The underside of globalisation

This is an audio transcript of the Rachman Review podcast episode: The underside of globalisation

Gideon Rachman
Hello and welcome to the Rachman Review. I’m Gideon Rachman, chief foreign affairs commentator of the Financial Times. This week, we’re looking at how globalisation can be turned into a weapon. In the nuclear age, great powers are increasingly and understandably reluctant to go to war with each other. Instead, they’re finding new ways of trying to get their way — trade sanctions, cyber warfare, lawsuits and even flows of migration. It’s what you might call the dark side of interdependence. And it’s the subject of a book called The Age of Unpeace by my guest this week, Mark Leonard. So can globalisation be turned into a weapon?

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During the past week, the presidents of the United States and Russia, Joe Biden and Vladimir Putin, held talks. But they didn’t diffuse the current fears that Russia may be poised to invade Ukraine. In the aftermath of the talks, President Biden threatened Russia with dire economic consequences.

Joe Biden
I’ve made it absolutely clear to President Putin, it’s the last thing I’ll say, that if he moves on Ukraine, the economic consequences for his economy are going to be devastating, devastating.

Gideon Rachman
But Russia has its own way of exerting pressure. Many Europeans are dependent on Russian gas to heat their homes.

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Russia’s new pipeline, Nord Stream 2, it bypasses Ukraine, and opponents say it’ll give Russia’s Gazprom more power over Europe’s energy market.

Gideon Rachman
So while a Russian attack on Ukraine might not cause a great power war, it wouldn’t exactly be normal peaceful relations either. It’s these kinds of tensions that Mark Leonard explores in his new book. I started our conversation by asking him what he means by an age of unpeace.

Mark Leonard
Well, if you look at the normal indicators of war and peace in the world, it looks like the world is going through a kind of age of extraordinary harmony. There are less people who get killed in armed conflicts every year than commit suicide, less than 70,000 people for the last decade on average. But at the same time, even though there aren’t any conventional wars going on between the great powers, there’s an enormous amount of conflict and unrest and all sorts of different types of violence being unleashed across the world, almost taking on pandemic proportions. We’re seeing cyber attacks. We’re seeing sanctions. We’re seeing information warfare. We’re even seeing people turned into bullets aimed at the heart of different regimes.

Gideon Rachman
So Mark, when you say people have been turned into bullets, what do you mean by that?

Mark Leonard
I mean that increasingly countries are turning migration into a weapon. So for example, President Erdogan opened the borders between Greece and Turkey and threatened to bus refugees over the border unless Europe made concessions to him. The same lesson was learnt by the Moroccans, who tried to use that to change Spanish policy on Western Sahara. And then, most recently, President Lukashenko in Belarus has actually been getting Syrian refugees to go all the way to Minsk and then into Belarus, and tried to persuade them to go into Poland and Lithuania as a way of pushing back against European sanctions. And what that means is that, you know, it’s no longer the time of Tolstoy where you had these clear periods of war between uniformed armies, which then give way to periods of peace. Instead, what you have is no conventional wars going on, but underneath the radar you have a lot of violence going on. And in order to describe that, people working in the cyber realm rehabilitated this old fashioned Anglo-Saxon word unpeace, which I think is a perfect illustration of where we are at the moment. And I think if you look at the news on a daily basis, you can see thousands of different examples of unpeace going on, which are hurting not just tens of thousands of people like armed conflicts are but hundreds of millions of people.

Gideon Rachman
Yeah, and so unpeace seems to me to overlap with other concepts. One is hybrid warfare, where people aren’t actually shooting at each other in the conventional way, but they are trying to undermine each other in some of the ways you discuss. And another is an idea of weaponised interconnectivity, that the connections that have been created by globalisation, which were meant to create co-operation, can also, as it turns out, be used as a kind of weapon.

Mark Leonard
That’s absolutely right. My sort of core thesis. Because I grew up believing that connections and interdependence was the foundation on which we could build a peaceful global order and thus particularly influenced by the experience of the European Union, where you see enemies turned into friends. And I thought that we could see that happening on a global basis with free trade, with the internet and all sorts of attempts to wipe out borders between different countries. But the conclusion I came to is that those connections, which have done so much to advance our knowledge and our civilisation and have made life much more colourful and more lively at the same time also gave people a motive to conflict with each other. And I’ve come to the conclusion that actually connectivity in and of itself creates conflict in various different ways. Secondly, it gives us an opportunity to interfere in each other’s internal affairs. But the biggest difference is that we have this arsenal of weapons, which come about from turning the ties that bind us together into a new currency of power. What people are trying to do is to exploit the asymmetries in the system. If one country needs access to resources from another country more than vice versa, that can be used as a currency of power. So that allows Putin, for example, to blackmail countries by using gas. So it can allow the Chinese to blackmail people by restricting access to PPE or vaccines. Or it can allow the US to threaten to cut countries out of the global financial system because of its control of the dollar.

Gideon Rachman
Yeah, I mean, all of which we’ll come back to in a moment. But before we do, I just wondered, given what’s in the news at the moment, are we, are you too quick to write off the possibility of a kind of conventional war old-style? What with Russia threatening to invade Ukraine, China doing all these exercises off the coast of Taiwan, are those kinds of conflicts really off the table?

Mark Leonard
No, not at all. I mean, I don’t think that it’s remotely implausible that there’s a war over Taiwan, which would be frankly terrifying, and it seems very likely that there’ll be a war in Ukraine. But what does seem to be happening now is that even when there are more traditional armed conflicts, they’re coupled with some of these other types of connectivity wars. So when Russia, for example, annexed Crimea back in 2013, the precursor to that was cyber attacks to take out the Ukrainian infrastructure. There’s lots of information war around it. And one of the features of our world is that in a democratic age, people look for the cracks in other countries’ systems. That’s not an entirely new phenomenon. Warfare has always included propaganda and other kinds of tools. And you know, you can go back to the Peloponnesian wars to see sanctions in action. But our world is so much more interconnected now with global supply chains, with the internet, that manipulating those things can be much more deadly than sending a few tanks or planes into each other’s territory, and it’s also a lot cheaper. And that’s why there’s so much more of that conflict going on than these traditional wars.

Gideon Rachman
And as you say, and I’m slightly alarmed to hear you say that it’s actually very likely there’ll be a war of Ukraine, it’s clearly the dominant issue in international relations at the moment. Biden, in talking about how he might respond, just talked this sort of massive economic retaliation, so presumably he would be mobilising exactly these forms of interconnectivity and weaponising them that you were discussing. So if they’re sitting in the White House, as I’m sure they are thinking about what tools short of conventional war do we have to use against Russia to punish Russia, what will they be looking at?

Mark Leonard
Well, that’s exactly what they’re doing. So they’re thinking about, you know, can we cancel the Nord Stream 2 pipeline? Could we shut Russian companies and Russian individuals out of the global financial market? One of the most extreme ideas that they had around the annexation of Crimea when the war started going into east Ukraine was the idea of shutting Russia out of Swift, which would mean that Russians wouldn’t be able to use credit cards any more, and it would effectively shut Russia out of the global financial system. I think those are the sorts of measures which they’re gonna be talking about, and they are credible threats because the US has used these measures before, not least against Iran.

Gideon Rachman
And the Russians presumably, they are also looking at weapons they have at their disposal, which are not military weapons. And you mentioned one before — gas, the supply of gas to Europe. If an invasion takes place in early next year as people are speculating, that’ll be the height of European winter, how powerful potentially is the threat to shut off the gas to, say, homes in Germany that need it?

Mark Leonard
This goes to the heart of how connectivity warfare works, which is about the asymmetries in the system. So Russia has used gas to devastating effect against small economies that are very, very dependent on it. So most recently, after the Moldovan people elected a western facing government, Russia used the threat of cutting off its gas to try and get them to give them guarantees that they wouldn’t go too far towards the west. And it was a powerful tool against Moldova, which is a tiny economy which consumes very little gas and doesn’t have that many other options. But Germany, on the other hand, is a huge market. It is the biggest customer for Russia, and it’s also got quite diversified energy supplies. So I don’t think there’s any real danger of Russia cutting Germany off because it would hurt itself much more than it would hurt Germany. But that doesn’t mean that it couldn’t be used the other way round. I think what the Russians have been better at doing, I mean, they are real pioneers of disruption — so they have used gas cut-offs, they’ve used various types of sanctions against lots of their neighbours, they’ve expelled workers from different countries because a lot of countries around Russia depend on remittances from the Russian economy, they’ve used cyber attacks, they’ve engaged in election interference, they’ve used information warfare — there’s almost no type of disruption that the Russian state hasn’t been involved with. One of the most dramatic things that I saw was after George Floyd was killed and the Black Lives Matter protest took off, there’s this wave of social media process from Africa calling for people to use violence against the so-called fascist police. And people thought this was a global political awakening from Africa, but in fact, it turned out that it was troll factories which were funded by the Russian secret services in Ghana and various other countries that were behind them rather than a grassroots sense of outrage from African people.

Gideon Rachman
Yeah, I mean, that’s pretty remarkable. How effective do you think it is? Do you think we should be worried about particularly this use of social media? Or is it just the kind of noise out there?

Mark Leonard
I think, you know, it really depends from case to case. My sense is that a lot of these things only have an effect on the margins. People focused a lot on Russian interference in the US elections in 2016 and in the Brexit campaign in the UK, and it’s certainly true that if the election is as close as the 2016 election was, a few thousand votes here or there did make a difference in a few key states. So they might have made a difference in the margins. But the real challenge, I think, to liberal democracy is usually domestic. You know, the Russians didn’t invent Donald Trump. They didn’t invent Dominic Cummings and the Brexit campaign, but they did take advantage of the cracks in our systems to make mischief. That’s, I think, very different from the fact that they can have on a country like Moldova, which is much more closely bound into the Russian system.

Gideon Rachman
And I mean, one of the things that obviously the intelligence services are beginning to think about a lot more, and indeed, we heard it last week on this Rachman Review podcast, whether it’s cyber but also particularly cyber money. So the head of GCHQ was saying that they have concerns that if China manages to persuade people to use the Chinese payment system and China’s digital currency, that will create exactly this kind of dependency you’re talking about that could later be weaponised. Do you think that is the kind of new frontier?

Mark Leonard
Absolutely. I mean, if you look at the way that the United States of America has turned the dollar into a tool of geopolitical power, particularly after 9/11, and the attempts to wage the global war on terror through financial means, it has been absolutely devastating to lots of different economies, to friends and foe alike. You know, it has brought many different countries to their knees. I mean, Iran has literally been shut out of the global financial system, but it’s equally impossible for European companies to do business with Iran because they’re so worried about being shut out of the dollar-based system. The birth of a digital Rmb risks giving China similar amounts of power and also a huge amount of information about all the different transactions which take place between different companies. And it’s the intelligence, you know, it’s that ability to use the forensic analysis of Big Data to work out who’s paying money to whom, which has turned sanctions into a really, really powerful resource for the US. And I think that China has shown that it’s willing to be much more brutal in terms of how it uses its sanctions weapons now. I mean, if you look at the recent disputes it’s having with Lithuania, where Lithuania renamed the representation office that it had in Taiwan, the Chinese not only introduce sanctions against Lithuania themselves, but they’ve also told any multinationals that do business with China that unless they stop doing business with Lithuania, the Chinese market will be closed to them. And that’s totally devastating. Imagine if they had a digital currency behind that, which would allow them to track every single transaction which these companies were engaged in, that would really allow this enormous amount of pressure on people like the Lithuanians.

Gideon Rachman
So I mean, it sounds from your description the Chinese are now getting into this game, if I can call it a game, that the Americans have been playing for quite a while. But in the book you say that America, China and the European Union have slightly different strengths and approaches to this age of unpeace because they have different ways of weaponising interdependence. What do you mean by that?

Mark Leonard
They look at the map of the world in slightly different ways. So, you know, a lot of my analysis is based on the science of networks. And when you look at networks, what you have is different nodes, which are the kind of individual units that are connected to each other. You have the ties which bind them together. Some ties are much more connected into the system than others. They are like hubs. And then you also have the kind of rules which the system operates. And interestingly, the Chinese, the Americans and the Europeans look at quite different things and have different idea of what power is. So the Americans — I call them the gateway power because they look at these hubs, these big areas of interconnections, which lots of traffic goes through in the network — and they use that either to shut countries in and out of it like they’ve done with Iran in the global financial system or to spy on countries and mine their data. So it’s also what, for example, Edward Snowden alleges they do with the internet because 97 per cent of data processed is for a few cables which go through the US, and that allows them to have a really good idea of what’s going on in different places. The Chinese I call a relational power because they have a very different way of thinking about power. Rather than looking at the kind of agents in the system or at the hubs, they look at how many ties there are between different players, and they think about the quality of the relationships. So going back to Confucian times, the Chinese have been obsessed with these kind of relationships and have a very particular idea about how this relationship be organised in quite a hierarchical way. And you know, the Chinese idea of being the Middle Kingdom is based on thinking about themselves as the sort of spider at the heart of the web with lots of links going out to other players. And nowadays they have a new architecture for that which they call the Belt and Road Initiative, this enormous attempt to link the world up through roads and pipelines and railways and fibre optic cables, which is going to cost several times what the Marshall Plan cost. It’s an attempt to put China at the middle of the system and to exploit the dependence of others on the Chinese system. Meanwhile, you have the Europeans that have a very different way of thinking about networks. Rather than thinking about the hubs or the ties, what they think about is the operating system, which allows the network to work the rule book. So I call Europe the rulemaking power. We have a rule book of 80,000 pages, which all countries have signed up to in order to join the European Union. And what Europeans try to do is make contact with others dependent on them being willing to follow European rules. So to join the EU you have to swallow all 80,000 pages, but if companies want have access to the European market, for example, they need to follow European rules like GDPR or the privacy rules for the internet and the use of data. Or increasingly, there’s talk about carbon pricing in Europe and the idea of taxing people on the amount of carbon they use. But it could also just mean the safety standards for toys or whether you’re allowed cool products, champagne or whatever. That rule book is being externalised and applied to others. So you’ve got three quite different ways of thinking about power, and these different countries can rub up against each other in unpredictable ways and often misread each other because they think about power in the age of unpeace in very different ways. And the thing not to forget is that most people don’t live in either the US, China or the European Union, and they’re trying to find their own way in the system, and they can’t affect how the whole system works. So they’re often using strategies like the Russians, like the Turks, which we talked about earlier with migration. But they’re also trying to make sure that they don’t get forced to choose between the Chinese way of working, the American way of working, the European way of working.

Gideon Rachman
Well, you outlined these three ways of working. I mean, if this is like the central currency of power now, if you have to place a bet on which will be the most effective in this new world, which would it be — the European, the American, the Chinese way or was that too simple?

Mark Leonard
I think that they all have strengths and weaknesses. And what is very interesting about the stage we’re at at the moment is how much all three are rethinking their attitude towards connection. So the Americans had this very universalist idea about connections, and they thought that they had nothing to fear from binding everyone into the system because it would turn everyone into being like the US. And now they’re absolutely terrified that actually being too connected to China isn’t going to turn China into a country like America, but could mean that the Chinese actually have ways of transforming America. You know, the Great Firewall of China or capital controls and not internationalising their currency. But as they become stronger, they’re thinking in much more aggressive ways about how they can turn the dependence of others into a tool of power for themselves in some of the ways that we talked about earlier. And Europeans have, I think, quite a utopian idea about how interdependence would lead to peace and to a kind of multilateral world order, and now they’re getting a bit more nervous about it. So there are these debates about European sovereignty and strategic autonomy, which reflect the idea that the rest of the world isn’t actually following all of the European rules, isn’t singing to a European tune. So I’m not quite sure exactly how these countries are going to develop, but I’m quite confident about the fact that Europeans and Americans should be able to channel a lot of the things that they’re most scared of from China, the systemic rivalry that people are talking about, if they become a bit more attuned to seeing the dark side, as well as the upside of connectivity and introduce different methods to help themselves. I think the biggest danger is that we carry on in a merry way, thinking that linking the world together will only have an upside. And that while we’re doing that, under the radar you see more and more tension and conflict emerging, which could actually get out of control. Because while we’re blind to the downside of connectivity, we don’t work out ways of regulating it and managing it. And I think that’s the big difference between the age of unpeace and, for example, the cold war. During the cold war, everyone was terrified of a nuclear holocaust so they worked out ways of controlling nuclear weapons and making them safer so that people didn’t take the world to a really dark place. And I don’t feel that we’re doing that with connectivity. I think people think that these things are much more benign than they actually are, and they’re not aware of how dangerous it could be if a cyber conflict gets out of control. If there was a meltdown of the global financial system, if rather than working together to stop climate change and to deal with pandemics, we end up gaming the system and exploiting the links between different countries in the way we’ve been doing in recent times, and that could actually potentially be catastrophic for the world.

Gideon Rachman
Yeah, but just to finish, I mean, you did mention that the Chinese have always been wary of connectivity, built the Great Firewall for the internet, you know, a decade ago and more, and that the Americans are now much warier than they used to be and that this new vogue word is decoupling, which is a form of saying de-globalisation. How much can this particular omelettes of connectivity be unscrambled? I mean, if the Americans decide that economically, as Trump said, the relationship with China had been very bad for them that now they’re opening themselves to all sorts of threats, can the world become more or less connected or might it, if conflict gets out of hand, really move in that direction rather than just managing connectivity, trying to just rip out the connections?

Mark Leonard
So I think that’s the big threat. You know, if you look at Brexit, if you look at Donald Trump’s election, that’s what happens when people feel that connectivity is out of control. The leitmotif of politics in lots of different places is about taking back control and building walls. I think that would be catastrophic for our civilisation, for the world. I think that a lot of the big advances have been driven by bringing people together. So I think the best way of defending connectivity, paradoxically, is to create a bit of distance. And, you know, it might be to decouple in some areas where it’s risky, to rethink how we build our relationships so that you don’t have one-sided dependency, and also to look at who the losers from connectivity are rather than assuming that everyone’s going to be a winner. I mean, in my book, I started in quite a dark place because a lot of my dreams about a connected world ended up not panning out as I hoped they were going to do it 20 years ago. But I end I think in a more optimistic place because I say that rather than thinking about bringing architects for a new open order, what we need in fact a therapist to allow us to accept who we are and how to live together in a safer way. And the challenge, I think for us is to try and de-risk or disarm connectivity so that it can’t be used as the deadly weapon that I was talking about earlier. And that is quite a difficult challenge because in the nuclear age, it was relatively easy to count and to inspect the warheads that different countries held. If everything can be weaponised, you can’t count it and you can’t inspect it in the same way that you can with nuclear warheads so you need to try and develop some rules. And I kind of argue that just as in a marriage, it’s the things that brought us together in the good times that become the tools that we use to hurt ourselves in the bad times, and in a marriage it’s who gets custody of the pet dog, the holiday home, the kids. With geopolitics, it’s more about trade, the internet, infrastructure, how we deal with global problems like climate change, migration. And those are the sorts of things that we need to try and work out some limits on how the competition works. I think that is a bit more like couples therapy than thinking about a new grand architecture because relationships have become very, very toxic and a lot of the problems are psychological as well as economic.

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Gideon Rachman
That was Mark Leonard, director of the European Council on Foreign Relations and author of The Age of Unpeace ending this edition of the Rachman Review. I hope you’ll join me again next week when I’ll be reviewing 2021 with my esteemed colleagues, Martin Wolf and Gillian Tett.

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