logo

Why Do Secondary Sanctions Work?

Abstract

The article addresses the issue of economic sanctions’ efficiency as an instrument of coercion in international relations. It goes beyond traditional approach where efficiency means an ability of an initiator-state to change a behavior of a target-state. Instead of a traditional “state vs. state” framework, the article makes a stress on the ability of an initiator-state to affect behavior of business at home and abroad i.e. it makes a focus on “state vs. business” framework. The U.S. governmental enforcement actions provide an empirical material for research. There are two major research questions. (1) Why does business violate the U.S. sanctions’ regimes? Is it a rational strategy to maximize profit or a result of reckless behavior or inaccuracy? (2) Does business change its behavior when affected by enforcement measures of the U.S. government? Are the U.S. secondary sanctions against business effective in terms of making business more loyal to the U.S. legislation? Research hypotheses imply that business misbehavior is rational and that the governmental measures make business change it in favor of compliance to the U.S. sanctions’ legislation. To test these hypotheses the author constructs quantitative database on 205 cases of the U.S. enforcement actions against business in 2009-2019. Investigation materials of the U.S. regulators provide empirical source for this database, composed of 73 variables. Descriptive statistics falsifies hypothesis on rational nature of violations by business – its misbehavior is rather reckless than willful. However, data supports an assumption about a significant impact of enforcement actions on business in terms of much better compliance to the U.S. sanctions’ legislation. These results show that while sanctions may be poorly effective in “state vs. state” framework, they are more effective when it comes to “state vs. business”.

Keywords:

sanctions policy; secondary sanctions; restrictive measures; penalties; business; U.S.; U.S. Departments of Treasury; sanctions efficiency.


Authors: Ivan Timofeev

Read the article in PDF