Beyond the Balance Sheet: What Really Drives Nations to Act

Conventional wisdom holds that nations respond to financial penalties such as sanctions. But what if this assumption is flawed?

History suggests economic pressure rarely changes state behavior. Since 1970, unilateral US sanctions have achieved policy goals in only 13 percent of cases (Peterson Institute, Hufbauer et al., 2009). Broader data since World War I show a 34 percent success rate, even for modest goals. Despite a two-thirds failure rate, sanctions remain overvalued as a foreign policy tool.

Sanctions often fail because nations do not act mainly out of economic self-interest. Identity, pride, history, and culture often matter more than money and resist outside influence.

To understand motivations, not just results, look at cases where economic logic fails.

The Miscalculation

Russia continues its war in Ukraine despite heavy Western sanctions. These hurt Russia’s economy, but Moscow has avoided or adapted to most restrictions. Economic damage is real, with GDP growth averaging 2.3–3.5% per year, but Russia’s behavior has not changed.

Russian leaders and society value national pride, historical legacy, and the restoration of influence more than economics. These deeper motivations, not financial reports, drive their choices.

Some countries’ leaders are unmoved by economic harm; they expect democracies to yield to public opinion but know that autocracies care most about regime stability and elite control. These countries value things beyond money or systems; their motivations go deeper.

Historical Memory as Currency

Nations carry memories that shape their actions in ways money cannot explain. Germany’s humiliation after Versailles shaped decades of politics. China’s memory of a “century of humiliation” shapes policy today. Russia still feels the collapse of its empire. These memories are living forces in decision-making.

Japan before World War II is another example. In July 1941, Western powers halted trade with Japan. Desperate for resources, Japan planned to seize the oil and minerals of the East Indies and Southeast Asia, making war in the Pacific almost certain. The sanctions sped up, rather than stopped, Japanese expansion. Why? Japan’s leaders believed in national destiny and regional domination. Economic pressure alone could not change their viewpoint. They saw sanctions as an existential threat and demanded a military response.

The pattern repeats in Iraq under Saddam Hussein, where economic sanctions certainly failed. Years of harsh sanctions devastated the economy and civilians, but Saddam stayed in power. His rule depended not on wealth, but on personality cult, tribal loyalty, and a defiant narrative against the West. In Iraq, power, survival, and maintaining an image of strength, not money, mattered most.

The Ego Factor

We often ignore how the ego shapes international relations. Leaders—especially autocrats—base legitimacy on strength and resistance. Yielding to sanctions challenges their identity and the story they tell their people.

Sanctions can backfire. In target countries, they can boost leaders’ legitimacy and drive people to radicalism. Economic pain often rallies people around leaders against foreign threats. Leaders blame hardship on the sanctioners. For example, in Iran in the 2000s, sanctions helped hardliners strengthen their power by portraying the West as hostile.

Reducing complex motives to economics misses the real drivers of national behavior. Economic pain rarely causes change; it often fuels defiance.

Cultural DNA and National Identity

Every country has a unique cultural DNA, shaped over centuries by deep beliefs, history, and self-image. These patterns guide national responses to pressure. GDP reports do not alter them.

For some nations, resilience or the restoration of glory justifies sacrifice. Religious or ideological beliefs often outweigh economic needs. Trying to change these convictions with sanctions is like trying to change character with money.

Despite years of sanctions, Iran continues nuclear and regional ambitions. The regime’s legitimacy rests on resistance, Islamic authenticity, and defying the West, not economic well-being.

The Social Dimensions of Conflict

Conflicts often start with social factors: group identity, status competition, revenge, honor, and response to perceived slights. These motivations often overwhelm economic incentives.

Ethnic conflicts rarely respond to sanctions; they are about identity and belonging, not economics. Religious conflicts focus on meaning, not money.

Even traditional conflicts rely on status and prestige. Nations act to claim or keep position, respect, and recognition in the world, not just economic gains.

What This Means for Policy

If states act for more than money, we must rethink how we see international conflicts.

We must be realistic about what sanctions can do. They can signal disapproval or constrain resources, but rarely change behaviors rooted in identity and meaning.

We must engage with national narratives, not just finances. If identity or history drives behavior, solutions must address the story and not just apply pressure.

In sum, true and lasting change requires more than negative incentives. We must look beyond economics to the fundamental forces like identity, memory, and narrative that guide nations. Effective policy means matching our tools not to our assumptions, but to the reality of what actually drives behavior. Only then can we hope to shape the world more wisely and more effectively.

Finally, we need patience and realism. Cultural DNA changes slowly, if at all. Historical memories fade over generations, not years. Identity-based conflicts can’t be resolved on the timeline of budget cycles or election campaigns. The expectation that economic pressure will produce rapid behavioral change often leads to frustration, escalation, and the very outcomes we hoped to avoid.

Conclusion

The world isn’t a marketplace where everything has a price, and everyone’s behavior can be bought or sold. It’s a tapestry of cultures, histories, identities, and meanings that shape how people and nations act, often in ways that defy economic logic. When a society has convinced itself of its historical destiny, when a leader has staked his legitimacy on resistance, when a nation’s identity is bound up with narratives that transcend material calculation, no amount of economic pressure will fundamentally alter the course.

This doesn’t mean economics don’t matter. They do. But they matter within the larger context of human meaning-making, which we ignore at our peril. Until we recognize that identity matters more than money, that who people think they are matters more than what they think they can afford, we’ll continue to be surprised when our economic tools fail to achieve our political objectives.

The question isn’t whether sanctions hurt. They do. The question is whether the pain targets what actually drives the behavior. And too often, the answer is no. We’re applying pressure to the wrong pressure points, trying to change minds and hearts with tools designed for wallets. Until we understand what really animates human behavior at the scale of nations and societies, our policies will continue to produce more frustration than results, more unintended consequences than desired outcomes.

The sooner we acknowledge this reality, the sooner we can design approaches to conflict that are grounded in the full complexity of human motivation rather than the comfortable simplicity of economic calculation.