U.S. Sanctions Economic Sanctions Are an Important

¶ … U.S. Sanctions

Economic sanctions are an important tool of U.S. foreign policy. They are used for a variety of reasons and often have substantial repercussions for countries on the receiving ends. Sanctions are used as a way to stop objectionable actions of foreign governments such as: to stop military adventures, arms proliferation, support of terrorism and drug trafficking, and human rights abuses among others. (Department of the Treasury website, 2002) "In conjunction with diplomacy and other measures, sanctions seek to demonstrate U.S. resolve and express outrage, change the behavior of the target country, and deter other countries from resorting to similar actions in the future." (Carter, 1988)

"Sanctions provide a middle road response between diplomacy and military action." (Day, 1992) Ineffective sanctions have led to U.S. military intervention in Panama, Haiti, Somalia, and Iraq, just to name a few places, and the consequences have been quite harsh. Not to mention the fact that they have not succeeded in changing the policies as they were intended for. "In Iraq, President Bush deemed the rapid deployment of troops necessary to counter Saddam Hussein's invasion of Kuwait; but in the other cases, the U.S. armed forces have intervened after sanctions made a bad situation worse." (ENGAGE, 2002)

In recent times, sanctions have served various purposes, including warning states that their behavior is unacceptable, influencing a modification of that behavior, and threatening stronger action should the offending state refuse to comply. Not until the end of World War I did states begin to explore the notion of employing economic sanctions as a substitute to a purely military response. The end of World War II ushered in a critical new element to sanctioning: the establishment of an instrument to provide for the collective security of all states. (Hufbauer, 1997)

Types of Sanctions

The federal government has discretion under a multitude of statutes to prohibit or otherwise restrict commercial relations, private and government-assisted commerce, and financing between the United States and other countries. When needed, the Congress can provide additional authority. Within those broad categories of commerce, seven major types of sanctions are possible under current laws: restrictions on international transport, personal travel, and communication; on current exports; on current imports; on foreign aid; on trade promotion activities by the government; on lending by international financial institutions, such as the World Bank and the International Monetary Fund; and on private financing of trade and investment. In many cases, sanctions against a particular country or sanctions to promote a particular policy include a collection of government actions to restrict different aspects of commerce, based on various statutes and regulations. (Carter, 1988)

At any time, the President can take a variety of diplomatic actions that affect all types of trade and investment by altering the basic environment for commercial relations. Those actions include changing the rules of special programs -- some of which were part of bilateral agreements -- that establish the rights of foreigners to dock their ships in U.S. ports or land their aircraft on U.S. soil. In addition, the government can impede the ability of businesses to communicate and make deals by prohibiting foreigners from visiting the United States and discouraging U.S. citizens from traveling abroad. (Department of the Treasury website, 2002)

Restrictions on the sale of U.S. goods and services abroad generally have one of two objectives. In some cases, the goal is to limit some or all trade with specific countries. In others, it is to limit trade in the technologies that underlie those goods and services -- technologies that could be used to the detriment of national security.

The President's control over imports is not as sweeping or direct as his control over exports. Authority exists to restrict the imports of certain goods through quotas and to raise tariffs on imports from certain countries. Import quotas are generally a tool of commercial policy, imposed to protect domestic industries by specifying maximum levels of imports. In the past, however, the government has revised quotas for various commodities to achieve foreign policy and national security goals. The same is true for tariffs, which are fees levied on imports from a particular country. Tariffs are also instruments of commercial or sometimes economic development policy that lawmakers can alter to pursue foreign policy ends. (Carter, 1988)

The government can directly influence trade and foreign investment through its spending on foreign aid and trade promotion, including its support of lending activities by international financial institutions. Restrictions on such spending do not constitute sanctions in some people's view because they withdraw a benefit rather than impose a cost. Access to government assistance is not a right, the argument goes. But many studies of sanctions do include actions to restrict government assistance, and some mistakenly identify those restrictions as a cost to the nation.

Actions that restrict government assistance are a particular concern for some supporters of the agriculture industry. The reason is that the United States sends a large dollar amount of agricultural products abroad as food aid or with the benefit of federal export subsidies. In 1997, for example, U.S. exports of food, feed, and beverages totaled over $50 billion. Foreign assistance paid for $0.8 billion of that as food aid, and new federally guaranteed loans helped finance another $2.4 billion of those agricultural exports. (Hufbauer, 1997)

Much of the United States' foreign assistance is bilateral -- provided directly to other countries. That assistance takes the form of supplying less developed countries with in-kind aid, grants to pay for the purchase of U.S. goods and services, and technical support. The U.S. government also funds the development activities of international organizations such as the United Nations. In all, the government spent nearly $11.2 billion on development, humanitarian, and security assistance in 1997. (Hufbauer, 1997)

The Effects of U.S. Sanctions

Sanctions impact on households by limiting families' access to foodstuffs and other essential supplies. Unemployment and inflation reduce a family's purchasing power, forcing them into debt and deprivation. Destitution increases household reliance on social assistance and government handouts. Meanwhile, economic hardship caused by sanctions reduces government revenues, forcing bureaucracies to cut back on social programs, including health, education, food subsidies and support for the destitute. The result is a drastic decline in the standard of living of most households, and exhaustion of pre-existing coping strategies. The poorest households are affected first, and their children affected most.

In both Iraq and Haiti, sanctions resulted in dramatic increases in the price of staple foods. In Iraq, 1995 market prices had increased to more than 1,000 times their pre-sanctions levels. More costly food directly contributed to rising rates of malnutrition. In Iraq, from 1991 to 1995, wasting among under-5's quadrupled to 12%, while stunting doubled to 28% Meanwhile, in Haiti, one study demonstrated a rise in child malnutrition from 7 to 35% in the two years following the introduction of sanctions. (Hufbauer, 1997)

Sanctions also affect food production and agriculture. In both Haiti and Iraq, agricultural inputs - including spare parts, seeds, fertilizers and pesticides - were either restricted or in short supply. The high cost of scarcely available cooking fuel led to increased use of charcoal and firewood, contributing to deforestation and environmental degradation. In Haiti, charcoal consumption increased by 19% during the first year of the embargo, equivalent to cutting an additional 220,000 tons of wood. (Hufbauer, 1997)

In sanctioned countries, medicines and medical supplies, despite their general exemption, frequently remain in short supply. In Haiti, essential drugs were often unavailable at public facilities. In Yugoslavia, it was estimated that the availability of medicines under sanctions declined by more than 50%. In Iraq, the shortfall of medicines was closer to 90% - and included antibiotics, anesthetics, X-ray films, intravenous fluids and surgical supplies. (Hufbauer, 1997)

The immunization of children also suffers in countries affected by sanctions. In Haiti, problems with vaccine supply and the cold chain were cited as having contributed to lower vaccination rates. National measles coverage declined from 40 to 24% during the first year of the Haiti crisis. A deadly measles epidemic during 1992/93 was directly attributed to the breakdown of immunization coverage. In Iraq, vaccination programs were suspended in late 1990 due to shortages of syringes and other consumables, and vaccine coverage did not regain pre-sanctions levels until late-1991. The incidence of vaccine-preventible diseases, including pertussis, measles, diphtheria and polio all increased in Iraq during 1991/92. (Hufbauer, 1997)

Furthermore, the increase in infectious diseases uniformly observed in all sanctioned countries has been partly attributed to the deterioration of water and sanitation services, made worse by long delays in obtaining Security Council approval for spare parts and shortages of purification chemicals.

The above impacts have been associated with measurable increases in infant and child deaths. Child mortality rates increased under sanctions in Haiti, Yugoslavia and Iraq. In Iraq, under-5 mortality rates had tripled by late 1991, due to the combined influences of sanctions and war. The lack of reliable data, as well as methodological difficulties, have greatly complicated measurement of the precise contribution of sanctions, as compared to other factors, to child morbidity and mortality. (Hufbauer, 1997)

To supplement family incomes, children in sanctioned countries often leave school to seek employment, increasing school drop-out rates. Meanwhile women burdened with greatly increased household responsibilities face increasing difficulties in providing care for themselves and their families. Women's reproductive health and pre-natal care also suffers from the general decline in health services due to sanctions ill-effects. In Iraq, the proportion of babies born with low-birth-weight more than quadrupled (to 22%) between 1990 and 1995. In Haiti contraceptives, not considered essential drugs until 1993, were in short supply during the sanctioned period. (Hufbauer, 1997)

In summary, sanctions can seriously compromise the survival of all civilians, particularly children. Despite humanitarian exemptions, recent examples from Haiti, Iraq and Yugoslavia demonstrate the damaging effects of sanctions. If these negative effects are to be moderated, then greater efforts are required to protect innocent and vulnerable civilians from sanctions ill-effects. One step in this effort is to improve assessment and monitoring of the humanitarian impact of sanctions on vulnerable civilian groups. A more confident and reliable assessment mechanism may help policymakers fine-tune sanctions, making them less harmful to innocent civilians.

Costs of Economic Sanctions to the United States

While the benefits of economic sanctions are elusive, the costs often are not. Trade sanctions deprive the United States of the gains from trade and frequently penalize exporting firms that are among the most sophisticated and productive in the U.S. economy. As American sanctions have expanded and proliferated over the past 20 years, they have also led to increasing tensions between the United States and its allies and trading partners around the world.

In a recent study, it was found that economic sanctions cost the United States $15 billion to $19 billion in forgone merchandise exports to 26 target countries in 1995. Lower exports of $15 billion to $19 billion would mean a reduction of more than 200,000 jobs in the relatively higher-wage export sector and a consequent loss of nearly $1 billion in export sector wage premiums. Though the estimates were calculated using trade in the base year of 1995, similar costs accrue each year that similar sanctions remain in place.

These effects could be overstated to the extent that exporters are able to redirect their goods to other markets. (Rennack, 1998)

Many American businessmen claim that the effects of even limited unilateral U.S. sanctions go well beyond targeted sectors and that the effects linger long after they are lifted because U.S. firms come to be regarded as "unreliable suppliers." Sanctioned countries may avoid buying from U.S. exporters even when sanctions are not in place, thus giving firms in other countries a competitive advantage in those markets. Exports lost today may also mean lower exports after sanctions are lifted because U.S. firms will not be able to supply replacement parts or related technologies. Foreign firms may also design U.S. intermediate goods and technology out of their final products for fear of one day being caught up in a U.S. sanction episode. (ENGAGE, 2002)

In a $7 trillion economy these costs may not be huge but they are tangible. Moreover, they are concentrated on sectors and firms involved in international trade and investment that are often the most sophisticated and competitive in the American economy. A rapidly changing global economy means that unilateral economic sanctions are decreasingly useful yet increasingly costly. If sanctions are to have any chance at all of producing favorable outcomes, they must be multilateral, they must be carefully formulated, and they must be vigorously enforced. (ENGAGE, 2002)

Effect of Sanctions on Iraq

Although food is available, sanctions have caused skyrocketing inflation and plunging wages. Skyrocketing inflation and plunging wages make it impossible for most people to buy on the free market, relying instead on the limited food rations the government provides at subsidized prices. As a result of sanctions, the economy has declined by an estimated 40%; Iraq's rate of inflation runs in the triple digits.

Furthermore, sanctions have cut living standards to half their pre-war level. The cost of living has increased drastically for Iraq. To keep inflation in check, the Iraqi government has periodically cracked down on merchants-- accused of fueling inflation by overcharging products. Increasingly as worrisome to price control is the plunging value of the Iraqi dinar. On the black market, it has plunged far below its official rate of U.S. $l = Iraqi Dinar 0.60. The price of the dollar on the black market is well over 1000 dinars and continues to rise. (Clark, 1996)

Although Iraq has sustained much damage from the sanctions, there has been some reconstruction. Much of the reconstruction which has gone on in Iraq has been temporary; Iraq has obtained the parts for its reconstruction by cannibalization of other industrial sectors. Rebuilding has been emphasized in areas visible to outsiders, thus, giving the impression that the sanctions are less deleterious than they truly are. Although civilian factories incurred little damage during the war, sanctions have forced most of the factories to either close or to drastically scale back their production. Sanctions have caused shortages of raw materials and spare parts used in production; as a result, unemployment is widespread. (Rennack, 1998)

Sanctions have reduced Iraq to becoming a poor nation: a nation unable -- with its rather meager funds -- to feed itself let alone take measures to protect Iraq's environment. Currently, in Iraq, water and sanitation services are said to be in a critical state of disrepair. This is because Iraq has a lack of spare parts to repair damages both caused by the Iran-Iraq War and breakdowns of equipment. Such disrepair has led to Iraqi water tables becoming contaminated. Posing as equally detrimental to Iraqi water sources is the dumping of sewage into all major rivers: the source of drinking water. (Wood, 1999)

Additionally, shortages of equipment have forced Iraq's cities into becoming garbage dumps. With a shortage of spare parts to repair garbage trucks, garbage piles up in the cities. These garbage dumps pose as health hazards to the cities' poor, because the poor often forage through them looking for food. The shortage of equipment caused by sanctions has also made Iraq more prone to oil spills. Nonetheless, on the upside, sanctions, in some regards, may have been good for the Iraqi environment. This is because Iraq's exports of oil have been banned. Without a market to sell petrol, Iraq's chances of an oil spill are presumably less likely. Whether the chances of an oil spill has been decreased, when taking into consideration the shortage of equipment, is as of yet to be determined. (Wood, 1999)

Effects of Sanctions on Libya

The United States established economic sanctions against Libya in 1986 charging Libyan involvement in international terrorism. These sanctions prohibit U.S. citizens from buying or selling to Libya; any financial dealings with Libya; entering any contracts benefiting Libya; and travel to Libya. The 1992 U.N. sanctions severed international air links and banned arm sales to Libya. In 1993, tougher sanctions were imposed including the freezing of all Libyan financial assets abroad, closing all foreign offices of the Libyan airline, as well as prohibiting oil refining and pipeline equipment exports to Libya. In August 1996, the U.S. Congress sought to discourage foreign firms from having commercial contacts with Libya by passing the Iran and Libya Sanctions Act. (Libya, 2002)