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ABSTRACT
For decades, the concept of deterrence and the fear for nuclear confrontation withheld large powers from waging aggression against each other. Recent technological developments and the growing interconnectedness however allowed some states to find ways to challenge the West by using so called ‘hybrid threats’. This way of waging war entails the synchronized use of a broad spectrum of instruments that are well-designed to stay below the thresholds of detection, attribution and retaliation. Combining these (relatively cheap) threats with conventional military hard power confronts the liberal democracies with a difficult choice in terms of defence budget allocation. Whereas arms race stability in the conventional and nuclear domain leads to a peaceful stalemate, this article demonstrates that adding hybrid threats to the spectrum of state power projection leads to a gradual shift of the power balance. While hybrid threats have been extensively studied within the international relations literature, we are (to the best of our knowledge) the first to study these changing security paradigms from a defence economic point of view. Moreover, this article is the first to represent this increasingly complicated state power competition in a game theoretic framework.
Acknowledgments
The useful comments and constructive suggestions by anonymous referees are gratefully acknowledged. The usual disclaimer applies.
Disclosure Statement
No potential conflict of interest was reported by the authors.
Notes
1. We limit this section to studies originating from high-ranked research institutions or journals.
2. Referring to the use of operations conducted by special forces to advise and assist foreign resistance movements of conducting a resistance warfare against their host nation or occupying force. (Kilcullen Citation2019).
3. E.g. Manipulating energy prices, economic aid, the use of economic sanctions, exploiting the dependency upon trade.
4. E.g. Murray and Mansoor (Citation2012) and Chivvis (Citation2017).
5. Denoted as the Russian ‘Active Measures’. See Holland (Citation2006).
6. E.g. Mazarr et al. (2019) estimate (derived from testimonies) that the Russian Internet Research Agency (IRA), also called the ‘troll factory’, devoted only $100.000 on Facebook and Instagram while attempting to influence the 2016 US election campaign. As stated by Radin et al. (Citation2020), ‘Russia finds subversion attractive because it helps achieving multiple foreign policy goals at relatively low cost’.
7. Kilcullen (Citation2020) describes the shift of state actors resorting to irregular techniques. State actors such as Iran, North-Korea, China and Russia learned to challenge the West during the recent period by analysing their struggle after 9/11 while fighting asymmetric non-state actors in Iraq and Afghanistan.
8. The two games depicted in Section 3 however contain an outcome leading to retaliation and high intensity conflict. This outcome hence reflects the case of hybrid warfare. As we will demonstrate, this constitutes an outcome both players wish to avoid.
9. The term ‘liminal’ stems from the Latin ‘threshold’ and refers to state competitors exploiting democratic nations’ predictable thresholds. (Kilcullen Citation2019).
10. See e.g. Merrick et al. (Citation2016).
11. Using hybrid threats does not necessarily imply that player 2 benefits equally from this situation. The overall pay-off is hence not constant.
12. Whether hybrid threats are able to generate decisive results, hence implying the possibility of a finite game, is discussed extensively in the literature and lies beyond the scope of this article. This article assumes that hybrid threats inflict a gradual weakening of one’s opponent without leading to a decisive victory, hence corresponding to an infinite game. This stems from the distinct nature of hybrid threats, where decisive (finite) conventional conflicts (in which Western nations are generally being perceived as superior) are being avoided, leading to a strategy of asymmetric conflict.
13. Defined as the use, or the threat to use, economic means against a country in order to weaken its economy. This could consequently lead to the reducing of its political and military power, which produces beneficial geopolitical results. See e.g. Blackwill and Harris (Citation2016).
14. With Information Warfare (IW), Cyber-attacks (Cyber), Economic Warfare (EW), Unconventional Warfare (UW) and Proxy-Warfare (PW). We stress that this only represents a selection of hybrid threats. The seminal work ‘unrestricted warfare’ by Qiao Liang and Wang Xiangsui (Citation1999), is generally seen as the Chinese view on hybrid threats and hybrid warfare. Liang and Xiangsui suggest challenging US dominance by launching a broad spectrum of (non-military and military) activities. This work composes an exhaustive list of tools to destabilize an adversary.
15. As stated before, this Section constitutes a first, simplified approach in which player 1 only takes into account the challenges arising from hybrid threats. Section 3.2 expands the problem of choice by adding conventional threats. In this case, the vector ‘T’ also needs to include conventional threats.
16. Whereas the classic ‘guns vs butter’ problem deals with civilian and ‘military’ goods, we choose to use the notation ‘security’ goods. This choice stems from the notion that hybrid threats do not only emanate from a military environment but could also entail a wide range of non-military means.
17. In this case, every type of hybrid threat would constitute a distinct tree branch.
18. This demonstrates the difficulty and the high cost of e.g. intercepting all cyber-attacks, to control for disinformation across all types of media channels, scanning and controlling the source funding of extreme right parties.
19. E.g. Cyber-attacks that are intercepted, disinformation taken offline, financial support to extreme right parties that is being blocked.
20. Given that retaliation might entail even higher costs, possibly even exceeding the original costs inflicted by the hybrid threat. Moreover, retaliating could offset a violent spiral that a liberal democracy preferably wants to avoid.
21. This implies an important assumption, strongly affecting the obtained equilibria. As previously argued, we assume that retaliation can lead to a violent spiral resulting in large costs, making retaliation an unattractive strategy. One could debate that a fierce response to hybrid threats could deter the adversary from conducting further attacks, hence preventing future costs associated with further attacks. This is however a debate that lies beyond the scope of this article.
22. E.g. the US government did not respond decisively (with the exception of some economic sanctions) despite clear reports and evidences of Russian interference in the 2016 US elections. There are in general few examples of determined actions of deterrence by punishment taken against the rising number of cyber-attacks throughout society and the rising number of authoritarian states executing influencing operations.
23. Hence reflecting the vector ‘T’ used in expression 1.
24. The field of literature focussing on Cross-Domain Deterrence (CDD) aims to offer answers to the rising challenges of hybrid threats by relying on the concepts of deterrence. Despite the ongoing discussions in the literature regarding a common definition, the notion mainly refers to the use of threats, or a combination of threats, in one domain (e.g. air strikes) to counter the activities in other domains (e.g. cyber-attacks) in order to avoid changes in the status quo. More information can be obtained by consulting following sources: Mallory (Citation2018), Sweijs and Zilincik (Citation2019) and Lindsay and Gartzke (Citation2019).
25. E.g. due to budgetary reasons and due to the characteristics associated with these hybrid threats such as their ability to stay below the threshold of retaliation (cfr. Section 2.1.).
26. This is a realistic scenario when observing for example Russian large-scale military exercises such as ‘Zapad 2017ʹ and ‘Vostok 2018ʹ. These exercises also included the usage of dual-capable weapon systems, capable of executing a nuclear strike (Johnson Citation2017, Citation2018).
27. Resulting from long-lasting observations from own and allied intelligence services.
28. Cyber-attacks and electronic warfare could in this case disable command and control centres.
29. With the important condition that they are well designed to remain under the level of retaliation, or a < r.
30. We limit our analysis to the first-order conditions (FOC) which allows us to draw conclusions and recommendations. The second-order condition (SOC) was also calculated to control whether we are dealing with minima or maxima. The second partial derivatives confirm the minimalization of the total costs, given their strictly positive values. We therefore chose to omit these equations.
31. In general, the economic costs resulting from violent conflict are threefold (Anderton and Carter Citation2009): diversion of resources to defence, destruction of goods and resources (and human capital), and disruption of present and future economic activities. Smith (Citation2014) offers a discussion regarding the methods available to calculate these effects.
32. Making reliable estimates also demands further efforts in mapping the magnitude of hybrid threats. Sophisticated research conducted by renowned institutions such as the ‘Oxford Internet Research Institute’ indicates that increasing success is being achieved in these areas. Another example of a study building a database with micro-level data of the number of cyberattacks and disinformation by relying on open sources can be found in Kostyuk and Zhukov (Citation2019).
33. A fraction of the iterations will end in player 1 being able to prevent the hybrid threat from taking place, in function of the height of D(θHT). This game then results in a cost ‘f’ for player 1 and a (negative) gain of ‘c’ for player 2. A proper design of hybrid threats however should succeed in keeping this fraction of outcomes considerably low compared to the total amount of iterations.
34. As explained in Expression 1, a government needs to solve the allocation problem, distributing its resources over civilian and security goods.
35. See e.g. the significant effect of threat variables used in studies analyzing the demand for military expenditures (Christie Citation2017).
36. First, hybrid threats could directly decelerate economic growth (e.g. by waging economic warfare, which in turn leads to a lower production possibility frontier). Second, political polarization has a major indirect influence on economic performance (Azzimonti Citation2011) and macroeconomic volatility (Azzimonti and Talbert Citation2014).
37. This finding can still be confirmed by analysing the number of nuclear weapons which indicates a near-parity in this domain. More precisely, the United States nuclear arsenal consists of 1750 deployed warheads (Kirstensen and Korda Citation2020a), whereas the Russian nuclear arsenal contains 1570 strategic warheads (Kirstensen and Korda Citation2020b).
38. Similar characteristics stem from analyzing the deterrence against the war on terror (Levine & Levine, Citation2007). The setting is however different and specific given the environment of state to state competition combining both conventional and asymmetric tactics.