ECONOMIC WORLD WAR: POWER, COERCION, AND THE STRUGGLE FOR A JUST GLOBAL ORDER

Mohd Azmi Abdul Hamid
President, Majlis Perundingan Pertubuhan Islam Malaysia (MAPIM)
17 April 2026

Abstract

The contemporary global order is increasingly defined by a form of conflict that transcends conventional warfare. This paper argues that the world has entered an era of “Economic World War,” characterized by the systematic use of economic instruments such as sanctions, financial exclusion, trade restrictions, technological denial, and debt conditionalities as tools of geopolitical coercion.

Unlike traditional wars, this form of conflict is diffuse, continuous, and deeply embedded within global systems of finance, trade, and governance. This article examines the structural mechanisms of economic warfare, its disproportionate impact on the Global South, and its implications for sovereignty, justice, and international stability. It concludes by proposing a framework for economic resistance grounded in resilience, regional cooperation, and ethical reorientation of global economic governance.

1. Introduction

The nature of warfare has undergone a profound transformation. While military conflict remains visible in regions such as West Asia, a more pervasive and less visible form of confrontation has emerged. Economic instruments have become primary tools of geopolitical competition.

Sanctions, currency manipulation, financial exclusion, and control over global supply chains are now deployed to weaken adversaries without direct military engagement.

This paper conceptualizes these developments as an Economic World War, a systemic and ongoing struggle embedded within global economic structures. It reflects a shift from territorial conquest to economic domination, where power is exercised through control of financial systems, trade routes, and technological infrastructure.

2. Conceptualizing Economic Warfare

Economic warfare refers to the deliberate use of economic measures by states or coalitions to weaken the economic capacity of adversaries.

Historically, economic blockades and embargoes have been used during wartime. However, in the contemporary era, these measures have become normalized as instruments of peacetime policy.

The architecture of modern economic warfare includes:
● financial sanctions and asset freezes
● exclusion from global payment systems such as SWIFT
● trade embargoes and tariff barriers
● technology export controls
● manipulation of commodity markets
● sovereign debt pressure and conditional lending

These tools operate within a global system that is asymmetrical in design, allowing dominant powers to exercise disproportionate influence.

As Baldwin argues, economic statecraft has become a central feature of international relations, often preferred over military intervention due to its lower immediate political cost.¹

3. The Financial System as a Weapon

The dominance of the United States dollar as the global reserve currency provides unparalleled leverage. Approximately 58 percent of global foreign exchange reserves are held in dollars, reinforcing its centrality in international trade and finance.² This dominance enables the United States to impose unilateral sanctions with global reach.

The freezing of sovereign assets, such as the Russian central bank reserves in 2022, demonstrates how financial systems can be weaponized.³ Such actions undermine trust in the neutrality of global financial institutions and accelerate efforts toward de-dollarization.

Countries are increasingly exploring alternative payment systems, bilateral currency arrangements, and gold-backed reserves to mitigate vulnerability.

The emergence of BRICS financial initiatives reflects a growing dissatisfaction with the current monetary order.

4. Sanctions and Humanitarian Consequences

Sanctions are often framed as targeted measures against governments. However, evidence suggests that their impact frequently extends to civilian populations. Studies have shown that comprehensive sanctions contribute to increased poverty, reduced access to medicine, and deterioration of public health systems.⁴

The case of Iraq in the 1990s and more recent sanctions on Iran and Venezuela illustrate the humanitarian costs of economic isolation. In many instances, sanctions function as a form of collective punishment, raising serious ethical and legal concerns under international humanitarian principles.

5. Energy, Food, and Supply Chain Warfare

Global dependence on interconnected supply chains has created new vulnerabilities. Disruptions in energy flows, particularly through strategic chokepoints such as the Strait of Hormuz, have immediate global consequences.

Approximately 20 percent of the world’s oil supply transits through this corridor.⁵

Similarly, food security has become increasingly politicized. Conflicts affecting major grain producers, combined with climate change and export restrictions, have contributed to global food price volatility. The World Bank has warned that supply disruptions can trigger widespread food insecurity, particularly in low-income countries.⁶

The COVID-19 pandemic and subsequent geopolitical tensions have exposed the fragility of global supply chains, prompting a shift toward localization and diversification strategies.

6. Debt and Structural Dependency

Debt has emerged as a powerful mechanism of economic control. Many developing countries face high levels of external debt, limiting their fiscal space and policy autonomy. According to the International Monetary Fund (IMF), over 60 percent of low-income countries are at high risk of debt distress.⁷

Debt conditionalities often require structural adjustments that prioritize fiscal austerity, market liberalization, and privatization. While intended to stabilize economies, these measures can exacerbate inequality and weaken domestic industries.

The concept of “debt diplomacy” has gained prominence, highlighting how financial dependence can translate into geopolitical leverage.

7. The Global South and Structural Inequality

The Economic World War disproportionately affects the Global South.

Countries in Africa, Asia, and Latin America are more vulnerable to external shocks due to their dependence on imported food, energy, and capital.

Currency depreciation, inflation, and capital flight further exacerbate economic instability. The United Nations Development Programme (UNDP) has noted that global crises are reversing decades of development gains in many regions.⁸

For the Muslim world, these challenges are compounded by geopolitical fragmentation and strategic vulnerabilities. Despite possessing significant natural resources, many Muslim-majority countries lack coordinated economic strategies.

8. West Asia as the Epicenter

West Asia represents a critical intersection of military and economic conflict. The region’s strategic importance stems from its energy resources, maritime routes, and geopolitical positioning.

Conflicts involving Gaza, Iran, and the Red Sea have significant global economic implications.

Disruptions in this region affect oil prices, shipping routes, and investor confidence, highlighting the interconnected nature of modern warfare.

9. Toward Economic Resistance and Resilience

In response to these challenges, countries are increasingly adopting strategies of economic resilience. These include:
diversification of trade partners
development of local industries
investment in food and energy security
establishment of regional financial mechanisms
promotion of South-South cooperation

Economic resistance is not isolationist. Rather, it seeks to balance integration with sovereignty. It emphasizes the need for strategic autonomy in critical sectors.

10. Implications for Malaysia

Malaysia, as an open and trade-dependent economy, is highly exposed to global economic shocks.

Ensuring national resilience requires a comprehensive approach that integrates economic policy with national security considerations.

Key priorities include strengthening food security, enhancing energy resilience, diversifying trade, and developing strategic industries.

Malaysia also has the potential to play a leadership role within the Global South, advocating for a more equitable international economic system.

11. Conclusion

The Economic World War represents a defining feature of the contemporary global order. It is a conflict fought through systems rather than armies, yet its consequences are equally profound.

Addressing this challenge requires not only policy reform but also a rethinking of global economic ethics. A just and sustainable order must prioritize human dignity, equitable development, and genuine multilateral cooperation.

The future of humanity depends on whether the global community can move beyond economic coercion toward a framework rooted in justice and shared prosperity.

References

Baldwin, David A. Economic Statecraft. Princeton University Press, 1985.

International Monetary Fund (IMF). “Currency Composition of Official Foreign Exchange
Reserves (COFER).” 2024.

Tooze, Adam. “The Economic Consequences of the War in Ukraine.” Foreign Affairs, 2022.
Peksen, Dursun. “Economic Sanctions and Human Security.” Journal of Peace Research, Vol. 48, No. 2, 2011.

U.S. Energy Information Administration (EIA). “World Oil Transit Chokepoints.” 2023.
World Bank. “Food Security Update.” 2024.

International Monetary Fund (IMF). “Global Debt Monitor.” 2023.

United Nations Development Programme (UNDP). “Human Development Report.” 2023.

Footnotes

¹ Baldwin, Economic Statecraft, p. 39.
² IMF, COFER Database, 2024.
³ Tooze, “Economic Consequences of the War in Ukraine,” 2022.
⁴ Peksen, “Economic Sanctions and Human Security,” p. 240.
⁵ U.S. EIA, “World Oil Transit Chokepoints,” 2023.
⁶ World Bank, “Food Security Update,” 2024.
⁷ IMF, “Global Debt Monitor,” 2023.
⁸ UNDP, “Human Development Report,” 2023.