June 2, 2006

Sanctions (Economic)

Posted in Economics, Politics at 5:24 pm by BenLo

Sanctions: The alternative to War?

In this case we assume that diplomatic means have been exhausted, therefore it remains to us to consider whether or not sanctions are a cheaper, faster, more humanitarian method of achieving international aims as opposed to war.

Clarifications: We will not go into justifications, nor consider whether the party imposing the sanction (unilateral or multilateral) is in the right or wrong, but rather judge the effectiveness of sanctions based on several key principles.

1) Were the goals of the sender country achieved?
2) How much time did it take to achieve?
3) Were they achieved with minimal total collateral damage (within and without the country)?

Inherent problems of sanctions:

In this particular section, we will consider problems of assumedly multilateral sanctions (ie UN-endorsed) that cause sanctions to be ineffective and questionably ethical in execution.

1) Ethics and justification

The use of sanctions inevitably harms the civilian population. While imposition of sanctions may result in a modest reduction of GNP (generally 5% for partial sanctions and 10%, as in Iraq, for comprehensive sanctions), it is the type of goods being restricted that matter.

For example, in Iraq no item was allowed in unless it was on the approved list, which meant that key medicines and foodstuffs were denied to Iraqis. Presumably, this operated under the hope that Iraqi policymakers survived in the same way as normal Iraqis, and would comply with resolutions in order to ensure their own continued comfort. However, though they may have felt the pinch, it should be noted that positions of power will carry their own perks, such as increased pay, foreign contacts and access to government-requisitioned stores. As a result, the ruling elite is essentially BUFFERED by the suffering populace.

Ethically speaking, this is a two-prong argument. Firstly, hoping as we do that it is the suffering of the people that will affect the government (who are at the end of the day, also citizens), can we justify causing millions to suffer to get a handful? Secondly, as the above argument shows, frequently the ruling elite are only slightly affected, while the development of the country is halted and as in the case in Iraq, the regime is bolstered as the middle-classes disappear.

2) Double standards of sanctions.

Firstly, sanctions are not imposed uniformly. Iraq was sanctioned for invading Kuwait, but Indonesia, Turkey and Israel were not likewise punished for their own invasions, even though a UN censure on their respective actions had been passed. This in itself is not a point on the ineffectiveness of sanctions, merely a note.

More importantly, we lack the mechanisms to enforce the sanctions. There is a lack of institutional memory in the UN, where the heads of sanctions committees are rotated every few years. Furthermore, the UN itself does not possess any proper monitoring system to ensure that sanctions imposed are being carried out efficiently, as a result sanctions-busting is rife. This leads to 2 problems: The entry of goods (albeit a lower volume) into a country defeats the purpose of sanctions. Secondly, the purchasers of these now-exorbitant goods will generally be the ruling elite, which is precisely the targeted group, while the populace is denied access for no particular purpose.

3) 3rd state effect

While some may argue that war is devastating in its reach, sanctions also affect countries beyond that of the target country. When a country is sanctioned, its trading partners suffer. They lose an export market, and this effect is exacerbated if they were previously exporting niche goods to the sanctioned country. This can lead to regional destabilization as the economies of trading partners in a region are frequently interlinked, and the shutting-off of one country, may lead to the collapse of another country’s economy, which in turn starts a domino effect. For example, sanctions against former Yugoslavia caused the international rail and road links through it to be shut down, thereby denying heavily used trade routes, which further caused an increase in prices around the region and export delays.

Even sender countries may suffer more than the country under sanction. For example, in 1980 the US imposed a grain embargo on the Soviet Union in an effort to force them out of Afghanistan. Not only did this measure fail, it also caused severe harm to American farmers as they lost a huge export market.

Conditions and circumstances of sanctions

It must be acknowledged that sanctions frequent succeed under a set of limited goals and circumstances.

Overall, based on an analysis of 116 case studies, beginning with World War I and going through the UN embargo of Iraq, economic sanctions tend to be most effective at modifying the target country’s behavior under the following conditions (Taken from http://www.econlib.org/library/Enc/Sanctions.html):

1. When the goal is relatively modest: winning the release of a political prisoner versus ending South Africa’s apartheid system, for example. Less ambitious goals may be achieved with more modest sanctions; this also lessens the importance of multilateral cooperation, which is often difficult to obtain. Finally, if the stakes are small, there is less chance that a rival power will step in with offsetting assistance.

2. When the target is much smaller than the country imposing sanctions, economically weak and politically unstable. The average sender’s economy in the 116 cases studied was 187 times larger than that of the average target.

3. When the sender and target are friendly toward one another and conduct substantial trade. The sender accounted for 28 percent of the average target’s trade in cases of successful sanctions, but only 19 percent in failures.

4. When the sanctions are imposed quickly and decisively to maximize impact. The average cost to the target as a percentage of GNP in success cases was 2.4 percent and in failures was only 1.0 percent, while successful sanctions lasted an average of only 2.9 years versus 8.0 years for failures.

5. When the sender avoids high costs to itself.
Aside from these, prevailing circumstances today, namely the increase in globalization, have had a double-bladed effect. Firstly, increasing interdependence and specialization of output have made sanctions more painful as countries are denied goods of which they produce very little. However, globalization also means that it is that much easier to find alternative sources to replace the halted source, and as it is difficult to get a consensus from countries on imposing sanctions, generally alternative sources can and will be found. The key determinant here is in how fast and how hard sanctions are imposed.

In support of sanctions:

However, sanctions should still be considered as a very viable alternative to war. Perhaps one way of looking at it is that sanctions, while having a long list of failure, also has certain successes (see below). War, on the other hand, inevitably results in huge loss of life, as well as various other costs such as restructuring and rebuilding. Sanctions provide an opportunity to achieve war’s goals, with a lighter cost.

Essentially, one can regard sanctions as a gamble: You might achieve your objective at a very low cost, or you might now achieve it at all, and still pay a high price. However, war is a purchase. You almost certainly achieve your objective, be it regime change, disarmament or the like. But it inevitably has a high cost. ‘Clean wars’ only mean the media has cleaned up the scenes.

Furthermore, there are situations in which sanctions are a far more versatile weapon than war. For example, sanctions were used in South Africa to induce the government to give up its apartheid policy. It would have been (And still is) difficult to justify a war on the basis of what a country does to its own citizens. Indeed, a country supposedly has the sovereign right to its own citizens. However, by imposing sanctions, other countries are merely exercising their own right to show displeasure with certain policies, and also modify the target government’s behaviour. South Africa’s renouncement of apartheid was credited in part to sanctions placed upon it. A case study is provided below.

Britain and the United States opposed sanctions against apartheid South Africa, in spite of strong pressures in the Security Council. Finally, after weak “voluntary” measures (voted in 1963) had little result, Britain and the US agreed to a Council-imposed mandatory arms embargo in 1977. Efforts to toughen sanctions through the UN met with further Anglo-American opposition, including a draft resolution vetoed by both permanent members on March 8, 1988 . Nevertheless, an international campaign induced private investors and governments to adopt sanctions measures. In 1989, the campaign finally succeeded in pushing a sanctions bill through the US Congress, against the opposition of the administration. Throughout, shippers, especially big oil companies, often flouted the embargoes. But thanks to the international campaign, maritime and longshore unions, along with United Nations agencies, helped enforce the sanctions by exposing sanction-breakers to public scrutiny. Many believe that the sanctions helped force the apartheid regime to finally capitulate, in a relatively peaceful transition of power. Whatever hardship the sanctions imposed on both Zimbabwe and South Africa, the outcome seems to have been well worth it.

Perhaps it is not that we should remove sanctions, but rather improve them continuously. The fact is, every weapon we can add to our diplomatic arsenal is going to be very useful. Smart sanctions are all the rage now, namely the idea that we can embargo certain government-essential items like arms and nuclear material, but we allow in food and medicine. The problem is of course, dual purpose goods, such as computers, which could easily be co-opted for military use. Even refrigerator trucks for medicine are suspect (refer to notes). However, it is a large step forward in making sanctions more sensitive.

Below are policy recommendations to bring about more precise and regulated sanctions.

1. Sanctions should be resorted to with caution
Sanctions cause considerable damage and even suffering, so they must not be seen as an early-response, but rather as a late-resort, after preventive and diplomatic means have been exhausted.

2. Sanctions should be applied under laws, rules, guidelines or binding criteria
Sanctions should be applied under predictable and roughly similar circumstances (no double standards). Sanctions should be incorporated into (and subject to) international law, possibly through a treaty or other instrument. Short of a formal treaty, the Security Council should develop and publish rules or guidelines for its own reference.

3. Sanctions should have clear, precisely-defined objectives and termination criteria
Sanctions when applied must have very clear objectives and well-defined criteria for termination. When the target country meets these criteria, and the objectives are met, sanctions should be lifted. In some types of cases, when criteria are partly met, sanctions could be partly lifted as a means of encouragement for further progress.

4. Sanctions should expire at the end of a specified term unless renewed
UN sanctions now continue until a decision is taken to lift them. In the Security Council, this means that a single Permanent Member can veto the lifting, against the will of a large Council majority. Sanctions should instead require a “green light” for renewal, even though the initial term could be set for a lengthy period.

5. Sanctions must always exempt food, medicines and other humanitarian supplies
General trade sanctions, such as those in place against Iraq, now often block humanitarian supplies including food and medicines. Rules for sanctions must allow clear exemptions for virtually all foods, medicines and other humanitarian supplies. Sanctions must also provide for delivery of these supplies and for their financing.

6. Sanctions aim to modify behavior, not to punish or exact retribution
Sanctions should not be confused with criminal law that results in a punishment. Sanctions must not punish or ostracize, but rather they must encourage a change of policy that leads to compliance with standards of international law.

7. Sanctions should be subject to pre-assessment
The effect of particular types of sanctions on a targetted population should always be subject to a pre-assessment study. Such a study would advise the Security Council on the probable impact of the proposed sanctions from a humanitarian point of view, as well as from the point of view of enforcement and efficacy.

8. Sanctions should be subject to monitoring and regular review
Sanctions must be reviewed on a regular and pre-established basis by the Security Council, and they must be monitored on an ongoing basis by the Secretariat. The monitoring process should employ regular indicators, to assess the humanitarian impact and other aspects of impact. Monitoring reports should be made public.

9. Sanctions regimes must take full account of “collateral effects”
Sanctions can have serious negative effects in nations that are neighbors or major trading partners of the target. Sanctions should seek to minimize such effects. When sanctions are put in place, they should provide for measuring collateral effects and allocating compensation, especially compensation to poor and vulnerable groups. Compensation funds must be fully and adequately financed.

10. Bodies imposing or supervising sanctions must have maximum possible transparency and accountability as well as improved working methods
The Security Council and its committees must have greater transparency and accountability in the matter of sanctions. This means regularly-scheduled meetings of the sanction committees, public reports on the work of the sanction committees, open debates (not closed consultations) on the occasion of the imposition of the sanctions and the periodic reviews, open reports on the monitoring process, and so forth.

11. UN Secretariat budgeting and staffing on sanctions needs to be strengthened
The budgets and staffing of the Secretariat must be sufficient to carry out the pre-assessments and regular monitoring, provide services for more frequent and regular sanction committee meetings, oversee enforcement, and fulfillment of other tasks not now sufficiently provided for.

12. Improve substantially the means of sanction enforcement
Sanctions are now very inadequately enforced and the UN has virtually no enforcement role. Sanctions must in future be enforced within the most multilateral possible framework. The UN should have sufficient naval and other inspection forces to be able to play a major role in enforcement. Minimally, the UN should have a fully-funded compliance-monitoring capability, free from member-state pressure and able to issue periodic reports that could mention member-states (including Security Council Permanent Members) that are not complying with the sanctions.

13. Unilateral sanctions must be eliminated
While regional bodies as well as the United Nations should be authorized to impose sanctions (if they use an established international code), individual states, sub-national entities or ad hoc coalitions should be forbidden from imposing sanctions. Only sanctions that command broad support at the regional or international level should be tolerated. Unilateral sanctions might themselves be considered a breach of law that might provoke sanctions by the international community!

14. Sanctions that don’t hurt the general population succeed better
It has been assumed that sanctions should be designed to hurt the general population of a country, who then are expected to bring pressure to bear on the political leadership to change policy. But this doesn’t work with non-democratic regimes, against whom sanctions are normally imposed. Such regimes are not open to such pressure from the public and they typically mobilize even stronger mass support when faced with a foreign challenge.

15. Develop targeted sanctions as the most effective and least harmful option
By contrast with general trade sanctions, targeted sanctions have a narrower focus and seek to minimize negative humanitarian effects and coolaterial damage while maximizing pressure on leaders. Targeting can aim at many possible items, including weapons trade. But more effort should be devoted to bringing pressure on decision-makers by targeting their travel, their personal assets and the like. Especially promising would be sanctions that freeze personal bank accounts and other assets like real estate.

16. Sanctions should not be considered alone, but as a last step in a broad process of prevention
Security crises and violations of international law typically arise in conditions of poverty and unjust development. Weapons trade and intelligence operations, based in northern countries, often worsen crises as means to gain geostrategic or corporate advantage. Those who aim for greater justice must look beyond sanctions towards preventive measures of a more fundamental and lasting type. The UN’s own initiatives for “prevention” can be strengthened as one part of this larger process.

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