Economic sanctions are a key tool of statecraft, used by governments and the international community to exert influence over other nations. They can be imposed in the form of trade restrictions or financial measures that limit access to international markets, finance and goods. The goal is to make it more expensive for the target country to break rules, ranging from fostering terrorism to violating basic human rights. They can be a useful alternative to military statecraft or as a moral protest against bad behavior by states and companies.
The effectiveness of sanctions depends on many factors, including the type and scope of the sanction and whether it is aimed at individuals, companies or countries. Sanctions that are imposed without demanding a specific policy change tend to fail. But those that demand modest policy changes are more likely to be successful than ones that are intended to bring about regime change or severe economic impairment.
A key challenge is calculating the economic impacts of sanctions. The most visible impact is a trade interruption, measured as an increase in import prices paid by (or export prices received by) the targeted nation. But that approach may miss less-visible secondary effects. A better estimate requires looking at the supply and demand for particular goods, which can be difficult because of multiple exporters, multiple markets, and smuggling and diversion strategies.
Another difficulty is that imposing and maintaining sanctions often involves domestic groups with vested interests in their continued existence. For example, the U.S. sugar manufacturers who supported the Cuba embargo in the 1960s were able to rally support for the sanctions because they suffered competition from more efficient Cuban producers. This can undermine the signal that the sender countries are trying to convey to their allies or domestic audiences.