Economic Sanctions: A Political Tool with a Cost

Raj Ashar | June 2021

Former President Donald Trump signing an executive order sanctioning Iran (June 2019)


n our interconnected world, where it is almost impossible for governmental activity to go unnoticed on the foreign stage, economic sanctions have become an important aspect of the federal government’s foreign policy toolkit. Used for a variety of different circumstances, including deterrence, condemnation, and strategically destabilizing foreign political regimes, this tool’s efficacy is rooted in the immense amount of market power wielded by the US, which allows sanctions to have intense effects on other countries with smaller economies.

One example of such sanctions occurred just a year ago, when the U.S. sanctioned Turkey for procuring and testing a Russian S-400 missile defense system. Another more controversial example can be seen with the sanctions the U.S. instituted against Iran for their development of a nuclear weapons program.


Economic sanctions have been a part of the United States’ diplomatic toolbox for many years. Their use abated in the 1800s after the failed Embargo Act of 1807, yet returned in the 20th century with the formation of the League of Nations. As a tool, they are often considered stronger than voiced condemnation but weaker than military mobilization. This proves very appealing as the U.S. often wants to avoid military conflict while also wielding a tool that has some force behind it. However, given the widespread use of sanctions over the past few decades, an all-too important question remains: how useful are they in achieving American goals in the international arena? 


A Question of Efficacy


The seminal book on the topic, Economic Sanctions Reconsidered, written by Gary Clyde Hufbauer, Jeffrey Schott, and Kimberly Ann Elliot and published in 1985, attempts to provide a framework to analyze sanctions throughout history, primarily utilizing qualitative measures of various policies’ effectiveness as well as the sanctions’ costs to the countries implementing them.1 Somewhat surprisingly, the authors consider only 34% of the sanctions levied by the US between 1990 and 2000 to be successful. The results from earlier eras don’t exhibit much success either: 24.1% were effective between 1970-89 and only around half worked between 1945 and 1969. Despite these bleak numbers, the authors do point out that the success rate is based on a specific measure of policy success, in this case how well the sanction lived up to its public rationale. 


However, another motivation for sanctions the authors cite is the degree to which a specific policy reflects well on a leader or government in the eyes of constituents. A sanction that is unsuccessful through a “policy” lens (one that did not achieve the desired goal or came at a large cost to the country imposing the sanction) can be successful from a political perspective by attributing a specific “action” or “attitude” to one or several of the nation’s leaders. 


For instance, one such sanctioning effort that might be seen as economically questionable yet politically successful is former President Donald Trump’s sanctioning of several Chinese officials and corporations, which allowed him to appear to be “strong on China,” despite brandishing policies with debatable economic outcomes. A quantitative paper by Taehee Whang studies the political efficacy of sanctions, analyzing the U.S. presidential approval rating from 1948-1999 along with the sanctions imposed by the US during that time, finding that “on average, the imposition of sanctions tends to result in a 3.301% increase in the approval rating [of the President] in the following month.” Whang attributes this boost in domestic approval to the fact that sanctions, despite possibly being instrumentally ineffective, exhibit “do something” leadership, elevating the popularity of the incumbent. 


Humanitarian Implications


While it's possible that sanctions are a useful domestic political tool if not a foreign policy one, critics often point to the humanitarian toll they can take. A policy analysis by the Cato Institute provides the example of the 2011 Obama administration sanctions on Syria which, along with those advanced by the European Union, worked to destabilize the Syrian economy, which shrank by 75% between 2010 and 2015, surely hurting Syrians. The goal of these sanctions was to overthrow the Assad regime, which was arguably a reasonable goal, yet the sanctions did not accomplish this, instead only harming Syrians who were already living through a civil war.


Yet another example of sanctions with humanitarian effects lies in the comprehensive U.N. sanctions imposed on Iraq resulting from the country’s 1991 invasion of Kuwait. The sanctions were immensely effective economically, yet they also had immense humanitarian consequences. Researchers cite an increase in the amount of babies born with low birth weights, an increase in malnutrition, as well as jumps in a variety of infections in Iraq as all at least partially attributable to the sanctions. 


Alternatives to Sanctioning


With this low efficacy and large humanitarian toll, one should ask whether there are alternative policy measures that can be taken without significantly affecting the well-being of a country's population. Unfortunately, there are none that can perfectly replace sanctions.


One alternative is the use of what is considered “soft power,” which is described as “the art of using cultural charm, appeal of ideals, and influential means of attraction to condition a positive relationship that tempers hostility.”2 This can often be seen in the form of foreign aid and educational exchange programs, among other options. Unlike sanctions, it seems soft power options would be unlikely to help garner domestic support for presidential administrations, but would rather hurt if used against an instance of aggression. Imagine the U.S. giving aid to a foreign country after that country imprisons a large group of American citizens without cause. From a domestic political perspective, it would likely be a disaster for the government, as many in the public would oppose this course of action; hence, soft power can sometimes be seen as a replacement for sanctions to achieve policy goals, but not necessarily as a magnet for domestic political support, as resentment and estrangement among the citizenry may ensue. 


Sanctions are a very powerful tool with the potential to crumble nations and destroy lives while still not achieving their intended policy result. Despite their ineffectiveness on the policy front, it seems that they are often sometimes used to quell the public’s calls for action rather than enact change. However, given sanctions’ potential for imposing disastrous harm on foreign nations, the U.S. must exercise caution in sanctioning others, doing so only when needed and crafting the punishments as narrowly as possible in order to reduce the potential for harming innocents.


In Closing 


The stakes here are high. The use of sanctions, or lack thereof, has the direct potential to influence foreign actors’ perceptions of American power and hegemony. While a downside to the use of sanctions is their lack of efficacy on the international stage, it would help us a great deal to ponder the ramifications of a world without sanctioning activity. Other countries, effectively dealing with an instance of moral hazard, could very well be incentivized to continue and expand malicious activities that are verbally condemned by the U.S. and our allies. For instance, the absence of economic and political ramifications for such activity might embolden states and sponsored terrorist organizations to augment arms purchases and expand offensive military capabilities, activities which would have been “chilled” or outright prevented by the prior use of sanctions. 


This topic is becoming especially relevant as we engage in what many would call a new “Cold War” with China. Among calls for an increasingly digital and cybersecurity-focused military in response to the totalitarian threat posed by China, the Biden administration has not been hesitant to impose sanctions on the country as well. Yet, due to such sanctions’ empirically disputed efficacy, one might do well to question our present sanctioning activity, ineffective activity which might point towards taking a harder, more militaristic stance in defending our interests in the Asia-Pacific region.


If anything is clear, the use of sanctions, especially by a country as powerful and agenda-setting as the United States, is a contentious and understandably controversial action: a political tool with a cost. While it might be politically expedient for a president to impose them on a threatening state actor, it is clear that sanctions imposed over the past century have been of questionable utility. An empirically informed approach to foreign affairs, paying heed to the effectiveness of various policy tools, is the only path towards a safer, more secure international arena.

Raj Ashar is a Senior Editor at Midwestern Citizen and is a rising senior at the University of Michigan studying Economics. In the future he hopes to attend law school and combine his interest in economics with the law. Outside of MC, Raj enjoys watching movies and running.

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