Sanctions
Economic warfare has become the default tool of statecraft. How it actually works, when it succeeds and fails, and how the world is adapting to live around it.
(plus thousands of individual and entity designations across many more countries)
(from a few thousand to tens of thousands of individuals, entities, and vessels)
(driven primarily by Russia, Iran, China-related, and Venezuela programmes)
A note on framing. Sanctions have moved from a peripheral foreign-policy tool to the default Western response to nearly any geopolitical confrontation short of war. The result is a system that touches the lives of hundreds of millions of people, reshapes how international finance operates, and produces effects, intended and otherwise, that nobody fully tracks. This page tries to walk through the mechanics, the empirical record on when sanctions actually achieve their goals, and the structural consequences of using them at the scale they are now being used.
What sanctions actually are
"Sanctions" is a single word covering several quite different mechanisms. Distinguishing them clarifies what each is meant to do and where each tends to break down.
Comprehensive sanctions. An entire country is cut off from a particular financial system or trade. Examples: Cuba (US embargo, since 1960), North Korea (UN Security Council, layered programmes since 2006), Iran (multiple US and UN programmes), Russia (post-2022 EU and US programmes covering broad sectors). These are the bluntest instrument and produce the largest humanitarian effects alongside the geopolitical signal.
Sectoral sanctions. Specific industries, exports, or imports are restricted while others are allowed. Russian oil price caps, technology export controls on Chinese chip-making, financial-services restrictions on Iran's banking sector. These are intended to target leverage points without collapsing the entire economy. They work better when the targeted sector has limited substitutes and worse when alternatives exist or develop.
Targeted "smart" sanctions. Specific individuals, entities, or vessels are designated. Their assets are frozen in jurisdictions cooperating with the sanctioning state, and persons in those jurisdictions are prohibited from doing business with them. The OFAC Specially Designated Nationals list now includes tens of thousands of names. These are designed to minimise harm to ordinary populations while creating personal cost for decision-makers. Their effectiveness depends heavily on whether the designated person actually has assets within reach of the sanctioning state.
Secondary sanctions. Non-US persons and entities face penalties for doing business with sanctioned parties, even if no US connection exists in the underlying transaction. The threat is exclusion from the US financial system, which for most large banks is unacceptable. Secondary sanctions are how the dollar's role as the global reserve currency translates into US extraterritorial reach. They are why a French bank pays a multibillion-dollar fine for transactions between non-US parties.
Export controls. Often grouped with sanctions but technically distinct. Specific products or technologies (advanced chips, dual-use components, particular software) cannot be exported to designated end-users. The US chip export controls on China since 2022 are the most consequential current example. These are highly targeted, technically complex, and depend on enforcement at the point of export and in the supply chain.
When sanctions actually work
The empirical record on sanctions effectiveness is one of the most carefully studied questions in international relations, and the picture is sobering. The most-cited estimate - the Hufbauer-Schott-Elliott dataset (Peterson Institute) - puts partial-or-better success at roughly 34 per cent of historical sanctions episodes. Robert Pape's reanalysis of the same dataset argued the true rate was closer to 5 per cent once one corrects for cases where force or other factors did the actual work. Recent meta-reviews tend to land in the 20 to 40 per cent range depending on coding choices. The honest summary is "well under half, with the exact figure contested by reasonable people," and the public discourse routinely assumes a much higher base rate than any dataset supports.
What predicts success, when sanctions do work? The conditions that appear most often in the empirical literature: the targeted regime depends on the sanctioning country economically; the demanded change is modest rather than regime-existential; multilateral support is broad rather than unilateral; the sanctions are imposed quickly rather than telegraphed slowly; and the targeted regime believes the sanctioning country will sustain the pressure. Conversely, sanctions tend to fail when the demanded change threatens the regime's survival, when the targeted economy can find alternatives or substitutes, when sanctions are unilateral and the rest of the world keeps trading, or when the targeted regime can blame foreign powers for domestic hardship.
The most cited successes - South Africa under apartheid, Iran's 2015 nuclear deal - share several of these conditions, though even the South Africa case is contested: economists like Philip Levy have argued the sanctions effect was overstated and that internal political dynamics, capital flight, and the end of the Cold War mattered more than the formal sanctions themselves. The most cited failures - Cuba, North Korea, Venezuela - violate most of the success conditions. The Russia case since 2022 is genuinely contested: the sanctions have produced major economic costs and constrained some Russian capabilities (especially advanced microelectronics), but Moscow has not abandoned its war aims, has built workarounds with willing partners, and the Russian economy has performed better than the original 2022 Western forecasts predicted. Whether one calls that "working slowly," "partial success," or "failure of the primary objective" depends on what one believes was achievable in the first place.
Who pays the cost
Sanctions are sometimes pitched as costless to the sanctioning country and harmful only to the targeted regime. The empirical picture is more complicated. Costs fall in several places.
Ordinary populations in the targeted country. Comprehensive sanctions tend to impose significant humanitarian costs on civilians, often more than on the elites the sanctions are meant to constrain. The 1990s Iraq sanctions are a frequently cited case: estimates of excess deaths range widely, but the lower bounds are still substantial, and elite consumption was largely insulated. Iran's sanctions have produced documented effects on medicine availability, despite formal humanitarian exemptions. North Korea's sanctions interact with the regime's policy choices in ways that make attribution difficult, but the food situation is genuinely dire. Targeted sanctions try to minimise this; the targeting is imperfect.
Sanctioning-country exporters and consumers. Russia's sanctions raised European energy prices substantially in 2022-23. Iran sanctions raised global oil prices repeatedly across two decades. Trade barriers reduce the variety and increase the prices of consumer goods in sanctioning countries by amounts that are hard to measure but consistently positive. The argument that sanctions are costless to the imposing country is not borne out empirically.
Third-country firms caught in the middle. European banks fined for technically violating US sanctions on transactions that did not involve US parties. Chinese firms cut off from Western technology. Indian refiners navigating contradictory pressures over Russian oil. Turkish, Emirati, and Central Asian firms facing pressure to limit re-export to Russia. The list of third-party costs is long and growing.
The sanctioning country's own statecraft. Excessive use of sanctions creates incentives for targeted countries and unhappy third parties to develop workarounds: parallel payment systems, alternative reserve currencies, smuggling networks, financial intermediaries. The dollar's role as the lingua franca of international finance has been one of the largest sources of US power since 1945. Each round of expansive sanctions creates marginal pressure to find ways around it. Whether the long-run cost to dollar centrality is significant is contested - dollar dominance has been resilient so far - but the direction of the pressure is not.
The sanctions adaptation industry
One of the underappreciated features of expanded sanctions is that an entire ecosystem has formed around helping countries and firms operate within or around them. Some of this is illegal evasion. Some of it is technically compliant but defeats the underlying intent. Some of it is fully compliant and represents sanctioning-country firms protecting themselves from secondary risk.
Russia's adaptation since 2022 has been the most studied case. Parallel imports through Central Asia and the Caucasus rose sharply. Shadow tanker fleets reflagged to lower-enforcement jurisdictions to move oil at prices above caps. Currency swap lines and bilateral payment arrangements with India, China, and the Gulf substituted for some lost dollar access. The Russian economy contracted in 2022 but stabilised; defence-sector capacity was rebuilt within two years. None of this means sanctions had no effect; it means the effect was constrained by adaptation in ways the original architects sometimes underestimated.
Iran's longer adaptation history is instructive. Decades of sanctions produced a deeply opaque smuggling and front-company network, ties to non-Western economies, domestic substitution in some sectors, and a hardened political class that has built legitimacy partly on resilience to outside pressure. Sanctions have constrained Iranian capability; they have also produced an economy and political system shaped by the experience.
Compliance and screening services have become a substantial industry. Banks employ thousands of compliance officers focused on sanctions screening. Specialised firms like K2 Integrity, Kharon, and Castellum.AI provide data and monitoring services. The adoption of AI-driven transaction screening is now widespread. The cost of compliance is substantial and is borne primarily by the sanctioning-country financial system, which is one of the under-noticed transfers in the broader system.
The paths from here
The future of sanctions as a tool depends on choices that have not yet been made about how widely to use them, how to coordinate them, and how to respond to the adaptation pressure they produce.
Continued expansion
Sanctions remain the default Western response to geopolitical confrontation. The number of designated parties continues to grow. Compliance costs rise. Adaptation industries grow in parallel. The dollar remains central but with a slowly increasing parallel-payments fringe.
Strategic restraint
Recognition that excessive sanctions use erodes the underlying tool produces voluntary discipline. Sanctioning countries reserve the most aggressive measures for genuinely high-stakes cases. The number of designations grows more slowly. The signalling value of sanctions partially recovers.
Decoupling produces parallel financial systems
Sustained sanctions on Russia, China-related parties, and others accelerate the development of alternative payment rails (CIPS, mBridge, bilateral arrangements). Sanctions efficacy declines as the share of global activity outside Western reach grows. The next decade is more multipolar in financial as well as geopolitical terms.
Multilateral coordination tightens
Western countries plus Japan, South Korea, and others coordinate more closely on sanctions design and enforcement. Third-country evasion becomes harder. Targeted regimes face more uniform pressure. This is the optimistic-effectiveness path; it requires political alignment that has often been incomplete.
Specific reforms address humanitarian costs
Better-designed humanitarian carve-outs, more targeted "smart" sanctions, and more careful pre-imposition impact assessment reduce civilian harm without losing political effect. Some of this is already happening; the political will to do more is uneven.
A major sanctions failure resets the tool
A high-profile failure - sanctions clearly not working in a major case, or producing a worse outcome than alternatives - triggers a wholesale reassessment. The tool is used more sparingly afterward. This has happened in earlier sanctions cycles and is not impossible again.
Where serious analysts disagree
Sanctions are a topic where careful researchers cluster in fairly clear positions, with named scholarship behind each.
Sanctions can be a powerful tool when designed and coordinated well
The empirical record shows enough success cases (South Africa, Iran 2015, Libya) and enough partial successes that sanctions remain a legitimate and useful instrument. Failure cases are usually traceable to specific design flaws (unilateral action, regime-existential demands, telegraphed pressure) rather than to inherent limits of the tool.
Held by: Daniel Drezner (Tufts), Juan Zarate (former US Treasury), parts of the policy community at CSIS, RAND, and the Atlantic Council. Their analysis is empirical and policy-engaged.
Sanctions are systematically over-credited and under-criticised
The same political class that demands sanctions rarely measures whether they achieved their stated goals. The humanitarian costs are routinely understated; the strategic costs to the imposing country are routinely ignored; the success cases are exceptional. Sanctions are popular because they substitute for the harder choices between diplomacy and force, not because they are effective.
Held by: Nicholas Mulder (Cornell, "The Economic Weapon"), Joy Gordon, Robert Pape (Chicago), and a strand of academic IR sceptical of the sanctions enthusiasm in policy circles. Their case has been strengthened by the difficulty of attributing the Russia outcome cleanly.
The dollar weaponisation is eroding the underlying privilege
Each round of sanctions and asset freezes - especially the Russian central bank reserve freeze in 2022 - signals to other states that dollar reserves are not safe under unfavourable political circumstances. The pressure to develop alternatives is real and rising. Western financial dominance is durable but no longer unconditional.
Held by: Adam Tooze (Columbia), Zoltan Pozsar (formerly Credit Suisse), parts of the macro-economic community, and increasingly Treasury and central-bank officials in private. The case is partly contested - dollar dominance has been resilient - but the structural pressure is real.
Smart sanctions can largely solve the humanitarian problem
Modern targeted sanctions, when designed carefully with humanitarian carve-outs, can impose meaningful costs on regime elites without significantly harming ordinary populations. The Iran-related Magnitsky-style designations, the post-2014 Russia individual sanctions, and the targeted designations against Chinese officials over Xinjiang are reasonable examples. The harm-to-civilians problem is largely a problem of poor design.
Held by: parts of the human-rights NGO community, the Treasury OFAC professional class, and academic researchers focused on targeted sanctions design. The case has merit on design but understates how often "smart" sanctions still produce broader humanitarian effects.
Sanctions are an avoidable substitute for harder political work
Both ends of the foreign-policy spectrum sometimes converge on the view that sanctions allow imposing countries to feel they are doing something while avoiding the harder work of either negotiation or military action. The result is that real conflicts are managed through partial economic pressure for years or decades, with poor outcomes. Better outcomes would require committing to either real engagement or real military choices, with sanctions playing a supporting role rather than the lead.
Held by: some realist IR scholars, a strand of conservative-isolationist thinking, parts of the progressive critique of liberal interventionism. The case is contested but is partly correct: sanctions are politically convenient in ways that may not align with strategic effectiveness.
None of these readings is fully right or wrong. What can be said from the available evidence: sanctions are a real tool with a measurable success rate that the most-cited dataset (Hufbauer-Schott-Elliott) puts around 34 per cent and that critical reanalyses (Pape and others) put considerably lower - in any case well below the public discourse's implicit assumption; their humanitarian costs are real and have been under-weighted in design (the 1990s Iraq comprehensive sanctions remain the most-studied case, with excess-deaths estimates that have themselves been heavily contested - early UN-cited figures of 500,000 child deaths were later revised down substantially, but the lower-bound humanitarian cost is still substantial); their strategic-cost-to-the-imposer is also real and growing as parallel financial systems develop; and the trajectory of expanded use without commensurate strategic restraint is producing pressures that may matter more in five to ten years than in any single sanctions case.
What this means for you
If you follow geopolitics
When you see a sanctions package announced, the question to ask is whether the conditions for success in the empirical literature are present: economic dependence, modest and specific demands, multilateral support, sustained credibility. Most coverage focuses on the announcement and the named individuals. The structural question is more useful for predicting outcomes.
If you do international business
Sanctions compliance is now a substantial cost of operating across borders, even for companies with no obvious exposure. The penalties for getting it wrong (large fines, reputational damage, exclusion from markets) are out of proportion to the underlying transaction. Investing in proper sanctions screening is no longer optional for businesses of any meaningful size.
If you live in a sanctioned country or have family there
Humanitarian carve-outs exist on paper but in practice often fail because banks decline to process technically permitted transactions. Specialised channels (humanitarian-licensed banks, NGO-coordinated transfers) work better than general retail banking. The gap between policy intent and operational reality is wider than coverage usually conveys.
If you invest internationally
Sanctions risk is now a real factor in pricing assets in or with exposure to certain countries. Russia 2022 demonstrated how quickly previously normal investments can become unsalable. The pricing of similar risk in China-exposed assets is one of the more contested questions in markets in 2026.
If you are voting on foreign policy
Demanding sanctions is politically easy and often emotionally satisfying. Asking whether the proposed sanctions meet the conditions for success in the empirical literature, what humanitarian carve-outs they include, and what the projected strategic costs are - those are harder questions, and they are where the actual quality of foreign-policy thinking shows up. They are largely absent from electoral conversation.
