Economic Coercion as a Geopolitical  Strategy: From Sanction Regimes to FATF

https://doi.org/10.31945/iprij.230203

The journal article is written by Dr M. Ajmal Abbasi that discusses how economic coercion is used as a geopolitical strategy by powerful states to influence the policies and behaviour of other actors, especially in the post-Cold War era.

Key Insights

• The journal article defines economic coercion as a form of financial constraint that is imposed upon the intended targets or entities to influence some of their policies and conduct, often without employing violent means. It can be implemented through various instruments, such as economic sanctions, commercial embargoes, and regulatory mechanisms like the Financial Action Task Force (FATF).
• The article argues that economic coercion is not a new phenomenon but has evolved from traditional sanction regimes to contemporary mechanisms that are more institutionalised and globalised. It also contends that economic coercion is not merely a means of achieving economic goals, but rather a vital element of grand strategic design that serves geopolitical interests and objectives.
• The journal article analyses the historical and conceptual dimensions of economic coercion, as well as the role of geo-economics and economic statecraft in the current international system. It also examines the cases of Iran, Pakistan, and the UAE as examples of how economic coercion has been employed by dominant powers for political purposes.

Summary

• Economic coercion as a geopolitical strategy: The paper explores how economic means are used to influence or compel other actors to comply with certain demands or objectives, especially in the post-Cold War era.
• Coercion and geo-economics: The paper defines coercion as the use or threat of force or harm to manipulate the behaviour of others, and geo-economics as the use of economic instruments to promote and defend national interests and power.
• Economic sanctions and FATF: The paper examines the evolution of economic coercion from traditional sanction regimes to contemporary mechanisms such as the Financial Action Task Force (FATF), which is seen as a tool for regulating and monitoring global financial flows.
• Research questions and methodology: The paper poses three research questions: 1) How does economic coercion work as a geopolitical strategy? 2) How effective is economic coercion in achieving desired outcomes? 3) How does FATF fit into the geo-economic framework? The paper adopts a qualitative and descriptive approach, using secondary sources and case studies.
• The role of IFIs in the FATF process: The author argues that the International Financial Institutions (IFIs) have a strong influence on the FATF, as they share the same neo-liberal agenda and expertise. The IFIs also have leverage over the non-FATF member developing states.
• The criticism of the FATF as a neo-colonial tool: The author cites various voices that oppose the FATF as a violation of sovereignty and a means of maintaining the dominance of the Global North. The author claims that the FATF is selective and biased in its scrutiny and listing of countries, and ignores the safe havens of black money in the Western countries. -
• The lack of accountability and transparency in the FATF operations: The author points out that the FATF does not follow a clear constitution or a fair procedure, and is influenced by the political interests of its founding and dominant members. The author gives the example of Pakistan’s grey listing in 2018 as a case of geopolitical coercion by the US and India. The author suggests that the FATF needs to be more inclusive, participatory, and problem-solving, rather than coercive and enforcement-oriented.