Do economic sanctions serve to stop a war?

The West opted for economic sanctions as a response to the Russian invasion of Ukraine. However, economic warfare is not a recent phenomenon.

Back in the Middle Ages, imports were prohibited or foreign merchants were expelled from the kingdom. In the Napoleonic wars, the British imposed an economic blockade on France, something that the Confederation also had to suffer in the American secession war and that Germany suffered during the First World War.

But are these measures really effective? Do they help to win a war or can they be counterproductive? Let us analyze some historical experiences.

the two world wars

In World War I, Great Britain, using its great naval power, imposed a maritime blockade on Germany. All this made it impossible for Germany to supply itself with goods from neutral nations.

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The Great War ended in 1918, the nightmare of the trenches ended, and shortages took their toll on German society. However, the world was terrified by the possibility that a new global conflict could break out. War had to be avoided at all costs and economic sanctions were chosen as a coercive instrument.

However, the countries could not act alone when imposing economic sanctions, since the League of Nations, as the forerunner of the UN, would be the great forum where these sanctions would be jointly approved.

In fact, the Treaty of Versailles imposed heavy economic sanctions on Germany, which was sentenced to pay the cost of the war. Germany was plunged into poverty by not being able to bear such high costs and, when the suspension of payments occurred, French troops occupied the industrial region of the Ruhr. Hunger and hyperinflation ravaged Germany, giving rise to a social context conducive to the emergence of totalitarian ideologies such as Nazism.

Also, during the interwar period, Italy attacked Abyssinia and in 1935 it was decided to impose sanctions on the Mussolini regime. A blockade against Italy of the Suez Canal and restrictions on the supply of oil were proposed. But the lack of will of countries like France, the United States and Great Britain left these sanctions on a dead letter, which were withdrawn in 1936.

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Shortly before the entry of the United States into World War II, there was already concern about Japan’s expansionist drift. In July 1941 the Japanese occupied French Indochina and President Roosevelt ordered a freeze on Japanese assets in the United States and an oil embargo. These economic sanctions left a fuel-strapped Japan in a difficult position and were one of the factors that led to the Japanese attack on Pearl Harbor.

Effective sanctions?

It is debatable whether economic sanctions are a useful tool or whether they can have a real effect in turning a government around. Where economic sanctions have not served their purpose has been in countries such as North Korea and Cuba, as they remain totalitarian regimes despite having suffered blockades that have lasted for decades.

Where sanctions did have a noticeable influence was in apartheid South Africa. On that occasion, the racist government of South Africa saw its access to oil denied, while an arms embargo was added. As a result, South Africa gradually abolished racist laws.

The South African experience is often held up as the great example that economic sanctions can bring about political change. Furthermore, Nelson Mandela himself recognized that economic sanctions had been highly effective in ending apartheid.

The case of Iraq in the 1990s is also striking. On this occasion, the sanctions provoked a true humanitarian drama in the country. Iraq was unable to purchase medicines and medical machinery, nor was it able to purchase spare parts for water treatment plants. Children were starving as a result of the economic blockade and Iraqi dictator Saddam Hussein remained in power. This experience showed that economic sanctions did not prevent the war in Iraq.

What is the purpose?

Beyond the various successes and failures through economic sanctions throughout history, it is clear that the objective of these measures is to weaken the economy of a country that is considered hostile.

However, many times, the effect of economic sanctions can lead to a situation opposite to what was intended. The result can bring with it a deterioration of human rights, an increase in the suffering of the population and can even strengthen dictators. In this sense, according to research from Drexel University, only a third of economic sanctions have the desired effect.

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Within sanctions, there are many ways to erode the economy of a hostile country. The measures that can be carried out are varied, commercial, military, financial and mobility sanctions can be implemented. Within this great variety of measures, the most common are financial and economic sanctions.

By using the economy as a weapon, the consequences are strongly felt by the population of the affected country. The objective is to make the population understand that their rulers are doing something wrong that is leading them to social and economic unrest.

On the contrary, the rulers of the sanctioned countries will try to blame foreign powers for the economic difficulties caused by international sanctions.

The specific case of Russia

Usually, economic sanctions were imposed on small states, however, it is the first time that a large battery of sanctions has been deployed against a nuclear power and a geopolitical actor of the stature of Russia.

Within days of the Russian invasion of Ukraine, the assets of Russian high-ranking politicians and oligarchs were frozen.

In addition, flights to Russia were banned, Russian airlines were restricted from flying over the airspace of many countries, imports of Russian coal, oil and gas were restricted, and large Russian banks were shut out of the financial system.

Also Russian foreign currency reserves were frozen by Western countries. Not even Russian luxury goods have been exempt from sanctions, as their importation was prohibited.

It was not only the initiatives of Western governments that punished the Russian economy, as major international companies, such as McDonald’s, Starbucks and Coca-Cola, announced that they were ceasing operations in Russia.

Such moves seem to have a devastating effect on the Russian economy. The fall may be such that in 2022 the Russian GDP could collapse between 8% and 30%. The Russian currency, the ruble, has collapsed and inflation is believed to be between 18% and 20%, seriously eroding the purchasing power of the Russian population and driving it towards widespread impoverishment.

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In this bleak economic landscape, China appears to be one of Russia’s few remaining partners. However, the Chinese companies Xiaomi and Lenovo have suspended a significant volume of their export operations to Russia.

But macroeconomic figures aside, how does this affect Russian citizens in their day-to-day lives? Well, in Russian factories, stock reserves are running low, Russian airlines’ Boeing and Airbus planes are grounded, without spare parts, while recourse to old, less safe and less efficient Russian planes is being considered.

The Russian railway company RhzD has suspended works for high-speed trains because Siemens has left the country and is no longer in charge of maintenance work. The isolation of Russia reaches such an extent that the precious chips from Taiwan, essential for the manufacture of numerous household appliances, will not arrive either.

In view of these daily examples, it is clear that Russian President Vladimir Putin’s plan has failed in its desire to replace 90% of imports with domestic production. And it is that, Russia faces the terrible consequences of a shortage.

No less worrying is Russia’s path towards “default” or suspension of payments. It would be the first time Russia has gone into receivership since 1918.

This would mean that foreign investors who have invested in Russia do not collect their debts. Faced with such a disaster, no one will want to lend money to an insolvent Russia, social cuts will come to Russian citizens, social protection mechanisms will collapse and unemployment will increase alarmingly.

In the absence of investment in the country, it will be difficult to create jobs, which can lead to a proliferation of the black market and an increase in crime.

Sanctions persist, the Russian economy is deteriorating by leaps and bounds, but despite the economic damage suffered, the war is not over in Ukraine. Thus, it is clear that economic sanctions by themselves do not stop a conflict, they are simply one more instrument.

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