Sanctions are becoming less effective in the modern world. Today’s economies, including Russia and Iran, are “networked” and their functioning is not dependent on individual disruptions. This was the argument made by University of Pennsylvania economics professor Jesús Fernández-Villaverde at the renowned Kansas City Federal Reserve Bank Economic Symposium in Jackson Hole, USA, on August 29.
According to optimistic estimates, a third of sanctions are considered successful, while skeptical estimates suggest only 5%, according to a presentation given by the economist (.pdf). And they work worst against political systems that Fernández-Villaverde classified as autocratic (Iran, Syria under Bashar al-Assad, etc.).
How countries subject to sanctions by the US, the EU, and others have learned to cope with them, and why this mechanism is being actively used despite everything—in a commentary by Nordic Star Partner Artem Zhavoronkov for RBC (available by subscription).