He was one of the architects of the US sanctions on Iran that forced Tehran to sign the nuclear deal in 2015. But also of the first sanctions against Russia in 2014 after the annexation of Crimea. A former diplomat in the State Department, the Defense Department and the Treasury Department, Edward Fishman witnessed from the front lines the dawn of a new era: the era of global economic warfare. From his experience and hundreds of interviews, he has created a fascinating book: "Choking Points: American Power in the Age of Economic Warfare", or how the US has perfected its economic weapons to build its power. "Now, with a stroke of the pen, the American president can impose economic sanctions much more severe than the blockades and embargoes of the past", he writes. Washington's opponents and allies have learned their lesson.
"Globalization is dead", claims Edward Fishman in an interview with the French newspaper L'Express. "No one believes anymore that trade relations between countries are always profitable. Especially Donald Trump, who is waging a large-scale trade war with excessive tariffs. A dangerous escalation, according to the diplomat. "History shows that when countries cannot acquire markets and resources abroad through trade, they are tempted to seize them through imperialism."
L"EXPRESS: What is new in the economic warfare of the 21st century?
EDUARD FISHMAN: Economic warfare is as old as the world. From ancient Greece to Napoleon's continental blockade, which prevented British goods from entering his empire. What is new are the "choke points" in the global economy: the key to geopolitical influence today lies in the control of a few critical nodes over which certain countries occupy a dominant position. They exert extraordinary influence because they can deny access to other countries and devastate their economies. The US dollar is certainly the most powerful of these weapons. But most of these "nerve points" were formed almost by accident.
L"EXPRESS: Except for the petrodollar, whose birth you describe in a secret deal signed in the Saudi city of Jeddah in July 1974....
E. FISHMAN: By Nixon's "energy czar", William Simon, at the height of the oil crisis. The United States was under an Arab embargo in retaliation for the Yom Kippur War. Gas prices in the United States skyrocketed. William Simon made a deal with the Saudis: in exchange for American military aid and continued oil purchases, the Kingdom would invest the oil money in U.S. Treasury bonds. Simon had secured a commitment from a foreign government to finance America's deficits.
L"EXPRESS: What pushed America into a "new era" of economic warfare?
E. FISHMAN: The confrontation with Iran was a turning point. When George W. Bush was reelected in 2004, Iran was a top national security priority for the United States because of the country's massive nuclear program. Iran had enriched uranium and plutonium, had a missile program, and facilities buried dozens of meters underground. The rise to power of Mahmoud Ahmadinejad, who threatened to "wipe Israel off the face of the earth," changed the situation. In the summer of 2005, George W. Bush was in a bind: two years earlier, he had invaded Iraq on the pretext that Saddam Hussein had nuclear weapons that never existed. And now Iraq's neighbor, a much larger and more powerful country, had a real nuclear weapons program. The United States already had troops in Iraq and Afghanistan and had no desire for another war in the Middle East. But there is a deep-seated fear that Iran will acquire nuclear weapons and hand them over to a terrorist group like al-Qaeda, Hamas, or Hezbollah—it wasn't long before the September 11 attacks. But George W. Bush doesn't believe in the effectiveness of sanctions. At the same time, a new department was created in the Treasury Department, headed by Stuart Leavy, the first assistant secretary of state for terrorism and financial intelligence. He sees the Iran affair as a personal challenge. He knows that there can be no question of deploying military force like in Iraq, or of ships to carry out a naval blockade, and there is no consensus at the UN for a full embargo on Iran.
But Levy quickly realized that he didn’t necessarily need the support of the UN or other countries. He began a crusade against banks around the world, distributing declassified intelligence showing how these banks were being used to finance Iran’s nuclear program, Hamas, and Hezbollah. Many banks were extremely concerned about the damage that could be done to their reputations if the public and their shareholders learned this information. As a result, most of them voluntarily stopped doing business with Iran. However, there were also those who did not want to do so, especially in Dubai and Turkey. The latter were threatened with secondary sanctions, that is, exclusion from the dollarized financial system, if they did not stop doing business with Iran. Those who ignored this threat paid dearly: the French bank BNP Paribas knows all too well what it was about, as in 2014 it was fined a whopping $9 billion for circumventing the embargo imposed by the United States. The combination of this direct diplomacy with business and secondary sanctions worked. Iran ended up isolated from the international financial system, and these sanctions ultimately led to the Iran nuclear deal in 2015.
L"EXPRESS: Will this method be used against Russia soon?
E. FISHMAN: This is crazy because the case with Russia is actually identical to the Iranian case. On November 24, 2013, the first preliminary agreement on Iranian nuclear energy was signed in Geneva. On the same day, thousands of protesters took over the Maidan in Kiev. This was followed by the flight of Ukrainian President Viktor Yanukovych and the annexation of Crimea by Russia in March 2014. At that time, confidence in sanctions was at its highest, because of the Iranian precedent. You will ask what is the problem with using the same tools against Russia, the eighth largest economy in the world, the largest exporter of fossil fuels, which sells tons of gas to Europe. There are fears that sanctions against Russia will collapse the European and global economies.
The United States wants to form a coalition of the willing with the Europeans. Russia has been excluded from the G8. And for the first time this economic arsenal is being used against a major economy. And although the sanctions against Russia were relatively modest in the summer of 2014, they ultimately led to the collapse of the Russian economy, as they coincided with the collapse of world oil prices. Looking back, we think that the final blow should have been struck then. But Hollande and Merkel went to Minsk to negotiate a ceasefire agreement in February 2015. And Obama gave them the upper hand.
L"EXPRESS: After Iran and Russia, will the US attack its biggest adversary - China?
Well. FISHMAN: Trump’s people at the time, Robert Lighthizer (trade representative) and Matt Pottinger (head of the National Security Council for Asia), believed that China had been waging economic warfare against the United States for decades, stealing intellectual property from American companies, preventing them from gaining access to the Chinese market, and forcing them to form joint ventures with Chinese companies. And what did Washington do in response? Nothing, they said. So the American operation is a form of retaliation against China. This time, it’s not relying on the dollar, but on another of China’s weak links: access to the technology supply chain. In other words, using Silicon Valley against Beijing. Once again, the US administration discovered this lever of power almost by accident, thanks to previous sanctions on Iran. In 2016, China’s second-largest telecommunications company, ZTE, was accused of “illegally re-exporting” equipment to Iran. Shortly after Trump took office, ZTE signed a settlement - negotiated under the previous Obama administration - with the US Department of Commerce. Under the agreement, the company agreed to pay a large fine and fire certain executives involved in its sanctions-evasion scheme. But a year later, Washington found out that ZTE was completely violating its commitments. Some top ZTE executives even claimed to have received bonuses. Commerce Secretary Wilbur Ross saw the red light and added ZTE to the United States' strictest export control blacklist. It prohibits the purchase of any products from these countries. ZTE, in particular, purchased chips from Qualcomm, a major US chipmaker. Within weeks, the company had effectively ceased operations.
The ZTE crisis was so severe that Xi Jinping called Trump in May 2018 and asked him to remove the company from the blacklist. Trump agreed, believing that Xi Jinping would be obliged. Trump administration hawks like Lighthizer were furious: Why are we offering Beijing such a lifeline? In any case, the episode was a revelation for the White House, which understood that technological weapons can decapitate Chinese companies. Chinese memory chip maker Fujian Jinhua took a hit in 2018 after stealing intellectual property from American chipmaker Micron. Then it was Huawei's turn, hit in 2019 by export controls.
L"EXPRESS: On the other hand, Beijing has also built up an economic arsenal...
E. FISHMAN: The most striking example is the green energy value chain, from the essential minerals used in the production of cars and batteries, through the production of the batteries themselves (a market completely dominated by China) and to the final product: electric vehicles. China has become the world's largest exporter of cars. The United States was so concerned that under the Biden administration, it imposed 100% tariffs on Chinese electric vehicles! China thus dominates the clean energy sector and has already begun to use batteries as a weapon, for example by imposing sanctions on the largest American drone company, Skydio. The result was not long in coming: Skydio is now in crisis and is forced to save batteries. It can only provide power for one battery per drone. But if you use your drone on the battlefield or in an area where you have to carry out multiple missions, having only one battery becomes a real problem. Beijing has also imposed controls on the export of essential minerals and rare earth metals to the United States.
L"EXPRESS: In your book you mention the case of North Korea, where economic pressure proved ineffective...
E. FISHMAN: This is an interesting case because it shows that sanctioning a country indefinitely without making economic damage a political goal leads to a dead end. The result is a country cut off from the world economy and with nuclear weapons. A pariah state armed to the teeth. North Korea is an example of the failure of economic warfare, which also shows that once a country goes nuclear, it is very difficult to reverse course. That is why Iran is such a problem now. It has lost a large part of its conventional deterrent - its air defenses and its proxies in Lebanon. That is why the United States fears that Tehran might try to create a nuclear weapon. In the early 2000s, we looked at sanctions, tariffs and export controls as a way to change the behavior of other governments. It was assumed that the normal state of relations between countries was open trade. If sanctions were imposed on a country, it was because it had behaved badly. And if it corrected its behavior, the sanctions were lifted. The conflict with China marks a major change not only because China is a very large economy, but also because the way of thinking has changed: if you look at the export controls on Huawei, there is no longer any expectation that the Chinese state will change its behavior. These measures have only one goal: to weaken China and to overtake it in the technological race. This is a psychological turning point: economic warfare ceases to be a means to achieve a political goal and becomes a means to weaken the adversary and eliminate certain aspects of globalization that, according to Washington, harm American interests. In this case, economic warfare becomes in practice an instrument of deglobalization. With the idea that we should not have integrated our economy so much with that of China and that therefore we want to reduce it forever. We have always wondered what will happen after globalization, what the new world economy will look like. But it is being built every day before our eyes, with every new sanction, with every new tariff, and with every new export control that comes into force. These measures are permanently restructuring financial and trade flows.
L" EXPRESS: Is this the end of globalization?
E. FISHMAN: In reality, we still have economic interdependence. China remains the third largest trading partner of the United States. But for me, globalization is already dead. Because the faith that underlies globalization is dead. I grew up in the 1990s. I was brought up to believe that economic relations between countries benefit everyone. All of that is over.
L"EXPRESS: In this context, economic security has become a national priority for many countries. You explain in your book that this is incompatible with economic interdependence and geopolitical competition. What is the outcome of this equation?
E. FISHMAN: In the United States, under the Biden administration, the idea was to strengthen economic ties with our friends Canada, Mexico, Europe, and Asian democracies like Japan and South Korea, while distancing ourselves from or diversifying from China and Russia. In short, economic interdependence will remain, but within a smaller group of countries. Donald Trump is taking us in another direction: that of economic war not only against China and Russia, but equally, if not more so, against Canada, Mexico, and the European Union. He has threatened Colombia, Brazil, India—virtually everyone—with sanctions and tariffs! In this scenario, there will not be one democratic bloc and one authoritarian bloc, but a global economy in which each nation works for itself. Therefore, if you are a company in the United States, the only logical place to invest is in the domestic market. Why build a factory in France or Canada if those countries are subject to sanctions or tariffs the next day? Unless Trump reverses course, the United States is headed toward autarky by default. Most people are rightly concerned about the economic consequences. That means more inflation in the United States, slower economic growth, and shortages of certain products.
But there is much worse, in my opinion. Because history shows that when countries cannot acquire markets and resources abroad through trade, they are tempted to seize them through imperialism. That is what motivated Hitler in the 1930s to create "Lebensraum" (ed. note: "living space", the idea of expanding Germany's borders to ensure its survival). When Donald Trump and J.D. Vance argue that the United States should seize Greenland for its mineral resources, that is exactly what they mean. Most people would say, well, Greenland has a lot of minerals, so let's trade with them. But this psychology that we can't control anything unless it's physically under the American flag is very disturbing. And it's shared by people like Vladimir Putin. If we move to a global economy without long-term trade agreements, we're going to end up in a world where wars and territorial conquests are going to become more frequent.