Alliances and Trade with Sanctioned States

Abstract

What determines how US economic sanctions affect the international trade conducted with their targets? This article develops a liberal-based explanation for why economic sanctions increase their targets' trade with some third parties and decrease it with others. It is theorized that the effects of defense pact alliances between sender and third-party states are conditional upon the strength of the third parties' commercial dependence upon the target states. Third parties will cooperate with senders when the costs are low, but use their alliance relationships as cover to sanctions bust when the commercial benefits are high. This suggests that the United States can best gain the support of allies whose cooperation matters the least, while the allies whose support is most important tend to sanctions bust. It is also theorized that a target state's allies trade more with it than its nonallies. An empirical analysis of ninety-six episodes of US-imposed sanctions supports these hypotheses.

Economic Sanctions, International Institutions, and Sanctions Busters: When Does Institutionalized Cooperation Help Sanctioning Efforts?

“…Early (2009Early ( , 2012 has shown that most of the sanctions-busting trade conducted by third-party states is driven by commercially motivated firms and traders. Commercial motivations are at the heart of what drives most private actors to engage in sanctions-busting trade, whereas government interests in sanctionsbusting are shaped by both the commercial and political benefits it can provide.…”

“…As Early (2012) has demonstrated with respect to allies of sender states, third-party leaders tend to give preference to their constituents' commercial interests in sanctions-busting over their foreign policy interests in supporting sanctioning efforts when their constituents can substantially profit from sanctions-busting. Third-party governments can shallowly cooperate with sanctioning efforts by imposing weak sanctions that they weakly/moderately enforce or deeply cooperate with sanctioning efforts by imposing severe sanctions that they assiduously enforce.…”

“…They can also respond flexibly to crackdowns and readily shift their activities to states in which oversight and enforcement is more lax (Early 2012). Preventing private sector sanctions-busting by members of a sanctions coalition poses significant monitoring and enforcement challenges that only grow larger the more states participate in a multilateral sanctions coalition.…”

“…Drawing on the liberal-based explanation of sanctions-busting trade, we include a series of variables to account for the commercial ties and profiles of the third-party and target states (Early 2009(Early , 2012. Drawing on the liberal-based explanation of sanctions-busting trade, we include a series of variables to account for the commercial ties and profiles of the third-party and target states (Early 2009(Early , 2012.…”

Economic coercion and currency crises in target countries

“…Previous research has exclusively focused on the dyadic trade and investment flows between the target and sender countries in an attempt to assess the economic impact of sanctions (Hufbauer et al, 2007;Lektzian & Souva, 2001;Biglaiser & Lektzian, 2011). Others have expanded this line of research examining the extent to which sanctions alter the trade and investment relations between the target and non-sanctioning countries (Early, 2009(Early, , 2012Lektzian & Biglaiser, 2013;Barry & Kleinberg, forthcoming).…”