US Economic Warfare #4: Limits
While America had found a new weapon (secondary sanctions and mafia diplomacy) to impose their will and policies on countries unilaterally, a new variable was growing larger and larger in the global economic equation. Yes, I am talking of China. China was the emerging economic superpower; and it lay outside America’s sphere of influence, says Jordan Schneider’s interview with Eddie Fishman.
Back then, the US
and China weren’t hostile to each other. Yet, America had to be careful with
its new weapon. If its unilateral sanctions hurt China, then China’s annoyance
aside, there was another risk - since all manufacturing lines led to China, any
(unintended) economic impact on China due to American sanctions on a 3rd
country could set off a rippling effect that might then get magnified into an
economic tsunami that slammed into the world’s economy. So all such unilateral
sanctions needed to make an exception for China.
Today, that list
of exceptions has expanded to India. Same reason – India is a huge economy and
market. Plus, intended or not, every act of American unilateralism is now
viewed through a new lens of suspicion in China and India – was the policy deliberately
created to hurt the two countries economically? Did America take Iranian oil
out of the market so that oil prices would increase and hurt China and India?
In the new world
where economic power was shifting to Asia, America couldn’t afford to alienate
both China and India. Its new weapon was no longer as all-powerful as it had
started out being. Exceptions had to be made.
Today, with open
hostilities between the US and China, the US still cannot use its mafia
diplomacy against China. Why not? Cripple China economically, and the cascading
effect will hurt the US too – higher prices of goods, American investments in
China going down the drain, entire companies would lose their manufacturing
lines and thus all sales and profitability, the stock market would fall, and
the economy would go into recession. No American President or politician would
take the risk of hurting his own voters in such ways, so equivalent resolutions
on China don’t stand any chance of getting passed.
That’s ultimately how weapons are. They work, until something changes in the landscape (technology, rise and fall of nations, political realignments) and then the weapon stops being as effective. Until someone creates a new weapon…
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