Economic Coercion


Funny how it doesn’t take long to coin a phrase. I’ve been warning about Economic Coercion for years. Finally, the weaponizing of sanctions and withholding of support or aid has a name. However, Economic Coercion goes beyond a government’s strong-armed demands for political compliance; enter Big Tech. In all actuality, this economic coercion is nothing new; it’s the old game of carrot and stick.

On Dec. 1, Valdis Dombrovskis, the EU commissioner for economy and trade, had enough. His angst began at least 10 months prior with concern about China placing import bans against Lithuania based on Lithuania’s friendly policies towards Taiwan. Dombrovskis presented a plan for stopping individual member states and the EU as a whole from being bossed around from the outside. He said the “anti-coercion instruments” would include import bans, the withdrawal of approval for certain product groups in the EU, the freezing of EU subsidies and the denial of research funding. 

Could the EU be signaling to the rest of the world that it is prepared to escalate a trade war or increase protectionism for the economic bloc? Or are they just puffing up to signal to the rest of the world that they, too, should have the same respect that others demand?  I’m thinking the deepening row between the United Kingdom and France over fishing, or the potential for erratic trade policies from the U.S., have had their toll on the EU. Hypocritical? The EU is no stranger to being a protagonist to coercive policies of its own. 

There are many scholarly articles on Economic Coercion. The more recent seem to have broadened the scope to include states’ motivations, their choice of coercive instruments and the scale of their efforts. I mention Big Tech. Governments control the physical world, and I argue, Big Tech controls the digital world. In the coming months/years they, too, will attempt to establish sovereignty by defining that space, its boundaries and algorithms that ultimately determine what happens in that space as well as the terms and conditions of who gets to operate in this world.

Recognizing this new threat (perhaps), the EU is yet again threatening Big Tech, vowing to curb their power by any means necessary. Many EU states have already either considered sanctions or are enacting laws on their own.

What does all of this mean to you?

Traditionally we’ve been ever mindful of government export or import regulations and the rules of the road so-to-speak. Big Tech controls the skies. You as a company utilize their platforms to advertise your very existence, communicate ideas, research new markets – the list is infinite. Your success depends on them. Ultimately, whose rules are you going to follow?

I am not suggesting a nefarious, ulterior motive by Big Tech, but I wouldn’t rule it out, either. Keep in mind that Big Tech has had absolutely no problem banning companies from its platforms.

I would keep an eye on legislation aimed at curbing Big Tech’s influence in the marketplace, currently controlled by governments.