The Case for Increasing Economic Warfare Capabilities in the Military 

Reigning Assumption

The U.S. government largely regards economic warfare as wholly distinct from military tools and tactics even though in multiple historic cases, the military has played a significant role in economic warfare well beyond enforcing sanctions. Adversaries currently see economic warfare as an attractive option, affording means to gain asymmetrical advantage over the United States.

Current U.S. Military Doctrine Assigns Economic Warfare Low-Priority

Economic warfare — which was critical during World War II — is now primarily relegated to the classified silo of irregular warfare. DoD’s Joint Publication 1 — the overarching joint force doctrine — lumps economic warfare into the “irregular warfare” grab bag. The most recent Irregular Warfare Annex to the National Defense Strategy includes a narrowly defined, specific instance of economic warfare as a mission-set for special operators: “counter-threat finance.” However, economic warfare is broader than special operators and intelligence analysts following bad actors’ money to create desired campaign effects.

Previously the U.S. military understood and embraced the importance of economic warfare as a national instrument to which it contributed. Perhaps the most famous examples of offensive economic warfare waged by the U.S. military occurred during World War II. The U.S. Army Air Corps’ strategic bombing of Nazi Germany’s supply chain for industrial production capabilities of ball bearings, oil refining, and fighters, as well as the U.S. Navy’s offensive submarine campaign targeting Japanese commercial shipping in the Pacific, are two often-cited examples of economic warfare. Today, in contrast, DoD’s economic warfare is doctrinally largely regarded as a U.S. Special Operations Command (SOCOM) mission, not a conventional military force “best practice.” In short, economic warfare is considered to be low profile, of low importance, and outside mainstream DoD practices.

Resurrecting a robust economic instrument of power-employing conventional forces is essential across the conflict spectrum to counter peers, near-peers, and violent extremist organizations. Waging offensive and defensive economic warfare to delegitimatize and undermine the support of belligerents is a vital tool of U.S. warfare, and the military needs to play a larger role in implementing economic strategies in partnership with other agencies.

Current DoD Approach to Economic Warfare Inadequate/Insufficient

Strategists anticipate that future conflicts will require leveraging economic and financial means as essential warfighting tools. However, U.S. government agencies with the necessary economic and financial knowledge and skills have traditionally not engaged directly in waging war. In addition, economic warfare in DoD is limited only to the counter-threat finance mission, which is largely overseen by SOCOM and primarily pertains to counterterrorism. This does not include grey-zone economic warfare activities, like cyber intrusions, or aggressive maritime rights enforcement, for example, or coercive actions leading to direct conventional action of the sorts conducted by U.S. adversaries today. Limited, if any, doctrine, theory, tools, or resources — much less operational strategy — exists or is practiced by the armed forces. This gap between strategic requirements and force capabilities handicaps the military’s ability to conduct economic warfare similar to the current scale demonstrated by U.S. adversaries. Thus, a significant gap exists between DoD’s warfighters and the rest of the U.S. government’s economic capabilities in addressing adversaries’ use of economic warfare in current and future conflicts. 

Adversaries Embracing Economic Warfare

No longer fearful and sensing Western nations’ vulnerability to economic shocks and perturbations, adversaries appreciate the potential asymmetric advantage created through offensive economic warfare. Economic warfare provides adversaries a grey-zone coercion tool short of direct action by conventional forces. Representative examples of adversaries embracing and employing economic warfare as an instrument of national power are rapidly emerging. Iran and China, in particular, are each upping their game on employing economic warfare as a key instrument in their struggle against U.S. power. 

Iran

Iran’s proxy units have pointedly attacked commercial shipping with conventional weapons in the Red Sea region since the October 7, 2023, Hamas attack on Israel.  The Houthi forces’ indiscriminate missile attacks on commercial shipping have already disrupted global supply chains to such an extent that Tesla shut down its Berlin manufacturing line due to crucial component shortages. Major commercial shipping lines, including Maersk, Hapag-Lloyd, and others, have paused or re-routed their ships around the risk area. Shipping rate costs have increased almost three times the normal rate, and material increases in transit times for nearly 20% or more of global maritime container shipments are impacting the global economy due to these attacks. Unarmed with economic warfare-waging capabilities, DoD planners would undoubtedly have benefited from a range of escalating non-kinetic response options in anticipating and reacting to the Houthi commercial shipping attacks. Options might range from interdicting and denying the flow of Iranian arms into Yemen, to digitally denying/degrading missile guidance systems, to leveraging counter-threat finance playbooks already learned in Iraq and Afghanistan (because the administration has re-designated the Houthis as terrorists). Non-kinetic economic warfare options and playbooks are therefore critically needed. Military operations other than war viewed through an economic warfare prism would arm war planners with a range of responses for dealing with Houthi attacks — as well as attacks from any other potential adversaries.

China

The People’s Liberation Army (PLA’s) doctrine and its “Three Warfares” non-kinetic option envision economic warfare as a key element of Beijing’s warfare strategy. The Chinese military’s embrace of economic warfare is on full display worldwide, in daily news items. On January 31, 2024, FBI Director Christopher Wray publicly warned Congress that Chinese military cyber forces “(…) are positioning on American infrastructure in preparation to wreak havoc and cause real-world harm to American citizens and communities, if and when China decides the time has come to strike.” Economic warfare is already targeting American industry, economic capabilities, and resources waged by doctrinally organized, trained, and equipped Chinese military forces. This strategy is intended to create chaos and confusion and to sap the support of Americans in the event of a Chinese takeover of Taiwan. The FBI Director’s latest warning builds on his 2020 warning regarding Chinese action as “(…) a threat to our economic security — and by extension, to our national security.”

Like the United States’ DIME construct, Chinese “war space” incorporates nonphysical political, informational, diplomatic, and economic aspects. Beijing is leveraging all its economic resources toward creating strategic political and military advantages over the United States. China has thereby successfully leveraged economic means — predatory debt lending, bribery, and trade agreements — to achieve military objectives and advantages. For example, the Chinese gained a warm-water port in the Horn of Africa without kinetic action by foreclosing on debt. In 2023, two underwater fiber-optic communications cables were cut within a short period by suspected Chinese organizations, disrupting and degrading Taiwanese commerce. Finally, the Chinese government pressures other countries not to sign free trade agreements with Taiwan. Thus, the United States’ most potent global adversary China — specifically called out in President Joe Biden’s National Security Strategy — unquestionably regards the economic instrument of power as a critical strategic enabler employed in a whole-of-government approach that includes military forces.

Preparing DoD to Address Adversaries in Economic Warfare: Next Steps

Revisiting, reinvigorating, and revamping DoD’s “E” capabilities in the DIME construct is critical to addressing adversaries already waging economic warfare. Though some critics regard the Pentagon as already having too much authority, DoD is tasked and resourced as the executive agency providing armed national security across the full spectrum of conflict with kinetic and non-kinetic means. Economic warfare inherently mandates an interagency-synchronized strategy to understand the target’s networked systems to achieve success. State, Treasury, Commerce, and other agencies offer the resources, insights, experiences, and skills required to plan and execute a whole-of-government approach. Violent action and armed force in the conduct of economic warfare, like the World War II Army Air Corps’ bombing of Germany’s ball-bearing manufacturing plants, or the U.S. Navy’s World War II submarine campaign against Japanese commercial shipping, however, are the primary responsibilities of the military. DoD should partner with other agencies and evolve to meet fast-expanding global threats in an interconnected global economy in a pace and manner similar to its embrace of the information element of national power with a military dimension in the cyber and digital domain.

For example, the U.S. military should be prepared to respond to China’s threatened economic warfare and coercion of Taiwan. Following the idea of, “Train the way you fight,” U.S. Cyber Command (USCYBERCOM) and U.S. Indo-Pacific Command (USINDOPACOM) would have leading roles in defending Taiwan in any PLA cyber-attack scenario against Taiwan’s economic activities. Taiwan plays a crucial role in the global economy: Its chip-manufacturing companies supply over 90% of the world’s smallest-sized chips. China is already engaged in and is increasing cyberattacks against Taiwan. A digital blockade that would cripple Taiwan’s largest chipmaker, TSMC, offers an attractive option to an adversary seeking to avoid any kinetic action yet isolate Taiwan. Such an attack would provide leverage against Taiwan’s international supporters, such as Western countries, which would be wounded economically. With U.S. policy now supportive, U.S. cyber units can now assist Taiwanese cyber forces in identifying vulnerabilities, hardening network defenses, and reducing attack surfaces. Conducting joint-force exercises with red teams would prepare allied cyber forces to defend critical economic targets in Taiwan and identify methods for fighting through and building resilience and redundancy. A cyber “red flag” exercise could be conducted to plan defensive operations; lessons learned could be applied to strike back at attackers. 

Likewise, U.S. Space Command (USSPACECOM) capabilities will be central to preparing to defend against economic attack — via a cyberattack, naval blockade, or other means. In preparing for Taiwanese defense, USSPACECOM elements in conjunction with Allied, Taiwanese, and commercial partners should focus on vulnerability assessment, resilience and building redundancy for space-reliant critical infrastructure that might be targeted in a PLA cyber-attack. Space-reliant financial transactions, commercial communications, and other actions pertaining to an adversary’s supply chain, transportation, and logistics, ability to trade with partners, or otherwise impact the economy — either permanently or temporarily— offer targets for space-reliant services the PLA might disrupt. Moreover, due to the criticality of command, control, communications, and intelligence assets, U.S. military space assets would be a strategic focus of PLA forces in a forced re-unification of Taiwan. USSPACECOM elements could anticipate such a move by devising tactics, techniques, and procedures for offensive action to deny or degrade China’s commercial remote sensing, satellite earth imagery, and communications. 

Embracing Economic Warfare: A Strategic Imperative

A DoD that is well equipped, well prepared, resourced, and leaning forward to engage in economic warfare, as shown by the potential Taiwan case, could deter Chinese aggression and build up Taiwan’s resiliency in case of an outright Chinese attack or invasion. Doing nothing to dissuade or prevent an attack only enables the United States’ enemies to succeed. Perhaps history offers a template for jump-starting such an economic warfare capability. U.S. military planners should consider the following recommendations to turbocharge the “E” in its DIME capabilities:

• Dial back the clock to a World War II-like organizational approach to economic warfare.
• Recruit experts directly from industry and the commercial sector; the National Guard and Reserve; and pair them with active-duty military targeters, intelligence analysts, weaponeers, and planners.
• Appoint an Office of the Secretary of Defense secretariat charged with expanding existing joint doctrine and theory in order to adapt offensive and defensive economic warfare strategy to current and future threats across the spectrum of conflict.
• Institutionalize with Service requirements backed by funding. In other words, tell the military to “go-do” and indicate a serious commitment with money to accomplish the mission.
• Stand-up interagency cells in Central Command (CENTCOM) and INDOPACOM that report to the operational commander — as in the early days of developing DoD’s information operations and cyber operations capabilities.
• Include more sophisticated economic warfare scenarios in operational war games and exercises with interagency, industry, and Allies to identify threats, gaps, seams, and needed resources.
• Develop tools for long-term and unexpected conflicts. Prepare economic warfare contingency plans that will be ready to roll if needed.
• Train conventional military forces to be capable of defending and attacking for economic effects and objectives — like defending against Houthis attacking commercial shipping in the Red Sea, or China cyber-attacking U.S. wireless networks and oil pipelines using malware.
• Plan and train to prevent or break a Chinese naval blockade of Taiwanese commercial shipping.

Regardless of the conflict phase and stage, the U.S. military should be ready and capable of waging economic warfare in both defense and offense as a full partner with the other instruments of national power. Americans need a Pentagon that is focused on and empowered to wage economic warfare using all force types in tight collaboration, cooperation, and coalition with interagency partners. Such an approach is essential to victory in current and future conflicts.

Bart Gray was with the U.S. military for over 30 years, serving in operational, planning, and policy roles in cyber, space, information, and special technical operations