When Do Sanctions on Terrorist Groups Work?

A substantial 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. Case study analysis of the 80 U.S. Foreign Terrorist Organizations between 1997 and 2019, summarized in a systematic large- n qualitative study, support this claim. We find no evidence that FTO sanctions reduce attacks when terrorist groups possess high financial adaptability. FTO sanctions only led to reduced attacks for a few low/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.