In the complex modern world, it has become increasingly difficult to achieve national security objectives. In response to the rising costs of modern warfare, nations have turned to alternative tools to achieve their national security objectives. One of these tools to accomplish these policy aims are economic sanctions. Economic sanctions are, according to the Council on Foreign Relations, “... are economic measures intended to either pressure or punish bad actors—whether individuals, groups, or countries—that violate international norms or threaten national interests.”1 They can include many different measures, including prohibiting trade, stopping financial transactions, or barring economic assistance.2
The United States has increasingly used economic sanctions in recent years. According to the U.S. Treasury Department, the use of economic sanctions has increased 10-fold from 2000 to 2021, with 912 sanctions in place in 2000 to 9,421 in 2021.3 There have been examples of sanctions producing favorable results. For example, in 1991, the U.S. withheld approximately $3 billion in loan guarantees from Israel, which helped force the Shamir government to attend the 1991 Madrid Peace Conference.4 A more recent example of effective sanctions was the economic sanctions the U.S. imposed on the front companies of the Cali Cartel which contributed to the dismantling of the cartel in 2014.3 However, in recent years, there have been increasing difficulties in enforcing sanctions and achieving favorable results.
Efficacy of U.S. Sanctions
In the past, U.S. sanctions have been remarkably effective due to the economic status and power of the United States. For decades, the United States has been the world’s most preeminent economic power, which has allowed the U.S. to impose more powerful and thus more effective sanctions. As the largest market for goods, losing access to it can be very damaging to other countries’ economies. Additionally, the U.S. dollar is the reserve currency for most of the world. Therefore, restricting access to the dollar can greatly impede the ability of bad actors to engage in trade.
Impediments to Effective Sanctions
Due to the ever-changing and complex nature of the modern world, sanctions now face multiple challenges to their effectiveness. These challenges can be grouped into three categories: circumvention, broader suffering than intended, and other unintended consequences.4
Sanctions can be circumvented in various ways. One significant way is to simply do business with third-party entities that are not subject to the sanctions imposed against a specific country. There are several ways to do this. For example, after the Russian invasion of Ukraine in early 2022, much of the Western world imposed massive sanctions on Russia in an attempt to both punish Russia and change its behavior. In response, Russia began to trade more with countries outside the European Union, such as the United Arab Emirates, Kazakhstan, and Hong Kong, among others. Meanwhile, trade in those countries increased with European Union member states. This move by Russia indicates that Russia was still gaining access to sanctioned goods through third parties which has greatly weakened the efficacy of the Sanctions from EU states.4 Another example of this is North Korea. For years, North Korea has been subject to massive sanctions from the United Nations in response to the development of its nuclear program. Despite this, North Korea has still been able to gain access to various Western weapons systems, among other materials. It has been theorized that North Korea has been able to access these through the black market, possibly doing so through other countries such as China and Russia that it borders, or using illicit financial markets. This example further demonstrates a potential weakness of sanctions.5
An additional weakness of sanctions is the widespread suffering that they can cause. Many sanctions not only target governments but also the entire country which can lead to widespread suffering in the targeted country, especially among those at the lower end of the socioeconomic spectrum. Those at the top of society and the government are often able to shield themselves from the negative consequences of their actions. Thus, the lower and middle classes are forced to bear a disproportionate share of the negative externalities, even though they are typically not responsible for their government’s actions. For example, sanctions have been imposed on Venezuela in recent years in hopes of either changing the behavior of Nicolas Maduro’s government or causing regime change. Rather than being effective, the sanctions have, at least in part, brought on large-scale human suffering. It has also bolstered the Maduro regime by enabling Maduro to rally his people against foreign powers.4
Another potential weakness of sanctions is the unintended consequences they may have. By their nature, unintended consequences are difficult to predict; however, they will inevitably occur with every action. The nature of these consequences can lead to sanctions completely backfiring. An example of this is the actions Russia took to restrict the sale of its oil and natural gas to the European Union. Before the invasion, the EU received roughly 40% of its oil and natural gas from Russia. Due to restrictions imposed by Russia and a desire to reduce itsleverage, the EU has accelerated its efforts to diversify its energy sector. In the long term, Russia may have unintentionally led Europe to diversify its energy sources, thereby reducing Russia’s future leverage.4 Despite all these potential impediments, sanctions can still be effective. However, there exist some policy considerations that nations must consider to avoid undesirable results.
Are Sanctions Effective?
The key question now is whether economic sanctions are an effective policy tool to achieve national strategic objectives. A study by the Peterson Institute for International Economics found that overall, 34% of economic sanctions were at least partially effective.6 However, it was found that certain types of sanctions were more effective than others. Sanctions that have more limited goals, such as the release of political prisoners, were effective about half the time. Meanwhile, sanctions with larger and more ambitious goals, such as regime change, tend to be significantly less effective.
However, it would be inaccurate to say that all of the sanctions that failed were due to inherent problems with sanctions. Quite often, bad policy by the sanctioning state can doom sanctions before they are even started. For example, the goal of sanctions is often not explicitly stated, which makes it more difficult to rally support around and enforce. This leads to ineffectiveness. Another problem that can occur is when there is ambiguous messaging with sanctions. An example of this would be taking action to sanction another country while still allowing certain firms to do business with that country. This allows the targeted country to circumvent sanctions more easily due to the ambiguity of its actions.
Overall, sanctions are demonstrably effective at producing at least limited results. Thus, nations can utilize sanctions as an effective foreign policy tool, but they should also be mindful of the inherent limitations of sanctions.
Policy Recommendations
To ensure that sanctions are as effective as possible, despite all the outlined complications, several policy recommendations can be applied to achieve favorable results. The first recommendation is to have clear and defined objectives for economic sanctions. When a sanction has well-defined objectives, it becomes easier to build up support for it on the home front, thus making the sanction more effective. It also helps the targeted country understand what specific behavior it needs to change to have the sanction removed.
Another recommendation is to use sanctions to achieve smaller policy goals. Rather than using sanctions to bring about regime change, for example, focus on a smaller, more targeted goal. This is due to sanctions typically only impoverishing a country rather than causing regime change or lowering military potential. Smaller, more targeted goals are more likely to be achieved with sanctions, thus resulting in more foreign policy “wins” for a country.
A third recommendation is to bring the full force of the sanctions immediately rather than slowly escalating them. This has been demonstrated to be more effective in causing desired behavioral changes in other regimes.6 It is more effective because sanctions are more effective when they impose greater economic costs on the targeted country.
The last recommendation is to make use of both carrot and stick.6 This is to say that the stick is the economic sanctions, while the carrot would be some reward that a targeted regime could receive if it changes its behavior. It is more effective to use rewards and punishments together because it introduces new and powerful incentives to produce desired behavior. It also raises the total economic costs that a regime must bear, as it has to deal with the punishment of the stick and the loss of the reward of the carrot.
Economic sanctions remain a valuable instrument in modern foreign policy especially in attempting to avoid armed conflict. Like every policy tool, Nations must use precise execution and strategic foresight to ensure that sanctions achieve policy objectives. It is necessary to define limited policy goals, bring the full force, and pair them with incentives to guide behavior. As policymakers recognize the limitations of sanctions and take steps to ensure sanction effectiveness, sanctions can be a powerful tool to achieve policy objectives and minimize the risks in an increasingly complex global environment.
1. Council on Foreign Relations. (n.d.). What are economic sanctions?. Council on Foreign Relations. https://education.cfr.org/learn/reading/what-are-economic-sanctions
2. Krulikowski, S. (n.d.). Economic sanctions: An overview. https://www.usitc.gov/sites/default/files/publications/332/executive_briefings/ebot_economic_sanctions_overview.pdf
3. The Department of the Treasury. (n.d.). The Treasury 2021 sanctions review. https://home.treasury.gov/system/files/136/Treasury-2021-sanctions-review.pdf
4. Drezner, D. (2024, June 25). The rise of economic sanctions in U.S. foreign policy. Econofact.
https://econofact.org/the-rise-of-economic-sanctions-in-u-s-foreign-policy
5. Rascoe, A. (2024, March 3). How North Korea gets around global sanctions to manufacture its weapons. NPR. https://www.npr.org/2024/03/03/1235606426/how-north-korea-gets-around-global-sanctions-to-manufacture-its-weapons
6. Economic sanctions reconsidered, ... (n.d.-a). https://www.piie.com/publications/chapters_preview/4075/06iie4075.pdf