Shooting blanks

The Economic Weapon: The Rise of Sanctions as a Tool of Modern War
By Nicholas Mulder
Yale University Press, $52, 448 pages

The world looks set for a new round of conflicts, and economic sanctions seems to be the weapon of choice for Western countries. This book is a timely look at the subject, and although it was written before the Russian invasion of Ukraine it is impossible to not make comparisons and find parallels. The Biden administration and its various supporters like to say that the sanctions it put in place were unprecedented and will ultimately be judged as successful. It is hard to accept either conclusion after reading what Mulder, a historian at Cornell University, has to say.

Sanctions have been around for as long as there has been international trade. They were used prominently in the lead-up to and during World War One. Far from being bloodless tools, sanctions were responsible for hundreds of thousands of deaths through starvation. Nevertheless, the idea was central to the operations of the League of Nations, the organisation created after the war, and was even written into the League’s constitution.

This extended to financial sanctions, a process which was helped by the dominance of the City of London, which acted as a clearing house for international trade. This role was eventually taken over by American banks, even though America was not a member of the League.

There was a theory that the threat of economic isolation could be enough to prevent aggressive actions or escalation, and there were some successes. But they were fairly small, such as resolution of the Yugoslav-Albanian crisis of 1921. On the other hand, there were spectacular failures. Attempts to punish and deter Japan after its invasion of China merely fed the country’s paranoia and sense of deprivation, a line that led directly to Pearl Harbor. A similar case can be made with the rise of Nazi Germany.

Sanctions can actually help a government, especially if it has control of the media, to rally the population behind it. Even more, a government that feels itself to be under attack may feel bound to undertake military action to secure needed resources. Pride is not an insignificant factor in the conduct of geopolitical affairs. The underlying assumption of sanctions, that countries and their leaders will act in their economic interests after doing rational cost-benefit analysis, may be fundamentally flawed to begin with.

With all this in mind, Mulder looks at the question of whether sanctions work. After much consideration he concludes that they nearly always fail to achieve their objectives. There may be some cases where they contribute but sorting out different factors is a difficult business, and specific conditions are required for even limited success.

Where does Russia and its autocratic leadership fit into this picture? It is difficult to see how the threat of sanctions, or their imposition, did anything to change Putin’s moves. Sanctions do not seem to have affected public support for Putin, although working out the attitudes of the Russian people is always a fraught exercise. Supporters of sanctions might argue that the effects will be felt in the long term but that is unlikely to be of much consolation to the Ukrainians. Is it possible to permanently cut a country the size of Russia out of the global map? It does not sound very likely.

Mulder does, however, have some suggestions for making sanctions more effective. A way forward might be to focus efforts on individuals, especially wealthy people with a reputation for corruption. These oligarchs, says Mulder, usually wield considerable clout with the leader, so if they believe that their own positions will be affected they will make their concerns known. A related avenue could be to direct sanctions towards the financial institutions that underpin economic activity. This strategy of hitting key people in their pocketbooks sounds more promising than broad-brush sanctions but it has been tried before and the results have been, at best, mixed. Does anyone really think that Putin cares if the super-boats of his mates are grabbed by Western authorities?

Why, then, are sanctions so popular with Western governments? The short answer seems to be that sanctions do not (or do not appear to) impose costs on them or their people. Essentially, politicians always like the idea of being seen to be doing something, even if it eventually turns out to be the wrong thing. And they will probably continue to do so, all evidence to the contrary.

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