Busted Sanctions

Bryan R. Early is an Assistant Professor in the Rockefeller College of Public Affairs & Policy at the University at Albany, SUNY and the founding Director of the Project on International Security, Commerce, and Economic Statecraft at the Center for Policy Research.

• Contents and Abstracts1Introduction: Why Busted Sanctions Lead to Broken Sanctions Policies chapter abstractThis chapter offers an overview of why U.S. policy makers employ economic sanctions, the wide range of adverse effects that sanctions have, and the poor track record of success that sanctions have had. It explains how economic sanctions affect their targets and incentivize different types of responses from third-party states that vary from cooperating with them to actively undermining them. The chapter then summarizes the theory of sanctions busting, explaining why extensive sanctions busters emerge and how their sanctions-busting aid and trade impact the effectiveness of sanctioning efforts. The chapter then discusses the mixed-method research design that will be used to evaluate the theory of sanctions busting and describes the book's findings in brief.2What Are Sanctions Busters? chapter abstractThis chapter explains how economic sanctions incentivize their targets to try to forge extensive commercial ties with small numbers of third-party states and to seek out the patronage of benefactors willing to provide them with extensive aid packages. It describes the role that sanctions busters can play in undermining sanctioning efforts via their aid and trade and explains why past approaches have been unable to systematically account for these effects. The chapter draws on the South African and North Korean sanctions episodes to illustrate the motives that appear to drive aid-based versus traded-based sanctions busting and presents distinct profiles for the types of states most likely to become aid-based sanctions busters and trade-based sanctions busters.3Assessing the Consequences of Sanctions Busting chapter abstractThis chapter develops the theory of sanctions busting's explanation of how trade-based sanctions busters and target states' foreign aid flows influence the outcomes of sanctions episodes. It is hypothesized that sanctions imposed against states that have the support of trade-based sanctions busters are less likely to be successful. It is also hypothesized that target states' sensitivity to changes in their foreign aid flows means that sanctions will be less successful against states experiencing gains in their foreign aid flows and more successful against states experiencing declines in their foreign aid flows. These hypotheses are evaluated via a statistical analysis of ninety-six episodes of U.S.-imposed economic sanctions from 1950 through 2002. The results offer strong support for the hypotheses, indicating that trade-based sanctions busters and foreign aid flows each exert separate, potent effects on sanctions outcomes.4For Profits or Politics? Why Third Parties Sanctions-Bust via Trade and Aid chapter abstractThis chapter develops the theory of sanctions busting's explanation for why third-party states become aid-based sanctions busters or trade-based sanctions busters in a given sanctions episode. It explains that trade-based sanctions busting is driven primarily by the commercial interests of third-party states to exploit the lucrative trading opportunities created by sanctions, whereas aid-based sanctions-busting is primarily motivated by third-party governments' political interests in preventing the sanctions against a target from succeeding. It is argued that third-party governments will prefer to employ trade-based sanctions busting if that option is feasible because that approach is profitable instead of costly. The chapter poses a suite of hypotheses to test the theory's predictions concerning which states will engage in aid-based and trade-based sanctions busting.5Sanctions Busting for Profits: How the United Arab Emirates Busted the U.S. Sanctions against Iran chapter abstractThis chapter examines how and why trade-based sanctions-busting relationships are fostered. It evaluates the trade-based sanctions-busting relationship that formed between the United Arab Emirates (UAE) and Iran after the United States sanctioned Iran in 1979. The chapter examines the formation and evolution of the sanctions-busting relationship during the period that preceded the military alliance the UAE formed with the United States (1979–1994) and period that followed the creation of their alliance (1995–2005). The analysis reveals insights into how the emirate of Dubai emerged as the leading venue for conducting sanctions-busting trade with Iran. The chapter also illustrates how even American firms used Dubai to circumvent the U.S. government's sanctions. Its postscript analyzes how recent changes in U.S. sanctions policies (2006–2013) have finally begun to succeed in curbing the sanctions busting taking place on Iran's behalf in the UAE and other countries.6Assessing Which Third-Party States Become Trade-Based Sanctions Busters chapter abstractThis chapter conducts a statistical analysis of the factors associated with trade-based sanctions busting. It tests whether the hypothesized factors affecting trade profitability influence which third-party states become trade-based sanctions busters. It reexamines the same ninety-six episodes of U.S.-imposed sanctions evaluated in Chapter 3 but this time looks at which third-party states sanctions-busted on behalf of the target states. The results offer strong support for the sanctions-busting theory's hypotheses, indicating that cross-national differences in the factors affecting the profitability of trading with sanctioned states largely determine which third-party states become trade-based sanctions busters. The results indicate that countries with large, open economies that are proximate to and have preexisting commercial ties with target states are significantly more likely to engage in trade-based sanctions busting, as are countries allied with the United States and/or the target state.7Sanctions Busting for Politics: Analyzing Cuba's Aid-Based Sanctions Busters chapter abstractThis chapter examines the role that aid-based sanctions busting has played in sustaining Cuba since the United States first sanctioned it in 1960 and why several countries have offered Cuba their patronage. It analyzes whether the aid-based sanctions-busting support that China and the Soviet Union offered to Cuba during the Cold War and that China and Venezuela offered it following the Cold War's conclusion were consistent with the sanctions-busting theory's hypothesized conditions. The evidence from these cases generally offers support for the theory, but the analysis of China case reveals that third-party states can occasionally employ both aid-based and trade-based sanctions-busting strategies. The narrative also presents detailed insights into the diplomatic efforts undertaken by U.S. policy makers to discourage trade-based sanctions busting on Cuba's behalf and those undertaken by Fidel Castro to woo the support of aid-based sanctions busters.8Implications and Conclusions chapter abstractThis chapter offers a summary analysis of the overarching findings of the book and explores their implications for policy makers and the broader study of economic statecraft. It summarizes the overarching threat that sanctions busting poses to the effectiveness of sanctioning efforts and offers a number of recommendations about how policy makers can best respond to them. It is argued that while sanctions busters will continue to represent an endemic challenge to sanctioning efforts, they pose problems that can be anticipated and, in some cases, mitigated if properly understood. The chapter concludes by examining how future research can build on the insights garnered from the book.

"This volume provides a valuable contribution to the literature on economic sanctions and will be of considerable interest to scholars and practitioners in international trade policy, international political economy, and international relations." —Anton D. Lowenberg, Journal of Economic Literature "[I]t would be a grave mistake to take this thoughtful, penetrating, and supple book just as an argument against using sanctions as an instrument of foreign policy. It is in fact a primer filled with hard facts and harder lessons from past efforts - and mistakes - designed to show how this process can actually become more effective and productive of the intended result."—Martin Rubin, Washington Times "[R]ecent history shows that US policy makers often choose to use economic sanctions against adversaries, despite ample evidence pointing to their ineffectiveness. In this book, Early seeks to explain reasons for the frequent and porlonged use of sanctions and to identify the factors limiting their effectiveness . . . Recommended."—E. L. Whalen, CHOICE "This work is truly novel. Bryan Early is the first scholar to address sanction busting in a rigorous, systematic fashion—by analyzing what motivates states to engage in sanction busting, what measures they use, what the consequences of that busting are and, ultimately, what can be done to counteract them."—A. Cooper Drury, Professor and Chair, Department of Political Science, University of Missouri "Understanding the reasons why firms 'bust' sanctions is an important part of discerning why sanctions frequently fail. Backed up by solid empirical modeling and compelling case studies, the research presented in Busted Sanctions goes a long way toward helping us grasp both the causes and consequences of sanction busting."—David Lektzian, Associate Professor of Political Science, Texas Tech University