The Utility of Threats in Economic Coercion

The use of economic sanctions against the Russian Federation have dominated headlines since the start of the Ukraine Crisis. In that time, they have had a distinct and damaging effect on the Russian economy. The Russian economy has had limited growth since the implementation of sanctions, and the International Monetary Fund estimates that as much as 100 billion dollars in capital will have left the country by the end of 2014. The stock market is down, as is foreign investment, and the threat of new sanctions opens the potential for more economic plight.

The European Union projects that its unilateral sanctions will impose significant cuts on Russian growth rates in the coming years, with the impact increasing year by year, potentially cutting it by 1.1% in 2015. This effect is notably independent of multilateral sanctions imposed by other nations, to include the United States, Canada, Japan, and others. The EU even projects a higher level of capital flight than the IMF, reaching 120 billion dollars by the end of the year.

Though the Russian economy has suffered damages, however, it is worth noting that the imposed sanctions have had little to no effect in achieving the assumed aim, which is deterring the country from meddling in Ukraine. Such sentiments have been noted even by the incoming EU foreign policy chief, Federica Mogherini. This lack of influence on Russia draws into question the applicability and utility of economic sanctions as a tool of international relations, and would seem to imply that another alternative is necessary.

Indeed, it would seem to be a general trend in the case of international economics for sanctions to have little effect. Political scientists such as Daniel Drezner have studied the matter extensively and reached some remarkable conclusions. While the use of sanctions since 1990 has increased dramatically, very few of these regimes have had the desired effect. As stated in the indicated article, some scholars have identified only 5% of economic sanctions succeed. This dichotomy further raises the question of what purpose sanctions serve, if they have not been successful historically, and are not successful now against Russia.

However, most scholarly analysis does not take into account circumstances in which sanctions were threatened, and only look at imposed sanctions regimes. Drezner suggests that the use of sanctions may actually be more effective in the threat than in the actual implementation. As the general success of sanctions use does not take this into account, the claimed effectiveness proportion of 5% is very misleading. In fact, there is significant evidence that many disputes in which sanctions were either threatened or imposed, the majority of disputes were resolved before those sanctions were imposed.

In analyzing sanctions as a tool of statecraft, the utility of the threat is worth considering. Still, the actual imposition of sanctions has been shown to have minimal effects at actually coercing a state to change its behavior, as the case with Russia has demonstrated so recently. The question arises as to why nations like the United States or organizations like the European Union should impose sanctions if their actual effect is unlikely to succeed. The answer to this is simple: to send a costly signal to back up the threat.

The sanctions regime in place against the Russian Federation is very costly, as has been duly noted. It is this highly visible damage that gives credence to the threat of the sanction, and allows it to be effective. A nation that seeks to go against the flow of international relations can see the damages dealt to the Russian economy, and can easily imagine the kind of disaster that might be imposed on their country. Thus, it is necessary that damaging sanctions be implemented, even if they do not have the desired outcome of deterring a state’s behavior.

Given the notion that the threat of sanctions may be more effective than their actual use, is it worth imposing sanctions against Russia? There may be little chance that the state’s behavior will change, but does the threat to other nations justify their use in this case?

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13 thoughts on “The Utility of Threats in Economic Coercion

  1. This was an interesting read. I think that while Russia’s behavior will most likely not change as a result of these sanctions, it does send a clear signal that Putin should relax his crazy, unnecessary behavior. Also, the threat to other nations does justify the use of sanctions because the threat of sanctions can keep other countries from becoming involved in this situation.

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  2. Sanctions may indeed be a good tactic to send a warning to Russia. Eventually this path may become too costly for Russia and it will ease up a bit, but that is yet to be seen. At the moment it seems like a good tactic to send a message though.

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  3. I think sanctions are a default response to remain peaceful and stop a countries aggression. I mentioned in one of my posts that Ukraine is one of many states that border Russia, so what is to stop Russia from reaching out into other countries. I think as sanctions intensify Russia will be forced into a fight or flight state. They can either invade other countries with their large military and take resources, or they can sit backed into a corner and suffer the repercussions of intense sanctions.

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  4. I think that this post just proves that economic sanctions are a viable tool to be used in IR. While they may not have the desired effect the threat of them would be non existent is states dont prove they are willing to use them. While the sanctions may not have worked yet in the long term they will be even more detrimental to the russian economy and could keep the pressure on while other options are considered

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    • To offer a counter-point to this argument, the sanctions in Russia are allowing Putin to solidify his control of the country. As an authoritarian leader, sanctions are good for his rule. At the same time, the country’s economy suffers, which can lead to the populace blaming the West rather than their government. There are two sides to every issue, and this one is more complicated than most.

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      • I’ve read an interesting article about the effects of the sanction towards Russia and Iran. (http://www.bbc.com/news/blogs-echochambers-29651742) And I was wondering how you would respond to the following statement:
        “The economic pressure isn’t expected to change Putin’s aggressive efforts to retain strong influence over Ukraine, which he considers non-negotiable,” Richter writes. “But they are causing strains in his relations with the Russian elite and business establishment, two pillars of his political support.”
        So wouldn’t internal pressure from Russian elites (as a response to the sanction) a proof that sanction would at least achieve an indirect effect in constraining a country’s behavior?

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  5. I feel that sanctions can work but often countries do not have the stomach for prolonged sanctions, such as the EU because if they actually imposed tough sanctions on Russia they would lose a major source of their oil and natural gas. The sanctions are costing the Russians money but not the enough to change their stance on the issues that brought the sanctions into existence. It’s just a way for countries to look as if they are being tough on Russia but a false toughness because most of the sanctions a geared towards individuals and not Russia itself.

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    • Unfortunately, the problem with sanctions is that the need to be imposed in order for the threat of them to have any real weight. If countries or the EU only threaten to use them, but either never do or only impose weak sanctions, then no one will take them seriously. You’re probably right in that Russia will not change their stance on the issues in question, but these nations are also looking at other, more weak-willed countries whom need to be reminded of the danger of sanctions.

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  6. It seems that the writer of this post did good amount of research. It was interesting to read.
    As far as I’m concerned, economic sanctions are still useful. Changing the behavior of the state is not the only reason for imposing the sanctions. Sanctions should be implemented as a punishment of violating the rules of the international society. As showing that Russia is getting punished, it is implicitly telling other countries to follow the order, the rules of the global community and not to provoke. It may not seem that the numerical range is huge, Russia is still getting big damages on their business market.

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  7. I really enjoyed reading this article, it was very informative. I believe it´s worth imposing sanctions although it may not always work and probably will not work in this case. Like the article told us, it sends costly signals and that itself is important i think, to show an actor when you´re not pleased with a certain behaviour. The threat Russia poses to other nations is not acceptable and the world can´t just stand by and watch this behaviour without doing anything. Imposing sanctions is not a perfect tools when you actually have to use it since it harms many innocent people, but it´s better than direct violence and hopefully it will lead to pressure from an unsatisfied population as well as from the international arena.

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  8. I think sanction is useful way to send signals. It does not directly harm them but to indirectly mention that other nations are taking reaction and appealing that they do not agree with. By sanction there are nothing to lose but trying to gather stances of other and to be more peaceful. But strongly wonder if it is going to work if the target come as Russia.

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  9. I think economic sanction is not affective to change the target behavior, but it is affective to make hand tying because Putin should expect the economic sanction by NATO before he moved military to Ukraine.
    Changing behavior and hand tying could be the same, but I believe that hand tying offer target more options to make decisions. Therefore, it is difficult to know how effective the economic sanction is.

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