The Effectiveness and Ethics of Economic Sanctions

By: Marcus Boomen

Economic sanctions are an important feature of the modern economic, political and social landscape, lauded as the humanitarian alternative to war, with over 500 cases of sanctions being implemented in the 1990’s alone. They are implemented with the stated intention of altering a targeted state’s behaviour, to elicit conformity with international ethical norms. An analysis of the effectiveness and ethics of economic sanctions reveals they have been a resounding failure. The only focus of academic debate remaining is centred on exactly how ineffective economic sanctions are.

Data and theory demonstrate their clear failure as a means of changing behaviour. Furthermore economic sanctions are not free of ethical cost. They impact innocent civilians and, at worst, can kill more people than the wars they are purported to supplant. Therefore the question must then be asked, why are sanctions still implemented so frequently? The answer: economic sanctions serve a symbolic function. They signal to the target, and the world, what is and is not acceptable ethical behaviour. This is an important act when examined through the ethical lens of constructivist theory. This is a political theory that argues many of our beliefs, behaviours and institutions are consequences of social interaction. Their structures can be and are actively changed, as opposed to the inevitable consequences of nature or necessity. Through this frame work the symbolic function of sanctions is important for it helps construct new ethical norms of belief and behaviour by signalling that acts such as sponsoring terrorism are unacceptable in the world today. The symbolic function serves as an important lesson for people and institutions alike: even when acting ethically seems to have little immediate or evident impact, it is still important to continue. Ethical acts and symbols have the capacity to shape normative practices and beliefs over time.

A Brief Historical Overview

Economic sanctions were seldom used during the Cold War. If the US sanctioned a state, that state would trade with the USSR and vice versa,[1] rendering the act of sanctioning counterproductive. Furthermore, the UN was incapable of imposing any sanctions as the two superpowers used their right of veto to block any such action with the exceptions of South Africa in 1965 and Rhodesia in 1962.[2] This standoff changed in the 1990’s with, firstly, the fall of Communism and, secondly, a wave of Humanitarianism that sought alternatives to the threat of war.[3] In this new climate, the world embraced sanctions. While there were only 248 cases of sanctions from 1914-1990, there were 343 cases in the 1990’s.[4]

The sanctions imposed during the 1990’s were pre-eminently ‘comprehensive’ trade embargos which were enforced on states such as Iraq, Yugoslavia and Haiti. These had little effect in changing the states’ policies and, additionally, caused immense suffering amongst their populations. The failure to change behaviour, combined with their capacity for inflicting suffering on civilians, led scholars to reassess the use of such all-encompassing methods at the turn of the century. The proposed alternativeswere called ‘smart’ sanctions. These specifically aimed at the elite, and their supporters, within a target state. The hope was smart sanctions would be more effective as they put pressure primarily on leaders while solving the humanitarian problems encountered with comprehensive sanctions. A decade later, these hopes have not come to fruition.

The Theoretical Basis of Sanctions

Primarily, the theoretical purpose of employing economic sanctions is to coerce behaviour change of states tha act unethically.[5] Sanctions are seen as the best alternative when words are not enough and war is not an option.[6] Economic sanctions should be simple, effective, and act in the form of a simple utility calculation. The key assumption of this a prioriphilosophy is to treat the state as a single rational actor.[7] With this in mind, sanctions should workthus:

1. State X is engaged in unethical behavior
2. Apply sanction on X
3. Sanctions create negative utility for X
4. If cost of sanctions > benefits of current unethical policy
5. Then X changes behavior to conform to required ethical norms

Under this conception, the key to success is the severity and duration of sanctions. [8]

This rationale is the driving force behind comprehensive sanctions – sanctions in which a sanctioning state attempts to ban all trade or almost all trade and commercial activity with the sanctioned state. This form of sanctions, as with all others, can be unilateral, imposed by a single state, such as the US embargoes on Cuba, or multilateral, imposed by many states, such as those enforced by the UN on South Africa. These sanctions effectively constitute an attempt to crush a state’s economy absolutely, and may even be carried to the point that they are enforced by naval blockade.[9] The comprehensive sanction is exemplified by sanctions imposed on Iraq from 1990-2003.[10] This cost Iraq an estimated $250 billion through the ban of all trade and financial interactions, save humanitarian aid and medicine, and was enforced by the US military.[11]

The largest shift in sanction theory in the twenty-first century was to dispense with the ‘single rational actor’ assumption that informed the actions of the 1990’s. The new ‘smart’ or ‘targeted’ sanctions try to engage with and utilise the complexity of societies to increase effectiveness and reduce capacity for collateral damage. This new philosophy is cognizant that, in order to change behaviour, sanctions need to impact those in power and their supporters.[12] The mechanisms are freezing financial assets, suspending aid, banning transactions or travel, as well as embargoing luxury goods or key goods such as arms, airplane components or nuclear technologies.[13]

Inefficacy in Practice

The track record of success for economic sanctions is not good. They appear to be relatively ineffective at altering a state’s behaviour. Not a single study argues sanctions are generally effective.[14] Empirical analysis of the success of economic sanctions by Morgan, Bapat, Krystev (MBK) since WW1 reveals that, at best, they have been successful 34% of the time.[15] At worst, a study by Pape found that only 4% of sanctions succeeded in gaining concessions from the sanctioned state.[16] The discrepancy between these results are attributed to the fact that the MBK dataset includes more cases of minor sanctions, compared to Pape’s sample, as well as instances where sanctions were threatened, but not imposed.[17] Among these minor cases, many are trade disputes amongst allies or normally friendly nations who are not at odds over contentious ethical or humanitarian issues. The relative success of economic sanctions should be taken as leaning towards the 5% success rate put forward by Pape. His dataset focuses to a greater extent on the major cases where sanctions were implemented to change unethical behaviour such as genocide, ethnic violence or weapons of mass destruction (WMD) development. Results of UN sanctions in which 98% of sanctions against authoritarian states have failed, corroborate the low success rate against unethical behaviour.[18]

A further contributing factor to the ineffectiveness of economic sanctions appears to be the duration of the action. The longer sanctions are imposed, the less chance they have of succeeding.[19] This result appears to be in direct contradiction with the predictions of the original theory of how sanctions should work. Presumably, operating under a simple utilitarian calculus, the longer sanctions are in place, the greater the negative utility. The greater the likelihood costs out weigh benefits, the more likely is the target to concede. Accounts of why long duration sanctions do not work argue that in circumstances where sanctions are effective they work quickly. Otherwise, the target adapts to the new situation. The result is a situation where the sanctioning state is reluctant to suspend its sanctions, and admit failure[20]. Thus, extending the duration of demonstrably futile sanctions.

Sanctions executed multilaterally, such as those imposed by the UN, are often less effective[21], a further counterintuitive result. Common sense suggests the more states involved, the higher the cost to the sanctioned state and the less options it has for trade, and the more likely the sanctions will succeed. However, this is often not true for two reasons. Firstly, states may have different levels of commitment to the sanctions. Some may not be willing to stringently enforce them along their borders or through the institutions. This mitigates the potency of sanctions by making them appear half-hearted and creating gaps through which sanctions are circumvented.[22] When many actors are involved, some are incapable of enforcing sanctions due to domestic issues, weak state control, or a lack of resources. This was how Rhodesia’s GDP actually rose while it was sanctioned, as its neighbours and their borders provided little resistance to sanction busters.[23] The chances of multilateral sanctions succeeding is minimal unless a major power is resolutely committed to enforcing them, and, even then, sanctions are still unlikely to result in the target changing its negative behaviour.[24]

Ethical Quandaries

Not only is the effectiveness of economic sanctions dubious but they may also bear serious consequences of ethical significance. The prevalent use of sanctions in the last 20 years is in no small measure due to the growth of humanitarianism, as economic pressure is seen as a more acceptable, non-violent alternative to war.[25] The use of sanctions as a more ethical form of coercion is important in many situations because it increases the legitimacy of the sanctioning state and its cause. This was the hope. However economic sanctions come with cost to innocents and civilians.

Comprehensive sanctions can create considerable suffering amongst the populace of the targeted country. An typical example is the sanctions policy imposed on Iraq (1990-2003). The total embargo on Iraq affected the population of 31 million, raising the price of basic commodities by as much as 1000% a year from 1990-95.[26] The embargo crippled infrastructure. Its maintenance could not be financed, and replacement parts could not be obtained.[27] Unemployment became a major problem with figures just prior to the 2003 invasion at 23%.[28] The worst effect of the sanctions was the malnutrition caused by poverty and import restrictions, estimated to have killed 100,000-200,000 children below the age of 5 from 1991-1998.[29] This number alone is higher than the total fatalities of the gulf war, or the estimated 120,000 civilians killed in the war and occupation from 2003-2012.[30]

These sanctions were intended to undermine Saddam Hussein’s power but they only strengthened his control.[31] This contradictory result arose from the state becoming the only source of goods or income. The government controlled all food distribution, the vast majority of employment opportunities, and the extraction of resources from both the land and the Iraqi people.[32] The powerful of Iraq were able to maintain their quality of life and increase their control, as the great burden of sanctions fell on minorities, the poor and the weak.[33] Evidently, comprehensive sanctions are not a clear moral alternative to war and their use has ceased. Sanctioning states can not claim to be acting morally while inflicting so much devastation on civilians.

The crisis in Iraq, coupled with those of Yugoslavia and Haiti, resulted in a, “new norm against comprehensive sanctions to become part of the shared understanding among states.”[34] Today, smart sanctions are championed as the tool of choice for states wanting moral legitimacy for their cause as there is a common view the humanitarian issue associated with comprehensive sanctions has been solved.[35] It is true the impact of smart sanctions is significantly less than that of comprehensive sanctions, but they are not without costs either.

One type of targeted sanction is an aviation ban which targets a nation’s airline industry and stops all companies working with or supplying them.[36] This sanction can have two serious impacts on civilians. Firstly, it restricts or stops transportation of items including agriculture, health care and trade. In countries with poor infrastructure, that puts people at risk, as vaccine shipments, medical evacuations and food supplies are disrupted.[37] Even worse, if people decide to fly they are at great risk as maintenance of aircraft within the state cannot be conducted without replacement parts. This has resulted in 700 deaths from 13 air crashes since 2005 in Iran due to its old fleet, poor maintenance and high costs which stem from the sanctions on its airline industry.[38] Air travel was critical in states such as Libya, Angola and Afghanistan and therefore, these measures designed to stop the rich and powerful from flying put innocents at risk.[39]

Financial sanctions can also be ethically problematic when sanctioning states blacklist banking and financial institutions within a target state. These blacklists ban any banking and financial institution from dealing with the target and so freezes assets as a means of restricting the wealth of the rich.[40] Yet again, this has a great negative impact on much of the population, as many average citizens have savings in national banks which they cannot get back. Nor can the ordinary citizen readily access financial measures such as loans or business transactions as such services become heavily impeded.[41] Punitive measures are taken against anyone who is seen to contravene these blacklists, which results in an issue known as the, “MacDonald’s Problem.”[42] For example, if all US citizens and companies cannot do business with al-Qaeda, does that mean selling a cheese burger to anyone suspected of association with al-Qaeda is breaking the law? If so, what possible measures can MacDonald’s create to monitor its transactions, knowing that it can be heavily penalised for a transgression? This problem has resulted in many companies and individuals being punished and even having their assets frozen for breaching sanctions specifically targeted against terrorist groups.

Smart sanctions may seem a vast improvement on comprehensive sanctions in terms of their reduced impact on innocent civilians, yet they appear to be even more ineffective at changing a target’s behaviour. Their utility remains in doubt.

The Constructivist Lens

If both comprehensive and smart sanctions are ineffective and can cause great harm to civilians, then why are they still used so readily by many states? A possible answer is sanctions serve a symbolic purpose. When faced with a crisis or immoral behaviour that is not serious enough to constitute a cause for war, politicians must still take action. Even an ineffective action is perceived at least as acknowledging to the public the sanctioned state is engaging in reprehensible behaviour.[43] Secondly, the imposition of sanctions also is a signal to other governments the sanctioning state disproves of a given act or state of affairs and will not let them pass unopposed.[44] These reasons for action may seem relatively trivial, but this view underestimates the impact such signals have at home and abroad in informing and shaping moral norms of behaviour and belief. This is the manner in which sanctions were effective against Rhodesia and South Africa. In terms of changing government behaviour, these two instances of economic sanctions were failures. The actual economic impact was negligible, as the rise in Rhodesian GDP demonstrates.[45] In both cases, they created a ‘rally around the flag’ effect in the white populations, which strengthened support for the governments. However, sanctions signalled to everyone the level of racism inherent in Apartheid was immoral and unacceptable. They also showed the black community that many in the world supported its cause.[46]

The idea of measuring the success of economic sanctions in terms of ethics, as symbols to shape normative beliefs and behaviour, is a critical aspect of what is known as constructivist theory. This theory views the world of politics, society and morality as mainly consisting of structures created through human interaction, perception and belief, rather than as a product of inevitable or objective laws of nature.[47] The differences in the way we experience the world shape our beliefs about that world; about what is possible, what is moral, and what is normal. Social facts, such as the acceptability of racism, only exist through social agreement and practice.[48] The best example of this is money. The notes and coins in and of themselves are just paper and metal of little use compared to many goods and services.[49] Without shared agreement and practices, without the belief in money, it is worthless. Over time social facts integrate themselves into our experience to the point they appear to us as eternal, objective reality. This is not to say all things are social constructions and liable to change. There are objective facts, such as humans need to eat and breathe to survive, which are true irrespective of our beliefs about them. However, so much is social construction that much of the perceived world can be changed by changing social norms of practice and belief, even at a global level.

This ability to change our world through social interaction underlines the importance of sanctions as symbols. These symbolic acts have the capacity to change our perceptions of what defines acceptable and unacceptable ethical behaviour in much the same way as symbolic historical acts of protest, such asthose of Rosa Parks or the Boston Tea Party. Even if the act of imposing a sanction fails to achieve its immediate ends, the act was is an indelible statement highlighting those values we believe to be right or wrong.

Conclusion

Economic sanctions are a tool of a state’s foreign policy that have been used frequently for the last 20 years since the fall of communism, and championed as the humane alternative to war. Despite their prevalent use they have conclusively failed in their stated purpose. Sanctions almost never succeed in stopping the unethical behaviour of target states, particularly when enacted over long periods of time or through multilateral actions. Sanctions are not cost-free from an ethical perspective. Comprehensive sanctions especially cause great pain and suffering to the innocent and weak within the sanctioned state’s population, as seen with the humanitarian disaster that was Iraq. Smart sanctions have mitigated the worst impacts on civilians but still carry costs that may be difficult to justify when weighed against their comparatively miserable efficacy. The only way economic sanctions make sense is if we view the power of sanctions as symbols in the constructivist light rather than their bare political form. Then, arguably, there is a place for sanctions as a means to shape international ethical norms for the better.

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[1] Goldsmith, Benjamin E. “Economics of War and Peace: Economic, Legal and Political Perspectives” (Emerald Group Publishing, 2010), p.227

[2] Askari, Hossein “Economic Sanctions: Examining their Philosophy and Efficacy” (Greenwood Publishing Group, 2003), p.47

[3] Weiss, Thomas G. “Sanctions as a foreign policy tool: Weighing humanitarian impulses.” Journal of Peace Research 36, no. 5 (1999), p. 499

[4] Morgan, T. Clifton, Navin Bapat, and Valentin Krustev. “The Threat and Imposition of Economic Sanctions, 1971—2000*.” Conflict Management and Peace Science 26, no. 1 (2009), p. 99

[5] Pape, Robert “Why Economic Sanctions Do Not Work” International Security 22, no.2 (1997), p.93

[6] Baldwin, David A. “The sanctions debate and the logic of choice.” (MIT Press, 2006). p83

[7] Eriksson, Mikael “Targeting Peace: Understanding UN and EU Targeted Sanctions” (Ashgate Publishing, 2013), p.5

[8] Allen, Susan Hannah. “The determinants of economic sanctions success and failure.” International Interactions 31, no. 2 (2005), p.118

[9] Orkin, Mark “Sanctions Against Apartheid” (New African Books, 1989), p.114

[10] Askari “Economic Sanctions: Examining their Philosophy and Efficacy” (2003), p.49

[11] Drezner, Daniel W. “Sanctions sometimes smart: Targeted sanctions in theory and practice.” International Studies Review 13, no. 1 (2011), p.97

[12] Solingen, Etel “Sanctions, Statecraft, and Nuclear Proliferation” (Cambridge University Press, 2012), p.154

[13] Philpott, Daniel, Powers, Gerard “Strategies of Peace” (Oxford University Press, 2010), p.172

[14] Eriksson “Targeting Peace” (2013), p.280

[15] Morgan, Bapat, Krustev. “The Threat and Imposition of Economic Sanctions, 1971—2000*.” (2009), p. 98

[16] Pape, Robert “Why Economic Sanctions Still Do Not Work” International Security 23, no.1 (1998), p. 66

[17] Morgan, Bapat, Krustev. “The Threat and Imposition of Economic Sanctions, 1971—2000*.” (2009), p. 98

[18]Eriksson “Targeting Peace” (2013), p.282

[19]Dashti-Gibson, Jaleh, Patricia Davis, and Benjamin Radcliff. “On the determinants of the success of economic sanctions: An empirical analysis.” American Journal of Political Science (1997), p.610

[20] Ibd, p.610

[21]Allen, Susan Hannah. “The determinants of economic sanctions success and failure.” International Interactions 31, no. 2 (2005), p.132

[22]Drezner, Daniel W. “Bargaining, enforcement, and multilateral sanctions: when is cooperation counterproductive?” International Organization 54, no. 01 (2000), p.97

[23] Hermele, Kenneth, Oden, Bertil “Sanction Dilemmas: Some Implications of Economic Sanctions Against South Africa” (Nordic Africa Institute, 1988), p.17

[24]Drezner “Bargaining, enforcement, and multilateral sanctions” ( 2000), p.75

[25] Weiss “Sanctions as a foreign policy tool” (1999), p.500

[26] Eriksson “Targeting Peace” (2013), p.282

[27] Bufacchi, Vittorio “Rethinking Violence” (Routledge, 2013), p.68

[28] CIA “Iraq Economic Data (1989-2003)” https://www.cia.gov/library/reports/general-reports-1/iraq_wmd_2004/chap2_annxD.htmlas of 01/20/2014

[29]Drezner, “Sanctions sometimes smart” (2011), p. 97

[30] Iraq Body Count http://www.iraqbodycount.org/as of 01/21/2014

[31] Weiss “Sanctions as a foreign policy tool”  (1999), p.501

[32] Eriksson “Targeting Peace” (2013), p.282

[33]Drezner, “Sanctions sometimes smart” (2011), p.99

[34] Solingen “Sanctions, Statecraft, and Nuclear Proliferation” (2012), p.159

[35] Eriksson “Targeting Peace” (2013), p.288

[36] Brzoska, Michael “Design and implementation of arms embargoes and travel and aviation related sanctions, result of the ‘Bonn-Berlin Process’ ” (BICC, 2007), p. 71

[37]Gordon, Joy. “Smart Sanctions Revisited.” Ethics & International Affairs 25, no. 03 (2011), p.325

[38] The Economist “Iranian Sanctions, Winging it”http://www.economist.com/blogs/gulliver/2013/07/iranian-sanctionsas of 20/01/2014

[39]Gordon “Smart Sanctions Revisited.” (2011), p.326

[40] Eriksson “Targeting Peace” (2013), p. 288

[41] Fitzgerald, Peter “Compliance Issues Associated with Targeted Economic Sanctions,” in House of

Lords, Select Committee on Economic Affairs, 2nd Report of Session 2006-07, The Impact of

Economic Sanctions, Vol. II: Evidence, p.150

[42]Gordon “Smart Sanctions Revisited.” (2011), p.328

[43] Whang, Taehee. “Playing to the Home Crowd? Symbolic Use of Economic Sanctions in the United States1.” International Studies Quarterly 55, no. 3 (2011), p.788

[44] Ibd, p. 787

[45] Mack, Andrew, and Asif Khan. “The efficacy of UN sanctions.” Security Dialogue 31, no. 3 (2000), p.282

[46] General Accounting Office of the United States of America “Economic Sanctions, Effectiveness as Tools of Foreign Policy” (DIANE Publishing, 1993), p.28

[47] Roberts, Peri “Political Constructivism” Routledge, 2007), p.1

[48] Frueh, Jamie “Political Identity and Social Change: The Remaking of the South African Social Order” (SUNY Press, 2003), p.10

[49] Barkin, Samuel J. “Social Construction and the Logic of Money: Financial Predominance and International Economic Leadership” (SUNY Press, 2003), p.25