Underground Empire

1. The US Unintentionally Built an "Underground Empire" Through Global Networks

Modern empire has turned the subterranean machineries that enable global markets and information flows—fiber-optic cables, server farms, financial payment systems, and the manufacturing systems that produce complex products such as semiconductors—into tools of coercion.

Private sector built it. The vast, interconnected systems underpinning the global economy – from financial transfers to internet traffic and complex manufacturing – were not initially designed for political domination. Instead, they were largely built by private companies like Citibank and telecommunications firms pursuing efficiency and profit in the wake of the Cold War. These businesses, like Walter Wriston's Citibank, sought to create global markets that transcended national borders and regulations.

Following old paths. However, these new networks often followed the paths of older power structures. Just as Roman roads facilitated both trade and military movement, modern fiber-optic cables and financial systems were laid down upon existing infrastructure and connections, many of which centered on the United States due to its post-WWII economic and political dominance. This historical path dependence meant that the architecture of globalization inadvertently created new levers of control.

Tools of coercion. Over time, these seemingly mundane "plumbing" arrangements of the global economy became powerful tools. The US government discovered that by controlling key intersections within these networks, it could gather information, interdict goods, and isolate adversaries, transforming the infrastructure of globalization into an "underground empire" capable of projecting power across borders.

2. Globalization's Infrastructure Converged on the US, Creating Choke Points

As they built, others built on top of what they had constructed, and others still again, in a process of continual accretion.

Network hubs emerged. Despite the initial vision of decentralized networks like the Internet, the physical infrastructure tended to centralize. Entrepreneurs realized that controlling key connection points, or "choke points," within these networks could be highly profitable. This led to the concentration of internet traffic and data centers in specific locations.

US territory became central. Due to historical factors and early investments, many of these crucial choke points ended up on US soil.

• Financial flows: Eurodollar markets and global payment systems routed through US banks and clearing houses like CHIPS.
• Information flows: A significant portion of global internet traffic passed through US territory and exchange points like MAE-East in Northern Virginia.
• Technology production: While manufacturing moved overseas, key aspects like semiconductor design software and intellectual property remained concentrated in the US.

Vulnerability and power. This convergence, while driven by efficiency, inadvertently made the global economy vulnerable to US authority. The US found itself in a unique position, able to observe and potentially control the flow of information, money, and technology simply by leveraging its domestic jurisdiction over these critical nodes.

3. Post-9/11, the US Weaponized These Networks for National Security

The United States sleepwalked its way into a new struggle for empire, breaking bad without ever quite realizing it.

Immediate threat response. The 9/11 attacks served as a catalyst, revealing how terrorists had exploited the very networks designed for open global exchange (email, wire transfers). In response, the US government, particularly the NSA and Treasury, began to aggressively explore how these networks could be used to counter threats. This was initially an opportunistic and reactive effort, not a deliberate plot for global domination.

New tools developed. Agencies stumbled upon the political power hidden within the "plumbing."

• NSA: Leveraged access to telecommunications networks and platform companies for mass surveillance programs like STORMBREW and PRISM.
• Treasury: Developed new forms of financial coercion, including aggressive use of sanctions and control over dollar clearing.

Expanding scope. What started as measures targeting terrorists and rogue states gradually expanded. As agencies developed new tools and tasted power, they found new uses, creating precedents for broader application. The focus shifted from just subduing villains to potentially influencing allies and competitors.

4. Treasury Transformed into a Financial Warfare Command

Treasury had financed many wars, but it had never fought one.

Shift in mission. Before 9/11, Treasury's focus was on facilitating global markets. After the attacks, it rapidly adopted a new mission: "shadow warfare" against terrorist financing. This required mapping and disrupting financial flows, a stark contrast to its previous role.

Weaponizing the dollar. Treasury discovered the immense power derived from the dollar's central role in global finance.

• Dollar clearing: Foreign banks needed access to the US dollar clearing system, making them vulnerable to US regulations and demands.
• Sanctions: OFAC's power to "designate" entities effectively cut them off from the global financial system, as other banks feared losing dollar access.

Unilateral power. This "dollar unilateralism" allowed the US to act unilaterally, compelling foreign banks and businesses to comply with US policy outside its borders, often without the consent or even knowledge of their home governments. The case of Banco Delta Asia demonstrated the devastating impact this could have, even on entities connected to major powers like China.

5. NSA Leveraged Network Hubs for Unprecedented Global Surveillance

By redrawing a line on a map, the NSA could change the world.

Exploiting physical infrastructure. The NSA realized that despite the Internet's distributed design, global communications converged at physical points, many located in the US. By partnering with (or compelling) telecommunications companies, the NSA gained access to the torrents of data flowing through these hubs.

Mass surveillance capabilities. Programs like STORMBREW and FAIRVIEW tapped into fiber-optic cables at landing sites and switches, allowing the NSA to intercept vast amounts of international communications. PRISM enabled access to data held by US-based platform companies like Google and Microsoft.

• Data collection: Enabled the collection of information on foreigners, even when commingled with US persons' data, by reinterpreting legal boundaries.
• Technological advantage: Leveraged the concentration of data and processing power in US cloud services.

Secret and controversial. These surveillance efforts were often conducted in secret, pushing the boundaries of legal interpretation. While initially justified by counterterrorism, they raised significant concerns among allies and civil liberties groups, particularly after the Snowden revelations exposed their scale and scope.

6. The Huawei Case Revealed the Weaponization of Tech Supply Chains

America's objective was not simply to limit Huawei's access to military-grade technology or redirect trade flows. It was to prevent Huawei from undermining U.S. dominance.

Rising Chinese tech power. Huawei's rise as a global telecommunications giant, particularly in 5G infrastructure, was perceived by the US as a direct threat to its influence over global networks. The US feared Huawei could enable China to build its own networked empire of surveillance and control.

Targeting through the underground empire. The US employed multiple tools of its underground empire against Huawei:

• Financial: Meng Wanzhou's arrest was based on bank fraud charges, leveraging HSBC's compliance obligations under US law.
• Information: HSBC's internal investigation, prompted by US pressure, provided evidence used in the case.
• Technology: The US weaponized its control over semiconductor design software and manufacturing equipment (via the foreign-produced direct product rule) to cripple Huawei's access to advanced chips.

Strategic goal. The campaign aimed not just to punish Huawei for alleged sanctions violations or intellectual property theft, but to prevent China from establishing a dominant position in the next generation of global communication infrastructure, thereby preserving US network dominance.

7. Europe Awakened to Its Vulnerabilities Under US Economic Power

Europe had awakened to discover that it had been transformed while it was asleep from an ally to a mere outlying province of a greater empire.

Post-Cold War complacency. After the Cold War, Europe largely focused on building peace and prosperity through economic integration and open markets, relying on the US for security. Dependencies on US finance, Russian energy, and Chinese trade were seen as economic opportunities, not strategic vulnerabilities.

Trump's catalyst. The Trump administration's unilateral actions, particularly withdrawing from the Iran nuclear deal and threatening secondary sanctions on European companies, shattered this complacency. Europe realized its businesses were beholden to US law and political whims, even when acting in line with EU policy.

Seeking "strategic autonomy." This led to a debate within Europe about reducing dependencies and building "strategic autonomy." While initially focused on military capabilities, the concept expanded to include economic resilience and the ability to act independently of the US, even contemplating developing alternative financial channels like INSTEX (which proved largely ineffective).

8. The Ukraine War Accelerated Europe's Geopolitical Shift and Exposed Dependencies

When Russia invaded Ukraine, it was as though the clock had struck midnight in a fairy tale.

Shattered illusions. Russia's invasion brutally exposed Europe's dependencies, particularly on Russian energy. The long-held belief that trade would transform Russia proved false, and the economic ties became a source of vulnerability.

Unprecedented EU response. Despite internal divisions and dependencies, the EU responded with surprising speed and unity, adopting sweeping sanctions against Russia. This included measures previously considered unthinkable, such as banning key Russian banks from SWIFT and freezing the Russian central bank's foreign reserves held in Europe.

Leveraging US tools. Europe's ability to implement such impactful sanctions relied heavily on cooperation with the US and the existing architecture of the underground empire. European officials worked closely with their US counterparts to coordinate measures, demonstrating that while Europe had woken up, its power was still deeply intertwined with and often dependent on US capabilities and intelligence.

9. Businesses Are Caught Navigating the Conflicts Between Competing Empires

Once, business leaders dreamed that companies would create their own independent realms on the high seas, far from the grasp of sovereigns.

New political risk. Globalization, intended to free businesses, has instead made them vulnerable to state coercion. Companies now face significant political risk not just from unstable developing countries, but from powerful states weaponizing economic networks.

Caught in the middle. Businesses like Microsoft and TSMC find themselves trapped between the demands of competing powers (US, China, EU).

• Microsoft: Buffeted by US surveillance demands, European privacy regulations, and cyberattacks from state-sponsored actors, forcing it to take sides in conflicts like the Ukraine war.
• TSMC: The world's most critical semiconductor manufacturer, caught between US demands to cut off Chinese customers and build fabs in the US, and the geopolitical risk of its location near a potential conflict zone.

Forced choices. Companies are increasingly forced to choose sides, adapt their business models, or risk being penalized by one power or another. The dream of a neutral, borderless commercial realm has dissolved, replaced by a reality where economic decisions are deeply political.

10. Crypto's Dream of Decentralization Collides with Sovereign Power

Crypto people weren't just fascinated with codes for their own sake.

Libertarian aspirations. The cryptocurrency movement, inspired by ideas of decentralized power and cryptography, aimed to create financial systems beyond government control. Projects like Bitcoin and Ethereum sought to replace centralized intermediaries (banks, governments) with code and decentralized networks.

Centralization re-emerges. Despite these aspirations, the crypto ecosystem has seen the re-emergence of centralization.

• Intermediaries: Users rely on centralized exchanges (Coinbase), marketplaces (OpenSea), and infrastructure providers (Alchemy, Infura).
• Stablecoins: Designed to provide stability, they often tether to traditional currencies (like the dollar) and rely on centralized entities.

Government pushback. Governments, particularly the US, view crypto's potential to circumvent financial controls as a threat. Regulators are increasing scrutiny, and OFAC has demonstrated its ability to target even seemingly decentralized entities like Tornado Cash, highlighting that code alone cannot escape the reach of sovereign power.

11. China Responds with Fear and Attempts to Build Alternative Systems

In our time line, the story of centralized digital currencies was of one power's anxieties feeding on another's in a chain reaction.

Fear of US power. China views the US weaponization of economic networks with deep anxiety, seeing it as an attempt to contain its rise. The Huawei case and the sanctions against Russia reinforced fears that the US could cripple Chinese companies or even cut China off from the dollar-dominated global financial system.

Building self-reliance. China is aggressively pursuing technological self-sufficiency and building alternative networks.

• Semiconductors: Massive investments aimed at developing domestic chip design and manufacturing capabilities.
• Digital Currency: Accelerating the development of a Central Bank Digital Currency (digital yuan) partly to reduce reliance on the dollar system.
• Payment Systems: Developing CIPS as an alternative to SWIFT, though it remains far less utilized globally.

Limitations and vulnerabilities. Despite these efforts, China faces significant challenges. Its technological capabilities still lag in critical areas, and its alternative financial systems lack the trust and global reach of the US-dominated ones. China's own authoritarianism and lack of rule of law make other countries hesitant to fully embrace its systems.

12. The Dangerous Spiral of Confrontation Requires a New Strategic Approach

The roots of imperium go far too deep to ever fully be torn out.

Escalating tensions. The US and China are locked in a dangerous feedback loop of fear and action. Each perceives the other's defensive measures as aggressive bids for control, leading to escalating economic confrontation that risks tearing apart the global economy and potentially spilling into military conflict.

Lack of strategic framework. The US, having built its underground empire haphazardly, lacks a coherent strategic doctrine for economic security. Responsibility is fragmented across agencies, making it difficult to anticipate consequences or manage escalation risks effectively.

Need for dialogue and new rules. Avoiding catastrophe requires a new approach.

• Strategic understanding: Both sides need better maps of the interconnected global economy and the potential consequences of their actions.
• Dialogue: Establishing forums for frank discussion between adversaries about the risks of weaponizing economic networks.
• Guardrails: Developing shared rules or understandings to mitigate escalation, similar to arms control during the Cold War.

Potential for common purpose. Despite the risks, the tools of the underground empire could potentially be redirected towards collective goals, such as combating climate change or corruption. This could build a "commonwealth" where national power reinforces global legitimacy, offering a path away from endless confrontation.

Last updated: May 12, 2025