PART II THEORIES OF ECONOMIC SANCTIONS

91

CHAPTER 3 THE ANATOMY OF ECONOMIC SANCTIONS

A nation that is boycotted is a nation that is in sight of surrender. Apply this economic, peaceful, silent, deadly remedy and there will be no need for force. It is a terrible remedy. It does not cost a life outside the nation boycotted, but brings a pressure upon the nation which, in my judgment, no modern nation could resist. -- Woodrow Wilson, U.S. President, 19191

Russia is becoming an imperial power of the 20th century; we no longer need physical control over territory, we can have economic influence. -- Sergei Karaganov, head of the Foreign and Defense Policy Council (Russia), 19972

I. The Definition of Economic Sanctions

Economic sanctions have been long used in international relations. According to Gary Hufbauer, Jeffery Schott, and Kimberly Elliot (hereafter HSE), there were at least 13 prominent cases of economic sanctions before World War I. 3 The most celebrated early use of economic sanctions occurred in 432 B.C. when Pericles issued

Gary Clyde Hufbauer, Jeffery J. Schott, and Kimberly Ann Elliot, Economic Sanctions Reconsidered: History and Current Policy, 2nd ed. (Washington, D.C.: Institute of International Economics, 1990), p. 9. Quoted in Saul K. Padover (ed.), Wilsons Ideals (Washington: American Council on Public Affairs, 1942), p. 108. Chrystia Freeland, From Empire to Nation State: As NATO Expands Eastwards Russia Is Having to Come to Terms with the Loss of Its Superpower Status, Financial Times, July 10, 1997, p. 29. These 13 cases refer to Athens vs. Megara (circa 432 B.C.), American colonies vs. Britain (1765), American colonies vs. Britain (1767-1770), Britain and France vs. France and Britain (1793-1815), United States vs. Britain (1812-1814), Britain and France vs. Russia (1853-1856), U.S. North vs. Confederate States (1861-1865), France vs. Germany (1870-1871), France vs. China (1883-1885), United States vs. Spain (1898), Britain vs. Dutch South Africa (1899-1902), Russia vs. Japan (19041905), and Italy vs. Turkey (1911-1912). Gary Clyde Hufbauer, Jeffery J. Schott, and Kimberly Ann Elliot, Economic Sanctions Reconsidered: History and Current Policy, 2nd ed. (Washington, D.C.: Institute of International Economics, 1990), pp. 28-32. 92

the Megaran decree limiting the entry of Megaras products into Athenian markets. The subsequent refusal to lift the Athenian boycott of Magara helped to trigger the Peloponnesian War.4 In the increasingly integrated global economy of the twentieth century, economic sanctions have become a popular tool of statecraft, particularly in the United States in the 1990s. In 1919, Woodrow Wilson believed that the economic, peaceful, silent deadly remedy of economic sanctions could be used by the League of Nations to police international society.5 Albert Hirschman shows how states tried to minimize their vulnerability to the interruption of strategic imports while maximizing others need to trade with them. In order to influence other countries behavior, Nazi Germany was particularly aggressive at cultivating economic dependency in its eastern European neighbors.6 There has been resurgence in the use of economic sanctions, especially since the end of the Cold War. Great powers, stymied by the price of military intervention in places such areas as Bosnia, Chechnya, and Somalia, are looking to alternative policy instruments to pursue their national interests. 7 For instance, in 1997 Sergei Karaganov, head of the Foreign and Defense Policy Council 8, articulated Russian policy by stating that economic influence bestows Russia with imperial power without a need to have physical control over another territory.9 According to HSE, 165 cases of economic sanctions were launched between

Thucydides, History of the Peloponnesian War, translated by Rex Warner (New York: Penguin Books, 1972), pp. 72-3, 118. Gary Clyde Hufbauer, Jeffery J. Schott, and Kimberly Ann Elliot, Economic Sanctions Reconsidered: History and Current Policy, 2nd ed. (Washington, D.C.: Institute of International Economics, 1990), p. 9. Quoted in Saul K. Padover, (ed.), Wilsons Ideals (Washington: American Council on Public Affairs, 1942), p. 108. Albert O. Hirschman, National Power and the Structure of Foreign Trade, expanded ed. (Berkeley, C.A.: University of California Press, 1980). Elizabeth S. Rogers, Using Economic Sanctions to Control Regional Conflicts, Security Studies, vol. 5, no. 4 (Summer 1996), pp. 43-72. The Foreign and Defense Policy Council is an influential group of Russian academics, businessmen, and politicians across the political spectrum. Chrystia Freeland, From Empire to Nation State: As NATO Expands Eastwards Russia Is Having to Come to Terms with the Loss of Its Superpower Status, Financial Times, July 10, 1997, p. 29. 93

1914 and 1998, of which 115 cases involved the United States, and of which 68 cases were unilateral U.S. initiatives.10 In addition, the Russian Federation employed economic sanctions on more than 35 occasions between 1992 to 1997 as a way of extracting political concessions from the Newly Independent States (NIS). 11 The United Nations Security Council imposed sanctions only twice in the first 45 years of its existence, against Rhodesia in 1966 and South Africa in 1977. However, during the 1990s, the Security Council imposed comprehensive or partial sanctions more than 16 times.12 These unprecedented activities have generated substantial discussion of economic sanctions in policy and academic circles. 13 These discussions have addressed the following issues: (1) Have sanctions been effective, and what is meant by effective; (2) What variables affect the degree of effectiveness? (3) How does one assess the importance of unintended side effects? (4) What are the effects on the side imposing sanctions? For lawyers, negative sanctions are measures of enforcement, which follow violations of law. They are penalties, which indicate the limits of permissible conduct and encourage compliance with known rules. Margaret Doxey defines economic sanctions as penalties threatened or imposed as a declared consequence of the targets failure to observe international standards or international obligations. 14 M. S. Daoudi and M. S. Dajani define economic sanctions as punitive actions initiated by a number of international actors, particularly a world organization such as the League of Nations
10

11

12

13

14

Gary Clyde Hufbauer, Trade as a Weapon, paper for the Fred J. Hansen Institute for World Peace, San Diego State University, World Peace Week, April 12-18, 1999, http://www.iie.com/TESTMONY/gch9.htm, accessed July 25, 2000, p. 3 of 5. Daniel W. Drezner, The Sanctions Paradox: Economic Statecraft and International Relations (New York: Cambridge University Press, 1999), p. 154. David Cortright and George A. Lopez, The Sanctions Decade: Assessing UN Strategies in the 1990s (Boulder, Colorado: Lynne Rienner, 2000), pp. 1-2. By 2000 the Carnegie Commission on Preventing Deadly Conflict, the Center for Preventive Action of the Council on Foreign Relations, Center for Strategic and International Studies, Institute for International Economics, and the Brookings Institution had all undertaken studies of sanctions policy either in general or toward a particular country. Margaret P. Doxey, Economic Sanctions and International Enforcement, 2nd ed. (New York: Oxford University Press, 1980), p. 9. 94

or the United Nations, against one or more states for violating a universally approved charter, as inducements to follow, or refrain from following, that particular course of conduct and conform with international law.15 In the 1920s and early 1930s, in line with the concept of enforcement of international law, economic sanctions meant League of Nations sanctions. According to HSE, there were only five cases of economic sanctions in total employed by the League of Nations: against Yugoslavia in 1921, Greece in 1925, Paraguay and Bolivia in 1932, and Italy in 1935.16 Although UN sanctions have recently become quite common, it would be unrealistic to limit the economic sanctions label to UN enforcement measures, or to measures imposed by any international body against its members. It is important to establish a more precise definition of economic sanctions, which now feature so prominently in state practice for other purposes. Essentially, economic sanctions imposed by a state, a group of states, or an international organization become a form of power exercised to influence other countries behavior or policy, which does not necessarily violate international law. For example, Johan Galtung defines economic sanctions as actions initiated by one or more international actors (the senders) against one or more others (the receivers) in order to punish the receivers by depriving them of some value and/or to make the receivers comply with certain norms the senders deem important. 17 Makio Miyagawa has a similar definition.18 Miroslav Nincic and Peter Wallensteen define economic coercion as the imposition of economic pain by one government on another in order to attain some

15

16

17

18

M. S. Daoudi and M. S. Dajani, Economic Sanctions: Ideal and Experience (Boston: Routledge & Kegan Paul, 1983), p. 8. Gary Clyde Hufbauer, Jeffery J. Schott, and Kimberly Ann Elliot, Economic Sanctions Reconsidered: History and Current Policy, 2nd ed. (Washington, D.C.: Institute of International Economics, 1990), p. 16. Johan Galtung, On the Effects of International Economic Sanctions, World Politics, vol. 19 (October 1966- July 1967), p. 379. Makio Miyagawa, Do Economic Sanctions Work? (New York: St. Martins Press, 1992), p. 7. 95

political goal. It is implemented, or at least initiated, by political authorities who intervene in the normal operation of economic relations. 19 [Emphasis added] James Lindsay defines economic sanctions as measures in which one country (the initiator) publicly suspends a major portion of its trade with another country (the target) to attain political objectives.20 Robert Pape, Ernest Preeg, Daniel Drezner, Neta Crawford, Jean-Marc Blanchard, Edward Mansfield, Norrin Ripsman, Steve Chan, and A. Cooper Drury have a similar definition. 21 The use of the term political goals/objectives is intended to rule out cases in which sanctions are used to obtain commercial ends. In their seminal work, Economic Sanctions Reconsidered, HSE define economic sanctions as the deliberate, government-inspired withdrawal, or threat of withdrawal, of customary trade or financial relations. Customary does not mean contractual; it simply means levels of trade and financial activity that would probably have occurred in the absence of sanctions.22 Based on her literature review, Donna Kaplowitz defines economic sanctions as economic or financial prohibitions taken by one or more countries the senders to punish another country or countries the target or

19

20

21

22

Miroslav Nincic and Peter Wallensteen, Economic Coercion and Foreign Policy, in Miroslav Nincic and Peter Wallensteen (eds.), Dilemmas of Economic Coercion: Sanctions in World Politics (New York: Praeger, 1983), p. 3. James M. Lindsay, Trade Sanctions as Policy Instruments: A Re-examination, International Studies Quarterly, no. 30 (1986), p. 154. Robert A. Pape, Why Economic Sanctions Do Not Work, International Security, vol. 22, no. 2 (Fall 1997), pp. 93-4. Ernest H. Preeg, Feeling Good or Doing Good with Sanctions: Unilateral Economic Sanctions and the U.S. National Interest (Washington, D.C.: Center for Strategic and International Studies, 1999), p. 4. Daniel W. Drezner, The Sanctions Paradox: Economic Statecraft and International Relations (New York: Cambridge University Press, 1999), pp. 2-3. Neta C. Crawford, Trump Card or Threat?: An Introduction to Two Sanctions Debates, in Neta C. Crawford and Audie Klotz, How Sanctions Work: Lessons from South Africa (New York: St. Martins Press, 1999), p. 5. Jean-Marc F. Blanchard, Edward D. Mansfield, and Norrin M. Ripsman, The Political Economy of National Security: Economic Statecraft, Interdependence, and International Conflict, Jean-Marc F. Blanchard, Edward D. Mansfield, and Norrin M. Ripsman, Power and the Purse: Economic Statecraft, Interdependence, and National Security (Portland, OR: Frank Cass, 2000), p. 3. Steve Chan and A. Cooper Drury, Sanctions as Economic Statecraft: An Overview, in Steve Chan and A. Cooper Drury (eds.), Sanctions as Economic Statecraft: Theory and Practice (New York: St. Martins, 2000), pp. 1-2. Gary Clyde Hufbauer, Jeffery J. Schott, and Kimberly Ann Elliot, Economic Sanctions Reconsidered: History and Current Policy, 2nd ed. (Washington, D.C.: Institute of International Economics, 1990), p. 2. 96

force change in the targets policies, or demonstrate to a domestic or international audience the senders position on the targets policies. 23 Obviously, both objectives can also be sought simultaneously, that is, to change the targets behavior and provide valued symbols to domestic or international constituencies. Economic sanctions, sometimes synonymous with economic coercion, are distinct from economic warfare (strategic embargo), economic inducements, and trade war, in terms of forms, purposes, and occasions. In essence, economic sanctions, according to David Baldwin, are only one category of economic statecraft, which refers to influence attempts relying primarily on resources which have a reasonable semblance of a market price in terms of money. Economic warfare (strategic embargo) seeks to weaken an adversarys aggregate economic potential in order to weaken its military capabilities, either in a peacetime arms race or in an ongoing war. Economic warfare represents a long-term approach to dealing with adversaries while economic sanctions usually have immediate political goals. Economic inducements involve commercial concessions, technology transfers, and other economic carrots that are extended by a sender in exchange for political compliance on the part of a target. Economic inducements are also called positive sanctions. Trade wars are disputes over economic policy and behavior instead of political/security goals.24 This study defines economic sanctions as the threat or act by a state or coalition of states, the sender, to disrupt customary economic exchange with another state, the target, in order to punish the target, force change in the targets policies, or
23

24

Donna Rich Kaplowitz, Anatomy of a Failed Embargo: The Case of the U.S. Sanctions against Cuba, vol. I, Ph.D. dissertation, Johns Hopkins University, 1995, p. 32. David Baldwin, Economic Statecraft (Princeton, N.J.: Princeton University Press, 1985), pp. 12-40. Miroslav Nincic and Peter Wallensteen, Economic Coercion and Foreign Policy, in Miroslav Nincic and Peter Wallensteen (eds.), Dilemmas of Economic Coercion: Sanctions in World Politics (New York: Praeger, 1983), p. 3. Richard J. Ellings, Embargoes and World Power: Lessons from American Foreign Policy (Boulder: Westview Press, 1985), p. 8. Richard N. Haass (ed.), Economic Sanctions and American Diplomacy (New York: Council on Foreign Relations, 1998), p. 1. Daniel W. Drezner, The Sanctions Paradox: Economic Statecraft and International Relations (New York: Cambridge University Press, 1999), pp. 2-3. Steve Chan and A. Cooper Drury, Sanctions as Economic Statecraft: An Overview, in Steve Chan and A. Cooper Drury (eds.), Sanctions as Economic Statecraft: Theory and Practice (New York: St. Martins, 2000), pp. 1-2. 97

demonstrate to a domestic or international audience the senders position on the targets policies. The sender is designated as the country or international organization that is the principal author of the sanctions. The target is designated as the country that is the immediate object of the sanctions. Economic sanctions do not include economic warfare, economic inducements, and trade wars. The following sections will elaborate further on the types, goals, logic, costs, and effectiveness of economic sanctions.

II. The Types of Economic Sanctions

There are four main methods of applying economic sanctions by the sender: trade controls, suspension of aid or technical assistance, freezing of the targets financial assets, and blacklisting of companies involved with bilateral business.25 First, trade controls (both goods and services) by the sender include one or more of the following elements: (1) quotas on exports/imports; (2) restrictive exports/imports licensing; (3) limited or total export disruption (embargo); (4) limited or total import disruption (boycott); (5) discriminatory tariff policy (including denial of most favored nation status); (6) restriction or cancellation of fishing rights; (7) suspension or cancellation of trade agreements; and (8) bans on strategic goods and advanced technology exports. Second, suspension of aid or technical assistance by the sender includes one or more of the following elements: (1) reduction, suspension, or cancellation of credit facilities at concessionary or market rates; (2) reduction, suspension, or cancellation of technical assistance, military assistance, development assistance, and training programs; and (3) votes against loans, grants, subsidies, and funding for technical or other assistance from international organizations.
25

Margaret P. Doxey, Economic Sanctions and International Enforcement, 2nd ed. (New York: Oxford University Press, 1980), pp. 14-5. 98

Third, freezing of the targets financial assets by the sender includes one or more of the following elements: (1) freezing or confiscation of bank assets of the target government or target nationals; (2) confiscation or expropriation of other target assets, including the targets investment in the sender; (3) freezing interest or other transfer payments; (4) refusal to refinance or reschedule debt repayments (interest and principal); and (5) suspension or cancellation of joint projects. Fourth, blacklisting of companies involved with bilateral business by the sender includes the following elements: (1) blacklisting of senders or third parties companies doing business with the target, including trade and investment; and/or (2) blacklisting of the targets companies doing business with the sender, including trade and investment. This study will discuss four particular scenarios within the above four categories: (1) a possible PRC embargo against Taiwan; (2) a possible Chinese boycott of Taiwanmade goods; (3) the possible freezing or expropriation of Taiwans investment in China; and (4) the possible blacklisting of Taiwan companies. This study focuses on these possible instruments of leverage for the following reasons. First, trade sanctions (embargo and boycott) are the most common form of economic sanctions and, as a result, these two terms are sometimes treated as synonymous. Second, embargo and boycott are more comprehensive and thus tend to be more effective in inflicting costs on the target than other forms of trade sanctions. Third, neither Taiwan nor China provides official aid or technical assistance to the other. Therefore, there is no need to consider the case of suspension of aid or technical assistance. Fourth, after the victory of Chen Shui-bian in Taiwans March 2000 presidential election, Beijing overtly warned some Taiwan business figures that their interests in China would be adversely affected if they supported Taiwan independence.26
26

On the Current Development of Cross-Strait Economic Relations: Questions Answered by the Leader of the Central Taiwan Affairs Office and the State Council Taiwan Affairs Office, Renmin 99

Furthermore, the possible scenarios of Chinas embargo and boycott against Taiwan, and a freezing or expropriation of Taiwans investment in the PRC would represent the most extreme situations in which China might seek to achieve its political goals. If China cannot win concessions from Taiwan using these extreme instruments, it would be more difficult for China to extract concessions successfully through milder forms of sanction measures.

III. The Goals of Economic Sanctions

Nearly all sanctions scholars recognize the difficulty in determining the senders objectives. This is particularly true when the senders goals are primarily demonstrative for domestic or international audiences. Also, the sender is usually a heterogeneous entity with different components intending to achieve different purposes. Therefore, there is a need to explore the hidden agendas embedded in sanctions as well as the stated goals. A review of economic sanctions cases and previous scholarly studies suggests that the goals of economic sanctions fall into five categories: punishment (deterrence), compliance (coercion), destabilization

(subversion), signaling, and symbolism (demonstrative effect).27

27

Ribao [Peoples Daily], April 10, 2000, p.1. Miroslav Nincic and Peter Wallensteen, Economic Coercion and Foreign Policy, in Miroslav Nincic and Peter Wallensteen (eds.), Dilemmas of Economic Coercion: Sanctions in World Politics (New York: Praeger, 1983), pp. 6-8. Thomas O. Bayard, Joseph Plezman, and Jorge Perez-Lopez, Stakes and Risks in Economic Sanctions, World Economy, vol. 6, no. 1 (March 1983), p. 74. James M. Lindsay, Trade Sanctions as Policy Instruments: A Re-examination, International Studies Quarterly, no. 30 (1986), pp. 155-6. David Leyton-Brown, Lessons and Policy Considerations about Economic Sanctions, in David Leyton-Brown (ed.), The Utility of International Economic Sanctions (New York: St. Martins Press, 1987), pp. 303-6. Gary Clyde Hufbauer, Jeffery J. Schott, and Kimberly Ann Elliot, Economic Sanctions Reconsidered: History and Current Policy, 2nd ed. (Washington, D.C.: Institute of International Economics, 1990), pp. 11, 38. Makio Miyagawa, Do Economic Sanctions Work? (New York: St. Martins Press, 1992), pp. 89106. David W. Hunter, Western Trade Pressure on the Soviet Union: An Interdependence Perspective on Sanctions (New York: St. Martins Press, 1991), pp. 44-6. Donna Rich Kaplowitz, Anatomy of a Failed Embargo: The Case of the U.S. Sanctions against Cuba, vol. I, Ph.D. dissertation, Johns Hopkins University, 1995, pp. 34-42. Margaret P. Doxey, International Sanctions in Contemporary Perspective, 2nd ed. (New York: St. Martins Press, 1996), pp. 54-65. 100

Punishment (Deterrence)

Both historically and conceptually, economic sanctions have been used to punish a transgression. Like sending a criminal to prison, the goal is not necessarily to rehabilitate the wrong-doer, but to punish him for his offense and to deter others from such wayward behavior. Economic sanctions invoked for punitive ends also serve to define unacceptable behavior, either unilaterally or multilaterally, and thus contributes to the establishment of internationally accepted standards of legitimate conduct.28 More specifically, the sender may invoke sanctions to discourage future objectionable policies by demonstrating the senders willingness and ability to retaliate. If the undesirable behavior is punished with sufficient severity, it may not be repeated by the target country. For example, in announcing a grain embargo against the Soviet Union issued in response to the invasion of Afghanistan, President Jimmy Carter declared, [W]e will deter aggression.29 Similarly, the sender may employ sanctions in order to deter other countries from undertaking undesired behavior by demonstrating to third parties the likely cost of misbehavior. For example, one purpose of U.S. economic sanctions against Cuba (1960-) was to discourage other Latin American nations from emulating Castros policies. Similarly, Soviet economic sanctions against Yugoslavia (1948-1955) and Lithuania (1990) served to deter other countries from emulating the targets policy of non-cooperation with the Soviet Union.

Compliance (Coercion)

28

29

David Leyton-Brown, Lessons and Policy Considerations about Economic Sanctions, in David Leyton-Brown (ed.), The Utility of International Economic Sanctions (New York: St. Martins Press, 1987), p. 303. Jimmy Carter, Transcript of Presidents Speech on Soviet Military Intervention in Afghanistan, New York Times, January 5, 1980, p. 6. 101

The sender may impose economic sanctions in order to force the target to alter its policy or behavior to conform to the senders preference or specific political goals, such as compelling desired action, encouraging acceptance of international norms, or restoring the status quo. In deterrence, one seeks to prevent action. In compliance, the sender is seeking to force the target to undo an action. The latter is far more difficult to achieve, as Alexander George and William Simons explained in their edited volume The Limits of Coercive Diplomacy.30 For example, the United Kingdom and the League of Nations imposed sanctions on Italy (1935-1936) in an effort to compel Mussolini to withdraw troops from Abyssinia. The Soviet Unions economic sanctions against Yugoslavia (1948-1955), China (1960-1970), and Albania (1961-1965) were imposed to win acceptance of Soviet leadership in other socialist countries. The U.S. grain embargo against the Soviet Union (1980-1981) sought Soviet withdrawal from Afghanistan. The United Nations economic sanctions against Rhodesia (1965-1979) were designed to force acceptance of international standards governing human rights. The United Nations economic sanctions against Iraq (1990-1991) were crafted to force Saddam Hussein to withdraw from Kuwait and subsequently to allow UN arms inspectors to complete their work. The United States economic sanctions against India (1998-) were designed to force India to sign the Comprehensive Test Ban Treaty immediately and without conditions.

Destabilization (Subversion)

The sender may impose economic sanctions to destabilize the target government or subvert the entire target political regime. For example, Stalin sought to replace Tito
30

Alexander L. George and William E. Simons, The Limits of Coercive Diplomacy, second edition (Boulder: Westview Press, 1994). 102

with a pro-Soviet leader by imposing economic sanctions against Yugoslavia (19481955). When the U.S. embargoed Cuba (1960-), it hoped to replace Castros regime with a non-communist one. The economic sanctions imposed by the Organization of American States and the United States against Haiti (1991-1996) demanded the restoration of the democratically elected President Jean-Bertrand Aristide, who had been overthrown in a military coup led by Lieutenant General Raoul Cedras.

Signaling

The imposition of economic sanctions conveys a signal of the senders resolve to both the target and the senders allies. It says that the words of the sender will be supported with action. Economic sanctions by a great power or an international organization often imply a threat of more drastic action (for example, military) against the target country. HSE contend that sanctions frequently serve as a junior weapon in a battery of diplomatic artillery aimed at the antagonistic state. In the 115 cases, HSE counted 34 cases of economic sanctions with companion policies of quasi-military action or/and regular military action.31 Economic sanctions may precede or accompany actual armed hostility. This indicates that the sender may use economic sanctions as a signal to convince the target to accept the senders preference before launching military action. For example, the United States and the United Nations imposed comprehensive economic sanctions, combined with vigorous diplomacy and a gradual military buildup, against Iraq in 1990 before they decided to adopt military action in 1991. Eric

31

Gary Clyde Hufbauer, Jeffery J. Schott, and Kimberly Ann Elliot, Economic Sanctions Reconsidered: History and Current Policy, 2nd ed. (Washington, D.C.: Institute of International Economics, 1990), pp. 43, 56-62. 103

Melby argues that economic sanctions against Iraq were the best tool available on August 2, 1990, to signal outrage and determination to resist Saddams annexation of Kuwait.32 In addition, Lisa Martin argues that costly sanctions by a great power can signal its determination and thus convince other states to join in the sanctioning effort.33

Symbolism (Demonstrative Effect)

Oftentimes, the demonstrative element behind a sanctions policy is not explicitly stated as a goal. Nevertheless, the demonstrative element is on occasion the most important goal, or the only meaningful function of the sanctions policy. Economic sanctions are often intended to defuse pressures and demonstrate the outrage of the domestic and international audiences. For domestic audiences, economic sanctions will defuse pressures for more extreme action and satisfy others that the government is acting firmly. For example, former British Foreign Minister David Lloyd George remarked in 1935 on the League of Nations economic sanctions against Italy (1935-1936): [Sanctions] came too late to save Abyssinia, but they are just in the nick of time to save the [British] Government.34 Only two weeks before election day in November 1960, President Eisenhower announced the U.S. export embargo against Cuba (1960-), probably in an effort to help the Republican presidential candidate, Richard Nixon. The other candidate, John Kennedy, also promised the electorate to do something about Cuban

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34

Eric D. K. Melby, Iraq, in Richard N. Haass (ed.), Economic Sanctions and American Diplomacy (New York: Council on Foreign Relations, 1998), pp. 107-128. Lisa L. Martin, Coercive Cooperation: Explaining Multilateral Economic Sanctions (Princeton, New Jersey: Princeton University Press, 1992), pp. 36-8. Quoted in Gary Clyde Hufbauer, Jeffery J. Schott, and Kimberly Ann Elliot, Economic Sanctions Reconsidered: History and Current Policy, 2nd ed. (Washington, D.C.: Institute of International Economics, 1990), p. 3. 104

leader Fidel Castro.35 Similarly, the support of many governments for the economic boycott of Ian Smiths Rhodesia (1965-1979) was apparently intended as a display of opposition to racist policies and meant for domestic consumption within the sender nations. 36 The mounting domestic pressure placed upon U.S. President Ronald Reagan following the declaration of martial law by the Polish government on December 13, 1981, contributed to President Reagans decision to announce comprehensive sanctions against the Soviet Union (1981-1982) on December 22.37 For international audiences, economic sanctions can deflect international criticism, give the appearance of concern, raise the visibility of an issue, show leadership initiative and commitments, and demonstrate moral outrage and disapproval of a regime when silence might be construed as tacit approval. For example, the U.S. economic sanctions against the Soviet Union (1983) were aimed at galvanizing criticism of Moscows downing of a Korean airliner. The Wests economic sanctions against China (1989-) in the wake of the Tiananmen Square incident were principally designed to assuage domestic constituencies and to make a moral statement. For example, President George Bush stated on June 6, 1989: The United States cannot condone the violent attacks and cannot ignore the consequences for our relationship with China.38 The principal emphasis was on condemning the violent repression of demonstrations, focusing the worlds gaze on the brutal, anti-democratic act of the Chinese government, and discrediting the Beijing regime.39
35 36

37 38

39

Makio Miyagawa, Do Economic Sanctions Work? (New York: St. Martins Press, 1992), p. 95. Miroslav Nincic and Peter Wallensteen, Economic Coercion and Foreign Policy, in Miroslav Nincic and Peter Wallensteen (eds.), Dilemmas of Economic Coercion: Sanctions in World Politics (New York: Praeger, 1983), pp. 7-8. Makio Miyagawa, Do Economic Sanctions Work? (New York: St. Martins Press, 1992), p. 96. Case 89-2 U.S. v. China, http://www.iie.com/FOCUS/SANCTION/china2.htm, accessed January 10, 2001. These sanctions were also designed to deter Eastern European regimes from engaging in similar brutal behavior as the Warsaw Pact broke apart. Makio Miyagawa, Do Economic Sanctions Work? (New York: St. Martins Press, 1992), pp. 93-4. Gary Clyde Hufbauer, Jeffery J. Schott, and Kimberly Ann Elliot, Economic Sanctions Reconsidered: History and Current Policy, 2nd ed. (Washington, D.C.: Institute of International Economics, 1990), p. 3. 105

More comprehensive theories on the initiation of economic sanctions -- why the sender initiates economic sanctions against the target -- will be discussed in Chapter 4.

IV. The Causal Logic of Economic Sanctions

More than a half century ago, Albert Hirschman showed in his book National Power and the Structure of Foreign Trade that the ability of one government to threaten to interrupt its trade with another can be an effective weapon in the struggle for power. In it, he argues that if a trading relationship is much more important to one government than to another, then the second may be able to demand from the first not only better terms of trade, but also significant political concessions.40 Following Hirschmans argument, the conventional theory about how economic sanctions are supposed to work is that sufficient economic pressure upon the target nation(s) caused by the disruption of economic relations can induce or compel that country to engage in more acceptable behavior in the eyes of the sender states. This proposition is based on the fundamental economic theory that international trade has positive income effects on nations, and that forced withdrawal from such trade reduces national income. If the target benefits more in the bilateral economic relations than the sender does, the sender would call for compensation on political issues by the target in exchange for maintaining bilateral economic relations. In addition, the conventional theory assumes that political change is directly proportional to economic hardship. The greater the economic pain caused by economic sanctions, the higher the probability of political compliance. As a result, the conventional theory generally
40

Albert O. Hirschman, National Power and the Structure of Foreign Trade, expanded ed. (Berkeley, C.A.: University of California Press, 1980), pp. 17, 26. 106

argues that the principal determinant of the success of economic sanctions is the extent of disutility experienced by the target.41 However, Johan Galtung criticizes the conventional theory as nave because it does not take into account the possibility that value-deprivation may initially lead to political integration and only later perhaps much later, or even never to political disintegration.42 Galtung emphasizes two points: First, it ignores the rally-aroundthe-flag effect of increased political integration as a response to economic sanctions. Second, it ignores the many counter measures available to the target that tend to nullify the degree of economic damage.43 Although Galtung points out the paradox that economic sanctions might lead to political integration, he does not provide a comprehensive causal logic of economic sanctions. Since the sender attempts to influence the behavior or policy of the target through economic sanctions, sanctions are an exercise of power between states per se. As George Shambaugh contends, [O]ne actor will be able to exercise power over another if it possesses a sufficient quantity of those particular resources that are valued by the target.44 Therefore, for economic sanctions to work the sender must wield its economic resources of favorable asymmetrical interdependence to influence the targets behavior and policies. Generally speaking, Robert Keohane and Joseph Nye define power as the ability of an actor to get others to do something they otherwise would not do (and at an acceptable cost to the actor) and control over outcomes.45 The first type of
41

42

43

44

45

Donald L. Losman, International Economic Sanctions: The Cases of Cuba, Israel, and Rhodesia (Albuquerque: University of New Mexico Press, 1979), pp. 124-128. David Cortright and George A. Lopez, Sanctions and Incentives as Tools of Economic Statecraft, in Raimo Vayrynen (ed.), Globalization and Global Governance (Lanham, Maryland: Rowman & Littlefield Publishers, Inc., 1999), p. 114. Johan Galtung, On the Effects of International Economic Sanctions, World Politics, vol. 19 (October 1966- July 1967), pp. 388-9. Johan Galtung, On the Effects of International Economic Sanctions, World Politics, vol. 19 (October 1966- July 1967), pp. 378-416. George E. Shambaugh, States, Firms, and Power: Successful Sanctions in United States Foreign Policy (Albany, New York: State University of New York Press, 1999), pp.6-10. Robert O. Keohane and Joseph S. Nye, Power and Interdependence, 3rd ed. (New York: Longman, 107

definition, potential power, refers to the power resources, which give an actor the potential ability to influence the other. The second type of definition, actual power, refers to an actors actual influence over patterns of outcomes. Keohane and Nye emphasize that asymmetrical interdependence is a source of power to control resources, or the potential to affect outcomes. That is potential power. They argue: A less dependent actor in a relationship often has a significant political resource, because changes in the relationship (which the actor may be able to initiate or threaten) will be less costly to that actor than to its partners. 46 Therefore, being less dependent will provide potential power or a source of power for the sender to influence the target. Further, Keohane and Nye distinguish between two dimensions of asymmetrical interdependence (potential power): sensitivity, short-term costs of economic sanctions, and vulnerability, long-term costs of economic sanctions. They explain, Sensitivity involves degrees of responsiveness within a policy framework how quickly do changes in one country bring costly changes in another, and how great are the costly effects? It is measured not merely by the volume of flows across borders but also by the costly effects of changes in transactions on the societies or governments. Sensitivity interdependence is created by interactions within a framework of policies...The vulnerability dimension of interdependence rests on the relative availability and costliness of the alternatives that various actors faceIn terms of the cost of dependence, sensitivity means liability to costly effects imposed from outside before policies are altered to try to change the situation. Vulnerability can be defined as an actors liability to suffer costs imposed by external events even after policies

46

2001), p. 10. Robert O. Keohane and Joseph S. Nye, Power and Interdependence, 3rd ed. (New York: Longman, 2001), p. 10. 108

have been altered.47 Keohane and Nye contend that sensitivity interdependence will be less important than vulnerability interdependence in providing power resources to the sender because the former does not take into consideration the alternative market or suppliers apart from the sender. The vulnerability dimension of interdependence rests on the relative availability and costliness of the alternatives that the target faces. If the target can reduce its costs by altering its policy, either domestically or internationally, the sensitivity patterns will not be a good guide to power resources. Johan Galtung, Steve Chan, and A. Cooper Drury also emphasize the importance of vulnerability in understanding the effectiveness of economic sanctions.48 Three factors will further shape vulnerability interdependence. First, the assistance from third parties will mitigate or even reverse the relationship of asymmetrical interdependence. Second, counter measures by the target and retaliation by third parties against the sender will increase the costs to the sender for initiating economic sanctions against the target and thus mitigate or even reverse the relationship of bilateral asymmetrical interdependence. Third, whether the sender can bear the absolute costs of initiating economic sanctions will also influence the effectiveness of economic sanctions although most economic sanctions in the past generated trivial costs for the sender in terms of lost Gross National Product (GNP).49

47

48

49

Robert O. Keohane and Joseph S. Nye, Power and Interdependence, 3rd ed. (New York: Longman, 2001), p. 10-11. See also George E. Shambaugh, States, Firms, and Power: Successful Sanctions in United States Foreign Policy (Albany, New York: State University of New York Press, 1999), p.16. The effectiveness of unilateral and multilateral sanctions will be discussed in Chapter 5. Robert O. Keohane and Joseph S. Nye, Power and Interdependence, 3rd ed. (New York: Longman, 2001), pp. 13-4. Johan Galtung, On the Effects of International Economic Sanctions, World Politics, vol. 19 (October 1966- July 1967), p. 385. Steve Chan and A. Cooper Drury, Sanctions as Economic Statecraft: An Overview, in Steve Chan and A. Cooper Drury (eds.), Sanctions as Economic Statecraft: Theory and Practice (New York: St. Martins, 2000), p. 9. Gary Clyde Hufbauer, Jeffery J. Schott, and Kimberly Ann Elliot, Economic Sanctions Reconsidered: History and Current Policy, 2nd ed. (Washington, D.C.: Institute of International Economics, 1990), pp. 75-90. Ernest H. Preeg, Feeling Good or Doing Good with Sanctions: Unilateral Economic Sanctions and the U.S. National Interest (Washington, D.C.: Center for Strategic and International Studies, 1999), p. 193. 109

However, the advantage of favorable asymmetrical interdependence in terms of vulnerability (potential power) for the sender does not guarantee that it will have superior actual power. The economic effects of sanctions do not necessarily translate potential power into actual power, and often much is lost in the translation, conversion of potential power into effects. As a result, the effectiveness of economic sanctions in generating coercive pressure is tied to the senders power resources vis--vis the targets value hierarchy.50 Keohane and Nye underline, Measurable power resources are not automatically translated into effective power over outcome. Translation occurs by way of a political bargaining process in which skill, commitment, and coherence canbelie predictions based on the distribution of power resources to predict and understand outcomes, we must give equal attention to the bargaining process in which power resources are translated into effective influence over outcomes.51 The translation process from potential power to actual power can be analyzed from three perspectives. First, if a state is treated as a unitary and rational actor, it will concede only when the cost of concessions is smaller than the cost of economic sanctions. The cost of sanctions to the sender is also taken into account by the target as an element in the equation. The higher the perceived cost to the sender, the less likely the target will concede.52 Although it is possible to measure the cost of economic sanctions by GNP loss over time in terms of sensitivity and vulnerability, it is hardly possible to quantify the cost of political concessions. Many factors will influence the value hierarchy of the target. For example, the superior will, determination, willingness to suffer, commitment, and core societal values of the target may
50

51

52

Robert O. Keohane and Joseph S. Nye, Power and Interdependence, 3rd ed. (New York: Longman, 2001), p. 10. David W. Hunter, Western Trade Pressure on the Soviet Union: An Interdependence Perspective on Sanctions (New York: St. Martins Press, 1991), p. 47. Robert O. Keohane and Joseph S. Nye, Power and Interdependence, 3rd ed. (New York: Longman, 2001), p. 196. Peter Liberman, Trading with the Enemy: Security and Relative Economic Gains, International Security, vol. 21, no. 1 (Summer 1996), pp. 150-155. Duncan Snidal, Relative Gains and the Pattern of International Cooperation, in David A. Baldwin (ed.), Neorealism and Neoliberalism: The Contemporary Debate (New York: Columbia University Press, 1993), pp. 170-233. 110

raise the cost of political concessions and discount the cost of economic sanctions. In such a case, compliance may mean more disutility to the target than resistance.53 Second, from the decision-makers perspective, the perception of the cost of economic sanctions and political concessions will determine the ultimate efficacy of economic sanctions. Third, from a societal perspective, how people and interest groups perceive and react to the economic sanctions will decide the effectiveness of the sanctions. For example, Robert Pape argues, Sanctions can coerce either directly, by persuading the target government that the issues at stake are not worth the price, or indirectly, by inducing popular pressure to force the government to concede, or by inducing a popular revolt that overthrows the government, resulting in the establishment of a government that will make the concessions.54 Similarly, Jonathan Kirshner asserts, There are three principal mechanisms through which these pressures [of economic sanctions] can bring about political change. First, pressure on the government and core support groups can force the target to yield to the will of the [sender] state through a straightforward cost-benefit calculus. Second, such pressure can lead to the overthrow of the existing regime .Third, and most subtly, the sanctions can have differential effects within the central government and across core groups themselves, shifting the balance of political power within the government and altering its preferences.55 To sum up, favorable asymmetrical interdependence will provide the sender with potential power or a source of actual power. This potential power needs to be translated into actual power through a process that takes into account subjective individual and group reaction. More comprehensive theories on the effectiveness of
53

54

55

Robert O. Keohane and Joseph S. Nye, Power and Interdependence, 3rd ed. (New York: Longman, 2001), p. 16. R. Harrison Wagner, Economic Interdependence, Bargaining Power, and Political Influence, International Organization, vol. 42, no. 3 (Summer 1988), pp. 476-7. Robert A. Pape, Why Economic Sanctions Do Not Work, International Security, vol. 22, no. 2 (Fall 1997), pp. 93-4. Jonathan Kirshner, The Microfoundations of Economic Sanctions, Security Studies, vol. 6, no. 3 (Spring 1997), p. 42. 111

economic sanctions will be discussed in Chapter 5.

V. The Costs of Economic Sanctions

Economic sanctions have double-edged effects on both the sender and the target, despite the fact that the sender usually suffers much less than the target. Robert Keohane and Joseph Nye argue that a less dependent actor (the sender) in a relationship has a significant political resource because changes in the relationship will be less costly to that actor (the sender) than to its partners (the target). But how much is the cost in terms of the GNP of economic sanctions that disrupt economic relations between the sender and the target? This determines the leverage (potential power or a source of power) for the sender to influence the targets behavior according to the senders foreign policy objectives. In terms of sensitivity interdependence, for both the sender and target, trade sanctions will bring an immediate loss of economic static allocative efficiency and reliability, such as loss of undelivered regular exports/imports, loss of outstanding orders for future exports, suspended sale of services in engineering or construction projects, and loss of transportation and communication services. In terms of vulnerability interdependence, trade sanctions will reduce the base for future economic growth by affecting dynamic efficiency and create adjustment costs to establish new trade patterns, such as producers loss of competitive advantage, unemployment, consumers loss of cheaper goods, and rent-seeking activities.56 Generally speaking, if the sender possesses a monopoly or monopsony power

56

James M. Lindsay, Trade Sanctions as Policy Instruments: A Re-examination, International Studies Quarterly, no. 30 (1986), pp. 168-169. Margaret P. Doxey, International Sanctions in Contemporary Perspective, 2nd ed. (New York: St. Martins Press, 1996), p. 68. Donna Rich Kaplowitz, Anatomy of a Failed Embargo: The Case of the U.S. Sanctions against Cuba, vol. I, Ph.D. dissertation, Johns Hopkins University, 1995, pp. 57-68. Richard D. Farmer, Costs of Economic Sanctions to the Sender, World Economy, vol. 23, no. 1 (2000), pp. 93-117. 112

over some particular goods or services which are necessary for the target, disrupting trade between the sender and the target will cause more severe economic pain for the target. That is, the target cannot find alternative markets and substitutes and thus suffers if these embargo or boycott goods are of significant value to its economy. The sender will face some specific costs of initiating economic sanctions. First, the sender will face implementation and administrative costs, including prevention of smuggling, and bureaucratic and internal coordination costs. Second, the sender may face retaliation by the target or third parties. By contrast, economic sanctions might entail smaller costs for the target if it can obtain help, alternative markets, or substitutes for critical goods from other countries. In a situation of complex trade relations among countries, the real impact of a sanction on the target cannot be measured by the extent of pre-sanction trade between the sender and the target because of the possibility of alternative sources of demand or supply. The target could find other markets when confronted with the senders boycott (import control) or will seek substitutes of goods embargoed by the sender (export control). Nevertheless, the extent of the pre-sanction trade still plays a role in determining the ease with which the target will find alternative markets and substitutes.57 If the sender does not possess an unutilized monopoly or monopsony power over particular goods, disrupting bilateral trade will simply worsen the terms of trade for both the sender and target, reducing the welfare of both parties. For instance, a senders embargo will cause the price of the senders exports to decline. Given the price of imports, the terms of trade (price of exports over that of imports) for the sender will deteriorate. The price of the targets imports will increase and thus the targets terms of trade will deteriorate as well. By contrast, a senders boycott will
57

William H. Kaempfer and Anton D. Lowenberg, International Economic Sanctions: A Public Choice Perspective (Boulder, Colorado: Westview Press, 1992), pp. 65-67. 113

increase the price of the senders imports. Given the price of the exports, the terms of trade for the sender will deteriorate. The price of the targets exports will decrease and thus the targets terms of trade will deteriorate as well. In both scenarios, both the senders and targets terms of trade will worsen. Indeed, the terms-of-trade effect has captured the significance of vulnerability costs since this effect takes into consideration the availability and costliness of alternative sources of demand and supply. In addition to conceptual analysis of the costs of economic sanctions, there are several empirical studies. In their 1990 study, Economic Sanctions Reconsidered, HSE developed a basic analytic model to guide their efforts in determining the costs of sanctions to both the target and the sender. The welfare loss inflicted on both the sender and the target depends on the size of the initial deprivation, the elasticity of supply (Es), and the elasticity of demand (Ed), and from these calculations the sanctions multiplier [1/ (Es+Ed)] can be determined. The welfare loss in terms of GNP for the target or sender is equal to the product of the sanctions multiplier and the size of the initial deprivation experienced by the target or sender nation. That is, the sanctions multiplier is the ratio of the percentage change in GNP to the percentage change in trade. While HSE could calculate the initial deprivation of markets or supplies, they use their own judgment to estimate the sanctions multiplier that should be applied in a particular case. To illustrate, they apply a multiplier of near 1.00 to most reductions in aid, and a multiplier between 0.10 and 0.50 to most reductions in the supply or demand for goods. They assume that the target country is likely to be a small factor in world markets, therefore in most contexts the combined supply and demand elasticities would ordinarily exceed 5.0. A combined elasticity greater than 5 would correspond to a sanctions multiplier of less than 0.2. 58 However,
58

Gary Clyde Hufbauer, Jeffery J. Schott, and Kimberly Ann Elliot, Economic Sanctions Reconsidered: History and Current Policy, 2nd ed. (Washington, D.C.: Institute of International 114

it must be acknowledged that not all costs, including losses in dynamic efficiency and rent seeking, can be calculated in numerical terms. In their 1997 study, Gary Hufbauer, Kimberly Elliot, Tess Cyrus, and Elizabeth Winston (hereafter, HECW) attempt to estimate the national costs of all U.S. economic sanctions against other nations. The studys results reflect the historical emphasis of U.S. sanctions many of them unilateral on efforts to limit foreign assistance and other trade with particular developing economies. The HECW analysis reports a total cost of the sanctions against 26 countries at only $1 billion of U.S. national income annually, resulting from an annual loss of $15 billion to $19 billion in merchandise exports.59 National income and merchandise exports in 1995, the year used in the study, were nearly $6 trillion and $0.7 trillion, respectively. Those results indicate that the overall impact on the U.S. economy was trivial at 0.02 percent of U.S. GNP and a cost of five cents per dollar loss of exports. 60 Richard Farmer contends that this sanctions multiplier (0.05) is most representative of the long-term (vulnerability) effects of unilateral sanctions against individual developing countries. However, he asserts that HECW results may be too high because of methodological considerations.61 It is difficult to generalize from HECW results to cases involving multilateral sanctions or sanctions against industrial economies. However, some additional

59

60

61

Economics, 1990), pp. 120-122. Gary C. Hufbauer, Kimberly A. Elliot, Tess Cyrus, and Elizabeth Winston, U.S. Economic Sanctions: Their Impact on Trade, Jobs, and Wages, Working paper (Washington, D.C.: Institute for International Economics, 1997), available at http://www.iie.com/CATALOG/WP/1997/SANCTION/sanctnwp.htm, accessed August 10, 2000, p. 2 of 9. In their 1999 article Kimberly Elliot and Gary Hufbauer assess that welfare costs probably do not exceed 10 percent of gross trade losses. In addition, they point out that the estimates do not reflect the impact on services trade. On a global basis, services trade flows are about 25 percent of merchandise trade flows, but conceivably they are more vulnerable to the indirect impact of economic sanctions. Kimberly Ann Elliott and Gary Clyde Hufbauer, Same Song, Same Refrain? Economic Sanctions in the 1990s, AEA Papers and Proceedings, May 1999, pp. 406-407. Richard D. Farmer, Costs of Economic Sanctions to the Sender, World Economy, vol. 23, no. 1 (2000), pp. 109-111. 115

indication of such costs is available from selected researches into the welfare gains that result from lowering trade barriers. Those studies look at policies that affect total U.S. trade, which is dominated by trade with industrialized countries. It is possible to simply change the signs on the reported welfare benefits of trade-opening policies. Farmer uses the results of those studies to derive foreign-trade multipliers calculated as the ratios of the absolute change in economic welfare to the associated absolute change in the value of trade. The total cost of cutting off a given amount of trade would then reflect the product of that multiplier and the value of the trade at stake.62 Although this methodology provides some clues in assessing the costs of economic sanctions, it must be noted that there are three potential pitfalls in this methodology. First, trade liberalization is usually multilateral, while economic sanctions are often bilateral. Second, trade liberalization is typically permanent, while economic sanctions are temporary. Third, trade liberalization generally occurs among harmonious countries with mutual interests, while economic sanctions are imposed by an antagonistic sender facing political tensions. The 1994 econometric research by Gary Hufbauer and Kimberly Elliot indicates that the gains in economic efficiency from unilaterally reducing trade protection for 21 U.S. industries would be about 20 cents for each dollar of increased exports. Farmer argues that this multiplier (0.20) would be most indicative of the short-term unit costs of sanctions that raise the protection for major U.S. industries although this estimate likely overstates the national costs.63 The 1998 analysis by W. J. McKibbin addresses the consequences both of investment and of shifting demands among sectors and among countries. This study indicates the long-term unit costs of multilateral

62

63

Richard D. Farmer, Costs of Economic Sanctions to the Sender, World Economy, vol. 23, no. 1 (2000), pp. 105-109. Richard D. Farmer, Costs of Economic Sanctions to the Sender, World Economy, vol. 23, no. 1 (2000), p. 112. 116

sanctions on industrialized countries may be only 10 cents per dollar of lost exports.64 Based on several studies of multilateral liberalization shown in Table 3.1, the short-term gains of such trade liberalization are between 15 cent and 35 cent per dollar increase in exports. These figures largely reflect gains in static allocative efficiency and the compounding effects of capital investment on economic growth. The longterm multipliers are between 45 cent to 85 cent for each dollar increase in exports. The gains per dollar of exports are greater for multilateral liberalization than for unilateral liberalization involving the same region. The reason is that multilateral actions to eliminate barriers yield a greater boost to trade and investment than do unilateral actions. These figures represent the extreme cases of multilateral sanctions among large industrial countries with the possibility of retaliation and escalation. 65 (See Table 3.1.)

Table 3.1. Foreign-Trade Multipliers Relevant to Multilateral and Unilateral Sanctions on Developing and Industrialized Economies
Source, nature of policy change Multiplier Short-term Studies of the costs of current sanctions, with emphasis on developing economies Hufbauer, Elliot, Cyrus and Winston (1997)
64

Long-term

n.a.

0.05

65

Richard D. Farmer, Costs of Economic Sanctions to the Sender, World Economy, vol. 23, no. 1 (2000), p. 112. Richard D. Farmer, Costs of Economic Sanctions to the Sender, World Economy, vol. 23, no. 1 (2000), pp. 113-114. 117

Studies of the gains from trade liberalization, with emphasis on industrialized economies Mckibbin (1998): U.S. tariffs on APEC and European imports Hufbauer and Elliot (1994): all protection of 21 major U.S. industries Multilateral changes involving specific sectors Brown, Deardorff, Fox and Stern (1995): tariffs on industrial goods Multilateral changes involving all sectors McKibbin (1998): tariffs with APEC and Europe Ho and Jorgenson (1994): Tariffs only Tariffs and other quantitative barriers Note: Studies include: Gary C. Hufbauer, Kimberly A. Elliot, Tess Cyrus, and Elizabeth Winston, U.S. Economic Sanctions: Their Impact on Trade, Jobs, and Wages, Working paper (Washington, D.C.: Institute for International Economics, 1997), available at http://www.iie.com/CATALOG/WP/1997/SANCTION/sanctnwp.htm, accessed August 10, 2000. W. J. Mckibbin, Unilateral versus Multilateral Trade Liberalization: The Importance of International Financial Flows, paper presented at the United States International Trade Commission APEC Symposium, Washington, D.C., September 11-12, 1997. Gary C. Hufbauer and Kimberly A. Elliot, Measuring the Costs of Protection in the United State (Washington, D.C.: Institute for International Economics, 1994). D. K. Brown, A. V. Deardorff, A. K. Fox, and R. M. Stern, Computational Analysis of Goods and Services Liberalization in the Uruguay Round, in W. Martin and L. A. Winters (eds.), The Uruguay Round and the Developing Economies, Discussion Paper no. 307 (Washington, D.C.: World Bank, 1995). M. S. Ho and D. W. Jorgenson, Trade Policy and U.S. Economic Growth, Journal of Policy Modeling, vol. 16, no. 2 (1994), pp. 119-146. 0.15 0.35 0.70 0.85 n.a. 0.45 0.35 n.a. n.a. 0.20 0.10 n.a.

These studies provide a rough order for the magnitude of potential sanctions costs for both Taiwan and China. Further, there are several empirical studies that are also useful for analyzing hypothetical China-Taiwan sanctions. Discussing macroeconomic effects of trade liberalization on China based on the simulations of the

118

Global Trade Analysis Project model,66 Yang Yongzheng estimates the macroeconomic effects of trade liberalization on China in 2005 under four scenarios: China joining the WTO as a developing economy; China joining the WTO as a developed economy; tariff cut and leveling; and non-participation of China in the Uruguay Round. Based on his work, Chinas foreign-trade multipliers are 27.4, 23.6, 13.7, and 35 percents, respectively.67 (See Table 3.2.) Table 3.2. Macroeconomic Effects of Liberalization on China, 2005
Unit: $ billion As a developing economy Equivalent variation Export volume Import volume Foreign-trade multiplier Note: a: Equivalent variation is the Hicksian exact measure of the change in consumer surplus and can measure the change in social welfare. It is a money metric measure of how much better or worse off the representative household is in the equilibrium after policy change than in the initial equilibrium using the base prices as reference. b: It is assumed that China undertakes to cut its tariffs to a maximum of 10 percent on top of the developing economy liberalization. Source: Yongzheng Yang, Chinas WTO Membership: Whats at Stake?, World Economy, vol. 19, no. 6 (November 1996), pp. 677-679.
a

As a developed economy 19.1 35.4 45.5 23.6%

Tariff cut and levelingb 27.4 81.2 119.1 13.7%

Non-participation in the Uruguay round -23.9 -30.3 -38 35%

18 29.8 35.9 27.4%

Wang Zhi uses a 12-region, 14-sector computable general equilibrium (CGE) model for world trade and production to quantify the potential impact of Chinas and Taiwans accession to the WTO. He estimates the scenario that China joins the WTO with the addition of a 35-percent reduction of Chinas April 1996 tariff cut offer based

66 67

The Global Trade Analysis Project was led by Thomas Hertel of Purdue University. Yongzheng Yang, Chinas WTO Membership: Whats at Stake?, World Economy, vol. 19, no. 6 (November 1996), pp. 661-682. 119

on simulations at 1992 constant prices under steady-state capital market closure 68. Based on his estimates, Chinas foreign-trade multiplier is 19.4 percent and Taiwans is 25 percent. Similarly, in his 1998 study, Wang Zhi estimates the scenario that both Taiwan and China join the WTO with an additional 30 percent reduction of Chinas February 1998 tariff cut offer based on simulations at 1995 constant prices under steady-state capital market closure. Based on his estimates, Chinas foreign-trade multiplier is 28.7 percent and Taiwans is 32 percent. In their 2000 study based on the CGE model, Wang Zhi and G. Edward Schuh estimate the impact of a 50 percent tariff cut by Taiwan, Hong Kong, China, the United States, Japan, and the European Union based on simulations at 1995 constant prices under steady-state capital market closure. Based on their estimates, Chinas foreign-trade multiplier is 26.8 percent and Taiwans is 22.3 percent. (See Table 3.3.)

Table 3.3. Macroeconomic Effects of Liberalization on Taiwan and China Unit: $ billion
China joins the WTO with addition 35-percent reduction of Chinas April 1996 tariff cut offer
a

China joins the WTO with additional 30 percent reduction of Chinas February 1998 tariff cut offerb

Multilateral liberalization among Chinas major trading partners of a 50 percent tariff cutb

China
68

Taiwan

China

Taiwan

China

Taiwan

Under the steady-state capital market closure, the return of capital is held constant while the capital stock in each region is endogenously determined. 120

Equivalent variation Export volume Import volume Foreign-trade multiplier Note:

21.5 65.7 46.2 19.2%

4 8.2 7.8 25%

23.5 49.4 37.8 28.7%

3.9 5.8 6.4 32%

55.5 103.3 104 26.8%

15 33 33.4 22.3%

a: The figures are at 1992 constant prices. b: The figures are at 1995 constant prices. Source: Zhi Wang, The Impact of China and Taiwan Joining the World Trade Organization on U.S. and World Agricultural Trade: A Computable General Equilibrium Analysis, Technical Bulletin Number 1858 (Washington, D.C.: The United States Department of Agriculture, 1997), pp. 12-24. Zhi Wang, Jiaru Shijie Maoyi Zuzhi (WTO) Duei Liangan Maoyi Guanxi De Yingxiang [The Impact of Taiwan and China Entering the World Trade Organization on Cross-Strait Trade Relations] (Taipei: Chung-Hwa Institution for Economic Research, 1998), pp. 10-13. Zhi Wang and G. Edward Schuh, Economic Integration Among Taiwan, Hong Kong and China: A Computable General Equilibrium Analysis, Pacific Economic Review, vol. 5, no. 2 (June 2000), pp. 256-260.

Wang Zhi and G. Edward Schuh argue that three types of gains from trade liberalization are captured by the CGE model: (1) the gains from more efficient utilization of resources; (2) more rapid physical capital accumulation resulting from the efficiency gain and thus higher saving and investment; and (3) more rapid growth of total factor productivity owing to faster technology transfer via expansion of capital and intermediate goods imports from other countries.69 As a result, these estimates of welfare gains from the trade liberalization based on the CGE model should be treated as multilateral, long-term gains. These estimates of foreign-trade multipliers should be applied to the multilateral and long-term scenarios for both Taiwan and China. Overall, based on the above studies, the short-term multiplier of Chinas unilateral sanctions against Taiwan could be at most 0.20 for both Taiwan and China.

69

Zhi Wang and G. Edward Schuh, Economic Integration Among Taiwan, Hong Kong and China: A Computable General Equilibrium Analysis, Pacific Economic Review, vol. 5, no. 2 (June 2000), pp. 243-244. 121

Considering the possibility of retaliation and escalation by Taiwan and other countries in response to Chinas sanctions, the (multilateral) short-term multiplier for China could be between 0.15 and 0.35. Regarding the long-term effect, the multiplier of Chinas unilateral sanctions against Taiwan could be between 0.05 and 0.10 for both Taiwan and China. Considering possible retaliation from Taiwan and other countries against Chinas sanctions, the (multilateral) long-term multiplier for China could be between 0.14 and 0.35. Nevertheless, the multipliers could only provide general estimates of costs for the sender and target. In some cases, trade sanctions could be focused on some critical and bottleneck sectors of the target. Compared with general embargoes or boycotts, these scenarios will entail more costs for the target than for the sender in those sectors.

VI. The Effectiveness of Economic Sanctions

The most often asked question in the literature on economic sanctions is, Do economic sanctions work? or, Are economic sanctions effective? The consensus reached by most scholars is that economic sanctions generally are ineffective, as the following statements indicate:70 Johan Galtung: [T]he probable effectiveness of economic sanctions is, generally, negative.71 Klaus Knorr: [C]oercively wielding economic power by means of trade reprisals or special trade advantages is rarely successful.72 Margaret Doxey: [T]he cases examined offer little evidence that economic

70

71

72

For more witnesses on the effectiveness of economic sanctions, see M. S. Daoudi and M. S. Dajani, Economic Sanctions: Ideal and Experience (Boston: Routledge & Kegan Paul, 1983), pp. 174-188. Johan Galtung, On the Effects of International Economic Sanctions, World Politics, vol. 19 (October 1966- July 1967), p. 409. Klaus Knorr, The Power of Nations: The Political Economy of International Relations (New York: Basic Books, 1975), p. 165. 122

sanctions provide reliable means of inducing states to adhere to internationally acceptable codes of conduct.73 James Blessing: In general the suspension of aid does not appear to have been a very effective means of inducing change in recipient behavior.74 Robin Renwick: It certainly is the case that, to date, [economic sanctions] have very rarely succeeded in producing the desired results.75 James M. Lindsay: The consensus in the literature is that trade sanctions generally fail to modify the targets behavior.76 HSE: [Sanctions] are of limited utility in achieving foreign policy goals that depend on compelling the target country to take actions it stoutly resists.77 Richard Haass: [W]ith few exceptions, the growing use of economic sanctions to promote foreign policy objectives is deplorable.78 T. Clifton Morgan and Valerie Schwebach: In most cases, a state imposing sanctions on its opponent can expect an outcome that is just about the same as would be obtained without sanctions.79 Robert A. Pape: [T]here is little empirical evidence that sanctions can achieve ambitious foreign policy goals.80 Ernest H. Preeg: [T]he overall assessment is that unilateral economic sanctions during the 1990s, with few exceptions, have been ineffective in achieving their foreign
73

74

75

76

77

78

79

80

Margaret P. Doxey, Economic Sanctions and International Enforcement, 2nd ed. (New York: Oxford University Press, 1980), p. 125. James A. Blessing, The Suspension of Foreign Aid: A Macro-Analysis, Polity, vol. 13, no. 3 (Spring 1981), p. 533. Robin Renwick, Economic Sanctions (Cambridge, Massachusetts: Center for International Affairs, Harvard University, 1981), p.91. James M. Lindsay, Trade Sanctions as Policy Instruments: A Re-examination, International Studies Quarterly, no. 30 (1986), p. 155. Gary Clyde Hufbauer, Jeffery J. Schott, and Kimberly Ann Elliot, Economic Sanctions Reconsidered: History and Current Policy, 2nd ed. (Washington, D.C.: Institute of International Economics, 1990), p. 92. Richard N. Haass, Sanctioning Madness, Foreign Affairs, vol. 76, no. 6 (November/December 1997), p. 75. T. Clifton Morgan and Valerie L. Schwebach, Fools Suffer Gladly: The Use of Economic Sanctions in International Crises, International Studies Quarterly, no. 41 (1997), p. 46. Robert A. Pape, Why Economic Sanctions Still Do Not Work, International Security, vol. 23, no. 1 (Summer 1998), p. 66. 123

policy objectives while having various adverse effects on other U.S. interests.81 Nevertheless, there is heated debate among scholars over the definition of the success of economic sanctions. David Baldwin argues that the use of economic sanctions and economic statecraft more generally typically involves multiple objectives and targets, and that the assessment of success or failure from the senders perspective could only be made convincingly by comparing the costs and benefits of economic statecraft to that of other forms of statecraft. While Baldwin does not claim that economic sanctions are likely to succeed, his conceptual framework and reconsideration of classic cases taking multiple objectives into account does suggest that the economic instrument is considerably more useful from the senders perspective than scholars generally acknowledge.82 As a matter of fact, Baldwin discusses the utility or efficiency instead of the effectiveness of economic sanctions. He takes the multiple goals of the sender defined by politician, the balance sheet of the costs and effectiveness, and the comparison of the statecraft alternatives when judging the success of economic sanctions into consideration. Baldwins approach is quite different from that of other analyses and will confuse the essence of the power relationship inherent in economic sanctions, which is the primary concern in this study with respect to Chinas leverage and Taiwans vulnerability. Baldwins approach will offer important implications for decision-makers of the sender in choosing alternative statecrafts, but it does not offer an answer to the effectiveness of economic sanctions.83 Similarly, M. S. Daoudi and M. S. Dajani place great importance on the domestic perceptive functions performed by sanctions. They argue that even if sanctions fail to
81

82

83

Ernest H. Preeg, Feeling Good or Doing Good with Sanctions: Unilateral Economic Sanctions and the U.S. National Interest (Washington, D.C.: Center for Strategic and International Studies, 1999), p. 207. David Baldwin, Economic Statecraft (Princeton, N.J.: Princeton University Press, 1985), pp. 115205. David Baldwin, The Sanctions Debate and the Logic of Choice, International Security, vol. 24, no. 3 (Winter 1999/2000), pp. 80-107. 124

achieve their initial goals, they may not be totally ineffective. They do not argue that sanctions are effective instruments in achieving stated foreign policy goals, but they do suggest that sanctions are important tools of statecraft if used for other purposes, such as reaching symbolic goals or inflicting severe economic deprivation on the target.84 Some scholars recognize that the senders often have multiple goals when imposing economic sanctions, but these experts distinguish utility of economic sanctions from effectiveness. For example, James Lindsay contends, [T]rade sanctions rarely force compliance or subvert the target government and have a limited deterrent value. Yet they often succeed as international and domestic symbols. 85 George Lopez and David Cortright argue, If the analysis of the effectiveness of sanctions remains literal regarding primary goals [the official or publicly declared purpose of sanctions], then sanctions do indeed have limited effectiveness. 86 In its report to the U.S. Senate Committee on Foreign Relations, the General Accounting Office concludes that economic sanctions are more successful in achieving the less ambitious and often unarticulated goals, such as upholding international norms and deterring future objectionable actions, but are less successful in achieving the most prominently stated goals of making the target comply with the senders stated wishes.87 The HSE study defines the success of economic sanctions in two parts: the policy result and the sanctions contribution. The policy result measures the degree to which

84

85

86

87

M. S. Daoudi and M. S. Dajani, Economic Sanctions: Ideal and Experience (Boston: Routledge & Kegan Paul, 1983), pp. 159-169. James M. Lindsay, Trade Sanctions as Policy Instruments: A Re-examination, International Studies Quarterly, no. 30 (1986), p. 154. George A. Lopez and David Cortright, Economic Sanctions in Contemporary Global Relations, in David Cortright and George A. Lopez (eds.), Economic Sanctions: Panacea or Peacebuilding in a Post-Cold War World? (Boulder, Colorado: Westview Press, 1995), p. 7 United States General Accounting Office, Economic Sanctions: Effectiveness as Tools of Foreign Policy, Report to the Chairman, Committee on Foreign Relations, U.S. Senate, GAO/NSIAD-92106, February 1992, p. 2.. 125

the senders policy objectives were achieved, and the sanctions contribution is the degree to which sanctions contributed to this outcome. Both parts are scaled from 1 to 4. For policy results, 1 indicates a failed outcome, 2 indicates an unclear but possibly positive outcome, 3 indicates a positive outcome with a somewhat successful result, and 4 indicates a successful outcome. For sanctions contribution, 1 indicates a zero or negative contribution, 2 indicates a minor contribution, 3 indicates a modest contribution, and 4 indicates a significant contribution. A product of nine or higher for the policy result and sanctions contribution is counted as a sanctions success.88 Using a rating system that attempts to determine whether the target complied with the senders goals and whether sanctions were the primary cause of this change, HSE calculate an overall success rate of 34 percent, or 40 cases for the 115 cases. Of the sanctions episodes in the pre-1973 period, 44 percent ended successfully, whereas the success rate among post-1973 cases was just under 25 percent. Even more striking is the decline in the effectiveness of sanctions imposed in pursuit of modest goals, from 75 percent to 21 percent, most of which involved the United States. In addition, unilateral sanctions imposed by the United States in recent years have only rarely worked, with just 13 percent (or 5 of 39) unilateral U.S. sanctions achieving any success between 1970 and 1990.89 By disputing many of the successes claimed by HSE and identifying different causes for the successes that did take place, Robert Pape concludes that the actual

88

89

Gary Clyde Hufbauer, Jeffery J. Schott, and Kimberly Ann Elliot, Economic Sanctions Reconsidered: History and Current Policy, 2nd ed. (Washington, D.C.: Institute of International Economics, 1990), pp. 41-42. According to Cortright and Lopez, in 1999 a revised and updated version of HSE study, encompassing 170 sanctions episodes from 1914 through 1999, gives an overall success rate of approximately 35 percent. Gary Clyde Hufbauer, Jeffery J. Schott, and Kimberly Ann Elliot, Economic Sanctions Reconsidered: History and Current Policy, 2nd ed. (Washington, D.C.: Institute of International Economics, 1990), p. 93. Kimberly Ann Elliot, Factors Affecting the Success of Sanctions, in David Cortright and George A. Lopez (eds.), Economic Sanctions: Panacea or Peacebuilding in a Post-Cold War World? (Boulder, Colorado: Westview Press, 1995), p. 54. Kimberly Ann Elliott, The Sanctions Glass: Half Full or Completely Empty, International Security, vol. 23, no. 1 (Summer 1998), p. 58. David Cortright and George A. Lopez, The Sanctions Decade: Assessing UN Strategies in the 1990s (Boulder, Colorado: Lynne Rienner, 2000), p 15. 126

success rate in the cases examined was less than five percent. In comparison, Kim Nossal argues that among the many sanctions episodes since 1945, only 14 stand out as unequivocally successful in the sense that the sanctions prompted the target state to alter its behavior. Out of HSE 115 total cases examined, Nossal concludes that only eight were successful.90 According to Papes definition, economic sanctions seek to lower the aggregate economic welfare of a target state by reducing international trade in order to coerce the target government to change its political behavior. He points out that this definition should exclude trade war and economic warfare, a point HSE agree with. Further, Pape credits economic sanctions with success only if they meet three criteria: (1) the target state conceded to a significant part of the senders demands; (2) economic sanctions were threatened or actually applied before the target changed its behavior; and (3) no more-credible explanation exists for the change in the targets behavior.91 Pape argues that an examination of the 40 sanctions cases HSE claim were successful reveals that, in fact, only five were clear successes. The remaining 35 are accounted for by four classes of errors: (1) eighteen are ultimately determined by force, not economic sanctions; (2) eight are failures, in which the target state never concedes to the senders demands; (3) six are trade disputes, not instances of economic sanctions; and (4) three are indeterminate.92 Pape points out that two problems account for the errors in HSEs findings. First, although their aim is to study the use of economic sanctions for political goals, their data set inappropriately includes instances of two other types of economic statecrafts:
90

91

92

Kim Richard Nossal, Liberal Democratic Regimes, International Sanctions, and Global Governance, in Raimo Vayrynen (ed.), Globalization and Global Governance (Lanham, Maryland: Rowman & Littlefield Publishers, Inc., 1999), pp. 128-129, 135. Robert A. Pape, Why Economic Sanctions Do Not Work, International Security, vol. 22, no. 2 (Fall 1997), pp. 93-97. Robert A. Pape, Why Economic Sanctions Do Not Work, International Security, vol. 22, no. 2 (Fall 1997), pp. 99-105. 127

commercial negotiations and economic warfare. Second, HSE routinely fail to control for the role of force. Nearly half of HSEs claimed successes of sanctions, according to Pape, are actually instances of successful application of force, which they routinely underrate or even underreport.93 In a rebuttal to Papes criticism, Kimberly Ann Elliot challenges Papes interpretation of seven cases. Therefore, Elliots response counts only 12 cases of economic sanctions successes without military determination. While Daniel Drezner agrees with Pape that seven of 40 successes in HSE data are miscoded and eleven are cases involving military force, he challenges Papes interpretation of two cases. Furthermore, both Elliot and Drezner criticize Pape for not addressing the issue of whether economic sanctions can enhance the effectiveness of force, primarily because Papes aim is to assess the independent usefulness of sanctions.94 However, Pape points out that both his study and the HSE study ask the same question: How effective are economic sanctions not as a complement to force but as a stand-alone foreign policy instrument? That is, are economic sanctions better alternatives to military action?95 In fact, military action without economic sanctions could cause equivalent or larger economic loss on the target through regular warfare or blockade. There is generally no need to use economic sanctions as a complement to force except for the purpose of signaling.

93

94

95

Robert A. Pape, Why Economic Sanctions Do Not Work, International Security, vol. 22, no. 2 (Fall 1997), pp. 105-106. Daniel Drezner argues the following success cases in HSE data set are either economic warfare or strategic embargoes: 14-1, UK vs. Germany; 21-1, League of Nations vs. Yugoslavia; 25-1, League of Nations vs. Greece; 39-1, Allied powers vs. Axis; 62-1, UN vs. South Africa; 77-4, Canada vs. the European Community; 79-3, Arab League vs. Canada. Kimberly Ann Elliott, The Sanctions Glass: Half Full or Completely Empty, International Security, vol. 23, no. 1 (Summer 1998), pp. 60-65. Robert A. Pape, Why Economic Sanctions Still Do Not Work, International Security, vol. 23, no. 1 (Summer 1998), pp. 72-76. Daniel W. Drezner, The Sanctions Paradox: Economic Statecraft and International Relations (New York: Cambridge University Press, 1999), pp. 103-106. Daniel W. Drezner, The Complex Causation of Sanction Outcomes, in Steve Chan and A. Cooper Drury (eds.), Sanctions as Economic Statecraft: Theory and Practice (New York: St. Martins, 2000), pp. 218-219. Robert A. Pape, Why Economic Sanctions Still Do Not Work, International Security, vol. 23, no. 1 (Summer 1998), pp. 69-70. 128

In addition, like David Baldwin, David Cortright and George Lopez challenge the HSE method of focusing exclusively on the stated policy objectives of sanctions while ignoring the other purposes sanctions may serve. They argue that analyses that focus too narrowly on instrumental objectives create a misleading impression of ineffectiveness and undervalue the broader political impact of sanctions. In addition to their official or publicly declared objectives, sanctions can be imposed for symbolic and other purposes, which may include deterring future wrongdoing, demonstrating resolve to allies or domestic constituencies, upholding international norms, and sending messages of disapproval in response to objectionable behavior.96 However, this criticism is again mistargeted because Cortright and Lopez discuss the utility instead of the effectiveness of sanctions. Finally, Daniel Drezner offers two insights on the dichotomy of success/failure made in the literature. First, he argues, the degree of success should be judged by the size of the agreed concessions relative to the status quo, and not the size of the concessions relative to the senders original demand. Second, the degree of success also depends upon the type of demand. A moderate degree of success in accomplishing a difficult task may seem more impressive than a high degree of success in accomplishing an easy task. He uses these criteria to examine 39 episodes of Russian sanctions against members of the NIS between 1992 to 1997. 97 Drezners analysis will be further discussed in Chapter 5. To sum up the debate, using a strict definition of economic sanction, which excludes economic warfare and trade disputes, the success rate of economic sanctions based on the HSE database is between 4.6 percent (five of 109 cases) 98 and 10.4
96

97

98

David Cortright and George A. Lopez, The Sanctions Decade: Assessing UN Strategies in the 1990s (Boulder, Colorado: Lynne Rienner, 2000), pp. 15-6. Daniel W. Drezner, The Sanctions Paradox: Economic Statecraft and International Relations (New York: Cambridge University Press, 1999), pp. 18-9, 68, 131-247. 109 cases exclude 6 cases in the HSE database, which, Pape argues, are trade disputes, not instance of economic sanctions. 129

percent (12 of 115 cases), even if we consider the difference of judgement on economic sanctions successes among HSE, Pape, and Nossal. This success rate is low enough to conclude that economic sanctions are generally ineffective. Based on the HSE database, Table 3.4 shows the differences of economic sanctions successes judged by HSE, Pape, and Nossal. Chapter 5 will further examine more comprehensive theories on the effectiveness of economic sanctions.

Table 3.4 Sanctions Successes since 1945 Based on HSE Database

Year 1914 1921 1925 1933 1938 1939 1948 1948 1951 1956 1956 1956 1958 1960 1961 1962 1962 1963 1963 1964 Sender U.K. Target Germany HSE resulta Pape resultb Success (d) N.A. (b) Success (c) N.A. (b) Success (c) N.A. (b) Success (a) Success Success (a) N.A. (d) Success (d) N.A. (a) Success (e) N.A. (a) Success (b) N.A. (c) Success (a) Failure Success (b) N.A. (c) Success (c) N.A. (b) Success (b) N.A. (d) Success (a) N.A. (d) Success (b) N.A. (c) Failure Failure Success (a) Failure Success (b) N.A. (c) Success (a) N.A. (d) Nossal result Failure Failure Failure Failure Failure Failure Failure Failure Failure Failure Success Success Failure Failure Failure Success Failure Failure Failure

League of Nations Yugoslavia League of Nations Greece U.K. U.S./U.K. Allies U.S. India U.S./U.K. U.S./U.K./France U.S. U.S. USSR U.S. U.S. U.S. UN U.S. U.S. France USSR Mexico Germany/Japan Netherlands Hyderabad Iran Egypt Laos U.K./France Finland Ceylon Brazil South Africa Egypt South Vietnam Tunisia

Success (c) Indeterminate Success

Dominican Republic Success (b) N.A. (b)

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1965 1965 1965 1967 1968 1970 1972 1973 1975 1976 1977 1977 1977 1979 1979 1981 1982 1982 1982 1987 1989
Note: a:

U.S. U.S. U.K./UN Nigeria U.S. U.S. U.K./U.S. Arab League U.S./Canada U.S. Canada U.S. U.S. U.S. Arab League U.S. U.S./Netherlands South Africa U.K. U.S. India

Chile India Rhodesia Biafra Peru Chile Uganda U.S./Netherlands South Korea Taiwan EC/Japan Brazil Nicaragua Iran Canada Poland Suriname Lesotho Argentina El Salvador Nepal

Success (a) N.A. (d) Success (a) Failure Success (b) N.A. (b) Success (e) N.A. (a) Success (a) N.A. (d) Success (b) N.A. (c) Success (b) N.A. (a) Success (e) Failure Success (a) Success Success (a) Failure Success (a) Failure Success (b) N.A. (a) Success (a) Failure Success (a) Success Success (e) Failure Success (a) N.A. (b) Success (c) N.A. (a) Success (a) Success Success (e) Success

Failure Success Failure Failure Failure Failure Failure Failure Success Success Failure Failure Failure Success Failure Failure Failure Failure Failure

Success (a) Indeterminate Failure

Success (b) Indeterminate Failure

success (a): modest policy change success (b): political destabilization success (c): disruption of military adventures (excluding major wars) success (d): impairment of military potential (including major wars) success (e): other major policy changes

b:

N.A. (a): outcomes determined by force, not economic sanctions (brute force military victory) N.A. (b): outcomes determined by force, not economic sanctions (military coercion) N.A. (c): outcomes determined by force, not economic sanctions (foreign-sponsored assassinations and military coups) N.A. (d): not instances of economic sanctions

Source: Robert A. Pape, Why Economic Sanctions Do Not Work, International Security, vol. 22, no. 2 (Fall 1997), pp. 100-103. Kim Richard Nossal, Liberal Democratic Regimes, International Sanctions, and Global Governance, in Raimo Vayrynen (ed.), Globalization and Global Governance (Lanham, Maryland: Rowman &

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Littlefield Publishers, Inc., 1999), p. 129.

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