U.S. Often Hurt : Economic Sanctions Under Fire

Ever since the Boston Tea Party, Americans have tried to force change on distant governments by turning the economic screw. Thomas Jefferson called it “peaceful coercion.”

The modern term is economic sanctions. Even before South Africa joined the target list, the United States had more sanctions in place against more governments than any other nation in the world.

Now, however, the value of economic sanctions is being challenged.

“The evidence is overwhelming that (sanctions) do not have the desired impact on target countries and are a doubtful foreign policy tool,” said Robert L. Thompson, assistant secretary for economics in the Agriculture Department.

Hardly Ever Work

Few analysts would question Thompson’s assertion that sanctions hardly ever work: neither the total trade embargoes against North Korea, Vietnam, Cambodia and Cuba, nor the range of lesser sanctions against nations as diverse as Libya, the Soviet Union and Chile.

Although they may inflict inconvenience and even hardship, such sanctions rarely attain their stated goal.

North Korea, for instance, has been under embargo for nearly 37 years. But Pyongyang, one of the world’s most repressive police governments, remains bent on destabilizing the Korean peninsula.

Altogether, 15 nations are on the U.S. government’s “country specific” sanctions list. About all they have in common is behavior that the White House or Congress or both find to be particularly reprehensible.

On the list, in addition to the countries already named, are Nicaragua (for destabilizing neighbors); Iran, Syria and South Yemen (for supporting terrorists); Poland (for imposing martial law); Angola (for retaining Cuban troops), and Afghanistan (for the continuing Soviet presence there).

Sanctions May Backfire

As the old Bostonians learned, economic sanctions do not only fail. Sometimes they bite back. Although dumping British tea into the harbor raised Colonial America’s revolutionary spirits, it also got the entire port of Boston closed in reprisal. (Years later, war--not tea consumption--won American independence.)

By cutting off grain sales to the Soviet Union, former President Jimmy Carter sought to discourage the Russian invasion of Afghanistan. The invasion continued and U.S. farmers lost a major market to other grain-exporting nations. Today, Moscow refuses to buy wheat from Americans at pre-embargo levels, even though the grain ban was lifted six years ago.

Although economic sanctions usually involve trade, they also can embrace a wide range of non-merchandise restrictions, from asset freezing, investment limits and credit cutoffs to suspension of airline landing rights, cancellation of fishing rights and termination of aid. Often they come in combination.

But, whatever the combination, the ultimate losers usually are Americans.

“If damage occurs, it is to ourselves--we wind up shooting ourselves in the foot,” Thompson said.

For almost any situation, middlemen or alternate sellers and buyers are always on hand to assist with the trigger. When the United States cut off its wheat, the Soviet Union got offers from Canada, Australia and Argentina. And after President Reagan cut off trade with Nicaragua, the Sandinistas simply went deeper into Moscow’s pocket, like Cuba and other Marxist countries under embargo.

Whatever South Africa needs, most experts agree, it will be able to acquire from suppliers other than Americans, although Pretoria may have a hard time finding buyers to replace the Americans who formerly purchased its fabrics, wine, foodstuffs like lobster and other banned goods.

Open Opposition

Increasingly, economic sanctions generate open opposition here in the United States.

Congress, for instance, had to override a presidential veto last year to expand restrictions aimed--counterproductively, the critics argued--at South Africa’s apartheid policies.

U.S. wheat growers are still heard from over Carter’s wheat embargo.

And the Wall Street Journal argued that Reagan’s economic sanctions against Nicaragua “may only be producing a more radical regime.”

Reflecting the mercurial shifts in world crisis, the number of targets rises and falls over time like a fever chart.

In the past 30 years, American administrations have imposed economic sanctions in one form or another on at least 55 nations--nearly half the world--including allies Britain and France (during the Suez crisis) and even such dependent nations as South Korea, Taiwan and Israel.

Other Nations Cool

Most nations either do not bother with economic sanctions or use them hardly at all. As they see it, no one country--or even a large group of them--has sufficient leverage to make sanctions work in a world so full of alternatives, except in the rarest circumstances.

It is too easy for people--and trade patterns--to adjust. After the United Nations imposed a mandatory total world embargo on Rhodesia in 1968, that country found conduits for trade--mainly through South Africa and Portugal--and developed a highly productive agricultural system.

Only when faced with actual war against Argentina did Britain impose economic sanctions over the Falkland Islands in 1982.

But in keeping with world style, Britain maintained commercial ties with Syria last year, even after it severed diplomatic relations over an attempted terrorist bombing at London’s Heathrow Airport.

In support of the British, Washington clamped economic sanctions on Syria.

Psychological Need

Why do Americans adhere to a doctrine that others largely shun?

Even American proponents of economic sanctions concede their downside. But in many cases, they argue, the measures meet Americans’ deep psychological need to make a statement stronger than words yet short of war.

“In South Africa’s case, sanctions send a strong message that gratifies our own people, that vents our frustration,” said Alexander H. Good, director general of the Commerce Department’s U.S. and Foreign Commercial Service. “The message says that we do not consider it appropriate to do business with South Africa so long as it practices apartheid.”

Sanctions can make good American politics. In some cases, in fact, domestic politics play so predominant a role that they invite controversy over how well the national interest has been served.

After Turkey invaded Cyprus in 1974, for example, America’s Greek lobby pushed through sanctions--a military aid embargo--against Ankara, a key NATO member then host to 26 U.S. bases. The Turks closed many of those bases and opened contacts with the Soviet Union. (When the embargo was repealed in 1978, Turkey allowed four intelligence bases to reopen).

Soviet Jews

And without the instigation and support of American Jewish groups, the Jackson-Vanik amendment might never have been proposed in 1972, let alone passed. It withdraws most-favored-nation status from Moscow until the Kremlin eases emigration restrictions. Since its passage, Jewish emigration from the Soviet Union has declined.

(Except for the Jackson-Vanik amendment, the only sanction now in place against the Soviet Union is a ban on supplies to the Kama River and Zil truck factories, for having supplied vehicles used in the Afghanistan invasion).

“Sanctions (in principle) are not a partisan issue, although political liberals favor trade restrictions on right-wing governments, like South Africa and Chile, and conservatives like them on Marxist countries,” said Rep. Don Bonker (D-Wash.), chairman of the House Foreign Affairs subcommittee on international economic policy and trade.

Moves Against Terrorism

“Both parties readily support sanctions on terrorist countries,” Bonker said. “Sometimes it is about all you have available short of war if you feel you have to ‘do’ something.”

For all the publicity, the South African sanctions may not have as much economic impact as proponents apparently had hoped.

Because key South African exports like diamonds, platinum, gold and chrome are fungible--that is, indistinguishable from production elsewhere in the world--they are not embargoed. If they were, they simply could be “laundered” through middlemen. Another reason touches on national security.

“If these products were embargoed, we would have to rely on the other principal source, the Soviet Union, which would drive up the price and put more dollars into Soviet hands,” explained Prof. Gary C. Hufbauer of Georgetown University, an expert on economic sanctions.

Some Successes

In a study of 103 cases of sanctions imposed by the United States and other major countries since 1914, Hufbauer and a colleague did find cases where sanctions were effective. But they were instances that involved measures with specific objectives against small nations, such as South Korea and Taiwan (which agreed under U.S. pressure to abandon nuclear reprocessing projects).

“The last case of effective sanctions,” Hufbauer said, “were Carter’s against (former Nicaraguan dictator Anastasio) Somoza.” In 1978, Carter withheld aid and persuaded the International Monetary Fund to hold back a loan. Those steps helped to topple the already weak Somoza.

Unlike the Sandinistas later, he had nobody to turn to for help.

Against Iran, economic sanctions played an important but limited role, Hufbauer says, in the release of U.S. hostages in 1981. Other factors, such as the start of war with Iraq, significantly figured.

Economic sanctions’ cost to Americans are incalculable. But they obviously are steep for U.S. wheat growers, who now are branded by the Soviets with one of the most odious labels in the business world, “unreliable supplier.”

So long as the Soviet Union refuses to buy American wheat, for instance, who can say what the ultimate cost will be to U.S. farmers? Already it is in the billions of dollars and rising. Because Argentina vastly expanded wheat exporting capacity to meet Soviet demands, Buenos Aires is expected to remain a strong competitor indefinitely in the world market. Australia and Canada too expanded.

“The cumulative cost of sanctions as a foreign policy tool, while never fully quantified, may be as high as $25 billion a year in lost markets,” Bonker, of the house subcommittee on international economic policy and trade, said. For an individual American company, the result of sanctions can be devastating.

In 1981, in response to the Soviet role behind martial law in Poland, the United States banned oil and gas equipment sales to the Soviet Union. As a result, General Electric lost a $175-million contract to supply components for gas compressor turbines for the giant Yamal pipeline connecting Siberian fields with Western Europe.

Contract Lost

And Caterpillar lost a $90-million contract for 200 pipe layers, which the Soviets diverted to a Japanese company, Komatsu, a construction equipment company that had never before made pipe-laying equipment of such huge size.

Last month, under pressure from the U.S. business community, Reagan lifted the oil and gas equipment sanction. But now, on the basis of its Soviet experience, Komatsu is a world-class competitor in the pipe-layer market and is expected to stay for keeps.

Ironies abound:

--On one hand, the U.S government is promoting sale of subsidized wheat to the Soviet Union, which has an invasion force in Afghanistan. On the other, Washington embargoes such exports to Nicaragua and four other Soviet client states for being regional troublemakers.

--In overall strategy, the United States seeks to weaken the imperial hold of Moscow on its satellites around the world. Yet economic sanctions enmesh these smaller nations more deeply in the Soviet network.

Easy Scapegoats

Sanctions also provide easy scapegoats. Although an embargo or other restriction may aim to exacerbate popular discontent, at the same time it can provide, as in Cuba and Nicaragua, a plausible propaganda excuse for the leaders’ own failure to provide for the country’s needs.

“A siege mentality can take hold,” a State Department official who asked not to be named explained. “Then you find people uniting behind their leaders, and the goal you seek becomes even more unattainable.”

Internally the State Department has no consensus on the principle of economic sanctions as a weapon in the diplomatic armory, he said.

“We all have a somewhat different viewpoint, depending on whether our own primary concerns are with terrorism or regional stability or economics. In and of themselves, economic sanctions don’t have much effect, but the value lies in the position that they express.”

‘Set an Example’

Explaining why the United States practices economic sanctioning so much more widely than other nations--in the last 20 years American administrations are said to have imposed more sanctions than all the other countries in the world have for the past 70 years--Paul Freedenberg, assistant secretary for trade administration of the Department of Commerce, said:

“First, we are the leaders of the free world and must set an example; second, we have the strongest economic system with the most leverage, and third, we don’t have the traditions of world trade that others have.”

Asked to elaborate, Freedenberg replied: “Our allies don’t see trade as relevant to foreign policy questions.”

Researcher Nina Green contributed to this article.