The week after Vladimir Putin decided to send troops into Ukraine, Western newspapers were filled with analysis about the economic sanctions that might be imposed on Russia. After a few days, the sheer number and severity of those sanctions surpassed the expectations of almost every previous analysis—and rightly so, because the speed in implementing them and their scale and implications had little precedent when it came to an economy the size of Russia’s. Despite this surprise, however, new questions arose about the consequences that this new set of sanctions could have, both for the war itself and at the level of the global economy.
Nicholas Mulder, a professor of modern European history at Cornell University, is the author of The Economic Weapon: The Rise of Sanctions as a Tool of Modern War, which provides a deep and nuanced understanding of the emergence of sanctions in the years after World War I, tracing their evolution and impact throughout the interwar period, World War II, and the formation of the United Nations. But Mulder was not just looking at history to explain the role of sanctions in the 21st century. As he states in this interview, we should not extrapolate lessons from the past without being careful to recognize how the global context has changed. This means that although the history of sanctions illuminates what we are seeing in response to the Russian invasion of Ukraine, we should not assume that history repeats itself. The current global economy looks quite different from the interwar period, and therefore sanctions perform a different role.
I spoke with Mulder about his new book and the likely consequences of the sanctions imposed on Russia. This conversation has been edited for length and clarity.
That was the original thing that I became interested in. But then, when I embarked on the project, I realized this is an international story that requires you to look at different countries, to look at economic history, political history, legal history, and also some military strategic history. Every history needs to ask itself the question: What is the nature of the object or the thing that you’re describing? What is the main object—is it a group of people? Is it a process? And I think sanctions have all of those aspects. There’s a group of people I trace in the book—I call them “sanctionists,” because that’s also how they sometimes refer to themselves. And sanctions are also a kind of material policy instrument, but there is also an idea of what this “thing” does to the world. So sanctions have all of these aspects. And I think one of the reasons why this struck me as such a rich topic was that previously, political scientists and international relations scholars had only really looked at sanctions at the level of a policy tool. But those other dimensions—the people behind it, the ideas that those people had, and the kind of global material backdrop that they were acting in—had not been fully reconstructed. So I think that was what I found to be very rich and stimulating in writing this book: reconstructing that whole world around sanctions.
PP: In the book, you show that raw material controls and financial blockades during World War I were the predecessors of economic sanctions. My first question would be what the purpose of those measures was, and how did they change the course of the war?
NM: The initial aim of the Allied blockade in World War I was largely to operate through the control of raw materials and, later on, to expand these controls over money flows and finance. It was basically a campaign of economic strangulation and of exhausting the fighting power of these modern industrialized trading states in Central Europe. But as the war went on, two additional aims emerged. One was to create a postwar order in which these countries could no longer be aggressors—particularly Germany, which was identified with a kind of militaristic Prussian spirit. This also, for many people in Britain and France, went hand in hand with destroying the power of German corporations, which were seen as the economic wing of Junkerism: You had German militarism in the field, and you had a German corporate presence in Latin America, Asia, and the United States, a kind of “malevolent” business influence that was also taking over the world. That was a European aim: to basically have a kind of commercial war within the economic war. There was another, final aim, which was articulated most strongly by Woodrow Wilson: that the reintegration of the defeated nations after World War I into the world economy could only happen if they fulfilled certain political conditions. And this was really the beginning of sanctions as a tool of ideological transformation, of regime change, and it tied the lifting of sanctions or the lifting of the blockade to a political move toward liberalism and away from autocracy. That didn’t have much of a continuation in the interwar period, because sanctions then mainly became about stopping wars; they were very much an interstate diplomatic tool. But of course, since the 1940s and the Cold War, sanctions as a tool of regime change and ideological transformation—or attempted ideological transformation—have really returned.
PP: You show that the analysis of the efficacy of economic sanctions during World War I shaped how Western powers thought about controlling the circulation of certain raw materials and restraining capital mobility during the interwar period. So how did sanctions turn from a war tool into a peacemaking tool in this narrative?
NM: I would say that the key moment happens during the negotiations at the Paris Peace Conference, where the Allies have to decide whether, when the League of Nations uses this tool of blockade in the future against an aggressor state, it will mean that the League will go to war, or whether it is possible to use this tool in a new kind of legal modality, which is a pacific blockade or a blockade that is not an act of war. And that is really where new ground is broken. And, interestingly, the British and the French for quite a while still have this idea that they do want the League to be able to go to war. But the influence of the American delegation at the Paris Peace Conference is very important, because they insist that the US Congress cannot grant the power to go to war to an international organization; it must remain a legislative power of the US Congress. So they can never allow a sanctions procedure by the League to automatically place America in a state of war with an aggressor—they must have that power themselves. In the negotiations, they create the possibility of using all of this force without officially going to war. And I think that is almost inadvertent, but it has major implications, because it means that now this wartime technique has been lifted into the realm of peace—that the damage and suffering imposed on civilians that previously was possible only in wartime can become possible in peacetime—and then that requires all this new legitimating work in terms of political negotiations and even ethical philosophy. And it created lots of diplomatic issues in the 1920s and ’30s.
PP: Yes, and, in fact, you show that it opened a Pandora’s box in trying to search for new legal and administrative ways to deal with sanctions. And let me add that we do not think as much about economic sanctions as one of the constitutive elements of the League of Nations. So how did this new conception of sanctions interact with the bureaucratic and administrative organization developed by the League?
NM: Thanks to the new historiography on the League of Nations from the last 15 years, we know so much more about all of its important innovations in the realm of economic governance, anti-trafficking, humanitarianism, or statelessness and war refugees. And interestingly, I think there is a tension in the League of Nations as an organization, because it is still an organization that also tries to restore a certain kind of pre–World War I order, particularly in the international economic sphere, where it tries to return to the gold standard and supports a kind of laissez-faire, classical liberal approach, including balanced budgets and dismantling the wartime state and the interventions of the wartime period. It’s dismantling interventionism by states and returning to a smaller state that is more disciplined by global capital. Sanctions, however, require the opposite. And this is where a tension emerges.
A tension that, as I try to show in the book, is never resolved, particularly in the economic and financial organs of the League. Because, on the one hand, imposing sanctions requires intelligence gathering, and no organization is better equipped to do that than the League of Nations, with its annual surveys of the world economy. But this goes against the desire of private business, and also some technocrats, to keep politics and diplomacy out of the economy. So there is this uncomfortable halfway situation that you get by the end of the 1920s, where the League of Nations has new interventionist powers, but there is not, at the nation-state level, the administrative capacity to back that up. So in theory, there is a legal mandate to impose sanctions and to engage in quite far-reaching interventions, but also within the League there are people who resist that. So it is a complex picture, where the desire to return to the 19th century and the desire to use sanctions—a 20th-century modern tool—rub up against each other.
PP: It is interesting what you said about the League of Nations, since I like to think of the League of Nations as the echo of an era that was coming to an end. And my next set of questions points in that direction. One could see both World War I and the Great Depression as indications that the first wave of globalization initiated in the 19th century was coming to an end. In the introduction of your book, you say that “sanctions shifted the boundary between war and peace, produced new ways to map and manipulate the fabric of the world economy, changed how liberalism conceived of coercion, and altered the course of international law.” How did sanctions transform international law in this period? Can they be seen as the obituary of the first wave of globalization?
NM: I think you are totally right that the Great Depression is really the thing that sounds the death knell of the 19th-century gold standard and laissez-faire-based model of globalization. I also agree with Stefan J. Link, who has argued that the 19th century, in an economic sense, globally speaking, ends in 1933. But sanctions are already pointing in a different direction of more intervention before that. The reason why that tension is not yet a total problem in the 1920s is because they can be used as a threat. So targets like Yugoslavia and Greece can basically be threatened into submission without the need to actually erect this new interventionist structure. That is what allows this tension to not become an explosive problem. But the situation changed in the 1930s. The Depression, of course, really stimulates economic nationalism, and all sorts of countries break away from the old liberal world economy. But then the targets that emerged for liberal internationalists as potential offenders able to disrupt the international order are much larger states. So sanctions inadvertently become something that raises the stakes of preserving the world order for liberal internationalists.
PP: A key argument of your book is that the efficiency and the effects of economic sanctions are not necessarily the same—quite the contrary, in fact. So during the interwar period, sanctions led states such as Germany, Italy, and Japan to increasingly resort to economic autarky. Would you mind expanding on how the risk of facing sanctions advances economic autarky?
NM: What I show in the book is that the Great Depression basically causes a crisis among political elites in every country, because the old economic recipe for how you manage your own national economy in an interdependent world economy no longer really works. And the Great Depression, with its market failures, gave very powerful arguments to the more nationalist, protectionist camp in each country. And I really think that we should identify that phenomenon in every single country, whether it is democratic, liberal, autocratic, or fascist. In all of these countries, the political elites had these different tendencies within them, both toward more openness and more closed approaches to the world economy. But the Great Depression massively weighs the scales in favor of the protectionist camp.
And what I argue that sanctions do is to further give powerful arguments to the countries that are not only protectionist—because it is a general thing for democracies to become protectionist—but that also have some sort of political or strategic gripe or resentment against the order that emerged from the Treaty of Versailles. They have an additional reason to become self-sufficient, because now they are not only concerned about protecting their economy from foreign competition and launching an economic recovery, but they also are pursuing foreign policies that potentially are going to be in conflict with the League of Nations and the powers behind it.
And here, I think the fact that the 1920s sanctions worked without having to be imposed has really made people miss the importance of sanctions structurally—we only think of sanctions being effective by actually being imposed. But the threat of sanctions in the 1920s was effective precisely because the memory of the wartime blockade was very fresh. And then in 1935 the League actually did do it again, even though it was a peacetime sanctions episode against Fascist Italy. That really tips the scales and creates not only protectionism but a very radical, nationalist form of autarky that, in Italy first, but then also in Nazi Germany and Japan, accelerates their desire for full access to raw materials. They do not just want to have commercial protection, but to actually secure a source of raw material supplies. And if those cannot be found within their countries’ borders, then military conquests will be needed to secure that outside their borders.
PP: Now let’s move to the present day and keep talking about efficiency and effects. As you know, after the Russian invasion of Ukraine, a new set of economic sanctions was imposed on Russia and some Russian billionaires. There was an internal debate among Western nations about the extent of the sanctions; one of the most contested issues was expelling Russia from the SWIFT payment system. Why do you think economic sanctions were applied at full strength this time?
NM: That’s a very good question. My sense is that sanctions became the domain into which a lot of the Western desire to act strongly against Russia has been channeled. I would say that there are three basic domains: military hard power, economic pressure, or aid and diplomatic negotiations. The softest and the hardest, basically, were off the table for various reasons. The military option was off the table because of the nuclear situation and the risk of escalation. But there was also, I think, in the West, because of NATO and because of the increasing authoritarianism of Russia and the meddling in Western elections, just a kind of impossibility of really engaging Russia diplomatically. There was some degree of possibility, but not enough to stabilize the situation. And that also had to do with the fact that NATO presented its own principles as non-negotiable, basically.
There was not enough flexibility in the diplomatic sphere on both sides. As a result of those two options being off the table, when this war did break out, we have now put a lot of our expectations and ambitions for the outcome in the basket of sanctions. And it is clear to me that the solution and the outcome will be determined, again, by all three of these domains, not just by one. I want to broaden the discussion to make the point that we should not expect everything to be the outcome of sanctions. If there is a stalemate emerging now, it might actually be because of what happens on the battlefield. And if there is a long-term solution, it is probably going to involve diplomacy. So all three of them are relevant.
PP: Branko Milanovic and others have been pointing to how, in the last 40 years, there has been a slow process of rebalancing international power with the rise of China and the East. What could be the unintended consequences of these economic sanctions? Could those play a role in this reshaping of the global economy and the international system?
NM: Yes, that is really the massive question on everyone’s minds right now. We definitely should not be prisoners of the past in answering this question. We should not try and extrapolate past tendencies and make them guide our expectations. Barry Eichengreen has made this point really convincingly—that we should not think that there will be a currency in the future with exactly the same role as the dollar. And that we should not start to measure, for example, the increasing internationalization of the yuan by the benchmark of what the dollar is now, because US hegemony is historically novel and might not be reproduced in the new model. We should not hypothesize or theorize this too much. But, of course, it is going to have massive effects.
My sense right now is that there is a very big gap within the group of countries that condemned the Russian invasion, which is not universal, but it is a very large global majority of 141 UN member states that voted in the General Assembly to condemn this Russian aggression. And rightly so—I think that is an open-and-shut case; the norm against territorial aggression and against annexation is really alive in the international community. But that is different from the 37 or so North Atlantic and developed Asian countries that have taken action by imposing sanctions. That is only less than 40 countries.
So there is a big gap between recognition of the norm and actually taking far-reaching economic actions in response. That means the countries imposing sanctions are in between two groups: one group of countries that has not actually taken sides—that is, the 35 major abstentions, which actually hold about half of the world’s population—and also a large group of countries that I think do support the norm but are not in a position, because of their dependence on Russian commodities, to take action right now. But the broader issue that looms behind all this is just that, today, the economic heft of the West in the world economy is much smaller than it was in the early 20th century, when the US and Europe together truly dominated and, of course, controlled a lot of what is now the Global South through direct imperial influence. The history that my book deals with is an imperial history, after all. And that really matters, because that shapes the sense of what was possible.
But today, I think we do have to reckon with the fact that a large part of the world—China, India, Indonesia, a lot of Latin American countries, South Africa, Pakistan, Turkey—are not necessarily keyed into this use of sanctions. That means there are more opportunities for trade diversion by countries that are under sanctions. You start to see that with Russia now, but we have already seen that with Iran, for example. And it also means that the real obstacle to sanctions in the 21st century is not going to be technical, because the West has shown that it can operate the levers of the dollar system with radical effects. The real obstacle will be political; it will be actually keeping the use of this tool legitimate in the face of so many countries that have a lot at stake and quite a lot to fear from the unrestrained use of this instrument. That is where the real future of sanctions will be determined—not at the level of technocratic policy-making.