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Economic Sanctions Are Overrated

An insightful piece by Ivan Eland on the uses and limitations of economic sanctions against nations. Sanctions — an economic means to achieve a political end — don’t work.

Frequent practitioners of economic warfare—especially the United States, which is the most aggressive user of such methods in the world—often confuse the economic effects of sanctions with the political. Sanctions are economic means that attempt to achieve political ends. Even if sanctions bite deeply on the target economy, they often have little or no effect in compelling it to bend to the sanctioning nations’ political will, especially if the goal is ambitious. For example, sanctions are not good at achieving regime change or the abandonment of a nuclear program—objectives that directly affect the security of the target nation or its ruling regime. In the case of Iran, economic pressure is designed to help achieve both of these lofty but unrealistic goals.

Even when most of the world’s countries agree to sanctions, it becomes a game with misaligned incentives. Arguably, each enforcing nation would be better off in the end if all enforcing nations held tough to the sanctions. However, each individual nation would be better off looking the other way while their corporations do business with the embargoed nation.

“Evasion of sanctions is usually rampant,” Eland writes, “because big money can be made selling to an embargoed nation that is willing to pay a premium to get banned goods. And evasion usually increases over time because both the target and the illicit exporters learn new ways of skirting restrictions.”

Still curious? Ivan Eland is the author of No War for Oil: U.S. Dependency and the Middle East.

via The Browswer