ACQ 3200 Foreign Investment and National Security Concerns
FINANCIAL GRAY ZONE
The U.S. government has slowly reoriented its foreign and security policy from the fight against
global terrorism toward international strategic competition.
This is accompanied by a re-examination of how
strategic competition will impact the integrity and
future stability of the U.S. economy and financial
system.
The U.S. is reorienting its
Strategic competition, also known as great power
competition, is the contest between the U.S. and foreign and security policy
its adversaries—primarily China and Russia—to towards strategic competition
shape security architectures, as well as norms and with China and Russia, which
practices worldwide. These norms and practices includes addressing the
include trade and investment regimes and the
development and regulation of new technological financial gray zone where
infrastructures. adversaries operate to
weaken the U.S. without direct
One of the most important elements of strategic
competition is asymmetric or gray zone warfare.
confrontation.
The gray zone resides at the blurred boundaries Adversarial actors exploit the
on the spectrum from cooperation and U.S. financial system and
competition. engage in harmful cyber
Emphasis on activities on the gray zone suggests
activities, posing a significant
that the adversary does not want to openly threat to national security.
confront the United States but instead seeks to
weaken it from within and separate it from its The U.S. and its allies are
allies. beginning to recognize and
Strategic competitors present a clear economic compete within this financial
and financial threat to the U.S. when they operate gray zone, requiring improved
in the emerging financial gray zone in which integration of data and the
adversarial actors can take advantage of the U.S. development of defensive and
financial system to further their aims and disarm
the country internally. offensive policy tools to
counter the emerging threat.
For the past thirty years or so, U.S. policy has
aimed to successfully integrate Russia and China
in the international financial and trade system.
There is a financial gray zone which threatens
the U.S. and national security.
Today, this deep, global integration—compounded
by Russia and China’s hostile capabilities—
presents a grave challenge to the U.S. as both
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ACQ 3200 Foreign Investment and National Security Concerns
actors look to challenge the U.S.-led global economic and financial order to reduce the U.S.
influence globally and within these institutions.
Harmful cyber activities deployed by state and non-state actors feature prominently in the
financial gray zone, particularly cybercrime. The future of cybercrime is closely tied to the future
of Russian, Chinese, Iranian, and North Korean foreign policies, as these actors have used a
variety of operations to gain tactical advantage.
How long has the financial gray zone competition been on our radar? The U.S. government and
allies have only begun to acknowledge the sweeping nature of this financial gray zone and
compete within it.
Because our adversaries exploit the seams between the internal and external policies, the U.S.
government must possess greater insights into a complex operating system and better integrate
data across the many relevant agencies—in a way, connecting the financial dots.
These actors vary considerably in terms of motivation and capability, but all cybersecurity
incidents, regardless of the original motive, have the potential to disrupt critical systems, even
inadvertently.
As it develops this comprehensive picture, the U.S. government needs to develop stronger
defensive and offensive policy tools to counter this emerging threat.
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