《国际政治经济学》文献资料（International Political Economy and National Security）The Hidden Hand of Economic Coercion.pdf

The Hidden Hand of Economic Coercion Daniel W.Drezner Economic coercion-defined here as the threat or act by a sender government or governments to disrupt economic exchange with the target state,unless the target acquiesces to an articulated demand-is an increasingly prominent tool of state- craft.The United Nations (UN)Security Council voted for economic sanctions twelve times in the past decade;between 1945 and 1990,the UN had only em- ployed sanctions twice.2 Excluding the UN cases,the estimated use of sanctions in the 1990s increased by 22 percent over the previous decade.3 Sanctions are costly as well as prominent.According to one estimate,the price of sanctions to the United States is $18 billion annually in lost exports,hardly a paltry sum.The damage from sanctions to the targeted state can be devastating,as the case of Iraq made clear. To analysts,the policymaker's reliance on sanctions is puzzling;the scholarly assessment of sanctions is that they fail to yield significant concessions.There is a long and distinguished line of authors who argue that sanctions do not work.6 This negative assessment has hardened since the end of the Cold War.Gary A previous version of this article was presented at the 4th meeting of the European Consortium on Political Research's Standing Group on International Relations,Canterbury,UK,September 2001.A Council on Foreign Relations International Affairs Fellowship provided crucial support during the draft- ing of this article.Elizabeth DeSombre,Alex Downs,A.Cooper Drury,Charles Glaser,Michael His- cox,Seth Jones,Nikolay Marinov,John Mearsheimer,Emerson Niou,Bob Pape,Duncan Snidal,and Han Dorussen provided valuable comments and suggestions.I am particularly grateful to Kimberly Elliott for making her data accessible to me.Michael Cohen's assistance was invaluable during the drafting process.The usual caveat applies. 1.In the interest of style,I will use the terms economic coercion,economic statecraft,and eco- nomic sanctions interchangeably,but they are distinct categories.On the differences,see Baldwin 1985. 2.Cortright and Lopez 2000. 3.Institute for International Economics 2001. 4.Hufbauer et al.1997. 5.See Buck,Gallant,and Nossal 1998;and Garfield 1999. 6.See Galtung 1967;Knorr 1975;Bienen and Gilpin 1980;von Amerongen 1980;Lindsay 1986; Doxey 1987;Pape 1997;and Haass 1997. International Organization 57,Summer 2003,pp.643-659 2003 by The IO Foundation. D0L:10.1017/S0020818303573052

The Hidden Hand of Economic Coercion Daniel W. Drezner Economic coercion-defined here as the threat or act by a sender government or governments to disrupt economic exchange with the target state, unless the target acquiesces to an articulated demand-is an increasingly prominent tool of statecraft.' The United Nations (UN) Security Council voted for economic sanctions twelve times in the past decade; between 1945 and 1990, the UN had only employed sanctions twice.2 Excluding the UN cases, the estimated use of sanctions in the 1990s increased by 22 percent over the previous de~ade.~ Sanctions are costly as well as prominent. According to one estimate, the price of sanctions to the United States is $18 billion annually in lost exports, hardly a paltry sum.4 The damage from sanctions to the targeted state can be devastating, as the case of Iraq made clear.5 To analysts, the policymaker's reliance on sanctions is puzzling; the scholarly assessment of sanctions is that they fail to yield significant concessions. There is a long and distinguished line of authors who argue that sanctions do not work.6 This negative assessment has hardened since the end of the Cold War. Gary A previous version of this article was presented at the 4th meeting of the European Consortium on Political Research's Standing Group on International Relations, Canterbury, UK, September 2001. A Council on Foreign Relations International Affairs Fellowship provided crucial support during the drafting of this article. Elizabeth DeSombre, Alex Downs, A. Cooper Drury, Charles Glaser, Michael Hiscox, Seth Jones, Nikolay Marinov, John Mearsheimer, Emerson Niou, Bob Pape, Duncan Snidal, and Han Dorussen provided valuable comments and suggestions. I am particularly grateful to Kimberly Elliott for making her data accessible to me. Michael Cohen's assistance was invaluable during the drafting process. The usual caveat applies. 1. In the interest of style, I will use the terms economic coercion, economic statecraft, and economic sanctions interchangeably, but they are distinct categories. On the differences, see Baldwin 1985. 2. Cortright and Lopez 2000. 3. Institute for International Economics 2001. 4. Hufbauer et al. 1997. 5. See Buck, Gallant, and Nossal 1998; and Garfield 1999. 6. See Galtung 1967; Knorr 1975; Bienen and Gilpin 1980; von Amerongen 1980; Lindsay 1986; Doxey 1987; Pape 1997; and Haass 1997. International Organization 57, Summer 2003, pp. 643-659 O 2003 by The I0 Foundation. DOI: 10.1017/S0020818303573052

644 International Organization Hufbauer,Jeffrey Schott and Kimberly Ann Elliott survey the use of sanctions from 1900 to 1990 and declare a success rate of 34 percent;for sanctions imposed after 1973,the success rate falls to 24 percent.7Robert Pape argues that Hufbauer, Schott,and Elliott are far too generous;his critical reassessment of their data con- cludes that only 5 percent of sanctions attempts succeed.s These assessments have affected the trajectory of this literature.Recent work focuses on explaining the duration of sanctions instead of analyzing their utility.The assumption underly- ing these studies is that sanctions are an important indicator of domestic and/or symbolic politics,but inconsequential as a tool of statecraft. Game-theoretic approaches to studying economic sanctions argue that because of strategic interaction,one should observe most of the failures but miss most of the successes.The imposition of sanctions represents a deadweight loss of utility for both the sender and target,in the form of disrupted economic exchange.There- fore,the actors have an incentive to reach an agreement before imposition.If the sender prefers the status quo to imposing sanctions,then there should be no coer- cion attempt.If the target prefers conceding to incurring the cost of sanctions,it has an incentive to acquiesce before the imposition of sanctions.The difficulty of observing threats that never need to be executed,particularly threats made behind closed doors,raises the possibility that selection bias has seriously affected empir- ical studies of economic statecraft.If this is true,then the sanctions literature has grossly underestimated the utility of economic diplomacy. To test the selection effects argument,the crucial cases to study are those in which coercion is threatened but not implemented.If these cases exist in signifi- cant quantity and have an appreciably higher success rate than cases in which sanctions are imposed,it strengthens the argument that selection bias has ad- versely affected the trajectory of research about sanctions,underestimating the role of strategic interaction.However,locating these cases is an empirical challenge, because of the difficulty in identifying sanctions events that end at the threat stage. Has there been a failure to appreciate the strategic interaction underlying the use of economic coercion?Is there significant selection bias?The answer to both questions is yes.This article argues that the most promising vein of data to test for selection bias involves sanctions employed in the pursuit of economic or reg- ulatory goals,because of the ability to observe threats.A statistical analysis of these cases strongly suggests that selection effects are present,and that models of economic statecraft emphasizing strategic interaction hold more promise as a com- prehensive explanation of economic statecraft.The data shows that a significant number of coercion attempts end at the threat stage,before sanctions are imposed. These cases yield significantly larger concessions when compared to instances in which sanctions are imposed. 7.Hufbauer,Schott,and Elliott 1990. 8.Pape1997. 9.See Bolks and Al-Sowayel 2000;Dorussen and Mo 2001;and McGillivray and Stam 2001

644 International Organization Hufbauer, Jeffrey Schott and Kimberly Ann Elliott survey the use of sanctions from 1900 to 1990 and declare a success rate of 34 percent; for sanctions imposed after 1973, the success rate falls to 24 percent.' Robert Pape argues that Hufbauer, Schott, and Elliott are far too generous; his critical reassessment of their data concludes that only 5 percent of sanctions attempts succeed.' These assessments have affected the trajectory of this literature. Recent work focuses on explaining the duration of sanctions instead of analyzing their utility.' he assumption underlying these studies is that sanctions are an important indicator of domestic and/or symbolic politics, but inconsequential as a tool of statecraft. Game-theoretic approaches to studying economic sanctions argue that because of strategic interaction, one should observe most of the failures but miss most of the successes. The imposition of sanctions represents a deadweight loss of utility for both the sender and target, in the form of disrupted economic exchange. Therefore, the actors have an incentive to reach an agreement before imposition. If the sender prefers the status quo to imposing sanctions, then there should be no coercion attempt. If the target prefers conceding to incurring the cost of sanctions, it has an incentive to acquiesce before the imposition of sanctions. The difficulty of observing threats that never need to be executed, particularly threats made behind closed doors, raises the possibility that selection bias has seriously affected empirical studies of economic statecraft. If this is true, then the sanctions literature has grossly underestimated the utility of economic diplomacy. To test the selection effects argument, the crucial cases to study are those in which coercion is threatened but not implemented. If these cases exist in significant quantity and have an appreciably higher success rate than cases in which sanctions are imposed, it strengthens the argument that selection bias has adversely affected the trajectory of research about sanctions, underestimating the role of strategic interaction. However, locating these cases is an empirical challenge, because of the difficulty in identifying sanctions events that end at the threat stage. Has there been a failure to appreciate the strategic interaction underlying the use of economic coercion? Is there significant selection bias? The answer to both questions is yes. This article argues that the most promising vein of data to test for selection bias involves sanctions employed in the pursuit of economic or regulatory goals, because of the ability to observe threats. A statistical analysis of these cases strongly suggests that selection effects are present, and that models of economic statecraft emphasizing strategic interaction hold more promise as a comprehensive explanation of economic statecraft. The data shows that a significant number of coercion attempts end at the threat stage, before sanctions are imposed. These cases yield significantly larger concessions when compared to instances in which sanctions are imposed. 7. Hufbauer, Schott, and Elliott 1990. 8. Pape 1997. 9. See Bolks and Al-Sowayel 2000; Dorussen and Mo 2001; and McGillivray and Stam 2001

Economic Coercion 645 These findings have significant implications for policy and theory.They strongly suggest that the current consensus among pundits and policymakers about the fu- tility of sanctions is misplaced.10 Economic coercion is a more useful tool than the conventional wisdom believes.The ramifications for scholarship are also im- portant.At a minimum,the empirical focus of the sanctions literature needs to move beyond an exclusive reliance on the Hufbauer,Schott,and Elliott data.Only 4.4 percent of the observations in their data set consist of sanctions that were threat- ened but not implemented.Significant research should be devoted to detecting and coding instances when sanctions were threatened but not imposed. This article is divided into five sections.The next section reviews the game- theoretic literature on economic statecraft to elaborate the underpinnings of the re- lationship between strategic interaction and selection effects.The third section discusses the data on U.S.sanctions in pursuit of economic or regulatory goals to see if it is suitable for testing the strategic interaction argument.The fourth section provides a statistical analysis of three different sets of this data;the pattern of sanc- tions outcomes supports the presence of selection effects and strategic interaction. The final section considers the implications of these findings for policy and theory. Strategic Interaction in Economic Coercion Most theories of coercion posit a similar model of action,as seen in Figure 1.The sender threatens to interrupt the status quo and block a stream of economic ex- change with the target unless the sanctioned country acquiesces to a specific de- mand made by the sender.If the target complies,sanctions are not imposed.If the target stands firm,the sender faces a choice between backing down or carrying out its threat and imposing sanctions.Sanctions impose costs on both the target and sender relative to the status quo by disrupting economic exchange.There are differences within the individual modeling efforts,but this is the basic narrative.2 Game-theoretic models of coercion that treat the sender and target as rational unitary actors share a common prediction:successful instances of economic coer- cion are much more likely to end at the threat stage than the imposition stage. This insight is hardly original to the study of economic coercion;it comes from the economics literature on bargaining.3 An agreement before implementation avoids the deadweight cost of the sanctions imposition for both the target and sender. It is,therefore,a more"efficient"outcome for rational utility maximizers.4 Under 10.For an example of how high up the policy food chain this belief exists,see Cheney 1999. 11.Elliott acknowledges that with regard to episodes of threatened sanctions,"there are many that we have missed."E-mail correspondence with the author,21 August 2001. 12.Some models end with the target making the final decision of backing down to sanctions or standing firm. 13.Rubinstein 1982 14.Eaton and Engers 1999,411

Economic Coercion 645 These findings have significant implications for policy and theory. They strongly suggest that the current consensus among pundits and policymakers about the futility of sanctions is misplaced.10 Economic coercion is a more useful tool than the conventional wisdom believes. The ramifications for scholarship are also important. At a minimum, the empirical focus of the sanctions literature needs to move beyond an exclusive reliance on the Hufbauer, Schott, and Elliott data. Only 4.4 percent of the observations in their data set consist of sanctions that were threatened but not implemented.'' Significant research should be devoted to detecting and coding instances when sanctions were threatened but not imposed. This article is divided into five sections. The next section reviews the gametheoretic literature on economic statecraft to elaborate the underpinnings of the relationship between strategic interaction and selection effects. The third section discusses the data on U.S. sanctions in pursuit of economic or regulatory goals to see if it is suitable for testing the strategic interaction argument. The fourth section provides a statistical analysis of three different sets of this data; the pattern of sanctions outcomes supports the presence of selection effects and strategic interaction. The final section considers the implications of these findings for policy and theory. Strategic Interaction in Economic Coercion Most theories of coercion posit a similar model of action, as seen in Figure 1. The sender threatens to interrupt the status quo and block a stream of economic exchange with the target unless the sanctioned country acquiesces to a specific demand made by the sender. If the target complies, sanctions are not imposed. If the target stands firm, the sender faces a choice between backing down or carrying out its threat and imposing sanctions. Sanctions impose costs on both the target and sender relative to the status quo by disrupting economic exchange. There are differences within the individual modeling efforts, but this is the basic narrative.I2 Game-theoretic models of coercion that treat the sender and target as rational unitary actors share a common prediction: successful instances of economic coercion are much more likely to end at the threat stage than the imposition stage. This insight is hardly original to the study of economic coercion; it comes from the economics literature on bargaining.'' An agreement before implementation avoids the deadweight cost of the sanctions imposition for both the target and sender. It is, therefore, a more "efficient" outcome for rational utility maximizer^.'^ Under 10. For an example of how high up the policy food chain this belief exists, see Cheney 1999. 11. Elliott acknowledges that with regard to episodes of threatened sanctions, "there are many that we have missed." E-mail correspondence with the author, 21 August 2001. 12. Some models end with the target making the final decision of backing down to sanctions or standing firm. 13. Rubinstein 1982. 14. Eaton and Engers 1999, 41 1