Pakistan has had to face such a war in recent months as India used the tool to get this country consigned to the blacklist of the Financial Action Task Force (FATF). The sword continues to hang. The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.
New Delhi has also used the weapon to deprive Pakistan of its export markets by flooding them with goods at competitive prices, mostly subsidized. It had also denied entry of a number of Pakistani goods into India misusing non-tariff barriers.
Pakistan and many other developing countries in the bad books of the US have had to suffer untenable aid conditions from the World Bank and the IMF which take their political prompts from Washington.
The intensifying trade war between the US and China is a classical manifestation of this kind of blood sports. The US feels geopolitically threatened by the rise of China as a global economic giant. By denying China access to the rich US market selectively, Washington hopes to stop Beijing's political ascendancy in the global political affairs. And the US sanctions against Iran are actually meant to bleed the latter white economically because that is what Israel, America's proxy in the Middle East, would like that to happen to its perceived permanent foe.
According to Agenda Weekly, a World Economic Forum news letter dated September 13, 2019 intensifying international competition has made geo-economics - the use of economic tools like sanctions or trade deals to achieve political goals - common practice.
"One particularly visible impact has been a shift in international trade relations, as large economies use what advantage they can to protect politically important industries while hampering those of rivals. However, the increased strategic use of economic tools by states, or state-owned enterprises, promises to have even broader consequences. Increasingly, directed cyber-attacks, devastating economic sanctions, and government investment in strategic infrastructure abroad will dominate the global agenda," says the Agenda Weekly.
The WEF newsletter has listed five categories of economic activities which are said to be prone to geo-economic warfare. These include Economic Institutions, Cyber Disruption, Trade and Investment, Economic Sanctions and Strategic Industries.
In order to escape falling victim to this warfare, China is said to have actively promoted the development of alternatives to the Bretton Woods institutions, such as the World Bank and the International Monetary Fund. Both institutions are often perceived as furthering US policy. In order to provide an alternative to the World Bank, China, along with its partners, helped to lay the groundwork for the BRICS bank, now known as the New Development Bank, which was established in 2014 with its headquarters in Shanghai.
China's influence on the IMF, meanwhile, is said to be growing. Since October 2016, China's renminbi has been included in Special Drawing Rights, an IMF international reserve asset backed by a basket of currencies in order to provide liquidity to countries in need - alongside the US dollar, euro, Japanese yen, and Pound Sterling. In addition, since 2011, a Chinese national has served as an IMF deputy managing director. A recent shift in US policy is said to have created even greater opportunity for countries such as China to gain more sway when it comes to the IMF and World Bank, as the US is said to have taken a more adversarial approach towards these international institutions generally.
Alternative economic institutions are said to have already tested relations between the US and traditional allies; for example, the US had sought to discourage the participation of Germany and France in the China-sponsored Asian Infrastructure Investment Bank, which began operations in 2016. And one also cannot rule out the possibility that despite the warnings by the US that the new 3-year $6b IMF structural adjustment programme that Pakistan entered earlier into this year should not be used to repay the Chinese loans acquired under the China Pakistan Economic Corridor (CPEC) project, the very presence of China inside the IMF could have neutralised the uncalled for US notice.
Government-sponsored hacking into the commercial and research concerns of rival nations, as a way of furthering economic or business interests, is said to have become increasingly prevalent world-wide; several high profile cases have been made public in recent years, where the aim has been to steal intellectual property and trade secrets for the benefit of domestic firms, or to simply create disruption and chaos.
US's trade dispute with China continues to intensify, amid disagreement over the size of current account deficits, steel and aluminium prices, and the alleged theft of intellectual property by Chinese companies (the US has lodged a related complaint with the World Trade Organization against China contesting its potential "market economy status," a designation that would protect Chinese goods from anti-dumping duties). As it has made good on tariff threats with both traditional allies and adversaries alike, the Trump administration has cited a need to protect domestic manufacturing and fulfil campaign promises.
China is said to be advancing its own regional goals with its massive Belt and Road Initiative, which involves more than $900 billion in infrastructure projects in various parts of the world that are either planned or underway. In 2017, Chinese President Xi Jinping announced a joint China-Russia development fund, reportedly in part to assuage Russian concerns that the initiative may encroach on Russian spheres of influence. The Chinese leadership has also signalled interest in a Regional Comprehensive Economic Partnership that includes the ten Association of Southeast Asian Nations (ASEAN) members, in addition to Australia, India, and Japan. Meanwhile, in Europe, French President Emmanuel Macron has called for the better protection of strategic trade interests; both France and Germany are said to be wary of Chinese investment in their domestic transport, defence, technology, and engineering sectors.
Economic sanctions restrict or eliminate another country's international trade and financial interaction, in order to achieve foreign policy or security objectives. Sanctions can be applied by individual nations, groups of states, or international organizations, and targets can be countries, specific industries within a country, or individuals - denying them entry abroad, freezing their assets, or restricting their financial dealings. In addition, many remain convinced that western sanctions imposed on the Russian Federation in 2014, with the purpose of reversing Russian policy on Ukraine, were really aimed at undermining Russian leadership and slowing the country's economic growth. Meanwhile, restrictions that the Russian Federation imposed on Georgian agricultural products in 2006 have been interpreted by some people as intended to deter the smaller country from aligning with western countries.
The United Nations Security Council has used sanctions to back up its resolutions with force, as it has confronted terrorist organizations, armed groups in Africa, and the North Korean nuclear programme. Regional blocs like the EU also make use of sanctions; in 2014, the EU hit Russia with sanctions that included asset freezes and visa bans for 149 people, and a cancellation of bilateral EU-Russia summits, in response to Russia's invasion of Ukraine. The US has applied its own sanctions against Russia, in response to alleged cyber-attacks and interference with the 2016 presidential election. The US has punished entities for violating its sanctions, aided by the importance of its financial industry to the international system. In 2014, the US fined French Bank BNP Paribas $8.9 billion for violating its sanctions on Cuba, Iran and Sudan.
Countries tend to consider an industry to be strategic either because it is critical for an economy, such as energy, or because it adds a military advantage; examples include the production of materials and technologies used to make stealth aircraft or submarines. However, control of energy resources remains an important tool. Venezuela has reportedly purchased foreign oil at a loss in order to supply Cuba, one of its only remaining political allies, while conflict with Ukraine has prompted Russia to consider re-directing energy routes around Ukraine - potentially denying that country its geostrategic position as a transit country.
Rare earth elements can be critical for the production of high end technologies, like jet engines or semiconductors - and can therefore also become the subject of geo-strategic gamesmanship. So-called "dual use" technologies, which are developed for civilian applications but can also be used militarily, have become a concern for public officials wary of related foreign investment. Meanwhile, foreign investment in basic infrastructure, like ports or telecommunications networks, is increasingly being subjected to political intervention.