At last week’s World Bank and IMF meetings, I heard sharply divided views about the future path of sanctions and what lessons should be drawn from their use against Russia. Have they been successful, and at what cost to the West? Should sanctions be extended to the payments system, which enhances their power but risks damaging a global public good? What signal does it send to other countries? With growing evidence that sanctions are materially damaging the Russian economy, concerns have been raised that sanctions could become too easy an option for U.S. policymakers.
My October monthly (here) looks at the question and suggests strategies for convincing other countries (and markets) that this new weapon will be reserved for combating serious violations of international norms and not used as leverage in conventional commercial disputes. Better communication of the principles involved in applying sanctions would help. There may also be a case for announcing a guiding set of principles or codes for their use. Other examples of voluntary codes for economic purposes, including the Santiago Principles for sovereign wealth funds and OECD export credit codes, could provide some guidance.