Chokepoints and economic warfare

Deploying the might of the US dollar, rather than the military, to fight America's foreign battles.

Banks around the globe can’t possibly hold every kind of currency in reserve. Instead most hold stocks of just two currencies, their home currency and the US dollar. Even when a transaction doesn’t touch an American company/consumer, the dollar largely serves as the intermediary — nearly 90% of all foreign exchange transactions involve the US dollar.

To put it bluntly, the US dollar has been an essential aspect of the globalized world economy.

As Edward Fishman lays out in his book, “Chokepoints: American Power in the Age of Economic Warfare”, the US has recently taken to leveraging the dollar’s strength to coerce adversaries. Rather than engaging in war on the battlefield, the US has spent the past twenty-odd years waging war via the financial plumbing it largely built and controls.

Fishman’s narrative focuses on four 21st century battles:

1. Limiting Iran’s nuclear ambition, culminating in the Obama-era Joint Comprehensive Plan of Action (JCPOA, colloquially known as the Iran Nuclear Deal), subsequently rolled back by Trump during his first term,

2. Punishing Russia for it’s incursion into Crimea in 2014,

3. America’s duel with China for technological supremacy, concentrated on Trump’s fight with Huawei and its 5G capabilities and Biden’s subsequent embrace of a ‘small yard, high fence’ strategy, and

4. Isolating Putin for the 2022 full-scale invasion of Ukraine.

Each topic is given its own section (the China portion is divided in two, one for Trump 1.0, another for Biden), and each of the sections has 10-15 chapters ranging from 5-10 pages a piece. By design, this makes the book eminently readable (it is perfect for the TikTok generation of broken attention spans).

As a veteran of the Obama-era state and treasury departments¹, Fishman has clearly leveraged his relationships well, conducting dozens of interviews (and collecting over 200 hours of tape) with insiders and decision makers. As a result, Chokepoints focuses on the people in the US government involved in the decision making process, making a topic that could come across as fairly rote and technical actually highly engaging.

Fishman spends time discussing how important it was to build alliances, highlighting how US-led economic warfare transitioned the nexus of power from from the UN Security Council (where permanent members Russia and China were antagonists) to the G7.² But while these alliances mattered for building sanctions support, Fishman points out that the US quickly learned that it could unilaterally deploy economic weapons with a profound impact. “Globalization had given America control over vital economic chokepoints, which it could use to bend the international financial system to its will. UN resolutions could still be helpful, as they gave Washington’s exercise of this fearsome power an air of legitimacy. But they were not strictly necessary.”³

• For Iran, this includes Trump’s sudden removal of the Obama-era JCPOA and subsequent resurrection of sanctions / ‘maximum pressure’ campaign, despite opposition from America’s European allies.

• For Russia, this came in the form of blocking sanctions⁴ after a Russian dissident and his daughter were poisoned in the UK.

• For China, this was Trump’s about-face regarding the tech company ZTE, first applying a denial order and then removing without much warning.

One of Fishman’s primary criticisms is that by playing fast and loose with policy, second-order impacts may not always be considered and as a result, the outcome is worse than before. Examples that are of particular relevance today include:

• Tariffs: Tariffing Chinese tech may have reduced US demand, but had little impact on demand elsewhere, and therefore did little to stem China’s ambitions to gobble up global market share across the technology industry⁵

• Huawei and the entity list: Preventing US companies from sending US manufactured chips to Huawei “created a perverse incentive to shift even more production overseas” so they could still ship to Huawei.⁶ Additionally, rival firms in Japan, South Korea and Taiwan did not have the same restrictions, allowing them to pick up the lost American business, leaving Huawei virtually unharmed. This was rectified in May 2020 when the US government deployed the Foreign Direct Product Rule banning companies around the world from selling chips to Huawei that were made using US tech, effectively forcing companies to choose between the US and Huawei (and they chose the US).⁷

• Consolidation of Axis of Resistance: The US’s liberal use of sanctions during the 2010s signaled economic war was the new normal, and alienated the countries impacted. In response, China, Iran and Russia deepened commercial ties and developed workarounds to western economic chokepoints.

  “Russia and Iran were becoming close military partners. Sino-Russian trade flourished, and Chinese firms furnished Russia with industrial components, bulletproof vests, and various other equipment with battlefield applications. China ramped up its imports of Iranian oil and brokered an agreement between Iran and Saudi Arabia that helped break Tehran’s diplomatic isolation.”⁸

Yet even with the dollar’s hegemonic power during the 21st century and the evidence showing America could be quick on the trigger when it desired, it still preferred to build coalitions of the willing, typically with Europe. However, it is notable that the US and the EU were too timid to really punish Russia after the initial invasion of Crimea. Europe signed the Minsk Agreement and set the wheels in motion for Nord Stream 2, while the US did very little even in the face of Russian interference during the 2016 election.

By acquiescing, Putin was emboldened into thinking he could withstand western pressure. Ultimately this culminated in 2022 when he went into Ukraine again, this time intending to take over the entire country. While the US and Europe came down harder on Putin this time around, it still took months to put the oil price cap in place, amidst fears about the domestic political repercussions surrounding inflation and the US midterm election. These intervening months gave Putin ample time to build up his economic war chest, which we are still dealing with today. The lesson from the economic war with Putin and Russia is that “deferred hard choices does America no good. Sanctions and export controls involve sacrifice, especially when levied against other big economies. They also require intensive preparation to succeed.”⁹

Another critique Fishman has is that, despite the US advocating for economic warfare, is is fighting with one hand tied behind our back. The US has no clear leadership structure (e.g., every conflict becomes a turf war between the money handlers at Treasury vs the diplomacy folks at State) resulting in an enormous amount of time wasted.

The US has nothing like a Pentagon for economic warfare, despite the political consensus that fighting economic wars is preferable to military battles. Japan has an economic security cabinet member. The EU has an economic security strategy. The US should be able to muster up a similar, cohesive strategy.

More broadly, strategies and goals have shifted from win-win (e.g., Iran gets relief for halting its nuclear program) toward indefinite length, zero-sum (e.g., the US’s technology strategy toward China).

Washington had declared Chinese domination of global 5G networks as a threat, and it would seek to weaken he companies at the forefront of that threat. The expectation was for this to be a permanent effort, even if no one said so out loud. The penalties were not designed to change behavior but to downsize China’s role in the world economy. Over time, inflicting economic damage on China became an end in and of itself.¹⁰

But if continuous economic warfare, where only one side can emerge victorious, is the new state of play, what are some ways the US can fortify its capabilities for the fights ahead? Fishman provides a few solutions including,¹¹

• A permanent economic war council: A group of experts drawn from across government (e.g., state, treasury, commerce), the private sector and academia that can regularly meet and strategize sanctions ideas pre-crisis, rather than dilly-dally when a crisis hits,

• Deeper alliances: Work closer with like-minded democracies for regular-sanctions planning sessions, developing early alignment instead of building coalitions from scratch every time there is a new issue, and

• Building incentives: Creating more carrots like strategic stockpiles of critical minerals and commodities (akin to the Strategic Petroleum Reserve for oil) as well as an equivalent to the Belt and Road Initiative to direct capital abroad. This would presumably act as a deterrent, reducing the need to rely on sticks like sanctions.

Of course, this book was written during the Biden tenure, and published in the opening weeks of Trump 2.0. Had the election in November gone differently, this would look like a playbook for an administration working in a globalized society. As it stands, these solutions read as the pie-in-the-sky hopes and dreams of a world lost rather than realistic goals for the next four years.

---

If you enjoyed this edition of Nuance Matters, consider letting me know by buying me a cup of coffee!

Cheers!

---

1. Though he was a relatively junior member of government at the time.

2. Fishman, E. (2025). Chokepoints: American power in the age of economic warfare. Portfolio/Penguin. pg 169.

3. ibid. pg 132.

4. Freezing of assets or other property.

5. Fishman, E. (2025). Chokepoints: American power in the age of economic warfare. Portfolio/Penguin. pg 255.

6. ibid. pg 278.

7. ibid. pg 290.

8. ibid. pg 396.

9. ibid. pg 416.

10. ibid. pg 304.

11. ibid. pg 420-422.