The Primacy of Economic Interests

Economic interests trump security and challenge Western unity

15/11/2012 | by Michael Rühle

Category: Financial Crisis, Finance, Economy and Finance, NATO, European Union, Regional Organizations, Law & Institutions, Military Capacity, Security, Resources and Energy, China, Russia, Worldwide

As traditional security policy is superseded by economic and energy interests, we must begin to discuss the “economization of security policy” – the implications of which go far beyond the current global financial crisis and its effects on the security policy of the West. One voice inside NATO describes what needs to be done to ensure that this commercialization of security will still allow the friendly member countries of NATO and the EU to avoid 21st century conflicts and to continue to act collectively.

Jared Rodriguez, CC BY

The global financial crisis will significantly affect the security policy of the West for years to come. It has already hit all members of NATO and EU, including those who have long been able to sustain high defense budgets. Equally importantly, the sheer duration of the crisis means that crucial investments in the development and procurement of key military capabilities will not be made – resulting in a growing modernization gap that will become ever harder to close. Given this background, it is not surprising that the security implications of the financial crisis are discussed mainly in categories of reduced military capabilities and, accordingly, reduced political ambitions. The solutions that are being advanced are equally unsurprising: pleas for more multinational armaments projects, suggestions for the “pooling and sharing” of certain national capabilities, and the familiar call for Europe to finally shoulder more responsibility in defense matters.

But this debate is far too narrow to capture the full extent of the paradigm shift taking place in the international system: the supersession of traditional security policy by economic and energy interests – the “economization of security policy.” The implications of this shift go far beyond the question of whether new “pooling and sharing” arrangements will enable NATO and EU member states to maintain adequate collective military capabilities despite budget cuts. The real question posed by the economization of security policy is far more profound: Can military alliances still have a future if the primacy of economic interests sets new security priorities, invalidates traditional national and multinational security concepts, and compromises the ability of international organizations to act coherently?

The economization of security policy is not just about “resource conflicts” or “climate wars,” notwithstanding the considerable popularity that such notions may enjoy. The oft-cited wars over water and raw materials have not yet taken place, because even hostile states have been able to agree, for example, on the sharing of water from rivers or on how to deal with controversial dam projects. Under closer inspection, even the United States’ alleged "wars for oil" in the Middle East were geopolitically motivated interventions in which access to oil played only an indirect role. And the vast majority of cyber attacks are not military in nature, but – in line with the primacy of economic interests – tools for industrial espionage. While it is entirely possible that these developments can cause military conflict, the true significance of the economization of security policy lies in the way it changes the structure of international relations.

One such change is occurring in the field of nuclear non-proliferation. For half a century, the proliferation of nuclear weapons was understood to be a purely intergovernmental phenomenon. For political and geostrategic reasons, some nuclear powers supported friendly nations in developing their own national nuclear programs. The uncovering of the nuclear smuggling network of Abdul Qadeer Khan, the “father of Pakistan's nuclear bomb,” has shattered this assumption. Khan delivered centrifuges for enriching uranium as well as plans for nuclear warheads to North Korea, Iran, Iraq, Libya and probably some other states as well. His motivations were not political, but economic. To profit, he created a network of commercial relationships – which ultimately included over a thousand companies – as well as his own production facilities in Malaysia, South Africa and Turkey. This privatization of nuclear proliferation has allowed several countries to approach the threshold of nuclear status, a development that has significantly altered the international security landscape. It is now clear that nuclear proliferation can also take place outside of the international state system – the very system on which the Nuclear Non-Proliferation Treaty is built. This development is bound to ensure unpleasant surprises in the future.

Whether Khan's proliferation network has been completely dismantled is not entirely clear. What is clear, however, is that the commercialization of nuclear proliferation continues. Seeking to become a nuclear power, Syria purchased an entire plutonium reactor from North Korea, including the technicians required to build the facility. An Israeli air strike in September 2007 brought this dubious cooperation to a sudden end. This episode, which surprised even many proliferation experts, demonstrates that a country’s lack of indigenous expertise to build nuclear weapons is of limited significance if this expertise can be purchased on the global market.

Nowhere is the hollowing out of non-proliferation norms by economic and energy interests more apparent than with respect to the Iranian nuclear program. China, for example, has come around to support “tough” sanctions against Iran, but the dependence of the rapidly growing Chinese economy on Iran's oil and gas supplies forces Beijing at the same time to ensure that an embargo against Iran does not lead to a complete interruption of supply. Chinese companies have now signed contracts with Tehran over refineries, enabling the Iranian regime to circumvent even tougher sanctions. Other states have also renegotiated their contracts in order to be able to continue importing oil and gas from Iran.

Russia's policy toward Iran also shows a significant economic dimension. While the issue is not energy but rather economic cooperation, there also seem to exist two layers of policy: At the governmental level, Russia agrees to UN sanctions against Iran, but an “industry” that seems to be operating independently of Moscow circumvents these decisions by continuing its close cooperation with Tehran on nuclear technology. The contrast could hardly be more striking: The West is discussing the vision of a world free of nuclear weapons – a goal that can only be achieved if the entire world considers nuclear non-proliferation to be a top political priority. However, the real-life case of Iran shows that economic and energy interests dominate the security agenda. Non-proliferation is relegated to the second tier.

The commercialization of security policy is now becoming visible in other areas as well. The competition for natural resources, for example, is taking on a significant military dimension. This is particularly true for the Asia-Pacific region, where defense budgets are growing rapidly. For example, many states in that region are claiming territories in the South China Sea, hoping to gain access to the estimated large reserves of raw materials and energy resources. These overlapping territorial claims are underscored by a growing naval military presence. Although this return of “gunboat diplomacy” has thus far remained confined to mere posturing – in Asia, the origins of the First World War have been studied in depth – the risk of military escalation increases, in particular as this competition is accompanied by increasingly nationalist rhetoric. One reason why the US announcement to strengthen its military engagement in the Asia-Pacific region is welcomed by many Asian states is their hope to gain more clout vis-à-vis China, which is seen as too inflexible on territorial issues. That competition for energy can also lead to tensions in Europe is demonstrated by the discovery of large gas reserves in the Eastern Mediterranean: several states in the region underscored their conflicting claims with military threats and military deployments.

Elsewhere, the competition for energy and raw materials proceeds more quietly. In the Arctic, where the melting icecap opens new sea routes and provides access to resources that once were off-limits, the littoral states have been acting with great care to avoid conflict. Their national defense planning, however, shows that their adjustment to new geopolitical realities also has a military dimension. The investment in coast guard vessels and icebreakers appears to be more than simple preparations for increasing ship traffic in the region. The various white papers of the countries in the High North reveal that increased military presence in the High North is also supposed to defend national economic interests.

The influence of economic and energy interests on the security-political orientation of states is also reflected in an economic policy through which Russia tries to pull certain states from the former Soviet Union back into its orbit. Russia's main instrument is an energy policy that tries to obtain control of its Southern neighbors’ oil and gas production through a marketing monopoly, thereby allowing Russia to determine the prices. On the other hand, Russia tries to present itself to the West as an indispensable energy producer. Attempts by some Western politicians to interpret this development in positive terms as a case of “mutual dependence through economic integration” between Europe and Russia have been unconvincing. The degree of economic interdependence between states has only a limited impact on their external relations. Not long ago, Japan underwent a similar experience. In the fall of 2010, when after a dispute over the Senkaku Islands Beijing stopped its export of “rare earths” to Japan, the theories of economic interdependence advanced by reformist Japanese politicians were discredited. Thus far, at least, mutual and balanced interdependence has remained a myth. States that do not own critical natural resources will continue to tilt towards a policy that seeks to accommodate their supplier countries.

The question remains: What needs to be done to ensure that the commercialization of security policy will still allow friendly countries to act collectively and is not otherwise divisive?

At the global level, the most important paths to take are a gradual shift away from fossil fuels and the diversification of energy and raw material imports, in order to reduce the economic and political dependence of specific supplier countries. To avoid the escalation of territorial disputes, new transparency and confidence-building measures are needed, especially in the maritime domain. The use of the cyberspace must be regulated by international agreements, with the minimum objective of defining criteria for violations and legitimate countermeasures. New alliances between state and non-state actors, for example on nuclear proliferation or terrorism, demand closer intelligence cooperation between likeminded states. And the divergent interests in the UN Security Council could at least be partially addressed by a strengthening of regional organizations, as could be seen in the more assertive role played by the Arab League during the 2011 Libya crisis.

An important instrument to protect alliances such as NATO and the EU from being paralyzed by the primacy of economic interests is the "coalition of the willing." Notions that acting in alternating groups would mean a political and military “minus” are echoes of the Cold War, when the West could not afford to be perceived as anything but a strategic unit. The economization of security policy makes the flexible coalition both a necessary and legitimate venue for collective action. Hence, the future lies in alliance structures that cultivate military cooperation, for example through training and joint exercises, while at the same time enabling operations with variable geometry. It is obvious that such scenarios set limits to the current efforts to strengthen joint military capabilities in NATO and the EU. But the risk that a state's refusal to participate in an operation puts the entire implementation into question is too great to allow certain nations to engage in far-reaching “pooling and sharing” arrangements.

Another means to ensure that the primacy of economic interests (and financial constraints) does not undermine the ability to act is to focus on new technologies and military structures that require fewer personnel and less money. As the current controversy about the legality and legitimacy of drone attacks demonstrates, such approaches are not without problems. However, the commercialization of security policy is bound to prevail. The boom in private security companies is the clearest example. Even the massive criticism of this "outsourcing of war” will not be able to hold up against the economic benefits of privatizing certain military services.

The world lives under the increasing primacy of the economy. For the West, this is a double challenge. Divergent interests and reduced military capabilities militate against collective approaches to new security risks; yet the primacy of economic and energy interests also creates new rivalries which could acquire a military dimension of their own. For alliances such as NATO and the EU, hard times are about to begin. To play their role as consultation and early-warning bodies for their member states, these institutions would have to become fora for a much broader security dialogue, in which the relationship between economic developments, resources, and military issues can be analyzed and discussed. Initial steps have been taken in this regard, but fears of "militarizing" non-military issues are still too high to allow for a thorough debate. Moreover, in line with the logic of the primacy of economics, a large part of political expertise in the West has now moved into economics and business. By contrast, the traditional “strategic community” is shrinking and increasingly less able to make their voice heard in the security debate. The West’s political leadership should seek to counteract this trend.

MICHAEL RÜHLE is Head of the Energy Security Section in NATO's Emerging Security Challenges Division. The views expressed in this article are those of the author alone.


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