Innocent or not-so-innocent bystanders: evidence from the gravity model of international trade about the effects of UN sanctions on neighbor countries

This paper examines two theories about the effects of UN sanctions on trade flows between land neighbors of the target country and the rest of the world. First, there have been claims that sanctions hurt neighbor countries by cutting off trading routes, increasing transportation costs, and disrupting established trading ties. We would expect that a neighbor’s trade with the rest of the world would fall, as a result. Second, there is extensive evidence that neighbors have been heavily involved in smuggling. As a result, neighbors should trade more with the rest of the world during UN trade embargoes, because now they also trade on behalf of the target. I employ the gravity model of international trade to show that, overall, a neighbor’s trade with the rest of the world tends to fall during UN sanctions episodes. This confirms the first claim above: overall, land neighbors have been “innocent bystanders” hit by UN sanctions.