The Iran war proves that U.S. economic coercion is weakening

Two months after the United States, along with Israel, launched a war against Iran, that conflict appears far from a lasting resolution. Much commentary on the protracted nature of the conflict has centered on the limits of both the military and diplomatic approaches to the war. But the conflict has also exposed another key reality: the limits of U.S. sanctions. The U.S. has been the world’s preeminent economic and military power for decades, certainly since the end of the Cold War. It is at the center of much global financial activity and has a military budget well beyond China, the closest competitor. Leveraging that power, the U.S. has long used economic coercion to achieve its foreign policy goals, whether against North Korea under the Kim regime, Russia over its invasion of Ukraine, or Iran since the 1979 revolution that overthrew the U.S.-allied shah. But as U.S. power in the world has slowly declined amid the rise of China and an increasingly multipolar world, the country has likewise lost some of its ability to effectively use economics as a weapon. Indeed, as scholars of economic sanctions and statecraft, we believe that the conflict against Iran has made clear the diminishing returns of U.S. economic sanctions. The limits of sanctions on Iran Since 1979, relations between Washington and Iran have been antagonistic. U.S. policy has been largely to punish, contain, or isolate Iran, and successive administrations have done so in part through a mix of primary, secondary and targeted financial economic sanctions. U.S. economic coercion has been applied on Iran for a variety of reasons, including its alleged state sponsorship of terrorism throughout the region and its nuclear program. The emergence of that nuclear program in 2003, which later resulted in United Nations sanctions against Iran, saw U.S. and European Union interests around Iran converge. This convergence led to the U.S. and EU cooperating on economic sanctions against Iran, which limited Iranian ac