Exclusive: Sanctions and Regime Survival

Some debates never die; they just get replayed. After the Soviet Army invaded Afghanistan in late December 1979, the United States imposed economic sanctions against the USSR. The Russian Federation since March 2014 has been subject to U.S. and EU sanctions for its annexation of Crimea and active role in the armed conflict in eastern Ukraine. The targets of the latest sanctions—political elites, business executives, and large companies and banks with close ties to Vladimir Putin—are more selective this time, but the continuation of the sanctions for nearly a year has rekindled the debate about the effectiveness of sanctions. Can sanctions compel governments to change policies? Do they encourage a “rally round the flag” effect? Can they help bring about regime change (which by now is the only way political power can genuinely change hands in Russia)?

The huge academic literature on sanctions addresses these questions in various ways, depending on what the aim of the sanctions is. Often the aim is to force a specific change of policy or behavior. In some instances, however, the coercing state has had the more ambitious objective of destabilizing and fomenting unrest in a targeted state. The idea is that if economic conditions deteriorate, the vast majority of people in the target country will blame their own government for the hardships and possibly rise up against it. The goal of regime change was at least part of the rationale for the use of economic warfare on numerous occasions during the Cold War, such as the Soviet Union’s imposition of economic sanctions against Yugoslavia in the late 1940s and early 1950s, the U.S. economic embargo against Cuba starting in 1960 (and tightened considerably in 1962), Soviet economic coercion against Albania and China in the 1960s, U.S. economic pressure on Salvador Allende’s government in Chile in the early 1970s, and the U.S economic embargo against Iran starting in 1979.

Moreover, even when the coercing state’s objectives are relatively limited and are not aimed at triggering upheavals and rebellion per se, one of the consequences of economic pressure might be an outbreak of destabilizing unrest in the target country. Indeed, some advocates of economic sanctions have argued that fears of such unrest are precisely what would spur the targeted regime to comply with the coercing state’s wishes.[1]

Despite the frequent use of economic pressure by states against other states, Western scholars and public officials have long questioned whether the tactic actually works. Much of the debate about the efficacy of economic sanctions lies outside the scope of this blog post, but some scholars have specifically focused on the question of whether economic coercion is likely to be successful in provoking political instability and undermining the ruling authorities in the target country. In particular, large-n studies show that, on average, economic sanctions do tend to facilitate regime change in targeted countries.

In a study of 136 countries from 1947 to 1999, Nikolay Marinov sought to determine whether “economic sanctions hurt the survival of government leaders in office.”[2] After comparing the longevity of leaders in countries that were targeted by sanctions with the longevity of leaders in countries that were not targeted, he concluded that sanctions do in fact “destabilize the leaders they target.”

In a major refinement of Marinov’s argument, Abel Escribà-Folch and Joseph Wright argue that rather than treating authoritarian regimes as a single class, scholars analyzing the impact of sanctions on regime survival must specify the type of authoritarian regime in the targeted state.[3] Escribà-Folch and Wright find that although economic sanctions do, on average, contribute to the destabilization and removal of personalistic dictators, sanctions do not have any appreciable effect on the longevity of single-party regimes and military juntas. The results of their analysis vary somewhat depending on how one treats hybrid regimes, but their findings are impressively robust.

A different take on this question comes in a study coauthored by William Kaempfer, Anton Lowenberg, and William Mertenis that relies on a model derived from public-choice theory.[4] The three authors claim that “damaging economic sanctions can have the counterproductive effect of encouraging the ruling regime and its supporters while at the same time undermining the political influence of the opposition.” As they see it, sanctions are less important for “their economic effects” than for “their impact on the relative political effectiveness of interest groups within the target country.”

Using a model of an authoritarian system in which a support-maximizing dictator engages in domestic redistribution by responding to pressures from interest groups, Kaempfer et al. contend that authoritarian rulers normally emphasize the provision of private (excludable) goods for their supporters rather than public (non-excludable) goods for the wider population. The imposition of economic sanctions, they argue, affects the relative levels of “political resources of key groups in the target countries” and thus “can alter the alignment of domestic interests” in the targeted state. In principle, this could lead to either the removal or the consolidation of the regime:

[I]f opponents of the regime are encouraged by foreign sanctions, the ability of opposition interest groups to mobilize collective action is increased. At the same time, the regime might be weakened by sanctions if potential supporters defect in expectation of imminent collapse of the status quo. However, the sanctions knife cuts both ways: it is equally likely that sanctions will cause the regime’s supporters to rally around the flag in defiance of foreign interference, thereby strengthening the ruling elite and reinforcing its objectionable policy. 

One of the implications of this approach is that sanctions cannot be effective in precipitating the downfall of the regime unless “there exists within the target country a reasonably well-organized opposition group whose political effectiveness potentially could be enhanced as a consequence of sanctions.” Even in this case, however, the sanctions might still have debilitating effects on the opposition.

The model developed by Kaempfer and his coauthors indicates that if the sanctions damage the economy of the targeted state “to such an extent as to impoverish the public, the domestic opposition’s ability to exert influence might be weakened. Moreover, the capacity of the regime to repress dissent might be increased if a poor populace is more readily policed.” Hence, the sanctions would allow the support-maximizing dictator to substitute loyalty for repression and consolidate his power.

The dictator would be helped even more if the sanctions enabled him “to gain some of the rents accruing from sanctions-induced changes in the terms of trade,” which could then be doled out to supporters to ensure their loyalty. The beneficial impact for the dictator would be multiplied if “groups that are close to the regime might be induced by the sanctions to increase their support in order to capture more of the sanctions rents for themselves,” which would mean that the costs borne by the dictator to preserve the loyalty of these key insider groups would diminish. The net result would be that the sanctions strengthen the dictatorship and undercut the main political opposition groups.

In the case of the Soviet regime and the sanctions imposed by the Carter administration in 1980 after the Soviet invasion of Afghanistan, we know for sure from declassified CPSU Politburo transcripts that Soviet leaders hated the sanctions and resented their effects. The sanctions did not, however, produce any near-term change in Soviet policy in Afghanistan.

The Reagan administration promptly lifted the measure that Soviet leaders particularly disliked, namely, the embargo on U.S. grain exports. During the 1980 election campaign, Reagan had promised voters in the Corn Belt states that he would end the grain embargo, and his administration fulfilled that promise in April 1981, just a few months after he took office.

Hence, assessing the longer-term effects of the 1980 sanctions is inherently difficult. The sanctions may have had a small deterrent effect on subsequent Soviet foreign policy decisions (e.g., during the crisis in Poland), but they did not change fundamental Soviet goals. Gorbachev's adoption of a vastly different approach to foreign policy is not directly traceable to the impact of past sanctions (though indirectly they may have played a small role).

In the case of the Russian Federation today, the U.S. and EU sanctions have not produced any discernible change in Russian policy vis-à-vis Crimea and eastern Ukraine, and Putin’s regime has given no indication that it will back down even if the sanctions are tightened. Will the sanctions help to bring about a change of regime?  With Putin’s popularity ratings at 85 percent and few if any signs of a debilitating split in the ruling elite, this goal, too seems elusive, at least for now. Although one cannot fully rule out a longer-term impact on the stability of the regime, that seems a distant prospect at best.

This comment is also available at openDemocracy here.