Sat, Mar 29, 2025 page7

• How much weaponization can the global economy take?

  • By Carla Norrlof
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  In January this year, US President Donald Trump signed an executive order to end the “weaponization” of federal law enforcement, alleging that the previous administration had exploited the interlinkages between law enforcement and intelligence to target political opponents. While critics dismissed the order as theatrics, loyalists applauded what they saw as a bold stand against partisan excess. Yet beneath this spectacle de jure looms a much larger story, involving energy pipelines, shipping routes, global trade and financial flows.

  Students of international affairs have long examined how asymmetrical economic relationships could be used to gain strategic advantages. A seminal twentieth-century contribution was Albert O. Hirschman’s 1945 National Power and the Structure of Foreign Trade, which demonstrated that dominant powers in unbalanced trade relationships could leverage their position to extract political concessions from weaker partners. Similarly, in the 1980s, David A. Baldwin’s Economic Statecraft catalogued many different forms of economic leverage, arguing that sanctions, aid and trade incentives could serve the same coercive functions as military power.

  In the following decade, an influential article by Edward Luttwak argued that, after the Cold War, economic competition had supplanted military conflict as the prime arena for great-power rivalry. For a long time, many had assumed that economic interdependence naturally lends itself to peace. By the early 2000s, this idea had begun to face fresh scrutiny, with critics arguing that such “liberal illusions” masked the friction arising from economic power imbalances.

  Through it all, policy reflected theory. During the Cold War, as Alan P. Dobson observed, the US substituted “economic warfare” for direct military engagement by leveraging trade embargoes, technology restrictions and monetary policies. As Susan Strange’s seminal theory of structural power showed, a state’s ability to shape the underlying systems of international finance, production or technology allows it to set the terms of engagement for everyone else, reducing the need for direct coercion.

  In late 2013, just before Russia sent “little green men” to seize Crimea and swaths of eastern Ukraine, Thomas Wright of the Brookings Institution saw that mutually beneficial economic networks could become vectors of strategic vulnerability. Three years later, Mark Leonard of the European Council on Foreign Relations coined the phrase “weaponizing interdependence” in an essay warning that the global networks once hailed for encouraging cooperation — cross-border investments, shipping lanes, digital infrastructure — could easily be hijacked.

  Since then, academics of the so-called Helsinki School, such as Mika Aaltola, Soren Scholvin and Mikael Wigell, have been calling attention to “geoeconomic corridors” — oil and gas pipelines, shipping routes, undersea cables — that could become choke points, giving strategic leverage to those capable of controlling, using or destroying them.

  Meanwhile, in his 2013 book Treasury’s War, Juan Zarate, a former US deputy national security adviser, explained how financial networks could be harnessed to disrupt terrorist and other illicit activities. Similarly, Robert D. Blackwill and Jennifer M. Harris illustrated how reliance on the SWIFT inter-bank messaging network offered effective new avenues for sanctions, and Cameron Rotblat extended this logic of “weaponizing the plumbing” to other payment systems, clearinghouses, and central-bank networks.

  In 2019, Henry Farrell and Abraham Newman wrote about “weaponized interdependence,” arguing that states commanding pivotal nodes in global networks of informational and financial exchange can coerce or monitor rivals. At the same time, Anthea Roberts, Henrique Choer Moraes and Victor Ferguson traced the shift “toward a new geoeconomic order,” a world in which “securitization of economic policy and economization of strategic policy” had become the norm.

  The context for all this research is an era in which globalization has grown more troubled. The US has refined the art of blacklisting alleged wrongdoers from dollar transactions, locking entities out of the global financial and payments system without firing a shot. China, in turn, has spun its own web of dependency through its Belt and Road Initiative of debt-financed ports, railways, and industrial zones spanning Eurasia and Africa.

  China has also increasingly used its dominance over rare-earth minerals (critical to much high-tech manufacturing) and refining to threaten anyone who defies it. For example, with control of 70 percent of global lithium refining, China has created a major supply-chain choke point in the electric-vehicle industry, and it has already begun to weaponize its position. The fraught China-US relationship is just one example of robust interdependency giving rise to mutual hostility. In Europe, the race is on to reduce dependency not only on Russian energy, but also on US payment rails and Chinese telecoms.

  The problem is likely to persist, because weaponizing economic nodes is more palatable to policymakers than traditional warfare. However, such tactics are not without costs. Over time, their use breeds suspicion and invites retaliation. States concerned about their exposure would assume more defensive postures, tightening trade policies and restricting technological collaboration.

  In such a fractured strategic environment, each economic node — be it a shipping corridor, a payments system, or a data platform — becomes a new potential front line. Over time, weaponized interdependencies would splinter global trade into rival blocs, undermining the ties that drove unprecedented prosperity gains for billions of people in recent decades. When every pipeline or semiconductor supply chain is viewed as a Trojan horse, cooperation on existential challenges such as climate change or pandemics becomes even more difficult.

  A delicate balance between deploying positional advantages and using them as strategic tools must be struck. By recognizing how weaponized interdependence has evolved, policymakers could avoid the kinds of ruinous mercantilist pitfalls that have run previous eras of globalization into the ground. The only question is whether they are actually inclined to do so.

  Carla Norrlof, professor of political science at the University of Toronto, is a non-resident senior fellow at the Atlantic Council.

  Copyright: Project Syndicate
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