As states adapt through alternative trade networks, shadow fleets, and new payment systems, Ilan Kapoor reveals how sanctions increasingly impose costs without securing political compliance 

Sanctions have become one of the preferred instruments of contemporary geopolitics. Western governments have deployed them against Russia, Iran, Venezuela, and China, seeking to alter behaviour without resorting to military force.

The appeal is obvious. Sanctions promise coercion without war. By restricting access to markets, finance, and technology, states can impose costs on adversaries while avoiding the risks of direct confrontation.

Yet recent experience suggests a growing problem. Sanctions continue to hurt targeted states, but they increasingly struggle to produce political compliance.

Russia’s response to sanctions imposed after its invasion of Ukraine offers a striking example. Despite unprecedented restrictions on its banking sector, energy exports, and access to Western technology, Moscow has adapted through rerouted trade, alternative financial arrangements, and an expanding ‘shadow fleet’ of oil tankers designed to circumvent restrictions.

This does not mean sanctions have failed. Rather, it suggests they were designed for a different international order.

Sanctions and the unipolar moment

Modern sanctions emerged during an era of overwhelming Western economic dominance.

The United States and its allies occupied pivotal positions within global finance, trade, insurance, and payment infrastructure. Access to the dollar-based financial system, the SWIFT messaging network, and Western markets became essential for participation in the global economy.

This gave sanctions extraordinary reach. States cut off from these networks faced severe economic disruption.

For much of the postwar period, the US and its allies exerted power not only through military might, but through control over global exchange infrastructure. Today, however, the landscape has changed

Political scientists have described this as a form of economic statecraft. Power operates not through military force alone but through control over the infrastructures that enable global exchange.

For much of the post-Cold War period, this model appeared remarkably effective. Few countries possessed viable alternatives to Western-centred institutions.

Today, however, the international landscape looks increasingly different.

Multipolarity creates workarounds

The rise of China, the expansion of BRICS, and the growing importance of intermediary states have created new opportunities for sanctions evasion and adaptation.

Russia has redirected large volumes of oil exports toward India and China. It has increasingly relied on non-Western insurers, alternative shipping arrangements, and payment mechanisms outside traditional Western channels. Even as Western governments have expanded sanctions on Russia’s shadow fleet, new vessels and networks continue to emerge.

The rise of China, the expansion of BRICS, and the growing importance of intermediary states have created new opportunities for sanctions evasion

At the same time, efforts to reduce dependence on Western financial infrastructure are accelerating. BRICS countries have expanded local-currency trade arrangements and explored alternative payment systems intended to reduce reliance on the dollar and SWIFT. These initiatives may remain incomplete, but they reflect a broader search for financial autonomy in an increasingly fragmented world.

Importantly, these developments do not require a complete replacement of the existing system. They need only provide enough alternatives to reduce the coercive impact of sanctions.

This is a crucial distinction. Multipolarity does not eliminate Western power. It creates options.

The unintended consequences of coercion

Sanctions can still impose significant costs.

Russia has experienced reduced revenues, technological constraints, and growing fiscal pressures. Recent measures targeting its energy sector and maritime networks have generated additional economic strain.

Yet the political results remain limited. Russia has not abandoned its objectives in Ukraine. Iran has not fundamentally altered its regional posture. Venezuela’s political system has endured years of sanctions pressure.

This points to a broader political dilemma.

As sanctions become more common, states increasingly invest in mechanisms designed to reduce their vulnerability. Alternative payment systems, local-currency trade arrangements, and parallel logistical networks become attractive not only for sanctioned states but also for countries seeking insurance against future coercion.

The result may be a paradox. Measures intended to reinforce Western influence can simultaneously encourage the development of institutions that weaken it.

From coercion to fragmentation

The larger consequence may be geoeconomic fragmentation.

Rather than compelling compliance, sanctions increasingly contribute to the emergence of parallel networks of trade, finance, and transportation. Economic interdependence is not disappearing, but it is becoming more segmented.

Rather than compelling compliance, sanctions increasingly contribute to the emergence of parallel networks of trade, finance, and transportation

This matters because the effectiveness of sanctions depends on the concentration of economic power. The more fragmented the global economy becomes, the harder it is to isolate targeted states.

Political scientists have long debated whether globalisation reduces conflict through interdependence. The sanctions era suggests a more complicated reality. Interdependence remains a source of power, but its coercive potential declines as alternative networks multiply.

Pain without compliance

Sanctions remain a powerful tool of statecraft.

They can constrain revenues, disrupt supply chains, and raise the economic costs of particular policies. They are unlikely to disappear from the diplomatic toolbox anytime soon.

But sanctions were most effective in a world characterised by concentrated economic power and limited alternatives. As the international system becomes more multipolar, sanctions' ability to compel political compliance appears increasingly uncertain.

The lesson is not that sanctions no longer matter. It is that they now operate in a more contested global environment.

In a fragmented international order, sanctions may continue to inflict pain. What they can no longer guarantee is obedience.