David R. Henderson  

The Problem With Economic Sanctions

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Unchecked and Unbalanced Banana Republic Watch...
When governments impose sanctions on people in another country, the main goal of the officials who favor the policy is to harm the person or people in charge of that country's government so that they will change their policies. That's the goal. What they do to achieve it is intentionally harm many innocent people in those countries, in this case by trying to reduce their supply of gasoline. The sanctions often work in a limited sense: they impose some harm on innocent people in the target country. But that's not the goal. Nor is the goal to cut off the "bad guy" from gasoline. You can be sure that Mahmoud Ahmadinejad, approximately the 18th most-powerful politician in Iran, and Ali Khamenei, the most powerful politician in Iran, will not do without gasoline. No. Instead, imposing sanctions is hurting innocent people so that they, like our neighbor's cat, will lash out at whoever's face is right in front of them. The idea is to induce people to see their own government as the enemy and to try to put pressure on it.

This is from my latest antiwar.com article, "The Case Against Iran Sanctions." I go on to ask the reader to imagine how we would react if another country's government imposed sanctions on us.


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CATEGORIES: International Trade



COMMENTS (27 to date)
Matt writes:

If Mexico were to start sanctioning our oil supply because it didn't think we had taken a strong enough stance on global warming, I would simply throw my middle finger toward the South and prepare to pay more at the pump. I wouldn't even question what Obama's global warming strategy was. But if I heard that we were sending more "foeign aid" to Mexico, I would get outraged.

Basically, I would just dislike Mexico a little bit more.

ECM writes:

I have to agree w/ Matt: let the world impose all the sanctions they want on us and watch their ramshackle economies collapse in a fortnight. (Oh sure, it'll hurt us too, in the short term, but I'm willing to go out on a limb and say they'd suffer far, far more than we.)

David R. Henderson writes:

Matt and ECM,
Both of you, especially ECM, missed the point but, in doing so, made my point. Both of you argued, correctly, that most other countries could do little harm to our country with sanctions. That's why, in my article, I said that to really put yourself in other people's shoes, you have to imagine that governments of these other countries could do substantial harm.
But notice the tone you both took: immediate anger at the government imposing the sanctions, which was exactly the point I made.
Best,
David

Eric H writes:

I agree with you David, but I think the proponents of sanctions against countries like Iran agree with you too, they just assume that the locus of political power resides within the people of such countries, and that pressure on the people of Iran will induce them to vote out or overthrow their corrupt leaders.

The proponents of sanctions, believing other countries to have political systems as transparent as ours, or electorates as powerful as ours, make a cynical sort of peace with their plan to impoverish the people of Iran.

The locus of political power in places like Iran lies within the entrenched religious and political classes, who are willing to use whatever force necessary to protect their interests.

Douglass Holmes writes:

Your link doesn't work. The link to your article on antiwar.com doesn't work either.

Sanctions are bad, but they are better than the alternative; war.

Matt writes:

Eric H,
I agree that those are the intentions of sanctions, but it seems to have the opposite effect. Places like N. Korea are economically ruined, and instead of blaming their own crappy government they rally behind them in hatred for the West. You have to remember that dictators and oppresive governments (or even democracies to some extent) have the advantage of controlling the frame of the situation.

My biggest problem with sanctions (and foreign aid for the same reasons) is that people don't bite the hand that feeds them. It's important that suppliers in Korea have to get on the phone and dial an American phone number if they want to get more beef (or iPod's for that matter).

guthrie writes:

Would you suggest that Iran be allowed to develop a nuclear weapons program? I imagine not, but short of sanctions or war, how might this be accomplished? If the answer is 'yes', how is this safe or responsible (given their government's stated aggression and antagonism toward Israel, in particular)? Or should the nations of the world just 'butt out' and let Israel 'fend for itself' (which would most certainly mean declaring war on Iran, IMO).

(I don't seem able to access the link to your full article from the computer I'm currently using... so if you've already answered these questions there, I apologize! I'll have to wait to read it)

Matt writes:

I think the answer would be that nothing outside of war is a sure thing. That being said, one could argue that free trade might have the most impact at preventing war by economically tying the population of Iran to Western civilization. The Iranian population have shown a desire for reform. Given that, the best bet might be to trade freely with them so that they have a greater incentive for peace and to put more internal pressure on their government. That isn't a garunteed outcome and a lot of other factors could come into play, but I strongly believe that free trade would give us the best chance for a peaceful solution.

fundamentalist writes:

Nice article! I agree completely. You have made the logical argument, but there is also the practical argument: sanctions have failed every single time they have been tried. There is not one example of sanctions every having accomplished anything.

Then there is the legal argument. I think if you go back to Grotius' treatise on international law, then blocking trade is illegal.

Colin K writes:

Another reason is simply to keep the sanctioned country as weak as possible.

There is an assumption that people become more cosmopolitan and liberal in their outlook as they become wealthier. This hardly seems to be the case in the run-up to WWI for Germany or WWII for Japan, to name just two.

If anything there seems to be an inflection point before which increasing wealth mostly provides the ability to pay for more guns and shinier medals, while the willingness to kill for national glory remains fairly constant. Even then, culture remains hugely influential--the UK retains a much stronger military culture than France or Germany, for example.

Given the choice, I would prefer to confront a North Korea which must daily choose between feeding soldiers and newborns, or an Iran that must choose between running irrigation pumps and centrifuges. The misery of these peoples is a problem only they can solve. The threat these countries pose to us* is ours.

* I am open to the idea that said threat is more or less oversold, but that is another discussion, innit?

guthrie writes:

Matt, I agree that sanctions do more harm than good on all the wrong people. However, the Iranian people don't rule Iran. Iran is run by a cabal of religious professionals whom, it would seem to me, are more than willing to follow their irrational impulses and give (out of their benevolence, of course) their people the glory of being martyrs at the hands of Israeli nukes. For whatever good might be accomplished with free trade, you always have the specter of the Iranian establishment, who's mantra is, in part, 'Death to Israel'.

I don't see any 'win' here, except for those who would consider the slaughter of innocents (on both sides) a triumph for their religion.

How can we, in good conscience, leave these matters to those we strongly suspect might conduct themselves based upon their irrational hatred of one another? Or is my own fear irrational?

guthrie writes:

Colin, there's another assumption that sanctions keep countries weak. I think David's post points out that these countries, Iran in particular, wouldn't be weakened at all, and might become stronger as a result of finding different sources of the sanctioned goods. On top of that, they'd be able to develop the resolve and backing of the people whom the sanctions affect the most. At that point sanctions work as a marketing tool for the regime we intend on weakening.

Colin K writes:

Guthrie:

The only point Prof. Henderson has made is that sanctions will not likely impose material poverty on the leaders of outlaw regimes; I agree with him.

The point of sanctions in practical terms is to deprive nations of resources. Saddam may have had palaces with golden commodes but the rest of the country was a complete shambles by the time we invaded. North Korea is barely above Zimbabwe outside a handful of research facilities.

Post-invasion we found that Iraq wasn't even capable of producing water or electricity in much of Baghdad, while North Korea appears to have failed (for now anyway) in successfully detonating a 70-year-old atomic bomb design despite outside assistance. Post-1991 Saddam stayed in his cage and the Kims have stayed in theirs. Arguably these prove the utility of sanctions.

Conversely, the embargo on Cuba is pointless largely because post-USSR it serves no purpose. Cuba was a security threat only by proxy.

RL writes:

To Douglass H, who believes sanctions are better than war, historically sanctions have led to war. Specifically, US sanctions restricting Japanese access to oil led to them attacking Pearl Harbor, just one example among many.

To those who believe that sanctions against Iran will cause the people of Iran to throw off the yoke of oppression and oppose their own government, I can only note that strategy has not yet succeeded in Cuba, though perhaps if only we are more patient...

Les writes:

I agree that sanctions are at best ineffective, and at worst harmful. But that is beside the point.

The point is how to prevent Iran from using nuclear weapons against its neighbors, either directly or - more likely - through its proxies or puppets.

So what would be germane is aiding the Iranian dissidents to help topple the ayatollahs.

David C writes:

This is probably the issue where Obama's actions have surprised me the most. He's been very quick to use trade sanctions or protectionist methods as a foreign policy tool to exert pressure on other countries. There's a lot of interests trying to get developed countries to exert more pressure on various dictators, and very lobbying interests for countries to quit telling other people what to do. While this is an improvement on invading other countries or threatening invasion, it's certainly not a good thing. It just gives dictators somebody else to blame.

guthrie writes:

Colin,

I'm skeptical that the examples you provide are adequate proof of the utility of sanctions. It could also be argued that sanctions allow dictators more freedom to horde those scarce resources, which they have found a way to obtain regardless of the limits imposed.

If the sanctions against Iraq were meant to deprive the citizens of Baghdad electricity and water, one could say they worked. If this was not the intent, what can we say of those sanctions? N. Korea is still tinkering with their bomb. If at first you don't succeed...! I think I have to side with fundamentalist on this one.

Les,

How would we aid Iranian dissidents without such acts being construed as a declaration of war? How might we do that while avoiding the catastrophe that befell the Kurds of Iraq?

Richard A. writes:

Our embargo on Cuba has probably been counterproductive. Why does it just keep going on?

RL writes:

Les: "The point is how to prevent Iran from using nuclear weapons against its neighbors, either directly or - more likely - through its proxies or puppets."

Why is it the role of the American taxpayer to prevent a country half a world away from attacking its immediate neighbors?

Eric H writes:

Matt--

I kind of jumped the gun; in his excerpt, David says something with which I wholeheartedly agree: that sanction advocates intentionally harm innocent citizens in hopes they will tire of starvation & privation and put pressure on their government. My point was that this intention is based on the false presumption that the innocents citizens actually can put pressure on their government. If sanctions were placed on the U.S., and they were detrimental to U.S. citizens, the offending parties would be voted out. No such luck in Iran; no real "electorate" exists when election results are predetermined.


Eric H writes:

I see my first comment as redundant after having read David's piece--the link didn't work when I tried to read it earlier.

Having read it, I'm even more convinced that sanctions of any kind are cruel, unproductive props our politicians use to maintain power. Sanctions against Iran are doubly shameful because they will hurt moderates who may want a closer relationship with the U.S. and because those moderates will be most harshly dealt with by the Iranian government. We're going to pile hardship upon hardship upon hardship on these people, for no other reason than to signal to the global community and certain American constituencies that we're still the world's police power.

steve writes:

Has there ever been a case where sanctions were succesfull. I can't think of one.

Besides, the hardliners in Iran are using the U.S. as a bogeyman to maintain control over a restless population. We are helping more then hurting those hardliners by implementing sanctions.

steve writes:

The U.S. entry into WWII in some sense was pushed along by sanctions on Japan. Do we really want a third war? ... Sheesh.

Les writes:

Answer to guthrie: Of course its war. Do you think Iran is our friend and benefactor?

Answer to RL: What percent of our oil is imported? And which Middle East nation is our steadfast ally and the only democracy in the Middle East?

Mike Rulle writes:

My take is significantly different than David's. I do not start with the assumption of duality between a Government and its people. The people either implicitly or explicitly support their government. It is incorrect to say that people can wash their hands of responsibility for their government's actions. They either are not willing to oppose injustice or are complicit in its creation. (I will put aside the argument as to whether Iran or any country can be called just or not--that's a separate point)

It is not comfortable to accept the implications of this assertion. One can say "but I am only one person". That same rationale can be used to not vote (my single vote surely does not matter). But we all tend to believe it is important to vote, assuming we think we are voting for a difference, even though our singular vote does not matter. The same is true relative to supporting the existence of a regime in general.

Why should we think it just that only soldiers risk their lives for liberty? Shouldn't we all be under the same obligation? Would the 9/11 terrorists have been less unjust had they killed 2800 sleeping soldiers instead? Conversely, it does not make them more unjust (only equally unjust) to have targeted civilians.

The same is true with countries to whom we apply sanctions. If we believe the government is unjust or simply a pure danger to us then it is appropriate to apply sanctions to all, as all are part of the problem.

To go back to my first paragraph, the source of David's error is creating this duality between a government and its people. If we took that logic to the extreme, we could never have fought WWII without resorting to some absurd utilitarian calculation, as there were surely people killed who did not support Hitler in Germany. But there were many Americans, British and others who were killed who also did not support Hitler.

Why should the domestic "anti-Hitler" Germans get to "rent-seek" or "free-ride" on the "anti-Hitler" foreign forces? In a truly moral and just world, we all should share in the risk of our lives and not think we can buy off soldiers to do our bidding.

To repeat, this is a separate argument from one that asks "to whom should we apply sanctions?" I believe we should do that and more to Iran, personally. But my point in this post is to strongly object to the notion that we as individuals can walk away from the responsibility to protect the values we hold dearest. That applies to Iranians as well as Americans.

Obviously this is not a utilitarian argument, but neither is David's.

CJ Smith writes:

@ David R. Henderson:

Interesting argument, but I think that you and many of the opponents of trade sanctions may be overstating the case by saying saying trade sanctions are never effective or should never be used. This is offest by proponents of trade sanctions, who believe that access to economic wealth is, in and of itself, a sufficient motivator to topple a government.

The purpose of economic sanctions isn't to target an individual or small ruling class, the purpose is to impose economic hardships on the general populace. Presumably, these hardships would lead the populace to consider a change in leadership to avoid the hardships, leading to internal change versus externally imposed change. Can economics as a force for change be effective? Absolutely. The United States is a perfect example of leadership and policy changes regularly brought about by populist perceptions of economic well-being. There are very few elctions were the state of the economy and professed plans to "stay the course" versus "change we can believe in" (to paraphase two of the more recent populist slogans) is not a fundamental factor in the elections.

Economic pressure has also caused some policy changes, albeit minor. Cuba does have a very limited capitalist market for luxuries and tourist dollars. China has conducted "limited capitalism" in Hong Kong.

As a singular tool, economic sanctions would fail for two reasons. First, the ease at which sanctions can be avoided. Sanctions become ineffective or have greatly reduced effectiveness when the target nation is or can become self sufficient in staple goods (hence the ineffectiveness of sanctions against the US, Russia, China, India and Pakistan). Economic sanctions are ineffective unless ALL external sources of trade are controlled. Cuba is the classic example - the US embargo was effectively total, but it merely opened the market to Soviet economies. When the USSR collapsed, the market shifted to France, Central America, and the Mid-East, all of whom had no constrainsts against dealing with the Castro regime. Iran is another good example of ineffective sanctions. France and Russia regularly either disregard the sanctions or funnel goods and funds through "non-signatories" to the trade sanction agreements. Even when trade sanctions are stepped up to include blockades, trade sanctions can be avoided under the guise of "humanitarian aid." What good is it impose economic sanctions against Hamas at the same time your allies are pumping millions or billions of dollars into the economy to help "non-combatants" and not controlling how the aid is actually used or spent. A block of US processed cheese feeds a jihadist just as well as it would feed the non-combatant civilian the jihadist is hiding behind.

The second factor that reduces the effectiveness of economic sanctions is the responsiveness and ability to change of the top political power structure. In many democratic societies, change is considered an intregal part of the ongoing process. In command economies, monarchies (regardless of name - "President for Life," "Dear Leader") and oligarchies, problems posed by economic sanctions merely join the host of other problems that an authoritarian political structure faces.

One of the stronger arguments made against economic sanctions is that the disparate impact it has on the rulers and the ruled as classes. One of the effects of economic sanctions is to reduce and restrict the free flow and availability of capital that could be used to fund dissent. Thus, economic sanctions primarily hurt those who would have the best chance to foment internal change.

I agree that economic sanctions alone are less effective than other avenues. As numerous political cartoonists and columnists pointed out, the better way to cause regime change in Cuba and Iran would be to ship everyone free PDA's and Twitter subscriptions, not refuse to buy cigars or oil. But I think that economic sanctions do have some role to play in the attempt to influence social and political changes in other countries. Violence is the last refuge of the incompetent.

ilona@israel writes:

what is strange-i am not sure that such policy really workes. i read so many blogs of arab people who seriously complains about Israel agression and its wrongful and severe actions to them, thus criticality to their own government is absent completely. try to find at least one Arabian blog criticising Islam or the government of iran ot gaza.

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