https://orcid.org/0000-0003-1004-5061
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Abstract
This article studies cooperation on multilateral economic sanctions. Despite low effectiveness and sanction-busting, multilateral economic sanctions are a popular tool of foreign policy. We explore an instrumental approach to sanctions and develop a game theory framework where sender states face a collective action problem when coordinating multilateral coercion. We indicate that cooperation can be achieved through repeated interactions and reputation. We test empirically the two mechanisms with the TIES data on economic sanctions and adherence to past sanction regimes and the Correlates of War data on membership in International Organizations. Our results indicate that reputation is a strong predictor of cooperation on multilateral economic coercion. The effect of repeated interaction appears conditional on reputation; states with poor reputation positively mediate its effect through repeated interaction.
Este artículo analiza la cooperación en materia de sanciones económicas multilaterales. A pesar de la escasa eficacia y de la violación de las sanciones, las sanciones económicas multilaterales son una herramienta popular de la política exterior. Exploramos un enfoque decisivo de las sanciones y desarrollamos un marco de teoría del juego en el que los Estados de origen se enfrentan a un problema de acción colectiva cuando coordinan la coerción multilateral. Indicamos que la cooperación puede lograrse mediante repetidas interacciones y mediante la reputación. Comprobamos empíricamente los dos mecanismos con los datos sobre la amenaza y la imposición de sanciones económicas (TIES, por su sigla en inglés), así como la adhesión a regímenes sancionadores anteriores y los datos del proyecto Correlates of War sobre la pertenencia a organizaciones internacionales. Nuestros resultados indican que la reputación es un fuerte predictor de la cooperación en materia de coerción económica multilateral. El efecto de la interacción repetida se ve condicionado por la reputación; los Estados con mala reputación median positivamente su efecto a través de la interacción repetida.
Le présent article s’intéresse à la coopération dans le cadre de sanctions économiques multilatérales. Malgré qu’elles soient peu efficaces et souvent violées, les sanctions économiques multilatérales restent un outil largement utilisé en politique étrangère. Nous nous intéressons à l’approche instrumentale des sanctions et développons un cadre de théorie des jeux dans lequel les États exportateurs sont confrontés au problème de l’action collective lors de la coordination de coercition multilatérale. Selon nous, la coopération est possible au moyen d’interactions répétées et grâce à la réputation. Nous testons empiriquement ces deux mécanismes à l’aide des données TIES sur les sanctions économiques et le respect des régimes de sanctions imposés par le passé, mais aussi des données du projet Correlates of War sur l’adhésion aux organisations internationales. Nos résultats indiquent que la réputation constitue un indicateur important de coopération en matière de coercition économique multilatérale. L’effet des interactions répétées semble dépendre de la réputation. En effet, les États jouissant d’une moins bonne réputation en atténuent les effets grâce aux interactions répétées.
Acknowledgments
The author would like to thank Annette Freyberg-Inan, Sebastian Krapohl, Natalia Letki, Claas Mertens, Geoffrey Underhill anonymous reviewers and the editor as well as the participants of the ECPR Joint Sessions (online, May 2021).
Correction Statement
This article has been corrected with minor changes. These changes do not impact the academic content of the article.
Notes
1 We employ the conceptualization of Morgan, Bapat, and Kobayashi (Citation2014, 8), where economic sanctions are an “actions that one or more countries take to limit or end their economic relations with a target country in an effort to persuade that country to change its policies.”
2 Yet, Galtung (Citation1967, 388) warns against a “naïve theory of sanctions,” where the effectiveness is a simple function of the severity of the sanctions; cooperation was seen as a necessary, but not a sufficient condition for multilateral sanctions to be effective.
3 In fact the payoff ought to be smaller than zero, because apart from the forgone profits the sender state has also experienced a diplomatic failure; at this stage for simplicity we keep it at zero.
4 One could assume that economic sanctions should be modelled as an increase in the costs to the state that has introduced the sanction regime, as business will move on to bust sanctions through, for example, foreign direct investment in third-party states seeking indirect access to the market of the targeted state (Barry and Kleinberg Citation2015; Early Citation2012). However, the results with asymmetric costs as an outcome of economic sanctions would not change our core findings—the game that states play can be seen as a Prisoners dilemma. In an asymmetric cost setting, the state that introduced sanctions observes lower profits than with no sanctions in place (albeit possibly higher than zero, subject to the size of the cost asymmetry). And the state that continues to trade enjoys a profit larger than under a symmetric Cournot game (yet possibly smaller than a monopoly profit, subject to the size of the cost asymmetry). An interesting insight from this theoretical approach to economic sanctions is that states that make it harder to bust sanctions also make it less appealing to cooperate. This is because the profits of the state that continues to trade move towards a monopoly profit—the highest possible return—together with the enforcement of the sanction regime on domestic business by the sender state.
5 For a more detailed discussion on the role of direct reciprocity please see the work of Imhof, Fudenberg, and Nowak (Citation2007) and Axelrod and Hamilton (Citation1981), among others.
6 We have conducted a robustness test excluding multilateral threats that have not materialised into a sanction regime after the threat failed, as they may indicate inability of the primary sender to create a coalition willing to engage in multilateral coercion beyond a threat. Results from this robustness test do not impact our main findings.
7 One could argue that institutions merely shadow the interest of states, echoing the debate advanced by Keohane and Martin (Citation1995); in this work we set out with the assumption that “institutions sometimes matter, and that it is a worthy task of social science to discover how, and under what conditions, this is the case” (Keohane and Martin Citation1995, 45)—with repeated interaction a possible mechanisms that makes IOs relevant for cooperation. However, unlike Keohane and Martin (Citation1995, 50), we are interested in cooperation to coerce rather than to achieve “lasting peace.”
8 We have decided to transform the variables in a way that follows the data generating process, hence a square root for the years in a single IO and the number of IO memberships in a single year, and a natural logarithm for the years spent at all IOs in a single year by the primary sender—because the latter follows an exponential-like growth. We offer a robustness test where we do not transform the variables in the Online Appendix (Table A.2), the data transformation does not affect our main findings.
9 Interestingly, our empirical results are in line with the recent conclusions in evolutionary game theory on the relative importance of reputation and repeated interactions; research suggests that for games with few rounds of repeated interaction reputation has a dominant role in fostering cooperation (Schmid et al. Citation2021).
10 At the same time foreign aid may have a commercial underpinning, for example through aid-for-trade like programmes, what motivates us to keep these observations in the main analysis.