Last month, Ellie Geranmayeh and Manuel Lafont Rapnouil wrote a report for the European Council on Foreign Relations, arguing that Europe needed to hit back hard against U.S. secondary sanctions targeting Iran. They recommended that Europe consider measures such as creating new financial channels outside U.S. control, investigating European companies that comply too readily with U.S. threats and targeting U.S. companies in retaliation for sweeping U.S. measures against European firms.
As the international nuclear deal with Iran known as the Joint Comprehensive Plan of Action (JCPOA) unravels, Europeans feel the bite of U.S. secondary sanctions and economic coercion, and many have come to believe that Europe needs to build up its own coercive tools to pursue its strategic goals and deter U.S. overreach. China and Russia too are starting to think more systematically about how they can use economic coercion and prevent others from coercing them. As allies, rivals and adversaries strengthen and employ their capacity for economic coercion, the U.S. is likely to retaliate in turn, generating new power dynamics.
National security and economic policy used to be separate spheres. They are now merging, turning the global networked economy into a space of strategic actions, counteractions, threats, targeting, countertargeting and decoupling.
We start to describe and explain this emerging world in our new article, “Weaponized Interdependence: How Global Economic Networks Shape State Coercion,” which has just come out in International Security. Mapping the strategic landscape of the new world and preventing destabilizing mistakes requires the academic and policy community to think about secondary sanctions and other forms of economic coercion as part of an emerging system, rather than discrete actions. “Weaponized Interdependence” explains how the broad structural features of the global economy enable some states while constraining others, providing a theory of power in the new world order.
As we show, the politics of sanctions and other forms of economic coercion have been transformed by globalization. It used to be that sanctions rested on a country’s ability to prevent outsiders from access to its internal market. Now, however, proper participation in the world economy requires access to global networks such as the dollar clearing system and the SWIFT financial network. We live in an interdependent world, but one where the dependencies are asymmetric. Some countries—most prominently the U.S.—are able to cut businesses or even entire countries out of these global networks, with profound economic consequences.
Henry Farrell and Abraham Newman, “Introducing a New Paper on Weaponized Interdependence,” Lawfare, July 31, 2019.