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The History of Sanctions

Nicholas Mulder’s account of the modern economic sanctions regime sheds new light on an era of extreme destabilization and destruction.

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Booked is a series of interviews about new books. In this edition, Nick Serpe talks to Nicholas Mulder, the author of The Economic Weapon: The Rise of Sanctions as a Tool of Modern War (Yale University Press).

The U.S. and European responses to the Russian invasion of Ukraine have generated the widest discussion and debate on economic sanctions in recent memory. Who are the targets? What are the mechanisms for implementing these policies, and can they be circumvented? What is the ultimate goal of sanctions, and how likely are they to achieve it? Could they escalate the conflict? What costs will be borne by ordinary people?

In The Economic Weapon: The Rise of Sanctions as a Tool of Modern War, Nicholas Mulder provides a historical backdrop for these questions. In the wake of the First World War, sanctions were embraced as a potential pathway to a more peaceful international order, but they were also immersed in controversy. From the beginning of the twentieth century until the dawn of the Second World War, Mulder writes, “deaths by economic isolation were the chief man-made cause of civilian death.” His account of the sanctions regime during the interwar period sheds new light on an era of extreme destabilization and destruction, and offers much to consider for anyone troubled by how war and peace, violence and humanitarianism, and internationalism and great-power dominance are intertwined in the current moment. We spoke a month ago, in the weeks leading up to the war in the Ukraine.

Nick Serpe: Some form of economic warfare has been around since the origin of warfare itself—the siege, the blockade. What is distinctive about sanctions, and their place in the politics of war and peace?

Nicholas Mulder: The idea of applying pressure to civilian societies and economies has been around as a practice and an idea for a very long time, but it was traditionally seen as part of the repertoire of war. Sanctions lift that technique from the realm of wartime into peacetime. That’s why the birth of modern international institutions after the First World War is so important, because they really affected that switch.

Sanctions are also often confused with economic restrictions that have other kinds of political or economic purposes—things like tariffs and protectionism. We’re in an era of general increasing economic nationalism in the wake of the 2008 crash and the COVID-19 pandemic. Tariffs are a matter of domestic regulation and protecting one’s own market from foreign competition, but sanctions are about trying to influence and deprive other territories.

Serpe: In the book you discuss some of the preconditions for a world where you could conceive of a sanctions regime. Some of this is just the fact of economic globalization; some of it is about bureaucratic capacity. But there’s also an intellectual underpinning to this: a theory of individual rationality, and a theory of how a people relates to its government. Could you say more about why sanctions emerged when they did?

Mulder: Some sort of idea of a sanctions-like instrument already existed in the nineteenth century, and there was a long series of discussions about how countries could come up with a form of international policy that would stabilize interstate relations and prevent war. The yearning for perpetual peace goes back all the way to the Enlightenment. But in the nineteenth century, there wasn’t really a good solution at hand, and in reality balance-of-power politics always devolved into trying to stop war with war itself.

In the First World War, a few different things come together that make sanctions possible. One is the first great era of globalization, from 1870 to 1914—the heyday of laissez-faire liberalism and the gold standard—which provided the material conditions that made a new form of policymaking possible. Add onto that the expansion of the administrative state and its interventions and controls during the First World War and, at the same time, the advent of mass democracy with the extension of universal suffrage during the 1910s. Those are the elements you need for sanctions: states that can exploit globalization in order to influence other societies so that their popular politics allow you to avoid war. All of those things–globalization, the administrative state, and mass society—are still present, to a lesser or greater degree, and that’s why we’re still in a world in which sanctions are so omnipresent.

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Serpe: There’s been a wave of recent scholarship on the League of Nations and the liberal internationalism of the interwar period that cuts against the popular belief that the League was a complete failure. What does the history of sanctions change about how we understand this period?

Mulder: In the last fifteen years, historians, international lawyers, and others who are interested in international relations have provided us with a much better grasp of the interwar League of Nations as the moment in which modern global governance was born. There are all these technical institutions, from the International Labour Organization to organizations covering public health, human trafficking, drug control, and economic policy—the antecedents of the International Monetary Fund (IMF) and the World Bank. It’s a very rich literature. One area where it has not gone as far, however, is in its tacit acceptance of the old verdict that the League of Nations totally failed as a security institution. The Second World War is of course undeniable proof that something went very badly wrong. But there has been an implicit equation of the League’s failure with the weakness of liberal internationalism, and that is a link we have to interrogate.

When you look at the crises of the 1920s and ’30s, what you find is that internationalists struggled not with the weakness of sanctions but with their unbelievable strength. They found it difficult in the aftermath of the blockade during the First World War to use these instruments of economic pressure, particularly against larger countries, without provoking a war, and thereby having the cure be worse than the disease. This debate happens around the crisis in Manchuria in 1931—the moment that for East Asians marks the beginning of the Second World War. It comes back as fascist Italy invades Ethiopia in 1935, and then with the gradual descent into another world war in Europe. The League of Nations faced genuine political difficulties and issues of calibration as it tried to use a tool of economic coercion that in the First World War had proven itself capable of really serious effects.

Serpe: When leftists in the United States today who are critical of sanctions think about them, the line that still comes up is when Madeleine Albright was asked in the 1990s about the fact that something like half a million Iraqi children had died as a result of U.S. sanctions, and she said, “We think the price is worth it.”

You show that the humanitarian critique has been present since the origin of sanctions. Could you talk about some of the arguments that were made—and how they followed or didn’t follow typical political lines?

Mulder: An armistice was signed to end the First World War, but Entente countries still maintained the blockade. Economic pressure that began in war was carried on into peacetime. And it was applied not just against Weimar Germany but also against Soviet rule in Russia and Hungary in the aftermath of the Russian Revolution. That prompted a massive public outcry across Western countries, by a broad coalition of different groups: feminists and women’s organizations; groups out of an older, free-trade, radical liberal tradition, which wanted to separate the private economy from interstate war; and, of course, among leftists and Communists, who had sympathies for the political experiments happening in Russia and Central Europe. That moment showed how deeply contested this practice was as it emerged, and I think that strengthens the idea that this was a momentous transformation. You can see how big the shift was in the meaning of war and peace by observing the resistance it provoked across the political spectrum.

One of the lines of criticism that ends up surviving the initial defeat of radicalism in this period—the aftermath of the First Red Scare, the counterrevolutionary crackdown in the early 1920s, the failure of the Russian Revolution to spread elsewhere—is one that anti-Communists take up. A number of liberal and conservative Western leaders argued that by increasing poverty, blockades actually fanned the radical behavior they were meant to smother. In their view, it was much better to try to tame “irrational” revolutionary passions by opening up these economies to the plenty that capitalism brings. Herbert Hoover was one of the major representatives of this position, along with Winston Churchill and David Lloyd George.

The humanitarian critique also persists throughout the interwar period. The International Committee of the Red Cross and a lot of neutral countries emphasize this. There are Christian strains to this critique, feminist strains, and also legalist strains out of movements that want to humanize war (which Samuel Moyn wrote about in his latest book, Humane). All of them develop different critiques of economic war. Many of the critics identified as liberals, but they represent a much older variety of liberalism, which thinks that the point of liberalism is to protect civilian combatants.

But sanctions also end up prompting a lot of liberal internationalists to embrace total war techniques of targeting civilians; being a “sanctionist” in the interwar years was often an openly anti-humanitarian position. This whole interwar process splits liberalism between a more activist but also more ruthless modern version and a more classical, more legalistic humanitarian version. That is partially the reason that this instrument has such a fraught implementation in the interwar period, because liberals themselves haven’t all agreed on their importance. And it chafes at certain liberal ideas that were essential in the nineteenth century—the protection of private property, civilian autonomy, civil society. They all of a sudden come under threat.

Serpe: So alongside the critiques of the intended effects of sanctions, there are also these arguments about the unintended effects. Maybe the most devastating part of your analysis was about the dynamic between sanctions and land conquest and territorial expansion through the 1930s.

Mulder: One of the things that I find most interesting about the interwar period is how much that world looks like our world, with globalization and an unstable interstate system. But it’s also an age of ideology, and of mass mobilization. Sanctions really feed into that. When entire societies became potential objects of pressure, in an age of mass politics, particularly after the First World War, they reacted in unanticipated ways. The mere threat of sanctions did have a stabilizing effect at times, like in small wars in the Balkans in the 1920s. But against governments that already had powerful nationalist movements based in mass politics, sanctions could work as a regime-strengthening device. Throughout the 1920s and even in the ’30s, there were many people in the West who thought that they could keep the Soviet Union at bay with sanctions, but visitors would go there and say, this is not likely to work, and you’re actually giving them a much better set of circumstances within which to pursue socialism in one country, this inward turn of Stalinism.

Similar things emerged in the 1930s with Japan, Germany, and Italy. That’s why it’s so important to study sanctions as a historical process: they aren’t just about pain and gain, about this utilitarian, game-theoretical language that much of foreign policy discourse uses. It’s vital to look at them much more holistically, with the tools of not just social sciences but also the humanities and culture and the study of ideology and ideas, because they have long-lasting effects, and they shape outlooks dramatically. Sanctions do not operate in a frictionless decision-making space, where you can just increase pain in the right way and then hopefully the right response will follow. They are deployed in a world in which states already have all sorts of uncertainties and antagonisms—the interwar period was a particularly unpropitious time for that reason. At the end of this project, I am left with sympathy for why people were ready to use any instrument that might avoid repeating the First World War; they had gone through an absolutely horrific war. But at the same time I am struck by their blindness to the power of ideology and nationalism to mobilize people that was put on display during the war, and the naïveté of thinking that merely some commercial pressure would convince them that they shouldn’t do that again. In that sense interwar sanctionism was a really striking and unworldly reaction. In effect, they hadn’t reckoned with the true furies unleashed by the First World War.

Serpe: And in response to sanctions, or the threat of them, Japan, Germany, and other countries start to embrace autarkic strategies.

Mulder: Sanctions are not the only thing responsible for this move. The two preceding, structuring events are the memory of economic war in the First World War and then the shock of the Great Depression. And the Depression was dramatically worsened by the fact that governments responded to it with austerity. They not only embraced protectionism but also tried to balance budgets for a very long time; it took them many, many years to appreciate the lessons of Keynesianism that would become hegemonic after the Second World War.

But there was also a persistent threat of sanctions. The language that was used at the time was about a Sword of Damocles. It had a very powerful reality to people, even if, at the level of material implementation, it was difficult to do quickly and effectively. We already know the story about how economic nationalism and autarky fed into the Second World War. What I try to do in the book is retrace that familiar ground through the prism of sanctions. Once you revise the assumption that the League of Nations failed because it was weak, and sanctions were a paper tiger, you can reconsider what people at the time were saying, what they were warning about, not just in the fascist and militarist countries but also in the liberal countries using sanctions. Contemporary observers were warning their own governments about it.

I don’t want to suggest that sanctions bear all or most of the responsibility for the Second World War; the process of deglobalization and the breakdown of international order has many agents and is very complicated. But once you start questioning the narrative established in 1939 by E.H. Carr in The Twenty Years’ Crisis, a foundational text of international relations realism—that the League had failed because it was weak—you start to see its struggles to calibrate sanctions as a serious independent contributing factor to the escalatory process that ends in global war.

Serpe: In the book, you distinguish between the negative economic weapon, sanctions, and a positive economic weapon. What does the latter look like?

Mulder: The constellation of elements that made sanctions thinkable and conceivable in the First World War also produced a new form of intercontinental logistics alliances. People like Keynes and Jean Monnet, who contributed, respectively, the ideas of fiscal expansion as an economic philosophy and the European Union, were part of that other side of thinking about the positive side of this. There was a serious attempt in the League of Nations between 1927 and 1930 to make a permanent financing facility for victims of aggression. If the organization they wanted had been established—basically a sort of security IMF—it would have allowed, for example, the League of Nations to lend money to China in its fight against the Japanese, or to the Spanish Republic during the Spanish Civil War. How would that have changed all sorts of crucial events in the run-up to the Second World War? That’s an alternative possibility that’s imminent in this whole period. In 1935, there were sanctions against Italy, but what Ethiopians themselves most called for was financial aid for their defense. The Lend-Lease program created in 1941 was effectively the United States very belatedly implementing the positive economic weapon. 

After the Second World War, the world moved from the austerity of the Depression era to a pro-growth, Keynesian politics of productivity. The lessons of the interwar period were much more appreciated. The postwar critics of the interwar period were very conscious of the failings of sanctions, and I think that’s something worth reviving today in the aftermath of 2008 and COVID-19.

Serpe: I want to ask about the contemporary landscape of sanctions. In some ways, the goals of sanctions have changed—there is more emphasis now on human rights and democracy and less on interstate aggression. And while there is still international coordination, the U.S. government is now the dominant force pushing sanctions. Even the mechanisms of implementation have changed. Where do you see continuity from the earlier sanctions era, and where have things shifted? 

Mulder: Today the United States presides over a sui generis hegemonic structure that has no prequel in world history. It’s interesting to note, though, that the United States, for most of the Cold War period, only used sanctions against smaller countries, as a kind of containment device in situations where there was a large power imbalance. It was quite moderate in the use of economic pressure against the Soviet Union and China. It only really used strategic export controls, and when it tried to go beyond that, you had some of the key inter-Atlantic crises of the Cold War. In the early 1980s, there was a massive crisis when Reagan imposed sanctions on pipelines between the Soviet Union and Europe—a direct antecedent to the Nord Stream 2 saga. But generally, they were used as a kind of American imperial-policing device in cases when there was a big power differential—with Cuba and North Korea in particular.

That, of course, has changed since the end of the Cold War. There was an explosion in the use of sanctions, because there was no great-power opponent that would act as an obstacle. And this coincided, of course, with financial globalization in the wake of the 1970s and Bretton Woods, the Volcker Shock—the expansion of the transatlantic, dollar-based global financial order. That shows, again, that you need to think about the economic historical underpinnings. The sanctions environment today was not purposely created by the U.S. government; it is a side effect of its stabilization strategy in the 1970s and ’80s under Carter and Reagan. But it wasn’t until George W. Bush and Barack Obama that the financial sanctions we’re familiar with today began to be developed.

Serpe: You document some moments where sanctions succeed, but the mass of evidence in the book makes it clear that you see them as a failed policy—in terms of human costs, in terms of their stated goals, and in terms of the unintended costs. But in the United States today, as with so many foreign policy issues, there’s a pretty big consensus about the legitimacy of their use, and it seems like not a lot of thought or debate necessarily goes into deciding when to implement them. Maybe that’s overstating it a bit; I saw that groups representing U.S. fossil fuel interests have expressed some concern about potential sanctions on Russia. But there certainly isn’t the kind of wide public discourse that there was a little over a hundred years ago. Why do you think they have persisted? Do you see any places where you think things are shifting, or where people are taking a different approach?

Mulder: I think that their attractiveness stems in part from the fact that the United States is in a unique position. Among advanced economies, historically, and among great powers, it’s not very trade-dependent. There aren’t many industries in the United States that make their living by exporting a large amount of things, other than the military-industrial complex, and the oil and gas industry. Maybe big agriculture. The big parts of U.S. trade balance today are oil, gas, and cereals. We’re kind of back to the 1890s.

Serpe: That’s on the export side, right?

Mulder: Imports are relatively diversified. But even if you add together exports and imports, it’s only about 25 percent of U.S. GDP. In the Netherlands, where I’m from, total trade amounts to 150 percent of GDP. Almost all Asian, European, and Latin American economies are much more dependent on trade. The United States has a currency that almost everyone uses but quite little exposure to direct trade blowback compared to other economies. The Russia standoff right now with Europe is really a dramatic example of that. It’s much easier for the U.S. government to impose sanctions on Russia. They will not rebound onto the United States in any meaningful way, except maybe via higher world oil and gas prices that might have some midterm costs.

But the other thing to keep in mind is that it is important to concern yourself with what goes on in other countries. Sanctions are a form of interventionism that lacks the overt brutality of military intervention and the costs and problems associated with that. They allow Democrats and even left-wing politicians to be involved in international conflict short of war, and there’s also still that dream and fear of something worse that remains in the background.

One of the figures that I found most interesting in researching the book is a British internationalist, William Arnold-Forster. He was in the admiralty during the First World War and administered the blockade. He was deeply troubled by it and was open about the fact that he worked on this policy of organized mass starvation. He became a fervent supporter of the League of Nations and joined the Labour Party. He represented this quite significant group of internationalist Labour Party politicians who wanted to work toward an international organization that could impose equal discipline on everyone—an idea of global justice. Because of the memory of how horrific the war was, they hoped that the mere threat of sanctions would suffice—that you could prevent war from occurring with threats. They saw that as an almost Kantian vision of equal and morally symmetrical justice.

The left is indebted to some of those ideas in our thinking about international politics, very understandably so. I don’t think those impulses are wrong. But we should at the same time look at the material and empirical reality of sanctions, and to a left-realist tradition that tries to take seriously unintended consequences—the gap between intentions and outcomes. 


Nicholas Mulder is an assistant professor of history at Cornell University.

Nick Serpe is senior editor at Dissent.

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