Economic sanctions and state-sponsored terrorism: the case of Iran

While economic sanctions are often used as a foreign policy tool to fight state-sponsored terrorism, their efficacy remains unclear. This article argues that the intensifying economic hardship caused by sanctions forces the targeted governments to undertake a retrenchment strategy, which in turn reduces the overall frequency of state-sponsored terrorist attacks. Using cross-sectional-time-series data of Iranian-backed terrorism from 1987 to 2005, the article shows that sanctions against the Iranian regime were instrumental in reducing terrorist attacks by Hamas, Hezbollah, and the Palestinian Islamic Jihad (PIJ).