New War Fronts Lie in Economic Zones

 

The nature of warfare has never stayed static – instead, it is dynamic. It keeps on changing, adjusting itself with the evolving circumstances of different times. Once the nomadic raids overwhelmed the world; with the gunpowder revolution, relatively lethal invasions stepped in; the invention of nuclear weapons brought yet another deadly variant in front of the world; and, in the post-Cold War era, the warfare of economic nature has superseded every other form. In the current times, the competition is less characterized by direct military confrontation and more by economic rivalry as the latter has come in handy for many states to advance their agendas with much fewer costs. The tools such as economic sanctions, trade controls, the creations of parallel financial institutions and their subjugation and polarization, and currency manipulation have become very common for coercion. Granted that there are concerns for nuclear use and domestic backlash, states are inclining more towards economic instruments than costly military adventures. However, the tactics of former nature do not come without repercussions. They have their perils that endanger innocent masses, exacerbate the economic stability of the 'Global South,' and promote neo-imperialism. In the long run, if the situation is left unbridled, the world may even have to face the erosion of globalization, aided by a wave of economic recession. Ironically, in such a scenario, no one would be a winner, including those who engage in tactics of similar sorts.

To start with, the incident of 9/11 had shaken America, leading it to adopt a new strategy of preventive wars to deter terrorism and nuclear proliferation. Having invaded Afghanistan in 2001, the world's first nonproliferation war was fought in Iraq two years later. By 2005, the war had severely failed: Iraq plunged into chaos, the USA was backlashed globally, the nuclear proliferation accelerated. Once again, a policy-shift was inevitable. Since then, economic sanctions have been put in use to deter the spread of the Weapons of Mass Destructions in Iran and North Korea. In other words, the USA, being mindful of the implications of military aggression, has found economic tools convenient with no severe complications such as domestic backlash.

Similarly, with declining domestic support for high-cost military adventures, people in the Global North have become warier of their leaders sinking their tax payments abroad in the unnecessary wars. This has limited the tools of power-projection for many states, including America. It is evident from the fact that since the failure in Iraq, the USA has so far been reluctant to wage any full-fledged wars. For instance, after the annexation of Cremia in 2014, the USA, instead of going with an aggressive approach, favored dollar diplomacy and trade controls against Russia to project its power. What encouraged the USA to pick economic tools was that they were cheaper yet potent and generated no domestic fuss.

In the same way, trade talks, too, have become an easy target. Countries the world over, especially the great powers, are religiously practicing the geo-politicization of trade talks to achieve their vested foreign policy goals. Particularly the case of Regional Comprehensive Economic Partnerships (RCEP) is worth a mention here. After the USA withdrew from the Trans-Pacific Partnership, China has accelerated its efforts to secure the RCEP in the Asia-Pacific region. This proposed deal is supposed to be signed between the economies of Association of Southeast Asian Nations and five of ASEAN's FTA (free trade agreement) partners – Australia, China, Japan, New Zealand, and South Korea. And, once materialized, the deal would undermine the influence of the USA in the region, create the world's largest FTA, and give China access to the gated markets of ASEAN countries, subsequently.

The race for the gated markets is a new phenomenon. Gone are those days when the powers used to compete for the territory abroad. Today there is a rush for getting preferential access to big closed markets as the international law no longer allows any sort of colonization. The latest so-called "Scramble for Africa 2.0" clearly validates this argument. Similar to the contest of capturing African territories physically during the 19th and early 20th century, this century, too, manifests a trend of securing the same lands but, this time, only for dumping their exports. There is already a competition ongoing between China and the European Union in this regard.

Also, the alliances have become infrastructure-driven as economic growth is also, not military strength alone, paramount to national security. Unlike the military alliance created during the Cold War times such as the Warsaw Pact and North Atlantic Treaty Organization, the recent ones have an economic aspect. The Chinese-led Belt and Road Initiative (BRI) is one such case in front of the world. Under this initiative, China has vowed to invest trillion dollars and build various infrastructural projects around the globe – from Asia to Europe. Such an opportunity has a great appeal, and over 125 countries have become a part of this so that they could avail loans and grants placed under the control of newly created financial institutions by China to support its grand project.

However, the new financial institutions in connection to the BRI should not merely be seen as funding agencies. Their creation has strategic meaning for China. They are, in reality, economic instruments for the Asian Dragon to counter the influence of the USA over the global financial system, particularly that of the Indo-Pacific zone. For this, China has erected various multinational forums, including the Asian Infrastructure Investment Bank, to dent the creditability of the International Monetary Fund (IMF) and the World Bank in the region of its interest. Simply put, parallel economic institutions are being used to undermine the opponent's sphere of influence and ultimately help great powers against each other to procure leverage over the recipient countries.

But one might ask how do financial institutions serve as devices of control? The answer to this question lies in analyzing the way the coffers of these organizations are filled. At the very core of their operational framework, these international agencies are dependent on their funding countries – the IMF being reliant on the USA, for example. Suchlike dependency encourages the mischievous states to exploit these global institutions at their whims to meet their particular outcomes. The recent incident wherein the IMF's loan to Pakistan was delayed by the USA to coerce the former to bring the Afghan Taliban on negotiation tables relates to the similar kind of exploitation. This whole scenario severely exposes the inherent flaws, which erode the sovereignty of developing nations, in the current world order induced by globalization.
Globalization, which was meant to be a ride of economic fortunes, is itself in ramshackle. It is nothing more than a pawn in the hands of a powerful few. Inspired by protectionism and surrounded by Sinophobic colleagues, in 2018, Trump initiated a trade war against China without considering its long term impacts on globalization. However, the USA is not alone in this gamble. China is also an experienced player. It is recognized nefariously for its acts of disrupting global supply chains at critical moments. In 2014, when Japan and China were at loggerheads over a long-standing maritime issue, the former blocked the supply of rare-earth metals, essential to the latter's key industries. Resultantly, this generated a ripple effect all over the global economies.

Yet another significant aspect that asserts the proposition that new war fronts lie in economic zones is currency manipulation. Contradictory to the essence of the liberal order, countries are misusing their currencies as a weapon of warfare to advance their foreign policy goals. In particular, China is the most exceptional example of a currency manipulator. Thanks to its communist-style democratic system, it has managed to keep the role of government intervention in the central bank alive. Even in its trade fight with the USA, China has not shied away from devaluating its currency to make its products artificially cheaper in the American markets. This topic has also turned many a time the World Trade Organization (WTO) into a battleground for Uncle Sam and the rising Dragon.

So is this all without any cost to the world? No, certainly not. The economic wars are severely punitive. They cost dearly and are not always productive in their results.

The most worrisome implication is that these are the common masses, not the state leaders who usually are targeted, suffer the most under the burden of economic sanctions. Nowhere it could be more conspicuous than in Iran or North Korea. Both countries have been under the U.S.-imposed economic sanctions for many years, for America wants to force the leaders there to abdicate and hence bring regime changes. But its plans have bluntly failed, resulting in the worst kind of human rights violations. People there have been abandoned, left alone to deal on their own with misery, unemployment, health crisis, and whatnot, whereas their state heads still live lavish and peaceful lives.

At a larger scale, the inequality between the two world poles is on the rise. Prolonged trade controls are debilitating the economic stability of developing nations, further widening the existent North-South gap. The rich are getting richer while the poor are getting poorer. Perhaps it will drain the capability of many targeted countries to grow and develop. Iran, which holds one of the largest oil reserves in the world, is the best example of this injustice. Very discriminately, despite meeting its obligations under the nuclear agreement, the USA has lashed it with prolonged trade controls. This has led to a significant decline in its oil exports, consequently depriving it of its potential economic growth.

As well, there is a greater tendency to practice neo-imperialism in the form of economic tactics. Very commonly, financial lending agencies, terrorist financing watchdogs, and international grants are taken advantage of for indirectly exerting political control over developing countries. The first in this line, lending agencies, are generally used for either blackmailing by withholding loans or controlling the state policies by sinking the receivers with unrepayable loans. The next in the queue, terrorist financing watchdogs, are for bargaining to extract various political objectives by blacklisting the countries. Then comes international grants which are frequently strings-attached. In short, the global economic infrastructure is outspreading neo-imperialism.

Going ahead, the unbridled rise of protectionism poses excessive risk to international institutions and global businesses. As the spoilers are generally pioneers of liberal order themselves, the big firms and associations are unable to nose up against them. In turn, accessing markets is becoming harder day by day, and multinational institutions are losing their credibility and efficiency. If the situation were to left uncontrolled, the liberal order itself might have to experience a harsh blow. In such a scenario, the current rules-based trading structure could shatter into pieces, and big business would become less profitable and more susceptible to state intervention. More so, the global supply chains would become vulnerable to disruption.

Unsurprisingly, the global supply chains, as earlier explained, are already under attack. But what the more alarming thing is that the undermining of them along with trade regimes may trigger an economic recession globally. Granted that countries are heavily interdependent in this age of hyper-globalization, the recession, of course, would not be biased in its impacts or limited to any particular country. Squarely all will get affected and face a loss, the same as the 1997 Asian financial crisis or financial crisis of 2007-8 had crashed the markets throughout the world. Still more, the emerging economies such as those of sub- Sahara Africa, South Asia, and the Middle East would found themselves stuck in the middle-income trap forever.

Nonetheless, there are some measures to eliminate, or at least mitigate, the critical bearings of war fronts lying in economic fronts on the world. The things needed only are state responsibility, political will, a spirit of cooperation, and innovation.

 
First of all, states ought to develop rules of the road for economic warfare, similar to the ones for nuclear weapons and conventional military. For this, the states should initially build up a broad consensus at the already existing platforms like the United Nations or WTO. Once they reach a compromise, they should follow up with a system of incentives and penalties so that all the nations abide by the rules. This way, every state would have a level playing field at the international level, and, all in all, rather powerful states would no longer be able to exercise their whimsical arbitrariness.

 
Secondly, to avoid being overwhelmed by regional powers, weak states will need to do more to pool their resources and challenge dominant forces in tandem. To do so, hostile neighbors will have to shrug off their petty revulsions and form local blocks based on the principle of collective security. Moreover, they may also help each other in times of demanding circumstances, e.g., natural disasters through resource pooling. This kind of cooperation will not only emancipate them from the influence of regional powers but will also add to their bargaining power as a whole – the groupings of Like-Minded Developing Countries at the UN and G-77 are only two such exemplars in this regard.

Thirdly, rather than relying solely on the universal Bretton Woods institutions, it is worth looking more carefully at regional and subregional layers of integration. Doing so would create buffer zones for emerging states so that they could insulate themselves from the brutal speculations of global financial markets. Besides, they will be less susceptible to blackmailing and coercion practiced by the western states in the veils of the IMF, World Bank, and other connected institutions. All that is required is to discover the alternatives to capitalist institutions and, riding the wave of multipolarity, design efficient financial governance organizations after the framework of the ASEAN coalition.

Fourth in the order is the role of big global firms to purse open globalization as they are among the main parties at a loss from the geo-economic rivalries of countries. Collectively the Big Five tech giants, or "FAAMG"—Facebook, Amazon, Apple, Microsoft, and Google (Alphabet)— have a combined market capitalization of over $4 trillion – even more than most of the countries' GDP barring only a few. These five leviathans can easily employ their economic means to gain political leverage over state leaders. Through that, they can force leaders, particularly in the USA, to eschew harmful practices of trade barriers, illegitimate trade wars, and supply chain disruptions.

Lastly, it is high time to overhaul the dispute settlement mechanism of the World Trade Organization to hinder the weaponization of economic infrastructure. The WTO has largely become ineffective due to personal wars between the world's two most powerful economies. So to overcome this problem, the appointment system of judges at the WTO must be overhauled. For now, the USA holds an asymmetrical influence in the system, and for that to change, other great powers must join their hands to demand an equitable saying in the selection of the dispute settlers. Such an effort will go a long way in reinvigorating the WTO, consequently minimizing the chances of economic battles.

Thus, by now, it should be crystal clear that modern war fronts lie in economic zones, and whatever remains of geopolitics will soon be supplanted by geoeconomics in the absence of outright war. Be that as it may, the wars of economic nature will not be short of repercussions – instead, they will comparatively be more lethal and horrendous than military ones at the end of the day. All the more so, this new war variant will perhaps carry enough potentiality to de-globalize the world and throw us back into an anachronic era in case states fail to grasp the enormity of this ball game. May better sense prevail among state leaders!