using sanctions to avoid a war with Japan

 I'm always looking for good cases to illustrate the policy process. For diplomatic and military policies, the supply is vast.  For foreign economic policy, however, I haven't found many. Until this week, when I finally had a chance to read Edward S. Miller's 2007 book for the Naval Institute Press, Bankrupting the Enemy: The U.S. Financial Siege of Japan before Pearl Harbor.

Miller also has a revealing summary of U.S. economic sanctions policies starting with World War I, showing how reluctant U.S. officials were to use sanctions for foreign policy purposes. The key law empowering the president for almost any economic sanctions, the International Emergency Economic Powers Act [IEEPA] of 1977, is actually based on a section of the 1917 Trading with the Enemy Act. That law resulted from a bureaucratic fight between the Commerce Department, which historically ran export controls, and Treasury, which claimed jurisdiction over financial transactions laws. Treasury won that fight, not least because the assertive secretary was also President Wilson's son in law.

A similar bureaucratic struggle occurred in 1940-41 over Japan.Secretary of State Cordell Hull, the key interlocutor with the Japanese, resisted harsh sanctions because he considered them too provocative. Treasury Secretary Henry Morgenthau, however, favored pressure but had only an advisory role on sanctions. In key meetings with FDR in July, 1941, the president decided on freezing Japanese assets in the United States and restricting exports of various commodities but not a full embargo. Roosevelt and his cabinet officers even expected to sell oil to Japan, but only after some delay and on a case-by-case basis.

At the sub-cabinet level, however, Dean Acheson dominated the interagency committee that wrote the rules implementing FDR's executive order and did so to prevent any oil shipments to Japan, a red line that many historians argue made war inevitable. Hull was upset to learn of the impact of the rules when he returned from medical leave, but was reluctant to force a change that might be viewed as favorable to the Japanese. FDR himself was preoccupied with his meeting with Churchill in August and the growing naval conflict with Germany and did not force a change back to his original policy.

Miller cites a 1976 paper by a researcher at the National Archives which has even more details of the hawkish cabal in the bureaucracy on the broad range of export restrictions on Japan, including redefining "aviation gas" so as to prevent any oil exports.

The key lesson for me is the power of the sub-cabinet bureaucracy to shape policy by implementation rules, regardless of presidential-level decisions. It happens all the time. The formal policy was to deter Japan from greater conquest by limited but significant export restrictions, not a full embargo. The actual policy Japan faced was an existential threat.