Economic warfare

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The Oxford English Dictionary defines economic warfare or economic war as involving "an economic strategy based on the use of measures (e.g. blockade) of which the primary effect is to weaken the economy of another state". [1]

<i>Oxford English Dictionary</i> Premier historical dictionary of the English language

The Oxford English Dictionary (OED) is the principal historical dictionary of the English language, published by Oxford University Press (OUP). It traces the historical development of the English language, providing a comprehensive resource to scholars and academic researchers, as well as describing usage in its many variations throughout the world. The second edition, comprising 21,728 pages in 20 volumes, was published in 1989.


In military operations, economic warfare may reflect economic policy followed as a part of open or covert operations, cyber operations, information operations [2] during or preceding wartime. Economic warfare aims to capture or otherwise control the supply of critical economic resources so that the military and intelligence agencies can operate at full efficiency or deprive enemy forces of those resources so that they cannot function properly.

A military operation is the coordinated military actions of a state, or a non-state actor, in response to a developing situation. These actions are designed as a military plan to resolve the situation in the state or actor's favor. Operations may be of a combat or non-combat nature and may be referred to by a code name for the purpose of national security. Military operations are often known for their more generally accepted common usage names than their actual operational objectives.

Economic policy refers to the actions that governments take in the economic field

The economic policy of governments covers the systems for setting levels of taxation, government budgets, the money supply and interest rates as well as the labour market, national ownership, and many other areas of government interventions into the economy.

War Organised and prolonged violent conflict between states

War is a state of armed conflict between states, governments, societies and informal paramilitary groups, such as mercenaries, insurgents and militias. It is generally characterized by extreme violence, aggression, destruction, and mortality, using regular or irregular military forces. Warfare refers to the common activities and characteristics of types of war, or of wars in general. Total war is warfare that is not restricted to purely legitimate military targets, and can result in massive civilian or other non-combatant suffering and casualties.

The concept of economic warfare is most applicable to conflict between nation states, especially in times of total war - which involves not only the armed forces of an enemy nation, but mobilization of that nation's entire economy towards the war effort. In such a situation, causing damage to the enemy's economy directly damages the enemy's ability to fight the war.

Total war conflict in which belligerents engage with all available resources

Total war is warfare that includes any and all civilian-associated resources and infrastructure as legitimate military targets, mobilizes all of the resources of society to fight the war, and gives priority to warfare over non-combatant needs. The Oxford Living Dictionaries defines "total war" as "A war that is unrestricted in terms of the weapons used, the territory or combatants involved, or the objectives pursued, especially one in which the laws of war are disregarded."

An economy is an area of the production, distribution, or trade, and consumption of goods and services by different agents. Understood in its broadest sense, 'The economy is defined as a social domain that emphasize the practices, discourses, and material expressions associated with the production, use, and management of resources'. Economic agents can be individuals, businesses, organizations, or governments. Economic transactions occur when two groups or parties agree to the value or price of the transacted good or service, commonly expressed in a certain currency. However, monetary transactions only account for a small part of the economic domain.

War effort Coordinated mobilization of societys resources towards supporting a military force

In politics and military planning, a war effort refers to a coordinated mobilization of society's resources—both industrial and human—towards the support of a military force. Depending on the militarization of the culture, the relative size of the armed forces and the society supporting them, the style of government, and the popular support for the military objectives, such war effort can range from a small industry to complete command of society.

Policies and measures in economic warfare may include blockade, blacklisting, preclusive purchasing, rewards and the capturing or control of enemy assets or supply lines, [3] tariff discrimination, sanctions, the suspension of aid, the freezing of capital assets, the prohibition of investment and other capital flows, and expropriation. [4] Scorched earth policies have often been applied to prevent an advancing enemy from gaining resources.

Blockade effort to cut off supplies from a particular area by force

A blockade is an effort to cut off supplies, war material or communications from a particular area by force, either in part or totally. A blockade should not be confused with an embargo or sanctions, which are legal barriers to trade. It is also distinct from a siege in that a blockade is usually directed at an entire country or region, rather than a fortress or city. While most blockades historically took place at sea, blockade is still used on land to prevent someone coming into a certain area.

Preclusive purchasing

Preclusive purchasing is an economic warfare tactic where one belligerent in a conflict purchases matériel and operations from neutral countries not for domestic needs, but in order to deprive other belligerents their use. The tactic was proposed by the French in World War I but never implemented.

Economic sanctions Financial penalties applied by nations to persons, nations or companies to affect political change

Economic sanctions are commercial and financial penalties applied by one or more countries against a targeted self-governing state, group, or individual. Economic sanctions are not necessarily imposed because of economic circumstances—they may also be imposed for a variety of political, military, and social issues. Economic sanctions can be used for achieving domestic and international purposes.


American Civil War

Attacks on infrastructure

Union forces in the American Civil War had the challenge of occupying and controlling the 11 states of the Confederacy. It was a vast area – larger than Western Europe. The economy of the Confederate States of America proved surprisingly vulnerable. [5] Union forces were faced with guerrilla warfare supported by a large fraction of the Confederate population, providing food, horses, and hiding places for official and unofficial Confederate units. [6] Before the war, most passenger and freight traffic moved by water, through the river system or coastal ports. Travel became much more difficult during the war. The Union Navy took control of much of the seacoast, and the main rivers such as the Mississippi River and the Tennessee River, using the Mississippi River Squadron of powerful small gunboats. Land transportation was contested, as Confederate supporters tried to block shipments of munitions, reinforcements and supplies through West Virginia, Kentucky, and Tennessee, to Union forces to the south. Bridges were burned, railroad tracks torn up, telegraph lines were cut. Both sides did this, effectively ruining the infrastructure of the Confederacy. [7] [8]

Confederate States of America (de facto) federal republic in North America from 1861 to 1865

The Confederate States of America, commonly referred to as the Confederacy, was an unrecognized country in North America that existed from 1861 to 1865. The Confederacy was originally formed by seven secessionist slave-holding states—South Carolina, Mississippi, Florida, Alabama, Georgia, Louisiana, and Texas—in the Lower South region of the United States, whose economy was heavily dependent upon agriculture, particularly cotton, and a plantation system that relied upon the labor of African-American slaves. Convinced that white supremacy and the institution of slavery were threatened by the November 1860 election of Republican candidate Abraham Lincoln to the U.S. presidency on a platform which opposed the expansion of slavery into the western territories, the Confederacy declared its secession from the United States, with the remaining states becoming known as the Union during the ensuing American Civil War. According to Confederate Vice President Alexander H. Stephens in his famous Cornerstone Speech, Confederate ideology was centrally based "upon the great truth that the negro is not equal to the white man; that slavery, subordination to the superior race, is his natural and normal condition".

The Confederate States of America had an agrarian-based economy that relied heavily on slave-worked plantations for the production of cotton for export to Europe and the northern US. If ranked as an independent nation, it would have been the fourth richest country of the world in 1860. When the Union blockaded its ports in summer 1861, exports of cotton fell 95 percent and the South had to restructure itself to emphasize food and munitions production. After losing control of its main rivers and ports, it had to depend on a weak railroad system that, with few repairs being made, no new equipment, and federal raids, crumbled away. The financial infrastructure collapsed during the war as inflation destroyed banks and forced a move toward a barter economy for civilians. The government seized needed supplies and livestock. By 1865 the economy was in ruins.

Mississippi River Squadron Union brown-water naval squadron that operated on the western rivers during the American Civil War

The Mississippi River Squadron was the Union brown-water naval squadron that operated on the western rivers during the American Civil War. It was initially created as a part of the Union Army, although it was commanded by naval officers, and was then known as the Western Gunboat Flotilla and sometimes as the Mississippi Flotilla. It received its final designation when it was transferred to the Union Navy at the beginning of October 1862.

Union soldiers destroying telegraph poles and railroads in Georgia, 1864 Sherman sea 1868.jpg
Union soldiers destroying telegraph poles and railroads in Georgia, 1864

The Confederacy in 1861 had 297 towns and cities with a total population of 835,000 people; of these 162 with 681,000 people were at one point occupied by Union forces. In practically every case, infrastructure was damaged, and trade and economic activity was disrupted for a while. Eleven cities were severely damaged by war action, including Atlanta, Charleston, Columbia, and Richmond. The rate of damage in smaller towns was much lower, with severe damage to 45 out of a total of 830. [9]

Farms were in disrepair, and the prewar stock of horses, mules and cattle was much depleted; 40% of the South's livestock had been killed. [10] The South's farms were not highly mechanized, but the value of farm implements and machinery in the 1860 Census was $81 million and was reduced by 40% by 1870. [11] The transportation infrastructure lay in ruins, with little railroad or riverboat service available to move crops and animals to market. [12] Railroad mileage was located mostly in rural areas and over two-thirds of the South's rails, bridges, rail yards, repair shops and rolling stock were in areas reached by Union armies, which systematically destroyed what they could. Even in untouched areas, the lack of maintenance and repair, the absence of new equipment, the heavy over-use, and the relocation of equipment by the Confederates from remote areas to the war zone ensured the system would be ruined at war's end. [13]

The enormous cost of the Confederate war effort took a high toll on the South's economic infrastructure. The direct costs to the Confederacy in human capital, government expenditures, and physical destruction totaled perhaps $3.3 billion. By 1865, the Confederate dollar was worthless due to high inflation, and people in the South had to resort to bartering services for goods, or else use scarce Union dollars. With the emancipation of the southern slaves, the entire economy of the South had to be rebuilt. Having lost their enormous investment in slaves, white planters had minimal capital to pay freedmen workers to bring in crops. As a result, a system of sharecropping was developed where landowners broke up large plantations and rented small lots to the freedmen and their families. The main feature of the Southern economy changed from an elite minority of landed gentry slaveholders into a tenant farming agriculture system. Disruption of finance, trade and services, as well as transportation nodes, severely disrupted the prewar agricultural system, forcing Southerners to turn to barter, ersatz, and even spinning wheels. The entire region was impoverished for generations. [14]

World War I

The British used the greatly superior Royal Navy to tightly blockade Germany and closely monitor shipments to neutrals so they could not be transshipped into Germany. Germany could not find enough food—its younger farmers were all in the Army—and the desperate Germans were eating turnips by the winter of 1916-17. [15] [16] US shipping was sometimes seized; Washington protested. The British paid monetary compensation so that the American protests would not escalate into serious trouble. [17]

World War II

Clear examples of economic warfare occurred during World War II when the Allied powers followed these policies to deprive the Axis economies of critical resources. The British Royal Navy again blockaded Germany, although it was much harder to do than in 1914. [18] The United States Navy, especially with submarines, cut off shipments of oil and food to Japan.

In turn, Germany attempted to damage the Allied war effort via submarine warfare—the sinking of transports ships carrying supplies, raw materials, and essential war-related items such as food and oil. [19]

Neutral countries continue to trade with both sides. The allies made a special effort to cut off sales to Germany of critical minerals such as wolfram (a tungsten ore; used to make steel armor) and mercury from Spain and Portugal. [20] Germany wanted Spain to enter the war but rejected its terms, which included control of French colonies in Africa. It was essential to keep Germany and Spain apart, so Britain used a carrot and stick approach. Britain provided oil and closely monitored Spain's export trade. It outbid Germany for the wolfram—the price soared and by 1943 wolfram was Spain's biggest export earner. Britain's cautious treatment of Spain brought it into conflict with more aggressive American policy. Washington cut off oil supplies in 1944, but then agreed with London's requests to resume oil shipments. [21] [22] Portugal feared a German invasion, but when that became unlikely in 1944 it virtually joined the Allies. [23]

The economic war in the interpretation of the French School of Economic War

Christian Harbulot, director of the Economic Warfare School in Paris, provides an historical reconstruction of the economic balance of power between states. In this study, he demonstrates that the strategies that states put in place in order to increase their economic power – and their impact on the international balance of power – can only be interpreted through the concept of economic warfare.

1973–74 oil embargo

In 1973–1974, the Arab nations imposed an oil embargo against the United States, United Kingdom, Canada, South Africa, Japan and other industrialized nations which supported Israel in the Yom Kippur War of October 1973. The results included a sharp rise in oil prices. [24]

U.S. embargo against Cuba

The United States currently imposes a commercial, economic, and financial embargo against Cuba. [25] [4]

U.S. sanctions against Iran

The United States applies economic, trade, scientific and military sanctions against Iran. In 2019, BBC reported that U.S. sanctions against Iran "have led to a sharp downturn in Iran's economy, pushing the value of its currency to record lows, quadrupling its annual inflation rate, driving away foreign investors, and triggering protests." [26]

See also

Related Research Articles

American Civil War Civil war in the United States from 1861 to 1865

The American Civil War was a civil war fought in the United States from 1861 to 1865, between the North (Union) and the South (Confederacy). The most studied and written about episode in U.S. history, the Civil War began primarily as a result of the long-standing controversy over the enslavement of black people. War broke out in April 1861 when secessionist forces attacked Fort Sumter in South Carolina shortly after Abraham Lincoln had been inaugurated as the President of the United States. The loyalists of the Union in the North, which also included some geographically western and southern states, proclaimed support for the Constitution. They faced secessionists of the Confederate States in the South, who advocated for states' rights to uphold slavery.

Blockade runner ship type

A blockade runner is a merchant vessel used for evading a naval blockade of a port or strait. It is usually light and fast, using stealth and speed rather than confronting the blockaders in order to break the blockade. Blockade runners usually transport cargo, for example bringing food or arms to a blockaded city. They have also carried mail in an attempt to communicate with the outside world.

Commerce raiding A form of naval warfare

Commerce raiding is a form of naval warfare used to destroy or disrupt logistics of the enemy on the open sea by attacking its merchant shipping, rather than engaging its combatants or enforcing a blockade against them. It is also known, in French, as guerre de course and, in German, Handelskrieg, from the nations most heavily committed to it historically as a strategy.

Cotton diplomacy refers to the diplomatic methods employed by the Confederacy during the American Civil War to coerce the United Kingdom and France to support the Confederate war effort by implementing a cotton trade embargo against the United Kingdom and the rest of Europe. The Confederacy believed that both the United Kingdom and France, who before the war depended heavily on southern cotton for textile manufacturing, would support the Confederate war effort if the cotton trade were restricted. Ultimately, cotton diplomacy did not work in favor of the Confederacy. In fact, the cotton embargo transformed into a self-embargo which restricted the Confederate economy. Ultimately, the growth in the demand for cotton that fueled the antebellum economy did not continue.

Union blockade Union blockade of the Confederacy in the U.S. Civil War

The Union blockade in the American Civil War was a naval strategy by the United States to prevent the Confederacy from trading.

"King Cotton" is a slogan which summarized the strategy used before the American Civil War by pro-secessionists in the southern states to claim the feasibility of secession and to prove there was no need to fear a war with the northern states. The theory held that control over cotton exports would make a proposed independent Confederacy economically prosperous, would ruin the textile industry of New England, and—most importantly—would force the United Kingdom and perhaps France to support the Confederacy militarily because their industrial economies depended on Southern cotton. The slogan, widely believed throughout the South, helped in mobilizing support for secession: by February 1861, the seven states whose economies were based on cotton plantations had all seceded and formed the Confederacy. Meanwhile, the other eight slave states, with little or no cotton production, remained in the Union.

Southern bread riots Civil unrest in the Confederacy during the American Civil War in March and April 1863

The Southern bread riots were events of civil unrest in the Confederacy during the American Civil War, perpetrated mostly by women in March and April 1863. During these riots, which occurred in cities throughout the South, women and men violently invaded and looted various shops and stores.

Alabama in the American Civil War

The State of Alabama was central to the Civil War, with the secession convention at Montgomery, birthplace of the Confederacy, inviting other states to form a Southern Republic, during January–March 1861, and develop constitutions to legally run their own affairs. The 1861 Alabama Constitution granted citizenship to current U.S. residents, but prohibited import duties (tariffs) on foreign goods, limited a standing military, and as a final issue, opposed emancipation by any nation, but urged protection of African slaves, with trial by jury, and reserved the power to regulate or prohibit the African slave trade. The secession convention invited all slaveholding states to secede, but only 7 Cotton States of the Lower South formed the Confederacy with Alabama, while the majority of slave states were in the Union and voted to make U.S. slavery permanent by passing the Corwin Amendment, signed by President Buchanan and backed by President Lincoln on March 4, 1861.

Foreign enlistment in the American Civil War

Foreign enlistment in the American Civil War largely favored the Union, which was far more successful in attracting international volunteers. Nonetheless, thousands of immigrants and mercenaries served with the Confederacy.

Wilmington, North Carolina in the American Civil War

Wilmington, North Carolina, was a major Atlantic Ocean port city for the Confederate States of America during the American Civil War. A vital lifeline for the fledgling Confederacy to trading partners in Europe, Wilmington was the last port to fall to the Union Army, which completed its blockade of the coast.

Although a territory of the British Empire, during the American Civil War, the Bahamas was affected by the great conflict. Much as in the age of pirates the Bahamas were a haven for the swashbucklers, between 1861 and 1865 the Bahamas were a haven for blockade runners aligned with the Confederate States of America. Although Florida is still only 55 miles away, the state had few ports of any real consequence at the time. Hence, blockade runners would make their trips from Nassau to Charleston, South Carolina, the largest Confederate port on the Atlantic Coast.

The United Kingdom of Great Britain and Ireland remained officially neutral throughout the American Civil War (1861–1865). It legally recognised the belligerent status of the Confederate States of America (CSA) but never recognised it as a nation and neither signed a treaty with it nor ever exchanged ambassadors. Over 90 percent of Confederate trade with Britain ended, causing a severe shortage of cotton by 1862. Britain financed blockade runners that sent munitions and luxuries to Confederate ports in return for cotton and tobacco. Top British officials debated offering to mediate in the first 18 months, which the Confederacy wanted but the United States strongly rejected.

France and the American Civil War

The Second French Empire remained officially neutral throughout the American Civil War and never recognized the Confederate States of America. The United States of America warned that recognition would mean war. France was reluctant to act without British collaboration, and the British Empire rejected intervention.

Confederate war finance

Confederate war finance was the various means, fiscal and monetary, through which the Confederate States of America financed its war effort during the American Civil War. As the war lasted for nearly the entire existence of the nation, it dominated national finance.

Blockade runners of the American Civil War Blockaders of the American Civil War

The blockade runners of the American Civil War were seagoing steam ships that were used to get through the Union blockade that extended some 3,500 miles (5,600 km) along the Atlantic and Gulf of Mexico coastlines and the lower Mississippi River. Blockade runners imported from England most of the guns and other ordnance the Confederacy desperately needed. To get through the blockade, these ships, many of them built in British ship yards and specially designed for speed, had to cruise undetected, usually at night. The typical blockade runners were privately owned vessels often operating with a letter of marque issued by the Confederate States of America. If spotted, the blockade runners would attempt to outmaneuver or simply outrun any Union ships on blockade patrol, very often successfully.

Confederate States Army revival

The Confederate States Army revival was a series of Christian revivals which took place among the Confederate States Army in 1863. It is generally regarded as part of the Third Great Awakening.

The diplomacy of the American Civil War involved the relations of the United States and the Confederate States of America with the major world powers during the American Civil War of 1861–1865. The United States prevented other powers from recognizing the Confederacy, which counted heavily on Britain and France to enter the war on its side to maintain their supply of cotton and to weaken a growing opponent. Every nation was officially neutral throughout the war, and none formally recognized the Confederacy.


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  19. David Livingston Gordon, and Royden James Dangerfield, The Hidden Weapon: The Story of Economic Warfare (Harper, 1947).
  20. Leonard Caruana, and Hugh Rockoff, "A Wolfram in Sheep's Clothing: Economic Warfare in Spain, 1940–1944." Journal of Economic History 63.1 (2003): 100-126.
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  22. James W. Cortada, "Spain and the second world war." Journal of Contemporary History 5.4 (1970): 65-75.
  23. Donald G. Stevens, "World War II Economic Warfare: The United States, Britain, and Portuguese Wolfram." Historian 61.3 (1999): 539-556.
  24. "The Arab Oil Threat". The New York Times. November 23, 1973.
  25. "General Assembly Adopts Annual Resolution Calling for End to Embargo on Cuba, Soundly Rejects Amendments by United States". United Nations. 1 November 2018.
  26. "Iran oil: US to end sanctions exemptions for major importers". BBC News . April 22, 2019.

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