Economics is new force of war

IT IS difficult to open a newspaper or tune in to a television news channel without being confronted with oh so many war stories. Regional war updates have to fight for pole position. Often it’s the extent to which the war has escalated away from the fight on the ground, up into the corridors of the superpowers — far, far way — that determines who gets the headline.

I know little of war, but I’ve never found the sense of it. War is a situation where individual people who have never met each other, let alone formed a dislike for the other, meet to kill one another.

Long, long ago, the purpose of war was to acquire land, to conquer the people, own their resources, join forces and move on together to the next frontier. Nowadays the causes for war extend way beyond geographic lines, way beyond sovereign states.

While borders are still lines in the sand, it is political ideology, religious belief, economics and strategic resource locations that are the real divides. Why can’t people with different beliefs just leave each other alone; why do you have to believe what I believe? Instead, the world is practically at war as innuendo, accusation and hesitance or avoidance lace conversations between people with different beliefs.

Between Israel, Gaza, Serbia, Iraq, Russia, Ukraine … take your pick, there is enough regional conflict to escalate into a world war, as the super-powers and alliances choose sides — as they seem somehow compelled to get involved. The US is either dropping food parcels or firing missiles, depending on who it wants to support, who it wants to destroy.

The new military weapons of war have devastating power and accuracy. The war is conducted further and further from the front line. There is little unassisted manto-man combat. It is about technology (and technology spend), it is drone against drone, this is SIM-card warfare.

But, like the world of finance, this war is being waged at two very different levels — the big guys and the little guys.

World leaders are centre stage. Television brings them into our houses. Vladimir Putin, Barack Obama, Angela Merkel, Abu Bakr al-Baghdadi, Benjamin Netanyahu — the list of household names keeps growing — as they gather their followers, meet in scenario rooms, program their micro-chips, mobilise their troops. With each decision these world leaders dig themselves deeper into positions from which they practically can’t withdraw, decreasing the likelihood of a peaceful resolution, increasing the probability of war. Putin will have to fight, that’s the foundation of his maintained leadership, that’s his mandate.

While these leaders are playing at war games the human beings that are their people are falling to pieces.

The people not able to fight are forced to flee. And so it is that we see kilometre upon kilometre of human lines, wandering through wastelands, carrying what limited personal belongings they can manage, heading for some man-made corridor of safety, protected by some air force that may well have another agenda. Refugee camps are growing into small tented cities in the middle of nowhere, surviving on food parcel drops and bottles of water. Families take turns in the shade. Imagine. People fight over blocks of melting ice handed out in the desert. Generators are the only source of power in hospitals in the Gaza strip, its infrastructure left barely functional. What is the prize, what could make this all worth it?

As much as physical occupation is no longer the sole purpose of war, so too are military forces no longer the only weapons. Economics is the new force of war, control of strategic resources the objective. Oil, water, minerals — at the highest levels the price isn’t measured in dollars, its measured in human life.

The United Nations Security Council unanimously imposes sanctions on the Islamic State group in Iraq and Syria, regulating the flow of finance and weapons supplies. The 28 members of the European Union approve economic sanctions against Russia — paper protests.

While economic blocs are playing at chess board-like sanctions, real business is falling to pieces.

Rosneft, a state-owned operator of seven major oil refineries in Russia with a combined capacity of 372-million barrels of oil, has already put in a claim for $42bn to Moscow for losses and costs related to western sanctions.

World-wide cold storage capacity starts clogging up as goods in transit are embargoed from crossing borders. Harvests lie rotting. Transport convoys are grounded. The trading world retreats from a peacetime effective global village back into sectors of economic association defined by political alliance. Bilateral trade agreements, many years of learned trust in the making, are set aside at the whim of a president.

Of course, all of this has a trickle-down effect to the smallest suppliers and users of goods, finally affecting economic life blood, cash flow. Orders not delivered are not paid for, new orders dry up, and payments are withheld.

Kept up for long enough, spread wide enough, these perhaps unintended consequences can come together to seize the very economies over which the fights started in the first place.

Is it all about money, after all? Defence is certainly good business.

In terms of military spend alone the world spent $1.75-trillion last year — quite a bit for peacetime maintenance. The US leads the world at around $650bn (4% of GDP) with China (surprisingly quiet in the face of all of the skirmishes going on — its world economic domination plan has more stealth) is next at $200bn, with Russia only coming in third at $90bn, if we can believe all the numbers. That’s a whole bunch of money and a whole lot of jobs — so much so that an argument could

The US is either dropping food parcels or firing missiles, depending on who it wants to support, who it wants to destroy

be made that these countries need to be at, or at least threatened by, a state of war — to keep their populations at work — patriotism and purpose aside. Many a well-timed war has saved an incumbent president or found a new one.

Do the markets care? Not as much as you think. When news of a Ukraine attack on a Russian convoy broke on Friday afternoon the S&P500 initially dropped more than 1% in 20 minutes but, five hours later, it had already retraced twothirds of the fall. Relative monetary policy remains the weapon of choice in the world markets — the European Central Bank will fire the next salvo. The dollar, still the “go to” currency in times of uncertainty, remains a barometer of world peace, although these intermittent cease-fires are making it difficult to predict.

I must admit a little confusion around the cease-fire intermissions. If countries or regions at war can cease hostilities whenever called upon to do so (to suit either government’s agenda), then why can’t they just call the war off indefinitely and focus on a diplomatic solution?

Why men and women enthusiastically go to war at all, I don’t know — the postmortems, without exception, prove them to be ill-considered alternatives — particularly if it isn’t really your fight, ask any Vietnam veteran.

Of course, as I join in singing our national anthem before the rugby Test, I do get just a small taste of what I may fight for, should the call come.