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  • Adam Zaiser

The Russian Invasion of Ukraine: A Lesson in Economic Warfare

On February 24th, 2022, Russia began to invade Ukraine from the south east. The first targets were the cities of Luhansk and Donetsk. With this ground invasion coming alongside rocket strikes on the capital city of Kyiv, President Putin’s message was loud and clear: the goal of this invasion was a complete takeover of Ukraine. This invasion has raised several major questions for civilians and world leaders alike. Why is Russia doing this? How long can Ukraine hold off Russian forces? And the biggest question of all, will NATO be getting involved in this conflict if so, what will it mean that two world powers with nuclear weapons will once again have those arms pointed at one another?

Seeing as NATO (Northern Atlantic Treaty Organization) was set up with the primary goal of stopping the Soviet Union from expanding its control in Eastern Europe, it seems they would once again be called upon to step in to stop a takeover of an eastern European country by Russia.

To start, there are rather clear reasons why both Russia and the members of NATO would naturally avoid a ground war at all costs. A direct military conflict between two nuclear powers would mean mutually assured destruction of both. However, this definitely doesn’t mean NATO hasn’t gotten involved in this conflict. While direct military conflict is off the table, NATO has decided to fight through an economic war instead. While economic warfare has several definitions, here economic war will be defined by the use of economic incentives instead of soldiers as a way of taking control over a nation. This leads to several different follow up questions, the obvious question being, how can a nation’s influence over another nation’s economy be so large that it gives the former nation control over the latter nation’s actions? While it’s definitely not realistic that an entire nation can be completely taken over by economic means alone, what is far more likely is the ability to influence what is and isn’t in the best interest of another nation.

Many scholars have claimed that President Vladimir Putin would more accurately be called Dictator Vladimir Putin for a number of different reasons. Not the least of these reasons is the fact that Putin has jailed or poisoned journalists who dared to disagree with him, a reminder that even getting to write this article is a luxury I’m only afforded because I’m 4,800 miles away from Putin. But understanding that Putin is effectively a dictator is vital if your goal is to make continuing to invade Ukraine economically unviable. It changes who incentives should be targeted at completely. Knowing that Russia is controlled primarily by Putin and that his power is derived from a small number of wealthy oligarchs means NATO knows exactly who they need to target to get those with power to reconsider a ground invasion of Ukraine.

As those who’ve followed this conflict already know, an economic war between the United States and western Europe against Russia and eastern Europe has been happening ever since the fall of Nazi Germany in World War II, the last time the US and Russia were referred to as allies. This has meant that there was a clear split in Europe between country’s whose interests aligned with Russia and country’s whose interests were aligned with the US. Collectively these countries are often called trade blocs because of their shared interest in continued trade with one another. A lot of what historians mean when they refer to the cold war is the period when the US and Soviet Union were using economic and military power to move different parts of the world into their trade blocs. Of course in the end the Soviet Union dissolved into modern Russia as its successor state and several autonomous eastern European countries including Ukraine. The worry of the Russian oligarchy was that these countries would end up aligning more with the US than with them. This worry ended up being warranted as Ukraine has been trading more and more with the US. Ukraine was even considered for entrance into NATO themselves. But, of course, this doesn’t give Russia any right to invade Ukraine by military force. At the end of the day, the people of Ukraine are the ones who should get to decide who they want to align with and the fact the vast majority chose the US was highly predictable. The reality is that the US has an economy that dwarfs Russia’s. The current GDP of the United States is $20.94 trillion and, converting to USD, Russia’s GDP is $1.483 trillion. To put that in perspective, the American Rescue Plan back in 2021 spent more than Russia’s entire GDP on covid relief.

So what have been the results of this economic war so far? While how well the invasion itself is going from Russia’s perspective is debatable, it’s quite clear that, on the economic side of things, this invasion has backfired in a big way. One way of comparing economic damage is to look at the value of currencies in reference to one another. Only 17 days into this invasion, the Russian Ruble has dropped 50% in value by comparison to the Euro. That is an almost unprecedented drop in value. Russia’s economy also relies heavily on the ability to sell their oil, which makes sanctions on trade and a boycott on their oil a real thorn in the side of the Russian Oligarchs from whom Putin derives his power. This comes alongside massive support for Ukraine. From providing weapons and other supplies all the way to negotiations opening for Ukraine to enter the EU, it appears that the stakes for Russia in this war have only grown larger as a loss would mean an independent Ukraine with economic interests in permanent alignment with western Europe. Though Ukraine was denied a sort of “fast track” procedure for entry into the EU partially because such a procedure would need to first be created and negotiated, it can’t be understated how big a deal it is that the EU expressed it’s supports through these sanctions and keeping negotiations for Ukraine’s entry to the EU open. In the moments when sanctions were passed, many speeches were given to commemorate this huge humanitarian victory. In her address to the EU, Ursula Von Der Leyen, the President of the EU-commission, put it best when she said “If Putin was seeking to divide the European Union, to weaken NATO, and to break the international community, he has achieved exactly the opposite. We are more united than ever and we will stand up in this war, that is for sure that we will overcome and we will prevail.”


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