Sanctions, Sunk Costs, and the Escalation Trap: When Economic Deterrence Backfires

Kennedy’s analysis of Anglo-American economic warfare against Japan (1937–42) raises the classic question: did coercive economic measures deter or accelerate conflict? Contemporary doctrine in Russia emphasizes non-military deterrence tools (Miljković & Marjanović, 2023), while NATO/EU sanctions and extended deterrence postures (Pop Lazić, 2025) aim to raise costs for aggressors. This project theorizes and measures an “economic entrapment” mechanism: once sanctioning coalitions invest political capital, reputational sunk costs make backing down difficult, while targets’ regime survival logics push them toward risk acceptance and escalation. We combine a historical-process tracing comparison (Japan 1941, Iraq 1990s, Russia 2014–present) with a global quasi-experimental design leveraging sanction onsets and exogenous political timing to estimate effects on conflict escalation. The novelty is shifting the unit of analysis from immediate deterrent success/failure to dynamic entrapment on both sides: senders become locked into punishment, targets into resistance. This approach integrates insights from realism’s concern for credible commitments (Lees, 2023, on Patrick James’s systemist reconstruction) with modern hybrid competition (Bartosh, 2025). The payoff is a tractable theory of when economic coercion deters, and when it conversely drives militarized outcomes—offering policy-relevant thresholds (scope, duration, coalition size) that minimize escalation traps.

References:

1. Patrick James, Realism and international relations: a graphic turn toward scientific progress. Nicholas Lees (2023). Cambridge Review of International Affairs.
2. Anglo-American Strategic Relations, Economic Warfare and the Deterrence of Japan, 1937–1942: Success or Failure?. G. Kennedy (2020).
3. The strategic deterrence measures of the Russian Federation: Terminology, definitions and some aspects of implementation in the Ukraine conflict in 2022. M. Miljković, Zoran Marjanović (2023). Vojno delo.
4. Croatia and the strategy of (extended) deterrence in the context of the Ukraine conflict: Normative foundations and practical challenges. Isidora Pop Lazic (2025). Nacionalni interes.
5. Diplomacy of deterrence and escalation in the global hybrid war. A. А. Bartosh (2025). Diplomatic Service.