Economic Security Through Trusted Connectivity for a Free and Open Indo-Pacific

Krach Institute for Tech Diplomacy at Purdue Senior Visiting Fellow Kaush Arha outlines the way forward for a free and open Indo-Pacific by economic security through trusted connectivity.

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Introduction 

The Ukraine crisis is a wake-up call for liberal democracies to strengthen their individual and collective economic security in an integrated global economy.  The European nations find themselves in the untenable position of vehemently opposing Russia’s unlawful invasion of Ukraine while continuing to import Russian energy and funding its war machine. Going forward, economic security will necessitate that economic relations better integrate broader national interests.  German Vice-Chancellor Robert Habeck observed that “We knew, or we could have known, that it was not only stupid to place all our security policy cards on just one country, but that it also wasn’t a smart idea to put them on that particular country. We have to acknowledge that we acted wrongly in the past.”[1] In a world economy defined by global supply chains, economic security will demand an increasingly high premium on trusted—and not merely profitable—trading relations with reliable partners.  The Trusted Connectivity framework[2] and its dual assurances of best business practices and legal-political commitment to a rules-based global order can inform the process of shoring up the economic security of free world nations.

Russia’s invasion of Ukraine marks an end to the era of “change through trade.”[3]  The G7 nations, since the fall of the Berlin Wall, have followed a foreign policy dictum of globalized economic interdependencies, including with nations with divergent views on individual and market freedoms and the rule-of-law.  The long-standing expectation has been that collective economic well-being will persuade nations to preserve economic relations and discourage political and military actions that put them in jeopardy.  Moreover, it was hoped that an integrated global economy would catalyze a global convergence across political, economic, legal, cultural, social, and moral norms around individual freedoms and free markets. This hoped for change has not come to pass.

The specter of rising Chinese mercantilism and continuing Russian annexations of sovereign neighbors represents a trend substantially different from the hoped for change through trade.  In hindsight, the change through trade advocates overestimated the import of global economic interdependencies as an irresistible force for both democracies and autocracies to equally commit to preserving the rules-based global order.  Autocratic regimes with a penchant for totalitarianism, like China and Russia, have subordinated their global economic arrangements to their political and military goals.  Their actions demonstrate the discordant motivations and maneuverability of economic interdependencies between democracies and autocracies.

The case of European dependence on Russian energy, and by extension funding the Russian war machine in Ukraine, points to—in the short-term—economic interdependencies making democratic economies less resilient and autocratic economies more untouchable.  Moreover, the lure of the Chinese market has led to a worrying culture of cooption, complacency, and self-censorship among free world business leaders. The inability of European economies to rid their dependence on Russian energy amidst the Ukraine war holds valuable lessons for any future confrontation with China, were it to invade Taiwan.  This necessitates a systemic rethink of the free world economic playbook.

The demise of change through trade signals the end of an era of treating economic relations separate from broader national interests and trading freely in a vacuum with political systems not committed to upholding the rules-based global order.  China and Russia have been forthright in their intentions to rebut and replace the free world rules-based order underwritten by the United States of America.  The recent “no-limits” China-Russia nexus aspires to that end.[4]  Notwithstanding, both China and Russia continue to benefit and game the very rules-based economic order they seek to undermine and overturn.  Meanwhile, free world economies persist, with a hope and a prayer, on economic relations under existing rules with China and Russia contrary to all evidence.  This asymmetry in economic relations is unsustainable.

This paper offers a broad framework for free world nations to bolster their individual and collective economic security by following the precepts of Trusted Connectivity.  The first part of the paper articulates the foundational sectors to shore up free world economic security including trade, energy, technology, and connectivity.  The second part, drawing upon the first, recommends select high-impact policy actions to advance economic security of the Indo-Pacific region that is free and open, secure, connected, and resilient—to consummate a truly Free and Open Indo-Pacific (FOIP).

 

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[1] Hans Von Der Burchard, “Annalena Baerbock: Germany knew about Russian energy risks — and did nothing,” Politico, March 29, 2022, https://www.politico.eu/article/germany-annalena-baerbock-russia-energy-risk-2014/.

[2] Kaush Arha, “Trusted connectivity: A framework for a free, open, and connected world,” Atlantic Council, August 31, 2021, https://www.atlanticcouncil.org/in-depth-research-reports/trusted-connectivity-a-framework-for-a-free-open-and-connected-world/.

[3] Noah Barkin, “Germany’s Strategic Gray Zone With China,” For decades, Germany’s preferred strategy toward China and Russia has been of  “Wandel durch Handel,” or change through trade. The U.S. motivated with similar goals championed China’s accession to the WTO, Carnegie Endowment for International Peace, March 25, 2020, https://carnegieendowment.org/2020/03/25/germany-s-strategic-gray-zone-with-china-pub-81360.

[4] “In their Own Words: Joint Statement of the Russian Federation and the People’s Republic of China on the International Relations Entering a New Era and the Global Sustainable Development,” China Aerospace Studies Institute, February 4, 2022,  https://www.airuniversity.af.edu/Portals/10/CASI/documents/Translations/2022-02-

Economic Security Through Trusted Connectivity for a Free and Open Indo-Pacific
Dr. Kaush Arha
Senior Visiting Fellow; Former...