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GNOSIS 2/2010
When the place of confrontation is the market

Geo-economy and Intelligence
from defence to attack


Marco Giaconi


Economic Intelligence has always gone hand in hand with all the other forms of Intelligence. In the majority of cases, it was considered an instrument of defence of the national economy and of penetration and knowledge of the economic initiatives of others. Marco Giaconi delineates the changes in the Economic Intelligence at the time of the global market, which has moved the operational axis; as well as the acquisition of information, it must also aim to influence and condition foreign public opinions. One could say the conquest of the hearts and minds of the target Country. Anyway, economic warfare knows no limits in pursuing the primary interest of ones own Country and the Intelligence, as always, plays a fundamental role.
(Foto Redazionale)



The economic Intelligence serves, in principle, to protect the productive systems and the comparative advantages of each single Country or commercial area. Therefore, given that the Ricardian model of international commerce foresees that everyone draws benefit from the economic exchanges between different Countries, the Intelligence of the productive structures is connected to the stabilization of the comparative advantage, to the protection of the final markets of the key-products of the productive formula of a Country, to the diminution of the political, cultural and social costs of the management of the final markets, and lastly, to the creation of a structural dependency between the economic cycles of the target-Country with respect to the Country with major comparative advantages (1) . The economic Intelligence is the soft power of the dependency, and creates commercial and informative asymmetries which tend to increas, ceteris paribus, the net profit of the goods and services induced in the market or in the dependent Country (2) .
It is, therefore, a classic model like the Ricardian theory that justifies it. But, today, the productive systems are widespread, and cannot be identified with a single Country, the economy has progressively de-materialized, the flow of strategic information is now global, the production of goods is transferring to “third” Countries or to the Asiatic area, and the weight of financial considerations on all the economic choices is greater than that which happens with the capitalism of the goods (3) .The comparative advantage assumes, above all, a strategic, political and cultural importance, while the flow of the goods is, by now,
enlarged on a global level and becomes unmanageable with the creation of barriers, tariffs or not, upon entry of the goods and services.
Therefore, we have passed from an economic intelligence in a position of defence, where the purpose of the operations was the maintaining of the comparative advantage as long as possible, also with clear protectionist mechanisms, to an economic warfare economic warfare of attack, where the mechanisms of consumption conditioning and the acceptance of goods and services in almost monopolistic conditions, are conveyed with mechanisms of perception management (4) .
The U.S Department of Defence defines perception management as a series of “items of information to channel or prohibit to the foreign public opinion, to influence their emotions, their motivations and the rational process in such a way that the governing classes l’intelligence classes or local intelligence are favourably directed to the interests of the originator of the perception management(5) . Therefore, it no longer concerns the protection of a market or a comparative advantage – by now an almost impossible objective in the globalized system – but to induce behaviour, also non-economic, which induces economic conduct useful to the originator of the process of transformation of the perception.
The clear-cut separation between war and peace having ceased, the distinction between economic war and military conflict having waned, and the difference between psy-war of a political and strategic character, and infowarof a commercial type is, by now, rather tenuous (6).
The difference between infowar economic and psywar economic is defined case by case, in the careful dosage between the elements of a military, economic and psycho-political paradigm (7).
LWars are won, perhaps without even a shot being fired, inducing in the dependent Country the styles, ways of life, consumption and the model of
political communication which best adapt to the interests of the “originator” Country. The most usual technique to create this perceptive deformation is that which, in the (Gestaltpsychologie) is defined as difference between “background” and “image”. If one teaches to recognize a particular figure in the background, how the same mechanism one induces in the behaviour a difference between salient features, objectives of the action, and secondary or random elements (8).
Naturally, all this does not exclude a de facto protectionism, according to the more usual rules of the 19th- 20th Century State-Nation.
The Countries that have major comparative advantages in certain technologies, like the evolved computer science, the biotechnologies, the telecommunications, protect these assetwith the criteria of an economic warfare attack: in fact, they monopolize the end markets, utilize the corruption of the local ruling classes, favour the protection of the end markets of their goods with advantageous collateral assets, both on the geopolitical level and in economic sectors different from those in which they need to protect their own leading technologies (9) . The corruption of the élites, the spread of meaningless mass defamatory phrases or words considered to be stylish; the ban on the spread of the successes reached by the target Country are studied techniques – complex and codified – which serve to create symbolic and economic dependence of the weaker Country.
There exists an offensive nation branding which tears down the credibility of the markets of a particular Country and shrinks global l’appeal for its products to major comparative advantage. L’economic warfare of attack spreads life-styles, paradigms of behaviour which crystallize the productive and political formula most favourable to the “originator” Country of the perception management. One thinks of the political use of the economic collaterals, of the utilization of the clause the most favoured Nation” in the U.S. trade Law or, of the mechanisms of economic protection and support to the agricultural production of the European Union. That which is no longer protected by the non-tariff barriers is induced by the political and psychological barriers created by the ’economic warfare and by the management of perceptions (10) .
In currency terms, since money is a highly symbolic asset the techniques of present economic war regard these primary elements: the acquisition of fresh capital to support the public debt or for the businesses, given that today, the monetary competition is based on the acquisition, first and better than the others, of the great masses of liquidity which goes through the world market, and secondly, by the ban of this additional mass of capital for certain competitor States.
Furthermore, the management of the differentials between the currencies is important in order to modify both the final prices and the public debt of the target Country, as well as, the management of the private financial news, so as to influence the secondary elites (11) .
Finally, and this is certainly not a thing of little importance, the dominance in the economic and financial war is acquired by emptying of cash, and acquiring it, Countries and areas which are not consistent with their productive system or which create excessive non-tariff barriers to the penetration of the goods and capital of the originator Country of the economic infowar. From this point of view, the crisis of the “Asiatic Tigers”, in 1997, was significant.
The present economic war is between China, “the factory of the world”, the EU and the U.S.A. Peking holds, at this moment, 895 billion U.S. securities, from the data of March 2010, followed by Japan with 784.9 billion and, after Great Britain, by petroleum exporter Countries in the
OPEC area with 229.5 billion (12) . The Greek crisis was the beginning of the crisis of the BCE, which is the treasury of the Central Bank of Athens.
The fall of the Greek Budget was managed by an information system which covered an exposure of the foreign debt of Athens, held at 70% outside of Greece, while its securities were sold for over 20 billion Euros (up to the 25 January, 2010) for those at five years, at fixed rate.
The banks of the Southern European Countries possess Greek bonds, for example, the Portuguese banks have Greek asset for their 23%, while France is at 13%, together with Ireland, for the ownership of Greek assets in bank capital (13) . And, therefore, the fall at 50% of the value of the Athens debt would cost the Lisbon banks, for example, the loss of circa 12% of their own capital. The debts of Spain, Greece, and Portugal to the European banks are 800 billion Euros, with Holland which, with 100 million credits, has greater exposure with respect to its GDP. The mutual exposures of the European banks are usually above 12%.
Therefore, in terms of the’ economic warfarethe question is simple: the Countries holding trade surplus the only source that generates real cash, today – are attacked, either by the Euro, if they come from the North American area, or by the U.S. Dollar, the “counter currency” of the Euro, since the European single currency has now become first, compared to the U.S. Dollar, for the handling of the international payments and the foreing bonds.
At the end of 2006, the 40% and 30% of all deposits were denominated in Euro, which is statistically more stable than the American Dollar. To attack Greece, after having “drugged” it with the collateral securities on the sovereign debt, means to attack the Euro and, in particular, Germany, which has a growing trade surplus up to 17.2 billion Euros, as of the data of March, 2010 .
The more surplus, the more favourable exchange capacity and the possibility of attracting new capital; more deficit, less attractiveness of the national productive structures. The trade deficit of the USA was, at 12th May, 2010, 40.4 billion US Dollars. Therefore, “the operation Euro” is now absolutely necessary: it avoids the growth of an economic area able to challenge the USA, and the action on the Greek debt forces Germany and the most economically evolved area of the EU to support the Athens debt, in order to avoid the fall of the single European currency, which permitted Germany itself a “de facto devaluation” which has rewarded also its intra-EU competitors. Therefore, the future scenarios have a high probability of being realized shortly. Otherwise, Berlin reconstructs its Deutschmark, reliable, but without competition compared to the dollar, which must remain, to allow the “double deficit” (balance of the current accounts + public accounts) – stable, but without geopolitical rayonnement, which would allow Germany to avoid the future bailout of three billion Euros of the debts of the European “Club Med”, with an exposure of the German banks in the area of 500 million. But this would mean provincializing the German economy, while China comes back to buy US Bonds when the US economy begins to show positive indexes again (14) .
Today, as we have seen, the economic war,is a struggle to acquire very scarce resources, such as liquidity. The scenario 2 implies, instead, the abandoning of the Euro on the part of the “Club Med” economies. To have the possibility of freely generating inflation would be the solution in Athens, to pay its debts to its citizens and avoid the monetary imbalance with the Euro and its Countries of reference. If the US and German decision makers, in the phase of the post-1989 Balkan wars, formulated a geopolitical approach to the dissociation,to constitute sufficiently small Countries to be economically penetrated by Berlin or by Washington (15) , and to avoid a linkage between Balkan middle powers and the Russian Federation, today the dissociation is an “indirect strategy” of the geo-economic type, to separate into two Euro areas and to avoid that the EU single currency can become direct competitor of the US Dollar and, finally lender of last resort in the international exchanges. The other
geopolitical aspect with which we must continue to reckon with is that of the economic warfare of the Qaedist terrorism
From its foundation, the organization of Osama Bin Laden has wanted to create a restructuring of the US and European economic system, which ties the Western economies to the oil burden, and permits, at the same time, a formidable expenditure in military actions, aid, support to “friendly” Countries of the West, to make the national public accounts explode, in conditions, above all, of a heavy oil burden, and isolate the US and EU economies from the flow of new capital which is generated by the axis between China, Central Asia, the Persian Gulf and the Middle East. The line of Osama Bin Laden is that of the financial and economic encirclement, and then to go on to the foundation of the Caliphate and to the restructuring of the geo-economic system, first the European and then the North American (16) .
The different strategies of the Al Qaeda in the Maghreb areas, the Horn of Africa, the Middle East and Yemen are the reflection of these different geo-economic choices of the Islamic terrorism.


(1) See A.K. Gupta, V.Govindarjan, H. Wang, The Quest for Global Dominance: Transforming Global Presence into Global Competitive Advantage. London, Jossey Bass, 2008.
(2) See E. Hennessy. Market Warfare, Leadership and Domination over Competitors. New York, American Book Publishing Group, 2008.
(3) See Leo Panitch, M. Konings (Eds) American Empire and the Political Economy of Global Finance. London, Palgrave Macmillan, 2009.
(4) See K. Agarwal. Perception Management: The Management Tactics. New Delhi, Global India Publications, 2009.
(5) See Department of Defence Dictionary of Military and Associated Terms. Joint Publications 1-02, 12th April, 2001.
(6) See Cymbala, Military Persuasion on War and Policy, The Power of Soft. London, Praeger, 2002.
(7) C. Paul, Information Operations, Doctrine and Practice, a Reference Handbook, London, Praeger, 2008.
(8) V. W. Kahler, H. Kopfermann, L. Kahler, Die Aufgabe der Gestaltspsychologie, Berlin, de Gruyter, 1971.
(9) See K. Hodkinson. Protecting and Exploiting New Technology and Designs. London, Spon Press, 1987.
(10) See T. Rid, M. Hecker. War 2.0, Irregular Warfare in the Information Age. London, Praeger, 2009.
(11) Y. Brooks. Financial Warfare, How to Fight and Win. Bloomington, the Universe, 2009
(12) See Ph. Low. Recent Economic Developments, Bank of International Settlements, Basel. 2010, in http://www.bis.org/review/r100518f.pdf .
(13) See J. Funk Kierkegaard, A Default by Greece, Why and When? Washington, D.C., Peterson Institute for International Economics, 16th May, 2010.
(14) Michael Collins, Economic Warfare, Europe versus Wall Street, The Agonist, 10th March, 2010 in www.agonist.org
(15) R.C. Nation, War in the Balkans, 1991-2002, US Army War College, Strategic Studies Institute, Carlisle Barracks, 2003.
(16) Gal Luft. Al Qaeda’s Economic War against the United States, Institute for the Analysis of Global Security, Potomac, 2005.

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