Sanctions
Economic warfare has become the default tool of statecraft. How it works, when it succeeds and fails, and how the world is adapting to live around it.
(two-thirds aimed at particular countries or regions, the rest at conduct such as terrorism)
(about 5,800 entries in 2014; about 19,400 in September 2026)
(54 countries, 27% of all; in the 1960s, 4% of countries)
A note on framing. Sanctions have moved from a peripheral foreign-policy tool to the default Western response to nearly any geopolitical confrontation short of war. The result is a system that touches the lives of hundreds of millions of people, reshapes how international finance operates, and produces effects, intended and otherwise, that nobody fully tracks. This page walks through the mechanics, the record on when sanctions work, and the wider consequences of using them at today's scale.
What sanctions are
"Sanctions" is a single word covering several quite different mechanisms, each with its own purpose and weak points.
Comprehensive sanctions. An entire country is cut off from a particular financial system or trade. Examples: Cuba (US embargo, since 1960), North Korea (UN Security Council, layered programs since 2006), Iran (US programs, plus UN sanctions restored in September 2025 by the nuclear deal's "snapback"), Russia (post-2022 EU and US programs covering broad sectors). Syria was another until 2025, when the United States and the EU lifted their broad sanctions after Bashar al-Assad's fall. These are the bluntest instrument and produce the largest humanitarian effects alongside the geopolitical signal.
Sectoral sanctions. Specific industries, exports, or imports are restricted while others are allowed. Russian oil price caps, technology export controls on Chinese chip-making, financial-services restrictions on Iran's banking sector. These are intended to target leverage points without collapsing the entire economy. They work better when the targeted sector has limited substitutes and worse when alternatives exist or develop.
Targeted "smart" sanctions. Specific individuals, entities, or vessels are designated. Their assets are frozen in jurisdictions cooperating with the sanctioning state, and persons in those jurisdictions are prohibited from doing business with them. These are designed to minimize harm to ordinary populations while creating personal cost for decision-makers. Their effectiveness depends heavily on whether the designated person actually has assets within reach of the sanctioning state.
Secondary sanctions. Non-US persons and entities face penalties for doing business with sanctioned parties, even if no US connection exists in the underlying transaction. The threat is exclusion from the US financial system, which for most large banks is unacceptable. Secondary sanctions, and US jurisdiction over dollar payments cleared through US banks, are how the dollar's role as the global reserve currency translates into US extraterritorial reach. That jurisdiction is why a French bank paid $8.9 billion in 2014 over dollar transactions between non-US parties. The newest variant is the secondary tariff. Washington charged an extra 25% tariff on Indian goods over Russian oil purchases until February 2026, and a law signed that September provides for tariffs of up to 100% on goods from the five largest buyers of Russian oil and gas, which the president can waive.
Export controls. Often grouped with sanctions but technically distinct. Specific products or technologies (advanced chips, dual-use components, particular software) cannot be exported to designated end-users. The US chip export controls on China since 2022 are the most consequential current example. These are highly targeted, technically complex, and depend on enforcement at the point of export and in the supply chain. Since January 2026 the US has reviewed licenses for chips up to Nvidia's H200 case by case, though Nvidia says Beijing has restricted the sales. China uses the tool too: its April 2025 rare-earth controls remain in force, while wider October 2025 ones are suspended under a truce that US Treasury Secretary Scott Bessent says runs to January 10, 2027.
When sanctions work
The empirical record on sanctions effectiveness is one of the most carefully studied questions in international relations. The most-cited estimate - the Hufbauer-Schott-Elliott dataset (Peterson Institute) - puts partial-or-better success at roughly 34% of historical sanctions episodes. Robert Pape's reanalysis of the same dataset argued the true rate was closer to 5% once one corrects for cases where force or other factors did the actual work. A fair summary is "well under half, with the exact figure contested by reasonable people."
What predicts success, when sanctions do work? Five conditions appear most often in the empirical literature. The target depends on the sanctioning country economically; the demanded change is modest rather than regime-existential; multilateral support is broad rather than unilateral; the sanctions are imposed quickly rather than telegraphed slowly; and the target believes the sanctioning country will sustain the pressure. Conversely, sanctions tend to fail when the demanded change threatens the regime's survival, when the targeted economy can find alternatives or substitutes, when sanctions are unilateral and the rest of the world keeps trading, or when the target government can blame foreign powers for domestic hardship.
The most cited successes - South Africa under apartheid, Iran's 2015 nuclear deal - share several of these conditions. Even the South Africa case is contested: economists like Philip Levy have argued the sanctions effect was overstated and that internal political dynamics, capital flight, and the end of the Cold War mattered more than the formal sanctions themselves. The Iran deal did not last: the United States left it in 2018. The most cited failures - Cuba, North Korea, Venezuela - violate most of the success conditions; Nicolás Maduro outlasted years of US sanctions until US forces captured him in January 2026, after which Washington eased them by license. The Russia case since 2022 is contested. The sanctions have produced major economic costs and constrained some Russian capabilities (especially advanced microelectronics), and growth slowed to 1% in 2025 and 0.6% in the first half of 2026. But Moscow has not abandoned its war aims, has built workarounds with willing partners, and its economy grew about 4% a year in 2023-24, better than 2022 Western forecasts predicted. Whether one calls that "working slowly," "partial success," or "failure of the primary objective" depends on what one believes was achievable in the first place.
Who pays the cost
Sanctions are sometimes pitched as costless to the sanctioning country and harmful only to the targeted government. The empirical picture is more complicated. Costs fall in several places.
Ordinary populations in the targeted country. Comprehensive sanctions tend to impose significant humanitarian costs on civilians, often more than on the elites the sanctions are meant to constrain. The 1990s Iraq sanctions are a frequently cited case. They sharply cut Iraq's imports of food and medicine while elite consumption was largely insulated, but the famous figure of 500,000 excess child deaths came from a 1999 survey that later surveys suggest Saddam Hussein's government manipulated. A 2025 cross-country study in The Lancet Global Health linked unilateral sanctions to about 564,000 deaths a year, similar to the toll of armed conflict, but found no clear effect from UN sanctions. The study was funded by the Center for Economic and Policy Research, a Washington think tank long critical of US sanctions. Iran's sanctions have produced documented effects on medicine availability, despite formal humanitarian exemptions. North Korea's sanctions interact with the government's policy choices in ways that make attribution difficult, but the food situation is dire. Targeted sanctions try to minimize this; the targeting is imperfect.
Sanctioning-country exporters and consumers. Sanctions and Russia's own gas cuts raised European energy prices substantially in 2022-23. Iran sanctions raised global oil prices repeatedly across two decades. Trade barriers reduce the variety and increase the prices of consumer goods in sanctioning countries by amounts that are hard to measure but consistently positive.
Third-country firms caught in the middle. European banks fined for technically violating US sanctions on transactions that did not involve US parties. Chinese firms cut off from Western technology. Indian refiners navigating contradictory pressures over Russian oil. Chinese, Turkish, Emirati, and Central Asian firms listed or pressured over re-exports to Russia. The list of third-party costs is long and growing.
The sanctioning country's own statecraft. Excessive use of sanctions creates incentives for targeted countries and unhappy third parties to develop workarounds: parallel payment systems, alternative reserve currencies, smuggling networks, financial intermediaries. The dollar's role as the lingua franca of international finance has been one of the largest sources of US power since 1945. Each round of expansive sanctions creates marginal pressure to find ways around it. Whether the long-run cost to dollar centrality is significant is contested - dollar dominance has been resilient so far - but the direction of the pressure is not.
Whichever institution physically holds the assets. This category is newer, and it has turned out to carry more weight than its size suggests. Of the Russian central bank reserves immobilized in 2022, more than half - on the order of €200 billion - sits at Euroclear, a securities depository in Belgium. When the European Commission proposed lending Ukraine roughly €140 billion against that balance, the resulting legal and retaliatory exposure did not fall on the European Union collectively. It fell on one depository and the small member state hosting it, which would face the counter-litigation - Russia's central bank duly sued Euroclear in a Moscow court - along with any seizure of Western assets still inside Russia. Belgium declined, and European leaders raised a €90 billion loan on the capital markets against the EU's own budget instead, while making the freeze open-ended. In May 2026 the Moscow court ordered Euroclear to pay about €200 billion; Euroclear contests the ruling.
The transferable lesson there is not really about Russia. When a coalition adopts a measure whose costs land on one member's balance sheet rather than on the group, that member acquires an effective veto, and what the coalition can actually do becomes constrained by where the financial plumbing happens to sit rather than by what the members agreed. It is a reliable place to look when a sanctions policy that everyone endorses somehow fails to happen.
The sanctions adaptation industry
One consequence of expanded sanctions is that an entire ecosystem has formed around helping countries and firms operate within or around them. Some of this is illegal evasion. Some of it is technically compliant but defeats the underlying intent. Some of it is fully compliant and represents sanctioning-country firms protecting themselves from secondary risk.
Russia's adaptation since 2022 has been the most studied case. Parallel imports through Central Asia and the Caucasus rose sharply. Shadow tanker fleets reflagged to lower-enforcement jurisdictions to move oil at prices above caps. Enforcement has chased them: by July 2026 the EU had blacklisted 692 tankers and frozen its price cap at $44.10 a barrel through 2027, and in October 2025 the United States sanctioned Rosneft and Lukoil, Russia's two largest oil companies. Currency swap lines and bilateral payment arrangements with India, China, and the Gulf substituted for some lost dollar access. The Russian economy contracted in 2022 but stabilized; defense-sector capacity was rebuilt within two years. None of this means sanctions had no effect; it means the effect was constrained by adaptation in ways the original architects sometimes underestimated.
Iran's longer adaptation history is instructive. Decades of sanctions produced a deeply opaque smuggling and front-company network, ties to non-Western economies, domestic substitution in some sectors, and a hardened political class that has built legitimacy partly on resilience to outside pressure. Sanctions have constrained Iranian capability; they have also produced an economy and political system shaped by the experience. Since the 2026 war with the United States and Israel, a US naval blockade has added force: Iran's oil loadings for export in August were more than 80% below a year earlier, according to Bloomberg. North Korea shows the same pattern. After Russia's 2024 veto ended the UN panel monitoring sanctions on North Korea, 11 countries formed their own team, which estimates that North Korean workers abroad earned the government $450-800 million in 2025; the analytics firm Chainalysis counts $2.02 billion in cryptocurrency stolen by North Korean hackers that year.
Compliance and screening services have become a substantial industry. Banks employ thousands of compliance officers focused on sanctions screening. Specialized firms like K2 Integrity, Kharon, and Castellum.AI provide data and monitoring services. The cost of compliance is substantial and is borne primarily by the sanctioning-country financial system, which is a transfer that rarely appears in the public accounting.
The paths from here
The future of sanctions as a tool depends on choices not yet made about how widely to use them, how to coordinate them, and how to respond to the adaptation they produce. In September 2026 the signals point both ways: new measures against Russia, relief for Syria and Venezuela.
Continued expansion
Sanctions remain the default Western response to geopolitical confrontation. The number of designated parties continues to grow. Compliance costs rise. Adaptation industries grow in parallel. The dollar remains central but with a slowly increasing parallel-payments fringe.
Strategic restraint
Recognition that excessive sanctions use erodes the underlying tool produces voluntary discipline. Sanctioning countries reserve the most aggressive measures for high-stakes cases. The number of designations grows more slowly. The signaling value of sanctions partially recovers.
Decoupling produces parallel financial systems
Sustained sanctions on Russia, China-related parties, and others accelerate the development of alternative payment rails (China's cross-border payment system, mBridge, bilateral arrangements). Sanctions efficacy declines as the share of global activity outside Western reach grows. The next decade is more multipolar in financial as well as geopolitical terms.
Multilateral coordination tightens
Western countries plus Japan, South Korea, and others coordinate more closely on sanctions design and enforcement. Third-country evasion becomes harder. Targeted governments face more uniform pressure. This is the optimistic-effectiveness path; it requires political alignment that has often been incomplete.
A major sanctions failure resets the tool
A high-profile failure - sanctions clearly not working in a major case, or producing a worse outcome than alternatives - triggers a wholesale reassessment. The tool is used more sparingly afterward. This has happened in earlier sanctions cycles and is not impossible again.
Where serious analysts disagree
Sanctions are a topic where careful researchers cluster in fairly clear positions, with named scholarship behind each.
Sanctions can be a powerful tool when designed and coordinated well
The empirical record shows enough success cases (South Africa, Iran 2015, Libya) and enough partial successes that sanctions remain a legitimate and useful instrument. Failure cases are usually traceable to specific design flaws (unilateral action, regime-existential demands, telegraphed pressure) rather than to inherent limits of the tool. A Kiel Institute estimate puts the cost at about a fifth of Iran's economy within three years of US sanctions on its banks in 2012 - before it signed the 2015 deal.
Held by: Daniel Drezner (Tufts), Juan Zarate (former US Treasury), parts of the policy community at the Center for Strategic and International Studies, RAND, and the Atlantic Council.
Sanctions are systematically over-credited and under-criticized
The same political class that demands sanctions rarely measures whether they achieved their stated goals. The humanitarian costs are routinely understated; the strategic costs to the imposing country are routinely ignored; the success cases are exceptional. Sanctions are popular because they substitute for the harder choices between diplomacy and force, not because they are effective.
Held by: Nicholas Mulder (Cornell, "The Economic Weapon"), Joy Gordon, Robert Pape (Chicago), and a strand of academic international-relations scholarship skeptical of the sanctions enthusiasm in policy circles. They point to mortality studies and to the difficulty of attributing the Russia outcome cleanly.
The dollar weaponization is eroding the underlying privilege
Each round of sanctions and asset freezes - especially the Russian central bank reserve freeze in 2022 - signals to other states that dollar reserves are not safe under unfavorable political circumstances. The pressure to develop alternatives is real and rising. Western financial dominance is durable but no longer unconditional.
Held by: Adam Tooze (Columbia), Zoltan Pozsar (formerly Credit Suisse), and parts of the macroeconomic community. In April 2023 Janet Yellen, then Treasury Secretary, said sanctions tied to the dollar could over time "undermine the hegemony of the dollar." Skeptics note that dollar dominance has so far been resilient.
Smart sanctions can largely solve the humanitarian problem
Modern targeted sanctions, when designed carefully with humanitarian carve-outs, can impose meaningful costs on regime elites without significantly harming ordinary populations. The Iran-related Magnitsky-style designations, the post-2014 Russia individual sanctions, and the targeted designations against Chinese officials over Xinjiang are reasonable examples. The harm-to-civilians problem is largely a problem of poor design.
Held by: parts of the human-rights community, Treasury sanctions staff, and academic researchers focused on targeted sanctions design. Critics reply that banks often shun whole countries rather than risk a violation, as in Afghanistan after 2021.
Sanctions are an avoidable substitute for harder political work
Both ends of the foreign-policy spectrum sometimes converge on the view that sanctions allow imposing countries to feel they are doing something while avoiding the harder work of either negotiation or military action. The result is that real conflicts are managed through partial economic pressure for years or decades, with poor outcomes. Better outcomes would require committing to either real engagement or real military choices, with sanctions playing a supporting role rather than the lead.
Held by: some realist international-relations scholars, a strand of conservative-isolationist thinking, parts of the progressive critique of liberal interventionism. Defenders reply that sanctions are often the only pressure short of force that allies will agree on.
What the available evidence supports: sanctions are a real tool with a measurable success rate, around 34% in the most-cited dataset and considerably lower in critical reanalyses. Their humanitarian costs are real and, by the newest cross-country estimate, large, though the best-known figure, 500,000 child deaths in 1990s Iraq, has not held up. Their cost to the imposer is also real; how much parallel financial systems have eroded the dollar so far is disputed. The open question is whether expanded use without matching restraint builds pressures that matter more in five to ten years than any single sanctions case.
What this means for you
If you follow geopolitics
When you see a sanctions package announced, the question to ask is whether the conditions for success in the empirical literature are present: economic dependence, modest and specific demands, multilateral support, sustained credibility. Most coverage focuses on the announcement and the named individuals; the conditions are more useful for predicting outcomes.
If you do international business
Sanctions compliance is now a substantial cost of operating across borders, even for companies with no obvious exposure. The penalties for getting it wrong (large fines, reputational damage, exclusion from markets) are out of proportion to the underlying transaction. Investing in proper sanctions screening is no longer optional for businesses of any meaningful size.
If you live in a sanctioned country or have family there
Humanitarian carve-outs exist on paper but in practice often fail because banks decline to process technically permitted transactions. Specialized channels (humanitarian-licensed banks, transfers run by aid groups) work better than general retail banking. The gap between policy intent and operational reality is wider than coverage usually conveys.
If you invest internationally
Sanctions risk is now a real factor in pricing assets in or with exposure to certain countries. Russia 2022 demonstrated how quickly previously normal investments can become unsalable. The pricing of similar risk in China-exposed assets is one of the more contested questions in markets in 2026.
If you are voting on foreign policy
Demanding sanctions is politically easy and often emotionally satisfying. Asking whether the proposed sanctions meet the conditions for success in the empirical literature, what humanitarian carve-outs they include, and what the projected strategic costs are - those are harder questions, and they are largely absent from electoral conversation.
