Помощничек
Главная | Обратная связь


Археология
Архитектура
Астрономия
Аудит
Биология
Ботаника
Бухгалтерский учёт
Войное дело
Генетика
География
Геология
Дизайн
Искусство
История
Кино
Кулинария
Культура
Литература
Математика
Медицина
Металлургия
Мифология
Музыка
Психология
Религия
Спорт
Строительство
Техника
Транспорт
Туризм
Усадьба
Физика
Фотография
Химия
Экология
Электричество
Электроника
Энергетика

ECONOMIC REWARDS AND PUNISHMENTS IN OPERATION



The postwar history of Soviet-Yugoslav relations provides an excellent example of how economic instruments, along with propaganda, military threats, and diplo­macy, played an important role in Soviet attempts to influence developments in Yugoslav foreign and domestic policies. Shortly after World War II, the Soviet Union began to assist the new Communist regime in Yugoslavia by enlarging trade and providing small amounts of economic assistance. In 1948, however, Tito was expelled from the Communist bloc because of his unorthodox domestic policies and unwillingness to submit to Soviet domination in ideological and political matters. The Yugoslav heresy resulted in threats of military action by Hungary, Romania, and Bulgaria; vituperation in Communist propaganda or­gans; and excommunication of the Yugoslav Communist party from the Comin-form. The Soviet Union also organized a Communist bloc embargo and boycott against Yugoslavia. The embargo was potentially an effective technique of pun­ishment because in 1948 Yugoslavia sold over 50 percent of its exports to the bloc and received 95 percent of its imports from the same source.1 The unfavor­able economic impact of the embargo and boycott on Yugoslavia was short­lived, however, because Tito was able to turn to Italy and Great Britain for compensating trade agreements and to the International Bank for Reconstruction and Development for development loans.

After Stalin's death, Soviet-Yugoslav relations intermittently deterio­rated and improved. In 1955, the Soviet government signed a barter pact for the exchange of commodities worth over $79 million annually. In the same year, Russia cancelled a $90 million Yugoslav debt and attempted to get other Eastern European countries to expand trade with the former heretic. Between 1955 and 1958, the bloc countries committed themselves to loans of nearly

1 Harold J. Berman, "The Legal Framework of Trade between Planned and Market Econo­mies: The Soviet-American Example," Law and Contemporary Problems, 24 (1959), 504.

 

 

218 Economic Instruments of Policy

$500 million in attempting to win back Tito's loyalty and subservience to Moscow on ideological matters. Tito continued to vacillate, however, and each time in 1957 and 1958 that he emphasized his independent Communist line, the Soviet government either threatened to cut off assistance or conveniently "delayed" the granting of new loans. In May 1958, Premier Khrushchev suspended negotia­tions on loans that amounted to nearly $300 million. By 1963, Tito had mended relations with Soviet Russia—without compromising his independence—and was amply rewarded through new trade agreements and increased Soviet loans.2

Considering Yugoslavia's economic dependence on the Soviet bloc, Communist economic punishments and rewards should have succeeded; they failed simply because Yugoslavia turned to the West and found alternative supply and market sources.

A case where alternatives were not available and economic sanctions succeeded occurred in the relations between Finland and the Soviet Union in 1958. After parliamentary elections in 1958, in which Finnish Communists won over one-quarter of the seats, a coalition government headed by a Social Demo­crat was formed. This government did not include among its ministers any Communists, however. The Soviet government has held a traditional enmity against all Finnish Socialists, and the Soviet premier wasted no time in announc­ing his displeasure and distrust of the new Finnish prime minister. The Soviet government also objected to inclusion of Conservatives in the new cabinet. Various articles in the Soviet press pointed to the "rightist" government as symptomatic of a general resurgence of "reactionary" forces in Finland and criticized these "rightists" for attempting to destroy friendly Soviet-Finnish rela­tions and planning to increase Finnish trade with the West at the expense of Soviet-Finnish trade. To indicate that it would not tolerate such political leader­ship in a neighboring country, the Soviet government began to to apply a number of diplomatic and economic pressures:

1. The Soviet ambassador in Helsinki returned to Moscow and was not replaced. The ambassador left without paying the usual courtesy and farewell visit to the Finnish president.

2. The Communist Chinese ambassador left Helsinki for Peking for "consulta­tions."

3. The Soviet government refused on "technical grounds" to sign an agreement with Finland covering fishing rights in the Gulf of Finland.

4. Talks that had proceeded smoothly on the Finnish lease of a Soviet canal (in former Finnish territory) for shipping logs to the Gulf of Finland were suspended.

5. A Finnish trade delegation scheduled to travel to Moscow to negotiate the 1959 trade agreement was left waiting without a Soviet invitation.

6. In November 1958, the Soviet government abruptly halted all trade with Finland, including goods that had already been ordered. This action had the most serious

2 Figures are provided in Berman, "The Legal Framework of Trade," and in Robert Loring Allen, Soviet Economic Warfare (Washington, D.C.: Public Affairs Press, 1960), pp. 16, 41.

219 Economic Instruments of Policy

effect, since many Finnish metal and machinery products sold in the Soviet Union could not be sold in Western markets because their prices were not competitive. In other words, since no alternative markets existed, the Soviet cancellation of trade threw many Finnish workers out of jobs, adding to an already severe winter unemployment problem.

Recognizing that such economic pressures could seriously damage the Finnish economy and worsen an already serious unemployment problem, several members of the cabinet resigned; and a new government more to the liking of the Kremlin was eventually formed. The Soviet economic pressures in this case worked very efficiently.3

That power and influence do not flow only from the major powers or those who possess military might is illustrated in the oil embargo imposed by the Arab countries against Western Europe, Japan, and the United States in 1973. During two previous Arab-Israeli wars, the Arabs had attempted to use oil as a means of reducing Western support for Israel. These efforts did not succeed, however, because the Arab governments were divided among them­selves on whether or not to apply an embargo and because the United States, a surplus oil producer until the late 1960s, was willing to share oil purchases from Venezuela with the Europeans. By 1973, in contrast, all the industrial countries were highly dependent upon Arab oil, and the Arab governments presented a united front against all governments that had publicly sympathized with Israel's diplomacy or war-making efforts. The Arab governments, once the October War started, cut back production by 5 percent each month and placed a complete embargo against the United States and the Netherlands. The purpose was clear: to place the industrial countries into a severe energy shortage that could be avoided or overcome only if the targets changed their policies toward Israel. It was hoped, too, that the most vulnerable countries, such as Japan and Great Britain, would urge Washington to reduce its commitment to Israel and take a more sympathetic stand toward the Arabs' claims for land lost to Israel in the 1967 war and for the plight of the Palestine refugees. Japan complied first and publicly disclaimed its policy of diplomatic support for Israel. The European governments, through a series of individual symbolic and policy actions, eventually induced the Arabs to lift the embargo against them. The American position on the Middle East also changed, if very quietly. While military support for Israel did not end, Secretary of State Kissinger began to urge the Israelis to make concessions on key territorial issues. As the American commit­ment to "peace" through concessions by both sides developed, the oil began to flow again—although at vastly increased prices. Arab solidarity, the extensive dependence of the industrial countries on Arab oil supplies, and lack of stock piles were the conditions that enabled the "weak" successfully to confront the "strong."

3 KJ. Holsti, "Strategy and Techniques of Influence in Soviet-Finnish Relations," The Western Political Quarterly, 17 (1964), 63-84.

220 Economic Instruments of Policy

Cuban-American relations during the period of the Castro regime pro­vide many examples of American efforts to use economic instruments of policy for foreign-policy objectives. President Eisenhower's decision in March 1960 to organize an emigre force to overthrow Castro gave the Cuban leader, who learned of the decision several months later, justification for arranging what had not been possible earlier—namely, switching his army's dependence from Western to Communist sources and undertaking major programs of expropria­tion of American assets in Cuba. Cuba was also dependent upon Western sources and facilities for oil until the American secretary of the treasury persuaded the American and British companies to refuse Castro's request for refining Soviet oil. Castro thereupon obtained a commitment from the Communist countries to supply all of Cuba's oil, confiscated American and British refineries, and refused to pay the $50 million owed for earlier deliveries. When Premier Castro began to expropriate other American-owned property in Cuba, the State Depart­ment and Congress retaliated by ordering reduction of quotas on the import of Cuban sugar. This hardly subtle measure of punishment failed to deter the Cuban government from adopting an increasingly anti-American foreign policy. Since American officials feared that Premier Castro might also seek to spread revolution beyond the confines of the island, they formulated measures to isolate the regime diplomatically and economically from the rest of the Caribbean and Central American regions. This involved an American embargo on sale of weap-

, ons to Cuba; the State Department simultaneously implored other Western gov­ernments to control shipments of military goods to the Castro regime. Later, when the Cubans had made explicit their association with the Communist bloc,

. the American government instituted a complete economic and travel boycott of Cuba. Since the United States had traditionally purchased a majority of Cuba's exports, this punishment seriously crippled the Cuban economy until the Cubans found alternate markets for their products (mainly sugar) in the Soviet Union, Eastern Europe, and Communist China. Although these measures helped to isolate Cuba, they did not bring down the Castro regime, so more pressures were applied. First, the United States imposed almost a complete embargo on exports to Cuba, excluding only food and medicines. Next, American diplomatic officials continued to urge other governments to reduce their exports to the island. To help enforce this policy, the State Department prohibited all foreign vessels carrying goods to Cuba from stopping in American ports to pick up new cargoes on their return voyage. This policy was not received with enthusiasm among foreign shipping companies but did reduce further trade between Europe and Cuba. As a final measure, the American government in 1964 imposed con­trols even on the export of food and medicine to the island.

How effective was the application of these economic punishments? Cuba briefly became economically isolated from its traditional trading partners, and its economy suffered seriously. Spare parts for automobiles, trucks, boats, and industrial plants became unavailable, and most economic indicators (except unemployment) moved steadily downward. Food rationing was also imposed.

221 Economic Instruments of Policy

Combined with several poor sugar harvests, the punishments created almost disastrous effects on the Cuban economy.

But, as in the case of Yugoslavia, the Cubans were eventually able to find alternative markets for their exports and some sources of supply to keep the economy running. By granting large loans and providing shipping facilities, the Communist-bloc countries prevented the total collapse of Cuba's economy. At times, Castro might have wondered whether he could keep his regime in power, but the punishments did not modify his aggressively anti-American behav­ior. The economic isolation of Cuba from the West might have succeeded in one respect, however. Since the Cuban government had to allocate so many resources and so much human energy into keeping the economy from collapsing, it may not have had either the time or resources to undertake major programs of external expansion, revolutionary agitation, or subversion in Latin America.

Another problem with the policy of punishment was that it failed to get total support from European countries. As with many international embar­goes and boycotts, unless all the participating countries perceive the target as a threat to their own security or economic interests, they are not likely to sympa­thize completely with policies that deprive their business community of economic opportunities. In the case of the embargo on Cuba, many NATO allies and nonaligned governments thought that the United States was too sensitive to Castro's presence in Cuba. They did not greet the embargo with much enthusi­asm; and when, for example, British and French companies made major sales to Cuba, their governments made no attempts to prevent the fulfillment of the trade contracts. Although the American embargo and boycott continued through the 1970s, American pressures on its allies to conform with the U.S. policy lapsed much earlier.

Does the systematic application of economic pressures to achieve politi­cal objectives normally succeed? These four cases would indicate that results are often as unfavorable to the state employing the pressures as to the target ' of the punishments. In the case of Yugoslavia, Soviet pressures forced it to become more reliant upon the West, a turn of events hardly in keeping with Soviet interests; later offers of rewards were undoubtedly instrumental in obtain­ing Yugoslav support for selected Soviet foreign-policy proposals. The case of Finland and the Soviet Union illustrates the effective utilization of economic and other pressures to bring about changes in the internal politics of the target country. In the cases of the oil embargo and Cuba, the results were mixed: Although Cuba may have had to concentrate on problems of survival as opposed to revolutionary activity abroad, there is little doubt that American pressures • literally forced Cuba to become dependent upon the Soviet bloc. And in the short run, the oil embargo forced some Western governments to change policies toward the Middle East conflict. But in the long run, the dramatic Arab action alerted the major oil-consuming countries to their highly dependent condition. Multibillion-dollar programs to develop alternative sources of supply, as well ' as emergency oil-sharing schemes, have resulted, so that presumably, in future

222 Economic Instruments of Policy

cases of embargo, the importers of oil will be far less vulnerable. What about other cases?

One study of eighteen cases in which total economic sanctions were •i employed in international relations between 1918 and 1968 indicates that only two worked effectively.4 The first occurred in 1933, when the British government threatened and imposed various economic pressures against the Soviet Union to obtain the release of six British subjects who had been arrested by the Russians. Faced with these pressures, the Soviet government released the persons in ques­tion. In 1962, the Kennedy administration complied with an international system of sanctions established by the Organization of American States against the Trujillo regime in the Dominican Republic. Even after Trujillo had been assassi­nated, the American government successfully maintained the embargo and boy­cott as a means of preventing the takeover of the government by any of Trujillo's heirs.

Aside from these two successes, the Finnish case, and possibly the Arab oil embargo, most other cases of economic sanctions, whether bilateral or multi­lateral, have had at best mixed results. The study shows, for example, that although the targets of sanctions and pressures may have suffered initially, ulti­mately they were able to restore their presanction volume of trade within two years after the sanctions were put into effect. Internally, the effects of economic pressures were quite the opposite of those intended. Economic pressures against Cuba and Rhodesia (the former was a bilateral, the latter a multilateral, UN-sponsored sanction program) were based on the assumption that economic hard­ships would bring about disaffection from the regime and ultimately the collapse of the target government, incapable of meeting the elementary economic needs of its citizens. In fact, most of the eighteen cases in the study, as well as the Cuban, oil, and Rhodesian examples, point out exactly the opposite: Sanctions, even if they create hardships, generally mobilize a population in support of their government. The enemy is not the home government, but the state or states that apply the sanctions. With this type of support, the target government can more effectively defy the wishes of the government or states that are applying the economic punishments.

Most of the cases in these examples share two characteristics: (1) The sanctions were imposed by great powers against relatively small states (the Arab oil boycott is the significant exception); and (2) the sanctions were of the most dramatic and publicized types, thus resulting in a surge of patriotism among the population of the target state. What of sanctions where these two conditions do not prevail? Again, recent diplomatic history provides some clues, if not definitive answers. In the case of economic pressures by the major powers against each other, the record indicates a string of failures. NATO strategic embargoes, coordinated by a committee of all NATO members throughout the postwar

4 See Peter Wallensteen, "Characteristics of Economic Sanctions," Journal of Peace Research, No. 2 (1968), 248-67; andjohan Galtung, "On the Effects of Economic Sanctions, with Examples from the Case of Rhodesia," World Politics, 19 (1967), 378-416.

223 Economic Instruments of Policy

period, did not prevent the Soviet Union from developing the most modern and sophisticated military capabilities. (It could be argued, of course, that Soviet military achievements would have been reached earlier had the Russians obtained access to Western military technology.) In the late 1960s the Soviet government attempted to "punish" the West Germans for the latter's attempts to play off one Warsaw Treaty Organization member against the other through lucrative trade arrangements. Russian efforts, primarily through the manipulation of promised gas deliveries, proved useless. The Jackson-Vanik amendment to the United States foreign-trade bill of 1974 made extension of most favored nation treatment to the Soviet Union conditional upon significant liberalization of the Soviet authorities' policies on Jewish emigration. The Soviet response to this tactic was to toughen emigration policies substantially, leading to a significant decline in Jewish emigration. This effort to link trade "carrots" with Soviet domestic policies was also a notable failure. Finally, in 1980, the United States imposed a number of economic sanctions against the Soviet Union for the latter's invasion of Afghanistan in December 1979. These measures included a partial grain embargo, halting the delivery of high technology items such as oil drilling equipment, and, most dramatically, boycotting the Moscow Olympic Games. The costs to the Soviet Union were not negligible. The grain embargo was predicted to reduce meat supplies, as the Russians had to divert more of their wheat to immediate necessities such as bread and away from feeding cattle. Oil-drilling equipment was important to a Soviet industry that was facing declin­ing production rates. And the American Olympic boycott, supported by some key countries such as Germany, Japan, Canada, and Kenya, reduced the signifi­cance of all the Soviet gold medals. But in terms of bringing about a change in Soviet policy in Afghanistan, the economic pressures must be judged as a total failure. To the Russians, the costs of pulling out of Afghanistan and seeing the collapse of their client government in that country far outweighed the costs of the American embargoes and boycotts.

What of the second condition, that is, various forms of economic pres­sures which are more subtle and directed against regimes that are highly depen­dent? Richard S. Olson had made a study of such techniques, as they have been applied by major powers against developing countries.5 A prime example would be the "silent blockade" imposed by the United States against Chile after the election of the Marxist president, Salvadore Allende, in 1970. Details of this case are outlined in Chapter 10. Here, it is only important to acknowledge that a variety of "quiet" economic pressures had serious economic consequences in Chile, without engendering a nationalist, anti-American response.

Olson outlines a variety of steps that can be taken that are far less dramatic than embargoes and boycotts but which nevertheless can have signifi­cant negative consequences for a developing economy. These include (1) declines

5 For details, see Richard Stuart Olson, "Economic Coercion in World Politics: With a Focus on North-South Relations," World Politics, 31 (Juty 1979), 471-94.

224 Economic Instruments of Policy

in foreign investment; (2) delays in delivery of spare parts; (3) snags in licensing or other technology transfers; (4) shutting off or reducing bilateral and multilat­eral loans and credits (as the United States did in Chile); and (5) refusal to refinance existing debts. According to Olson, such measures can create serious economic distress and exacerbate social and political tensions already existing within the society, thus vastly increasing the probabilities of civil turmoil and coup d'etat. Although not a direct cause, "quiet" economic coercion, according to Olson's studies, can lead to economic decline and such decline, where depen­dency and social conflicts are already notable, can result in change of regime and ultimate compliance with the major power's economic objectives. Cases where such cause-effect relationships seem impressive include Ghana, 1969-1972; Brazil, 1962-1964; Peru, 1965-1968; and Chile, 1970-1973. In all but . the Ghanaian case, the United States was the source of the "invisible blockade." And in each of the Latin American cases, the regime which resulted from internal turmoil was more amenable to American economic policies in the region. While these examples are perhaps not a sufficient sample of the total universe of cases of "quiet" economic coercion, they do indicate a relatively high rate of success— certainly greater than in the case of dramatic trade sanctions.

ECONOMIC WARFARE

, Economic warfare refers to those economic policies used as an adjunct to military operations during wartime. The objective is either to hold or conquer strategic resources, so that military forces can operate at maximum strength, or to deprive the enemies of these resources, so that their capacity to fight will be weakened. Economic warfare was used extensively by all the major combatants in both world wars, as none of the belligerents except the United States could raise and sustain a modern army and feed a civilian population by relying solely on its own resources. Mutual dependence thus becomes even more crucial during wartime. Using examples primarily from World War II, one can summarize the techniques that have been used as follows:

1. Blockade. In both wars, the Allies established blockades around Germany in an attempt to "starve" it of materials necessary to prosecute the war. Although rules of international law specifically prescribe the nature and extent of legitimate blockades, the Allies frequently disregarded these rules and blockaded even neutral vessels carrying nonmilitary goods to Germany. In World War II, the Allied blockade was applied at first only to Germany; but as the European neutrals—Sweden, Switzerland, Portugal, Turkey, and Spain—were able to sell and ship valuable raw materials and manufactured goods to the Third Reich, the blockade authorities also threatened to impose strict controls over them. Two American economic-warfare officials have described the function and problems of blockades as follows:

225 Economic Instruments of Policy

It was theoretically possible for us to cut off all imports from overseas [to the neutrals] in order to force a neutral country to cease its trade with Germany, or to use our blockade controls as a club to compel a neutral citizen to follow a pro-Ally line. In practice, however, the situation was seldom so simple, and open pressure of this sort was rare. Some of the reasons for Allied hesitation . . . involved complex considerations of international law, political and diplo­matic expediency, and military strategy, as well as economic warfare pure and simple.

The possibility of such sanctions was always there, however, implicit in all our relations with the neutrals. It was our major source of bargaining power, and in the later stages of the war, as our military and diplomatic position became stronger, it was used more and more effectively to curb neutral aid to our ene­mies. We prevented Spain from importing essential petroleum products until the Franco government curbed exports of tungsten to the Axis and made other concessions. We employed similar pressure less dramatically against Sweden and Switzerland, to force cuts in their economic aid to Germany.6

2. Blacklist. Since much of the trade between the neutrals and Ger­many was conducted by private firms, Allied pressures were exerted directly on them. One device that has been used effectively by governments (sometimes in peacetime as well) against private traders is the blacklist. During World War II, these lists, drafted by British and American economic warfare authorities, included the names of Axis nationals or agents located outside enemy territory, as well as neutral or even Allied citizens who were conducting trade with the Axis states. Persons on the list were considered enemies of the United States or Great Britain; their property was subject to seizure; no American or Briton could deal commercially with them in any way; and they could not travel or ship any of their commodities to occupied Europe through any routes or facilities under Allied control. These people could carry on trade with the Axis only if they were prepared to lose all markets in the Allied countries and face the confiscation of their goods during shipment to Europe.

3. Preemptive Buying. Most of the Allied program was concentrated on trying to outbid German agents for materials that the neutrals were willing to export to either side. Where the blacklist was not feasible, the Allies paid greatly inflated prices for commodities in order to keep the Germans from pur­chasing them. With combined American and British financial resources, the Germans were hard-pressed to match the exorbitant prices the Allies were willing to pay. But preemption did not always take the form of legal market operations. Sometimes it involved smuggling, hijacking, flooding mines, tying up transporta­tion, sabotage, or any other means that would deprive the Axis of needed sup­plies.

4. Rewards. Economic warfare during World War II used rewards as well as threats and punishments, although it was normally a combination

6 David L. Gordon and Royden Dangerfield,The Hidden Weapon: The Story of Economic Warfare (New York: Harper & Row, 1947), p. 13.

 

226 Economic Instruments of Policy

of the two. Sweden, for example, was promised access to Allied oil and other products, which its armed forces desperately needed, when it agreed to reduce the export of bearings to Germany. By selling Spain the materials it needed to maintain its economy, the Allies succeeded at least partially in reducing Span­ish economic dependence upon Germany.

The success of economic warfare, according to Gordon and Dangerfield, has been difficult to assess. Certainly the German armies did not collapse as a result of shortages created by Allied preemptive buying and the blockade. But the Germans did have to pay high prices for some needed items, and they had to invest other material and human resources in creating substitutes. Had the mate­rials been readily available, the Germans could have freed thousands of people and millions of dollars for other purposes.

 




Поиск по сайту:

©2015-2020 studopedya.ru Все права принадлежат авторам размещенных материалов.