ECONOMIC LENS
Sanctions: An instrument of foreign policy or a mechanism for redistributing global power
By Mohammadreza Hosseini Aliabad
Researcher in int’l economics
In the contemporary world, economic sanctions are no longer merely an instrument for exerting pressure on governments or compelling them to alter their political behavior. Rather, they have become one of the defining components of the global architecture of power—an instrument situated at the intersection of economics, politics, and international security, reshaping the traditional boundaries between military confrontation and economic competition. At a time when economic interdependence, cross-border financial networks, and global supply chains have become undeniable features of the international system, control over the flows of capital, technology, trade, and market access can exert an influence on international relations comparable to that of military power.
From the perspective of international political economy, economic sanctions cannot be understood merely as reactions to the conduct of a particular state. In many instances, they reflect structural inequalities in the distribution of global economic power. Countries occupying dominant positions within the international financial system, payment networks, capital markets, and technological infrastructure possess greater capacity to transform other countries’ economic dependencies into instruments of political pressure. In other words, the power to impose sanctions derives not simply from political decisions, but also from states’ structural positions within the global economy.
Within this framework, sanctions perform two functions simultaneously: first, exerting pressure to alter the political calculations and behavior of the targeted government; and second, constraining that country’s economic and strategic capabilities in regional and international affairs. This dual function raises a fundamental question: Is the ultimate objective of sanctions merely to secure political concessions, or, in certain cases, is the weakening of a rival’s economic position and the reshaping of the balance of power also part of the underlying agenda?
The experience of the international system demonstrates a significant gap between the declared objectives of sanctions and their actual consequences. Comprehensive sanctions can disrupt not only trade and investment but also access to technology, financial resources, and international markets. Yet the effects of these measures do not necessarily translate into changes in political behavior. In some cases, the economic costs of sanctions are transferred to society, the private sector, and vulnerable groups, without achieving the political objectives sought by those imposing them. From this perspective, the effectiveness of sanctions cannot be measured solely by the severity of the restrictions. It must also be assessed in terms of the relationship between the costs imposed, the extent to which intended objectives are achieved, and the long-term consequences for the economic structure of the targeted country.
More importantly, sanctions operate within the global economy and generate consequences that extend well beyond bilateral relations. Financial and trade restrictions can create new avenues for commerce, regional cooperation, and the emergence of alternative economic arrangements. The expansion of non-dollar settlement mechanisms, bilateral currency agreements, and efforts to diversify trading partners are among the responses countries have adopted to restrictions arising from the sanctions regime. Nevertheless, these developments should not be interpreted as evidence that the dominance of existing financial structures is nearing an imminent end. Replacing an international financial system requires institutional trust, monetary stability, deep and liquid capital markets, and efficient payment infrastructure—conditions that cannot be established easily or in the short term.
At the same time, secondary sanctions and extraterritorial restrictions have turned economic sovereignty into a serious challenge for states. When a government can influence the economic decisions of companies and financial institutions in other countries by restricting their access to its own markets, the very notion of independent economic decision-making faces new questions. Under such circumstances, even actors that are not directly targeted by sanctions may find themselves compelled to reconsider their economic relationships in order to protect their commercial interests. This transforms sanctions from a bilateral instrument of coercion into a mechanism for exercising influence across the wider network of the global economy.
Nevertheless, economic sanctions should not be regarded as a cost-free instrument for those who impose them. Disruptions to supply chains, higher transaction costs, lost markets, and declining confidence in international financial arrangements can also undermine the economic interests of sanctioning states. Furthermore, the repeated use of sanctions may encourage countries to reduce their dependence on infrastructure controlled by dominant powers—a trend that, over the long term, could contribute to the further fragmentation of the global economic system.
Ultimately, economic sanctions must be analyzed beyond the framework of conventional foreign policy instruments and understood in the context of competition over resources, markets, technology, and positions within the hierarchy of global power. The central issue is that, in today’s world, power is no longer defined solely by the ability to generate wealth. The capacity to control the channels of production, financing, exchange, and market access has also become an integral dimension of the contemporary concept of power. Accordingly, sanctions are both instruments of political pressure and potential mechanisms for redistributing opportunities, costs, and advantages within the international system.
The future of the global economy will depend, to a considerable extent, on whether competition among major powers can be managed within the framework of shared rules and economic cooperation, or whether it will increasingly move toward the securitization of trade and the instrumentalization of economic interdependence. The decisive question is no longer simply which country becomes the target of sanctions, but rather which actor has the power to determine the rules governing access to the global economy.