Carrots or Sticks: The Choice and Impact of EU Democratic Sanctions and Aid

Both the provision of democracy aid and the imposition of sanctions are tools to promote democracy. Yet, it is unclear under which conditions states choose to set positive or negative incentives. In order to answer which tool—democracy aid or democratic sanctions—is more effective, one has to analyse the actual form of the provision of aid. Sanctions and democracy aid can also be employed at the same time. The goal of this study is to determine their joint effect on democratization in recipient countries. We argue that sending civil society aid or democracy aid channeled through NGOs and the civil society when sanctions are in place, enhances the effectiveness of sanctions as a democracy promotion tool because the civil society can be empowered to introduce democratic changes in its country—so additionally to the top-down pressure created by sanctions, there is bottom-up pressure exerted by the civil society. Our results suggest that democratic sanctions are more likely to be successful if democracy aid bypasses the government in a target state. Conversely, other forms of aid provision tend to decrease the effectiveness of sanctions. In order to precisely explain the joint impact of positive and negative incentives on democratization, we employ a new comprehensive dataset on economic sanctions for the period between 1989 and 2015 which integrates and updates the Threats and Imposition of Economic Sanctions and the GIGA sanctions data sets, merged with disaggregated OECD aid data and V-Dem as well as PolityIV democracy scores