By Lili Bayer

Summary Western governments often use sanctions as a tool to persuade other governments to change their policies. Nevertheless, it is often the evolution of competing interests, rather than the economic pressure of sanctions, that informs the decisions of political leaders. Sanctions and economic pressure are merely tactics states use to pursue their goals, and as realities change governments often opt to shift tactics.

While Western governments have over the years imposed sanctions on both Russia and Iran, the two sanctions regimes differed significantly in design, scope and ultimately impact. Sanctions on Russia were designed to demonstrate that the West disapproves of the annexation of Crimea and fighting in eastern Ukraine without fully alienating the Russian regime, thus allowing for continued cooperation on issues ranging from arms control to Syria. In Iran, the sanctions regime was designed to isolate the country and push the regime into a corner. But as Western and Iranian geopolitical goals began converging, both Iran and Western governments became more amenable to concessions. In both cases, however, evolving interests, rather than economic pressure, play a dominant role in shaping the trajectory of negotiations and the use of sanctions as a tool.
Designing Sanctions Regimes
Sanctions imposed on Russia and Iran differed both in design and scope. U.S. and European Union sanctions on Russia, implemented in 2014, were designed to create long-term costs for Russia. Both the U.S. and European sanctions target specific Russian citizens, including government and military officials, who were deemed in part responsible for Russian actions in Ukraine. The sanctions also impact several Russian energy and defense companies and banks by limiting their access to Western credit markets. Moreover, the sanctions prohibit the export of certain oil exploration technologies to Russia. These sanctions, therefore, have a direct impact on some Russian elites and on the ability of some Russian firms to pursue new projects and access funding, but they do not have a direct impact on Russia’s ability to export to Western markets. In August 2015, the International Monetary Fund estimated that sanctions and countersanctions have cost Russia between 1 percent and 1.5 percent of GDP.
In contrast, Western sanctions on Iran, especially those imposed since 2012, were built to cripple the country’s economy in the short term. The U.S. has imposed a variety of sanctions on Iran since 1979. Nevertheless, several measures enacted by the U.N., U.S., EU and other entities over the past few years had a dramatic impact on Iran’s economy. Besides measures targeting Iran’s nuclear and ballistic missile programs, the most significant sanctions include a 2012 European Union ban on oil imports from Iran and U.S. efforts to isolate Iran from the international financial system. Notably, countries like China, India, Japan and South Korea also moved to reduce oil imports from Iran. According to U.S. Treasury Secretary Jacob Lew, due to the 2012 round of sanctions, Iran’s economy was 15 percent to 20 percent smaller than it would have been without the sanctions.

Shifting Tactics and Evolving Interests
Sanctions are a tactic governments use to achieve strategic goals, but the use of this tactic depends on evolving strategic priorities. For the U.S. and European Union, the Russian sanctions regime was designed to pressure Moscow about Ukraine without sacrificing the West’s ability to cooperate with Russia on other issues or, perhaps more important, putting Moscow in a position where it felt it must react more aggressively. U.S. and European strategists feared that if sanctions crippled the Russian economy, Moscow would react by retaliating against Western companies operating in Russia or making moves, militarily or politically, to boost its position in the region. Moreover, as a nuclear state and a major regional power, Russia still had a complex set of legal arrangements with the West, especially in the realm of arms control, that Western governments did not wish to jeopardize. The U.S. and EU thus designed sanctions that would have an impact on Russian elites and firms without crossing the threshold where the Kremlin would see these sanctions as a significant threat. The sanctions on Russia remain in place because Russian and Western interests in Ukraine have not shifted. Russia and the U.S. are engaged in negotiations over the future status of Ukraine, but have yet to come to an agreement. As a result, sanctions remain a useful yet limited tool for the West.
When it comes to Iran, Western tactics shifted as the situation in the Middle East evolved. The sanctions against Iran were designed to bring Tehran to the negotiating table regarding its nuclear program. The sanctions had a significant negative impact on Iran’s economy. However, it was ultimately the regional balance of power and shifting realities on the ground, rather than financial pressures, that led to the nuclear deal between Iran and world powers and a partial lifting of sanctions. Instability in Iraq and the rise of the Islamic State meant that U.S. and Iranian strategic interests in the region began converging. Faced with its rival, Saudi Arabia, taking a greater role in the region and the Islamic State controlling parts of Iraq and Syria, Iran became more willing to bargain with the West. For Western governments, changes in the Middle East shifted the focus away from Iran’s nuclear program to other regional issues. The imposition of sanctions was a tactic employed under earlier circumstances, and as interests shifted for both Iran and the West, a change in tactics was needed.
Sanctions and the creation of economic pressures are not an end in themselves, but rather a tactic that governments use to pursue goals. The design and impact of sanctions vary based on their aim, and as interests shift and new challenges emerge, governments often opt for a change in tactics. Sanctions have not been a decisive factor in the relationships between the West and countries like Russia and Iran, but rather one element in a complex set of Western strategies.