Governments often try to use economic power to put pressure on other countries for political purposes. This might take the form of economic aid, to encourage particular behaviour, or economic sanctions imposed to deter or punish behaviour that they do not want.
When politicians offer financial aid in return for a desired behaviour, its cost is visible in the budget of the donor country and must compete with other political priorities. The country that receives it is usually grateful, but the aid risks unintended consequences:
· Aid can damage the country which receives it, as discussed later in this chapter (3.5.8.1).
· Aid given to a corrupt regime might be used to buy arms, as reported by the BBC in an article entitled On the trail of Ethiopia aid and guns for example.
Economic sanctions are always unpopular in the country against which they are being applied, but they they can be popular in the country that imposes them because they send a strong political message. They can take various forms, including:
· banning the sale of some goods and services to the target country, which harms the country’s exporters (and which would be ineffective unless other countries imposed similar measures);
· refusing to buy from the target country, which conflicts with the regulations which protect free trade unless formal permission has been given (3.5.4.5);
· denying it access to financial markets, affecting its ability to borrow and to service its debts.
These measures all put pressure on the country concerned by harming its economy. They give their initiators a sense of ‘having done something’, but they are not costless. In a free market, trade patterns settle into a pattern which benefits both the buyer and the seller – so sanctions have an economic impact on both countries as they struggle to adjust. This is very visible in the example of the economic sanctions against Russia, to put pressure on it when it invaded Ukraine; Sky News described these as “an invisible parallel conflict”, observing that “never before have such measures been imposed in tandem, at such speed, and upon such a significant economy”. Prices rose sharply in both Russia and the West.
It is less clear whether the political outcome in the target country matches the published intention. It is too early at the time of writing to predict what effect the current sanctions against Russia will have, but the contrasting effects of sanctions against South Africa and against Iraq in the 1990s illustrate some of the issues.
Economic sanctions on South Africa were widely regarded as having successfully contributed towards bringing about an end to apartheid. This view has been challenged, though, in a paper Sanctions On South Africa: What Did They Do?, which concluded that their role “was probably very small…their principal effect was probably psychological”. South Africa’s economy survived the pressure, by vigorously developing its own industry and by finding ways around the sanctions. A New York Times article, South Africa Sanctions May Have Worked, at a Price, commented:
“In hindsight, few now question that the sanctions had powerful consequences, but there is no consensus that the results were quite what the sponsors intended.”
The UN High Commissioner for Human Rights produced a report, The Human Rights Impact of Economic Sanctions on Iraq, that described the unintended consequences of sanctions:
· They had a very adverse impact on the health and economic well-being of the population.
· They gave the regime a financial windfall in exploiting the shortages.
As observed in Chapter 3 of a subsequent Parliamentary report, Economic Affairs - Second Report:
“When economic sanctions are relatively weak in their economic effects, they can have the overall net effect of strengthening the target regime by legitimizing it, by strengthening its control command over resources, or both.
…In the case of Iraq, the most important concessions were produced not by sanctions alone but by sanctions and force combined”.
The South African sanctions appear to have worked (or at least may have helped) because they put pressure on politicians who were able to provide the desired response. In Iraq there was no mechanism by which the sanctions could have directly produced the desired result because the people were unable to put pressure on the regime – as is also the case under Russia’s current authoritarian regime.
Simon Jenkins argued that there is no example of successful economic sanctions, in an article, Sanctions are a war waged by cowards. They strengthen the power of governments which have been targeted, by giving them someone to blame for their economic woes. As reported in the Irish Times, for example, Mugabe blames sanctions for Zimbabwe problems; this ready-made excuse deflected criticism of his economic mismanagement.
(This is an archived page: a later version than the one published in Patterns of Power Edition 3a. The latest versions are at book contents).