Lloyd (Jeff) Dumas
Despite all of the positive changes that have occurred with the ending of the Cold War, there are still tens of thousands of nuclear warheads deployed around the world on delivery vehicles ranging from small-scale artillery pieces to giant intercontinental ballistic missiles. The threat of nuclear war has clearly been reduced, yet as long as these weapons continue to exist, it will continue to hang over our heads like a dark cloud. If we persist in seeking security in such weapons, by accident or intention, we will someday light the spark that will spell the end of the human enterprise.
It would not take a general nuclear war to ruin the world's economy and take an enormous toll in human life and personal suffering. Even a relatively limited nuclear exchange could easily tear the highly interdependent system of production, trade, and finance to pieces. For that matter, worldwide conventional war, fought with modern nonnuclear weapons far more devastating than those of World War II, could well produce a long-lasting and severe global depression. And economic disaster is likely to lead to severe social and political disruption. Economic progress has made war larger and more destructive, and the growing destructiveness of war has made it an ever greater threat to an increasingly sophisticated, global, and interdependent economic system. Even the preparation for war threatens to undermine the economies of those nations engaged in high levels of military spending by diverting critical resources needed to maintain and improve their productive efficiency. When the military sector grows too large for too long, it weakens and ultimately destroys key parts of the economic system which support it, just as a parasite grown too large destroys the host on which its own life depends.1 The progress of war threatens to end the progress of the economy. The question is: "Can the economy return the favor?" Is it possible to use economic relations to render war obsolete?
One of the most central themes in market economics is the impact of incentives on voluntary behavior. The assumption is that there are always explicit or implicit goals that drive human behavior. It is therefore possible to affect behavior by creating conditions that affect the way in which those underlying goals can be achieved. For example, a tax credit for business investment will stimulate investment because it lowers the cost of buying equipment and therefore makes more investment an effective route to higher profits, the firm's underlying goal. Generally, it is further assumed that positive and negative incentives have symmetrical effects. Since they are both equally effective, it does not matter which approach is used. This follows from the first assumption, that behavior is instrumental, that it is driven by underlying goals that are rationally pursued. Instituting fines for firms that continue to exceed established pollution limits will have the same effect as providing comparable tax credits for those who do not. In either case, profits will be lower by the same amount if the firm continues current levels of pollution, so it will be just as likely to reduce pollution.
Economic sanctions are the main form of negative economic incentive used to influence international political behavior. As such, they fit easily into the usual political science paradigms of influencing behavior through threat or punishment. Even so, they do not have a good reputation among political scientists who often aver that they are relatively ineffective, especially as compared to the threat or use of military force. The historical record does not, however, appear to support this negative assessment of the effectiveness of economic sanctions. Applied in the right way under the right conditions, a sanctions regime can be an effective tool for influencing international behavior. To the extent that it is effective, there is little question that it would be greatly preferred to armed conflict.
Nevertheless, economic sanctions are still a part of the paradigm of threat, an attempt to influence behavior through punishment. As such, I do not believe they work as well as positive incentives in reinforcing desirable norms of international behavior. I take issue with both political scientists, who seem to think that economic sanctions are not powerful enough to compel compliance, and with economists, whose world view implies that sanctions are equivalent to positive incentives. An economic sanctions regime can be an effective and important tool for ending undesirable behavior. But establishing positive economic incentives that reinforce acceptable norms of behavior is even more effective, and costs much less.
In this chapter, the economic sanctions approach will be considered first, and suggestions made for institutionalizing the process of applying, monitoring, and enforcing them. Then, possibilities for restructuring international economic relations to strengthen positive economic incentives to avoid armed conflict and other violations of decent international behavior will be discussed.
There are three basic categories of economic sanctions: trade embargoes, financial boycotts, and the freezing of assets abroad. The strongest form of trade embargo is a total ban on exports to and imports from the target country. Tight export or import quotas, and the erection of very high, punitive tariff barriers are milder forms. Financial boycotts include divestment of the securities of the target country or firms from the target country, withdrawal of foreign investment in infrastructure or plant and equipment, and denial of foreign aid. If the target nation has substantial physical or financial assets abroad, those might be frozen. That is, although those assets would remain the property of the offending nation, it would be denied access to the assets themselves or earnings from those assets until it came into compliance with whatever conditions were specified by those initiating the sanctions.
There are two questions involved in the issue of whether sanctions work. The first is, are they effective on their own terms? For example, are trade embargoes really able to cut off trade or can the target country get around them by shifting trading partners? The second is, are they successful? In other words, do they ultimately have the desired effect on the behavior of the target nation? The answers to these questions are clearly interrelated. Sanctions that are not effective are unlikely to be successful, although success even in this instance is possible. It is conceivable that ineffective sanctions might still show that there is considerable public opposition to the offending behavior. That could cause the target nation to change its behavior, if it were particularly sensitive to world opinion. On the other hand, even very effective sanctions could fail to bring about the desired change, if the leaders and/or people of the nation in question believe they have enough at stake, and so are willing and able to suffer the punishment rather than give in. However, the ultimate criterion of how well sanctions work must be success, not effectiveness.
In their 1990 study of 116 cases of sanctions use, Gary Hufbauer, Jeffrey Schott, and Kimberly Elliott found a general success rate of 34 percent.2 While that falls short of being an overwhelming endorsement of sanctions as a policy tool, it is very strong evidence against the often stated opinion that sanctions do not work. According to Hufbauer, Schott, and Elliott, there was a relationship between the cost that sanctions imposed on the target country and their degree of success. On average, successful sanctions cost the target country about 2.5% of its Gross National Product CGNP), while failed sanctions only cost 1% of GNP or less. A second important condition of success was that the sanctions had to be imposed for a relatively long time to succeed. Generally, an average of almost three years was required. Sanctions were also more likely to succeed when the target country was much smaller economically than those applying the sanctions. When sanctions are applied by more than one nation, the size of the bloc imposing the sanctions grows relative to the offending nation. Thus, all other things being equal, multilateral sanctions should work better for this reason alone.
It is not surprising that sanctions that inflict heavy costs on the target and relatively light costs on the imposers are more likely to succeed. When trade embargoes are placed on nations that are important trading partners, minimizing the cost to the imposera may require careful attention to alternate patterns of production or trade. For example, when the United Nations Security Council imposed a strict trade embargo on Iraq following Iraq's invasion of Kuwait on August 2,1990, Saudi Arabia agreed to increase oil production to replace Iraqi oil in the world marketplace. This helped mitigate the effects of the embargo on all the oil-importing nations participating in the boycott. Finally, slow, hesitant, and incremental imposition of sanctions usually does not work well. Such a halfhearted approach often reflects conflict or ambiguity of purpose of the imposera. For example, U.S. sanctions against Panama put into effect by the Reagan administration in 1988 sought to drive the leader of Panama (Manuel Noriega) from power. But at the same time, the U.S. seemed intent on not inflicting real pain on the Panamanian economy. Sanctions were applied incrementally, then weakened by a series of exemptions. This is not a recipe for success. Sanctions are more likely to be successful when they are applied quickly and in full force.
As the world economy has become more interconnected, the likelihood that economic sanctions can be successfully applied by any one nation has diminished. There are simply too many alternate trading partners, and too many ways of bypassing sanctions with the assistance of nations that disagree with their imposition. Furthermore, the spread of democratization has emphasized more participatory forms of decision making, and the end of the long Cold War has given new hope to the age-old dream of a more just and demilitarized world order. Taken together, these trends imply that nations are ready to develop a new, multilateral approach to global security.
One such approach could be the creation of a Council on Economic Sanctions and Peacekeeping (CESP) within the framework of the United Nations. Though the activities of the CESP would have to be coordinated with those of the UN Security Council and its sanctions committee, and a working relationship established, there are many reasons why it seems worthwhile to create a new entity. First, the membership of the Security Council is quite small and it would be better if the CESP were more inclusive. Second, the five permanent members of the Security Council (Britain, France, Russia, China, and the U.S.) have the power to veto any resolution by simply voting against it. The small size of the Security Council combined with the absolute veto power of its permanent members has the feeling of the few imposing their decisions on the many. This is not consistent with the more cooperative, participatory spirit of the CESP. Finally, the task of imposing, monitoring, and enforcing sanctions is large and complex enough to justify creating an entity wholly focused on doing these important functions well. Organizing these functions separately emphasizes the commitment the world community to a less militarized style of international relations.
Just how inclusive should the membership of the CESP be? It could be a committee of the whole, with every country in the UN being represented. However, this structure, although inclusive, immediately raises questions about voting procedures. If every member nation has one vote and there is to be no veto allowed, then the large number of smaller nations in the UN would dominate the council's decisions and could impose their will on the world's largest and most powerful countries. This is not only undesirable, it is completely impractical. An equitable weighted voting scheme of some type would have to be developed. For example, each nation might be given several votes, roughly in proportion to its economic size. Using some fairly objective measure like GNP, several rough categories of economic size could be established. Each nation in any particular category would have the same number of votes as every other nation in the same category. Those that fall into larger size categories would have more votes than those in smaller size categories. Using comparatively few categories defined by broad ranges of size, with some reasonable relative number of votes assigned to each category would prevent any given large country (or handful of countries) from completely dominating.
Who could introduce a resolution to institute sanctions? Certainly the Security Council, by voting, must be able to request the CESP to institute sanctions. But how else can such a request be made? One approach would be to allow any member of the UN to introduce a sanctions resolution, it might, however, be better to require that a certain number of member nations agree to cosponsor sanctions before the CESP would consider a request to impose them. If the number was kept small, for example, six to ten members, this would avoid "frivolous" resolutions without putting an undue restriction on any nation's ability to raise important grievances. After all, if a resolution could not attract that limited a number of cosponsors, it would have virtually no chance of succeeding anyway.
Certain acts could be defined in advance as so unacceptable that sanctions would automatically be imposed against any nation committing them. For example, it could be agreed in advance that any nation engaging in military combat in which its own forces have invaded or attacked the territory of another nation would be subject to an immediate and total trade embargo by all member nations. The embargo would continue until the attacks ceased or the forces were entirely withdrawn and a UN peacekeeping force deployed to monitor compliance with the cease-fire or withdrawal. Only participation in UN-authorized military actions (including those set in motion to help an attacked nation repel the attack or invasion) would be exempted from this provision.
How should the CESP determine the level of sanctions to be imposed? Certainly, the resolution requesting that sanctions be instituted could specify the sanctions requested, but there is no inherent reason why it would have to do so. Whether or not the initial resolution requested particular sanctions, there would still need to be some mechanism for agreeing upon the type and severity of sanctions to be implemented. The usual democratic process of discussion, debate, and vote should be used. The debate and vote should always be in two stages: first, whether to impose sanctions; second, if sanctions are to be imposed, what kind should they be? The first vote should include a clear statement about what behavior the target nation would have to change to cause the CESP to lift whatever sanctions it was imposing. Regarding trade embargoes, the second vote should include explicit consideration of whether basic items of food and medicine should be exempted from the boycott, and if so, how they should be delivered to the people of the nation being sanctioned.
This two-step procedure parallels the common practice of having an innocence/guilt phase and a punishment phase of capital murder trials. Separating the condemnation of the offending behavior from the debate on sanctions helps avoid situations where the parties are so far apart on punishment that they become deadlocked and do nothing at all for a time. This would delay and thus weaken the impact of a clear, joint condemnation of the behavior, a matter about which all might strongly agree. Furthermore, it is possible in advance to specify ranges of appropriate punishment for certain general types of offenses, as is done in domestic criminal law. A yes vote on imposing sanctions would thus be an implicit agreement to inflict at least the minimum prescribed punishment. It would narrow the subsequent punishment debate. The disadvantage of prescribing ranges of punishment in advance is the loss of flexibility and the possibility that more minor offenses may cease to be deterred if offenders are assured that punishment will be light even if they are caught.
Once the CESP has agreed to impose sanctions, it must have means available to monitor them. The CESP should have direct access to and priority with a permanent UN Monitoring Organization (UNMO), which might be a successor to the current cluster of Sanctions Committees. It would include a variety of analysts, from those who are skilled at gathering and interpreting economic data on financial and trade flows to those who operate, maintain, and interpret data from special dedicated UN satellite surveillance systems. In a way, the UNMO would be the internationally controlled equivalent of the headquarters of a national intelligence gathering agency, minus the secrecy (and minus any covert operations). It is worth operating the UNMO as a separate entity because there are a variety of other functions it could perform that are of vital interest to the world community. The UNMO could be used to help monitor compliance with certain types of arms reduction and disarmament treaties, and provide economic data useful for research, planning, and development.
How are sanctions to be enforced? The present state of the legal and political environment is such that it is not possible to rely on an overarching authoritative and enforceable system of international law or governance with any real degree of confidence. There is no system for enforcing the tenets of international law or treaty agreements comparable to the police, court, and prison systems that enforce domestic law. In this context, international laws and treaties work best when they are perceived as mutually beneficial by the parties involved. An important force that leads the parties to comply is the possibility that their violation of the agreement will cause the agreement to collapse, and thus, the benefits they receive from the agreement to be lost. This may seem like a weak force, but it can be strong enough to achieve compliance. We hear so much about violations of international law that we tend to forget that they are the exception. Some international treaties, like those governing the mails and aviation, have been extremely successful. Others, like the law of the seas, are violated too often but are still much more often obeyed. And after all, with all their enforcement mechanisms, are not domestic laws violated on a daily basis in virtually every country on earth? The fact that enforcement is far from perfect does not mean that it is ineffective.
Having an organization like the CESP engaged in enforcing established norms of international behavior makes sense precisely because it is of great mutual benefit to the nations of the world. The multilateral CESP sanctions approach to world order and global security is more democratic, less dangerous, much cheaper and more stable, just, and effective than continuing to rely so heavily on the brute force of national militaries applied unilaterally or by small numbers of countries in alliance. By virtue of their membership, the nations participating in the CESP would have publicly declared their belief that it was an agreeable alternative. As always, of course, the real test of the strength of their belief and commitment comes when the CESP votes to do something with which they strongly disagree. Will they accept the cost of their complying with a particular decision they do not like to retain the ongoing benefits of keeping the CESP strong?
As a general principle, any nation that violates CESP sanctions should automatically and immediately be subject to the same sanctions. Since sanctions would be automatic, potential violators would know about them in advance and would further know that there would be no debate about imposing them. Violators would be certain that they would be punished if their violations were discovered. Occasionally where the nature of the sanctions would make them inappropriate or irrelevant to the violator, the CESP could vote to institute alternate sanctions against the violator if they are at least as severe as those originally imposed.
Military forces should be employed to monitor and/ or enforce compliance with the sanctions. Military intelligence and surveillance systems could be of great help in monitoring movements of planes, railroad trains, truck convoys, and ships—systems that are critical to sanctions involving trade embargoes. It is perfectly possible that national governments would agree to a set of sanctions that private profit-seeking interests or subnational political groups would then try to violate. Most of the enormous amount of smuggling that goes on in the world, after all, is not a government enterprise. Naval blockades, no-fly zones, and other forcible interdictions of the movement of people and goods may be necessary. Military or paramilitary forces are useful and perhaps indispensable here. Partial boycotts are even more difficult to enforce. It is easier to stop all ships from entering target country ports than it is to allow certain types of cargoes to pass through while stopping others. Total boycotts do not require boarding and inspection of caigo, but partial boycotts do. The only way to get around this problem with partial embargoes is to have the UN itself, or another appropriate international group (the Red Cross for example), put together shipments of the goods that are not being interdicted (like food or medical supplies) and deliver them in vehicles over which they have total control. Nonetheless, there would have to be some way to stop the movement of other vehicles, by force if necessary. Military forces would still be very useful for this.
All military or paramilitary forces involved in enforcing CESP sanctions should always be clearly identified as UN forces. They should fly UN flags, use UN decals and so forth so they are easily identifiable as UN forces, A flotilla of UN-flagged ships blockading the harbors of the offending nation would have a very different psychological impact than ships flying the colors of any nation or group of nations. Along with reducing the postboycott antipathy of the target nation's population to any particular country or set of countries, it would be a clear and unmistakable symbol of the world community's condemnation of the acts that led to the imposition of trade sanctions in the first place.
It is important to point out that the type and magnitude of military forces used as an adjunct to other means of enforcement of trade sanctions do not justify maintenance of anything like present-day arsenals of the major military powers. Nuclear, chemical, or other weapons of mass destruction are clearly of no value for this purpose. Long-range offensive forces are similarly irrelevant. What is needed is the capacity for comprehensive border patrol. And since CESP actions are, by definition, very multilateral, the forces of many nations would be available to put together the combined military capability required.
Like other approaches to dealing with violations of the norms of decent national and international behavior, sanctions will not always succeed. At what point should they be declared a failure, if they are not working? What should be done then? One thing is clear: Economic sanctions rarely work quickly. The shortest average duration of successful sanctions in the Hufbauer, Schott, and Elliott study was fourteen months; the longest was five years. They are not tools for quickly achieving total surrender. They are, however, a means for applying strong, sustained pressure to move the target nation increasingly in the direction of compliance. Economic sanctions should be used jointly with continuing attempts at diplomacy and other nonmilitary means of conflict resolution. It is, in fact, much easier to couple sanctions with diplomacy than it is to effectively use diplomacy and offensive military force together. While it is difficult to specify how long a sanctions regime should be allowed to operate before it is declared unsuccessful, it is a tactic that requires patience. Unless the offending behavior is so dramatic and difficult to reverse as to compel more drastic approaches—as would be the case, for example, where the offending nation is engaged in systematic genocide—sanctions should be given at least a year, if not a few years, to produce reasonable progress. CESP staff should prepare evaluations of both the effectiveness and success of each ongoing case of sanctions every six months. Any time after a year, the CESP may consider a resolution to declare the original sanctions a failure. If the CESP declares that the imposed sanctions are not working, it may either vote to increase their severity or to refer the case to the Security Council for further action.
On the other hand, sanctions should be lifted immediately upon certification by the CESP that the offending nation has met the required conditions. The required conditions would be either those specified in the original sanctions resolution, or modified conditions subsequently negotiated and approved by an official CESP vote. At the same time, the CESP would evaluate whether the target nation has directly done significant damage to another nation (or readily defined subnational group) in concert with its offending action. If the nature and extent of the damage are judged sufficient to warrant consideration of reparations, the CESP will refer the case to the International Court of Justice for final judgement. What should be done if another nation militarily attacks a nation being sanctioned to take advantage of its weakened condition? Such an action should be met by the same automatic response that would accompany offensive military action in any other case—the immediate imposition of severe sanctions against the attacker.
Beyond all of its functions in relation to imposing, monitoring, and enforcing various economic sanctions, the CESP could and should play an important additional role in international conflict resolution. The CESP needs a staff of negotiators and conflict resolution specialists anyway, in concert with its sanctions function. Since the CESFs basic purpose is to provide a less violent and destructive alternative to military action, it would be perfectly consistent for it to dispatch those specialists to any place in the world where serious, potentially violent international conflict may be brewing. The UNMO could be given the added responsibility of notifying the CESP about any such situations that its monitoring activities detect. The Security Council could also direct the CESP to send mediators anywhere in the world to try to head off a developing crisis before it erupts into violence.
Economic sanctions are important. Their potential contribution to a more civilized system of enforcing reasonable norms of national and international behavior should not be underestimated. Yet the greatest contribution economic relations can make to global security lies not in their use for punishing, but in their potential for strengthening positive incentives to keep the peace. Elsewhere, I have analyzed some principles and institutions that could help make the use of economic relations successful as a means to this end.3 These are not so much a set of tools for reacting to military crises as a possible way of preventing conflicts from degenerating into military crises and war. There are four basic principles involved in creating an international peacekeeping economy.
Economic relationships in which the flow of benefits is primarily one way generate hostility, conflict, and war. They anger those being exploited and produce strong incentives for them to disrupt the relationship and injure the exploiter. This, in turn, forces the exploiters to continuously expend resources to stay in control. This is expensive, and creates a stressful atmosphere of continual tension and fear. Mutually beneficial, balanced relationships do just the opposite. They bind the parties together out of mutual self-interest. Everyone has strong incentives to resolve any conflicts that arise to avoid losing or even diminishing the benefits that the relationships provide. The people of the dozen member nations of the European Community have fought many wars with each other over the centuries. They still have many disagreements, some of them quite serious. But now they are bound together in a web of balanced multilateral economic relationships so mutually beneficial that they no longer even think in terms of attacking each other militarily. They debate, they shout, they argue, but they don't shoot.
Economic independence reduces vulnerability and therefore the feeling of insecurity that vulnerability produces. Insecurity often leads to defensive, belligerent behavior. The problem is that economic independence runs counter to the idea of tying nations together in a web of mutually beneficial relationships, as discussed above. However, it is possible to strike a sensible balance between independence and interdependence by increasing independence where vulnerability is most frightening, and increasing interdependence everywhere else. This implies that critical goods such as staple foods, water, and basic energy supplies should be exempt from the general principle of maximizing interdependence.
There have been about 150 wars since the end of World War Π, nearly all of them fought in the less developed countries.4 Poverty and frustration can be a fertile breeding ground for conflict, yet one cannot fight poverty and frustration with bullets. Without sustained improvement in the material conditions of life of the vast majority of the world's population living in the Third World, there is little hope for a just and lasting peace. It is also much easier to establish balanced relationships among nations at a higher and more equal level of development. They have more to offer each other.
Competition for depletable resources has been a source of conflict over the millennia of human history. Environmental damage also generates conflict.5 It does not recognize or respect the arbitrary political bordera that people have created. Acute environmental disasters such as those of the Persian Gulf War or the nuclear power accident at Chernobyl make this clear, as do chronic ecological problems such as acid rain. Developing renewable energy resources, conserving depletable resources by recycling and a whole host of other environmentally sensible strategies are thus not only important for ecological reasons, but because they also help reduce the strain on our ability to keep the peace.
It is always an interesting and gratifying intellectual exercise to invent new structures, institutions, and strategies for better dealing with the problems that face us. But the times call for more than just an intellectual exercise. We are living in a time of extraordinary opportunity, a time in which the character and operation of national and international systems are undergoing profound, structural changes. Such times are always turbulent and difficult. They call upon us to take action to guide the change that is undeniably occurring in progressive directions. Guiding change means both developing a clearer vision of where we want to go and a practical strategy for getting there from here. The vision that underlies this analysis is that of a demilitarized world, a world in which international conflict is more justly and peacefully resolved. We humans are a contentious and quarrelsome lot. It will be a long time, if ever, before we learn to treat each other with the caring and respect with which we would all like to be treated. But as cantankerous and conflictual as we may be, there is no reason we cannot learn to manage and resolve our conflicts without these all-too-frequent spasms of mass organized brutality we call war. In this increasingly interconnected world, war has become too dangerous and the preparation for war too expensive to allow it to continue as an accepted social institution. It is an idea whose time has gone.
The institutions and procedures described and discussed here are far from Utopian. The economic sanctions approach as institutionalized in the CESP and the UNMO does not represent an ideal way of handling international conflict. It is, however, a great deal better than what we have now. And it is practical. The idea of a peacekeeping international economy is still more appealing. It too is practical. But it will undoubtedly take even longer to establish. This is a time to dream. But we must do more than dream. We must take the tools in our hands and begin to build. We will probably never have a better chance than we have now.
1. Lloyd J, Dumas, The Overburdened Economy: Uncovering the Causes of Chronic Unemployment, Inflation and National Decline (Berkeley, Calif.: Univ. of California Press, 1986).
2. Gary Clyde Hufbauer, Jeffrey J. Schott and Kimberly Ann Elliott, Economic Sanctions Reconsidered, 2d ed., (Washington, D.C.: Institute for International Economics, 1990) p. 93.
3. Lloyd J. Dumas, "Economics and Alternative Security: Toward a Peacekeeping International Economy" in Alternative Security: Living Without Nuclear Deterrence, ed. Burns Weston (Boulder, Col.: Westview Press, 1990), pp. 137-75.
4. Ruth L. Sivard, et al.. World Military and Social Expenditures, 1993, (Washington, D.C.: World Priorities, 1993), p. 20.
5. For examples, see Thomas Homer-Dixon, "On the Threshold: Environmental Changes as Causes of Acute Conflict," International Security, Vol. 16, No. 2 (Fall 1991), pp. 76-116.