In the contemporary world, states do not need armies with physical weapons; economic coercion can be enough to shock other states. The optimism of the post-Cold War era was encapsulated in the liberals’ belief in economic interdependence. With the passage of time, the 1990s optimism began to face new realities: economic vulnerabilities and leverage. Economic interdependence is hardly symmetric and creates unequal vulnerabilities, which are used as strategic leverage by less-dependent states. This asymmetrical interdependence paves the way for strategic leverage under which economic instruments such as sanctions, trade barriers, financial dominance, technological chokepoints, supply chains, and transport routes are used as means of coercion.
The present geoeconomic landscape is an interplay of economic asymmetries among states and international organizations. Henry Farrell and Abraham L. Newman’s concept of Weaponized Interdependence illustrates the logic of how states having control over critical nodes of the global economy can exert pressure on other states. Hence, interdependence does not eradicate power competition; it augments power competition by incorporating economic vulnerabilities into the arenas of geopolitical power competition.
States that dominate global financial networks have the leverage to destabilize those that are dependent. The dominating states disrupt the economies of other states to achieve political goals. The instrument of financial dominance as an economic disruption can be seen in the U.S. Treasury’s Sanctions Measures, which demonstrate the response of the U.S. to Russia in economic terms. The U.S. opted for economic measures to disrupt Russia’s integration into the global financial system.
States with strong and stable economies often pursue technological goals that will strengthen their economic advancement and digital innovations. The demand for semiconductor-manufacturing equipment and related technologies increases when the majority of states depend on those that produce these technologies. This creates vulnerabilities for states that rely heavily on other states.
Technological chokepoints can be seen as an element through which interdependence can be transformed into a distinctive form of strategic leverage. Any critical technological capability, component, or means of production that is limited to several actors is called a technological chokepoint. Semiconductor industries are a profound example of technological chokepoints. These industries have advanced chip-manufacturing capabilities and specialized equipment, which are limited to them. The states that control the industries have the will to pressure the dependents to achieve their own geopolitical and economic objectives. This mechanism shows how technological chokepoints reflect a complex asymmetrical interdependency and depicts that technological advancement is one of the major determinants of economic power in the hands of states.
Economic interdependence is not merely a mutual arrangement of imports and exports; rather, it constitutes multidimensional economic networks, including supply chains and strategic transport routes.
A network through which manufactured products, offered services, and natural resources are moved from a supplier country to other countries is called a supply chain. In asymmetrical interdependence, supply-chain leverage is used when the supplier country limits or restricts supplies to achieve geopolitical goals. According to the International Energy Agency’s “Global Critical Minerals Outlook 2025,” China is leading the refinement of the majority of strategic minerals and holds an average share of around 70%. This supply-chain leverage gives China dominance and significant influence over dependent economic industries and actors without resorting to military means.
On the other hand, it is not the case that crucial geostrategic transport routes can be ignored. In fact, in the modern geoeconomic landscape, geostrategic transport routes represent a vulnerability. States having control over economic corridors and maritime chokepoints can cause supply shortages, increase product costs, and disrupt the flow of goods and energy. These restrictions are a means of economic pressure. The International Energy Agency’s “Sheltering from Oil Shocks” report demonstrates the critical situation of oil transport from the Strait of Hormuz during the 2026 Middle East conflict. When the flow of oil from the Strait of Hormuz fell dramatically, oil prices exceeded $100 per barrel, leaving the global energy markets in shock. This episode shows how a single maritime chokepoint can create disruption in economic interconnectedness. These types of disruptions in geostrategic transport routes can transform economic connectivity into geopolitical leverage.
Without involving armed conflict and physical violence, economic interdependence bears a distinct form of power competition. The complex realities of economic interdependence must be understood and managed strategically.
The approach through which economic interdependence was developed is based on peace and cooperation. To keep this approach on track, it is very important to counter the weaponization of economic interdependence. By establishing clearer codes of conduct for economic statecraft and developing collective regulatory mechanisms, the weaponization of economic interdependence can be mitigated. International organizations, private actors, and the international community shall prioritize economic interdependence as a path to peace and cooperation.
If you want to submit your articles and/or research papers, please visit the Submissions page.
To stay updated with the latest jobs, CSS news, internships, scholarships, and current affairs articles, join our Community Forum!
The views and opinions expressed in this article/paper are the author’s own and do not necessarily reflect the editorial position of Paradigm Shift.
