Civilsdaily’s Faculty’s article published in Hindu Business Line. A must-read for Civil Services Aspirants.

Economics is one of the primary Pillars of UPSC preparation. It has substantial weightage in Prelims and also in  GS 3rd paper of mains. To ensure that students build  a strong foundation and  a strong hold over the subject, we at Civilsdaily, have the best and most trusted faculty, Himanshu Arora Sir.

Credentials of Himanshu Sir-

  • MPhil Economics (JNU)
  • Works at Prime Minister Economic Advisory Council
  • Writes regularly in various famous Indian and international weeklies like Millenium post and Huffington Post.
  • Worked as Assistant Professor in Delhi University.

Here is the article by Himanshu Sir  that was published today in  Business Line;

US sanctions have rarely worked

Instead of punishing ‘errant’ countries, sanctions inflict serious economic damage on other nations

The US has refused to extend the oil sanction waivers previously extended to seven countries — China, India, Japan, South Korea, Italy, Greece and Turkey — after Donald Trump pulled the US out of the Iran nuclear deal.

The oil waivers were granted as a short-term measure to substitute oil with alternative energy sources and to avoid a global oil shock.

The nuclear deal aka Joint Comprehensive Plan of Action (JCPOA), signed in 2015, mandated Iran to reduce its uranium stockpile by 97 per cent, to limit enrichment of uranium only up to 3.67 per cent.

In return, Iran was supposed to receive relief from the economic sanctions imposed on it. The failure of JCPOA and the subsequent imposition of sanctions on Iran and other countries raise an important question — do sanctions work?

History of sanctions

Sanctions were first used in ancient Greece with Pericles Megarian decree of 432 BC in response to the kidnapping of three Aspasian women. Ancient Greece also imposed them during the Peloponnesian War (431-404 BC). However, they failed to have an impact and the Spartans won the Peloponnesian War.

The US first imposed sanctions on Iran in 1979 in response to the Iranian hostage crisis. The second round of sanctions were imposed in 1983, when an Iranian terrorist group bombed US Marine Corps in Lebanon. The US imposed restrictions on trade particularly oil to weaken Iran’s oil industry and hence its ability to fund terrorists.

The third round of sanctions was in response to Iran’s nuclear proliferation activities. Iran’s nuclear power programmes to weaponise its army have resulted in the passage of Iran and Libya Sanction Act (ILSA) 1996. Along with other trade and financial restrictions, the ILSA prohibits foreign companies to undertake oilfields investment in Iran.

But do sanctions fulfil their purpose of dissuading the target countries from taking a particular action?

To answer that question, we must first understand what sanctions are and how they work. Sanctions are economic instruments that cut off the target country’s economy from rest of the world.

The US regards sanctions as an important weapon in the geopolitical game and President Woodrow Wilson was the first to impose them.

The opponents

But opponents question the efficacy of sanctions especially when imposed unilaterally by a single country. They argue that target countries often shield themselves from the harsh impact and that the costs inflicted on other countries indirectly affected by such sanctions are greater than the benefits derived.

For example, by unilaterally imposing sanctions on Iran, the US is hurting the economies of India, China, Turkey, South Korea and Japan. These sanctions are likely to increase the global crude oil prices affecting the oil importing countries negatively.

Evidence supporting the success of sanctions are few as they have mostly failed to alter the behaviour of the targeted country. The US imposed sanctions on Turkey when it invaded Cyprus in 1974. But Turkish troops remained in Cyprus for more than 30 years despite sanctions. When USSR invaded Afghanistan in 1979, the Carter administration imposed sanctions and a food embargo on it. But the sanctions failed as the Soviet troops remained in Afghanistan till 1989. The sanctions imposed on Saddam Hussein tell a similar story.

Also the US along with Canada, France and Russia had frequently used sanctions in 1970s and 1980s to deter non-nuclear countries from developing nuclear capabilities and force them to comply with nuclear non-proliferation.

In 1974, Canada imposed sanctions on India and Pakistan to deter them from further nuclear explosions, to apply striker nuclear safeguards and forgo reprocessing capability of nuclear fuel that can be used in developing weapons. The US did the same with South Korea and applied financial sanctions to forestall the purchase of a nuclear reprocessing plant.

In the subsequent years, the US imposed sanctions on shipments of nuclear fuel and technology to South Africa, imposed sanctions on Brazil, Argentina, India and Pakistan to make them adhere to nuclear safeguards, multilateral surveillance for nuclear facilities and to prevent the acquisition of nuclear technologies. But these sanctions failed to dissuade South Africa, Brazil, India and Pakistan from becoming nuclear powers.

Multiple episodes of imposition of US sanctions across the world clearly reflect that unilateral sanctions do not really work. Therefore, in the light of historical evidence, the US should rethink its policy of imposing sanctions on Iran given the economic damage it can inflict on nations like India, China, Turkey, South Korea and Japan.


Here is the link of the original Article

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