Economic warfare is replacing traditional warfare because the high cost and unpredictable nature of modern military conflict have made non-kinetic methods of coercion more appealing and effective.

The hyper-connected nature of the global economy means that financial sanctions, supply chain disruptions, and cyberattacks can cripple an adversary's ability to wage war or even function as a state, often at a lower risk of direct military escalation.

The Shift from Conventional to Economic Warfare 

Traditional warfare is becoming less viable for major powers due to several factors. The rise of asymmetric warfare and the devastating costs of prolonged military conflicts, as seen in the wars in Iraq and Afghanistan, have demonstrated that a powerful military does not guarantee a swift victory. In this new reality, economic warfare offers a more precise, less destructive, and potentially more effective alternative.

• Financial Sanctions: One of the primary tools of modern economic warfare is the use of financial sanctions. By cutting an adversary off from the global financial system, nations can cripple their ability to trade, borrow, and conduct business. The U.S. and its allies have repeatedly used sanctions to isolate countries like Iran and Russia, freezing their assets and making it nearly impossible for them to transact in U.S. dollars, the world's primary reserve currency.

• Weaponizing Supply Chains: The just-in-time, globally interconnected supply chains that have defined the modern economy are also a major vulnerability. Nations can weaponize these systems by restricting the export of key materials or components. For example, a country that controls the production of a critical material like rare earth minerals or semiconductors can deny an adversary access to the essential building blocks of its technology, from consumer electronics to advanced military hardware.

• Targeting Infrastructure: While traditional wars targeted physical infrastructure with bombs, modern economic warfare can use cyberattacks to cripple a country's energy grid, telecommunications network, or financial system. This can create widespread chaos and economic damage without a single bullet being fired.

The Low Cost and High Reward of Economic Coercion 

Economic warfare offers a different risk-to-reward ratio than traditional military conflict. It is a form of coercive statecraft that allows nations to apply immense pressure without the immediate threat of a direct military response.

• Avoiding Escalation: Economic pressure can be applied with a lower risk of military escalation, particularly in conflicts between nuclear powers. A blockade or a financial sanction can achieve similar goals to a military strike—crippling an enemy's economy and military—but it can be more easily reversed and does not carry the same risk of triggering a full-scale war.

• Disrupting Society: Economic warfare can be used to cause internal instability within an enemy state. By creating shortages of food, medicine, and energy, a nation can create public discontent and undermine an enemy government's legitimacy. The goal is to create chaos and encourage the population to revolt against their own leaders.

The Blurred Lines Between Economic and Military Conflict 

The line between economic and military conflict is becoming increasingly blurred. Today, these two forms of warfare are often used in tandem to achieve a common goal. For example, a naval blockade may be used to enforce a financial sanction, or a cyberattack may be used to disable an energy grid to support a military invasion.

• Total War: In the past, the concept of total war meant that a nation mobilized all of its economic and social resources for a military conflict. In the modern era, with economic warfare, the entire global economy can be a battlefield. Every company, every trade route, and every financial transaction can be a potential target, as nations seek to gain an advantage.