One of the most famous sanctions cases is that of Napoleon’s Continental System, which was in place from November 1806 until April 1814. The Continental System occurred during the Napoleonic Wars, which were a series of conflicts between the French Empire (led by Napoleon I) against various European coalitions (usually led by the UK). These conflicts were the result of unresolved disputes from the French Revolution. On November 21, 1806, Napoleon I issued the Berlin Decree, which created a large-scale embargo against British trade, forbidding the importation of British goods into any European countries allied with or dependent upon France.
This decree installed the Continental System, which intended to disconnect all other countries from the British and even severed the mail service. The idea was that the UK, which was dependent on trade as an island country, would become isolated and weak, leaving Napoleon I able to invade after the economic collapse.
The UK, as a result of the Continental System, was highly motivated to seek out new markets.
Through their powerful navy, they replaced much of their trade with North and South America and ultimately covered a great deal of the decline. They were also able to smuggle throughout Europe, as Napoleon’s customs officers were exclusively land-based and again, they could use their powerful navy. Ultimately, it was not the Continental System that ended up harming the UK’s trade. Rather, it was the series of events that occurred after they responded by issuing their Orders of Council (1807).
These Orders prohibited their trading partners from trading with France and threatened to sink any ships that complied with the French. The US found this to be far too restrictive and responded with the Embargo Act of 1807 and Macon’s Bill No. 2, which ultimately caused more harm to American merchants than the British. As tensions increased, the US ultimately declared the War of 1812, harming British trade.
The Continental System caused great pain to France, her allies, and the European continent as a whole. Across the continent, trade fell somewhere between 25-and 55%. France was harmed as the prices of food staples increased and industries such as shipbuilding and rope-making were closed down. As allies were hurt by the loss of British trade, governments tried to circumvent the system. As Napoleon fought to maintain the system, he invaded numerous countries and ultimately suffered major losses amongst the French army. Spain served as a large source of smuggling, and Napoleon invaded during the Spanish War of independence. Portugal outright refused to join t the system and again, Napoleon attempted an invasion. The Portuguese rose in revolt with the assistance of the British army, launching the Peninsular War in 1808. Meanwhile, Russia refused the economic depression caused by the system and thus violated it constantly. Napoleon’s invasion in 1812 served as a large turning point in the Napoleonic Wars; while the French army was greatly harmed and forced to withdraw, the Russians, Austrians, and Prussians were inspired to launch a new campaign against the French. They were able to capture Paris in 1814 and exile Napoleon to the Island of Elba. Although he escaped to France in 1815, the Allies, along with the Seventh Coalition, were able to permanently defeat Napoleon in June of 1815 at Waterloo.
This embargo occurred from 1914-to 1919, both during and after WWI to restrict supplies of goods to Central Powers. This idea first entered into the British navy’s war plans in 1908 and remained in revision until 1914. At the outbreak of war in August of 1914, the British immediately established the blockade and established the North Sea as a war zone. This blockade was thus considered useful because it could both act as an economic weapon and force the enemy’s fleet to fight. Meanwhile, the US protested vigorously, as they were under pressure from commercial groups hoping to profit from wartime trade with both sides. The British made attempts to placate the US, such as implementing a program to purchase American cotton at prices above peacetime levels and agreeing to purchase the entire cargo of US ships found to contain contraband.
The embargo was incredibly restrictive, considering even food and fertilizer to be contrabands of war and having severe humanitarian effects. The average daily diet of a German citizen fell to 1,000 calories, and diseases such as scurvy, tuberculosis, and dysentery were rampant. The blockade lasted longer than the war itself, remaining in effect until Germany signed the Treaty of Versailles, while victors of WWI appropriated domestic sources of German fertilizer supplies (Cox, 600). Official statistics claim 763,000 Germans died due to starvation during WWI (National Archives). Herbert Hoover famously declared, “The United States is not at war with German infants,” (Hoover in Cox, 624). The claim that the Allies starved the Germans into submission has been hotly contested. Researcher Mary Elizabeth Cox further investigated the effects of the blockade on children in Germany after the discovery of a new dataset in 2014, which had recorded the heights and weights of 600,000 German schoolchildren between 1914 and 1924. Cox found that “all things equal, boys were 2.570 cm shorter at their lowest point in 1918 than they had been before the war, and 1.100 kg lighter. Girls were 2.810 cm shorter and 0.989 kg lighter,” (629). Social class impacted the risk of deprivation, as working-class children suffered the most from malnutrition. After the Treaty of Versailles was signed, a subsequent massive rescue was fueled, with aid provided from former enemies of Germany.
The case of sanctions against South Africa is deemed significant because many believe the disinvestment and sanctions were crucial to defeating apartheid. In particular, Nelson Mandela himself and other black leaders credited the economic sanctions for bringing about democratic transition. Thus, it is an anecdote occasionally used as evidence that sanctions can succeed in overthrowing a regime or drastically changing policy.
The process of disinvestment from South Africa occurred gradually. In the early 1960s, the United Nations adopted an arms embargo. The first clear break in economic performance occurred in the mid-1970s when OPEC nations commenced an oil embargo against South Africa (though Iran continued to supply oil to them until 1979). In September of 1985, the European Community imposed very limited trade and financial sanctions, with the Commonwealth countries following suit in October. Meanwhile, the Reagan administration was opposed to sanctions against South Africa but imposed a limited export ban to stem the tide of calls for divestment. In the Fall of 1986, a more significant round of sanctions was ensured globally, though many major products were omitted, such as coal and diamonds. Meanwhile, Congress passed the Comprehensive Anti-Apartheid Act over President Reagan’s veto. President Reagan had been supporting constructive-engagement strategies, endorsed by the South Africa Foundation. To many, the message of white-led reform in place of coercive pressure was “the same broken record.” (Minter, 48). In contrast, the Comprehensive Anti-Apartheid Act severely restricted lending to South Africa and imposed important bans of significant goods, including iron, steel, coal, uranium, textiles, and agricultural goods. It seemed to many that a western country truly interested in ending apartheid would have no option, short of military action, then to support the sanctions. The logic seemed that the apartheid regime would not negotiate the tremendous risk of ending their years of privilege unless the consequences of refusing seemed worse. Advocates believed the sanctions would succeed for several reasons. First, after years of spoil and affluence, the whites in South Africa seemed to have a low bar for discomfort. The vehement opposition expressed by South African officials and businesses seemed to support such inference. (Minter, 54). Overall, the prevailing belief seemed to be that for black South Africans (many of whom had been urging sanctions), would experience benefits that far outweighed temporary costs (Minter, 44). By 1994, Nelson Mandela was elected president.
Philip Levy argues that the sanctions against South Africa were not instrumental in overthrowing apartheid. Instead, Levy insists that the economic actions taken by private actors were far more damaging, while sanctions taken by governments mostly caused the Nationalist party to stiffen its repression (415). Instead, several alternate explanations are explored by Levy. First, he cites the effectiveness of the political opposition of the black majority (419). In addition, Levy explains that the fall of the Soviet Union helped the Afrikaner government to view the ANC as less of a communist threat and more of a political party with which they could negotiate (420). Finally, and most crucially, Levy argues that the apartheid system inherently created inefficiency and a growing economic cost to the country. For example, the limitations on travel and jobs available to black South Africans created labor-market distortion (416). In addition to these inefficiencies, South Africa financed an extensive amount of its economy through external borrowing. This left them vulnerable to shifts in lending, with ⅔ of their debt in the short term (416). As unrest in South Africa intensified, President P.W. Botha declared a state of emergency, stressing their dependence on refinancing. Chase Manhattan Bank was the first to declare it would not be renewing short-term loans, though it clarified that it did not have an intention to facilitate change but rather to protect its assets (417). The South African rand continued to decline, forcing the government to temporarily close the stock and foreign exchange markets, as well as suspend their interest payments on debts. Through these examples, Levy insists that economic forces mandating changes were internal rather than caused by sanctions.
Overall, Levy claims that the arguments of sanction effectiveness rely far more on the psychological impact of sanctions on South Africa, rather than quantitative analysis. The sanctions signaled the extent of isolation South Africa faced in the international community (419). His claims are supported by the fact that from 1985-to 1989, during the time of the most severe economic sanctions, export volumes rose by 26% (though the terms of trade did suffer). The HSE study estimated that the costs to South Africa were about 0.5% of the GNP (HSE Study). Furthermore, South African sanctions were not tightly targeted (418), as whites in South Africa often benefited from the fire-sale disinvestment occurring while blacks were harmed by the loss of jobs (419). He concludes by insisting that his analysis should, at the least, cast serious doubt “on the applicability of the South African case as a model for further trade sanctions,” (420).
There is a long history of sanctions against the USSR, and later against Russia, with questionable success. Throughout the Cold War, sanctions were likely been the result of both ideological differences and specific triggers, such as the withdrawal from WW1, the episodes of Soviet espionage, and the ongoing USSR military buildup (Davis, 180). Sanctions’ goals involved restraining the economic and military power of the USSR, as well as that of the Warsaw Pact countries in general (Davis, 181). During this time period, the efficiency of sanctions was limited by the uneven participation by countries. For example, when the USSR invaded Afghanistan in 1979 and imposed martial law on Poland in 1981, the United States imposed export controls on energy-related technologies, while Western Europe assisted the USSR in building a natural-gas pipeline (Davis, 182). Meanwhile, the USSR attempted to covertly acquire Western technology through secret cooperation and technological espionage, built into official state plans. Trade diversion and economic warfare countermeasures also ran rampant (Davis, 181).
After the fall of the USSR, sanctions against Russia did diminish, though some argue this is predominately representative of the tendency of sanctions to be recalled in response to more important international focuses (Davis, 182). Many significant sanctions remained in place well after new leaders removed or remedied the original causes. For example, after accusing the Soviet Union of repressioperiod dissidents and blocking of immigration, the United States enacted the Jackson-Vanik amendment. These sanctions ultimately would remain in effect throughout to Cold War and into the year 2012. Even when repealed in 2012, the Jackson-Vanik Amendment was replaced with the Magnitsky Rule of Law Accountability Act of 2012, imposing visa bans and asset freezes on several Russian Officials (Davis, 184). In addition, many technology leaders (such as the United States and the United Kingdom) maintained export controls on military and dual-use technologies (Davis, 183).
In addition to residual sanctions from Cold War days passed, modern events contributed to additional measures. A combination of increased U.S. security after 9/11, a military buildup in Russia in the early 200s, and a decline in bilateral relations played a role. Meanwhile, actions by Russia such as annexing Crimea and shooting down Malaysia Airlines Flight 17 prompted additional sanctions from the European Union, the United States, Canada, and, Japan (Davis, 184).
Russia has been able to continue to work with seven major nations that decline to engage in sanctions: Brazil, China, India, Indonesia, Iran, South Korea, and Turkey (Davis, 185). This collaboration reflects the broader theme that trade diversion and technology acquisition havehas only become easier in a world that is far more globalized than during the Cold War. Russia has adopted several other countermeasures, including exploring options for obtaining finance in Asian financial centers, engaging several institutions in covthe ert acquisition of banned technology, imposing import-substitution policies, and requiring all state agencies to purchase exclusively Russian-sourced software (Davis, 186).
Thus, the question remains: have the ongoing sanctions against the USSR and Russia been effective? Between 2014-2015and, economic indicators would suggest trouble in Russia, with GDP growth down to -3.8% and inflation up to 15.5%. However, this occurred alongside a dramatic drop in world oil prices, making it difficult to analyze the extent to which sanctions contributed to financial difficulties (Davis, 186). While the defense-sector export controls have been effective in preventing Russian production plans in the short run, the self-sufficiency forced by such sanctions may have a larger payoff in the long run for Russia. Regarding sanctions directed at specific officials within the government, the government has largely already forbidden the individuals from maintaining foreign bank accounts and restricted their travel, rendering the sanctions irrelevant. However, it seems restrictions on business transactions of firms owned by wealthy Russians have led to some pain. It appears that financial sanctions may have led to capital outflow by creating uncertainty in the markets, though 50% of Russian external debt obligations lie with Russian entities and can be rescheduled (Davis, 188). It has been argued that the most significant effect of the financial sanctions against Russia has been to make firms and banks more dependent on the Russian state (Gaddy & Ickes, in Davis 189).