Supported by
Paul Krugman
Trade and Peace: The Great Illusion
Opinion Columnist
On April 12, 1861, rebel artillery opened fire on Fort Sumter, beginning the U.S. Civil War. The war eventually became a catastrophe for the South, which lost more than a fifth of its young men. But why did the secessionists believe they could pull it off?
One reason was they believed themselves to be in possession of a powerful economic weapon. The economy of Britain, the world’s leading power at the time, was deeply dependent on Southern cotton, and they thought a cutoff of that supply would force Britain to intervene on the side of the Confederacy. Indeed, the Civil War initially created a “cotton famine” that threw thousands of Britons out of work.
In the end, of course, Britain stayed neutral — in part because British workers saw the Civil War as a moral crusade against slavery and rallied to the Union cause despite their suffering.
Why recount this old history? Because it has obvious relevance to the Russian invasion of Ukraine. It seems fairly clear that Vladimir Putin saw the reliance of Europe, and Germany in particular, on Russian natural gas the same way slave owners saw Britain’s reliance on King Cotton: a form of economic dependence that would coerce these nations into enabling his military ambitions.
And he wasn’t entirely wrong. Last week I castigated Germany for its unwillingness to make economic sacrifices for the sake of Ukraine’s freedom. But let’s not forget that Germany’s response to Ukraine’s pleas for military aid on the eve of war was also pathetic. Britain and the United States rushed to provide lethal weapons, including hundreds of the anti-tank missiles that were so crucial in repelling Russia’s attack on Kyiv. Germany offered and dragged its feet on delivering … 5,000 helmets.
And it’s not hard to imagine that if, say, Donald Trump were still president here, Putin’s bet that international trade would be a force for coercion, not peace, would have been vindicated.
If you think I’m trying to help shame Germany into becoming a better defender of democracy, you’re right. But I’m also trying to make a broader point about the relationship between globalization and war, which isn’t as simple as many people have assumed.
There has been a longstanding belief among Western elites that commerce is good for peace, and vice versa. America’s long push for trade liberalization, which began even before World War II, was always in part a political project: Cordell Hull, Franklin Roosevelt’s secretary of state, firmly believed that lower tariffs and increased international trade would help lay the foundations for peace.
The European Union, too, was both an economic and a political project. Its origins lie in the European Coal and Steel Community, established in 1952 with the explicit goal of making French and German industry so interdependent that there could never be another European war.
And the roots of Germany’s current vulnerability go back to the 1960s, when the West German government began pursuing Ostpolitik — “eastern policy” — seeking to normalize relations, including economic relations, with the Soviet Union, in the hope that growing integration with the West would strengthen civil society and move the East toward democracy. Russian gas began flowing to Germany in 1973.
So does trade promote peace and freedom? Surely it does in some cases. In other cases, however, authoritarian rulers more concerned with power than with prosperity may see economic integration with other nations as a license for bad behavior, assuming that democracies with a strong financial stake in their regimes will turn a blind eye to their abuses of power.
I’m not talking just about Russia. The European Union has stood by for years while Viktor Orban of Hungary has systematically dismantled liberal democracy. How much of this weakness can be explained by the large Hungarian investments that European, and especially German, companies have made while pursuing cost-cutting outsourcing?
And then there’s the really big question: China. Does Xi Jinping see China’s close integration with the world economy as a reason to avoid adventurous policies — such as invading Taiwan — or as a reason to expect a weak-kneed Western response? Nobody knows.
Now, I’m not suggesting a return to protectionism. I am suggesting that national-security concerns about trade — real concerns, not farcical versions like Trump’s invocation of national security to impose tariffs on Canadian aluminum — need to be taken more seriously than I, among others, used to believe.
More immediately, however, law-abiding nations need to show that they won’t be deterred from defending freedom. Autocrats may believe that financial exposure to their authoritarian regimes will make democracies afraid to stand up for their values. We need to prove them wrong.
And what that means in practice is both that Europe must move quickly to cut off imports of Russian oil and gas and that the West needs to supply Ukraine with the weapons it needs, not just to hold Putin at bay, but to win a clear-cut victory. The stakes here are much bigger than Ukraine alone.
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