Why sanctions do not always work

"Sanctions often have unintended consequences. Those against Iran may have been focused on its Revolutionary Guard, banks that help finance the regime's nuclear ambitions, and so on, but they have hit ordinary Iranians hard. Targeted governments can use sanctions as a rallying cry at home: as fed up as many Venezuelans are with the nasty, incompetent regime of Nicolas Maduro, more than half of them oppose Western sanctions against it, according to one poll. Sanctions can also inadvertently help adversaries to advance their interests abroad. China has signed a $400bn energy-and-infrastructure deal with Iran. Russia has secured lucrative stakes in Venezuelan oil projects in return for its sanctions-busting support.

Another danger is escalation. Sanctions beget counter-sanctions and less-direct forms of retaliation--and the bigger the target, the more power it has to strike back. Russia's options are limited in terms of direct retaliation, but American sanctions encourage it to ramp up asymmetrical warfare, such as cyber-attacks and disinformation campaigns. China no longer just shrugs when targeted. It has hit back at America and Europe over their Xinjiang-related sanctions with, and has signalled that it will be more willing to impose pre-emptive or retaliatory sanctions in future. And its economic heft gives it options of a less formal sort, too: it orchestrated a consumer boycott of Western brands such as H&M and Nike over their decision to stop using cotton from Xinjiang.

The final danger with sanctions--and perhaps the most corrosive over the long term--lies in heavy use encouraging targeted countries and entities, and others who want to trade with them, to look for ways to reduce their reliance on the West's (particularly America's) economic networks. China, Russia and others are, for instance, exploring ways to circumvent the dollar and SWIFT, the main interbank messaging service for cross-border payments. Belarus, for its part, is already heavily reliant on Russia, which supplies it with cash and commodities, and handles its meagre exports. The more sanctions are used, the more their targets will look for ways to insulate themselves from their effects." [1]

1. "Why sanctions do not always work; The Economist explains." The Economist, 27 May 2021, p. NA.