What Makes Sanctions Effective?
Economic sanctions are an increasingly important part of the West’s foreign policy toolkit, yet they remain one of the most contested topics in international relations and security studies. Some prominent critics have argued that sanctions are almost never successful at coercing their target into changing its behaviour, because national security objectives inevitably override economic ones.
Much of the academic research assumes that the sole purpose of sanctions is to force a change in the target’s policy, but we know from observing state practice that sanctions often have multiple objectives, including:
Pressuring the target into changing its policy (coercion).
Degrading the target’s ability to achieve its objective (constraint).
Deterring the target or others from a course of action (deterrence).
Signaling the sender’s position on an issue, especially where an international norm is concerned (signaling).
Punishing an individual, organization or state, e.g. for breaches of international humanitarian law (punishment).
When we acknowledge the variety of potential aims of sanctions, a more nuanced picture emerges as to how and when they are effective. Applying standard microeconomic concepts, researchers have found that the effectiveness of sanctions will be determined by how elastic the target’s demand for the policy is. The more elastic the demand, the more that sanctions which increase the cost of pursuing the policy more will reduce the level of the policy; where demand for the policy is relatively inelastic, sanctions will need to be tougher in order to achieve the same reduction. From the perspective of the sender, sanctions will be a desirable tool to use where the benefit of reducing the level of the policy is greater than the cost of imposing the measures.
Even where demand for the policy is highly inelastic, sanctions can still work as a constraint by preventing the target from accessing a resource, technology or asset. In such a situation, the price of the resource is, essentially, infinity – regardless of what the target is willing to pay, it cannot procure what it desires. The target is then forced to either find less desirable substitutes (e.g. less effective weapons) or to reduce the level of the policy. This explains how, even where the target’s policy is related to defence – and therefore demand for the policy is likely to be relatively inelastic – sanctions can still constrain the ability of the target to pursue the policy.
Sanctions also force a target with multiple competing policy objectives to make a zero-sum choice. Given that governments are faced with a budget constraint, making a desired policy more expensive forces the target to choose to either do less of that policy or to forego another desired policy. Even as states tend to prioritise national security and military policies, sanctions can exert a medium to long-term effect on a country’s overall economic performance by indirectly constraining spending on economically productive investment (e.g. infrastructure).
In Degrade and Deny: Economic Sanctions 2.0, I argued that governments should adopt an approach which priorities the constraint objective. Whilst the coercion, deterrence and signaling objectives are valid components of sanctions strategy, the primary aim of sanctions should be to erode the target’s capacity to pursue the objectionable policy.
This model reflects the evidence that (i) sanctions can be effective at constraining the target, and (ii) sanctions are not particularly effective at forcing the target to abandon its policy. It also reflects the insights from game theory about costly signaling; by prioritising constraint, the sender signals a willingness to impose costs on the target which, inevitably, come at some economic cost to the sender.
The primary goal of economic sanctions should be to degrade the target’s ability to carry out the objectionable policy. Constraint can be achieved in both broad and targeted ways.
Broad constraint consists of measures to reduce the target state’s overall economic performance, which is the foundation of its ability to support the objectionable policy. Conventionally, this is measured through GDP, which is the combined value of all final goods and services produced in an economy. This is closely linked to the productive capacity of the economy, key drivers of which include the quantity of labour, the capital stock, access to natural resources, the productivity of labour and capital, and entrepreneurialism.
Targeted constraint focuses on identifying key resources and inputs that enable the target to carry out the objectionable policy and disrupting their supply, e.g. dual-use technologies.
How, then, should governments approach deterrence and signaling objectives? The signaling could be to deter the target or other states that may be considering the same action. In order for signaling to be effective, however, it has to change the payoff structure faced by the target, who must realise and expect that it will face costs. Degrading the target’s military capabilities through the constraint objective can be a particularly powerful deterrent to future conduct because it alters the balance of military power. Sanctions can also demonstrate the sender’s commitment to an international norm by showing a willingness to incur costs to uphold it. Economic sanctions, once imposed, inherently create economic costs for the sender. By demonstrating a willingness to bear these costs, the sender signals the importance of the norm.
Finally, a successful sanctions regime needs to be supported by the analytical and operational capabilities in government to understand the targets’ economies, financial vulnerabilities, supply-chains and alternative ways of financing their activities . These capabilities should be informed by a procedures that implement a constraint-based understanding of sanctions, so that sanctions can be calibrated effectively.