The Economic Weapon. The Rise of Sanctions as a Tool of Modern War

Can sanctions be an effective instrument to achieve peace? No, argues Nicholas Mulder, a historian of modern European history in The Economic Weapon (Yale University Press, 2022). In his book, published just before the Russian invasion of Ukraine, Mulder argues that economic sanctions after the First World War developed into “a form of economic war” and should never be imposed. He claims there are several reasons that new sanctions are more severe than previous ones and in some cases have even worse effects than war. Mulder’s focus on a historical narrative that equates all sanctions with war comes at the expense of the careful causal thinking that is dominating contemporary political science scholarship, and sanctions research in particular.

In his book, Mulder introduces several reasons for his claim that sanctions after the First World War were different than previous sanction efforts, while never settling on final ones. At different times, he proposes the new scale of multiple countries involved, a newly missing boundary between economics and politics, the adaptation of sanction policy in the image of the World War I blockade, or that sanctions are used in peacetime, as arguments for his claim. There are good reasons to contest any of these criteria. For example, even the first written account of sanctions by Athens against Megara in 432 BC was a peacetime sanction.

Still, vague criteria are not a fatal flaw in themselves. Issues arise when they are used to draw conclusions from a small number of cases and applied to sanctions in general. Unquestionably, a small number of sanctions has had devastating humanitarian effects – a well-established fact that, for example, recently led to the introduction of humanitarian carve-outs in UN sanction regimes.

But to extrapolate from this small number of cases and conclude that all sanctions equate to war is, at best, pointless and, at worst, dangerous policy advice that favours framing over evidence. The emphasis on framing a historical narrative leads Mulder to conclude that sanctions should never be used – despite not finding any evidence of humanitarian effects of sanctions of the interwar period and acknowledging that, during that time, sanction (threats) restrained border wars in the Balkans, significantly contributed to the peaceful settlement of the Mosul Dispute, and constrained the Mussolini regime to the extent that it was unable to wage another war for several years.

Discarding the pointless framing of all sanctions as warlike, we can take an unbiased view of the causal mechanisms for the effectiveness of sanctions, as established in political science. They are successful if they achieve their goals, constrain their targets or deter other potential offenders. Sanctions achieve their goal in about 33% of cases – a significant amount, considering that quite often sanction senders demand regime change, free elections, or the end of human rights abuses. Examples of successful sanctions include the JCPOA in 2015 or the overthrow of Yugoslavian president Milošević in 1998.

In the other two thirds of cases, sanctions are often able to constrain authoritarian leaders by limiting the resources they distribute among their supporters. Although imposed sanctions are rare, sanction threats are more common and achieve significant policy concessions in 54% of the cases. This is still an understatement of the effectiveness of sanctions because we only observe sanction threats that are made publicly. We can assume that economic pressure is used successfully much more frequently in private diplomatic meetings.

The third acknowledged way in which sanctions work is through deterrence. Mulder expects that the new scale of sanctions after 1945 would weaken liberal freedoms and cause frequent sanctions and humanitarian disasters. Instead, a world order governed by the universal norms of the United Nations led to unprecedented peace, large-scale alleviation of poverty (measured in % living below poverty line of 2.15$ a day), and liberal freedoms. Throughout its 80 years of existence, with close to 200 members, the UN used economic blockade only four times – against Rhodesia, Iraq, Yugoslavia, and North Korea. The large increase in the number of sanctions since the end of the second world war was mostly driven by targeted sanctions, designed to avert grave humanitarian effects.

What alternative to economic sanctions does Mulder propose? He suggests positive sanctions, that is, supporting countries financially. This is hardly a radical idea, considering that aid programmes have soared ever since the end of World War II. But sanctions are frequently used when economic engagement has failed. Take, for example, the Russian invasion of Ukraine in 2022. After Russia began wars in Georgia and Ukraine in 2008 and 2014, European countries continued to trade in natural resources that financed the Russian state and enriched Russian oligarchs.

Imagine an alternative reality in which European countries do not learn from this experience and react to the full-scale invasion in 2022 through positive sanctions alone. They would continue to send large amounts of money to Russia for years to come, while at the same time sending similar amounts of money and weapons to Ukraine. In the current war of attrition, this would cause a prolonged conflict, as both countries never run out of resources. Even worse, it seems naïve to assume that Russia would not use its significant leverage over European energy sources to force European countries to stop weapon deliveries and financial assistance to Ukraine. Neglecting economic sanctions could create a reality in which Western countries financially support the Kremlin while watching powerlessly how Ukraine is destroyed.

Nicholas Mulder uses a small number of sanctions with grave humanitarian effects to frame all sanctions as equal to war. In doing so, it becomes irrelevant to him that he does not find significant humanitarian effects of the sanctions of the interwar period and that they were, in fact, effective. Without offering a valuable alternative to sanctions when engagement has failed, the contribution of the book reduces to providing an interesting account of the adaptation of sanctions to a globalised world after the First World War – a stimulating exercise, but devoid of policy relevance.