IR Semineri: “Economic Sanctions and the Carbonization of Target States”, Emre Hatipoğlu, 13:30 14 Haziran (EN)

Associate Professor Emre Hatipoğlu,
KAPSARC (King Abdullah Petroleum Studies and Reseach Center), Saudi Arabia

Title: “Economic sanctions and the carbonization of target states”

Date & Time: 14 June 2022, 13:30
Place: Room A326

Abstract: While economic sanctions aim to induce policy change in the targeted state in the shorter term, a wealth of studies has shown that inhabitants of the targeted state continue to suffer from adverse unintended consequences even after sanctions are terminated. This study focuses on one such consequence, the unintended carbonization of the target state’s energy mix. We posit and present empirical evidence that sanctions lock targeted countries into carbon-intensive modes of energy generation. Our line of reasoning advances in three steps. First, economic sanctions restrict a target’s access to capital. Coupled with the immediate need to satisfy energy needs, this restriction forces targeted states shift to cheaper, more carbon-intensive (predominantly coal) modes of generation in their primary energy supply Second, these targets’ economies tend to rebound after sanctions. Again, carbon-intensive (and, coal, in particular) modes are the fastest and easiest way of meeting this demand. Finally, targeted states strive to use these carbon-intensive generation plants over their life-span, crowding out investment in others. The results we obtain from matching estimators run on a global cross-sectional time-series dataset support our expectations.