Economic Sanction As Foreign Policy
Summary and Keywords
Economic sanctions are an attempt by states to coerce a change in the policy of another state by restricting their economic relationship with the latter. Between, roughly, the 1960s–1980s, the question dominating the study of sanctions was whether they are an effective tool of foreign policy. Since the 1990s, however, with the introduction of large-N datasets, scholars have turned to more systematic examinations of previously little explored questions, such as when and how sanctions work, when and why states employ sanctions, and why some sanctions last longer than others. Two dominant perspectives, one based on strategic logic and the other on domestic politics, have emerged, providing starkly different answers to these questions. A growing body of evidence lends support to both strategic and domestic politics perspectives, but also points to areas in which they fall short. To complement these shortcomings, a new direction for research is to unite these perspectives into a single theoretical framework.
Since the 1970s, economic sanctions have played an increasingly prominent role in international politics. States are employing economic sanctions with greater frequency in pursuit of a variety of foreign policy objectives. According to the most comprehensive data, 317 sanctions were imposed between 1945 and 1975. Between 1975 and 2005, however, 1095 new sanctions were put in place, targeting 164 countries; these data suggest that sanctions are expected to remain a popular choice of foreign policy for the future (Morgan, Bapat, & Kobayashi, 2014). At the same time, recent history demonstrates that while often viewed as a low-cost substitute for military interventions, sanctions can come with tremendous economic, human, and political costs. Ill-designed sanctions have created food shortages and malnutrition and dramatically raised morality rates within sanctioned populations (Gibbons, 1999; Weiss, 1999). Accordingly, there is growing attention by scholars and policy makers to minimizing these humanitarian externalities (Allen & Lektzian, 2013; Peksen, 2011). Less visible, but politically important nonetheless, is the economic harm that sanctions do to the sanctioning state itself, which is often compounded by the levying of counter-sanctions by the target.
With their increasingly prominent role in international politics, and their potential costs, systematic research on sanctions has grown in recent years. Forty years ago, most studies on sanctions were concerned about whether sanctions succeed in achieving their goals. Predominantly drawing on a small number of prominent cases such as the U.S. sanctions imposed on Cuba after Castro came to power (Baer, 1973; Doxey, 1972; Galtung, 1967), they encouraged the then conventional wisdom that sanctions rarely succeed. As more systematic research became possible when Hufbauer, Schott, and Elliot (1990) introduced a large-N dataset on sanctions, this conventional wisdom was increasingly challenged. Contrary to the conclusion reached in early studies, subsequent research demonstrated that sanctions could be an effective tool of foreign policy, at least under certain conditions. As result, the literature since the 1990s can be characterized by systematic studies that are more concerned about when and how sanctions help achieve foreign policy goals; when and why states employ sanctions; how long sanctions last; and, more broadly, how economic sanctions function. This article reviews this growing body of systematic analyses of sanctions.
The article is organized as follows. The first two sections define economic sanctions and discuss their economic impact on sanctioned states. Sections “Strategic Approach to Sanctions” and “Domestic Politics Approach to Sanctions” then introduce two prominent approaches to economic sanctions, discuss their implications for the questions about how sanctions work, and assess the evidence. Section “Strategic Approach to Sanctions” discusses the strategic approach, whereas section “Domestic Politics Approach to Sanctions” assesses the domestic politics approach. I make several suggestions for future research in these four sections, and offer a few more in the concluding summary.
Defining the Scope of Economic Sanctions
In this article, I refer to economic sanctions as the threat of, or actual restriction of, economic relations taken by one or more states with another to coerce a change in the latter’s behavior.1 Three parts of this definition are noteworthy. First, sanctions involve at least one sanctioning and sanctioned state. The former is commonly referred to as a “sender” and the latter as a “target.” Restrictions imposed by non-state actors such as a boycott by consumers or divestment efforts by subnational entities are not considered sanctions. Not all states use sanctions; in fact, sanctions have been employed frequently only by a few states. According to the Threat and Imposition of Economic Sanctions (TIES) data, the United States is the most frequent sender between 1945 and 2005—responsible for about 48% of all sanction cases. After the United States, Canada, the United Kingdom, and Russia follow respectively, but their use of sanctions is significantly less frequent. The United States is also the most frequent target of sanctions, but it was the target in only about 7% of all cases. It’s important to note, of course, that sanctions can be imposed bilaterally or multilaterally with other states and/or international institutions; about 30% of all sanctions between 1945 and 2005 were multilateral.
Second, economic sanctions restrict economic relations between the sender and target state, including trade, financial, and foreign aid relationships. In the sanctions literature, diplomatic sanctions (e.g., expulsion of ambassadors) are excluded. Sanctions can take many different forms, ranging from restrictions on exports and/or imports from the target and the termination of foreign aid, to asset freezes and travel bans. Trade sanctions (e.g., import restrictions and total embargoes) have been by far the most common form of economic sanctions. However, financial sanctions (e.g., aid terminations and asset freezes) are not uncommon. TIES reports that 78% of all imposed sanctions can be defined as trade sanctions, whereas 26% are financial.2
Third, another important element of the definition is that sanctions must be accompanied by demands by the sender to alter the policy of the target state. That is, if a sender imposes sanctions for domestic reasons—for example, protection of its own industry—those actions would not be considered sanctions. States use sanctions to pursue a variety of goals, ranging from altering targets’ trade, environmental, and human rights policies, to preventing military actions by the target and overthrowing the target regime. TIES reveals that a little less than 50% of all cases resulted from trade disputes and this number dramatically increased in the 1980s. Other frequent causes of sanction include disputes over a target’s alliance choices (9%), human rights (6%), and (possible) military behavior (5%).
Economic Effects of Sanctions on Target
I begin by considering the economic effects of sanctions.3 Different approaches to understanding sanctions, which will be discussed in the following sections, address different processes through which these economic costs influence target (and sender) states’ behavior. Not surprisingly, most theories of sanctions assume that sanctions inflict economic harm upon target states. However, in a world characterized by the internationalization of trade, emergence of multinational corporations, and increased mobility of capital, whether and how sanctions generate economic costs on targets is unclear.
Do economic sanctions inflict economic costs on target states? Research suggests that the economic costs are generally not crippling, but can be under certain conditions. Several studies report that sanctions, those imposed by the United States in particular, reduce bilateral trade between the sender and target states; their effects are stronger when they are severe and multilateral (Caruso, 2003; Hufbauer, Schott, Elliot, & Oegg, 2007; Yang, Askari, Forrer, & Teegen, 2004). Biglaiser and Lektzian (2011) also find that sanctions reduce sender-target FDI flows, possibly due to the sender government’s efforts to pressure their firms to divest. However, this impact of sanctions on dyadic economic exchange can be mitigated by the behavior of third-party states. The target state may easily compensate its losses from sanctions by finding alternative sources for foreign aid or by finding another market or partners to whom they redirect their economic exchange. Several studies confirm such “sanction-busting” behavior by third parties (Caruso, 2003; Early, 2015; Early & Jadoon, 2016; Hufbauer et al., 2007; Lektzian & Biglaiser, 2013; Yang et al., 2004).4 The sharpness of sanctions can also be dulled by smuggling and informal financial intermediaries, effectively mitigating much of the damage by continuing trade and financial relationships in an altered form (Andreas, 2005). Petrescu (2016) finds evidence consistent with this: for target states, the size of their “shadow economy” increases under pressure of sanctions.
Firms within the sender may also mitigate the harm imposed on the target. One consequence of sanctions is that they also harm the businesses within the sender state that had economic relationships with the target state prior to their imposition. These profit-seeking actors are unlikely to forgo profitable business and incur the costs unless sanctions are vigorously enforced to prevent them from exploring possibilities for circumvention (Morgan & Bapat, 2003). Barry and Kleinberg (2015) find that firms that divest as a result of sanctions redirect their investment to third-party countries that are known “sanction busters” (Early, 2009). While more evidence is clearly needed to conclude that firms deliberately attempt to evade sanctions by rechanneling their business through third-party states, the evidence is consistent with the argument that sender firms can reduce the cost of sanctions to the target.
However, “sanction-busting” by the third-party states and private actors is unlikely to mitigate the full economic costs of sanctions. Target governments and firms may find a way to deflect their exchanges to other partners, but deflections inevitably come with costs. Even when they find alternative business partners, the target actors usually must accept worse terms by, for example, paying higher prices for imported goods and selling exports for lower prices. Moreover, finding ways to rechannel all their transactions is unlikely, and not all target actors have the capacity to do so in any case. Haider (2017) examines the changes in the behavior of Iranian exporters in the wake of the anti-Iran sanctions imposed on non-oil products in 2008. Analyzing a rich dataset covering more than 1.8 million export transactions by Iranian non-oil exporters between 2006 and 2011, Haider (2017) finds that large, experienced exporters were able to redirect some portion of their trade, but smaller, unexperienced firms had significantly more difficulty. Importantly, those who deflected their exports had to reduce their product prices.
Thus, it is not surprising that several other studies find that sanctions can have some negative effect on the overall health of the target’s economy. Analyzing data from 1976 to 2012, Neuenkirch and Neumeier (2015) report that the United Nations sanctions reduced the target’s economic growth rate by 2–3 percentage points, while the U.S. sanctions averaged about 1 percentage point. Likewise, Neuenkirch and Neumeier (2015) show that U.S. sanctions adversely increase the poverty gap within the target, while Afesorgbor and Mahadevan (2016) reveal that sanctions increase income inequality within target countries. Finally, Peksen and Son (2015) and Hatipoglu and Peksen (forthcoming) demonstrate that sanctions also negatively affect financial stability by instigating currency and banking crises. These findings together illustrate that while the economic costs may not be as severe as the sender intends, sanctions nevertheless can bring harm to the economy and those within the target state.
Strategic Approach to Sanctions
The dominant perspective in the study of sanctions treats sender and target states as unitary, rational, and forward-looking actors. Moreover, it presumes that they are in a dispute over some political issue. The purpose of sanctions is assumed to be instrumental—namely, to coerce the target into making political concessions. Accordingly, sanctions are modeled as economic costs associated with disagreement on a disputed policy issue. The main focus of this perspective is how these costs influence strategic interactions between the sender and target states and thus on the states’ choices and the outcomes of sanctions episodes.5
Earlier Studies of Sanctions Success and HSE
From the beginning, scholars (implicitly) adopted the strategic perspective, viewing sanctions as an instrument that makes disagreement costly (e.g., Daoudi & Dajani, 1983; Doxey, 1980; Galtung, 1967). One intuitive implication from this perspective is that an eventual outcome depends, in part, on how undesirable to their interests the parties perceive disagreement to be. Accordingly, in the context of sanctions, severe economic costs should drive targets to make concessions on the disputed issue, rendering sanctions more successful. This basic insight has led a number of scholars to focus on the costs of sanctions to the target as a primary determinant of sanctions success (e.g., Hufbauer, Schott, & Elliott, 1990; Morgan & Schwebach, 1997). The literature proposes a number of factors that influence sanction costs to the target, as well as those that determine the target’s vulnerability to them. For example, some scholars suggested that the key determinant of sanction costs is whether sanctions are imposed unilaterally or by a multilateral coalition (e.g., Martin, 1993; Miers & Morgan, 2002). Multiple senders should be able to create more severe economic harm to the target, whereas economic costs caused by one sender should be limited. Relatedly, some argue that “sanction-busting” by third-party states undermines the effectiveness of sanctions, as it offsets the costs of sanctions (Early, 2011; Hufbauer et al., 1990). Others also considered the preexisting economic and political relationships (Bonetti, 1998; Drezner, 1999). Still others also suggested that states that are suffering internal turmoil are particularly vulnerable to sanctions (Allen, 2005; Major, 2012).
Systematic tests of these hypotheses were made possible when Hufbauer and his colleagues developed the first large-N data on economic sanctions (hereafter HSE). The data included 116 cases between 1914 and 1990 in which states applied economic sanctions.6 Using the HSE, a number of studies have devoted considerable effort to identify the determinants of sanctions success (e.g., Ang & Peksen, 2007; Dashti-Gibson, Davis, & Radcliff, 1997; Dehejia & Wood, 1992; Drury, 1998; Lam, 1990; Nooruddin, 2002; McLean & Whang, 2010). Many intuitive hypotheses previously proposed by scholars, however, failed to hold up under empirical scrutiny. For example, the HSE data reveal that multilateral sanctions are no more likely, and indeed are sometimes less likely, to succeed than unilateral alternatives (Allen, 2005; Hufbauer et al., 1990; Hufbauer, Schott, Elliott, & Oegg, 2007; Nooruddin, 2002). At a more fundamental level, evidence for the costs of sanctions to the target was also mixed. Some studies indicate that sanction costs to the target appear to contribute to sanctions success (Allen, 2008; Dashti-Gibson et al., 1997; Drury, 1998; Hufbauer et al., 1990; Lam, 1990) while others find the relationship is weak (Bonetti, 1998; Jing, Kaempfer, & Lowenberg, 2003; Nooruddin, 2002).
Selection Bias and Solutions
The literature offers three reasons for the elusive evidence found by the HSE. First, the economic costs of sanctions are not sufficient to coerce target leaders into political concessions. Many argue that the key to effective sanctions is to generate political rather than economic costs, targeting the elites and leaders who can change policy (Brooks, 2002; Kirshner, 1997; Morgan & Schwebach, 1996). This follows from a common criticism of sanctions, namely, that they increase the suffering of average citizens while barely affecting those responsible for the policies to which the sender objects. This idea is the core of the domestic politics approach, the topic of the next section.
Second, the lack of clear evidence may be the product of some systematic bias in the HSE. In particular, scholars have criticized the HSE for its unclear methodology for the coding and collection of data. In particular, its measure of sanctions success, which is the combination of the policy outcomes and the extent to which sanctions contributed to these outcomes, has received much criticism for its sensitivity to subjective judgment (Dashti-Gibson et al., 1997; Drury, 1998). The HSE also shows some troubling patterns, including its overrepresentation of the U.S. sanction cases and its emphasis on more visible cases with longer durations, as well as its underrepresentation of sanctions by minor powers (see, for example, Morgan, Bapat, & Krustev, 2009).
Third, more recent work suggests that analyzing only cases of imposed sanctions is problematic due to a strategic selection that occurs during sanction episodes. According to these strategic theories, because target states anticipate the cost of sanctions, those that would comply with demands by the senders should do so when sanctions are threatened, but before they are actually imposed. Senders may still impose sanctions on recalcitrant targets, even when they know they might not work, simply to maintain the credibility of their threats. If this argument is correct, sanctions could be much more effective than we have imagined, but they would be so at the threat stage, before actual sanctions are applied (e.g., Drezner, 2003; Krustev, 2010; Lacy & Niou, 2004; Morgan & Miers, 1999; Smith, 1996).7 This result further suggests that empirical investigation using the HSE, which cover only instances of imposed sanctions, may be subject to a form of selection bias that clouds the results. According to the strategic perspective, impositions of sanctions and their outcomes are intrinsically interdependent, and, as a result, the sample of imposed sanctions is not random, but rather systematically biased against successful sanctions. Therefore, failure to account for the strategic process is likely to bias our inferences about how sanctions work.
Sanction scholars have addressed this strategic process and selection bias in a variety of ways. For example, Nooruddin (2002) and subsequent studies (e.g., Bapat & Kwon, 2015; Lektzian & Biglaiser, 2014; Lektzian & Souva, 2007; Major, 2012) use a censored probit model to account for the interdependence between the occurrence of sanctions and their outcomes. Others address the strategic process by using fully structural estimations of strategic models (McLean & Whang, 2010; Whang, 2010; Whang, McLean, & Kuberski, 2013). Instead of relying on such statistical techniques, Nooruddin and Payton (2010) seek to overcome the issue of selection bias by looking at a smaller set of instances where sanction attempts were made by senders to all states. For example, they consider the United States’ attempt to coerce all other states into signing and ratifying Bilateral Immunity Agreements that would exempt U.S. citizens from prosecutions by the International Criminal Court.
Another effort was taken up by Morgan and his colleagues to collect data on sanction threats and develop more comprehensive data (TIES) on economic sanctions than the HSE (Morgan et al., 2009; Morgan et al., 2014). Using cases of both threats and imposed sanctions, Bapat, Heinrich, Kobayashi, and Morgan (2013) subject the previously proposed hypotheses about determinants of sanctions success to empirical tests.8 Their sensitivity analysis shows that some factors that received little empirical support in the HSE indeed do contribute to sanctions success. Particularly important is their finding that sanctions are more likely to succeed when they are, or are expected to be, costly to the target, confirming the claims of strategic logic. Moreover, multilateral sanctions, especially when threatened or imposed by international institutions, are more effective than unilateral sanctions (also see Bapat & Morgan, 2009). These findings are consistent with the strategic argument that selection bias led to the previous murky results. On the other hand, their analysis also suggests that results for many factors that were previously suggested as determinants of sanctions success are sensitive to specifications of the statistical models. Furthermore, some factors, for example, the types of sanctions, may contribute to the success of imposed sanctions, but not mere threats. While the strategic perspective has led to a richer understanding of sanctions success, these recent findings also suggest the need for greater theoretical attention to how possible determinants of sanction success relate to strategic interactions at various stages in the dynamic processes of sanction episodes.
Strategic Implications for Other Aspects of Sanctions
My focus has so far fallen on the targets’ strategic behavior and how it might have muddled our understanding of sanction success. However, strategic calculations are also likely to play an important role in senders’ decisions to threaten and impose sanctions.9 If this is the case, these sender decisions are likely to systematically bias our inferences about outcomes of sanctions, as they happen early in sanctions episodes.
According to the strategic perspective, senders base their decisions to apply sanctions on their assessments of how likely targets would be to make political concessions. There is a good deal of evidence that is consistent with such strategic behavior. States are more likely to threaten and impose sanctions against those who are economically dependent on them (Cox & Drury, 2006; Drury, James, & Peksen, 2014; Hafner-Burton & Montgomery, 2008) and are less able to mitigate the economic harm of sanctions by redirecting their trade to third-party states (Peksen & Peterson, 2016). Likewise, states are more likely to apply sanctions against those regimes that are political vulnerable (Licht, 2017; von Soest & Wahman, 2015). Lektzian and Souva (2003, 2007) also find that democratic senders avoid sanctioning other democracies for fear that they would resist the sanction’s pressure. Finally, von Soest and Wahman (2015) argue that states are also more likely to initiate sanctions when their decisions to forgo sanctions would be politically costly at home and abroad.
A smaller, but still important, vein of the scholarship suggests that states may be deterred from offensive behavior or moved to voluntarily change their policy before threats are explicitly made. Miller (2014) investigate whether implicit threats by the United States deterred states from starting nuclear weapon programs. His empirical tests demonstrate that those that are economically and politically vulnerable to the United States are less likely to pursue such programs. Similarly, Peterson (2014) finds that states improve human rights practices when they are economically vulnerable to the United States, and when the United States imposes sanctions on other states that are similar to them.
The strategic perspective additionally provides useful implications for predicting when sanction episodes end and how long they last. According to some strategic models, in a world of complete information, states would never impose sanctions. If a target were to yield to sanction pressure, it would do so before sanctions are imposed; and if sanctions were to be ineffective, the sender would not impose those costly sanctions in the first place. Nevertheless, sanctions are possible when information is incomplete (e.g., Lacy & Niou, 2004; Morgan & Miers, 1999; Smith, 1996). Then, sanctions are imposed either because the sender underestimated the target’s costs of concession or because the target underestimated the sender’s resolve. If incomplete information is responsible for imposed sanctions, these sanctions should come to an end when the uncertainty is resolved. We would expect this to happen fairly quickly once sanctions are imposed, as the incurred costs reveal information and eliminate uncertainty (Krustev & Morgan, 2011). Consistent with this, empirical evidence supports that the majority of sanction episodes are fairly short. According to the TIES, 49% of sanctions end within one year, and 76% within three.
Domestic Politics Approach to Sanctions
Another prominent approach to economic sanctions relies heavily on political economy models of domestic politics, mirroring a trend in the broader international relations literature (Bueno de Mesquita & Smith, 2012; Fearon, 1998). The focus on domestic politics is not new in the sanctions literature; earlier studies saw domestic politics as one of factors responsible for the failure of sanctions (e.g., Galtung, 1967; Schreiber, 1973). A more systematic approach has evolved since these earlier attempts, producing a richer understanding of how sanction policies are formed and influence leaders within target states through domestic political processes.
Sanctions and Domestic Politics Within Target
Arguments in this tradition build directly upon the earlier finding that severe economic costs do not often lead to concessions by target states. The central idea underlying this approach is that the economic pain a target state suffers, and the political costs faced by the target leaders, are not the same; equating these is problematic. Without the political costs, the target leader has little incentive to yield to sanction pressure (Blanchard & Ripsman, 1999; Kirshner, 1997; Morgan & Schwebach, 1996). Therefore, to understand how sanctions succeed, we need to think through the political processes that shape how target leaders cope with economic harm and how the economic costs of sanctions are distributed across domestic groups.
One aspect of domestic politics that receives a good deal of attention is the institutional context within target states. Research generally concludes that sanctions are more effective against democratic targets than their autocratic counterparts. The literature offers two complementary reasons for this. First, autocratic leaders are better positioned to counter the effects of sanctions than those wielding more limited power (Allen, 2005; Bolks & Al-Sowayel, 2000). A variety of countermeasures are available to target leaders. For example, target leaders can manipulate the domestic economy and encourage smuggling and corruption (Andreas, 2005). Likewise, they can also initiate campaigns to portray the sender as the enemy of the nation and bolster their support among the populace (Galtung, 1967). This so-called rally-round-the-flag effect of sanctions also can be exploited by the leaders to justify repression against their oppositions under the name of fighting against external threats (Peksen, 2009; Wood, 2008). Leaders’ ability to employ these measures in a timely manner depends on their institutional environments, however, and autocratic leaders generally face fewer institutional constraints to use countermeasures quickly.
Second, autocratic institutions provide little incentive for the leaders to serve the interests of those who are affected by sanctions, and this makes it difficult for sanctions to succeed (Lektzian & Souva, 2007). To survive in office, a leader must maintain the support and loyalty of her core supporters. The survival of democratic leaders relies on a large segment of the society, whereas autocratic leaders are supported by small coalitions (Bueno de Mesquita, Smith, Siverson, & Morrow, 2003). Sanctions have two effects under this framework: They cause economic harm to the general population and reduce the resources available to leaders to distribute among supporters. Democratic leaders are particularly vulnerable to sanction pressure because they are accountable to a large group of supporters, but their limited resources prevent them from lessening the costs to their supporters. On the other hand, autocratic leaders are more insulated against sanctions as they have no reason to alleviate the pain to average citizens and can instead focus their efforts on maintaining strong loyalty from their small coalitions. Furthermore, autocratic leaders generally have greater control over the domestic economy and are better able to use this to encourage smuggling and corruption, often enabling their core supporters to benefit from sanctions (Andreas, 2005).
This logic notwithstanding, the evidence is somewhat mixed on the link between target regime type and sanctions success. Using the HSE, Allen (2005), Hufbauer et al. (2007), Lektzian and Souva (2007), and Nooruddin (2002) report that democratic states are more likely to give into sanctions than their autocratic counterparts. However, Early (2011), Hart (2000), and McLean and Whang (2010) find that sanctions against democratic targets are no more likely to succeed the pattern also found in the TIES data (Bapat et al., 2013; Bapat & Kwon, 2015; Lektzian & Biglaiser, 2014; Peterson, 2012). Despite this troubling ambiguity, some evidence is consistent with the logic of the domestic politics explanation. Sanctions appear to destabilize democratic leaders somewhat more severely (Licht, 2017; Marinov, 2005). Sanctions also lead to growth in corruption and the informal economy, more repression against opposition groups and independent media organization, and thus encourage the erosion of freedom and human rights within target regimes, especially when these are autocratic (Peksen, 2009, 2010, 2016; Petrescu, 2016; Wood, 2008).
One possible explanation for the lack of clear evidence in this literature stems from the use of the classical democracy-autocracy dichotomy. Some autocratic leaders may be more vulnerable to sanctions than others (or possibly their democratic counterparts). One study by Escriba-Folch and Wright (2010) distinguishes among different types of autocratic regimes and argues that personalist leaders are more vulnerable to sanctions than other autocratic types. One reason is that personalist leaders depend largely on free revenues (e.g., foreign aid and natural resources), whereas other autocratic leaders do not. The evidence is consistent with their argument, suggesting that more work in this line of inquiry would further clarify the regime-sanctions success nexus.
More insights come from the application of this logic to study how sanctions end. Drawing on selectorate theory (Bueno de Mesquita et al., 2003), McGillivray and Stam (2004) argue that sanctions are likely to end when there are changes in the target leadership. Leadership changes indicate realignments in targets’ domestic politics, and consequently, represent shifts in targets’ preferences. Therefore, leadership changes within targets should increase the likelihood that sanctions end. They further argue that this effect of leader changes depends on target regime types. Because support coalitions for autocratic leaders are small in size, leadership changes are likely to result in radical political realignments in autocratic targets, and thus quickly end an episode of sanctions. On the other hand, leadership changes in democratic regimes are likely to lead to small preference changes and thus little affect the duration of sanctions. Analyzing the HSE data, McGillivray and Stam (2004) find that leadership changes in autocratic targets are more likely to result in the end of a sanction episode than those in democracies. Meanwhile, using the TIES, Krustev and Morgan (2011) consider changes in support coalition rather than leadership and find similar patterns.10
One important implication of the domestic perspective is that sanctions effectiveness depends on who they target—that is, elites who actually possess political power to alter the policy must suffer from the sanctions (Brooks, 2002; Cortright & Lopez, 2002; Kirshner, 1997; Morgan & Schwebach, 1996). This insight has led scholars and policy makers to pursue so-called targeted sanctions or smart sanctions in the 1990s. Smart sanctions have received a great deal of attention from policy makers because, unlike other scholarly findings, the idea of smart sanctions gives clear policy guidance on how to make sanctions more effective. Additionally, in the 1990s, it was becoming clear that sanctions could have dire humanitarian consequences. This has produced increasing pressure for policy makers to design sanctions to minimize their humanitarian externalities, ultimately leading the UN and many governments to embrace smart sanctions.
What do we know about the performance of targeted sanctions? The evidence is preliminary and mixed at best. Cortright and Lopez (2002) and Elliott (2002) have examined the UN’s targeted sanctions and conclude that targeted sanctions have been no more successful than comprehensive or traditional sanctions. Several others have investigated the performance of one common form of targeted sanctions, financial sanctions (e.g., asset freezes and aid withdrawals). Using the HSE and the TIES, some—though not very robust—evidence has emerged in favor of financial sanctions (Allen, 2008; Bapat et al., 2013; Shagabutdinova & Berejikian, 2007).
Clearly, more rigorous empirical examinations are necessary to make an informed judgment on the merits of targeted sanctions, but important challenges need to be addressed to more accurately understand them. Design choices are inherently linked to the outcomes of sanctions, rendering evaluations of smart sanctions difficult, if not impossible (see Jing, Kaempfer, & Lowenberg, 2003). The evidence also suggests that policy makers resort to smart sanctions when pressure from the domestic audience to impose sanctions looms large, but when they are nevertheless not serious about imposing costly sanctions (Lektzian & Souva, 2003; McLean & Whang, 2014). These suggest that a better understanding of smart sanctions necessitates further examinations of senders’ choices of sanction type.
Sanctions and Domestic Politics Within Sender
The domestic politics approach views sanctions as an outcome of domestic political processes within the sender state. That is, sender decisions regarding sanctions policy are heavily influenced by pressures from domestic interest groups. The economic costs and benefits of sanctions are often not distributed equally across domestic groups. As a result, political conflict is inevitable, and which domestic groups have influence—and how much influence they wield—depends on the nature of domestic political contexts (Kaempfer & Lowenberg, 1988; McGillivray & Stam, 2004).
Among the domestic actors within sender states, the general public received a good deal of attention (Barber, 1979; Daoudi & Dajani, 1983; Drury, 2005; Schreiber, 1973; Whang, 2011). Originally proposed as an explanation for why policy makers implement seemingly ineffective sanctions, this argument presumes that sanctions serve symbolic purposes. When the target state violates international norms, citizens in sender states will demand their leaders “do something.” In democracies, leaders fear the electoral consequences of ignoring such demands, but diplomacy is too mild and military interventions often too costly. Economic sanctions serve as a good substitute for military interventions or diplomacy. Accordingly, the intrinsic value of sanctions to policy makers is their ability to deflect pressure from the general public, not necessarily in their capacity to affect a targets’ policy. In fact, recent experimental evidence demonstrates that sanctions effectiveness in achieving political concessions does not weigh heavily in voters’ support for them (Heinrich, Kobayashi, & Peterson, 2017). These together provide an explanation for why sanctions are unlikely to be effective in changing the target’s behavior. This argument also implies that democratic leaders with low public approval should be more likely to use sanctions to boost their popularity among voters.
The literature offers some evidence consistent with this account. Peksen, Peterson, and Drury (2014) and Nielsen (2013) argue that voters are particularly concerned about human rights violations abroad and demand their leaders impose sanctions on rights abusers. They hypothesize that sanctions are likely to be applied to rights abusers when voters are aware of human rights violations. Indeed, Drury, Peterson, and Peksen (2014) find that the United States is more likely to threaten and impose sanctions on rights abusers when the rights violations are highly publicized. Similarly, Nielsen (2013) show that aid donors withdraw aid from rights abusers when voters are better informed. Whang (2011) takes a somewhat more direct approach and argues that the initiation of economic sanctions has electoral benefits for U.S. presidents. He demonstrates that the initiation of sanctions increases U.S. presidential approval by 1–3 percentage points. Moreover, Whang (2011) and Peksen and Peterson (2016) report that U.S. presidents are more likely to impose sanctions when their approval rate is low.
Others also focus on the role of pro-sanction and anti-sanction groups within a sender state, as well as conflict between them (e.g., Kaempfer & Lowenberg, 1988, 1992). An obvious pro-sanction group is one that gains rents from sanctions. For example, domestic producers who compete with imports should be interested in seeing import restrictions slapped on their competitors. In an era of globalization where many states pursue liberal trade policy, it would not be easy for the pro-sanction groups to persuade their governments to initiate import restrictions. However, political leaders may use sanctions as political cover for protectionist policy without being too obvious. Following this logic, Lektzian and Souva (2003) argue and find that democracies are pressed to employ more sanctions because of their many domestic interest groups that leaders need to satisfy.
Domestic interest groups may influence not only senders’ decisions to impose sanctions but also their choices on the content or design of sanction policy. When public demands to impose sanctions are strong, democratic leaders cannot avoid them, but also need to minimize the harm to their domestic groups. McLean and Whang (2014) show that as the size of the export sector increases, and thus opposition to sanctions from the exporting sector increases, the sender leader is more likely to choose sanction policies that hurt the exporting sector less (e.g., targeted sanctions), and less likely to impose sanctions that generate costs on the exporting sector (e.g., export restrictions and aid cuts). Correspondingly, Lektzian and Souva (2003) consider the difference between democratic and nondemocratic senders and argue that nondemocratic leaders do not need to worry about the economic damage to their domestic producers as much as their democratic rivals. Their evidence illustrates that democratic leaders are more likely to choose financial sanctions as opposed to trade sanctions; autocracies are not similarly pressed to protect their domestic producers.
Forty years ago, the main question asked about economic sanctions was whether sanctions are an effective tool of foreign policy. The research program on sanctions has evolved since then. The development of two major theoretical perspectives, the strategic and domestic politics approaches, has generated a richer understanding of previously unexplored aspects of sanctions, including the role of threats, the duration of sanction episodes, and the design of sanction policy. Simultaneously, the introduction of large-N datasets led to a considerable effort to systematically test key theoretical explanations. A growing body of evidence reviewed here lends some support for (at least parts of) both the strategic and domestic politics perspectives, but also points to areas in which they fall short. It is important to note that these two perspectives are not necessarily contradictory to each other, however. Rather, these approaches should be viewed as complementary, and used to compensate for the limitations of each. Given the evidence supporting both perspectives, a fruitful direction for future research is to find ways to combine these perspectives under one unified theoretical framework. Some efforts in this direction are already underway. For example, Krustev and Morgan (2011) propose to look at the duration of sanctions as a way to identify which perspective better explains each sanction episode. They argue that factors that are associated the strategic perspective should better explain short sanction episodes as short episodes are more consistent with logic of strategic interaction. By contrast, the domestic politics perspective should be better suited to explain prolonged episodes. This line of inquiry is one that is likely to make a significant contribution to the sanctions research.
Several other areas are also ripe for investigation. Existing research typically analyzes sanctions as though they only involve a sender and a target state. As a result, the effect of sanctions outside of the sender-target dyadic relationships remain understudied. Sanction-busting behavior by third-party states and private actors has already received attention (e.g., Barry & Kleinberg, 2015; Early, 2015; Lektzian & Biglaiser, 2013). Likewise, some have begun investigating the reputation effect of sanctions on third-party states’ behavior (Peterson, 2014), as well as how being targeted by sanctions may encourage military aggression by third-party states (Peterson & Drury, 2011). However, the effect of sanctions is likely to be even more wide ranging than suggested by the existing research. Disputes over which states employ sanctions often directly involve a range of multiple actors and states other than merely a target and a sender. How do they perceive and evaluate sanction efforts? Do they view them as a gesture of international support or as a signal of weak commitment? Given that the perceptions of these actors are important to fully understanding the target’s behavior in disputes, answers to these questions would lead to a more complete understanding, not only of sanctions success, but also of the role of sanction in international relations more broadly.
Finally, another area for further research is to explore the relationships between economic sanctions and other instruments of foreign policy. Existing perspectives typically view sanctions as a substitute for military interventions and focus their inquiry exclusively on their effects or what gives rise to them. However, sanctions are often accompanied by carrots (e.g., foreign aid) and diplomatic sanctions. Likewise, economic sanctions are often used in conjunction with military force as a complement (Clark & Reed, 2005). One small body of research that has already examined this link treats sanctions as a costly signal to the target that the sender is willing to use force in an international crisis (Lektzian & Sprecher, 2007; Schwebach, 2000; Whang & Kim, 2015). Alternatively, McCormack and Pascoe (forthcoming) model sanctions as a mechanism that mediates commitment problems in international crises by smoothing shifts in the distribution of power. A greater attention to these relationships between foreign policy tools would be a significant contribution to the sanctions literature and to the study of foreign policy more generally.
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(1.) Sanctions against non-state actors or those imposed by non-state actors (e.g., boycotts) are not considered.
(2.) Many cases include multiple forms of sanctions.
(4.) Knowing this, sender states also apply pressure to third-party states to not engage in economic exchange with the target state when the issue is salient. An example of this is the Helms-Burton Act of the United States, whose purpose was to threaten to punish foreign companies doing business with Cuba.
(5.) By focusing on strategic interaction, this perspective assumes that states have alternative choices of actions, actions chosen by each affect the payoffs for all, and the rational, forward-looking actors base their choices on the expectations of others’ actions.