Chokepoints

How the Global Economy Became a Weapon of War

By Edward Fishman

Category: Technology & the Future | Reading Duration: 24 min | Rating: 4.2/5 (55 ratings)

About the Book

Chokepoints (2025) is a riveting, thought-provoking, thorough tale of how the United States has transformed economic warfare in the modern age. It shows how sanctions, asset freezes, and export controls have reshaped geopolitics, from crippling Iran’s oil profits to gutting China’s technological ambitions. Finally, it proves that in a world supposedly governed by market forces, it’s state power that ultimately reigns supreme.

Who Should Read This?

Anyone fascinated by global affairs and economic statecraft
Economics and history buffs
Fans of political drama

What’s in it for me? Watch a new era of economic warfare unfold before your eyes.

The Bosphorus is a narrow waterway that divides the city of Istanbul in half, marking the boundary between Europe and Asia. Because of its connections to both the Black Sea and the Mediterranean, the strait has been a strategic site of commerce and trade for millennia. Now as ever, the Bosphorus can be thought of as a chokepoint: a critical point in international trade. Today, though, it’s far less likely to be seized outright or blocked by a hostile battleship.

Instead, its geopolitical importance can be leveraged by paperwork. In December 2022, as Russia’s war against Ukraine raged, a line of oil tankers –⁠ some nearly a thousand feet long –⁠ blocked all transit through the strait. The reason for the blockage was a piece of regulation from Washington that banned US and European firms from shipping, insuring, or financing cargoes of Russian oil sold for more than $60 per barrel. What happened next? And how else has the United States weaponized economic chokepoints to shape geopolitics?

Chapter 1: Setting the scene

Let’s find out. Today’s systems of economic warfare rest largely on the dominance of the US dollar. But how did it come to dominate in the first place? The story begins in the early 1970s, when the global economy was still defined by Bretton Woods.

The Bretton Woods system pegged the dollar to gold at a fixed rate, and all other currencies to the dollar. It was designed to foster global financial stability. However, the system was starting to crumble. ⁠ Countries like Britain and France began to doubt the US’s ability to trade back their gold at the fixed rate and demanded it back. Faced with the risk of empty coffers, President Nixon made a shocking decision. He declared that, rather than return the gold, he would end dollar-gold convertibility entirely.

The move seemed like a massive relinquishment of power. The dollar would now “float” like all other currencies, its value tied to the whims of the market. Instead, it ended up paving the way for a new kind of dominance. In 1973, facing a major deficit and an oil embargo, the US struck a bargain with Saudi Arabia. In exchange for military assistance and continued oil purchases, the Saudis would reinvest their oil revenues in US Treasury bonds –⁠ effectively recycling their profits into US debt. Other petroleum exporters soon followed.

Thanks to this system, oil is still priced in dollars –⁠ and foreign countries still finance American deficits. Every major economy needs dollars to buy oil. And those dollars must pass through American-controlled banks and payment systems. As a result, 90 percent of all foreign exchange transactions involve the dollar. For years, US officials hesitated to weaponize this dominance, fearing it would erode trust. That calculus changed after 9/11.

Tasked with “starving terrorists of funding,” the US Treasury Department gained sweeping new powers to blacklist individuals, banks, and entire regimes from the US financial system. One remarkable use of that power came in 2005, when it targeted Banco Delta Asia, a small bank in Macau funnelling North Korean cash. Treasury signaled that the bank, and any institution doing business with it, could lose access to the US financial system. In response, authorities in Macau froze $25 million in North Korean funds and seized the bank itself to prevent a run.

Banks across Asia scrambled to sever ties with Pyongyang. One North Korean official reportedly admitted, “You Americans finally found a way to hurt us. ” The episode hinted at the ways in which Washington could weaponize global finance. But the real test was yet to come.

Chapter 2: Iran’s nuclear program

The United States invaded Iraq in 2003 over fears it might possess nuclear weapons. Those fears turned out to be baseless. But next door in Iran, a genuine nuclear program was underway –⁠ led by a fundamentalist Islamist regime whose president had openly called for Israel to be “wiped off the map. ” Washington made it clear that a nuclear Iran was unacceptable.

But given the miserable failure of the Iraq War, military intervention was a no-go. Instead, a small Treasury team set out to craft a different sort of weapon. The US began sanctioning major Iranian banks using a powerful tool called blocking sanctions. These sanctions froze assets and prohibited all transactions with the US. Even though Iran had few ties to the US economy, Iranian payments to Europe or Asia still often passed briefly through US financial institutions. Blocking sanctions froze even these “U-turn transactions” –⁠ cutting sanctioned banks off from the global financial system entirely.

Additionally, these sanctions were “conduct-based” –⁠ which meant they explicitly tied Iranian banks to nuclear activity and terrorism financing. So, along with hurting Iran economically, the sanctions were designed to convince foreign banks to see business with Iran as a liability, a risk legally, reputationally, and most importantly, financially. Multimillion dollar fines were issued to banks that flaunted the sanctions. Soon, almost all of the world’s major banks had voluntarily walked away from Iran. Even then, Tehran was still raking in billions’ worth of oil profits every year, and its nuclear program showed no signs of stopping. If the US really wanted to hurt Iran, it needed to target its oil.

First, Congress threatened sanctions on foreign firms doing business with Iranian energy companies. Within months, major firms like Shell, Total, and Eni left the Iranian sector. Next, Congress forced SWIFT, the global financial messaging service, to disconnect from Iranian financial institutions, locking Iran out of much of the global banking infrastructure. Then came the killing blow: the Iran Threat Reduction and Syria Human Rights Act. This act forced foreign banks to freeze Iran’s oil profits in overseas escrow accounts. Iran could continue selling oil and generating profit, but it couldn’t bring any of the funds home.

The strategy worked. By mid-2012, Iran’s currency collapsed, and inflation soared to an estimated 40 percent. Iranians took to the streets in protest while their government watched billions in oil profits accumulate in accounts they couldn’t access. Thanks to these “scalpel-like” sanctions, Iran finally agreed to negotiate.

In July 2015, it signed the JCPOA, agreeing to dispose of 98 percent of its enriched uranium and dismantling key nuclear infrastructure in exchange for sanctions relief. Before the deal, Iran could have built a nuclear bomb in months. Now, it would take at least a year –⁠ giving US intelligence ample time to take preventative action.

Chapter 3: Russia’s annexation of Crimea

In February 2014, Russia stunned the world, initiating the first act of territorial conquest on European soil since World War II. In just days, Russia invaded the peninsula of Crimea on the Black Sea, installed a pro-Russian leader, and staged a sham referendum in which Crimea “voted” overwhelmingly to join Russia. Faced with this violation of international norms, the US and its allies looked to fight back. Military intervention was off the table, since Russia was a nuclear power.

And Iran-style sanctions wouldn’t work, given that Russia was far more deeply entwined with the global economy –⁠ especially Europe –⁠ than Iran had been. Instead, the Obama administration wanted precise sanctions that could inflict maximum damage on Russia while minimizing harm to Europe. The strategy would be shaped by State Department veteran Dan Fried and Treasury’s Daleep Singh. The first wave of sanctions targeted Putin’s closest cronies, freezing their assets and curtailing their access to Western finance. These sanctions were symbolic but had little real impact –⁠ not least because Putin compensated his posse handsomely with favorable loans and contracts. Next, Singh’s team identified a key vulnerability: Russia’s dependence on foreign debt.

Russian banks and companies owed over $700 billion to international creditors, much of it in dollars and euros. And Russia’s state-owned firms⁠ relied on Western capital markets to roll over debt and fund new investments. To cut off Russia’s access to future credit, sectoral sanctions would bar the largest state-owned banks and energy companies from raising new debt or equity in US financial markets. Without the ability to refinance loans, they’d have to either pay down their obligations or beg the Russian government for help. The effects of these sanctions were swift and severe. The ruble collapsed.

Russia's central bank, led by Elvira Nabiullina, burned through its reserves to slow the crash. Nabiullina also hiked interest rates and arranged secret bailouts for state-backed firms. Meanwhile, US shale oil production surged, pushing global oil prices below $60 a barrel. With oil revenues falling and credit lines frozen, Russia’s economy entered freefall. On a day that came to be known as “Black Tuesday,” the ruble lost half its value in a single day. And yet, the war in eastern Ukraine continued.

Russia agreed to a ceasefire, but the conflict was far from over. Russia held on to Crimea and continued to arm and support separatists. Putin was forced to shelve his “Novorossiya” –⁠ New Russia –⁠ project, at least for the time being. But he hadn't been forced to retreat, and Crimea remained under his control.

Chapter 4: China and Huawei

In April 2019, Washington received terrible news. The United Kingdom, America’s closest ally, had just agreed to let the Chinese tech giant Huawei build its national 5G network. Officials in the Trump administration were mortified. Huawei was more than just a tech company –⁠ it was a bonafide arm of Chinese intelligence.

Because of the backdoors built into its technology, it could potentially be used to disrupt communications, shut down power grids, and monitor military operations. If the world became dependent on Huawei, China could leverage that dependence to impose its will. The US needed to stop Huawei. This time, it would strike through a new chokepoint: America’s dominance in high-end semiconductors and cutting-edge technology. The first big hit came in May 2019, when the Commerce Department placed Huawei on a roster called the Entity List. The Entity List is one of the most powerful instruments in US export control law.

If a company is on it, no US company can sell anything to it without first obtaining a license –⁠ and licenses are almost never granted. Overnight, Huawei lost access to US chips and software,⁠ including Google’s Android services. This meant users of Huawei smartphones outside of China would eventually lose access to the Google Play store, Gmail, YouTube, and other Google products. Unsurprisingly, Huawei’s international smartphone sales collapsed 40 percent in just a month. But Huawei’s 5G division, the heart of its empire, remained strong –⁠ until 2020, when the Trump administration dusted off an obscure Cold War regulation called the Foreign Direct Product Rule, or FDPR. The original FDPR was designed to stop foreign factories from producing missile parts with US technology.

The new version was retooled to cut Huawei’s access to advanced semiconductors. The impact was seismic. Taiwan’s TSMC, the world’s top chip foundry and Huawei’s second-largest customer, severed ties with Huawei to protect its relationship with the US. It also announced a $12 billion plan to build a new plant in Arizona. Deprived of TSMC’s processors, Huawei’s future 5G equipment suddenly looked uncertain. The UK launched an emergency review.

British intelligence concluded that without the chips, it could no longer vouch for the safety or functionality of Huawei’s systems. And by mid 2020, UK Prime Minister Boris Johnson banned Huawei outright, ordering carriers to strip its equipment from existing networks by 2027. Soon, other countries backed out of their own 5G deals with Huawei. The strategy marked a turning point in US foreign policy. Before, economic pressure was a means to change behavior –⁠ to get Iran to negotiate or Russia to withdraw from Crimea. Under Trump, it became an end in itself:⁠ to constrain the capacity of a rival superpower.

Chapter 5: Russia’s full-scale invasion of Ukraine

On February 4 2022, the opening day of the Beijing Winter Olympics, Vladimir Putin and Xi Jinping announced a new strategic partnership between their two nations. Behind closed doors, Xi reportedly asked Putin for a favor: Wait until the Olympics are over to initiate an invasion. The Olympics would end on February 20th. That gave the West two weeks to act.

Together, the US and the EU set to work on a set of “Day Zero” sanctions that would go into effect at the first sign of an invasion. On February 21st, Putin moved, sending troops into Donetsk and Luhansk. But there was hesitation from the West, and a hope Putin was bluffing. Three days later, as missiles struck Ukrainian cities, the Day Zero sanctions were finally triggered. Major Russian banks were cut off from the dollar, assets were frozen, and export controls –⁠ modeled on those that had crippled Huawei –⁠ severed Russia’s access to semiconductors and other critical technology. Without semiconductors, Russia would lose access to the high-tech munitions its army depended on.

But the invasion pressed on. The West responded by upping its aggression –⁠ taking the unprecedented move of freezing Russia’s central bank reserves. Without access to its reserves, Russia was unable to stabilize its economy. The ruble tanked, and Russia’s stock index dropped by a third in a single day. A critical loophole remained, though: energy. Russia was still raking in oil profits, funding its war machine.

But sanctioning oil outright would spell disaster for the EU, dependent as it was on Russian oil. The solution the Biden administration converged on was a price cap. Let Russia keep selling oil, but limit how much it could earn per barrel. The cap was set at $60 per barrel, which was below Russia’s budgetary break-even price but high enough to keep exports flowing. When the cap came into effect, Turkish authorities blocked tankers from transiting the Bosphorus, that strait dividing Europe and Asia. The issue was that any tanker in violation of the cap would lose its insurance coverage.

So Turkey demanded explicit, written letters from London insurance firms confirming that the waiting tankers’ insurance still held. After several nerve-wracking days of communication, the impasse broke. The oil tankers could move again. Then, something remarkable happened: the price cap began to work. Global crude oil prices slipped below $80 per barrel, while Russian barrels sank below $50. By mid-2023, Russia’s oil revenues had dropped by nearly 50 percent year over year.

Analysts projected over $1 trillion in lost energy income by 2030. The war in Ukraine raged on. But the price cap had done what earlier sanctions hadn’t –⁠ it had rewired the global oil market.

Chapter 6: The future of economic warfare

Despite having advance warning, the sanctions the US and Europe imposed on Russia were too little, too late. Yes, Russia’s access to high-tech weapons was cut –⁠ but it had no trouble leveling Ukrainian cities and devastating lives with old Soviet weapons and oil profits. The Biden administration was determined not to repeat that mistake, so it acted swiftly when China later started showing signs of its own escalation. After Speaker Nancy Pelosi traveled to Taiwan in 2022, China initiated a series of military exercises that looked uncomfortably like a dress rehearsal for an invasion.

If sanctions were going to be effective in preventing that outcome, the US needed to act before an invasion, not after. So it imposed a sweeping set of export controls aimed at cutting off Beijing’s access to cutting-edge semiconductors. The day after the export controls were revealed, Chinese computer chip stocks lost almost $10 billion in value. These actions marked what national security advisor Jake Sullivan called a “new Washington consensus” in international economic policy. Their goal was to protect a “small yard” of foundational technologies –⁠ like semiconductors –⁠ with a “high fence. ” Moves in economic warfare like these have led to a global scramble for economic security.

Countries like Brazil, Iran, and South Africa have grown more united, having felt the impacts of the Russian oil sanctions despite not being sanctioned directly themselves. Those states have begun to build hedges, diversifying their supply chains and financial relationships. Meanwhile, former Chair of the US Federal Reserve Janet Yellen has recommended that the US do the same in a process she calls “friendshoring. ” The US, she said, should pursue economic integration with trusted countries while lessening dependence on China, Russia, and other adversaries. That’s not all the US needs to do to make economic war more effective. It should also look to diversify its supply of carrots instead of relying solely on sticks.

So far, American economic warfare has depended mostly on punishments for noncompliance. It needs more rewards –⁠ like a sovereign wealth fund or strategic stockpiles it can use to direct capital abroad. Some day, the Age of Economic Warfare will end –⁠ perhaps because of gradual increases in friendshoring, or because of a war of conquest in Taiwan. Some will certainly cheer the end of this globalized era. Perhaps they’ll be right. If countries no longer fear one another’s economic weapons, a kind of stability could take hold.

Yet there’s also a darker possibility. If great-power rivalry persists –⁠ as history suggests it will –⁠ and the economic tools of coercion lose their edge, the world may return to older, bloodier forms of conflict. For all its costs, economic warfare offers one great benefit: it prevents mass-scale loss of life. Perhaps we’ll miss the Age of Economic Warfare once it’s gone.

Final summary

The main takeaway of this Blink to Chokepoints by Edward Fishman is that since the 1970s, the US has transformed its financial dominance into a series of powerful economic weapons: strategic sanctions, asset freezes, and export controls, among others. Through these new weapons, it has managed to pressure Iran into giving up nuclear weapons technology, slow Russia’s invasion of Ukraine, and prevent China from gaining access to a global surveillance network. Though economic weapons have demonstrated great effectiveness, they have limitations – they weren’t able to fully stop Russia’s invasion. With other countries seeking their own chokepoints and alternatives to the dollar, the future of economic warfare remains uncertain.

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About the Author

Edward Fishman is a Senior Research Scholar at the Center on Global Energy Policy and teaches in the department of International and Public Affairs at Columbia University. Previously, he served in various economics policy-related roles at the US State Department, the Pentagon, and the US Treasury Department. He was a member of the Iran sanctions team at the State Department and was the first Russia and Europe lead in the State Department’s Office of Economic Sanctions Policy and Implementation. His writing has appeared in many publications, from The New York Times to Politico, The Wall Street Journal, and beyond.