Opening Remarks

Why Economic Sanctions Rarely Work


Why Economic Sanctions Rarely Work

Photograph by Caleb Charland for Bloomberg Businessweek

Sanctions, particularly economic sanctions, have long been a tool of U.S. foreign policy, and few presidents have leaned on them as much as Barack Obama or been as successful at rallying others to do the same. To thwart Iran’s nuclear ambitions, the U.S. has cajoled and bullied much of the world to slash imports of Iranian oil and freeze out Iranian banks. Most of the world has similarly choked off trade with North Korea. And for almost two years after the outbreak of Syria’s civil war, the U.S., Europe, and the Arab League hoped that asset freezes, banking and visa sanctions, and a Western ban on Syrian oil purchases would pressure Bashar al-Assad to step down or persuade his cronies to oust him.

In a world bristling with bad actors, and especially at a time when the country is wary of another war, sanctions have an obvious appeal—and limited impact. Sanctions have failed to dissuade Iran from continuing to enrich uranium. They haven’t dislodged North Korea’s repressive and erratic leaders or forced a rollback of their nuclear and missile programs. For all the international pressure on Syria’s Assad, the regime is getting more ruthless, not less, and the policy debate in Washington has moved on to how much military support to provide the rebels.

That record hasn’t stopped Congress from seeking to pile even more sanctions on the U.S.’s adversaries. In the House, more than 300 members from both parties are pushing a bill that would target Iran’s commercial trade and punish countries that buy even reduced amounts of oil from Iran. Several senators have proposed bills intended to choke off Iran’s access to foreign reserves and trade. Lawmakers are working on similar legislation to tighten the economic noose around North Korea.

It’s an open question whether more punishment will actually change the behavior of Iran and North Korea—or instead make their leaders more defiant. Veteran U.S. diplomat Thomas Pickering says policymakers must understand that sanctions are only a tool and not a strategy. In the case of Iran, the U.S. has “spent a huge amount of time and attention developing a sanctions regime and far less on trying to work out a negotiating approach to take advantage” of that pressure, he says. “There has to be a rebalancing.”

The U.S. has punishing restrictions on a half-dozen countries, including Cuba, Iran, North Korea, Sudan, and Syria. A U.S. Department of the Treasury list of sanctioned individuals, businesses, and government programs worldwide runs to more than 550 pages. Daniel Drezner, a professor at Tufts University’s Fletcher School, says sanctions “tend to work when the demand is incredibly well-defined,” like resolving a trade dispute, “and there is some sort of decent relationship with the target state.” Those governments can compromise without worrying that the country imposing sanctions will keep demanding more. Drezner says that broad sanctions targeted at adversaries have far lower odds of success. “Put yourself in Iran’s shoes or North Korea’s shoes, when administration after administration has imposed sanctions”—they question whether what Washington is really pushing for is regime change.

American policy toward Cuba may qualify as sanctions’ most conspicuous failure. Despite 50 years under a U.S. embargo, the Castro brothers are still in charge, an illustration of how unilateral sanctions are far less effective than punishments imposed by a broad coalition of nations. Still, there are some cases where sanctions have helped change the behavior of repressive regimes, although analysts debate whether those pressures were the deciding factor. International sanctions were critical to ending apartheid rule in South Africa—but political resistance, apartheid’s economic inefficiencies, and the unraveling of the Soviet Union were important as well. After Libya agreed to give up its chemical and nuclear weapons programs in late 2003, officials told me during a visit to Tripoli that the biggest impetus for the deal was their desire to end sanctions and send their kids to American schools. The Bush administration maintained that Libya had been spooked into compliance by the U.S. invasion of Iraq earlier that year.

The case of Iraq in the 1990s is the most fiercely debated use of sanctions and a reminder of how multiple goals can confuse and complicate policy. Proponents of sanctions—and critics of the 2003 invasion—say the trade and financial embargo against Saddam Hussein was working because it crippled his ability to threaten his neighbors. The Bush administration disagreed, arguing that international appetite for the embargo was flagging and years of crushing punishments had failed to get Saddam to come clean about his weapons or force him from power. The Iraq example also raises vital questions about the cost of sanctions. Critics of the embargo long maintained that it led to the deaths of half a million Iraqi children. While those estimates have since been scaled back or retracted, the human toll was real.

In the wake of the Iraq War, the U.S. and other governments have committed to so-called smart sanctions, which are supposed to target decision-makers and do the least amount of damage to ordinary citizens. That’s difficult to pull off. There are no restrictions on selling food or medicine to Iran, but few banks want to risk the Treasury Department’s ire by facilitating even humanitarian trade. A senior U.S. official says the administration is looking for a solution.

For the U.S., the ongoing dispute over Iran’s nuclear program has become the primary test of whether sanctions can work. Iran has already been hit hard. Oil exports are down more than 40 percent; annual inflation could top 60 percent. The economy shrank 1.9 percent in 2012, the first negative growth in more than two decades. Yet the government continues to move forward with its nuclear program, which it insists is solely for peaceful purposes. Negotiations have gone nowhere.

The U.S. and Europe have dropped their demand that Tehran forswear all nuclear fuel production—under the most recent offer from the P5+1 (the permanent members of the UN Security Council plus Germany), Iran would, as a first step, suspend production of fuel that can be easily turned into weapons grade. In return, restrictions would be suspended on its trade in precious metals and petrochemical products. The Iranians are insisting on the lifting of all sanctions and recognition of the country’s right to enrich uranium.

A recent report from the Iran Project, signed by Pickering and 35 other former senior officials and analysts, argues there’s little chance of progress until Obama commits to direct negotiations and takes “active steps—rhetorical assurances will not suffice—to convince [Iran’s] Supreme Leader that the United States does not seek to overthrow his regime.” While the report says the U.S. shouldn’t reduce current sanctions without verifiable Iranian commitments, it says that Washington will have to outline what Iran can expect to receive for reining in its nuclear program. Even then, it says there’s no guarantee that any mix of pressure and incentives will work.

The administration has resisted laying out its terms for a comprehensive agreement with Iran. Unwinding 35 years of U.S. sanctions wouldn’t be easy, especially while Iran supports terrorist groups and represses its citizens. The White House may be worried about being accused—on Capitol Hill and by Israel—of giving away too much. A senior U.S. official believes the White House’s main concern is that if Tehran rejected a deal, Obama would have to decide whether to take military action.

Sanctions are more appealing than letting rogues and knaves have their way or fighting another war. Syria’s Assad still may be ousted, especially if Russia cuts him off as well. But North Korea’s Kim Jong Un may be able to hold out indefinitely, unless China stops enabling him. And without a diplomatic breakthrough with Tehran, Obama may finish his second term having to choose between ordering a military attack on Iran’s nuclear facilities or coming up with a new policy to contain a nuclear-armed state.

Squeezing dangerous regimes can signal strong global disapproval and impose some pain on rogue leaders and their cronies. It’s unlikely to change their behavior. What the Obama administration may discover, in the cases of Iran, North Korea, and Syria, is that sanctions can help delay hard decisions. But they can only buy so much time.

Robbins is an adjunct senior fellow at the Council on Foreign Relations.

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