With the war in Ukraine approaching the end of its third year, the military conflict has become a war of attrition. Russia has understood the importance of shifting to a war economy to sustain this war of attrition, devoting a large share of its industrial capacity to the war effort. Hence, while analysis of the war must account for the military attrition taking place, it is equally or even more important to consider the economic dimension of this attrition.

Contemporary discussions on economic warfare and economic coercion, including those examining the war in Ukraine, focus primarily on diplomatic and legislative actions (e.g., the use of negative sanctions). These sanctions consist of a series of boycotts, embargos, blacklists, quotas, and asset freezes that are widely accepted as a low-risk, less-costly alternative to military force. From a historical point of view, however, economic coercion often takes a much broader form, as was the case in the major conventional wars of the twentieth century. Furthermore, strategic thinking about economic warfare during those conflicts reserved an important role for the military, including the use of naval power to impose blockades in World War I and the use of strategic bombing to accelerate the effects from blockades in World War II.

An exploration of economic warfare in historical high-intensity conventional conflicts highlights the importance of disorganizing an opponent’s economy using military means as part of the total war effort. By understanding this fact and the strategic perspective that undergirded it, we can complement the current prevailing Western views of economic coercion, which predominantly focus on using economic (nonmilitary) means such as sanctions to weaken an adversary.

Large-Scale Economic Warfare: Historical Insights

Although the use of economic coercion in some form is perhaps as old as human conflict itself, the notion of “the economic weapon” gained most of its traction beginning with World War I. The foundations for these developments are the Allied Powers’ efforts to obstruct their adversaries’ import and export of goods, mainly by means of blockades. During the interbellum period, a broad range of new sanctioning tools (blacklisting, import and export rationing, asset freezes, and preclusive purchasing) were further developed.

When World War II broke out, the Allies again devoted substantial resources to economically weaken the Axis Powers. These efforts were crafted by specific organizations devoted to planning and applying economic warfare—like the British Ministry of Economic Warfare, founded on September 3, 1939. The resources devoted to devising Great Britain’s economic warfare campaign are illustrated by looking at the composition of the ministry. At its height in October 1942, its staff comprised 1,358 personnel.

The Ministry of Economic Warfare applied two broad categories of action: indirect action through diplomatic and legislative means and direct action through military means. Whereas the forms of indirect action can mainly be considered as extensions of the traditional blockade measures (e.g., setting up blacklists or forcing ships to pass via contraband-control ports), economic pressure was also exerted in a direct way by means of strategic bombing. The British considered that strategic bombing could be a powerful complement to the traditional blockade, accelerating its effects. Ideally, a first part of the strategy should focus on preventing the adversary from getting its supplies, while the other part should hit specific parts of the opponent’s industry to aggravate the shortages created by the blockade.

The Ministry of Economic Warfare supported the strategic bombing campaign by means of its Industrial Intelligence Centre, which was responsible for creating industrial target reports and industrial damage reports. Throughout 1942, the ministry selected a broad range of targets, prioritized by economic importance (and the selection of industries that could create bottlenecks in the German war economy), as well as by feasibility (in terms of bomber range) and vulnerability. Although some successes were achieved (toward the end of the war repeated attacks on the oil industry, steel production, railways, and waterways inflicted substantial damage on the German economy), the strategic bombing campaign was overall not assessed to have achieved its desired results. This was mainly due to the relatively low accuracy of bombers at the time, resulting in expensive campaigns and high-risk missions.

Besides the objective of physically preventing the adversary from continuing the war effort, it’s also important to mention that a part of the early historical thinking around economic warfare started from an irregular warfare philosophy. More specifically, it was thought that economic coercion could be used to shape the collective behavior of human populations, creating chaos and unrest with the aim of encouraging them to revolt against their own governments.

Contemporary Direct Economic Warfare

The current conflict landscape includes two examples where actors have turned to the use of direct economic warfare: Houthi attacks (using drones and long-range missiles) against merchant vessels in the Strait of Hormuz and a variety of activities in the Russia-Ukraine War. The latter of these two examples serves as a particularly valuable case study to understand the role of economic warfare in modern military conflict.

Both Ukraine and Russia have made considerable efforts to exhaust each other economically. During the first phases of the conflict, Russia resorted to a rather traditional naval blockade in the Black Sea, landlocking the country by occupying a large number of important ports. By doing so, it was able to severely reduce Ukrainian exports of goods, given that 75 percent of Ukraine’s prewar foreign trade took place via the Black Sea. The West on the other hand mainly supported Ukraine in an indirect way by implementing a series of diplomatic and legislative decisions. This primarily consisted of the expansion of sanctions that had been in place against Russia since 2014—including travel bans, asset freezes, prohibition of imports of a large series of Russian goods, blocking the export of goods critical for Russia’s war industry, a price cap on Russian oil, and a recent ban on reexporting Russian liquified natural gas outside the European Union.

In addition, the war in Ukraine has also been characterized by direct military-enabled economic warfare, aimed at destroying each other’s economic capacity and industrial base. These actions have been supported by technological advances, including the accelerating evolution of drone and cyber capabilities. Besides the unprecedented use of small tactical drones, Russia has also employed hundreds of long-range Shahed strike drones against Ukrainian critical infrastructure (mainly energy and military-industrial infrastructure). These drones have several advantages, compared to the strategic bombing campaigns of earlier conflicts: they have a low cost (generally, they are substantially lower cost than the air defense missiles used to shoot them down), they can cover extended distances, and they are difficult to detect by radar as they travel at low altitude. The consequences for Ukraine are not to be underestimated: it is assessed that 90 percent of the nonnuclear power-generating capacity has been destroyed over the last year. Consequently, restoring Ukraine’s energy infrastructure before this winter has been one of the priorities of Western support to Ukraine.

Similarly, Ukraine has also made use of drones to counter or to conduct economic warfare. It has successfully disrupted Russia’s economic naval blockade by means of naval drones, forcing Russia to relocate its Black Sea Fleet. As of October 2023, Ukraine stepped up its efforts to target the Russian economy by adapting a similar strategy of direct action—for instance, by targeting dozens of oil refineries with long-range strategic drone strikes, covering distances up to 1,400 kilometers of the Russian border. These attacks have drawn a lot of attention, as Russia’s oil-refining capacity was assessed to be reduced by 17 percent in July 2024.

Takeaways for Future Economic Warfare

By examining the use of economic warfare in current conflicts like the Russia-Ukraine War against the contextual backdrop of historical cases, three conclusions emerge. First, economic intelligence is of growing importance. In an increasingly connected and globalized world, the effects of every attempt to dislocate an adversary’s economy by means of direct attacks need to be analyzed ahead of any action, assessing all possible secondary fallout effects and the impact on friendly nations’ economies—including that of the nation undertaking the action. Historical lessons highlight the importance of pulling in supply chain specialists or establishing a nuclei of trained soldier-economists (resulting in a better coordination and synchronization of economic warfare, nested in the operational campaign plan). Institutions as large as the Ministry of Economic Warfare are, however, not a necessity. The conflict in Ukraine has also demonstrated the potential of mobilizing broad public support by leveraging people with specialized backgrounds. These organized online communities are able to support the Ukrainian military via open-source intelligence and inflict economic pain by means of actions in cyberspace. The best example is the IT Army of Ukraine, consisting of thousands of volunteer tech specialists. The IT Army is already supporting the long-range strikes on oil refineries by conducting cyberattacks against Russian internet providers, disrupting the video feeds around areas where Ukrainian drones would attack.

Second, current evolutions in unmanned sea and aerial vehicles are revolutionizing some of the more classic approaches to economic warfare, such as blockades and targeted destruction of vital economic infrastructure. So, for example, while the Russian Navy deployed its massive Black Sea Fleet to impose a maritime blockade, Ukraine succeeded in disrupting this blockade and reopening its trade routes by making use of cheap unmanned surface vessels. Offensively, the repeated strategic strike campaigns against Russian key industries offer a good example how an adversary’s economy can be targeted with increased precision, in an inexpensive way, while avoiding human losses. Hence, whereas direct economic warfare previously required the deployment of conventional military capabilities (i.e., naval and air), similar objectives can now be achieved in an irregular way.

Finally, while drone attacks don’t yet have the destructive potential to destroy large-scale industries (due to drones’ limited payloads), we also need to reflect on secondary, nonphysical effects stemming from deep strikes such as the Ukrainian targeting of oil refineries. These examples highlight the importance of including direct economic warfare in Ukraine’s irregular warfare strategy. Russia is, for example, coerced to make difficult choices regarding the positioning of its air defense systems. Moreover, it also has to divert labor forces it could otherwise use for its war economy to repair damaged facilities. Given Ukraine’s ambition to further increase the quality and quantity of its long-range drones, Russia will likely be further forced to channel a part of its wartime efforts to deal with this problem. In addition, the Russian government’s ability to defend against these attacks will be further questioned, as more refineries (or even the strategic pipelines connecting the Ural Mountains and Siberia with the Baltics and the Black Sea) come into striking range. Indeed, as the strikes continue, certain companies have already taken matters into their own hands by protecting their infrastructure with metal nets and by setting up their own mobile air defense groups armed with machine guns. Moreover, growing digital connectivity creates more opportunities to exploit these actions in the information environment. Although it seems unlikely that targeting key Russian economic infrastructure would provoke mass mobilization or internal protests—since history has shown that such objectives are rarely achieved—the potential for a new form of economic unrest, manifested in decreased consumer confidence, could be an outcome. This drop in consumer confidence, which reflects citizens’ expectations about the economy and typically drives consumer spending, could negatively impact a country’s GDP growth.

As both Russia and Ukraine fail to achieve decisive breakthroughs, both sides are engaging more and more in directing a part of their military means toward destroying economic production, broadening the war of attrition beyond the strictly military dimension of the conflict. From a Western perspective, there are concerns that certain of the Ukrainian actions could have negative spillover effects across the interconnected world economy. However, economic coercion played a prominent role in the major conflicts of the twentieth century, and the ongoing war in Ukraine suggests that it is likely to do so in present and future conflicts, as well. A thorough understanding of economic warfare, therefore, is vital—most notably the fact that it is a broad spectrum, not only limited to indirect (diplomatic and legislative) measures such as sanctions. As history has shown, a successful economic war campaign also extends beyond blocking an adversary’s access to critical goods at their origin or by hampering the import process and can include targeting critical components at the adversary’s destination by means of direct action. Similar actions, including those targeting Western nations, are increasingly evident well beyond the Russia-Ukraine War—the Houthi long-range strikes on cargo ships in the Strait of Hormuz highlight these emerging threats. Collectively, these trends reinforce the urgent need to strengthen measures that shield our economic resilience from adversarial acts of economic coercion.

Senior Captain Dr. Pieter Balcaen is a Belgian military officer and conducts research in the field of defense economics.

The views expressed are those of the author and do not reflect the official position of the United States Military Academy, Department of the Army, or Department of Defense, or that of any organization the author is affiliated with, including the Belgian Armed Forces.

Image credit: kyiv.dsns.gov.ua