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Cristine Koehler Zanella

The road taken: the institutionalization of

economic sanctions as an instrument at service

of international collective security

O caminho tomado: a institucionalização das

sanções econômicas como um instrumento a serviço

da segurança coletiva internacional

DOI: 10.21530/ci.v11n2.2016.483

Cristine Koehler Zanella

Abstract

This paper addresses the institutionalization of multilateral economic sanctions from a

historical perspective, aiming at explaining when, why and how economic sanctions became

an instrument of deterrence and coercion in the toolbox of collective security. First, it is

shown that a new concern emerged in the Hague Conferences, in which states began to

institutionalize international arbitration as a pacific mean to solve international disputes:

how to enforce arbitral sentences in an anarchic international system? Economic sanctions

were then envisioned as an eventual remedy to pressure recalcitrant states into complying

with the terms of the sentences. Second, the paper describes the process that resulted in

economic sanctions becoming autonomous deterrence and coercion tool in the Covenant of

the League of Nations, showing the liberal-idealist framework that shaped it, the expectations

surrounding economic sanctions and the cases in which they have been applied. Finally, it

describes the realist ideas that influenced the creation of the United Nations, whose Charter

lists economic sanctions as an instrument to be used in the collective security framework

but at that time less prominently than the use of force.

Keywords: economic sanctions; collective security; the Hague Conferences; League of

Nations; United Nations.

1 Lecturer in International Relations at Federal University of Uberlândia (Brazil) and Research associate in the

Faculty of Law and Social Communication, Department of Public Law at Universidad Bernardo OHiggins (Chile).

Doctor in Political Sciences (Ghent University – Belgium) and Doctor in International Strategic Studies (Federal

University of Rio Grande do Sul – Brazil).

Artigo recebido em 30/05/2016 e aprovado em 02/08/2016.

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Resumo

Este artigo traça a institucionalização das sanções econômicas multilaterais a partir de uma

perspectiva histórica, com o objetivo de explicar quando, por que e como as sanções econômicas

se tornaram um instrumento de dissuasão e coerção a serviço da segurança coletiva. Para

tanto, primeiro demonstra-se que uma nova preocupação emergiu das Conferências de

Haia, quando os Estados começaram a institucionalizar a arbitragem internacional: como

executar essas sentenças em um sistema internacional anárquico? É neste momento que

as sanções econômicas passam a ser vistas como um eventual remédio para pressionar o

Estado recalcitrante em cumprir com os termos de uma sentença desfavorável. Em seguida

descreve-se o processo que resultou na institucionalização das sanções econômicas como

uma ferramenta de dissuasão e coerção autônoma no Pacto da Liga das Nações. Apresenta-

se como o referencial liberal-idealista moldou esse processo, as expectativas que existiam

por trás das sanções econômicas e os casos em que sanções econômicas foram aplicadas.

Por fim, o artigo descreve as ideias realistas que influenciaram a criação das Nações Unidas,

cuja Carta constitutiva previu as sanções econômicas como um instrumento de segurança

coletiva, mas àquele tempo lhes conferia papel menos proeminente que o uso da força.

Palavras-chave: sanções econômicas, segurança coletiva, Conferências de Haia, Liga das

Nações, Nações Unidas.

Introduction

In a world were governments and people buy and sell things, and invest and

transfer money beyond national borders, it is crucial for states to maintain the

international commercial and financial channels open. Closing these channels

harms states’ economic health. That is why economic sanctions are a painful

instrument in the toolbox of international organizations, used to threat or coerce

states to change their course of action.

Since the end of the Cold War, the United Nations has imposed more than

twenty mandatory economic sanctions

in name of collective security. This

represents a substantial increase comparing to only two mandatory economic

sanctions imposed from 1945 to 1989. The content of economic sanctions is also

quickly changing. Present day sanctions are becoming increasingly targeted, in

contrast to the mostly comprehensive sanctions imposed in the beginning of the

2 Mandatory economic sanctions are the ones imposed by the Security Council and that all states are constrained

to obey.

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Cristine Koehler Zanella

1990s.

But when, why, and how economic sanctions became an instrument of

deterrence and coercion in the toolbox of collective security? To answer these

questions this article is divided in three parts.

First, it is shown how the Hague Conferences, in which states began to

institutionalize international arbitration as a pacific mean to solve international

disputes, created a concern over how to enforce arbitral sentences in an anarchic

international system. Economic sanctions were foreseen, at least theoretically,

as an effective remedy to pressure recalcitrant states, defeated in international

arbitration, to comply with the terms of the sentence.

Second, the article explores the process of inserting economic sanctions in

the Covenant of the League of Nations as an autonomous tool of deterrence and

coercion to be used against states that have threaten or broken peace. It is shown

how the liberal-idealist framework shaped this process, the existing expectative

behind it, and the cases in which economic sanctions were applied as well as the

outcomes reached.

Finally, the article describes the realist ideas that influenced the creation

of the United Nations (UN). In the UN’s institutional framework, use of force

gained prominence over economic sanctions, which was perceived as a naïve

and liberal-inspired tool. Time, however, would prove economic sanctions an

increasingly important tool serving collective security.

The Hague Conferences and the question on arbitration

decisions’ enforcement

The first Hague Conference was proposed by Tsar Nicholas II. In 1898, he

invited the major powers to jointly discuss mechanisms of arms control and

peaceful means of conflict resolution.

The late XIX century and the beginning of XX century were the apex of the

system of complex alliances between European countries. This system has a

date and place of birth: the 1815 Congress of Vienna, held after the end of the

3 Comprehensive sanctions have also been called collective sanctions and their aim is to “hit the nation as a

whole, including individuals and groups that are not particularly responsible [for the situation that triggered

the sanction]” (GALTUNG, 1967, p. 381). Targeted sanctions, by their turn, are imposed on individuals or

non-state entities. The high humanitarian costs of comprehensive economic sanctions imposed on Iraq and Haiti

(GARFIELD, 1999) and the rise of international individual accountability made UNSC rely mainly on targeted

sanctions since the mid-1990s (GIUMELLI, 2011, p. 11-12).

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Napoleonic wars: “at the end of the nineteenth century the traditional system

of empires, built on the basis of power relations, mainly military or economic,

reached its maturity”

(DI NOLFO, 2002, p. vii). Therefore, it’s not surprising that

the Tsar’s invitation to discuss arms control and peaceful settlement of disputes

caused astonishment and produced little expectation in most European capitals

(EYFFINGER, 1999, p. 16).

Despite incredulity, all major powers attended the conference in 1899

According to Abler, two reasons can explain their attendance: (i) even without

believing in the potential of achieving effective results, no one wanted to be

responsible for the failure of the conference; and (ii) most importantly, the

Tsar’s letter of invitation and the carefully drafted agenda limited some more

controversial issues. For example, on the agenda for discussion was a proposal

for international arbitration which was less threatening to the invitees than the

issue of arms control (ABLER, 2008, p. 15-16).

Between May and July 1899 the twenty-six states represented at the Conference

issued six voeux, three declarations and three conventions

: (i) Convention for

the Pacific Settlement of International Disputes, (ii) Convention with respect to

the Laws and Customs of War on Land, and (iii) Convention for the Adaptation

to Maritime Warfare of the Principles of the Geneva Convention of 22 August

1864. The First Convention is considered the greatest advance on multilateral

instruments available to states to deal with peace and security issues made

by the two Hague conferences. In fact, the Second Hague Conference, held in

1907, failed to establish a system of compulsory arbitration for the resolution

4 In the original: “alla fine del secolo XIX il sistema degli imperi tradizionali, costruiti sulla base di rapporti di

forza prevalentemente militari o economici, raggiunse la sua maturità”.

5 Sovereigns and heads of state represented at the first Hague Conference: “His Majesty the German Emperor,

King of Prussia; His Majesty the Emperor of Austria, King of Bohemia, etc., and Apostolic King of Hungary;

His Majesty the King of the Belgians; His Majesty the Emperor of China; His Majesty the King of Denmark; His

Majesty the King of Spain, and in his name Her Majesty the Queen-Regent of the Kingdom; the President of the

United States of America; the President of the United States of Mexico; the President of the French Republic;

Her Majesty the Queen of the United Kingdom of Great Britain and Ireland, Empress of India; His Majesty the

King of the Hellenes; His Majesty the King of Italy; His Majesty the Emperor of Japan; His Royal Highness the

Grand Duke of Luxemburg, Duke of Nassau; His Highness the Prince of Montenegro; Her Majesty the Queen of

the Netherlands; His Imperial Majesty the Shah of Persia; His Majesty the King of Portugal and the Algarves;

His. Majesty the King of Rumania; His Majesty the Emperor of All the Russias; His Majesty the King of Serbia;

His Majesty the King of Siam; His Majesty the King of Sweden and Norway; The Swiss Federal Council; His

Majesty the Emperor of the Ottomans; and his Royal Highness the Prince of Bulgaria. (SCOTT, 1920, p. 161)

6 Conventions and Declarations are non-binding to the signatory states. Voeux are wishes and, as such, express

expectations on how discussions can evolve. They indicate general guidelines for further discussions on issues

in which the delegates failed to reach an agreement. Voeux are not binding. (BAKER, 2011)

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of disputes between states. Thus, despite the limits of the voluntary system of

conflict resolution, which was anchored in good offices, mediation, conciliation

and international arbitration, it is remarkable that the states also agreed on creating

the Permanent Court of Arbitration, the first permanent international institution

created to arbitrate international conflicts in a “system of empires” era. The preface

of “The Proceedings of the Hague Peace Conferences” stated:

The Peace Conferences held at The Hague were the first truly international

assemblies meeting in time of peace for the purpose of preserving peace, not

of concluding a war then in progress. They marked an epoch in the history

of international relations. They showed on a large scale that international

cooperation was possible, and they created institutions—imperfect it may

be, as is the work of human hands,— which, when improved in the light of

experience, will both by themselves and by the force of their example promote

the administration of justice and the betterment of mankind (SCOTT, 1920).

Following the progressive institutionalization of international arbitration,

a new question emerged: how to enforce arbitral sentences. The international

community had not at that time deliberated on tools to pressure a state that had

voluntarily participated in the international arbitration to comply with the sentence.

Sanctions were then proposed as tools to pressure recalcitrant states to comply

with the terms of the sentence. Jacques Dumas, a French jurist, noted in a seminal

1911 study that the success of the most elaborate instrument to peacefully settle

international disputes, created in the Hague Conferences – arbitration – depended

on finding a solution to arbitral sentences enforcement:

It has always been urged, both by skeptics and by believers, that the test

of the practicability of international arbitration stands on the question of

sanctions (DUMAS, 1911, p. 934).

Dumas (1911) categorized sanctions as political, legal, criminal, and economic,

according to their “moral” substance. After presenting data and highlighting

interconnections on the world economy he sustained that, in such an international

context, political economy could provide various instruments for the enforcement

of arbitral sentences. He noted that one of the most effective economic tools would

be cutting foreign currency transfers that could be used to finance war.

Interestingly, Dumas considered economic sanctions focused on trade dangerous

to senders, precisely because of economic interdependence. He underlined that

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these sanctions could effectively damage the target state’s economy, but would

also harm the sender because (i) the sender state would be deprived of imports,

what could compromise its economy and (ii) if the sender state wants to sell in

international trade, it needs to buy, since imports are paid with exports:

Too many people believe, as soon as political economy is concerned, that no

better sanction could be thought of than boycotting the produce, and, as a

general rule, all exportations of the unwilling state. Such a sanction may be

practicable sometimes when the foreign trade of that state is of such a kind

that the other nations can stop commercial intercourse with it without any

inconvenience to themselves. But the increasing international character of

trade and industry will more and more render boycotting impossible. The

placing of an embargo upon the purchase of needed products amounts to two-

fold self-punishment, first because we would remain deprived of necessary

articles, even perhaps of raw material, without which our own industry

could not thrive, and, secondly, because importations are always paid for

with exportations and our unwillingness to buy results in an impossibility to

sell (DUMAS, 1911, p. 948).

History would prove Dumas´s predictions wrong. The imposition of economic

sanctions by international community increased. Their intense use by the United

Nations Security Council since 1990 seems less conditioned to how interconnected

the global economy is and more aligned to the structure of political and economic

interests of the most powerful states. These interests are frequently promoted

through international institutions and take advantage of their enforcement

mechanisms in single states.

However, at these earlier stages, a concern on the sanctions effects on the

population was raised. Dumas stated that making individuals pay for a state’s

transgressions inevitably works against the development of international law and,

lastly, against peace. In this rationale lies the key to the evolution of economic

sanctions in UNSC from comprehensive sanctions to smart sanctions in the 1990s

Effects on the civilian population became a critical issue for the international

community after the severe effects that followed the economic sanctions imposed

on Iraq from 1990 to 2003 and on Haiti from 1993 to 1994.

Dumas did not fail to recognize that trade sanctions might be feasible when

international trade could be stopped without major inconveniences to the senders.

7 “In a time when the progress of international law consists in limiting all conflicts to governmental concerns,

and putting the individual out of their sphere, boycotting would be all the more inconsistent with modern

doctrine, since it is intended to make the individual pay for the faults of the state” (DUMAS, 1911, p. 949).

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So, whether commercial or financial, whether their effects on civilians were

acceptable or not, the first steps were already given to the acceptance of economic

sanctions as an enforcement mechanism. They would be instruments to remedy

the lack of a legitimate international force to enforce arbitral sentences. Economic

sanctions could, thus, be a safeguard to peace and international security.

The League of Nations:

economic sanctions to promote collective security

In spite of the good intentions and normative progresses of the Hague

Conferences, it took a conflict involving the death of more than 4 million Russian,

French, British and American people to awaken states to the necessity of building

an international political system guided by principles different from those emerging

from the balance of power

. Woodrow Wilson sponsored a new way of organizing

the international system. On 22 January 1917 the President of the United States

held before the US Senate the world need for an organized peace:

The terms of the immediate peace agreed upon will determine whether it is a

peace for which such a guarantee can be secured. The question upon which

the whole future peace and policy of the world depends is this: Is the present

war a struggle for a just and secure peace, or only for a new balance of

power? If it be only a struggle for a new balance of power, who will guarantee,

who can guarantee, the stable equilibrium of the new arrangement? Only a

tranquil Europe can be a stable Europe. There must be, not a balance of

power, but a community of power; not organized rivalries, but an organized

common peace (WILSON, 1917). [emphasis added].

Believing in the power of deterrence that a joint international response would

have against states that threatened or breached peace, Wilson proposed a totally

new conformation to international society: the community of power.

What Wilson meant by ‘community of power’ was an entirely new concept

that later became known as ‘collective security’ (KISSINGER, 1994, p. 51).

8 Balance of power is a core concept to classical realist and neorealist theories of international relations. “The

concept of a balance of power implies an equilibrium of force as between the States or groups of States, within

the system in question. Such a balance, it is asserted, works for peace since no State is in a position to seek

hegemony. The balance may be conceived of as a status maintained by self-correcting natural forces or as the

product of deliberate human intervention” (VAGTS, 2011).

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In this new conformation, peace would be considered indivisible. It meant that

a state’s aggression would be considered a breach of the entire peace system and,

when that happened, all non-aggressor states would unite to halt the belligerent.

Wilson’s activism and the – mainly economic —power that the United

States accumulated at the end of the First World War advocated in favor of the

institutionalization of collective security. The new form of international politics

would be operationalized by an international organization: the League of Nations –

the first universal political international organization. In the League’s architecture,

for the first time international security became a collective responsibility, based

on the acceptance that peace is indivisible and that all states have an interest in

curbing aggression wherever and whenever it arises. If this threat of collective

reaction failed, it would be necessary to adopt measures in response.

At that time, European countries, especially France, were apprehensive to

predict effective mechanisms and measures to prevent violent conflict between

nations. The demand was that the coming rules “must provide the sanctions

necessary to insure their execution, and so prevent a false security from serving

simply to facilitate new aggressions” (BERTRAM, 1932, p. 140).

More than a century after the industrial revolution had consolidated the

ideas of classic economic liberalism between Western governments, it was not

strange that measures which were intended to weaken the economic sector were

perceived as a great tool of deterrence initially, or coercion if necessary. With the

progressive interconnection of international trade and the possibility of collective

action, they seemed to be potentially effective.

The British General Jan Christiaan Smuts was largely responsible for the central

role that economic sanctions assumed in the League of Nations toolbox. He suggested,

in a pamphlet of great influence released on the eve of the Paris Conference, the

power of economic sanctions —both commercial and financial —and credited it a

central role in the effectiveness of a broad League of Nations sanctions’ mechanism

(BERTRAM,1932, 141). The measures that the League of Nations could effectively

9 Anton Bertram describes the context in which General Smuts’ pamphlet comes to public attention and the

influence it had on President Woodrow Wilson. Considering the terms of the pamphlet Bertram also stretches

General’s recommendations to the use of economic boycott as a powerful weapon: “I therefore recommend [...]

(19) That the Peace Treaty shall provide that if any Member of the League break its covenant under paragraph

(18) it shall ipso facto become at war with all the other Members of the League, which shall subject it to complete

economic and financial boycott, including the severance of all trade and financial relations, and the prohibition of

all intercourse between their subjects and the subjects of the Covenant-breaking State, and the prevention as far

as possible of the subjects of the Covenant-breaking State from having any commercial or financial intercourse

with the subjects of any other State, whether a Member of the League or not” (BERTRAM, 1932)

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take to restore peace when moral persuasion was not enough were finally put

forward in article 16 of the Covenant of the League of Nations. Woodrow Wilson

drafted this article incorporating economic sanctions as suggested by Smuts:

Article 16. Should any Member of the League resort to war in disregard of its

covenants under Articles 12, 13 or 15, it shall ipso facto be deemed to have

committed an act of war against all other Members of the League, which hereby

undertake immediately to subject it to the severance of all trade or financial

relations, the prohibition of all intercourse between their nationals and the

nationals of the covenant-breaking State, and the prevention of all financial,

commercial or personal intercourse between the nationals of the covenant-

breaking State and the nationals of any other State, whether a Member of the

League or not. (LEAGUE OF NATIONS, 1919) [emphasis added].

Article 16 was considered “League’s heart of collective security system”

(BARACUHY, 2005, p. 39). In it, the economic sanctions were legally codified and

elevated to an autonomous deterrence and coercion mechanism, outside the war

efforts, admitted to ensure collective security. To put it another way, economic

sanctions were seen as a mechanism to prevent the use of force. This emerged from

the recognition that the pressure that economic sanctions could exert conferred

on them an irresistible power of persuasion:

A nation that is boycotted is a nation that is in sight of surrender. Apply this

economic, peaceful, silent, deadly remedy and there will be no need for force.

It is a terrible remedy. It does not cost a life outside the nation boycotted, but

brings a pressure upon the nation which, in my judgment, no modern nation

could resist (PADOVER apud HUFBAUER et al. 2007, p. 1).

It is the most complete boycott ever conceived in a public document, and I want

to say with confident prediction that there will be no more fighting after that.

There is not a nation that can stand that for six months (Bertram 1932, 144).

The rationality of states as well as some idealism, especially Woodrow Wilson’s,

who believed it was possible to transcend power politics and the endemic character

of war

, strongly echoed in the rules of collective security that were put in place.

The logic inherent in the economic sanctions’ mechanism assumed the growing

economic interdependence in international society and the rationality of states:

10 In the original: “coração do sistema de segurança coletiva da Liga”.

11 The basic idea behind the liberal tradition is the assumption of rationality as a basic characteristic of humanity.

It is the rationality that enables the transformation of social relations and leads to overcome the power politics

and the endemic character of the war. (HERZ, HOFFMANN, 2004, p. 51).

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The theory was that the complexities of modern commerce had rendered

no nation self-supporting and therefore capable of resisting a general

economic boycott. A nation threatened with such a siege would not think it

worthwhile to persist in a course of action liable to lead to that result. The

League was thus based on optimistic assumption about the rationality of

states and the effectiveness of economic pressures on them (RENWICK apud

ABLER, 2008, p. 23).

When the League of Nations started working, questions soon emerged about

the content and procedural rules that should be applied to economic sanctions.

Article 16 listed measures that should be taken independently by individual

states on the involvement of the League’s Council. In 1921 “the Assembly of

the League adopted guidelines stipulating that the Council could recommend

to the member states an appropriate plan of action and secure the assistance of

a technical commission” (KRISCH, 2012). In 1929, the International Blockade

Committee was created. Its conclusions and recommendations, formally accepted

by the General Assembly in the first report submitted, served to guide discussions

about the implementation of economic sanctions by the League of Nations. In the

“operation’s scheme” to put in place economic sanctions, the Committee’s first

item was dedicated to clarify that economic sanctions should not be used as an

act of war, but as a form of peaceful pressure. In addition, the Committee stressed

that there should be a simultaneous and complete coordination mechanism; that

economic disruptions should be gradually strengthened, preserving humanitarian

relations; that the ban on food should be adopted only as an extreme measure;

and finally, if – and only if – necessary in a situation unsolved by sanctions

enforcement, the reactions of the League should develop into a state of war.

Since then, the League of Nations’ economic sanctions were treated as a form

of peaceful pressure to use against a state which decided on war or aggression

in breaching Articles 12 to 15 of the League´s Covenant

. The Liberal-idealist

framework, considering the growing interdependence of states and believing in

the rationality of relations between them, could not consider economic sanctions

as anything other than an “irresistible pressure to which no nation could resist”.

12 Articles 12 to 15 echoed the adoption, at League Covenant, of conciliation and arbitration procedures designed in

the Hague Conferences. Moreover, art. 14 provided for the creation, as proposed by the Council, of a Permanent

Court of International Justice [PCIJ]. The PCIJ worked from 1922 to 1940 and during this period dealt with 29

contentious cases and emitted 27 advisory opinions. (BIBLIOTECA VIRTUAL DE DIREITOS HUMANOS, 2013).

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As mentioned before, although peace was conceived as indivisible – a

responsibility all and every state – states were responsible to assert, individually,

if the obligation to enforce sanctions had effectively arisen. It was believed states

would behave in good faith so there was not only an individual obligation to

verify the need for sanctions but also a moral (not lawful) obligation to punish

the emerging aggressor:

Wilson’s view prevailed as the Covenant ultimately provided for a voluntary

approach for member states to decide, based on a unanimous recommendation

of the League Council, whether they want to take military or economic

measures against a member that had committed aggression (ALEXANDER,

2009, p. 21).

Hans Kelsen pointed out a structural deficiency in the “‘League’s heart of

collective security system”. He said there was a failure in Article 16 because despite

prescribing immediate application of sanctions for those who violated Articles 12

to 15 (regarding disrespect of the obligation to submit the dispute to international

jurisdiction), it was not clear who would declare that a state had violated the rules

and would be therefore subject to sanctions

. All things considered, it would

behoove each state to say whether or not the violation existed and, consequently,

only in this case would emerge the obligation to apply sanctions (KELSEN, 1951).

Finally, the decision-making system of the League´s organs, based on

unanimity, topped the list of normative difficulties at the institutional level for the

application of sanctions. If considered the decision would be taken collectively,

with the organization bodies in their entire composition, a member state should

literally vote against itself in order to enforce the League’s mechanism of sanctions.

The following table shows cases in which the system of economic sanctions under

the League of Nations has been invoked. It is possible to notice initial successes, in

the 1920s, when the Council’s threats to use economic sanctions had some effect.

In the 1930s, with the war winds approaching, the legal limits to adopt a sanction

recommendation and the rising Germans threats buried the liberal expectations that

with sanctions in place there would be no more military aggressions. Article 16 was

effectively applied only in the conflict between Italy and Ethiopia.

13 The Assembly of the League “adopted a number of amendments to the Covenant, which, for example, granted

the Council the authority ‘to give an opinion whether or not a breach of the Covenant has taken place’. The

Council was also to recommend to the member States the appropriate moment for the application of economic

enforcement measures. However, these amendments were never ratified and retained the character of non-

binding guidelines” (KRISCH, 2012).

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Box 1 – Economic sanctions applied or threatened by the League of Nations

Year and

description

Targeted

State

Cause Outcome

1920

Threat

Poland

Polish general seized Vilnius,

Lithuania’s capital

Poland abandoned Vilnius before Council’s

decision on the Lithuanian request for imposition

of sanctions

1921

Threat

Yugoslavia Invasion of Albania

League threatened Yugoslavia with sanctions and

the troops were withdrawn before the sanctions

were applied.

1925

Threat

Greece

Conﬂict between Greece

and Bulgaria with friction in

the border area and Greek

occupation of territory

Greece agreed to a cessation of hostilities and

avoided sanctions.

1931

League

powerlessness

to impose

economic

sanctions

Japan

Japan invaded China

(Manchuria). Both states

were League’s members.

As Japan was member of the League, it held veto

power over the issue. This situation led to the

absurd – but legitimate – conclusion that League of

Nations (LoN) could only act with the accordance

of the aggressor state.

1931

Sanctions

recommended

Bolivia and

Paraguay

Chaco War between Bolivia

and Paraguay. Both states

were League’s members.

Sanctions recommended in the form of arms

embargo, but neighbor states refused to stop

sending weapons. In 1934, the LoN suggested

to lift the embargo imposed on Bolivia but to

maintain it on Paraguay. Paraguay then withdrew

from the organization.

1935

Sanctions

imposed

Italy Italian invasion of Ethiopia.

Sanctions imposed in 1935 (except on oil, coal and

steel) and lifted in 1936, when Italy consolidated

its position in Ethiopia. It was considered a big

failure of LoN economic sanctions mechanism.

Nevertheless, League’s response to Italian

aggression must be understood within the political

context of a rising aggressive Japan and a resurgent

Germany

. It is considered the only economic

sanction effectively applied.

Source: Author’s own elaboration based on Abler, 2008, p. 29-30; Hufbauer et al., 2007; Alexander, 2009, p. 23).

14 Facing the growing impotence of the League of Nations and in a context where collective security was more a

wish than a reality, Britain and France preferred to hardly damage Italy in order to make it not tend to a coalition

with Germany – which recovered its power under the leadership of Hitler – if the war broke out. The Council

of the League recommendation – which avoided the Italian veto by a procedural maneuver to convoke a special

conference to define what sanctions would be applied against Italy – was to impose on Italy an embargo on the

supply of weapons and military goods, a prohibition from financial dealings with Italy, cessation of imports

of Italian commodities and the refusal to sell certain products. These sanctions were considered elastic and

not universal because they did not included oil, coal and steel trade restrictions. The other measures taken,

such as denying passage through the Suez Canal, allowed war materials to continue to be shipped from Italy

to Eritrea. Even without impacting too severely on political leaders and the Italian population, the sanctions

and the cost of the war caused the Lira to be devalued by 25% in November 1935. The country was forced to

sell almost 100 million dollars in gold and both imports and exports fell. British and French concerns about

Ethiopia, which were not great, ceased when Hitler denounced the treaties of Locarno and sent German troops

to the militarized region of Rhenania. Feeling a threat of a German aggression materializing, to push Italy into

the arms of a coalition with Germany was an undesirable risk and made the Ethiopian case a concern of lower

case in Europe. (NYE, 2009, p. 116-117; HUFBAUER et al, 2007, p. 102).

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Cristine Koehler Zanella

Thus, despite the success of economic sanctions’ threats on smaller states

during the 1920s, in the following years they succumbed to the most urgent and

existential needs of the central states. Facing concrete acts of aggression since 1939,

states’ immediate survival could not wait the time that the economic sanction

needed in order to act effectively, nor could states rely on the support to be given

by a collective security system unrepresentative of international society, on which

neither the United States nor the Soviet Union were willing to contribute to the

enforcement of measures adopted. Economic sanctions shown to be not a real

option in the states’ toolbox for ensuring and articulating the collective security

required in order to prevent war. Instead, states would be impelled to appeal

directly to weapons.

The United Nations: economic sanctions initially distrusted – but

still there

In the same year that the Second World War broke out, Edward Hallett Carr

published “Twenty years of crisis: 1919-1939”. His scathing criticism of idealistic

postulates intended to remind the world of the prominence of power in world

politics. Carr’s goal was

not merely to remind his readers about the importance of power in world

politics, but, rather, to show that the crisis of which he wrote in 1939 was in

large part the result of what he viewed as a serious mismatch between the

depth of the world’s disorders and the liberal solutions many thought might

solve these after World War I (apud Cox, 2010, p. 1).

The liberal idea of equality, for instance, and its reception at the League of

Nations through the formal recognition of a legal equality, which is reflected in an

equality of power between states in the decision making instances, demonstrated

an inadequacy for the dynamics of power at the time. The most powerful states

would not join such an international organization scheme, unless the institution

recently created reflected the distribution of power in the international system.

Accepting this perspective, “the League of Nations could only be effective to the

extent that it was an instrument of national policy of its most powerful members”

(CARR, 2001, p.182).

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The road taken: the institutionalization of economic sanctions [...]

If, on the one hand, the construction of an equal system, even formally,

between the states to ensure world peace was discredited, on the other, the concern

with collective security was more alive than ever. Unsurprisingly, already in 1941

the Atlantic Charter, signed between the leader of the British government, Winston

Churchill, and the US President, Franklin Roosevelt, enunciated the need to create

an extensive and permanent general security system. In 1943, in Quebec, the two

leaders agreed that the initiative to create an international organization for peace

and security maintenance belonged to the states who led the fight against the

Axis – the Big Four (US, Soviet Union, Britain and China).

The pillars of the new political international organization were designed at

the Dumbarton Oaks meetings, in 1944. The terms accorded were also discussed

at Yalta and at the San Francisco Conferences, where the UN Charter was finally

adopted. The pillars discussed at Dumbarton Oaks were kept virtually unchanged:

(i) the Security Council would have the primary responsibility and authority to

maintain peace and security by non-military and military means; (ii) member

states agree to adhere to the mandate of the Council and (iii) France and the

four major leaders which resisted the Axis would be permanent members of the

Security Council, each one holding veto power (ABLER, 2008, p. 32-37).

Box 2 – Main institutional differences between the League of Nations

and the United Nations

League of Nations United Nations

Voting on non-

procedural

matters

Unanimity criteria both in the

Council and in the Assembly.

General Assembly: required afﬁrmative vote of

2/3 of those present and voting; Security Council:

required afﬁrmative vote of 9 of the 15 members

and the absence of the use of veto power by any

of the ﬁve permanent members.

Nature of

decisions

All resolutions, from the Council or

the Assembly, had no mandatory

character.

General Assembly resolutions: recommendations

nature only, with no binding character; Security

Council resolutions: with non-binding or binding

nature, depending on the will of the Council.

Military

coercion

Not previewed. Previewed (Chapter VII).

Source: Author’s own elaboration.

As the composition of the different bodies and the voting powers of states

echoed in the new institutional structure (Table 2), there was a real incentive to

the major powers to engage in the nascent organization. The solution equated a

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Cristine Koehler Zanella

series of disjunctions which existed among the discredited idealists’ claims and

the actual distribution of power between the states, resulting in a possible model

of international collective security.

The new institutional framework pulled away doubts on critical points that

emerged from the use of economic sanctions in the League of Nations. This was

made possible by four changes. First, by changing the unanimity rule in the voting

processes, which ended up giving too much power to small states or leading to

the unusual situation of a member having to agree with its own punishment in the

League of Nations. Second, by overcoming the voluntarism in deciding whether

there had been a threat or a breach of the peace, and also which penalties states

should apply and how. Decisions would ultimately be under the UNSC’s control,

which would have the power to issue binding decisions for all members. Third,

by predicting the use of military force to enforce collective security if necessary.

Finally, by granting veto to great powers, which could paralyze the organization

if faced with the possibility of seeing it turning against them.

The gap which existed in the League of Nations regarding, on the one hand,

the concern for collective security, and on the other, the distance between formal

equality and the real power among the states, was repaired. The key was the

structure, rules, and working mechanisms of the Security Council: “[t]he Security

Council can be seen as a nineteenth century concept of balance of power integrated

in the UN collective security framework” (NYE, 2009, p. 213). In these terms, it

was in the interests of the most powerful nations to be part of an international

organization that sought to ensure collective security.

Within this framework it was natural that the UN sanction’s mechanisms

were impregnated with realism. Inside the toolbox to enable collective security,

economic sanctions were listed but less prominently than the use of force.

The acceptance of military mobilization provided specifically to an organization

which would not be inert because of the unwillingness of less expressive countries

could be explained by the general feeling that the League of Nations lacked

materials and effective means of coercion. Within the realistic orientation that

prevailed in the academy and among statesmen, this was necessary to avoid both

the tragedy of a new world war and the ineffectiveness of the United Nations

against conflicts of significant proportions:

The planners of the United Nations were at odds on many questions, but they

were in agreement from the outset that the new organization must have the

power to maintain the future peace of the world through the use of international

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The road taken: the institutionalization of economic sanctions [...]

force. (…) These views reflected a preoccupation with force which was inevitable

in the midst of war and, also, a general feeling that the League of Nations had

failed in its task of keeping the world’s peace because it had been insufficiently

endowed with physical means of coercion (KIRK, 1946, p. 1081).

This concern, moreover, was not new in the political arena. Carr, criticizing

the “League of Nations’ affairs” stated that “the elimination of assumption of force

in politics could only be the result of a completely uncritical attitude to political

problems” (CARR, 2001, p. 137).

Everything was prepared to the acceptance of the vetoing right of the five

permanent members of the Security Council

, the prominence of this organ in

matters related to peace and security

, the mandatory character conferred on its

decisions

, and the concrete provision of the use of force as a collective security

mechanism

After World War II, the structures and dynamics of the new organization

should meet the general expectation of speed and efficiency:

Sweeping statement were made concerning the coercive powers which any new

organization must have, and the public was led to believe that this time there

was to be created an agency which would be able to deal with international

breaches of the peace almost as swiftly and effectively as law enforcement

officers deal with an individual criminal within the state (KIRK, 1946, p. 1081).

15 Article 27 of the Charter provides voting rules and the privilege of veto granted to the five permanent members

in the Security Council: “Article 27 – 1. Each member of the Security Council shall have one vote; 2. Decisions of

the Security Council on procedural matters shall be made by an affirmative vote of nine members; 3. Decisions

of the Security Council on all other matters shall be made by an affirmative vote of nine members including the

concurring votes of the permanent members; provided that, in decisions under Chapter VI, and under paragraph

3 of Article 52, a party to a dispute shall abstain from voting” (UNITED NATIONS, 1945)

16 The prominence of the Security Council was agreed by the Article 12 of the Charter: “Article 12 – 1. While the

Security Council is exercising in respect of any dispute or situation the functions assigned to it in the present

Charter, the General Assembly shall not make any recommendation with regard to that dispute or situation

unless the Security Council so requests; 2. The Secretary-General, with the consent of the Security Council, shall

notify the General Assembly at each session of any matters relative to the maintenance of international peace

and security which are being dealt with by the Security Council and similarly notify the General Assembly, or

the Members of the United Nations if the General Assembly is not in session, immediately the Security Council

ceases to deal with such matters” (UNITED NATIONS, 1945)

17 Binding nature of Security Council decisions: “Article 25. The Members of the United Nations agree to accept and

carry out the decisions of the Security Council in accordance with the present Charter” (UNITED NATIONS, 1945)

18 Real possibility for the use of force: “Article 42. Should the Security Council consider that measures provided for in

Article 41 would be inadequate or have proved to be inadequate, it may take such action by air, sea, or land forces as

may be necessary to maintain or restore international peace and security. Such action may include demonstrations,

blockade, and other operations by air, sea, or land forces of Members of the United Nations” (UNITED NATIONS,

1945) The operationalization of the use of force was regulated under Articles 43 to 47 of UN’s Charter.

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Cristine Koehler Zanella

In the context of agility and efficiency aimed for the new organization, any

idealistic aspiration should be contextualized within the power of the states.

Economic sanctions – once the most celebrated of the League of Nations’ tools –

although referred to in the UN Charter, were re-signified in terms of importance. They

survived as an instrument less important than the use of force; one that could not

claim anymore the former importance received in the League of Nations Covenant.

The “realist” school of international relations emerged after World War II

largely as a reaction to the overly optimistic expectations associated with the

League of Nations. It was the “utopian” ideas associated with the League

that provided grist for the “realists” mill; therefore, it was only natural that

economic sanctions, as the policy instrument most closely identified with

the League in the public mind, should also be denounced. Whereas military

force symbolized hard-headed “realism,” economic sanctions symbolized

fuzzy minded “idealism” and unwillingness to face up to the hard facts of

international life (BALDWIN, 1985, p. 155).

Despite being linked to idealism, the damaging power of economic sanctions

was soon recognized. Differing interests between the US and the UK on the one

hand, and the USSR on the other, made the situation involving the fascist regime

of General Francisco Franco in Spain impossible to be resolved at the Security

Council

. On December 12, 1946, under the live fascist ghost already hovering over

Spain, and in the context of the Cold War, the General Assembly recommended

the severance of diplomatic relations with Spain. The Western bloc considered it

risky to act more emphatically – and this included mandatory economic sanctions

measures against Franco:

[…] in 1946 neither the British nor the Americans could afford the political

instability and even the danger of renewed civil war which might result

from any attempt to oust Franco. Consequently they were not prepared to

intervene with force or support economic sanctions against him (JOHNSON,

2006, p.50).

As regards the possible impact of economic sanctions, Western countries

pondered that disruption of trade ties would compromise the general economic

recovery of the targeted country, eventually contributing to a Spanish inclination

19 US and UK did not want an intervention, but were in the awkward position of supporting Francisco Franco

to avoid the natural path to the revolution, as expected by the USSR with the deteriorating situation in Spain.

(JOHNSON, 2006)

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The road taken: the institutionalization of economic sanctions [...]

toward Soviet influence. Thus, the US held the sale of oil to Spain while the British

considered the importance of this trade for supplies of food, raw materials, and

industrial products.

A British cabinet note, from 6 January 1947, recognized that:

The British were reliant on Spanish fruit and vegetables and Spanish potash

for fertilizer to improve post-war food production. British industry also needed

Spanish raw materials and Spain used its currency earnings to purchase

manufactured goods from Britain and other European states so adding to

general postwar economic recovery (JOHNSON, 2006, p. 59).

The discussions on the adoption of economic sanctions at the United Nations

were starting. However, the dynamics of the Cold War balance of power and the

voting rules of Security Council froze the organization for forty-five years. The

same happened with the imposition of economic sanctions. During the Cold War,

mandatory economic sanctions were adopted only twice: against Southern Rhodesia

and against South Africa, because of the abuse of power by white minorities in

these countries (CORTRIGHT, LOPEZ, 2000). However, the ending of the Cold

War changed the scenario.

During the 1990s, five times as many economic sanctions were imposed

compared to the previous four decades. Rebirthed, economic sanctions entered the

UN policy agenda and, up to these days, are one of the most important instruments

in the international community´s toolbox of measures to enforce international

peace and security.

Conclusions

This article described the path to economic sanctions’ institutionalization as

an instrument to ensure international peace and security.

It started by showing that the Hague Conferences, which progressively

institutionalized international arbitration as a pacific mean to solve international

disputes, lead to the concern on how to enforce the arbitral sentences. Jurist Jacques

Dumas article can be considered the first one to present systematic reflections on

this topic and presented some concerns – as the danger to economic sanctions

senders – still shape the states concerns when deciding to adopt this measure.

The end of the First World War lead to the creation of the League of Nations.

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Cristine Koehler Zanella

In its Covenant, the economic sanctions were formally conceived as an important

tool to achieve world peace and security in the international community toolbox.

For the first time they had been codified internationally as an autonomous

coercive measure to promote collective security, not linked to an arbitral sentence.

Convinced on the economic sanctions’ power to dissuade eventual aggressors,

Woodrow Wilson advocated emphatically in their favor and they were previewed in

article 16 of the Covenant of the League of Nations. From 1920 to 1935, economic

sanctions were adopted and distrusted after the League of Nations failure to avoid

the Second World War (WWII). At the dawn of WWII aggressions, the emerging

realist school of international relations denounced the too ‘idealistic’ ideas enclosed

in this organization. Excessive confidence on the power of economic sanctions

were also criticized.

At the close of WWII the planners of the United Nations (UN) had a shared

comprehension that the use of international force must be an important tool of

the new organization. Without the emphasis that could be observed in the League

of Nations Covenant, economic sanctions were then listed in article 41 of the UN

Charter as one of many coercive measures to maintain peace and security. During

the Cold War, the Security Council approved mandatory economic sanctions

against Southern Rhodesia and against South Africa. In both cases, the reason

for imposing sanctions was the condemnation of racial segregation imposed

by white minorities. At those times, the condemnation of racial discrimination

was one of the few subjects that received the support – or at least the absence

of formalized objection – from international actors with veto power within the

Security Council. In the 1990s, economic sanctions were used intensively and this

measure of coercion remains until now one of the most important instruments in

the Security Council´s toolbox to enforce international peace and security.

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