Economic sanctions are tools designed to restrict trade with a country in order to leverage political change. They are often used as a substitute for military statecraft or diplomatic censure. They have a long history dating back to ancient times, including the notorious blockade of ports by Athens against Megara in 432 bce, in an attempt to starve that city-state into submission. Supporters of sanctions argue that despite their effects on citizens, these measures are the best alternative to doing nothing, citing democratic peace theory in the process.
In addition to the direct impact of sanctions on the target country, they also have indirect effects on the private sector, through onerous reporting obligations and due diligence throughout supply chains, the threat of civil or criminal penalties, and reputational damage. This can be a powerful incentive to try and circumvent sanctions, e.g., by using foreign-registered entities to channel payments through the banking system or by transferring assets overseas.
While this strategy may work in some cases, it does not always work as intended. Moreover, in many cases sanctions can become entrenched. Over time, domestic groups with vested interests in maintaining sanctions can emerge, and they can be difficult to remove as goals are achieved or objectives change. For example, the U.S. embargo against Cuba was largely kept in place for decades, because sugar manufacturers had a vested interest in continuing to rely on a protected market. Similarly, the EU’s refusal to lift sanctions on Russia until the country does more to deescalate conflict in Ukraine risks undermining international consensus on legal rights for foreign sovereign assets held in central banks.
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