Fall 2023 (37.3) Review

Backfire: How Sanctions Reshape the World Against U.S. Interests

Backfire: How Sanctions Reshape the World Against U.S. Interests, Agathe Demarais (New York: Columbia University Press, 2022) 304 pp., cloth $30, eBook $29.99.

Agathe Demarais, in Backfire: How Sanctions Reshape the World Against U.S. Interests, makes the compelling argument that the currently unmatched leverage of the United States to use economic sanctions in pursuit of its foreign policy goals could unravel in the coming years. And more importantly, she argues that, because sanctions are U.S. policymakers’ weapon of choice—despite their potential for unforeseen negative externalities—U.S. economic coercion is accelerating the decline of the country’s preeminence in the international system.

As the book illustrates with detailed and engaging case studies, there are real reasons to question the efficacy of sanctions as a foreign policy tool. Imposed sanctions—particularly those with broad aims—rarely coerce policy concessions, as shown through cases involving Cuba, North Korea, and Venezuela (p. 42). Sanctions often lead to increased suffering among the most vulnerable civilians in the target state, as in post–Gulf War sanctions on Iraq (pp. 53–54). They can lead adversaries to replace lost U.S. markets while gaining economic and political ties to the target, as when Russia and China supported Venezuela after the United States imposed sanctions in 2019 (pp. 48–49). And sanctions can have broader, detrimental externalities. They can crash commodity markets, for example, which nearly occurred when the United States sanctioned the Russian aluminum firm Rusal (p. 90). Secondary sanctions can lead to de-risking—that is, overcompliance—by firms who fear retaliation for doing any business with U.S.-sanctioned entities, as also illustrated by the Rusal case.

Though not explicitly advocating a pro-globalization position, Demarais presents a liberal argument that, in a highly intertwined global economy, sanctions are destabilizing restrictions that will harm all sides. Indeed, the negative effects of sanctions can be felt (inadvertently or intentionally) beyond their targets. Demarais notes that consequences for U.S. multinational corporations could be dire, as tit-for-tat economic restrictions could motivate foreign competitors to enter the market, reduce U.S. market access, and undermine incentives for the research and development that has promoted a U.S. lead in technology.

Though coming from a more practitioner-oriented perspective, Demarais’s discussion in chapter 3 of when imposed sanctions achieve target concessions mirrors the findings of the academic literature on the topic. The argument is most novel, and most engaging, when it predicts future developments, particularly as they involve technology. The discussion in chapter 10 breaking down the global value chain in semiconductors and the varying dominance of U.S. firms at various points therein, for instance, should be required reading for students of economic statecraft. Though not explicitly stated, there are also critical lessons for those who use quantitative methods: summed flows of bilateral trade (or even networks constructed from them) are no longer adequate to understand the power and vulnerability inherent in complex global production chains.

Demarais makes fascinating parallels between the U.S. centrality in technology and its centrality in finance. In chapter 2, she reviews the evolution of U.S. financial sanctions, which involved a learning process for U.S. policymakers, who realized over time the leverage afforded by the U.S. position in global finance, as well as the strength of the U.S. dollar. Of course, other states have learned about U.S. power as well, and are trying to adapt by developing alternate payment systems. In chapters 10 and 11, Demarais makes the case that a similar process is likely to play out in technology. Yet, it is not clear that U.S. sanctions are necessary for—or that U.S. restraint would prevent—the attempt by rising challengers to circumvent the predominant U.S. position. We could simply be witnessing the inevitable practice of power politics in an anarchic international system.

My biggest critique of the book is that, at times (most evident in chapter 3), it falls into the common trap of judging the effectiveness of U.S. sanctions on the narrow grounds of whether they extract policy concessions from the target. I see two issues with this line of reasoning. First, it ignores the extent to which sanctions serve other purposes. For example, containment of the target and/or signaling to third parties are important contributions of imposed sanctions. Second, the author does not engage directly with the most important theoretical and empirical findings in the study of economic coercion: sanctions that would be most successful in changing target behavior rarely require imposition because rational targets will concede to the preceding threat. Taken together, these two points highlight the fact that much of the impact of U.S. sanctions—or more specifically of U.S. coercive power—takes the form of “dogs that didn’t bark,” that is, proactive compliance. Of course, scholars have a difficult task identifying exactly the extent to which foreign actors comply with U.S. policy preferences more than they would if not for the power of U.S. sanctions. Much more work on the subject is needed.

Further, some of the counterproductive elements of sanctions that Demarais highlights could be seen, from a slightly different angle, as useful components of a broader coercive strategy. Demarais discusses several U.S. decisions not to employ certain kinds of sanctions, given the high domestic costs it would face. For example, the United States refrained from sanctioning Venezuela’s oil firms in 2017 because large investments in U.S. refineries would have been at risk (p. 29). She then notes that oil sanctions were imposed in 2019, after domestic U.S. production had begun to ramp up and dependence on Venezuelan imports had diminished (p. 32). There is an important lesson here that goes largely unmentioned in the book: the signaling effects of U.S. sanctions—and even sanction threats that are not imposed initially—could motivate firms to find alternative markets less at risk of these measures. The United States could rattle the saber of sanctions specifically to incentivize firms to reroute around potential targets, after which it is in a better position to impose harsher sanctions. Current efforts by Germany to wean off Russian fossil fuels could be another example of this process, as could attempts to find alternatives to the Chinese market for semiconductors. It remains unclear whether the long-term effects of this behavior will be beneficial or detrimental to U.S. interests.

Finally, it is worth mentioning a factor given relatively little attention in Demarais’s analysis: U.S. partisan polarization and growing populist pressures against globalization. Sanctions might be popular in part because they are easy for the executive branch to use in a divided country. I would have also liked to see more discussion of incentives for U.S. policymakers to use sanctions as a form of industrial policy. No book can cover everything, of course; these topics would make great subject matter for future work.

While Backfire makes a compelling case that U.S. power could be undermined by its own actions, it leaves open for future scholars a systematic analysis of exactly how political and economic networks are reorienting as a consequence of U.S. sanctions. The reader comes away with a recognition of how important it is for scholars to undertake such research, and for policymakers to pay attention to externalities associated with economic coercion. Notably, Backfire was written shortly before U.S. strategy on China attempted to rebrand from “de-coupling” to the softer sounding “de-risking” (with a definition distinct from firm over-compliance with sanctions), which perhaps illustrates a realization of the dangers inherent in over-sanctioning. As the liberal international order faces challenges from outside and from within, it is ever more important to bridge the academic-practitioner divide, as Backfire accomplishes.

—Timothy M. Peterson

Timothy M. Peterson is an associate professor in the School of Politics and Global Studies at Arizona State University and studies the causes and consequences of economic coercion. His work has been published in journals including
International Studies Quarterly, British Journal of Political Science, and Journal of Conflict Resolution.

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