How far has interdependence among states undermined sovereignty? (1991)
Robert O. Keohane and Joseph S. Nye (Power and Interdependence, 1977) define interdependence as mutual dependence with reciprocal costly effects: change in one state imposes costs on others. Sovereignty is not one thing. Stephen D. Krasner (Sovereignty: Organized Hypocrisy, 1999) separates domestic, interdependence, international legal and Westphalian sovereignty. Interdependence has substantially eroded interdependence sovereignty, the control over cross-border flows, and partly Westphalian autonomy. It has scarcely touched legal sovereignty, and it often strengthens powerful states.
Where interdependence has undermined sovereignty
- Economic policy autonomy. With mobile capital, a state cannot fix its exchange rate, keep an independent monetary policy and allow free capital movement at once (the impossible trinity). Dani Rodrik‘s trilemma adds that deep integration constrains democratic choice. Bond markets and rating agencies discipline budgets.
- Rule-bound trade. WTO commitments and dispute settlement narrow tariff and subsidy choices; bilateral investment treaties exposed states to arbitration. India’s adverse awards led it to rewrite its model treaty in 2015.
- Pooled sovereignty. The EU has turned interdependence into shared institutions: supremacy of EU law and a common currency.
- Problems no border can stop. Climate change, pandemics and financial contagion require collective rules. The ICJ’s July 2025 advisory opinion treated climate obligations as owed to all states.
- Sensitivity and vulnerability. Keohane and Nye’s distinction shows that states bear costs even from policies they never chose, such as US interest-rate cycles hitting emerging markets.
Why the erosion is limited
- Consent and exit. Commitments are sovereign choices and can be reversed: Brexit (2016–20) and the US’s second withdrawal from the Paris Agreement, effective 27 January 2026.
- Interdependence is power. Asymmetry turns dependence into leverage. Henry Farrell and Abraham L. Newman call this weaponised interdependence: Russian banks cut from SWIFT in 2022, China’s rare-earth export controls in 2025, sweeping US tariffs in 2025. Interdependence redistributes sovereignty toward those controlling chokepoints rather than eroding everyone’s equally.
- Uneven burden. Dependency theorists note that conditionality and capital flight hollow out peripheral states far more than core ones.
- Legal sovereignty intact. No state has lost recognition, UN membership or legal equality through trade or finance.
Perspectives
| School | Verdict |
|---|---|
| Liberal | Interdependence pools and transforms sovereignty, making cooperation rational |
| Realist (Kenneth N. Waltz) | Great powers stay self-reliant; interdependence is a source of vulnerability to be managed |
| Marxist/dependency | Formal sovereignty masks subordination; B. S. Chimni sees an “imperial global state” in the making (2004) |
| Constructivist | Sovereignty is a social institution, reconstituted rather than lost |
The Indian experience
The 1991 balance-of-payments crisis and IMF conditionality showed interdependence constraining policy. India later stayed out of RCEP (2019) and defends public food stockholding at the WTO. An extra 25% US tariff tied to India’s Russian oil purchases (August 2025) was lifted on 7 February 2026 under an interim trade understanding; the US Sanctioning Russia and Iran Act (September 2026) now authorises tariffs of up to 100% on such buyers. Iran’s 2026 restriction of the Strait of Hormuz, through which about 45% of India’s crude had passed, showed vulnerability rather than mere sensitivity. Strategic autonomy is thus exercised within dense interdependence, not outside it.
Conclusion
Interdependence has undermined sovereignty as control over flows and policy, considerably for weaker states, but not sovereignty as authority. It has made sovereignty more conditional and more unequal, and states increasingly use interdependence itself as an instrument of power.