Back in December 2023, the Republican Senator Rick Scott wrote to the US Commerce Secretary claiming that the import of Chinese garlic poses a national security threat to the United States. Scott was concerned firstly about the safety standards of Chinese garlic, arguing that “Food safety and security is an existential emergency that poses grave threats to our national security…and economic prosperity”. He was also worried about the economic strategy behind China’s “dumping” of garlic into the market at below-cost price as a form of predatory pricing. Scott then went into fastidious detail about the different types of garlic which should be investigated, including unpeeled, “peeled, chilled, fresh” or “packed”.
How have we arrived at a point where garlic is viewed by some as a national security issue? Peeled or unpeeled? Across swathes of the economy, so-called ‘critical sectors’ (from artificial intelligence to biotech) are being labelled as matters of strategic advantage and national security. The fact that something as banal as garlic might be raised as a national security issue in the same vain represents a significant, if laughable, example of a serious reality: throughout the West and beyond, the line between economics and national security has become blurred.
The economy was not always deemed a national security issue. Surprisingly, the Cold War was characterised by a relatively narrow conception of security. The primary concern was nuclear and non-nuclear capabilities, and deterrence between the two major powers: the US and USSR.
But, following the collapse of the Soviet Union, and compounded by rapid globalisation, the scope of national security expanded: from environmental security to migration. The economy, too, was slowly absorbed into the realm of interstate competition. With the crumbling of the Soviet Union came the loss of a common enemy — paving the way for more fierce economic competition between supposedly friendly states. The US, for example, began worrying about semiconductor dependency on Japan — described in the 1980’s as a “critical national problem”. As the Soviet Union collapsed, therefore, the seeds of economic security were sown.
This concern with relative economic power after the Cold War was compounded by the emerging issue of ‘dual use’ technology. Throughout the Cold War, technological innovation frequently arose from state investments into national security which then spilled over into consumer goods. GPS, for example, was developed by the U.S. Department of Defence during the Cold War to help military operations and precision missile development. But by the 1980s, the U.S. Government made GPS available for civilian use — ultimately leading to the creation of an entirely new consumer sector.
After the Cold War, however, the reverse became true: the state no longer dominated innovation. Instead, as Beverly Crawford puts it, “those cutting-edge technologies most vital to military power are not found in defence research labs but in global commercial markets”. The result was that the line between the military and civil industrial complex began to dissolve.
Today we are witnessing the stark absence of that line. Companies like NVIDIA are not simply important for the US economy, but essential for national security and for the United States’ strategic advantage over other countries. These private companies are both strategic assets and national security risks.
This poses a fundamental dilemma for modern state governments — a question of autonomy and capability. Do you try to maintain key technological research and private sector companies within domestic control in order to ensure autonomy and self-sufficiency? The Biden administration’s ramping up of export controls on semiconductors towards China is a case in point. Or does doing so come at the cost of curtailing innovation and making production more expensive, both of which could also undermine state capability (and, in turn, national security)?
Either way, rapid globalisation and the rise of private sector power has diminished the power of the state — and encroached upon the national security realm.
Threats were once acute and simple: ‘we have an enemy (e.g. the Soviet Union) and they are threatening our national security’. Al-Qaeda’s attacks on 9/11 changed that. They proved that power was no longer held by states, but could be wielded randomly — and lethally — by non-state actors. The world entered what is now called the grey zone of conflict.
This new reality not only made national security harder to protect, but it also initiated a transition of security thinking from acute, specific threat to systemic risk. Bush in 2007 talked of “vulnerability to terrorism”being “a new condition of life”. The emergence of terrorism therefore pushed the realm of national security away from traditional guns, borders, and wars to a far more insidious world of unknowns. National security took on a tone of everydayness. So today’s confluence of national security and economics is partly an extension of that post-9/11 dispersal of threats.
And yet the expansion of the domain of national security, as well as the indefatigable rise of private sector power, were necessary but not sufficient factors in turning the economy into a national security problem. It took an economic crash to securitise the economy.
Following the 2008 financial crisis, there was a particular worry amongst U.S. hawks about foreign-owned debt — especially debt owned by China. Hilary Clinton suggested in 2008 that America’s reliance on Chinese foreign investment was causing the “slow erosion of our economic sovereignty”. There were logical reasons for this fear. If China or Japan made a decisions to decrease their vast holdings of U.S. dollars, that could instigate a currency crisis, force the Federal Reserve to raise interest rates, and create a recession.
The former U.S. treasury Secretary Lawrence Summers labelled the post-2008 US-China economic relationship as a form of “mutually assured financial destruction” — since both sides had the capability to destroy each other.
Suddenly, following 2008, the Cold War language of atomic war was being used to describe the state of the global economy. Economics was being absorbed into the language of war.
It was another, more recent black swan event, however, which really turned the page to a new age of economic security. Under the stark light of the pandemic it was clear how many businesses had failed to become resilient, and how vulnerable supply chains were. The penny did not just drop, it crashed. The global shortage of semiconductors — those precious chips that find their way into everything from phones to ballistic missiles — dented global GDP by 1%. And then followed by the Russian (re)invasion of Ukraine in 2022 also seemed to pour cold water onto complacent globalists, with Germany cancelling its ill-judged Nord Stream 2 pipeline from Russia. This was all, of course, compounded by US-China great power rivalry.
The subsequent rise of supply-chain ‘de-risking’ strategies, export controls, and foreign investment screening has led to a new era of “geoeconomics”. Trade and economics are now essential components of statecraft. The OECD estimates that 60% of foreign direct investment amongst member states is now being screened — largely on national security grounds. Trade has become a zero-sum game.
The new Washington playbook today involves heavy state-funded industrial policy and defensive economic policy. U.S. tariffs on Chinese EVs are at 100%. The Biden administration is currently planning a 25% tariff on Chinese cranes. Moat-drawing is replacing bridge-making.
But is this a viable long-term strategy? Matt Ferchen argues not: “The U.S. must better balance its coercive economic security measures with constructive policies that underscore the benefits of new and sustainable forms of interdependence”.
The U.S. was right to call out China, and is right to take a more strategic approach to critical technologies and domestic manufacturing. But it must also offer its allies carrots as well as sticks. After all, what won the Cold War for the West — amongst other things — was the positive economic and political vision offered by the United States, not just a defensive trade policy to shut the Soviets out.
In February 1944 a U.S. State Department memorandum argued that, without an agreement liberalising trade, the postwar period would witness a revival of the economic warfare which had characterised the 1920’s and 1930s. The agreement turned out to be successful: it was called Bretton Woods.
However, this was not simply an economic proposal; it was an ideological one. Its proponents believed that economic integration and liberalism would not just be beneficial for trade, but would also cement ties and reduce the likelihood for conflict in the postwar era.
The rise of economic security and anti-globalisation sentiment is therefore not only important in itself. If we are not careful, it contains within it the seeds for undermining the ideological premises on which the postwar consensus was built — and the Cold War was won.
All opinions are my own
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