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1. (thread)… This story talks about a report suggesting that China should move away from the SWIFT financial network to reduce its vulnerabilities to US penalties and surveillance. It's _just_ a report. Still, as @RichardMNephew says, "Watch this space."
2. The background to this is the way in which the US has weaponized global economic networks such as SWIFT (which is lynchpin of world financial system) against adversaries, as @ANewman_forward and I describe in our work on #WeaponizedInterdependence….
3. Systems such as SWIFT used to be disregarded in the same ways as the plumbing of a building is disregarded - so long as it works, who cares? Now, however, the plumbing is becoming political as networks are weaponized. China's problem is that it can't readily retaliate in kind.
4. It does not have the same dominance over core networks of globalization that the US does, so that its best tools are to deny access to its own domestic economy. This is one of the reasons why the US and China are fighting so bitterly over Huawei - both see 5G as geopolitical.
5. As a cynical European diplomat told the Economist recently, "“America wants to prevent China being able to do what America currently does to the rest of the world by controlling the financial system.”…
6. So how do we understand this new politics? With enormous difficulty. It commingles national security and economics, the global and the national in horribly complex ways, that we don't even have the beginnings of good maps of.
7. One of the big problems we have in understanding the emerging world is that our key concepts date from the 1990s and 2000s, where economics and national security were regarded as distinct - it was possible for US and China to compete militarily and integrate economically.
8. Now, it is clear that this isn't true. National security and economics are commingling in ways that are reshaping the global economy. People used to talk about national security "exceptions" to global trade rules. Now the exception is poised to devour the global trade regime.
9. Another problem is that traditional geopolitics fits awkwardly with a world in which nation-states aren't separate from each other any more. Underlying the "decoupling" debate is a palpable nostalgia for a US-USSR confrontation with distinct and noncongruent economic blocs.
10. A third is that the global structures that have emerged to shape the global economy are partially autonomous of state interests. Over three decades, businesses constructed their own globalization, which they are seeking to defend against the encroachment of raison d'état.
11. And fourth - and perhaps most important - are the unavoidable physical and ecological constraints. The current model of globalization is a system for generating problems such as coronavirus pandemics and climate change that it is utterly incapable of solving.
12. What globalization has created is a world where our collective fates are bound up with each other far more closely than in the past, but without any real collective ability to control these fates.
13. The Hayekian fantasy that all this could be taken care of by markets embedded in some minimal global constitutional order has been shown to be just that - a fantasy, which has paved the way for the clash of states and empires, as privately operated networks such as SWIFT
14. have been transformed into tools of geopolitics, turned towards the purposes of national interest. The risk is that an unsustainable globalization of markets whose protagonists imagined that they had somehow floated free of politics, may turn into a globalization
15. of nation states contending for individual domination without any shared capacity for understanding of the collective costs that are being imposed or needs that are being neglected. Business has been a bad master for globalization. There may be worse.
16. Adam Tooze has a fascinating new essay in the LRB that talks to some of these issues (and namechecks weaponized interdependence in passing)…. He proposes a new détente and a renewed focus on the problems generated by the Anthropocene.
17. Abe and I have made similar suggestions starting from a loosely similar analysis - various versions of our arguments in………
18. The problem that all of us confront is the following. We are moving from an era of (shallow) consensus on what the operating system of the global economy should look like, to one of clash and disagreement. Détente is a means of managing this disagreement so it doesn't explode
19. But it is not a notably solid foundation for active cooperation. It is pretty clear that many of the problems of the Anthropocene are going to require quite extensive forms of cooperation, and of mutual information sharing. How to accomplish this in a world of clashing
20. political philosophies and intense mutual distrust? I am not a Cold War historian, but what I know about the levels of shared cooperation/problem solving then do not fill me with optimism for the prospects. They fill me with worry shading into fear and perhaps dread. Finis.
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