More than any war in my lifetime, the Ukraine-Russian War is demonstrating all the ways that economics is central to warfare.
[THREAD]
This war touches on EVERY component of the economics-security link:
- Economic warfare
- Macroeconomic Consequences
- Global Economic Consequences
- Commodities-and-War link
- War finance
- War Supply & burden-sharing
Let's explore each.
First and foremost, there is economic warfare itself, i.e. sanctions.
As is being well documented, the international community has unleashed a massive package of economic restrictions on Russia.
bbc.com/news/world-eur…
I mean, even SWITZERLAND...
...and Singapore are participating.
As @njtmulder observed, it is now complete global financial war against Russia.
But many are also pointing to the big risks associated with deploying the instruments of economic warfare at such massive scale.
Second and a consequence of the first, is the national macroeconomic consequence of war.
In short, Russia's financial sector...
...currency...
....and key industries...
...are being devastated.
This is what economists would call a "shock" (though it's definitely NOT an "exogenous" one) to the Russian economy....
nationalreview.com/the-morning-jo…
...and it is already having an impact on Russian society.
nytimes.com/2022/02/26/wor…
Of course, given where the fighting is taking place, the macroeconomic consequences of the war's destruction for Ukraine will be severe and lasting.
france24.com/en/video/20220…
Third, the war's economic impact is not limited to the direct participants. It is global.
The costs include...
...the financial sanctions generating financial hardship for the countries imposing them (after all, that's how economic sanctions work)...
...global grain supply chains being severely disrupted...
nytimes.com/2022/02/25/wor…
...oil markets being squeezed...
reuters.com/business/energ…
...inflation rising globally...
bbc.com/news/business-…
...the list can go on and on. I HIGHLY recommend that folks follow @adam_tooze to keep track of all of the global economic developments.
A key consequence of this global disruption is something that has occurred time and time and time again in the face of global crises (see, most recently, the outbreak of COVID19): strengthening of the US dollar (the true marker of US global hegemony).
Fourth and related to the impact the war has on oil, the war also illustrates the broader link between oil and war.
Namely, that oil wealth can lead to war.
@JeffDColgan has written extensively on this link...
amazon.com/Petro-Aggressi…
...and we're witnessing the oil price-war onset link in full effect.
Fifth, there is the "sinew of war": money. Wars cannot be fought if they are not financed.
The Ukrainian government recognized this immediately, with @NBUkraine setting up a special account to accept "financial donations".
bank.gov.ua/en/news/all/za…
Indeed, the money has been coming in from numerous sources.
aljazeera.com/news/2022/2/28…
For instance, the United States was already contributing financial assistance to Ukraine, but has increased the assistance dramatically
state.gov/additional-mil…
What is notable is how the war is sparking other countries to reassess how much THEY spend on defense, particularly Germany:
That financing and spending are so critical to war fighting is why the latest edition of the text "What do We Know About War" (edited by @sbmitche & John Vasquez) includes a chapter on war financing by @rosellacappella & 🙋♂️.
amazon.com/What-Do-Know-a…
Sixth, the money raised is used to purchase weapons. That leads to yet another, and often underappreciated, economic aspect of war: supply.
To be clear, military professionals do not underappreciate supply. They take it VERY seriously. As the saying goes, "Amateurs talk strategy. Professionals talk logistics."
What is notable is that the war is a massive COALITIONAL supply effort, with the arms are arriving from other countries and making their way to the battlefield.
The arms (what they call "pratical support") are coming from @NATO countries...
nato.int/cps/en/natohq/…
...and, quite shockingly, from the European Union.
politico.eu/article/eu-ukr…
In sum, to understand war, both fighting and outcomes, you have to understand economics. That has never been more evident than in this war.
[END]
Share this Scrolly Tale with your friends.
A Scrolly Tale is a new way to read Twitter threads with a more visually immersive experience.
Discover more beautiful Scrolly Tales like this.