Sanctions Can’t Spark Regime Change

In the last several decades, financial and economic sanctions have become a key tool of U.S. foreign policy. The Trump administration has made particularly heavy use of this tool, especially in its efforts to induce regime change in Venezuela and Iran. On March 21, for instance, National Security Adviser John Bolton tweeted that unless Venezuelan President Nicolás Maduro relinquishes power, “he and his cronies will be strangled financially.” The next day, the White House announced sanctions against one major Venezuelan bank and four of its subsidiaries, stating that the United States “will continue to take steps to pressure Maduro, his regime, and those who support him, until they step out of the way and allow a democratic transition to occur.”
And although the administration has been more oblique in its call for the overthrow of Iran’s clerical regime, the demands it has issued to Tehran are so onerous that, as former U.S. Ambassador Robert Blackwill has argued, they are “effectively impossible for Iran to accommodate without fundamentally changing its leadership and system of government.”
On April 22, the United States took the latest step in this direction by announcing that it would refuse to issue waivers allowing other countries to purchase Iranian oil—an effort to drive “Iran’s oil exports to zero,” But the Trump administration’s use of sanctions in this pursuit will probably fail. Moreover, it will likely weaken the force of sanctions as a U.S. foreign policy tool.

HOW SANCTIONS WORK
Used properly, sanctions can help persuade a target to change its behavior. But for sanctions to work in this manner, they must be aimed at behavior that the target can, however reluctantly, change. The targeted party must also believe that sanctions will be lifted if it abandons the behavior in question. For instance U.S. sanctions weakened the grip of the military in Myanmar, inducing it to finally hold elections in 2015. Or In South Africa, international sanctions helped nudge the white apartheid regime to reach a deal with Nelson Mandela’s African National Congress in 1993 to start a transition toward black majority rule. Or it persuaded the Iranian government to agree to the Joint Comprehensive Plan of Action. In each case, the sanctioned parties were willing and able to make the necessary changes, even if doing so was financially or politically painful. Also in all of these cases the United States removed (or chose not to implement) sanctions when the target adjusted its behavior.

AN IMPOSSIBLE GOAL
The logic of coercive sanctions does not hold, however, when the objective of sanctions is regime change. Put simply, because the cost of relinquishing power will always exceed the benefit of sanctions relief, a targeted state cannot conceivably accede to a demand for regime change. No matter how intense, U.S. sanctions pressure will never convince governments that they or their countries would be better off if they abandoned their revolutions in exchange for sanctions relief. Indeed, this is one key lesson of Washington’s half century of futile efforts to oust the communist regime in Cuba.
The United States imposed a trade embargo on Fidel Castro’s Cuba in 1962; more than half a century later, the regime he founded is still in place. Iran has been under U.S. sanctions since its Islamic Revolution in 1979; 40 years later, they did not budge. The United Nations imposed sanctions on Iraq after Saddam Hussein invaded Kuwait in 1990; it took a U.S.-led invasion in 2003 to end his reign.

David S. Cohen, a former top Treasury Department official who directed Iran sanctions under President Obama, says the lesson is clear: Sanctions don’t produce regime change. As the sanctions pressure on Iran intensified in 2013 and 2014, some, especially in Congress and think tanks, argued that instead of offering sanctions relief in exchange for policy concessions, Washington and its international partners should dial up the pressure until the Iranian regime collapsed. But “not only were there no indications that the regime was anywhere close to collapsing, there were no historical precedents for governments falling as a direct result of long-term sanctions pressure.” U.S. unilateral sanctions are taking a severe toll, but this economic impact should not be confused with policy success, especially when regime change is the objective.

AMERICAN OVERREACH
Even if sanctions are unlikely to spark regime change in Venezuela and Iran, one might ask: “What’s the harm in trying?” Although there are benefits to noncoercive sanctions—for example, depriving the targeted regime of resources for malign activities—the downsides are significant.
By their nature, sanctions impose costs on innocent third parties, and the more complex the sanctions, the greater the cost and the more likely they are to result in unintended harm. U.S. sanctions on Venezuela and Iran are extraordinarily complex: primary sanctions prohibit parties within the United States from engaging in a range of business and financial activities with entities in both countries. Secondary sanctions, meanwhile, prevent American individuals, banks, and other businesses from transacting with foreign entities that do business with Iran.

Such sanctions impose significant compliance costs and legal risks on both U.S. and foreign businesses. They can also unintentionally roil markets, as demonstrated by the recent episode with U.S. sanctions on the Russian aluminum giant Rusal—the Trump administration was forced to issue a series of sanction waivers to prevent the global aluminum market from collapsing before finally agreeing to lift sanctions on the company.
Nor is it possible to devise sanctions so precise as to avoid collateral harm to the target country’s population. Sanctions designed to fundamentally alter a government’s policies usually take aim at the core of the target country’s economy. And although U.S. sanctions always exempt trade in food, medicine, and medical devices, the sanctions against Venezuela and Iran have plainly exacerbated both countries’ crises, causing economic activity to recede and inflation and unemployment to spike.
These collateral harms are justifiable when sanctions are deployed in pursuit of a proportionate and plausibly achievable policy goal, but when broad-based economic sanctions are imposed in the quixotic pursuit of an impossible goal such as regime change, they are, in effect, purely punitive.

Finally, when the United States imposes punitive sanctions, it not only weakens the sanctions regime but breeds resentment and alienates would-be international partners. The power of U.S. sanctions depends largely on the dollar’s status as the global reserve currency and preferred means of exchange for international commerce, which gives the U.S. financial system an outsize role in business transactions around the world. But the dollar’s global dominance is relatively recent and by no means permanent or preordained.
In response to what they perceive as U.S. overreach other actors, including China and the European Union, are actively looking for ways to limit their exposure to the dollar and the U.S. financial system. The more the United States uses sanctions to pursue policies that lack international support, the more other countries, including U.S. allies, will seek alternatives to the dollar and the U.S. financial system. If they find such alternatives, it will be a blow not only to U.S. sanctions policy but to the United States’ position in the global financial system. In result, in the long run, it works against U.S. foreign policy interests and threatens the American economy.
Moreover, if other countries like china, India, turkey, and the EU are hit by sanctions, they could band together into “coalitions of the sanctioned,” united by a sense of grievance against the United States. They ultimately could find ways around the U.S. financial system, a loss for America. With no real benefits for U.S. policy and hidden costs that outweigh them.

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