The Missing Lever in Rebuilding Britain's Economic Statecraft

‍Economic statecraft in competition, crisis and conflict.

More than two thousand years ago Cicero warned that unlimited money is the sinews of war. The observation has lost none of its relevance.

On 1 January 2026, China's updated Export Licensing Catalogue came into force, extending licence requirements to further critical minerals. It was the latest move in an escalating campaign. An October 2025 package had claimed licensing authority over any foreign product containing 0.1 per cent or more of Chinese-origin rare earths, or manufactured with Chinese processing technology, before Beijing suspended its most sweeping measures for one year following a trade agreement with Washington. By November 2025 only around half of some 2,000 European licence applications had been approved, and prices for key critical minerals had risen four to five fold. This is not just a trade dispute but rather it is economic coercion which is calibrated and reversible by design, and it is one front in a much wider contest.

Russia and Iran operate war economies designed to defeat Western sanctions, with Iran's shadow fleet sustaining its oil exports and Russian laundering networks moving value through cash and cryptocurrency. Hostile intelligence services finance sabotage and violence on British streets through hired criminals. Foreign money purchases covert influence in British politics, and North Korean workers earn salaries inside British firms that are remitted to Pyongyang's nuclear weapons programmes. These threats take different forms but they share a common foundation. All of them run on money, and the money is almost never traced until after the act, if at all.

The UK government recognises the danger. The 2025 National Security Strategy declares that economic security is national security and warns that economic coercion will become more common as states weaponise trade. Yet recognition is not capability. Britain once mastered economic warfare and built world-leading institutions to wage it, then allowed them to wither. This article argues for rebuilding that capability as a standing instrument of national power, defensive and offensive, with threat finance and economic levers of power principles at its core.

The Nature of the Weapon

Money is a more subtle weapon than it first appears. Money is both the objective and enabler of state and non-state activity. Its intrinsic value is purchasing power, since it buys the goods and services that sustain or even supercharge an economy, a society and military capability. It is also emotional and rooted in both trust and perception, since money generates admiration and respect at one end of the spectrum and jealousy, envy and hatred at the other. Those emotions are targeted and leveraged in information operations against elites, institutions and populations.

The distinction between economics and finance matters given the application to Economic Warfare and Financial Warfare. The RUSI Journal's Counter Threat Finance for Strategic Competition defines how economics concerns the production and consumption of goods and services while finance is the movement of the money and credit that pays for them, in effect the wiring behind trade. In the conduct of Economic Warfare or Financial Warfare, where trade itself cannot be interdicted perhaps due to geography or unacceptable collateral damage, the means of paying for it can be attacked overtly, clandestinely or both, which creates disruption and friction, undermines trust, imposes costs and confronts the adversary with dilemmas at every transaction.

When Britain Led

Britain has done this before, and done it well. The first Minister of Economic Warfare was appointed on 3 September 1939, the day Britain declared war, placing a dedicated department of state in charge of degrading the enemy's war economy from the first hours of the conflict. The Special Operations Executive was placed under the aegis of the same minister, on the reasoning that sabotage and economic pressure were alternative means of undermining the same target. Its analysts tracked the Axis economy's dependencies, from Swedish iron ore to Iberian wolfram, and attacked them through contraband control, pre-emptive purchasing of scarce commodities and a Statutory List of firms trading with the enemy, first issued on 13 September 1939 with 280 names. Its economic intelligence reached into military planning through a dedicated Bomb Targets Section, and much of its strength came from staffing the new department with businessmen as well as military personnel.

The same generation built an equally formidable information capability. Sefton Delmer's black propaganda operations for the Political Warfare Executive, including counterfeit German forces' radio stations, attacked the enemy's will-to-fight as the blockade attacked their means. Delmer's broadcasts featured rationing inequities, profiteering and corruption and the luxuries enjoyed by the Nazi elites. Both organisations shared a single insight. Wars are won by targeting the systems that sustain an adversary, not only their forces.

The historical record also counsels patience. As the economic historian Duncan Weldon observes, economic warfare works slowly, cumulatively imposing the costs of adaptation, and it succeeds as a complement to other forms of pressure rather than a substitute for them. By 1918 the Allied blockade had contributed to a 60 per cent fall in Germany's imports, and the Second World War taught that there are rarely strategic commodities, only strategic uses, since an adversary will substitute and adapt unless pressure is sustained across the whole system. These are precisely the lessons a standing capability exists to preserve. Both wartime organisations were dismantled after victory, and the institutional memory went with them.

Economic And Financial Warfare Doctrine

Others did not forget. In 1999 two colonels of the People's Liberation Army, Qiao Liang and Wang Xiangsui, published Unrestricted Warfare, arguing that war should be extended beyond the military domain into finance, trade, law and information, and predicting that financial warfare would become an entry in the official military lexicon. The argument was institutionalised when the PLA revised its Political Work Guidelines in 2003 to adopt the doctrine of the Three Warfares, directing the coordinated use of public opinion warfare, psychological warfare and legal warfare to shape the strategic environment. Russian military thought followed a parallel course. In a 2013 article widely, if loosely, termed the Gerasimov Doctrine, the Chief of the Russian General Staff observed that in modern conflict nonmilitary measures outnumber military ones by roughly four to one, and analysts of Russia's campaigns in Ukraine described the resulting New Generation Warfare as a sequence whose first phase is nonmilitary asymmetric warfare encompassing economic measures. In both Chinese and Russian doctrine, economic and financial instruments are not auxiliary to war but rather among its principal forms.

The West has no equivalent. NATO possesses no economic warfare doctrine, because the Alliance was constructed as a military pact whose economic instruments remained national competences, and its closest approach to the subject is the resilience commitment under Article 3 of the Washington Treaty. The United States comes nearer at the conceptual level, since its joint doctrine describes the instruments of national power as diplomatic, informational, military, economic, financial, intelligence and law enforcement, the DIMEFIL construct, it has counter threat finance doctrine and Department of Defense Instruction 3000.07 declares CTF one of the twelve activities of irregular warfare. The United Kingdom has published its Joint Doctrine Note 2/20 on Threat Finance and the Economic Levers of Power (TFEL), but neither has been developed into a genuine grand strategic framework that integrates economic and financial power with the other instruments of power and statecraft.

The Campaign Already Under Way

This doctrine is being applied against British interests now, on two fronts, coercion from without and subversion from within.

The coercive front is the more visible and sometimes deliberately so, as a means of signalling. Until 2023 China accounted for 99 per cent of the world's heavy rare earths processing, a dominance it has converted into licences, quotas and calibrated restrictions. Research by the European Centre of Excellence for Countering Hybrid Threats shows that such coercion as a tool of economic statecraft operates alongside inducement and works as much by signal as by execution, since punishing one state warns others. The same research records that the 2010s brought the highest average number of trade sanctions since the 1950s, an 80 per cent increase on the previous decade. Russia and Iran demonstrate the wartime variant. The United States has sanctioned successive waves of vessels in Iran's shadow fleet as Tehran sustains oil deliveries to China through ship-to-ship transfers at sea while vessels disable tracking systems and paint over identity numbers, financing the Islamic Revolutionary Guard Corps and its proxies.

The subversive front is documented in British court records. A six-member espionage cell directed from Moscow by the Wirecard fugitive Jan Marsalek and run from a guesthouse in Great Yarmouth conducted surveillance operations across Europe before its conviction at the Old Bailey. Marsalek deserves particular attention, because his case shows what a hostile service can achieve from inside the financial system itself. Investigative journalists exposed him as a decade-long agent of Russian military intelligence at the heart of a major European payments company. Wirecard's infrastructure provided covert financial capabilities used by European intelligence and police services, and his access to card data could reveal when and where undercover operatives were spending, compromising the operations those products were meant to conceal. He is also suspected of financing militia forces in Libya under a proposed border force scheme that investigators link to Russian efforts to control and weaponise migration flows into Europe.

The wider pattern is consistent. The Wagner Group procured an arson attack on Ukraine-linked warehouses in Leyton, recruiting British criminals over Telegram. Iranian intelligence recruited, funded and directed criminal proxies to surveil and then stab the Iran International presenter Pouria Zeraati outside his London home, and a serving British soldier collected 2,000 dollars in cash from a dead drop after passing military information to Iranian intelligence. MI5's first interference alert concerned more than 420,000 pounds channelled to a sitting MP's office on behalf of the Chinese Communist Party. In every case the financing was reconstructed by investigators after arrest, almost never detected in advance. The significant exception demonstrates the alternative, since the National Crime Agency's Operation Destabilise followed laundering networks through billions in flows and identified funds used to support Russian espionage operations in Europe.

The Convergence of the Threat

Part of the reason the money is missed lies in how the West has chosen to see it. Governments and commercially focused financial services understand and approach the threat in very different ways. Illicit finance is conventionally viewed through three separate lenses, money laundering by organised crime groups, terrorist financing by terrorist organisations and proliferation financing by Iran, North Korea and non-state actors, and the global standards that govern the response are divided along the same lines. The reality is convergence of the threats. As the National Defense University's study of illicit networks argued, these threats form a nexus in which criminal, terrorist and state networks interpenetrate, and the convergence is greatest on the financial side, because all of them use the same professional enablers, the same international financial centres and the same money laundering techniques. Operation Destabilise found precisely this, with one network serving drug cartels, ransomware crews, sanctioned elites and Russian espionage at once.

The Doctrine Is Written but the Capability Is Absent

None of this requires intellectual invention. The Ministry of Defence published Joint Doctrine Note 2/20, Threat Finance and the Economic Levers of Power, in November 2020. It defines threat finance as examining how a threat actor generates, moves, uses and stores value and counter threat finance as the actions taken to deny, disrupt, destroy or defeat an actor's ability to raise, move, use or store value. It is explicit that the combined capability, termed TFEL, is an offensive or defensive capability, and that finance can be a tool of diplomacy but equally a tool of security and war. It is worth noting that threat finance and illicit finance are often used interchangeably, although the former reflects military and intelligence usage while the latter dominates law enforcement, regulatory and policy practice.

Subsequent research in the RUSI Journal extended the concept to state adversaries through three vectors. Counter illicit finance follows the money through the crime and state nexus. Vendor threat mitigation defends the financial layer of the supply chain, a lesson learned from the Afghan trucking contracts that funnelled some 700 million dollars to Taliban insurgents and local warlords. Countering fiscal subversion maps financial terrain as planners map physical terrain, establishing who owns the critical infrastructure before a crisis rather than during one.

To its credit, the United Kingdom has begun to take the defensive elements more seriously. The National Security and Investment Act regime gives government the power to scrutinise and condition acquisitions, exercised through the Investment Security Unit. The Office for Investment manages the other side of that ledger, attracting capital while screening risk, and the new Economic Security Advisory Service offers firms practical advice and resources on economic security matters. Parliament's Business and Trade Committee has pressed further, and the Government Response to its report on a new doctrine for economic security engages seriously with the case for a more organised approach. This is genuine progress, but it is defence of the inbound investment perimeter only, screening what arrives while failing to watch what moves and imposing no cost on the adversary.

The gap is starkest in Defence itself. JDN 2/20 remains a doctrine note, never promoted into formal doctrine and never resourced, and its own conclusion is the telling one. Without a standing TFEL capability the Ministry of Defence is not actively listening for signals of economic levers being used against the UK. The term threat finance has never appeared in any UK National Security Strategy, Integrated Review or defence review, from the Strategic Defence Review of 1998 to the present, across some 1,400 pages of national strategy. Illicit finance entered the strategy vocabulary only in 2015, framed as a matter of crime and development aid rather than statecraft, and no Defence-authored document has ever used either term. The Strategic Defence Review 2025 does not contain the word sanction. The strategies describe the threat with increasing alarm while the capability documents remain silent.

A Shield and a Sword

A standing UK TFEL capability would complete the defensive architecture and supply the offensive instrument that is currently missing altogether.

Defensively, it would place a listening function at the centre of national security. A modest fusion cell, drawing financial intelligence from the banks, the National Crime Agency, the intelligence community and allied partners, would watch for the signatures that preceded every case above, from small cryptocurrency payments to petty criminals through donation patterns structured to disguise their origin to ownership changes around defence suppliers and critical infrastructure. It would extend the investment screening perimeter into continuous financial terrain mapping, and it would give ministers a prepared playbook for coercion, so that the response to the next licensing squeeze is planned rather than improvised.

Offensively, the same understanding becomes targeting. Threat finance intelligence converts sanctions from broad signalling into precise disruption aimed at the specialist financiers, facilitators and front companies that adversary networks cannot easily replace. It feeds the targeting approach JDN 2/20 illustrates in its planning scenario, spanning munitions and non-munitions based options, and it would carry the campaign to the shadow fleets and laundering networks that fund adversary operations, in concert with allies. The historical evidence demands honesty about timescales, since one study found that sanctions achieved their stated aims in only one third of 174 recorded cases and economic pressure grinds rather than shatters. Sustained, intelligently aimed pressure is precisely what a standing capability provides and improvisation cannot.

The machinery matters as much as the mandate. The Ministry of Economic Warfare succeeded in part because it was staffed with businessmen drawn from commerce and the City, and its modern successor should do the same, embedding bankers, compliance specialists and data scientists alongside intelligence officers, with a career structure that allows the expertise to compound rather than dissipate at the end of each posting. The investment required is modest by Defence standards, since the capability needs no new platforms, and it would give NATO's European pillar a developed model of economic statecraft that does not depend on the United States.

A capability of this kind must also rest on more than a whole of government approach, since the contest reaches into society itself. It touches economic well-being directly, as rearmament is being paid for in part through the diversion of government funding from welfare to Defence, a trade-off that endures only while citizens understand why it is necessary. It touches societal cohesion, because the espionage and disinformation campaigns documented above are financed precisely to erode trust between citizens, institutions and allies, and a public that understands those threats is far harder to subvert. The 2025 National Security Strategy recalls that Britain's own history offers the example of a whole-of-society effort motivated by a collective will to keep each other safe, and that is the spirit a modern economic statecraft capability must mobilise.

Conclusion

Three conclusions follow. First, Britain's adversaries consider economic and financial pressure as a single operational domain, codified in their doctrine and applied seemingly coherently from export licensing in Beijing to a dead drop in a London park, and they deliberately exploit both the seams in departmental machinery and the stovepipes through which the West views illicit finance. Second, the United Kingdom has strengthened its defensive perimeter through the National Security and Investment Act regime and its supporting institutions, but it detects hostile money almost exclusively after the act, and it possesses little proactive capability. Third, the remedy is neither novel nor expensive, but it must engage society as well as the state. The doctrine is written, the historical model is proven and the case record demonstrates continuing requirement.

The wartime generation understood that blockade and information were weapons, and built institutions to wield them within days. Their successors allowed those institutions to lapse and the atrophy has repeated across too many areas of Defence. The rare earth licences now being weighed in Beijing, and the small payments still moving quietly to proxies in British towns, are reminders that others never forgot what Cicero knew. Money is the sinew of war, and economic statecraft belongs alongside cyber and space in Britain's multi-domain future.

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