The Politics of Trade Pressure

American-Soviet Relations, 1980-88

Mohammed Ishaq

• Publisher: Routledge
• Year: 2019
• ISBN:
  9780429808166
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

First published in 1999, this volume examines Soviet-American relations with a specific emphasis on the American use of trade pressure in comparison with Soviet involvement in regional conflicts, in contrast to a broader East-West dichotomous analysis. Mohammed Ishaq addresses the history of the political and economic partnership, followed by the questions of non-strategic trade, strategic trade, Soviet policy on human rights and Soviet involvement in the Third World and regional conflicts. In doing so, Ishaq recognises the use of trade pressure as economic statecraft in foreign policy in a reassessment of its effectiveness.

1 Soviet-American Relations from Afghanistan to Gorbachev: An Overview

Introduction

The concept of trade pressure involves the manipulation of economic measures, and the utilization of economic instruments to influence the behaviour and actions of another nation with the hope of satisfying designated political goals. In other words it has to be remembered that economics is the means and politics is the intended end.

It should be understood that judging the success of trade pressure is really a two-part task. The first task is to see whether economic pressure had the desired economic impact, since this will go a long way in determining whether trade pressure will be successful from a political standpoint, which is then the second task.

In this respect, as most writers on the issue also appear to recognise, “the political success of sanctions is an independent variable separate from the economic impact of sanctions”.¹ The term economic sanctions is used very readily in most discussions of trade pressure. Although it is only one form of trade pressure, it is the form in which trade pressure manifests itself more than any other way.

The true measurement of whether trade pressure is successful from an overall perspective has to be whether the political aims of the practising state are met, and to what extent. This is because the ability of trade pressure to have the intended negative economic impact on the target state will not in itself guarantee that political objectives will be met. Although economic measures such as embargoes and sanctions can be used, and have been used for purely economic reasons, when they are deployed as part of trade pressure then they are being used in a political capacity.

It is fair to say that if trade pressure fails to have the desired negative economic impact on the target nation the chances of it having the desired political impact are virtually zero. Its economic failure will only serve to boost the political will and morale of the target country, which will become less inclined to alter its policies. The only hope then, is that other factors such as leadership changes or changes in government, may force the target to alter its behaviour. The exception to this idea, that if trade pressure fails to have the intended economic effects its chances of achieving the political objectives are low, would be when trade pressure measures such as sanctions are imposed which are of a purely symbolic nature and where no change in political behaviour of the target is expected.

However, although the success of trade pressure from an economic viewpoint boosts the chances of it altering the political behaviour of the target state, this need not be the case since pride, reputation, and sheer stubbornness may make the target state unwilling to budge even in the face of economic adversity brought on by trade pressure measures like sanctions. Also the target may hope to hold out and hope that trade pressure may be relaxed in the near future. Certainly in the case of US trade pressure against the Soviet Union throughout the 1980’s its failure to impose significant economic costs on the USSR made the chances of it succeeding in satisfying its political objectives much more difficult.

Although this book looks at the use of trade pressure by the U.S. against the USSR in a specific time period (1980 - 88), it is worth stressing that the use of this policy of trade pressure was not new in US - Soviet relations and had in fact been part of US strategy towards the Soviet Union in the early days of the Cold War, and it is even fair to argue that Ronald Reagan’s policy bordering on economic warfare bears striking resemblance to US policy in the early years of the cold war.

As Mastanduno points out, part of US economic containment policy in the years immediately after 1945 involved the “...use of US economic instruments...”² to shape Soviet behaviour. The end of the Second World War saw the emergence of the United States as a leading economic as well as military power. The US sought to use its economic power against the Soviet Union as part of its cold war conflict and rivalry with Moscow. As can be witnessed from the U.S. at the time, it became clear that a policy of economic containment would be part of US strategy toward the USSR which was not as powerful economically. Taking into account the fact that trading with an adversary can be detrimental as it can contribute towards its military strength, for these reasons as Mastanduno indicates “....throughout the Cold War US officials treated trade with the Soviet Union and its allies differently from US trade with other destinations ...”³ The historical debate in the West on trade with the Soviet Union centred largely on the question of the export of goods to the Soviet Union which would contribute to the military potential of Moscow. Western efforts to coordinate allied controls over exports to the Soviet Union and its allies, saw the formation of COCOM in 1949 at a time when the West recognised the strategic risks of trading with the Soviet bloc. In decades to come COCOM came to represent the strategic embargo, the aim of which was to hinder Warsaw Pact access to militarily useful technology in which the West had a lead.

While the allies of America in Western Europe accepted the dangers of trading with the USSR particularly in strategic items and technology and were as a result willing to cooperate with the US in controlling strategic exports they had initially been wary of using economic means as a policy instrument especially to the extreme of economic warfare. From the 1945 period up to the late 1950s the West denied the Soviet Union the benefits of any significant trade with the West. Clearly at this time international or Western Security assumed priority over economic interests. This period from 1945 well into the 1950’s was generally depicted as the period of economic containment. The force that initially brought COCOM into being and held it together in the early years was the enormous economic leverage the US could exert on its Western allies in the immediate aftermath of the Cold War.

This was typified by the 1951 US Mutual Defence Assistance Act which was seen as an attempt by the US to use aid to Western Europe as a lever to compel allied compliance on export controls by providing for the discontinuance of US financial assistance to countries that exported restricted commodities to communist countries. As Mastanduno points out⁴ Western European nations were not entirely happy with the strategy of economic warfare which was adopted through such means as COCOM but were virtually compelled to participate through US pressure and coercion, even though they acknowledged the principle behind the need to control the export of strategic items. A major concern for Western European nations was that the US was overstating the problem of strategic exports to the Soviet bloc to the extent that items with little or no strategic significance would be restricted, and that this would prove an unnecessary detriment to already minute East - West trade that there was.

Indeed initial COCOM controls saw a compromise between a longer US control list and a shorter list proposed by Britain and France. For Western Europe the desire was “...to limit controls to those of a more narrow strategic embargo”. As highlighted by Mastanduno⁵ there was somewhat of a retreat from Economic Warfare beginning to take place from 1953. This saw West European nations in particular calling for a liberalisation of COCOM export controls and cuts in the COCOM control list.

This trend or movement towards liberalisation of the western strategic embargo was viewed with alarm by the United States who continued to stress the overwhelming security threat posed by the Soviet Union as well as China.

However, the West Europeans got their way to a great extent and in 1945 during negotiations the COCOM control list was reduced by 50%. Furthermore there was a narrowing of control criteria that would in future cover only those items which made a direct contribution to the Soviet military sector.

In addition to this, in 1958 there was a review of the COCOM list which “...resulted in a significant liberalisation of controls”.⁶ This was much to the delight of the West European governments who had been unhappy about the inclusion in the control list of many items which were not regarded as strategically important.

The period beginning from the 1960s saw changes in East - West trade. Trade ties began to emerge on a measurable scale by the 1960s and were to benefit greatly from detente during the 1970s. Much of this change was due to Western European governments beginning to reestablish traditional links with markets in Eastern Europe. The United States no longer exercised leadership of Western policies on East - West trade. In view of this the West Europeans moved towards liberalisation of controls within COCOM. This saw the number of items on the COCOM lists decline. The US attempted to stave off this movement towards liberalisation or easing of controls by maintaining its more extensive national controls.

The end of the 1960s to the mid 1970s saw or witnessed what can be called a further liberalisation of East - West trade. It was the period of economic detente (in line with the political detente at the time) with the belief in the West that increased economic ties between East and West may help to foster improved political relations. Even in the United States this view or line was being promoted, and there were calls for a relaxation of controls.

During the 1970s COCOM had almost threatened to become obsolete. Member States had in fact become rather casual in their enforcement of controls. At the same time East - West trade had increased in comparison to previous years. The second half of the 1970s witnessed problems in Western policies towards economic relations with the Soviet bloc. Disagreements once again began emerging within the Western alliance. The U.S. had began to end its liberal approach of the early 1970s to trade with the Soviet Union in response to concerns over Moscow’s behaviour. The new more stricter US approach was not to the liking of the West Europeans who by now had considerable economic interests at stake in their trade links with the Soviet bloc. The divisions primarily between the US and its European allies intensified going into the 1980s. On top of this, as we shall see, the renewed period of conflict in East - West relations in the early 1980s proved a disaster for Soviet American economic relations in particular, and saw economic warfare one of the initial features of the cold war dictate Soviet - American issues.

It might be appropriate to briefly look at the reason for the development of Soviet - American relations in the manner in which they did in particular the reasoning behind the Cold War, which actually contributed in attracting the use of U.S. trade pressure in the post - 1945 period.

Since 1945 the Soviet-American relationship has oscillated rather like a business or trade cycle. The period immediately following the Second World War saw the onset of what became known as the ‘Cold War’.⁷ This term was used to describe the extreme state of tension and hostility that developed between the Western powers led by the United States, and the Communist bloc of Eastern Europe led in turn by the Soviet Union. The ‘Cold War’ in fact became the norm by which Soviet-American (and East-West relations which were naturally closely interconnected) were governed, and was characterised for much of the post-war period by: political manoeuvring; diplomatic wrangling, psychological warfare; ideological hostility; economic warfare; a major arms race; peripheral wars; and other power contests; falling short of an actual ‘hot war’.

It can be said that the Cold War which emerged between the United States and the USSR was waiting to happen long before major developments in Europe after the Second World War ma...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Dedication
• List of Figures
• List of Tables
• Preface
• Acknowledgements
• 1 Soviet-American Relations from Afghanistan to Gorbachev: An Overview
• 2 Soviet-American Relations: Reagan, Gorbachev and Summit Diplomacy
• 3 The Impact of American Trade Pressure on the Soviet Union: 1 - The Question of Non-Strategic Trade
• 4 The Impact of American Trade Pressure on the Soviet Union: 2 - The Question of Strategic Trade
• 5 Assessing the Political Success of American Trade Pressure: 1 - Soviet Policy on Human Rights
• 6 Assessing the Political Success of American Trade Pressure: 2 - Soviet Involvement in the Third World and Regional Conflicts
• 7 U.S. Trade Pressure on the Soviet Union: Reconsidered
• Bibliography