The use of economic sanctions was an ongoing feature of US foreign economic policy. In the context of the Cold War, specific sanctions were used against North Korea, China, Cuba, and North Vietnam. But they were also used against the thoroughly anti-Communist Trujillo regime of the Dominican Republic, against neutral India, and against Portugal, a member of the North Atlantic Treaty Organization (NATO). The United States often resorted to sanctions when a foreign government’s behavior displeased it. Other countries also used economic sanctions, although not so frequently as the United States, where members of Congress individually and collectively complained about foreign behavior and wanted to employ economic sanctions against the offending foreign government.
Specific sanctions were threatened, introduced, or tightened against Cuba, the German Democratic Republic, the United Arab Republic (Egypt), North Vietnam, Chile, and Kampuchea (Cambodia); they were relaxed against Laos. But it needs to be emphasized that the United States threatened or imposed economic sanctions twenty-six times during the period 1960-75, not counting US participation in United Nations’ (UN) sanctions against South Africa (1962), Portugal (1963), and Rhodesia (1965).48
Before addressing specific episodes, we need to describe US trade policy toward Communist countries in the absence of specific sanctions. This consisted of three components: treatment of imports from Communist countries; controls on exports to Communist countries; and granting of official credits to foreign countries, for example, by the Commodity Credit Corporation (CCC) for the purchase ofUS agricultural products or by the Export-Import Bank for the purchase of US equipment.
The basic tariff legislation of the United States was (and in 2008 remained) the infamous Smoot-Hawley Tariff Act of 1930. These high tariffs had been greatly reduced through a series of reciprocal trade negotiations, bilateral in the 1930s, multilateral (under the auspices of GATT) thereafter. Tariff reductions to any country were typically extended to other countries under so-called most-favored-nation (MFN) treatment, both by US policy and as required by GATT for all signatories to GATT. The United States did not, however, extend MFN treatment to Communist countries (except Yugoslavia and, after 1960, Poland). Thus, while the Soviet Union, for example, could export to the United States, its goods had to pay the typically high 1930 tariffs, except for those goods on the duty-free list, mostly raw materials. A combination of central planning in the USSR, with tight control over foreign trade, and high import duties into the United States assured little trade between the United States and the USSR and other Communist countries.
The United States also limited sales to the Soviet Union and its allies of military goods and of "strategic" goods that might have direct or indirect military application. This process started in 1948 and was formalized in the Export Control Act of 1949, which, with amendments, governed US exports thereafter. The United States also enlisted the cooperation of West European countries, and ofJapan, in limiting such sales to the USSR and East European communist countries, and to Communist China and North Korea - covering both strategic goods originating locally and reshipment of such goods from the United States. An initially secret Coordinating Committee (COCOM) was established to agree on lists of goods considered "strategic" and to discuss enforcement of the export controls.
Like other countries, the United States had mechanisms for extending official credits or credit guarantees to foreign purchasers of US exports, through CCC, Exim Bank, the Defense Department (for credit on sales of military equipment), and the Agency for International Development (AID) or its predecessors (for foreign economic assistance to poor countries). In general, Communist countries were denied access to these credits, although occasional exceptions were made for CCC credits.
In addition to the "penalties" imposed on Communist countries affiliated with the Soviet Union (Yugoslavia was exempt after Josip Broz Tito’s break with Stalin in 1948), specific sanctions - effectively, a total embargo - had been applied to trade with North Korea after its invasion of South Korea in 1950, and to China after its entry into that war. Chinese and North Korean assets in the United States were also frozen, and all financial transactions between American residents and those countries required a license. These embargoes continued through the 1960s; that against China was relaxed following President Nixon’s visit to China in 1972; that against North Korea continued into the twenty-first century.
Trade with Cuba was partially embargoed, with increasing severity, starting in 1960, following nationalization of American-owned property, with inadequate promised compensation; the embargo persists (as of 2009), nearly five decades later. In 1961, the German Democratic Republic (GDR), with the approval of the Soviet Union, put an economic squeeze on West Berlin, which was viewed increasingly as a disruptive island of growing prosperity surrounded by the GDR and an unwanted source of attraction to East Germans, many of whom worked in the western sector. The United States and its allies protested vigorously and sent additional troops; economic sanctions against the GDR were seriously, and openly, considered. In the end, the GDR backed off and instead built the infamous Berlin Wall between the east and west sectors of the city, closing West Berlin to East Germans, and the sanctions were not applied.
In 1963-65, the United States first threatened and then cut foreign aid and agricultural credits to the United Arab Republic (Egypt), following its intervention in Yemen, its alienation of Saudi Arabia, and its support for rebels in Congo. In May 1964, after Hanoi augmented its support for the Viet Cong in South Vietnam, the United States imposed an embargo on all economic transactions between the United States and North Vietnam and froze North Vietnamese assets in the United States - an embargo that was terminated only in 1994. In 1975, President Gerald Ford imposed a total trade embargo on and froze the US assets of Kampuchea (Cambodia), after the Khmer Rouge (Cambodian Communists) seized power, sought to be self-sufficient, and forced many Cambodians into the countryside (and ultimately to their deaths).
The United States attempted to reward actions it considered positive as well as penalize countries that moved in the wrong direction. Thus, in 1960, the United States extended MFN treatment to goods from Communist Poland, as it had earlier done for Yugoslavia, as that country showed greater autonomy with respect to the USSR. Aid, turned off and on since 1956 as the Communist Pathet Lao moved in and out of coalition governments and attempted to establish diplomatic relations with the USSR and China, was finally resumed to Laos in 1962, following the Geneva accords; it was suspended again in 1975 after a takeover by the Pathet Lao. Although rigidly authoritarian, Romania increasingly distanced itself from the USSR, and gained MFN treatment from the United States in 1975.
This is not the occasion to evaluate the effectiveness of the sanctions, or the rewards. Suffice it to say that one detailed analysis found a mixed picture. Many of the sanctions were judged to have had negligible effect on their stated objectives, such as the long-lasting embargo on Cuba, which arguably contributed to keeping Castro in power for more than four decades. But others, such as the cut-off of critical agricultural credits to Gamal Abdel Nasser’s Egypt, may have encouraged that country to pull back fTom its foreign interventions.49
By the mid-1960s, the time seemed ripe to improve relations with the USSR - what later was called detente. Kennedy and Johnson started the process, banning atmospheric testing of nuclear weapons in 1963 and concluding the important non-proliferation agreement in 1968 to inhibit the spread of nuclear weapons. Johnson had hoped also to start negotiations on limiting nuclear arms, anti-ballistic missiles, and multiple independently targetable re-entry vehicles (MIRVs), but an upcoming summit in Leningrad was cancelled following the Soviet invasion of Czechoslovakia. The process eventually led to the Anti-Ballistic Missile Treaty and an interim Strategic Arms Limitation Treaty (SALT I) finally agreed at a Brezhnev-Nixon summit in May 1972.
Detente also involved increased East-West trade. As part of his bridgebuilding effort, Johnson tried to alter the discriminatory US trade policy in 1966, but failed to persuade the Congress.50 Germany’s foreign minister (later chancellor) Willy Brandt inaugurated Ostpolitik, with tacit US approval. In July 1972, after Nixon’s trip to China, the United States agreed to sell $750 million of grain to the Soviet Union over the following three years (which was implicit acknowledgment that the Soviet economy could not by itself provide meat to its people on the scale desired). In October 1972, the two countries initialed a trade agreement that would extend MFN treatment to Soviet goods sold in the United States (which would have reduced US tariffs by on average about 64 percent, fTom 24 percent to 8.6 percent), while the USSR agreed to a significant partial payment (of $722 million) on its 1945 Lend Lease debts to the United States.
Some Americans were concerned about the inability of minorities, especially Jews, to emigrate fTom the USSR. The Soviets responded quietly by allowing more emigration, rising from 400 in 1968 to 35,000 in 1973. Senator Henry M. Jackson (D-Washington) and Congressman Charles Vanik (D-Ohio) added an amendment to the trade bill that was then passing through Congress to the effect that MFN could not be extended to non-market (i. e., Communist) countries that restricted emigration. Soviet officials suggested privately that emigration might reach 45,000, but bristled at any open US intervention in what they considered their internal affairs. In the end, Nixon resigned over Watergate, the newly installed president, Gerald Ford, signed the Trade Act of 1974, including the Jackson-Vanik amendment (and a parallel piece oflegislation that restricted - but did not prohibit - Export-Import Bank loans to the Soviet Union). The USSR backed out of the 1972 trade agreement, and Soviet goods never received MFN treatment.
The Jackson-Vanik amendment is an example of the ability of a determined Congress to thwart an American president’s foreign policy. More generally, presidents must constantly seek at least the acquiescence of Congress for the actions they wish to pursue, and must work diligently for legislative support when additional funds are required.
The Yom Kippur War between Israel and Egypt of October 1973 led to an Arab oil embargo on the United States and a nearly four-fold increase in oil prices in 1974. This relieved the hard currency shortage of the oil-exporting Soviet Union and diminished its eagerness to receive MFN treatment from the United States.
World History
