In Germany, companies are working with citizens to provide humanitarian aid for the refugees from Ukraine. Dozens of international corporations have also withdrawn from Russia out of solidarity with the invaded country or broken off business ties with Putin’s regime. The credit card providers Visa and Mastercard are the latest examples of this “public-private partnership” against war and for democracy. An oil and gas boycott would send Russia into solitary confinement altogether.
Business is not neutral in this conflict – and that’s a good thing. Many experts even consider the economy to be the West’s most powerful weapon against Putin and describe the sanctions imposed on Russia as the economic equivalent of a nuclear bomb. For Putin they are tantamount to a “declaration of war”.
For Germany in particular, it is long overdue for the industrial nation to become aware of its geoeconomic power. However, the economy is not a silver bullet.
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Since globalization unfolded great dynamism in the 1990s, the global economy has grown ever closer into a network of mutual dependencies. For a long time, economic interdependence was considered the best guarantee of peace.
The American globalization apostle Thomas Friedman (“The world is flat”) came up with the catchy formula that two countries in which the burger chain McDonald’s is represented would not go to war with each other. This has proved to be just as wrong as the German Ostpolitik formula of “change through trade”.
In fact, the Russian crisis seems to prove the opposite: economic dependency has become a weapon, as Putin’s empire is now painfully realizing after Western sanctions. “Networks have turned out to be less paths to freedom and more new chains,” warned US scholars Henry Farrell and Abraham Newman in their 2019 essay “Weaponization of Interdependence.” We too will feel this even more if there is an embargo on Russian energy supplies.
The container ship “MSC New York” is cleared early in the morning at the Eurogate terminal in the Port of Hamburg.
(Photo: dpa)
However, it is not only countries that benefit from the economic power of mutual dependence that can now exclude Russian banks from international payment transactions or block Russia’s central bank reserves. Companies located at nodal points in the world economy also have geoeconomic power. Such nodes can be, for example, critical supply chains such as computer chips and Internet platforms, but also raw materials such as oil and gas. Digitization is shifting and redistributing these nodes, which is why the technological race has become the focus of the geopolitical struggle of the great powers.
Economy is not a silver bullet
The fact that companies and their managers are becoming aware of this power and are willing to use it in a targeted manner against Putin’s war is an important advance in the geopolitical struggle between authoritarian regimes and western democracies. A sign that will also be observed very closely in China.
The Middle Kingdom is still far more closely linked to the world economy than Putin’s empire. But that also means that the next, far greater test is already waiting for the companies – especially if Beijing should permanently side with the warmonger in the Kremlin or even toy with an attack on breakaway Taiwan.
However, corporations are not states, and their boardrooms do not have democratically elected governments. Politicians must therefore have the last word, especially when it comes to peace and freedom. But the companies are no longer only committed to their shareholders, but live in a world with many stakeholders.
The economic power of states and companies extends far – but not so far that it could change the military balance of power on the battlefield in the short term. We should therefore not expect any miracles from the economic sanctions, such as a rapid “regime change” in Moscow.
More: Delivery routes to Russia are collapsing – ships are piling up in Europe’s ports.