Economics & Global Affairs

Power transitions affect a state’s ability to exercise economic statecraft. As a dominating and a rising power approach parity, they face structural incentives to decouple their economies. This decoupling affects business-state relations: high-value businesses within the dominant power tend to oppose their state’s economic statecraft because of its costs to them, whereas low-value businesses within the rising power tend to cooperate because they gain from it. 

China leverages its market in a form of “predatory liberalism” that weaponizes the networks of interdependence created by globalization. ne response to China’s bullying would be for its targets to form an alliance to retaliate against China’s high-dependence trade should Beijing act against any alliance members. 

Economic interdependence has long been considered important to international peace. Questions about harmful effects of the free flow of capital, however, are arising. China and Organization for Economic Co-operation and Development countries are increasingly involving their business firms in security and intelligence work, causing a security dilemma dynamic that increases economic competition.

 This article argues and seeks to demonstrate that "global history," with its roots in the study of empires and transnational integration, provides a useful intellectual framework for better understanding the powerful forces currently reshaping the international system—most significantly geopolitical competition and economic decoupling between the United States and China in the age of Covid-19.

Over the last two decades, there has been a dramatic increase in the popularity of financial sanctions as an instrument of US foreign policy to address security threats ranging from weapons of mass destruction (WMD) proliferation and terrorism to human rights violations and transnational crime. Washington’s policymakers have prized these tools for their ability to rapidly apply pressure against foreign targets with few perceived repercussions against American business interests. The problem, however, is that Washington is ignoring a growing tension between financial sanctions designed to support economic statecraft (with non-financial goals) and those designed to protect the international financial system. Confusing the two sends mixed signals to adversaries as well as allies and undermines US credibility and commitment to upholding international banking rules and norms. If Washington cannot reconcile these competing processes, it is unlikely that future administrations will enjoy the same foreign policy levers, leaving the United States at a significant disadvantage.

THE NOT-TOO-DISTANT FUTURE—The National Security Council holds an emergency meeting. North Korea has launched a missile, capable of carrying a nuclear warhead within range of U.S. forces in Guam. At this rate, North Korea could land a nuke on the U.S. mainland in less than a year.

For Saudis these days, life is a roller coaster. Even as Iranian missiles threaten their national security and livelihood, previously unimaginable social freedoms accelerate. All this leaves some Saudis squealing with delight; others are frozen with fright.