From the bookshelf: ‘The economic weapon: the rise of sanctions as a tool of modern war’
12 Aug 2022|

The war in Ukraine has put economic sanctions in the global spotlight. The West’s sanctions on Russia are perhaps the most comprehensive ever imposed, limiting trade and investment, restricting energy imports from Russia, closing Western airspace to Russian flights, and freezing more than US$300 billion of central bank reserves and the assets of Russian oligarchs. Companies and investors have withdrawn from Russia in droves.

Russia has responded in kind, weaponising its energy exports, closing its airspace to flights from countries imposing sanctions, and blocking shipping in the Black Sea.

The economic repercussions have been felt around the world. The sanctions and countersanctions have caused oil and gas prices to soar, stoking inflation and presaging an energy crisis later in the year when the northern hemisphere turns up the heating. In the European Union, inflation is already over 9%, with many countries planning to restrict energy use.

Russia’s blockade in the Black Sea has restricted Ukraine’s grain exports, pushing up global prices. The implications for grain-importing economies in Africa and Asia are particularly dire. Tentative steps have been taken to ease the blockade, but a global food crisis looks imminent.

The experience thus far raises questions about the effectiveness of sanctions. In Russia, the general population has taken a significant hit, while the impact on elites is less clear. Some outcomes were unexpected—for example, Russia’s reaping of the rewards of high energy prices which have left poor countries reeling.

Will the sanctions force Moscow to back down? The West claims that they are having the desired effect, limiting Russia’s ability to wage an extended war. Russia claims that the West is committing economic suicide.

In The economic weapon, Nicholas Mulder, an assistant professor of European history at Cornell University, reviews the history of economic sanctions. Mulder traces the first use of sanctions back to the Peloponnesian War, when Athens in 432 BC imposed a commercial ban on merchants from Greece. In the 18th and 19th centuries, the use of blockades, embargos and sieges as tools of war gradually expanded.

However, it was only in the globalising world of the 20th century that sanctions moved to centre stage. According to Mulder, during World War I, blockades caused more deaths than other anti-civilian weapons combined, although due to their indirect nature they were ‘difficult to render visible or condemn’.

For centuries, sanctions were used mainly as a tool of war, but after World War I they were also viewed as a tool for peace. At the Paris peace talks in 1919, US President Woodrow Wilson rather optimistically dubbed sanctions ‘something more tremendous than war’ that would ultimately render war unnecessary.

The League of Nations, although generally considered ineffective, provided a mechanism for imposing sanctions to prevent war. Mulder describes several instances in the interwar period when the risk of sanctions dissuaded countries from using force.

Ultimately, however, the threat of sanctions was ineffective against major powers and insufficient to prevent another world war. When Fascist Italy invaded Ethiopia in 1935, three-quarters of the world’s states severed most of their commerce with Italy. However, Italy had prepared to withstand shortages, and the sanctions were ineffective.

Mulder reminds us that the risk of sanctions can encourage nationalist powers to build up their self-reliance. In the 1930s, Nazi Germany implemented a nationwide plan to achieve ‘blockade-resilience’, reducing its reliance on raw materials and minimising its foreign exchange exposure, while Japan saw territorial expansion as a means towards autarky. There are clear parallels with President Vladimir Putin’s Russia, which built up its foreign reserves and firmed up its position as an essential supplier of natural gas prior to attacking Ukraine.

Mulder’s focus on the first half of the last century is well justified. It would nonetheless have been useful to include a chapter on more recent sanctions, including those on the Soviet Union, China, North Korea and Iran.

Ironically, as the use of sanctions has surged, their chances of success have plummeted. In the 20th century, only one instance in three of using sanctions was considered ‘at least partially successful’. More recently the success rate has dropped to 20%.

The threat of sanctions, Mulder notes, is more potent as a deterrent than the imposition of sanctions once war has broken out. Not surprisingly, sanctions are more effective against small states than against large ones. These conclusions don’t bode well for the measures taken against Russia.

Mulder concludes with an important chapter on the role of positive sanctions in keeping the peace. During World War II, the American Lend-Lease program provided financial aid as an incentive to oppose the Axis powers.

Mulder’s timely book contains important lessons for decision-makers, not least those dealing with sanctions related to geopolitical hotspots.