Sanctions Do Not Grant Obedience, They Accelerate Decoupling

Economic sanctions have long been wielded as tools of statecraft to isolate rogue states, weaken their economies, and force obedience. Policymakers' and civil servants in charge of designing and implementing sactions often rely on a commonplace assumption borrowed from early scolarship on the topic. Namely, that they can degrade the target country’s economic position by restricting its access to global financial systems and critical markets. And, ultimately, pressures its leadership and fostering political change. And, while most of the ongoing policy and economic debates focus on sanction politics in the sanctioning countries, those in charge of sanction regimes know little of the effects on sanctioned countries.

Indeed, some of the most convincing original arguments on economic sanctions depend on an unwavering support for the free market. Thus, they are of minor relevance for civil servants and bureaucrats in charge of following policy directives. However, the latter must pay atttiont to the rarer efforts to investigate whether sanctions really work and what is their effect on the global economy.

The sanctions against Russia following the 2014 annexation of Crimea and subsequent full-scale invasion of Ukraine in 2022 represent one of the most aggressive modern applications of sanctions. However, despite the comprehensive nature of these measures, Russia has not suffered the expected economic collapse. But this is not the only reason to question the long-term effectiveness of economic sanctions as a geopolitical weapon. Rather, an array of recent studies shows that their design and administration has been having massive unintended consequences upon which many policymakers and academics have not yet reflected sufficiently. Namely, there is evidence of sanctions against Russia (and, partly, Iran and Venezuela) not just failing to elicit obedience. But rather accelerating the shift of global trade away from the Western “core” countries.

A New Perspective: Sanctions as Catalysts of Trade Reconfiguration

New findings show that, as it is known, sanctions do not necessarily cripple the target economies. Instead, they often redirect trade flows toward alternative partners. Rather than isolating Russia, sanctions have contributed to a reorientation of its trade away from Western economies. With “neutral” or “friendly” states such as China, India, or even Turkey reaping the benefits due to hard-to-close loopholes and almost-impossible enforcement.

This shift is not a mere survival strategy but part of an ongoing restructuring of the global economy. And there are signs that a parallel economic “core” may be forming, composed of countries that either resist or circumvent Western economic influence. In this framework, sanctioned nations do not necessarily fall into economic ruin but instead find new trading relationships that may eventually reduce future sanctions' ability to affect even 'easier' targets.

Decoupling and the Rise of a China-Centered Trade Network

While some sanctioned states do suffer economic decline, others maintain or even improve their position in global trade networks. The case of Russia illustrates how a global actor can leverage sanctions as currently designed to catalyse trade diversification. Rather than suffer its dependence on European markets, Russia deepened ties with alternative partners in ways sanction designers failed to predict and saction administrators still struggle to grasp. Particularly within the BRICS (Brazil, India, China, and South Africa) and the Eurasian Economic Union.

Sanction evasion though regional partners and alternative financial systems is not exclusive to Russia. Iran and Venezuela have similarly adjusted their trade patterns to mitigate sanctions’ effects. And the emergence of a 'non-Western' economic bloc could challenge the US’s and its allies’ capacity to regulate the global trade system. If decoupling continues, it may reshape the ranking or dominance of countries within global trade in a way reminiscent of a new Cold War — though now driven by economic interests rather than ideological conflicts.

Explaining the Limits of Economic Warfare to Sanction Administrators

The implications of these findings challenge the view of sanctions as a potentially ineffective, but overall “manageable” policy tool, which is still dominant amongst civil servants. Recent events suggest that while sanctions can create economic distress and serve as a deterrent, they may also backfire. Beyond jeopardizing the benefits of free trade, they can weaken the sanctioning countries' own geopolitical and economic leverage by favoring trade diversification and encouraging the development of parallel financial systems insulated from Western control. This little-known unintended consequence could diminish Western influence over global trade and financial markets in the long run.

For policymakers, economists, and voters these insights suggest a need for a more nuanced approach to economic sanctions. If the goal is to deter aggression and transgressions of the international rule-base order, reliance on broad-based economic penalties may be counterproductive. Instead, strategies that consider strategies that consider how trade connections between countries influence each other (so-called network effects), trade reconfiguration, and the adaptability of sanctioned economies may be necessary.

As the global economy evolves, so too must the tools of economic statecraft. If sanctions fail to achieve their intended goals, alternative strategies may be necessary. For instance, direct diplomatic engagement, sector-specific restrictions, or incentives for compliance. The West's ability to adapt remains uncertain. But one thing is clear: economic pressure alone is unlikely to maintain the existing global economic order indefinitely.