How Sanctions Work
Iran and the Impact of Economic Warfare
Narges Bajoghli, Vali Nasr, Djavad Salehi-Isfahani, and Ali Vaez




One of the most important developments in international affairs is the growing primacy of economic sanctions as a tool of foreign policy. Increasingly, the US response to international crises is first and foremost the application of sanctions. But do sanctions work? If so, when and how, and at what cost? The case of US sanctions on Iran is particularly instructive in this regard. For over four decades Iran has been a foreign policy concern for the United States: a country that refuses to deal directly with the US, and that maintains anti-Americanism at the core of its foreign policy and even its identity. The United States has addressed its Iran problem primarily through sanctions. Since their first imposition in 1979, sanctions have become more far-reaching and sophisticated; so much so that, at the time of this writing, Iran is the most sanctioned country in the world. In the process, the US has come to consider sanctions as a nearly unassailable necessity; to the point, we will argue, of a counterproductive overreliance on them.

Additional sanctions, and more punishing sanctions, have failed to realize US policy objectives. The experience of Iran shows how ineffective this seemingly effective foreign policy tool can be. Waged by warriors in dark suits in the US Department of the Treasury, the sanctions are assumed to be more efficient and less costly alternatives to what warriors in the Pentagon and diplomats at the State Department are capable of. The decades of sanctions exacted on Iran, and the application of “maximum pressure” sanctions under the Trump and Biden administrations, challenge this assumption. The extended period also allows us to gain a better understanding of the humanitarian, social, and political costs of sanctions, as well as the less noticed costs that sanctions inflict on the US. The case of Iran also shows that sanctions are far from being an efficient tool; while they are more easily applied than direct military or diplomatic measures, that very facility is also at the root of their failure because they become so difficult to lift, regardless of whether they are accomplishing their goals.

The forty-plus years of US and international sanctions, and recently the maximal use of sanctions, have been levied on Iran not only to punish its behavior but also to force the Islamic Republic to change course: desist from supporting terrorist activities, refrain from aggressive regional policies, and abandon its nuclear ambitions. President Trump in particular believed in the promise of sanctions to achieve this course change, but his administration failed on each of these three counts, and in fact the threat of Iran has appeared to become increasingly grave on every front of concern to the US.

Iran has shown greater defiance and more willingness to directly and dangerously confront the US and its allies in the Middle East. The application of maximal sanctions, beginning in 2018, provoked an aggressive response from Tehran. A year after the imposition of maximum pressure, Iran attacked four tankers off the coast of the United Arab Emirates (UAE) port of Fujairah on the Gulf of Oman; downed a high-flying US surveillance drone; and launched a sophisticated attack with drones and missiles on oil facilities in Abqaiq and Khurais in eastern Saudi Arabia. The audacity of this latter attack, and Iran’s ability to evade Saudi and American radar and air defense systems, caught Washington by surprise. But all of the aggressive actions were cause for alarm, given that Iran carried them out while subject to the worst sanctions it had ever faced. In 2022, the world was shocked when Russia deployed lethal drones that Iran had developed under sanctions.

Throughout 2019–20, the US response to Iranian provocations only invited escalation. After US missiles attacked an Iraqi militia base in response to the killing of an American contractor, Iran and its Iraqi allies laid siege to the US Embassy in Baghdad. In turn, the United States used an attack drone to kill Iranian general Qasem Soleimani, who played a key role in Iran’s regional policies. Iran was neither chastened nor deterred, and in January 2020 it launched nearly two dozen Iranian-built ballistic missiles at a military base in Iraq, which hosted US forces. This attack on the Ain al-Asad base in Iraq—in retaliation for the assassination of Soleimani—was not only a precise strike, but the largest missile attack US troops have ever faced.

Through such actions, Iran showed that Trump’s maximum pressure sanctions had not bent the nation’s will to accept Western demands. Instead, the sanctions had achieved the opposite effect: making Iran more aggressive, risk-taking, and dangerous. Indeed, this was a consequence of sanctions. Instead of sanctions offering an “alternative to war,” maximum pressure sanctions on Iran have shown that they could be a cause of war.1

“Do sanctions work?” is often asked by policymakers and pundits. Perhaps that is the wrong question. When a country with the size and economic power of the United States imposes harsh sanctions on a country, of course they “work”: sanctions create massive disruptions in the everyday lives of citizens, impact the political culture of the targeted state, and induce shocks in the economy. But do sanctions—as some claim—bring about the behavioral changes in targeted states as intended by Western foreign policy? Do sanctions work the way they “should”?

Consider Iran, the most sanctioned country in the world. Comprehensive sanctions are meant to induce uprisings or instigate pressure that leads to a change in the behavior of the ruling establishment, or a lessening of its hold on power. But after four decades, Iran has shown the opposite to be true. In fact, despite periodic protests, sanctions have strengthened the Islamic Republic, weakened and impoverished its population, and increased Iran’s military posture vis-á-vis the US and its allies in the region. It is not only that the Islamic Republic is still around despite harsh sanctions; most importantly, Iran has become a more belligerent state as a result of increased American sanctions.

As this book shows, then, sanctions do work. But not in the way most think.