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Tue April 29, 2014
More Sanctions Imposed On Russia, But To What End?
Originally published on Tue April 29, 2014 4:43 pm
The U.S. and European Union are adding new names to the sanctions list, to protest Russia’s interference in the political turmoil in Ukraine.
But Bryan Early argues that economic sanctions often fail. He tells Here & Now’s Jeremy Hobson that sanctions imposed by the U.S. on a particular entity or country can harm American businesses.
And then there’s the case of North Korea. It’s isolated by the U.S., but plenty of other countries will to do business with it.
- Bryan Early, assistant professor at State University of New York in Albany. He’s director of the university’s Project on International Security, Commerce, and Economic Statecraft and author of the forthcoming book “Busted Sanctions: Explaining Why Economic Sanctions Fail.”
JEREMY HOBSON, HOST:
It's HERE AND NOW. Today the European Union added 15 people to its sanctions list following a move yesterday by the U.S. to protest Russia's interference in Ukraine. But what do sanctions accomplish? Joining us now is Bryan Early, assistant professor at State University of New York in Albany and director of the Project on International Security, Commerce, and Economic Statecraft.
Professor, you have said these latest sanctions are not game-changers. Why not?
BRYAN EARLY: I don't think they're game-changers because they're still targeting a fairly limited number of companies and a fairly limited number of individuals. If you look at some of the things that the Russian government had put into place, like the 2013 law on foreign accounts. They've actually taken measures to limit the exposure of Russian officials to having their foreign assets seized by putting prohibitions on foreign officials holding foreign bank accounts.
So while they're widening the circle of individuals within Russia that are being targeted, I think that the vulnerability of the elites within Russia, at least in terms of twisting their arms enough to actually have a significant effect on Russian policy, I just don't think these sanctions are going to have that large of an impact.
HOBSON: Well, do you think it makes sense to do these very targeted sanctions against individuals as opposed to larger sanctions that would either cover entire sectors of the economy in Russia or the country in general?
EARLY: Well, there are a number of findings that have come out of the scholarship on the effectiveness of economic sanctions, and one of the most consistent indicators of whether or not sanctions will be effective is the total amount of cost that they impose against the states they target. So if we really want these sanctions to be effective in changing Russian behavior, we have to be prepared to really impose a high degree of cost upon the Russian government.
Now part of the problem with doing that is that economic sanctions are double-edged swords. When we impose policies that are costly on the Russians, they are also going to be policies that are costly for American businesses and the American economy, as well.
HOBSON: Because there are two sides to every business transaction.
EARLY: You are absolutely correct. So when we cut off business that's profitable for American firms to be able to conduct with Russia, yes it hurts our Russian counterparts, but it will also hurt American businesses at home, and I think that's why the U.S. Chamber of Commerce has kind of cautioned U.S. policymakers about imposing really stringent sanctions.
HOBSON: And if you look at the Treasury Department's website, you will see all of the countries around the world that have sanctions against them right now - Burma, Belarus, Iraq, Lebanon, Iran and North Korea. Those are some - those are a couple of big ones right there. I want you to talk about what has worked and what hasn't worked in those places. Let's start with North Korea because there's even today questions about whether they're going to test a nuclear weapon again, something that sanctions were supposed to deter them from doing.
EARLY: Well, one of the challenges the U.S. government has had is as you noted, it has sanctions against so many different countries and parties around the world. And I think that one of the practical challenges that this creates for the U.S. government is monitoring and then enforcing all of those sanctions. And I also think it creates a compliance problem for U.S. firms in being able to keep track of all of the parties that are subject to sanctions.
One of the things that I explore in my new book about why economic sanctions so often fail is that when the U.S. government imposes sanctions, it often creates commercial opportunities for firms in foreign countries to take advantage of the countries that the U.S. is no longer doing business with and to trade in place of American firms.
The other flip side of that is that U.S. companies have actually gotten very savvy. And in the cases when the U.S. government isn't actively monitoring or enforcing some of the sanctions that they have on the books, U.S. companies do a cost-benefits analysis and try to find ways of circumventing U.S. sanctions and continuing to do business with sanctioned countries and sanctioned entities, oftentimes through using foreign subsidiaries in third-party countries or finding partners in third-party countries that they can trade with first, and that will turn around and resell the U.S. goods to the country the U.S. government has sanctioned.
HOBSON: Or you could just have a country like North Korea that is simply not persuaded that the sanctions are enough of a problem that they shouldn't pursue a nuclear program.
EARLY: Yes, and that's part of the issue is that you have some cases where the political issue that's at stake are such that sanctions, almost no matter, even if you impose a full embargo if you're a country like the United States, it's not going to change the political calculus of the leadership. In the case of North Korea, the Chinese government has provided the North Korean government with substantial aid and become a real major trade partner for North Korea as the North Korean government has become further isolated from trade with the West and even the aid sources that it had grown reliant upon during the 1990s.
HOBSON: It's a lot harder for the sanctions to be effective if there's another country that's not doing them.
HOBSON: What about Iran? This is a place where the economy really has been crippled by sanctions not just from the U.S. but other countries, as well. Have sanctions worked in Iran?
EARLY: Well, we've had sanctions in various levels of strength against Iran since 1979. And I would say that for a large part of those sanctions' existence, they weren't more effective. I mean, the drive towards Iran to move ahead with its nuclear program occurred during U.S. sanctions. I think that in past approximately five years, the U.S. sanctions have really started to have a lot more bite.
The U.S. government actually in this case has started to really stringently enforce it. Sanctions really active seek the compliance of firms and foreign banks, and then they actually were really successful in getting the support of the countries within Europe onboard for the sanctions. So I would agree with your assessment that economic sanctions against Iran have been much more effective at imposing the real strong types of economic costs within Iran that have gotten them to the negotiating table.
And I think the ultimate question is, though, sanctions aren't going to enough to get Iran to completely give up on their ability to possess nuclear capabilities, but I think it's got them into a place where they're much more willing to strike a deal that they otherwise wouldn't have a number of years ago.
HOBSON: Well, and it sounds like you're saying sanctions alone are not going to convince Russia to do what the United States would like.
EARLY: Sanctions alone probably aren't going to compel Russia to do everything that the United States likes. I don't think sanctions, for example, are going to get the Crimea back. But I think that the goal of the economic sanctions that have been imposed are about raising the costs for Vladimir Putin and Russian government in potentially escalating the situation or expanding its efforts to regain territories and that it's not going to provide an overarching solution to the situation, but it might allow for political circumstances that are more favorable, I guess, to reach some sort of settlement to calm the situation down.
HOBSON: Bryan Early is assistant professor at the State University of New York in Albany and, by the way, author of a book called "Busted Sanctions: Explaining Why Economic Sanctions Fail." And it sounds like you've made your case that they don't always work.
EARLY: Yes, I think that sanctions are an important tool of U.S. foreign policy. I just think that foreign policy makers need to have a pretty realistic sense of what they can do and what they can't do.
HOBSON: Bryan, thanks so much.
EARLY: Thank you.
HOBSON: And you can let us know what you think of Bryan's idea that sanctions don't always work. Do you think they're valuable? Hereandnow.org. Transcript provided by NPR, Copyright NPR.