How do sanctions work in a globalized world? Do private companies always comply with state-imposed sanctions even if it’s against their interests? Will American economic coercion against Russia, China, and Iran backfire? Listen to to this episode of the International Security Off the Page podcast to find out.
IS Executive Editor Morgan Kaplan speaks to Abraham (Abe) Newman and Elizabeth Rosenberg about how how states increasingly “weaponize” economic interdependence among nations by leveraging global networks of informational and financial exchange for strategic advantage. This episode is based on the article “Weaponized Interdependence: How Global Economic Networks Shape State Coercion,” published in the Summer 2019 issue of International Security.
A transcript of the podcast can be found below.
Morgan Kaplan: Hello and welcome to IS Off the Page. I’m your host, Morgan Kaplan, and I’m the Executive Editor of International Security, a quarterly journal edited and sponsored by the Belfer Center at the Harvard Kennedy School and edited and published by MIT Press.
Morgan Kaplan: Off the Page seeks to bring together policymakers, academics, and practitioners into conversation about security issues of global importance. In each episode, we will discuss a recent piece of research published in International Security, and more importantly go beyond each article’s findings to engage in the policy implications of rigorous research. In this sense we’ll be going off the page and directly into the heart of contemporary policy discussions. To help us do so, we’ll have at least two guests on each show: the author and someone from the broader policy community.
Morgan Kaplan: On today’s inaugural episode, we’ll be talking about Henry Farrell and Abraham Newman’s summer 2019 International Security article titled “Weaponized Interdependence: How Global Economic Networks Shape State Coercion.” In their article, Farrell and Newman explain how states are increasingly able to weaponize their centralized positions within global informational and financial networks for strategic purposes.
Morgan Kaplan: For today’s discussion, we have one of the authors, Abe Newman, with us as well as Elizabeth Rosenberg, who’s a Senior Fellow and Director of Energy, Economics, and Security at the Center for a New American Security. Abraham Newman is a professor in the Edmund A. Walsh School of Foreign Service and Government Department at Georgetown University. He is also the Director of the Montara Center for International Studies and Chair of the European Union Studies Association.
Morgan Kaplan: Thank you for joining us, Abe Newman.
Abe Newman: Thanks for having me, Morgan.
Morgan Kaplan: Of course! So, today we are talking about your most recent article, published in International Security with Henry Ferrell–Weaponized Interdependence: How Global Economic Networks Shape State Coercion–Tell us a little bit about this interesting project.
Abe Newman: There’s a large literature. A lot of people have thought about “what’s the relationship between conflict and economic interaction?” It goes back to Hamilton, so that’s not a new kind of…
Morgan Kaplan: Wait, the musical?
Abe Newman: *laughs* Exactly. Actually, Henry and I are putting together . . . nah, I’m just kidding.
Morgan Kaplan: Nah. *laughter*
Abe Newman: But what we’re focusing on with weaponized interdependence is how the private networks of globalization, how those private networks, are being leveraged by states for coercive ends. If you think, it used to be what states did is they would create embargoes. For example, they would say “you know, nobody gets to sell to this country or we’re not going to let people from that country sell to our market.” And so they would use their economic power to limit access to a country or to themselves. But what now is happening is that powerful states are limiting access to the global network and that’s really what weaponized interdependence is: it’s about control over access to these global networks.
Morgan Kaplan: Right, so when you’re talking about central nodes, help us think about it. What are these key nodes in the networks? What does this network look like?
Abe Newman: Sure, I mean, first of all there’s multiple networks, it’s not just kind of one, you know, Godzilla kind of network. But in each kind of component of globalization…If it’s the internet–so, if you’re going to hold a website, it’s very likely that your website runs through Amazon Web Services–and so even though the internet seems so decentralized and fragmented, all of the data is being routed through just a few core companies that hold the, kind of the key to providing that service. The same thing happens in finance, you know, you think “oh, global finance, it’s the most decentralized, non-state-oriented, fragmented kind of set of networks.” But, in fact, most global economic transactions are routed through US dollar clearing and so those are a few US banks that are responsible for that and they hold the, kind of the key to those nodes. Similarly, there’s this thing called the SWIFT System, it’s basically a way for banks to make secure financial transactions. Well it’s one organization that sits in Belgium and regardless of what bank you are, you know, you’re basically sending all of your very sensitive data through SWIFT.
Morgan Kaplan: Is this conventional wisdom that globalization leads to these kinds of asymmetrical networks–where some countries or some places have all the ties with everything leading through it and other places don’t–or is this actually contrary to the conventional wisdom?
Abe Newman: Yeah, so I think the standard story is first, that globalization has fragmented power and so if you think about Thomas Friedman or Anne-Marie Slaughter, or even Keohane, there’s a whole, you know, lineage of people who’ve argued that more actors have power and the second point is that coercion becomes less beneficial; and so, the idea in all those studies has been that economic interdependence creates mutual dependence so that people don’t want to leverage these asymmetries because they would hurt themselves to hurt somebody else.
Morgan Kaplan: Right.
Abe Newman: And what we’re, kind of, we’re flipping both of those. We’re saying first, you know, it’s actually not always decentering and fragmenting that it can help the core powers, but also we’re saying that there are asymmetric interdependencies and that those can, you know, differentially hurt different people in the system.
Morgan Kaplan: Tell me a little bit about how it actually happens. How do states weaponize interdependence in a play by play? Because I think what’s fascinating about this story is we have a number of different actors: We have the state–where the kind of key node is. We have the private sector actors–who in some ways have to either do the bidding of the state or they’re being acted upon by the state. But then there’s also the target out there that’s being . . . kind of having the weapon turned on them, so to speak. Could you tell us a little bit more about what it looks like in reality, you know, maybe going through one of your cases?
Abe Newman: Just in the, kind of, the nuts and bolts: You have, we called them, privileged states. Those are the states that can use these tools and you have the ultimate target. In the case of, let’s say, Iran sanctions, it’s the US and Iran. Those are the privileged state and the target. But really, all the work is happening through the global private networks: the private actors, the companies, and in that case it’s happening through global financial networks. And really, the true target of weaponized interdependence, in that case, it’s not Iran specifically but it’s the German banks that might clear the oil transactions for the Iranian government and their banks. And so it’s by clamping down on those German banks and saying “you know, we’re not going to give you access to SWIFT” or “we’re not going to give you access to US dollar clearing.” Then those banks and particularly their compliance departments, you know, they start to say “look Iran is small potatoes compared to the United States, we need access to the US dollar clearing system, we need access to SWIFT, and so, you know, we’re going to follow the laws and sanctions of the US because if we don’t, we risk this global private actor network.”
Morgan Kaplan: And that’s something that I think is really interesting about the argument itself. Because, although we’re thinking about weaponized interdependence itself as how, you know, “State A” can weaponize it’s privileged space in the economy against a target to either choke off that target’s access to certain resources or to economics, it looks like a lot of the politics and a lot of the coercion is actually happening amongst the state and its allies or amongst those that it actually does a lot of business with. It seems a lot of the tension and a lot of the interesting politics is actually happening outside the context of the target itself.
Abe Newman: Definitely, and it’s not just with the allies, but it’s with their private sector businesses. And it’s not even, you know, always about an ally. So, in the current conflict with China, you know, a lot of the US pressure is directed at US companies like Google or Qualcomm and saying “we do not want you engaged in Chinese supply chains.” Well, the target is at yourself, but it’s through these–it’s not directly at China–it’s through these private networks that the, what Henry and I are now calling “the quiet war,” is happening.
Morgan Kaplan: So, how does a state get these private companies to comply, or do they not comply? You know, I know you write in the article about institutions and the importance of institutions and norms–in the home state for example–that gives the ability of the state to actually get private sector components to comply. But how does that work? How does that happen? What conditions need to exist for a state to effectively convince private sector actors to come on board?
Abe Newman: When we talk about weaponized interdependence, and the character of the network and how it opens up these strategic opportunities for states, that’s basically a structural condition. Do the states have access to this type of toolkit? But then the question of whether they can actually activate it . . . Well not every state, even if they have access to a hub, do they have the institutions and norms that allow them to do it. And so, if you take the United States in the area of finance: One of the things that’s so powerful for the United States is OFAC, which is a part of Treasury that is, you know, has huge institutional capability to identify economic hubs and then also to enforce sanctions on companies. And so, that kind of institutional capacity is something that really helps the United States do this. Just a counter example, in the European Union, they also have key economic hubs in their markets, up until Brexit. They have London–they have it for a few more months–but they don’t really have this similar kind of institutional bureaucracy that allows them to activate those sanctions against these global economic networks.
Morgan Kaplan: So, is the idea that these institutions are good at identifying who is actually needed to be part of a, you know, kind of organized process of closing down economic ties to another state or maybe some sort of sanctioning of goods? You’re saying it’s almost hard for a state to understand who actually it needs to comply.
Abe Newman: Exactly. In any global economic network, it’s difficult to identify who these lynchpin actors are. I’ll give you an example. Recently, the US government went after a Russian company, Rusal. And people kind of think commodities are substitutable; “You know, who cares, it’s aluminum. We can just shut down Rusal and people will just switch over to some other aluminum producer.” But there’s a very specific high-grade type of aluminum that Rusal makes and those sanctions did not just affect the general aluminum market, but that high-grade aluminum market as well and that basically was going to crush the European auto market. And so it’s the institutional capacity to know about “where do I need to target these actions in order to really get to a hub?” but also “I need to make sure that there’s no unanticipated consequences that might really make this, you know, not beneficial to me ultimately in the end.”
Morgan Kaplan: Well on that note, Abe, I’ve got to ask you a very important question.
Abe Newman: Okay.
Morgan Kaplan: Are you ready?
Abe Newman: I’m ready.
Morgan Kaplan: Do you know what you’re ready for?
Abe Newman: I don’t.
Morgan Kaplan: To go off the page.
Abe Newman: *laughter* Nice.
*musical intermission*
Morgan Kaplan: And now to join Abe and I, we have Elizabeth Rosenberg who is a Senior Fellow and Director of the Energy, Economics, and Security Program at the Center for a New American Security in Washington D.C. Prior to joining CNAS, Elizabeth was also working at the US Department of the Treasury from 2009 to 2013, where she worked on issues including terrorist financing, financial crimes, and sanctions. Liz, thank you so much for joining our show today. What are your general impressions from the policy side, from the policy perspective, of where we are in terms of weaponized interdependence in 2019?
Elizabeth Rosenberg: Well I really like this paper, so congratulations on the article to Abe and Henry. I think this really captures what is a contemporary state of play in the world of international politics and I think that, from the policy practitioner standpoint, we’re actually just at the beginning of what is going to be a much more developed and nuanced trading of barbs by different nodes in the networks in the future. I think it’s interesting and really begets a rich analytical conversation to talk about nodes that may be smaller but that may nevertheless have important influence in this network, a shaping influence.
Morgan Kaplan: Hmm . . .
Elizabeth Rosenberg: For example . . . when they’re talking about . . .
Morgan Kaplan: Yeah, who are they?
Elizabeth Rosenberg: So . . . by the way, Abe, I want to hear what you think too!
Abe Newman: *laughs* I’m here, I’m in the background, I’m lurking and I’m ready to strike.
Morgan Kaplan: Abe is here, everybody.
Elizabeth Rosenberg: Hi Abe! When thinking about SWIFT and SWIFT cutoff, the article discusses the significance of the United States in influencing SWIFT to remove Iranian banks from its system, but they rightly point out that the EU and the Belgian national authorities were the ones who directed SWIFT, in the end, to do so. Of course, the EU has its own–it is another important node–and it’s my view that because the United States and the EU worked together at that time in 2012 in cutting off a number of designated Iranian banks from the SWIFT system, it had both the perceived and the actual powerful effect of enabling the United States to do it unilaterally more recently when that happened. When the US reimposed sanctions after pulling out of the GCPOA last year. I think there are other nodes here, some of which may be more important than others, but it really makes this interesting article even more controversial than it might seem, to suggest that some of these nodes, even if they’re marginal, may have some important power to wield or to shape which may undercut the notion that there are, you know, states that are just weak or that have the tools of the weak. I think I’d like to . . . This article may challenge that idea, even if it’s a jurisdiction that has really small nodes, they may nevertheless be able to wield their leverage from their node in important ways to influence the actions of states with bigger nodes, including the United States.
Abe Newman: Liz, can I ask you to talk a little bit about the institutional capacity that’s necessary to do this kind of stuff and also the propensity for miscalculation or unanticipated consequences? What I’m thinking about is, just riffing off of what you just said, you really have to understand the economic network that’s underlying these relationships in order to leverage some kind of coercive pressure. I think there have been a series of different examples where actors did things and maybe they didn’t fully understand the market structure behind it. What I’m thinking in the back of my head is there were the US sanctions against Rusal and the kind of spill over that that had for car manufacturing in Europe, and how it kind of was like “oh wow, we thought the aluminum market was very flat but actually it has these centralized nodes.” Or another example was Germany in response to the Khashoggi murder, they passed a law preventing German components to be used in arms sales. And then, all of a sudden, everybody realized that German machine tools are used…
Elizabeth Rosenberg: Everywhere…
Morgan Kaplan: …across the European arms production system. And so, the German law wasn’t just stopping German exports but it basically prevented all Europeans from exporting to Saudi Arabia. So, I guess it’s just kind of like . . . how many countries have the institutional expertise to know where the pressure points are and then also to kind of understand what might be the unanticipated consequences of using them?
Elizabeth Rosenberg: Right, it’s a really good question. So, in order to leverage the power, a government, a state, has to have people in its bureaucracy that have really excellent knowledge of the market structure and supply chains and the connectivity on a whole bunch of levels. Certainly, that includes parts, technology, intermediate and finished manufacturing processes. It can sometimes mean . . . it definitely means having a really detailed knowledge of major global companies and what legal jurisdictions they sit in and that they’re subject to. And so your Rusal and aluminum example is a good one. Certainly, excellent knowledge of market structure, corporate structures, applicable legal and regulatory frameworks. Another thing that is necessary in this institutional capacity is a pretty well developed legal and regulatory system as the modality for exercising this leverage in the state where these nodes exist and I mean that, like in the first instance. Being able to sufficiently research and develop the evidentiary package for making a sanctions designation, for example, or the parallel process for putting an entity on the [US Department of] Commerce Entities List which is something that the US has done with Huawei, referenced in your article, and there are other examples of other legal authorities that would certainly apply to the information or IT space and others. And along with that, exercised in the first instance is certainly also licensing on the back end to–if you will–course correct or unwind some of those unintended consequences. That’s something that the United States has been able to do with the issuance of general and specific licenses and other licenses as in–going back to that Huawei case–where you create certain forms of permission so that the blanket choke point effect is not quite as severe and it will help to ease some of the business disruption or the information flow disruption so that you can–if you will–better calibrate how disruptive this action is.
Morgan Kaplan: How do businesses bite back? You know, we were talking a little bit about how states are using their institutions to actually weaponize these systems but, I mean, a lot of this involves private sector companies actually complying. When do companies bite back? When do they want to fight back and say “you know what, I know that the government wants to engage in some form of, you know, economic coercion internationally but this is bad for business and you can’t tell us what to do.” Or maybe they can? So, how is the private sector looking at all of this?
Abe Newman: You know, my intuition is that a really important part of the puzzle for the private sector is the legitimacy of the target and the cost to its brand of resisting. And so, you know, in the article we talk a lot about the post-9/11 period and there, a lot of IT firms, they saw very few options in the wake of the attacks to really resist collaboration with the US government. But now you see IT firms, as the threat environment has waned, a lot more willingness by IT firms to push back: So, Microsoft has this whole agenda they called the Digital Geneva Convention. They’re trying to get IT firms to cooperate together to say that they’re not going to collaborate in cyber operations with the government. I think the big question right now is how China and its position in these debates is changing. I think that the legitimacy of targeting China by the US government has really transformed in the last three years. Where firms used to see economic cooperation with China as just a win-win for them, but now the legitimacy of the government targeting China seems to be increasing. So for me, that, I think, plays a big role.
Morgan Kaplan: Right.
Elizabeth Rosenberg: I wanted to add to that, the environment here, from a commercial standpoint with China, influences that changing political willingness to embrace really tough policies on China, tough economic policies on China. It’s not as though there haven’t been serious concerns by US and other international business firms related to Chinese IP theft, forced tech transfer, unequal joint ventures, a lack of reciprocity on investment, the distortions or unfair advantages from Chinese state-owned companies by comparison to other international companies. Those concerns have been there for a long time, but China has been–it’s economy has of course not held steady–it’s been growing massively so the nature of the competition and the fact that China, because of some of these unfair trade or commercial espionage activities, they’re now flooding the market, pushing other companies out. It’s the growing political appetite to embrace the use of tough measures, your choke point measures, with regard to China. It is increasing. It’s not just a, you . . . I agree it’s both popular from a public policy perspective and it’s been a really rapid increase. Companies, of course, have a different perspective on this because they are exposed on all sides. Some of them–global companies–are exposed on all sides. They feel more and more and more unhappy and challenged commercially by those unfair trade practices. But China is this massive growing economy and a growth strategy for an international business involves trying to figure out how to navigate in both places. So, pushing back is really tricky, and so I think you’re seeing a whole array of responses, some of which are . . . but many of which fall into the “do your best” . . .
Morgan Kaplan: Be best?
Elizabeth Rosenberg: Oh goodness, I wasn’t going quite there, but… Do the best in the environment that you now find yourself in even if it means accepting greater inefficiencies or redundancies in order to create insurance for your business. On the face of it, it’s a really important question to say, well: “Aren’t companies which are made to be the foot soldiers of states using these policies? They are the long term extension of state power here. How do they feel about it?” Don’t they object and say things like “hey we’re not state institutions, we’re commercial actors, don’t involve us in your big power politics.” Well, one thing we should immediately step back and ask ourself is well, do those companies have shareholders and where do those shareholders live? Because I think what you quickly come to, in addition to what legal jurisdiction they’re in and whether they have to–if they’re US companies and they have a lot of exposure to the US market–they just have to hold their nose and comply. And if they put up a stink about it, even if there’s lots of legitimacy to that, they have to deal with the fact that it might not do well for their brand, and their shareholders might not like it. And their shareholders may furthermore be bound by legal obligations, US legal or other legal obligations, that have a bearing on what kind of reaction the company chooses to take. This is one of the reasons we see that even when countries disagree, say the United States and some of its European counterparts in the Iran nuclear deal with JCPOA, and those Europeans and the other parties in the agreement don’t like it when the US left the JCPOA, they’re not the ones who ultimately decide whether European and other companies comply with US sanctions in those democracies and in those relatively free market economies. The companies make their own decisions about who they’re doing business with and they take one look at this new political reality and these new sanctions and they say “Are you kidding me? Of course I’m going to follow the US law. I don’t want to be branded as the company that tried to stand up to the United States and got on the wrong side of their policy.” And even if there’s a legal avenue to do it and some small amount of money to be made, it’s a huge burden to take on and it might seriously diminish our brand and our shareholders might have strong views and we don’t want to wade into that.
Morgan Kaplan: Liz, I want to connect that conversation you just had with another set of themes about using these tools in a diplomatic way. Okay, so, bear with me for a second. I am totally on board that the power of these coercive strategies is largely through reputation because ultimately the sanctions, OFAC sanctions, against companies are relatively rare: the cases that they actually pursue and finance. They use them in a kind of demonstration effect way, but companies aren’t on the chopping block every day. Instead, what they’re really worried about is their compliance departments, this kind of reputational effect. That’s on the one hand, but what we’re seeing increasingly under the Trump administration is that these tools are being used unilaterally with very little kind of precacusing with allies or even amongst the business community. And so, could you imagine a place where you get a tipping point the other way of non compliance where people say, you know, “Actually, the United States is the rogue actor. They’re the one that’s just going out and making these demands? Why should we be cowed by these threats if the signals aren’t credible, if they’re changing policy every third day, if they don’t have anybody on board with them? You know, what is really the likelihood that we’re gonna get sanctioned? Wouldn’t it be better if we just teamed up and just collectively non-complied?”
Elizabeth Rosenberg: Right, so…
Morgan Kaplan: What do you think about that scenario?
Elizabeth Rosenberg: Yeah, we’re seeing other countries explore that scenario. As a way to address their feelings of frustration and dismay and outrage that the United States has jettisoned their views and acted unilaterally. SO, coming back to the JCPOA, it’s a great example, again, where these European capitals have said “No, no, no, no. We absolutely disagree with the way the United States has approached this and we’re deeply dismayed by the fact that your new unilateral sanctions have these effects on our companies that we don’t choose to create but they’re nevertheless happening.” And so they’ve done this work to create what is now referred to by the acronym that is the INSTEX which is a non-bank financial mechanism to manage financial exchange between Iran and, at the beginning, Europe to try and avoid US jurisdiction and the dollar, etcetera, which is to say to try and make it sanctions proof. But what we’ve seen here . . . there’s two really important takeaways that I want to point out. One is, well, unhappily, it looks like they’re still subject to US jurisdiction, they still wind up having to care about this and the United States. It seems unlikely that if these countries bandwagon together and decide to play . . . so say the German, the French, and the British central banks get together and say “I dare you to sanction us and just think of what you’ll do.” That’s unrealistic, because they’re so heavily interdependent and intertwined with the US financial system that they can’t push back on the US on these policies because their economic livelihood and financial capabilities are so heavily invested in staying connected to the United States. They can’t just decide to go it alone. The second thing I wanted to just say is I think that a behavioral economist would want to remind us that political officials, by being frustrated with the policy and deciding to build a coalition and build this non-backed financial mechanism cannot substitute for an actual economic impulse or the real behavioral economics here where, in order to create a new network or a major new node–that’s more appropriate–a major new node, they need actual consumer preferences or economic actor preferences moving users or units in this broad network to a new node. Political outrage and diplomacy just ain’t enough.
Morgan Kaplan: Ouu, we’re kind of going down a road in talking about the conversation of weaponized interdependence from different perspectives. We kind of started out from the perspective of the state that is actually weaponizing interdependence, we’ve moved then to the private sector, the companies that essentially have to comply to be the weapon–more or less–in these types of networks. But I’m wondering if now we can talk a little bit more about the complete other side, what is it likely to be a target in this system? What is it like to be on the weaker side of the asymmetry? How do these states respond? You’d mentioned tools of the weak, the weapons of the weak. What are the weapons of the weak if you’re on the receiving end of this powerful node that is trying to crush you?
Elizabeth Rosenberg: I’ve observed a whole array of different reactions. Back to what I was saying earlier about if you’ve got a node in your jurisdiction, even if it’s relatively marginal, maybe you’re not weak. Maybe these aren’t the weapons of the weak. These may be smaller nodes exercising their leverage, but they may still be meaningful even if they’re lesser nodes and lesser amounts of leverage. And we can see all kinds of things here, like denying visas, or cancelling a state trip, or a state meeting. But if that really, you know, is a thorn in their side, maybe you’re not so weak. You just have different kinds of tools and you may be able to destroy less business, but what are those various tools? I think it’s really worthy to think about what the tools are of these different nodes, and there are many. I think they all move around the disruption or interruption or denial of access for the otherwise necessary or important flow of goods, information, services, people. And so sometimes, you know, we talked about INSTEX. That’s one kind of reaction, but Europe in this case isn’t even using their most powerful tool. If, for example, those European central banks instead of getting together and saying we’re going to try to create a non-bank sanctions-proof clearing mechanism, which for, you know, trade with Iran, which they haven’t . . . . They’ve sort of done it. They’re getting toward it, but they’re not going to embrace anything that’s illegal under sanctions, so they’ll just trade humanitarian goods. But what if they had come together and said “We’re going to refuse to clear Euros for any US financial institution?” That is an absolutely enormous . . . Or what if they had come together and the jurisdiction of Belgium had said “We’re going to order SWIFT to limit its terms of service to US financial institutions in some way for some period of time as a disciplinary measure.” Those are enormous nodes that Europe has not used. So, I think it would be . . . It’s totally taboo in Japan, with its formidable economy, to talk about the exercise of this kind of economic coercion but, boy, do they have tools.
Abe Newman: Your examples bring up, which I think is really important, how states can use nodes from one sector or subsector to defend against attacks from when they’re being put under pressure from another sector hub. Two examples that I thought might resonate is one, in the Huawei case, the US is actually the weak node. Here’s an example where China is going to dominate 5G internet, and the US doesn’t really have a strategy how to deal with that. And so, they’re worried that if they lose control over those key networks that they’ll be at a national security disadvantage, and so they use the dominance over things like the Android operating system or semiconductor chips and the supply chains in order to cripple Huawei. Or, if you take another example from Japan and South Korea right now, where South Korea was trying to get back at Japan for World War Two indiginities and used their financial system to do it and so then Japan strikes back with the . . . it bans the export of these particular chemicals that are needed for flat screen TVs and uses that choke point to get back at South Korea. And so you’re seeing states think about this three dimensional chess board of how different networks and hubs can be used against each other.
Elizabeth Rosenberg: Absolutely, and I think it’s going to proliferate. And I like the way you described that because it’s really not just retribution for like action reaction, I think it’s going to be a really multidimensional strategy used by all kinds of countries to shape and influence relationships. You know, there’s the folks who are talking about grey zone conflict or cross-domain competition, this really sings to that community.
Morgan Kaplan: What’s the kind of trajectory going forward, right? Because if we see that, and it actually sounds like this could be quite escalatory in the sense of you may have a strong, you may be a key node in one sector, but not in another, and so does this create a world where people are going to be weaponizing interdependence back and forth and there’s going to be this escalatory component of just a lot more kind of threatening and even course of actions taken against each other? And this is kind of what the global economic system is going to look like in the future? Or does this create a kind of mutually assured destruction moment where everybody knows they can hurt each other and maybe we’re in this learning moment right now, you know, of “hey, maybe this isn’t exactly the best way to go about employing leverage.” What do you think the trajectory is?
Elizabeth Rosenberg: I think both of those are true and that there’s no political salience for restraint at all, so both of those are true. Which is to say, you know, folks look around and say “what is the space between diplomacy, which maybe ain’t getting us anywhere and military action, some of which may be available without over . . . you can manage the escalation.” But this entire realm of legal and economic actions relating to trade, banking, and also information and data flow, those are all available options or steps in the new era of shaping and signaling and interdependence. I think my own take on this is that now is the right time to be revisiting our notion about escalation management and a ladder of what would get us towards mutually assured destruction. That’s going to look a lot different now and maybe it has, you know, six different leading forms but it’s appropriate for analysts to be mapping out what that looks like so that analysts and public policy leaders have a better sense of when not to step in it.
Morgan Kaplan: We’re running out of time, and so I wanted to thank Liz very much for joining us today and talking to us. And Liz, it is a, I should call it a new custom because we’re a new podcast, but to end the show by asking guests what advice they would give to young academics, policy analysts, practitioners, you know, based on your experience. What’s the advice you’d give for success?
Elizabeth Rosenberg: For success?
Morgan Kaplan: Well it doesn’t have to be success. It could be happiness.
Elizabeth Rosenberg: Oh geez, no pressure here. Can I give you two items?
My first one is: Be brave in asking your “so what?” questions. Don’t ask a safe question that may be analytically interesting. Be really brave about it and put yourself out there.
And my second one is always remember to wear sunscreen. I’ve met a lot of folks who don’t wear enough of it. Young folks, you’re not immune. Just do it, it’s safe. Just do it. That’s it!
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