In the first part of this three-part examination of sanctions, we looked at the examples of Cuba, Iraq, and North Korea, and reached the (somewhat obvious) conclusion that targeted sanctions with a precise goal can be effective while all-encompassing sanctions with a vague goal of regime change are unlikely to work. Today, we take a closer look at the effectiveness of threatening sanctions and offering incentives. From specific examples involving nuclear testing, conflict diamonds, and knock-off drugs, we will try to abstract some general guidelines.

It clearly makes sense to threaten an action before carrying it out, to give the target a chance to adjust their behavior before you are required to actually do anything. At the same time, empty threats are counterproductive in most settings, from parents trying to manage unruly children, to unions battling for better working conditions, to international diplomacy. If you're not really going to ground your teenager for a month if he comes home after curfew, don't promise you will; if your bluff is called you'll won't be taken as seriously next time. If you're not actually prepared to go on strike, don't threaten to do so; you'll lose leverage in future negotiations. If you're not fully committed to imposing sanctions if the targeted country ignores your demands, don't threaten them in the first place; it will highlight your impotency and further decrease your influence.

A firm commitment to implementing sanctions if the threat is ignored will help ensure that the sanctions are well designed (targeted and proportional), which will then make the threat more believable. If it is true that the "mere threat of sanctions" is sufficient to compel behavior change it must be because the party being threatened considers the threat both significant and credible. People tend to react differently depending on how serious they perceive the threat to be; if it is viewed as just an annoyance they might actually respond more negatively than they would absent any threat (ie, the threat would be counterproductive), while if it is viewed as significant and credible they are more likely to acquiesce to the requested behavior:

The flip side of sanctions is incentives: offer to give a country money or recognition or technological assistance or some other benefit if it agrees to change its behavior. Sanctions are the stick, incentives the carrot, and they are often employed simultaneously. The effectiveness of incentives naturally depends on their value, evaluated not in a vacuum but as stacked against the (perceived) value of the behavior that would have to be stopped in order to obtain the incentives. Channeling Austin Powers, a million dollars doesn't go as far as it used to.

What other factors influence the effectiveness of threatening sanctions and offering incentives? Let's look at a few examples and see if anything jumps out:

A. Pakistan
Motivating incident: India conducted nuclear tests in early May 1998 and there was concern that Pakistan would escalate the situation. Detailed timeline here.
Goals: Prevent Pakistan from conducting their own nuclear tests.
Methods: The US threatened sanctions against Pakistan if they tested nuclear weapons, while Japan offered them aid if they didn't.
Results: Failure. Pakistan conducted tests later that month, met with international criticism and various sanctions. Two weeks later Pakistan promised no more tests.
Comments: Presumably Pakistan decided it was more important to demonstrate that they had a working nuclear weapons program than to avoid the threatened sanctions or obtain the offered incentives. The sanctions as imposed were not particularly harsh (out of concern for Pakistan's financial situation). In October of the following year Musharraf took power in a coup, and due to his stance on the war on terror became a US ally; this friendship has been tested with Musharraf's recent dictatorial actions. There is some concern that Pakistan's weapons could fall into the wrong hands:

B. Liberia
Motivating incident: Liberian support for rebels in neighboring Sierra Leone.
Goals: Help end the brutal civil war in Sierra Leone by preventing financing via sales of conflict diamonds.
Methods: The UN Security Council threatened sanctions within two months that would prohibit the import of diamonds from Liberia and put travel restrictions upon members of the Liberian government and military.
Results: Mixed. The UN was forced to implement the sanctions, which were reasonably effective. Political progress in Sierra Leone eventually made the issue sort of moot.
Comments: Here is the follow-up report to the UN on the results of the sanctions. Extremely short version:

It seems to me that there was no real motivation for Liberia to comply with the threatened UN sanctions; there were no substantial incentives offered and the sanctions themselves were narrowly targeted towards shutting down the conflict diamond pipeline, which is exactly what Liberia was asked to do voluntarily when the sanctions were threatened. (There are a whole lot of interesting side notes to this one, from Charles Taylor's connection to Pat Robertson to Kanye West's Diamonds from Sierra Leone song (lyrics) to the dual environmental and humanitarian costs of "conflict timber.")

C. Brazil
Motivating incident: Faced with risings costs for AIDS care, Brazil threatened to break the patent on [American pharmaceutical company] Abbott's drug Kaletra.
Goals: Abbott in particular and the US in general wanted to prevent compulsory licensing.
Methods: There were suggestions that the US consider retaliatory sanctions, although I don't know if Brazil was ever formally threatened. Abbott offered to help Brazil get set up to produce a generic as soon as the patent expired.
Results: Mixed/success. Brazil managed to coerce a lower prices but refrained from making knock-offs.
Comments: Actually, Brazil also used threats to useful effect here, essentially telling Abbott to take curtailed profits or else nothing. This is a consistent strategy with Brazil and has allowed the country to provide AIDS drugs at a fraction of their cost in the US. Drug companies are typically willing to adjust to local economic conditions, and particularly when it comes to a product designed to save lives it doesn't pay to try to squeeze too much money out of poor countries, since the negative publicity offsets the marginal income gain. Brazil's approach is potentially problematic from a big-picture standpoint, in that it could perhaps decrease R&D into necessary drugs (more discussion here), but it appears to work for them. Brazil has carried through on its threats in some cases, and the legal situation is actually not entirely clear-cut:

D. Conclusions
To recap, threats are an important aspect of sanctions; they provide an opportunity for the target country to alter its behavior and avoid more serious consequences. If they are genuine, they cost nothing to attempt in lieu of immediate sanctions, but empty threats should be avoided. Threats are most effective when they are both significant and credible. Incentives (either on their own or in combination with threatened sanctions) are an alternative method of influencing the target country.

Of the three cases here, Pakistan and Liberia did not respond to initial threats (although the later targeted sanctions were reasonably effective, strengthening the conclusion from part I) while Brazil did. My hypothesis is Pakistan decided the benefits of carrying out a nuclear test outweighed the expected costs of sanctions (and the missed opportunities of incentives); it was probably considered important to demonstrate that they had a functioning nuclear weapons program, for deterrence if nothing else. For Liberia, it is possible that the UN threat was not taken seriously, but I think it more likely that there was simply no strong motivation to comply absent any meaningful incentives, since the sanctions would only force compliance anyway and did not have additional (e.g., punitive) scope. This is not a knock on the UN sanctions, which I think were reasonably designed and went to some lengths to avoid hurting ordinary citizens of Liberia, just a suggestion that for these particular sanctions the threat alone wasn't very convincing. But then, it probably wasn't intended to be; I got the impression, reading the resolution, that it was fully expected that the sanctions would go into effect after the grace period expired. With Brazil, both sides engaged in a give-and-take of threats coupled with incentives, and here the threatened consequences were significant enough that both sides wished to work out a compromise. Abbott didn't want to get zero profit, the US didn't want to see Brazil establish a trend of ignoring patents, and Brazil didn't want to start a larger trade war with the US or lose out on future drugs.

Up next, applying what we've discussed so far to some current examples where sanctions are being considered, such as Iran or Gaza. We can evaluate whether sanctions are likely to be able to accomplish the proposed goals, and if so what type would be best. We can determine whether the threat alone of these sanctions will prove compelling, and discuss what (if any) incentives would be useful. Then we can compare and contrast to what is actually being done or suggested, and consider the likely outcomes of these alternative courses of action.

Cross-posted from SC
--

Come, my friends. 'Tis not too late to seek a newer world -- Tennyson