Aspects of the political economy of the policy of economic sanctions are addressed. Given the fact that decisions taken in both sender and target countries depend on the interaction of numerous groups of political and economic agents, sanctions research can be productive only if such behavior is explicitly modelled given the objective functions and institutional context they face. It is shown that the political economy approach can help resolve a number of paradoxes common in sanctions research, i.e., paradoxes related to the inefficiency of sanctions, a pro-conflict reaction to sanctions by target countries, escalation of inefficient sanctions by sender countries, and retaliatory measures. Analysis shows that escalation of economic sanctions against the Russian Federation cannot shift the country's foreign policy in the direction preferred by the sender countries. On the contrary, higher sanction costs for the Russian economy fuel domestic political support for current foreign policy decisions. Consequently, conflict resolution should rely upon multilateral political dialogue rather than economic sanctions.
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