Economic sanctions have become the weapon of choice in the United States’ diplomatic and strategic arsenal. Trade tariffs, export controls and other financial penalties offer a quick means to punish ‘bad behaviour’, whether by terrorist groups, drug cartels or national governments. Over the past two decades, the US has imposed more sanctions than the United Nations, the European Union and Canada combined.

From a government point of view, sanctions are low cost. They may be drafted by a handful of civil servants, but the burden of implementation falls on multinationals and banks. And sanctions tend to boost the approval ratings of the leaders who impose them. No wonder policymakers like to use them to fill the diplomatic space between ineffective declarations and high-risk military operations.

However, sanctions have a poor success rate, have high economic costs, and may also have massive unanticipated consequences for innocent bystanders.

North Korea is a case in point. Despite being subjected to some of the toughest sanctions ever applied, North Korea’s regime has remained in power and continued its weapons testing undeterred. In response to sanctions, Pyongyang has developed sophisticated illicit tools to generate foreign exchange and support the lifestyles of the country’s elite. Decades of sanctions have pushed North Korea deep into poverty. The burden is borne by the poor, many of whom live on the brink of starvation. By any yardstick, sanctions on North Korea are a failure.

As the use of sanctions has soared, so too have the compliance and opportunity costs for the private sector. Major deals have been lost and entire supply chains redirected due to ill-conceived measures.

By relying so heavily on sanctions, is the US shooting itself in the foot?

Agathe Demarais is the global forecasting director of the Economist Intelligence Unit. While working for the French Treasury in Russia and Lebanon she learned about sanctions firsthand. In Backfire, which will be published on 15 November, she examines the extensive downsides to US-led sanctions and suggests a way forward in a world that is increasingly polarised between liberal and authoritarian regimes.

In 2002, the US Congress considered sanctioning oil companies doing business with Sudan, to pressure the country’s leaders into ending a brutal civil war. The US administration, however, was opposed, noting that sanctions would damage American businesses, work counter to Washington’s commitment to the free movement of capital, and force multinationals to raise capital outside the US. Congress backed down, but the debate rages on.

When American founding father Benjamin Franklin in 1763 learned that Great Britain would tax its colonies’ imports, he replied, ‘You cannot hurt us without hurting yourselves.’ The same holds true of sanctions today. When the US in the 1980s restricted grain exports to the Soviet Union, Argentina and Brazil quickly filled the gap left by US companies. And when it sanctioned Iranian and Venezuelan oil exports in 2019, Russia stepped in.

Estimates put American business opportunities lost due to sanctions at as much as US$50 billion a year. And sanctions-related regulations have pushed banks’ risk and compliance costs through the roof.

Sanctions also hurt the innocent. In response to Iraq’s 1990 invasion of Kuwait, US-led sanctions cut off the country’s food and medical supplies. Estimates put the resulting death toll at up to half a million, mainly children. In 1996, Madeleine Albright, the then US ambassador to the UN, said that reining in Iraqi leader Saddam Hussein was ‘worth it’, words that she later retracted as a ‘terrible mistake’.

Demarais confirms previous findings that sanctions fail about two-thirds of the time, and that successes are often only partial. Her book includes an important discussion on when sanctions can be expected to work.

To be effective, sanctions should be short term, have a narrow goal, target a country with significant ties with the US, and be backed by American allies. In stark contrast, US sanctions tend to be long term, target dictatorships with few ties to the US, and have broad objectives such as regime change. The US often goes it alone, with little consultation with allies or other interested parties. It should therefore not be surprised when its sanctions fail.

Demarais wraps up with a discussion about the current decoupling of the US and China. She debunks the notion that decoupling would be beneficial to the US and the West. At the business level, decoupling would be difficult and enormously costly, given closely integrated global supply chains. And at the geopolitical level, decoupling would leave Beijing freer to pursue its own agenda in political hotspots like Taiwan.

The heyday of US-led sanctions is drawing to a close. Demarais predicts that a self-reliant China will increasingly undermine US sanctions on Iran, North Korea, Russia, Venezuela and other authoritarian regimes.

Backfire provides valuable pointers for policymakers. If US-led sanctions are to retain any effectiveness, Washington will need to rethink its approach. It should become more strategic, learn from past failures, work more closely with other governments, and pay heed to the impact of sanctions on the strategic thinking of both allies and adversaries.

China has become a peer competitor with the US for a wide range of technologies, a remarkable feat for a country that was bereft of most modern technologies just four decades ago.

China has been a technological power for most of its recorded history and accounted for half of the world’s engineering inventions in the period leading up to the Industrial Revolution period. Yet it never developed a culture of science and missed the Industrial Revolution, writes Nigel Inkster in his new book, The great decoupling: China, America and the struggle for technological supremacy.

This meant that China was highly vulnerable when it came into contact with the industrialised West and Japan in the 18th century, with devastating consequences for the country. China would remain a technological backwater until its reform and opening up, launched by Deng Xiaoping in the late 1970s.

Inkster, a veteran of the British Secret Intelligence Service, now at the London-based International Institute for Strategic Studies, offers a forensic history of China’s technological development. He argues that, somewhat curiously, it was the writings of American futurologist Alvin Toffler that helped China’s reformist leaders see the importance of information and communications technologies in promoting the country’s economic modernisation.

The burgeoning economic interdependence with the US provided a pathway to technological progress for China, writes Inkster. As China opened its economy, it attracted investment in low-end manufacturing activities, notably the assembly of mobile phones and computers.

This enabled China to develop its technological capabilities, which were enhanced by returning Chinese talent that had been educated in the US and worked in Silicon Valley. The Chinese tech sector has also benefited from massive government subsidies and the exclusion of American tech giants from the Chinese market, a theme that could have been better developed by Inkster.

As China’s capabilities grew, so too did its discomfiture with reliance on American technology, particularly after the revelations in 2013 by Edward Snowden on US tech-enabled surveillance.  China has been promoting indigenous manufacture of technology and the concept of cyber sovereignty ever since. For Beijing, this means the right for countries to police content transiting their sovereign space. Digital and quantum technologies have also enabled China to become a major global intelligence power.

The election of Xi Jinping in 2012 as general secretary of the Chinese Communist Party proved to be a major event in China’s technological development, writes Inkster. Xi grasped the importance of technology. He set the goal of China becoming the leading global technology power in the world by 2035. China is very keen to reshape the world order in its favour and is using its growing dominance in technology to shape global norms and standards for how these technologies are employed. Xi’s vision is encapsulated in the phrase ‘community of common destiny for mankind’, which is code for a China-led world order.

China’s rise as a technological power has put it on a collision course with the US, which wants to maintain its global technological supremacy. Inkster argues that China’s technological rise is a ‘Sputnik moment’ for the US. In recent years, the US has been pushing back against China, a policy led by Donald Trump’s administration and continued, for the moment, by President Joe Biden. The US wants to constrain China’s ambitions and give US companies breathing space to catch up for 5G mobile telecommunications. After all, most of the fundamental technology for Huawei’s 5G is actually American.

The ‘great decoupling’ on the tech front is starting to happen, as the US tries to disentangle its research and development and supply-chain connectivity with China. The US is now denying China access to advanced components, controlling its tech investments in the US, and putting restrictions on joint research activities and Chinese students and migrants in America.

The US has banned Huawei from its 5G network and succeeded in encouraging most Western countries to follow suit. But decoupling will be slow, and partial. Because it results in less collaboration, decoupling will likely have an adverse impact on innovation in both countries. Decoupling has also created some difficult geopolitics, particularly regarding Taiwan, which has cornered the global market for high-end semiconductors—something China can’t make and has no likelihood of making soon.

Who will win this technological competition?

The US enjoys the advantages of incumbencies—it got there first. America is ahead for most technologies and China is playing catch-up. The US has much greater strengths in foundational science, which is still a weakness for China.

But the US also has its own problems. It isn’t producing the educated people that it needs, so it has to rely on migrants. And while it’s been able to attract some of the world’s best talent, China will now be much less of a source.

For its part, China has shown remarkable ingenuity in the application of existing technologies. And it is now showing a capacity to innovate, despite the doubts of many Westerners. In some of the higher order technologies like quantum encryption, China is clearly leading the global field.

Perhaps China’s greatest risk is that political concerns about security could end up stifling entrepreneurship and innovation. At the same time, the Chinese party-state is able to employ a whole-of-nation approach to technological development that is inconceivable in a liberal democracy.

Inkster concludes that it’s far from certain that the US will win this technology competition with China. And the US will need to accept that in some areas of technology, China will dominate.

The strong point of Inkster’s book is that he traces China’s long-term technological development in the broad context of China’s history, civilisation and evolving identity. But that may also be the book’s shortcoming, as the narrative of China and America’s struggle for technological supremacy is at times clouded by the volumes of contextual information.

That said, the book contains a wealth of information on an issue that is critical for our understanding of US–China rivalry and is an excellent reference for all scholars of Sino-American relations and international relations more generally.

As China expands its reach around the globe, it is important to understand not only its foreign, economic and security policies but also its massive covert operations. Roger Faligot, an investigative journalist who specialises in studying intelligence agencies, first published Chinese spies in French. It proved so successful that he recently had a significantly expanded version translated into English.

Faligot’s ambitious book spans a century of Chinese espionage, from the beginnings of the Chinese Communist Party to the Xi Jinping era.

In the 1920s, a youthful Zhou Enlai organised Chinese communist cells, in Hong Kong under the alias Stephen Knight and in France as Wu Hao, while Deng Xiaoping, then a factory worker in Paris, spent his evenings mimeographing underground pamphlets. The Chinese secret services modelled themselves on the Soviets, who trained many of their operatives. Both wove complex webs, spying on factions, dissidents and each other. The Belgian Hergé was inspired by real characters in 1930s China to write the Tintin adventure The blue lotus.

Once the People’s Republic was established, intelligence operations moved into high gear. Taking a page from the FBI’s J. Edgar Hoover, China’s first spymaster, Kang Sheng, even bugged the offices of Chairman Mao Zedong and Premier Zhou.

The Tiananmen Square protests, the collapse of the Soviet Union and China’s fear of contagion ushered in an era of reform and internationalisation of intelligence operations, including the establishment of a network of think tanks. Operation Yellowshirt used ‘deepwater fish’ around the world to pursue dissidents who had fled China. Operation Autumn Orchid, again, spent a decade overseeing the return of Hong Kong and Macao, including a smear campaign against Governor Chris Patten.

As China’s global relations expanded, so did its covert presence. According to Faligot, at least 40% of Chinese embassy staff worldwide conduct intelligence work, compared with 20% in Russian embassies. Evidence suggests that China has singled out Australia and France as the two countries most vulnerable to manipulation.

In the internet age, the People’s Liberation Army set up a vast empire of cyber warriors, working on security, military and economic issues. In the run-up to the 2008 Beijing Olympics, China even established a sports intelligence department tasked with spying on other countries’ athletes and ensuring that China won the most medals.

Faligot provides valuable insights on China’s methods. In the early days, operations were conventional cloak and dagger, including wiretapping, double agents, the ‘beautiful woman stratagem’, bribery and torture. Once Deng opened the economy, China quickly moved into industrial and economic espionage, even setting up a specialised school in Beijing in 1984. More recently, China has become a global leader in cyber espionage, hacking and financial manipulation.

China’s intelligence agencies draw on a vast diaspora of students, academics and businesspeople, which gives them a significant edge over their competitors. Covert drops are history, with strategic information on artificial intelligence, civil aviation, energy and medical technology flowing to China from myriad sources.

Appendixes provide information about China’s clandestine agencies, from the ministries of State Security and Public Security to the innocuous-sounding China Institute for Contemporary International Relations. The United Work Front Department supervises China’s soft power, including the ubiquitous Confucius Institutes.

Faligot’s book is thoroughly researched and brims with little-known information. In the 1980s, when Bill Clinton was governor of Arkansas, he regularly ate for free at a Chinese restaurant. There he was befriended by ‘John Huang’, who went on to work at the Commerce Department before being unmasked as a spy in the ‘Chinagate’ scandal.

The US bombing of the Chinese embassy in Belgrade in 1999 was described by President Clinton as a colossal mistake, and he apologised profusely to China’s leaders. In fact, both sides knew it was intentional, as the embassy was equipped to gather intelligence on Western weaponry being used in Serbia.

Faligot reminds us that intelligence is a two-way street. Over the years, the KGB gathered embarrassing information on ‘Ivan Sergeyevich Dozorov’, better known as Deng Xiaoping. The highly classified dossier is still kept in Russian President Vladimir Putin’s safe, ‘just in case’. The book also details the intelligence work that brought down Xi Jinping’s arch-rival Bo Xilai and, ultimately, intelligence chief Zhou Yongkang, in the process breaking the unwritten rule that Politburo Standing Committee members are untouchable.

The cat-and-mouse game of cyber espionage will accelerate further with the introduction of 5G, with the Chinese telecommunications company Huawei set to dominate a significant part of the global market. China is already the world’s data powerhouse, accounting for 23% of cross-border data flows, compared with America’s 12%. It also recently eclipsed the US in satellite surveillance. With the world’s largest network of intelligence operatives, a large diaspora and a growing economic presence, China’s covert operations can only expand.

Faligot’s ground-breaking book is essential reading for both intelligence professionals and generalists seeking to understand the reach of China’s hidden hand. Given rapid technological developments, one can only hope that Faligot is working on a follow-up volume.

This is an excellent book.

Peter Edwards is recognised as an outstanding Australian historian, especially in the field of defence and national security.

Edwards presided over the Official history of Australia’s involvement in Southeast Asian conflicts 1948–1975 in nine volumes. His task as the official historian was achieved in an exemplary manner, which is also reflected in his influential Australia and the Vietnam War.

And now Edwards has taken the same insightful and reasoned approach to a biography of a very influential Australian: Justice Robert Marsden Hope.

In his biography of the legendary Sir Arthur Tange, Arthur Tange: last of the mandarins, Edwards demonstrated his mastery of the byzantine federal bureaucracy and its Sir Humphreys, just as he demonstrated repeatedly in his military histories that he understood the nature of Australia’s strategic history and the impact of our deployments abroad.

In Law, politics and intelligence: a life of Robert Hope, Edwards delivers a masterclass in the governance, or lack of it, of Australia’s security and intelligence services in the post-war era. Hope, in two major royal commissions on our security and intelligence communities and a related inquiry (into the Hilton Hotel bombing), set the foundations on which Australia’s intelligence framework now operates, very much for the better, both domestically and in foreign climes.

Hope was a graduate not only of the University of Sydney law school, courtesy of a scholarship, but earlier of the Australian commitment to fighting the Axis in World War II, both in the Mediterranean and in the Pacific. Designated as a gunner in the 2/6 Field Regiment of the 7th Division, Hope served in Syria fighting the Vichy French alongside other remarkable Australians such as Roden Cutler, who was later governor of New South Wales. The campaign in Syria and Lebanon deserves greater attention in our military history. British command was at best inept, but the troops on the front line, from wherever in the empire and its dominions or from Free French allies, fought with their usual bravery. But so did the Vichy French colonial troops from throughout the Middle East. It was a stiff fight.

Serving later in New Guinea, Hope paid a price for his courage. For the rest of his life, he suffered the scourges of tropical diseases, particularly malaria and scrub typhus.

Hope’s original penchant for the law saw him move to the Sydney bar in the post-war years. His first encounter with an unsympathetic magistrate at the Paddington Police Court lends humour to a very serious book. Hope recalled that the case was based on a reform initiative of the federal Labor government that enabled servicemen and ex-servicemen to apply for the tenancy of unoccupied dwellings:

There was a magistrate called Anderson, who thought this was an outrageous piece of socialistic legislation and disbelieved it entirely. Whenever I addressed him or … was examining or cross-examining a witness, he swivelled his chair around and turned his back to me. When I addressed him, he did that: then he turned around and said: ‘I don’t want to hear you,’ to the man on the other side. He said [to me]: ‘I dismiss this application. My only regret is that I have no jurisdiction to award costs against you.’

This was Hope’s introduction to Australian law and to a future brilliant career.

Edwards doesn’t confine himself to Hope the jurist. He traverses many of the dimensions of Hope’s interesting life, including his (often inebriated) friendship with his cousin, Manning Clark, which would have doubtless earned the disapproval of their colonial ancestor, the Reverend Samuel Marsden, known infamously as ‘the flogging parson’.

The anecdote about Clark drinking enormous quantities of vodka with Hope at a Sydney bar and then collapsing to the floor is worthy of a comic sketch. Also very amusing is Hope’s account of his ill-fated attempt to join the Communist Party.

Hope was in fact a classical liberal, wedded to just outcomes based on respect for the law, with a tolerance for dissent and a receptivity to debate.

But it’s Hope’s reforming work with Australia’s security and intelligence agencies that’s his appropriate epitaph.

Hope’s first royal commission on intelligence and security was for the Whitlam government, which was determined to ensure that the agencies, dominated by Cold War rigidities, were made more responsive to changing strategic and social circumstances. Hope’s landmark work achieved much towards strengthening our security services while reforming them in critical areas such as accountability, oversight, control and coordination, and appeals processes. Indeed, Allan Gyngell, then director of the Office of National Assessments, said he saw several major achievements in Hope’s reforms:

The first was the breadth of the field that he envisaged. Both in the scope of assessments and in the source material on which assessments were based. The second was ‘the centrality of assessment’, placing an agency concerned solely with assessment at the central focus of the system, with the independence of those assessments guaranteed by legislation. The third was a vast improvement in the accountability of the whole system, and each of its constituent parts. A fourth that might be added is depth.

Hope’s final royal commission was for the Hawke government and was a judicial audit of the performance of the security and intelligence agencies on the basis of his original recommendations. Unfortunately, the Combe–Ivanov affair, involving a former national secretary of the Labor Party and a Soviet agent, took six months of the inquiry and led to adverse commentary. But Hope persevered and ultimately the fruit of his work is to be found in the more open nature of the relationship between our peak security bodies and the broader Australian community. Fittingly, the building that houses the Office of National Intelligence is named after him.

Edwards has delivered a book that will endure not only as a powerful narrative on a great contributor to Australian law and government but as a comprehensive assessment of the evolution and deepening of Australia’s security framework. Robert Hope was known as the godfather to Australian spies. Edwards brings the Don to life in all his dimensions.

During the 17 years since the 9/11 terrorist attacks, Australia’s intelligence agencies have gained not only a massive boost in resources but also a corresponding prominence in public policy and the political debate. Today barely a week goes by without an intelligence-related issue making headlines. But to put those headline-grabbing stories into context, we need a body of serious publications, by historians and political scientists, think tankers, practitioners and others in and around the intelligence community, so politicians and the public can understand the issues and judge what is appropriate and what isn’t.

A new collection of essays, Intelligence and the function of government (Daniel Baldino and Rhys Crawley (eds), Melbourne University Press, 2018), is therefore welcome. It makes for both sobering and encouraging reading.

The sobering news comes from the two first chapters. The first, by Rhys Crawley and Shannon Brandt Ford, titled ‘The state of intelligence studies: Australia in international context’, demonstrates that the field is now developing in Australia, but belatedly and from a low base. As an area of serious study, the discipline of intelligence studies in Australia has lagged far behind its counterparts in the countries that have always been our two major partners, Great Britain and the United States.

The second chapter is a short history of the Australian intelligence community by John Blaxland and Crawley, who were co-authors of David Horner’s three-volume The official history of ASIO. It’s a useful overview, but the half-dozen pages covering the post-1945 period indicate how much more needs to be done to give readers a real idea of how the intelligence community has developed, where it has succeeded and where it has fallen short in the past 70 years.

The encouraging news is that this book itself is evidence that a new generation of scholars, with Baldino and Crawley among the leaders, is taking the field seriously and beginning to make some inroads.

One of the footnotes in the chapter by Blaxland and Crawley refers to the seventh report of the Royal Commission on Intelligence and Security in 1977, Jacqueline Templeton’s two-volume history of Australia’s intelligence and security services from 1900 to 1950. Although the report was made available to public researchers, it was never published in book form, as the royal commissioner, Justice Robert Hope, recommended at the time and for years afterwards. Even today, publishing it would provide an important foundation for scholarship in the field.

This chapter, and the book as a whole, demonstrate the need for many more detailed histories of episodes in Australia’s intelligence history. As experience here and elsewhere indicates, this can be done without prejudicing the ‘sources and methods’ that do require legitimate protection.

The importance of historical work is cited in a chapter on ‘managing reputational risk’. Andrew Brunatti, a Canadian academic, looks at the different ways in which the Australian, Canadian and New Zealand intelligence communities reacted to the massive disclosures by Edward Snowden. He draws several pertinent lessons from the comparison (conveniently summarised in dot points on pages 211–213). They include the need to protect sources and methods, but to be transparent on the operational environment.

Brunatti argues that organisational histories (like the official history of ASIO) should be published, to counter ‘the skewed perception [of the agencies] as both all-seeing behemoths and dangerous bumblers’. ‘[T]he truth’ he says, ‘is in the middle.’ The intelligence communities should encourage an external research community and rolling releases of official records. This chapter deserves to be widely read across the Australian intelligence community, by members of parliament (especially those on the Parliamentary Joint Committee on Intelligence and Security), and by journalists who take a serious interest in intelligence matters.

Much else in the book is valuable, with chapters on military intelligence by Dirk Maclean and Charles Vandepeer; open-source intelligence by Baldino and Caroline Mulligan; intelligence dissemination by Michael Wesley; financial intelligence by Ashton Robinson; intelligence cooperation in the age of counterterrorism by Siobhan Martin and Carl Ungerer; intelligence leadership and capability development by Grant Wardlaw; current trends, proportionality and metadata by Adam Henschke; cyberwarfare by Liam Nevill; and cybersecurity by Nick Ellsmore.

A collection of essays like this opens lines of inquiry and can’t be expected to cover everything. It’s worth noting that the crucial matters of oversight and accountability are touched on only incidentally in three chapters; the most extensive discussion is in Robinson’s essay on financial intelligence. This is likely to be a crucial matter in the coming years. Will the Inspector-General of Intelligence and Security get the increase in resources recommended in the 2017 Independent Intelligence Review? Will the joint parliamentary committee get the greater authority that former Labor senator John Faulkner called for? Let’s hope for another collection like this before too long.