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Research Report

THE NEW TOOLS OF ECONOMIC WARFARE: Effects and Effectiveness of Contemporary U.S. Financial Sanctions

Elizabeth Rosenberg
Zachary K. Goldman
Daniel Drezner
Julia Solomon-Strauss
Copyright Date: Apr. 1, 2016
Pages: 78

Table of Contents

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  1. (pp. None)
  2. (pp. 1-1)
  3. (pp. 2-3)
  4. (pp. 4-7)

    The United States has had a long history with economic coercion, and in the years since 9/11, financial sanctions in particular have taken on a prominent role in the national security strategy of the United States and its allies. This era saw a remarkable expansion in the use of financial sanctions as a policy tool, and substantial innovation in the types of sanctions tools policymakers deployed to counter security threats. But central questions remain about the appropriate role and application of sanctions of various kinds – trade, financial, economic, and others. How can we measure the effects of sanctions with...

  5. (pp. 8-13)

    Just before the dawn of the 21st century, there seemed to be a strong policy consensus in Washington about economic sanctions: They didn’t work.⁹ A wide swath of policymakers and experts had internalized the hard lessons of the post-1991 Iraq sanctions.10 Indeed, a powerful motivation behind the 2003 invasion of Iraq was the widespread, albeit mistaken, belief that the U.N. sanctions regime had failed to prevent Saddam Hussein from acquiring weapons of mass destruction.11 The most widely-cited paper on economic sanctions in the 1990s was entitled, “Why Economic Sanctions Do Not Work,” in which the author claimed that sanctions worked...

  6. (pp. 14-26)

    What are policy leaders to make of the enthusiasm for the targeted sanctions implemented in the last 15 years on the one hand, and some of the concerning critiques about their effects and utility on the other? What lessons are they to draw about when sanctions, an increasingly integral element of U.S. security strategy, work and how to contemplate the costs and benefits of using them? These questions are central to the defense, security, and commercial communities. However, the policy discussion of such questions suffers from inadequate empirical analysis.

    As a contribution to the policy debate about the role of...

  7. (pp. 27-32)

    The previous chapter discussed new ways to conceive of and gauge the effects and effectiveness of country-based sanctions programs that are designed to change the behavior of rogue regimes. This chapter shifts focus to analyze the effects and effectiveness of sanctions principally targeted at non-state actors. These include sanctions programs focused on curtailing terrorism, narco-trafficking, transnational organized criminal activity, human rights abuses, malicious cyber activities, and other similar harms.

    In our survey of sanctions experts, the strongest degree of consensus was that sanctions against non-state actors were less effective than sanctions against states. A remarkable 27 out of 30 survey...

  8. (pp. 33-42)

    In contrast to the previous chapters, which focused on the effects and effectiveness of sanctions imposed on the targets of those sanctions, this chapter will highlight some of the effects that modern financial sanctions have had on the United States, its allies, and the international financial system as a whole. Some of the dynamics described below are still beginning to take shape, and it is impossible to determine at this juncture whether they ultimately will have strategic significance. One key reason for this is the difficulty in gathering extensive data to systemically determine the scope and severity of these challenges....

  9. (pp. 43-53)

    As previously discussed, the set of sanctions tools that policymakers can use to attack security threats has created profound economic and political effects and proved effective in some instances. Policymakers can improve on the efficacy of sanctions as a policy instrument to achieve national interests. But they will need to focus their attention on how to mitigate some of the negative effects of sanctions on U.S. policy goals and on the global financial system. Indeed, the task of updating and improving sanctions strategies and institutions is to retain the relevancy and cogency of these security measures.

    Improving on the authorities...

  10. (pp. 54-55)

    In recent years, sanctions have become a preferred and frequently used tool for advancing U.S. national and security priorities, often with significant effects and sometimes in a very effective manner. Sanctions may become one of the most important instruments of economic competition or hybrid warfare in the future, with undeniable staying power because of their utility in projecting power to achieve desirable policy outcomes. However, the use of contemporary sanctions has come with troubling costs and challenges, some of which undermine other U.S. policy goals and the strength and leadership of the United States as an economic and strategic player....

  11. (pp. 56-63)
  12. (pp. 64-74)
  13. (pp. 75-76)