Economic Sanctions as a Foreign Policy Tool

Economic Sanctions as a Foreign Policy Tool is a podcast episode from EconoFact, hosted by Michael Klein; this episode in 2024 interviews Daniel W. Drezner. It is available online.

Three categories of economic sanctions:

1. "Economic coercion": Impose costs with expectation or demand that a target will change some behavior.

   • Bush coerced Shamir to attend the Madrid Peace Conference by withholding loan guarantees.

   • Trump voiding the JCPOA with Iran and reimposing sanctions.

   • Sanctions rarely include explicit demands, and never include a mechanism for enforcing terms against the sanctioner, so it's practically impossible to quantify the efficacy of these.
2. Economic warfare: Impose costs to constrain a target's choices or production possibilities.
   • Note: not his phrasing

   • CoCom

3. "Economic statecraft": Selection of policies, etc., based on political goals rather than fair market trade, such that costs are effectively levied against a target.

   • Belt and Road Initiative creates a cost for having bad relations with China.

"[B]etween 1945 and 1990, there were an average of maybe 13.5 sanctions being imposed per year. On the other hand, between 1990 and 2005, that average skyrocketed to more than 53 attempts every year." End of Cold War could be a causal difference, but the primary imposer of sanctions is U.S., and U.S. has actually increased military engagements since then.

A rough framework for efficacy of economic coercion:

• Need to make an explicit demand
• Multilateral buy-in
• Impose costs on socioeconomic elite
• Expectation for normalization of relations; if more conflict is expected, less appetite to bargain now.

Cuban sanctions characterized by:

• "Cuban emigres", a substantial voting bloc in Florida, who wanted economic coercion
• Sugar industry wanted economic warfare to bar Cuban sugar production from the international marketplace.

Of those two, the latter is more "sticky" in terms of incentive structures and policymaking.

Russian sanctions have not been effective.

• Sanctions did not bar Russian oil and gas production from the international marketplace, rather attempted to cap prices.
• While sanctions imposed a cost, the central bank 'bit the bullet' and tackled the issue with rate hikes.
• China stepped into a "black knight" role, substituting the international marketplace.
• Trade patterns suggest several countries are violating sanctions.

  • Armenia, UAE, Hong Kong, Kazakhstan, and Uzbekistan coincidentally have increased trade with Russia and increased trade with the West.

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