Editorial Board

A Guide to the Proper Use of Economic Sanctions

Look at the nonstop carnage in Syria and the ongoing nuclear project in Iran and you would be forgiven for not putting much faith in the use of sanctions as an instrument of foreign policy.

But look at Mali and you might arrive at a different conclusion: Sanctions can work, and under the right circumstances, not just in a drought-stricken, turmoil-riven corner of Africa.

Mali is one of the world’s poorest countries. It’s landlocked, relatively small, largely dependent on gold exports and part of a currency union that has a common central bank in neighboring Senegal. But it has also been a trailblazer for democracy in a region of dictatorships, enjoying peaceful transfers of power through elections for more than 20 years. The junta that removed President Amadou Toure in a coup on March 22, just a month before the next elections, is already under pressure -- the rebellion that the junior officers said they seized power to crush is instead expanding. Rebels seized the city of Timbuktu last weekend.

These factors all make Mali a good candidate for sanctions, according to Gary Clyde Hufbauer of the Peterson Institute for International Economics in Washington. Hufbauer led a team that produced the closest thing we have to a definitive study of sanctions and their effects, documenting 170 cases since 1914.

The Economic Community of West African States, generally known as Ecowas, responded quickly to the coup. Last week it threatened to impose a package of potentially crippling sanctions that would seal Mali’s borders and cut it off from its accounts at the central bank, among other penalties, if the coup leaders didn’t step aside within 72 hours. And on Monday, despite a pledge by the coup’s leader to reinstate the constitution and hold elections, Ecowas put the sanctions , too fast for the regime to prepare and cushion itself from them. So far, the indications are that the pressure is working.

Sanctions have succeeded about 30 percent of the time, according to the Peterson Institute study, and Mali should have better odds than that. Rapid responses from the country’s West African neighbors, as well as the African Union and France, reflect clear recognition of the outsize political importance Mali’s democracy has in the region. The sanctions should remain in force until constitutional order is restored and elections take place.

What about the more controversial cases of Iran and Syria? Iran has been under U.S. sanctions for decades. The first round, which lasted from 1979 to 1981, aimed to secure the release of U.S. Embassy hostages. The sanctions cost Iran 3.8 percent of its gross domestic product and are marked in the Peterson study as a success, scoring 12 points out of a maximum 16 (the hostages were eventually released). The U.S. then imposed a second round of sanctions in 1984, hoping to deter Iran from supporting terrorism and pursuing nuclear weapons. These cost Iran just 0.4 percent of its GDP, according to the study, and have failed abysmally.

Iran is large, has a strong regime, is supported by powerful international allies and has had plenty of time to prepare for the latest rounds of sanctions imposed by the U.S. and the European Union. It is, in many ways, the anti-Mali; the odds of success therefore remain poor. The same goes for Syria, where the regime and the Alawite minority it represents are fighting for survival. If President Bashar al-Assad is willing to kill and torture thousands of his own people, he’s unlikely to step down just because of sanctions.

Yet it is too simplistic to stop there. In Syria, sanctions aren’t operating on their own: The most important factor by far is the country’s popular uprising and military insurgency. During World War I, Britain imposed a blockade that cost Germany 7.1 percent of its GDP, according to the Peterson study. Alone, this certainly wouldn’t have stopped Kaiser Wilhelm’s armies, but as a supporting player to military action, those sanctions can be counted as a success.

The case of Iran is more finely balanced. Toughened sanctions are hurting the economy -- as Bloomberg News reported last week, the Iranian rial has lost half its black market value against the dollar. Yet in Iran, economic hardship could shore up popular support for the regime and harden its determination to acquire nuclear weapons.

The real purpose of the new sanctions therefore should be different -- namely, persuading Israel not to resort to airstrikes while other nonmilitary pressure is still being brought to bear. Equally, sanctions could pave the way for an eventual U.S. military intervention, which would enjoy more international support if all other options were seen to have been exhausted.

After a decade of failed diplomacy over Iran’s nuclear program, the probability of success for a sanctions policy has become less important than the poor choice of alternatives, namely military force or acquiescence in a nuclear Iran and the regional arms race that would follow. With options like these, sanctions that keep Israeli planes on the ground and push the Iranians back to nuclear negotiations with the so called P5+1 remain the best available policy.

Given that foreign policy is about calculating odds rather than certainties -- the world’s an unruly place and diplomacy and war don’t have great success rates either -- sanctions can be the right pick, even when the odds look steeper than in Mali.

    To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at davidshipley@bloomberg.net .

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