Not rockets but economic choke points are the new currency of power

A short introduction to Economic Security

In my previous newsletter, I argued that development cooperation and trade liberalization, as the central approaches to international cooperation, may increasingly be replaced by a growing focus on economic security.

It was therefore to no surprise that Jozef Sikela, Commissioner of EU’s DG INTPA (EU’s “Ministry” for Development Cooperation officially the Directorate-General for International Partnerships) posted after the Foreign Affairs Council held in May 2026:

“Today’s Foreign Affairs Council for Development was exactly about that. How to make our investments more strategic and deliver on our partners’ priorities while advancing Europe’s own: stability, economic security, and new opportunities.“

Yet for many of us working ininternational cooperation, the trajectory of economic security is not always obvious. Some may not even have come across the term itself. At the same time, most of us are already familiar with many of the debates that sit at its core: friend-shoring, de-risking, strategic autonomy, supply chain resilience, and the growing recognition that technology and global value chains have become geostrategic assets.

It is precisely for this reason that I wanted to dedicate this newsletter to a deeper dive into the concept of economic security—its theoretical foundations, the key ideas that underpin it, and the different ways it is being interpreted and implemented across the globe.

The term has become remarkably prominent in recent years. The European Union has adopted an Economic Security Strategy. The United States increasingly frames industrial and technology policy through the lens of economic security. Japan has passed a comprehensive Economic Security Promotion Act. South Korea, Australia, India and many others have launched major initiatives aimed at strengthening economic resilience, reducing strategic dependencies and protecting critical industries.

To understand economic security, it is useful to begin with a simple observation. For much of the post-Cold War period, globalization was primarily viewed as a source of prosperity. Increasing interdependence was expected to reduce conflict, strengthen cooperation and improve economic efficiency. Supply chains became global, production processes became highly specialized and countries increasingly focused on those parts of value chains where they possessed comparative advantages.

What received far less attention was the fact that interdependence creates not only opportunities but also vulnerabilities.

As global production networks became more integrated, critical functions often became concentrated in specific places, companies or infrastructures. Certain actors gained control over key nodes within global systems. Over time, these nodes evolved into what are now commonly described as economic choke points.

An economic choke point exists when a country, company or group of actors controls a critical component of a broader economic network that cannot easily be replaced. The strategic value of such a position does not necessarily derive from controlling an entire industry. Rather, it derives from controlling a bottleneck upon which many others depend.

This insight has become central to the emerging field of economic security.

Another term describes this phenomenon as weaponized interdependence. This concept argues that global economic networks are not as decentralized as many had assumed. Instead, they often exhibit hub-and-spoke structures in which a limited number of actors occupy particularly central positions. Those who control these hubs acquire forms of power that can be used both defensively and offensively.

Political scientists distinguish between two mechanisms.

The first is what they call the panopticon effect. Actors that control central nodes within networks gain privileged access to information. They can observe transactions, monitor activities and map relationships across entire systems. In financial networks, for example, access to transaction data can provide significant intelligence advantages. In digital infrastructures, operators may gain visibility into communications and data flows. The panopticon effect therefore concerns visibility and surveillance.

The second mechanism is the choke point effect. Here, power derives not from observing flows but from interrupting them. Actors controlling critical nodes can slow, restrict or entirely block access to goods, services, technologies or financial systems. This ability transforms economic networks into instruments of strategic influence.

Many of the most consequential geopolitical developments of recent years can be understood through this lens.

The often-cited example is China's position in rare earth processing. Rare earth elements are essential inputs for a wide range of advanced technologies, including electric vehicles, wind turbines, semiconductors and defence systems. While rare earth deposits exist in many countries, China spent decades building dominance in refining, separation and processing capacities. The result was not merely a strong position in mining but control over a critical bottleneck.

When exports to Japan were disrupted following a diplomatic dispute in 2010, policymakers around the world were reminded that control over a processing stage can be more strategically significant than control over the resource itself.

The United States occupies a similarly influential position in several technological ecosystems. Advanced semiconductor manufacturing depends on highly specialized software, intellectual property and equipment. Export controls introduced in recent years demonstrated that influence over a relatively small number of critical technologies can shape the technological trajectory of entire countries.

The same logic extends beyond technology. Financial infrastructure provides another example. The dominance of the US dollar and the centrality of systems such as SWIFT have given Western countries significant influence over global financial flows. Access to these networks has become an increasingly important component of geopolitical strategy.

Economic choke points also exist in physical infrastructure. The Iran war demonstrated how the Strait of Hormuz is one of the world's most important energy corridors. Roughly one fifth of global oil consumption passes through a narrow maritime passage between Iran and Oman.

Economic security has therefore emerged as an attempt to systematically identify and manage such vulnerabilities.

Yet countries approach this challenge very differently.

In high-income economies, economic security is largely concerned with technological leadership, supply chain resilience and strategic competition. Japan provides perhaps the most comprehensive example. Following its experience with rare earth dependencies, Tokyo developed a broad framework that combines supply chain diversification, protection of critical infrastructure, support for strategic technologies and closer coordination between government and industry. The underlying objective is not self-sufficiency but strategic indispensability: ensuring that Japan remains essential to critical global value chains while reducing its own exposure to coercion.

The European Union has pursued a somewhat different approach. Its Economic Security Strategy is often summarized through the concepts of promoting competitiveness, protecting critical assets and partnering with trusted countries. European policymakers generally seek to balance openness with resilience, avoiding both excessive dependency and excessive protectionism. Economic security in the European context therefore remains closely linked to questions of technological competitiveness, research security, investment screening and strategic autonomy.

The United States has placed greater emphasis on industrial policy and technology controls. Through initiatives such as the CHIPS and Science Act, large-scale investments have been directed toward rebuilding domestic manufacturing capabilities in strategic sectors. At the same time, export controls have become a central instrument for protecting technological advantages in areas such as advanced semiconductors and artificial intelligence.

When we move from high-income economies to low- and middle-income countries, however, the picture changes considerably.

For many countries in Africa, Latin America and parts of Asia, economic security is not primarily about semiconductors or advanced manufacturing.

It is about debt sustainability, food security, fertilizer access, energy imports and foreign exchange reserves.

The vulnerabilities are different, but the underlying logic remains remarkably similar.

Brazil provides an illustrative example. As one of the world's largest agricultural producers, the country depends heavily on imported fertilizers. Geopolitical disruptions affecting fertilizer markets therefore become economic security concerns. Recent industrial policies have sought to strengthen domestic capabilities while reducing exposure to external supply shocks.

India has approached economic security through its Atmanirbhar Bharat initiative, which combines industrial development with efforts to reduce critical import dependencies. Semiconductor production, defence manufacturing and strategic technologies have become key priorities, reflecting concerns about both economic resilience and national security.

Across Africa, economic security debates often revolve around critical minerals, sovereign debt and industrialization. Resource nationalism, local processing requirements and industrial policy initiatives can all be understood as attempts to convert resource endowments into more durable forms of economic security.

For the moment, economic security is mostly managed on a country-by-country basis. There are of course already international partnerships especially in the area of critical earth supply chains in place, but since the concept is still in the process of emerging as a central policy objective, cross-border initiatives remain in infant shoes.

This will likely change. No country controls all choke points. China may dominate rare earth processing, but relies on export markets and imported technologies. The United States possesses powerful positions in semiconductors and financial infrastructure, yet depends on critical minerals and global manufacturing networks. Europe remains highly innovative in certain sectors while depending on external energy, technology and raw material supplies. Many countries in the Global South possess critical resources, strategic geographic positions or growing markets, but seek greater access to technology, investment and industrial capabilities.

In other words, economic security cannot be achieved through isolation. This creates an interesting dynamic. While economic security strategies are usually developed at the national level, many of the vulnerabilities they seek to address are international by nature. Reducing dependency on one actor often requires building stronger relationships with others.

The result may be a gradual shift toward forms of cooperation that are explicitly designed around economic resilience. If military alliances emerged because countries recognized that security threats could not be managed individually, it is conceivable that new forms of economic security alliances could emerge for similar reasons.

NATO's Article V commits countries to collective defence in the event of an armed attack. Few obligations are more consequential than a commitment to potentially send soldiers into conflict on behalf of an ally.

Economic security cooperation operates at a different level. Countries may agree to coordinate investments, develop shared industrial capabilities, secure supply chains, establish technology partnerships or guarantee access to critical resources without entering into the far-reaching commitments associated with military alliances.

Precisely because the stakes are different, economic security partnerships may be possible across a much broader spectrum of countries.

Countries do not need identical political systems, common military doctrines or complete strategic alignment to cooperate around semiconductors, critical minerals, energy systems, pharmaceutical manufacturing, digital infrastructure or logistics networks. They simply need a shared interest in reducing vulnerabilities and strengthening productive capabilities.

Building on existing initiatives such as critical earths and renewable energy partnerships, will we soon see comprehensive economic security alliances?