3.3.7.2 International Economic Inducements and Sanctions

Governments try to use economic power to put pressure on other countries for political purposes.  When they offer financial inducements in return for a desired behaviour, they risk 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 can be thought of as negative inducements, and they seem to be popular with governments.  They conflict with the regulations which protect free trade (3.5.4.5), so there is usually a need to obtain the agreement of other countries – without which they would be ineffective anyway.  They can take various forms, including:

  • Banning the sale of some goods and services to the target country;
  • Refusing to buy from it;
  • Denying it credit;
  • Denying it economic aid.

Undeniably, these measures all place pressure on the country concerned and have an effect on its economy.  They can all, therefore, be classified as economic sanctions: political pressure applied by economic means.  They give their initiators a sense of ‘having done something’, which might be popular in their domestic political situations, but it is less clear whether the political outcome in the target country matches the published intention.  Two contrasting examples illustrate the uncertainty of the effects of sanctions: against South Africa and against Iraq in the 1990s.

Economic sanctions on South Africa were widely regarded as having successfully contributed towards bringing about an end to apartheid.  This view has been challenged, 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 a group of people 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.

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.

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