Economic Sanctions: The Iran Case

On November 2, the New York Times reported that Iran has begun the process of decommissioning thousands of centrifuges used for the production of highly-enriched uranium in compliance with the deal it reached with the international community this summer.   Iran’s supreme leader, Ayatollah Ali Khamenei, has endorsed the deal (with some conditions), but there is still some wrangling within the Iranian government over the execution of the deal. Under the terms of the deal, Iran must also convert one of its nuclear facilities into a light-water reactor (less useful for the creation of materials that could be used in a nuclear weapon), and it must make a series of disclosures about the nature of its nuclear activities. After the International Atomic Energy Agency (IAEA) verifies that Iran has fulfilled its responsibilities under the deal, the comprehensive economic sanctions against Iran will be lifted.

I have been thinking a lot about how this case will be viewed by scholars of economic sanctions. Will we think of the 2015 Iran nuclear deal as a case in which economic sanctions were successful? How would we know?

The term “economic sanctions” can refer to a wide range of punitive measures, and can include the freezing of a foreign leader’s assets, penalties imposed on a country’s financial system, banning the export of luxury goods to a country (a tactic we’ve tried with North Korea), and more comprehensive measures designed to stop the flow of goods into or out of a country. Different types of sanctions are supposed to work in different ways. For example, sanctions imposed against an enemy leader are intended to punish that leader or force him/her to change his/her behavior; the logic behind more comprehensive measures is that a population forced to suffer under heavy trade sanctions will pressure their government to change policies or perhaps overthrow the sitting regime. The United States currently has economic sanctions of some type in place against dozens of countries and non-state actors (like criminal organizations). The Department of the Treasury maintains a list of current sanctions here, if you would like to take a look.

Measuring the effectiveness of economic sanctions as an instrument of foreign policy is actually quite difficult. It can be relatively easy to measure the direct impact of sanctions—say, how much oil we are preventing a country from selling in a given month or year—but it is much, much harder to determine the extent to which sanctions influence the political behavior of other states. Just because the United States imposes sanctions and then the targeted state subsequently changes its behavior, this does not necessarily mean that the sanctions caused the change in behavior. It is just as possible that the change was due to domestic political factors in the targeted country, for example.

The best and most comprehensive study[1] on economic sanctions of which I am aware estimates that sanctions are effective—meaning they had some impact on the desired change in target behavior—in roughly one third of cases in which they are applied (and in some of these cases, additional instruments were also used against the target state). Sanctions tend to work best when the sanctioner makes relatively modest demands and when many countries cooperate to target the sanctioned country.

I don’t know how the Iran case will be recorded, and I think it’s far too early to make a confident assessment. First, we would have to agree about the purpose of the sanctions to assess whether they have been effective or not—were the sanctions intended to prevent Iran from obtaining nuclear weapons indefinitely, or were they designed to compel Iran to reach an agreement with the international community about its nuclear program? In the case of the first goal, we will be waiting forever to determine whether the sanctions worked (or at least until such a point when we could confidently declare that they had failed). In the case of the latter, we will need time to assess how the sanctions influenced the thinking of Iran’s top decision makers. That information may be very difficult to obtain. Leaders often have an incentive to publicly claim that sanctions (or other coercive instruments) did not affect their calculations, lest they appear weak to domestic or international rivals. We will have to wait and see, but if we do find out that the sanctions played a role in Iran’s decision to reach the agreement this summer, then I think this case is likely to be cited as a significant success for economic sanctions.

[1] Gary Hufbauer et al., Economic Sanctions Reconsidered, 3rd Edition (Peterson Institute for International Economics, 2009).