Economic warfare

Economic warfare, or economic war, is defined by the Oxford English Dictionary as involving "an economic strategy based on the use of measures (e.g. blockade) of which the primary effect is to weaken the economy of another state".[1]

In military operations, economic warfare may reflect economic policy followed as a part of open or covert operations, cyber operations, information operations[2] during or preceding a war. Economic warfare aims to capture or otherwise to control the supply of critical economic resources so friendly military and intelligence agencies can use them and enemy forces cannot.

The concept of economic warfare is most applicable to conflict between nation states, especially in times of total war, which involves not only the armed forces of an enemy nation, but also a mobilized war economy. In such a situation, damage to the enemy's economy is damage to its ability to fight a war. Scorched earth policies have often been applied to deny resources to an enemy.

Policies and measures in economic warfare may include blockade, blacklisting, preclusive purchasing, rewards and the capturing or the control of enemy assets or supply lines.[3] Other policies, such tariff discrimination, sanctions, the suspension of aid, the freezing of capital assets, the prohibition of investment and other capital flows, and expropriation,[4] even if without war, may be referred to as economic warfare.

History

Crusades

In his Book on the Recovery of the Holy Land, Fidentius of Padua provides prescriptions for economic warfare to be waged against the Mamluk sultanate of Egypt in furtherance of the Crusades. He envisions a fleet of 40–50 galleys to enforce a blockade on trade between Europe and Egypt. He sees this trade as helping Egypt in two ways: from Europe it obtains war materiel (iron, tin, timber, oil) and from Asia dues on goods brought in via the Red Sea for trade to Europe. If this spice trade were deflected from the Red Sea to Mongol Persia, Egypt would be deprived of customs duties and would also lose export markets because of the reduction in shipping. This may also make it unable to afford more slave soldiers imported from the Black Sea.[5]

American Civil War

Union forces in the American Civil War had the challenge of occupying and controlling the 11 states of the Confederacy, a vast area larger than Western Europe. The Confederate economy proved surprisingly vulnerable.[6] Union forces were faced with guerrilla warfare supported by a large fraction of the Confederate population that provided food, horses, and hiding places for official and unofficial Confederate units.[7] Before the war, most passenger and freight traffic moved by water through the river system or coastal ports. Travel became much more difficult during the war. The Union Navy took control of much of the seacoast and the main rivers such as the Mississippi River and the Tennessee River, using the Mississippi River Squadron of powerful small gunboats. Land transportation was contested, as Confederate supporters tried to block shipments of munitions, reinforcements and supplies through West Virginia, Kentucky, and Tennessee to Union forces to the south. Bridges were burned, railroad tracks torn up, and telegraph lines were cut. Both sides did the same and effectively ruined the infrastructure of the Confederacy.[8][9]

Union soldiers destroying telegraph poles and railroads in Georgia, 1864

The Confederacy in 1861 had 297 towns and cities with a total population of 835,000 people, 162 of which were at one point occupied by Union forces with a total population of 681,000 people. In practically every case, infrastructure was damaged, and trade and economic activity was disrupted for a while. Eleven cities were severely damaged by war action, including Atlanta, Charleston, Columbia, and Richmond. The rate of damage in smaller towns was much lower, with severe damage to 45 out of a total of 830.[10]

Farms were in disrepair, and the prewar stock of horses, mules, and cattle was much depleted; 40% of the South's livestock had been killed.[11] The South's farms were not highly mechanized, but the value of farm implements and machinery in the 1860 census was $81 million and had been reduced by 40% by 1870.[12] The transportation infrastructure lay in ruins, with little railroad or riverboat service available to move crops and animals to market.[13] Railroad mileage was located mostly in rural areas and over two thirds of the South's rails, bridges, rail yards, repair shops, and rolling stock were in areas reached by Union armies, which systematically destroyed what they could. Even in untouched areas, the lack of maintenance and repair, the absence of new equipment, the heavy overuse, and the relocation of equipment by the Confederacy from remote areas to the war zone ensured the system would be ruined at war's end.[14]

The enormous cost of the Confederate war effort took a high toll on the South's economic infrastructure. The direct costs to the Confederacy in human capital, government expenditures, and physical destruction totaled perhaps $3.3 billion. By 1865, the Confederate dollar was worthless because of high inflation, and people in the South had to resort to bartering for goods or services to use scarce Union dollars. With the emancipation of the slaves, the entire economy of the South had to be rebuilt. Having lost their enormous investment in slaves, white planters had minimal capital to pay freedmen workers to bring in crops. As a result, a system of sharecropping was developed in which landowners broke up large plantations and rented small lots to the freedmen and their families. The main feature of the Southern economy changed from an elite minority of landed gentry slaveholders to a tenant farming agriculture system. The disruption of finance, trade, services, and transportation nodes severely disrupted the prewar agricultural system and forced Southerners to turn to barter, ersatz, and even spinning wheels. The entire region was impoverished for generations.[15]

World War I

The British used their greatly-superior Royal Navy to cause a tight blockade of Germany and a close monitoring of shipments to neutral countries to prevent them from being transshipped to there. Germany could not find enough food since its younger farmers were all in the army, and the desperate Germans were eating turnips by the winter of 1916–17.[16][17] US shipping was sometimes seized, and Washington protested. The British paid monetary compensation so that the American protests would not escalate into serious trouble.[18]

World War II

Clear examples of economic warfare occurred during World War II when the Allied powers followed such policies to deprive the Axis economies of critical resources. The British Royal Navy again blockaded Germany although with much more difficulty than in 1914.[19] The US Navy, especially its submarines, cut off shipments of oil and food to Japan.

In turn, Germany attempted to damage the Allied war effort via submarine warfare: the sinking of transport ships carrying supplies, raw materials, and essential war-related items such as food and oil.[20]

Neutral countries continue to trade with both sides. The Royal Navy could not stop land trade, so the allies made other effort to cut off sales to Germany of critical minerals such as tungsten, mercury and iron ore from Spain, Portugal, Turkey, Sweden and elsewhere.[21] Germany wanted Spain to enter the war but they could not agree to terms. To keep Germany and Spain apart, Britain used a carrot-and-stick approach. Britain provided oil and closely monitored Spain's export trade. It outbid Germany for the wolfram, whose price soared, and by 1943, wolfram was Spain's biggest export-earner. Britain's cautious treatment of Spain brought it into conflict with the more aggressive American policy. Washington cut off oil supplies in 1944 but then agreed with London's requests to resume oil shipments.[22][23] Portugal feared a German-Spanish invasion, but when that became unlikely in 1944, it virtually joined the Allies.[24]

French Economic Warfare School

Christian Harbulot, the director of the Economic Warfare School in Paris, provides an historical reconstruction of the economic balance of power between states. In his study, he demonstrates that the strategies that states put in place to increase their economic power and their impact on the international balance of power can be interpreted only by the concept of economic warfare.

Economic sanctions

The Covenant of the League of Nations provided for military and economic sanctions against aggressor states, and the idea of economic sanctions was regarded as a great innovation.[25] However, economic sanctions without military ones failed to dissuade Italy from conquering Abbysinia.

In 1973–1974, the Arab nations imposed an oil embargo against the United States, United Kingdom, Canada, South Africa, Japan, and other industrialized nations that supported Israel during the Yom Kippur War of October 1973. Results included the 1973 oil crisis and a sharp rise in prices[26] but not an end to support for Israel.

Many United States sanctions have been imposed since the middle 20th century.

References

"economic war - definition of economic war in English from the Oxford dictionary". Retrieved 26 February 2016.
"Economic Information Warfare, Robert Deakin, QUT" (PDF). Retrieved 1 June 2003.
David A. Baldwin, Economic Statecraft (Princeton UP, 1985).
Shambaugh, George. "Economic warfare". Encyclopædia Britannica.
Cornel Bontea (2018), "The Theory of the Passagium Particulare: A Commercial Blockade of the Mediterranean in the Early Fourteenth Century?", in Georgios Theotokis; Aysel Yıldız (eds.), A Military History of the Mediterranean Sea: Aspects of War, Diplomacy, and Military Elites, Brill, pp. 203–204, doi:10.1163/9789004362048_011.
Roger L. Ransom, "The economics of the Civil War." EH. net Encyclopedia 24 (2001) online.
Anthony James Joes, America and guerrilla warfare (2015) pp 51-102.
Daniel E. Sutherland, "Sideshow No Longer: A Historiographical Review of the Guerrilla War." Civil War History 46.1 (2000): 5-23.
Daniel E. Sutherland, A Savage Conflict: The Decisive Role of Guerillas in the American Civil War (U of North Carolina Press, 2009). online
Paul F. Paskoff, "Measures of War: A Quantitative Examination of the Civil War's Destructiveness in the Confederacy," Civil War History (2008) 54#1 pp 35–62 doi:10.1353/cwh.2008.0007
McPherson, James M (1992). Abraham Lincoln and the Second American Revolution. Oxford University Press. p. 38. ISBN 978-0-19-507606-6.
William B. Hesseltine, A History of the South, 1607–1936 (1936), pp. 573–574.
John Samuel Ezell, The South since 1865 (1963), pp. 27–28.
Jeffrey N. Lash, "Civil-War Irony-Confederate Commanders And The Destruction Of Southern Railways." Prologue-Quarterly Of The National Archives 25.1 (1993): 35-47.
Claudia D. Goldin, and Frank D. Lewis, "The economic cost of the American Civil War: Estimates and implications." Journal of Economic History 35.2 (1975): 299-326. online
Hans-Jürgen Teuteberg, "Food Provisioning on the German Home Front, 1914–1918." in Rachel Duffett and Ina Zweiniger-Bargielowska, eds. Food and War in Twentieth Century Europe (2016). 77-89.
The alternative theories of Nicholas A. Lambert, Planning Armageddon: British Economic Warfare and the First World War (2012) are refuted by John W. Coogan, "The Short-War Illusion Resurrected: The Myth of Economic Warfare as the British Schlieffen Plan," Journal of Strategic Studies (2015) 38:7, 1045-1064, DOI: 10.1080/01402390.2015.1005451
Charles Seymour, "American Neutrality: The Experience of 1914-1917," Foreign Affairs 14#1 (1935), pp. 26-36 online
W.N. Medlicott, The economic blockade (1978).
David Livingston Gordon, and Royden James Dangerfield, The Hidden Weapon: The Story of Economic Warfare (Harper, 1947).
Leonard Caruana, and Hugh Rockoff, "A Wolfram in Sheep's Clothing: Economic Warfare in Spain, 1940–1944." Journal of Economic History 63.1 (2003): 100-126.
Christian Leitz, "‘More carrot than stick’, British Economic Warfare and Spain, 1941–1944." Twentieth Century British History 9.2 (1998): 246-273.
James W. Cortada, "Spain and the second world war." Journal of Contemporary History 5.4 (1970): 65-75.
Donald G. Stevens, "World War II Economic Warfare: The United States, Britain, and Portuguese Wolfram." Historian 61.3 (1999): 539-556.
Doxey, Margaret P. (1980), Doxey, Margaret P. (ed.), "Economic Sanctions under the League of Nations", Economic Sanctions and International Enforcement, London: Palgrave Macmillan UK, pp. 42–55, doi:10.1007/978-1-349-04335-4_4, ISBN 978-1-349-04335-4
"The Arab Oil Threat". The New York Times. November 23, 1973.
"General Assembly Adopts Annual Resolution Calling for End to Embargo on Cuba, Soundly Rejects Amendments by United States". United Nations. 1 November 2018.
"Iran oil: US to end sanctions exemptions for major importers". BBC News. April 22, 2019.

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[1] "economic war - definition of economic war in English from the Oxford dictionary". Retrieved 26 February 2016.

[2] "Economic Information Warfare, Robert Deakin, QUT" (PDF). Retrieved 1 June 2003.

[3] David A. Baldwin, Economic Statecraft (Princeton UP, 1985).

[britannica-4] Shambaugh, George. "Economic warfare". Encyclopædia Britannica.

[5] Cornel Bontea (2018), "The Theory of the Passagium Particulare: A Commercial Blockade of the Mediterranean in the Early Fourteenth Century?", in Georgios Theotokis; Aysel Yıldız (eds.), A Military History of the Mediterranean Sea: Aspects of War, Diplomacy, and Military Elites, Brill, pp. 203–204, doi:10.1163/9789004362048_011.

[6] Roger L. Ransom, "The economics of the Civil War." EH. net Encyclopedia 24 (2001) online.

[7] Anthony James Joes, America and guerrilla warfare (2015) pp 51-102.

[8] Daniel E. Sutherland, "Sideshow No Longer: A Historiographical Review of the Guerrilla War." Civil War History 46.1 (2000): 5-23.

[9] Daniel E. Sutherland, A Savage Conflict: The Decisive Role of Guerillas in the American Civil War (U of North Carolina Press, 2009). online

[Paskoff-10] Paul F. Paskoff, "Measures of War: A Quantitative Examination of the Civil War's Destructiveness in the Confederacy," Civil War History (2008) 54#1 pp 35–62 doi:10.1353/cwh.2008.0007

[mcpherson2-11] McPherson, James M (1992). Abraham Lincoln and the Second American Revolution. Oxford University Press. p. 38. ISBN 978-0-19-507606-6.

[12] William B. Hesseltine, A History of the South, 1607–1936 (1936), pp. 573–574.

[13] John Samuel Ezell, The South since 1865 (1963), pp. 27–28.

[14] Jeffrey N. Lash, "Civil-War Irony-Confederate Commanders And The Destruction Of Southern Railways." Prologue-Quarterly Of The National Archives 25.1 (1993): 35-47.

[15] Claudia D. Goldin, and Frank D. Lewis, "The economic cost of the American Civil War: Estimates and implications." Journal of Economic History 35.2 (1975): 299-326. online

[16] Hans-Jürgen Teuteberg, "Food Provisioning on the German Home Front, 1914–1918." in Rachel Duffett and Ina Zweiniger-Bargielowska, eds. Food and War in Twentieth Century Europe (2016). 77-89.

[17] The alternative theories of Nicholas A. Lambert, Planning Armageddon: British Economic Warfare and the First World War (2012) are refuted by John W. Coogan, "The Short-War Illusion Resurrected: The Myth of Economic Warfare as the British Schlieffen Plan," Journal of Strategic Studies (2015) 38:7, 1045-1064, DOI: 10.1080/01402390.2015.1005451

[18] Charles Seymour, "American Neutrality: The Experience of 1914-1917," Foreign Affairs 14#1 (1935), pp. 26-36 online

[19] W.N. Medlicott, The economic blockade (1978).

[20] David Livingston Gordon, and Royden James Dangerfield, The Hidden Weapon: The Story of Economic Warfare (Harper, 1947).

[21] Leonard Caruana, and Hugh Rockoff, "A Wolfram in Sheep's Clothing: Economic Warfare in Spain, 1940–1944." Journal of Economic History 63.1 (2003): 100-126.

[22] Christian Leitz, "‘More carrot than stick’, British Economic Warfare and Spain, 1941–1944." Twentieth Century British History 9.2 (1998): 246-273.

[23] James W. Cortada, "Spain and the second world war." Journal of Contemporary History 5.4 (1970): 65-75.

[24] Donald G. Stevens, "World War II Economic Warfare: The United States, Britain, and Portuguese Wolfram." Historian 61.3 (1999): 539-556.

[25] Doxey, Margaret P. (1980), Doxey, Margaret P. (ed.), "Economic Sanctions under the League of Nations", Economic Sanctions and International Enforcement, London: Palgrave Macmillan UK, pp. 42–55, doi:10.1007/978-1-349-04335-4_4, ISBN 978-1-349-04335-4

[26] "The Arab Oil Threat". The New York Times. November 23, 1973.

[27] "General Assembly Adopts Annual Resolution Calling for End to Embargo on Cuba, Soundly Rejects Amendments by United States". United Nations. 1 November 2018.

[28] "Iran oil: US to end sanctions exemptions for major importers". BBC News. April 22, 2019.