lecture 4 - interdependence

Question 1

interdependence theory 1.0
- the original concept

Answer 1

Keohane and Nye (1970s)

developed in response to oil crisis 1973 (bc war Israel and Arab states, US was supporting Israel -> oil producing countries declared an embargo: would not sell oil to US and its European allies)
-> rethink central idea of anarchy

interdependence = reciprocal effects among states resulting from cross-border flows of money, goods, people, pollutants and information
- dependence between multiple actors

• welfare state and citizens depends on actions of actors outside of the state
• INTERdependence: it’s a two-way street

immediate consequence: the well-being of a state and its citizens depends on decisions taken by actors in other countries

interdependence varies:
it is a variable: it varies

1. over time
2. across issue-areas
3. across regions and relationships
4. within relationships (A may depend on B more than B depends on A)

Question 2

interdependence theory 1.0

interdependence and international cooperation

• expectations of Keohane and Nye 1977

Answer 2

interdependence motivates international cooperation by:

1. exposing states to a risk of external shocks (other may do something to hurt you)
2. creating opportunities for joint gains (logic of trade: they will both be better off)

states will create international institutions (rules and organizations) to make cooperation possible

• to reduce risks and maximize gains from interdependence

cooperation enables joint games of trade (e.g. WTO) + helps avoid negative external shocks (e.g. international agreements to address pollution)

Question 3

(concept international system)

Answer 3

there are different definitions of the international system, of what it means

Question 4

interdependence theory 1.0

interdependence and international cooperation
- observations post-1977

Answer 4

expected by Keohane and Nye

Interdependence -> broad and deep institutionalization of world politics (within and across all regions and issue-areas) -> more cross-border integration of economies & societies (globalization).

• Extensive int’l cooperation & support for rules-based int’l order.

not expected by Keohane and Nye

Cross-border integration (globalization) -> massive but uneven growth.

Continued external shocks to domestic well-being (interdependence) -> backlash against globalization & int’l institutions.

Question 5

interdependence theory 1.0

interdependence and the power of states

Answer 5

expectations Keohane and Nye 1977:

• power lies in the two states’ relative dependence on each other
  i.e. the difference in the costs each would pay if cross-border flows were reduced or increased
• the less-vulnerable state can (threaten to) manipulate cross-border flows if the more-vulnerable state doesn’t comply with its wishes

observations post-1977:

massive expansion in use of ‘sanctions’ as a tool of statecraft

states try to shield themselves from sanctions, via:
- self-reliance in production
- diversification of supply
- accumulation of financial reserves (sitting on money -> less vulnerable to financial sanctions)

sanctions = manipulation of interdependence: states creating power out of relative dependence

Question 6

concept: relative dependence

Answer 6

the difference in the costs each would pay if cross-border flows were reduced or increased

(is A more dependent on B than B is on A?)

imbalance creates power

Question 7

difference hierarchy and interdependence

Answer 7

hierarchy involves authority, the one with the higher power is expected to rule over the author

interdependence can be a source of hierarchy, can result in authority of one over another

e.g. Europe more dependent on US than US is on Europe in terms of military -> created hierarchical relation in which the US can influence Europe

Question 8

example sanctions - 2021 EU Belarus

Answer 8

EU reduces cross-border flows:
imposes financial sanctions to punish Belarus gov for election fraud and political repression (violation democratic rights Belarusian people)

Belarus increases cross-border flows:
facilitates passage of 3d country migrants to punish EU for financial sanctions

• EU does not depend on money from Belarus: not vulnerable in this way -> Belarus had to find another way: Europe could not handle many migrants
• offered free plane tickets from the middle east to Minsk (capital Belarus), pointed them to the EU border (Poland)

Question 9

example sanctions - 2022 EU Russia after invasion of Ukraine

Answer 9

EU reduces cross-border flows:
cuts energy purchases, investment and technology to Russia

Russia reduces cross-border flows: reduces supplies of energy to EU

Russia limited its supply of energy to Europe, Europe limited the amount of money supplied to Russia = two directional manipulation of interdependence

Question 10

interdependence theory 2.0 versus 1.0

Answer 10

original interdependence theory is still very relevant today, but not sufficient to explain the globalized world of the 21st century

revision to help understand C21

Question 11

the ‘new interdependence’

Answer 11

Farrell and Newman (diff article than we had to read)

decades of pro-globalization policies have restructured the int’l system

three dimensions of “the world that trade built”

1. rule overlap: dev. global rules creates clashes between national and global jurisdictions
2. transnational alliances: institutionalization of globalization enables firms, citizens, NGOs to promote policy change via transnational alliances
3. power asymmetries: institutions are not just rules of the game, they are a source of uneven, asymetric power
   - some states have more influence over the institutions that govern interdependence

Question 12

Farrell and Newman - results of the ‘new interdependence’

Answer 12

institutions of globalization are contested bc they have power and diff actors have diff access to them -> actors try to change and resist them (feel like it is biased against you)

• “[T]he politics of globalization has expanded from struggles over free trade and protectionism to a much broader and complicated fight over the rules and principles that affect how the economic and political benefits of globalization are distributed.” (714)
• e.g. protests against the WTO

non-state actors play a critical role

• World politics is not “a world of discrete independent states [but] a world where both overlapping jurisdictions and the need to resolve the problems and disputes that emerge from this overlap create new opportunity structures for actors beneath the level of the unitary nation-state.” (716)
• in Keohane and Nyes world, states were central, INGOs didn’t really matter then

Question 13

the world that trade built

Answer 13

Farrell and Newman: decades of pro-globalization have restructured the int’l system, we live in a world that trade built

has 3 dimensions:

rule overlap

• dev. of global rules creates clashes between national and global jurisdictions
• rules telling actors what to do (individuals, states, companies)
• rules at diff levels can be conflicting
• was not obvious in the 70s bc there were a lot less int’l rules
• Europe: understanding that EU law wins over national law, although now this is contested
• actors subject to multiple jurisdictions

transnational alliances

• institutionalization of globalization enables firms, citizens, NGOs to promote policy change via transnational alliances

power asymmetries:

• institutions are not ‘just rules of the game’: they are a source of uneven, asymetric power (institutions are not equally accessible to everyone)
  its not just rules that affect everyone in the same way, have equal effects
  institutions privilege certain types of actors
• some states have more influence over the institutions that govern interdependence

Question 14

China’s contestation of the institutions that govern independence

Answer 14

Stephen 2021

two strategies:

1. place personnel in leadership positions in existing (‘legacy’) institutions
   - will senior personnel change the policy agenda of existing int’l institutions?
2. create new alternative institutions, less controlled by US and EU
   - Shanghai Cooperation Organisation, AIIB, New Development Bank
   - will new institutions complement or compete with legacy institutions? do they have similar or diff policy aims?

Question 15

‘weaponized interdependence’

Answer 15

article we read: Farrell and Newman 2019

In complex networks, some actors are more centrally connected than others -> new & uneven opportunities for ‘weaponization.;

• On power & coercion: Actors who occupy key positions within networks of interdependence can use these positions to gain power by gathering information on others (‘panopticon effect’) and limiting their access to resources (‘chokepoint effect’).

“[S]tates with political authority over the central nodes in the international networked structures through which money, goods, and information travel are uniquely positioned to impose costs on others… [They can] gather information or choke off economic and information flows, discover and exploit vulnerabilities, compel policy change, and deter unwanted actions.” (45)

• On international institutions: “Institutions designed to generate market efficiencies and reduce transaction costs can be deployed for coercive ends.” (46-7)

*how do you become central in the web? some actors help(ed) create it + you can position yourself there (e.g. Russia is figuring out how to read info of internet cables on the ocean floor)

Question 16

panopticon effect and chokepoint effect

Answer 16

= ways for actors to weaponize interdependence

panopticon effect = actors with key positions in webs of interdependence can gather info on others, info is power
e.g. US accessed international money flows, info on who was sending money to who -> crackdown terrorist organizations

chokepoint effect = you can limit others access to resources: you can choke of access to resources

Question 17

implications of weaponized interdependence

Answer 17

interdependence gives well-connected states a new, non-military source of power

• 2001: US threatened to exclude from US financial system any bank world-wide that handled finance of Al Qaeda
• 2022 US and EU sanctions excluded key Russian banks from SWIFT, the primary global network for inter-bank transfers

interdependence may also be a source of vulnerability for traditional powers

• Russian cyber intervention in public opinion before elections in Europe, US
• North Korean cyber attacks on Hollywood and other US industries (bc leader was made look funny in Hollywood films)

this gives all states an incentive to de-risk: to reduce their vulnerability via controls on information, increased financial reserves, and self-sufficiency for key resources

• e.g. Russia and China have been developing alternative inter-bank networks (SPFS, CIPS)

Question 18

example de-risking: a new BRICS currency?

Answer 18

• will the BRICS create their own currency?
• would it reduce their vulnerability to US power over int’l finance?
• would it create new vulnerabilities?

BRICS = Brazil, Russia, India, China, South Africa = now eleven countries
talk they will create their own currency
why would they? own currency to trade -> less vulnerable to US manipulating global finance

want to remove themselves from what they experience as the negative consequences of interdependence