Affordable Adjustments and Exploitable Opportunities in the European Union: The Search for Alternatives to Sanctions Busting Trade
39 Pages Posted: 13 Oct 2020
Date Written: August 31, 2020
My research explores the role of trade interests in sanctions busting. The literature on sanctions busting argues that economic sanctions create commercial opportunities for third-party states to exploit as sender state firms cease trading with states targeted by sanctions. EU member states, particularly, France, Italy, Germany, and the United Kingdom, are frequently cited as sanctions busters. This sanctions busting trade has been shown to weaken the effectiveness of economic sanctions, which can generate political costs for EU firms attempting to maintain trade relationships with targeted states. I argue that the picture is incomplete, demonstrating that firms’ in EU member states instead follow a “path of least resistance.” By following this path, EU member states eschew sanctions busting commercial opportunities because more convenient and equally lucrative commercial opportunities potentially exist with alternative trade partners within their existing dense trading networks. The economic community that has developed among EU member states thus serves as a convenient “path of least resistance” and provides a less costly – both economically and politically – route for trade as the number of sanctions in force increases. Using UN Comtrade data from 1962-2011, I test the effects of intra-EU trade on the likelihood of sanctions busting using a multilevel logistic regression and find that as intra-EU trade increases for EU member states, the probability of sanctions busting declines.
Keywords: Economic Sanctions, Sanctions Busting, Trade Interests, European Union
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