How sanctions imposed by third countries could prevent war
The threat of sanctions to be imposed in the event of an invasion might have averted the war in Ukraine. This is the hypothesis of a computer model developed by researchers in economics and political science.
Could Europe and the United States have prevented the war in Ukraine by threatening economic sanctions against Russia earlier? The question will no doubt remain impossible to settle definitively. But economics allows us to evaluate the probability of such an outcome.
With the support of the Swiss National Science Foundation (SNSF), researcher Mathias Thoenig from the University of Lausanne assessed the probability of a conflict escalating in February 2022 if deterrent sanctions had been announced in 2021 as soon as Russian troops started gathering at the Ukrainian border. In other words, if a credible threat of sanctions had been made against Russia to be imposed if it invaded Ukraine.
The study, conducted in collaboration with Thierry Mayer and Isabelle Méjean from Sciences Po Paris, suggests that such an announcement involving similar sanctions to those that were ultimately adopted after the invasion – restricting access to international financial services, banning the export of sensitive technologies, and introducing penalties aimed at certain institutions linked to the Kremlin – may have altered the Russian leadership’s strategic outlook.
A virtual lab for geopolitics
The analysis (*), which was published by the Centre for Economic Policy Research (CEPR), is based on computer simulations of geopolitical scenarios. The researchers conducted what Mathias Thoenig calls a ‘counterfactual experiment’ using a computer model. It involves constructing a virtual world which serves as a point of comparison with the real world.
“In economics and international relations, we can’t always conduct controlled experiments like in a laboratory, nor can we create a treatment group and a control group. The solution is to simulate an alternative world,” the researcher explains.
The model compares the actual trajectory of events with a hypothetical scenario in which the West announced sanctions in 2021 to be imposed if Russia decided to go to war. The aim is to evaluate whether this threat could have altered Russia’s strategic calculations.
In order to conduct these simulations, the model is based on two types of data. On the one hand, it comprises historical information on international conflicts in the 20th century. On the other, it includes highly detailed data on global value chains – in other words, the production and trade networks that link up economies all over the world.
This data allows the researchers to estimate the reactions of businesses, consumers and governments to the prospect of major commercial disruption brought about by the conflict and sanctions. They then calculate how these reactions could have influenced the political decision to resort to the use of force – or not.
The approach is based on an old idea that has shaped theories of diplomacy and international relations for centuries: doux commerce, or gentle commerce. It was put forward by Montesquieu in 1748 in his work De l’Esprit des Lois (‘The Spirit of Law’) and states that trading relations between countries reduce the risk of conflict by increasing their cost.
He wrote: “Peace is the natural effect of trade. Two nations that trade with each other become reciprocally dependent.” This concept significantly inspired the architecture of international trade after the Second World War.
Cutting off trade: a double-edged measure
Economic sanctions are specifically designed to increase the cost of war by taking advantage of the integration of global trade – for example by depriving Russia of access to international means of payment, by reducing its export capacity or by banning the import of goods and services that are essential to the functioning of its industry.
The simulations highlight a key moment in the geopolitical tensions between Russia and Ukraine: the annexation of Crimea in 2014. From that date onwards, Ukraine sought to reduce its trade dependence on Russia by reorienting its economy towards Europe. This strategy aimed to deprive Moscow of leverage over Kyiv. From this perspective, it was successful.
But this decoupling had a paradoxical effect. By weakening the economic ties between the two countries, it also reduced the potential losses that Russia would have to suffer by entering into war against Ukraine. From the early 2020s, the cost of conflict was relatively limited for Moscow.
The Europeans and Americans could have used a credible threat of severe sanctions made contingent on further aggression precisely to increase this cost and to avoid military escalation.
Beyond the case of Ukraine, these results shed light on a broader evolution in the global economy. For some years now, the major powers have been stepping up economic decoupling strategies: industrial relocation, trade restrictions, fragmentation of supply chains.
According to Mathias Thoenig, this trend could have unexpected geopolitical consequences. By reducing economic interdependence between countries, it could potentially weaken one of the mechanisms that has historically helped contain conflicts. In other words, “as economies decouple, the economic costs of war decrease. And this in turn may increase the risks of confrontation.”