Lit Review: United States Foreign Policy — Sanctions
With the understanding that Russian sanctions represent a real-world application of domestic IR theory under the realism paradigm, it was possible to begin to explore perspectives on U.S. foreign policy in the preceding period to the sanctions under analysis. Exploration in the present study was limited to perspectives on sanctions and energy policy.
Sanctions
Sanctions are coercive acts instituted by a state actor against another actor with the goal of shifting policy. These can include “loud” diplomatic acts, such as full embargoes, and “quiet” diplomatic acts, such as trade restrictions (Doraev, 2015). Internationally, sanctions find their legal basis in Article 41 of the Charter of the United Nations, although it is important to note that the text states that sanctions, as defined under Article 41, are not unilateral in nature but are imposed at the direction and discretion of the Security Council:
The Security Council may decide what measures not involving the use of armed force are to be employed to give effect to its decisions, and it may call upon the Members of the United Nations to apply such measures. These may include complete or partial interruption of economic relations and of rail, sea, air, postal, telegraphic, radio, and other means of communication, and the severance of diplomatic relations (U.N. Charter, art. 41).
Domestic sanctions in the United States, however, are generally unilateral in nature and find their legal basis in three pieces of legislation: the Trading With the Enemy Act of 1917, which permits sanctions during times of war; the International Emergency Economic Powers Act of 1977, which permits sanctions during times of peace, and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (otherwise known as the PATRIOT Act), which was designed to increase the power of the executive branch to combat terrorism after the September 11 terror attacks (Wolfe, 2015).
U.S. sanctions can originate in either the executive branch through executive orders or the legislative branch from either the House or the Senate. Depending on their point of origin, though, sanctions can have different characteristics. Sanctions originating from the legislative branch tend to last longer than those from the executive, with estimates placing the survival rate of legislative sanctions at over 70% on average than that of executive-originating sanctions (Hatipoglu, 2014). Executive sanctions, though, are more quickly implemented, as the president needs merely to issue an executive order, which is not subject to immediate checks and balances from either the legislative or judicial branch. Executive orders can similarly rapidly be issued to undo the actions of the same administration or a previous administration without obligation to immediate checks and balances, thus suggesting an explanation to the dramatic lifespan difference in comparison to congressional sanctions.
As was previously stated, U.S. academics and the foreign policy establishment have held that economic sanctions are not beneficial to public policy. A study by the Council on Foreign Relations, the leading liberalist foreign policy think tank in the United States, concluded that sanctions do not realize their end goals when they have short-term objectives or broad-sweeping agendas; this effectively negates most legislation (Haass, 1998a). Such sanctions, the study noted, failed in their efforts to force Saddam Hussein out of Kuwait, end the brutal ethnic warfare in Yugoslavia, halt Iranian regional geopolitical and nuclear ambitions, and induce social changes in Cuba to topple the Castro regime (Haass, 1998a).
Moreover, the study noted that authoritarian regimes are generally able to survive sanctioning efforts, since the act of sanctioning itself plays into the regime’s hand for nationalistic rally-around-the-flag effects and political exploitation due to a sense of being under siege by external forces (Haass, 1998a). The study also highlighted the challenge of lifting sanctions, which was corroborated in Hatipoglu (2014). Haass (1998a) noted that there is more inertia for imposing than lifting sanctions due to the root problem that triggered the sanctions not usually fully disappearing, thus rendering the obligation to act on those favoring change to the status quo before the sanctions trigger has disappeared. Hatipoglu (2014) quantified this stagnation as a 70% likelihood of congressional sanctions remaining after a five-year period versus a 40% likelihood for executive sanctions. The dramatic difference between the lifespan of congressional and executive sanctions is due to the differences of their origin processes as was previously discussed.
In addition to leading to faulty public policy, implementing economic sanctions also bears threats to the U.S. domestic economy. As U.S. investment decreases in compliance with sanctions, global investment increases to fill the void, as Lektzian and Biglaiser (2013) argued, leaving U.S. firms out of previous markets and targeted states unharmed. This was observed in the energy-producing states of Angola, where U.S. firms relinquished upwards of 40% of their energy extraction rights to foreign firms, and Colombia, where French investment replaced all U.S. investment lost due to sanctions (Lektzian & Biglaiser, 2013). The argument is further demonstrated in additional examples of sanctions implemented against other energy-producing states. In Iran, U.S. energy firms lost all market share to Asian and European competitors because of sanctions, including access to Iran’s US$3 billion petroleum market (Lektzian & Biglariser, 2013; Clawson, 1998). The domestic interest group favoring normalization of Iranian relations argues that the continuation of U.S. sanctions effectively bars U.S. firms from an estimated US$1 trillion national market (Iran Project, 2013). Iranian sanctions have also not had their intended effect, which means the financial loss for U.S. firms has been for naught (Clawson, 1998; Haass 1998a; Iran Project, 2013; Wolfe, 2015).
In Libya, the Reagan administration permitted U.S. energy firms to continue operations in the state through their European subsidiaries to minimize economic exposure (Rose, 1998). However, the ongoing effect of new rounds of sanctions under the Clinton administration and by the United Nations placed firms in a form of double jeopardy. To pull out would mean being unable to recover outstanding payments from the Libyan government, while to remain would mean being subject to U.S. and global sanctions and the economic costs therein (Rose, 1998). While some firms pulled out of the country, most chose to remain and weather the storm; unsurprisingly, the Libyan sanctions also failed in realizing their intended goals due to the inefficient implementation and the loopholes permitted (Rose, 1998).
Each of these examples demonstrates both the failure of sanctions and that U.S. firms bear the brunt of the economic distress intended for the targeted states. The strong demand for their products — energy as noted in the previous examples — ensured that global competitors would quickly enter and supplant U.S. presence after U.S. firms retreated from the markets, thus negating the political and economic impact of the sanctions. It can thus be expected that this pattern would be replicated for sanctions targeting the Russian Federation. What makes the Russian sanctions unique, though, is the sheer size of the Russian energy sector. By 2014, Iran, the largest aforementioned energy-producing state, had topped 2.5 billion of barrels of oil equivalent (BBOE) in annual production (U.S Department of Energy, n.d.).
The Federation, on the other hand, was producing at a rate nearly four times as high, at 9.5 BBOE at the time of the first sanction in the present study (U.S. Department of Energy, n.d.). By applying sanctions to the Federation’s energy sector, the United States was effectively sanctioning the producer responsible for one-tenth of the global market. The only previous case of this occurring was under the Reagan administration during the Yamal pipeline embargo, when the United States sought to impose sanctions on firms and their subsidiaries supporting the construction of the natural gas pipeline across continental Europe, which, like the previous energy sanctions examples, ultimately failed.
The literature that exists concerning contemporary Russian sanctions is small but rather diverse in its analysis of the impact that they have had on specific industries and Russo-European relations. However, no text discusses the development of the sanctions in the United States or the impact on Russo-American relations beyond Doraev’s analysis of the legal basis for the U.S. sanctions themselves and the Federation’s subsequent response (2015). Servettaz (2014) provided a self-described “primer” concerning the process of implementation for sanctions within the global financial system and discussed the unintended consequences for ordinary Russian citizens who were not specifically targeted by the legislation or named in their implementation. Kochajdova offered an analysis of the immediate and long-term implications for the Federation’s energy sector, commenting that the sanctions were designed to have masked effects in the short-term in order to mitigate any macroeconomic trends from an immediate decline in Russian production (2019). Kim and Blank (2019) discussed the impact that sanctions have had on the Federation’s defense sector, noting that the state was forced to decrease spending due to the decrease in energy export revenue. Arms sales, which had previously occurred for financial reasons regardless of the impact on public policy, shifted to become aligned with the Federation’s aims to counter the United States and its allies globally after 2015 (Kim & Blank, 2019), leading to the implementation of the Countering America’s Adversaries Through Sanctions Act of 2017 and the Export Control Reform Act of 2018 under the Trump administration.
The primary ally that implemented sanctions in tandem with the United States was the European Union. In contrast to the lack of literature around the United States and Russian sanctions, analyses of Russo-European relations provide a clear perspective on the efficacy of the sanction efforts. Tsakiris (2015) discussed the impact on energy relations, noting that the critical interdependence between both parties limited the extent to which Brussels was able to operate in tandem with Washington, given the impact that access to Russian energy has on its own economic output. Romanova (2016) broadened this discussion to include the impact on European producers as Russian imports were severely curtailed in retaliation against E.U. sanctions. Romanova noted that the domestic backlash received by E.U. member states has hindered future sanctions and dampened the sentiment for maintaining the status quo (2016). Hellquist (2016) observed that E.U. spheres of influence have also been impacted by the implementation of Russian sanctions noting that, while non-member states in Europe have historically supported Brussels in sanctioning efforts because it was economically and politically prudent to do so, Brussels has failed to draw in non-member support against Moscow. This leaves markets open to Russian exports, in particular energy exports — effectively negating the impact of the sanctions and providing a further demonstration of the arguments laid out in Haass (1998a) and Lektzian and Biglaiser (2013) that sanctions are not effective public policy tools and result in harm for the sending actor.
References:
Clawson, P. (1998). Iran. In R. Haass (Ed.), Economic sanctions and American diplomacy (pp. 85–106). Council on Foreign Relations.
Doraev, M. (2015). The “memory effect” of economic sanctions against Russia: Opposing approaches to the legality of unilateral sanctions clash again. University of Pennsylvania Journal of International Law, 37(1), 355–419. https://scholarship.law.upenn.edu/jil/vol37/iss1/7/.
Haass, R. (1998a). Conclusion: Lessons and Recommendations. In R. Haass (Ed.), Economic Sanctions and American diplomacy (pp. 197–212). Council on Foreign Relations.
Hatipoglu, E. (2014). A story of institutional misfit: Congress and U.S. economic sanctions. Foreign Policy Analysis, (10)4, 431–445. https://doi.org/10.1111/fpa.12032.
Hellquist, E. (2016). Either with us or against us? Third-country alignment with EU sanctions against Russia/Ukraine. Cambridge Review of International Affairs, 29(3), 997–1021. https://doi.org/10.1080/09557571.2016.1230591.
Iran Project. (2013, April 17). Strategic options for Iran: Balance pressure with diplomacy. https://www.scribd.com/doc/136389836/Strategic-Options-for-Iran-Balancing-Pressure-with-Diplomacy.
Kim, Y., & Blank, S. (2019). Russia’s arms sales policy after the Ukraine sanctions. Asian Politics and Policy, 11(3), 380–398. https://doi.org/10.1111/aspp.12471.
Kochajdova, M. (2019). Western sanctions: The impact on Russia’s oil and gas sector. Geopolitics of Energy, 41(4), 2–8.
Lektzian, D., & Biglaiser, G. (2013). Investment, opportunity, and risk: Do U.S. sanctions deter or encourage global investment? International Studies Quarterly, 57(1), 65–78. https://doi.org/10.1111/j.1468-2478.2012.00761.x.
Romanova, T. (2016). Sanctions and the future of E.U.-Russian economic relations. Europe-Asia Studies, 68(4), 774–796. https://dx.doi.org/10.1080/09668136.2016.1159664.
Rose, G. (1998). Libya. In R. Haass (Ed.), Economic sanctions and American diplomacy (pp. 129–156). Council on Foreign Relations.
Servettaz, E. (2014). A sanctions primer: What happens to the targeted? World Affairs, 177(2), 82–89. https://www.jstor.org/stable/43556206.
Tsakiris, T. (2015). The energy parameters of the Russian–Ukrainian–EU impasse: Dependencies, sanctions and the rise of ‘Turkish Stream.’ Southeast European and Black Sea Studies, 15(2), 203–219. https://doi.org/10.1080/14683857.2015.1060020.
U.N. Charter art 41.
U.S. Department of Energy, Energy Information Administration, Independent Statistics & Analysis (n.d.). Primary energy. https://www.eia.gov/international/data/world/total-energy/total-energy-production.
Wolfe, N. C. W. (2015, April). Nuclear chain reaction: Why economic sanctions are not worth the public costs. Florida Journal of International Law, 27(1), 1–22. https://heinonline.org/HOL/LandingPage?handle=hein.journals/fjil27&div=5&id=&page=.
