The fact that sanctions failed to prevent Russia invading Ukraine, has uncovered critical problems in how the West can respond economically to the threat China poses to Taiwan, a new report from the Henry Jackson Society has found.
Written by Reform UK leader Richard Tice, the report outlines how the West failed to provide a united and credible threat of the economic measures it would level against Russia should it invade Ukraine. This lack of clarity, the report argues, emboldened Vladimir Putin to push ahead with his invasion.
The paper highlights that the West was slow to move on sanctions before the war because of the dependency of many European nations on Russian energy. Given how embedded China is in the global supply chain networks, the report believes that getting nations to show a united front against the world’s second largest economy could prove even harder.
According the report’s authors, the key to levelling successful economic deterrents against China is twofold. First the West needs to make it clear how economically dependent the world is on a free Taiwan, and secondly, work needs to begin now to unpick both the West’s reliance on China and Chinese influence in western nation’s critical supply chains.
While launching the report, Richard Tice said: “The sanctions imposed have without question achieved their objective in making life difficult for Putin. The Russian economy ministry estimates that sanctions have caused a contraction of their GDP by 8.8% – 12.4%, however external experts put this figure as high as 15%. Furthermore, as sanctions continue to mount, Russia’s isolation has deepened and combined with the global freezing of Russian assets, Putin’s war chest has been severely depleted.
“Nevertheless, as a deterrence, sanctions (and specifically the threat of sanctions) failed entirely to prevent war in the first place.
“The West must be prepared for the economic uncertainty that would be caused by sanctioning such a central global economy. To put it bluntly, to impose sanctions that would have any effect on the People’s Republic, the West would have to be prepared for economic disturbance that would out-pace the disruption caused by COVID. That’s why, sanctions against China need to be planned in advance with clear warning being given to businesses and other private sector actors that their trade with China will cease in the event of an invasion of Taiwan. This would also have the effect of encouraging alternative sources of supply outside China and away from Beijing’s sphere of influence.
“The West also needs to move away from vague statements and become more willing to publicly discuss policy options in the event of a Chinese invasion. Clear statements in advance give the greatest deterrent effect, and given the West’s response to Ukraine and its willingness to endure economic pain, China could well think twice about writing off Western threats.”