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Economic sanctions: Coalitions increase the cost for the target and reduce own burden

Publication of October 28, 2022

What is the role of coalitions in enforcing sanctions? In a newly released study, researchers at IfW Kiel and DIW Berlin analyse the economic impact of jointly implementing punitive measures in the context of the 2012 Iran and 2014 Russia sanctions. They find that coalitions serve two crucial purposes -- they not only magnify the economic cost imposed on the target but also reduce domestic costs for sanctioning states. The result that the 2014 Russia sanctions caused a welfare loss of 1.5 percent, or roughly ten percent of Russia’s welfare gains from trade openness is relevant with regard to the current Russia sanctions.

Topics: Markets