To better grasp the choices to be made in the current economic sanctions against Russia, it is instructive to examine sanctions use in the 1930s, when democracies similarly attempted to use them to stop the aggression of large-sized autocratic economies such as Fascist Italy, imperial Japan, and Nazi Germany. The crucial backdrop to these efforts was the Great Depression, which had weakened economies and inflamed nationalism around the world. When Italian dictator Benito Mussolini invaded Ethiopia in October 1935, the League of Nations implemented an international sanctions regime enforced by 52 countries. It was an impressive united response, similar to that on display in reaction to Russia’s invasion of Ukraine.
But the league sanctions came with real tradeoffs. Economic containment of Fascist Italy limited democracies’ ability to use sanctions against an aggressor who was more threatening still: Adolf Hitler. As a major engine of export demand for smaller European economies, Germany was too large an economy to be isolated without severe commercial loss to the whole of Europe. Amid the fragile recovery from the Depression, simultaneously placing sanctions on both Italy and Germany—then the fourth- and seventh-largest economies in the world—was too costly for most democracies. Hitler exploited this fear of overstretch and the international focus on Ethiopia by moving German troops into the demilitarized Rhineland in March 1936, advancing further toward war. German officials were aware of their commercial power, which they used to maneuver central European and Balkan economies into their political orbit. The result was the creation of a continental, river-based bloc of vassal economies whose trade with Germany was harder for Western states to block with sanctions or a naval blockade.
Nicholas Mulder
Quite a disturbing historical analogy to the current geopolitical situation – today’s Russia as junior partner in relation to China mirroring the dynamic between Fascist Italy and Nazi Germany in the 1930s. Ominously, the parallels can go further still: just as Nazi Germany was too large to contain back then, China has also grown into an economic force that would be impossible to sever from the world economy without inflicting serious and lasting damages. Americans are quick to berate Europeans, and Germany in particular, about their energy dependency on Russia, but the US economy basically runs on imports of consumer goods from China. It’s almost inconceivable that the US might someday impose strict sanctions on Chinese trade – public opinion was in a frenzy over a slight increase in gas prices, despite the US being largely energy independent; how would they react if the supply of their precious iPhones suddenly dried up?
One aspect of sanctions that few seem to be discussing is how, so far, they were only imposed by the West and a few Asian democracies. China, India, and most of the African and Latin American countries have not joined the sanctions regime, nor are they likely too. Thus Russia still has plenty of trading partners and potential customers for its fossil fuels exports, undermining the effectiveness of this economic pressure (there are plenty of loopholes as well). The initial devaluation of the ruble has already stopped, and its value returned to levels similar to before the invasion. I doubt further escalating sanctions from the US and EU side will have the desired impact as long as other states continue unrestricted trade with Russia. Calling for increased sanctions has become rather a moral position and retaliatory desire to inflict as much pain on Russia as possible, decoupled from strategic or tactic considerations.
A similar initiative to economically isolate China would face the same constraints, but on a much larger scale. China is the largest supplier of batteries, so cutting it off from the global economy would drastically undermine the transition away from fossil fuels. Moreover, China has become the world’s largest official creditor, surpassing the World Bank and the IMF – I doubt those emerging economies would choose to renounce China in case of a significant rift with the West.
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