• Friday, September 29, 2023
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The weaponisation of global supply chains

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A look at the methods through which superpowers leverage the globally interconnected supply chains to play a dangerous, potentially fatal game of chess. Superpowers—China, Russia, the United Kingdom, and the United States of America—have been waging war by proxy for just about as long as anybody living today can remember. They do so both militaristically and diplomatically. But ultimately, the seemingly most effective method to damage an opposing nation’s opportunity to win is by devastating its economic prospects. And, as history has written, the very best way to ruffle those feathers is to enact embargoes and sanctions that cripple the warring country’s supply chain.

“How do embargoes and sanctions work?” I hear you ask. Well, it used to be fairly simple, to be honest. Back in time, a powerful nation would simply blockade the shipping lines of its rival and it would rescind the right of organisations and institutions from within its borders to trade with the targeted nation. In the modern day, as an outright blockade would likely incite World War III, a powerful nation would instead produce legal frameworks and regulations that force companies to stop investing in and procuring from certain regions of the world.

A saga of supply chain sanctions

Whether the United States’ efforts will be successful or not is something that only time will tell. But, let’s take a look at the history of nations using embargoes and sanctions as a political weapon. Truthfully, when it comes to the saga of supply chain sanctions, there’s a hell of a lot of debate as to whether countries using trade restrictions maliciously is a product of modernity. It strikes me as slightly odd that one would consider debating that, but each to their own, I suppose. In my opinion, it’s an art as old as civilisation itself. History, being the beautiful educator that it is, has provided ample examples of nations and empires alike using supply chain blockades as a political tool.

Thankfully, where I lack deep historical knowledge, author Stefan Stantchev does not; in Stantchev’s book, History of Political Thought, he points out that, “partly on the basis of archaeological and textual evidence,” there is evidence that the poverty of “Central Anatolian Hittite artefacts in the Mycenaean world and for the lack of Mycenaean artefacts in Hittite home-lands of Central Anatolia during the late Bronze Age” can be attributed to embargoes between the two regions restricting each population from accessing goods and services from the opposing civilization.

Later than the Bronze Age, you could consider another popular period of history: Classical Greece, around the 5th century BCE—you know, when King Leonidas from The 300 was strutting his stuff. During this period of time, the Megarian decrees, which Ancient Athens propagated against the city of Megara at the very start of the Peloponnesian War, absolutely ravished the Ancient Greek economy.

For the most part, historians agree that Athenian leaders “sought to inflict economic hardship on the city of Megara by limiting (its) trade in areas under the control of Athens in order to coerce Megara into abandoning the Peloponnesian League and (become an ally of Athens).” In other words, Athens actively embargoed Megara to bring the city to its knees and force fealty. I should clarify, however, that the true reasoning will never be known, and historians do tend to argue about it.

Moving on to an example that historians would, in fact, find it hard to argue against and with which the wider majority are most likely familiar, one of contemporary history’s most notable use of economic sanctions: the Blockade of Germany. The Blockade of Germany, which has even gained capitalization due to its importance (and official name), was a set of sanctions that crippled Nazi Germany’s international supply chain, blocking the European nation from procuring the food, fuel, metals, minerals, and textiles that it needed to power its war efforts during World War II.

Fun Fact: The Blockade of Germany, which also affected Italy, led to American companies not supplying wartime Germany; without the United States, the German Coca-Cola bottling company couldn’t get hold of Coca-Cola syrup, and the German people found themselves without the globally-beloved beverage. To remedy its lack of the dark, bubbly soda, the Germans innovated their own soda: the iconic Fanta, which people still enjoy, around the world, to this day. You might be wondering how embargoes and supply chain sanctions play out in the modern day. Truthfully, you seldom hear the terms mentioned via mainstream media channels, and they’re certainly not trending topics on social media. But, in reality, sanctions affect segments of the global population on a daily basis.

Right now, the battle between Capitalism and Communism is providing us with some absolutely excellent examples—though I fear the outcome of the sanctions and embargoes in place could well be catastrophic. Unfortunately, the atrocities committed and the moral high ground taken by the countries—eastern and western, respectively—involved leaves a bitter taste in the mouth of the populace at either end of society.

The People’s Republic of China vs. the United States of America

China, the so-called “People’s Republic,” has been, in recent years, somewhat unkind to a segment of its population. The Chinese government has, since 2014, singled out and continually abused the Uyghur people—an ethnic minority native to the Xinjiang Uyghur Autonomous Region of the nation that follows Islam—for various reasons. Most concerningly, the government has put policies into place that have allowed for the detainment of, according to some reports, more than one million Uyghur Muslims. The despotic move led to several atrocities, including the suppression of traditional Uyghur religious practices, forced labour, political indoctrination, as well as forced sterilisation, contraception, and abortion being inflicted upon the oppressed.

Let’s be honest; it’s a sorry state of affairs. But, in the modern world, superpowers cannot simply invade and emancipate oppressed populations; the worldwide fallout would, potentially, be far too excessive. Especially given the current climate with the never-ending East versus West—Communism versus Capitalism—issue.

In response to the somewhat Orwellian scenario in the far east, the US decided to essentially boycott elements of the Chinese supply chain. How? Well, US leaders have put regulations in place that veto the ability of North American companies to procure raw materials, such as cotton, from China’s Xinjiang Uyghur Autonomous Region. Said regulations, which came into effect in June 2022 after President Biden signed them into law back in December 2021, are listed under the Uyghur Forced Labour Prevention Act; essentially, the act strictly prohibits companies from importing products that are partly or wholly produced in the oppressive province. It’s a little too soon to assess the damage that this act causes to the Chinese economy, but the American government will be hoping that it’ll be impactful enough to make the rival leaders reverse or rectify their actions.

Only time will tell. But, to shout it louder for the people at the back… Leaders of the People’s Republic of China, take heed of the fact that you should stop persecuting members of the population that do not ascribe to your traditional belief system. Dare I say that your flag doesn’t warrant one gold star—let alone five—if you continue to bully and persecute your fellow compatriots?

Read also: Achieving prosperity in Africa through supply chain management

The European Union vs. the Russian Federation

While the US is making an effort to break one element of China’s chokehold on the global supply chain through the plight of the Uyghur people, the Russian Federation is tightening the tap on the European Union—quite literally. The European Union, which has looked to capitalise on the upward trend of eco-friendly energy production and the—often expensive—products that come with it, looks like it’s going to face one of its harshest winters yet.

The bloc of nations, which is heavily dependent on Russia for its gas reserves, chose to take the moral high ground, not once but twice; first with its pledge to minimize its contribution to climate change, demonizing the opposing nations that are a little more lax on climate-related issues; second, with its objection to the Russia─Ukraine conflict and its overwhelming support for the latter.

Now, just to be clear, I do not support the Russian agenda and the nation’s current conflict. However, at a time of relative peace across Europe, it does seem like Donald Trump’s advice—a few years back—to European leaders not to become dependent on Russian oil reserves may well have been quite sound. The media, as well as European leaders and American Democrats, spun a narrative that Trump was somewhat stupid for the suggestion; well, all I can say is that hindsight is a beautiful thing. Or, as Hegel once said, “The owl of Minerva spreads its wings only with the falling of dusk.”

Unfortunately, Europe now finds itself at the whim of Russia and its notorious leader, Vladimir Putin; the European bloc chose to back Ukraine in the eastern conflict and veto Russia with supply chain embargoes and financial sanctions. Now, in response, Russia is threatening to leave Europe without gas and crude oil for the coming winter—which could kill, supposedly, hundreds of millions of vulnerable individuals and is leading to meteoric price rises across the continent. Both the populace and the governments are, at best, starting to panic.

I suppose you could say that the European response to climate change and the most recent Ukraine conflict backfired and resulted in a Russian counter-sanction of sorts. At this point in time, it appears that Russia has the ability to frustrate and choke the European Commission into political submission due to poor planning on the European side of affairs.

Weaponising interdependence: The Chinese Way

Unfortunately, in the modern world, supply chains are becoming increasingly complex and, more specifically, increasingly interconnected. The use of embargoes and sanctions is, at present, becoming harder; why? Because you might sanction one nation only to find that it uses three other neighbouring countries to produce its goods and services—and you might also have interests or affiliations in those additional countries.

The Chinese supply chain is an excellent example of this very issue.

The eastern giant boasts the second largest economy in the world, and it’s the leading provider of services globally. That’s why, in the past, I’ve referred to it as “the manufacturing hub

of the world.” China, a couple of years ago, announced its modern revision of the Silk Road initiative, “One Belt One Road” (OBOR), which is now known as the “Belt and Road Initiative” (BRI). The BRI focuses on one “belt” which runs from China through the Middle East, Central Asia, and across Europe. The initiative is led by China but includes an incredible 65 partner countries that, with the Chinese government’s guidance and investment, will assist in the development of energy generation, logistics hubs, and the necessary infrastructure to power the global trading and supply chain initiative.

The initiative, which benefits each partner nation, appears to be an advancement of China’s wider global strategy for dominance—and its attempt at dethroning the United States as the leading superpower. Through a seemingly trade-based plan, China has managed to secure strategic assets and resources, as well as logistical and military access to strategic ports in partner countries that it couldn’t previously have forces in. And to enforce its dominance as the powerhouse in the relationship, the Chinese government has put its partner nations in a debt trap by acting as a creditor that extends debt to the borrowing nations to fund their involvement.

That is to say that, not content with its sole status as the “manufacturing hub of the world,” China is creating a global network of manufacturing and logistics hubs that are interdependent under its own rules and regulations; these hubs will continue to produce all of the goods and services that China is known for, which means that even in the scenario where western nations look to diversify their supply chain portfolios and acquire products from alternative nations, whether it says “made in Thailand” or “made in Vietnam,” what it actually means is “made by China.”