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Economist and trade expert Rebecca Harding has launched the Centre for Economic Security (CES), an organisation focused on researching economic threats and developing tools to combat them.

The CES is headed up by Harding, who serves as CEO. Retired Lieutenant General Richard Wardlaw, who was the UK’s first chief of defence logistics and support from 2019 to 2023, is chair of the centre’s advisory board. The advisory team itself is made up of eight experts across defence, trade and finance.

“I started thinking about this over a year ago because it has been clear to me for a long while that we’ve been at economic war,” Harding tells GTR.

This concern is also the focus of CES’s first whitepaper, released on February 25 and titled Economic Warfare In The 21st Century, which argues that the weaponisation of trade, tariffs and sanctions have become a key vector of conflict in recent years.

Financing for the defence sector has traditionally been a politically sensitive topic, but the Russian invasion of Ukraine and election of US President Donald Trump has fuelled a push for European countries to boost military spending and access to finance for the defence supply chain.

“We need to think about new ways of taking responsibility for our own spending in Europe and the UK,” Harding says. “We need to think about relationships with the US. In the end it’s not [good] having a negative relationship with the US.”

For the CES, the best way to defend against economic insecurity is preparedness, and trade is vital to this agenda. Strengthening supply chain resilience is one of its whitepaper’s five recommendations and lies at the heart of the organisation’s thinking.

Harding calls for a reworking of financing for defence manufacturing, with the CES currently working on an accreditation structure for defence manufacturers in the UK that would mark them as critical infrastructure.

Accreditation would then allow those firms easier access to guarantees from institutions like the British Business Bank and UK Export Finance, it argues.

The UK export credit agency has provided landmark defence guarantees in recent months, including extending a £1.6bn facility to back the sale of missiles to Ukraine on March 3 and a £9bn guarantee for the export of an air defence system to Poland.

Once guarantees are in place, trade finance should unleash its full suite of tools, Harding says.

“You need to have the supply side in place,” she says.

“That’s what Europe has to build and that’s about all the things in trade finance that we talk about all the time.

“This is about reinventing the and restructuring the financial infrastructures. It’s effectively putting the financial system on a security footing.”

 

De-dollarisation

 

A key area of conflict relevant to the trade finance space is the use of global payment systems. While the dollar-based Swift network is still by far the most common for cross-border trade, China has been working to expand the coverage of its Renminbi-denominated Cross-Border Interbank Payment System for the past decade.

Last November, then President-elect Donald Trump threatened a 100% tariff on imports from Brics countries – Brazil, China, Egypt, Ethiopia, Iran, India, South Africa and the United Arab Emirates – if they tried to move away from the dollar.

But Harding believes that this may not be enough to slow the momentum behind de-dollarisation, and that eventually even European banks may be persuaded to make the move.

“If you are a financial services provider in Europe, you have two choices,” Harding says. “Either you can work with the United States or you can say America is not going to change at the moment. Is this an aberration, or is this a continuum?

“I’m beginning to hear lots of people thinking that this is a continuum, that there is no normal to return to, and that we need to start thinking about using the CIPS system and the renminbi, because we don’t know if the United States itself is going to weaponise the dollar.”

Another area of focus is the growing importance of the digital market, she says, where “control of data and information is as important in controlling markets” as control of financial flows.

“At the front of the stage, we’ve got trade and trade wars, and everybody’s focusing on that,” Harding says. “At the back of the stage, we’ve got a gorilla going across that nobody’s paying attention to. The gorilla is this great power conflict between Russia, China and the United States, for that geostrategic digital space.”