Effectiveness-Escalation Tradeoff: Difficulties in Use of Economic Statecraft

• In Event: Security Dilemma and War

Abstract

The increasing trends towards deeper globalization and states’ constant recourse to economic coercion as a tool of foreign policy showcase both the amplified potential and perceived utility of economic power in the pursuit of security goals. At the same time, the scholarly consensus is that economic statecraft typically fails at achieving its goals. In this paper, I ask the question why don’t sending states design and implement their policies to achieve greater international effectiveness. While economic statecraft can be incredibly powerful, it is subject to the effectiveness-escalation tradeoff. Increasing the effectiveness of an economic statecraft policy requires the sender to control not only its own economic policy, but also those of third-party states. Yet imposing its own preferences on third-party states greatly increases escalation pressures both from third-party states and the target of the economic statecraft policy. The difficulties this tradeoff imposes on the application of economic statecraft is traced through the changes in the sanctioning regime against Iran from 1996 to 2019.

Author

• Mariya Grinberg, MIT