Henry Farrell and Abraham Newman: Weaponized Interdependence

Please find below the recording and a summary of the talk delivered by Henry Farrell and Abraham Newman at the UC pre-Module online event hosted by Columbia University on 11 February 2021. The event was chaired by our Leading Professor Timothy Colton.

Listen to the recording here.

Summary

Henry Farrell:

Weaponized interdependence is both an old and new topic at the same time. We are looking at ideas which did not receive much attention over last couple of decades, but which may have new value for understanding the realities we are all facing today. And there are plenty of research opportunities for those of you interested in this nexus between international security, international political economy, and domestic politics.

The fundamental idea that we wanted to explore is universally shared: when we think about globalization, there is a general agreement that it is facilitated by networks. In the case of international financial services, there are various facilitating networks such as SWIFT. In the case of complex international manufacturing chains, there are various logistics networks, and of course the biggest network of them all is the internet, which allows for global access to information.

Political scientists have traditionally treated these networks as neutral and politically uninteresting systems of support. However, it is broadly accepted that if these networks have political consequences, they are bringing the world together and rob traditional geopolitics of much of its appeal. This is a very influential and appealing “standard” version of the story, famously advocated by Thomas Friedman in 1999. Networks had replaced the Cold War, he suggested. The old world of state power and state domination, together with the hostility of the Cold War, had been swept away, replaced by a new world of markets and the exchange of goods, money and information, all of it underpinned by networks that would bring us together in relatively peaceful and harmonious relationships.

But now it seems that this is not the way politics have unfolded. In recent years, we have seen headline after headline suggesting that instead of these networks being used to replace state power and geopolitics, they have become instruments of state power. Big and mid-size powers like the United States, China or Russia, but also smaller powers like South Korea, use the network structures of their mutual interdependence in order to win concessions from the other side. For example, technology supply chains, once heralded for their benefits to the global economy, now appear as an area of key strategic weakness. This is the world of weaponized interdependence.

In this world, the networks that enable global interdependence do not serve as neutral means of conveying information or money anymore. Instead, they are becoming the tools of power projection by major states.

What are the mechanisms of weaponized interdependence? When you look at these globalized networks, you will see that they often tend, in fact, to have centralized nodes or choke points within them. These are usually caused by the way these networks have emerged, or how they grow based on the interests of their key actors; and their potential impact on the networks is significant, because most of the traffic goes through them. This is true for financial networks, for the internet, and for supply chains, and it generates new opportunities for powerful states that are able in one way or another to seize control of these nodes and then use them as a form of coercion.

The fundamental message here is that these global networks are asymmetric because some nodes tend to be far more important than others. If we look at, for example, the flights of Delta Airlines, you will note on the map that some airports are more important than others, and that there is one super-hub in this network and that is Atlanta, where most connections happen. That means that if there is bad weather in Atlanta, the whole network is in trouble.  Obviously, we are not talking about random events such as bad weather, but about the specific efforts of some states to seize control of the central nodes of these global networks in order to be able to effectively exercise power over the network as a whole.

It is also important to note that these networks are often not just asymmetric, but asymmetric in favour of powerful Western states, and of the United States in particular. Most of these networks were developed in 1990s or early 2000s, a period of unparalleled US dominance, and as a result, many of the key nodes are located directly under US control or in places where the US is able to exercise very substantial pressure. This serves as a powerful force multiplier of US ability to exercise economic coercion and economic surveillance on a global scale. We have identified two major ways through which powers, such as the United States, can exercise their power when they control a key node in the network.

The first way is through what we have called the ‘panopticon effect’. This term comes from a concept for a prison developed by Jeremy Bentham and further explored by Michel Foucault. They suggested a prison with a single central point from which one is able to surveil all of the inmates at once. The argument we hold is that if you control the central node of the network, you are able to gather tremendous amount of information about all of the communication which goes on within the whole network. If you are able to tap into these flows of information, you may be able to keep track of what actors are saying to each other and how often. This may give you a strategic advantage, a strategic edge vis-à-vis your adversaries and rivals.

The second possible effect is to use these nodes as choke points. If you are able to deny access to your adversary (business, individual or state), you are capable of cutting off an actor from central networks of the world economy, probably with massive disruptive consequences for them. Moreover, these networks are often embedded within the national economic lives of these actors, not just within their international activities, which means that you may be able to create significant repercussions for their ability to communicate within the state, company or society.

Abraham Newman:

I will quickly run through our two case studies, so you get a flavour of how these coercive tools play out in specific sectors.

First, we look at internet space. The usual idea of the internet is that it is very decentralized, but we argue there are these hubs within the information domain which allow for this type of coercive power to play out. Just the physical infrastructure of the internet is actually quite centralized. It is this centralization of the internet’s physical facilities that have allowed the United States government and the NSA to tap into the global information communication of our adversaries during the War on Terror. It was the Snowden revelations that really revealed the centrality of the infrastructure of the global information super-highway. At the same time, a very small number of companies (like Google, Facebook, Apple) control tremendous amounts of information flows.

The Snowden case showed how, under this programme called PRISM, the NSA was able to gather information from this small group of powerful platforms. It has shown that there is no need to get into each person’s individual router to obtain the information you need; you only need to tap into a few corporate headquarters. Under the programme called STORMBREW, the NSA was able to tap into global internet communications because the vast majority of the world’s data runs through a mere seven optical cables.

The second case we analyse is the weaponization of finance. We focus on the organization called SWIFT, which sits in Belgium and works as a backend post office of the world’s financial networks. Any transaction which is bigger than $10,000 has to be routed through SWIFT for the banks to know that these transactions can be trusted and are real. SWIFT now processes three million transactions a day. Short after 9/11, the US Treasury Department realized that access to SWIFT data would give the US a method of uncovering never-before-seen financial links and revealing possible next plots and possibly entire hostile networks. Moreover, during the Obama administration, they tried to utilize the SWIFT system to choke Iranian banks and push them out of the global financial network.

As for future developments, we are convinced that these trends will continue under the Biden administration. For example, development of 5G networks seems to create another playing field where weaponized interdependence can be deployed. Originally, when developing the concept, we did not think about China or Russia, but rather about these ‘rogue’ actors identified after 9/11 like Iran. But now weaponized interdependence has come into play within the context of great power competition, which may have much broader consequences.

There are, of course, various types of economic coercion: some of them have been around for a long time already, such as market power (i.e., cutting adversaries out from accessing certain markets), asymmetric interdependence (i.e., sanctions), or other types of bilateral dependencies which countries would leverage in order to achieve their priorities through some form of dominance. There are also points of control where states already leverage networks to influence global actors, but the focus has been mostly on economic actors. The concept of weaponized interdependence focuses on how choke points and nodes/hubs are used by states to target their adversaries.

For weaponized interdependence to work, decentralized, flat networks are not especially useful. There has to be hierarchy in the network, meaning there must be a small number of more significant hubs which can be exploited. It is our task for the future to map various existing networks in order to identify those vulnerable to weaponized interdependence. For this, it is important to note that the world economy is not a single network, but consists of many sub-networks which should be analysed in this context.

How do states respond when they face weaponized interdependence? One strategy is to insulate themselves from (US) pressure. For example, Russia and Turkey are developing a rouble-based system for their resource-based transactions. Other countries are trying to build their own hubs. We see this with China and their effort to build 5G networks abroad.

The important thing to realize is that responses to this type of pressure may not take place within the same space of weaponized interdependence, but may instead manifest themselves in the material world in a variety of ways. When the US, for example, goes too far in using weaponized interdependence against Iran, Iran responds by physically blowing up real oil tankers. This needs to be part of the calculation: when faced with pressure in one place, in what other playing fields might states respond?

Are there ways to contain weaponized interdependence? We probably need a set of rules to regulate the use of weaponized interdependence. The situation is similar to nuclear weapons where the regimes were developed in cooperation with scientists and politicians to regulate their use and minimise the risks after the technology had already emerged. Here we are in similar situation where there are new means of coercion which the US is increasingly using not only against rogue actors like Al Qaeda but against great powers, and this is a dangerous moment which may require policy solutions further down the road.

Moreover, states seem to be more aware of the risks of weaponized interdependence. The Biden administration has just released a critical review of US supply chains, and they are going to look at where these vulnerabilities are in the US system and what efforts need to be taken in order to mitigate them.