Alliances and Trade with Sanctioned States

Abstract

What determines how US economic sanctions affect the international trade conducted with their targets? This article develops a liberal-based explanation for why economic sanctions increase their targets’ trade with some third parties and decrease it with others. It is theorized that the effects of defense pact alliances between sender and third-party states are conditional upon the strength of the third parties’ commercial dependence upon the target states. Third parties will cooperate with senders when the costs are low, but use their alliance relationships as cover to sanctions bust when the commercial benefits are high. This suggests that the United States can best gain the support of allies whose cooperation matters the least, while the allies whose support is most important tend to sanctions bust. It is also theorized that a target state’s allies trade more with it than its nonallies. An empirical analysis of ninety-six episodes of US-imposed sanctions supports these hypotheses.