Analysis

Do sanctions work?

Congress recently slapped new sanctions on Russia, North Korea, and Iran. How effective are such measures?

Congress recently slapped new sanctions on Russia, North Korea, and Iran. How effective are such measures? Here's everything you need to know:

How do sanctions work?They are a means of squeezing countries or individuals economically in order to coerce them into changing their behavior. Imposed by individual governments such as the U.S. and by multinational bodies like the United Nations and European Union, sanctions take several different forms, including travel bans, asset freezes, arms embargoes, foreign aid reductions, and trade restrictions. They generally target rogue nations or individuals for destabilizing behavior: building a nuclear program (Iran, North Korea); invading a foreign country (Russia); or committing gross human rights abuses (Sudan). Countries or firms that violate these sanctions — by selling weapons to a nation under an arms embargo, for example — are fined or sometimes even sanctioned themselves. These diplomatic tools do cause significant economic damage to the targeted nation, especially to its citizens, but they rarely succeed in forcing authoritarian leaders to make lasting policy or behavior changes. "All too often," says Council on Foreign Relations president Richard Haass, "the economic, humanitarian, and foreign policy costs of U.S. sanctions far outweigh any benefits."

How long have sanctions been used?Sanctions date to at least 432 B.C., when Athens imposed a trade embargo on neighboring Megara. Multilateral sanctions are a more recent phenomenon: The U.N., which by dint of its 193-nation membership wields far more sanctioning power than any one country, enshrined the practice in its charter in 1945, but only started using them in earnest in 1990. Since then, the Security Council has imposed sanctions more than 20 times, targeting such countries as Iraq, Liberia, and the former Yugoslavia. In the 1990s, the Clinton administration also started imposing "smart sanctions" on individuals and companies rather than entire countries. After 9/11, the U.S. and its allies expanded their use of sanctions to disrupt the financial infrastructure of international terrorism — shutting out rogue banks from the global financial system, for example. Today, the U.S. has sanctions in place relating to more than 20 issues, including drug trafficking, terrorism, nuclear proliferation, and human rights abuses.

Do sanctions actually work?Sometimes. U.N. and U.S. sanctions were definitely a factor in Libyan leader Moammar Gadhafi's decision to dismantle his weapons of mass destruction program in 2003. More recently, the multilateral sanctions imposed on Iran by the U.S., U.N., and EU helped bring Tehran to the negotiating table over the country's nuclear program — albeit in conjunction with the overhanging threat of military action. But these relative successes have been the exception rather than the rule. Nicholas Burns, a senior diplomat under President George W. Bush, says that over the past 25 to 30 years there have been "very few examples where sanctions have actually succeeded" — that is, forced a country to change an objectionable policy.

Why is that?In large part because sanctions rarely result in real personal pain for the targeted country's leaders and top officials. The Russian economy, for example, has clearly been hurt by the sanctions imposed on the country after its 2014 annexation of Crimea: Foreign direct investment plunged from $69 billion in 2013 to just $6.8 billion in 2015. But President Vladimir Putin has continued to live like royalty, and hasn't returned Crimea to Ukraine or halted his cyberwarfare; indeed, he has used his conflict with the West to boost Russian nationalism and his own popularity. Kim Jong Un is another example: In defiance of the multilateral sanctions imposed on him and his starving country, the North Korean dictator has pressed forward with his nuclear and intercontinental ballistic missile programs. In most sanctioned countries, leaders encourage the population to blame any hardships on whoever is imposing the sanctions, which can actually harden their support base. Cuba is the best example: Since the U.S. imposed a trade embargo on the island nation in 1960, the Castro regime has survived by using the U.S. as a scapegoat for its anemic economy and poor standard of living.

How do countries get around sanctions?Primarily by taking their trade or assets elsewhere. When sanctions are imposed only by the U.S. or the EU — and not the U.N. — the targeted country or individual can still deal with other nations. North Korea has even found a number of ways to circumvent U.N. sanctions, such as using front companies to bypass arms embargoes, and exploiting a loophole to export coal to China. Besides, sanctions are only effective if they are rigorously enforced. For some of the U.N.'s more impoverished members, selling goods to sanctioned countries can be a risk worth taking; for developed nations, enforcement often butts up against other geopolitical considerations. The U.S. has fined European banks $12 billion for laundering money for Iran, for example, but hasn't demanded a cent from Chinese institutions doing the same for North Korea. Despite the strategy's shortcomings, diplomats still consider imposing sanctions better than doing nothing. "Military action is increasingly unpopular, and words don't work with hard regimes," says Sir Jeremy Greenstock, a former British ambassador to the U.N. "So something in between these is necessary. What else is there?"

The Magnitsky ActThe bipartisan 2012 Magnitsky Act may not have changed Russia's behavior, but it sure did get its ruling elite's attention. The legislation is named after Sergei Magnitsky, a 35-year-old Russian lawyer who in 2007 uncovered a $230 million tax fraud scheme involving top Kremlin officials. Magnitsky was arrested and imprisoned in 2008; he died a year later, chained to his bed, after being beaten by guards and denied medical treatment for pancreatitis and gallstones. Congress sanctioned the Russian officials responsible, specifically targeting their ability to travel abroad and move money out of their country. This infuriated members of Putin's inner circle, who were accustomed to sending family and the fruits of corruption to safe havens abroad. "Once your name is on a Treasury sanctions list, you cannot open a bank account anywhere in the world," explains Bill Browder, CEO of Hermitage Capital Management, who lobbied for the act. "You're effectively a financial pariah." A furious Putin responded by canceling a program through which American families adopted Russian children. In meetings with Trump campaign associates last year, Russians with Kremlin connections repeatedly brought up the Magnitsky sanctions and lobbied for them to be removed.

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