July 01, 2022
Economic Strategy and Statecraft: From Engagement to Decoupling
A New Cold War
Like the Korean War of 1950, Russia’s war in Ukraine today appears to be the hot opening salvo in a new Cold War pitting the United States and our allies against a bloc of revisionist dictatorships whose actions are increasingly coordinated. Unlike in 1950, however, today the Russian and Chinese roles are reversed, with Russia the junior partner doing the fighting and China the senior partner supporting from behind. Also unlike in 1950, the United States today has avoided direct military engagement in the Ukraine war, relying instead on arming Ukraine’s military and using unprecedented economic warfare tools against Moscow.
This emphasis on economic warfare, both in support of and in place of military power, carries important lessons—and poses difficult challenges—for U.S. and allied thinking about the New Cold War broadly, far beyond the immediate circumstances of Ukraine.
This emphasis on economic warfare, both in support of and in place of military power, carries important lessons—and poses difficult challenges—for U.S. and allied thinking about the New Cold War broadly, far beyond the immediate circumstances of Ukraine.
A vital aspect of this New Cold War will be whether the United States can reverse the advantages that adversaries have gained from open access to international trade. Washington has partially proven its economic-warfare mettle during the Ukraine war, with powerful measures taken (with allies) against Russia’s central bank, oligarchs, and other targets. Yet there remain significant gaps in U.S. and allied sanctions, especially on Russia’s energy exports and leading banks. More fundamentally, U.S. and allied threats of economic warfare failed to deter Vladimir Putin’s invasion in the first place, partly because Putin had built trade-based relationships of dependence in Europe that apparently convinced him that Washington, Berlin, and other allies lacked the will to defeat his neo-imperial ambitions.
Now we risk making similar mistakes vis-à-vis China, which has global revisionist ambitions and economic leverage greater than Putin could dream of. Far more than Russia, China has benefited from international trade and used its trade links to create relationships of leverage over the United States and our allies.
Read the full article on the Ronald Reagan Foundation and Institute.
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