Only once in a very long while, the stars may align for scholars of things long gone to have their works taken up and eagerly consumed by the public right after their publication. In that regard, the timing could not be more fortunate for Nicholas Mulder, assistant professor of modern European history at Cornell University, and author of ‘The Economic Weapon: The Rise of Sanctions as a Tool of Modern War’, published by Yale University Press in January 2022, which explores the genesis of economic sanctions as an alternative to war in the interwar period in the early twentieth century after the creation of the League of Nations.
Mulder’s historical investigation is highly relevant to our times because, at the dawn of the Russia-Ukraine war, Russia became the most sanctioned country on earth as Western powers scrambled to confront it by doing everything they could short of direct military engagement – which, for the Western block, primarily translated into resorting to pervasive economic sanctions. The move has so far helped them save face and inflict pain. But what’s exactly its ultimate goals? Would it be effective in materializing those goals? What about its unintended consequences? If history is any indication, the answers to such questions are far more complicated than what is often proclaimed, and there are other factors at play when it comes to contemporary uses of sanctions, according to Mulder.
The US, in particular, is an interesting case in point. “It is a historical irony that the state that between the world wars most fervently opposed economic sanctions has been their most avid user over the last seven decades,” says Mulder in his book. Explaining that in an exclusive interview with Iran Daily, Mulder, a regular contributor to prestigious journals such as Foreign Policy and The Nation, argues that it’s not just about the effectiveness of sanctions. The fact that the US can use the economic weapon without much of a serious consequence for its own economy encourages American statesmen to apply it for their “domestic political benefits” without much regard for “its ultimate success in achieving its external goal,” which often has been disappointing.
Moreover, it is far more difficult to lift sanctions (that is, in return for compliance) than to impose them, which essentially questions the credibility of sanctions “as a goal-oriented coercive strategy,” says Mulder, adding that “the US domestic politics is a real constraint on more effective sanctions use.” In the long run, therefore, the American way of sanctioning may prove utterly counterproductive by turning a potent tool of international politics into an obsolete one, especially given the rise of new economic powerhouses across the globe – most notably China. This, in itself, may curiously be of much interest to Mulder, who, on the sidelines of an interview with The Wire China in 2021, had said that his personal hero were the Byzantines, who played a bad geopolitical hand well for over a millennium.”
You observe that in the interwar period, “the economic weapon” was created to serve as “a form of deterrence,” the threat of which would hopefully impose peace on “unruly” or “predatory” nations, in the words of French cabinet minister Étienne Clémentel in 1917. The common rule of mafia games, if you will, about a threat of that kind is that once it’s implemented, it should work or its credibility would vanish into thin air. And over decades, there have been many instances of it being implemented with not so much avail. Curiously, however, its credibility is still, and has always remained, there, even if marginally tainted. Why is that?
Credibility is always in the eyes of the beholder. One of the common issues in implementing sanctions is that they require political support to be imposed. As Clausewitz observed, on every battlefield there is friction, and this is no different on the economic battlefield in the realm of sanctions. The prevalence of these obstacles often leads to complaints by sanctionists that the measures taken are not sufficient, incomplete, or otherwise undermined by the resistance of vested interests. To this group of advocates of sanctions, failure is a sign of insufficient resolve to persist in sanctions, not a demonstration that there might be a flaw in the tool itself. A sufficient political commitment to any policy can be used for quite a while to compensate for lack of credibility in actual outcomes – and the same is true for austerity economics, which has failed to create economic stability more often than not, but which continues to be prescribed as a cure for crises.
Your account of Woodrow Wilson’s position toward imperial Germany, where he “refused to negotiate with any German government before the Kaiser abdicated,” is perhaps the earliest modern instance of tying economic sanction to regime change. In more recent times, the US government has taken the same stance, whether implied or expressly stated, vis-à-vis many countries, including Iraq (under Saddam), Cuba, North Korea, Venezuela, and Iran. If you agree with those who argue that the move most often doesn’t seem to work toward that end, then, why is the US insistent on doing it?
It’s clear that regime change is one of the most difficult goals that one can try to achieve using sanctions. Yet the use of sanctions for such purposes by the United States can be explained by factors other than efficacy. For one thing, the United States is in a relatively unique position where it controls a currency used in a majority of transactions in world trade but often does not have direct commercial exposure to other countries’ economies, or very little. This allows the United States to use economic sanctions with very little negative effects for its own economy. The fact that the policy’s political results are disappointing matters less here than the ability to show that some policy is being used against perceived US opponents: It has domestic political benefits to do so and carries little to no economic costs, so the policy is used regardless of its ultimate success in achieving its external goal.
The economic sanctions were meant to be imposed by the international community on “rogue nations” (in contemporary terminology) as a disciplinary measure. After the collapse of the Soviet Union, the US took the lead, using its economic, intelligence, and military might to impose sanctions, whether unilaterally or otherwise, which effectively undermined international mechanisms set up to apply and monitor them. Some argue, however, that the rather rapid rise of new powers on the global stage (most notably China, but also others) is increasingly circumscribing the effectiveness of the US-led sanctions, perhaps dooming them as an obsolete (or, at least, much less effective) weapon. What’s your take on that?
The rise of China is a very interesting phenomenon for the development of sanctions. On the one hand, the PRC is clearly beginning to experiment with the use of economic coercion against countries such as Australia and Lithuania. On the other hand, China is clearly trying to discredit US sanctions as illegitimate and is using its own commercial relations with Eurasian, African and Latin American states to try to create what one might call sanctions-free zones. This desire is further strengthened by the great Chinese exposure to USD asset seizures and sanctions on USD-financed banks.
In the short term there is relatively little that China can do to protect itself against this direct pressure from the US, and its banks and firms have been relatively cautious in trading with Russia. But in the medium to long term it is successfully using its large commercial heft to become the buyer of last resort for other countries under US sanctions. This has financial benefits (the goods are cheaper because of sanctions discounts) but also allows China to reduce the force of US sanctions by providing a big destination for trade diversion. These changes will take time, but I think that the trend (also displayed by the Chinese role in buying much of Iran’s oil exports in the last decade of sanctions) is clear. I recently talked more about China and sanctions for The Wire China.
You argue that the sanctions are “philosophically appealing” to liberals because of “their reliance on a homo-economicus rationale.” In many instances, however, the actual application or threat of international sanctions have worked to further mobilize a people who sought to become “blockade resilient.” That reminds me of the Ultimatum Game, first developed by Nobel laureate John Harsanyi in 1961: In many of its experimental runs across cultures, most people decided that they would only accept a fair offer even if meant losing a material gain, which is contrary to the simplified (or overly abstracted) notion of homo-economicus. Or simply put, the underlying rationale of sanctions doesn’t stand critical experimental examination. Don’t you think that for sanctions to work, they actually need to incorporate an element of fairness?
Certainly one kind of fairness that is essential to giving sanctions a chance of working is the basic expectation that complying with the sanctioner’s demand should result in sanctions lifting. But here the importance of domestic politics that I mentioned earlier returns with a vengeance. For it is far more difficult to lift sanctions than to impose sanctions against countries that are considered illegitimate, irrational or evil. Yet to be able to guarantee any credibility in sanctions as a goal-oriented coercive strategy, credible ability to lift in return for compliance is key. This seems to me a great problem for the US in the renegotiation of the new US-Iran nuclear deal. Iran has shown it can comply with the terms, but can the US hold its end of the bargain? The US domestic politics is a real constraint on more effective sanctions use.
The last question, almost inevitable on my part as an Iranian, is about the former US president Trump’s withdrawal from the 2015 Nuclear Deal and reimposing sanctions on Iran: Do you think that the move delegitimized economic sanction as an alternative to war?
In short, yes. Let me quote from an essay I wrote in September 2021: “Trump’s actions have rendered Biden’s project of diplomatic restoration significantly more difficult. By aggressively pursuing national self-interest in defiance of existing rules, the Trump administration forfeited much of what remained of US credibility. Its repudiation of the JCPOA will have consequences far beyond the Middle East, weakening the US bargaining position in other negotiations involving the option of sanctions relief, including with North Korea, Venezuela, Russia, and China. Even if Biden restores the agreements broken by his predecessor and lifts all of Trump’s sanctions (a scenario that unfortunately seems less and less likely), he will still have to convince foreign governments that his domestic opponents will not re-impose these measures if they return to office. Given the political situation in Washington, will a future administration be able to make believable promises? Conversely, how can any foreign government really be sure that it will permanently enjoy sanctions relief by acceding to American demands? This credibility problem will likely be a lasting legacy of the Trump years for US sanctions policy.”