Do trade embargoes work?

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SEATTLE, Washington — The conduct and policies of one nation can sometimes be contradictory to those of other nations, and trade embargoes are a popular tool to counter “bad policy.” Embargoes are a complete or partial restriction on trade between countries or conglomerates like the United Nations. Trade embargoes are often used in times of diplomatic tension to gain an advantage in foreign policy, as a form of conflict resolution, to advocate for human rights or to restrict nuclear weapons testing and advancements. But, do trade embargoes work?

Previous Well-Known Embargoes

Past embargoes like the U.S. embargoes against Cuba and Iran have been accompanied by criticism and mixed results, as have U.N. mandates calling for arms embargoes against 28 countries and organizations like the Taliban, Al-Qaeda and ISIS. Calls for smarter practices have created more specialized trade embargoes since 9/11, targeting specific sectors, organizations within countries or individuals known as Specially Designated Nationals (SDNs).

The U.S. currently has 30 sanctions programs in place against nations including North Korea, Syria, Russia and Venezuela. Foreign policies regarding these countries target acts of aggression with embargoes. For example, those put in place after the Russian attack on Ukraine and the annex of Crimea, those against North Korea (starting in the Korean War and continuing through decades of nuclear threats from the Kim regime) and those following Syrian involvement in the war in Iraq into the country’s civil war.

The Effectiveness Versus Unintended Consequences

Critics of the use of embargoes ask whether the unintended consequences are worth the changes being sought. Some unforeseen problems have included harm to citizens in the target country, lost revenue for the issuing nation or its allies and increased economic isolation.

Current sanctions against Russia appeared to be hurting the economies of the EU in 2016, leading to questions as to whether sanctions have been overused. For example, in 2014, Italy reported losing 1.25 billion euros in export revenues. Allies are pressured by the U.S. not to do business with embargoed nations, so they lose out on profit. The concern is that allies could be driven to work with the nations being punished and that the U.S., by creating a hostile economic environment full of restrictions, could also lose revenue and lose economic bargaining power.

Ultimately, the question is not ‘do trade embargoes work,’ but do the potential results of trade embargoes outweigh risks and consequences? Furthermore, how do nations formulate foreign policies that achieve results? The U.N. recommends them as part of a wider strategy, and proponents urge critics to be mindful of comparative success next to other options.

Best Practices for Successful Policies

There have been successful and unsuccessful embargoes. To measure success, nations consider whether short-term goals, like a drop in GDP in the targeted country, and long-term goals, like improvements in human rights, are being achieved. In order for an embargo to be successful, policymakers must ensure that the terms meet certain criteria. The terms should be:

  • Well-rounded: Punishments for non-compliance, like military action, must be balanced with rewards to the targeted country for changes made, such as increased aid.

  • Attainable: Long-term goals should be realistic. Goals that require extensive change are less likely to succeed.

  • Multilateral: Support from multiple countries or international bodies (i.e., EU, U.N.) can help with enforcement and better ensure the success of the embargo, especially if the country has a diverse economy and trades with many nations.

  • Credible and Flexible: Justification must be present for an embargo and it must be believed. The targeted country must be confident that the issuing nation will be fair and that changes will be rewarded and inaction punished.

The success of trade embargoes is also dependent on context. Countries like North Korea are economically isolated by design and relatively unswayed by embargoes. However, nations open to the free market tend to be more easily influenced by them. In 2015, An embargo on Iranian oil is credited with pushing Iran into a nuclear deal after decades of tension over nuclear testing.

What Can Be Determined

The success of a trade embargo is intermixed with the different diplomatic tools working between two powers, making it difficult to determine if success is a product of an embargo or a combination of tactics. In some cases, there has been some success in achieving long-term goals following an embargo. However, overall effects have been mixed and their causes uncertain.

It is, therefore difficult to answer a question like ‘do trade embargoes work’ with a simple yes or no since experts suggest a mixture of several strategies to increase the likelihood of success. Whether the balance of outcomes can be considered a success depends on the judgments of the issuing nations and how the terms of the trade embargoes are formulated.

Marissa Field
Photo: Flickr
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