Rethinking hegemony: Financial infrastructures in times of geopolitical tensions

Abstract

With West-led financial sanctions being deployed on an unprecedented scale against Russia for its full-fledged invasion of Ukraine, financial infrastructures have moved to the center of attention for the most recent hardening of geopolitical tensions. Analysts interpret the western governments’ sanction politics and the responses of the Russian government, and the Chinese government as an attentive observer, as an indication for the major role of financial infrastructures as an instrument in international power constellations and hegemony. However, this approach tends to downplay research on the security/finance nexus, which has long highlighted the mutually interdependent constitution of arrays of political power and financial devices, institutions, and rationalities. Seen from that angle, ‘hegemony’ would not only refer to the functionalization of financial infrastructures in geopolitical struggles, but also to the entanglement of finance in the constitution of understandings of political security and political threat.

On the example of the role of decentralized financial infrastructures (for instance, crypto exchanges) in the current war in Ukraine and its reverberations in the international system, this paper ties together discussions about hegemony in the international system and about hegemony with respect to the calibration of understandings of financial and political security. It proposes to conceptualize ‘hegemony’, following Laclau and Mouffe, as a modality of the interdependent constitution, consolidation and interrogation of political and financial identities, rationalities, and imperatives. This modality determines the respective roles of, and expectations toward, political and financial institutions in international tensions. As will be argued, it is through financial infrastructures that the role of governments and their security interests and threat perceptions in the tensions become articulated; and it is through political institutions that the identity of ‘finance’ – here: financial infrastructures – gets understood and defined.