Abstract
One meaning of sanctions concerns power within the framework of value systems manipulated to achieve coercion. Another view focuses on the mechanics of economic sanctions. The distribution of trade resources in the world marketplace obtains from three perspectives: interregional trade flows; bilateral measurement of trade, and measurement by commodity bases. The choice of a model for analysis determines the conclusions reached on the significance of trade flows. Economic resource control uses specific tools, that is to say, export sanctions (boycotts), import sanctions (embargoes), and financial sanctions. Attention must be paid, as well, to the target’s needs for those products which are subject to control, and to the economic consequences of the interdiction of supplies.
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Notes and References
It should be noted that these data consider intra-EEC trade as exports and imports, and the overall trade dependence implication would be much lower if only trade outside the Common Market were considered foreign trade.
The calculation of Soviet GDP is, at best, an estimate since trade and production data in the USSR are classified. For a discussion of determining GDP in the USSR in the absence of exchange prices, see V. Tremi, ‘Measuring the Role of Foreign Trade in the Soviet Economy,’ in Senate Foreign Relations, Committee Print, ‘The Premises of East-West Commercial Relations’ (December 1982) U.S. Government Printing Office, pp. 98–101.
Significantly, these 1980 data reflect Canada’s sales to the USSR of grain following the 1979 U.S. grain embargo, and must be considered an abnormality in traditional Australian export volumes to the USSR.
Of course, this calculation is only a rule of thumb derived from the labor input to dollar value of production for domestic production. It would not necessarily be the same ratio if U.S. manufacturers were to sell excess production, in which case the marginal labor to value ratio would be less. Also, the firms that export tend to be more high-tech and less labor-intensive than U.S. manufacturing as a whole.
From the pattern, it may be observed that the Soviet Union today is not unlike it was under the Tzar in economic relations: the Europeans supplied Russia with manufactured goods while the Russians served as a source of raw materials for Europe.
For a good discussion of the whole issue of European dependence on Soviet gas, see J. Stern, Soviet Natural Gas Development to 1990 (Lexington, Massachusetts: D.C. Heath, 1980).
Strictly speaking, not all economic and trade restrictions are sanctions: for example, so-called short supply controls applied in the U.S. during times of domestic scarcity are not imposed to achieve any foreign policy objective. On the other hand, even such domestic restrictions can produce foreign policy consequences, intended or unintended. In the case of a 1973 soybean embargo on exports, the effects were felt in Japan and led it to expand trade with Brazil to reduce dependence on the U.S.
The term ‘boycott’ originates with a certain Captain Boycott who was employed in Ireland in the 19th Century as a tax collector. The peasants organized against him, refusing to sell goods or services, which resulted in his growing discontent and in him leaving the country. Thus originated the term which developed to connote a refusal to sell, export or offer for sale, any goods or services to a party for the purpose of obtaining political, rather than purely economic, concessions. See Y.Z. Blum, ‘Economic Boycotts in International Law,’ Texas International Law Journal, Vol. 12 (Winter 1977) p. 6.
Article XXI of the GATT, signed in Geneva, Switzerland, 30 October 1947, Sect(b) says nothing concerning agreement to ‘prevent any contracting party from taking any action which it considers necessary for the protection of its essential security interests.’ See A.F. Lowenfeld, Public Controls on International Trade (New York: Matthew Bender 1979), p. DS-44. In fact, the GATT can be openly violated even without Article XXI justification, as when the U.S. undertook sanctions on Idi Amin in Uganda. In this case, the U.S. argued that moral grounds and universal human rights preempted the GATT requirement for nondiscrimination in trade provision.
See R. Ullman, ‘Human Rights and Economic Power,’ Foreign Affairs (April 1978).
On East Bloc membership in the GATT, see M.M. Kostecki, East-West Trade and the GATT System (London: Macmillan, 1979). As he explains, Czechoslovakia was an original signatory of the GATT. Yugoslavia joined in 1966, Poland in 1967, Romania in 1971, and Hungary in 1973. Bulgaria has observer status in the GATT.
House Banking, Finance and Urban Affairs Committee, Committee Print, 97th Congress, 2nd Session, July 1981, entitled ‘Iran: The Financial Aspects of the Hostage Settlement Agreement,’ p. 43.
Hearings before Senate Banking Committee, 97th Congress, 2nd Session, 23 February 1982, entitled ‘To Discuss Polish Debt’ p. 99, includes a written reply by the State Department’ the scenario … whereby Western Governments would declare Poland in default and cut off all credits to East Europe could well lead to an East Bloc-wide default.’ On p. 39, it is revealed that during renegotiations on Polish debt in April 1981, a so-called ‘tank’ clause was added, calling for automatic default in case of exceptional circumstances such as internal repression (if Soviet tanks invaded Poland). See also Radio Free Europe Research, Vol. 7, No. 7, Part 3 (19 February 1982) p. 34, which says, in part, ‘opponents of an official declaration of default … argue that an official declaration of default by even a few banks would have such drastic adverse consequences for the Western banking system that the costs to the West of such a decision would far outweigh the benefits.’
According to Mr H. Sherwood, who was Commercial Attaché for the U.S. Embassy in Bonn at the time, the West Germans threatened to call Mexico into default if the U.S. declared Poland in default. Since the U.S. held the majority of Mexican debt, and there could be a spillover effect on other U.S. loans in Latin America, the Germans felt this threat would deter any U.S. default action against Poland, where Germany had the greatest debt exposure. It is reported this argument made to Ambassador Burns convinced him strongly to oppose the Defense Department on this matter. According to Technology and East-West Trade, Office of Technology Assessment, U.S. Congress (Washington, D.C: GPO, 1979) p. 28, the U.S. ranked only fifth in official credits to the East Bloc, behind the FRG, France, Japan and the UK.
R.C Porter, ‘The Potential Impact of International Trade and Investment Sanctions on the South African Economy,’ CRED, University of Michigan, Discussion Paper 77 (February 1979).
R.C. Porter, ‘Sanctions on the South African Economy,’ Journal of Conflict Resolution (December 1979) p. 585. ‘Statistical analysis assumes the elasticity of substitution in both production and consumption increases the longer the period considered. Thus, for the basic theory, sanctions must work quickly for they are increasingly averted by long run adjustment.’
For a discussion of Israel’s water vulnerability and the threat of its curtailment as the basis for Israel’s occupation strategy, see ‘Water and Israel’s Occupation Strategy,’ Merip Reports (July–August 1983).
For an excellent discussion of bottlenecks in the Soviet economy, see F.D. Holzman, ‘Import Bottlenecks and the Foreign Trade Multiplier,’ Western Economic Journal (June 1969).
Also, Peter J. Wiles, ‘Economic War and the Soviet Type Economy,’ Osteuropa-Wirtschaft, No. 1 (1965).
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© 1991 David William Hunter
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Hunter, D.W. (1991). Economic Dimensions of Sanctions. In: Western Trade Pressure on the Soviet Union. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-12002-4_5
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