Image from Associated Press
The United States applied an oil embargo against Japan in 1941 in response to a limited incursion into southern Indochina. The embargo crippled Japan’s energy supply, forcing it to choose between a complete economic catastrophe and a potentially devastating war with the U.S. Ultimately, Japan attacked the U.S., culminating in the bombing of Pearl Harbor. This moment exemplified deterrence failing despite credible and probable threats of costly retaliation. Eighty years later, the United States and European Union are imposing sanctions on Russia following its incursion into Ukraine. These measures can reduce Russia’s perceived security and convulse its population. Escalation, such as attacking NATO and using weapons of mass destruction, could be considered a rational response if Russia perceives an imminent collapse. By examining how a seemingly mild measure led to deterrence failure in 1941, NATO and its partners can sustain military and economic measures toward Russia that provide robust deterrence while limiting the blowback from perceptions of loss.
Deterrence establishes an environment where intrusive behavior is dissuaded through a convincing threat of high costs that outweighs the intrusion’s benefits. These include troop deployments referred to as “tripwires” and irretractable alliance commitments known as “bridge-burning.” If communicated to the target properly, the deterrent threat becomes credible and probable, thus discouraging unwanted behavior. Any gap in perception or cost analysis will result in deterrence failure.
The U.S. sought to prevent Japan’s takeover of the Dutch East Indies in 1941 by avoiding intervention and deterring Japan’s southward movement. This involved a “tripwire” in placing the U.S Navy’s Pacific Fleet at Pearl Harbor, track one dialogue communicating the high probability of US intervention, and fleet visits to Australia and New Zealand showcasing US combat power in the region. These deterrent efforts were paired with economic sanctions. US sanctions prohibited Japan from receiving exports of defense material (e.g. iron and steel) and froze Japanese assets in US banks.
The situation deteriorated when the Roosevelt administration imposed a complete oil embargo on Japan as it advanced into southern Indochina. Ostensibly mild, the oil embargo starved Japan of energy and crippled its ability to sustain its war in China. Japan would soon be unable to secure its empire and the risk of collapse became imminent. The costs of not going to war became substantial and decision-makers in Tokyo considered attacking the U.S. as the least unfavorable off-ramp. Indeed, Japan chose to initiate its attack on Pearl Harbor knowing massive retaliation would likely follow and entail a low chance of victory.
1941 illustrates an ominous reminder to current decision-makers in Washington and Brussels. Russia’s authorization of a “special military operation” into Ukraine on February 24th resulted in the U.S. and NATO bolstering their forward “tripwire” deployments within Western Europe. The U.S. pursued “bridge-burning” through its public commitments to defend “every inch” of NATO territory and implemented economic sanctions as a non-escalatory move in deterring further aggression.
Sanctions targeted Russia’s Central Bank which holds $630 billion in foreign currency reserves. As of 2021, the reserves constituted 33% of Russia’s total GDP and were split between dollars, euros, gold, and yuan. These assets lay in accounts within the jurisdiction of Western sanctions, thus freezing a majority of Russia’s foreign liquidity. This denied Russia access to essential funding for military regenerative capabilities. Russia is unable to use foreign cash to support a collapsing ruble, and, most importantly, it will be unable to maintain its foreign debt obligations, inevitably leading to Russian default.
This caused panic in the system. Without foreign reserves, Russia was forced to implement capital controls to prevent the ruble from collapsing. Market exchanges were shuttered, and the initial stages of capital flight began. Banks will be unable to meet withdrawals, interest rates are bound to rise, and Russia’s quality of life will be on a Soyuz ride back to 1980.
Sanctions, while portrayed as non-escalatory, may culminate in a perceived loss that pushes Russia towards escalation. Without access to foreign reserves, Russia’s economy is on track for a catastrophic recession. Russian citizens are seeing their net worth depreciate daily and are unable to access their life savings. The benefits of perestroika and glasnost are in their final stages of decay and global isolation on the level of North Korea is plausible. Moreover, the Russian military has so far failed to meet Vladimir Putin’s political objectives in Ukraine. The military is unwisely expending valuable munitions such as hypersonics and losing highly skilled leadership to targeted killings. Limited military gains in Ukraine, coupled with an inability to afford the regeneration of combat power, could be perceived as an immense capability gap within Russia’s national security apparatus.
This perception, combined with a nuclear doctrine centered on bolstering conventional shortfalls, could lead Russia to assume more risk, believing it cannot reverse the costs of these losses. Indeed, according to prospect theory, humans tend to overweigh losses with comparable gains, leading to risk acceptant behavior. Similarly, if a state perceives the status quo as a loss, it may take risky action to prevent further decline.
Sanctions applied by the U.S. and E.U. are appropriate given the current situation in Ukraine. However, decision-makers must remain vigilant and monitor the behavior of the Russian government. Actions to further raise nuclear alert levels, strike Ukrainian lines of communication in Poland, or sudden disappearances of Russian cabinet-level officials would be particularly worrying developments and perhaps early symptoms of potential escalation. Moreover, a cyberattack against European or US infrastructure would signal an ominous move toward the brink. The decision to sanction Russia’s oil and gas—its most profitable export—should be surgical and fully examined before execution. Unlike in 1941, a better understanding of the ramifications that may result from inadvertent measures will help the U.S. predict unintentional provocation and reduce the likelihood of a broader global conflict.