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Globe and Mail
6 days ago
- Business
- Globe and Mail
A $500 attack drone costs millions to repel. It's an economic war, and the West is losing
Omar Saleh is the chief commercial officer at North Vector Dynamics Paul Ziadé is the chief executive officer at North Vector Dynamics and an associate professor at the University of Calgary Canada and its allies face a new kind of economic warfare. In early 2024, a US$2.1-billion U.S. Navy destroyer used a US$2.1-million SM-2 missile to shoot down a US$500 one-way attack drone launched by Houthi rebels over the Red Sea. It wasn't the first time. Over several weeks, the United States and its allies expended more than a billion dollars in high-end munitions defending commercial shipping lanes against threats that, in many cases, cost the enemy a few hundred dollars each to launch. This isn't a tactical mismatch. It's an economic war – and we're losing it. For more than a decade, Western defence procurement has drifted toward the exquisite. Precision, complexity and integration have become synonymous with capability. But in Ukraine, Gaza, Yemen and across every theatre of war now defined by drones, the shape of modern warfare has shifted. The most strategically disruptive systems aren't the most advanced – they're the most affordable, adaptable and numerous. Ukraine says Russia launched its biggest drone attack yet, part of an escalating campaign Sudan declares UAE 'enemy state' after wave of drone strikes on its Red Sea port And yet, most Counter-Unmanned Aerial Systems (CUAS) today are built to fight a different war. A war of doctrine, not of contact. A war where every engagement is clean, jammed signals mean safety and supply lines never break. Where the defender always has more – more equipment, more time, more missiles. That kind of war doesn't exist any more. Drones have flipped the battlefield. Every new drone engagement pushes the same question to the surface: how long can Canada and its allies outspend an adversary before the ledger becomes the real battlefield? In Ukraine, US$39,000 Shaheds and US$35,000 Lancets have knocked out multimillion-dollar NATO tanks and air defence systems. In Gaza, rockets costing a few hundred dollars have triggered US$40,000–US$50,000 Iron Dome interceptors – and occasionally slipped through. In the Red Sea, low-end drones have forced the U.S. Navy to expend US$3-million missiles while still managing to strike commercial vessels. Across every theatre, the attacker's return on investment keeps improving. Even when intercepted, the cost ratio favours the offence. When not, the damage speaks for itself. According to the U.K.'s Royal United Services Institute (RUSI), a British defence and security think tank, drones are now responsible for 60 to 70 per cent of all damaged and destroyed Russian equipment in Ukraine. Many of these are low-cost tactical drones operating within 10- to 30-kilometre ranges. A growing proportion are equipped with AI guidance, allowing them to autonomously lock on to targets even if radio frequency links are jammed. Research by CSIS shows that while human-piloted drones achieve 10- to 20-per-cent hit rates, AI-enabled systems can exceed 70 to 80 per cent, reducing the number of drones needed to destroy a target by a factor of four. This means adversaries can now field smaller, cheaper and smarter swarms, making each engagement harder to detect, harder to track, harder to kill. And every step in that chain bleeds time, money and readiness. And now the math is getting worse. Sure, defence has always cost more than offence. That's not new. You spend more to protect something valuable than to destroy something expendable. But the current dynamic goes well beyond asymmetry. These drones are not just nuisance threats. They're destructive, strategic tools of exhaustion. Their job isn't just to penetrate air defences. It's to exhaust them. It's to force defenders to burn through interceptors, reposition assets and respond faster than procurement cycles allow. The goal isn't precision. It's volume. Time. Attrition. This is not about one drone versus one missile. It's about the balance of industrial capacity and the economics of attrition. If the cost to stay in the fight keeps rising for defenders and falling for attackers, the outcome won't hinge on technology. It'll hinge on who runs out of options first. Why, then, do we continue to field US$15-million truck-mounted CUAS to intercept drones worth less than a used iPhone? The problem isn't capability – it's culture. The Western defence procurement ecosystem isn't built to reward cost-efficiency. It rewards integration, vendor relationships, program longevity and adherence to legacy doctrine. Major defence firms still push gold-plated, monolithic systems built for complex and tightly controlled battlefields. And for high-end threats, this makes sense. But against swarms of cheap drones, this is like buying a luxury SUV to operate a motorcycle courier service – reliable, expensive and completely mismatched to the problem. The result is predictable: exquisite systems deployed for every threat, until the cost-per-kill breaks the budget and operational tempo grinds to a halt. This is where conventional military logic breaks down. If you design a missile to hit a drone with 98-per-cent reliability and a $100,000 price tag, you'll win every engagement. That is, until you run out of money, interceptors or political will. That's not a strategy. That's a liability. As Gen. Sir Patrick Sanders, former U.K. chief of the general staff, warned in late 2023, 'We are now in a race to mass. Wars of the future will be won by those who can deploy at scale, not by those with the most sophisticated single asset.' This point applies far beyond Britain: mass, modularity and replenishment will define survivability in the drone age. Modern CUAS architecture needs to do more than just bring down drones. It must bend the cost curve of battlefield survivability. That means building systems around a new set of assumptions: That sensing and targeting systems can be blinded or thrown off. That there may be nothing to jam, either because control runs through fibre-optic cable or because it's guided by AI that won't miss. That the next wave won't be the last one. What's needed is a shift – from complex, centralized systems toward modular, distributed and affordable components that can degrade gracefully under fire, replenish quickly and keep operating without perfect infrastructure or exquisite command-and-control. This isn't a call to abandon integration. It's a call to rethink where the centre of gravity is in CUAS architecture. And that is not in centralized control towers, but in distributed launch points. Not in high-profile weapons platforms, but in low-cost surveillance drones and expendable strike units. Some defence firms are already moving in this direction. Others are still locked into exquisite, top-heavy systems – built to serve entire divisions, not squads – that can't deploy without weeks of preparation. But the battlefield is no longer waiting for integration timelines or procurement cycles. It's defined by who can absorb losses, reconstitute quickly and operate without the illusion of perfect conditions. Canada, with its $26.5-billion defence budget and 1.76 per cent of GDP spending – below NATO's 2-per-cent target – can't afford to fire million-dollar missiles at $500 drones. Modernizing NORAD and meeting NATO commitments demand affordable, scalable defences against this growing threat. Procurement agencies must prioritize systems that can be deployed by platoons, resupplied in hours and purchased in volume. The future doesn't belong to the side with the most expensive defence system. It belongs to the side that can afford to keep fighting – and defend long enough to win.
Forbes
26-05-2025
- Business
- Forbes
Can The Economy Grow When All Relationships Are Negotiating Chips?
Edward Fishman's timing is perfect. His book, Chokepoints: American Power in the Age of Economic Warfare, was released one month into a new administration that views every economic relationship as a potential negotiating lever. Fishman's book tells the story of a gradual, and then sudden, awakening of government officials to the power associated with squeezing or cutting off key arteries of economic connection to achieve political goals. Fishman is friends with Chris Miller, who introduced us to the idea of chokepoints in his book Chip War. Miller explained that every chip that goes into the world's most advanced computers are made by Taiwan Semiconductor Manufacturing Company. And TSMC cannot produce these chips without a machine that only one other company, ASML of the Netherlands, can make. Those companies, and their products, are 'chokepoints' - control access to them and you wield enormous power. Fishman expands the story into a chronology of how the U.S. government learned to identify and use chokepoints. He knows many of the key actors, and was personally involved in some of the policy actions. This gives his book a 'fly on the wall feel' as the reader is placed in the room where decisions were made. Many of the stories track the increasingly detailed use of financial chokepoints. This began in 2006 with the US government going on a road show through Europe, meeting with bank CEOs and explaining how their institutions were helping channel money to Iran. Many of the CEO's were unaware and, fortunately, this forensic accounting approach convinced most to tighten enforcement of sanctions. But there was always going to a subset of banks that didn't care about maintaining good relationships with the US, and thus continued to work with Iran. This forced a pivot in the Americans' approach. Instead of trying to suffocate Iran's oil business, the US attempted to prevent Iran from bringing home the money it had earned. Iran could sell oil and receive payments in U.S. dollars. But, as the revenue was held in escrow accounts at foreign banks, the U.S. was able to restrict access. That created a tantalizing economic lever the US could pull. Look at all the money you've got - do what we want and you can have it, keep behaving badly and you can't. It feels like a pandora's box - once the lid was lifted and the US started to view the global economy from the lens of chokepoints, it got progressively more 'creative'. This creatively was unleashed in full force against Russia in 2022. One of the most striking stories in the book takes place just after Ukraine was invaded. Russian oil tankers attempting to leave the Black Sea and take their product to market became lined up in a vast traffic jam at the Bosphorus strait. Why? Because they weren't insured. And if they didn't have insurance Turkey was not going to let them pass through its territory. Why were they uninsured? Because 95% of shipping insurance is provided by firms in London who were complying with a services ban on Russian oil. London insurers were the TSMC of shipping - without their product an entire industry could not operate. Economic warfare has expanded beyond the financial realm and an important part of Fishman's story is how detailed legal maneuvering has been used against Chinese companies. One very important legal tool is a 'denial order' - an export control that bans the target company from buying all US products. In an interdependent global supply chain, getting hit with a denial order can amount to a death sentence. For example, China's second-largest telecom equipment maker ZTE was caught in a plot to buy US technology and resell it to Iran. In 2016, as part of a settlement, they were fined $1.2 billion. When they were later found to be violating those terms, the Commerce department issued a denial order against them. Because ZTE relied on American technology, the denial order was deadly and within three weeks the company issued this announcement: As a result of the denial order, the major operating activities of the company have ceased. President Xi eventually sweet talked Trump into rescinding the order, but as Fishman says, the lesson was learned - a leading foreign company could be dispatched, and then resurrected, with the stroke of a pen. What's my view on all this? It's clever to squeeze Russian oil by banning London-based insurers from dealing with them. That's a short-term win, and justifiable given the savage invasion of Ukraine. But surely that action at least partially undermines the basis of the industry in London. Why rely on insurance from a firm that can be squeezed to shut you off? The same logic applies almost everywhere pressure on a chokepoint is applied. The usual answer to this dilemma is: just don't invade a democracy and murder tens of thousands of people and you'll be fine. Fishman presents a version of this argument: That distinction has now been eviscerated by the Trump government. It doesn't matter if you are Canada - the country most aligned with the US on values, culture and economic prosperity. It doesn't matter if you are Germany - a country that used its economic leadership in Europe to shepherd democracy across the continent. Nope - the message is now clear. Your economic ties with us are just as liable to be used as chokepoints as those with China, Iran or Iraq. Germany made the mistake of relying on Russian natural gas for about 50% of its supplies. A massive chokepoint. And Russia choked them, triggering an energy crisis that threatens Germany's formidable industrial base. The US meanwhile has experienced a boom in exports of liquefied natural gas, and had ambitions to replace Russia supply, at least in part. But why would Germany build a reliance on US imports when it's obvious that will eventually be seen as a chokepoint? I've often thought of Putin as a tactical genius and a strategic incompetent. He knows how to use threats, manipulations and leverage to influence events in the short term. Meanwhile, all his maneuverings keep his focus on tactical wins, while in the long-term his country declines. It declines because of the contradiction that underlies the 'chokepoints' view of the economy. A country accumulates strength by virtue of a vibrant, competitive and growing economy. That economy is a network of connections and relationships. If all those relationships are ultimately vulnerable to government manipulation, the connections will be kept weak and shallow, because they must be expected to snap at any time. If everything becomes a point to be choked, there is no oxygen for growth. In the end you become weaker. Pre-Trump many of us imagined the world moving back into blocks based on political systems and shared values. Yes, chokepoints might exist inside a 'western' group of democracies, but that's ok because there was no need to fear they would be used as leverage. That vision is now gone. The US is now transactional, all chokepoints are fair game.
South China Morning Post
15-05-2025
- Business
- South China Morning Post
Taiwan more likely to face blockade or economic warfare from Beijing than invasion: panel
Beijing is more likely to carry out a blockade or economic warfare against Taiwan rather than an invasion, witnesses and lawmakers said at a congressional hearing on Thursday, even as they urged the US to prepare for all scenarios. 'The most likely scenario is they're going to try this cyber-enabled economic warfare campaign,' said Mark Montgomery, a retired US rear admiral and senior director at the Washington-based Foundation for Defense of Democracies, testifying before the House Select Committee on the Chinese Communist Party 'Beijing will want to force Taiwan's capitulation through less drastic methods' than a military takeover, he added. As for what such a campaign would entail, Montgomery believed it would target Taiwan's financial, energy and telecommunications sectors, and involve 'malicious' cyber activity. Beijing sees Taiwan as part of China to be reunited by force if necessary. Most countries, including the US, do not recognise Taiwan as an independent state, but Washington is opposed to any attempt to take the self-governed island by force and is committed to arming it. Play
Yahoo
11-05-2025
- Business
- Yahoo
Editorial: The economic war between the U.S. and China is causing pain in Chicago's Chinatown and beyond
President Donald Trump is beginning to understand that nosebleed tariffs on goods imported from China aren't sustainable. Encouraging, at least. Just before Trump administration representatives were to begin meeting Saturday in Switzerland with Chinese counterparts, the president suggested that 80% might be an appropriate tariff on China rather than the current 145%. That surely is too high as well, but at least we're headed in the right direction. This bit of cautiously positive news came just after this board met with the genial Midwest consul general of China, Wang Baodong, and some of his staff and had a wide-ranging discussion, including on the tense state of affairs between the two countries, one these diplomats bemoan. What struck us after leaving the meeting at the Chinese Consulate General in River North was how the economic warfare waged by the highest levels of these two powerful countries affects ordinary folks trying to make a living and carry on the traditions of their culture in our city, a true melting pot if there ever was one. The area around Chicago's Chinatown is the only Chinatown in the U.S. that is growing, the consul general told us. Between 2010 and 2020, Asian Americans were by far the fastest-growing ethnic group in Chicago, with their numbers rising by nearly a third in that span. Much of that influx was centered in Chinatown and nearby Bridgeport. Many of those residents are first- or second-generation Chinese Americans, and they maintain close ties with relatives in China. It's a connection felt strongly in Chinatown itself, where small businesses depend heavily on trade with China. With the Trump administration having removed tariff exemptions for even small deliveries of goods, those business owners are scared and hoping cooler heads prevail. So it is our fervent hope that the combative rhetoric that has emanated from the White House toward China not filter down to the day-to-day interactions of people going about their business. So far, we've seen no evidence of that, thankfully. And neither had the consul general when we asked him. Still, folks have to make a living. In a global economy that will remain a fact of modern economic life no matter how fervently Trump wishes for a made-in-America past to be revived, the world's second-most-populous country (barely trailing India) can't long be the target of what effectively is a trade embargo. Traffic at some U.S. ports already has slowed dramatically. The Port of Los Angeles, the busiest such facility in the Western Hemisphere, reportedly saw its cargo traffic drop 35% last week compared with the same time a year ago. Such trends, if they persist, will hurt unionized port workers, rail employees and truck drivers, among many others. In other words, many Trump voters. In an Oval Office press gathering Thursday, Trump was asked directly about port workers losing their jobs because of lack of trade. His response? Calling it a 'good thing and not a bad thing,' he said: 'That means we lose less money, you know? When I see that, that means we lose less money.' Trump routinely interprets a negative balance of trade the U.S. has with another nation as equivalent to this country as a whole paying something when, of course, the only Americans paying for the administration's draconian trade barriers are consumers (in the form of higher prices) and workers (in the form of lost trade-related jobs). There surely are legitimate grievances the U.S. has toward Chinese government behavior in the global marketplace. The complaints have run over the years from technology theft to uncompetitive dumping of commodities to inordinately high barriers making it difficult for U.S. companies to access the vast Chinese market. Notably, President Joe Biden kept the Chinese tariffs imposed by Trump's first administration throughout Biden's presidency. Worries about Chinese trade practices have been — and continue to be — bipartisan. We are pleased to see the beginnings of recognition from the administration that economic warfare of this magnitude is bad for most of the country even if favored by a few industries that are direct beneficiaries. Let's keep lowering the rhetorical temperature and allow for rational negotiations to open up the channels of fair trade — in both directions — rather than close them down. Submit a letter, of no more than 400 words, to the editor here or email letters@
