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The United States Bimonthly Foreign Affairs issue, November/December (pre-published) published an article entitled New Economic Security: How Will Risk Reshape Geopolitics? by Henry Farrell, Professor at Johns Hopkins University, United States, and Abraham Newman, Professor at Georgetown University. The main elements of the text are as follows:
In April 2023, the Assistant to the United States President for National Security Affairs, Jack Sullivan, gave an important speech on the economy and begged the audience to forgive him for having strayed from his path. But his true argument — that for decades, fanaticism in the free market has weakened national security — does not mean an apology.
Over the past decade, there has been a conflict between the economy and national security, which has revolutionized the Government. The definition of security has gone beyond issues related to war and terrorism, and previously neglected economic and environmental issues (such as food insecurity, energy shortages, inflation and climate change) have become the “core” of the United States national security strategy.
When the United States market is interwoven with the markets of rivals, officials cannot easily separate trade, business and security.
The economies of the United States and China are inextricably intertwined, and it is impossible to completely dismantle this interdependence or separate the civilian economy from the military economy without causing irreparable harm to American society. That is why United States officials borrowed the words of the President of the European Commission, von DeLean, about “no risk”, which is a process of managing the vulnerabilities of an interdependent world.
This difficult task falls neither in the traditional areas of national security nor in the free market economy. This is an effort to maintain economic security, with the aim of preventing economic shocks that could destabilize societies and in the hope of limiting the increasing use of interdependence as an instrument of coercion. Maintaining economic security means focusing on the trajectory of growth and innovation while managing foreseeable security threats and creating sufficient policy space to respond to unforeseen security threats. It cannot be reduced to missile systems or market regulation, but involves complex trade-offs and decisions about which economic constraints will defusing threats without compromising growth and which measures may help to address common global problems such as climate change without seriously undermining United States security and prosperity.
Over time, markets can provide great flexibility and adapt to shocks, but no longer seem to offer universal geopolitical alternatives, as they did after the cold war. In fact, the strategies of large countries are fully intertwined with markets. The United States and China are caught in a cycle of action, confrontation and hostile suspicion, but their markets are closely linked. Competition and interdependence among major Powers are jointly creating new problems. Information networks, financial flows and supply chains have contributed to explosive economic growth, but they have also created new geopolitical vulnerabilities. The United States must now manage its economic security in a highly interdependent and competitive world in which countries are inevitably tempted to exploit the vulnerabilities of others.
After the end of the cold war, manufacturing logistics was an area of private enterprise rather than government management. Today, the United States Government sector still knows very little about global supply chains, although they are critical to economic security. The United States Government has reviewed supply chains in four areas that it considers important and has tasked government departments to review the risks associated with supply chains. However, it had to rely on incomplete business databases and imperfect and non-standardized information that private enterprises were reluctant to disclose. Enterprises often have limited knowledge of the vulnerabilities of their supply chains. Even if they knew what suppliers were doing, their role was not always clear.
Moreover, as the United States seeks to curb China ' s ambitions, it must take on complex and uncertain technological risks. The United States has adopted a “column wall” approach to technology control, with strong restrictions on limited products and technologies. However, this will require a certain degree of precision, but it will be difficult to do so even if there is a detailed understanding of the global economy and the potential path of future innovation.
While it may be reasonable for Washington to curtail China’s ambition in artificial intelligence by imposing export controls on a dedicated semiconductor, it may also stimulate the success of China’s own investment, so that China not only avoids the US, but also transcends it.
The United States cannot take for granted that it remains the global leader of technology. China is clearly in the lead in a number of areas, such as batteries and photovoltaics, which are essential for a green economy.
As the United States security sector becomes involved in the economic sphere, it will overemphasize those instruments of coercion designed to limit interaction, rather than those aimed at maintaining healthy economic exchanges. If China and other opponents react in a similar way, miscalculation and over-reaction could jeopardize the global economy.
by Henry Farrell, Abraham Newman