Global powers like Russia and China that depend on trade actually increase chances of escalation through dependence.

https://www.foreignaffairs.com/china/when-trade-leads-war-china-russia

Almost as startling as the threats themselves are what they seem to suggest about the limits of economic interdependence as a force for peace. Both China and Russia rely to an extraordinary degree on trade for economic growth and to secure their positions on the world stage. China has managed to quintuple its GDP over the last two decades in large measure through the export of manufactured products; more than 50 percent of Russia’s government revenue comes from the export of oil and gas. According to an influential strand of thinking in international relations theory, these crucial economic ties should put a much higher price on military conflict for both countries. Yet at least from appearances, neither power seems restrained by the potential loss of such trade.

The picture is not as simple as it looks, however. For one thing, under certain circumstances, trade relationships may serve as an inducement rather than a deterrent to war. Moreover, the assertion of military power or even the threat of adversarial confrontation does not always correlate with a rupture in economic relations. As the contrasting cases of China and Russia have demonstrated over the past year, economic ties often play out in ways that defy expectations. For those who assume that commerce can help prevent great-power conflict, it is critical to examine the complex ways that economic forces have actually shaped strategic thinking in Beijing and Moscow.

AGGRESSIVE COMMERCE

To understand how trade might increase, not reduce, the chance of military conflict, it is necessary to draw on the insights of realist theory. In general, realism focuses on the struggle of great powers for relative military power and position in a world that lacks a central authority to protect them. But realists understand that economic power is the foundation for long-term military strength and that international commerce is vital for building an economic power base. For realists, trade can have two major effects. First, by providing access to both cheap raw materials and profitable markets, trade can bolster a state’s overall economic performance and technological sophistication, thus enhancing its ability to support long-term military power. This is the upside to having a relatively open trade policy, and it explains why Japan after the Meiji Restoration and China after the death of Mao Zedong left behind the failed autarchic policies of the past and sought to join the global economy.

But growing commerce also has a second effect. It increases a great power’s vulnerability to trade sanctions and embargoes after having become dependent on the import of resources and the export of goods for sale abroad. This vulnerability can drive leaders to build up navies to protect trade routes and even to go to war to ensure access to vital goods and markets.

Growing commerce makes states more dependent on outsiders.

As long as state leaders expect their trade relationships to remain strong into the future, they are likely to allow the state to become more dependent on outsiders for the resources and markets that drive state growth. This was the situation of Japan from 1880 to 1930 and of China from 1980 to the present day. Leaders in both states knew that without significant commercial ties with other great powers, including the United States, neither could become important members of the great power club.

Yet if expectations of future trade turn sour and leaders come to believe that the trade restrictions of other states will start to reduce their access to key resources and markets, then they will anticipate a decline in long-term economic power and therefore military power. They may come to believe that more assertive and aggressive policies are necessary to protect trade routes and ensure the supply of raw materials and access to markets. This was Japan’s predicament in the 1930s as it saw France, the United Kingdom, and the United States retreating into increasingly closed and discriminatory economic realms. As a result, Japanese leaders found themselves compelled to expand Japan’s control over its commercial ties with its neighbors. Yet they also came to see that such moves made them only look more aggressive, giving the United Kingdom and the United States new grounds for restricting Japanese imports of raw materials, including oil.

Today, China’s leaders understand that they face a similar dilemma—as have the leaders of almost every rising state in modern history. They know that their foreign policy needs to be moderate enough to sustain the basic trust that allows trade ties to continue. But they also need to project enough military strength to deter others from severing those ties. The realist view of how commerce affects foreign policy does much to explain why Chinese leaders have been so hostile over the past year to certain developments in East Asia—particularly regarding Taiwan. In a more limited way, this view can also help explain Russian President Vladimir Putin’s obsession with Ukraine.

NOW OR NEVER

By most accounts, Putin’s war in Ukraine was driven by his fears about Russian security—a concern that Ukraine was likely to join NATO in the near term—and his desire to go down in history as the man who helped rebuild the Russian empire. But the decision to launch the invasion was likely reinforced in two important ways by something else: Russian energy exports to Europe.

First, Putin certainly understood that Europe was much more dependent on Russia than Russia was on Europe. Before February, the European Union relied on Moscow for approximately 40 percent of the natural gas it needed for its industries and to heat its homes. The Russian economy was, of course, dependent on selling this gas. But given the nature of the commodity, Putin could expect that any significant reduction in the flow of natural gas would cause its price to rise, hurting the EU in two ways—through reduced supply and higher costs—while only marginally affecting the total revenue Russia would receive from its gas exports. As the economist Albert Hirschman pointed out in 1945, in reference to Germany’s lopsided relationship with eastern European countries during the 1930s, in a situation of asymmetrical interdependence, the less dependent state will likely feel confident it can browbeat its more dependent counterparts into accepting its hard-line policies simply because they need the trade and are too weak to resist.

The fact that the Europeans continued to buy Russian gas and oil at high levels after Russia annexed Crimea in 2014 suggested strongly to Putin that they would not put up a fuss if he invaded Ukraine in 2022. He clearly underestimated the ferocity of the European response. But Putin’s awareness of Europe’s economic dependence on Russia, combined with the common belief that Russia could handily beat Ukraine in a few weeks, helped give him the confidence that his bold attack would succeed.

Second, Putin had reason to fear that Russia’s economic leverage over Ukraine and Europe would decline in the future. In 2010, huge natural gas deposits were discovered south of the eastern Ukrainian city of Kharkiv and spreading into the Donetsk and Luhansk Provinces. The field was estimated to hold some two trillion cubic meters of gas, an amount equivalent to the total consumption of the 27-country EU over five years at current usage rates. The Ukrainian government quickly changed state regulations to encourage foreign investment, and in 2013, it signed an agreement with Shell Oil to develop the field, with ExxonMobil and Shell agreeing to work together on deep-water gas extraction off the southeast coast.

Russia feared its economic leverage would decline in the future.