Sunday, August 10, 2014

Economic Sanctions I – What they are, who can impose them, what they can achieve, why they are taken, and when they are effective

Nowadays, you can read, hear, and see about economic sanctions everywhere. But do we always understand what we are talking about? Here are the questions that you probably don’t dare to ask when discussing economic sanctions.

What are economic sanctions?

Economic sanctions are coercive measures taken against one or more countries to force a change in policies or, at least, to demonstrate a country’s opinion about another’s policies. On a continuum of relations among states, they are in the middle between full cooperation and war.

Economic sanctions can take the form of

  • trade embargoes, i.e. restrictions on particular exports or imports (commodities etc.);
  • limitation of foreign assistance, loans, and investments;
  • control or freeze of foreign assets;
  • cancellation of government procurement contracts;
  • negative votes in international institutions;
  • abrogation of trade agreements and other bilateral accords;
  • limitation of aviation, maritime, or surface access.

Who can impose economic sanctions?

One country (unilateral sanctions), several countries (multilateral sanctions), or the United Nations (universal sanctions) can impose economic sanctions. Obviously, the more countries impose a sanction the better are its chances of success.

What can economic sanctions achieve?

By inflicting economic sanctions, a country can

  • condemn a certain behavior,
  • coerce a change in a specific behavior,
  • punish, and
  • dissuade third countries to adopt the same behavior.

Why do states set up economic sanctions?

First of all, economic sanctions can be motivated by defense interests, i.e. the protection of the home country and its citizens against a threat of physical violence.

A state can also pursue economic interests, for example enhancing the home country’s economic well-being.

Likewise, world order interests, for instance maintaining a secure and peaceful international political and economic system, can motivate economic sanctions.

Finally, ideological interests, such as protecting a set of values that the citizens of a nation-state share and believe being universally good, can drive economic sanctions.

(When) are economic sanctions effective?

Notably, many commentators agree on the following statement:

“The effectiveness of sanctions is very difficult to assess because the cost of benefit cannot be considered in vacuum.”

What this means is that international relations are so complex that you cannot reasonably assess what the impact of sanctions is.

However, it seems clear that sanctions can only be effective when credible armed forces are available and ready to be used if required.

“Coercion in the economic realm can force compliance in the political realm.”

In addition,

  • compliance with economic sanctions should not be too difficult to obtain,
  • the objectives should be clear and not shift over time, and
  • the target state must be vulnerable.

This was a bit stodgy, I know. Next time, we will bring these concepts to life by looking at the current relationship between Russia and the West.