The Economic Weapon: The Rise of Sanctions as a Tool of Modern War, 2022

Following the annexation of Crimea in 2014 and Russia’s subsequent invasion of Ukraine in February 2020, forty-five nations imposed economic sanctions on the aggressor nation. These sanctions targeted key sectors of the Russian economy, including finance, energy, and defense, aiming to pressure the Kremlin into stopping its aggressive behavior and adhere to international law. The sanctions had an impact on Russia'seconomy, resulting in a decline in foreign investment, restricted access to capital markets, and limitations on technology transfers. The costs and consequences of these sanctions have reverberated around the world, which makes Nicholas Mulder's new book on the evolution of the “economic weapon” as an instrument of foreign policy since the end of World War I a very timely contribution.

Economic sanctions, as a means of exerting pressure and influencing the behavior of other nations, have a long history that can be traced back to ancient times. In antiquity, economic sanctions took various forms and were utilized by powerful empires and city-states. For example, during the Peloponnesian War in the fifth century BCE, Athens imposed a trade embargo on Megara, prohibiting Megarian merchants from participating in Athenian markets. This had a detrimental impact onMegara's economy, as it relied heavily on trade with Athens. Economic sanctions and blockades continued to be used as a tactic of war in the centuries that followed. But it was not until the 1920s that economic sanctions were used outside of war. How, why and to what effect these modern sanctions were used is the subject of Mulder’s work.

Those who have studied the “economic weapon” (i.e. economic sanctions or blockades) usually fall into one of two schools of thought. The first school is made up of those who have argued that sanctions are a toothless tiger and therefore irrelevant in the grand scheme of things. The use of sanctions during the interwar period, for example, has been regarded as a failure, along with the League of Nations that imposed them. But a second school of thought argues that sanctions are a potent policy tool which fuel, as much as diminish, geopolitical conflicts. While sanctions have only occasionally produced their desired results, they have been consequential and thus deserve a more pronounced place in any explanation of modern international affairs. A professor of history at Cornell University, Nicholas Mulder is a member of this second school of thought.

Drawing on the extant historical literature and archival material, the author traces the evolution of the economic weapon from 1914 to 1945 and in the process paints a vivid picture of the changing dynamics of power, conflict and twentieth-century internationalism. The book is chronologically organized, and Mulder's writing style makes the subject accessible to experts and non-experts alike. The book is divided into three parts and the narrative moves at a quick pace.

Part one covers the period from 1914 to 1921 and examines the origins and early development of the economic weapon. The concept of employing sanctions to economically isolate an international wrongdoer originated during World War I when the Allied Powers implemented a blockade against the Central Powers. Although there were problems with the wartime blockade, the British minister responsible for overseeing it, Lord Robert Cecil, proposed (as early as 1916) using similar economic pressure as a means of international coercion after the war had ended. This idea was further developed in Paris in 1919 when the League of Nations was formed. The victorious nations of World War I, including Britain, the United States, France, and Italy, aimed to use the economic weapon to deter potential aggressors during peacetime and punish those who threatened the new world order. This objective to deter and punish was officially enshrined in Article XVI of the League's Covenant.

The second part of the book explores the legitimacy of the economic weapon from 1921 to 1931. As Mulder notes, there was “a profound imperial dimension to the way the economic weapon operated in this period”. (22) National leaders and technocrats in the League managed the nascent system of sanctions that took shape during the 1920s. This began with the League’s convening of an international blockade committee in 1921 and ended with the international crisis over Manchuria in 1931. Initially, due to the divisions within Western liberal elites, (between sanctionists and neutralists), the League struggled to situate the extent of coercion within the established economic warfare framework. Many also worried about the humanitarian effects of sanctions. Nevertheless, by the end of the decade, as Mulder notes, the sanctionists had “politicized the international economy to a new degree”. (158) Threats of economic sanctions successfully restrained border wars in the Balkans and convinced Turkey to give up its territorial claims to Iraq.

The third part of the book examines the use of the economic weapon during the Great Depression and World War II. It was during this period that the liberal system of sanctions was truly tested; as Japan exhibited hostility towards China; Italy engaged in aggression in Ethiopia; and Hitler ascended to power in Germany. According to Mulder, League-imposed sanctions were not weak measures during this period. On the contrary, they were excessively potent. The perceived threat of sanctions compelled militarist Japan, Mussolini's Italy, and Hitler’s Germany to pursue expansionist policies towards neighboring nations in order to secure essential resources and raw materials. Expansionism was thus a means of counteracting the economic shocks that would be brought on by a blockade. “Conquest appeared as an avenue of escape from the anxiety of living under the Damoclean sword of international blockade” Mulder writes. (11) In short, Mulder boldly argues that sanctions were a significant factor in the onset of World War II.

Mulder's well-researched (with over 100 pages of notes) and well-argued history of the rise of sanctions as a tool of foreign policy will be of interest to anyone moved by the recent events in Ukraine. While business historians might be disappointed by the fact that there is little on how and why enterprise lobbied either for or against the use of sanctions, Mulder’s work is an excellent study that demonstrates that “the history of sanctions is largely a history of disappointment”. (295) In too many cases, sanctions inadvertently spurred the targeted nation to respond with aggression, contrary to the outcome envisioned by the architects of liberalism’s ultimate weapon more than a century ago.