Relationship between Economic Sanctions and Militarized Conflict Focusing on Reciprocal Causation

ABSTRACT

This research empirically examines the relationship between economic sanctions and militarized conflicts for the period 1945–2001. The collective security principles of the League of Nations (after WWI) and the United Nations (after WWII) are based on the sequential imposition of economic and militarized sanctions against states that violate international rules and regulations. A recent example is the international sanctions imposed on North Korea in response to its nuclear weapons testing and ballistic missile development. Theoretical arguments in the field of international relations suggest that economic sanctions lead to militarized tensions and conflicts among states. In this research, we argue that the relationship between economic sanctions and military conflict is two-way (i.e. sanctions cause conflict, and conflict causes sanctions) rather than one-way. Using sanctions data (Threat and Imposition of Sanctions v4.0) and conflict data (Correlates of War Militarized Interstate Disputes v4.2; International Crisis Behavior v12), we find that the relationship is mutually causative. The involvement of economic sanctions causes the onset of militarized conflict, and vice versa.

KEYWORDS:

• Economic sanctions
• international crisis
• militarized dispute
• reciprocal causation

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1. Other literature on conflict suggests increasing effects of economic interdependence on militarized conflicts (see theoretical work by Waltz 1979; Gaddis 1986; Gartzke and Lupu 2012; empirical work by Barbieri 1996, 2002; Keshk, Pollins, and Reuveny 2004; Keshk, Reuveny, and Pollins 2010).

2. For related theoretical arguments, see Bearce’s (2003) study on the commercial peace theory and Most and Starr (1984) and Drury and Park (2004) regarding the foreign policy substitutability/complementarity argument.

3. Regarding simultaneity in empirical studies on militarized conflict, see Kim and Rousseau (2013) for democracy–conflict relations; for the relation between economic interdependence and conflict, see Keshk, Pollins, and Reuveny (2004), Kim and Rousseau (2005), Hegre, John Oneal, and Russett (2010), Keshk, Reuveny, and Pollins (2010), Goenner (2011, 2013), and Reuveny and Keshk (2012).

4. In response to the complementarity argument, others argue for foreign policy substitutability (see Most and Starr 1984; Selden 1999; Morgan and Palmer 2000; Palmer, Wohlander, and Clifton Morgan 2002; Palmer and Clifton Morgan 2006). For example, Selden (1999) argues that sanctions are a policy option that falls between diplomacy and war. For the substitutability argument in studies on international relations, see Most and Siverson (1987), McGinnis (1990), Most, Greffenius, and Gill (1992), Diehl (1994), Morrow (1994), and Palmer and Souchet (1994) for military alliance–arms race relations; Morgan and Schwebach (1997), Miers, Morgan and Palmer (2000), Cox and Cooper Drury (2006), Lektzian and Sprecher (2007), and T Clifton, Palmer, and Zaccariello (2010) for economic sanctions–military conflict relations; Palmer, Wohlander, and Clifton Morgan (2002) for economic aid–military conflict relations. For other issues on sanctions, see also Azam and Saadi-Sedik (2004), Driscoll, Halcoussis, and Lowenberg (2011), Peksen (2016, 2017), and Hatipoglu and Peksen (2018).

5. There have been several other data collection efforts on economic sanctions (see Drezner 1999, 60–62, 2000, 2003, 652; Marinov 2005; see also Blessing, James Alan 1975; Ellings 1985; Bayard and Elliot 1994; Elliott and David Richardson 1997; DeSombre 2000; O’Sullivan 2003; Hufbauer et al. 2009). For example, Ellings (1985) assembled data on 107 instances of economic sanctions between 1945 and 1982. O’Sullivan (2003) provides data for sanctions imposed by the US and the UN for the period 1990–2002. Hufbauer et al. (2009) collected cases of sanctions for the period 1914–2006. The main problems with these data collections on sanctions such as that of Hufbauer et al. (2009) is that they suffer from the over-representation of a single sender country (esp. the US) and/or cover a limited time frame. For insightful suggestions on this issue, we thank the editor and anonymous reviewer.

6. Despite disagreements regarding the definition of ‘sanction,’ we agree with the definition by Morgan, Bapat, and Kobayashi (2014, 543): ‘A sanction must (a) involve one or more sender states and a target state and (b) be implemented by the sender in order to change the behavior of the target state.’ However, some scholars define it differently (see Blanchard, Mansfield, and Ripsman 1999, 3; Miers and Clifton Morgan 2002, 117; Hufbauer et al. 2009, 3; see also Baldwin 1985; Drezner 2003).

7. In controlling for simultaneity in the models, we employ two different estimation strategies; first, using the current values of explanatory variables to simultaneously estimate the two models; and, second, using lagged explanatory variables and estimating in two steps (e.g. using predicted values of Involvement of Economic Sanctions (from Equation 2)(2) $\begin{array}{rl}& \mathrm{I}\mathrm{n}\mathrm{v}\mathrm{o}\mathrm{l}\mathrm{v}\mathrm{e}\mathrm{m}\mathrm{e}\mathrm{n}\mathrm{t}\mathrm{o}\mathrm{f}\mathrm{E}\mathrm{c}\mathrm{o}\mathrm{n}\mathrm{o}\mathrm{m}\mathrm{i}\mathrm{c}\mathrm{S}\mathrm{a}\mathrm{n}\mathrm{c}\mathrm{t}\mathrm{i}\mathrm{o}\mathrm{n}\mathrm{s}{,}_{†}={\beta }_0+{\beta }_1\ast \mathrm{J}\mathrm{o}\mathrm{i}\mathrm{n}\mathrm{t}\mathrm{D}\mathrm{e}\mathrm{m}\mathrm{o}\mathrm{c}\mathrm{r}\mathrm{a}\mathrm{c}\mathrm{y}{,}_{†}\\ & +{\beta }_2\ast \mathrm{L}\mathrm{e}\mathrm{v}\mathrm{e}\mathrm{l}\mathrm{o}\mathrm{f}\mathrm{E}\mathrm{c}\mathrm{o}\mathrm{n}\mathrm{o}\mathrm{m}\mathrm{i}\mathrm{c}\mathrm{I}\mathrm{n}\mathrm{t}\mathrm{e}\mathrm{r}\mathrm{d}\mathrm{e}\mathrm{p}\mathrm{e}\mathrm{n}\mathrm{d}\mathrm{e}\mathrm{n}\mathrm{c}\mathrm{e}{,}_{†}\\ & +{\beta }_3\ast \mathrm{S}\mathrm{h}\mathrm{a}\mathrm{r}\mathrm{e}\mathrm{d}\mathrm{A}\mathrm{l}\mathrm{l}\mathrm{i}\mathrm{a}\mathrm{n}\mathrm{c}\mathrm{e}\mathrm{T}\mathrm{i}\mathrm{e}\mathrm{s}{,}_{†}+{\beta }_4\ast \mathrm{D}\mathrm{i}\mathrm{s}\mathrm{t}\mathrm{a}\mathrm{n}\mathrm{c}\mathrm{e}{,}_{†}\\ & +{\beta }_5\ast \mathrm{L}\mathrm{e}\mathrm{v}\mathrm{e}\mathrm{l}\mathrm{o}\mathrm{f}\mathrm{E}\mathrm{c}\mathrm{o}\mathrm{n}\mathrm{o}\mathrm{m}\mathrm{i}\mathrm{c}\mathrm{D}\mathrm{e}\mathrm{v}\mathrm{e}\mathrm{l}\mathrm{o}\mathrm{p}\mathrm{m}\mathrm{e}\mathrm{n}\mathrm{t}{,}_{†}\\ & +{\beta }_6\ast \mathrm{U}\mathrm{n}\mathrm{i}\mathrm{t}\mathrm{e}\mathrm{d}\mathrm{S}\mathrm{t}\mathrm{a}\mathrm{t}\mathrm{e}\mathrm{s}{,}_{†}\\ & +{\beta }_7\ast \mathrm{O}\mathrm{n}\mathrm{s}\mathrm{e}\mathrm{t}\mathrm{o}\mathrm{f}\mathrm{D}\mathrm{y}\mathrm{a}\mathrm{d}\mathrm{i}\mathrm{c}\mathrm{C}\mathrm{o}\mathrm{n}\mathrm{f}\mathrm{l}\mathrm{i}\mathrm{c}\mathrm{t}{,}_{†}+\mathrm{e}\end{array}$(2) to estimate Equation 1(1) $\begin{array}{rl}& \mathrm{O}\mathrm{n}\mathrm{s}\mathrm{e}\mathrm{t}\mathrm{o}\mathrm{f}\mathrm{D}\mathrm{y}\mathrm{a}\mathrm{d}\mathrm{i}\mathrm{c}\mathrm{C}\mathrm{o}\mathrm{n}\mathrm{f}\mathrm{l}\mathrm{i}\mathrm{c}\mathrm{t}{,}_{†}={\beta }_0+{\beta }_1\ast \mathrm{L}\mathrm{e}\mathrm{v}\mathrm{e}\mathrm{l}\mathrm{o}\mathrm{f}\mathrm{D}\mathrm{e}\mathrm{m}\mathrm{o}\mathrm{c}\mathrm{r}\mathrm{a}\mathrm{c}\mathrm{y}{,}_{†}+{\beta }_2\ast \mathrm{L}\mathrm{e}\mathrm{v}\mathrm{e}\mathrm{l}\mathrm{o}\mathrm{f}\mathrm{E}\mathrm{c}\mathrm{o}\mathrm{n}\mathrm{o}\mathrm{m}\mathrm{i}\mathrm{c}\mathrm{I}\mathrm{n}\mathrm{t}\mathrm{e}\mathrm{r}\mathrm{d}\mathrm{e}\mathrm{p}\mathrm{e}\mathrm{n}\mathrm{d}\mathrm{e}\mathrm{n}\mathrm{c}\mathrm{e}{,}_{†}\\ & +{\beta }_3\ast \mathrm{B}\mathrm{a}\mathrm{l}\mathrm{a}\mathrm{n}\mathrm{c}\mathrm{e}\mathrm{o}\mathrm{f}\mathrm{P}\mathrm{o}\mathrm{w}\mathrm{e}\mathrm{r}{,}_{†}+{\beta }_4\ast \mathrm{S}\mathrm{h}\mathrm{a}\mathrm{r}\mathrm{e}\mathrm{d}\mathrm{A}\mathrm{l}\mathrm{l}\mathrm{i}\mathrm{a}\mathrm{n}\mathrm{c}\mathrm{e}\mathrm{T}\mathrm{i}\mathrm{e}\mathrm{s}{,}_{†}+{\beta }_5\ast \mathrm{C}\mathrm{o}\mathrm{n}\mathrm{t}\mathrm{i}\mathrm{g}\mathrm{u}\mathrm{i}\mathrm{t}\mathrm{y}{,}_{†}\\ & +{\beta }_6\ast \mathrm{D}\mathrm{i}\mathrm{s}\mathrm{t}\mathrm{a}\mathrm{n}\mathrm{c}\mathrm{e}{,}_{†}+{\beta }_7\ast \mathrm{M}\mathrm{a}\mathrm{j}\mathrm{o}\mathrm{r}\mathrm{P}\mathrm{o}\mathrm{w}\mathrm{e}\mathrm{r}{,}_{†}+{\beta }_8\ast \mathrm{P}\mathrm{e}\mathrm{a}\mathrm{c}\mathrm{e}\mathrm{Y}\mathrm{e}\mathrm{a}\mathrm{r}{,}_{†}\\ & +{\beta }_9\ast \mathrm{S}\mathrm{p}\mathrm{l}\mathrm{i}\mathrm{n}\mathrm{e}1{,}_{†}+{\beta }_{10}\ast \mathrm{S}\mathrm{p}\mathrm{l}\mathrm{i}\mathrm{n}\mathrm{e}2{,}_{†}+{\beta }_{11}\ast \mathrm{S}\mathrm{p}\mathrm{l}\mathrm{i}\mathrm{n}\mathrm{e}3{,}_{†}\\ & +{\beta }_{12}\ast \mathrm{I}\mathrm{n}\mathrm{v}\mathrm{o}\mathrm{l}\mathrm{v}\mathrm{e}\mathrm{m}\mathrm{e}\mathrm{n}\mathrm{t}\mathrm{o}\mathrm{f}\mathrm{E}\mathrm{c}\mathrm{o}\mathrm{n}\mathrm{o}\mathrm{m}\mathrm{i}\mathrm{c}\mathrm{S}\mathrm{a}\mathrm{n}\mathrm{c}\mathrm{t}\mathrm{i}\mathrm{o}\mathrm{n}\mathrm{s}{,}_{†}+\mathrm{e}\end{array}$(1) .

8. We also conducted numerous sensitivity analyses to ensure that our findings are robust across different data sources, model specifications, and estimation methods (see Appendices I and II). The primary results (i.e. statistical significance in the expected direction for both halves of the reciprocal relationship) are stable when (1) using sanctions data by Hufbauer et al. (2009) and others such as Ellings (1985) and O’Sullivan (2003), (2) using onset rather than involvement of sanctions variables, (3) dropping some of the included variables from the models or adding others, and (4) employing alternative estimation methods such as using predicted dependent variables with the lagged independent variables. In other words, our sensitivity analysis demonstrates the robustness of the results to alternative data and different specifications and estimation methods. Details on our sensitivity analyses are available upon request. We thank the anonymous reviewer for his/her helpful suggestions on this issue.

9. We performed all analyses in this research using Stata 15.0. The results and Stata do/log files are available upon request. The presentation of results in this section focuses on the effect of sanctions on conflict onsets (Equation 1(1) $\begin{array}{rl}& \mathrm{O}\mathrm{n}\mathrm{s}\mathrm{e}\mathrm{t}\mathrm{o}\mathrm{f}\mathrm{D}\mathrm{y}\mathrm{a}\mathrm{d}\mathrm{i}\mathrm{c}\mathrm{C}\mathrm{o}\mathrm{n}\mathrm{f}\mathrm{l}\mathrm{i}\mathrm{c}\mathrm{t}{,}_{†}={\beta }_0+{\beta }_1\ast \mathrm{L}\mathrm{e}\mathrm{v}\mathrm{e}\mathrm{l}\mathrm{o}\mathrm{f}\mathrm{D}\mathrm{e}\mathrm{m}\mathrm{o}\mathrm{c}\mathrm{r}\mathrm{a}\mathrm{c}\mathrm{y}{,}_{†}+{\beta }_2\ast \mathrm{L}\mathrm{e}\mathrm{v}\mathrm{e}\mathrm{l}\mathrm{o}\mathrm{f}\mathrm{E}\mathrm{c}\mathrm{o}\mathrm{n}\mathrm{o}\mathrm{m}\mathrm{i}\mathrm{c}\mathrm{I}\mathrm{n}\mathrm{t}\mathrm{e}\mathrm{r}\mathrm{d}\mathrm{e}\mathrm{p}\mathrm{e}\mathrm{n}\mathrm{d}\mathrm{e}\mathrm{n}\mathrm{c}\mathrm{e}{,}_{†}\\ & +{\beta }_3\ast \mathrm{B}\mathrm{a}\mathrm{l}\mathrm{a}\mathrm{n}\mathrm{c}\mathrm{e}\mathrm{o}\mathrm{f}\mathrm{P}\mathrm{o}\mathrm{w}\mathrm{e}\mathrm{r}{,}_{†}+{\beta }_4\ast \mathrm{S}\mathrm{h}\mathrm{a}\mathrm{r}\mathrm{e}\mathrm{d}\mathrm{A}\mathrm{l}\mathrm{l}\mathrm{i}\mathrm{a}\mathrm{n}\mathrm{c}\mathrm{e}\mathrm{T}\mathrm{i}\mathrm{e}\mathrm{s}{,}_{†}+{\beta }_5\ast \mathrm{C}\mathrm{o}\mathrm{n}\mathrm{t}\mathrm{i}\mathrm{g}\mathrm{u}\mathrm{i}\mathrm{t}\mathrm{y}{,}_{†}\\ & +{\beta }_6\ast \mathrm{D}\mathrm{i}\mathrm{s}\mathrm{t}\mathrm{a}\mathrm{n}\mathrm{c}\mathrm{e}{,}_{†}+{\beta }_7\ast \mathrm{M}\mathrm{a}\mathrm{j}\mathrm{o}\mathrm{r}\mathrm{P}\mathrm{o}\mathrm{w}\mathrm{e}\mathrm{r}{,}_{†}+{\beta }_8\ast \mathrm{P}\mathrm{e}\mathrm{a}\mathrm{c}\mathrm{e}\mathrm{Y}\mathrm{e}\mathrm{a}\mathrm{r}{,}_{†}\\ & +{\beta }_9\ast \mathrm{S}\mathrm{p}\mathrm{l}\mathrm{i}\mathrm{n}\mathrm{e}1{,}_{†}+{\beta }_{10}\ast \mathrm{S}\mathrm{p}\mathrm{l}\mathrm{i}\mathrm{n}\mathrm{e}2{,}_{†}+{\beta }_{11}\ast \mathrm{S}\mathrm{p}\mathrm{l}\mathrm{i}\mathrm{n}\mathrm{e}3{,}_{†}\\ & +{\beta }_{12}\ast \mathrm{I}\mathrm{n}\mathrm{v}\mathrm{o}\mathrm{l}\mathrm{v}\mathrm{e}\mathrm{m}\mathrm{e}\mathrm{n}\mathrm{t}\mathrm{o}\mathrm{f}\mathrm{E}\mathrm{c}\mathrm{o}\mathrm{n}\mathrm{o}\mathrm{m}\mathrm{i}\mathrm{c}\mathrm{S}\mathrm{a}\mathrm{n}\mathrm{c}\mathrm{t}\mathrm{i}\mathrm{o}\mathrm{n}\mathrm{s}{,}_{†}+\mathrm{e}\end{array}$(1) ). The results estimated for Equation 2(2) $\begin{array}{rl}& \mathrm{I}\mathrm{n}\mathrm{v}\mathrm{o}\mathrm{l}\mathrm{v}\mathrm{e}\mathrm{m}\mathrm{e}\mathrm{n}\mathrm{t}\mathrm{o}\mathrm{f}\mathrm{E}\mathrm{c}\mathrm{o}\mathrm{n}\mathrm{o}\mathrm{m}\mathrm{i}\mathrm{c}\mathrm{S}\mathrm{a}\mathrm{n}\mathrm{c}\mathrm{t}\mathrm{i}\mathrm{o}\mathrm{n}\mathrm{s}{,}_{†}={\beta }_0+{\beta }_1\ast \mathrm{J}\mathrm{o}\mathrm{i}\mathrm{n}\mathrm{t}\mathrm{D}\mathrm{e}\mathrm{m}\mathrm{o}\mathrm{c}\mathrm{r}\mathrm{a}\mathrm{c}\mathrm{y}{,}_{†}\\ & +{\beta }_2\ast \mathrm{L}\mathrm{e}\mathrm{v}\mathrm{e}\mathrm{l}\mathrm{o}\mathrm{f}\mathrm{E}\mathrm{c}\mathrm{o}\mathrm{n}\mathrm{o}\mathrm{m}\mathrm{i}\mathrm{c}\mathrm{I}\mathrm{n}\mathrm{t}\mathrm{e}\mathrm{r}\mathrm{d}\mathrm{e}\mathrm{p}\mathrm{e}\mathrm{n}\mathrm{d}\mathrm{e}\mathrm{n}\mathrm{c}\mathrm{e}{,}_{†}\\ & +{\beta }_3\ast \mathrm{S}\mathrm{h}\mathrm{a}\mathrm{r}\mathrm{e}\mathrm{d}\mathrm{A}\mathrm{l}\mathrm{l}\mathrm{i}\mathrm{a}\mathrm{n}\mathrm{c}\mathrm{e}\mathrm{T}\mathrm{i}\mathrm{e}\mathrm{s}{,}_{†}+{\beta }_4\ast \mathrm{D}\mathrm{i}\mathrm{s}\mathrm{t}\mathrm{a}\mathrm{n}\mathrm{c}\mathrm{e}{,}_{†}\\ & +{\beta }_5\ast \mathrm{L}\mathrm{e}\mathrm{v}\mathrm{e}\mathrm{l}\mathrm{o}\mathrm{f}\mathrm{E}\mathrm{c}\mathrm{o}\mathrm{n}\mathrm{o}\mathrm{m}\mathrm{i}\mathrm{c}\mathrm{D}\mathrm{e}\mathrm{v}\mathrm{e}\mathrm{l}\mathrm{o}\mathrm{p}\mathrm{m}\mathrm{e}\mathrm{n}\mathrm{t}{,}_{†}\\ & +{\beta }_6\ast \mathrm{U}\mathrm{n}\mathrm{i}\mathrm{t}\mathrm{e}\mathrm{d}\mathrm{S}\mathrm{t}\mathrm{a}\mathrm{t}\mathrm{e}\mathrm{s}{,}_{†}\\ & +{\beta }_7\ast \mathrm{O}\mathrm{n}\mathrm{s}\mathrm{e}\mathrm{t}\mathrm{o}\mathrm{f}\mathrm{D}\mathrm{y}\mathrm{a}\mathrm{d}\mathrm{i}\mathrm{c}\mathrm{C}\mathrm{o}\mathrm{n}\mathrm{f}\mathrm{l}\mathrm{i}\mathrm{c}\mathrm{t}{,}_{†}+\mathrm{e}\end{array}$(2) are in line with the hypotheses implied by previous empirical studies on this topic, which we did not include due to space considerations and because this research focuses on the effect of sanctions on conflict. For example, the results show that in all models, as expected, the onset of militarized conflict increases the probability of states in a dyad being involved with economic sanctions (confirming Hypothesis 2).

10. The results regarding other hypotheses in the conflict models are in line with previous empirical studies. For example, as expected, democracies, economically interdependent states, geographically distant states, and states with a power preponderance are less likely to engage in militarized conflict. Contiguous states and major powers tend to engage more frequently in such conflicts.

11. This program, using stochastic simulation techniques, first ‘draws simulations of the main and ancillary parameters from their asymptotic sampling distribution,’ then ‘converts the simulated parameters into substantively interesting quantities, such as predicted values, expected values, or first differences’ (Tomz, Michael, Jason Wittenberg, and Gary King 2003, 5–6). We chose to simulate 1000 sets of parameters from our models to produce the predicted values for each of our models to be tested.

12. Econometrics research (e.g. Gujarati 2004; Greene 2011) has shown that when simultaneity problems occur in models, not controlling for this simultaneity, estimating only one of the models (e.g. the dispute onset model), and ignoring the reciprocal connection will produce erroneous conclusions about the relationship.

13. For example, of the 1412 threatened/imposed sanctions identified in Morgan, Bapat, and Kobayashi (2014) (for the period 1945–2005), 725 cases (about half of the total) were initiated post 1991 (the post-Cold War era). Also, an important recent issue in international relations is the effectiveness of sanctions against North Korea imposed for its norm-breaking behaviors of developing nuclear arms and missiles.

14. For a qualitative research method, see King, Gary, Robert O. Keohane, and Sidney Verba (1994); for process-tracing case studies, see Beach and Pedersen (2013).

15. For combining quantitative and qualitative methods in international relations, see Lamont (2015).