Why sanctions work

Expect autocratic regimes to resist foreign pressure more often than democracies. The small support base and the control over the redistribution of public resources enables most autocratic regimes to survive economic sanctions. They are able to keep their ruling coalition intact through the supply of selective inducements, such as access to scarce luxury goods, to their supporters in return for their loyalty to the regime.

Consider that rivals are more defiant against sanctions than allies. If countries are sanctioned by their rivals, they have less incentive to alter their behavior because of the assumption that future conflict with them is likely. This is reinforced by the negative domestic or international reputational effects that would follow from capitulating to rivals. Allies, on the other hand, are more willing to concede to avoid the escalation of the dispute that would further harm their strong strategic ties with sanctioning countries.

Anticipate that sanctions are less effective in achieving major policy objectives than modest ones. Coercive economic instruments work less often in achieving major policy objectives like military impairment or political regime change than achieving modest policy goals like releasing a political prisoner or resolving a minor trade dispute. The use of sanctions to achieve the ambitious goal of regime or leadership change might even backfire by inducing insecure leaders to become more authoritarian and use repressive means against the domestic opposition to cling to power.

Dursun Peksen is a professor of political science at the University of Memphis. Such flexibility is essential if the executive is to have the necessary flexibility to conduct foreign and defense policy and if sanctions are to contain exit strategies that can provide incentives to targets to change their ways. I would similarly welcome the many reporting requirements contained in the legislation for both the executive branch and the Congressional Budget Office at the time a sanction is initiated and at regular intervals thereafter; the more details contained in such reports the better.

Let me end with a few questions and suggested modifications of the proposed legislation. This is reminiscent of War Powers, and here, like there, I think it wrong to place the burden on those who would continue policy. I also worry about regular high-profile debates that could make it more difficult to modify existing policy.

I would instead put the emphasis on transparency and a requirement for serious reporting by the executive branch and congressional support agencies both prior to congressional action and at regular intervals thereafter.

The proposed waiver authority also introduces needed flexibility into the policy process. In order to increase prospects for passing reform legislation, it might be useful to introduce some mechanism by which Congress can challenge a waiver, possibly by joint resolution which, if vetoed by the President, could then be made to stand by an override.

Third, it is not obvious why compensation should be limited to the agricultural sector. Why not consider extending to firms and workers in other realms? Fourth and last, I would add the DCI to the Sanctions Review Committee as intelligence community assessments are sure to be central to the debate over projected and actual effects.

Thank you for this opportunity to appear before you and share my thoughts on this important set of policy issues. I look forward to any questions you might have. Related Books. Bucharest Diary By Alfred H. Transatlantic Relations By Xenia Wickett. Richard N. More on International Affairs. Play Audio. Horsley , and Shuxian Luo. Planet Policy Infrastructure in the developing world is a planetary furnace.

Jeffrey Ball. Post was not sent - check your email addresses! Sorry, your blog cannot share posts by email. As long as they do not violate WTO criteria and they do not , they are both reasonable and legitimate. What really matters, however, is whether they are effective, and to be effective politically they need to cause specifically targeted economic pain and, at the same time, not cause proportionate pain to the sanctioning states themselves.

As to this last criteria, there is no doubt that the consequences of sanctions for Russia will be much more significant than they will for either the European Union or the United States.

The restrictions on the supply of equipment, the freeze on new loans, and the cutting of ties with several Russian companies are unilateral Western actions that harm only Russia. More critically, European and American sanctions damage Russia in at least four ways, and all of these ways are gaining impact with the passage of time.

First, most painful to Russia are the financial sanctions. Russia throughout the s remained an economy with high inflation, and therefore with high interest rates. In such circumstances large Russian companies listed on foreign stock exchanges and showing healthy financial results easily obtained three- to ten-year loans from foreign banks at 3. The Western ban on issuing new loans to major Russian banks and a number of state-owned corporations has therefore put them in a very difficult position.

Lacking that option has caused a sharp decline in new investment; corporations have lined up to obtain loans from state reserve funds instead.

But the rates are high, the capital is limited, and they still need to buy dollars to repay their Western creditors. This made debt-servicing much more problematic; if recalculated into rubles, the foreign debt of Russian corporations and banks increased by This means that Russian companies will have no choice but to reduce investment even more dramatically in They will cut their workforce, too, while the government, forced to bail some of them out, will embezzle at least half of its reserves.

By next winter the government will face extremely limited elbow room for similar financial maneuvers. Second, the sectoral sanctions are having a very serious effect, as well. Throughout the s and s, Russia became seriously de-industrialized, and a large number of critical components and technologies now need to be imported.

In the space industry, for example, which is subject to the sanctions, every communication satellite consists of more than 60 percent imported elements. The share of imported electronics used in Russian military equipment exceeds 50 percent, too. The materials used in the semiconductor industry are 70 percent produced abroad. In fact, Russia will not be able to carry out its military sales contracts as soon as existing agreements expire. The country is also unable to import any modern military equipment, as the endgame over the French Mistral ships shows.

Most critically, almost all new Russian oil and gas fields have been put into operation with the use of technologies provided by companies like Halliburton or Schlumberger, which are now banned from participating in offshore Arctic drilling as well as in the extraction of shale gas.

All that Russia has managed to achieve so far is to reach oil and gas production levels common for the RSFSR in the late s. Russia, with its dwindling deposits put into operation back in the s and the s, desperately needs new resources, but their development is profoundly jeopardized by the sanctions. There will thus be a noticeable reduction by at least 6—10 percent in oil and natural gas production by Given that oil- and gas-connected incomes accounted for nearly 52 percent of Russian Federal budget revenues in , this is of extreme significance.

On the one hand, the appreciation of the dollar and the euro against the ruble has caused higher inflation. In Russia imports account for 40 percent of all foodstuffs, 60—70 percent of clothing and footwear, 75 percent of medical equipment and medicines, and close to percent of electronic hardware, office equipment, and mobile phones, and the depreciation of the national currency immediately provokes a rise in prices.

Local producers, using the situation to their advantage, also raise prices in line with those of the imported goods. The doubling of the dollar exchange rate from July to December has not yet led to a proportionate increase in prices because the conclusion and execution of contracts require four to six months to play through the system, but beginning in February the effect will become obvious.

Inflation in cannot stay below 20 percent. Nor will real disposable incomes increase. So the government, as Putin emphasizes, will meet its obligations to state employees. But these employees will be paid the same number of now-devalued rubles as last year, and they will not buy as much. The private sector, faced with a full-scale crisis, will not raise wages.

Together this portends a significant drop in living standards. By the end of this year, one can assume that this share will grow to at least 40 percent, which corresponds to the situation in Belarus in It is difficult to know whether all these trends will catalyze social protest in Russia—probably not.