Chokepoints: How the global economy became a weapon of war
What I Read this Week, w/c 28th April
I’ve been pretty unwell this week, so I’ve used the time to get stuck into a few slightly intimidating books that have been sitting on my shelf for a while. Chokepoints has been staring me down for ages so I’m glad I finally got the chance to read it – I’m doing a long review because it’s an important book to understand where we are now.
Chokepoints: How the global economy became a weapon of war, Edward Fishman
This is definitely not a book written for lefties, but it’s astonishingly interesting and informative. The author, Edward Fishman, is a Washington insider who has worked in the State Department, the Department of Defence, and the Treasury, where he spent several years in the Terrorism and Financial intelligence team designing sanctions on states like Iran. The book is an insider’s account of how the US developed an armoury of powerful sanctions based on its control over the world’s financial system – and how the overuse of these tools ended up undermining their effectiveness, ultimately compromising US hegemony itself.
I’ve spent most of my adult life in a world where sanctions have been used as powerful and effective tools of foreign policy. But Fishman argues that this is a relatively recent development. Sanctions used to be akin to a slap on the wrist – they would be used to target foreign leaders and their inner circles, making it harder for them to moor their yachts in the Med or purchase mansions in London. The author shows how, over several decades, sanctions morphed into some of the most powerful tools of economic warfare the world has ever seen.
It all started with North Korea, a rogue state that wanted nukes. Bureaucrats at the Treasury realised they could target the banks that connected North Korea to the international financial system. All banks need dollars, as they’re the world’s reserve currency (explained here), and the US controls access to dollars. If the Treasury decides that a bank can no longer access dollars, it’s effectively done for. So once the US started to target banks linked to North Korea, no one wanted to do business with them anymore.
Korea was pretty easy to isolate as it was a relatively small economy – not so with Iran. US sanctions against Iran in the 1990s were relatively ineffective. The US prevented its own companies (mainly oil companies) from doing business in the country, but foreign competitors just stepped in and took the business instead. The US tried to levy ‘secondary sanctions’ against these companies, but it caused outcry in Europe and had to be abandoned.
