Trade, Peace and War

When weaponized interdependence escalates

The United States emerged from World War II in a position of remarkable economic and military dominance — a hegemony unrivaled in the Western world since the fall of the Roman Empire. Against some smaller, poorer countries – particularly in South and Central America — America used its position to pursue crude, exploitative imperialism. However, for the most part, the U.S. adopted a more sophisticated, beneficent approach: building interlocking diplomatic, military and economic systems to promote stability and democratic values as well as national self-interest.

A key part of the intellectual basis for the “Pax Americana” was the belief, most fervently advocated by Cordell Hull, FDR’s secretary of state, that “commerce” — that is, global economic integration — is a force for peace.

But is it really?

Even before the Trump tariffs and the Hormuz crisis, there was rapidly growing interest in “geoeconomics,” which the International Monetary Fund defines as “the use of financial and trade relationships to achieve geopolitical and economic goals” — basically the exploitation of economic interdependence as a tool of coercion. (The upcoming European Central Bank conference on the topic will be livestreamed, although I regret to inform U.S. readers that I’ll be giving the Jean Monnet lecture this Thursday, September 17th, at 3 AM New York time.)

The point is that large-scale international trade, while it may sometimes serve the cause of peace, can also create the potential for conflict. This phenomenon of “weaponized interdependence” was articulated and analyzed by the political scientists Henry Farrell and Abe Newman. And the weaponization need not be merely metaphorical: As I write this, Iran’s Houthi allies have just seized military control of part of the Red Sea coast while Iranian drones attack Saudi Arabia’s East-West pipeline, threatening the main alternative route for oil trying to bypass the Strait of Hormuz.

An interesting aside: weaponized interdependence was already a well understood phenomenon in the Sci-Fi literature. The picture at the top of this post is a still from the 2024 film Dune 2, based on the classic Frank Herbert science-fiction novel. The novel is set on the desert planet Arrakis, which is the center of conflict because it’s the sole source for “spice,” a drug crucial to the Galactic economy. In effect, Arrakis is the Strait of Hormuz with giant sandworms, and one way to think about Dune is that it’s a novel about weaponized interdependence — and how such interdependence can escalate into open warfare.

Now I am not suggesting that real-world policy should be dictated by fears inspired by works of fiction. After all, fear is the mind-killer. But the reality of weaponized interdependence is now all around us.

Today’s primer, then, is about the dark side of international economic integration, how it can be used as a tool of coercive power as well as a source of international conflict, even shooting wars.

The key word here is “can.” I am in no sense arguing that global commerce is always or even usually a source of conflict. In fact, I’ll begin this primer by reviewing the historical arguments in favor of trade as a force for peace. But there are clearly situations in which the dark side of globalization prevails. So the rest of the primer will be about those situations: their intellectual basis, historical examples, and, alas, current relevance.

Beyond the paywall I will address the following:

1. Traditional arguments for global trade as a source of peace

2. International trade as a source of conflict

3. How weaponized interdependence can escalate

4. Interdependence and conflict today

5. The costs of insecurity