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To lift the US economy, lift sanctions on America's foes

Profit, not patriotism, keeps companies afloat.

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At a time when the United States is faced with its largest economic crisis since the Great Depression, why does the US government remain committed to being the world's most active user of economic sanctions?

Given the economic circumstances facing the country and President Obama's goal of mending the US image abroad, the US government must reevaluate its sanctions policies.

In the research I have conducted on the international response to US economic sanctions, I've made several surprising discoveries about the effects the sanctions have on their targets' trade with other countries. In studying more than 100 cases of US-imposed sanctions from 1950-2000, I found that the United States' allies have consistently exploited the commercial opportunities created by US sanctions for their own benefit.

US allies have tended to trade far more with the states it has sanctioned than other countries. Part of this is because the US has lots of commercially competitive allies. It is also because these states use their alliances with the US as political cover to shield their companies from American retaliation. In effect, this means that the US subsidizes the economies of its allies to the detriment of its own businesses.

The US sanctions against Iran and Cuba illustrate this point well. Sanctions against Iran have forced American oil companies either to do their business elsewhere or give up their trade to foreign firms. It is not a coincidence that after Halliburton was scathingly rebuked by Congress for business dealings with Iran through its Dubai-based subsidiary that the company moved its entire headquarters to Dubai in 2007.


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