Economic Effects of a Strike on

Syria
Will We Go to War?
War is risky business but a business nonetheless, with economic implications that are far too
potent to ignore.

Ever since images surfaced of dead and dying victims of a sarin nerve gas attack in the Ghouta
district of Syrias capital city of Damascus on August 21 st, the leaders of several Western nations,
including the U.S., the U.K., and France, have been sounding a rallying cry for the international
community to mount a punishing strike against the Syrian government of Bashar al-Assad, whom
they believe is responsible.

It will definitely have a negative impact on the world economy, warned Chinas Vice Finance
Minister Zhu Guangyao, citing International Monetary Fund projections that the conflict could add
another $10 to the price of oil, which would in turn erode some 0.25% from global economic
growth.
Chinas and Russias concerns were echoed by India, Brazil, and South Africa, who all share a
kinship as the BRICS group of developing nations.

The destructive implications of war on an economy are easily understood. Depleted reserves of
cash, food, and fuel, plus the loss of a large percentage of the workforce through death and
disability, can leave nations devastated if not bankrupt. As a result, many a revolution have been
triggered by the turmoil of war, such as Russias in 1917 toward the end of World War I.

Yet economists and politicians will just as adamantly stress that war can sometimes bail certain
countries out of terrible economic depressions, as the Second World War did for the U.S., the U.K.,
and a whole host of their allies.

20th century economist John Maynard Keynes wrote to U.S. President F. D. Roosevelt in 1933 that
war has always caused intense industrial activity, as cited by New Deal Documents. In the past,
Keynes references, orthodox finance has regarded a war as the only legitimate excuse for creating
employment by governmental expenditure.
Although the positive economic implications of war have come to be known as Military
Keynesianism, Dr. Keynes was not advocating war in his letter to the President. He was, instead,
advocating borrowing to pay for public works that the government take out loans and spend its
way out of the depression. He merely referenced war as the only other known means of spurring
economic growth. War stimulates an economy as the government ramps up its war machine and
goes on a shopping spree for food, clothing, arms, and transportation. It builds factories and drives
production. It recruits soldiers and other personnel, putting people to work. It even lays the
groundwork for innovation in science and technology, giving us such inventions are radar, wireless
phones, jet engines, computers, and even the Internet.

It is not like me to be so cynical. But if the five-year-old economic crisis that has paralysed the
globe is comparable to the Great Depression of the 1930s, then perhaps the only thing that will get
us out now is what got us then a world war.

Chinas Deputy Finance Minister Zhu Guangyao has warned that any military
action against Syria would harm the global economy through causing a hike
in oil prices.

Military action would have a negative impact on the global economy, especially on
the oil price - it will cause a hike in the oil price, the Chinese minister told reporters
on the sidelines of a Group of 20 Summit in the Russian city of St. Petersburg on
Thursday.