This morning, I attended an interesting speech by Jack Lew, Secretary of the Treasury, on the future of economic sanctions. The speech was notable in that Lew made not only a defense of the effectiveness of sanctions, but also highlighted their potential costs, a variable that is too often missing from debates over sanctions policy.

Some of the points Lew made – like the argument that multilateral sanctions are better than unilateral ones – were hardly novel. Yet others were more interesting, including the argument that sanctions implementation should be based on cost/​benefit analysis and an assessment of whether they are likely to be successful. Though such an approach sounds like common sense, it has not always been the rule.

He also focused on the importance of lifting sanctions once they’ve achieved their ends. This is a rebuke to some, particularly in congress, who have argued for reintroducing the sanctions on Iran lifted by the nuclear deal through some other mechanism. As he pointed out, refusing to lift these sanctions now means that they will be less effective in the future: if states know sanctions will remain in place regardless of their behavior, what incentive do they have to change it?

Perhaps most interestingly, Lew argued for the ‘strategic and judicious’ use of sanctions and against their overuse. This is an interesting argument from an administration for whom sanctions have often been the ‘tool of first resort.’ In doing so, he referenced both growing concerns about the costs of sanctions from the business community, and the broader strategic concern that overuse of sanctions could weaken the U.S. financial system or dollar in the long-run.

I still disagree with the Secretary on several points. While he is correct that nuclear sanctions on Iran have broadly been a success, he dramatically overstates the effectiveness of sanctions in the more recent Russian case. Much of the economic damage in that case was the result of falling oil prices, and sanctions have produced little in the way of coherent policy change inside Russia.

He also overstates the extent to which today’s targeted sanctions avoid broad suffering among the population. In fact, evidence suggests that modern sanctions still suffer some of the same flaws as traditional comprehensive trade sanctions, allowing the powerful to deflect the impact of sanctions onto the population, and reinforcing, not undermining, authoritarian dictators.

Despite this, it is refreshing to hear concerns about the long-term implications of runaway sanctions policy expressed by policymakers. In alluding to these concerns – many of which have been noted for some time now by researchers – the Treasury Secretary may help to spark a broader policy discussion of the benefits and costs of sanctions. If we wish to retain sanctions as an effective tool of foreign policy moving forward, such discussion is vital.

For more on some of the big issues surrounding sanctions policy, you can read some of Cato’s recent work on sanctions policy here and here, or check out the video from our recent event on the promises and pitfalls of economic sanctions.