Image Description: A stamp printed in USSR shows Urengoy Uzgorod Transcontinental Gas Pipeline Completion, 1983. By shutterstock.com / Olga Popova
Economic sanctions have become one of the defining instruments of US foreign policy in responding to international crises, from Russia's full-scale invasion of Ukraine to escalating tensions with Iran. Increasingly, they enable the United States to exert influence beyond its borders by shaping the behaviour of not only target states but also foreign governments, companies, and financial institutions. Yet this form of extraterritorial economic power did not emerge overnight.
In this interview, Max Weber Fellow Flavia Canestrini in the EUI Department of History traces the historical evolution of the Siberian pipeline dispute of the early 1980s, examining how debates over export controls culminated in the 1985 Export Administration Act and reshaped the relationship between sanctions, global markets, and US power.
You begin your historical analysis with the 1981–1982 Siberian pipeline dispute. What was this dispute about, and how did Europe respond when Washington tried to extend its sanctions to European companies?
In my book, I wanted to study sanctions as tools operating within globalising markets. As a historian, my goal was not only to understand how they functioned, but also how they adapted to the changing conditions of the global economy between the end of the 1970s and the 1980s. The pipeline sanctions were, in this sense, one of the key events of the period, encapsulating some of the transformations emerging in US sanctions policy. Therefore, they became an important case study for my analysis.
In response to the repression of the Solidarity movement in Poland and Soviet involvement in it, US President Ronald Reagan imposed economic measures against the Soviet Union in December 1981. Through these measures, he also sought to halt construction of the Siberian gas pipeline, intended to bring Soviet gas to Western Europe. In Washington’s view, this would make Western Europe increasingly dependent on Soviet energy supplies.
This story is typically understood as both part of a moment of renewed Cold War tensions in the early 1980s and a manifestation of growing divisions within the Western bloc. These tensions stemmed from Western European allies' refusal to support US efforts to halt the Siberian gas pipeline project, choosing instead to continue both the project and the broader policy of détente. The peak of these tensions came in June 1982, when Reagan decided to extend US sanctions extraterritorially to the subsidiaries and licensees of US firms located in Western Europe that were using American components and technology to build the pipeline. The European governments reacted strongly, refusing to comply, arguing that Washington was interfering in their sovereignty and in the activities of European companies. Months of negotiations over energy policy, trade financing, and the management of East-West economic interdependence followed before the United States lifted the sanctions in November 1982.
The lifting of the pipeline sanctions is often remembered as a European victory. Yet your analysis of the Dresser France case points to a rather different conclusion. How did this case unfold, and what did it demonstrate about the power of the United States?
The implementation of extraterritorial sanctions generated significant controversy, not only complicating the ongoing diplomatic dispute but also revealing important aspects of US sanctioning power. Thirty-five minutes after receiving word that a ship carrying Dresser France (a French subsidiary of the US engineering company Dresser Industries) components had left the docks of Le Havre, France, in violation of Washington's embargo, the United States began leveraging its power through secondary sanctions. A temporary denial order of "all export privileges" against the firm was issued, effectively prohibiting the company from engaging in any activities involving the export of technology or commodities from the United States. In practice, this meant that Dresser France lost access to US technology, products, and export licenses, severely disrupting the company's operations and illustrating the far-reaching consequences of US secondary sanctions.
In response, Dresser became the first firm to challenge sanctions in a US court, making the case emblematic of the disruptive consequences of not complying with US decisions. While diplomatic measures would eventually resolve the Dresser France legal dispute, the broader pipeline crisis exposed a fundamental contradiction. European governments sought to resist US extraterritorial sanctions, yet their companies continued to rely heavily on US technology and access to American markets. Against this backdrop, the extent of US sanctioning power became apparent: the United States could still impose high costs on firms operating in markets shaped by US technological and economic power, as well as on the countries that hosted them.
The pipeline dispute did not mark the end of sanctions as a foreign policy tool. Instead, it reshaped how policymakers thought about sanctions in an increasingly globalised economy. How did this transformation unfold?
The dispute can be understood through two different historical lenses. If we look at this event from a classic international and Cold War history perspective, the argument is that Europeans successfully resisted US interference. This resistance took the form of refusing to comply with US sanctions, maintaining economic commitments to the Eastern bloc, and ultimately building what is now known as the Urengoy gas pipeline. Ultimately, sanctions failed in their foreign policy goals. However, when examined from the perspective of the tool itself and its consequences for global markets, the picture becomes more complicated. Namely, we see how sanctions increasingly affected third countries integrated into markets centred on US financial and economic power. This became particularly clear in the aftermath of the pipeline dispute, which left many economic actors concerned about its long-term implications for contracts, investments, and business strategies.
Already in the early 1980s, European actors increasingly recognised that the United States could use these tools unilaterally at any time and that their extraterritorial effects could reach well beyond the targeted country. As sanctions started to operate across borders, firms in the United States and abroad increasingly faced consequences regardless of whether they were the direct target of US measures. Companies had to anticipate risks, adapt business strategies, and sometimes abandon certain activities. These issues have since become longstanding concerns for multinational companies operating in a globalised economy and remain mainly centred around the United States.
These debates emerged across different negotiating bodies, but Congress became a key arena for debating the future of sanctions, surrounding the 1985 Export Administration Act. Here, policymakers, business groups, executive agencies, and foreign governments debated the future of export controls and sanctions policy, both in terms of their reach and their economic consequences. Different actors advanced competing visions: some favoured strong unilateral controls in the name of national security interests. Others argued that excessive restrictions harmed US economic competitiveness by hurting US companies and undermining the US reputation as a trading partner. In my book, I interpret this moment as part of a broader redefinition of US economic statecraft in a globalised economy, one in which European governments and firms actively lobbied Congress to influence rules that would affect future contracts, investments, and commercial relations.
At the heart of this redesign lay a central tension in US policy: the desire to promote free trade while also preserving sanctions as a tool of geopolitical influence. How did the 1985 Export Administration Act try to resolve this dilemma?
Thanks to globalisation, the United States increasingly relied on open markets and internationally competitive firms to sustain its economic leadership. At the same time, policymakers wanted to retain export controls and sanctions as instruments of national security and foreign policy. The 1985 Export Administration Act sought to reconcile these competing objectives by requiring greater consideration of the economic costs of controls before they were imposed or renewed, including the foreign availability of controlled items and greater protection of existing contracts. Meanwhile, it kept important tools that expanded the reach of sanctions, such as the extraterritorial application of sanctions and the possibility of using secondary measures against actors not complying with US rules. Rather than abandoning sanctions, the Act aimed to ensure they were used more selectively, balancing strategic objectives against their impact on US businesses and competitiveness.
In one of your papers, you build on the themes explored in your analysis of the Siberian pipeline crisis by examining sanctions against Iran. What does the case of Iran reveal about the evolution of US sanctions power since the Cold War?
As US extraterritorial power has become a central feature of contemporary global economic governance, I’ve explored other cases to understand how this process developed from the US perspective and how European actors have sought to counter it over the years. The case of Iran is useful because it shows how this extraterritorial reach moved from the realm of trade and technology that characterised the pipeline sanctions into the financial sphere, reflecting the central role of the US dollar in international finance. While there is a broad literature on this coming from other disciplines that has analysed existing mechanisms, as a historian, my work has been to extend the historical timeline through which these tools emerged and became a defining feature of contemporary US sanctions during the second global era. Beyond policy debates or traditional assessments of whether sanctions succeed or fail, I trace how the United States used sanctions to navigate an increasingly globalised economy. This enabled Washington to exert leverage not only over target states such as the Soviet Union and Iran, but also over third countries and foreign companies that failed to comply with US sanctions.
Flavia Canestrini is a Max Weber Fellow at the EUI Department of History. Her current research interests lie in the dynamics of global markets and in how they have become spaces of political contestation and competition. Her first monograph, currently under review and based on her dissertation, examines how expanding markets in the 1970s and 1980s transformed economic sanctions into key instruments of international diplomacy.