Underground Empire Midterm

Weaponized Interdependence

The strategy by which states leverage centralized global economic and technological networks (such as finance, communications, and supply chains) as asymmetric tools of coercion, leverage, and surveillance against adversaries and allies alike

Chokepoints

Central nodes or hubs in global networks—such as internet exchanges, financial clearinghouses, or semiconductor foundries—through which global flows must pass, rendering them prime sites for state control and coercion

Transit Authority

A legal doctrine formulated after 9/11 that allowed U.S. intelligence agencies to intercept international communications traffic passing through U.S. physical infrastructure without a warrant, provided the communication did not originate or terminate with a U.S. person

Sanctions Industrial Complex

A self-reinforcing policy feedback loop in which the widespread implementation of economic sanctions creates institutional mechanisms and political dynamics that continually generate demands for even harsher sanctions

Stickiness

The high switching costs and structural inertia that prevent companies or governments from moving their data, operations, or financial activities away from centralized hubs (such as Amazon Web Services or Virginia data centers) once established

Sputnik Moment

A sudden crisis of anxiety where a state fears it is falling behind a rival in a critical technological or economic arena (e.g., China’s accelerated central bank digital currency project following Facebook’s Libra announcement, and the U.S. reaction to China's CBDC)

Wandel durch Handel

(“Change through trade”) The long-standing German and European foreign policy doctrine asserting that deep economic integration and commercial ties with autocratic states (such as Russia) would gradually transform their political systems and secure long-term peace

STORMBREW

A classified post-9/11 NSA surveillance program that tapped directly into physical internet backbone cables and landing switches on U.S. soil in partnership with corporate telecommunications providers like Verizon/MCI.

Panopticon Effect

The unexcelled surveillance advantage gained by a state that monitors central network hubs (such as U.S. fiber exchange points, SWIFT messaging servers, or Virginia server farms), allowing it to observe global communication and financial flows

Secondary Sanctions

Sanctions enforced against third-country entities or individuals operating outside domestic territorial jurisdiction, forcing foreign firms to choose between conducting business with a targeted nation or maintaining access to the U.S. dollar financial system

Huawei

China’s leading telecommunications company and 5G global frontrunner, which became a prime target of U.S. network coercion through export bans, foreign direct product rules, and financial fraud charges against CFO Meng Wanzhou

INSTEX

(Instrument in Support of Trade Exchanges) A special-purpose financial vehicle established by France, Germany, and the UK to facilitate non-dollar barter trade with Iran in order to bypass U.S. secondary sanctions after the U.S. exited the JCPOA

Strategic Autonomy

The European policy debate regarding the necessity of developing independent European economic, technological, and security capabilities so the EU can protect its interests without total reliance on the U.S. or vulnerability to foreign coercion.

Stuxnet

A sophisticated joint U.S.-Israeli cyberweapon designed to physically sabotage centrifuges in Iran’s nuclear program, which subsequently escaped into global networks and established a precedent for state-sponsored cyber warfare

Friendshoring

The practice of restructuring global supply chains to restrict sourcing and manufacturing exclusively to allied or friendly nations in order to mitigate geopolitical vulnerability

Digital Switzerland

A proposal put forward by Microsoft (Brad Smith) calling for global technology companies to adopt strict neutrality and act as defenders of civilian internet infrastructure against state-sponsored cyberattacks

SWIFT

(Society for Worldwide Interbank Financial Telecommunication) The Belgium-based global messaging cooperative connecting financial institutions, which was press-ganged by U.S. authorities to monitor terrorist financing and sever targeted nations (such as Iran and Russia) from international banking

OFAC

(Office of Foreign Assets Control) The U.S. Department of the Treasury agency that administers economic sanctions, possessing the authority to unilaterally designate foreign entities and sever their access to dollar clearing accounts

Farrell and Newman challenge what assumption about globalization?

Economic interdependence promotes peace and cooperation

Which of the following is NOT identified as a source of network power by the authors?

-Territorial conquest

-Control over infrastructure

-Control over switches

-Information access

-Regulatory reach

Territorial conquest

Farrell and Newman contend that the United States has continued as a global power by commanding and controlling what technology?

Fiber optic cables

Which world leader claimed that the Internet was a CIA project?

Vladimir Putin

What concept do the authors of Underground Empire offer as an explanation for the new dangerous era of economic warfare?

Weaponized interdependence

According to the famous phrase, “…with great power comes great ____”

responsibility

Walter Wriston argued in the Twilight of Sovereignty that technology would liberate ____ from government control and decentralize ____ around the world.

… technology would liberate capital (and ideas) from government control and decentralize power (and knowledge) around the world.

Walter Wriston complained that banking in the 1960s suffered from what problems?

From being: sluggish, timid, and lazy

Wriston postulated that banking was actually a branch of the ____ business.

information business

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) was designed, built, and implemented in the United States. (T/F?)

False, it was founded in Brussels, Belgium

The Internet today functions like a distributed network. (T/F?)

False

The STORMBREW map was created by what government agency?

National Security Agency (NSA)

What was the name of the legal doctrine that the United States used to tap into telecommunications traffic that flowed through US networks?

Transit authority

The United States initially started using SWIFT to monitor financial transactions in order to deal with what national security threat?

Jihadist terrorism

What two countries were initially targeted by the Office of Foreign Assets Control in the 2000s to limit their access to the international banking system and to punish financial institutions that did business with these countries?

Iran and North Korea

What are part of the portfolio of the Chinese company Huawei?

Satellite Technology, Advanced AI Research, Telecommunications equipment, Smart City Technology, and Microchip manufacturing.

There were concerns that the equipment being developed and installed by Huawei could be used for spying, but also that the technology might have an embedded ___ switch.

kill

Meng Wanzhou, the CFO of Huawei, was arrested in which country?

Canada

The United States and other western countries had national security concerns over the rollout of what technology by Huawei?

5G Technology

Huawei’s strategy of expansion was modeled on Chairman Mao’s tactics in China. In order to encircle the cities you needed to occupy the ___.

the countryside

Underground Empire highlights the paradox of how the European Union, which was a poster child for this phenomenon _____, has become much more concerned about its own economic security.

globalization

The European Union has a clear Common Foreign and Security Policy with no disagreement or dissension among its member states. (T/F?)

False

Which type of sanctions being imposed by the U.S. on Iran were the Europeans deeply concerned with?

Secondary sanctions

According to conventional wisdom, Europe had gotten used to relying on the US for what, Russia for what, and China for what?

-Europe relied on security from the US

-Europe relied on energy from Russia

-Europe relied on trade from China

The Trump Administration opposed the completion of the Nord Stream 2 pipeline between Russia and Germany (T/F?)

True

Microsoft’s monopoly power was targeted by the U.S. federal government over what software product?

Internet Explorer

Microsoft got into trouble with its overseas customers for working with which U.S. government agency?

National Security Agency (NSA)

The authors argue that to address issues of privacy and digital rights, there needs to be a digital ____ convention.

Geneva

One of the problems of TSMC is that its fabs or chip fabrication facilities, are primarily located in which country?

Taiwan

Many important microchip processors for the U.S. military are produced by TSMC. (T/F?)

True

Morris Chang, the longtime CEO of TSMC, has argued the world is no longer what?

Flat

Cryptocurrencies are based on what core piece of technology?

blockchain

Cryptocurrencies have opted for what adaptation in order to provide some reliability and security?

stablecoins

The US Treasury promulgated oil price caps to deal reduce the profits generated by the sale of oil from what country?

Russia

Both President Biden and President Trump aimed to disengage the United States from China’s economy. (T/F?)

True

The authors quote a former Bernie Sanders advisor who says that the U.S. government has developed a “sanction ____ complex".”

industrial

The United States imposed sanctions on a Russian oligarch, Oleg Deripaska, who it turned out controlled a company which produced what vital metal necessary for European industry?

Aluminum