Examining The Impact Of U.S. Sanctions Against Other Countries
DAVID GREENE, HOST:
The United States has sanctions in place against more than two dozen countries and more than 7,000 companies, individuals and groups. That is more than in any other time in U.S. history, which seems like a good moment to ask the question, do sanctions actually work? Stacey Vanek Smith and Cardiff Garcia, hosts of The Indicator from Planet Money, tried to find out.
STACEY VANEK SMITH, BYLINE: Some of the sanctions the U.S. has in place have really deep roots. U.S. sanctions against Cuba go back decades. Some sanctions are really new. Our latest sanctions against Iran went into effect just a few weeks ago.
CARDIFF GARCIA, BYLINE: Dan Drezner is a professor of international politics at the Tufts University School of Law and Diplomacy. He's also the author of "The Sanctions Paradox." Dan says there are four key elements that can help sanctions be successful.
DAN DREZNER: The first is - and I know this sounds banal - but that your demand is actually specific.
VANEK SMITH: Dan says the current demands on Iran by the Trump administration seemed really unclear and really broad when he read them. And he says this might make U.S. sanctions against Iran much less likely to be effective.
GARCIA: The second rule of sanctions, Dan says, is that it helps if you're allies in some way with the country that you are sanctioning or at least, that you do some business with that country. Otherwise, there's just not as much to lose because the ties aren't that strong. So that's rule no. 2 - sanction your friends...
VANEK SMITH: (Laughter).
GARCIA: ...Or at least your frenemies, I guess.
VANEK SMITH: Always sanction your...
VANEK SMITH: ...Frenemies. Rule no. 3 - go after the money not the products.
DREZNER: So in many ways, if you try to impose a trade embargo of some kind, as I said, you're incentivizing black market activity. And local traders are going to be perfectly happy to bust sanctions. And they're not really going to worry about, let's say, losing access to the U.S. market. On the other hand, when you talk about financial sanctions, the dollar is such an important part of global capital markets that any reputable bank does not want to risk running afoul of the United States Treasury.
GARCIA: Rule no. 4 - make sure you've got a lot of other countries on board.
VANEK SMITH: All those frenemies.
GARCIA: Yeah. Exactly, because otherwise, the country being sanctioned can more easily find other ways to do business or even worse, they might start to cut you out of the system.
DREZNER: We're sort of approaching the point where if you step back, it seems that we're using this tool an awful lot. And here, the concern becomes you're going to start incentivizing actors can find alternatives to the dollar.
GARCIA: But there's another downside, one that's a lot more human. Branko Milanovic is an economist at the City University of New York, and he specializes in inequality.
BRANKO MILANOVIC: Blanket sanctions, I think, actually, are fundamentally wrong. They punish people who, actually, don't have any influence or very small influence on what the government does.
GARCIA: Branko worries that something similar will happen in Iran, where people were already protesting a lack of drinking water and problems affording basic food staples.
VANEK SMITH: Of course, there's also this idea that sanctions will make conditions in a country really bad and cause the population to revolt and overthrow the leadership. But that can backfire, says Branko.
MILANOVIC: They have the opposite effect of people have greater solidarity with the government because they're - everybody is being affected by them.
VANEK SMITH: Ultimately, Dan says, the best kind of sanction - the most effective kind of sanction - is often the sanction that never actually happens.
DREZNER: The ideal outcome is to threaten but not impose sanctions.
VANEK SMITH: It's like a horror movie. It's better if you don't actually ever see the monster. You just sort of...
VANEK SMITH: Because once you see it, you know...
VANEK SMITH: You can fight it off, things like that.
DREZNER: And it's more menacing when you don't see it.
VANEK SMITH: Stacey Vanek Smith.
GARCIA: Cardiff Garcia, NPR News.
(SOUNDBITE OF KAYTRANADA'S "CHANCES")
GREENE: Stacey and Cardiff are the hosts of The Indicator from Planet Money, a daily podcast about economic ideas in the news.
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