What is International Economic Security?

Author(s): Vincent Cable

Source: International Affairs (Royal Institute of International Affairs 1944-), Vol. 71, No. 2
(Apr., 1995), pp. 305-324
Published by: Wiley on behalf of the Royal Institute of International Affairs
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is international
JJWhat
economic
security?

VINCENT

CABLE

a concept
The authortakesissuewiththeproponents
oftheidea of 'geo-economics',
basedon a confrontational
modelofinternational
economic
activity
thathasgained
somecurrency
in theUnitedStates,Japanand Europe.Examiningthearguments
that
on thegroundofeconomic
domestic
havebeenputforward
security
forprotecting
he demonstrates
thatcontemporary
globalconditions
supplies,
technologies,
and markets,
security
oftencallfora cooperative
rather
thanconfrontational
pursuitofan economic
thatis a sharedcondition
rather
thana goal ofindividual
states.
The demarcationlines between internationaleconomic and securityconcerns
are becomingblurred.The disappearanceof the Soviet Union as a superpower
is partlyto blame. The Soviet Union provideda clearlydefined,and bounded,
different
militarysecuritythreat.Its economic systemwas also fundamentally
and economic intercoursewas protectedthroughspecial ruleslike COCOM.
In theWesternworld,instruments
ofeconomicintegration-GATT, theBretton
and theEU-were justifiednot onlyin economic termsbut
Woods institutions
also as cementingrelationshipsbetween capitalistand democraticstatesand
in conflict.Now,
securityand economic objectiveswere not fundamentally
however,it is no longerclearwho the 'enemy' is and what 'security'involves.
Theodore Sorensenwritesof a 'conceptualvacuum'.'
In the absence of a clearlydefinedsecurityagenda,economic integrationhas
a momentumof its own. All economies are becoming more interdependent
throughimprovedcommunications,capitalflowsand trade.There is a nearuniversaland voluntaryacceptanceby governmentsthe world over-including
and increased
former communist countries-of reduced self-sufficiency
economic integration.In a liberalinternational
economic system,vulnerability
to externaleconomic events and dependence on foreignersare a necessary
consequenceofimmersionin globalmarkets.
They arethesourceofopportunities
forimprovedlivingstandards,not threatsto be avoided. It is not obvious, in
such a world, that the concept of 'economic security'any longer has much
Theodore Sorensen, 'Rethinkingnationalsecurity',ForeignAffairs,
69: 3, I990.

International
Affairs
71,

2 (I995)

305-324

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305

VincentCable
of liberal capitalismis
content. Indeed, one of the definingcharacteristics
uncertainty
and risk.That is the basis of economic freedomand choice. One
necessarycorollaryis a sense of insecurityforindividuals,firmsand nations.
Yet theidea thateconomicpolicyshouldhave a securitydimensionwill not go
wheneverdefenceprocurement
away.It repeatedlysurfaces
involvesdependence
on foreignsuppliersas in theUK withWestland.The I99I GulfWar prompted
to resurrect
the questionof whetherfuelchoice shouldbe
some policy-makers
influencedby 'securityof supply'considerationsand preferenceforindigenous
energysources,whethercoal or nuclearpower.
A contemporary
economic securitythreatsis
spurto definingand identifying
looking
the existenceof largemilitaryand intelligencegatheringestablishments
fora new role.Recent reviewsofCIA priorities
have emphasizedtheimportance
of counteringa wide varietyof 'greyarea' threatsto nationalsecurity2
which
could be seen as aspects or side-effectsof increased internationaleconomic
integration:the narcoticstrade; diffusionof militarytechnologyembodied in
sophisticatedequipment; the use of espionage or sabotage in international
business; money-launderingand organized crime; politically orchestrated
transmitted
environmental
disruptionof oil and otherimports;internationally
waters.
damage; economic or environmentalrefugees;poaching in territorial
is
to
an
as
wide
as
there
much
With
agenda
this,
keep intelligence-gathering
agenciesemployed(and theyhave everyintentionofremainingso employed,if
we are tojudge fromthecurrentattemptoftheNational SecurityAgencyin the
US to attachan encryptionproduct,the Tessera,to theInternetsystemin order
to eavesdrop on users suspectedof being drug barons, money launderersor
terrorists).
There is, however, a question as to how many of the 'greyarea' issues are
indeed securitythreatsin any meaningfulsense. Why should nationalsecurity
agenciesofthestatebe involvedin protecting
privatecompaniesfromcommercial
be treatedas a securityconcern?It is,
espionage?Why shouldlaw enforcement
moreover,one thingto observe,eavesdrop,monitorand analyse.What is much
less clearis what governmentsshould do with the intelligencetheyacquire. At
in commerce?Are
what point do nationalsecurityconcernsjustifyintervention
therenational economic interestswhich transcendin importancethe sum of
privatetransactions?
When a concept is employed by so many differentpeople in different
countriesto mean different
thingsit is usefulto startwith some definitions.
First,economic securitycan refermost obviouslyto those aspectsof tradeand
investmentwhich directlyaffecta country'sabilityto defenditself:freedomto
acquire weapons or related technology, reliabilityof supplies of military
equipment, or threatsof adversariesacquiring a technologicaladvantage in
weapons. The issuesinvolvedin practiceare,however,becomingmore complex
and difficult,
with 'dual' use technologies.Few would argue that
particularly
2

ErnestMay, 'Intelligence:backing into the future',ForeignAffairs,

7I: 3, I992; Max Manwaring, ed., Grey
areaphenomena:confronting
thenewworlddisorder
(Boulder, CO, Oxford: Westview, I993).

306

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economic
security?
Hhat is international
tradein weapons is a sensibleobjective.There are
freeand non-discriminatory
good, prudent,reasonsfornot applyingGATT principlesto armaments.But, in
practice, regulationby governmentsis a confused mixture of prudential
concerns over weapons fallinginto the wrong hands and mercantilisttrade
And,
policy (exportingmore of 'our' weapons; importingless fromforeigners).
as inconclusiveattemptsto renegotiateCOCOM have shown,the definitionof
new securitythreatsis veryambiguous.
A second approach to definingeconomic securityis in termsof economic
which are used forpurposesof aggression(or defence):trade
policyinstruments
of energysupplies.Securityneeds have
boycotts;the restriction
and investment
have
oftenbeen definedin termsof 'securityof supply'.Westerngovernments
exercisedby thesecurityofsupplyof oil (to a lesserextentgas)
been considerably
and some raremineralsand specialisedtechnologies.Considerableresourceshave
supplies.How relevantare
been tied up in stockpilesand high cost alternative
What is themost
'securityof supply'concernsin a post-ColdWar environment?
costeffective
way of meetingthem?
A thirdusage is more oblique: the idea that relativemilitarycapacity,or
projection of power, may be undermined by relativelypoor economic
and requiresan economic policy response.Fear of relativedecline
performance
has fedthe currentinterestin 'geo-economics',which positsa stateof economic
'warfare'betweenleadingcountries.It is arguedthattheUS, theEU, Japan(and
adversaries
thoughthe weapons in countering
China) are essentially
increasingly
threatsto nationalsecurityare economic policy measuresratherthan Cruise
missilesand Stealthbombers. These measuresinvolve aggressivegovernment
supportfordomesticproducersas agaisntforeigncompetitors.By combininga
relationswith the languageof
'realist',Machiavellian,approachto international
tradetheory',advocatesof a more
and theeconomicinsightsof 'strategic
security
and made
mercantilist
approachhave achieved some intellectualrespectability
some impact,in the US especially.
Finally,thereis an even looser concept of economic securitywhich captures
As noted above,
the fearof global economic, social and ecological instability.
is inherentin anymarketeconomic system.But there
some degreeofinsecurity
which can perhapsbe isolatedas callingforthe
are some elementsof insecurity
involvementof securityservices.Potentialthreatsinclude internationalcrime
dumpersof toxicwaste,
narcoticssmugglers,
traffickers,
pornography
syndicates,
peddlersofplutonium.Creatinga national-let alone a global-security agenda
Not all are illegal
fromsuch a listof nefariousactivitiesis, however, difficult.
everywhere.Some illegaleconomic activitiesin some countriesarguablydo no
harm, or more good than harm, let alone threaten'national security':the
smugglingof consumer goods; foreignexchange arbitrage;arguably,illegal
tolerancelevels for,interalia,
immigration.Differentsocietieshave different
and weapon ownership.The conceptofeconomicsecurityis
drugs,pornography
necessarilyveryslippery.
The slipperinessof the concept of economic securityis compounded by
attemptsto extend it to global problems.It is easy to see thatthe economic
307

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VincentCable
policyoftheWest towardsRussia, or oftheUnited StatestowardsMexico, or of
the EU towardsNorth Africais governedby a complex nmixture
of economic
and securityconcernswhich we can call 'economic security';but to stretchthe
definition
to worldpoverty,populationgrowth,globalwarmingand thestability
is perhaps
of theinternational
bankingsystem,as do some recentcontributions,3
to make the concept so wide as to be unmanageable.
In thispaper I shalllook at how each of thesedistinctconcerns-all making
use of the vocabularyof security-enter the currentpolicy debate and how
valid the concernsare. I shallstartwith 'geo-economics', not because it is the
most importantaspect of securityin the econormicsense indeed, in some
respectsit could be said to be a bogus concept-but because it has,at leastin the
United States,moved to the centreof the debate,perhapscrowdingout more
legitimateissuesmore directlylinkedwith traditionalnotionsof security.
Geo-economics, primacy and competitiveness
Governmentsdo not treatnationalecononiies only as means of enrichingtheir
citizens.The Britisheconomist,Hawtrey,wrote of a world where 'the major
concern of the state is prestige.The means to prestigeis power. Power is
economic productivity
capable ofbeing appliedas a force.'4Samuel Huntington
has expressedthe same point in a modernidiom: 'Economistsare blind to the
fact that econonmicactivityis a source of power as well as well-being. It is,
indeed,probablythe mostimportantsource of power and, in a world in which
militaryconflictbetween major statesis unlikely,econonmicpower will be
increasingly
importantin determiningthe primacyor subordinationof states.'5
The model which is implicitin thisview is a kind of zero sum game in which
the gains of one country(primacy)are seen as cancelling out the losses of
another(subordination)even if both achieve growingprosperity.It has been
called 'geo-econonmics'by Edward Luttwak6:'the pursuitof adversarialgoals
with commercialmeans'. National securityinvolves winning this economic
war .
'Geo-economics', or what Theodore Moran calls 'an economics agenda for
neo-realists',7 is heavily influenced by US concerns over Japan and US
assumptionsaboutJapaneseeconomic thinking.Samuel Huntington,who sees
the centralissuebeinga lossofUS 'primacy'toJapan,declares:'Japanesestrategy
is a strategy
ofecononmic
warfare... Japanesestrategy,
behaviourand declarations
all point to the existenceof a cold war betweenJapanand the United States.'8

7
8

JessicaTuckman Matthews,'Redefiningsecurity',ForeignAffairs,
68: 2, Spring I989; Nicholas Eberstadt,
'Population change and nationalsecurity',ForeignAffairs,
69: 3, Summer I990; Theodore Moran,
'Internationaleconomics and nationalsecurity',ForeignAffairs,
69: 5, I990.
Quoted and discussedin Charles Kindleberger,Powerand money,(London: Macmillan, I970).
Samuel Huntington,'Why internationalprimacymatters',International
Security,
I7: 4,. Spring I993, p. 72.
Edward Luttwak,'Disarmingthe world's economies' (WashingtonDC: Centre forStrategicand
InternationalStudies,unpublishedCEO Paper, I990).
Theodore Moran, 'An economics agenda forneo-realists',International
i8: 2, I993.
Sectirity,
Ibid., p. 76.

308

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Hhat is international
economic
security?
Within this context, attentionhas been focused on the idea of national
US tradeand currentaccountimbalances
'competitiveness'
and on thepersistent
whichareseenas leadingto theaccumulationofexternaldebtand inwardforeign
especiallythe
investment
and ownership(leadingto 'dependence' on foreigners,
Japanese,for'strategic'
technologies).
Deficits and mercantilism
From a 'geo-economic' standpoint,the US externaldeficitoriginatesin an
uneven playingfieldfor trade. The solution is to be found in forcingopen
foreignmarkets(or restricting
imports)so as to balance trade.This view has had
some impacton US-Japan relations,which have been dominatedby the size of
the bilateraldeficitand US demandsforJapanto set quantitativeperformance
targetsto help reduce the deficit(so farresistedwith unexpectedvigourby the
Japanese).
of the US deficit,largely
the mainstream
economic interpretation
By contrast,
the
is
that
external
deficit
is a mirrorimage,and
the
sharedthroughout OECD,
consequence, of the internalimbalancebetween savingsand investmentand
deficitreductionand,
shouldbe addressednotby tradepolicybutby government
where possible,encouragingprivatesavings.There is a fundamentaldifference
economic approachto external
betweenthe 'geo-econoniic' and themainstream
deficits:the latterimplies that externalbalance 'cannot be accomplishedby
externalassertiveness.
It is an externalmanifestation
of an internalproblemand
itsbalance
cannotbe correctedotherthanby the United Statesitselfredressing
between savingsand consumption.9
The currentcongressionaland presidential
preoccupationwiththeUS budgetdeficit,and thereducedemphasison aggregate
trade targetsforJapan (as opposed to specificgrievancesabout construction,
cellulartelephonesand cars)suggeststhatthe mainstream
view has prevailed.In
a
role
has
also
been
by
self-correcting
marketforcesthrough
practice, key
played
the yen-dollarexchange rate. The acquiescence of the US authoritiesin the
further
slideof the exchangeratein I994 has squeezed theprofitmarginsand the
marketsharein the US ofJapaneseexporters;and it has devaluedthe claimsof
on the US.
foreigners
In the longer term,however, there is more to this issue than a technical
about policy: a fundamentaliy
different
view of what mattersand
disagreement
how theworldworks.In the geo-economicview of the world,a tradedeficitis
intrinsically
undesirable,not merelyforitsown sake (imports'destroy'jobs) but
or theacquisitionof
becauseitis balancedby capitalinflows-foreigninvestment
claimson the US federalgovernment-so thatthe 'US becomes dependenton
and 'vulnerabletoJapanesethreats'.The
importsofgoodsand moneyfromJapan'
alternative
is
that
is
view
Japaneseinvestors
dependence also interdependence.
have acquiredUS assetsbut have also takena commercialand foreignexchange

Ibid.
309

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VincentCable
riskon theirUS investments
which, we can see with hindsight,
has cost them
dear. Indeed, the world at the beginningof I995 makes the geo-economic
ofa fewyearsago look strikingly
interpretation
dated.There is stilla largecurrent
account deficit(over $I5o billion in I994); but thereis now minimalJapanese
inwardinvestment,
and it is US investors
who are diversifying
overseas.Farfrom
'exporting'
jobs, theUS is close to fullemployment.The US carindustry,
seen as
the principaltargetof theJapanesegeo-economic offensive,
is booming. The
a stockmarketcollapseand seriousrecession.
Japanesehave suffered
Competitiveness
seems to
Anotherpartof 'geo-economics',the concernwith 'competitiveness',
have penetratedpopularthinking.The popularnotionof competitiveness-that,
in thewordsofPresidentClinton,'each nationislikea big corporationcompeting
in the globalmarketplace'-has been widelyused to createa sensethatthe US
and Europe are 'losing' (to each other,Japanor everyoneelse) in some kind of
knock-outcompetition.LesterThurow's Head tohead:thegrowing
economic
battle
Ira
Michel Albert'sCapitalism
versus
amongJapan,
EuropeandAmerica,'0
capitalisme,I
Garten'sA coldpeace:America,Japan,
Magaziner'sThesilent
war,'2Geoffrey
Germany
and thestruggle
forsupremacy'3
and manyotherpublicationsof recentvintageleave
theirreadersin littledoubt as to what the 'competitiveness'
debate is about: an
economicequivalentoftheCold War.
Economistsspenda lot of timeexplainingthatthe analogybetween countries
and firms(or footballteams)is not valid; thatcountries,unlikefirms,cannotall
'make a profit' on their external transactions;that internationaltrade and
investmentis not about 'winners'and losers'. To a large degree,the realityof
policy, as opposed to the rhetoric of debaters,implicitlyrecognizes this
distinction.Indeed, most of the 'competitiveness'debate is quite innocuous.
is oftenused as a synonymforproductivity,
and theconclusion
'Competitiveness'
reached is thatthejob of governmentsis to facilitateproductivitygrowthby
raising the quality of public education; increasingthe efficiencyof infrastructure;making markets,including labour markets,more transparentand
flexible;and improvingtheclimateforinvestment,
includingforeigninvestment.
AfterseveraltripsthroughtheEU Council ofMinisters,thisis essentially
where
Delors' White Paper on competitivenesscame out, with a listof productivity
raisinginitiativeswhich would have not been out of place in a reportfromthe
OECD or theWorld Bank.'4
'? LesterThurow, Head tohead:thecoming
economic
battleamongJapan,
EuropeandAmerica(New York: Morrow,
I992).
12

Michel Albert,Capitalismversuscapitalisme
(Paris: Editions du Seuil, I992).
Ira Magaziner and Mark Patinkin,The silentwar:insidetheglobalbusinessbattles
shapingAmerica'sfuture
(New

York:VikingBooks,I990).

13

'4

GeoffreyGarten,A coldpeace:America,Japan,
Germanyand thestrugglefor
supremacy
(New York: Times
Books, I992).
Commission of the European Communities, Growth,competitiveness,
White Paper, Brusselsand
employment,

Luxembourg,
I993.

3IO

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"hat is international
economic
security?
Is the 'competitiveness'issue,then,a non-issue?If politicianspreferto call a
and believe that human beings are more easily
spade a digginginstrument,
motivatedto improveproductivity
by a senseofinternational
competition-like
into
it
should
organized
'houses'-why
matter?
Paul Krugman,
schoplchildren
among others,regardsthe obsession with competitivenessas 'dangerous'.'5
Krugman'sconcernsare several.One is thatthisobsessionwill lead to wasteful
spendingon quasi-economic activitiesdesignedto enhance 'competitiveness',
much as superpower competition in the securitydomain led to massive
'overkill'. In practice,this has not happened. The main initiativestaken to
advanceinfrastructure
provisionin theinterestof'competitiveness'-Mr Gore's
information
'superhighway'and theless clearlyarticulatedEuropean equivalent
underMr Bangemann-have essentially
been stepsto acceleratederegulation.
A more serious concern is that governmentswill be temptedto use trade
As Krugmanputs
policyto tryto reverseadversetendenciesin competitiveness.
it, 'the focus on the supposedlycompetitivenatureof internationaleconomic
if not frankly
relationsgreasesthe rails for those who want confrontational,
protectionist,
policies."6 Laura Tyson argued before her appointmentto the
Chair of PresidentClinton's Council of Economic Advisersthatcomparative
advantagein 'strategic'high-techindustries'can be created by government
action'.'7 These industries which include microelectronics,biotechnology,
new materials, telecommunications,civilian aircraft,machine tools, and
computinghardwareand software-have no naturalhome, she argues,other
than an assemblageof innovatorsand technologicallyattunedbrains.There is
concernthatthe US, and also Germanyand the UK, have seen theirshareof
world high technologyexportsshrinkin relationto Japanand the Asian NICs.
A 'geo-economics'perspectiveleads to the conclusionthatadversetrendscan be
counteredby activegovernmentpromotionof 'strategic'industries.
There is, however, seriousdoubt as to whethermost governmentsare very
good at pickingfuturehigh-techindustriesor know how to nurturethemuntil
theyarefullycompetitive.One recentstudyconcludesthatwhateveradvantages
may have accrued in the past, or to countrieslike Japan when they were
technologicalfollowers,'techno-nationalism... does not work verywell any
more'.i8 That is not to saythatgovernments
thereis a useful,if
are unimportant;
elusive,mixtureof policies to promote qualityeducation, scientificenquiry,
in advanced technologysectorsand fiscalor
government-business
relationships
institutional
supportforventurecapitalwhich can be importantin gettinghigh
debatewere simply
technologyindustriesoffthe ground.Ifthe competitiveness
about countriestryingto improve such a mix of policies it would be

'5
6
'7
,8

Paul Krugman,'Competitiveness:a dangerousobsession', ForeignAffairs,

73: 2, March/April
n994.
Ibid., pp. 4I-2.
LauraD'AndreaTyson,W/ho's
bashing
whom:
tradse
conflict
inhightechnology
industries
(Washington:Institute
forInternationalEconomics, I992).

R. Kuttner,
Theendoflaissez-faire:
national
purpose
andtheglobaleconomy
after
theColdWar(New York:

Knopf, I 99

I).

3''

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VincentCable
uncontroversial.
But, in practice,such subtletiesare of littleinterestto those
hungryforthe red meat of geo-economics.Increasesin productivity
and living
standardsare not importantfortheirown sake: 'under geo-economics,private
commerce ... would have to precariouslyexist with the currentlysubsidised
exports,governmenttended technologyprogrammes,enticinglow interest
credit, one-sided licensing restrictions... of states bent on economic
That all such practicesare apt to reduce the livingstandardsof
aggrandisement.
even beforetheyreduce thoseof theirvictimsis [unlikely]
economic aggressors
... to dissuadegeo-economic ambitions."9
While it is difficultto see much evidence that Western governmentsare
moving decisively towards 'geo-economic' thinking, there has been a
powerful upsurge in populist forms of protectionism,fed by the ideapromulgatedby the likes of Ross Perot and, more recentlyin Europe, by Sir
JamesGoldsmith-that foreigntrade is a threatto jobs and living standards.
The fallaciesembodied in these ideas have been set out in considereddetail
elsewhere.20 The practical consequence of their popularity is that geoeconomic ideas can become embedded politically,in particularthe beliefthat
internationaleconomic integrationis a win-lose, zero-sum game. Thus the
groundworkis laid forprotectionismin all its forms.
The mostpervasivedangerin the competitiveness
obsessionis thatit shiftsthe
attentionof policy-makersaway from those things which affectabsolute
economic performanceand living standardstowards the 'threat' of relative
decline. Thus Samuel Huntingtonworriesthat 'American influencein third
countriesdeclinesrelativeto thatofJapan... Japanhas supplantedthe US as the
largestprovider of economic assistance.'2IIn this sense, geo-economics is
doomed to frustration,
since technologicalcatch-up and liberalpolicy reform
mean that emergingmarketeconomies are almost certainlybound to grow
fasterthanthe US (or EU), which will consequentlyhave a steadilyshrinking
shareofworld GNP and trade.Britainhas had to getused to relativedeclinefor
a centuryor more and the processis by no means complete. Such relativities
should be a matterof indifference
but, in practice,states,like individuals,are
often more agitatedby differential
than absolute performance.And in the
context of geo-economics relativitiestriggeralarm because they are seen as
affectingthe capacities of countries to defend themselves.Geo-economic
prescriptions-wherethisinvolvesprotectionism-may,however,actuallymake
the problem,ifit is one, worse.

'9 EdwardLuttwak,
theworld'seconomies'.
'Disarming
20

BrianHindley,Reportpublished
bytheTradePolicyUnitoftheCentreforPolicyStudies,London,

21

Ibid., p. 77.

'994.

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economic
"hat is international
security?
Security of supply
The more conventionaltreatment
of economic securityconcernsthe degreeto
which national securityis threatenedby dependence on externalsources of
technology,rawmaterials,
food and fuel.Anyformof externalinterdependence
can be seen as 'dependence'. But self-sufficiency
carriescosts,and as DeAnne
Juliushas put it, 'taken to its logical extremethe quest of economic security
impliesminimisingtraderelationswith all but one's closestallies and seeking
economic self-sufficiency
whereverpossible.'22Outside the madhouseof Enver
Hoxha's Albania,fewmodernstateshave been willingto pay theenormouscost
ofsuchself-sufficiency,
though'self-reliance'remainsa popularnotionin many
developingcountries(India's Hindu nationalistBJP,forexample,has recently
adopted as its slogan 'Swadeshi', or 'home-made'). Ideas about 'self-reliance'
have had much less influenceon Western economies-which have become
correspondinglymore integratedeconomically, and richer, as a result of
specialization-but theyretainsome importancein policy-making.
In practice,the 'securityof supply' issue involves two separateproblems,
though they are often confused (and often exist together).The firstis that
in importsupply-caused by war, revolution,foreignsanctions
interruptions
or accident-could severelydisruptthe nationaleconomy, or partsof it. The
second is thatoverseas supplierscould acquire a monopoly position through
unique ownership or cartel action, turningthe terms of trade against the
importer.This latterconcern is exemplifiedby the price of oil but is also
relevantto new technologies(a major elementin strategictradetheoryis the
advantage in terms of monopoly 'rent' which accrues to a technological
leader). These two preoccupationsmay coincide but are analyticallydifferent
and have different
policy implications.
Threats to economic securityfromdisruptedsupply can become a public
policy issue (as opposed to a private matterof inventoryaccumulation or
diversificationby individual or industrial consumers) under certain
circumstances:
where thereare certainoverseassupplieswhich are vulnerableto
sudden,politicallyinspireddisruption,leading to physicalshortagesor sharp,
short-term
price increases;where thereis a high degree of dependence on a
smallnumberofsupplysources;and where theimpactof disruptionis 'strategic'
defenceinterestsbut oftenused more loosely).
(affecting
One applicationof the securityof supplyargumentbecame a causecelebre
in
GATT. In I975 theSwedishgovernment
soughtto invokeArticleXXI ofGATT
in
'takenin timeofwar or otheremergencies
(whichprovidesfortraderestrictions
international
relations')tojustifyglobalquotason footwearimports.It arguedthat
'decreasein domesticproductionhas become a criticalthreatto the emergency
planningof Sweden's economic defence as an integralpart of the country's
the maintenanceof minimumdomestic
securitypolicy. This policy necessitates

22

DeAnne Julius,'Britain's changinginternationalinterests',International

Affairs,
63: 3, p. 390.

3 13

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VincentCable
productioncapacityin vitalindustries.'23
There was littlesympathy
in GATT and
two yearslaterthe quotas were withdrawn.But the assumptions
underlying
the
policyhaveremainedinfluential,
even in theveryopen,free-trading
economiesof
Scandinavia.Thatexampleis a good illustration
of a more generaltendencyfor
to
evoke
policy-makers
'securityofsupply'withoutdue care.I developthispoint
by looking in some detailat these areas where the concept is most frequently
employed:forfood,minerals,energyand advancedtechnology.
Food
'Securityof supply'has frequently
been invoked to justifymarketintervention
throughstockpilingand bordercontrolsin agriculture.
have
Many governments
takentheview thatsome public food-stockingis requiredto cope withpossible
to envisagethe circumstances
in which this
emergencies,thoughit is difficult
would arisein Europe todayor why globalmarketsshouldnot be accessible(the
communistgovernmentsof the USSR and China, which were never shortof
securityconsciousness,regularlytopped up grain supplies from the world
market).Securityconcernshave also been used tojustifyagricultural
protection
and self-sufficiency.
In Germany,the beliefin agriculturalself-sufficiency
was
taken(likemuch else) to extremelengthsundertheThirdReich, butitpredated
thattime and continuedin the postwarperiod, havinga major impacton the
designof the EEC Common AgriculturalPolicy. There is, in fact,no explicit
referenceto self-sufficiency
or securityof food supplyin the Treatyof Rome
and even the most ferventapologist for the CAP would have difficulty
in
a defenceof its enormouseconomic cost on the basis of security
constructing
considerations.
Nonetheless,it has been a politicallyusefulsupportingargument.
With the McSharryand Blair House reformsbeginningto bite,thereis now
the prospect of some liberalization.As presentlyconceived, however, the
reformsdeal with surplus,exportableproductionratherthan opening up the
largelyclosed marketof the EU. The concept of self-sufficiency
is stillwidely
employed,forexample, to extend CAP coverage to Mediterraneanproducts.
in a broad sensemayprove to be themeansof
Ironically,securityconsiderations
underminingclosed markets.The EU's securityneed forpoliticalstabilityin
easternEurope is unlikelyto be met withoutsustainableeconomic recoveryin
the east,which in turnis heavilydependenton the EU openingup itsmarkets
to the productsof Hungary,Poland, Ukraine and the rest,which will have a
substantial agriculturalcomponent. Commissioner Brittan is using this
opportunityto reopen the possibilityof radical agriculturalliberalization,but
theweightoftraditionand self-interest-aswell as datedand inappropriate
ideas
of economic security-standin the way.24

23
24

GuidetoGATT lawandpractice,
6thedn,p. 554 (Geneva:GATT).
MichaelFranklin
andJonathan
Ockenden,European
agricultural
policy-ten
stepsintheright
direction,
Royal
Instituteof InternationalAffairsBriefingPaper, no.

14,

November

I994.

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1hat is international
economic
security?
Strategic
minerals
Anotherfieldwhere securityof supplyconsiderationshave been importantis
metals.Alarmover 'strategic
minerals'reacheditspeak two decades ago, and the
simultaneousend of the Cold War and of apartheidhave broughtinto question
the continuingrelevanceof strategicstockpiling.There have, however, been
continuedwarningsthattheeconomies (and defenceindustries)of theWest are
vulnerableto seriousdisruptionas a resultof the concentrationof supplyin the
handsofa smallnumberof politicallyunstableexporters,25
and theiruse in some
industries
regardedas 'strategic'such as aircraft
production:chromium,cobalt,
manganese,plutoniumand possibly(but less vulnerableto supplydisruption)
columbium,nickel, tantalumand titanium.The change in the geopolitical
landscapehas now led to some liquidationofstrategic
stocks,notablyby theUS,
thoughTaiwan, France and, to a degree,Japanappear stillto believe in their
value.
The currentprocessofdivestment
ofsome ofthe
is,however,itselfinstructive
considerable hidden burdens of strategic stockpiling. Politically driven
decisions,carriedout by governmentofficials,
have led to largecoststo the US
taxpayeras stockshave been sold into a fallingmarket.Some mineralsacquired
on the assumption that they were critical to new technologies (indium,
germanium)turnout to be no longercriticalbecause of technologicalchange.
The dabblingof theBritishgovernmentin strategicmineralsstocksin the early
I980s was anothercase of governments
havingtheirfingers
burnt.Now thatthe
issueis recedinginto history,one lessonwhich shouldperhapshave been learnt
is the dangerof credulouspoliticiansbeing seduced by securityargumentsinto
assuminggovernmentobligationsand riskswhich should more properlyhave
remained with private citizens.

Oil andgas
That lessonremainsvitallyimportantin the altogethermore substantial
fieldof
ofoil supplieshasbeen a majorcauseforconcem ofWestern
energy.The security
for20 years,recentlygivenadded substanceby the circumstances
policy-makers
theGulfWar. The security
issueis posed by thefactthatone-quarter
surrounding
of worldcrudeoil exportscurrendycomes fromone country,Saudi Arabia,and
one-halfcomes throughthe PersianGulf(moreifIraq were back
approximately
on stream).Net oil importsaccountfornearly40 per centofEU primaryenergy
supply,justunder20 per centin theUS and 55 per centinJapan.But the'security
of supply'issueis oftenpresented,politically,
in misleadingly
simpleterms.There
is a clear distinction
in practicebetween measuresto countersupplydisruption
and measuresto countercartelaction; thereis a distinctionbetween the very
specificactions envisaged by the IEA and national governmentsto handle

25

M. Lax,Selected
strategic
minerals:
theimpending
crisis
(Lanham,MD: University
PressofAmerica,I987).
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VincentCable
emergenciesand the looser securityargumentsadvancedto promotealternative
fuelsand to protectindigenousoil production;and thereis a subtlebut powerful
distinction
betweenoil dependenceand interdependence.
In a recentevaluationof past disruptionsin I979 and i99i, John Mitchell
concludesthatthe key elementsin minimizingdisruptionhave been concerted
actionby importing
countries(to avoid a competitivescrambleand to coordinate
use of strategicstocks); making full use of market transparency(covering
suppliesin futuresmarketsratherthanthe physicalmarket);and the scope for
offsetting
suppliesfromotherexporters(thoughthisdependson sparecapacity
).26
There will remaina case forstrategicstocks,giventhe dependenceof importers
on a smallnumberofpotentiallyvulnerablesuppliers(a dependencewhich may
grow ratherthan decline): 'There is academic, as well as policy and business,
consensusthata high level of oil stocksin importingcountriesis an essential
ingredientof emergencypreparedness.
Demand restraint,
reallocationof supplies
and increasingdomestic supplies are also potentialinstruments
in the IEA
responsecapabi1ity.'27
What is not appropriate-given that the total cost of
precautionary
strategic
reservesis only$I-2 a barrel-is 'developingan alternative
fuelwhich exceeds oil pricesby more than$2-[which is] not economic'.28By
the same token,attemptsartificially
to createmarketsforhigh-costalternative
fuel sources-nuclear, coal or biomass-cannot convincinglybe justifiedon
supplysecuritygroundsunlessthereis a plausibleprospectof eventstakingplace
in the Persian Gulf which are farmore disruptiveforlongerperiods than we
have experiencedin the past.
The idea thatthe best safeguardof nationaleconomic securityis to maintain
thecooperative,IEA-based,approachto emergenciesmayseem uncontroversial
but is wholly at odds with the prescriptions
thatwould emerge froma geoeconomic perspective,which would make implausiblethe idea of multilateral
cooperationbetween 'enemies'-the EU, the US and Japan-and place much
greateremphasison fuelself-sufficiency,
regardlessof cost. Experience has, by
contrast,shown the value both of marketsand of multilateralcooperationin
enhancingeconomic security.If there is any room for usefulinnovation it
probablylies in extendingan IEA typeof cover to other,growing,importers,
like India, China and Brazil.
Is there,however, anotherpossibility:that a threatto 'economic security'
mightarisefromthe OPEC cartelbeing reformed?All currentindicatorsare
thattheprospectsare remote.Crude pricesare now lower in real termsthanat
any time since 1973 and there is still some spare capacity,notably in Iraq.
Vulnerabilityto oil shocks is now much lower for almost all oil-importing
countriesthan in the mid-i97os, mainlybecause of reduced energyintensity
caused by conservationand changingeconomic structures.The behaviour of
thatcartelpower cannot
leadingOPEC countriesshows a clear understanding
26
27
28

Affairs,
I994).
ofInternational
Europe(London:RoyalInstitute
Anoilagendafor
JohnV. Mitchell,
Ibid.,p. 56.
Ibid.,p. 59.

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1hat is international
economic
security?
be sustainedover a long period in the face of alternativeenergysources and
active conservationpolicies. They recognizethatoil dependenceis a two-way
street.This is not to say that there will never be futureoil 'shocks'; there
probablywill be price 'spikes' if capacitygrowthfallsbehind demand growth,
and as thereareforothercommodities.There is no reasonto regardsuchmarket
behaviouras a securitythreat.
Naturalgas mayin futurealso presentsecurityof supplyproblems,thoughof
kindfomthosein the oil sector.29
Over 30 per centof theEU's
a quite different
total suppliesare importsfromRussia and Algeria,and the proportionmay
in supplyon account of
grow.30Gas, unlikeoil, is characterizedby inflexibility
being confinedto pipelines (or shippinginvolvinghighlysophisticatedand
forLNG). There is no spot market,as yet.And crossexpensiveinfrastructure,
bordertradeis regulated.It is quite possiblethatin futuretherecould be severe
disruptionof the pipelines from Russia. The main route at presentpasses
throughUkraine, and supplieshave alreadybeen affectedby Russia-Ukraine
disputesover trans-shipment
chargesand off-take.It is also possible that the
insurgencyin Algeriacould lead to disruptionof pipeline suppliesto southern
If thatoccurred,there
Europe. Both disruptionscould happen simultaneously.
could-in an extremecase-be prolongedinterceptionof suppliesto industrial
and domesticusers,and especiallygas-basedpower stations.
In practice,it is doubtfulif the situationmeritsattentionas a major security
threat.There is no reason to assume that disruptionin Russian or Algerian
A coincidencewould be pure chance. There is
supplieswould be orchestrated.
largestoragein the existingsystem;reportedlyover a year'ssupplyin Italy,for
example. There is growing flexibilitywithin the EU gas networksthrough
interconnection(the UK interconnectorgoes on streamin I998) and the
has been able to improvisea responseto pastdisruptionwithoutbeing
industry
instructed
by governmentsto do so. Nor is thereany reasonto believe thatthe
Russiansor Algerians,or both,have eitherthe capabilityor anyambitionsto act
cartelsuppliers.Such behaviourwould underminetheirown
as price-raising,
effortsto develop sales in the EU market(and in the case of Gazprom, the
developmentof EU downstreambusinesses,includingthe UK interconnector
in which it has an equity stake). The industryis increasinglygoverned by
competitivemarketprocessesand is characterizedby interdependencerather
than dependence. If there are any genuine, unaddressed,securityof supply
issues,theyare ratherlimitedand localized,such as the questionofwhetherthe
EU has an obligationin an emergencyto help out eastEuropean countrieslike
the Czech Republic or Poland which are heavilydependenton Russian gas. As
in the case of oil, securityof supplyriskscan easilybe exaggerated,theremedies
are quite specificand do not call fora protectionist
approachto importsor for
controlswhich impede energymarketsand discouragetheuse of gas.
regulatory
29

30

for
andopportunity
inthe1990S (Aldershot,
Hants:Dartmouth
Jonathan
Stem,European
gasmarkets:
challenge
access
inEuropean
party
gasmarkets
Royal Instituteof InternationalAffairs,iggo);Jonathan Stem, Third
(London: Royal Instituteof InternationalAffairs,I993).
Energyin Europe-a viewto thefuture
(Brussels:The European Commission, 1992).

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VincentCable
Advancedtechnology
One areawheretheconcernsof'geo-economics'and 'securityofsupply'intersect
is the degree to which nationalsecurityis compromisedby dependence on
foreignsuppliersforadvancedtechnology.Overseassuppliers(or foreigninvestors
within the country)might,it is argued, refuseto make supplies availablein
emergency;mightseekto extractmonopoly'rents';or mighteven underminethe
purchaser'stechnologicaladvantageby similarly
supplyingan adversary.
Because of such concerns,dependence on foreignhigh-technologysuppliers
has become a controversialissue in the US. In I988 the US Defense Science
Board identified22 areas of critical technologies and judged Japan to be
in six areas.3'A
ahead in some niches of technology',specifically
'scientifically
I990 Commerce Departmentstudyargued thatJapanhad an ascendancyover
theUS in fiveof twelveemergingtechnologiesand was gainingin fiveothers.32
have had no difficulty
While US defencecontractors
buyingJapanese
technology
when theyhave needed it (forthe Gulf War), clearlythereis a hypothetical
possibilitythattheymightface reluctanceto supply.
For countriesmore dependenton foreignsuppliersthantheUS, theproblems
are farfromhypothetical.Britain'sinabilityto obtain key shellsfromBelgium
even those
duringtheGulfWar, forexample,was well publicized.Most analysts,
writingfromthestandpointofeconomic efficiency,
acknowledgethatproblems
can ariseifa countryis dependenton one firmor countryforsupplies,outside
itscontrol,forcriticaldefencerequirements.33
Yet it is clearlyover-simple,and
oftenperverse,to equate 'security'with self-sufficiency
in defencetechnology.
unreliableor produced at a cost which
Indigenoustechnologymaybe inferior,
precludesothersecurityoutlays.A classiccase was theBritishdevelopmentofits
own Nimrod in competitionwith Boeing's AWACS. One analystconcluded
thatBritain's'inabilityto reach out formultinationalassistancein the face of a
rapidlychanging set of challengesresultednot so much in any one single
technologicalfailureas in a seriesof delays,price increasesand questionable
upgradesof capability'.3Britainwas consequentlyleftwithinferior
sophisticated
surveillancetechnology.It is preciselyforthisreason thatdefenceprocurement
can pitchservicechiefs-who are employedto be good judges of
controversies
securityin the narrowsense-on the side of foreignsuppliersagainstcoalitions
ofpoliticiansand domesticindustrialists.
Rational considerations
of cost,quality
and technologicalsuperioritymay well lead to a sourcingof defence-related
equipment,systemsor componentswith foreignsuppliersor foreign-owned
companies.Moreover,protecteddomesticsuppliersare more likelyto exercise

DC: US Department
3 Critical
technologies
plan(Washington
ofDefense,MarchI990).
32 Energizing
technologies:
a survey
oftechnical
andeconomic
opportunities
(Washington
DC: US Department
of
Commerce,
Technology
Administration,
SpringI990).
33 R. Vernon,
Multinational
industry
andnational
security
(London:International
Institute
forStrategic
Studies,
AdelphiPaper,74, 197 1).
34 T. M. Moran,'The globalization
ofthedefenceindustry',
International
Security,
15, Summer
I990.
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economic
What is international
security?
monopolypower thanthoseoperatingin a global competitivemarketplace. In
such cases,appealsto economic securitymay be at odds with militarysecurity.
The issue has come to a head in the US with a clause added to the I988
Omnibus Trade and Competitiveness Act-the so-called Exxon-Florio
amendment-which gives the Presidentauthorityto block mergerswith, or
acquisitions of, US firmson national security grounds. In practice, the
amendmenthas been lightlyused (leading to some congressionalfrustrations
and demandsfora more explicitbias againstforeignfirms).One detailedreview
ofUS experienceconcludedthattheguteconomic nationalismemanatingfrom
CongressunderminedratherthanhelpedUS securityinterests:'By implication,
theUS defenceindustrial
base is weakened ifforeigncontrolledfirmsparticipate
in it and national securityinterestsare served by excluding such firmsor
subjectingthem to a draconian regulation.Yet as numerous analyseshave
concluded,theseprejudicesare largelyunwarrantedand unjustified.'35
withthe British
The authorsof thatstudycontrastedUS policy unfavourably
method of handling mergers and acquisitions affectingdefence-related
companies,which has 'no preconceivedbias againsta take-overwith a foreign
bidder'. It commends the Britishemphasison competitionas the overriding
considerationto reduce the riskof abuse by monopoly suppliers,domesticor
foreign,and calls for cooperation to create an internationally
harmonized
framework
forachievingconsistencyin competitionpolicy.Above all, 'realities
... [such as] thatthe US no longer enjoys a monopoly in the developmentof
military-critical
technologiesand thatthe costs of nationaldefenceR&D and
procurement will likely continue an upward spiral-suggest that the
maintenanceof technologicalsuperiorityover likely adversaries... requires
closer collaborationwith, not exclusion of, foreignactors.'36The interestsof
economic securityare not servedby isolationor self-sufficiency.
Taking the 'securityof supply' issue as a whole thereare, clearly,instances
where national security can be undermined by external disruption.But
experience suggestssome lessons: the importance of counteringsupply in
securitythroughcooperativeaction among consumersratherthanunilaterally;
theimportanceofusingmarketmechanismsratherthanregulatory
controls;and
the potentialcostsof inward-looking,self-reliance
policies.
and weaponsproliferation
Security,
technology
diffusion
One of themoststriking
consequencesof the end ofthe Cold War has been the
virtualcollapse of strategicexportcontrols.COCOM, the West's multilateral
controlregime(of seventeenmemberstates),has expiredand a more flexible
successoris beingput together.Nationalcontrolshave been radicallyliberalized.

35 Edward Graham and Michael Ebert, 'Foreign-directinvestmentand US nationalsecurity:fixingExxonFlorino',The WorldEconomy,I4: 3, SeptemberI99I.

3
Ibid., pp. 267-8.

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VincentCable
Superficially,
at least,therehave been favourableresultsfromliberalization.
While conventionalarmsbusinesshas declined (from$38 billionin deliveriesin
I989 to $22 billionin I993) therehas been a substantial
growthin civilianhightechnology trade with indirect securityapplications telecommunications;
advancedcomputers-to China and the ex-WarsawPact area. There has been a
drastic reduction in administrativecontrols and in the economic cost of
production restraint.Moreover, the contractionof the control systemhas
enabledpriorityto be focusedon countriesseen as particularthreats(Iraq, Iran,
Libya, North Korea) and on particularly
dangerousweapons systems(nuclear
components, chemical weapons, long-range missiles). This still leaves a
substantialnumberof countrieswhich may emerge with dangerousweapons
capability.Recent assessmentssuggestthat in addition to nuclear weapons
thresholdstates,20 countrieshave, or are developing,weapons capabilitiesand
at least I S will soon be producingtheirown balistic missiles.37
The problemsassociatedwithcontrolling
tradeinvolvingmilitary
technologies
are veryfamiliar,
notablyestablishing
the military
risksin 'dual use' technologies
and defini'ng
targetcountries.The new arrangements
(or lack of them)do have
some seriouslimitations,
two in particular.
The firstis that,in thoseareaswhere
controlsnow exist,non-proliferation
mechanismsare oftenineffective:
not only
have these regimesbeen imperfect,but they have been underminedto a
considerabledegreeby the operationof a marketinvolvingboth licitand illicit
The participants
in theWMD (weaponsofmassdestruction)
businesses.38
market
formsupplynetworksthatare able to circumventcomplex,multi-layered
export
controlregimesand move the mostadvancedtechnologyto the consumerstate
with near impunity.The Britishembarrassment
over MatrixChurchilland the
evidenceofan activeplutoniummarketin westernEurope givea smallinklingof
whatappearsto be much more extensivecircumvention
of controls.
These problemsare compoundedby another:thata majorconsequence ofthe
breakdownof COCOM controlshas been the nationalizationas much as the
liberalizationof policy. There has been a breakdownof multilateral
discipline.
'Geo-economic', mercantilistthinking,which validates the idea of intergovernmentalcompetitionto promote exports,would furtherunderminethe
commitmentto multilateral
regimes.Multilateraldisciplineis partlya question
of subordinatingnational competitivenessconsiderationsto securitybut also
involvesfindingan appropriatelevel forcooperation:sufficiently
comprehensive
to preventevasionthroughnon-meinbercountries,yetsufficiently
tightto have
successor
to
for
a
multilateral
enforcement
This
the
need
powers.
points
strong
to COCOM, which reinforcesthe work of the existingsuppliers'clubs (the
MissileTechnologyControlRegime, the Chemical Weapons Convention and

37
38

for
Institute
(London:International
proliferation
intheTlirdWorld
missile
Inter
alia,MartinNavias,Ballistic

StrategicStudies,Adelphi Paper, no. 252, Summer I990).

and weaponisproliferation',
Phil Williams and StephenBlack, 'Transnationalthreats:drugtrafficking
Security
Policy,
Contemporary
I5: i, April I994, pp. I27-5I.

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economic
security?
1hat is international
the Nuclear Suppliers Group). It would have to cover key 'dual use'
technologieswhich could be misusedby 'rogue' countries;it would have to
targetthose countries;and it would have to coopt potentialnew sources of
supply (like the Asian NICs, the countriesof easternEurope, Russia and
China). Of course,such thingsare easiersaid thandone, as is quicklyapparent
when specificproblemspresentthemselves(like the problems of coopting
China into arrangementswhich prevent North Korea acquiring a nuclear
in a comprehensiveregimewill require
weaponscapability).Broad participation
fordefections.Access
ofincentivestojoin and stayand disincentives
a structure
to [advanced]technologyand certainfinancialtools could be used.'39
view would be thatglobalmarketsand communications
A radical,ifpessimistic,
are so well developedthatit is impossibleto stop
in weaponsof massdestruction
howeverwell managedand targetedthey
throughcontrolsystems,
proliferation
are. That is the counsel of despair;but it does underlinethe necessityfor
alternative
approaches,notablythatof a regimewhichis able to applysignificant
carrotsand sticksoftradeand financeto influencethebehaviourofstatestempted
It also underlinesthemaindanger
to acquireor use weaponsofmassdestruction.
approachto tradewhich would
of geo-economicswhich is a confrontational
disciplines.
underminean alreadytenuousset of multilateral
oftheglobaleconomy
Drugsand criminalization
There are perhapsquestionmarksto be raisedagainsttreatingthe drugstrade,
crimein general,as a 'security'problem. If by so doing we
and international
of organized
encouragethe idea thatdrugsmugglingand othermanifestations
crime are a 'foreignthreat',then harm is done, since many of the problems
originatein domesticpolicy. The United Statesin particularhas been much
more confidentwith assertivepolicies to persuade or instructdrug-exporting
countriesto cut supplies, than in tacklingthe trickierand more sensitive
domestic policy demand-managementissues. There, a bizarre and lethal
ofweapons
of drugsdistribution
and liberalization
combinationofcriminalization
it is easierfortheRussian authorities
ownershipis a recipefortrouble.Similarly,
mafiathanto address
to believe thattheyare victimsof a globallyorchestrated
the (admittedly
manyand complex) domesticpolicy temptationsto organized
crimein a period of transition.
Nonetheless, many governmentshave come to regard the drugs-and
specificallynarcotics-trade as a securityproblem. Intelligenceand military
(especiallynaval) personnel are already heavily involved in counteringit.
There has been a stronglink with more conventionalsecuritymatters(as in
the oustingof GeneralNoriega throughthe invasionof Panama). And thereis
a large area of overlap between the narcoticstrade, money-laundering(an
estimated$I 00-200 billion 'laundered' everyyear in the US alone) and illicit
tradein weapons.
39 Ibid.

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VincentCable
learnedfromattemptsto managethe drugs
Variouslessonsare beingpainfully
problem. The most importantis that the internationalcrime syndicatesare
highlysophisticated
globalbusinesses.The so-called Cali 'cartel'controls70 per
cent of the world's cocaine business,which is worth$I 5-20 billion in the US
totalaround$35
alone (bycomparison,theUS importsof all formsoffoodstuffs
entrepreneurial
billion). These businessesdemonstratecommercialflexibility,
flair (including a capacity for imaginativeproduct innovationslike 'crack'
cocaine), an abilityto build alliances and sensitivityto marketforceswhich
would be eulogized if employedin legitimatebusiness.Like the best modern
businesses,they are networkingorganizationsratherthan rigid hierarchical
structures.
They are havingto be counteredby nationallaw enforcementand
security agencies which have the management style of public-sector
suspiciousof
bureaucraciesand a nationalsecurityethos which is traditionally
foreigners
and innocentof economics. The problemsare compounded by the
which is characteristic
of
weaknessof manystatesand the 'anarcho-capitalism'
fromsocialismto market
ex-communistand developingcountriesin transition
economies. Such weak statesprovidea perfectcover fortheproductionofillicit
the borderareas of
substances(in such relativelylawlessplaces as Afghanistan,
Burma, Thailand and Laos, Colombia, Guatemala and Bolivia) and transshipment(via the formerSoviet Union or Nigeria).
There are severalspecificimplicationsfor the internationalsecurityregime
which has to emergein orderto addressthe problem(or set of problems).The
firstis thatit has to be cooperative.Assertive,nationalistic,'geo-economics' is
and
utterlyinimicalto the buildingof alliancesamong intelligence-gathering
enforcementagencies,withoutwhich effectivemanagementof the problemis
the growingand refiningareas,especiallyforheroin,
impossible.Furthermore,
are so diverse that the aggressiveuse of leverage on supplier countriesto
introduceexportcontrolsis bound to be ineffective,
even ifit were consistently
Interdiction
to
be
of
limited
effectiveness
(thoughharassment
applied.
appears
adds to trafficking
costs and is thereforeuseful). By contrast,a cooperative
infrastructure
is being establishedthrough Interpol,the recentlynegotiated
Vienna Convention covering drug trafficking,the OECD's and the
Commonwealth'swork on money-launderingand the Bank of International
Settlementscommon approachto bank supervision.
A second implicationis that policy has to be alive to the possibilitiesof
workingwith ratherthan againstthe grainof markets.'Sting' operationslike
operation'Green Ice' usingfrontcompaniesis one model. So is thecooperation
betweenBritishcustomsand freight-forwarding
businesseswherebythe former
in returnforinformation.
gives acceleratedtreatment
A further
conclusionrelatesto the importanceof domesticeconomic policy.
One recentexample of a sophisticatedlinkagebetween economic policy and
secuntyconcernswas the pressureon the Russian government-fromdomestic
economicreformers
andfromWesternagencies-to scrapthesystemofoil export
quotas which was, notoriously,a major source of 'rent' forRussian organised
crimeand was spillingover intoWesternmarketswithdestabilizing
effects.
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security?
1hat is international
economic
Domestic policy in consumingcountriesis also criticalto tradein narcotics;
arguablymore importantthan interdictionand action againstsuppliers.Law
enforcementagencies and medical professionalsalike point to the damaging
ratherthansubtlemethodsof
consequencesof prohibitionand criminalization
changing behaviour which do not create large 'rents' for criminal gangs.
Treating narcoticsas a securityissue deflectsattentionfrom hard political
choices which may involve a move to decriminalization.
The widersecurity
agendaandpolicyresponse
issuesnarrowly
While theissuesraisedabove arelargeand go well beyondsecurity
defined,some would argue thatthe perspectiveis stillfartoo narrow.Jessica
Matthews redefines security to include the environment,since some
environmentalproblemsare global in character(global warmingand ozone
The emerging'blackmarket'in CFCs
life-threatening.
depletion)and potentially
the
of
the
Montreal
Protocol) could, in thissense,be seen
terms
(circumventing
as much as a securitythreatas narcoticssmuggling.The two most convincing
refugeemovements-Haiti and the Horn
examplesof large-scaleenvironmental
of Africa-have both helped to create political upheavals into which major
been treated
Populationchangehas similarly
military
powershave been drawn.40
as a securityproblem because both changes in demographicproportionsand
(arguably)aggregatepopulationgrowthcan be sourcesof conflict.In much the
samevein,poverty-and theproblemof globaldevelopment-is a securityissue
becauseitmaylie behindmanyconflicts.
With a veryhighproportionofmodem
conflictstakingplace withinsocietiesratherthanbetween them,each with the
capacityto generateexternal nilitaryintervention,it becomes importantto
or rootedin questions
understand
thereasons,be theyeconomic,environmental
of culturalidentityand nationality.
and not immediately
While it is likelyto be frustrating,
helpfulforoperational
personnel,to be told thatsecurityinvolvesdealing with complex, intangible,
multifacetedinternationalproblems,it is a necessarystep to understanding.
Today's securitythreatsare more blurredthan in traditionalconfrontations
between nation-statealliances. It is becoming more difficultto draw clean
dividinglines between governments(it is not clear who adversariesare; or
adversariesin one contextare allies in another);between levels of decisionlike the international
drugand organized
making(some threatsare transnational,
crime syndicates;some are sub-national,like terroristgroups); and between
economic,ecologicaland otherconcerns.
military,
Some generalconclusions,however,do emerge.One is thatmanyof thenew
solutions.Threatsof disruption
securitythreatsrequirecooperative,multilateral
of oil supplies;drug-smuggling
and the launderingof the proceeds; trafficking

40

2: 3,
Conflict
andLawEnforcement,
Phil Williams, 'The internationaldrug trade:an analysis',LowIntensity
Winter I993, pp. 397-420.

323

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VincentCable
in weapons of mass destruction;evasion of controlsinstitutedto tackle lifethreateningenvironmentalhazards:counteringall and any of these requiresa
highlevel of mutualtrustand practicalcollaborationbetweencountriesthatare
not necessarily
neighboursor traditional
allies.The threats,
in termsof disruption
or cartelpricing,potentiallyposed by highlevelsof dependenceon overseas(or
foreign-owned)monopolysuppliersof advancedtechnology,gas or food grains
are best met not by costlyself-sufficiency,
but by a diversityof supplyand an
open, competitivesystem.Such a systemwhich in turn requires a strong
multilateralcommitmentto freetrade and capital movementsand consistent
competitionrules.
Of course,'cooperation'begs the questionof at what level and with whom.
Some formsof economic securityare best dealt with in like-mindedclubs of
countrieswhich can maintaincollectivediscipline,as the IEA and COCOM
successfully
did in timesof crisis.In practice,thebreakingdown of old alliances
and the blurringof boundaries between 'rich' and 'poor' (reflectedin the
widening membershipof the OECD and Russia's semi-membershipof the
G7-8) means thatclubs and allianceshave to be more inclusive.Proposalshave
been put forwardforan Economic SecurityCouncil, variouslyconceived of as
a free-standing
globalbody to replaceor supplementthe G7, or as an economic
counterpartto the SecurityCouncil withinthe UN.4' It could createa global
forumto deal with those aspects of economic security-like, for example,
narcoticsor global environmental
hazards-which cannotbe satisfactorily
dealt
withat a lower level. In practicewhatis slowlyemergingis a complexhierarchy
at national,regionaland global level
of institutions
and informalarrangements
(and pointsin between) to deal, case by case, with various economic security
for
threats.The outcome is messy,and no doubtfrustrating
and time-consuming
the officialsinvolved.But thisis the futureshape of international
relations.
These requirements
are theveryoppositeofthoseimpliedby theidea of 'geoof economic securitywhich entailsa mercantilist
economics',an interpretation
and confrontational
approachto economic relationsbetween leadingindustrial
'Geocountriesand a preferencefor unilateralaction over multilateralism.
economics-a current of thinking that is well representedin the US
in Japan and in parts of Europe-leads not just to dubious
administration,
economics but to a neglect of securityboth in its traditionaland its more
complex contemporaryforms.
The new interestin redefiningsecurityis an understandableand healthy
consequence of the end of the Cold War. There is, however,a dangerthatthe
debateis being hijackedby conceptslike geo-economicswhich have littleto do
with securityin any meaningfulsense.

4'

Ourglobal
ReportoftheCommission
on GlobalGovernance,
ch.4 (Oxford:Oxford
neighbourhood,

University
Press,I995).
324

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