Underground Empire: How America Weaponized the World Economy by Henry Farrell and Abraham Newman is a rip-roaring read and simultaneously terrifying. The reader is left with the clear impression of fragility in the world financial system – bad enough in itself – that could tip over into armed conflict. Eek.
The book is about the intersection of the discovery by the US of physical choke-points in the global internet with legal choke points in the world economy and financial system, globalized as it has become. Specifically, the NSA started to find it convenient, post 9/11, to start gathering data on a massive scale on financial movements through the internet. Just seven sites in the US act as bottlenecks for internet traffic, while in other countries there are a similarly small number of such sites. This realisation became the Underground Empire of the title, the deployment of a set of technical and financial mechanisms using these choke points, allowing the US “to cut off businesses and even whole countries from access to key global networks that wove the world’s economy together.”
As the book goes on to describe, the initial post-9/11 responses merged into a haphazard but ever more extensive set of policies and legal tools that enabled the US to extert increasing leverage over extra-territorial entities – not only businesses but also governments. These have included using the power and reach of the US dollar as a reserve currency and currency of trade to “persuade” the Swift network into applying US requirements to exclude for example North Korean and Iranian entities from international payments, and more recently sanctions on US chip technology or IP being exported. The authors write: “From outside, the underground empire seems like a relentless machine of domination, the product of decades of engineering. From inside, it looks quite different, a haphazard construction lashed together from ad hoc bureaucratic decisions and repurposed legal authorities.”
And yet it is a powerful empire and has contributed to increasing geopolitical tensions, and in particular US-China rivalry – although it has also, thanks to its increasingly evident power, prompted countervailing efforts to escape imperial power. But the book concludes “There is no visible exit from the underground empire. … The roots of imperium go far too deep ever to be fully torn out.” The globalisation dream of peace through markets has turned into a nightmare of potential conflict thanks to the realisation elsewhere that markets are built on the foundations of American physical, financial and intangible infrastructure. The book concludes that it is up to the US now to turn the empire into more of a commonwealth, serving the interests of others as well as itself – something hard to see happening in the current political moment.
