Q&A with authors of a new paper aids the understanding of the difference between targeted and comprehensive sanctions, as well as their impact on the loyalty and morale of a sanctioned citizenry, revealing major flaws in the West’s current slate of sanctions against Russia for its invasion of Ukraine.
Q: What is the difference between comprehensive and targeted sanctions? Why did you study these two types of sanctions?
All sanctions aim at imposing costs on a foreign country in order to compel it to change its behavior. The sanctions should be removed if the behavior changes. Comprehensive sanctions, such as trade embargoes, impose costs on the foreign country’s population as a whole. This is meant to cause social unrest which either destabilizes the government or forces it to change its behavior to avoid being destabilized. Targeted (“smart”) sanctions impose costs directly on the political elite, e.g., blocking personal financial assets, restricting the ability to travel and to consume luxury goods, etc. This is meant to incentivize the elite to change its behavior by directly impacting its cost-benefit analysis.
The United States has frequently imposed comprehensive economic sanctions on countries that are perceived as threats against international peace and stability. More recently, there has been a push towards targeted sanctions. Both types of sanctions have been imposed on Iran and North Korea. But South Africa, Iraq and Libya faced mainly comprehensive sanctions. After the collapse of the Soviet Union, Russia used economic coercion against the newly independent states which relied on Russia to export their products, import energy and other inputs in production and transport oil and natural gas to the West.
The recent sanctions against Russia have both targeted and comprehensive components. Members of the Russian Parliament and Cabinet have been sanctioned along with their family members. Assets of oligarchs have been seized. These are targeted sanctions. Financial sanctions have restricted the ability of some banks to use the SWIFT system to facilitate foreign transactions. These hit citizens as well as the elite. Private companies such as IKEA, McDonald’s and Coca Cola have pulled out of Russia on their own initiative. This is costly to the Russian population as a whole.
In the last couple of decades, there has been a movement from comprehensive sanctions to targeted sanctions. Therefore, it is important to understand the effects and the interactions between the two types of sanctions. Our research aims to do this.
Q: What is the importance of your findings?
A: We argue that sanctions often backfire by creating a “rally round the flag” effect such that citizens’ support for their government actually increases. Therefore, the combination of comprehensive and targeted sanctions must be designed carefully. Either comprehensive sanctions should be maximized and targeted sanctions reduced, or targeted sanctions maximized and comprehensive sanctions reduced.
These ideas flow from the central point that international relations are characterized by uncertainty and limited information. The citizens of a sanctioned country such as Russia are uncertain as to the motives and objectives of the sanctioners (the West). The political elite, here President Putin, will paint the West as hostile with the intent to subjugate Russia. If sanctions help to amplify this view, they lead to an increase in support for Putin rather than a change in Russia’s behavior. This is the sense in which sanctions can backfire.
Using the strategic reasoning of game theory, we find that this “rally round the flag” effect is more likely to occur, the stronger are the targeted sanctions. Since the Russian elite is suffering severe sanctions and yet is not capitulating to the West, if the Russian citizens reason strategically they will conclude that the elite really must think the West is hostile and an existential threat to Russia. There will be no social unrest, as the Russian citizens believe their government is behaving in Russia’s best interests. Game theory suggests that the citizens will be willing to suffer comprehensive sanctions as long as the elite is suffering from targeted sanctions. For comprehensive sanctions to be truly effective in creating social unrest, targeted sanctions should therefore be minimized.
The other option is to maximize targeted sanctions, to create the most powerful incentive for the elite to cooperate, but this comes at the cost of undercutting the power of comprehensive sanctions. In this case, comprehensive sanctions should be minimized so as not to immiserate the population and thereby inadvertently help Putin’s propaganda machine.
Which option is optimal depends on three key factors – how much citizen unrest feeds into the elite’s insecurity, how likely citizens think the sanctioner is hostile, and whether a large peace dividend is released by cooperation. The threat of social unrest is more effective the more democratic is the targeted country. Comprehensive sanctions are unlikely to be effective against dictators. The more interaction there is between citizens and the West, the less difficult it is to portray the West as evil. If there is trust that, once cooperation begins, sanctions will be replaced by mutually beneficial trade, citizens have more incentive to exert pressure.
These factors contributed to the end of apartheid in South Africa. But years of comprehensive sanctions against Cuba and North Korea have led to no significant change as the elite has a repressive state apparatus and does not fear popular unrest.
Q: How do your findings relate to current events, such as the sanctions imposed on Russia?
A: For any kind of sanctions to be effective at all, they must be conditional on the targeted regime’s behavior. Sanctions must be removed if the targeted regime starts to cooperate with the sanctioner. This means “cooperation” must be clearly defined. Otherwise, the elite and the citizens do not know what they must do to have sanctions removed. Currently, the threshold for acquiescence is not clear. Perhaps, the US and Europe are waiting for President Zelensky to define the terms, but this is a necessary condition for setting expectations for President Putin. Moreover, the West must be committed to removing sanctions if Russia meets this acceptable standard of behavior. If sanctions are unconditional, they do not create incentives for Putin to cooperate with the West, or for Russian citizens to impose political pressure on him. Western leaders’ calls for regime change make it less likely Putin cooperates. If Russian citizens see no end to deprivation and no return of Western goods and services, there will be no unrest and no pressure on Putin. Opaque definitions of cooperation and unremitting sanctions will lead to a longer war and more lives lost.
Current sanctions do not seem to take into account the game theoretic logic of targeted versus comprehensive sanctions. Assets such as the yachts and mansions of oligarchs in London and France are easy to confiscate. These targeted sanctions are supposed to make the oligarchs put pressure on Putin to withdraw from Ukraine. However, these oligarchs may not be able to influence Putin’s policy decisions. Sanctioning Putin’s daughters makes more sense from the perspective of targeted sanctions. Putin’s inner circle consists of the siloviki (hard men) that run the security forces and the oil and gas company Rosneft. Targeted sanctions should ideally focus of them and on Russian exports of oil and gas. Moreover, revenue from energy sales is used to fund the war with Ukraine. However, energy sanctions are conspicuous by their absence. Germany relies on Russian natural gas for heat and has so far been immovable in its refusal to sanction Russian energy. Therefore, from the perspective of targeting, the current sanctions are ineffective.
Currently, Russian citizens seem to rally around the flag: ‘people believe that “everyone is against us” and that “Putin defends us, otherwise we would be eaten alive” ’. A major Russian newspaper reports that the US Treasury has sanctioned the children of Russian officials, publicizing targeted sanctions. So, while the comprehensive sanctions have caused bank runs, pressure on the ruble and frenzied buying at Western stores, there is a rally round the flag effect.
In some sense, the current sanctions regime is the worst of both worlds: the targeted sanctions are not aimed at key sectors such as oil and gas but are still prominent enough to create a rally round the flag effect. The comprehensive measures that have been imposed are unlikely to create enough social unrest to threaten a dictator like Putin.
There are two choices, each with political problems. One option is to target Russian exports of oil and gas. This requires Germany to accept a slowdown in its economy. If this path is followed, there is no need for comprehensive measures to block imports of Western consumer goods into Russia. Letting IKEA back in would make it harder for the Russian government to persuade its citizens that the West is hostile. After all the Beatles were banned from performing in Russia by the Soviet Union not the UK. Let Putin ban foreign imports and carry the blame. The other option is to maximize comprehensive sanctions and drop targeted sanctions, to try to create a division between the elite and the population. But it is practically impossible to remove the targeted sanctions given the strength of feeling against Putin and his henchmen.
It seems targeted sanctions is the only option truly on the table. It may even be optimal as Putin has accumulated so much coercive power domestically as to be immune from any popular unrest that could possibly be sparked by comprehensive sanctions.
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