Chokepoints: American Power in the Age of Economic Warfare

by Edward Fishman

Bosphorus,

“The acme of skill,” Sun Tzu wrote in The Art of War, is not “to win one hundred victories in one hundred battles,” but “to subdue the enemy without fighting.”

American economic warriors often shoot from the hip, forced to react to crises without much advance planning.

an enduring problem in economic warfare: the harm it inflicts does not always elicit the hoped-for policy changes, and its unintended consequences can sometimes precipitate the very outcome it aimed to prevent. Indeed, the failures of economic warfare are better known than its successes.

Valued at over $50 trillion, the U.S. bond market also dwarfs those of the rest of the world. And when firms anywhere turn to international capital markets for cash, they almost always borrow in dollars: 70 percent of foreign-currency debt is denominated in dollars.

United States accounts for less than 10 percent of global exports.

UN-backed sanctions against China or Russia are impossible since Beijing and Moscow possess veto power as permanent members of the UN Security Council. But over the past decade, America has targeted both China and Russia by weaponizing its control over the global economy, leaving the rest of the world scrambling to adapt.

America’s preeminence in manufacturing and trade was fading, but its supremacy in international finance was about to begin.

exchange for American military assistance and continued oil purchases, the Saudis would funnel their oil money into U.S. Treasury bonds, which they would be permitted to buy in secret outside the normal auctions.

In history, timing is everything.

Over the course of the 1990s, the European Union launched a common currency, the euro, and paved the way for the accession of more than a dozen new members, turning the bloc into the world’s largest single market.

Japan and the so-called “Asian tiger” economies of South Korea and Taiwan became export powerhouses. Corporate giants such as Sony, Samsung, and Taiwan Semiconductor Manufacturing Corporation (TSMC) churned out the electronic components that powered the digital revolution. Most important of all, China emerged as the workshop of the world. The country’s economy had boomed ever since the onset of market reforms under Deng Xiaoping in the late 1970s, and its expansion was now reaching dizzying speeds, with Chinese exports growing fivefold during the

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Back in 2003, America had gone so far as to invade Iraq and overthrow Saddam Hussein in search of weapons of mass destruction that proved nonexistent.