Chokepoints: American Power in the Age of Economic Warfare

"I think you’re starting to get the picture that a lot of the books on this year’s shortlist are about the current global geo-economic tensions. This book goes right to the heart of economics as a weapon and sanctions in particular. Eddie Fishman worked in the US State Department and helped to shape some of the policies that we’ve seen unfolding and being used against Russia, for example, over the Ukraine war. And although it sounds like a potentially rather dry tale, it’s enlivened by the way he takes you into the human side of it. People are trying to think creatively about ways in which they can apply the tools of economics to some pretty tense geopolitical confrontations. Fishman has really captured the zeitgeist of the moment. I was talking recently to one of my colleagues, who said that the word ‘chokepoints’ has become part of the language in which people talk about sanctions, tariffs etc. It’s obviously front and center as a subject for the FT. He finds ways to shed light on it which I think are pretty valuable. Yes, absolutely. That’s common to a couple of the books on the list. We like a nice history lesson for this award."

"This book is a history of how the United States learned to weaponize the role of the dollar in the global financial system to achieve geopolitical goals. Eddie is a former US government official who was one of the architects of the sanctions on Russia and Iran. He’s also a terrific storyteller who interviewed all the key people, and it’s just a yarn of how the United States, in the post-Cold War moment, especially through the War on Terror, realized that it had this monumental financial power that it had acquired almost by accident. A number of things come through in this book which I think are really relevant to understanding American power today and the way that a US-China conflict might unfold. The first is how much American financial power has emerged through improvisation rather than design. The second is adaptation against it on the part of all the authoritarian powers who either have been targets of it or who fear that they might be targets of it in the future. By the end of the book, you already see the emerging anti-sanctions coalition with Russia, the most prominent player, but really coordinated behind the scenes by China to try to build resilience to that financial sanctions playbook. Eddie has written really cogently, both in this book and elsewhere, about how, despite the fact that this is the perfect weapon that can impose immensely asymmetrical costs on an adversary, there are still real limits to the American public’s willingness to accept economic pain to punish bad guys. This raises profound questions for deterrence against China and Taiwan, because we began this conversation by talking about Taiwan’s centrality to the global electronics supply chain. There can be no AI without Taiwan. But also, if a crisis over Taiwan forces a reset in the US-China relationship, that is an economic shock far more devastating than what we’re seeing in Hormuz today, or that we saw after Russia’s full-scale invasion of Ukraine. It raises the question: yes, in principle, the United States has these formidable tools of economic punishment that it could use against China. But is China just too big, too important, too central to global value chains to target with those tools? Would the collateral damage simply be too great? Eddie ends the book by throwing up his hands and asking, ‘Is this playbook, which worked pretty well against Venezuela and Iran, where we saw the limits against Russia, actually going to work against China, an economy ten times Russia’s size?’ My own answer is no. I think that these threats have some value in the same way that nuclear threats do, but they really are much less effective because economic mutually assured destruction isn’t a thing. The way we should be thinking about the Taiwan crisis scenario, from an economic point of view, should be less about punishing China and more about how we would protect our own interests and restructure the international economic system if relations with China broke down. It would be a monumental economic shock. There would be no going back, and the tools that we have come to rely on in this post-Cold War moment might not be the tools we would want to use. Eddie has shown us essentially the ingenuity involved in building and applying those tools, but maybe we need to be even more ingenious and think even more creatively. I’m drawing on all of these books as well as others. The goal of the book is to chart a strategy to prevent a devastating war and preserve an honourable peace. An honourable peace means a peace where China can’t coerce its neighbours by threatening them with starvation. I think China’s preferred plan of action against Taiwan is going to be political and economic. It’s going to be an economic strangulation through incremental steps to take control of who and what comes and goes, alongside political pressure to break the will of the people of Taiwan to resist and to break the will of the US and its allies to hold together. So my book tries to articulate how the United States and its allies can draw on every aspect of their national power and link them together to deter China from testing us in that way. A big piece of the puzzle is showing that we have an economic contingency plan for what happens if China takes us to the brink of disaster over Taiwan. I think Taiwan’s fate is more likely to be decided through a crisis than a war. So our strategy should be to deter the crisis, not just deter the war, and also prepare for both."