Ozde AykurtSweeping Western sanctions on Russia were meant to isolate the Kremlin and choke off its ability to wage war in Ukraine. But more than two years in, Russia's economy has proven resilient — with 4.3 percent higher-than-expected growth and a wartime budget flush with cash.
Sanctions haven’t stopped Moscow’s offensive or dented its military funding. Instead, they've redrawn trade routes and hardened geopolitical divides.
Yet the United States is doubling down once again — this time on Iran.
In its latest move, Washington has imposed fresh sanctions on individuals and entities it claims are helping Tehran secretly sell oil on the global market.
The official aim? Cut off Iran’s cash flow and slow its nuclear programme.
If this sounds familiar, that’s because it is. For decades, the US has used economic pressure to rein in Iran. These new sanctions echo those imposed after Iran fired missiles at Israeli targets last October.
The idea behind sanctions is simple: apply economic pain to avoid military conflict. But do they work? That’s far less clear.
In a fresh twist, Iran is preparing for nuclear-related talks with representatives from the E3 countries – France, Germany, and the UK – in Istanbul. The talks aim to de-escalate tensions over Iran’s nuclear programme.
Notably absent from the table is the United States.
America’s go-to move
Today, the US has sanctions against more than a third of the world’s countries.
Over time, sanctions have become America’s default tool — not quite war, not quite diplomacy, but something in between. While potentially powerful, they’re often blunt.
Sanctions can freeze billions in assets, disrupt industries, and pressure governments — all without firing a shot. But they can also inflict suffering on civilians, damage US credibility with allies, and sometimes miss their intended targets entirely.
Iran’s exclusion of the US highlights how sanctions may now be sidelining Washington from the very diplomacy it seeks to influence.
“Sanctions are a political instrument of coercion and punishment,” says Olga Krasnyak, associate professor of International Relations at the Higher School of Economics in Moscow.
“They aim to change a state’s behaviour — but when that behaviour is rooted in national identity or sovereignty, sanctions tend to harden rather than change it,” she tells TRT World.
Take Cuba, for example. Sanctions have been in place since the Cold War. The government hasn’t shifted, but ordinary Cubans face chronic shortages of food, medicine, and other essentials.
Syria presents a similar case. Though the US and other Western nations are starting to lift the crippling Assad-era curbs, humanitarian groups say Syrians are in urgent need of aid.
Analyst Javier Farje, who specialises in international affairs with a focus on Latin America, echoes this view with examples closer to home.
“Economic sanctions are meant to punish violations — terrorism, human rights abuses, or aggression — or force a behaviour change. But that doesn’t always happen,” he tells TRT World.
He points again to Cuba. “The US embargo, in place since 1960, is the world’s oldest sanctions regime. It has blocked US companies, banned exports, and restricted dollar access. Yet, the Cuban regime is intact, while the population suffers from isolation and scarcity.”
Farje adds, “Some Israeli settlers advocating Palestinian removal face travel bans and asset freezes. Meanwhile, the US sanctioned UN rapporteur Francesca Albanese for criticising Israeli genocide – showing sanctions can serve political motives as much as justice.”
How sanctions hit economies — and not just Iran’s
Sanctions aim to hurt — and they often succeed. They freeze assets, block bank access, sever trade ties, and sink industries.
For Iran, the economic toll has been devastating: high inflation, currency collapse, and over $1.2 trillion in estimated losses between 2011 and 2022, according to economist Reza Zamani.
Oil, Iran’s economic lifeblood, has become harder to sell. Despite efforts to skirt restrictions, the country now earns significantly less per barrel due to risk premiums, middlemen, and limited access to Western markets.
“Iran’s economy is increasingly pushed into shadow networks,” says Mario Arturo Estrada of Universiti Kuala Lumpur Business School.
“To get around restrictions, it relies on middlemen, high-risk traders, and unofficial routes. That means the profits shrink and the economic strain deepens.”
But sanctions don’t just hurt Iran. By tightening oil supply, they can drive up prices globally. Banks and companies spend billions on compliance. Secondary sanctions punish businesses from third countries that work with Iran, creating ripple effects across global markets.
Vicky Pryce, an economist and analyst, warns that sanctions are often “distorting tools” that fail to deliver intended results.
“Evidence shows sanctions rarely work as intended. Targeted nations find ways around them, often with help from others. Meanwhile, there are costs for both the sanctioned and the sanctioning country,” she says.
Iran’s continued oil exports — often through opaque routes — highlight the limits of enforcement. Similar dynamics exist in Russia, Venezuela, and even among illegal Israeli settlers sanctioned by the EU.
Sanctions enforcement is now a multi-billion-dollar industry.
In Washington, law firms, consultants, and software companies help businesses avoid violations. Banks hire analysts to screen transactions. International firms now prioritise legal compliance over market expansion.
The result is a more cautious and fragmented global economy. Many firms avoid entire regions just to steer clear of US penalties, even if rules are vague or constantly shifting.
“Black markets and criminal networks are stepping in to fill the gaps,” warns Estrada. “Sanctioned states turn to smuggling and underground trades, creating an informal economy outside Western systems.”
He adds, “The cost of compliance is enormous. Global firms increasingly disengage from sanctioned areas, amplifying fragmentation.”
Winners, losers, and the blowback
Not all sanctions are created equal and not all of them succeed. South Africa is one of the rare success stories. Global sanctions helped bring an end to apartheid. In the 2010s, sanctions also nudged Iran to the nuclear negotiating table.
But there are more failures. North Korea remains nuclear-armed despite decades of sanctions. Russia continues its war in Ukraine, using a fleet of shadow oil tankers and alternative trade partners to blunt sanctions' effects.
Iran, too, has resisted US pressure. It hasn’t changed its leadership or core policies. Instead, it has grown closer to Russia and China — a realignment reshaping global power dynamics.
The US sanctions system hinges on dollar dominance. Because most global trade and banking runs through dollar-based systems, Washington can police much of the international economy.
“Iran is now tightly aligned with Moscow and Beijing,” says Estrada. “BRICS — Brazil, Russia, India, China, and South Africa — is becoming more cohesive. If these countries unite economically and reduce reliance on the dollar, US influence will decline.”
That shift has already begun. Russia and China are building alternative payment networks. Central banks in the Global South are diversifying reserves. BRICS is even considering expansion to include Iran and Türkiye.
Krasnyak sees this as part of a broader transformation.
“Sanctions are accelerating the fragmentation of the world order. We’re moving from a US-led, rules-based system to a multipolar one. The more pressure Washington applies, the more these states seek sovereignty — not just militarily, but economically and technologically,” she says.
Farje agrees, noting that sanctions only tighten bonds among targeted governments and individuals.
“Take Nicolas Maduro of Venezuela. He’s under sanctions for (alleged) electoral fraud. His US assets are frozen, and even a presidential jet was confiscated. But he hasn’t backed down, he’s simply moved further from the West,” he says.
That same pattern appears to be playing out again. Ahead of nuclear talks in Istanbul with European powers, Iranian officials have made clear that there are "no plans" to resume negotiations with Washington.
This marks a sharp break from the 2015 JCPOA era, when US-led diplomacy brought Iran to the table. Today, diplomacy is happening — but without the US in the room.
As Iran meets with European powers in Istanbul, and the US continues to expand its sanctions list, the broader question remains: are sanctions still a tool of leverage, or a symptom of diplomatic paralysis?
As Krasnyak puts it, “There is no realistic prospect that the US will lift sanctions on Iran anytime soon, just as there’s little evidence Iran will change its core policies. This isn’t just about oil or nukes. It’s about entrenched security narratives — and those don’t change easily.”
If current dynamics hold, the Istanbul talks may not yield a new nuclear deal — but they might mark the beginning of a new world order, where sanctions lose their edge, and diplomacy reconfigures without Washington at the centre.
