When the First World War broke out in Europe 100 years ago, governments of the warring nations waged their grotesque battles using the power of conscription. In most countries, men aged 18 or older were forced to join the military, where they became not much better than cannon-fodder, their bodies shot into enemy lines with the certain knowledge many and often most would be killed.
Mandatory individual induction into the armed forces, taken for granted as a necessary evil a century ago in the West, is largely unknown today. The subject of divisive debate when it was introduced in Canada toward the end of the First World War, conscription is now considered a breach of human and individual rights by most nations, including Canada and the United States.
But a new form of conscription has taken over. Today it is apparently acceptable to induct businesses into involuntary war efforts. In the latest campaign, various industries are being forced to march in an economic war against Russia — putting revenue and jobs at risk. Sanctions are the weapon.
Writing in the Financial Post this week, consultant David Chmiel warns that today’s integrated global economy means sanctions pose greater economic and business risks than in the past. The power to block capital movements and other activities “gives sanctions a potency that did not exist when capital flowed less freely across international borders.” And imposing sanctions against a major nation such as Russia, as opposed to minor rogues such as Libya, Burma and Iran, marks a dangerous precedential turn in the international game of economic warfare. The risks are much higher and unpredictable.
The legality of sanctions has never been tested in court. The Special Economic Measures Act (SEMA) gives Ottawa vast arbitrary power to use trade and investment as economic weapons in case of a “grave breach of international peace and security that has or could result in a serious international crisis.” Passed in 1992, after the end of the Cold War and the first Gulf War, SEMA is a kind of permanent standing war measures act.
It’s not hard to imagine a point where specific Canadian industries consider mounting a legal challenge over their loss of business. As Ottawa and Moscow single out specific companies and industries for attack and counter-attack, it’s reasonable to ask: Who should pay the costs?
Why should any one industry or even one company be forced to bear the burden of Canada’s political war with Russia over Ukraine? By imposing travel and other restrictions on Russian oligarchs, Ottawa prompted a retaliatory Russian strike on Canadian agricultural imports. Which flank of the Russian economy will Canada hit next? Where will it end?
Canadian pork producers, investment firms and trade companies have been conscripted into political and strategic conflict. Speculation is rising within industry as to what might be next. Derek Lothian, vice-president of Canadian Manufacturers and Exporters, said last week that manufacturing companies are worried. “It’s a perfect storm for agriculture equipment manufacturers. It makes a lot of folks nervous, impacting jobs and investment,” he said
Obviously there’s a vast moral difference between forcing young men to go to their deaths and issuing bans on certain kinds of business and trade activities. On the other hand, the principle is the same: forced participation in an international conflict.
What is the legal and moral basis for conscripting business into the political and territorial conflicts being waged around the world? At least conscripted soldiers, if they survived, received compensation for their efforts. Businesses are left to absorb losses in the national interest, no matter how remote their enterprises may be from the looming military conflict.
And it is, indeed, war. “Sanctions: The Economic Weapon of the New World Order” is the title of a paper written in 1993 by Michel Rossignol, an analyst with the Library of Parliament. At the end of the First World War, the international community came to believe the imposition of economic sanctions on militarily and politically delinquent states had the potential to end military conflict. U.S. President Woodrow Wilson was a leading advocate: “A nation that is boycotted is a nation that is in sight of surrender. Apply this economic, peaceful, silent, deadly remedy and there will be no need for force,” he said.
The United Nations had sanction powers but members could never reach agreement to impose them, in part because of strategic considerations surrounding the Cold War. With the collapse of communism, individual nations developed their own sanctions legislation, including Canada — although the objective seemed to be intimidating small nations rather than confronting large belligerent imperial powers such as Russia.
Success has not followed the theory. In recent years, economic sanctions have been minimally applied against a variety of lesser troublemakers: Iran, Lybia, Burma, Zimbabwe, Syria. Evidence that they are effective is far from conclusive. “Sanctions have not proved to be the surefire alternative to military action hoped for by President Woodrow Wilson and others after the First World War,” said Mr. Rossignol, updating his paper in 1996. “In most cases, it has taken sanctions months, if not years, to produce the desired results; in other cases, sanctions have failed to prevent the use of military force.”
No new evidence of sanctions successes has emerged since 1996, and certainly no nations have tested the use of these economic weapons to the degree they are being deployed in the West’s new war with Russia.
Exactly where all this is heading, and who will pick up the cost, is unknown and not discussed. Signs of escalation abound. First Canada prohibits certain interactions with Russians by Canadians; then Russia bans the import of Canadian agriculture products. Canada and its Western allies could follow with fresh volleys in weeks to come, with Ottawa using its arbitrary business conscription powers to resolve what are essentially military and political conflicts.