Mouood Mouood English Edition
The Art of Sanctions – On Sanctions Imposition and Pain: let’s take a step back now and think about how sanctions imposition and the application of pain work on a strategic level.
Mouood’s Introduction: The author of the present book (The Art of Sanctions) is Richard Nephew. Richard Nephew was in charge of the sanctions team against Iran during Obama’s second term. He supported the nuclear negotiators in the matter of sanctions in Vienna. Richard Nephew has previously served for ten years as an Iran member of the National Security Council at the White House and as Deputy Secretary of State for Coordination of Sanctions at the State Department. The book is also translated into Persian by the Iranian Parliamentary Research Center (IPRC).
Note: The content of this book is not approved by us and is published solely to familiarize policymakers with the views, approaches, and methods of the designers of sanctions against Iran.
There are many different ways to evaluate political systems and economies, as well as the effects of steps taken by governments to influence them. Structured, academically rigorous approaches are available to scholars interested in such things (Drezner’s The Sanctions Paradox and Lisa Martin’s book Coercive Cooperation offer compelling modeling approaches for conducting such analysis). Once again, I commend these works as well as others listed in the bibliography for such analysis.
In my experience, however, many models fall short because of the intrinsic difficulty of modeling national reactions of highly specific governments to highly specific events and stimuli. Below, I offer an approach based on my practical experience, combining academic and personal observations about what works and how to evaluate effectiveness and efficiency.
Sanctions-imposed hardship can take many forms. Experts often describe sanctions as economic tools—and, indeed, the most destructive sanctions do target economic interests—but economic sanctions should be properly considered a class of sanctions rather than their totality. Broadly speaking, I view sanctions as encompassing the following main types: diplomatic/political, military, technological, and economic. I consider each briefly in turn.
Diplomatic/Political Sanctions
These sanctions impose a cost to the target’s standing, either diplomatically or politically (and, consequently, tend to be associated with state-level sanctions rather than those applied against individuals or entities). Associated measures include suspension of a state’s ability to participate in international organizations or committees, denial of visa privileges and other travel-related impediments, and a reduction in the level of diplomatic relations between governments (such as the withdrawal of an ambassador, either temporarily—“for consultations”—or permanently).
These sanctions do impose hardship on the target, but the cost is often more in terms of international reputation than it is in economic loss. Importantly, this is conceptually distinct from notions of diplomatic wrangling that all states engage in at some level or another. The key criterion to differentiate simple “diplomacy” from a “diplomatic sanction” is that there is a perceived, intentional, substantive cost or harm done to the target of the sanction.
Put in terms of contrasting examples, one could see the gathering of a coalition to oppose a resolution being pushed by a particular government as “diplomacy.” On the other hand, one could see the act of seeking to lower the status of diplomatic relations with those governments that vote contrary to the sanctioner’s wishes as a “diplomatic sanction.”
To some extent, Palestinians and their supporters in the Arab world have been trying to impose this class of sanctions against Israel for decades. In addition to advancing the cause of a separate Palestinian state, they have sought to put pressure on Israel by attacking it in multilateral bodies, undermining its legitimacy internationally and subjecting it to criticism for its treatment of Palestinians.
Military Sanctions
These sanctions deny access to military hardware and technical assistance. They can include outright global embargoes—such as those imposed by the UN Security Council (UNSC) against Iraq and Iran—as well as state-based decisions to either preclude or halt military cooperation. The target of these sanctions is military, with the idea being that the loss of preexisting access or cooperation creates political pressure on the target, as well as, perhaps if only in the long term, a strain on its military forces.
The United States has used this tool against adversaries and partners, responding—for example—to nondemocratic changes in government in Egypt and elsewhere by denying military sales for a period of time. Likewise, in 1974, the United States slapped an arms embargo on Turkey—a NATO ally and critical frontline state in the Cold War—in response to its invasion of Cyprus.
Technological Sanctions
This category encompasses providing specific goods (including goods that could support WMD programs) and technical support across the board. The objective of this class of sanctions is to impair the technological development of a country, either in specific ways (such as denial of assistance with the development of an important national resource or economic opportunity) or more generally. In this way, these measures present longer-term implications than other types of sanctions. That said, they are also more scalable and usable against individuals and entities, which can be denied access to exports or participation in various projects.
The sanctions imposed against Russia’s oil and gas industry in 2014 are a case in point. Although the impact will—in time—become economic, the primary target is the technological capabilities of the country. Similarly, sanctions imposed on items going to and from North Korea and Iran (at least prior to January 2016) had this character, isolating the countries from items that could be used not only for nuclear and missile programs but also for a whole host of other applications.
Put another way, this type of sanction can impair economic growth indefinitely by lowering a country’s potential versus merely knocking the economy off its current trajectory. But the intended principal effect of the sanctions is to impair the technological development of the target in question.
Economic Sanctions
This category is the most used type of sanction, and, arguably, the one with the most immediate punch. It is divisible in a variety of ways, with particular measures targeting the financial vulnerabilities of one target and the tangible goods of another. The objective of these sanctions is to damage the target’s ability to obtain and use economic resources, thus undermining its objectionable conduct directly—by depriving it of the opportunity and/or means to act—and inflicting punishment.
These sanctions are also scalable, targeting both various elements of economic activity (e.g., financial linkages) and different types of actors (depriving individuals and entities of their access to markets, or depriving entire countries of the same).
Considering the significance of this class of sanctions, it is worth dwelling on two particular avenues for their application: trade-related measures and finance-related measures. Throughout history, the term economic sanctions was largely synonymous with trade sanctions, with particular items being prohibited from import or export.
Financial sanctions, in contrast, are a relatively new specialization, taking advantage of the increasingly globalized nature of currency markets, financial flows, and insurance patterns. Financial sanctions concentrate less on the types of commodities or goods being traded and more on the modalities of their trade, in acknowledgment of the central nature of financial flows for underlying trade and—for the United States and Europe—the centrality of Western countries for financial flows.
Starting in 2005–2006, the United States has used financial sanctions and the threat of being cut off from the U.S. financial system as a cudgel, scaring banks and other financial institutions away from business with risky jurisdictions. In 2014, as we will see in chapter 9, touching on Russia, this tool took an entirely new tack, targeting foreign-held Russian debt as a means of exerting pressure.
Ultimately, it is debatable whether the force of this type of economic sanction derives from the nature of the tool—imperiling financial linkages—or from nature of the states that wield it. But it is certain that such instruments have power and are seen as an artful way of approaching economic sanctions without inherently preventing the transfer of otherwise legitimate goods. (For more on financial sanctions and their utility, see Juan Zarate’s excellent book, Treasury’s War.)
Of course, the separation of sanctions measures into different categories is a matter of personal preference, for only in the rarest of circumstances are sanctions regimes structured so that their measures fall cleanly into only one or two types. More often than not, when sanctions are imposed, the constituent measures cross boundaries in order to account for the peculiarities of targets and their vulnerabilities: a central tenet of this book is that precisely this type of careful thinking is necessary for sanctions to be an effective part of strategy.
For example, as noted in the previous chapter, in 1996, the United States imposed sanctions against Iran that denied it access to U.S. technology for the liquefaction of natural gas, thereby denying Iran the ability to tap fully the export potential of this resource, of which Iran has the second-largest reserves in the world.
The sanction began as a technological one, but—especially after 2010—it had dramatic economic consequences. On the other hand, not all technological sanctions are primarily economic in nature: for example, the United States also denied Iran access to dual-use items that have limited nonsensitive applications but are widely utilized in nuclear and other WMD-related projects.
But separating measures into these four categories helps clarify two main points: first, sanctions are a more diverse set of tools than commonly presented; and, second, a well-developed sanctions strategy will seek to apply pain using the full tool kit, potentially with some measures employed in different ways or at different times to take advantage of circumstances that develop. In the following chapter, I will discuss in further detail the full range of potential overlaps as presented in the case of Iran starting in 2007.
Pain and Sanctions in a Strategic Context
The application of pain against a sanctions target is sheer sadism unless it is connected to an expectation about what that pain will achieve and is matched with a readiness to stop inflicting pain when the sanctioning state’s objectives are met. In my experience, a state usually decides to use sanctions in order to satisfy at least one of the following interests:
- to affect the behavior and capabilities of the sanctions target
- to demonstrate commitment on the part of the sanctioner to persevere (which is strengthened if the imposition of sanctions comes with a cost to the sanctioner as well as the sanctioned)
- to satisfy domestic or international constituents’ or stakeholders’ demands for either a specific response to whatever misbehavior is underway or, more generally, for someone to “do something”
- to demonstrate willingness to escalate pressure if the sanctions target does not change course
But even so, there is incredible diversity in how sanctions can be employed. Some sanctions regimes are imposed swiftly, with rapid escalation from initial steps to a comprehensive set of restrictions, as in the case of Iraq in the 1990s. Other sanctions regimes take longer to develop, as was the case with Iran, which—as noted—began in earnest as an international movement with the adoption of UNSC resolution 1737 in December 2006.
There are advantages to each approach, depending on the nature of the target and its transgressions, the extent of its vulnerabilities, and the degree of international support for the imposition of sanctions.
The two cases we have already discussed offer useful contrasts in this regard. In both cases, the sanctions regimes started with a significant first step, leaving room for the sanctions to grow thereafter. The primary difference is that, for Iraq, the escalation took place over a dramatically shorter time period in part because of the exigent nature of the circumstances—an active invasion with power in the occupied territory being consolidated on a daily basis as opposed to a notional threat of nuclear weapons acquisition at some time in the future—provided the necessary level of international support for a robust reaction.
As mentioned previously, the absence of an opportunity for incremental escalation—so sensible in anticipation of military conflict but ultimately damaging as part of a longer-term containment strategy—eventually contributed to sanctions fatigue and policy failure in Iraq.
Escalation is the currency of coercive diplomacy. Opponents must believe that you are not only prepared to go further, but that doing so is inevitable without resolution of the underlying problem. The implicit choice becomes: you can stop this now or suffer worse. Sanctions imposition fits this profile, with escalation taking the form of new measures targeting new sectors or an intensification of the pressure on already targeted sectors.
In this regard, the time lag of sanctions imposition is an integral, operative part of the sanctions regime. We will see this in the following chapters, particularly when discussing the U.S. sanctions regime on Iranian oil sales to third countries.
Over time, pain is added to the sanctions regime, intensifying the negative consequences to the sanctioned party for continuing with its intransigence. Importantly, increased pain can come either as a result of new sanctions or from existing sanctions.
States have the ability to ratchet up or down the pain that they apply via sanctions. In no circumstances, however, is pain infinite in its potentiality. At some point, there is no economy to sanction and no trade to deny. This situation could arise quickly or over a long period of time, but it is unrealistic to assume that it lies within the province of a sanctioning state to impose endless escalation of pain.
Assuming that this limit exists, the most intense, initial application of sanctions pain would still have an upper bound. This is meaningful because it also sets an upper bound to our expectations of what is possible. Sanctions pain is not a limitless source of leverage but rather a commodity that has particular value and currency.
And at some point the utility of sanctions pain may also decrease, depending on the nature of a sanctioned country’s resolve.
I will cover the issue of resolve in greater detail in the next chapter. But it is important to clarify that just as no two persons perceive pain in the same fashion, no two countries perceive sanctions in the same fashion. It is clear that the sender perceives pain differently than the target. What’s less obvious is that one’s perception of how painful the pain is can also vary depending on who one is. Here, we speak to the issue of mirror imaging, which has been a known problem in intelligence community analysis for decades but also merits consideration here.
Let’s simplify this by talking about a common government problem—unemployment. All governments likely prefer full employment to massive unemployment. Employed citizens tend to be happier citizens, more satisfied with their government and its performance, and less inclined to revolt (in whatever fashion is feasible depending the nature of the host government system and local culture or society).
Unemployed citizens are, by extension, probably less happy citizens, less satisfied with their lot in life and the performance of their government. But beyond these generalizations, there are infinite variations in how populations might react to an unemployment crisis.
The U.S. election of 2016, ironically, helps to show this distinction. As of Election Day 2016, unemployment was back below levels that preceded the Great Recession of 2008–2009.1 San Francisco Federal Reserve President John Williams had declared in May 2016 that the United States was “basically back at full employment.”2 Putting aside all other considerations, this situation logically should have resulted in a more relaxed voter posture on economic issues, permitting voters to focus on other issues in choosing which presidential candidate to support.
However, as the political website FiveThirtyEight demonstrated shortly after the election, voting positions differed significantly based on relative considerations of job security, with those in economically weaker positions less inclined to view the U.S. economy as well run (and thereby more willing to choose a candidate with a business background and outsider brand).3
The point is that even within one extremely prosperous country, there were sharp cleavages in public perception of economic strength, the risk of unemployment, and how to respond. And, consequently, the level of analysis necessary to understand the effect of unemployment on decision making—even at the level of the average voter—was far more granular that a simple observation would permit.
In a country with a tradition of full employment or even government guarantee of a job, discontent with unemployment may be greater than in a country where jobs have been scarce for generations and the economic situation is dog-eat-dog. Whether the two countries in these examples have domestic situations that permit dissent is irrelevant for our purposes: the point is that unemployment in the first country is logically a greater source of dissatisfaction than in the second.
Now let’s layer on the problem of sanctions, starting with the proposition that sanctions are imposed on both countries and designed in such a way as to force layoffs in export-intensive industries. Regardless of various individual factors such as population size, it is logical to posit that people in the country with traditions and rules supporting full employment will be more upset by the imposition of these sanctions than the country in which unemployment is the norm, or where the social safety net is such that unemployment is less meaningful.
And now let’s posit instead that the country with a tradition of full employment is the one imposing sanctions generating unemployment on the country with no such tradition. The policymakers in the sending country would doubtless assume at the gut level, even taking aside their own knowledge of the target country, that such sanctions measures would have a devastating impact on the target country and its internal cohesion. But this may not be the case at all; the sanctioned country may well simply shrug off the assault.
This issue highlights a central challenge of sanctions enforcement—knowing the nature of your opponent—as well as a risk that the sanctioning country may determine that “sanctions”
simply don’t work against the target. In our short hypothetical exercise, the problem was not that “sanctions” failed to work but rather that the target country did not feel as much pain as the sanctioning country intended because the sanctioning country did not really understand the full nature of its target and how the measure selected would work.
A way to work through this problem lies in understanding how pain is applied and felt. It is useful to know that pain imposition can be ratcheted up or down depending on circumstances and that incremental escalation can be achieved in concert with changes in international environment. But this is less useful if it is impossible to know whether the pain is having its intended effect.
Assessing the Level of Pain Applied and Felt
Pain should be measured in relation to the identified values and vulnerabilities of the target country and how much the sanctions cost the target, rather than out of an absolute assessment of precisely what happens when sanctions are imposed. In my view, this means that a standard model that could give real guidance would be impossible to develop without knowing some national specifics. But that’s the point. Sanctions should be tailored; they usually wear poorly directly off the rack.
An individualized measurement approach would ultimately focus on assessing the sanctioned state’s national priorities and self-image and how best to injure them. But critical factors that would contribute to this assessment could include the following eight points (which are not in order of importance, as this depends on the country in question).
The Nature of the Target Country’s Political Institutions
Is the country a democracy or an autocracy? Do the various political groups in the country have a say in its affairs or does a ruling clique make the decisions? Answering these questions is important for a clear understanding of whether political forces can be galvanized to create internal pressure as a result of externally applied pain.
All states being somewhat different, the key factor is not whether a country can be classified with a one-word identifier but rather whether the various elements of power can be described in sufficient detail to articulate who holds what power in that system. North Korea and ISIS are particularly extreme examples of this phenomenon.
North Korea’s governance structures are sufficiently opaque that it is unclear whether, outside of Kim Jong Un, there are leaders to be influenced. ISIS, by contrast, may have a variety of potential pressure points in the form of many different centers of government gravity, but its very diffusion—combined with the zealous nature of its construction—bedevils sanctions pressure as a means of influence. Instead, as was shown in the early part of 2016, financial pressure on ISIS through the direct destruction of its assets may be more meaningful if orchestrated as a means of denying capabilities rather than changing ISIS policy.
The Existing Macroeconomic and Financial System, and Its Vulnerabilities
Is the country an advanced economy, integrated into the rest of the international system? Or is it an emerging economy, still finding its place? These distinctions matter greatly, as they speak to the degree to which an economy is itself vulnerable to international forces. They also can inform an effective analysis of whether the country can push back on sanctions, imposing its own costs on sanctioners.
Beyond that, important subsidiary questions merit examination, including the degree to which the economy is open or closed, private or state controlled. Economic pressure, in particular, requires a clear-eyed understanding of where and against which groups the sanctions pain will be felt.
Economic inequality is another related factor that ought to be contained in the assessment.
The Nature of Its Trade Relationships
Although closely related to the previous topic, assessment of this factor should focus on how vulnerable a country is to different forms of economic coercion. If a country is dependent on one or two other countries for all of its trade, then the sanctions regime might focus on applying broad pressure against a narrow subset of the economy.
If, by contrast, a country is open to business around the world, then it may be easier to instead target one or two particular sectors and seek to scale back the target country’s overall ability to conduct business in those sectors. Here, too, consideration must be given to the nature of the sector and the companies that operate in it, both for the target country and for those doing business with it. If the primary avenue for trade lies in state-to-state enterprises, then direct sanctions pressure on both the target country and its trading partners at a governmental level would be prudent.
By contrast, if the target country’s international business is conducted largely by and between private-sector entities, then the method of applying pressure could change, possibly focusing instead on informal, private means of applying pressure by simply convincing foreign companies to withdraw from the affected sectors (as occurred with Iran from 2006 to 2010).
Moreover, if a country’s economy is closed (or near enough as makes no difference), the application of sanctions pressure via economic sources will be inherently more difficult to arrange, execute, and sustain with any significance. A state in autarky may be weak from an economic theory perspective but strong from the perspective of avoiding externally applied economic pressure.
Cultural Values
Is the country’s population materially motivated or not? Does its population subscribe to a religion with a history of martyrdom? Are the United Nations and multilateral institutions important sources of pride and legitimacy? Such questions can help explain responses to the imposition of sanctions pain and calibrate expectations for what kind of pain may be necessary to overcome resolve. They can also help steer the type of sanction to use.
A country that prizes the UN system (such as East Timor, which owes its existence in part to the United Nations) might be more affected by sanctions limiting its UN voting rights and normal status than a country far more dismissive of the United Nations and similar institutions. Cultural values can be overinterpreted, however, and ought to be evaluated with care. Simply because a country has a primary religion that embraces pain and sacrifice is no guarantee that sanctions-driven pain won’t touch the population or its government, just as a long historical memory is no protection against present hardship.
Everyone’s grandfather may have walked to school in ten feet of snow, uphill both ways, but knowledge of this experience is less salient when someone is shoveling two feet of snow on a blustery day. Cultural values and experience are important and should be factored in, but they are neither deterministic nor an excuse to discount other elements of analysis.
Indeed all too often, in my experience, those utilizing such values as an argument for or against a position are adhering to stereotypes in order to avoid complicated assessment. The debate over the form of sanctions to take against Iran provides a case in point. Some suggested that because Shi’ism is a religion that praises martyrdom and includes practices such as self-flagellation, Iranians were incapable of responding to economic sanctions.
Of course, this is a gross exaggeration of both religious practice and Iranian personal experience; one might just as well argue that since Catholics revere martyred saints, they too are incapable of responding to economic sanctions. I urge consideration of cultural factors but also caution that we delineate between meaningful elements of national consciousness on one hand, and sentiment and stereotype on the other.
Recent History
Has the country been at war for decades or experienced a long period of peace? Even such a simple question can help create a picture of what kind of sanctions pain may be required to shake the country’s leadership into pursuing a new course. Moreover, countries can also emerge from such situations with vastly different views of what pain they can accept going forward.
A victorious country that underwent some privation could be more resilient than one that expended vast sums of blood and treasure for a failed cause. And, of course, war is not the only critical element of recent history: other events, such as political upheaval, natural disasters, and economic recession, are also key.
Demography
Is the population balanced between old and young, male and female? Or is it excessively young or old, skewed toward one gender group or the other? Some forms of economic pressure, in particular, are more effective in targeting a young population versus an older one, such as sanctions that cause unemployment in the kind of manufacturing and industrial jobs that young people might lose faster and never regain.
Travel bans, especially those restricting the freedom of movement of young, urban populations and students, might likewise be more troublesome for some countries than others. Knowing the population’s composition can help ensure that targeting is as effective as possible.
Access to Outside Sources of Information
Can the country in question access external sources of information so as to overcome national propaganda services and the local rumor mill? Are parts of the population free to access such information and question the arguments made by their government representatives? Or would such knowledge be considered a capital crime? There are benefits to a sanctioner from widespread access to a number of information sources, but knowledge of the situation on the ground is imperative so as to help the sanctioner understand the mindset of the population and leadership in experiencing sanctions.4
Sanctions Construction Questions
Are the measures that may be achievable also enforceable? An example of an issue that could arise under this topic is physical geography: is the country a small island that is easily embargoed or a large country with wide-ranging borders that are hard to monitor? Another issue is the value of a country in the global economy or politics. Shades of the answers to these questions can be found in other parts of this proposed assessment, but conducting a separate, focused query on whether enforcement can be meaningfully undertaken is also warranted to ensure the very concept of sanctions makes sense.
Iraq and Iran provide studied contrasts for such a national assessment-based approach. In Saddam’s Iraq, we had a country that was ruled by an autocratic strongman who made very little attempt to hide his approach to governance. The Iraqi population had little opportunity to challenge government decisions and there were grave consequences for doing so. Saddam ruled substantial parts of his country through terror, including the use of chemical weapons against the Kurds to the north and the Shi’a to the south.
The Iraqi economy was state run and oil dependent, leading to chronic underemployment. By the time sanctions were imposed, Iraq’s recent history was one of war, with Iraq having fought Iran for eight years and then the United States and its partners for six weeks. Access to economic information was a state secret. And prior to the Internet, the average Iraqi’s ability to access foreign-generated information was fairly limited. Radio and satellite TV broadcasts did exist but were also subject to jamming, which hindered the ability of the average Iraqi to understand the purpose of the pressure they easily perceived.
Iran in the 2000s appears quite distinct. Although ruled by an authoritarian system, Iran’s government operates on a consensus-building approach, in which a variety of stakeholders can express their views and concerns.
Further, the Iranian sense of government legitimacy flows from the Iranian revolution, in which power was passed from an autocratic strongman into—if in name only to some degree—the hands of the people. Censorship and the threat of reprisal exist, but access to external news sources and information (as well as the relative ease of Iranian citizen travel outside of the country) ensures that even politically marginalized points of view are understood within the country. The Iranian economy is also oil dependent and government controlled, but increasingly diverse and privatized, as well.
Iran has prioritized the development of new industries to reduce its reliance on a single commodity. The Iranian population is relatively young, in part a consequence of the military conflict with Iraq in which hundreds of thousands of Iranians died. Its government leadership is also more religious than that of Iraq, and it is affiliated with the Shi’a branch of Islam, which has an affinity for self-sacrifice and martyrdom, as well as the nobility of resistance.
From a sanctions design perspective, one can deduce a few lessons from even this superficial treatment of the national characteristics of each country. For example, one could make an educated guess that targeting the population of Iraq might have less value than targeting the population of Iran because the Iraqi people have relatively less stake and say in how decisions are made in the country.
Likewise, sanctioning Iran’s private sector would theoretically have more coercive power than sanctioning the Iraqi private sector. That said, both countries’ reliance on oil as their primary economic driver suggests that oil-related sanctions would be effective in either case. A key issue for ensuring the effectiveness of sanctions against both countries would be communication: ensuring that the population understood the complicity of their respective governments in creating the sanctions problem.
Although there is censorship in both countries, Iran (due to the wider penetration of modern communications technology) is probably an easier lift for this communication challenge than Iraq (a challenge that a twenty-year difference in global telecommunications development has accentuated). On the other hand, Iranians could also believe that their own sense of empowerment by the government gives them a stake in the country, which might consequently increase their willingness to stand with the government in defying the rest of the world.
A similar exercise can be conducted with respect to other countries using a similar logical framework. The purpose in doing so is to first identify the sanction categories that would have an impact and then identify particular vulnerabilities within it. Categories vary in significance depending on the vulnerabilities targeted.
Let’s take a practical example. Prohibiting arms transfers to countries that do not frequently import them has far less effect than such an action taken against countries which are major importers of arms; that said, those that do not import arms because they are primarily exporters of them might still find that a comprehensive arms embargo bites significantly. For example, the United States is largely untouchable with respect to the possibility of military sanctions.
Its vast domestic production capacity gives it considerable independence, although the sourcing of some constituent raw materials may create hindrances. But an arms embargo against the United States is fairly insignificant as an instrument, just as it would be against any other state that possesses a robust domestic arms industry.
One cannot make the same bold statement with respect to economic sanctions against the United States. Though counterintuitive given both the size of the U.S. economy and its own weight internationally, as I have written elsewhere, the United States is itself vulnerable to economic disruption from the outside.5 For example, in 2012, the Federal Reserve issued a paper that noted the following:
The income received on the US external position plays an important role in one of the biggest issues confronting international macroeconomists—the sustainability (or lack thereof) of the US current account deficit. Net income receipts, which equaled 33 percent of the goods and services balance in 2010, provide a significant stabilizing force for the current account. Future sustainability will depend, in part, on the persistence of these net income receipts.6
Implicitly, this conclusion suggests that a denial of U.S. access to foreign markets would have a profoundly damaging impact on the U.S. current account balance and, with it, on the ability of the United States to maintain positive economic performance. It may not be possible to engineer such a set of sanctions given international politics, but this is a different question than whether such measures would hurt if achieved.
Moreover, some vulnerabilities may not be intuitively obvious, requiring either an analyst’s special awareness of a country or insight from its own population. For example, although Pew polling suggests that Israelis generally have a low opinion of the United Nations (or did in 2013), this may not be the case for elites.7
More than one Israeli diplomat reminded me during my time at the State Department that the role of the United Nations in Israel’s formation means that UN condemnation of Israeli policy bites deeper than might be imagined. This lens in place, I have found myself much more understanding of why UN condemnation of Israel—or resolutions that Israeli officials argue undermine its security—hits such a nerve for the Israeli government.
Iran also has demonstrated an interesting love/hate relationship with the United Nations, several times arguing that the United Nations has no jurisdiction over its nuclear program while simultaneously pursuing leadership roles on as many UN committees as it can obtain.
From my experience, therefore, the best starting place for sanctions design lies not in considering the tools available but rather in understanding the nature of the state. By fits and starts, it is how we brought the heat applied to the Iranian economy and government after 2006.
Footnotes:
1. “Labor Force Statistics from the Current Population Survey, 2007–2017,”Bureau of Labor Statistics, https://data.bls.gov/timeseries/LNS14000000.
2. Heather Long, “The U.S. Is ‘Basically at Full Employment,’ ” CNN Money, May 23, 2016, http://money.cnn.com/2016/05/23/news/economy/us-full-employment-williams/.
3. Jed Kolko, “Trump Was Stronger Where the Economy Is Weaker”, FiveThirtyEight, November 10, 2016, http://fivethirtyeight.com/features/trump-was-stronger-where-the-economy-is-weaker/.
4. Of course, another target of the information war that any sanctions campaign must involve are other states worldwide, either in service of creating a coalition of “likeminded” states that might join a sanctions effort or to ward off any other states that could seek to offer solace to the principle target of the campaign. Sanctioners should be aware of how the target states and the sanctions effort will be perceived—a prudent response to an unac-ceptable challenge or bullying of the weak by the strong—and how they can use this information element to advance their sanctions goals.
5. Richard Nephew, “Issue Brief: The Future of Economic Sanctions in a Global Economy,” Columbia/SIPA Center on Global Energy Policy, May 2015, https://gallery.mailchimp.com/20fec43d5e4f6bc717201530a/files/Issue_Brief_The_Future_of_Economic_Sanctions_in_a_Global _Economy_May_2015.pdf.
6. Stephanie Curcuru and Charles Thomas, “The Return on U.S.Direct Investment at Home and Abroad,” International Finance Discussion Papers (2012), http://www.federalreserve.gov/pubs/ifdp/2012/1057/ifdp1057.pdf.
7. Pew Research Center, “UN Retains Strong Global Image,” September 17, 2013, http://www.pewglobal.org/2013/09/17/united-nations-retains-strong-global-image/.
