The United States emerged from World War II as the only great power whose economy had escaped the conflict relatively unscathed. Consequently, it was a potential reservoir for rebuilding war-torn nations and was often the sole supplier of critical goods. Such economic power inevitably made economic sanctions an attractive option for the United States in the Cold War, despite the dismal record of embargoes in American history. Economic sanctions were often the only recourse for the United States when fear of nuclear war or other political constraints put limits on the use of military force.
In 1948, the United States began a campaign of economic sanctions against the Soviet Union that would last more than fifty years. In March of that year, the Department of Commerce announced restrictions on exports to the Soviet Union and its European allies. Congress formalized these restrictions in the Export Control Act of 1949. Originally, Congress intended this act as a temporary measure to keep arms and strategic materials out of the hands of potential enemies, but the outbreak of the Korean War in 1950 made the Cold War more rigid and the measure became permanent. In 1951, the United States attempted to strengthen these sanctions with the so-called Battle Act. According to this act, the United States would refuse assistance to any nation that did not embargo strategic goods, including oil, to the Soviet Union and nations subject to its influence. Under pressure from its allies, the United States accepted many exemptions from this act and it was not notably effective.
For many years, the embargo on the Soviet Union was quite severe. The embargo on Eastern European countries was less stringent, in hopes of driving a wedge between the Soviet Union and its allies. Two of the most independent East European nations, Poland and Romania, were given particularly mild treatment. With the growing détente of the 1970s, trade restrictions on the Soviet Union and its allies were increasingly lightened, most notably in the permission granted the Soviets to purchase large amounts of American wheat when Soviet crops failed in 1973. But restrictions were tightened again after the Soviet invasion of Afghanistan in December 1979. In 1983, Ronald Reagan approved the National Security Decision Directive 75, which set the policy of using economic pressure to limit the foreign policy and military options of the Soviets. This stricter regime of sanctions led to considerable conflict with America's allies on the Coordinating Committee for Multilateral Export Controls (COCOM), especially over the export of oil and gas equipment.
When the Soviet Union collapsed in 1991, a major debate broke out over the contribution that the campaign of economic sanctions had made toward the fall of the Soviet empire. Many former officials in the Reagan administration credited sanctions with a significant role in the disintegration of the Soviet economy and therefore of the Soviet Union itself. On the other hand, the leading work on the effectiveness of economic sanctions—Hufbauer, Schott, and Elliott, Economic Sanctions Reconsidered (vol. 1, p. 137)—concludes that although the United States did succeed in denying some arms and key technologies to the Soviets, the collapse stemmed from internal inefficiencies rather than U.S. economic sanctions.
Ironically, the most effective use of economic sanctions made by the United States during the Cold War in Europe was against its own allies, Great Britain, France, and Israel, during the Suez Crisis of 1956. When those three powers concerted to invade Egypt in response to Egyptian nationalization of the Suez Canal, President Dwight Eisenhower not only warned them to retreat, he began a massive sell-off of British pounds and embargoed U.S. oil shipments to the three nations. For one of the few times in history, sanctions stopped a military invasion in its tracks.
During the Cold War in Asia, the United States imposed embargoes on North Korea, China, and North Vietnam. These were severe embargoes established under the Trading with the Enemy Act. The embargo of China and North Korea began in 1950, during the Korean War. Secretary of State John Foster Dulles insisted that the embargo continue after the war, but America's allies protested, arguing that such trade should be under the same regulation as trade to Eastern Europe. The United States used the Battle Act to prevent this, but in 1957 gave way to allow its allies to trade with China and North Korea. The United States, however, maintained its own unilateral embargo until 1969, when the administration of Richard M. Nixon lifted restrictions on most trade to China except for strategically important goods. The economic effect of the embargo on China was minimal because China itself chose to restrict imports to what it could pay for with its few exports. China found all the imports it needed in Europe anyway.
The United States reimposed some sanctions on China after the Tiananmen Square massacre of 1989. President George H. W. Bush suspended arms and some commercial contracts but maintained China's most-favored-nation status. Congress, however, continuously threatened to remove that status in order to apply pressure against China over its record on human rights. Using the Jackson-Vanik Amendment to the Trade Act of 1974, which was originally designed to force the Soviet Union to permit Jewish emigration, Congress required the president to certify annually that China was respecting human rights before he could renew its MFN status. Ultimately, in 1999, President Bill Clinton narrowly succeeded in convincing Congress to grant China permanent MFN status and permit China to join the World Trade Organization. Clinton argued that the best way to influence China was to keep it engaged in the world economy and polity. The likelihood that the United States would resort to economic sanctions to influence China's human rights policy in the near future diminished as a result of this decision, but the United States continues to hold out the possibility of sanctions against China's nuclear proliferation policies by restricting Chinese access to advanced technologies.
While the United States relaxed its harsh economic sanctions against China a few years after the Korean War, it maintained those sanctions against North Korea because of human rights violations, a nascent nuclear building program, and a continuing military threat to South Korea. In 1994, North Korea's concessions on its nuclear program led the United States to lessen the restrictions and offer some aid. A famine in North Korea and the growing détente between North and South Korea have brought some increase in that aid, but U.S. sanctions against North Korea were still quite severe at the turn of the century.
Economic sanctions accompanied America's war against North Vietnam just as they did previous U.S. conflicts. The Eisenhower administration suspended all export licenses for North Vietnam in 1954, shortly after the Geneva Convention temporarily divided Vietnam in two. President Lyndon Johnson extended those sanctions to a prohibition of all commercial and financial transactions with North Vietnam when the war escalated in 1964. Although the peace agreement signed in 1973 included a provision for renegotiating economic ties, the final conquest of South Vietnam by North Vietnam in 1975 resulted in an extension of the sanctions to all of Vietnam. President Jimmy Carter moved toward easing those restrictions, but he was thwarted first by congressional opposition and then by Vietnam's occupation of Cambodia. Thus, sanctions remained in place until February 1994, when Bill Clinton ended the nineteen-year trade embargo.
America's Cold War embargoes and sanctions in the Western Hemisphere were somewhat different from those in either Europe or Asia. Rather than being attempts to punish military adventures or to slow the arms buildups of major powers, the United States used sanctions to destabilize weaker regimes that were too friendly to the Soviet Union or otherwise threatened stability and U.S. interests in the Western Hemisphere.
The United States levied the most stringent and long-lived of its sanctions against Cuba. In 1962, following the embarrassing defeat at the Bay of Pigs, President John F. Kennedy expanded a set of piecemeal sanctions that had been imposed on Cuba after its 1959 revolution by using congressional authorization to embargo all trade with Cuba. The United States then brought pressure on the Organization of American States and the NATO allies to follow suit, especially by threatening to deny aid to, and penalize companies of, nations continuing to trade with Cuba. The OAS did embargo trade except for food and medical supplies, but there was considerable leakage. More important, the Soviets granted large subsidies to keep the Cuban economy afloat, primarily by trading oil to Cuba for sugar on extremely favorable terms.
The fall of the Soviet Union and the elimination of its subsidies devastated the Cuban economy. Some in the United States thought that the end of the Cold War should lead to a termination of the Cuban embargo as well. But others, especially the Cuban exile lobby in Florida, thought that the end of Soviet subsidies provided a chance to tighten the embargo and finally oust Castro. Presidents George H. W. Bush and Bill Clinton, with an eye on Florida's twenty-five electoral votes, tightened restrictions on U.S. foreign subsidiaries trading with Cuba, on the grounds that Cuba needed to improve human rights on the island. The U.S. Congress went even further. In 1996, it passed legislation sponsored by Senator Jesse Helms and Representative Dan Burton to apply economic sanctions to any U.S. ally that continued to trade with Cuba. President Bill Clinton threatened to veto the legislation until Cuba shot down two civilian planes being flown toward Cuba by anti-Castro Cuban exiles. The furor this created in the midst of the 1996 presidential election brought Clinton to sign the Helms-Burton Act, but bitter protests from America's allies and Clinton's own inclinations caused the president to suspend the most onerous provisions of the act indefinitely. America's allies continued to simmer over this attempt to force their participation in the U.S. embargo of Cuba, especially because the United States was passing similar legislation to coerce an expansion of existing embargoes against Libya and Iran. In the annual votes of the UN General Assembly that urged the United States to abandon its sanctions against Cuba, the United States found itself increasingly alone. Meanwhile, Castro hung on to power and continued to defy the United States.
Sanctions against other Latin American nations during the Cold War were somewhat more effective. When President Rafael Trujillo of the Dominican Republic tried to have President Romulo Betancourt of Venezuela assassinated in 1960, the United States limited the Dominican sugar quota and successfully pressed two-thirds of the OAS members to vote for an embargo on oil, trucks, and spare parts to Trujillo. The sanctions did play a part in the fall of Trujillo's regime, but the assassination of Trujillo and subsequent threats of military force against his successors played a larger part.
Sanctions also played a minor part in the military coup that ousted Joao Goulart of Brazil in 1964. They destroyed the viability of Salvador Allende's government in Chile, which made it easier for the Chilean military, with U.S. support, to overthrow Allende in 1973. Sanctions helped to strangle the economy of Nicaragua under the Sandinistas and secure the election of the opposition UNO party favored by the United States in 1990. Finally, the denial of aid and loans to Manuel Noriega's government in Panama sowed much discontent, paving the way for the U.S. invasion of Panama and the arrest of Noriega in 1989. Thus, economic sanctions against regimes in Latin America during the Cold War had a more obvious effect than they did in Europe or Asia, primarily because those regimes were already weak and unstable, and received little outside help from the Soviet Union. But, even then, sanctions in Latin America most often required covert activities and military action to succeed fully.
Because the United States had fewer vital interests in Africa than in Europe, Asia, or Latin America, there were fewer instances of American economic sanctions. The United States did institute sanctions against Angola and Ethiopia in the 1970s to counter Soviet influence. But in the two major instances of embargoes and sanctions, South Africa and Rhodesia, the United States was a reluctant and partial participant in UN sanctions rather than an initiator of them. This was because the human rights objectives of the sanctions, with which the United States for the most part sympathized, threatened America's Cold War interests in the strategic materials supplied by South Africa and Rhodesia. In both cases, therefore, the United States supported limited sanctions as a moderate alternative to the more militant actions demanded by a majority of United Nations members.
From 1951 to 1962, the United States embargoed any arms to South Africa that could be used domestically to support apartheid; it extended that embargo to all arms in 1962. The United States and its allies, Britain and France, voted consistently against attempts by the United Nations to apply further sanctions, however. Jimmy Carter tightened arms sanctions slightly, but Ronald Reagan reversed course with his policy of "constructive engagement." Reagan specifically undercut a concerted UN move to impose wider sanctions on South Africa in support of the independence of Namibia by tying any action on Namibia to the exodus of Cuban troops from Angola. Congress, however, steadily pressed for tighter sanctions and, in 1986, overrode Reagan's veto to extend sanctions beyond arms to loans, new investments, and many imports. Combined with the sanctions of the United Nations and the refusal of many private banks to roll over South African loans, these economic pressures contributed significantly to the internal pressures from black anti-apartheid rebels that finally brought the white regime to accept a new constitution installing majority rule in the 1990s.
In Rhodesia, when Ian Smith declared independence from the British Commonwealth in 1965 as a means of maintaining white rule, the United States followed the lead of Great Britain in the United Nations. The United States first joined a 1966 embargo on oil, arms, and spare parts along with a boycott of major Rhodesian products; it then moved on to a complete embargo in 1968. While responding to these initiatives of the United Nations, the United States voted against proposals that called on Britain to use force against Rhodesia. The United States cast its first veto ever in the Security Council to defeat such a measure in 1970. In 1971, a coalition of conservative legislators led by Harry F. Byrd, Jr., sponsored an amendment forbidding the United States to boycott products from noncommunist countries unless it also boycotted such products coming from communist nations. Because the United States was importing much of its chromium from Russia instead of its usual supplier, Rhodesia, the Byrd amendment opened the door once again to imports of Rhodesian chromium. Although South Africa and Portugal had tacitly defied the embargo to the point that Rhodesia's exports and imports were almost back to the pre-embargo level by 1972, the American action was the first formal defiance of United Nations economic sanctions. This congressional action seriously embarrassed the United States in the United Nations until 1977, when the Carter administration secured the repeal of the amendment and reinstituted the sanctions. By 1979, Smith had succumbed and agreed to majority rule.