Disquiet on the Russian Front, Part II

Disquiet On The Russian Front II

As attentive readers know, I’ve been thinking about the implications of recent US and EU sanctions that threaten Russia’s ability to develop production from Arctic oil fields – production the nation needs if it is ever to compensate for declining output from its western Siberian fields.

From the Russian point of view, the implications are not immediate but nonetheless dire, because Vladimir Putin’s ability to finance virtually all of the programs that buoy his popularity in Russia – from food subsidies to the annexation of Crimea – depends largely on oil revenues. (Think Saudi Arabia.) So his own long-term viability, and the prospects of his vision for a “Greater Russia”, independent of the global financial system, all depend on huge and sustainable earnings from Russia’s energy sector.

Which got me thinking as well about analogous (and, it turns out, largely distinguishable) situations in the history of US export controls. Herewith, some historical musings.

Prior Situation A ~ A Great Power Brought To Its Knees: When Mikhail Gorbachev was presiding over the dissolution of the Russian empire in the early 1990s, Leslie Gelb – one of Tom Friedman’s predecessors as The New York Times foreign affairs columnist – asked the Number Two man in the then-“Soviet” Defense Ministry the crucial question: Just how far would the Russian military allow Gorbachev to go before the military stepped in to preserve the Russian empire?

The answer was instructive: The Red Army was not going intervene, and not – as worshipers of Ronald Reagan insist – because Russia could not afford to counter America’s investment in a military buildup but because, no matter what Russia spent, it could not match our development of “smart weapons”. That, in turn, was because the Soviet Union’s incentive-stifling economic system could not produce the needed military software, and US/allied export controls made it impossible for the Soviet Union to get the needed software on world markets.

Something fundamental had to change, the Russian general was saying. Without the profit motive that drove American geeks to month-after-month of Mountain-Dew and pizza-fueled twenty-hour coding sessions, the USSR military was toast. Implicitly, however, he was also saying that, but for the export control regimes that otherwise denied Russia the software it needed, the Soviet system might never have fallen.

So here we have an example in which a technology-starved Russia ceded its empire because allied export controls prevented it from obtaining the military software it needed to maintain that empire.

Prior Situation B ~ An Armaments-Starved Psuedo-Power Exposed: In 2003, the United States invaded Iraq, ostensibly because – in the now-infamous words of Condi Rice – the US could not take the chance that the “smoking gun” of Iraq’s disputed possession of WMDs would turn out “to be a mushroom cloud”, rising vividly above New York or some other US population center. Famously, this specter turned out to be a Neo-Con fantasy at best (and quite likely a Neo-Con con), because the pre-invasion export control system turned out to have worked so well that no WMDs of any kind, much less Condi’s notional nukes, were ever discovered in Saddam Hussein’s Iraq, despite the embattled Bush administration’s most dogged efforts.

Here, the example suggests again that export controls – if realistically relied upon and rigorously enforced – can be effective, even obviating (if ranking officials are not ideologically committed to dismissing the possibility) the need for war.

Prior Situation C ~ Export Controls That Led Inexorably To War: The standard American narrative – that America’s entrance into World War II resulted solely from Japan’s unwarranted attack on Pearl Harbor – ignores the very significant role that export controls played in precipitating Japan’s assault.

Those controls arose from Franklin Delano Roosevelt’s call, in response to Japanese bombing of civilians in China, for a “moral embargo” on US exports of war materiel to Japan. Without the force of law, FDR simply asked US aircraft companies to refrain from supplying Japan with planes and parts that could be used in the bombing of innocents. By 1939, FDR had expanded his exhortations to cover airplane plans and technical information for the production of high-quality aviation gasoline. Because US suppliers largely heeded FDR’s call, munitions traffic between the US and Japan effectively ceased.

At the same time, the US began to discourage US banks and investors from extending loans to Japan, much as US sanctions now bar such investments in Russia.

But US sanctions didn’t really begin to bite until July of 1940, when Congress enacted and FDR signed an Export Control Act that authorized FDR to require (and deny) licenses for exports of basic war materiel to Japan. For starters, these included aviation gasoline and most kinds of machine tools; by September, they included iron and scrap steel, which were chronically in short supply in Japan. But in light of Japan’s very substantial reliance on imports of oil from the US, the real question was always whether – and when – the US would refuse to sell oil to Japan.

That decision did not come until the summer of 1941, after Japan’s advance into Indochina and US intelligence intercepts made it clear that Japan had designs, not only on Singapore and the Philippines, but also on the oil- and rubber-rich Dutch East Indies (now Indonesia). On July 26, 1941, less than four months before December 7, FDR issued an executive order freezing Japanese funds in the US. The British and Dutch followed suit. This meant that Japan could no longer buy oil in the US or the DEI.

It also amounted to a declaration of war – unless, of course, the Japanese responded by ditching their oil-fueled expansionist ambitions in Asia, which was not going to happen and did not happen. The western oil embargo served to put Japan on a deadline which dictated that it invade Indonesia and secure its flow of oil before Japan exhausted its oil reserves.

FDR knew this and Pearl Harbor, while a surprise as to time and place, was no surprise in the larger scheme of things: Something very like “Pearl” was going to come.

So here we have the example of a resource-poor country, Japan, hell bent on territorial expansion, reduced to rolling dice in an all-or-nothing attack on the country whose export control policies were effectively denying that country its wonted place in the sun. Once again, export controls may be said to have “worked”, but at a price that very few Americans have understood, in 1941 any more than today.

Analysis

So which, if any, of these prior situations is relevant to today’s sanctions on Russia?

That country is no longer so supine as it was in Gorbachev’s day, but its economic health is hardly robust. So the West’s financial sanctions (against Westerners lending funds to state-owned Russian banks) may be more important in the short run than sanctions on Russia’s defense or energy sectors.

But Western sanctions are directed, not only against Russia’s energy sector, but also against various state-owned armaments companies. There is no indication at this writing, however, that prohibitions on sales into Russia’s defense sector could have anything like the effect of Western bans on sales of military software in the 1990s. More to the point, though, the kind of conventional, on-the-ground weaponry that Russia might need for assaults in Ukraine (or, God forbid, Estonia and Poland) is reportedly dependent on parts that are manufactured – of all places – in eastern Ukraine. Which suggests that, if Russia were to invade Ukraine overtly, it might be for reasons (at least in part) that are more akin to the Japan example than any of the others.

Of course, Vladimir Putin actually does have the kind of nuclear arsenal that Saddam Hussein (and the Neo-Cons) only dreamed of. But is he likely to use it to shore up Russia’s oil future? That sounds exceedingly far-fetched – about as far-fetched, by the way, as the notion that the US would actually put boots on the ground in a war against Russia to protect its “NATO ally” Estonia. But that’s a question for another day.

Still and all, there remains the oil element that is common to today’s sanctions and those that led to World War II. The difference is that today’s Western sanctions are directed at Russia’s oil future, not at current oil flows that Russia needs to meet domestic needs and realize its territorial ambitions, whatever those might be. Which means that these sanctions leave time for Putin to come to his senses.

In that sense, it appears that current sanctions are properly tailored to give diplomacy time to work, to the avoidance of immediate war and ultimately (one dares hope) to a resolution of the current crisis that sees Russia gaining concessions it needs and Ukraine getting a deal that it deserves.

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