The International Security Externalities of Economic Sanctions

• In Event: Economics as a Tool of Power

Abstract

Do countries who come under international pressure pursue more aggressive foreign policies? More specifically, are countries that become targets of economic sanctions more likely to initiate militarized interstate disputes (MIDs)? Severe U.S. economic pressure against Japan in the early 1940s is believed to have played an important role in Japan’s subsequent decision to attack Pearl Harbor. More recently, Iranian attacks against oil tankers in the Gulf of Oman and the Saudi Arabian oil fields demonstrate that ‘crippling’ economic sanctions may have considerable security externalities. Yet this question has not received adequate scholarly attention. I argue that sanctions may lead to security externalities through two main mechanisms. First, economic sanctions which impose significant economic costs on the target can create “diversionary” incentives. Sanctions and the ensuing economic problems can undermine support for the government which, in return, may use external conflicts to invoke the ‘rally-round-the-flag’ effect. Research shows that during domestic turmoil, leaders may use external conflict to strengthen their political positions. Secondly, the target may follow aggressive policies in order to enhance its bargaining position through ‘brinkmanship’. The research on crisis bargaining suggests that because of information asymmetries, countries can take costly escalatory steps, including limited military actions, to ‘signal’ their resolve. The preliminary results of this study suggest that the targets of sanctions are more likely to be involved in militarized disputes. This indicates that despite economic sanctions’ reputation as a less costly alternative to military interventions, they, too, can have significant destabilizing consequences.

Author

• Omer Zarpli, University of Pittsburgh