Sanctions Unmasked: The High Cost of Economic Coercion

Sanctions are often portrayed as precision tool of modern diplomacy that is strategic, targeted, and non-violent which helps in compelling rogue regimes into compliance without the costs of war. But in practice, sanctions have proven to be blunt instruments with unpredictable trajectories and collateral damage that often outweigh their gains.

According to research, the effectiveness of sanctions is below 10%. Even by more generous standards that include partial concessions or negotiated settlements, the success rate rises to just about 35%. This sobering data calls into question the faith that Western powers, particularly the United States and European Union, have placed in sanctions as a dominant tool of economic statecraft.

BARRIERS AND GLOBAL LOOPHOLES

One of the major flaws in sanctions regimes is the assumption that trade restrictions can be airtight. The Iranian case says otherwise. Despite decades of sanctions, Iranians continue to access Western products through intermediaries in countries like Turkey and the Gulf. Globalization and supply chain complexity have made it easy to reroute goods and services, often with just enough legal ambiguity to evade regulatory scrutiny.

This dynamic is particularly evident in the case of Russia, which has faced unprecedented sanctions following its full-scale invasion of Ukraine in 2022. These sanctions did cause notable disruptions including inflation, labour shortages, and currency devaluation but their broader strategic impact has been minimum. In fact, in April 2024, the International Monetary Fund projected that Russia’s economy would outpace all advanced economies, including the United States, in terms of growth that year.

This is mainly possible because of the Enforcement gaps. Major global players such as China, India, and many Global South countries have refused to participate in the Western sanction regime. This has enabled Russia to maintain critical economic activities through transshipment, a method by which goods are rerouted through politically sympathetic or economically opportunistic nations such as Armenia, Uzbekistan, China, and Turkey. A 2023 report by the Silverado Policy Accelerator showed that these countries increased the transshipment of goods made by multinational firms that had ostensibly exited the Russian market.

Further insulating Russia is its internal resilience. With vast natural resources and a large, diversified economy, Russia has ramped up domestic production in agriculture and manufacturing. Its energy exports remain a critical lifeline. China and India have increased purchases, and despite public condemnations, EU countries still rely on Russian gas. In a startling turn, even after a pipeline agreement through Ukraine ended in January 2025, EU gas imports from Russia hit record levels.

THE MYANMAR PARALLEL

The case of Myanmar reveals similar flaws in sanctions strategy. Following the 2021 military coup, Western powers imposed targeted sanctions on military-linked businesses, including Myanmar Gem Enterprise. While these actions sought to cripple the junta’s financial base, they failed to account for the informal, opaque nature of industries like jade mining. This resulted in stable junta revenue which deepening misery for Myanmar’s civilian population.

Even as Western corporations exited Myanmar under pressure from governments and activists, their departure created power vacuums filled by Asian partners notably from China, India, and Southeast Asia. Border trade remains porous, and foreign firms often delay actual withdrawal despite public announcements, undermining the symbolic and material power of sanctions.

A study conducted in 2024 by Anna Grosman and her colleagues highlights the dilemma multinational companies face when operating in sanctioned environments. Formal pressures, such as penalties from home governments or exit barriers imposed by host regimes intersect with informal activism, creating a complex matrix of incentives. The choice to stay or leave becomes less about ethics and more about financial loss minimization and political risk calculation.

BLOWBACK AND HUMAN COSTS

Sanctions are often lauded as "non-lethal" policy instruments, but the reality is far grimmer. In countries like Iraq (during 1990s), Afghanistan Yemen, Venezuela sanctions have triggered inflation, product shortages, unemployment, and power outages, etc. Such situations often encourage people to choose the dangerous path that leads them into terrorism, black market operations, radicalism or extremism just to afford basic necessities like food or medicine. The harsh outcomes of these sanctions are not borne by authorities or elites but by ordinary people like you and me. If we look at the current situation in Myanmar, the currency has collapsed, imported medicines and fuel are scarce, and Western banking sanctions are only deepening the suffering of an already traumatized population.

Meanwhile, in Russia, sanctions have inadvertently accelerated the country’s efforts toward autarky and strengthened its alliances with non-Western powers. Rather than isolating Moscow, sanctions have nudged it closer to Beijing and New Delhi, an outcome that may ultimately weaken Western influence and embolden sanctioned regimes globally.

RETHINKING ECONOMIC STATECRAFT

Sanctions can work, but only under very specific conditions including multilateral coordination, narrow and clear objectives, a vulnerable target, and an off-ramp for compliance. Without these, there is a low possibility of sanctions fulfilling its cause. Moreover, the overuse of sanctions risks eroding the dominance of Western economic tools like the U.S. dollar, SWIFT banking network, and multinational corporations. Already, efforts at de-dollarization and alternative financial systems are gaining traction among sanctioned nations and their trading partners.

If sanctions continue to function as the primary tool of economic coercion, they must be matched with strategies for humanitarian relief, robust diplomacy, and post-conflict engagement. Governments and businesses, too, bear responsibility, not only to act ethically in sanctioned spaces but also to anticipate and mitigate the fallout that their withdrawal or continued presence can create. Sanctions are not surgical. They are slow, broad, and often indiscriminate. In today’s tangled global economy, their unintended consequences may do more harm than the problems they intend to fix.

CONCLUSION

Sanctions are often wielded with moral certainty, presented as the civilised world's response to authoritarianism, aggression, and injustice. But in reality, they frequently resemble a blunt hammer striking a fragile surface i.e., loud, forceful, but often misdirected and destructive. The assumption that economic pain will translate into political obedience is not only simplistic but dangerously naive in an increasingly multipolar world.

The cases of Russia and Myanmar show us that sanctions are not neutral tools but political gambits at a cost of ordinary human lives as collateral damage. They punish populations more than regimes, destabilize economies without necessarily reshaping behaviour, and often create power vacuums that opportunistic actors are quick to fill. In the process, they also undermine the legitimacy of the very liberal order they are meant to uphold.

It is time for Western policymakers to confront an uncomfortable truth which is the sanctions are not working the way they are supposed to and in many cases, they are making things worse. If economic statecraft is to retain credibility, it must evolve beyond punitive instincts and toward more strategic, coordinated, and human-centered approaches. Otherwise, sanctions will remain not instruments of principled diplomacy, but symbols of geopolitical frustration and declining leverage.