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A Take on Economic Sanctions
  • May 2022
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A Take on Economic Sanctions

27th May 2022

Economic sanctions have been used as a tool to promote the entirety of American Foreign policy objectives. Not just that, but economic sanctions are also increasingly becoming tools of war for centuries. In his article “The United States of Sanctions'' for Foreign Affairs, The International Politics Professor at Fletcher School, Tufts University, and nonresident senior fellow at the Brookings Institution, Daniel W. Denzer also agreed that the US is using economic sanctions as a tool above all. 

He states– “In theory, superpowers should possess a range of foreign policy tools: military might, cultural cachet, diplomatic persuasion, technological prowess, economic aid, and so on. But to anyone paying attention to U.S. foreign policy for the past decade, it has become obvious that the United States relies on one tool above all: economic sanctions. Sanctions—measures taken by one country to disrupt economic exchange with another—have become the go-to solution for nearly every foreign policy problem.”

Often sanctions end up being much more than the expressions of the American preferences that hurt the US economic interests without changing the behavior of the target for the best interest. This is the reason why by rule, sanctions are needed to be less unilateral in nature and focus more on the problem that is at hand.

The Congress needs to institute a far more rigid superintendence of sanctions prior to adopting them, and thereafter, at a regular period to ensure that the benefits that are expected to come out of these sanctions are weighing more than the cost bared by levying sanctions. 

One of the paradoxes of modern day American Foreign Policy is the widespread use of economic sanctions in trade. Even though economic sanctions have become a policy tool of preference for the United States since the post-cold war era, they are often highly criticized. 


What are these Sanctions

To put in a simpler language, sanctions are defined as the economic, and sometimes political and military penalties that are introduced by a country to counter or change the course of the political or military behavior of another nation.

In the American context, these sanctions are levied by the United States for the purposes of  discouraging the generation or import of weapons of mass destruction including ballistic missiles, to solidify human rights, aim to end terrorism, drug trafficking, arm agression, and at the same time promoting market acces while also  ensuring the protection of environments. 

Sanctions take form of arms embargoes, foreign assistance cutoffs and reductions, limitations on export and import, freezed assets, negative votes at international financial institutions, tariff increase, revocation of MFN (Most Favored Nation) trade status, retrieval of diplomatic relations, visa denials and cancellations, stoppage of air links, credit, financing, and investment prohibition for accomplishing the foreign policy ends. 

The United States of America has levied several sanctions on various nations over different grounds. Drezner, a subject matter expert in History and Diplomacy, globalization and trade, International communication, International finance, and politics, further talks about the economic sanction levied by the US government on different countries under several presidencies by giving numerous examples in the Foreign Affair  article “United States of Sanctions”. 

“During President Barack Obama’s first term, the United States designated an average of 500 entities for sanctions per year for reasons ranging from human rights abuses to nuclear proliferation to violations of territorial sovereignty. That figure nearly doubled over the course of Donald Trump’s presidency. President Joe Biden, in his first few months in office, imposed new sanctions against Myanmar (for its coup), Nicaragua (for its crackdown), and Russia (for its hacking). He has not fundamentally altered any of the Trump administration’s sanctions programs beyond lifting those against the International Criminal Court. To punish Saudi Arabia for the murder of the dissident Jamal Khashoggi, the Biden administration sanctioned certain Saudi officials, and yet human rights activists wanted more. Activists have also clamored for sanctions on China for its persecution of the Uyghurs, on Hungary for its democratic backsliding, and on Israel for its treatment of the Palestinians.”


Why are Sanctions So Popular?

The sanctions seem to provide what appears to be an appropriate and proportional response to a challenge wherein little less crucial interests are at stake. Apart from this, they can be used as a way of indicating official displeasure towards a certain behavior by another country, or party. Sanctions also serve the purpose of reiterating a commitment to humanity and respecting human rights, and opposing the proliferation. The reluctance of using military forces in America also helps to make the United States Sanctions a popular and legible military tool. 

The sanctions make for a visible and less expensive military tool in most conditions where an intervention is necessary but it does not really require the United States military to act on the situation. 

The CNN effect that arises due to sanctions can increase the visibility of issues to other countries and stimulate a response, hence making sanctions popular among policy makers.  The increased power of single issue constituencies in the American political scenario also plays an important role in determining the popularity of sanctions in policy making. 

Despite the popularity of sanctions, the renowned political author, and professor of International holds a different opinion about the untrammeled use of sanctions in the American economy and expresses his opinion quoting different studies in the Foreign Affairs article stating- “This reliance on economic sanctions would be natural if they were especially effective at getting other countries to do what Washington wants, but they’re not. The most generous academic estimate of sanctions’ efficacy—a 2014 study relying on a data set maintained by the University of North Carolina—found that, at best, sanctions lead to concessions between one-third and one-half of the time. A 2019 Government Accountability Office study concluded that not even the federal government was necessarily aware when sanctions were working. Officials at the Treasury, State, and Commerce Departments, the report noted, “stated they do not conduct agency assessments of the effectiveness of sanctions in achieving broader U.S. policy goals.” 


Assumptions Pertaining to Economic Sanctions

There is a widespread false assumption among policy makers not just in the United States, but around the world that economic sanctions are the only toolbox available in hand for enforcing the agenda of global peace and prosperity.

And even if they have imposed huge economic pain to the countries implied on, in the past, the sanctions in general have been more or less unsuccessful more times in achieving their political agendas. The instances of success are very few.

A key determinant for the success of sanctions is the comparison between how the sanctions target versus the cost of changing its behavior, will compare to the economic cost that is imposed (in most cases, disconnect from the international financial and trade markets). Some examples of success are– Sanctions on Iran successfully brought the country back to the negotiating table with the US and Iran finally agreed to the Nuclear accord after the Obama administration provided clarification on the sanction goal; which in this case was to not a regime change, but persuading Iran to not build a nuclear weapon.

In the past as well, there have been instances of sanctions or threats of sanctions successfully changing the target nation’s behavior. For instance, when the League of Nations threatened to impose sanctions on Yugoslavia under the Article 16, 1921, to persuade it against seizing the lands from nations like Albania.

The author of ‘Theories of International Politics and Zombies’, Daniel Drezner has quite an interesting take on the usefulness of sanctions over time. Drezner, in his open-editorial titled ‘The U.S. is hooked on economic sanctions”, published under the ‘post everything section’ of The Washington Post, states that- 

“Skeptics could point to too many cases — such as North Korea, Cuba, Iran or Iraq — in which long-term sanctions imposition and near-comprehensive trade embargoes had accomplished little in the way of tangible concessions.”

Referring to his book ‘The Sanctions Paradox’, Drezner continues- 

“The point I was trying to make in that book was that perceptions of failure were largely a matter of noticing the most high-profile failures, while the successes were likely to be harder to observe for various reasons. There were conditions under which sanctions could work. Compared to the policymaking center of gravity, I was a veritable sanctions enthusiast.

Things change after a generation of additional policymaking. I do not think my position has changed all that much — sanctions can still be a useful tool if applied adroitly. The policymaking center of gravity, however, has swung wildly behind the position that economic sanctions are awesome. Rather than look at high-profile failures, policymakers now look at high-profile successes, such as the Iran nuclear deal, and generalize from that.”


How Have Sanctions Come to be Seen as Economic Weapons

In recent years, the economic sanctions have been used as a tool of statecraft along with the military tools. With the world entering a new era of globalization that is characterized by the increase in use of economic tools for geopolitical reasons and systemic rivalries. In the coming years, we might see proxy wars and situations leading to indirect military confrontations, but the relation that exists between the different chief powers of the world will be molded by the economic warfare at the forefront.

This is bound to happen mainly because the powers at top will try to avoid direct confrontations with other nations to avoid using the nuclear weapon. These nations can easily leverage asymmetric dependencies in economics to pressurize each other. 

In the present scenario, we can witness this preference for economic tools in order to avoid nuclear war with Russia over its aggression in the Ukraine. What becomes imperative here though can be explained better with a quote from Drezner

“Policymakers should treat sanctions like a scalpel, not a Swiss Army knife.”


The United States Policy Makers Should Consider the Impacts of Sanctions on Commoners

It is a general tendency of the policy makers to overlook and underestimate the direct costs of various sanctions as it does not show up directly in the United States Government’s budget tables and balance sheets.

However, sanctions do often have a huge effect on the economy. As a result of imposed sanctions, the revenues of American companies and citizens are drastically reduced. The cost to people becomes even harder to measure because it is not only required to reflect the lost sales, but also all the forfeited opportunities.

Sanctions often end up costing the companies in the United States of America, billions of dollars per year in lost sales and the returns on investment. This also often leads to several thousands of workers in the country, losing their jobs. Drezner argues that the American economic policy makers often treat sanctions like the snack food of the United States Foreing Policy.

In his article “United States of Sanctions” for the Foreign Affairs, he writes,- 

“The truth is that Washington’s fixation with sanctions has little to do with their efficacy and everything to do with something else: American decline. No longer an unchallenged superpower, the United States can’t throw its weight around the way it used to. In relative terms, its military power and diplomatic influence have declined. Two decades of war, recession, polarization, and now a pandemic have dented American power. Frustrated U.S. presidents are left with fewer arrows in their quiver, and they are quick to reach for the easy, available tool of sanctions.

The problem, however, is that sanctions are hardly cost free. They strain relations with allies, antagonize adversaries, and impose economic hardship on innocent civilians. Thus, sanctions not only reveal American decline but accelerate it, too. To make matters worse, the tool is growing duller by the year. Future sanctions are likely to be even less effective as China and Russia happily swoop in to rescue targeted actors and as U.S. allies and partners tire of the repeated application of economic pressure. Together, these developments will render the U.S. dollar less central to global finance, reducing the effect of sanctions that rely on that dominance.”


What Needs to Change 

“The most obvious advice will also be the hardest to follow: the United States needs to sanction less often.” – Prof. Daniel Drezner, The United States of Sanctions, Foreign Affairs. 

Often, the economic, foreign policy, and humanitarian costs of the American economic sanctions largely outweighs the benefits of these sanctions. To avoid these internal painful costs, the United States needs to kick its habits and sanction less often. The best advice is that even when an individual act of imposing sanction makes sense, the policy makers must take into consideration an aggregate effect of imposing way too many sanctions on other nations. 

Prof. Drezner, in his closing remarks for the post ‘The United States of Sanctions’, shares an opinion about kicking the habits of US policy makers, stating–

“Economic coercion works best when the state imposing the sanctions is unambiguous about the conditions under which they will be threatened, enacted, and lifted. To preserve its future ability to use economic statecraft, the United States must reassure other countries that it will apply sanctions smartly. It should, in word and deed, make it clear that it turns to sanctions under narrow and precisely defined circumstances. It should create standard operating procedures to secure multilateral support for sanctioning those well-defined categories of behavior. And it should swiftly lift sanctions and allow cross-border exchange to resume when actors comply with the stated demands.”


There is a Better Way

There is no way that current American economic sanctions are not more potent than the sanctions that existed in the US in the last century. However, the problem is that the policy makers do not respond well to the innovations in sanctions. They refuse to simply apply these new, and more potent sanctions to the similar targets for addressing similar policy mishaps. They ramped up their ambitions instead, to solve newer problems. 

Daniel Drezner best summarizes the better ways of formulating and imposing sanctions while concluding his post for the Foreign Affairs Magazine. He writes–

“To preserve its future ability to use economic statecraft, the United States must reassure other countries that it will apply sanctions smartly. It should, in word and deed, make it clear that it turns to sanctions under narrow and precisely defined circumstances. It should create standard operating procedures to secure multilateral support for sanctioning those well-defined categories of behavior. And it should swiftly lift sanctions and allow cross-border exchange to resume when actors comply with the stated demands.”

According to Daniel Drezner, the Congress at Washington should institute another standard process for operation– insertion of a sunset clause into all the new sanction legislations to make the sanctions, not only innovative, but also effective.

Drezner makes the final remarks by saying that there is a need for policy makers at Washington, for exercising the policy muscle that the Government of the United States of America has, but sadly, has been atrophied due to negligence, to lessen the statecraft gap that has emerged between the United States of America, and the other governments from across the world.



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