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Strategies of Economic Containment: U.S. Trade Relations with the Soviet Union

Published online by Cambridge University Press:  13 June 2011

Michael Mastanduno
Michael Mastanduno
Affiliation:
Princeton University
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Extract

If a consensus exists in the literature on international economic sanctions, it is that attempts to use economic instruments to achieve political objectives are likely to fail.1 This widely shared conclusion has been based on the analysis of a number of highly visible but unsuccessful attempts, including the League of Nations' sanctions against Italy in 1935–1936, the Arab boycott of Israel, U.S. sanctions against the Castro regime, United Nations sanctions against Rhodesia, and most recently, U.S. sanctions against the Soviet Union following the invasion of Afghanistan and the imposition of martial law in Poland.

Type
Research Article
Information
World Politics , Volume 37 , Issue 4 , July 1985 , pp. 503 - 531
Copyright
Copyright © Trustees of Princeton University 1985

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References

1 See, for example, Knorr, Klaus, The Power of Nations (New York: Basic Books, 1975)Google Scholar; Losman, Donald, International Economic Sanctions: The Cases of Cuba, Israel and Rhodesia (Albuquerque: University of New Mexico Press, 1979)Google Scholar; Doxey, Margaret P, Economic Sanctions and International Enforcement, 2d ed. (London: Oxford University Press, 1980)CrossRefGoogle Scholar; Galtung, Johan, “On the Effects of International Economic Sanctions, With Examples from the Case of Rhodesia,” World Politics 19 (April 1967), 378–416CrossRefGoogle Scholar. On East-West trade in particular, see Adler-Karlsson, Gunnar, Western Economic Warfare, 1947–1967 (Stockholm: Almquist & Wiksell, 1968)Google Scholar, and Paarlberg, Robert L., “Lessons of the Grain Embargo,” Foreign Affairs 59 (Fall 1980), 144–62CrossRefGoogle Scholar.

2 On the multinationals and private sanctions, see Stuart Olson, Richard, “Economic Coercion in World Politics: With a Focus on North-South Relations,” World Politics 31 (July 1979), 471–94CrossRefGoogle Scholar; on positive sanctions, see Baldwin, David A., “The Power of Positive Sanctions,” World Politics 24 (October 1971), 19–38CrossRefGoogle Scholar. More generally, see Abbott, Kenneth W., “Linking Trade to Political Goals: Foreign Policy Export Controls in the 1970s and 1980s,” Minnesota Law Review 65 (No. 5, 1981), 739–889Google Scholar.

3 This distinction is made by Angela Stent, From Embargo to Ostpolitikj The Political Economy of West German - Soviet Relations, 1955-1980 (Cambridge: Cambridge University Press, 1981), 17Google Scholar.

4 See Barber, James, “Economic Sanctions as a Policy Instrument,” International Affairs 55 July 1979), 367–84.CrossRefGoogle Scholar

5 The most comprehensive statement thus far is Baldwin, David A., “Economic Sanctions as Instruments of Foreign Policy,” mimeo (Hanover, NH: Dartmouth College, 1984)Google Scholar.

6 See Hechscher, Eli, The Continental System (Oxford: Clarendon Press, 1922)Google Scholar; Medlicott, W. M., The Economic Blockade, Vols. I and II (London: H.M.S.O., 1952Google Scholar and 1959); Milward, Alan W., War, Economy and Society, 1939–1945 (Berkeley: University of California Press, 1977)Google Scholar.

7 The phrase is borrowed from, and the idea inspired by, Lewis Gaddis, John, Strategies of Containment: A Critical Appraisal of Postwar American National Security Policy (New York: Oxford University Press, 1982)Google Scholar.

8 See Mead Earle, Edward, “Adam Smith, Alexander Hamilton, and Friedrich List: The Economic Foundations of Military Power,” in Earle, , ed., Makers of Modern Strategy (Princeton: Princeton University Press, 1943), 117–54Google Scholar.

9 Knorr (fn. 1), 47.

10 Ibid., 84.

11 During the early phases of World War II, the British went as far as to rely on economic warfare as their primary strategic instrument, hoping to achieve an “economic shortcut to victory.” See Medlicott (fn. 6), I, p. 44. They quickly learned, however, that economic warfare could only complement, but not substitute for, military warfare.

12 Knorr (fn. 1), 47.

13 See Krasner, Stephen D., “Domestic Constraints on International Economic Leverage,” in Knorr, Klaus and Trager, Frank, eds., Economic Issues and National Security (Lawrence: University of Kansas Press, 1977), 160–81Google Scholar.

14 Wiles, Peter, Communist International Economics (Oxford: Basil Blackwell, 1968), 462Google Scholar.

15 Ibid., 465.

16 See Defense Science Board Task Force, An Analysis of Export Control of U.S. Technology: A DoD Perspective (Washington, DC: Office of the Director of Defense Research and Engineering, 1976)Google Scholar. This is commonly known as the Bucy Report, after the Committee chairman, J. Fred Bucy of Texas Instruments. A good discussion of the relationship between technology transfer and the economy is also found in Hanson, Philip, Trade and Technology in Soviet-Western Relations (New York: Columbia University Press, 1982)Google Scholar, chap. 2.

17 Gufstafson, Thane, Selling the Russians the Rope? Soviet Technology Policy and U.S. Export Controls (Santa Monica, CA: RAND, 1981), 66Google Scholar. See also Flax, Alexander H., “The Influence of the Civilian Sector on Military R & D,” in Long, Franklin A. and Reppy, Judith, eds., The Genesis of New Weapons Systems (Elmsford, NY: Pergamon Press, 1980), 113–36CrossRefGoogle Scholar.

18 See Tucker, Robert W., The Law of War and Neutrality at Sea, International Studies of the Naval War College (Washington, DC: G.P.O., 1955)Google Scholar, chap. 9.

19 Medlicott (fn. 6), I, p. 70.

20 See, for example, Wiles (fn. 14), 464.

21 In addition to Wiles, see Kent Osgood, Theodore, “East-West Trade Controls and Economic Warfare,” Ph.D. diss. (Yale University, 1957)Google Scholar, and Kemp, Murray, The Pure Theory of International Trade (Englewood Cliffs, NJ: Prentice-Hall, 1964)Google Scholar, chap. 15, “Trade Warfare: A Sketch.”

22 The distinction between trade that is “capability enhancing” as opposed to “resource releasing” is found in Klitgaard, Robert, “Limiting Exports on National Security Grounds,” Commission on the Organization of the Government for the Conduct of Foreign Policy, Vol. IV, Part VII (Washington, DC: G.P.O., 1975), 443–75Google Scholar.

23 Many items, of course, will simultaneously be economic and military bottlenecks. An item may be an economic, though not a military, bottleneck if the target can produce only a limited quantity of it, and if fulfilling the requirements of the military is considered the first priority. For example, the Soviet Union may currently be able to produce enough basic integrated circuits (ICs) to satisfy its military needs, but not the demands of its economy as a whole. That is the assessment of the C.I.A.; see “Soviet Acquisition of Western Technology,” mimeo (Washington, DC: April 1982), 9. Therefore a strategic embargo would permit the sale of the ICs in question; economic warfare, seeking to stifle the modernization of the economy as a whole, would not. A strategic embargo, however, would deny the technology needed to produce the ICs if that know-how could be used to produce more sophisticated ICs, with more advanced military applications, which are currently beyond the Soviets' production-possibility frontier.

24 Peterson, Peter G., U.S.Soviet Commercial Relationships in a New Era (Washington, DC: U.S. Department of Commerce, August 1972), 3–4Google Scholar.

25 Hirschman, , National Power and the Structure of Foreign Trade, 26 ed. (Berkeley: University of California Press, 1980)Google Scholar.

26 Huntington, , “Trade, Technology and Leverage: Economic Diplomacy,” Foreign Policy 32 (Fall 1978), 63–80CrossRefGoogle Scholar.

27 Medlicott (fn. 6), Vol. I, p. 39.

28 See, for example, Hardt, John P. and Holliday, George D., U.S.Soviet Commercial Relations: The Interplay of Economics, Technology Transfer, and Diplomacy (Washington, DC: G.P.O., June 10, 1973)Google Scholar.

29 See, for example, comments by Defense Department officials, New York Times, March 14, 1982, p. 1Google Scholar; Weinberger, Caspar W., Annual Report to the Congress for Fiscal Year 1983 (Washington, DC: U.S. Department of Defense, 1982), II-26–32Google Scholar.

30 Interview in the Washington Post, June 15, 1982, p. 1.

31 On European willingness to comply with economic warfare, see Mastanduno, Michael, “In Pursuit of Closure: American East-West Trade Strategy, 1949–58,” mimeo (Clinton, NY: Hamilton College, 1983)Google Scholar. For an alternative explanation, see Adler-Karlsson (fn. 1).

32 The Coordinating Committee (CoCom) is the multilateral export control regime of the NATO allies, minus Iceland and Spain, plus Japan. Its controls have traditionally focused on civilian items of direct military utility. The U.S. proposal that the control criteria be broadened was made at a special high-level meeting of CoCom in January 1982, and at subsequent CoCom meetings. Interviews (not for attribution) at the Trade, Defense, and Foreign Ministries of Britain, France, and West Germany, May-July, 1982.

33 The comment was made in a speech by Under Secretary of State Lawrence S. Eagleburger, New York Times, March 31, 1982, p. A8Google Scholar.

34 For the resolution of the crisis, see New York Times and Washington Post, November 14 and 15, 1982, p. 1Google Scholar.

35 Washington Post, October 10, 1982, p. C3Google Scholar.

36 New York Times, March 7, 1984, p. DIGoogle Scholar.

37 Hewett, Edward A., “The Likely Effects of U.S. Economic Pressure on the Decisions made by Soviet Leaders,” in U.S., Congress, Senate, Committee on Foreign Relations, Economic Relations with the Soviet Union, 97th Cong., 2d sess., August 12–13, 1982, pp. 128–31Google Scholar.

38 lbid., 130.

39 See Paarlberg (fn. 1), 149–53.

40 Financial Times, September 6 and 17, 1980, p. 1.

41 A succinct review of European views can be found in Kaufman, Richard F., Western Perceptions of Soviet Economic Trends, a staff study prepared for the U.S. Congress Joint Economic Committee, March 6, 1978Google Scholar.

42 See Abbott (fn. 2), 790–97.

43 For examples of U.S. firms losing business to Western competitors, see U.S., Congress, Senate, Committee on Banking, Housing, and Urban Affairs, Use of Export Controls and Export Credits for Foreign Policy Purposes [hereafter cited as Use of Export Controls], 95th Cong., 2d sess., October 10–11, 1978.

44 For the interview with Schmidt, see New York Times, January 3, 1982. p. A1Google Scholar.

45 The members of the Common Market did promise not to undercut U.S. sanctions, and later expressed their disapproval of Soviet activity by imposing a modest embargo on certain Soviet exports. New York Times, March 12, 1982, p. A6Google Scholar. Officials on both sides of the Atlantic have suggested that the allies had drawn up a plan to impose collective sanctions in case the Soviets intervened militarily in Poland. The alliance was unprepared, however, to deal with contingencies short of an invasion.

46 The controls went into effect on August 1, 1978; between that date and March, 1979, there were 113 requests for licenses. See the testimony of Commerce Secretary Kreps in U.S., Congress, Senate, Committee on Banking, Housing and Urban Affairs, U.S. Export Control Policy and Extension of the Export Administration Act, 96th Cong., 1st sess., March 5 and 6, 1979, p. 66Google Scholar.

47 Kissinger, Henry A., “Trading with the Russians,” The New Republic, June 2, 1982, pp. 14–16Google Scholar.

48 A detailed analysis of the domestic politics of the Jackson-Vanik Amendment is Paula Stern, Water's Edge: Domestic Politics and the Maying of U.S. Foreign Policy (Westport, CT: Greenwood Press, 1979)Google Scholar.

49 See, for example, the statement of William Verity, Chairman of Armco, in Use of Export Controls (fn. 43).

50 See Michael Mastanduno, “Between Economics and National Security: The Western Politics of East-West Trade,” Ph.D. diss. (Princeton University, 1985)Google Scholar, chap. 3.

51 See the statement of James Buckley in U.S., Congress, Senate, Permanent Subcommittee on Investigations, Transfer of U.S. High Technology to the Soviet Union and Soviet Bloc Nations, 97th Cong., 2d sess., May 4–6, 11–12, 1982, p. 160Google Scholar.

52 U.S., Congress, Office of Technology Assessment, Technology and East-West Trade (Washington, DC: G.P.O., 1979), 157–60Google Scholar.

53 Financial Times, July 16 and 25, 1984, p. 1Google Scholar.

54 U.S. Central Intelligence Agency, “Soviet Acquisition of Western Technology,” mimeo (Washington, DC: April 1982)Google Scholar.

55 The initiative stems directly from the recommendations of the Bucy Report. Generally, see Wallerstein, Mitchel B., “Scientific Communication and National Security in 1984,” Science 224 (May 4, 1984), 460–66CrossRefGoogle Scholar.

56 Interviews, Defence Ministry of Great Britain, June 2, 1982, and Economics Ministry of the Federal Republic of Germany, July 8, 1982.

57 Ibid. Similar arguments were made by French officials. Interview, Foreign Ministry of France, June 15, 1982.

58 Interview, Economics Ministry of the Federal Republic of Germany, July 8, 1982Google Scholar.

59 Ibid.

60 Wall Street Journal, July 25, 1984, p. 1Google Scholar.

61 Financial Times, April 24, 1984, p. 1Google Scholar.

62 Washington Post, November 29, 1982, p. 13Google Scholar.

63 An interesting analysis of the politicization of U.S. national security export controls is Root, William A., “Trade Controls That Work,” Foreign Policy 56 (Fall 1984), 61–80CrossRefGoogle Scholar.