A Wolfram in Sheep's Clothing: U.S. Economic Warfare in Spain, 1940-1944
Leonard Caruana, Hugh Rockoff
NBER Historical Working Paper No. 132
One of the most sustained uses of economic warfare by the United States occurred in Spain during WWII. We provide an overview of this episode based on the secondary literature and new research in the Spanish archives. We focus on three key battles: (1) an oil embargo against Spain in the summer of 1940, (2) pre-emptive buying of wolfram (tungsten ore) during the middle years of the war, and (3) a second oil embargo in the first months of 1944. The first oil embargo, although launched when Germany was going from victory to victory, was successful in helping keep Spain neutral because it forced the Franco regime to rethink the costs of joining the war. Pre-emptive buying of wolfram was also successful. It forced Germany to pay more for and to consume less tungsten, a material crucial for hardening steel. Ironically, the second oil embargo, undertaken when the Germans were retreating on all fronts, was less successful. The major goal, halting shipments of wolfram to Germany, was not fully realized. Several special circumstances, in particular the naval blockade and the tendency of sanctions and incentives to push the Franco regime in the direction consistent with its long-run survival, help explain the successes.
Published: Caruana, Leonard and Hugh Rockoff. "A Wolfram In Sheep's Clothing: Economic Warfare In Spain, 1940-1944," Journal of Economic History, 2003, v63(1,Mar), 65-99.