Russia, China, and the perils of economic warfare
Many Russians may believe that Putin’s invasion of Crimea was legitimate and justified, many may also believe that Putin’s domestic and foreign policies are at odds with their national interests. However, we shouldn’t be surprised if, in future, many Russians also remember the nations that refused to lift their economic sanctions whilst they suffered from a crippling crisis and that it was the Chinese government that offered help in those dire straits. Of course, this is limited help and there are a lot of other problems to sort out but the gesture is a strong signal of China’s stance and indicative of the possibility of further assistance in future. Warfare via economic sanctions leads to the division of the world into inefficient trading blocs and provides a natural basis from which governments can form convenient, logical military alliances. The wonder then, is whether economic sanctions are really worth risking any chance at long-term peace and stability we may have? Though sanctions are designed to put pressure on governments, regular citizens suffer immensely from them and, in future, when young Russians remember this crisis, that suffering won’t easily be forgotten.
Iran, like Russia, is also in a vulnerable situation and it is quite easy to see how these sanctions that artificially and inefficiently divide the world could also encourage the proliferation of worrying military alliances between those states that feel ‘cornered’ and this garners a sort of legitimate solidarity against their ‘oppressors’.
In the long-run, with alliance systems that lead to increased military posturing (as we had already witnessed from Russia in the Ukraine and in the EU, we are witnessing from China in the Asia-Pacific and we might conceivably further witness from Iran and North Korea) there will be increased uncertainty and genuine fear amongst peaceful peoples and, in the end, global social welfare and economic growth will be stunted in the name of ‘humanitarian’ intervention.
Of course, the wider problem is that the global system of trade restrictions are essentially sugar coated economic sanctions and, therefore, a form of subtle economic warfare that we are conditioned to ignore. Free trade is necessary in order to ensure that there is no unnecessary, state-induced hatred fostered between peoples. Perhaps we could add to the Geneva conventions by suggesting that economic sanctions be ruled out of the question? In this way, instead of providing fertile ground for fostering the animosity necessary for armed conflict, people who truly want peace would be free to go about their own business. The peaceful sentiment that free trade encourages may also help discourage these governments from acting violently in the first place!
Oil prices, Iranian economic sanctions and the Strait of Hormuz
Just as Russia is feeling the pinch from the drop in oil prices (both leading up to and after OPEC’s decision not to cut production further), Iran is feeling the pinch too (being one of the main countries that desired a cut in production but was rebuffed by Saudi Arabia). It is hardly surprising that Russia sees incentive to engage in increasingly aggressive geopolitical posturing when oil-revenue makes up a substantial part of its income. However, things have been eerily quiet in the Persian Gulf. Iran, being arguably probably in a far worse position, does not have the Russian luxury of nuclear power status or an extremely advanced, formidable Navy that can match the US. However, the Iranian government still has incentive to increase oil prices and it is strategically positioned next to the infamous Strait of Hormuz, one of the world’s most important oil chokepoints.
Iran threatened to shut off the Strait of Hormuz in 2011 in response to US-led economic sanctions but this did little to unnerve markets since there was confidence in the US’s ability to swiftly resolve such an eventuality. Going into 2015, oil prices are forecasted to remain low and often forecast to go even lower. Simply raising tensions around the Strait whilst not actually shutting it off (this could be accomplished by perspicuous naval manoeuvring, aggressive press statements etc.) could quickly escalate into something more if responses are miscalculated and intentions misjudged. Such tensions are really not needed in this fragile macroeconomic and shaky geopolitical climate.
Easing up on at least some of the economic sanctions on Iran (even if they are only token concessions) will enable the Iranian government to at least appear to be in a stronger negotiating position (despite suffering from a very real deterioration in bargaining power from falling oil prices) and it may, thereby, delay or even help prevent possible future aggression. It would also help ensure that cash-strapped citizens across the world enjoy the benefits of cheaper oil for longer whilst decreasing the punishment of Iranian citizens (most of whom have little to no say when it comes to their government’s nuclear program).
Free trade with Iran is unlikely for the foreseeable future but even some token easing of trade restrictions could help preserve our increasingly shaky, threatened (relative) world peace.