going beyond traditional deprivation-based and political opportunity explanations of
mobilization, a third literature strand has recently started to scrutinize whether the messages
that sanctions convey also encourage the voicing and enacting of dissent. Building on research
that stressed the symbolic or signalling dimension of sanctions (Baldwin 1999; Doxey
1980; Giumelli 2011), it has been argued that sanctions signals of regime disapproval and
opposition support create perceived opportunities for anti-regime protest (Grauvogel et al.
2017). Sanctions draw attention to norm-violating regimes, thereby revealing an international
audience for opposition demands. They also constitute a form of third-party advocacy, which
regime opponents interpret as providing additional legitimacy for their demands. Sanctions
threats, which have minimal economic repercussions but can convey highly visible signals of
opposition support, have been shown to increase anti-government protest (Grauvogel et al.
2017). However, it remains unclear whether similar processes are also at work in the case of
imposed measures.
In summary, opposition mobilization potentially constitutes a key transmission belt from
external sanctions pressure to domestic political change. Existing research suggests that

sanctions can induce dissent in two ways: on the one hand, they increase the motivation
to lash out at the regime in view of economic disruption. On the other hand, they provide
symbolic support that can have a tangible effect on mobilization. Despite these advances in
the study of the internal opposition effect of international sanctions, important knowledge
gaps remain. While the few existing large-N studies focus on one particular mechanism (Allen
2008; Grauvogel et al. 2017), case studies tend to highlight the relevance of numerous, highly
case-specific factors (Eriksson 2007; Jones 2015). In the following, I will explore to what
extent QCA can contribute to bridging these shortcomings by focusing on the interplay of the
previously discussed explanatory approaches.
10.3 TOWARDS A BROADER METHODOLOGICAL TOOLKIT?
QCA is grounded in the analysis of sub- and supersets (Ragin 1987), which are interpreted in
terms of necessity and sufficiency. This constitutes a complement to correlational approaches,
which are based on the notion of probabilistic relations. As a set-theoretical method, QCA
comprises three key features that make it particularly suitable for addressing the gaps described
above in previous works. First, QCA accounts for conjunctural and equifinal relations due to
the underlying logic of sets (Schneider and Wagemann 2012, 3–8). QCA is based on fully
interactive models (Lacey and Fiss 2009) that capture the interplay of all explanatory factors
termed ‘conditions’. The approach is also attuned to equifinality, as various configurations can
lead to an outcome (Bennett and Elman 2006). In contrast, sanctions research has often been
concerned with the identification of a single variable that makes them work, which—in the
words of Allen—has tended to ‘blind researchers and policymakers to the possibility that there
can be substitutable causal processes at work’ (2005, 135). Hence, I utilize QCA because it
allows for the identification of conjunctural explanations and substitutable pathways towards
the outcome of interest.
Second, QCA reflects causal asymmetry, meaning that the explanation of a potential
outcome cannot automatically be derived from its opposite and vice versa (Schneider and
Wagemann 2012, 112–14). While the effect of sanctions on the targeted regime has been
extensively studied (see Peksen, Chapter 9 in this Handbook for a summary), the impact on
the politics of opposition remains unclear. Existing research that explores the influence of
sanctions both on ruling coalitions and opposition forces—at least to some extent—suggests
that the outcome for the latter is not simply the mirror image of those for the former (Jones
2015, 176–82). It thus appears vital to rely on an approach that reflects this adequately.
Finally, QCA aims to bridge the divide between case-oriented and variable-oriented
approaches, as stated in the title of Ragin’s (1987) first book. It has moved beyond being just a
medium-N method (Fiss et al. 2013; Rihoux et al. 2013) and can potentially combine elements
of both large-N and case-based approaches. On the one hand, QCA is ‘predominantly case-
oriented’ (Tomini and Wagemann 2018, 688) in the sense that cases are not disaggregated into
variables. Accordingly, Schneider and Wagemann stress that ‘QCA should always be related
back to the cases’ (2010, 4) in the presentation and discussion of results, which requires a
certain degree of familiarity with those cases. On the other hand, QCA allows researchers
to synthesize and systematically explore case-based information for larger samples than
‘traditional’ case studies, with some applications comprising as many as 400 cases (Fiss et al.
2013).

Calibration Truth table Minimization

Transformation of Synthesization of Collapsing truth
empirical data by assigning table into a minimal
information into set each case to one formula explaining
membership scores logically possible the outcome
to create the data combination of
matrix conditions
Figure 10.1 Three major steps of a QCA
QCA consists of three major steps (see Figure 10.1). Initially, empirical information on
each case—which can be qualitative or based on existing datasets—is transformed into
set-membership scores for all explanatory conditions and the outcome, a process dubbed
‘calibration’ (Ragin 2008, 71; Schneider and Wagemann 2012, 24).2 The resulting data matrix
contains one row for each empirical case. Subsequently, the data matrix is transformed into
a so-called ‘truth table’ containing one row for each logically possible combination of condi-
tions (Schneider and Wagemann 2012, 103). Each case is then assigned to the row in which
it has the highest membership for this specific combination of conditions. This procedure
systematically synthesizes the data (Ragin 1987, 93). In this analysis with 75 sanctions cases
and four conditions, the data matrix containing 75 rows is reduced to a truth table of 16 rows
containing all logically possible combinations of conditions. In a final step, this table is
collapsed into a minimal formula explaining the outcome that is logically equivalent to the
data matrix (Ragin 1987, 93). Put less technically, if two countries under financial sanctions
experience opposition mobilization but only one of them is a democracy, political openness
is logically irrelevant for explaining the outcome. The solution formula consists of alternative
configurations of explanatory conditions simultaneously leading to the outcome, referred to
as ‘solution paths’.
While QCA has developed from ‘[a] niche to mainstream method’ in the social sciences
over the past two decades (Rihoux et al. 2013, 17), it nevertheless continues to be a relatively
marginalized approach in sanctions research. Only a total of six books and journal articles
utilize QCA as their major analytical tool (see Table 10.1 below).3 QCA has been applied
to study the efficacy of different types of EU sanctions (Portela 2010), the EU’s uneven use
of restrictive measures for democracy promotion in sub-Saharan Africa (Del Biondo 2015)
as well as its Arab Spring sanctions (Boogaerts 2018). Moreover, QCA applications have
addressed the failure of EU, UN and US sanctions to instigate democratization (Grauvogel
and von Soest 2014), the use of specific types of sanctions by EU and UN policymakers
(Giumelli 2011), and the ineffectiveness of UN Security Council sanctions in the Middle
East and North Africa (Boogaerts and Drieskens 2020). Most of these studies address EU
sanctions, however. Some books and articles also cover UN measures, but just a single
study also includes US sanctions. To some extent, this reflects a more general trend that
QCA—despite being originally developed by a US scholar—is now more widely used in
European political science.
It may also be attributable to the fact that QCA applications still focus on mid-size universes
of cases, while the TIES dataset comprises more than 400 US cases (Morgan et al. 2014).
However, this bears the danger of reinforcing a divide between research on European and US

Table 10.1 QCA applications in sanctions research
N < 100 N ≥ 100

EU cases Boogaerts (2018): EU’s Arab Spring
Sanctions
Del Biondo (2015): Explaining
Sanctions in EU Democracy
Promotion
Portela (2010): European Union
Sanctions and Foreign Policy
EU and other Giumelli (2011): Explaining EU and Grauvogel and von Soest (2014):
cases UN Sanctions after the Cold War Why Sanctions Fail to Instigate
Democratization in Authoritarian
Regimes
Non-EU cases Boogaerts and Drieskens (2018):
The (In)Effectiveness of UN Security
Council Sanctions
sanctions and preventing cross-fertilization from insights into the sanctions policies enacted
on both sides of the Atlantic. Being partially attributable to this EU bias, which limits the
universe of potential cases, most QCA applications analyse a small- to medium-N sample:
ranging from 13 to 17 EU sanctions cases in the studies by Boogaerts (2018) and Del Biondo
(2015) respectively to between 61 and 70 cases or episodes captured in the analyses by Portela
(2010), Boogaerts and Drieskens (2018) and Giumelli (2011). The 120 cases examined by
Grauvogel and von Soest (2014) clearly constitute the upper outlier for QCA-based sanctions
research.
If the innovative potential of QCA for sanctions research is to be further explored and
exploited, it should, then, be applied to different (and potentially larger) universes of cases
that extend beyond EU sanctions. Future research would also benefit from a more systematic
integration of different methodological approaches. It is potentially challenging of course to
explain this approach, still unknown to many scholars, and the complex calibration procedure
that QCA requires in the context of a multi-method design when one is faced with journals’
restrictive word limits. Nonetheless, proponents of QCA have always warned scholars against
becoming ‘QCA monomanic’ (Ragin and Rihoux 2004, 6); recent trends in QCA application
indeed point towards the increasing integration of the approach into multi-method research
designs (Rihoux and Marx 2013). This has not yet been reflected in sanctions research using
QCA, however. Finally, one important caveat is in order here: QCA is no panacea to address
existing shortcomings in sanctions research. Instead, it should only be applied if the research
question fits the underlying notions of causal asymmetry, equifinality and conjunctural
explanations (Møller and Skaaning 2019). As a result, it could also remain a relatively
infrequent approach if scholars and/or policymakers favour different types of puzzles and
explanations—but still one that can add to existing debates in a useful way, as I will show in
the following.

10.4 A QUALITATIVE COMPARATIVE ANALYSIS OF ANTI-REGIME

MOBILIZATION UNDER SANCTIONS
I use fuzzy set Qualitative Comparative Analysis (fsQCA) to analyse how the interplay of
economic deprivation, signals and political opportunities affects opposition mobilization
in regimes under sanctions. The universe of cases consists of all episodes of sanctions by
the EU, the UN, the US and regional organizations against countries in sub-Saharan Africa
implemented between 1990 and 2011 (see Table 10.2). I focus on this time period because
both the frequency and the design of sanctions changed significantly after the end of the Cold
War. The analysis is limited to sub-Saharan Africa to ensure familiarity with the cases, which
is easier to acquire within a more closely confined geographic space. Moreover, the region
is particularly shaped by international actors’ interventions (Young 1996) and accordingly
comprises a significant amount of all sanctions cases worldwide.
10.4.1 Calibration of the Explanatory Conditions and the Outcome
In the following, the operationalization of these approaches is described. The so-called cali-
bration of the explanatory conditions and the outcome relies on a combination of conceptual
considerations, case knowledge and data distribution (Emmenegger 2011; Freitag and Schlicht
2009; Schneider and Wagemann 2006). As interval-scaled data was available on economic
deprivation, political openness and anti-regime mobilization, I relied on the direct method of
calibration that is most appropriate to deal with such data (Schneider and Wagemann 2012, 36).
In order to convert the raw data into fuzzy values by means of the direct method of calibration,
three qualitative anchors must be defined: non-membership (0), the cross-over point (0.5) and
full membership (1). I will describe how I determined these in the following. In the case of the
two conditions that I calibrated based on qualitative information (sanctions comprehensive-
ness and signals), I will also detail this process below.
Sanctions Comprehensiveness: The pain inflicted upon the target state should induce
citizens to challenge the incumbent regime. According to a conventional pain–gain logic,
many sanctions are designed under the assumption that harsher economic consequences are
more likely to turn the population against the regime (Amuzegar 1997). Following Grauvogel
and von Soest (2014), sanctions comprehensiveness captures the strength of sanctions and
whether a specific measure is implemented in conjunction with others. The calibration, which
is based on the GIGA Sanctions Dataset (Portela and von Soest 2012) and on additional
data collected regarding regional sanctions from primary written sources, differentiates
between ‘comprehensive’ and ‘targeted’ sanctions to determine the crossover point of 0.5.
Comprehensive sanctions target the entire economy and/or population and consist of flight
bans, financial sanctions, commodity and comprehensive trade embargos as well as costly aid
sanctions—namely, those that have a severe impact according to the literature and/or those
that are imposed together with additional measures. In contrast, targeted sanctions include all
blacklist-based measures (visa bans, asset freezes), diplomatic sanctions and those targeting
the military (arms embargos, interruption of military cooperation).5
Signals: Building on research into how the clarity and coherence of the message transmit-
ted by sanctions affect their signalling dimension (inter alia Biersteker 2012; Doxey 1980;
Grauvogel et al. 2017), I assume that opposition movements are empowered when the goals

Table 10.2 Sanctions Cases
Sender Target Sanctioning Years4

US Angola 1986–1993
EU Burundi 1996–2000
US Burundi 1996–2005
OAU Burundi 1996–1999
US Cameroon 1992–1998
AU CAR 2003–2005
EU CAR 2003–2005
US CAR 2003–2005
EU Comoros 1999–2000
AU Comoros 2007–2008
EU Comoros 2008–2008
US Côte d’Ivoire 1999–2002
EU Côte d’Ivoire 2000–2002
UN Côte d’Ivoire 2004–ongoing
AU Côte d’Ivoire 2010–2011
ECOWAS Côte d’Ivoire 2010–2011
US DRC 1990–1997
EU DRC 1992–1997
EU DRC 1997–2008
UN DRC 2003–2008
EU Equatorial Guinea 1992–ongoing
UN Eritrea 2000–2001
US Eritrea 2005–ongoing
UN Eritrea 2009–ongoing
UN Ethiopia 2000–2001
US Gambia 1994–1998
EU Gambia 1994–2002
EU Guinea 2002–2006
AU Guinea 2008–2010
EU Guinea 2009–ongoing
US Guinea 2009–2010
ECOWAS Guinea 2009–2010
US Guinea-Bissau 2003–2004
US Kenya 1990–1993
ECOWAS Liberia 1992–1997
(continued)


UN Liberia 1992–2001
EU Liberia 2001–2001
UN Liberia 2001–2003
EU Madagascar 2009–2011
US Madagascar 2010–ongoing
AU Madagascar 2009–ongoing
SADC Madagascar 2009–ongoing
EU Malawi 1992–1994
US Malawi 1992–1994
AU Mauritania 2005–2007
AU Mauritania 2008–2009
US Mauritania 2008–2009
EU Mauritania 2008–2009
EU Niger 1996–1999
US Niger 1996–2000
ECOWAS Niger 2009–2011
AU Niger 2010–2011
US Niger 2009–2011
US Nigeria 1993–1998
EU Nigeria 1993–1999
EU Rwanda 1994–1995
UN Rwanda 1994–1995
ECOWAS Sierra Leone 1997–2003
UN Sierra Leone 1997–1998
US Somalia 1989–ongoing
UN South Africa 1977–1994
US South Africa 1985–1991
US Sudan 1990–ongoing
EU Sudan 1990–ongoing
UN Sudan 1996–2001
UN Sudan 2005–ongoing
US Sudan 2006–ongoing
EU Togo 1992–1995
EU Togo 1998–2004
AU Togo 2005
(continued)


ECOWAS Togo 2005
EU Zambia 1996–1999
US Zambia 1996–1998
EU Zimbabwe 2002–ongoing
US Zimbabwe 2002–ongoing
of sanctions senders and those of domestic opposition movements are compatible, as this
makes for a consistent signal. The calibration relies on information on sanctions senders’
goals retrieved from the GIGA Sanctions Dataset (Portela and von Soest 2012). The goals
of opposition movements are coded using the annually updated Africa Yearbook.6 After the
identification of sanctions senders’ and opposition movements’ goals, their degree of overlap
is gauged. High consistency denotes cases where senders and oppositional goals are identical
(coded as 1) or converge (coded as 0.66), for example when anti-regime activists demand
the protection of group-specific rights and senders voice a general concern for human rights.
Meanwhile, low consistency signals case in which goals concern different issue areas (coded
as 0.33) or are even incompatible (coded as 0), for example, when sanctions senders seek
to support a peace agreement while anti-regime actors fight for a military victory in the
respective conflict.
Economic Deprivation: Following prior studies on the significant relationship between
economic growth rates and political protest (for example Urdal and Hoelscher 2012), the
analysis relies on the annual percentage growth rate of GDP at market prices based on constant
local currency (World Bank 2011) as a proxy for economic deprivation. While this is certainly
a rough indicator in assessing how economic trajectories under sanctions affect anti-regime
mobilization, it provides a first impression of the circumstances under which economic crises
or recovery against the backdrop of sanctions may affect opposition mobilization. While there
may be some overlap with the sanctions comprehensiveness variable, as broader sanctions
are more likely to cause economic disruptions, a distinct measure of economic deprivation is
useful for two major reasons: first, relatively targeted sanctions can also result in a noteworthy
economic downturn if, for example, FDI in a country marked as unlawful by sanctions,
decreases. Second, one may observe economic downturn that occurs in parallel to, but is not
necessarily caused by, the imposition of sanctions, which could nonetheless encourage the
opposition to mobilize. For the calibration, the average time period spent under sanctions
is taken. For ongoing sanctions, 2011 is used as the final year. The calibration differentiates
between countries where the economy grows to such an extent that the population should
experience a decreasing sense of deprivation and those where negative or marginal growth
rates are likely to result in heightened feelings thereof. More specifically, full membership—
that is, very high deprivation—is assigned to cases with a negative growth rate whereas full
non-membership—namely, minimal deprivation—is coded for an average GDP growth of
7 per cent and more based on development success stories such as Ethiopia (Clemens et al.
2007). The crossover point, located at an average of 3.2 per cent growth per annum, captures

the average growth rate of all African countries under sanctions while also being clearly above
the average population growth rate of 2.2 per cent (World Bank 2011). This ensures that GDP
growth is not merely absorbed by the population increase.
Political Openness: Political institutions and, in particular, their openness influence the
intensity of protest strategies (Gurr 1970; Kitschelt 1986, 58; Kriesi 2004; Schock 2004).
The calibration relies on the Authoritarian Regime Dataset, which is based on a combined
and inverted Freedom House and Polity IV (ifhpol) measure (Wahman et al. 2013, 23). I
understand political openness as a continuum rather than as a binary value, which allows for a
nuanced assessment of political opportunities in regimes located in the grey zone (for example
Lührmann and Lindberg 2019). For the calibration, the average value for the sanctioned period
is used; for ongoing sanctions, 2011 is again used as the final year. The calibration is based on
the distinction between democratic and hybrid regimes on the one hand and ‘fully’ authoritar-
ian regimes on the other hand (Bogaards 2009; Bratton and van de Walle 1997; Collier and
Levitsky 1997; Morlino 2009). The threshold for full membership is set at a value of 5.0 on
the aforementioned ifhpol scale. This not only makes use of a significant gap in the raw data,
but also places countries such as South Africa above the threshold. The 0.5 anchor is located
at a value of 4 on the ifhpol scale because it constitutes a notable gap in the empirical data.
Finally, full non-membership begins with an ifhpol value of 2, thereby encompassing the most
repressive regimes in the sample including Equatorial Guinea, Sudan and Rwanda during the
genocide.
Opposition Mobilization: The outcome is operationalized as the emergence of anti-govern-
ment mobilization, understood as sustained collective action that opposes certain policies of
the government or the regime (Dudouet 2006). I draw on the Cross-National Time-Series Data
Archive (CNTS), which is one of the most widely used data sources for domestic conflicts. To
reflect different ways of voicing and enacting dissent, the calibration is based on the dataset’s
‘domestic9’ variable, which encompasses and weights information on a variety of anti-regime
activities such as strikes, riots, revolutions and non-violent demonstrations taking place
with more than 100 participants (Banks and Wilson 2012). While CNTS does not account
for small-scale action due to this threshold, the focus on broad-based actions significantly
reduces measurement bias across different countries—for which the news coverage of minor
protest events in international outlets varies. The calibration is based on a comparison between
the average value of the domestic9 variable for the entire time period and the average value
during the years of sanctions. Following a careful examination of the data distribution, full
set-membership is defined as an increase of 2,000 points, the crossover point is defined as an
increase of no more than 100 points (in other words, a situation in which anti-regime activity
under sanctions is neither smaller nor significantly larger than without sanctions), while a
decrease of more than 500 points on the domestic9 scale constitutes full non-membership.
10.4.2 Results: The Interplay of Different Explanations
In this section, I explore anti-regime mobilization in countries under sanctions by means of

an fsQCA. While these results are to be considered as preliminary,7 they offer new insights
into how set-theoretic approaches can further our understanding of the internal opposition
effect of international sanctions. In the analysis, four conditions lead to 16 possible configura-
tions thereof. The truth table reveals one logical remainder—that is, a theoretically possible
combination of explanatory conditions for which no empirical cases exist. Consequently, the

Table 10.3 Sufficient conditions for explaining the outcome
Complex solution
Causal pathways Raw coverage Unique coverage Consistency
intensity*SIGNALS+ 0.578489 0.047541 0.796759
POS*INTENSITY+ 0.315368 0.054130 0.912185
SIGNALS*DEPRIVATION 0.718993 0.125206 0.714453
OUTCOME
Solution coverage 0.821134
Solution consistency 0.712768
difference between the complex and the parsimonious solution is so small that I report the com-
plex solution, which does not rely on counterfactual assumptions that are difficult to interpret
(Schneider and Wagemann 2012, 162). Using a frequency cut-off of one empirical case and a
minimum consistency level of 0.75, in line with commonly discussed requirements (Schneider
and Wagemann 2012, 279), three pathways constitute sufficient combinations of conditions
for the outcome: (1) targeted sanctions and consistent signals; (2) relative political openness
and comprehensive sanctions; and (3) deprivation and consistent signals. Table 10.3 presents
the solution formula in Boolean notation, meaning that capital letters indicate the presence of
a condition and small letters their opposite. For example, ‘DEPRIVATION’ denotes that the
country under sanction suffered from economic deprivation, whereas ‘deprivation’ indicates
that this was not the case according to the calibration rules detailed above.
The solution has a coverage of 0.821134, meaning that—simply speaking—it accounts for
more than 80 per cent of the empirical cases. The consistency, which specifies the degree to
which the empirical observations are in accordance with the postulated set relations (Schneider
and Wagemann 2012, 324), is 0.712768. While this indicates that the solution’s goodness of
fit could be further improved in future analysis, for example by including additional explana-
tory conditions, it reaches commonly accepted requirements for meaningful solutions (Ragin
2008).
In the following, I will explore these results in greater depth and discuss how they relate
to prior research on protest and the politics of opposition in countries under sanctions. In line
with good practice in conducting QCA, these results will also be linked back to the cases that
are explained by the respective paths (Table 10.4).
Targeted Sanctions and Consistent Signals: This combination of conditions jointly producing
the outcome shows that targeted measures are sufficient for inducing anti-regime mobilization
if they convey a clear signal of opposition support and regime disapproval. While initial work
suggested that economically costly sanctions per se are more likely to succeed (Barber 1979;
Doxey 1980), subsequent research specified the potential link between what has been referred
to as the intensity, comprehensiveness or costs of sanctions and their outcome. Several large-N
studies indeed show that the success rate of sanctions increases as the costs to the target become
more severe (for example Drury 1998; Nooruddin 2002; Morgan et al. 2014). Yet, Tsebelis
shows that ‘under a wide range of (specified) circumstances, the size of the sanction has no

Table 10.4 Anti-regime mobilization under sanctions
Deprivation
N of cases
Openness
Intensity
Signals
Sanctions episodes
intensity* EU_CIV_00; AU_CIV_10;
SIGNALS ECOWAS_CIV_10; AU_
GIN_08; EU_GIN_09; US_
GIN_09; ECOWAS_GIN_09;
US_GNB_03; AU_MDG_09;
SADC_MDG_09; AU_MRT_08;
EU_MRT_08; EU_NER_96;
ECOWAS_NER_09;
AU_NER_10; UN_ZAF_77;
EU_TGO_92; AU_TGO_05;
ECOWAS_TGO_05
POS* US_CIV_99; EU_MDG_09;
INTENSITY US_MDG_10; US_NER_09;
ECOWAS_SLE_97; UN_
SLE_97; US_ZAF_86; EU_
ZMB_96; US_ZMB_96
SIGNALS* US_AGO_86; EU_BDI_96;
DEPRIVATION US_BDI_96; OAU_BDI_96;
US_CMR_92; US_CIV_99;
EU_CIV_00; AU_CIV_10;
ECOWAS_CIV_10; EU_
GMB_94; AU_GIN_08;
EU_GIN_09; US_GIN_09;
ECOWAS_GIN_09; US_
GNB_03; US_KEN_90;
EU_MDG_09; US_MDG_10;
AU_MDG_09; SADC_MDG_09;
EU_MWI_92; US_MWI_92;
AU_MRT_08; US_MRT_08;
EU_MRT_08; US_NER_96;
US_NGA_93; EU_NGA_93;
UN_ZAF_77; US_ZAF_86;
EU_TGO_92; AU_TGO_05;
ECOWAS_TGO_05; EU_
ZMB_96; US_ZMB_96; EU_
ZWE_02; US_ZWE_02
Note: In line with the GIGA Sanctions Dataset (Portela and von Soest 2012), episodes are given a code that
indicates: (1) the sender (abbreviated as AU, EU, ECOWAS, OAU, UN or US); (2) the identity of the target
(abbreviated with the three-letter country code derived from ISO alpha-3); and, (3) the year of the imposition of
sanctions featuring its last two digits. Dark grey represents the presence of a condition, whereas light grey denotes
its absence.

impact upon the behaviour of the target country’ (1990, 3). Lektzian and Souva (2007) find
that targeted sanctions in fact work ‘better’ against authoritarian leaders than comprehensive
ones. According to Brooks, they ‘work by mobilizing internal opposition by key constituencies’
(2002, 28). The fsQCA indicates that this could indeed be the case because targeted sanctions
that directly affect those responsible for human rights violations or democratic misconduct
send particularly consistent signals of regime disapproval and opposition support.
Sanctions against South Africa, in particular the more targeted UN measures, help to shed
light on this solution path. They were imposed with the goal of countering institutionalized
racial discrimination and eventually contributed to ending Apartheid even though the South
African regime managed to circumvent some of the economic constraints (Klotz 1996). Put
differently, sanctions send a powerful message of support for the norm of global racial equality
regardless of their material consequences (Klotz 1995)—or the lack thereof. In this regard,
so-called social sanctions—which had limited economic repercussions, but served to isolate
the regime diplomatically and culturally and thus were targeted rather than comprehensive—
played an important role (Crawford and Klotz 1999).
Even though it is difficult to unravel causality because the case is over-determined in the
sense of being explained by several of the solution paths, the anti-Apartheid sanctions are
a useful illustrative example because the wide range of secondary literature on this case
allows us to reconstruct the signalling dimension hereof. By imposing sanctions, the senders
recognized the African National Congress (ANC) and enhanced its normative power—thereby
strengthening the ANC’s position in the ongoing negotiation process with the incumbent
regime (Black 1999). Moreover, the ANC’s role in spearheading the international pro-
sanctions campaign enhanced its standing domestically (Black 1999). The fact that sanctions
constituted a visible international condemnation of Apartheid was discursively exploited
by the ANC (Black 1999, 99; Lodge 1989) and thereby provided an additional push for the
anti-Apartheid movement (Adam and Moodley 1993). As Nelson Mandela claimed, sanctions
showed that ‘the [Apartheid] state is practically isolated from the rest of the world’ (cited
in Thomas 1996, 8–9). In a nutshell, the principal effect of sanctions against South Africa
was allegedly the psychological one of visibly displaying international support for various
domestic actors alongside the condemnation of others (Levy 1999).
This finding shows that it is not only the comprehensiveness of sanctions that matters but
their signalling dimension as well. By zooming in on the explicit goals of sanctions senders,
von Soest and Wahman (2015) show that so-called democratic sanctions (those explicitly
seeking to promote democracy) are significantly correlated with increased levels of democracy
in targeted authoritarian regimes while this does not hold for sanctions that pursue other goals.
They identify leadership and regime change as an important driver behind this pattern. The cur-
rent analysis adds another crucial insight: sanctions that consistently condemn the regime and
provide international legitimacy for anti-regime forces induce opposition mobilization—even
if the economic impact of these sanctions remains limited.
Comprehensive Sanctions and Political Opportunity Structures: The second path shows
that comprehensive sanctions induce anti-regime activity if the population enjoys a certain
degree of political freedom. In other words, comprehensive sanctions can only translate into
anti-regime mobilization if a minimum degree of political openness allows for the voicing and
enacting of dissent, which can also help explain why democracies tend to concede more often
and quickly (Allen 2005). While senders may seek to shift the balance of power in the target
state towards a potentially more compliant or even democratic opposition with the imposition

of sanctions, their leverage remains limited if sanctions are imposed on a highly authoritarian
regime. Sanctions against Zambia illustrate the proposed interplay of comprehensive sanctions
and relative political openness.
When the government under President Frederick Chiluba introduced a controversial consti-
tutional amendment in early 1996, which banned his main rival from contesting the elections,
Zambian opposition parties called on international donors to impose sanctions (Chilaizya
1996). All major donors progressively cancelled or reduced their assistance in the months that
followed, dropping from approximately USD 1.6 billion in 1995 to less than USD 300 million
in 1996 (Hufbauer et al. 2007, database case description). In the run-up to the elections to
be held under the new constitutional framework, the opposition heavily mobilized (Baylies
and Szeftel 1997, 122–3; van Donge 1998, 93–7), but the ruling Movement for Multiparty
Democracy won. Yet, the Zambian government sought to re-establish its democratic creden-
tials after the elections so as to re-engage with international donors: the bill that required all
media institutions to register with the state was discarded and the regime furthermore initiated
talks with the National Patriotic Coalition, an umbrella opposition movement—as such
dialogue constituted one of the donors’ major conditions for resuming development assistance
(Rakner 2003, 110–11).
As indicated by the QCA, these developments occurred in a regime where a certain degree of
political freedom still existed despite government interference with the opposition (van Donge
1998, 92). Watchdog non-governmental and civil society organizations, which had effectively
‘pressed the government to widen the political space, to respect independent criticism and
provide a more level playing field for political opposition’ (Burnell 2011, 257) continued to be
active in the years prior to the 1996 elections. The developments in Zambia in 1996 suggest a
twofold impact of the aid freezes on domestic dynamics of contention—illustrating the posited
interplay between relative political openness and sanctions. The economic impact of the aid
cuts forced President Chiluba to consider concessions vis-à-vis domestic contenders, who also
enjoyed enough political freedom to take to the streets. In the words of Baylies and Szeftel:
‘It is probable that the critical stance of donors served to encourage opposition elements and
local civic organizations in their protest’ (1997, 127).
This confirms Allen’s emphasis on political opportunity structures for explaining protest
in regimes under sanctions. In pointed terms, she argues that for ‘sanctions against autocratic
states to be costly, it appears that the political costs needed to alter behaviour must be gener-
ated internationally rather than domestically’ (Allen 2008, 117). Moreover, it mirrors her
finding that different types of sanctions have varying impacts on anti-government activity.
Allen (2008, 935) finds that the effect is weakest with regards to narrower financial sanctions
and strongest for broader export and import ones. Similarly, QCA suggests a systematic link
between comprehensive measures and protest in politically relatively open regimes. The case
of Zambia briefly discussed above appears to indicate that in such countries with relatively
open political structures, the existing opposition (see, for example, Kaplan 2007) is empow-
ered by sanctions.
Deprivation and Sanctions Signals: The results show that sanctions’ economic repercussions
and their signalling dimension cannot be separated out when analysing the impact of external
pressure on domestic anti-regime mobilization. More precisely, a combination of economic
deprivation caused or magnified by sanctions and sanctions’ messages of regime disapproval
and opposition support jointly explains increased opposition mobilization in regimes under
sanctions.

But how do such sanctions signals of opposition support and regime disapproval together with
economic deprivation translate into anti-regime activity? In Zimbabwe, the major opposition
party Movement for Democratic Change (MDC)—unlike previous opposition parties—enjoyed
the support of the international community (Alao 2012, 104). The endorsement of the opposition
and criticism of the regime was prominently expressed through sanctions, which were regularly
justified and extended with reference to the violence perpetrated against opposition politicians
and against demonstrators (Eriksson 2007, 30). This vocal external encouragement was an
important source of support for the opposition at that time (Chingono 2010).
However, it was not the sanctions signals alone that helped the opposition to mobilize. The
MDC gained political capital from the EU and US measures by carefully integrating them into
its discourse of economic revival, which resonated broadly with the population in a situation
of economic crises not caused but rather exacerbated by the EU and US sanctions. According
to this narrative, much-needed international assistance to rebuild the economy would only
be provided to an MDC-led government (MDC 2004, 2005, 2008). However, the case of
Zimbabwe also shows one of the major shortcomings of QCA, namely its inability to reflect
the temporal dimension of developments (Caren and Panofsky 2005). Case-specific research
shows that when the regime successfully spread its narrative of patriotic history (Tendi
2010), which denounced sanctions as a neocolonial instrument, these measures turned into a
discursive liability for the opposition (Grauvogel and von Soest 2015).
Despite these limitations, this path identified via fsQCA sheds new light on the sanctions—
protest nexus in two major ways. First, and in contrast to previous studies suggesting that
‘opportunity is more influential than deprivation’ (Allen 2008, 935), this path shows that for a
specific subset of cases, economic downturns do lead to an increase in anti-government mobi-
lization—but only if the most important opposition movements and the senders of sanctions
pursue consistent goals. Such coherent signals of regime disapproval and opposition encour-
agement create perceived opportunities that foster collective mobilization. Following existing
work on the international dimension of social-movement activism revealing that influential
international allies (Meyer 2003; Osa and Corduneanu-Huci 2003) and international pressure
(Layton 2000; McAdam and Tarrow 2000) encourage social movements, it seems plausible
that international sanctions can also change the perceived room for manoeuvre of opposition
movements. Second, the path casts doubt on an exclusively deprivation-based explanation of
anti-regime mobilization in regimes under sanctions (Kerr and Gaisford 1994)—which fails
to fully account for the link between these measures and domestic protest.
10.5 CONCLUSION
The question of why sanctions lead to meaningful concessions (or not) by targeted states has
kept generations of scholars busy. A growing strand of research began to examine how target-
state characteristics shape sanctions’ (in)effectiveness at the beginning of the 2000s—and
how these measures more generally affect domestic politics in countries under sanctions.
This research on the domestic ‘microfoundations of economic sanctions’ (Kirshner 1997,
32) examines, inter alia, how sanctions influence repression and co-optation of the targeted
regime (Escribà-Folch 2011; Peksen 2009; Wood 2008) and how this relates to their chances
of resisting external pressure. In addition to these important insights relating to incumbents
and ruling elites, the impact of sanctions on opposition actors and their activities was also

proposed as a key transmission belt from economic pressure to political compliance (Jentleson
2000; Mastanduno 1999).
Yet, research specifically focusing on ‘the opposition’ has remained scarce. The two large-N
studies that do exist identify the importance of political opportunity structures (Allen 2008) and
a signalling mechanism (Grauvogel et al. 2017), whereas qualitative research tends to explore
the highly case-specific constellations that may enable or constrain opposition forces (Jones
2015). Against this backdrop, this chapter has proposed Qualitative Comparative Analysis
as an additional methodological approach that can be called upon in investigating sanctions’
effect on opposition movements. QCA is a set-theoretic method that is specifically attuned
to conjunctural explanations that highlight the interplay of various factors. This offers the
potential to add to existing research on the internal opposition effect of international sanctions.
The explorative analysis indeed shows that neither a deprivation or signalling mechanism nor
political opportunity structures alone suffice to explain anti-regime mobilization in countries
under sanctions. Instead, scrutinizing the interplay of these factors helps to shed light on cases
where domestic opponents benefit from external pressure.
Despite this potential of QCA, only a few studies have employed the approach thus far—not
least because of the various limitations that it has. QCA struggles to incorporate a temporal
dimension into the analysis (Caren and Panofsky 2005). Further, the possibility to conduct
extensive robustness checks is still limited compared to statistical approaches even despite
recent advances (Skaaning 2011). Hence, this chapter does not constitute a plea for QCA as
a methodological panacea. Rather, it is argued that QCA can constitute a useful complement
that should ideally be applied together with other approaches. Moreover, QCA should only be
employed if the research question fits the underlying assumptions about conjunctural relations,
equifinality and asymmetry. Under these circumstances, QCA can broaden sanctions research-
ers’ methodological toolkit in a highly meaningful way.
NOTES
1. Recent research suggests that only comprehensive economic measures may increase support for the opposition—
and that an internal opposition effect could be limited to prior regime opponents (Grossman et al. 2018; Frye
2919).
2. These membership scores indicate whether a case is in or out of a set; for example, whether a sanctions case
(predominantly) belongs to the set of ‘comprehensive measures’ or not.
3. This account of QCA applications in sanctions research is based on a systematic keyword search using different
variants of ‘QCA’ and ‘sanctions’ (including the most widely used synonym ‘economic statecraft’) to identify all
peer-reviewed articles that appeared in SCCI-ranked journals and all books with major academic publishers.
4. As data collection ended in 2012, sanctions that were still in place as of 2012 are marked as ‘ongoing’.
5. For more details on the calibration, see web appendix by Grauvogel and von Soest (2014).
6. Details on the coding procedure can be found in Grauvogel (2017, 86–88 and 290–297).
7. As I do not conduct extensive robustness checks such as using a different frequency cut-off point to control for
deviant case errors or testing a different sample to check for potentially omitted variables, the results should be
taken as merely illustrative.
REFERENCES
Adam, Heribert and Kogila Moodley (1993), The Opening of the Apartheid Mind: Options for the New South Africa,
Berkeley, CA/Los Angeles, CA: University of California Press.
Afesorgbor, Sylvanus K. and Renuka Mahadevan (2016), ‘The Impact of Economic Sanctions on Income Inequality
of Target States’, World Development, 83 (1), 1–11.
Alao, Abiodun (2012), Mugabe and the Politics of Security in Zimbabwe, Montreal: McGill-Queen’s University Press.

Alexseev, Mikhail A. and Henry E. Hale (2020), ‘Crimea Come What May: Do Economic Sanctions Backfire
Politically?’, Journal of Peace Research, 57 (2), 344–59.
Allen, Susan H. (2005), ‘The Determinants of Economic Sanctions Success and Failure’, International Interactions,
31 (2), 117–38.
Allen, Susan H. (2008), ‘The Domestic Political Cost of Economic Sanctions’, Journal of Conflict Resolution, 52 (6),
916–44.
Amuzegar, Jahangir (1997), ‘Adjusting to Sanctions’, Foreign Affairs, 76 (3), 31–41.
Baldwin, David A. (1999), ‘The Sanctions Debate and the Logic of Choice’, International Security, 24 (3), 80–107.
Banks, Arthur S. and Kenneth A. Wilson (2012), ‘Cross-National Time Series Data Archive’, accessed 1 February
2012 at http://www.databanksinternational.com/.
Barber, James (1979), ‘Economic Sanctions as a Policy Instrument’, International Affairs, 55 (3), 367–84.
Baylies, Carolyn and Morris Szeftel (1997), ‘The 1996 Zambian Elections: Still Awaiting Democratic Consolidation’,
Review of African Political Economy, 24 (71), 113–28.
Bennett, Andrew and Colin Elman (2006), ‘Qualitative Research: Recent Developments in Case Study Methods’,
Annual Review of Political Science, 9, 455–76.
Biersteker, Thomas J. (2012), ‘Naming, Shaming, and Stigmatizing through UN Targeted Sanctions’, Joint Meeting
of the British International Studies Association and the North American International Studies Association,
Edinburgh.
Black, David (1999), ‘The Long and Winding Road: International Norms and Domestic Political Change in South
Africa’, in Thomas Risse-Kappen, Stephen C. Ropp and Kathryn Sikkink (eds), The Power of Human Rights:
International Norms and Domestic Change, Cambridge: Cambridge University Press, pp. 87–108.
Blanchard, Jean-Marc F. and Norrin M. Ripsman (1999), ‘Asking the Right Question: When Do Economic Sanctions
Work Best?’ Security Studies, 9 (1–2), 219–53.
Bogaards, Matthijs (2009), ‘How to Classify Hybrid Regimes? Defective Democracy and Electoral Authoritarianism’,
Democratization, 16 (2), 399–423.
Boogaerts, Andreas (2018) ‘Beyond Norms: A Configurational Analysis of the EU’s Arab Spring Sanctions’, Foreign
Policy Analysis, 14 (3), 408–28.
Boogaerts, Andreas and Edith Drieskens (2020), ‘Lessons from the MENA Region: A Configurational Explanation of
the (In)Effectiveness of UN Security Council Sanctions between 1991 and 2014’, Mediterranean Politics, 25 (1),
71–95.
Bratton, Michael and Nicholas van de Walle (1997), Democratic Experiments in Africa. Regime Transitions in
Comparative Perspective, Cambridge: Cambridge University Press.
Brooks, Risa A. (2002), ‘Sanctions and Regime Type: What Works and When?’ Security Studies, 11 (4), 1–50.
Burnell, Peter (2011), ‘Is the International Environment Becoming Less Benign for Democratisation’, Comparative
Governance and Politics, Special Issue (1), 81–102.
Caren, Neal and Aaron Panofsky (2005), ‘TQCA: A Technique for Adding Temporality to Qualitative Comparative
Analysis’, Sociological Methods & Research, 34 (2), 147–72.
Chilaizya, Joe (1996), ‘Bracing Against Opponents Within And Without’, Inter Press Service, accessed 30 October
2014 at http://www.ipsnews.net/1996/06/zambia-politics-bracing-against-opponents-within-and-without/.
Chingono, Heather (2010), ‘Economic Sanctions: A Panacea to Democracy and Good Governance in Zimbabwe?’,
Alternatives: Turkish Journal of International Relations, 9 (1), 192–216.
Clemens, Michael A., Charles J. Kenny and Todd J. Moss (2007), ‘The Trouble with the MDGs: Confronting
Expectations of Aid and Development Success’, World Development, 35 (5), 735–51.
Collier, David, and Steven Levitsky (1997), ‘Democracy with Adjectives: Conceptual Innovation in Comparative
Research’, World Politics, 49 (3), 430–51.
Crawford, Neta C. and Audie Klotz (1999), How Sanctions Work: Lessons from South Africa, New York: St. Martin’s.
Curtin, T. R. C. (1969), ‘Total Sanctions and Economic Development in Rhodesia’, Journal of Commonwealth &
Comparative Politics, 7 (2), 126–31.
de Vries, Anthonius (2002), ‘European Union Sanctions against the Federal Republic of Yugoslavia from 1998 to
2000: A Special Exercise in Targeting’, in David Cortright and George A. Lopez (eds), Smart Sanctions: Targeting
Economic Statecraft, Lanham, MD: Rowman & Littlefield, pp. 87–108.
Del Biondo, Karen (2015), ‘Donor Interests or Developmental Performance? Explaining Sanctions in EU Democracy
Promotion in Sub-Saharan Africa’, World Development, 75, 74–84.
Doxey, Margaret P. (1980), Economic Sanctions and International Enforcement, London: Macmillan.
Drury, A. Cooper (1998), ‘Revisiting Economic Sanctions Reconsidered’, Journal of Peace Research, 35 (4), 497–509.
Dudouet, Veronique (2006), Transitions from Violence to Peace: Revisiting Analysis and Intervention in Conflict
Transformation, Berlin: Berghof Foundation.
Eisinger, Peter K. (1973), ‘The Conditions of Protest Behavior in American Cities’, American Political Science
Review, 67 (1), 11–28.
Emmenegger, Patrick (2011), ‘Job Security Regulations in Western Democracies: A Fuzzy Set Analysis’, European
Journal of Political Research, 50 (3), 336–64.

Eriksson, Mikael (2007), Targeting the Leadership of Zimbabwe: A Path to Democracy and Normalization?, Uppsala:
Department of Peace and Conflict Research.
Escribà-Folch, Abel (2011), ‘Authoritarian Responses to Foreign Pressure: Spending, Repression, and Sanctions’,
Comparative Political Studies, 10 (5), 1–31.
Escribà-Folch, Abel and Joseph Wright (2015), Foreign Pressure and the Politics of Autocratic Survival, New York,
NY: Oxford University Press.
Fiss, Peer C., Dmitry Sharapov and Lasse Cronqvist (2013), ‘Opposites Attract? Opportunities and Challenges for
Integrating Large-N QCA and Econometric Analysis’, Political Research Quarterly, 66 (1), 191–98.
Freitag, Markus and Raphaela Schlicht (2009), ‘Educational Federalism in Germany: Foundations of Social Inequality
in Education’, Governance, 22 (1), 47–72.
Frye, Timothy (2019), ‘Economic Sanctions and Public Opinion: Survey Experiments From Russia’, Comparative
Political Studies, 52 (7), 967–94.
Galtung, Johan (1967), ‘On the Effects of International Economic Sanctions: With Examples from the Case of
Rhodesia’, World Politics, 19 (3), 378–416.
Giumelli, Francesco (2011), Coercing, Constraining and Signaling: Explaining and Understanding International
Sanctions After the End of the Cold War, Colchester: European Consortium for Political Research (ECPR).
Grauvogel, Julia (2017). The Internal Opposition Effect of International Sanctions: Insights from Burundi, Zimbabwe
and a Qualitative Comparative Analysis of Sub-Saharan Africa. Hamburg University, accessed 6 August 2020 at
https://ediss.sub.uni-hamburg.de/volltexte/2018/8895/.
Grauvogel, Julia, Amanda A. Licht and Christian von Soest (2017), ‘Sanctions and Signals: How International
Sanction Threats Trigger Domestic Protest in Targeted Regimes’, International Studies Quarterly, 61 (1), 86–97.
Grauvogel, Julia and Christian von Soest (2014), ‘Claims to Legitimacy Count: Why Sanctions Fail to Instigate
Democratisation in Authoritarian Regimes’, European Journal of Political Research, 53 (4), 635–53.
Grauvogel, Julia and Christian von Soest (2015), ‘Die Verfehlte Sanktionspolitik des Westens Gegen Simbabwe‘, (The
failed sanctions policy of the West against Zimbabwe; in German) GIGA Focus, 02 (2015), 1–8.
Grossman, Guy, Devorah Manekin and Yotam Margalit (2018), ‘How Sanctions Affect Public Opinion in Target
Countries: Experimental Evidence From Israel’, Comparative Political Studies 51 (14), 1823–57.
Gurr, Ted (1970), Why Men Rebel, Princeton, NJ: Princeton University Press.
Hatipoglu, Emre and Dursun Peksen (2018), ‘Economic Sanctions and Banking Crises in Target Economies’, Defence
Hufbauer, Gary Clyde, Jeffrey J. Schott, Kimberley Ann Elliott and Barbara Oegg (2007), Economic Sanctions
Reconsidered, Washington, DC: Peterson Institute of International Economics.
Jentleson, Bruce W. (2000), ‘Economic Sanctions and Post-Cold War Conflicts: Challenges for Theory and Policy’,
in Paul C. Stern and Daniel Druckman (eds), International Conflict Resolution after the Cold War, Washington,
DC: National Academies Press, pp. 123–77.
Jones, Lee (2015), Societies under Sege: Exploring How International Economic Sanctions (Do Not) Work, Oxford:
Oxford University Press.
Kaempfer, William H. and Anton D. Lowenberg (1999), ‘Unilateral Versus Multilateral International Sanctions: A
Public Choice Perspective’, International Studies Quarterly, 43 (1), 37–58.
Kerr, William A. and James D. Gaisford (1994), ‘A Note on Increasing the Effectiveness of Sanctions’, Journal of
World Trade, 28 (6), 169–76.
Kirshner, Jonathan (1997), ‘The Microfoundations of Economic Sanctions’, Security Studies, 6 (3), 32–60.
Kitschelt, Herbert P. (1986), ‘Political Opportunity Structures and Political Protest: Anti-Nuclear Movements in Four
Democracies’, British Journal of Political Science, 16 (1), 57–85.
Klotz, Audie (1995), ‘Norms Reconstituting Interests: Global Racial Equality and US Sanctions Against South
Africa’, International Organization, 49 (3), 451–78.
Klotz, Audie (1996), ‘Norms and Sanctions: Lessons from the Socialization of South Africa’, Review of International
Studies, 22 (2), 173–90.
Kriesi, Hanspeter (2004), ‘Political Context and Opportunity’, in David A. Snow, Sarah A. Soule and Hanspeter Kriesi
(eds), The Blackwell Companion to Social Movements, Oxford: Blackwell Publishing, pp. 67–90.
Lacey, Rodney and Peer C. Fiss (2009), ‘Comparative Organizational Analysis Across Multiple Levels: A Set-
Theoretic Approach’, in Brayden G. King, Teppo Felin and David A. Whetten (eds), Research in the Sociology
of Organizations: Studying Differences Between Organizations: Comparative Approaches to Organizational
Research, Bingley: Emerald Group, pp. 91–116.
Layton, Azza Salama (2000), International Politics and Civil Rights Policies in the United States, 1941–1960,
Cambridge, MA: Cambridge University Press.
Lektzian, David and Mark Souva (2007), ‘An Institutional Theory of Sanctions Onset and Success’, Journal of
Conflict Resolution, 51 (6), 848–71.
Levy, Philip I. (1999), ‘Sanctions on South Africa: What Did They Do?’, The American Economic Review, 89 (2),
415–20.

Lodge, Tom (1989), ‘Sanctions and Black Political Opposition’, in Mark Orkin (ed.), Sanctions Against Apartheid,
Claremont, South Africa: David Philip Publishers, pp. 34–51.
Lopez, George A. and David Cortright (1997), ‘Economic Sanctions and Human Rights: Part of the Problem or Part
of the Solution?’, The International Journal of Human Rights, 1 (2), 1–25.
Lührmann, Anna and Staffan I. Lindberg (2019), ‘A Third Wave of Autocratization Is Here: What Is New about It?’,
Marinov, Nicolay (2005), ‘Do Economic Sanctions Destabilize Country Leaders?’, American Journal of Political
Science, 49 (3), 564–76.
Mastanduno, Michael (1999), ‘Economic Statecraft, Interdependence and National Security: Agendas for Research’,
Security Studies, 9 (1–2), 288–316.
McAdam, Doug and Sidney Tarrow (2000), ‘Nonviolence as Contentious Interaction’, PS: Political Science and
Politics, 33 (2), 149–54.
McKinnell, Robert (1969), ‘Sanctions and the Rhodesian Economy’, The Journal of Modern African Studies, 7 (4),
559–81.
MDC (2004), RESTART: Our Path to Social Justice—The MDC’s Economic Programme for Reconstruction
Stabilisation Recovery and Transformation, Harare.
MDC (2005), The Manifesto of the Movement for Democratic Change: Parliamentary Elections 2005, Harare.
MDC (2008), A New Zimbabwe, A New Beginning: Policies of the Movement for Democratic Change 2008,
Harare.
Meyer, David S. (2003), ‘Political Opportunity and Nested Institutions’, Social Movement Studies, 2 (1), 17–35.
Møller, Jørgen and Svend-Erik Skaaning (2019), ‘Set-Theoretic Methods in Democratization Research: An Evaluation
of Their Uses and Contributions’, Democratization, 26 (1), 78–96.
Morgan, T. Clifton, Navin Bapat and Yoshiharu Kobayashi (2014), ‘Threat and Imposition of Economic Sanctions
1945–2005: Updating the TIES Dataset’, Conflict Management and Peace Science, 31 (5), 541–58.
Morlino, Leonardo (2009), ‘Are There Hybrid Regimes? Or Are They Just an Optical Illusion’, European Political
Science Review, 1 (2), 273–96.
Neuenkirch, Matthias and Florian Neumeier (2015), ‘The Impact of UN and US Economic Sanctions on GDP
Growth’, European Journal of Political Economy, 40 (A), 110–25.
Neuenkirch, Matthias and Florian Neumeier (2016), ‘The Impact of US Sanctions on Poverty’, Journal of
Development Economics, 121 (C), 110–19.
Niblock, Tim (2001), ‘Pariah States’ and Sanctions in the Middle East: Iraq, Libya, Sudan, Boulder, CO: Lynne
Rienner Publishers.
Nooruddin, Irfan (2002), ‘Modeling Selection Bias in Studies of Sanctions Efficacy’, International Interactions,
28 (1), 59–75.
Osa, Maryjane and Cristina Corduneanu-Huci (2003), ‘Running Uphill: Political Opportunity in Non-Democracies’,
Comparative Sociology, 2 (4), 605–29.
Peksen, Dursun (2009), ‘Better or Worse? The Effect of Economic Sanctions on Human Rights’, Journal of Peace
Research, 46 (1), 59–77.
Peksen, Dursun and Byunghwan Son (2015), ‘Economic Coercion and Currency Crises in Target Countries’, Journal
of Peace Research, 52 (4), 448–62.
Peksen, Dursun and Byunghwan Son (2010), European Union Sanctions and Foreign Policy: When and Why Do They
Work?, London: Routledge.
Portela, Clara (2005), ‘Where and Why Does the EU Impose Sanctions?’ Politique Européenne, 17 (3), 83–111.
Portela, Clara and Christian von Soest (2012), GIGA Sanctions Dataset Codebook, Hamburg: GIGA Institute of
Global and Area Studies.
Ragin, Charles C. (1987), The Comparative Method: Moving Beyond Qualitative and Quantitative Strategies,
Berkeley, CA: University of California Press.
Ragin, Charles C. (2008), Redesigning Social Inquiry: Fuzzy Sets and Beyond, Chicago, IL: University of Chicago
Press.
Ragin, Charles C. and Benoît Rihoux (2004), ‘Qualitative Comparative Analysis (QCA): State of the Art and
Prospects’, Qualitative Methods: Newsletter of the American Political Science Association Organized Section on
Qualitative Methods, 2 (2), 3–12.
Rakner, Lise (2003), Political and Economic Liberalisation in Zambia 1991–2001, Uppsala: Nordic Africa Institute.
Rihoux, Benoît et al. (2013), ‘From Niche to Mainstream Method? A Comprehensive Mapping of QCA Applications
in Journal Articles from 1984 to 2011’, Political Research Quarterly, 66 (1), 175–84.
Rihoux, Benoît and Axel Marx (2013), ‘QCA, 25 Years after ‘The Comparative Method’: Mapping, Challenges, and
Innovations’, Political Research Quarterly, 66 (1), 167–235.
Schneider, Carsten Q. and Claudius Wagemann (2006), ‘Reducing Complexity in Qualitative Comparative Analysis
(QCA): Remote and Proximate Factors and the Consolidation of Democracy’, European Journal of Political
Research, 45 (5), 751–86.

Schneider, Carsten Q. and Claudius Wagemann (2010), ‘Standards of Good Practice in Qualitative Comparative
Analysis (QCA) and Fuzzy-Sets’, Comparative Sociology, 9 (3), 397–418.
Schneider, Carsten Q. and Claudius Wagemann (2012), Set-Theoretic Methods for the Social Sciences: A Guide to
Qualitative Comparative Analysis, Cambridge: Cambridge University Press.
Schneider, Carsten Q. and Claudius Wagemann (2004), Unarmed Insurrections: People Power Movements in
Nondemocracies, Minneapolis, MN: University of Minnesota Press.
Schock, Kurt (1996), ‘A Conjunctural Model of Political Conflict The Impact of Political Opportunities on the
Relationship between Economic Inequality and Violent Political Conflict’, Journal of Conflict Resolution, 40 (1),
98–133.
Skaaning, Svend-Erik (2011), ‘Assessing the Robustness of Crisp-Set and Fuzzy-Set QCA Results’, Sociological
Methods & Research, 40 (2), 391–408.
Tendi, Miles Blessing (2010), Making History in Mugabe’s Zimbabwe: Politics, Intellectuals, and the Media, Oxford:
Peter Lang.
Thomas, Scott (1996), The Diplomacy of Liberation: The Foreign Relations of the ANC Since 1960, London:
I.B.Tauris.
Tomini, Luca and Claudius Wagemann (2018), ‘Varieties of Contemporary Democratic Breakdown and Regression:
A Comparative Analysis’, European Journal of Political Research, 57 (3), 687–716.
Tostensen, Arne and Beate Bull (2002), ‘Are Smart Sanctions Feasible?’, World Politics, 54 (3), 373–403.
Tsebelis, G. (1990), ‘Are Sanctions Effective? A Game-Theoretic Analysis’, Journal of Conflict Resolution, 34 (3),
3–28.
Urdal, Henrik and Kristian Hoelscher (2012), ‘Explaining Urban Social Disorder and Violence: An Empirical Study
of Event Data from Asian and Sub-Saharan African Cities’, International Interactions, 38 (4), 512–28.
van Donge, Jan Kees (1998), ‘Reflections on Donors, Opposition and Popular Will in the 1996 Zambian General
Elections’, The Journal of Modern African Studies, 36 (01), 71–99.
von Soest, Christian and Michael Wahman (2015), ‘Are Democratic Sanctions Really Counterproductive?’,
Wahman, Michael, Jan Teorell and Axel Hadenius (2013), ‘Authoritarian Regime Types Revisited: Updated Data in
a Comparative Perspective’, Contemporary Politics, 19 (1), 19–34.
Wallensteen, Peter (2000), A Century of Economic Sanctions: A Field Revisited, Uppsala: Department of Peace and
Conflict Research.
Weiss, Thomas G. (1999), ‘Sanctions as a Foreign Policy Tool: Weighing Humanitarian Impulses’, Journal of Peace
Research, 36 (5), 499–509.
Wood, Reed M. (2008), ‘A Hand Upon the Throat of the Nation’: Economic Sanctions and State Repression,
1976–2001’, International Studies Quarterly, 52 (3), 489–513.
World Bank (2011), World Development Indicators, Washington, DC, accessed 6 August 2020 at https://databank.
worldbank.org/reports.aspx?source=world-development-indicators.
Young, Crawford (1996), ‘Africa: An Interim Balance Sheet’, Journal of Democracy, 7 (3), 53–68.

11. Secondary sanctions mechanism revisited:
the case of US sanctions against North Korea
Baran Han
11.1 INTRODUCTION
When the Democratic People’s Republic of Korea (hereafter, North Korea) conducted its
4th nuclear test on 6 January 2016 and a missile test on 7 February 2016, the US Congress
responded with the first stand-alone sanctions against North Korea—the North Korea
Sanctions and Policy Enhancement Act of 2016 (hereafter, NKSPEA)—which was followed
by Executive Order 13722. Individuals designated to have been involved in North Korea’s
transportation, mining, energy, or financial services were targets of the sanctions. After North
Korea tested its first and second intercontinental ballistic missile (hereafter, ICBM) in July
2017, Executive Order 13810 was issued, which denies the foreign financial institutions that
conducted or facilitated significant transactions tied to trade with North Korean access to the
US banking system.
The Act and Executive Orders are secondary sanctions, which provide the legal grounds
to punish third parties—nation states, businesses, or individuals—for engaging with North
Korea. Historically, secondary sanctions have been almost always called for by the US, one
well known exception being the Arab League boycott of Israel.1 For the threat of the secondary
sanction to be credible, the sender has to have economic and political leverage that other states
cannot ignore. Even the US-led secondary sanction drives, however, had an unsuccessful track
record until very recently (Clawson, 2010). The Helms Burton Act of 1996 resulted in firms
from Belgium, Canada, France, and Germany replacing US firms in Cuba (Hufbauer et al.,
1997; Yang et al., 2009). When the EU opposed the Iran Libya Sanctions Act of 1996, President
Clinton ended up using a presidential waiver to allow the firms to continue their businesses
with Iran. The “extraterritorial” nature of secondary sanctions gave them weak legal grounds
(Meyer, 2009) and has been subject to dispute (Patterson, 2013).
The change of view on secondary sanctions as an effective foreign policy tool in resolving
deadlock conflicts (Maloney, 2015) came as the Comprehensive Iran Sanctions, Accountability,
Divestment Act of 2010 (hereafter CISADA) led the international community to partake in
the sanctions drive against Iran as a response to its nuclear proliferation. By threatening the
third parties that engaged in financial transactions, trade, and investment in certain sectors of
Iran, CISADA complemented the UN Security Council (hereafter, UNSC) resolutions with its
extended scope as well as a monitoring and enforcement framework, and subsequently played
a key role in deriving an agreement between P5+1 (the UN Security Council’s five permanent
members—China, France, Russia, the UK, and the US and Germany) and Iran in July 2015
(Han, 2018).
Thus, it was only natural for the US to turn to secondary sanctions in dealing with North
Korea for its continuing provocations, maturation of nuclear technology, and impasse negotia-
tions. The UNSC Resolutions gradually strengthened after 2006, but as with the Iranian case,
223
Baran Han - 9781839102721
not only were the sanctions defined narrowly due to the objections of veto holding council
members, China and Russia, but also weakly enforced (Haggard, 2016). With over 90 percent
of North Korean trade being conducted with China, its disregard of the UN sanctions was
identified as the reason for the ineffectiveness. It was only after 2016, as the US secondary
sanctions were being implemented, that China began to show significant commitment toward
enforcing the UNSC Resolutions.
This chapter explores the case of US secondary sanctions against North Korea—their
background, structure, and effectiveness—guided by a game-theoretic framework. Game
theory is an excellent tool to analyze strategic interactions of two or more actors in interna-
tional relations.2 Though the reductionist approach with simplified assumptions such as the
actors of the game being a unitary, representative entity with consistent utility functions can
be considered as limiting, insights can be drawn by focusing only on the key attributes of the
sanctions dynamics. The framework provided here can always be extended to incorporate
additional components that one considers to be critical in the analysis.
The rest of the chapter is as follows. In the next section, I present a game-theoretic frame-
work of secondary sanctions. I then describe the key features of the US and UN sanctions
against North Korea and discuss their effectiveness. I conclude with a note on possible future
research.
11.2 SECONDARY SANCTION FRAMEWORK
How do secondary sanctions work and when can these be effective in sustaining multi-
lateral cooperation? Because of the dearth of cases, while there has been ample research
that theoretically and empirically explores the importance of multilateral cooperation for
sanctions success (Bapat and Morgan, 2009; Drezner, 2000; Early, 2012; Hufbauer et al.,
2007; Kaempfer and Lowenberg, 1999; Martin, 1992, 1993; McLean and Whang, 2010;
Elliott, 1998; Gilpin, 1984), there does not exist a Large-N study on secondary sanctions.
Explicit theoretical treatment of secondary sanctions to date that the author is aware of are
Martin (1992, 1993) and Han (2018). Martin (1992, 1993), using a dyadic game between
sender and target, argues that the credibility of secondary threats either signaled by greater
self-imposed costs in executing the threat or high domestic and international audience costs
that the sender would incur reneging on the punishment could lead to cooperation. Using
a triadic game of sender, third party, and target, Han (2018) shows that if the secondary
sanction threats are too costly to execute from the point of view of the sender, it would not
be considered credible. If the sender announces a manageable threat and alters the third
party’s payoffs such that it is actually better off to participate in the sanctions campaign
against the target than not, one is likely to see cooperation as we have for the Iranian case in
the 2010s. Secondary sanctions can be welfare improving for third parties that value target
compliance but find it too costly to voluntarily participate in the sanctions when the target
complies at a suboptimal level.
In this section, I present a game-theoretic framework to explore the mechanism of secondary
sanctions in the presence of maturing technology. Suppose there are three states where S is the
leading sender, R is a potential sender or a third party, and T is the actual target. There are other
states in the world, but we do not explicitly include them here. In the North Korean sanctions
context, S is the US, R is China, and T is North Korea.
Baran Han - 9781839102721

Secondary sanctions mechanism revisited 225
T
a r
R
UT
UR dR
US
S
p
UT (1 – aTR dR) – c + h(c, t0)

UR(1 – aRT dR – aRS p) – gR h(c, t0)
US (1 – aSR p) – gS h (c, t0)
Figure 11.1. Game Tree
11.2.1 Sequence of Moves
The timeline of the stage game is as follows. Suppose T comes to this stage game having been
sanctioned by R at a level of d R0 for developing a certain technology without any secondary
pressure from S. R and S threaten T to give up the technology, which T can accept {a} or reject
{r}. S threatens R to sanction T if T does not comply. When T accepts, the sanction is lifted
and the game ends. When T rejects, R chooses a punishment level for the period d R ∈ [d R0 , 1] ,
based on which S decides on how much to punish R, or p ∈ [0, 1]. The stage game with payoffs
is depicted in Figure 11.1. We are interested in a supergame where the stage game is infinitely
repeated: the states involved believe that further rounds of negotiations would follow without
exactly knowing the end point. Even when T agrees to discard the technology and the sanction
is lifted for that period, T’s future decisions would be a result of continuing negotiations among
the states involving sanctions threats.
11.2.2 Payoffs
The gains from business-as-usual economic relations without any sanction imposed is repre-
sented as Uj and the coefficient αjk reflects the economic dependency of j to k where j, k = R,
S, T, and j ≠ k satisfying 0 ≤ αjk < 1: gains from business with k from j’s perspective would be
αjkUj. To reflect the US–North Korea relations, we assume that αST = αTS = 0, or that S and T
have no business between them to begin with. The three states have economic relations with
other states in the world: αTR, αRT, αSR are strictly positive but not equal to 1.
Suppose that the reason behind sanctions against T is its cumulative investment in a certain
technology. The technology level h(c, t0) is a function of c, or the size of investment incurred
periodically by T and t0, or the total number of periods of investment coming into the current
stage. We assume that ∂h(c, ∂c
t0 ) ∂h(c, t )
> 0, ∂t 0 > 0: technology improves at an increasing rate with
0
respect to the unit size and duration of investment. S and R value T’s compliance in discarding
the technology at γS and γR, respectively. When T does not comply, their payoffs are reduced
by γSh(c, t0) and γRh(c, t0). Let’s suppose that the initial sanction level d R0 that T faces at the
beginning of the game is an increasing function of γS, γR and h(c, t0) and a decreasing function
of αRT or R’s dependency on T. For instance, the maturity of North Korea nuclear technology
as well as how much the US and China value deterrence would influence the level of UN
Baran Han - 9781839102721

Resolutions, which would in turn influence the level of punishment d R0 that China imposes
on North Korea without US secondary sanctions. Domestic or international audience costs
(Dorussen and Mo, 2001; Schelling, 1960; Drezner, 2000; Martin, 1993), though not explicitly
modeled here, would influence the size of the initial sanction level d R0 . The greater China’s
economy depends on North Korea, however, the less China will be willing to impose sanctions
on North Korea. To focus on pure strategies, we assume that if payoffs are equal between
accept and reject, T chooses to accept.
11.2.3 Equilibrium Solutions
I solve for the subgame perfect Nash equilibrium with a common discount factor θ for all
states: the discount factor can be thought of as each state’s perception of the probability that the
stage game will continue to the next period. There are many subgame perfect Nash equilibrium
strategy profiles in an infinitely repeated game, but here we focus on two solutions.
11.2.3.1 Nonperformance equilibrium

The first solution is the nonperformance equilibrium or ({r}, {d R0 }, {0}) with d R0 < h(c,
α U
t0 )– c
:
TR T
T rejects discarding the technology, R punishes T at d R0 , and S does not punish R. We denote
h(c, t0 )−c
α U
as d R or the minimum punishment threat that can coerce T to accept. In this equilibrium
TR T
when it is expected that there is no secondary pressure from S, R is expected to sanction T at d R0

as before, which is low enough that T is actually better off continuing to invest in the technol-
ogy and getting sanctioned. S does not punish R for not raising its sanction level against T.
Any secondary sanction threat from S to R is non-credible: every actor knows that the threat
will not be carried out because it is not in S’s best interest to do so.3
11.2.3.2 Coercion equilibrium

The coercion equilibrium builds on a strategy profile consisting of acceptance supported
by single period punishments by the three players—(see Proposition 1 in the Mathematical
Appendix). Given a credible secondary sanction threat p = pE, R can credibly threaten T to
punish at d R = d R (which is greater than the minimum required sanction level d R0 ) when T
rejects and knowing this, T agrees to discard the technology. While in the nonperformance
equilibrium secondary sanction is not implemented because it is not in S’s interest to do so
despite the incompliance of R and T, in the coercion equilibrium the secondary sanction is not
implemented because the sanction threats are credible, and R and T comply.4
In order for the coercion equilibrium to hold, R and S would have to believe that T will
accept once R punishes at d R = d R . Punishment level pE is the minimum threat that would
convince R to sanction T that will coerce T to accept, and pE is the maximum credible punish-
ment threat from S to R in case R does not punish T at d R . Recall that the game begins with T
having been already punished by R at a level lower than the minimum required to coerce T to
accept (d R0 < d R ). The role of the secondary sanction threat is to credibly threaten R at level pE
and push up the maximum level of punishment d R0 that R is willing to impose on T from d R0 to
α
d R0 + α RS pE . If the maximum punishment level R is willing to impose on T after the secondary
RT
sanction threat is greater than the minimum punishment level required by T to accept, or
α
d R ≤ d R0 + RS pE , T will accept.
α RT
Baran Han - 9781839102721

Note here that the maximum credible secondary threat pE increases with an increase in S’s
valuation of T’s compliance (γS) as well as a greater valuation of the future (θ), an increase
of technology level (h(c, t0)), and a decrease in S’s economic dependency on R (αSR). The
minimum secondary threat pE that can induce R’s sanction against T to become stronger and
make T agree to discard its technology increases with an increase in R’s economic dependency
on T (αRT) and a decrease in T’s dependency on R (αTR). Given that the punishment level that R
is willing to impose on T without secondary threat d R0 is an increasing function of γS and γR, pE
also decreases with increasing γS and γR: with compliance valuations of S and R increasing, the
minimum secondary sanction threat required to pressure R in heightening its sanction against
T would be lower, because even without the threat it would have already been punishing T
more (increased d R0 ).
How the maturity of technology h(c, t0) affects pE depends on whether0 the rate at which
∂d
technology h(c, t0) affects the voluntary sanction rate of R toward T, or ∂hR , is greater or less
than the rate at which technology h(c, t0) affects the minimum punishment threat of R that can
∂d ∂d 0
coerce T to accept, or R (see Proposition 2 in the Mathematical Appendix). If ∂hR ≤ ∂d ∂h
R
, then
∂h
with greater technology maturity, pE , the minimum sanction threat required to pressure R
decreases because the initial punishment level d R0 has already responded well to the advancing
technology: a lower secondary sanction threat is sufficient to coerce R to increase its sanction
∂d 0
toward T. On the other hand, if ∂hR > ∂d
∂h
R
, the minimum secondary sanction threat required to
pressure R increases. With greater technology maturity, the cost of giving it up increases for
T and raises the minimum punishment threat of R that can coerce T to accept. The increased
voluntary punishment of R is insufficient to convince T to abandon the technology and requires
an increased secondary sanction threat for R to credibly threaten T to comply.
11.3 UN SANCTIONS AGAINST NORTH KOREA
The first UNSC Resolution against North Korea came after North Korea’s missile launch on 16
July 2006. Nine more resolutions have followed, mainly condemning the missile and nuclear
tests and demanding NK abandon “nuclear weapons, existing nuclear programs, . . . weapons
of mass destruction and ballistic missile programs in a complete, verifiable, and irreversible
manner” (S/RES/2397).
Though the level of sanctions gradually increased with continuing missile and nuclear tests,
before 2016, the resolutions were defined narrowly. Asset freezes, prohibition of financial
services, technology transfer restrictions as well as trade bans were imposed given that they
were directly related to the missiles and nuclear programs (S/RES/2094). In January 2016,
commercial trade was included (S/RES/2270). Throughout 2016 and 2017, the UNSC gradu-
ally extended the sanctions on trade, access to foreign financial institutions, North Korean
nationals working abroad, as well as inspection and transportation of North Korean vessels
and aircraft since they may contribute to the nuclear and missile programs.
The most notable inclusion was mineral import bans by member states that targeted North
Korean coal, iron, iron ore, gold, titanium ore, vanadium ore, and rare earth elements. In 2015,
coal was the top ranked export good of North Korea and took up 44.7 percent of its exports to
China, with which North Korea conducted 91.3 percent of its total trade.5 In Resolution 2270
(UN Security Council, 2016a), coal trade was allowed only if it was for livelihood purposes of
Baran Han - 9781839102721

North Koreans. In the following Resolution 2321 (UN Security Council, 2016b), a cap on coal
was applied even though it was for livelihood purposes and unrelated to generating revenue for
North Korea’s nuclear or ballistic missile programs. In 2017 after two ICBM tests in July, the
caps and livelihood purposes exceptions were eliminated and coal trade was fully banned (S/
RES/2371, UN Security Council, 2017a). The Resolution was also the first UN sanction that
restricted refined petroleum as well as crude oil exports to North Korea with an aggregate cap.
The extended scope and increased levels of the sanctions were not only to punish North
Korea for its continuation of nuclear technology investment, but also to respond to the
increasing of the minimum required sanctions threat d R to coerce North Korea as its nuclear
technology h(c, t0) matured. There were, however, two concerns by the interested states going
into the UN Resolutions in 2016. First, the insufficient level of the UNSC Resolutions and
second, the weak implementation capability of the UNSC.
11.3.1 Compromised Level of UN Sanctions
China, a permanent UNSC member, has been accused of watering down the levels of the
UNSC Resolutions. Sharing a border and political as well as economic interests, China and
North Korea have been staunch allies. Given that for China, North Korea is an inconsequential
82nd trade partner (low αRT), imposing sanctions would not be too costly to the Chinese
economy. China has also made it clear that it does not want a nuclear capable North Korea.
Economic sanctions that might lead to a collapse of the country, however, would be even less
desirable because they would likely be followed by instability in the border regions and a
large influx of refugees. Thus, the relative value that China puts on North Korea’s compliance
in discarding the weapons program has been low (low γT) compared to other states, and the
maximum sanction level it was willing to impose on North Korea d R0 has been low.
Being a veto holding permanent UNSC member, such reluctance to sanction North Korea
harshly led to a lower level of UNSC Resolution even with rising global concerns about
North Korea’s weapons technology. The “livelihood exemption” that China had adamantly
argued for in the earlier resolutions was one loophole: as long as businesses self-claim that a
transaction with the North Korean partner was for the livelihood of North Koreans and did not
contribute to the weapons program, it was allowed (Haggard, 2016). When Resolution 2375
UN Security Council (2017b) was being drafted in 2017, the US wanted a travel ban and an
asset freeze on Kim Jung Un, an authorization of the use of force for ships that do not comply
with inspections, a full blocking of crude oil exports to North Korea, and a banning of North
Korean employment abroad.6 China with Russia countered the proposal and the final version
of the resolution reflected a compromise: there was no mention of Kim Jung Un, and the
inspections of ships were to be performed with the consent of the countries where the ships
were registered. For the crude oil exports, rather than a full blocking, a cap was introduced
and the new work permits were not to be provided unless it was for humanitarian purposes
and denuclearization.
Suppose the final UNSC Resolution level is dUN, which most likely would be a function of
the level of sanctions that China is willing to impose on North Korea without external pressure,
d R0 , and nuclear technology, h(c, t0). Even with the gradual strengthening of the resolutions
due to advancement of North Korean nuclear technology, because of China, the UN resolution
level is likely to not have been higher than the level of sanctions that China was willing to
impose without secondary pressure, or dUN ≤ d R0 .
Baran Han - 9781839102721

11.3.2 Weak Enforcement Mechanism of the UN sanctions
Though sanctions are the most important and frequently used coercive tool for the UNSC
with which to promote peace and security, their effectiveness has always drawn questions
(Boulden and Charron, 2009). The UN system’s insufficient capacity to monitor and manage
sanctions implementation has been one of the reasons noted. While all member states have
an obligation to implement sanctions (UN Charter Article 25), without domestic legislation
to follow up, resolutions do not have much bite. Since member states differ in their access to
specialized knowledge and lack domestic institutional capacity for sanctions implementation,
timely application of the UN Resolutions is not always possible—even the EU took six months
to pass legislation implementing the sanctions against North Korea (Portela, 2010: 18).
There does exist a UNSC Sanctions Committee on North Korea that gathers information
from member states about North Korea’s illicit activities, determines sanctions violations
and decides upon exemptions, and regularly issues observations and recommendations (S/
RES/1718, UN Security Council, 2006). The members of a Panel of Experts assist the
Committee in carrying out its mandate and gather, examine, and analyze information regarding
member states’ sanctions implementation (S/RES/1874, UN Security Council, 2009). The
evaluation of the performance of the Panel of Experts, however, is that there still is room for
improvement in their functions (Park and Walsh, 2016).
The role of China in the Committee and the Panel of Experts has also been a source of skepti-
cism. There are reports of incidences in the Committee where China declined to designate
certain entities or individuals that are close to its government. Once, the Chinese representative
even publicly rejected releasing a Panel of Experts report in the drafting of which he had
himself participated (Jones, 2015).
In summary, even if the international community succeeded in setting the level of UN sanc-
tions dUN to be higher than the level of sanctions that China was willing to impose on North
Korea without external pressure, or d R0 < dUN , due to its weak enforcement mechanism, dUN was
not being implemented. Thus, regardless of whether dUN was strong enough to pressure North
Korea to discard its nuclear weapons technology, before 2016, China implemented a sanctions
level that was lower than the minimum level required to coerce North Korea (d R0 < d R ). The
world was at an equilibrium similar to the nonperformance equilibrium described in the previ-
ous section where North Korea failed to acquiesce, China punished at a level that could not
coerce North Korea and there was no punishment for China for doing so.
11.4 US SANCTIONS AGAINST NORTH KOREA
After the 4th nuclear test in early 2016, the US turned to secondary sanctions to complement
the unsatisfactory sanctions scope and weak punishment mechanism of the earlier UNSC
Resolutions. Accompanying Resolution 2270 (UN Security Council, 2016a) to achieve
“peaceful disarmament of North Korea,” the NKSPEA (18 February 2016) authorized the US
president to block and prohibit all transactions in property in the US of persons designated
to have been engaged in trade, training, or financial support for the North Korean weapons
program, luxury goods trade, censorship, human rights abuse, money laundering, undermining
of cybersecurity, and significant amounts of trade in natural resources directly related to the
weapons program. A follow-up Executive Order 13722 (15 March 2016) by President Obama
Baran Han - 9781839102721

ordered asset blocking of persons engaged in transportation, mining, energy, or financial

services even if they did not contribute directly to the weapons program.
In July 2017, after North Korea tested its ICBMs potentially capable of reaching cities in
the mainland US, the US ratcheted up the level of sanctions with a renewed determination
not only to hold “North Korea to account” but also to make “nations accountable to their
commitments to isolate the regime.”7 Before the UNSC acted, the amended NKSPEA (2
August 2017) included in their discretionary designation list those that have traded in crude
oil, refined petroleum products, and garments. In the subsequent Executive Order 13810 (20
September 2017) after the 6th Nuclear test on 3 September 2017, for the first time, foreign
financial institutions that conduct transactions on behalf of anyone designated for sanctions
and transactions related to North Korean trade were denied access to the US banking system,
and their US based assets and property were blocked.
Though the scope of the secondary sanctions covered more grounds than the UN sanc-
tions (Rennack, 2020), their priority was to get states—i.e., China—to abide by the UNSC
Resolutions. NKSPEA specifically uses UNSC limits as benchmarks when it authorizes
the President to designate any person who trades in coal, iron, iron ore, textiles, seafood,
petroleum products, or crude oil for asset freezes. Actually, imposing the secondary sanctions
beyond the UNSC Resolution levels on violating third parties did not happen often. For
instance, NKSPEA requires the President to impose sanctions on any foreign persons who
employ North Korean labor, while the UNSC Resolutions prohibit entities from entering into
new contracts with North Korean exported labor (S/RES/2375, UN Security Council, 2017b)
and required member states to repatriate exported North Korean labor within two years
(S/RES/2397, UN Security Council, 2017c). Only in January 2020 after the deadline of the
UN sanctions passed in December 2019, the US blacklisted two entities involved with North
Korean exported labor.8
The true strength of the US sanctions was in the possibility of actually punishing the
designated persons with asset freezes. Targeting foreign financial institutions that con-
ducted transactions related to North Korea (Executive Order 13810) meant that they could
be punished for being involved in transactions for any goods and services. Advancement
of North Korea’s weapons technology raised the importance the US put on North Korea’s
compliance (γS), which resulted in a greater maximum secondary threat pE that the US was
willing to impose on third-party states to get to the coercion equilibrium. While in 2016,
almost all of the individuals and entities designated for violation of the US sanctions were
North Korean,9 beginning in June 2017, it started to include a number of entities based in
Russia and China.
The main target of the secondary sanctions was, of course, China. The imposition and
increase in the level of US secondary sanctions over time despite China’s more adamant stance
against North Korea reflected in the UNSC Resolutions can be understood with Proposition
2. The minimum required secondary sanction threat pE to coerce China was increasing
because the rate at which China was willing to impose additional sanctions on North Korea
as the weapons technology was maturing was below the rate at which the minimum level of
(∂d
)
0
sanctions that was required to convince North Korea to give it up was increasing R > ∂d R .
∂h ∂h
Mostly asking China to enforce the UNSC sanction levels (dUN) shows that the US perceives
dUN to be not far away from d R , the actual required sanction level that would lead them to a
coercion equilibrium.
Baran Han - 9781839102721

11.5 EFFECTIVENESS
To determine the effectiveness of US secondary sanctions, we examine: first, how much China
has increased its sanctions level against North Korea; and second, whether the heightened
sanctions levels have damaged North Korea enough to induce behavioral change.
11.5.1 Chinese Participation
While the impact of sanctions on the trade between North Korea and China in 2016 was
negligible, from 2017, the effect started to kick in as seen in Table 11.1.
Total North Korean exports to China in 2017 decreased by 37.3 percent from 2016 and
in 2018 by a further 88.2 percent. Total imports from China slightly increased in 2017 but
decreased by 33.4 percent in 2018. This was strictly in line with the UNSC Resolutions: while
the 19 UNSC sanctioned goods took up 97.4 percent of total exports to China from North
Korea, their share plummeted by 95.5 percent and 47.5 percent respectively in 2017 and 2018
(Jeong, 2020). The most quoted example is North Korean coal exports to China. While at first
the UNSC Resolution allowed for coal imports from North Korea for livelihood purposes (S/
RES/2270, UN Security Council, 2016a), by the end of 2016 a cap was imposed even if the
coal was for livelihood purposes (S/RES/2321, UN Security Council, 2016b). Government of
China’s MOFCOM and GACC Announcement No. 12 of 2017 (20 February 2017) declared
that, in order to execute the UNSC Resolution, it was suspending coal imports till the end of
the year.10 In 2018 and 2019, official coal imports from North Korea to China were zero.
Whether the reduction in the volume of trade between China and North Korea can be attrib-
uted to the US secondary sanctions is debatable given that almost all of the sanctions imposed
by China were within the scope of the UNSC Resolutions. There is evidence that China was
willing to impose more sanctions on North Korea even without secondary pressure (increase
in d R0 ) as it started to value North Korean compliance more (increase in γR) with the nuclear
technology maturing (increase in h). Diversified interests within the Chinese Communist Party
Table 11.1 North Korean trade with China, 2015–2019 in US millions and percent change
2015 2016 2017 2018 2019

Exports (A) 2,483.9 2,634.4 1,650.7 194.6 208.5
(−12.6%) (6.1%) (−37.3%) (−88.2%) (7.2%)
Imports (B) 2,946.5 3,192.0 3,328.0 2,217.1 2,588.7
(−16.4%) (8.3%) (4.3%) (−33.4%) (16.8%)
(A) + (B) 5,430.4 5,826.4 4,978.7 2,411.7 2,797.2
(−14.7%) (7.3%) (−14.5%) (−51.6%) (16.0%)
(A) − (B) −462.6 −557.6 −1,677.3 −2,022.5 −2,380.2
(−32.1%) (20.5%) (200.8%) (−20.6%) (17.7%)
Note: (Year-on-year change in the parenthesis)
Source: Korea International Trade Association Trade Statistics Database http://stat.kita.net (date accessed October
1, 2020)
Baran Han - 9781839102721

started to emerge that questioned the traditional foreign policy toward North Korea (Gill,
2011). North Korea’s aggressivity and unpredictability were leading to an expansion of the
Japanese military as well as an increase in the US military presence on the Korean peninsula
(Bandow, 2016: 11). When South Korea decided to have the US-made Terminal High Altitude
Area Defense (hereafter, THAAD) anti-missile system deployed in early 2016 to defend itself
from North Korea, frustration toward North Korea grew. The macroeconomic environment
China was facing was another factor. Overproduction in many industries11 as well as stronger
international environmental standards12 reduced its demand for North Korean imports such as
coal (decreasing αRT). Thus, it was natural to expect China to support a strengthening of the
UNSC Resolutions more than it had before and to actually implement them this time.
Though it is difficult to disentangle the effect of UN sanctions from the effects of US sanc-
tions, China’s weak implementation of UNSC Resolutions before 2016 followed by a drastic
change in stance seems to suggest that there must have been more pressure to raise the sanction
levels than before, given the greater cost in violating the Resolutions. Reports of unofficial and
illegal trade and business between China and North Korea still exist (Gao, 2019), but the next
section shows that the amount is insufficient to countervail the impact of sanctions.
There have also been reports of China going beyond the UNSC sanction levels guided by
the US secondary sanctions. Months before the signing of the Executive Order 18310, Chinese
bank branches were said to have been ordered by the country’s central bank—the People’s
Bank of China—not to open any new accounts for North Korean citizens and businesses. Such
accounts would not be a violation of the UNSC Resolutions.13 The day Executive Order 18310
was signed, the US Treasury Secretary followed up with a phone call to the Governor of the
People’s Bank of China to discuss “how . . . to work together.”14 Though China has officially
opposed the US’s “long arm jurisdiction,”15 the two states seem to have been communicating
closely to navigate the implementation of the secondary sanctions.
11.5.2 Impact on North Korea
The international sanctions regime since 2016 has had a dire impact on the North Korean
economy. Table 11.2 shows the trends of North Korea’s GNI growth rate from 2015 to 2019
by sector. The overall GNI decreased, and the GNI of sectors that were hit most severely by
the sanctions saw a substantial reduction.
Whether sanctions are effective in inducing behavioral change in the target has long been a
subject of debate. In the case of the recent sanctions against North Korea, the effectiveness was
Table 11.2 North Korean GNI growth rate 2015–2019
2015 2016 2017 2018 2019
Overall −1.1 3.9 −3.5 −4.1 0.4

Growth Rate
Agriculture −0.8 2.5 −1.3 −1.8 1.4
Mining −2.6 8.4 −11.0 −17.8 −0.7
Manufacturing −3.4 4.8 −6.9 −9.1 −1.1
Source: Bank of Korea economic statistics system http://ecos.bok.or.kr (accessed on October 1, 2020).
Baran Han - 9781839102721

evident. At the Hanoi Summit between Trump and Kim in 2019, Kim asked for the lifting of
the UN sanctions that had been implemented since 2016 and in return offered to “permanently
and completely” dispose of all the plutonium and uranium North Korea held and dismantle
the nuclear production facilities at the primary nuclear site in the Yongbyon area.16 Though the
summit led to no agreement, it was interpreted as a sign that the sanctions had had an impact
on North Korea, persuading it to change its behavior on its weapons technology (Lee, 2020).
Recall that the minimum sanctions level from China that could coerce North Korea to acquiesce
was expressed as d R = h(c,
α U
t0 )−c
. It would be costly to give up its maturing technology, but since
TR T
it was becoming evident that China was going to participate seriously in the sanctions, it was
only rational for North Korea to acquiesce before experiencing greater damage to its economy.
11.6 CONCLUSIONS AND SUGGESTIONS FOR FURTHER

RESEARCH
This chapter examined how the US secondary sanctions mechanism coerced China to get on
board in implementing the UNSC Resolutions against North Korea. I provided a game-theoret-
ical framework of secondary sanctions when there exists a prohibited technology that advances
with time. According to the framework, though advancement of the target’s technology may
raise the level of sanctions that a third-party state would willingly impose on a target, it may
fall short of coercing the target to discard the technology. A credible secondary sanction threat
from a leading sender could potentially pressure the third party to raise the sanctions level.
As North Korea was testing and demonstrating its weapons technology through missile and
nuclear tests in 2016, the international community was alarmed. The UNSC Resolutions in
response included, for the first time, commercial trade that could potentially harm the liveli-
hoods of ordinary North Koreans. The US complemented the UNSC Resolutions with second-
ary sanctions that not only punished non-US individuals or entities that violated the Resolutions,
but also authorized the President and the State Department to punish beyond the Resolution
levels. With every weapons technology milestone reached by North Korea, the US ratcheted
up the secondary sanction threats: it was becoming more costly for North Korea to abandon the
maturing technology, and the voluntary increase in sanction levels of China was not enough.
US secondary threats seem to have played a role in China’s enhanced commitment to sanc-
tion implementation. North Korea has been open about the economic hardship it was suffering
as a result of the sanctions and demonstrated its willingness during the Hanoi Summit 2019 to
give up substantial amounts of its weapons program to have them lifted. Though no agreement
was reached, the interplay of the UN resolutions and the US secondary sanctions against North
Korea from 2016 to 2019 in successfully coercing China to partake in the sanctions and North
Korea to come to the negotiation table demonstrated how sanctions could work.
Future research on the game-theoretic framework front on secondary sanctions could involve
relaxing the complete information assumption of the players’ payoffs and introduce different
types of players. Examining how secondary sanctions lead to different social welfare conse-
quences within the third-party state would also be an interesting extension. Since the increase in
voluntary sanctions levels of the third party responding to the maturing technology could lower
the minimum credible secondary sanctions threat that would result in target state compliance,
there would be winners and losers due to the introduction of secondary sanctions. In the context
Baran Han - 9781839102721

of Chinese sanctions against North Korea, one could explore the roles domestic politics and
industry dynamics played in shaping the sanction implementation processes and outcome.
NOTES
1. The Arab League boycott of Israel not only prohibited citizens of an Arab League member from doing business
with either the Israeli government or an Israeli citizen, but also extended the boycott to any entity that did business
with Israel (Weiss 2017).
2. For an excellent discussion of the benefits and limitations of game-theoretical frameworks in studying interna-
tional relations, see Stein (1999).
3. A credible sanction threat, on the other hand, would be a threat that every actor knows will be carried out. The
following Coercion equilibrium is based on a credible sanctions threat.
4. Morgan et al. (2009) discuss the importance of distinguishing sanction threat and sanction implementation in
empirical research into sanctions. Note here that in the model presented we expect sanctions to be implemented
when non-credible threats fail to change the target’s behavior. In reality, however, information asymmetry on the
players’ payoff functions makes it difficult to know a priori whether a sanction threat will be actually carried out
(Schelling, 1960; Boulding, 1962; van Bergeijk, 2009, p. 149).
5. KOTRA 2016. 16-0082015 North Korean Foreign Trade Trends (in Korean) accessed 23 April 2020 at https://
news.kotra.or.kr/common/extra/kotranews/globalBbs/249/fileDownLoad/39367.do.
6. “After U.S. Compromise, Security Council Strengthens North Korea Sanctions,” New York Times, 9 November
2017, accessed 10 March 2020 at www.nytimes.com/2017/09/11/world/asia/us-security-council-north-korea.html.
7. “We’re Holding Pyongyang to Account,” Wall Street Journal, 13 August 2017. Accessed 10 March 2020 at https://
www.wsj.com/articles/were-holding-pyongyang-to-account-1502660253.
8. “China Fails to Repatriate North Korea Workers Despite U.N. Sanctions: U.S. Official,” Reuters, 23
January 2020. Accessed 15 April 2020 at https://www.reuters.com/article/us-northkorea-usa-china-sanctions/
china-fails-to-repatriate-north-korea-workers-despite-u-n-sanctions-u-s-official-idUSKBN1ZL34H.
9. The U.S. Department of the Treasury keeps Specially Designated Nationals And Blocked Persons List (SDN),
which can be found in https://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/archive.aspx. The
number 141 includes several duplicated individuals or entities to take into account spelling and capitalization
variation of their names.
10. Accessed 12 April 2020 at english.mofcom.gov.cn/sys/print.shtml?/policyrelease/buwei/201702/20170202520711.
11. “China Reduces Imports from North Korea,” CBC April 7 2018. Accessed 15 April 2020 at https://www.cbc.ca/
news/business/china-north-korea-imports-1.4609739.
12. “China’s pollution crackdown poses serious threat to North Korea’s Economy,” UPI March 9 2015. Accessed
15 April 2020 at https://www.upi.com/Top_News/World-News/2015/03/09/Chinas-pollution-crackdown-poses
-serious-threat-to-North-Koreas-economy/6301425916647/.
13. “China Banks Fear US North Korea Sanctions,” BBC News 12 September 2017. Accessed 25 April 2020 at
https://www.bbc.com/news/business-41242411.
14. White House Press Release, Press Briefing by Treasury Secretary Steven Mnuchin 21 September 2017.
Accessed 26 April 2020 at https://www.whitehouse.gov/briefings-statements/press-briefing-treasury-secretary
-steven-mnuchin-092117/.
15. “China opposes ‘long arm jurisdiction’, says Beijing after US action against Chinese firm,” South China Morning
Post, 27 September 2016. Accessed 8 April 2020 at https://www.scmp.com/news/china/diplomacy-defence/
article/2023030/china-opposes-long-arm-jurisdiction-foreign-ministry#!
16. “North Korea Asked for only a Partial Lifting of Sanctions at Summit with Trump, Its Foreign Minister Said,” CNN,
1 March 2019. Accessed 8 April 2020 at https://edition.cnn.com/2019/02/28/asia/north-korea-hanoi-summit-intl/.
REFERENCES
Bapat, N. and T.C. Morgan (2009), ‘Multilateral versus unilateral sanctions reconsidered: a test using new data,’
International Studies Quarterly, 53, 1075–1094.
Bandow D. (2016), ‘Will China solve the North Korea problem?’, Dec 2016. 806. Policy Analysis, Cato Institute.
accessed 1 April 2020 at https://www.cato.org/publications/policy-analysis/will-china-solve-north-korea-problem.
Bergeijk, P.A.G. van, (2009), Economic Diplomacy and the Geography of International Trade, Edward Elgar:
Cheltenham, UK.
Boulden, J. and A. Charron (2009), ‘Evaluating UN sanctions: new ground, new dilemmas, and unintended conse-
quences,’ International Journal, 65(1), 1–11.
Baran Han - 9781839102721

Boulding, K.E. (1962), Conflict and Defense—A General Theory. New York: Harper.
Clawson, P. (2010), ‘U.S. sanctions,’ in: Wright R. (ed.), The Iran Primer; Power, Politics, and U.S. Policy,
Washington, DC, USA: USIP Press Books, pp. 115–118.
Drezner, D.W. (2000), ‘Bargaining, enforcement and multilateral sanctions: when is cooperation counterproductive?’
International Organization, 54(1): 73–102.
Early, B.R. (2012), ‘Alliances and trade with sanctioned states: a study of U.S. economic sanctions, 1950–2000,’
Journal of Conflict Resolution, 56(3): 547–572.
Elliott, K.A. (1998), ‘The Sanction glass: half full or completely empty?’ International Security, 23(1): 50–65.
Gao, B. (2019), ‘Chinese cross-border economic activities in North Korea,’ in: Tan-Mullins, M., A. Knee,
and F. Gilardi (eds), China’s Economic Engagement in North Korea, Palgrave Series in Asia and Pacific
Studies, Palgrave Macmillan, Singapore. accessed 3 March 2020 at https://link.springer.com/chapter/10.1007
/978-981-13-0887-1_4.
Gilpin, R. (1984), ‘Structural constraints on economic leverage: market-type systems,’ in: McCormick G.H. and R.E.
Bissell (eds), Strategic Dimensions of Economic Behavior, New York: Praeger, pp. 105–128.
Gill, B. (2011), ‘China’s North Korea policy: assessing interests and influences,’ United States Institute of Peace
Special Report. Accessed 2 February 2020 at https://www.files.ethz.ch/isn/141392/SR_283.pdf.
Haggard, S. (2016), ‘Negotiating a Korean settlement: the role of sanctions,’ Korea Observer, 47(4): 939–961.
Han, B. (2018), ‘The role and welfare rationale of secondary sanctions: a theory and a case study of the US sanctions
targeting Iran,’ Conflict Management and Peace Science, 35(5): 474–502.
Hufbauer, G.C., A.E. Kimberly, T. Cyrus, and E. Winston (1997), ‘US economic sanctions: their impact on trade, jobs,
and wages,’ Working Paper Special April 1997, Peterson Institute for International Economics.
Hufbauer, G.C., J.J. Schott, A.E. Kimberly, and B. Oegg (2007), Economic Sanctions Reconsidered, 3rd edition.
Washington, DC: Institute for International Economics.
Jeong, H. (2020), ‘Evaluation of North Korea’s trade in 2019 and projections: impact of sanctions against North
Korea,’ KDI Review of the North Korean Economy, 22 (1): 48–69. in Korean.
Jones, C. (2015), ‘China’s interests, actors, and the implementation of sanctions against North Korea,’ The Asan
Forum. Accessed 1 January 2020 at http://www.theasanforum.org/chinas-interests-actors-and-the-implementation
-of-sanctions-against-north-korea/#40.
Lee, S. (2020), ‘Overview—evaluation of North Korea’s macroeconomy and projections for 2020,’ KDI Review of
the North Korean Economy, 22(1): 3–38. in Korean.
Maloney, S. (2015), ‘Un-sanctioning Iran: what the nuclear deal means for the future of sanctions.’ Accessed
2 February 2020 at: http://www.brookings.edu/blogs/markaz/posts/2015/08/03-iran-sanctions-future-nuclear
-deal-maloney.
Martin, L.L. (1992), Coercive Cooperation: Explaining Multilateral Economic Sanctions, Princeton, NJ, USA:
Princeton University Press.
Martin, L.L. (1993), ‘Credibility, costs, and institutions: cooperation on economic sanctions,’ World Politics, 45(3): 406–432.
McLean, E.V. and T. Whang (2010), ‘Friends or foes? Major trading partners and the success of economic sanctions,’
International Studies Quarterly, 54: 427–447.
Meyer, J.A. (2009), ‘Second thoughts on secondary sanctions,’ University of Pennsylvania Journal of International
Law, 30: 905–968.
Mo, J. (1994), ‘The logic of two-level games with endogenous domestic coalitions,’ Journal of Conflict Resolution,
38(3): 402–422.
Morgan, T.C., N. Bapat, and V. Krustev (2009), ‘The threat and imposition of economic sanctions, 1971–2000’,
Conflict Management and Peace Science, 26(1):92–110.
Park, J. and J. Walsh (2016), ‘Stopping North Korea, Inc.: Sanctions Effectiveness and Unintended Consequences,’
MIT Security Studies Program. Accessed 25 April 2020 at https://www.belfercenter.org/sites/default/files/legacy/
files/Stopping%20North%20Korea%20Inc%20Park%20and%20Walsh%20.pdf.
Patterson, R. (2013), ‘EU sanctions on Iran: the European political context,’ Middle East Policy, 20(1): 135–146.
Portela, C. (2010), ‘National implementation of United Nations sanctions,’ International Journal, 65(1): 13–30.
Rennack, D.E. (2020), ‘North Korea: legislative basis for U.S. economic sanctions,’ Congressional Research Service.
Updated March 9, 2020. Accessed 10 April 2020 at https://fas.org/sgp/crs/row/R41438.pdf.
Schelling, T.C. (1960), The Strategy of Conflict, Cambridge, MA, USA: Harvard University Press.
Stein, A.A. (1999), The Limits of strategic choice: constrained rationality and incomplete explanation. in: Lake D.A.
and R. Powel (eds), Strategic Choice and International Relations, Princeton, NJ, USA: Princeton University Press,
pp. 197–228.
UN Security Council (2006), United Nations Security Council Resolution 1718. Accessed 1 March 2020 at http://
www.un.org/ga/search/view_doc.asp?symbol=S/RES/1718.
Baran Han - 9781839102721

UN Security Council (2016a), United Nations Security Council Resolution 2270. Accessed 1 March 2020 at http://
UN Security Council (2016b) United Nations Security Council Resolution 2321. Accessed 1 March 2020 at http://
UN Security Council (2017a) United Nations Security Council Resolution 2371. Accessed 1 March 2020 at http://
UN Security Council (2017b) United Nations Security Council Resolution 2375. Accessed 1 March 2020 at http://
UN Security Council (2017c) United Nations Security Council Resolution 2397. Accessed 1 March 2020 at http://
Weiss, M.A. (2017), Arab League Boycott of Israel. CRS Report 7-5700 RL33961. Accessed 3 September 2020 at
https://fas.org/sgp/crs/mideast/RL33961.pdf.
Yang, J., H. Askari, J. Forrer, and L. Zhu (2009), ‘How do US economic sanctions affect EU’s trade with target
countries?’ World Economy, 32(8): 1223–1244.
APPENDIX 11A.1 PROOF OF PROPOSITIONS
Proposition 1
Suppose the secondary sanction threat is p = pE that satisfies pE ≤ pE ≤ pE where

pE = ( −c+h(c, t0 )
αTRU T
− d R0 (γ S , γ R , h, α RT ) ) α RT
α RS
and pE =
γS
α SRU S
Σ∞j=1θ j h(c, t0 + j).
The following strategy profile then constitutes a coercion equilibrium:
● Equilibrium path: play according to the sequence ({a})

● T punishment path (which applies whenever T rejects): R punishes T for a single period
at d R = d R and S does not punish R. From the next period on, R, T, and S return to the
equilibrium sequence ({a})
● R punishment path (which applies whenever R fails to punish the target at d R ≥ d R
after T rejects): S punishes R by p = pE and from the next period on, R, T, and S return
to the equilibrium sequence ({a})
● S specific punishment path (which applies whenever S fails to punish d R < d R by p = pE:
from the next period on, the sequence ({r},{d R0 }, {0}) is played indefinitely.
Proof for Proposition 1
First, the target will not deviate from the equilibrium path as long as the expected payoff of
accepting outweighs the expected payoff of rejecting. That is:
∞ ∞
∑ j=0θ jU T ≥ (1− αTR d R )U T − c + h(c, t0 ) + ∑ j=1θ jU T , (E1)
Thus, as long as d R ≥ min ⎡ −c+h(c, t0 ) , 1⎤, it will be always better for the target to acquiesce. If
⎣ αTRU T ⎦
we assume that UT is great enough to guarantee min ⎡ −c+h(c, t0 ) ⎤ −c+h(c, t0 )
⎣ αTRU T ,1⎦ = αTRU T
, then as long as
d R ≥ d R T will accept.
Baran Han - 9781839102721

Second, the third party will not deviate from the target specific punishment path d R = d R as
long as the expected payoff sanctioning the target at d R = d R outweighs the expected payoff
of punishing at d R = d R0 and get punished by S.
∑ j=1θ jU R ≥ U R (1− α RT d R0 − α RS pE ) − γ R h (c, t0 ) + ∑ j=1θ j U R . (E2)

∞ ∞
U R (1− α RT d R ) − γ R h ( c, t0 ) +
Rewriting this we get: d R ≤ d R0 + α RS pE .

α RT
So as long as d R ≤ d R0
α
+ α RS
RT
pE or ( −c+h(c, t0 )
αTRU T
− d R0 ) α RT
α RS
≤ pE , the third party will not deviate
from this equilibrium path. We denote the LHS expression as pE .
The sender will not deviate from the target punishment path as long as the expected payoff
of sanctioning R at pE is greater than the expected payoff of not doing so.
∞
U S (1− α SR pE ) − γ S h ( c, t0 ) + ∑ θ jU S
j=1
(E3)
∞
≥ U S − γ S h ( c, t0 ) + ∑ θ j (U S − γ S h ( c, t0 + j ))
j=1
γS ∞
pE ≤ ∑ θ j h (c, t0 + j )
α SRU S j=1
Let’s denote the RHS expression as pE .
So as long as pE ≤ pE ≤ pE and d R = d R , T will choose {a}.
∂d 0
Proposition 2 In the coercion equilibrium, if ∂hR ≤ ∂d
∂h
R
, pE decreases with advancement of
∂d R ∂d R0
technology. If ∂h > ∂h , pE increases with advancement of technology.
Proof for Proposition 2
Differentiating pE = ( −c+h(c, t0 )
αTRU T
− d R0 ) α RT
α RS (
= d R − d R0 ) α RT
α RS
both sides with h, we get:
∂ pE ∂d R ∂d R0 ∂ pE ∂d R ∂d R0 ∂ pE
= − . We see that > 0 if and only if ∂h
> ∂h
and that ∂h
≤ 0 if and only if
∂h ∂h ∂h ∂h
∂d R ∂d R0
∂h
≤ ∂h
.
Baran Han - 9781839102721

12. Researching firms and sanctions: theoretical and
methodological considerations
Michal Onderco and Reinout A. van der Veer
12.1 INTRODUCTION
The study of sanctions has historically focused its analysis on states. On the one hand, this
is understandable, given that states have, for a long time, been seen as the primary actors of
international politics, and they are the ones imposing sanctions on others. On the other hand,
the stubborn persistent focus on states is somewhat surprising, given the marked shift away
from the focus on states in other areas of the study of foreign policy and the increased attention
given to other actors.
The focus on states is even more surprising, given that most economic exchange is executed
by firms in modern capitalist economies. Despite this fact, scholarship has largely eschewed
firms as actors in the study of sanctions. Even among economists, the focus has historically
been more macro—rather than micro—when it comes to the study of sanctions. In economics,
the tides started to turn some time ago. Among political scientists, recent work has started
exploring the involvement of banks and insurance companies in sanctions enforcement (de
Goede and Sullivan, 2016; de Goede and Wesseling, 2017; Giumelli, 2018). Yet the role of
firms should also be more closely studied when it comes to the political economy scholarship
on sanctions, which is, in a way, the “standard” sanctions scholarship.
In this chapter, we aim to sketch the future research agenda toward closing the existing gap.
We tackle three questions:
● why political scientists should study firms as actors in sanctions enforcement;

● how the study of firms fits with the existing scholarship on sanctions; and
● how they might design both large- and small-N studies to do so.
Our argument is that the focus on sanctions is important because it is academically relevant
and because it responds to the societal salience of sanctions. We demonstrate that firms are
present in much of the theorizing about the role of firms in sanctions enforcement but argue
that their role should be brought out more explicitly in empirical analyses. Next, we discuss
the promises and pitfalls of studying the role of firms in sanctions research empirically. The
final section suggests issues for future research.
12.2 WHY SANCTIONS RESEARCH SHOULD PAY ATTENTION TO

FIRMS
Although sanctions are one of the oldest tools of economic statecraft, social scientists have
focused surprisingly little on their political economy. This is somewhat surprising given that the
effectivity of sanctions has been studied rather extensively by international relations scholarship.
238
Michal Onderco and Reinout A. van der Veer - 9781839102721
Researching firms and sanctions: theoretical and methodological considerations 239
International relations scholars realized early on that the effectivity of sanctions depends
on the ability to actually enforce them (Hufbauer, Elliott, Cyrus, and Winston, 1997; Pape,
1998). During the Cold War, one of the strongest international sanctions regimes was (eventu-
ally) imposed on South Africa’s apartheid regime. However, scholars explored extensively
the South Africans’ efforts to bypass the sanctions regimes (De Quaasteniet and Aarts, 1995;
Evenett, 2002; Klotz, 1999). The South African experience has given rise to the emergence of
scholarship on sanctions-busting (Early, 2009, 2015; Galtung, 1967).
In South Africa’s case—as in those of the majority of sanctions occurrences throughout
history—the economy of the country imposing the sanctions is significantly larger than that
of the target country (van Bergeijk, 1994). This is not surprising—as observed early on, the
sender’s ability to coerce the target depends largely on the sender’s ability to sustain the cost
of coercion (Baldwin, 1985; Hirschman, 1980 [1945]). This is not really a concern when the
target is a country like North Korea or Zimbabwe, which is rarely a major trading partner for
any country.
During the Cold War, the West did impose sanctions on the Soviet Union, but the economic
exchange between the two was limited to a degree by the USSR’s economic structure (Gould-
Davies, 2020). However, as the early twentieth-first century saw the imposition of sanctions on
larger trading countries—such as Iran and Russia—the ability to weather the costs of economic
statecraft became more relevant. For numerous Western states, these countries are not only
the source of energy resources (whether oil or gas), but they are also lucrative export markets.
The imposition of sanctions, combined with a turn toward import substitution, creates costs
for the sender(s) (Barry and Kleinberg, 2015; Hedberg, 2018; Klotz, 1999). As foreign policy
becomes increasingly politicized in European countries (Hooghe and Marks, 2009; Zürn,
2014), the costs of sanctions to the senders’ economies are becoming increasingly important
for the general public, and hence also for policymakers, in the sender countries.
The sanctions imposed on Russia by the European Union (EU) highlight this logic. The EU
imposed, in coordination with the United States, a series of targeted sanctions and export bans
in the aftermath of Russia’s invasion of Crimea and in response to Russia’s efforts to stoke
violence in Eastern Ukraine. These sanctions targeted high-level officials within the Russian
regime, individuals responsible for the violence, dual-use goods, and a small number of highly
specialized tools for Russia’s oil and gas industry. Russia retaliated by imposing sanctions on
European exports to Russia, mainly in the agricultural sector, under the pretense of food safety
(Hedberg, 2018; Moret et al., 2016). However, in the European debate about these sanctions,
the effect of EU sanctions is often conflated with the effect of Russian counter-sanctions.
European elites are often blamed for trade losses, which are actually caused by the Russian
sanctions (exactly as the traditional model of sanctions would expect; see also Chapter 13 of
by Bělín, and Hanousek this Handbook). As illustrated by Giumelli (2017), while European
countries are unequally impacted by the sanctions, their opposition to the sanctions on Russia
is unrelated to the extent to which they were exposed to Russian sanctions.
As is the case with every public policy, the imposition of sanctions has redistributive effects
domestically. This finding was not lost on the early theorists of economic statecraft and is in
the back of the minds of scholars studying the effectiveness of sanctions (see, for example,
Kaempfer and Lowenberg, 1999; see also Chapter 7 in this Handbook). Our argument is to
bring it to the forefront and to study more closely the domestic redistributive effects of sanc-
tions imposition. In other words, we are interested in finding out who wins and who loses.
This plea is in line with the argumentation developed by economists and political scientists

alike that political tensions increase exporters’ economic costs (Crozet and Hinz, 2016; Fuchs
and Klann, 2013; Heilmann, 2016; Michaels and Zhi, 2010; Morgan and Bapat, 2003). While
existing scholarship recognizes the sanctions-busters, sanctions have an immediate impact on
all affected companies, whether they engage in sanctions-busting or not, and that impact can
be simultaneously positive and negative. Understanding the impact will help us better address
political charges against the use of sanctions.
A careful reader will note that this argument for studying firms as intermediaries is different
from the argument for studying firms as sanctions implementers. The argument for studying
firms as enforcers is slightly different and builds on the so-called New Public Management
(NPM) literature (Pollitt and Bouckaert, 2017). NPM advocated using market forces in admin-
istering public goods (Lane, 2000). When it comes to sanctions implementation, states have
been “outsourcing” their enforcement to private actors such as banks, insurance companies, or
shippers. This outsourcing is due to a combination of two factors: firstly, the shift of the types
of sanctions imposed; and secondly and relatedly, the type of knowledge needed to implement
these new sanctions. Over time, sanctions have moved from comprehensive sanctions target-
ing whole countries, to targeted sanctions that are meant to target only certain individuals,
companies, and sectors (Drezner, 2011). This shift meant that to enforce these sanctions, the
knowledge of private companies who know their customers better becomes more relevant.
These private companies are also more suited to implement the sanctions’ rules. In a recent
study, Giumelli and Onderco looked at the implementation of sanctions within the private
sector in the Netherlands. The authors conducted this study in two stages: firstly, by organ-
izing two workshops with representatives of companies, regulators, and academic experts
under the Chatham House rule, and then secondly by conducting two dozen semi-structured
interviews with representatives of companies from different sizes and fields off-the-record
and on-background. This study pointed out that sanctions legislation leaves much scope for
interpretation by the private actors. Given that these actors face major risks related to noncom-
pliance (mainly fines, but also public shaming), they tend to end up overcomplying with the
rules (Giumelli and Onderco, 2021). The overcompliance by private actors is something on
which other scholars also remarked. This process, in effect, turns smart or targeted sanctions
into quasi-comprehensive ones (Eckert, et al., 2016; Portela, 2015). This is indeed an important
aspect to focus on, and some pioneering work has been done in this area (de Goede and
Sullivan, 2016; de Goede and Wesseling, 2017; Giumelli, 2018), focusing on the interpretation
of the rules by banks, insurance companies and shippers in their enforcement of sanctions.
12.3 STUDY OF FIRMS AND EXISTING SCHOLARSHIP ON

SANCTIONS
The study of sanctions has for a long time recognized that the primary purpose of sanctions
is to put pressure on the target, with the goal of coercing the target into making some sort of
concession (Drezner, 1999; van Bergeijk, 1994).1 The most commonly assumed mechanism
is through the pain logic premised on pressure exercised on the domestic governments by the
impacted actors. The pain logic was the driving force behind the comprehensive sanctions
approach, popular during the Cold War, even though this approach was considered naïve early
on (Galtung, 1967). After the end of the Cold War, driven partially by the concerns stemming
from the humanitarian disaster of the sanctions on Iraq after the First Gulf War, sanctions

shifted from those that were comprehensive to those that were targeted (Drezner, 2011;
Eckert et al., 2016). These targeted sanctions often involve financial bans, travel restrictions,
and frozen assets for selected individuals as well as arms exports bans (Giumelli, 2011). Yet
highly regulated financial sectors (de Goede and Sullivan, 2016; de Goede and Wesseling,
2017; Giumelli and Onderco, 2021) or arms exports are not the only sectors that are often
impacted by sanctions. The imposition of financial bans often ends with blanket restrictions on
conducting businesses with the sanctioned jurisdictions. For example, the American sanctions
on Iranian businesses led to quasi-comprehensive sanctions for financial exchange with Iran,
which in turn led to a large withdrawal of Western businesses from Iran. As with any other set
of public policy, sanctions create winners and losers.
Once sanctions are imposed, firms are impacted because the imposition of sanctions creates
important restrictions on their activities. Losing partners abroad, losing the welfare from trade,
and the increase in the erection of new costly barriers to trade all come into play. Furthermore,
firms become vulnerable to new competitors, as they are being shut out of the market (and their
place is taken by someone else). These competitors can be foreign, but also domestic, since
some of the sanctions lead to the emergence of import substitution (Hedberg, 2018; Klotz,
1999). Early scholarship on sanctions soon recognized that firms have incentives in sanctions-
busting, which increases by the profit that can be reaped by continuing to conduct business
(Pape, 1998). Yet, as the enforcement of sanctions increases and the cost of noncompliance
rises, firms have to balance the cost of noncompliance against potential profit from continuing
trade (Barry and Kleinberg, 2015; Early, 2009; Giumelli, 2018; Morgan and Bapat, 2003).
This makes the role of firms all the more important when thinking about sanctions as a tool
of economic statecraft. For example, it is realistic to expect that firms hit by sanctions lose
revenue in the short term, for the reasons listed above. This is likely to apply especially to
firms with export portfolios that are not too diverse. Firms with diverse portfolios are more
likely to either benefit from having a broader set of partners, or a broader set of goods that
can be traded (or both). This is similar to the logic of economic statecraft in general—the
more diverse an economy, the more difficult to coerce the actor (Blanchard, Mansfield,
and Ripsman, 2000). Yet, over time, we would, for example, expect that firms as profit-
motivated economic actors recover losses. Imagine you are an exporter—if your exports to
one of your markets are sanctioned, you are probably unlikely to wait until the sanctions
are removed but would instead look for alternative markets (for a practical demonstration,
see Haidar, 2017).
These considerations are not a side-show, but rather they are central to the thinking about
economic statecraft in the era where foreign policy is heavily politicized. Thinking about the
structure of the economy, the structure of the export (and import) base, and dependence is
crucial for theorizing about sanctions. The ability of a target to weather economic coercion,
and for the sender to sustain it (and even possible counter-sanctions) is a crucial aspect when
thinking about sanctions effectiveness concretely, as well as about the usability of economic
statecraft in general. This observation comes back to the point that Simmons (2003) raised in
relation to the idea of a so-called “pax mercatoria” (commercial peace), the idea that economic
exchange between actors leads to less conflict. As Simmons points out (2003), our thinking
about the link between the economy and society rests heavily on the theoretical model we
have for state–society relations: how broadly the costs and benefits from trade are distributed
(Gerschenkron, 1962). The same is true about economic statecraft: theorists recognized this
point a long time ago (Baldwin, 1985; Hirschman, 1980 [1945]).

Thinking about the impact of sanctions on firms in both sender and target economies is
crucial for our understanding of the effectiveness and impact of sanctions. In the subsequent
section, we will outline some of the methodological considerations for the study of firms.
12.4 HOW TO STUDY FIRMS
There is a plethora of design choices that can be made when embarking on a study of firms
and sanctions, and, as usual in scientific practice, the specific methodological design of a
study will depend heavily on the research question, the units of analysis and observation, the
availability of good quality data and the methodological expertise of the researcher. Larger
samples of firms require statistical approaches and less information per observation, while
small-N designs yield insights into more detailed patterns of firm behavior that are more
difficult to generalize. Below we highlight a number of these considerations in so far as they
are specifically relevant to the study of firms.
12.4.1 Census
Researchers interested in generic patterns of sanctions-induced firm behavior would ideally

access entire populations of firms that are active in the target’s or sender’s economy. Whereas
identifiability issues and limited resource capacity make accessing entire populations near-
impossible in most areas of study, this is not necessarily the case for firms.2 Most Western
governments provide access to official trade and customs databases that are collected for
policy purposes and made available to researchers under certain conditions and for a price.
EU governments, for example, keep track of firms’ import and export activities on a monthly
basis. They are able to provide data on firms’ exports and imports at a product-firm-month
level, as well as data on relevant covariates. Data availability is not as good in other parts of
the world, and data availability, accessibility, validity, reliability, and completeness are to be
taken seriously. While it is clear that research using firm-level data can be done in countries
under sanctions (see, for example, Haidar, 2017), data concerns need to be taken seriously by
scholars.
Once available, such a wealth of data allows researchers to analyze generic firm-level
patterns for entire (sub)national populations. Naturally, they require appropriate statistical
methods of analysis, such as regression models that properly account for temporal or special
dependency, or network models that can unearth shifts in the trading partners of sanctioned
firms. Having access to entire populations also makes it feasible to use statistical matching
approaches, which allow researchers to make statistical pairings between firms that were
subjected to sanctions and firms that were not (for example because they did not export to the
sender state prior to the imposition of sanctions). This allows researchers to statistically create
the quasi-experimental conditions that enable them to draw less model-dependent and more
causal conclusions regarding the impact of sanctions on individual firms. A variety of statisti-
cal matching approaches are available; for example, Hainmueller (2012) and Iacus, King, and
Porro (2012) provide statistically sound alternatives that are easy to implement in a variety
of commonly used software applications. Similar methods have been used by economists to
study the impact of sanctions. Crozet and Hinz (2016) used such a matching approach with
firm-level data to show how Russian counter-sanctions against the EU after the annexation of

Crimea affected French firms: treated firms faced significant export losses to Russia and were
not able to offset these losses by diverting their exports.
One important issue to consider when using trade data at the firm level is the nature of the
dependent variable. Researchers that have accessed official databases in such a way will most
likely be modeling import and export flows measured in a given currency. In data provided
by governments’ statistical offices, import and export measures often only report the monthly
firm revenue per product after deduction of taxes, transport, and insurance costs. It is therefore
possible that revenues for specific products have negative or null values, while trade did occur.
How such issues must be resolved will depend on the specifics of the data. At the very least, it
is advisable to put some thought into the substantive meaning of a non-positive export value.
The reliability of the data might also be affected by misclassification of goods by exporters
(or importers), whether accidental or intentional (see van Bergeijk, 1994, for a more thorough
discussion of this issue).
This issue is especially relevant when researchers set out to model changes in firms’ trade
flows over time, as a reduction to nothing if trade in a specific product category with a given
country could indicate bankruptcy, trade diversion, or a shift in a firm’s trade portfolio. Some
government statistical offices also have firm-level data on bankruptcy filings, which may pro-
vide a way out of this conundrum. Finally, it is rarely a good idea to use a continuous measure
of (change in) revenue as the outcome variable, as negative and positive values have very
different substantive implications that are not captured well through linear model estimations.
12.4.2 Sampling
If accessing entire populations of firms is not feasible, or if researchers want more control
over the type of data gathered (e.g., they require more subjective data on a firm’s strategies or
experiences with sanctions), they can resort to sampling large numbers of firms themselves.
In this case, it is advisable that researchers with little experience with survey sampling employ
the services of one of the many private organizations that specialize in sampling respondents
for academic research. Whereas these organizations will require a fee, they have ample experi-
ence with targeting the researcher’s desired population of firms while keeping coverage high
and sampling error low. Moreover, they usually provide useful additional services, such as
observation weighting through pre- or post-sampling stratification.
Not relying on government census data can be preferable in a number of situations. First,
given the issues regarding misclassification as mentioned above, official statistics may not
always be a reliable source of firm-level data. Second, it often takes time (sometimes years)
before official census data is made available and alternative methods of gathering data can
provide quicker access to more recent data. Lastly, authorities providing researchers with
census data at a micro level require approval of the researcher’s project. Should such approval
not be granted, alternative sampling strategies are the only way forward.
As with sampling from any population, there are also risks involved with the sampling
of firm-level data by the researcher. Common sampling problems like selection biases, low
response rates, missing-not-at-random data and issues concerning the provision of strategic or
socially desirable responses are well documented in the survey literature (e.g., Fowler, 2014).
Other issues may also arise when more specifically sampling firms for research on sanctions,
however. Depending on the population of interest, researchers may require research permits or
may need to be physically present in the country where the sampling takes place.

12.4.3 Small-N
A third option is to conduct small-N research. Methodologies in this category allow researchers
to collect far more data per observation and may be better suited if they desire detailed insights
into private actors’ experiences and motivations in relation to the imposition of sanctions on
their sector. Such qualitative data will primarily be collected either through focus groups or
interviews with relevant individuals, depending on whether the desired units of observation
are groups or individuals. In the case of small-N research, researchers will have to decide
on the appropriate sampling strategy, which will require at least some idea regarding which
firms have been affected by sanctions. If researchers have little knowledge of the field and
few network ties to draw on, snowball sampling with multiple starting points may be the most
effective strategy to identify a potential sample.
Small-N research on firms and sanctions is more suitable for researchers who are more inter-
ested in understanding their role as policy actors in their own right, as well as for researchers
who want to understand decision-making within firms. Such research might also be suitable
for generating hypotheses and expectations for subsequent large-N research, as is often the
case for small-N and mixed-methods designs (Blatter and Haverland, 2012; Lieberman, 2005;
Yin, 2009).
Small-N firm research also poses a number of sanctions-related challenges for researchers.
First, focus groups and interviews may yield distorted accounts of actual firm behavior for two
reasons. Firms may have vested interests in the removal of sanctions on their sector (or in their
maintenance, as discussed above), and these actors may not present complete or fully accurate
accounts of their intentions, motivations, or strategies. Secondly, the sampling of respondents
may be biased through the higher likelihood that selected respondents are also compliant with
the sanctions. Non-compliant actors may purposefully avoid taking part in any research project
in order to minimize chances of detection. Naturally, this also holds in case of larger-N survey
research (Giumelli and Onderco, 2021).
12.5 CONCLUSION AND SUGGESTIONS FOR FURTHER

RESEARCH
In this chapter, we offered a case for the focus on firms in the study of sanctions by social
scientists. As we argued, much of the theorizing about the effects of sanctions implicitly
assumes certain activities by firms; reflecting more consciously on this activity will come to
enrich the scholarship. Furthermore, there are good theoretical reasons to theorize about the
behavior of firms under sanctions, since this comes close to thinking about economic statecraft
known from the classics of political economy.
In the modern economy, firms carry the costs of sanctions imposition (the loss from trade
is theirs). But the loss from trade is then reflected in the national economy, and policymak-
ers interested in maintaining or increasing their voters’ well-being are concerned about the
impact of sanctions on firms. Firms (private actors) are also becoming increasingly involved
in sanctions enforcement, although we did not focus on this aspect. Cognizant that the study
of sanctions is not that widespread among political scientists, we suggested both large- and
small-N ways to study sanctions and listed some of the methodological considerations that are
specific to the study of firms and sanctions.

Reflecting the role of firms in the study of sanctions will ultimately lead to better scholarship
on economic statecraft. Improved scholarship will be better able to address the most pressing
policy questions related to the imposition of sanctions, which have been thus far side-stepped
by political scientists. There are some immediate research questions that future scholars could
address. Future studies could focus on more countries as well as on more long-term effects
of sanctions on firms. These studies would show us more about the impact of sanctions
imposition, the short-term reaction of firms, but also about the firms’ ability to weather the
imposition of sanctions and then sustain and reinvent themselves. With the growing number
of sanctions regimes, these insights are also relevant for policymakers who increasingly care
about the impact of coercive foreign policy measures on their domestic public. However, more
ambitious future studies could explore the impact of different modes of domestic sanctions
enforcement on the behavior of firms. As Giumelli (2018) argued, even within the EU, differ-
ent countries adopt various modes of sanctions enforcement. Therefore, one can expect that
firms will behave differently depending on how strong the expectation of sanctions enforce-
ment is. Another question open for political scientists is to study in more depth how the costs
of sanctions and their concentration influence public views—in other words, whether the costs
to firms translate to public attitudes. More qualitative studies could then also explore firms’
individual-level decisions, and the interactions between firms, their branch organizations, and
government.
Expanding the scope of the academic work on sanctions and private actors will, in the long
term, increase the policy relevance of the academic work, and will work toward bridging the
policy–academic gap. By addressing in more detail the issue of the costs of sanctions, scholars
might speak to questions on the minds of policymakers.
NOTES
1. Scholars have also recognized that beyond this primary goal, sanctions also have secondary goals related to their
signaling and stigmatization tasks (e.g., Giumelli, 2013; Zarakol, 2014; Adler-Nissen, 2014).
2. Although this data is usually collected for a different purpose, researchers must take extra care in guaranteeing
the validity of results.
REFERENCES
Adler-Nissen, R. (2014). Stigma Management in International Relations: Transgressive Identities, Norms and Order
in International Society. International Organisation, 68(1), 143–176.
Baldwin, D. A. (1985). Economic Statecraft. Princeton, NJ: Princeton University Press.
Barry, C. M., and Kleinberg, K. B. (2015). Profiting from Sanctions: Economic Coercion and US Foreign Direct
Investment in Third-Party States. International Organization, 69(4), 881–912.
Bělín, M. and J. Hanousek (2021). Imposing Sanctions versus Posing in Sanctioners’ Clothes. In P. A. G. van Bergeijk
(ed.), Research Handbook on Economic Sanctions, Cheltenham: Edward Elgar, Chapter 13.
Blanchard, J.-M. F., Mansfield, E. D., and Ripsman, N. M. (2000). Power and the Purse: Economic Statecraft,
Interdependence, and National Security. London; Portland, OR: F. Cass.
Blatter, J., and Haverland, M. (2012). Designing Case Studies: Explanatory Approaches in Small-N Research.
Basingstoke: Palgrave Macmillan.
Crozet, M., and Hinz, J. (2016). Collateral Damage: The Impact of the Russia Sanctions on Sanctioning Countries’
Exports. Centre d’études prospectives et d’informations internationales. Retrieved from http://www.cepii.fr/
PDF_PUB/wp/2016/wp2016-16.pdf.
de Goede, M., and Sullivan, G. (2016). The Politics of Security Lists. Environment and Planning D: Society and
Space, 34(1), 67–88.

de Goede, M., and Wesseling, M. (2017). Secrecy and Security in Transatlantic Terrorism Finance Tracking. Journal
of European Integration, 39(3), 253–269.
De Quaasteniet, T., and Aarts, P. (1995). Putting Money over Mouth, Profit over Principle: Arab and Iranian Oil Sales
to South Africa, 1973–1993. In R. Hengeveld and J. Rodenburg (eds), Embargo: Apartheid’s Oil Secrets Revealed
(pp. 269–279). Amsterdam: Amsterdam University Press.
Drezner, D. W. (1999). The Sanctions Paradox: Economic Statecraft and International relations. Cambridge:
Drezner, D. W. (2011). Sanctions Sometimes Smart: Targeted Sanctions in Theory and Practice. International Studies
Review, 13(1), 96–108.
Early, B. R. (2009). Sleeping with Your Friends’ Enemies: An Explanation of Sanctions-Busting Trade. International
Studies Quarterly, 53(1), 49–71.
Early, B. R. (2015). Busted Sanctions: Explaining Why Economic Sanctions Fail. Stanford University Press.
Eckert, S. E., Biersteker, T., and Tourinho, M. (2016). Introduction. In T. Biersteker, S. E. Eckert, and M. Tourinho
(eds), Targeted Sanctions: The Impacts and Effectiveness of United Nations Action (pp. 1–11). Cambridge:
Evenett, S. J. (2002). The Impact of Economic Sanctions on South African Exports. Scottish Journal of Political
Economy, 49(5), 557–573.
Fowler, F. J. (2014). Survey Research Methods (5th ed). Thousand Oaks: Sage.
Fuchs, A., and Klann, N.-H. (2013). Paying a Visit: The Dalai Lama Effect on International Trade. Journal of
International Economics, 91(1), 164–177.
Galtung, J. (1967). On the Effects of International Economic Sanctions: With Examples from the Case of Rhodesia.
World Politics, 19(3), 378–416.
Gerschenkron, A. (1962). Economic Backwardness in Historical Perspective, a Book of Essays. Cambridge: Belknap
Press of Harvard University Press.
Giumelli, F. (2011). Coercing, Constraining and Signalling: Explaining UN and EU Sanctions after the Cold War.
Colchester: ECPR Press.
Giumelli, F. (2013). How EU Sanctions Work: A New Narrative. EU ISS Chaillot Paper No.129. Retrieved from http://
www.iss.europa.eu/uploads/media/Chaillot_129.pdf.
Giumelli, F. (2017). The Redistributive Impact of Restrictive Measures on EU Members: Winners and Losers from
Imposing Sanctions on Russia. JCMS: Journal of Common Market Studies, 55(5), 1062–1080.
Giumelli, F. (2018). The Role of For-Profit Actors in Implementing Targeted Sanctions: The Case of the European
Union. In O. Bures and H. Carrapico (eds), Security Privatization: How Non-security-related Private Businesses
Shape Security Governance (pp. 123–141). Cham: Springer International Publishing.
Giumelli, F., and Onderco, M. (2021). States, Firms and Security. How Private Actors Implement Sanctions,
Lessons Learned from the Netherlands. European Journal of International Security. DOI: https://doi.org/10.1017/
eis.2020.21
Gould-Davies, N. (2020). Russia, the West and Sanctions. Survival, 62(1), 7–28.
Haidar, J. I. (2017). Sanctions and Export Deflection: Evidence from Iran. Economic Policy, 32(90), 319–355.
Hainmueller, J. (2012). Entropy Balancing for Causal Effects: A Multivariate Reweighting Method to Produce
Balanced Samples in Observational Studies. Political Analysis, 20(1), 25–46.
Halcoussis, D., W. H. Kaempfer, and A. D. Lowenberg, 2021, The Public Choice Approach to International Sanctions:
Retrospect and Prospect. In P. A. G. van Bergeijk (ed.), Research Handbook on Economic Sanctions, Cheltenham:
Edward Elgar, Chapter 7.
Hedberg, M. (2018). The Target Strikes Back: Explaining Countersanctions and Russia’s Strategy of Differentiated
Retaliation. Post-Soviet Affairs, 34(1), 35–54.
Heilmann, K. (2016). Does Political Conflict Hurt Trade? Evidence from Consumer Boycotts. Journal of International
Economics, 99(C), 179–191.
Hirschman, A. O. (1980 [1945]). National Power and the Structure of Foreign Trade. Los Angeles: University of
California Press.
Hooghe, L., and Marks, G. (2009). A Postfunctionalist Theory of European Integration: From Permissive Consensus
to Constraining Dissensus. British Journal of Political Science, 39(01), 1–23.
Hufbauer, G. C., Elliott, K. A., Cyrus, T., and Winston, E. (1997). US Economic Sanctions: Their Impact on Trade,
Jobs, and Wages. Peterson Institute for International Economics Working Papers. Retrieved from http://www.iie.
com/publications/wp/print.cfm?ResearchId=149anddoc=pub.
Iacus, S., King, G., and Porro, G. (2012). Causal Inference without Balance Checking: Coarsened Exact Matching.
Political Analysis, 20(1), 1–24.
Kaempfer, W. H., and Lowenberg, A. D. (1999). Unilateral versus Multilateral International Sanctions: A Public
Choice Perspective. International Studies Quarterly, 43(1), 37–58.
Klotz, A. (1999). Making Sanctions Work: Comparative Lessons. In N. Crawford and A. Klotz (eds), How Sanctions
Work: Lessons from South Africa (pp. 264–282). Basingstoke: Macmillan.
Lane, J.-E. (2000). New Public Management. London: Routledge.

Lieberman, E. S. (2005). Nested Analysis as a Mixed-Method Strategy for Comparative Research. American Political
Science Review, 99(3), 435–452.
Michaels, G., and Zhi, X. (2010). Freedom Fries. American Economic Journal: Applied Economics, 2(3), 256–281.
Moret, E., Biersteker, T., Giumelli, F., Portela, C., Veber, M., Bastiat-Jarosz, D., and Bobocea, C. (2016). The New
Deterrent: International Sanctions against Russia over the Ukraine Crisis. The Graduate Institute Geneva. Retrieved
from http://repository.graduateinstitute.ch/record/294704/files/The%20New%20Deterrent%20International%20
Sanctions%20Against%20Russia%20Over%20the%20Ukraine%20Crisis%20-%20Impacts,%20Costs%20
and%20Further%20Action.pdf.
Morgan, T. C., and Bapat, N. A. (2003). Imposing Sanctions: States, Firms, and Economic Coercion. International
Studies Review, 5(4), 65–79.
Pape, R. A. (1998). Why Economic Sanctions Still Do Not Work. International Security, 23(1), 66–77.
Pollitt, C., and Bouckaert, G. (2017). Public Management Reform: A Comparative Analysis into the Age of Austerity.
Oxford, UK: Oxford University Press.
Portela, C. (2015). How the EU Learned to Love Sanctions. In M. Leonard (ed.), Connectivity Wars: The Geo-
economic Battlegrounds of the Future (pp. 36–42). London: European Council on Foreign Relations.
Simmons, B. (2003). Pax Mercatoria and the Theory of the State. In E. D. Mansfield and B. M. Pollins (eds), Economic
Interdependence and International Conflict: New Perspectives on an Enduring Debate (pp. 31–43). Ann Arbor:
University of Michigan Press.
van Bergeijk, P. A. G. (1994). Economic Diplomacy, Trade, and Commercial Policy: Positive and Negative Sanctions
in a New World Order. Aldershot, UK and Brookfield, VT: Edward Elgar.
van Bergeijk, P. A. G. (1995). The Accuracy of International Economic Observations. Bulletin of Economic Research,
47(1), 1–20.
van den Berg, M. (2014). Does Internationalization Foster Firm Performance? (PhD thesis), Universiteit Utrecht,
Retrieved from http://dspace.library.uu.nl/handle/1874/300220
Yin, R. K. (2009). Applications of Case Study Research (2nd ed). London: SAGE.
Zarakol, A. (2014). What Made the Modern World Hang Together: Socialisation or Stigmatisation? International
Theory, 6(2), 311–332.
Zürn, M. (2014). The Politicization of World Politics and Its Effects: Eight Propositions. European Political Science
Review, 6(1), 47–71.

13. Imposing sanctions versus posing in sanctioners’
clothes: the EU sanctions against Russia and the
Russian counter-sanctions
Matěj Bělín and Jan Hanousek*
13.1 INTRODUCTION
Curtailing international trade flows by means of sanctions is a delicate balancing act in which
the governments of the sender countries reconcile the interests of different groups of stakehold-
ers (Barber, 1979; Morgan & Schwebach, 1995). To their domestic voters, as well as to foreign
allies and adversaries, the imposition of sanctions is a signal that the sender government is
willing to undertake radical steps to effect change in the target country’s policy irrespective
of whether these changes actually take place or not (Lindsay, 1986). On the other hand,
the adverse effects of sanctions on the sender’s domestic markets may turn public opinion
against the continuation of the sanctioning regime. For this reason, whereas imposing harsher
sanctions may have greater impact on the target country (Drury, 1998), it may also stimulate
opposition to the sanctioning regime within the sender country. Yet another dimension of the
sanctioning problem is lobbying: sanctions in the form of a ban on imports originating in the
target country can be a boon to the sender country’s producers, who gain protection from
foreign competitors (Kaempfer & Lowenberg, 1988). In contrast, if the sender country bans
exports to the target country, this closes markets to the sender country’s producers, who are
therefore motivated to lobby their government to lift sanctions and allow exports to resume
(Brooks, 2002; McLean & Whang, 2014).
Even though this economic intuition has received attention in a long line of research
(Galtung, 1967; Kaempfer & Lowenberg, 1988; Mansfield, 1995), testing it on empirical data
has been difficult. Notwithstanding technical problems with data collection (Elliott, 1998;
Pape, 1997, 1998), the main challenge is to construct credible counterfactuals describing what
would have happened in the absence of sanctions. Typically, the counterfactual outcomes
would be generated by an econometric model relying on some source of exogenous variation
in the data, which is a very rare occurrence in international politics, where the (presumably)
strategic behaviour of involved parties is expected to create endogeneity problems. For this
reason, it is unsurprising that econometric analyses of the success rates of economic sanc-
tions (e.g. Hufbauer, Schott, & Elliott, 1990) appear to depend on the particular choice of
econometric models (Drury, 1998).
In this chapter, we provide empirical evidence that strongly supports the theoretical eco-
nomic prediction that domestic considerations in the sender countries are a crucial determinant
of the manner in which sanctions are imposed. Comparing EU sanctions imposed on Russia
in 2014 and Russian counter-sanctions, we find that the European restrictions on exports of
extraction equipment into Russia were drafted in such a way that most of the exports were
unaffected by the sanctions. This allowed European exporters to continue exporting into
Russia, largely unhindered by the sanctioning regime. In contrast, Russian counter-sanctions
249
Matěj Bělín and Jan Hanousek - 9781839102721
on exports of foodstuffs from the EU to Russia seem to have been designed to severely restrict
trade inflows from the EU, thus inflicting significant damage on European exporters.
A natural interpretation of this scenario, which is well in line with previous research
(Brooks, 2002; McLean & Whang, 2014), is the EU’s reluctance to let its exporters sustain
losses on account of the sanctions against Russia. By the same token, the Russian govern-
ment, not having to weigh the welfare of European exporters, was indeed willing to take a
harsher stance against them. This interpretation is bolstered by the extraordinary nature of
this doublet of sanctioning regimes, both motivated by the same impetus, both involving the
same set of countries, both imposed at the same time, which makes it difficult to argue that
the differences in sanctions’ harshness were due to some unobserved factors. In addition, our
identification strategy also exploits the quasi-random assignment of different types of goods
into the sanctioning regime. We are able to show that both European and Russian sanctioning
regimes did not target several classes of goods that are close substitutes to the sanctioned ones.
This variation allows us to create counterfactuals for the trade flows of the sanctioned goods
and thereby quantify the amount of disruption caused by the sanctions.
The remainder of this paper is organised as follows: first, we review the research on the
sanctions of 2014, then describe the econometric methodology used in this study and present
the results. These results are interpreted in the concluding remarks.
13.2 LITERATURE REVIEW
The wealth of well-presented accounts of the historical background to the 2014 Russian
annexation of the Crimean peninsula (e.g. Crozet & Hinz, 2016; Moret et al., 2016; Renz,
2019) allows us to confine the discussion to the statement of key points. Following the Russian
military intervention in Ukraine, which started in early 2014, the EU and the US imposed
sanctions against a number of Russian individuals and firms connected to the Russian govern-
ment (cf. EU Council decision 2014/145/CFSP). Among these measures were asset freezes,
travel bans, and closure of lines of credit to the sanctioned parties. These “targeted” sanctions
were the focus of a study by Ahn and Ludema (2016), who find a significant impact of these
restrictions on the target firms’ profitability.
In the summer of 2014, the EU (and its allies) imposed additional, “sectoral” sanctions that
forbade the export of goods used for extraction of oil and natural gas into Russia (cf. EEC
No 833/2014). In response, the Russian government imposed a ban on imports of European
foodstuffs into Russia (cf. Decree of the President of the Russian Federation No 560). These
sectoral sanctions are the focus of the present study, in which we update earlier work by
Crozet and Hinz (2016) who estimated the effects of the Russian counter-sanctions and found
that the associated loss of trade amounted to about 10.7 billion USD between mid-2014 and
mid-2015. Their estimation relies on a gravity model of trade, which effectively compares
trade flows to Russia with those to non-sanctioning countries. Bělín and Hanousek (2021)
proceed in a similar way, comparing flows of sanctioned goods to those that are similar (within
the same 4-digit code of the Harmonised System of classification) but not sanctioned, using
a differences-in-differences model. Their conclusion is in agreement with Crozet and Hinz
(2016) in terms of the magnitude of the losses due to the Russian sanctions. Finally, Dreger,
Kholodilin, Ulbricht, and Fidrmuc (2016) estimate a VAR model in which they identify the
effect of Western sanctions against Russia. Their analysis suggests that Russian imports have

Imposing sanctions versus posing in sanctioners’ clothes 251
mostly declined due to a fall in oil prices, while the effects of sanctions themselves were rather
subdued.
Building on the previous analyses, we present two new methods of evaluating the sanctions’
impact. We start with a very agnostic approach, in which we simply search for a structural break
at an unknown date (Andrews, 1993) in the time series of exports into Russia and other trading
partners of the EU. In this way, we are able to see if an observer who is unaware of the true date
of sanctions would be able to find the start of the sanctioning regime from the exports data alone.
As a second method, we propose a hybrid estimation that shares properties with both the VAR
and differences-in-differences methods. We estimate this model on the pre-intervention period
and use its predictions to create counterfactuals in the post-intervention period. Comparing the
predictions with actual outcomes supplies estimates of the trade lost due to sanctions. Finally,
we use a classical differences-in-differences method to calculate counterfactuals and show the
robustness of the results from the previous two methods to a change in model specification.
13.3 DATA
We extracted data from the Eurostat database of monthly European trade flows disaggregated
by the 8-digit Common Nomenclature (CN) classification. The CN classification uses the
standard, 6-digit Harmonised System (HS) categories but adds two extra digits for further
refinement pursuant to Article 3 of the EC Regulation No 2658/87. This finer resolution is
necessary because the EU sanctions were imposed on a number of mining goods at the 8-digit
resolution (cf. Annex II to the Council Regulation No 833/2014). For this reason, the use
of the UN Comtrade database or the BACI database (Gaulier & Zignago, 2010) would be
problematic as they use the standard 6-digit HS coding, which would introduce measurement
error to our estimates. On the other hand, Eurostat data only record information supplied by
the European countries, without reconciling it with data from their trading partners. Hence,
some measurement error, albeit of a different kind, might be present here as well. However,
agreement between our results and those obtained from Comtrade data (Crozet & Hinz, 2016)
suggests that the problem of measurement error is minor, if any.
The raw data form a panel, which records trade flows in Euros from the EU into Russia
and 20 other countries that were the EU’s most important trading partners in terms of the
value traded in 2018 (European Commission, 2018): USA, China, Switzerland, Turkey,
Norway, Japan, South Korea, India, Canada, Mexico, Brazil, Saudi Arabia, Singapore, Taiwan,
Vietnam, United Arab Emirates, South Africa, Australia, Hong Kong, and Ukraine. In addi-
tion, we include data on the EU’s internal trade flows as another destination. On average, for
each of the 22 destinations we record trade flows of about 3,800 goods, from January 2010 to
December 2018. We include all the goods that belong to the same HS chapter as the sanctioned
ones, i.e. their classification code starts with the same two digits. The EU’s sanctions involve
goods from chapters 73, 82, 84, 87, and 89. Russian counter-sanctions apply to goods from
chapters 02, 03, 04, 07, 08, 16, 19, and 21.
Examining the raw data immediately reveals notable patterns. Figure 13.1 shows EU
exports of mining equipment to Russia and the US, separating the sanctioned goods from those
that are within the same HS chapter but not subject to sanctions themselves (“controls”). The
sanctioned and control goods share the general time trend, suggesting a synchrony between
them arising from the same supply and demand factors that determine the equilibria in the

.4 15
.3
10
EUR (billions)
.2
5
.1
0 0
2010m1 2012m1 2014m1 2016m1 2018m1
Date (monthly)
Sanctioned RU Sanctioned US
Control RU (right y-axis) Control US (right y-axis)
Notes: Sanctioned RU (US) = exports of sanctioned goods to the Russian Federation (United States); Control RU
(US) = exports of non-sanctioned goods to the Russian Federation (United States). The start of sanctions is marked
by the vertical line.
Figure 13.1 Monthly EU exports of mining equipment to Russia and US disaggregated by

the sanctioning status
markets for both categories of goods (Bena & Jurajda, 2011). A second feature to note is the
volatility of these time series, with short-lived spikes and troughs that are a consequence of
the large deliveries when mining operations expand their capacities (Crozet & Hinz, 2016).
Finally, and most strikingly, the sanctioned goods flowing into Russia display only a
modest decline in the post-sanctions period, essentially following the pre-intervention trend.
This highly counter-intuitive feature is explicable by the provisions in the EU sanctions
package that allow exporters to claim exemptions from the sanctioning regime in order to
honour pre-existing contracts (EEC No 833, sec. 2.2, 3.5, and 4.2). The data, therefore, show
that the exporters were largely successful in applying for these exemptions. As a remarkable
illustration of this discretionary enforcement of the EU sanctions, one may point to the sale of
two French Mistral assault ships to Russia, which would have been possible despite sanctions
because the contract was made in 2010. Nevertheless, the deal was cancelled and the Russian
Federation was reimbursed for the price of the ships and received compensation for breach of
contract (Szczepański, 2015; Tavernise, 2015).
In contrast, the time series for foodstuffs behave very differently, as shown in Figure 13.2.
There is a pronounced drop in imports of goods subject to the Russian counter-sanctions,
which clearly separates the pre-intervention period from the post-intervention one. Moreover,
this drop does not correspond to any comparable change in the time series for the US imports,
suggesting that the break was indeed caused by the sanctioning regime. Some imports of
sanctioned goods still continue to flow to Russia but in vastly diminished quantities. To the best
of our knowledge, no discretion is allowed for granting exemptions from the Russian sanctions
(Resolution of the Government of the Russian Federation No 778). However, whether the

.5 .2
.4
.15
EUR (billions)
.3
.2 .1
.1
.05
0
2010m1 2012m1 2014m1 2016m1 2018m1
Date (monthly)
Sanctioned RU Sanctioned US
Control RU (right y-axis) Control US (right y-axis)
Notes: Sanctioned RU (US) = exports of sanctioned goods to the Russian Federation (United States); Control RU
(US) = exports of non-sanctioned goods to the Russian Federation (United States). The first month of sanctions
(August 2014) is marked by the vertical line.
Figure 13.2 Monthly EU exports of foodstuffs to Russia and the US disaggregated by the
sanctioning status
recorded imports are attributable to some (limited) discretion, measurement error, or re-export
is immaterial to the present study because we seek to compare the relative effectiveness of the
European and Russian sanctioning measures.
13.4 METHODOLOGY
The empirical strategy employed in this study proceeds along two different lines. First, we
consider the time series of European exports of sanctioned goods flowing into Russia and to
21 other destinations (the EU’s internal market and 20 major trading partners). The second
line of investigation studies the entire panel in a differences-in-differences framework.
Encouragingly, the results are similar across methods, lending credence to the estimates.
13.4.1 Time Series Analysis
Beginning with a “minimum assumptions” approach, we search for a structural break at an

unknown date. This search proceeds by specifying a model for the time series under consid-
eration and computing a Wald test for a structural break at each period within a pre-defined
estimation window. The period yielding the largest Wald test statistic is then selected as the
most probable locus for the structural break. Due to the repeated testing, the distribution of this
sup-Wald statistic is non-standard (Andrews, 1993), and hence the corresponding p-values are
calculated using the approximative method suggested by Hansen (1997).

The model to be tested is specified as a modified VAR:
y1 jt = α 0 j + α1 j y1 jt−t + α 2 j y0 jt + α 3 y0 jt−1 + ε jt , (13.1)
where y1jt is the value of sanctioned exports delivered to destination j in period t, y0jt is
the value of control exports. Model (13.1) is a hybrid specification between a VAR and a
differences-in-differences model. Unlike a standard differences-in-differences model, where
the counterfactual is calculated as the average of all control outcomes, here we directly use
y0jt as the counterfactual. This specification immediately suggests itself by inspecting the raw
data, which show concordance in trends between the treated and control groups (see Figures
13.1 and 13.2). In order to put to rest concerns about the appropriateness of model (13.1), we
perform the Kwiatkowski, Phillips, Schmidt, and Shin (1992) test of the stationarity of residu-
als in the pre-intervention period in order to check if there are systematic deviations between
the observed values and the model’s predictions. The search for a structural break then looks
for a statistically significant change in all coefficients in (13.1) in each period, excluding the
7.5% observations at both the beginning and end of the sample.
The second method rests on estimating (13.1) in the period before sanctions were imposed
(until August 2014) and using the estimated model to generate predictions of y1jt in the
post-intervention period. This allows us to compute the deviation of trade flows from levels
predicted by the model:
D jt ≡ y1 jt − ŷ1 jt , (13.2)
and the corresponding cumulative deviation:

Dec2018
CD jt ≡ ∑ D jt . (13.3)
t=Aug2014
The cumulative deviation CDjt measures the value of trade lost (or gained) between the EU
and destination j in the post-intervention period until period t. In order to draw inference on
CDjt, we perform a wild bootstrap (Wu, 1986). We acknowledge that a block bootstrap might
be preferable on account of potentially autocorrelated errors (Kunsch, 1989), but due to the
relatively short time series (54 observations in the pre-treatment window) a block bootstrap
may yield unreliable results. To alleviate these concerns, we conduct cluster-robust inference
in the panel estimation and show that the conclusions remain the same.
13.4.2 Panel Data Analysis
For the full panel dataset, we consider a differences-in-differences method, in which we exploit
the variation in sanctioned status among goods that are otherwise similar to each other. The
empirical specification can be written as:
Dec 2018
yijt = β0ij + ∑ ( )
β1s I ⎡⎣t = s⎤⎦ + β 2s I ⎡⎣t = s⎤⎦ × sanctionsi + ε ijt , (13.4)
s=Feb 2010
where yijt is the value of exports of good i delivered to destination j in period t; β0ij is the set of fixed
effects for each importer-good dyad; sanctionsi is a dummy taking the value of 1 if good i is subject

to sanctions and 0 otherwise; and I[.] is the indicator function. The subscript i indexes goods by their
8-digit CN classifications. The focus of our interest is the coefficient vector β2s, which measures
the mean deviations between trade flows of sanctioned goods and the controls. If the treatment
and control groups are as good as randomly assigned, no difference in their time-trends should be
detectable in the pre-treatment period. This condition, sometimes called a “parallel trend,” is crucial
for the validity of the differences-in-differences models. If the control and treatment groups do in
fact share a “parallel trend,” then β2s = 0 ∀s ∈ [Feb.2010, Aug.2014). In other words, there should
be no detectable difference between sanctioned and control goods in the pre-sanctions period. For
the post-intervention period, we may calculate the change in trade as follows:
DtDD ≡ nt β̂ 2t , (13.5)
and the corresponding cumulative deviation:

Dec2018
CDtDD ≡ ∑ DtDD , (13.6)
t=Aug2014
where nt is the number of sanctioned categories of goods at 8-digit CN categorisation delivered

to the Russian Federation in time t. Scaling the coefficients by the factor nt is necessary because
the differences-in-differences model produces estimates of the average change in trade flows
across the treated goods. Hence, in order to calculate the total change, we need to scale the
coefficients by the number of the sanctioned goods. In order to perform inference on CDtDD
we perform a cluster bootstrap by good type at the 6-digit level. In this way, we recognise that
factors driving the supply and demand of different types of goods can be persistent in time as
well as correlated across different importers.
13.5 RESULTS
13.5.1 Time Series Analysis
The first set of results is the sup-Wald statistics (i.e., the supremum of a set of Wald statistics)
obtained from tests for a structural break in 22 time series describing the EU export flows to dif-
ferent destinations. The test statistics and their approximate p-values are reported in Table 13.1,
ordered according to the significance of the estimated structural break, with the most significant
break listed at the top. Regarding the EU sanctions on exports of mining equipment, it is striking
to note that exports of sanctioned goods to Russia have not experienced the most significant
structural break among the 22 time series considered. Rather, the most prominent structural
break was found to have occurred in February 2014 in trade flows with Singapore. Perhaps an
even more surprising result of the sup-Wald tests is that rather than finding a structural break
in the Russian imports at the start of the sanctioning regime, that is, August 2014, the most
significant structural break took place in February of 2012. This strongly suggests that the
sanctions did not impact EU exports of sanctioned goods in any dramatic way. Rather, it shows
that the post-sanctions trade flows were consistent with the pre-sanctions dynamics.
Providing a meaningful interpretation to the other detected structural breaks would be
precarious for two main reasons. The first is the volatility of these time series, in which periods

Table 13.1 Sanctions on extraction equipment
Structural break at Change in trade after

an unknown date Aug. 2014 (bn EUR)
Importer Date supW pval R2 99% CI KPSS
Singapore Feb-14 32.816 0.000 0.05 −1.43 −0.34 0.147
Russia Feb-12 24.203 0.000 0.18 −1.42 −0.15 0.145
Saudi Arabia Sep-14 14.81 0.002 0.61 −0.74 2.65 0.128
Canada Aug-17 12.171 0.007 0.08 −0.70 −0.06 0.076
Mexico Sep-15 11.966 0.008 0.02 −0.17 0.00 0.153
S. Korea Apr-15 11.529 0.009 0.25 −1.72 −0.35 0.072
Turkey Mar-17 11.25 0.010 0.22 −8.32 3.19 0.13
Hong Kong Jul-12 11.105 0.011 0.06 −0.19 0.01 0.071
Taiwan Jan-17 9.510 0.023 0.05 −0.40 −0.09 0.083
USA Apr-13 8.944 0.030 0.6 −0.22 −0.02 0.12
Switzerland Dec-11 8.150 0.043 0.59 −2.22 −0.40 0.068
Ukraine Feb-17 7.442 0.059 0.55 −0.72 0.00 0.149
Norway Jul-17 7.069 0.070 0.04 −1.26 0.02 0.054
UAE Aug-13 5.663 0.129 0.23 −4.31 0.11 0.102
China Aug-16 5.303 0.151 0.15 −1.22 −0.32 0.067
India Oct-13 4.812 0.186 0.19 −2.29 0.25 0.065
EU internal market Sep-12 3.997 0.262 0.48 −0.10 0.31 0.064
Japan Dec-11 3.591 0.309 0.54 −0.01 0.08 0.111
South Africa Apr-17 3.520 0.318 0.51 −0.04 0.06 0.104
Vietnam Jul-11 1.976 0.577 0.02 −3.80 −0.09 0.151
Brazil Dec-16 1.857 0.603 0.03 −0.21 0.16 0.072
Australia Jul-12 1.486 0.686 0.67 −0.11 0.02 0.046

Notes: Results are ordered according to the significance of the estimated structural break. Date = date of the most
probable structural break identified by the test for a structural break at an unknown date, supW = sup-Wald test
statistic; pval = corresponding p-value; R2 = coefficient of determination for model (1) between January 2010 and
December 2018; 99% CI = 99% confidence interval for CDjDec–18 defined in (3) from a wild bootstrap with 1000
replications in Euros (billions); KPSS = Kwiatkowski et al. (1992) test statistic for stationary of residuals in (1) in
the pre-intervention period; 1% critical value of the KPSS test statistic 0.216.

of relatively steady trade flows are punctuated by sudden surges in imports when extraction
capacities are expanded (Crozet & Hinz, 2016). This feature is visible in the relatively modest
coefficients of determination in Table 13.1, not only for Russian imports but also for exports
to Singapore and other importers, which may complicate the search for a structural break.
We therefore proceed further and ask how much the post-August-2014 trade flows depart
from the values predicted by the model. The results are reported in the “Change in trade after
August 2014” panel in Table 13.1. The estimates indicate that in the post-intervention period,
Russian imports from the EU have largely obeyed the pre-intervention dynamics, possibly
deviating by as little as −150 million EUR over the period of nearly 4.5 years. At most, the lost
trade in the post-sanctions period can be placed at 1.42 billion EUR, which is comparable to the
change in trade with Singapore at the lower margin of its confidence interval. Since Singapore
was not subject to any sanctions, but rather had been in the process of negotiating a trade deal
with the EU since 2010 (European Commission, 2019), the sanctions against Russia cannot be
seen as creating any major trade disruption. It also bears noting that none of the KPSS tests of
stationarity of residuals in the pre-intervention period come close to the 1% critical value of
0.216, which suggests there are no systematic departures between the model and the observed
values and thus the relatively parsimonious model (1) provides an adequate fit for the data.
Having surveyed the results of the European sanctions, consider the estimation results for
the Russian counter-sanctions reported in Table 13.2. Here, the structural break in the EU
exports to Russia is correctly estimated to have occurred in August of 2014, and it is the most
significant structural break in the entire sample. In fact, its sup-Wald test statistic is nearly
double that of the second largest one. This is congruent with the other approach, in which we
calculate the cumulative deviations between the predicted values and observed trade flows
in the post-sanctions period. Here, the model suggests that the post-treatment imports of
sanctioned foodstuffs were lower than predicted. Under an optimistic scenario, the value of
lost trade was about 2.9 billion EUR, and the loss may be as large as nearly 13 billion EUR. To
an extent, these large losses can be discerned from Figure 13.2, which shows the precipitous
decline in EU food exports into the Russian Federation, without any parallel in Figure 13.1,
which depicts the exports in mining equipment. Furthermore, it bears noting that models of
food exports may be even more successful in capturing the data characteristics than models of
mining equipment, due to better behaved time series. These exports seem to follow smoother
trends, which is why they produce models with relatively high R2.
The conclusion to be drawn from the time series models in Table 13.2 is that the Russian
counter-sanctions have had a substantial impact on EU foodstuff exports. The immediate
follow up question is whether the trade flows that have been lost in Russia have been re-
directed to another destination. By the results in Table 13.1, it appeared that the closure of
Russian markets has been absorbed by the European internal market, since the trade flows
there are notably higher than the model suggests. However, the confidence interval in this case
is rather wide, ranging from −1.62 billion EUR to +24.68 billion EUR, so it is difficult to draw
any firm conclusions. There is some evidence that a certain portion of the sanctioned European
exports have ultimately reached Russia via third countries (Fritz, Christen, Sinabell, & Hinz,
2017; Geller, Maidment, & Devitt, 2014; Yeliseyeu, 2017). However, the re-directing of food
exports back to the EU member states is consistent with several earlier analyses (European
Commission, 2015; Kutlina-Dimitrova, 2017). Therefore, it is a plausible interpretation of the
results obtained in the present study that the EU member states have internalised the excess
supply of food products created by the Russian sanctions.

Table 13.2 Sanctions on food and agricultural products
Structural break Change in trade after

at an unknown date Aug. 2014 (bn EUR)
Importer Date supW pval R2 99% CI KPSS
Russia Aug-14 59.174 0.000 0.97 −12.78 −2.93 0.067
South Africa Dec-13 31.588 0.000 0.75 −0.10 0.17 0.079
Singapore Nov-16 18.983 0.000 0.68 0.09 0.39 0.117
Canada Apr-13 18.695 0.000 0.85 0.22 0.85 0.066
Taiwan Jul-15 14.043 0.003 0.85 0.16 0.71 0.047
USA Jul-17 13.112 0.004 0.92 −0.28 1.17 0.134
Brazil Dec-14 9.144 0.027 0.55 −0.08 0.21 0.082
Hong Kong Aug-15 8.88 0.031 0.77 0.17 0.91 0.086
EU internal market Mar-16 7.186 0.066 0.95 −1.62 24.68 0.056
Turkey Dec-11 6.577 0.087 0.66 −0.15 0.31 0.061
Switzerland Jun-17 6.023 0.111 0.80 −0.25 0.88 0.059
Australia Apr-17 5.834 0.120 0.84 0.01 0.45 0.068
UAE Jul-13 4.435 0.218 0.82 −0.03 0.32 0.055
China Jul-16 4.425 0.219 0.95 −1.78 0.08 0.052
Mexico Jul-15 3.596 0.308 0.62 0.02 0.45 0.168
Ukraine Dec-11 3.319 0.345 0.71 −0.55 −0.12 0.106
India Oct-16 2.245 0.523 0.38 0.01 0.41 0.105
Vietnam Apr-12 2.039 0.564 0.67 −0.11 0.64 0.120
Saudi Arabia Nov-14 1.235 0.745 0.68 −0.56 0.23 0.065
Japan Mar-17 1.100 0.777 0.66 −0.24 2.05 0.130
Norway Jun-17 0.962 0.811 0.60 −0.22 0.38 0.051
S. Korea Aug-16 0.4000 0.94 0.87 −0.14 0.82 0.083

Notes: Results are ordered according to the significance of the estimated structural break. Date = date of the
most probable structural break identified by the test for structural break at an unknown date, supW = sup-Wald
test statistic; pval = corresponding p-value; R2 = coefficient of determination for model (1) between January 2010
and December 2018; 99% CI = 99% confidence interval for CDjDec–18 defined in (3) from wild bootstrap with 1000
replications in Euros (billions); KPSS = Kwiatkowski et al. (1992) test statistic for stationarity of residuals in (1) in
the pre-intervention period; 1% critical value of the KPSS test statistic 0.216.

13.5.2 Panel Data Analysis
To check the robustness of the time series results to a change in the econometric specification,
consider the panel regression in (13.4). The quantities of interest in that model are the 214
cumulative deviations from the counterfactual outcome CDtDD defined in (6), which measure
the impact of sanctions. In the interests of both space and clarity, we plot these values and their
99% bootstrap confidence intervals in Figure 13.3, rather than tabulating them.
It is apparent from Figure 13.3 that there was little difference between the sanctioned
and control goods in the pre-intervention period, since zero is always within the confidence
intervals of the cumulative deviations in the months leading up to August 2014. This shows
that there were no systematic differences in trends between these two groups of goods. In other
words, the sanctioned status seems to have assigned on the trade levels (goods traded at greater
volumes became sanctioned), rather than on trends (growth in the trade volumes does not seem
to have played a significant part). At first sight, this may seem somewhat surprising but exam-
ining the lists of sanctioned goods reveals that the sanctioned categories have not been chosen
in a way that would reflect the pre-intervention trends. For example, the European sanctions
ban exports of seamless drill pipes (CN 73042200) but allow exports of seamless “tubing of
a kind used for drilling for oil or gas [made of] stainless steel” (CN 73042400). Similarly,
while the sanctions cover seamless “drill pipe of stainless steel, of a kind used in drilling for
oil or gas” (CN 73042200), unless it is made of cast iron, in which case the sanctions do not
apply (CN 73042100). Russian counter-sanctions ban imports of pork (CN 0203), while lamb
20
10
EUR (billions)
−10
−20
2010m1 2012m1 2014m1 2016m1 2018m1

Date (monthly)
EU RU
Notes: Thick lines represent the p0.5 and p99.5 of the bootstrap distribution of CDtDD defined in (13.6), while the
thin lines represent the corresponding means. Start of the sanctioning regime is indicated by the vertical line. These
distributions were obtained from 1,000 bootstrap replications clustered by 6-digit HS codes (170 clusters for EU
sanctions and 88 clusters for Russian counter-sanctions).
Figure 13.3 Differences-in-differences estimates of the cumulative losses due to the

European sanctions (solid) and Russian counter-sanctions (dashed)

is allowed (CN 0204). While it is of course conceivable that the forces prevailing in the lamb
market might be different from those in the pork market, this does not seem to be the case
in the data. Rather, the sanctioned goods are broadly similar to the control group. As another
example we might cite fruits (CN 0811), which are sanctioned by the Russian government,
unless they are provisionally preserved (e.g. by “sulphur dioxide gas, in brine, in sulphur water
or in other preservative solutions”, cf. CN 0812), in which case the import ban does not apply.
Having established the quasi-random assignment into the sanctioning treatment, we consider
the post-intervention period. Once the sanctioning regime begins, the Russian sanctions produce
a very steady accumulating loss, following a virtually linear path downwards. By December
2018, the loss is estimated to range between 5.7 billion EUR and 22.6 billion EUR with the
mean at about 13 billion EUR. In contrast, the European sanctions seem to have produced only a
minuscule effect, if any. The cumulative losses remain centred at zero with the mean at −0.3 bil-
lion EUR and the 99% confidence interval from −7 to almost +13 billion EUR by the end of 2018.
The conclusions of the panel estimation agree with those from the time series model. The
European sanctions did not produce any strong effect on the trade flows. On the other hand, there
were substantial amounts of lost trade due to the Russian counter-sanctions. The wider confi-
dence intervals from the panel model, compared to those from the hybrid VAR model, can be
attributed to the need to calculate the counterfactual outcome as the mean of all control outcomes,
rather than taking one control outcome directly as the counterfactual. Another potential source of
uncertainty arises from autocorrelations within the error terms. These may have been imperfectly
accounted for by the wild bootstrap in the time series modes, while they were taken into account
here by a performing cluster bootstrap (which was not possible in a time series setting).
Quantitatively, the panel data estimate losses that are in line with those from the hybrid VAR
models. The mean cumulative loss due to the European sanctions is within the corresponding
99% confidence interval from the hybrid VAR (between −1.42 and −0.15 billion EUR). The
mean cumulative loss due to the Russian sanctions on foodstuffs is roughly at the lower bound
of the 99% confidence interval from the hybrid VAR model rather than the centre, but there is
still substantial overlap between the two confidence intervals.
It is, therefore, encouraging that the results are robust to the choice of econometric specifica-
tion. In terms of choosing the preferred estimates, the panel estimates have the advantage of
using a more conservative method of calculating the variance-covariance matrix. Furthermore,
the panel estimates are in agreement with other estimates of the cost of sanctions. Christen,
Fritz, and Streicher (2015) place the loss to the EU between 11 and 55 billion EUR, although
their model also considers spillover effects in addition to the losses directly resulting from the
sanctions themselves. More comparable estimates of the losses due to the Russian counter-
sanctions were obtained from a gravity model of trade by Crozet and Hinz (2016), who found
losses directly attributable to the Russian sanctions to be around 10.7 billion USD until
mid-2015. This estimate is within the corresponding confidence interval from our differences-
in-differences model.
13.6 CONCLUSION
The European sanctions against Russia prohibited exports of equipment used for extraction of oil
and natural gas from the EU to Russia. At the same time, the European exporters were given the
opportunity to claim exemptions from the sanctioning regime if they could show that they were

under pre-existing contractual obligations to deliver sanctioned goods to Russia. As far as we can
tell, no data are available for the exemptions themselves, so the best evidence on the enforcement
of sanctions comes from the trade data.1 The analysis presented in this paper shows that these
exemptions were indeed granted, because the exports of the sanctioned goods follow essentially
the same trend before and after the imposition of sanctions in August 2014. In fact, our search for
a structural break did not identify August 2014 as the most probable locus of a structural break
in the time series. Furthermore, time series and panel data analysis show that to the extent that
the European sanctions did impact the trade flows, the effect was minor. Based on time series
analysis, the EU sanctions resulted in trade losses of 1.42 billion EUR at most between August
2014 and December 2018. In fact, the loss may be as little as 0.15 billion EUR. The panel data
results are less precise, yielding a confidence interval from −7 to +13 billion EUR for the same
period. However, the panel data results still clearly show that the most plausible values for the
true effect are around zero (mean effect is estimated at −0.3 billion EUR).
On the other hand, the Russian counter-sanctions against European foodstuffs yielded far
more dramatic results. Not only did the start of the sanctioning regime appear as the most
significant structural break, but also the estimated losses were more pronounced. Time series
analysis places the effect between −2.93 and −12.78 billion EUR; panel data yield a wider,
but also unambiguous confidence interval between −5.7 and −22.6 billion EUR. Clearly, the
Russian sanctions were enforced more resolutely than the European ones. Notwithstanding the
partial evidence of bypassing Russian sanctions by re-routing European food exports through
non-sanctioning countries to Russia (Fritz et al., 2017; Geller et al., 2014; Yeliseyeu, 2017),
our results show that, if anything, the EU member states have internalised the excess food
supply caused by the closure of the Russian market. This internalisation outcome is consistent
with previous work (e.g. Kutlina-Dimitrova, 2017).
The significance of these results stems from their close fit into the long line of theoretical
economic research, which emphasises the role of different players in determining how economic
sanctions ought to be implemented. As argued by Brooks (2002), sanctions against exports
from the sender country are inherently more difficult to sustain as they create motivation by the
domestic exporters to lobby their governments to relieve the sanctions. Indeed, this seems to be
precisely what happened in the EU, where domestic exporters have claimed exemptions from
sanctions and were allowed to deliver sanctioned goods to Russia. Furthermore, the concerns
over the sanctions’ effects on the European energy markets (Wagstyl, 2017) could certainly
have been a major consideration in favour of selective enforcement of the sanctions on mining
equipment (McLean & Whang, 2014). From the Russian perspective, a ban on imports from
abroad incentivises the Russian producers to lobby their government to maintain the sanctions,
which protect them from foreign competitors (Pospieszna, Skrzypczyńska, & Stępień, 2019).
Another potential explanation may be that the Russian food importers may be in a relatively
weak position to influence the Russian government, while the European exporters of mining
equipment might be able to exercise greater influence over the EU (van Bergeijk, 2009,
Chapter 6; Kaempfer & Lowenberg, 1988). Both explanations highlight the centrality of the
political economy as the determination of the economic sanctions.
In sum, the sectoral sanctions imposed by the EU on exports to Russia appear to have been
largely signalling rather than an effort to curtail international trade. Indeed, the role of sanc-
tions as a signalling device has been recognised in the literature (van Bergeijk, 2009; Lindsay,
1986). While speculating about the motivations of the European policy makers is beyond the
scope of this study, we note that it is easy to imagine how signalling the willingness to take a

tough stance against Russia could have been seen as valuable in its own right, without actually
harming Russian oil and gas extraction. Alternatively, one may accept the reasoning of Ahn
and Ludema (2016) that the priority of the Western coalition was to punish influential Russian
firms and individuals and not the Russian economy as a whole. From this viewpoint, the EU’s
strategy was primarily focused on the individual, rather than the sectoral, sanctions.
Irrespective of the actual motivation, it is clear that the European sanctions were drafted and
enforced in a way that is not consistent with the view that sanctions are the only means of inflict-
ing damage on the target country. Future research might, therefore, productively incorporate this
sanctioning episode in pursuit of a more nuanced understanding of the political forces driving the
imposition of economic sanctions and the manner in which the sanctions are imposed.
NOTES
* The research was supported by GAČR grant No. 18-18509S. We are grateful to Richard French, Gary Hufbauer,
Štěpán Jurajda, Vilém Semerák, Jiří Trešl, and Krešimir Žigić for insightful comments that greatly improved
earlier versions of this chapter. The opinions expressed in this article are the authors’ own and do not reflect the
view of the affiliated institutions. All mistakes remain our own.
1. Firm-level evidence collected by Weber and Stępień (forthcoming) suggests that European firms dependent on
the Russian market increased their engagement in non-sanctioned economic activities with their Russian partners.
While this dataset does not cover exemptions from sanctions, the results agree with those presented here: the
European sanctioning regime made significant allowances for European exporters to engage with the Russian
market without violating the sanctions. On the Russian side, the firm-level evidence suggests quite thorough
(albeit imperfect) enforcement of the import sections of European goods (Miromanova, 2019).
REFERENCES
Ahn, D. P., & Ludema, R. (2016). Measuring Smartness: Understanding the Economic Impact of Targeted Sanctions.
U.S. Department of State Office of the Chief Economist Working Paper 2017–01.
Andrews, D. W. K. (1993). Tests for Parameter Instability and Structural Change With Unknown Change Point.
Econometrica, 61(4), 821–856. doi: 10.2307/2951764.
Barber, J. (1979). Economic Sanctions as a Policy Instrument. International Affairs, 55(3), 367–384. doi: 10.2307/2615145.
Bělín, M., & Hanousek, J. (2021). Which sanctions matter? Analysis of the EU/Russian sanctions of 2014. Journal of
Comparative Economics. doi: https://doi.org/10.1016/j.jce.2020.07.001.
Bena, J., & Jurajda, Š. (2011). Financial Development and Corporate Growth in the EU Single Market. Economica,
78(311), 401–428. doi: doi:10.1111/j.1468-0335.2009.00822.x.
Brooks, R. A. (2002). Sanctions and Regime Type: What Works, and When? Security Studies, 11(4), 1–50. doi:
10.1080/714005349.
Christen, E., Fritz, O., & Streicher, G. (2015). Effects of the EU-Russia Economic Sanctions on Value Added and
Employment in the European Union and Switzerland. WIFO Studies, 58219.
Crozet, M., & Hinz, J. (2016). Collateral Damage: The impact of the Russia sanctions on sanctioning countries’
exports. CEPII Working Paper 2016–16.
Dreger, C., Kholodilin, K. A., Ulbricht, D., & Fidrmuc, J. (2016). Between the hammer and the anvil: The impact
of economic sanctions and oil prices on Russia’s ruble. Journal of Comparative Economics, 44(2), 295–308. doi:
https://doi.org/10.1016/j.jce.2015.12.010.
Drury, A. C. (1998). Revisiting Economic Sanctions Reconsidered. Journal of Peace Research, 35(4), 497–509. doi:
10.1177/0022343398035004006.
Elliott, K. A. (1998). The sanctions glass: half full or completely empty? International Security, 23(1), 50–65.
European Commission. (2015). The Russian ban on EU agricultural products – 12 months on. Retrieved 2019/07/07,
from https://ec.europa.eu/agriculture/newsroom/218_en.
European Commission. (2018). Client and Supplier Countries of the EU28 in Merchandise Trade. Retrieved
2019/10/09, from http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_122530.pdf.
European Commission. (2019). Singapore. Retrieved 2019/09/24, from https://ec.europa.eu/trade/policy/
countries-and-regions/countries/singapore/.

Fritz, O., Christen, E., Sinabell, F., & Hinz, J. (2017). Russia’s and the EU’s Sanctions: Economic and Trade Effects,
Compliance and the Way Forward. WIFO Studies, 60669.
Galtung, J. (1967). On the Effects of International Economic Sanctions: With Examples from the Case of Rhodesia.
World Politics, 19(3), 378–416. doi: 10.2307/2009785.
Gaulier, G., & Zignago, S. (2010). BACI: International Trade Database at the Product-Level. The 1994–2007 Version.
CEPII Working Paper, 2010–23.
Geller, M., Maidment, N., & Devitt, P. (2014). Belarussian oysters anyone? EU food trade looks to sidestep
Russian ban. Retrieved 2019/02/02, from https://www.reuters.com/article/ukraine-crisis-russia-traders/belarussian
-oysters-anyone-eu-food-trade-looks-to-sidestep-russian-ban-idUSL2N0QI1XL20140817.
Hansen, B. E. (1997). Approximate Asymptotic P Values for Structural-Change Tests. Journal of Business &
Economic Statistics, 15(1), 60–67. doi: 10.2307/1392074.
Hufbauer, G. C., Schott, J. J., & Elliott, K. A. (1990). Economic Sanctions Reconsidered: History and Current Policy
(2nd ed.). Washington D.C.: Institute for International Economics.
Kaempfer, W. H., & Lowenberg, A. D. (1988). The Theory of International Economic Sanctions: A Public Choice
Approach. The American Economic Review, 78(4), 786–793.
Kunsch, H. R. (1989). The Jackknife and the Bootstrap for General Stationary Observations. Annals of Statistics,
17(3), 1217–1241. doi: 10.1214/aos/1176347265.
Kutlina-Dimitrova, Z. (2017). The economic impact of the Russian import ban: a CGE analysis. International
Economics and Economic Policy, 14(4), 537–552. doi: 10.1007/s10368-017-0376-4.
Kwiatkowski, D., Phillips, P. C. B., Schmidt, P., & Shin, Y. (1992). Testing the null hypothesis of stationarity against
the alternative of a unit root: How sure are we that economic time series have a unit root? Journal of Econometrics,
54(1), 159–178. doi: https://doi.org/10.1016/0304-4076(92)90104-Y.
Lindsay, J. M. (1986). Trade sanctions as policy instruments: A re-examination. International Studies Quarterly,
30(2), 153–173.
Mansfield, E. D. (1995). International Institutions and Economic Sanctions. [Coercive Cooperation: Explaining
Multilateral Economic Sanctions, Lisa L. Martin; Economic Containment: COCOM and the Politics of East-West
Trade, Michael Mastanduno]. World Politics, 47(4), 575–605.
McLean, E. V., & Whang, T. (2014). Designing foreign policy: Voters, special interest groups, and economic sanctions.
Journal of Peace Research, 51(5), 589–602. doi: 10.1177/0022343314533811.
Miromanova, A. (2019). Quantifying the Trade Reducing Effect of Embargoes: Firm Level Evidence from Russia.
Unpublished manuscript, University of Oregon.
Moret, E., Biersteker, T., Giumelli, F., Portela, C., Veber, M., Jarosz, D., & Bobocea, C. (2016). The New Deterrent:
International Sanctions against Russia over the Ukraine Crisis. Institute of International and Development Studies
in Geneva.
Morgan, T. C., & Schwebach, V. L. (1995). Economic sanctions as an instrument of foreign policy: The role of
domestic politics. International Interactions, 21(3), 247–263. doi: 10.1080/03050629508434868.
Pape, R. A. (1997). Why Economic Sanctions Do Not Work. International Security, 22(2), 90–136. doi: 10.2307
/2539368.
Pape, R. A. (1998). Why Economic Sanctions Still Do Not Work. International Security, 23(1), 66–77. doi: 10.2307
/2539263.
Pospieszna, P., Skrzypczyńska, J., & Stępień, B. (2019). Hitting Two Birds with One Stone: How Russian
Countersanctions Intertwined Political and Economic Goals. PS: Political Science & Politics, 53(2), 243–247. doi:
10.1017/S1049096519001781.
Renz, B. (2019). Russian responses to the changing character of war. International Affairs, 95(4), 817–834. doi:
10.1093/ia/iiz100.
Szczepański, M. (2015). Economic impact on the EU of sanctions over Ukraine conflict. European Parliamentary
Research Service, 569.020.
Tavernise, S. (2015). Canceling Deal for 2 Warships, France Agrees to Repay Russia. Retrieved 2019/02/01, from
https://www.nytimes.com/2015/08/06/world/europe/france-reimburses-russia-for-warships-as-deal-becomes-
casualty-of-ukraine-sanctions.html.
van Bergeijk, P. A. G. (2009). Economic Diplomacy and the Geography of International Trade: Edward Elgar Publishing.
Wagstyl, S. (2017). Merkel sharpens attack on US sanctions against Russia. Retrieved 2018/01/05, from https://www.
ft.com/content/6fbafa0c-528e-11e7-bfb8-997009366969.
Weber, P. M., & Stępień, B. (forthcoming). Conform or challenge? Adjustment strategies of sanction-torn companies.
The World Economy. doi: 10.1111/twec.12985.
Wu, C. F. J. (1986). Jackknife, Bootstrap and Other Resampling Methods in Regression Analysis. Annals of Statistics,
14(4), 1261–1295. doi: 10.1214/aos/1176350142.
Yeliseyeu, A. (2017). Belarussian shrimps anyone? How EU food products make their way to Russia through Belarus.
Think Visegrad - V4 Think Tank Platform.

14. Trade preference suspensions as economic
sanctions*
Clara Portela
14.1 INTRODUCTION
The employment of political conditionality, defined as the attachment of conditions to the

provision of benefits such as aid or preferential trade relations, constitutes a distinctive
feature of the foreign relations of the European Union (EU). Although political conditionality
permeates the external relations of the EU (Prickartz and Staudinger, 2019; Velutti, 2016), it
is in the granting of trade preferences to developing countries under the Generalised Scheme
of Preferences (GSP) that the EU has achieved its most perfected conditionality arrangement.
The EU’s GSP (henceforth, EUGSP) represents a veritable “carrots and sticks” mechanism that
rewards outstanding compliance and penalises abuses: For beneficiary countries, the threat
of losing preferential treatment can be a “stick”, while the possibility of expanded tariff-free
access operates as a “carrot” (Orbie and Tortell, 2009, 666).
Since the institution of GSP in 1971, 13 advanced economies have put GSP arrangements
in place, including Australia, Belarus, Canada, Iceland, Japan, Kazakhstan, New Zealand,
Norway, Russia, Switzerland and Turkey.1 However, it is the GSP operated by the US and the
EU that most attract developing countries as they give access to the largest markets. US and EU
conditionality systems have been closely connected since their early days. The US pioneered
labour conditionality in its GSP, serving as a blueprint for the EU arrangement. However, their
respective withdrawal practices differ vastly in terms of frequency: While the US suspended 12
beneficiaries for workers’ rights deficits in the decade that followed the introduction of labour
conditionality (Elliott and Freeman, 2003), the EU has only suspended four beneficiaries in
its 25 years of existence.
As an instrument at the cross-roads of policy in the areas of trade, development and foreign
relations, GSP has been the subject of a large volume of scholarship. In European studies, by
contrast, interest in EUGSP has been modest and has focused mostly on the balance between
its developmental intent and commercial goals (Siles-Brügge, 2014). Trade scholars tend to
focus on sustainable development commitments in Free Trade Agreements (FTAs),2 the true
protagonists of EU trade policy (Harrison et al., 2019; Van den Putte and Orbie, 2015), while
development researchers devote their attention to aid sanctions (Crawford and Kacarska, 2019;
Molenaers et al., 2015; Zimelis, 2011). Yet other scholars concentrate on sanctions adopted
under the Common Foreign and Security Policy (CFSP), the principal EU framework for
the production of foreign policy, institutionally separate from trade and development policy
(Cardwell, 2015). The withdrawal of trade preferences is most commonly addressed in discus-
sions of human rights conditionality in EU external relations (Lerch, 2004; Velutti, 2016), even
though human rights is only one of various areas protected by their conditionality provisions.
As will be elaborated on below, conditionality and sanctions are closely related albeit separate
concepts. Political conditionality clauses have proven remarkably popular in the EU, which
264
Clara Portela - 9781839102721
Trade preference suspensions as economic sanctions 265
has extended their substantive scope to cover fields such as the fight against terrorism or the
spread of weapons of mass destruction.
The present chapter discusses sanctions resulting from the activation of political condition-
ality in the context of the EU GSP scheme. Four countries experienced the suspension of trade
preferences: Myanmar in 1997, Belarus in 2007, Sri Lanka in 2009 and Cambodia in 2020.3
While political conditionality became embedded in the EU’s external trade relations in the
heyday of this policy instrument in the mid-1990s, GSP suspension practice presents intrigu-
ing peculiarities. The structure of this chapter is as follows: The initial section introduces
the conditionality arrangements in the EUGSP and offers an overview of the suspension and
reinstatement record. The second section discusses whether GSP suspensions qualify as eco-
nomic sanctions, defined as economic restrictions imposed in pursuance of non-trade foreign
policy goals as opposed to restrictions imposed for trade policy goals, such as measures of
trade defence or so-called trade wars, following a standard distinction in the literature (Elliott
and Freeman, 2003, 78). After that, the third section presents the controversies surrounding
their employment in policy and academic circles, followed by options for reform. Returning
to the initial research question, the chapter argues that the design, employment and perception
of GSP withdrawals support their status as economic sanctions. The chapter concludes by
delineating avenues for future research.
14.2 POLITICAL CONDITIONALITY IN EUGSP
The GSP is a non-reciprocal scheme granting developing countries enhanced access for most
of its products, intended to increase beneficiaries’ export earnings and promote their industri-
alisation (Gstöhl and De Bièvre, 2017). Its origins can be traced to an initiative launched in
the context of the United Nations Commission for Trade and Development (UNCTAD). In the
EU, trade preferences are governed by a regulation – thus a unilateral instrument – which is
revised at regular intervals. The current scheme is designed as follows: The Commission drafts
a regulation for adoption by the Council and prepares the lists of products covered as well as
a list of eligible beneficiaries, which are selected according to criteria of economic develop-
ment and vulnerability. While developing countries have been enjoying trade privileges under
the EUGSP since 1971, the scheme only made them conditional on political requirements
in 1994. In addition to political conditions, access to the EU market is subject to safeguards
allowing for suspension in response to unfair trading practices and unexpected developments
causing difficulties for specific sectors. Political conditionality provisions evolved greatly
in their 25 years of existence. The original EU scheme followed the US model, which had
been introduced almost a decade before, foreseeing the withdrawal of preferences in case of
evidence of forced labour.4
The special incentive arrangements merit particular attention, as they have taken centre
stage and been subject to frequent transformation. Special incentive arrangements were
introduced to coexist with the general scheme. A “labour arrangement” granted developing
countries enhanced tariff preferences if they applied the contents of ILO conventions Nos
87 and 98 guaranteeing the freedom of trade unions and No 138 banning the worst forms of
child labour.5 An “environmental arrangement” aimed to reward sustainable management
of tropical forests. A third scheme dubbed the “drugs regime”, which had been in existence
since 1990, granted preferences to countries for combatting the production and trafficking of

cocaine.6 Since 2001, the Everything-But-Arms (EBA) scheme grants particularly favourable
preferences to the Least Developed Countries (LDCs) for all products except military items
without including any additional conditions.
The configuration of EUGSP conditionality was transformed on account of a successful
Indian challenge to the drugs regime at the WTO. New Delhi contested the granting of
preferences to Pakistan under the drugs regime, which the Appellate Body judged in 2004 to
be discriminatory as it failed to afford identical treatment to similarly situated beneficiaries
(Gstöhl and De Bièvre, 2017). In response to this ruling, the EU scrapped the drugs regime
and consolidated the special incentive arrangements into one, adding human rights to it and
labelling the scheme “GSP+” or (“GSP Plus”). Thus, after 2005, vulnerable countries became
eligible for GSP+ incentives provided that they ratified 16 human rights conventions, includ-
ing the eight fundamental ILO conventions, and at least seven conventions on environment
and good governance. Withdrawal of preferences was foreseen when beneficiaries perpetrated
“serious and systematic” violations of the principles laid down in the labour and human rights
conventions. Under the current scheme, in force from 2014 to 2023, the reinforced condition-
ality dimension of GSP+ requires beneficiaries to ratify and implement all conventions, in
addition to accepting regular monitoring by the Commission.
14.3 CONDITIONALITY AND WITHDRAWAL UNDER THE

CURRENT SCHEME
The system, disciplined in Regulation (EU) No 978/2012, is subdivided into three separate
schemes, which offer markedly different levels of privilege:
a) the General Scheme, also referred to as the “default” scheme, is the least advantageous;
b) the Special Incentive Scheme, labelled “GSP+”, offers improved access to the EU market
in exchange for additional commitments in the fields of labour standards, environmental
protection and good governance;
c) the EBA scheme offers the most advantageous scheme to LDCs.
The international conventions relevant to conditionality, listed in Annex VIII of the Regulation,
are subdivided into two different groups: 15 conventions apply to all GSP schemes, and 12
additional international conventions are only relevant to GSP+. The conventions applicable
to all schemes include the eight ILO core conventions and seven human rights conventions,
which are listed in Part A of Annex VIII.7 By contrast, the 12 conventions concerning the GSP+
relate to environmental protection and the fights against narcotics and corruption; they appear
in Part B of the annex.
The procedure for “temporary withdrawal”, the official term for what is also referred to as
“suspension” in the present chapter, has suffered repeated modifications. Its current iteration
introduces the possibility of suspending preferences from certain products only, rather than
across the board, for all subtypes of the schemes. Contrary to previous regulations, which
involved external stakeholders in the process or emphasised the role of the Council, the
Commission is empowered to unleash the withdrawal process of its own accord, although it
must consult with a committee of member states under the so-called advisory procedure.8 If it
decides on initiation, the Commission must publish a notice in the Official Journal and notify

the beneficiary, providing grounds. For the ensuing six months, the Commission monitors the
situation in the beneficiary country, taking into account available assessments, comments,
decisions, recommendations and conclusions of the relevant supervisory bodies, at the end of
which it submits a report to the authorities in question for comments. The Commission then
decides in favour of withdrawal or otherwise. In the event of a decision for withdrawal, the
act does not take effect for six months. In the meantime, both the Council and the European
Parliament have the option of cancelling its validity. The Commission is also empowered to
repeal its own decision on withdrawal if the causes cease to prevail, e.g. if the beneficiary
takes remedial action.
Although all GSP types are subject to conditionality, the specific provisions differ depend-
ing on the type. Two separate withdrawal provisions co-exist:
Article 15 applies to GSP+ beneficiaries. It stipulates that preferences shall be withdrawn
when a GSP+ beneficiary has failed to:
(i) ratify and effectively implement the 27 conventions;

(ii) comply with the reporting requirements, including monitoring; or
(iii) cooperate with the Commission in its monitoring efforts.
By contrast, Article 19 disciplines the withdrawal for general scheme and EBA beneficiaries,
providing that trade preferences may be withdrawn in situations of:
(i) serious and systematic violation of principles laid down in conventions listed in Part A of
Annex VIII;
(ii) export of goods made by prison labour; or
(iii) serious shortcomings in custom controls on the export or transit of drugs; serious and
systematic unfair trading practices.
Thus, conditionality is not only more pronounced for GSP+ beneficiaries than for beneficiaries
of the general scheme and EBA, but the wording of Articles 15 and 19 suggests that withdrawal
for GSP+ beneficiaries is compulsory, while it remains optional for the others (Van der Ven,
2019). On the other hand, Article 15 threatens beneficiaries with being downgraded to the
general GSP scheme, whereas Article 19 entails sliding back to “Most Favoured Nation
(MFN)”. Thus, suspended GSP+ beneficiaries still enjoy some benefits, while others risk
losing all preferences.
The historical evolution of EUGSP conditionality shows an initial upward trend emphasis-
ing labour standards. After the US and European members failed to include the protection of
labour standards on the WTO’s agenda, Washington and Brussels embraced social conditional-
ity in their own trade relations with third countries (Senti, 2006). However, after 2005, they
broadened the scope of the conventions covered to include human rights, environmental
protection and rule of law, diluting the centrality of labour standards. Over time, labour
standards have been increasingly framed as part of a sustainable development agenda instead.
This has found its most manifest reflection in the parallel practice of bilateral EU FTAs, whose
last generation enshrines social conditionality in so-called Trade and Sustainable Development
(TSD) chapters. While some celebrate that embedding them in this way aids the normative
consolidation of core labour standards (Van den Putte and Orbie, 2015, 264), others resent the
definitional weakness of the notion of sustainable development (Moore and Scherrer, 2017,

3). At the same time, labour standards are increasingly equalised with human rights. The
combination of human rights treaties and ILO conventions in the GSP Annex puts both on an
equal footing under the scheme. The latest EU Action Plan on Human Rights and Democracy
lists GSP+ monitoring practices as implementation tools, and highlights the need to “integrate
economic, social, cultural and labour rights in EU human rights dialogues” with partner
countries, discursively embedding labour standards among classical human rights categories
(European Commission, 2020b, 6). While this framing does not dilute the promotion of labour
rights, it transcends the original linking of GSP preferences specifically and exclusively to
uphold labour standards.
14.4 ACTIVATION AND REINSTATEMENT RECORD
GSP preferences have been suspended on four occasions. Each episode of suspension was gov-
erned by consecutive GSP regulations with different conditionality provisions and withdrawal
procedures, complicating their comparability. Withdrawal was contemplated but not activated
in a number of cases, not all of which are publicly documented.9
Myanmar was the subject of the first suspension. The investigation of Myanmar was trig-
gered by a joint complaint filed by the European Trade Union Confederation (ETUC) and the
International Confederation of Free Trade Unions (ICFTU)10 in 1995. The investigation, which
included hearings with civil society and experts, confirmed the existence of forced labour.
Yangon contested the charges, arguing that the practice was covered by an exception in the
ILO Convention No 29 allowing for community service, an interpretation that was ultimately
rejected by the ILO. Withdrawal was eventually approved in 1997. The regulation enacting
the suspension stipulated that the suspension would be reversed once the condemned practices
no longer prevailed. However, subsequent regulations excluding Myanmar from eligible
beneficiaries justified this measure on account of “the political situation in Myanmar” in a
departure from the original formulation. Following the reform process initiated by President
Thein Sein and his subsequent handover to a partially civilian government, GSP was reinstated
to Myanmar in 2013 in the form of EBA, a sub-scheme that had been unavailable at the time
of suspension (Portela and Orbie, 2014).
The second beneficiary suspended was Belarus. In 2003 the Commission initiated an
investigation against alleged violations of the ILO conventions on freedom of association and
the right to collective bargaining, triggered by a joint request of the ICFTU, ETUC and the
World Confederation of Labour (WCL). In 2005, the Commission announced that it intended
to recommend withdrawal to the Council. Attempts by the Belarusian authorities to show
compliance were judged insufficient by the Commission, which complained that Belarus
had “not taken any real, tangible measure to remedy the situation” (Mandelson, 2006). The
decision on withdrawal, which entered into force in 2007, indicated that preferences would be
reinstated when the violations no longer prevailed. However, even in the event of compliance,
GSP preferences can no longer be reinstated because upper-middle income countries like
Belarus ceased to be eligible.
Sri Lanka is the only GSP+ beneficiary to have lost privileges. The Commission launched
an investigation into violations against the International Covenant on Civil and Political Rights
(ICCP), the Convention against Torture, and the Convention on the Rights of the Child in 2008,
perpetrated by the Colombo government during its offensive against the rebel group, the Tamil

Tigers. The investigation concluded that legislation failed to implement the abovementioned
human rights conventions. After withdrawal had been decided, in 2010 Commissioner De
Gucht and the High Representative for Foreign Affairs and Security Policy Catherine Ashton
communicated to the Colombo government that they would reconsider suspension if it can-
celled the state of emergency and abolished the “Prevention of Terrorism Act”, among other
measures. However, the government of Sri Lanka denounced these proposals as a breach of
the country’s sovereignty, and in 2010 Sri Lanka reverted to standard GSP tariffs (European
Union, 2010). After Colombo reapplied for GSP+ preferences in 2016, the EU granted GSP+
privileges to Sri Lanka in 2017 in exchange for improvements in governance and human rights,
including re-establishing the independence of the National Human Rights Commission and
re-engaging with the UN system (European Union, 2017). Acknowledging the unsatisfactory
state of labour rights in the country, Trade Commissioner Cecilia Malmström described the
admission into the scheme as “a vote of confidence from the European Union that the Sri
Lankan Government will maintain the progress it has made in implementing the international
conventions” (European Commission, 2017a).
The most recent case is the withdrawal of EBA privileges from Cambodia for violations
of the ICCP in the context of the 2017 political crackdown, which saw the banning of the
main opposition party and the detention of its leader, activists and journalists, along with
the closing of broadcasters in the run-up to elections (Kijewski, 2020). The Commission
determined that actions against trade union leaders also violated the freedom of association
protected under ILO Conventions 87 and 98 (Commission, 2020a, 14). The possibility of a
partial suspension found its first application here, and only certain products were covered. In
identifying the products affected by the withdrawal, the Commission claimed to “take into
account the country’s economic development needs, including the need to diversify its export
base, and the socio-economic impact of the withdrawal, including on workers and industries”
(Commission, 2020a, 1).
14.5 CAN THE SUSPENSION OF TRADE PREFERENCES BE

CONSIDERED A SANCTION?
The suspension of GSP differs from classical sanctions in that it does not in itself restrict trade
but rather entails the restoration of normal trade flows. As a result of GSP withdrawal, regular
duties apply for products of the suspended beneficiary entering the common market. GSP
withdrawal is not officially considered a sanction. The term is entirely absent from EU political
discourse. Commissioners consistently refrain from employing the term “sanctions” or the jargon
“restrictive measures” when alluding to suspensions (Mandelson, 2006; European Union, 2010;
European Commission, 2017a; Commission, 2020a). The Commission services, traditionally
uneasy with the treatment of preference withdrawal as a sanction, have only used this term in
the context of the TSD chapters in new generation FTAs in order to justify their rejection. A
Commission non-paper on TSD chapters alludes to jurisdictions which “use economic sanctions
as an enforcement tool” pointing out that “in the US case, this means the withdrawal of trade con-
cessions, while Canada relies on fines” (European Commission, 2017b, 7, authors’ emphasis).
However, numerous scholars refer to their suspension as a sanction. Kryvoi discusses GSP
suspensions under the heading of “trade sanctions” (2008, 1), the same term is used by Vogt
(2015, 286). Bossuyt and her collaborators similarly allude to “GSP trade sanctions” (2020,

56). Orbie and Tortell refer to the conditionality clause as the “sanctions clause”, and to the
withdrawal process as the “sanctioning process” (2009, 668). Referring to GSP withdrawals
as “sanctions” has become commonplace among scholars and practitioners (Gstöhl and De
Bièvre, 2017; Richardson et al., 2017; Van der Ven, 2019).
Before addressing this controversy, the link between conditionality and sanctions ought to
be explained. Following Lerch (2004), political conditionality is defined as the linking of the
provision of benefits to a third party to its compliance with non-economic aims,11 whereby
benefits may include trade exchange, aid, or privileged market access, which is the subject
of the present discussion. By contrast, sanctions entail the interruption of relations or other
benefits in response to objectionable behaviour. Sanctions often result from the activation of
conditionality provisions. However, the relationship between conditionality and sanctions
is not one of automaticity, given that not every breach must lead to a suspension. Whether a
suspension is triggered or not ultimately depends on a political choice; thus, non-compliance
and the activation of the suspension clause is never perfectly correlated. Neither is the exist-
ence of conditionality provisions a pre-requisite for sanctions, as these may also be imposed
in situations in which no previous conditions were spelled out.
While conditionality provisions are widely appreciated for their political value, clauses fore-
seeing the possibility of suspension in the event of severe breaches of essential elements are in
fact a legal requirement for the lawful interruption of their application (Gstöhl and De Bièvre,
2017). The conditional provision of rewards embedded particularly in GSP+ corresponds to
the notion of a “positive sanction”, which in theoretical terms is regarded as an option superior
to both negative sanctions (Wallensteen, 2005) and to threats and unconditional rewards
(Bergeijk, 2009, 168). The presence of conditionality has been linked to behavioural changes
in the target, suggesting that the so-called ex-ante conditionality is effective in cajoling third
countries into norm adoption and compliance (Koch, 2015). Pre-accession conditionality
to the EU is a most celebrated example. The GSP+ arrangement has been associated with
the signature of conventions by aspiring beneficiaries (Orbie and Tortell, 2009). The threat
implied in conditionality provisions is presumed to have a deterrent effect. While such effect
is empirically difficult to prove, it can logically be derived from the assumption that sanctions
represent the failure of a coercive attempt (Hovi et al., 2005), consistent with studies claiming
that sanctions work best at the threat stage (Drezner, 2004).
Having differentiated conditionality from sanctions, the next step is to define sanctions.
They are routinely described as the deliberate interruption, reduction or withdrawal of normal
relations or of a benefit that would otherwise be granted in response to what is considered
objectionable behaviour by a target (Portela, 2016).12 GSP withdrawals meet both definitional
criteria: They entail the suspension of a benefit that would otherwise be granted (as it is
suspended from eligible beneficiaries), and the grounds for their withdrawal are politically
motivated (based on breaches of international norms). The effects of GSP withdrawal are
equated to those of comprehensive embargoes owing to their indiscriminate nature (Harneit-
Sievers, 2019). Most research on EU sanctions focuses on bans imposed in the framework of
foreign policy co-ordination, a practice the EU has been cultivating over the past few decades
under its CFSP (Cardwell, 2015; de Vries and Hazelzet, 2005). However, there is a growing
scholarly recognition that the EU levies sanctions in alternative frameworks (Fürrutter,
2019; Koch, 2015; Nivet, 2015). Besides the suspension of development aid under the EU’s
Partnership Agreement with African-Caribbean and Pacific states (Crawford and Kacarska,
2019; Zimelis, 2011), this includes GSP withdrawals (Lerch, 2004; Portela, 2010).

Although the idea that restrictions outside the CFSP qualify as sanctions is gaining accept-
ance, different legal categories are usually studied separately (Fürrutter, 2019; Koch, 2015).
Also, GSP suspensions attract less attention than aid sanctions, popular among development
scholars (Molenaers et al., 2015). Importantly, preference withdrawal remains excluded from
large-N sanctions datasets, whose preponderant role in knowledge production accounts for
the neglect of preference withdrawal in sanctions scholarship (Peksen, 2019). In addition,
Washington normally suspends GSP as part of broader sanctions packages, thereby reduc-
ing its visibility as a sanctions type. The popular dataset of the seminal volume ‘Economic
Sanctions Reconsidered’ contains a single stand-alone episode of preference withdrawal, the
US Congress’s suspension of Most Favoured Nation (MFN)13 treatment from Romania in 1987
(Hufbauer et al., 2007).
14.6 THE DEBATE SURROUNDING GSP SANCTIONS:

EXCEPTIONALITY, SELECTIVITY AND CRUDENESS
The activation record of GSP conditionality has been the subject of vociferous criticism on
grounds that mirror the sanctions debate.
14.6.1 Exceptionality
The rare activation of suspension clauses contrasts with the widespread violations of labour
and human rights in GSP beneficiaries, and constitutes the most common source of criticism,
with observers objecting that the Commission fails to use its leverage to improve labour rights
(Orbie and Tortell, 2009). The Commission’s predisposition in favour of dialogue and coopera-
tive mechanisms over enforcement action has been widely noted (Vogt, 2015, 286). Its reticence
to use sanctions was once described by a member state official as “the Commission’s proclivity
to afford comfort to international pariahs” (cited in Nuttall, 1996, 140). The Commission has
openly manifested a preference for positive incentives over negative conditionality, claiming
that “not every problem in implementation, even if sometimes serious, should lead to the
withdrawal of GSP, as long as there is a concrete commitment and actions from the country to
improve the situation” (European Commission, 2018). This attitude is also evident in the field
of bilateral trade agreements. While new generation FTAs include a human rights clause, social
standards and environmental protection are covered in TSD chapters which are not subject
to conditionality. In the context of the debate surrounding the pertinence of inserting social
conditionality into these chapters, the Commission expressed concerns that making labour and
environmental commitments enforceable would be regarded as confrontational by partners,
jeopardising long-term links (European Commission, 2017b, 9).
Some authors argue that the Commission’s strong free-trade orientation is rooted in its
displeasure with any obstacles to trade flowing from foreign policy considerations alien to
trade policy. Some speak of an ideational sensitivity against using trade policy for non-trade
purposes such as labour or human rights (Bossuyt et al., 2020, 56). The same rationale accounts
for the Commission’s preference for granting additional privileges under the GSP+, since
its impact is liberalising: “granting even more market access to third countries beyond the
liberalisation already provided under the standard GSP” (Bossuyt et al., 2020, 56, emphasis
in original).

A further motivation results from the alleged ineffectiveness of suspensions in revers-

ing the violations that trigger them, as well as the perceived loss of influence that ensues.
According to a 1996 account, the Commission argued that it was better to maintain contact
with governments even when their policies were repugnant in order to exert discreet and more
effective pressure behind the scenes (Nuttall, 1996, 140). A 2017 non-paper similarly rejects
conditionality in TSD chapters citing “only very limited evidence to demonstrate a positive
impact on the issues in question” (European Commission, 2017b, 9), which echoes a tradi-
tional criticism of economic sanctions (Peksen, 2019). The contention that GSP suspension
is ineffective in promoting compliance is corroborated by the record: GSP suspensions report
the lowest efficacy record of EU sanctions practice (Portela, 2010). None of the withdrawals
led to improvements in the beneficiaries: Myanmar preferences were restored after a political
transition had installed a new (civilian) government. The suspension of Belarus ceased when
it graduated from the scheme. Sri Lanka regained access to preferences years after the military
campaign which had provided the context for the breaches, and once a new government had
taken office.
14.6.2 Selectivity
A second criticism concerns target selection. Contrary to the fears of protectionist capture,
protectionism has not been identified as a driver for target selection. In other words, political
conditionality has not proved to be “protectionism in disguise”. However, the beneficiary’s
geopolitical importance is believed to have shielded prominent beneficiaries from suspension,
and even from investigation (Lerch, 2004), again a claim often found in the sanctions literature
(Saltnes, 2018). Scholars and activists complain that suspensions have not been consistently
applied to major violations of labour standards and human rights (Development Solutions,
2017).
Some authors point to the close interconnection between targets of GSP withdrawal and
CFSP sanctions, two realms of EU external policy unrelated in principle. The first suspensions,
Myanmar and Belarus, were effected in response to breaches of ILO conventions; however,
they only occurred after they had spent years under CFSP sanctions motivated by autocratic
regression. Thus, political ostracism appears as a pre-condition for the GSP withdrawal. By
contrast, preferences were withdrawn from Sri Lanka in response to human rights breaches
committed in the context of armed conflict, a situation typically relevant to the CFSP. Violations
concerned the Convention against Torture, the Convention on the Rights of the Child and the
ICCP. Thus, GSP withdrawal manifestly substituted for, rather than complemented, CFSP
measures (Portela and Orbie, 2014). Similarly, Cambodia’s suspension followed widespread
condemnation by the UN Human Rights Council (Al-Nasani, 2019). In neither case were
decisions on withdrawal divorced from the broader political situation in the beneficiary.
Others posit that inconsistencies in GSP suspensions for labour standards breaches result
from a misunderstanding of the ILO supervisory system, on which the Commission relies for
the identification of non-compliance. According to Vogt, the Commission considers suspen-
sion when shortcomings are flagged by the ILO Committee on Application of Standards, or the
ILO establishes a Commission of Inquiry. However, neither constitutes a reliable signpost of
non-compliance given that that they result from tripartite negotiations which allow for severe
breaches to go undetected (Vogt, 2015). Reliance on the ILO monitoring system, motivated by
the Commission’s lack of in-house capacity, thus contributes to inconsistences in target selec-

tion. The misidentification of signposts also explains why several beneficiaries continue to
receive GSP+ preferences despite severe criticisms from authoritative ILO committees (Orbie
and Tortell, 2009; Vogt, 2015). Observers express puzzlement at the continued provision of
privileges to beneficiaries in breach of labour standards like Guatemala or Uzbekistan (Velluti,
2016; Vogt, 2015).
14.6.3 Crudeness
A separate concern with trade preference withdrawal has to do with its inability to hit per-
petrators. This connects with the above point about ineffectiveness, and once again echoes
the debate on economic sanctions. The EU chooses to suspend beneficiaries when their
governments bear responsibility for violations (Kryvoi, 2008). In all withdrawal cases, state
authorities rather than the private sector were responsible for the breaches. Still, the costs
of preference cancellation were carried by society as a whole. Moreover, GSP suspensions
display perverse effects by hitting the wrong targets. Because preference cancellation increases
unemployment in the suspended beneficiary, this tool has been criticised as harming those
groups it purports to help (Moore and Scherrer, 2017). The downgrading of Sri Lanka from
GSP+ to standard GSP mostly affected the garment industry, exacerbating poverty (Zamfir,
2017). Similarly, the suspension of Western preferences from Myanmar mostly hit its textile
industry, a sector unconnected to the condemned leadership or the policies that triggered the
sanctions. It has been claimed that the suspension not only failed to address violations but also
hindered the development of a sector that could have organised against government policies
(Jones, 2015). The Commission’s justification of its reluctance to suspend Pakistan on grounds
of widespread child labour, maintaining that withdrawal would be “counterproductive”,
dovetails with this criticism.
Until 2020, withdrawals applied to preferences across the board (Richardson et al., 2017).
This contrasts sharply with CFSP practice, where the EU follows a policy of targeting sanc-
tions to affect only individuals, elites and societal groups responsible for the condemned poli-
cies, while sparing populations and sectors not implicated in them (Cardwell, 2015; Council,
2004). Indeed, the withdrawal of GSP privileges has been singled out as the least targeted
sanction type in the EU’s repertoire (Portela, 2016). The nature of the products benefiting
from preferences is determined by the EU on the basis of criteria of commercial sensitivity in
the European market (Gstöhl and De Bièvre, 2017). Thus, blanket withdrawals do not affect
elites responsible for the shortcomings because they are not designed with such an aim in mind.
14.6.4 Proposed Reforms
Against the backdrop of the periodic revision of the GSP regulation, several proposals for
reform have been floated. Some have suggested that sanctions should discriminate among
targets. The current regulation already allows for suspending specific sectors. However, the
proposed approach goes one step further by advocating the suspension of non-compliant
companies rather than sectors. Company-specific withdrawals could be effected by reinstating
MFN tariffs for products from industries tied to violations (Richardson et al., 2017). The notion
of company-based suspension enjoys the endorsement of civil society organisations. They
propose that foreign firms wishing to export to the EU market should be required to follow UN
Guiding Principles on Business and Human Rights, or that the EU should ban exports from

blacklisted companies responsible for human rights violations, imitating a practice established
to fight money laundering (EPRS, 2018, 49).
It has also been suggested that the EU could react to the breaches with foreign policy tools
other than GSP sanctions (Kliem, 2020). Individuals who are linked either to government
authorities or the private sector and who are implicated in the breach could be targeted with
travel bans and asset freezes, instead of preference suspensions (Portela, 2018). These can be
used to highlight the role of the decision-makers responsible, but also to deprive certain actors
of funding sources. Targeted sanctions are useful due to their versatility and discriminatory
nature, i.e. their ability to affect specifically those responsible for objectionable actions. They
admit various actors as targets, including rebel groups, economic sectors, companies, har-
bours, vessels, and private individuals. The EU “Principles for the use of restrictive measures”
embrace the notion of targeting: “Sanctions should be targeted in a way that has maximum
impact on those whose behaviour we want to influence. Targeting should reduce to the
maximum extent possible any adverse humanitarian effects or unintended consequences for
persons not targeted” (Council, 2004, 3). This echoes the 1995 UN Security Council response
to negative experiences with comprehensive embargoes, which announced that, “any future
sanctions regime should be directed to minimise unintended adverse side-effects of sanctions
on the most vulnerable segments of targeted countries” (UNSC, 1995).
A challenge of this approach is the difficulty of selecting sectors or companies linked to the
violation. This might be particularly true of human rights breaches. As Van der Ven points out,
it would be difficult to link a country’s failure to abolish the death penalty to economic sectors
(2019, 69). In identifying the products affected in its first ever sector-specific withdrawal, the
Commission claimed to “take into account the country’s economic development needs, includ-
ing the need to diversify its export base, and the socio-economic impact of the withdrawal,
including on workers and industries” (Commission, 2020a, 1). However, it was not specified
how product selection is tied to the breaches.
Finally, a proposal suggested revision of the trigger mechanism, as a corrective to what
is widely perceived as the selective and uneven application of suspensions. This could be
accomplished by introducing objective standards, e.g. through the issuing of guidelines, or the
definition of a threshold to narrow the Commission’s discretion (Van der Ven, 2019, 70). Yet,
any attempt to limit the flexibility of a sender needs to strike a balance between sender discre-
tion and the coherence of its foreign policy output, as epitomised by the recent debate around
the establishment of a horizontal human rights regime in the EU (Portela, 2020). Moreover,
research shows that senders operating under sanctions legislation with quasi-automatic trig-
gers often circumvent their activation, thereby nullifying their intent (Crawford and Kacarska,
2019).
14.7 CONCLUSIONS AND SUGGESTIONS FOR FUTURE RESEARCH
The original question of this chapter, namely whether GSP withdrawals can be considered
economic sanctions, is answered in the affirmative. The previous sections confirm the presence
in GSP withdrawals of the definitional elements of economic sanctions. A number of additional
features approximate GSP withdrawals to this notion. GSP withdrawals have been subject to
criticisms similar to those voiced with regard to sanctions: They are blamed for ineffectiveness
in promoting compliance and for their perverse effects. The EU has been the target of the same

allegations of selectivity and “double standards” that characterise its remaining sanctions
practice. This highlights, once again, their character as foreign policy sanctions.
In addition, the evolution of EUGSP reveals that the EU has expanded the focus of what
was originally designed as a social conditionality instrument, turning it into yet another
human rights tool in its foreign policy. Labour standards remain protected, but ILO core
conventions are now embedded in a collection of international treaties on human rights, rule
of law, environmental protection and climate change, participating from a broader trend in
trade policy. Moreover, the GSP+ incentive scheme does not entail additional labour standards
requirements. Beneficiaries desiring enhanced access must demonstrate better performance
in human rights and sustainability, but not in labour rights protection. The withdrawal record
further underscores the GSP conditionality’s transformation into a human rights instrument.
Strictly speaking, social conditionality was activated in Myanmar and Belarus. The downgrad-
ing of Sri Lanka from GSP+ to the default GSP did not respond to breaches of labour standards,
but to transgressions of humanitarian law and human rights. Cambodia’s suspension was
justified on ICCP breaches, with tangential allusions to the protection of trade union leaders.
The Commission’s discourse reflects this shift of emphasis. Former Trade Commissioner
Peter Mandelson framed the suspension of Belarus as a demonstration of adherence to labour
standards, claiming that the decision was “a test case of our collective commitment to the
promotion of workers’ rights as an integral part of our trade policy objectives” (Mandelson,
2006). By contrast, when announcing the withdrawal from Cambodia, HRVP Josep Borrell
highlighted the EU’s “commitment to the Cambodian people’s . . . rights and the country’s
sustainable development”, without alluding to labour standards (Commission, 2020a). This
confirms the comparability between CFSP sanctions and GSP withdrawals. The violations
addressed in Sri Lanka—human rights breaches in a civil war context—and Cambodia—
violations of civil liberties in a crackdown on internal dissent—correspond to the situations
typically addressed by the EU under the CFSP, as well as by other senders in their sanctions
practice (Borzyskowski and Portela, 2018).
A number of insights can be gained for the development of the future research agenda on
GSP. One very obvious implication is the need to introduce GSP withdrawals into sanctions
scholarship. While mainstream databases do feature GSP suspension as a sanction type, their
absence as stand-alone category and their comparatively low number has rendered them almost
invisible to researchers, who leave them out of their analyses. Such exclusion is unjustified.
The connection of GSP with other types of economic sanctions invites an exploration of the
interaction between GSP withdrawals and other sanctions. In addition, the parallelism between
EU and US GSP schemes attracts comparison between sanctions effected by both actors, and
possibly by other economies operating conditional schemes. In the specific case of EUGSP,
the sophisticated nature of its conditionality system may offer lessons for conditionality
arrangements in other trade and foreign policy instruments in Brussels’ toolbox. Conversely,
lessons from the rich CFSP sanctions experience could be transferred to the EUGSP sphere.
Finally, there is the inescapable question of efficacy in compelling target compliance, the
classical focus of sanctions research. In their study of US GSP withdrawals due to wanting
labour standards, Elliott and Freeman found that labour conditions improved in approximately
half of beneficiaries under threat of suspension (Elliott and Freeman, 2003, 78). For its part,
the rare EUGSP suspension practice, without a single success case yet on record, features the
lowest success rate among EU sanctions types (Portela, 2010). The extent and causes of such
discrepancies are worthwhile contextualising and exploring in future research.

NOTES
* The author thanks Kim Elliott, Michal Onderco, Jan Orbie and the editors for comments on an earlier draft.
Errors are hers. This chapter is dedicated to the memory of Hadewych Hazelzet, an inspiration and a friend.
1. China, India and South Korea offer tariff preferences to the Least Developed Countries only.
2. An FTA is defined by the WTO as an agreement between countries that removes tariffs and other restrictions
on substantially all goods traded between them. A list of FTAs concluded by the EU can be found under https://
trade.ec.europa.eu/tradehelp/free-trade-agreements.
3. See, respectively, Council Regulation (EC) 552/97 of 24 March 1997, Council Regulation (EC) 1933/2006 of 21
December 2006, Implementing Regulation (EU) 143/2010 of the Council of 15 February 2010, and Commission
Delegated Regulation (EU) 2020/550 of 12 February 2020.
4. As defined in the Geneva Conventions (1926 and 1956) and ILO Conventions Nos 29 and 105.
5. Nos 87 and 98, and No 138 respectively. In 2001, the legal basis was extended to cover all eight core Conventions
of the ILO, bringing them in line with the 1998 ILO Declaration on Fundamental Principles and Rights. The text
of the eight core conventions can be found under http://www.ilo.org/asia/decentwork/dwcp/WCMS_143046/
lang--en/index.htm.
6. EC Regulation 3835/90 of 20 December 1990.
7. See list in the appendix.
8. See Regulation (EU) No 182/2011.
9. International trade unions filed a complaint regarding child and forced labour practices in Pakistan in 1998, with
the backing of the EU’s Economic and Social Committee. The Commission declined to investigate because the
prohibition of child labour was not covered under the GSP regulation at the time, and Pakistan had committed
to reverse this practice (Lerch, 2004). The Commission initiated an investigation into El Salvador concerning
the implementation of ILO Convention No 87 relating to the freedom of association and the right to organise
but concluded that the findings did not justify GSP withdrawal (Reid, 2015). An investigation into Bolivia was
also launched in 2012, but again the Commission decided against suspension.
10. IFTUC was renamed International Trade Union Confederation (ITUC) after merging with the World Confedera-
tion of Labour (WCL) in 2006.
11. When aims are economic, one speaks of economic rather than political conditionality.
12. Additional elements typically associated with sanctions, such as their economic character or coercive intent
(Hufbauer et al., 2007), are not necessarily definitional, given the existence of sanctions types deprived of eco-
nomic implications and of the ambition of changing behaviour.
13. According to the Most Favoured Nation principle instituted by the General Agreement for Trade and Tariffs
(GATT), any trade advantages granted to a trading partner must be extended to all members. See Article I, para.
1 of the 1994 version of GATT. Individual members can extend MFN treatment to non-members of GATT on a
voluntary basis.
REFERENCES
Al-Nasani, A. (2019), ‘EU lässt die Muskeln spielen’, Kommentar, Berlin: Heinrich Böll-Stiftung, 7 January, accessed
at https://www.boell.de/de/2019/01/07/eu-laesst-die-muskeln-spielen?dimension1=division_as.
Bergeijk, P.A.G. van (2009), Economic Diplomacy and the Geography of International Trade, Cheltenham:
Edward Elgar.
Biersteker, T., S. Eckert and M. Tourinho (eds) (2016), Targeted Sanctions. The impacts and effectiveness of United
Nations action, Cambridge: Cambridge University Press.
Borzyskowski, I.v. and C. Portela (2018), ‘Sanctions cooperation and regional organisations’, in S. Aris, A. Snetkov
and A. Wenger (eds) Inter-organisational Relations in International Security: Cooperation and Competition,
Abingdon: Routledge, pp. 240–61.
Bossuyt, F., J. Orbie and L. Drieghe (2020), ‘EU external policy coherence in the trade-foreign policy nexus: foreign
policy through trade or strictly business?’, Journal of International Relations and Development, 23 (1), 45–66.
Cardwell, P. (2015), ‘The legalisation of EU foreign policy and the use of sanctions’, Cambridge Yearbook of
European Legal Studies, 17 (1), 287–310.
Council of the European Union (2004), Basic Principles on the use of restrictive measures (Sanctions), Brussels,
June 7, 2004.
Crawford, G. and S. Kacarska (2019), ‘Aid sanctions and political conditionality: Continuity and change’, Journal of
International Relations and Development, 22 (2), 184–214.
De Gucht, K. (2010), ‘On the EU trade agreement with Colombia and Peru’, Speech at the European Parliament,
SPEECH 10/101, Brussels, March 16, 2010.

De Vries, A. and H. Hazelzet (2005), ‘The EU as a new actor on the sanctions scene’, in P. Wallensteen and C. Staibano
(eds), International Sanctions: Between words and wars in the global system, Abingdon: Frank Cass, pp. 95–106.
Development Solutions (2017), Mid-term evaluation of the Generalised Scheme of Preferences. Final Interim report.
Brussels: European Commission, DG Trade. September.
Drezner, D.W. (2003), ‘The hidden hand of economic coercion’, International Organization, 57 (3), 643–59.
Elliott, K.A. and R. Freeman (2003), Can Labour Standards Improve under Globalisation? Washington: Institute for
International Economics.
EPRS, European Parliament Research Service (2018), The Generalised Scheme of Preferences Regulation (No
978/2012) European Implementation Assessment, December, Brussels: European Parliament, accessed at https://
www.europarl.europa.eu/RegData/etudes/STUD/2018/627134/EPRS_STU(2018)627134_EN.pdf.
European Commission (2017a), ‘EU grants Sri Lanka improved access to its market as incentive for reform’, Press
Release IP/17/1363. Brussels: European Commission, May 17, 2017.
European Commission (2017b), ‘Non-paper of Commission Services on Trade and Sustainable Development (TSD)
chapters in the EU’s Free Trade Agreements (FTAs)’, 11 July.
European Commission (2018), ‘Commission Staff Working Document, Mid-term Evaluation of the Generalised
Scheme of Preferences’, SWD(2018) 430 final, Brussels, 4 October.
European Commission (2020a), Commission Delegated Regulation (EU) amending Annexes II and IV to Regulation
(EU No 978/2012) as regards the temporary withdrawal of the referred to in Article 1(2) in respect of certain
products originating in the Kingdom of Cambodia, Brussels, 12 February.
European Commission (2020b), EU Action Plan on Human Rights and Democracy 2020–2024, Annex to the Joint
Communication to the European Parliament and the Council, Brussels, 25 March.
European Union (2010), Implementing Regulation (EU) No 143/2010 of the Council of 15 February 2010 temporarily
withdrawing the special incentive arrangement for sustainable development and good governance provided for
under Regulation (EC) No 732/2008 with respect to the Democratic Socialist Republic of Sri Lanka. Brussels:
Official Journal of the European Union L45, February 20.
European Union (2011), Regulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February
2011 laying down the rules and general principles concerning mechanisms for control by Member States of the
Commission’s exercise of implementing powers European Union. Brussels: Official Journal of the European Union
L55/13, February 28.
European Union (2012), Regulation (EU) No 978/2012 of the European Parliament and of the Council of 25 October
2012 applying a scheme of generalised tariff preferences and repealing Council Regulation (EC) No 732/2008.
Brussels: Official Journal of the European Union L303, October 31.
European Union (2017), Commission Delegated Regulation (EU) 2017/836 of 11 January 2017 amending Annex III
to Regulation (EU) No 978/2012 of the European Parliament and of the Council applying a scheme of generalised
tariff preferences. Brussels: Official Journal of the European Union L125, May 18, 2017.
Fürrutter, M. (2019), ‘The transnationalized reality of EU sanctioning: a new research agenda beyond the study of
effective economic sanctions’, Journal of European Public Policy, online first.
Gstöhl, S. and D. De Bièvre (2017), The Trade Policy of the European Union, Basingstoke: MacMillan.
Harneit-Sievers, A. (2019), Mehr Kollateralschäden als politische Wirkung?’, Kommentar, Berlin: Heinrich
Böll-Stiftung, 7 January, accessed at https://www.boell.de/de/2019/01/07/mehr-kollateralschaeden-als-politische
-wirkung?dimension1=division_as.
Harrison, J. et al. (2019), ‘Labour Standard Provisions in EU Free Trade Agreements: Reflections on the European
Commission’s reform agenda’, World Trade Review, 18 (4), 635–57.
Hovi, J., R. Huseby and D. Sprinz (2005), ‘When do (imposed) economic sanctions work?’, World Politics, 57 (4), 479–99.
Hufbauer, GC., J. Schott, K.A. Elliott and B. Oegg (2007), Economic Sanctions Reconsidered, 3rd ed, Washington,
D.C.: Peterson Institute for International Economics.
Jones, L. (2015), Societies under Siege, Cambridge: Cambridge University Press.
Kijewski, L. (2020), ‘EU to suspend some of Cambodia trade benefit over human rights’, Aljazeera, 11 February 2020.
Kliem, F. (2020). ‘Punishing Cambodia is going to backfire on EU’, Nikkei Asian Review, 14 February, accessed at
https://asia.nikkei.com/Opinion/Punishing-Cambodia-is-going-to-backfire-on-EU.
Koch, S. (2015), ‘A Typology of Political Conditionality Beyond Aid: Conceptual Horizons Based on Lessons from
the European Union, World Development, 75 (1), 97–108.
Kryvoi, Y. (2008), ‘Why European Union Trade Sanctions Do Not Work’, Minnesota Journal of International Law,
12 (2), 209–46.
Lerch, M. (2004), Menschenrechte und europäische Aussenpolitik. Wiesbaden: Verlag für Sozialwissenschaften.
Mandelson, P. (2006), ‘Trade policy and decent work, EU Decent Work Conference on Globalisation’, Brussels,
December 5, 2006.
Molenaers, N., A. Gagiano, L. Smets and S. Dellepiane (2015), ‘What determines the suspension of budget support?’,
World Development, 75 (1), 62–73.
Moore, M. and C. Scherrer (2017), Conditional or promotional trade agreements – Is enforcement possible?,
Singapore: FES Asia Office, 2017.

Nivet, B. (2015), ‘Les sanctions internationales de l’Union européenne: soft power, hard power ou puissance symbol-
ique?’, Revue Internationale et Stratégique, 97, printemps, 129–38.
Nuttall, S. (1996), ‘The Commission: The struggle for legitimacy’ in C. Hill (ed) The Actors in Europe’s Foreign
Policy, Abingdon: Routledge, pp.130–50.
Orbie, J. and L. Tortell (2009), ‘The New GSP+ Beneficiaries: Ticking the box or truly consistent with ILO findings?’,
European Foreign Affairs Review, 14 (4), 663–82.
Peksen, D. (2019), ‘When Do Imposed Economic Sanctions Work? A Critical Review of the Sanctions Effectiveness
Literature’, Defence and Peace Economics, 30 (6), 635–47.
Portela, C. (2010), European Union Sanctions and Foreign Policy, Abingdon: Routledge.
Portela, C. (2016), ‘Are EU sanctions ‘targeted’?’, Cambridge Review of International Affairs, 29 (3), 912–29.
Portela, C. (2018), Enforcing Respect for Labour Standards with Targeted Sanctions. Singapore: Friedrich Ebert
Stiftung Office for Regional Co-operation in Asia.
Portela, C. (2019), ‘Die Europäische Union, die Aussetzung von Handelspräferenzen und die Sanktionslogik’,
Kommentar, Berlin: Boell-Stiftung, accessed at https://www.boell.de/de/2019/01/07/die-europaeische-union-die
-aussetzung-von-handelspraeferenzen-und-die-sanktionslogik.
Portela, C. (2020), ‘Building a resilient EU Human Rights sanctions regime’, Brief, EUISS: Paris.
Portela, C. and J. Orbie (2014), ‘Sanctions under the EU’s Generalised System of Preferences (GSP): Coherence by
accident?’, Contemporary Politics, 20 (1), 63–76.
Prickartz, A.C. and I. Staudinger (2019), ‘Policy vs Practice: The use, implementation and enforcement of human rights
clauses in the European Union’s international trade agreements’, Europe and the World Law Review, 3 (1), 1–23.
Reid, E. (2015), Balancing Human Rights, Environmental Protection and International Trade. Oxford and Portland: Hart.
Richardson, B., J. Harrison and L. Campling (2017), Labour rights in export processing zones with a focus on GSP+
beneficiary countries. Brussels: European Parliament, Directorate-General for external policies.
Saltnes, J.D. (2018), ‘The European Union’s human rights policy: Is the EU’s use of the human rights clause inconsist-
ent?’, Global Affairs, 4 (2–3), 277–89.
Senti, R. (2006), Die WTO im Spannungsfeld zwischen Handel, Gesundheit, Arbeit und Umwelt. Baden Baden: Nomos.
Siles-Brügge, G. (2014), ‘EU trade and development policy beyond the ACP: Subordinating developmental to com-
mercial imperatives in the reform of GSP’, Contemporary Politics, 20 (1), 49–61.
UNSC (1995), Letter from the Permanent Representatives of China, France, the Russian Federation, the United States
and the United Kingdom to the United Nations addressed to the President of the Security Council, S/1995/300,
New York: United Nations, April 13.
Van den Putte, L. and J. Orbie (2015), ‘EU Bilateral Trade Agreements and the surprising rise of labour provisions’,
International Journal of Comparative Labour Law and Industrial Relations, 31 (3), 263–84.
Van der Ven, C. (2019), Sustainable Trade Preferences for the 21st Century, Eschborn: Gesellschaft fur Internationale
Zusammenarbeit (GIZ).
Velutti, S. (2016), ‘The promotion and integration of Human Rights in EU external trade relations’, Utrecht Journal
of International and European Law, 32 (83), 41–68.
Vogt, J. (2015), ‘A little less conversation. The EU and the (non-) application of labour conditionality in the
Generalised System of Preferences (GSP)’, International Journal of Comparative Labour Law and Industrial
Relations, 31 (3), 285–304.
Wallensteen, P. (2005), ‘Positive sanctions: on the potential of rewards and target differentiation’, in P. Wallensteen
and C. Staibano (eds), International Sanctions: Between words and wars in the global system, Abingdon: Frank
Cass, pp. 229–241.
Zamfir, I. (2017), ‘Human rights in EU trade policy. Unilateral measures’, Brussels: European Parliament.
Zimelis, A. (2011), ‘Conditionality in the EU-ACP Partnership’, Australian Journal of Political Science, 46 (3),
389–406.

APPENDIX A.14: CONVENTIONS LISTED IN ANNEX VIII
PART A: Conventions on human and labour rights

Convention on the Prevention and Punishment of the Crime of Genocide
International Convention on the Elimination of All Forms of Racial Discrimination
International Covenant on Civil and Political Rights
International Covenant on Economic Social and Cultural Rights
Convention on the Elimination of All Forms of Discrimination against Women
Convention against Torture
Convention on the Rights of the Child
Convention concerning Forced or Compulsory Labour, No 29
Convention concerning Freedom of Association and Protection of the Right to Organise, No 87
Convention concerning the Right to Organise and to Bargain Collectively, No 98
Convention concerning Equal Remuneration of Men and Women Workers for Work of Equal
Value, No 100
Convention concerning the Abolition of Forced Labour, No 105
Convention concerning Discrimination in Respect of Employment and Occupation, No 111
Convention concerning Minimum Age for Admission to Employment, No 138
Convention concerning the Elimination of the Worst Forms of Child Labour, No 182
PART B: Conventions on environment and governance
Convention on International Trade in Endangered Species of Wild Fauna and Flora
Montreal Protocol on Substances that Deplete the Ozone Layer
Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their
Disposal
Convention on Biological Diversity
The United Nations Framework Convention on Climate Change
Cartagena Protocol on Biosafety
Stockholm Convention on persistent Organic Pollutants
Kyoto Protocol to the United Nations Framework Convention on Climate Change
United Nations Single Convention on Narcotic Drugs
United Nations Convention on Psychotropic Substances
United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances
United Nations Convention against Corruption

15. Economic sanctions and the WTO
Maarten Smeets
15.1 INTRODUCTION
Despite the growing evidence that economic sanctions are an ineffective and costly policy
instrument, they continue to gain significant popularity. They are widely used by both large
and small trading nations around the globe. From a WTO perspective, economic sanctions fly
in the face of its fundamental principles and undermine trade liberalization. Yet, the drafters
of the GATT made explicit provisions under Article XXI, as part of the security exceptions,
which allowed for economic and trade sanctions. Article XXI can be considered “the mother
of all exceptions”, given the open way in which it is drafted. Until quite recently members
and WTO panels have carefully abstained from defining some of the key elements contained
therein, including the concept of “essential security interests” and thus determining the condi-
tions under which the provisions can be invoked. They have left this decision or judgement
intentionally to the discretion of the members. This changed, however, with the recent case
brought by Ukraine against the Russian Federation in 2016 on measures concerning traffic in
transit, where the dispute settlement panel in 2019 provided some guidance on the interpreta-
tion of Article XXI (Ukraine vs Russia case DS 512).
This chapter addresses the question of how economic sanctions applied by members have
been justified in the GATT/WTO, and what can be said about their relationship with the
WTO. The structure of this chapter is as follows: after a brief discussion of how sanctions
work in relation to the fundamental non-discrimination principles of the WTO, specific
attention will be given to the question of how the security exceptions were applied in
several cases. It will be argued that case law has gradually evolved from “self-judgement”,
with members determining the conditions under which Article XXI could be invoked, to
providing guidance.
15.2 TRADE SANCTIONS, WHAT THEY ARE AND WHAT THEY

ARE MEANT TO DO
Trade sanctions cover all direct trade-restricting policies between sovereign nations gener-
ally include either embargoes in the form of prohibitions on exports from one or more
countries to the target country or boycotts in the form of blocks on imports from the target
country, or both, effectively cutting off all trade relations. Sanctions increasingly include
financial and/or investment, sports and cultural restrictions, and diplomatic measures.
They can target individuals, depriving them of mobility and access to their luxury homes,
properties and boats abroad. These so-called “smart” sanctions are designed to target their
effects very precisely, depriving individuals of their freedom of movement and their ability
to enjoy their wealth.
280
Maarten Smeets - 9781839102721
Economic sanctions and the WTO 281
Sanctions are widely seen as a feature of “soft” international diplomacy and as providing
an alternative to war. They can be followed by military action, either to add to the pressure of
sanctions or, indeed, substitute for them altogether. The effectiveness of sanctions will largely
depend on the economic vulnerability of the target country and on the instruments available
in the sanctions campaign. In most cases they turn out to be costly to both the sender and the
target. The ways in which trade is conducted have evolved in recent decades. The outsourcing
of inputs and production processes on a world-wide scale, the rapid increase in intra-industry
trade, and the rise in significance of global value chains (GVCs) are all factors that together
make it ever more challenging to identify and single out goods and services that are essential
to the economy under sanctions (Smeets, 2018). This is closely related to the phenomenon
of globalization, which has led to strong economic interdependencies and linkages, making
markets more interconnected (Smeets, Mashayekhi, 2019). The sender risks shooting itself in
the foot. This also explains in part (and is evidenced in various studies) how the overall track
record of sanctions is poor in terms of their success rate (Elliott, Hufbauer, Oegg, Schott, 2008;
see also Chapter 2 of this Research Handbook). Nevertheless, sanctions are very popular,
which can probably best be explained by the strong signal they sends to the domestic electorate
about the determination of their leaders to act and take concrete punishing measures. Indeed,
economic and trade sanctions are a more powerful expression of disapproval than purely
verbal declarations and are intended to give teeth to such declarations.
The theory and practice of economic sanctions has been widely analysed and documented
in the literature where there are many examples of specific goals, motivations and measures
taken and their success rates (Baldwin, 1998, 1999–2000; Bergeijk, 1994; Brzoska, 2003,
2014; Doxey, 1980, 1987; Galtung, 1967; Hufbauer, Schott, Elliott, Oegg, 2007; Smeets, 1990,
1994, 2000, 2018, 2019; Wallensteen, 1968, 2000). Economic sanctions target one or several
trade partners, depriving them of access to markets, products, consumer goods, income and
revenue, thus isolating that partner with an explicit goal such as compliance with a specific
demand, regime change or any other hard or soft objective. Hence, they are selective in nature.
Sanctions have perverse effects: they are basically meant to target governments, regimes,
policies and systems. But it is, in fact, citizens and consumers who are the first to suffer from
sanctions. This partly explains why the countries being targeted rarely, if ever, give in. On the
contrary, they often retaliate, to the extent they have the means to do so, by taking counter
measures, diverting trading relations to “friendly” nations and decreasing their dependency on
the country taking the sanctions. They often dig in and resist, putting the responsibility for the
hardship felt in the domestic economy on the countries taking the sanctions. There are many
examples confirming this, as demonstrated in the cases of Iraq, after Saddam Hussein occupied
Kuwait (Smeets, 1990); Iran, which has been suffering from sanctions for most of the last 40
years without leading to a regime change; Cuba; and many others which can be considered
unsuccessful sanction episodes.
Sanctions and the escalation of trade tensions that generally follow lead to much uncertainty
in trade, inefficiencies, delays in investments and lack of transparency. They thus affect the
world economy negatively. Sanctions can ultimately lead to military conflict and warfare,
resulting in loss of life. Here again the examples are numerous, with military interventions
having occurred in Iraq, the former Yugoslavia and Ukraine. More recently there has been a
serious threat of military intervention in Iran. Sanctions can and unfortunately sometimes do
lead to terrorist actions, making citizens’ lives uncertain wherever they are.

15.3 ARE SANCTIONS IN CONFLICT WITH THE OBJECTIVES

AND KEY PRINCIPLES OF THE WTO?
Sanctions are in conflict with the Multilateral Trading System (MTS) and yet are tolerated
under Article XXI as part of the exceptions. From a systemic and rule-making point of view,
they undermine mainly the Most Favoured Nation (MFN) Treatment and, to a lesser extent if
at all, the National Treatment (NT) principles. These together guarantee non-discriminatory
treatment in trade.1 The breach of the NT principle is less of concern as products are suppos-
edly not entering the market of supply. From an economic and trade perspective sanctions not
only negatively affect trade and undermine the free flow of goods, services and investment,
they are costly to both sides involved in sanction episodes. This leads to the question of what
the relationship between sanctions and the key principles of the WTO is. First the economic
aspects will be discussed, followed by institutional issues.
Economic sanctions are meant to distort or interrupt (partially or fully) the economic ties
between two or more countries. The preambular parts of the GATT and the WTO stipulate
however that the fundamental objectives of liberalizing trade and opening up markets are
to raise overall standards of living, create full employment and thus provide for stable,
secure, transparent and predictable trade relations. In order to achieve those objectives, the
WTO endeavours to create and maintain harmonious trade relations between members, thus
improving overall levels of economic welfare. The conflict between the objectives of the
GATT/WTO and sanctions is thus immediately evident: the two approaches are fundamentally
incompatible.
The GATT and WTO approaches to trade liberalization are based on international trade
theories that go back to Ricardo (1817), Heckscher (1919), Kemp (1964) and many other
economists. Many of these theories have since been further refined. Sanctions are essentially
based on a reversal of these theories, suggesting that by depressing the targeted economy the
goal of the sanctions can be achieved. Sanctions aim at disrupting or altogether cutting off
trade flows, whereas the WTO promotes the free flow of goods and services on the basis of
the notion of comparative advantage. The two are clearly in conflict.
The second observation is that sanctions are intentionally applied in discriminatory ways,
as they are directed towards one or several targets. This is technically and legally a breach of
the MFN principle, which requires that all WTO members be treated equally. The MFN clause
has been the pillar of the multilateral trading system since the inception of GATT in 1947 and
GATT 1994. In the same way that the contracting parties to GATT were bound to grant each
other’s products equal and non-discriminatory treatment, WTO Members have entered into
similar non-discriminatory commitments concerning trade in goods, the supply in services and
the protection of intellectual property rights.
While non-discrimination is the rule, the WTO foresees that, in exceptional circum-
stances, Members can deviate from this principle and most GATT/WTO rules allowing
for import restrictions include the non-discrimination provisions. A country that wishes
to impose import restrictions in a case of a sudden increase in imports (or threat thereof)
can invoke safeguard measures (Article XIX-GATT 1994). Such measures need to be
applied in a non-discriminatory manner, hence on an MFN basis. The main reason is
that safeguard measures are meant to address a situation of “legitimate” trade, when an
importing country cannot cope with a rise in imports which risks distorting the competi-
tive conditions in the domestic market. Compensation needs to be provided to the trade

partner affected by the safeguard measures, taking account of the forgone trade oppor-
tunities. In other words, the balance of rights and obligations needs to be maintained or
restored with the trading partners. The safeguard measures can include an increase in
tariffs or quantitative restrictions, whichever measure is more appropriate and contributes
to averting a distortion in the domestic market. The measures need to be applied on an
MFN basis and cannot be solely applied to the exporter that triggered the safeguard
measures in the importing country. For transparency purposes, the measures proposed
and applied are monitored by the safeguards committee in the WTO, thus ensuring that
the rules of the WTO are respected.
This is not to say that the WTO does not allow for situations that imply discriminatory
treatment and hence a deviation of the MFN treatment principles. This is the case when
anti-dumping measures are applied to counter a situation of dumping, or countervailing
duties to set off subsidies granted by a public authority. These clearly refer to situations of
“unfair” trade which are in breach with the WTO rules, i.e. the Anti-dumping Agreement
and the Agreement on Subsidies and Countervailing Duties.2 The measures are specifically
taken in response to anti-competitive behaviour by a specific country, hence the deviation
of the MFN rule. The relevant WTO bodies have a specific monitoring and surveillance
function ensuring that the extent to which the measures are applied is proportionate and
measured.
Trade sanctions are often directly associated with retaliatory action resulting from
the conclusion of a WTO dispute settlement process. The (authorized) retaliatory action
resulting from WTO trade disputes follows the logic of restoring a balance in rights and
obligations between members when these are affected by a country applying policies that
violate WTO rules. Such retaliatory measures can only be taken under the strict authority
of the WTO; its Secretariat and relevant bodies play a key monitoring role ensuring that
the retaliatory or compensatory measures are proportional and taken in line with the
panel findings. The measures can eventually be subjected to a panel review, as has been
the case.3
Finally, and as a third observation in relation to the core principles of the WTO, the country
being hit by sanctions is denied NT for its products and services. The NT principle condemns
discrimination in the domestic market between foreign and national goods or service suppliers,
or between foreign and national holders of intellectual property rights. In practice this means
that once duties on goods have been paid, imported goods must be given the same treatment
as domestic products in relation to any charges, taxes or administrative or other regulations
(GATT Article I:ll). Given that during a sanction episode the products and services of the
foreign supplier are a priori banned from the market of supply, the NT argument has more
theoretical and less economic significance.
15.4 SECURITY EXCEPTIONS UNDER ARTICLE XXI
How then can economic sanctions be justified in the WTO? The legal basis of applying
economic and trade sanctions in the WTO can be found in Article XXI of the GATT 1994,
referring to the protection of “essential security” and Article XIV bis of the GATS. Article
XXI of GATT allows for the imposition of trade restrictions when a country deems those
“necessary for the protection of its essential security interests”.4 Article XIV bis has never

been invoked and the discussion in this chapter will focus solely on Article XXI which states
that:
BOX 15.1
Nothing in this Agreement shall be construed
(a) to require any contracting party to furnish any information the disclosure of which it considers
contrary to its essential security interests; or
(b) to prevent any contracting party from taking any action which it considers necessary for the
protection of its essential security interests
(i) relating to fissionable materials or the materials from which they are derived;
(ii) relating to the traffic in arms, ammunition and implements of war and to such traffic in
other goods and materials as is carried on directly or indirectly for the purpose of sup-
plying a military establishment;
(iii) taken in time of war or other emergency in international relations; or
(c) to prevent any contracting party from taking any action in pursuance of its obligations under
the United Nations Charter for the maintenance of international peace and security.
Source: WTO World Trade Organization, Marrakesh Agreement Establishing the World Trade Organization,
15 April 1994, 33 ILM 1125 (1994), Article XXI.
However, what constitutes essential security interests is not defined and thus remains rather
flexible, to the point that some observers have expressed the fear that the open-ended manner
in which the relevant article is drafted paves the way for protectionist measures. Looking
back at the origin of Article XXI, it can be seen that the open nature of the provisions is not
accidental but by design: it was intentional. Indeed, there has been much inconclusive discus-
sion of when security exceptions may be invoked to impose sanctions. During discussions in
the Geneva session of the Preparatory Committee, in response to an inquiry as to the meaning
of “essential security interests”, one of the drafters of the original Draft Charter said: “We
gave a good deal of thought to the question of the security exception which we thought should
be included in the Charter. We recognized that there was a great danger of having too wide
an exception and we could not put it into the Charter, simply by saying: ‘by any Member of
measures relating to a Member’s security interests’, because that would permit anything under
the sun. Therefore, we thought it well to draft provisions which would take care of real security
interests and, at the same time, so far as we could, to limit the exception so as to prevent the
adoption of protection for maintaining industries under every conceivable circumstance. . . .
there must be some latitude here for security measures. It is really a question of balance. We
have got to have some exceptions. We cannot make it too tight, because we cannot prohibit
measures which are needed purely for security reasons. On the other hand, we cannot make it
so broad that, under the guise of security, countries will put on measures which really have a
commercial purpose”.5 The Chairman of Commission A suggested in response that the spirit in
which Members of the Organization would interpret these provisions was the only guarantee
against abuses of this kind.6 In the absence of a clear definition as to what constitutes “essential
security interests” Article XXI provides much leverage to WTO members to disrupt trade
relations for non-economic reasons.
The WTO provisions in Article XXI thus entitle a member to interrupt its trade relations
immediately, without prior notice. Measures taken under Article XXI have been challenged
sporadically. In many ways Article XXI is considered self-declaratory. As early as in 1949, in a

case concerning Czechoslovakia, it was stated, inter alia, that “every country must be the judge
in the last resort on questions relating to its own security. On the other hand, every contracting
party should be cautious not to take any step which might have the effect of undermining the
General Agreement”.7 In other words, it is up to each WTO member to determine what it consid-
ers to be its own “essential security interests” without the need to meet an objective standard.
Governments have generally applied self-restraint in invoking the security interest argument.
Van den Bossche and Zdouc (2017) note that “in view of the wording of Article XXI(b),
and in particular the use of the terms ‘action which it considers necessary’, the question arises
whether the exceptions of this paragraph are ‘justiciable’, i.e. whether the application of
these exceptions can usefully be reviewed by panels and the Appellate Body. Indeed, Article
XXI(b) gives a Member broad discretion to take national security measures which it ‘considers
necessary’ for the protection of its essential security interests. However, it is imperative that a
certain degree of ‘judicial review’ be maintained; otherwise the provision would be prone to
abuse without redress”.
Lester observes: “What can be said is that overall members have exercised due restraint
in applying Art XXI and/or challenging it under the provisions of the Dispute Settlement
Understanding (DSU)” (Lester, Zhu). Similarly, Alford (2011) noted that “Member States have
exercised good faith in complying with their trade obligations”, as “invocations of the security
exception have only been challenged a handful of times, and those challenges have never resulted
in a binding GATT/WTO decision”. The few instances where tensions over Article XXI have
risen to the surface include the Cold War conflicts, the Falklands War (1982), and the US embar-
goes on Nicaragua (1985) and Cuba (1960), cases which will be discussed below. As a result of
governments’ good faith efforts, the GATT/WTO system has been able to avoid major conflict
over this issue which means they have not had to decide on the precise boundaries of Article XXI.
Thus, there has been considerable, but inconclusive, discussion of when security exceptions
may be invoked to impose sanctions. In the absence of a clear definition as to what constitutes
“essential security interests”, Article XXI provides considerable room to WTO members
to disrupt trade relations for non-economic reasons. There is no committee or WTO body
overseeing or monitoring the implementation of sanctions. The only way the body can consider
the sanctions is when a legal case is brought through the Dispute Settlement procedures and, as
stated earlier, even then until quite recently, the panellists have applied their utmost restraint in
their judgements. As will be seen further, the only provision introduced following one of the
disputes relates to the notification requirement of sanctions for transparency purposes.
This fear that Article XXI could be referred to in order to cover certain trade practices has mean-
while materialized and the “essential security interests” argument has increasingly been invoked.
Before turning to the more recent cases, and to better understand the context of the current
discussions, it is worth briefly reviewing the history of the GATT cases, which are referred to
in Article XXI and security exceptions.
15.5 SANCTION EPISODES, ARTICLE XXI AND

ESSENTIAL SECURITY
Since the very origin of the GATT, the security exceptions under Article XXI were tested and
members have consistently and strongly supported its self-judging nature. Some of the main
sanction episodes that were raised in the GATT and its successor, the WTO, are discussed

below and more specifically those where Article XXI was invoked.8 Some sanctions have
been taken on the basis of UN Security Council Resolutions, including one involving Iraq and
one affecting Iran. As neither country is a member of the WTO, there is no need for a WTO
justification and these cases will not be discussed. Another case where broad sanctions were
applied over a long period of time by the international community under the aegis of the UN
was against South Africa with the aim of bringing Apartheid to an end.
– Czechoslovakia: security
The first case was raised in 1949, less than two years after the GATT entered into force. In
it, Czechoslovakia requested a decision under GATT Article XXIII as to whether the US had
failed to carry out its obligations under Articles I and XIII, by reason of the US administration’s
export licensing controls (both short-supply controls and new export controls) instituted in 1948
discriminating between destination countries for security reasons. The US took the position that
its controls for security reasons applied to exports in a narrow group of goods which could be
used for military purposes9 and also stated that “the provisions of Article I would not require
uniformity of formalities, as applied to different countries, in respect of restrictions imposed for
security reasons”.10 It was also stated by one contracting party that “goods which were of a nature
that could contribute to war potential” came within the exception of Article XXI. The debates led
to the conclusion that every country must ultimately be the judge on questions relating to its own
security. Hence and from the outset this set the tone for the cases that followed suggesting little
if any role for the GATT contracting parties in judging the validity of the sanctions.
– Portugal-Angola: threat to peace

More than a decade later, and on the occasion of Portugal’s accession to GATT (1961),
Ghana argued that a country’s security interests might be threatened by a potential as well as
by an actual danger. It applied a boycott of Portuguese goods based on Article XXI: (b)(iii),
noting that:
“. . . under this Article each contracting party was the sole judge of what was necessary in its
essential security interest. There could therefore be no objection to Ghana regarding the boycott of
goods as justified by security interests. It might be observed that a country’s security interests might
be threatened by a potential as well as an actual danger. The Ghanaian Government’s view was that
the situation in Angola was a constant threat to the peace of the African continent and that any action
which, by bringing pressure to bear on the Portuguese Government, might lead to a lessening of this
danger, was therefore justified in the essential security interests of Ghana”.11
Accordingly, the situation in Angola was considered a constant threat to the peace of the
African continent and any action which, by bringing pressure to bear on the Portuguese
government, might lead to a lessening of this danger was deemed legitimate.
Hence, this second case further strengthened the earlier decision taken by the contracting
parties to leave the ultimate decision as to what constitutes essential security to the contracting
parties themselves, hence self-judging. This perhaps also explains why the next case involving
Article XXI was raised some 15 years later.
– Sweden: footwear
In 1975, Sweden invoked Article XXI to justify its imposition of a global import restriction
on certain footwear, stating that a decrease in domestic production of footwear had reached the

point of representing “a critical threat to the emergency planning of its economic defence” and
therefore required and properly justified the imposition of an import ban. This broad applica-
tion of Article XXI was hard to justify considering that exceptions in Article XX (General
Exceptions) require that measures taken by a State not be “applied in a manner which would
constitute a means of arbitrary or unjustifiable discrimination between countries where the
same conditions prevail or a disguised restriction on international trade”. This shows that there
are limits to the extent to which security provisions can be applied and that there is no blank
cheque to justify import restrictions. Sweden’s argument that maintaining a minimum domestic
production capacity in vital industries was indispensable to securing the provision of products
essential for meeting basic needs in time of war or other emergency was not found convincing
and Sweden was effectively obliged to terminate the quotas on leather and plastic shoes.12
Sweden notified the termination of the quotas as far as leather and plastic shoes were concerned
as of 1 July 1977.13 The Swedish case shows the limits of invoking the security argument.
– Argentina/Falklands
The GATT contracting parties did not discuss the matter of security issues again until the
Falklands (Malvinas) crisis erupted. In April 1982, the European Economic Community (EEC)
and its member states along with Canada and Australia suspended indefinitely imports into
their territories of products from Argentina. In notifying these measures they stated: “They
have taken certain measures in the light of the situation addressed in the Security Council
Resolution 502 [the Falkland/Malvinas issue]; they have taken these measures on the basis
of their inherent rights of which Article XXI of the General Agreement is a reflection”.14
Argentina took the position that, in addition to infringing the principles and objectives underly-
ing the GATT, these measures were in violation of Articles I:1, II, XI:1, XIII, and Part IV. The
legal aspects of these trade restrictions affecting Argentina were discussed extensively in the
Council.15
During the Council discussions on the EEC, Canada and Australia import restrictions on
goods from Argentina, it was indicated that the rights under Article XXI constituted a general
exception and did not require notification, justification or approval. Again, it was stated that
every contracting party was, in the last resort, the judge of when it should exercise these rights
and that GATT had neither the competence nor the responsibility to deal with the political
issue which had been raised. Hence the self-judging nature of sanctions was once again
reconfirmed. These views were broadly supported by other major trading partners, including
the United States.16 Argentina, contesting this position, argued that trade restrictions could
not be applied without notification, discussion and justification. As a result of these debates,
ministers considered the issue during their annual deliberations in 1982 and adopted specific
language in paragraph 7(iii) of the Ministerial Declaration: “The contracting parties undertake,
individually and jointly to abstain from taking restrictive trade measures, for reasons of a non-
economic character, not consistent with the General Agreement”.17 They refrained, however,
from going any further and opening the door to a legal interpretation of Article XXI and when
it could be invoked. Instead, and by way of compromise, Ministers addressed the issue of
transparency, leading to a decision by the contracting parties on notifications referred to as the
“Decision Concerning Article XXI of the General Agreement”18:
1. Subject to the exception in Article XXI(a) contracting parties should be informed to the
fullest extent possible of trade measures taken under Article XXI.

2. When action is taken under Article XXI, all contracting parties affected by such action
retain their full rights under the General Agreement.
3. The Council may be requested to give further consideration to this matter in due course.
– Arab League–Israel: State of War

Several economic sanctions have been justified under the provisions contained in Article
XXI(b)(iii) relating to war or other emergencies in international relations. In one such case,
members of the Arab League justified their boycott against Israel and the secondary boycott
against firms having relations with Israel by the exceptional circumstances of the Middle East
conflict. They argued that the state of war which had long prevailed in the area necessitated
resorting to the boycott. In view of the political character of the issue, the United Arab Republic
(UAR) did not wish to discuss it within the GATT.19 Several members of the working party
supported the views of the representative of the UAR that the background of the boycott
measures was political and not commercial.20 Once again the case confirmed the self-judging
character of the security exceptions, thus consolidating the trend that had become established
to simply leave such matters to the parties concerned.
– United States–Nicaragua: perceived threat

In yet another case, the United States notified the contracting parties in 1985 that it was block-
ing all imports of goods and services of Nicaraguan origin, and all US exports to Nicaragua and
transactions relating thereto. The United States justified the measures by invoking the national
security exceptions of Article XXI. Nicaragua stated that measures imposed by the US contra-
vened Articles I, II, V, XI and XIII and that “this was not a matter of national security but one
of coercion”. The court rejected the American defence based on the essential security clause,
since it did not find the perceived threat posed by Nicaragua’s aggression in Central America
to reach the requirement of essential security (Moon, 2012). Measures which are coercive in
the sense that they seek to require the target State to change its policies on any matter within
its domestic jurisdiction, in particular with regard to its political, economic and social systems
are agreed to be unlawful (Happold, Eden, 2016). The terms of reference of the GATT panel
established to investigate the US embargo precluded it from examining or judging the validity of
Washington’s invocation of Article XXI. The case was lifted when the trade embargo was lifted
in April 1990, as the United States felt that the conditions necessitating action under Article XXI
had ceased to exist and that the national security emergency with respect to Nicaragua was over.
– EU–Socialist Federal Republic of Yugoslavia: suspension of trade concessions

Another sanctions episode relates to trade measures applied under Article XXl by the
European Community and its member states against Yugoslavia in 1991. The measures com-
prised suspension of trade concessions granted to Yugoslavia under its bilateral trade agreement
with the European Community; the imposition of certain limitations (previously suspended)
on textile imports from Yugoslavia; the withdrawal of preferential trade benefits; and action
to suspend the bilateral trade agreements between the European Community and its member
states and Yugoslavia.21 Similar economic sanctions or withdrawal of preferential benefits
to Yugoslavia were also taken by Australia, Austria, Canada, Finland, Japan, New Zealand,
Norway, Sweden, Switzerland and the United States. Yugoslavia requested the establishment
of a panel under Article XXIII, arguing that the measures taken by the European Community
were inconsistent with Articles I and XXI and with the Enabling Clause; that they departed
from the letter and intention of paragraph 7(iii) of the Ministerial Decision of November

1982; and that they impeded the attainment of the objectives of the General Agreement.
Moreover, Yugoslavia claimed that there had been no decision or resolution of a relevant UN
body to impose economic sanctions against Yugoslavia. The panel was established in March
1992, but as a result of the subsequent transformation of the Socialist Federal Republic of
Yugoslavia into the Federal Republic of Yugoslavia, consisting of the Republics of Serbia and
Montenegro, the European Union felt that until the succession to Yugoslavia’s contracting
party status had been resolved, the panel process which had been initiated no longer had any
foundation and could not proceed. Hence, this case did not yield any specific findings leading
to a narrowing of the interpretation of the security exceptions.
– US-Cuba: embargo
On 19 October 1960, the US imposed an embargo on exports to Cuba (except medicines
and food), extended the embargo to foreign subsidiaries of US firms, reduced Cuba’s sugar
quota in the US market to zero and blacklisted vessels carrying cargo to and from Cuba from
carriage of US government-financed cargo (Hufbauer, Schott, Elliott, Cosic). This provided
the basis of a series of sanctions applied in different forms to Cuba by the US in subsequent
years and decades. The legality of the sanctions was not challenged in the WTO until 1996,
after the Senate passed a compromise version of the Cuban Liberty and Democratic Solidarity
Act, called the “Helms–Burton Act”. According to the same authors, a similar measure passed
the House the previous September but had stalled in the Senate due to opposition from the State
Department and major US allies. Title III of the bill permits Americans with claims to property
expropriated by the Cuban government to sue foreign corporations or individuals “trafficking”
in such property. Under Title IV, the United States must deny entry to the executives and
major shareholders, as well as their immediate families, of firms found to be “trafficking” in
expropriated property. Title I codified existing federal regulations and reaffirmed the embargo
under the Trading with the Enemy Act and the Cuban Democracy Act of 1992. After the House
passed the revised legislation, President Clinton signed the bill into law.
In the autumn of 1996, the EU Council of Ministers took action against the new US legislation
to protect its economic interests and approved anti-boycott legislation that forbids compliance
with the Helms–Burton Act unless an EU firm receives a waiver on grounds that resisting
Helms–Burton will seriously injure either a company’s or the EU’s interests. The same year
the WTO agreed to establish a dispute settlement panel to review the EU’s complaint about the
Helms–Burton law. The then WTO Director General, Renato Ruggiero, named a three-member
panel to rule on the Helms–Burton dispute, but the Clinton Administration announced that
the US will not “show up” for such a proceeding, arguing that Helms–Burton was based on
foreign policy rather than commercial concerns and therefore should not be judged in the WTO.
Following challenges by the US’s main trading partners and anti-boycott legislation passed in the
EU, the US waived the application of the Act for European companies and relaxed its policies.
Here again the US re-enforced its position, considering the nature of the conditions under
which sanctions can be applied as self-judging, thus denying a role in this regard to the WTO.
The self-judging nature of when and how to apply sanctions has been the “rule”, so to speak,
for nearly 70 years, except for Swedish footwear, where Art XXI could clearly not be justified.
While some would argue that this approach was very much in the spirit in which the security
exceptions were designed by the original drafters, this is now gradually changing with a case
brought by Ukraine against the Russian Federation. The jurisprudence is likely to create a
precedent for future cases invoking Article XXI.

15.6 SANCTIONS TAKEN AGAINST RUSSIAN FEDERATION:

ARTICLE XXI SELF-JUDGING?
Two recent sanctions episodes concerning the Russian Federation are very distinct in nature
despite having the same origin in that they were triggered by the Russian Federation reclaiming
territories in Ukraine. The first case involves the United States and the European Union, who
took a broad range of economic and diplomatic sanctions, not based on Article XXI. The second
case concerns a complaint by Ukraine following restrictions imposed on traffic in transit from
Ukraine through the Russian Federation. Here the issue of the self-judging nature is discussed.
– US and EU against Russian Federation

Following actions by the Russian Federation reclaiming territories in Ukraine in March
2014, both the United States and the European Union responded with economic sanctions. A
brief account of the sanctions put in place by the US administration is provided in a previous
work (Smeets, 2019) and the chronology and content discussed more specifically in a study
undertaken by the Graduate Institute (Moret, Biersteker, Giumelli, Portela, Veber, Bastiat-
Jarosz, Bobocea (2016)) in Geneva and separately by Nelson (2017). The security exceptions
were not invoked by the EU to provide legal justification for the measures in the WTO and
despite Russia’s threats to challenge the legality in the WTO, it never did.22 Interestingly, it
took counter measures which also were not justified under WTO law.
The economic and trade sanctions taken against Russia included a mixed bag of economic,
financial and diplomatic sanctions, some of which by their very nature fall outside the scope
of WTO responsibilities. This explains to some extent why the WTO was not legally involved
in the case. Indeed, and as was noted earlier, sports sanctions were applied in 1980 when the
US decided to boycott the Olympic Games in Russia, and it threatened to repeat that action
for the Winter Olympics, also held in Russia, in 2014. The President of the European Council
at the time, Herman van Rompuy, said in March 2014: “Sanctions are not a question of retali-
ation, they are a policy tool. Not a goal in themselves, but a means to an end. Our goal is to
stop Russian action against Ukraine, to restore Ukraine’s sovereignty – and to achieve this we
need a negotiated solution” (Nelson 2017, p. 3). Furthermore, Nelson points out that “Canada,
France, Germany, Italy, Japan, the United Kingdom and the United States have suspended
(Russia’s) participation in the G-8 and instead convened as the G-7, of which Russia is not a
member, for the first time since the late 1990s”.23 The simple fact of excluding Russia from
the G-8 sends a strong political signal, as Russia’s joining the G-8 (in recognition of the role it
plays on the world economic and political scene) had been considered a major step.
In short, this is a case where sanctions were applied without a WTO justification or legal
challenge.
– Ukraine vs Russian Federation

The second case is different and has systemic implications. As the discussions so far show,
the self-judging nature of sanctions was not much questioned in the past. This changed in the
case brought by Ukraine against the Russian Federation (Ukraine vs Russia case DS 512).
It is particularly significant and, according to Ukraine, of historic importance as it was the
first decision to examine a member’s right to impose measures under Article XXI. Ukraine
launched its complaint on 14 September 2016, requesting consultations with the Russian
Federation. Ukraine challenged the Russian bans and restrictions on traffic in transit by road

and rail from Ukraine crossing Russia destined for Kazakhstan and the Kyrgyz Republic, as
well as to the alleged de facto extension of these bans and restrictions to Ukrainian traffic in
transit destined for Mongolia, Tajikistan, Turkmenistan and Uzbekistan (para. 7.1).
Given the inconclusive nature of the discussions, Ukraine requested the establishment of
a panel, which took place on 21 March 2017. Nearly 20 countries reserved their third-party
rights. On 5 April 2019, the panel report was circulated to members and adopted by the DSB
on 26 April 2019. The summary of the key findings, as presented by the WTO Secretariat,24
are as follows:
“Ukraine claimed that these transit measures are inconsistent with Russia’s obligations under
Article V (freedom of transit), Article X (publication and administration of trade regulations)
and with related commitments in Russia’s Accession Protocol (para. 7.2). Russia asserted that
the measures were among those that it considered necessary for the protection of its essential
security interests, which it took in response to the emergency in international relations that
occurred in 2014, and which presented threats to Russia’s essential security interests. Russia
therefore invoked the provisions of Article XXI(b)(iii) of the GATT 1994, arguing that, as a
result, the panel lacked jurisdiction to further address the matter (paras. 7.3–7.4)”.
The panel found that WTO panels have jurisdiction to review aspects of a member’s invoca-
tion of Article XXI(b)(iii), that Russia had met the requirements for invoking Article XXI(b)
(iii) in relation to the measures at issue and, therefore, that the transit bans and restrictions were
covered by Article XXI(b)(iii) of the GATT 1994.
Specifically, the panel found that, while the chapeau of Article XXI(b) allows a member to
take action “which it considers necessary” for the protection of its essential security interests,
this discretion is limited to circumstances that objectively fall within the scope of the three
subparagraphs of Article XXI(b) (see paras. 7.101 and 7.53–7.100). Consequently, the panel
rejected Russia’s jurisdictional argument that Article XXI(b)(iii) was totally “self-judging”
(paras. 7.102–7.104).
Turning to subparagraph (iii) of Article XXI(b), and based on the particular circumstances
affecting relations between Russia and Ukraine, the panel determined from the evidence before
it that the situation between Ukraine and Russia since 2014 was an “emergency in international
relations” (paras. 7.76 and 7.114–7.123). The panel also determined that the challenged transit
bans and restrictions were taken in 2014 and 2016, and therefore were “taken in time of” this
2014 emergency (paras. 7.70 and 7.124–7.125). Accordingly, the panel found that Russia’s
actions were objectively “taken in time of” an “emergency in international relations” under
Article XXI(b)(iii) (see para. 7.126).
As for the discretion accorded to a member under the chapeau of Article XXI(b), the panel
found that “essential security interests” could be generally understood as referring to those
interests relating to the quintessential functions of the State. The panel observed that the
specific interests at issue will depend on the particular situation and perceptions of the State
in question and can be expected to vary with changing circumstances. For these reasons, the
panel held that it is left in general to every member to define what it considers to be its essen-
tial security interests (see paras. 7.130–7.131). Moreover, the panel found that the specific
language “which it considers” meant that it is for a member itself to decide on the “necessity”
of its actions for the protection of its essential security interests (see paras. 7.146–7.147).
That said, the panel considered that a member’s general obligations to interpret and apply
Article XXI(b)(iii) in good faith meant that WTO panels may review, (i) whether there was
any evidence to suggest that the member’s designation of its essential security interests was not

made in good faith, and (ii) whether the challenged measures were “not implausible” as meas-
ures to protect those essential security interests (see paras. 7.132–7.135 and 7.138–7.139).
Accordingly, the panel considered that:
● The 2014 emergency said to threaten Russia’s essential security interests was very close to
the “hard core” of war or armed conflict. In these circumstances, the panel was satisfied of
the veracity of Russia’s designation of its essential security interests (paras. 7.136–7.137).
● The challenged transit bans and restrictions were not so remote from or unrelated to
the 2014 emergency that it was implausible that Russia implemented these measures
for the protection of its essential security interests arising out of the 2014 emergency
(paras. 7.140–7.145).
The panel also explained that Article XXI(b)(iii) acknowledged that a war or other emergency
in international relations “involves a fundamental change of circumstances which radically
alters the factual matrix in which the WTO-consistency of the measures at issue is to be evalu-
ated”. Unlike evaluations of whether measures are covered by the exceptions in Article XX,
an evaluation of measures under Article XXI(b)(iii) does not necessitate a prior determination
that the measures would be WTO-inconsistent had they been taken in “normal times” (para.
7.108). The panel therefore considered that, once it had found that the measures at issue were
within its terms of reference and that Ukraine had established their existence, the “most logical
next step” was to determine whether the measures were covered by Article XXI(b)(iii) of the
GATT 1994 (para. 7.109).
The panel acknowledged, however, that should its findings on Russia’s invocation of
Article XXI(b)(iii) be reversed in the event of an appeal, it may be necessary for the Appellate
Body to complete the analysis (para. 7.154). In this connection, the panel concluded that
had the measures been taken in normal times, i.e., had they not been taken in an “emergency
in international relations” (and met the other conditions of Article XXI(b)), Ukraine would
have made a prima facie case that the measures at issue were inconsistent with (i) the first or
second sentence of Article V:2 of the GATT 1994, or both, and (ii) related commitments in
paragraph 1161 of Russia’s Working Party Report (see paras. 7.166–7.184, 7.189–7.196 and
7.239–7.240). The panel did not consider it necessary to address Ukraine’s claims of violation
of the other provisions of Article V and Article X of the GATT 1994 or other commitments in
Russia’s Accession Protocol (see paras. 7.197–7.201).
In short, the panel acknowledged Russia’s right to apply the traffic restrictions on specific
and substantive grounds and based on the circumstances, while rejecting the argument of
the self-judging nature of the security exceptions. The panel conducted an examination as to
whether the explanations provided by the member concerned were reasonable or whether the
measure constituted an apparent abuse, as suggested by Van den Bossche and Zdouc.25
15.7 US NATIONAL SECURITY ARGUMENT: STEEL

AND ALUMINIUM
The controversy on who decides when the national security argument can be invoked does
not stop with the Ukraine–Russia case. In March 2018 the United States specifically used
the national security argument to justify across-the-board tariffs (import duties) of 25%

on steel and 10% on aluminium. While this case is unrelated to economic sanctions per
se, according to Lester, the US Steel national security case and the use of Section 232 is
significant as this litigation and subsequent retaliation threatens to do serious damage to
the system.26
It is recalled that the US President had made the protection of the country’s domestic
industry, and these two sectors specifically, a central element in his election campaign. The
measures were based on an investigation undertaken by the Department of Commerce in April
2017 on the question of whether steel and aluminium imports “impaired national security”.
The investigation found that they did. This provided the basis for the President’s action. Also,
one of the main reasons for the US using Article XXI and the national security argument was
probably the fact that the increase in tariffs of up to 30% applied by President George W.
Bush in 2002, for an expected period of three years and which were not based on the national
security argument, had been found to be inconsistent with WTO rules and had hence needed
to be cancelled.
Nine governments have brought WTO complaints against the US measures. In autumn
2018 a panel was established, and in early 2019 the panel was composed.27 Simon Lester
observes28: “The complainants’ legal claims are fairly straightforward, focusing on GATT
Article I (MFN treatment) and GATT Article II (tariff commitments)”. According to Lester,
it is the US defence that will be a challenge to the system, as the United States has invoked
GATT Article XXI. A former US Congressman and former Chairman of the Appellate Body,
James Bacchus, equally challenges the US measures, considering them in many ways to be in
conflict with WTO rules.29 In the meantime, retaliatory measures were taken by many of the
governments involved in the dispute with tariffs of their own (Fefer).
The US considers Article XXI to be self-judging and hence is of the view that the WTO
cannot review the invocation of the security exceptions. At the relevant DSB meetings, the
United States has repeatedly made clear its view that, once Article XXI is invoked, the panel
cannot even hear the case. In the context of the EU complaint, the United States described its
position as follows:
“Because the United States has invoked Article XXI, there is no basis for a WTO panel to
review the claims of breach raised by the European Union. Nor is there any basis for a WTO
panel to review the invocation of Article XXI by the United States. . . . If the EU maintains its
misguided request for a panel to make findings that the United States has not acted consistently
with WTO rules in this dispute, there is no finding a panel could make other than to note that
the United States has invoked Article XXI”.30
As the time of writing, the panel has not presented its findings, which were initially expected
in the autumn of 2020. On 4 February 2021, the Chair of the panel informed the DSB that due
to delays caused by the global pandemic, the panel expected to issue the final report to the
parties no earlier than the second half of 2021. More recently (August 2021), it was reported
that the US and the EU intend to resolve the issue before 1 November 2021. What is clear,
however, is that the controversy on Article XXI and its self-judging character is far from over,
with a risk that positions will become more entrenched than ever before. The judgement will
have considerable importance, as it might open the door to further import restrictions in other
sectors of the economy without justification, thus providing a blank cheque for protectionism.
On the other hand, the pandemic that has affected all nations around the world since the spring/
summer of 2020 is shedding new light on the notion of national security, reliance on foreign
products and the role of GVCs.

15.8 CONCLUSIONS
The WTO security exceptions provided under GATT Article XXI have been invoked regularly
since the very creation of the GATT and even more so in recent years. While they run counter to
the key principles and objectives of the Multilateral Trading System (MTS), they allow mem-
bers to safeguard their “essential security interests”. The lack of a definition of the concept of
“essential security interests” by the drafters of the GATT was by design, intending to leave that
decision up to the members. Discussions in the WTO Council confirm that members did not
wish to delineate and/or interpret the concept, covering a wide range of different situations.
The “self-judging” nature of the security exceptions has thus become an accepted practice
strongly supported by members of the WTO.
In the dispute between Ukraine and the Russian Federation, the panel contested the
self-judging nature of Article XXI and ruled that sanctions were considered legitimate on
substantive grounds. Instead, the panel gave guidance on the conditions under which the
security exceptions could be applied. In doing so, it may have opened a pandora’s box as the
issue of essential security interests is highly sensitive and members having expressed their own
positions on it very strongly. It is likely to be tested in the most recent case with the United
States applying sanctions and trade measures against its trading partners, including increases
in tariffs on steel and aluminium, in order to defend its essential security interests. The US
strongly defends the argument that Article XXI is self-judging and contests any legal basis for
a WTO panel to judge the grounds on which these provisions have been applied. The outcome
of the panel, expected in the autumn of 2021, will be of great interest to the MTS and is likely
to have generic implications. It is also likely to add to the pressures on the WTO’s MTS, which
is already under heavy attack, and more specifically the dispute settlement system.
NOTES
1. According to Article I, para. 1 of the GATT 1994, the Most Favoured Nation (MFN) Treatment means that “with
respect to customs duties and charges of any kind . . . any advantage, favour, privilege or immunity granted by
any (member) to any product originating in or destined for any other country shall be accorded immediately and
unconditionally to the like product originating in or destined for the territories of all other members”. For further
reading, see also Van den Bossche, P. and W. Zdouc, The Law and Policy of the WTO (4th edition, Cambridge
University Press, 2017), op. 311–340. National treatment is covered under Article III of the GATT 1994, which
contains specific provisions prohibiting discrimination in the treatment of any product, domestic or imported,
once it has entered the market. Para. 4 states that “the products of the territory of any contracting party imported
into the territory of any other contracting party shall be accorded treatment no less favourable than that accorded
to like products of national origin in respect of laws, regulations and requirements affecting their internal sale,
offering for sale, purchase, transport, distribution or use . . .”. For further reading, see also Van den Bossche and
Zdouc, Law and Policy, p. 341–399.
2. Art VI and XVI of GATT 1994.
3. According to the WTO database on DSU, a total of 21 retaliatory actions have been authorized since the creation
of the WTO.
4. For a detailed discussion on the security exceptions under the GATT 1994 and the GATS, see Van den Bossche
and Zdouc, The Law and Policy of the WTO, pages 618–623.
5. UN, Econ. & Soc. Council, Second Session of the Preparatory Comm. of the UN Conf. on Trade & Employment,
Thirty-Third Meeting of Commission, UN Doc.
6. EPCT/A/PV/33, p. 20–21 and Corr.3; see also EPCT/A/SR/33, p. 3.
7. GATT/CP.3/SR.22, Corr. 1.
8. This part draws on information contained in the WTO’s Guide to GATT Law and Practice (Analytical Index) as
well as Smeets, M 2000, “Conflicting Goals: Economic Sanctions and the WTO”, Global Policy Dialogue, vol.
2, no. 3, pp. 119–129.

9. GATT/CP.3/38; GATT/CP.3/SR.22, p. 8.
10. GATT/CP.3/SR.22, p. 4–5.
11. Analytical Index of the GATT, page 600, SR.19/12, p. 196.
12. GATT/CP.3/SR.20, p. 3–4.
13. L/4250/Add.1; L/4254, p. 17–18; MTN.GNG/NG7/W/16, 18 August 1987.
14. L/5319/Rev.1.
15. L/5317, L/5336; C/M/157, C/M/159.
16. The measures were removed in June 1982, after the conflict came to an end.
17. L/5424.
18. L/5426, 2 December 1982, Decision of 30 November 1982.
19. L/3362, 25 February 1970.
20. L/3362, 17S/40, para. 23, 25 February 1970.
21. C/M/240, p. 31; L/6661.
22. Moret, E., Biersteker, T., Giumelli, F., Portela, C., Veber, M., Jarosz, D. and Bobocea, C. (2016), The New Deter-
rent? International Sanctions Against Russia Over the Ukraine Crisis; Impacts, Costs and Further Action, PSIG,
Geneva. Annex 2, page 32.
23. Nelson, R. (2017), US Sanctions on Russia’s Economy, US Congressional Research Service, viewed 29 June
2018, https://fas.org/sgp/crs/row/R43895.pdf, page 6.
24. https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds512_e.htm.
25. Cf. Footnote 4.
26. S. Lester and H. Zhu: A proposal for Rebalancing to deal with “national security” trade restrictions, Fordham
International Law Journal, 1451–1474, page 1455.
27. DS548: United States Certain measures on Steel and Aluminium Products. https://www.wto.org/english/tratop_e
/dispu_e/cases_e/ds548_e.htm, last consulted 22 January 2020.
28. Lester, page 1451.
29. Mapping out a WTO Case Against Trump’s metal tariffs-Law 360. Article by Alex Lawson, 15 March 2018.
30. Statements by the United States at the meeting of the WTO Dispute Settlement Body, 16, WT/DS184/15/
ADD.189 (Nov. 21, 2018), https://geneva.usmission.gov/wp-content/uploads/sites/290/Nov21.DSB_.Stmt.as
-deliv.fin.public.pdf[https://perma.cc/5T5E-CVKY].
REFERENCES
Alford, R. (2011), The Self-judging WTO Security Exception, 2011 UTAH L. REV. 697, 699.
Baldwin, D. (1999–2000), The Sanctions Debate and the Logic of Choice, International Security, winter, Vol. 24,
No. 32, pp. 80–107.
Baldwin, David A. (1998), Evaluating Economic Sanctions, International Security, Vol. 23, No. 2, pp. 189–195.
Bergeijk, P.A.G. (1994), Economic Diplomacy, Trade and Commercial Policy: Positive and Negative Sanctions in a
New World Order, Edward Elgar, Cheltenham, London.
Bergeijk, P.A.G. and Van Marrewijk, C. (1994), ‘Economic Sanctions: A Hidden Cost of the New World Order’, in:
M. Chatterij, A. Rima and H. Jager (eds) Economics of International Security: Essays in Honour of Jan Tinbergen,
MacMillan, London.
Brzoska, M., The Power and Consequences of International Sanctions E-International relations, May 19, 2014, avail-
able at https://www.e-ir.info/2014/05/19/the-power-and-consequences-of-international-sanctions/.
Brzoska, Michael (2003), From Dumb to Smart? Improving UN Sanctions, Global Governance, Vol. 9, No. 4, pp. 519–535.
Doxey, M. (1980), Economic Sanctions and International Enforcement, 2nd edition, The Macmillan Press Ltd, London.
Doxey, M. (1987), International Sanctions in Contemporary Perspective, Palgrave Macmillan, New York.
Fefer, R. et al. (2018), Congressional Research Service, R45249, Section 232 Investigations: Overview and Issues for
Congress, available at https://perma.cc/89ZN-9U3A.
Galtung, J. (1967), On the Effects of International Economic Sanctions: With Examples from the Case of Rhodesia,
World Politics, Vol. 19, No. 3, pp. 378–416.
Happold, M. and Eden, Paul (2016), Economic Sanctions and International Law (Studies in International Law), Hart
Publishing Ltd, Oxford, England, p. 62.
Heckscher, E.F. (1919), The Effects of Trade on the Distribution of Income, Economic Tidskrift, pp. 497–512.
Hufbauer, G.C. and Jung, E. (2021), ‘Economic Sanctions in the 21st Century’, in: P.A.G. van Bergeijk (ed.) Research
Hufbauer, G.C., Schott, J.J., Elliott, K.A. and Cosic, M., ‘Case Studies in Economic Sanctions and Terrorism’ Case
60-3 US v. Cuba (1960–: Castro), paper updated October 2011, from Economic Sanctions Reconsidered, Peterson
Institute for International Economics.

Hufbauer, G.C., Schott, J.J., Elliott, K.A. and Oegg, B. (2007), Economic Sanctions Reconsidered: History and
Current Policy, 3rd edition, Peterson Institute, Washington, DC.
Kemp, M.C. (1964), The Pure Theory of International Trade, Prentice Hall Inc., New Jersey.
Lawson, A., Mapping out a WTO Case against Trump’s Metal Tariffs-Law 360, March 15, 2018, available at https://
www.law360.com/articles/1022525/mapping-out-a-wto-case-against-trump-s-metal-tariffs.
Lester, S. and Zhu, H. (2019), A Proposal for Rebalancing to Deal with ‘National Security’ Trade Restrictions,
Fordham International Law Journal, Vol. 42, No. 5, pp.1451–1474.
Moon, W. (2012), Essential Security Interests in International Investment Agreements, Journal of International
Economic Law, April 10, Vol. 15, No. 2, pp. 481–502.
Moret, E., Biersteker, T., Giumelli, F., Portela, C., Veber, M., Jarosz, D. and Bobocea, C. (2016), The New Deterrent?
International Sanctions against Russia over the Ukraine Crisis; Impacts, Costs and Further Action, PSIG, Geneva.
Moret, E., Giumelli, F. and Bastiat-Jarosz, D. (2017), Sanctions on Russia: Impacts and Economic Costs on the United
States, PSIG, Geneva.
Nelson, R. (2017), US Sanctions on Russia’s Economy, US Congressional Research Service, viewed June 29, 2018,
https://fas.org/sgp/crs/row/R43895.pdf.
Ricardo, D. (1817), On the Principles of Political Economy and Taxation, John Murray, London.
Rikson, M. and Wallensteen, P. (2015), Targeting Sanctions and Ending Armed Conflicts: First Steps towards a New
Research Agenda, International Affairs, November, Vol. 91, No. 6.
Smeets, M. (1990), Economic Sanctions against Iraq: The Ideal Case?, Journal of World Trade, Vol. 24, No. 6,
pp. 105–120.
Smeets, M. (1994), ‘Economic Sanctions against Iraq’, in: H. Blumberg and C. French (eds) Lessons from the Gulf
War: Social Science Findings, University Press of America, Lanham.
Smeets, M. (2000), Conflicting Goals: Economic Sanctions and the WTO, Global Policy Dialogue, Vol. 2, No. 3,
pp. 119–129.
Smeets, M. (2018), ‘Can Economic Sanctions be Effective’, ERSD Staff Working paper series, WTO, Geneva.
Smeets, M. (2019), ‘The Theory and Practice of Economic Sanctions’, in: S. Sutyrin, O. Trofimenko and A. Koval
(eds) Russian Trade Policy, Achievements, Challenges and Prospects, Routledge, pp. 66–79.
Smeets, M. and Mashayekhi, M. (2019), Trade Policies in Support of Inclusive Growth to the Benefit of All, Restoring
Trust in Trade: Liber Amicorum in Honor of Peter Van den Bossche, Chapter 2, Hart Publishers.
Van den Bossche, P. and Zdouc, W. (2017), The Law and Policy of the WTO, 4th edition, Cambridge University Press.
Wallensteen, P. (1968), Characteristics of Economic Sanctions, Journal of Peace Research, Vol. 5, No. 3, pp. 247–266.
Wallensteen, P., (2000), A Century of Economic Sanctions, a Field Revisited, Uppsala Peace Research Papers No 1,
ISBN 91-506-1444-4.
WTO (World Trade Organization) (1994), Marrakesh Agreement Establishing the World Trade Organization, 15 April
1994, 33 ILM 1125.
WTO’s Guide to GATT Law and Practice (Analytical Index).

16. Negative and positive sanctions
Raul Caruso*
16.1 INTRODUCTION
International economic sanctions are economic policies undertaken by states toward other
states in order to influence their strategies and actions. Needless to say, any reasoning about
sanctions takes as its point of departure that economic interdependence may have a substantial
impact on the foreign politics of states. In this respect, the case of sanctions is to be linked
to the argument of interdependence as expounded by Angell (1911) in Great Illusion. There,
the author challenged the traditional idea of supremacy of military power in establishing
advantages for states. In brief, according to Angell, the idea that war was an essential tool for
improving the position of a state, its economic condition, and the well-being of its population,
was to be regarded only as a “great illusion”: an illusion made anachronistic by the growth
of international trade and increasingly by closer economic interdependence between all the
countries of the world. The application of sanctions as economic instruments to influence,
persuade, or coerce rival countries descends from this idea.
In fact, sanctions can be either negative or positive. First and foremost, it is essential to
underline the distinction between negative and positive sanctions as presented firstly by
Baldwin (1971). Such distinction is widely accepted. In general, positive sanctions can be
defined as the assignment (or promise of assignment) of economic benefits by sender state(s)
with the aim of shaping the behavior and strategy of a target state. Positive sanctions consist
often of trade policy measures that favor trade between two or more countries, but also cover
such items as development aid, technological co-operation, cross border infrastructure, or
repayments. By contrast, negative sanctions are punitive measures that a sender state puts
in place in order to cause or threaten economic damage to a target state. In fact, negative
economic sanctions are a foreign policy tool that serve as an alternative to war. In the presence
of some hostility between states, negative sanctions are used to force hostile regimes to bow
to the directives of one or more states. In simple words, economic sanctions interrupt existing
economic relations or prevent the creation of new ones. In several cases, negative and positive
sanctions coexist, creating something of a “carrot and stick” approach.
Both types of sanction can be divided into unilateral and multilateral. In the first case, they
are imposed by a single country while in the second they are imposed by the international com-
munity (or by a group of states). Although such a distinction is more used for negative sanctions,
it can be adopted for positive ones as well. The US, after the Second World War, is the country
that has used negative sanctions more frequently. Multilateral sanctions are often designed
and approved within the United Nations and “may include a total or partial interruption of
economic relations and railway, sea, air, postal, telegraphic, radio and other communications,
and the severance of diplomatic relations” (Article 41 of the Charter of the United Nations).
297
Raul Caruso - 9781839102721
In recent years, EU has also introduced a substantial number of sanctions. With respect to
the items covered, sanctions can then be partial or global. In the first case, they concern the
exchange of particular goods (in many cases they concern weapons, military technology). In
the second case, they concern almost all commercial exchanges together with financial ones.
The most famous examples of comprehensive sanctions are constituted by Cuba,1 Iraq,2 and
Yugoslavia3 against which the blockade of economic relations has been almost total.
The aim of this brief chapter is to shed light on a set of insights that can be eventually
used to design a comprehensive framework for shifting from negative sanctions to positive
sanctions. In order to do that, I first briefly present the well-known elements of the debate on
the effectiveness of negative sanctions and the evidence on arms embargoes. Finally, drawing
some insights from previous sections, I present some points to be considered in the design of
successful positive sanctions. In particular, I present five points to be taken in account: (i) the
role of interest groups (ii) the rules of the game in economic integration; (iii) a policy-mix
including disarmament; (iv) the role of civil society; and (v) the credibility of sender govern-
ments. A final paragraph summarizes and concludes.
16.2 EFFECTIVENESS OF NEGATIVE SANCTIONS: CONSENSUS

OR NO CONSENSUS
A long-lasting debate exists about the effectiveness of negative sanctions. In brief there is no
clear-cut consensus on this. More precisely, there is no clear-cut assessment of the performance
of sanctions. The pioneering study on the effectiveness of sanctions was Hufbauer et al. (1990).
There, the authors estimated that sanctions have been effective tools only about 34% of the
time. Subsequent studies confirmed the recurring idea on lack of effectiveness. Only a few
years later, Pape (1997) showed that in many cases sanctions were combined with the use of
military force. Thus, he points out that sanctions by themselves are effective less than 5% of
the time. Bonetti (1998) used 104 episodes highlighting that failure is most likely if there is
significant third-party assistance to the target, and if the pre-existing trade linkage between
sender and target is small. In general, the main argument supporting the lack of effectiveness
of sanctions appears to be that of sanctions-busting, which is caused by a lack of coordination
between states. van Bergeijk (1995, 1994a, 1994b) expounded on the emergence of sanctions-
busting and negative network effect as outcomes of sanctions. The first in-depth study in the
literature on the emergence of both sanctions-busting and negative network effects is Caruso
(2003), which focused on the sanctions imposed by the US in the period from 1960 to 2000. In
order to study the comprehensive impact of US sanctions on global trade, the analysis focused
not only on the volume of trade between the US (sender country) and the target countries,
but also on the trade flows between the other countries of the G-7 group (Canada, France,
Germany, Japan, United Kingdom, Italy) and the target. In fact, the other G-7 countries in the
light of similar productive structure and technology, were to be considered the only potential
competitors to the US as supplier countries for the target countries, especially of manufactured
goods. Therefore, applying a counterfactual experiment, the study showed that the US, had
it not unilaterally applied negative sanctions, would have traded approximately 60% more
with target countries. The figure is clearly more relevant for cases of global sanctions for
which the missing trade exceeds 80%. Sanctions-busting emerged clearly when considering
that the other G-7 countries would have traded 17% less in the absence of US sanctions. The
Raul Caruso - 9781839102721

Negative and positive sanctions 299
unilateral US sanctions thus favored the exports of the other G-7 countries. It is clear at this
point that, in order to understand the effectiveness of negative sanctions, one cannot ignore
the characteristics set out above. Unilateral and partial sanctions can hardly be considered
effective. Sanctions-busting takes shape easily and the international isolation of the country
is not, therefore, properly enforced. Partial but multilateral sanctions can be more effective as
long as the coordination of the international community is effective. Bapat and Morgan (2009)
explain that multilateral sanctions can appear to work more than unilateral if we consider in
particular the number of issues at stake and whether an international institution is involved. In
this case, both direct effects (a decrease in trade between sender countries and target countries)
and negative network effects may appear. For instance, this would be desirable for sanctions
imposed against oppressive and dictatorial regimes involving arms transactions. In the case
of total but unilateral sanctions, both the negative network effects and the sanctions-busting
phenomenon emerge. For example, when the US applied the total embargo on Nicaragua,
all European countries continued to maintain their trade relations and even Canada allowed
Nicaragua to move its foreign trade office from Miami to Toronto, trying to favor the circum-
vention of sanctions. It is clear that in the presence of multilateral sanctions, the emergence
of sanctions-busting is more difficult and less likely. In the presence of total sanctions, even
if unilateral, negative network effects still emerge. The brilliant book by Brian Early (2015)
describes sanctions-busting in detail. In brief, evidence about sanctions-busting is somewhat
confusing because a significant number of states engaged in trade-based sanctions-busting.
Then, this poses a serious concern about the potential effectiveness of trade sanctions and this
appears to be even more concerning nowadays in the light of the increased interdependence.
In other words, the probability of sanctions-busting increases in the number of trade ties of
the target country.
The debate on effectiveness of negative sanctions has regained momentum in recent years.
Hufbauer and Jung (2021), in the second chapter of this Handbook, point out that recent
sanctions are not more effective than those applied in the Cold War period and in the 1990s,
so confirming results outlined in Hufbauer et al. (2009). Among recent studies, interestingly,
Weber and Schneider (2020) compared EU and US sanctions, exploiting a new dataset on
threatened and imposed sanctions by the EU and US for the period between 1989 and 2015.
The empirical evidence demonstrates that EU sanctions are indeed more successful than those
imposed by the US. By contrast, US sanction threats appear to be more successful than those
made by the EU. Reasons and arguments on effectiveness of sanctions nowadays go beyond
those regarding the trade mechanisms that take place. Morgan (1995) highlighted some aspects
and anomalies and more recently works by van Bergeijk et al. (2019) and Peksen (2019) have
highlighted factors that are relevant for negative sanctions for being successful. In particular,
Van Bergeijk et al. (2019) focus on three main aspects: (i) intensity of trade linkage; (ii)
timing of sanctions (sanctions probably need to be quick and unexpected to have maximum
impact); and (iii) prior relations between sender and target (sanctions may work better against
friends than rivals). Peksen (2019) points out the conditions that have been identified as more
likely to lead to successful sanctions outcomes in the literature. He also presents four major
shortcomings of the current literature: (1) there is a sender-biased interpretation of sanctions
effectiveness, overestimating the number of failures; (2) the use of static data reduces the
study of various time-specific factors affecting the probability of sanctions success; (3) the
dominant state-centric bargaining model in the literature offers limited insight into measures
directed at non-state actors; and (4) the study of sanctions in isolation of other instruments that
Raul Caruso - 9781839102721

frequently accompany them, such as incentives and diplomatic pressure, leads only to a partial
understanding of the specific weight of sanctions in foreign policy initiatives.
However, there is another major argument that is often underestimated in the sanctions
literature, namely the regime type of the target countries. It is to be expected that the effective-
ness of negative sanctions will be different when they are implemented against autocracies or
democracies. In line with McGuire and Olson (1996), we can expect that autocrats are com-
mitted to maximizing the transfer from society without regard for the welfare of their subjects.
This implies that whenever rents are maximized, an autocrat will not be willing to change their
strategy or behavior. Since negative sanctions like trade embargoes generate rents, autocrats
could also paradoxically end up in an enviable scenario. So, this contributes to explain why
negative sanctions often do not work. In this vein, Lektzian and Souva (2007) empirically
show that success of sanctions is conditional on the political institutions of target countries.
Escribà-Folch and Wright (2010) used data on sanctions imposed against authoritarian regimes
from 1960 to 1997 to highlight dissimilarities between different types of autocrats. They
point out that personalist dictators are more vulnerable to foreign pressure than other types
of dictator so confirming that most autocrats are less sensitive to negative sanctions. In fact,
single-party and military regimes are able to increase their revenues even when targeted by
sanctions, by shifting fiscal pressure from one stream to another. They also increase repression
to thwart the domestic opposition, which could be determined by a smaller set of economic
opportunities. In the light of this last point, it is clear that comprehensive negative sanctions
can be expected to fail, particularly in autocracies.
The failure of some sanctions and the growing awareness about the above-mentioned aspects
have eventually led some scholars and analysts to suggest the implementation of “smart”
negative sanctions, namely those measures that are intended to hurt only a specific sector or
individuals of ruling elite. Drezner (2011) highlights how the unsuccessful case of sanctions on
Iraq has determined a loss of consensus on comprehensive negative sanctions. On the one hand,
the humanitarian cost of sanctions was massive and on the other, Saddam Hussein and its elite
remained in power. There is, therefore, no doubt that comprehensive sanctions have become
politically unsustainable, and “smart” sanctions seem to be a feasible alternative. Among
negative “smart” sanctions, the case of arms embargoes appears to deserve particular attention.
Even in the case of arms embargoes, sanctions-busting practices are often suspected of being
the cause of failure (see among others Boucher and Holt [2009]; Tierney [2005]; Cortright and
Lopez, [2009]. Other studies, however, find evidence of compliance with arms embargoes.
Brozska (2008), analyzing arms embargoes between 1990 and 2005, shows that arms embar-
goes do reduce arms imports. Similarly, Erickson (2013) argues that arms embargoes restrained
exports of both small and major conventional weapons from 1981 to 2004. Moore (2010)
finds that in cases of UN arms embargoes, a large part of sender countries does not export
conventional weapons to target countries. In a recent working paper, Baronchelli et al. (2020)
investigate the impact of arms embargoes on the trade in small arms and light weapons from
1990 to 2017. By means of a gravity model, the analysis focuses on transfers of small arms
between 9,275 pairs of countries and territories. Results show that embargoes are effective in
reducing transfers of small arms. Interestingly, findings show that both UN and EU sanctions
decrease trade, but the quantitative impact is different. An EU embargo determines a decrease
of 39% of imports of Small Arms and Light Weapons (SALW), whereas in the presence of UN
sanctions the negative impact is 24%. In brief, EU embargoes appear to be more effective than
UN embargoes. Since it is often maintained that sanctions-busting is more likely with small
Raul Caruso - 9781839102721

arms, authors have also investigated whether embargoes on neighboring countries stimulate
imports from target countries. Findings show no evidence of sanctions-busting.
Finally, it can be maintained that “smart” negative sanctions appear to work better than
comprehensive ones because they are based upon the relaxing of the assumption of states as
“unitary actors,” which has led scholars and policy-makers to wrongly associate the destiny
of dictators and their elites with that of citizens.
16.3 SHIFTING TO POSITIVE SANCTIONS?

Causes of failure of negative sanctions in this context were instrumental to drawing insights
that point to the factors to be considered in a specular reasoning about positive sanctions.
As mentioned above, following Baldwin (1971), positive sanctions are defined as actual or
promised rewards to another actor. It is possible to distinguish between two types of sanctions,
with reference to the objective and the different time horizon that are proposed: the first form of
incentive (specific positive linkage) translates into the promise of “a well-specified economic
concession in the attempt to alter a specific foreign or internal policy of the target country”;
the second form (positive linkage or “long-term commitment”) “involves an effort to employ a
continuous stream of economic benefits to change the balance of political interests in the target
country.” That is, they can take different shapes but, more generally, positive sanctions are
economic policies that are supposed to favor another state, namely some trade policy or foreign
aid. Reasonably, Hufbauer and Jung (2020) point out that the definition of “positive sanctions”
ought not to be too broad; they suggest that we “[. . .] confine the term to situations where the
promise of monetary rewards is twinned with the imposition or threat of negative sanctions
in a quid pro quo fashion [. . .].” The latter definition by Hufbauer and Jung highlights clearly
that positive and negative sanctions are not, in fact, to be disentangled. In simpler words, if
taking the existence of a rivalry as point of departure, it is also necessary to evaluate positive
sanctions in the light of (pre-)existing negative measures.
As mentioned above, the likelihood of success for positive sanctions derives from the
mutual benefits of economic interdependence. Put more simply, in order to have peaceful
spillovers, first and foremost, economic interdependence has to be unambiguously beneficial.
Needless to say, among positive sanctions, trade policies have appeared to be the ones most
considered to be potentially successful. For example, the establishment of a free trade area
was among the policies suggested in the unheard proposal produced by John Maynard
Keynes in his Economic Consequences of Peace (1919) in the aftermath of the First World
War. Generally speaking, optimistic expectations about positive sanctions rely on the liberal
idea of the peacefulness of economic integration. The classical reference for analyzing the
benefits of economic integration is Viner (1950) and since then a substantial literature has
shown gains resulting from trade integration. In addition, a vast literature had demonstrated
that peace and international economic integration between democratic countries is positively
associated (Polachek et al. [2011]; Hegre et al. [2010]; Reuveny [2000]). The argument echoes
the Kantian liberal peace, and it is structurally different from deterrence’s underlying theoreti-
cal construction. Whereas deterrence is grounded on the idea of a zero-sum game, trade and
economic integration are based on the idea of a positive-sum game. In sum, although rational
agents can be non-cooperative, they are capable of recognizing the incentives to trade instead
of engaging in a continuing conflict. In recent years, a substantial stream of economic literature
Raul Caruso - 9781839102721

has taken as its point of departure the work by Polachek (1980), which provides a model based
on a country’s social welfare function, assumed to be derived from the preference sets of the
entire population. Following a standard trade model, when a country is engaged in a conflict,
a restriction in trade fosters a deterioration in the terms of trade given the impact of conflict
on prices. Then, a rational government will be choosing an optimal level of hostility that
maximizes the welfare function given the balance of payments constraints. The equilibrium
is reached when the results of the model show that the net cost associated with extra hostility
equals the welfare benefit of more hostility. In the light of this literature, trade policies are
assumed to be unambiguously beneficial as tools of conflict resolution.
In what follows, I seek to underline briefly some points to be considered when shifting
from negative to positive sanctions, namely: (i) the role of interest groups in designing trade
policies; (ii) the rules of the game in economic integration; (iii) a policy-mix including disar-
mament; (iv) the role of civil society; (v) the credibility of sender governments.
16.3.1 The Role of Interest Groups and Regime Types in Economic Interdependence
While the relevance of economic interdependence is almost self-explanatory, other related

aspects need to be addressed. First, the literature mentioned has often underestimated the cru-
cial role of interest groups in designing trade policies as explained in Grossman and Helpman
(2020, 2002, 2001); expectations about the potential effectiveness of positive sanctions could,
therefore, be excessive. In addition, the importance of intra-industry trade and global value
chains in the world economy (see among many others Melitz and Trefler [2012] and Timmer
et al. [2014]) dictates the necessity of considering the role of special interest groups. In brief,
proper models and mechanisms of positive sanctions ought to relax the basic assumption
of the state as a unitary actor. With regard to negative sanctions, Kaempfer and Lowenberg
(1988, 1992; see also Chapter 7 of this Handbook by Halcoussis, Kaempfer and Lowenberg)
and Kaempfer, Lowenberg, and Mertens (2004) used a public choice framework to explain
how sanctions had distributional effects on interest groups within the target country. In this
vein, albeit specular, Verdier and Woo (2011) embed a sanction game-theoretic model in a
trade model, assuming that the sanctions take the form of a trade embargo. A trade embargo is
a sanction with redistributive effects and the model considers two groups, a group that is hurt
by the embargo and another that benefits. Depending on the relative economic importance of
each group, the government then chooses the policy outcome. The game yields unambiguous
results, namely a sanctioner should prefer reward promises to sanction threats. This model has
the merit of considering different groups, and it shows that this aspect is not a severe constraint
to the implementation of positive sanctions. Recently, Woo and Verdier (2020) have proposed
a model and an empirical application to deepen the likelihood of both positive and negative
sanctions on different types of regime. The theoretical model predicts different applications of
rewards and sanctions to different regime types (limited autocracy, democracy, and dictator-
ship). In particular, it predicts that “limited autocracies” are responsive to high rewards only,
whereas democracies and dictatorships comply in response to modest positive incentives.
Eventually a logit regression model on the success score of sanctions exhibits positive and
statistical coefficients for democracy and dictatorships, so suggesting that sanctions against
democracies and dictatorships are more likely to succeed than against “limited autocracies.”
In sum, whenever designing positive sanctions, the type of regime as well as the charac-
teristics of interest groups in both target and sender countries have to be taken into account.
Raul Caruso - 9781839102721

16.3.2 Rules of the Game for Economic Integration
An additional crucial point is about the set of institutions governing the commitment of states
to trade policies. In fact, economic interdependence is more beneficial if it is managed under
the umbrella of a legitimate institution (Caruso [2006]; Mansfield and Pevehouse [2000]).
In particular, in Caruso (2006), I developed an analytical model of conflict in which rational
parties have to choose to be engaged in a continuing conflict or to settle and exchange under
the umbrella of an institution. In any case, parties spend rationally on their military capabilities,
but the latter scenario would be more peaceful because the aggregate level of guns would be
lower. A stable Nash equilibrium can be reached if and only if the cost (broadly defined) of
joining an institution is not prohibitive. Moreover, the model also shows that results in terms
of peacefulness hold even if the settlement between parties does produce unequal gains within
certain boundaries. That is, even in the presence of unequal gains from trade, countries may
still prefer rationally to settle at a lower level of guns rather than being engaged in a destructive
conflict. In brief, the model suggests that a reasonable level of unequal benefits from trade is
acceptable if and only if the parties take part in some institutional arrangement. This is inher-
ently a crucial issue because the emergence of unequal gains from trade is commonly used by
adversaries of liberal theory, to highlight risks and deficiencies of economic integration. This
aspect is also emphasized by Dumas (2011), who mentions it as one of the core principles
of a peacekeeping economy. In this respect, it might be argued that the role of the WTO as a
regulatory organization becomes crucial.
In this respect, it is extremely important to point out that such a role could be played also in
a policy-mix of both negative and positive sanctions. As pointed out by Smeets (2021) in this
Handbook, economic sanctions fall within the domain of Article XXI of the GATT, namely
within the category of security exceptions. In fact, they violate principles of the multilateral
trade system. However, unlike in the past, an undisputed claim of Article XXI exception
could be challenged. In particular, the role of the Dispute Settlement System could be the
most relevant in the years ahead because in a recent dispute between Ukraine and the Russian
Federation, the panel clarified that Article XXI is not “self-judging.” In sum, the role of the
WTO in shaping security spillovers of trade integration, is crucial and the same relevance is to
be considered when some sanctions are applied for security exceptions.
16.3.3 Policy-Mix Including Disarmament
An additional point is about a crucial component of an effective policy-mix, namely a disarma-

ment policy. That is, although economic benefits can be expected to be substantial, positive
sanctions can be ineffective in the presence of a high risk of military conflict. In some cases, the
dynamics of military spending can lead to a higher risk of conflict escalating until the outbreak
of a war. Therefore, reducing military spending is crucial. A copious literature on arms races has
highlighted this aspect (see among others Mitchell and Pickering [2017], Glaser [2000], Sample
S.G. [1997], Intriligator and Brito [1984]). In addition, trade and military confrontation between
rival states can coexist (see Levy and Barbieri [2004], Croft [1989]). A recent experimental
study by Abbink et al. (2019) shows that mutually beneficial trade does not necessarily decrease
the likelihood of costly arms races. A reasonable interpretation of this is that between rivals,
military spending can be interpreted as a signal of hostility. From this perspective, Collier and
Hoeffler (2006) developed a signaling model to study the impact of military spending on the
Raul Caruso - 9781839102721

risk of renewed conflict in post-conflict societies. In particular, a war-averse government can

choose a low level of military spending as a signal toward a rebel group in order to sustain a
peaceful settlement. By means of a similar reasoning, plausibly positive sanctions cannot lead
to more peaceful relations between states if not associated with a policy of disarmament.
16.3.4 The Role of Civil Society
In the vein of considering characteristics of target countries, when relaxing the assumption
of states as unitary actors, substantial attention ought to be paid also to civil society. To the
best of my knowledge, with regard to negative sanctions, at the time this chapter is being
written, only few studies point out the relevance of civil society. Recently, the role of civil
society has been found to be relevant in Pospieszna and Weber (2020). They have shown that
sending democracy-related aid through civil society organizations enhances the effectiveness
of sanctions as a democracy-promotion tool because civil society is empowered to introduce
democratic changes. In their interpretation, there is bottom-up pressure exerted by civil soci-
ety that is to be added to the top-down pressure on the target government created by sanctions.
The empirical results point out that sanctions imposed by the EU and the US are more likely
to have a positive effect when aid flows bypass the government. Conversely, aid channeled
through the public sector mitigates the generally positive effect of sanctions on democracy. In
brief, composition and attitudes of civil society matter significantly. The attention to be paid
to civil society derives from and is related to the impact of negative sanctions on opposition
groups within target countries. Grauvogel at al. (2017) delve into this by analyzing how
threats and actual impositions of sanctions trigger social protest within target countries.
Interestingly, threats of multilateral sanctions in response to human rights violations issued by
multiple credible actors trigger internal protest whereas actually imposed sanctions seem not
to achieve the same effect. Grauvogel (2021) in Chapter 10 of this Handbook, in particular,
highlights the lack of convergence of the existing literature on this point. While in the pres-
ence of sanctions, social dissent and mobilization in target countries appear to be explained by
economic disruption or by international support for opposition groups. The author proposes
the Qualitative Comparative Analysis (QCA) as a methodological tool for overcoming such
shortcomings. The proposed evidence confirms the idea that economic deprivation does not
explain mobilization, but rather needs to be complemented by a clear-cut credible signal of
opposition support.
Finally, it can be maintained that the design of a framework for successful positive sanctions
has to be based first upon proper consideration of social groups within the target country. Then,
from this, several suggestions emerge with regard not only to economic interest groups but
also to social groups broadly defined.
16.3.5 Credibility of Sender Countries
While all these points have to be considered for implementing effective positive sanctions, a
major concern is the credibility of sender countries. Credibility is often taken into account when
debating deterrence and threats. In fact, among economists it is well known that credibility plays
a crucial role in the implementation of economic policies. Macroeconomic stabilization, for
example, is definitely linked to the credibility of governments. In fact, credibility may play a
crucial role. Eng and Urpelainen (2015) analyze the case of donors’ credibility in foreign aid by
Raul Caruso - 9781839102721

shedding light even here on the role of domestic interest groups. In simple terms, domestic groups
are expected to support a donor’s implementation of rewards. A credible instrument choice,
therefore, also depends upon preferences of interest groups. This is by no means a negligible
point. It implies that multilateral positive sanctions may appear less credible than unilateral
positive sanctions. That is, since credibility of states differs widely, multilateral positive sanctions
can be less effective than unilateral positive sanctions. In this respect, it is likely that positive
sanctions undertaken by a relatively homogenous group of countries turn out to be more effective
than a more diverse group of countries. In this way, positive EU sanctions can inevitably be more
credible than measures announced by larger set of countries (e.g., the UN). Nevertheless, among
all existing regional organizations, the EU is the organization that has made most progress in inte-
grating the foreign economic policies of its member countries. In fact, the EU encompasses many
policy fields that can be included within a large set of foreign economic policies, such as trade,
development assistance and international finance among others. In trade policy, in particular, the
EU has had sole competence since the Treaty of Rome. Then, the evidence mentioned above
about the superior effectiveness of EU sanctions can also be explained in the light of this. In
sum, the EU is to be perceived as credible when dealing with any kind of trade policy. Moreover,
with respect to the EU approach, Portela (2021) in Chapter 14 of this Handbook, interprets the
suspension of GSP preferences as a sanction even if it differs from classical negative sanctions.
In fact, the suspension of GSP preferences toward some countries does not explicitly restrict trade
but instead it reshapes future trade flows by a withdrawal of some concessions. In the light of
this, the EU can be considered as designing a specific sanctioning scheme.
16.4 CONCLUSION
This short chapter has been an attempt to plot a thin interpretative line between the evidence
on negative sanctions and a plausible outline of positive sanctions. In particular, evidence on
negative sanctions has been considered worthwhile and also helpful when dealing with positive
sanctions. That is, evidence on negative sanctions does constitute the necessary background
to analyze the potential success of positive sanctions. In addition, this is also motivated by the
awareness that positive and negative sanctions often coexist, either reinforcing or weakening
each other. In brief, scholars and analysts would gain from developing comprehensive frame-
works of research where both positive and negative measures are to be considered.
Five points have been highlighted as relevant: (i) the role of interest groups; (ii) the rules
of the game in economic integration; (iii) a policy-mix including disarmament; (iv) the role of
civil society; (v) the credibility of sender governments. Above all, a proper consideration of
interest and social groups has been considered to explain the failure of comprehensive negative
sanctions, the success of smart sanctions and – more interestingly – the potential success of
positive sanctions. Secondly, the existence (or the lack) of some institutional arrangement
between states also explains the failure of negative sanctions as well as the potential success
of positive sanctions. On the first aspect, the lack of institutional coordination explains why
sanctions-busting cannot be avoided, whereas the existence of an institutional setting favors
more peaceful trade integration associated with a reduction in military capability of rival
parties. Secondly, it is rather predictable that a successful positive sanction may be not only a
policy (trade or aid) but rather a policy-mix combining the economic instrument with disarma-
ment and participation in a larger institutional setting.
Raul Caruso - 9781839102721

NOTES
* The author warmly thanks Peter A.G. van Bergeijk. Some of the reasoning in this chapter also derives from
conversations with Damiano Palano.
1. On the US sanctions against Cuba, see among others Gordon (2016), Spadoni (2010), and Kaplowitz (1998).
2. On the sanctions against Iraq, see among others Bures and Lopez (2009), and Alnasrawi, A. (2001).
3. On the sanctions against Yugoslavia, see among others Paes (2009).
REFERENCES
Abbink, K., Dong, L., Huang, L. (2019), Arms Races and Conflict: Experimental Evidence, Discussion Papers 2019–01,
The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
Alnasrawi, A. (2001), Iraq: Economic Sanctions and Consequences, 1990–2000. Third World Quarterly, vol. 22, n.
2, 205–218.
Angell, N. (1911), The Great Illusion, New York and London: G.P. Putnam’s & Sons.
Baldwin, D. (1971), The Power of Positive Sanctions, World Politics, vol. 24, n. 1, pp. 19–38.
Bapat, N.A., Morgan, T.C. (2009), Multilateral Versus Unilateral Sanctions Reconsidered: A New Test Using New
Data, International Studies Quarterly, vol. 53, n. 4, pp. 1075–1094.
Baronchelli, A., Caruso, R., Ricciuti, R. (2020), Trade in Small Arms and Light Weapons. Are Embargoes Effective?
CESPIC Working paper 2020/05.
Bonetti, S. (1998), Distinguishing Characteristics of Degrees of Success and Failure in Economic Sanctions Episode,
Applied Economics, vol. 30, pp. 805–813.
Boucher, A.J., Holt, V.K. (2009), Targeting spoilers: The Role of United Nations Panels of Experts. Stimson Center
Report No. 64, http://www.stimson.org/images/ uploads/research-pdfs/Targeting_Spoilers_jan09_FINAL.pdf.
Brzoska, M. (2008), Measuring the Effectiveness of Arms Embargoes, Peace Economics Peace Science and Public
Policy, vol. 14, n. 2.
Brzoska, M., Lopez, G.A. (2009), Putting Teeth in the Tiger: Improving the Effectiveness of Arms Embargoes. Emerald
Group Publishing, Bingley.
Bures, O., Lopez, G.A. (2009), The Unprecedented Embargo: The UN Arms Sanctions against Iraq, 1990–2004,
in Brzoska, M., Lopez, G.A. (eds), Putting Teeth in the Tiger: Improving the Effectiveness of Arms Embargoes,
Emerald Group Publishing Limited, Bingley, pp. 29–53.
Caruso, R. (2003), The Impact of International Economic Sanctions on Trade. An Empirical Analysis, Peace
Economics, Peace Science and Public Policy, vol. 9, n. 2.
Caruso, R. (2006), A Trade Institution as a Peaceful Institution? A Contribution to Integrative Theory, Conflict
Management and Peace Science, vol. 23, pp. 53–72.
Collier, P., Hoeffler A. (2006), Military Expenditure in Post-Conflict Societies, Economics of Governance, vol. 7,
pp. 89–107.
Croft, P. (1989), Trading with the Enemy 1585–1604, The Historical Journal, vol. 32, n. 2, pp. 281–302.
Drezner, D.W. (2011), Sanctions Sometimes Smart: Targeted Sanctions in Theory and Practice, International Studies
Review, vol. 13, pp. 96–108.
Dumas, L.J. (2013), The Peacekeeping Economy: Using Economic Relationships to Build a More Peaceful,
Prosperous, and Secure World, Yale University Press, New Haven.
Early, B.R. (2015), Busted Sanctions: Explaining Why Economic Sanctions Fail, Stanford University Press, Palo Alto.
Eng, M.Y., Urpelainen J. (2015), The Domestic Sources of Donor Credibility: When and How Can Domestic Interest
Groups Improve the Effectiveness of Threats and Promises? Journal of Conflict Resolution, vol. 59, n. 2, pp. 283–309.
Erickson, J.L. (2013), Stopping the Legal Flow of Weapons: Compliance with Arms Embargoes, 1981–2004. Journal
of Peace Research, vol. 50, n. 2, pp. 159–174.
Escribà-Folch, A., Wright, J. (2010), Dealing with Tyranny: International Sanctions and the Survival of Authoritatarian
Rulers, International Studies Quarterly, vol. 54, 335–359.
Glaser, C.L. (2000), The Causes and Consequences of Arms Races, Annual Review of Political Science, vol. 3, pp. 251–276.
Gordon, J. (2016), Economic Sanctions as ‘Negative Development’: The Case of Cuba. Journal of International
Development, vol. 28, n. 4, pp. 473– 484.
Grauvogel, J. (2021), The International Opposition Effect of International Sanctions: Insights from Qualitative
Comparative Analysis, in van Bergeijk, P.A.G. (ed.), Research Handbook on Economic Sanctions, Edward Elgar,
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, vol. 61, n. 1, pp. 86–97.
Raul Caruso - 9781839102721

Grossman, G.M., Helpman, E. (2001), Special Interest Politics, Cambridge, MA: The MIT Press.
Grossman, G.M., Helpman, E. (2002), Interest Groups and Trade Policy, Princeton: Princeton University Press.
Grossman, G.M., Helpman, E. (2020), Identity Politics and Trade Policy, Review of Economics Studies, 88.3 (2021):
1101–1126, doi:10.1093/restud/rdaa031
Halcoussis, D., Kaempfer, W., Lowenberg, A.D. (2021), The Public Choice Approach to Economic Sanctions: Retrospect
and Prospect in van Bergeijk, P.A.G. (ed.), Research Handbook on Economic Sanctions, Edward Elgar, Cheltenham,
Chapter 7.
Hegre, H., Oneal, J.R., Russett, B. (2010), Trade Does Promote Peace: New Simultaneous Estimates of the Reciprocal
Effects of Trade and Conflict, Journal of Peace Research, vol. 47, pp. 763–774.
Hufbauer, G.C., Jung, E. (2020), What ‘s New in Economic Sanctions? European Economic Review, vol. 130, doi:
10.1016/j.euroecorev.2020.103572.
Hufbauer, G.C., Jung, E. (2021), Economic Sanctions in the 21st Century, in van Bergeijk, P.A.G. (ed.), Research
Hufbauer, G.C., Schott, J.J., Elliott, K.A., Oegg, B. (2009). Economic Sanctions Reconsidered, 3rd edition,
Washington DC: Peterson Institute for International Economics.
Intriligator, M.D., Brito, D.L. (1984), Can Arms Races Lead to the Outbreak of War? Journal of Conflict Resolution,
vol. 28, n. 1, pp. 63–84.
Kaempfer, W., Lowenberg, A. (1988), The Theory of International Economic Sanctions: A Public Choice Approach,
American Economic Review, vol. 78, n. 4, pp. 786–793.
Kaempfer, W., Lowenberg, A. (1992), International Economic Sanctions: A Public Choice Perspective. Boulder:
Westview Press.
Kaempfer, W., Lowenberg, A., Mertens, W. (2004), International Economic Sanctions Against a Dictator. Economics
and Politics, vol. 16, n. 1, pp. 29–51.
Kaplowitz, D.R. (1998), Anatomy of a Failed Embargo: US Sanctions against Cuba. , Boulder: Lynne Reiner.
Keynes, J.M. (1919), The Economic Consequences of the Peace. London: Macmillan & Co., Limited.
Levy, J.S., Barbieri, K. (2004), Trading with the Enemy During Wartime, Security Studies, vol. 13, n. 3, pp.1–47.
McGuire, M.C., Olson, M. (1996), The Economics of Autocracy and Majority Rule: The Invisible Hand and the Use
of Force, Journal of Economic Literature, vol. 34, n. 1, pp. 72–96.
Melitz, M.J., Trefler, D. (2012), Gains from Trade When Firms Matter, Journal of Economic Perspectives, vol. 26,
n. 2, pp. 91–118.
Mitchell, D.F., Pickering, J. (2017), Arms Buildups and the Use of Military Force, Oxford Research Encyclopedia
of Politics, Oxford Research Encyclopedias: Oxford, https://doi.org/10.1093/acrefore/9780190228637.013.390.
Moore, M. (2010), Arming the embargoed: A supply-side understanding of arms embargo violations. Journal of
Conflict Resolution, vol. 54, n. 4, 593–615.
Morgan, C.T. (1995), Hearing the Noise: Economic Sanctions, Theory and Anomalous Evidence, International
Interactions, vol. 41, n. 4, pp. 744–754.
Paes, W.C. (2009), The Challenge of Measuring Success: Yugoslavia’s Sanctions Decade (1991–2001), in Brozska,
M., Lopez, G.A (eds), Putting Teeth in the Tiger: Improving the Effectiveness of Arms Embargoes, Emerald Group
Publishing Limited, Bingley, pp. 55–79.
Pape, R.A. (1997), Why Economic Sanctions do not work. International Security, 22(2), pp. 90–136.
Peksen, D. (2019), When Do Imposed Economic Sanctions Work? A Critical Review of the Sanctions Effectiveness
Literature. Defence and Peace Economics, vol. 30, n. 6, pp. 635–647.
Polachek, S.W. (1980), Conflict and Trade, Journal of Conflict Resolution, 24, 55–78.
Polachek, S.W., Seiglie, C., Xiang, J. (2011), Globalization and International Conflict: Can Foreign Direct Investment
Increase cooperation among Nations? in Garfinkel, M., Skaperdas, S. (eds), The Oxford Handbook of the Economics
of Peace and Conflict, Oxford University Press, New York.
Portela, C. (2021), Trade Preferences Suspensions as Economic Sanctions, in van Bergeijk, P.A.G. (ed.), Research
Pospieszna, P., Weber P.M. (2020), Amplifying and Nullifying the Impact of Democratic Sanctions through Aid to
Civil society, International Interactions, vol. 46, n. 5, pp. 724–748.
Reuveny, R. (2000), The Trade and Conflict Debate: A Survey of Theory, Evidence and Future Research, Peace
Economics, Peace Science and Public Policy, vol. 6, n. 1.
Rogers, E.S. (1996). Using Economic Sanctions to Prevent Deadly Conflict, Prepared for the Carnegie Commission
on Preventing Deadly Conflict.
Sample, S.G. (1997), Arms Races and Dispute Escalation: Resolving the Debate, Journal of Peace Research, vol. 34, n. 1,
pp. 7–22.
Smeets, M. (2021), Economic Sanctions and the WTO, this research handbook in van Bergeijk, P.A.G. (ed.), Research
Spadoni, P. (2010), Failed Sanctions: Why the U.S. Embargo against Cuba Could Never Work. Gainesville, FL:
University Press of Florida.
Raul Caruso - 9781839102721

Tierney, D. (2005), Irrelevant or Malevolent? UN Arms Embargoes in Civil Wars. Review of International Studies,
vol. 31, pp. 645–664.
Timmer, M.P., Erumban, A.A., Los, B., Stehrer, R., de Vries, G.J. (2014), Slicing Up Global Value Chains, Journal of
Economic Perspectives, vol. 28, n. 2, pp. 99–118.
Van Bergeijk, Peter A.G. (1994a), Economic Diplomacy, Trade and Commercial Policy, Positive and Negative
Sanctions in a New World Order, Aldershot: Edward Elgar Publishing Ltd.
Van Bergeijk, P.A.G. (1994b), The effectivity of economic sanctions: Illusion or reality. Peace Science, Peace
Economics and Public Policy, vol. 2, n. 1, pp. 24–35.
Van Bergeijk, P.A.G., Demena, B.A., Reta, A., Jativa, G.B., Kimararungu, P. (2019), Could the Literature on the
Economic Determinants of Sanctions Be Biased?, Peace Economics, Peace Science and Public Policy, vol. 25, n.
4, 20190048. doi: https://doi.org/10.1515/peps-2019-0048.
Van Bergeijk, P.A.G. (1995), The Impact of Economic Sanctions in the 1990s, World Economy, vol. 18, n. 3, pp.
443–455.
Verdier, D., Woo, B. (2011), Why Rewards Are Better than Sanctions, Economics and Politics, vol. 23., n. 2, pp.
220–238.
Viner, J. (1950), The Customs Union Issue, Washington DC Washington, Carnegie Endowment for International
Peace.
Weber, P.M., Schneider, G. (2020), How Many Hands to Make Sanctions Work? Comparing EU and US Sanctioning
Efforts, European Economic Review, vol. 130, doi: 10.1016/j.euroecorev.2020.103595
Woo, B., Verdier, D. (2020), A Unifying Theory of Positive and Negative Incentives in International Relations:
Sanctions, Rewards, Regime Types, and Compliance, Economics of Governance, vol. 21, n. 215–236.
Raul Caruso - 9781839102721

17. Economic sanctions within the Graph Model for
Conflict Resolution
Bader A. Sabtan, D. Marc Kilgour, and Rami Kinsara
17.1 INTRODUCTION
The Graph Model for Conflict Resolution (GMCR) is a system for the modeling and analysis
of strategic conflicts that enables a user to understand what can be achieved, given the con-
straints faced by the various decision-makers. In a graph model of a dispute, Decision-Makers
(DMs) interact using moves and countermoves to achieve a goal or to maximize gains. Because
graph models make it easy to visualize conflicts, the GMCR system has been applied to
many strategic conflicts, including water conflicts in the Middle East (Hipel et al. 2014), the
European natural gas crisis (Kinsara and Matbouli 2016), and the nature and effectiveness of
economic sanctions (Sabtan et al. 2019).
It is challenging to predict whether an economic sanction will have the desired impact on
its target; it is uncertain which of the two or more possible outcomes will be the end result.
For example, if the US sanctions China economically, aiming to achieve some outcome, China
may comply, or it may not. What China decides will result in two or more different scenarios,
and the US response may be different for each scenario. In most conflicts, uncertainty about
the players’ actions makes the course of the conflict hard to visualize or track, and the number
of possible outcomes may inflate rapidly. GMCR allows a user, who may be a decision-maker
or a third-party analyst, to track the evolution of the conflict and easily visualize the possible
outcomes, reducing difficulty and confusion when actions have uncertain consequences.
In this chapter, the GMCR methodology will be explained in section 17.3 and will then be
applied to construct a simple model of the conflict over the 2018 US–Iran nuclear conflict, and
then analyze the model in section 17.4. Moreover, section 17.4 will contain a general discus-
sion of how users can interpret GMCR results, and in particular of how decision-makers can
adjust their strategies to best meet their objectives. The final section describes future research.
17.2 THE VALUE OF GMCR IN MODELING
Strategic conflicts usually involve two or more decision-makers and many possible moves. It
is difficult to track the many moving pieces and understand how they will shape the outcome.
Mistakes are usually costly and often irreversible. Some of the limitations of the working
memory, such as the inability of the human brain to track more than a few objects at once,
and the time required to recall stored information (Cowan 2001), can be mitigated by using a
modeling system like GMCR. Moreover, a structured system such as GMCR avoids errors in
retrieving information from memory, often observed in stressful situations (Öztaş Ayhan, and
Işiksal 2005). For example, a decision-maker choosing to sanction a country economically
should try to identify and track those affected by the sanctions, which can be challenging.
309
Bader A. Sabtan, D. Marc Kilgour and Rami Kinsara - 9781839102721
GMCR helps users identify changes in the status of the conflict and reduces the potential
human error associated with working memory and recall. Moreover, it enables the user to
answer questions such as: “If I sanction a country, what can that country do that would put me
at a disadvantage?” and “If I block trades to country A, which allies will be affected?” Such
questions seem to be easy to answer. However, if a party has multiple allies in a conflict, each
with multiple actions, it will be challenging to keep track of those actions over a prolonged
conflict. GMCR allows the user to identify quickly which actions have been used previously
and which actions are available for all players.
17.3 METHODOLOGY
Any application of GMCR has two main stages, modeling and analysis, as shown in Figures
17.1 and 17.5 respectively (Xu et al. 2018).
17.3.1 Modeling Stage
There are six steps in the modeling stage of GMCR, as follows:
1) Choose the conflict. In this step, the user will select the conflict and the point in time at
which it is to be analyzed. Because conflicts are dynamic, it is sometimes useful to carry
out separate GMCR analyses for different phases of the conflict.
2) Identify the decision-makers (DM). The DMs are the individuals or groups who can
take actions that influence the outcome of the conflict, and who have preferences about
the outcome.
3) Identify the options or actions that each DM controls. Options include sanctions,
interventions, and military action. In general, a DM can choose one or more of the options
they control.
Each possible combination of the DMs’ options constitutes a state of the graph model.
A matrix is formed in which the states are the columns, and the rows are the options of all
DMs. For each state, the column shows the options that must be chosen, or not, to form
the state. For example, in a conflict model with US and Iran as DMs, where US has two
options, impose sanctions or carry out a limited military strike; and Iran has two options,
comply with the demands or escalate, there are 16 possible states, as shown in Table 17.1.
Modeling
Decision- Feasible Allowable

Conflict Options Preferences
Makers States Transitions
Figure 17.1 GMCR+ removing infeasible states

Economic sanctions within the Graph Model for Conflict Resolution 311
Table 17.1 States in table form
Actions States
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Sanctions N N N N N N N N Y Y Y Y Y Y Y Y
US
Military Strike N N N N Y Y Y Y N N N N Y Y Y Y
Comply N N Y Y N N Y Y N N Y Y N N Y Y
Iran
Escalate N Y N Y N Y N Y N Y N Y N Y N Y
State 9 (Y N N N)
Actions States
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Sanctions N N N N N N N N Y Y Y Y Y Y Y Y
US
Military Strike N N N N Y Y Y Y N N N N Y Y Y Y
Comply N N Y Y N N Y Y N N Y Y N N Y Y
Iran
Escalate N Y N Y N Y N Y N Y N Y N Y N Y
Identifying the DMs’ options often requires research into the context, as will be illustrated
in section 4.
In Table 17.1, the DMs and their options are shown in the first two columns on the
left, followed by the 16 = 24 states (because there are four options in the model, and each
option has two possibilities, selected or not). A “Y” means “yes,” the action in that row
is executed at that state, and “N” means “no,” the option is not part of that state. For
example, at State 9 (written YNNN), the first two options from the left (YNNN) represent
the choices of the US, and the last two options (YNNN) are the choice of Iran. In State 9
(YNNN), the US imposes a Sanction but does not execute a Military Strike, while Iran
does not Comply, but does not Escalate either.
4) Remove infeasible states. States including combinations of options that are not logically
possible are removed. For example, in Table 17.1, all states that include (--YY) are
removed because it is logically impossible for Iran to Comply and Escalate at the same
time. Note that “-” means either (Y) or (N). As a result, four states are removed from the
model: States 4 (NNYY), 8 (NYYY), 12 (YNYY), and 16 (YYYY). The remaining 12 states
are shown in Table 17.2.
5) Define the allowable transitions between states. The default assumption of the graph
model is that any option can be changed at any time by the DM who controls it. Therefore,
a DM can force a transition between any two states that differ only in the options they
select. For example, in Table 17.2, Iran controls transitions between States 1 and 2, and
the US controls transitions between States 3 and 7. In fact, some actions are reversible
and some are not. For example, once an action like a military strike is taken, it cannot be
reversed. Thus, the US can cause the model to move from State 3 to State 7, but this move
cannot be reversed. Defining allowable transitions will tend to limit the movements of
players within the graph model, mimicking real-world scenarios.

Table 17.2 Remaining states after removing infeasible states
Actions States
1 2 3 5 6 7 9 10 11 13 14 15
Sanctions N N N N N N Y Y Y Y Y Y
US
Military Strike N N N Y Y Y N N N Y Y Y
Comply N N Y N N Y N N Y N N Y
Iran
Escalate N Y N N Y N N Y N N Y N
6) Rank the states for each DM in order of that DM’s preference. In this step, the user
describes the DM’s preferences, which regulate their behavior. The states in Table 17.2
will be ranked from most preferred to least preferred for each DM. This step is done by
isolating each state and comparing it to all other states. For example, State 3 (NNYN)
is the most preferred state for the US because Iran complies even though the US does
not use any of its actions. On the other hand, State 1 (NNNN) is the most preferred state
for Iran because the US is not choosing any option that harms Iran, and Iran is also not
choosing any option, which would be costly to execute. State 14 (YYNY) is the least
preferred state for the US as it applies sanctions and a military strike on Iran, but Iran
escalates the conflict and does not comply. The reason State 14 is the least preferred
for the US is that the US wants Iran to comply; in this state, there is no compliance,
even though US is executing all of its (costly) threats. For similar reasons, Iran’s least
preferred state is State 15. After identifying a DM’s most and least preferred states, the
user can usually sort the remaining states to reflect each DM’s preferences. The preference
ranking for the US [3,11,15,7,9,5,13,1,2,10,6,14] is shown in Table 17.3; the ranking
for Iran [1,9,10,6,2,5,14,13,3,11,7,15] is shown in Table 17.4. States are always ranked
in decreasing order of preference. Notice in Table 17.3, the US top four most preferred
States [3,11,15,7] have Iran complying as a common action, and the least preferred States
[2,10,6,14] have Iran escalating as a common action.
Preference ranking allows the user to model the DM’s decision calculus. For example,
Iran complies in both State 11 (YNYN) and State 7 (NYYN), but in State 11 Iran complies
as a result of the US sanctions, while in State 7 Iran complies as a result of a US military
strike. Iran might prefer to comply after being sanctioned over complying after being hit
with a military strike, because the military strike might be very damaging, or because
Table 17.3 US preference ranking
Actions States
US Preferences Most Preferred >>>>> Least Preferred
3 11 15 7 9 5 13 1 2 10 6 14
Sanctions N Y Y N Y N Y N N Y N Y
US
Military Strike N N Y Y N Y Y N N N Y Y
Comply Y Y Y Y N N N N N N N N
Iran
Escalate N N N N N N N N Y Y Y Y

Table 17.4 Iran preference ranking
Actions States
Iran Preferences Most Preferred >>>>> Least Preferred
1 9 10 6 2 5 14 13 3 11 7 15
Sanctions N Y Y N N N Y Y N Y N Y
US
Military Strike N N N Y N Y Y Y N N Y Y
Comply N N N N N N N N Y Y Y Y
Iran
Escalate N N Y Y Y N Y N N N N N
complying as a response to a military strike might be seen as weakness. As a result, Iran

will prefer State 11 over State 7.
The movements of players within the conflict are graphically illustrated in Figure 17.2.
For example, Iran controls the transition from State 5 (NYNN) to State 6 (NYNY),
because the only change from State 5 to State 6 is in the last option, which is under the
control of Iran; the (N) for Iran action2 (escalate) changes to (Y) when Iran chooses the
option Escalate, thereby moving the conflict from State 5 (NYNN) to State 6 (NYNY).
The US actions in Figure 17.2 remain unchanged. The dotted lines indicate that the action
remains unchanged, while the solid arrow indicates that the action is changed.
Another example can be seen in Figure 17.3, in which the model moves from State
1 (NNNN) to State 9 (YNNN). Notice that only the first action for the US (Sanction) is
changed, while Iran’s actions remain the same. In Figure 17.3, the conflict is in the status
quo (State 1), and no actions are taken yet. Referring back to the US preference rankings
in Table 17.3, the US prefers State 9 over State 1, and only the first action (Sanction) is
changed from an N to a Y; this action is under US control. By using the action (Sanction)
the conflict will move from State 1 (NNNN) to State 9 (YNNN).
The entire graph model for the conflict is shown in Figure 17.4. Note that each block
represents a state. The solid arrows are the moves controlled by the US while the dashed
arrows are those controlled by Iran. Arrows in both directions mean that the action is
reversible, i.e., the DM can go into and out of the state in question. But note that some
actions are irreversible, meaning that once an action is taken, the controlling DM cannot
State State
5 6
N No change N
Y No change Y
N No change N
N N >>>> Y Y
Figure 17.2 State transition, Iran controls the transition

State State
1 9
N N >>>> Y Y
N No change N
N No change N
N No change N
Figure 17.3 State transition, US controls the transition
Allowable transitions
Solid lines are Iran’s moves Dashed lines are US moves
1 3 5 6
NNNN NNYN NYNN NYNY
2
7
NNNY
NYYN
9 11 13 14
YNNN YNYN YYNN YYNY
15
10
YYYN
YNNY
Figure 17.4 The graph model

go back to the initial state. In this model, all irreversible transitions include military
strikes; built into the model is the assumption that a military strike cannot be undone.
Some conflicts may have three or more DMs with each having many options. Such
conflicts can have hundreds of states, which often makes it difficult to generate the prefer-
ence rankings. GMCR+ software, which will be explained in the methodology section,
can aid in this task, along with many other functions.
17.3.2 Analysis Stage
In the analysis stage, there are four steps, as shown in Figure 17.5:
1) Individual stabilities
2) Equilibria
3) Sensitivity analysis
4) Information for the user
A state is considered stable for a given DM if the DM is not willing to move away from it
due to their preferences and expectations about how other DMs will react to the move. A state
that is stable for all DMs is an equilibrium (possible resolution). There are four main solution
concepts that define the behavior of DMs in strategic conflicts, as listed below. Moreover,
conflicts are graphically illustrated, which will help the DMs understand their current situation
and possible moves given the movements of other players in the conflict. The four solution
concepts are:
1. Nash (R): All DMs have no unilateral moves to a more preferred state.
2. General Metarational (GMR): All of the DMs’ improvement moves can be punished by
a move from an opposing DM; this move by the opposing DM can be a disimprovement
for themself. Such stability will account for situations in which a DM is willing to harm
themself in order to harm their opponent (mutually assured destruction).
3. Sequential Stability (SEQ): All of the DM’s improvement moves can be sanctioned by an
opponent DM’s unilateral improvement. Unlike GMR, in an SEQ-stable state, the focal
DM can move to a more preferred state that can be punished with a move that would be
a disimprovement for the focal DM and an improvement for the opponent.
Analysis
Individual Sensitivity
Equilibria Information
Stabilities Analysis
Figure 17.5 The GMCR analysis stage

4. Symmetric Metarational (SMR): An opponent can punish the focal DM’s unilateral improve-
ment, and the focal DM cannot escape to a more preferred state. An SMR stable state means
that if the DM can move to a more preferred state, the opponent can move the conflict to a
state in which the focal DM will be stuck in a less preferred state and out of moves.
17.3.3 GMCR Plus Software
GMCR plus (GMCR+) is an advanced decision support system (DSS) (Kinsara et al. 2015).
It was built from the ground up to facilitate the analysis of complex problems involving
multiple DMs with multiple options using a user-friendly graphical interface (GUI). To use
GMCR directly, some mathematical background is advisable. For example, to apply GMCR,
the analyst might be required to analyze large matrices (5×32 or higher). A simple conflict
with two DMs and a total of six actions (three actions for each DM) will result in 64 possible
outcomes (states), a matrix size of 6×64. Increasing the number of actions will exponentially
increase the number of states. For example, having seven actions instead of six, will increase
the number of states from 64 to 128 (matrix size increases from 6×64 to 7×128). In a real-life
conflict between two countries, if each country initially considered using five actions each, it
will result in 1,024 states (matrix size of 10×1,024); performing mathematical calculations on
such a matrix is difficult and may result in errors.
But GMCR+ automates all of these calculations, avoiding human error as it finds all
equilibria of a conflict model. Moreover, after building a model, if the user decides to add
or drop an action or make a small change to the preferences, GMCR+ will allow the user
to make these changes within a few minutes. With that said, GMCR+ enables the user to do
sensitivity analysis to the model quickly and accurately, which may enable the user to make
better decisions promptly. Added to that, GMCR+ does not require the user to be an expert in
math, matrices, or game theory, which will reduce the barrier to entry.
The feature-rich system provides a graphical representation of the conflict model in addition
to multiple post-analysis capabilities. GMCR+ is similar to Business Intelligence (BI) soft-
ware, which structures the data, converts it into information, and presents it in a meaningful,
actionable way. Some of the GMCR examples explained in this chapter might look simple to
the reader in that they can intuitively reach the same conclusions. However, as the conflict size
increases, the amount of data will eventually slow down, and possibly overwhelm, the user.
In summary, GMCR+ is a human-centric system that allows for intuitive manipulation and
interaction of conflict models to generate valuable insights. A simple guide to using GMCR+
was made to reduce the barrier to entry further (Kinsara 2014).
17.4 ECONOMIC SANCTIONS IN GMCR: APPLICATION TO IRAN
It is challenging to calculate the impact of economic sanctions, and whether the sanctions will
generate the desired pressure on an opponent. Because the results or payoff from such an action
are not instant, the user may need to see how the game will play out while the sanction takes
effect. Two similar graphs with different preferences were introduced to better envision this
kind of conflict (Sabtan 2018; Sabtan et al. 2019).
Economic sanctions are used to coerce an opponent to alter their behavior. If a particular
DM prefers the conflict to end in a particular state, but the opponent has no interest in moving

State 1
State 2
Figure 17.6 One option for Iran
the conflict to that state, then the DM can introduce an action (Sanction) to the game in order
to pressure the sanctioned player into the desired outcome.
For example, consider the conflict in 2018 between the US and Iran over the nuclear deal,
in which the US wanted Iran to stop its nuclear program while Iran wanted to continue it. To
model this conflict in a simplified way, Iran has one action, “Stop the nuclear program,” and
they can either take this action or not based on their preferences, while the US, for now, has
no actions. This conflict has two states, as seen in Figure 17.6: State 1 (N) State 2 (Y) based
on the Iranian action “Stop the nuclear program” (an N means they will not stop the nuclear
program and a Y indicates they will stop the nuclear program).
If the US wants the conflict to move from State 1 (N) to State 2 (Y), it cannot force this because
the action is under the control of Iran. As a result, Iran will choose whether to stay in State 1
or move to State 2 based on its own preferences. If the US wants to alter Iran’s preferences
and force it to move to State 2, the US can introduce an action that is not desired by Iran. For
instance, the US can introduce economic sanctions to move the conflict from State 1 to a new
state. Figure 17.7 shows the introduction of additional states, which include economic sanctions.
Dark arrows are Iran’s moves, white arrows are the US moves
State 1 State 3 Tolerable Intolerable

sanctions sanctions
NN NY State 3 State 3
NY NY
State 2 State 4 State 4 State 4

YN YY YY YY
Figure 17.7 Illustration of two scenarios in the graph model

Adding the option “Economic Sanction” introduces two possible scenarios. If the sanc-
tion is tolerable, Iran will not be motivated to move to State 4 (YY) in which the US uses
economic sanctions and Iran stops its nuclear program. However, if the sanction is intoler-
able, Iran will prefer to move to State 4, as it will be preferable to State 3. The strength
of the sanction will have an impact on the decision-making, which can be captured in the
preferences in the graph model. In Figure 17.7, the box on the left shows the graph model
for this conflict. If the model enters State 3 (NY) in which the US applies economic sanc-
tions and Iran does not stop the nuclear program, then there can be two different outcomes
depending on whether Iran perceives the sanction as tolerable or intolerable, as seen in
the box on the right. Iran prefers to stay in State 3 (NY) (under sanction and continue its
nuclear program), over State 4 (YY) (under sanction and stop the nuclear program) if Iran
can tolerate the sanction. The changes in preferences based on whether Iran can or cannot
tolerate the sanction may have an effect on the equilibria of the conflict within GMCR.
In this simplified example, it is simple to predict whether Iran can or cannot tolerate the
sanction. However, in a larger conflict that involved more DMs and actions, such small
changes may be harder to track.
Moreover, calculating the values for each state in the model is challenging. For example,
in the US–Iran conflict, sanctions and war are on the table, and calculating their values will
consume a lot of time, as the options for war contain many variables and uncertainties. This
framing allows the users to envision where they will end up given the uncertainties.
17.4.1 US–Iran Conflict (Case Study): Background and Timeline
In 2018, the US withdrew from the Iranian nuclear deal, the Joint Comprehensive Plan of
Action (JCPOA), to prevent Iran from acquiring a nuclear weapon (see Chapters 2 and 18
of this Handbook that also deal with this case). The US wanted to negotiate a new deal with
Iran, and Iran refused. As a result, the US imposed sanctions on Iran in order to bring them to
the negotiating table. As of February 2020, the conflict has not been resolved. This conflict
will be modeled using GMCR to study how the DMs will behave based on the strength of the
economic sanctions imposed.
Iran needs nuclear power. Recently, Iran’s oil reserves have decreased, as the level of oil
exports plus oil consumption has exceeded its oil production. For example, in 2018, Iran
produced 3.553 million barrels a day (Mb/d) and consumed 1.854 Mb/d, leaving only 1.849
Mb/d for export (OPEC: Iran 2018). These oil exports accounted for 80% of Iran’s revenue
(Worldbank 2017; The Telegraph 2012).
It has been predicted that failing to replace oil as a source of energy with nuclear or renew-
able power will result in Iran becoming a minor oil exporter by 2025, and a non-exporter by
2032 (Salameh 2014). Switching to nuclear power for electricity generation will enable Iran to
replace at least 93% of the oil (and natural gas) it currently uses to generate domestic electrical
power (Salameh 2014). Iran would like to become the dominant nuclear power in the region,
and nuclear weapons are the ultimate deterrent (Waltz 2012). As a result, Iran desperately
needs nuclear power because it will help it achieve its objective of becoming a dominant power
in the region and saving its economy by switching its main energy source from oil to nuclear.
To address concerns about Iran developing nuclear weapons, the Iranian nuclear agreement,
signed on July 14, 2015, was imposed on Iran as an alternative to sanctions. Iran and the P5+1
(permanent members of the United Nations Security Council i.e., US, UK, Russia, France,

Table 17.5 US-Iran conflict timeline
May 2018 US withdraws from the Iranian nuclear deal (CFR 2020)
Aug 2018 US reimposes sanctions on Iran (Reuter 2019)
Jun 2019 Oil ships attacked in the Gulf of Oman (F. G. Doucet Lyse 2019)
Jun 2019 US drone shot down (CFR 2020)
Jul 2019 Oil export sanctions on Iran (Reuters 2019)
Jul 2019 Iran surpasses agreed cap on uranium enrichment (CFR, 2020)
Jul 2019 Iran escalates by seizing the British oil tanker in the strait of Hormoz
(Reuters, 2019)
Sep 2019 Attacks on an oil facility in Saudi Arabia (L. Doucet 2019)
Dec 2019 Iran-backed militia kills US civilian contractor in Iraq (Barbara Starr 2019)
Dec 2019 US kills Iran-backed militia members for the killing of the US contractor
(Franck 2019)
Dec 2019 Iran-backed militiamen storm the US embassy in Iraq (Franck, 2019)
Jan 2020 Iranian Major General Qassim Soleimani killed by the US (Dorsey 2020)
and China plus Germany) agreed to the framework summarized below (The Washington Post
2015; Kerr and Katzman 2018).
1. Uranium Stockpile: Iran gives up 97% of its stock of enriched uranium, going from 10,000
kg to 300 kg. 300 kg is much less than what is needed to create one nuclear weapon.
2. Uranium Enrichment: Iran agrees not to produce uranium enriched to more than 3.67%
purity. A purity of 90% is needed to make a weapon. This limit is applied for 15 years.
3. Centrifuge Reduction: Iran reduces its number of centrifuges from 19,000 to 5,000 plus
an additional 1,000 for research and development.
4. Inspections: UN inspectors are allowed to inspect nuclear sites, including military sites, but
Iran can challenge the requests for inspections and can delay inspections for up to 24 days.
5. Sanctions Relief: The US, EU, and UN lift sanctions if Iran complies with this deal. This
is important to Iran, as the sanctions are crippling the Iranian economy.
The progress of the conflict can be seen in Table 17.5.
17.4.2 Graph Model of the Conflict
Goals of each DM: The goal of the US is to deter Iran from pursuing nuclear capabilities. The
goal of Iran is to get nuclear power.
Conflict point of time: May 2018: The US wants to prevent Iran from getting a nuclear
weapon. It believes that the current deal enables Iran to build a nuclear weapon.
US options
First wave economic sanctions: Re-imposing sanctions that were in effect before the
nuclear deal. This will limit Iran’s export receipts. Broad sanctions being re-imposed
range from carpets and health care to the automotive sector (Kenneth 2020).

Second wave economic sanctions: This will include the oil ban, in which Iran will not be
able to sell oil (Torbat 2020).
Retaliation against Iran escalation: If Iran escalates the situation, the US will retaliate.
The US will also retaliate if any US personal are harmed. In 2019, Iran shot down a US
drone; as a result, the US planned to retaliate but later called off the attack because the
retaliation was not proportionate to shooting down an “unmanned” drone (Pickrell 2019).
Iran options
Negotiate a new deal: Iran has an option to negotiate a new nuclear deal.
Escalate: Iran can escalate the conflict as a retaliation against US actions. Iran is
expected to use its proxies to escalate, likely in Iraq, Yemen, and/or Lebanon (Claire
Parker 2020). Iran can also escalate by attacking oil facilities in the Gulf: specifically,
Saudi Arabian oil facilities. The Center for Strategic & International Studies (CSIS)
predicted such an attack on Abqaiq, the world’s largest oil processing facility and crude
oil stabilization plant, in a report published in August 2019 (Jones 2019), one month
before the attack took place. Moreover, Iran may not act at all because they prefer the
current nuclear deal.
17.4.2.1 Conflict states

The US has three options: first wave sanctions, second wave sanctions, and retaliation against
Iranian aggression. On the other hand, Iran has two options: negotiate a new nuclear deal or
escalate. As a result, the conflict will have 25 = 32 states.
17.4.2.2 Removing Infeasible states

States that are perceived to be illogical will be removed from the conflict. All states contain-
ing (--Y-N) will be removed; those are the states that have a “Yes” for the third option (US:
Retaliation against Iran aggression) and a “No” on the fifth option (Iran: Escalate). The US will
only retaliate against Iranian aggression; it is not possible for the US to retaliate if Iran does not
escalate, which is what (--Y-N) suggests. As a result, eight states will be removed: (YYYYN),
(YNYYN), (NYYYN), (NNYYN), (YYYNN), (YNYNN), (NYYNN), and (NNYNN). The
removal of the infeasible states is easily done using GMCR+ software by clicking on the
states perceived to be infeasible. Figure 17.8 shows a screenshot of the software in which the
infeasible states are removed.
All states having (NY---) are removed because the US will use option one (first wave
sanctions) before they use the second option (second wave sanctions). States (NN--Y) will be
removed because Iran will not escalate the conflict unless the US uses some form of aggres-
sion, such as sanctions. As a result, 18 states will be removed, leaving 14 possible states, as
shown in Table 17.6. Table 17.6 is a screen shot from the GMCR+ software; at the top, the
states are numbered from 1 to 14.
17.4.2.3 Preference ranking

In this step, the states will be ranked for each DM. The preference rankings are as follows:
US: [4, 5, 6, 14, 12, 13, 11, 3, 2, 1, 10, 9, 8, 7] (State 4 is the most preferred state)
Iran: [1, 10, 8, 7, 9, 2, 3, 14, 12, 11, 13, 4, 5, 6] (State 1 is the most preferred state)

Figure 17.8 Screenshot of the software in the which infeasible states are removed
The graph model can be seen in Figure 17.9; the solid arrows are the US’s allowable transitions
and the dotted arrows are Iran’s allowable transitions. Moreover, the preference ranking will
allow the user to predict the movement of the DMs within the graph model. For example, the
conflict will start at State 1 (NNNNN), and Iran can move from State 1 (NNNNN) to State 4
(NNNYN), in which they negotiate a new nuclear deal. However, based on Iran’s preferences,
State 1 is the most preferred, and as a result, Iran will prefer to stay in State 1 because State
4 is less preferred. On the other hand, the US can move the conflict from State 1 to State 2
(YNNNN) or State 3 (YYNNN), in which it imposes sanctions on Iran. Both State 2 and State
3 are more preferred than State 1 for the US. If the US moves the conflict to State 2 (YNNNN),
in which the US imposes sanctions on Iran, Iran can make a move from State 2 (YNNN) to
States 5 (YNNYN), 7 (YNNNY), or 11 (YNNYY). However, only State 7 is more preferred
than State 2 for Iran based on Iran’s preference rankings, and so Iran will move the conflict to
State 7 (YNNNY), in which they escalate as a retaliation against the US sanction.
17.4.3 Analysis Stage
In this stage, the GMCR+ software (version 0.4) will be used to find the equilibria by using the
“Equilibria Results” tab, as seen in Figure 17.10. State 10 (YYYNY) is a Nash equilibrium, in
which the US will use first wave sanctions, second wave sanctions, and retaliate against Iranian
aggression, while Iran will not negotiate a new nuclear deal and will escalate the conflict.
Moreover, State 1 (NNNNN) is GMR stable for both DMs.
Table 17.6 US–Iran states in table form
1 2 3 4 5 6 7 8 9 10 11 12 13 14
First wave economic sanctions N Y Y N Y Y Y Y Y Y Y Y Y Y
US
Second wave economic sanctions N N Y N N Y N Y N Y N Y N Y
Retaliation against Iran escalation N N N N N N N N Y Y N N Y Y
Iran Negotiate a new deal N N N Y Y Y N N N N Y Y Y Y
Escalate N N N N N N Y Y Y Y Y Y Y Y

10 14
9 13
8 12
7 11
3 6
2 5
1 4
US
Iran
Figure 17.9 The graph model for the US-Iran conflict
A GMR equilibrium means that if a DM makes any improvement from State 1, it can be
punished by the opponent by moving the conflict to a less preferred state. For example, if the
US chooses to move from State 1 to State 2, Iran can respond by moving the conflict from
State 2 to State 7. State 7 is less preferred for the US than State 1, which is why State 1 is
GMR stable.
This resolution is far from ideal from the US perspective. State 10 is one of the four least
preferred states. If a DM is in the same position as the US, they will want to know “what can be
done to end in a better state.” The “Post Analysis” tab in GMCR+ can answer such a question.
17.4.3.1 “Post Analysis” tab in GMCR+

The “Post Analysis” tab in GMCR+ informs the user about the changes to the preference
ranking required to achieve the desired state (goal). For example, if the user wants the conflict
to end in State X (the goal), GMCR+ will inform the user about the changes in the preference
rankings necessary for the conflict to end in State X.

Figure 17.10 Equilibria result of the US–Iran conflict
The conflict in its current state is not what the US had hoped for. Our theory is that the two
waves of sanctions were not strong enough to force Iran to move the conflict into a state in
which they would negotiate. Using the “Post Analysis” tab in GMCR+, the goal was set to State
4 (NNNYN), in which there are no sanctions, no retaliation, and no retaliation against Iran
escalation, while Iran negotiates a deal and does not escalate. According to the post-analysis
information, for the conflict to end in State 4, Iran should prefer State 4 (NNNYN) over State 1
(NNNNN) (the status quo), which is not the case. Moreover, the US has no leverage to change
Iran’s preferences without taking any action. As a result, the goal is set to State 5 (YNNYN), in
which the US will use the first wave sanctions and Iran will negotiate. According to the “Post
Analysis” tab, to end the conflict in State 5 (YNNYN), Iran must prefer State 5 over at least
one of the following: State 2 (YNNNN), State 7 (YNNNY), or State 11 (YNNYY), as shown
in Figure 17.11. The most common action among these three states is US action (first wave
Figure 17.11 Post-Analysis tab in GMCR+ (screenshot)

sanction). The US will need to increase the strength of the option “Sanction” in order for it to
become intolerable for Iran, and thereby, change its preferences.
GMCR equilibria are not robust to the changes in preferences, as small changes in the prefer-
ence rankings may change the equilibria of the model. Increasing the strength of the economic
sanction will alter Iran’s preferences. As a result, Iran will have two sets of preferences based
on whether the economic sanction is perceived to be tolerable or intolerable, and therefore, the
equilibria will change for each possible preference ranking for Iran.
17.4.4 Robustness Analysis
There are two scenarios for this conflict: tolerable sanctions and intolerable sanctions. Each
will have different results. The reason for using two scenarios is because the US cannot be sure
whether the sanctions will be tolerable or not; with such uncertainty, the user may want to know
what would be the end result of both scenarios. The preferences for each scenario are as follows:
Tolerable Sanctions preferences:
US: [4, 5, 6, 14, 12, 13, 11, 3, 2, 1, 10, 9, 8, 7]

Iran: [1, 10, 8, 7, 9, 2, 3, 14, 12, 11, 13, 4, 5, 6]
Intolerable Sanctions preferences:
US: [4, 5, 6, 14, 12, 13, 11, 3, 2, 1, 10, 9, 8, 7]

Iran: [1, 5, 6, 12, 14, 4, 11, 7, 13, 9, 2, 8, 10, 3]
Comparison:
Iran: [1, 10, 8, 7, 9, 2, 3, 14, 12, 11, 13, 4, 5, 6]

Iran: [1, 5, 6, 12, 14, 4, 11, 7, 13, 9, 2, 8, 10, 3]
The two different preference rankings, based on the strength of the economic sanctions, will
produce different equilibria, and therefore different outcomes. The graph model along with the
equilibria results for both scenarios can be seen in Figures 17.12 and 17.13. Note that in the
tolerable sanction scenario, State 10 (YYYNY) is a Nash equilibrium and State 1 (NNNNN) is
a GMR equilibrium. On the other hand, the intolerable sanction scenario results in four Nash
equilibria: States 4 (NNNYN), 5 (YNNYN), 6 (YYNYN), and 14 (YYYYY).
17.4.5 Results and Conclusions
The graph models show that there are four possible Nash equilibria in the intolerable sanction
scenario and one Nash and one GMR equilibria in the tolerable scenario.
Intolerable sanction scenario
State 4 (NNNYN) may be a possible resolution if Iran is aware of the strength of the economic sanction
and would prefer to avoid any unnecessary losses by negotiating a new deal. State 5 (YNNYN), a pos-
sible resolution, can be reached from five different states, including State 4 (NNNYN). However, this is

Intolerable
NASH
10 14
(YYYYY)
9 13
8 12
7 11
NASH
(YYNYN)
3 6 NASH
2 5
NASH
(YNNYN)
1 (NNNYN) 4
Figure 17.12 Graph model for the US-Iran intolerable sanction
unlikely to happen because if Iran moves to State 4, the US will not have any incentive to add economic
sanctions, because Iran is willing to negotiate without pressure. Similarly, State 5 can be reached from
State 2 (YNNNN), which is likely because Iran might be pressured to negotiate a new deal on the
condition of lifting the sanction. State 6 (YYNYN) is similar to State 5 (YNNYN) but with additional
economic sanctions to bring Iran to the negotiating table. Finally, State 14 (YYYYY) is a possible
resolution in which both DMs will use all their options but in which Iran is eventually forced to negotiate.
Tolerable sanction scenario
State 1 (NNNNN) is a possible resolution if the US is aware that either the economic sanction will
not be effective, or if the economic sanction would trigger a chain reaction in which it will not lead to

Tolerable Sanctions
NASH
(YYYNY)
10 14
9 13
8 12
7 11
3 6
2 5
1 (NNNNN) US
4
GMR Iran
Figure 17.13 Graph model for the US–Iran tolerable sanction
Iran negotiating a new deal. As a result, the US may choose not to start this conflict; this information
is helpful for Iran, and if they wish to remain in State 1, they can give the illusion of being willing to
take extreme measures to avoid negotiating a new deal.
State 10 (YYYNY) is a Nash equilibrium in which all the options, excluding Iran’s options to
negotiate, will be used; in this case, there is no clear winner because State 10 is relatively low on the
preference ranking for both sides. If they envision State 10 as the end result of the conflict, they may
refrain from starting it.
Presenting the conflict in this manner enables a user to understand how the conflict might
unfold under uncertainty. In the case of economic sanctions, neither the sanctioner nor the
sanctionee can be certain whether the sanction will be perceived as tolerable or intolerable.

Both the US and Iran can see graphically most of the possible outcomes and make adjust-
ments to their strategies in order to achieve a more desirable result. GMCR illustrates the
conflict from a macro perspective, enabling users to be more knowledgeable about the situa-
tions, resulting in better decisions and reduced errors. Illustrating similar graphs for different
scenarios allows a user to predict outcomes with fewer calculations; this is necessary for sce-
narios in which a user cannot accurately calculate the payoff of an action such as an economic
sanction. Using GMCR+ software makes the implementation of GMCR significantly easier
and requires much less technical information.
17.5 FUTURE WORK
There are only a few GMCR applications to economic sanctions. Moreover, GMCR has a
wide range of extensions that might be useful in modeling economic sanctions. Some possible
extensions include: Hypergames, options effectiveness, gray-based preferences, and coalition
analysis. Below is a brief explanation of these extensions.
Hypergames help the user to capture misinformation in conflict settings. The user will be able to
model a conflict if the players are misperceiving the preferences due to misinformation (Aljefri et
al. 2020). This is useful in situations in which a user manipulates the information trusted by a target
without the target being aware. In economic sanctions, manipulation of information may have an
effect on an economic sanction’s chances of success.
Options effectiveness allows the user to compare different equilibria states quantitatively and
identify which option is important to achieve the desired equilibria (Alhindi et al. 2018).
Gray preferences let the user express their uncertain preferences in a general way. Preferences might
not be defined as black or white due to uncertainty. Moreover, the user can understand how such
uncertainties are influencing the results (Kuang et al. 2015).
Coalition analysis enables users to coordinate their actions to achieve a better result by altering
their decisions. A coalition is a subset of decision-makers that can achieve a preferred outcome by
cooperating. One objective of coalition analysis is to inform the user if coalition potential exists in a
conflict (Kilgour et al. 2001; Inohara and Hipel 2008).
REFERENCES
Alhindi, T., M. Kilgour, and K. Hipel (2018), ‘Option effectiveness in conflict resolution’, in 2018 IEEE International
Conference on Systems, Man, and Cybernetics (SMC), IEEE, pp. 445–50.
Barbara, S. (2019), ‘US civilian contractor killed in rocket attack in Iraq on Friday’, accessed 5 February 2021 at www.
edition.cnn.com/2019/12/27/politics/iraq-rocket-attack-contractor-killed/index.html.
CFR (2020), ‘Confrontation between the United States and Iran’, accessed 5 February 2021 at www.cfr.org/
global-conflict-tracker/conflict/confrontation-between-united-states-and-iran.
Claire, P. (2020), ‘Iran has invested in allies and proxies across the Middle East. Here’s where they stand
after Qasem Soleimani’s death’, accessed 5 February 2021 at www.washingtonpost.com/world/2020/01/03/
iran-has-invested-allies-proxies-across-middle-east-heres-where-they-stand-after-soleimanis-death/.
Cowan, N. (2001), ‘The magical number 4 in short-term memory: A reconsideration of mental storage capacity’,
Behavioral and Brain Sciences, 24 (1), 87–114.
Dizaji, S.F., 2021, ‘The impact of sanctions on the banking system: New evidence from Iran’ in: P.A.G. van Bergeijk
Dorsey, M. (2020), ‘Killing of Iranian General: US reaps more than it wished for’, Counter Terrorist Trends and
Analyses, 12 (2), 1–5.
Doucet, L. (2019), ‘What we know about Gulf of Oman tanker attacks’, accessed 5 February 2021 at https://www.
bbc.com/news/world-middle-east-48627014.

Gardner, F. (2019), ‘Race on to restore supply after Saudi oil attacks’, accessed 5 February 2021 at https://www.bbc.
com/news/world-middle-east-49775849.
Franck, T. (2019), ‘Trump says Iran will be held “fully responsible” for attack on the US embassy in Iraq’, accessed
5 February 2021 at www.cnbc.com/2019/12/31/trump-says-iran-will-be-held-fully-responsible-for-attack-on-the-
us-embassy-in-iraq.html.
Hipel, K., M. Kilgour, and R. Kinsara (2014), ‘Strategic investigations of water conflicts in the Middle East’, Group
Decision and Negotiation, 23 (3), 355–76.
Inohara, T. and K. Hipel (2008), ‘Coalition analysis in the graph model for conflict resolution’, Systems Engineering,
11 (4), 343–59.
Kenneth, K. (2020), Iran Sanctions, Congressional Research Service.
Kerr, P. and K. Katzman (2018), Iran Nuclear Agreement and U.S. Exit, Congressional Research Service.
Kilgour, M., K. Hipel, L. Fang, and X. Peng (2001), ‘Coalition analysis in group decision support’, Group Decision
and Negotiation, 10 (2), 159–75.
Kinsara, R. (2014), ‘A Simple Guide to GMCR+’, accessed 5 February 2021 at http://www.eng.uwaterloo.
ca/~rkinsara/story.html.
Kinsara, R. and Y. Matbouli (2016), ‘Strategic analysis of the European natural gas crisis’, in 2016 IEEE International
Conference on Systems, Man, and Cybernetics (SMC), pp. 004367–72.
Kinsara, R., O. Petersons, K. Hipel, and M. Kilgour (2015), ‘Advanced decision support for the graph model for
conflict resolution’, Journal of Decision Systems, 24 (2), 117–45.
Kuang, H., M. Bashar, K. Hipel, and M. Kilgour (2015), ‘Grey-based preference in a graph model for conflict
resolution with multiple decision makers’, IEEE Transactions on Systems, Man, and Cybernetics: Systems, 45 (9),
1254–67.
OPEC (2018), ‘Iran facts and figures’, accessed 5 February 2021 at www.opec.org/opec_web/en/about_us/163.htm.
Öztaş Ayhan, H. and S. Işiksal (2005), ‘Memory recall errors in retrospective surveys: A reverse record check study’,
Quality & Quantity, 38 (5), 475–93.
Pickrell, R. (2019), ‘Here’s what Trump, his advisers, and the US military were talking about striking after Iran
shot down a US drone’, accessed 5 February 2021 at www.businessinsider.com/what-us-planned-to-strike
-after-iran-downed-us-drone-2019-9.
Reuters (2019), ‘Hit by sanctions and rising tensions, Iran’s oil exports slide in July’, accessed 5 February 2021 at www
.reuters.com/article/us-oil-iran-exports-idUSKCN1UP1UD.
Reuters (2019), ‘Iran’s detention of UK-flagged tanker unacceptable: owner’, accessed 5 February 2021 at www.
reuters.com/article/us-mideast-iran-britain-tanker-idUSKCN1UW20B.
Sabtan, B. (2018), ‘Studying economic sanctions using the graph model for conflict resolution’, doctoral dissertation,
University of Waterloo ON.
Sabtan, B., M. Kilgour, and K. Hipel (2019), ‘Assessing the effectiveness of economic sanctions’, EURO Journal on
Decision Processes, 7 (1–2), 69–82.
Salameh, D. (2014), ‘Major geopolitical developments that could impact oil supplies from the Arab Gulf region,
energy & the economy’, 37th IAEE International Conference, June 15–18, 2014. International Association for
Energy Economics.
Seth, J. (2019), ‘Iran’s threat to Saudi critical infrastructure: The implications of U.S.-Iranian escala-
tion | Center for Strategic and International Studies’, accessed 5 February 2021 at www.csis.org/analysis/
irans-threat-saudi-critical-infrastructure-implications-us-iranian-escalation.
The Telegraph (2012), ‘Iran threatens new war games in the oil lanes of the Gulf’, accessed 5 February 2021 at www
.telegraph.co.uk/news/worldnews/middleeast/iran/8996819/Iran-threatens-new-war-games-in-the-oil-lanes-of-
the-Gulf.html.
The Washington Post (2015), ‘Full text of the Iran nuclear deal’, accessed 5 February 2021 at https://apps.washing-
tonpost.com/g/documents/world/full-text-of-the-iran-nuclear-deal/1651/.
Torbat, A.E. (2020), ‘The economic sanctions against Iran’, Politics of Oil and Nuclear Technology in Iran, editor
A.E. Torbat, Springer, pp. 201–24.
Waltz, K. (2012), ‘Why Iran should get the bomb: Nuclear balancing would mean stability’. Foreign Affairs, pp. 2–5.
Worldbank (2017), ‘Islamic Republic of Iran’, accessed 5 February 2021 at www.worldbank.org/en/country/iran/
overview.
Xu, H., K. Hipel, M. Kilgour, and L. Fang (2018), Conflict Resolution Using the Graph Model: Strategic Interactions
in Competition and Cooperation’, Cham: Springer International Publishing.

18. The impact of sanctions on the banking system:
new evidence from Iran*
Sajjad Faraji Dizaji
18.1 INTRODUCTION
This chapter investigates the performance of Iran’s banks during different sanctions episodes.
Moreover, it investigates the impact of the Iran nuclear deal and the consequent partial lifting
of sanctions on Iranian banks’ costs and efficiency scores. Since the 1979 revolution that
abolished the Persian monarchy, and the US embassy hostage crisis, the Iranian government
has been under a variety of economic and financial sanctions imposed by the United States
(Hufbauer et al., 2007; case: 79-1). Starting in the early 2000s, the United States imposed
limited sanctions against Iran in response to claims that the country had supported terrorism
and sought to develop weapons of mass destruction. In 2003, the International Atomic Energy
Agency (IAEA) confirmed the presence of undeclared nuclear sites in Iran (Hufbauer et al.,
2007; case: 84-1).
Following the reactivation of Iran’s nuclear program in 2005, the United Nations, the
United States, and the European Union, in a multilateral international effort, imposed a new
round of sanctions against Iran (see also Chapter 17 by Sabtan et al. that also deals with this
case). Between July 2006 and 2012, the UN, the US, and the EU imposed several waves of
increasingly severe sanctions and restrictions on technology transfers, financial transactions,
investments, revenue repatriation, and on various state and private entities in Iran. The sanctions
against Iran were intensified in 2012, when the US and the EU agreed to impose oil sanctions
against Iran and impede its access to SWIFT facilities. Iran was unable to export its hydrocarbon
products and could not repatriate its export revenues. Oil exports declined from 2.5 million
barrels per day (bpd) to about 1 million bpd between 2011 and 2014 (Devarajan and Mottaghi,
2015). Real GDP growth fell from 2.6% in 2011 to negative 7.4% in 2012. With Iran cut off
from the financial world, the Rial weakened significantly and inflation accelerated, eventually
peaking at 45.1% in June 2013. Access to capital in Iran was severely challenged, forcing the
government to intervene in banks’ credit allocation, effectively dictating which industries were
to be prioritized for funding. During this period, Iranian banks’ access to liquidity as well as their
profitability fell substantially and the number of non-performing loans increased.
In July 2015, following a series of intense negotiations between Iran and Permanent Members
of the UN Security Council and Germany (P5+1), the two sides reached an agreement, known
as the Joint Comprehensive Plan of Action (JCPOA). This agreement suspended a portion
of the Islamic Republic’s nuclear program. Subsequently, the Western powers lifted many of
the previously imposed sanctions (Dizaji, 2019). Iran’s inflation rate fell below 10% for the
first time in nearly 25 years. Most Iranian banks were reconnected to the SWIFT network and
could engage in international transactions, which was vital for Iran’s trade, particularly for the
country’s oil exports and the broader stability of its currency.
330
Sajjad Faraji Dizaji - 9781839102721
The impact of sanctions on the banking system: new evidence from Iran 331
Early in 2018, the US administration announced its unilateral withdrawal from the JCPOA,
leading to significant inflation and pressure on the country’s economy and banking system.
The US administration claimed that Iranian banks had assisted the Islamic Revolutionary
Guard Corps (IRGC) in exporting the regime’s revolutionary principles, carrying out
extraterritorial operations, and sponsoring and arming terror groups. The US Department of
Treasury, therefore, targeted the sanctions at 50 Iranian banks and their foreign and domestic
subsidiaries. However, on this occasion a key difference from earlier experiences was the lack
of international agreement, especially within the EU, about whether to support the US plans
(Dizaji and Farzanegan, 2021).
During the different sanctions episodes over recent years, Iranian banks have fallen far
behind international norms and standards established by the Financial Action Task Force
(FATF). A priority for those in Iran seeking reintegration into the global economy has been
banking reforms that meet globally accepted standards. However, Iranian conservatives have
been painting the FATF as a US-controlled entity that seeks to interfere in financial transac-
tions of the country and have thus opposed reform. The conservative faction’s views have
been reinforced by the US decision to unilaterally leave the JCPOA. A timely question arises:
To what extent have the imposed sanctions influenced the performance of Iranian banks?
Moreover, how has the JCPOA agreement, before and after the US withdrawal, affected the
efficiency of Iran’s banks?
Earlier case studies of Iran have investigated the effects of sanctions on its economic vari-
ables and political system. Dizaji (2014) discusses how oil sanctions have affected the Iranian
government budget negatively and worsened the welfare and living standards of Iranian
people. Some other studies argue that sanctions may influence the political behavior of the
Iranian government by creating economic costs and a contracting government budget (Dizaji
and Bergeijk, 2013; Bergeijk, 2015; Dizaji, 2019). According to Dizaji and Farzanegan (2021),
although the extensive multilateral sanctions imposed by the US and other Western countries
have controlled Iran’s military expenditure, the unilateral sanctions imposed by the US may
not influence Iran’s military ambitions significantly. Other groups of studies have discussed
the impact of sanctions on Iran’s trade and how it has changed its trading partners from
Western countries to non-sanctioning countries (Haidar, 2017; Dizaji, 2018). Farzanegan and
Hayo (2019), using Iranian province-level data, find that the international sanctions on Iran
have damaged the informal economy even more than the formal. Dizaji (2013) highlights that
there is a marked difference in Iran’s banks’ cost efficiencies before and after the intensified
financial sanctions over the period from 1999 to 2012.
Despite a considerable number of studies on the political and economic impact of sanctions
imposed on Iran, there is no specific study investigating the impact of the intensity of sanctions
on the Iranian banking system and the efficiency impact of lifting sanctions on Iranian banks.
Indeed, there is no well-developed or detailed analysis of the impact of financial sanctions.
After all, the sanctions against Iran were the first occasion on which the SWIFT system was
used. The current study aims to fill these gaps. For the purposes of this research, I employ
the parametric approach of stochastic frontier analysis (SFA) using data from 12 Iranian
banks over the period from 2006 to 2018.1 The results show that the intensity of sanctions is
associated with increases in Iranian banks’ costs. The cost efficiency scores of Iranian banks
on average show a decreasing trend over this period. The estimated cost functions reveal that
commercial and private banks tend to have lower costs than development and government-

owned banks. Moreover, the results show that although JCPOA, also known as the Iran nuclear
deal, has significantly decreased the cost inefficiencies of Iranian banks, it was only effective
before the US withdrawal from the nuclear agreement.
Section 18.2 reviews Iran’s banking industry. Methodology, data, and variables are
discussed in Section 18.3. Section 18.4 presents the research results. Section 18.5 concludes.
18.2 IRAN’S BANKING INDUSTRY

Iran’s banks are the country’s main source of funding for development plans and support for
the strategies of income distribution equality in the Iranian economy. According to the Law
on Interest-Free Banking, three main tasks have been determined for the banking system in
Iran. The first is the duty to direct monetary sources to deposits. The second is the allocation
of financial resources (financial facilities). The third is the duty of monetary policy practices
(Rajaei-Baghsiyaei, 2011: 240–241; Anwar, 1992:1090). The Iranian banking industry makes
up about 2.5% of GDP and ranks second after Saudi Arabia among Islamic countries with
$434.42 million in Islamic financial assets (COMCEC, 2017:8). Due to the high capital
requirements of some big projects, banks sometimes provide physical investments in the
market through their own subsidiaries (Erdogan et al., 2020:966).
The Central Bank of Iran (CBI), as a banker for the government, was established in 1960
with the responsibility for issuing currency and executing the national monetary policy. By
1977, some 36 banks (24 commercial and 12 specialized) were in operation. After the Iranian
Islamic Revolution of 1979, Sharia law became important for the banking sector as it did for
other sectors (Hosseini, 2015:136). All banks, along with a number of other financial and
industrial establishments, were nationalized to facilitate the launch of Islamic banking. Since
1983 Iran has adopted the non-interest banking system and applies Islamic principles to the
financial system. Nowadays, Iran’s banking system is 100% Sharia compliant (the highest of
any country), far exceeding that of Saudi Arabia, Kuwait, and Brunei, all of which are less
than 50%. Iran is the only Muslim country besides Sudan where the entire financial industry
is obliged to be consistent with the principles of Sharia law, accounting for more than 40% of
the world’s total Islamic banking assets (ILIA, 2016).
After widespread nationalization in the 1980s, reform of the financial system in the 1990s
and 2000s focused on improving the regulatory environment and streamlining controls to
enhance efficiency. Between 2000 and 2010, the Iranian government moved toward liberal-
izing the banking sector, although progress was slow.2 After the public commercial bank
privatization in 2008–2009, private bank assets have become the largest in Iran’s Islamic
banking industry. In this period, Iran’s equity markets became very important channels of
finance for real economic activities (IMF, 2011:2).
Currently the banking system includes state and private banks. All private banks are
categorized as commercial banks. In addition, there are three types of public banks including
commercial, specialized, and Qard al-Hassan banks. Specialized banks operate in special-
ized fields such as housing or the agricultural sector (Parveen, Zadeh, and Muzakkir Syed,
2015: 63). Qard al-Hassan banks provide loans for small producers, farmers, and small-scale
businessmen who have difficulty in finding financial sources for their personal needs. These
loans do not make any profit (Iqbal, 2011:103–104). The government plans to expand the use

0.10
0.09
0.08
0.07
0.06
0.05
0.04
0.03
0.02
0.01
0
2014Q1
2014Q2
2014Q3
2014Q4
2015Q1
2015Q2
2015Q3
2015Q4
2016Q1
2016Q2
2016Q3
2016Q4
2017Q1
2017Q2
2017Q3
2017Q4
2018Q1
2018Q2
Source: Islamic Financial Services Board (IFSB, 2019)
Figure 18.1 Capital Adequacy Ratio (CAR)
of online banking and to modernize the banking systems that are at the moment far below
international standards (ILIA, 2016:11). The Tehran Stock Exchange is relatively large,
and market capitalization was $100 billion in 2012. Some Iranian banks are quite large. In
2012, five of the Iranian banks ranked in the ‘Top 1000 Banks in the World’ (Jahan-Parvar,
2013:8). The number of Islamic banks in Iran reached 34 in 2018 from 31 in 2014. However,
the number of branches decreased from 21,299 in 2014 to 20,598 in 2018. Mobile banking
and the number of ATMs increased. The number of ATMs was 36,400 and 59,519 in 2014
and 2018, respectively. Increasing mobile banking and ATM services affected the number of
employees in this sector. The number of employees declined from 227,419 in 2014 to 222,397
in 2018 (IFSB, 2019).
In March 2012, Iranian banks were disconnected from the SWIFT payment system after the
escalation in financial sanctions; all Iranian banks were blocked from using SWIFT services.
The capital adequacy ratio (CAR) of the banking system decreased from 8.4% in 2012 to 5.8%
in 2015 (IMF, 2017:10). Figure 18.1 displays the CAR of Iranian banks between 2014Q1 and
2018Q2. This figure shows that in general CAR had a decreasing trend over this period. It fell
from 8.9% in 2014Q1 to 4.5% in 2018Q2. There were exceptions in some quarters between
2016 and 2018 (i.e., 2016Q3, 2017Q1, and 2017Q2) where the trend was upward. It seems
that implementation of the nuclear agreement between Iran and the P5 + 1 (China, France,
Russia, UK, US + Germany) prevented the decreasing trend of CAR. However, after the
US withdrawal from the nuclear deal (at the end of 2017 and beginning of 2018), the CAR
continued its decline.
Iran still needs a better functioning banking system to absorb sufficient FDI to help diversify
the economy. Iran is trying to reform its banking sector. President Rouhani’s government
attempted to expand the Central Bank’s independence and adhere to the FATF standards
against money laundering and terrorist financing and to increase financial transparency,

although the hardline parties like the IRGC and bonyads (state-operated religious foundations)
discouraged these efforts.
18.3 METHODOLOGY AND RESEARCH DESIGN
18.3.1 The Stochastic Cost Frontier Approach
For a given technology, the production function shows the maximum amount of output
that can be produced from a given combination of inputs. Since production functions are
usually unobservable, duality theory (Shephard, 1970) indicates that, under certain condi-
tions, the properties of a production function can be investigated through the cost function.
In theory, all firms perform on their frontiers and there is no inefficiency in production.
However, in practice, observations on cost levels and production plans are not derived from
rational and efficient decisions due to poor production plans, errors, managerial inability,
and distorted communication. These factors force a firm to produce inside of its frontier
(Kasman, 2002).
The econometric frontier approach and the mathematical programming approach, or data
envelopment analysis (DEA), have been developed in the literature to separate the error
component from the theoretical frontier. The two approaches take different techniques to
envelop data more or less tightly in different ways (Fried et al., 1993). In this research, I
use an econometric frontier approach, namely SFA, to estimate the cost efficiency of the
Iranian banks. The SFA enables us to separate random noise from inefficiency components
(Aigner et al., 1977; Meeusen and Broeck, 1977). In contrast, the programming approach is
non-stochastic and combines noise and inefficiency together—also referred to as combination
efficiency. Additionally, since the aim of this study is to examine changes in the efficiency of
the banks over the sanctions period, the assumption of the variability of the efficiency over
time is important. Therefore, unlike Schmidt and Sickles (1984) and Berger (1993), I assume
that inefficiency varies across observations and time, and I use the stochastic econometric
frontier approach to estimate the cost efficiency for each year in the sample period. The cost
function for panel data, for the i-th bank (i = 1, 2,..., N) at the t-th period (t = 1, 2,. . ., T ), is
specified as follows:
lntcit = ln f ( pit , yit , β i ) + uit + vit (18.1)
where tcit is the total cost for the i-th bank at the t-th period; pit and yit represent vectors of
input prices and output, respectively; and βi is a vector of unknown parameters to be estimated.
2
The vit’s are assumed to be independent and identically distributed as N (0, σ v ). They are also
independent of the uit’s, which are non-negative random variables corresponding to technical
inefficiency of cost.
Moreover, uit’s are assumed to be independently distributed. In order to be comparable with
other studies, in this research, uit is assumed to be distributed as truncated-normal: N (µ , σ u2 ).
In order to estimate the maximum likelihood function, the variance terms are
parameterized as σ u2 and σ v2 . Several more terms are defined based on these. Jondrow

et al. (1982) discuss how the ratio of variability, σ, is helpful for measuring a firm’s
mean efficiency.
σ u2
σ 2 = σ u2 + σ v2 and γ =
σ2
The log likelihood function of this model is presented as:
N 2 1
N N ⎡ ⎛ ε λ ⎞⎤
ln L = ln − N lnσ − 2 ∑ε i2 + ∑ln ⎢Φ ⎜ i ⎟⎥ (18.2)
2 π 2σ i=1 ⎢
i=1 ⎣ ⎝
σ ⎠⎥⎦
where N is the number of banks, εi = ui + vi, and Φ represents the standard normal cumulative
distribution function. Farrell (1957) defined a simple measure of firm efficiency using a simple
example involving firms that use two inputs to produce a single output, under the assumption of
constant returns to scale. Given the measure of technical efficiency, the overall cost efficiency
(CE) can be explained as a product of technical (TE) and allocative efficiency (AE) measures:
TE × AE = CE (18.3)
Cost efficiency is a measure of the ratio between the minimum feasible cost and the observed
expenditure (Kumbhakar and Lovell, 2003). Hence, CE is bounded between 0 and 1.
Accordingly, a measure of CE is provided as follows:
C min C (Yit , X it , β ) exp (Vit )

CEit = = = exp (−U it ) (18.4)
C C (Yit , X it , β ) exp (U it +Vit )
18.3.2 The Empirical Model
Banks, like other firms, employ a set of inputs to produce a certain amount of output. One of
the main problems confronted by researchers examining banks’ cost efficiency is difficulties in
the definition and measurement of the concept of bank output, mainly caused by the nature and
functions of financial intermediaries. There are two different views in the banking literature
regarding the role of deposits: on the one hand, deposits are supposed to be an input to the
production process (intermediation approach); on the other hand, they are considered as an
output (production approach) (Elyasiani and Mehdian, 1990).
Berger and Humphrey (1997) argue that the intermediation approach may be more suitable
for evaluating entire financial institutions as this approach is inclusive of interest expenses,
which account for a considerable part of total costs. Accordingly, I use the intermediation
approach, which considers financial institutions as mediators between the supply and demand
of funds. According to the intermediation approach, the banks collect deposits and other pur-
chased funds with the assistance of labor and physical capital and intermediate these sources
of funds into earning assets such as facilities and investments in shares and securities. I specify
the Fourier-Flexible nonparametric form for the cost function to characterize the efficient
frontier for Iranian banks. This specification increases the degree of flexibility in choosing the
global form of the cost frontier, and moderates the problems related to local approximations,

such as translog.3 The multi-product cost function for the bank s at time t is presented as
follows (see Kasman, 2002; Girardone et al. 2004):
3
lnCst = α 0 + ∑α i lnyist
i=1
3 3
1
+ ∑∑α lny lny
2 i=1 k=1 ik ist kst
3
+ ∑ β j lnp jst
j=1
3 3 3 3
1 1
+ ∑ ∑ β lnp lnp + ∑∑δ lny lnp + γ lnBRst + 2 γ 2 (lnBRst )2
2 j=1 m=1 jm jst mst i=1 j=1 ij ist jst 1
(18.5)
3
+ ∑ψi lnyist lnBRst
i=1
3
1
+ ∑ξ j lnpist lnBRst + θ1t + θ 2T 2
j=1
2
3 3 3
+ ∑ ∅ i yist t + ∑τ j pist t + v1ln(NPL / L)st + v2 ln(LA / TA)st + ∑[ηi cos(zist )
i=1 j=1 i=1
3 3
+ λi sin(zist )]+ ∑∑[ηij cos(zist + z jst ) + λij sin(zist + z jst )]+ ust + vst
i=1 j=1
Where C = total cost function; yi = outputs (loans, and investments); pj = input prices (borrowed
funds, labor, and capital); BR = number of branches; T = a proxy of technological index; NPL /
L is the ratio of non-performing loans to total loans; LA/TA is the ratio of liquid assets to total
assets; zi = the adjusted values of the log output lnYi such that they span the interval [0.1 × 2π,
0.9 × 2π]. In particular, the formula for zi used here is (0.2π − μ × a + μ × lnYi), where a and b
(0.9 × 2π − 0.1 × 2π )
are the maximum and minimum values of ln Yi respectively, and µ = .
(b − a)
In addition, the duality condition implies that the standard properties of the cost function—
symmetry and linear homogeneity in input prices—should be imposed before estimation. The
symmetry condition requires:
α ik = α ki and β jm = β mj
The linear homogeneity condition, on the other hand, requires:
3 3 3 3
∑β j = 1, ∑ξ j = 0, ∑β jm = 0, ∑∅i = 0
j=1 j=1 m=1 i=1
3 3
∑ j=1δij = 0, ∑ j=1τ j = 0, i = 1,2,3, j = 1,2,3.
In a cost frontier, the units on the frontier are efficient, whereas the units above the frontier
are inefficient. Moreover, the area below the frontier is not preferred, since the most cost

efficient unit is located on the frontier. For reading purposes, frontier models are the standard
for efficient scores—the best performing (efficient frontiers) units are equal to one, and the
underperforming units (inefficient frontiers) are less than one. The econometric frontier
estimates the performance of the units statistically and measures the difference between the
inefficient units and the frontier by the residuals (Fare et al., 1994).
18.3.3 Variables and Data
I use unbalanced panel data for 12 Iranian banks (Eghtesad Novin, Tejarat, Karafarin, Mellat,
Parsian, Pasargad, Refah, Saderat, Industry and Mine, Sarmayeh, Sina, Export Development)
with two different types of ownership, government-owned banks and non-government-owned.
The Bank of Industry and Mine, and the Export and Development Bank are categorized as
development banks while other banks in my sample are commercial banks. My unbalanced
panel data include 13 years from 2006 to 2018, inclusive. Required data have been extracted
from the reports of banks’ balance sheets and financial reports from CBI for the years 2006
to 2018.
I use two outputs; y1 = values of loans, and y2 = values of investments. The price of labor (p1)
is total labor expense divided by the number of persons employed by the bank. The price of
funds (p2) is interests paid to deposits divided by volume of deposits. The price of capital (p3)
is equal to the total depreciation divided by total fixed assets. For linear homogeneity, I rewrite
cost and prices using p3 (price of capital) as a numeraire. The number of branches implies a
technological condition of the production. It characterizes the technology of firms and interacts
with all other exogenous variables in the cost function. The linear and square time trends
(t and t2) are also included in the cost frontier to capture the missing time dimension of inputs
or other dynamics that are not modeled explicitly. According to Mester (1996), I use the ratio
of non-performing loans to total loans NPL / L to capture the output quality proxy. The ratio of
liquid assets to total assets (LA/TA) is also applied to show the liquidity risk.
I use four dummy variables:
Sanction is a dummy variable capturing the intensity of sanctions. This variable is coded as
an ordinal variable (1–3), which includes the categories: limited sanctions (1) for the period
2016–2018; moderate sanctions (2) for the period 2006–2011; and extensive sanctions (3)
for the period 2012–2015. Instead of using a mere dummy variable for economic sanctions,
the three-category ordinal measure better captures the impact of the sanctions. Specifically,
because extensive sanctions place comprehensive economic and financial pressures on the
target economy, they should have a greater substantial impact than limited or moderate sanc-
tions (see Caruso, 2003; Dizaji, 2018; Dizaji and Farzanegan, 2021).
JCPOA is a dummy variable capturing the impact of the nuclear agreement and lifting some
parts of the sanctions against Iran. The implementation of JCPOA took place on 16 January
2016, at which point the multilateral sanctions on Iran were lifted while unilateral sanctions
imposed by the US on Iran continued. It takes the value of 1 for the years 2016–2017, i.e.,
after the nuclear deal and before US withdrawal from the nuclear agreement, and 0 otherwise.
Owner is a dummy variable capturing the impact of a bank’s ownership on cost function.
It takes the value of 1 if the bank is a non-government-owned bank and 0 otherwise. The
government-owned banks and private banks have significantly different goals and objectives.

Table 18.1 Descriptive statistics of variables
Standard
Variable Description Mean Maximum Minimum deviation
TC Total cost 49524.76 253024 219 60879.74
Y1 Values of loans 260370.6 2262224 1212 316615.6
Y2 Values of investments 15664.98 150988 22 23114.92
p1 Total labor expense divided by 0.673722 2.722075 0.059922 0.521269
the number of persons employed
by the bank
p2 Interest paid on deposits divided 0.052012 0.313842 0.00573 0.04883
by volume of deposits
p3 Total depreciation divided by 0.098818 0.363563 0.003644 0.056145
total fixed assets
BR Branches 729.4295 3295 22 893.1601
NPL / L Ratio of non-performing loans 0.181716 1.586975 0.00491 0.178555
to total loans
LA/TA Ratio of liquid assets to total assets 0.026212 0.205995 0.000448 0.039141
Note: Assets, costs, and loan amounts are in IRR billion.
Source: Author’s calculations.
The main objective of private banks is to maximize profits. The government-owned banks, on
the other hand, do not seek to maximize profits. They also carry a huge amount of duty losses
on their balance sheets. The government-owned banks may also have different cost structures
from those of the private banks and are not independent in selecting their portfolio structure
(Kasman, 2002).
Commercial is a dummy variable capturing the impact of commercial and development

banks on the cost function. Commercial banks function to provide financial services to indus-
tries and individuals and aim to gain profit by lending money at high-interest rates. Whereas
development banks are set up to provide funds for infrastructural and economic development
and their purpose is to attain social welfare through financial aid. It takes the value of 1 if the
bank is a commercial bank and 0 if the bank is a development bank.
The characteristics of the variables are summarized in Table 18.1.
18.4 EMPIRICAL RESULTS
In this study, Frontier 4.1 is applied to estimate the parameters of the cost frontier function.
The results of the stochastic frontier estimations using different dummy variables are presented
in the five columns of Table 18.2. Model I uses a sanctions dummy to show the impact of
the intensity of the sanctions on 12 Iranian banks’ costs over the period from 2006 to 2018.

Model II uses a dummy variable for JCPOA to show how the nuclear deal between Iran and
world powers and its partial lifting of the financial and economic sanctions has influenced the
costs of Iranian banks. Model III applies a dummy variable to examine the impact of banks’
functions in terms of commercial and development banks on the cost frontier. Model IV aims
to capture the impact of the bank ownership type—i.e., private or government owned—on the
cost function. Finally, Model V uses all of these four dummies together.
As shown in Table 18.2, the coefficients of most inputs and outputs are statistically
significant. That means the selection of inputs and outputs is appropriate for the cost frontier
estimation. The coefficients with respect to output variables, loans α1 and investments α2, are
positive and significant in all models. The positive signs indicate that an increase in outputs
will lead to an increase in the total cost and therefore cost inefficiency. According to Model I,
a 1% increase in total loans leads to a 1.39% increase in total costs (as the ratio of the price of
capital) ceteris paribus, whereas a 1% increase in bank investment leads to a 0.51% increase in
total costs (as the ratio of the price of capital). Moreover, all models confirm that the elasticities
of bank costs (as a percentage of the price of capital) with respect to total loans are greater than
their elasticities with respect to investments. This indicates that Iranian banks’ costs are mainly
influenced by loans rather than by their investments. Table 18.1 also reveals that the values of
loans are, on average, greater than the values of investments.
The price of labor (as the percentage of p3) has a positive impact on the banks’ costs (as the
percentage of p3), while the impact of the price of funds (as the percentage of p3) is negative
ceteris paribus.
The number of branches and the ratio of liquid assets to total assets have a decreasing
impact on banks’ costs (as the percentage of p3) although in some models, these impacts are
insignificant or marginally significant.
Models II and V show that the nuclear agreement between Iran and the world powers within
the framework of JCPOA had a negative and statistically significant impact on Iranian banks’
costs. Model V confirms the increasing and statistically significant impact of sanctions on
banks’ costs. My hypotheses regarding the positive impacts of sanctions on the Iranian banks’
costs and the negative impact of lifting sanctions (through the JCPOA agreement) on costs are,
therefore, confirmed. The results of Model V show that an increase in the intensity of sanctions
is associated with a larger increase in banks’ costs. Each level of increase in the intensity of
sanctions with respect to my coding approach increases banks’ costs by approximately 6%,
ceteris paribus. The nuclear agreement has reduced Iranian banks’ costs by about 4.87% and
3.92% according to Models I and V, respectively.4
The negative sign of dummy variables for bank ownership type in Model III indicates that
private banks tend to have lower costs than government-owned banks. Moreover, the negative
sign of dummy variables for commercial banks reveals that development banks tend to have
higher costs than commercial banks.
The ratio of the variability for U and V can be used to estimate the relative inefficiency in
a bank. It is an estimation of the amount of variation 2
stemming from inefficiency relative to
noise for the sample. The values of γ, where γ = 2σ U 2 , are 0.79, 0.75, 0.93, 0.92, and 0.59 in
(σ U +σ V )
Models I to V, respectively and significant at the 1% level. The relatively larger amounts of γ
in different models reveal that significant proportions of variance in the composite error terms
come from the inefficiency effect. This confirms the appropriateness of using the stochastic
frontier approach in this study.

Table 18.2 Parameter estimates and test statistics using error components model
Model I Model II Model III Model IV Model V
Parameters Variable Estimates Estimates Estimates Estimates Estimates

(t-ratio) (t-ratio) (t-ratio) (t-ratio) (t-ratio)
Constant –2.65 –1.65 –2.4 –2.87 1.15
(–1.50) (–0.92) (–1.18) (–1.43) (0.47)
α1 ln(y1) 1.39*** 1.24*** 1.31*** 1.35*** 0.95***
(5.22) (4.46) (4.29) (4.47) (2.71)
α2 ln(y2) 0.51** 0.49** 0.49** 0.54*** 0.29
(2.38) (2.46) (2.33) (2.59) (1.37)
β1 ⎛p ⎞ 0.63*** 0.53*** 0.58*** 0.59*** 0.38**
ln ⎜⎜ 1 ⎟⎟ (4.36) (3.84) (4.45) (4.62) (2.29)
⎝ p3 ⎠
β2 ⎛p ⎞ –0.17** –0.17* –0.19** –0.21** –0.19**
ln ⎜⎜ 2 ⎟⎟ (–1.98) (–1.95) (–2.23) (–2.36) (–2.14)
⎝ p3 ⎠
γ1 ln BR –0.047 –0.06* –0.09*** –0.10*** –0.059*
(–1.48) (–1.88) (–3.01) (–3.21) (–1.73)
θ1 T –0.02 –0.03 –0.023 –0.023 –0.05
(–0.65) (–0.99) (–0.74) (–0.79) (–1.57)
ν1 ⎛ NPL ⎞ –0.01 –0.002 –0.014 –0.011 0.044
ln ⎜ ⎟ (–0.34) (–0.06) (–0.46) (–0.37) (1.13)
⎝ L ⎠
ν2 ⎛ LA ⎞ –0.01* –0.015* –0.017* –0.02** –0.008
ln ⎜ ⎟ (–1.79) (–1.79) (–1.75) (–2.08) (–1.005)
⎝ TA ⎠
α11 ln y1 lny1 0.003 0.007 0.008 0.006 0.006
(0.26) (0.59) (0.63) (0.52) (0.41)
α22 ln y2 lny2 0.005 0.007 0.015 0.013 0.002
(0.27) (0.35) (0.78) (0.66) (0.12)
β11 ⎛p ⎞ ⎛p ⎞ 0.03 0.03 0.018 0.019 0.04
ln ⎜⎜ 1 ⎟⎟ ln ⎜⎜ 1 ⎟⎟ (1.21) (1.25) (0.71) (0.76) (1.42)
⎝ p3 ⎠ ⎝ p3 ⎠
β22 ⎛p ⎞ ⎛p ⎞ 0.005 0.016 0.032** 0.03** 0.009
ln ⎜⎜ 2 ⎟⎟ ln ⎜⎜ 2 ⎟⎟ (0.38) (1.06) (2.001) (1.98) (0.59)
⎝ p3 ⎠ ⎝ p3 ⎠
γ11 ln BR ln BR –0.02 –0.021 –0.019 –0.02 –0.006
(–1.53) (–1.33) (–1.25) (–1.34) (–0.37)
θ2 t2 –0.013*** –0.009** –0.019*** –0.019*** –0.003
(–2.80) (–1.99) (–3.35) (–3.52) (–0.81)
α12 ln y1ln y2 –0.10*** –0.10*** –0.11*** –0.11*** –0.06*
(–3.73) (–3.59) (–3.99) (–4.15) (–1.81)
(continued )


β12 ⎛p ⎞ ⎛p ⎞ 0.002 –0.009 –0.007 –0.007 –0.018
ln ⎜⎜ 1 ⎟⎟ ln ⎜⎜ 2 ⎟⎟ (0.08) (–0.35) (–0.27) (–0.28) (–0.62)
⎝ p3 ⎠ ⎝ p3 ⎠
δ11 ⎛p ⎞ –0.03 –0.016 –0.006 –0.003 –0.002
ln y1ln ⎜⎜ 1 ⎟⎟ (–1.19) (–0.51) (–0.19) (–0.12) (–0.06)
⎝ p3 ⎠
δ12 ⎛p ⎞ 0.09*** 0.1*** 0.11*** 0.11*** 0.08**
ln y1ln ⎜⎜ 2 ⎟⎟ (3.77) (3.65) (4.72) (4.65) (2.16)
⎝ p3 ⎠
δ21 ⎛p ⎞ 0.04 0.02 0.019 0.02 0.012
ln y2 ln ⎜⎜ 1 ⎟⎟ (1.55) (1.007) (0.68) (0.8) (0.40)
⎝ p3 ⎠
δ22 ⎛p ⎞ –0.07** –0.06** –0.069*** –0.072*** –0.03
ln y2 ln ⎜⎜ 2 ⎟⎟ (–2.56) (–2.34) (–2.68) (–2.92) (–0.89)
⎝ p3 ⎠
ψ1 ln y1 ln BR 0.008 0.012 0.014 0.013 0.005

(0.49) (0.69) (0.82) (0.75) (0.29)
ψ2 ln y2 ln BR 0.07** 0.06** 0.06* 0.06** 0.04
(2.11) (1.98) (1.93) (2.16) (1.35)
ξ1 ⎛p ⎞ –0.05 –0.052 –0.092** –0.09*** –0.024
ln ⎜⎜ 1 ⎟⎟ ln b r (–1.24) (–1.31) (–2.38) (–2.61) (–0.62)
⎝ p3 ⎠
ξ2 ⎛p ⎞ 0.04 0.027 0.04 0.05 0.014

ln ⎜⎜ 2 ⎟⎟ ln b r (0.95) (0.67) (1.11) (1.34) (0.31)
⎝ p3 ⎠
Ø1 ln y1T –0.007 –0.01 0.002 0.003 –0.012
(–0.69) (–1.23) (0.19) (0.30) (–1.07)
Ø2 ln y2T 0.032** 0.037*** 0.024* 0.022* 0.03**
(2.40) (2.89) (1.72) (1.69) (2.54)
τ1 ⎛p ⎞ –0.001 –0.001 1.92 0.011 –0.009
ln ⎜⎜ 1 ⎟⎟T (–0.08) (–0.07) (1.01) (0.61) (–0.53)
⎝ p3 ⎠
τ2 ⎛p ⎞ –0.023 –0.02 –0.038** –0.033** –0.017

ln ⎜⎜ 2 ⎟⎟T (–1.58) (–1.55) (–2.49) (–2.24) (–1.05)
⎝ p3 ⎠
η1 cos(z1) –0.028 –0.02 –0.05** –0.05** –0.02

(–1.07) (–0.89) (–1.98) (–2.06) –0.87
λ1 sin(z1) –0.02 –0.005 –0.004 –0.003 0.017
(–0.76) (–0.18) (–0.15) (–0.12) (0.55)
(continued )

η2 cos(z2) 0.023 0.03 0.05 0.04 0.0003
(0.66) (0.82) (1.54) (1.38) (0.01)
λ2 sin(z2) –0.02 –0.025 –0.036 –0.03 –0.029
(–0.82) (–0.83) (–1.14) (–1.07) (–0.97)
η11 cos(z1+z1) –0.005 –0.002 0.007 0.004 –0.005
(–0.23) (–0.12) (0.31) (0.24) (–0.22)
λ11 sin(z1+z1) 0.01 0.02 0.016 0.017 0.028
(0.87) (1.43) (1.03) (1.09) (1.07)
η22 cos(z2+z2) 0.039* 0.04** 0.06*** 0.068*** 0.03
(1.78) (2.04) (3.01) (3.17) (1.22)
λ22 sin(z2+z2) 0.003 0.008 0.018 0.02 0.0004
(0.13) (0.34) (0.71) (0.78) (1.52)
η12 cos(z1+z2) 0.01* 0.018** 0.017** 0.017* 0.01
(1.83) (2.16) (2.002) (1.96) (0.72)
λ12 sin(z1+z2) –0.01 –0.019 –0.015 –0.014 –0.006
(–1.14) (–1.32) (–1.04) (–0.94) (–0.34)
DUM1 sanctions –0.03 0.06**
(–1.44) (2.15)
DUM2 JCPOA –0.05** –0.04**
(–2.16) (–2.01)
DUM3 commercial –0.071** 0.004
(–3.05) (0.21)
DUM4 owner –0.08** 0.009
(–3.33) (0.84)
sigma-squared 0.13*** 0.1*** 0.33*** 0.28*** 0.06***
σ 2 = σ U2 + σ V2
(5.29) (5.45) (4.65) (4.94) (3.39)
Gamma 0.79*** 0.75*** 0.93*** 0.92*** 0.59***
σ U2
γ= (15.29) (11.10) (39.79) (36.49) (3.71)
(σ 2
U
+ σ V2 )
Log likelihood 34.17 35.44 41.68 42.54 36.52
function
LR test of the 13.01 13.78 26.66 27.39 10.49
one-sided error
Total number of 127 127 127 127 127
observations
Note: ***, **, and * represent significance at the 1%, 5%, and 10% levels, respectively (t-values in brackets).

1.2
1.0
0.8
0.6
0.4
0.2
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Based on model I Based on model II Based on model III

Based on model IV Based on model V
Figure 18.2 Annual average cost efficiency
Figure 18.2 summarizes the annual average cost efficiency scores from the residuals applying
five different models based on the five stochastic cost frontier models specified in Table 18.2.
The cost efficiency scores show a stable decreasing trend from 2006 to 2018 in all five models.
According to Model I, the mean efficiency score in the first year is 88.6%. This value indi-
cates that, to operate efficiently, banks could only reduce their input costs by 11.4% without
decreasing their outputs. According to all models, the highest scores of cost efficiency occur
in the initial years of the study while the final years show the lower scores of cost efficiency.
This indicates that, according to all models, the cost efficiency in Iran’s banking sector has
reduced after the tightening of the sanctions in 2006 and over the period from 2006 to 2018.
Table 18.3 shows the average cost efficiency scores for 12 Iranian banks over the period
from 2006 to 2018. Sina Bank has the maximum average cost efficiency score of 93.8%,
while Parsian Bank shows the minimum average cost efficiency score of 55.8% among the 12
banks and over the 2006–2018 period. These indicate that, to operate efficiently, Sina Bank, on
average, could only reduce its input costs by 6.2% while Parsian Bank could reduce its costs
by 44.2% to reach the efficient frontiers.
18.4.1 Technical Efficiency Effects Model for Partial Lifting of Sanctions
Many scholars in the early empirical literature, such as Pitt and Lee (1981) and Kalirajan
(1981), engaged in the illustration of the inefficiency effects. They took a two-stage approach.
In the first stage, the stochastic frontier production function is estimated and the technical inef-
ficiency effects are predicted based on the assumption that these inefficiency effects are caused
by appropriate distributions. In addition, the models for the technical inefficiency effects of
the stochastic frontier functions have been proposed by Kumbhakar and Lovell (2003) and
Reifschneider and Stevenson (1991).

Table 18.3 Average cost efficiency rankings of Iranian banks
ID Bank Cost efficiency Ranking

1 Eghtesad Novin Bank 0.715 6
2 Tejarat Bank 0.665 9
3 Karafarin Bank 0.638 10
4 Bank Mellat 0.696 7
5 Parsian Bank 0.558 12
6 Bank Pasargad 0.610 11
7 Refah Bank 0.919 2
8 Bank Saderat Iran 0.765 4
9 Bank of Industry and Mine 0.877 3
10 Sarmayeh Bank 0.672 8
11 Sina Bank 0.938 1
12 Export Development Bank of Iran 0.762 5
Eq. (18.5) specifies the stochastic cost frontier function. The deviation from the frontier
occurs because of the random shocks and statistical noise (Vit) as well as technical inefficiency
(Uit). Eq. (18.6) is a one-sided term reflecting technical inefficiency.
U it = δ0 + δ1 JCPOA+ θ it (18.6)
where i represents the number of banks, i = 1,2,. . ., N; t is time, t = 1,2,. . ., T; JCPOA is the
dummy variable for the Iran nuclear deal; and θit is a non-negative random variable following
the truncated normal distribution.
On 8 May 2018, President Trump announced that United States would withdraw from
JCPOA. Following the US’s withdrawal, the EU enacted an updated blocking statute to nullify
US sanctions on countries trading with Iran. The withdrawal caused concerns in Iran due to
its impact on the economy. Therefore, in this section, I examine whether the Iran nuclear deal
has been effective in reducing Iranian banks’ inefficiency after the US withdrawal or not. For
this purpose, I use two different dummies, JCPOA and JCPOA*, in two different technical
efficiency effects models as follows:
JCPOA: This takes the value of 1 for the years 2016–2017, i.e., after nuclear deal and before the US
withdrawal, and 0 otherwise.
JCPOA*: This takes the value of 1 for the years 2016–2018, i.e., after the nuclear agreement between
Iran and world powers, and 0 otherwise.
The results of the stochastic frontier cost function estimates using technical efficiency
effects model are presented in Table 18.4. The outputs (loans and investments) have positive
and significant impact on cost functions in both Models VI and VII. Consistent with previous
findings, the results shown in Table 18.4 reveal that the cost function is more sensitive to

Table 18.4 Parameter estimates and test statistics using the technical efficiency effects
model
Model VI Model VII

Parameters Variable Estimates Estimates
(t-ratio) (t-ratio)
Constant –3.88*** –1.45***
(–6.74) (–5.96)
α1 ln (y1) 0.97*** 1.02***
(4.67) (5.01)
α2 ln (y2) 0.55*** 0.57***
(2.71) (2.76)
β1 ⎛p ⎞ 0.45*** 0.52***
ln ⎜⎜ 1 ⎟⎟ (3.25) (3.67)
⎝ p3 ⎠
β2 ⎛p ⎞ –0.15* –0.16*
ln ⎜⎜ 2 ⎟⎟ (–1.89) (–1.73)
⎝ p3 ⎠
γ1 ln BR –0.047* –0.04
(–1.75) (–1.38)
θ1 T –0.089*** –0.087***
(–2.91) (–2.82)
ν1 ⎛ NPL ⎞ 0.081*** 0.081***
ln ⎜ ⎟ (2.93) (2.80)
⎝ L ⎠
ν2 ⎛ LA ⎞ (0.0026) 0.006
ln ⎜ ⎟ (0.36) (0.92)
⎝ TA ⎠
α11 ln y1 ln y1 0.019 0.019
(1.45) (1.44)
α22 ln y2 ln y2 0.008 0.007
(0.36) (0.33)
β11 ⎛p ⎞ ⎛p ⎞ 0.042 0.048*
ln ⎜⎜ 1 ⎟⎟ ln ⎜⎜ 1 ⎟⎟ (1.58) (1.75)
⎝ p3 ⎠ ⎝ p3 ⎠
β11 ⎛p ⎞ ⎛p ⎞ 0.017 0.006
ln ⎜⎜ 2 ⎟⎟ ln ⎜⎜ 2 ⎟⎟ (1.16) (0.42)
⎝ p3 ⎠ ⎝ p3 ⎠
γ11 ln BR ln BR –0.023 –0.026
(–1.39) (–1.61)
θ2 t2 –0.006 –0.006
(–1.39) (–1.51)
α12 ln y1ln y2 –0.091*** –0.094***
(–3.67) (–3.81)
(continued )

Model VI Model VII

(t-ratio) (t-ratio)
β12 ⎛p ⎞ ⎛p ⎞ –0.024 –0.019
ln ⎜⎜ 1 ⎟⎟ ln ⎜⎜ 1 ⎟⎟ (–0.81) (–0.65)
⎝ p3 ⎠ ⎝ p3 ⎠
δ11 ⎛p ⎞ –0.024 –0.05*
ln y1 ln ⎜⎜ 1 ⎟⎟ (–0.96) (–1.79)
⎝ p3 ⎠
δ12 ⎛p ⎞ 0.11*** 0.12***
ln y1 ln ⎜⎜ 2 ⎟⎟ (4.91) (4.88)
⎝ p3 ⎠
δ21 ⎛p ⎞ 0.036 0.055**
ln y2 ln ⎜⎜ 1 ⎟⎟ (1.25) (1.98)
⎝ p3 ⎠
δ22 ⎛p ⎞ –0.08*** –0.095***
ln y2 ln ⎜⎜ 2 ⎟⎟ (–3.17) (–3.67)
⎝ p3 ⎠
ψ1 ln y1 ln BR 0.012 0.0098
(0.6) (0.50)
ψ2 ln y2 ln BR 0.04 0.048
(1.31) (1.45)
ξ1 ⎛p ⎞ –0.03 –0.023
ln ⎜⎜ 1 ⎟⎟ ln b r (–0.86) (–0.59)
⎝ p3 ⎠
ξ2 ⎛p ⎞ 0.032 0.036
ln ⎜⎜ 2 ⎟⎟ ln b r (0.76) (0.86)
⎝ p3 ⎠
Ø1 ln y1T –0.002 0.003
(–0.18) (0.26)
Ø2 ln y2T 0.024* 0.018
(1.96) (1.35)
τ1 ⎛p ⎞ –0.012 –0.012
ln ⎜⎜ 1 ⎟⎟T (–0.59) (–0.63)
⎝ p3 ⎠
τ2 ⎛p ⎞ –0.004 –0.003
ln ⎜⎜ 2 ⎟⎟T (–0.27) (–0.22)
⎝ p3 ⎠
η1 cos(z1) –0.022 –0.026
(–0.78) (–0.89)
λ1 sin(z1) 0.037 0.028
(1.18) (0.89)
(continued )

Model VI Model VII

(t-ratio) (t-ratio)
η2 cos(z2) –0.006 –0.004
(–0.16) (–0.12)
λ2 sin(z2) –0.03 –0.02
(–0.84) (–0.63)
η11 cos(z1+z1) –0.005 –0.003
(–0.21) (–0.11)
λ11 sin(z1+z1) 0.044*** 0.031***
(3.47) (2.07)
η22 cos(z2+z2) 0.03 0.03
(1.36) (1.29)
λ22 sin(z2+z2) –0.011 –0.023
(–0.45) (–0.88)
η12 cos(z1+z2) 0.03*** 0.03***
(3.61) (3.19)
λ12 sin(z1+z2) –0.027 –0.03*
(–1.63) (–1.79)
Constant in the equation 3.67*** 0.88
of cost inefficiency (4.79) (1.14)
DUM2 JCPOA –0.051***
(–6.05)
DUM5 JCPOA* –0.013
(–1.42)
sigma-squared 0.047*** 0.04***
σ 2 = σ U2 + σ V2
(7.25) (8.06)
(
γ = σ U2 / σ U2 + σ V2 ) Gamma 0.99
(190.33)***
0.99
(1.75)
Log likelihood function 28.19 27.94
LR test of the one-sided 3.34 2.85
error
Total number of 127 127
observations
loans than investments. Hence, a 1% increase in loans could increase the total cost by 0.97%
(1.02%) in Model VI (Model VII). In the case of investments, a 1% increase could increase the
total cost by 0.55% (0.57%) in Model VI (Model VII). This implies that the loans remain an
important contributor to the cost function in the Iranian banking system. The price of labor (as
a percentage of the price of capital) and also the ratio of non-performing loans to total loans
have positive and statistically significant impacts on total costs (as a percentage of the price
of capital) in both Models VI and VII. A 1% increase in the ratio of non-performing loans to
total loans increases the ratio of total costs to the price ofSajjad
capital by Dizaji
Faraji 0.08%.
- 9781839102721
For the inefficiency models the two nuclear deal dummies (i.e., JCPOA and JCPOA*) are
negative, but JCPOA* is not statistically significant. This indicates that the nuclear agreement
between Iran and the world powers had been successful in reducing the Iranian banks’ inef-
ficiency before the US withdrawal. However, after the US withdrawal, it could not contribute
significantly to Iranian banks’ efficiency.
18.5 CONCLUSION
This study has employed a stochastic cost frontier model to analyze panel data and to estimate
the impact of imposing and lifting sanctions on the cost efficiency of banks in Iran. The
estimation results are based on an econometrics frontier model that permits the incorporation
of multiple inputs and multiple outputs in determining the relative efficiency. I have adopted
time-varying models proposed by Battese and Coelli (1995) to estimate banks’ cost functions
based on the error components model in panel data. Additionally, I have applied technical
efficiency effects models, which simultaneously estimate the stochastic cost frontier and the
equation of inefficiency with panel data. Previous studies largely focused on the production
frontier of the DEA and used data from only a single year. By using the time-varying model
and panel data, I have trended the cost efficiency of banks during the different episodes of
financial sanctions against Iran’s banking system and over the period from 2006 to 2018.
This period also includes the years when a nuclear agreement was reached between Iran and
a group of world powers: the P5+1 (the permanent members of the United Nations Security
Council—the United States, the United Kingdom, Russia, France, and China—plus Germany)
and the European Union.
The findings show that the values of loans and investments as well as the price of labor
caused positive and statistically significant impacts on Iranian banks’ costs during the period
under sanctions. Moreover, there is evidence regarding the positive impact of the ratio of
non-performing loans to total loans and the negative impact of the number of branches on the
banks’ costs. The estimated cost efficiencies based on the Fourier-Flexible form of the cost
function reveals that Iranian banks’ cost efficiencies experienced a decreasing trend after the
tightening of the sanctions in 2006 and over the period from 2006 to 2018. According to the
applied dummies for private and commercial banks, the results indicate that both private and
commercial banks performed better than government-owned and development banks during
the sanctions period in terms of their total costs.
Although the more intensive sanctions have had a larger (and increasing) impact on banks’
costs, the applied dummy for joint comprehensive action indicates that the nuclear agreement
has reduced banks’ costs. The results of technical efficiency effects models reveal that the
JCPOA was effective in reducing the banks’ inefficiency before the US withdrawal. However,
after the US withdrawal, the agreement was not successful in reducing Iranian banks’ inef-
ficiency. This research has investigated the impact of sanctions in general on the performance
of the banking system by considering the intensity of sanctions and without taking into account
the types of sanctions. Different types of sanctions may have different impacts on the banking
system. Future research should focus on the direct impact of targeted sanctions imposed on
Iran’s banks. It also will be important that future research categorizes and investigates indirect
impacts of other types of sanctions, including trade restrictions and financial sanctions on the
costs and performance of Iran’s banks.

NOTES
* This research was done as a Part of Project # NPRP12S-0310-190280 “Economic, political and security aspects
of sanctions and blockades from a target country perspective: policy lessons for Qatar and other target countries”,
funded by the Qatar National Research Fund.
1. The global financial crisis of 2008–2010 happened during the period under study. However, the existing studies
point out that Islamic financial systems were affected to a lesser extent than conventional banks (Hasan and Dridi,
2011). Moreover, the relative isolation from the world’s economy alleviated the negative impact of the global
financial crisis on Iran’s banks. Therefore, I have not considered it in my study.
2. Government-owned banks are usually considered to function poorly as financial intermediaries.
3. When using a translog cost function, one has to assume that the banking industry’s true cost function has the
translog form. If this maintained hypothesis is false, misspecification problems occur. When using the Fourier-
Flexible functional form, one avoids holding any maintained hypothesis by allowing the data to display the true
cost function through a large value of fitted parameters (Mitchell and Onvural, 1996; Berger et al., 1993).
4. The dependent variable in regression analysis is the log of total costs (as the percentage of p3). I have used a
dummy variable for JCPOA. It takes the value of 1 after the agreement and before withdrawal of the US (period
from 2016 to 2017) and 0 otherwise. The estimated coefficient for the JCPOA dummy variable is −0.05 and −0.04
in Models I and V respectively. Then the negative effects on total cost are (exponential value of (−0.05) −1)*100
for Model I and (exponential value of (−0.04) −1)*100 for Model V, which are approximately 4.87% and 3.92%,
respectively. See Dizaji (2018) and Hufbauer and Oegg (2003) for similar perspectives regarding the interpreta-
tion of similar dummy variables.
REFERENCES
Aigner, D.J., Lovell, C.A.K. and Schmidt, P. (1977), Formulation and estimation of stochastic frontier production
function models. Journal of Econometrics, 6, 23–37.
Anwar, M. (1992), Islamic banking in Iran and Pakistan: A comparative study. The Pakistan Development Review,
31(4), Papers and Proceeding Part II, Eight Annual General Meeting of Pakistan Society of Development
Economists, Islamabad, January 7–9, 1992, Winter 1992, 1089–1097.
Battese, G.E. and Coelli, T.J., (1995), A model for technical inefficiency effects in a stochastic frontier production
function for panel data. Empirical Economics 20, 325–332.
Bergeijk, P.A.G. van (2015), Sanctions against Iran – A preliminary economic assessment. In Iana Dreyer, José Luengo-
Cabrera (eds), On Target? EU Sanctions as Security Policy Tools, EUISS: Brussels (pp. 49–56). doi:10.2815/710375.
Berger, A.N. (1993). Distribution free estimates of efficiency in the U.S. banking industry and tests of the standard
distributional assumptions. Journal of Productivity Analysis 4, 261–292.
Berger, A.N. and Humphrey, D.B. (1997), Efficiency of financial institutions: International survey and direction for
future research, European Journal of Operational Research, 98, 175–212.
Berger, A.N., Hunter, W.C. and Humphrey, D.B. (1993), The efficiency of financial institutions: A review and preview
of research, past, present and future, Journal of Banking and Finance, 17, 221–250.
Caruso, R. (2003), The impact of international economic sanctions on trade: an empirical analysis. Peace Economics,
Peace Science and Public Policy, 9(2), Article 1.
COMCEC (2017), Diversification of Islamic financial instruments. COMCEC Coordination Office, October.
Devarajan, S. and Mottaghi, L. (2015), Economic implications of lifting sanctions on Iran, Middle East and North
Africa Quarterly Economic Brief, July, World Bank, Washington, DC.
Dizaji, S.F. (2013), Financial sanctions and Iranian banks’ performance, Journal of Money and Economy 8(4), 99–136.
Dizaji, S.F. (2014), The effects of oil shocks on government expenditures and government revenues nexus (with an
application to Iran’s sanctions), Economic Modelling 40, 299–313.
Dizaji, S.F. (2018), Economic diplomacy in Iran: Reorientation of trade to reduce vulnerability. In Bergeijk, P.A.G. van
and Moons, S. (eds), Research Handbook on Economic Diplomacy: Bilateral Relations in a Context of Geopolitical
Change. Cheltenham and Northampton, MA, Edward Elgar (pp. 273–296).
Dizaji, S.F. (2019), Trade openness, political institutions, and military spending (evidence from lifting Iran’s sanc-
tions), Empirical Economics, 57 (6), 2013–2041.
Dizaji, S.F. and Bergeijk, P.A.G. van (2013), Potential early phase success and ultimate failure of economic sanctions:
A VAR approach with an application to Iran. Journal of Peace Research 50(6), 721–736.
Dizaji, S.F., Farzanegan, M.R. (2021), Do sanctions constrain military spending of Iran?, Defence and Peace
Economics, 32(2), 125–150.
Elyasiani, E. and Mehdian, S. (1990), Efficiency in the commercial banking industry, a production frontier approach,
Applied Economics, 22, 539–551.

Erdogan, S., Gedikli, A. and Derindag, M.R. (2020), An investigation of Iran’s banking system: Challenges and
remedies, bilimname XLI, 1, 957–990.
Fare, R., Grosskopf, S. and Lovell, C.A.K. (1994), Production Frontiers. Cambridge University Press, Cambridge.
Farrell, M.J. (1957): The measurement of productive efficiency, Journal of the Royal Statistical Society, 120, 253–281.
Farzanegan, M.R. and Hayo, B. (2019), Sanctions and the shadow economy: Empirical evidence from Iranian
provinces, Applied Economics Letters, 26, 501–505.
Fried, H.O., Lovell, C.A.K., Schmidt, S.S. (eds) (1993), The Measurement of Productive Efficiency: Techniques and
Applications. Oxford University Press, New York.
Girardone, C., Molyneux, P. and Gardener, E.P.M. (2004), Analyzing the determinants of bank efficiency: The case
of Italian banks. Applied Economics, 36(3), 215–227.
Haidar, J.I. (2017), Sanctions and export deflection: Evidence from Iran, Economic Policy, 32(90), 319–355.
Hasan, M. and Dridi, J. (2011), The effects of the global crisis on Islamic and conventional banks: A comparative
study. Journal of International Commerce, Economics and Policy, 2(02), 163–200.
Hosseini, E.A. (2015), Legislation and case law: Provisional profit in Iran’s banking system: Same meat, different
gravy. Electronic Journal of Islamic and Middle Eastern Law (EJIMEL), University of Zurich, 3, 135–145.
Hufbauer, G.C. and Oegg, B. (2003), The impact of economic sanctions on US trade: Andrew Rose’s Gravity Model,
International Economics Policy Briefs, PB03-4, Institute for International Economics.
Hufbauer, G.C., Schott, J., Elliott, K.A. and Oegg, B. (2007), Economic Sanctions Reconsidered, 3rd edn, Institute
for International Economics, Washington, DC.
IFSB (2019), Data by country, https://www.ifsb.org/psifi_03.php.
ILIA (2016), Banking Industry Iran: Current Status, Opportunities, and Threats, http://www.ilia-corporation.com/
wp-content/uploads/2016/09/Banking-Industry-Iran-ILIA-Corporation-White-Paper-c.pdf.
IMF (2011), Islamic Republic of Iran: Selected Issues Paper, IMF Country Report, No. 11/242, August 2011, 1–28.
IMF (2017), Islamic Republic of Iran: Selected Issues Paper, IMF Country Report, No. 17/63, February 2017.
Iqbal, M. (2011), Islamic banking: Theory, practice, and evaluation, Journal of Islamic Business and Management,
1(1), 95–126.
Jahan-Parvar, M. (2013), The practice of central banking in the Islamic Republic of Iran: Is there room for reform?,
Future of Iran, Economy, Legatum Institute, Global Transitions, September 2013, 1–15.
Jondrow, J., Lovell, C.A., Materov, I.S. and Schmidt, P. (1982), On the estimation of technical inefficiency in the
Stochastic Frontier Production Model, Journal of Econometrics, 19, 233–38.
Kalirajan, K.P. (1981), An econometric analysis of yield variability in paddy production. Canadian Journal of
Agricultural Economics, 29, 283–294.
Kasman, A. (2002), Cost efficiency, scale economies, and technological progress in Turkish banking, Central Bank
Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, 2(1), 1–20.
Kumbhakar, S.C., Lovell, C.A.K. (2003), Stochastic Frontier Analysis. Cambridge University Press, Cambridge.
Meeusen, W. and Van den Broeck, J. (1977), Efficiency estimation from Cobb-Douglas production functions with
composed error, International Economic Review, 18, 435–444.
Mester, L.J. (1996), A study of bank efficiency taking into account risk preferences, Journal of Banking and Finance,
20, 1025–1045.
Mitchell, K. and Onvural, M.N. (1996), Economies of scale and scope at large commercial banks: Evidence from the
Fourier flexible functional form, Journal of Money, Credit, and Banking, 28, 178–199.
Parveen, T., Zadeh, E.L., MuzakkirSyed, A. (2015), Evolution of Islamic banking in Iran: Prospects and problems.
Journal of Business and Management, 17 (9), 61–66.
Pitt, M.M., Lee, L.F. (1981), Measurement and sources of technical inefficiency in the Indonesian weaving industry.
Journal of Development Economics 9, 43–64.
Rajaei-Baghsiyaei, M. (2011), The contribution of Islamic banking to economic development (The case of the Islamic
Republic of Iran). A thesis submitted in fulfilment of the requirements for the degree of doctor of philosophy at the
School of Government and International Affairs Durham University.
Reifschneider, D., Stevenson, R. (1991), Systematic departures from the frontier: a framework for the analysis of firm
inefficiency. International Economic Review 32, 715–723.
Sabtan, B., D.M. Kilgour and R. Kinsara, 2021, Economic sanctions within the graph model for conflict resolution.
In P.A.G. van Bergeijk (ed.), Research Handbook on Economic Sanctions, Edward Elgar, Cheltenham, Chapter 17.
Schmidt, P. and Sickles, R.C. (1984), Production Frontier and Panel Data, Journal of Business and Economic
Statistics, 2, 367–374.
Shephard, R. (1970), Theory of Cost and Production Functions, Princeton University Press, Princeton, NJ.

19. Tourism and sanctions
C. Michael Hall and Siamak Seyfi
19.1 INTRODUCTION
Although often framed in terms of holiday travel, tourism refers to the voluntary temporary
mobility for periods of usually less than one year. Tourism therefore does include short-term
domestic or international vacations but, often even more importantly than the holiday market,
it also includes visiting friends and relations (VFR), business travel, and travel for health and
educational reasons. The amount of travel generated by tourism activities is enormous. For
example, sometime between 2015 and 2017 the total number of tourist arrivals (international
and domestic tourist trips combined) became for the first time greater than the world’s popula-
tion, at over 7.5 billion trips (Hall 2015).
Tourism ranks as one of the largest economic sectors together with fuels, chemicals, and
food, generating an estimated 10.3% of world gross domestic product (GDP) in 2019 (World
Travel and Tourism Council [WTTC] 2020). Its economic significance cannot be overstated.
Following the Global Financial Crisis, tourism became one of the five top export earners
in over 150 countries and therefore a major source of foreign exchange, while in around
two-fifths of these countries it is the number one export sector (UNEP 2011). Travel and
tourism services account for more than 50% of the services exports of the Least Developed
Countries (LDC) (UN Office of the High Representative for the Least Developed Countries,
Landlocked Developing Countries and Small Island Developing States [UN-OHRLLS]
2018). It is therefore perhaps not surprising that given its economic importance, tourism
has become an important element for many countries in the achievement of the Sustainable
Development Goals (UNWTO and UNDP 2017; Hall 2019). Under the central projections
of the United Nations World Tourism Organization (UNWTO) (2012, 2014) the number
of international tourist arrivals is forecast to increase an average of 3.3% per year between
2010 and 2030 (representing an average increase of 43 million arrivals a year), reaching an
estimated 1.8 billion international arrivals by 2030 (Table 19.1). Although these figures will
clearly be affected by COVID-19, the WTTC estimating that the pandemic led to a 72% drop
in international tourists in the first half of 2020 (BBC, 2020), it needs to be noted that until
2020 international tourism growth was occurring at the very high end of UNWTO forecasts.
Therefore, despite the COVID-19 pandemic and assuming no full return of the industry until
2023 or 2024, international tourism will still likely achieve its original UNWTO forecast of
the number of international arrivals at the global scale by 2030, although the relative growth
arrivals forecast for emerging economies in 2030, which was expected to be double the pace
of arrivals in advanced economies, is unlikely.
Yet despite the economic significance of tourism, analysis of the way in which tourism is
incorporated into foreign policy and international relations is limited (Mosedale 2010; Hall D.
2017). This is surprising given the way that limits of the movement of people across interna-
tional borders is a common feature of sanctions regimes. Indeed, in many ways the remarkable
growth in the application of economic sanctions (Cortright and Lopez 2018) matches that of
351
C. Michael Hall and Siamak Seyfi - 9781839102721
Table 19.1 International tourism arrivals and forecasts 1950–2030
Year World Africa Americas Asia and Pacific Europe Middle East
1950 25.3 0.5 7.5 0.2 16.8 0.2
1960 69.3 0.8 16.7 0.9 50.4 0.6
1965 112.9 1.4 23.2 2.1 83.7 2.4
1970 165.8 2.4 42.3 6.2 113.0 1.9
1975 222.3 4.7 50.0 10.2 153.9 3.5
1980 278.1 7.2 62.3 23.0 178.5 7.1
1985 320.1 9.7 65.1 32.9 204.3 8.1
1990 439.5 15.2 92.8 56.2 265.8 9.6
1995 540.6 20.4 109.0 82.4 315.0 13.7
2000 687.0 28.3 128.1 110.5 395.9 24.2
2005 806.8 37.3 133.5 155.4 441.5 39.0
2010 940 49.7 150.7 204.4 474.8 60.3
b
2019 1 460 71.9 219.5 360.1 743.7 65.1
forecast
2020a 1 360 85 199 355 620 101
2030 1 809 134 248 535 744 149
a. Original UNWTO forecast

b. UNWTO provisional data
Source: World Tourism Organization 1997; UN World Tourism Organization 2012, 2014, 2020.
international tourism. This apparent relationship should not be surprising as it reflects the
growing intensity and scale of economic globalization and associated transport connectivity
and therefore the increased capacity of economic sanctions to have effect as an instrument in
international geopolitics and relations (Eriksson 2011; Brzoska 2015; Biersteker, Eckert, and
Tourinho 2016; Lopez and Cortright 2018).
In a tourism context, Hall (2005) viewed sanctions as part of a type of “carrot-and-stick”
trade diplomacy in which sanctions on access to a country by tourists from a sanctioning
country was a stick for which measures might range from increased visa costs or limitation
through to prohibition on access. In contrast “carrot” type measures would include the estab-
lishment of bilateral or multilateral agreements that provide for visa-free access to one country
for nationals of another, or a measure that allows market access to outbound tourists. China
makes extensive use of outbound tourism as a tool of economic statecraft, whereby access
to this market is either constrained or expanded, depending on broader political-economic
goals (Lim, Ferguson, and Bishop 2020). For instance, following the Australian government’s
support for an independent inquiry into the origins of COVID-19, China immediately reacted
and warned of a potential complete ban on package tours to Australia and international student
travel unless Australia became more understanding of China’s perspectives (Chandler and
Yang 2020). Such concerns may even be further expanded if existing sanctions regimes also

Tourism and sanctions 353
serve to curtail the capacity of some countries to access vaccines should they become available
in the future (Seyfi, Hall, & Shabani 2020) or do not join the development of recognized new
international travel protocols and vaccine certificates for COVID-19.
Historically, countries subjected to sanctions are usually neither a main international tour-
ism destination nor influential in terms of global tourism-generating markets (e.g., Iran, North
Korea, Syria) (Seyfi and Hall 2020b), although this does not negate the economic importance
of tourism for sanctioned countries and especially as a source of foreign exchange (Seyfi and
Hall 2020a). However, the application of sanctions against Russia and Turkey, two of the main
national actors in the global tourist system, provides new perspectives on sanctions issues in
relation to tourism. This chapter therefore provides cases of Iran and Cuba as countries that
have long been subject to sanctions; Russia as one of the main international tourism-generating
markets that was exposed to international sanctions after its 2014 annexation of Crimea; and
Turkey as a major international tourism destination that suffered Russian sanctions following
the incursion of a Russian military aircraft into Turkish airspace in 2015.
This chapter is divided into three main sections. The first provides a brief review of the
limited literature on tourism and sanctions. Second, it explores the Iranian, Cuban, Turkish,
and Russian cases of sanctions. Finally, it highlights commonalities in the main adaptation
tactics between sanctioned states, despite significant differences in terms of tourism develop-
ment, market, and, above all, the nature of the sanctions. The chapter then concludes by noting
potential future research directions.
19.2 SANCTIONS AND TOURISM
Despite substantial post-Cold War growth in the use of sanctions as a foreign policy instrument
(see Chapter 4 of this volume by Kirilakha et al.), there is limited research on sanctions in a
tourism context despite their substantial impact on destinations and tourist flows (Seyfi and
Hall 2019, 2020a, b, c). Although there is significant research on sanctions in political science,
international relations, economics, and public policy, relatively few studies explicitly examine
the effect of sanctions on tourism (Hall 2017). Nevertheless, tourism is profoundly affected
by sanctions impacting tourism and hospitality businesses and destination image, severely
restricting international travel, and disrupting financial investment and supply chains. More
comprehensive sanctions may lead to substantial economic and personal hardship in destinations
as well as indirect effects including declines in the value of currency and inflationary pressures
(Seyfi and Hall 2019, 2020a, b, c). A major effect of sanctions is that the destination image of
sanctioned countries and their promotion and attractiveness as a tourism destination is severely
affected in some target markets in the sanctioning countries. This highlights the reverse causality
of sanctions regimes which show, for instance, how violations of human rights may generate
both avoidance by tourists and lead to sanctions. Moreover, tourism is important as an economic
sector that includes transport, accommodation, restaurants, retail, and supply services, within
which women are historically extremely prominent because of the service dimension as well
as notions of hospitality provision. Therefore, sanctions that affect tourism have been shown to
disproportionately affect women and can therefore considerably reinforce gender divisions and
empowerment in targeted countries (Seyfi, Hall and Vo-Thanh 2020a).
Seyfi and Hall (2019) identified four main types of sanctions (financial, sectoral, diplomatic,
and individual) that have different implications for tourism at various scales. Sanctions can be

unilateral and multilateral and can be targeted at individuals, organizations, and/or the govern-
ing regimes. They also range in scope from economic and financial sanctions to restrictions
on travel and cross-border mobility. Other sanctions may focus specifically on diplomatic
engagement (such as restricting the diplomatic services one country can offer in another or
the numbers of diplomatic staff) or on a particular industry sector, such as travel or transport.
Significantly, such restrictions may operate on third parties, for example, restrictions on
organizations in third countries that trade with the sanctioned country or on third-country trade.
These challenges are particularly critical for emerging destinations. In such destinations,
the volatility of tourism is strongly felt, in particular among the sectors reliant on foreign
partners. The imposition of sanctions can create a negative image of a destination in some
markets (Khodadadi 2016) and increase perceived risk, and thus contribute to fewer tourist
arrivals. Sanctions also negatively influence the socio-economic status of the population in
sanctioned countries by increasing poverty and widening the income gap and affecting the
level of disposable income that might be used, for example, for domestic tourism, thereby
further affecting the tourism economy. For example, as a result of the sanctions imposed on
Iran, Iranians’ living standards have been adversely affected with Iranian workers losing 90%
of their purchasing power over the sanctions period (Seyfi and Hall 2018a). Many of those
affected in the sanctioned countries are middle class people who are otherwise consumers of
tourist services. For example, following EU and US sanctions against Russia’s annexation
of the Crimea, tourist flows from Russia to Europe have reduced (Ovcharov, Ismagilova,
Ziganshin, and Rysayeva 2015). The sanctions contributed to the collapse of the Russian ruble,
affected the image of Russia in tourism and investment terms, and contributed to the Russian
financial crisis, which led to the decline of leading Russian players in the tourist market (ibid.).
Similarly, in their study on tourism development in Serbia, Popesku and Hall (2004) noted
that due to the economic sanctions then in place, Serbia became isolated from the international
tourism market, which became a major issue along with regional and political change for the
long-term development of tourism in Serbia. Furthermore, even without sanctions on nation-
als, outbound mobility is also potentially restricted, given the resulting currency devaluation
in the sanctioned countries, which can lead to the overall reduction in tourist trips and tourist
expenditure.
Nearly all of the research which has been undertaken in tourism on sanctions has focused
on the sanctions target, and especially the country or, in tourism terms, the destination, rather
than the political rationale of the sanctioning party to focus on tourism. As such, it is difficult
to know in policy terms whether tourism is a deliberate target in sanctions policy or whether
it is an affected byproduct of other policy goals. Tourism, per se, is not usually stated as the
focus of sanctions, although the travel of individuals is, and the discussions that surround the
development of sanctions, for example, reduced travel to Cuba from the United States, will
often recognize that tourism will be the sector that will be hit (see the case of Cuba and the
United States discussed below). Nevertheless, from a destination perspective considerable
interest has been given to tourism’s role in the “resistive economy” (Seyfi & Hall 2019), a term
used to describe the economic adaptive and coping strategies applied by sanctioned states. The
term was first used in 2005 to describe attempts to maintain the regional economy following
the blockade of Gaza by Israel (Isaac, Hall, and Higgins-Desbiolles 2015) and has since been
adopted in Iran to describe the various economic responses to sanctions (Smyth 2015).
Seyfi and Hall (2020a) examined the coping responses of Iran to a wide range of sanctions
imposed on the country. They found that in its macro policy strategy, Iran had attempted to

develop a resistive economy in order to circumvent the US sanctions and remain resilient to
sanctions in the long term. Ideas of greater economic self-reliance are a significant part of secu-
rity discourse (Tsygankov 2002), as well as some strands of sustainable development thinking
applied in a regional, urban, and community context (Rees 1997; Midmore and Thomas 2008;
Gupta 2014). In the case of Iran, the notion of a resistive economy was used to refer primarily
to nullifying the negative effects of sanctions by making the economy more self-sufficient,
reducing dependence on oil and gas revenue, introducing fiscal austerity, increasing produc-
tion, and strengthening the economic role of science and technological innovation (Esfandiari
2012). In a tourism context, Seyfi and Hall (2019) identified several major resistive strategies
in Iran’s response to sanctions: first, the attraction of international tourists from “friendly
countries” which, in the case of Iran, include Russia, China, and neighboring countries which
may ignore American sanctions; second, increased promotion to the international Persian
diaspora; third, the greater focus on domestic tourism as a relatively viable solution to the
long-term effects of sanctions; and fourth, the promotion of the country as a “cheap destina-
tion” due to its currency devaluation as well as low-cost specialist products, such as medical
tourism. This latter strategy has become an important means of attracting visitors, especially in
budget markets such as backpackers, who are also likely to be willing to use cheaper accom-
modation offerings and to visit regions outside of the main cities. Nevertheless, the adaptations
mechanism of other destinations with different types of sanctions (multilateral, regional and
unilateral) whose level of tourism development or markets are different, as well as the micro
and meso policy strategies, are yet to be fully explored. These are detailed later in the chapter.
19.3 CASE STUDIES
19.3.1 United States Embargo Against Cuba
The United States economic and financial embargo against Cuba is one of the longest trade
embargoes of the contemporary era (Wilson and Látková 2016). The United States first
imposed an arms embargo on Cuba on March 14, 1958, under the Fulgencio Batista regime.
On October 19, 1960, almost two years after the fall of the Batista regime, the United States
imposed an embargo on exports to Cuba, with the exception of food and medicine, after Cuba
nationalized American-owned oil refineries in response to the US role in the Cuban missile
crisis. On February 7, 1962, the embargo was extended to almost all exports.
In 1958, the United States accounted for 67% of Cuban exports and 70% of its imports.
Cuba, on the other hand, accounted for 3% of US exports and 4% of imports, placing the island
in seventh place for exports and imports (Balin 1960). From the early years of the embargo,
official trade between the two countries was completely eliminated. The Cuban government
estimates the total effect of the embargo to be at least $70 billion and potentially more, taking
into account lost export revenues, additional import costs (the island could have bought
cheaper US products) and substantially reducing economic growth (Wilson and Látková
2016). Nevertheless, the embargo had a limited effect on Cuba in the early decades as the island
was supported by the Soviet Union and the Council for Mutual Economic Assistance (CMEA1)
countries, which provided it with fuel, consumer goods, and subsidies in exchange for sugar
and nickel. While relations between Cuba and the United States deteriorated rapidly after
the Cuban revolution and the resulting expropriation and nationalization of businesses, the

island was cut off from its traditional market as a result of the US travel embargo on American
citizens traveling to Cuba (Gordon 2016).
Cuba, which has been under Washington’s embargo since 1962, has been confronted with
a travel ban that limits the mobility of American citizens. It is one of the oldest prohibitions
on travel and mobility to a destination (Macaulay 2007). Cuban tourism declined to record
low levels in the two years following Castro’s accession to power. Under the Cuban Asset
Control Regulations, persons subject to US jurisdiction must obtain a license to carry out any
transaction related to travel to or from Cuba. Transactions related solely to tourist trips are not
subject to licensing. American citizens whose main interest is tourism may be able to travel
under the auspices of a program whose activities are basically religious, educational, cultural,
or otherwise exempt to qualify for a license. However, such programs have shifted according
to the preferences of the President who is in power and domestic politics, especially in Florida,
which has a substantial Cuban diaspora (Seyfi and Hall 2020a).
Due to the embargo, a traveler visiting Cuba may face very serious financial complications
because of the long extranational reach of US law in terms of banks and financial institutions
that trade in US dollars. Bank cards (debit cards issued by a bank) from all countries are use-
less. For Americans, credit and debit cards from American financial institutions do not work
in Cuba. For all others, any credit card issued by a foreign bank with a US parent company
or processing company is also blocked. Sanctions also prevent US companies from engaging
in commercial transactions with Cuban state-owned companies managed by the armed forces
and intelligence and security institutions.
Educational activities or “people-to-people exchanges” were one of 12 authorized categories
of travel for Americans wishing to travel to Cuba. This allowed Americans to travel to Cuba
for educational activities and cultural exchanges. It was originally created by President Bill
Clinton in 1999 to override the embargo to enable US citizens to travel to Cuba to participate
in some educational exchanges. This travel category was halted by President Bush in 2003
and reopened by President Obama in 2011. In December 2014, in the light of the restoration
of diplomatic relations with Cuba under Obama’s administration, travel restrictions were also
relaxed for tour operators and cruise lines. Following the revision of the travel advisory on
Cuba and the lifting of the US travel ban on Americans visiting the country, there was a huge
increase in the number of American tourist arrivals in the country. The number of American
travelers recorded the fastest growth in 2017, rising from 1,173,428 (+19% compared to
2016). In addition, major US airlines began to restore direct flights to Cuba from Miami or
other US points that had been suspended since the 1960s. However, in 2017, President Trump
announced a return to the strict policies in place before President Obama’s term in office,
forcing Americans to leave the country. The Trump administration also imposed new sanctions
on the Cuban tourism industry, what is now a key sector for the island’s economy. Washington
also banned Americans from traveling to Cuba on group trips. These were guided tours organ-
ized by accredited service providers, with visitors required to avoid financial transactions
with companies under military control on the island, including some hotels and restaurants.
Sanctions were also reimposed on cruise, fishing, or recreational and passenger vessels as well
as commercial aircraft. This decision resulted in the immediate cancellation of some 800,000
reservations, according to the Cruise Lines International Association, the largest professional
group in the cruise industry in the world (Leposa 2019).
The new sanctions package targeted around 180 entities (including, for example, the
recently opened five-star Kempinski Hotel in Havana, travel agencies, Crucero del Sol and

Gaviota Tours) and also European investors in Cuba’s tourism and hotel industry. These sanc-
tions placed many constraints on the tourism sector and online tour operators. For example,
online travel giant Expedia agreed to pay more than $325,000 to the US government to settle
allegations that it had helped 2,221 people—including Cuban nationals—through travel
services, violating US sanctions (Associated Press 2019). Such actions had a substantial
economic impact given that tourism had become one of the activities that brought the most
foreign currency into Cuba. After the sale of medical services, itself often related to travel,
tourism is the island’s second largest economic activity, with an estimated income of $2.5
billion per year (Apollo and Rettinger 2019).
As a result of the sanctions, online travel agencies were fined and removed several Cuban
hotels from their offers, fearing that they would be the subject of complaints under the US
Helms–Burton Act. Chapter III of this Act, which came into force in May 2019, allows
Cuban exiles to sue companies that made profits from nationalized companies after the
Cuban revolution of 1959 in US courts. Since 1996, and to avoid friction with many allies,
successive US administrations had not activated this article. President Trump gave the
green light for its application in May 2019. The European Union and Canada, whose com-
panies are the main investors in Cuba, particularly in the tourism and extractive industries,
denounced the Trump government’s implementation of Title III of the Act (Reuters Staff
2019). The Trump administration’s blacklisting of Gaviota implies that no US corporations
or individuals are allowed to do business with the hotel group or invest in any expansion
of Cuba’s tourist infrastructure (Moya-Ocampos 2018). This has many implications for the
island’s tourism industry as this investment ban may force Cuba to turn to the domestic
or foreign private sector (mainly French and Spanish investors) to maintain, modernize,
and develop its tourism infrastructure. Yet, foreign investors face high compliance and
regulatory risks as they are exposed to the extra-territorial effects of the US embargo on
Cuba and are not allowed to conduct transactions through the US financial system or in US
dollars and they are excluded from the US market (Stoll et al. 2020). President Joe Biden
has stated that he wants the US to return to the Obama policy of engagement. However, the
damage wrought by the Trump presidency on Cuba’s tourism economy may take some time
to restore without appropriate confidence-building measures between the two governments
(CNN Newsource, 2021).
19.3.2 International Sanctions Against Iran: Comprehensive Sanctions
Iran has been subject to one of the longest and strongest sanctions regimes in history (Seyfi and
Hall 2018a, b; Pratt and Alizadeh 2017; Takeyh and Maloney 2011; Carswell 1981; Esfandiary
and Fitzpatrick 2011) for over 40 years. Few countries have suffered as many sanctions as Iran
(Coville 2015). Since the upheavals of the late 1970s that ousted Iran’s pro-US monarchy and
eventually replaced it with a theocracy hostile to the West with the establishment of the Islamic
Republic in 1979, the United States has sought to temper Iran’s geopolitical ambitions through
a range of foreign policy instruments, including economic sanctions (Takeyh and Maloney
2011). Since the early 1980s and following the 1979–1981 hostage crisis these instruments
have grown in their stringency. From 1995 to 2006, successive US governments increased
restrictions, including bans on oil trade with Iran, which they consider to be a state that
supports terrorism. At the time of writing, the United States has over 8,000 sanctions in place
worldwide, with Iran by far the largest state target (Gilsinan 2019). More recently, Wadhams

and Mohsin (2020) reported that the Trump administration took more than 3,900 distinct
sanctions actions against Iran, with a surge in 2018, when the administration pulled out of
the 2015 nuclear deal. No previous administration had exceeded 700 sanctions actions a year.
Following the US withdrawal from the Iranian nuclear deal, officially known as the Joint
Comprehensive Plan of Action (JCPOA), President Trump’s administration aimed to cut
Iranian oil exports (which make up over 80% of its government budget) to zero as a part of a
strategy to change Iran’s behavior and to curb the country’s projection of regional power (Hall
and Seyfi 2018a). In a final effort to bring Tehran to the negotiating table, Washington extended
sanctions to any trading partner that establishes a dollar transaction for Iranian metals. This is
because the iron, steel, aluminum, and copper sectors account for 10% of the country’s export
value and are its main source of non-oil income.
The lifting of international sanctions following the 2015 nuclear agreement had transformed
Iran’s political and economic climate and created substantial opportunities for the struggling
tourism sector (Khodadadi 2016). Iran had experienced substantial growth in the number of
incoming tourists, visitor spending, employment, and investment in tourism-related infrastruc-
ture as a result of the initial lifting of sanctions. With the return of US economic sanctions,
tourism—and air transport in particular—was considerably affected. Several airlines such
as Air France, KLM, Lufthansa, Alitalia, and British Airways suspended their flights to Iran
with negative consequences for Iranian tourism while substantial international investment in
the Iranian accommodation sector was also dramatically halted (Seyfi, Hall and Vo-Thanh
2020a). As well as dramatically reducing international visitor numbers, the US actions also
served to reinforce a negative image of Iran in some Western markets which the Iranian tourism
industry had been seeking to overcome. An action which arguably has as great an impact on
international leisure travel to Iran as any effect of sanctions on international investment (Seyfi
and Hall 2018b).
19.3.3 Russia’s Sanctions Against Turkey: Unilateral Sanctions
The Russian-Turkish crisis of 2015 began on October 3 due to the incursion of a Russian
military aircraft into Turkish airspace and its subsequent shooting down (Şahin, Konak, and
Karaca 2017). This was the first time a NATO member state had shot down a Russian aircraft
since the Korean War. In retaliation for this event, Russia quickly imposed a series of economic
sanctions and punitive measures on Turkey that significantly affected Turkish companies
(including construction and food export companies), as well as the tourism industry (Cetin
et al. 2016). Restrictions were also imposed on Turkish companies operating in Russia and
Turkish citizens working for companies registered in Russia. In addition, Russia suspended
work on the TurkStream pipeline project (an alternative to the Russian South Stream pipeline
that allows gas to be transported to Europe without crossing Ukraine). This had a huge impact
on Turkey because it relied on Russia for 55% of its annual natural gas needs. Overall estimates
showed that the wide range of sanctions cost Turkey at least $10 billion (Cetin et al. 2016;
Şahin et al. 2017).
Many sectors, including tourism, were directly, immediately, and heavily affected by these
decisions. Among the restrictive measures, Russia restored the visa regime between Turkey
and Russia by ending the exemption that had existed between the two countries, thereby
making travel between the two countries more difficult. The Russian authorities also banned
all charter flights between the two countries and regular flights were subjected to additional

checks. In addition, Natali Tours, one of Russia’s largest tour operators, suspended the sale
of trips to Turkey, while Pegas Touristik, one of the largest Russian travel agencies, cancelled
all its reservations for Turkey. Rostourism, the federal tourism agency, also warned Russians
on holiday in Turkey about the risk of kidnapping by Daesh terrorists. All these restrictions
immediately affected Turkey’s tourism industry. At the time Russia was the second largest
tourism market for Turkey after Germany. Russian tourists accounted for about 12.2% of the
37 million arrivals in Turkey in 2014, and spent about $3 billion, or 0.3% to 0.4% of GDP
(Şahin et al. 2017).
Turkey’s seaside resorts were among the popular holiday destinations for Russians due
to their geographical proximity, holiday facilities designed according to the preferences of
Russian visitors, visa facilities, and the long tourist season in terms of climate (Cetin et al.
2016). All these sanctions and restrictions against Turkey severely affected Russian arrivals
in Turkey. The number of Russian visitors decreased by 76% in 2016, and Russian tourist
revenues decreased by 80% in 2016 compared to the previous year. As a result, many tourism
and hotel businesses were hit hard. According to estimates, Turkey lost $3.5 billion a year
in revenue from Russian tourists. According to the European Bank for Reconstruction and
Development (EBRD), Russian economic sanctions are estimated to have caused a loss of
0.7 growth points, which would represent a deficit of up to $9 billion for Turkey. Antalya,
the Mediterranean seaside resort in southwest Turkey and one of Turkey’s leading tourist
destinations, had been strongly focused on the Russian market and was consequently greatly
affected by the sanctions with 12,039 Russian tourists in the January–April 2016 season com-
pared to 210,657 in the same period in 2014 (Cetin et al. 2016). However, Russian relations
with Turkey have since been normalized and Russia became Turkey’s main inbound tourism
market with over seven million Russian arrivals in 2019, representing 15.6% of all arrivals
(Daily Sabah 2020).
19.3.4 Sanctions Against Russia: Multilateral and Smart Sanctions
Following the Russian military intervention in Ukraine in late February 2014 and the annexa-
tion of Crimea by Russia, the United States, the European Union, and other Western countries
and institutions put in place a series of economic sanctions against Russia. Initially, these
“smart” sanctions targeted certain personalities involved in the Crimean crisis by prohibiting
them from traveling and by freezing their financial assets (Sutyrin et al. 2019). Seventeen
Russian banking entities (including VTB, Bank of Moscow, Rosselkhozbank) were later
added to the list of sanctioned bodies. In addition, sanctions were imposed against several
other Russian military companies and Russian oil companies (e.g., Gazprom, Gazprom Neft,
Lukoil, Surgutneftegas, and Rosneft). In December 2014, the European Union imposed sanc-
tions on companies linked to the Crimea, both oil companies and those involved in maritime
transport, as well as companies investing in real estate and tourism in the Crimea. In response
to the economic sanctions put in place by these countries, Russia introduced counter sanctions,
including a food embargo in 2014 (Sutyrin et al. 2019).
Before the sanctions, Russian tourism was on a path of constant growth. The number of
independent hotels and global hotel chains (brands such as Hilton, Kempinski, Radisson SAS,
Novotel, and Park Inn) had increased. Many tourism indicators had shown a positive dynamic.
According to the UNWTO, by 2012, Russia was among the top 10 world leaders in terms of
tourist arrivals (ranked ninth) and tourism spending (ranked fifth) (UNWTO 2014).

The first round of sanctions by the United States, the EU, Australia, New Zealand, and
Canada involved travel bans and financial credit freezes for citizens of the Russian Federation
on special lists (the “EU lists” and the “US lists”). The tourism industry was no exception.
The influx of tourists from Russia to Europe decreased substantially even though markets had
become well established (Furmanov, Balaeva, and Predvoditeleva 2012), joint investment
projects in hotels failed, and Russia’s image in the West was substantially affected, leading to
a decline in inbound tourism (Ovcharov et al. 2015). The imposition of economic sanctions
on Russia following the escalation of the conflict in eastern Ukraine led to a sharp decrease in
Russian tourism flows to EU countries in 2014 (Kozlov and Popov 2015; Sutyrin et al. 2019).
The devaluation of the ruble also hit Russian outbound tourists hard, mainly in European
destinations, which had been among the fastest growing tourist destinations for Russians. In
2014, tour sales in Europe decreased by 30% to 50%, according to Russian tourism opera-
tors (Ovcharov et al. 2015). European destinations such as Finland, Greece, and the United
Kingdom experienced the largest reduction, followed by Austria and the Czech Republic (Falk
and Vieru 2017). The overall sensitivity of Russian tourism demand appears to have increased
following the introduction of economic sanctions. However, the sensitivity of tourism demand
to exchange rate changes differs markedly across regions and cities in countries such as
Finland, with higher elasticities in border regions and cities not too far from the Russian border,
which attract substantial numbers of second-home and short-stay Russian visitors who are
often motivated by cross-border shopping and other activities (Åkerlund, Lipkina, and Hall
2015; Falk and Vieru 2017, 2019).
19.4 RESPONSES AND ADAPTATION TO SANCTIONS
In addition to the four cases above, other studies of the effects of sanctions on destinations
include Rhodesia/Zimbabwe (Galtung 1967), Myanmar (Hall 1994; Philp and Mercer 1999;
Henderson 2003; Reith and Nauright 2005), North Korea (Connell 2017; Xizhen and Brown
2000), Palestine (Isaac, Hall and Higgins-Desbiolles 2015), South Africa (Pirie 1990; Hall
1994), and Syria (Moret 2015). In reviewing the limited number of cases showing the effects
of sanctions on destinations, a number of adaptation mechanisms have emerged and are
identified below.
19.4.1 Reinforcing Existing Main Markets
Countries that are exposed to sanctions usually attempt to keep their existing main markets in
order to enable the tourism sector to survive. This is especially true for markets that already
have a high degree of repeat visits. For example, in the case of Iran, the Iranian tourism admin-
istration has encouraged the arrival of Shiite pilgrims who visit the country and especially
the religious cities such as Mashhad or Qom (Seyfi and Hall 2018). Cuba has tried to keep
its traditional and loyal markets such as Canada, Spain, Argentina, and Brazil, by expanding
accommodation options—including five-star hotels in Havana—as well as increasing the
number of hotels and rooms at competitive prices, which could generate increased interest
from holidaymakers. In an interesting interplay between countries facing sanctions, Turkey
has also sought to encourage more Iranians to visit Turkey by offering very competitive prices
and establishing more direct and charter flights from Iran’s major cities to Turkey, at the time

these were mainly destinations on the southern coast of the country, which were dependent on
Russian market. This was important as Iran is among the main markets for Turkey in terms
of arrivals. Sanctioned countries often try to attract tourists from “friendly country” markets
which, in the case of Iran, include Russia, China, and neighboring countries which may ignore
American sanctions. In the case of Turkey this included Iran and Azerbaijan (Seyfi and Hall
2020a).
19.4.2 Developing Alternative Markets
Finding alternative markets which are less vulnerable to sanctions is among the main priori-
ties of sanctioned destinations. In the case of Cuba, by modifying the message “Socialism
or Death” to “Welcome to Cuba,” then premier Fidel Castro concluded that the only way
to preserve the achievements of the revolution was to exploit Cuba’s immense potential as
a vacation destination (Wilson and Látková 2016). Canadian and European tourists have
long been the mainstay of the Cuban tourism industry (Macaulay 2007). Unlike the United
States, Canada’s diplomatic relationship with Cuba was unaffected by the Cuban revolution
of 1959 and about one-third of visitors to Cuba each year are Canadians. Prior to COVID-19,
Cuba had also launched promotional campaigns to attract more travelers from the United
Kingdom, France, Germany, Spain, and emerging markets such as China, Vietnam, and
South Africa. The Cuban government moderated its policies on state ownership to stimulate
international investment and also allowed the creation of small private companies to
stimulate tourism.
In response to Russian sanctions Turkey allocated $225 million to tourism companies and
extended the debt repayment period for these companies to an additional five years. They also
provide subsidies for flights charted by so-called Group A travel agencies for a month in order
to attract more foreign tourists. Group A includes tourism agencies that can issue tickets for
all types of flights (Şahin et al. 2017).
Iran’s response to the reimposition of US sanctions included the application of a visa-free
policy for Chinese travelers, the world’s largest outbound market. Chinese citizens with a
passport from the People’s Republic of China or the Special Administrative Regions of Hong
Kong or Macao can travel to Iran without a visa and can stay in the country for up to 21 days
(Motamedi 2019).
19.4.3 Targeting Regional Tourists
Because of their high levels of repeat visits and country knowledge, regional tourists are
among the less sensitive markets for sanctioned destinations and tend to be actively pursued
(Seyfi and Hall 2019). For example, following the imposition of Russian sanctions, Turkey
established promotional programs to attract Iranian tourists who already enjoying visa-free
travel to Turkey. The launch of the Tehran–Van–Ankara train, which received wide publicity
for its modest price compared to air transport, was one of the main factors behind the increase
in the number of Iranian trips to Turkey. More charter flights to Turkey were introduced. The
Turkish national airline, Turkish Airlines, launched direct flights from Iran to popular coastal
resorts in Turkey, such as Alanya, Bodrum, and Marmaris. In general, Iranian tourists prefer
Istanbul for shopping and the Mediterranean region of Antalya for rest. To further encourage
such tourism, Turkey launched a financial system to avoid US sanctions that allowed Iranians

to use their domestic credit cards in Turkey and thus spend more money. Before this initiative,
Iranians could only use cash (Seyfi and Hall 2020a).
Iran has also pursued a similar policy. Strengthening infrastructure and cutting red tape are
among the measures implemented to attract more visitors from countries in the region who
are less affected by sanctions than Western tourists. For example, Iraqis are now exempt from
paying visa fees to visit Iran. Through this initiative Iran hopes to further increase the number
of tourists from Iraq, which is already Iran’s largest inbound tourist market, many of whom
travel for religious and medical tourism as well as VFR. Iran also exempted Azerbaijani,
Egyptian, Georgian, Lebanese, Malaysian, and Syrian tourists from visas while, as of October
2018, Omani nationals no longer required a visa or an entry stamp on their passport to enter
Iran.
19.4.4 The Diaspora
Migrant, diaspora, and VFR markets are among the least affected by sanctions regimes (Seyfi
and Hall 2020a, b). Diasporic communities are economically significant for sanctioned
countries because of the remittances they provide and because they constitute a travel market
that is relatively little affected by the imposition of sanctions on destination image. Diaspora
tourism refers to the travel of people to destinations where they have a family or ancestral
connection. Although there are no clear indications of the financial value of diaspora tourism,
remittances are extremely significant. For example, remittances which are estimated to be
over $3bn a year have become a driving force of the Cuban economy, providing a means
of securing hard currency and ensuring the financial survival of the country (Sullivan 2009,
2018; Blue 2013). Iran also benefits from its very large diaspora living abroad with numerous
Iranians having emigrated since the 1950s. There are no reliable and accurate statistics on the
number of Iranians living permanently outside Iran, although the estimate is between three
and six million people, all of whom constitute a significant travel market for Iran. The largest
population of Iranian emigrants, more than a million, live in the United States. There are also
smaller groups of Iranians in Canada, Europe, and the Gulf States (Sreberny and Gholami
2016). In addition to remittances and travel, diasporic relations are also important in terms of
business connections and networks, although their response to sanctions remains relatively
little explored (Majeed, 2016).
19.4.5 Reinforcing Domestic Tourism
Although international tourism is significant for its attraction of foreign exchange, domestic
tourism can also help generate economic activity and is a major focus of the tourism policies
of sanctioned countries. Domestic travel can be encouraged directly by marketing campaigns
and by imposing constraints on outbound leisure travel, for example, by imposing limits on
how much money can be taken out of the country or departure taxes on outbound tourists which
redirect tourism consumption (Seyfi and Hall 2019). In the case of Iran, the government sought
to promote domestic tourism by reducing outbound flows by such measures as the introduction
of a threefold rise in departure tax, as well as economic support for local industry (Seyfi and
Hall 2020c, d).
Reorienting outbound tourism toward domestic tourism and using public–private partner-
ships to train, improve, and diversify domestic tourism products was one of the first responses

of the Russian public sector to sanctions (Ovcharov et al. 2015). Outbound tourism restrictions
and prohibitions on some foreign companies to operate in the Russian tourism market have
become a factor in strengthening domestic tourism (Seyfi and Hall 2020a). The reconstruction
of the Russian tourism sector toward domestic tourism (increasing the share of domestic travel,
promoting domestic travel, and developing infrastructure in the Crimea) was one of the main
objectives of circumventing sanctions for Russian tourism (Ovcharov et al. 2015). Given the
sharp decline in Russian tourists in the southern Turkish seaside resorts from mid-2014 to
2016, the Turkish government sought to strengthen domestic tourism to these destinations
by promoting more halal or “Muslim friendly” tourist experiences (Hall and Prayag 2020).
Stakeholders in the sector also requested that Eid al-Fitr, the end of Ramadan celebration, be
extended to nine days to encourage more national tourists to travel to the coast (Cetin et al.
2016).
19.4.6 Diversifying Tourism Products
Another policy that is pursued across countries is diversifying the tourism product to attract
new customers. In the case of Turkey, following the sharp decline in Russian tourists to Turkey,
the country has adopted a series of strategies to minimize the direct and indirect effects of
sanctions on its tourism sector. These strategies ranged from submerging an old Airbus A300
off Kuşadası, a tourist resort on the Aegean Sea, to attract diving tourists to developing halal
tourism in order to attract new customers from the Gulf (Hall and Prayag 2020).
As a result of the reduction in the value of its currency, Iran has become a cheap des-
tination for medical tourism and is positioning itself in China and India as a reliable and
inexpensive destination for medical treatment, including organ transplants. Iran is already
an important medical tourism destination, particularly with regard to eye and plastic surger-
ies for Iraqi, Omani, and Central Asian nationals (Seyfi and Hall 2018a). Although Western
credit and debit cards such as Mastercard and systems such as PayPal do not work in Iran,
the Iranian MahCard offers the possibility of transferring money from a foreign bank
account to a debit card in Iranian currency in order to pay for medical treatment (Safaeian
2019). The Iranian government is also devoting more resources to medical tourism by
developing health tourism clusters, particularly in Shiraz, the capital of Fars province in
the south of the country.
19.4.7 Limiting Outbound Tourism
Outbound tourism is one of the elements of tourism that is directly and indirectly affected
by sanctions. In addition to visa restrictions that may be imposed on the sanctioned country,
currency devaluations increase the expense of traveling abroad. Outbound tourism can also be
directly taxed or limited in an attempt to limit the flow of hard currency abroad (Hall 1994).
For example, Russian authorities were considering restoring Soviet-style exit visas, which
would severely limit Russians’ right to travel abroad for the first time since the fall of the
Soviet Union. However, a decline in disposable income due to the economic crisis had already
led Russians to travel abroad less. In the case of Iran, the country imposed a threefold rise
in departure tax on outbound tourists in an effort to reduce the outflow of foreign currency
and to optimize tourism’s contribution to the country’s balance of payments by redirecting
consumption.

19.4.8 Dumping and Pricing
Private sector companies involved in tourism and hospitality also respond in their own way to
maintain market share in the light of the shocks created by sanctions. For example, in Russia,
price reductions, seasonal sales, and dumping were among the tactics used by major tour
operators (Neva, Yuzhniy Krest, Labirint) which then went bankrupt (Ovcharov et al. 2015).
Such tactics may assist companies in the short term, but as the Russian experience indicates,
they make travel firms extremely vulnerable if sanctions continue for more than two or three
months. Furthermore, Ovcharov et al. (2015) observed that the bankruptcies of reliable tour
operators undermine consumer confidence in tour operators and agents. As a result, many
Russians have stopped using the services of tourist agencies and have started to organize their
own holidays online.
19.4.9 Not Stamping Tourists’ Passports
Under the US sanctions, US citizens and others who have traveled to certain countries such
as Cuba or Iran would face US penalties and restrictions on their ability to enter the United
States. In response to this, Iran no longer stamps the passports of travelers entering the country
(Jalili 2019).
19.5 CONCLUSIONS AND SUGGESTIONS FOR FURTHER

RESEARCH
Although not previously a significant issue in either the sanctions or the tourism studies
literature, the increased use of sanctions as a foreign policy tool, together with the growing
economic importance of tourism, suggest the need for a more comprehensive account of the
impact of sanctions on the tourism sector. This chapter shows that countries exposed to sanc-
tions have focused on domestic capacity to minimize the effects of sanctions in the short term
and reduce their vulnerability in the long term to external economic pressures. For instance,
in the case of Russia, the country has taken several measures, mainly by making greater use
of domestic resources—or “Russification”—in securing strategic areas of economic policy
(import substitution), and toward a more multidirectional foreign economic policy that favors
closer relations with non-Western countries (Connolly 2018). According to Connolly: “The
already considerable influence of the Russian state on key sectors of the economy has proved
particularly important, as it has enabled it to react in a relatively coordinated manner to Western
sanctions through a variety of financial, institutional, and diplomatic measures” (2018, p. 3).
Similarly, Iran has also focused on the development of a so-called resistive economy as an
overt policy response toward sanctioning countries. This policy strategy mainly focuses on
developing self-reliance and, in the case of tourism, developing domestic offerings as well as
seeking to attract visitors from the immediate region and supportive countries such as China.
It is therefore unsurprising that sanctioned countries have primarily sought to preserve their
traditional tourist markets. For instance, in the case of Iran, the pilgrimage market has proven
to be relatively resilient to external shocks such as sanctions.
Numerous gaps exist in understanding the relationships between sanctions for tourism.
As noted in this chapter, the vast majority of the available research focuses on the impact

of sanctions on international tourism to the sanctioned country. This is generally undertaken

at a macro-level in broad analysis of the economic effects. In-depth studies of business and
government policy responses to sanctions are extremely limited (Seyfi and Hall 2020d).
Similarly, there is a marked lack of decision-making processes with respect to tourism as part
of the sanctions policy mix of governments and institutions. This means that it is unclear at
times whether tourism is a deliberate or incidental casualty of economic statecraft. This is a
significant issue given that sanctions often fail to achieve their intended objectives and may
be more for domestic political consumption than effective foreign policy (Peksen 2016; Seyfi
and Hall 2020a; Seyfi, Hall, and Vo-Thanh 2020a). Nevertheless, it is clear that economic
sanctions will continue to be part of the foreign policy arsenal for a number of countries and
international institutions for the foreseeable future.
In addition to examining the relationship between tourism and sanctions over all aspects of
tourism systems, greater attention needs to be given to understanding the tools by which private
sector actors, including transnational corporations, respond to sanctions regimes. Furthermore,
longitudinal studies are also required to evaluate the effectiveness of the policies of both the
sanctioned state and the sanctioning institution or country in the long term. This is especially
the case given that many sanctioned countries appear to be relatively resilient in the face of
sanctions, and their experiences may even provide insights into better understanding the effec-
tiveness of foreign policy and economic statecraft at a macro-level, as well as the capacities of
national economic policies and destinations to effectively respond to external crisis and pressure.
NOTE
1. The Council for Mutual Economic Assistance was an economic organization that existed from 1949 to 1991
under the leadership of the Soviet Union. It comprised the countries of the Eastern Bloc along with a number of
communist states elsewhere in the world.
REFERENCES
Åkerlund, U., O. Lipkina, and C.M. Hall (2015), ‘Second home governance in the EU: in and out of Finland and
Malta’, Journal of Policy Research in Tourism, Leisure and Events, 7 (1), 77–97.
Apollo, M. and R. Rettinger (2019), ‘Mountaineering in Cuba: Improvement of true accessibility as an opportunity for
regional development of communities outside the tourism enclaves’, Current Issues in Tourism, 22 (15), 1797–1804.
Balin, M. (1960), ‘Les problèmes du développement de Cuba’, Revue Tiers Monde, 1 (4), 447–460.
BBC (2020), Covid-19: Hong Kong-Singapore travel corridor postponed, 22 November, accessed 23 November 2020
at https://www.bbc.com/news/world-asia-55027305.
Biersteker, T.J., S. Eckert, and M. Tourinho (eds) (2016), Targeted Sanctions, Cambridge: Cambridge University Press.
Blue, S.A. (2013), ‘Internationalism’s remittances: The impact of temporary migration on Cuban society’,
International Journal of Cuban Studies, 5 (1), 41–60.
Brzoska, M. (2015), ‘International sanctions before and beyond UN sanctions’, International Affairs, 91 (6), 1339–1349.
Carswell, R. (1981), ‘Economic sanctions and the Iran experience’, Foreign Affairs, 60 (2), 247–265.
Cetin, H., H. Akmese, S. Aras, and V. Aytekin (2016), ‘The effects of the Russian crisis on Turkish tourism sector: A
case of Antalya Province, Turkey’, International Journal of Social, Behavioral, Educational, Economic, Business
and Industrial Engineering, 10 (7), 2566–2570.
Chandler, A. and S. Yang (2020), ‘China considers penalising more Australian goods in virus dispute’, Al
Jazeera, 20 May, accessed 10 December at https://www.aljazeera.com/economy/2020/5/20/china-considers
-penalising-more-australian-goods-in-virus-dispute.
CNN Newsource (2021), ‘Biden Says He Wants to Return U.S.-Cuba Relations to Obama-era Engagement Policies’.
October 31 2021. Retrieved from https://local21news.com/news/nation-world/biden-says-he-wants-to-return-us
-cuba-relations-to-obama-era-engagement-policies.

Connell, J. (2017), ‘Shining light on the darkness. Placing tourists within North Korean tourism. Comment on:
Desiring the dark: “A taste for the unusual” in North Korean tourism?’, Current Issues in Tourism, 20 (4), 356–362.
Connolly, R. (2018), Russia’s Response to Sanctions: How Western Economic Statecraft is Reshaping Political
Economy in Russia, Cambridge: Cambridge University Press.
Cortright, D. and G. Lopez (eds) (2018), Economic Sanctions: Panacea or Peacebuilding in a Post-Cold War World?,
Abingdon: Routledge.
Coville, T. (2018), ‘Quel sens donner à l’économie de la résistance?’ [What is the meaning of the economy of
resistance?], La Revue de Téhéra, accessed 1 April 2020 at http://www.teheran.ir/spip.php?article2494#gsc.tab=0.
Daily Sabah (2020), ‘Number of Russian tourists arriving in Turkey could hit 4 million’, Daily Sabah, 22 July, accessed
1 December 2020 at https://www.dailysabah.com/business/tourism/number-of-russian-tourists-arriving-in-turkey
-could-hit-4-million.
Eriksson, M. (2011), Targeting Peace: Understanding UN and EU Targeted Sanctions. Farnham: Ashgate.
Esfandiari, G. (2012), ‘Iran looks to “resistive economy” to fight sanctions’, Radio Free Europe, 12 August. Accessed
1 April 2020 at https://www.rferl.org/a/iran-looks-to-resistive-economy-to-fight-sanctions/24674314.html
Esfandiary, D. and M. Fitzpatrick (2011), ‘Sanctions on Iran: Defining and enabling “success”’, Survival, 53 (5), 143–156.
Falk, M. and M. Vieru (2017), ‘Impact of rouble’s depreciation on Russian overnight stays in Finnish regions and
cities’, Tourism Economics, 23 (4), 854–866.
Falk, M. and M. Vieru (2019), ‘International tourism demand to Finnish Lapland in the early winter season’, Current
Issues in Tourism, 22 (11), 1312–1326.
Furmanov, K., O. Balaeva, and M. Predvoditeleva (2012), ‘Tourism flows from the Russian Federation to the
European Union’, Anatolia, 23 (1), 17–31.
Galtung, J. (1967), ‘On the effects of international economic sanctions, with examples from the case of Rhodesia’,
Gilsinan, K. (2019), ‘A boom time for U.S. sanctions’, The Atlantic, May, accessed 1 April 2020 at https://www.
theatlantic.com/politics/archive/2019/05/why-united-states-uses-sanctions-so-much/588625/.
Gordon, J. (2016), ‘Economic sanctions as “negative development”: The case of Cuba’, Journal of International
Development, 28 (4), 473–484.
Gupta, C. (2014), ‘Sustainability, self-reliance and aloha aina: The case of Molokai, Hawai’I’, International Journal
of Sustainable Development and World Ecology, 21 (5), 389–397.
Hall, C.M. (1994), Tourism and Politics: Policy, Power and Place, Chichester: John Wiley and Sons.
Hall, C.M. (2005), Tourism: Rethinking the Social Science of Mobility, Harlow: Pearson.
Hall, C.M. (2015), ‘On the mobility of tourism mobilities’, Current Issues in Tourism, 18 (1), 7–10.
Hall, C.M. (2017), ‘Tourism and geopolitics: The political imaginary of territory, tourism and space’, in D. Hall (ed.),
Tourism and Geopolitics: Issues from Central and Eastern Europe, Wallingford: CABI, pp. 15–24.
Hall, C.M. (2019), ‘Constructing sustainable tourism development: The 2030 agenda and the managerial ecology of
sustainable tourism’, Journal of Sustainable Tourism, 27 (7), 1044–1060.
Hall, C.M. and G. Prayag (eds) (2020), The Routledge Handbook of Halal Hospitality and Islamic Tourism. Abingdon:
Routledge.
Hall, C.M. and S. Seyfi (eds) (2020), Cultural and Heritage Tourism in the Middle East and North Africa:
Complexities, Management and Practices, Abingdon: Routledge.
Hall, D. (ed.) (2017), Tourism and Geopolitics: Issues and Concepts from Central and Eastern Europe, Wallingford: CABI.
Henderson, J.C. (2003), ‘The politics of tourism in Myanmar’, Current Issues in Tourism, 6 (2), 97–118.
Isaac, R.K., C.M. Hall, and F. Higgins-Desbiolles (eds) (2015), The Politics and Power of Tourism in Palestine.
Abingdon: Routledge.
Jalili, S. (2019), ‘Iran stops stamping passports’, Al-Monitor, accessed 1 April 2020 at https://www.al-monitor.com/
pulse/originals/2019/06/iran-stops-stamping-passports.html.
Khodadadi, M. (2016), ‘A new dawn? The Iran nuclear deal and the future of the Iranian tourism industry’, Tourism
Management Perspectives, 18, 6–9.
Kirilakha, A., G.J. Felbermayr, C. Syropoulos, E. Yalcin, and Y.V. Yotov (2021), ‘The Global Sanctions Data Base:
An Update to Include the Years of the Trump Presidency’, in P.A.G. van Bergeijk (ed.), Research Handbook on
Kozlov, D.A. and L. Popov (2015), ‘Prospects of Russian tourism in Greece’, Mediterranean Journal of Social
Sciences, 6 (4), 536.
Leposa, A. (2019), ‘Cuba cancelled: How the cruise lines are reacting’, Travel Agent Central, 5 June, accessed 1 April 2020
at https://www.travelagentcentral.com/cruises/carnival-corp-cancels-cuba-cruises-other-lines-analyzing-details
Lim, D.J., V. Ferguson, and R. Bishop (2020), ‘Chinese outbound tourism as an instrument of economic statecraft’,
Journal of Contemporary China, 29, 916–933.
Lopez, G.Α., and D. Cortright (2018), ‘Economic sanctions in contemporary global relations’, in D. Cortright and G.Α.
Lopez (eds), Economic Sanctions: Panacea or Peacebuilding in a Post-Cold War World?, Abingdon: Routledge, pp. 3–16.
Macaulay, J. (2007), ‘Tourism and the transformation of Cuba—revisited’, Cornell Hotel and Restaurant
Administration Quarterly, 48 (4), 419–422.

Majeed, A. (2016), ‘Out of sight, in mind: Cell-phones and the reconnection of the Iraqi diaspora with a (home)
land’. The University of Western Ontario Journal of Anthropology, 24 (1). https://ojs.lib.uwo.ca/index.php/uwoja/
article/view/8963.
Midmore, P. and D. Thomas (2006), ‘Regional self-reliance and economic development: The Pembrokeshire case’,
Local Economy, 21 (4), 391–408.
Moret, E.S. (2015), ‘Humanitarian impacts of economic sanctions on Iran and Syria’, European Security, 24 (1),
120–140.
Mosedale, J. (ed.) (2010), Political Economy and Tourism: A Critical Perspective, Abingdon: Routledge.
Motamedi, M. (2019), ‘Iran wants more Chinese tourists – a whole lot more’, Aljazeera, 6 August, accessed 1 April
2020 at https://www.aljazeera.com/economy/2019/8/6/iran-wants-more-chinese-tourists-a-whole-lot-more.
Moya-Ocampos, D. (2018), ‘Cuban hotel sector expansion, 27 July’, accessed 1 April 2020 at https://ihsmarkit.com/
research-analysis/cuban-hotel-sector-expansion-72718.html.
Ovcharov, A.O., G. Ismagilova, I. Ziganshin, and M. Rysayeva (2015), ‘The influence of Western countries’ sanctions
on the development of the Russian exit tourism’, Asian Social Sciences, 11 (11), 289–296.
Peksen, D. (2016), ‘Economic sanctions and official ethnic discrimination in target countries, 1950–2003’, Defence
Philp, J. and D. Mercer (1999), ‘Commodification of Buddhism in contemporary Burma’, Annals of Tourism
Research, 26 (1), 21–25.
Pirie, G.H. (1990), ‘Aviation, apartheid and sanctions: Air transport to and from South Africa, 1945–1989’,
GeoJournal, 22 (3), 231–240.
Popesku, J. and D.R. Hall (2004), ‘Sustainability as the basis for future tourism development in Serbia’, in D.R. Hall
(ed.), Tourism and Transition: Governance, Transformation and Development, Wallingford: CABI, pp. 95–103.
Pratt, S. and V. Alizadeh (2018), The economic impact of the lifting of sanctions on tourism in Iran: A computable
general equilibrium analysis. Current Issues in Tourism, 21 (11), 1221–1238.
Rees, W.E. (1997), ‘Is “sustainable city” an oxymoron?’, Local Environment, 2 (3), 303–310.
Reith, S. and J. Nauright (2005), ‘Ethics, economics and tourism: Myanmar as a case stud’, Tourism Recreation
Research, 30 (2), 81–85.
Reuters Staff (2019), ‘EU stresses support for Cuba even as U.S. hikes sanctions’, Reuters, 10 September, accessed 1
April 2020 at https://www.reuters.com/article/us-cuba-eu-idUSKCN1VU2BY.
Safaeian, B. (2019), ‘Iran is offering itself as cheaper destination for medical tourism’, Iran Trawell, accessed 1 April
2020 at https://en.irantrawell.com/iran-is-offering-itself-as-cheaper-destination-for-medical-tourism/.
Şahin, E., F. Konak, and S. Karaca (2017), ‘Impact of “aircraft crisis” between Turkey and Russia on Borsa Istanbul
food, beverage and tourism indexes’, Business and Economics Research Journal, 8 (3), 473–485.
Seyfi, S. and C.M. Hall (2018a), ‘Tourism in Iran: An introduction’, in S. Seyfi and C.M. Hall (eds.), Tourism in Iran:
Challenges, Development and Issues, Abingdon: Routledge, pp. 3–37.
Seyfi, S. and C.M. Hall (eds) (2018b), Tourism in Iran: Challenges, Development and Issues, Abingdon: Routledge.
Seyfi, S. and C.M. Hall (2019), ‘International sanctions, tourism destinations and resistive economy’, Journal of
Policy Research in Tourism, Leisure and Events, 11 (1), 159–169.
Seyfi, S. and C.M. Hall (2020a), Tourism, Sanctions and Boycotts, Abingdon: Routledge.
Seyfi, S. and C.M. Hall (2020b), ‘Sanctions and tourism: Effects, complexities and research’, Tourism Geographies,
22 (4–5), 749–767.
Seyfi, S. and C.M. Hall (2020c), ‘Sanctions and tourism: Conceptualisation and implications for destination marketing
and management’, Journal of Destination Marketing and Management, 15, 1–6.
Seyfi, S. and C.M. Hall (2020d), ‘Political transitions and transition events in a tourism destination’, International
Journal of Tourism Research, 22 (4), 493–506.
Seyfi, S., C.M. Hall, and B. Shabani (2020), ‘COVID-19 and international travel restrictions: The geopolitics of health
and tourism’. Tourism Geographies, https://doi.org/10.1080/14616688.2020.1833972
Seyfi, S., C.M. Hall, and T. Vo-Thanh (2020a), ‘The gendered effects of statecraft on women in tourism: Economic
sanctions, women’s disempowerment and sustainability?’, Journal of Sustainable Tourism, https://doi.org/10.108
0/09669582.2020.1850749.
Seyfi, S., C.M. Hall, and T. Vo-Thanh (2020b), ‘Tourism, peace and sustainability in sanctions-ridden destinations’,
Journal of Sustainable Tourism, https://doi.org/10.1080/09669582.2020.1818764.
Smyth, G. (2016), ‘Deciphering the Iranian leader’s call for a “resistance economy”’, The Guardian, 19 April, accessed
1 April 2020 at https://www.theguardian.com/world/iran-blog/2016/apr/19/iran-resistance-economy-tehranbureau.
Sreberny, A. and R. Gholami (2016), Iranian Communities in Britain, London: London Middle East Institute, SOAS,
University of London.
Stoll, T., S. Blockmans, J. Hagemejer, C. Hartwell, H. Gött, K. Karunska, and A. Maurer (2020), Extraterritorial
Sanctions on Trade and Investments and European Responses, EP/EXPO/INTA/FWC/2019-01/LOT5/R/06,
Strasbourg: European Parliament, Policy Department, Directorate-General for External Policies.
Sullivan, M.P. (2009), Cuba: US Restrictions on Travel and Remittances, Washington DC: Library of Congress
Congressional Research Service.

Sullivan, M.P. (2018), ‘Cuba: US restrictions on travel and remittances (updated)’, Current Politics and Economics
of South and Central America, 11 (4), 375–442.
Sutyrin, S., O. Trofimenko, and A. Koval (eds) (2019), Russian Trade Policy: Achievements, Challenges and
Prospects, Abingdon: Routledge.
Takeyh, R. and S. Maloney (2011), ‘The self-limiting success of Iran sanctions’, International Affairs, 87 (6),
1297–1312.
Tsygankov, A.P. (2002), ‘The culture of economic security: National identity and politico-economic ideas in the
post-Soviet world’, International Politics, 39 (2), 153–173.
UN Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries and
Small Island Developing States (UN-OHRLLS) (2018), State of the Least Developed Countries 2018: Follow Up
of the Implementation of the Istanbul Programme of Action for the Least Developed Countries. New York: UN.
UNEP (2011), Towards a Green Economy: Pathways to Sustainable Development and Poverty Eradication. Nairobi:
UNEP.
United Nations World Tourism Organization (UNWTO) (2006), International Tourist Arrivals, Tourism Market
Trends, 2006 Edition – Annex. Madrid: UNWTO.
UNWTO (2012), UNWTO Tourism Highlights. 2012 Edition. Madrid: UNWTO.
UNWTO (2014), UNWTO Tourism Highlights. 2014 Edition. Madrid: UNWTO.
UNWTO (2020), World Tourism Barometer, 18 (6) October issue pp. 1–36.
UNWTO and UNDP (2017). Tourism and the Sustainable Development Goals: Journey to 2030. Madrid: UNWTO.
Wadhams, N. and S. Mohsin (2020), ‘Trump imposed sanctions at record pace. Will Biden be different?’,
Aljazeera, 9 December, accessed 10 December 2020 at https://www.aljazeera.com/economy/2020/12/9/
bbtrump-imposed-sanctions-at-a-record-rate-will-biden-alter-them.
Wilson, J. and P. Látková (2016), ‘American tourists in Cuba: Is the communist country a forbidden or a tainted fruit?’,
Tourism and Hospitality Research, 16 (1), 6–18.
World Tourism Organization (WTO) (1997). Tourism 2020 Vision. Madrid: WTO.
World Travel and Tourism Council (WTTC) (2020), To Recovery and Beyond: The Future of Travel and Tourism in
the Wake of COVID-19, London: WTTC.
Xizhen, Z. and E. Brown (2000), ‘Policies toward North Korea: A time for new thinking’, Journal of Contemporary
China, 9 (25), 535–545.

20. FDI and sanctions
Irina Mirkina
20.1 INTRODUCTION
The use of sanctions has been and still is common among the many instruments of foreign
policy. However, recent empirical studies increasingly find that few sanctions cases achieve
their declared objectives sufficiently to be labelled “successful” (see van Bergeijk [2020] for
a review of the current debate in the literature). More often, the effect of sanctions not only
differs from the intended policy objective but produces numerous side effects, creating overall
a new economic reality for target, sender, and third-party states (as illustrated in Part IV of this
Research Handbook). As I show in this chapter, foreign direct investment (FDI) has been one
of the most common reasons why sanctions do not work quite as expected.
FDI became more widespread over the past few decades: Inward FDI stocks grew from 8
percent of the world GDP in 1990 to 38 percent in 2018 (UNCTAD 2019). In an increasingly
globalized, economically interdependent world, economic agents use foreign investment
to deflect the effect of trade sanctions, to reduce the cost of non-trade barriers, to redirect
financial flows to the so-called “sanctions busters,” and to eventually establish a new economic
equilibrium for the target country. Apart from traditional forms of cross-border investment
(securing direct ownership in a foreign entity or setting up cross-border merger and acquisition
deals), FDI played an important role in the expansion of global value chains (GVCs). GVCs
have changed the ways trade and production are organized around the world and accounted
for almost 50 percent of global trade by 2015 (World Bank 2020). According to the World
Development Report 2020 (World Bank 2020), multinational enterprises (MNEs) use GVCs
as a way of optimizing their investment either by reducing the costs of trade (market-seeking
investment) or by taking advantage of lower costs of production (efficiency-seeking invest-
ment). Thanks to GVCs and other global trends, the relationship between international trade
and FDI has become extremely complex, turning FDI into a major factor in reducing the costs
of both trade and non-trade barriers. Now, when sanctions threaten trade and production in
the target country, MNEs use the same FDI channels to limit their risks and reduce their costs
(UNCTAD 2019). Recognizing this, a growing number of sanctions studies focuses on the
mitigating effects of FDI on sanctions effectiveness or, more comprehensively, on the interplay
between FDI and sanctions.
This chapter starts with the discussion of factors affecting FDI in Section 20.2 and the
role sanctions play among the determinants of FDI (Section 20.3). Section 20.4 reviews the
findings of empirical studies, which suggest that both economic and non-economic sanctions
may lead to a significant, albeit not always projected change in the flows of foreign invest-
ment. Even when such a change may not correspond to the objectives of the sanction senders,
sanctions create a new economic reality for both the sender and target states. Moreover, they
also create a new economic reality for many third-party (non-sanctioned) countries that are
included in the trade and investment networks of the sender and target states. The chapter also
examines numerous factors that influence the structure and stability of this new economic
369
Irina Mirkina - 9781839102721
reality. The chapter concludes with an empirical analysis of the effect of sanctions on FDI
using a sample of 177 countries over the period from 1970 to 2018 (Section 20.5). For the
purposes of this chapter, host country denotes a country that receives FDI, while home country
refers to the country where FDI originates. The terms target country and sender country are
used to mean a country targeted by sanctions and a country (or group of countries) imposing
sanctions, respectively.
20.2 DETERMINANTS OF FOREIGN DIRECT INVESTMENT

Determinants of FDI—factors that affect investors’ decisions about where, when, and how
much to invest—have long been a question of great interest in a wide range of fields, from
development economics to international relations studies. While the early studies focused on
the economic or geographical determinants of investment, a growing body of literature has
examined political factors, such as regime type, internal and external conflicts, or participa-
tion of host countries in international alliances (Blonigen and Piger 2014; Li and Vashchilko
2010). In the contemporary global economy, all these factors could be affected by sanctions,
which makes them a central issue for the recent studies on FDI. Economic coercion inevitably
changes the rules of the game for foreign investors in the target country by altering the costs
of production and trade, raising the risks of political instability, and increasing the pressure on
the domestic market.
The current research consensus indicates that the relationship between sanctions and FDI
is, in fact, interdependent and heterogenous. The imposition of sanctions typically becomes an
external shock for foreign investment. But, on the other hand, foreign investment could replace
trade and financial resources that sanctions aim to coerce. Evidence of a rather modest “suc-
cess” of numerous sanctions cases (Shin et al. 2016) has amongst others led to a proliferation
of studies that focus on FDI as a mediating factor in the imposition of sanctions.
Most FDI studies in political science and economics focus on the determinants of FDI under
normal circumstances—when the ability of the host country to attract investment compared
to other countries is fairly stable, and any changes to this ability could be detected, predicted,
and explained by a set of factors, such as economic development, institutional quality, or social
instability. There is also evidence that the determinants of FDI vary with respect to the volume
of investment flows and the decision to invest. This would mean that firms take into account
different factors when deciding whether to invest in (or disinvest from) the country affected
by sanctions and when deciding how much to invest.
Sanctions provide a remarkable opportunity to study investor choices in the case of an
external shock to the host economy—and in spite of the usual factors affecting FDI. If eco-
nomic factors (such as market size and growth) are important as determinants of FDI, would
investors disinvest when certain industries in a host country are sanctioned? If formal institu-
tions are important for MNEs’ location decisions, would investors disinvest when sanctions
are imposed over contentious government policies? If proximity to other countries and trade
opportunities are important, would investors disinvest when sanctions dramatically increase
the costs of trade and transportation?
To answer these questions, let us examine first how the extant studies formulate theoretical
arguments for the determinants of FDI. The early theories separated two types of FDI that were
expected to pursue different economic interests and therefore have different determinants:

FDI and sanctions 371
vertical and horizontal. Vertical FDI allows MNE subsidiaries located in different countries to
produce intermediate goods and components, trade with each other, and then deliver the final
product—in a setup that became known as GVCs. Vertical FDI is one of the channels through
which MNEs could set their production networks, leveraging low factor prices in the host
country to reduce their production costs and fostering trade flows among their production sites
in different countries (Buckley and Casson 2009; Hanson et al. 2005). International trade and
vertical FDI are expected to increase together, in a complementary relationship, since MNEs
would generally choose to invest in host countries that are well connected with the rest of the
world (Markusen et al. 1996; Helpman 1984; Chakrabarti 2001; Duval and Utoktham 2014;
Habib and Zurawicki 2002; Aizenman and Noy 2006; Martínez-Galán and Fontoura 2019).
Horizontal FDI, on the other hand, is not expressly connected to the same production chains
and is fostered by unique advantages of the host country for FDI. Horizontal FDI is driven by
increasing trade tariffs and is meant to expand the foreign firm’s business in the host country
if producing goods on site is cheaper than importing them. International trade and horizontal
FDI are considered substitutes in this framework (Brainard 1997; Antràs and Yeaple 2014;
Swenson 2004).
More recent studies aggregate different types of FDI into a more comprehensive framework,
noting that FDI could be used to produce goods that serve not only the host market but also
the neighbouring markets (export-platform FDI). These studies illustrate the significance
of neighbouring country characteristics for estimating FDI inflows into a host country. For
instance, economic unions and regional trade agreements could create a network with low
tariff barriers among countries with low production costs (but small markets) and countries
with large, attractive markets (but high production costs). MNE logic dictates in this case
that FDI would flow into the country with lower costs but the goods produced would then be
exported to serve the larger neighbour (Baltagi et al. 2007; Ekholm et al. 2007; Blonigen et al.
2007; Bergstrand and Egger 2007).
Market potential and the costs of doing business in the host country are consistently found
to be the most significant factors in FDI location choice (Duanmu 2012). Moreover, the
importance of the market size increases for the larger MNEs, while geographic and cultural
factors remain more important for smaller firms (Rasciute and Downward 2017). But, apart
from purely economic factors affecting FDI, such as market size, economic growth, resource
availability, and production costs, multiple studies highlight the importance of institutional
factors. Well-developed formal institutions, such as the rule of law, control of corruption, and
government effectiveness are expected to reduce administrative barriers for foreign investors,
reduce the risks of expropriation, and guarantee the protection of property rights. Most studies
come to the consensus that the quality of the host country’s institutions is important for attract-
ing FDI. Moreover, this effect is also found to be heterogeneous and conditional on the home
country’s institutions (Lei and Chen 2011; Pak and Park 2005; Moons and van Bergeijk 2017;
Nielsen et al. 2017; Rasciute and Downward 2017).
The last large group of factors that is recurrently found to have a significant effect on FDI
is conflicts and social instability. This group might be particularly relevant for the coercion
studies, because sanctions are commonly related to conflicts—either because military
intervention is used in combination with economic coercion, or because sanctions increase
political risks in the same way as conflicts (such as wars and civil unrests) do. FDI studies
that examine the effect of conflicts on FDI largely find that extreme forms of political
risk—political violence, civil wars, international military conflicts, and terrorism—reduce

the attractiveness of countries as FDI destinations (Busse and Hefeker 2007; Driffield et
al. 2013). Generally speaking, investors choose to avoid potential losses associated with
conflicts and increasing risks of political instability, unpredictable regulations, or the threat
of expropriation (Holburn and Zelner 2010; Jensen 2003). As predicted by the theories of
FDI, MNEs are generally found to avoid investing in countries with severe military conflicts
(Bussmann 2010; Li 2008; Polachek et al. 2007). From this perspective, economic sanctions
(often used in combination with military intervention or as a replacement for it) should be
expected to affect FDI in a similar manner, to the extent that they increase political risks and
economic costs.
Perversely, some recent studies find that foreign investors are not particularly discouraged
by conflicts. Biglaiser and De Rouen, Jr. (2007) find evidence that US investors seek to profit
from armed conflict and follow US troops abroad. Skovoroda et al. (2019) find that civil war
and terrorism risks are positively associated with US investment in the oil and gas industry,
with US subsidiaries committing to foreign ownership despite escalating conflict situations.
Lee (2017) comes to a similar conclusion in cases of petroleum firms that maintain their
investment in conflict zones if they expect oil prices to rise. Disinvestment in Sub-Saharan
Africa was found to be associated only with major conflicts, such as wars with more than 1000
deaths, while relatively minor conflicts that cause between 100 and 1000 battle-related deaths
did not deter MNE investments (Witte et al. 2020). These findings also indirectly suggest that
MNEs from the countries even without pre-existing connections to the host country, such
as colonial ties, might in the long run benefit from wars and political unrest as these events
level the playing field in the host market. As some studies argue, although conflicts increase
costs to MNEs, they could also make MNEs eager to exploit their growth opportunities in
the vulnerable markets and actually may reduce expropriation risk. Finally, Barry (2018)
finds that MNEs would avoid conflict zones when choosing a location for new investment
but would be resilient to most conflicts in a case of existing investment. Given that the risks
and costs associated with economic coercion rarely if ever exceed those of war, investors
could be expected to follow the similar logic of economic opportunism in cases of a sanctions
imposition despite all the related risks (Jauch 2011; Sautman and Hairong 2008; Skovoroda
et al. 2019; Witte et al. 2017).
20.3 SANCTIONS AS A DETERMINANT OF FDI
Theories explaining the determinants of FDI allow for the establishment of a broader context
for the role of sanctions, as well as their short-term and long-term effects.
The main focus in the theories of FDI has always been on economic costs and risks
that increase due to sanctions. Coercion, by definition, aims to impose sufficiently high
economic costs on the target state to force it into submitting to the sender’s objectives. Such
costs usually come from trade and non-trade barriers: restricting imports from the target
state to pressure its domestic production, restricting exports to the target state to increase the
costs of production resources and to limit its domestic consumption, and restricting financial
operations to limit the pool of economic resources available to the target. Furthermore,
sanctions increase administrative burdens, for instance, when firms have to demonstrate
their compliance and prove that they do not cooperate with the sanctioned sectors or entities
(Stępień and Weber 2019). Importantly, sanctions increase costs for the sender country as

well as for the target, particularly for the sender firms that conduct business in the target
country.
In addition to mounting costs, sanctions also increase economic, political, and social risks
in the target state. Sanctions increase uncertainty for economic agents: Even if firms are not
affected directly, they may be affected indirectly or may perceive themselves to be affected
by sanctions. For example, sanctions could target a specific sector and directly increase
production risks for all firms—in the target, sender, or third-party countries—working in that
sector. More often, though, sanctions affect firms indirectly by putting at risk their trading
partners, financial institutions, or GVCs (Stępień and Weber 2019). Sanctions also increase
the uncertainty regarding laws and political decisions in the target country and may become a
catalyst of social instability or civil unrest.
The uncertainty created by sanctions affects firms to a different extent. While smaller
companies would often have no other choice but to tolerate the risks, multinational enterprises
could afford various adjustment strategies, depending on the extent of sanctions, as well as their
perceived severity and expected duration. In some cases, MNEs are able to anticipate political
decisions and shift their investment even before the imposition of sanctions. Typically, the
costs of mitigating risks increased by sanctions add up to the direct economic costs that firms
have to pay in the form of a “risk premium on economic interaction [. . .] even with respect to
activities not directly covered by sanctions” (Noland 2009: 62).
Research also shows that time factors play an important role, and this is directly related to
the expectations about the imposition of sanctions and their duration. In order to reduce risks
and minimize costs, firms adopt various adjustment strategies—sometimes in anticipation,
even before the sanctions imposition. Existing studies argue that investors seek to avoid
uncertainty caused by the looming sanctions and shift FDI to avoid higher costs after the
imposition of those sanctions. Factoring the expected costs into their investment strategies,
MNEs seek to minimize the uncertainty, so that the threat of potential sanctions could lead to
greater disinvestment than a nearly certain sanction (Biglaiser and Lektzian 2011).
On the other hand, investors may choose to adopt different short-term and long-term
strategies. A sharp decline in trade, for instance, may temporarily increase the rate of return
on investment immediately after the imposition of sanctions; however, it could also increase
production costs and lower profits later on when most financial resources have been exhausted
(Kaempfer and Lowenberg 2007).
As a result of a complex interplay between sanctions and FDI, a new equilibrium would
eventually emerge after the sanctions imposition. An increasing number of studies argue that
the shift in foreign investment could lead to the restructuring of the target economy (Askari
2004), providing incentives for the engagement of third-party investors in the target country
(Stępień and Weber 2019) or motivating the target government to invest more heavily in
domestic projects (Li and Vashchilko 2010). As a long-term result of these changes, the new
economic equilibrium could remain relatively unchanged even after the sanctions are lifted.
If anything, the lifting of sanctions would reinforce this equilibrium, potentially making the
target economy less vulnerable to any subsequent sanctions.
The extant literature shows that this is generally the case where the political objectives of
the sanction sender governments diverge from the economic interests of businesses (even
businesses in the sender state). Variations on the theory of economic opportunism help to
explain that firms in both the sender state and in the third-party states have incentives to
shift their economic activity in order to bypass the sanction-induced barriers—if doing so is

economically beneficial at that time. Despite the objectives of the sender state and political
reasons that lead to the sanctions imposition, firms’ primary objectives are focused on reduc-
ing their costs and increasing their profits. Therefore, the interests of the sender firms and the
sender government may well be in conflict (Morgan and Bapat 2003: 66). Inevitably, firms
will adopt various adjustment strategies in order to reduce risks and minimize costs—and
such strategies may become sanctions evasion even if, technically, firms do comply with
sanctions. Policymakers can enact laws, but they cannot control business decisions (Stępień
and Weber 2019).
Over the last century, FDI has been used to bypass tariff barriers with some regularity. When
governments introduced protectionist measures (not necessarily related to sanctions), foreign
firms would often consider shifting production directly into the protectionist country instead
of trying to deal with import restrictions (for an extensive review, see Li and Vashchilko 2010).
FDI would be used in a similar way in cases of sanctions imposition: As trade costs and risks
increase, firms turn to FDI to replace lost trade and limited financial resources.
However, globalization, technological advancements, and GVCs have also made possible a
different framework, where increasing FDI is associated with trade openness and decreasing
trade tariffs (Clausing 2000; Martínez et al. 2012; Nishitateno 2013). The logic of FDI dictates
that firms seek to gain control over the host market and reduce the costs and uncertainty
associated with trade transactions. Trading with other firms in the host countries gives way to
trading between the subsidiaries of the multinational enterprise. In this case, sanctions would
be expected to hamper investment, since increasing barriers to trade would distribute the
increased costs across a global value chain.
The sanctions literature shows that comprehensive sanctions, imposed by many states,
may have a greater effect on the trade and investment networks. A crucial point to remember
here, however, is that the extent of sanctions also depends on the extent of the target country
participation in these networks. Sanctions could do little to restrict economic flows from or to
a target state that is already fairly isolated. Of course, if the country is barely trading with the
rest of the world, firms would rarely choose to invest there even in the absence of sanctions (as
discussed above). Therefore, the potential economic impact of sanctions and the new equilib-
rium of trade and FDI depend not only on the extent of sanctions, but also on the pre-sanctions
volumes of trade and investment in the target state (Felbermayr et al. 2019). Since the level of
the target state’s inclusion in the global financial networks and GVCs is increasingly dependent
on FDI, foreign investment has become an important factor predicting both the likelihood of
the sanctions being imposed and the effect of those sanctions.
The resource dependency theory also explains that the adjustment strategies adopted
by firms after the imposition of sanctions at least partially depend on how much they
have already invested in the target economy. Large volumes of FDI and the difficulties in
replacing resources from the host market would force MNEs to consider sanction-avoiding
strategies that maintain economic connections to the target country or, if possible, even
increase investment in non-sanctioned sectors. Stępień and Weber (2019) find that depend-
ency on the target market, a threat to their property, and low administrative barriers become
necessary and sufficient conditions for firms to defy sanctions and keep investing in the
target state.
Trade sanctions may therefore have a heterogenous effect on investment, depending on the
levels and structure of FDI prevalent in the target country. But there is one more reason to
expect the sanctions effect on FDI to be heterogenous regardless of who is the target and who

is the sender of sanctions, and that reason has to do with the economic interests of third-party,
non-sanctioned firms and governments.
By restricting economic flows to and from the target country, sanctions create not only
costs and risks, but also opportunities. Limited trade (particularly in a sensitive sector) would
force economic agents in the sanctioned state to search for new sources of imports or for
new markets for exports. It could also decrease the cost of entry for firms and states that had
been unable to infiltrate the target market prior to sanctions. The firms in both the target and
sender states will struggle to adjust to the economic reality under sanctions, but their adjust-
ment strategies would allow them to explore other opportunities that in this new economic
reality could potentially make them even better off than before (Barry and Kleinberg 2015).
Moreover, multiple studies show that economic opportunities arising from sanctions typically
benefit non-sanctioned countries as well—leading to the activities known as “sanctions bust-
ing.” In every sanction case, there would be economic actors both in the target country and
the third-party countries that seek to undermine sanctions. In some cases, the third-party states
implement sanctions-busting policies for political reasons—Hufbauer et al. (2007) argue that
such policies from the “black knight” states undermined the success of many US sanctions
during the Cold War, for example, against Cuba. More often, though, investors find sanction
busters among other firms pursuing new business opportunities and finding ways to save their
profits under sanctions. With uncertainty rising from the imposition of sanctions, firms and
governments with a history of busting sanctions provide to investors credible ways to reduce
that uncertainty. Adjusting to the sanctions imposition, firms in the sender state(s) would have
incentives to shift their investment from the target state to third-party states that have close
economic relations with the target. This effect is expected to be even larger if those third-party
states have preconditions to become “sanctions busters” (Barry and Kleinberg 2015).
Moreover, not only investment from the sender states would be redirected to third-party
states (and then further to the target country), but also the third-party firms would have an
incentive to replace the sender FDI hosted in the target country (Lektzian and Biglaiser 2013).
Sanctions may force both trade and FDI flows to be rerouted through third-party states (even
if they are allies of the sender states), thus strengthening connections between the target state
and the third-party states (Barry and Kleinberg 2015; Early 2009; Early 2012; Early and Spice
2015). If the sender firms lose their positions in the target market, they are not likely to recover
those positions after the sanctions are lifted. The shift in FDI after the sanctions imposition can
not only prevent sanctions from harming the economy of the target state, but also give a boost
to the economies of third-party states that keep economic relations with the target.
Given the reality of sanctions-busting strategies, the sender state will have to estimate—
even before the sanctions imposition—the ability of the target state to attract financial
resources from third-party states (Krustev 2010). If the potential sanction sender anticipates
that the target state could simply cover the costs of sanctions by attracting more investment
from elsewhere, the sender would be less likely to resort to sanctions as a means of pressure
on the target economy. Peksen and Peterson (2015) argue that the potential sanction senders
employ this logic when deciding whether to impose trade sanctions. Due to the ability of
FDI to both replace and stimulate trade, discussed above, the estimated effectiveness of trade
sanctions would also depend on the potential ability of the target state to replace lost trade
with third-party investment.
Having explored theoretical foundations of the complex relationship between sanctions and
FDI, I now turn to empirical studies and their findings.

20.4 REVIEW OF EMPIRICAL EVIDENCE
20.4.1 Impact of FDI on Sanctions
Theoretical predictions that larger volumes of FDI decrease the probability of the sanctions
being imposed have been confirmed in numerous studies. Lektzian and Biglaiser (2014)
provide evidence that high levels of US FDI stocks in the host country’s GDP reduce the
likelihood that the United States would use sanctions against the host country. Other studies
(e.g., Nooruddin 2002; Kim 2013; Cilizoglu and Bapat 2020) explain the reasons for this
dynamic and demonstrate the mechanism behind the impact of pre-existing FDI on sanctions.
Generally, senders are less likely to impose sanctions if the economic dependence of the
potential target on the sender country is high. Such economic dependence includes trade flows,
economic alliances, and, to a high degree, existing FDI flows and GVCs. There are two main
reasons for FDI reducing the likelihood of sanctions that have been confirmed in empirical
studies. The first reason has to do with the logic of economic costs to the sender: If the target
country hosts a large volume of the sender country’s FDI, imposing sanctions could directly
harm the sender’s businesses (Gartzke et al. 2001). The second reason has to do with the role
of sanctions in foreign policy and diplomatic tugs-of-war: Studies find that the states that are
highly dependent on the sender country’s trade and investment would be more sensitive to
the sender merely threatening sanctions (Morgan and Miers 1999; Cilizoglu and Bapat 2020).
This makes it all the more likely that the dependent states settle their disagreements with the
sender at the threat stage. If the threat is credible enough, the potential target state changes
its policy and sanctions are never actually imposed. Kim (2013) provides empirical evidence
that cross-border mergers and acquisitions—the most common form of direct investment for
US firms—reduce the likelihood of sanctions. Moreover, the study finds that in many cases,
mergers and acquisitions discourage not only the sanctions imposition but also the mere threat
of sanctions.
It is important to highlight that the reluctance of sanctions senders to impose sanctions on
the targets with high levels of the sender’s FDI leads to a selection bias in the process of the
sanctions imposition. This bias has been illustrated by the findings in Cilizoglu and Bapat
(2020): Sanctions are more likely to be imposed on the targets with relatively low dependence
on the sender that are able to withstand the threat stage. Naturally, this selection bias in the
imposition of sanctions directly leads to the bias in the success of the sanctions: If economic
ties between the target and sender states have been low prior to the sanctions imposition, the
sanctions could do little to harm the target economy (Kim 2013). This bias is less prominent in
cases of multilateral sanctions and may be one of the reasons why multilateral sanctions usu-
ally appear to have a more significant effect on the target economy than unilateral sanctions:
They do not have to take the existing levels of trade and investment into account (because those
levels would vary across the countries-senders of the sanctions), and they are often imposed
bypassing the threat stage. For this reason, several sanctions studies emphasize the importance
of accounting for the selection bias when analysing observed sanctions, especially unilateral
sanctions (Drezner 2003; Marinov 2005; Nooruddin 2002).
Cilizoglu and Bapat (2020) also provide evidence that sanctions are often imposed based on
the sender’s assessment of the target’s ability to replace financial resources lost due to sanc-
tions. Again, this factor would play a more important role in case of unilateral sanctions than
in case of multilateral ones. The target’s prior access to alternative financial resources is likely

to reduce the cost of sanctions to the target (but not to the sender) and diminish the impact of
sanctions. If the sender estimates the target’s ability to attract alternative investment as high, it
would be less likely to impose sanctions to avoid disproportionate costs to its own economy.
Commonly used metrics of a country’s attractiveness for investors and lenders include credit
ratings and investment climate ratings. Cilizoglu and Bapat (2020) show that countries with
poor credit ratings are more likely to be targeted by sanctions, because the sanction senders
do not expect them to be able to offset the cost of sanctions. However, such expectations are
notoriously unreliable. In some cases, potential targets may have an incentive to simulate their
ability to attract financial resources, avoiding low credit ratings and leading potential sanction
senders to miscalculate the effectiveness of economic coercion. In other cases, when the
sanctions create a deficit of financial resources in the target economy, low credit ratings might
stimulate potential investors to see it as a viable business opportunity, because low ratings
reduce the costs of market entry for them.
In short, the available empirical evidence points to the likelihood of sanctions being imposed
depending strongly on the pre-existing levels of FDI in the target state. If the volumes of FDI
between the sender and the target states are fairly high, the political objectives of the sender
could be achieved at the threat stage, never resulting in the actual imposition of sanctions. On
the other hand, the sender could deem economic coercion ineffective and turn to other means
if it perceives that the target does not depend on investment from the sender or could easily
replace the lost financial resources, based on the target’s economic ties to other countries.
20.4.2 Impact of Sanctions on FDI
Once the sanctions are imposed, the focus of the FDI–sanction interplay shifts to the conse-
quences of economic coercion and the resulting changes in the FDI structure and volume, as
well as to the role of FDI in establishing a new economic equilibrium in the target economy.
Extensive research supports the theoretical expectations that sanctions generate costs for
investors, but also shows that the newly created business opportunities commonly outweigh
the costs (Lektzian and Biglaiser 2013; Barry and Kleinberg 2015; Peksen and Peterson 2016).
Many studies (reviewed in Lektzian and Biglaiser 2013) confirm that some economies see
a surge in FDI inflows that could not be explained by geographical, economic, or political
determinants (such as distance, market size, or regime type). Sanctions change the weight of
FDI determinants for the target country, so that economic factors (such as market size and the
cost of entry) often offset political and social factors (such as instability risks or corruption).
In addition, investment may shift after the imposition of sanctions into other, non-sanctioned
sectors, especially if the sanctions are limited and non-extensive. Depending on the extent of
this shift, FDI has the capacity to potentially change the target economy structure, for example,
by reducing the target country’s dependence on natural resources (Askari 2004).
Studies also find that the effects of sanctions on FDI may differ in the short and long term
(Dizaji and van Bergeijk 2012; Mirkina 2018). In some cases, investors choose to disinvest
due to uncertainty risks as soon as there is a threat of sanctions, prior to their actual imposition.
In other cases, investors stay in the short term to exploit the shock-enabled opportunities, but
there is no new investment in the long term due to diminishing returns. In yet other cases,
investment flows freeze in the short run (so that, for example, the researchers may observe an
effect of sanctions on FDI inflows but not on FDI stocks); however, they may go back to pre-
sanction levels in the long run. Biglaiser and Lektzian (2011) find that MNEs start reinvesting

while sanctions remain in place as soon as “the uncertainty surrounding the amount of risk
decreases.”
In a comprehensive study of sanction effectiveness, Shin et al. (2016) do not find any
evidence that sanctions significantly hinder the macroeconomic fundamentals of target
economies in general or FDI in particular. They find that only severe cost sanctions may
reduce FDI inflows immediately after the sanctions imposition (or slightly prior—indicating
an anticipation effect), but even that influence does not last. In fact, all types of sanctions seem
to have a positive and statistically significant effect on FDI two years after their imposition.
Sanctions with minor costs to the target are found to have a significant positive effect on FDI
prior to imposition (partially supporting also the threat stage theory discussed above). Shin
et al. (2016) conclude that MNEs are likely to continue business as usual with the sanctioned
countries and are likely to be motivated by profits rather than by politics.
Mirkina (2018) finds that the effect of sanctions on FDI might differ across decades.
Sanctions imposed in the 1990s, on average, led to a 15 percent decrease in FDI shortly
after their imposition, although the magnitude of this effect declined as the time passed. In
most sanctions cases from other decades, however, the target countries, on average, have not
experienced any significant reduction in FDI inflows.
Perhaps more importantly in the age of globalization, empirical studies consistently find that
sanctions affect trade and investment flows for third-party states, and not only the target and
sender states. Investors in both the target country and third-party countries adopt avoidance
or sanctions-busting strategies, which significantly alter the impact of sanctions. Similar to
research that has showed that trade flows get redirected through third-party states (Early 2011;
Early and Spice 2015), investment studies demonstrate that FDI would also shift to third
parties (Lektzian and Biglaiser 2013; Barry and Kleinberg 2015). However, this shift would
not be arbitrary: FDI inflows would predominantly select countries that give investors indirect
access to the target state. Overall, countries with a higher share of the target’s total trade or a
history of busting US sanctions are likely to see higher FDI inflows when the United States
is the sanction sender.
Focusing on the evidence from the cases of US sanctions and US investment is justifiably
common in coercion studies. The United States for many years have been the pre-eminent sender
of sanctions and, due to the size of the US economy (around 15 percent of global GDP in 2018),
US sanctions could potentially affect 2.5 percent of global trade. Together, the United States
and the EU could have an impact on over two thirds of global trade (Felbermayr et al. 2019).
However, these findings are not limited to the sanctions imposed by the United States.
Besedeš et al. (2017), studying German FDI and the cases of European sanctions, find that
investors affected by the imposition of sanctions start investing more heavily in other countries.
The researchers find evidence of such behaviour only for the cases of EU sanctions but not for
the sanctions imposed by the entire UN, supporting the conclusion that the shift in transactions
occurs due to sanctions evasion and not due to the mere portfolio diversification. The increase
in financial activities after the imposition of sanctions is greater for the largest trading partners
of the sanctioned countries, framing those countries as intermediaries in sanctions evasion.
Finally, in one of the most comprehensive studies to date on the interplay between sanctions
and investment flows, Lektzian and Biglaiser (2014) find that the dynamics of FDI after the
imposition of sanctions have a significant effect on the outcome of the sanctions. The results of
their empirical analysis demonstrate that a decline in US investment increases the likelihood of
sanctions success, but also that global FDI in the target country is likely to increase, replacing

US investment and undermining the impact of sanctions. Essentially, even if the sender has a
very large economy (such as the US), its ability to coerce the target could be hampered by the
cumulative financial inflows from third-party states.
20.5 ANALYSING THE EFFECT OF SANCTIONS ON FDI
Mirkina (2018) finds that the effect of sanctions on FDI is heterogenous across countries and
over time. The study argues that the standard estimation techniques, such as static panel data
models, may produce biased results and therefore advocates the use of bias-corrected estimators
in coercion studies. This chapter extends the analysis from Mirkina (2018), similarly using the
common correlated effects estimator in its dynamic form (Pesaran 2006; Chudik and Pesaran,
2015) and the synthetic control method (Abadie and Gardeazabal 2003; Abadie et al. 2010).
Thanks to a newly available Global Sanctions Data Base (GSDB), covering an extended
time period and more sanctions cases than the previously available datasets (Felbermayr et
al. 2019; see also Chapter 4 of this Research Handbook by Kirilakha et al.), this chapter fills
in two gaps. First, given that Mirkina (2018) has found differences in the effect of sanctions
on FDI across decades, it is crucial to check whether these findings hold over a longer time
period. In this chapter, I use the GSDB to analyse sanctions cases for the period from 1970 to
2018, extending the coverage in Mirkina (2018) for almost a decade. Secondly, it is important
to check whether research findings are affected by any methodological differences among the
existing assessments of sanctions episodes (van Bergeijk and Siddiquee 2017). This chapter
therefore aims to compare directly the results received from analysing the GSDB with the
results in Mirkina (2018) that uses the “Threat and Imposition of Sanctions” dataset (Morgan et
al. 2014, see also their Chapter 3 in this Research Handbook), while using the same estimation
techniques. Such a comparison ensures that findings about the true effect of sanctions on FDI
are driven by the data in the two sanctions datasets and not by the differences in their data
collection processes.
As specified in Mirkina (2018), the dynamic common correlated effects mean group
(DCCEMG) estimator (Chudik and Pesaran 2015) takes the form:
p p p
FDI it = α i + ∑β il FDI t−l + ∑τ ilʹ X t−l + ∑ϕ ilʹ Zt−l + ε it (20.1)
l=1 l=0 l=0
where FDIit stands for FDI inflows to host country i in time t, FDIt−l stands for a lagged dependent
variable, Xt−l is a vector of lagged covariates, including sanctions imposition, trade openness,
and GDP per capita, as well as the state of war and civil war. Zt−l is a vector of the cross-section
means (FDI t−l , X t−l ʹ ), p = [T1/3] = 3, εit is the error term. The estimates of short-run effects are
given by ( β̂ il , τ il ). The mean long-run effects are estimated as N −1Σi=1
ˆ N ˆ
θ i , where the estimates
p
Σ τˆ
of individual mean level coefficients are given by θ i = ˆ * l=0 il
p
.
1−Σ l=1β̂ il
The DCCEMG estimation is run on a sample of 177 countries over the period from 1970 to
2018. Table 20.1 presents the results, comparing different types of sanctions from the GSDB
that are directly relevant for investment decisions (financial sanctions and trade sanctions), as
well as the effect of US sanctions (compared to the baseline of internationally imposed sanc-

Table 20.1 The effect of various types of sanctions on FDI, 1970–2018
(1) (2) (3)

Trade sanctions Financial sanctions US sanctions
VARIABLES short run long run short run long run short run long run
Trade −0.101 0.047
sanctions (0.104) (0.086)
Financial 0.039 0.046
sanctions (0.133) (0.123)
US sanctions −0.128 0.004
(0.249) (0.258)
Ln(GDP p.c.) 2.078** 1.048** 1.558* 0.602 1.843** 1.001**
(0.850) (0.452) (0.852) (0.430) (0.825) (0.412)
Ln(Trade 0.216 0.623* 0.233 0.655* 0.093 0.703*
openness) (0.367) (0.370) (0.406) (0.369) (0.450) (0.419)
War 0.077 0.053 0.030 0.007 0.091 0.088
(0.081) (0.147) (0.079) (0.135) (0.082) (0.149)
Civil war −0.029 0.057 −0.062 −0.110 −0.071 −0.118
(0.086) (0.157) (0.076) (0.128) (0.074) (0.126)
FDIt –1 −0.820*** −0.829*** −0.836***
(0.024) (0.023) (0.023)
Observations 8,358 8,358 8,358
Number of 177 177 177
countries
RMSE 1.560 1.516 1.503
CD test −0.661 −0.935 −1.267
statistic
Adj. 0.423 0.407 0.392
R-squared
p-value 0.508 0.350 0.205
Note: (standard errors in brackets)

tions). Table 20.2 presents the results for all types of sanctions combined (as discussed above,
even non-financial sanctions may be indirectly relevant for investment because of political or
social risks). It also replicates the results from Mirkina (2018) on a sample running from 1970
to 2010 to compare the results across sanction databases.
Findings presented in Tables 20.1 and 20.2 show unambiguously that sanctions do not
have a statistically significant effect on FDI either in the short or the long run. This finding
holds irrespective of the type of sanctions or the sanctions sender. Contrary to the results in
Mirkina (2018), US sanctions do not yield a significant effect in the long run and the size of
their long-run effect is not far from zero. Comparing the results across different time samples
indicates the source of this discrepancy: As shown in Table 20.2, the coefficients on sanctions
have a negative sign in the 1970–2010 sample but a positive sign in the 1970–2018 sample.
Moreover, the results attained with the GSDB in this chapter from 1970 to 2010 uphold the
results attained with the “Threat and Imposition of Sanctions” dataset in Mirkina (2018).
Clearly, the effect of sanctions is never statistically significant, and any changes in sign and
magnitude come simply from having more countries and observations included in the sample
extended up through 2018.
The synthetic control method (SCM) complements the DCCEMG estimation particularly
well, because it allows the estimation of a treatment effect for each sanctions case, comparing
the target countries with their “synthetic counterparts” in the absence of sanctions.
In the SCM, each country i, targeted by sanctions at time t0 (1 ≤ t0 < T), receives a so-called
“donor sample” of countries—states that have never been subject to coercion up until the year
preceding the year of the sanctions imposition, t−1. To ensure that there are enough observations
to construct synthetic controls and calculate the effect of sanctions, countries that have been
sanctioned prior to 1975 are excluded from both the sample of targets and the donor sample.
For countries that have been sanctioned more than once during the observed period, only the
first sanction episode counts as “treatment.” Due to the nature of the SCM, it is inadvisable to
estimate a treatment effect for a country that has been subjected to sanctions more than once.1
Countries sanctioned in the 2010s thus had to be excluded from the sample used with the SCM,
since all of these countries had been targeted by sanctions before. The sample of sanction cases
extracted from the GSDB, therefore, is limited to 75 countries.2 However, this sample allows
estimating the 10-year treatment effect for the sanction cases from the 2000s—the result that
has been missing in Mirkina (2018).
Given Yit(0) and Yjt denote respectively the outcomes for the target country i and the donor
countries j at time t in the absence of sanctions, it is clear that only Yit(1) could be observed for
country i, i.e., the outcome when this country is subject to sanctions at time t0, while Yit (0) =
Yit (1) for tpre ∈ {1, …, t0}. Directly estimating the effect of the sanctions imposition φit = Yit
(1) − Yit (0) for tpost ∈ {t1, …,T} is infeasible, since Yit(0) is impossible to observe after the
sanctions imposition. Abadie et al. (2010) show that it is possible to estimate
N −1
ϕ̂ it = Yit (1) − ∑w*jY jt (20.2)
j=1
with weights w*j

satisfying ≥ 0,
w*j ∑ w*j
= 1 , if the weights make the synthetic control group
resemble the target country prior to the sanctions imposition. That is, the weights w*j are
chosen to minimize the difference between the target and the weighted average of the donor
sample of potential controls both in terms of outcome and the covariates prior to sanctions.

Table 20.2 The effect of sanctions on FDI across samples
(1) (2)
Period 1970–2018 Period 1970–2010

VARIABLES short run long run short run long run
All sanctions 0.049 0.145 −0.068 −0.146
(0.121) (0.126) (0.132) (0.273)
Ln(GDP p.c.) 1.730** 0.920** 2.022* 0.775
(0.857) (0.441) (1.051) (0.606)
Ln(Trade openness) 0.313 0.841** 0.595* 0.802**
(0.431) (0.423) (0.343) (0.370)
War 0.094 0.083 0.053 0.013
(0.082) (0.151) (0.080) (0.150)
Civil war −0.079 −0.111 −0.022 0.018
(0.074) (0.125) (0.083) (0.134)
FDIt –1 −0.831*** −0.866***
(0.022) (0.024)
Observations 8,358 6,905
Number of countries 177 174
RMSE 1.519 1.185
CD test statistic −0.508 −0.102
Adj. R-squared 0.402 0.362
p-value 0.611 0.919
Note: (standard errors in brackets)
In practice, the synthetic control weights w*j are estimated in a nonparametric fashion, so that
this condition holds approximately (Billmeier and Nannicini 2013). As a measure of fit, the
root mean squared prediction error (RMSE) of the outcome variable is minimized in the pre-
sanctions period by assigning larger weights to variables that have a larger predictive power
on the outcome (Abadie and Gardeazabal 2003). The overall effect of the sanctions imposition
is then given by
Yit (1) − ∑ w*jY jt

∑i σˆ i ∑t ⎡⎣Yit (1) − ∑ w*jY jt ⎤⎦
2
ϕ̂ = , while σˆ i = (20.3)
1 Lpre
∑i σˆ
i
where ϕ̂ denotes the effect of sanctions computed using cumulative outcomes in the post-
sanctions period [t1, T], σˆ i is RMSE, and Lpre denotes the length of the pre-sanctions period

(a) Overall mean treatment effect of sanction imposition on FDI

.4
1-year effect
3-year effect
.3 10-year effect
Density
.2
.1
0
–5 0 5 10
Effect of sanctions
(b) The mean treatment effect of sanctions on FDI by decade

1970s 1980s 1990s 2000s
.4 .4 .4 .4
.3 .3 .3 .3
Density
.2 .2 .2 .2
.1 .1 .1 .1
0 0 0 0
–5 0 5 10 –5 0 5 10 –5 0 5 10 –5 0 5 10
Effect of sanctions
Figure 20.1 The mean treatment effect of sanctions on FDI by decade
[1, t−1]. The formula assigns greater weight to better matches, since the synthetic controls that
bear closer resemblance to the actual target countries (expressed by RMSE) naturally provide
a better estimate for the impact of the imposition of sanctions.
Again, findings from using the SCM on the GSDB sample corroborate the results in Shin et al.
(2016) and Mirkina (2018). Only countries targeted by sanctions in the 1990s have, on average,
experienced less FDI after the imposition of sanctions than their synthetic counterparts would
have predicted. In other decades, the effect of sanctions on FDI inflows has been close to zero or
skewed to the right. Over the whole period under analysis, sanctions have had a mean weighted
effect of 0.61 in one year after the sanctions imposition and 0.66 in the three-year period, which
corresponds to an average increase in FDI inflows to the target countries of 11.5–11.6 percent.3
The results clearly indicate that the actual impact of sanctions on investment in most cases
has been largely different from the intended consequences of harming the target economies.
Recent studies, reviewed in this chapter, discuss a complex interplay between sanctions and
FDI. While sanctions may affect the investment decisions of international businesses, FDI may
have an impact on the extent and the success of sanctions.
There are multiple theories placing sanctions among the determinants of FDI and predicting
that sanctions should increase economic, political, and social risks in the target state. They also

predict that sanctions may increase the uncertainty for trading partners, financial institutions,
or GVCs in the target and sender states, as well as in the third-party states.
Other theories, however, predict that foreign investors would be led by economic opportun-
ism more than by their aversion to risk. Due to the fact that the political objectives of the
sanction-sending governments usually diverge from the economic interests of businesses,
firms in both the sender state and in third-party states (not affected by sanctions directly) have
multiple incentives to shift their economic activity to avoid the sanctions barriers. Firms will
therefore adopt various adjustment strategies and become “sanctions busters” by, for example,
turning to FDI to replace lost trade and limited financial resources. As a result, investment
from the sender states may be redirected to the third-party states (and then further to the target
country), while the third-party firms may attempt to replace the sender’s country trade and FDI.
Therefore, the shift in FDI caused by sanctions may prevent sanctions from actually harming
the economy of the target state.
Findings from an empirical analysis on a sample of 177 countries from the GSDB over the
period from 1970 to 2018 confirm that sanctions do not have a statistically significant effect on
total FDI. The DCCEMG estimation shows that these findings hold both in the short or the long
run, irrespective of the type of sanctions or the sanction sender. This chapter also demonstrates
that the results are not affected by any methodological differences across different sanction
databases.
The SCM estimation shows that only sanction cases in the 1990s experienced less FDI
after the imposition of sanctions than the estimation predicts. Other decades saw the effect
of sanctions on FDI being close to zero or even positive, demonstrating an estimated average
increase in FDI by approximately 11.5 percent over a period of one to three years.
Although this chapter only reports the mean treatment effects from the SCM to be able to
draw meaningful conclusions, it is important to note that the mean effects in the SCM are
calculated from the individual treatment effects and that all sanctions cases demonstrate a
sizable heterogeneity in the impact of sanctions on FDI. The variation in the individual treat-
ment effect was largest in the sanctions cases in the 1970s. This is an important phenomenon,
proving once again that estimating only the mean effects or using econometric methods that
do not account for heterogeneity may produce biased findings in sanctions studies.
This chapter thus also demonstrates the necessity of using advanced, bias-corrected estima-
tors that allow accounting for both observed and unobserved heterogeneity, non-stationarity,
and cross-sectional correlation in sanctions studies. Further research to move the field forward
should seek explanations for the diverging effects of sanctions on target countries, for the
trade-offs and substitutions effects between international trade and foreign investment, as
well as for the role of sanctions on shaping GVCs. The most promising directions in sanctions
studies would also see the use of better-quality data—tracking longer time periods, taking
advantage of bilateral data, and calculating effects based on counterfactuals.
NOTES
1. There are two reasons for this precaution. First, the variable values for the target country in the pre-sanctions
period may have been affected by the previous sanctions episode(s) and as such are not comparable with the
variable values for other countries used to create a synthetic control country. Secondly, if the effect of sanctions
is cumulative, that would lead to overestimating the treatment effect of any subsequent sanctions cases.
2. These cases (and the year of the sanctions imposition) include Albania (2001), Angola (1986), Antigua and
Barbuda (2002), Bahrain (1976), Bangladesh (2002), Barbados (2002), Benin (1998), Botswana (2002), Bulgaria
(2001), Burkina Faso (1998), Cambodia (1975), Cameroon (1992), Cape Verde (1998), Chad (2002), China

(1989), Comoros (1993), Congo (2002), Democratic Republic of the Congo (1990), Costa Rica (2002), Côte
d’Ivoire (1998), Cyprus (1987), Czech Republic (2002), Dominican Republic (2002), Egypt (1976), Equatorial
Guinea (1992), Gabon (2002), Gambia (1994), Ghana (1998), Grenada (1983), Guinea-Bissau (1998), Guinea
(1998), Guyana (2002), Honduras (2002), Hungary (2002), Iceland (2002), Jordan (1976), Kuwait (1976),
Lebanon (1976), Liberia (1992), Libya (1976), Madagascar (2002), Mali (1998), Marshall Islands (2002), Mau-
ritania (1976), Mauritius (2002), Mexico (2002), Mongolia (2002), Morocco (1976), Namibia (2002), Nepal
(1989), Niger (1996), Nigeria (1993), Norway (2002), Oman (1976), Poland (2002), Qatar (1976), Romania
(2002), Rwanda (1994), Saudi Arabia (1976), Senegal (1998), Seychelles (2002), Sierra Leone (1997), Slovakia
(2002), South Africa (2002), St Lucia (2002), Sudan (1976), Tanzania (2002), Thailand (1991), Togo (1992),
Trinidad and Tobago (2002), Tunisia (1976), United Arab Emirates (1976), Venezuela (2002), Yemen (1976).
3. Detailed results are available on request.
REFERENCES
Abadie, A., and Gardeazabal, J. (2003), ‘The economic costs of conflict: A case study of the Basque Country’,
American Economic Review, 93(1), 113–132.
Abadie, A., Diamond, A., and Hainmueller, J. (2010), ‘Synthetic control methods for comparative case studies:
Estimating the effect of California’s tobacco control program’, Journal of the American Statistical Association,
105(490), 493–505.
Aizenman, J., and Noy, I. (2006), ‘FDI and trade—Two-way linkages?’, The Quarterly Review of Economics and
Finance, 46(3), 317–337.
Antràs, P., and Yeaple, S. R. (2014), ‘Multinational firms and the structure of international trade’, in: Handbook of
International Economics (Vol. 4), Amsterdam: Elsevier, pp. 55–130.
Askari, H. (2004), ‘Iran’s economic policy dilemma’, International Journal, 59(3), 655–668.
Baltagi, B. H., Egger, P., and Pfaffermayr, M. (2007), ‘Estimating models of complex FDI: Are there third-country
effects?’, Journal of Econometrics, 140(1), 260–281.
Barry, C. M. (2018), ‘Peace and conflict at different stages of the FDI lifecycle’, Review of International Political
Economy, 25(2), 270–292.
Barry, C. M., and Kleinberg, K. B. (2015), ‘Profiting from sanctions: Economic coercion and US foreign direct
investment in third-party states’, International Organization, 69(4), 881–912.
Bergstrand, J. H., and Egger, P. (2007), ‘A knowledge-and-physical-capital model of international trade flows, foreign
direct investment, and multinational enterprises’, Journal of International Economics, 73(2), 278–308.
Besedeš, T., Goldbach, S., and Nitsch, V. (2017), ‘You’re banned! The effect of sanctions on German cross-border
financial flows’, Economic Policy, 32(90), 263–318.
Biglaiser, G., and DeRouen Jr, K. (2007), ‘Following the flag: Troop deployment and US foreign direct investment’,
International Studies Quarterly, 51(4), 835–854.
Biglaiser, G., and Lektzian, D. (2011), ‘The effect of sanctions on US foreign direct investment’, International
Organization, 65(3), 531–551.
Billmeier, A., and Nannicini, T. (2013), ‘Assessing economic liberalization episodes: A synthetic control approach’,
Review of Economics and Statistics, 95(3), 983–1001.
Blonigen, B. A., and Piger, J. (2014), ‘Determinants of foreign direct investment’, Canadian Journal of Economics/
Revue canadienne d’économique, 47(3), 775–812.
Blonigen, B. A., Davies, R. B., Waddell, G. R., and Naughton, H. T. (2007), ‘FDI in space: Spatial autoregressive
relationships in foreign direct investment’, European Economic Review, 51(5), 1303–1325.
Brainard, S. L. (1997), ‘An empirical assessment of the proximity-concentration trade-off between multinational sales
and trade’, American Economic Review, 87(4), 520–544.
Buckley, P. J., and Casson, M. C. (2009), ‘The internalisation theory of the multinational enterprise: A review of the
progress of a research agenda after 30 years’, Journal of International Business Studies, 40(9), 1563–1580.
Busse, M., and Hefeker, C. (2007), ‘Political risk, institutions and foreign direct investment’, European Journal of
Political Economy, 23(2), 397–415.
Bussmann, M. (2010), ‘Foreign direct investment and militarized international conflict’, Journal of Peace Research,
47(2), 143–153.
Chakrabarti, A. (2001), ‘The determinants of foreign direct investments: Sensitivity analyses of cross-country regres-
sions’, Kyklos, 54(1), 89–114.
Chudik, A., and Pesaran, M. H. (2015), ‘Common correlated effects estimation of heterogeneous dynamic panel data
models with weakly exogenous regressors’, Journal of Econometrics, 188(2), 393–420.
Cilizoglu, M., and Bapat, N. A. (2020), ‘Economic coercion and the problem of sanctions-proofing’, Conflict
Management and Peace Science, 7(4), 385–408.
Clausing, K. A. (2000), ‘Does multinational activity displace trade?’, Economic Inquiry, 38(2), 190–205.

Dizaji, S. F., and van Bergeijk, P. A. G. (2012), ‘Early phase success and long run failure of economic sanctions. With
an application to Iran’, Institute of Social Studies Working Paper No. 544. The Hague: International Institute of
Social Studies of Erasmus University Rotterdam (ISS).
Drezner, D. W. (2003), ‘The hidden hand of economic coercion’, International Organization, 57(03), 643–659.
Driffield, N., Jones, C., and Crotty, J. (2013), ‘International business research and risky investments, an analysis of
FDI in conflict zones’, International Business Review, 22(1), 140–155.
Duanmu, J. L. (2012), ‘Firm heterogeneity and location choice of Chinese multinational enterprises (MNEs)’, Journal
of World Business, 47(1), 64–72.
Duval, Y., and Utoktham, C. (2014), ‘Impact of trade facilitation on foreign direct investment’, Trade and Investment
Division Working Paper No. 04/14, 18 August 2014, Bangkok: United Nations Economic and Social Commission
for Asia and the Pacific.
Early, B. R. (2009), ‘Sleeping with your friends’ enemies: An explanation of sanctions-busting trade’, International
Studies Quarterly, 53(1), 49–71.
Early, B. R. (2012), ‘Alliances and trade with sanctioned states: A study of US economic sanctions, 1950–2000’,
Journal of Conflict Resolution, 56(3), 547–572.
Early, B. R., and Spice, R. (2015), ‘Economic sanctions, international institutions, and sanctions busters: When does
institutionalized cooperation help sanctioning efforts?’, Foreign Policy Analysis, 11(3), 339–360.
Ekholm, K., Forslid, R., and Markusen, J. R. (2007), ‘Export-platform foreign direct investment’, Journal of the
European Economic Association, 5(4), 776–795.
Felbermayr, G., Syropoulos, C., Yalcin, E., and Yotov, Y. V. (2019), ‘On the effects of sanctions on trade and welfare:
New evidence based on structural gravity and a new database’, Kiel Working Paper No. 2131. Kiel: Kiel Institute
for the World Economy (IfW).
Gartzke, E., Li, Q., and Boehmer, C. (2001), ‘Investing in the peace: Economic interdependence and international
conflict’, International Organization, 55(2), 391–438.
Habib, M., and Zurawicki, L. (2002), ‘Corruption and foreign direct investment’, Journal of International Business
Studies, 33(2), 291–307.
Hanson, G. H., Mataloni Jr, R. J., and Slaughter, M. J. (2005), ‘Vertical production networks in multinational firms’,
Review of Economics and Statistics, 87(4), 664–678.
Helpman, E. (1984), ‘A simple theory of international trade with multinational corporations’, Journal of Political
Economy, 92(3), 451–471.
Holburn, G. L., and Zelner, B. A. (2010), ‘Political capabilities, policy risk, and international investment strategy:
Evidence from the global electric power generation industry’, Strategic Management Journal, 31(12), 1290–1315.
Hufbauer, G. C., Schott, J. J., Elliott, K. A., and Oegg, B. (2007). Economic Sanctions Reconsidered. Washington,
DC: Peterson Institute for International Economics.
Jauch, H. (2011, June), ‘Chinese investments in Africa: twenty-first century colonialism?’, in: New Labor Forum (Vol.
20, No. 2). Los Angeles, CA: SAGE Publications, pp. 49–55.
Jensen, N. M. (2003), ‘Democratic governance and multinational corporations: Political regimes and inflows of
foreign direct investment’, International Organization, 57(3), 587–616.
Kaempfer, W. H., and Lowenberg, A. D. (2007), ‘The political economy of economic sanctions’, Handbook of Defense
Economics, 2, 867–911.
Kim, M. (2013), ‘FDI and export spillovers through horizontal and vertical linkages in South Korea using Heckman’s
two step approach’, Korea and the World Economy, 14(2), 259–280.
Kirilakha, A., Felbermayr, G. J. , Syropoulos, C. , Yalcin E. , and Yotov, Y. V. (2021), ‘The Global Sanctions Data
Base: An Update to Include the Years of the Trump Presidency’, in: P.A.G. van Bergeijk (ed.), Research Handbook
on Economic Sanctions, Cheltenham: Edward Elgar, Chapter 4.
Krustev, V. L. (2010), ‘Strategic demands, credible threats, and economic coercion outcomes’, International Studies
Quarterly, 54(1), 147–174.
Lee, H. (2017), ‘Does armed conflict reduce foreign direct investment in the petroleum sector?’, Foreign Policy
Analysis, 13(1), 188–214.
Lei, H. S., and Chen, Y. S. (2011), ‘The right tree for the right bird: Location choice decision of Taiwanese firms’ FDI
in China and Vietnam’, International Business Review, 20(3), 338–352.
Lektzian, D., and Biglaiser, G. (2013), ‘Investment, opportunity, and risk: Do US sanctions deter or encourage global
investment?’, International Studies Quarterly, 57(1), 65–78.
Lektzian, D., and Biglaiser, G. (2014), ‘The effect of foreign direct investment on the use and success of US sanctions’,
Conflict Management and Peace Science, 31(1), 70–93.
Li, Q. (2008), ‘Foreign Direct Investment and Interstate Military Conflict’, Journal of International Affairs, 62(1),
53–66.
Li, Q., and Vashchilko, T. (2010), ‘Dyadic military conflict, security alliances, and bilateral FDI flows’, Journal of
International Business Studies, 41(5), 765–782.
Marinov, N. (2005), ‘Do economic sanctions destabilize country leaders?’, American Journal of Political Science,
49(3), 564–576.

Markusen, J. R., Venables, A. J., Eby-Konan, D., Zhang, K. H. (1996), ‘A unified treatment of horizontal direct
investment, vertical direct investment, and the pattern of trade in goods and services’, NBER Working Paper No.
5696, Cambridge, MA: National Bureau of Economic Research.
Martínez, V., Bengoa, M., and Sánchez-Robles, B. (2012), ‘Foreign direct investment and trade: Complements or
substitutes? Empirical evidence for the European Union’, Technology and Investment, 3(2), 105–112.
Martínez-Galán, E., and Fontoura, M. P. (2019), ‘Global value chains and inward foreign direct investment in the
2000s’, The World Economy, 42(1), 175–196.
Mirkina, I. (2018), ‘FDI and sanctions: An empirical analysis of short- and long-run effects’, European Journal of
Political Economy, 54, 198–225.
Moons, S. J., and van Bergeijk, P. A. G. (2017), ‘Does economic diplomacy work? A meta-analysis of its impact on
trade and investment’, The World Economy, 40(2), 336–368.
Morgan, T. C., and Bapat, N. A. (2003), ‘Imposing sanctions: States, firms, and economic coercion’, International
Studies Review, 5(4), 65–79.
Morgan, T. C., and Miers, A. C. (1999), ‘When threats succeed: A formal model of the threat and use of economic
sanctions’, in: Annual Meeting of the American Political Science Association (Vol. 264), Atlanta, GA: American
Political Science Association.
Morgan, T. C., Bapat, N., and Kobayashi, Y. (2014), ‘Threat and imposition of economic sanctions 1945–2005:
Updating the TIES dataset’, Conflict Management and Peace Science, 31(5), 541–558.
Morgan, T. C., Bapat, N., and Kobayashi, Y. (2021), ‘The Threat and Imposition of Economic Sanctions Data Project:
A Retrospective’, in: P.A.G. van Bergeijk (ed.), Research Handbook on Economic Sanctions, Cheltenham: Edward
Elgar, Chapter 3.
Nielsen, B. B., Asmussen, C. G., and Weatherall, C. D. (2017), ‘The location choice of foreign direct investments:
Empirical evidence and methodological challenges’, Journal of World Business, 52(1), 62–82.
Nishitateno, S. (2013), ‘Global production sharing and the FDI–trade nexus: New evidence from the Japanese
automobile industry’, Journal of the Japanese and International Economies, 27, 64–80.
Noland, M. (2009), ‘The (non-) impact of UN sanctions on North Korea’, Asia Policy, 7, 61–88.
Nooruddin, I. (2002), ‘Modeling selection bias in studies of sanctions efficacy’, International Interactions, 28(1),
59–75.
Pak, Y. S., and Park, Y. R. (2005), ‘Characteristics of Japanese FDI in the East and the West: Understanding the
strategic motives of Japanese investment’, Journal of World Business, 40(3), 254–266.
Peksen, D., and Peterson, T. M. (2016), ‘Sanctions and alternate markets: How trade and alliances affect the onset of
economic coercion’, Political Research Quarterly, 69(1), 4–16.
Pesaran, M. H. (2006), ‘Estimation and inference in large heterogeneous panels with a multifactor error structure’,
Econometrica, 74(4), 967–1012.
Polachek, S., Seiglie, C., and Xiang, J. (2007), ‘The impact of foreign direct investment on international conflict’,
Defence and Peace Economics, 18(5), 415–429.
Rasciute, S., and Downward, P. (2017), ‘Explaining variability in the investment location choices of MNEs: An
exploration of country, industry and firm effects’, International Business Review, 26(4), 605–613.
Sautman, B., and Hairong, Y. (2008), ‘The forest for the trees: Trade, investment and the China-in-Africa discourse’,
Pacific Affairs, 81(1), 9–29.
Shin, G., Choi, S. W., and Luo, S. (2016), ‘Do economic sanctions impair target economies?’, International Political
Science Review, 37(4), 485–499.
Skovoroda, R., Goldfinch, S., DeRouen, K., and Buck, T. (2019), ‘The attraction of FDI to conflicted states: the
counter-intuitive case of US oil and gas’, Management International Review, 59(2), 229–251.
Stępień, B., and Weber, P. (2019), ‘Passive, aggressive or creative? Adjustment strategies of companies affected by
sanctions’, in: International Business in a VUCA World: The Changing Role of States and Firms, Bingley: Emerald
Publishing Limited.
Swenson, D. L. (2004), ‘Foreign investment and the mediation of trade flows’, Review of International Economics,
12(4), 609–629.
UNCTAD (2019), World Investment Report 2019, Geneva: United Nations Conference on Trade and Development.
van Bergeijk, P. A.G. (2019), ‘Can the Sanction Debate Be Resolved?’, in: CESifo Forum (Vol. 20, No. 04, pp. 3–8).
München: ifo Institut–Leibniz-Institut für Wirtschaftsforschung an der Universität München.
van Bergeijk, P. A. G., and Siddiquee, M. S. (2017), ‘Biased sanctions? Methodological change in economic sanctions
reconsidered and its implications’, International Interactions, 43(5), 879–893.
Witte, C. T., Burger, M. J., and Pennings, E. (2020), ‘When political instability devaluates home-host ties’, Journal
of World Business, 55(4), 101077.
Witte, C. T., Burger, M. J., Ianchovichina, E. I., and Pennings, E. (2017), ‘Dodging bullets: The heterogeneous effect
of political violence on greenfield FDI’, Journal of International Business Studies, 48(7), 862–892.
World Bank (2020), World Development Report 2020: Trading for Development in the Age of Global Value Chains,
Washington, DC: World Bank.

21. In and out of the penalty box: U.S. sanctions and
their effects on international trade
Tristan Kohl1
21.1 INTRODUCTION
As is widely discussed throughout this Handbook, economic sanctions are policy instruments
that nation states (senders) impose on other nations (targets) with the objective of altering the
targets’ behavior with respect to policies the sender deems undesirable. These economic sanc-
tions cover any number of policy domains, ranging from travel bans to withholding military
assistance, from asset freezes to full-scale trade embargoes.
The United States has historically been the most active user of economic sanctions in its
arsenal of tools to influence international relations and economic outcomes given its leading
geopolitical role in responding to potential (nuclear) threats posed by Iran and North Korea
(Hufbauer et al. 1990, Felbermayr et al. 2020; see also Chapters 2 and 4 of this Handbook).
Therefore, this chapter examines empirically how U.S.-imposed trade and financial sanctions
affect U.S. imports and exports. We will explore the dynamics of U.S. sanctions over time by
examining whether sanctions have a delayed or prolonged effect on U.S. trade flows. In addi-
tion, we investigate how these sanctions affect trade once they have been removed. Finally,
we look into whether trade flows are deflected to trade partners in close geographic proximity
to the targeted nations. In doing so, this chapter highlights the dynamic effects of sanctions on
trade once sanctions have been imposed – and revoked.
This chapter is related to several other empirical studies on the economic outcomes of trade
sanctions. Recently, Felbermayr et al. (2020) introduced a new, extensive database on sanc-
tions and studied their overall effect on international trade. The authors find that, depending on
the type of sanction imposed, bilateral trade sanctions can significantly reduce trade between
targets and senders – a remarkable result, especially in light of the fact that the empirical
evidence on the effectiveness of sanctions tends to suggest that sanctions do not work.
Intuitively, sanctions impositions induce temporary changes in trade barriers among send-
ers, targets, and third countries. For the sender and target, but also third countries, a sanction
imposition will increase trade costs and decrease their bilateral trade due to increased transac-
tion and transportation costs, disruptions to supply and trade routes, and greater economic
uncertainty.2 Once sanctions are removed, trade costs decline and, all else equal, trade returns
to its pre-imposition level.3
Nevertheless, sanctions may continue to have a longer-lasting effect on trade outcomes
long after the sanction imposition has ended. Business ties may have been severed and require
time to be re-established. U.S. firms may have to regain their (former) international partners’
trust—and business contracts. Policy uncertainty and wariness about future sanctions could
stall trade and investment decisions not only for the sender and target, but for the world
economy at large (also see Bergeijk 1995, Handley and Limão 2017). Intermediate inputs may
no longer be readily available and hence delay delivery of goods that depend on global value
388
Tristan Kohl - 9781839102721
U.S. sanctions and their effects on international trade 389
chains. Trade flows may have been rerouted to other countries in search of new (and not only
temporary) destinations. Taken together, sanctions will quickly impose trade frictions that will
immediately reduce trade, and these frictions will only gradually wear off some time after the
sanctions have been officially lifted.
To the best of our knowledge, the only test of this hypothesis for the United States was done
by Hufbauer & Oegg (2003). Using two years of data (1995 and 1999), these authors found
no empirical evidence of prolonged negative effects of sanctions on U.S. trade, and to some
extent even increases in U.S. trade due to business partners catching up on delayed purchases
from the United States. However, our results paint a rather different picture of the negative
post-imposition effects of sanctions on U.S. trade, at least partly due to substantial differences
in data coverage.
Considering the role of Foreign Direct Investment (FDI), Biglaiser & Lektzian (2011)
empirically investigate how U.S. sanctions affect U.S. FDI into target nations (171 countries,
1965–2000). They find that U.S. investment drops before sanctions are imposed, yet invest-
ment returns to pre-sanction levels around two years after the sanctions have been imposed.
This result can be explained in that investors diversify their risks away from the economic
uncertainty involving the target when sanctions are announced and first imposed; once the
sanction is implemented and its terms and broader economic effects are known, risk and
uncertainty decrease by a sufficient margin for FDI to return (also see Chapter 20 in this
Handbook). Alternatively, there may be a temporary substitution effect between sanctioned
trade and unrestricted FDI.
Finally, with a view on the long-term effects of sanctions on economic growth, Neuenkirch
and Neumeier (2015) study the role of multilateral UN and bilateral U.S.-imposed sanctions
on targets’ GDP per capita (160 countries, 1976–2012). The authors find that multilateral
sanctions have a stronger, more prolonged, and detrimental effect on GDP growth compared
to unilateral sanctions, with the aggregate decline in GDP amounting to 26 and 13 per cent,
respectively, over a period of seven to 10 years.
For the purposes of the current study, we will focus on the effects that trade sanctions have
on U.S. imports and exports. Yet, as the studies above illustrate, there is a need to shed more
light on the long-term impacts of these sanctions – and their removal – on international trade
flows. To that end, Section 2 presents the data and methodology underlying our analysis
and Section 3 presents our key results. Section 4 discusses our findings, avenues for future
research, and concludes.
21.2 DATA & METHODOLOGY
21.2.1 Data
We obtain imports and exports data from the U.S. International Trade Commission (ITC),
which covers the universe of U.S. imports (series: imports for consumption) and exports
(series: domestic exports) for 1989–2016 at the 10-digit level of the Harmonized System (HS).
All trade values are deflated with U.S. GDP deflators from the World Bank Development
Indicators. Real values (in constant US$ of 2010) are collapsed by partner-HS8-year triplets to
enable us to match these observations with Most Favored Nation (MFN) import tariffs, which
are available at the HS 8-digit level.4
Tristan Kohl - 9781839102721

100
200
80
Share of sanctions (%)
U.S. sanction impositions

150
60
Other
40 100 Travel
Trade
Financial
Arms
20 Military
Impositions (right hand axis)
50
1990 1995
2000 2005 2010 2015
Year
Source: Own calculations based on the Global Sanctions Database (Felbermayr et al. 2020)
Figure 21.1 Share of U.S. sanctions impositions by type, 1989–2016
The variables of interest are obtained from the Global Sanctions Database (GSDB;
Felbermayr et al. 2020, also see Chapters 4 and 22 of this Handbook), which provides the most
extensive coverage of economic sanctions on the world economy since 1945. Crucially, the
authors distinguish between different types of sanctions, which is relevant for the purposes of
our analysis. The GSDB broadly classifies sanctions as being (i) trade sanctions, (ii) financial
sanctions, (iii) travel restrictions, (iv) arms sanctions, (v) sanctions on military assistance, and
(vi) other types of sanctions that are not frequently observed.
As Figure 21.1 shows, the U.S. imposed a total of between 100 and 150 economic sanctions
per year in the past two and a half decades. A notable breach in this pattern was observed in
the 2000s as a result of the U.S. War on Terror, shifting the focus in U.S. sanctions to a much
stronger focus on military assistance sanctions. On average, financial sanctions account
for about 32 per cent of U.S. sanctions, followed by 27 per cent for sanctions on military
assistance, 15 per cent on arms sanctions, 12 per cent on trade sanctions, 9 per cent on travel
restrictions, and 5 per cent for other types of sanctions.
Figure 21.2 and Figure 21.3 show the frequency, or number of years, that individual coun-
tries were subject to U.S.-imposed sanctions between 1989 and 2016 on the horizontal axis.5
The vertical axis represents the log of real imports (Figure 21.2) and exports (Figure 21.3).
Both figures suggest, not surprisingly, a negative correlation between the overall volume of
U.S. trade with targets and the number of years that a target is subject to a trade-related sanc-
tion. In the past 28 years, most U.S. trade partners were subject to U.S. sanctions less than 10
times; countries such as Belarus, Iraq, and Syria were targeted between 10 and 20 times and
Cuba, Iran, Myanmar, North Korea, and Sudan between 20 and 30 times.
Tristan Kohl - 9781839102721

30
CHN
VEN IND RUS

IDN
VNM
CHL KWT ZAF AGO IRQ
ARG
25 PAK HUN
NIC KHM POL
AZE
KAZ HTI UKR ROM LBY
ln(Imports)
CIV
PAN LTU
EST SVN BGR
LVA HRV CMR BLR
SVU SYR MMR
GEO BLZ MKD
UZB MNG SRB LBR IRN
TKM
ARM AFG SLE BIHMDA
TJK CSK
20 ALB SDN
DDR
MLI KGZ
MNE
SOM
ERI
15 CUB
PRK
0 10 20 30
Frequency of U.S. trade sanction impositions
Figure 21.2 Frequency of U.S. trade sanction impositions, 1989–2016 and log imports (in
constant US$ of 2010)
21.2.2 Estimation
In order to estimate the effect of imposing – and lifting – sanctions on international trade, we
estimate the following specification:
f cpy = α o + β1 Impositioncy + γ1WTOcyformal + γ 2GATTcyinformal + γ 3 FTAcy
(21.1)
+ γ 4 MFN cpy + γ 5 Durationcy + γ 6 Deflectioncy + δc + δ p + δ y + ε cpy
where f depicts the dependent variable as either the import or export flows between the United
States and country c for product p in year y. Imposition is a binary variable equal to 1 if the
United States imposed a sanction on country c in year y and 0 otherwise.
Our control variables account for formal General Agreement on Tariffs and Trade (GATT)/
World Trade Organization (WTO) membership (WTOformal) and informal GATT participa-
tion (GATTinformal) – measures which allow us to control for the trade-inducing effect that
participation in the multilateral trading system would bring relative to non-participants (see
Tomz et al. 2007). Also observe that the United States is a founding member of the GATT
and has always been a formal member of the GATT/WTO. We also include FTA, which is
a binary, time-varying variable accounting for the presence of U.S. Free Trade Agreements,
which extend preferential market access to partners’ products compared to non-partners’
goods.6 Moreover, we need to control for the MFN ad valorem duty rates that exporters face
when their goods are imported by the United States (in regressions with U.S. imports as the
Tristan Kohl - 9781839102721

28
CHN
26 IND
CHLVEN
ARG IDN
PAN RUS
ZAF
PAK VNM
24 KWT POL
ln(Exports)
SVU HTI
NIC UKR IRQ
HUN ROM AGO
LTU IRN
LVA BLZ BGR SYR CUB
KAZ AFG
22 GEO SVN HRV CIV
AZE EST LBY
UZB LBR
TKM CMR SDN
ARM CSK BLR
TJK KHM SLE BIH
MLI KGZ MNG SRB MDA MMR
20 ALB MKD
ERI SOM
DDR PRK
MNE
18
0 10 20 30
Frequency of U.S. trade sanction impositions
Figure 21.3 Frequency of U.S. trade sanction impositions, 1989–2016 and log exports (in
constant US$ of 2010)
dependent variable). Conversely, regressions with U.S. exports as the dependent variable
require the MFN rates that importers impose on U.S. products. To that end, we include for
regressions on U.S. imports, the 8-digit MFN tariffs retrieved from the ITC. For analyses
with U.S. exports as dependent variable, the 6-digit MFN simple average tariff imposed by
partners on U.S. exports (WITS) is the best available tariff we can use.7 Finally, we include
Duration, which measures the number of consecutive years during which a unique trade
sanction was imposed on a target country to control for the possibility that trade decreases as
sanction spell length increases. All regressions include country, HS8-digit product and year
fixed effects, and standard errors are clustered at the country level.8 Descriptive statistics are
provided in Table 21.1.
We estimate equation (21.1) through Poisson pseudo-likelihood estimation (PPML; see
Correia, Guimarães, and Zylkin 2019a, 2019b) in order to account for the large share of zero
trade flows in the data, a strategy that is common in the empirical trade literature. Ignoring
these zero trade flows would give rise to estimation bias, as does relying on OLS for a
log-linear specification of the gravity equation because ln(0) is not defined (Santos Silva
& Tenreyro 2006). Moreover, accounting for zero trade flows is especially relevant when
analyzing how sanctions depress, possibly even eliminate, international trade. Omitting
country-pairs with sanction spells and zero trade would bias our estimate of β1 in equation
(21.1).9
In the tables that follow, the left-hand columns present results taking imports as the depend-
ent variable, while results for exports are presented in the right-hand columns. Moreover,
Tristan Kohl - 9781839102721

Table 21.1 Descriptive statistics
Variable Obs. Mean Std. dev. Min. Max.

Imports 9,508,438 4.36E+06 1.29E+08 0 4.67E+10
Exports 9,508,438 1.72E+06 3.84E+07 0 2.46E+10
GATT/WTO Formal 9,508,438 0.7381 0.4397 0 1
GATT/WTO Informal 9,508,438 0.1558 0.3626 0 1
FTA 9,508,438 0.1184 0.3231 0 1
MFN imports 9,508,438 0.0279 0.0493 0 0.48
MFN exports 9,508,438 0.0513 0.0839 0 1
Duration: Trade 9,508,438 0.1853 1.4640 0 28
Duration: Financial 9,508,438 1.9748 6.8371 0 28
Imposition: All types 9,508,438 0.3095 0.4623 0 1
Imposition: Trade 9,508,438 0.0267 0.1611 0 1
Imposition: Financial 9,508,438 0.0942 0.2922 0 1
Removal: Trade 9,508,438 0.0069 0.0825 0 1
Removal: Financial 9,508,438 0.0071 0.0837 0 1
Deflection: Trade 9,508,438 0.1937 0.3952 0 1
Deflection: Financial 9,508,438 0.2121 0.4088 0 1
our regression specifications will be modified in various ways, depending on the particular
research question at hand.
First, we will explore the extent to which different sanction types have different effects on
trade. Second, we allow for the possibility that sanctions have a prolonged and/or delayed
effect on trade, very similar to the delayed effects of FTAs on trade (see Besedeš et al. 2020).
Third, we construct a dummy variable Removal that is unity if a country was subject to a
trade sanction in the previous but not in the concurrent year, and zero otherwise. Including
this variable in our regressions will allow us to gauge how lifting a sanction affects U.S. trade
with former targets. Finally, we consider the possibility that trade flows may be deflected
to countries in near proximity to the targets. For example, it could be the case that targets
reroute goods destined for U.S. markets through neighboring countries (provided these are not
targets as well). We would then expect to observe an increase in trade from targets’ neighbors
once a trade sanction has been imposed. To measure this empirically, we rely on the GSDB
(Felbermayr et al. 2020) and CEPII GeoDist database (Mayer & Zignago 2011) to construct a
binary variable, Deflection. This variable is unity for those trade partner-product-year triplets
in our main dataset when the trade partner is contiguous to a U.S. trade sanction target in that
year, and zero otherwise. We exclude neighbors who also were U.S. trade sanction targets in
the same year.
Tristan Kohl - 9781839102721

21.3 RESULTS
We first ask how U.S. sanctions in general, and in particular those sanctions aimed at affect-
ing international trade, influence U.S. imports and exports. In Table 21.2, columns 1 and 5,
respectively, we show the baseline estimates for the control variables that feature in all of
our regressions using either U.S. imports or exports as the dependent variable. Formal WTO
membership and informal GATT participation have the expected positive effect on U.S.
imports and exports. Interestingly, U.S. FTAs do not seem to have a statistically significant
effect on U.S. imports from its FTA partners, but we do find a statistically significant and posi-
tive effect for U.S. exports. We do not find that MFN ad valorem rates imposed by the United
States on imports (at the HS 8-digit level) nor those imposed by U.S. trade partners on their
imports from the United States (at the HS 6-digit level) affect U.S. bilateral trade volumes. The
length of sanction spells, i.e., the number of consecutive years a trade partner faces a sanction,
decreases the overall level of imports, albeit that this parameter estimate will not be statistically
significant once we add more sanction-specific controls in later analyses.10
Next, columns 2 and 6 shows that sanctions, in general, do not have a direct effect on
imports, and only a statistically marginal, positive effect on exports. Yet, this measure of
sanctions covers any type of sanction, including military, arms, financial, trade, and other types
described in the Global Sanctions Database. In order to avoid potential measurement bias in
the independent variable of interest, we proceed in the remainder of this chapter to focus only
on sanctions that are actually intended to affect trade outcomes, namely trade and financial
sanctions. Indeed, column 3 shows that trade sanctions reduce U.S. imports from targets by
around 40 per cent relative to non-targets. Moreover, column 7 finds that U.S. exports to targets
decrease by 30 per cent relative to non-targets, once trade sanctions are imposed. Financial
sanctions decrease U.S. imports from targets (relative to non-targets) by 35 per cent (column
4), but U.S. exports remain unaffected (column 8).
We then ask to what extent these negative impacts on U.S. trade persist, once a sanction
has been imposed. Table 21.3 examines the lagged effects of trade and financial sanction
impositions. For imports, column 1 (together with column 3 from Table 21.2) suggests that
part of the contemporaneous effect of the sanctions imposition occurs with a one-year delay.
However, allowing for even longer lagged effects in columns 2 and 3 shows that this is not
the case: while the lagged terms are statistically insignificant, the contemporaneous effect
remains fairly consistent and statistically significant across the columns. A similar story holds
for the regressions focusing on how financial sanctions affect U.S. imports in columns 4 to 6.
Taken together, these results suggest that trade and financial sanctions only have a short-term
negative impact on U.S. imports, with no meaningful lagged effects on trade flows from targets
relative to non-targets.
For U.S. exports, column 7 shows a statistically significant and negative one-year lagged
term. While this effect disappears with the addition of one more lagged term in column 8, it
reappears when allowing for a four-year window for trade sanctions to have a delayed effect
on U.S. exports in column 9. A similar result holds for financial sanctions in columns 10–11,
but this finding is not robust to the inclusion of a third lagged term in column 12. Overall,
these findings suggest that U.S. imports and exports respond very quickly to trade and financial
sanctions impositions with a contemporaneous (or at best one-year lagged) decline in trade
with sanction targets. There is no evidence of persistent, long-term continued declines in U.S.
trade following a U.S.-imposed trade or financial sanction.
Tristan Kohl - 9781839102721

Table 21.2 Contemporaneous effects of sanctions on trade flows
Imports Exports
(1) (2) (3) (4) (5) (6) (7) (8)
GATT/WTO
- Formal 0.932*** 0.960*** 0.902*** 0.938*** 0.985*** 1.006*** 0.958*** 0.984***
(0.14) (0.15) (0.14) (0.14) (0.22) (0.23) (0.22) (0.22)
- Informal 0.894*** 0.914*** 0.850** 0.908*** 0.969*** 0.978*** 0.940*** 0.970***

(0.27) (0.28) (0.28) (0.27) (0.25) (0.25) (0.25) (0.25)
FTA 0.180 0.189 0.176 0.178 0.265* 0.268* 0.265* 0.264*

(0.19) (0.18) (0.19) (0.19) (0.13) (0.13) (0.13) (0.13)
MFN –0.432 –0.431 –0.428 –0.422 –0.520 –0.497 –0.508 –0.520

(1.52) (1.52) (1.52) (1.52) (0.37) (0.36) (0.37) (0.37)
Duration –0.0335*** –0.0453** 0.0110 0.0109 0.00152 –0.0166 0.0455 0.0119

(0.01) (0.01) (0.02) (0.02) (0.01) (0.02) (0.02) (0.02)
Imposition:
- All types 0.127 0.154*
(0.07) (0.06)
- Trade –0.389* –0.293*

(0.15) (0.15)
- Financial –0.351* –0.212

(0.17) (0.12)
Constant 17.64*** 17.56*** 17.67*** 17.63*** 16.29*** 16.23*** 16.32*** 16.29***

(0.13) (0.16) (0.13) (0.13) (0.20) (0.23) (0.21) (0.20)
Obs. 7,880,388 7,880,388 7,880,388 7,880,388 7,111,783 7,111,783 7,111,783 7,111,783
Pseudo-R2 0.694 0.694 0.694 0.694 0.710 0.710 0.710 0.710
Notes: PPML estimates based on equation (1). Standard errors in parentheses, clustered by partner. * p < 0.05,
**
p < 0.01, *** p < 0.001. All regressions include country, HS8-digit product and year fixed effects.
Tristan Kohl - 9781839102721

Table 21.3 Lagged effects of trade and financial sanctions on U.S. imports and exports
Imports Exports
Trade Sanctions Financial Sanctions Trade Sanctions Financial Sanctions
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
GATT/WTO
- Formal 0.848*** 0.765*** 0.702*** 0.899*** 0.834*** 0.787*** 0.937*** 0.881*** 0.825*** 0.979*** 0.931*** 0.895***
(0.12) (0.10) (0.09) (0.12) (0.11) (0.09) (0.20) (0.18) (0.17) (0.20) (0.18) (0.16)
- Informal 0.765** 0.667** 0.581* 0.835** 0.758** 0.699** 0.904*** 0.845*** 0.764*** 0.949*** 0.899*** 0.841***
(0.26) (0.25) (0.24) (0.26) (0.25) (0.24) (0.23) (0.21) (0.20) (0.23) (0.21) (0.20)
FTA 0.159 0.152 0.139 0.159 0.152 0.138 0.229 0.185 0.126 0.226 0.183 0.124
396
(0.17) (0.15) (0.14) (0.17) (0.15) (0.14) (0.12) (0.10) (0.09) (0.12) (0.10) (0.09)
MFN –0.305 –0.206 –0.117 –0.303 –0.212 –0.134 –0.558 –0.602 –0.596 –0.554 –0.600 –0.599
(1.49) (1.44) (1.35) (1.49) (1.44) (1.34) (0.37) (0.36) (0.36) (0.36) (0.36) (0.36)
Duration 0.0237 0.0353 0.0392* 0.0225 0.0312 0.0449* 0.0444 0.0455 0.0539 0.0197 0.0164 0.0261
(0.02) (0.02) (0.02) (0.02) (0.02) (0.02) (0.03) (0.03) (0.03) (0.02) (0.02) (0.02)
Imposition –0.262 –0.380** –0.463** –0.281 –0.339* –0.518** –0.138 –0.220 –0.304 –0.0561 –0.0552 –0.173
Tristan Kohl - 9781839102721

(0.15) (0.14) (0.14) (0.18) (0.17) (0.16) (0.14) (0.16) (0.17) (0.11) (0.12) (0.12)
(continued )
Imports Exports
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
Imposition(t –1) –0.212* –0.0405 –0.0160 –0.152* –0.0775* –0.0139 –0.197* –0.0760 –0.135** –0.231*** –0.140* –0.0849
(0.09) (0.06) (0.05) (0.06) (0.04) (0.04) (0.08) (0.06) (0.04) (0.07) (0.06) (0.04)
Imposition(t –2) –0.161 –0.0826 –0.0808 –0.00346 –0.0739 0.0159 –0.0555 0.00315

(0.09) (0.07) (0.08) (0.04) (0.09) (0.08) (0.06) (0.04)
Imposition(t –3) –0.0787 –0.0989 –0.0212 –0.0674

(0.06) (0.08) (0.06) (0.08)
397
Constant 17.81*** 17.95*** 18.06*** 17.76*** 17.87*** 17.96*** 16.40*** 16.49*** 16.57*** 16.36*** 16.44*** 16.49***
(0.11) (0.09) (0.08) (0.11) (0.09) (0.08) (0.19) (0.17) (0.15) (0.18) (0.17) (0.15)
Obs. 5,833,774 4,867,238 4,213,092 5,833,774 4,867,238 4,213,092 5,246,564 4,346,698 3,746,700 5,246,564 4,346,698 3,746,700
2
Pseudo–R 0.694 0.696 0.699 0.694 0.696 0.699 0.704 0.701 0.699 0.704 0.701 0.699
Notes: PPML estimates based on equation (1) augmented with 3 lagged Imposition terms. Standard errors in parentheses, clustered by partner. * p < 0.05, ** p < 0.01,
***
p < 0.001. All regressions include country, HS8-digit product and year fixed effects.
Tristan Kohl - 9781839102721

Having established that U.S. imports and exports decline relatively quickly after sanctions
impositions, we then proceed to examine to what extent U.S. trade is restored with ex-targets,
once these sanctions have been removed. As in previous empirical exercises, we introduce in
Table 21.4 a contemporaneous effect (Removal) as well as 2 lagged effects to study the dynam-
ics of lifting trade sanctions over time.11 Column 1 shows that U.S. imports with ex-targets
continue to decline compared to countries that are not targets in the year that trade sanctions are
lifted, all else equal. Allowing for a longer time horizon, moving from column 2 to 3 reveals
that there is a considerable lagged effect of trade sanctions removal on bilateral trade. Taken
together, our results suggest an overall decline in U.S. imports from ex-partners of up to around
70 per cent, once trade sanctions are removed, an effect that is drawn out over a period of two
to three years after the trade sanction has been lifted. A very similar pattern emerges for how
financial sanctions affect U.S. imports (columns 4–6), with an overall decline in imports from
former financial targets of around 50 per cent.
For exports, we again find evidence of a contemporary, negative effect for trade with
ex-targets compared to non-targets. There also is a contemporaneous negative effect on
U.S. exports once trade and financial sanctions have been lifted. However, in contrast to our
findings for U.S. imports, we do not observe significant lagged effects of sanctions removal,
regardless of whether we examine the removal of trade sanctions (columns 7–9) or financial
sanctions (columns 10–12).12 Overall, these findings suggest that U.S. exports to ex-targets
do not continue to decrease post-imposition, while U.S. imports from ex-targets continue to
decline for a number of years after a trade or financial sanction has been terminated. A possible
explanation for this difference could be that, compared to the average exporter in a former
target, the average U.S. exporter has more extensive firm-level resources and capabilities to
temporarily relocate its exports to other nearby destination markets during the sanction spell,
and to outrival competitors once the sanction is lifted to regain its original market share in the
ex-target. (A lack of suitable substitutes for U.S. exports to these generally small economies
might also be an explanation.) In contrast, this process may be more challenging for the aver-
age exporter in (small) formerly targeted states seeking re-entry into a large, relatively more
competitive U.S. market.13
To follow up on this idea, we now consider how trade routes might change in light of sanc-
tions impositions. Is trade deflected to a target’s geographic, non-targeted neighbor? If imports
from/exports to the target increase, the sender may see its trade originally coming from the
target being rerouted through the target’s geographic neighbor to reach the sender. This sug-
gests that the target and its neighbor are engaged in “sanctions busting” behavior. Alternatively,
it is also a possibility that international firms are sufficiently capable of reorganizing their
activities in such a way that they can quickly source key inputs from other locations in their
regional supply chains, and access different regional markets in which to sell their exports,
once the target country is cut off from the United States. Negative parameter estimates would
indicate that sanctioning the target has negative externalities for its neighbors stemming from
disruptions to their regional trade routes.
Table 21.5 presents the results for sanctions-induced trade deflection. For U.S. imports, we
do not find any evidence that imports from targets’ neighboring countries increase once trade
sanctions are imposed on the targets. The parameter estimates in columns 1 through 6 for both
the contemporaneous as well as lagged terms are not statistically significant. In contrast, U.S.
exports do seem to be deflected to targets’ neighbors. Columns 7 through 9 report an increase
of 7 to 14 per cent in U.S. exports to neighboring countries of nations under a U.S. trade
Tristan Kohl - 9781839102721

Table 21.4 Contemporaneous and lagged effects of sanction removals on U.S. imports and exports
Imports Exports
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
GATT/WTO
- Formal 0.874*** 0.818*** 0.734*** 0.939*** 0.900*** 0.834*** 0.926*** 0.911*** 0.855*** 0.983*** 0.978*** 0.931***
(0.14) (0.12) (0.11) (0.14) (0.12) (0.11) (0.22) (0.20) (0.19) (0.22) (0.20) (0.18)
- Informal 0.829** 0.742** 0.642* 0.912*** 0.840** 0.764** 0.913*** 0.882*** 0.822*** 0.972*** 0.951*** 0.900***
(0.27) (0.26) (0.25) (0.27) (0.26) (0.25) (0.25) (0.23) (0.21) (0.25) (0.23) (0.21)
FTA 0.177 0.160 0.153 0.178 0.159 0.152 0.266* 0.229 0.185 0.263* 0.226 0.182
399
(0.19) (0.17) (0.15) (0.19) (0.17) (0.15) (0.13) (0.12) (0.10) (0.13) (0.12) (0.10)
MFN –0.429 –0.306 –0.207 –0.424 –0.306 –0.215 –0.517 –0.564 –0.604 –0.512 –0.553 –0.597
(1.52) (1.49) (1.44) (1.52) (1.49) (1.44) (0.37) (0.37) (0.37) (0.37) (0.37) (0.37)
Duration 0.0103 0.0148 0.0212 0.00800 0.0153 0.0211 0.0475 0.0361 0.0359 0.0102 0.0104 0.00653
(0.02) (0.02) (0.02) (0.02) (0.02) (0.02) (0.02) (0.03) (0.03) (0.02) (0.02) (0.02)
Imposition –0.400** –0.377** –0.412** –0.350* –0.363* –0.391* –0.325* –0.254 –0.273 –0.216 –0.178 –0.137
(0.15) (0.14) (0.14) (0.17) (0.17) (0.17) (0.15) (0.16) (0.16) (0.12) (0.12) (0.12)
Tristan Kohl - 9781839102721

Imports Exports
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
Removal –0.416** –0.346** –0.274* –0.508*** –0.246* –0.228* –0.324* –0.334* –0.241 –0.380*** –0.336** –0.253*
(0.13) (0.13) (0.11) (0.14) (0.11) (0.11) (0.15) (0.14) (0.13) (0.11) (0.12) (0.13)
Removal(t –1) –0.269** –0.240** –0.324** –0.224 –0.144 –0.137 –0.198* –0.166

(0.10) (0.09) (0.11) (0.12) (0.12) (0.13) (0.09) (0.09)
Removal(t –2) –0.181* –0.264** –0.124 –0.0890

(0.08) (0.10) (0.09) (0.11)
400
Constant 17.69*** 17.84*** 17.98*** 17.63*** 17.76*** 17.88*** 16.35*** 16.43*** 16.51*** 16.29*** 16.36*** 16.44***
(0.13) (0.11) (0.09) (0.13) (0.11) (0.09) (0.21) (0.19) (0.18) (0.20) (0.18) (0.17)
Obs. 7,880,388 5,833,774 4,867,238 7,880,388 5,833,774 4,867,238 7,111,783 5,246,564 4,346,698 7,111,783 5,246,564 4,346,698
Pseudo-R2 0.694 0.694 0.696 0.694 0.694 0.696 0.710 0.704 0.701 0.710 0.704 0.701
Notes: PPML estimates based on equation (1) augmented with contemporaneous and 2 lagged Removal terms. Standard errors in parentheses, clustered by partner.
*
p < 0.05, ** p < 0.01, *** p < 0.001. All regressions include country, HS8-digit product and year fixed effects.
Tristan Kohl - 9781839102721

Table 21.5 Effects of deflecting trade to neighbors of sanctioned targets on U.S. imports and exports
Imports Exports
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
GATT/WTO
- Formal 0.900*** 0.858*** 0.780*** 0.940*** 0.900*** 0.835*** 0.954*** 0.947*** 0.884*** 0.985*** 0.981*** 0.934***
(0.14) (0.13) (0.11) (0.14) (0.12) (0.10) (0.22) (0.20) (0.18) (0.22) (0.19) (0.18)
- Informal 0.846** 0.768** 0.672* 0.908*** 0.832** 0.754** 0.928*** 0.906*** 0.841*** 0.971*** 0.950*** 0.897***
(0.28) (0.27) (0.26) (0.27) (0.26) (0.25) (0.25) (0.23) (0.21) (0.25) (0.23) (0.21)
FTA 0.173 0.153 0.147 0.179 0.160 0.155 0.249* 0.214 0.173 0.265* 0.231 0.186
401
(0.18) (0.16) (0.15) (0.19) (0.17) (0.16) (0.12) (0.11) (0.10) (0.13) (0.12) (0.11)
MFN –0.426 –0.299 –0.198 –0.423 –0.302 –0.210 –0.516 –0.558 –0.602 –0.520 –0.560 –0.605
(1.53) (1.50) (1.45) (1.52) (1.49) (1.44) (0.37) (0.37) (0.36) (0.37) (0.36) (0.36)
Duration 0.0103 0.0144 0.0218 0.00830 0.0153 0.0212 0.0436 0.0290 0.0304 0.0118 0.0117 0.00551
(0.02) (0.02) (0.02) (0.03) (0.02) (0.02) (0.03) (0.03) (0.03) (0.02) (0.02) (0.02)
Imposition –0.367* –0.326* –0.367* –0.305 –0.316 –0.340 –0.210 –0.118 –0.159 –0.204 –0.159 –0.102
(0.16) (0.16) (0.16) (0.20) (0.20) (0.20) (0.16) (0.17) (0.17) (0.13) (0.13) (0.14)
Tristan Kohl - 9781839102721

(continued )
Imports Exports
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
Deflection 0.0309 0.0325 0.0256 0.0729 0.0481 0.0457 0.143** 0.0993* 0.0740* 0.0188 0.0417 0.0356
(0.12) (0.12) (0.12) (0.11) (0.09) (0.09) (0.05) (0.04) (0.03) (0.08) (0.06) (0.06)
Deflection (t –1) 0.0225 0.00509 0.0382 0.0366 0.0576 0.0574 –0.0337 0.00797
(0.04) (0.02) (0.04) (0.04) (0.05) (0.03) (0.04) (0.03)
Deflection(t –2) 0.0447 0.0171 0.0397 –0.0450

(0.03) (0.04) (0.04) (0.02)
402
Constant 17.66*** 17.79*** 17.91*** 17.61*** 17.73*** 17.84*** 16.30*** 16.37*** 16.46*** 16.29*** 16.35*** 16.44***
(0.14) (0.12) (0.10) (0.14) (0.12) (0.10) (0.20) (0.18) (0.17) (0.20) (0.18) (0.17)
Obs. 7880388 5833774 4867238 7880388 5833774 4867238 7111783 5246564 4346698 7111783 5246564 4346698
Pseudo-R2 0.694 0.694 0.696 0.694 0.694 0.696 0.710 0.704 0.701 0.710 0.704 0.701
Notes: PPML estimates based on equation (1) augmented with contemporaneous and 2 lagged Deflection terms. Standard errors in parentheses, clustered by partner.
*
p < 0.05, ** p < 0.01, *** p < 0.001. All regressions include country, HS8-digit product and year fixed effects.
Tristan Kohl - 9781839102721

sanction. And, recalling the overall decline in U.S. exports to the sanctioned state of about 30
per cent (Table 21.2, column 7), this result suggests that at least a non-trivial portion of U.S.
exports may still find their way to the target’s region through increased trade with the target’s
geographic neighbors.14 Determining to what extent this finding reflects sanctions busting as
opposed to exporters’ agility in reorganizing regional supply chains is an interesting topic for
future research.
Finally, we ask if some goods are more vulnerable to sanctions than others. We have
two classifications in mind, namely Rauch’s (1999) distinction between homogeneous and
differentiated goods, and the BEC classification of products as primary, intermediate, and
final goods (all at the HS6-digit level).15 In Table 21.6, we show estimates for the effect of
trade sanctions on U.S. imports obtained by estimating equation (1) on the subset of goods
that are specified in the column heading, i.e., homogeneous goods (column 1), differentiated
goods (column 2), primary goods (column 3), intermediate goods (column 4), and final goods
(column 5).16 A similar logic applies to our estimates for the effect of financial sanctions on
U.S. imports in columns 6–10, as well as our presentation of the results for U.S. exports in
Table 21.7.
We find that trade sanctions notably reduce U.S. imports of differentiated and intermediate
goods. Once these sanctions are lifted, a lagged negative impact continues to depress U.S.
imports for differentiated and final goods from ex-targets relative to non-targets. These
findings suggest that suitable substitutes in terms of consumer and production inputs can be
readily and permanently sourced from alternative (non-target) suppliers. We do not find that
the deflection effect is specific to any one particular commodity type. For financial sanctions,
column 9 suggests that intermediate goods are most susceptible to impositions and a drawn-
out, negative post-removal effect—a finding which might be explained by the observation that
financial frictions are detrimental to global production networks that crucially depend on trade
in intermediate goods (Manova and Yu 2016).
Turning to U.S. exports, the negative effect of trade sanction impositions is most pronounced
for intermediate goods (and, in fact, statistically insignificant for all other product types) – a
finding which again suggests vulnerability of supply-chain trade to economic sanctions. There
is no systematic pattern with respect to the (lagged) effects of sanction removals. Interestingly,
U.S. exports are deflected to targets’ neighbors most notably in the case of homogeneous
goods and intermediate products – the former suggesting that homogeneous U.S. exports are
competitive in other markets, the latter pointing to the agility of U.S. exporters to (partially)
relocate their products to other geographies. Finally, consistent with our earlier findings, we do
not see that U.S. exports of any particular product type are vulnerable to financial sanctions.
21.4 DISCUSSION AND FUTURE RESEARCH
This chapter highlights that U.S. trade sanctions have a contemporaneous, immediate, and
detrimental effect on U.S. imports from and exports to target countries relative to non-targets.
While we do not find any evidence of delayed or prolonged negative effects during the sanction
spell, trade does not swiftly recover once these sanctions have been lifted. In fact, imports
remain substantially lower and continue to decline over a prolonged number of years once
a trade or financial sanction has been lifted, suggesting that these sanctions impositions do
lasting damage to U.S. imports from targets. However, U.S. exports to targets do not suffer the
Tristan Kohl - 9781839102721

Table 21.6 Effects of trade and financial sanctions on U.S. imports by Rauch (1999) and BEC classifications
Trade Sanctions Financial Sanctions

Homogeneous Differentiated Primary Intermediate Final Homogeneous Differentiated Primary Intermediate Final
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
GATT/WTO
- Formal 0.170 0.762*** –0.478 0.895*** 0.548*** 0.230 0.932*** –0.411 1.021*** 0.714***
(0.23) (0.08) (0.32) (0.17) (0.07) (0.24) (0.07) (0.34) (0.15) (0.08)
- Informal 0.144 0.679** –0.276 0.670* 0.372 0.211 0.894*** –0.190 0.816** 0.610*
(0.28) (0.26) (0.29) (0.27) (0.29) (0.29) (0.25) (0.30) (0.26) (0.28)
FTA 0.184 0.148 0.380 0.212 0.0714 0.187 0.172 0.417* 0.224 0.0971
404
(0.14) (0.16) (0.20) (0.15) (0.14) (0.14) (0.17) (0.19) (0.15) (0.15)
MFN 3.979 –1.182 8.954 3.222** –1.980 3.947 –1.191 8.487 3.230** –1.991
(2.33) (1.56) (5.14) (0.99) (1.73) (2.34) (1.56) (5.27) (0.99) (1.74)
Duration 0.0343 0.0612 0.0448 0.0219 0.0231 0.0369 0.0137 0.0315 0.0792** –0.00422
(0.03) (0.04) (0.03) (0.03) (0.06) (0.04) (0.02) (0.05) (0.03) (0.02)
Imposition –0.384 –0.472** –0.369 –0.449* –0.275 –0.264 –0.284 –0.140 –0.538** –0.194
(0.24) (0.18) (0.27) (0.19) (0.28) (0.28) (0.19) (0.32) (0.20) (0.20)
Tristan Kohl - 9781839102721

(continued )

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
** ***
Removal –0.0730 –0.337 –0.0517 –0.145 –0.408 0.0105 –0.133 –0.0128 –0.0892 –0.374
(0.08) (0.12) (0.13) (0.14) (0.11) (0.11) (0.22) (0.17) (0.21) (0.21)
Removal(t –1) –0.0952 –0.265** –0.170 –0.157 –0.298*** 0.0226 –0.226 –0.0140 –0.199 –0.353
(0.12) (0.09) (0.25) (0.14) (0.08) (0.09) (0.18) (0.13) (0.15) (0.19)
Removal(t –2) –0.0452 –0.288** –0.0128 –0.184 –0.296** –0.0110 –0.292 –0.0172 –0.233* –0.368*
(0.09) (0.10) (0.19) (0.12) (0.09) (0.08) (0.16) (0.10) (0.10) (0.16)
405
Removal(t –3) –0.0403 –0.167 –0.000771 –0.187 –0.0850 –0.0178 –0.262* 0.0214 –0.301*** –0.223
(0.10) (0.09) (0.22) (0.12) (0.08) (0.10) (0.13) (0.12) (0.08) (0.13)
Deflection 0.0133 0.159 0.144 0.0904 0.216 0.0479 0.149 0.0470 0.152 0.128
(0.10) (0.12) (0.08) (0.14) (0.14) (0.09) (0.11) (0.08) (0.11) (0.15)
Constant 18.94*** 17.94*** 21.92*** 16.69*** 18.28*** 18.81*** 17.77*** 21.75*** 16.50*** 18.15***
(0.20) (0.09) (0.30) (0.16) (0.12) (0.21) (0.10) (0.29) (0.15) (0.13)
Obs. 1,109,173 3,103,463 163,661 2,106,242 1,709,504 1,109,173 3,103,463 163,661 2,106,242 1,709,504
Pseudo-R2 0.748 0.709 0.902 0.628 0.707 0.748 0.709 0.902 0.628 0.707
Tristan Kohl - 9781839102721

Notes: PPML estimates based on equation (1) augmented with a contemporaneous and 2 lagged Removal terms and a contemporaneous Deflection term. Standard errors
in parentheses, clustered by partner. * p < 0.05, ** p < 0.01, *** p < 0.001. All regressions include country, HS8-digit product and year fixed effects.
(continued )
Table 21.7 Effects of trade and financial sanctions on U.S. exports by Rauch (1999) and BEC classifications

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
GATT/WTO
- Formal 0.898*** 0.622*** 1.206*** 0.726*** 0.248 0.999*** 0.711*** 1.379*** 0.908*** 0.218*
(0.19) (0.16) (0.31) (0.14) (0.15) (0.18) (0.14) (0.30) (0.14) (0.09)
- Informal 0.944*** 0.576*** 1.394*** 0.589*** 0.320* 1.065*** 0.670*** 1.586*** 0.789*** 0.298**
(0.25) (0.17) (0.38) (0.16) (0.15) (0.26) (0.16) (0.37) (0.17) (0.12)
FTA 0.261* 0.0572 0.152 0.112 0.0213 0.276* 0.0536 0.167 0.138 0.0244
406
(0.12) (0.10) (0.17) (0.07) (0.15) (0.13) (0.10) (0.19) (0.09) (0.15)
MFN −0.467 −0.879* −1.336 −1.248* 0.475 −0.460 −0.846* −1.333 −1.250* 0.504
(0.40) (0.42) (0.81) (0.63) (0.30) (0.40) (0.40) (0.81) (0.62) (0.29)
Duration 0.0364 0.0107 0.0612 0.0679* −0.126 0.0292 0.0174 0.0337 0.0342 0.0135
(0.04) (0.05) (0.04) (0.03) (0.07) (0.03) (0.02) (0.04) (0.02) (0.03)
Imposition −0.306 −0.0984 −0.421 −0.501* 0.565 −0.261 −0.185 −0.338 −0.331 −0.311
(0.26) (0.27) (0.24) (0.22) (0.44) (0.21) (0.20) (0.23) (0.19) (0.30)
Tristan Kohl - 9781839102721

(continued )

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
Removal * *
−0.0480 −0.301 −0.205 −0.335 −0.0556 −0.147 −0.183 −0.142 −0.109 −0.110
(0.20) (0.13) (0.18) (0.13) (0.20) (0.16) (0.12) (0.12) (0.14) (0.16)
Removal(t−1) 0.0588 −0.122 −0.122 −0.130 −0.151 −0.0888 −0.137 −0.113 −0.103 −0.0191
(0.18) (0.11) (0.18) (0.13) (0.25) (0.15) (0.11) (0.11) (0.11) (0.20)
Removal(t−2) −0.163 −0.118 −0.263 −0.176* −0.0566 −0.172 0.00724 0.0349 −0.00909 0.0528
(0.13) (0.10) (0.15) (0.09) (0.14) (0.12) (0.14) (0.12) (0.12) (0.17)
407
Removal(t−3) −0.213* −0.0410 −0.396* −0.170 −0.0438 −0.158* 0.0232 −0.0628 −0.0453 0.0370
(0.11) (0.10) (0.18) (0.11) (0.14) (0.06) (0.11) (0.09) (0.10) (0.15)
Deflection 0.232*** 0.0582 0.186 0.201*** 0.101 0.127 −0.0510 0.137 0.100 −0.0533
(0.05) (0.05) (0.13) (0.06) (0.07) (0.07) (0.07) (0.10) (0.08) (0.07)
Constant 16.34*** 16.87*** 17.32*** 16.11*** 16.51*** 16.25*** 16.79*** 17.15*** 15.93*** 16.56***
(0.18) (0.15) (0.29) (0.13) (0.14) (0.18) (0.13) (0.28) (0.14) (0.10)
Obs. 1,154,132 2,592,517 162,041 1,971,921 1,404,289 1,154,132 2,592,517 162,041 1,971,921 1,404,289
Pseudo-R2 0.652 0.740 0.755 0.657 0.682 0.651 0.740 0.755 0.656 0.682
Tristan Kohl - 9781839102721

Notes: PPML estimates based on equation (1) augmented with a contemporaneous and 2 lagged Removal terms and a contemporaneous Deflection term. Standard errors
in parentheses, clustered by partner. * p < 0.05, ** p < 0.01, *** p < 0.001. All regressions include country, HS8-digit product and year fixed effects.
same fate; while there is no rebound effect to pre-sanction levels, trade does not deteriorate
any further in a period of up to three years after the sanctions have been lifted. Taken together,
these results suggest that where trade and trade sanctions are concerned, there are significant,
long-term disadvantages to being on the U.S. target list.
Moreover, we find partial evidence of trade deflection, which is to say that once sanctions
are imposed, imports from targets are not rerouted to the United States through the targets’
neighboring countries. However, the same does not seem to be the case for U.S. exports:
we observe a significant increase in U.S. exports to sanctioned targets’ neighbors during the
sanctions period, in particular for homogeneous and final goods. These findings point to the
possibility of superior U.S. exporter performance in foreign markets, and/or sanctions busting
behavior via third non-target countries.
Our finding that U.S. exports are at least to some extent deflected to targets’ neighboring
countries, highlights an interesting avenue for future research. A next step would be to deter-
mine if neighbors primarily serve to reroute trade to the target (with bilateral neighbor-target
data) or subsume the target’s role as entry hub that serves to distribute U.S. imports to the larger
immediate region (excluding the target). Such analyses would be possible with bilateral, and
ideally transaction-level data on economic exchanges between the sender, target and countries
in its geographic proximity.
So far, our measure of trade sanctions is country-year specific, but not product-specific.
And, while most trade sanctions in the data generally cover the majority of products, some
sanctions are only partial in nature. In order to correctly assess how these sanctions affect trade
outcomes, a next step for future research would be to specify the exact products that are (not)
included in each individual sanction. And, ideally, firm-level data would enable the research
to examine product-specific flows and routing decisions among international subsidiaries, and,
ultimately, end users.
Alternatively, more inquiry is needed to understand the motives that neighboring countries – or
any third party, for that matter – might have for assisting targets in reducing the harmful impact
of trade sanctions, a phenomenon referred to in the literature as sanctions busting (see, e.g.,
Early 2009). Such behavior, in turn, may very well determine which countries will be the next
in line to be put in the penalty box.
NOTES
1. University of Groningen, Faculty of Economics & Business, Nettelbosje 2, 9747 AE Groningen, The Netherlands.
E-mail: t.kohl@rug.nl. The author gratefully acknowledges Gabriel Felbermayr, Aleksandar Kirilakha, Constan-
tinos Syropoulos, Erdal Yalcin, and Yoto Yotov for generously sharing an early version of the Global Sanctions
Database, and thanks Peter van Bergeijk, Gina Ledda, and an anonymous referee for helpful comments on an
earlier draft.
2. In earlier work, we did not find evidence of an initial pre-imposition uptake in countries’ trade in anticipation of
impositions with which senders were threatening targets (see Kohl and Klein Reesink 2019).
3. For third countries competing with targets for similar exports, a sanctions imposition may either increase or
decrease their exports. The former occurs when a sanctions imposition tilts the terms of trade in the third country’s
favor (Curovic 1997). However, given that most targets – and countries similar to them in export structure – are
small economies, these will not be able to influence world prices and this channel becomes less likely (Slavov
2007). A more plausible alternative channel for sanctions to increase these countries’ trade might be through
smuggling and so-called sanctions busting, in which case a (geographically proximate) country imports and
exports on behalf of both itself as well as the target (see Early 2009; Yang et al. 2009). Ultimately, the question
of how sanctions affect third countries requires an empirical answer.
Tristan Kohl - 9781839102721

4. Unfortunately, these official statistics do not explicitly account for intentional misreporting of trade flows that
could be aimed at facilitating smuggling and trade through third countries, i.e. sanctions busting.
5. In the period from 1989 to 2016, Cuba, Iran, Myanmar, and North Korea each made up about 6% of a total of 458
U.S.-imposed trade-related sanctions. An additional 3–4% of these sanctions were imposed on Angola, Belarus,
Iraq, Liberia, Libya, Sudan, and Syria. Each of the following countries account for 1–2% of these sanctions:
Albania, Belize, Bosnia and Herzegovina, Bulgaria, Cameroon, Côte d’Ivoire, Croatia, Czechoslovakia, East
Germany, Eritrea, Hungary, Indonesia, Macedonia, Moldova, Mongolia, Montenegro, Palestinian Authority,
Poland, Romania, Russian Federation, Serbia and Montenegro, Sierra Leone, Slovenia, Somalia, South Africa,
Ukraine, Vietnam. Finally, the following countries each accounted for less than 1% of U.S. trade-related sanc-
tions over this period: Afghanistan, Argentina, Armenia, Azerbaijan, Cambodia, Chile, China, Estonia, Georgia,
Haiti, India, Kazakhstan, Kyrgyz Republic, Kuwait, Latvia, Lithuania, Mali, Nicaragua, Pakistan, Panama, Soviet
Union, Tajikistan, Turkmenistan, Uzbekistan, Venezuela.
6. The United States’ FTA partners (and year of the agreements’ enforcement in parentheses) are Israel (1985),
Canada (1989), Mexico (1994), Jordan (2001), Chile (2004), Singapore (2004), Australia (2005), Bahrain (2006),
Morocco (2006), Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua (2006–2007), Costa Rica
(2009), Oman (2009), Peru (2009), Colombia (2012), Panama (2012), and South Korea (2012).
7. Import and export product codes can only be compared up to the 6-digit level of the Harmonized System, which
is why partners’ 6-digit level import tariffs are mapped to U.S. 6-digit level exports.
8. Note that employing a richer set of fixed effects including country-year, product-year or country-product fixed
effects leads to substantial collinearity of our independent variables of interest with the fixed effects.
9. Of course, trade between a sender and target may already be zero prior to sanctions imposition; such cases of
“symbolic” sanctions also need to be incorporated in our parameter estimates to accurately reflect the average
effect of sanctions on trade.
10. In the remainder of this chapter, Duration will be calculated based solely on the spell length of a trade (financial)
sanction when the effects of trade (financial) sanctions are considered.
11. Results with a third lagged term – of which the parameter estimates are statistically insignificant – are omitted for
brevity.
12. The only caveat here is the statistically significant one-year lagged term in column 11, but column 12 shows this
is not a robust estimate.
13. In a related vein, Besedeš et al. (2020) show that Mexican imports into the United States do not immediately
increase, but only gradually respond to tariff cuts embedded in trade liberalization brought about by the North
American Free Trade Agreement due to, at least in part, frictions related to information asymmetries and market
search and entry costs.
14. In related work, Slavov (2007) examines the impact of United Nations (UN) sanctions imposed by many senders
on different targets. He finds that targets’ neighboring countries see a decrease in their imports and exports during
sanction spells, highlighting negative externalities such as increased trade costs and disruptions of regional trade
routes. While this study is not entirely compatible with Slavov’s (we consider unilateral U.S. sanctions as opposed
to UN sanctions, in a bilateral U.S.–partner than multilateral importer–exporter trade setting), our results suggest
that U.S. exporters manage to overcome such negative externalities when entering/expanding in targets’ neighbor-
ing markets.
15. Using the liberal classification, we treat the reference-priced goods and goods sold on organized exchanges as
homogeneous goods.
16. An alternative to estimating equation (21.1) on subsamples is to interact our variables of interest with product-
specific dummies. However, this gives rise to a large number of collinear and therefore, omitted variables.
REFERENCES
Bergeijk, P.A.G. van (1995), The Impact of Economic Sanctions in the 1990s. The World Economy, 18(3): 443–455.
Besedeš, T., Kohl, T., and Lake, J. (2020), Phase Out Tariffs, Phase in Trade? Journal of International Economics,
Volume 127, November 2020, https://doi.org/10.1016/j.jinteco.2020.103385.
Biersteker, T., and Hudakova, Z. (2021), ‘UN Targeted Sanctions: Historical Development and Current Challenges’
in: P.A.G. van Bergeijk (ed.), Research Handbook on Economic Sanctions, Edward Elgar: Cheltenham, Chapter 5.
Biglaiser, G., and Lektzian, D. (2011), The Effect of Sanctions on U.S. Foreign Direct Investment. International
Organization, 65(03): 531–551.
Correia, S., Guimarães, P., and Zylkin, T. (2019a), ppmlhdfe: Fast Poisson Estimation with High-Dimensional Fixed
Effects. https://arxiv.org/abs/1903.01690.
Correia, S., Guimarães, P., and Zylkin, T. (2019b), Verifying the Existence of Maximum Likelihood Estimates for
Generalized Linear Models. https://arxiv.org/abs/1903.01633
Tristan Kohl - 9781839102721

Curovic, T.D. (1997), Essays in the Theory and Practice of Economic Sanctions. Dissertation, Rutgers University.
Dai, M., Felbermayr, G.J., Kirilakha, A., Syropoulos, C., Yalcin, E., and Yotov, Y.V. (2021), ‘Timing the Impact of
Sanctions on Trade’ in: P.A.G. van Bergeijk (ed.), Research Handbook on Economic Sanctions, Edward Elgar:
Early, B. (2009), Sleeping with Your Friends’ Enemies: An Explanation of Sanctions-Busting Trade. International
Studies Quarterly, 53(1): 49–71.
Felbermayr, G., Kirilakha, A., Syropoulos, C., Yalcin, E., and Yotov, Y. (2020), The Global Sanctions Data Base,
European Economic Review, 129: 103561.
Handley, K., and Limão, N. (2017), Policy Uncertainty, Trade, and Welfare: Theory and Evidence for China and the
United States. American Economic Review, 107(9): 2731–2783.
Hufbauer, G.C., and Jung, E. (2021), ‘Economic Sanctions in the 21st Century’ in: P.A.G. van Bergeijk (ed.), Research
Hufbauer, G.C., and Oegg, B. (2003), The Impact of Economic Sanctions on U.S. Trade: Andrew Rose’s Gravity
Model. International Economics Policy Briefs, 3(4): 1–24.
Hufbauer, G.C., Schott, J.J., and Elliott, K.A. (1990), Economic Sanctions Reconsidered: History and Current Policy.
Institute for International Economics: Washington, D.C.
Kirilakha, A., Felbermayr, G.J., Syropoulos, C., Yalcin, E., and Yotov, Y.V. (2021), ‘The Global Sanctions Data Base:
An Update to Include the Years of the Trump Presidency’ in: P.A.G. van Bergeijk (ed.), Research Handbook on
Economic Sanctions, Edward Elgar: Cheltenham, Chapter 4.
Kohl, T., and Klein Reesink, C. (2019), ‘Sticks and Stones: Sanction Threats, Impositions, and Their Effect on
International Trade’ in: T. Besedeš and V. Nitsch (eds.), Disrupted Economic Relationships: Disasters, Sanctions,
Dissolutions. Cambridge MA, MIT Press, pp. 103–130.
Manova, K., and Yu, Z. (2016), How Firms Export: Processing vs. Ordinary Trade with Financial Frictions. Journal
of International Economics, 100: 120–137.
Mayer, T., and Zignago, S. (2011), Notes on CEPII’s Distances Measures: The GeoDist Database. CEPII Working
Paper No. 2011-25. CEPII: Paris.
Mirkina, I. (2021), ‘FDI and Sanctions’ in: P.A.G. van Bergeijk (ed.), Research Handbook on Economic Sanctions,
Edward Elgar: Cheltenham, Chapter 20.
Neuenkirch, M., and Neumeier, F. (2015), The Impact of UN and U.S. Economic Sanctions on GDP Growth. European
Journal of Political Economy, 40(A): 110–125.
Rauch, J.E. (1999), Networks versus Markets in International Trade. Journal of International Economics, 48(1): 7–35.
Santos Silva, J.M.C., and Tenreyro, S. (2006), The Log of Gravity. The Review of Economics and Statistics, 88(4):
641–658.
Slavov, S.T. (2007), Innocent or Not-So-Innocent Bystanders: Evidence from the Gravity Model of International Trade
about the Effects of UN Sanctions on Neighbour Countries. World Economy, 30(11): 1701–1725.
Tomz, M., Goldstein, J.L., and Rivers, D. (2007), Do We Really Know That the WTO Increases Trade? Comment.
American Economic Review, 97(5): 2005–2018.
Yang, J., Askari, H., Forrer, J., and Zhu, L. (2009), How Do US Economic Sanctions Affect EU’s Trade with Target
Countries? World Economy, 32(8): 1223–1244.
Tristan Kohl - 9781839102721

22. Timing the impact of sanctions on trade
ian Dai, Gabriel J. Felbermayr, Aleksandra Kirilakha,
M
Constantinos Syropoulos, Erdal Yalcin and Yoto V. Yotov1
22.1 INTRODUCTION
For decades, decision makers, political scientists and scholars of international relations have
displayed a keen interest in sanctions and their effects on target (i.e., sanctioned) and sender
(i.e., sanctioning) states. While interest in this controversial instrument of foreign policy is on
the rise, the extent to which economists have contributed to the related scholarship has been
modest. Taking center stage in the sanctions debate is one multifaceted problem that invariably
all researchers and policy practitioners must grapple with: Are economic sanctions effective?
Do they work?
But how should one go about determining the “effectiveness” of sanctions? Surely, the
motivation, specific objectives and intentions of the interacting parties should matter. The
existing scholarship emphasizes that the initiation of sanctions and the responses to them aim
to: compel governments to change their behavior internationally and/or domestically (Galtung,
1967; Renwick, 1981; Drury, 2001; Hufbauer et al., 2007); project power; reassure domestic
constituencies and/or interest groups of their leaders’ commitment to national and/or special
interests (Kaempfer and Lowenberg, 2007; Krustev and Morgan, 2011); and achieve policy
objectives peacefully rather than by means of force.2 Naturally, the ability to exert influence
and the affected leaders’ response to coercive measures are also important as they, too, may
alter behavior (Kirshner, 2007; Drezner, 2011; Lektzian and Souva, 2003; 2007). Similarly,
the outcomes of sanctions depend on: the strategic environment within which senders and
targets operate (e.g., political regime, level of economic development, domestic institutions,
international cooperation, exposure to foreign trade and investment); the availability of policy
instruments (e.g., diplomacy, types of economic sanctions, military intervention) in interacting
states; and the various policy constraints the primary actors face. Ultimately, though, the suc-
cess or failure of sanctions hinges on the benefits they generate to sender governments and the
costs they inflict on leaders in targeted states (Tsebelis, 1990; Morgan and Schwebach, 1997;
Eaton and Engers, 1992). It is widely believed that the magnitude of the economic hardship
imposed on the ruling elite and/or the general citizenry in sanctioned states is a key predictor
of the efficacy of sanctions (Drury, 2000; Hufbauer et al., 2007). However, this view has been
criticized on measurement, implementation and moral grounds (Pape, 1997; Morgan and
Schwebach, 1997; and Cortright and Rogers, 2002, among numerous others). While we do
not dispute the importance of the objections raised in such contributions, we find the idea that
the costs of economic coercion matter in this context to be logically sound. For this reason,
we think there is value in careful studies (e.g., Ahn and Ludema, 2018; Besedes et al., 2018;
Crozet and Hinz, 2016; and Felbermayr et al., 2020a;b, among others) that strive to quantify
these costs.
We, too, aim to contribute to this literature. Our primary objective is to characterize the
evolution of the impact of sanctions on trade flows. We accomplish this objective by utilizing
411
el J. Felbermayr, Aleksandra Kirilakha, Constantinos Syropoulos, Erdal Yalcin and Yoto V. Yotov - 9781839102721
the newly developed Global Sanctions Data Base (GSDB) and by capitalizing on the latest
developments in the international trade literature related to the gravity equation.3
The descriptive analysis of the GSDB, which we present in Section 22.2, illustrates that
sanctions exhibit extensive heterogeneity with regards to the duration of imposed sanctions.
On average, a complete trade sanction lasts about six years and the median duration is four
years, pointing to a significant variance. Around 14% of complete trade sanctions last more
than five years, and the longest episode of a complete trade sanction in the GSDB is 66
years. These figures suggest that the duration of sanctions may play an important role in the
determination of their efficacy.
With these new stylized facts about sanctions, in this chapter, we build on and extend
the recent work of Felbermayr et al. (2020a;b) and Egger et al. (2020).4 Motivated by
the findings of Felbermayr et al. (2020a;b), who quantify the heterogeneous effects of
sanctions on trade, we focus on complete trade sanctions and complement the analysis
of these works by characterizing the evolution of their impact on trade over time. We do
this by extending Egger et al. (2020), who quantify the evolution of the impact of free
trade agreements (FTAs) on international trade, to include pre-sanction and post-sanction
effects. Thus, we depart from the existing literature in that we consider the pre-sanction
and post-sanction period effects, in addition to allowing for heterogeneous phasing-in
effects during the period that sanctions are in place.5 Our estimation methods are presented
in Section 22.3.1.
We draw a number of conclusions on the impact of sanctions on trade flows and its
evolution over time in Section 22.3.2. First, our contemporaneous estimate when pre- and
post-sanction effects are considered is relatively larger (about 17% in our sample) than
the corresponding estimate when pre- and post-sanction effects are not considered. As a
consequence, estimates of the effects of sanctions that do not allow for pre- and post-sanction
effects may underestimate the true contemporaneous sanction effects. The econometric
explanation of this finding is that the introduction of pre- and post-sanction effects changes
the reference group used to identify the contemporaneous effects. Second, our estimates
for the pre-sanction period reveal that sanctions affect trade flows even before they are
formally/officially imposed. We find that these effects, which we label “anticipatory effects,”
are strongest (in terms of economic magnitude and statistical significance) between one
and three years prior to the imposition of sanctions. We view the theoretical and empirical
disentangling of the underlying dynamic channels and causes as interesting and important
tasks that future work ought to address. For now, the key implication of our findings is that,
when assessing the impact of sanctions on trade, researchers should examine the just noted
anticipatory effects.
Third, consistent with the related literature (e.g., Morrow et al., 1998; Lektzian and
Souva, 2001; North, 1990; and Eichengreen and Irwin, 2009), we find that: (i) the impact
of sanctions on trade flows is present for a significant period of time (e.g., seven to eight
years) after sanctions are lifted; and (ii) the recovery of trade flows is gradual and steady.
The important takeaway is that the recovery of trade flows during post-sanction periods is
not instantaneous.
Fourth, a comparison of our pre- and post-sanction estimates reveals an interesting and
encouraging result. Specifically, we observe that the negative post-sanction estimates become
statistically insignificant – in fact, they turn positive in some specifications – after the elapse
Timing the impact of sanctions on trade 413
of a certain period of time (i.e., seven to eight years after the lifting of sanctions). On the other
hand, the pre-sanction estimates are all negative and at least marginally statistically significant
sometimes 10 years prior to the imposition of sanctions. Therefore, sanctions may lead to
increased trade flows and improved trade relations in the post-sanction period as compared to
the pre-sanction period.
We also study the evolution of the impact of complete trade sanctions during the period of
their imposition. We find that, on average, the longer sanctions are in place the stronger their
adverse effect on trade flows. Next, we distinguish between the phasing-in effects of long
(5+ years) vs. short (<5 years) sanctions. The negative impact of complete trade sanctions
on trade is mostly driven by sanctions with long duration. In combination with our finding
that the impact of sanctions during the period of their imposition is stable, this result implies
that the depth of the initial sanction effect can help predict whether its duration will be long
or short.
To strengthen our analysis, we distinguish between unilateral and multilateral trade sanc-
tions. The main finding is that the estimates of the effects of unilateral sanctions on trade are
significantly larger. We also check for possible differences in sanctions imposed by the US,
the UN, and the EU. Our estimates reveal strong anticipatory effects for all three groups of
sanctions. The negative impact of US sanctions on trade appears to be the strongest. Our main
results are robust to a number of sensitivity experiments.
Our work is related to contributions that deal with dynamic aspects of economic sanctions.
For example, Bolks and Al-Sowayel (2000) report that the institutional structure and the politi-
cal vulnerability of the sanctioned country’s regime play a significant role in the determination
of the duration of sanctions. Dorussen and Mo (2001) rely on audience costs and sanction
rents to explain the occurrence and duration of sanctions episodes. Krustev and Morgan
(2011) extend this contribution – by combining the redistributive and bargaining dimensions
of sanctions – to argue that “. . .the influence of bargaining factors declines as a sanction
episode continues while the relevance of domestic realignments increases over time” (p. 351).
McGillivray and Stam (2004) show that change of leadership in nondemocratic sanctioning
and sanctioned states significantly affects the duration of sanctions. Our work in the current
paper differs in one important respect: it addresses the timing of the effects of sanctions on
international trade.
We also contribute to a small literature that studies the effectiveness of sanctions by
incorporating timing. This issue has been of interest to economists and political scientists
alike but has been underexplored due to the lack of appropriate data (Peksen, 2019). There
are, however, notable exceptions. For example, Dizaji and van Bergeijk (2013) show that
economic sanctions are effective for the first two years of their imposition but then their
effectiveness diminishes because the target learns how to adjust to the imposed sanctions
regime. These authors study the impact of sanctions on economic indicators such as real
government consumption expenditures per capita, real imports per capita, real investment
per capita and real GDP per capita. van Bergeijk and van Marrewijk (1995) also show that
sanctions can be effective in the long run when the permanent damage caused by the sanctions
is estimated to be higher than the yields of non-compliance. We complement these studies
by focusing on the impact of sanctions on bilateral trade flows and implementing the latest
developments in the empirical trade literature to study possible links between sanctions
duration and effectiveness.
22.2 TRADE SANCTIONS AND THEIR DURATION
To perform the upcoming empirical analysis, we rely on the GSDB developed by Felbermayr
et al. (2020a) and recently updated by Kirilakha et al. (2021).6 This section zooms in on trade
sanctions, which are a key dimension of the GSDB, and which are the focus of our analysis.
Specifically, Section 22.2.1 offers details on various dimensions of trade sanctions in the
GSDB, while Section 22.2.2 discusses the duration of trade sanctions.
22.2.1 Trade Sanctions in the GSDB
In the GSDB, trade sanctions are broadly defined as limitations of trade flows. The GSDB
distinguishes between several types of trade sanctions depending on coverage, direction and
participating countries. First, some trade sanctions specifically ban imports and/or exports
while others could limit trade in both directions. Accordingly, depending on the direction of
the restriction on trade flows, the GSDB distinguishes between sanctions on exports from
the sender to the target (export sanctions), sanctions on imports from the target to the sender
(import sanctions), and sanctions that simultaneously apply to both the exports and the imports
between the two sides (bilateral trade sanctions). Second, trade sanctions may apply only to
specific goods (partial trade sanctions) or to exports and/or imports as a whole (complete trade
sanctions). Thus, the GSDB distinguishes between “partial” and “complete” sanctions within
each of the three dimensions, depending on the direction of banned trade flows.7 Finally, an
important aspect of sanctions is the scope of participating countries that can vary from one
country (a unilateral sanction) to, for example, a sanction imposed multilaterally by all mem-
bers of the United Nations.8 To perform the empirical analysis, we capitalize on the variation
across each of the three dimensions of trade sanctions in the GSDB.
Figure 22.1 tracks partial and complete trade sanctions over time. Interestingly, in the
early 1950s, all countries that imposed import sanctions restricted imports to the full extent.
Share of Countries Imposing a

a) Partial or Complete Import Sanction b) Partial or Complete Export Sanction
100% 100%
90% 90%
80% 80%
70% 70%
60% 60%
50% 50%
40% 40%
30% 30%
20% 20%
10% 10%
0% 0%
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
Partial Import Sanction Complete Import Sanction Partial Export Sanction Complete Export Sanction
Note: Share of countries that have imposed partial and complete import (panel [a]) and export (panel [b])
sanctions over time (1950 to 2016).
Figure 22.1 Partial versus Complete Trade Sanctions
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
1950
1952
1954
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
(a) . . . US Sanctions
3.5%
3%
2.5%
2%
1.5%
1%
0.5%
0%
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
(b) . . . EU Sanctions
Note: The diagrams show the share of world exports exposed to US and EU sanctions. Trade data stem from the
IMF Direction of Trade Statistics. EU statistics start in 1992 due to German unification.
Figure 22.2 Share of World Trade Exposed by US and EU Sanctions
However, in the succeeding years, an increasing share of countries restricted imports only
partly. In 2016, their share stood at around 70% of all countries applying import sanctions.
In contrast, as illustrated in panel (b) of Figure 22.1, over the past 65 years, countries have
been less eager to impose restrictions on all exports. Between 1950 and 1990, around 60% of
countries sanctioning exports imposed partial restrictions. In the following 10 years, more than
half of all export restricting countries applied complete export sanctions, whereas in recent
years partial export sanctions have been on the rise again. These patterns illustrate the impor-
tance of identifying the differing extent of trade sanctions as partial vs. complete and export
vs. import sanctions. In the econometric analysis below, we demonstrate that the effectiveness
of sanctions varies across these dimensions. However, due to the findings in Felbermayr et al.
(2020b) that complete trade sanctions (complete ban on both exports to and imports from the
sanctioned country) appear to have the strongest effect on trade flows, we focus on complete
trade sanctions to obtain our main results.
Motivated by the fact that the US and the EU members have been the most active send-
ers of sanctions, Figure 22.2 depicts the share of world trade that has been exposed to US
sanctions (panel [a]), and to EU sanctions (panel [b]). Panel (a) reveals that the US sanctions
could potentially impact 2.5% of global trade in 2015. Interestingly, the share of global trade
potentially affected by EU sanctions turns out to be substantially less volatile (but similarly
sized). The main message from Figure 22.2 is that, individually and in combination, US and
EU sanctions have the potential to affect a significant fraction of trade flows, and therefore
economic activity, in the world.
Figure 22.3 complements the analysis of the impact of US and EU sanctions by illustrat-
ing the total potential impact on trade that could be caused by all trade sanctions in the world
for a given year.9 The left panel of Figure 22.3 reports the sanction-affected trade volumes
in levels, measured in trillions of current US dollars. Three periods with a stepwise increase
in potentially affected global trade volume can be identified. In the mid-1970s, sanctions
started to have some bite, but the extent of their impact remained very minor. After the
fall of the Iron Curtain in 1989, potentially affected trade volumes quickly rose to about
200 billion US dollars. The most dramatic increase occurred after 2002: the trade volume
potentially affected by sanctions has stood at over 2 trillion US dollars or 7% of world
trade in recent years. The increasing economic integration over recent decades could be one
reason for the exponential pattern depicted in Figure 22.3. All these statistics suggest that
the potential size of economic damage from sanctions through the trade channel has reached
quite a significant volume. This justifies our focus on measuring the impact of sanctions on
international trade as an important component in itself. Our empirical analysis below com-
plements and reinforces the stylized description presented in this section by demonstrating
that the EU and US sanctions have been among the most effective sanctions in reducing
trade flows. In addition, we show that the impact of sanctions is very heterogeneous even
across the EU members.
22.2.2 On the Duration of Trade Sanctions
This section offers descriptive analysis of the duration of trade sanctions. The distribution
of the duration of complete trade sanctions is highly skewed. On average, a complete trade
sanction lasts about six years; the median duration is four years. Around 14% of complete
3.0
2.5
2.0
1.5
1.0
0.5
0.0
1950
1952
1954
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
(a) in trillion USD
8%
7%
6%
5%
4%
3%
2%
1%
0%
1950
1952
1954
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
(b) . . . in % of world trade
Note: These diagrams quantify the exposed value and the share of exposed trade in world trade to all observed
sanctions for each year between 1950 and 2015. The presented trade volume is the amount of observed yearly trade
between countries that introduce a sanctions policy in the same year. Trade data come from the IMF Direction of
Trade Statistics.
Figure 22.3 Trade Potentially Affected by All Sanctions
Duration of Complete Export and Import Sanctions (5+)
ISR
CUB
PRK
PSE
ARM
CHN
ZAF
SDN
IRN
VDR
KHM
VNM
GIB
IRQ
FJI
RHO
NLD
SLE
YUG
NIC
MMR
GEO
ALB
0 20 40 60
Duration (in years)
(a) . . . Long Sanctions
Duration of Complete Export and Import Sanctions (<5)
MKD
SRB
MNE
SVN
HRV
BIH
MYS
HTI
BDI
PRT
UGA
NPL
CHE
KWT
LSO
0 1 2 3 4
Duration (in years)
(b) . . . Short Sanctions
Note: The graphs show the average duration of complete trade sanctions for a given target (ranked from longest to
shortest duration). The targets’ names are written as USITC ISO-3 codes (refer to Dai et al. (2021) for details).
Figure 22.4 Duration in Years of Sanctions by Target (Long vs. Short)
trade sanctions last more than five years; the longest episode is 66 years. Figure 22.4 (a) and
(b) illustrate the average duration of long (5+ years) complete trade sanctions and the average
duration of short (<5 years) complete trade sanctions ranked by the targeted nation (from
longest to shortest in duration). Long-lasting complete trade sanctions are usually associated
with a territorial conflict, an inter-country or intra-country war, and/or ideological conflict (i.e.,
capitalism vs. communism). Many of those conflicts, such as the Arab–Israeli conflict, the
Cuban Missile Crisis, the North Korea nuclear tensions, or the Armenia–Azerbaijan conflict
over the Nagorny Karabakh region are still unresolved. In Section 22.3, we explore the impact
of short vs. long complete trade sanctions.
Additionally, we investigate the difference between unilateral and multilateral complete
trade sanctions. While the presence of unilateral sanction is more often than multilateral
sanctions, there is no significant difference in duration. Figure 22.5 shows that the longest
and ongoing unilateral complete trade sanction has been imposed on Cuba by the US as a
result of the Cuban Missile Crisis. Not surprisingly, the US sanctions on North Korea are the
second longest and are still in force due to nuclear tensions. Among multilateral sanctions,
Israel and Palestine have been sanctioned by the Arab League for an extended period. In
addition to the US sanctions, Cuba was also subject to Multilateral Export Controls (Co-
Com) sanctions, which were imposed by Coordinating Committee to target primarily the
Communist regime.
Next, we compare the complete trade sanctions imposed by the EU, the US, and the UN.
The EU has been the most frequent sanction sender as a union, while the US has sanctioned
the most as an individual country. Figure 22.6 lists the countries affected by the UN, the
US, and the EU sanctions ranked by the duration of the corresponding sanctions episodes.
Figure 22.6 (a) shows that North Korea and Cuba were sanctioned by the US with one of
the longest complete trade sanctions. China, Vietnam and Cambodia have also been hit by
long US sanctions (primarily for ideological reasons). Iran has been sanctioned by the US
for its nuclear program. The UN sanctions have been on a rapid rise for the past 30 years.
However, their duration is much shorter given that the UN only started more actively using
sanctions as a tool to achieve certain political objectives in 1990. Iraq has been hit by the
longest UN sanctions as a result of the Iraqi invasion and its attempted annexation of Kuwait.
Rhodesia (now Zimbabwe) was sanctioned by the UN due to its break from rule by the United
Kingdom, and Iran was sanctioned due to their nuclear activities. South Africa was punished
for its Apartheid policies, and this is one vivid example of a sanction that has been imposed
to advocate democracy and human rights. Finally, complete EU trade sanctions affected only
Iraq and South Africa. Overall, the durations of the US sanctions are usually longer than those
of UN and EU sanctions. In Section 22.3, we take a closer look at the impacts of the complete
trade sanctions imposed by the US, the UN and the EU.
22.3 EMPIRICAL ANALYSIS
To characterize the evolution of the impact of sanctions on trade flows, we rely on the
workhorse empirical trade model – the gravity equation. In Section 22.3.1, we set up and
motivate our econometric model. Section 22.3.2 presents our main findings and offers a series
of sensitivity experiments that demonstrate the robustness of our main findings.
Duration of Bilateral Complete Sanctions
CUB
PRK
ARM
CHN
ZAF
SDN
IRN
VDR
KHM
VNM
GIB
RHO
FJI
PRT
NLD
NIC
MMR
GEO
ALB
MYS
HTI
SLE
UGA
NPL
MKD
CHE
LSO
0 20 40 60
Duration (in years)
(a) . . . Unilateral
Duration of Multilateral Complete Sanctions
ISR
PSE
CUB
CHN
VNM
IRQ
RHO
IRN
ZAF
SLE
PRK
YUG
MKD
SRB
MNE
SVN
HRV
BIH
HTI
BDI
PRT
ARM
KWT
0 20 40 60
Duration (in years)
(b) . . . Multilateral
Note: The graphs depict: (a) the average duration of unilateral complete trade sanctions ranked (from longest to
shortest duration) by the target, and (b) the average duration of multilateral complete trade sanctions ranked (from
longest to shortest duration) by the target. The targets’ names are written as USITC ISO-3 codes (refer to Dai et al.
[2021] for details).
Figure 22.5 Duration of Sanctions by Target (Unilateral vs. Multilateral)
Duration of US Complete Trade Sanctions
PRK
CUB
CHN
IRN
VNM
SDN
KHM
VDR
RHO
NIC
HTI
UGA
0 20 40 60
(a) . . . US Duration (in years)
Duration of UN Complete Trade Sanctions
IRQ
RHO
IRN
ZAF
PRK
MKD
SRB
MNE
SVN
HRV
BIH
SLE
HTI
PRT
KWT
0 5 10 15
(b) . . . UN Duration (in years)
Duration of EU Complete Trade Sanctions
IRQ
ZAF
0 5 10 15
(c) . . . EU Duration (in years)
Note: The graphs depict the average duration (ranked from longest to shortest) of complete trade sanctions for
a given target. Panel (a) shows the average duration of the US complete trade sanctions ranked (from longest to
shortest duration) by the target. Panel (b) shows the average duration of the UN complete trade sanctions ranked
(from longest to shortest duration) by the target. Finally, panel (c) shows the average duration of the EU complete
trade sanctions ranked (from longest to shortest duration) by the target. The targets’ names are written as USITC
ISO-3 codes (refer to Dai et al. [2021] for details).
Figure 22.6 Duration of Sanctions by Target (US vs. UN vs. EU)
22.3.1 Econometric Specification
To set up our estimating equation we capitalize on the latest developments in the empirical
gravity literature.9 Specifically, we combine and extend the recent work of Felbermayr et al.
(2020a;b) and Egger et al. (2020). Felbermayr et al. (2020a;b) are the basis for our analysis
because they, too, use the GSDB and the latest gravity estimation techniques to study the
heterogeneous impact of sanctions on international trade. We complement and extend on
Felbermayr et al. (2020a;b) by characterizing the evolution of the impact of sanctions on trade
over time. To this end we follow and extend on the methods of Egger et al. (2020) who quantify
the evolution of the impact of FTAs on international trade. Based on the insights from these
and other related studies, we specify the following econometric model:
X ij,t = exp( π i,t + χ j,t + µ ij + α CTSij,t + ∑ sα sCTSij,t+s + ∑ k β k CTSij,t−k + GRAVij,tγ ) × ε ij,t (22.1)
Before we motivate and discuss each of the individual elements in our econometric model,
we note that, as famously demonstrated by Arkolakis et al. (2012), equation (22.1) is repre-
sentative of a very wide class of alternative theoretical micro foundations. Anderson (1979)
is the first to derive a structural gravity model of trade under the assumptions that goods
are differentiated by place of origin (Armington, 1969) and that consumer preferences are
homothetic, identical across countries and approximated by a CES utility function. Since then,
the gravity equation has been derived from many alternative micro foundations, including:
a Monopolistic Competition setting, e.g., Krugman (1979); from Heckscher–Ohlin founda-
tions, e.g., Bergstrand (1985); from a Ricardian setting, e.g., Eaton and Kortum (2002); at the
sectoral level from a demand-side perspective, e.g., Anderson and van Wincoop (2004); with
heterogeneous firms, e.g., Chaney (2008); at the sectoral level from a supply-side perspective,
e.g., Costinot et al. (2012); with country-specific dynamics via asset accumulation, e.g.,
Olivero and Yotov (2012); with input–output linkages, e.g., Caliendo and Parro (2015); and
with bilateral dynamics, e.g., Anderson and Yotov (2020).10
In what follows, we motivate each of the elements in our estimating specification, and we
present and defend our identification strategy. The dependent variable in equation (22.1), Xij,t,
denotes nominal trade flows (in levels) from exporter i to importer j at time t. Given our main
goals, it is natural to employ panel data. In addition to allowing us to characterize the evolu-
tion of the impact of sanctions on trade over time, the use of panel data has two econometric
advantages. First, using panel data will improve estimation efficiency because when we move
from a cross-section to panel bilateral data the number of parameters in our specification grows
slower than the number of observations. Second, using panel data will allow us to include
country-pair fixed effects, whose benefits we discuss below.
Cheng and Wall (2005) note that econometric specifications with fixed effects, such as the
gravity model employed here, are “sometimes criticized when applied to data pooled over
consecutive years on the grounds that dependent and independent variables cannot fully adjust
in a single year’s time.” (Footnote 8, p. 52, Cheng and Wall, 2005). Therefore, they recom-
mend the use of interval data instead of data over consecutive years for gravity estimations.
Many papers follow this recommendation and, to avoid the Cheng-and-Wall critique, they
estimate gravity with interval data.11 More recently, however, Egger et al. (2020) argue that in
addition to improving estimation efficiency and avoiding arbitrary dropping of observations,
the use of pooled/consecutive-year data in fact improves our ability to capture the adjustment
of trade flows in response to trade policy changes. We follow Egger et al. (2020) in using
consecutive-year data to obtain our main results. However, in the sensitivity analysis, we also
experiment with interval data. Our main conclusions remain robust.
In combination with the fact that the dependent variable enters our estimating specification in
levels, the exponential function on the right-hand side of equation (22.1) reflects the fact that, to
obtain our main results, we rely on the Poisson Pseudo Maximum Likelihood (PPML) estima-
tor. Following the recommendations of Santos Silva and Tenreyro (2006; 2011), the motivation
for using PPML for our main analysis, and for gravity estimations in general, is twofold. First,
the PPML estimator handles successfully the heteroskedasticity in trade data, which would
otherwise lead to inconsistent OLS estimates. Second, due to its multiplicative form, the PPML
estimator enables us to take advantage of the information contained in the zero trade flows,
which account for 43.1% of the observations in our sample. In the sensitivity analysis, we
demonstrate that our main findings are robust to the use of the standard OLS estimator.
Equation (22.1) includes three sets of fixed effects. As is now standard in the gravity
literature, we use exporter-time fixed effects (πi,t) and importer-time fixed effects (χj,t). Based
on the seminal work of Anderson and van Wincoop (2003), the theoretical motivation for the
use of exporter and importer fixed effects in gravity estimations is that these dummy variables
will control for the unobservable multilateral resistances terms, which account for the fact
that trade between two countries depends not only on their sizes and the direct trade frictions
between them but also on how remote these economies are from the other countries in the
sample. Olivero and Yotov (2012) demonstrate that, due to the presence of country-specific
dynamic forces, e.g., asset accumulation, the multilateral resistances should be accounted for
by exporter-time and importer-time fixed effects in panel gravity specifications. Baldwin and
Taglioni (2006) refer to the malpractice of not accounting for the multilateral resistances in
gravity estimations as “the gold medal mistake”. Finally, we note that the exporter-time and
the importer-time fixed effects will also absorb/control for any other time-varying country-
specific characteristics that may impact bilateral trade on the exporter side and on the importer
side, respectively.12
We also employ a set of country-pair fixed effects, μij. The motivation for the use of country-
pair fixed effects in gravity estimations is twofold. First, as convincingly argued by Baier and
Bergstrand (2007), the pair fixed effects absorb most of the linkages between the potentially
endogenous trade policy variables and the error term εij,t , which mitigates potential endogene-
ity concerns. Thus, in our setting, the pair fixed effects would mitigate endogeneity concerns
with respect to sanctions.13 Second, on a related note, the country-pair fixed effects will absorb/
control for all time-invariant bilateral trade costs. This is important because, as demonstrated
by Egger and Nigai (2015) and Agnosteva et al. (2019), the proxies for trade costs that are
normally used in gravity models (e.g., the log of bilateral distance and indicators for contiguity,
common language, colonial ties, etc.) may sometimes fail to capture all time-invariant bilateral
trade costs. To obtain our main results we follow Baier et al. (2016) and employ directional
bilateral fixed effects. The benefits are: (i) that the directional fixed effects allow and control
for the presence of asymmetric trade costs; and (ii) this treatment is consistent with the fact
that many of the sanctions in our database are directional. In the sensitivity analysis we also
demonstrate that our findings are robust to using symmetric bilateral fixed effects.
The next three sets of covariates are the most important for our purposes. Felbermayr et al.
(2020b) find that the impact of sanctions on trade is widely heterogeneous. In particular, and
as expected, they find that Complete Trade Sanctions (CTS) have the strongest impact on
trade, followed by sanctions on exports. This is the reason why the focus of our main analysis
is exactly on the impact of complete trade sanctions. To capture the evolution of the impact
of sanctions on trade, we follow and extend the methods of Egger et al. (2020) who study
the evolution of the effects of FTAs. An important difference between sanctions and FTAs,
however, is that sanctions are often lifted/terminated, while, in general, most of the FTAs
continue to exist throughout the estimating samples. This allows and, in fact, requires us to
introduce an additional, post-sanction period in our analysis.
Based on these insights, we use three sets of covariates to capture the desired time-varying
sanction effects. CTSij,t is a vector of variables that are designed to capture the contemporane-
ous effects of sanctions on trade (i.e., the effects during the period when the sanctions are actu-
ally in place). In the main analysis, we limit this vector to a single dummy variable, which takes
the value of one if there is a complete trade sanction in place between exporter i and importer
j at time t, and the value of zero otherwise. However, we also zoom further in by allowing for
differential effects of sanctions during the period when they are imposed. Following Egger et
al. (2020), Σk β k CTSij,t−k is a vector of sanction variables designed to capture any changes in
the trade flows between the sanctioning and sanctioned countries prior to the imposition of
sanctions (i.e., in the pre-sanction period). Mechanically, these variables are constructed as
the k leads of CTSij,t. Finally, Σsα sCTSij,t+s is a vector of sanction variables that are designed to
capture the post-sanction evolution of trade flows. The idea is to examine whether, when, and
how fast trade flows return to their pre-sanction levels. Again, mechanically, these variables
are constructed as the lags of CTSij,t.14
Finally, vector GRAVij,t in equation (22.1) includes a series of additional time-varying
control variables. In particular, here we add all other types of sanction that are covered by the
GSDB. We experiment by combining the rest of the sanctions into a single variable but also
by including them separately. In addition, we control for the presence of economic integration
agreements (EIAs) with an indicator variable that takes the value of one if there is an EIA
between countries i and j at time t and equals zero otherwise. We also include indicator vari-
ables for membership in the European Union (EUij,t) and for membership in the World Trade
Organization (WTOij,t).15 Given the rich structure of fixed effects in each of our specifications,
we believe it is safe to assume that the error term εij,t is just noise. Finally, we note that in all
specifications we cluster the standard errors by country-pair.
22.3.2 Estimation Results and Analysis
This section presents the results from a series of specifications that are designed to characterize
the evolution of the impact of sanctions on trade flows over time. We present our main findings
in two subsections. Section 22.3.2.1 focuses on the pre- and post-sanction effects on trade,
while Section 22.3.2.2 analyzes the evolution of the impact of sanctions during the period when
they are in place. As described in the previous section, to obtain our main results we focus on
the effects of complete trade sanctions, and we use the PPML estimator, consecutive-year data,
exporter-time and importer-time fixed effects, and directional country-pair fixed effects. All
of our specifications allow for possible pre-sanction and post-sanction effects 10 years before
and 10 years after the corresponding sanctions are in place. In addition to yearly estimates, we
experiment with two-year and three-year lags and leads. All standard errors are clustered by
country-pair. For clarity, due to the large number of estimates we obtain in some specifications,
we complement some of our main estimation results with visual graph presentations.
22.3.2.1 On the pre- and post-sanction effects on trade

We start the analysis in column (1) of Table 22.1, where we obtain a single estimate of the
impact of complete trade sanctions on trade flows. These benchmark results are comparable
to the estimates from Felbermayr et al. (2020a) and confirm one of their main findings that
complete trade sanctions are very effective in impeding bilateral trade flows. Specifically,
our estimate implies that, all else equal, complete trade sanctions have led to a 76.8% (std.
5.531) decrease in bilateral trade between the sanctioning and the sanctioned countries in our
sample.15
The estimates in column (2) of Table 22.1 include a series of sanction leads and lags. In
particular, in order to capture the full lifespan of the impact of sanctions on trade, we allow
for 10 yearly leads and for 10 yearly lags. Three main results stand out from the estimates
in column (2). First, we note that the contemporaneous effect of sanctions in column (2) is
relatively larger (about 17% larger) as compared to the corresponding estimate in column (1).
The explanation for this result is that by introducing pre-sanction and post-sanction effects,
we are changing the reference group that is used to obtain the corresponding contemporane-
ous effects. Specifically, when the contemporaneous effects of sanctions are estimated
without allowing for pre- and post-sanction effects, the pre- and post-sanction effects are in
the reference group. When we explicitly allow for pre- and post-sanction effects, these are
no longer in the reference group. This, in combination with the fact that we obtain negative
estimates of the pre- and post-sanction effects, explains the increase (in the absolute value)
of our contemporaneous sanction estimate. The implication of this result is that estimates
of the effects of sanctions that do not allow for pre-sanction and post-sanction effects may
underestimate the contemporaneous sanction effects.
Next, we turn to the estimates of the impact of sanctions in the pre-sanction period (i.e.,
the estimates on the covariates CTSij,t−10 through CTSij,t−1). We notice two patterns in these
results. First, we see that between 10 and four years prior to the implementation of a sanc-
tion, trade between the sanctioned and the sanctioning countries is already lower. This is
captured by the negative estimates on CTSij,t−10 through CTSij,t−4. As a reminder, we note that
all of our specifications include country-pair fixed effects. Thus, these negative estimates
cannot/should not be reflective of higher time-invariant trade costs between the sanction-
ing and the sanctioned countries. They may, however, reflect long-term tensions between
these countries. We also note that the estimates on CTSij,t−10 through CTSij,t−4 are often only
marginally significant. Therefore, we are hesitant to put heavy weight on their importance
and policy implications.
More importantly, we see from column (2) that the impact of sanctions picks up about
four years prior to their implementation. This is captured by the estimates on CTSij,t−4 through
CTSij,t−1 in column (2) of Table 22.1, which are increasing (in absolute value) and also becom-
ing more statistically significant the closer we move to the sanction period.16 Based on our
pre-sanction estimates, we conclude that sanctions do have an impact on trade before they are
implemented, which is the strongest, both in terms of economic magnitude and in terms of
statistical significance between one and four years prior to the implementation of the sanc-
tion. This result is consistent with and complements the results of Egger et al. (2020) who
obtain positive and significant estimates of the effects of FTAs prior to their implementation.
Following Egger et al. (2020), we label the statistically significant effects we obtain in the
pre-sanction period as Anticipatory Effects. Possible explanations for such effects include: (i)
already increased trade frictions between the sanctioning and the sanctioned countries prior to
Table 22.1 Timing the Impact of Sanctions on Trade
(1) (2) (3) (4)

SINGLE YEARLY 2 YEARS 3 YEARS
CTSij,t−10 −0.414 −0.504
(0.286) (0.310)
CTSij,t−9 −0.606 −0.471
(0.363)+ (0.275)+
CTSij,t−8 −0.387 −0.474
(0.353) (0.305)
CTSij,t−7 −0.595
(0.310)+
CTSij,t−6 −0.555 −0.528 −0.508
(0.295)+ (0.283)+ (0.255)*
CTSij,t−5 −0.520
(0.290)+
CTSij,t−4 −0.506 −0.564
(0.254)* (0.238)*
CTSij,t−3 −0.588 −0.643
(0.240)* (0.238)**
CTSij,t−2 −0.542 −0.674
(0.293)+ (0.252)**
CTSij,t−1 −0.810
(0.226)**
CTSij,t −1.460 −1.707 −1.698 −1.679
(0.238)** (0.274)** (0.274)** (0.270)**
CTSij,t+1 −0.676
(0.214)**
CTSij,t+2 −0.594 −0.632
(0.179)** (0.193)**
CTSij,t+3 −0.696 −0.645
(0.152)** (0.167)**
CTSij,t+4 −0.650 −0.672
(0.127)** (0.127)**
CTSij,t+5 −0.596
(0.147)**
CTSij,t+6 −0.572 −0.583 −0.596
(0.170)** (0.157)** (0.141)**
CTSij,t+7 −0.500
(0.150)**
(continued )
(1) (2) (3) (4)

SINGLE YEARLY 2 YEARS 3 YEARS
CTSij,t+8 −0.372 −0.430
(0.158)* (0.147)**
CTSij,t+9 −0.177 −0.326
(0.147) (0.138)*
CTSij,t+10 −0.126 −0.149
(0.114) (0.127)
N 1936973 1935581 1935581 1935581
Notes: This table reports estimates of the evolution of the impact of sanctions on trade. All results are obtained
with the PPML estimator, consecutive-year data, exporter-time and importer-time fixed effects, and directional
country-pair fixed effects. The estimates of all fixed effects are omitted for brevity. The dependent variable is
always nominal trade flows in levels. Column (1) obtains a single average estimate of the impact of complete trade
sanctions on trade flows. Column (2) uses 10 yearly sanction lags and 10 yearly sanction leads. Columns (3) and
(4) employ two-year lags and leads and three-year lags and leads, respectively. Standard errors are clustered by
country-pair. + p < 0.10, * p < .05, ** p < .01. See text for further details.
the implementation of the sanction, including the ability of governments to influence firms,
especially their state-owned firms, even before the formal sanction restrictions are in place;
and/or (ii) adjustments made by the firms in expectation of the imposition of the sanction. We
view the disentangling of these dynamic channels (both empirically and theoretically) as very
interesting and important tasks for future work. For now, the main implication of our findings
is that researchers should allow for anticipatory effects when they estimate the impact of
sanctions on trade.
The third main result from column (2) of Table 22.1 relates to our post-sanction estimates
(i.e., the estimates on the covariates CTSij,t+1 through CTSij,t+10). We see two significant patterns
in the evolution of these estimates. The main conclusion from them is that the recovery of
trade flows is not instantaneous. Our estimates suggest that the impact of sanctions on trade
flows is not completely eliminated until about seven to eight years after the sanctions had
been lifted. The second pattern we observe in our post-sanction estimates is that the recovery
of trade flows is gradual and steady. The two patterns captured by our estimates are consist-
ent with the discussion in the literature explaining the smooth dynamic adjustment after
the lifting of the sanctions. One possible explanation is that sanctions damage the trust in
international trade relations, which increases the risk associated with trade and the transaction
costs that accompany commercial relationships (Morrow et al. [1998], Lektzian and Souva
[2001]) and which, in turn, may influence patterns of international specialization even after
the sanctions have been lifted. Moreover, the speed with which trade recovers depends on
the target’s political system (North [1990], Eichengreen and Irwin [2009]). Other possible
explanations for this smooth dynamic could be the gradual lifting of various trade barriers
as well as post-sanction adjustment of firms, including gradual re-entry into the previously
banned market.
A. Yearly Leads and Lags

1
0
Sanction Estimates
–1
–2
1 3 5 6 8
1
9
10
10
2
4
3
t+ 9
2
4
7
6
t+
5
t+ t+
7
t+ t+
t–
t–
t–
t+
t–
t–
t+
t–
t+
t–
t–
t–
t+
t–
Time
B. 2-Year Leads and Lags
–.5
Sanction Estimates
–1
–1.5
–2
–2.5
t–10 t–8 t–6 t–4 t–2 t t+2 t+4 t+6 t+8 t+10
Time
C. 3-Year Leads and Lags

0
–.5
Sanction Estimates
–1
–1.5
–2
t–9 t–6 t–3 t t+3 t+6 t+9

Time
Note: This figure presents estimates of the evolution of the impact of sanctions on trade. The estimates used
to construct the three panels of the figure are those from Table 22.1. Specifically, panel A of the figure depicts
the estimates, and their corresponding confidence intervals, from column (2) of Table 22.1. Panels B and C,
respectively, visualize the results from columns (3) and (4) of Table 22.1. See text for further details.
Fgure 22.7 Evolution of the Impact of Sanctions on Trade
Comparison between our pre-sanction and post-sanction estimates reveals an encouraging

result. Specifically, we notice that the post-sanction estimates also become statistically
insignificant after a given period of time and they become smaller in absolute value, i.e.,
less negative, as compared to the pre-sanction estimates. While the differences between the
pre- and the post-sanction estimates may not be statistically significant, pushing inference
to the limit, the implication is that sanctions may actually lead to increased/improved
trade relationships in the post-sanction period as compared to the pre-sanction period. A
natural explanation for this pattern is that the sanctions could have eliminated the source
of tension between the countries and, therefore, they have led to improved economic/trade
relationships.
The estimates in columns (3) and (4) of Table 22.1 are obtained with yearly data, and all
estimation features we used to obtain the results in column (1). The only difference is that
the results in columns (3) and (4) are obtained with two-year and three-year lags and leads,
respectively. These estimates are visualized in panels B and C of Figure 22.7, respectively. Our
results reveal that using longer lags and leads has some advantages and some disadvantages.
On the positive side, the new estimates are “smoother” due to the fact that they are averages
over longer periods of time. They are also more “efficient” from an econometric point of view.
The “smoothness” of the longer lead and lag estimates is clearly depicted in panels B and C
of Figure 22.7. We also note that our argument about the difference between the pre-sanction
and the post-sanction effects is most clearly seen in panel B of Figure 22.7. On the downside,
using longer leads and lags may lead to inaccurate timing of some of the sanction effects. For
example, the yearly estimates in column (3) reveal that the post-sanction effects of sanctions
are exhausted seven to eight years after their lifting, while the results in column (4) suggest
that the sanction effects are still strong nine years after their implementation. Based on these
results, our recommendation is that researchers should experiment with alternative lags and
leads and use a combination of them to present and interpret their findings.
22.3.2.2 On the phasing-in sanction effects

In this section we zoom in on the time period when complete trade sanctions are in place
in order to investigate how the impact of such sanctions evolves while they are active. If
the enforcement of complete trade sanctions is strict, trade should immediately fall and
stay at the low level. In practice, trade flows may vary within the sanction period depend-
ing on, for instance, enforcement effort, specific goals sought, and/or the expectation of
conflict resolution. To understand the time-varying impact of complete trade sanctions
on trade, we first designate each sanction-year as early, mid or late phase, by dividing
the spell of the sanctions into three periods, and separately estimate the phase-specific
sanction effects. Two main findings emerge from column (2) of Table 22.2 and Panel D
of Figure 22.8. First, our estimates confirm that the impact of complete trade sanctions is
deep and immediate. Second, they suggest that the negative impact of sanctions appears
to be increasing over time. The estimated effect of sanctions is weaker in the early phase
and stronger in the late phase. However, the differences across phases are quite small and
statistically insignificant.
In order to understand the timing of the contemporaneous impact of sanctions, in the next
step we allow for differential effects of long (five or more years) vs. short (less than five
years) complete trade sanctions.17 Figure 22.8 (F) (corresponding to column [4] of Table 22.2)
suggests that sanctions with longer durations are very effective in restricting trade. Trade flows
D. Sanction Phase (Begin, During, End) F. Long Sanctions (5+ yrs)
1
0
0 –1
–1 –2
Sanction Estimates
Sanction Estimates
–2 –3
–3 –4
t–10 t–8 t–6 t–4 t–2 b m e t+2 t+4 t+6 t+8 t+10 t–10 t–8 t–6 t–4 t–2 0 2 4 6 8 10+ t+2 t+4 t+6 t+8 t+10
Time Time
E. Time-Varying Sanction Effects G. Short Sanctions (<5 yrs)

.5
430
0
0
–1
–.5
–2
Sanction Estimates
Sanction Estimates
–1
–3
–1.5
t–10 t–8 t–6 t–4 t–2 0 2 4 6 8 10+ t+2 t+4 t+6 t+8 t+10 t–10 t–8 t–6 t–4 t–2 0 2 4 t+2 t+4 t+6 t+8 t+10
Time Time
Note: This figure presents estimates of the evolution of the impact of sanctions on trade. The estimates and their corresponding confidence intervals
used to construct the figure are those from Table 22.2. Specifically, panel D of the figure depicts the estimates, and their corresponding confidence
intervals, from column (2) of Table 22.2. Panels E, F, and G visualize the results from columns (3), (4), and (5) of Table 22.2. See text for further details.
Figure 22.8 Phasing-in Impact of Sanctions on Trade

Table 22.2 On the Contemporaneous Impact of Sanctions on Trade
(1) (2) (3) (4) (5)

AVE_SANCT DURATION YEARLY LONG_SANCT SHORT_SANCT
CTSij,t−10 −0.414 −0.420 −0.467 −0.497 −0.542

+ +
(0.286) (0.284) (0.280) (0.278) (0.279)+
CTSij,t−9 −0.606 −0.611 −0.664 −0.698 −0.761
(0.363)+ (0.360)+ (0.356)+ (0.351)* (0.355)*
CTSij,t−8 −0.387 −0.394 −0.447 −0.483 −0.549
(0.353) (0.349) (0.345) (0.339) (0.349)
CTSij,t−7 −0.595 −0.601 −0.654 −0.688 −0.767
+ + * *
(0.310) (0.308) (0.304) (0.303) (0.305)*
CTSij,t−6 −0.555 −0.563 −0.620 −0.655 −0.732
(0.295)+ (0.293)+ (0.291)* (0.291)* (0.291)*
CTSij,t−5 −0.520 −0.528 −0.584 −0.621 −0.689
+ + * *
(0.290) (0.289) (0.290) (0.293) (0.296)*
CTSij,t−4 −0.506 −0.513 −0.562 −0.599 −0.614
(0.254)* (0.253)* (0.259)* (0.262)* (0.267)*
CTSij,t−3 −0.588 −0.590 −0.634 −0.671 −0.668
(0.240)* (0.240)* (0.245)** (0.249)** (0.252)**
CTSij,t−2 −0.542 −0.519 −0.552 −0.582 −0.565
+ + + *
(0.293) (0.288) (0.292) (0.295) (0.296)+
CTSij,t−1 −0.810 −0.683 −0.663 −0.663 −0.565
(0.226)** (0.238)** (0.225)** (0.247)** (0.233)*
CTSij −1.707 −0.871 −0.874 −0.742
** ** *
(0.274) (0.227) (0.353) (0.238)**
BEGIN −1.629
(0.278)**
DURING −1.874
(0.304)**
END −1.888
(0.294)**
IN _CTSij,t+1 −1.287 −2.321 −0.794
** **
(0.180) (0.516) (0.142)**
IN _CTSij,t+2 −1.273 −2.550 −0.551
(0.197)** (0.444)** (0.131)**
(continued )
(1) (2) (3) (4) (5)

IN _CTSij,t+3 −1.200 −2.520 −0.537

** **
(0.182) (0.396) (0.117)**
IN _CTSij,t+4 −1.304 −2.377 −0.592
(0.199)** (0.367)** (0.135)**
IN _CTSij,t+5 −2.041 −2.213
**
(0.278) (0.310)**
IN _CTSij,t+6 −2.320 −2.469
(0.346)** (0.372)**
IN _CTSij,t+7 −2.153 −2.291
**
(0.323) (0.343)**
IN _CT Sij,t+8 −2.249 −2.391
**
(0.340) (0.356)**
IN _CT Sij,t+9 −2.340 −2.482
(0.331)** (0.348)**
IN _CT Sij,t+10 −2.650 −2.803
**
(0.343) (0.364)**
CT Sij,t+1 −0.676 −0.676 −0.650 −0.653 −0.612
** ** ** **
(0.214) (0.213) (0.210) (0.208) (0.206)**
CT Sij,t+2 −0.594 −0.594 −0.571 −0.575 −0.541
** ** ** **
(0.179) (0.179) (0.176) (0.175) (0.172)**
CT Sij,t+3 −0.696 −0.698 −0.674 −0.676 −0.642
(0.152)** (0.152)** (0.150)** (0.150)** (0.147)**
CT Sij,t+4 −0.650 −0.653 −0.632 −0.630 −0.594
** ** ** **
(0.127) (0.126) (0.125) (0.124) (0.125)**
CT Sij,t+5 −0.596 −0.598 −0.598 −0.580 −0.547
(0.147)** (0.147)** (0.146)** (0.144)** (0.146)**
CT Sij,t+6 −0.572 −0.573 −0.563 −0.551 −0.539
(0.170)** (0.170)** (0.169)** (0.168)** (0.167)**
CT Sij,t+7 −0.500 −0.503 −0.491 −0.480 −0.465
(0.150)** (0.150)** (0.149)** (0.148)** (0.147)**
(continued )
(1) (2) (3) (4) (5)

CT Sij,t+8 −0.372 −0.375 −0.364 −0.354 −0.339

* * * *
(0.158) (0.159) (0.158) (0.157) (0.156)*
CT Sij,t+9 −0.177 −0.179 −0.170 −0.161 −0.151
(0.147) (0.147) (0.145) (0.144) (0.144)
CT Sij,t+10 −0.126 −0.128 −0.119 −0.111 −0.104
(0.114) (0.114) (0.113) (0.112) (0.113)
N 1935581 1934732 1935585 1935585 1926032
Notes: This table reports results from the sanctions duration analyses. Column (1) shows the benchmark results
from column (2) of Table 22.1. Column (2) reports estimates for the sanctions period divided into three phases.
Column (3) shows the yearly phasing-in effects of complete trade sanctions. Columns (4) and (5) differentiate
between the phasing-in effects of complete trade sanctions with long (5+ years) and short (<5 years) duration.
Standard errors are clustered by country-pair. + p < 0.10, * p < .05, ** p < .01. See text for further details.
dip in the first year following the sanctions and remain low (roughly a 79% reduction in trade
flows) throughout the duration of the sanctions.18 There is no obvious trend in trade volume
prior to the onset or termination of long sanctions, which suggests the absence of anticipation.
This is not very surprising since sanctions of long duration are often related to territorial
conflict, war and ideology issues. Affected countries usually confront pervasive conflicts in
areas beyond trade and resolutions may be negotiated in stealth.
By contrast, Figure 22.8 (G) and column (5) of Table 22.2 show mixed results for sanctions
of short duration. Trade initially decreases (by around 42%) following the onset of sanctions.
However, after two years, trade flows come back to almost the same level as those in pre-
sanction periods, possibly in response to the expectation of swift conflict resolution. Trade then
gradually increases in the post-sanction period, which again could be explained by the sanction-
driven eased tensions between the sender(s) and the target(s). Finally, column (3) of Table 22.2
and Figure 22.8 (E) demonstrate the full set of time-varying sanction effects. Consistent with
the duration analysis, complete trade sanctions reduce trade on average and more so after being
effective for over five years. The reduction is primarily driven by the sanctions with durations
longer than five years while sanctions with short durations have limited impact on trade. It is
also worth noting that trade flows recover once the sanctions are repealed. In fact, post-sanction
trade flows rise on average compared to the pre-sanction level. The increase becomes apparent
eight years after the sanction ends, and the estimates CTSt+8 and CTSt+10 are larger than those in
pre-sanction periods. One possible explanation is that countries are able to achieve a certain
degree of conflict resolution to have sanctions removed, and this could promote trade.
22.3.2.3 Further analysis and robustness specifications

We further investigate the differential effects of complete trade sanctions based on the scope
and identity of sanctioning countries. The detailed results and interpretation of this analysis can
be found in the working paper version of this chapter by Dai et al. (2021). First, we compare the
unilateral and multilateral complete trade sanctions. Our results reveal that the partial estimate
of the impact of unilateral sanctions is larger than the corresponding impact of multilateral
sanctions. Next, we look at the differential effects of the US, UN, and EU sanctions. We find
that the US complete trade sanctions emerge as the most powerful in restricting trade, and that
the US sanctions have strong anticipation and post-sanction effects which disappear about six
years after the sanctions are repealed. Our estimates of the UN sanctions also reveal strong
anticipatory effects, but the UN sanctions appear to be less effective in terms of trade reduction.
Our estimates reveal that, on average, it takes about four years to observe the additional impact
of UN sanctions on trade. The estimates of the effects of EU sanctions are not different from
those of the UN sanctions.
We conclude our empirical analysis with a series of sensitivity experiments that confirm the
robustness of our main findings. Due to space limitations, the results and the discussion of the
findings from these experiments can be found in the results and detailed interpretation of this
analysis of the working paper version of this chapter (Dai et al., 2021). Specifically, we show
that our results and conclusions remain valid when we use: (i) the PPML with positive observa-
tions only; (ii) the OLS estimator; (iii) symmetric country-pair fixed effects; (iv) additional
time-varying control variables including non-trade sanctions, the EU membership, the WTO
membership, and the presence of the EIAs; and (iv) the three- and five-year interval data.
22.4 CONCLUSION
The popularity of economic sanctions has risen in recent years. Moreover, due to intensifying
geopolitical rivalries – for example between Russia and Ukraine or Greece and Turkey in the
eastern Mediterranean and other conflicts – the use of sanctions is expected to persist in the
years ahead. Surprisingly, despite countries’ increasing reliance on economic sanctions as
foreign policy instruments, the academic literature is struggling to grapple with the question
of whether sanctions represent an efficient policy tool.
We contribute to this literature by characterizing the evolution of the impact of sanctions on
trade flows. To this end, we utilize the newly developed GSDB and we capitalize on the latest
developments in the international trade literature related to the gravity equation. Descriptive
statistics based on the GSDB suggest that the effectiveness of sanctions hinges on three key
features: their type, scope, and duration. We are able to illustrate that, in addition to the sanction
types and scope, the duration of sanctions is of major consequence for the effectiveness of
this policy instrument. Moreover, our empirical analysis establishes several important results
related to the dynamic impact of sanctions.
We find that the estimate of the impact of complete trade sanctions on international trade is
larger (by 17%) with the inclusion of pre- and post-sanction indicators. As a consequence, esti-
mates of the effects of sanctions that do not allow for pre- and post-sanction effects underestimate
the true contemporaneous sanction effects. Our results also establish the presence of significant
anticipatory effects of sanctions. In addition, our analysis reveals that economic recovery from
sanctions is not instantaneous. The negative impact of sanctions on trade is on average present
for about seven to eight years down the road after sanctions are lifted. Importantly, we find that
the effect of sanctions that last for more than five years is much stronger than that of shorter
ones. Thus, the negative impact of complete trade sanctions on trade in our analysis is mostly
driven by sanctions of long duration. Lastly, we perform a series of robustness analyses which
generate additional insights about the impact and effectiveness of sanctions.
NOTES
1. We thank Peter A.G. van Bergeijk and two referees for valuable feedback and excellent suggestions.
2. In the words of Hufbauer et al. (2007, p. 7), ‘[T]he imposition of sanctions conveys a triple signal: To the target
country it says the sender does not condone the target’s actions; to allies it says that words will be supported with
deeds; and to domestic audiences it says the sender government will act to safeguard the nation’s vital interests.’
3. We refer the reader to Felbermayr et al. (2020a) for a detailed description of the GSDB and to Kirilakha et al.
(2021) for a recent update of the data. The GSDB is freely available at GSDB@drexel.edu.
4. Our work is also related to several other contributions that use the gravity model to estimate the effects of sanc-
tions on trade (e.g., Hufbauer and Oegg [2003], Caruso [2003], Yang et al. [2004], and Afesorgbor [2018]). The
main differences between these papers and ours can be summarized as follows: (i) we rely on a newer database;
(ii) our analysis is based on the latest developments in the empirical gravity literature; and (iii) we develop new
insights on the evolution of sanctions.
5. An important difference between the effects of sanctions and FTAs that differentiates our work from Egger et al.
(2020) is that sanctions are often lifted/terminated within a certain number of periods while, typically, most FTAs
remain present throughout the estimating samples.
6. The GSDB is freely available and we will be happy to share it with interested researchers, who can request it by
e-mail at GSDB@drexel.edu. When writing to us with requests for the data, please indicate your name and affiliation.
7. For a range of cases the GSDB additionally includes detailed trade ban information (e.g., export controls of
small aviation, helicopter, aviation parts and electronics, or export restrictions of high-tech products). The partial
character of this trade sanction type is very heterogeneous as the product ranges differ substantially.
8. A prominent example of a complete unilateral sanction is the full trade sanction policy imposed by the United
States on Cuba, which was introduced by President John F. Kennedy in February 1962. The UN sanction on Iran
based on resolution 1996 is an example of a partial sanction policy that is imposed by all UN member states. The
different dimensions of trade sanctions in the GSDB are explained in detail in Felbermayr et al. (2020a).
9. In case of unilateral sanctions, the graph accounts for imports and exports of sanctioning countries while for cases
with reciprocal sanctions only both import volumes have been accounted for.
10. We refer the reader to Anderson (2011), Costinot and Rodríguez-Clare (2014), Head and Mayer (2014) and Yotov
et al. (2016) for surveys of the theoretical gravity literature, which is the foundation for our estimations as well
as for the general equilibrium analysis.
11. For example, Trefler (2004) also criticizes trade estimations with samples that are pooled over consecutive years
and uses three-year intervals. Cheng and Wall (2005) and Baier and Bergstrand (2007) use five-year intervals,
while Olivero and Yotov (2012) experiment with three- and five-year interval data.
12. For further analysis of the Multilateral Resistance Terms and their importance in the structural gravity system, we
refer the interested reader to Yotov et al. (2016).
13. As noted by Felbermayr et al. (2020a), another factor that mitigates potential endogeneity concerns with respect
to sanctions is that, by definition, sanctions are usually imposed in response to actions/inactions that are specific
to the target country. Therefore, the use of exporter-time and importer-time fixed effects in our econometric
specification completely controls for any such target-specific linkages.
14. The additional time-varying control variables come from the Dynamic Gravity Database of the US International
Trade Commission, c.f., Gurevich and Herman (2018).
15. The trade volume effect (in %) is calculated as (exp(−1.46) − 1) * 100 = 76.774, and the corresponding standard
errors are obtained with the Delta method.
16. The exception is the estimate on CTSij,t−2, which is still negative but not increasing in absolute value.
17. Long and short sanctions each represent 20% and 80% of sanction cases in the sample.
18. It is worth mentioning here the ‘naïve’ theory of sanctions (Galtung [1967]), according to which extensive eco-
nomic damage translates into the achievement of ambitious objectives, which long-term sanctions might pursue.
REFERENCES
Afesorgbor, Sylvanus K., “The Impact of Economic Sanctions on International Trade: How Do Threatened Sanctions
Compare with Imposed Sanctions?,” European Journal of Political Economy, 56 (2019): 11–26.
Agnosteva, Delina E., James E. Anderson, and Yoto V. Yotov, “Intra-national Trade Costs: Assaying Regional
Frictions,” European Economic Review, 2019, 112 (C), 32–50.
Ahn, P. Daniel and Rodney D. Ludema, “The Sword and the Shield: The Economics of Targeted Sanctions,” CESifo
Working Paper 7620, CESifo: Munich, 2018.
Anderson, James E., “A Theoretical Foundation for the Gravity Equation,” American Economic Review, 1979, 69
(1), 106–116.
Anderson, James E., “The Gravity Model,” Annual Review of Economics, 2011, 3, 133–160.
Anderson, James E. and Eric van Wincoop, “Gravity with Gravitas: A Solution to the Border Puzzle,” American
Economic Review, 2003, 93 (1), 170–192.
Anderson, James E. and Eric van Wincoop, “Trade Costs,” Journal of Economic Literature, 2004, 42 (3), 691–751.
Anderson, James E. and Yoto Yotov, “Short Run Gravity,” Journal of International Economics, 126, (2020): 103341,
September.
Arkolakis, Costas, Arnaud Costinot, and Andrés Rodríguez-Clare, “New Trade Models, Same Old Gains?,” American
Economic Review, 2012, 102 (1), 94–130.
Armington, Paul S., “A Theory of Demand for Products Distinguished by Place of Production,” IMF Staff Papers,
1969, 16, 159–176.
Baier, Scott L. and Jeffrey H. Bergstrand, “Do Free Trade Agreements Actually Increase Members’ International
Trade?,” Journal of International Economics, 2007, 71 (1), 72–95.
Baldwin, Richard E. and Daria Taglioni, “Gravity for Dummies and Dummies for Gravity Equations,” NBER:
Cambridge MA. NBER Working Paper No. 12516, 2006.
Bergstrand, Jeffrey H., “The Gravity Equation in International Trade: Some Microeconomic Foundations and
Empirical Evidence,” Review of Economics and Statistics, 1985, 67 (3), 474–481.
Besedes, Tibor, Stefan Goldbach, and Volker Nitsch, “Cheap Talk? Financial Sanctions and Non-Financial Activity,”
Manuscript, 2018.
Bolks, Sean M. and Dina Al-Sowayel, “How Long Do Economic Sanctions Last? Examining the Sanctioning Process
through Duration,” Political Research Quarterly, 2000, 53 (2), 241–265.
Caliendo, Lorenzo and Fernando Parro, “Estimates of the Trade and Welfare Effects of NAFTA,” Review of Economic
Studies, 2015, 82 (1), 1–44.
Caruso, Raul, “The Impact of International Economic Sanctions on Trade – An Empirical Analysis,” University
Library of Munich, Germany, 2003.
Chaney, Thomas, “Distorted Gravity: The Intensive and Extensive Margins of International Trade,” American
Economic Review, 2008, 98 (4), 1707–1721.
Cheng, I-Hui and Howard J. Wall, “Controlling for Heterogeneity in Gravity Models of Trade and Integration,”
Federal Reserve Bank of St. Louis Review, 2005, 87 (1), 49–63.
Cortright, David, George A. Lopez, and Elizabeth S. Rogers, “Targeted Financial Sanctions: Smart Sanctions That
Do Work,” in David Cortright and George Lopez, eds., Smart Sanctions, Philadelphia, PA, Rowman & Littlefield,
2002, pp. 23–40, Lanham.
Costinot, Arnaud and Andrés Rodríguez-Clare, “Trade Theory with Numbers: Quantifying the Consequences of
Globalization,” in Gita Gopinath, Elhanan Helpman, and Kenneth S. Rogoff, eds., Chapter 4 in the Handbook of
International Economics, Vol. 4, , Elsevier Ltd., Oxford, 2014, pp. 197–261.
Costinot, Arnaud, Dave Donaldson, and Ivana Komunjer, “What Goods Do Countries Trade? A Quantitative
Exploration of Ricardo’s Ideas,” Review of Economic Studies, 2012, 79 (2), 581–608.
Crozet, Matthieu and Julian Hinz, “Friendly Fire – The Trade Impact of the Russia Sanctions and Counter-Sanctions,”
Kiel Working Papers 2059, Kiel Institute for the World Economy (Ifw), Kiel, 2016.
Dai, Mian, Gabriel Felbermayr, Aleksandra Kirilakha, Constantinos Syropoulos, Erdal Yalcin, and Yoto V. Yotov,
“Timing the Impact of Sanctions on Trade,” School of Economics Working Paper Series 2021–7, Drexel University,
Philadelphia, 2021.
Dizaji, Sajjad Faraji and Peter A.G. van Bergeijk, “Potential Early Phase Success and Ultimate Failure of Economic
Sanctions: A VAR Approach with an Application to Iran,” Journal of Peace Research, 2013, 50 (6), 721–736.
Dorussen, Han and Jongryn Mo, “Ending Economic Sanctions: Audience Costs and Rent- Seeking as Commitment
Strategies,” Journal of Conflict Resolution, 2001, 45 (4), 395–426.
Drezner, Daniel W., “Sanctions Sometimes Smart: Targeted Sanctions in Theory and Practice,” International Studies
Review, 2011, 13 (1), 96–108.
Drury, A. Cooper, How and Whom the US President Sanctions: A Time-series Cross-section Analysis of US Sanction
Decisions and Characteristics, 2000, London: Palgrave Macmillan.
Drury, A. Cooper, “Sanctions as Coercive Diplomacy: The US President’s Decision to Initiate Economic Sanctions,”
Political Research Quarterly, 2001, 54 (3), 485–508.
Eaton, J. and M. Engers, “Sanctions,” Journal of Political Economy, 1992, 100 (5), 899–928.
Eaton, Jonathan and Samuel Kortum, “Technology, Geography and Trade,” Econometrica, 2002, 70 (5), 1741–1779.
Egger, Peter, Mario Larch, and Yoto V. Yotov, “Structural Gravity with Interval Data: Revisiting the Impact of Free
Trade Agreements,” Manuscript, 2020.
Egger, Peter and Sergey Nigai, “Energy Demand and Trade in General Equilibrium,” Environmental and Resource
Economics, Feb 2015, 60 (2), 191–213.
Eichengreen, Barry and Douglas A. Irwin, “The Slide to Protectionism in the Great Depression: Who Succumbed and
Why?,” NBER Working Paper 15142, 2009.
Felbermayr, Gabriel, Aleksandra Kirilakha, Constantinos Syropoulos, Erdal Yalcin, and Yoto V. Yotov, “The Global Sanctions
Data Base,” School of Economics Working Paper Series 2020–2, LeBow College of Business, Drexel University, Philadelphia,
2020.
Felbermayr, Gabriel, Constantinos Syropoulos, Erdal Yalcin, and Yoto Yotov, “On the Heterogeneous Effects of
Sanctions on Trade and Welfare: Evidence from the Sanctions on Iran and a New Database,” School of Economics
Working Paper Series 2020–4, LeBow College of Business, Drexel University, May 2020.
Galtung, Johan, “On the Effects of International Economic Sanctions, With Examples from the Case of Rhodesia,”
World Politics, 1967, 19 (3), 378–416.
Gurevich, Tamara and Peter Herman, “The Dynamic Gravity Dataset: 1948–2016,” USITC Working Paper 2018-02-A,
2018.
Head, Keith and Thierry Mayer, “Gravity Equations: Workhorse, Toolkit, and Cookbook,” in Gita Gopinath, Elhanan
Helpman, and Kenneth S. Rogoff, eds., Chapter 3 in the Handbook of International Economics, Vol. 4, , Elsevier
Ltd., Oxford, 2014, pp. 131–195.
Hufbauer, Gary C. and Barbara Oegg, “The Impact of Economic Sanctions on US Trade: Andrew Rose’s Gravity
Model,” Peterson Institute for International Economics, 2003.
Hufbauer, Gary C., Jeffrey J. Schott, Kimberly A. Elliott, and Barbara Oegg, Economic Sanctions Reconsidered (3rd
edition). Washington, DC: Peterson Institute for International Economics, 2007.
Kaempfer, William H., and Anton D. Lowenberg. “The Political Economy of Economic Sanctions,” in T. Sandler and
K. Hartley, eds., Handbook of Defense Economics 2, (2007): 867–911.
Kirilakha, Aleksandra, Gabriel Felbermayr, Constantinos Syropoulos, Erdal Yalcin, and Yoto V. Yotov, “The Global
Sanctions Data Base: An Update to Include the Years of the Trump Presidency,” in Peter A.G. van Bergeijk, ed.,
Research Handbook on Economic Sanctions, this handbook 2021.
Kirshner, Jonathan, “The Microfoundations of Economic Sanctions,” Security Studies, 2007, 6 (3), 32–64.
Krugman, Paul R., “Increasing Returns, Monopolistic Competition and International Trade,” Journal of International
Economics, 1979, 9 (4), 469–479.
Krustev, Valentin L. and T. Clifton Morgan, “Ending Economic Coercion: Domestic Politics and International
Bargaining,” Conflict Management and Peace Science, 2011, 28 (4), 351–376.
Kwon, Ohyun, Constantinos Syropoulos, and Yoto V. Yotov, “Pain and Gain: The Short- and Long-run Effects of
Economic Sanctions on Growth,” Manuscript, Drexel University, 2020.
Lektzian, David, and Mark Souva. “Institutions and international cooperation: An event history analysis of the effects
of economic sanctions.” Journal of Conflict Resolution, 45.1 (2001): 61–79.
Lektzian, David and Mark Souva, “The Economic Peace between Democracies: Economic Sanctions and Domestic
Institutions,” Journal of Peace Research, 2003, 40 (6), 641–660.
Lektzian, David and Mark Souva, “An Institutional Theory of Sanctions Onset and Success,” Journal of Conflict
Resolution, 2007, 51 (6), 848–871.
McGillivray, Fiona and Allan C. Stam, “Political Institutions, Coercive Diplomacy, and the Duration of Economic
Sanctions,” The Journal of Conflict Resolution, 2004, 48 (2), 154–172.
Morgan, T. Clifton and Valerie L. Schwebach, “Fools Suffer Gladly: The Use of Economic Sanctions in International
Crises,” International Studies Quarterly, 1997, 41, 27–50.
Morrow, James D., Randolph M. Siverson, and Tressa E. Tabares, “The Political Determinants of International Trade:
The Major Powers, 1907–90,” The American Political Science Review, 1998, 92 (3), 649–661.
North, Douglass C., Institutions, Institutional Change and Economic Performance, Cambridge, UK: Cambridge
University Press, 1990.
Olivero, María Pía and Yoto V. Yotov, “Dynamic Gravity: Endogenous Country Size and Asset Accumulation,”
Canadian Journal of Economics, 2012, 45 (1), 64–92.
Pape, R.A., “Why Economic Sanctions Do Not Work,” International Security, 1997, 22 (2), 90–136.
Peksen, Dursun, “When Do Imposed Economic Sanctions Work? A Critical Review of the Sanctions Effectiveness
Literature,” Defence and Peace Economics, 2019, 30 (6), 635–647.
Renwick, Robin, “Economic Sanctions,” International Affairs, Cambridge, MA: Harvard University, 1981.
Santos Silva, João M.C. and Silvana Tenreyro, “The Log of Gravity,” Review of Economics and Statistics, 2006, 88
(4), 641–658.
Santos Silva, João M.C. and Silvana Tenreyro, “Further Simulation Evidence on the Performance of the Poisson
Pseudo-Maximum Likelihood Estimator,” Economics Letters, 2011, 112 (2), 220–222.
Trefler, Daniel, “The Long and Short of the Canada-U.S. Free Trade Agreement,” American Economic Review, 2004,
94 (4), 870–895.
Tsebelis, George, “Are Sanctions Effective? A Game-Theoretic Analysis,” Journal of Conflict Resolution, 1990, 34,
3–28.
van Bergeijk, Peter A.G. and Charles van Marrewijk, “Why Do Sanctions Need Time to Work? Adjustment, Learning
and Anticipation,” Economic Modelling, 1995, 12 (2), 75–86.
Yang, Jiawen, Hossein Askari, J. Forrer, and Hildy Teegen, “US Economic Sanctions: An Empirical Study,” The
International Trade Journal, 2004, 18 (1), 23–62.
Yotov, Yoto V., Roberta Piermartini, Jose-Antonio Monteiro, and Mario Larch, An Advanced Guide to Trade Policy
Analysis: The Structural Gravity Model, Geneva: UNCTAD and WTO, 2016.
23. Sanctioned to starve? The impact of economic
sanctions on food security in targeted states
Sylvanus Kwaku Afesorgbor*
23.1 INTRODUCTION
The imposition of economic sanctions and the consequences for targeted states have been
receiving major research interest recently because of the continuous use of sanctions in
diplomatic circles (see, e.g., Afesorgbor and Mahadevan, 2016; Neuenkirch and Neumeier,
2016; Peksen, 2011; Peksen and Son, 2015). Extending this interest to the consequences of
economic sanctions (hereafter sanctions) on food (in)security is particularly relevant consider-
ing the continuous global concern to eradicate hunger and famine. Food insecurity remains
a pertinent global concern as demonstrated by the Sustainable Development Goal (SDG 2).
More recently, anecdotal evidence points to a potential reversal in the long-term decline in the
food security trajectories of many developing countries (FAO et al., 2017). The report indicates
that about 815 million people were undernourished, with over 100 million still facing a severe
level of food insecurity in 2016. The current trend points to a worsening situation of acute
food insecurity. A report by FSIN (2018) recently highlighted the alarming and deteriorating
rate of food insecurity in 51 countries. It indicates that, in 2017, the number of people facing
acute food insecurity increased to almost 124 million.
Incidentally, most of the food insecure countries in the world are also sanctioned states. For
instance, according to the Global Hunger Index1, countries such as Burundi, Eritrea, Yemen,
Afghanistan, Chad, Ethiopia, Sudan, Somalia and North Korea are the most food insecure
countries and at the same time these countries have also suffered long periods of international
sanctions. From the political-economy point of view, the imposition of sanctions can adversely
affect food security in sanctioned countries from different channels. Oechslin (2014) indicates
two mechanisms through which sanctions can adversely affect food security. First, the central
government in a sanctioned state can under-supply essential resources thereby reducing
private-sector (farmers’) productivity. Second, government can deliberately centralize the
distribution of essential goods (e.g., food) in order to use access to food as a mechanism to
punish dissent against the leadership.
It is not far-fetched to link sanctions to food insecurity in the target countries as any form
of externally induced crisis could in principle take a variety of forms, for example, lower
income levels, higher unemployment, lower investments in education by families (Friedman
and Schady, 2013). For example, Neuenkirch and Neumeier (2015, 2016) show how sanctions
adversely affect income and poverty, while Garfield and Santana (1997), Gibbons and Garfield
(1990) and Peksen (2011) also show the adverse effect of sanctions on public health and
nutrition. All these could possibly result in lower consumption and deteriorating nutritional
outcomes in sanctioned countries and thereby adversely affect food security.
However, any anecdotal relationship between food insecurity and sanctions may not
present sufficient grounds to impute causality, thus it is imperative to employ a more rigorous
438
Sylvanus Kwaku Afesorgbor - 9781839102721
The impact of economic sanctions on food security in targeted states 439
econometric approach to assess whether there exists a causal relationship between sanctions
and food insecurity after accounting for several confounding factors. This will therefore help to
provide specific answers to many important questions such as: (1) whether sanctions aggravate
the incidence of food insecurity; (2) which dimensions of food security are more affected with
the imposition of sanctions; and (3) whether different sanctions instruments have heterogene-
ous effects on the different dimensions of food security.
Historically, many examples exist where sender nations employ various types of sanctions
to curtail the trade in food and agricultural products, for example, the US Embargo Act of
1807 that restricted trade between the US and the United Kingdom (UK). This embargo
contributed to jumps in corn prices in the UK (Pond, 2007). Other examples include the 1980
grain embargo imposed by the US on Russia, as well as the 1994 Glenn Amendment that
required the US to restrict exports of farm products to countries that had nuclear enrichment
programs such as Pakistan and India (Hufbauer et al., 2007). More recently, there has been the
particular case of sanctions and counter sanctions on agri-food products by the EU and Russia
following Russia’s annexation of the region of Crimea in Ukraine. Thus, this chapter seeks to
determine this additional human cost of sanctions building on literature such as Afesorgbor and
Mahadevan (2016), Neuenkirch and Neumeier (2015), and Neuenkirch and Neumeier (2016).
Current studies focus on the impact of sanctions on various economic outcomes in the tar-
geted states. These studies examine, for example, the impact of sanctions on income inequality
(Afesorgbor and Mahadevan, 2016), economic growth (Neuenkirch and Neumeier, 2015), and
poverty (Neuenkirch and Neumeier, 2016). Common to all these studies is the consistency that
the imposition of sanctions has unintended and adverse consequences for civilian populations
and general economic development in the targeted states. Apart from these recent papers, pre-
vious studies have also pointed to the adverse effects of sanctions on human well-being, health,
morbidity and mortality, which are attributed to restrictions on food and medicines. Citing the
case of sanctions on Haiti, Gibbons and Garfield (1999) point out that not only has the quality
of food consumption significantly diminished, but also the quantity of food available.
It is plausible that the imposition of sanctions can affect different dimensions of food secu-
rity through the effects on trade, technology adoption, food aid and agricultural development
assistance. In terms of trade, sanctions may directly hinder the flow of agricultural products
and food to targeted states as sanctions involve the use of several prohibitive instruments such
as financial and trade restrictions. Economic sanctions are associated with higher demand
for trade protection (Pond, 2017). Similarly, Kaempfer and Lowenberg (1988) show that
economic sanctions benefit special interest groups, especially import-competing producers,
thereby creating greater demand for protectionist policies that can regulate both the flow of
final goods and factors of production. Transfer of agricultural technology could be adversely
affected as trade in agricultural inputs and the diffusion of new agricultural ideas and innova-
tions may be hindered. For instance, it is believed that the transfer of the green revolution to
Asia played a major role in reducing the prevalence of hunger in that region (Evenson and
Gollin, 2003).
Food aid has been identified as playing a pivotal role in reducing the prevalence of under-
nourishment. A paper by Mary et al. (2018) shows econometrically that nutrition-sensitive
aid composing of emergency food aid decreases hunger substantially. More precisely, they
estimated that a 10% increase in per capita food aid would reduce hunger by 1.3% on average.
For sanctions, one of the ubiquitous instruments employed is a cut in foreign assistance (both
cash and food aid) by sender states to the targets. Hufbauer et al. (2007) cite the case of the

cancellation of a large US shipment of grain to Pakistan and India because of US sanctions.

Apart from cuts in food aid directly exacerbating the condition of food insecurity in the
sanctioned state, the situation created by sanctions can also make the efficient distribution
of food more difficult. Through all these channels, sanctions could have direct effects on the
capacity of targeted countries to meet the different dimensions of food security, availability,
access, utilization and stability.
Another mechanism through which sanctions can affect food security is by undermining
political institutions in the targeted countries. Marinov (2005) argues that sanctions desta-
bilize governments and cause political instability. Relating how political indicators affect
food security, Deaton and Lipka (2015) highlight that one common phenomenon associated
with the seven most food insecure countries in the developing world is political instability.
Although their analytical approach was descriptive, their results provide a nuance that political
institutions and the type of political governance of a country are important determinants of
food security. They argue that political instability can cause food insecurity through many
mechanisms. First, it may impair the capacity of the poor to generate income in the non-
agricultural sector and thereby reduce their purchasing power. Second, political instability
may increase the risk premium as a result of a higher rate of return for investment, thereby
reducing the level of investment in both agricultural and non-agricultural sectors. The Food
and Agricultural Organization (FAO) attributes the highest prevalence and the greatest depth
of hunger in sub-Saharan Africa to insufficient investment in the agriculture sector. Apart from
these, political instability may also create an environment which makes the distribution of food
costly.2 These mechanisms enumerated by Deaton and Lipka (2015) may be equally applicable
in the case of sanctions.
Essentially, this chapter makes three major contributions to the literature. First, our analysis
of the impact of sanctions provides the first empirical interrogation of how sanctions affect
food security in targeted states. The chapter fills an apparent research gap as the association
between sanctions and food insecurity has for some time just been a matter of media specula-
tion without concrete empirical evidence. Second, it is the first paper to analyze empirically
how the imposition of sanctions affects the different indicators that measure dimensions of
food security. In essence, looking at these different dimensions of food security is very relevant
as Barrett (2010) indicates that food security is a multi-faceted concept such that different
food security indicators can show contrasting results. Thus, it also extends the existing scope
of the sanctions literature on how sanctions affect food availability, access and stability in
targeted countries. Third, and finally, from the methodological point of view, the chapter also
circumvents the major identification strategy challenge arising from endogeneity of sanctions
by employing a matching technique that provides an additional robustness to our baseline
fixed effect estimations.
To pre-empt our results, we find that the imposition of economic sanctions affects one of the
most important and fundamental requirements for human survival, hunger and food security.
Primarily, sanctions increase the composite index measure of hunger, the Global Hunger Index
(GHI). In terms of different dimensions of food security, the results show that availability
and stability are the most affected dimensions. Focusing on the different instruments of sanc-
tions, we also find that employing the instrument of financial and trade sanctions has a more
pronounced adverse effect on food security.
Section 23.2 provides a theoretical underpinning for the study by looking at some of the
possible mechanisms through which sanctions can affect food security. Section 23.3 looks at the

data and the empirical strategy adopted. It discusses our two sources of data on food security,
the FAO and the International Food Policy Research Institute (IFPRI) and it also shows our
baseline model. In Section 23.4, we provide the results of our baseline estimations. This shows
that the imposition of sanctions adversely affects food security, and availability and stability
dimensions. We test the robustness of the baseline results in Section 23.5 by using entropy
balancing as a matching technique, and we find that the estimations to a large extent confirm our
baseline estimations. Section 23.6 concludes the chapter and offers some policy implications.
23.2 THEORETICAL CONSIDERATIONS
Theoretically, sanctions can be associated with food insecurity in targeted states as there are
many channels through which the imposition of sanctions can affect various dimensions of
food security. For instance, Oechslin (2014) offers a theoretical political-economy model
which explains how sanctions make governments in targeted countries reduce the private-
sector productivity and under-supply essential goods and services in order to use them as a way
of punishing any public dissent. He cites the case of US sanctions on Haiti when the Haitian
leaders systematically destroyed the agriculture infrastructure and prevented agricultural
extension officers from offering their services to Haitian farmers. In addition, skilled farmers
in Haiti were also forced to give up their farmlands, thereby reducing agricultural production
and aggravating food insecurity.
Looking at food insecurity from Amartya Sen’s entitlement theory, the imposition of
sanctions on a targeted country may induce the failures of exchange entitlements. This would
undermine the four main categories of entitlement: production, labor or livelihoods, trade
and social transfers. Conceição et al. (2016) emphasize the relevance of exchange (trade) and
production (productivity) for alleviating food insecurity; however, these channels of ensuring
food security can be undermined under situations of sanctions. From the household’s perspec-
tive, Anderson (2016) indicates that accessibility to food supplies depends to a large extent
on the household’s endowment such as the level of income, assets and wealth, remittances,
and other entitlements. Similarly, from the macroeconomic perspective, the imposition of
sanctions can adversely affect economic structures such as domestic production or GDP
(Neuenkirch and Neumeier, 2015), international trade (Afesorgbor, 2019) and public finance
(Peksen and Son, 2015). All in all, these varying effects would translate into an adverse impact
on food security in the targeted states.
Sanctions may create supply-side constraints by adversely affecting agricultural produc-
tion. Agricultural production is relevant for food security as it is the main source of food and
income for the majority of rural poor (World Bank, 2008). At the macro level, Dithmer and
Abdulai (2017) reveal that increases in economic growth significantly improve dietary energy
consumption. Generally, it is estimated that the imposition of sanctions reduces the target’s
GDP by on average 3%, thereby plunging the target into economic recession (Hufbauer et al.,
2007). This adverse consequence on GDP is also confirmed by Neuenkirch and Neumeier
(2015). They show that a strong negative relationship exists between sanctions and GDP.
Specifically, they find that sanctions imposed by the US and the UN decrease the target state’s
real GDP per capita growth rate by more than 2 percentage points. Since the main intention of
the sender is to effectively undermine the production capacity of the target in order to coerce
it into submission, imposition of sanctions is likely to trigger economic recessions in the target

states. Specifically, food and agricultural production may invariably be affected, hampering
the target’s ability to provide food (availability). Peksen and Son (2015) allude to this by stat-
ing that sanctions may limit agricultural products and inputs, thereby causing food shortages,
food price spikes and ultimately poor nutrition.
Agricultural production depends significantly on better technology adoption, research and
innovation in the agricultural sector such as the use of high-yield seed varieties, drought and
pest-resistant seeds, farm machinery and others. FAO (2003) indicates that training in agricul-
tural techniques and the acquisition of the new skills required by local farmers form an integral
component of food security interventions. However, the channels for the transfer of such new
agricultural technologies or agricultural development assistance from more developed senders
to developing targets could be blocked. For example, Hufbauer et al. (2007) highlight the case
of US sanctions on Iraq, where the US suspended agricultural export credits to Iraq. This lack
of agricultural innovation may result in low agricultural productivity, thereby producing higher
food insecurity.
Through demand-side constraints, sanctions can also affect access to food, especially
by reducing the income-generating opportunities for individuals in the target country. The
imposition of sanctions would adversely affect employment and income opportunities for
individuals, in turn affecting their sources of livelihood and ability to meet their daily dietary
requirements. In addition, the precarious economic situation may undermine the capacity of
the state to implement social protection programs (e.g., food stamps or cash transfers) that
can be effective in alleviating the burdens of the poor in the targeted states. FAO (2003)
emphasizes that transfers from the state to poor households in the form of cash or in-kind
transfers can augment access to food. The provision of social protection mechanisms by the
state would help manage vulnerabilities and reduce food and income poverty (Devereux,
2016). For example, Neuenkirch and Neumeier (2016) provide categorical evidence of how
US sanctions have detrimental effects on the poor in the targeted states. They show that the
poverty gap, which measures the total population of those living at or below the poverty line
of 1.25 international dollars (at Purchasing Power Parity) a day, was significantly larger in
sanctioned states compared to non-sanctioned states. This evidence was also supported by
Afesorgbor and Mahadevan (2016) who indicated the income shares of those in the lowest
income quintiles were more adversely affected than those in the highest income quintiles
during the sanctions period.
Trade has direct implications for food security through its effect on incomes and expen-
ditures (FAO, 2003). The openness of a nation to international trade and foreign investment
optimizes the use of resources devoted to production of food, maximizes real incomes and
minimizes fluctuations in domestic food prices and the quantities traded (Anderson, 2016). He
further argues that openness to trade would affect three specific dimensions of food security:
availability, access and stability. Trade has a direct effect on food availability as imports
constitute part of total domestic food supplies in an economy (FAO, 2015). Through opened
trade, nutrition can be improved as there will be better access to diversified food baskets
(IFPRI, 2018). Dithmer and Abdulai (2017) also highlight this important link between food
security and trade openness. They indicate that at the global level, trade links the production
and consumption of food, thereby reducing food insecurity. This link between trade and food
security was confirmed by Dorosh (2001) in the case of Bangladesh when poor harvests in
1997 and massive floods in 1998 caused low food production. However, through trade with
India, domestic food supplies were augmented, and food prices were stabilized in Bangladesh.

Trade may also affect access if it results in gains as pointed out from the Ricardian perspec-
tive. Through agricultural trade, production would increase in the comparative advantage
agricultural sector, thereby raising the income levels of farmers producing in that sector.
Conversely, the comparative disadvantage sector would also import food at relatively cheaper
prices from world food markets. This can ensure greater diet diversity for consumers (IFPRI,
2018). From the employment perspective, any increasing activities of exports would create
opportunities for workers in the expanded export sector, translating into higher income for
individuals.
This negative relationship between sanctions and trade as captured in Afesorgbor (2019)
provides a plausible link through which sanctions can affect food security. IFPRI (2018)
states that limiting trade would result in high prices in land-scarce countries and depressed
food prices and lower real incomes in land-abundant countries. Many empirical studies have
provided robust empirical results showing that sanctions reduce the target’s trade with the
rest of the world as well as dyadic trade between the sender and the target (Slavov, 2007).
Even the adverse effect of sanctions on trade extends to essential goods such as agri-food,
and medicines and pharmaceutical products in contravention of the Geneva Convention
that stipulates free passage of essential products even in times of economic sanctions
(Afesorgbor, 2019).
Relating sanctions directly to trade, Hufbauer et al. (2007) emphasize that sanctions engen-
der costs to the target country in terms of lost export markets, denial of critical imports, lower
prices for embargoed exports, and higher prices for substitute imports. This creates a situation
in which the imposition of sanctions can be similarly compared to prohibitive trade restric-
tions, as it may create trade-distorting situations that would affect the different components of
food security. Sanctions will not only disrupt export routes, but also have a deleterious effect
on imports. Any foreign interventions such as sanctions would limit the amount of goods a
country can import and may thus cause food shortages and food price hikes in the targeted
state. With most sanctioned states being developing countries, this means that they are most
likely to be net importers of food. Thus, any disruptions to imports would reduce not only
food availability in the domestic markets, but also the affordability of non-food items (fuel for
cooking) necessary for food preparation (FAO et al., 2017).
Within the sanctions literature, there is discussion of how senders of sanctions could use dif-
ferent sanctions instruments on a target. Examples of different instruments employed by send-
ers include tariffs, export controls, import restrictions, travel bans, freezing assets, reduction
or removal of foreign aid, and severing of diplomatic relations. More broadly, these different
instruments can be categorized into financial and trade sanctions. Hufbauer et al. (2007) argue
that these different instruments would have heterogeneous effects on the target depending on
the ability of the target to circumvent the sanctions. There are many available strategies the
target can adopt to minimize the sanctions damage such as transshipment. Comparing financial
and trade sanctions, Hufbauer et al. (2007) emphasize that financial sanctions would produce
more pronounced economic damage compared to trade sanctions, since financial sanctions
can disrupt trade even without any explicit trade sanctions. In addition, it is more difficult to
circumvent financial sanctions than trade sanctions.
In line with the above theoretical considerations, this chapter seeks to fundamentally answer
the question of whether the imposition of sanctions could have adverse effects on food security.
Furthermore, we examine whether the imposition of sanctions has differential effects on differ-
ent dimensions of food security and whether there are any heterogeneous effects when specific

instruments of sanctions are employed. More specifically, we investigate whether financial

sanctions have more adverse effects on food security compared to trade sanctions. Lastly, we
test whether the duration of the sanctions matters for the effect of sanctions on food security.
From the empirical perspective and to the best of our knowledge, no research exists on
how sanctions affect food insecurity at the macro level. However, there are few batches of
related studies that have focused on how macroeconomic, political and institutional factors
affect food security at the macro level, while there is a large batch of studies that analyze food
security at the micro or household levels. We tend to see more micro studies at the household
level because of the prevailing concept that food security is more of a household issue that is
closely related to household poverty (Anderson, 2016). However, looking at food security at
a more macro level from a set of government policies targeted at improving macroeconomic
indicators can quicken the pace of escape from hunger (Timmer, 2000). Timmer (2000) argues
that policymakers have an opportunity to create the macro conditions in which households at
the micro level can gain access to food on a reliable basis through self-motivated interactions
with local markets and home resources. Thus, it is relevant to look at the determinants of
food security at a more macro level using cross-country regressions following the strand of
literature exemplified by Dithmer and Abdulai (2017) and Mary et al. (2018).
23.3 DATA AND EMPIRICAL STRATEGY
The micro effect of sanctions on different aspects of human wellness makes it important to
analyze whether the imposition of sanctions affects one of the most important necessities for
human survival, food, at the macro level. Food security is a broad concept, and this makes
any form of measurement difficult. Barrett (2010) indicates that the concept of food security
is multi-dimensional, and this makes it empirically necessary not to limit analyses of food
security to a one-dimensional or composite measure but to extend it to the different dimensions
of food security. Generally, food security is defined as a situation in which all people, at all
times, have economic, physical and social access to sufficient, safe and nutritious food that
enables them to live active and healthy lives (Barrett, 2016). To capture the broad concept of
food security, we rely on two widely known sources of data.
First, we use a composite index, GHI, developed by the IFPRI.3 IFPRI calculates the score
in order to assess progress and setbacks associated with food security in most countries. GHI is
a composite index measured on a 100-point scale, where 0 is the score (no hunger) and 100 is
the worst. The index has a five-scale interval that depicts the intensity or severity of hunger. If
the index is less than or equal to 9.9, it indicates a low level of hunger, while an index greater
than or equal to 50 is considered extremely alarming. GHI is based on the following main
components: the share of the population that is undernourished (whose caloric intake is below
certain dietary requirements); the share of children under five years who are underweight
(wasting and stunting); and the percentage of children who die before the age of five (under
five-year mortality). Figure 23.1 compares the average GHI and its four components during
sanctions and no-sanctions periods. Although causal interpretation cannot be made, the
figure provides anecdotal evidence that food insecurity was higher during sanctions periods
compared to non-sanctions periods.
Second, we use the FAO data to break food security down into multiple dimensions as
indicated by Barrett (2010). This is important because if sanctions affect food security, it would

30
25
20
Score (Percentage)
15
10
0
GHI undernourished underweight mortality
No sanction Sanction
Figure 23.1 Comparison of food insecurity indicators between sanction period and
non-sanction period
be imperative to know which specific dimensions are affected. For lack of data, we focus on
three specific dimensions of food security, namely availability, access, and stability (there are
insufficient data on indicators that measure utilization). Availability and access are the main
dimensions of food security as they directly measure the supply and demand sides of food
security (Barrett, 2010).
According to FAO et al. (2017), availability represents the physical availability of food that
is determined by the levels of food production, stock and trade. We use three indicators to
measure availability. These include food supply from crops (kcal/caput/day), average value of
food production (international dollar per caput) and average dietary energy supply adequacy
(%). Diet adequacy (%) is measured as the dietary energy supply as a percentage of the average
dietary energy requirement. For access, this captures economic and physical access to food,
and we use domestic food price index, depth of food deficit (kcal/caput/day) and prevalence of
undernourishment (%) as indicators. Stability refers to continuous access to adequate food over a
longer time-period. We use three indicators: the percentage of arable land irrigated; the food price
volatility index; and per capita food supply variability (kcal/caput/day). The use of these different
indicators under all the three dimensions is solely informed by the availability of the data.
We merge the food security data sets with our main variable of interest obtained from
the widely known sanctions database by Hufbauer et al. (2007) at the Peterson Institute for
International Economics (see Chapter 2 of this Handbook). In all, we have data spanning the
period from 1990 to 2014 for 66 countries as indicated in Table 23.A.1 in the appendix. This
data set spans 116 cases of sanctions with varied durations imposed by different senders,
including international organizations (UN, EU, etc.) and sender states (US, Canada, UK, etc.)

on target states. As the sanctions variable is a dummy, the categories of sanctions are mutually
exclusive and in cases where sanctions have been imposed by more than one principal sender
at the same time, we combine and classify such cases as multiple senders. Thus, the sanctions
cases are fully separable and not partially overlapping. With many papers (see, e.g., Bapat and
Morgan, 2009, see also Morgan, Bapat, and Kobayashi in Chapter 3 of this Handbook) already
pointing to the fact that multilateral sanctions are more effective and have a pronounced effect
compared to unilateral sanctions, we did not find it necessary to repeat the differential effect
of unilateral and multilateral sanctions.
Since there are many possible factors that can affect food insecurity in targeted states, there
is a need to control for exhausting the set of other variables that can confound the effect of
sanctions on food insecurity. Following closely the determinants of food security within the
econometric model of Dithmer and Abdulai (2017), we control for various economic, political
and institutional factors. It is very important to control for these factors to obtain unbiased and
consistent estimates. This is necessary as the effect of sanctions could be confounded by socio-
economic environments in the targeted states. Neuenkirch and Neumeier (2015) emphasize
that the sanctions variable may be indirectly capturing the targeted countries’ own policies,
which may be considered bad. More specifically, for the economic factors, we include trade
openness using the conventional approach in measuring the share of exports plus imports of
GDP. Since the income level of individuals within the economy also matters for food insecu-
rity, we include GDP per capita as a proxy for the level of economic development. Population
also plays a pivotal role in influencing food security such that, if population growth outstrips
agricultural productivity, this may lead to a Malthusian trap. We include the population growth
rate and the share of the rural population as additional control variables.
From the Malthusian perspective, agricultural and food production would be constrained by
population growth because of the fixed supply of arable land, and low agricultural productivity.
To account for this Malthusian effect, we follow Dithmer and Abdulai (2017) by including the
percentage of arable land and agricultural productivity (measured as cereal yield). Inefficient
farm or land policies focusing on land tenure systems or ownership may also leave people
marginalized. This can act as a disincentive for investment in the agricultural sector. The
importance of land tenure systems was emphasized by the FAO (2011) in which it indicated
that inappropriate tenure or inequitable land distribution regimes can lead to over-exploitation
and discourage sustainable practices. To cater for this, we include a measure of property rights
from the Varieties of Democracy (V-Dem) project.4 The price level of household consumption
is also included as a measure for the general cost of living within a state.
Non-economic or political conditions in the targeted states may potentially affect the
different measures of food security. For instance, Deaton and Lipka (2015) indicate that the
presence or absence of political institutions in a country has ramifications for food security.
To control for political institutions, we use PolityIV from Marshall and Jaggers (2016). This
measures the presence of institutions and procedures through which citizens can express their
effective preferences about policies and governance. The index uses an additive point scale
ranging between (–10, +10), where +10 indicates the presence of strong democratic institu-
tions and –10 indicates the presence of strong autocratic institutions. Apart from this, we
control for the occurrence of conflict using an indicator variable that equals 1 if there was an
occurrence of international or domestic conflict and 0 otherwise (from V-Dem). The possible
relationship between food prices and social unrest was alluded to in the study by Bellemare
(2015). To control for human rights violations, we obtain a proxy measure for violence from

the physical violence index sourced from V-Dem, and this provides information on violence
committed by government agents against civilians. Dithmer and Abdulai (2017) explain that
the occurrence of natural disasters can have detrimental effects on domestic food production
and availability. Thus, we also include a count of natural disasters obtained from EM-DAT.5
Controlling for conflict, violence and disasters is important as FAO et al. (2017) categorically
state that conflict, disasters and violence have displaced millions of people, thereby causing
food insecurity in many nations.
Table 23.1 Descriptive statistics
Variable Obs Mean Std. Dev. Min Max

Food supply 1237 2633.9 481.5 1571 3775
Global hunger index 761 18.4 13.0 1.1 71.7
Prevalence of undernourished 817 19.1 15.1 0 76
Percentage of under-five underweight 757 15.6 12.7 .2 68
Percentage of under-five mortality 851 7.3 6.2 .4 32.7
Diet adequacy 1076 113.5 16.3 71 165
Food production 989 292.3 302.8 55 2325
Price index 572 1.7 .4 .99 2.92
Prevalence of undernourished 794 24.3 14.0 5 75.2
Food deficit 919 152.7 126.3 2 673
Percentage of land irrigated 1014 24.0 27.0 .1 100
Food price volatility 566 11.1 11.6 1.6 210.4
Food supply volatility 1005 42.0 24.9 3 253
Sanctions 960 .2 .4 0 1
Log GDP per capita 960 8.6 1.0 6.3 10.4
Trade openness 960 .4 .2 .04 1.808
Population growth 960 1.7 1.1 −2.1 5.6
Price of consumption 960 .4 .2 .05 4.5
Average years of education 946 2.1 .6 1.0 3.6
Percentage of arable land 960 17.4 14.2 .30 57.6
Agricultural productivity (yield for cereal) 959 2480.8 1446.2 267.8 8105.4
Percentage of rural population 960 49.5 21.3 5.6 89.6
Polity IV 949 3.1 6.1 −10 10
Domestic conflict 826 .03 .2 0 1
International conflict 709 .08 .3 0 1
Physical violence index 960 .6 .3 .03 1.0
Property rights 960 .6 .2 .03 .9
Disasters 960 3.8 4.7 1 43

In terms of the empirical strategy, we use the fixed effect estimation, combined with
a Newey and West (1987) estimator with a lag truncation of 1 as our baseline equation
specified in Eqn. (23.1). Using country fixed effects (αi) would control for unobserved and
time-invariant heterogeneity, such as social, political and cultural values. αt is the time fixed
effects that control for external trends common to all countries, and ϵt captures the error term.
The inclusion of an exhaustive set of time-varying control variables and time-invariant fixed
effects should plausibly prevent our results from being plagued by omitted variables. In addi-
tion, the Newey–West estimation helps to produce standard errors and coefficients that are
heteroscedastic and autocorrelation-consistent (HAC). This is relevant as we are dealing with
a data set that spans a long time period and our sample size is also reasonably large.
FSit = γ Sanctionsit + β X it−1 + α i + α t + ε it (23.1)
Our baseline model identifies the various factors at the state level that determine food security.
Thus, we include the sanction variable as a possible determinant. The dependent variable,
FSit, measures hunger or food security for country i at time t and the main variable of interest
is Sanctionsit. Sanctionsit is measured as an indicator variable which takes the value 1 during
sanctions period, and 0 otherwise. Xit−1 measures the vector of control variables that can
confound the effect of sanctions on food security. Econometrically, there are other potential
sources of endogeneity that could plague our results. One such is reverse causality in which
there could be a bicausality between sanction and food security measures. This argument was
put forward by Neuenkirch and Neumeier (2015) who stated that the imposition of sanctions
could be a result of a negative economic, social and political environment in the target, such
that any negative effect of sanctions on food security could possibly be the negative environ-
ment that pushes the sender into imposing the sanctions.
To deal with this possible endogeneity, we lag all control variables in our baseline model.
However, we follow Neuenkirch and Neumeier (2015) by not lagging the sanction variable.
This is very important as Afesorgbor (2019) recently indicated that the period prior to sanctions
captures the threat stage and this could have a significant impact that conflicts with the actual
period of sanctions. In addition, Neuenkirch and Neumeier (2016) recommend a matching
technique in which a synthetic control group is created that is comparable to the treatment
group on the basis of control variables. Thus, as an additional robustness check in Section 5,
we employ entropy balancing as the matching technique to create the synthetic control group
as in Hainmueller (2012).
23.4 RESULTS AND DISCUSSION
The baseline results from the empirical estimations are presented in Tables 23.2–23.7.
Table 23.2 examines the effect of sanctions on food security using the IFPRI data after
controlling for potentially confounding variables. Our results show that the imposition
of sanctions has a large economic and statistically significant effect on food security. In
column 1, we find that the imposition of sanctions increases the composite index for hunger
as measured by GHI. Since the sanction variable is an indicator variable, the coefficient
of 1.605 indicates that GHI is greater by 1.6 point in the sanctions period compared to

Table 23.2 Impact of economic sanctions on food security
VARIABLES Global Prevalence of Percentage Percentage of

Hunger Index undernourishment of children child mortality
underweight
Sanctions_t 1.605** 2.978*** 1.859*** −0.177
(0.637) (1.030) (0.663) (0.308)
ln GDP per capita_t–1 −3.788*** −0.344 −0.780 −0.394
(1.408) (2.026) (1.624) (0.621)
Trade openness_t–1 −4.896*** −10.76*** −3.752* 0.345
(1.470) (2.637) (2.244) (0.722)
Population growth_t–1 −0.725 1.101 0.228 −0.324
(0.683) (0.805) (0.420) (0.396)
Price of consumption_t–1 3.108** 2.826 −0.199 0.947
(1.213) (1.889) (0.964) (0.613)
Agricultural productivity_t–1 0.000992* 0.000869 −0.000666 3.40e-05
(0.000531) (0.000671) (0.000681) (0.000250)
Polity IV_t–1 −0.0301 0.115 0.0802 0.0268
(0.0690) (0.0951) (0.0644) (0.0302)
Domestic conflict_t–1 2.580** 0.836 1.390 0.355
(1.156) (1.584) (1.150) (0.631)
International conflict_t–1 −1.182 −2.218** 0.130 0.387
(0.803) (1.085) (0.783) (0.351)
Physical violence_t–1 1.408 1.524 0.731 −1.600*
(1.959) (2.440) (1.594) (0.850)
Property rights_t–1 −4.043 −4.871 −0.397 −0.0359
(3.398) (4.306) (2.827) (1.388)
Natural disasters_t–1 0.149** 0.133 −0.0702 −0.0247
(0.0610) (0.0834) (0.0503) (0.0248)
Constant 72.63*** 50.68*** 43.16*** 31.80***
(12.67) (18.16) (14.57) (6.821)
Observations 539 600 550 616
R-squared 0.927 0.914 0.951 0.924
Notes: Country and time fixed effects included. Heteroscedastic and autocorrelation-consistent standard errors in
parentheses. *** p < 0.01, ** p < 0.05, * p < 0.1.

non-sanction years after accounting for other determinants. Shifting focus to various
components of GHI, our results show that sanctions also have a deleterious effect on the
prevalence of undernourishment (PoU), as the result indicates that sanctions increase the
percentage of the population undernourished by 2.978 percentage points (pp). In addition,
the percentage of children under five years of age who are underweight also increases
significantly by 1.859pp during sanctions periods. For child mortality, we find an effect
that is not statistically significant.
Turning to the control variables, their estimated coefficients have the signs we would
expect. Increases in GDP per capita have a pronounced effect on food security by reducing
GHI. The effect is negative for PoU, children underweight and mortality, but they are not
significant. This applies similarly to trade openness as we see more trade-opened economies
are relatively more food secure compared to less trade-opened economies. The trade open-
ness effect on food security also confirms the result of Dithmer and Abdulai (2017) that
trade openness can help improve food security. Similarly, the price of consumption also
has a significant effect on the composite hunger index, reflecting the fact that higher prices
adversely affect the GHI. This also confirms the notion that since food expenditure consti-
tutes a greater proportion of the income of poor countries, increases in general prices could
exacerbate the situation of food insecurity. The results also confirm the assertion of FAO et
al. (2017) that the incidence of food insecurity is compounded by the occurrence of conflicts
and natural disasters. Agricultural productivity does not have an economically or statistically
significant effect. None of the other remaining control variables has any significant effect
on food security.
Table 23.3 presents the results on how the imposition of sanctions affects different
dimensions of food security on the basis of the FAO data. Specifically, the results show
that availability and stability are the most affected dimensions of food security when there
is an imposition of sanctions on a targeted state. Columns 1–3 focus on the availability
dimension of food, and the results show that the average value of food supply declines by
75.52kcal/caput/day during sanctions periods. Similarly, dietary supply adequacy declines
by 2.083pp when there is an imposition of sanctions in a period. In contrast, we fail to find
any significant effect on domestic food production. Normally, it would be expected that
domestic production would increase if the imposition of sanctions reduced the food supply
as targeted states might also try to be self-sufficient by increasing domestic food production
to meet the shortfall resulting from dwindling foreign food imports. Pond (2017) cites the
recent of case of Russia where there has been an increase in domestic substitutes to replace
foreign imports. Similarly, columns 7–9 provide the results of the effect of sanctions on the
stability dimension of food security. Stability is an important dimension of food security as
it looks at how food supply at the household level remains constant during the year (FAO,
2011). Our results suggest that during sanctions periods, targeted states experience high
uncertainty with regard to food supply, an indication that households within sanctioned
states that are considered food secure may periodically have inadequate access to food.
Under stability, we also find that the percentage of land irrigated is reduced when a country
is under sanctions. However, this is statistically insignificant. In contrast to availability
and stability, we find no evidence that the imposition of sanctions significantly affects the
various indicators under access. The food price index increases when there are sanctions,
but this is only significant at 10%.

Table 23.3 Impact of economic sanctions on different dimensions of food security
Availability Access Stability

(1) (2) (3) (4) (5) (6) (7) (8) (9)
VARIABLES Food Food Diet Price index Prevalence of Food deficit Percentage Food price Food
supply production adequacy undernourishment of land volatility supply
irrigated volatility
Sanctions_t −75.52*** 4.341 −2.082** 0.141* 0.351 −0.850 −0.752 3.604 10.67***
(20.98) (4.091) (0.845) (0.0845) (0.962) (8.240) (0.761) (3.298) (3.676)
ln GDPpc_t–1 101.8* 6.440 6.212*** 0.114 −6.646*** −50.74*** 5.147*** −5.710 −22.55***
(53.88) (12.90) (1.459) (0.151) (2.031) (15.48) (1.605) (4.282) (6.880)
Trade 164.3** 8.351 5.246** −0.0982 −7.013*** −39.83** −2.301 −0.890 4.882
openness_t–1 (72.22) (17.09) (2.388) (0.147) (2.557) (20.06) (2.249) (7.597) (9.979)
451
Population −2.223 2.385 −0.329 0.0348* 0.919 10.51 −0.701* −0.121 0.263
growth_t–1 (10.53) (1.865) (0.536) (0.0203) (0.670) (7.119) (0.381) (1.130) (1.628)
Price of 24.86 −27.36 2.527 0.204 −3.271 −19.75 −0.256 −4.796 −7.616
consumption_t–1 (67.20) (25.77) (2.086) (0.126) (3.194) (18.66) (1.016) (5.252) (11.74)
Agricultural 0.0197 0.0416*** −0.000244 1.92e-05 0.00119 0.0200*** 0.000218 0.00447 0.000908
yield_t–1 (0.0160) (0.00663) (0.000548) (4.52e-05) (0.000953) (0.00532) (0.000670) (0.00298) (0.00232)
Polity IV_t–1 −1.946 −0.566 0.0912 0.0407*** 0.147* 0.567 −0.232*** −0.437 −0.667*
(2.475) (0.411) (0.0841) (0.0113) (0.0885) (0.676) (0.0847) (0.398) (0.398)
Domestic 21.95 10.98** 0.346 0.379** 0.288 9.895 −0.340 24.73** 0.726
conflict_t–1 (23.34) (5.124) (0.946) (0.161) (1.362) (10.79) (1.594) (11.52) (7.149)
(continued )


(1) (2) (3) (4) (5) (6) (7) (8) (9)
International 43.06** 16.13*** 1.945** 0.0617 −3.074*** −16.83** 0.156 2.337 −0.889
conflict_t–1 (20.30) (4.135) (0.828) (0.0584) (0.970) (7.409) (0.803) (2.945) (4.039)
Physical −15.77 3.032 −3.923* −0.0426 −0.144 16.33 1.036 −10.86 −1.341
violence_t–1 (50.28) (10.18) (2.088) (0.264) (2.084) (16.61) (1.931) (10.08) (8.154)
Property 38.21 22.83 11.95*** 1.333*** −6.414 −96.09*** −3.104 −38.88** 13.61
rights_t–1 (81.73) (19.40) (3.147) (0.367) (4.102) (35.94) (2.291) (18.05) (12.55)
452
Natural 0.846 0.461 −0.0500 0.00375 0.146** 0.893* 0.0790 0.0641 −0.387
disasters_t–1 (1.892) (0.409) (0.0571) (0.00368) (0.0665) (0.468) (0.0538) (0.174) (0.325)
Constant 1,132** 46.64 39.13*** 0.312 98.69*** 724.1*** −35.37** 88.33** 205.8***
(482.7) (109.8) (13.51) (1.384) (18.78) (148.1) (14.36) (44.13) (61.75)
Observations 795 730 767 408 611 705 755 409 723
R-squared 0.961 0.976 0.952 0.803 0.913 0.929 0.978 0.327 0.500
Notes: Country and time fixed effects included. Heteroscedastic and autocorrelation-consistent standard errors in parentheses. *** p < 0.01, ** p < 0.05, * p < 0.1.

As expected, we find that different instruments of sanctions affect food security differently
in terms of both size and the significance of the sanction coefficient. In Table 23.4, we find
that a combination of both financial and trade sanctions has the most significant effect on food
security. The results show when senders employ both financial and trade sanctions, sanctions
have a large economic and statistical effect on GHI, prevalence of undernourishment and
children underweight. The result indicates that the composite hunger index increases by 1.891
points, the percentage of undernourished increases by 3.474pp during the period of sanctions
and the percentage of children underweight also increases by 2.519pp. Equally, we find that
using financial and trade sanctions separately also increases food insecurity, but these are not
statistically significant. Surprisingly, we find that financial sanctions reduce child mortality,
but this is only at a 5% level of significance.
Table 23.5 reports how different types of sanctions affect the different dimensions of food
security. The results show that the different instruments mainly affect the physical availability
of food. In particular, financial sanctions and a combination of financial and trade sanctions
significantly reduce food supply and diet adequacy. We see that domestic food production is
not significantly affected in the case of combining financial and trade sanctions. Because the
positive effect on domestic production is insignificant, it is not sufficient to forestall the decline
in food supply. The last results of our baseline estimations are presented in Tables 23.6 and
23.7. Table 23.6 tests whether the duration of sanctions matters, and the table shows that the
duration of sanctions has an insignificant effect on GHI and on its component. However, the
results in Table 23.7 indicate that the duration of sanctions significantly affects availability by
reducing food supply and diet adequacy but increases domestic food production.
23.5 ROBUSTNESS
23.5.1 Entropy Balancing
In our quest for a robust causal identification, we resort to a matching technique as shown
in Eqn. 23.2. The matching technique involves the use of entropy balancing to obtain a
synthetic control group (country-year observations without sanctions) that is comparable to
a treatment group (country-year observations with sanctions). In the entropy balancing, a
re-weighting scheme based on pre-specified balanced constraints from the sample moments of
pre-treatment characteristics is used to obtain a close control group comparable to a treatment
group (Hainmueller, 2012). Using this state-of-the-art approach thus produces a robust causal
identification strategy to circumvent any potential source of endogeneity. A recent application
of entropy balancing is by Neuenkirch and Neumeier (2016), where they estimate the impact
of US economic sanctions on poverty.
τ ATT = E[FSit (1) | T = 1,C = c)]− E[FSi (0) | T = 0,C = c)] (23.2)
Using entropy balancing mimics randomization and orthogonalizes the treatment with
covariates to ensure an estimation of average treatment effect on the treated (ATT). The ATT
(τATT) is estimated by using the difference in mean outcomes between the treated group and
re-weighted control group, and this constitutes the estimated impact of economic sanctions on

Table 23.4 Impact of different types of economic sanctions on food security
(1) (2) (3) (4)

VARIABLES Global Prevalence of Percentage Percentage of
Hunger undernourishment of children child mortality
Index underweight
Financial sanctions_t 1.143 1.853 0.698 −1.045**
(0.897) (1.654) (0.730) (0.491)
Trade sanctions_t 1.458 3.713 0.853 1.788
(2.126) (3.042) (1.473) (1.172)
Financial and trade 1.891** 3.474*** 2.519*** 0.0923
sanctions_t (0.806) (1.300) (0.886) (0.330)
ln GDP per capita_t–1 −3.718*** −0.156 −0.572 −0.211
(1.424) (2.030) (1.624) (0.626)
Trade openness_t–1 −4.959*** −10.79*** −3.703* 0.349
(1.483) (2.631) (2.204) (0.719)
(0.682) (0.806) (0.427) (0.393)
(1.206) (1.835) (0.934) (0.593)
(0.000532) (0.000672) (0.000678) (0.000252)
Polity IV_t–1 −0.0348 0.105 0.0736 0.0194
(0.0688) (0.0971) (0.0644) (0.0304)
(1.156) (1.597) (1.156) (0.615)
International conflict_t–1 −1.084 −2.039* 0.302 0.461
(0.825) (1.075) (0.782) (0.364)
Physical violence_t–1 1.418 1.481 0.760 −1.711**
(1.977) (2.464) (1.647) (0.864)
Property rights_t–1 −3.879 −4.717 −0.0162 0.0485
(3.353) (4.256) (2.835) (1.387)
Natural disaster_t–1 0.150** 0.134 −0.0694 −0.0267
(0.0615) (0.0840) (0.0503) (0.0254)
Constant 71.84*** 48.38*** 40.33*** 29.78***
(12.75) (18.30) (14.70) (6.887)
R-squared 0.927 0.915 0.952 0.926
Note: Country and time fixed effects included. Heteroscedastic and autocorrelation-consistent standard errors in
parentheses. *** p < 0.01, ** p < 0.05, * p < 0.1.

Table 23.5 Impact of different types of economic sanctions on different dimensions of food security

(1) (2) (3) (4) (5) (6) (7) (8) (9)
VARIABLES Food Food Diet Price Prevalence of Food Percentage Food Food
supply production adequacy index undernourishment deficit of land price supply
irrigated volatility volatility
Financial sanctions_t −70.61*** 0.0295 −2.483** −0.0786 1.244 7.565 −0.616 4.283 9.757**
(23.07) (5.056) (1.104) (0.0542) (1.316) (11.44) (0.869) (3.177) (4.588)
Trade sanctions_t −50.24 −8.529 −1.950 −0.0432 2.251 16.61 −0.0142 2.765 19.85*
(43.63) (8.710) (1.881) (0.0477) (2.037) (14.81) (1.480) (2.949) (11.47)
Financial and trade −81.17*** 8.184* −1.835* 0.203* −0.336 −8.026 −0.914 3.715 10.56**
sanctions_t
(28.00) (4.743) (1.029) (0.106) (1.139) (9.934) (0.992) (4.086) (4.948)
455
Log GDP per capita_t–1 100.7* 7.447 6.318*** 0.110 −6.961*** −52.87*** 5.088*** −5.687 −22.67***
(54.73) (13.00) (1.465) (0.154) (1.984) (15.17) (1.643) (4.285) (6.907)
Trade openness_t–1 164.4** 8.255 5.207** −0.157 −6.945*** −38.74* −2.313 −0.972 4.618
(72.43) (17.09) (2.394) (0.146) (2.562) (20.17) (2.253) (7.735) (9.947)
Population growth_t–1 −2.450 2.469 −0.318 0.0401** 0.896 10.29 −0.704* −0.121 0.284
(10.57) (1.871) (0.537) (0.0201) (0.669) (7.114) (0.382) (1.141) (1.629)
Price of 24.60 −27.36 2.533 0.254** −3.403 −20.51 −0.244 −4.742 −7.737
consumption_t–1
(66.98) (25.82) (2.092) (0.127) (3.185) (18.64) (1.016) (5.430) (11.76)
Agricultural 0.0203 0.0413*** −0.000264 1.41e-05 0.00130 0.0207*** 0.000229 0.00444 0.00101
productivity_t–1
(0.0161) (0.00664) (0.000545) (4.48e-05) (0.000938) (0.00523) (0.000673) (0.00297) (0.00233)

(continued )

(1) (2) (3) (4) (5) (6) (7) (8) (9)
Polity IV_t–1 −1.883 −0.605 0.0906 0.0418*** 0.153* 0.615 −0.230*** −0.437 −0.657
(2.443) (0.404) (0.0840) (0.0112) (0.0863) (0.658) (0.0850) (0.399) (0.399)
Domestic conflict_t–1 23.68 10.20** 0.320 0.383** 0.433 11.27 −0.301 24.70** 1.027
(23.23) (5.120) (0.952) (0.152) (1.366) (10.95) (1.604) (11.56) (7.227)
International 41.10* 17.37*** 2.023** 0.0820 −3.369*** −19.20** 0.112 2.388 −1.013
conflict_t–1
(21.24) (4.141) (0.846) (0.0558) (0.996) (7.525) (0.815) (3.062) (3.952)
456
Physical violence_t–1 −16.57 3.733 −3.962* −0.0591 −0.278 15.62 0.986 −10.84 −1.737
(50.45) (10.28) (2.095) (0.263) (2.064) (16.53) (1.943) (10.19) (8.107)
Property rights_t–1 39.89 23.36 11.96*** 1.477*** −6.389 −96.90*** −3.136 −38.75** 14.57
(81.45) (19.39) (3.155) (0.373) (4.173) (36.46) (2.319) (18.05) (12.74)
Natural disasters_t–1 0.736 0.524 −0.0467 0.00456 0.134** 0.784 0.0768 0.0656 −0.392
(1.839) (0.411) (0.0576) (0.00384) (0.0681) (0.482) (0.0550) (0.173) (0.325)
Constant 1,143** 35.75 38.13*** 0.254 101.8*** 745.8*** −34.75** 88.07** 206.6***
(491.9) (110.8) (13.61) (1.397) (18.37) (145.4) (14.78) (44.26) (62.22)
Observations 795 730 767 408 611 705 755 409 723

R-squared 0.961 0.976 0.952 0.805 0.913 0.929 0.978 0.327 0.502
Notes: Country and time fixed effects included. Heteroscedastic and autocorrelation-consistent standard errors in parentheses. *** p < 0.01, ** p < 0.05, * p < 0.1.
Table 23.6 Impact of duration of economic sanctions on food security
(1) (2) (3) (4)

VARIABLES Global Hunger Prevalence of Percentage Percentage of
Index undernourishment of children child mortality
underweight
Duration of sanctions_t 0.0566 0.0620 0.131* −0.00215
(0.0520) (0.0890) (0.0680) (0.0188)
Log GDP per capita_t–1 −3.786*** −0.232 −0.768 −0.409
(1.413) (2.006) (1.656) (0.620)
Trade openness_t–1 −4.732*** −10.64*** −3.307 0.344
(1.514) (2.662) (2.294) (0.727)
(0.683) (0.811) (0.409) (0.398)
(1.209) (1.873) (0.960) (0.616)
(0.000548) (0.000689) (0.000684) (0.000249)
Polity IV_t–1 −0.0285 0.138 0.0883 0.0258
(0.0698) (0.0957) (0.0675) (0.0304)
(1.176) (1.629) (1.228) (0.647)
International conflict_t–1 −1.026 −1.988* 0.414 0.378
(0.809) (1.100) (0.792) (0.350)
Physical violence_t–1 0.790 0.481 0.119 −1.540*
(1.975) (2.434) (1.567) (0.843)
Property rights_t–1 −4.419 −6.203 −0.892 0.0494
(3.490) (4.457) (2.930) (1.389)
Natural disasters_t–1 0.149** 0.120 −0.0866* −0.0239
(0.0602) (0.0833) (0.0505) (0.0251)
Constant 73.16*** 53.19*** 44.33*** 31.72***
(12.68) (17.80) (14.44) (6.903)
R-squared 0.926 0.913 0.951 0.924
Notes: Country and time fixed effects included. Heteroscedastic and autocorrelation-consistent standard errors in
parentheses. *** p < 0.01, ** p < 0.05, * p < 0.1.

Table 23.7 Impact of the duration of economic sanctions on different dimensions of food security

(1) (2) (3) (4) (5) (6) (7) (8) (9)
Duration of sanctions_t −4.614** 0.825*** −0.190** 0.00399 0.0496 −0.553 −0.0691 0.407 0.450*
(1.894) (0.308) (0.0737) (0.0109) (0.0756) (0.665) (0.0565) (0.485) (0.237)
Log GDP per capita_t–1 102.8* 5.542 6.387*** 0.0419 −6.668*** −49.22*** 5.173*** −6.527 −22.09***
(55.97) (12.90) (1.506) (0.149) (2.029) (15.71) (1.620) (4.407) (7.115)
Trade openness_t–1 161.2** 10.80 4.928** −0.0703 −6.957*** −39.84** −2.483 −0.737 4.529
(72.73) (17.15) (2.375) (0.145) (2.571) (20.07) (2.271) (7.630) (10.46)
458
Population growth_t–1 −3.732 2.507 −0.380 0.0285 0.935 10.55 −0.723* −0.143 0.463
(9.815) (1.869) (0.515) (0.0205) (0.669) (7.106) (0.384) (1.134) (1.718)
Price of 17.48 −26.70 2.331 0.176 −3.186 −20.54 −0.270 −3.599 −6.715
consumption_t–1
(70.11) (25.71) (2.099) (0.132) (3.189) (18.53) (1.014) (5.310) (11.95)
Agricultural 0.0183 0.0421*** −0.000360 2.48e-05 0.00122 0.0202*** 0.000166 0.00425 0.000973
productivity_t–1
(0.0162) (0.00672) (0.000553) (4.65e-05) (0.000940) (0.00540) (0.000677) (0.00274) (0.00240)
Polity IV_t–1 −1.753 −0.632 0.107 0.0388*** 0.143 0.614 −0.226*** −0.450 −0.666*
(2.511) (0.396) (0.0856) (0.0111) (0.0891) (0.673) (0.0864) (0.377) (0.398)
Domestic conflict_t–1 10.78 10.28** 0.152 0.385** 0.275 11.38 −0.409 24.60** 2.721

(24.68) (5.031) (0.992) (0.164) (1.379) (10.88) (1.546) (11.58) (7.034)
(continued )

(1) (2) (3) (4) (5) (6) (7) (8) (9)
International 35.12* 16.85*** 1.680** 0.0795 −2.996*** −16.86** 0.0772 2.968 0.123
conflict_t–1
(20.92) (4.137) (0.813) (0.0596) (0.952) (7.284) (0.792) (3.058) (4.053)
Physical violence_t–1 17.86 1.372 −3.030 0.0121 −0.279 16.01 1.353 −10.94 −6.333
(52.56) (10.18) (2.028) (0.270) (2.033) (16.04) (1.860) (10.82) (8.268)
Property rights_t–1 34.36 24.71 11.81*** 1.165*** −6.374 −97.47*** −3.169 −39.60** 13.43
(86.30) (19.23) (3.244) (0.383) (4.083) (36.03) (2.316) (19.69) (12.97)
459
Natural disasters_t–1 1.216 0.430 −0.0420 0.00289 0.143** 0.926* 0.0824 0.0361 −0.444
(2.006) (0.396) (0.0580) (0.00376) (0.0667) (0.472) (0.0544) (0.189) (0.333)
Constant 1,118** 51.00 37.81*** 1.070 98.77*** 711.7*** −35.48** 95.71** 204.3***
(501.6) (109.5) (13.88) (1.375) (18.74) (149.8) (14.44) (46.26) (63.47)
Observations 795 730 767 408 611 705 755 409 723
R-squared 0.960 0.977 0.952 0.799 0.913 0.929 0.978 0.329 0.491
Notes: Country and time fixed effects included. Heteroscedastic and auto-correlation consistent standard errors in parentheses. *** p < 0.01, ** p < 0.05, * p < 0.1.

Table 23.8 Entropy balancing: Impact of duration of economic sanctions on food security
(1) (2) (3) (4)

VARIABLES Global Hunger Prevalence of Percentage of Percentage of child
Index undernourishment underweight children mortality
Sanction_t 2.350* 2.736*** 0.932 0.354
(1.236) (1.055) (0.944) (0.506)
Constant 31.77*** 46.83*** 32.94*** 21.34***
(2.207) (2.195) (2.574) (1.609)
R-square 0.912 0.918 0.938 0.884
Notes: Country and time fixed effects included. Cluster robust standard errors at the level of countries in
parentheses. *** p < 0.01, ** p < 0.05, * p < 0.1.
food security. This is imputed by the difference in means between the food security measure-
ments (Yij) in the treatment period (T = 1, when there are economic sanctions) and the control
period (T = 0, when there are no economic sanctions) conditioned on a vector of pre-treatment
characteristics (C = c). Using this technique has an added advantage as you can also control
for country fixed effects to account for time-invariant heterogeneity after covariate balancing
of the treatment and synthetic control groups (Neuenkirch and Neumeier, 2016).
Using the entropy balancing technique, we re-estimate the baseline equation and the results
confirm most of the results in our baseline results. In Table 23.8, we find comparable results
as in the baseline estimations in Table 23.2. However, the results here have more pronounced
effect of sanctions on GHI and PoU in terms of the magnitude of the effect. Largely, our
results for different dimensions reported in Table 23.9 also confirm that food supply under the
availability dimension is more affected than other dimensions. The results on the impact of
different instruments of sanctions also confirm our previous findings that employing financial
and trade sanctions simultaneously have more pronounced and significant adverse effects on
food security, especially for the composite index and food supply dimension in the targeted
states.
This chapter looks at how the imposition of economic sanctions affects one of the most impor-
tant and fundamental requirements for human survival, food. Primarily, the chapter seeks to
determine whether the imposition of sanctions exacerbates the incidence of food insecurity in
targeted countries. This question is relevant on two fronts in particular. First, considering that
there are international conventions that stipulate the free passage of essential products like
food even during sanctions periods, it is generally expected that sanctions should not adversely
affect food security. Second, the international media (such as Reuters, The Washington Post,
and other international media) have all highlighted how sanctions are hampering the ability of
international aid groups to supply food aid to sanctioned countries.

Table 23.9 Entropy balancing: Impact of economic sanctions on different dimensions of food security

(1) (2) (3) (4) (5) (6) (7) (8) (9)
Sanction_t −57.01*** 3.142 −0.595 0.0899 0.163 −2.836 −0.326 10.52* 3.792
461
(20.54) (2.981) (0.708) (0.113) (0.656) (5.591) (0.569) (5.969) (3.371)
Constant 1,933*** 152.9*** 95.48*** 2.011*** 44.70*** 342.6*** 10.89*** 27.47** 29.93***
(44.76) (10.86) (2.529) (0.190) (2.064) (21.97) (1.655) (11.40) (6.266)
Observations 797 730 730 381 584 672 756 381 761
R-square 0.952 0.958 0.948 0.404 0.940 0.943 0.987 0.275 0.500
Notes: Country and time fixed effects included. Cluster robust standard errors at the level of counties in parentheses. *** p < 0.01, ** p < 0.05, * p < 0.1.

Table 23.10 Entropy balancing: Impact of different types of economic sanctions on food security

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
GHI Food Food Diet Price Prevalence of Food Percentage Food Food
Financial 1.115 −27.73 1.803 −0.773 0.0117 0.631 2.479 1.315** 5.721 1.946
sanctions_t
(1.206) (18.96) (3.189) (0.956) (0.127) (1.002) (8.099) (0.589) (9.548) (4.407)
Trade −1.497 0.175 3.121 −0.691 0.0417 0.798 4.968 0.865 0.318 15.83
462
sanctions_t
(2.220) (42.94) (7.354) (1.879) (0.0954) (2.127) (16.03) (1.026) (5.230) (11.43)
Financial 2.960** −78.03*** 3.875 −0.493 0.0945 −0.119 −6.280 −1.479** 11.70* 3.812
and trade
(1.497) (27.17) (3.675) (0.833) (0.122) (0.755) (6.349) (0.697) (6.378) (4.691)
sanctions_t
Constant 33.43*** 1,943*** 152.9*** 95.47*** 2.011*** 44.71*** 342.9*** 10.97*** 27.54** 30.29***
(4.195) (44.26) (10.98) (2.542) (0.190) (2.080) (22.19) (1.645) (11.40) (6.998)
Observations 525 797 730 730 381 584 672 756 381 761
R-square 0.915 0.952 0.958 0.948 0.404 0.940 0.943 0.988 0.278 0.504
Notes: Country and time fixed effects included. Cluster robust standard errors at the level of counties in parentheses. *** p < 0.01, ** p < 0.05, * p < 0.1

Results from the research described in the chapter provide the first empirical evidence that
the imposition of sanctions contributes to hunger and starvation in many sanctioned countries
even after accounting for several other factors such as conflict and natural disasters. Although
the media attention on the implication of sanctions only highlights the frustration of interna-
tional organizations in reaching out to food insecure and poor households, the evidence pro-
vided in this chapter shows that different aspects or dimensions of food security are impaired
by the sanctions. Invariably, the results show that not only is the distribution of food severely
hindered but also food availability, measured in terms of the capacity of the targeted country
to supply minimum dietary requirements and dietary energy adequacy that meet the FAO basic
standards, is undermined. Interestingly, our results show that it is not increases in food prices
that are significant causes of food insecurity but rather food supply in sanctioned countries.
More specifically, our results show that the imposition of sanctions increases the composite
index (GHI) measure of food security on average by about 1.247–2.225 points. Focusing
on the different components of GHI, we find that the percentage of the population that is
undernourished, as well the percentage of children under five who are underweight largely
influences this effect. Thus, the imposition of sanctions exacerbates the incidence of hunger
and also causes malnutrition in children under five during the sanctions periods compared
to non-sanctions periods. This adverse effect of sanctions on food security also extends to
multiple dimensions of food security. The most severely affected dimension is availability.
Within the availability dimension which is measured using food supply, food production and
diet adequacy are most affected. Total domestic supply declines significantly and leads to an
adverse effect on food adequacy. In addition, the sanctions episodes affect stability, especially
in terms of uncertainty arising from increased volatility in the supply of food in the domestic
market. With different senders employing varying instruments of sanctions, we also examine
whether these different instruments have a heterogeneous effect on food security. Categorizing
these instruments into financial and trade sanctions, we find that the use of financial sanctions
and a combination of financial and trade sanctions have a pronounced adverse effect on food
security compared to trade sanctions.
The evidence provided by this chapter has major policy implications for the SDG goal of
ending hunger and preventing all forms of malnutrition. It is plausible that increases in the
use of sanctions can effectively undermine food security in many countries and reverse the
progress made so far in ensuring food security in many countries. This is very likely to delay
the pace at which zero hunger and malnutrition targets can be achieved in many countries
because developed countries are increasingly resorting to the tool of sanctions. The results
reiterate that it is not just a mere coincidence that most sanctioned countries are at the same
time food insecure. The causal link between sanctions and food security means that senders,
targeted countries and international organizations must ensure that if an economic sanction is
warranted then alternative provisions have to be made in order not to undermine the agriculture
and food production systems in targeted countries.
Knowing the implication of sanctions on food insecurity in sanctioned states will help inter-
national organizations and senders adopt mitigating strategies that would minimize the costs
of sanctions for food insecure people during the sanctions periods. Avenues that will ensure,
for example, free passage of essential items such as food and medicines to sanctioned states
would ensure that the situation of food insecurity does not deteriorate further. An important
strategy adopted in the case of international sanctions on Iraq when it was realized that the
sanctions were having a devastating effect on food security was the Oil-for-Food program in

1995 (Hufbauer et al., 2007). Such food programs could be effective tools to ensure that all
people, at all times (including sanctions period) have physical, social and economic access to
a sufficient, safe and nutritious diet.
As suggestions for future research, it will be interesting to cover extensively all the vari-
ous indicators used in measuring food security in order to derive a more robust relationship
between economic sanctions and food security. This is important as food security is a broad
concept and using a limited set of indicators to measure it could limit the robustness of
the relationship between sanctions and food security. Surprisingly, we also failed to find a
significant relationship between sanctions and food production and it will be interesting to
investigate in future research the possible channels or mechanisms through which sanctions
can affect food production.
NOTES
* Thanks to Peter van Bergeijk, to Brady Deaton, to the anonymous reviewers, and to all participants in the Inter-
national Conference of Agricultural Economist and the Canadian Agricultural Economics Conference (2018) in
Vancouver, British Columbia, Canada for their valuable comments and support. The usual disclaimer applies.
1. https://www.globalhungerindex.org/ranking.html.
2. https://www.washingtonpost.com/world/asia_pacific/sanctions-are-hurting-aid-efforts--and-ordinary-people-
-in-north-korea/2017/12/15/df57fe6e-e109-11e7-b2e9-8c636f076c76_story.html?utm_term=.7bebd81bd2a3 on
16th December 2017.
3. https://dataverse.harvard.edu/dataset.xhtml?persistentId=doi:10.7910/DVN/ZTCWYQ.
4. V-Dem provides information on different indicators of democracy (see, https://www.v – dem.net/en/).
5. EM-DAT is the emergency events database that provides information on counts of natural or technological disas-
ters (see, http://emdat.be/emdatdb/em – dat).
REFERENCES
Afesorgbor, S. K. 2019. The impact of economic sanctions on international trade: How do threatened sanctions
compared with imposed sanctions. European Journal of Political Economy, 56, 11–26.
Afesorgbor, S. K., and Mahadevan, R. 2016. The impact of economic sanctions on income inequality of target states.
World Development, 83, 1–11.
Ali, M. M., and Shah, I. H. 2000. Sanctions and childhood mortality in Iraq. The Lancet, 355(9218), 1851–1857.
Anderson, K. 2016. Agricultural Trade, Policy Reforms, and Global Food Security. Berlin, Springer.
Bapat, N. A., and Morgan, T. C. (2009). Multilateral versus unilateral sanctions reconsidered: A test using new
data. International Studies Quarterly, 53(4), 1075–1094.
Barrett, C. B. 2010. Measuring food insecurity. Science, 327(5967), 825–828.
Bellemare, M. F. 2015. Rising food prices, food price volatility, and social unrest. American Journal of Agricultural
Economics, 97(1), 1–21.
Conceição, P., Levine, S., Lipton, M., and Warren-Rodríguez, A. 2016. Toward a food secure future: Ensuring food
security for sustainable human development in Sub-Saharan Africa. Food Policy, 60, 1–9.
Deaton, B. J., and Lipka, B. 2015. Political instability and food security. Journal of Food Security, 3(1), 29–33.
Devereux, S. 2016. Social protection for enhanced food security in sub-Saharan Africa. Food Policy, 60, 52–62.
Dithmer, J., and Abdulai, A. 2017. Does trade openness contribute to food security? A dynamic panel analysis. Food
Policy, 69, 218–230.
Dorosh, P. A. 2001. Trade liberalization and national food security: Rice trade between Bangladesh and India. World
Development, 29(4), 673–689.
Evenson, R. E., and Gollin, D. 2003. Assessing the impact of the Green Revolution, 1960 to 2000. Science, 300(5620),
758–762.
FAO. 2003. Trade reforms and food security: Conceptualizing the linkages. Food and Agriculture Organization.
FAO. 2011. Global strategic framework for food security and nutrition, 2011. Committee on World Food Security,
Food and Agricultural Organization.

FAO. 2015. The state of agricultural commodity markets trade and food security: Achieving a better balance between
national priorities and the collective good. Food and Agricultural Organization.
FAO, IFAD, UNICEP, WFP, and WHO. 2017. The state of food security and nutrition in the world 2017. Building
resilience for peace and food security. Food and Agricultural Organization.
Friedman, J., and Schady, N. 2013. How many infants likely died in Africa as a result of the 2008–2009 global financial
crisis? Health Economics, 22(5), 611–622.
FSIN. 2018. Global report on food crises 2018. Food Security Information Network.
Garfield, R., and Santana, S. 1997. The impact of the economic crisis and the US embargo on health in Cuba. American
Journal of Public Health, 87(1), 15–20.
Gibbons, E., and Garfield, R. 1999. The impact of economic sanctions on health and human rights in Haiti, 1991–1994.
American Journal of Public Health, 89(10), 1499–1504.
Hainmueller, J. 2012. Entropy balancing for causal effects: A multivariate reweighting method to produce balanced
samples in observational studies. Political Analysis, 20(1), 25–46.
Hufbauer, G. C., and Jung, E. 2021, ‘Economic sanctions in the 21st century’ in: P. A. G. van Bergeijk (ed.), Research
Hufbauer, G. C., Schott, J. J., Elliott, K. A., and Oegg, B. 2007. Economic Sanctions Reconsidered (3rd ed.).
Washington, DC: Peterson Institute for International Economics.
IFPRI. 2018. 2018 Global Food Policy Report. International Food Policy Research Institute, Washington, DC.
Kaempfer, W. H., and Lowenberg, A. D. 1988. The theory of international economic sanctions: A public choice
approach. The American Economic Review, 78(4), 786–793.
Marinov, N. 2005. Do economic sanctions destabilize country leaders? American Journal of Political Science, 49(3),
564–576.
Marshall, M. G., and Jaggers, K. 2016. Polity IV project: Political regime characteristics and transitions, 1800–2015.
https://www.systemicpeace.org/polityproject.html (accessed October 31, 2021)
Mary, S., Saravia-Matus, S., and y Paloma, S. G. 2018. Does nutrition-sensitive aid reduce the prevalence of under-
nourishment? Food Policy, 74, 100116.
Morgan, T. C., Bapat, N., and Kobayashi, Y., 2021, ‘The threat and imposition of economic sanctions data project:
A retrospective’ in: P. A. G. van Bergeijk (ed.), Research Handbook on Economic Sanctions, Edward Elgar,
Neuenkirch, M., and Neumeier, F. 2015. The impact of UN and US economic sanctions on GDP growth. European
Journal of Political Economy, 40, 110–125.
Neuenkirch, M., and Neumeier, F. 2016. The impact of US sanctions on poverty. Journal of Development Economics,
121, 110–119.
Newey, W. K., and West, K. D. 1987. A simple, positive semi-definite, heteroskedasticity and autocorrelation consist-
ent covariance matrix. Econometrica, 55(3), 703–708.
Oechslin, M. 2014. Targeting autocrats: Economic sanctions and regime change. European Journal of Political
Economy, 36, 24–40.
Peksen, D. 2011. Economic sanctions and human security: The public health effect of economic sanctions. Foreign
Policy Analysis, 7(3), 237–251.
Peksen, D., and Son, B. 2015. Economic coercion and currency crises in target countries. Journal of Peace Research,
52(4), 448–462.
Pond, A. 2017. Economic sanctions and demand for protection. Journal of Conflict Resolution, 61(5), 1073–1094.
Slavov, S. T. 2007. Innocent or not-so-innocent bystanders: Evidence from the gravity model of international trade
about the effects of UN sanctions on neighbor countries. The World Economy, 30(11), 1701–1725.
Timmer, C. P. 2000. The macro dimensions of food security: Economic growth, equitable distribution, and food price
stability. Food Policy, 25(3), 283–295.
World Bank. 2008. World Development Report 2008: Agriculture for Development. The World Bank, Washington,
DC.

APPENDIX
Table 23.A.1 List of sanctioned states
Number Country Freq. Percent Number Country Freq. Percent

1 Albania 12 1.07 34 Latvia 7 0.63
2 Algeria 20 1.79 35 Lebanon 4 0.36
3 Angola 18 1.61 36 Lithuania 8 0.72
4 Argentina 24 2.15 37 Malawi 20 1.79
5 Azerbaijan 9 0.81 38 Mexico 25 2.24
6 Bolivia 23 2.06 39 New Zealand 20 1.79
7 Brazil 24 2.15 40 Nicaragua 23 2.06
8 Cambodia 20 1.79 41 Niger 23 2.06
9 Cameroon 23 2.06 42 Nigeria 22 1.97
10 Chile 12 1.07 43 Pakistan 25 2.240
11 China 25 2.24 44 Panama 20 1.79
12 Colombia 25 2.24 45 Paraguay 19 1.7
13 Côted’Ivoire 12 1.07 46 Peru 25 2.24
14 Democratic Republic 23 2.06 47 Poland 20 1.79
of Congo
15 Dominican Republic 20 1.79 48 Romania 3 0.27
16 Ecuador 10 0.9 49 Rwanda 15 1.34
17 Egypt 13 1.16 50 SierraLeone 17 1.52
18 ElSalvador 12 1.07 51 South Africa 24 2.15
19 Equatorial Guinea 1 0.09 52 Sudan (former) 23 2.06
20 Estonia 3 0.27 53 Suriname 2 0.18
21 Ethiopia 23 2.06 54 Syrian Arab Republic 6 0.54
22 Gambia 15 1.34 55 Thailand 24 2.15
23 Guatemala 22 1.97 56 Togo 14 1.25
24 Haiti 22 1.97 57 Tunisia 4 0.36
25 India 25 2.24 58 Turkey 24 2.15
26 Indonesia 25 2.24 59 Turkmenistan 2 0.18
27 Iran 24 2.15 60 Uganda 22 1.97
28 Iraq 12 1.07 61 Ukraine 18 1.61
29 Israel 9 0.81 62 Uruguay 15 1.34
30 Jordan 6 0.54 63 Viet Nam 25 2.24
31 Kazakhstan 15 1.34 64 Yemen 16 1.43
32 Kenya 22 1.97 65 Zambia 20 1.79
33 Laos People’s 16 1.43 66 Zimbabwe 17 1.52
Democratic Republic

Index
Note: Page numbers followed by n and number represent endnote and note number, respectively.
Aarts, P., 239 Angola, as threat to peace, 286

Abadie, A., 379, 381, 382 Anti-dumping Agreement, 283
Abbink, K., 303 anti-regime mobilization, QCA of, 208–17
Abdulai, A., 441, 442, 444, 446, 447, 450 Antràs, P., 371
Accession Protocol, 291 Anwar, M., 332
Action Plan on Human Rights and Democracy Apolinário, Laerte, Jr., 188, 189, 199
(EU), 268 Apollo, M., 357
Adam, A., 55, 189, 190 Appellate Body (WTO), 33
Adam, H., 215 Arad, R.W., 144n7
Adler-Nissen, R., 245 Aras, S., 358, 359, 363
Afesorgbor, S. K., 12, 21n21, 40n8, 55, 56, 134, Argentina, 287–88
141, 144n12, 438, 439, 441, 442, 443, 448 Arkolakis, C., 422
Afesorgbor, Sylvanus Kwaku, 187, 192, 204, 435n4 Armington, P.S., 422
African National Congress (ANC), 215 Arnold, A., 170
Aggarwal, V.K., 21n10 Article XXI, 280
aggressive trade action, against China, 39 invoked by Sweden, 286–87
Agnosteva, D.E., 423 national security argument, 292–93
Agreement on Subsidies and Countervailing sanctions taken against Russian Federation,
Duties, 283 290–92
Ahn, D.P., 37, 38, 250, 262, 411 security exceptions under, 283–89
Aigner, D.J., 334 self-judging, 290–92
Aizenman, J., 371 Asada, M., 184
Åkerlund, U., 360 Askari, H., 223, 373, 377, 408n3, 435n4
Akmese, H., 358, 359, 363 Asmussen, C.G., 371
Akoto, W., 53 autarky production combination, 130
Alao, A., 217 author characteristics, 138–39
Alexseev, M.A., 203 Aytekin, V., 358, 359, 363
Alford, R., 285
Alhindi, T., 327 Baer, G.W., 44
Alizadeh, V., 357 Baier, S.L., 423, 435n11
Allen, Susan Hannah, 58n15, 147, 150, 161, 168, Balaeva, O., 360
187, 188, 190, 191, 192, 193, 196, 202, 204, Baldwin, D.A., 8, 187, 204, 239, 241, 281, 297,
205, 215, 216, 217, 218 301
alliances, 27–28 Baldwin, R.E., 423
Al-Nasani, A., 272 Balin, M., 355
Alnasrawi, A., 306n2 Baltagi, B.H., 371
Al-Sowayel, D’ina, 156, 157, 413 Bandow, D., 232
alternative markets, 361 Banks, A.S., 212
Amuzegar, Jahangir, 208 banks/banking system
analysis stage, GMCR, 315–16 Iran, impact of sanctions on, 330–48
Anderson, J.E., 422, 423, 435n10 private, 27
Anderson, K., 441, 442, 444 Bapat, N.A., 2, 13, 42n47, 45, 53, 54, 55, 56,
Andreas, P., 114, 172, 187, 190 58n21, 64, 65, 111, 113, 125, 132, 143n4, 148,
Andrews, D.W.K., 251, 253 149, 150, 158, 159, 160, 161, 167, 168, 169,
Ang, A.U.-J., 132, 147, 149, 150, 161 170, 171, 178, 187, 206, 213, 224, 234n4,
Angell, N., 297 240, 241, 299, 371, 376, 377, 379, 446
467
Barbara, S., 319 Boulden, J., 229

Barber, J., 111, 187, 213, 249 Boulding, K.E., 234n4
Barbieri, K., 303 Boutros-Ghali, B., 44
Baronchelli, A., 300 Brainard, S.L., 371
Barrett, C.B., 440, 444, 445 Brakman, S., 21n3
Barry, C.M., 172, 239, 241, 372, 375, 377, 378 Bratton, M., 212
Bashar, M., 327 Brito, D.L., 303
Bastiat-Jarosz, D., 239 broad-based sanctions campaigns, 161
Basu, K., 21n15 Brooks, R.A., 196, 204, 249, 250, 261
Battese, G.E., 348 Brown, E., 360
Baylies, C., 216 Brubaker, R., 109, 120
Beirut barracks bombings (1983), 32 Brzoska, M., 108, 109, 114, 122n11, 174, 188,
Belarus, 268 195, 281, 352
Belín, M., 3, 239, 250 Brzozowski, A., 176
Bellemare, M.F., 446 Buck, T., 372
‘‘Belt-and-Road’’ initiative, 30–31, 34 Buckley, P. J., 371
Bena, J., 252 Bull, B., 109, 202
Benalcazar, J.G., 10 Bull, H., 21n2
Bengoa, M., 374 Bures, O., 306n2
Bennett, A., 205 Burger, M.J., 372
Berejikian, J., 147 Burlone, J.L.B., 12
Berger, A.N., 334, 335, 349n3 Burnell, Peter, 216
Bergstrand, J.H., 371, 422, 423, 435n11 Business Intelligence (BI) software, 316
Bergström, C., 144n7 Busse, M., 372
Besedes, T., 3, 378, 393, 409n13, 411 Bussmann, M., 372
Bhagwati, J.N., 144n7
Biden, J. calibration, 206
trade agenda, 39 of explanatory conditions and outcome,
Biersteker, T.J., 2, 5, 21n10, 42n48, 48n9, 65, 208–12
107, 108, 109, 110, 112, 113, 114, 115, 117, Caliendo, L., 422
118, 121, 122n3, 122n6, 125, 167, 168, 177, Campling, L., 270, 273
189, 199, 208, 239, 240, 241, 250, 290, 352 capital adequacy ratio (CAR), 333
Biglaiser, G., 21n19, 54, 56, 160, 172, 173, 372, Cardwell, P., 264, 270, 273
373, 375, 376, 377, 378, 389 Caren, N., 217, 218
Billmeier, A., 382 Carisch, E., 177
Bin Salman, M., 37 Carneiro, C.L., 159, 188, 189, 199
Bishop, R., 352 carpet bombing, 28
Black, D., 215 “carrot-and-stick” trade diplomacy, 352
Blanchard, J.-M.F., 203, 241 Carswell, R., 357
Blatter, J., 244 Caruso, R., 3, 21n12, 298, 300, 303, 337, 435n4
Blockmans, S., 176, 357 Casson, M.C., 371
Blonigen, B.A., 370, 371 census, 242–43
Blue, S.A., 362 Central Bank of Iran (CBI), 332
Bobocea, C., 239, 250, 290 Central Intelligence Agency (CIA), 28
Boehmer, C., 376 Cetin, H., 358, 359, 363
Bogaards, M., 212 Chakrabarti, A., 371
Bolks, S.M., 156, 157, 413 Chan, S., 132, 148, 149, 161
Bonetti, S., 147, 150, 298 Chandler, A., 352
Bonn-Berlin Process, 109 Chaney, T., 422
Boogaerts, A., 206, 207 Charron, A., 122n11, 229
Bo Ram, K., 159 Chatagnier, J.T., 53
Borzyskowski, I.V., 275 Chatham House rule, 240
Bossuyt, F., 269, 271 cheating, 28
Boucher, A.J., 300 Chen, Y. S., 371
Bouckaert, G., 240 Cheng, I-Hui, 422, 435n11

Index 469
Chilaizya, J., 216 Cosic, M., 289

Chiluba, F., 216 Costinot, A., 422, 435n10
China, 29–30, 34–35, 228 COVID-19 pandemic, 121, 352–53
aggressive trade action against, 39 impact on tourism, 351
‘‘Belt-and-Road’’ initiative, 30–31, 34 Coville, T., 357
outbound tourism, 352 Cowan, N., 309
secondary sanctions and, 230, 231–32 Cox, D.G., 53, 187
“tit-for-tat” sanctions, 35 Crawford, G., 264, 270, 274
Chingono, H., 217 Crawford, N.C., 202, 215
Choi, S.-W., 160, 188, 193, 370, 378, 383 Crimea, 36, 37, 243
Christen, E., 257, 260, 261 Croft, P., 303
Christensen, G., 142 Cronqvist, L., 205
Chudik, A., 379 Cross-National Time-Series Data Archive
Churchill, W., 28 (CNTS), 212
Cilizoglu, M., 12, 53, 376, 377 Crotty, J., 372
Cirone, A.E., 21n11 Crozet, M., 21n18, 240, 242, 250, 251, 252, 257,
civil society, role of, 304 260, 411
civil wars, 194–95 crudeness, 273
Claire, P., 320 Cuba, US embargo on exports to, 289, 355–57
Clausing, K.A., 374 Cuban Asset Control Regulations, 356
Clawson, P., 223 cumulative deviation, 254
Clay, K.C., 55, 58n16, 188, 191 Curovic, T.D., 408n3
Clemens, J., 160 Curtin, T.R.C., 204
Clemens, M.A., 211 cyber warfare, 26, 31
Clifton, Morgan, T., 160 Cyrus, T., 223, 239
clustered data analysis (CDA), 137 Czechoslovakia, 286
coalition analysis, 327
coalitions; sanctions, 176–77 Dai, M., 3, 8, 19, 71, 418, 420, 421, 433, 434
Cockayne, J., 120 Dashti-Gibson, J., 132, 147, 149, 187
Coelli, T.J., 348 databases, 38
Cold War, 239, 240 data collection, TIES, 45–52
New, 26, 39 data envelopment analysis (DEA), 334
collateral damage, 161 Davies, R.B., 371
Collier, D., 212 Davis, P., 132, 147, 149
Collier, P., 303 Davis, Patricia, 187
Committee on Foreign Investment in the United Deaton, B.J., 440, 446
States (CFIUS), 30 De Bièvre, D., 265, 266, 270, 273
Common Foreign and Security Policy (CFSP), De Fiedorowicz, G., 10
264 de Goede, M., 238, 240, 241
Common Nomenclature (CN) classification, 251 De Gucht, K., 269
Complete Trade Sanctions (CTS), 423–24 Dehejia, R.H., 147, 149, 150
Comprehensive Iran Sanctions, Accountability, De la Calle, L., 53, 54, 55, 56, 58n21, 159
Divestment Act of 2010 (CISADA), 223 Del Biondo, K., 206, 207
comprehensive sanctions, 109, 208 Dellepiane, S., 264, 271
and political opportunity structures, 215–16 demand curve, 154
Conceição, P., 441 Demena, B.A., 125, 131, 134, 141, 299
conditionality, and sanctions, 270 Deng Xiaoping, 34
conjunctural model of political conflict, 204 dependent variable, 137
Connell, J., 360 De Quaasteniet, T., 239
Connolly, R., 364 Derindag, M.R., 332
Corduneanu-Huci, C., 217 DeRouen, K., Jr., 372
Correia, S., 392 deterrence, 36
Correlates of War (COW) data set, 51 Devarajan, S., 330
Cortright, D., 5, 107, 108, 187, 203, 351, Devereux, S., 442
352, 411 Devitt, P., 257

de Vries, A., 203, 270 Economic Consequences of Peace (Keynes), 301

de Vries, G.J., 302 economic deprivation, 211–12
Diamond, A., 379, 381 and sanctions signals, 216–17
diasporic communities, 362 economic integration, 303
Di Maio, M., 143n6 economic interdependence, 302
diplomatic exceptions, 28–29 economic sanctions, 167–68
diplomatic sanctions, 195 bilateral structure of, 68
Dithmer, J., 441, 442, 444, 446, 447, 450 capacity-building, 174–75
Dizaji, S.F., 12, 40n4, 144n7, 187, 330, 331, 337, causes for failure, 168–70
349n4, 377, 413 coalitions, building, 176–77
doctrine of sovereign immunity, 31 coercing external sanctions busters, 179–80
domestic politics, public choice approach and, defined, 45–46, 270
157–62 effectiveness, 180–82
domestic tourism, 362–63 effectivity of, 238–40
Donaldson, D., 422 enforcing, 177–79
Dong, L., 303 evolution by type, 88–90
Dorff, C., 53 extraterritorial provisions, 175–76
Dorosh, P.A., 442 foreign direct investment and (see foreign
Dorsey, M., 319 direct investment (FDI))
Dorussen, H., 413 and internal conflicts, 191–95
Doucet, L., 319 newly added cases, 77–88
Doucouliagos, C., 133, 136, 137, 139, 143 objectives of, 99–106
Downward, P., 371 policies, compliance for, 170–71
Doxey, M.P., 44, 107, 111, 187, 204, 208, 213, policies, vulnerabilities of, 182–83
281 and political repression, 189–91
Dreger, C., 250 publication bias of research, 125–42
Drezner, D.W., 44, 109, 111, 132, 148, 150, 159, robust implementation, 177
160, 168, 175, 176, 182, 187, 224, 226, 240, secondary (see secondary sanctions)
241, 270, 300, 376, 411 successful, policies for promoting, 173–82
Dridi, J., 349 success rate of, 70, 71
Drieghe, L., 269, 271 threats, 191
Drieskens, E., 206, 207 during Trump presidency, 70–74
Driffield, N., 372 in twenty-first century, 26–40
Driscoll, D., 12, 148, 157 types of, 93–98
drugs regime, 265–66 undercutting, mechanisms for, 171–73
Drury, A.C., 21n2, 21n21, 53, 55, 132, 147, 150, working of, 168–70
159, 160, 161, 187, 189, 190, 213, 249, 411 Economic Sanctions Reconsidered (Hufbauer and
Duanmu, J. L., 371 Schott), 125
Dudouet, V., 212 Eden, P., 288
Dumas, L.J., 303 educational activities, 356
Duval, Y., 371 Eggenberger, K., 170, 180
Dynamic Analysis of Dispute Management Egger, P., 371, 412, 422, 423, 424, 425, 435n5
(DADM) Project, 63 Eichengreen, B., 412, 427
Eisinger, P.K., 204
Early, B.R., 12, 20, 53, 56, 118, 149, 150, 160, Eizenstat, S., 176
161, 162, 167, 168, 170, 171, 172, 173, 174, Ekholm, K., 371
175, 176, 177, 178, 179, 180, 182, 183, Elliott, K.A., 2, 13, 26, 40, 53, 63, 64, 65, 70,
184n2, 187, 189, 190, 199, 224, 239, 241, 111, 113, 125, 127, 144n7, 148, 150, 152,
299, 375, 378, 408, 408n3 158, 187, 216, 224, 239, 249, 264, 265, 275,
Early, J.G., 167, 173, 174, 184 281, 289, 299, 330, 375, 388, 411, 435n2,
Eaton, J., 153, 158, 411, 422 439, 441, 442, 443, 445, 464
Eby-Konan, D., 371 Elman, C., 205
Eckert, S.E., 2, 65, 109, 112, 125, 177, 189, 199, Elyasiani, E., 335
240, 241, 352 Emilie, M., 161
Eckert, T., 110 Emmenegger, Patrick, 208

Index 471
empirical model, 335–37 Fiss, P.C., 205

Eng, M.Y., 304 Fitzpatrick, M., 357
Engers, M., 153, 158, 411 Floridi, A., 141
entropy balancing, 453–60 Fontoura, M.P., 371
environmental arrangement, 265 food aid, 439–40
Erdogan, S., 332 Food and Agricultural Organization (FAO), 440,
Erickson, J.L., 300 444–45
Eriksson, M., 109, 110, 205, 217, 352 food security, in targeted states
Erumban, A.A., 302 data and empirical strategy, 444–48
Escribà-Folch, A., 54, 160, 182, 188, 194, 196, impact of economic sanctions on, 438–60
202, 217, 300 foreign direct investment (FDI), 369–83
Esfandiari, G., 355 determinants of, 370–72
Esfandiary, D., 357 horizontal, 371
essential security interests, 284 impact of sanctions on, 377–83
Estonia, economic sanctions on, 34 impact on sanctions, 376–77
European Economic Community (EEC), 287 sanctions as determinant of, 372–74
European Trade Union Confederation (ETUC), vertical, 371
268 Foreign Investment Risk Review Modernization
European Union (EU), 32, 33–34, 51, 203 Act (FIRRMA), 30
Action Plan on Human Rights and Democracy, foreign policy goals, 55–56
268 Foreign Sovereign Immunities Act (FSIA) of
Generalised Scheme of Preferences (see 1976, 32
Generalised Scheme of Preferences (GSP)) Forrer, J., 223, 408n3, 435n4
against Russian Federation, 290 Forslid, R., 371
sanctions imposed on Russia by, 239, 249–60 Fowler, F. J., 243
European Union Sanctions (EUSANCT), 38 Franck, T., 319
Eurostat database, data from, 251–53 Freeman, R., 264, 265, 275
Evenett, S.J., 239 Free Trade Agreements (FTAs), 264
Evenson, R.E., 439 free trade production combination, 130
Everything-But-Arms (EBA) scheme, 266 Freitag, Markus, 208
ex-ante conditionality, 270 Frey, B.S., 144n7
exceptionality, 271–72 Fried, H.O., 334
Executive Order 13722, 229–30 Friedman, J., 438
Export Control Reform Act of 2018 (ECRA), 30 Fritz, O., 257, 260, 261
extraterritorial sanctions provisions, 175–76 Frye, T., 198, 203n1
Fu, Q., 21n21
Falk, M., 360 Fuchs, A., 240
Falklands (Malvinas) crisis, 287 Funnel Asymmetry Test (FAT), 133
Fang, L., 310, 327 Furmanov, K., 360
Fare, R., 337 Fürrutter, M., 270, 271
Farrell, H., 6, 182 fuzzy set Qualitative Comparative Analysis
Farrell, M.J., 335 (fsQCA), 208
Farzanegan, M.R., 331, 337 results, 212–17
FDI. see foreign direct investment (FDI)
Fearon, J.D., 156 Gagiano, A., 264, 271
Fefer, R., 293 Gaisford, J.D., 217
Felbermayr, G.J., 1, 2, 3, 8, 14, 19, 26, 38, 41n16, Galtung, J., 14, 44, 111, 153, 156, 189, 203, 239,
42n50, 62, 63, 67, 71, 74, 75n*, 75n2, 143, 240, 249, 281, 360, 411, 435n18
353, 374, 378, 379, 388, 390, 393, 408n1, game theoretic model, 158, 161, 224
411, 412, 414, 416, 418, 420, 421, 422, 423, Gao, B., 232
425, 433, 434, 435n3, 435n8, 435n13 Gardeazabal, J., 379, 382
Ferguson, V., 352 Gardener, E.P.M., 336
Fidrmuc, J., 250 Garfield, R., 438, 439
Financial Action Task Force (FATF), 331 Gartzke, E., 376
financial tools, 27 Gaulier, G., 251

Geddes, B., 54 Goldbach, S., 378, 411

Gedikli, A., 332 Goldfarb, R.S., 10, 139
Geller, M., 257 Goldfinch, S., 372
General Agreement on Tariffs and Trade (GATT), Goldman, Z.K., 168, 182, 189, 199
30, 282–83 Goldstein, J.L., 391
Czechoslovakia, security of, 286 Golikova, V., 12
Portugal-Angola, threat to peace, 286 Gollin, D., 439
security exceptions under Article XXI, 285–89 Gordon, J., 108, 118, 122n4, 160, 189, 199,
Generalised Scheme of Preferences (GSP), 264–74 306n1, 356
activation and reinstatement record, 268–69 Gott, H., 176, 357
conditionality, 266–68, 270 Gould-Davies, N., 239
debate surrounding, 271–74 Graph Model for Conflict Resolution (GMCR),
exceptionality, 271–72 309–27
historical evolution of, 267–68 analysis stage, 315–16
political conditionality in, 265–66 application to Iran, 316–27
proposed reforms, 273–74 modeling stage, 310–15
suspension of, 269–71 value in modeling, 309–10
target selection, 272–73 Grauvogel, J., 3, 15, 188, 190, 191, 192, 193,
withdrawal, 266–68, 270 202, 203, 204, 205, 206, 207, 208, 217, 218,
General Metarational (GMR), 315 218n5, 218n6, 304
general-to-specific (GTS) modelling, 139 gray preferences, 327
genocides, 194–95 Great Depression, 29
geoscheme, UN Great Illusion (Angell), 297
classification of regions based on, 91–92 Green, D.P., 142
Gerber, A.S., 142 grievance theory, 192
Gerschenkron, A., 241 Grosskopf, S., 337
Gershenson, D., 194 Grossman, G.M., 198, 203, 218n1, 302
G-7 group, 298–99 Grosso, J.L., 21n15
Gholami, R., 362 GSP Plus scheme, 266–68
Gibbons, E.D., 187, 438, 439 Gstöhl, S., 265, 266, 270, 273
GIGA Sanctions Dataset, 208, 211 Guimarães, P., 392
Gill, B., 232 Gullstrand, J., 21n18
Gilpin, R., 224 Gultang, J., 168
Gilsinan, K., 357 Gupta, C., 355
Girardone, C., 336 Gurevich, T., 435n14
Giumelli, F., 111, 204, 206, 207, 238, 239, 240, Gurr, T.R., 192, 204, 212
241, 244, 245, 245n1, 250, 290 Gutmann, J., 21n21, 55
Glaser, C.L., 303
Glen, B., 159 Haass, R., 44
Global Hunger Index (GHI), 438, 440, 444, 448–53 Habib, M., 371
Global Sanctions Data Base (GSDB), 38, Hafner-Burton, E.M., 161
62–74, 390 Hagemejer, J., 176, 357
dyadic structure of, 67 Haggard, S., 224, 228
overview, 62–63 Haidar, J.I., 38, 241, 242, 331
sanction cases, 65–66 Hainmueller, J., 242, 379, 381, 448, 453
sanctions by objective, 67, 69, 70 Hairong, Y., 372
trade sanctions in, 414–16 Halcoussis, D., 6, 12, 148, 157, 302
updated, 63–70 Hale, H.E., 203
global value chains (GVCs), 281, 369 Halegua, A., 109
GMCR. see Graph Model for Conflict Resolution Hall, C.M., 4, 18, 351, 352, 353, 354, 355, 356,
(GMCR) 357, 358, 360, 361, 362, 363, 365
GMCR + software, 316 Hall, D.R., 353, 354
analysis stage, 321–22 Han, B., 3, 6, 16, 223, 224
“post analysis” tab, 322–24 Handley, K., 388
robustness analysis, 324 Hanousek, J., 3, 239, 250

Index 473
Hansen, B.E., 253 187, 216, 223, 224, 239, 249, 271, 276n12,
Hanson, G.H., 371 281, 289, 299, 301, 330, 349n4, 375, 388,
Happold, M., 288 389, 411, 435n2, 435n4, 439, 441, 442, 443,
Harmonized System (HS), 38, 251 445, 464
Harneit-Sievers, A., 270 Hultman, L., 159, 188, 195
Harrell, P., 41n37 humanitarian exceptions, 28
Harris, Arthur ‘Bomber,’ 28 human rights, 189, 190–91
Harrison, J., 264, 270, 273 sanctions, threats of, 191
Hart Jr, R.A., 132, 147, 150 Human Rights Council, 120
Hartwell, C., 176, 357 Humphrey, D.B., 335, 349n3
Hasan, M., 349 Hunter, W.C., 349n3
Hastings, J., 172, 173 Hurley, J., 41n23
Hatipoglu, E., 53, 161, 204 Huseby, R., 111, 270
Haverland, M., 244 Hussein, S., 300
Hayo, B., 331 Hwami, M., 21n21
Hazelzet, H., 270 hypergames, 327
Head, K., 435n10
Heckscher, E.F., 282 Iacus, S., 242
Hedberg, M., 239, 241 Ianchovichina, E.I., 372
Hefeker, C., 372 imposition of sanctions, 238–40, 249–60
Heffington, C., 188, 193 estimation, 391–93
Hegre, H., 301 Inohara, T., 327
Heilmann, K., 240 Instrument for Supporting Trade Exchanges
Heinrich, T., 53, 54, 55, 58n20, 143n4, 187 (INSTEX), 34, 121
Hellmeier, S., 188, 190, 193 intercontinental ballistic missile (ICBMs), 223,
Helms–Burton Law of 1996, 31, 357 228, 230
Helpman, E., 302, 371 Interlaken Process, 109
Henderson, J.C., 360 internal conflicts, 191–95
Herman, P., 435n14 civil wars/genocides, 194–95
heteroscedastic and autocorrelation-consistent protest activity, 191–93
(HAC), 448 terrorism, 193–94
Higgins-Desbiolles, F., 354, 360 internal opposition effect, of international
Hillman, A.L., 144n7 economic sanctions, 202–17
Hinkkainen, K.H., 53, 54, 55, 56, 58n21, 159, International Confederation of Free Trade Unions
188, 193, 194 (ICFTU), 268
Hinz, J., 240, 242, 250, 251, 252, 257, 260, 261, 411 International Covenant on Civil and Political
Hipel, K., 309, 310, 316, 327 Rights (ICCP), 268
Hirschman, A.O., 239, 241 international economic sanctions, 152–53
Hoeffler A., 303 impact on North Korea, 232–33
Hoelscher, K., 211 internal opposition effect of, 202–17
Hoffmann, F., 187 public choice approach (see public choice
Holburn, G.L., 372 approach)
Holt, V.K., 300 international trade
Hooghe, L., 239 impact of U.S. sanctions on, 388–408
horizontal FDI, 371 International Trade Commission (ITC), 389
Hosseini, E.A., 332 Intriligator, M.D., 303
Hovi, J., 111, 270 investment sanctions, 155
HSE data sets, 38, 44, 53–54 Ioannidis, J.P.A., 142
Hsieh, H.-F., 21n Iqbal, M., 332
Huang, L., 303 Iran, 360–61
Hudáková, Z., 2, 5, 42n48, 48n9, 112, 114, 115, banking system, impact of sanctions on, 330–48
125 GMCR application to, 316–27
Hufbauer, G.C., 1, 2, 5, 6, 7, 13, 21n8, 26, 38, international sanctions against, 357–58
44, 53, 64, 111, 113, 125, 127, 144n7, 148, nuclear sanctions, 33–34
150, 152, 153, 158, 167, 168, 169, 172, 176, Revolutionary Guard, 155

Irwin, D.A., 412, 427 Kijewski, L., 269

Isaac, R.K., 354, 360 Kilgour, D.M., 3, 6, 17, 309, 310, 316, 327, 330
Isiksal, S., 309 Kim, D.-H., 160
Islamic Revolutionary Guard Corps (IRGC), 331 Kim, H.J., 159
Ismagilova, G., 354, 360, 363, 364 Kim, H.M., 147, 149, 150
Israel, 288 Kim, M., 376
Kimararungu, P.B., 10, 299
Jack-knife analysis, 141–42, 147–50 Kimberly, A.E., 223, 224
Jadoon, A., 53, 172, 173 Kimberly Process, 35
Jaggers, K., 446 King, G., 242
Jahan-Parvar, M., 333 Kinsara, R., 3, 6, 17, 309, 316, 330
Jalili, S., 364 Kirilakha, A., 1, 2, 3, 8, 14, 19, 42n50, 62, 63,
James, P., 53, 55, 159, 187 67, 71, 74, 75n*, 75n2, 353, 379, 388, 390,
Jarosz, D., 250, 290 393, 408n1, 411, 412, 414, 416, 418, 420,
Jarrell, S.B., 138 421, 422, 423, 425, 433, 434, 435n3, 435n8,
Jativa, G.B., 299 435n13
Jauch, H., 372 Kirshner, J., 21n17, 189, 204, 217, 411
Jayakody, N., 120 Kitschelt, H.P., 204, 212
Jensen, N.M., 372 Klann, N.-H., 240
Jentleson, B.W., 202, 203, 218 Kleinberg, K.B., 132, 148, 150, 167, 172, 173,
Jeong, H., 231 174, 184, 239, 241, 375, 377, 378
Jeong, J.M., 58n18 Klein Reesink, C., 408n2
Jeydel, P., 170 Kliem, F., 274
Jing, C., 132 Klotz, A., 202, 215, 239, 241
Jo, H., 195 Kobayashi, Y., 13, 42n47, 45, 53, 54, 55, 58n20,
Joint Comprehensive Program of Action 64, 65, 111, 113, 125, 143n4, 158, 167, 168,
(JCPOA), 27, 36, 118, 318, 330 169, 187, 206, 213, 379, 446
Jondrow, J., 334–35 Koch, S., 270, 271
Jones, C., 229, 372 Kohl, T., 18, 71, 393, 408n2, 409n13
Jones, L., 12, 20, 182, 202, 203, 205, 218, 273 Komunjer, I., 422
Jung, E., 44, 64, 168, 299, 301 Konak, F., 358
Jurajda, Š., 252 Kortum, S., 422
Koval, A., 359, 360
Kacarska, S., 264, 270, 274 Kozlov, D.A., 360
Kaempfer, W.H., 6, 15, 132, 153, 154, 155, 156, Krain, M., 195
157, 168, 172, 176, 187, 203, 239, 249, 261, Kriesi, H., 204, 212
302, 373, 411, 439 Krugman, P.R., 422
Kaempfer–Lowenberg model, 155–57 Krustev, V.L., 2, 13, 45, 54, 125, 132, 149, 150,
Kalirajan, K.P., 343 157, 158, 160, 234n4, 375, 411, 413
Kaplowitz, D.R., 306n1 Kryvoi, Y., 269, 273
Karaca, S., 358 Kuang, H., 327
Karunska, K., 176, 357 Kuberski, D.W., 132, 147, 160
Kasman, A., 334, 336, 338 Kumbhakar, S.C., 335, 343
Katzman, K., 319 Kunsch, H. R., 254
Kavakli, K.C., 53 Kutlina-Dimitrova, Z., 257, 261
Kemp, M.C., 14, 282 Kuznetsov, B., 12
Kenneth, K., 319 Kwiatkowski, D., 254, 256, 258
Kenny, C.J., 211 Kwon, B.R., 58n21, 132, 148, 169
Kerr, P., 319
Kerr, W.A., 217 labour arrangement, 265
Keynes, J.M., 301 Lacey, R., 205
Khashoggi, J., 37 Laerte, A., 159
Khodadadi, M., 354, 358 Lake, J., 393, 409n13
Kholodilin, K. A., 250 Lam, C., 36

Index 475
Lam, S.L., 147, 150 Loury, G.C., 144n7

Lane, J.-E., 240 Lovell, C.A.K., 334–35, 337, 343
Langlois, C.C., 160, 161 Lowenberg, A.D., 6, 12, 15, 132, 148, 153, 154,
Langlois, J.-P.P, 160, 161 155, 156, 157, 168, 172, 176, 187, 203, 239,
Lanz, D., 109 249, 261, 302, 373, 411, 439
Larch, M., 412, 422, 423, 424, 425, 435n5, Ludema, R.D., 37, 38, 250, 262, 411
435n12 Lührmann, A., 212
large-N data sets, 2, 12, 125 Luo, S., 160, 188, 193, 370, 378, 383
Látková, P., 355, 361
Latvia, economic sanctions on, 34 Macaulay, J., 356, 361
Lawson, A., 295n29 Mahadevan, R., 21n21, 55, 187, 192, 204, 438,
Layton, A.S., 217 439, 442
Lazzaroni, S., 21n4, 128 Maidment, N., 257
leadership stability, 196–97 Majeed, A., 362
Le Blanc, D., 21n20 Major, S., 132, 147
Lee, H., 372 Maloney, S., 223, 357
Lee, L.F., 343 Mandelson, P., 268, 269, 275
Lee, S., 233 Manekin, D., 198, 203, 218n1
Lehman, J.A., 153, 154, 155, 156, 157 Manova, K., 403
Lei, H. S., 371 Mansfield, E. D., 241, 249
Lektzian, D.J., 21n19, 53, 54, 56, 58n15, 132, Marcos, T., 167, 168, 177
147, 149, 150, 159, 160, 168, 172, 173, 187, Margalit, Y., 198, 203, 218n1
203, 204, 215, 373, 375, 376, 377, 378, 389, Marinov, N., 159, 188, 196, 202, 376, 440
411, 412, 427 Marks, G., 239
Lentz, A., 170 Markusen, J.R., 371
Leposa, A., 356 Marshall, M.G., 446
Lerch, M., 264, 270, 272, 276n9 Marshall Plan, 30, 34
Lester, S., 295n26 Martin, L.L., 176, 224, 226
Levine, S., 441 Martínez, V., 374
Levitsky, S., 212 Martínez-Galán, E., 371
Levy, J.S., 303 Marx, A., 207
Levy, P.I., 215 Mary, S., 439, 444
Li, Q., 370, 372, 373, 374, 376 Mastanduno, M., 218, 281
Licht, A.A., 53n17, 188, 190, 191, 192, 193, 202, Mataloni, R. J., Jr., 371
204, 205, 207, 218, 304 Matbouli, Y., 309
Lieberman, E. S., 244 Materov, I.S., 334–35
light switch diplomacy, 26 Maurer, A., 176, 357
Lim, D.J., 352 Mayer, T., 393, 435n10
Limão, N., 388 McAdam, D., 217
Lindberg, S.I., 212 McCormack, D., 159
Lindsay, J.M., 187, 249, 261 McGillivray, F., 54, 413
Liou, R.Y.-L., 188, 189, 190, 191 McGuire, M.C., 300
Lipka, B., 440, 446 McKinnell, R., 204
Lipkina, O., 360 McLean, E.V., 53, 54, 55, 56, 58n21, 132, 147,
Lipton, M., 441 157, 159, 160, 188, 193, 194, 224, 249,
Liu Xiaobo, 35 250, 261
livelihood exemption, 228 Medoff, M.H., 138
Lodge, T., 215 Meeusen, W., 334
Lohmann, S., 175 Mehdian, S., 335
Long, L., 58n20 Meister, K., 120
Lopez, G.A., 107, 108, 160, 187, 203, 306n2, Melitz, M.J., 302
351, 352, 411 Mercer, D., 360
Lorber, E., 174 Mertens, W., 156, 302
Los, B., 302 Mester, L.J., 337

meta-analysis, 128 Moya-Ocampos, D., 357

and bias, 134–37 Mueller, J., 108
Meta-Analysis in Economics Research-network Mueller, K., 108
(MAER-Net), 130–34 Muller, E.N., 192
empirical strategy, 133–34 multilateral sanctions, 297–98, 359–60
meta-data, 131–32 Multilateral Trading System (MTS), 282
meta-data, 131–32 multinational enterprises (MNEs), 369
meta-regression analysis (MRA), 133, 136–37 vertical FDI and, 371
for FAT-PET, 147–50 Murdie, A., 55, 188, 189, 190, 191
Meyer, D.S., 217 Muzakkir S.A., 332
Meyer, J.A., 223 Myanmar, 268
Michaels, G., 240
Midmore, P., 355 naïve theory of sanctions, 12, 189
Miers, A.C., 44, 45, 376 Nannicini, T., 382
Miguel, E., 142 narrative evaluations/reviews of literature, 127–30
militarized interstate dispute (MID), 46 Nash equilibrium, 226
Minear, L., 108, 187 national income, 128
Minhas, S., 53 National Security Agency (NSA), 28
“minimum assumptions” approach, 253 national security argument, 292–93
Mirkina, I., 18, 56, 377, 378, 379, 381, 383 National Treatment (NT) principle, 282
Miromanova, A., 262n1 Naughton, H.T., 371
Mitchell, D.F., 303 Nauright, J., 360
Mitchell, K., 349n3 negative sanctions, 297–98
mixed-effects multilevel model (MEM), 133–34, causes of failure, 301
136 effectiveness of, 298–301
Miyagiwa, K., 161 Nelson, R., 290, 295n23
Mo, J., 226, 413 Nephew, R., 168
modeling stage, GMCR, 310–15 Neuenkirch, M., 55, 159, 187, 192, 204, 389,
Mohsin, S., 357–58 438, 439, 441, 442, 446, 448, 453, 460
Molenaers, N., 264, 271 Neumeier, F., 55, 159, 187, 192, 204, 389
Møller, J., 207 New Cold War, 26, 39
Molyneux, P., 336 new economic weapons, 26
Monteiro, J.-A., 435n12 alliances, 27–28
Montgomery, A.H., 161 cyber warfare, 31
Moodley, K., 215 diplomatic exceptions, 28–29
Moon, W., 288 financial tools, 27
Moons, S.J.V., 138, 371 humanitarian exceptions, 28
Moore, M., 267, 273, 300 positive measures, 30–31
Moret, E., 239, 250, 290 weaponized tariffs, 29–30
Moret, E.S., 360 Newey, W. K., 448
Morgan, T.C., 2, 13, 42n47, 44, 45, 53, 54, 55, Newman, A.L., 6, 182
64, 65, 111, 113, 125, 132, 143n4, 149, 150, New Public Management (NPM) literature, 240
157, 158, 160, 161, 167, 168, 169, 170, 171, Niblock, T., 204
178, 187, 206, 213, 224, 234n4, 240, 241, Nicaragua, 288
249, 299, 371, 376, 379, 411, 413, 446 Nickerson, D., 142
Morlino, L., 212 Nielsen, B.B., 371
Morris, S., 41n23 Nielsen, R.A, 58n20
Morrow, J.D., 412, 427 Nigai, S., 423
Mosedale, J., 351 Nili, S., 159
Moss, T.J., 211 Nishitateno, S., 374
Most Favored Nation (MFN), 389 Nitsch, V., 3, 378, 411
Most Favoured Nation (MFN), 271, 282, 283 Nivet, B., 270
Motamedi, M., 361 Noack, R., 180
Mottaghi, L., 330 Noland, M., 373
Movement for Democratic Change (MDC), 217 nonperformance equilibrium, 226

Index 477
non-smart sanctions vs. smart sanctions, 55 Parveen, T., 332

non-state actors, 35 Pascoe, H., 159
Nooruddin, I., 53, 132, 147, 150, 156, 157, 213, 376 Patriot Act of 2001, 152
North, D.C., 412, 427 Patterson, D., 132, 147, 149, 150, 159
North Atlantic Treaty Organization (NATO), Patterson, R., 223
26, 32 pax mercatoria (commercial peace), 240
North Korea, 223 payoffs, 225–26
impact of international sanctions on, 232–33 peer review, 138
intercontinental ballistic missile, 223, 228, 230 Peksen, D., 12, 15, 20, 21n21, 53, 54, 55, 56,
UN sanctions against, 227–29 58n15, 58n18, 132, 143, 143n3, 147, 149,
US sanctions against, 229–30 150, 159, 160, 161, 169, 172, 173, 182,
North Korea Sanctions and Policy Enhancement 184n1, 184n3, 187, 188, 189, 190, 191, 195,
Act of 2016 (NKSPEA), 223, 229–30 196, 197, 199, 204, 217, 271, 272, 299, 365,
Nossal, K.R., 156 375, 377, 413, 438, 441, 442
Noy, I., 371 Peng, X., 327
Nuttall, S., 271, 272 Pennings, E., 372
“people-to-people exchanges,” 356
Obama, B., 27, 28, 229–30 Pesaran, M.H., 144n7, 379
and cyber warfare, 31 Peterson, T.M., 53, 54, 55, 58n16, 159, 160, 183,
and Iranian sanctions, 29 188, 191, 375, 377
Oechslin, M., 159, 438, 441 Petersons, O., 316
Oegg, B., 2, 26, 40, 53, 63, 64, 65, 70, 111, 113, Petroleos de Venezuela, S.A. (PdVSA), 36
125, 144n7, 148, 150, 152, 187, 216, 224, Pfaffermayr, M., 371
281, 299, 330, 349n4, 375, 389, 411, 435n2, phasing-in sanction effects, 429–33
435n4, 439, 441, 442, 443, 445, 464 Phillips, P.C.B., 254, 256, 258
Office of Foreign Asset Control (OFAC), 174 Philp, J., 360
Ohno, Y., 159 Pickering, J., 303
Oil-for-Food Programme, 108 Pickrell, R., 320
Olivero, M.P., 422, 423, 435n11 Piermartini, R., 435n12
Olson, M., 154, 300 Piger, J., 370
Onderco, M., 3, 16, 38, 240, 241, 244 Pirie, G.H., 360
Oneal, J.R., 301 Pitt, M.M., 343
Onvural, M.N., 349n3 Poisson Pseudo Maximum Likelihood (PPML),
opposition mobilization, 203–5, 212 392, 423
options effectiveness, 327 Polachek, S.W., 301, 302, 372
Orbie, J., 264, 267, 269, 270, 271, 272, 273 policy-mix including disarmament, 303–4
Osa, M., 217 political conditionality, 270
outbound tourism, 363 politically exposed persons (PEPs), 120
Ovcharov, A.O., 354, 360, 363, 364 political openness, 212
Öztas Ayhan, H., 309 political repression, 189–91
naïve theory of sanctions and human rights, 189
Paes, W.C., 306n3 regime consolidation, 190
Pak, Y. S., 371 political stability, in target countries, 187–88
Paldam, M., 139 leadership stability, 196–97
Paloma, S. G., 439, 444 political repression, 189–91
panel data analysis, 254–55 political violence, 192
results, 259–60 politicides, 195
Panofsky, A., 217, 218 Pollitt, C., 240
Pape, R.A., 44, 113, 142, 156, 239, 241, 249, Pond, A., 157, 159, 439, 450
298, 411 Popesku, J., 354
parallel trend, 255 Popov, L., 360
Park, B.B., 58n17 Porro, G., 242
Park, J., 229 Portela, C., 4, 12, 17, 20, 21n1, 122n11, 203, 208,
Park, Y.R., 371 211, 214, 229, 239, 240, 250, 270, 272, 273,
Parro, F., 422 274, 275, 290, 305

Portelance, G., 41n23 Radcliff, B., 132, 147, 149, 187

Porter, R.C., 144n7 Radtke, M., 56, 195
Portugal’s accession to GATT, 286 Ragin, C.C., 205, 206, 207, 213
positive measures, 30–31 Rajaei-Baghsiyaei, M., 332
positive sanctions, 31, 270, 297–98, 301–5 Rakner, L., 216
civil society, role of, 304 “rally-around-the-flag” effect, 155
credibility of sender countries, 304–5 Rasciute, S., 371
defined, 301 Rathbone, M., 170
economic integration, 303 Rauch, J.E., 403, 404, 406
economic interdependence, 302 Reagan, R., 26
policy-mix including disarmament, 303–4 Reddie, A.W., 21n10
Pospieszna, P., 261, 304 Rees, W.E., 355
post-sanction effects on trade, 425–29 Regan, P.M., 159
Pratt, S., 357 regime consolidation, 190
Prayag, G., 363 regional tourists, 361–62
pre-accession conditionality, 270 rehabilitation, 37
Preble, K., 118, 167, 170, 171, 174, 175, 177, Reid, E., 276n9
178, 179, 180, 182 Reid, N., 109
Precision Effect Test (PET), 133 Reifschneider, D., 343
Predvoditeleva, M., 360 Reith, S., 360
pre-sanction effects on trade, 425–29 Rennack, D.E., 230
Prickartz, A.C., 264 Renwick, R., 14, 153, 411
private banks, 27 Renz, B., 250
private litigation, 26 repression
production combination, 129–30 political, 189–91
propositions, proof of, 236–37 research-cycle hypothesis, 139
protectionism, 272–73 researching firms, 238–45
protest activities, 191–93 attention towards, 238–40
publication bias of research, 125–42 study of, 240–42
determinants of, 137–42 ways to study, 242–44
MAER-Net, 130–34 research teams, 138
meta-analysis and, 134–37 Restrepo, D., 118
public choice approach, 153–57 Reta, A.S., 10, 299
countervailing effects of sanctions in target Replication 2, 142, 256
country, 154–55 retribution, 36–37
and domestic politics, 157–62 Rettinger, R., 357
investment sanctions, 155 Reuveny, R., 301
Kaempfer-Lowenberg model, 155–57 Revolutionary Guard (Iran), 155
literature, 157–62 Ricardo, D., 282
overview of, 153–54 Ricciuti, R., 300
punishment theory, 203–4 Richardson, B., 270, 273
Rickard-Martin, L., 177
Qard al-Hassan banks, 332 Rihoux, B., 205, 206, 207
Qualitative Comparative Analysis (QCA), 202–3, Ripsman, N.M., 203, 241
304 Rivers, D., 391
of anti-regime mobilization, 208–17 robustness, 453–60
applications in sanctions research, 207 checks, 2, 53, 139, 141–42, 218, 259, 324, 443,
features, 205 453–60
fuzzy set, 208 Rodríguez-Clare, A., 422, 435n10
methodological toolkit, 205–7 Romuniuk, P., 109
opposition mobilization, 203–5 Rose, A.K., 8
steps of, 206 Rosenberg, E., 41n37, 168, 173, 177, 178, 182,
qualitative dataset, TSC project, 110 189, 199
quantitative dataset, TSC project, 110 Ruggiero, R., 289
Quickenden, C.L., 40n7 Rusal, 153

Index 479
Russett, B., 301 sectoral sanctions, 250

Russia, 34, 35 Seiglie, C., 301, 372
Accession Protocol, 291 Seitz, W., 198
counter-sanctions, 249–60 Seligson, M.A., 192
sanctions against, 359–60 sender states, 297
sanctions against Turkey, 358–59 Senti, R., 267
sanctions imposed by EU, 239, 249–60 Sequential Stability (SEQ), 315
Russian Federation Seyfi, S., 4, 18, 353, 354, 355, 356, 357, 358,
European Union against, 290 360, 361, 362, 363, 365
sanctions taken against, 290–92 Shabani, B., 353
Ukraine vs., 290–92 Shagabutdinova, E., 147
United States against, 290 Shambaugh, G., 176, 178, 180
Rutherford, Lord, 38 Shannon, S.E., 21n14
Rysayeva, M., 354, 360, 363, 364 Sharapov, D., 205
Shephard, R., 334
Sabtan, B., 3, 6, 17, 309, 316, 330 Shin, G., 370, 378, 383
Safaeian, B., 363 Shin, Y., 254, 256, 258
Sahin, E., 358 Shultz, G., 26
Salameh, D., 318 Sickles, R.C., 334
Saleh, A.S., 161 Siddiquee, M.S.H., 21n16, 127, 132, 379
Saltnes, J.D., 272 signalling dimension, of sanctions, 208, 211
Sample, S.G., 303 Siles-Brügge, G., 264
sampling, 243 ‘‘silver bullet’’ sanctions, 27
Sánchez-Robles, B., 374 Simmons, B., 241
sanctions busters, 369 Sinabell, F., 257, 261
Santana, S., 438 Siverson, R.M., 412, 427
Santos Silva, J.M.C., 392, 423 Skaaning, S.-E., 207, 218
Saravalle, E., 41n37 Skovoroda, R., 372
Saravia-Matus, S., 439, 444 Skrzypczynska, J., 261
Sarkees, M., 51 Slaughter, M. J., 371
Sautman, B., 372 Slavov, S.T., 408n3, 409n14, 443
Schady, N., 438 Small Arms and Light Weapons (SALW), 300
Schelling, T.C., 37, 226, 234n4 small-N research, 244
Scherrer, C., 267, 273 smart sanctions, 26, 28, 152, 280, 359–60
Schlicht, R., 208 non-smart sanctions vs., 55
Schmidt, H., 37 Smeets, M., 4, 5, 281, 290, 303
Schmidt, P., 254, 256, 258, 334–35 Smets, L., 264, 271
Schmidt, S.S., 334 Smith, A., 44
Schneider, C.Q., 205, 206, 208, 213 Smith, T., 21n15
Schneider, G., 21n9, 38, 40, 63, 64, 65, 71, 299 Smoot–Hawley Act, 29
Schock, K., 204 Smyth, G., 354
Schott, J.J., 1, 2, 13, 26, 40, 53, 63, 64, 65, 70, 111, Solomon-Strauss, J., 168, 182
113, 125, 127, 144n7, 148, 150, 152, 153, Son, B., 204, 438, 441, 442
158, 167, 168, 169, 172, 176, 187, 216, 224, South Africa, 27, 35, 202
249, 271, 276n12, 281, 289, 299, 330, 375, anti-apartheid sanctions against, 155
388, 411, 435n2, 439, 441, 442, 443, 445, 464 apartheid regime, 239
Schulzke, M., 189, 199 sanctions against, 215
Schwebach, V.L., 111, 249, 411 Souva, Mark, 53, 132, 147, 168, 203, 204, 215,
secondary sanctions, 223–33 411, 412, 427
Chinese participation in, 231–32 sovereign immunity doctrine, 31
effectiveness of, 231–33 Spadoni, P., 173, 306
equilibrium solutions, 226–27 ‘‘specially designated’’ targets, 35–36
framework, 224–27 Spice, R., 159, 177, 375, 378
payoffs, 225–26 Sprinz, D., 111, 270
sequence of moves, 225 Sreberny, A., 362

Sri Lanka, 268–69, 272 Targeted Sanctions Consortium Database (TSE),

Srinivasan, T.N., 144n7 38
Staibano , C., 109 Targeted Sanctions Consortium (TSC) project, 38
Stam, A.C., 54, 413 110–11
stamp collections, 38 effectiveness evaluation, 111
Stanley, T.D., 130, 133, 136, 137, 138, findings of, 112–14
139, 143 research design of, 110–11
Staudinger, I., 264 target selection, 272–73
Stehrer, R., 302 target states, 297
Stein, A.A., 234n2 tariffs, 29–30
Stepien, B., 172, 261, 262, 372, 373, 374 Tarrow, S., 217
Stevenson, R., 343 Tavernise, S., 252
stochastic frontier analysis (SFA), 331, Teegen, H., 435n4
334–35 Tehran Stock Exchange, 333
Stockholm Process, 109 Tendi, M.B., 217
Stoll, T., 176, 357 Tenreyro, S., 392, 423
Strandow, D., 188, 195 Teorell, J., 212
Streicher, G., 260 terrorism, 193–94
study characteristics, 139 Thies, C.G., 53
Sue Eckert, 167, 168, 177 third-party advocacy, 204
Sullivan, G., 238, 240, 241 Thomas, D., 355
Sullivan, M.P., 362 Thomas, S., 215
Sustainable Development Goals (SDG 2)19 , Threat and Imposition of Sanctions (TIES), 38,
438 45, 158
Sutyrin, S., 359, 360 data collection, 45–52
Swanson, A., 153 findings from, 52–56
Sweden, and imposition of global import retrospective of, 56–57
restriction on footwear, 286–87 sanctions cases, 50–52
Swenson, D.L., 371 variable list, 47–50
SWIFT network/system, 330, 331 threat aspect of sanctions, 37–38
symbolic value of sanctions, 191–92 Tierney, D., 300
Symmetric Metarational (SMR), 316 TIES. see Threat and Imposition of Sanctions
Syropoulos, C., 1, 2, 3, 8, 14, 19, 26, 38, (TIES)
41n16, 42n50, 62, 63, 67, 71, 74, 75n*, time series analysis, 253–54
75n2, 143, 353, 374, 378, 379, 388, 390, results, 255–58
393, 408n1, 411, 412, 414, 416, 418, 420, timing
421, 422, 423, 425, 433, 434, 435n3, impact on trade sanctions, 411–34
435n8, 435n13 Timmer, C.P., 444
Szczepanski, M., 252 Timmer, M.P., 302
Szeftel, M., 216 Timofeev, I., 179
‘tit-for-tat’ sanctions, 35
Taglioni, D., 423 Tobias, H., 160
Takeyh, R., 357 token compensation, 28
Tama, J., 173, 177, 178 Tomini, L., 205
targeted sanctions, 108–10, 189, 250 Tomz, M., 391
challenges, 117–21 Torbat, A.E., 320
and consistent signals, 213–15 Tortell, L., 264, 270, 271, 273
contemporary policy challenges, 121 Tostensen, A., 109, 202
implementation challenges, 119 Tourinho, M., 2, 65, 109, 112, 114, 115, 125, 189,
legal challenges, 120 199, 240, 241, 352
political challenges, 120 tourism, 351–64
technical challenges, 118–19 case studies, 355–60
types of, 109 domestic, 362–63
see also Targeted Sanctions Consortium (TSC) economic significance of, 351–52
project impact of COVID-19 pandemic on, 351

Index 481
international, arrivals and forecasts 1950– UNSanctionsApp, 108, 114–17

2030, 352 features of, 115
literature on, 353–55 scope of, 115, 116
outbound, 363 2020 version of, 115, 117
private sector companies in, 364 UN Security Council (UNSC), 107, 174,
products, diversifying, 363 223–24
responses and adaptation to sanctions, 360–64 Oil-for-Food Programme, 108
Trade Act of 1962, 32 resolution 986, 108
Trade Act of 1974, 29, 32 resolution level, 228
Trade and Sustainable Development (TSD), 267 Sanctions Committee on North Korea, 229
trade preference suspensions, 264–74 UN Security Council’s 1874 (“DPRK”) Sanctions
trade sanctions, 280–81, 283, 388–408 Committee Panel, 174
data, 389–91 Urdal, H., 211
duration of, 416–19 Urpelainen, J., 21n11, 304
empirical analysis, 419–34 US–China trade, 29
in Global Sanctions Data Base, 414–16 US–Iran conflict, 318–19
impact of timing on, 411–34 graph model of, 319–21
transnational terror groups, 194 utility function, 128
Trefler, D., 302, 435n11 Utoktham, C., 371
Trofimenko, O., 359, 360
Trump, D., 28 Valente, M., 143n6
and cyber warfare, 31 Van Bergeijk, P.A.G., 5, 6, 8, 10, 12, 14, 20,
economic sanctions during presidency, 21n3, 21n4, 21n7, 21n8, 21n13, 21n16,
70–74 40n2, 53, 54, 128, 131, 132, 137, 138,
and New Cold War, 39 143n1, 143n6, 144n7, 144n8, 144n9, 147,
and sanctions against Iran, 29 149, 150, 187, 234, 239, 240, 243, 261, 270,
and US tariff regime, 29–30 281, 298, 299, 331, 371, 377, 379, 388, 413
truth table, 206 Van den Bossche, P., 285, 292, 294n1, 294n4
Tsarsitalidou, S., 55, 189, 190 Van den Broeck, J., 334
TSC project. see Targeted Sanctions Consortium Van den Putte, L., 264, 267
(TSC) project Vvan der Veer, R., 3, 16, 38
Tsebelis, G., 12, 44, 213, 411 Van der Ven, C., 267, 270, 274
Tsygankov, A.P., 355 Vvan de Walle, N., 212
Turkey, 30 Vvan Donge, J.K., 216
Russia’s sanctions against, 358–59 Vvan Marrewijk, C., 54, 143n6, 144n8, 144n9,
413
Ukraine, 34 Vvan Wincoop, E., 422, 423
Russian Federation vs., 290–92 variables
Ulbricht, D., 250 dependent, 137
UN Charter, Chapter VII of, 107 list, TIES, 47–50
unilateral sanctions, 34–35, 152–53, 297–98, Varieties of Democracy (V-Dem) project, 446–47
358–59 VAR model, 250, 251, 254
United Arab Republic (UAR), 288 Vashchilko, T., 370, 373, 374
United Nations (UN) Veber, M., 239, 250, 290
credibility, 114 Velutti, S., 264
geoscheme, classification of regions based on, Venables, A.J., 371
91–92 Verdier, D., 160, 161, 302
sanctions, weak enforcement mechanism of, vertical FDI, 371
229 Vieru, M., 360
targeted sanctions, 108–10 (see also Targeted Viner, J., 301
Sanctions Consortium (TSC) project) violence, in target countries, 187–88
United Nations Commission for Trade and internal conflicts, 191–95
Development (UNCTAD), 265 political, 192
United Nations World Tourism Organization Vogt, J., 269, 271, 272, 273
(UNWTO), 351 Von Amerongen, O. W., 44

von Von Soest, C., 111, 188, 190, 191, 192, 193, Xiang, J., 301, 372
202, 203, 204, 205, 206, 207, 208, 211, 214, Xi, J., 34
215, 217, 218, 218n5, 304 Xizhen, Z., 360
Vo-Thanh, T., 353, 358, 365 Xu, H., 310
Waddell, G.R., 371 Yahia, A., 161

Wadhams, N., 357–58 Yalcin, E., 1, 2, 3, 8, 14, 19, 26, 38, 41n16,
Wagemann, C., 205, 206, 208, 213 42n50, 62, 63, 67, 71, 74, 75n*, 75n2, 143,
Wagner, N., 141 353, 374, 378, 379, 388, 390, 393, 408n1,
Wagner, R.H., 44 411, 412, 414, 416, 418, 420, 421, 422, 423,
Wagstyl, S., 261 425, 433, 434, 435n3, 435n8, 435n13
Wahman, M., 111, 212, 215 Yang, J., 223, 408n3, 435n4
Wald test, 253 Yang, S., 352
Wall, H.J., 422, 435n11 Yeaple, S.R., 371
Wallace, G.P., 53 Yeliseyeu, A., 257, 261
Wallensteen, P., 1, 111, 125, 143n5, 187, 203, Yin, R. K., 244
270, 281 Yoshiharu, K., 160
Walsh, J., 229 Yotov, Y.V., 1, 2, 3, 8, 14, 19, 26, 38, 41n16,
Waltz, K., 318 42n50, 62, 63, 67, 71, 74, 75n*, 75n2, 143,
Warren-Rodríguez, A., 441 353, 374, 378, 379, 388, 390, 393, 408n1,
Wayman, F., 51 411, 412, 414, 416, 418, 420, 421, 422, 423,
weaponized US tariff regime, 29–30 424, 425, 433, 434, 435n3, 435n5, 435n8,
Weatherall, C.D., 371 435n11, 435n12, 435n13
Webb, C., 159 Young, C., 208
Weber, P.M., 21n9, 38, 40, 63, 64, 65, 71, 172, Yu, Z., 403
262, 299, 304, 372, 373, 374 Yugoslavia, 288–89
weighted least squares (WLS), 133
Weiss, M.A., 234n1 Zadeh, E.L., 332
Weiss, T.G., 55, 108, 187, 203 Zambia, 216
Weschler, J., 107 and blockade against Rhodesia, 46
Wesseling, M., 238, 240, 241 Zamfir, I., 273
West, K.D., 448 Zarakol, A., 245n1
Whang, T., 55, 132, 147, 157, 159, 160, 168, 173, Zarate, J., 180
224, 249, 250, 261 Zarghamee, H., 21n15
Wilson, J., 355, 361 Zazzaro, A., 198
Wilson, K.A., 212 Zdouc, W., 285, 292, 294n1, 294n4
Winkler, M., 118 Zelner, B.A., 372
Winston, E., 223, 239 Zhang, K.H., 371
Wintrobe, R., 156 Zhi, X., 240
Witte, C.T., 372 Zhu, H., 295n26
Woo, B., 160, 161, 184n3, 302 Zhu, L., 223, 408n3
Wood, B., 147, 149, 150 Ziganshin, I., 354, 360, 363, 364
Wood, R.M., 188, 189, 190, 204, 217 Zignago, S., 251, 393
World Confederation of Labour (WCL), 268 Zimbabwe, 217
World Trade Organization (WTO), 26, 32–33, 39, constitutional referendum in, 33
280–93 Zimelis, A., 264, 270
sanctions in conflict, 282–83 Zurawicki, L., 371
security exceptions under Article XXI, 283–85 Zürn, M., 239
World Travel and Tourism Council (WTTC), 351 Zylkin, T., 392
Wright, J., 54, 160, 182, 188, 196, 197, 202, 300
Wu, C.F.J., 254

Handbook Economic Sanctions

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Handbook Economic Sanctions

Uploaded by

Copyright:

Available Formats

© Editor and Contributors Severally 2021

Edward Elgar Publishing, Inc.

A catalogue record for this book

Library of Congress Control Number: 2021947944

This book is available electronically in the

ISBN 978 1 83910 271 4 (cased)

Peter A.G. van Bergeijk - 9781839102721

List of contributors vii

1 Introduction to the Research Handbook on Economic Sanctions 1

PART I THE VALUE OF LARGE-N DATA SOURCES

2 Economic sanctions in the twenty-first century 26

PART II SANCTION MECHANISMS

11 Secondary sanctions mechanism revisited: the case of US sanctions

PART III APPEARANCES OF SANCTIONS

13 Imposing sanctions versus posing in sanctioners’ clothes: the EU

PART IV INTENDED AND UNINTENDED IMPACTS

Peter A.G. van Bergeijk - 9781839102721

Peter A.G. van Bergeijk - 9781839102721

Peter A.G. van Bergeijk - 9781839102721

ANC African National Congress

Peter A.G. van Bergeijk - 9781839102721

UNWTO United Nations World Tourism Organization

Peter A.G. van Bergeijk - 9781839102721

1.1 THE EXPANDING UNIVERSE OF SANCTION KNOWLEDGE

Peter A. G. van Bergeijk - 9781839102721

Meta-analysis holds promise for a better understanding of the heterogeneity of findings

Peter A. G. van Bergeijk - 9781839102721

Subject and method Chapter

Using complex numerical evaluations, such as Qualitative Comparative Analysis or

1.2 THE SANCTIONS TSUNAMI

Peter A. G. van Bergeijk - 9781839102721

Average number of sanctions by decade

Peter A. G. van Bergeijk - 9781839102721

Figure 1.2 Development of sanctions impositions, by sanction type (1950–2019)

Peter A. G. van Bergeijk - 9781839102721

Trade Financial Travel Other Total

Peter A. G. van Bergeijk - 9781839102721

1.3 THE ACADEMIC DISCOURSE ON SANCTIONS

Peter A. G. van Bergeijk - 9781839102721

Source: Google Scholar, accessed December 31, 2020.

success failure effective

Note and source: see Figure 1.1.

Peter A. G. van Bergeijk - 9781839102721

Source: see Figure 1.4.

Peter A. G. van Bergeijk - 9781839102721

Diagram 1.2 The sanctions black box

Peter A. G. van Bergeijk - 9781839102721

Peter A. G. van Bergeijk - 9781839102721

1.4 ORGANIZATION OF THE HANDBOOK AND INTRODUCTION

1.4.1 Data: The Large-N Data Sets

Peter A. G. van Bergeijk - 9781839102721

Chapter 4 by Aleksandra Kirilakha, Gabriel J. Felbermayr, Constantinos Syropoulos, Erdal

1.4.2 Sanctions Mechanisms

Peter A. G. van Bergeijk - 9781839102721

Peter A. G. van Bergeijk - 9781839102721

1.4.3 Appearances and Imaging

Peter A. G. van Bergeijk - 9781839102721

Peter A. G. van Bergeijk - 9781839102721

1.4.4 Economic Impacts

Peter A. G. van Bergeijk - 9781839102721

1.5 WHAT NEXT?

Peter A. G. van Bergeijk - 9781839102721

Peter A. G. van Bergeijk - 9781839102721

Peter A. G. van Bergeijk - 9781839102721

List of contributors vii

1 Introduction to the Research Handbook on Economic Sanctions 1

PART I THE VALUE OF LARGE-N DATA SOURCES

PART II SANCTION MECHANISMS

11 Secondary sanctions mechanism revisited: the case of US sanctions

PART III APPEARANCES OF SANCTIONS

13 Imposing sanctions versus posing in sanctioners’ clothes: the EU

PART IV INTENDED AND UNINTENDED IMPACTS

1.3 THE ACADEMIC DISCOURSE ON SANCTIONS

1.4 ORGANIZATION OF THE HANDBOOK AND INTRODUCTION