Sanctions: more complicated than they appear

The history of sanctions has many lessons for the government

IVANO-FRANKIVSK, UKRAINE - FEBRUARY 28: A man with a bicycle is seen next to a cafe that has a sign "Russian Warship, go **** yourself", and another sign with the numbers of people and vehicles Russia lost in the recent war with Ukraine, on February 28, 2022 in Ivano-Frankivsk, Ukraine. Ukrainians from the eastern and central parts of the country have increasingly fled to western cities as Russian forces advance toward Kyiv from three sides. Russia launched a large-scale invasion of Ukraine last week, prompting widespread condemnation from European countries, coupled with sanctions on Russia and promises of military support for Ukraine. (Photo by Alexey Furman/Getty Images)
IVANO-FRANKIVSK, UKRAINE - FEBRUARY 28: A man with a bicycle is seen next to a cafe that has a sign "Russian Warship, go **** yourself", and another sign with the numbers of people and vehicles Russia lost in the recent war with Ukraine, on February 28, 2022 in Ivano-Frankivsk, Ukraine. Ukrainians from the eastern and central parts of the country have increasingly fled to western cities as Russian forces advance toward Kyiv from three sides. Russia launched a large-scale invasion of Ukraine last week, prompting widespread condemnation from European countries, coupled with sanctions on Russia and promises of military support for Ukraine. (Photo by Alexey Furman/Getty Images)

Just like the word itself, which can mean to permit or to penalise, aspects of sanctions can be contradictory: the intentions behind their use as well as their eventual effects. They are often touted as an obvious and “soft” option to conflict, but this ignores the potential for devastating consequences. The history of sanctions is fraught with lessons for current and future governments.

War, not peace

The first recorded use of economic sanctions was back in 432 BC in Ancient Greece. It was Pericles, builder of the Acropolis, instigator of modern democracy and Boris Johnson’s personal hero, who issued the Megarian Decree, which blocked Megara from trading in any port within the Delian League. Banned from harbours and market places across the Athenian Empire, the Megarian economy was strangled. The city was isolated and its economy suffered. Starvation killed many.

The ban strained a fragile peace. After Megara appealed to Sparta for help, the Peloponnesian War broke out. The repeal of the decree was Sparta’s main demand. In this case, sanctions arguably became the trigger for war rather than preventing it.

Economic sanctions take many forms and their effects can be mild or severe: an asset freeze imposed on named individuals or companies, or a ban on trade in a limited number of products. More powerful measures have included exclusion of some or all companies from capital markets, a ban on direct investment, or exclusion from international payment systems. On some occasions governments have threatened to sell holdings of a country’s government bonds.

It wasn’t until the 19th and 20th centuries that the craze for sanctions really took off. The British government, a huge economic power, discovered a way to manipulate foreign policy objectives without the costs of all–out war. They imposed economic blockades during all their major conflicts, from the Napoleonic War to the Boer War. In the 1920s, the threat of sanctions prevented skirmishes in the Balkans from escalating into war.

The more interconnected global economies became, the more effective sanctions became as a punishment or threat. In the 70 years to 1914 trade flows rose from 5% of global GDP to 14%.

The League of Nations – founded in 1920 and the forerunner to the United Nations (UN) – played a key role in forging country-based sanctions. Acting as an alliance proved far more effective than acting autonomously. It stopped the targeted country simply transferring its economic activity from its aggressor to a new ally.

In the second half of the 20th century, the world witnessed peak sanctions. The World Economic Forum (WEF) estimates that in the 1990s “sanctions regimes were introduced at an average rate of about seven per year”. Unsurprisingly, given their position as leaders of the international rules-based order, it was the Americans who used them most prolifically. The WEF’s data shows that during Bill Clinton’s presidency, “around 40% of the world’s population, or 2.3 billion people, were subject to some form of US sanctions.” And, unsurprisingly, “the great majority of sanctions are imposed by large countries against small countries” explains the WEF. 

In addition, since the 1960s, the UN Security Council has established 30 multilateral sanctions regimes; the most successful helped bring an end to the apartheid regimes in South Africa and what is now Zimbabwe. The UN has also imposed sanctions on non-state entities such as al-Qaeda, the Taliban, and, more recently, the so-called Islamic State (Isis).

Who are you trying to hurt?

A report from consultancy Capital Economics suggested that “the objective [of sanctions] is sometimes to appease a domestic audience by imposing some “token” sanctions which are not costly for the countries implementing them”. 

But if a government is trying to make an impact on a foreign regime, what should it consider? Although they are often considered to be “soft” alternatives to conflict, sanctions can have had utterly devastating impacts on innocent people. So what are the lessons from history?

Economic sanctions, if implemented on a serious scale, will likely lower GDP and smother economies. They can reduce food supplies, risking the lives of innocent citizens. It’s hard to overstate the consequences. In Afghanistan today, 90% of the population do not have enough to eat. In February, former British Prime Minister Gordon Brown argued: “A liberal world order that puts military and economic sanctions before food is neither liberal nor orderly”. He argued for a relaxation of economic sanctions balanced with a maintenance of political ones. 

Fears about such horrors are what led to the introduction of “smart” or “targeted” sanctions at the beginning of this century. Sanctioning specific oligarchs in the case of Russia, for example.

Unintended consequences

One of the longest-running sanctions regimes is the US-imposed regime against Cuba. Professor Lee Jones of Queen Mary University London, author of Societies Under Siege: Exploring How International Economic Sanctions (Do Not) Work, argues that instead of getting rid of the communist leader Fidel Castro and pushing Cuba to become more western and liberal, this sanctions regime not only failed but pushed Cuba towards Venezuela.

Jones explains that a similar situation developed in Myanmar. Sanctions were in place from the late 1980s to 2012 but, according to him, they “didn’t do anything”. Instead of forcing the country to adopt a democratic system, Myanmar simply turned away – increasing trade with China and other Asian countries “deflecting the cost of sanctions and becoming stronger”.

Lessons from Libya

One notably successful use of sanctions was against Libya following the Lockerbie bombing – to date the largest terror attack on the United Kingdom, which killed nearly 300 people in 1988. UN sanctions were imposed from 1992 to 1999 covering air travel, some downstream oil activities, and the freezing of non-oil-related Libyan assets held abroad. They crippled Libya and ultimately got Colonel Gaddafi, the country’s ruler, to end its arms supplies of the IRA and to halt its nuclear programme. Success.

Why did sanctions succeed in Libya? According to Lord Hannay, British Permanent Representative to the UN in the early 1990s, its small size, lack of resources and reliance on imports were all vital factors. Libya had been reliant on tourism, which ceased. And because of its reliance on one commodity export (oil), a targeted blockade proved very powerful.

A further factor was the unity of the international response. As Lord Hannay put it: “Gaddafi had, slightly unwisely, blown up two international airliners so that altogether there were 72 countries whose nationals had been murdered. So that was a good start because nobody whose nationals had been murdered in those planes was going to vote against them. It would have been enormously destructive domestically… I’m sure he didn’t think of that when he blew them up.”

Not every country is as easily sanctioned as Libya. And there are critics who say that sanctions on Libya fostered terrorist groups like Al Qaeda and Isis, spread hated of the West and damaged relations for decades.

Spreading hate

The WEF points to the “longevity” of sanctioned regimes in countries such as North Korea. If sanctions have to be imposed for so long, is this a sign of futility? Worse, they can bolster support for the sanctioned government. The WEF sees “the blockade imposed on Qatar by Saudi Arabia, UAE, Bahrain, and Egypt since June 2017” as having “boosted the emir’s popularity and led a significant part of the population to rally behind him”.

You can’t run with us 

There are alternatives. The idea of “sporting sanctions” has developed since the second half of the 20th century. These are more than boycotts: sports sanctions were part of the UN Security Council’s international sanctions against Yugoslavia from 1992 to 1995. Part of what made the boycott on Apartheid so successful was the effective use of sport as a means to isolate South Africa and change its social structure. For a sporty country, being banned from almost every international tournament possible was a huge blow – for the government’s reputation and for its supporters. It is also an economic drain. From 1977, the Commonwealth of Nations committed to discourage contact and competition between themselves and South African teams, players and organisations. 

But it wasn’t just governments and diplomats that sanctioned South Africa. Fifa suspended the country in 1963. South Africa was banned from the Golf World Cup for nearly two decades. The International Cricket Conference (ICC) imposed a moratorium on tours in 1970. It was excluded from two rugby world cups. Even nerds were punished: South Africa was expelled from the International Chess Federation in 1974, not returning until 1992. 

Sports sanctions are attractive because they are unlikely to put anyone’s life in jeopardy. It may be hugely devastating for innocent athletes and it may ruin careers, as anyone who knows how hard athletes train will know, is no joke. But it can’t be compared to actual loss of life. 

Companies command kudos

In the case of Russia today, the impact of multinational companies “sanctioning” the country could be colossal. Many big names have done so already. Nike has made merchandise purchases on its website and app unavailable in Russia; Google has cut access to its apps from Russian-backed servers; Apple has paused all product sales in Russia. 

More will undoubtedly follow suit. In the West, brands are now expected to take political stances and popular opinion is united against the invasion. A 2018 study in the United States showed that 59% of consumers will buy or boycott a brand solely because of its position on a social or political issue — this was a 12% increase from the previous year.

These internationally renowned, desirable brands may command more kudos from ordinary Russians than the US government. Or at least, their loss may be more impactful. The international brief of big business disconnects any action taken from the toxic brand of “the West”. 

As noted by Finland’s former Prime Minister Alexander Stubb, the capacity [of Russian people] to experience discomfort is high”. Ordinary Russians may be more aggrieved by the absence of their Nike Air Maxes than the economic sanctions imposed by the EU and UN. 

What all these forms of sanctions must aim to achieve is the avoidance of direct conflict. Sanctions may be less obviously risky than other methods to deal with aggression, like arms supply, no-fly zones and military intervention, but they can fail catastrophically. Like in the case of Pericles’s Megarian Decree, sanctions can spark all-out war. Getting them right is a matter of life and death.

3rd March 2022