Chapter 7 United States in Post–Cold War Conflicts
While US military engagements after the Cold War are, in some respects, different from warfare before 1945, the US wartime commercial policy during these conflicts largely fits with the predictions of the wartime trade theory. After the Cold War, the United States participated in the Persian Gulf War (1990–91), an intervention in Haiti (1994–95), the bombing of Kosovo (1999), the Afghanistan War (2001), the Iraq War (2003), an intervention in Libya (2011), an intervention in Syria (2014), and a proxy war against Russia in its conflict with Ukraine (2022–present). In two of these conflicts—Afghanistan and Syria—there was no peacetime trade before the war started. The United States had severed trade with the Taliban more than a year and a half before the Afghanistan War and did not establish peacetime trade ties with the new territorial entity of the Islamic State, who was the primary enemy during the intervention in Syria. The rest of the conflicts analyzed in this chapter are divided mostly chronologically into conflicts under a UN Security Council (UNSC) comprehensive trade embargo, bombing campaigns, and proxy wars.
As the Cold War was ending, the collective security mechanism of the UN was revived to work as intended by its founders. When the members of the UNSC agreed to designate an aggressor in a conflict and placed mandatory sanctions on that state, every member of the UN was required to adhere to the resolution. Placing a target state under a UN comprehensive trade embargo re-created a world with no neutral rights. No member of the UN could carry products to the target state, nor was the target state’s produce safe from seizure in the ships of any country. With such restrictions, the military benefits of a comprehensive embargo were high, as the enemy was virtually cut off from resupply and the economic costs were dispersed to all states. When the United States could gather agreement for a UNSC trade embargo, it did not need a specialized wartime commercial policy. In a world without neutral rights, severing all wartime trade is the best strategy. The United States followed this strategy in the Persian Gulf War, the intervention in Haiti, and the Iraq War, as the 1990 UN embargo was still maintained in 2003.
After a decade of unipolarity, the general consensus at the UNSC dissipated. In 1998, the United States knew it would not be able to reinstate a comprehensive trade embargo on Serbia, even though one was agreed on in 1992. As Russia would no longer agree to much more lax sanctions against Serbia, a complete trade ban was a nonstarter. For the North Atlantic Treaty Organization (NATO) bombing campaign of Kosovo, the United States had to formulate a more strategic wartime commercial policy. Since it expected to force the president of Serbia to the negotiation table with only a few days of bombing, a lax wartime trade policy would suffice. With a UN prohibition on arms exports to Serbia preventing products with quick conversion times from reaching the enemy, the United States permitted the rest of wartime trade to continue. However, when the bombing campaign extended beyond a month, the US wartime commercial policy grew more restrictive, matching the predictions of the wartime trade theory. Similar conditions played out in the intervention in Libya. The United States front-loaded its participation, planning for a brief campaign before turning command over to NATO and reducing its engagement in the conflict. With a UN embargo on the export of arms to Libya, there was no further need for the United States to restrict wartime trade.
Finally, in the current Russia-Ukraine war, the United States is neither a belligerent nor a neutral. It provides advanced weapons and intelligence to one side and actively interferes in the war effort of the other. Its actions are reminiscent of proxy warfare, where a patron participates in all aspects of the war effort except the physical fighting. The US wartime commercial policy’s focus on denying products to Russia resembles the predictions of the wartime trade theory. Set at the product level, the commercial policy was lax at the start of the conflict and grew progressively more restrictive as war expectations extended. The export of products with short conversion times—those of immediate battlefield use—was prohibited first, followed by prohibitions on intermediate goods and raw materials, which have longer conversion times. Yet almost three years into the conflict, wartime trade between the United States and Russia remains.
Since the conflicts examined in this chapter are very recent, this chapter relies on different types of data than the preceding ones. For the most part, the archival documents required to process trace the formation of the wartime commercial policy are not yet available. With the exception of a few declassified documents, the evidence on the formation of policy and the changing war expectations are gleaned from official government publications, secondary sources, newspaper articles, and military analysts’ assessments. The content of the US wartime commercial policy is gathered from the Federal Register, which chronicles all of the US government public notices, including instructions on what is permitted to be traded in war. Unfortunately, any information on the specific licenses to trade granted despite official prohibitions will remain unknown until archival material is declassified. The content of the US wartime commercial policy is supplemented with assessments of direct bilateral trade between the United States and its enemies, disaggregated by month of conflict and by product where possible. The existence of direct bilateral trade during a war is a high bar to pass since wartime trade tends to flow through indirect channels; thus, the numbers presented here may be undercounting the amount of wartime trade that actually occurred. Either way, direct bilateral trade is not the best measure of wartime trade because actual trade flows are a function of two disparate processes: the limits set by a wartime commercial policy and the destruction wrought by the process of war itself.
This chapter starts with a discussion of the differences between US post–Cold War military engagements and the cases examined in the previous chapters—namely, the asymmetric nature of the conflicts and of the trade relations. It then shows the US wartime commercial policy in wars where it could use the UNSC to simulate a world with no neutrals. Once this was no longer possible, the United States had to return to more strategic formulations of wartime commercial policy in its various bombing campaigns. Finally, the chapter turns to the US role in the Russia-Ukraine war, showing how US policies toward Russia changed with shifting war expectations.
Post–Cold War Military Engagements
The US military conflicts after the Cold War are somewhat different from the kinds of wars the nation had previously fought. Since the end of the Cold War started the unipolar moment, these conflicts are asymmetric in nature: no other state can match US capabilities. While some of these military engagements are closer to traditional wars where ground forces fight for control over territory, others, like the bombing campaigns, are restricted to a specific domain. Moreover, since the United States is a large and populous state, it has a large market. Many of its wartime enemies are economically weaker, making the US market more important for them than their markets are for the United States. This section addresses what these differences mean for the wartime trade theory.
In most of its post–Cold War conflicts, the United States is the more capable adversary by a wide margin. The end of the Cold War launched the United States to unipolar status, which is defined by a preponderance of both military capabilities and economic power.1 At the same time, the United States tends to fight as part of a coalition.2 These coalitions are generally intended to promote legitimacy, as opposed to capability aggregation.3 But in general, the United States has not entered into any wars where it was at a military disadvantage in the post–Cold War period. For the wartime trade theory, this suggests that the stakes of the conflict tend to be set artificially by the commitment level of the government as opposed to the conduct of the war itself. While asymmetric conflicts can be fought for the state’s national interest, they are not typically wars of national survival for the stronger side.4 Even the biggest troop and financial commitments of all US post–Cold War conflicts —the Iraq War—did not interfere with the daily lives of American civilians.
While the conflicts examined in this chapter are all asymmetric, they vary in terms of engagement type. Some are traditional territorial wars, some are bombing campaigns, some are interventions in civil wars, and some are proxy wars. This variation affects the interpretation of the expected length of the conflict. In traditional wars, the expected length of war is set against the end of the conflict; it is the amount of time until the belligerents either achieve their objectives or settle for less at the negotiation table. For bombing campaigns and interventions in civil wars, if the goals of the intervention are accomplished, the US participation in the conflict can end before the war is terminated. It is the accomplishment of self-defined goals that sets the expected length of the conflict. Finally, some of the United States’ post–Cold War conflicts involved nation-building elements; the nation-building component does not count as part of the war length expectation for the purposes of wartime trade. Once the United States establishes effective territorial control over a nation, which is a necessary step before nation building can begin, it gains de facto sovereignty over the territory and the authority to set commercial policy. Unsurprisingly, US trade with Afghanistan, starting in 2003, and Iraq, starting in 2004, rose considerably compared to prewar levels.5 In the same vein, the theory is difficult to apply to insurgency warfare where territorial control is contested, which tends to occur in postwar nation building. For the theory to apply, there needs to be a clear understanding of who has the authority to set commercial policy for specific industries within a given territory.
In addition to the military asymmetries, these conflicts tend to feature asymmetric trade relations, where the enemy market is not significant to the United States. According to the wartime trade theory, this should not affect how states formulate their wartime commercial policies. Even if the enemy does not supply the United States with any products important to US industry and the total value of the commercial relationship is small, there is little reason to pay the economic costs of severing trade if there is no military benefit. On the other hand, an alternative hypothesis might be that the logistical costs of setting and enforcing a product-level wartime commercial policy could outweigh the economic benefits of commerce with an insignificant market. From this point of view, given any reason, the United States would sever all trade with the enemy. Given the lack of process-tracing archival material available in modern conflicts, it is hard to determine which logic ultimately prevails, but the cases in this chapter suggest that the United States protects even small portions of its commercial relationship. When comprehensive UN embargoes left room for humanitarian exceptions, the United States continued to maintain such trade during the conflict with Haiti and through the Iraq War. In the Kosovo case, the United States severed all trade with Serbia when their war expectations increased; however, the EU adopted a more nuanced product-level strategy, despite Serbia being a fairly small trade partner for both the United States and the EU. On the other hand, the United States continued to trade with Libya during the bombing campaign, despite, likewise, having asymmetric trade relations with the country.
UNSC Re-creates a World without Neutral Rights
With the Cold War winding down and Soviet global activity declining, the UNSC, for the first time since its creation in 1945, had the opportunity to work as initially intended. The most relevant aspect of the UN Charter for wartime trade is Article 2 (5), which mandates that all member states “shall give the United Nations every assistance in any action it takes in accordance with the present Charter, and shall refrain from giving assistance to any state against which the United Nations is taking preventive or enforcement action.”6 When the members of the UNSC agree to designate an aggressor and recommend measures to be taken in response, the rest of the UN member states are required to follow this mandate. This means that UNSC authorization for military action or comprehensive trade embargo automatically creates a world with no neutrals.
Without a single neutral state in the international system, global imports to the target and exports from the target to the world would cease. As was the case before the widespread adoption of neutral rights, a UN-mandated trade embargo substantially increases the military benefits of severing trade with the enemy at the same time as dispersing the economic costs to all nations. With all avenues of trade severed, the enemy does not have any options for resupply. Moreover, every state bears the cost of losing its own trade with the target, and more importantly, no state can take over the preconflict market share of other states. The global embargo ensures there are no relative losses from a neutral state taking over trade relations that previously connected the state severing trade and the target. In a world without neutrals, the economic imperative of wartime trade is considerably reduced and the military imperative strengthened. Severing all trade with the enemy during war becomes the dominant strategy.
In some respects, the UN-mandated world with no neutrals has a greater impact than the pre–Declaration of Paris world. Before the widespread adoption of neutral rights, belligerents relied on their naval strength to seize enemy commerce on enemy and third-party ships. Additionally, privateers were engaged to supplement the belligerent navy. These measures effectively severed seaborne trade but were less helpful for affecting land trade. At the time, land-based transportation was difficult, lengthy, and costly, which made it inefficient for wartime resupply. Under a UN mandate, a comprehensive trade embargo can simultaneously sever all routes for trade—sea, land, and air—to reach the target. Moreover, before the widespread adoption of neutral rights, nothing obliged third parties to sever trade with the belligerents. Their merchant marine was liable to capture if it engaged in such trade, but any enterprising captain could legally take the risk for the lucrative reward. In the UN world with no neutrals, all states are required to sever trade or stand in violation of their obligations to the UN.7 In practice, no one quite knows how strong a censure that is, but some trade is restricted by virtue of states wishing to remain in good standing with the institution.8 Of course, in both worlds, the amount of trade actually interdicted comes down to the strength of the enforcement measures.
persian gulf war, 1990–91
Within twelve hours of Iraqi forces crossing the border into Kuwait, the United States imposed a comprehensive trade embargo against Iraq and froze Iraqi and Kuwaiti assets “so that Saddam Hussein could not use any U.S.-based Iraqi assets or trade with the US to aid his efforts.”9 It was estimated that Iraq would need no more than a week to gain control of Kuwaiti assets, so the asset freeze had to be executed with haste. But the United States did not intend to bear the costs of economic warfare alone.10 The US ambassador to the UN was instructed to draft a resolution for the UNSC, which met at an emergency 2:00 a.m. meeting to condemn the Iraqi invasion and demand immediate withdrawal from Kuwait.11 Key Iraqi trade partners that did not swiftly sever their own trade with Iraq received personalized phone calls from President George H. W. Bush, incentivizing their cooperation.12 It took only four days for the UN to issue Resolution 661—a trade embargo requiring all states to prevent the sale or supply of products from their territory to Iraq or Kuwait, prohibit any activities that might assist export or transshipment to Iraq or Kuwait, and halt imports of products originating in Iraq or Kuwait.13 The resolution was worded comprehensively, prohibiting all aspects of trade by all methods of transportation, with the exception of medical supplies and, in humanitarian situations, foodstuffs. It considerably strengthened the unilateral US embargo, while dispersing the economic costs to all states. The trade embargo was strengthened on September 13, 1990, to limit trade in medicine and food and again on September 25 to limit commercial traffic by air.14
To ensure that the trade embargo worked, the United States rushed to militarily enforce it. By August 12, 1990, US ships, supported by the British navy, were ordered to the Persian Gulf to interdict shipping that would attempt to ignore the UN embargo.15 This caused some consternation in the international coalition, as France and the Soviet Union pointed out that enforcement of the blockade required additional UN authorization, without which Iraq could interpret the interdiction as an act of war.16 UN Resolution 665 of August 25, 1990, resolved the issue by granting explicit authority to all member states deploying forces in the area to halt and inspect all maritime shipping.17
Simultaneously, the United States worked to ensure strict enforcement of the embargo from Iraq’s neighboring states.18 Turkey had frozen Iraqi assets and halted transshipment of Iraqi oil as of August 7, 1990. Saudi Arabia agreed to host US troops to deter a potential Iraqi attack. President Bush offered Jordan financial assistance for compliance with the UN sanctions, all the while threatening to blockade the Jordanian port of Aqaba.19 By August 20, Iran had also agreed to abide by the blockade.
When it came time to execute Desert Storm, Iraq was well and truly isolated from global trade. Having used the UN to create a world with no neutrals, and having severed all trade with Iraq, the United States ensured that it would not be alone in bearing the costs of lost trade. With the costs of the policy distributed to all states, the military benefits of a comprehensive trade ban dictated the best wartime commercial policy. There was no direct wartime trade between the United States and Iraq in 1990 and 1991.20
operation uphold democracy, haiti, 1994
The United States repeated a similar pattern while attempting to restore democracy in Haiti. A trade embargo was implemented and expanded globally through a UN resolution to ensure that the costs of economic warfare were shared among all states. When the democratically elected president of Haiti was overthrown in a military coup in September 1991, the United States, jointly with the Organization of American States, imposed a trade embargo on Haiti. The United States prohibited imports from and exports to Haiti, with the exception of medicine, rice, beans, sugar, wheat flour, and cooking oil.21 At the same time, licenses were granted to continue trade with Haiti in the assembly sector—where raw materials were shipped to Haiti for processing and then exported back to the United States.22 Before the military coup, in 1991, the United States accounted for 85 percent of Haitian exports. In 1993, this percentage did not change, but the volume of exports dropped from $297 million to $162 million.23 While the United States suffered the costs of severing trade, it did not face a permanent loss of position in the Haitian markets as the closest states to Haiti likewise adopted a trade embargo.
The initial economic pressure led to negotiations and the Governor’s Island Agreement, but the Haitian military ultimately refused to cede power back to the elected president.24 Sanctions, which were revoked on August 31, 1993, in anticipation of the power transfer, were reinstated on October 18. Additionally, the UN prohibited the global export of arms and related products, petroleum, and petroleum products to Haiti.25 Following the pattern from the Persian Gulf War, the United States sent six naval vessels to enforce both the UN and the US sanctions; it was joined in this effort by Canada, France, Argentina, the Netherlands, and the UK.26
The decision to use force in Haiti began to take prominence in April 1994. In a meeting with foreign policy advisers on Haiti, on April 15, the Clinton administration decided to pursue comprehensive sanctions and “complementary measures” against Haiti.27 During the meeting, General John Shalikashvili, chair of the Joint Chiefs of Staff, explained that the use of force to restore democracy in Haiti could be accomplished at acceptable risk of US casualties but expressed concern about being drawn into a long nation-building project afterward. Ideally, the United States would hand off that portion of the operation to a multilateral UN force. Madeleine Albright, the ambassador to the UN, pointed out that a multilateral force would be a hard sell, although it would be possible if the United States pushed hard for it. When asked by the president if other states would be more willing to accept a multilateral force if comprehensive sanctions were adopted first, she answered in the affirmative. This became the US strategy—a comprehensive UN trade embargo against Haiti accomplished through considerable side payments, followed by a swift US military intervention and a handoff to a multilateral UN force.28
On May 21, 1994, through UN Resolution 917, a comprehensive trade embargo was levied against Haiti.29 On the same day, the United States updated its prohibitions on trade with Haiti to match, authorizing only exports of medicine and medical supplies, rice, beans, sugar, wheat flour, cooking oil, corn, corn flour, milk, and edible tallow.30 In essence, the only change this represented was giving up the licensed trade in the assembly sector. To help with the enforcement of the UN’s comprehensive trade embargo, the United States prepared a package of inducements and sanctions for the Dominican Republic, to seal their border with Haiti against smuggled trade.31
By the time the invasion began—on September 18, 1994—the United States had dispersed the economic costs of severed trade to all states through the UN trade embargo. With costs thus lowered, the military benefits of severing all trade should take priority in a wartime commercial policy. Yet the UN trade embargo did not sever all trade completely; it maintained a humanitarian exception for food and medicine. Thus, the US wartime commercial policy severed trade indiscriminately in products facing a global embargo yet maintained trade in products to which the embargo did not apply. In September 1994, the United States exported $5 million worth of food and medicine to Haiti.32
iraq war, 2003
The United States invaded Iraq while Iraq was still under the UN’s 1990 comprehensive trade embargo. The only trade between the United States and Iraq was conducted through the UN Oil-for-Food program. Established in 1995, the program allowed Iraq to export oil, with proceeds placed into a special escrow account used to pay for the import of food, medicine, and other humanitarian needs to the Iraqi population. In 1998, the program was extended to finance urgent development needs as well as to permit the import of spare parts necessary to repair Iraqi infrastructure.33 As a member of the committee responsible for determining exceptions to the comprehensive embargo, the United States maintained the authority to deny any trade they expected to carry negative security externalities.34 Thus, any existing trade between the United States and Iraq had already been carefully assessed for the potential to add, in any way, to Iraqi military capabilities.
As the trade between the two countries was deemed safe, the start of the war did not cease US participation in the program. The United States continued to import Iraqi oil—twenty-one thousand barrels in March 2003, when the invasion began, and twenty-two thousand in April, at the end of which the war was declared won.35 Likewise, direct exports to Iraq from the United States continued, with $0.4 million worth of goods exported in March and $14.6 million in April.36
When the United States could spread the costs of severed wartime trade to all states by means of UNSC-mandated global participation in a comprehensive embargo, a wartime commercial policy of prohibiting all wartime trade became the best military option available. Because the lack of neutrality was mandated by an institution, the primacy of the no-wartime-trade strategy applied only to the segments of trade the UN severed. All other segments of trade remained governed by the world with neutral rights, where relative gains considerations required a more strategic wartime commercial policy.
Bombing Campaigns and Strategic Wartime Trade
When the moment of general agreement between the members of the UNSC ended, the UN returned to its typical stalemate and the idea of neutrality returned to wartime engagements. The military benefits of severing trade individually dropped substantially, as neutrals could resupply the target state with necessary products. At the same time, the economic costs became localized to the state severing trade, and concerns over relative gains increased as neutrals could take over severed relationships. In essence, the United States found itself, once again, faced with the fundamental problem of trade with the enemy. Its wartime commercial policy in military engagements after the breakdown of consensus at the UN would have to be strategically crafted at the product level to balance the military and economic consequences of wartime trade.
Since the UN stopped imposing comprehensive trade embargoes, the United States has participated in four wars: the bombing of Kosovo (1999), the Afghanistan War (2001), an intervention in Libya (2011), and an intervention in Syria (2014). In two of these conflicts, there was no peacetime trade between the United States and the enemy, so the wars fell outside the scope of the wartime trade theory. On July 4, 1999, long before the impetus for the Afghanistan War occurred, the United States prohibited any commercial interactions with the Taliban or any Afghanistan territory controlled by the Taliban.37 At the time, the Taliban controlled thirty-two of the thirty-four provinces of Afghanistan. After the imposition of these sanctions, in 2000, the United States imported $0.8 million worth of goods from Afghanistan and exported $8 million.38 Most US imports were works of art, while its exports were primarily cereals.39 If it is assumed that only legal trade is recorded in official trade balance sheets, these numbers represent trade with the remaining two provinces in Afghanistan. It seems likely that the comparable level of trade in 2001—$6 million in exports and $0.8 million in imports—represents trade with the same regions, which were not at war with the United States during the Afghanistan War. The enemy in the intervention in Syria was the Islamic State, which became a territorial entity in 2014. There were no preexisting peacetime trade relations between the United States and the Islamic State. Meanwhile, the United States continued to trade with Syria throughout the bombing campaign. In 2014, the volume of trade between the United States and Syria was $19.2 million, with the United States importing mostly stone, plaster, coffee, and spices and exporting mostly oilseeds and pharmaceutical products.40 The trade volume dropped to an average of $11 million over the next three years.41
While the US participation in the bombing of Kosovo and the intervention in Libya was dominated by airpower, the approach to wartime commercial policy was not substantively different from that of other wars. The enemy could still convert the gains from trade into military capabilities, which kept security externalities of trade relevant to decision-making. For the most part, the predictions of the wartime trade theory cohere with US wartime commercial policy in Serbia and Libya. With the exception of arms, wartime trade was permitted with Serbia when the United States and NATO expected a brief bombing campaign; when expectations lengthened, the wartime commercial policy grew more restrictive. In Libya, the United States allowed wartime trade for the duration of the bombing campaign.
bombing of kosovo, 1999
In 1998, when the Kosovo Liberation Army first rebelled against the Serbian government, the United States already understood that it would not be able to pass a resolution in the UN for the comprehensive trade embargo on Serbia. While such an embargo existed during the Bosnian War (1992–95), it was removed in 1995 as a part of the Dayton Peace Accords.42 To reimpose it, the United States would need the agreement of all members of the UNSC, and it no longer had Russian support. On March 9, at a meeting of the Contact Group, the US secretary of state, Madeleine Albright, pushed for immediate and firm action against Serbia.43 The Contact Group was a forum for six states—the United States, Britain, France, Germany, Italy, and Russia—to coordinate action over the breakup of Yugoslavia. At the end of the four-hour-long emergency negotiation, the most common ground found among all states was an arms embargo on Serbia and a refusal to supply Serbia with equipment that might be used for internal repression.44 Russia refused to accept any stricter sanctions, not even signing on to two further measures supported by the other members.
When the arms embargo was put before the UN, Russia ensured that all wording referring to the situation in Kosovo as a threat to international peace and security was eliminated.45 Russia did not want the resolution to be used to justify any subsequent enforcement action against its ally in the Balkans. It also had domestic reasons to dilute UN action. With growing instability and secessionist pressures in Chechnya, Russia sought to avoid a UN precedent or any potential UN intervention in its domestic affairs.46 In the face of Russian opposition to milder sanctions measures, a comprehensive UN trade embargo against Serbia was completely out of reach. Any military enforcement actions to follow would require the United States to formulate a strategic wartime commercial policy.
When NATO planes started bombing their first Serbian targets on March 24, 1999, there were no restrictions on trade with Serbia beyond the arms embargo mandated by the UN. A short bombing campaign lasting only a few days was expected to persuade Slobodan Milosevic, the president of Serbia, to back down and return to the negotiating table.47 No serious considerations were given to the possibility of a long engagement.48 The first phase of NATO’s final plan provided commanders with only three days’ worth of targets—fifty-one integrated air defense system targets and forty fixed army installations.49 These were meant to accomplish the twin goals of the bombing campaign: reducing the Serb military capability and putting pressure on the regime to change its policies.50 Optimistic predictions of a brief campaign were widely shared among the NATO capitals.51 With expectations of a short campaign, there was no need to sever much trade. In the space of three days, the enemy would not feel any effects from an embargo.
After the first few days of bombing, Milosevic did not reverse course and come to the bargaining table. Two weeks after the campaign started, the violence in Kosovo only increased, and the United States was forced to acknowledge that the campaign had failed to reach its goals.52 Serbians swiftly rebuilt damaged communications and air defense installations; Milosevic continued to increase forces in Kosovo; in twenty of the first thirty-five days, inclement weather caused the cancellation or failure of sorties. The expectation of the length of the conflict extended into the summer of 1999.53 NATO leaders used the alliance’s fiftieth anniversary summit, on April 23–25, to discuss the future of the conflict. The consensus was that the air campaign was insufficient and that NATO could not afford to lose a war against Serbia.54 At the same time, the possibility, or even the necessity, of a ground invasion gained more supporters. The British prime minister, having arrived in Washington two days before the summit, proposed an invasion of Kosovo to the US president.55 While his suggestion was not adopted, senior presidential advisers indicated that the US president had already decided to send in US troops if the air campaign failed.56 Any military option involving a ground invasion would necessarily lengthen the war.
As expectations of the length of the campaign increased, the wartime commercial policy became more restrictive. On April 30, 1999, the United States prohibited all trade with Serbia.57 The goal of the sanctions was to degrade the Serbian ability to “sustain the war economy.” At the same time, air-strike targets expanded to include economic targets “which are primary means of cash generation.”58 While the rationale and the restrictions of wartime trade broadly cohere with the wartime trade theory, the extent of the prohibitions does not. According to the wartime trade theory, prohibiting all trade with Serbia is too extreme a measure for a month-long conflict, expected to last about four more months.59 The European response, set at the same decision point, fits the predictions of the theory better. On April 26, 1999, the EU prohibited the export of oil, petroleum products, strategic materials, and dual-use items.60 Covering fifty-four product descriptions, the EU prohibitions targeted war equipment, replacement parts for war equipment, and intermediate goods necessary for the refinery industry. This product-level approach, with a more targeted strategic selection of prohibitions, is closer to expectations for a state seeking to balance the military and economic consequences of wartime trade.
Table 7.1 shows the level of direct trade between the United States and Serbia in 1999, including the four months in which NATO was bombing the country—March 24 to June 10. The US prohibition on trade with Serbia from May 1999 included a humanitarian exception, which could explain why direct wartime trade between the United States and Serbia persisted. In general, the United States accounted for around 1.5 percent of Serbia’s total trade volume, while the EU and Russia accounted for 87.5 percent.62 For the entire year of 1999,63 most US exports to Serbia were transportation and electrical machinery, while imports from Serbia were mostly metals.
Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | Total | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Imports | 0.9 | 0.6 | 1.3 | 0.7 | 0.3 | 0.1 | 0.1 | 0.1 | 0.0 | 0.0 | 0.0 | 0.3 | 4.4 |
Exports | 6.8 | 7.6 | 6.2 | 4.4 | 2.0 | 4.4 | 5.2 | 2.4 | 2.4 | 7.4 | 6.9 | 2.8 | 58.5 |
intervention in libya, 2011
No matter how long the actual conflict lasted, the United States expected its participation in an intervention in the Libyan civil war to be short. Limiting the US engagement to air and naval forces, President Barack Obama asserted that the US role in the operation would last about a week, before control shifted to NATO and US participation scaled down.64 This short time frame was set for practical reasons. The US military was already involved in two conflicts in the Middle East and did not have the spare forces to engage in yet another large conflict.65 Moreover, because of domestic disagreements in Congress over the intervention’s benefit to US national interests, no funding was allocated to the campaign.66 With limited forces and funds available, the United States could only arrange for a short campaign.67 Planning for a brief intervention, it had little need to sever trade with Libya. Products with high security externalities—those of immediate use on the battlefield—had already been prohibited from trade. On February 26, the UN adopted an arms embargo against Libya, prohibiting the export to the country of arms, ammunition, military equipment, and spare parts for military equipment.68
The US bombing campaign began on March 19, 2011, with three objectives: enforce the arms blockade, establish a no-fly zone, and protect civilians. After the first three days, the no-fly zone was in place.69 By March 23, the Libyan Air Force no longer existed as a fighting force, and the integrated air defense system was severely degraded.70 Within a week, the combined coalition efforts stopped the advance of Muammar Qaddafi’s forces on Benghazi, before Libya’s leader could carry out his threats of indiscriminately slaughtering civilians.71 US leaders turned their attention to transitioning control of operations in Libya to NATO, which occurred on March 31.72 The change in command structure also signified a change to a support role for the United States.73 The military effort was ratcheted down, with the United States reducing its contribution to strike assets.74 US assets flew about 61 percent of the sorties while the campaign was under US leadership and about 27 percent of all sorties after the campaign shifted to NATO command.75
Most US involvement in the intervention in Libya was front-loaded to the first two weeks of conflict; thus, a lax wartime commercial policy proved sufficient, and no changes were introduced. Yet the United States was still part of the military coalition that continued its engagement in the conflict from April through October 2011. According to the wartime trade theory, some additional restrictions could have been warranted as the conflict lasted for another half a year. A possible reason no such restrictions were made could be the content of trade with Libya. Libyan imports from the United States were primarily wheat, rice, and cars.77 By March 2011, imports were predominantly wheat; limiting trade in foodstuffs in a civil war would have raised considerable humanitarian concerns. On the other hand, US imports from Libya were mostly petroleum and petroleum products, the proceeds from which could have greatly benefited the enemy, especially in a campaign lasting more than half a year.
Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | Total | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Imports | 193.8 | 117.2 | 124.0 | 0.1 | 0.4 | 117.8 | 0.0 | 2.4 | 14.1 | 7.2 | 37.3 | 30.7 | 645.0 |
Exports | 73.0 | 40.6 | 63.9 | 13.8 | 28.9 | 13.9 | 1.7 | 1.1 | 8.1 | 5.1 | 20.6 | 36.7 | 307.2 |
Table 7.2 provides the level of direct trade between Libya and the United States in 2011, with the numbers for the months of the NATO bombing campaign—March 19 through October 31—bolded. Some caution is required in interpreting these numbers, as they represent the entire territory of Libya, while territorial control shifted throughout the war between the Libyan government forces and the various rebel movements. The existence of direct bilateral trade between the two countries is a high bar to pass for wartime trade, as most wartime trade flows through indirect channels. At the same time, the patterns in direct bilateral trade cannot be taken as indicative of patterns in wartime trade. This is because direct bilateral trade is a function of two separate processes: the limits set on wartime commercial policy and the destruction wrought by the process of war itself.
Proxy Warfare: Not Quite Belligerent, Definitely Not Neutral
US participation in the ongoing war between Russia and Ukraine straddles the line between neutral and belligerent. While wartime trade theory explains only belligerent behavior during war, it is possible to use the theory as a lens for proxy warfare. This requires the additional hypothesis that if a third party comes close to becoming a belligerent—if it does not respect its neutral obligations—its commercial policy is more likely to conform to the expectations of the wartime trade theory. Although there are no official US ground troops involved in the conflict, no bombing campaign, and no naval operations, the United States is hardly impartial. Along with fellow NATO members, it provides substantial economic support to Ukraine, exports considerable quantities of weapons and ammunition, and trains Ukrainian troops. US intelligence on Russian military activity, likewise, finds its way to Ukrainian military leaders. The policy toward Russia is vastly different. Russian central bank reserves in the United States are frozen; several Russian banks have been removed from the SWIFT (Society for Worldwide Interbank Financial Telecommunication) system; commercial relations with Russia are sanctioned with the stated goal of causing injury to the Russian war machine.78 American actions are reminiscent of the proxy warfare of the Cold War, where the two superpowers fearful of nuclear escalation from outright hostilities still found a way to wear down each other’s capabilities by funding proxies to fight on their behalf.79 By helping one side and expressly harming the other, the United States is abandoning its neutral obligations and treating the Russia-Ukraine war as a proxy war against Russia.
As the United States is not a direct belligerent in the war, its commercial policy toward Russia does not serve a unitary purpose of a typical wartime commercial policy. Instead, it is bifurcated: one branch approximates a wartime commercial policy designed to balance the state’s economic and security imperatives to weaken the enemy’s war efforts, and the second branch follows the traditional punishment logic of sanctions against states that violate the norms of the international order. The policies of the latter branch seek to degrade the standard of living of stakeholders in the Russian regime, with the expectation that they will place pressure on Vladimir Putin to change Russia’s foreign policy. Travel visas are denied to these individuals; their assets in the United States are seized; the export of luxury goods to mostly these consumers is prohibited. Neither the Russian war effort nor the Russian population will be largely affected by the seizure of an oligarch’s yacht. This punishment portion of the US policy toward Russia in the ongoing conflict is not considered in the following analysis as it has little to do with the trade-offs examined by the wartime trade theory.
On the other hand, the first branch of the US commercial policy toward Russia, aimed at reducing Russia’s ability to prosecute the war, largely conforms to the predictions of the wartime trade theory. First, wartime trade with Russia remains. Direct commercial ties are maintained, and for some sanctioned goods, indirect trade continues to flow between the two countries. Second, the wartime commercial policy toward Russia is product specific. Prohibitions on exports to Russia conform to expected patterns based on conversion times—starting with a narrower, more targeted set of products and expanding over time to cover more intermediate goods associated with those initially prohibited. Imports from Russia are mostly untouched by the policy, demonstrating a discounting of Russia’s revenue gains from trade. The big exception is Russian oil, the direct import of which is prohibited; however, it continues to enter the country indirectly. Finally, the wartime commercial policy tracks war expectations, becoming progressively more restrictive as the expectation of the length of war grows.
direct wartime trade with russia persists
After Russia invaded Ukraine on February 24, 2022, the United States, working in tandem with the EU, Japan, and other allies, imposed numerous and varied sanctions on Russia. In addition to restrictions on trade with Russia, seven of Russia’s banks were removed from SWIFT, and the foreign reserves of the Russian Central Bank were frozen; both actions made commercial relations with Russia more difficult. The sanctions’ breadth and incredible speed were hailed as unprecedented,80 as well as, most severe and comprehensive.81 As the war progressed, US and allied measures against Russia became progressively more restrictive, including a US ban on imports of Russian energy, an EU restructuring to limit imports of Russian energy, and the imposition of a price cap on Russian crude oil.82
Despite these measures, trade between the United States and Russia remains.83 In 2022, the United States imported $10.4 billion worth of products from Russia after the invasion started (March–December) and exported $820 million to Russia. This represented 51 percent of the previous three years’ average US imports from Russia and 17 percent of US exports to Russia.84 In 2023, US imports from Russia were $4.9 billion; its exports to Russia were $597 million. Through August of 2024, US continued to imported $2.5 billion worth of Russian goods and exported $334 million to Russia. Compared to the same months in the previous year of the war, this represents a 32 percent decrease in imports and a 16 percent decrease in exports. Almost three years after the start of the war, about 16 percent of direct bilateral imports and 9 percent of exports remain.
These statistics show direct trade between the United States and Russia. Most wartime trade is indirect, as direct trade with the enemy tends to be harder to sustain during a war. Overall levels of wartime trade are likely much higher if indirect trade is accounted for. Many of Russia’s neighbors are acting as transshipment hubs for products sanctioned by the United States and EU. They import products from the West and sell these products to Russia, creating an indirect channel for wartime trade. Collectively, Armenia, Georgia, Kyrgyzstan, Uzbekistan, and Kazakhstan increased their imports from the United States and EU by more than $9 billion and increased their exports to Russia by nearly $5 billion.85 In many cases, these increases in exports to Russia represent trade in new sectors—like dual-use products and integrated circuits—for Russia’s neighbors.86 Armenia, Kyrgyzstan, and Kazakhstan are part of a customs union with Russia, making the indirect transfer of goods to Russia fairly easy.87 And Russia’s neighbors are not the only ones creating lucrative indirect pathways for wartime trade. Turkey’s exports to Russia more than doubled from 2021 to 2022, reaching $4.9 billion.88
wartime commercial policy set at the product level
Initial export prohibitions on industry-related products started in May 2022, about two and a half months into the war. These prohibitions include numerous products of use to the Russian war effort and defense production, such as engines, shovels, bulldozers, radio transmitters, and medical and surgical equipment. Additionally, wood articles, articles of iron and steel, and industrial machinery were prohibited. The sanctions were enumerated on the basis of the harmonized tariff schedule of the United States. This is a hierarchical categorization system for all traded products; the first six digits are part of the harmonized system shared globally, and the latter four digits are reserved for use by individual countries. Products prohibited from trade on May 9, 2022, were listed at the ten-digit level, the most detailed classification for products.89
After another four months of fighting, the policy was expanded on September 15, 2022. Prohibitions were switched to a more general six-digit code, and all existing ten-digit code prohibitions were converted.90 This effectively broadened the scope of the prohibitions by all products in the six-digit category that were not previously prohibited at the ten-digit level. Furthermore, the policy expanded to include the “components, parts, accessories, and attachments” of previously prohibited products.91 Modifiers such as parts of or components typically refer to intermediate products that require further manufacturing before they are ready for use—that is, products with longer conversion times compared to the products prohibited earlier in the war. The September sanctions also added export prohibitions on aerial cameras, integrated circuits, and locomotives.
A year and three months into the war, US prohibitions reached raw materials exported to Russia. On May 23, 2023, plastics, rubber, wood, cork, wood pulp, wool, cotton, stone, tanning materials, mineral products, and numerous metals, such as iron, steel, copper, nickel, cobalt, tin, and zinc, were prohibited from export to Russia.92 Raw materials tend to have longer conversion times into military capabilities as they require more manufacturing; with longer conversion times, they tend to be prohibited later in the war. The general pattern of prohibitions in the US wartime commercial policy toward Russia—starting with products of immediate adjacency to the battlefield, then expanding to intermediate goods associated with those products, and only afterward shifting to raw materials—correlates with the predictions of the wartime trade theory.
On January 23, 2024, additional sanctions were introduced to align the US policy closer with its allies.93 Prohibited products included coal, coke, their by-products, chemicals, metal articles, airplanes, drones, and parachutes. Most of the products prohibited from export to Russia were in the “residual” category of all remaining subtypes not otherwise already prohibited. Additionally, two years and four months after the start of the war, on June 12, 2024, the United States increased the scope of the export prohibitions on various metals to include metal waste and scrap, that is products which could be repurposed into something useful for production of other goods.94 These products would have a fairly long conversion time, especially since Russia is a significant global extractor of these metals and isn’t hurting for lack of their import.
It is plausible that given the expected length and stakes of the conflict, the United States has reached the limit of the trade it is willing to sever with Russia. Given the low stakes of the conflict for the United States, as it is still not a belligerent, the threshold for determining which trade is significant enough to GDP to protect in wartime could be set fairly low. Concurrently, given the expected length of the war, most remaining products of use to the Russian military or industry have already been added to the prohibition list. Indeed, the brunt of US efforts in 2023 has been in tightening the enforcement of existing prohibitions on trade. Most changes in the sanctions policy stem from expanding the entity list to make it harder for Russia to acquire military capabilities through third parties.95
The import of products from Russia remains mostly unsanctioned. In the first month of the war, the import of Russian energy products96—crude oil, petroleum fuel and oil, liquefied natural gas, coal and coal products— as well as fish, seafood, alcoholic beverages, and nonindustrial diamonds was prohibited.97 Gold was added on September 15, 2022;98 diamonds and diamond jewelry on February 8, 2024.99 These products do not represent significant US imports from Russia, and with the exception of energy products, they are not major Russian exports. Severing trade in crude oil and petroleum products was not much of a sacrifice for the United States. Russian crude oil accounted for only 3 percent of US imports in 2021.100 While Russia supplied nearly 20 percent of the US-imported petroleum products, this trade has not been lost during the war, only redirected. Third-party states, especially India, purchase Russian crude oil, process it domestically until it loses its “Russian character,” and export the resulting petroleum products to the United States.101
If the United States wanted to target Russian revenue through import prohibitions, it could have, at the start of the war, prohibited the import of Russian metals as most European states have done.102 Mining is a significant source of revenue for the Russian government, and the United States is Russia’s sixth-largest customer. However, measures affecting the Russian mining industry only started in 2024, two years into the war. The import of aluminum, nickel, and copper was prohibited on April 13, 2024.103 Additionally, Congress prohibited the import of Russian uranium products into the United States, effective as of August 12, 2024, yet at the same time allowed such trade through a licensing process.104 Other metals are at present unaffected. While Russia is a substantial global producer of aluminum, copper, and nickel, the United States is not a significant Russian customer for these specific metals.105 This suggests that imports significant to the US economy are still being protected, even at this point in the war.
war expectations change wartime commercial policy
The United States started the war with a punitive strategy targeting Russia. The focus was to foment domestic unrest in Russia, not to directly interfere with Russia’s capabilities on the battlefield. Widespread belief, from before the war began, was that the war would be over quickly, with Russia steamrolling over Ukraine. US intelligence reports indicated that Ukraine would last a week or two at the most,106 with Kyiv expected to fall within days of the invasion.107 The comparable analogy was the Russo-Georgian War of 2008, where all fighting was over within five days.108 After that experience, the Russian military upgraded its equipment and battlefield communication, which was well showcased in Syria. With 175,000 troops prepared for the invasion and naval dominance in the Black Sea, there was not much hope for Ukraine.109
With the expectation of a conflict measurable in days, commercial policy could not affect the outcome on the battlefield. If Russia was going to deliver another fait accompli, just like the annexation of Crimea, the United States would follow its previous strategy as well, punishing Russia for violating international norms against territorial conquest. The sanctions rolled out in the first month of conflict prohibited export to Russia of products related to the oil extraction industry, as it was one of Russia’s most lucrative enterprises. At the same time, export prohibitions of luxury goods were set in the hope that disrupting the lifestyle of stakeholders in the Russian regime would lead to domestic pressure on Putin to change Russia’s foreign policy. These sanctions were not designed to affect the balance of capabilities on the battlefield. Given the extremely short time frame to maneuver, no sanctions could have done so.
As frequently occurs in war, initial predictions of outcomes proved incorrect. While Russia’s strategy in the South of the country succeeded in taking control of most of the coastal territory of Ukraine, building a land bridge to the Crimean Peninsula, efforts to take the capital stalled.110 Despite dire predictions at the start of the conflict, and thanks in large part to the swift influx of Western weaponry and intelligence, after about a month of combat, Ukraine succeeded in pushing the Russian forces out of the northern part of the country. Starting in May 2022, US intelligence assessments shifted to predictions of a longer period of fighting.111 The Ukrainian forces demonstrated that the war would continue, which placed commercial policy back on the table as a useful tool to affect the enemy’s war effort. At this point in the war, the United States started prohibiting exports to Russia under an industry designation, starting with an initial set of products related to Russia’s defense production.
At the start of autumn, Ukraine began its counteroffensive, and by September 9, it had retaken the Kharkiv region in the Northeast. However, despite Ukrainian success in regaining territory, Western leaders saw no indication that Putin was willing to end the conflict or come to the bargaining table for a negotiated solution.112 Confirming pessimistic expectations, Putin announced partial mobilization and the annexation of four Ukrainian provinces.113 At the same time, the Department of State notified Congress of intentions to provide additional funding to Ukraine to assist with the war effort, indicating that US leaders did not expect the conflict to end soon. Sanctions on trade with Russia were expanded to include parts and components of previously prohibited products.
By winter of 2022, expectations of a long conflict seemed to have solidified.114 General Mark Milley, chair of the US Joint Chiefs of Staff, stated in November that the war was unwinnable by military means alone.115 In December, the NATO Secretary-General Jens Stoltenberg, likewise, warned that Russia was preparing for a long war.116 The continued stasis on the battlefield did nothing to dispel these expectations. Even the second Ukrainian counteroffensive, expected in the spring of 2023, was postponed until the middle of summer.117 The US commercial policy seems to reflect these pessimistic predictions about the length of the conflict, as in May 2023 prohibitions on trade with Russia were tightened once more, with many raw materials prohibited from export. With the Ukrainian counteroffensive judged a failure by some Ukrainian generals and most global analysts,118 military experts began questioning whether a military victory is at all possible.119
This chapter’s assessment of US wartime commercial policy in its post–Cold War military engagements showed the continued relevance of the wartime trade theory. While the range of conflicts examined is quite diverse—interventions, ground wars, bombing campaigns, and even proxy wars—the US commercial policy consistently balanced the military and economic consequences of wartime trade. In the brief decade of UNSC consensus, when it was possible to simulate a world with no neutral rights, the United States pushed for the world to sever trade with its enemies during military engagements. When this was no longer possible, the United States severed as much wartime trade as would aid the enemy in the given conflict and maintained the rest.
When the United States could reasonably count on agreement in the UN for a comprehensive trade embargo against aggressors in international affairs, its preference was to establish a world without neutral rights. Severing trade with the target is not as costly and is considerably more beneficial when the rest of the world joins in the sanction. This was possible in the Persian Gulf War, the intervention in Haiti, and the Iraq War. However, even in these conflicts, when the UN embargo was not fully comprehensive and allowed for humanitarian trade, the United States maintained its trade with the target in such products.
As a UN-mandated world without neutral rights has ceased to be a possibility, the United States returned to strategically formulating its wartime commercial policies, carefully balancing the military benefits and economic costs of severing trade. Expecting a brief bombing campaign against Kosovo, the United States prohibited only the export of arms and ammunition to Serbia, as very few other products could have affected the balance of capabilities in the war in a few days. When the initial sorties did not produce their intended effect and the expectations of the length of the bombing campaign lengthened, the US wartime commercial policy became more restrictive. Similarly, in Libya, expecting its contribution to the intervention to be short, the United States prohibited only trade in military equipment.
Finally, in an analysis of US participation in the Russia-Ukraine war as a proxy conflict, the US policy of interfering with the Russian war effort corresponds to the predictions of the wartime trade theory. Prohibitions on trade with Russia were fairly lax at the start of the conflict, targeting primarily products required for the Russian defense industry. As the expected length of the war grew, the policy became more restrictive, prohibiting the export of products with longer conversion times.