Economy

Does Economic Deterrence Work? Understanding the West’s Assumptions About Keeping Russia in Check

Does Economic Deterrence Work? Understanding the West’s Assumptions About Keeping Russia in Check

In the lead-up to the February 24, 2022 invasion of Ukraine, Western nations threatened Russia with severe economic sanctions, export controls, and other punitive economic measures if it proceeded with an invasion. These threats were ignored. Over a year into the invasion, Russia’s economy and war-fighting capabilities are hurting. Punitive economic measures by the West have shut Russia out of the global economy and challenged its ability to profit from oil sales, import critical technology, and finance its war effort.

Reconceiving U.S. Economic Strategy

Reconceiving U.S. Economic Strategy

The mental model of a unified government “orchestrating” the economic instrument of power is fundamentally misleading. Rather, the more appropriate “mental model” to describe the milieu of the economic instrument is as a network of a variety of entities, and even more specifically to describe that milieu as a complex adaptive system. Behaviors in such a system are inherently decentering– no single node in the system predominates. Understanding how the economic instrument can operate in this system also requires understanding the rest of the elements and their interconnected interdependencies.

The End of Strategic Patience: The North Korea Dilemma

The End of Strategic Patience: The North Korea Dilemma

The continuum of applied U.S. strategies towards North Korea has failed and will never achieve the desired strategic objectives, as they are currently envisioned. This is because U.S. policymakers remain focused on denuclearization and non-proliferation vice regional stability as the strategic goal. In the 2015 U.S. National Security Strategy (NSS) President Obama outlined his vision for leveraging “strategic patience” as a means to force the Kim regime to the negotiating table. In his view, this strategy focused on a “commitment to the denuclearization of the Korean Peninsula.” However, because the U.S. continues to fundamentally miscalculate the underlying cultural influences guiding North Korean decision-makers and because China and Russia have failed to consistently enforce economic sanctions imposed by the UN Security Council (UNSC), strategic patience as envisioned by President Obama failed to produce the desired results. Continuing to march towards the same end-state, albeit more aggressively than before, President Trump released his 2017 NSS that asserts the U.S. “will work with allies and partners to achieve complete, verifiable, and irreversible denuclearization on the Korean Peninsula and preserve the non-proliferation regime in Northeast Asia.” Unfortunately, pursuing a denuclearized North Korea and convincing North Korea to agree to non-proliferation are fruitless endeavors. To understand precisely why these strategies have failed and will continue to fail, it is important to understand the cultural ideologies that influence North Korean national objectives and domestic policy actions.

A Case of Decline? Examining the US Strategic Position in the Mid-1970s

A Case of Decline? Examining the US Strategic Position in the Mid-1970s

By 1974 a combination of the Watergate scandal, the Vietnam War, inflation, and slow economic growth cast serious doubts on American power. The United States faced a constitutional crisis not seen since the Civil War, and the 895 days that followed were wracked with fears of decline. As David Rothkopf noted, “While few in the street would consider or articulate questions about American decline as academics might, people knew in their gut that something was deeply wrong, that this was not the America they had been raised believing in.”

The Gambler: An Economic Outlook for the American Presidency

The Gambler: An Economic Outlook for the American Presidency

The primary way to frame the strategic approach and environment of the new administration as it relates to national security should be through an economic lens. In doing so, one cannot on the one hand understate an atypical governance style, yet on the other ignore the inertia of a large nation and an intertwined global economic system.

#Reviewing War by Other Means

#Reviewing War by Other Means

There isn’t much grand about America’s post-Cold War grand strategy. Such is the consensus among the academic scholars, think-tankers, pundits, and many former national security officials who have chastised U.S. foreign policymakers for lacking strategic sophistication, or worse, failing to craft a coherent grand strategy at all...In their well-crafted and important new book, War by Other Means: Geoeconomics and Statecraft, Robert Blackwill and Jennifer Harris join this discussion orthogonally, arguing that the United States has altogether abandoned the economic dimension of grand strategy.

Green Tea Curse

How Japanese Societal Expectations and a Stressed Economy Will Undercut Defense

In its 2014 white paper, the Japanese Ministry of Defense states “the essence of national security can be found in creating an international environment that is stable and predictable, while preventing the emergence of threats before they occur, through diplomacy.”[1] This implies an underlying desire to handle international conflicts via means other than force. However, it goes on to say “reality…suggests that it is not necessarily possible to prevent invasions from the outside by employing only non-military means.”[2] Can the recent nationalistic rhetoric of Prime Minister Shinzo Abe, which included increased prioritization of the country’s military capabilities, overcome the underlying Japanese socio-economic malaise? Japan faces an uphill battle to create a fighting force capable of rivaling potential regional adversaries. Despite the regional threats from North Korea, China, and Russia, Japan will find it difficult to increase its defense force numbers and overall capability due to economic, demographic, and political considerations.

Neighborhood Rivals and the Question of Force

Stretching from 65 miles off the northeastern coast of Taiwan to 25 miles south of Russia, all of Japan’s international borders lie along the open water. The extensive coastline creates an obvious need to protect Japan’s island states from sea and air-based threats. The 2014 Ministry of Defense white paper alludes to three main potential threats to the island nation: North Korea, China, and Russia.[3]

Japanese Maritime Self-Defense Force’s Aegis guided-missile destroyers, Kongo (front) and Chokai (rear), leaving their base in Sasebo, Nagasaki Prefecture to head out to sea. (AFP/GETTY)

Japanese Maritime Self-Defense Force’s Aegis guided-missile destroyers, Kongo (front) and Chokai (rear), leaving their base in Sasebo, Nagasaki Prefecture to head out to sea. (AFP/GETTY)

North Korea provides the most unpredictable threat to Japanese security. Continued missile and nuclear testing, as well as an overtly obstinate attitude towards international negotiation, have continued to isolate the Kim Jong-un regime. The most pressing Japanese concerns, with respect to North Korea, are the continued growth of the regime’s ballistic missile programs and its development of nuclear weapons technology. The increasing capabilities of North Korea have led to a significant focus on Japan’s ballistic missile defense (BMD) and regional defense cooperation. Furthermore, in April of 2014, the U.S. announced that it would send additional naval BMD assets to augment Japan’s current and future force.[4] The North Korean ballistic missile and nuclear programs have become such a regional concern that both Japan and South Korea (two countries with historically divisive differences) have shown interest in trilateral defense agreements with the U.S.

A Japanese Maritime Self-Defense Force’s P-3C patrols the Senkaku Islands. (AP)

A Japanese Maritime Self-Defense Force’s P-3C patrols the Senkaku Islands. (AP)

The publicized disputes over the Senkaku/Diaoyu Islands have recently highlighted the 1,000-year history of conflict between Japan and China. The Japanese defense white paper takes a significantly different tone in discussing China versus North Korea. Although it discusses “dangerous activities that could cause unintended consequences,” the paper also makes note of the current and expected growth of China on the economic and diplomatic fronts.[5] Of note, the mutually beneficial economic relationship between the two countries may serve as its own deterrent towards military force as China has become Japan’s number one trade partner.[6]

Finally, the 2014 white paper also highlights Russia as a potential threat within the region.[7] The recent Russian-Ukraine incidents serve as a backdrop to highlight a potentially aggressive player in the region.[8] Russian armed forces have maintained a presence in and around the disputed Kuril Islands since the end of World War II. Recently these forces completed an exercise in the islands involving air force, navy, and army personnel, prompting Prime Minister Abe’s response that deplored the activities as “utterly unacceptable for our country.”[9] Japan’s ability to provide follow-up unilateral action for that statement is questionable.

Article nine of the Japanese constitution states:

Aspiring sincerely to an international peace based on justice and order, the Japanese people forever renounce war as a sovereign right of the nation and the threat or use of force as means of settling international disputes.[10]
In order to accomplish the aim of the preceding paragraph, land, sea, and air forces, as well as other war potential, will never be maintained. The right of belligerency of the state will not be recognized.[11]

However, is that enough to deter Japan from future military build-up?

Japanese policy on military force has gradually crept away from an explicit interpretation of the phrases “use of force” and “will never be maintained.”

Japanese Ground Self-Defense Force troops and U.S. Marines stage a joint drill Wednesday involving MV-22 Osprey tilt-rotor transports at Camp Pendleton in California. (KYODO)

Japanese Ground Self-Defense Force troops and U.S. Marines stage a joint drill Wednesday involving MV-22 Osprey tilt-rotor transports at Camp Pendleton in California. (KYODO)

Japanese policy on military force has gradually crept away from an explicit interpretation of the phrases “use of force” and “will never be maintained.”[12] The Ministry of Defense utilizes Japan’s status as a sovereign nation and the inherent right of self-defense to justify maintaining military forces.[13] In their online description of constitutional interpretation, multiple references are made to using only the minimum amount of force required for the defense of Japan.[14] However, the ministry also goes so far as to highlight that an attack on a foreign ally may constitute a requirement of military response if such an attack severely threatens Japan and its people (a recent controversial change).[15] This interpretation of the Japanese constitution suggests a policy of collective self-defense, or that an attack on the United States (or theoretically any other ally) may trigger Japanese involvement if deemed severe enough to threaten Japanese security.

Japanese Prime Minister Shinzo Abe reviews an honor guard in a ceremony prior to his meeting with officers of the Japan Self Defense Forces, on Sept. 12, 2013. (Koji Sasahara/AP)

Japanese Prime Minister Shinzo Abe reviews an honor guard in a ceremony prior to his meeting with officers of the Japan Self Defense Forces, on Sept. 12, 2013. (Koji Sasahara/AP)

The new leadership of Japan has at least implemented some measures to back up their nationalistic views. On August 29, 2014, the Ministry of Defense submitted a fiscal year 2015 budgetary request that increased defense spending 3.5%.[16] This increase may appear substantial until compared with the percentage of government spending that has traditionally been allocated towards defense (around 5%).[17] When compared with potential adversary spending plans, this increase represents a small shift in the regional defense-spending outlook. In 2013, China spent approximately $118 billion on defense while Russia spent $88 billion.[18] During that same year, Japan spent $48 billion.[19] Through August 2014, Jane’s Online reported overall military strength numbers comparing Japan to China with a ratio of roughly 1 to 3.5 for submarines, 1 to 4.8 for surface combatants, and a 1 to 4.3 ratio for combat aircraft.[20-23] Although mass isn’t the end-all of military might, significant shifts in future resource allocation would be required for Japan to challenge this disadvantage on its own. But, as recent sequestration events in the U.S. have demonstrated, economic resources and public opinion can easily halt growth or drive aggressive reductions in a nation’s fighting force.

Economic Dependence

One-third of the world’s liquefied natural gas passes through the Straits of Malacca and into the South China Sea, with the bulk of it originating in the Persian Gulf. LNG also flows into the region from Southeast Asia and Oceania. Much of this impo…

One-third of the world’s liquefied natural gas passes through the Straits of Malacca and into the South China Sea, with the bulk of it originating in the Persian Gulf. LNG also flows into the region from Southeast Asia and Oceania. Much of this imported LNG is bound for Japan and South Korea. (CSIS)

As a nation of relatively small, mountainous islands, Japan is highly dependent on international trade. Currently, Japan produces less than 10% of its energy needs internally.[24]The Japanese also rely heavily on oil and liquid natural gas for their energy needs (this was 47% and 24%, respectively, of the country’s total 2012 consumption).[25] Oil imports primarily come from the Middle East (79%), and the majority of natural gas shipments arrive from Southeast Asia (49%) and the Middle East (29%).[26] The future of internal energy production for Japan does not look any more positive based on recovery from the 2011 Fukushima nuclear power plant disaster and the widespread anti-nuclear sentiment that it reinforced. The Japanese dependence on outside energy sources is likely to continue long into the future. Prior to the 2011 disaster, Japan’s plan for nuclear energy development peaked at providing 50% of the country’s requirements by 2030 (a respectable amount, but still leaving 50% to other sources).[27] Japan also imports approximately 60% of its population’s food requirements.[28] Of that, ASEAN countries provide approximately 16%, and China approximately 13% (the U.S. provides approximately 26%).[29] The vast majority of these trade requirements depend on routes through the East China, the Philippine, and South China Seas. Although the rise of China may seem like a single-sided threat towards these trade routes, other economic factors are at play.

In addition to providing passage for incoming commodities, the states of Maritime Asia also have deeply interdependent trade relations among themselves. China and ASEAN (Southeast Asia), China and Japan, and Japan and ASEAN states have robust trade …

In addition to providing passage for incoming commodities, the states of Maritime Asia also have deeply interdependent trade relations among themselves. China and ASEAN (Southeast Asia), China and Japan, and Japan and ASEAN states have robust trade relations. The China-ASEAN trade relationship is especially strong. (CSIS)

To provide the economic basis for $250 billion in energy imports and $60 billion in agricultural imports, Japan relies heavily on its key exports: cars, machinery, and electrical components.[30-32] Japan’s number one customer for its top three export products is China. Approximately 66% of Japanese exports to China go directly towards China’s manufacturing industry for creation of their own exports.[33] Conversely, many of the components used in Japan’s exports come directly from imports from China. Japan itself is China’s number three export country.[34]This economic interdependence between the two countries serves as a potential buffer against the breakout of hostilities.

Japan’s Aging Nation and Continued Pacifism

(Reuters)

Exacerbating the regional defense challenges faced by Japan are its current demographic trends. By 2050, Japan is expected to have a 15% decrease in population.[35] During that decrease, the median age is expected to grow from 45 to 53 with the proportion of the population at or above retirement age growing from 23% to 36.5%.[36] This trend will create a staggering dependency ratio (“the size of the ‘dependent’ population relative to the ‘working age’ population”) of .96.[37] In the year 2010, the Japanese dependency ratio was .57 (comparatively, the U.S. ratio was .49).[38] In 2014, the Japanese governmental budget allocated 31.8% towards social security (a percentage that has been on the rise over the last five years) compared to the 5% on defense spending mentioned earlier.[39] Although public pensions as a percentage of GDP are not expected to increase sharply in Japan, social security is likely to be a fierce competitor for government funding in the future. 69% of recently polled Japanese feel that either the government or their family should bear the brunt of taking care of them in retirement.[40] In a September poll, only 11% of the Japanese public hoped that the top priorities for Minister Abe’s cabinet would be security and diplomacy (compared to 32% looking for improvements in the economy and employment, and 22% vying for tax and social security reforms).[41] Despite the wishes of Prime Minister Abe, Japan’s demographic trend of an aging populace has a different priority than self-defense.

The current Japanese socio-political environment also does not appear to support widespread defense reform. In an August 2014 poll, 60.2% of the surveyed population opposed the idea of collective self-defense (an increase of nearly 6% from a month earlier).[42] Additionally, the level of public support for the Liberal Democratic Party (LDP) is highly suspect. Minister Abe and the LDP won landslide victories in the 2012 elections. However, many (including Abe himself) based the large win on the failures of the previous governing party versus true support behind the LDP.[43] Since the election, the LDP has depended on a coalition with the New Komeito party to ensuring a two-thirds majority of the lower Diet and the sway of governmental policy. Ironically, the New Komeito party leans towards pacifism. Recently it exercised its control within the coalition to force the LDP to revise wording of the collective self-defense proposal to avoid potentially enabling more liberal use of military force.[44]

Unless a major shift in global alliances or power occurs, the future of Japan’s military appears to (at best) remain similar to its current state: technologically current, but reliant upon foreign alliances to maintain competitive relevancy with regional rivals.

Conclusion

U.S. President Barack Obama (L) shakes hands with Japanese Prime Minister Shinzo Abe at the G20 Summit in St. Petersburg, Russia, Sept. 5, 2013. (Reuters)

U.S. President Barack Obama (L) shakes hands with Japanese Prime Minister Shinzo Abe at the G20 Summit in St. Petersburg, Russia, Sept. 5, 2013. (Reuters)

It is likely that some form of modernization will be required to keep the Japanese Self Defense Force technologically relevant in their regional environment. Modernization may arrive in the form of shared technology and increasing military sales (such as the planned purchase of F-35s from the U.S. or recent agreement to sell Soryu submarines to Australia). However, it is not cheap to maintain a military capable of rivaling many of the regional powers in northeast Asia. Growing social demands on the Japanese economy as its population ages will likely curb large-scale military growth. The emphasis on satisfying the internal needs of its society makes sense for a country where pacifism (or at least strong opposition to aggression in any form) exists as a binding fiber of post-World War II society. A continued reliance on defense alliances and outside support will likely be required to protect Japan’s vital interests, particularly in the case of North Korea and Russia. Although defense cooperation may serve as a possible preventative measure towards full-scale war with China, the more likely deterrent is Japan and China’s inter-dependence on trade. Unless a major shift in global alliances or power occurs, the future of Japan’s military appears to (at best) remain similar to its current state: technologically current, but reliant upon foreign alliances to maintain competitive relevancy with regional rivals.


Major Kevin Hicok is a USAF F-16 fighter pilot and weapons officer currently in attendance at the US Naval War College. The views expressed in this article are those of the author and do not reflect the official policy or position of the US Air Force, US Navy, the DoD, or the US Government. Twitter: @kevin_hicok.


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Notes:

[1]. Japan, Ministry of Defense, Defense of Japan 2014, August 5, 2014,http://www.mod.go.jp/e/publ/w_paper/2014.html.

[2]. Ibid.

[3]. Japan, Ministry of Defense, Defense of Japan 2014, August 5, 2014.http://www.mod.go.jp/e/publ/w_paper/2014.html.

[4]. Cheryl Pellerin, “United States Department of Defense,” Defense.gov News Article: Hagel: U.S. to Send 2 More Aegis Ships to Japan, April 06, 2014, accessed September 11, 2014,http://www.defense.gov/news/newsarticle.aspx?id=121992.

[5]. Japan, Ministry of Defense, Defense of Japan 2014, August 5, 2014,http://www.mod.go.jp/e/publ/w_paper/2014.html.

[6]. “China (CHN) Profile of Exports, Imports and Trade Partners,” Observatory of Economic Complexity, accessed September 22, 2014,http://atlas.media.mit.edu/profile/country/chn/.

[7]. Japan, Ministry of Defense, Defense of Japan 2014, August 5, 2014,http://www.mod.go.jp/e/publ/w_paper/2014.html.

[8]. Ibid.

[9]. Yuka Hayashi, “Japan Lodges ‘Strong Protest’ with Russia Over Military Exercise,” The Wall Street Journal, August 14, 2014, accessed September 12, 2014, http://online.wsj.com/articles/japan-lodges-strong-protest-with-russia-over-military-exercise-1407998329.

[10]. It should be noted that the wording of the Japanese Constitution was highly subject to United States influence in the post-WWII environment.

[11]. Constitution of Japan, Ch. 2, Art. 9.

[12]. Ibid.

[13]. Japan, Ministry of Defense, Fundamental Concepts of National Defense,accessed September 12, 2014,http://www.mod.go.jp/e/d_act/d_policy/dp01.html.

[14]. Ibid.

[15]. Ibid.

[16]. Banyan, “Tooling Up,” The Economist (blog), September 1, 2014, accessed September 13, 2014,http://www.economist.com/blogs/banyan/2014/09/japans-military-spending.

[17]. “Highlights of the Budget for FY2014,” Ministry of Finance Japan: Budget, December 24, 2013, http://www.mof.go.jp/english/budget/budget/index.html.

[18]. Military Spending and Armament, report (Stockholm International Peace Research Institute, 2014),http://www.sipri.org/research/armaments/milex/milex_database/milex_database.

[19]. Ibid.

[20]. “Japan — Navy,” IHS, September 1, 2014, accessed September 13, 2014,https://janes-ihscom.usnwc.idm.oclc.org/CustomPages/Janes/DisplayPage.aspx?DocType=Reference&ItemId=+++1303192&Pubabbrev=CNA.

[21]. “China — Navy,” IHS, September 1, 2014, accessed September 13, 2014,https://janes-ihscom.usnwc.idm.oclc.org/CustomPages/Janes/DisplayPage.aspx?DocType=Reference&ItemId=+++1303146&Pubabbrev=CNA.

[22]. “Japan — Air Force,” HIS, September 1, 2014, accessed September 13, 2014, https://janes-ihs-com.usnwc.idm.oclc.org/CustomPages/Janes/DisplayPage.aspx?DocType=Reference&ItemId=+++1303191&Pubabbrev=CNA.

[23]. “China — Air Force,” IHS, September 1, 2014, accessed September 13, 2014, https://janes-ihs-com.usnwc.idm.oclc.org/CustomPages/Janes/DisplayPage.aspx?DocType=Reference&ItemId=+++1303145&Pubabbrev=CNA.

[24]. “Japan,” U.S. Energy Information Administration — EIA — Independent Statistics and Analysis, July 31, 2014, accessed September 08, 2014,http://www.eia.gov/countries/cab.cfm?fips=JA.

[25]. Ibid.

[26]. Ibid.

[27]. Ibid.

[28]. “Japan: Trade,” USDA Economic Research Service, August 7, 2014, accessed September 09, 2014,http://www.ers.usda.gov/topics/international-markets-trade/countries-regions/japan/trade.aspx#.VA9Q4UvcCaw.

[29]. Ibid.

[30]. Ibid.

[31]. “Japan,” U.S. Energy Information Administration — EIA — Independent Statistics and Analysis, July 31, 2014, accessed September 08, 2014,http://www.eia.gov/countries/cab.cfm?fips=JA.

[32]. “Japan (JPN) Profile of Exports, Imports and Trade Partners,” The Observatory of Economic Complexity, accessed September 21, 2014,http://atlas.media.mit.edu/profile/country/jpn/.

[33]. Richard Katz, “Why Chinese-Japanese Economic Relations Are Improving,” Foreign Affairs, December 30, 2013, accessed September 21, 2014, http://www.foreignaffairs.com/articles/140615/richard-katz/why-chinese-japanese-economic-relations-are-improving.

[34]. “China (CHN) Profile of Exports, Imports and Trade Partners,” Observatory of Economic Complexity, accessed September 22, 2014,http://atlas.media.mit.edu/profile/country/chn/.

[35]. Attitudes About Aging: A Global Perspective, report (Pew Research Center, 2014), accessed September 12, 2014,http://www.pewglobal.org/2014/01/30/chapter-2-aging-in-the-u-s-and-other-countries-2010-to-2050/.

[36]. Ibid.

[37]. Ibid.

[38]. Ibid.

[39]. “Highlights of the Budget for FY2014,” Ministry of Finance Japan: Budget, December 24, 2013.http://www.mof.go.jp/english/budget/budget/fy2014/01.pdf.

[40]. Attitudes About Aging: A Global Perspective, report (Pew Research Center, 2014), accessed September 12, 2014,http://www.pewglobal.org/2014/01/30/chapter-2-aging-in-the-u-s-and-other-countries-2010-to-2050/.

[41]. “64% Approval Rating for New Cabinet,” The Japan News, September 5, 2014, accessed September 12, 2014, http://the-japan-news.com/news/article/0001547443.

[42]. “84% of Public Says Explanation of Collective Defense Decision Unclear: Poll,” Japan Times RSS, August 3, 2014, accessed September 12, 2014,http://www.japantimes.co.jp/news/2014/08/03/national/84-public-says-explanation-collective-defense-decision-unclear-poll/?utm_source=rss#.VBMYc0vcCay.

[43]. “UPDATE: Abe’s LDP Dominates Election; Noda Resigns after DPJ Humiliation — AJW by The Asahi Shimbun,” AJW by The Asahi Shimbun RSS, December 17, 2012, accessed September 12, 2014,http://ajw.asahi.com/article/behind_news/politics/AJ201212170006.

[44]. “MAJOR SECURITY SHIFT: New Komeito Agrees to Revised Collective Self-defense Proposal,” AJW by The Asahi Shimbun, June 25, 2014, accessed September 12, 2014, http://ajw.asahi.com/article/ behind_news/politics/AJ201406250049.