Economic Sanctions and their Consequences for International Security and the Global Economy

Economic sanctions have become an off-the-shelf tool of diplomacy. With growing tensions in international politics, we have witnessed and should expect more weaponization of economic interdependence (Farrell and Newman 2019). Two concurrent circumstances warrant further investigation. Firstly, the determination of sanctions' impact and efficacy remains an open research agenda, which, long confined to North American circles, is of increasing significance to Europe. Now more than ever, sanctions are a foreign policy tool in flux. Secondly, Russia’s recent invasion of Ukraine has brought about what some have labelled a ‘sanctions revolution’ in Europe (Miadzvetskaya and Challet 2022), as it unleashed a sanctions package of unprecedented severity. While previous generations of scholarship have focused heavily on sanctions success, defined from the perspective of sender states as an attempt to induce desired policy changes, exactly how sanctions bring about other intended and unintended consequences remains to be further investigated. Pursuing this direction of sanctions research is important for at least three reasons. First, while we have seen some recent advancements in investigating the unintended consequences of economic sanctions (e.g. income inequalities, human rights violations, and degradation of democratic institutions), the field still awaits a broader investigation of the different positive and negative externalities. For instance, we have only a limited understanding of how companies and targeted individuals absorb, react to, and even evade economic restrictions. Second, the different consequences are often studied in silos. As such, we lack a good understanding of the policy trade-offs between desired and undesired externalities. Finally, the field is in need of a more systematic and long-term perspective. For example, the imposition of targeted and potent financial sanctions appears to yield more success in the short run (Drezner 2022). But it also raises the question of whether it would incentivize sender states to demand more policy concessions and whether target states or other third-party states should hone their sanctions evasion techniques (e.g. growing reliance on cryptocurrencies) in the future. At the systemic level, sanctions could also accelerate financial or trade diversion, resulting in a less integrated global economy and decreased potency of future sanctions. Moreover, the recent Russian invasion of Ukraine signifies a turning point, as it unleashed several waves of sanctions of unusual stringency adopted in close succession. These recent developments emphasize the versatile character of sanctions as a foreign policy tool. However, they also bear new questions for research. With the growing imposition of economic sanctions, state and private actors seeing themselves as potential targets are taking dedicated measures to sanction-proof themselves. This trend can lead to more but less effective sanctions, resulting in more unintended consequences, a less integrated global economy, more human suffering and a potentially higher risk of military conflict. As some recent historical research highlights, the current era and recent development share many similarities with the interwar period, when economic sanctions accelerated and widened a catastrophic outcome (Mulder 2022). This Workshop will provide a forum for scholarly discussion of this incipient and increasingly policy-relevant research agenda among European scholars.