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Do economic sanctions work?

Jo Harper
September 14, 2020

As Berlin mulls sanctions against Russia over the Navalny poisoning, DW looks into how effective they are at resolving international crises. The picture is far from positive.

Russland | Deutschland | Handschlag Merkel und Putin
Image: picture-alliance/AP Images/P. Golovkin

Peter Altmaier is skeptical that sanctions work, ever. Asked about possible German sanctions against Russia, he replied that he couldn't think of a single example in which they had caused a country to change its behavior. But how valid is the German Economy Minister's bold assertion as Berlin mulls imposing sanctions on Russia over the Navalny affair?

Sanctions — war by others means, to rephrase the famous Prussian general Carl Von Clausewitz's aphorism a little — vary widely and measuring their success is notoriously difficult.

But, put simply, "[they] are typically an instrument of coercion that is supposed to be less harmful to the target and maybe less costly to the initiator than outright military conflict," Matthias Neuenkirch, professor of economics at the University of Trier, tells DW. 

Recent years have seen a proliferation of use and threatened use of sanctions. Google "sanctions" and any of Turkey, Iran, Russia, Belarus, North Korea, Cuba, Venezuela, Syria and you will see for yourself.

According to Global Sanctions Database (GSDB) data, European countries are the most frequent users and African countries the most frequent targets. They are also becoming more diverse, with the share of trade sanctions falling and that of financial or travel sanctions rising, GSDB found.

UN-Sicherheitsrat New York 2016 | Waffenembargo Libyen
It often falls to the UN Security Council (pictured) to impose sanctions.Image: Imago Images/Xinhua

The UN Security Council has imposed sanctions over 20 times since the end of the Cold War, mostly in cases where diplomacy has already failed and military options have not been viable. The EU has levied sanctions over 30 times, in addition to those mandated by the UN, says New York-based think-tank the Council on Foreign Relations. The US, meanwhile, uses economic and financial sanctions more than any other country, it found.

Jaw jaw not war war

Reluctance to become involved in foreign conflicts is a key factor in the growing popularity of sanctions. "Military action is increasingly unpopular and in many ways ineffective in a modern legitimacy-oriented world, and words don't work with hard regimes, so something in between these is necessary. What else is there?" Jeremy Greenstock, a former UK ambassador to the UN, told the BBC.

"We can also see that especially Western democracies have become less and less motivated to engage in wars," Neuenkirch agrees. "This might have to do with the media delivering colorful pictures into our homes that show an unromantic picture of war." 

Others, like Janis Kluge from the German Institute for International and Security Affairs (SWP) in Berlin, see sanctions as a key element of the 'do something' strategy of international crisis management, performing an alibi function. "Sometimes the declared goal might also not be the real goal," Neuenkirch adds.

How effective?

"Though the US and EU have become increasingly sanctions-happy, there is no indication that sanctions are more effective today," Dursun Peksen, a professor at the University of Memphis, tells DW.

He says sanctions, on average, work less than about 40% of the time, even according to the most optimistic estimates. They are even less effective against autocratic states, but are convenient in that their use does not necessarily stir any major public and media backlash against leaders in the US and Europe, he believes.

Deutschland Mukran | Rohre für Nord Stream 2 Pipeline
The Navalny affair could prompt Germany to pull out of the Nord Stream 2 pipeline projectImage: Imago Images/D. Sattler

Sanctions have also been criticized on humanitarian grounds, as they negatively impact a nation's economy and may cause collateral damage to ordinary citizens. Branko Milanovic, an economist at the City University of New York, says sanctions against countries often increase inequality because they tend to hit hardest those who have the least power and are the most economically vulnerable.

How to improve effectiveness

Dan Drezner, a professor of international politics at the Tufts University School of Law and Diplomacy, has suggested four key elements that can help sanctions succeed. The first is that demands are specific and clearly articulated. The second is that it helps if you are allies in some way with the country that you are sanctioning or at least that you do some business with that country. Number three is to go after the money, not the products.

Trade-based sanctions, where a particular product is sanctioned, such as oil or natural gas, are far less effective than cutting a country off from the US financial system. Number four, he argues, is to make sure you've got other countries on board.

German sanctions on Russia

"I hope the Russians don't force us to change our position on Nord Stream 2," Heiko Maas, German Minister for Foreign Affairs said, referring to pressure within Germany and from the US and some Eastern European states to scrap the huge gas pipeline project.

Do sanctions work?

This is what Gabriel Felbermayr from the Kiel Institute calls "the threatening period." Felbermayr told DW that the best sanctions are those that are not used as there is a change in behavior. But it remains unclear if Drezner's first rule of successful sanctions will be met, i.e., if the goals are clear, transparent and clearly articulated. Sanctions could be imposed, for example, without threatening the project in which German firms have a large stake.

"Russia was sanctioned, among other things, for annexing Crimea. To this day, there has been no progress in resolving this issue despite the sanctions," says Neuenkirch. The irrationality of sanctions could be seen when Russia imposed its "retortive sanctions" on EU food products, he adds.

"You impose sanctions on somebody in order to reduce their welfare despite the fact that it reduces yours as well. This is a deeply irrational move since nobody can rationally wish to be worse-off, " Milanovic says.

Süddeutsche Zeitung noted that Merkel's condemnation of Navalny's poisoning would make it harder to justify her support for Nord Stream 2. "The government waved goodbye to a fiction," the newspaper's correspondent Daniel Brössler commented. "A fiction that made it possible to slap Russia with sanctions one day and court it as a business partner the next."

"Germany's diplomatic approach to Russia has run out of road this week," said Roderich Kiesewetter, a member of Merkel's Christian Democratic Union (CDU). "For years, we have misunderstood the game of chess that the Kremlin has been playing with us," Kiesewetter told the Observer newspaper. "And now we cannot pull the sanction strings any tighter without garroting ourselves."