Questions of Power: Beyond the Conventional Wisdom on Sanctions and Coercion

April 9, 2018

Richard Nephew, The Art of Sanctions: A View from the Field (Columbia University Press, 2017)

“Not over our dead body,” the Russian official warned his Turkish counterpart. “No to gas pipelines across the Caspian.” In the spring of 2006, not long after Russia cut off natural gas exports to Ukraine, America was renewing its efforts to diversify European gas supply routes away from Russia. The Russian official cautioned Turkey to steer clear of America’s zeal in pushing back against Russia’s attempts to exert control over Ukraine.

Yet a leading expert wasn’t too worried. Around the same time Joseph Nye argued that Russia had miscalculated in halting Ukraine’s gas supplies, because export interruptions harm Russia, too, by undermining its reputation as a reliable supplier to the rest of Europe. The next decade would be marked by a “delicate balance” in vulnerability between the two sides, Nye predicted. According to his influential argument that “power arises from asymmetries in interdependence,” Russia would be unable to attempt gas coercion because it was just as vulnerable as its targets. For years, Nye and other scholars have advised policymakers that economic coercion in a mutually beneficial relationship is only possible when one side would be hurt more by a complete or partial exit. If two countries are instead equally — or symmetrically — vulnerable to a break, the thinking goes, there’s no power potential in the relationship.

But Russia cut or threatened to reduce its gas exports multiple times after 2006. It successfully used gas leverage — cutting off Ukraine’s gas, restarting exports at high prices, and then agreeing to reduce them when Ukraine couldn’t pay — to secure a 25-year extension of the lease for the Russian Black Sea Fleet in Ukraine. The conventional wisdom suggested that Russia wouldn’t even attempt coercion in this way if there was rough symmetry in vulnerability. So what happened?

As sanctions and economic coercion increasingly become foreign policy tools of choice, it’s worth asking whether we really understand the fundamentals of power short of war. The asymmetry shortcut may be highly intuitive, but it’s misleading. Richard Nephew’s The Art of Sanctions: A View from the Field suggests that some practitioners of coercion understand why. By giving due weight to national priorities, he departs from analysis that focuses too much on relative pain and too little on the reasons that states choose to inflict or resist that pain.

Nephew’s book covers his recent experiences serving at the State Department and then as a director for Iran on the National Security Council. For 18 months, Nephew was the sanctions expert on the U.S. team negotiating the Obama administration’s landmark nuclear agreement with Iran. Now at Columbia University’s Center on Global Energy Policy, Nephew does a service to the sanctions specialists in government (whose numbers are, by some accounts, diminishing) by laying out a six-point framework for effective coercion.

Readers will find some elements of this framework to be straightforward. For sanctions to function as expected, for instance, a government must first identify its objectives, including what the target state must do before penalties are relaxed. A sanctioning government must then communicate its conditions for sanctions removal to the target state while offering to pursue any negotiation that might achieve the sanctioner’s objectives. (Of course, in practice, sanctioners have a hard time raising anything but maximal objectives.)

Given his role in the nuclear negotiations, the author’s insider account of the Iran sanctions program dominates the text. In Nephew’s telling, U.S. officials thought carefully about how to mold sanctions to fit Iran’s domestic politics. He explains, for instance, that the United States and its partners used their knowledge of the story behind the Iranian revolution when designing restrictive measures: They chose not to prohibit luxury goods from being imported into Iran, a conscious move meant to reveal income inequality within the country. This is surprising, because we tend to believe that separating elites from their playthings is an effective way to exert pressure on authoritarian regimes. In this case, the wealthy were permitted to continue buying luxury goods. Nephew suggests this helped drive average Iranians into the streets to protest their meager take-home earnings.

Even as the Iran program intensified, the book notes, the United States made it easier for U.S. and foreign companies to sell personal communications technology to Iranians, “helping ensure that the Iranian public had the ability to learn more about the dire straits of their country’s economy and to communicate with one another.” Nephew acknowledges, on the other hand, that sanctions may have had undesirable effects on Iran’s domestic politics as well. He confronts the possibility that restrictions made the Islamic Revolutionary Guards Corps (IRGC) stronger because the organization was well-positioned to help Iran procure prohibited items. The IRGC benefited economically from smuggling and became, according to Nephew, “once more heroes to the Iranian government.”

As someone who works with former U.S. Treasury Department officials, I was hoping to learn more about the division of labor between the Treasury and State Departments as Iran sanctions were intensified — especially given past interagency tensions. Nephew provides more satisfying insight into another axis of disagreement: He suggests that enduring and vitriolic differences in Washington between proponents and opponents of the Iran nuclear deal are rooted in initial disagreement over the purpose of the sanctions program. One camp has long sought regime change or, failing that, broad concessions by Iran across all of its nuclear and non-nuclear behaviors, such as support for Hezbollah. The other camp believes U.S. pressure is unlikely to change Iranian behavior across the board; thus, it was worth relaxing sanctions pressure in return for serious Iranian concessions regarding nuclear proliferation. Remaining threats can be addressed, this group holds, through maritime interdictions and other tools, including sanctions that target non-nuclear provocations. Nephew argues convincingly that, “for a while, the combination of threatened U.S. military force and a largely unified, global approach to sanctions papered over this debate,” since everyone could find something in the coercive effort to latch onto.

It seems both camps supported the early effort to “tar Iran’s financial sector as riddled with illicit activity” so that banks all over the world would avoid the country. Experts and international organizations agree that there were, and still are, serious illicit financing risks in Iran. But Nephew does not weigh in on the risk that global advertising campaigns meant to “tar” banking systems may hinder the post-sanctions relief promised by negotiators. Even after political deals are signed, the tar sticks: The financial sector tends to avoid countries it perceives as presenting severe corruption, money laundering, or terrorist financing risks. Sanctions targets, especially those who have watched the Iran case carefully, may see less incentive to change their behavior if they doubt that business will ramp up again even after they comply with the sanctions’ intent. American policy following the Iran nuclear deal has not helped. For example, lawmakers keep trying to make it harder for the United States to license the sale of civilian aircraft to Iran even though such licensing was specifically promised as part of the deal (not to mention the benefits of diverting billions of dollars in Iranian government spending into such purchases).

Nephew’s Iran discussion is nevertheless well worth reading, as are his critical assessment of Iraq sanctions in the 1990s and his coverage of current Russia and North Korea sanctions programs. Specific sanctions cases aside, the book’s conceptual approach to economic coercion leaves the reader well-equipped to avoid the traps set by conventional wisdom. First, Nephew appreciates that sanctions outcomes are subject to chance. Sanctions may fail because of inherent strategic flaws, but also because of unrelated changes that neither side can predict. The decision to implement sanctions is thus a gamble. So is the decision to resist them in hopes that the sanctioner will tire of the costs that she, too, suffers.

Second, Nephew’s framework calls on policymakers to understand a target’s national interests and “commitment to whatever it did to prompt sanctions,” not simply to identify and exploit the target’s vulnerabilities. Understanding what targets want, in his view, is just as important as knowing how pain can be brought to bear. This is notable because the conventional shortcut tells us that, to understand whether coercion is possible, we need only compare the costs that each side would pay from a break in the relationship — the vulnerability of the sanctions target versus the vulnerability of the sanctioning party. But as the Russian gas case showed, by relying on this shortcut, we fail to factor in two other crucial considerations. How badly does the sanctioning party, given its national priorities, want the target to change course? And how badly does the target want to resist making that change, given its own national priorities? As Nephew acknowledges throughout his book, these two additional preferences are more difficult to measure than the two parties’ relative costs or vulnerabilities, but that does not make them any less important.

In Nye’s analysis of Russian gas power, relative costs loom large while national priorities get short shrift. We are told that Ukraine suffers when gas inflows plunge, but Russia, too, suffers when it cuts off gas exports. Maybe so, but it turned out to be wrong to imply that rough “symmetry” would preclude coercion. Rather, we need to consider what, exactly, a coercer wants its target to do. Though the demand was implicit in this case, we now know how highly Moscow valued a lease extension for the Black Sea Fleet in Sevastopol, and we now know that Ukraine was willing to concede that lease extension rather than face a renewed gas cutoff.

It’s counterintuitive, but states can get what they want even when they are as or more vulnerable than the state they are coercing. If one state cares enough about changing its adversary’s behavior on, say, a human rights issue, the first state may be willing to gamble on sanctions for a while even if both sides would suffer equally with each passing day. The adversary may give in early if it understands this: That’s coercive power. Alternatively, the adversary may choose to risk resistance if it cares enough to maintain its current stance on human rights. This is why we shouldn’t be shocked to see sanctions threats carried out under conditions of symmetric vulnerability. Once we recognize that relative vulnerabilities are not the only core considerations in understanding any case of potential coercion, we understand the need for a framework that incorporates all of them. Motivated by David Baldwin’s writing on the concept of power, part of my recent dissertation did this by building on works by Daniel Drezner and Mark Crescenzi that went beyond the asymmetry shortcut.

Since being less vulnerable is neither necessary nor sufficient for coercive ability, it’s confusing to view vulnerability asymmetry as a “source of power,” and we should be skeptical whenever analysts try to predict the outcomes of trade wars and sanctions campaigns by identifying “the bigger loser.” In Nephew’s framing, focusing only on “pain” and ignoring “resolve” leads us astray: We need to understand what exactly states are fighting for and how important the fight is to each country. In 1988, R. Harrison Wagner recognized this, though he went too far in dismissing vulnerability comparisons altogether. It still makes sense for governments to strategically pursue low relative vulnerability, since they don’t know what sticking points could arise in a relationship with another state. This increases the number of issues over which a state may be able to get its way in the future. And if a partner state can be made so vulnerable that it would do anything to avoid damaging the relationship, we can properly call the relationship one of “dependence.”

The accepted wisdom on interdependence and power treats national interests as an afterthought. Refreshingly, The Art of Sanctions does not. That is only one reason the book is more practical than its title suggests. Nephew presumably chose the title because he believes “sanctions design will likely remain an art form, requiring flexibility, adaptability, and intuition.” When grappling with questions of economic coercion, he implies, shortcuts will get you only so far.


Omar S. Bashir received his Ph.D. in Politics from Princeton University and is now an Associate at the Financial Integrity Network, where he specializes in U.S., E.U., and U.N. sanctions programs and illicit financing safeguards. He has published academic work in the fields of engineering, international relations, and American politics. His most recent article explains why only some changes in global energy have drawn major powers into competition.

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