Economic Security: Threats, Crises, and Global Impact
The Role of Economic Crises in International Security
Some traditional security analysts argue that economic security is not directly relevant to the core international security problems of war and organized violence. However, many traditional security issues can be linked to economic factors, such as the role of economic investment and technology in fueling political rivalry, often manifesting as an arms race.
The relationship between weak states and interstate war, particularly in less developed regions, can be greatly exacerbated by economic problems. Violent conflicts over identity or ethnicity might also have strong economic elements, especially when certain economic classes or sectors have links to foreign stakeholders, such as former colonial states. A focus on the international level would involve the global institutions, firms, and networks that facilitate cross-border economic transactions.
No matter the level of analysis, an economy is fundamentally a system—a constant flow of goods/services and the means to produce and pay for them. Therefore, we must ask whether ‘economic security’ is concerned with maintaining the current system or with changing it into another, supposedly more secure and better one.
While these ideas resonate as political goals for many individuals and some states, and have resulted in some concrete international policy initiatives, they currently do not enjoy the same urgent status as other international economic security problems. They are more appropriately considered as central topics in disciplines involving domestic political economy or economic development.
Experiences of the economic depression of the 1930s, the global monetary and energy crises of the 1970s, and assorted monetary crises in various states during the 1980s and 1990s also serve as reference points in discussions regarding a breakdown or disputation of the international economy.
Threats to Economic Order
Major (non-criminal) threats to the economic order:
- Differential business cycles & growth rates (added to varying comparative advantage)
- High debt held by governments, firms, and individuals
- Financial/monetary crises (since 1973). Plus the ‘contagion effect’ in Less Developed Countries (LDCs)
- Social unrest among those who lose out: backlash against globalization (North/South, Old/Young), IMF riots, pensions ‘time-bomb’, overall instability.
Major Responses to Economic Threats
- Business-as-usual (status quo): Deny there is a crisis, do nothing, or try to profit from it
- National (unilateral) self-help: Fiscal/monetary policy, aid from the IMF (conditional)
- Coordinated multilateral solutions (temporary): G7/IMF bailouts, debt ‘write-offs’
- Greater international or regional (EU) regulation (after the crisis ends): Limited
Example: Ukraine-Russia Sanctions
Russia’s March 2014 annexation of Crimea, for example, continues to be the gift that keeps on giving, unleashing sanctions and counter-sanctions that only seem to escalate. In September 2015, Ukraine’s Prime Minister Arseny Yatseniuk announced that his country would ban Russian planes from Ukrainian soil. The ban was slated to take effect on October 25, 2015. Just days after Ukraine’s announcement, Russia’s Ministry of Transport responded by threatening a retaliatory ban against Ukraine, according to TASS, Russia’s official state-run news agency.