CHAPTER 4
THEORIES ON THE INITIATION OF ECONOMIC SANCTIONS
As shown in Chapter 3, economic sanctions are generally ineffective and the rate
of success of economic sanctions in terms of compliance of the target has declined
over time, particularly in the period from 1975 to 1990. (See Table 4.1.) While
economic sanctions have been increasingly employed over time, Gary Hufbauer,
Jeffery Schott, and Kimberly Elliot (hereafter HSE) calculate an overall success rate
of 34 percent, or 40 cases of the 115 cases they have studied. Moreover, Robert Pape
and Kim Nossal argue that HSE overestimate the overall success rate by including
non-economic sanctions cases, as discussed in Chapter 3. Regardless, there is a
contrast between the increasing use of and declining effectiveness of economic
sanctions.
Table 4.1. The Rate of Economic Sanctions Successes Based on HSE Database
Period
Total cases
Cases of success
Rate of success
1914-1929 (16 years)
5
3
60%
1930-1944 (15 years)
7
3
43%
1945-1959 (15 years)
20
7
35%
1960-1974 (15 years)
34
14
41%
1975-1989 (15 years)
52
13
25%
1990-1999 (10 years)
50
n.a.
n.a.
Source:
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.
Gary Clyde Hufbauer, Jeffery J. Schott, and Kimberly Ann Elliot, Economic Sanctions Reconsidered:
134
History and Current Policy, 2nd ed. (Washington, D.C.: Institute of International Economics,
1990).
If the sender’s leaders are rational and aware of the relative ineffectiveness of
sanctions as policy tools, they should not choose economic sanctions as a means to
achieve foreign policy goals, or at a minimum, do so less often and only under
circumstances that are most propitious. Do decision-makers not learn the lessons of
history? How do theories of economic sanctions explain this discrepancy between the
ineffectiveness and frequent employment of economic sanctions over time? And why
are economic sanctions imposed so often given the frequency of failure, particularly
after 1975?
In general, there are three sets of explanations for why economic sanctions
remain a popular foreign policy tool: the domestic politics/symbolic approach, the
signaling/deterrence approach, and the conflict expectations model.
I. The Domestic Politics/Symbolic Approach
The domestic politics/symbolic approach focuses on the domestic politics of
sender countries. The decision to initiate sanctions is caused by domestic pressure
within the sender country to punish the target and show the sender’s disapproval or
moral outrage. If the target country’s behavior violates the sender’s interests or
international norms, citizens or groups in the sender country will feel compelled to
“do something.” Furthermore, the costs of effective military intervention may be too
high, therefore the sender will turn to economic sanctions as an imperfect substitute
for coercive action. The sanctions themselves might be ineffective, but their
implementation allows foreign policy decisionmakers to avoid accusations of
135
doing-nothing.1
Many authors have proposed this rationale for sanctions. Johan Galtung states,
“When military action is impossible for one reason or another, and when doing
nothing is impossible for one reason or another, and when doing nothing is seen as
tantamount to complicity, then something has to be done to express morality,
something that at least serves as a clear signal to everyone that what the [target] nation
has done is disapproved of. If the sanctions do not serve instrumental purposes they
can at least have expressive functions.”2 Klaus Knorr similarly argues, “[E]conomic
power can be exercised to register displeasure and mete out punishment not for
coercive purposes but simply in order to gratify the actor’s emotional desire for
hurting a recalcitrant government.”3
Robin Renwick contends, “A decision to impose sanctions may be taken less on
its intrinsic merits than because of its attractions in relations to the alternatives [doing
nothing or military action].”4 M. S. Daoudi and M. S. Dajani assert, “The imposition
of sanctions absorbs the initial reaction that something needs to be done.” 5 David
Baldwin emphasizes: “[Economic sanctions] were undertaken in order to pacify
domestic public opinion rather than because policy makers viewed them as
1
2
3
4
5
David Leyton-Brown, “Lessons and Policy Considerations about Economic Sanctions,” David
Leyton-Brown (ed.), The Utility of International Economic Sanctions (New York: St. Martin’s Press,
1987), pp. 305-6. 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. 3, 13. Christopher C. Joyner, “Sanctions and International Law,”
in David Cortright and George A. Lopez (eds.), Economic Sanctions: Panacea or Peacebuilding in a
Post-Cold War World? (Boulder, Colorado: Westview Press, 1995), pp. 74-5. Daniel W. Drezner, The
Sanctions Paradox: Economic Statecraft and International Relations (New York: Cambridge
University Press, 1999), pp. 11-2.
Johan Galtung, “On the Effects of International Economic Sanctions,” World Politics, vol. 19
(October 1966- July 1967), pp. 411-412.
Klaus Knorr, The Power of Nations: The Political Economy of International Relations (New York:
Basic Books, 1975), p. 138.
Robin Renwick, Economic Sanctions (Cambridge, Massachusetts: Center for International Affairs,
Harvard University, 1981), p. 1.
M. S. Daoudi and M. S. Dajani, Economic Sanctions: Ideal and Experience (Boston: Routledge &
Kegan Paul, 1983), p. 161.
136
instruments of statecraft.”6 James Lindsay points out, “The resort to sanctions more
likely was made for their symbolic effects….When military options are not feasible or
desirable and the [sender] wants to respond forcefully to the target’s behavior,
sanctions provide a means of ‘doing something’. ”7
Pre-1980s Evidence
Despite the above argument the available statistical evidence on sanctions cases
before the 1980s does not always support the domestic politics/symbolic argument. To
determine the cause of aid suspensions, James Blessing compares a set of 59 countries
that had their U.S. aid suspended between 1948 and 1972 against a null set of 59
countries that did not have aid suspended. He found that domestic pressure played a
minimal role in motivating sanctions, and concluded that, in the vast majority of the
126 cases, U.S. aid was suspended by the executive branch more in response to the
target’s behavior than in response to either domestic or overt congressional pressure.
But this finding had a low level of confidence attached to it and should be viewed only
as a hypothesis.8
To determine why states initiate economic sanctions, Richard Ellings examines
107 incidences of sanctions threats and actualized sanctions between 1945 and 1982.
The U.S. participated in 75 multilateral sanctions and 63 unilateral ones. Nine of the
American and two of the non-American cases were threats. He finds that domestic
political variables had little influence on sanctions initiation. The United States
practiced economic sanctions when its national interests in maintaining the
6
7
8
David Baldwin, Economic Statecraft (Princeton, N.J.: Princeton University Press, 1985), pp. 97-98.
James M. Lindsay, “Trade Sanctions as Policy Instruments: A Re-examination,” International Studies
Quarterly, no. 30 (1986), p. 170.
James A. Blessing, “The Suspension of Foreign Aid: A Macro-Analysis,” Polity, vol. 13, no. 3
(Spring 1981), pp. 524-35.
137
international system and peace were threatened. This cause, as well as U.S. president’s
personality, appear to account for most, if not all, of sanctions and threats.9
However, A. Cooper Drury argues that domestic factors did play a role in
initiating sanctions by the United States between 1948 to 1978. He analyzes 22 dyads
of U.S. economic sanctions in this period by using logistic regression with a random
sample of nations (a control group) which were not sanctioned by the United States in
the same period. He concludes that the decisions of U.S. presidents to impose
sanctions against Latin American nations were driven only by the international
relations between the U.S. and the target, while those against other countries were
driven by both international and domestic forces. He speculates that the domestic
influence on the initial decision of imposing sanctions against non-Latin American
countries is probably the president’s reaction to public demand for action.10
Pre-1980s evidence generally rejects the hypothesis that economic sanctions are
imposed in reaction to public opinion or as a means to take symbolic action because
there are no other feasible actions available. Elling’s and Blessing’s researches reject
this hypothesis. Drury’s result provides moderate support for a domestic explanation.
However, these three statistical exercises contain a very important limitation: they
only discuss cases before the 1980s, so may be not applicable to a post-Cold War era.
The reasons for this possible pre- post-1980 disjuncture may include the increasing
important role of the Congress, interest groups, and non-governmental organizations
in foreign policy-making, the declining legitimacy of the use of force, and growing
economic interdependence -- subjects to which we now turn.
9
Richard J. Ellings, Embargoes and World Power: Lessons from American Foreign Policy (Boulder:
Westview Press, 1985), pp. 113-155.
10
A. Cooper Drury, “How and Whom the US President Sanctions: A Time-series Cross-section
Analysis of US Sanction Decisions and Characteristics,” in Steve Chan and A. Cooper Drury (eds.),
Sanctions as Economic Statecraft: Theory and Practice (New York: St. Martin’s, 2000), pp. 17-36.
138
Evidence from the 1980s to the Present
According to HSE’s new study, from 1980 to 1997 the United States participated
in 56 of 77 cases of economic sanctions, or 72 percent of the total. 11 Therefore, it is
necessary to examine U.S. motivations from 1980 onward. Four factors contribute to
the frequent use of economic sanctions by the United States after 1980, particularly in
the 1990s.12 First, the U.S. Congress increasingly constrained the U.S. president’s
discretion in various foreign policy situations by requiring the use of economic
sanctions in many situations. For example, between 1993 and 1996, the U.S. Congress
passed five sanctions laws: the Nuclear Proliferation Prevention Act of 1994, the
Cuban Liberty and Democratic Solidarity Act (the “Helms-Burton Act”) of 1996, the
Antiterrorism and Effective Death Penalty Act of 1996, the Iran-Libya Sanctions Act
of 1996, and the Free Burma Act of 1996.13
Second, by the 1990s, interest groups and non-governmental organizations
(NGOs) have played an increasingly important role in influencing U.S. foreign policy.
Since the demise of the Soviet Union, security issues and opposition to Soviet
expansion no longer drive U.S. foreign policy. Non-security issues, such as
democratization, religious freedom, and human rights have gained greater prominence.
11
12
13
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, 7/25/00, pp. 4-5 of 5.
Kimberly Ann Elliott and Gary Clyde Hufbauer, “‘New’ Approaches to Economic Sanctions,” in
Arnold Kanter and Linton F. Brooks (eds.), U.S. Intervention Policy for the Post-Cold War World
(New York: W. W. Norton, 1994), chapter 5, pp. 143-144. Peter A. G. van Bergeijk, “The Impact of
Economic Sanctions in the 1990s,” World Economy, vol. 18, no. 3 (May 1995), pp. 445-449. 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), pp. 4-6. Richard N. Haass (ed.),
Economic Sanctions and American Diplomacy (New York: Council on Foreign Relations, 1998), pp.
2-4. Zachary Selden, Economic Sanctions as Instruments of American Foreign Policy (Westport,
Connecticut: Praeger, 1999), pp. 1-3. Robert G. Sutter, U.S. Policy Toward China: An Introduction to
the Role of Interest Groups (Lanham, Maryland: Rowman & Littlefield, 1998). Randall Ripley and
James Lindsay (eds.), Congress Resurgent: Foreign and Defense Policy on Capitol Hill (Ann Arbor,
Michigan: University of Michigan Press, 1993).
Jesse Helms, “What Sanctions Epidemic?,” Foreign Affairs, vol. 78, no. 1 (January/February 1999),
139
As a result, the number of interest groups and NGOs have increased dramatically. In
America of the 1950s and 1960s, there were relatively few NGOs with foreign policy
missions. By late 1998 the number of lobbyists registered with the Secretary of the
U.S. Senate was 18,590. In addition, there were more than 7,500 interest groups and
NGOs in the United States, of which 2,300 organizations had their national
headquarters within twenty miles of the Capitol in 1998. Various interest groups and
NGOs focused on these subjects have enhanced influence in the policy-making
process through lobbying the executive and legislative branches.14
Third, the end of Cold War led to a decline in the legitimacy of the use of force,
and sanctions provided a highly visible but less costly alternative to military
intervention. Finally, the volume of international trade and investment, and thus
economic interdependence, has increased enormously. Regarding international
investment, the stocks of world total outward FDI was only $68 billion in 1960 while
in 1997 it was $3,541 billion. Multinational companies worldwide generated more
than $2 trillion in value added in 1997. They accounted for an increasing share in
world GDP: close to 7 percent in 1997, as compared with 5 percent in the mid-1980s.
They also accounted for approximately one-third of world exports in 1995, compared
to about one-quarter during the latter half of the 1980s.15 Regarding international
trade, the ratio of international trade of developing countries (potential target of
sanctions) to their GDP was 40 percent in 1980, while it was 48 percent in 1993.16
Therefore, high economic interdependence makes economic sanctions an available
14
15
16
pp. 3-4.
David M. Lampton, Same Bed, Different Dreams: Managing U.S.-China Relations, 1989-2000
(Berkeley: University of California Press, 2001), pp. 282-288.
United Nations Conference on Trade and Development, World Investment Report 1998: Trends and
Determinants (New York: United Nations, 1998), pp. 2-6.
Developing countries refer to both low- and middle-income economies in the classification by the
World Bank. World Bank, World Tables 1995 (Baltimore: Johns Hopkins University Press, 1995), pp.
28-29. International Monetary Fund (IMF), International Financial Statistics Yearbook 2000
(Washington, DC: IMF, 2000), pp. 128-135.
140
tool for the sender to influence the target’s policy.
Kimberly Elliot and Gary Hufbauer point out that the end of the Cold War meant
the diffusion of power from the U.S. executive branch to congressional and
sub-federal players, and NGOs. They also note that U.S. presidents feel compelled to
adopt sanctions against foreign misdeeds, even when the likelihood of changing the
target country’s behavior seems remote. In their examination of 50 cases launched in
the 1990s, they contend that many of the high-profile unilateral sanctions were pushed
by domestic interest groups and accepted only reluctantly, after persistent lobbying, by
the executive branch. For example, the Western sanctions against South Africa’s
apartheid policy and against China’s violent crackdown in Tiananmen Square were
principally designed to assuage domestic constituencies.17
Examining recent prominent cases of economic sanctions imposed by the United
States in the post-Cold War era, both Richard Haass and Ernest Preeg conclude that
sanctions provide a visible and less expensive alternative to military intervention and
at the same time they provide an alternative to doing nothing or limiting the U.S.
reaction to rhetoric. In addition, both Ivan Eland and Kim Nossal argue that economic
sanctions were more popular in the 1990s for two reasons: (1) nations have limited
policy options to influence the behavior of other nations; and (2) sanctions are a better
alternative than diplomatic and paramilitary/military action.18
17
18
Kimberly Ann Elliott and Gary Clyde Hufbauer, “‘New’ Approaches to Economic Sanctions,” in
Arnold Kanter and Linton F. Brooks (eds.), U.S. Intervention Policy for the Post-Cold War World
(New York: W. W. Norton, 1994), chapter 5, pp. 132-158. Kimberly Ann Elliott and Gary Clyde
Hufbauer, “Same Song, Same Refrain? Economic Sanctions in the 1990’s,” AEA Papers and
Proceedings, May 1999, pp. 403-408.
Richard Haass’s study examines eight cases, including China, Cuba, Haiti, Iran, Iraq, Libya, Pakistan,
and the former Yugoslavia. Ernest Preeg’s study examines five cases, including China, Cuba, Iran,
Myanmar (formerly Burma), and Vietnam. Richard N. Haass (ed.), Economic Sanctions and
American Diplomacy (New York: Council on Foreign Relations, 1998). 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). Ivan Eland, “Economic
Sanctions as Tools of Foreign Policy,” in David Cortright and George A. Lopez (eds.), Economic
Sanctions: Panacea or Peacebuilding in a Post-Cold War World? (Boulder, Colorado: Westview
Press, 1995), pp. 29-31. Kim Richard Nossal, “Liberal Democratic Regimes, International Sanctions,
and Global Governance,” in Raimo Vayrynen (ed.), Globalization and Global Governance (Lanham,
141
Jesse Helms, an influential U.S. senator, promotes this argument by asserting,
“Take away sanctions and how can the United States deal with terrorists, proliferators,
and genocidal dictators? Our options would be empty talk or sending in the marines.
Without sanctions, the United States would be virtually powerless to influence events
absent war. Sanctions may not be perfect and they are not always the answer, but they
are often the only weapon.”19
Further, the public choice perspective directs attention away from sovereign
nation states as agents of international relations and toward individuals and groups
within these states. This perspective argues that policy is viewed as a product of
collective choice involving voters, interest groups, politicians, and bureaucrats. In
particular, this perspective emphasizes the role of interest groups in influencing
foreign policy. The sender governments often attempt to meet the demands of interest
groups who are pressuring them to do something (i.e. apply sanctions) against a
foreign government’s violation of some behavioral norm.20
Interest groups include not only domestic groups but also global interest groups
which are emerging due to the rapid globalization of the world economy, information
globalization, and the broad global issues of common concern. These groups are
playing an important role in the sender countries, particularly the United States, in the
era of globalization. These groups include foreign entities (governments and political
organizations) and individuals, international lobby groups, international human rights
19
20
Maryland: Rowman & Littlefield Publishers, Inc., 1999), pp. 127-132.
Jesse Helms, “What Sanctions Epidemic?,” Foreign Affairs, vol. 78, no. 1 (January/February 1999),
p. 5.
William H. Kaempfer and Anton D. Lowenberg, “A Public Choice Analysis of the Political
Economy of International Sanctions,” in Steve Chan and A. Cooper Drury (eds.), Sanctions as
Economic Statecraft: Theory and Practice (New York: St. Martin’s, 2000), pp. 158-186. William H.
Kaempfer and Anton D. Lowenberg, International Economic Sanctions: A Public Choice
Perspective (Boulder, Colorado: Westview Press, 1992). William H. Kaempfer and Anton D.
Lowenberg, “The Problems and Promise 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), pp. 51-71.
142
and religious groups, business associations of multinational companies, and other
NGOs. Both global as well as domestic interest groups have pressed their cases with
the U.S. administration and Congress, as seen in the U.S. debate over granting China
MFN trade status, which is discussed later.
William Kaempfer and Anton Lowenberg, theorists of the public choice
perspective, argue that sanctions are designed specifically to benefit interest groups in
sender countries, such as economic rent-offering, achievement of non-proliferation
policy, or stopping human rights abuses. These sanctions are essentially
redistributional policies, creating privatized gains, either pecuniary or nonpecuniary,
concentrated on narrow special interests. In general, this perspective emphasizes that
the decision, form, and severity of the sanctions applied depend on at least three
factors: (1) the relative influences of various interest groups within the sender country;
(2) the ability of policymakers to act independently of interest-group pressures; and,
(3) the amount of information possessed by individuals and groups within the sender
country regarding the objectionable policy of the target country. In particular, the
greater the awareness of the objectionable policy of the target, the greater the
momentum of the sanctioning campaign in the sender country. 21
For example, William Kaempfer and Anton Lowenberg find that the trade
sanctions applied against South Africa by Western countries in the late 1980s were
designed to minimize the costs imposed on influential interest groups within the
sender nations. Similarly, trade sanctions imposed by the U.S. against India in May
1998 in response to their nuclear weapons tests were deliberately weakened by
exempting U.S. agricultural exports to those countries at the request of the politically
21
William H. Kaempfer and Anton D. Lowenberg, “A Public Choice Analysis of the Political
Economy of International Sanctions,” in Steve Chan and A. Cooper Drury (eds.), Sanctions as
Economic Statecraft: Theory and Practice (New York: St. Martin’s, 2000), pp. 159-181. William H.
Kaempfer and Anton D. Lowenberg, “The Problems and Promise of Sanctions,” in David Cortright
and George A. Lopez (eds.), Economic Sanctions: Panacea or Peacebuilding in a Post-Cold War
143
influential farm lobby. Finally, Richard Haass asserts that the so-called “CNN effect”
of high media exposure to a particular issue will stimulate a desire among Americans
to respond.22
Furthermore, the domestic politics/symbolic argument is generally used to
speculate that democracies will impose economic sanctions more frequently than
authoritarian regimes. In a democracy, public and interest-group pressure has a better
chance of forcing the government to take at least symbolic action (“do something”)
than an authoritarian regime. For example, Daniel Drezner finds that the sender was a
democracy in 84 percent of the HSE database, excluding economic warfare (strategic
and wartime embargoes). His cases include those cases with multiple observations.23
The number of observations ends up 114 cases, ranging from 1917 to 1989. Hereafter,
this will be called the HSE-Drezner database.24
However, this argument that democracies use economic sanctions more
frequently is overdetermined. According to HSE, the United States was responsible
for 71 percent of the sanctions attempts, or 106 of 149 cases between 1950 and 1997.
22
23
24
World? (Boulder, Colorado: Westview Press, 1995), pp. 63-64.
In addition, in the third presidential debate in the 2000 campaign, U.S. Republican candidate George
W. Bush states, “I don’t want to use food as a diplomatic weapon from this point forward. We
shouldn’t be using food. It hurts the farmers. It’s not the right thing to do.” William H. Kaempfer and
Anton D. Lowenberg, “A Public Choice Analysis of the Political Economy of International
Sanctions,” in Steve Chan and A. Cooper Drury (eds.), Sanctions as Economic Statecraft: Theory
and Practice (New York: St. Martin’s, 2000), pp. 160-161. Richard N. Haass, “Introduction,” in
Richard N. Haass (ed.), Economic Sanctions and American Diplomacy (New York: Council on
Foreign Relations, 1998), p. 3. eMediaMillWorks, “Page Three: Presidential Debate, St. Louis,
Mo.,” Washington Post, available at
http://washingtonpost.com/…politics/elections/debatetext101700c.htm , accessed October 18, 2000,
p. 2 of 16.
HSE code some events as a single case, but in fact these events contain several distinct and
identifiable sanctions cases. For example, the sanction efforts by the United States to liberalize
emigration in Eastern Europe are grouped into one case in the HSE database. This case really
contains five different sanction events: the United States failed to coerce Czechoslovakia, East
Germany, and Bulgaria in 1975, successfully coerced Hungary in 1978, and successfully coerced
Romania in 1983.
In testing the causes of sanctions outcomes, the cases of regular military force are excluded,
reducing the number of observations to 103. Daniel W. Drezner, The Sanctions Paradox: Economic
Statecraft and International Relations (New York: Cambridge University Press, 1999), pp. 102-106,
118-119.
144
The United States was also the global economic hegemon in this period. 25 It is
unclear whether the United States was the primary sender because it was a democracy
or because it was the economic power.26
The public choice perspective can also be used to explain that interest groups and
the public will prevent the sender from initiating economic sanctions against the target
if they get hurt by the sanctions. The literature generally ignores any opposition
against the initiation of economic sanctions in the sender countries because the costs
to the senders are trivial in most of the sanctions cases and sometimes there are even
positive gains due to the suspension of aid. For example, it is plausible that U.S.
business did not mobilize to oppose Washington’s attempts at economic sanctions
against communist countries in the Cold War era because they did not have a major
interest in East-West trade.
The issue of costs to the sender will be further discussed in the section on the
conflict expectations model. However, the conflict expectations model discusses how
decisionmakers rationally maximize the utility for their countries instead of how the
public and interest groups maximize their utility by influencing these decisionmakers.
The case of U.S. extending China’s MFN status is a good example of the strong
influence of both global and domestic interest groups in the decision-making process
of the United States, the sender country.
On the one hand, some interest groups, in particular the Chinese dissident
community and human rights groups, lobbied the U.S. government to exploit the issue
of extending China’s MFN status to punish Beijing for human rights abuses or other
infractions of U.S.-backed norms. They argued that the trade relationship between the
25
26
From 1980 to 1993, the U.S. GDP was about 25 percent of world GDP. World Bank, World Tables
1995 (Baltimore: Johns Hopkins University Press, 1995), pp. 28-29.
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, 7/25/00, pp. 4-5 of 5.
145
United States and China was characterized by significant asymmetries that favored the
United States. The most visible evidence was China’s chronic and mounting trade
surplus with the United States in the 1990s. The logic at the time from these groups
was, should the current trade relationship be disrupted, Beijing had more to lose than
Washington. On the other hand, other interest groups, in particular business groups,
opposed the suspension of China’s status by the United States. Since 1990, when the
U.S. administration and Congress debated whether to extend China’s MFN status or
not, both the Chinese government and U.S. business groups lobbied in favor of
extending China’s status, along with Hong Kong entrepreneurs, the Hong Kong
government, Hong Kong opposition Democratic Party, and the Korean government. In
addition, in the decade-long fight Taiwanese entrepreneurs joined these groups in
supporting MFN extension somewhat later.27
In particular, Jim Mann argues that U.S. farm and grain-exporting groups were
essential to President George Bush’s efforts in 1991 to sustain his veto against
congressional attempts to place strict conditions on continued MFN status for China.
Furthermore, both Charles Goldman and Yuan I point out that President Bill Clinton’s
decision to de-link MFN and China’s human rights practices in 1994 reflected strong
efforts by representatives of the U.S. business community with interests in China.
Finally, the emphasis on limiting U.S. imports of Chinese goods rather than the
27
Steven M. Teles, “Public Opinion and Interest Groups in the Making of U.S.-China Policy,” in
Robert Ross (ed.), After the Cold War: Domestic Factors and U.S.-China Relations (Armonk, New
York: M. E. Sharpe, 1998), pp. 40-69. Steve Chan, “Economic Sanction: The U.S. Debate on MFN
Status for China,” in Steve Chan and A. Cooper Drury (eds.), Sanctions as Economic Statecraft:
Theory and Practice (New York: St. Martin’s, 2000), pp. 112-117. David M. Lampton, “A Better
Approach in Waging the Next MFN Battle,” Topics, vol. 27, no. 6 (August 1997), pp. 43-48. Robert
G. Sutter, U.S. Policy Toward China: An Introduction to the Role of Interest Groups (Lanham,
Maryland: Rowman & Littlefield, 1998), pp. 26-65. Steve Chan, “Economic Sanction: The U.S.
Debate on MFN Status for China,” in Steve Chan and A. Cooper Drury (eds.), Sanctions as
Economic Statecraft: Theory and Practice (New York: St. Martin’s, 2000), pp. 113-117. Robert
Dreyfuss, “The New China Lobby”, via Lexis-Nexis, The American Prospect, January-February
1997, p. 30. Kong-Lien Kao, Liangan Jingmao Xiankuang yu Zhanwang [The Current Situation and
Prospect of Cross-Strait Economic Relations] (Taipei: Mainland Affairs Council, 1994), p. 20.
Jeffrey Koo, “MFN for China Is Also Good for Taiwan”, The Wall Street Journal, May 7, 1996, p.
22.
146
exports of U.S. goods to China is also a good example of how sanctions are motivated
by U.S. domestic considerations. According to the public choice perspective, the
United States will tend to impose trade boycotts rather than embargoes because
producers are a more politically effective interest group than consumers. An import
restriction (boycott) would benefit producers of import-substitutes in the United States
and hurt consumers while an export restriction (embargo) would hurt American
producers of exportables and benefit consumers.28
Furthermore, the domestic politics/symbolic approach argues in Chapter 5 that a
target government facing political and economic instability is more likely to feel the
effects of sanctions and thus makes concessions. It is very plausible that this rationale
should be applied to the sender as well because economic sanctions are double-edged.
The sender government facing political and economic instability is less likely to
impose economic sanctions with high costs against the target because the negative
effects of sanctions will contribute to further domestic instability. The traditional
literature ignores this question because the senders were always strong and powerful
and thus the costs of economic sanctions in terms of GNP were trivial or even positive
to the sender countries. However, when the sender is weak and unstable in terms of
social, economic, and political conditions, the costs should be a significant concern for
the sender.
Melvin Gurtov and Byong-Moo Hwang assert that domestic instability was an
28
Jim Mann’s and I Yuan’s arguments are cited from Robert G. Sutter, U.S. Policy Toward China: An
Introduction to the Role of Interest Groups (Lanham, Maryland: Rowman & Littlefield, 1998), pp.
2-3. Charles A. Goldman, Managing Policy Toward China Under Clinton: The Changing Role of
Economics, Center for Asia-Pacific Policy Working Paper 95-1 (Santa Monica, CA: The RAND
Center for Asia-Pacific Policy, 1995), pp. xv-xvi. Steve Chan, “Economic Sanction: The U.S. Debate
on MFN Status for China,” in Steve Chan and A. Cooper Drury (eds.), Sanctions as Economic
Statecraft: Theory and Practice (New York: St. Martin’s, 2000), pp. 123-124. Makio Miyagawa, Do
Economic Sanctions Work? (New York: St. Martin’s Press, 1992), pp. 73-75. See also 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), pp.
147-166.
147
important factor that had been taken into account by Chinese leaders to engage in
major military conflicts in Mao Zedong’s era. They emphasized that the greater the
instability or weakness, the more likely it is that the leaders’ energies will be directed
inward. As a result, domestic instability in China discourages foreign-policy initiatives
for Chinese leaders.29 Both Alastair Johnston’s and J. David Singer’s studies of 118
cases of China’s behavior engaging in military conflicts from 1949 to 1992 support
that domestic instability will reduce the probability for China to launch coercive
action against other countries. They find that an increase in China’s domestic unrest
leads to a decrease in China’s tendency to get into a militarized dispute. That is, if
China is preoccupied with domestic disorder, it is reluctant to initiate external
violence. 30 This suggests that China is less likely to initiate economic sanctions
against Taiwan if China is experiencing political unrest or economic stress.
By contrast, Mark Burles and Abram Shulsky argue that some important cases of
Chinese behavior engaging in military conflicts demonstrate that Chinese leader
wanted to exploit external conflicts to divert domestic attention, to consolidate their
domestic political standing, and to mobilize the population in support of the regime’s
goals, such as China’s involvement in the Korea War in 1950, the Taiwan Strait crisis
in 1958, the Sino-Indian conflict in 1962, the Sino-Soviet border conflict in 1969, and
the Sino-Vietnamese War in 1979. 31 However, Melvin Gurtov and Byong-Moo
Hwang contend that limited use of force by China, which was defensive military
29
30
31
Melvin Gurtov and Byong-Moo Hwang, China under Threat: The Politics of Strategy and
Diplomacy (Baltimore: Johns Hopkins University Press, 1980), pp. 249-250.
Alastair Iain Johnston, “China’s Militarized Interstate Dispute Behavior 1949-1992: A First Cut at
the Data,” China Quarterly, no. 153 (March 1998), pp. 18-20. J. David Singer, “Statistical
Regularities in Chinese and Other Foreign Policy: A Basis for Prediction?,” presented at the
conference of “China in the 21st Century”, sponsored by the Democratic Progressive Party,
International Reception Hall, Taiwan University, Taipei, on November 6-7, 1999,
http://www.future-china.org/csipf/activity/19991106/mt9911_05e.htm, accessed November 20, 2000,
p. 7 of 8.
Mark Burles and Abram N. Shulsky, Patterns in China’s Use of Force: Evidence from History and
Doctrinal Writings (Santa Monica, CA: Rand, 2000), p. 17.
148
strategy per se, was intended to defuse a crisis and to dispel perceptions of weakness.
Therefore, to China’s leaders, using force on a small scale not only was in keeping
with Mao’s domestic concerns but also was necessary to prevent escalation.32
Parenthetically, a Taiwan studies scholar in Beijing argued that China’s military
threats toward Taiwan in 1995-96 was reaction of a weaker because China was too
weak compared with the United States and had to consider the possibility of U.S.
intervention. He explained that Chinese leaders intended to use limited conflicts to
deter Taiwan from further action by escalating tensions, but had no intention to launch
military attacks on Taiwan at that time.33
II. The Signaling/Deterrence Approach
The signaling/deterrence approach argues that sanctions can function as an
effective signal as well as a deterrent because states conduct foreign policy in a world
of imperfect information. If one state is uninformed about another state’s preferences,
there is always an incentive to bluff in international conflicts. As a result, states
frequently engage in signaling techniques to demonstrate credibility. Economic
sanctions, therefore, could be a type of signal and deterrence to distinguish credible
threats of future action from cheap talk.34 As David Leyton-Brown contends, “Despite
sceptical images of ‘shooting oneself in the foot’, the seriousness of the signal of
resolve can be strengthened by the willingness of the [sender] to incur some costs in
32
33
34
Melvin Gurtov and Byong-Moo Hwang, China under Threat: The Politics of Strategy and
Diplomacy (Baltimore: Johns Hopkins University Press, 1980), pp. 249-259.
A Taiwan studies scholar in Beijing, interview with author, July 30, 2001.
David Baldwin, Economic Statecraft (Princeton, N.J.: Princeton University Press, 1985), p. 24.
Robert A. Pape, “Why Economic Sanctions Do Not Work,” International Security, vol. 22, no. 2
(Fall 1997), pp. 98-106. Daniel W. Drezner, The Sanctions Paradox: Economic Statecraft and
International Relations (New York: Cambridge University Press, 1999), pp. 15-17. Valerie L.
Schwebach, “Sanctions as Signals: A Line in the Sand or a Lack of Resolve?,” in Steve Chan and A.
Cooper Drury (eds.), Sanctions as Economic Statecraft: Theory and Practice (New York: St.
Martin’s, 2000), pp. 187-211.
149
the process. This phenomenon is reminiscent of the argument in early deterrence
theory that the credibility and effectiveness of a threat could be enhanced if its
execution involved some cost to the party issuing the threat.”35
Therefore, the signaling hypothesis suggests that the costs incurred by the sender
should be positively correlated with the scope of military force. In other words, the
sender will incur greater costs to signal their resolve when she threatens or uses
military force.
Statistical Evidence
The results of Daniel Drezner’s statistical tests on the HSE-Drezner database
strongly support the signaling hypothesis. Chi square tests show a positive correlation
between the sender’s costs and the escalation of military coercion to be significant at
the 1 percent level. Difference-of-means tests reveal that the difference between
absence and presence of military statecraft is significant at the 5 percent level.36
III. The Conflict Expectations Model
Daniel Drezner develops a conflict expectations model. The model makes two
assumptions: (1) states act as rational, unitary utility-maximizers and (2) national
preferences are partially motivated by conflict expectations. In particular, there are
two international political effects stemming from bilateral conflict expectations. First,
states will have some concerns for relative gains, because concessions made in the
35
36
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. 305.
Daniel W. Drezner, The Sanctions Paradox: Economic Statecraft and International Relations (New
York: Cambridge University Press, 1999), pp. 120-121.
150
present can be used against nation-states in the future. Nation states care about this
redistribution if they think it will harm their bargaining position in the future conflicts.
Second, countries are concerned that conceding in the present will damage their
reputation in future interactions. Reputation concerns are particularly salient because
the expectation of repeated play and the shadow of the future conflict increase. The
expectation of future conflict is translated into a short-run concern for relative gains
and reputation that varies with the expectation of future threats or conflicts in the
bilateral sender-target relationship.37
Accordingly, the model makes two specific predictions about the pattern of
sanction attempts. First, no sanction event should generate greater costs for the sender
country than the target country. In other words, the costs gap should be larger than
zero, where the costs gap is defined as the difference between target’s costs and
sender’s costs as a percentage of GNP. Second, conflict expectations should be
positively correlated with the costs to the sender, but negatively correlated with the
costs to the target. In general, the sender will prefer imposition of economic sanctions
against the target if the target’s costs are sufficiently greater than its own costs, and
there is some expectation of future conflict. The sender should be willing to incur
smaller costs or a greater gap of costs between the sender and the target when
sanctioning allies, as opposed to adversaries. In other words, an adversarial
relationship between the sender and the target will make the initiation of an economic
sanction attempt more likely.38(See Figure 4.1.)
Figure 4.1. The Sender’s Sanction Decision
37
Daniel Favorable
W. Drezner,
to The Sanctions Paradox: Economic Statecraft and International Relations (New
Threaten
sanctions
York: Cambridge University
Press, 1999),
pp. 32-35. Daniel W. Drezner, “The Complex Causation
Sender
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. 216-7.
38
Daniel W. Drezner, The Sanctions Paradox: Economic Statecraft and International Relations (New
Cost
ratio
151
Do nothing
Equal costs
Statistical Evidence
Daniel Drezner criticizes the sample selection bias in the traditional literature on
two counts. First, the literature typically discusses the most well-known cases, which
do not represent the universe of observations. He argues that by developing theories
inductively from a biased set of observations, the existing theories can at best only
explain a subset of the database with the United States being the primary sender of
economic sanctions. Second, the HSE database includes the cases involving both
economic sanctions and non-economic sanctions (economic warfare).
In order to develop a general theory of economic sanctions, Daniel Drezner
assesses both the HSE-Drezner database with the United States being the primary
sender of economic sanctions as well as a different set of data with Russia being the
only sender. He examines 39 cases of Russia’s use of economic sanctions against the
York: Cambridge University Press, 1999), pp. 27-42, 114-128, 233-236, 307-309.
152
NIS between 1992 to 1997. The Russian cases are valuable because they correct a
tendency in the literature to focus on cases where the United States is the primary
sender.39
Further, Daniel Drezner argues that statistical inference, assuming that
explanatory variables have independent effects on the dependent variable, overlooks
the possibility that different combinations of these variables affect the outcome. In a
world of complex causation, statistical inference or case studies are limited in their
ability to account for interaction effects. Therefore, he suggests the Boolean approach
to determine causality, which is based upon the premise that outcomes have multiple
causal mechanisms. The advantage of Boolean analysis is that it can test all possible
causal combinations that could lead to a sanction success and eliminate extraneous
variables. It determines whether specific conditions are necessary, sufficient, either or
neither.40
Based on the HSE-Drezner database, the ordinal figures of the sender’s costs
reveal that in 45 percent of the cases the sender incurred no costs from the sanction
episode, and in an additional 40 percent of the cases the sender suffered minimal costs.
That is, in around 85 percent of the cases the sender suffered no costs or minimal costs
from the sanction episodes. This is because a large number of cases involve the
disruption of aid rather than trade flows. Although Drezner and other scholars
discussed only actual cost to both the sender and the target without discussing
misperception or miscalculation for decision-makers of the sender, the cardinal figures
of the sender’s costs show that in only one of the 114 cases is the cost to the sender
39
40
Daniel W. Drezner, The Sanctions Paradox: Economic Statecraft and International Relations (New
York: Cambridge University Press, 1999), pp. 18-21, 102-106.
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. 219-229. Daniel W. Drezner, The Sanctions Paradox: Economic Statecraft and International
Relations (New York: Cambridge University Press, 1999), pp. 239-245.
153
greater than the costs to the target.41 In all of the other events, the target’s costs of
deadlock are greater than or equivalent to the sender’s costs. That is, misperception
and miscalculation of decision-makers played a very limited role in the
decision-making process of imposing sanctions. Therefore, the sender will tend to
impose sanctions only after a cautious and thorough calculation of costs of sanctions
both to the target and to itself.42
Regarding conflict expectations, James Blessing uses chi square tests to examine
27 cases of foreign aid suspension by the United States between 1927 and 1948. He
finds in his dissertation that sanctions are more likely if aid levels are high; the result
is significant at the 1 percent level. In fact, most of the high aid states were allies of
the United States (22 out of 27 cases), where most low aid states were not. The size of
U.S. aid represents positive costs (gains) for the sender and negative ones (losses) for
the target. Therefore, the larger the gap of costs between the sender and the target (the
aid suspension level), the more likely are economic sanctions against allies.43
Nevertheless, James Blessing’s study is out of date and his samples do not
include trade sanctions. Daniel Drezner uses the HSE-Drezner database to confirm the
hypotheses of conflict expectations. In his study, difference-of-means tests reveal that
within the sample of sanction events, conflict expectations are positively correlated
with the costs to the sender, but negatively correlated with the costs to the target. As
the bilateral relationship switches from antagonistic to neutral, the average of the
target’s costs unambiguously increases, more than doubling in value. The t-test shows
significance at the 10 percent level. The target’s average costs increase more
41
42
43
The only case with greater costs to the sender is Canada’s sanctions against Japan in 1974. Canada
imposed a cost of 0.04 percent of Canada’s GNP, but only a cost of 0.01 percent of Japan’s GNP.
Daniel W. Drezner, The Sanctions Paradox: Economic Statecraft and International Relations (New
York: Cambridge University Press, 1999), pp. 108-128.
James Blessing, The Suspension of Foreign Aid by the United States, 1927-1948, Ph.D. dissertation,
State University of New York at Albany, 1975. Cited from Daniel W. Drezner, The Sanctions
Paradox: Economic Statecraft and International Relations (New York: Cambridge University Press,
1999), pp. 62-64.
154
dramatically when the relationship switches from neutral to cordial; the mean
increases by a factor of three. The t-test shows significance at the 1 percent level. This
result confirms that the target’s costs are negatively correlated with alignment. For the
sender to prefer to threaten economic sanctions in a relationship with allies (minimal
expectation of future conflict), the target must suffer significantly greater costs.44
Using the ordinal measure of the sender’s costs, Daniel Drezner finds that the
sender’s costs decrease unambiguously as the bilateral relationship switches from
antagonistic (enduring rivalry) to neutral. The t-test shows significance at the 1
percent level. Chi square tests show a negative correlation between alignment and the
sender’s costs that is significant at the 1 percent level. In addition, he finds that the
sender’s costs decrease slightly as the bilateral relationship switches from neutral to
cordial (formal alliance). The change is not statistically significant for the HSE’s
measure of alignment and is statistically significant at the 10 percent level for the
Drezner’s measure. The cardinal measure of the sender’s costs displays a similar
pattern.45
In the 39 episodes of Russian economic sanctions between 1992 to 1997, Daniel
Drezner finds that Russia imposed moderate costs on itself in only 13 percent of its
sanctions attempts against allies and 54 percent against adversaries. Chi square tests
reveal a positive relationship between conflict expectations and Russia’s costs of
sanctions that is significant at the 5 percent level. That is, the sender tends to impose
sanctions on enemies more than friends given the same costs of sanctions.46
44
45
46
Daniel W. Drezner, The Sanctions Paradox: Economic Statecraft and International Relations (New
York: Cambridge University Press, 1999), pp. 115-117.
Daniel W. Drezner, The Sanctions Paradox: Economic Statecraft and International Relations (New
York: Cambridge University Press, 1999), pp. 117-118.
Daniel W. Drezner, The Sanctions Paradox: Economic Statecraft and International Relations (New
York: Cambridge University Press, 1999), pp. 236-237.
155
IV. Conclusion
The domestic politics/symbolic approach helps us understand both the
determination and reluctance of a sender (whether governed by a democratic regime
or not) to impose economic sanctions against a target. However, the result will depend
on particular circumstances in different countries. On the one hand, the pressure from
both the public and global/domestic interest groups who stand to gain either pecuniary
or nonpecuniary benefits from sanctions will impel the sender government to impose
economic sanctions against the target. In particular, economic sanctions provide a
visible and less expensive alternative to either military intervention or doing nothing
for the sender. On the other hand, the pressure from both the public and
global/domestic interest groups who will suffer either pecuniary or nonpecuniary
losses from sanctions will oppose the sender’s sanctions policy. Therefore, the
dynamic balance of these two opposing forces will determine whether the sender will
impose sanctions against the target.
Moreover, it is very plausible that the sender government facing political and
economic instability is less likely to impose economic sanctions with high costs
against the target because the negative effects of sanctions will exacerbate its domestic
instability. This argument, in particular, finds support from Chinese military
experience from 1949 to 1992.
Thus, the decision, form, and severity of sanctions applied will depend primarily
on five factors: (1) the relative gains or losses of various interest groups and the public;
(2) relative influence of interest groups and the public within the sender state; (3) the
ability of policymakers to act independently of pressure from both the public and
interest groups; (4) the amount of information possessed by individuals and groups
within the sender country regarding the objectionable policy of the target country; and
156
(5) the conditions of political and economic stability in the sender.
The signaling/deterrence approach argues that sanctions can be an effective
signaling and deterrence tool. The sender will incur greater costs to signal its resolve
when it threatens to use military force. Statistical tests provide strong support for this
argument.
The conflict expectations model developed by Daniel Drezner makes two
predictions about the pattern of sanctions attempts. First, no sanction should generate
greater costs for the sender than the target. Second, conflicts expectations should be
positively correlated with the costs to the sender, but negatively correlated with the
costs to the target. Both arguments have been supported by strong statistical evidence.
There are two contrasting assumptions made by these three approaches regarding
both the initiation and effectiveness of economic sanctions, where the latter will be
discussed in the next chapter. The domestic politics/symbolic approach assumes that
states are pluralist societies. The initiation and effectiveness of economic sanctions
will depend on the dynamic balance among various domestic actors, including the
public (voters), interest groups, politicians, and bureaucrats. By contrast, the
signaling/deterrence approach and the conflict expectations model are state-centric
theories based on the assumption that states act as rational, unitary utility-maximizers.
The initiation and effectiveness of economic sanctions will depend on the bilateral
relationship between the sender and the target with the decision-makers taking into
consideration the need to signal/deter, the balance of relative gains, and concerns
about reputation.
Despite the dichotomy of assumptions and the bifurcation of predictions, these
approaches are complementary. According to Robert Putnam, domestic groups pursue
their interests at the national level of government policymaking by pressuring their
government to adopt policies favorable to their interests. National politicians seek
157
power by constructing coalitions among these interest groups. At the international
level, national governments seek to maximize their own ability to satisfy domestic
pressures while minimizing the adverse consequences of foreign developments. Each
of these levels of what Putnam calls a “two-level game” in foreign policy is important
to decisionmakers in the sender countries, who would strive to reconcile domestic and
international imperatives simultaneously.47
Regarding the implication for cross-Strait economic relations, the necessary
condition for China to impose sanctions against Taiwan is that China’s costs be lower
than Taiwan’s. Second, China might use economic leverage to threaten Taiwan or
signal its resolve so long as China enjoys an advantage in the economically
interdependent relationship. Third, the dynamic balance among the public and
global/domestic interest groups, and the conditions of political and economic stability,
will in the end determine whether China will impose sanctions against Taiwan.
Chinese leaders need to reconcile both the domestic and international imperatives of a
two-level game simultaneously.
By examining two cases: (1) the 1995-96 Taiwan Strait tensions and (2) the
1999-2000 Taiwan Strait incident, Chapters 6 to 10 will further test the following
three-part hypotheses on the initiation of China’s sanctions against Taiwan:
1. The costs gap between Taiwan and China (the potential power of economic
leverage from asymmetric economic interdependence) was insufficiently
favorable to Beijing for it to initiate economic sanctions against Taiwan.
Parenthetically, China’s costs include the reaction/retaliation of third parties to
the imposition of economic sanctions.
2. China had grave domestic concerns and could not afford to impose economic
47
Robert D. Putnam, “Diplomacy and Domestic Politics: The Logic of Two-Level Games,” in Peter B.
Evans, Harold K. Jacobson, and Robert D. Putnam, Double-Edged Diplomacy: International
Bargaining and Domestic Politics (Berkeley: University of California Press, 1993), pp. 431-468.
158
sanctions against Taiwan because of economic, social, and political instability,
and opposition from interest groups (such as southeast coastal leaders and
Taiwan businesspeople) associated with such sanctions.
3. Chinese leaders believe that military threats directed at Taiwan were more
effective signals and deterrence tools than actual economic sanctions.
159