Misunderstanding Rationality: The Failure of Sanctions against Iran
Photo credit: SAUL LOEB / AFP
By Nikolaj Werk
Since the Iranian Revolution in 1979, the US has almost constantly employed sanctions against Iran. With stricter rounds recently enforced by the EU and US in response to Iran’s nuclear proliferation program, it is worth reflecting on the way we think about sanctions as a foreign policy tool. The West urgently has to rethink its understanding of rationality to fully grasp why its continued stricter sanctions are unlikely to bring about their intended outcome.
The conventional logic of sanctions expects target states to react rationally to their impact according to simple cost-benefit analysis. In making the cost of pursuing a nuclear program greater by inflicting pain on the Iranian economy, Western hopes are that Iran will rationally realise that it is not in its interest to continue the program. Crawford and Klotz have provided the best summary of the expected logic of sanctions. First, at the most basic level, sanctions can compel targets to comply with demands. By raising the economic costs of an action, sanctions will compel the target government to change its policies if the economic cost outweighs its expected political benefit. Second, the economic suffering caused by sufficiently strong sanctions can threaten the legitimacy of a government by either splitting it or by producing a revolution. Third, sanctions can deny governments the resources with which to claim monopoly on their territory. Finally, they can send a strong signal to the international community that a target country is violating global norms. What all these outcomes have in common is that they rely on the rational assumption that, if target governments act sensibly to the various costs of sanctions, they will be forced to react in predictable ways. In most cases, this would mean abandoning the policy or seeking a compromise. The current round of Western sanctions on Iran demonstrates the continued perseverance of these rationalist assumptions. For instance, a British government official argued that tougher sanctions would "hasten Iran's economic collapse and deepen rifts within the regime, in the hope that saner voices will deem the price of pursuing nuclear weapons too high" (Jenkins 2012).
It is interesting that this perspective persists despite the decades in which sanctions have failed to bring about political change. Western sanctions have historically been successful in putting pressure on the Iranian economy, but they have never managed to deter or prevent Iran from pursuing targeted policies. This is because a misunderstanding about rationality underlies Western policy: acting in a rational manner does not mean acting in a predictable manner. As Helmut von Moltke famously stated “no battle plan survives first contact with the enemy”. As in war, it is wrong to expect the other side to respond passively to sanctions. Four examples from the Iranian case demonstrate how targets of sanctions have means at their disposal to instead respond in active ways.
First, targets of sanctions can react with similar tactics. In response to the threat of sanctions, the Iranian government threatened to close the Strait of Hormuz, which is a key strategic point for the global transport of oil. Whether or not this was meant as a bluff is unimportant. What matters is that rather than responding passively, Iran too attempted to change the balance between costs and benefits for the Westby threatening their oil supply. This makes it crucial to distinguish between acting rationally, and acting predictably. By actively responding, Iran was rational in a similar manner as the US, because it attempted to increase the costs of the sanctions.
Second, in response to sanctions on trade, as Robert Pape explains, the target government can attempt to substitute, conserve, or replace trade partners. Iran has recently sought to build new and stronger trade alliances with South American countries. It has also recently found different partners to avoid disturbing its transport flow by making use of Turkish seaports (Esfandiary and Fitzpatrick 2011, 149). Similarly, due to the persistence of Western sanctions, Iran has gradually adjusted its domestic economy. It has reinvested in its infrastructure to depend more on Central Asia and Transcaucasia, and has become largely self-reliant in certain parts of the economy, such as weapons production (Amuzegar 1997, 192). While it is difficult to completely replace economic ties, targets of sanctions can lessen the blow by restructuring their economy. In fact, such restructuring can create a short term Keynesian boost to the domestic economy, weakening the political impact of sanctions. Once again, this is rational but not predictable.
Third, the target of sanctions can attempt to avoid or cheat its way around the impact of sanctions. This can be done through various methods, such as the black market, or exploiting weaknesses in tracking systems. It can be very difficult to implement sanctions globally, and the Iranian government has already found ways to circumvent the global tracking system of containers by copying unique serial numbers (Esfandiary and Fitzpatrick 2011, 151).
Finally, the hope that the deployment of sanctions will split the Iranian government also misunderstands rationality. In Iran, the relationship between President Ahmadinejad and other key parts of government, such as Ayatollah Khamenei, was notoriously bad leading up to the most recent sanctions in 2011. The West hoped that the economic hardship caused by the sanctions would worsen this fracture, and either force Iran to change his policy or cause a regime change. That was also the plan of the Clinton Administration, which had hoped that previous sanctions would split the Khatami government in the late 1990s (Amuzegar 1997, 195). This happened despite fears that excessive pressure on the relatively moderate president might bring a more radical leader to power. Although the sanctions alone cannot be credited with the regime change in 2005, the sceptics turned out to be right when the far more radical Ahmadinejad took over. More importantly, the “political fracture argument” ignores ways that leaders can try to immunize government partners from the impact of sanctions, by compensating their losses, or replacing their partners. These techniques were both used successfully by Saddam Hussein in neighbouring Iraq, as we will see shortly. These four points illustrate the crucial point that while target governments often react rationally to sanctions, doing so does not necessarily mean reacting in predetermined ways. As in war, it is naïve to expect the adversary to fight on one’s own terms.
Another way in which misunderstanding rationality has caused sanctions to fail is a persistent Western-centric view of statehood and legitimacy. Two points are worth making with regards to the Iran crisis. First, if sanctions fail to split the target government, the hope is that the economic hardship delegitimizes it to the point where its people revolt. However, instead of starving people to serve the sanctioner’s cause, the economic hardship can cause the people of the target country to “rally around the flag” in a spirit of nationalism. In Iran, the government has previously appealed to such populist sentiments by arguing that US policy is merely an extension of the hostile “Jewish lobby”, or pointing out that the hardship is caused by forces outside their control (Amuzegar 1997, 185-88). While the sway of such appeal is difficult to measure, it is worth noting that in a poll from 2009, a majority of Iranians were against abandoning the nuclear proliferation program in response to sanctions (World Public Opinion 2009). It is therefore wrong to think that sanctions necessarily delegitimize governments.
Second, underlying sanctions is a sweeping and problematic assumption about the relationship between states and legitimacy which neglects the structural differences between democracies and non-democracies. Unlike democracies, governments in autocratic states like Iran need not rely on popular legitimacy alone. Therefore, “the economic costs imposed on the larger population do not translate into political costs for the regime” (Lektzian and Souva 2007, 849). This in turn means that the leader has “little incentive to alleviate civilian suffering”. Iran’s neighbour, Iraq, provides a powerful illustration of how misunderstanding the structure of a state and the idea of legitimacy can make the deployment of sanctions counterproductive. As the Iraqi economy plummeted, Saddam Hussein spent enormous sums buying loyalty from key players. Consequently, food in the already poor country became even scarcer, resulting in the death of five to six thousand children from starvation every month for thirteen years (Dodge 2010, 88). Saddam Hussein transferred the burden of the sanctions onto his population by installing a national rationing system, with which the regime could tightly control food supplies. In this way, the Iraqi regime’s response to sanctions ended up strengthening its position. While this is unlikely to happen in Iran, where the domestic economic structure is very different, Iraq’s example illustrates how the rationalist approach to sanctions relies on highly western-centric ideas about how states function, which may be problematic in the case of Iran.
Hence, the lesson to draw about sanctions against Iran is not that we must abandon rationalism, but that we must reflect on our own assumptions. Sanctions do not force target countries to act in predictable ways. We fool ourselves if we follow the rationalist argument from its premise of targets of sanctions acting according to a cost-benefit analysis to its conclusion that they will therefore react in predictable ways and comply with our demands. Paradoxically, the West has an irrational faith in these rationalist assumptions. While it fears the Iranian nuclear program because it does not consider the Iranian government rational enough to abide by rules of deterrence, its own rationalist view of how sanctions function explains both their persistence and failure against Iran.
About the Author
Nikolaj Werk is a postgraduate student in International Relations Theory at the London School of Economics and Political Science. He is an editorial board member of Millennium: Journal of International Studies, and has previously been Editorial Assistant in the London-based think-tank, The Royal United Services Institute, and Consular Assistant at a Danish Diplomatic mission to the United Kingdom. He writes for the Danish Council of Council for International Conflict Resolution (RIKO) on a regular basis, and has written about various topics, including; NATO, the Libya intervention, and international law, for publications in the UK and Denmark. He is currently based in London.
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