Economic Sanctions: Past, Present, and Future
Economic SanctionsPast, Present, and Future
We are living in a golden age of economic sanctions. As of this writing, the United States has imposed economic and financial sanctions on over 6,500 targets in at least 19 countries across 60 distinct sanctions programs, with more almost certainly on the way. The United Nations has also imposed sanctions on nearly 1,180 individuals and entities via 13 Security Council resolutions.1
Many other countries, including the European Union, Russia, and China, have also used or are testing economic sanctions in the geopolitical arena. The explosive popularity of sanctions, particularly smart sanctions that target specific individuals, entities, and transactions, has led analysts to dub them the new "Swiss army-knife" of foreign policy.2
But debate continues over their efficacy. Supporters are enthused at their alleged sophistication and targeted nature, while detractors criticize their impotency and warn of the dangers of overuse. At this watershed moment, reviewing some historical episodes of sanctions, some that date back centuries, can provide important lessons for both the present and future of sanctions.
Since antiquity, economic sanctions have been a tool of statecraft. While a comprehensive history of sanctions is beyond the scope of this paper, we consider some notable episodes of sanctions, such as during Napoleon's Continental System, British economic warfare against Germany during the Great War, and the recent US-EU sanctions program against Russia.
Comprehensive sanctions have seen mixed success since World War II and significant rethinking during the 1990s. This in turn paved the way for the proliferation of targeted sanctions programs post-9/11, with the United States at the forefront.
Recent research by the author suggests targeted sanctions concentrate economic harm on targets with limited collateral damage, but spillover remains, offering an opportunity for further refinement. Western policymakers must also recognize that the economic impact of sanctions is channeled through the target's dependence on Western financial and other services inputs; their usage must remain both ubiquitous and essential if sanctions are to remain potent.
As the way agents transact in the global economy continues to evolve, Western authorities must become data-driven, harness emerging capabilities (such as artificial intelligence and digital currencies), and avoid strategic overreach. [End Page 126]
Historical Episodes of Sanctions
Despite their recent popularity, the history of sanctions as a tool of statecraft dates to at least 432 BC, when Athens sanctioned the Spartan-allied city-state of Megara and banned its presence in the markets of the Athenian Empire.
Thucydides dismissed the Megarian Decree as merely a superficial casus bello and famously focused on Spartan fear of the rising power of Athens as the true underlying cause of the Peloponnesian War. But Athenian playwright Aristophanes depicted a starving Megarian bewailing the price of wheat in his city, suggesting the potency of weaponizing Athenian commercial dominance.3
Fast forwarding to the 19th century, we see Napoleon, militarily dominant on the European Continent but impotent against the Royal Navy, impose the Continental System, which embargoed British goods in 1806 to break the Perfidious Albion's tradedependent economy.
While the blockade did cause economic dislocation to Great Britain, the damage to continental Europe's economy, especially in the Low Countries and northern German cities, was greater. French officials struggled to prevent smuggling from Zeeland and Hamburg with Great Britain (with ultimately dire strategic consequences as we shall discuss later), even as France provided special dispensation to import cheaper British textiles to clothe the Grande Armée.4
During the same global conflict, the United States also attempted to sanction Great Britain with the Embargo Act of 1807 in retaliation for the forced impressment of American seamen by the Royal Navy. Like Napoleon's Continental System, the US embargo was more damaging to the sanctioning than the target economy. British merchants soon replaced lucrative American trade routes, which were only partially mitigated by widespread illegal American smuggling.5
Perhaps the closest historical counterpart to the current US sanctions regimes is the economic warfare conducted by Great Britain against Imperial Germany during the Great War. Economists describe the period from 1870 to 1914 as the first era of "globalization," with international goods and capital...
