Implications

What drives the ‘hidden hand’ of economic coercion? Put differently, when can we expect economic sanctions to succeed without actual implementation? The primary goal of this dissertation is to demonstrate that prior actions in international disputes exert a significant influence on the effectiveness of sanction threats. The results reported in this chapter strongly support this contention. Using a comparatively large sample of observations involving both

for any of the remaining variables in the models. In Model 4.7, it slightly decreases the significance of

Multilateral/International Organization (from p=0.049 to p=0.052). In Model 4.5 it also slightly decreases the

significance of Relative Military Capability (from p=0.002 to p=0.036). The indicator for the economic health of the targeted state also does not produce a statistically significant coefficient in any specification of the model (Hypothesis 4b). As noted before, its inclusion leads to the loss of a number of observations (N=30) due to missing data. The main effect of this variable is to depress somewhat the statistical significance of certain control variables in the reduced estimation sample, most notably for International Organization and Survival at Stake.

52_{This hypothesis was tested by replacing the indicators of monadic regime type, Sender Democracy and Target}

Democracy, with a dichotomous indicator that takes a value of 1 when at least one of the states in the sender-

target dyad has a POLITY IV score equal to or greater than 6, indicating a fully institutionalized democracy, and takes a value of 0 otherwise. This weak-link approach to the impact of regime type on dyadic outcomes is consistent with the theoretical argument from which the hypothesis derives (Dixon 1994). Coefficients for

Democratic Dyad are negative across all model specifications presented in Tables 4.3 and 4.4 and fail to reach

threats and impositions of economic sanctions, empirical analyses indicate that a stronger record of carrying out threats in the face of defiance is associated with increased coercive success in subsequent coercion attempts.

These findings are consistent with the central theoretical argument proposed in Chapter 3, which suggests that state reputations built on past performance can help reduce a targeted state’s uncertainty about a sender’s type, and allow unresolved targets to acquiesce prior to incurring costly sanctions. Specifically, the findings indicate that the state’s monadic record of following through on threats across the full range of previous sanctions episodes decisively influences whether coercion attempts end in concessions by the target or in failure for the sender state. One interpretation of these results is that at least some states draw on all available information about a sender’s past behavior to form a judgment about the state’s propensity for bluffing and their own odds of resisting without being punished.

Chapter 3 also outlined two complementary explanations for threat credibility as a function of sanctions costs and domestic political conditions in the sender state. The analyses in this chapter provide support for only one of these theoretical arguments. Greater prospective costs to the sender state, measured here as the relative significance of bilateral trade with the target state, appear to decrease the likelihood of successful outcomes for the sender. This result is consistent with the theoretical argument that greater costs will undermine the credibility of a threat as targets come to believe that sanctions would be too pernicious for the sender’s economy to impose at all or to maintain after imposition. While commercial ties are a prerequisite for the exercise of influence through sanctions, the welfare gains that states have to forego in implementing economic punishments may in fact tie their hands in the eyes of opponents.

These conclusions are based on findings for two of the most commonly employed operationalizations of economic dependence in the extant literature. It should be noted that while findings for these predictors are generally consistent, the magnitude of their coefficients in different models varies because they capture different aspects of such dependence. To the extent that trade dependence is in fact a valid proxy for potential welfare costs of economic sanctions, the results of this study serve as a reminder that conclusions regarding the influence of economic interdependence on international interactions can depend significantly on the conceptualization and measurement in empirical testing.

Greater relative strength, whether in economic or purely military terms, appears to weaken the ability of states to coerce effectively using sanctions as a policy tool short of armed violence. This finding raises the question of whether policy makers in targeted states view economic statecraft as a tool that states use as complements or substitutes for military force. One possible interpretation of the regression results is that in some cases, the use of economic coercion may signal a lack of resolve on the part of a sender when more potent threats, such as overwhelming military force, are available to that sender and could have been employed. An initial expectation was that a capacity for the use of military force should serve as an implicit threat of escalation that will enhance the potency of an economic sanction threat and make target concessions more likely. While the findings presented here suggest that this is not the case, a more direct test of this expectation might examine which sanction threats were in fact accompanied by explicit mentions of potential military escalation, and assess how successful such threats were as compared to instances where senders did not clearly and explicitly outline a path to military escalation.

Another notable if intuitively unsurprising finding is that clearer threats, which spell out precisely the terms of compliance and the consequences of defiance, are more effective than ambiguous threats. Ambiguity may signal a lack of resolve on the part of the sender, encouraging targets to discount their statements and challenge the sender to let actions speak instead. Sender state leaders may be unable or unwilling to outline in sufficient detail their grievances and how they must be addressed by a targeted state in order to avert sanctions. It is plausible, for example, that policy makers may phrase threats in broad terms in the hope of gaining at least some concessions on a policy issue by allowing the target some discretion in choosing the nature of these concessions. The results presented here suggest, however, that for senders seeking target cooperation, precision is a more promising path.

The apparent impact of past actions on future coercive success further suggests that states have incentives to acquire and maintain reputations for making threats they intend to carry out. To what extent the findings presented here are in fact the product of deliberate reputation building on the part of potential sanctioners is a question that cannot be answered with the data at hand. This fact does not preclude one from speculating about the courses of action potential sanctioners may adopt to strengthen their bargaining position in future conflicts of interest with other states.

On the one hand, states seeking to build reputations for resolve may carry out some threats, even if the prospects for success are dim. If the commerce that is interrupted in this process is valuable to the sender, providing proof of resolve may be costly in the short run. But a stronger for resolve may pay off in the long run, if it then becomes easier to coerce targets without having to impose sanctions. This strategy should be particularly attractive to states whose superior military capability otherwise undermines the credibility of their

economic sanction threats. A strong reputation for resolve may help compensate for perceived weakness. Although economic sanctions may be attractive to many states as a less bloody and risky alternative to military force, they are nonetheless costly if one has to prove one’s willingness to use them on occasion. On the other hand, states may adopt a strategy of choosing threats carefully and minimizing the likelihood of engaging those targets that are bound to resist coercion. For example, unresolved states seeking to avoid damage to their reputation would do well not to threaten democratic targets, who appear somewhat more likely to stand firm than non-democracies. Unresolved senders should also avoid threatening sanctions over issues of national survival as targeted states are more likely to resist coercion attempts in these cases.

This chapter has shown that a more positive record of enforcing threats makes coercive success more likely, whether defined narrowly as unconditional cooperation with demands or more broadly as including negotiated compromises. A general history of upholding commitments can contribute to the effectiveness of economic coercion by reducing the target state’s uncertainty about the sender’s type. By focusing on the lessons that actors in the international state system can learn over time, this study has uncovered a powerful predictor of sanctions success that was previously overlooked in the extant literature. The following chapters will discuss and empirically evaluate two refinements to the general reputation argument developed in Chapter 3. The main thrust of these propositions is that targeted states may use available information about the sender’s past behavior more selectively than suggested here: while the reputation measure employed in the previous analyses are based on the totality of the sender’s prior record, it is also plausible that targets give greater

consideration to direct experience or judge sanctioning behavior only within particular contexts, for example when similar issues are at stake.