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June 6, 1998


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'Impact of US sanctions is unimpressive'

Sanctions -- and their cost to the US economy -- ''will grow with the volume of trade,'' says John Paul Acton, economist and assistant director of the Congressional Budget Office.

Given the burgeoning competition for opportunities in the developing world's ''rapidly emerging economies, the leverage of today's sanctions may be even more costly in the future.''

More than 75 countries are under or threatened with unilateral sanctions in retaliation for 27 different forms of behaviour disapproved by Washington, according to the President's Export Council.

Congress is considering new laws to mandate trade bans against countries persecuting religious minorities and exploiting child labour while also putting up proposals to slow the speed with which bans are imposed.

Proposals include legislation to authorise unilateral steps only after diplomatic and multilateral efforts fail and not before lawmakers and the White House agree on the costs, benefits, and timing of such measures.

The impact of solo US action is unimpressive, says the Centrist Institute for International Economics.

Unilateral sanctions in the 1970s and 1980s succeeded in influencing target countries only 13 per cent of the time, compared to almost 70 per cent in 1945-1970, the institute says.

US sanctions falling under multilateral efforts have fared better in recent years, bringing the overall success rate to one out of every five cases.

Unilateral sanctions tend to fail ''because the world's economy has become too interdependent'', says Under Secretary of State Stuart Eizenstat. ''When we act alone to deny another country access to our products or to our markets, it usually has plenty of alternatives.''

Washington will not hesitate to impose unilateral measures where necessary, Eizenstat says. However, these ''often harm our foreign policy... When we act alone to punish a bad government, we give it a scapegoat for problems of its own making,'' he notes, pointing to Cuba, Iran and Libya.

Benefits of trade bans often are elusive but ''the costs are more tangible,' says CIIE research fellow Kimberly Elliot. Sanctions cost the United States between $ 15 million and 19 million annually in lost exports -- or 200,000 relatively well-paying jobs.

However, ''some of the lost exports will certainly be redirected to other markets,'' argues Thea Lee, director for international economics in the public policy department of the American Federation of Labour Congress of Industrial Organisations.

It puts the cost to the US economy of unilateral sanctions at around $ 1 billion per year. ''Multilateral sanctions can result in a greater loss to the national income than unilateral sanctions,'' he warns.

''Without the full participation of other countries, sanctioned goods can be rerouted..., foiling the sanctions,'' he explains.

''Similarly, unilateral sanctions on investments can lead target contributors, or target countries, to seek investments from third party nations who then turn to the United States to finance other projects.''

Exactly how to impose sanctions also is subject to debate. The US law requires an automatic ban on arms exports and opposition to international loans for undeclared nuclear countries conducting tests.

But details including banking transactions, 'dual-use' items having military and civilian applications, and agricultural exports are left to the White House to decide.

Food is exempt, for example, but the future of credits enabling US farmers to export wheat to Pakistan -- their number three market -- remains uncertain as Washington considers prohibiting deals with state-owned banks there.

President Bill Clinton implemented the core measures immediately following last month's nuclear tests but is sparing many dual-use items -- for now. Other dual-use items, including high-speed computers, may be sold to other buyers in the two countries.

Disarmament groups argue stronger measures are needed to guard against further nuclear escalation because cuts in direct US aid will be relatively small. Pakistan has been under sanctions since 1990 because of nuclear suspicions and India was scheduled to get only $ 144 million in economic and military aid -- less than 15 cents for each of its 988 million citizens.

Business groups, facing a loss of customers to overseas competitors, welcome signs of flexibility. Threats of sanctions failed to deter the South Asian neighbours from conducting tests, they say, and Islamabad built its nuclear programme despite the existing US sanctions.

Diplomats consider the measures a barrier to winning peace pledges from the South Asian rivals -- because they leave Washington little to offer India and Pakistan in exchange for compliance with US wishes.

Senator Charles Robb, Democrat of Virginia, is drawing up legislation granting the president authority to waive mandatory penalties in the Nuclear Proliferation Prevention Act of 1994, say congressional staffers. That would give Bill Clinton leeway to withdraw US opposition to international loans, without which Pakistan soon could be forced into default.

Confusion exists because sanctions ''were simply invented as a deterrent. No one thought though what would happen if the deterrent failed,'' says Richard Haass, director of foreign policy studies at the influential Brookings Institution.


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