Sanctions

 I see "new sanctions" on Iran by the States and a "warning" to other countries not themselves enforcing sanctions, but the reports seem to lack specifics.

You're not imagining it. Much of the reporting has been heavy on the rhetoric and light on the details because the administration appears to have announced a framework and warning rather than immediately imposing the most severe penalties on other countries.

What seems to have happened is:

    The U.S. announced a new sanctions campaign against Iran, targeting dozens of Iranian-linked entities and expanding the sectors under scrutiny, including shipping, aviation, technology, gold, and digital assets.

    The administration warned that countries and companies continuing significant business with Iran could face "secondary sanctions." Those are sanctions applied not to Iran itself, but to third parties doing business with Iran. The real threat is often exclusion from the U.S. financial system or loss of access to dollar transactions.

    However, Treasury Secretary Scott Bessent reportedly stopped short of immediately imposing those secondary sanctions on major countries such as China and others. He said he wanted countries to have an opportunity to disengage from Iran first.

So the "warning" you've seen is essentially: start reducing your economic ties to Iran now, because we may later sanction those who continue them.

The obvious question is whether the U.S. is really prepared to sanction major economies. China is Iran's largest oil customer, and countries such as India, Turkey, the UAE, and others have varying degrees of trade with Iran. Imposing full secondary sanctions on large trading partners could create major diplomatic and economic friction. Several reports note that no specific countries were named for punishment in the announcement itself.

Historically, secondary sanctions work because many banks and companies decide that access to the U.S. financial system is more important than access to Iran. The question is not whether Iran is sanctioned—that has been true for decades—but how aggressively Washington will enforce penalties against non-Iranian firms and governments.

My reading is that the reports sound vague because the administration intentionally left itself room to escalate later. The concrete sanctions are on Iranian-linked entities now; the consequences for other countries remain more of a warning than a fully specified policy at this point.

Is it somewhat accurate to call it speaking loudly and carrying a small stick?

That's a fair quip.

The original Roosevelt phrase was "Speak softly and carry a big stick." The idea was that the threat in the background was credible, so you didn't need to shout.

Critics of many modern sanctions announcements sometimes reverse it: lots of stern language, but uncertainty about whether the threatened penalties will actually be imposed, especially when doing so would be costly to the country making the threat.

In this particular case, the "stick" is not actually small. The United States still has enormous leverage through the dollar, the banking system, insurance markets, and access to the American economy. If Washington truly chose to impose severe secondary sanctions, many firms around the world would take notice very quickly.

The question is whether it is willing to swing that stick at major powers and major trading partners. Sanctioning a small shipping company is one thing; sanctioning a large Chinese bank or a major company in an allied country is another. Markets and governments know this, which is why they often watch enforcement actions more closely than announcements.

So I might amend your phrase slightly: not "a small stick," but perhaps "speaking loudly while leaving people guessing how much of the stick will actually be used."

International politics is full of that sort of ambiguity. Sometimes the uncertainty itself is part of the strategy.

That is one of the central problems of economic statecraft.

Once sanctions begin targeting not only the offending country but also third countries that continue trading with it, the risk increases that the dispute stops being about the original issue and becomes a dispute about sovereignty and trade rights. At that point, retaliation can spread outward in a chain reaction. The WTO system was largely designed to prevent exactly this kind of escalation through consultation, transparency, compensation, dispute resolution, and limits on unilateral trade restrictions.

Historically, several things help keep sanctions from spiraling into a broader trade war:

    Keep objectives narrow and specific. If sanctions are tied to a concrete demand—stop a weapons program, release hostages, cease a particular activity—other countries can see a path to their removal. Open-ended sanctions invite resistance and circumvention.

    Act multilaterally where possible. Sanctions backed by a broad coalition or by the UN tend to generate less resentment than sanctions imposed by a single country on the rest of the world. Other nations may still dislike them, but they are less likely to see them as an assertion of one state's economic dominance.

    Use exemptions generously. Humanitarian goods, food, medicine, and often certain commercial activities can be exempted. This reduces collateral damage and lowers pressure for retaliation.

    Provide off-ramps. Countries and companies need to know what actions will lead to sanctions being lifted. If sanctions appear permanent regardless of behavior, there is little incentive to comply.

    Target more than punish. Measures aimed at specific banks, military entities, shipping networks, or individuals generally create less disruption than broad embargoes affecting entire economies.

    Maintain diplomatic channels. Even during the Cold War, trade disputes and geopolitical confrontations were often accompanied by constant negotiation. Economic pressure without diplomacy tends to harden positions.

There is also a more fundamental economic reality. The more interconnected the world economy becomes, the more expensive large-scale sanctions become for everyone involved. A country can often absorb the cost of restricting trade with a small adversary. It is much harder to restrict trade simultaneously with several major economies without significant blowback at home.

That is why governments often announce sanctions in sweeping language but implement them selectively. They want enough pressure to influence behavior, but not so much pressure that they trigger a self-sustaining cycle of retaliation. In effect, they are trying to persuade others that the stick is large without having to swing it very often.

Your observation points to a tension that has become more pronounced in recent years: the sanctions tool has grown more powerful because of global financial integration, but that same integration means aggressive use of the tool risks fragmenting the very system that gives it power in the first place. Economically, there is a point at which overuse of sanctions starts to erode the leverage that made sanctions effective.

Countries may ignore sanctions for ideological of political reasons, but it seems likely the leading reason will be simple economic advantage.

Yes. In many cases, economic self-interest is probably the strongest motive for a third country to resist sanctions, especially when the sanctions aren't backed by a broad international consensus.

A government might say, "We reject American unilateralism," but underneath that rhetoric may be a rather prosaic calculation: Iran is offering us cheap oil, a market for our goods, or a profitable transit business, and Washington is asking us to give that up.

And the calculation can become particularly compelling when the third country thinks it can avoid the penalties.

There are really three questions for such a government:

1. What do we gain by trading with the sanctioned country?

Cheap energy, export markets, investment, strategic commodities, shipping revenue, banking fees, etc.

2. What do we risk by ignoring Washington?

Loss of access to American markets and finance, penalties against particular banks or companies, diplomatic consequences, perhaps restrictions on technology.

3. How credible is the threat?

This last one is crucial. If Washington threatens sanctions against everyone but actually has to exempt or tolerate some major countries, other governments notice. The threat then becomes less frightening.

And there is an interesting feedback effect. Suppose China can buy Iranian oil at a substantial discount because Western companies won't touch it. The sanctions themselves create the economic advantage that encourages China to ignore them. The sanctioned commodity becomes cheaper precisely because the sanctioning countries have withdrawn from the market.

That can turn into a bargaining game:

    "You want us to stop buying Iranian oil. Fine. What are you offering us for the oil we will have to buy elsewhere?"

If the answer is essentially "Nothing; we are merely threatening you," the economic case for cooperation may be weak.

This is also why secondary sanctions are much more difficult when the third country is large. A small bank may decide that access to the American financial system is indispensable. A huge country with its own enormous market, banks, manufacturing base, and alternative trading partners has considerably more room to say, "No."

So I think your formulation gets at something important: ideology often supplies the public explanation; economics frequently supplies the staying power. And when the economic advantage of violating the sanctions is large enough, political hostility toward the sanctioning country can simply make the decision easier.

And it is the big countries that count.

Exactly. And that makes secondary sanctions a rather different proposition from ordinary sanctions.

If a small country ignores the sanctions, Washington can often punish the particular companies involved without much wider consequence. But if China, India, Turkey, or another major economy decides that trading with Iran is sufficiently advantageous, the arithmetic changes dramatically.

The sanctioning country then faces a choice:

Enforce the secondary sanctions → risk disrupting its own trade, antagonizing a major power, raising commodity prices, and encouraging retaliation.

Don't enforce them → demonstrate that the threat has limits, potentially encouraging other countries to ignore it too.

And there is a third possibility: negotiate exemptions. That's probably the most practical way to prevent the situation from becoming a trade war. A major country might agree to reduce certain transactions, impose its own restrictions on particularly sensitive goods, or provide transparency in exchange for being spared the full force of U.S. sanctions.

There is also a scale issue that I think is easy to miss. If, say, twenty small countries comply but one enormous economy continues buying most of the sanctioned commodity, the nominal number of cooperating countries tells you almost nothing about the effectiveness of the sanctions. What matters is the share of world trade they represent.

Which brings us back to your earlier "small stick" observation. The United States possesses an extraordinarily large stick—but against a sufficiently large country, actually using it can be economically painful enough that everyone watches to see whether Washington really intends to swing it.

And if the answer repeatedly turns out to be "only up to a point," the credibility of the stick gradually becomes the issue.