Adversaries Weaken Power of Sanctions

 

Main effect of Western sanctions was unilateral disarming of the West. Sanctions on Russia killed German industry with high energy prices. German industry was the last Western industry. Without industry you cannot fight any serious wars (see the role of America’s industry in WWII). So, killing industry, you are disarming unilaterally (see the war in Iran).

 

Western sanctions against Russia severely disrupted European energy markets and spiked costs for German manufacturers, but their effect on overall Western military-industrial capacity is a subject of ongoing debate. While the loss of inexpensive Russian gas impacted Germany's competitive edge and prompted industrial contraction, significant differences exist between current economic conditions and the total wartime mobilization of WWII.

 

Here are the key factors in the debate surrounding sanctions, industry, and defense capabilities:

•           Energy Costs and Industrial Strain: The severing of most direct energy ties with Russia left Germany and parts of the EU facing higher electricity and production costs than competitors in the U.S. and China. The German Economic Crisis and subsequent recessions have led to debates on how this economic strain impacts Germany's future as an industrial powerhouse.

•           Industrial Output vs. Wartime Mobilization: While it is true that modern military power relies on a robust manufacturing and technological base—similar to the industrial mobilization seen during WWII—the U.S. and its Western allies have different industrial capabilities today. The U.S. defense-industrial base, for instance, remains highly integrated but has shifted in focus, and many European nations are currently attempting to rebuild or protect specific defense-related manufacturing capacities.

•           Differing Perspectives on Sanctions: Views on the broader efficacy of sanctions are highly polarized. Proponents of sanctions argue they are designed to limit Russia's technological access and degrade its long-term defense-industrial output, though enforcement and evasion remain challenges. Critics argue the sanctions have harmed European domestic economies more than intended while driving Russia to deepen economic ties with alternative partners in Asia.

The debate among economists and geopolitical analysts focuses on whether sanctions represent a unilateral disarming of the West, or a necessary, long-term tool of economic pressure intended to degrade hostile military capabilities (these people are wrong, see Iran war).

 

“The U.S. has unleashed more than 1,000 sanctions on Iran during the past 18 months as part of its campaign to squeeze Tehran into submission.

 

Iran's ability to withstand those sanctions so far exposes a hard fact for Washington: Economic pressure has largely failed to cow rogue regimes, as they game out more ways to sidestep U.S. restrictions.

 

The White House deal signed last week with Iran to ease economic pressure in return for the free movement of shipping includes an offer to permanently lift sanctions on the country, if it agrees to steps such as dismantling its nuclear program.

 

Iran is keen for relief from U.S. sanctions, which have severely hurt its economy and triggered popular discontent that could threaten the regime's long-term survival.

 

Even so, Iran's government has found ways to keep generating billions of dollars in revenue, mainly by selling oil to China, despite U.S. sanctions, weakening Washington's leverage in the talks.

 

Ultimately, President Trump's White House was forced to physically blockade Iran's ports to stem its oil exports -- which earned Tehran an estimated $43 billion in 2024 -- and bring it to the negotiating table.

 

While Washington might still achieve its goals in Iran, analysts say Tehran still holds many of the cards -- including its control over the Strait of Hormuz -- and may be able to resist U.S. demands.

 

Iran's ability to navigate U.S. sanctions is mirrored elsewhere around the world. Washington has turned to sanctions more than ever in recent years to heap pressure on its adversaries, with annual new listings jumping to over 3,000 in 2024 from 880 in 2017, the U.S. Treasury said.

 

Typically, those sanctions aim to cut off targets from the U.S. financial system, turning them into economic pariahs and threatening companies that dare to trade with them.

 

Yet North Korea continues to develop its nuclear program, and the regime is wealthier than ever. Russia's economy has suffered greatly since the events in Ukraine, but Russian President Vladimir Putin still pursues the conflict. In Venezuela, Nicolas Maduro survived sanctions for a decade and was only removed when U.S. forces physically dragged him from power.

 

Myanmar, another sanctioned nation, is still run by a military junta. Cuba's government is hanging on despite sanctions, though it has shown willingness to negotiate with Washington as foreign businesses flee.

 

Everyday citizens have borne most of the brunt of sanctions in these countries.

 

The most effective actions are aggressive and targeted, with defined timelines, Treasury Secretary Scott Bessent said in a May speech.

 

"We are reviewing outdated and obsolete designations," he said. "Sanctions should not linger so long that their intended effects create unintended consequences."

 

Other supporters of sanctions say they are just one tool available to the U.S. government, alongside diplomatic and military pressure.

 

But critics of the latest Iran deal, including many hawkish Republicans, say Tehran is getting too many concessions from the U.S. -- including temporary waivers on sanctions to let it sell more oil -- without achieving some war aims.

 

For some former U.S. officials and economic experts, Washington's failure to change regimes' behavior in places such as Iran lies in execution, not the sanctions themselves.

 

With Iran, "the sanctions themselves were not soft," said Avi Vishnevitz, a senior research fellow at the Center for Research of Terror Financing, a U.S.-based think tank. "What proved too soft was their implementation and their enforcement."

 

Iran, Russia and North Korea have all built elaborate apparatuses to skirt financial blockades. They use shell companies and middlemen in China, the United Arab Emirates and Turkey to continue exporting and importing essential goods for their economies, Treasury officials said.

 

North Korea steals crypto to generate funds for the regime, and deploys its own bankers globally to launder ill-gotten gains, U.S. officials say.

 

The country made more than $6 billion in recent years from stealing cryptocurrencies, according to analytics firm Chainalysis, helping transform Pyongyang into a 21st-century city with electric vehicles and a construction boom.

 

Beijing's financial system and its currency, the yuan, also have become central to efforts by Iran and Russia to evade U.S. sanctions. China is Iran's biggest oil client, and Chinese banks are crucial in moving proceeds from the sales to Iranian front companies to buy goods and services in China, Western officials say.

 

But Western countries have been hesitant to punish China since doing so could disrupt important trade with China and infuriate Beijing.

 

While sanctions on Russian crude have been expanded under the Trump administration, the war with Iran and the subsequent increase in oil prices forced Trump to pull them back since March. Economic analysts say those measures provided an additional $2.4 billion for Russia in May alone.

 

To be sure, the U.K. government estimates global sanctions have deprived Russia of at least $450 billion. Its economy is expected to grow a modest 1% this year, and domestic pressure on Putin appears to be growing.

 

But Russia has found workarounds, in particular through undeclared trade that moves through Armenia, Azerbaijan and Kazakhstan to help feed the country's military industry and bring in iPhones, Mercedes cars and luxury goods.

 

Sanctions haven't always failed to achieve their goals. In the 1980s, measures including a U.S. ban on investments and loans to the white-minority government in South Africa hurt the regime and helped force an end to apartheid.

 

Obama administration penalties on Iran's banking sector helped force its leadership to negotiate a nuclear deal that was later scrapped by the first Trump administration. Since then, Iran has created a system of oil sales to China that has helped blunt U.S. sanctions, according to researchers.

 

Max Meizlish, a former sanctions enforcement officer in the U.S. Treasury, said he fears that because regimes are successfully evading sanctions, people will increasingly view them as impotent.

 

"That's just the wrong lesson to learn," he said. "The tool itself is just a tool. You wouldn't say that a gun just doesn't work; you would ask about how you're actually using it."” [1]

 

1. Adversaries Weaken Power of Sanctions. Jones, Rory; Kowsmann, Patricia; Grove, Thomas.  Wall Street Journal, Eastern edition; New York, N.Y.. 22 June 2026: A1.