OUR TRACK RECORD SPEAKS FOR ITSELF.

Brief Book Review of Nicholas Mulder’s The Economic Weapon

By Anne M. Eberhardt, CFE, CAMS, Senior Director, Valuation & Litigation Consulting

Will 2022 be remembered as the year things fell apart? Can the center continue to hold? Do the best lack all conviction, and are the worst full of passionate intensity? The threat of “unprecedented sanctions” hasn’t prevented the loosening of the blood-dimmed tide on Eastern Europe. Tens-of-thousands have died and billions of dollars in infrastructure has been destroyed. And now the word “Armageddon” has been uttered by the President.

During these dark times, I confess to having consulted Nukemap more than is probably healthy. But when I’m not worrying about what type of nuclear blast is at hand, I have been reading about the history of financial regulations. In what is arguably a candidate for the Timeliest Book of All Time Award, Nicholas Mulder’s The Economic Weapon: The Rise of Sanctions as a Tool of Modern War provides a gripping account of the story behind the development of sanctions as an international enforcement tool.

Mulder begins his story with the development of sanctions in the First World War and the interwar period following the establishment of the League of Nations. He argues that sanctions were intended to inflict severe, and even deadly, economic consequences.

Mulder also argues that, despite a handful of success stories in achieving foreign policy aims, the threat of sanctions actually encouraged Germany, Japan, and Italy to take increasingly aggressive steps to secure their economic survival—including invading other countries and forming security pacts to protect strategic trade.

The economic blockade the Allies imposed on the Central Powers during World War I left a traumatic memory in the minds of most Europeans. More civilians and soldiers were killed by blockade-induced starvation than by aerial bombing or poison gas, and most leaders were reluctant to use sanctions in the interwar period. But by 1945, following the horrors of concentration camps and the devastation of atomic warfare, sanctions came to be regarded as comparatively mild.

Nevertheless, despite their increasingly widespread use, sanctions have generated very mixed results. Mulder cites recent studies indicating that in the twentieth century, less than 30 percent of sanctions were successful, at least partially, in achieving their stated goals. The use of sanctions doubled in the 1990s and 2000s compared to the Cold War period from 1950 to 1985. Moreover, by the 2010s the use of sanctions had doubled again. While sanctions could still be described as about 35-40 percent effective between 1985 and 1995, by 2016, effectiveness had fallen to below 20 percent.

Will today’s “unprecedented sanctions” be the exception? Can the West’s desired policy aims be impacted without a nuclear Armageddon? I’m told by those who hold the very best opinions that expressing fear of nuclear war only plays into Putin’s hands. But as a child of the Cold War, I’m weak. And so, I continue to consult Nukemap, worrying what rough beast—its hour come round at last—slouches towards St. Petersburg to be born.