26. Sanjaya Baru, “Introduction: Understanding Geo-economics and Strategy,” presented at the seminar “A New Era of Geo-economics: Assessing the Interplay of Economic and Political Risk,” IISS, October 24, 2012.
27. Baldwin, Economic Statecraft, 40.
28. Some have tried, although employing different definitions of geoeconomics, geopolitics, or both. According to Babić, geopolitics focuses on exercising control over territories and the populations contained therein, whereas geoeconomics focuses on exercising control over commodities, technologies, and markets. Second, geopolitical strategies rely on the deployment of military power or the threat to deploy it; geoeconomic strategies rely on economic means. And third, where geopolitics is typically conceived of as zero-sum, geoeconomics need not be. Klaus Solberg Søilen, author of a book on geoeconomics, provides another distinction: “The activities [of geoeconomics] are not undertaken chiefly by individuals representing the nation state, but by employees of private-sector organizations.” Klaus Solberg Søilen, Geoeconomics (BookBoon: 2012), 8.
29. Graham Evans and Jeffrey Newnham, The Penguin Dictionary of International Relations (London: Penguin Books, 1998), 197. For a review of geopolitics that is second to none, see Gearóid Ó Tuathail, Simon Dalby, and Paul Routledge, The Geopolitics Reader (London: Routledge, 1998).
30. Geopolitics, as mid-twentieth-century U.S. diplomat and academic Robert Strausz-Hupé once noted, is “the struggle for space and power.” Robert Strausz-Hupé, Geopolitics: The Struggle for Space and Power (New York: G. P. Putnam’s Sons, 1942). See also Robert D. Kaplan, “Crimea: The Revenge of Geography,” Forbes, March 14, 2014.
31. Note that “economic performance” as used here refers only to the relationship between a nation’s overall economic health and military strength; it does not include the concerted use of economic tools or influence to attain specific geopolitical objectives.
32. Hillary Clinton does so in her “Economic Statecraft” speech, noting the role strong economic capabilities play in underwriting elements of smart power, namely robust diplomacy and development and the strongest military in the world. Speech delivered at the Economic Club of New York, October 14, 2011.
33. Michael Mandelbaum, The Road to Global Prosperity (New York: Simon and Schuster, 2014), xvi.
34. Ibid.
35. As part of her Economic Statecraft agenda, Clinton also spoke openly about the institutional changes needed to bring these policy shifts about. See, e.g., Hillary Rodham Clinton, “Economic Statecraft,” remarks to the New York Economic Club.
36. See, e.g., Zoellick, “The Currency of Power”; David Rothkopf, “Hillary Clinton Ingests the Commerce Department,” Foreign Policy, October 14, 2011; R. Nicholas Burns and Jonathon Price, eds., The Global Economic Crisis and Potential Implications for Foreign Policy and U.S. National Security (Washington, D.C.: Aspen Institute, 2009). One of the finest articulations of this call, however, was also one of the earliest. C. Fred Bergsten, writing in April 1971 as a young NSC staffer to his boss, national security advisor Henry Kissinger, in preparation for a meeting between Kissinger and Pete Peterson, said, “There is, however, a deeper and more philosophical point which will continuously pervade your relationship with Peterson: the relationship between foreign economic policy and overall foreign policy. It is roughly accurate to say that foreign economic policy has been the handmaiden of overall U.S. foreign policy throughout the post-war period; all of our great ‘economic’ initiatives (IMF-IBRD, Marshall Plan, Kennedy Round, SDRs, etc) have been undertaken for essentially foreign policy reasons, and foreign policy considerations have dictated the U.S. position on virtually all issues of foreign economic policy.… There is now great and increasing pressure to change this relationship. In fact, it probably must be changed to some extent—to increase the ‘economic’ content of foreign economic policy—for the same reasons that we are now seeking to share our global role in political and security matters.” “Memorandum from C. Fred Bergsten of the National Security Council Staff to the President’s Special Assistant for National Security Affairs (Kissinger),” Foreign Relations of the United States, 1969–1976 Volume III, Foreign Economic Policy; International Monetary Policy, 1969–1972, Document 64, Department of State, Office of the Historian, http://history.state.gov/historicaldocuments/frus1969-76v03/d64.
37. Rothkopf, “Hillary Clinton Ingests the Commerce Department.”
38. Nicholas Burns, personal communication.
39. Zoellick, “The Currency of Power.”
40. Historians like Alan Dobson and Frank Gavin have offered portrayals similar to Zoellick’s. By Gavin’s telling, throughout much of its history, “the United States has ruthlessly exploited economic tools to reward friends and punish adversaries whenever it saw fit, and has rarely hesitated to subordinate financial gain to achieve perceived geo-political goals.” F. J. Gavin, “Both Sticks and Carrots,” Diplomatic History 28 (2004): 607–610.
41. Luttwak, “From Geopolitics to Geo-Economics”; Francis J. Gavin, Gold, Dollars, and Power: The Politics of International Monetary Relations, 1958–1971 (Chapel Hill: University of North Carolina Press, 2004); Mandelbaum, The Road to Global Prosperity, xvi–xvii.
42. See, for instance, Colin S. Gray and Geoffrey Sloan, eds., Geopolitics, Geography, and Strategy (New York: Routledge, 1999); Jakub J. Grygiel, Great Powers and Geopolitical Change (Baltimore: Johns Hopkins University Press, 2006); Walter Russell Mead, “The Return of Geopolitics,” Foreign Affairs, May/June 2014; Robert Kaplan, The Revenge of Geography: What the Map Tells Us about Coming Conflicts and the Battle against Fate (New York: Random House, 2012).
43. Dobson, US Economic Statecraft for Survival.
44. The practical stakes matter little. Because the United States and most countries have long since decoupled sanctions efforts from physical embargoes, physical embargoes are no longer of central importance in present-day sanctions debates.
45. This section owes great intellectual debt to Baldwin; he discusses at length how the ambiguity with which several distinct concepts—foreign economic policy, mercantilism, and liberal economic thought, among others—are often linked to geoeconomics (what he calls “economic statecraft”) can pose hindrances to thinking about geoeconomics. See Baldwin, Economic Statecraft, 48–77.
46. Stephen D. Cohen, The Making of United States International Economic Policy: Principles, Problems, and Proposals for Reform (New York: Praeger, 1977), xvii–xxiii, cited in ibid., 34.
47. Baldwin, Economic Statecraft, 77.
48. Or, as Baldwin puts it, “between the study of such mean things as ‘national rivalries and national power’ and the ‘study of national wealth’ ” (ibid.).
49. It is not a large leap from this reading of Adam Smith and his cohorts to the view that “the free trade doctrine … (as well as other intellectual descendants of liberal economic thought) denies the validity of the use of economic instruments for political ends.” John Pinder, “Economic Diplomacy,” in World Politics: An Introduction, ed. James N. Rosenau, Kenneth W. Thompson and Gavin Boyd (New York: Free Press, 1976).
50. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 1776, cited in Baldwin, Economic Statecraft, 80.
51. Smith quoted in Baldwin, Economic Statecraft, 81.
52. Ibid., 84, 81.
53. Robert Gilpin quoted in Baldwin, Economic Statecraft, 84.
54. Both David Baldwin and David Singh Grewal forcefully make this point. See Baldwin, Economic Statecraft, 78–85; and Grewal, Networked Power, 235–238, 360–361.
55. John Maynard Keynes, “National Self Sufficiency,” Yale Review 22, no. 4 (June 1933).
56. Ibid.
57. Baldwin, Economic Statecraft, 79.
58. Ibid., 85.
59. See Frank M. Russell, Theories of International Relations (New York: Appleton-Century, 1936), 295; Edmund Silberner, La guerre dans la pensée économique du XVIe au XVIIIe siècle (Paris: Librairie du Recueil Sirey, 1939), 282; Hirschman, Na
tional Power and the Structure of Foreign Trade, 6.
60. Edward Mead Earle, “Adam Smith, Alexander Hamilton, Friedrich List: The Economic Foundations of Military Power,” in Makers of Modern Strategy: Military Thought from Machiavelli to Hitler, ed. Fred I. Greenstein and Nelson W. Polsby (Reading, Mass.: Addison-Wesley, 1975), 123–124.
61. Frank M. Russell, Theories of International Relations (New York: Appleton-Century, 1936), 296, cited in Baldwin, Economic Statecraft, 86.
62. F. H. Hinsley, Power and the Pursuit of Peace (London: Cambridge University Press, 1963), 97, cited in Baldwin, Economic Statecraft, 86.
63. Ibid.
64. Baldwin, Economic Statecraft, 77.
65. Russell, Theories of International Relations, 179–203, 282–313; Hirschman, National Power and the Structure of Foreign Trade, 6–10; Silberner, La guerre dans la pensée économique, 125–269.
2. Geoeconomics and the International System
1. Leslie H. Gelb, “Foreign Affairs; The Asia Test for Mr. Bush,” New York Times, October 9, 1991.
2. Reginald Dale, “Thinking Ahead: Diplomats: Don’t Forget the Economy,” New York Times, November 26, 1996. Walter Russell Mead also argues that the “end of history” in the post–Cold War world allowed in a shift of focus from geopolitics to development economics and nonproliferation. This conflation of the end of geopolitics has offered an “especially enticing prospect to the United States: the idea that the country could start putting less into the international system and taking out more. It could shrink its defense spending, cut the State Department’s appropriations, lower its profile in foreign hotspots—and the world would just go on becoming more prosperous and more free” (“The Return of Geopolitics: The Revenge of the Revisionist Powers,” Foreign Affairs, May/June 2014).
3. Thomas A. Stewart with Ricardo Sookdeo, “The New Face of American Power,” CNNMoney, July 26, 1993.
4. Asma Alsharif, “Saudi, Qatar Paying Salaries to Syria Rebels: Diplomat,” Reuters, June 23, 2012, http://www.reuters.com/article/us-syria-crisis-saudi-idUSBRE85M04J20120623. Lila Shetova, “Putin’s Attempt to Recreate the Soviet Empire Is Futile,” Financial Times, January 7, 2014.
5. Ibid.
6. Doug Gavel, “Linda Bilmes on U.S. Engagement in Iraq and Afghanistan: ‘The Most Expensive Wars in U.S. History,’ ” John F. Kennedy School of Government, Harvard University, March 28, 2013; Mark Thompson, “The True Cost of the Afghanistan War May Surprise You,” Time, January 1, 2015.
7. Recent reports suggest al-Qa’ida is making a comeback in Afghanistan. Marine general Joseph Dunford pointed out, “Where at one time al Qaeda could be isolated—as we intended to do in 2001—extremist networks have now expanded in the country” (Kristina Wong, “General: Al Qaeda Has Expanded throughout Afghanistan,” The Hill, March 12, 2014). Other recent reports bolster this viewpoint, including Bruce Riedel, “Al Qaeda’s Next Comeback Could be Afghanistan and Pakistan,” Daily Beast, January 13, 2014; and Robert Blackwill, “Plan B in Afghanistan: Why a De Facto Partition Is the Least Bad Option,” Foreign Affairs, January/February 2011.
8. A 2013 analysis observed that “Iraq is now seized with some of its bloodiest, sectarian violence since the darkest days of the American-led occupation. Afghanistan is threatened with internecine bloodletting the moment Western forces withdraw at the end of this year.… [T]he avowed target of the Afghan campaign—jihadism—has simply dissipated to re-form elsewhere, in Somalia, Yemen, the desert hide-outs of North Africa and the newest killing fields of Syria.” Alan Cowell, “As They Leave Afghanistan, Britons Ask, ‘Why?’ ” New York Times, October 17, 2013. See also Joseph Goldstein, “Afghan Security Forces Struggle Just to Maintain Stalemate,” New York Times, July 22, 2015.
9. Robert Kagan, “New Europe, Old Russia,” Washington Post, February 6, 2008.
10. Peter Pomerantsev, “How Putin Is Reinventing Warfare,” Foreign Policy, May 5, 2014.
11. As Australian foreign policy strategist Hugh White summarized this view: “American officials have also affirmed support for Japan as an ally under the United States-Japan defense treaty. But it’s clear that Beijing doesn’t buy that. Instead, China has concluded America would stand back in an armed conflict, which is why it increasingly courts confrontation with Japan so brazenly.” Hugh White, “Sharing Power with China,” New York Times, March 19, 2014.
12. Kissinger quoted in Alan P. Dobson, US Economic Statecraft for Survival, 1933–1991 (New York: Routledge, 2002), 4.
13. Dobson, US Economic Statecraft for Survival, 4.
14. Ibid.
15. State capitalism, according to one political scientist, has four primary actors: national oil corporations, state-owned enterprises, privately owned national champions, and sovereign wealth funds. With the state acting as the leading economic actor and using markets primarily for political gain, new global competition between competing economic models is the new norm. Ian Bremmer, “State Capitalism Comes of Age: The End of the Free Market?,” Foreign Affairs, May/June 2009.
16. Ian Bremmer, “State Capitalism and the Crisis,” McKinsey Global Insight, July 2009; Ian Bremmer, “The Long Shadow of the Visible Hand: Government-Owned Firms Control Most of the World’s Oil Reserves,” Wall Street Journal, May 22, 2010.
17. Joshua Kurlantzick, “The Rise of Innovative State Capitalism,” Bloomberg Businessweek, June 28, 2012.
18. United Nations Conference on Trade and Development, World Investment Report 2013, July 2013, http://unctad.org/en/PublicationChapters/wir2013ch1_en.pdf; Adrian Woolridge, “The Rise of State Capitalism: An Economist Special Report,” Economist, January 21, 2012.
19. Woolridge, “The Rise of State Capitalism.”
20. Estimates for total sovereign wealth fund (SWF) assets vary, at least partly based on whether data sources define SWFs to include various reserve asset management entities. According to estimates by Peterson Institute senior fellow Ted Truman, total SWF assets as of mid-2013 totaled “$4.2 trillion, including $3.6 trillion in foreign assets—increases of almost 40 percent from mid-2010.” A 2014 report from KMPG estimates that sovereign wealth funds control $5.9 trillion in assets. See “Sovereign Wealth Funds, 2014,” KPMG, http://www.kpmg.com/ES/es/ActualidadyNovedades/ArticulosyPublicaciones/Documents/sovereign-weath-funds-v2.pdf. On total reserves, see International Monetary Fund, “Currency Composition of Official Foreign Exchange Reserves (COFER),” data as of Q2 2015, http://data.imf.org/?sk=E6A5F467-C14B-4AA8-9F6D-5A09EC4E62A4; Allie Bagnall and Edwin Truman, “Progress on Sovereign Wealth Fund Transparency and Accountability: An Updated SWF Scoreboard,” Peterson Institute for International Economics Policy Brief PB13-19, August 2013.
21. International Monetary Fund, “Currency Composition of Official Foreign Exchange Reserves (COFER),” data as of Q1 2015.
22. China’s trade surplus, for instance, has enabled Beijing to invest growing foreign exchange reserves in low-risk sovereign debt, such as U.S. Treasuries. Continued volatility in commodity prices since 2000 (measured by the standard deviation from the mean commodity price) has been roughly three times what is was in the 1990s. This trend of volatile resource prices will only be further exacerbated in years ahead, leaving individual countries more exposed to fluctuations in production. See James Manyika et al., “Global Flows in a Digital Age: How Trade, Finance, People, and Data Connect the World Economy,” McKinsey Global Institute, April 2014. Richard Dobbs et al., “Resource Revolution: Tracking Global Commodity Markets,” McKinsey Global Institute, September 2013.
23. Bremmer, “State Capitalism Comes of Age.”
24. Hillary Rodham Clinton, “Economic Statecraft,” speech at the New York Economic Club, October 14, 2011.
25. Euro-watchers such as Martin Feldstein have already labeled the euro experiment a failure, not because of “bureaucratic mismanagement, but rather the inevitable consequence of imposing a single currency on a very heterogeneous group of countries.” Martin Feldstein, “The Failure of the Euro,” Foreign Affairs, January/Feb
ruary 2012.
26. There is a growing discussion on the North American energy revolution. Recent noteworthy pieces include Robert Blackwill and Meghan O’Sullivan, “America’s Energy Edge: The Geopolitical Consequences of the Shale Revolution,” Foreign Affairs, March/April 2014; “The Petrostate of America,” Economist, February 15, 2014; Christof Rühl, “Spreading an Energy Revolution,” New York Times, February 5, 2013; Javier Solana, “The Shale Revolution’s Global Footprint,” Project Syndicate, November 20, 2013; Leonardo Maugeri, “The Shale Oil Boom: A U.S. Phenomenon,” Belfer Center for Science and International Affairs, John F. Kennedy School of Government, June 2013; Alan Riley, “The Shale Revolution’s Shifting Geopolitics,” New York Times, December 25, 2012; Carolyn Barnett, “The New Energy Revolution and the Gulf,” Center for Strategic and International Studies, Washington, D.C., November 2014; Amy Myers Jaffe and Ed Morse, “The End of OPEC,” Foreign Policy, October 16, 2013; Edward L. Morse, “Welcome to the Revolution: Why Shale Is the Next Shale.” Foreign Affairs, May/June 2014; Andrew Higgins, “Oil’s Swift Fall Raises Fortunes of U.S. Abroad,” New York Times, December 24, 2014.
27. The U.S. Energy Information Administration estimated “the amount of technically recoverable shale gas in the United States was 482 trillion cubic feet—an increase of 280 percent from EIA’s 2008.” U.S. Government Accountability Office, “Oil and Gas: Information on Shale, Resources, Development, and Environmental Public Health Risks,” GAO-12-732, September 2012.
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