The Role and Impact of Sanctions in International Diplomacy

Published: August 5 2025

Sanctions as a Strategic Tool

Throughout history, sanctions have been deployed by politicians and economists as a means of advocating for peace and cooperation between adversarial leaders and regimes. In the modern era, sanctions have become a cornerstone of international diplomacy, used to deter aggression, combat terrorism and nuclear proliferation, whilst promoting human rights and democratic governance.

Often referred to as a "smart alternative to warfare," sanctions serve as dual-edged tools, designed to punish hostile regimes while strategically nudging them towards cooperation. Despite inflicting economic strain and strategic disruption, sanctions have yet to consistently achieve lasting political change.

Notable Modern Sanctions: Case Studies
Iraq (1990)
The United Nations imposed comprehensive sanctions on Iraq following its invasion of Kuwait in August 1990, setting a modern precedent for broad-based economic restrictions. These sanctions had a devastating economic and humanitarian consequence.

In 1996, the United Nations introduced the Oil-for-Food Programme, designed to permit Iraq to sell oil in return for food and essential humanitarian supplies. While intended to alleviate civilian suffering under sanctions, the programme ultimately became emblematic of systemic failure—riddled with corruption and exploitation. Today, the Iraqi sanctions regime is widely regarded as one of the most devastating examples of how broad-based sanctions can disproportionately impact civilian populations.

Iran (2006)
The international community sanctioned Iran in response to its refusal to halt its uranium enrichment programme, marking a pivotal moment in efforts to curb nuclear proliferation. As recently as June this year, global bodies, including the EU, re-enforced the messages that Iran must never be allowed to acquire a nuclear weapon and urges Iran to reverse its “alarming unclear trajectory”. 2011 saw further sanctions imposed in response to serious human rights violations, which are currently extended through to 2026, and in 2023 a framework was put in place to sanction Iran’s military support of Russia’s war against Ukraine.

While sanctions have undeniably inflicted significant economic and humanitarian strain on Iran—marked by high inflation, widespread unemployment, and recurring nationwide unrest—the country has nonetheless crafted a variety of strategies to withstand these pressures and assert its influence both politically and economically. It has cultivated strategic alliances with powers like Russia and China, expanded its presence in the cryptocurrency market, and established sophisticated networks to facilitate the circumvention of sanctions.

Russia (2014 – Present)
In response to Russia's annexation of Crimea in 2014 and its full-scale invasion of Ukraine in February 2022, the U.S., EU and other allies enacted the most extensive sanctions regime in modern history:

• Over $300 billion in Russian central bank reserves frozen
• Thousands of individuals and entities sanctioned globally, with asset seizures targeting oligarchs, politicians and military officials
• Prohibitions on high-tech exports, including semiconductors, aircraft parts and dual-use goods to degrade military capabilities

While Russia's economy initially adapted, by mid-2025 it is experiencing clear signs of recession, high inflation and labour shortages.

However, evasion techniques remain widespread:

• Surging exports of banned goods to intermediary countries (Central Asia, the Caucasus, Turkey, UAE), many of which are re-exported to Russia
• Networks of front companies in Hong Kong, China, Singapore and Kyrgyzstan continue to funnel restricted technologies – such as chips and drone parts – into Russia
• Asset concealment tactics, often facilitated by lawyers, accountants and trust providers, are still active in jurisdictions like the UK and Switzerland

Sanctions have imposed real economic costs and hindered Russia's war capabilities but have not yet succeeded in forcing a change in Kremlin policy or ending the conflict.

Syria: A Shifting Sanctions Landscape
Syria has experienced one of the most comprehensive sanctions programs globally, though its effectiveness has varied over time.

Timeline of key events:

• 1979: The U.S. designates Syria as a State Sponsor of Terrorism, triggering restrictions on aid, defence exports and dual-use technologies.
• 2011: Amidst the Assad regime’s brutal civil war crackdown, the U.S., EU and others introduce sweeping sanctions targeting leadership, oil exports and financial networks.

Recent Developments: Sanctions Relief
Following the fall of President Bashar al-Assad in December 2024 and the rise of a transitional government led by Ahmed al-Sharaa, a major policy shift occurred.

On July 1, 2025, U.S. President Donald Trump signed an executive order terminating longstanding U.S. sanctions on Syria. This move was intended as a gesture of support for the country’s transition toward peace and stability.

Key highlights include:

• Broad economic sanctions lifted, opening access to foreign financing and international markets
• Targeted sanctions retained on Assad, his affiliates and terrorist-linked organisations

Challenges and Outlook
While lifting sanctions offers a potential economic lifeline for a population where 90% live below the poverty line, significant hurdles remain:

• Security fragmentation: Syria remains divided among Kurdish-led forces, Turkish-backed militias and residual armed groups
• Foreign interference: Ongoing involvement from Turkey, Iran, Israel and the U.S. complicates stabilisation
• Reconstruction needs: Rebuilding basic infrastructure is estimated to cost between $250 – $400 billion

Though welcomed domestically, the decision to end U.S. sanctions is seen internationally as a calculated risk, contingent on the new Syrian government delivering genuine progress on peace, human rights and counter-extremism.

Summary

While sanctions continue to serve as a key instrument within global democratic frameworks, their overall impact can appear limited – particularly when observing nations such as Russia, Iraq and Iran, which have retained a degree of economic resilience despite sustained international pressure. As the international community grapples with protracted conflicts, emerging technologies, and shifting power alliances, the question isn't merely whether sanctions "work", but whether they represent the most effective mechanism for long-term peace and stability.

Moreover, it is everyday citizens who frequently bear the brunt of sanctions, despite having little influence over political decision-making. This raises an important question: should we begin shifting focus toward alternative peacekeeping mechanisms? Approaches like preventive diplomacy, mediation, strategic incentives through aid and trade, and diplomatic recognition for peaceful leadership offer more targeted pathways to stability. Where these efforts fall short, accountability through international prosecution may serve as a critical deterrent.

Regardless of how effective or flawed sanctions programs may be perceived, financial institutions remain among the most closely monitored sectors for compliance with these regimes. As global sanctions frameworks become increasingly complex and fast-evolving, compliance teams face mounting operational pressures that demand deeper expertise, heightened vigilance, and more time. To stay effective amid rising workloads, financial institutions must embrace intelligent automation. 

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