Economic Coercion in the Liberal International Order - Russia's Non-Military Strategy

The trajectory of the liberal order from its theoretical inception in Adam Smith to its triumphant universalised realisation in the post Cold War order has been paralleled by a developing discourse concerning the inherent capability of economic coercion embedded in foreign trade relations. Consecutive failures of the liberal ideal to materialise definitively into a lasting peace drew particular attention to this dynamic as it was central to revisionist strategy and thus a critical consideration of postwar reconstruction – with reference to Germany’s southeast european trade offensive, Halford Mackinder and later Albert Hirschman both invoked uneven economic development and trade terms as the principal obstacle.

Specific to the 21st century structure, this dynamic is conceptualised by Henry Farrell and Abraham Newmans’s weaponized interdependence – which rejects the liberal claim to decentralised global networks and instead argues for asymmetric power concentrations, enabling a considerable coercive arsenal for their controlling actors. Within this framework Russia’s re-emergence on the global stage as a revisionist actor invokes a significant lens for previous and contemporary setbacks attributed to liberal internationalism via the non-military facet of its hybrid warfare. Therefore, as the optimistic vision for a “consensus on peace that would permit real cooperation” falters once more, this article aims to explore the question: What structural implications does complex interdependence have for the Liberal International Order? By tracing EU-Russia energy relations from the 1970s to the annexation of Crimea and its aftermath, this article argues for an erosion of the LIO based on Russia’s weaponization of complex interdependence.

Weaponized interdependence – Shaping Grand Strategy.

While the US and China are key holders of nodes within finance and information networks[1] – Russia’s own integration into the international market has enabled a more rigid and regional node[2] within the energy network in virtue of its hold over concentration in the upstream, gas fields, and midstream: pipeline infrastructure (as the primary transport mechanism for natural gas) in the near abroad. The Soviet Union developed its energy diplomacy in the 1970s, having become a major oil and natural gas exporter. Its primary use on the international field was managing intra-bloc dependency – more than that it emerged as a diplomatic tool for rapprochement with the West. The gas-for-pipe project directed at neutralizing a perceived aggressive West Germany[3] marked a significant turning point, reflecting the liberal variant of peace: ensuring cooperation via mutual dependence. Reagan however cautioned against European dependency on Russian energy exports, after multiple attempts via diversification efforts and sanctions the US failed to stop the Brotherhood pipeline from being constructed having faced strong resistance from Western allies.[4]

Russia had inherited the Soviet era energy toolkit but as a result of disastrous liberalisation from Gorbachev’s decentralization efforts to Yeltsin's shock therapy it served as more of a playground for oligarchs. In the 2000s Putin’s emergence on the stage marked an additional step towards enabling coercion: state control over strategic sectors – this was paralleled by an intensified integration into the global market. The strategy being pursued, conceptualised as Sovereign Globalization, aimed to increase state strength via economic gains while actively decreasing the ‘influence effect’ implicit in foreign trade relations, thus retaining autonomy.[5]

What followed in this period was a proliferation of pipeline construction Yamal, NS1 and Blue Stream and an overall increase in energy exports to the EU, comprising 41% of its gas imports.[6] In addition to Sovereign Globalization Russia began to exert influence building an arsenal of coercive measures: controlling energy flows, applying discriminatory pricing and engaging in asset swaps. This was not a veritable compliance or convergence to the new order, rather an adaptive strategy with a focus on geoeconomics that can be understood as weaponized complex interdependence. A notable example of this was the discounted gas offered to Ukraine, whose effects had been materialised in a suspension of EU talks – the turning point culminated in a domestic upheaval, the Maidan revolution, which had resulted in the toppling of the pro-Russian Yanukovych government.[7]

Within the EU this form of economic power projection during the immediate post-Cold War period took on an almost covert capacity whose latent coercive effects were obscured by a reduced threat perception in the West that accompanied the collapse of the Soviet Union: previous EU-Russia energy relations mostly continued down the same line and Washington ceased to push back for the time being.[8] So while Russia advanced its strategy leveraging the structural basis it was also largely aided by the ideal the LIO meant to uphold, as Stephen Kotkin notes: "Fever dreams of a limitless liberal order obscured the stubborn persistence of geopolitics”.[9] As the ideal began to face challenges, the ramifications of its oversight was contoured in the following decades.

Balancing and security under complex interdependence – the annexation of Crimea

The first phase of EU led liberalisation within the energy market from the 2000s to the 2010s was met with the persistence of the post-WW2 partner state model characterised by monopolistic features. This was most prevalent in major European consumers such as Italy and Germany's national champions: ENI, Eon [10] – where vulnerability to Russia’s strategy was heightened as a result of the industry-first foreign policy, proliferated across parties once previous concerns regarding the Soviet Union had been alleviated[11]. Asset swaps and long-term deals were a success for Russia, having managed to receive the EC’s support in expanding its infrastructure while simultaneously hindering its cohesion.

This produced latent tensions between the EC’s push for a new form of energy security by advancing a liberalised Internal Energy Market (IEM) in 2011, aimed at debundling –pushing for a decentralised energy market, and shifting regulatory power to the EU. Consumer states acted preemptively and secured long-term deals with Gazprom, while disputing the Third Energy Package that had ultimately reached a compromise. Under geopolitical pressure with the annexation of Crimea these issues were exacerbated.

1. Soft balancing in the immediate response

Within Mearsheimer's realist framework balancing is the function of a state’s threat perception - under multipolarity inefficient and untimely balancing is attributed to the given option of buck-passing, getting another power to check the aggressor, typically determined by the magnitude of the threat and geography: “common borders promote balancing; barriers encourage buck-passing” [12]

Soft balancing, done primarily through international institutions and economic sanctions, originated in the post-WW1 period, constituting an integral enforcement mechanism designated to maintaining peace on the basis of liberal internationalism, that is to say heavily dependent on structural conditions of global trade relations for its use. However this failed as a deterrent and became a partial instigator of Germany’s resilience strategy – one aimed at obtaining independence from global sources of supply while maintaining selective trade relations. A crucial component of this plan was leveraging southeastern states with dependency on the German market and thus more prone to being dissuaded from engaging in sanctions.[13] Russia too focused its strategy on uneven relations with consumer states to hinder sanction efficiency and similarly responded by building a resilience strategy against the dollar.

Sanctions in 2014, often described as limited, display a significant impediment that cannot readily be described as buck-passing. It also constitutes a case in which the geography is destiny dictum invoked by Mearsheimer plays an additional and significantly different role. The demonstrable gap between coordinated US-EU sanctions can be explicated by a necessary avoidance of the energy sector - EU states continued to import Russian gas, allowed for a continuation of existing contracts, and were unable to impose sanctions on oil projects.[14] This reflects that blowback was a considerable factor and one that has its provenance in Russia’s pipeline infrastructure – which offers accessibility to its export markets. Sanctions ultimately did have an impact, mostly enhanced by exogenous factors notably: the collapse in global oil prices and COVID-19, however served as an unsuccessful deterrent in the long-term.

2. The follow-up: diversification and lobbying

By 2019 Russia remained the biggest exporter to the EU while the EU represented Russia’s biggest export market,[15] however the annexation had prompted an accelerated bid for diversification - a crucial energy security strategy for both ends.

Russia’s pivot to Asia was facilitated by expanding the energy network with the construction of the Power of Siberia pipeline and China’s financial rescue of the Yamal LNG project. Moreover 2014 marked the initial phases of Russia’s de-dollarization, an attack on the US’s central chokepoint, cross-border payment infrastructure, and acceleration of the aforementioned Sovereign Globalization approach, using the influence effect by constructing a mechanism for bypassing dollar weaponization. Moreover, before the 2022 invasion Russia utilised its own chokepoint to advance these efforts by cutting gas supply to eastern European and Baltic states who opposed the rouble payment system.[16] Post-2022 there has been a continuation in Russo-Chinese energy relations with prospects of a Power of Siberia 2 (PoS-2) agreement, simultaneously propelling both diversification efforts and advancing de-dollarization, as payments would be made in renminbi and roubles.[17]

Europe had gradually advanced its own efforts through initiatives such as the 2015 Energy Union; however they were constrained by a lack of viable near term alternatives.[18] In the subsequent reconfiguration of gas flows LNG development assumed a key security role in Russia’s former sphere of influence, however it remained a costly alternative and one that required close cooperation among states with diverging policies[19] – an instance in which network based and political influence tactics operated in tandem, forming a complex non-military strategy. The 2025 US -EU trade deal illustrates a continued necessity for diversification, having committed to $750 billion in US oil and LNG imports[20], however one that increases the EU’s dependence on America, much like the Russo-Chinese dependency dynamics to emerge from PoS 1 & 2. Notably it has also meant compromising institutionalised liberal ideals by violating the WTO’s preferential treatment rules outside the framework of a comprehensive agreement, made necessary under Russia’s revisionist threat. Both Russia’s original Sovereign globalization and the EU’s own strive for strategic autonomy exacerbated by the latter, have been met with the underlying power dynamics that increased dependency within their own trading blocs.

Another setback was accentuated by the construction of Nord Stream 2, a pipeline running from Russia to Germany under the Baltic Sea . The distinction from prior forms of globalization, as described by Noam Chomsky, is as follows: “Transnational corporations (TNC) are the driving force, and their political power largely shapes state policy in their interests” –a significant reconfiguration of domestic governance based on the emergence of dominant private sector actors. While the European Commission identified NS2 as a security threat, TNCs of major western European consumers largely shaped their position in an adverse direction.[21] German companies such as Uniper and Wintershall, financial backers of the pipeline, with close ties to Russia’s Gazprom had significant and effective lobbying power on energy policy[22]. The persistence of policies like Germany’s Wandel durch Handel: Change through trade[23] indicate a shift in the balance toward commercial over security logic, when the two are at a crossroads. While prevalent in Germany this extended to the US, during the course of the first sanction packages ExxonMobil continued its joint venture with Gazprom, hindering the effectiveness of export controls.[24] Even if the pipeline ultimately did not enter into service and companies like Exxon were later forced to sever ties with Russia -this heavily contributed to its failure as a deterrent and instead fueled Russian perception of legitimisation and weakened credibility of West’s economic resolve to counter Russia.

Conclusion

Tensions provoked within the EU and between the US emerging over conflicting costs and interests display an effective development of Russia’s weaponized interdependence in terms of penetrating the West. This strategy exploited the longstanding issue of asymmetries embedded in global trade and prominent influence of private sector actors – magnifying structural vulnerabilities of the LIO.

This order as developed during the Cold War was not built to withstand the reconfiguration of power dynamics that began in the 1970s most notably via the distinct forms of liberalisation that took place in China and Russia, with their subsequent integration into the global market. Russia’s sustained assault on the LIO’s key tenets: its free-market principles, collective defense mechanisms, and institutional integrity, was underway long before 2022, demonstrating that trade cannot be depoliticised but is inherently susceptible to weaponization. The trading blocs that have hardened in response, shaped by resilience strategies on both sides, mark the emergence of a new bifurcation under geoeconomic rivalry that pits together once more contradictory visions for an international order.

Footnotes

1. Ibid, 47-48.

2. Prontera, Andrea. The New Politics of Energy Security in the European Union and Beyond : States, Markets, Institutions, Taylor & Francis Group, 2017, 6-8.

3. Schattenberg, Susanne. “Pipeline Construction as ‘Soft Power’ in Foreign Policy. Why the Soviet Union Started to Sell Gas to West Germany, 1966–1970.” Journal of Modern European History 20, no. 4 (2022)

4. Yergin, Daniel. The Prize : The Epic Quest for Oil, Money and Power, Simon & Schuster, Limited, 2009, 967-970.

5. Nigel Gould-Davies, Russia’s Sovereign Globalization: Rise, Fall and Future (London: Chatham House, January 2016) https://www.chathamhouse.org/sites/default/files/publications/research/20160106RussiasSovereignGl obalizationGouldDaviesFinal.pdf

6. Martin Russell, The Nord Stream 2 Pipeline: Economic, Environmental and Geopolitical Issues, EPRS Briefing no. 690.705 (European Parliamentary Research Service, July 2021), https://www.europarl.europa.eu/RegData/etudes/BRIE/2021/690705/EPRS_BRI%282021%29690705 _EN.pdf

7. Fishman, Edward. (2025) Chokepoints: How the Global Economy Became a Weapon of War, London: Elliott & Thompson, 171.

8. Prontera, The New Politics of Energy Security in the European Union and Beyond, 114-5.

9. https://www.foreignaffairs.com/reviews/ukraine-cold-war-never-ended-russia-ukraine-war

10. Prontera, The New Politics of Energy Security in the European Union and Beyond, 118.

11. Wolfgang Münchau, Kaput: The End of the German Miracle (London: Swift Press, 2024), 96-7.

12. Mearsheimer, John J.. The Tragedy of Great Power Politics. W. W. Norton & Company, 2014, 196-225.

13. Mulder, Nicholas. The Economic Weapon: The Rise of Sanctions as a Tool of Modern War. 1st ed. New Haven: Yale University Press, 2022, 191

14.  See pp.36-7https://www.congress.gov/crs_external_products/R/PDF/R45415/R45415.13.pdf#page39

15. See https://www.europarl.europa.eu/RegData/etudes/BRIE/2021/690705/EPRS_BRI%282021%2969 0705_EN.pdf

16. See page 14 https://iea.blob.core.windows.net/assets/c7e74868-30fd-440c-a616-488215894356/GasMarketReport,Q3-2022.pdf#page12

17. https://www.csis.org/analysis/how-power-siberia-2-deal-could-reshape-global-energy

18. Ibid

19. Prontera, The New Politics of Energy Security in the European Union and Beyond, 145.

20. https://ec.europa.eu/commission/presscorner/detail/en/qanda_25_1930

21. Prontera, The New Politics of Energy Security in the European Union and Beyond, 140.

22. Muradkhanli, Nigar. (2023). German-Russian Gas Relations: From Cooperation to Conflict, 99-103.

23. https://www.politico.eu/article/ukraine-geopolitics-in-eu-trade-china-russia/

24. Fishman, Edward. (2025) Chokepoints: How the Global Economy Became a Weapon of War, London: Elliott & Thompson, 213.

    
    

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