Can someone explain how US economic sanctions work and why are they so important? Thank you.
Not important for prelims.
But anyway: USA controls most of the global financial systems. If USA sanctions an Individual, Entity or Country - it means that American controlled financial institutions wont do business with you - they may additionally freeze your assets in their banks etc. So basically you wont be able to use your money across most of the world. For example: Iran was selling India oil, but India could not pay Iran because of American sanctions - increasing operation costs. Iranian firms cant also raise funds in international capital markets. Sometimes sanctions also mean that USA coerces countries to stop doing business with a particular entity or a country. For example, Trump admin got India to stop buying Iranian oil recently.