Economic warfare facts for kids
Economic warfare is when countries use money and trade to weaken an enemy, instead of fighting with soldiers. It involves stopping them from getting important supplies, like raw materials or factory-made goods. It can also mean messing with their money system to stop them from getting cash or loans. This way, a country can put pressure on another without actually going to war.
While bombs can destroy factories, economic warfare focuses on financial tricks. Sometimes, both methods are used together in a big war plan. This article talks about actions meant to have a real impact, not just symbolic ones.
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Stopping Supplies to an Enemy
During the Second World War, it became clear that Germany's military needed two main things: ball bearings and oil. One way to hurt Germany was to attack the factories making ball bearings, especially in a place called Schweinfurt.
Ball bearings are small but need special machines to make them. While it was hard for Germany to get oil by sea because the Allies controlled the oceans, small amounts of bearings could be flown in by transport aircraft.
Buying Up Supplies
Germany could buy bearings from neutral countries like Sweden. The Allies realized that if they bought up all the Swedish bearings, even if prices went up, Germany would get less. This price war also put financial pressure on Germany.
So, every week, a fast De Havilland Mosquito plane would fly bearings bought in Sweden to Britain. The people buying these bearings had almost unlimited money to spend.
Stopping Exports
During the Iran-Iraq War, countries like the United Kingdom tried to limit the fighting by stopping exports of important military items. However, countries under such bans might create tricky financial plans to get around them.
Export controls also try to stop the spread of dangerous weapons, like those covered by the Missile Technology Control Regime (for missiles) and the Chemical Weapons Convention (for chemical weapons). Things get complicated with "dual-use" items, which can be used for both peaceful and military purposes.
For example, thiodiglycol can be used to make ink or mustard gas. The amount of thiodiglycol Iraq tried to get was far too much for just ink. Some microorganisms, which can be used for biological warfare, also have normal uses in medicine.
Pressure from Cartels
Instead of telling their own companies what not to do, a group of nations can act as a cartel (a group that controls a product). They can then pressure another country that relies on their exports. For instance, Arab nations in the Organization of Petroleum Exporting Countries (OPEC) used this method to pressure the United States for supporting Israel during the 1973 Arab-Israeli War.
Blockades
A Blockade means stopping goods from entering or leaving a place. When aimed at trade, a blockade that stops raw materials from reaching an enemy's factories is as effective as bombing them, as long as the enemy can't import the finished goods they need.
Blockades can also stop exports. During the American Civil War, the Confederate States of America (the South) were stopped from exporting cotton. This prevented the South from getting money and the goods they needed to buy with that money.
Messing with Money and Credit
One key way to fight groups that don't have factories or a country of their own is to stop them from buying what they need. It's hard to just buy up all the supplies they might want, because there are too many possible sellers.
Sometimes, governments might give supplies to these groups, but often there's no easy way to ship them. International arms dealers usually want cash right away. If a country can't buy important supplies like shoulder-fired missiles, the opposing country might stop them by freezing their bank accounts and other money.
Counterfeiting Money
Some groups have tried to make people lose trust in a country's money by printing fake money. A famous example was a Nazi plan called Operation Bernhard, which aimed to fake British bank notes. They used skilled prisoners in a concentration camp to do this. Some of these fake notes were later found in Lake Toplitz.
After the Second World War, the Allies planned to use a common currency for the occupied areas. The Soviets wanted to control the printing plates. Later, it was found that a U.S. official, Harry Dexter White, who was a Soviet agent, pushed to give the Soviets access to these plates.
In 1948, the Western Allies surprised everyone by issuing new money to replace the currency printed with the Soviet-controlled plates. This stopped the Soviets from flooding the economy with too much money.
Freezing Money
It's very common, especially in fighting terrorism, for a government to stop an organization or country from using their money accounts that are under that government's control.
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