War in Ukraine: “The effects of economic sanctions against Russia may turn out to be significant and very different from what we imagine a priori”

The effects of economic sanctions against Russia

The rivalry between England and France, from Louis XIV to Napoleon, was also commercial, and had long-term economic consequences, recalls Pierre-Cyrille Hautcœur, director of studies at the EHESS, in his column.

Chronic. The economic sanctions put in place against the Russian economy have been the subject of very little preliminary reflection. Depending on the activities affected, and depending on their duration – today unpredictable but potentially long – their effects can turn out to be significant and very different from what we imagine a priori. A historical example helps to understand this.

In the 17th and 18th centuries, mercantilism was less an economic policy than a commercial tool in the service of rivalries between European nations. Beyond the very frequent periods of war, when blockades of enemy ports and the boarding of merchant ships by war fleets and corsairs were a common practice, protectionism (the massive taxation of imports) or the monopoly colonial (the trade in foodstuffs reserved for merchants from the metropolis) aim to weaken strategic adversaries.

The long Franco-English rivalry which lasted at least from the reign of Louis XIV (from 1643 to 1715) to the battle of Waterloo (1815), which has been described as the “second hundred years war”, saw these behaviors return from recurring way. The development of the Royal Navy, which represents a considerable expense for the English government, is at the service of both commercial and military expansion, which largely involves the “armed robbery” appropriation of the trade and colonies of other powers; as well as Canada, lost by France at the end of the Seven Years’ War (1756-1763).

As Guillaume Daudin, a professor at Paris-Dauphine University, recalled during a conference at the Paris School of Economics on March 23, England’s primary objective was to permanently weaken the trade of its main strategic adversary in Europe. However, if during the armed conflicts, naval superiority reduced, sometimes significantly, French maritime trade, these resumed vigorously as soon as peace returned, so that, at least until the Revolution, French foreign trade grew just as faster than English.

Redirection of exchanges

The British strategy is therefore not so much to temporarily reduce this trade as to get French traders to redirect their activity towards other partners and other products. France is thus excluded from the most profitable products of international trade and must carry out costly reallocations of resources, but it is not certain that this is a long-term disadvantage. Because French trade is then oriented more towards the continent (Germany, the Netherlands, Italy, Switzerland) and towards the high value-added transformation of national raw materials into luxury products.