In the contemporary world, states do not need armies with physical weapons; economic coercion can be enough to shock other states. The optimism of the post-Cold War era was encapsulated in the liberals’ belief in economic interdependence. With the passage of time, the 1990s optimism began to face new realities: economic vulnerabilities and leverage. Economic interdependence is hardly symmetric and creates unequal vulnerabilities, which are used as strategic leverage by less-dependent states. This asymmetrical interdependence paves the way for strategic leverage under which economic instruments such as sanctions, trade barriers, financial dominance, technological chokepoints, supply chains, and transport routes are used as means of coercion.

The present geoeconomic landscape is an interplay of economic asymmetries among states and international organizations. Henry Farrell and Abraham L. Newman’s concept of Weaponized Interdependence illustrates the logic of how states having control over critical nodes of the global economy can exert pressure on other states. Hence, interdependence does not eradicate power competition; it augments power competition by incorporating economic vulnerabilities into the arenas of geopolitical power competition.

States that dominate global financial networks have the leverage to destabilize those that are dependent. The dominating states disrupt the economies of other states to achieve political goals. The instrument of financial dominance as an economic disruption can be seen in the U.S.........

© Paradigm Shift