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Book part
Publication date: 21 October 2019

Beata Stępień and Patrick Weber

The probability of sanctions’ effectiveness increases not only due to their severity for the target country’s economy but is also a function of adherence to their principles by…

Abstract

The probability of sanctions’ effectiveness increases not only due to their severity for the target country’s economy but is also a function of adherence to their principles by enterprises from senders’ countries. Sanctions avoidance and increasing investments in the target country (the observed behavior of many companies facing the European Union (EU) sanctions against Russia which were imposed in 2014) mitigate the impact of these restrictive measures. In this chapter we show (by analyzing adaptation strategies of EU enterprises affected by sanctions imposed on Russia by EU) how particular types of strategies affect the effectiveness of sanctions and what factors determine the choice of their respective behavior. We draw our conclusions from the online survey of more than 1,000 responses from British, French, German, Italian, and Polish enterprises. We find that while administrative burdens make conformance to sanctions more likely, market dependency and non-tangible assets in the target country induce strategies that challenge sanction policies. We conclude that the EU–Russian sanctions dispute incentivizes European companies to increase their engagement in Russia. These so-called defiance strategies diminish the real economic effect of the sanctions and generate a new equilibrium which outlasts the lifting of these restrictive measures and has negative long-term political implications.

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International Business in a VUCA World: The Changing Role of States and Firms
Type: Book
ISBN: 978-1-83867-256-0

Keywords

Book part
Publication date: 15 July 2009

Maraike Wenzel and Sami Faltas

On December 24, 1989, an armed insurrection began in Liberia. Charles Taylor, a former government official, led a rebel force, the National Patriotic Front of Liberia (NPFL), into…

Abstract

On December 24, 1989, an armed insurrection began in Liberia. Charles Taylor, a former government official, led a rebel force, the National Patriotic Front of Liberia (NPFL), into the north-eastern Nimba County. A breakaway faction, the Independent National Patriotic Front (INPFL), led by Prince Yormie Johnson gained control of central Monrovia – the capital – and killed the President Samuel Doe. The Economic Community of West African States (ECOWAS) intervened in August 1990, sending monitoring troops (the ECOWAS Military Observer Group, ECOMOG), and convened a national conference which elected an Interim Government of National Unity. In October 1990, ECOMOG established a neutral zone in Monrovia where Dr. Amos Sawyer was installed as Interim President in November. Various different factions and opposition groups were formed and clashes between the rebel groups and the Liberian army continued.

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Putting Teeth in the Tiger: Improving the Effectiveness of Arms Embargoes
Type: Book
ISBN: 978-1-84855-202-9

Book part
Publication date: 9 June 2015

David Cadden

This chapter traces the history of animosity between the United States and Iran that characterizes the current relationship between the two countries which were once close…

Abstract

This chapter traces the history of animosity between the United States and Iran that characterizes the current relationship between the two countries which were once close diplomatic, economic, and political allies. The chapter identifies the various cultural, economic, and political factors that have contributed to the hostility between these two countries and focuses particularly on the UN and US sanctions that have been imposed on Iran because of its overt and covert nuclear programs. The chapter concludes with a discussion on how the lifting of sanctions might allow the United States and Iran to rebuild a strategic partnership.

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Reintegrating Iran with the West: Challenges and Opportunities
Type: Book
ISBN: 978-1-78441-742-0

Keywords

Book part
Publication date: 28 February 2022

Gregory DeAngelo, Michael D. Makowsky and Bryan McCannon

Law enforcement agents enforce rules that they might transgress in their private lives. Building from a theory of “hypocrisy aversion” where agents incur psychological costs from…

Abstract

Law enforcement agents enforce rules that they might transgress in their private lives. Building from a theory of “hypocrisy aversion” where agents incur psychological costs from imposing a sanction on others for rules that they might break, the authors design a two-player game in which players are simultaneously placed in the roles of enforcer and potential transgressor. In this model, discretionary enforcement is endogenous to the size of the sanction. Conditional on rewards to enforcement and punishment that are both sufficiently small in the status quo, the authors demonstrate that price effects can be dominated by second-order hypocrisy effects, leading to rates of transgression that increase with larger sanctions. The authors test the model within a laboratory experiment where individuals can simultaneously gamble at the expense of a third party and punish those they observe gambling. Examining the comparable testable predictions of models of (i) selfish agents, (ii) pro-social agents, and (iii) pro-social agents who are averse to hypocrisy, the authors find evidence of hypocrisy aversion in the rates of gambling, sanctioning, and the changing composition of agent strategies. Our results suggest that increasing sanctions can backfire in the deterrence of common criminal and non-criminal offenses.

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Experimental Law and Economics
Type: Book
ISBN: 978-1-83867-537-0

Keywords

Book part
Publication date: 24 November 2017

Anna Abramova and Olga Garanina

Economic sanctions imposed by the EU and United States on Russia have brought significant changes into Russian foreign economic policy, in particular leading to deepening…

Abstract

Purpose

Economic sanctions imposed by the EU and United States on Russia have brought significant changes into Russian foreign economic policy, in particular leading to deepening cooperation with Asian countries and China in particular. The present contribution aims to shed light on the influence of sanctions on Russian multinational enterprises (MNEs) internationalization toward China using the example of energy and information and communication technology (ICT) industries.

Methodology/approach

The chapter builds on case study analysis. The choice of sectors allows us to highlight the recent strategic trends in the internationalization of oil and gas industry, dominated by state-owned multinationals, and in ICT by privately owned companies.

Findings

Our results provide empirical data for understanding the influence of sanctions on MNEs from the country being under the sanctions. In the case of Russian oil and gas industry and ICTs, research indicates that the shift toward China was not initiated primarily by the sanctions. In both cases, expansion to Asian markets was correlated with business interests in the Chinese market. However, changes in geopolitical and macroeconomic business environment accelerated Russian MNE’s pivot to China, for the purposes of attracting capital and reaching new markets in context of deteriorating relations with western partners. The cases demonstrate a moderating role of the industry in the context of sanctions, helping compensate for the slowdown of economic relations with traditional partners.

Originality/value

The novelty of the chapter is to delineate the consequences of sanctions on MNEs from the country being under sanctions. In this way, it illustrates the role of geopolitical environment in intensifying internationalization of Russian MNEs toward China.

Details

The Challenge of Bric Multinationals
Type: Book
ISBN: 978-1-78635-350-4

Keywords

Book part
Publication date: 23 September 2009

Christine Horne, Chien-Fei Chen, Justin Berg and Katie Evermann-Druffel

Instrumental approaches to norms treat their enforcement as problematic and suggest that self-interested actors are unlikely to sanction. We suggest an alternative…

Abstract

Instrumental approaches to norms treat their enforcement as problematic and suggest that self-interested actors are unlikely to sanction. We suggest an alternative conceptualization of the norm enforcement problem. Research shows that social rewards can offset sanctioning costs, thereby encouraging enforcement. The issue then becomes how individuals determine what to sanction. We suggest that the typicality of behavior may provide a clue. We identify conditions under which atypical behavior may be punished. Consistent with existing instrumental approaches, we find that atypical behavior is sanctioned if it detracts from group welfare. We also find evidence pointing to the importance of a non-instrumental factor – perceptions of a behavior's social desirability.

Details

Altruism and Prosocial Behavior in Groups
Type: Book
ISBN: 978-1-84855-573-0

Abstract

Details

The Political Economy of Antitrust
Type: Book
ISBN: 978-0-44453-093-6

Book part
Publication date: 30 December 2013

Liu Jianwei

China has showed its eagerness in using its economic strength in the very recent years. Is China going to be a major sanctioning state like the United States or the European…

Abstract

China has showed its eagerness in using its economic strength in the very recent years. Is China going to be a major sanctioning state like the United States or the European Union? This chapter argues that although there have been an increasing number of economic sanctions imposed by China with its expanding national interests and growing diplomatic problems, China will still keep a low profile in using economic sanctions because of the restraining factors such as the WTO rules, inherent problems in its economy, the pursuit of a good reputation and its strategy of peaceful development. Thus the frequency and tactics of using economic sanctions may vary according to its rising economy and changing international situation, but that will go in a very limited way.

Details

Cooperation for a Peaceful and Sustainable World Part 2
Type: Book
ISBN: 978-1-78190-655-2

Book part
Publication date: 15 July 2009

Sumita Kumar

Sanctions are normally used as an instrument by one country or an alliance of countries to affect change in the behaviour of another country. As Ian Anthony has noted, “Within the…

Abstract

Sanctions are normally used as an instrument by one country or an alliance of countries to affect change in the behaviour of another country. As Ian Anthony has noted, “Within the legal code of states, sanctions are that part of a law that inflicts a penalty for its violation. In common usage, international sanctions can be defined as any restriction or condition established for reasons of foreign policy or national security applied to a foreign country or entity by a group of states using substantially equivalent measures” (Anthony, 2002, p. 204). Most analysts would agree that clearly defined goals on the part of the initiator – and outlining a consistent set of policies with respect to such goals – are an important factor in gauging the effectiveness of sanctions at any given time.

Details

Putting Teeth in the Tiger: Improving the Effectiveness of Arms Embargoes
Type: Book
ISBN: 978-1-84855-202-9

Abstract

Details

The Political Economy of Antitrust
Type: Book
ISBN: 978-0-44453-093-6

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