Using the Carrot as the Stick: US Foreign Aid and the Effectiveness of Sanctions Threats

Abstract

We theorize that foreign aid relationships influence both the effectiveness of economic sanctions threats and the aggressiveness of senders in imposing sanctions. Aid sanctions are generally far less costly for senders than imposing commercially oriented sanctions but can still be very costly for their targets. Being able to disrupt aid flows as part of potential sanctions enhances sender states' credibility that they will impose painful sanctions against resisting target states. The more foreign aid a sender provides to a target state, the more successful we expect its sanctions threats to be and the more aggressive we expect the sender to be in imposing sanctions if the target resists. We test our theory using a competing risks analysis of ongoing, politically motivated sanctions threats issued by the United States from 1960-2010. Our analyses support our theory by revealing that the more foreign aid that the United States provides to target states, the more likely US sanctions threats are to succeed and the more aggressive the United States becomes in imposing sanctions.