Is Money Our New International Power?

Joseph Greico's talk of neoliberal institutionalism in "Anarchy and the Limits of Cooperation" led me to think about something that is sort of off-topic from his main points, but relevant nonetheless.

In today's international economy, we hear a lot about how economic interdependence is a motivating factor for states to remain peaceful with each other. The theory is simple, and it puts forth the idea that if State A and State B are reliant on each other for products X and Y, they will never attack each other. Applied to the whole spectrum of world politics, this theory suggests that so long as countries maintain irreplaceable needs, money and trade will act as the pacifying factor between states. However, such examples of extreme and irreplaceable need are rarely the case, and contingency plans for what happens if trade falls through do not seem to exist. Further, this scenario may put immense pressure on a state to remain in a trade agreement that does not favor its own interests or that empowers the other state to dictate the non-monetary terms of the trade (especially with regard for labor conditions or political aspirations).

For example, if the United States was to suddenly and completely shut off trade with a Middle Eastern nation (let's say Saudi Arabia) because of its hypothetical affiliation with a terrorist organization or its history of human rights abuses and enter into a new agreement with a number of South American countries for oil instead, Saudi Arabia's leaders would be under immense pressure to retaliate in some way against the United States.

**I know OPEC and the WTO are in place to stop such things from happening, but this is a hypothetical.**

Another example would be China's almost insatiable need for oil, a need that the government of Sudan was more than willing to fill in exchange for economic support. Beijing is trying to improve everything in its country as cheaply as possible (a mistake, considering they now hold $1 trillion of US currency and still have failing infrsatructure in their factories and are still using outdated technology), and the CCP is not known to hold human rights in the highest esteem. In an extreme example, an international peacekeeping force trying to stop the genocide in Sudan by overthrowing the government there would only incite rage from the Chinese.

In this interwoven world of international trade, I am reminded of the tangled web of international treaties that led to World War I. Countries that were not even marginally affected by the assassination of archduke Franz Ferdinand found themselves bound to a war they did not belong in.

Even if we are truly in a perfect state of equilibrium as far as trade is concerned, what happens as this theory plays out over time and the theory is upset? Will the proliferation of nuclear weapons deter states from going to war or enable some desperate, economically and diplomatically powerless state to resort to extreme measures? States that are now able to build nuclear weapons will keep those arms even as their economies fall into hard times and their political situations become unstable - is it really wise to be relying on these states in this scenario of economic interdependence?

And, perhaps most pertinent to the reading, can international organizations like the WTO, UN, and OPEC keep the situation stable throughout the world? Should we really be trusting such entities with this power, especially if they do not have standing armies or a nuclear arsenal?