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Book Review: The Economic Weapon: The Rise of Sanctions as a Tool of Modern War

26 Sep 2022
Reviewed by Professor Paul W. Rhode

Nicholas Mulder explores the historical use of economic sanctions. He uncovers how this coercive wartime tool was turned into a peacekeeping instrument with unintended consequences.  

Nicholas Mulder’s well-researched first book, published a month before Russia invaded Ukraine, has received great press attention. Sanctions on trade, finance, and people were once again front-and-centre in the public mind. Mulder offers an origin story for the so-called “economic weapon.” He argues that the policy of imposing sanctions in peacetime to achieve military objectives was born in 1919, in the immediate aftermath of the First World War. The policy was laid out in Article 16 of the League of Nations charter, which mandated collective sanctions to be imposed against any member state starting an aggressive war.

The League of Nations sanctions were actually tried in the interwar period, but they did not work out as intended or expected. While the historical consensus is that the League’s sanctions policy was weak – Italy was not deterred from invading Ethiopia in late 1935 — Mulder contends that they were stronger than generally believed. The resulting embargo against Italy, which one observer (p. 202) called the “greatest experiment of modern history,” pushed Mussolini to take additional aggressive measures to gain greater self-sufficiency.

In addition to having unintended consequences, the sanctions were not as timely or targeted as desired. They could not replace the use of military force. In fact, blockades required military force to be effective. Countries threatened with sanctions could seek workarounds and would prepare for trade cut-offs, for example, by conquering resource-rich neighbours. Italy, Germany, and Japan followed this path.

Sanctions policies, it appears, facilitated rather than inhibited the escalation of conflicts by providing intermediate steps between peace and full-scale war. The sanctions policies also added uncertainty, contributing to destabilising tests of strength. Although Mulder does not use the term “sleepwalking,” a term at the heart of Christopher Clark’s well-known book about the start of the First World War, one has a sense that the possibility of invoking a series of economic restrictions allowed leaders to avoid making stark choices. Denying crucial supplies to an adversary came right up to the line of declaring war, as the Japanese and Americans found out in late 1941. Furthermore, turning back proved to be hard. Mulder warns us to not think of economic sanctions as a panacea, or as an alternative to armed conflict.

As an American economic historian, I learned a great deal from Mulder’s very detailed treatment of the intricate debates over the application of sanctions during the interwar years. One issue that I have with this book is that while Mulder can find a handful of advocates who assert that sanctions were the weapon that would end all war, most of his historical actors almost certainly did not. They understood war was messy and so was the use of sanctions.. It is also hard to accept that the “economic weapon” was born in 1919, as Mulder repeatedly asserts.

Anyone who knows a little US history knows that “peaceful coercion” was tried extensively in America before 1919. While Mulder (p. 268) states that withholding oil and iron from Spain and Japan in 1940 was “the first time the US government used openly discriminatory economic sanctions in peacetime,” one recalls Jefferson’s embargo of 1807-09. This bold move had restricted all trade to Britain and to France for as long as they disrespected US neutral rights. Further, one recalls it was part of a long line of coercive measures, from the non-importation agreements adopted in the crisis period before the American Revolution to the embargo threats derived from King Cotton thinking in the Civil War era. The “cotton famine” of early 1860s was a major global event. The American policies of “peaceful coercion” typically did not work out as planned, and they suffered from many of the same problems as the interwar sanctions discussed in the book. Indeed, one of Mulder’s actors, Woodrow Wilson, both lived through a period of trade closures and wrote about the use of peaceful coercion in his US history textbooks. What economic warfare was, as US Secretary of State Robert Lansing noted (p. 69), was always in the eye of the beholder. To assert that the economic weapon had its inception in 1919 is to choose not to look before.

I am also troubled about the lack of counterfactual reasoning about the decisions of 1919, of explicitly laying out the available alternatives and weighing which were more plausible and which less. Are we to imagine that countries would gather together to form a new global governance body after the First World War, and that body would be empowered not to use economic sanctions but only military force? This does not seem plausible to me.

Mulder focuses chiefly on commodity trade and financial restrictions. He does not discuss cultural embargoes at length. The separation of peoples through war-induced social ostracism and the interruption of the exchange of ideas can have long-lasting adverse consequences. In late 1914, 93 leading German intellectuals famously signed a manifesto “to the civilized world”, praising their nation’s war efforts, including the invasion of Belgium. It was many years before German intellectuals – apart from Albert Einstein, who did not sign- were welcome at international scholarly meetings.

Mulder argues that the trade blockade of Central Powers during the First World War was less effective than commonly asserted. Mulder notes that food supplies for the German civilian population improved in mid-1918 and argues that the claims about blockade-induced demoralisation on the German home front are just part of the “stab-in-the-back legend” seeking to cover up for the true military collapse on the front lines. I believe that Mulder paints a too sanguine picture of the food situation in the Central Powers during the war and that the effects of the wartime blockade deserve a fuller analysis.

I would have, in general, liked more attention paid to economics in a book entitled The Economic Weapon. The use of this weapon has a long history and there are many lessons to consider.

This is a review of Nicholas Mulder, The Economic Weapon: The Rise of Sanctions as a Tool of Modern War (Yale University Press: 2022), Hardcover ISBN: 9780300259360

Paul W. Rhode teaches at the University of Michigan where he has been since 2009. Previously, he was on the faculty of the University of North Carolina and the University of Arizona. He is a Research Associate with the National Bureau of Economic Research (NBER), a Fellow of the Cliometrics Society and of the Economic History Association, and a former editor of the Journal of Economic History.

This article is published under a Creative Commons Licence and may be republished with attribution.