Daily Times

Words change and ideas evolve as the definition of power shifts, and the garb of the power broker is transformed. We partition our present into the pre and post-Cold War era- a defining period that ushered in changes the impact of which still lingers. The West won, capitalism was awarded the sash and tiara, and the evolution of geoeconomics began as economic tools and instruments started being deployed strategically to achieve political and security aims. In this era bankers and economists and global lending institutions yield power that has hitherto been reserved only for the military and security establishment. Globalisation and international trade have redefined borders as supply chains have gotten longer and more convoluted. For geo-economists the interdependence that allowed comparative advantage and economic efficiency to flourish and helped many countries climb the GDP ladder, has now become a very potent weapon that has secured the unqualified approval of military and security establishments the world over. In short, everyone has jumped onto the bandwagon.

‘Strategic’ is a much overused and little understood word, with very different meanings and connotations when uttered by a politician or a General or an economist. But we are seeing greater convergence between the various definitions, and, the repercussions of this bonhomie are anticipated to shatter the old economic order, change the art and practice of statecraft, make the economic sanction an all encompassing power, and restructure global power competitions to centre on the economic might of each competitor rather than the size of their military.

Economics is strategy, it is tactics, it is financial surveillance, it is wealth ‘track and trace’, it is the deployment of tools and instruments designed to direct the evolution of global trade and the control centre of geopolitical power. The creep of capitalism that became a deluge when the Soviet’s threw down their arms, has swept before it any imperial or colonial domination aspirations in favour of allowing capital valorisation free reign to perpetuate itself ad infinitum across boundaries and time periods. Capital is king, not for the efficient working of the global market, production, and trade but for the furthering of the geopolitical and security aims of national or transnational entities – brandishing both giddy growth and a civilised pulverizing. And the entities in question range from cities to countries to global lending institutions, and finally, to the exponentially growing corporations.

Never before in human history have we lived in such an interlocked and interdependent world where economics has become the foundation and source of national power, rather than a by-product of geostrategic manoeuvring. But then, economics has always been the quiet, watchful power behind many great conquests and many great empires. Geography’s weight and heft is immutable and fundamental as is its control over the spatial distribution of primary resources, but it was the economic possibilities of that geography that created the great leaders and conquerors of history.

It was the US, France, and Britain, after WW1, that formalised and legitimised the tools of economic warfare and expanded the circumstances and situations that would allow the trigger to be pulled. They succeeded in using the coldness and objectivity of economics to tame and smother the exuberance of war. A century down the line economic sanctions, trade policy, capital investments, country aid, loans, and debt relief have all but eliminated the concepts of neutrality and ‘exclusive sovereignty’ and led to a world where nations are aligned with their economic and financial benefactors and geoeconomics has become the primary source of power.

Never before in human history have we lived in such an interlocked and interdependent world where economics has become the foundation and source of national power, rather than a by-product of geostrategic manoeuvring

For the United States the twentieth century saw a cementing of its position as the centre of geopolitical and geoeconomic order. It was the financial and economic interests of America that drove globalisation and the inter-dependency of nations, and, it was the efficiency imperative of economics that created the great, global supply chains that have blessed the US dollar with near mythic powers in the world of global trade and finance. But during that time period, countries on the periphery of the global market created their own hybrid methods of growth that differed from the US model. China chose to use a mixed-economy model that emphasized high exports combined with higher savings and investment rates, and used the world’s economic efficiency imperative to create an offshoring industry that built a manufacturing base at unparalleled speed. China’s instinctive understanding that economic might would lead to geographic dominance was diametrically different from the American experience, yet very successful – a lesson many in Asia still have to learn.

No hegemon gracefully relinquishes his position in favour of another, and the current US-China trade and tech war unfolding before the eyes of a terrified global market is the 21st century’s clash of empire. The rhetoric of this economic war is incredibly emotive and militaristic with Donald Trump accusing China of ‘raping’ the US and ‘killing’ American trade and Beijing coming out with ‘submission or mortal combat’ to describe American tactics. Innovation, technology, corporations, and trade are the tools being wielded by these two countries as American geo economists, recognizing the inherent threat of dependency on a global supply chain with an arch-rival at its centre, are piecing together a ‘selective’ multilateralism that envisages bubbles of influence and prosperity, bolstered by the power of their corporations. The call of ‘with us or against us’ is coming down the pike again and, as with Huawei and 5G, all countries in the path of these two behemoths will have to pick their sides to escape the ‘peaceful, silent, deadly remedy —— a terrible remedy’ which was Woodrow Wilson’s description of economic warfare.

History has always been underpinned by geography and economics, though we have often faltered in our recognition of that fact. Upon those twin foundations great men and great empires have ebbed and flowed as history laid down layer after layer to build a monolith. Pakistan’s geography had military value for the US both during its proxy war with the Soviet Union in the 80s and during the Afghan adventures of the near past, and now that same geography has economic value for China as part of its Belt and Road initiative. History’s patterns of empire building and falling are not drawn on the ever-changing sands but are graven in rock and stone . The men at the centre of each pattern change, but the geoeconomic pattern remains – opportunity and greed.

The writer is an investment analyst at raanas @gmail.com