Prior to this humanitarian crisis, about a million Rohingya resided in Myanmar. Since then, 600,000 Rohingya have fled Myanmar to escape the oppression. The United Nations Secretary General said last Friday that it is an essential priority to stop the violence against the Rohingya, allow the Rohingya to return home, and be granted legal status. Freedom House, which is a non-governmental organization [NGO] focused on the research and advocacy of political freedom, democracy, and human rights, had something to say on the issue. Last week, Freedom House co-signed a letter with 58 NGOs to urge the U.S. government to impose targeted sanctions on Myanmar. This letter brought up an interesting question for me: how well do economic sanctions work?
A short primer on economic sanctions: Economic sanctions are commercial and financial penalties enacted by one or more country to target a certain country, group, or individual. An economic sanction can take multiple forms, including steep tariffs, quotas, restrictions on financial transactions, asset freezes or seizures, or other non-tariff barriers. Depending on the scenario, the purpose of an economic sanction can be to prevent a national security threat (e.g., North Korea), to bring about regime change, or to punish for human rights violations, as we see with Myanmar. Economic sanctions are used as an alternative to war in order to engender certain foreign policy goals. The appeal to economic sanctions is that they do not spill blood and they do not cost a lot of money to implement. Even so, there is the debate as to whether they work.
Countries that are subject to economic sanctions tend to have smaller economies. Knowing that these economics are more prone to vulnerabilities could help target these regimes. On the other hand, these same countries tend to be more corrupt, which means the target government will pillage its citizens and continue oppressing its people, even with the economic sanctions. Even then, I think the success of economic sanctions comes down to "it depends." There are multiple factors in play, including the balance of power dynamics, the decision-making process of those in charge of the target country, as well as the economic composition and levels of corruption of the target country. As the Council on Foreign Relations [CFR] brings up in its primer on economic sanctions, we can only determine correlation (as opposed to causation) since so many domestic and international factors are in play.
Based on the Peterson Institute's ranking, economic sanctions were much more successful in the 1960s, and the success waned since then. A lot of research on economic sanctions is more dated (e.g., Harvard report), such as this 1992 report from the Government Accountability Office that states that economic sanctions are not effective at the primary directive (e.g., regime change). With the example of Iran, the sanctions boosted military spending more than it hurt the Iranian economy (McDonald and Reitano, 2016). One recent report from the University of Chicago goes as far as saying that economic sanctions do not have the desired effects on the target economy (Shin et al., 2016). Calling the success of economic sanctions as mixed seems to be an understatement, but over the years, a few suggestions (primarily from the CFR) on best practices for economic sanctions have come about:
- Make sure the goals of the sanctions are targeted. Economic sanctions cannot simply be a knee-jerk reaction of the United States flexing its soft power. If the embargo on Cuba has taught us anything, the less ambitious and more targeted the sanctions are, the better.
- Have a more comprehensive and well-rounded plan. Take Libya as an example. Not only were there economic sanctions and threats of military action, but there was also the positive inducement of financial aid in the event that Libya behaved accordingly. Many countries can weather the storm in more ways in one, so it is helpful to have multiple incentives pointing the target country in the desired direction.
- There is also research to suggest that comprehensive sanctions have more of an impact on bilateral trade between the sanctioning and target countries than selective sanctions do (Yang et al., 2004).
- Have multilateral economic sanctions. If the United States unilaterally imposes economic sanctions, they are less likely to succeed than if multiple countries team up with the United States. Unless the United States has a monopoly in a certain market, the effect that economic sanctions will have will be less in comparison to multilateral sanctions. A 1998 report from the International Trade Commission admits that unilateral sanctions lack the transparency and discipline to be effective.