How to Dominate the Economic Battlefield with a "Freedom Fund"
An essay I wrote with some friends for Foreign Policy.
I wrote an essay for Foreign Policy with David Talbot and Jordan Schneider about how the allies should combine and manage their formidable economic strength to combat Russia most effectively. We also discuss how those tools could be deployed in future conflicts against other potential adversaries. The first few paragraphs are below. I hope you go and read the whole thing.
An unprecedented global alliance of democracies has imposed crushing sanctions on Vladimir Putin’s regime as punishment for its invasion of Ukraine. Russia is being ejected from the networks that bind the global economy as companies from the United States, Europe, Japan, South Korea, Taiwan, and elsewhere cut off exports and evacuate their assets and staff. Without ongoing access to modern technology and foreign expertise, Russia’s planes will stop flying, its military hardware will degrade, and even its ability to extract hydrocarbons and grow food will be imperiled. The country is now enduring an economic crisis worse than anything since the collapse of the Soviet Union.
The astonishing speed, scale, and scope of the allied response to the Russian assault demonstrates the centrality of the economic and financial battlefield in modern warfare. To dominate this new arena, the allies should establish permanent mechanisms to maximize coordination during the current crisis—but also future ones. They should also develop doctrines and rules of engagement for economic conflicts of this kind, and invest in enhancing their ability to project economic and financial power to deter future breaches of international peace. Done right, the democracies will be able to preserve the benefits of globalization for everyone without undermining their ability to enforce necessary norms of behavior.
The allies’ strength comes from the size of their domestic markets, their dominance of the production of critical goods and services, and their centrality in the international financial system. But the allies’ coercive powers will be limited unless they can find a way to offset the significant domestic costs of their policies. The political consensus in favor of resisting Russian aggression will fracture if enough businesses start to lose money, lay off workers, and write down their investments. Putin is surely counting on this to lead to the premature removal of sanctions.