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 furthermore will be imposed at the expense of the global
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 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
“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
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
“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
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 may tell.
Cat: Policy,Sub: Economics,