,
17 tweets,
5 min read
Read on Twitter
1. nationalinterest.org/feature/americ… My and @ANewman_forward National Interest piece on America and financial infrastructure has just come out. In ways, it's a companion to great @dandrezner piece on US grand strategy foreignaffairs.com/articles/2019-…, which mentions stupidity of US on SWIFT.
2. But in other ways it's different. It's an argument about structure in international relations - but not the usual kinds of structures. Instead of big power relations, we focus on how the plumbing is going wrong - and how that may be more important than any number of NATO spats
3. Our argument is a version of the military dictum that "Amateurs talk about tactics, but professionals study logistics." International political economy scholars think a lot about money and trade - but they tend to focus on high policy decisions
4. Beneath these lie inglorious systems of conduits, which seem often seem highly technical and incomprehensible to non-industry-experts. But they are really important - and US discovery of how important they are has had dramatic consequences for US geoeconomic strategy.
5. Our article describes how the plumbing was built out in the 1990s as globalization burgeoned. Businesses built huge financial and information networks, vast distributed global supply chains and the like, on the assumption that they were operating in a great global market.
6. In @zeithistoriker terms, they assumed that "dominium" - the world of private property rights and free exchange - had replaced "imperium" - the rule of nation states. What they did not realize is that they were building great structures that imperium could turn to own ends.
7. The US began to use SWIFT and other nbetworks for its own security purposes. It tapped into the Internet. It turned the dollar clearing system into an extension of US power. In short, it turned the plumbing of the world economic system into a foundationof empire.
8. And, as empires do, it overreached. As Dan noted back in 2016, some of the administrators of imperium, like Jack Lew, had worried that this might happen. washingtonpost.com/posteverything… But when the administration changed, these warnings were forgotten. Trump doesn't do subtlety well.
9. The result is backlash. US sanctions against ZTE had justification in law - but they have led to a dramtic shift in Chinese economic policy so that it is ensuring that it has options in the future, should the US put pressure on it again.
10. The Europeans have responded to American unilateralism over JCPOA/Iran sanctions/SWIFT by building an alternative arrangement, a so-called "special purpose vehicle." This is still getting off the ground - but is intended as a put option on US financial hegemony.
11. As Lew has argued, "the plumbing is being built and tested to work around the United States. ... if the United States stays on a path where it is seen as going it alone…there will increasingly be alternatives that will chip away at the centrality of the United States."
12. [we had used the same plumbing metaphor in the first draft of the paper, before Lew hit on it independently - that both of us seized upon it suggests that there is something very important to the infrastructure that high politics analyses are missing].
13. The danger for the US is that its own actions may further rapidly accelerate the unraveling of global networks as other states both experiment themselves along the same lines as the US, or withdraw from them in order to insulate themselves from external pressure.
14. And there will be bitter infighting among allies as the disagreements over Huawei already indicate. We don't talk about international relations theory in this piece - it's a policy argument. But obviously our parallel arguments about "weaponized interdependence" provide
15. a more theoretical perspective on the developments that we are seeing. dropbox.com/s/27mnqcxrxwap… . We expect that others are also going to come in with their own analyses - and we need them.
16. The dominant approach in international political economy is OEP - "open economy politics." The problem is that we do not live in a world that is opening up in the way that it used to. We need to think urgently about what CEP - Closing Economy Politics - is going to look like.
17. And to get a handle on it, we're going to have to look carefully at a lot of technical seeming plumbing arrangements that suddenly don't seem all that technical any more, as they become the tools of strategy and counter-strategy. Finis.
