At this stage of global development, national security and economic policy have become so deeply intertwined, that separating them is practically impossible. Modern states must confront an extremely wide range of challenges, many of which lie beyond their control. This makes the presence of flexible, capable, and highly competent governing institutions more crucial than ever.
The American Precedent
Before pointing to specific issues or proposals, I need to set the stage and briefly turn to history. This historical prelude relates to the modern understanding of national security, an understanding that is highly multilayered, integrated, and, of course, includes economic security.
Before ‘security,’ in its broad sense, came to mean what it does today, political and academic thought had to undergo a natural evolution.
As early as 1937, US President Franklin Delano Roosevelt (during the opening of a new bridge in Chicago, no less) delivered one of his defining speeches on American foreign policy. That address became a cornerstone of the United States’ strategic approach, because it linked socio-economic welfare with national defense within a single doctrine of ‘national security.’
Simply framing these elements as interconnected radically transformed the US Department of Defense. It moved beyond the narrow concept of territorial defense, and began speaking about not only physical threats, but also economic and ideological ones.
As a result, the traditional understanding of ‘security’ changed its substance. It acquired a profound ideological dimension, detached itself from a specific geographic area, and took root in a global context.
From the American perspective, this global dimension was defined as the protection of the ‘American way of life,’ and any threat or challenge to that way of life was placed within a unified definition of ‘national security.’
The broadening of this concept was not without controversy, shaped as it was by different historical eras and events.
Still, it is undeniable that the developments of 1937 set in motion a historical process of rethinking national security—a process that has endured over time and has reached us with a larger, wider and, as it is often called, ‘integral’ meaning. Such ‘integrality’ places at the foundation of the security system the strength of a country’s economy, its capacity for resilience, its ability to survive crises, and its inclination toward modernization and development in an autonomous mode.
Alongside this, the modernized version of national security emphasizes the active role of the state in economic processes (so-called ‘state activism’), which is especially visible against the backdrop of new types of risks.
Accordingly, the boundary between the state’s self-restraint and its intervention in the economy is often fluid. This, logically, is explained by the transition from the old global and economic order to a new one, a transition laden with uncertainty, unanswered questions, and ambiguity.
I will return to this delicate aspect of the economic-security nexus later.
For now, it is important to note that today’s economic system, which is shaped by multiple historical upheavals and periodic modifications, stands as a real load-bearing pillar of comprehensive security.
It is characterized by:
1. Providing the critical infrastructure of the economy;
2. Possessing autonomy (at least for an acceptable duration) and resilience during crises;
3. Supplying essential services to its population; and
4. Ensuring secure and stable development, at least in the medium term.
From this perspective, when forming and implementing state policy, those entrusted with authority and responsibility must communicate with domestic and external audiences using the most realistic scenarios, without ‘rose-tinted glasses.’
At a minimum, this requires:
1. Understanding that economic security reflects the balance of power in the region and globally;
2. Recognizing that economic security is inseparable from the art of compromise;
3. Acknowledging the existence of actors more powerful than oneself, which demands proper consideration and well-managed relations;
4. Maintaining close coordination with partners; and
5. Having the patience and ability to engage in the ‘long game.’
Modern Economic Warfare
When describing the modern economy, one could list many characteristics. I have spoken about several of them before, but here I want to highlight one aspect of the current trend: the growing ruthlessness, egoism, and voracious appetite of actors in economic relations, that is, the drive to secure their interests practically at any cost.
Leaving the literary flourishes aside, I would single out several aspects in particular.
First and foremost is the ‘militarization’ of the global economy. This is a clear shift from development-driven economic constructivism toward economic coercion.
In this sense, tools of pressure and ‘forced agreement’ are now widely used: sanctions, attacks on supply and logistics chains, export–import restrictions, etc.
One of the key system-shaping factors behind today’s disordered global economic environment is the US–China relationship. Here, too, the degree of interdependence between the American and Chinese systems is so high that any poorly calculated step by either party risks leading to ‘mutually guaranteed self-destruction.’
For this reason, it is no coincidence that the US and China have settled into a mode of so-called ‘managed instability’: each side escalates tensions up to an acceptable threshold, followed by de-escalation (a temporary pause or a ‘truce’) and then another round of escalation.
Naturally, such a relationship requires its own craft. As with nuclear deterrence and the logic of ‘mutually assured destruction,’ the risk of miscalculation—and thus serious consequences—in this ‘militarized’ economic rivalry between the US and China remains rather high.
Both sides, of course, possess their own arsenals of influence and coercion.
In the US case, the primary instruments are the dollar (which is still the world’s dominant reserve and settlement currency) and America’s critically important consumer market. It is extremely difficult for China to disregard these two advantages. In innovation, energy, and finance, the US economy still maintains a certain lead, although, given today’s challenges, and without proper structural reforms in the national economy, this advantage cannot be considered guaranteed in the medium or long term.
China, for its part, holds several advantages of its own, which it uses to bargain with the US: its rapidly growing tech industry, its leap forward in the green economy through heavy subsidization, and its near-exclusive dominance of rare-earth extraction and processing. This is only a short outline of Beijing’s ‘trump cards,’ since China’s economy also faces numerous structural challenges that require deep and urgent reform.
Relations among states today, shaped by national egoism and economic autarky, largely revolve around three sectors: communications, finance, and manufacturing.
From this perspective, the global ‘systemless system’ is driven far more by attack–defense tactics than by attempts to reconcile shared commercial interests. As is geopolitics, geo-economics too is hierarchical—the strong on top and the weak at the bottom—and is guided by the factor of dominance.
It is also increasingly evident that the old, classical categories of economic thought (capitalism vs. socialism, free market vs. planned economy, etc.) no longer neatly apply. States (and not only states) are significantly altering long-established practices and approaches to the point that rigid classification within any economic school has become impossible.
Given the evolutionary nature of national economic systems, ‘mobile economic thinking’ is perhaps a more precise and flexible term than any doctrinal or conceptual label.
One visible result is a certain convergence of systems, and even ideologies, that once differed sharply.
While China’s model of active state involvement in economic life is no surprise, what is new is the desire of both the previous and current US administrations to introduce more statism, that is, more state intervention into the American economy. Moreover, personalism increasingly replaces healthy bureaucracy, and short-term goals take precedence over long-term objectives.
From the standpoint of economic security and self-sufficiency, I want to touch separately on Europe, which is a particularly complex case.
Europe could become a highly influential geo-economic actor, but it suffers from a severe deficit of institutional capacity, which prevents it from fully mobilizing the resources at its disposal. Its predicament is compounded by the fact that its security remains heavily dependent on the United States—a dependence made even more uncomfortable by the unabashed mercantilism of the Trump administration in its quest to secure the best possible deals for America by any means.
Europe also struggles with a lack of unity in foreign (and other) policy areas. In short, the European case remains, for now, a clear illustration of a situation in which the goal exists, but the necessary means for achieving it do not.
Analysis by Victor Kipiani, Chairman, Geocase
