U.S. History of Weaponized Interdependence

SUMMARY

Henry Farrell and Abe Newman discuss the concept of weaponized interdependence, focusing on how the United States has leveraged centralized global networks such as SWIFT for geopolitical advantage. The conversation explores the historical development, international responses, and the shifting norms surrounding the use of economic choke points in global politics.

MAIN POINTS

• The concept of weaponized interdependence emerges from examining centralized global networks like SWIFT and their potential for geopolitical leverage. [1:01]
• The United States increasingly uses financial and technological choke points, such as the dollar clearing system, to exert pressure on adversaries like Iran and China. [3:00]
• After September 11, 2001, U.S. government agencies shift from protecting global financial systems to using them as tools for national security and power projection. [5:01]
• China adopts similar strategies by weaponizing rare earth exports and creating its own entities list, escalating the dynamic of mutual economic coercion. [8:00]
• The normalization of weaponizing economic choke points leads to broader acceptance and use by various global actors, challenging previous norms and raising questions about decision-making and unintended consequences. [10:00]

DETAILED ANALYSIS

Weaponized interdependence refers to the strategic use of centralized global networks—such as financial messaging systems, supply chains, and information platforms—as instruments of state power. The idea crystallized from research into transatlantic disputes over privacy and the SWIFT banking network, revealing how seemingly mundane infrastructure could serve as geopolitical choke points. Historically, interdependence was seen as a source of efficiency and collective benefit, rooted in trade theory and the advantages of specialization.

However, the centralization of key platforms, often under U.S. jurisdiction, gave the United States unique leverage to monitor, exclude, or coerce other actors, particularly after the September 11 attacks. This period marked a shift in U.S. policy, with agencies like the Treasury Department moving from defending the integrity of global finance to actively seeking ways to enhance U.S. power through these networks.

The use of SWIFT to cut off Iran from the global banking system exemplifies this approach, as does the application of export controls to restrict Chinese access to advanced semiconductors. The U.S. has extended its extraterritorial reach by leveraging intellectual property rights and legal requirements, compelling foreign companies to comply with American sanctions if they use U.S. technology. In response, China has mirrored these tactics, weaponizing its rare earth supply chains and establishing its own regulatory barriers.

This reciprocal escalation has broadened the scope of weaponized interdependence beyond finance and information to include physical goods and critical resources.

The growing acceptance of such strategies reflects both a shift in international norms and the influence of U.S. hegemony. While some actors previously refrained from exploiting choke points due to normative constraints or uncertainty about repercussions, the repeated use by major powers has made economic coercion more commonplace. Decision-makers often lack complete information or coordination, leading to cautious or reactive strategies.

The dynamic now includes both the threat and actual use of economic weapons, creating a volatile equilibrium where the potential for escalation remains ever-present.

LINKS

• Full conversation with Henry Farrell and Abe Newman on weaponized interdependence
• Subscription page for Paul Krugman's Substack
• Paul Krugman's Bluesky profile

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