How Sanctions Became Everyone’s Problem; And Why South Asia Must Respond Together

A sanction against a Russian bank. A new US law targeting buyers of Russian oil. A stalled UN mechanism for watching Iran. These sound like disputes between great powers. They are not. They have become a global disruption that reaches far beyond Washington, Moscow, and Tehran.

In September 2026, the United States sanctioned Russia's VTB Bank for allegedly helping Iran evade sanctions. Around the same time, new US legislation gave the president power to impose tariffs of up to 100% on countries that buy large volumes of Russian oil and gas. Days later, Russia and China blocked the renewal of independent UN monitoring of sanctions on Iran. Each of these events looks like a bilateral or great-power story. Together, they show something larger: sanctions are no longer aimed only at the countries they name. They are reshaping global energy prices, shipping routes, insurance markets and international payment systems for everyone who trades across borders.

This matters most for economies that had nothing to do with the original dispute. South Asia is a clear example. The region imports most of its energy. It settles most of its trade in dollars. It depends heavily on Western markets for exports, especially garments. When sanctions disrupt energy supply chains or banking networks, South Asian economies absorb the shock even though they are not the intended target. The costs of these new sanctions architecture are falling on bystanders, not only on the countries the sanctions were built to punish.

The deeper problem is that South Asia is facing this pressure alone, country by country. Bangladesh, India, Pakistan, Sri Lanka and Nepal are each too small individually to negotiate favourable terms with Washington. None of them, on its own, has the reserves or leverage to absorb a major energy-price shock without real pain. Yet instead of coordinating, these countries often respond separately. During past disruptions, several have even competed against each other for the same alternative suppliers or spot-market cargoes, driving up prices for everyone in the region.

This fragmentation is expensive. Each country builds its own strategic reserves instead of sharing capacity. Each negotiates its own shipping and insurance arrangements instead of pooling volume. Each manages its own foreign-exchange pressure instead of building shared buffers. These are largely the same costs, paid five times over instead of once. A region that trades and suffers disruption together should be able to plan resilience together.

A coordinated South Asian response would look different. It would include shared strategic energy reserves that member countries could draw on during a crisis, rather than each country scrambling alone. It would include joint procurement of oil and LNG, giving the region collective bargaining power that no single country has on its own. It would include stronger regional energy grids, so that electricity and gas can move across borders when one country faces a shortage. It would also include shared payment mechanisms, reducing the region's collective exposure to disruptions in any single financial channel. None of this requires South Asian countries to agree on every political question. It only requires them to agree that resilience is cheaper when it is shared.

Building this kind of cooperation will inevitably raise a harder question: what role should China, Russia and Iran play? Some of the most useful alternative channels — alternative energy suppliers, alternative shipping routes, alternative payment systems — will naturally involve these countries, simply because they are large energy producers and, in some cases, are already building institutions like the BRICS payment framework. This is where the argument needs to be precise, because the wrong framing invites the wrong response.

Cooperation with China, Russia and Iran should not be framed as joining an anti-Western bloc. It should be framed as risk diversification. The goal is not to replace Western markets or Western finance. The goal is to reduce the leverage any single power or system can exert over South Asian economies. A country that depends on only one energy supplier, one shipping route, or one payment system is vulnerable to whatever happens to that one channel. A country with several channels is not.

This distinction carries a real obligation. South Asian countries, and any partners they work with, must stay firmly within the boundaries of legal, sanctions-compliant trade. Building alternative channels to reduce exposure is a legitimate act of economic self-protection. Building channels to help sanctioned entities evade the law is a different act altogether, and it would expose South Asian countries to the very secondary sanctions they are trying to avoid. Compliance is not an obstacle to this strategy. It is what makes the strategy credible and sustainable.

Seen this way, the case for cooperation is not ideological. It is practical. South Asia does not need to decide whether its future lies with Washington or with Beijing and Moscow. It needs infrastructure that lets it trade safely with all of them, without any single relationship becoming a point of maximum vulnerability. That infrastructure does not yet exist at the regional level, which is precisely why the current sanctions regime falls so heavily on South Asia. The burden is not simply the cost of sanctions themselves. It is the absence of any collective mechanism to spread that cost across the region instead of letting it land on each country individually.

The lesson from September 2026 is not that South Asia must pick a side in a larger geopolitical contest. It is that South Asia has been trying to manage a global problem with national tools, and national tools are no longer enough. Shared reserves, joint procurement, regional grids and diversified payment channels would not eliminate the risks created by an increasingly weaponized sanctions system. But they would ensure that no single disruption, and no single power, can inflict damage on South Asia that the region could have avoided simply by acting together.

The sanctions regime will keep evolving. Whether it becomes an occasional inconvenience or a recurring burden for South Asia depends less on decisions made in Washington, Moscow or Beijing, and more on whether South Asian countries choose to face this new reality separately or together.

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The writer is political and international affairs analyst; Research Fellow, Bangladesh Neeti Gobeshona Kendra