The title “Bookshelf: Age of Economic Warfare Challenges US Power” encapsulates a significant shift in global power dynamics influenced by economic strategies rather than military interventions. As articulated in Edward Fishman’s insightful work, "Chokepoints: American Power in the Age of Economic Warfare," economic warfare has supplanted conventional geopolitical strategies in modern international relations, shaping how nations engage and compete.
The Transition from Hyperglobalisation to Economic Warfare
The late 20th century was characterized by hyperglobalisation, where countries quickly integrated into an increasingly interconnected global economy. This era saw a proliferation in international trade and finance, enabling emerging economies, particularly China and Russia, to intertwine with Western markets. However, beginning around 2006, we entered what Fishman identifies as the age of economic warfare, a shift rooted in competition rather than cooperation.
Economic warfare employs economic tools—sanctions, tariffs, export controls—to exert power over other nations without direct military conflict. This transition stems from three critical factors: the decline of military interventionism, the rise of great power competition, and a deepening sense of economic insecurity.
The Mechanics of Economic Warfare
Fishman defines "chokepoints" as strategic economic leverage points. Historically, access points like the Bosphorus canal in ancient Greece facilitated or hindered trade; similarly, today’s chokepoints can manifest in financial systems, trade routes, and technology. For instance, the predominance of the U.S. dollar in global markets provides the U.S. with significant leverage over other nations. Economic warfare becomes especially potent through the strategically controlled use of financial instruments and technology.
Under Barack Obama, the U.S. successfully leveraged these tools against nations like Iran, compelling them to negotiate on nuclear treaties. Conversely, Donald Trump’s withdrawal from the Iran nuclear deal marked a shift back towards unilateral action, undermining diplomatic gains made through economic pressure.
Sanction Strategies in Contemporary Conflicts
Russia’s annexation of Crimea in 2014 and subsequent invasion of Ukraine demonstrated the complexities of imposing sanctions. Europe’s heavy reliance on Russian energy limited the ambition of Western sanctions, revealing the vulnerability of using economic tools against a nation that plays a crucial role in global energy supplies. The response was a more calculated approach to sanctions, although the effectiveness of these measures diminished as alternative markets—such as China, India, and Turkey—continued to bolster the Russian economy.
Moreover, U.S. efforts to curb China’s technological advancements have led to stringent export controls, particularly targeting sectors crucial for national security. As competition heightens, restricting access to technology like 5G networks becomes an essential strategy in maintaining U.S. dominance.
Factors Driving Economic Warfare
Fishman identifies the following primary motivators for the rise of economic warfare:
Declining Military Intervention: The wars in Afghanistan and Iraq eroded public and political support for military engagement, prompting a pivot to economic means as a less costly and more politically palatable option.
Resurgent Great Power Competition: The proclaimed intention of fostering democracy and stability in nations like China and Russia has shifted to a recognition of these nations as systemic competitors. Economic tools thus become vital in asserting U.S. power and influence.
- Weaponising Economic Instruments: The strategic use of the dollar, intellectual property in technology, and the dominance of the U.S. in industries such as semiconductors allows for the imposition of significant economic pressure on rivals.
The Challenges and Limitations of Economic Warfare
Despite its increased usage, Fishman warns that economic warfare is not without its challenges. The effectiveness of chokepoints can deteriorate over time. China, for example, is actively working to diminish its reliance on the dollar by promoting the yuan in international trade. This strategy, while currently limited by the yuan’s lack of global convertibility, poses a long-term threat to U.S. economic leverage.
Furthermore, economic warfare strategies have a tendency to provoke retaliation. For instance, following U.S. tariffs on various goods, China has restricted the export of critical minerals vital for high-tech manufacturing, demonstrating a reciprocal approach in this new era of economic confrontation.
Navigating the Impossible Trinity
In navigating what Fishman terms the “impossible trinity,” governments are confronted with a difficult decision-making scenario: they can prioritize only two of three factors—economic interdependence, economic security, and geopolitical competition—at any given time. During the era of hyperglobalisation, the U.S. enjoyed both interdependence and economic security, but the return of great power rivalry has complicated matters significantly.
The COVID-19 pandemic further underscored vulnerabilities tied to global supply chains. Over-reliance on China for essential medical and pharmaceutical products highlighted the potential risks inherent in economic interdependence. However, the solution is not as straightforward as simply repatriating manufacturing back to the U.S. Fishman suggests focusing on "friendshoring," which emphasizes strengthening supply chains with allied nations, to bolster economic security while minimizing the risks associated with geopolitical tensions.
Projections for the Future of Economic Warfare
Looking ahead, Fishman’s analysis suggests little likelihood of returning to the hyperglobalisation of the past. The growing geopolitical rivalry between the U.S. and China could result in a bifurcated world economy, segmented into spheres of influence dominated by these superpowers. The unsettling prospect of global autarky looms as businesses reconsider their global investment strategies, shifting increasingly toward domestic markets.
Conclusion
The age of economic warfare denotes a significant recalibration in international relationships, where financial and technological instruments become the primary tools of statecraft. As detailed in Fishman’s work, the complexities of implementing such strategies reveal both opportunities and challenges for nations navigating this uncharted terrain. Moving forward, understanding and adapting to these new dynamics will be crucial for the U.S. and its allies as they strive to maintain their global influence in an increasingly competitive environment.
