Sanctions aren't always effective, but you have to consider the economic force that Europe and the U.S. can bring to bear.
Economic sanctions leveled against Russia last week by the U.S. and Europe raise a question: Is such pressure effective in getting nations to change their behavior?
Sanctions have been invoked more than 100 times in the past 50 years against dozens of countries, including South Africa, North Korea—and even the United States.
They are a middle ground between war and peace. They often succeed in lowering living standards in the target country, but only sometimes achieve their political objective.
Here are a few examples:
Cuba: The U.S. banned travel and most trade with Cuba in 1960, in protest against the turn to communism by Fidel Castro, whose revolution against the regime of Fulgencio Batista succeeded in 1959. The sanctions have been maintained ever since, though loosened a bit of late. They have probably helped to keep Cuba poor. However, they have not induced any major change in Cuba’s communist system.
North Korea: The United Nations imposed sanctions on North Korea in 2006, trying to discourage it from pursuing its nuclear weapons program and to punish it for human-rights violations. There is little evidence that the sanctions have affected the actions of Kim Jong-Il, North Korea’s former dictator, or his son Kim Jong-Un, the current dictator. North Korea has lived with international sanctions on and off since 1950.
South Africa: In protest against Apartheid, a policy of racial segregation and discrimination by whites against blacks, there were various efforts by countries and by private parties to organize sanctions. The United States got serious about sanctions in 1986, during President Reagan’s term, imposing a variety of trade and capital-flow restrictions.
With Nelson Mandela leading a peaceful uprising by the black majority in South Africa, the country repealed most of its Apartheid laws in 1991. While the economic sanctions were not the only factor leading to repeal, they helped to make the South African government take the opposition’s demands seriously.
The United States. In 1973-1974, the Organization of Petroleum Exporting Countries (OPEC) imposed the so-called Arab Oil Embargo, designed to discourage U.S. support for Israel. The U.S. suffered a recession, but it never abandoned its friendship for Israel, or its practice of supplying Israel with advanced weapons.
The new sanctions against Russia—focusing on the banking, energy and arms industries—are designed to make it refrain from supporting pro-Russian separatists in the Ukraine.
There are two reasons to hope that they will succeed. One is that Russia does have important trade ties to Europe. The other is that sanctions work best when the countries imposing them have more economic power than the target does.
The U.S. and Europe together have more than $33 trillion in gross domestic product; Russia has about $2 trillion.
John Dorfman is chairman of Thunderstorm Capital LLC, an investment management firm in Boston. He can be reached at email@example.com.