The Double-Edged Sword of Carrots: Exploring Their Simultaneous Effects on Threat and Imposition Stages of Economic Sanctions

Abstract

This article investigates the effectiveness of incentive-based policies, or “carrots,” during the threat and imposition stages of sanctions, with a focus on addressing potential endogeneity arising from self-selection processes in designing sanctions strategy. Successful sanctions require the sender’s sustained commitment until the target concedes, demonstrating a consistent policy stance and a readiness to bear associated costs. Carrots utilized during the threat stage represent a tit-for-tat approach, complementing the sender’s consistent policy stance of conditionally combining both carrots and sticks, and potentially reducing the perception of bluffing, thereby increasing target compliance probability. However, introducing carrots during the imposition stage may be misinterpreted as a sudden shift towards appeasement, undermining policy coherence and indicating a lack of capacity or willingness to enforce sanctions. This perception could lead the target to await sanctions removal, resulting in a failed outcome. Following the mitigation of potential sender self- selection into carrots, the findings emphasize the importance of combining carrots with sanctions threats. Nonetheless, caution is advised when using carrots as a substitute for ineffective punitive strategies, as adverse effects may arise.