The West’s economic threats failed to deter Vladimir Putin from invading Ukraine. Can policymakers fix past mistakes to build painful enough economic threats to deter Chairman Xi from invading Taiwan?
First, we must determine where we went wrong with Russia. The simple answer: the costs promised by the West weren’t impressive enough. In late 2021, President Biden and European leaders called Putin and warned him of “severe economic pain” they would inflict on Russia if Ukraine was invaded. But just weeks before the invasion, Putin saw the White House and some in Congress had blocked sanctions, not just against the high-profile Nord Stream 2 pipeline, but also on a powerful package of mandatory banking and energy sanctions that would have been triggered by a Russian invasion. No wonder Putin wasn’t afraid.
If we want to stop the CCP from invading Taiwan, we need to address three key challenges to strengthening our economic deterrence. Challenge One: How can we telegraph the threat of extreme economic costs of war to Beijing in a credible manner that would force Chinese leadership to reconsider an invasion? China’s leaders have to believe the pain we would inflict is too overwhelming to make an invasion worthwhile.