<p>Economic penalties have become one of the most often utilised tools of foreign policy in modern international relations. Authorities and global entities are progressively employing sanctions to affect the political, economic, and strategic conduct of nations without engaging in armed action. These actions encompass trade limitations, financial sanctions, asset immobilisations, travel prohibitions, and technology regulations aimed at inducing policy modifications, deterring breaches of international law, and safeguarding global security. Although sanctions have emerged as a significant element of economic diplomacy, their efficacy continues to be a topic of substantial scholarly and policy discussion. In some instances, sanctions have effectively compelled governments to engage in negotiations or alter particular policies, but in other circumstances, they have not met their intended goals and have resulted in considerable humanitarian, economic, and geopolitical repercussions. This research rigorously analyses the development of economic sanctions, their function as a tool of foreign policy, the determinants affecting their efficacy, and their significant constraints within the modern international framework. The study employs a qualitative approach utilising secondary sources and examines significant case studies, such as Iran, Russia, North Korea, and South Africa. The document is analysed under the lenses of Realism, Liberal Institutionalism, Economic Statecraft Theory, and Complex Interdependence Theory. The research determines that economic sanctions are a significant non-military policy tool; yet, their efficacy is heavily reliant on multilateral collaboration, efficient execution, well-articulated goals, and the political and economic fortitude of the targeted nation. A well-rounded sanctions approach integrated with diplomacy presents enhanced opportunities for attaining enduring foreign policy results compared to penalties applied independently.</p>