An Analysis of Economic Warfare

In times of conflict, an adversary’s resources are a source of potential harm. Many geopolitical tactics are, thus, quite explicitly economic, as they seek either to deter an adversary’s worst intentions or reduce its capacity to inflict damage (Richardson 1960; Tullock 1974). Relevant policies include trade-limiting sanctions (Galtung 1967; Pape 1997) and direct attacks on an adversary’s military infrastructure or personnel. This paper explores a third example, namely efforts to undermine an adversary’s source of income. I focus on US efforts to reduce the resources of Taliban-loyal insurgents by suppressing the Afghan opium trade, with additional applications to conflicts involving oil-producing nations. The Taliban historically profited from the opium trade through a 10 percent tax on farmers, known locally as ushr, and by providing traffickers with protection services. This link between opium income and Taliban resources, coupled with concerns about a NarcoticsInsecurity Cycle, motivates the view that the United States should suppress the Afghan opium trade (Blanchard 2009). Caution is warranted, however, as work by Miron (1999, 2001), Miron and Zwiebel (1995), and Dell (2011) shows that