For decades, an array of economic sanctions was considered the key to containing Iran’s regional ambitions and deterring its aggressive nuclear program. But with direct military conflict now underway, we must ask: were sanctions ever effective, or did they just postpone the inevitable while allowing adversarial and tyrannical regimes the time to strengthen their military capabilities?
Until the 1979 Iranian Revolution and the fall of the Shah, Israel and Iran maintained extensive economic, military, and intelligence ties. By 1982, however, the Islamic Republic of Iran had become a key supporter of a new movement, Hezbollah, based in Lebanon, and later the leader of the "Axis of Resistance" to Israel and its allies. This network of militias—armed, trained, and financed by Iran—mainly operated in Lebanon, Iraq, Syria, Yemen, and the Palestinian Territories. Yet Iran largely avoided directly attacking Israel or taking credit for hostile actions by these heavily armed proxies. Israel, in turn, focused its military actions on the proxies, while hoping that international pressure—particularly the economic sanctions imposed since the 1980s—would eventually persuade Iran to curb its support for terrorism and halt its nuclear ambitions.
A Change in Status Quo
Following the outbreak of the Gaza War in October 2023—initially a proxy conflict involving Hamas, Hezbollah, and the Houthis in Yemen— a direct confrontation began to unfold between Israel and Iran. In April 2024 the Islamic Republic launched more than 300 drones and missiles at Israel in retaliation for an Israeli airstrike on its operatives in Syria. Israel responded with targeted strikes, especially on Iran’s air defenses around Isfahan’s major nuclear technology facility. In October 2024, Iran launched a barrage of ballistic missiles at Israel, prompting a wide-scale Israeli offensive on sites in Iran, Iraq, and Syria, aimed at crippling Iran’s missile production and air defenses.
In a new phase, on June 15, 2025, Israel launched an extensive military attack on Iran, Operation Rising Lion, amid another failed U.S.-led effort to persuade Iran to halt uranium enrichment and dismantle its nuclear infrastructure. Israel struck over 100 strategic targets, including nuclear facilities, missile installations, command centers, and assassinated numerous top military commanders and nuclear experts. Iran retaliated fiercely with ballistic missiles against Israeli population centers.
Economic Sanctions: From Hope to Disillusion
Sanctions are meant to apply economic pressure to compel a target state or organization to meet political or strategic demands. Most are punitive, based on the belief that economic harm will prompt compliance, generate internal unrest, or bring about more moderate leadership. Strong sanctions are ultimately intended as coercive tools instead of outright war. Thus, if full-scale military conflict follows prolonged sanctions, it signals that they have failed.
For decades, Israel attempted to convince the international community—especially the U.S., Europe, and the UN—to sanction Iran in order to halt its sponsorship of terrorism and nuclear advancement. But Israel became increasingly skeptical, especially in 2015 when the Joint Comprehensive Plan of Action (JCPOA) granted Iran partial sanctions relief. Israel responded with a shadow war: sabotage, cyberattacks, intelligence operations (including stealing Iran’s nuclear archive), and assassinations. These sought to delay Iran’s nuclear progress and potential weaponization without triggering open war, while also presenting evidence that Iran was deceiving the international community. The hope was that signatory nations would lose confidence in the JCPOA’s effectiveness. Although the United States withdrew from the agreement in 2018, its official expiry date is not until October 2025.
The Israeli attack on Iran’s nuclear facilities—publicly supported by sanctioning countries such as the United States, the United Kingdom, Germany, and France—highlights the undeniable failure of economic sanctions. While their precise impact is hard to determine—due to Iran’s shadow economy, institutional dysfunction, and corruption—the economic pain is clear.
This outcome is not unique. Sanctions often fail in the Middle East: Iraq (1980–2003), where sanctions ended with military occupation; Libya (1992–2003), where compliance stemmed from fear of
invasion, as happened to Iraq, rather than sanctions; the United States against Syria (1986–present), where sanctions coincided with civil war and jihadist control; Lebanon (1984--1997), where U.S. sanctions demanding the disarming of Hizballah failed to weaken the group. Israel’s sanctions on the Palestinian Authority (2000–2006) helped Hamas—an extreme terrorist organization—to arise, while mixed sanctions on Hamas (2007–2023) failed to prevent escalation and their major attack on Israel on October 7.
The End of the Economic Sanctions Era?
Over time, it became clear that targeted regimes often prioritized political, ideological, and security goals over economic ones. Sanctions sometimes even strengthened a regime by rallying national sentiment. The informal economy and black markets often undermined sanctions, and the humanitarian impact on civilian populations raised ethical and practical concerns. Alternative supply routes provided by third party “Black Knights” reduced pressure (and in the case of Iran were China and Russia, who boosted trade with the Islamic Republic).
Whether or not these outcomes will influence policymakers remains an open question. On the one hand there is significant evidence—now more than ever—that economic sanctions are ultimately doomed to fail. On the other hand, governments often cling to policies even as mounting evidence reveals their flaws, and applying sanctions may still be used for the sender’s domestic political purposes, to signal that a leader is taking action – even when aware that success is unlikely.
Amos Nadan is a professor at Tel Aviv University and the Director of the Moshe Dayan Center for Middle Eastern and African Studies at the University. He holds a PhD in Economic History from the London School of Economics and Political Science.