Economic Weaponry as a Tactic of Total War by Kevin Freeman (April 11, 2018)

in Articles Authored by Kevin

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While the reality of economic warfare is beyond question, the traditional view has been that economic weapons are limited at best.

Summing up these thoughts as recently as 1993, historian Tor Egil FŅrland wrote that:

“modern analysis of the effectiveness of economic warfare leads to the conclusion that if circumstances are right, economic warfare may shorten armed conflicts but not replace the use of armed force. And circumstances are seldom right. With such modest prospects there seems to be little comfort in the economists’ advice as to strategies of economic warfare. We may not be at the end of economic warfare history. But perhaps we ought to be approaching the end of economic warfare illusions.”29

Taken at face value, this would imply that economic weapons do not qualify as WMD. While this view appears to have been adopted by the West, especially in the post-Cold War era, others have expressed the opposite view, including elements in China’s PLA, terrorists such as Osama bin Laden and post-Soviet Russia.

In the view of PLA colonels Liang and Xiangsui, as they discussed extensively in Unrestricted Warfare,

“we can get at least an inkling of the magnitude of financial war’s destructive power. Today, when nuclear weapons have already become frightening mantelpiece decorations that are losing their operational value with each passing day, financial war has become a “hyperstrategic” weapon that is attracting the attention of the world. This because financial warfare is easily manipulated and allows for concealed actions, and is also highly destructive … But, as a superweapon is it practical? The answer is affirmative.” 30

There is reason to believe that Osama bin Laden held similar views. He was quoted in December 2001:

There is another way, through hitting the economic structure which is basic for the military power. If their economy is destroyed, they will be busy with their own affairs rather than enslaving the weak peoples. It is very important to concentrate on hitting the US economy through all possible means.31

Bin Laden’s comments at the time appeared to reflect the thinking in Unrestricted Warfare, and there is reason to suspect that he read and attempted to follow the strategies outlined in the book.32 In fact, U.S. intelligence reportedly confirmed that the Chinese military provided training to al Qaeda in Afghanistan before the 9/11 attacks.33

The Soviet view was similarly focused on economic warfare, as outlined by KGB defector Anatoliy Golitsyn in New Lies for Old. He described Soviet intentions to monitor the U.S. economy for signs of weakness, as they were ready to exploit such opportunities and to “induce the West to underestimate the potency of the [communist] bloc’s economic weapons.”34 Golitsyn also described a planned attempt to reorganize the Soviet Union following an advertised “liberalization” of the Soviet bloc that would appear to the West as weakness and failure. He suggested in 1984 that “the demolition of the Berlin Wall might even be contemplated” as a ploy to lull the West.35 Were his revelations accurate, or was he simply another defector writing a book? A recent commentary by J. R. Nyquist suggests that Golitsyn was extremely accurate:

According to Mark Riebling, KGB defector Golitsyn’s 1984 book contains 148 falsifiable predictions. Of these predictions, 139 were “fulfilled by the end of 1993—an accuracy rate of nearly 94 percent.” Today, Golitsyn’s accuracy rate is higher. Having predicted Russia’s use of oil as a weapon, having predicted a future alliance between Russia and China, it might be said that 141 out 148 of Golitsyn’s predictions have come to pass.36

In Nyquist’s view, the Soviet-era strategy of economic weaponry remains intact in Putin’s Russia today:

Russia is not only engaged in a military buildup. Russia wants to use its economic muscles. You might ask what economic muscles Russia could have? It is bankrupt, backward, hobbled, demoralized and generally dismissed as an effective economic actor. We must remember, however, that positions in the world economy can change, that tables can be turned. Last June, at the International Economic Forum in St. Petersburg, the Russians called for a “new international financial architecture.” Here is Russia’s “Final Phase” economic strategy. The financial vulnerability of capitalism is growing. Keep pushing oil prices higher. Weaken the dollar. Precipitate the inevitable “crisis of capitalism.” Let the have-not nations rise up. Let them throw off their dollar shackles. Let them unite with Russia and China in “one clenched fist.” Russian President Vladimir Putin believes the United States is vulnerable. The emerging economies of Brazil, India and China—combined with Russia— can shove the hollowed-out American economy aside. After all, American economic ascendancy is “archaic, undemocratic and unwieldy,” according to Putin.37

There clearly have been substantive changes in Russia since the end of the Cold War, with Moscow now home to more billionaires than any city in the world.38 Even recent comments by the U.S. intelligence community suggest a growing awareness of the importance of economic security, as noted in a 2009 New York Times article:

The new director of national intelligence told Congress on Thursday that global economic turmoil and the instability it could ignite had outpaced terrorism as the most urgent threat facing the United States. Dennis C. Blair, the director of national intelligence, outlined a variety of security threats during his testimony on Thursday. The assessment underscored concern inside America’s intelligence agencies not only about the fallout from the economic crisis around the globe, but also about long-term harm to America’s reputation. The crisis that began in American markets has already “increased questioning of U.S. stewardship of the global economy,” the intelligence chief, Dennis C. Blair, said in prepared testimony …

Mr. Blair’s comments were particularly striking because they were delivered as part of a threat assessment to Congress that has customarily focused on issues like terrorism and nuclear proliferation. Mr. Blair singled out the economic downturn as “the primary near term security concern” for the country, and he warned that if it continued to spread and deepen, it would contribute to unrest and imperil some governments. “The longer it takes for the recovery to begin, the greater the likelihood of serious damage to U.S. strategic interests,” he said.39

While Blair was replaced as director of national intelligence in mid-2010, many in the U.S. government continue to recognize the economy’s growing importance to national security. In August 2010, Admiral Mike Mullen, then chairman of the Joint Chiefs of Staff, told CNN, “The most significant threat to our national security is our debt. And the reason I say that is because the ability for our country to resource our military—and I have a pretty good feeling and understanding about what our national security requirements are—is going to be directly proportional over time, not next year or the year after, but over time—to help our economy.”40 A year later, former UN ambassador John Bolton echoed this thought: “I think there is an obvious linkage between national security and a strong domestic economy.”41

In sum, anything capable of severely disrupting the U.S. economy must be considered a threat to national security and, by extension, could be classified a WMD. This basic thought has been supported by elements within China, al Qaeda, Russia, and the U.S. intelligence community. In fact, if Chinese authors Liang and Xiangsui were prescient, financial attacks may become the most important and strategic form of warfare in the 21st century:

Thus, financial warfare is a form of nonmilitary warfare which is just as terribly destructive as a bloody war, but in which no blood is actually shed. Financial warfare has now officially come to war’s center stage—a stage that for thousands of years has been occupied only by soldiers and weapons, with blood and death everywhere. We believe that before long, “financial warfare” will undoubtedly be an entry in the various types of dictionaries of official military jargon. Moreover, when people revise the history books on twentieth century warfare in the early 21st century, the section on financial warfare will command the reader’s utmost attention. The main protagonist in this section of the history books will not be a statesman or a military strategist; rather it will be George Soros.42

Soros is mentioned because of his understanding of financial markets and how to manipulate them. Unfortunately, such capabilities appear to be lacking in the U.S. defense and intelligence communities. This was believed to be the case in 1999, when Liang and Xiangsui first published Unrestricted Warfare. Referring to the new concept of weaponry, such as a stock market crash or currency manipulations, Liang and Xiangsui wrote:

” … However, the Americans have not been able to get their act together in this area. This is because proposing a new concept of weapons does not require relying on the springboard of new technology; it just demands lucid and incisive thinking. However, this is not a strong point of the Americans who are slaves to technology in their thinking.43

This perception was confirmed as recently as 2009, when the defense department was preparing for what may have been the first financial war game conducted by the department. According to one participant, James Rickards,

“… if we were going to conduct a financial war, we [would] need … people who knew how to use financial weapons—such as frontrunning, inside information, rumors, “painting the tape” with misleading price quotes, short squeezes and the rest of the tricks on which Wall Street thrives. We [would] need … people who were ready “to bite the ass off of a bear” when it came to trading currencies, stocks and derivatives. There was no lack of testosterone among the uniformed military or spies in the room, but they knew no more about destroying a country with credit default swaps than the average stock trader knew about the firing sequence for an ICBM.44


Notes:

29 Fњrland, “The History of Economic Warfare.”

30 Liang and Xiangsui, Unrestricted Warfare, pp. 40, 161.

31 Brad K. Berner, The World According to Al Qaeda. New Delhi: Peacock Books, 2006, p. 45.

32 Kevin D. Freeman, Secret Weapon: How Economic Terrorism Brought Down the U.S. Stock Market and Why It Can Happen Again. Washington, DC: Regnery, 2012, p. 72.

33 Bill Gertz, “China-Trained Taliban,” Washington Times, June 21, 2002

34 Anatoliy Golitsyn, New Lies for Old: The Communist Strategy of Deception and Disinformation. New York: Dodd, Mead, 1984, p. 342.

35 Golitsyn, New Lies for Old, p. 340.

36 J. R. Nyquist, “Economic Warfare in the Final Phase,” Financial Sense. August 31, 2007. Available at https://www.financialsense.com/ node/441. Accessed March 2012.

37 Nyquist, “Economic Warfare in the Final Phase.”

38 Michele Nichols, “China, Russia Drive Growth in World’s Billionaires,” Reuters, March 10, 2011. Available at https://www.reuters.com/article/2011/03/10/uk-billionaires-idUSLNE72903120110310.

Accessed March 2012.

39 Mark Mazzetti, “Global Economy Top Threat to U.S., Spy Chief Says,” New York Times, February 12, 2009. Available at https://www.nytimes. com/2009/02/13/washington/13intel.html. Accessed March 2012.

40 “Mullen: Debt Is Top National Security Threat,” CNN. August 27, 2010. Available at https://articles.cnn.com/2010-08-27/us/debt.security.mullen_1_pentagon-budget-national-debt-michael-mullen?_

s=PM:US. Accessed March 2012.

41 “Global Economic Downturn a Threat to National Security?” Fox News. August 12, 2011. Available at https://video.foxbusiness.com/v/1108330377001/global-economic-downturn-a-threat-to-nationalsecurity/.

Accessed March 2012.

42 Liang and Xiangsui, Unrestricted Warfare, p. 39. 43 Liang and Xiangsui, Unrestricted Warfare, p. 15. 44 James Rickards, Currency Wars: The Making of the Next Global Crisis. New York: Portfolio/Penguin, 2011,

p. 9.

43 Liang and Xiangsui, Unrestricted Warfare, p. 15. 44 James Rickards, Currency Wars: The Making of the Next Global Crisis. New York: portfolio/Penguin, 2011, p. 9.

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