Link of the Day: Case against economic sanctions

Primary version of this post, with visual content at Barry Stocker’s Weblog.

Thomas Bell. Western sanctions are doing nothing for the people of Burma, from the Daily Telegeraph, London.

It’s a shame to be disagreeing with the `Burmese democracy leader Aung San Suu Kyi, who is is a genuine hero, but Thomas Bell is right to do so. As Bell points out Burma has been under more or less heavy sanctions since 1988, when pro-democracy demonstrators were gunned down in Rangoon. In 1990 a military junta cancelled the election victory of Suu Kyi’s National League for Democracy, and the county has been run by the dominant personalities in national military and intelligence institutions ever since. There was a period of inward investment and economic growth in the 1990s but this has been stymied, at least in part, by economic sanctions, as Bell briefly indicates. Some relevant detail is that there was huge campaigning in the United States for sanctions in the 1990s, which met with success in the mid 90s with three laws, and with decisions by state and local governments to exclude companies trading with Burma from receiving public contracts. In general companies investing in Burma found themselves under extreme moral and social pressure. As Bell points out, this has not brought the extremely disgusting Burmese government to its knees. It has kept Burma impoverished while the regime has gone from bad to worse.

Elections planned for next year hold out a very slight hope for amelioration of the situation, but we must expect the elections to be rigged and for members of the new assembly to be uncritical servants of the regime. One can only hope that some slight crack of light will emerge with, regard to public debate and debate in the assembly; and if the regime does go into crisis, the existence of a national assembly might allow members of the national assembly to behave more like normal politicians (or jump off a sinking ship), and form the nucleus of constitutional democracy in a new Burma These are very faint hopes though, and sanctions have so far only brought more real repression, and what will for a long time be a ritual decorative national assembly. Though the sanctions imposed by the US and its allies have been tough, the increasingly wealthy countries of southern, south-eastern and eastern Asia have continued to trade enthusiastically with Burma. As Bell points out, the moral outrage and the associated sanctions are strangely selective. Why not China? Why not Sudan?

When have sanctions brought more? Is there any evidence that sanctions hastened the end of Apartheid in South Africa? Apartheid ended with the Cold War and South Africa was always able to trade. The Cold War ending was not the only factor, internal resistance and economic problems were factors as well. Apartheid was economically irrational, and more and more so over time. Businesses benefit from being able to hire people from any place and have the widest pool of talent possible available. Segregating populations, and providing the majority population with limited education chances is clearly not the way to achieve that. The exclusion of the majority population from the political process, and basic justice, caused contempt for legality, still a problem in South Africa. Again the economy does not benefit where there is contempt for law, alongside associated property rights and contractual rights.

Have sanctions ended Marxist-Leninist dictatorship in Cuba? Clearly not, and they probably increased the legitimacy of the regime internally and internationally, by giving it excuses for economic backwardness It’s a complete delusion to think economic backwardness and shortages in Cuba are due to US sanctions. The USSR which used to subsidise the economy had exactly the same problems, because that is consequence of one party rule combined with a state monopoly of economic activity above a very low level. Cuba can trade, and does, trade with many countries in the world apart from the US. In any case, many people from America visit Cuba illegally via other countries, spending dollars, so Cuba is in practice trading with the US. Cuba was receiving subsidies from the USSR, and it now receives them from Chavez, so is now ultimately funded by Venezuela’s oil wealth, and is still a country of shortages in very basic goods.

In the cases of Burma, South Africa and Cuba, sanctions have never proved at all comprehensive, In that sense we don’t know if sanctions would work, because they have not been tried. I suppose the closest to really enforced sanctions was Iraq between the two Gulf Wars. They still didn’t work to bring down Saddam’s regime and clearly there were illegal imports and exports. It’s clearly not possible to make all countries in the world impose sanctions and impose them with full force.

Sanctions impose costs on Burma, the country does trade but with a relatively limited range of partners, limiting the benefits of trade. So costs are endured by everyone in Burma, though probably not the regime, Since the regime is able to loot national finances at will, it’s unlikely that any of this harms its members, though it probably restricts the chances of those regime associates who wish to go into business. We should want these people to go into business, certainly the people outside the core of the regime, since it’s less likely they can treat business as receiving a state monopoly. We should want associates of the regime to participate in trade and wealth making in the market place.

It’s a shame that people with bad political connection benefit, but the advantage of the market is not that it rewards the good, but that it produces constant technological and organisational innovation, and increases living standards for everyone. Economic growth produces more people above the subsistence level, more educated middle class people, more people with the will and self-confidence to demand more rights. There is no automatic immediate progress from increasing prosperity, and increasing business and middle classes to full democracy as we see in China, but that does not mean there is no link. We have seen the process work out over several decades in the Republic of Korea (i.e. South Korea).

Trade with established democracies increases the chance of ideas of democracy and human rights spreading. Trade with established democracies, and tourism from those countries, increases the chances of Burmese people meeting people from established democracies and learning about democratic ideas. Increasing movements of people into and out of the country makes it easier for Burmese democracy activists to slip out of the country to avoid persecution, and makes it easier to slip back to continue their work. The growth of commerce, with all its contracts and laws, increases the spirit of legality in a country and understanding for the merits or equality before the law, and accountability of the state to law. Companies may pursue profits through corrupt alliances with the state, or the use of illegal violence, but the more trade and prosperity there is, the more difficulty there is in dominating the market in this way and turning it into a means for extracting tribute from the population.

Sanctions on Burma are a proven failure. The path from autocracy to democracy through trade and economic growth is a proven success. All countries, on an upward path of trade and prosperity, move from autocracy to democracy sooner or later. Bill Clinton was President of the US at the time of the anti-Burma trade laws, but opposed them. He had to give in to Congress and ‘public opinion, i.e. the activism of the pro-sanctions lobby. According to Bell, Hillary Clinton has said since becoming Secretary of State that sanctions have not worked in Burma. I hope that Barack Obama, and other democratic leaders agree, or can be persuaded. The people of Burma should not be punished for living under an autocracy. This does not prevent sanctions on the regime members, bans on foreign travel, educating their children abroad, keeping deposits in foreign banks, and so on. Sanctions which hurt the bad people, not the people as a whole.

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