Iranian sanctions extended to Venezuela, but will they work?

The USA has imposed sanctions on Venezuela’s state oil company in retaliation for them trading with Iran (CNN story).

These sanctions are unlikely to have any effect: research has shown that generally sanctions don’t work, why is this?

If anything is going to work then it is the threat of sanctions, if a country has got to the point of having to impose sanctions then they have already failed. This is because if a country is going to give in to sanctions then they are better off giving in to the threat and not suffering any loss, rather than waiting for the sanctions to be imposed, suffering a loss, and then giving up anyway. The only reason to wait for the sanctions before giving in is if they don’t believe that the other country will follow through on the threat.

This then leads to a strange situation where if the threat of sanctions hasn’t worked then the country threatening the sanctions knows that actually imposing them is very unlikely to work but they still have to go through with the threat, otherwise future threats will not be believed. They only actually impose the sanctions to try to maintain a strong image, but they know that they probably won’t work.

In the particular case of Venezuela the sanctions don’t even limit the ability of the Venezuelans to export oil to the US so there will be very little impact on them. It is clearly just a political move to appease those politicians who want to see sanctions but don’t understand game theory. Those same politicians would never agree to the USA caving in to sanctions from, for example, China, so why do they think that other governments will respond to their threats?

One alternative to sanctions is to offer investment and co-operation to the country in return for them changing their behavior. The carrot is more likely to be effective than the stick.

Today’s takeaway: Before you start threatening someone take time to think whether co-operation will be a better strategy.

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