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Why Countries Use Economic Sanctions to Prevent Conflict

White House press conference
U.S. Secretary of State Mike Pompeo and Secretary of the Treasury Steven Mnuchin participate in a press briefing at the White House Jan. 10, 2020 to discuss new sanctions imposed against Iranian officials. Alex Wong/Getty Images

In early January 2020, as tensions between the U.S. and Iran that some feared would lead to war seemed to ease slightly, the Trump administration opted for an alternative to more missiles or bombs to attack Iran. Instead, President Donald Trump announced a set of "intensified" sanctions against eight senior officials in the Iranian regime and an array of Iranian steel, aluminum and copper producers.

The administration also targeted Chinese businesses that bought and transported the metals, including the owner of a ship that hauled steel slabs from Iran to China. (Here's a complete list of the targets.)

"As a result of these actions we will cut off billions of dollars of support to the Iranian regime, " the Treasury Secretary Steven Mnuchin said during a press briefing with Secretary of State Mike Pompeo Jan. 10, 2020.

If you follow the news about foreign policy, you may have seen or heard the ominous-sounding S-word before. But you might be wondering what are sanctions, anyway? How are they imposed? What are they supposed to accomplish? And do they really work?

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What Are Sanctions?

Basically, sanctions are a sort of economic version of bombs and bullets, designed to turn up the pressure on another country and its regime's leaders by hitting them in the wallet.

"Sanctions are any penalty or disruption in the normal economic relations between two countries," explains Ellen Laipson, director of the Master's in International Security degree program and the Center for Security Policy Studies at George Mason University's Schar School of Policy and Government. She's also a former vice-chair of the U.S. government's National Intelligence Council.

"Usually, sanctions are supposed to target a particular bad behavior or send a signal to an unfriendly country," Laipson says.

Sanctions often involve freezing any of the target's assets — such as real estate or funds in bank accounts — that happen to be inside the U.S., and threatening to punish any financial institution inside or outside the U.S. that does transactions for the adversary or helps in some other way. (Those sorts of actions were laid out in a June 2019 executive order on Iranian sanctions signed by President Trump.)

But as Laipson explains, sanctions also can take a variety of other forms as well, from interrupting international trade or closing a border to suspending arms sales. Sanctions can even be tailored to hit a specific industry or part of another nation's economy. Either way, it's a form of what's called coercive diplomacy.

Sanctions come down to this. "How do you get their attention so that they're feeling some pain, and give them incentives to change their behavior? "

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Who Has the Authority to Use Sanctions?

The U.S. president has sweeping authority to impose sanctions on other countries and leaders under the International Emergency Economic Powers Act of 1977, often referred to as IEEPA for short, which allows him or her to impose them "to deal with any unusual and extraordinary threat."

Congress also has the power to hit other nations and people with sanctions as well. Back in 2012, for example, legislators passed the Magnitsky Act to impose sanctions against the Russian Federation. (The law is named after a corruption-exposing lawyer named Sergei Magnitsky, who died in a Russian prison cell in 2009.) Congress imposed additional sanctions against Russia for its 2014 invasion of Ukraine, as detailed in this Congressional Research Service report.

Congress often resorts to sanctions to avoid having tensions with another country explode into armed conflict, Laipson says. "Congress often believes, let's go carefully up the escalatory ladder. Let's express our disapproval in a resolution. If they don't pay attention, we'll then threaten sanctions," she explains. "If they still don't pay attention, we'll impose sanctions. And then we'll impose more sanctions. It's a longer continuum from peace to war."

Either way, once sanctions are imposed, the Treasury Department's Office of Foreign Asset Control enforces the restrictions. Here's the lengthy list of U.S. sanctions programs currently in force, against countries ranging from Belarus to Zimbabwe.

Other countries can impose sanctions as well, though nobody utilizes the economic weapon as frequently as the U.S. does, according to Laipson. Instead, most only want to participate in multinational sanctions, such as those imposed by the U.N. Security Council, which have included economic and trade sanctions, as well as arms embargoes and travel bans. Since 1966, the U.N. has used such measures 30 times punishing regimes ranging from Apartheid-era South Africa to North Korea.

Iranian protesters
On the eve of new sanctions being imposed, Iranian protesters demonstrate outside the former U.S. embassy in the Iranian capital of Tehran on Nov. 4, 2018, marking the anniversary of its storming by student protesters that triggered a hostage crisis in 1979.
Majid Saeedi/Getty Images

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Do Sanctions Actually Work?

"There's always this range of opinion about whether sanctions work or not," Laipson says. "It depends on what your intentions were. If your intention was to punish, then just measuring the economic pain on another country is a way of saying the sanctions are working. If your intention is to truly change the behavior of the other country, you have to use a very different metric. And in that case, most sanctions fail. Because countries become resistant — they are willing to absorb the pain for nationalistic reasons. They don't want to concede to a more powerful country."

Instead of giving in, for example, a targeted nation may find another, more powerful nation to act as its patron. After the U.S. imposed a sweeping embargo on the communist regime of Fidel Castro in Cuba in 1960, the island nation relied upon trade with the Soviet Union, which for years bought Cuban sugar at five to six times the world market price as a way of tweaking the U.S., its Cold War adversary.

There's also increasing political pushback against the sort of sanctions that broadly target a nation's economy, out of concern that they punish the population rather than an adversarial government. As Laipson explains, that's led to a shift toward so-called smart or targeted sanctions, which might be designed to target a regime's leaders but allow the country to import needed medicines. Targeted sanctions might also include arms embargoes, financial sanctions on the assets of individuals and companies, travel restrictions on the leaders of a sanctioned state and trade sanctions on particular goods.

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