October 2018

Economic War

Rashmin Chandulal Sanghvi, Chartered Accountant

1. Preface

This is a simple and short article explaining ‘what is an economic war’. The term: “Trade War” has become current term. Earlier popular term was “Currency War”. Economic War is a broader term covering all these smaller wars.


Some common queries may be: “Why this War?” “What may be the impact of a global economic war on India/ on global economy?” “Can we protect India from the ill effects of a war amongst other nations?” “How is it that President Trump imposed sanctions on Turkey (In August 2018) and Indian Rupee went down?”


This article presents:


(i)    Historical reasons leading to current Trade War; and

(ii) A few probabilities as results of war. These are considered guesses. I don’t know actually how future will unfold.


Global events like Economic Wars are like “elephants”. Writers and observers are like “the six blind men”. Everyone looks at one or two aspects. Warring parties involved also create deliberate confusions. I am presenting my views. There are several other views simultaneously prevalent. Some philosophical thoughts on Wars are given in notes at the end of the article.


1.2  Definition: An Economic War is fought mainly for economic benefits using economic instruments as weapons. Its economic impact can be more devastating than a weapons war. And yet, there may be no loss of life – at least directly due to war.


1.3  When the war is between a giant like USA and a smaller country like Venezuela; the smaller nation may get economically destroyed. When the war is between two giants like USA & China, both may be damaged. If a full scale Economic World War eru


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