Trade for Peace: Can Trade be an Effective Tool to Support Peace? Lessons from History



Alan Wm. Wolff | Peterson Institute for International Economics

The notion that international trade can foster peace lost currency as the two world wars of the last century faded from memory, and whatever remained of the theory’s credibility was largely extinguished when, in 2022, for the first time one WTO Member invaded another on the European continent. Apparently debunked was the policy of Wandel durch Handel (WdH, German for “change through trade”)? Also known as Wandel durch Annäherung, it refers to a central political and economic element of German foreign policy that the European Union had also largely adopted, of increasing trade with authoritarian regimes in an effort to induce political change in the direction of creating a safer global environment.

Now, the issue is in sharper relief once again, as the Russia-Ukraine war has blocked shipping through the Black Sea, cutting off wheat, sunflower oil and fertilizer shipments, driving up food costs and curtailing physical supplies of these commodities. The intimate relationship between trade and peace is being demonstrated once again with the importance of moving food from areas of surplus to world markets and to those in need. During the 2008 financial crisis, spikes in food prices led to political unrest and violence in northern Africa among other places. Land transportation is at risk – trains and trucks may be interdicted. Some of the warehouses of the World Food Programme (WFP) are empty, with the result that those who were hungry before may be left starving. Even were war to end sooner rather than later, wheat fields are mined, crops are not planted in the war zone, and the logistics of moving grain from other safe sources are not completely flexible. Transportation for Canada’s export crops is aimed westward across the Pacific and not eastward toward Europe and Africa.

There is nothing more basic to the human condition than food. Constraints on food supplies and unaffordable prices drive political unrest and can sow the seeds of war.

Trade can produce greater harmony or greater friction. Where there is big-power geopolitical rivalry, the rivalry itself is likely to dominate the challenge of maintaining peace. This is true with respect to Russia and the West, and it can become the case between China and the West. Trading relations will be uneasy, used to coerce, used to limit goods in the name of national security, and used to build a closer alignment of interests.

There is, however, also an area where there is more conviction and less doubt about whether trade can serve a predominantly positive outcome for peace-related objectives. This is to be found with respect to fragile and conflict-affected countries. For these countries, trade can serve as an enabler for peace. To assure that this is the case, the trade and peace communities must bring the trade-peace connection to the attention of both trade negotiators and peace negotiators. This collaboration has historically been difficult to achieve. 




To read the summary, click here.

To read the full lecture as it was presented at The Graduate Institute and the University of St. Gallen Geneva, Switzerland, click here.