From Globalization to Geopolitical Competition
The integration in one sense was the great pacifier for the three decades following the fall of the Iron Curtain, as the more firmly countries were unified the more it became expensive to wage war and the less it was likely to be done. Now that’s all washed up. Financial messaging networks, technology supply chains, energy lines — the very networks that have united nations — are tools of coercion. This, Henry Farrell and Abraham Newman, political scientists, called the “weaponization of interdependence” – the use of the architecture of the world economy for political purposes. This is an idea that no one can afford to miss, if they want to get a handle on today’s international politics.
Understanding the Concept
In a seminal article (2019) in International Security, Farrell and Newman presented an argument that the world economy is not an equal network of mutually beneficial transactions. They are structures where the main places are of small numbers but are asymmetric. These hubs have a unique kind of structural power, including those with jurisdiction over them. They can use the ‘panopticon effect’ by tracking transactions, building strategic advantages and gathering intelligence, or the ‘chokepoint effect’ to block users from networks, making the situation extremely costly for the opponents. Most importantly, this influence would be over trade that might not be in the coercing state’s economy. The real control is on the infrastructure and not in size of the market.
The United States–Iran Confrontation
The United States/ Iran relationship is a case-in-point of such dynamics. Washington has effectively used its control over the international financial system, which is offered in dollars, to cut off Tehran. Cross-border payments have to go through parallel, costly and opaque systems since Iran was banned from the Society for Worldwide Interbank Financial Telecommunication (SWIFT), the messaging backbone which is used by international banking. Then there are the secondary sanctions which further limit access: Any foreign bank that facilitates transactions on behalf of sanctioned Iranian entities stands to lose access to the US dollar system and thus to global commerce. This extraterritorial choke point is how Washington can force not only Iran, but every country and institution it deals with to comply.
It was exacerbated in President Trump’s second term. In February of 2025, the Trump administration released its National Security Presidential Memorandum 2 – a maximum pressure campaign that made the elimination of Iranian oil exports its top priority. Since then, the Office of Foreign Assets Control (OFAC) has imposed sanctions on some 1,000 people, ships and planes associated with Iran. Sanctions waivers for India’s Chabahar Port operations were recently revoked in September 2025, highlighting the potential for infrastructure with a developmental intent to be caught in the sanction’s perimeter.
When Iran says back, weaponized interdependence is not a one-way street. The Strait of Hormuz was the route for about 25 per cent of the seaborne oil trading in the world, as well as 20 per cent of the global trade in LNG, before the current conflict. Canada’s involvement would certainly result in “huge costs” being inflicted on the world economy, which many times exceed the economic value of Tehran. The disruption of global energy flows by Iran following the US/Israeli military campaign in February 2026 is the biggest of all time, in the opinion of the Atlantic Council. These sanctions have been responded to by Washington’s retaliatory measures against Iran’s Persian Gulf Strait Authority, and a warning against the risk of foreign financial institutions facing secondary sanctions if they pay the country for passage rights through the Persian Gulf.
The greater picture: Russia and China
The Iran case is a part of a broader change. In the wake of Russia’s 2022 invasion of Ukraine, the U.S. and its allies have applied more than 19,000 sanctions and sanctions packages to Moscow, severed ties with the country’s key financial messaging infrastructure SWIFT, and imposed wide-ranging semiconductor export restrictions on its defense sector. These restrictions have reduced Russia’s ability to supply chips which are key for precision missiles, armored vehicles and drones, as Carnegie Endowment researchers have now found, though they have been partially neutralized by Russian circumvention using intermediaries or via China.
China is at both ends of the stick against and as a victim. The restrictions on advanced semiconductors exports are intended to take advantage of the U.S. position in the chip design and manufacturing technology and presumably to give the United States more time to wean itself from dependence on Chinese-made products. However, Beijing has countered with an investment in the Cross-Border Interbank Payment System (CIPS) as a SWIFT alternative, bulking up a part of its banking system without being reliant on dollars and keeping Iranian and Russian energy imports from being sanctioned. It’s really a race between network power deployment and building alternative networks.
The consequences of Globalization and Global South
This creates structural pressures which can erode the global economy over time. The integrated networks that support modern globalization are less universal as global states become building parallel financial systems, shadow shipping ‘fleet’ and localized supply chains are developed. The global states are developing parallel financial systems, shadow shipping ‘fleet’s’ and localized supply chains, making the networks that support modern globalization less universal. In the case of middle powers like India, Turkey, Brazil, ASEAN countries, they are posed with an uncomfortable dilemma: either be denied access to the US financial system or continue doing business with the sanctioned countries. Their strategic non-alignment’ posture is increasingly difficult to maintain.
Where smaller and poorer states exist, it’s more about than not about exposure. The disruptions to the Strait of Hormuz, commodity sanctions and the fluctuations in debt markets that are denominated in the dollar are real economic costs that impact the economies of countries which have nothing to do with the conflict itself. The report, entitled Weaponized Interdependence, by the Brookings Institution is particularly harmful to those who are able to choose not to use it.
Conclusion
The weaponization of interdependence is a pattern of power that has undergone a change of structure. International exercise of power is structurally changing due to the weaponization of interdependence. The influence over financial messaging systems, technology supply chains and maritime choke points is as important – if not more – than over military power; and it is much more useful. The United States-Iran case study is a reminder both success of this method of coercion, as well as its limitations: an overwhelmingly superior force can still exploit its own chokepoint situation to wreak asymmetric damage. At a more general level, the use of economic networks is becoming a tool for state policy, which is increasingly splintering the globalization on which they thrive. Money, energy and data transmission networks are no longer just economic infrastructures. They are disputed territory – and who wins the fight to control this region will shape the international order for the foreseeable future.
