Economic Warfare – New Wars Between Countries

Are new tools like cyber-attacks against economic targets more effective than traditional tools of economic warfare like blockades, submarine warfare, or strategic bombing?

The idea of economic warfare is not new. Same time it is direct and indirect manipulation of the economy through state actor or any other entity, through both, legal and illegal means. One sees it as a form of aggression conducted by state, another can see it as a necessity in order to achieve political goals. The problem with the concept is that it does not distinguish economic war and a trade war from economic competition. 

The concept itself was used for solving the economic tactics of the armed conflict. As for the conventional methods of this type of warfare contain trade embargos, boycotts, tariff discrimination, etc. But are these tools really effective or as technology develops newer trends raise up and take the lead in the war of the modern era? 

Historiography supports both side of the coin. Taking a look to the case of Lebanon blockade of 2006, provides enough empirical data to prove that conventional tools of economic warfare are effective because it damages the economy at its best. For example, this blockade was hitting up to 50 million dollars per day that costed to Lebanese government to get the steps on the time flow. But there always is another side. For Israeli government this blockade was a huge impact as well. In the end, facts speak for itself and show that even Israeli government had big economic loss due to this traffic. 

In modern world, as technology evolves, so the methods of warfare develop and go to the next level. New tools, such as cyber-attacks took the lead and became a worldwide problem. This tools same time are relentless, undiminished and unstoppable, until the goal is reached. As the vast majority of the countries developed the principles of hybrid warfare, they started using the cyberwarfare as influential method over the politics and economy.  Comparing this new approach in warfare to its earlier prototype, it becomes clear that the only difference between new and conventional tools is loss of resources. Taking into consideration the fact that traditional tools like blockades, strategic bombing and submarine warfare costs a lot and links with the risks of human resource lose, one cannot argue that cyber-attacks against any country at any economic target can be more effective and beneficial. The only resource that has to be put in this actual type of warfare is economic resource and the only damage it can bring is economic as well. Computer worm STUXNET and Iranian nuclear program case provides enough arguments to prove this idea. For example, over fifteen Iranian facilities were attacked and infiltrated by the Stuxnet worm. This was enough to damage whole nuclear program of Iran that approximately costed several billion dollars and plus this cyber-worm managed to damage almost 60% of total central network, which means that more than half of the network operated computers outside of the nuclear facilities were damaged. Adding to this, 984 uranium enriching centrifuges were destroyed that decreased 30% in enrichment efficiency. This was the biggest cyber-attack that still remains undetailed on the full scale, but surely proves the fact that cyber-attacks can cause big economic damage in just one day without any human resource loss and still tackle the development of the country. 

Conscious attacks by a state using a combination of cyber-attacks, nowadays, is directed at economic targets. The innovators of cyber means and economic targeting were Russians. Russia was the first country that used cyber warfare as a mean of hybrid war, which is actively used even in informational war, spreading the propaganda, damaging the economy, etc. For example, before Russia invaded Georgia, there were several cyber-attacks on oil and gas facilities that goes through South Caucasus in order to create an unstable ground conditions, that made pipelines unreliable. This in a way caused big economic loss in 2005-06 for Georgia and in addition, from the economic perspective this opened an opportunity window for Russians to control oil price at its high level, because for that time the blockage of chokepoint that was caused by cyber-attack, led to substantial increase in total of the energy cost, that damaged not just Georgia, but the majority of the western countries and the only one who benefited from this was Russian federation. 

At one point cyber-attacks can become prelude to economic growth that is basically proportional to some other state’s loss. Russian case against Ukraine is another good example, how cyber-attack can harm whole central system in just one day. And the only thing that is needed is economic resource in order to launch it. Russians actively used computer virus “Petya” against Ukraine. With just this cyber-attack, they tackled whole financial system of Ukraine, banks, and its monetary policy; gathered intelligence and broke down whole network, that for Ukraine turned out to be very costly to restore. 

However, it is obvious that this cyber-attacks are not cost efficient. Each and every cyber-warfare needs a lot of economic input, in order to be successful. The more technology develops; the more resources are needed for cyber-attacks. As for today’s policy agenda shows, every country is ready to input in this sector, because the more vulnerable the country will be towards this exact issue, there are more chances that if attack happens, the loss will be greater. Small group research concluded that new tools of economic warfare, can be more fast, effective and efficient, even though it is costly. Same time, there can be an argument that traditional tools, such as blockades and strategic bombing is more effective, but talking from the perspectives of future politics, one cannot argue the fact that cyber warfare is a new word in warfare that is hardly trackable, effective tool to tackle economy of each and every country at its high level that can pause development processes and cause economic and political instability using just network. 

Giorgi Rostomashvili

The opinions and conclusions expressed are those of the author and do not necessarily reflect the views of The Foreign Policy Council.

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