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Between war and Commerce: economic sanctions as a tool of statecraft

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BaldwinDavid A.. Economic Statecraft. Princeton: Princeton University Press, 1985.
HufbauerGary Clyde and SchottJeffrey, assisted by Kimberly Ann Elliott . EconomicSanctions Reconsidered: History and Current Policy. Washington, D.C.: Institutefor International Economics, 1985.

Published online by Cambridge University Press:  22 May 2009

Stefanie Ann Lenway
Stefanie Ann Lenway
Affiliation:
Assistant Professor of Strategic Management at the University of Minnesota, Minneapolis.
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Type
Review Essay
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International Organization , Volume 42 , Issue 2 , Spring 1988 , pp. 397 - 426
Copyright
Copyright © The IO Foundation 1988

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References

I would like to thank John Aldrich, Philip Bromiley, Beverly Crawford, Judy Goldstein, Carol Jacobson, Brian Job, Peter Katzenstein, Steve Krasner, Ian Maitland, Tim McKeown, Michael Mastanduno, Craig Murphy, Dennis Quinn, Peter Ring, and two anonymous reviewers for their thoughtful comments and suggestions.

1 This article focuses on economic sanctions because both books reviewed here address this issue. In addition to economic sanctions, David Baldwin also analyzes international trade and foreign aid as instruments of economic statecraft. Baldwin considers the utility of both negative and positive sanctions in his analysis, while Hufbauer and Schott concern themselves entirely with an analysis of negative sanctions.

2 Baldwin, David, Economic Statecraft (Princeton, N.J.: Princeton University Press, 1985), p. 68Google Scholar.

3 Knorr, Klaus, The Power of Nations: The Political Economy ofInternational Relations (New York: Basic, 1975), p. 152Google Scholar.

4 Ibid., p. 152.

5 Ibid., p. 154.

6 Ibid., p. 155.

7 Strack, Harry R., Sanctions: The Case of Rhodesia (Syracuse, N.Y.: Syracuse University Press, 1978), p. 238.Google Scholar.

8 Washington Post, 15 November 1982, p. A15.

9 Washington Post,14 November 1982, p. A10.

10 Baldwin, Economic Statecraft, p. 19.

11 Hufbauer, Garry Clyde and Schott, Jeffrey, Economic Sanctions Reconsidered: History and Current Policy (Washington, D.C.: Institute for International Economics, 1985), p. 1Google Scholar.

12 Hufbauer, and Schott, , Economic Sanctions Reconsidered, p. 12Google Scholar.

13 Baldwin, , Economic Statecraft, p. 4Google Scholar.

14 Ibid., p. 69.

15 Hufbauer, and Schott, , Economic Sanctions Reconsidered, p. 12Google Scholar.

16 Ibid., p. 10.

17 Baldwin, , Economic Statecraft, p. 9Google Scholar.

18 Ibid., p. 58.

19 Ibid., p. 16.

20 Baldwin argues that Lasswell, Harold D. and Kaplan's, Abrahamanalysis in Power and Society: A Framework for Political Inquiry (New Haven, Conn.: Yale University Press, 1950)Google Scholar is the first of the modern studies on power. In his discussion of the social power literature, Baldwin also includes: Simon, Herbert, Models of Man (New York: Wiley, 1957)Google Scholar; March, James G., “An Introduction to the Theory and Measurement of Influence,” American Political Science Review 49 (06 1955), pp. 431–51CrossRefGoogle Scholar; Dahl, Robert A., “The Concept of Power,” Behavioral Science 2 (07 1957), pp. 201–15CrossRefGoogle Scholar; Nagel, Jack H., “Some Questions about the Concept of Power,” Behavioral Science 13 (03 1968), pp. 129–37CrossRefGoogle Scholar; Frey, Frederick W., “On Issues and Nonissues in the Study of Power,” American Political Science Review 65 (12 1971), pp. 1081–1101CrossRefGoogle Scholar; and Oppenheim, Felix E., Political Concepts: A Reconstruction (Chicago: University of Chicago Press, 1981), pp. 1–52Google Scholar

21 Baldwin, , Economic Statecraft, p. 9Google Scholar.

22 Ibid., pp. 13–14.

23 Ibid., p. 17.

24 Ibid., p. 22.

25 Ibid., p. 22.

26 Ibid., p. 22.

27 Ibid., p. 23.

28 Ibid., p. 24.

29 Ibid., p. 24.

30 Ibid., p. 63.

31 Ibid., p. 107.

32 Hufbauer, and Schott, , Economic Sanctions Reconsidered, p. 32Google Scholar.

33 Ibid., p. 33.

34 Ibid., p. 33.

35 Ibid., p. 32.

36 Ibid., p. 29.

37 The variables that they consider to be significant (those that have a t-statistic greater than one) include: a time trend, a dummy variable that reflects World War 1 and World War II, a dummy variable that reflects whether the target country receives significant support from third countries, an index of prior relations between sender and target countries, an index of the political and economic health and stability of the target country, presanctions trade linkage between target and sender expressed as a percentage of the target country's total trade (a dummy variable to indicate whether the sender country's GNP is between 10 and 100 times greater than the target country's GNP), and a dummy variable that indicates whether the sender country imposes export controls. The variables that are not significant at this level include: a dummy variable that indicates whether the episode involves a modest policy change or destabilization, a dummy variable that indicates if covert action is used in the episode, a dummy variable that indicates military force is used in the episode, an index of international cooperation, a variable that indicates the length of the sanctions episode in years, the cost of sanctions to the target country as a percent of GNP, a dummy variable that indicates whether the sender country imposes import controls, a dummy variable to indicate whether the sender country imposes financial controls, and an index of the cost of sanctions to the sender country. They report that the equation in its entirety is significant.

38 They note that the explanatory power of the regression equation is not high. All the variables taken together in the regression explain 21% of the variance in the outcomesof sanctions episodes. They may also overstate the number of variables that are significant because they consider those variables to be significant that have a t-statistic that is greater than one. At this significance level, they have a one-in-three chance of finding a significant relationship in totally random data.

39 Five cases were counted twice in the regression analysis because the source country had multiple goals.

40 Baldwin, , Economic Statecraft, p. 130Google Scholar.

41 Hufbauer, and Schott, , Economic Sanctions Reconsidered, p. 64Google Scholar.

42 Baldwin, , Economic Statecraft, p. 108Google Scholar.

43 Hufbauer, and Schott, , Economic Sanctions Reconsidered, p. 9Google Scholar.

44 Baldwin, , Economic Statecraft, p. 132Google Scholar.

45 Hufbauer and Schott do include some sanctions episodes that do not involve major world powers in their case analyses. These are: Spain v. UK (1954–84: Gibraltor); Indonesiav. Netherlands (1957–62: West Irian); Nigeria v. Biafra (1967–70: Civil War); Canada v. India (1974–76: Nuclear Explosion); Canada v. Pakistan (1974–76: Nuclear Safeguards); Canada v. Japan and EC (1977–78: Nuclear Safeguards); South Africa v. Lesotho (1982–83: Expel Dissident Refugees); Australia v. France (1983: Nuclear Weapons Testing).

46 Baldwin, , Economic Statecraft, pp. 68–69Google Scholar.

47 Hufbauer, and Schott, , Economic Sanctions Reconsidered, p. 9Google Scholar.

48 Kagan, Donald, The Outbreak of the Peloponnesian War (Ithaca, N.Y.: Cornell University of Press, 1969), p. 241Google Scholar.

49 Hufbauer, and Schott, , Economic Sanctions Revisited, p. 4Google Scholar.

50 Aristophanes, , The Archarnians in Eleven Comedies (New York: Liveright, 1976), p. 112Google Scholar. (The translator is anonymous.).

51 Kagan, , The Outbreak of the Peloponnesian War, p. 271Google Scholar.

52 Baldwin, , Economic Statecraft, p. 152Google Scholar.

53 Ibid., p. 153.

54 Ibid.

55 Kagan, , The Outbreak of the Peloponnesian War, p. 268.Google Scholar.

56 Ibid., p. 269.

57 Baldwin, , Economic Statecraft, p. 154Google Scholar.

58 Ibid., p. 154.

59 Baer, George, Test Case: Italy, Ethiopia, and the League ofNations (Stanford, Calif.: Hoover Institution Press, 1976), p. xiiiGoogle Scholar.

60 Baer, , Test Case, p. 7Google Scholar.

61 Hufbauer, and Schott, , Economic Sanctions Reconsidered, p. 145Google Scholar.

62 Doxey, Margaret P., Economic Sanctions and International Enforcement (New York: Oxford University Press, 1980), p. 54CrossRefGoogle Scholar.

63 Baer, Test Case, chaps. 5 and 6.

64 Baldwin, , Economic Statecraft, p. 160Google Scholar.

65 Ibid.

66 Ibid., p. 282.

67 Crawford, Beverly and Lenway, Stefanie, “Decision Modes and International Regime Change: Western Collaboration on East-West Trade,” World Politics 37 (04 1985), p. 398CrossRefGoogle Scholar.

68 Ibid., pp. 398–99.

69 Baldwin, , Economic Statecraft, p. 289Google Scholar.

70 Hufbauer, and Schott, , Economic Sanctions Reconsidered, p. 701Google Scholar.

71 Ibid.

72 Ibid., p. 710.

73 Ibid., p. 45.

74 Ibid., p. 57.

75 Ibid., p. 64.

76 Ibid., p. 68.

77 Ibid.

78 Gilpin characterizes the stability of the international political system as “largely determined by its capacity to adjust to the demands of actors affected by changing political and environmental conditions.” There is no consensus in the literature about whether a specific structure contributes to the stability of the system. Instead, Gilpin argues that “the most destabilizing factor is the tendency in an international system for the power of member states to change at different rates because of political, economic, and technological developments.” Gilpin, Robert, War and Change in International Politics (New York:Cambridge University Press, 1981) p. 13CrossRefGoogle Scholar. The importance of stability to the argument here is that when the international political system is unstable, the imposition of stringent economic sanctions by a major actor may be enough to throw it out of equilibrium and trigger a war. To avoid military conflict, states may choose to implement sanctions that will not undermine thestability of the international system and that, as a result, are not effective in terms of influencing the behavior of the target state. In contrast, in a stable political system, economic considerations may dictate the intensity of economic sanctions.

79 These are necessary, but not sufficient, conditions for sanctions to be effective. If source states are willing to embargo the sale of goods that they believe would effectively reduce the growth of the target state's economy, sanctions may have a chance of coercing the target to change its policies to conform to those desired by the source. Studies by Johan Galtung and Harry R. Strack have shown, however, that stringent sanctions can backfire. Galtung in his analysis of sanctions against Rhodesia, concludes: “When hit and hurt it [the target] reacts—like most organisms—in such a way as to try to undo the damage and to restore the status quo ante. In so doing, the target society may even be partly strengthened because of the hidden forcesthat are activated. The goals of the system may not only be maintained but even be reinforced; the sending nation(s) not only may fail to achieve their goals, but may even contribute to exactly the opposite of what they hoped for.” Galtung, Johan, “On the Effects of International Economic Sanctions,” World Politics 19 (04 1967), p. 409CrossRefGoogle Scholar. Yet, in the cases already discussed, in which Baldwin's finds the influence base was economic (i.e., the source state tried to achieve policy goals through imposing economichardship on the target), the political context is important to understand the intensity of the imposed sanctions and shows when sanctions can be expected to be an effective instrument of foreign policy.

80 Baldwin, , Economic Statecraft, p. 112Google Scholar.

81 Ibid., p. 113.

82 Ibid., p. 157.

83 Hufbauer, and Schott, , Economic Sanctions Reconsidered, p. 10Google Scholar.

84 These preferences are relevant primarily if both the source and the target are relatively large states. If a dispute erupts between a large and a small state, stringent sanctionsare unlikely to trigger a war or cost much in terms of lost business to the source. In this case, the source could impose stringent sanctions even if its first choice would be to avoid war or to minimize the economic impact of sanctions on its domestic economy. Thus, if sanctions are imposed by a large state on a small state, they could be sufficiently stringent to be effective because both the political and economic cost of the sanctions to the source would not be great. The interesting political problems, especially those raised by Baldwin, involve sanctions among large states because, in the political relations among large states, economic statecraft could potentially substitute for devastating military conflict.

85 By “commercial,” I mean the impact that sanctions have on the profitability of private firms in the source state.

86 Baldwin, , Economic Statecraft p. 129Google Scholar.

87 Hufbauer, and Schott, , Economic Sanctions Reconsidered, p. 1Google Scholar.

88 Ibid., p. 65.

89 Baldwin, , Economic Statecraft, p. 372Google Scholar.

90 Ibid., p. 373.

91 Hufbauer, and Schott, , Economic Sanctions Reconsidered, pp. 86–88Google Scholar.

92 Ibid., pp. 82–90.

93 Ibid., p. 91.

94 For a discussion of the domestic politics involved in the Soviet trans-Siberian pipeline case, see Jentleson, Bruce, Pipeline Politics (Ithaca, NY: Cornell University Press, 1987)Google Scholar.