The Evils of Economic War

Economic warfare is warfare, but it is rarely treated as such when policymakers are debating whether they should employ this weapon.

Francisco Rodriguez reports the findings of a new paper on the destructive effects of sanctions:

The evidence decisively shows that sanctions make living conditions worse in target countries. I looked at 32 academic papers that estimated their effect. Of these, 30 found consistently negative effects on measures ranging from poverty, inequality and growth to health conditions and human rights.

The magnitude of the harm is dramatic. One study estimated that sanctions would lead to a decline in a state’s gross domestic product by as much as 26 per cent — equivalent to that in the Great Depression. Another found falls in female life expectancy of 1.4 years — similar to the estimated effect on global mortality of the pandemic. In many cases, the harm is similar to that suffered during armed conflicts, making economic sanctions possibly the deadliest weapon used by western powers [bold mine-DL].

Economic warfare is warfare, but it is rarely treated as such when policymakers are debating whether they should employ this weapon. The U.S. has engaged in armed conflict reflexively over the last thirty years, and it has been even more cavalier in waging economic war. Policymakers know in advance that economic warfare won’t achieve anything useful, but many still endorse waging economic war because they don’t take its deadly consequences seriously and because they take for granted that the U.S. has the right to inflict punishment on target states at will. Their desire to be seen “doing something” about some international problem counts for more in their minds than the lives and welfare of innocent people.

Sanctions advocates often present using this weapon as a peaceful alternative to war rather than acknowledging that it is a different form of warfare, and they do this to make an indiscriminate and cruel policy seem humane by comparison. The illusion that economic warfare is a humane option makes it much easier for politicians and policymakers to endorse it, and the fact that the costs are borne by people in the targeted country makes it politically safe for them to support. When confronted with the overwhelming evidence of the harm that sanctions cause, they will usually deny that their policy harms ordinary people and insist that it somehow magically only hurts the targeted government.

In his paper, Rodriguez marvels at how such obviously harmful and failed policies continue:

The evidence surveyed in this paper shows that economic sanctions are associated with declines in living standards and severely impact the most vulnerable groups in target countries. It is hard to think of other cases of policy interventions that continue to be pursued despite the accumulation of a similar array of evidence of their adverse effects on vulnerable populations [bold mine-DL]. This is perhaps even more surprising in light of the extremely spotty record of economic sanctions in terms of achieving their intended objectives of inducing changes in the conduct of targeted states.

If broad sanctions were judged solely by their results, it is hard to see why a rational policymaker would ever support them. The proof that they do far more harm than good is extensive and well-established by now, and their lack of success in changing regime behavior is proverbial. The trick is that sanctions are usually judged by the intentions of their senders rather than by the effects that they have in the real world.

In the debate over sanctions, the evidence of sanctions failure doesn’t seem to register with the relevant policymakers. This brings to mind Steve Simon’s observation about the role of evidence in the policymaking process that I quoted the other day: “evidence in the U.S. policymaking process is often superfluous in a system where preconceived notions and conceptual frameworks derived from ideological conviction are what really matter.”¹ When it comes to economic warfare, the belief that the U.S. can and must use its power to do good things in the world outweighs the mass of evidence that it is routinely doing the opposite.

The burden of proof ought to be on sanctions advocates when they call for using such a dangerous weapon, but in practice it isn’t. The bar that advocates have to clear to justify starting an economic war is so low that it might as well be on the ground. Because sanctions are perceived as striking a blow against “rogue” governments, policymakers tend to take a “shoot first, ask questions never” approach. What matters for most policymakers is whether the policy inflicts damage and not whether it achieves any of the stated goals. Once the definition of success is watered down to causing damage, sanctions advocates will claim victory because damage is the one thing that economic warfare always causes.

The frivolous overuse of economic warfare is another aspect of our government’s excessive interventionism. Esfandyar Batmanghelidj made an important point this week in a long thread on economic warfare against Iran:

Today, the US is still far too comfortable waging war on the basis of distorted assessments of the threats posed by middling powers. It is just that US leaders take steps to make ensure that young Americans don't get killed in the fight. Sanctions make that possible.

Washington prefers economic wars because they are typically so lopsided and almost all the costs are borne by the targeted country. Sanctions give the U.S. the option to wreak havoc on weaker states without assuming the risks of military action. Because the victims of economic warfare are mostly invisible, it is possible for the U.S. to cause great harm to the people in a targeted country while feigning concern for their welfare.

If we are ever going to end the endless economic wars, we need to make policymakers and the public understand the evils of economic warfare.

1. Simon, Grand Delusion: p. 65.