Summary of "Chokepoints: American Power in the Age of Economic Warfare" with Edward Fishman

The Lawfare Podcast episode titled "Chokepoints: American Power in the Age of Economic Warfare," featuring Edward Fishman, delves into the intricate dynamics of modern economic warfare. Fishman, a Senior Research Scholar at Columbia's Center on Global Energy Policy and author of the eponymous book, provides a comprehensive analysis of how the United States leverages economic tools to exert influence on the global stage.

1. Introduction and Background

Host, Scott R. Andersen, introduces Fishman, highlighting his extensive experience in sanctions policy within the U.S. government. Fishman recounts his journey from an undergraduate student puzzled by U.S. foreign policy's inefficacies to a pivotal figure in shaping economic statecraft.

"Today you can have the director of the Office of Foreign Assets Control in the Treasury Department sign a document and impose economic pressure on a foreign country that's even stronger than when you used to park a naval ship outside of their port." (01:47)

2. Understanding Choke Points

Fishman defines choke points as critical segments of the global economy where one state holds a dominant position with few alternatives available. These points are essential because they allow the U.S. to exert disproportionate economic pressure without the need for broad international unity or military intervention.

"A choke point is a part of the global economy where one state has a dominant position and there are very few substitutes." (09:10)

He contrasts modern economic warfare with historical precedents, emphasizing that today's tools are more precise and potent.

3. Historical Evolution of Economic Warfare Tools

Fishman traces the evolution of economic warfare tools from ancient times to the present. He underscores the transformation brought about by the hyperglobalization of the 1990s, which, combined with the expansion of U.S. regulatory frameworks, has empowered the U.S. to weaponize choke points effectively.

"The threshold for the use of sanctions has gone way down because you don't need UN backing and you don't need to deploy the US Navy to make them work, and the impact has gone up." (09:10)

4. Sanctions Policy and Its Implications

The discussion delves into the intricacies of sanctions policy, highlighting how targeted sanctions have become a primary tool in U.S. foreign policy. Fishman explains the shift from broad economic sanctions to more targeted approaches that focus on specific sectors or entities within a foreign country.

"Economic warfare is not just about offense, but also defense. We need to prepare ourselves proactively for foreign retaliation." (28:02)

He critiques past administrations for their handling of sanctions, particularly noting the limitations faced by the Biden administration in imposing aggressive sanctions on Russia due to domestic political concerns.

5. The Role of Multilateralism

Fishman emphasizes the critical importance of multilateralism in enhancing the effectiveness of sanctions. He argues that while the U.S. possesses significant unilateral power, multilateral support amplifies the impact and ensures broader compliance.

"We need multilateral coalitions to achieve big diplomatic victories. If the US is just doing unilateral sanctions run amok, you will see everyone hedge against the dollar, against key American technology companies, and start building alternatives." (44:05)

He contrasts the Trump administration's unilateral sanctions against Iran with the Biden administration's more coordinated efforts, demonstrating how multilateral support can sustain the potency of sanctions.

6. Challenges: Political Backlash and Economic Consequences

A significant portion of the conversation addresses the domestic political backlash resulting from economic sanctions. Fishman acknowledges that while sanctions can pressure foreign governments, they often come with substantial economic repercussions at home, such as increased inflation and higher prices for consumers.

"President Biden... wasn't willing to do aggressive oil sanctions on Russia for domestic political reasons." (28:02)

He argues that political transparency about the sacrifices required for economic warfare is essential to maintaining public support.

7. Export Controls and Economic Statecraft Tools

The discussion expands to include export controls and other economic statecraft tools beyond traditional sanctions. Fishman highlights the complexities and challenges associated with these tools, noting that their effectiveness often depends on industry-specific compliance and the willingness of private sector actors to adhere strictly to regulations.

"Until that happens, until Jensen Huang or these top CEOs realize that if they don't comply to the letter of the law and maybe even beyond the letter of the law, they're risking their financial performance. They're not going to be effective infantry." (58:19)

8. The Impossible Trinity: Economic Interdependence, Economic Security, and Geopolitical Competition

Towards the end of the episode, Fishman introduces the concept of the Impossible Trinity, a framework illustrating the trade-offs between economic interdependence, economic security, and geopolitical competition. He posits that currently, the world grapples with maintaining economic interdependence amid rising geopolitical tensions, leading to compromised economic security.

"We have economic interdependence and geopolitical competition, but economic security feels lacking." (65:33)

Fishman warns of a potential future where the erosion of economic security could lead to increased reliance on military force, fostering instability and imperialistic tendencies.

9. Recommendations and Future Outlook

In his concluding remarks, Fishman advocates for a balanced approach to economic warfare. He suggests:

• Institutionalizing Economic Statecraft: Creating dedicated government departments focused on economic security, akin to military planning units.

• Enhancing Multilateral Cooperation: Strengthening alliances to ensure sanctions are more effective and sustainable.

• Building Domestic Resilience: Investing in sectors like technology and energy to reduce vulnerability to foreign economic pressures.

"We need to take economic warfare more seriously as a nation. And I think that sort of the basic thing to do is to fund OFAC and BIS at Commerce more generously." (21:59)

Fishman concludes with a sobering reflection on the trajectory of global economic policies, emphasizing the need for strategic foresight to navigate the complexities of modern economic warfare.

Key Takeaways

• Choke Points: Critical segments of the global economy where the U.S. can exert significant influence through targeted economic policies.

• Evolution of Tools: From broad sanctions to specialized export controls, the toolkit for economic warfare has become more sophisticated and potent.

• Multilateralism: Essential for amplifying the effectiveness of sanctions and preventing the erosion of the dollar's dominance.

• Political and Economic Balances: Navigating domestic repercussions while maintaining robust foreign economic policies is a delicate but necessary balance.

• Future Challenges: Addressing the Impossible Trinity by enhancing economic security without sacrificing interdependence or escalating geopolitical tensions.

Notable Quotes with Timestamps

1. Choke Points Defined:

   "A choke point is a part of the global economy where one state has a dominant position and there are very few substitutes." (09:10)

2. Impact of Hyperglobalization:

   "The threshold for the use of sanctions has gone way down because you don't need UN backing and you don't need to deploy the US Navy to make them work, and the impact has gone up." (09:10)

3. Economic Warfare as Defense:

   "Economic warfare is not just about offense, but also defense. We need to prepare ourselves proactively for foreign retaliation." (28:02)

4. Importance of Multilateralism:

   "We need multilateral coalitions to achieve big diplomatic victories. If the US is just doing unilateral sanctions run amok, you will see everyone hedge against the dollar, against key American technology companies, and start building alternatives." (44:05)

5. Export Controls and Compliance:

   "Until that happens... they're risking their financial performance. They're not going to be effective infantry." (58:19)

6. The Impossible Trinity:

   "We have economic interdependence and geopolitical competition, but economic security feels lacking." (65:33)

7. Institutionalizing Economic Statecraft:

   "We need to take economic warfare more seriously as a nation. And I think that sort of the basic thing to do is to fund OFAC and BIS at Commerce more generously." (21:59)

Conclusion

Edward Fishman's insights shed light on the complexities and strategic imperatives of modern economic warfare. As global dynamics evolve, understanding and effectively managing choke points, sanctions, and economic statecraft will be crucial for maintaining U.S. influence and ensuring national security. The episode serves as a vital resource for policymakers, scholars, and anyone interested in the intersections of economics, law, and national security.