Since the end of the Cold War it has become accepted knowledge that economic ties between the major powers prevent conflict. In a world of globalised production chains and capital flows the general argument is sound – it doesn’t make sense to destroy your trade partners, markets and financiers.
This general proposition has, however, led to complacency in the foreign affairs community, a situation revealed by the shocked and stumbling response to Russia’s invasion and annexation of Crimea.
Russia, so the conventional views suggested, should have been deterred from annexing Crimea from Ukraine by the threat of sanctions or other repercussions. Yet Russia stood firm and Crimea is now, once again, Russian.
Meanwhile, in the Asia-Pacific, another authoritarian power – China – is nibbling at the territorial status quo. The situation is even more fluid and more open to manipulation than that of Ukraine. Here too the conventional wisdom remains that China will be deterred from a range of behaviours by its reliance on foreign money and markets, or by American military superiority.
Yet neither economic interdependence nor Chinese military inferiority will necessarily deter some Chinese actions for a simple reason: the politics behind force or sanctions matter, and not in the way most people think.
Nuclear deterrence theory offers us a useful analogy here. During the Cold War a handful of nuclear-armed states stood ready to cripple each other’s societies with nuclear weapons. That made attacks on each other’s homelands politically difficult.
Nuclear weapons did not create a global peace but they did make major war between the great powers less attractive because the potential costs of victory were so high. Rather than assail each other directly, the great powers competed for supremacy in other ways. They vied for influence in the Third World, fought limited wars on the periphery of their spheres of influence, sponsored terrorist campaigns, civil wars, proxy wars, invaded minor states and toppled hostile governments.
Nuclear weapons, a force too costly to use, remained a veiled threat to be used only in the event of some strategic catastrophe. The trick for security bureaucracies at the time was to manipulate the chances of catastrophe. That is, to generate systems of deterrence that could create the credible risk of nuclear war while leaving the triggering action up to the opponent.
For instance, a Soviet occupation of Berlin was not something that in and of itself should have drawn the US to risk nuclear war. However, once the decision was made to defend West Berlin, strong American forces were stationed in the city. That meant the Soviets would have to create a major incident in capturing it, thereby backing the US into a corner and forcing Washington to consider the use of nuclear weapons.
The underlying mentality was that if the USSR was permitted to kill or capture 1000 Americans without response, no other plausible “red line” would exist and American strategy could be dismantled piece by piece. The USSR, knowing it would be backing the US into such a corner, was deterred from assaulting West Berlin and was forced to try other kinds of strategies (such as blockade).
Dilemmas of deterrence and interdependence
In the contemporary world, wealthy liberal democracies face similar problems with nuclear deterrence regarding states like China and Russia. Just as no-one was willing to risk a nuclear war over Crimea, so too will no one risk a nuclear war over islands in the South China Sea or in the Senkaku/Diaoyu chain.
However, the problem today goes deeper than it did during the Cold War. At that time economic interdependence between the authoritarian and liberal great powers was minimal. The US and its allies appeared more willing to enforce a “red line” in Asia. Then the US commitment to Quemoy was certain; today we can plausibly question the commitment to Taiwan as a whole.
Just as Russia dismissed chances of NATO intervening in Crimea, I wonder if a single member of the PRC Secretariat thinks either Japan or the US would risk a major combat vessel to evict a Chinese occupation force from disputed islands.
No-one evicted China from the islands it occupied in the South China Sea (at a time when China was much weaker). Recent moves to shift oil rigs into disputed territory show that, like in Crimea, China has little fear of military counter-moves. Rightly so – there is little will for a war over rocks.
Of course, even if China’s neighbours are irresolute, there are always economic sanctions. But sanctions, like nuclear weapons or military force, are politically difficult weapons to use. Rich countries have used sanctions as a weapon against poor countries, and big economies can certainly use their market power as a weapon. But if two states are genuinely economically interdependent there is no reason why one cannot embark on limited aggression, such as we saw in Crimea.
After all, just as not all issues are worth a nuclear war, not all issues are worth self-harming market disruption. NATO states clearly care more about their business interests in Russia than they do about Ukrainian sovereignty. The same can probably be said in the Asia-Pacific when it comes to Chinese assertiveness in territorial disputes.
Australia certainly cares more about selling minerals than stopping Chinese island hopping. Now that the Chinese economy matters, China too can threaten sanctions, as Russia has, thereby making the sanctions threat implausible for most states.
China has the advantage
Because of these issues China is likely to continue to expand its influence at sea. Actual sovereignty claims will probably matter little; China will simply start policing disputed waters, perhaps even blockading disputed islands occupied by opponents (just as Russians encircled Ukrainian bases). China’s aircraft carrier will be useful here, as “evicting” such a vessel will trigger a major incident and leave responsibility for the crisis on the opponent’s hands.
Because China and Russia are major powers with nuclear weapons, dangerous conventional forces and economic leverage, states seeking to deter them from territorial challenges lack credible threats. To address this they must learn the Cold War lessons of manipulating risk or forfeit the initiative to opponents.
I suspect China’s creeping assertiveness will work in the long term and that Beijing, like Russia, will end up in possession of its nationalist objectives with foreigners tamely acquiescing in the end. The problem will come if there is confusion over the “red lines” in the future because of the submissive pattern set today.