Geopolitics and Geoeconomics Won the Cold War

“[T]he entire realm of strategy,” wrote Edward Luttwak in his 1987 classic Strategy: The Logic of War and Peace, “is pervaded by a paradoxical logic of its own.” War and conflict, he explained, fundamentally involve “the struggle of adversary wills.” Grand strategy, he noted, is dominated by “political considerations,” and it “pervades the upkeep of peace as much as the making of war.”

Luttwak has been writing about strategy since at least the late 1960s. His notable books include Coup d’Etat (1968), The Grand Strategy of the Roman Empire (1978), Strategy and Politics (1980), The Grand Strategy of the Soviet Union (1983), The Pentagon and the Art of War (1985), On the Meaning of Victory (1986), Turbo Capitalism (1999), The Grand Strategy of the Byzantine Empire (2009), and, most recently and most relevant, The Rise of China vs. The Logic of Strategy (2012).

In 1990, just as the Cold War was coming to an end, Luttwak wrote a provocative article in The National Interest entitled “From Geopolitics to Geo-Economics.” He began that article by asserting that the “waning of the Cold War is steadily reducing the importance of military power in world affairs” because the elite decision-makers of the great powers “have ceased to consider war as a practical solution for military confrontations between them.” He was careful to limit his analysis to nuclear-armed great power competition. Wars between smaller states and between nuclear states and smaller powers would still occur and would still depend on non-nuclear military power. But the greatest powers, he wrote, “appear to have concluded that military confrontations between them are only dissuasive of threats that are themselves most implausible.”

Despite the title of the article, Luttwak did not declare the obsolescence of geopolitics. Instead, he posited that economic warfare would replace kinetic war as the primary tool of statecraft in the geopolitical competition between the great powers. This form of warfare, he labeled "geo-economics." And he conceded that geo-economics had a long and storied history in international politics.

Luttwak expanded on that article in 1999 in Turbo Capitalism. In a chapter entitled “The Theory and Practice of Geo-Economics,” he identified some of the weapons of geo-economics, including investment capital for industry provided by or guided by the state, state subsidies of product development, import restrictions and prohibitions, tariffs, state-subsidized research and development of technologies, and predatory finance.

In the endgame of the Cold War, the United States waged economic warfare against the Soviet Union. The U.S. imposed limits and prohibitions on dual-use technologies; it struck agreements with Arab oil producers to depress oil prices to lessen Soviet hard currency earnings, and it engaged in an arms race that added pressures to an already stretched Soviet economic base. This geoeconomic offensive added to the pressures of the costly and unending Soviet war in Afghanistan, the defeat of Soviet clients in Nicaragua, El Salvador, and Grenada, China's geopolitical antagonism the nationalist ferment in the satellite states of Eastern Europe.

It was a combination of geopolitics and geo-economics that forced Soviet leader Mikhail Gorbachev to loosen the Soviet grip on Eastern Europe and attempt to revive the Soviet economy by encouraging openness and restructuring the economy (Glasnost and Perestroika). The result was the fall of the Berlin Wall and the end of the Soviet Union.

But the defeat of the Soviet Union also resulted in the beginnings of China’s rise. Luttwak saw this coming before almost anyone else. In a 1978 article in Commentary entitled “Against the China Card,” he argued that those in the Carter administration and the U.S. foreign policy establishment sought to strengthen China militarily and economically and abandon Taiwan as means to help contain the Soviet Union were "unstrategical." Luttwak ridiculed the notion that we should expect strategic wisdom from “McGovernites,” pro-Beijing Sinologists, and American businessmen, whose motives in helping China’s rise were “sentimental, ideological, or commercial.”

 The problem with playing the "China Card" the way we did, Luttwak explained, is that we failed to recognize that each strategic move triggers a reaction, and that reaction may not be what we expected. Providing economic and technological aid to China may, in the short run, have bolstered its ability to oppose Soviet policies, but in the long run is set the stage for continuing and increased Western assistance to China after the Cold War ended, thereby facilitating China’s economic and military rise in the post-Cold War world.

In contemplating such a momentous move as playing the China Card, Luttwak continued, “even the most feckless ought to consider the long-term consequences.” What, he asked, is our long-term policy toward China? "Is it our true purpose," he wrote, "to promote the rise of the People's Republic to superpower status?... [S]hould we become the artificers of a great power which our grandchildren may have to contend with? Will they be grateful if we help to make China more powerful than it would be in the natural way of things?”

Luttwak did not oppose opening diplomatic relations with Beijing, but he saw no need—strategically or morally—for the U.S. to diminish our relations with Taiwan. There was no need to play the China Card, he wrote, because the Sino-Soviet rivalry preceded the Nixon-Kissinger “opening” to China. “Instead,” he wrote, “we should play the America card, mustering more of our own strength for our own purposes.” "Ultimately," he concluded, "it would avail us little to resist one form of communism by aiding another," and the "attempt to derive a . . . benefit from Chinese strength in order to spare ourselves efforts which we are very well equipped to make would fatally compromise not only our strategic position but also our most fundamental political purposes." 

 Successive American administrations ignored Luttwak's sage advice. U.S. political leaders of both major parties—liberals and conservatives—welcomed China into the “liberal” world order, while Wall Street provided the capital and funding that helped fuel China’s rise. The American foreign policy establishment continued to view China as a peaceful competitor instead of a geopolitical predator, even as the Chinese Communist Party engaged in a massive military (including naval and nuclear) buildup, became ever more aggressive in the South China Sea, and launched a geopolitical program known as the Belt and Road Initiative that envisioned China’s preeminence in Eurasia. Even the more recent communist crackdown in Hong Kong has failed to still the voices of accommodation and appeasement.

All is not lost, however. In his most recent book, The Rise of China vs. the Logic of Strategy (which was originally written for the Pentagon’s Office of Net Assessment), Luttwak sees China’s leaders as being “trapped by the paradoxes of the logic of strategy” due to their “great state autism.” China’s leaders, like the leaders of other great powers, tend to make foreign policy decisions “on the basis of highly simplified, schematic representations of unmanageably complex realities, which are thereby distorted to fit within internally generated categories, expectations, and perspectives.” In China’s case, it has led to foreign policy decisions and military moves that have produced a predictable reaction—the gradual formation of an alliance or alliances between the smaller powers of the Indo-Pacific (Japan, Australia, India, Vietnam) and the United States designed to resist China’s encroachments.

China's policies also resulted in the U.S. pivot to Asia, begun during the Obama administration, and strengthened by the Trump administration. It was China’s “military growth and threatening conduct,” Luttwak writes, that led inexorably to the growing strategic cooperation of the other Indo-Pacific powers with each other and the United States, a perfect example of the paradoxical logic of strategy.

The resistance to China's rise should be both geopolitical and geoeconomic, Luttwak believes. The United States must continue to expand its relatively recent cooperation with India and Vietnam, while continuing its traditional alliances with Japan, South Korea, Singapore, and Australia. Improved relations with Indonesia and the Philippines would also be beneficial. And the U.S. must protect the independence of Taiwan.

Writing in 2012, Luttwak hoped that U.S. policies could dissuade China from its self-defeating path, but nothing that has happened since then supports that hope. Luttwak does not advocate war with China, but rather containment—supported by increased military power, improved strategic cooperation among smaller Indo-Pacific powers, and geoeconomic measures to “apply the logic of strategy in the grammar of commerce.”  


Francis P. Sempa is the author of Geopolitics: From the Cold War to the 21stCentury, America’s Global Role: Essays and Reviews on National Security, Geopolitics and War, and Somewhere in France, Somewhere in Germany: A Combat Soldier’s Journey through the Second World War. He has written lengthy introductions to two of Mahan’s books, and has written on historical and foreign policy topics for The Diplomat, the University Bookman, Joint Force Quarterly, the Asian Review of Books, the New York Journal of Books, the Claremont Review of Books, American Diplomacy, the Washington Times, and other publications. He is an attorney, an adjunct professor of political science at Wilkes University, and a contributing editor to American Diplomacy.

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