Economics is defined as the study of scarce resources, production, consumption, and the connection between all financial decisions made in our daily lives that either contribute to or contravene society. Every individual in this world strives to uphold the stability of their financial status, whether it’s in the government or private sector. Having a formidable economy has always been a number one priority for them, and many would go to extreme lengths to assure and maintain their power, income, and place in the market. As the competition in the market grows, conflicts will not only revolve around financial problems but the morals of humans as well.
John Maynard Keynes, an English economist and philosopher, once stated that: “Economics is a very dangerous science”, to which has been proven to be true more than once throughout history. This is because economics not only involves financial numbers or the analysis of income transfer but also politics, ideologies, international relations, and the development of society as a whole. All of these elements can be twisted into advancing forward or backward with just the power of policies created by governments that struggle with the evolution of different concepts of ideologies regarding economic policies. It may take more than one failure of government-constructed roads to anger the population into a protest, but one bad economic decision can turn the whole public into a revolutionary group.
Events like the collapse of the Soviet Union, Zimbabwe’s uncontrollable hyperinflation, and the Great Depression all have one thing in common: the downfall of their economies has greatly affected their populations, whose quality and expectancy of life has been reduced significantly due to the risen rate of unemployment, starvation, and political chaos. This not only demonstrates the strong correlation between economy, state, and its population, but also how a country can begin its downfall internally with only one factor of theirs sabotaged. It is only when the people suffer financially and physically that they turn their heads to the government and demand action and accountability.
As we enter the age where wars are being more narrowly watched and deemed unnecessary by many states, it raises the question of how one can gain a better advantage over the others without using any physical weapons or causing any international incidents but still hold their enemy in the grip with which they are able to benefit or exploit them to the maximum. The most strategic and dominant way to do so is by weaponizing the influence of one’s economic powers.
Ever since the Cold War began, the weaponization of economics has been a trendy option for powerful countries like the United States, Russia, and China as a means to sabotage or manipulate others into gaining beneficial outcomes or advantages against the other countries. It has always been an option in the modern era, but with even greater usage and the invention and advancement of technologies that allow greater access and insight into others’ economic structures and systems. Among the population, however, the creation of economic autonomy from state influences like crypto currency has also been a revolutionary work for the people but also a threat for many governments.
A prime example of economic weaponization would be the sanctions imposed by the United States and its coalition forces on Russia for their invasion of Ukraine as an effort to cut back on Russia’s economy in hopes of pressuring them to cease the invasion. According to Edward Fishman, a policy planning staff member of the U.S. The Department of State, classified the sanctions against the Central Bank of Russia as “the single largest sanctions actioned in modern history”. The hopes of these sanctions have centered around immobilizing the assets of the Russian government to prevent them from stabilizing the ruble currency. This includes banning Russian oil and gas imports, the withdrawal of international companies like McDonald’s and Adidas, and the targeting of oligarchs associated with Putin or the Russian government.
Though maximum efforts of economic sabotaging have been put into the conflicts against Russia, the growing debate about the efficiency of the sanctions is still being questioned by many members of the public, as Russia has no plan to step down or cease their intentions in Ukraine. Though their imports are restricted by many western countries, Russia has maintained a friendly economic relationship with China and India, which raises concerns for many world leaders.
To gain a better insight into the relationships between Russia, India, and China, it is shown that China has been and will be the biggest consumer of Russia’s fossil fuels, with imports reaching around $30 billion in 2023 up until June 16, 2023, according to Visual Capitalist. However, India has also maintained a competitive consumption of Russia’s oil as they have reached a new level of oil imports, estimated at around 1.93 million barrels per day, as seen in May and mentioned by the Indian Express.
The invasion of Ukraine by Russia has already sparked a major dispute between all existing countries in this world. Not only did it lead to nations siding with one faction to secure their future well-being, but it also generated much internal dissension among political parties and interest groups in countries like the United States on the topic of funding the Ukrainian government. The US funded more than $75 billion in assistance to Ukraine, according to the Council of Foreign Relations, which listed them as one of the top contributors among other nations.
With these events happening around the world, it became clear that countries are becoming more cautious with their economic decisions. With how dominion countries are being impacted by the sanctions, countries with weak or average economies must either side with one faction to ensure the stability of their economies in the long run. With only the stroke of a pen on a piece of paper, the world began turning their heads against each other.
Weaponizing one’s economic influence is one thing, but among the normal population, the seeking of financial betterment has never been more creative and dangerous at the same time until the creation and discovery of crypto currency. The creation of crypto currency, a digital currency that does not require the moderation of the state or any institution, has made it a well-known currency around the world, with an estimated total amount of 420 million users worldwide as of 2023. Without state or government interference, crypto users are set in a restriction-free environment where they are able to transfer the currency across all borders and in whatever amount they please, in contrast to the banks, where regulations are set to a high standard.
Although the currency is highly volatile, it has placed and posed serious concerns for many major banks as well. This is because banks oftentimes rely on the regulations set by governments to function properly, but crypto provides a passage for users to not only make transactions anonymously but freely from any surveillance at certain times. The digital currency, however, has also been used to fund the war efforts in Ukraine, as it is reported that around $212 million worth of crypto has been donated to the Ukrainian government and the people in the country. Supplying the Ukrainian forces with essential equipment like bullet-proof vests, radios, drones, and many more. The Ukrainian Government has recognized the efforts and donations made to their forces by the use of crypto and issued a statement on Twitter on May, 2022, stating: “ The people of Ukraine are grateful for the support and donations from the global crypto community as we protect our freedom.”.
The greatest war that needs to be won is not on the land but through economics. Every single individual seeks to gain an increase in their financial status, and there is no doubt that some people are willing to manipulate or restrict other people’s opportunities by any means necessary as an ensurement of their own financial well-being in this world. Economics has always played an important role in every place; its connection and impacts vary in different topics, and in the hands of those who have the greatest insight and the most connection in economics, they will be the ones who determine the financial outcome of other people.
Economics determines the relationships of one country to the others, the ideologies that the population within a state will have, the quality of life the people will receive, and so on. All of said examples have already been demonstrated by the events mentioned in the article, whether the sanctions on Russia or the creation of a digital currency. Both are prime examples of how economics is used to establish the basis of conflicts and benefits. The only question is, how will we allocate such things?
– Article written by Pune Thiemboonkit, MUIDS.
– Edited by Ramon (Miki) Prasertthavon, Senior Managing Editor, ICS.
