Sanctions policy

One of the favorite targets of recent economic sanctions has been oil-producing countries. The U.S. has sanctions in place against countries that account for more than 10% of world oil output and 16% of estimated oil resources. In a recent study, the American Petroleum Institute said, "Some of these countries are undemocratic, have spotty human rights records, or actively promote terrorism or international aggression. As a consequence, there is little mystery as to the motivation for sanctions.

Sept. 7, 1998

3 min read

Patrick Crow
Washington, D.C.
[email protected]

One of the favorite targets of recent economic sanctions has been oil-producing countries.

The U.S. has sanctions in place against countries that account for more than 10% of world oil output and 16% of estimated oil resources.

In a recent study, the American Petroleum Institute said, "Some of these countries are undemocratic, have spotty human rights records, or actively promote terrorism or international aggression. As a consequence, there is little mystery as to the motivation for sanctions. However, their rationality is more elusive."

API said that, so far, unilateral sanctions have had little effect on the behavior of targeted regimes, and U.S. firms have borne a disproportionate share of their costs.

"The 'signal' sent out by this ineffective policy is one of growing isolation and disengagement from the world's most disturbing problems, rather than one of active global leadership."

Effects

API said the counterproductive effects of sanctions are expected to grow.

"Over the next dozen years, expansion of world oil supplies will be needed from countries already sanctioned, as well as other areas, in the Middle East, the Caspian, Russia, Latin America, Africa, and Asia.

"While there are challenges for U.S. firms involved in these frontier areas, U.S. sanctions policy has complicated rather than engaged these challenges.

"In the Middle East, sanctions against Iran have failed to slow the development of Iran's oil industry but have instead led to public disputes between the U.S. and most of its major allies underlining divisions in their approach to commonly acknowledged concerns over Iranian behavior.

"In Asia, the imposition of unilateral sanctions threatens to reduce the foreign policy influence of the U.S. at precisely a time when such leadership is essential.

"New sanctions under consideration could expand coverage to countries currently comprising over two thirds of current oil production and over 80% of estimated remaining resources."

Recommendations

API said that U.S. policymakers face a challenge.

They need to allow technology and institutional changes to develop oil and gas supplies that the world will need to sustain economic prosperity, while influencing foreign policy in areas of key strategic interest.

API said the U.S. must motivate its trading partners "to respond to the legitimate concerns of human rights and civilized norms of behavior" through the usual channels of diplomacy and commercial engagement.

"However, if such conventional methods fail, and unilateral sanctions are adopted as a last resort, such options should be carefully screened to ensure that they have at least some plausible chance of success in modifying the behavior of the target regime, and that the cost to the U.S. of the measures adopted are commensurate with the expected benefit.

"While these principles do not preclude the future use of sanctions, they do require a far more careful screening of options than has been apparent in recent and prospective sanctions against oil-producing countries," API said.