Economic sanctions and their unintended effects : a case study of the French weapon embargo on Israël of 1967

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Economic sanctions and their unintended

effects:

A case study of the French weapon

embargo on Israel of 1967

Faculty of Economics and Business

MSc. International Economics and Globalization

Name:

Maxime van Gelder

Student number:

5927560

Email address:

maximevangelder@hotmail.com

Supervisor:

Dr. D.J.M. Veestraeten

Second reader:

Drs. N.J. Leefmans

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Section 1: Introduction

The role and usefulness of economic sanctions as a tool of foreign policy have been debated for almost a century (Elliot and Hufbauer, 1999). Much of the literature about economic sanctions is focused upon the effectiveness of economic sanctions (Nossal, 1989). An economic sanction is seen as a tool of the governments of one or more sender countries to do economic harm to a target country (Baldwin and Pape, 1998). Whether economic sanctions are effective or not, and what the factors are that make them an often used instrument in foreign policy by governments have been discussed (Kaempfer and Lowenberg, 1988). An extensive literature has been written on the negative effects that economic sanctions can bear for the target country and the positive effects they may have for the sender country. While these findings contribute to the understanding of the effects of economic sanctions, there seems to be an absence of literature focused on the positive externalities that can result from economic sanctions. These externalities are the unintended effects for both the sender and target country and can have large consequences both on short and long-‐ term for the national economy.

Marinov (2005) argues that economic sanctions vary a lot in scope and intensity. One of the most harsh economic sanctions is a comprehensive trade boycott, also referred to as an embargo (Greenwood, 2012). This paper examines one specific case, namely that of a weapon embargo. The purpose of this paper is to explore the relation between an economic sanction and the positive effects it can have for a local industry in the target country. Such positive effects would undermine the economic sanction and make it ineffective or even counterproductive in the long run. This paper examines one specific case, namely that of a weapon embargo. By studying a case, the French weapon embargo of 1967 on Israel, this paper looks for an answer on the following research question:

How did the weapon embargo of 1967 of France on Israel had a positive effect on Israel's economy?

In order to provide a substantiated answer to the research question a literature review is conducted. This paper is structured as follows. Section 2 gives an overview of the extant literature on economic sanctions and describes the most important concepts such as the different objectives, types, the construction of and trends concerning economic sanctions and their effectiveness. Section 3

describes the development of the French-‐Israeli relationship prior to the imposed weapon embargo. This section describes the French arms policy towards the Middle East from 1948 to 1967, and the early development of Israel’s military industry up to 1967. Section 4 examines the unintended effects of the French weapon embargo on Israel, both for Israel and France. For Israel these

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unintended effects are described for the short-‐term as well for the long-‐term. Section 5 presents the conclusions.

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Section 2: Economic Sanctions

In order to create a better understanding of the notion of economic sanctions this section focuses on four main elements that are relevant while looking into economic sanctions. Although there are numerous more elements when it comes to sanctions, for the sake of clarity and link to the below case study the following four will be discussed. First the variety in objectives of economic sanctions are discussed and classified in a structured manner. Secondly, the construction and trends in the use of economic sanctions are discussed. Furthermore, different types of economic sanctions are

outlined. Finally, an overview is given of the voluminous literature on the effectiveness of economic sanctions.

2.1 Objectives of economic sanctions

The need to intervene is a practical necessity in a world in which the government and citizens of some states choose to, or are forced to, take interest in activities that take place beyond the border of territory they live in (Marinov, 2005). According to Baldwin and Pape (1998) economic sanctions are part of a larger set of policy instruments available to governments, in addition to diplomacy, propaganda, and military interference. Since economic sanctions are a tool for governments it is useful to conceive them as instruments of state power within the context of international relations (Baldwin and Pape, 1998). Convicting via a diplomatic note of protest is a mild and common measure, while sending troops to invade a country is a dramatic but infrequent example of intervention (Marinov, 2005). Marinov (2005) states that economic sanctions occupies the middle ground between 'words and war' and its relatively frequent use can be explained as a result of high demand and available supply. Thence Pape (1997) argues that economic sanctions have come to be seen by the 'traditional understanding’ as a more advanced alternative to war, being potentially as effective as military force nevertheless more humane.

In order to make any insightful statement about the effectiveness of economic sanctions it is meaningful to have a better understanding about the different objectives that sanctions can have. Barber (1979) categorizes the objectives of economic sanctions into three main categories and in this section the varying (sub)objectives are outlined on the basis of Barber's framework. Barber (1979) states that economic sanctions can have 'primary objectives' which are concerned with the actions and behaviour of the target state. The 'primary objectives' can be explained easiest as trying to hurt the target state (Barber, 1979). These primary objectives are themselves diverse and may include attempts to induce internal political change within the target state as a consequence of economic harm, in line with the so-‐called 'traditional understanding' (Barber, 1979). This so called

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'traditional wisdom' is best described by the idea that target countries suffer the disutilities that result from the actions of sender countries imposing the economic sanctions, and therefore will change policy in the direction of the sender countries (Baldwin and Pape, 1998). Baldwin and Pape (1998) explain economic sanctions as such that it is an attempt from a sender country to change the target country's behaviour. In line with this, Galtung (1967) states that economic sanctions have either or both of two purposes namely, to punish the receivers by depriving them of some value and/or to make the receivers comply with certain norms the senders deem important. The resulting costs, or the fear of such costs, in turn may cause target countries to moderate their behaviour in the direction demanded by the sending countries (Dasthi-‐Gibson, Davis and Radcliff, 1997). Much of the 'traditional wisdom' on sanctions implicitly assumes that their real goal is to alter policies by

imposing economic harm in the target country, making economic sanctions an instrumental tool for achieving political objectives (Kaempfer and Lowenberg, 1988). An economic sanction that is instrumental is designed for the results it is expected to produce instead of for its own sake or any symbolic reason, which can be a 'secondary objective' (Nossal, 1989). Drury (1988) argues that when used properly, these economic sanctions can assist policymakers of sender countries to avert war by enforcing their nation's will while still allowing time and room to settle the dispute diplomatically and without bloodshed.

Nossal (1989) categorizes the instrumental role of economic sanctions into three smaller purposes, namely for prevention, for compulsion, and for retribution. Nossal (1989) explains that firstly a sanction can be imposed in order to deter or prevent future wrongful behaviour. Secondly, punishment may be inflicted in order to compel an offender to directly stop wrongful behaviour (Nossal, 1989). In this case sanctions are inflicted until the target country obeys to the sender's will. The third purpose is retribution, whereby the economic sanction is a response to the target as a return for an evil inflicted on the sender state or community of sender states (Nossal, 1989). In the case of retribution the harm is seen as an appropriate response of the sender countries to the target country that had the choice to act otherwise but chose to act wrongfully (Nossal, 1989). The response of the sender countries can be seen as a result of a 'Tit for Tat' strategy. A 'Tit for Tat' strategy is a strategy whereby an agent, first cooperates and then subsequently replicates the other agents action (Hargreaves-‐Heap and Varoufakies, 2004). In the case of retribution, the sender states reply the non-‐ cooperative action of the target state by imposing economic sanctions. Nossal (1989) argues that the first two purposes are oriented to influence a change in direct or future behaviour of the target country, while the third purpose is backward looking and based on what has occurred and went wrong in the past. Although there is no clear future oriented end in such a formulation, this does not suggest that the sanctions cannot be instrumental (Nossal, 1989).

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Kirshner (2007) argues that a state may initiate economic sanctions not just to comply action on the part of the target state, but also to communicate its preferences, support allies, deter other states to behave alike, and dissuade the target from expanding its objectionable activity. Economic sanctions may also be designed to punish, weaken, distract, or contain the adversary (Kirshner, 2007). Lindsay (1986) argues that states installing economic sanctions are seeking to achieve one or more of five broad ends: compliance, subversion, deterrence, international symbolism and/or domestic symbolism.

In line with these broader objectives, Barber (1979) argues that economic sanctions that serve

'secondary objectives' are designed to enhance the status, behaviour and expectations of the sender countries government(s), directed to both domestic and international audiences. For instance, it can be a secondary objective for politicians to increase domestic support by imposing an import

embargo (Barber, 1979). These economic sanctions often contain a substantial symbolic element and are imposed to demonstrate a willingness as well capacity to act (Barber, 1979). Furthermore they provide a way of symbolising a general stance in international relations and these symbols are very important in political relationships since it demonstrates which countries are more powerful and in control within the political domain (Galtung, 1967). Barber (1979) explains that if the primary objectives are achieved the status of the imposing state is likely to be enhanced and therefore the symbols as well actions it is seeking to condemn take on greater meaning. Secondary objectives are easiest to be explained as reinforcing the sender state's government via symbolism (Barber, 1979).

Kaempfer and Lowenberg (1988) exemplify these 'secondary objectives' by arguing that the level and type of economic sanctions are an outcome of the relative effectiveness of interest groups in

pressuring domestic policymakers. Thereby the purpose of economic sanctions is to appease domestic pressure groups interested in expressing their disapproval of the practices of a foreign country (Kaempfer and Lowenberg, 1988). A common case is that in order to align with the interests of domestic pressure groups sanctioners typically restrict imports from the target country rather than exports to that country (Kaempfer and Lowenberg, 1988). These measures are installed to reduce the competition on the domestic market via the exclusion of foreign competitors. Kaempfer and Lowenberg (1988) state that since domestic industries seeking protection from foreign imports have common and/or overlapping interests with other interest groups seeking to sanction the exporting nation, it is likely that the groups will ally themselves. As a consequence the type of economic sanctions are unlikely to be designed to impose the maximum amount of economic harm on the target (Kaempfer and Lowenberg, 1988). Instead of that it is more likely that the types of sanctions observed are designed to serve the interests of influential domestic pressure groups operating in the sender country, a so-‐called public choice approach (Kaempfer and Lowenberg,

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1988). In the United States (US), Non-‐Governmental Organisations (NGOs) often succeed in mobilizing congressional support for economic sanctions, even in the face of inconsistency of the foreign policy (Elliot and Huffbauer, 1999). For instance, via lobbying groups members of US congress can be influenced to vote in a specific direction that contradicts the position of the government. Elliot and Huffbauer (1999) explain this seemingly contradictory phenomena by showing that the objectives of the sender country's politicians are not necessarily 'primary' to influence the target country, moreover to receive support from domestic groups that strengthens the status of the politicians, i.e. a 'secondary objective'. This is one of the reasons why sender country politicians frequently claim that economic sanctions constitute an expressive activity, a so-‐ called 'release of internal tension' directed at a domestic audience without other ends (Nossal, 1989).

'Tertiary objectives' of economic sanctions are those that deal with the composition and behaviour

of the international system in general, or those parts of it that influence the imposing states (Barber,

1979). Barber (1979) states that this includes efforts of the imposing states to ensure a certain pattern of behaviour in international affairs in order to favour their own position and interests. According to Barber (1979), tertiary objectives are usually directed to defending or promoting existing structures or organisations, whether it be an alliance or an international body. For instance, economic sanctions with a tertiary objective may be an attempt to defend the balance of power in a certain region, of which the Tripartite declaration that is discussed in section 3.1.1., is an example. Or to delegitimize a nation and its rights, which is an attempt of Arab countries over the years with regards to Israel and exemplified in section 3.1.4. by the Yugoslav resolution (Barber, 1979). Tertiary objectives are easiest to be explained in order to form international bodies and alliances by sender states (Barber, 1979).

2.2 The construction and trends in the use of economic sanctions

This section briefly discusses why international cooperation is necessary in order to impose effective economic sanctions, explains why the US is leading in imposing economic sanctions and outlines the general trends that could be observed over the last decades.

Prior to the imposition of economic sanctions towards a target, a domestic political process takes place within the sender country (Major and McGann, 2005). The initiative in imposing international sanctions normally rests on one or two particular states, but to make the economic sanctions effective the economic sanctions have to be multilateral (Martin, 1993). Therefore the 'leading' state have to recruit and involve other states and/or international agencies and is referred to as the

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cooperation problem (Martin, 1993). A significant level of international cooperation is necessary to be effective. For instance, unilateral trade restrictions give the target country an opportunity to move to other trading partners and thereby bypassing the trade restrictions (Martin, 1993).

According to Kirshner (1997) trade restrictions are the most common form of economic sanctions and can be divided into two categories: export sanctions and import sanctions. The export sanctions ban export to the target state while the import sanctions prohibit imports from the target state (Kirshner, 1997). Kirshner (1997) states that although the two categories differ from each other both aim to deprive the target from the gains of international trade. Martin (1993) argues that in order

for economic sanctions like trade restrictions or an embargo, a complete prohibition of commerce,

to be effective international cooperation is crucial. Martin (1993) outlines that in many unsuccessful cases the lack of international cooperation was the main issue, since states considering the use of export restrictions rarely have unilateral control over the goods they wish to deny to the target and therefore the target can purchase the goods from other states. The target state may have to pay higher prices for imports due to transition costs, but unless sender states achieve a significant level of international cooperation trade restrictions and/or embargoes in general will fail (Martin, 1993).

Martin (1993) explains that the process of organizing multilateral economic sanctions, trade restrictions from more than one state to one target state, typically occurs under conditions of significant asymmetry of interests among potential sanctioners. The asymmetry of interests is because one state has a strong interest in seeing sanctions imposed on the target while other potential sender states have lower interests in doing so (Martin, 1993). Martin (1993) explains that due to this asymmetry one state is usually taking a leading role in organizing the multilateral effort, the so-‐called 'leading sender'. While the leading sender attempts to organize sanctions, other states often appear willing to free ride on its efforts and need extensive persuasion before they will agree to cooperate (Martin, 1993).

The US government was in many cases, particularly between 1945 and 1989, the leading force and has turned more frequently than other countries to economic sanctions in response to demands to 'do something', about ethnic conflict, human rights violations, drug trafficking, terrorism, or nuclear proliferation (Elliot and Hufbauer, 1999). Cox and Drury (2006) state that two democracies would preferably sanction each other instead of engage in military action, since the key factors that underlie the democracies are the common norms for conflict resolution as well the high level of trades between democracies provides a shared interest not to go into war. Cox and Drury (2006) suggest that democracies may use non-‐military types of coercion, like economic sanctions, as a substitute to military confrontation when engaged in a dispute with another democracy. These

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norms for conflict resolution as well the pursuit of human rights and democratization goals explain in part why democracies employ sanctions more than any other type of regimes (Cox and Drury, 2006). In the vast majority of cases, 77 out of 120 between 1970-‐1998, the US was the leading sender of economic sanctions and in even 52 sanctions the US acted unilaterally (Elliott and Huffbauer, 1999). Elliot and Huffbauer (1999) state that over the years the targets as well senders have changed, reflecting the end of the Cold War. During the Cold War the Soviet Union and/or its allies were targets of the Western economic sanctions mainly led by the US, while after the Cold War Western sanctions to former Soviet Union states decreased but Russia subjected more sanctions to these states (Elliot and Huffbauer, 1999). Furthermore the US saw itself forced to impose several economic sanctions in its 'backyard' to Latin American countries to settle disputes and to push these states towards a more democratic governance (Elliot and Huffbaeur, 1999). Another big change was the

rise in initiative of European countries when ethnic unrest struck in the Balkans or when their traditional sphere of influence in Africa declined (Elliot and Huffbauer, 1999).

According to Marinov (2005), around 1950 only five countries were subject to economic sanctions while that number had increased to 47 by the mid-‐1990s. In June 2016 economic sanctions are still active on 44 countries in one form or another, varying from Afghanistan to Zimbabwe, showing that they still are a commonly used tool in international politics (Business and Sanctions Consulting Netherlands, 2016). In the last decade, virtually nowhere could democratic rights and freedoms be suspended, human rights grossly abused, or a civil war break out without causing a group of states to react with economic sanctions (Marinov, 2005). Cortright and Lopez (2000) even referred to the 1990s as 'the sanctions decade'. Kirshner (1997) foresees that economic diplomacy will play an increasingly large role in the post-‐Cold War era for the following four reasons. Firstly Kirshner (1997) explains that although conflicts between Eastern and Western European countries are likely to increase, these conflicts will almost certainly be fought with economic tools as opposed to military techniques as a consequence of the democratization process. Furthermore, due to the collapse of communism the number of small market economies has increased and thereby the number of states that are vulnerable to economic coercion increased (Kirshner, 1997). Thirdly, many great democratic powers such as US, Japan, Germany appear reluctant to use force to resolve conflicts since they prefer to settle disputes in a more peaceful manner (Kirshner, 1997; Cox and Drury, 2006). Fourthly, Kirshner (1997) explains that due to the lack of urgency that was related to many Cold War crises, states are likely to apply economic sanctions as an early method to affect the conflict whereby the use of force is only brought in as a last resort.

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2.3 Types of economic sanctions

Similar to the variety of objectives of economic sanctions, the types of economic sanctions are also various and numerous. For the sake of clarity this section briefly touches upon the most common types of economic sanctions.

Marinov (2005) states that coercive measures vary a lot in scope and intensity. Some are relatively mild like partial withholding of economic aid, while others are much harsher like a comprehensive trade boycott (Marinov, 2005). Such comprehensive trade boycott is in general referred to as an embargo and is considered as a complete prohibition of commerce and trade with a particular country or group of countries (Greenwood, 2012).

Kirshner (1997) argues that due to the fact that each particular case has different goals and constraints it is useful to differentiate economic sanctions. Kirshner (1997) argues that since

economic sanctions have distinct characteristics varying over robustness, publicity and speed making one kind of economic sanction not uniformly better or worse than others. According to Kirshner (1997) economic sanctions take five general forms: Firstly, the so called trade restrictions that are most common in use and disrupt trade, finance, currency, and trading in assets of the target state. These trade restrictions are further divided into export sanctions and import sanctions (Kirshner, 1997). Another form of economic diplomacy is aid, which has been employed to advance political goals and has traditionally been seen as a mechanism for maintaining alliances (Kirshner, 1997). Kirshner (1997) refers to it as a positive economic sanction that is quite popular because of its exchangeability for things like basing rights, for instance for oil or mining companies, and other privileges. Thirdly, a relatively modern instrument of sender states to influence a target is to manipulate international financial relations of the target state (Kirshner, 1997). Kirshner (1997) clarifies that financial sanctions can involve the withdrawal of either loans or investments, but both techniques aim to restrict the flow of financial resources to the target and thereby increase pressure on the target. Fourthly, Kirshner (1997) mentions monetary sanctions that aim to destabilize the stability and value of the target state's currency. Monetary sanctions have been used in a

considerable amount of cases with dramatic consequences for the target due to its real economic effects like increasing inflation and debt burdens, and upsetting public and private economic planning (Kirshner, 1997). For instance, the ability of the US to force the withdrawal of Great Britain during the Suez War of 1956 by exploiting the weakness of the pound is an example of a threat of a monetary sanction (Kirshner, 1997, II). Fifthly, Kirshner (1997) mentions the least commonly used form of economic sanctions, the seizure of a target's assets. This can take the form of physical property, securities and bank accounts in order to prevent the target from accessing them (Kirshner,

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1997). Furthermore in extreme cases, such as wartime, ownership of the assets can be transferred from the target to the sender state as part of a strategy to weaken the opponent or providing leverage to influence the target (Kirshner, 1997).

In a more general way, Pape (1997) categorizes international economic sanctions into two main categories, trade restrictions and financial restrictions, each of which can be employed with varying intensity and scope. In order to be more effective, economic sanctions can be employed on a

personal base, for instance freezing the personal assets of political, military and/or economic leaders in rogue states (Elliot and Huffbauer, 1999). Recent effective types of economic coercion in the case of Iran are the increase of trade costs, restrictions on cross border imports of financial and transport services and eventually a full embargo (Ianchovichina et al., 2016)

2.4 Effectiveness of economic sanctions

This section gives an overview of the broad literature on the effectiveness of economic sanctions. In order to state anything insightful about effectiveness it is important to understand what the

objectives of a sender state were at forehand. Therefore to evaluate effectiveness, Barber's (1979) framework of objectives is useful to differentiate between 'primary objectives' and 'secondary objectives'. To simplify, if economic sanctions are imposed for primary objectives the aim is to shift the target's behaviour towards a more favourable policy for the sender state, therefore these economic sanctions are also referred to as 'instrumental' tools of foreign policy (Barber, 1979). If economic sanctions serve secondary objectives they concern the status, reputation and position of the government(s) imposing them, thereby serving a more symbolic purpose (Barber, 1979). In the case of 'tertiary objectives', the structuring and behaviour of international bodies, evaluation of effectiveness is too hard to measure since the range of factors to be taken into account is so large that it is impossible to isolate the particular part played by the economic sanctions (Barber 1979). Therefore this section focuses on the effectiveness of instrumental and symbolic economic sanctions.

Wagner (1988) refers to a situation whereby two countries have trade relations and the large country, with a relatively smaller stake in the common trade than the small country, wants to bend the small country into a different policy by threatening with the use of economic sanctions. In this case there is an asymmetrical interdependence, because of the different relative stakes that the trade relation has, and the threat or use of economic sanctions could in theory be effective (Wagner, 1988). Nevertheless, Wagner (1988) argues that in such case economic sanctions are seldom an

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that one of the most important reasons that the economic sanction is not effective is because the commitment of the weaker/smaller/target state can be much greater than the bigger sender state, and the target state is more willing to suffer. Another argument that Wagner (1988) refers to is that the cost of the target state to agree upon the terms of the sender state can be higher than the possible burden of the economic sanctions. In such case the expected costs of an economic sanction is too small to change the target's policy. Furthermore, Hovi et al. (2005) argue that if economic sanctions are installed unilaterally, the target might reduce the effects by moving to other clients or suppliers, and by employing other counterstrategies such as rationing, stockpiling, import

substitution and if necessary smuggling.

Bergeijk (1989) agrees that quite generally economic sanctions are ineffective, but for different reasons. Bergeijk (1989) argues that economic sanctions like trade restrictions and/or embargoes are ineffective since it is practically impossible to create the necessary political unity for a forceful embargo, and even if embargoes are established they are easy to circumvent. This might explain why Elliot (1998) claims that in the early post-‐World War II era economic sanctions were a relatively effective tool of US foreign policy. During that period, from 1945 to 1970, the US had a political and economic hegemony making US economic sanctions at least a partial success in half of the cases (Elliot, 1998). As a result of the increasing international economic integration, economic sanctions by the US decreased in effectiveness since target countries had more alternatives to trade with (Elliot, 1998). Furthermore, Bergeijk (1989) mentions that the plausibility of a change in behaviour as a consequence of economic sanctions is doubtful since the target can have strong incentives not to comply. Bergeijk (1989) mentions that one of the incentives not to comply is the fear of losing face by the target's leadership. Since economic sanctions are public measures, compliance may damage the target leadership's international prestige or diminish the leadership's domestic support (Bergeijk,

1989).

Pape (1997) argues that the target's leadership can misuse the economic sanctions that are imposed to stimulate nationalistic feelings among the target's country population. By framing the economic sanctions to the population as a foreign threat the target's government can even strengthen its own position making the economic sanctions counterproductive (Pape, 1997). Pape (1997) argues that this pervasive nationalism can result in the fact that states and societies are willing to undergo substantial punishment as well economic damage rather than leave what is framed as the interests of the nation. Pape (1997) refers to this phenomenon as the 'dance around the flag', and this trend may be seen nowadays in Putin's Russia after the international criticism as a result of the annexation of the Crimea.

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Another reason why economic sanctions are ineffective as instrumental tools is that modern states have administrative capabilities to mitigate and/or transfer the damage done by economic sanctions (Pape, 1997). For instance, in the case of a monetary sanction whereby the national currency of a target is depreciated, the target government can buy its own currency to undo the depreciation. Furthermore, Pape (1997) argues that in case of economic damage is done by sanctions, the target's government is still capable to protect itself and its supporters by shifting the economic burden to opponents or disenfranchised groups. For instance, in case of an economic sanction like freezing assets of a target that hurts the ruling elite, the ruling elite might be able to transfer the burden to the population by raising taxes or reducing subsidies. Major and McGann (2005) explain that if costs are transferred to other groups the economic sanctions are not likely to be effective since those groups are potential agents of change within the target state. If, on the other hand, the costs of sanctions are borne by groups that do have the ability to change policy but are unwilling to do so, the economic sanction will be ineffective as well (Major and McGann, 2005).

On the other hand, Hovi et al. (2005) argue that economic sanctions can be effective under certain conditions. According to Hovi et al. (2005), economic sanctions can be effective only if the target country initially underrates the consequences, miscalculates the sender's determination to impose them, or wrongly believes that economic sanctions would be imposed and maintained irrespectively of the target's behaviour. Before an economic sanction is imposed, the sender state usually threatens to do so, if the target does not comply to its demands (Hovi et al., 2005). Hovi et al. (2005) explain that this threat should bear the following three elements in it: credibility in the eyes of the target, the threat should be potent, meaning that the costs of sanctions for the target outweighs yielding, and the threat should be non-‐contingent, meaning that the economic sanctions will not be installed if the target complies to the sender's demands. In the situation where the target has complete

information and the threat of an economic sanction does not make the target yield, nor will the imposition of the economic sanction do so since policymakers made an informed decision (Hovi et al., 2005). On the contrary, economic sanctions can only be effective if the target's policymakers

misinterpreted at least one of the three factors, namely credibility, potency and non-‐ contingency, of the sender's threat (Hovi et al., 2005). In spite of the fact that this reasoning is highly intuitive, in fact it represents something completely new in the literature on economic sanctions (Hovi et al., 2005)

Marinov (2005) looks at the effectiveness of economic sanctions via the destabilizing effect they can have on the target's government. The reasoning behind this is that sender states impose economic sanctions if the target does not yield to the sender's demands to weaken the target's government in the hope the target will eventually change their policy (Marinov, 2005). Marinov (2005) shows, by

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using panel date on 136 countries over an average of 37 years, that the presence of economic sanctions in a given year makes it significantly more likely that the target's government will lose power in the following year. In a number of cases, the entrance of new leaders has brought a policy change in favour of the sender country and makes it more likely that economic sanctions are lifted (Marinov, 2005). Marinov (2005) argues that imposed economic sanctions increase the baseline risk of losing power by 28% for the target government.

Numerous scholars refer to the study by Hufbauer, Schott and Elliot of 1985, that was later revisited in 1990, (hereafter HSE) as key evidence that economic sanctions can achieve ambitious foreign policy goals. HSE published the first empirical large N-‐study of economic sanctions, reviewing economic sanctions from 1914 to 1990 and identifying 115 cases in total of which they reported 40 cases as a success. This 35% of success rate of economic sanctions was much higher than most scholars expected, and in many cases the use of economic sanctions is to be viewed as a credible alternative to military force (Hufbaeur et al., 1990). Hovi et al. (2005) argue that the HSE study is also the most important attempt to point out the conditions for effective economic sanctions. Hufbauer et al. (1990) conclude that economic sanctions work best if the following eight conditions are met: (1) the goals of the sender are limited, (2) the target is already experiencing economic difficulties, (3)

there are generally friendly relations and/or trade relations between sender and target countries, (4)

sanctions are forcefully implemented in a single step so that the target does not have the opportunity to adapt itself, (5) sanctions entail significant costs for the target, (6) the costs for sender countries are modest, (7) the sanctions are not accompanied by covert action or military operations, (8) few countries are needed to implement the economic sanctions.

As a response on the HSE study, Pape (1997) argues in his article 'Why economic sanctions do not

work' that the HSE study is seriously flawed. Pape's (1997) standard of judging the success of

economic sanctions requires three criteria. Firstly, that the target state concede to 'a significant part of the sender's demands' (Pape, 1997). Secondly, economic sanctions were threatened and/or actually applied before the target changed its behaviour (Pape, 1997). If this is not the case the change of behaviour can also be a result of any other cause. Finally, no other plausible explanation exists for the target's change of behaviour (Pape, 1997). These criterion do not allow for gradations in the degree or kind of success (Baldwin and Pape, 1998). Pape (1997) claims that practically none of the 40 cases that are claimed as a success of economic sanctions in the HSE study stands up this type of examination. Pape (1997) outlines that eighteen cases were actually settled by direct or indirect use of force, in eight cases there is no evidence that the target made the demanded concessions, six cases do not qualify as instances of economic sanctions and three cases are indeterminate. This leaves the HSE study with only five out of 115 cases that can be considered

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effective (Pape, 1997). Since in very few of the cases the criteria of an economic sanction are verified, Pape (1997) claims economic sanctions to be ineffective.

Kirshner (2007) argues that although economic sanctions fail to change a target's policy as the sender demands, they may be successful along in serving secondary objectives, complement other policies, and remain an appropriate policy instrument. Morgan and Swebach (1997) state that economic sanctions continue to be applied in a variety of contexts, yet we have not developed a sufficient understanding of the processes involved to determine when, or even if, sanctions can work. According to Gordon (1983), in general there is little evidence indicating that economic sanctions alone have been effective in past instances. Though some have argued that the main function of sanctions is symbolic or to serve the domestic political interest of the sanctioning state and that sanctions have often served these ends (Gordon, 1983). This symbolic function of economic

sanctions might explain why policymakers often seem to hold contradictory views to scholars and do impose economic sanctions on a frequent base (Nossal, 1989). Nossal (1989) states that with the ongoing debate about the effectiveness, economic sanctions as an instrument of foreign policy have become more and more controversial. Therefore, Nossal (1989) outlines that it is perhaps not surprising that much of the literature on economic sanctions focuses on a dominant puzzle: if sanctions do not work, why do states continue to impose them? Lindsay (1986) provides a possible answer to this question by outlining the broad objectives of economic sanctions, to be known as compliance, subversion, deterrence, international symbolism and domestic symbolism. Both compliance and subversion can be categorized in primary objectives, while the latter two are examples of secondary objectives. Deterrence is hard to put into one of these two categories, since both instrumental sanctions as international symbolism can deter other states. In general, it seems to be that economic sanctions are quite effective in serving a secondary objective as a symbolic function, and they can often be useful in support of other policy initiatives (Daoudi and Dajani, 1983; Baldwin, 1985; Lindsay, 1986; Nossal, 1989).

Section 2 has aimed to present an overview of the most relevant concepts and underlying principles of economic sanctions. The different objectives, construction and trends, types and effectiveness of economic sanctions were outlined to get a better understanding of the notion of economic

sanctions. Section 3 outlines the development of the French-‐Israeli relationship from 1948 to 1967, prior to the French weapon embargo.

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Section 3: The development of the French-‐Israeli relationship

from 1948 to 1967

To understand the effects of the French weapon embargo of 1967 it is important to gather a better understanding of the French-‐Israeli relationship before and at that time, as well the condition and development of the Israeli military industry. Therefore section 3.1 focuses on the French arms policy to the Middle East from 1948 to 1967, and section 3.2 outlines the early development of Israel's military industry up to 1967.

3.1 French arms policy to the Middle East from 1948 to 1967

According to Kolodziej (1980), to understand the direction and scope of French arms sales policy and decisions with regards to the Middle East we have to take into account three factors. Firstly, French arms sales decisions are based on the regional and global security issues and the efforts of the French governments to influence and adapt France to this environment. Furthermore, the economic incentives that encourage an open arms transfer policy play an important role in decisions made by the French government. Thirdly, the decision power of a political figure and his/her preferences to influence the transfer of production, arms and knowhow to Israel or any Arab state (Kolodziej, 1980).

This section looks into the three factors mentioned above that vary over time and provides insights in the French-‐Israeli relationship prior to the weapon embargo of 1967. The French foreign policy towards the Middle East from 1948 to 1967 is mainly influenced by four events, which are

distinguished. At first, the Tripartite Declaration of 1950, secondly the Suez War of 1956, thirdly the nuclear ambition of both countries and finally the Six-‐Day War of 1967.

3.1.1 The Tripartite Declaration of May 1950

During the Nazi occupation of France powerful political and military connections had been made because of the Jewish exploits within the Résistance and in the Free French Forces (Crosbie, 1974). Due to this, a large number of Jewish leaders could count on the support of leading figures in the first Gaullist government, 1944-‐1946 (Crosbie, 1974). Crosbie (1974) states that in 1946, Ben Gurion and other Haganah -‐ Jewish underground defence army -‐ leaders established their headquarters in Paris with the tacit acceptance of the French government. During a meeting in Paris, the Zionist Directory openly collected money to purchase arms, while the police closed their eyes for the comings and goings of underground leaders (Crosbie, 1974). According to Crosbie (1974), it is in

Economic sanctions and their unintended effects : a case study of the French weapon embargo on Israël of 1967