Global sanctions are a powerful political tool with major global economic implications. They have a long history dating back to antiquity. The victors of World War I promoted them as a means to pursue political goals, and their use spread in Europe and elsewhere, including Weimar Germany and early Fascist Italy, and in the United States, where they were used against Nazi Germany.
However, despite their importance in the modern world, we know little about what makes them work. As a result, their effectiveness has been much debated. Some argue that they are effective only when combined with a military threat, others that they are largely ineffective and that their success is a matter of timing, and still others that they have a significant role to play and can be highly successful, even against the most oppressive regimes.
The problem with these analyses is that they do not take into account the broader economic context in which sanctions operate. As the author of a recently published book, The Economic Weapon: Sanctions as a Tool of Modern War, NIcholas Mulder, explains, “Sanctions are inherently linked to the administrative state and globalization.”
For example, a sanction on oil or food exports can hurt a nation, but it can also reduce their capacity to innovate by disrupting supply chains and knowledge-exchange networks. This can undermine the very purposes of sanctions and lead to counterproductive results. Moreover, in today’s increasingly integrated world, nations can simply shift their trade to new markets and partners that bypass sanctions and maintain healthy levels of trade. This undermines the effectiveness of sanctions and raises serious concerns about their global economic stability implications.”