April 14, 2025 • 37 mins
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How effective are economic sanctions in shaping global behavior—and what happens when they backfire?
In this episode of the At the Boundary podcast, host Jim Cardoso is joined by Dr. Zachary Selden, a leading expert on U.S. foreign policy and economic sanctions from the University of Florida. Together, they explore the evolving role of sanctions in diplomacy and global security, using both historical and current examples to examine when sanctions work—and when they don’t.
Key topics include:
- The U.S. embargo on Japan before WWII and its strategic consequences
- Sanctions on Russia and Iran: impacts, workarounds, and domestic responses
- How sanctions can unintentionally drive local production (like rare earth metals)
- Why sanctions are more effective when tied to specific goals—not regime change
- The challenges of sanctioning authoritarian regimes with access to alternative suppliers like China
Whether you're a policy professional, student of international relations, or just curious about how sanctions shape global events, this episode offers clear, timely insights into one of the most debated tools of modern statecraft.
Links from the episode:
• Future Strategist Program Cyber Frontier Summit
At the Boundary from the Global and National Security Institute at the University of South Florida, features global and national security issues we’ve found to be insightful, intriguing, fascinating, maybe controversial, but overall just worth talking about.
A "boundary" is a place, either literal or figurative, where two forces exist in close proximity to each other. Sometimes that boundary is in a state of harmony. More often than not, that boundary has a bit of chaos baked in. The Global and National Security Institute will live on the boundary of security policy and technology and that's where this podcast will focus.
The mission of GNSI is to provide actionable solutions to 21st-century security challenges for decision-makers at the local, state, national and global levels. We hope you enjoy At the Boundary.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Jim Cardoso (00:12):
Jim, hello everyone. Welcome to another
episode of at the boundary, thepodcast from the global and
national security Institute atthe University of South Florida.
I'm Jim Cardoso, Senior Directorfor GNSI and your host for at
the boundary. Today on thepodcast, we're going to be
talking about economic sanctionsand the role they play in US
(00:35):
foreign policy. I'll be talkingwith Dr Zachary Selden, author
and associate professor at theUniversity of Florida. But first
couple quick notes, we're lessthan 24 hours out from the GNSI
future strategist programhosting its first student led
conference here at USF. It'scalled the cyber frontier
(00:57):
Summit, and features anoutstanding lineup of speakers
and discussions. There's no costto attend, but registration is
required. It kicks off Tuesdaymorning at the Marshall Student
Center. We'll drop the link inthe show notes for more
information. And since cybersecurity isn't going away as a
hot topic, I also want tohighlight our partnership with
the University of Paris at clayfor a cyber and computer
(01:19):
security forum on June 23 thisvirtual forum will connect the
great researchers and expertshere at USF with some of
France's leading cyber andcomputer security practitioners
for four hours of high levelanalysis and insight. Keep your
eyes on our website, socialmedia and newsletter for more
information as we finalize theagenda. Again, that's June 23
(01:42):
GNSI USF and the University ofParis at Clay cyber and computer
security virtual forum. Don'tmiss it. All right. It's time
for today's interview. DrZachary Selden is an associate
professor at the University ofFlorida. Yep, those same gators
that just won the men's collegebasketball national
championship. Congratulations,that's okay. Our USF Bulls are
(02:04):
in their first top 25 rankinglast season, and they'll get
there in a few years. Dr Seldenshared time with GNSI strategy
and research manager Dr Tadschnaufer to talk about his
book, economic sanctions asinstruments of American foreign
policy, while tariffs andsanctions are two very different
things, the global argumentabout tariffs over the past few
(02:27):
weeks has brought much attentionto the importance of economic
actions in foreign policy. Inaddition to being one of the
country's foremost experts oneconomic sanctions, Dr Sheldon
was the director of the defenseand security committee of the
NATO Parliamentary Assembly TEDtalk with him about the overall
effectiveness of sanctions andwhat role they should take in US
(02:48):
foreign policy.
Tad Schnaufer (02:57):
Well, Zach, welcome to the podcast. I look
forward to our discussion
Zachary Selden (03:00):
today. No, thank you very much for having me. So
today, we're going to focus
Tad Schnaufer (03:05):
on the nexus of sanctions and critical natural
resources and rail Earth, rareearth, metals, and how they
interact. So how you could youpossibly use sanctions to limit
an adversary's access to thesecritical resources, or vice
versa, how an adversary couldlimit yours via sanctions. So
why don't we start backhistorically? Are there some
(03:25):
historical examples Zach ofwhere sanctions, or maybe even
boycotts, have been used to denyan adversary critical natural
Zachary Selden (03:33):
resources? Yeah, sure. I mean, there's plenty of
examples, some which have beenused against the United States
and some which the United Stateshas used against others. So the
classic example I think peopleturn to is back before World War
Two, the United States tried todeny Japan, Imperial Japan,
given its war in China and itsbrutal occupation of Manchuria,
(03:57):
access to critical aspects ofwhat the United States was
exporting at the time? So thesewere certain metals, but also
oil, right? And for many peoplewho look back on the history of
World War Two, you know? Andobviously there's a debate here,
but this was one of the thingsthat that drove Imperial Japan
to seize the Dutch East Indiesand really launch a broader war
(04:18):
that dragged European powers inthe United States in so that's
one example. You know, if youwant to think about an example
where sanctions, in a way, orexport controls were used
against the United States, lookto the history of the you know,
the great airplane, the SR 71the Blackbird. You know the
(04:40):
still, I think, one of thefastest aircraft, if not the
fastest aircraft ever, everbuilt. But the thing about an
aircraft that moves at thatspeed, you know, the skin of it
had to be made out of titanium.
That was the only thing that wasgoing to withstand the kind of
heat and that that speed wouldgenerate. But here's the thing,
at that time, in the early 1960sAlmost all the titanium in the
world we knew about was comingout of the Soviet Union, and
(05:03):
they obviously weren't going tobe selling it to the United
States, so the CIA set up,there's a whole string of fake
buyers to gobble up titaniumfrom the Soviet Union through
shell corporations. And it's abit of mythology. I'm pretty
sure it's true. I've read itfrom a at least in a number of
reputable sources, but one ofthe most effective ways of doing
(05:24):
this was they set up a companythat was supposedly buying
titanium for making pizza ovens,but this was actually being, you
know, funneled into the SR 71project. So, you know, states
will always find ways aroundthese kinds of restrictions,
right? And the United Statesreally found a creative way at
(05:44):
that point.
Tad Schnaufer (05:48):
So if we're looking at the let's just start
with the economic basis.
Obviously, we have the currentwar in Ukraine out of sanctions
on Russia and Iran. What keepsthem from getting those, you
know, critical resources at thispoint. I mean, obviously from
the West,
Zachary Selden (06:03):
well, I mean, it's a good question. You know,
it's always a matter of cost,right? So things are always
available from alternativesuppliers if you can't
manufacture it yourself. And Ithink, you know, we sometimes
make an error in thinking aboutthings like sanctions and
tariffs and all these things aresort of separate things, but
they're actually, you know,based on the same economic
(06:25):
logic, right, right? So what amI doing? I'm making it more
expensive or difficult for youto get something from outside
your country, which creates adistinct incentive to produce it
inside that countries, you know.
So my sanctions against you arekind of like you imposing a
protective tariff, right? It'sgoing to help you develop your
domestic industry to producethat thing, if you can do it
(06:46):
right now. The thing aboutcritical minerals is that not
everybody has access to them intheir own country, so it's not
like producing a widget, right?
It has to be dug out of theground or something. But even
here, you know, in many cases,it's not that a country can't
(07:08):
produce a critical mineral, it'sjust that it happens to be more
expensive to do that, and soit's cheaper to buy it from
abroad. But if that's denied toyou, you will find ways to get
it out of the ground at home,and that's currently one of the
things that's happening in theUnited States on rare earth
metals.
Tad Schnaufer (07:27):
And that's why we see these discussions about the
untapped natural resources,whether in the Arctic or
otherwise, where, you know,countries looking to compete for
those mining resources,
Zachary Selden (07:38):
absolutely. But even beyond that. I mean, you
know, in the continental UnitedStates, for example. So, you
know, two that I'm aware of,that China has put export
restrictions on the UnitedStates to China is actually, I
think, the world's largest, byfar, exporter of gallium, which
is one of the rare earth metals,also antimony. And so what has
(08:03):
happened is that you're seeing alot of development in these in
the continental United States.
So there's a mine in Idaho thathave been dormant for a long
time that produces antimony. Imean, did so during World War
Two, and it was a criticalmineral then. And now it's doing
it again. And now there's a bigdevelopment in Texas, I think,
areas called round top, thatestimates are it could produce,
(08:26):
you know, all the gallium thatthe United States could need for
the foreseeable future from thatone area. And see, the thing is,
is that with those minerals,they're in very low
concentrations in many, manyplaces. And so it's a question
of the effort, the environmentalimpact, the cost of getting that
(08:48):
stuff out of the ground andrefining it. China, with very
low environmental standards, iswilling to put a lot into
pulling lots of gallium out ofthe ground, which is, like I
said, in very lowconcentrations, and then going
through the refining process theUnited States, we weren't
willing to do that. But youknow, if you can't get it from
(09:08):
somewhere else, you'll get ithere. So, you know, once again,
it's just a matter of the costand benefit ratio to these
things. And so, yeah, that'sbeen that's been changing,
that's been driving a lot ofproduction the United States.
The flip side of that, ofcourse, is that if you sort of
follow the economic incentivedown the line, once people have
(09:28):
invested a lot into mining thesethings out of the ground,
whether it's in Texas or Idaho,we're talking billions of
dollars of investment, they'renot going to want to see that go
away. So my guess is 10 yearsfrom now, if China were to drop
its export restrictions on rareearth metals to the United
States, the United States wouldprobably put some kind of tariff
(09:51):
in place to protect thoseproducers right for strategic
purposes. So yeah, it's, youknow. We could look at these
things as kind of differentaspects of policy, but in fact,
from an economic logic, they'requite similar.
Tad Schnaufer (10:07):
So it almost ties into tariffs as well, where you
drive home industry, but thatindustry would not like to see
those tariffs lifted, becauseonce they invest building
exactly the infrastructure isthere. This takes a long time,
though as well. There's a timehorizon which is not immediate,
yeah,
Zachary Selden (10:22):
yeah. And, you know, it can vary a lot.
Obviously, you know, underwartime conditions, countries do
extraordinary things. You know,the United States certainly did
during World War Two, and otherswill as well under normal
conditions. Yeah, it's gonnatake a long time to build up,
and the infrastructure isexpensive. But you know, things
can happen pretty rapidly. Sofor example, you know, the
United States was a net importerof major fossil fuels, whether
(10:47):
it was natural gas or or oil.
For a long time, we're now amajor net exporter, right? And
we're looking at seeing theincrease, the significant
increase in the export ofnatural gas from the United
States in the form of liquefiednatural gas. Liquefied natural
gas, which really, when you sortof look at it in terms of our
relationship with Russia, andour ability to sort of contain
(11:08):
Russian revenues, governmentrevenues, this is actually a
really important area. So theramp up the United States has
been able to make in the exportof liquefied natural gas has
pretty significant impacts, Ithink, geopolitically. And yeah,
you're right. It's an expensiveinfrastructure. It's billions of
dollars of private investment.
(11:31):
But it happens. And it happenedpretty quickly over I mean, if
you consider over a span of 10years quickly, you know, it
happened quite quickly.
Tad Schnaufer (11:39):
How do you then, you know, as we look at these
critical natural resources, orfossil fuels, or whatever it may
be, how do you impose asanctions regime? And then also,
in this case, like we're talkingabout with oil, the US is able
to offer an alternative. So yousanction Russia, deny its sale,
and then you offer analternative to further deny the
Russians to be able to, let'ssay, you know, use a unflag ship
(12:02):
or a third party flagship to getit sold around. So how does that
work?
Zachary Selden (12:07):
Yeah, I mean, so in the case of the United States
and in liquefied natural gas, Imean, it's a global market,
right? So an enormous amount ofwhat the United States produces
goes to Asia, right, or LatinAmerica. But when demand really
skyrocketed in Europe, becauseEurope tried to shut off the,
you know, the gas tapsessentially coming from, from
(12:29):
Russia. After the invasion ofUkraine, a lot of it started
going towards Europe. So, youknow, the price went up. The
demand in Europe went up. Theprice that Europeans were
willing to offer went up. Sonaturally, you know, gas started
to flow in that direction, youknow. So it's all about supply
and demand and prices and so,yeah, as prices hit a certain
(12:50):
point, producers are willing toinvest more in the
infrastructure to get this stuffout and onto ships and moving
around. It's an expensiveprocess. But you know, if the
alternative is is more expensivethan this is what where we are.
So, yeah, it's entirely possiblethat the United States can, can
play this role in it. As itstarts to change the whole sort
(13:13):
of market structure, it putsRussia in a very different
position, where now almost allof its energy is, I wouldn't say
all of it, that's probably anoverstatement, but, you know,
the vast majority is goingtowards China and or India to a
lesser degree. Well, with
Tad Schnaufer (13:30):
that in mind, looking at China and India and
how they've dealt with theseresources, you know, obviously
countries want to be, you know,resource independent. If they
can, they can have a homesource, or an organic source to
these critical naturalresources. So that way they can,
sanctions aren't even an option.
You can't place sanctions on acountry if they already have it.
And China has done this in partthrough the BRI the Belt and
(13:51):
Road Initiative by, you know,helping build mines around the
world, lithium mines and Chilethings like that. So how has
that process worked and are howsecure are? Do you think those
supply lines actually are? Arethey unsanctionable? You
Zachary Selden (14:07):
know, that's a really good question. And this
is, I think it's been a hugepart of China's strategy, and
particularly in Africa. So, youknow, a lot of what they've been
trying to do. And I think, interms of, I think we mentioned,
we talked about gallium earlier.
Ghana is a huge source of this,right? And China has just sort
of hoovered up land to minegallium in that region. Yeah. I
(14:27):
mean, but at the end of the day,these are our, you know,
sovereign countries, and we'veseen a lot of sort of pushback
against Bri in some of thesecountries as they start to see
the negative impact of Chineseinvolvement, whether it's Sri
Lanka or some countries inAfrica, you know, and there's a
limit to what China can do ifcountries start to push back on
(14:49):
this, or say, you know, we don'twant to be part of this deal
anymore, because it's entirelypossible that the countries do
started pulling out, and we'veseen that, right? So yeah, you
can sort of secure supplies ofthese things from outside your
country through variousagreements. But you know,
there's always the possibilitythat that's not your sovereign
(15:10):
territory. And you know, unlessyou're willing to sort of truly
use gumbo gumbo diplomacy, youknow, you may not be able to
actually always get that.
Tad Schnaufer (15:22):
So for the United States, in this case, how
resource independent could theUnited States be if it was a all
out conflict, let's say in theUS had to really produce. What
do you think the overallcritical natural resources,
whether fossil fuels or rareearth metals? How well could the
US fare?
Zachary Selden (15:39):
Yeah, I mean, once again, it's all a question
of how much are you willing topay, right? And not just in
terms of, you know, actualfinancial costs, but you know,
environmental cost andopportunity cost. So if you're
going to sink a lot of money andtime and effort into one thing,
you're not obviously doing it insomething else. And of course,
all this is a little bit morecomplex in the United States
(16:02):
than in sort of authoritariansystems, because we're talking
about private industry, right,and there's a limit to what
government can do to sort ofdirect private industry. There's
got to be sort of financialincentives there, so, but yeah,
we we've clearly seen that whenexport restrictions are put in
place on things like rare earthmetals. Suddenly, there's a lot
(16:23):
more exploration, and peoplefind a lot more in the US. You
know, it's sort of out there ifyou're willing to look and if
you're willing to pay the cost.
And you know, so once again,it's just sort of a supply and
demand and what cost you willingto pay? So can the United States
be independent on many of thesethings. Sure, right? It's not
economically necessarily thebest way to go in a peacetime
(16:48):
situation. But if you argue thatyou're approaching a period of
great power conflict and thatthese things are strategically
necessary, then that's a verydifferent kind of context,
right?
Tad Schnaufer (17:04):
Because the economic model, obviously you
said the private industry needsto make money, and it's it's
just often cheaper just toimport it from overseas and make
whatever device you need thiscritical resource for. But the
Chinese and the Russians don'tnecessarily have that same
calculation, as you noted,because they subsidize a lot of
these industries, or thegovernment just straight up owns
the industries that are outthere doing it, or, yeah.
Zachary Selden (17:27):
And in fact, oftentimes the government is
actually a primary beneficiaryof the sales that those, those,
you know, for example, you know,I the the oil and gas industry
in Russia has been described assort of the Kremlin's piggy
bank, right? I mean, a hugeamount of Russian federal
revenues come off of thoseextractive industries and their
(17:48):
ability to export. So, yeah,these things are completely sort
of interdependent government andan industry within sort of
authoritarian structures. Yeah.
I mean, I think another thing wehave to sort of keep in mind,
though, is that when the UnitedStates uses sanctions against
any country, it can sometimeshave a perverse effect. And I
think we've been kind ofpointing to this in a certain
(18:09):
way, which is that when youimpose sanctions on a on a
country, you're creating anincentive for them to produce
whatever it is that you'resanctioning in that country, but
then producers in that countryhave a distinct incentive to
make sure that sanctions stay inplace, right, right? And so this
can be and that can actuallymake things really difficult to
(18:30):
change. And we've got, I mean,plenty of historical examples of
that when the United States orothers have tried to sanction
countries. So you know, my myfavorite example of this is
South Africa under the apartheidregime, which was under pretty
strict sanctions. These were unbased sanctions, so pretty much
across the board, many you know,most of the countries in the
(18:51):
world, and most of it targetedthe south what could go into
arms exports to South Africa,right? Because it was a very
repressive regime, and so no onewanted to be sending any kind of
military supplies or things thatcould be sort of bolstering
security forces of South Africa.
(19:11):
So South Africa being, you know,reasonably capable country in
terms of industrial capacity,set about developing an arms
industry, and they didn't justproduce light arms. They did at
first, then they started torealize that, hey, they could
actually produce armoredvehicles and mobile howitzers.
(19:31):
And this actually became a bigexport industry for them. And
ironically, they were exportingmost of their product to Sub
Saharan Africa, but South Africawent from not having an arms
industry to being the fifth orsixth largest exporter in the
world in about 10 years, right?
And you can imagine at thatpoint in time, and this was
definitely the case, that thepeople who were involved in that
(19:54):
industry didn't want to see itgo away, right? And this.
Happens in other countries aswell, right? If you're
benefiting from the effects ofsanctions, they're essentially
like a protective tariff foryour industry, and you're not
going to want that to go away.
So there are times when we'vemade it more difficult to
actually change the behavior ofstates through sanctions,
(20:17):
because we've actually created asort of a group of powerful and
wealthy individuals within thosecountries or industries that
have a vested interest in seeingsanctions stay in place. So it's
a very tricky balance. When youuse these things, it's
Tad Schnaufer (20:32):
interesting, because a lot of times you just
see people talking about kind ofthat surface level effect, oh,
we're going to punish thiscountry this way. But what
you're not taking intocalculations is that secondary,
tertiary effect of, okay, well,industries are going to reorient
themselves. They're going tofind other trading partners, if
they can, and they're going toadapt their economy. They're not
just going to take the sanctionsand just, you know, sit with
(20:53):
them. Yeah,
Zachary Selden (20:54):
exactly right.
And once again, it's a, I thinka bigger question is, Who are
you punishing, right? Um, youknow. And I think this is a
really big question when we'retalking about the kinds of
countries that we're trying toimpose sanctions on Currently,
most of them are authoritarianor certainly non democratic,
right, whether it's Russia orIran. And so you have to ask
(21:16):
yourself, how do you translatethat economic pain into
something that really affectsthe leadership of the country?
You know, maybe one thing thatyou do that actually creates
economic pain to the generalpopulation. And you can argue
that there's sort of a logic tosanctions, kind of a
transmission belt. I imposeeconomic pain on the population,
(21:38):
and that population is angry atthe government for doing
whatever it's doing that'scausing this, and so they take
action to get a new government.
Right? Well, that could work ina democratic country, right,
right? But in an authoritarianregime, that's going to be a
little bit different, right?
Because what can people do?
(22:00):
Well, they can protest, but agreat risk to themselves. So how
do you sort of translateeconomic pain into something
really impacts on the leadershipof a country and forces them to
moderate their behavior? That isnot an easy thing to do,
Tad Schnaufer (22:19):
particularly when, again, it's not worldwide
sanctions. So they canoftentimes just be what they
want from somebody else, or likewe've discussed, they just
create a homegrown industry. Imean, there's look at drone
development. You know, theIranians had advanced drones.
Now they're developing them inRussia, you know. So, yeah,
Zachary Selden (22:33):
exactly right.
And so, yeah, you know. And onceagain, you know, the drone
technology that Iran I mean,what they have done,
essentially, is take, you know,Western, in particular, German
technology, and sort of adapt totheir own purposes and add to
it. But yeah, they developed avery effective, you know, cost
effective, relatively cheapdrone business. That pretty
good, right? So, yeah, they nowhave, frankly, an export
(22:57):
industry and drones, right? AndRussia is buying them, so they
didn't have that before,
Tad Schnaufer (23:06):
right? So the impacts of sanctions, or in this
case, really tariffs, becauseyou can see that relationship
between sanctions and tariffs,and how the effect it actually
has on domestic the domesticindustry of the country either
imposing tariffs or the onewho's under sanction?
Zachary Selden (23:22):
Yeah, no, exactly. I think, you know, I
think you're just sort ofgetting back to my original
point is, like, you know, youcan look at tank sanctions and
tariffs is, it's really verysimilar things in a lot of ways,
in terms of the economiceffects, just kind of a question
of who's imposing them, right,
Tad Schnaufer (23:37):
right the direction of the supposed money
in the in a sense, going usingthe legal term of intent. What's
the intent? Yeah,
Zachary Selden (23:45):
yeah, yeah, exactly, yeah. I think that's a
that's a good way of phrasingit, right? So
Tad Schnaufer (23:49):
when we look at that, then we look at, you know,
we talked about resourceindependence. We've talked about
international trade, how, howdoes the US and and the West in
general, look at naturalresources now going forward, is
it, do you think there's apolicy of denial to try to deny
these things to the Chinese andRussians and some, you know,
through sanctions or othermeans, or is it just not really
(24:12):
feasible, given the currentglobal situation?
Zachary Selden (24:16):
You know, honestly, I think the place
where you're more likely to seeeffective pressure is going to
be not so much criticalstrategic resources. Because
once again, as far as I know,the things which, which we now
have today, is sort of criticalresources, whether it's rare
earth, metals, lithium, thingslike that, I don't see that
(24:36):
you're going to be able to toeffectively impose some kind of
sanctions regime on thosecountries, because with a lot of
the rare earth stuff, Chinaalready has a lot of it, and is
willing to, you know, to take itout of the ground at whatever
environmental cost. And the sameis true of Russia to a large
extent. So I think really, theplaces where you're going to
have any kind of effectivesanctions is probably going to
(24:58):
be on things you. Very, veryhigh end manufacturer products,
in particular, chips,superconducting materials, you
know, they're very on that veryhigh end of semiconductors.
There are very few placescapable of producing those
(25:19):
things, right? So most of thatproduction is where it's in
Taiwan, it's in the UnitedStates, it's in the Netherlands.
There really aren't too manyplaces capable of it. And in
fact, China has had a difficulttime developing its own very
high end semiconductor business,right? They've tried, right, but
(25:40):
they haven't been able to reallyeffectively do this. And I think
in part, that's because, yeah,they have been denied some
rather, you know, criticalmaterials and equipment for
that. So there, I think you canprobably have some kind of
effective sanctions on the sortof highest end of the technology
spectrum, but in terms of sortof the critical minerals and
(26:04):
things like that, I don't thinkthat's going to be a very
effective path,
Tad Schnaufer (26:10):
right? And as you mentioned about causing, you
know, in a sense, you'reimposing sanctions to deny
resources, possibly, but also toimpose pain, in a sense, on a
society or maybe a group ofleaders. But we haven't really
seen that be necessarilyeffective. So let me just as you
just mentioned, naturalresources is pretty hard,
because you can go a lot ofother places, or you can mine in
your own country at an increasedcost. So where, where does that
(26:32):
infliction of pain work? Do wehave some successful cases of
sanctions around the world? Youknow, we're thinking of North
Korea, of Cuba, countries thathave just been under sanctions
for decades. Are those reapingresults?
Zachary Selden (26:45):
Yeah. I mean, if you mentioned, you know, North
Korea and Cuba. I mean, theseare countries that have, you
know, probably under leadershipthat has done everything
possible to shoot themselves inthe foot economically. So I'm
not sure the sanctions arereally the critical thing,
right? I mean, if they hadcompletely free trade, I'm not
sure that it would, you know,really make much difference now.
(27:08):
So I think if you want to lookat effective sanctions, you'll
find that sanctions tend towork. And this isn't, you know,
necessarily my own work. There'sGary Huff Bauer and and some
others have done. You know,enormous amounts of work on
this. Sanctions are ofteneffective when you have sort of
very, not huge strategic goals,but rather sort of very specific
(27:30):
goals, like, Hey, you went andnationalized this piece of
property that belongs to, youknow, a company from our
country. We don't like that, sowe're imposing sanctions until
you turn that around, that sortof thing. You know, if you can
impose some economic disruptionon a country, you can oftentimes
get a leadership to kind ofchange things, but that's very
(27:51):
discreet, right? And it's verytargeted, and there's a there's
a clear answer what they need todo. It's very different if
you're imposing sanctions on acountry because we don't like
your government and what you do,right? They're not going to
change everything, right? So itcan be very difficult to sort of
(28:12):
get those kind of huge changes.
But you know, you can putpressure, and you can do things
that affect even authoritariancountries, which are basically
insulated from public pressureto a large degree. So, you know,
for example, with Russia, youknow, back to once again,
they're a huge amount of theirthe federal government's
(28:36):
revenue, so the money that ithas available to fund its war
effort in Ukraine comes from thesale of oil and gas. And yes,
it's true that they've been ableto find new buyers in the form,
particularly of China, but alsoIndia. But that doesn't make up
for all of it. And So Russia hashad to sort of struggle and find
ways to get out from underneaththe sanctions and sell oil and
(28:59):
yeah, it has come at a cost tothem, right? Is it enough to
push them No, but you know, ifyou're able to deny them 100
billion a year, you know, overtime, one hopes that that starts
to have some negative impact onwhat they can do in terms of
resupplying their military inthe long run. So, you know, is
(29:23):
it the solution? No, but can itcontribute? Sure,
Tad Schnaufer (29:31):
and that, you know, makes one wonder about the
long term impacts of sanctions,as we talked about, as economies
react to sanctions. So, youknow, looking at Russia again,
it's reacting to the sanctionsplaced on it. It's looking for
other outlets, looking for othertrading partners, other markets
to export to. Is there a timefactor here where the sanctions
(29:54):
have the most impact right awayand they start losing effect, if
you will, over time? Have weseen that? Play out,
particularly when it comes toresources,
Zachary Selden (30:03):
yeah, I mean absolutely in terms of Russia,
and here, you know, I think theinitial sort of effect was, was
quite a shock on the Russianeconomy, if you, if you look at,
you know, there's a blip there,when, when sanctions hit. And in
particular, it really is moresort of the financial sanctions,
right? You know, things wereimposed that really made it very
(30:24):
difficult for Russia to engagein international financial
transactions. And that was areal problem. But, you know,
once again, others stepped in,China stepped in to really sort
of facilitate financialtransactions so that Russia
could really sort of participatein the international economy
that became its major buyer ofits major export. And so, yeah,
(30:47):
it's kind of like, you know, youcan squeeze a balloon and it's
just going to kind of move in adifferent direction. And, you
know, economies are elastic,right? We talk about elasticity
and economics all the time, andthings adapt. So yes, there was
an initial shock, and certainlyit affected the Russian
population. And one couldimagine that this would, you
(31:09):
know, drive an opposition torise to the fore and try to
change things in Russiangovernance. Obviously, that
didn't happen. And over time,Russians have adapted, right?
They have switched how credithas done. They have changed
suppliers, they have changedpurchasers of major products.
(31:31):
And in the end, they're doingokay, right? So it's a new
normal, and it doesn't seem tohave changed things that much,
Tad Schnaufer (31:40):
right? Well, and also to, you know, put it into
context, the Russians knew thata number of sanctions were
coming before they started theconflict, because, as they were
able to prepare some of the,some of their system for that
blow as well. You know, itwasn't just out there they
Zachary Selden (31:54):
were. And, you know, another thing that people
have tried is so called Smartsanctions aimed at individuals,
influential individuals ingovernments or private business,
who are connected to government,but once again, those
individuals have, you know,pretty good intelligence of
what's coming down the line, andthey're very good at finding
ways to sort of park their moneyin relatively safe places. So
(32:18):
many of them may be constrainedin some ways, but have simply
found, you know, alternatives towhat they were doing. So what
Tad Schnaufer (32:27):
overall sounds like? Yeah, sanction is
absolutely a policy tool. Itdoes have effects. Those effects
are time sensitive. They changeover time. It's not going to be
a lasting effect one way or theother. And then what I'm also
hearing is that for when itcomes to natural critical
resources, you can try to denyit to a country, you can try to
sanction it, but likely it'sjust not. It's not going to
(32:49):
completely stop the flow.
Zachary Selden (32:52):
No, I mean, it's highly unlikely. And like I
said, you know, with many ofthese resources, it's not a
matter that they are impossibleto get from, you know, from
either your your own domesticterritory, or from countries
that are friendly to you. It'sjust that it's more expensive or
environmentally risky, but ifyou drive up the cost, then it's
(33:13):
worth it,
Tad Schnaufer (33:14):
right? Yeah. And it's really just, you know, this
happens when you think aboutpolicy making. Quite often,
don't ask more than what yourpolicy can deliver the sanctions
can't deliver impacts. Justdon't expect them to be a Plan C
at pancia,
Zachary Selden (33:26):
yeah, no, it's not a panacea. You know, is it
part of a package of tools?
Sure, but you know, once again,always be aware of the secondary
effects of whatever you do. Andyou know, that's generally good
policy advice, right? What? Whatare the possible secondary
effects? Right? Always a goodquestion to ask yourself, yeah,
who else
Tad Schnaufer (33:43):
is this going to affect? And really, like we
talked about with sanctionshere, how soon can they work to
circumvent it? Yeah, yeah,that's so if we were going to,
as we wrap up here, what wouldyou say are the big takeaways
going forward as we look at theexpansion of these rare earth
metals, the need for microchipsand other technological things
that can be sanctioned moreeasily and can be restricted and
(34:05):
denied to adversaries moreeasily, as we discussed, what
would be the big takeaway?
Zachary Selden (34:11):
Yeah, I mean, I think the big takeaway is that
the United States is going to, Ithink, find many ways to become
more self sufficient in thesecritical minerals. I mean, there
have already been steps thathave been taken, I think, and I
I expect under the currentadministration, you'll see a
(34:32):
deliberate green lighting ofmining operations and perhaps a
less attention to environmentalregulations and sort of green
light projects so this can moveahead more quickly, as well as
green lending projects thatallow the United States to
(34:53):
export more oil and gas, andtherefore sort of deprive Russia
of that leverage of theinternational environment. So I
think you'll see more of that.
You know, there's always been,or I shouldn't say, always been,
but for the last, you know,several years, and certainly
under the previous presidentialadministration, a focus on
restricting the export of hightechnology items, particularly
(35:17):
the semiconductor field, andalso trying to encourage much
more domestic production ofthese things to to ensure the
United States is highly selfsufficient in high end
semiconductors. So once again, Ithink that's going to continue
too. So I would expect to seemore of that over time. We'll
Tad Schnaufer (35:40):
have to keep a look out for that, and in the
meantime, thank you so much forjoining us today. Thank you.
Jim Cardoso (35:53):
That's Dr Tad schnaufer genoci, strategy and
research manager, talking withDr Zachary Selden, one of the
country's foremost authoritieson sanctions, and author of the
book, economic sanctions asinstruments of American foreign
policy. Special thanks to DrSheldon for his unique analysis
and perspective on a key andoften misunderstood tool in
(36:13):
global foreign policy. Laterthis week, with the Houthis in
Yemen dominating recentheadlines, we're dropping our
first special episode of theyear, we have an opportunity to
sit down with nadwa al daswari,a veteran researcher and
foremost Yemen expert betweenthe controversy of senior
administration officialsdiscussing military plans on an
(36:34):
unsecured signal application andthe success of those strikes
themselves. There's a lot todiscuss. Al daswari is an
Associate Fellow at the MiddleEast Institute and the founding
director at Partners Yemen,amongst many other high profile
roles in the region. Look forthat special episode to drop
little later this week. Thanksfor listening today. If you like
(36:56):
the podcast, please share withyour colleagues and network. You
can follow GNSI and our LinkedInand X accounts at USF,
underscore GNSI, and check outour website as well, at
usf.edu/gnsi, where you can alsosubscribe to our monthly
newsletterthat's going to wrap up this
(37:19):
episode of at the boundary. Eachnew episode will feature global
and national security issues wefound to be insightful,
intriguing, fascinating, maybecontroversial, but overall, just
worth talking about. I'm JimCardoso, and we'll see you at
the boundary.
Jim, hello everyone. Welcome to another
episode of at the boundary, thepodcast from the global and
national security Institute atthe University of South Florida.
I'm Jim Cardoso, Senior Directorfor GNSI and your host for at
the boundary. Today on thepodcast, we're going to be
talking about economic sanctionsand the role they play in US
(00:35):
foreign policy. I'll be talkingwith Dr Zachary Selden, author
and associate professor at theUniversity of Florida. But first
couple quick notes, we're lessthan 24 hours out from the GNSI
future strategist programhosting its first student led
conference here at USF. It'scalled the cyber frontier
(00:57):
Summit, and features anoutstanding lineup of speakers
and discussions. There's no costto attend, but registration is
required. It kicks off Tuesdaymorning at the Marshall Student
Center. We'll drop the link inthe show notes for more
information. And since cybersecurity isn't going away as a
hot topic, I also want tohighlight our partnership with
the University of Paris at clayfor a cyber and computer
(01:19):
security forum on June 23 thisvirtual forum will connect the
great researchers and expertshere at USF with some of
France's leading cyber andcomputer security practitioners
for four hours of high levelanalysis and insight. Keep your
eyes on our website, socialmedia and newsletter for more
information as we finalize theagenda. Again, that's June 23
(01:42):
GNSI USF and the University ofParis at Clay cyber and computer
security virtual forum. Don'tmiss it. All right. It's time
for today's interview. DrZachary Selden is an associate
professor at the University ofFlorida. Yep, those same gators
that just won the men's collegebasketball national
championship. Congratulations,that's okay. Our USF Bulls are
(02:04):
in their first top 25 rankinglast season, and they'll get
there in a few years. Dr Seldenshared time with GNSI strategy
and research manager Dr Tadschnaufer to talk about his
book, economic sanctions asinstruments of American foreign
policy, while tariffs andsanctions are two very different
things, the global argumentabout tariffs over the past few
(02:27):
weeks has brought much attentionto the importance of economic
actions in foreign policy. Inaddition to being one of the
country's foremost experts oneconomic sanctions, Dr Sheldon
was the director of the defenseand security committee of the
NATO Parliamentary Assembly TEDtalk with him about the overall
effectiveness of sanctions andwhat role they should take in US
(02:48):
foreign policy.
Tad Schnaufer (02:57):
Well, Zach, welcome to the podcast. I look
forward to our discussion
Zachary Selden (03:00):
today. No, thank you very much for having me. So
today, we're going to focus
Tad Schnaufer (03:05):
on the nexus of sanctions and critical natural
resources and rail Earth, rareearth, metals, and how they
interact. So how you could youpossibly use sanctions to limit
an adversary's access to thesecritical resources, or vice
versa, how an adversary couldlimit yours via sanctions. So
why don't we start backhistorically? Are there some
(03:25):
historical examples Zach ofwhere sanctions, or maybe even
boycotts, have been used to denyan adversary critical natural
Zachary Selden (03:33):
resources? Yeah, sure. I mean, there's plenty of
examples, some which have beenused against the United States
and some which the United Stateshas used against others. So the
classic example I think peopleturn to is back before World War
Two, the United States tried todeny Japan, Imperial Japan,
given its war in China and itsbrutal occupation of Manchuria,
(03:57):
access to critical aspects ofwhat the United States was
exporting at the time? So thesewere certain metals, but also
oil, right? And for many peoplewho look back on the history of
World War Two, you know? Andobviously there's a debate here,
but this was one of the thingsthat that drove Imperial Japan
to seize the Dutch East Indiesand really launch a broader war
(04:18):
that dragged European powers inthe United States in so that's
one example. You know, if youwant to think about an example
where sanctions, in a way, orexport controls were used
against the United States, lookto the history of the you know,
the great airplane, the SR 71the Blackbird. You know the
(04:40):
still, I think, one of thefastest aircraft, if not the
fastest aircraft ever, everbuilt. But the thing about an
aircraft that moves at thatspeed, you know, the skin of it
had to be made out of titanium.
That was the only thing that wasgoing to withstand the kind of
heat and that that speed wouldgenerate. But here's the thing,
at that time, in the early 1960sAlmost all the titanium in the
world we knew about was comingout of the Soviet Union, and
(05:03):
they obviously weren't going tobe selling it to the United
States, so the CIA set up,there's a whole string of fake
buyers to gobble up titaniumfrom the Soviet Union through
shell corporations. And it's abit of mythology. I'm pretty
sure it's true. I've read itfrom a at least in a number of
reputable sources, but one ofthe most effective ways of doing
(05:24):
this was they set up a companythat was supposedly buying
titanium for making pizza ovens,but this was actually being, you
know, funneled into the SR 71project. So, you know, states
will always find ways aroundthese kinds of restrictions,
right? And the United Statesreally found a creative way at
(05:44):
that point.
Tad Schnaufer (05:48):
So if we're looking at the let's just start
with the economic basis.
Obviously, we have the currentwar in Ukraine out of sanctions
on Russia and Iran. What keepsthem from getting those, you
know, critical resources at thispoint. I mean, obviously from
the West,
Zachary Selden (06:03):
well, I mean, it's a good question. You know,
it's always a matter of cost,right? So things are always
available from alternativesuppliers if you can't
manufacture it yourself. And Ithink, you know, we sometimes
make an error in thinking aboutthings like sanctions and
tariffs and all these things aresort of separate things, but
they're actually, you know,based on the same economic
(06:25):
logic, right, right? So what amI doing? I'm making it more
expensive or difficult for youto get something from outside
your country, which creates adistinct incentive to produce it
inside that countries, you know.
So my sanctions against you arekind of like you imposing a
protective tariff, right? It'sgoing to help you develop your
domestic industry to producethat thing, if you can do it
(06:46):
right now. The thing aboutcritical minerals is that not
everybody has access to them intheir own country, so it's not
like producing a widget, right?
It has to be dug out of theground or something. But even
here, you know, in many cases,it's not that a country can't
(07:08):
produce a critical mineral, it'sjust that it happens to be more
expensive to do that, and soit's cheaper to buy it from
abroad. But if that's denied toyou, you will find ways to get
it out of the ground at home,and that's currently one of the
things that's happening in theUnited States on rare earth
metals.
Tad Schnaufer (07:27):
And that's why we see these discussions about the
untapped natural resources,whether in the Arctic or
otherwise, where, you know,countries looking to compete for
those mining resources,
Zachary Selden (07:38):
absolutely. But even beyond that. I mean, you
know, in the continental UnitedStates, for example. So, you
know, two that I'm aware of,that China has put export
restrictions on the UnitedStates to China is actually, I
think, the world's largest, byfar, exporter of gallium, which
is one of the rare earth metals,also antimony. And so what has
(08:03):
happened is that you're seeing alot of development in these in
the continental United States.
So there's a mine in Idaho thathave been dormant for a long
time that produces antimony. Imean, did so during World War
Two, and it was a criticalmineral then. And now it's doing
it again. And now there's a bigdevelopment in Texas, I think,
areas called round top, thatestimates are it could produce,
(08:26):
you know, all the gallium thatthe United States could need for
the foreseeable future from thatone area. And see, the thing is,
is that with those minerals,they're in very low
concentrations in many, manyplaces. And so it's a question
of the effort, the environmentalimpact, the cost of getting that
(08:48):
stuff out of the ground andrefining it. China, with very
low environmental standards, iswilling to put a lot into
pulling lots of gallium out ofthe ground, which is, like I
said, in very lowconcentrations, and then going
through the refining process theUnited States, we weren't
willing to do that. But youknow, if you can't get it from
(09:08):
somewhere else, you'll get ithere. So, you know, once again,
it's just a matter of the costand benefit ratio to these
things. And so, yeah, that'sbeen that's been changing,
that's been driving a lot ofproduction the United States.
The flip side of that, ofcourse, is that if you sort of
follow the economic incentivedown the line, once people have
(09:28):
invested a lot into mining thesethings out of the ground,
whether it's in Texas or Idaho,we're talking billions of
dollars of investment, they'renot going to want to see that go
away. So my guess is 10 yearsfrom now, if China were to drop
its export restrictions on rareearth metals to the United
States, the United States wouldprobably put some kind of tariff
(09:51):
in place to protect thoseproducers right for strategic
purposes. So yeah, it's, youknow. We could look at these
things as kind of differentaspects of policy, but in fact,
from an economic logic, they'requite similar.
Tad Schnaufer (10:07):
So it almost ties into tariffs as well, where you
drive home industry, but thatindustry would not like to see
those tariffs lifted, becauseonce they invest building
exactly the infrastructure isthere. This takes a long time,
though as well. There's a timehorizon which is not immediate,
yeah,
Zachary Selden (10:22):
yeah. And, you know, it can vary a lot.
Obviously, you know, underwartime conditions, countries do
extraordinary things. You know,the United States certainly did
during World War Two, and otherswill as well under normal
conditions. Yeah, it's gonnatake a long time to build up,
and the infrastructure isexpensive. But you know, things
can happen pretty rapidly. Sofor example, you know, the
United States was a net importerof major fossil fuels, whether
(10:47):
it was natural gas or or oil.
For a long time, we're now amajor net exporter, right? And
we're looking at seeing theincrease, the significant
increase in the export ofnatural gas from the United
States in the form of liquefiednatural gas. Liquefied natural
gas, which really, when you sortof look at it in terms of our
relationship with Russia, andour ability to sort of contain
(11:08):
Russian revenues, governmentrevenues, this is actually a
really important area. So theramp up the United States has
been able to make in the exportof liquefied natural gas has
pretty significant impacts, Ithink, geopolitically. And yeah,
you're right. It's an expensiveinfrastructure. It's billions of
dollars of private investment.
(11:31):
But it happens. And it happenedpretty quickly over I mean, if
you consider over a span of 10years quickly, you know, it
happened quite quickly.
Tad Schnaufer (11:39):
How do you then, you know, as we look at these
critical natural resources, orfossil fuels, or whatever it may
be, how do you impose asanctions regime? And then also,
in this case, like we're talkingabout with oil, the US is able
to offer an alternative. So yousanction Russia, deny its sale,
and then you offer analternative to further deny the
Russians to be able to, let'ssay, you know, use a unflag ship
(12:02):
or a third party flagship to getit sold around. So how does that
work?
Zachary Selden (12:07):
Yeah, I mean, so in the case of the United States
and in liquefied natural gas, Imean, it's a global market,
right? So an enormous amount ofwhat the United States produces
goes to Asia, right, or LatinAmerica. But when demand really
skyrocketed in Europe, becauseEurope tried to shut off the,
you know, the gas tapsessentially coming from, from
(12:29):
Russia. After the invasion ofUkraine, a lot of it started
going towards Europe. So, youknow, the price went up. The
demand in Europe went up. Theprice that Europeans were
willing to offer went up. Sonaturally, you know, gas started
to flow in that direction, youknow. So it's all about supply
and demand and prices and so,yeah, as prices hit a certain
(12:50):
point, producers are willing toinvest more in the
infrastructure to get this stuffout and onto ships and moving
around. It's an expensiveprocess. But you know, if the
alternative is is more expensivethan this is what where we are.
So, yeah, it's entirely possiblethat the United States can, can
play this role in it. As itstarts to change the whole sort
(13:13):
of market structure, it putsRussia in a very different
position, where now almost allof its energy is, I wouldn't say
all of it, that's probably anoverstatement, but, you know,
the vast majority is goingtowards China and or India to a
lesser degree. Well, with
Tad Schnaufer (13:30):
that in mind, looking at China and India and
how they've dealt with theseresources, you know, obviously
countries want to be, you know,resource independent. If they
can, they can have a homesource, or an organic source to
these critical naturalresources. So that way they can,
sanctions aren't even an option.
You can't place sanctions on acountry if they already have it.
And China has done this in partthrough the BRI the Belt and
(13:51):
Road Initiative by, you know,helping build mines around the
world, lithium mines and Chilethings like that. So how has
that process worked and are howsecure are? Do you think those
supply lines actually are? Arethey unsanctionable? You
Zachary Selden (14:07):
know, that's a really good question. And this
is, I think it's been a hugepart of China's strategy, and
particularly in Africa. So, youknow, a lot of what they've been
trying to do. And I think, interms of, I think we mentioned,
we talked about gallium earlier.
Ghana is a huge source of this,right? And China has just sort
of hoovered up land to minegallium in that region. Yeah. I
(14:27):
mean, but at the end of the day,these are our, you know,
sovereign countries, and we'veseen a lot of sort of pushback
against Bri in some of thesecountries as they start to see
the negative impact of Chineseinvolvement, whether it's Sri
Lanka or some countries inAfrica, you know, and there's a
limit to what China can do ifcountries start to push back on
(14:49):
this, or say, you know, we don'twant to be part of this deal
anymore, because it's entirelypossible that the countries do
started pulling out, and we'veseen that, right? So yeah, you
can sort of secure supplies ofthese things from outside your
country through variousagreements. But you know,
there's always the possibilitythat that's not your sovereign
(15:10):
territory. And you know, unlessyou're willing to sort of truly
use gumbo gumbo diplomacy, youknow, you may not be able to
actually always get that.
Tad Schnaufer (15:22):
So for the United States, in this case, how
resource independent could theUnited States be if it was a all
out conflict, let's say in theUS had to really produce. What
do you think the overallcritical natural resources,
whether fossil fuels or rareearth metals? How well could the
US fare?
Zachary Selden (15:39):
Yeah, I mean, once again, it's all a question
of how much are you willing topay, right? And not just in
terms of, you know, actualfinancial costs, but you know,
environmental cost andopportunity cost. So if you're
going to sink a lot of money andtime and effort into one thing,
you're not obviously doing it insomething else. And of course,
all this is a little bit morecomplex in the United States
(16:02):
than in sort of authoritariansystems, because we're talking
about private industry, right,and there's a limit to what
government can do to sort ofdirect private industry. There's
got to be sort of financialincentives there, so, but yeah,
we we've clearly seen that whenexport restrictions are put in
place on things like rare earthmetals. Suddenly, there's a lot
(16:23):
more exploration, and peoplefind a lot more in the US. You
know, it's sort of out there ifyou're willing to look and if
you're willing to pay the cost.
And you know, so once again,it's just sort of a supply and
demand and what cost you willingto pay? So can the United States
be independent on many of thesethings. Sure, right? It's not
economically necessarily thebest way to go in a peacetime
(16:48):
situation. But if you argue thatyou're approaching a period of
great power conflict and thatthese things are strategically
necessary, then that's a verydifferent kind of context,
right?
Tad Schnaufer (17:04):
Because the economic model, obviously you
said the private industry needsto make money, and it's it's
just often cheaper just toimport it from overseas and make
whatever device you need thiscritical resource for. But the
Chinese and the Russians don'tnecessarily have that same
calculation, as you noted,because they subsidize a lot of
these industries, or thegovernment just straight up owns
the industries that are outthere doing it, or, yeah.
Zachary Selden (17:27):
And in fact, oftentimes the government is
actually a primary beneficiaryof the sales that those, those,
you know, for example, you know,I the the oil and gas industry
in Russia has been described assort of the Kremlin's piggy
bank, right? I mean, a hugeamount of Russian federal
revenues come off of thoseextractive industries and their
(17:48):
ability to export. So, yeah,these things are completely sort
of interdependent government andan industry within sort of
authoritarian structures. Yeah.
I mean, I think another thing wehave to sort of keep in mind,
though, is that when the UnitedStates uses sanctions against
any country, it can sometimeshave a perverse effect. And I
think we've been kind ofpointing to this in a certain
(18:09):
way, which is that when youimpose sanctions on a on a
country, you're creating anincentive for them to produce
whatever it is that you'resanctioning in that country, but
then producers in that countryhave a distinct incentive to
make sure that sanctions stay inplace, right, right? And so this
can be and that can actuallymake things really difficult to
(18:30):
change. And we've got, I mean,plenty of historical examples of
that when the United States orothers have tried to sanction
countries. So you know, my myfavorite example of this is
South Africa under the apartheidregime, which was under pretty
strict sanctions. These were unbased sanctions, so pretty much
across the board, many you know,most of the countries in the
(18:51):
world, and most of it targetedthe south what could go into
arms exports to South Africa,right? Because it was a very
repressive regime, and so no onewanted to be sending any kind of
military supplies or things thatcould be sort of bolstering
security forces of South Africa.
(19:11):
So South Africa being, you know,reasonably capable country in
terms of industrial capacity,set about developing an arms
industry, and they didn't justproduce light arms. They did at
first, then they started torealize that, hey, they could
actually produce armoredvehicles and mobile howitzers.
(19:31):
And this actually became a bigexport industry for them. And
ironically, they were exportingmost of their product to Sub
Saharan Africa, but South Africawent from not having an arms
industry to being the fifth orsixth largest exporter in the
world in about 10 years, right?
And you can imagine at thatpoint in time, and this was
definitely the case, that thepeople who were involved in that
(19:54):
industry didn't want to see itgo away, right? And this.
Happens in other countries aswell, right? If you're
benefiting from the effects ofsanctions, they're essentially
like a protective tariff foryour industry, and you're not
going to want that to go away.
So there are times when we'vemade it more difficult to
actually change the behavior ofstates through sanctions,
(20:17):
because we've actually created asort of a group of powerful and
wealthy individuals within thosecountries or industries that
have a vested interest in seeingsanctions stay in place. So it's
a very tricky balance. When youuse these things, it's
Tad Schnaufer (20:32):
interesting, because a lot of times you just
see people talking about kind ofthat surface level effect, oh,
we're going to punish thiscountry this way. But what
you're not taking intocalculations is that secondary,
tertiary effect of, okay, well,industries are going to reorient
themselves. They're going tofind other trading partners, if
they can, and they're going toadapt their economy. They're not
just going to take the sanctionsand just, you know, sit with
(20:53):
them. Yeah,
Zachary Selden (20:54):
exactly right.
And once again, it's a, I thinka bigger question is, Who are
you punishing, right? Um, youknow. And I think this is a
really big question when we'retalking about the kinds of
countries that we're trying toimpose sanctions on Currently,
most of them are authoritarianor certainly non democratic,
right, whether it's Russia orIran. And so you have to ask
(21:16):
yourself, how do you translatethat economic pain into
something that really affectsthe leadership of the country?
You know, maybe one thing thatyou do that actually creates
economic pain to the generalpopulation. And you can argue
that there's sort of a logic tosanctions, kind of a
transmission belt. I imposeeconomic pain on the population,
(21:38):
and that population is angry atthe government for doing
whatever it's doing that'scausing this, and so they take
action to get a new government.
Right? Well, that could work ina democratic country, right,
right? But in an authoritarianregime, that's going to be a
little bit different, right?
Because what can people do?
(22:00):
Well, they can protest, but agreat risk to themselves. So how
do you sort of translateeconomic pain into something
really impacts on the leadershipof a country and forces them to
moderate their behavior? That isnot an easy thing to do,
Tad Schnaufer (22:19):
particularly when, again, it's not worldwide
sanctions. So they canoftentimes just be what they
want from somebody else, or likewe've discussed, they just
create a homegrown industry. Imean, there's look at drone
development. You know, theIranians had advanced drones.
Now they're developing them inRussia, you know. So, yeah,
Zachary Selden (22:33):
exactly right.
And so, yeah, you know. And onceagain, you know, the drone
technology that Iran I mean,what they have done,
essentially, is take, you know,Western, in particular, German
technology, and sort of adapt totheir own purposes and add to
it. But yeah, they developed avery effective, you know, cost
effective, relatively cheapdrone business. That pretty
good, right? So, yeah, they nowhave, frankly, an export
(22:57):
industry and drones, right? AndRussia is buying them, so they
didn't have that before,
Tad Schnaufer (23:06):
right? So the impacts of sanctions, or in this
case, really tariffs, becauseyou can see that relationship
between sanctions and tariffs,and how the effect it actually
has on domestic the domesticindustry of the country either
imposing tariffs or the onewho's under sanction?
Zachary Selden (23:22):
Yeah, no, exactly. I think, you know, I
think you're just sort ofgetting back to my original
point is, like, you know, youcan look at tank sanctions and
tariffs is, it's really verysimilar things in a lot of ways,
in terms of the economiceffects, just kind of a question
of who's imposing them, right,
Tad Schnaufer (23:37):
right the direction of the supposed money
in the in a sense, going usingthe legal term of intent. What's
the intent? Yeah,
Zachary Selden (23:45):
yeah, yeah, exactly, yeah. I think that's a
that's a good way of phrasingit, right? So
Tad Schnaufer (23:49):
when we look at that, then we look at, you know,
we talked about resourceindependence. We've talked about
international trade, how, howdoes the US and and the West in
general, look at naturalresources now going forward, is
it, do you think there's apolicy of denial to try to deny
these things to the Chinese andRussians and some, you know,
through sanctions or othermeans, or is it just not really
(24:12):
feasible, given the currentglobal situation?
Zachary Selden (24:16):
You know, honestly, I think the place
where you're more likely to seeeffective pressure is going to
be not so much criticalstrategic resources. Because
once again, as far as I know,the things which, which we now
have today, is sort of criticalresources, whether it's rare
earth, metals, lithium, thingslike that, I don't see that
(24:36):
you're going to be able to toeffectively impose some kind of
sanctions regime on thosecountries, because with a lot of
the rare earth stuff, Chinaalready has a lot of it, and is
willing to, you know, to take itout of the ground at whatever
environmental cost. And the sameis true of Russia to a large
extent. So I think really, theplaces where you're going to
have any kind of effectivesanctions is probably going to
(24:58):
be on things you. Very, veryhigh end manufacturer products,
in particular, chips,superconducting materials, you
know, they're very on that veryhigh end of semiconductors.
There are very few placescapable of producing those
(25:19):
things, right? So most of thatproduction is where it's in
Taiwan, it's in the UnitedStates, it's in the Netherlands.
There really aren't too manyplaces capable of it. And in
fact, China has had a difficulttime developing its own very
high end semiconductor business,right? They've tried, right, but
(25:40):
they haven't been able to reallyeffectively do this. And I think
in part, that's because, yeah,they have been denied some
rather, you know, criticalmaterials and equipment for
that. So there, I think you canprobably have some kind of
effective sanctions on the sortof highest end of the technology
spectrum, but in terms of sortof the critical minerals and
(26:04):
things like that, I don't thinkthat's going to be a very
effective path,
Tad Schnaufer (26:10):
right? And as you mentioned about causing, you
know, in a sense, you'reimposing sanctions to deny
resources, possibly, but also toimpose pain, in a sense, on a
society or maybe a group ofleaders. But we haven't really
seen that be necessarilyeffective. So let me just as you
just mentioned, naturalresources is pretty hard,
because you can go a lot ofother places, or you can mine in
your own country at an increasedcost. So where, where does that
(26:32):
infliction of pain work? Do wehave some successful cases of
sanctions around the world? Youknow, we're thinking of North
Korea, of Cuba, countries thathave just been under sanctions
for decades. Are those reapingresults?
Zachary Selden (26:45):
Yeah. I mean, if you mentioned, you know, North
Korea and Cuba. I mean, theseare countries that have, you
know, probably under leadershipthat has done everything
possible to shoot themselves inthe foot economically. So I'm
not sure the sanctions arereally the critical thing,
right? I mean, if they hadcompletely free trade, I'm not
sure that it would, you know,really make much difference now.
(27:08):
So I think if you want to lookat effective sanctions, you'll
find that sanctions tend towork. And this isn't, you know,
necessarily my own work. There'sGary Huff Bauer and and some
others have done. You know,enormous amounts of work on
this. Sanctions are ofteneffective when you have sort of
very, not huge strategic goals,but rather sort of very specific
(27:30):
goals, like, Hey, you went andnationalized this piece of
property that belongs to, youknow, a company from our
country. We don't like that, sowe're imposing sanctions until
you turn that around, that sortof thing. You know, if you can
impose some economic disruptionon a country, you can oftentimes
get a leadership to kind ofchange things, but that's very
(27:51):
discreet, right? And it's verytargeted, and there's a there's
a clear answer what they need todo. It's very different if
you're imposing sanctions on acountry because we don't like
your government and what you do,right? They're not going to
change everything, right? So itcan be very difficult to sort of
(28:12):
get those kind of huge changes.
But you know, you can putpressure, and you can do things
that affect even authoritariancountries, which are basically
insulated from public pressureto a large degree. So, you know,
for example, with Russia, youknow, back to once again,
they're a huge amount of theirthe federal government's
(28:36):
revenue, so the money that ithas available to fund its war
effort in Ukraine comes from thesale of oil and gas. And yes,
it's true that they've been ableto find new buyers in the form,
particularly of China, but alsoIndia. But that doesn't make up
for all of it. And So Russia hashad to sort of struggle and find
ways to get out from underneaththe sanctions and sell oil and
(28:59):
yeah, it has come at a cost tothem, right? Is it enough to
push them No, but you know, ifyou're able to deny them 100
billion a year, you know, overtime, one hopes that that starts
to have some negative impact onwhat they can do in terms of
resupplying their military inthe long run. So, you know, is
(29:23):
it the solution? No, but can itcontribute? Sure,
Tad Schnaufer (29:31):
and that, you know, makes one wonder about the
long term impacts of sanctions,as we talked about, as economies
react to sanctions. So, youknow, looking at Russia again,
it's reacting to the sanctionsplaced on it. It's looking for
other outlets, looking for othertrading partners, other markets
to export to. Is there a timefactor here where the sanctions
(29:54):
have the most impact right awayand they start losing effect, if
you will, over time? Have weseen that? Play out,
particularly when it comes toresources,
Zachary Selden (30:03):
yeah, I mean absolutely in terms of Russia,
and here, you know, I think theinitial sort of effect was, was
quite a shock on the Russianeconomy, if you, if you look at,
you know, there's a blip there,when, when sanctions hit. And in
particular, it really is moresort of the financial sanctions,
right? You know, things wereimposed that really made it very
(30:24):
difficult for Russia to engagein international financial
transactions. And that was areal problem. But, you know,
once again, others stepped in,China stepped in to really sort
of facilitate financialtransactions so that Russia
could really sort of participatein the international economy
that became its major buyer ofits major export. And so, yeah,
(30:47):
it's kind of like, you know, youcan squeeze a balloon and it's
just going to kind of move in adifferent direction. And, you
know, economies are elastic,right? We talk about elasticity
and economics all the time, andthings adapt. So yes, there was
an initial shock, and certainlyit affected the Russian
population. And one couldimagine that this would, you
(31:09):
know, drive an opposition torise to the fore and try to
change things in Russiangovernance. Obviously, that
didn't happen. And over time,Russians have adapted, right?
They have switched how credithas done. They have changed
suppliers, they have changedpurchasers of major products.
(31:31):
And in the end, they're doingokay, right? So it's a new
normal, and it doesn't seem tohave changed things that much,
Tad Schnaufer (31:40):
right? Well, and also to, you know, put it into
context, the Russians knew thata number of sanctions were
coming before they started theconflict, because, as they were
able to prepare some of the,some of their system for that
blow as well. You know, itwasn't just out there they
Zachary Selden (31:54):
were. And, you know, another thing that people
have tried is so called Smartsanctions aimed at individuals,
influential individuals ingovernments or private business,
who are connected to government,but once again, those
individuals have, you know,pretty good intelligence of
what's coming down the line, andthey're very good at finding
ways to sort of park their moneyin relatively safe places. So
(32:18):
many of them may be constrainedin some ways, but have simply
found, you know, alternatives towhat they were doing. So what
Tad Schnaufer (32:27):
overall sounds like? Yeah, sanction is
absolutely a policy tool. Itdoes have effects. Those effects
are time sensitive. They changeover time. It's not going to be
a lasting effect one way or theother. And then what I'm also
hearing is that for when itcomes to natural critical
resources, you can try to denyit to a country, you can try to
sanction it, but likely it'sjust not. It's not going to
(32:49):
completely stop the flow.
Zachary Selden (32:52):
No, I mean, it's highly unlikely. And like I
said, you know, with many ofthese resources, it's not a
matter that they are impossibleto get from, you know, from
either your your own domesticterritory, or from countries
that are friendly to you. It'sjust that it's more expensive or
environmentally risky, but ifyou drive up the cost, then it's
(33:13):
worth it,
Tad Schnaufer (33:14):
right? Yeah. And it's really just, you know, this
happens when you think aboutpolicy making. Quite often,
don't ask more than what yourpolicy can deliver the sanctions
can't deliver impacts. Justdon't expect them to be a Plan C
at pancia,
Zachary Selden (33:26):
yeah, no, it's not a panacea. You know, is it
part of a package of tools?
Sure, but you know, once again,always be aware of the secondary
effects of whatever you do. Andyou know, that's generally good
policy advice, right? What? Whatare the possible secondary
effects? Right? Always a goodquestion to ask yourself, yeah,
who else
Tad Schnaufer (33:43):
is this going to affect? And really, like we
talked about with sanctionshere, how soon can they work to
circumvent it? Yeah, yeah,that's so if we were going to,
as we wrap up here, what wouldyou say are the big takeaways
going forward as we look at theexpansion of these rare earth
metals, the need for microchipsand other technological things
that can be sanctioned moreeasily and can be restricted and
(34:05):
denied to adversaries moreeasily, as we discussed, what
would be the big takeaway?
Zachary Selden (34:11):
Yeah, I mean, I think the big takeaway is that
the United States is going to, Ithink, find many ways to become
more self sufficient in thesecritical minerals. I mean, there
have already been steps thathave been taken, I think, and I
I expect under the currentadministration, you'll see a
(34:32):
deliberate green lighting ofmining operations and perhaps a
less attention to environmentalregulations and sort of green
light projects so this can moveahead more quickly, as well as
green lending projects thatallow the United States to
(34:53):
export more oil and gas, andtherefore sort of deprive Russia
of that leverage of theinternational environment. So I
think you'll see more of that.
You know, there's always been,or I shouldn't say, always been,
but for the last, you know,several years, and certainly
under the previous presidentialadministration, a focus on
restricting the export of hightechnology items, particularly
(35:17):
the semiconductor field, andalso trying to encourage much
more domestic production ofthese things to to ensure the
United States is highly selfsufficient in high end
semiconductors. So once again, Ithink that's going to continue
too. So I would expect to seemore of that over time. We'll
Tad Schnaufer (35:40):
have to keep a look out for that, and in the
meantime, thank you so much forjoining us today. Thank you.
Jim Cardoso (35:53):
That's Dr Tad schnaufer genoci, strategy and
research manager, talking withDr Zachary Selden, one of the
country's foremost authoritieson sanctions, and author of the
book, economic sanctions asinstruments of American foreign
policy. Special thanks to DrSheldon for his unique analysis
and perspective on a key andoften misunderstood tool in
(36:13):
global foreign policy. Laterthis week, with the Houthis in
Yemen dominating recentheadlines, we're dropping our
first special episode of theyear, we have an opportunity to
sit down with nadwa al daswari,a veteran researcher and
foremost Yemen expert betweenthe controversy of senior
administration officialsdiscussing military plans on an
(36:34):
unsecured signal application andthe success of those strikes
themselves. There's a lot todiscuss. Al daswari is an
Associate Fellow at the MiddleEast Institute and the founding
director at Partners Yemen,amongst many other high profile
roles in the region. Look forthat special episode to drop
little later this week. Thanksfor listening today. If you like
(36:56):
the podcast, please share withyour colleagues and network. You
can follow GNSI and our LinkedInand X accounts at USF,
underscore GNSI, and check outour website as well, at
usf.edu/gnsi, where you can alsosubscribe to our monthly
newsletterthat's going to wrap up this
(37:19):
episode of at the boundary. Eachnew episode will feature global
and national security issues wefound to be insightful,
intriguing, fascinating, maybecontroversial, but overall, just
worth talking about. I'm JimCardoso, and we'll see you at
the boundary.
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