Destabilizing the Corrupt: US Sanctions and Their Conflict-Inducing Consequences

Mohammad Reza Farzanegan () and Mohamad Alkurdi Albarawi

No 11754, CESifo Working Paper Series from CESifo

Abstract: This study investigates the impact of U.S. economic sanctions on internal instability and conflict using a global sample. Our analysis, which includes cross-country and panel data from over 120 countries between 1996 and 2022, shows that economic sanctions increase the risk of internal conflict and political instability, but only in countries with high levels of public corruption. In contrast, sanctions have no significant effect on political stability in countries with lower levels of corruption. These results are robust across various model specifications, control variables, competing moderator, and alternative indicators of conflict. Our findings suggest that countries can strengthen their resilience to external financial pressures during sanctions by improving their control of corruption.

Keywords: global sanction; corruption; conflict; politicial instability (search for similar items in EconPapers)
JEL-codes: D73 D74 F51 (search for similar items in EconPapers)
Date: 2025
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