Economic Sanctions: Disappointing Old Wine in New Bottles

Abstract

Economic sanctions are back and high on the policy agenda. They are used as ‘bloodless’ policy instruments that replace ‘hard’ wars against countries that need to alter their behaviour. Sanctions come in various types and shapes. They can be introduced both by international organisations and by individual countries. The rate of their success compared to their goals varies, as it may be difficult to agree on the measure of success. Moderate sanctions encounter greater success than total ones. Still, suggestions can be made for increasing the effectiveness of sanctions: the objectives of sanctions need to be clear; a target’s weaknesses need to be located; define the target’s capacities to absorb hits and to retaliate; sanctions need to be reviewed and fine-tuned; and there should be conditions for removing sanctions. The 2022 ‘total economic and financial war’ against Russia ends dollar-based globalisation. A new de-dollarised Bretton Woods version 3.0 financial system emerges as many of the world’s countries fear they may be subject to similar sanctions in the future. Sanctions may also be used as a handy tool to shift public attention away from much bigger national and structural problems which governments are not tackling decisively. Economic sanctions create immediate costs in both the target country and the sanctions-imposing countries. The same sanctions also create great new opportunities for innovations in the medium- and long-term which ought to be considered and turned into profits.

Keywords: sanctions, gas, Russia, dollar, de-globalisation, Bretton Woods, monetary system, rouble

JEL Classification: E42, F13, F19. F33, F42, F51, F59, N44