Author: Edward Fishman
_Edward Fishman_
Reading time: 24 minutes
Synopsis
Chokepoints (2025) is an interesting and detailed book. It talks about how the United States changed economic warfare in modern times. It shows how things like sanctions, freezing money, and controlling exports have reshaped world politics. For example, they greatly reduced Iran’s oil profits. They also stopped China from reaching its technology goals. The book argues that even when markets seem to be in charge, government power is what really wins.
What’s in it for me? Watch a new era of economic warfare unfold before your eyes.
The Bosphorus is a narrow waterway. It cuts the city of Istanbul in half. It marks the border between Europe and Asia. This strait has been an important place for trade for thousands of years. This is because it connects both the Black Sea and the Mediterranean Sea.
Today, the Bosphorus is still a chokepoint. This means it is a critical point in international trade. But now, it is much less likely to be taken over or blocked by an enemy ship. Instead, its importance in world politics can be used with official papers.
In December 2022, Russia’s war against Ukraine was still going on strongly. A line of oil tankers, some almost a thousand feet long, blocked all movement through the strait. The reason for the blockage was a rule from Washington. This rule banned US and European companies from shipping, insuring, or financing Russian oil sold for more than $60 per barrel.
What happened next? And how else has the United States used important economic points as weapons to change world politics? Let’s find out.
Blink 1 – Setting the scene
Today’s ways of economic warfare mostly rely on the power of the US dollar. But how did the dollar become so powerful in the first place?
The story starts in the early 1970s. Back then, the world economy followed the Bretton Woods system. This system tied the dollar to gold at a set price. All other currencies were tied to the dollar. Its goal was to help make world finance steady.
However, the system was starting to fail. Countries like Britain and France began to not trust that the US could give their gold back at the set price. They demanded their gold. President Nixon faced the risk of having no money left. So he made a shocking choice. He said that instead of returning the gold, he would end the dollar-gold link completely.
This move seemed like a huge giving up of power. The dollar would now “float” like other currencies. Its value would change with the market.
But instead, it led to a new way of being powerful. In 1973, the US had a lot of debt and a ban on oil. It made a deal with Saudi Arabia. The US would give military help and keep buying oil. In return, the Saudis would use their oil money to buy US government bonds. This basically turned their profits into money owed by the US.
Other oil-exporting countries soon did the same. Because of this system, oil is still priced in dollars. And foreign countries still help pay for American debt. Every major economy needs dollars to buy oil. And those dollars must pass through American-controlled banks and payment systems. Because of this, 90 percent of all money changes between countries involve the dollar.
For years, US officials did not want to use this power. They were afraid it would make people lose trust. That thinking changed after 9/11. The US Treasury Department was given the job to “stop money going to terrorists.” It gained big new powers to stop people, banks, and whole governments from using the US financial system.
One notable use of that power came in 2005. It targeted Banco Delta Asia, a small bank in Macau that was sending North Korean money. The Treasury warned that the bank, and any institution working with it, might be cut off from the US financial system. Because of this, authorities in Macau froze $25 million in North Korean funds. They also took over the bank itself to stop everyone from taking their money out. Banks across Asia hurried to cut links with North Korea. A North Korean official reportedly admitted, “You Americans finally found a way to hurt us.”
This event showed how Washington could use world finance as a weapon. But the real test was still to come.
Blink 2 – Iran’s nuclear program
The United States invaded Iraq in 2003. It feared Iraq might have nuclear weapons. Those fears turned out to be wrong. But next door in Iran, a real nuclear program was happening. It was led by a strict religious government whose president had publicly said Israel should be “removed from existence.”
Washington made it clear that a nuclear Iran was not okay. But the war in Iraq had been a terrible failure. So sending soldiers was not an option. Instead, a small Treasury team set out to create a different kind of weapon.
The US began punishing major Iranian banks with a powerful tool called blocking sanctions. These sanctions froze assets and banned all deals with the US. Iran had few links to the US economy. But Iranian payments to Europe or Asia still often passed briefly through US financial institutions. Blocking sanctions froze even these “U-turn transactions.” This completely separated the punished banks from the global financial system.
Also, these sanctions were “based on conduct.” This meant they clearly linked Iranian banks to making nuclear weapons and funding terrorism. So, besides hurting Iran economically, the sanctions aimed to convince foreign banks that doing business with Iran was a problem. It was a risk legally, for their name, and most of all, for their money. Very large fines were given to banks that ignored the sanctions. Soon, almost all of the world’s major banks chose to stop doing business with Iran.
Even then, Iran was still making billions of dollars from oil every year. Its nuclear program showed no signs of stopping. If the US really wanted to hurt Iran, it needed to target its oil.
First, Congress said it would punish foreign companies working with Iranian energy companies. Within months, big companies like Shell, Total, and Eni stopped working in Iran’s oil business. Next, Congress made SWIFT, a system for sending money messages worldwide, cut off Iranian financial institutions. This stopped Iran from using a lot of the world’s banking network.
Then came the final damaging step: the Iran Threat Reduction and Syria Human Rights Act. This act made foreign banks hold Iran’s oil money in special accounts outside the country. Iran could keep selling oil and making money. But it could not get any of that money back to Iran.
The plan worked. By mid-2012, Iran’s money lost its value. And prices went up very fast, to about 40 percent. Iranians came out to protest in the streets. Meanwhile, their government watched billions in oil profits build up in accounts they couldn’t use.
Thanks to these very precise sanctions, Iran finally agreed to talk. In July 2015, it signed the JCPOA. It agreed to get rid of almost all its enriched uranium. It also agreed to take apart important nuclear facilities. This was in return for sanctions being lifted.
Before the deal, Iran could have built a nuclear bomb in months. Now, it would take at least a year. This gave US intelligence enough time to take preventative action.
Blink 3 – Russia’s annexation of Crimea
In February 2014, Russia shocked the world. It started the first time a country took land from another in Europe since World War II. In just days, Russia invaded the peninsula of Crimea on the Black Sea. It put in a leader who supported Russia. Then it held a fake vote where Crimea “voted” very strongly to join Russia.
This was a breaking of international rules. So the US and its allies wanted to respond. Sending soldiers was not an option because Russia had nuclear weapons. And sanctions like those used against Iran wouldn’t work. Russia was much more connected to the world economy, especially Europe, than Iran had been. Instead, the Obama government wanted exact sanctions. These would hurt Russia a lot but hurt Europe as little as possible. This plan would be shaped by Dan Fried from the State Department and Daleep Singh from the Treasury.
The first set of sanctions focused on Putin’s closest friends. They froze their money and limited their access to Western banks. These sanctions showed a point but didn’t do much. This was partly because Putin paid his group well with good loans and deals.
Next, Singh’s team found a main weakness: Russia needed to borrow money from other countries. Russian banks and companies owed over $700 billion to lenders from other countries. Much of this was in dollars and euros. And government-owned companies in Russia needed money from Western markets to pay old debts and invest in new projects.
To stop Russia from getting future loans, sanctions on certain parts of the economy were used. These would stop the biggest state-owned banks and energy companies from getting new loans or selling shares in US financial markets. If they couldn’t get new loans to pay off old ones, they would have to either pay their debts or ask the Russian government for help.
The results of these sanctions were quick and serious. The Russian money (ruble) lost its value. Russia’s central bank, led by Elvira Nabiullina, used up its savings quickly to try and slow down the crash. Nabiullina also increased loan rates and secretly helped government-supported companies.
Meanwhile, oil production from shale in the US went up a lot. This pushed world oil prices below $60 a barrel. With oil money falling and credit lines frozen, Russia’s economy started to drop very fast. On a day known as “Black Tuesday,” the ruble lost half its worth in a single day.
And yet, the fighting in eastern Ukraine went on. Russia agreed to stop fighting, but the conflict was not finished. Russia kept Crimea and kept giving weapons and help to rebel groups. Putin had to put his “Novorossiya” – New Russia – plan aside, at least for a while. But he hadn’t been forced to retreat, and Crimea remained under his control.
Blink 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 government were very upset. Huawei was more than just a tech company. It was a real part of Chinese intelligence services. It had secret ways to access its technology. Because of this, it could potentially be used to stop communications, turn off electricity networks, and watch military actions. If the world relied on Huawei, China could use that reliance to force its ideas on others.
The US needed to stop Huawei. This time, it would attack using a new weak point: America’s lead in advanced computer chips and new technology.
The first big hit came in May 2019. The Commerce Department put Huawei on a list called the Entity List. The Entity List is one of the strongest tools in US law about controlling exports. If a company is on it, no US company can sell anything to it without first getting a license. And licenses are very rarely given.
Overnight, Huawei could no longer get US chips and software. This included 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. Not surprisingly, Huawei’s global phone sales fell by 40 percent in just one month.
But Huawei’s 5G division, the most important part of its business, stayed powerful. This changed in 2020. That’s when the Trump government used an old, little-known rule from the Cold War. It was called the Foreign Direct Product Rule, or FDPR. The first FDPR was meant to stop factories in other countries from making missile parts using US technology. The new version was changed to stop Huawei from getting advanced computer chips.
The effect was huge. Taiwan’s TSMC, the world’s best chip maker and Huawei’s second-biggest client, ended its business with Huawei. This was to keep its good relationship with the US. TSMC also announced a $12 billion plan to build a new plant in Arizona.
Without TSMC’s computer chips, Huawei’s future 5G equipment suddenly looked uncertain. The UK launched an urgent check. British intelligence concluded that without the chips, it could no longer say that Huawei’s systems were safe or worked well. By mid-2020, UK Prime Minister Boris Johnson completely banned Huawei. He told phone companies to remove its equipment from their existing networks by 2027. Soon, other countries also pulled out of their own 5G deals with Huawei.
This plan showed a big change in US foreign policy. Before, using economic pressure was a way to make someone change what they were doing. For example, to get Iran to talk or Russia to leave Crimea. Under Trump, it became a goal on its own: to limit the power of a competing powerful country.
Blink 5 – Russia’s full-scale invasion of Ukraine
On February 4, 2022, the first day of the Beijing Winter Olympics, Vladimir Putin and Xi Jinping announced a new important cooperation between their two nations. Behind closed doors, Xi reportedly asked Putin for a favor: Wait until the Olympics finish before starting an attack.
The Olympics would end on February 20th. That gave Western countries two weeks to act. Together, the US and the EU worked on a set of “Day Zero” sanctions. These would start at the first sign of an invasion.
On February 21st, Putin moved. He sent troops into Donetsk and Luhansk. But there was hesitation from Western countries. They hoped Putin was not serious. Three days later, missiles hit Ukrainian cities. The “Day Zero” sanctions finally started. Major Russian banks could no longer use the dollar, their money was frozen, and rules on exports – like those that hurt Huawei – stopped Russia from getting computer chips and other important technology. Without computer chips, Russia would lose access to the advanced weapons its army needed.
But the invasion continued. Western countries responded by acting more strongly. They took the never-before-seen step of freezing Russia’s central bank’s savings. Without access to its savings, Russia could not make its economy steady. The Russian money (ruble) fell sharply, and Russia’s stock market value dropped by one-third in a single day.
However, an important gap still existed: energy. Russia was still making a lot of money from oil, paying for its army. But stopping oil sales completely would cause big problems for the EU. The EU relied on Russian oil.
The solution the Biden government agreed on was a price limit. Let Russia keep selling oil, but limit how much it could earn per barrel. The limit was set at $60 per barrel. This was lower than the price Russia needed to cover its costs. But it was high enough for oil to still be sold.
When the limit started, Turkish authorities blocked tankers from moving through the Bosphorus, that strait dividing Europe and Asia. The problem was that any tanker breaking the price limit would lose its insurance. So Turkey asked for clear, written letters from insurance companies in London. These letters had to confirm that the ships waiting still had insurance. After several stressful days of talks, the problem was solved. The oil tankers could move again.
Then, an amazing thing happened: the price limit began to work. World oil prices dropped below $80 per barrel. Russian oil sold for less than $50. By mid-2023, Russia’s oil revenues had fallen by almost half compared to the previous year. Experts expected Russia to lose over $1 trillion in oil and gas money by 2030.
The war in Ukraine went on. But the price limit had done what earlier sanctions hadn’t. It had changed how the world oil market worked.
Blink 6 – The future of economic warfare
The US and Europe had an early warning. But the sanctions they put on Russia were not enough, and started too late. Yes, Russia’s access to advanced weapons was cut. But it had no problem destroying Ukrainian cities and ruining lives with old Soviet weapons and money from oil.
The Biden government was determined not to make that mistake again. So it acted quickly when China later started showing signs of increasing tension. After Speaker Nancy Pelosi traveled to Taiwan in 2022, China started a series of military exercises. These looked worryingly like practice for an invasion.
If sanctions were to stop that from happening, the US needed to act before an invasion, not after. So it put in place many export rules. These aimed to stop China from getting very advanced computer chips. The day after the export rules were revealed, Chinese computer chip company shares lost almost $10 billion in value.
These actions showed what national security advisor Jake Sullivan called a “new shared idea in Washington” about world economic policy. Their goal was to protect a “small area” of basic technologies, like computer chips, with strong rules.
Moves in economic warfare like these have led to a worldwide rush to become economically safe. Countries like Brazil, Iran, and South Africa have become more united. They felt the effects of the Russian oil sanctions even though they were not directly punished. These countries have started to create protections. They are spreading out where they get goods and how they handle money.
Meanwhile, Janet Yellen, who used to lead the US Federal Reserve, said the US should do the same. She calls this process “friendshoring.” She said the US should work more closely economically with trusted countries. It should also rely less on China, Russia, and other enemies.
That’s not all the US needs to do to make economic war more effective. It should also offer more rewards instead of only punishments. So far, American economic warfare has mostly used punishments when countries did not follow rules. It needs more rewards, like a government investment fund or important reserves of goods. It can use these to send money overseas.
Some day, the time of fighting with money will end. Maybe it will be because of the slow growth of working with trusted friends. Or maybe it will be because of a war to take over Taiwan. Some people will certainly be happy about the end of this time of global connections. Perhaps they’ll be right. If countries stop being afraid of each other’s economic weapons, things might become more stable.
Yet there’s also a more worrying chance. If competition between powerful countries continues – as history shows it often does – and economic ways of forcing others lose their power, the world may go back to older, more violent types of fighting. Economic warfare has its costs. But it offers one great benefit: it stops many people from dying. Perhaps we’ll miss the Age of Economic Warfare when it’s over.
Final summary
The main idea from this summary of Chokepoints by Edward Fishman is this: Since the 1970s, the US has changed its strong financial position into many powerful economic weapons. These include strategic sanctions, freezing money, and controlling exports.
With these new weapons, it has succeeded in pushing Iran to stop making nuclear weapons technology. It has also slowed Russia’s invasion of Ukraine. And it has stopped China from getting a worldwide spying network. Economic weapons have shown to be very effective, but they have limits. They were not able to fully stop Russia’s invasion. Other countries are looking for their own important points to control and other options instead of the dollar. So the future of economic warfare remains uncertain.
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Source: https://www.blinkist.com/https://www.blinkist.com/en/books/chokepoints-en