In other areas beyond sanctions, the situation is far worse. Aid budgets continue to shrink. Real questions hang over the fate in Congress of both TPP and TTIP. The G20 issued an ultimatum to the United States to implement changes, agreed in 2010, to voting weights and operations of the International Monetary Fund.56 Add in Congress’s near refusal to renew the U.S. Export-Import Bank’s license or reauthorize OPIC, and a dismaying picture emerges. Put bluntly, the U.S. Congress is often a serious impediment to implementing a coherent American geoeconomic strategy.
POLICY PRESCRIPTION 20
Increase university teaching around geoeconomics.
In order to produce the skills required over the long term to implement this ambitious geoeconomic agenda, academic preparation needs to go well beyond narrow disciplinary boundaries. Geoeconomics needs its own disciplinary language, one that joins the tools of economics with the logic of geopolitics. Only by endowing geoeconomics with its own analytic framework can policymakers approach these questions clearly. Universities need to create this interdisciplinary approach, and foundations need to fund it.57
THE POLICY prescriptions contained in this chapter, if implemented in a sustained way, would make the United States a powerful geoeconomic actor in the world. They would allow the United States to address seriously the growing geoeconomic coercion practiced by authoritarian governments in Asia and Europe against their neighbors. They would give the industrial democracies new positive tools to influence regional and global geopolitics. And they would strengthen the U.S. alliance systems and thus bolster the current regional and global balance of power. But these measures will, of course, not be implemented in a day or, in many cases, even a year. They will require a fundamental redefinition of how America conducts its foreign policy, including in the first instance presidential leadership and an increased and sustained realization by the Congress that geoeconomic instruments can frequently promote America’s national interests, a subject we address in Chapter 10.
CHAPTER TEN
Geoeconomics, U.S. Grand Strategy, and American National Interests
Never let the other fellow set the agenda.
—JAMES BAKER, FORMER SECRETARY OF STATE
AS THE United States faces an uncertain, complex, and periodically dangerous world in the decade ahead, how should it forge its external relations? What should be its primary foreign policy objectives, and what strategies and instruments should it adopt in an era of limited resources to realize those objectives? How can the United States avoid, to paraphrase former secretary of state Warren Christopher, careening from crisis to crisis? As Arnold J. Toynbee observed, great nations die by suicide, not murder.
After Pearl Harbor, Roosevelt and Churchill adopted a grand strategy for conducting the war: defeat Germany first, and then Japan. The clarity of that grand strategy—its insistent relationship of ends to means, of resources and instruments to priorities and long-term outcomes—was apparent to all who sought defeat of the Axis, and the strategy was implemented with tactical adjustments every day until the end of the war. Crucially, the United States emerged from that conflict far stronger and more influential than when it entered it—an abiding characteristic of a successful grand strategy and perhaps the best evidence that millennial America lacks one.
The mandate staked out in 2011 by Secretary of State Hillary Clinton’s Economic Statecraft agenda marks a modest beginning in this crucial endeavor.1 As Clinton put it: “Our foreign and economic relations remain indivisible. Only now, our greater challenge is not deterring any single military foe, but advancing our global leadership at a time when power is more often measured and exercised in economic terms.”2 George Shultz and James Baker, both of whom served as both secretary of state and treasury secretary, would undoubtedly applaud the concept and its policy objectives.
Consistent with this vision, Clinton articulated four broad lines of effort: updating U.S. foreign policy priorities to take economics more into account; turning to economic solutions for strategic challenges; stepping up commercial diplomacy (or “jobs diplomacy”) to boost U.S. exports, open new markets, and level the playing field for American companies; and building U.S. diplomatic capacity to execute this ambitious agenda.3
There was some progress during her tenure. Clinton was a strong advocate for launching a trade agreement with Europe, urging the point on precisely geoeconomic grounds, and making that case internally with the Obama White House for an agreement different in kind compared with previous trade accords—one that, among other things, would be more responsive to the strategic dimensions of the transatlantic relationship. In the wake of the Arab uprisings, Secretary Clinton noted that, to be successful, the Middle East political awakening also required an economic awakening, and she succeeded in pushing through an initial package in the early months of the uprisings that, announced by President Obama in May 2011, included over $4 billion in government financial support for the region (including $1 billion in debt relief for Egypt). And perhaps most important, it was primarily Clinton and her staff who engineered the pivot to Asia, which—not coincidentally—she launched the same week in October 2011 as her Economic Statecraft agenda. And she pushed through far more aggressive sanctions on Iran against a divided and skeptical group of agencies.
Of lesser importance, the State Department over the past several years has developed new expertise, partly through standing up new offices (including appointing a chief economist and establishing the Bureau for Energy and Natural Resources) and in part through new internal training. It created new communications tools for economic officers, allowing for better insight into problems and patterns—state-owned enterprises, for example, or Chinese influence in Latin America—that may well impact U.S. national interests similarly across far-flung posts. It introduced new commercial diplomacy requirements for senior officials. And after conducting a review of promotion rates and opportunities for midlevel and senior economic officers, it wrote new economic criteria into performance evaluations to place economics into the context of U.S. strategic objectives.
But though any progress is welcome, these efforts were clearly far from sufficient. Writing in 2013, Robert Zoellick noted that “the administration has talked about some of these topics. But it is oddly passive, as if it were hesitant to lead. State Department speeches are not enough.”4 Zoellick is right. It is unlikely that any State Department, no matter how forcefully engaged on reprioritizing geoeconomics within U.S. foreign policy, could succeed alone. Given the diverse competencies involved, such a mandate can come only from the White House. Only the president can translate the growing stock of observations and commitments by U.S. policy makers and others attesting to the need to reprioritize geoeconomics into effective geoeconomic action. As efforts from the Obama administration on Egypt, Syria, Ukraine, the pivot to Asia, the TPP, and the TTIP all attest, U.S. policy has tended to fall back on old habits and fall plain short.5
During the four-decade-long Cold War, the U.S. strategic elite, Democrats and Republicans alike, and the American public generally accepted Washington’s grand strategy. George Kennan introduced the concept of containment in a 1947 article in Foreign Affairs, written under the pseudonym “X,” describing a U.S. approach that would block Soviet encroachment on Western territory and national interests and prevent Moscow from shaping a malignant international order, with the attendant central proposition that the internal contradictions of the Soviet empire would eventually produce its demise. It is difficult to imagine a clearer U.S. grand strategy—or one with greater success, as the USSR itself dissolved in 1991.
At the same time, it is worth stressing how much this American grand strategy became interpreted as resting fundamentally on the instruments of the U.S. military and NATO: nuclear weapons, deterrent military capability, and arms control. Economic issues entered discussions of U.S. grand strategy in the context that an America with a strong economy at home would be able to sustain a large and potent military and conduct robust security policies abr
oad.
It is noteworthy that Western grand strategy toward the Soviet Union had virtually no serious geoeconomic element in the years following the Gulf of Tonkin incident in 1964 and America’s subsequent involvement in the Vietnam War. With the exception of intermittent sanctions against Moscow, such as the U.S. wheat embargo following the Soviet invasion of Afghanistan and strict prohibitions against technology transfer, Washington right up to the fall of the Berlin Wall continued to be largely preoccupied with the military balance between the two sides.
Thus the West’s extraordinary victory in the U.S.-Soviet confrontation, abetted by Ronald Reagan’s grand strategy of geopolitical offensive and concluded by George H. W. Bush’s skillful diplomatic handling, was accomplished much more with political-military instruments than with geoeconomic ones, an omission that has had its consequences in the years following the collapse of the Soviet Union.
Since the 1990s, the United States has been searching without much success to find a new grand strategy to match the new era. Perhaps a robust American grand strategy would have eventually emerged except for al-Qa’ida’s attacks on New York and Washington on September 11, 2001, and the subsequent decade-long wars in Afghanistan and Iraq. Perhaps. What happened, in fact—as in World War II, the Cold War, the Korean War, the Vietnam War, and the Balkan and Desert Storm conflicts—was that U.S. administrations and the Congress became preoccupied with military instruments, both to destroy al-Qa’ida through the war on terror and to conduct the two large conventional conflicts. Washington’s national security debates concentrated on the size and content of the defense budget, including missile defense; on war-fighting capabilities and strategies; and on what constituted successful security outcomes in Iraq and Afghanistan. This military mind-set also contributed to the U.S./NATO attack on Libya, triggered the debate regarding whether the United States should use force to change the balance of power on the ground in Syria and deal with ISIS, and, of course, addressed how the United States should roll back the Iranian nuclear weapons program.
Other than economic sanctions against Iran, it is striking how little of the public debate has addressed whether the United States, possessing the largest and most powerful economy in the world, could use economic instruments for geopolitical purposes. And when the administration and Congress have encountered these geoeconomic possibilities, whether in the form of economic assistance to Egypt and Jordan or the TPP and TTIP negotiations, they have been blunted by bureaucratic disputes inside the administration, by differences within a Congress largely unfamiliar with the potential of these geoeconomic tools, and by contentious U.S. domestic politics.
The post-9/11 United States faces a blizzard of international problems: the rise of Chinese power, the return of Russian systemic destabilizing policies in Eurasia and beyond, chaos in the Middle East, the continuing danger of terrorism involving weapons of mass destruction (WMD). With statesmen rare in any age, perhaps it is best to return to a compelling compass for U.S. external behavior—American national interests as a basis for U.S. grand strategy—and to examine briefly again how geoeconomic instruments, as informed by history and enumerated in this book, might promote these interests.6
Vital National Interests
Vital national interests are conditions that are strictly necessary to safeguard and enhance Americans’ survival and well-being in a free and secure nation. Vital U.S. national interests are: (1) preventing a WMD, major terrorist, or cyber attack on the American homeland; (2) maintaining the global balance of power, including through America’s alliance systems, and preventing the emergence of a hegemonic rival on the Eurasian landmass; (3) ensuring the survival of U.S. allies and their active cooperation with the United States in shaping an international liberal order, based on democratic values and the rule of law, in which the United States can thrive; (4) preventing the emergence of hostile major powers or failed states on America’s borders; and (5) ensuring the viability and stability of major global systems (trade, financial markets, supplies of energy, and the environment).
Extremely Important National Interests
Extremely important national interests are conditions that, if compromised, would severely prejudice but not strictly imperil the ability of the U.S. government to safeguard and enhance the well-being of Americans in a free and secure nation.
Extremely important U.S. national interests are: (1) preventing, deterring, and reducing the threat of the use of nuclear, biological, and chemical weapons anywhere; (2) preventing the regional proliferation of WMD and delivery systems; (3) promoting the acceptance of international rules of law and mechanisms for resolving or managing disputes peacefully; (4) promoting the well-being of U.S. allies and friends and protecting them from external aggression; (5) promoting democracy, prosperity, and stability in the Western Hemisphere; (6) preventing, managing, and (if possible at reasonable cost) ending major conflicts in important geographic regions; (7) maintaining a lead in key military-related and other strategic technologies, particularly information systems; and (8) preventing genocide.
U.S. MILITARY primacy continues to be essential in promoting and defending these national interests. With respect to international diplomacy, the United States is, as Secretary of State Madeleine Albright stressed, “the indispensable nation.” At the same time, geoeconomic tools as defined and discussed in this volume seem especially relevant to each and every one of these vital and extremely important American national interests.
America’s problem today is that after many decades of being preoccupied with the security dimension of American foreign policy, Washington instinctively reaches for the military instrument when often it is largely or entirely irrelevant or inappropriate to the external challenge at hand.
As we have earlier sought to demonstrate in detail, China, in our judgment, seeks a grand strategy that will end U.S. primacy in Asia and alter the balance of power in that vast and crucial region. And although the People’s Republic of China is undertaking an ambitious program of military modernization, its tools in pursuing that grand strategy for the foreseeable future are primarily geoeconomic and not military.
The strength of the economies of America’s Asian allies and of India will be crucial factors in their ability to resist Chinese economic coercion and to stand strong in maintaining the current balance of power in Asia writ large.
A stable and collaborative Egypt is a linchpin of broader U.S. national interests in the Middle East. Again, however, American military power will have little to do with whether Egypt overcomes its current monumental economic problems.
Tough international economic sanctions against Iran ultimately brought it to the negotiating table and to an agreement—a classic use of a geoeconomic instrument.
The future of Jordan—based in large part on the viability of its economy—will be an important determinant of whether the Middle East can regain a degree of peace and stability in the period ahead.
Putin’s Russia appears to be embarked on an effort to re-create Soviet-era spheres of dominating influence on its borders and beyond, witness its military intervention in Syria. Although NATO allies in Eastern Europe in these circumstances require reassurance through U.S. military deployments and power projection, the future of Ukraine, Georgia, Azerbaijan, and the nations of Central Asia will not be decided by American military capabilities. The only hope for Ukraine to withstand Moscow’s disruptive policies is to stabilize its economy, and that in turn depends extensively on American and European use of geoeconomic tools—trade, loans, grants—and the assistance of international lending institutions.
If Mexico’s economic challenges were to produce deep and prolonged instability across the border, the United States certainly would be significantly diverted from its broader international missions and responsibilities.
During World War II, during most of the Cold War period and its aftermath, and in America’s immediate responses after the 9/11 attacks, the military and security dimensions of U.S. foreign policy wer
e rightly preeminent. After all, it was U.S. military power that defeated Germany and Japan, held NATO together, animated the U.S.-Japan alliance, deterred the Soviet Union, and killed most of al-Qa’ida’s leadership. But in the years ahead, U.S. military prowess is not going to ease China’s economic coercion against the nations of Asia, not going to help rescue Egypt, not going to promote Ukraine’s independence from Moscow, and not going to assist Mexico to thrive as a stable modern democracy.
Either the United States will begin to use its geoeconomic power with much greater resolve and skill, or its national interests will increasingly be in jeopardy. U.S. domestic economic strength in the decades ahead must have more relevance to American national interests and the identification of consequent international threats and opportunities than simply funding a huge defense budget, useful as that is to U.S. global purposes. To recall Mao, international power and the influence needed to flourish and to shape the balance of power in America’s favor must derive not only from the barrel of a gun but also from the strength and geopolitical applications of the U.S. economy. Whether administrations and the Congress will understand, digest, and implement this compelling reality with focus, clarity, and a sense of geoeconomic purpose remains a preeminent issue of American grand strategy in our era.
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