Can Economic Sanctions Deter War? Evidence from Russia and Ukraine

Mayer, Méjean, and Thoenig (2026) examined whether credible threats of economic sanctions can deter war, using the Russia–Ukraine conflict as a case study. They combined international trade data from 1995–2021 with a quantitative model linking trade, diplomacy, and the probability of armed conflict. Their analysis found that Ukraine’s reduced economic dependence on Russia after 2014 lowered the economic costs of war and increased the predicted risk of conflict by more than 5 percentage points. However, if the stronger 2024 sanctions package had been credibly threatened in 2021, it would have raised the probability of peace from about 94 percent to nearly 100 percent.

Why This Article Was Selected for The Policy Scientist

This article addresses an important policy question because economic sanctions have become one of the most widely used alternatives to military force in international relations. Understanding whether sanctions can prevent conflict, rather than simply punish countries after conflict occurs, has implications far beyond the Russia–Ukraine case. The topic is especially timely given increasing geopolitical tensions and the growing use of trade restrictions worldwide. Mayer, Méjean, and Thoenig have contributed extensively to the literature on trade fragmentation, conflict, and international political economy, and this study builds on that broader research agenda. The analysis benefits from high-quality international trade data spanning more than two decades and employs a sophisticated structural model that explicitly links economic incentives to conflict risk. Although the approach is grounded in counterfactual causal reasoning, it remains model-based rather than experimental. Future research would be strengthened by additional causal inference designs that exploit real-world policy variation. While the specific estimates depend on the Russia–Ukraine context, the underlying framework is potentially applicable to other international disputes involving major trading partners.

Full Citation and Link to Article

Mayer, T., Méjean, I., & Thoenig, M. (2026). Can sanctions deter wars? The Russia-Ukraine case. AEA Papers and Proceedings, 116, 114–118. https://doi.org/10.1257/pandp.20261071 (American Economic Association⁠)

Central Research Question

Mayer, Méjean, and Thoenig investigate whether economic sanctions can deter interstate conflict when they are credibly threatened before a war begins. Their analysis focuses on the Russia-Ukraine relationship and asks a more specific question: Would the threat of sanctions comparable to those imposed after Russia’s 2022 invasion have been sufficient to prevent the conflict if those sanctions had been credibly announced in advance? The article seeks to move beyond the traditional question of whether sanctions impose economic costs and instead examines whether they alter strategic incentives in a manner that reduces the probability of war.

The authors argue that sanctions are intended to exchange economic costs for diplomatic leverage. Consequently, evaluating sanctions requires understanding how they affect the bargaining process that occurs before military conflict begins. Their framework therefore links international trade, economic welfare, diplomatic bargaining, and the probability of armed conflict into a single quantitative model. The central issue is whether raising the anticipated economic costs of war changes the incentives of potential belligerents enough to preserve peace.

Previous Literature

The article builds upon two substantial research traditions. The first examines the economic effects of international trade and trade disruptions. Previous studies have documented that wars, sanctions, and geopolitical tensions fragment trade networks and reduce economic welfare. Research by Glick and Taylor (2010), for example, showed that wars significantly reduce international trade flows, while a broader quantitative trade literature has developed methods for estimating the welfare consequences of trade barriers.

The second literature examines the effectiveness of sanctions as instruments of foreign policy. Although many studies document that sanctions impose economic costs on targeted countries, considerably less research has examined whether sanctions actually prevent conflicts from occurring. Much of the existing literature focuses on outcomes after sanctions are imposed rather than on their deterrent effects before hostilities begin.

The present study also builds directly on the authors’ earlier work. Mayer, Méjean, and Thoenig have published extensively on trade fragmentation, geopolitical risk, and the relationship between economic integration and international security. Their earlier research developed a framework linking trade relationships to conflict incentives. This article extends that framework by applying it to one of the most consequential geopolitical events of the twenty-first century and by explicitly modeling the deterrent effects of sanctions.

The study therefore contributes to the literature by integrating economic and strategic considerations into a unified framework. Rather than treating sanctions solely as economic instruments, it evaluates their potential role in preventing conflict through changes in expected incentives.

Data

The analysis combines several high-quality data sources covering the period from 1995 through 2021. Trade and production information are drawn primarily from the OECD Trade in Value Added (TiVA) database. These data allow the authors to measure bilateral trade relationships, production linkages, and patterns of economic dependence between Russia, Ukraine, and the rest of the world.

The study also incorporates labor force data from the World Bank and casualty estimates from the Center for Strategic and International Studies (CSIS). These sources are used to calibrate the human costs associated with war. Estimates of wartime economic losses are derived from previous research by Federle and colleagues (2024), which quantified the economic damage resulting from the Russia-Ukraine conflict.

To estimate the effects of sanctions, the authors use detailed product-level trade data and information from Egorov et al. (2025) concerning the sanctions imposed by Western countries following the 2022 invasion. These data identify which products were sanctioned, when sanctions were imposed, and which countries participated in sanction regimes.

The dataset is a significant strength of the article. It spans more than twenty-five years, incorporates multiple countries and industries, and combines historical trade patterns with detailed information on actual sanctions. The breadth and quality of the data enable the authors to construct realistic counterfactual scenarios rather than relying on purely theoretical assumptions.

Methods

The study employs a structural quantitative model that integrates international trade theory with a diplomatic bargaining framework. The model assumes that countries facing a geopolitical dispute can either resolve their differences peacefully through negotiation or experience bargaining failure that results in war.

A key concept in the analysis is the “opportunity cost of war.” This represents the economic losses that countries would suffer if conflict occurs. According to the model, the probability of peace increases as the opportunity costs of war increase. When war becomes more expensive, countries have stronger incentives to settle disputes through diplomacy.

The authors estimate these opportunity costs by comparing a baseline peacetime equilibrium with a counterfactual wartime equilibrium. The model incorporates production losses, labor force reductions, and disruptions to international trade. Using established methods from the quantitative trade literature, they calculate how these factors affect real consumption and economic welfare.

To estimate the impact of sanctions, the authors employ a difference-in-differences approach using product-level trade data. This method compares sanctioned products with non-sanctioned products before and after sanctions are imposed. The resulting estimates are then incorporated into the larger structural model.

Although the article does not use an experimental design or a natural experiment in the traditional causal inference sense, the methodology is substantially stronger than standard multivariate regression approaches. The analysis relies on explicit counterfactual modeling and attempts to identify causal mechanisms linking trade relationships, sanctions, and conflict probabilities. Nevertheless, because the findings depend on model assumptions rather than observed randomized variation, future research could strengthen causal claims through additional quasi-experimental designs when suitable geopolitical circumstances permit.

Findings/Size Effects

The authors find that economic integration influences conflict incentives in important ways. Prior to 2014, Ukraine maintained substantial economic ties with Russia. Following Russia’s annexation of Crimea, however, Ukraine significantly reduced its dependence on Russian imports and increased trade with other countries, particularly within Europe.

The model suggests that this economic decoupling had an unintended consequence. By reducing Ukraine’s dependence on Russia, it lowered the economic costs Ukraine would incur during a conflict. As a result, the combined opportunity costs of war for the two countries declined. According to the model, the probability of conflict increased after 2014, with the estimated probability of appeasement falling by more than 5 percentage points between 2014 and 2021.

The article’s most important findings concern sanctions. Without additional sanctions, the model predicts approximately a 94 percent probability of appeasement in 2021. When the authors simulate the sanctions package actually imposed in 2022 and assume that it had been credibly threatened before the invasion, the probability of appeasement rises to approximately 97.5 percent. This represents a reduction in conflict risk of more than one-half relative to the baseline scenario.

The effects become even larger when the stronger 2024 sanctions package is simulated. Under this scenario, the probability of appeasement rises to nearly 100 percent. In practical terms, the model suggests that sufficiently strong, credible, and preannounced sanctions would have raised Russia’s expected economic costs of war enough to restore peace probabilities to levels observed before the deterioration of relations following 2014.

An additional finding is that sanctions matter primarily when they are contingent on future behavior. Sanctions imposed only if war occurs increase the expected costs of conflict and therefore strengthen deterrence. In contrast, sanctions imposed regardless of future actions may actually reduce deterrence because they encourage economic adjustment before conflict occurs, thereby lowering the marginal costs of war.

Conclusion

The article provides a novel framework for evaluating the relationship between trade sanctions and interstate conflict. Rather than focusing exclusively on the economic consequences of sanctions, the authors examine how sanctions influence strategic incentives during diplomatic bargaining. Their findings suggest that sanctions can affect the probability of war when they are credibly threatened in advance and when they substantially increase the anticipated costs of military action.

Using detailed trade data and realistic counterfactual scenarios, the study concludes that sanctions comparable to those imposed after 2022 could have significantly reduced the likelihood of a Russian invasion if they had been announced credibly before the conflict began. The analysis further demonstrates that the design of sanctions matters. Sanctions that are contingent on future aggression appear substantially more effective than sanctions imposed unconditionally.

More broadly, the article contributes to the growing literature connecting international economics and geopolitical security. By integrating trade theory, bargaining theory, and empirical evidence into a single framework, it offers a systematic approach for evaluating how economic policies may influence the likelihood of conflict. While the findings depend on model assumptions and should therefore be interpreted as counterfactual estimates rather than observed outcomes, the study provides an important foundation for future research on the deterrent effects of economic sanctions.