Edward Fishman provides timely lessons on the potential, but also the limits, of U.S. power to impose its will through economic warfare.
A review of Edward Fishman’s Chokepoints: American Power in the Age of Economic Warfare.
E dward Fishman’s Chokepoints: American Power in the Age of Economic Warfare arrives at a critical moment. Economic warfare, in the form of tariffs, trade restrictions, and targeted economic sanctions, is now the preeminent U.S. foreign policy tool. Though academic studies and publications such as The Economist have long argued that economic sanctions are ineffective as a tool of geopolitics, the United States has emerged as the architect of a world awash in economic warfare. Chokepoints helps us understand how the United States became so enamored of economic warfare — and so effective at waging it — over the past two decades. He also offers clues about its dangers, especially how the legal framework for economic warfare tests America’s commitment to the separation of powers.
Fishman’s narrative provides a rare granular exploration of how, since the George W. Bush Administration, U.S. government bureaucrats developed new and unusually powerful types of economic sanctions against adversaries such as Iran, Russia, and China. His key insight is that, almost by accident, the U.S. government has achieved dominance over two global economic “chokepoints”: 1) the U.S. dollar’s indispensability to global financial transactions and 2) the U.S. government’s control over trade in high technology, especially super-advanced semiconductors. Almost at whim, and without any need for support from allies, the United Nations, or even Congress, the U.S. government can achieve geopolitical goals through economic restrictions via access to the dollar or high technology.
The Iran-sanctions case stands out as Fishman’s most powerful example of effective sanctions. In Fishman’s telling, the George W. Bush Administration’s Treasury Department began threatening banks around the world with restricted access to the U.S. financial system and the all-powerful dollar if they did not comply with U.S. sanctions on Iran. Bureaucrats in the Treasury Department demonstrated that unilateral sanctions — imposed without the cooperation of even allied governments in Europe and Asia — could create severe havoc in Iran’s domestic economy. The damage was so severe that, in Fishman’s account, it was largely responsible for forcing Iran’s hardline regime to agree to the 2015 agreement restricting its nuclear program. While sanctions on Russia and China do not appear to have achieved their desired effects, Fishman argues that these sanctions have achieved more limited goals of weakening Russia’s war-fighting resources in Ukraine and slowing China’s advances in new, chip-dependent technologies.
The book’s main strength lies in its careful attention to technical details and human dynamics. Because it is based on interviews with the actual participants in the events, it provides credible details about the personalities that shaped and even redirected U.S. sanction policies. Trump’s sanctions against China are described as focusing on technology exports instead of financial sanctions, largely due to the personal policy preferences of Trump’s first Commerce secretary, Wilbur Ross (a China hawk), versus his first Treasury secretary, Steven Mnuchin (a China dove). Trump himself offered little guidance to either of his subordinates. Meanwhile, sub-cabinet officials including Bush-Obama official Stuart Levey and Obama-Biden official Daleep Singh were pivotal in developing and implementing sophisticated economic pressure tactics at crucial historical moments.
Some of Fishman’s most fascinating revelations concern the subtleties of sanctions implementation. When Levey was an official in the Bush administration, he figured out that the U.S. could use threats of reduced access to the U.S. dollar to force European and Asian banks into complying with U.S. sanctions on Iran, even though European and Asian governments were not willing to adopt those same sanctions. The ability of the U.S. government to sidestep foreign governments and directly regulate foreign banks, oil companies, and technology players is an important feature of Fishman’s account of how the U.S. became a unilateral sanctions powerhouse. In prior generations, the U.S. would have to patiently negotiate with its foreign partners to collectively adopt sanctions — such as those concerning North Korea — but those sanctions were often riddled with loopholes, exceptions, and poor enforcement. In the new U.S.-dominated sanctions regime, the U.S. government single-handedly determines the rules as well as the enforcement mechanism over global companies that are the target of sanctions. As long as the U.S. controls these chokepoints of globalization, Fishman argues, this tool of U.S. power will continue to exist.
Meanwhile, even with such power, the U.S. still must go to great lengths to drag along its unwilling allies. According to Fishman, the U.S. government revealed, in a “global intelligence roadshow,” that Huawei 5G technology contained “backdoors” enabling Chinese government spying. Yet despite massive diplomatic pressure, the U.S. was not able to convince the U.K. government to act until the Chinese crackdown on Hong Kong, combined with its obfuscation of the Covid-19 data, soured the U.K. government on China.
Sometimes, a determined lower-level official can overcome cabinet opposition. In a particularly striking anecdote, Fishman describes how Daleep Singh, a Treasury subordinate, convinced Biden’s national security adviser to circumvent his boss, Treasury Secretary Janet Yellen, on whether to freeze Russian central bank assets. This story should make us wonder which sub-cabinet staffer in the new Trump administration will try to exert their influence over policy in unexpected and unnoticed ways.
Fishman is not an attorney, so he can be forgiven for not discussing the uncertain and troubling legal foundations of many of the sanctions he describes. Most financial sanctions imposed on Iran and Russia are based on the International Emergency Economic Powers Act (IEEPA), a 1977 law that President Trump would later use to launch his recent massive “Liberation Day” tariff campaign. IEEPA grants the president broad powers to block, freeze, and possibly tariff almost any cross-border transaction. All that is required is for the president to declare that there is a “national emergency” due to an “unusual and extraordinary threat . . . to the national security, foreign policy, or economy” of the U.S. Such a declaration lasts only one year, but the president can simply renew the declaration. Almost all the existing powers for the Treasury’s financial sanction power depend on annual declarations of national emergencies that show no sign of ending after decades.
According to the Congressional Research Service, since 1990, “Presidents have issued roughly 4.5 executive orders [per year] citing IEEPA and declared 1.5 new national emergencies [per year] citing IEEPA.” In his three months in office, President Trump has already declared six new IEEPA emergencies to justify his tariffs on Canada, Mexico, China, and the rest of the world. Fishman discusses that even the export controls on high technology were imposed for many years under a strained interpretation of IEEPA. Export controls were initially regulated under a Cold War–era statute, but when that law expired in 2001, presidents declared a series of implausible “national emergencies” annually to maintain the authority to impose export controls. It was not until 2018 that Congress finally provided firm statutory authority for export regulations.
Because courts almost always defer to presidential determinations of “national emergency,” the IEEPA is a massive delegation of power to the president with little or no congressional oversight. The current battle over President Trump’s IEEPA tariffs reveals that Congress cannot reverse his actions without enacting a new law by veto-proof majorities. This effectively leaves the president with the power to control any cross-border economic interaction at his discretion.
Defenders of IEEPA can cite Chokepoints, however, as evidence for the necessity of IEEPA-based sanctions. But despite all of the excitement about the U.S. sanctions power, a reader comes away from Chokepoints with the conclusion that the academic critics of sanctions are right: Sanctions are unlikely to alter state behavior on fundamental questions. Sanctions will not prevent China from potentially invading Taiwan, nor will sanctions force Iran to abandon its nuclear program, nor even topple the Cuban government. They do represent a crucial instrument in the United States’ geopolitical toolkit, capable of weakening adversaries and complementing broader diplomatic and strategic efforts. Still, they cannot replace the use of military force or diplomacy. Nor does the president need an unchecked IEEPA power to execute sanctions policies effectively. Congress has shown that it is willing to act to authorize sanctions on foreign countries, including Cuba, Russia, and China, and is much more open to economic warfare than actual warfare. Fishman’s book shows that sanctions can be a creature of bureaucratic maneuvering or presidential unilateralism, but history shows they don’t have to be.
In time, the sanctions regime documented by Fishman may be rolled into a broader “economic statecraft” agenda that blends national economic and national security policy closer and closer together. As that process happens, a clearer understanding of what exactly sanctions are and how they work, and the legal basis for these sanctions will become even more necessary. Chokepoints provides lessons on the potential, but also the limits, on U.S. power to impose its will through economic warfare.