Abraham Newman, Professor at Georgetown University and a Research Fellow at the Centre for International Security, presents his paper on the potential unanticipated consequences of secondary sanctions. This event is part of the International Security Research Colloquium hosted by the Centre for International Security.
As states employ secondary sanctions as a form of economic coercion, firms become the foot soldiers. While research has examined how such sanctions impact firm behavior towards targets, less is known about broader systemic consequences. In this presentation, Abraham Newman will bridge work on political risk with work on extraterritorial authority to better understand the derisking behavior of firms. Firms fearing extraterritorial enforcement are likely to limit exposure to third party jurisdictions, which may expose the firm to the sanctions regime. In particular, Newman and coauthor Qi Zhang (Georgetown University) have identified two mechanisms – target leakage and political cascades – to understand which third-party jurisdictions are most likely to be affected. These hypotheses are tested through analyses of multinational banks’ lending before and after the 2010 sanctions on Iran. Using a difference-in-difference estimator to evaluate the Iran sanction’s impact on cross-border lending, the analysis shows that the sanctions reduced multinational banks’ lending to neighboring countries of Iran and its political allies by approximately 11% and 14% respectively. Moreover, the authors observed lender heterogeneity as banks from major offshore financial centers increased their lending to the affected jurisdictions by 26% and 27%. In this session, Newman will demonstrate the potential unanticipated consequences of secondary sanctions both in terms of the impacted countries and the potential to drive lending to less regulated spaces.
Speaker
Abraham Newton
Abraham L. Newman is professor of Government and the Edmund A. Walsh School of Foreign Service at Georgetown University. His research focuses on the politics generated by globalization and he co-authored Of Privacy and Power: The Transatlantic Struggle over Freedom and Security (Princeton University Press 2019), which was the winner of the 2019 Chicago-Kent College of Law / Roy C. Palmer Civil Liberties Prize, the 2020 International Studies Association ICOMM Best Book Award, and one of Foreign Affairs’ Best Books of 2019. He is also the co-author of Voluntary Disruptions: International Soft Law, Finance and Power (Oxford University Press 2018), author of Protectors of Privacy: Regulating Personal Data in the Global Economy (Cornell University Press 2008) and the co-editor of How Revolutionary was the Digital Revolution (Stanford University Press 2006). He has published over forty peer-reviewed articles in journals including Comparative Political Studies, International Organization, International Security, Nature, Science, and World Politics.
