Does Punishing Sanctions Busters Work? Sanctions Enforcement and U.S. Trade with Sanctioned States

AuthorBryan R. Early,Timothy M. Peterson
Published date01 September 2022
Date01 September 2022
Subject MatterArticles
Political Research Quarterly
© 2021 University of Utah
Article reuse guidelines:
DOI: 10.1177/10659129211025620
Given the scarce resources that governments devote to
implementing economic sanctions, how can the agencies
responsible for enforcing sanctions enhance their effec-
tiveness? The strategies that sanctions enforcement bod-
ies employ vis-à-vis firms can play an important role in
shaping the severity of the costs that sanctions’ targets
experience. Increasing the consequences firms face for
sanctions violations and their perceived risks of being
caught are both mechanisms by which senders can influ-
ence firms’ responses to sanctions (Early and Preble
2020a; Morgan and Bapat 2003). Sender governments
can influence the risks their firms perceive in doing busi-
ness with partners in sanctioned states via the penalties
they impose against sanctions violators. Importantly, the
positive relationship between the economic costs sanc-
tions impose on targets and the success of sanctioning
efforts is one of the strongest empirical findings in the
sanctions literature (Bapat et al. 2013; Akoto et al. 2020).
Improved sanctions enforcement can thus contribute to a
higher likelihood of sanctions succeeding. Our study
seeks to uncover how the penalties imposed against sanc-
tions violators by enforcement bodies within sender gov-
ernments affects sanctions’ disruptive effects on trade
with target states.
While intuitive linkages exist between the enforce-
ment, consequences, and effectiveness of economic
sanctions, the topic of enforcement has received sur-
prising little attention (Bapat and Kwon 2015; Morgan
and Bapat 2003). Efforts to study how governments
obtain private sector compliance with their sanctions
have provided initial insights into what kinds of
enforcement strategies governments can employ (Bapat
et al. 2020; Early 2016; Early and Preble 2020b;
Morgan and Bapat 2003). To date, however, no empiri-
cal studies have examined how the use of specific
enforcement policies affects the behavior of the private
sector actors whose behaviors sanctions are intended to
alter. One of the key reasons why enforcement-related
variables have not been included in many of the major
sanctions datasets (e.g., Hufbauer et al. 2007; Morgan,
Bapat, and Kobayashi 2014) is that few governments
make robust investments in enforcing sanctions.
25620PRQXXX10.1177/10659129211025620Political Research QuarterlyEarly and Peterson
1University at Albany–SUNY, NY, USA
2Arizona State University, Tempe, USA
Corresponding Author:
Timothy M. Peterson, Arizona State University, Coor Hall 6664, 976
S. Forest Mall, Tempe, AZ 85281, USA.
Does Punishing Sanctions Busters
Work? Sanctions Enforcement and
U.S. Trade with Sanctioned States
Bryan R. Early1 and Timothy M. Peterson2
How can the government agencies responsible for enforcing economic sanctions enhance their effectiveness? This
study explains how and why sanctions enforcement actions undertaken by sender governments can discourage their
firms from trading with the states they sanction. Specifically, we examine how the penalties imposed against sanctions
violators by the U.S. Department of Treasury’s Office of Foreign Asset Control (OFAC) affect U.S. firms’ trade with
target states. We argue that because U.S. firms are responsive to the risk of being penalized and the disruptions that
penalties create, U.S. trade with sanctioned states will be lower in the aftermath of OFAC enforcement actions. The
penalties’ frequency and severity will magnify those negative effects. We hypothesize that OFAC enforcement actions
taken against both U.S. and foreign sanctions violators will negatively impact U.S. trade with targets. Analyzing data
from 2003 to 2015, we find that OFAC’s sanctions enforcement actions decrease U.S. trade with sanctioned states
in numerous ways.
sanctions enforcement, international trade, U.S. foreign policy
2022, Vol. 75(3) 782–796

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