The reputation effect of US sanctions
Timothy M. Peterson
The accomplishment of the United States’ long-standing foreign policy goals — such as nuclear non-proliferation, counter-terrorism, the prevention of narcotics trafficking, and support for human rights and democracy — requires cooperation from states throughout the international system. Sanctions have increasingly become the centrepiece of the US foreign policy toolkit employed to secure international compliance on these and other policy goals. The apparent failure of sanctions to achieve substantial policy concessions — for example in Cuba, North Korea or Iraq — has led many to doubt the effectiveness of this foreign policy instrument. However, this pessimism might follow in part from a lack of close scrutiny of the domains where economic coercion is most likely to be successful. While sanctions imposed against prolific violators of international norms might not lead to policy reversals, this does not necessarily mean that the sanctions have had no effect. In particular, as I will demonstrate, the imposition of sanctions often motivates third parties to change or avoid similar proscribed behaviour. That is, sanctions hold reputation effects.
It is intuitive to think of reputation in terms of individual-level attributes, such as one’s ‘toughness’ or ‘credibility’. With regard to the third-party deterrent effects of foreign policy, however, it is useful to also consider reputation in terms of ‘vicarious learning’. This is as sanctioning behaviour conveys information about the US government’s policy preferences and the degree to which it is willing to impose costs on itself to signal its disapproval of proscribed behaviour. Leaders throughout the world update their beliefs, and consequentially their behaviour, depending on whether they are likely to be sanctioned, particularly by the US.
Scholars were long sceptical of a third-party deterrent effect of sanctions because the US appeared inconsistent in its use of sanctions, potentially weakening any signal conveyed by an imposition. More recently, however, this is being re-evaluated by considering how the US and potential oppositional countries incorporate each other’s expected behaviour into their strategic calculus when formulating policy. This more nuanced approach has led to the finding that reputation effects do exist, though there are (at least) three points we must consider to identify them.
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Before a crisis originates
The pessimism regarding potential reputation effects of sanctions mirrors a broader view that a state’s behaviour during today’s international crises does not inform the oppositional states’ beliefs when the next crises arise. However, this misses that reputation effects are most likely to manifest in ways that prevent crises from originating. Stated differently, a focus on cases of immediate deterrence overlooks the impact of reputation on the stability of general deterrence. The third-party deterrent effect of sanctions is an extension of the fact that imposed sanctions appear relatively ineffective because targets willing to acquiesce to sanctions demands would not wait for imposition, but rather give in to the preceding threat. Taking this logic one step further, backing down to an explicit sanction threat signals weakness to a leader’s domestic audience. Thus, a leader who believes that a sanction threat is forthcoming and prefers to avoid economic restrictions is likely to change policy proactively rather than reverse it when facing US demands.
Additionally, policy-makers scrutinize sanctions for context, particularly considering their similarity to sanction targets. For example, when the US imposes human rights sanctions against an adversarial state such as North Korea or Iran, US allies such as Saudi Arabia probably do not anticipate that they could face similar punishment even if they were to engage in similar levels of abuse. However, relative political affinity is only one aspect of context. Policy-makers in states witnessing US sanctions against a third-party likely consider their similarity to the sanctioned state along many dimensions — such as regime type, degree of economic dependence on the US and the degree to which they engage in the sanctioned behaviour — in order to determine whether they might face similar punishment. The recent behavior of the sanctioning state is another of the contexts that is examined. Specifically, a state facing a US sanction threat is more likely to resist US demands if the US has recently backed down amid resistance from a previous target.
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Modest effects are still effects
Finally, reputation effects in many cases could be widespread throughout the international system yet modest in magnitude. As dramatic proactive policy change probably is rare, it is important not to overlook systematic, if modest, change in behaviour throughout the international system. For example, US human rights sanctions are associated with a minor reduction in the likelihood that third-parties worsen their abuses. Aggregated across even just a few states that are sufficiently similar to the sanction target, this suggests a meaningful reduction in human suffering following from US sanctions policy. Indeed, this finding is particularly important when considering the fact that human rights sanctions tend to worsen any such abuse in states targeted directly.
What does that mean?
Practitioners understandably desire actionable recommendations when crises arise. However, this discussion of reputation effects is better at highlighting systematic patterns that inform broader policy orientations aimed at reducing the frequency of crises. That said, there are several practical policy recommendations that result, as well as questions that invite future scholarly research.
The discussion above of reputation effects can be used to look at how specific leaders are signalling their sanctioning behaviour throughout the international system. For researchers, this provides an opportunity to examine how the reputation effect of sanctions changes over presidential administrations or differs during periods of united vs divided governments. It also indicates that, for policy-makers, it could be useful to communicate or reiterate sanctions policy shortly into the tenure of a new administration. This also means that a change in US leadership, and particularly a change in the party in control of US government, could and should lead states to reassess the implications of prior US sanctions.
Moreover, time is an important part of the context which influences the reputation effects of a state’s sanctions. This is as reputational information decays over time as only recently imposed sanctions — in particular, sanctions that have been implemented within the last 1−2 years — have a clearly observable third-party deterrent effect. This point brings us back to the importance of consistency. Policy-makers can enhance the third-party deterrent effect of sanctions by regularly threatening — and, if necessary, imposing — sanctions against prolific violators of international norms.
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Policy-makers could also leverage the connection between the reputation effects of sanctions and the domestic political processes underlying their use. A recent survey experiment found that US citizens approve of sanctions for reasons beyond immediate policy concessions — including the potential for third-party and future deterrence. Policy-makers can leverage this public support for the government to ‘do something’ in the wake of proscribed behaviour by publicizing such behaviour and the potential for sanctions. This will send signals of US disapproval to the international community. By using the media to inform the public, policy-makers can simultaneously increase the credibility of sanction threats and strengthen the third-party deterrent effect of imposed sanctions.
Finally, the imposition of sanctions could deter future proscribed behaviour by a sanction target even if that state refuses to reverse the policy that led directly to sanctions. Such temporal reputation effects for states targeted directly with sanctions are worth exploring in future research. This effect would be particularly likely to occur if reversing behaviour in the immediate aftermath of sanctions would have too high of a domestic public opinion penalty. As with third-party deterrent effects, these effects would be challenging to identify. For example, while Russia has certainly remained belligerent in the aftermath of sanctions imposed over its annexation of Crimea, we do not know how much more aggressive it might have been in a hypothetical future where no sanctions had been imposed. Scholars would benefit from developing systematic tests of recurrent proscribed behaviour in order to examine this difficult yet important, open question.
It is clear then that, while reputational information associated with sanctions is limited and not always easy to detect, it could have wide-ranging effects. This means that, if the conditions are right, a state’s sanctions may have effects far further afield than the target state — something which scholars would do well to know more about and policy-makers would do well to more actively use. The importance of context, the immediacy of the crisis and the limited nature of reputational effects could be coming clear, however much further work is needed to demonstrate all its consequences.
Timothy M. Peterson is Associate Professor in the Department of Political Science at the University of South Carolina.
The first contributions to this series are based on presentations given as part of Bridging the Gap’s New Voices in National Security program.
New Voices in National Security, the newest program by the Bridging the Gap Project, extends current national security debates by incorporating the most up-to-date research findings from both established and emerging scholars who are not typically part of the Washington, DC policy orbit. Made possible through support from the Frankel Family Foundation, the workshops are aimed to build connections between innovative national security scholars and members of the policy community, and result in a tailored outreach strategy aimed at informing sound national security decisions.