In international crises, do economic sanctions increase or reduce the risk of conflict escalation? Some studies suggest that sanctions can serve as a costly yet non-violent tool to demonstrate resolve. Others argue that because states tend to avoid self-imposed costs, the logic of costly signaling often unravels in practice: sanctions instead reveal weakness and may heighten the risk of escalation. To reconcile this debate, I shift away from the self-imposed-cost rationale and argue that sanctions primarily operate by communicating and reshaping policymakers’ threat perception. Economic sanctions are associated with a higher risk of conflict escalation only when pre-existing threat perception is sufficiently high. In such situations, sanctions signal a willingness to intensify pressure and may foreshadow trade diversion, heightened coercion, and adverse power shifts for the target. They may also foster a political environment conducive to nationalism and diversionary conflict, thereby encouraging further escalation. By contrast, when threat perception is low, the association between sanctions and escalation weakens and may disappear. I test these expectations using actor-level data on international crises from 1950 to 2016 and find consistent support for the conditional effect of sanctions on military escalation.
Yuleng Zeng (Tue,) studied this question.