An infinitely more terrible instrument
A brief and incomplete history of economic statecraft
“The boycott is an infinitely more terrible instrument of war. Excepting our own singularly fortunate country, I can not think of any other country that can live upon its own resources.” — Woodrow Wilson (1919)
Here’s a short primer on how to use economic statecraft: When you want another country to do something, you take a look at your economy and identify a few goods or services that the target country depends upon — ideally something they really depend upon — then you turn that dependence into a weapon: withholding access, taxing it, etc., until the country shapes up and does what you want. This lets you leverage commerce for political means. Economic statecraft is both effective (every country needs grain!) and tempting (no need to send in the army!), so much so that any one tool is rarely viable for long, as target countries find workarounds. And what then?
For a moment, it seemed like tariffs might become the new sanctions, but the Supreme Court struck down the Trump administration’s tariffs issued through IEEPA, ruling that they lacked legal authority. IEEPA tariffs are now off the table. In response, President Trump announced a new, universal 15% (or maybe 10%?) tariff, using Section 122 of the Trade Act of 1974, which is legally stronger but strategically weaker (can’t target specific countries, capped at 15%, and expires in 150 days). That 150-day clock is running, and though the White House has backup options, there’s no clear path to rebuild the full tariff regime by July. At the meta level, our trading partners are recalculating whether U.S. tariff threats are still credible: the deals we struck with China and Canada are in limbo, and the European Union has already paused ratification of its trade deal.
As the door closes on IEEPA, the administration will look for a window. This is nothing new. Since antiquity, states have turned to economic coercion to achieve foreign policy aims, and when one tool stopped working, they invented another. Innovation and statecraft have always gone hand-in-hand, so, in a bit of a departure from our regular Hegemoney content, I rounded up a brief and incomplete list of examples of statecraft innovation through history — with many thanks to my brother, a history professor, who taught me about the Salt War.
Disciplining rogue Hellenic states
One of the earliest recorded uses of economic statecraft dates to the fifth century BCE, when Athens issued the Megarian Decree. The decree banned the citizens of the city-state of Megara from Athens’ markets and trade within the Athenian maritime empire — a move likely driven by political tension and commercial rivalry.1 Historians remember the decree less for its effectiveness and more for its consequences: many consider it a trigger for the Peloponnesian War.2 Still, it marked a critical innovation: the use of economic ties to achieve political aims and a recognition that blocking access to markets could be as devastating as a Hellenic phalanx.
Feeding (or starving) Rome’s hungry legions
Over the centuries that followed, rulers repeatedly turned to economic weapons. In the late Roman Republic, the empire’s reliance on grain was a sign of its strength as much as it was a vulnerability. An expansionist power like Rome required grain to both feed a growing civilian population and sustain military forces across the Mediterranean and Europe. During the Third Servile War (73-71 BCE), Spartacus led his army to the Strait of Messina, intent on crossing over to Sicily to escape the mainland and incite another slave revolt. While his revolt failed, some historians argue that Spartacus would have assessed that Sicily’s role as the breadbasket of Rome made it an appetizing target (sorry) and invaluable negotiating chip.
Centuries later, Cleopatra VII, the last Queen of Ptolemaic Egypt, understood the political leverage of Egypt’s agricultural wealth. Rome’s reliance on grain supplies from Egypt gave Cleopatra leverage over Rome, and it’s possible she used this leverage to gain preferential treatment from Rome and its emissaries, imitating earlier tactics of the Ptolemies and Greek city-states in the wake of the wars of the Diadochi. When Octavian conquered Egypt and absorbed it into the Roman Empire, he forbade Roman elites to enter Egypt without his permission — preventing rivals from exploiting Egypt’s agricultural abundance. Grain was finally weaponized against Rome during the Gildonic War of 398 CE.3 The Roman governor of North Africa, Gildo, sought to form a separate state from Rome by cutting off the empire’s access to grain. He did not succeed; according to Gibbon, the Roman legions defeated Gildo’s army in a nearly bloodless battle, and he was thrown into a dungeon by his former subjects while trying to flee. But he deserves some credit for understanding that commodity dependence can be used as leverage.
Silken espionage
The first known act of industrial espionage occurred under the Byzantine Empire, the dominant economic player in the 6th century Silk Road trade. Constantinople was Europe’s primary gateway for Asian luxury goods. However, the lucrative overland route ran through Persian-controlled lands, allowing the Persian Sassanid Empire to enrich itself through tariffs and transit tolls. Determined to break this monopoly, Byzantine Emperor Justinian I sought the secrets of Chinese silk from the Far East to create a local silk industry in the Roman East. Justinian sent two Nestorian Christian monks into China under the guise of missionary work, and they successfully smuggled out silkworm eggs in hollowed-out bamboo canes. The Byzantine Empire soon established its own silk industry — cutting out both Chinese and Persian middlemen. This was a striking innovation in economic statecraft: the fusion of intelligence, trade, and industrial policy to reshape the flows of commerce and power.
Spiritual warfare
By the late Middle Ages, the papacy had become adept at using spiritual networks for political and economic coercion. An “interdict” — a suspension of religious services — functioned as both moral punishment and economic warfare, depriving entire regions of sacraments and trade. In 1376, during the War of the Eight Saints, Pope Gregory XI placed all of Florence under interdict.45 Going beyond earlier spiritual sanctions, Gregory not only excommunicated the city’s leaders and suspended all ecclesiastical rites within Florentine territory, but also authorized the confiscation of Florentine property and the arrest of Florentines throughout papal lands. The sanction was unevenly enforced across the papal states and didn’t paralyze commercial activity, but it struck at the foundations of Florentine prosperity6, marginalizing the diaspora and hindering trade with the city. Gregory’s act represented an early fusion of religious authority with economic interdiction. Use what you got.
When faith failed to bend rivals to papal will, fiscal innovation and military engineering were often effective. Enter the Salt War of the 1540s: The Papal States instituted a salt tax on all territory within its sphere of control. The Italian city of Perugia, while nominally under Papal control, possessed near complete autonomy and rejected the tax outright. Pope Paul III responded by officially annexing Perugia and constructing the Rocca Paolina, one of Italy’s most imposing Renaissance military fortifications and a clear symbol that Perugia’s semi-independence was at an end. The Rocca served not merely as a military stronghold but as a monument to economic subjugation — a physical reminder that fiscal sovereignty flowed from obedience to Rome. Through taxation, confiscation, and a big fortress, the papacy showed how control over material infrastructure can secure political submission.
Total economic war
After the destruction of the French fleet at the Battle of Trafalgar by the Royal Navy, Napoleon recognized that British naval supremacy made an invasion of Britain impossible. So he turned to economic warfare, seeking to strangle the British economy through a continental-scale embargo. The Berlin Decree of 18067 established the Continental System, prohibiting all correspondence and trade with Britain and mandating the seizure of British goods in French or allied territories — designed to seal off the British Colonial Empire from European markets. Napoleon’s Milan Decree of 1807 extended the system, stating that any neutral ship that submitted to British search or paid British duties would be treated as British and subject to seizure.
Conceived as a total embargo, the Continental System quickly evolved into a sprawling, protectionist regime of tariffs, licenses, and customs controls that sought to starve Britain’s economy while financing France’s empire through tightly managed, “licensed,” and highly corrupt commerce. The experiment fused economic isolation with industrial policy, and forced continental Europe to develop domestic industries and administrative controls that foreshadowed modern wartime economies. In Napoleon’s hands, the embargo grew beyond a mere tool of deprivation into an early form of economic system-building — a precursor to the total mobilization of markets that would define the twentieth century8.
The First World War then birthed economic warfare on a multilateral scale, as Allied Europe pioneered a “financial blockade” that blacklisted enemy firms, restricted loans, seized German assets, and coordinated control over shipping, insurance, and trade9. Capital markets and financial networks were mobilized as instruments of war. This period also gave rise to the idea that economic pressure could replace direct violence. British statesman Robert Cecil argued in 1916 that there should be a tool that “put considerable pressure on a recalcitrant power without causing excessive risk to the power using it.”10 The League of Nations first formalized financial blockades as a collective instrument in the 1920s and 1930s, hardening an experiment with economic coercion into a permanent feature of international politics — even though early efforts against Italy proved uneven and ultimately ineffective.11
Arming the dollar
After 1945, Bretton Woods institutionalized U.S. financial leadership by tying global currencies to the dollar and the dollar to gold, while placing IMF and World Bank governance in American hands. The Bretton Woods system was designed to provide stability. But by concentrating clearing, credit, and reserves in New York, it created a coercive tool that later enabled finance to be used as a weapon — completing a long evolution from ancient embargoes to modern sanctions.1213
Over time, the dollar’s centrality in global finance turned access to USD into a lever. The Office of Foreign Assets Control (OFAC), born from its WWII predecessor “The Office of Foreign Funds Control,” in the mid-twentieth century institutionalized this power, with financial exclusion becoming a legal instrument of statecraft. What began as a tool to freeze Axis assets in World War II evolved into our precise system of modern sanctions.
The campaign against Colombian narcotraffickers in the 1990s demonstrated how cutting individuals and banks off from dollar clearing could cripple criminal networks. After September 11, this machinery got turbocharged. The U.S. Department of the Treasury redefined national security to include the financial system itself — targeting terrorists, proliferators, and their enablers through an expanding network of designations. As Juan Zarate observed in Treasury’s War, the attacks remade the department into “the nerve center for a different kind of warfare.”14
Access to the dollar system became a privilege, not a right. The U.S. harnessed SWIFT data to trace terrorist financing and later pressured the network to disconnect Iranian banks. By 2022, the coordinated sanctions campaign against Russia — freezing hundreds of billions in reserves, cutting major banks from SWIFT, and enforcing oil-price caps — showed how control over financial plumbing could rival traditional warfare in speed, scope, and consequence.
What is old is new again
A century ago, Woodrow Wilson warned that the economic blockade was “an infinitely more terrible instrument of war.” To stay terrible and effective, economic statecraft will have to evolve. Persia monopolized the silk route, so Justinian sent monks into China. Britain ruled the seas, so Napoleon shut every European port to British goods. Terrorists exploited global finance, so Treasury turned the dollar system into a weapon. The Trump administration, disarmed of its favorite tool, is searching for the next one. They will find it — in old laws or new technologies. As Edward Fishman observes in Chokepoints15 and elsewhere, when certain chokepoints lose potency, others emerge, and economic warfare will only continue to grow. Innovation is the central theme of the history of economic statecraft. The future will test how that ingenuity is applied.16