Do Sanctions Work?
If you’re an expert in international economics, you’ll know that the answer to the above question is not particularly straightforward. The word itself is somewhat confusing, because it has two opposite definitions: “an official, formal, or legal permission to do something”, and “a punishment given when people do not obey a rule or law”. Today, SimpleNation takes a closer look at the latter definition in international politics, and asks whether this is an effective method of upholding a rules-based international order.
Former Iranian President, Hassan Rouhani, inspects a nuclear power plant in southern Iran. Source: NPR
The list of countries financially sanctioned by the UK for a variety of reasons includes North Korea, Russia, Syria, Afghanistan, Iran, Libya, and more. Reasons for their presence on this list include human rights violations, terrorism-related activities, and illegal exploitation of natural resources. Regulations are imposed unilaterally by the UK’s government, but as a permanent member of the UN Security Council, the UK is automatically obligated to uphold sanctions made by this body as well. We also hear about high-level targeted sanctions made on individuals in governments deemed hostile or national security threats to the origin country. The United States has quite openly sanctioned senior officials from Russia and China, for example. Financial sanctions can come in many forms, including export restrictions, asset seizures, disincentivising of trade, and even full-scale trade embargoes.
The central question remains, however: do sanctions work?
We should begin our answer with a question: do they work to achieve what? If the objective is to prevent jumping towards open conflict against a hostile power acting against a country’s interests: then, yes. In terms of instigating regime change, however, it isn’t as clear-cut. Vali Nasr, one of the world’s leading Middle East and international studies experts, says that “What we have found [in our study] is that it works in ways that we don’t want it to work. And it doesn’t work in the ways that we want it to work.”. Although sanctions on Iran, which have been implemented in response to nuclear weapon treaty violations, have caused enormous national unemployment and devastated the economy, they have not resulted in de-throning the current political status quo. Rather, they have promoted the cultivation of financial loophole exploitation and black market goods growth. In the case of nuclear weaponry pursuits, this will not only allow for the proliferation of illegal weaponry, but also the enrichment of regimes willing to sell materials to Iran.
Russian government spending has actually increased since the invasion of Ukraine, despite being the most heavily-sanctioned country in the world. Source: Financial Times
In the case of Russia, now the most sanctioned country in the world following the invasion of Ukraine, the story appears somewhat different. Restrictions placed on Russian resources, military technology, and financial sectors have undeniably inflicted damage on the national economy. GDP per capita, which measures the average person’s income in US dollars, shows a decline from an average annual salary of USD $15,000 to $13,000 in Russia from 2022 onwards. But the Russian economy has adapted to these sanctions: trends in the oil market keep revenues to the Russian economy available, and a labour shortage means that jobs with higher wages than normal are easy to obtain and maintain. Perhaps most obviously: the sanctions have not ended the war in Ukraine, nor have they led to any type of regime change in Russia.
Furthermore, countries had threatened sanctions prior to the outbreak of the invasion of Ukraine, allowing time for Russian money to be moved elsewhere. The UAE was a popular destination for finances to remain largely untouched.
Some countries even use incoming sanctions to their advantage. Scholars have identified that military and single-party states can use the existence of these barriers to justify their grip on power, citing the constant “threat” of incoming pressure from foreign adversary, while increasing taxes to adjust for economic woes. In North Korea, the ruling party uses sanctions to actually depict its people as “empowered”, a rallying cry for those struggling against foreign oppression in an almost ultra-nationalistic tone.
Ultimately, it seems that sanctions are less effective than those imposing them intend. While they have certainly damaged the economies of their targets, they have often led to unintended, non-financial consequences. Restrictions placed on Iran have led to the growth of a nuclear black market, those placed on Russia have fueled arguments that a new Cold War is now in effect, and those placed on North Korea have further entrenched the Korean Worker’s Party. New solutions will need to be found to new problems - or old solutions will risk making them worse.
TAI Score: Degree 3. In addition to ensuring that businesses and governments do not conduct business with sanctioned individuals or groups, sanctions must ensure a lack of knock-on effects. Proper due diligence and long-term analyses of financial sanctions should be taken before they are put into place, and states should be less inclined to threaten sanctions before they take place - allowing for an increased element of strategic ambiguity against rivals.
