Tools of the Weak? Economic Sanctions, Threat Perception, and Conflict Escalation

In international crises, do economic sanctions increase or reduce the risk of conflict escalation? Some studies suggest that sanctions can be a costly yet non-violent tool to demonstrate resolve. Others, however, argue that given states tend to avoid self-imposed economic costs, the costly signaling logic often unravels in practice. Instead, sanctions reveal weakness and would further heighten the risk of militarized conflict. To reconcile this debate and advance the field, we should shift away from the self-imposed costs rationale and recognize that sanctions present leaders with multiple policy options, allowing them to communicate intentions and maintain flexibility. During crises, leaders are more likely to impose harsher and less flexible sanctions when they perceive and expect severe security threats. In other words, the imposition of sanctions reflects and potentially exacerbates the underlying threat perception. Therefore, the signaling values of sanctions in times of international crises hinge not on self-imposed costs but rather on this communication of threat and hostility. As such, imposing economic sanctions can increase the risk of conflict escalation only when countries perceive a high threat to each other. This escalatory effect becomes stronger as the actual economic costs increase. When threat perception is sufficiently low, sanctions do not exacerbate threat perception and do not escalate costly conflict. Using multiple measures of external threat perception, I test the above theoretical expectations on states' crisis behavior and find supporting results.