Global sanctions are a powerful tool for countries that seek to use their power and influence internationally. They can be imposed against countries that are considered to condone or support terrorist groups or against states that violate international safety rules. Sanctions can also be used to stop these nations from gaining access to resources that are believed to threaten the security of other regions. Using a global sanctions check allows companies to ensure their business partners are not breaking international laws and not in violation of any other regulations they may be subject to.
Yet, despite their immense power and importance, sanctions are often seen as failing instruments of global governance, particularly by left-wing and liberal politicians and activists. The problem, they argue, is that they do not prevent war or create a lasting peace, but only cause more pain and destruction to those on the receiving end.
To understand why, we need to revisit the history of sanctions.
The interwar period was a time of growing autarky, when trade diminished, and currencies fragmented, making it harder for governments to reach their desired geopolitical objectives through sanctions. But today, the world is far more interconnected, which makes it easier for governments to use sanctions and achieve their policy goals. This is not a coincidence. The economic historical underpinnings of the current proliferation of sanctions-imposing regimes are a consequence of financial globalization, which began with the Bretton Woods agreement and continued in the 1970s and ’80s with the Volcker shock and the expansion of the dollar-based transatlantic trading system.