The Underground Empire: How America Weaponized the World Economy - A Book Review

What grants the US unparalleled power over shaping the global narratives? What allows the US to punish its adversaries and allies alike? Is there any country, company, commoner, container or carrier which can escape the reach of US power?

Illustration by The Geostrata

Amid the ongoing trade war initiated by President Donald Trump, this book is a timely read for people to understand the extent of American influence within the Global Value Chain, which gives them an undue advantage when negotiating the terms of bilateral trade and commerce. 

It's a universally known fact that the US enjoys a monopoly over global information, finance flows, and technology flows with its all-pervasive dollar, banks and institutions. As for Big Tech, it controls our lives in this internet era. 

 Lending a physical shape to this virtual, interconnected world of ours, this book lays bare its all-controlling nervous system - the subterranean world of cables crisscrossing land and oceans, the overland data centres, the powerful buildings in the Pentagon and the big dollar clearing houses. This infrastructure is what gives the US the unequivocal power to enforce its diktat and shape the global order. 

Before diving further into the thriller, the erudite authors Henry Farrell and Abraham Newman take us on a historical quest to understand the universe of cloud computing as well as the laying down of cables, internet exchanges and the numerous companies seeking to take advantage of the same. We are also told about the origins of the SWIFT messaging system and the evolution of the banking industry. 

The Washington Consensus ushered in an era of ‘openness’. The globalized networks of finance, information and technology led to their diffusion even as the distributed production according to the ‘comparative advantage’ governed the manufacturing process. The human capital was also free to travel anywhere. The physical economy was completely transformed with these factors. 

 Earlier, the internet exchanges, nondescript buildings housing data centres had begun to mushroom in the US which is basically the plumbing of the global information flows. The SWIFT system also became a crucial link in global financial flows. The world has become a global village. All was well until the US was attacked in 2001. 

Post 9/11, the USA ‘stumbled’ upon a vast information network lying at its door. The US realised it had a hold over the choke points of global economic and information systems, whether it was the massive data centres or the US-based banks and institutions like CHIPS.

The SWIFT system caved in to accommodate US demands of detecting and preventing crime. The expanse and scope of its Treasury, intelligence and investigative departments gradually expanded to include the whole world. 

It was now time to unleash these metaphorical nuclear weapons on the world, without letting any smoke. A template emerged on how the US dealt with the world - not only punishing the terrorists and arm-twisting the rogue states but also exploiting the interdepencies against its allies and friends, which is presented in the book.

The US Office of Foreign Assets Control freezing assets or its Treasury department's ‘designating’ foreign banks and institutions unilaterally could cut Iran from the global economic system or rein in the dictatorial regime in Pyongyang. Well, the swiftness with which Russian sanctions were carried out is also proof of a ‘weaponized’ world economy. 

This phenomenal capacity also allows Washington to coerce businesses and individuals alike, the examples of which are plenty to be found in this captivating thriller. One of the interesting case studies is that of Huawei. Huawei’s phenomenal success story and its equally dramatic fall is brilliantly captured in this book. How the US crippled a company which was set to build the world's telecommunications networks as the 5G rolled on, is truly illuminating. 

Though initially created by businesses driven by profit to benefit from vast open networks, this aforementioned underground network ultimately provided the levers to control the world to America's imperium. Doesn’t history loudly tell us how the merchants who began to pursue profit opportunities were invariably followed by the firepower of the old empires ? 

The nature of the US-China competition is also explored, with significant implications for the world. Tracing the globalized nature of the semiconductor industry, the authors also present it as a case study of how governments and businesses ignored geopolitical risks by focusing only on the benefits of globalisation. Is the current semiconductor tussle between the US and China anything short of a war zone? 

The book also briefly touches upon how to cooperate and manage the huge risks emerging from the current state of the world, offering alternatives. 

Towards the end, the authors raise a significant question:

How long can the US continue to use coercive tools with impunity without harming itself? 

What happens when other countries decide to strike back?

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BY ADITI CHOUDHARY

CENTRE FOR SCIENCE AND TECHNOLOGY

TEAM GEOSTRATA

info@thegeostrata.com