When Do Sanctions On Terrorist Groups Work?

A substantial amount of literature studies the effects of sanctions against states, but far less is known about sanctions against violent non-state actors. We argue and show that the effectiveness of counterterrorism sanctions hinges on terrorist groups’ financial adaptability. Groups with low financial adaptability are likely to reduce attacks due to sanctions. In contrast, groups with high financial adaptability are likely to adapt to sanctions and continue attacks. A case study analysis of the 80 US Foreign Terrorist Organizations between 1997 and 2019, summarized in a systematic large-n qualitative study, supports this claim. We find no evidence that foreign terrorist organization (FTO) sanctions reduce attacks when terrorist groups possess high financial adaptability. FTO sanctions led to only reduced attacks for a few low- and medium-adaptability groups. Our analysis is the first to show a direct link between adaptability and counterterrorism sanctions, with important implications for adaptation and the role of sanctions as a foreign policy instrument.