Suppose one company threatens another with sanctions if they do not enter into a contract, and the sanctions could be genuinely serious and severely damage that company’s budget; how do you see the solution to such hypothetical problems?

Matvey

Let’s introduce different terms depending on what kind of sanctions are envisioned, because the reaction to the threat will heavily depend on this.

Let’s define robbery as the demand for a predatory deal under threat of physical violence, extortion as the demand for a predatory deal under threat of economic sanctions, and blackmail as the demand for a predatory deal under threat of disclosing information that the target of the threat would prefer to keep hidden.

The reaction to robbery depends on the balance of power, the determination to resist, and an assessment of the situation regarding the possibility of receiving outside help. For instance, under current conditions, it often turns out to be cheaper to comply with the robbery demands of a state, although sometimes one can try to negotiate a way out, provided, of course, that state officials respect at least some principles—for example, those considered official laws of that state, or any others. (For example, in Montenegro, an attempt to negotiate a way out is the most obvious response to any attempt at state robbery.) Cases of forceful resistance to the state are also possible, and if such cases are frequent, political scientists say something like “state X is a failed state.”

Robbery demands from private individuals are far more likely to encounter forceful opposition, as such opposition is much more likely to be supported by bystanders, and in some relatively sane state jurisdictions, even by representatives of that very state, especially if the robber acts completely recklessly.

Extortion is perceived by many economic agents as lawlessness and a direct invitation to bypass the sanctions. If the bypass proves successful—that is, if the losses of the party applying the sanctions are almost higher than the losses of the party bypassing them—then the sanctions will be quickly lifted, perhaps even with apologies. However, if the author of the economic sanctions is the state, its officials may, in turn, consider the evasion of sanctions as lawlessness and move from extortion to robbery. Fortunately, the state is not a single organism, but a multitude of actors with their own interests, and bypassing sanctions usually implies that certain officials are interested in making it work.

Finally, in a blackmail situation, the target must solve a difficult dilemma: agree to let all interested parties find out something about them that they would prefer to hide (which is usually something unsightly), or enter into a predatory deal, usually without guarantees that the blackmail will end there. We often encounter such stories in detective novels, and it is easy to see that a wide variety of outcomes are possible. The most boring stories are those where the blackmailer honestly fulfills their part of the deal, and the target of the blackmail, accordingly, escapes with a mild scare. A note to potential blackmailers: act exactly this way. A note to potential targets of blackmail: do not abuse deals with your conscience; in the long run, honesty and openness pay off more.