RESEARCH HANDBOOK ON ECONOMIC SANCTIONS
Research Handbook on Economic
Sanctions
Edited by
Peter A.G. van Bergeijk
Professor of International Economics and Macroeconomics,
International Institute of Social Studies, Erasmus University,
The Hague, the Netherlands
WITH THE ASSISTANCE OF GINA MACATANGAY LEDDA
Cheltenham, UK • Northampton, MA, USA
© Editor and Contributors Severally 2021
Cover image: © Peter A.G. van Bergeijk, Broken Links, lithography, 2020.
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EEP BoX
Contents
List of contributors
List of abbreviations
1
vii
x
Introduction to the Research Handbook on Economic Sanctions
Peter A.G. van Bergeijk
1
PART I THE VALUE OF LARGE-N DATA SOURCES
2
Economic sanctions in the twenty-first century
Gary Clyde Hufbauer and Euijin Jung
3The Threat and Imposition of Economic Sanctions data project:
a retrospective
T. Clifton Morgan, Navin A. Bapat, and Yoshiharu Kobayashi
4The 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
5
UN targeted sanctions: historical development and current challenges
Thomas J. Biersteker and Zuzana Hudáková
6Publication bias of economic sanctions research: a meta-analysis of the
impact of trade linkage, duration and prior relations on sanctions success
Binyam A. Demena, Alemayehu S. Reta, Gabriela Benalcazar Jativa,
Patrick B. Kimararungu, and Peter A.G. van Bergeijk
26
44
62
107
125
PART II SANCTION MECHANISMS
7
The public choice approach to international sanctions: retrospect and prospect
Dennis Halcoussis, William H. Kaempfer, and Anton D. Lowenberg
152
8Making sanctions work: promoting compliance, punishing violations,
and discouraging sanctions busting
Bryan R. Early
167
9
187
Economic sanctions and political stability and violence in target countries
Dursun Peksen
10The internal opposition effect of international sanctions: insights from
a qualitative comparative analysis
Julia Grauvogel
v
202
vi Research handbook on economic sanctions
11Secondary sanctions mechanism revisited: the case of US sanctions
against North Korea
Baran Han
12 Researching firms and sanctions: theoretical and methodological considerations
Michal Onderco and Reinout A. van der Veer
223
238
PART III APPEARANCES OF SANCTIONS
13Imposing sanctions versus posing in sanctioners’ clothes: the EU
sanctions against Russia and the Russian counter-sanctions
Matěj Bělín and Jan Hanousek
249
14 Trade preference suspensions as economic sanctions
Clara Portela
264
15 Economic sanctions and the WTO
Maarten Smeets
280
16 Negative and positive sanctions
Raul Caruso
297
17 Economic sanctions within the Graph Model for Conflict Resolution
Bader A. Sabtan, D. Marc Kilgour, and Rami Kinsara
309
PART IV INTENDED AND UNINTENDED IMPACTS
18 The impact of sanctions on the banking system: new evidence from Iran
Sajjad Faraji Dizaji
330
19 Tourism and sanctions
C. Michael Hall and Siamak Seyfi
351
20 FDI and sanctions
Irina Mirkina
369
21 In and out of the penalty box: U.S. sanctions and their effects
on international trade
Tristan Kohl
22 Timing the Impact of sanctions on trade
Mian Dai, Gabriel Felbermayr, Aleksandra Kirilakha Constantinos
Syropoulos, Erdal Yalcin, and Yoto V. Yotov
388
411
23Sanctioned to starve? The impact of economic sanctions on food
security in targeted states
Sylvanus Kwaku Afesorgbor
438
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
CAR
CDA
CFIUS
CFSP
CIA
CISADA
CNTS
CoCom
COW
DADM
DCCEMG
DMZ
DPRK
EBA
ECRA
EIA
EPRS
ETUC
EU
EUGSP
EUSANCT
FAO
FAT
FDI
FIRRMA
fsQCA
FTA
GATT
GDP
GHI
GMCR
GNI
GSDB
GSP
GTS
GVC
African National Congress
Capital Adequacy Ratio
Clustered Data Analysis
Committee on Foreign Investment in the United States
Common Foreign and Security Policy
Central Intelligence Agency
Comprehensive Iran Sanctions, Accountability, Divestment Act
Cross-National Time-Series Data Archive
Coordinating Committee for Multilateral Export Controls
Correlates of War
Dynamic Analysis of Dispute Management
Dynamic Common Correlated Effects Mean Group
Demilitarized Zone
Democratic People’s Republic of Korea
Everything But Arms
Export Control Reform Act
Economic Integration Agreement
European Parliament Research Service
European Trade Union Confederation
European Union
European Union’s Generalised Scheme of Preferences
European Union Sanctions
Food and Agriculture Organization
Funnel Asymmetry Test
Foreign Direct Investment
Foreign Investment Risk Review Modernization Act
fuzzy set Qualitative Comparative Analysis
Free Trade Area/Agreement
Generalised Agreement on Tariffs and Trade
Gross Domestic Product
Global Hunger Index
Graph Model for Conflict Resolution
Gross National Income
Global Sanctions Data Base
General Scheme of Preferences
General to Specific
Global Value Chain
x
Abbreviations xi
HS
HSE
HSEO
ICBM
ICCPB
ICFTU
IFPRI
ILO
INSTEX
ITUC
JCPOA
LDC
MAER-Net
MEM
MFN
MID
MNE
MRA
MTS
NATO
NGO
NKSPEA
NPM
NSA
NT
OFAC
OLS
PDVSA
PET
PoU
PPML
QCA
R2P
SALW
SDG
THAAD
TIES
TSC
TSD
UAE
UNCTAD
UNSC
Harmonized System
Hufbauer, Schott and Elliott
Hufbauer, Schott, Elliott and Oegg
Intercontinental Ballistic Missile
International Covenant on Civil and Political Rights
International Confederation of Free Trade Unions
International Food Policy Research Institute
International Labour Organization
Instrument in Support of Trade Exchanges
International Trade Union Confederation
Joint Comprehensive Plan of Action
Least Developed Country
Meta-Analysis of Economics Research Network
Mixed-Effects Multilevel Model
Most Favored Nation
Militarized Interstate Dispute
Multinational Enterprise
Meta Regression Analysis
Multilateral Trading System
North Atlantic Treaty Organization
Non-Governmental Organization
North Korea Sanctions and Policy Enhancement Act
New Public Management
National Security Agency
National Treatment
Office of Foreign Assets Control
Ordinary Least Squares
Petróleos de Venezuela, S.A.
Precision Effect Test
Prevalence of Undernourishment
Poisson Pseudo Maximum Likelihood
Qualitative Comparative Analysis
Responsibility to Protect
Small Arms and Light Weapons
Sustainable Development Goal
Terminal High Altitude Area Defense
Threat and Imposition of Economic Sanctions
Targeted Sanctions Consortium
Trade and Sustainable Development
United Arab Emirates
United Nations Commission for Trade and Development
United Nations Security Council
xii Research handbook on economic sanctions
UNWTO
USSR
VAR
V-Dem
VFR
WCL
WLS
WTO
United Nations World Tourism Organization
Union of Soviet Socialist Republics
Vector Auto Regression
Varieties of Democracy
Visiting Friends and Relatives
World Confederation of Labour
Weighted Least Squares
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 qualitative 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 enabled 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, selection 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
2 Research handbook on economic sanctions
TIES
Threats
1945–2005 and
‘non-political’
sanctions goals
GSDB
Imposed
sanctions
2000–2005
HSEO
Imposed sanctions
2005–2019
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.
4 Research handbook on economic sanctions
Table 1.2 Overview of applied methodologies in this Handbook
Subject and method
Chapter
Descriptive statistics
Discourse analysis
Game theory
Impact of sanctions
4, 5
1
11, 17
- Common correlated effects
- Gravity model
- Entropy balancing
- Hybrid VAR and differences-in-differences
- Stochastic frontier analysis
- Synthetic Control Method
Research synergy
20
21, 22
23
13
18
20
- Comparative qualitative analysis
- Meta-analysis
- Narrative review of literature
Review of case law and policies
10
6
3, 7, 8, 9, 12, 16, 19, 20
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 economic sanctions over the years 2010 to 2019 inclusive almost doubled to 482 per year from an
Average number of sanctions by decade
Introduction to the Research Handbook on Economic Sanctions 5
500
2010s
400
300
1990s
200
100
0
1960s
1950s
0
1970s
2000s
1980s
5
10
15
20
25
30
35
40
45
Average index of openness of the world economy
50
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
6 Research handbook on economic sanctions
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 uncertainty 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 economic 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
Other
1980
Trade
1990
2000
Financial
2010
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)
Introduction to the Research Handbook on Economic Sanctions 7
100%
75%
50%
25%
0%
1950
1960
1970
Trade
1980
1990
Financial
2000
2010
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
1950s
17
Financial
6
Travel
6
Other
Total
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).
8 Research handbook on economic sanctions
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 element.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 deglobalization (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 contradictions 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
Introduction to the Research Handbook on Economic Sanctions 9
25000
success
failure
effectiveness
threat
20000
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)
10 Research handbook on economic sanctions
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1950s
1960s
average *)
1970s
1980s
punishment
1990s
threat
2000s
2010s
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 consideration 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
Introduction to the Research Handbook on Economic Sanctions 11
1
Diagram 1.2
2
3
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 container 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 sanctions 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 measurement 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.
12 Research handbook on economic sanctions
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 sanctions, 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 senderfocused, 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.
Introduction to the Research Handbook on Economic Sanctions 13
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.
14 Research handbook on economic sanctions
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 unrecorded 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
Introduction to the Research Handbook on Economic Sanctions 15
economies, firms, or industries with enough market power that may actually gain economically 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 differently—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 protectionism 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 effective 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 sanctions 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 reduction 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 mobilization under sanctions. QCA clearly expands the toolkit of sanctions researchers, but Grauvogel
also points out the limitations and the need to conduct robustness checks.
16 Research handbook on economic sanctions
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 sanctions 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 countersanctions 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
Introduction to the Research Handbook on Economic Sanctions 17
results are consistent with the theoretical literature which emphasizes the difficulty of imposing 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 measures 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 success 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.
18 Research handbook on 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 economic 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 differentiation 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 advocates 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
Introduction to the Research Handbook on Economic Sanctions 19
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 continue 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 regarding 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 composition 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
20 Research handbook on economic sanctions
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 context 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 comparative 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.
Introduction to the Research Handbook on Economic Sanctions 21
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 economics 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 negative 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).
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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 applications, 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.
PART I
THE VALUE OF LARGE-N
DATA SOURCES
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 international 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 targets 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
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 headquartered 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 relations 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
28 Research handbook on economic sanctions
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 implementing 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.
Economic sanctions in the twenty-first century 29
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 eventually 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 assembling 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).
30 Research handbook on economic sanctions
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 government 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, possibly with a grant element, for infrastructure projects in adjacent and distant friendly countries.
Economic sanctions in the twenty-first century 31
How much will be expended to improve sea, rail, and road ties with China remains to be determined, 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 ambiguous. 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 vulnerable, 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 measures 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.
32 Research handbook on economic sanctions
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 damages 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 misalignment 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
Economic sanctions in the twenty-first century 33
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, participating 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 countries 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 violations (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
34 Research handbook on economic 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 perception, 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 Russianspeaking 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
Economic sanctions in the twenty-first century 35
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
36 Research handbook on economic sanctions
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 administration 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
Economic sanctions in the twenty-first century 37
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 persuade 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 twentyfirst 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 economic 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
38 Research handbook on economic sanctions
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.
Economic sanctions in the twenty-first century 39
2.6
NEW COLD WAR
New financial sanctions with systemic consequences and new trade, technology, and investment 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 technology, 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 technology—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.
40 Research handbook on 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
Economic sanctions in the twenty-first century 41
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 Initiative 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 Terrorism,” 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 Research handbook on economic sanctions
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 sanctions 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.
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in: P.A.G. van Bergeijk (ed.), Research Handbook on Economic Sanctions, Edward Elgar, Cheltenham, Chapter 23.
Ahn, D.P. and R.D. Ludema, 2020, “The Sword and the Shield: The Economics of Targeted Sanctions,” European
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Besedeš, T., S. Goldbach, and V. Nitsch, 2017, “You’re Banned! The Effect of Sanctions on German Cross-Border
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Crozet, M. and J. Hinz, 2016, “Collateral Damage: The Impact of Russia Sanctions on Sanctioning Countries’
Exports,” CEPII Working Paper, June. CEPII: Paris.
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(ed.), Research Handbook on Economic Sanctions, Edward Elgar, Cheltenham, Chapter 18.
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Kirilakha, A., G.J. Felbermayr, C. Syropoulos, E. Yalcin, and Y.V. Yotov, 2021, “The Global Sanctions Data Base:
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Economic Sanctions, Edward Elgar, Cheltenham, Chapter 4.
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in Geneva.
Economic sanctions in the twenty-first century 43
Morgan, T.C., forthcoming, “MDs Bury Their Mistakes, We Don’t Have To: Learning from Empirical Findings That
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Evidence, and Policy Implication,” Drexel University, Philadelphia.
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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, suggested 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 sanctions, 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 imposing 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
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
46 Research handbook on economic sanctions
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 sanctions 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 question. 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
The Threat and Imposition of Economic Sanctions data project 47
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.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Case Identification Number.
Start Date.
End Date.
Ongoing as of: identifies the month, day, and year of the last reported incident related to
this sanctions case.
Senders: lists the Correlates of War (COW) country codes for up to five senders.
Primary Sender: the COW country code of the primary sender.
Target State: the COW country code for the target government.
Institution: indicates if an institution was involved as sender.
Institution ID: identifies the institution involved, if any.
Target State Institution: indicates if the target is part of the institution that issues a threat
against it.
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
48 Research handbook on economic sanctions
12.
13.
14.
15.
16.
17.
18.
19.
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.
Other Issue: presents an explanation if the issue is coded as ‘other.’
Threat: Identifies if a threat occurs 0) No 1) Yes.
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.
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.
Other sanction type threatened: identifies sanction types threatened that do not fit previous
categorical definitions.
Offending Behavior Specificity:
a. Ambiguous
b. Clear.
Sender Commitment:
a. Weak
b. Moderate
c. Strong.
Threatened Target Interest:
a. General
b. Regime leadership
c. Business interest
d. Political interest
The Threat and Imposition of Economic Sanctions data project 49
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
e. Military
f. Other.
Diplomatic Sanctions:
a. Expulsion of ambassador
b. Recall of ambassador
c. Temporary closing of embassies
d. Ending diplomatic contact.
Carrots:
a. Economic payments or aid
b. Trade concessions
c. Removal of previous sanctions
d. Military aid
e. Political concessions.
Anticipated Target Economic Costs:
a. Minor
b. Major
c. Severe.
Anticipated Target Economic Costs Figure: dollar amount of anticipated costs of sanctions
to target.10
Anticipated Sender Economic Costs:
a. Minor
b. Major
c. Severe.
Anticipated Sender Economic Costs Figure: dollar amount of anticipated costs of
sanctions to sender.
Imposition: identifies if sanctions were imposed 0) No 1) Yes.
Sanction Start Date: identifies the day, month, and year when sanctions begin.
Sanction Identity: identifies the actor(s) responsible for implementing sanctions:
a. Bureaucratic
b. Legislative
c. Judicial
d. Executive
e. Government
f. International Institution.
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.
50 Research handbook on economic sanctions
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
The Threat and Imposition of Economic Sanctions data project 51
300
Imposed-sanction cases
Threat-only cases
200
100
Figure 3.1
50
–5
4
19
55
–5
9
19
60
–6
4
19
65
–6
9
19
70
–7
4
19
75
–7
9
19
80
–8
5
19
85
–8
9
19
90
–9
4
19
95
–9
9
20
00
–0
5
19
19
45
–4
9
0
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
52 Research handbook on economic sanctions
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
The Threat and Imposition of Economic Sanctions data project 53
are used over a number of cases, we might conclude that that policy is a cost-effective instrument 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 relationship 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
54 Research handbook on economic sanctions
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 shortlived. 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 duration 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.
The Threat and Imposition of Economic Sanctions data project 55
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 wellbeing 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
56 Research handbook on economic sanctions
governments, sanctions can be an effective policy to discourage states from supporting terrorism. 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 sanctions 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
The Threat and Imposition of Economic Sanctions data project 57
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.
58 Research handbook on economic sanctions
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 suggesting 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.
The Threat and Imposition of Economic Sanctions data project 59
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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 sanctions 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
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 analysis 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
64 Research handbook on economic sanctions
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
The Global Sanctions Data Base (GSDB) 65
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 regarding 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 differentiates 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 sanctions 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
66 Research handbook on economic sanctions
a) Existing Cases vs. All Active Cases
300
250
200
b) New Cases
60
Existing Cases
50
All Active Cases
(Existing Cases + New Cases)
40
100
20
50
10
0
0
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30
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1968
1971
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1998
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2010
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150
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
Travel Sanctions
Financial Sanctions
Military Sanctions
Arms Sanctions
Trade Sanctions
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
b) Share of Different Sanction Types
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
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1998
2001
2004
2007
2010
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2019
a) Frequency by Type
Other Sanctions
1950
1953
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2001
2004
2007
2010
2013
2016
2019
600
550
500
450
400
350
300
250
200
150
100
50
0
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
The Global Sanctions Data Base (GSDB) 67
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 existing 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 particular 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 NorthAfrican 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.
ia
NW
.E
sia
.A
SE
ca
S. Asia
meri
S. A
ean
Oc
S. Eu
rope
68 Research handbook on economic sanctions
uro
pe
sia
A
W.
N. Am
erica
E. Europe
E. Asia
b
Cari
ia
s
A
C. rica
e
Am
C.
W
.A
sia
S. Eu
ca
S. Asia
S. Ameri
ania
Oce
rope
ca
Afri
(a) 2019
sia
E. A
Africa
C. America
Carib
N.
e
op
Am
eric
a
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
The Global Sanctions Data Base (GSDB) 69
400
Cases with Objective: Other
350
Cases with Objective: Democracy
Cases with Objective: Human Rights
Number of Cases
300
Cases with Objective: End War
250
Cases with Objective: Terrorism
Cases with Objective: Prevent War
200
Cases with Objective: Territorial Conflict
Cases with Objective: Destabilize Regime
150
Cases with Objective: Policy Change
100
50
2019
2016
2013
2010
2007
2004
2001
1998
1995
1992
1989
1986
1983
1980
1977
1974
1971
1968
1965
1962
1959
1956
1953
1950
0
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
70 Research handbook on economic sanctions
350
300
Number of Cases
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200
150
100
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0
O
er
cy
ts
gh
Ri
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th
D
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lC
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Po
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
The Global Sanctions Data Base (GSDB) 71
100%
90%
80%
Sanctions with Success Rating:
Failed
70%
60%
Sanctions with Success Rating:
Negotiation Settlement
50%
Sanctions with Success Rating:
Partial Success
40%
30%
Sanctions with Success Rating:
Total Success
20%
10%
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2019
0%
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
72 Research handbook on economic sanctions
100%
90%
80%
70%
Other Senders
60%
EU Sanctions
50%
UN Sanctions
40%
US Sanctions
30%
20%
10%
2019
2016
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2007
2004
2001
1998
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1989
1986
1983
1980
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1950
0%
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 resolution 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 sanctions 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
The Global Sanctions Data Base (GSDB) 73
(a) US Sanctions by Type (Number)
(b) US Sanctions by Type (%)
2019
2018
2017
2016
2015
2014
2018
2019
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
0
2013
20
2012
40
2011
60
2010
80
2009
100
2008
120
2007
140
2006
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Other Sanctions
Travel Sanctions
Financial Sanctions
Military Sanctions
Arms Sanctions
Trade Sanctions
2005
160
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%
20
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
0
80%
70%
60%
50%
40%
30%
20%
10%
0%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Cases with Objective: Other
120
Cases with Objective: Democracy
Cases with Objective: Human Rights
100
Cases with Objective: End War
Cases with Objective: Terrorism
80
Cases with Objective: Prevent War
Cases with Objective: Territorial Conflict
60
Cases with Objective: Destabilize Regime
Cases with Objective: Policy Change
40
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
74 Research handbook on economic sanctions
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 sanctions 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
The Global Sanctions Data Base (GSDB) 75
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.
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Weber, P.M., and G. Schneider, “Making the World Safe for Liberalism? Evaluating the Western Sanctions Regime
with a New Dataset,” 2018.
The Global Sanctions Data Base (GSDB) 77
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,
Liechtenstein, Iceland
Russia
2015
2019
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)
78 Research handbook on economic sanctions
Table 4 A.1 (continued)
Case ID
Sanctioned State
Sanctioning State
Begin
End
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
35
Bulgaria
US
1950
1959
36
Bulgaria
US
1950
1963
37
Bulgaria
Turkey
1985
1992
38
Bulgaria
Turkey
1989
1992
39
Bulgaria
US
1989
1990
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
50
Cambodia
Japan
1975
1991
51
Cambodia
Japan
1968
1999
52
Cambodia
EU
2017
2018
53
Cambodia
Australia
1975
1992
54
Cambodia
US
2018
2019
55
Cambodia
Germany
1975
1979
56
Cambodia
Thailand
1977
1978
57
Cambodia
Australia
2018
2019
58
Cambodia
US
2019
2019
59
Cameroon
US
2019
2019
60
Canada
Russia
2014
2019
61
Canada
Taiwan
2015
2016
62
Canada
Korea (South)
2015
2016
(continued)
The Global Sanctions Data Base (GSDB) 79
Table 4 A.1 (continued)
Case ID
Sanctioned State
Sanctioning State
Begin
End
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
71
Central African Republic
US
1996
1998
72
Central African Republic
US
2012
2014
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,
Netherlands
1973
1990
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
90
China
Japan
1989
1990
91
China
Japan
1995
1997
92
China
US
2019
2019
93
Colombia
US
2003
2003
94
Colombia
EU
2002
2016
95
Colombia
US
2018
2019
96
Colombia
US
2014
2018
(continued)
80 Research handbook on economic sanctions
Table 4 A.1 (continued)
Case ID
Sanctioned State
Sanctioning State
Begin
End
97
Colombia
US
2011
2014
98
Congo (Brazzaville)
EU
1997
2001
99
Congo (Democratic Republic)
Canada
1993
1997
100
Congo (Democratic Republic)
US
2006
2019
101
Congo (Democratic Republic)
US
2012
2019
102
Congo (Democratic Republic)
US
1960
1963
103
Congo (Democratic Republic)
US
2016
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)
The Global Sanctions Data Base (GSDB) 81
Table 4 A.1 (continued)
Case ID
Sanctioned State
Sanctioning State
Begin
End
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
142
Estonia
Russia
1992
1993
143
Estonia
Russia
1993
1993
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)
82 Research handbook on economic sanctions
Table 4 A.1 (continued)
Case ID
Sanctioned State
Sanctioning State
Begin
End
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)
The Global Sanctions Data Base (GSDB) 83
Table 4 A.1 (continued)
Case ID
Sanctioned State
Sanctioning State
Begin
End
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
224
Kyrgyzstan
Uzbekistan
2010
2010
225
Kyrgyzstan
Uzbekistan
2014
2014
226
Kyrgyzstan
Uzbekistan
2013
2014
227
Kyrgyzstan
Uzbekistan
2000
2000
228
Kyrgyzstan
Uzbekistan
2001
2001
229
Kyrgyzstan
Uzbekistan
1998
1998
230
Kyrgyzstan
Uzbekistan
1999
2000
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)
84 Research handbook on economic sanctions
Table 4 A.1 (continued)
Case ID
Sanctioned State
Sanctioning State
Begin
End
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
265
Nepal
India
2005
2005
266
Nepal
US
2005
2005
267
Nepal
UK
2005
2005
268
Nepal
India
1962
1965
269
Nigeria
US
2003
2019
270
Nigeria
Czechoslovakia
1968
1970
271
Nigeria
UN
2014
2019
272
Nigeria
US
2013
2019
(continued)
The Global Sanctions Data Base (GSDB) 85
Table 4 A.1 (continued)
Case ID
Sanctioned State
Sanctioning State
Begin
End
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
279
Pakistan
India
2001
2002
280
Pakistan
Netherlands
2007
2008
281
Pakistan
US
2012
2013
282
Pakistan
US
2018
2019
283
Pakistan
India
1971
1976
284
Pakistan
South Africa
1999
2001
285
Pakistan
US
2018
2019
286
Pakistan
US
2019
2019
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
Rica, Dominican Republic
1962
1963
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,
Czechoslovakia
US
1961
1991
300
Portugal
India
1954
1975
301
Portugal
India
1954
1954
302
Qatar
Saudi Arabia, UAE, Bahrain,
Egypt
2017
2019
303
Qatar
Mauritania, Djibouti, the
Comoros, Jordan, Libya, Yemen,
Niger
2017
2019
304
Qatar
Chad
2017
2018
(continued)
86 Research handbook on economic sanctions
Table 4 A.1 (continued)
Case ID
Sanctioned State
Sanctioning State
Begin
End
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)
The Global Sanctions Data Base (GSDB) 87
Table 4 A.1 (continued)
Case ID
Sanctioned State
Sanctioning State
Begin
End
341
Taiwan
US
1994
1995
342
Taiwan
US
2013
2019
343
Taiwan
US
1950
1953
344
Tajikistan
Uzbekistan
2009
2009
345
Tajikistan
Uzbekistan
2010
2010
346
Tajikistan
Uzbekistan
2012
2012
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,
Netherlands, Sweden
2005
2007
358
Uganda
Sweden
2014
2014
359
UK
Spain
1966
1984
360
UK
League of Arab States
1973
1974
361
Ukraine
Russia
2006
2006
362
Ukraine
Russia
2009
2009
363
Ukraine
Russia
2014
2014
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)
88 Research handbook on economic sanctions
Table 4 A.1 (continued)
Case ID
Sanctioned State
Sanctioning State
Begin
End
376
Venezuela
Switzerland
2018
2019
377
Venezuela
US
2017
2019
378
Venezuela
US
2019
2019
379
Yemen
US
2017
2019
380
Yugoslavia (former)
Germany
1957
1968
381
Zimbabwe
UK
2002
2009
Table 4 A.2
Year
Evolution of Sanctions by Type
Trade
Sanctions
Arms
Sanctions
Military
Assistance
Sanctions
Financial
Sanctions
Travel
Sanctions
Other
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)
The Global Sanctions Data Base (GSDB) 89
Table 4 A.2 (continued)
Year
Trade
Sanctions
Arms
Sanctions
Military
Assistance
Sanctions
Financial
Sanctions
Travel
Sanctions
Other
Sanctions
Total
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)
90 Research handbook on economic sanctions
Table 4 A.2 (continued)
Year
Trade
Sanctions
Arms
Sanctions
Military
Assistance
Sanctions
Financial
Sanctions
Travel
Sanctions
Other
Sanctions
Total
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
The Global Sanctions Data Base (GSDB) 91
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.
92 Research handbook on economic sanctions
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.
93
US sanction against Cuba
based on proclamation
3447
Unilateral (Full trade
sanction) (Total trade
sanction)
US sanction against
Liberia based on E.O.
13348
UN sanction against Iran
based on resolution 1696
Multilateral (Partial trade
sanction) (Export sanction)
Unilateral (Partial trade
sanction) (Import sanction)
Case
Trade Sanctions
In Section 2, the Executive order states that except to the extent
provided in regulations, orders, directives, or licenses that may be
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.
In paragraphs 2 and 3 the proclamation states that the president does
2. hereby prohibit, effective 12:01 A.M., Eastern Standard Time,
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
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.
In paragraph 5 of this resolution the UN calls upon all States, in
accordance with their national legal authorities and legislation and
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.
Formulation
Table 4 B.1 Different Types of Sanctions. Historical Examples
(continued)
E.O. 13348 of July 22,
2004
US Proclamation 3447
(1962)
UN Resolution 1696
(2006)
Reference
94
SWIFT sanction against
Iran
Multilateral
EU sanction against
Mali based on Council
Conclusions on Mali from
January 18, 2013
Multilateral
US sanction against Haiti
UN sanction against Iran
based on resolution 1737
Multilateral
Unilateral
Case
Financial Sanctions
Table 4 B.1 (continued)
In February 2012 the Belgium-based SWIFT, which provides banks
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.
As a result of the election boycott and human right violations that
happened in Haiti in November 2000, the US withheld governmentto-government economic aid to Haiti in 2001 as per the Foreign
Operations Appropriations Act for FY2001. The aid was resumed
in 2004 when the new parliament was elected and there was
improvement in human rights.
4. Political progress is essential in order to ensure Mali’s long-term
stability. To that end, the EU urges the Malian authorities to adopt
and implement a roadmap for the restoration of democracy and
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
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.
In paragraph 6 of the UN resolution 1737 (2006) it is stated that
all States shall also take the necessary measures to prevent the
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.
Formulation
(continued)
Foreign Operations
Appropriations Act for
FY2001
European Union Council
Conclusions on Mali from
January 18, 2013
UN Resolution 1737
(2006)
Reference
95
Reciprocal
Armenia-Azerbaijan
border closure, 1989
Russia sanction against
Georgia, October 2006
Unilateral
The Nagorno-Karabakh War is an ethnic and territorial conflict
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.
As a consequence of tensed relations between Russia and Georgia
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.
UN sanction against
In paragraph 3 of the UN resolution 1054 (1996) it is stated that all
Sudan based on resolution states shall a) Significantly reduce the number and the level of the
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.
Multilateral
Formulation
Case
Travel Sanctions
Table 4 B.1 (continued)
(continued)
UN Resolution 1054
(1996)
Reference
96
US sanction against
Afghanistan, Taliban
regime based on 61 FR
33313
UN sanction against
Lebanon based on
resolution 1701
Multilateral
Australia sanction against
Russia from September
1, 2014
Unilateral
Unilateral
Case
Arms Sanctions
Table 4 B.1 (continued)
In paragraph 15, the Security Council decides further that all States
shall take the necessary measures to prevent, by their nationals or
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.
The US imposed arms sanction on Afghanistan in June 1996 after
the Taliban rule was established there. The regime was notorious
for its extremist views and provided home to al-Qaeda and Osama
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.
Australian law prohibits the direct or indirect supply, sale or transfer
to Russia, for use in Russia, or for the benefit of Russia, of the
following ‘export sanctioned goods’ for Russia: arms or related
matériel; and items suited to any of the following categories of
exploration and production projects in Russia, including its Exclusive
Economic Zone and Continental Shelf: (i) oil exploration and
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.
Formulation
(continued)
UN Resolution 1701
(2006)
61 FR 33313
Expanded sanctions
against Russia from
September 1, 2014
(Australian Government
website-Sanctions
Regimes-Russia)
Reference
97
Turkey sanction against
Cyprus from April 1987
Unilateral
UN sanction against
Lebanon based on
resolution 1701
Multilateral
Case
Switzerland sanction
against Somalia from
May 13, 2009
Unilateral
Other Sanctions
Case
Military Assistance
Table 4 B.1 (continued)
The Turkish restrictive measures were originally introduced in April
1987 and concerned exclusively the prohibition of Cyprus flagged
vessels to call at Turkish ports. In May 1997 Turkey issued new
instructions to its ports and harbours to clarify uncertainties arising
from the imposition of the restrictions, thus extending them against
vessels under a foreign flag (of any nationality) sailing to Turkish
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)
Formulation
In paragraph 15, the Security Council decides further that all States
shall take the necessary measures to prevent, by their nationals or
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; 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;
1. The supply, sale and transit of armaments of all kinds, including
weapons and ammunition, military vehicles and equipment,
paramilitary equipment and accessories and spare parts therefor, to
Somalia are prohibited.
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.
Formulation
(continued)
Republic of Cyprus
Ministry of Foreign
Affairs website,
Turkish Measures
Against Cyprus’
Shipping
Reference
UN Resolution 1701
(2006)
Verordnung
über Massnahmen
gegenüber Somalia
vom 13. Mai 2009
Reference
98
Commonwealth
Fiji Islands’ membership lapsed in 1987, after a military coup imposed
sanction against Fiji a constitution contrary to Commonwealth principles, and returned to
membership in October 1997, when it had embarked on constitutional
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
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.
Multilateral
Reference
The Commonwealth
website (Withdrawals
and Suspensions)
PSC/PR/COMM.
In paragraph 8, the AU Council decides, in the light of the foregoing, to
(CCCLXIII)
immediately suspend the participation of the CARin all AU activities,
as well as to impose sanctions, including travel ban and asset freeze, on
leaders of the Seleka group, as indicated in the attached Annex, pending
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.
African Union
sanction against
Central African
Republic from
March 25, 2013
Multilateral
Formulation
Case
Other Sanctions
Table 4 B.1 (continued)
(continued)
99
Case
US sanction against Venezuela
based on 71 FR 47554
Japan sanction against Russia
(2014)
Policy Change
Unilateral
Unilateral
The Japanese government released this list of new [targeted]
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)
SUMMARY: Notice is hereby given that the United States
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.
Formulation
Table 4 B.2 Different Objectives of Sanctions. Historical Examples
sputniknews.com
71 FR 47554
Reference
(continued)
100
UK sanction against Argentina,
1982
Unilateral
On April 3, the British government also broke diplomatic
relations with Argentina and imposed economic sanctions.
These sanctions, which were clarified over the next few
days, included a freeze on Argentine assets in British banks
(valued at about $1.5 billion), embargo of arms sales to
Argentina, suspension of export credit insurance, and a ban
on Argentine imports.
(continued)
Lisa L. Martin, Institutions
and Cooperation: Sanctions
during the Falkland Islands
Conflict, International Security,
Volume 16, Issue 4 (Spring,
1992), 143–178.
Reference
Case
Territorial Conflict
Formulation
Agence France Presse
US sanction against Niger, 2009 The United States will suspend about 27 million dollars in
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)
Reference
Unilateral
Formulation
Case
Destabilize Regime
Table 4 B.2 (continued)
101
Case
UN sanction against Liberia
based on resolution 1521
Prevent War
Multilateral
Table 4 B.2 (continued)
Reference
(continued)
UN Resolution 1521 (2003)
Calling upon all States in the region, particularly the
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
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.
Formulation
102
E.O. 13399 of April
US sanction against Syria based President of the United States of America, determine that
25, 2006
on E.O. 13399
it is in the interests of the United States to (1) assist the
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)
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.
Reference
Unilateral
Formulation
Case
Terrorism
Table 4 B.2 (continued)
(continued)
103
Case
EU sanction against Sudan
based on 2005/411/CFSP
End War
Multilateral
Table 4 B.2 (continued)
Reference
(continued)
In paragraph 3, the Council deems it appropriate to maintain Council Common Position
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).
Formulation
104
Case
Canada sanction against
Belarus, 2006
Human Rights
Unilateral
Table 4 B.2 (continued)
Reference
(continued)
Government of Canada
From the Export Controls to Belarus: 1. This Notice is
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
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.
Formulation
105
Case
EU sanction against GuineaBissau based on Council
Regulation No 377/2012
Democracy
Multilateral
Table 4 B.2 (continued)
Reference
(continued)
EU Council Regulation
Decision 2012/237/CFSP provides for the adoption of
No 377/2012
restrictive measures against certain persons, entities and
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
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.
Formulation
106
Case
EU sanction against Tunisia
based on 2011/72/CFSP
Other Objectives
Multilateral
Table 4 B.2 (continued)
Reference
In Article 1, it is stated: 1. All funds and economic resources EU Council Decision
2011/72/CFSP
belonging to, owned, held or controlled by persons
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.
Formulation
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, telegraphic, 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
108 Research handbook on economic sanctions
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 resolution 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 implementation, 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 regulatory 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,
110 Research handbook on economic sanctions
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 prominent 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 different 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; economic, 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 information 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
UN targeted sanctions: historical development and current challenges 111
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, stigmatizing 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), effectiveness 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 instrument of policy than they are often thought to be.
112 Research handbook on economic sanctions
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 sanctions 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 contrast, 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 violence 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. Nonproliferation 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 targeting 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.
UN targeted sanctions: historical development and current challenges 113
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 discriminating 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 sancTable 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).
114 Research handbook on economic sanctions
tions applied on neighbouring countries due to their alleged systematic evasion of existing sanctions, 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 instruments, 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 strengthening 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
UN targeted sanctions: historical development and current challenges 115
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 mandatory, 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 population. Second, the measures of effectiveness have been expanded from those originally conceptualized 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
1 2
`
2
2
1
3
4
3
1
3
1
4
2
2
3
5
2
1
1
3
4
1
2
1
2
2
2
1
5
1
1
2
3
3
3
2
4
4
4
1
2 3
1
3 4
4
1
5
3
5
1
1
4
5
2
1
6
4
5
78
1
6
2
6
Figure 5.1
Scope of UNSanctionsApp research (August 2020)
Cease hostilities/peace enforcement
Counter-terrorism
Democracy/political transition support
Non-proliferation
Responsibility to protect (R2P)
Comprehensive sanctions episodes
Primary objectives
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
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
1 2
45
UN targeted sanctions cases
FRY I (Serbia) 1
2
Somalia/Eritrea 1
Libya I
1
2
12 3
Haiti
Liberia
1
Angola
1
Rwanda
Sudan I
Sierra Leone
FRY II (Kosovo)
ISIL (Da’esh)/Al-Qaida/Associates
Eritrea-Ethiopia
Iraq
DRC
Sudan II
Côte d’Ivoire
Lebanon
DPRK
Iran
Libya II
Taliban
Guinea-Bissau
Central African Republic
Yemen
South Sudan
Mali
116 Research handbook on economic sanctions
UN targeted sanctions: historical development and current challenges 117
Table 5.2 UN targeted sanctions effectiveness by purpose (1991–2020)16
Coerce
Effective
Constrain
Signal
n
%
n
%
n
%
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
118 Research handbook on economic sanctions
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 institutions 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 territory, 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 enforcement 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.
UN targeted sanctions: historical development and current challenges 119
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, experience 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 sanctioned 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.
120 Research handbook on economic sanctions
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 visible, 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 allegedly 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 independent 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 contributions 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.
UN targeted sanctions: historical development and current challenges 121
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 dealing 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
122 Research handbook on economic sanctions
developed in the late 1990s and early 2000s to replace the harmful effects of comprehensive 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.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
UN General Assembly resolution 1514 (XV) of 14 December 1960.
This followed a UN arms embargo on the Yugoslav Federation imposed in September 1991.
For additional information on the individual UN sanctions cases, see Biersteker et al. (2018, 2020).
The programme, however, became marred by mismanagement and corruption. See, for example, Gordon (2010).
The up-to-date version is available at https://unsanctionsapp.com/.
For more information about the two datasets, see Biersteker et al. (2018).
For a more detailed comparison between the three datasets, see Biersteker et al. (2018).
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).
Note that not all purposes are present in each sanctions episode.
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).
For more information on the relationship between UN sanctions and regional sanctions, see Brzoska (2015) and
Charron and Portela (2016).
UNSanctionsApp can be accessed at https://unsanctionsapp.com/.
In addition, UNSanctionsApp also includes information about three comprehensive UN sanctions episodes.
For more information about the App, please consult the App’s ‘User guide’ as well as the ‘About us’ section.
For the details of how the overall score is calculated, see the ‘User guide’ section of the App.
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.
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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.
UN targeted sanctions: historical development and current challenges 123
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
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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’,
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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.
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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
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Galtung, J. (1967), ‘On the effects of international economic sanctions, with examples from the case of Rhodesia’,
World Politics, 19 (3), 378–416.
Giumelli, F. (2011), Coercing, Constraining and Signalling: Explaining UN and EU Sanctions After the Cold War,
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43–49.
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Harvard University Press.
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479–99.
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124 Research handbook on economic sanctions
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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 inconclusiveness, 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 variables 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 observation 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
126 Research handbook on economic sanctions
a) Trade linkage
8
6
4
2
0
−2
−4
−6
1985
1990
1995
2000
2005
2010
2015
2020
2010
2015
2020
2010
2015
2020
b) Sanction duration
2
1
0
−1
−2
−3
−4
−5
1985
1990
1995
2000
2005
c) Prior relations
5
4
3
2
1
0
−1
−2
−3
−4
1985
1990
1995
2000
2005
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 characteristics 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 primary 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 literature. 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
128 Research handbook on economic sanctions
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 qualitative, 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 systematically 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
> 0. Also,
∂Cy
the production possibilities frontier is standard: y = φ(x) with
∂ϕ
∂x
< 0 and
∂2 ϕ
∂x 2
< 0 (the function
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
Publication bias of economic sanctions research 129
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 notrade 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)
x
(6.1)
∂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
130 Research handbook on economic sanctions
autarky production combination (xa, φ(xa)) and the free trade production combination xp,t,φ(xp,t).
∂s (x )=0. Likewise, if π = 1, then
If π = 0, then xa, φ(xa) is the solution since π = 0 implies that ∂x
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
of the first order condition becomes π ∂2 t2 + (1− π ) ∂2 s2 dx = ( ∂s − ∂t ) dπ and as the first order
∂x
∂x
∂x
∂x
condition implies that
∂t
∂x
=
( π −1) ∂∂ xs
π
{
}
, we may rewrite this as
dx
dπ
=
{
π π
∂s
∂x
2
∂ t +(1−π ) ∂2 s
∂ x2
∂ x2
}
< 0 so that we have
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 metaanalysis 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.
Publication bias of economic sanctions research 131
Table 6.1 Search list of keywords, selected primary studies and collected observations
Database
Categories
Keywords
Results
returned
(selected)
Observations
Google
Scholar & Web
of Science
(ISI Web of
Knowledge)
trade linkage
Economic sanctions, economic
coercion*, sanction* threat,
success or failure*, work,
sanction and outcomes*,
episodes, determinant*, cost*,
result*, culture*, effectiveness*
198 (33)
174
duration
economic sanctions, sanctions*,
success of economic sanctions,
sanction*outcome*, sanction*
duration, sanction time,
sanctions episode*, sanctions
imposition*, length sanction
episode*
210 (15)
77
prior relations
Economic sanctions, economic
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
360 (24)
83
We use the so-called all-set, constructed through coding all relevant regressions in all studies, because the number of available studies is limited and we want to use within-study information (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
132 Research handbook on economic sanctions
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
linkage
Prior
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
Duration
*
*
+
*
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
(2015)
International Studies Quarterly
*
+
*
Bapat and Kwon (2015)
International Interactions
+
van Bergeijk and Siddiquee
(2017)
International Interactions
*
+
–
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.
Publication bias of economic sanctions research 133
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:
tij ≡
effectij
Seij
⎛ 1 ⎞
⎟ + eij
= β1 + β0 ⎜⎜
⎟
⎝ Seij ⎠
(6.3)
( )
tij is the individual t-value reported in regression i from study j, Se1 the inverse of its standard
ij
u
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 indicates 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
( )
134 Research handbook on economic sanctions
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 duration 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
–0.203
0.164
174
–0.527
0.120
0.014
0.016
174
–0.016
0.045
Trade linkage
Simple average effect
Weighted average
effect
Duration
Simple average effect
–0.440**
0.077
77
–0.5948
–0.2852
Weighted average
effect
–0.075**
0.028
77
–0.1310
–0.0186
Simple average effect
0.400
0.055
83
0.2916
0.5089
Weighted average
effect
0.312**
0.047
0.2192
0.4042
Prior relations
83
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.
Publication bias of economic sanctions research 135
Trade-linkage
Logarithm of the precision (1/SE)
8
6
4
2
0
–2
–10
–5
0
Estimate of the trade-linkage effect
5
Logarithm of the precision (1/SE)
Sanction Duration
5
4
3
2
1
0
–2
–1.5
–1
–.5
Estimate of the duration effect
0
.5
Prior-relation
Logarithm of the precision (1/SE)
3
2
1
0
–1
Figure 6.2
0
1
Estimate of the prior-relations effect
2
Funnel plots of the reported estimates on economic sanctions success
136 Research handbook on economic sanctions
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 success 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
Variables
Bias (FAT)
Coefficient
CDA
t-value
0.907**
3.32
–0.19
Genuine effect (PET)
–0.0003
Observations
174
Studies
33
Coefficient
t-value
0.727
1.96
0.002
0.66
174
33
Panel B: Duration
MEM
Variables
Coefficient
CDA
t-value
Coefficient
t-value
Bias (FAT)
–1.384**
–3.01
–1.7624*
–2.25
Genuine effect (PET)
0.004
0.59
–0.005
–0.51
Observations
77
Studies
15
77
15
Panel C: Prior relations
MEM
Variables
Coefficient
CDA
t-value
Coefficient
t-value
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).
Publication bias of economic sanctions research 137
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 estimatelevel of bias. This is the difference between, on the one hand, the underlying genuine metaeffect 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).
138 Research handbook on economic sanctions
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
1.815
3.120
0
11.548
0.340
0.537
0.019
3.658
0.275
0.447
0
1
No. of citations of the lead or corresponding author
a
No. of observations used by the study
a
A study is co-authored
a
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/
others)
0.692
0.463
0
1
The publication year of the study (base, 1985)
23.620
8.393
0
33
Idem squared
628.14
335.14
0
1089
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
Publication bias of economic sanctions research 139
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 researchers. 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
140 Research handbook on economic sanctions
Table 6.6 Determinants of publication bias (restricted maximum likelihood) dependent
variable = ǀβ1jǀ
Moderator variable
Peer-Reviewed
Co-authored
Journal rank
Publication year (base 1985)
(1)
(2)
(3)
(4)
(5)
Specific
Specific
MEM
Robust se
CDA
–0.467*
–0.329*
–0.188
–0.329*
–0.329
(0.174)
(0.172)
(0.361)
(0.142)
(0.277)
–0.519*
–0.489*
–0.468
–0.489**
–0.489
(0.180)
(0.175)
(0.294)
(0.154)
(0.302)
0.695**
0.487*
0.447
0.487**
0.487
(0.177)
(0.178)
(0.332)
(0.154)
(0.287)
0.018*
–0.181**
–0.140*
–0.181**
–0.181*
(0.009)
(0.045)
(0.071)
(0.046)
(0.076)
0.005**
0.004*
0.005**
0.005*
(0.001)
(0.001)
0.001
(0.002)
Idem squared
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
Publication bias of economic sanctions research 141
Absolute value of publication bias
5
4
3
2
1
0
1985
Figure 6.3
1988
1991
1994
1997 2000 2003 2006 2009
Publication year of the study
2012
2015
2018
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 subsamples 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.
142 Research handbook on economic sanctions
1.8
1.6
1.4
Bias (FAT)
1.2
1
0.8
0.6
0.4
0.2
0
40
60
80
100
120
140
160
180
Number of observation in the meta-regression analysis
trade linkage
Figure 6.4
duration (absolute value)
200
220
prior relations
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).
Publication bias of economic sanctions research 143
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 publication 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 methodology 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. Metaanalysis 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 Marrewijk, 1992, for details) and reformulated in dynamic rather than static format (see Di Maio and Valente, 2013).
144 Research handbook on economic sanctions
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 advantage. 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 variable (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 #)
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147
1
3
11
5
Whang et al. (2013)
Bergeijk (1989)
Bergeijk (1994)
Bergeijk (2009)
2
3
Elliott and Uimonen (1993)
14
3
Nooruddin (2002)
Allen (2008)
24
Kim (2013)
Major (2012)
1
Kim (2009)
3
1
Hufbauer et al. (1985)
1
2
Shagabutdinova and Berejikian (2007)
Bonetti (1998)
2
Dehejia and Wood (1992)
Lam (1990)
1
Lektzian and Souva (2007)
3
8
Lektzian and Patterson (2015)
1
2
Dashti-Gibson et al. (1997)
Bergeijk and Siddiquee (2017)
2
Hart (2000)
7
Ang and Peksen (2007)
Dropped
observations
Drury (1998)
Dropped individual studies
Trade Linkage
0.732**
0.713**
0.741**
0.798**
0.776**
0.785**
0.744**
0.701**
0.709**
0.740**
0.767**
0.816**
0.818**
0.658**
0.793**
0.793**
0.815**
0.845**
0.849**
0.822**
0.801**
0.841**
FAT coefficient
0.0001
0.00001
0.0001
–0.00004
–0.00004
0.0003
–0.00002
0.0002
0.0001
0.00003
–0.0001
–0.0001
–0.0006
0.0030
–0.00003
–0.00004
–0.0004
–0.0001
–0.0002
–0.00004
–0.00004
–0.0003
PET coefficient
MEM
Appendix A.6 Meta-Regression Analysis for the FAT-PET: Jack-knife experiment
0.628
0.527
0.625
0.659
0.652
0.626
0.623
0.507
0.606
0.640
0.646
0.667
0.625
0.487
0.657
0.655
0.666
0.674
0.712
0.668
0.660
0.686
FAT coefficient
0.002
0.002
0.002
0.002
0.002
0.003
0.002
0.002
0.002
0.002
0.002
0.002
0.001
0.005
0.002
0.002
0.002
0.002
0.002
0.002
0.002
0.002
PET coefficient
CDA
(continued)
169
157
168
170
170
168
166
160
168
170
168
168
147
170
170
169
169
170
163
169
169
164
Total
observations
148
Hatipoglu (2010)
3
5
Hull (2015)
Bapat and Kwon (2015)
8
Woo and Verdier (2014)
1
1
Drezner (2000)
10
2
Chan (2009)
Peterson (2016)
3
Kleinberg (2018)
Jankowitsch-Prevor et al. (2015)
2
20
Driscoll et al. (2011)
9
Dropped
observations
Hufbauer et al. (2007)
Dropped individual studies
Trade Linkage
Appendix A.6 (continued)
0.799**
0.823**
0.815**
0.881**
0.847**
0.810**
0.811**
0.889**
0.908**
0.861**
0.771**
FAT coefficient
–0.00004
–0.0001
–0.0001
–0.0002
–0.0001
–0.0001
–0.0001
–0.0002
–0.0003
–0.0002
–0.0001
PET coefficient
MEM
0.659
0.739
0.664
0.723
0.709
0.662
0.663
0.709
0.954**
0.686
0.634
FAT coefficient
0.002
0.002
0.002
0.002
0.002
0.002
0.002
0.002
0.001
0.002
0.002
PET coefficient
CDA
(continued)
171
151
170
166
163
170
169
168
151
169
162
Total
observations
149
1
Jankowitsch-Prevor et al. (2015)
5
6
13
Bergeijk (1994)
Bergeijk (2009)
3
3
Bergeijk and Siddiquee (2017)
12
Kim (2013)
Bergeijk (1989)
Chan (2009)
1
1
Hufbauer et al. (1985)
Kim (2009)
2
Dehejia and Wood (1992)
–1.395*
3
4
Dashti-Gibson et al. (1997)
Lektzian and Patterson (2015)
–1.379**
–1.388**
–0.939
–1.203*
–1.179*
–1.181*
–1.271**
–1.499**
–1.479**
–1.514**
–1.462**
–1.553**
–1.486**
2
19
Bapat and Morgan (2009)
Early (2011)
–1.499**
0.004
0.004
–0.020
0.003
0.002
0.003
0.006
0.004
0.004
0.004
0.004
0.004
0.004
0.003
0.003
PET coefficient
MEM
FAT coefficient
2
Dropped
observations
Ang and Peksen (2007)
Dropped individual studies
Sanction Duration
Appendix A.6 (continued)
–1.730*
–1.755*
–1.539
–1.552
–1.125
–1.600*
–1.575*
–1.755*
–1.755*
–1.797*
–1.816*
–1.747*
–2.444**
–1.803*
–1.778*
FAT coefficient
–0.005
–0.005
–0.019
–0.006
–0.011
–0.006
0.001
–0.005
–0.004
–0.004
–0.004
–0.005
0.002
–0.005
–0.005
PET coefficient
CDA
(continued)
76
74
71
72
64
74
65
76
76
75
73
74
58
75
75
Total
observations
150
0.885**
0.859**
0.866**
1.587**
0.916**
3
2
1
2
6
Nooruddin (2002)
Jing (2003)
Lektzian (2003)
Bergeijk (2009)
Bergeijk and Siddiquee (2017)
0.868**
0.855**
1
Jankowitsch-Prevor et al. (2015)
0.922**
0.969**
0.919**
0.867**
1.022**
0.858**
0.048
0.044
0.049
0.044
0.043
0.046
0.048
0.045
0.067
0.046
0.046
–0.190*
0.046
0.046
0.046
0.053
0.045
0.047
0.047
0.046
0.051
0.065
0.043
1.009*
1.109**
1.004*
0.984*
1.190**
0.924*
0.967*
1.002*
0.980*
0.998*
1.767**
0.971*
0.974*
0.947*
1.010*
0.816
0.977*
0.976*
0.984*
0.852*
0.788
1.040*
0.951*
1.010*
FAT coefficient
0.040
0.047
0.041
0.041
0.035
0.046
0.043
0.049
0.043
0.043
–0.206
0.044
0.044
0.045
0.054
0.051
0.044
0.045
0.043
0.056
0.059
0.037
0.047
0.031
PET coefficient
CDA
82
77
82
82
78
74
81
81
81
82
77
81
82
81
80
71
82
82
81
79
72
81
81
79
Total
observations
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.
1
6
Woo and Verdier (2014)
Hatipoglu (2010)
5
1
Kleinberg (2018)
Drezner (2000)
2
9
Allen (2008)
Hufbauer et al. (2007)
0.888**
2
Bonetti (1998)
0.877**
1
2
Hart (2000)
Lam (1990)
0.831**
0.940**
0.840**
1
12
Kim (2009)
0.868**
Kim (2013)
2
1
Dehejia and Wood (1992)
4
Hufbauer et al. (1985)
0.781**
11
Early (2011)
Lektzian and Patterson (2015)
0.786**
0.846**
0.947**
2
2
Ang and Peksen (2007)
Bapat and Morgan (2009)
0.043
PET coefficient
MEM
FAT coefficient
0.969**
Dropped
observations
4
Drury (1998)
Dropped individual studies Prior
Relations
Appendix A.6 (continued)
PART II
SANCTION MECHANISMS
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 weaponize 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
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 telecommunications 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
154 Research handbook on economic sanctions
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 determined 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
The public choice approach to international sanctions 155
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 support 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 “rallyaround-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
156 Research handbook on economic sanctions
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 sanctions 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 government’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
The public choice approach to international sanctions 157
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 instruments 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 identifies major recent contributions to each of these categories.
Thus, for example, Pond (2017) examines the process by which trade sanctions generate 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.
158 Research handbook on economic sanctions
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.
The public choice approach to international sanctions 159
Table 7.2 Classification of Literature (57 studies, 2007–2018)
Paper
1
1
McLean, et al. (2018)
X
2
Webb (2018)
3
Hultman and Peksen
(2017)
4
McCormack and
Pascoe (2017)
5
Pond (2017)
6
Van Bergeijk and
Siddiquee (2017)
7
Lektzian and Regan
(2016)
X
8
Carneiro and
Apolinário (2016)
X
9
Neuenkirch and
Neumeier (2016)
X
10
Bapat and Kwon
(2015)
11
Drezner (2015)
12
Early and Spice (2015)
13
Lektzian and Patterson
(2015)
14
Marinov and Nili
(2015)
15
Miyagiwa and Ohno
(2015)
16
Neuenkirch and
Neumeier (2015)
17
Peksen and Peterson
(2016)
18
Whang and Kim (2015)
19
Drury, et al. (2014)
20
Lektzian and Biglaiser
(2014)
21
McLean and Whang
(2014)
22
Oechslin (2014)
23
Peterson (2014)
2
3
4
5
6
7
8
9
10
11
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
(continued)
160 Research handbook on economic sanctions
Table 7.2 (continued)
Paper
1
24
Allen and Lektzian
(2013)
25
Bapat, et al. (2013)
26
Choi and Luo (2013)
27
Clemens (2013)
28
Kim (2013)
29
Peterson (2013)
30
Whang, McLean, et al.
(2013)
31
Early (2012)
32
Lopez (2012)
33
Biglaiser and Lektzian
(2011)
34
Drezner (2011)
35
Early (2011)
36
Gordon (2011)
37
Krustev and Morgan
(2011)
38
Peksen (2011)
X
39
Peterson and Drury
(2011)
X
40
Verdier and Woo
(2011)
41
Whang (2011)
42
Driscoll et al. (2010)
43
Escribà-Folch and
Wright (2010)
44
Langlois and Langlois
(2010)
45
Peksen (2010)
X
46
Peksen and Drury
(2010)
X
47
Whang (2010)
48
Bapat and Morgan
(2009)
2
3
4
5
6
7
8
9
10
11
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
(continued)
The public choice approach to international sanctions 161
Table 7.2 (continued)
Paper
49
Chan (2009)
50
Early (2009)
51
Miyagiwa (2009)
52
Morgan, Bapat, et al.
(2009)
53
Verdier (2009)
54
Allen (2008)
55
Hafner-Burton and
Montgomery (2008)
56
Yahia and Ali Salman
(2008)
57
Ang and Peksen (2007)
Total
1
2
3
4
5
6
7
8
9
10
11
X
X
X
X
X
X
X
X
X
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
162 Research handbook on economic sanctions
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 episodes 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
The public choice approach to international sanctions 163
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 liberalism 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.
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Fearon, James D., “Domestic Political Audiences and the Escalation of International Disputes,” American Political
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Gordon, Joy, “Smart Sanctions Revisited,” Ethics and International Affairs, Fall 2011, 25, 315–35.
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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.
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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
Handbook on Economic Sanctions, Edward Elgar: Cheltenham, Chapter 2.
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on Conflict Intensity,” Journal of Conflict Resolution, July 2017, 61, 1315–39.
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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
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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.
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Bargaining,” Conflict Management and Peace Science, September 2011, 28, 351–76.
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Sanctions,” Conflict Management and Peace Science, February 2014, 31, 70–93.
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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 enforcement 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
168 Research handbook on economic sanctions
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 undercutting 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 sanctions costs in terms of the total trade or investment that sanctions are meant to disrupt on paper?
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 implementing 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
170 Research handbook on economic sanctions
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 compliance 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 sanctions impose restrictions that limit or prohibit otherwise profitable or beneficial economic relations 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 communication 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 policies have grown increasingly more complicated over time, especially as part of targeted sanctions 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
Making sanctions work 171
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 capacity to impose meaningful penalties (Morgan and Bapat 2003). Monitoring sanctions compliance 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
172 Research handbook on economic sanctions
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 economic 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 commerce 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. Thirdparty 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 economic 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
Making sanctions work 173
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 sustaining 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 subject 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 relationships 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 different 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
174 Research handbook on economic sanctions
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
Making sanctions work 175
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 coordinate 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 sanctions (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 sanctions 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 commercial 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 sanctions that seek to compel their constituents to comply with sanctions. For example, Canada,
176 Research handbook on economic sanctions
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 adopting 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 programs 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 thirdparty 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 coalitions. 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 organizations 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 sanctions obligations, which can help prevent backsliding behavior (Drezner 2000).
There are limits to how helpful even international organizations can be in promoting effective sanctions. For example, not all members of international organizations that participate in
Making sanctions work 177
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 organizations 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 senders. 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 obligations 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 compliance 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
178 Research handbook on economic sanctions
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 company 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 punishing 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 effectively over the past decade, they remain highly controversial, and the enforcement challenges
they entail make them impractical for most governments to adopt. Monitoring and investigating 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 extraterritorial 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).
Making sanctions work 179
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 providing 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 sanctions diversion risks. The United States threatened to do that with the United Arab Emirates
180 Research handbook on economic sanctions
(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. policymakers 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 heavyhanded 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 retaliating 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 designate 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 effectiveness, there are three broad mechanisms to which each one can contribute: improving domestic
compliance; improving foreign compliance; and mitigating external sanctions busting. I draw
Making sanctions work 181
Table 8.1 Summarizing How Sanctions Can Be Made More Effective
Mechanism for Improving Effectiveness
Strategies for Improving
Effectiveness
Improve Domestic
Compliance
Improve Foreign
Compliance
Sanctions Capacity-Building
ü
ü
Extraterritorial Sanctions
Provisions
ü
Building Sanctions Coalitions
ü
Robust Sanctions
Implementation
ü
ü
Enforcing Sanctions
ü
ü
Coercing External Sanctions
Busters
Mitigate External
Sanctions Busting
ü
ü
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 governments 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 international 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.
182 Research handbook on economic sanctions
Mitigating external sanctions busting involves convincing actors that have no legal obligation 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 busting. 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 extraterritorial 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 concerning the implementation and enforcement of sanctions in developing sanctions evasion
strategies. If the sender has weak implementation and enforcement programs, target governments 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
Making sanctions work 183
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 enforcement 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 likelihood 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 particular 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
184 Research handbook on economic sanctions
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 influence 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.govdelivery.com/accounts/USTREAS/subscriber/new.
6. This inference was drawn from overviewing the periodic reports issued by the Panel of Experts for 1718 Committee that discuss international compliance with the UN sanctions against North Korea and the national implementation reports compiled by the 1718 Committee (UN 2020).
7. See the OFAC (2020) website for examples of these resources.
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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 restrictions, 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 sanctions 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
188 Research handbook on economic sanctions
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 associated 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 civilian 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.
190 Research handbook on economic sanctions
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
Economic sanctions and political stability and violence in target countries 191
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, including 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 antigovernment 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
192 Research handbook on economic sanctions
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 governments relative to mixed regimes. Political violence and protest are costly and irregular activities. 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 immediate 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
Economic sanctions and political stability and violence in target countries 193
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 government 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 organizations. 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
194 Research handbook on economic sanctions
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 governments’ 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
Economic sanctions and political stability and violence in target countries 195
(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 relative 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 restrictions 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 nonmilitary 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 governments 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.
196 Research handbook on economic sanctions
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 economic 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 sanctions? 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.
Economic sanctions and political stability and violence in target countries 197
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 various 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 economic sanctions are likely to incentivize target regimes to employ more repression to maintain
198 Research handbook on economic sanctions
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 associated 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
Economic sanctions and political stability and violence in target countries 199
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.
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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:
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Cheltenham, Chapter 7.
Heffington, Colton (2017), ‘Marked Targets: Coercive Diplomacy and Domestic Terrorism’, Journal of Global
Security Studies, 2 (2), 123–36.
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Hoffmann, Fredrik (1967), ‘The Functions of Economic Sanctions: A Comparative Analysis’, Journal of Peace
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Handbook on Economic Sanctions, Edward Elgar, Cheltenham, Chapter 2.
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
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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
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Krain, Matthew (2017), ‘The Effect of Economic Sanctions on the Severity of Genocides or Politicides’, Journal of
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Economic sanctions and political stability and violence in target countries 201
Lindsay, James M. (1986), ‘Trade Sanctions as Policy Instruments: A Re-Examination’, International Studies
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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 mobilization. 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
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-roundthe-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 antiregime 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 regularly 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
204 Research handbook on economic sanctions
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 generally, 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 identification 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 classical 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
The internal opposition effect of international sanctions 205
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 caseoriented’ (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).
206 Research handbook on economic sanctions
Figure 10.1
Calibration
Truth table
Minimization
Transformation of
empirical
information into set
membership scores
to create the data
matrix
Synthesization of
data by assigning
each case to one
logically possible
combination of
conditions
Collapsing truth
table into a minimal
formula explaining
the outcome
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 conditions (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
The internal opposition effect of international sanctions 207
Table 10.1 QCA applications in sanctions research
N < 100
EU cases
N ≥ 100
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
cases
Giumelli (2011): Explaining EU and
UN Sanctions after the Cold War
Non-EU cases
Boogaerts and Drieskens (2018):
The (In)Effectiveness of UN Security
Council Sanctions
Grauvogel and von Soest (2014):
Why Sanctions Fail to Instigate
Democratization in Authoritarian
Regimes
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.
208 Research handbook on economic sanctions
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 calibration 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 comprehensiveness 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 transmitted 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
The internal opposition effect of international sanctions 209
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)
210 Research handbook on economic sanctions
Table 10.2 (continued)
Sender
Target
Sanctioning Years4
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)
The internal opposition effect of international sanctions 211
Table 10.2 (continued) Sender
Target
Sanctioning Years4
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
212 Research handbook on economic sanctions
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’ authoritarian 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-government 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 configurations 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
The internal opposition effect of international sanctions 213
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 complex 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 explanatory 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
214 Research handbook on economic sanctions
intensity*
SIGNALS
EU_CIV_00; AU_CIV_10;
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*
INTENSITY
US_CIV_99; EU_MDG_09;
US_MDG_10; US_NER_09;
ECOWAS_SLE_97; UN_
SLE_97; US_ZAF_86; EU_
ZMB_96; US_ZMB_96
N of cases
Openness
Deprivation
Signals
Sanctions episodes
Intensity
Table 10.4 Anti-regime mobilization under sanctions
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.
The internal opposition effect of international sanctions 215
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 prosanctions 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 current 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
216 Research handbook on economic sanctions
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 constitutional 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 credentials 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 generated 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 empowered 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.
The internal opposition effect of international sanctions 217
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 mobilization—but only if the most important opposition movements and the senders of sanctions
pursue consistent goals. Such coherent signals of regime disapproval and opposition encouragement 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 targetstate 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
218 Research handbook on economic sanctions
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 researchers’ 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.
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.
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 negotiations. The UNSC Resolutions gradually strengthened after 2006, but as with the Iranian case,
223
224 Research handbook on economic sanctions
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 international 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 framework 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 multilateral 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.
Secondary sanctions mechanism revisited 225
T
r
a
UT
UR
US
R
dR
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 represented 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
t0 )
∂h(c, t )
stage. We assume that ∂h(c,
> 0, ∂t 0 > 0: technology improves at an increasing rate with
∂c
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
226 Research handbook on economic sanctions
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
t0 )– c
The first solution is the nonperformance equilibrium or ({r}, {d R0 }, {0}) with d R0 < h(c,
:
α U
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
as d R or the minimum punishment threat that can coerce T to accept. In this equilibrium
α U
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 technology 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 punishment 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
Secondary sanctions mechanism revisited 227
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
0
∂d
∂d
R
coerce T to accept, or R (see Proposition 2 in the Mathematical Appendix). If ∂hR ≤ ∂d
, then
∂h
∂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
0
∂d
R
toward T. On the other hand, if ∂hR > ∂d
, the minimum secondary sanction threat required to
∂h
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 gradually 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
228 Research handbook on economic sanctions
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 .
Secondary sanctions mechanism revisited 229
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 skepticism. 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 sanctions 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 previous 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
230 Research handbook on economic sanctions
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 sanctions (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 conducted 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
0
∂d
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.
Secondary sanctions mechanism revisited 231
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 attributed 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
(−12.6%)
2,634.4
(6.1%)
1,650.7
(−37.3%)
194.6
(−88.2%)
208.5
(7.2%)
Imports (B)
2,946.5
(−16.4%)
3,192.0
(8.3%)
3,328.0
(4.3%)
2,217.1
(−33.4%)
2,588.7
(16.8%)
(A) + (B)
5,430.4
(−14.7%)
5,826.4
(7.3%)
4,978.7
(−14.5%)
2,411.7
(−51.6%)
2,797.2
(16.0%)
(A) − (B)
−462.6
(−32.1%)
−557.6
(20.5%)
−1,677.3
(200.8%)
−2,022.5
(−20.6%)
−2,380.2
(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)
232 Research handbook on economic sanctions
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 sanctions, 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
Growth Rate
−1.1
3.9
−3.5
−4.1
0.4
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).
Secondary sanctions mechanism revisited 233
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
t0 )−c
was expressed as d R = h(c,
. It would be costly to give up its maturing technology, but since
α U
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-theoretical 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 livelihoods of ordinary North Koreans. The US complemented the UNSC Resolutions with secondary 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 sanction 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 consequences 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
234 Research handbook on economic sanctions
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 international 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/.
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UN Security Council (2017a) United Nations Security Council Resolution 2371. Accessed 1 March 2020 at http://
www.un.org/ga/search/view_doc.asp?symbol=S/RES/2371.
UN Security Council (2017b) United Nations Security Council Resolution 2375. Accessed 1 March 2020 at http://
www.un.org/ga/search/view_doc.asp?symbol=S/RES/2375.
UN Security Council (2017c) United Nations Security Council Resolution 2397. Accessed 1 March 2020 at http://
www.un.org/ga/search/view_doc.asp?symbol=S/RES/2397.
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
⎦
t0 ) ⎤ −c+h(c, t0 )
we assume that UT is great enough to guarantee min ⎡ −c+h(c,
, then as long as
⎣ αTRU T ,1⎦ = αTRU T
d R ≥ d R T will accept.
Secondary sanctions mechanism revisited 237
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.
U R (1− α RT d R ) − γ R h ( c, t0 ) +
∑ 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)
∞
∞
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
∞
≥ U S − γ S h ( c, t0 ) + ∑ θ j (U S − γ S h ( c, t0 + j ))
(E3)
j=1
pE ≤
∞
γS
∑ 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}.
0
∂d
R
Proposition 2 In the coercion equilibrium, if ∂hR ≤ ∂d
, pE decreases with advancement of
∂h
∂d R
∂d R0
technology. If ∂h > ∂h , pE increases with advancement of technology.
Proof for Proposition 2
Differentiating pE =
∂ pE
∂h
∂d R
∂h
=
≤
∂d R
∂h
∂d R0
∂h
.
−
∂d R0
∂h
(
−c+h(c, t0 )
αTRU T
. We see that
− d R0
∂ pE
∂h
)
α RT
α RS
(
= d R − d R0
)
α RT
α RS
> 0 if and only if
∂d R
∂h
both sides with h, we get:
>
∂d R0
∂h
and that
∂ pE
∂h
≤ 0 if and only if
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
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 (eventually) 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 (GouldDavies, 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 sanctions 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
240 Research handbook on economic sanctions
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 administering 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 targeting 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 organizing 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 noncompliance (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
Researching firms and sanctions: theoretical and methodological considerations 241
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 sanctionsbusting, 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 profitmotivated 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]).
242 Research handbook on economic sanctions
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 nearimpossible 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 statistical 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
Researching firms and sanctions: theoretical and methodological considerations 243
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 provide 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 experience 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.
244 Research handbook on economic sanctions
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 interested 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 policymakers 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.
Researching firms and sanctions: theoretical and methodological considerations 245
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, different countries adopt various modes of sanctions enforcement. Therefore, one can expect that
firms will behave differently depending on how strong the expectation of sanctions enforcement 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.
2.
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).
Although this data is usually collected for a different purpose, researchers must take extra care in guaranteeing
the validity of results.
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PART III
APPEARANCES OF SANCTIONS
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 stakeholders (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 sanctions (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 economic 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
250 Research handbook on economic sanctions
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 government, 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 government (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 addition, 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
252 Research handbook on economic sanctions
.4
15
10
.2
5
EUR (billions)
.3
.1
0
0
2010m1
2012m1
2014m1
2016m1
Date (monthly)
Sanctioned RU
Control RU (right y-axis)
2018m1
Sanctioned US
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
Imposing sanctions versus posing in sanctioners’ clothes 253
.5
.2
.4
.2
.1
EUR (billions)
.15
.3
.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 consideration 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).
254 Research handbook on economic sanctions
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 residuals 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:
CD jt ≡
Dec2018
∑
(13.3)
D jt .
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:
yijt = β0ij +
Dec 2018
∑
(
)
β1s I ⎡⎣t = s⎤⎦ + β 2s I ⎡⎣t = s⎤⎦ × sanctionsi + ε ijt ,
s=Feb 2010
(13.4)
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
Imposing sanctions versus posing in sanctioners’ clothes 255
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:
CDtDD ≡
Dec2018
∑
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 different 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
256 Research handbook on economic sanctions
Table 13.1 Sanctions on extraction equipment
Structural break at
an unknown date
Change in trade after
Aug. 2014 (bn EUR)
Importer
Date
supW
pval
R2
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
99% CI
KPSS
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.
Imposing sanctions versus posing in sanctioners’ clothes 257
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 redirected 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.
258 Research handbook on economic sanctions
Table 13.2 Sanctions on food and agricultural products
Structural break
at an unknown date
Change in trade after
Aug. 2014 (bn EUR)
Date
supW
pval
R2
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
Importer
99% CI
KPSS
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.
Imposing sanctions versus posing in sanctioners’ clothes 259
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 examining 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
EUR (billions)
10
0
−10
−20
2010m1
2012m1
2014m1
Date (monthly)
EU
2016m1
2018m1
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)
260 Research handbook on economic sanctions
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 billion 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 confidence 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 specification. 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 countersanctions 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 differencesin-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
Imposing sanctions versus posing in sanctioners’ clothes 261
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 sanctions 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
262 Research handbook on economic sanctions
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 inflicting 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).
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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 discussions 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
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 conditionality 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 intriguing 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 economic 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 industrialisation (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 development 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
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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, including 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 conditionality 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
Trade preference suspensions as economic sanctions 267
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 depending 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 emphasising 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 conditionality 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,
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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 governed 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 triggered 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
Trade preference suspensions as economic sanctions 269
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 cancelled 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 concessions, 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,
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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 existence 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 foreseeing 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 (HarneitSievers, 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).
Trade preference suspensions as economic sanctions 271
Although the idea that restrictions outside the CFSP qualify as sanctions is gaining acceptance, 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 reducing 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 cooperative 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).
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A further motivation results from the alleged ineffectiveness of suspensions in reversing 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 traditional 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 suspension 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-
Trade preference suspensions as economic sanctions 273
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 perpetrators. 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 sanctions to affect only individuals, elites and societal groups responsible for the condemned policies, 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
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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, harbours, 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, including 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 discretion 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 triggers 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
Trade preference suspensions as economic sanctions 275
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 downgrading 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.
276 Research handbook on economic sanctions
NOTES
*
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
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.
China, India and South Korea offer tariff preferences to the Least Developed Countries only.
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.
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.
As defined in the Geneva Conventions (1926 and 1956) and ILO Conventions Nos 29 and 105.
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.
EC Regulation 3835/90 of 20 December 1990.
See list in the appendix.
See Regulation (EU) No 182/2011.
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.
IFTUC was renamed International Trade Union Confederation (ITUC) after merging with the World Confederation of Labour (WCL) in 2006.
When aims are economic, one speaks of economic rather than political conditionality.
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 economic implications and of the ambition of changing behaviour.
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.
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Trade preference suspensions as economic sanctions 279
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 conditions 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 interpretation 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 generally 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
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.
282 Research handbook on economic sanctions
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 supposedly 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 circumstances, 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 competitive conditions in the domestic market. Compensation needs to be provided to the trade
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partner affected by the safeguard measures, taking account of the forgone trade opportunities. 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
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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)
(b)
(c)
to require any contracting party to furnish any information the disclosure of which it considers
contrary to its essential security interests; or
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 supplying a military establishment;
(iii) taken in time of war or other emergency in international relations; or
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 discussion 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
Economic sanctions and the WTO 285
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 considers 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 embargoes 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 meanwhile 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
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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
Economic sanctions and the WTO 287
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 application 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 underlying 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 noneconomic 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.
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2.
3.
When action is taken under Article XXI, all contracting parties affected by such action
retain their full rights under the General Agreement.
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 blocking 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 contravened 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 comprised 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
Economic sanctions and the WTO 289
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.
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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, BastiatJarosz, 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 retaliation, 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
Economic sanctions and the WTO 291
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 invocation 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 essential 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
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made in good faith, and (ii) whether the challenged measures were “not implausible” as measures 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 evaluated”. 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%
Economic sanctions and the WTO 293
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.
294 Research handbook on economic sanctions
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 members 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.
Economic sanctions and the WTO 295
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
GATT/CP.3/38; GATT/CP.3/SR.22, p. 8.
GATT/CP.3/SR.22, p. 4–5.
Analytical Index of the GATT, page 600, SR.19/12, p. 196.
GATT/CP.3/SR.20, p. 3–4.
L/4250/Add.1; L/4254, p. 17–18; MTN.GNG/NG7/W/16, 18 August 1987.
L/5319/Rev.1.
L/5317, L/5336; C/M/157, C/M/159.
The measures were removed in June 1982, after the conflict came to an end.
L/5424.
L/5426, 2 December 1982, Decision of 30 November 1982.
L/3362, 25 February 1970.
L/3362, 17S/40, para. 23, 25 February 1970.
C/M/240, p. 31; L/6661.
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. Annex 2, page 32.
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.
https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds512_e.htm.
Cf. Footnote 4.
S. Lester and H. Zhu: A proposal for Rebalancing to deal with “national security” trade restrictions, Fordham
International Law Journal, 1451–1474, page 1455.
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.
Lester, page 1451.
Mapping out a WTO Case Against Trump’s metal tariffs-Law 360. Article by Alex Lawson, 15 March 2018.
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].
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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, available 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
Handbook on Economic Sanctions, Edward Elgar, Cheltenham, Chapter 2.
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.
296 Research handbook on economic sanctions
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.
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https://fas.org/sgp/crs/row/R43895.pdf.
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Rikson, M. and Wallensteen, P. (2015), Targeting Sanctions and Ending Armed Conflicts: First Steps towards a New
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War: Social Science Findings, University Press of America, Lanham.
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pp. 119–129.
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(eds) Russian Trade Policy, Achievements, Challenges and Prospects, Routledge, pp. 66–79.
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16.
16.1
Negative and positive sanctions
Raul Caruso*
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 community (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
298 Research handbook on economic sanctions
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 governments. 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 sanctionsbusting 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
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 circumvention 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
300 Research handbook on economic sanctions
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 effectiveness 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 committed 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 embargoes 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
Negative and positive sanctions 301
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 theoretical 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
302 Research handbook on economic sanctions
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 disarmament; (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 crucial 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 dictatorship). 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 characteristics of interest groups in both target and sender countries have to be taken into account.
Negative and positive sanctions 303
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 inherently 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 disarmament 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
304 Research handbook on economic sanctions
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 society 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 presence 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
Negative and positive sanctions 305
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 integrating 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 frameworks 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 disarmament and participation in a larger institutional setting.
306 Research handbook on economic sanctions
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).
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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 constraints 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 discussion 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.
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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
Conflict
Figure 17.1
DecisionMakers
Options
Feasible
States
GMCR+ removing infeasible states
Allowable
Transitions
Preferences
Economic sanctions within the Graph Model for Conflict Resolution 311
Table 17.1 States in table form
Actions
US
Iran
States
1
2
3
4
5
6
7
8
9
10 11
12 13 14 15 16
N
N
N
N
N
N
N
N
Y
Y
Y
Y
Y
Y
Y
Y
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
Escalate
N
Y
N
Y
N
Y
N
Y
N
Y
N
Y
N
Y
N
Y
Sanctions
State 9 (Y N N N)
Actions
States
1
US
Iran
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
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
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.
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Table 17.2 Remaining states after removing infeasible states
Actions
US
Iran
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
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
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 >>>>>
US
Iran
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
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
Escalate
N
N
N
N
N
N
N
N
Y
Y
Y
Y
Economic sanctions within the Graph Model for Conflict Resolution 313
Table 17.4 Iran preference ranking
Actions
States
Iran Preferences
Most Preferred >>>>> Sanctions
US
Iran
Least Preferred
1
9
10
6
2
5
14
13
3
11
7
15
N
Y
Y
N
N
N
Y
Y
N
Y
N
Y
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
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
6
State
5
Figure 17.2
N
No change
N
Y
No change
Y
N
No change
N
N
N >>>> Y
Y
State transition, Iran controls the transition
314 Research handbook on economic sanctions
State
9
State
1
Figure 17.3
N
N >>>> Y
Y
N
No change
N
N
No change
N
N
No change
N
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
10
YNNY
Figure 17.4
The graph model
15
YYYN
Economic sanctions within the Graph Model for Conflict Resolution 315
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 preference 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)
2)
3)
4)
Individual stabilities
Equilibria
Sensitivity analysis
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 p