Question

Discuss the outlines of the Cuban embargo and the comprehensive sanctions against the Apartheid regime in South Africa. Why did one work while the other seems not to have? Can you generalize from these two cases about how sanctions work?

Answer 1

An “ineffective sanctions” story
An alternative interpretation of events can be offered in which sanctions played no important role. Instead, one can identify three factors that led to the downfall of apartheid. First, the extensive labor market distortions of apartheid proved increasingly costly and unacceptable. The South Africans linking economic conditions with the need for political change could well have been sincere in dismissing sanctions; the economic forces mandating change were internal. This is supported by the steady relaxation of apartheid labor laws, beginning in the 1970s, well before serious sanctions. Second, there was an effective political movement against the apartheid government. While this movement did not have sufficient power to overthrow the government by force, it was able to create substantial internal disruption. This political instability combined with the economic flaws of apartheid (and of the accompanying program of import-substitution industrialization) to make South Africa unattractive to foreign investors, both directly and indirectly. The direct effect was the increase in risk. Indirectly, the measures taken by the government to combat the turmoil raised spending and taxes, thus further diminishing South Africa’s attractiveness as a host for FDI. Despite these two effects, which were in full play by the mid-1980s, the apartheid regime remained in power. The final key ingredient in the change was the fall of communism in Eastern Europe and Mikhail Gorbachev’s forswearing of regional proxy wars. The Afrikaner government of South Africa saw the ANC as a party of godless communists, ready to take their country into the communist bloc. Once the communist bloc fell apart and a withdrawal of Cuban troops from Angola was negotiated, a political deal with the ANC became conceivable.

Summarize

It is impossible to argue conclusively that trade sanctions failed in the South African case. Given the small economic effects of trade sanctions, an argument for their effectiveness ends up hinging on their psychological impact on the governing party. Most South African leaders claimed the impact was minimal, but one can choose not to believe them. Such issues are very difficult to resolve; the best one can do is argue that it is implausible that trade sanctions played a significant and positive role.

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