PART II
THEORIES OF ECONOMIC SANCTIONS
91
CHAPTER 3
THE ANATOMY OF ECONOMIC SANCTIONS
A nation that is boycotted is a nation that is in sight of surrender. Apply this
economic, peaceful, silent, deadly remedy and there will be no need for force. It is a
terrible remedy. It does not cost a life outside the nation boycotted, but brings a
pressure upon the nation which, in my judgment, no modern nation could resist.
-- Woodrow Wilson, U.S. President, 19191
Russia is becoming an imperial power of the 20th century; we no longer need
physical control over territory, we can have economic influence.
-- Sergei Karaganov, head of the Foreign and
Defense Policy Council (Russia), 19972
I. The Definition of Economic Sanctions
Economic sanctions have been long used in international relations. According to
Gary Hufbauer, Jeffery Schott, and Kimberly Elliot (hereafter HSE), there were at
least 13 prominent cases of economic sanctions before World War I. 3 The most
1
2
3
Gary Clyde Hufbauer, Jeffery J. Schott, and Kimberly Ann Elliot, Economic Sanctions Reconsidered:
History and Current Policy, 2nd ed. (Washington, D.C.: Institute of International Economics, 1990),
p. 9. Quoted in Saul K. Padover (ed.), Wilson’s Ideals (Washington: American Council on Public
Affairs, 1942), p. 108.
Chrystia Freeland, “From Empire to Nation State: As NATO Expands Eastwards Russia Is Having to
Come to Terms with the Loss of Its Superpower Status,” Financial Times, July 10, 1997, p. 29.
These 13 cases refer to Athens vs. Megara (circa 432 B.C.), American colonies vs. Britain (1765),
American colonies vs. Britain (1767-1770), Britain and France vs. France and Britain (1793-1815),
United States vs. Britain (1812-1814), Britain and France vs. Russia (1853-1856), U.S. North vs.
Confederate States (1861-1865), France vs. Germany (1870-1871), France vs. China (1883-1885),
United States vs. Spain (1898), Britain vs. Dutch South Africa (1899-1902), Russia vs. Japan
(1904-1905), and Italy vs. Turkey (1911-1912). Gary Clyde Hufbauer, Jeffery J. Schott, and
Kimberly Ann Elliot, Economic Sanctions Reconsidered: History and Current Policy, 2nd ed.
92
celebrated early use of economic sanctions occurred in 432 B.C. when Pericles issued
the “Megaran decree” limiting the entry of Megara’s products into Athenian markets.
The subsequent refusal to lift the Athenian boycott of Magara helped to trigger the
Peloponnesian War.4
In the increasingly integrated global economy of the twentieth century, economic
sanctions have become a popular tool of statecraft, particularly in the United States in
the 1990s. In 1919, Woodrow Wilson believed that the “economic, peaceful, silent
deadly remedy” of economic sanctions could be used by the League of Nations to
police international society.5 Albert Hirschman shows how states tried to minimize
their vulnerability to the interruption of strategic imports while maximizing others’
need to trade with them. In order to influence other countries’ behavior, Nazi Germany
was particularly aggressive at cultivating economic dependency in its eastern
European neighbors.6 There has been resurgence in the use of economic sanctions,
especially since the end of the Cold War. Great powers, stymied by the price of
military intervention in places such areas as Bosnia, Chechnya, and Somalia, are
looking to alternative policy instruments to pursue their national interests. 7 For
instance, in 1997 Sergei Karaganov, head of the Foreign and Defense Policy Council8,
articulated Russian policy by stating that economic influence bestows Russia with
imperial power without a need to have physical control over another territory. 9
4
5
6
7
8
9
(Washington, D.C.: Institute of International Economics, 1990), pp. 28-32.
Thucydides, History of the Peloponnesian War, translated by Rex Warner (New York: Penguin Books,
1972), pp. 72-3, 118.
Gary Clyde Hufbauer, Jeffery J. Schott, and Kimberly Ann Elliot, Economic Sanctions Reconsidered:
History and Current Policy, 2nd ed. (Washington, D.C.: Institute of International Economics, 1990),
p. 9. Quoted in Saul K. Padover, (ed.), Wilson’s Ideals (Washington: American Council on Public
Affairs, 1942), p. 108.
Albert O. Hirschman, National Power and the Structure of Foreign Trade, expanded ed. (Berkeley,
C.A.: University of California Press, 1980).
Elizabeth S. Rogers, “Using Economic Sanctions to Control Regional Conflicts,” Security Studies,
vol. 5, no. 4 (Summer 1996), pp. 43-72.
The Foreign and Defense Policy Council is an influential group of Russian academics, businessmen,
and politicians across the political spectrum.
Chrystia Freeland, “From Empire to Nation State: As NATO Expands Eastwards Russia Is Having to
Come to Terms with the Loss of Its Superpower Status,” Financial Times, July 10, 1997, p. 29.
93
According to HSE, 165 cases of economic sanctions were launched between
1914 and 1998, of which 115 cases involved the United States, and of which 68 cases
were unilateral U.S. initiatives. 10 In addition, the Russian Federation employed
economic sanctions on more than 35 occasions between 1992 to 1997 as a way of
extracting political concessions from the Newly Independent States (NIS). 11 The
United Nations Security Council imposed sanctions only twice in the first 45 years of
its existence, against Rhodesia in 1966 and South Africa in 1977. However, during the
1990s, the Security Council imposed comprehensive or partial sanctions more than 16
times. 12 These unprecedented activities have generated substantial discussion of
economic sanctions in policy and academic circles. 13 These discussions have
addressed the following issues: (1) Have sanctions been effective, and what is meant
by “effective”; (2) What variables affect the degree of effectiveness? (3) How does
one assess the importance of unintended side effects? (4) What are the effects on the
side imposing sanctions?
For lawyers, negative sanctions are measures of enforcement, which follow
violations of law. They are penalties, which indicate the limits of permissible conduct
and encourage compliance with known rules. Margaret Doxey defines economic
sanctions as “penalties threatened or imposed as a declared consequence of the target’s
failure to observe international standards or international obligations.”14 M. S. Daoudi
and M. S. Dajani define economic sanctions as “punitive actions initiated by a number
10
11
12
13
14
Gary Clyde Hufbauer, “Trade as a Weapon,” paper for the Fred J. Hansen Institute for World Peace,
San Diego State University, World Peace Week, April 12-18, 1999,
http://www.iie.com/TESTMONY/gch9.htm, accessed July 25, 2000, p. 3 of 5.
Daniel W. Drezner, The Sanctions Paradox: Economic Statecraft and International Relations (New
York: Cambridge University Press, 1999), p. 154.
David Cortright and George A. Lopez, The Sanctions Decade: Assessing UN Strategies in the 1990s
(Boulder, Colorado: Lynne Rienner, 2000), pp. 1-2.
By 2000 the Carnegie Commission on Preventing Deadly Conflict, the Center for Preventive Action
of the Council on Foreign Relations, Center for Strategic and International Studies, Institute for
International Economics, and the Brookings Institution had all undertaken studies of sanctions policy
either in general or toward a particular country.
Margaret P. Doxey, Economic Sanctions and International Enforcement, 2nd ed. (New York: Oxford
94
of international actors, particularly a world organization such as the League of Nations
or the United Nations, against one or more states for violating a universally approved
charter, as inducements to follow, or refrain from following, that particular course of
conduct and conform with international law.”15
In the 1920s and early 1930s, in line with the concept of enforcement of
international law, economic sanctions meant League of Nations sanctions. According
to HSE, there were only five cases of economic sanctions in total employed by the
League of Nations: against Yugoslavia in 1921, Greece in 1925, Paraguay and Bolivia
in 1932, and Italy in 1935.16 Although UN sanctions have recently become quite
common, it would be unrealistic to limit the economic sanctions label to UN
enforcement measures, or to measures imposed by any international body against its
members. It is important to establish a more precise definition of economic sanctions,
which now feature so prominently in state practice for other purposes.
Essentially, economic sanctions imposed by a state, a group of states, or an
international organization become a form of power exercised to influence other
countries’ behavior or policy, which does not necessarily violate international law. For
example, Johan Galtung defines economic sanctions as “actions initiated by one or
more international actors (the ‘senders’) against one or more others (the ‘receivers’) in
order to punish the receivers by depriving them of some value and/or to make the
receivers comply with certain norms the senders deem important.” 17 Makio
Miyagawa has a similar definition.18
15
16
17
18
University Press, 1980), p. 9.
M. S. Daoudi and M. S. Dajani, Economic Sanctions: Ideal and Experience (Boston: Routledge &
Kegan Paul, 1983), p. 8.
Gary Clyde Hufbauer, Jeffery J. Schott, and Kimberly Ann Elliot, Economic Sanctions Reconsidered:
History and Current Policy, 2nd ed. (Washington, D.C.: Institute of International Economics, 1990),
p. 16.
Johan Galtung, “On the Effects of International Economic Sanctions,” World Politics, vol. 19
(October 1966- July 1967), p. 379.
Makio Miyagawa, Do Economic Sanctions Work? (New York: St. Martin’s Press, 1992), p. 7.
95
Miroslav Nincic and Peter Wallensteen define economic coercion as “the
imposition of economic pain by one government on another in order to attain some
political goal. It is implemented, or at least initiated, by political authorities who
intervene in the ‘normal’ operation of economic relations.”19 [Emphasis added] James
Lindsay defines economic sanctions as “measures in which one country (the initiator)
publicly suspends a major portion of its trade with another country (the target) to
attain political objectives.” 20 Robert Pape, Ernest Preeg, Daniel Drezner, Neta
Crawford, Jean-Marc Blanchard, Edward Mansfield, Norrin Ripsman, Steve Chan,
and A. Cooper Drury have a similar definition. 21 The use of the term political
goals/objectives is intended to rule out cases in which sanctions are used to obtain
commercial ends.
In their seminal work, Economic Sanctions Reconsidered, HSE define economic
sanctions as “the deliberate, government-inspired withdrawal, or threat of withdrawal,
of customary trade or financial relations. ‘Customary’ does not mean ‘contractual’; it
simply means levels of trade and financial activity that would probably have occurred
in the absence of sanctions.”22 Based on her literature review, Donna Kaplowitz
19
20
21
22
Miroslav Nincic and Peter Wallensteen, “Economic Coercion and Foreign Policy,” in Miroslav
Nincic and Peter Wallensteen (eds.), Dilemmas of Economic Coercion: Sanctions in World Politics
(New York: Praeger, 1983), p. 3.
James M. Lindsay, “Trade Sanctions as Policy Instruments: A Re-examination,” International
Studies Quarterly, no. 30 (1986), p. 154.
Robert A. Pape, “Why Economic Sanctions Do Not Work,” International Security, vol. 22, no. 2
(Fall 1997), pp. 93-4. Ernest H. Preeg, Feeling Good or Doing Good with Sanctions: Unilateral
Economic Sanctions and the U.S. National Interest (Washington, D.C.: Center for Strategic and
International Studies, 1999), p. 4. Daniel W. Drezner, The Sanctions Paradox: Economic Statecraft
and International Relations (New York: Cambridge University Press, 1999), pp. 2-3. Neta C.
Crawford, “Trump Card or Threat?: An Introduction to Two Sanctions Debates,” in Neta C.
Crawford and Audie Klotz, How Sanctions Work: Lessons from South Africa (New York: St. Martin’s
Press, 1999), p. 5. Jean-Marc F. Blanchard, Edward D. Mansfield, and Norrin M. Ripsman, “The
Political Economy of National Security: Economic Statecraft, Interdependence, and International
Conflict,” Jean-Marc F. Blanchard, Edward D. Mansfield, and Norrin M. Ripsman, Power and the
Purse: Economic Statecraft, Interdependence, and National Security (Portland, OR: Frank Cass,
2000), p. 3. Steve Chan and A. Cooper Drury, “Sanctions as Economic Statecraft: An Overview,” in
Steve Chan and A. Cooper Drury (eds.), Sanctions as Economic Statecraft: Theory and Practice
(New York: St. Martin’s, 2000), pp. 1-2.
Gary Clyde Hufbauer, Jeffery J. Schott, and Kimberly Ann Elliot, Economic Sanctions Reconsidered:
History and Current Policy, 2nd ed. (Washington, D.C.: Institute of International Economics, 1990),
p. 2.
96
defines economic sanctions as “economic or financial prohibitions taken by one or
more countries – the senders – to punish another country or countries – the target – or
force change in the target’s policies, or demonstrate to a domestic or international
audience the sender’s position on the target’s policies.”23 Obviously, both objectives
can also be sought simultaneously, that is, to change the target’s behavior and provide
valued symbols to domestic or international constituencies.
Economic sanctions, sometimes synonymous with “economic coercion,” are
distinct from economic warfare (strategic embargo), economic inducements, and trade
war, in terms of forms, purposes, and occasions. In essence, economic sanctions,
according to David Baldwin, are only one category of economic statecraft, which
refers to influence attempts relying primarily on resources which have a reasonable
semblance of a market price in terms of money. Economic warfare (strategic embargo)
seeks to weaken an adversary’s aggregate economic potential in order to weaken its
military capabilities, either in a peacetime arms race or in an ongoing war. Economic
warfare represents a long-term approach to dealing with adversaries while economic
sanctions usually have immediate political goals. Economic inducements involve
commercial concessions, technology transfers, and other economic carrots that are
extended by a sender in exchange for political compliance on the part of a target.
“Economic inducements” are also called “positive sanctions.” Trade wars are disputes
over economic policy and behavior instead of political/security goals. 24
23
24
Donna Rich Kaplowitz, Anatomy of a Failed Embargo: The Case of the U.S. Sanctions against Cuba,
vol. I, Ph.D. dissertation, Johns Hopkins University, 1995, p. 32.
David Baldwin, Economic Statecraft (Princeton, N.J.: Princeton University Press, 1985), pp. 12-40.
Miroslav Nincic and Peter Wallensteen, “Economic Coercion and Foreign Policy,” in Miroslav
Nincic and Peter Wallensteen (eds.), Dilemmas of Economic Coercion: Sanctions in World Politics
(New York: Praeger, 1983), p. 3. Richard J. Ellings, Embargoes and World Power: Lessons from
American Foreign Policy (Boulder: Westview Press, 1985), p. 8. Richard N. Haass (ed.), Economic
Sanctions and American Diplomacy (New York: Council on Foreign Relations, 1998), p. 1. Daniel W.
Drezner, The Sanctions Paradox: Economic Statecraft and International Relations (New York:
Cambridge University Press, 1999), pp. 2-3. Steve Chan and A. Cooper Drury, “Sanctions as
Economic Statecraft: An Overview,” in Steve Chan and A. Cooper Drury (eds.), Sanctions as
Economic Statecraft: Theory and Practice (New York: St. Martin’s, 2000), pp. 1-2.
97
This study defines economic sanctions as the threat or act by a state or coalition
of states, the sender, to disrupt customary economic exchange with another state, the
target, in order to punish the target, force change in the target’s policies, or
demonstrate to a domestic or international audience the sender’s position on the
target’s policies. The sender is designated as the country or international organization
that is the principal author of the sanctions. The target is designated as the country that
is the immediate object of the sanctions. Economic sanctions do not include economic
warfare, economic inducements, and trade wars. The following sections will elaborate
further on the types, goals, logic, costs, and effectiveness of economic sanctions.
II. The Types of Economic Sanctions
There are four main methods of applying economic sanctions by the sender: trade
controls, suspension of aid or technical assistance, freezing of the target’s financial
assets, and blacklisting of companies involved with bilateral business.25
First, trade controls (both goods and services) by the sender include one or more
of the following elements: (1) quotas on exports/imports; (2) restrictive
exports/imports licensing; (3) limited or total export disruption (embargo); (4) limited
or total import disruption (boycott); (5) discriminatory tariff policy (including denial
of most favored nation status); (6) restriction or cancellation of fishing rights; (7)
suspension or cancellation of trade agreements; and (8) bans on strategic goods and
advanced technology exports.
Second, suspension of aid or technical assistance by the sender includes one or
more of the following elements: (1) reduction, suspension, or cancellation of credit
25
Margaret P. Doxey, Economic Sanctions and International Enforcement, 2nd ed. (New York: Oxford
University Press, 1980), pp. 14-5.
98
facilities at concessionary or market rates; (2) reduction, suspension, or cancellation of
technical assistance, military assistance, development assistance, and training
programs; and (3) votes against loans, grants, subsidies, and funding for technical or
other assistance from international organizations.
Third, freezing of the target’s financial assets by the sender includes one or more
of the following elements: (1) freezing or confiscation of bank assets of the target
government or target nationals; (2) confiscation or expropriation of other target assets,
including the target’s investment in the sender; (3) freezing interest or other transfer
payments; (4) refusal to refinance or reschedule debt repayments (interest and
principal); and (5) suspension or cancellation of joint projects.
Fourth, blacklisting of companies involved with bilateral business by the sender
includes the following elements: (1) blacklisting of sender’s or third parties’
companies doing business with the target, including trade and investment; and/or (2)
blacklisting of the target’s companies doing business with the sender, including trade
and investment.
This study will discuss four particular scenarios within the above four categories:
(1) a possible PRC embargo against Taiwan; (2) a possible Chinese boycott of
Taiwan-made goods; (3) the possible freezing or expropriation of Taiwan’s investment
in China; and (4) the possible blacklisting of Taiwan companies. This study focuses on
these possible instruments of leverage for the following reasons. First, trade sanctions
(embargo and boycott) are the most common form of economic sanctions and, as a
result, these two terms are sometimes treated as synonymous. Second, embargo and
boycott are more comprehensive and thus tend to be more effective in inflicting costs
on the target than other forms of trade sanctions. Third, neither Taiwan nor China
provides official aid or technical assistance to the other. Therefore, there is no need to
consider the case of suspension of aid or technical assistance. Fourth, after the victory
99
of Chen Shui-bian in Taiwan’s March 2000 presidential election, Beijing overtly
warned some Taiwan business figures that their interests in China would be adversely
affected if they supported Taiwan independence.26
Furthermore, the possible scenarios of China’s embargo and boycott against
Taiwan, and a freezing or expropriation of Taiwan’s investment in the PRC would
represent the most extreme situations in which China might seek to achieve its
political goals. If China cannot win concessions from Taiwan using these extreme
instruments, it would be more difficult for China to extract concessions successfully
through milder forms of sanction measures.
III. The Goals of Economic Sanctions
Nearly all sanctions scholars recognize the difficulty in determining the sender’s
objectives. This is particularly true when the sender’s goals are primarily
demonstrative for domestic or international audiences. Also, the “sender” is usually a
heterogeneous entity with different components intending to achieve different
purposes. Therefore, there is a need to explore the hidden agendas embedded in
sanctions as well as the stated goals. A review of economic sanctions cases and
previous scholarly studies suggests that the goals of economic sanctions fall into five
categories:
punishment
(deterrence),
compliance
(coercion),
destabilization
(subversion), signaling, and symbolism (demonstrative effect).27
26
27
“On the Current Development of Cross-Strait Economic Relations: Questions Answered by the
Leader of the Central Taiwan Affairs Office and the State Council Taiwan Affairs Office,” Renmin
Ribao [People’s Daily], April 10, 2000, p.1.
Miroslav Nincic and Peter Wallensteen, “Economic Coercion and Foreign Policy,” in Miroslav
Nincic and Peter Wallensteen (eds.), Dilemmas of Economic Coercion: Sanctions in World Politics
(New York: Praeger, 1983), pp. 6-8. Thomas O. Bayard, Joseph Plezman, and Jorge Perez-Lopez,
“Stakes and Risks in Economic Sanctions,” World Economy, vol. 6, no. 1 (March 1983), p. 74.
James M. Lindsay, “Trade Sanctions as Policy Instruments: A Re-examination,” International
Studies Quarterly, no. 30 (1986), pp. 155-6. David Leyton-Brown, “Lessons and Policy
Considerations about Economic Sanctions,” in David Leyton-Brown (ed.), The Utility of
100
Punishment (Deterrence)
Both historically and conceptually, economic sanctions have been used to punish
a transgression. Like sending a criminal to prison, the goal is not necessarily to
rehabilitate the wrong-doer, but to punish him for his offense and to deter others from
such wayward behavior. Economic sanctions invoked for punitive ends also serve to
define unacceptable behavior, either unilaterally or multilaterally, and thus contributes
to the establishment of internationally accepted standards of legitimate conduct.28
More specifically, the sender may invoke sanctions to discourage future
objectionable policies by demonstrating the sender’s willingness and ability to
retaliate. If the undesirable behavior is punished with sufficient severity, it may not be
repeated by the target country. For example, in announcing a grain embargo against
the Soviet Union issued in response to the invasion of Afghanistan, President Jimmy
Carter declared, “[W]e will deter aggression.”29
Similarly, the sender may employ sanctions in order to deter other countries from
undertaking undesired behavior by demonstrating to third parties the likely cost of
misbehavior. For example, one purpose of U.S. economic sanctions against Cuba
(1960-) was to discourage other Latin American nations from emulating Castro’s
28
29
International Economic Sanctions (New York: St. Martin’s Press, 1987), pp. 303-6. Gary Clyde
Hufbauer, Jeffery J. Schott, and Kimberly Ann Elliot, Economic Sanctions Reconsidered: History
and Current Policy, 2nd ed. (Washington, D.C.: Institute of International Economics, 1990), pp. 11,
38. Makio Miyagawa, Do Economic Sanctions Work? (New York: St. Martin’s Press, 1992), pp.
89-106. David W. Hunter, Western Trade Pressure on the Soviet Union: An Interdependence
Perspective on Sanctions (New York: St. Martin’s Press, 1991), pp. 44-6. Donna Rich Kaplowitz,
Anatomy of a Failed Embargo: The Case of the U.S. Sanctions against Cuba, vol. I, Ph.D.
dissertation, Johns Hopkins University, 1995, pp. 34-42. Margaret P. Doxey, International Sanctions
in Contemporary Perspective, 2nd ed. (New York: St. Martin’s Press, 1996), pp. 54-65.
David Leyton-Brown, “Lessons and Policy Considerations about Economic Sanctions,” in David
Leyton-Brown (ed.), The Utility of International Economic Sanctions (New York: St. Martin’s Press,
1987), p. 303.
Jimmy Carter, “Transcript of President’s Speech on Soviet Military Intervention in Afghanistan,”
New York Times, January 5, 1980, p. 6.
101
policies. Similarly, Soviet economic sanctions against Yugoslavia (1948-1955) and
Lithuania (1990) served to deter other countries from emulating the target’s policy of
non-cooperation with the Soviet Union.
Compliance (Coercion)
The sender may impose economic sanctions in order to force the target to alter its
policy or behavior to conform to the sender’s preference or specific political goals,
such as compelling desired action, encouraging acceptance of international norms, or
restoring the status quo. In deterrence, one seeks to prevent action. In compliance, the
sender is seeking to force the target to undo an action. The latter is far more difficult to
achieve, as Alexander George and William Simons explained in their edited volume
The Limits of Coercive Diplomacy.30
For example, the United Kingdom and the League of Nations imposed sanctions
on Italy (1935-1936) in an effort to compel Mussolini to withdraw troops from
Abyssinia. The Soviet Union’s economic sanctions against Yugoslavia (1948-1955),
China (1960-1970), and Albania (1961-1965) were imposed to win acceptance of
Soviet leadership in other socialist countries. The U.S. grain embargo against the
Soviet Union (1980-1981) sought Soviet withdrawal from Afghanistan. The United
Nations economic sanctions against Rhodesia (1965-1979) were designed to force
acceptance of international standards governing human rights. The United Nations
economic sanctions against Iraq (1990-1991) were crafted to force Saddam Hussein to
withdraw from Kuwait and subsequently to allow UN arms inspectors to complete
their work. The United States economic sanctions against India (1998-) were designed
30
Alexander L. George and William E. Simons, The Limits of Coercive Diplomacy, second edition
(Boulder: Westview Press, 1994).
102
to force India to sign the Comprehensive Test Ban Treaty immediately and without
conditions.
Destabilization (Subversion)
The sender may impose economic sanctions to destabilize the target government
or subvert the entire target political regime. For example, Stalin sought to replace Tito
with a pro-Soviet leader by imposing economic sanctions against Yugoslavia
(1948-1955). When the U.S. embargoed Cuba (1960-), it hoped to replace Castro’s
regime with a non-communist one. The economic sanctions imposed by the
Organization of American States and the United States against Haiti (1991-1996)
demanded the restoration of the democratically elected President Jean-Bertrand
Aristide, who had been overthrown in a military coup led by Lieutenant General
Raoul Cedras.
Signaling
The imposition of economic sanctions conveys a signal of the sender’s resolve to
both the target and the sender’s allies. It says that the words of the sender will be
supported with action. Economic sanctions by a great power or an international
organization often imply a threat of more drastic action (for example, military) against
the target country. HSE contend that sanctions frequently serve as a junior weapon in a
battery of diplomatic artillery aimed at the antagonistic state. In the 115 cases, HSE
counted 34 cases of economic sanctions with companion policies of quasi-military
103
action or/and regular military action. 31 Economic sanctions may precede or
accompany actual armed hostility. This indicates that the sender may use economic
sanctions as a signal to convince the target to accept the sender’s preference before
launching military action.
For example, the United States and the United Nations imposed comprehensive
economic sanctions, combined with vigorous diplomacy and a gradual military
buildup, against Iraq in 1990 before they decided to adopt military action in 1991. Eric
Melby argues that economic sanctions against Iraq were the best tool available on
August 2, 1990, to signal outrage and determination to resist Saddam’s annexation of
Kuwait.32 In addition, Lisa Martin argues that costly sanctions by a great power can
signal its determination and thus convince other states to join in the sanctioning
effort.33
Symbolism (Demonstrative Effect)
Oftentimes, the demonstrative element behind a sanctions policy is not explicitly
stated as a goal. Nevertheless, the demonstrative element is on occasion the most
important goal, or the only meaningful function of the sanctions policy. Economic
sanctions are often intended to defuse pressures and demonstrate the outrage of the
domestic and international audiences.
For domestic audiences, economic sanctions will defuse pressures for more
extreme action and satisfy others that the government is acting firmly. For example,
31
32
33
Gary Clyde Hufbauer, Jeffery J. Schott, and Kimberly Ann Elliot, Economic Sanctions Reconsidered:
History and Current Policy, 2nd ed. (Washington, D.C.: Institute of International Economics, 1990),
pp. 43, 56-62.
Eric D. K. Melby, “Iraq,” in Richard N. Haass (ed.), Economic Sanctions and American Diplomacy
(New York: Council on Foreign Relations, 1998), pp. 107-128.
Lisa L. Martin, Coercive Cooperation: Explaining Multilateral Economic Sanctions (Princeton, New
Jersey: Princeton University Press, 1992), pp. 36-8.
104
former British Foreign Minister David Lloyd George remarked in 1935 on the League
of Nations economic sanctions against Italy (1935-1936): “[Sanctions] came too late
to save Abyssinia, but they are just in the nick of time to save the [British]
Government.”34 Only two weeks before election day in November 1960, President
Eisenhower announced the U.S. export embargo against Cuba (1960-), probably in an
effort to help the Republican presidential candidate, Richard Nixon. The other
candidate, John Kennedy, also promised the electorate to “do something” about Cuban
leader Fidel Castro.35
Similarly, the support of many governments for the economic boycott of Ian
Smith’s Rhodesia (1965-1979) was apparently intended as a display of opposition to
racist policies and meant for domestic consumption within the sender nations.36 The
mounting domestic pressure placed upon U.S. President Ronald Reagan following the
declaration of martial law by the Polish government on December 13, 1981,
contributed to President Reagan’s decision to announce comprehensive sanctions
against the Soviet Union (1981-1982) on December 22.37
For international audiences, economic sanctions can deflect international
criticism, give the appearance of concern, raise the visibility of an issue, show
leadership initiative and commitments, and demonstrate moral outrage and
disapproval of a regime when silence might be construed as tacit approval. For
example, the U.S. economic sanctions against the Soviet Union (1983) were aimed at
galvanizing criticism of Moscow’s downing of a Korean airliner. The West’s economic
sanctions against China (1989-) in the wake of the Tiananmen Square incident were
34
35
36
37
Quoted in Gary Clyde Hufbauer, Jeffery J. Schott, and Kimberly Ann Elliot, Economic Sanctions
Reconsidered: History and Current Policy, 2nd ed. (Washington, D.C.: Institute of International
Economics, 1990), p. 3.
Makio Miyagawa, Do Economic Sanctions Work? (New York: St. Martin’s Press, 1992), p. 95.
Miroslav Nincic and Peter Wallensteen, “Economic Coercion and Foreign Policy,” in Miroslav
Nincic and Peter Wallensteen (eds.), Dilemmas of Economic Coercion: Sanctions in World Politics
(New York: Praeger, 1983), pp. 7-8.
Makio Miyagawa, Do Economic Sanctions Work? (New York: St. Martin’s Press, 1992), p. 96.
105
principally designed to assuage domestic constituencies and to make a moral
statement. For example, President George Bush stated on June 6, 1989: “The United
States cannot condone the violent attacks and cannot ignore the consequences for our
relationship with China.”38 The principal emphasis was on condemning the violent
repression of demonstrations, focusing the world’s gaze on the brutal, anti-democratic
act of the Chinese government, and discrediting the Beijing regime.39
More comprehensive theories on the initiation of economic sanctions -- why the
sender initiates economic sanctions against the target -- will be discussed in Chapter 4.
IV. The Causal Logic of Economic Sanctions
More than a half century ago, Albert Hirschman showed in his book National
Power and the Structure of Foreign Trade that the ability of one government to
threaten to interrupt its trade with another can be “an effective weapon in the struggle
for power.” In it, he argues that if a trading relationship is much more important to one
government than to another, then the second may be able to demand from the first not
only better terms of trade, but also significant political concessions.40
Following Hirschman’s argument, the conventional theory about how economic
sanctions are supposed to work is that sufficient economic pressure upon the target
38
39
40
“Case 89-2 U.S. v. China,” http://www.iie.com/FOCUS/SANCTION/china2.htm, accessed January
10, 2001.
These sanctions were also designed to deter Eastern European regimes from engaging in similar
brutal behavior as the Warsaw Pact broke apart. Makio Miyagawa, Do Economic Sanctions Work?
(New York: St. Martin’s Press, 1992), pp. 93-4. Gary Clyde Hufbauer, Jeffery J. Schott, and
Kimberly Ann Elliot, Economic Sanctions Reconsidered: History and Current Policy, 2nd ed.
(Washington, D.C.: Institute of International Economics, 1990), p. 3.
Albert O. Hirschman, National Power and the Structure of Foreign Trade, expanded ed. (Berkeley,
C.A.: University of California Press, 1980), pp. 17, 26.
106
nation(s) caused by the disruption of economic relations can induce or compel that
country to engage in more acceptable behavior in the eyes of the sender states. This
proposition is based on the fundamental economic theory that international trade has
positive income effects on nations, and that forced withdrawal from such trade
reduces national income. If the target benefits more in the bilateral economic relations
than the sender does, the sender would call for compensation on political issues by the
target in exchange for maintaining bilateral economic relations. In addition, the
conventional theory assumes that political change is directly proportional to economic
hardship. The greater the economic pain caused by economic sanctions, the higher the
probability of political compliance. As a result, the conventional theory generally
argues that the principal determinant of the success of economic sanctions is the
extent of disutility experienced by the target.41
However, Johan Galtung criticizes the conventional theory as “naïve” because “it
does not take into account the possibility that value-deprivation may initially lead to
political integration and only later – perhaps much later, or even never – to political
disintegration.”
42
Galtung
emphasizes
two
points:
First,
it
ignores
the
“rally-around-the-flag” effect of increased political integration as a response to
economic sanctions. Second, it ignores the many counter measures available to the
target that tend to nullify the degree of economic damage. 43 Although Galtung points
out the paradox that economic sanctions might lead to political integration, he does
not provide a comprehensive causal logic of economic sanctions.
41
42
43
Donald L. Losman, International Economic Sanctions: The Cases of Cuba, Israel, and Rhodesia
(Albuquerque: University of New Mexico Press, 1979), pp. 124-128. David Cortright and George A.
Lopez, “Sanctions and Incentives as Tools of Economic Statecraft,” in Raimo Vayrynen (ed.),
Globalization and Global Governance (Lanham, Maryland: Rowman & Littlefield Publishers, Inc.,
1999), p. 114.
Johan Galtung, “On the Effects of International Economic Sanctions,” World Politics, vol. 19
(October 1966- July 1967), pp. 388-9.
Johan Galtung, “On the Effects of International Economic Sanctions,” World Politics, vol. 19
(October 1966- July 1967), pp. 378-416.
107
Since the sender attempts to influence the behavior or policy of the target through
economic sanctions, sanctions are an exercise of power between states per se. As
George Shambaugh contends, “[O]ne actor will be able to exercise power over
another if it possesses a sufficient quantity of those particular resources that are valued
by the target.”44 Therefore, for economic sanctions to work the sender must wield its
economic resources of favorable asymmetrical interdependence to influence the
target’s behavior and policies.
Generally speaking, Robert Keohane and Joseph Nye define power as “the ability
of an actor to get others to do something they otherwise would not do (and at an
acceptable cost to the actor)” and “control over outcomes.” 45 The first type of
definition, potential power, refers to the power resources, which give an actor the
potential ability to influence the other. The second type of definition, actual power,
refers to an actor’s actual influence over patterns of outcomes.
Keohane and Nye emphasize that asymmetrical interdependence is a source of
power to control resources, or the potential to affect outcomes. That is potential power.
They argue: “A less dependent actor in a relationship often has a significant political
resource, because changes in the relationship (which the actor may be able to initiate
or threaten) will be less costly to that actor than to its partners.” 46 Therefore, being
less dependent will provide potential power or a source of power for the sender to
influence the target.
Further, Keohane and Nye distinguish between two dimensions of asymmetrical
interdependence (potential power): sensitivity, short-term costs of economic sanctions,
and vulnerability, long-term costs of economic sanctions. They explain, “Sensitivity
44
45
46
George E. Shambaugh, States, Firms, and Power: Successful Sanctions in United States Foreign
Policy (Albany, New York: State University of New York Press, 1999), pp.6-10.
Robert O. Keohane and Joseph S. Nye, Power and Interdependence, 3rd ed. (New York: Longman,
2001), p. 10.
Robert O. Keohane and Joseph S. Nye, Power and Interdependence, 3rd ed. (New York: Longman,
108
involves degrees of responsiveness within a policy framework – how quickly do
changes in one country bring costly changes in another, and how great are the costly
effects? It is measured not merely by the volume of flows across borders but also by
the costly effects of changes in transactions on the societies or governments.
Sensitivity interdependence is created by interactions within a framework of
policies...The vulnerability dimension of interdependence rests on the relative
availability and costliness of the alternatives that various actors face…In terms of the
cost of dependence, sensitivity means liability to costly effects imposed from outside
before policies are altered to try to change the situation. Vulnerability can be defined
as an actor’s liability to suffer costs imposed by external events even after policies
have been altered.”47
Keohane and Nye contend that sensitivity interdependence will be less important
than vulnerability interdependence in providing power resources to the sender because
the former does not take into consideration the alternative market or suppliers apart
from the sender. The vulnerability dimension of interdependence rests on the relative
availability and costliness of the alternatives that the target faces. If the target can
reduce its costs by altering its policy, either domestically or internationally, the
sensitivity patterns will not be a good guide to power resources. Johan Galtung, Steve
Chan, and A. Cooper Drury also emphasize the importance of vulnerability in
understanding the effectiveness of economic sanctions.48
Three factors will further shape vulnerability interdependence. First, the
47
48
2001), p. 10.
Robert O. Keohane and Joseph S. Nye, Power and Interdependence, 3rd ed. (New York: Longman,
2001), p. 10-11. See also George E. Shambaugh, States, Firms, and Power: Successful Sanctions in
United States Foreign Policy (Albany, New York: State University of New York Press, 1999), p.16.
The effectiveness of unilateral and multilateral sanctions will be discussed in Chapter 5. Robert O.
Keohane and Joseph S. Nye, Power and Interdependence, 3rd ed. (New York: Longman, 2001), pp.
13-4. Johan Galtung, “On the Effects of International Economic Sanctions,” World Politics, vol. 19
(October 1966- July 1967), p. 385. Steve Chan and A. Cooper Drury, “Sanctions as Economic
Statecraft: An Overview,” in Steve Chan and A. Cooper Drury (eds.), Sanctions as Economic
Statecraft: Theory and Practice (New York: St. Martin’s, 2000), p. 9.
109
assistance from third parties will mitigate or even reverse the relationship of
asymmetrical interdependence. Second, counter measures by the target and retaliation
by third parties against the sender will increase the costs to the sender for initiating
economic sanctions against the target and thus mitigate or even reverse the
relationship of bilateral asymmetrical interdependence. Third, whether the sender can
bear the absolute costs of initiating economic sanctions will also influence the
effectiveness of economic sanctions although most economic sanctions in the past
generated trivial costs for the sender in terms of lost Gross National Product (GNP).49
However, the advantage of favorable asymmetrical interdependence in terms of
vulnerability (potential power) for the sender does not guarantee that it will have
superior actual power. The economic effects of sanctions do not necessarily translate
potential power into actual power, and often much is lost in the translation, conversion
of potential power into effects. As a result, the effectiveness of economic sanctions in
generating coercive pressure is tied to the sender’s power resources vis-à-vis the
target’s value hierarchy.50 Keohane and Nye underline, “Measurable power resources
are not automatically translated into effective power over outcome. Translation occurs
by way of a political bargaining process in which skill, commitment, and coherence
can…belie predictions based on the distribution of power resources… to predict and
understand outcomes, we must give equal attention to the bargaining process in which
power resources are translated into effective influence over outcomes.”51
The translation process from potential power to actual power can be analyzed
49
50
51
Gary Clyde Hufbauer, Jeffery J. Schott, and Kimberly Ann Elliot, Economic Sanctions Reconsidered:
History and Current Policy, 2nd ed. (Washington, D.C.: Institute of International Economics, 1990),
pp. 75-90. Ernest H. Preeg, Feeling Good or Doing Good with Sanctions: Unilateral Economic
Sanctions and the U.S. National Interest (Washington, D.C.: Center for Strategic and International
Studies, 1999), p. 193.
Robert O. Keohane and Joseph S. Nye, Power and Interdependence, 3rd ed. (New York: Longman,
2001), p. 10. David W. Hunter, Western Trade Pressure on the Soviet Union: An Interdependence
Perspective on Sanctions (New York: St. Martin’s Press, 1991), p. 47.
Robert O. Keohane and Joseph S. Nye, Power and Interdependence, 3rd ed. (New York: Longman,
2001), p. 196.
110
from three perspectives. First, if a state is treated as a unitary and rational actor, it will
concede only when the cost of concessions is smaller than the cost of economic
sanctions. The cost of sanctions to the sender is also taken into account by the target as
an element in the equation. The higher the perceived cost to the sender, the less likely
the target will concede.52 Although it is possible to measure the cost of economic
sanctions by GNP loss over time in terms of sensitivity and vulnerability, it is hardly
possible to quantify the cost of political concessions. Many factors will influence the
value hierarchy of the target. For example, the superior “will,” “determination,”
“willingness to suffer,” “commitment,” and “core societal values” of the target may
raise the cost of political concessions and discount the cost of economic sanctions. In
such a case, compliance may mean more disutility to the target than resistance.53
Second, from the decision-makers’ perspective, the perception of the cost of
economic sanctions and political concessions will determine the ultimate efficacy of
economic sanctions. Third, from a societal perspective, how people and interest
groups perceive and react to the economic sanctions will decide the effectiveness of
the sanctions. For example, Robert Pape argues, “Sanctions can coerce either directly,
by persuading the target government that the issues at stake are not worth the price, or
indirectly, by inducing popular pressure to force the government to concede, or by
inducing a popular revolt that overthrows the government, resulting in the
establishment of a government that will make the concessions.”54
Similarly, Jonathan Kirshner asserts, “There are three principal mechanisms
52
53
54
Peter Liberman, “Trading with the Enemy: Security and Relative Economic Gains,” International
Security, vol. 21, no. 1 (Summer 1996), pp. 150-155. Duncan Snidal, “Relative Gains and the Pattern
of International Cooperation,” in David A. Baldwin (ed.), Neorealism and Neoliberalism: The
Contemporary Debate (New York: Columbia University Press, 1993), pp. 170-233.
Robert O. Keohane and Joseph S. Nye, Power and Interdependence, 3rd ed. (New York: Longman,
2001), p. 16. R. Harrison Wagner, “Economic Interdependence, Bargaining Power, and Political
Influence,” International Organization, vol. 42, no. 3 (Summer 1988), pp. 476-7.
Robert A. Pape, “Why Economic Sanctions Do Not Work,” International Security, vol. 22, no. 2
(Fall 1997), pp. 93-4.
111
through which these pressures [of economic sanctions] can bring about political
change. First, pressure on the government and core support groups can force the target
to yield to the will of the [sender] state through a straightforward cost-benefit calculus.
Second, such pressure can lead to the overthrow of the existing regime… .Third, and
most subtly, the sanctions can have differential effects within the central government
and across core groups themselves, shifting the balance of political power within the
government and altering its preferences.”55
To sum up, favorable asymmetrical interdependence will provide the sender with
potential power or a source of actual power. This potential power needs to be
translated into actual power through a process that takes into account subjective
individual and group reaction. More comprehensive theories on the effectiveness of
economic sanctions will be discussed in Chapter 5.
V. The Costs of Economic Sanctions
Economic sanctions have double-edged effects on both the sender and the target,
despite the fact that the sender usually suffers much less than the target. Robert
Keohane and Joseph Nye argue that a less dependent actor (the sender) in a
relationship has a significant political resource because changes in the relationship
will be less costly to that actor (the sender) than to its partners (the target). But how
much is the cost in terms of the GNP of economic sanctions that disrupt economic
relations between the sender and the target? This determines the leverage (potential
power or a source of power) for the sender to influence the target’s behavior according
to the sender’s foreign policy objectives.
55
Jonathan Kirshner, “The Microfoundations of Economic Sanctions,” Security Studies, vol. 6, no. 3
(Spring 1997), p. 42.
112
In terms of sensitivity interdependence, for both the sender and target, trade
sanctions will bring an immediate loss of economic static allocative efficiency and
reliability, such as loss of undelivered regular exports/imports, loss of outstanding
orders for future exports, suspended sale of services in engineering or construction
projects, and loss of transportation and communication services. In terms of
vulnerability interdependence, trade sanctions will reduce the base for future
economic growth by affecting dynamic efficiency and create adjustment costs to
establish new trade patterns, such as producers’ loss of competitive advantage,
unemployment, consumers’ loss of cheaper goods, and rent-seeking activities.56
Generally speaking, if the sender possesses a monopoly or monopsony power
over some particular goods or services which are necessary for the target, disrupting
trade between the sender and the target will cause more severe economic pain for the
target. That is, the target cannot find alternative markets and substitutes and thus
suffers if these embargo or boycott goods are of significant value to its economy.
The sender will face some specific costs of initiating economic sanctions. First,
the sender will face implementation and administrative costs, including prevention of
smuggling, and bureaucratic and internal coordination costs. Second, the sender may
face retaliation by the target or third parties. By contrast, economic sanctions might
entail smaller costs for the target if it can obtain help, alternative markets, or
substitutes for critical goods from other countries.
In a situation of complex trade relations among countries, the real impact of a
sanction on the target cannot be measured by the extent of pre-sanction trade between
the sender and the target because of the possibility of alternative sources of demand or
56
James M. Lindsay, “Trade Sanctions as Policy Instruments: A Re-examination,” International
Studies Quarterly, no. 30 (1986), pp. 168-169. Margaret P. Doxey, International Sanctions in
Contemporary Perspective, 2nd ed. (New York: St. Martin’s Press, 1996), p. 68. Donna Rich
Kaplowitz, Anatomy of a Failed Embargo: The Case of the U.S. Sanctions against Cuba, vol. I, Ph.D.
dissertation, Johns Hopkins University, 1995, pp. 57-68. Richard D. Farmer, “Costs of Economic
113
supply. The target could find other markets when confronted with the sender’s boycott
(import control) or will seek substitutes of goods embargoed by the sender (export
control). Nevertheless, the extent of the pre-sanction trade still plays a role in
determining the ease with which the target will find alternative markets and
substitutes.57
If the sender does not possess an unutilized monopoly or monopsony power over
particular goods, disrupting bilateral trade will simply worsen the terms of trade for
both the sender and target, reducing the welfare of both parties. For instance, a
sender’s embargo will cause the price of the sender’s exports to decline. Given the
price of imports, the terms of trade (price of exports over that of imports) for the
sender will deteriorate. The price of the target’s imports will increase and thus the
target’s terms of trade will deteriorate as well. By contrast, a sender’s boycott will
increase the price of the sender’s imports. Given the price of the exports, the terms of
trade for the sender will deteriorate. The price of the target’s exports will decrease and
thus the target’s terms of trade will deteriorate as well. In both scenarios, both the
sender’s and target’s terms of trade will worsen. Indeed, the terms-of-trade effect has
captured the significance of vulnerability costs since this effect takes into
consideration the availability and costliness of alternative sources of demand and
supply.
In addition to conceptual analysis of the costs of economic sanctions, there are
several empirical studies. In their 1990 study, Economic Sanctions Reconsidered, HSE
developed a basic analytic model to guide their efforts in determining the costs of
sanctions to both the target and the sender. The welfare loss inflicted on both the
sender and the target depends on the size of the initial deprivation, the elasticity of
57
Sanctions to the Sender,” World Economy, vol. 23, no. 1 (2000), pp. 93-117.
William H. Kaempfer and Anton D. Lowenberg, International Economic Sanctions: A Public Choice
Perspective (Boulder, Colorado: Westview Press, 1992), pp. 65-67.
114
supply (Es), and the elasticity of demand (Ed), and from these calculations the
“sanctions multiplier” [1/ (Es+Ed)] can be determined. The welfare loss in terms of
GNP for the target or sender is equal to the product of the sanctions multiplier and the
size of the initial deprivation experienced by the target or sender nation. That is, the
sanctions multiplier is the ratio of the percentage change in GNP to the percentage
change in trade. While HSE could calculate the initial deprivation of markets or
supplies, they use their own judgment to estimate the “sanctions multiplier” that
should be applied in a particular case. To illustrate, they apply a multiplier of near
1.00 to most reductions in aid, and a multiplier between 0.10 and 0.50 to most
reductions in the supply or demand for goods. They assume that the target country is
likely to be a small factor in world markets, therefore in most contexts the combined
supply and demand elasticities would ordinarily exceed 5.0. A combined elasticity
greater than 5 would correspond to a sanctions multiplier of less than 0.2. 58 However,
it must be acknowledged that not all costs, including losses in dynamic efficiency and
rent seeking, can be calculated in numerical terms.
In their 1997 study, Gary Hufbauer, Kimberly Elliot, Tess Cyrus, and Elizabeth
Winston (hereafter, HECW) attempt to estimate the national costs of all U.S.
economic sanctions against other nations. The study’s results reflect the historical
emphasis of U.S. sanctions – many of them unilateral – on efforts to limit foreign
assistance and other trade with particular developing economies. The HECW analysis
reports a total cost of the sanctions against 26 countries at only $1 billion of U.S.
national income annually, resulting from an annual loss of $15 billion to $19 billion in
merchandise exports.59 National income and merchandise exports in 1995, the year
58
59
Gary Clyde Hufbauer, Jeffery J. Schott, and Kimberly Ann Elliot, Economic Sanctions Reconsidered:
History and Current Policy, 2nd ed. (Washington, D.C.: Institute of International Economics, 1990),
pp. 120-122.
Gary C. Hufbauer, Kimberly A. Elliot, Tess Cyrus, and Elizabeth Winston, U.S. Economic Sanctions:
Their Impact on Trade, Jobs, and Wages, Working paper (Washington, D.C.: Institute for
115
used in the study, were nearly $6 trillion and $0.7 trillion, respectively. Those results
indicate that the overall impact on the U.S. economy was trivial at 0.02 percent of U.S.
GNP and a cost of five cents per dollar loss of exports.60 Richard Farmer contends
that this sanctions multiplier (0.05) is most representative of the long-term
(vulnerability) effects of unilateral sanctions against individual developing countries.
However, he asserts that HECW results may be too high because of methodological
considerations.61
It is difficult to generalize from HECW results to cases involving multilateral
sanctions or sanctions against industrial economies. However, some additional
indication of such costs is available from selected researches into the welfare gains
that result from lowering trade barriers. Those studies look at policies that affect total
U.S. trade, which is dominated by trade with industrialized countries. It is possible to
simply change the signs on the reported welfare benefits of trade-opening policies.
Farmer uses the results of those studies to derive foreign-trade multipliers – calculated
as the ratios of the absolute change in economic welfare to the associated absolute
change in the value of trade. The total cost of cutting off a given amount of trade
would then reflect the product of that multiplier and the value of the trade at stake.62
Although this methodology provides some clues in assessing the costs of
economic sanctions, it must be noted that there are three potential pitfalls in this
methodology. First, trade liberalization is usually multilateral, while economic
60
61
62
International Economics, 1997), available at
http://www.iie.com/CATALOG/WP/1997/SANCTION/sanctnwp.htm, accessed August 10, 2000, p.
2 of 9.
In their 1999 article Kimberly Elliot and Gary Hufbauer assess that welfare costs probably do not
exceed 10 percent of gross trade losses. In addition, they point out that the estimates do not reflect
the impact on services trade. On a global basis, services trade flows are about 25 percent of
merchandise trade flows, but conceivably they are more vulnerable to the indirect impact of
economic sanctions. Kimberly Ann Elliott and Gary Clyde Hufbauer, “Same Song, Same Refrain?
Economic Sanctions in the 1990’s,” AEA Papers and Proceedings, May 1999, pp. 406-407.
Richard D. Farmer, “Costs of Economic Sanctions to the Sender,” World Economy, vol. 23, no. 1
(2000), pp. 109-111.
Richard D. Farmer, “Costs of Economic Sanctions to the Sender,” World Economy, vol. 23, no. 1
116
sanctions are often bilateral. Second, trade liberalization is typically permanent, while
economic sanctions are temporary. Third, trade liberalization generally occurs among
harmonious countries with mutual interests, while economic sanctions are imposed by
an antagonistic sender facing political tensions.
The 1994 econometric research by Gary Hufbauer and Kimberly Elliot indicates
that the gains in economic efficiency from unilaterally reducing trade protection for 21
U.S. industries would be about 20 cents for each dollar of increased exports. Farmer
argues that this multiplier (0.20) would be most indicative of the short-term unit costs
of sanctions that raise the protection for major U.S. industries although this estimate
likely overstates the national costs.63 The 1998 analysis by W. J. McKibbin addresses
the consequences both of investment and of shifting demands among sectors and
among countries. This study indicates the long-term unit costs of multilateral
sanctions on industrialized countries may be only 10 cents per dollar of lost exports.64
Based on several studies of multilateral liberalization shown in Table 3.1, the
short-term gains of such trade liberalization are between 15 cent and 35 cent per dollar
increase in exports. These figures largely reflect gains in static allocative efficiency
and the compounding effects of capital investment on economic growth. The
long-term multipliers are between 45 cent to 85 cent for each dollar increase in
exports. The gains per dollar of exports are greater for multilateral liberalization than
for unilateral liberalization involving the same region. The reason is that multilateral
actions to eliminate barriers yield a greater boost to trade and investment than do
unilateral actions. These figures represent the extreme cases of multilateral sanctions
63
64
(2000), pp. 105-109.
Richard D. Farmer, “Costs of Economic Sanctions to the Sender,” World Economy, vol. 23, no. 1
(2000), p. 112.
Richard D. Farmer, “Costs of Economic Sanctions to the Sender,” World Economy, vol. 23, no. 1
(2000), p. 112.
117
among large industrial countries with the possibility of retaliation and escalation.65
(See Table 3.1.)
Table 3.1. Foreign-Trade Multipliers Relevant to Multilateral and Unilateral
Sanctions on Developing and Industrialized Economies
Multiplier
Source, nature of policy change
Short-term
Long-term
Studies of the costs of current sanctions, with emphasis on developing economies
Hufbauer, Elliot, Cyrus and Winston (1997)
n.a.
0.05
Studies of the gains from trade liberalization, with emphasis on industrialized economies
Mckibbin (1998): U.S. tariffs on APEC and European imports
n.a.
0.10
0.20
n.a.
0.35
n.a.
n.a.
0.45
Tariffs only
0.15
0.70
Tariffs and other quantitative barriers
0.35
0.85
Hufbauer and Elliot (1994): all protection of 21 major U.S. industries
Multilateral changes involving specific sectors
Brown, Deardorff, Fox and Stern (1995): tariffs on industrial goods
Multilateral changes involving all sectors
McKibbin (1998): tariffs with APEC and Europe
Ho and Jorgenson (1994):
Note: Studies include:
Gary C. Hufbauer, Kimberly A. Elliot, Tess Cyrus, and Elizabeth Winston, U.S. Economic Sanctions:
Their Impact on Trade, Jobs, and Wages, Working paper (Washington, D.C.: Institute for
65
Richard D. Farmer, “Costs of Economic Sanctions to the Sender,” World Economy, vol. 23, no. 1
(2000), pp. 113-114.
118
International Economics, 1997), available at
http://www.iie.com/CATALOG/WP/1997/SANCTION/sanctnwp.htm, accessed August 10, 2000.
W. J. Mckibbin, “Unilateral versus Multilateral Trade Liberalization: The Importance of International
Financial Flows,” paper presented at the United States International Trade Commission APEC
Symposium, Washington, D.C., September 11-12, 1997.
Gary C. Hufbauer and Kimberly A. Elliot, Measuring the Costs of Protection in the United State
(Washington, D.C.: Institute for International Economics, 1994).
D. K. Brown, A. V. Deardorff, A. K. Fox, and R. M. Stern, “Computational Analysis of Goods and
Services Liberalization in the Uruguay Round,” in W. Martin and L. A. Winters (eds.), The
Uruguay Round and the Developing Economies, Discussion Paper no. 307 (Washington, D.C.:
World Bank, 1995).
M. S. Ho and D. W. Jorgenson, “Trade Policy and U.S. Economic Growth,” Journal of Policy Modeling,
vol. 16, no. 2 (1994), pp. 119-146.
These studies provide a rough order for the magnitude of potential sanctions
costs for both Taiwan and China. Further, there are several empirical studies that are
also useful for analyzing hypothetical China-Taiwan sanctions. Discussing
macroeconomic effects of trade liberalization on China based on the simulations of the
Global Trade Analysis Project model,
66
Yang Yongzheng estimates the
macroeconomic effects of trade liberalization on China in 2005 under four scenarios:
China joining the WTO as a developing economy; China joining the WTO as a
developed economy; tariff cut and leveling; and non-participation of China in the
Uruguay Round. Based on his work, China’s foreign-trade multipliers are 27.4, 23.6,
13.7, and 35 percents, respectively.67 (See Table 3.2.)
Table 3.2. Macroeconomic Effects of Liberalization on China, 2005
Unit: $ billion
As a developing
Equivalent variationa
66
67
As a developed
Tariff cut and
b
Non-participation in
economy
economy
leveling
the Uruguay round
18
19.1
27.4
-23.9
The Global Trade Analysis Project was led by Thomas Hertel of Purdue University.
Yongzheng Yang, “China’s WTO Membership: What’s at Stake?,” World Economy, vol. 19, no. 6
(November 1996), pp. 661-682.
119
Export volume
29.8
35.4
81.2
-30.3
Import volume
35.9
45.5
119.1
-38
27.4%
23.6%
13.7%
35%
Foreign-trade multiplier
Note:
a: Equivalent variation is the Hicksian exact measure of the change in consumer surplus and can
measure the change in social welfare. It is a money metric measure of how much better or worse
off the representative household is in the equilibrium after policy change than in the initial
equilibrium using the base prices as reference.
b: It is assumed that China undertakes to cut its tariffs to a maximum of 10 percent on top of the
developing economy liberalization.
Source: Yongzheng Yang, “China’s WTO Membership: What’s at Stake?,” World Economy, vol. 19, no.
6 (November 1996), pp. 677-679.
Wang Zhi uses a 12-region, 14-sector computable general equilibrium (CGE)
model for world trade and production to quantify the potential impact of China’s and
Taiwan’s accession to the WTO. He estimates the scenario that China joins the WTO
with the addition of a 35-percent reduction of China’s April 1996 tariff cut offer based
on simulations at 1992 constant prices under steady-state capital market closure68.
Based on his estimates, China’s foreign-trade multiplier is 19.4 percent and Taiwan’s
is 25 percent. Similarly, in his 1998 study, Wang Zhi estimates the scenario that both
Taiwan and China join the WTO with an additional 30 percent reduction of China’s
February 1998 tariff cut offer based on simulations at 1995 constant prices under
steady-state capital market closure. Based on his estimates, China’s foreign-trade
multiplier is 28.7 percent and Taiwan’s is 32 percent. In their 2000 study based on the
CGE model, Wang Zhi and G. Edward Schuh estimate the impact of a 50 percent tariff
cut by Taiwan, Hong Kong, China, the United States, Japan, and the European Union
based on simulations at 1995 constant prices under steady-state capital market closure.
Based on their estimates, China’s foreign-trade multiplier is 26.8 percent and Taiwan’s
68
Under the steady-state capital market closure, the return of capital is held constant while the capital
stock in each region is endogenously determined.
120
is 22.3 percent. (See Table 3.3.)
Table 3.3. Macroeconomic Effects of Liberalization on Taiwan and China
Unit: $ billion
China joins the WTO with
China joins the WTO with
Multilateral liberalization
addition 35-percent
additional 30 percent
among China’s major
reduction of China’s April reduction of China’s February
trading partners of a 50
1996 tariff cut offera
1998 tariff cut offerb
China
Taiwan
China
Taiwan
China
Taiwan
Equivalent variation
21.5
4
23.5
3.9
55.5
15
Export volume
65.7
8.2
49.4
5.8
103.3
33
Import volume
46.2
7.8
37.8
6.4
104
33.4
19.2%
25%
28.7%
32%
26.8%
22.3%
Foreign-trade multiplier
percent tariff cutb
Note:
a: The figures are at 1992 constant prices.
b: The figures are at 1995 constant prices.
Source:
Zhi Wang, The Impact of China and Taiwan Joining the World Trade Organization on U.S. and World
Agricultural Trade: A Computable General Equilibrium Analysis, Technical Bulletin Number 1858
(Washington, D.C.: The United States Department of Agriculture, 1997), pp. 12-24.
Zhi Wang, Jiaru Shijie Maoyi Zuzhi (WTO) Duei Liangan Maoyi Guanxi De Yingxiang [The Impact of
Taiwan and China Entering the World Trade Organization on Cross-Strait Trade Relations] (Taipei:
Chung-Hwa Institution for Economic Research, 1998), pp. 10-13.
Zhi Wang and G. Edward Schuh, “Economic Integration Among Taiwan, Hong Kong and China: A
Computable General Equilibrium Analysis,” Pacific Economic Review, vol. 5, no. 2 (June 2000), pp.
256-260.
Wang Zhi and G. Edward Schuh argue that three types of gains from trade
121
liberalization are captured by the CGE model: (1) the gains from more efficient
utilization of resources; (2) more rapid physical capital accumulation resulting from
the efficiency gain and thus higher saving and investment; and (3) more rapid growth
of total factor productivity owing to faster technology transfer via expansion of capital
and intermediate goods imports from other countries.69 As a result, these estimates of
welfare gains from the trade liberalization based on the CGE model should be treated
as multilateral, long-term gains. These estimates of foreign-trade multipliers should be
applied to the multilateral and long-term scenarios for both Taiwan and China.
Overall, based on the above studies, the short-term multiplier of China’s
unilateral sanctions against Taiwan could be at most 0.20 for both Taiwan and China.
Considering the possibility of retaliation and escalation by Taiwan and other countries
in response to China’s sanctions, the (multilateral) short-term multiplier for China
could be between 0.15 and 0.35. Regarding the long-term effect, the multiplier of
China’s unilateral sanctions against Taiwan could be between 0.05 and 0.10 for both
Taiwan and China. Considering possible retaliation from Taiwan and other countries
against China’s sanctions, the (multilateral) long-term multiplier for China could be
between 0.14 and 0.35.
Nevertheless, the multipliers could only provide general estimates of costs for the
sender and target. In some cases, trade sanctions could be focused on some critical and
bottleneck sectors of the target. Compared with general embargoes or boycotts, these
scenarios will entail more costs for the target than for the sender in those sectors.
VI. The Effectiveness of Economic Sanctions
69
Zhi Wang and G. Edward Schuh, “Economic Integration Among Taiwan, Hong Kong and China: A
Computable General Equilibrium Analysis,” Pacific Economic Review, vol. 5, no. 2 (June 2000), pp.
243-244.
122
The most often asked question in the literature on economic sanctions is, “Do
economic sanctions work?” or, “Are economic sanctions effective?” The consensus
reached by most scholars is that economic sanctions generally are ineffective, as the
following statements indicate:70
Johan Galtung: “[T]he probable effectiveness of economic sanctions is, generally,
negative.”71
Klaus Knorr: “[C]oercively wielding economic power by means of trade reprisals
or special trade advantages is rarely successful.”72
Margaret Doxey: “[T]he cases examined offer little evidence that economic
sanctions provide reliable means of inducing states to adhere to internationally
acceptable codes of conduct.”73
James Blessing: “In general… the suspension of aid does not appear to have been
a very effective means of inducing change in recipient behavior.”74
Robin Renwick: “It certainly is the case that, to date, [economic sanctions] have
very rarely succeeded in producing the desired results.”75
James M. Lindsay: “The consensus in the literature is that trade sanctions
generally fail to modify the target’s behavior.”76
HSE: “[Sanctions] are of limited utility in achieving foreign policy goals that
depend on compelling the target country to take actions it stoutly resists.”77
70
71
72
73
74
75
76
77
For more witnesses on the effectiveness of economic sanctions, see M. S. Daoudi and M. S. Dajani,
Economic Sanctions: Ideal and Experience (Boston: Routledge & Kegan Paul, 1983), pp. 174-188.
Johan Galtung, “On the Effects of International Economic Sanctions,” World Politics, vol. 19
(October 1966- July 1967), p. 409.
Klaus Knorr, The Power of Nations: The Political Economy of International Relations (New York:
Basic Books, 1975), p. 165.
Margaret P. Doxey, Economic Sanctions and International Enforcement, 2nd ed. (New York: Oxford
University Press, 1980), p. 125.
James A. Blessing, “The Suspension of Foreign Aid: A Macro-Analysis,” Polity, vol. 13, no. 3
(Spring 1981), p. 533.
Robin Renwick, Economic Sanctions (Cambridge, Massachusetts: Center for International Affairs,
Harvard University, 1981), p.91.
James M. Lindsay, “Trade Sanctions as Policy Instruments: A Re-examination,” International
Studies Quarterly, no. 30 (1986), p. 155.
Gary Clyde Hufbauer, Jeffery J. Schott, and Kimberly Ann Elliot, Economic Sanctions Reconsidered:
123
Richard Haass: “[W]ith few exceptions, the growing use of economic sanctions
to promote foreign policy objectives is deplorable.”78
T. Clifton Morgan and Valerie Schwebach: “In most cases, a state imposing
sanctions on its opponent can expect an outcome that is just about the same as would
be obtained without sanctions.”79
Robert A. Pape: “[T]here is little empirical evidence that sanctions can achieve
ambitious foreign policy goals.”80
Ernest H. Preeg: “[T]he overall assessment is that unilateral economic sanctions
during the 1990s, with few exceptions, have been ineffective in achieving their foreign
policy objectives while having various adverse effects on other U.S. interests.”81
Nevertheless, there is heated debate among scholars over the definition of the
success of economic sanctions. David Baldwin argues that the use of economic
sanctions – and economic statecraft more generally – typically involves multiple
objectives and targets, and that the assessment of success or failure from the sender’s
perspective could only be made convincingly by comparing the costs and benefits of
economic statecraft to that of other forms of statecraft. While Baldwin does not claim
that economic sanctions are likely to succeed, his conceptual framework and
reconsideration of classic cases taking multiple objectives into account does suggest
that the economic instrument is considerably more useful from the sender’s
perspective than scholars generally acknowledge.82
78
79
80
81
82
History and Current Policy, 2nd ed. (Washington, D.C.: Institute of International Economics, 1990),
p. 92.
Richard N. Haass, “Sanctioning Madness,” Foreign Affairs, vol. 76, no. 6 (November/December
1997), p. 75.
T. Clifton Morgan and Valerie L. Schwebach, “Fools Suffer Gladly: The Use of Economic Sanctions
in International Crises,” International Studies Quarterly, no. 41 (1997), p. 46.
Robert A. Pape, “Why Economic Sanctions Still Do Not Work,” International Security, vol. 23, no. 1
(Summer 1998), p. 66.
Ernest H. Preeg, Feeling Good or Doing Good with Sanctions: Unilateral Economic Sanctions and
the U.S. National Interest (Washington, D.C.: Center for Strategic and International Studies, 1999), p.
207.
David Baldwin, Economic Statecraft (Princeton, N.J.: Princeton University Press, 1985), pp.
124
As a matter of fact, Baldwin discusses the utility or efficiency instead of the
effectiveness of economic sanctions. He takes the multiple goals of the sender defined
by politician, the balance sheet of the costs and effectiveness, and the comparison of
the statecraft alternatives when judging the success of economic sanctions into
consideration. Baldwin’s approach is quite different from that of other analyses and
will confuse the essence of the power relationship inherent in economic sanctions,
which is the primary concern in this study with respect to China’s leverage and
Taiwan’s vulnerability. Baldwin’s approach will offer important implications for
decision-makers of the sender in choosing alternative statecrafts, but it does not offer
an answer to the effectiveness of economic sanctions.83
Similarly, M. S. Daoudi and M. S. Dajani place great importance on the domestic
perceptive functions performed by sanctions. They argue that even if sanctions fail to
achieve their initial goals, they may not be totally ineffective. They do not argue that
sanctions are effective instruments in achieving stated foreign policy goals, but they
do suggest that sanctions are important tools of statecraft if used for other purposes,
such as reaching symbolic goals or inflicting severe economic deprivation on the
target.84
Some scholars recognize that the senders often have multiple goals when
imposing economic sanctions, but these experts distinguish utility of economic
sanctions from effectiveness. For example, James Lindsay contends, “[T]rade
sanctions rarely force compliance or subvert the target government and have a limited
deterrent value. Yet they often succeed as international and domestic symbols.”85
83
84
85
115-205.
David Baldwin, “The Sanctions Debate and the Logic of Choice,” International Security, vol. 24, no.
3 (Winter 1999/2000), pp. 80-107.
M. S. Daoudi and M. S. Dajani, Economic Sanctions: Ideal and Experience (Boston: Routledge &
Kegan Paul, 1983), pp. 159-169.
James M. Lindsay, “Trade Sanctions as Policy Instruments: A Re-examination,” International
Studies Quarterly, no. 30 (1986), p. 154.
125
George Lopez and David Cortright argue, “If the analysis of the effectiveness of
sanctions remains literal regarding primary goals [the official or publicly declared
purpose of sanctions], then sanctions do indeed have limited effectiveness.”86 In its
report to the U.S. Senate Committee on Foreign Relations, the General Accounting
Office concludes that economic sanctions are more successful in achieving the less
ambitious and often unarticulated goals, such as upholding international norms and
deterring future objectionable actions, but are less successful in achieving the most
prominently stated goals of making the target comply with the sender’s stated
wishes.87
The HSE study defines the success of economic sanctions in two parts: the policy
result and the sanctions contribution. The policy result measures the degree to which
the sender’s policy objectives were achieved, and the sanctions contribution is the
degree to which sanctions contributed to this outcome. Both parts are scaled from 1 to
4. For policy results, 1 indicates a failed outcome, 2 indicates an unclear but possibly
positive outcome, 3 indicates a positive outcome with a somewhat successful result,
and 4 indicates a successful outcome. For sanctions contribution, 1 indicates a zero or
negative contribution, 2 indicates a minor contribution, 3 indicates a modest
contribution, and 4 indicates a significant contribution. A product of nine or higher for
the policy result and sanctions contribution is counted as a sanctions success.88
Using a rating system that attempts to determine whether the target complied
with the sender’s goals and whether sanctions were the primary cause of this change,
86
87
88
George A. Lopez and David Cortright, “Economic Sanctions in Contemporary Global Relations,” in
David Cortright and George A. Lopez (eds.), Economic Sanctions: Panacea or Peacebuilding in a
Post-Cold War World? (Boulder, Colorado: Westview Press, 1995), p. 7
United States General Accounting Office, Economic Sanctions: Effectiveness as Tools of Foreign
Policy, Report to the Chairman, Committee on Foreign Relations, U.S. Senate, GAO/NSIAD-92-106,
February 1992, p. 2..
Gary Clyde Hufbauer, Jeffery J. Schott, and Kimberly Ann Elliot, Economic Sanctions Reconsidered:
History and Current Policy, 2nd ed. (Washington, D.C.: Institute of International Economics, 1990),
pp. 41-42.
126
HSE calculate an overall success rate of 34 percent, or 40 cases for the 115 cases. Of
the sanctions episodes in the pre-1973 period, 44 percent ended successfully, whereas
the success rate among post-1973 cases was just under 25 percent. Even more striking
is the decline in the effectiveness of sanctions imposed in pursuit of modest goals,
from 75 percent to 21 percent, most of which involved the United States. In addition,
unilateral sanctions imposed by the United States in recent years have only rarely
worked, with just 13 percent (or 5 of 39) unilateral U.S. sanctions achieving any
success between 1970 and 1990.89
By disputing many of the successes claimed by HSE and identifying different
causes for the successes that did take place, Robert Pape concludes that the actual
success rate in the cases examined was less than five percent. In comparison, Kim
Nossal argues that among the many sanctions episodes since 1945, only 14 stand out
as unequivocally successful in the sense that the sanctions prompted the target state to
alter its behavior. Out of HSE 115 total cases examined, Nossal concludes that only
eight were successful.90
According to Pape’s definition, economic sanctions seek to lower the aggregate
economic welfare of a target state by reducing international trade in order to coerce
the target government to change its political behavior. He points out that this
definition should exclude trade war and economic warfare, a point HSE agree with.
Further, Pape credits economic sanctions with success only if they meet three criteria:
89
90
According to Cortright and Lopez, in 1999 a revised and updated version of HSE study,
encompassing 170 sanctions episodes from 1914 through 1999, gives an overall success rate of
approximately 35 percent. Gary Clyde Hufbauer, Jeffery J. Schott, and Kimberly Ann Elliot,
Economic Sanctions Reconsidered: History and Current Policy, 2nd ed. (Washington, D.C.: Institute
of International Economics, 1990), p. 93. Kimberly Ann Elliot, “Factors Affecting the Success of
Sanctions,” in David Cortright and George A. Lopez (eds.), Economic Sanctions: Panacea or
Peacebuilding in a Post-Cold War World? (Boulder, Colorado: Westview Press, 1995), p. 54.
Kimberly Ann Elliott, “The Sanctions Glass: Half Full or Completely Empty,” International Security,
vol. 23, no. 1 (Summer 1998), p. 58. David Cortright and George A. Lopez, The Sanctions Decade:
Assessing UN Strategies in the 1990s (Boulder, Colorado: Lynne Rienner, 2000), p 15.
Kim Richard Nossal, “Liberal Democratic Regimes, International Sanctions, and Global
Governance,” in Raimo Vayrynen (ed.), Globalization and Global Governance (Lanham, Maryland:
127
(1) the target state conceded to a significant part of the sender’s demands; (2)
economic sanctions were threatened or actually applied before the target changed its
behavior; and (3) no more-credible explanation exists for the change in the target’s
behavior.91
Pape argues that an examination of the 40 sanctions cases HSE claim were
successful reveals that, in fact, only five were clear successes. The remaining 35 are
accounted for by four classes of errors: (1) eighteen are ultimately determined by
force, not economic sanctions; (2) eight are failures, in which the target state never
concedes to the sender’s demands; (3) six are trade disputes, not instances of
economic sanctions; and (4) three are indeterminate.92
Pape points out that two problems account for the errors in HSE’s findings. First,
although their aim is to study the use of economic sanctions for political goals, their
data set inappropriately includes instances of two other types of economic statecrafts:
commercial negotiations and economic warfare. Second, HSE routinely fail to control
for the role of force. Nearly half of HSE’s claimed successes of sanctions, according
to Pape, are actually instances of successful application of force, which they routinely
underrate or even underreport.93
In a rebuttal to Pape’s criticism, Kimberly Ann Elliot challenges Pape’s
interpretation of seven cases. Therefore, Elliot’s response counts only 12 cases of
economic sanctions successes without military determination. While Daniel Drezner
agrees with Pape that seven of 40 successes in HSE data are miscoded and eleven are
cases involving military force, he challenges Pape’s interpretation of two cases.
91
92
93
Rowman & Littlefield Publishers, Inc., 1999), pp. 128-129, 135.
Robert A. Pape, “Why Economic Sanctions Do Not Work,” International Security, vol. 22, no. 2
(Fall 1997), pp. 93-97.
Robert A. Pape, “Why Economic Sanctions Do Not Work,” International Security, vol. 22, no. 2
(Fall 1997), pp. 99-105.
Robert A. Pape, “Why Economic Sanctions Do Not Work,” International Security, vol. 22, no. 2
(Fall 1997), pp. 105-106.
128
Furthermore, both Elliot and Drezner criticize Pape for not addressing the issue of
whether economic sanctions can enhance the effectiveness of force, primarily because
Pape’s aim is to assess the independent usefulness of sanctions.94
However, Pape points out that both his study and the HSE study ask the same
question: How effective are economic sanctions not as a complement to force but as a
stand-alone foreign policy instrument? That is, are economic sanctions better
alternatives to military action?95 In fact, military action without economic sanctions
could cause equivalent or larger economic loss on the target through regular warfare
or blockade. There is generally no need to use economic sanctions as a complement to
force except for the purpose of signaling.
In addition, like David Baldwin, David Cortright and George Lopez challenge
the HSE method of focusing exclusively on the stated policy objectives of sanctions
while ignoring the other purposes sanctions may serve. They argue that analyses that
focus too narrowly on instrumental objectives create a misleading impression of
ineffectiveness and undervalue the broader political impact of sanctions. In addition to
their official or publicly declared objectives, sanctions can be imposed for symbolic
and other purposes, which may include deterring future wrongdoing, demonstrating
resolve to allies or domestic constituencies, upholding international norms, and
sending messages of disapproval in response to objectionable behavior. 96 However,
94
95
96
Daniel Drezner argues the following success cases in HSE data set are either economic warfare or
strategic embargoes: 14-1, UK vs. Germany; 21-1, League of Nations vs. Yugoslavia; 25-1, League
of Nations vs. Greece; 39-1, Allied powers vs. Axis; 62-1, UN vs. South Africa; 77-4, Canada vs. the
European Community; 79-3, Arab League vs. Canada. Kimberly Ann Elliott, “The Sanctions Glass:
Half Full or Completely Empty,” International Security, vol. 23, no. 1 (Summer 1998), pp. 60-65.
Robert A. Pape, “Why Economic Sanctions Still Do Not Work,” International Security, vol. 23, no. 1
(Summer 1998), pp. 72-76. Daniel W. Drezner, The Sanctions Paradox: Economic Statecraft and
International Relations (New York: Cambridge University Press, 1999), pp. 103-106. Daniel W.
Drezner, “The Complex Causation of Sanction Outcomes,” in Steve Chan and A. Cooper Drury
(eds.), Sanctions as Economic Statecraft: Theory and Practice (New York: St. Martin’s, 2000), pp.
218-219.
Robert A. Pape, “Why Economic Sanctions Still Do Not Work,” International Security, vol. 23, no. 1
(Summer 1998), pp. 69-70.
David Cortright and George A. Lopez, The Sanctions Decade: Assessing UN Strategies in the 1990s
(Boulder, Colorado: Lynne Rienner, 2000), pp. 15-6.
129
this criticism is again mistargeted because Cortright and Lopez discuss the utility
instead of the effectiveness of sanctions.
Finally, Daniel Drezner offers two insights on the dichotomy of success/failure
made in the literature. First, he argues, the degree of success should be judged by the
size of the agreed concessions relative to the status quo, and not the size of the
concessions relative to the sender’s original demand. Second, the degree of success
also depends upon the type of demand. A moderate degree of success in
accomplishing a difficult task may seem more impressive than a high degree of
success in accomplishing an easy task. He uses these criteria to examine 39 episodes
of Russian sanctions against members of the NIS between 1992 to 1997.97 Drezner’s
analysis will be further discussed in Chapter 5.
To sum up the debate, using a strict definition of economic sanction, which
excludes economic warfare and trade disputes, the success rate of economic sanctions
based on the HSE database is between 4.6 percent (five of 109 cases)98 and 10.4
percent (12 of 115 cases), even if we consider the difference of judgement on
economic sanctions successes among HSE, Pape, and Nossal. This success rate is low
enough to conclude that economic sanctions are generally ineffective. Based on the
HSE database, Table 3.4 shows the differences of economic sanctions successes
judged by HSE, Pape, and Nossal. Chapter 5 will further examine more
comprehensive theories on the effectiveness of economic sanctions.
97
98
Daniel W. Drezner, The Sanctions Paradox: Economic Statecraft and International Relations (New
York: Cambridge University Press, 1999), pp. 18-9, 68, 131-247.
109 cases exclude 6 cases in the HSE database, which, Pape argues, are trade disputes, not instance
of economic sanctions.
130
Table 3.4 Sanctions Successes since 1945 Based on HSE Database
Year
Sender
Target
HSE resulta Pape resultb
Nossal result
1914
U.K.
Germany
Success (d) N.A. (b)
Failure
1921
League of Nations Yugoslavia
Success (c) N.A. (b)
Failure
1925
League of Nations Greece
Success (c) N.A. (b)
Failure
1933
U.K.
USSR
Success (a) Success
Failure
1938
U.S./U.K.
Mexico
Success (a) N.A. (d)
Failure
1939
Allies
Germany/Japan
Success (d) N.A. (a)
Failure
1948
U.S.
Netherlands
Success (c) Indeterminate Success
1948
India
Hyderabad
Success (e) N.A. (a)
Failure
1951
U.S./U.K.
Iran
Success (b) N.A. (c)
Failure
1956
U.S./U.K./France
Egypt
Success (a) Failure
Failure
1956
U.S.
Laos
Success (b) N.A. (c)
Failure
1956
U.S.
U.K./France
Success (c) N.A. (b)
Success
1958
USSR
Finland
Success (b) N.A. (d)
Success
1960
U.S.
Dominican Republic Success (b) N.A. (b)
Failure
1961
U.S.
Ceylon
Success (a) N.A. (d)
Failure
1962
U.S.
Brazil
Success (b) N.A. (c)
Failure
1962
UN
South Africa
Failure
Success
1963
U.S.
Egypt
Success (a) Failure
Failure
1963
U.S.
South Vietnam
Success (b) N.A. (c)
Failure
1964
France
Tunisia
Success (a) N.A. (d)
Failure
1965
U.S.
Chile
Success (a) N.A. (d)
Failure
1965
U.S.
India
Success (a) Failure
Success
1965
U.K./UN
Rhodesia
Success (b) N.A. (b)
Failure
1967
Nigeria
Biafra
Success (e) N.A. (a)
Failure
1968
U.S.
Peru
Success (a) N.A. (d)
Failure
1970
U.S.
Chile
Success (b) N.A. (c)
Failure
1972
U.K./U.S.
Uganda
Success (b) N.A. (a)
Failure
1973
Arab League
U.S./Netherlands
Success (e) Failure
Failure
1975
U.S./Canada
South Korea
Success (a) Success
Success
1976
U.S.
Taiwan
Success (a) Failure
Success
1977
Canada
EC/Japan
Success (a) Indeterminate Failure
1977
U.S.
Brazil
Success (a) Failure
131
Failure
Failure
1977
U.S.
Nicaragua
Success (b) N.A. (a)
Failure
1979
U.S.
Iran
Success (a) Failure
Failure
1979
Arab League
Canada
Success (a) Success
Success
1981
U.S.
Poland
Success (e) Failure
Failure
1982
U.S./Netherlands
Suriname
Success (a) N.A. (b)
Failure
1982
South Africa
Lesotho
Success (b) Indeterminate Failure
1982
U.K.
Argentina
Success (c) N.A. (a)
Failure
1987
U.S.
El Salvador
Success (a) Success
Failure
1989
India
Nepal
Success (e) Success
Failure
Note:
a:
success (a): modest policy change
success (b): political destabilization
success (c): disruption of military adventures (excluding major wars)
success (d): impairment of military potential (including major wars)
success (e): other major policy changes
b:
N.A. (a): outcomes determined by force, not economic sanctions (brute force military victory)
N.A. (b): outcomes determined by force, not economic sanctions (military coercion)
N.A. (c): outcomes determined by force, not economic sanctions (foreign-sponsored
assassinations and military coups)
N.A. (d): not instances of economic sanctions
Source:
Robert A. Pape, “Why Economic Sanctions Do Not Work,” International Security, vol. 22, no. 2 (Fall
1997), pp. 100-103.
Kim Richard Nossal, “Liberal Democratic Regimes, International Sanctions, and Global Governance,”
in Raimo Vayrynen (ed.), Globalization and Global Governance (Lanham, Maryland: Rowman &
Littlefield Publishers, Inc., 1999), p. 129.
132