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Are Economic Sanctions Effective Against Rogue Rulers?

Written by Rakotomalala · Translated by Catherine Randall On 9 April 2014 @ 14:32 pm | 3 Comments

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Since Russia's military intervention in Crimea, economic sanctions have been threatened [1] as a means of penalizing Vladimir Putin's government. The White House has already announced travel bans and asset freezes [2] for several individuals close to the Kremlin, and the European Union is examining similar sanctions.

Yet it is difficult to determine the effectiveness of such sanctions. The African continent is already familiar with the imposition of economic sanctions on countries that do not respect the rule of law. For example, the Central African Republic, Mali, Mauritania, and Madagascar were hit with sanctions in recent years after power was seized in coups d'état. These countries then faced major difficulties in emerging from the political impasse and resuming international cooperation. But did these economic sanctions influence their return to constitutional rule?

Christian Chavagneux, deputy editor in chief of Alternatives Economiques, recalls why it is difficult [3] to apply effective economic sanctions:

Enfin, les leçons de l’histoire font douter de l’efficacité de sanctions économiques. Rappelons-nous que le boycott militaire de l’Afrique du Sud de l’apartheid ne l’a jamais empêché d’acheter des armes, que les campagnes de désinvestissements et les boycotts de produits de consommation n’ont pas fait s’effondrer sa classe dirigeante et que les grandes banques y sont largement toujours resté présentes.

The lessons of history cast doubt on the efficacy of economic sanctions. Let us remember that the military boycott of apartheid South Africa never stopped the country from buying weapons, that the divestment campaigns and consumer product boycotts didn't cause the collapse of the ruling class, and that the big banks are, in large part, still present.

The case of Madagascar

Madagascar was hit with economic sanctions immediately after Andry Rajoelina seized power in March 2009 with the support of part of the army. After the suspension of trade agreements with the United States via the African Growth and Opportunity Act (AGOA) and the suspension of aid from the European Commission and various other development agencies, the country's GDP fell rapidly, reaching its lowest level since 2002:

le PIB de Madagascar entre 2001 et 2011 - Domaine public [4]

GDP of Madagascar between 2001 and 2011. Public domain

Learning of the AGOA's withdrawal, economist William Easterly argued [5][en] at the time that the sanctions did not penalize the leaders responsible for the situation, but rather the already fragile population:

The US pulled the plug on AGOA at the end of December and import duties of up to 34 percent were reintroduced. Now we are starting to see the effects in the formal and informal economy:

  • Factories closing and factory jobs lost
  • Increased competition among street traders now that former factory workers are pushed out to sell goods in overly crowded street markets
  • Knock-on effects in neighboring countries (Mauritius, Swaziland, Lesotho, South Africa) which made inputs like zippers to Madagascar’s factories.

Among the effects we are NOT seeing: signs of increased interest in arriving at a power-sharing agreement or instating democratic governance on the part of Rajoelina’s government. 

The ensuing chain of events would prove Easterly right. Madagascar plunged into a deep economic crisis, while those responsible for the political crisis were unaffected, remaining in power for five years after the coup d'état. New 4X4s proliferate in certain towns, inhabited by a small wealthy minority [6], while the majority of the population rapidly grows poorer. [7] In 2013, 90 percent of Madagascans were living on less than two US dollars per day.

Economic sanctions and military intervention in Mali

After Captain Amadou Sanogo and his troops took power [8] [en] in 2012, the international community immediately announced sanctions [9]and withdrew its development aid [10] in Mali. But the situation rapidly worsened as rebel groups fought for independence for Northern Mali [11] [en] and international military intervention began, led by France.

distribution de nourriture pour les réfugiés maliens - via wikimédia commons CC-BY-NC  [12]

Food being distributed to Malian refugees. Photo via Wikimedia Commons CC-BY-NC

The United Nations Development Program (UNDP) and the Malian minister for humanitarian action issued a final report on the impacts of the crisis. The report was unambiguous on the negative impact [10] of the sanctions on the country's economy and its dependence on development aid:

The economic sanctions include two elements: the suspension of development aid by the technical and financial partners, and the economic embargo imposed by the Economic Community of West African States [13]:

La manifestation des conséquences de ces évènements a été perçue à travers les aspects suivants :

- la suspension de la coopération avec les partenaires ;
- la baisse de l’activité (investissement, production, bancaire, commerciale, import/export, inflation) ;
- la détérioration du pouvoir d’achat des populations à travers la hausse de l’indice des prix à la consommation, la dégradation de la confiance des agents économiques (incertitudes) ;
- la baisse des recettes budgétaires (révision du budget, etc… ) ;
- la baisse des dépenses en faveur des secteurs sociaux (CSCRP, OMD, etc.).

[...] Un des enseignements clés de la crise politique et sécuritaire réside dans la très grande dépendance du Mali vis-à-vis de ses relations extérieures. [...]

The consequences of these events have been revealed through the following conditions:

- the suspension of cooperation with partners;
- the decline in activity (investment, production, bank, commercial, import/export, inflation);
- the decline in the population's buying power through the increase in the consumer price index, and the loss of confidence of economic agents (uncertainties);
- the decline in budgetary revenues (budget revisions, etc.);
- the decline in spending on social sectors (the Strategic Framework for Growth and Poverty Reduction and the [United Nations'] Millennium Development Goals, etc.).

[...] One of the key lessons of the political and security crisis lies in Mali's great dependence on its foreign relations. [...]

Once again, the imposed sanctions penalized the already fragile local population. These sanctions did not result in a return to good government, as external military intervention was necessary to stabilize the country.

It appears that the international community has learned from these events. The recently proposed sanctions against Russia seem more targeted towards the leaders at fault.

However, unanswered questions remain regarding the reasons that motivate the imposition of sanctions on certain countries. The economic interests of countries seem to be significant factors in the way these decisions are approached by the international community.


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URL to article: http://globalvoicesonline.org/2014/04/09/are-economic-sanctions-effective-against-rogue-rulers/

URLs in this post:

[1] economic sanctions have been threatened: http://www.lexpress.fr/actualite/monde/europe/des-sanctions-economiques-contre-la-russie-sont-elles-credibles_1496989.html

[2] travel bans and asset freezes: http://www.lefigaro.fr/international/2014/03/17/01003-20140317ARTFIG00167-l-ue-s-apprete-a-riposter-contre-moscou.php

[3] why it is difficult: http://alternatives-economiques.fr/blogs/chavagneux/2014/03/24/pourquoi-des-sanctions-economiques-contre-la-russie-ne-sont-pas-si-evidentes-a-prendre/

[4] Image: http://twitter.yfrog.com/e6g2oj?sa=0

[5] argued : http://aidwatchers.com/2010/02/chronicle-of-a-death/

[6] certain towns, inhabited by a small wealthy minority: http://www.lanation.mg/archive.php?id=6803

[7] rapidly grows poorer.: http://fr.globalvoicesonline.org/2013/09/06/153287/

[8] took power: http://en.wikipedia.org/wiki/2012_Malian_coup_d%27%C3%A9tat

[9] announced sanctions : http://www.lemonde.fr/afrique/article/2012/04/02/la-cedeao-se-reunit-a-dakar-pour-evoquer-la-crise-malienne_1678862_3212.html

[10] withdrew its development aid: http://www.ml.undp.org/content/dam/mali/docs/omd/RAPPORT%20FINAL%20EFFETS%20ECONOMIQUES%20ET%20FINANCIERS%20VFFF%2015%2003%202013.pdf

[11] fought for independence for Northern Mali: http://en.wikipedia.org/wiki/Northern_Mali_conflict

[12] Image: http://commons.wikimedia.org/wiki/File:Getting_some_food_is_one_problem_solved._Getting_it_home_is_another_challenge._%288509961715%29.jpg?uselang=fr

[13] Economic Community of West African States: http://en.wikipedia.org/wiki/Economic_Community_of_West_African_States

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