World leaders are considering how to respond to Russia's annexation of Crimea from Ukraine, and there has been plenty of talk (but so far, little action) about placing economic sanctions on the newly expanded nation. Some have expressed concern that sanctions won't have the intended effect, and that they have furthermore will be imposed at the expense of the global economy.
Do economic sanctions ever work? It's a tricky question. After all, the decades-long US trade embargo against Cuba has not brought down that regime, while the US, European, and British Commonwealth sanctions against South Africa may have played a part in changing that country's leadership.
Following the recent redrawing of borders, the IGM Economic Experts Panel considered whether past experience suggests that economic sanctions do little to to deter target countries from their course of action. In a rare display of disunity, the panel was nearly equally divided over whether any such actions will be effective. Nearly a third disagree with the statement and believe that sanctions are useful. Another third are uncertain, while some others don't have an opinion, and the remainder agree that sanctions are ineffective.
"I think a part of what made Iran come to the bargaining table has to do with sanctions, though I have no way to prove this," said MIT's Abhijit Banerjee with his disagree vote. Harvard's Oliver Hart expressed a similar sentiment, saying, "My sense is that economic sanctions were important in ending apartheid in South Africa, and are leading Iran to negotiate with the West."
The significant uncertain contingent on the panel was largely concerned with knowing more specifics before they could take a stand. "Depends on the country, its trade and its politics. Also, sanctions that are initially apparently ineffective can gradually undermine a regime," said Stanford's Caroline Hoxby.
"We have evidence both ways—sanctions of Myanmar and North Korea have accomplished little, while sanctions on Iran may be useful, said Larry Samuelson of Yale.
Those who agreed that sanctions have largely proved futile expressed varying points of view. Daron Acemoglu of MIT noted differences among types of sanctions, saying, "This is true for limited sanctions being imposed on Russia. Much more comprehensive sanctions as in South Africa or Iran would be effective."
Chicago's Robert Shimer, meanwhile, pointed to the type of economy under sanction. "The effectiveness must depend on the openness of the target economy and the uniformity of the sanctions," he said.
Right now, the US response to the annexation of Crimea has been to impose sanctions against Vladimir Putin and his cronies, but the UN is calling for wider restrictions. Will they be more effective? Will Ukraine regain its most valuable territory? We don't know, and only time will tell.