Can Financial Sanctions and Economic Exclusion Create Stability?

In an increasingly interconnected world, economic exclusion has become a tool for geopolitical strategy. Governments and institutions use financial sanctions, asset freezes, and trade restrictions to influence state behaviour and, in some cases, to promote peace. But does it work?

At Fowler Drew, we examine whether economic exclusion is truly an effective force for stability or whether it merely creates unintended consequences that harm innocent people.

The Rationale for Economic Exclusion

Economic exclusion is based on the idea that financial pressure can force political change. Governments, businesses, and international organisations use sanctions and financial restrictions to target states, regimes, and individuals involved in:

• Human rights violations
• Aggressive military actions
• Terrorism financing
• Corrupt governance

The goal is to squeeze the economic capacity of a country or group, making it harder for them to fund destabilising activities.

Success Stories and Failures

Where Economic Sanctions Have Worked

There are cases where economic exclusion has contributed to meaningful political shifts.

• South Africa (Apartheid Era): Sanctions and financial isolation played a role in pressuring the South African government to dismantle apartheid.
• Iran Nuclear Deal: Years of economic sanctions contributed to Iran agreeing to limit its nuclear programme, leading to the 2015 Joint Comprehensive Plan of Action (JCPOA).

Where Economic Exclusion Has Failed

However, there are also major failures where sanctions have not led to desired outcomes.

• North Korea: Decades of financial isolation have not stopped nuclear weapons development.‍
• Russia (Post-2014 and 2022 Sanctions): Despite massive sanctions, Russia has continued military operations in Ukraine, finding alternative economic partners.

The Risk of Unintended Consequences

While targeting regimes, economic exclusion often harms ordinary people by:

• Driving up inflation and reducing economic opportunities.
• Restricting access to essential goods, including food and medicine.
• Weakening domestic opposition movements, as governments blame external pressures rather than internal policy failures.

The Future of Economic Exclusion

While financial restrictions remain a key diplomatic tool, their effectiveness depends on coordinated global enforcement and strategic targeting. At Fowler Drew, we argue that economic exclusion should be paired with engagement strategies, ensuring it does not become purely punitive.