DB6041

Watch: Economic Instruments

Welcome to Module 6, economic instruments. This week we want to talk about economic power as an instrument of US foreign policy. Whether of the hard or soft power kind. It may be a testament to the elasticity of economic power that it is hard to tell at tons whether this asset is hard or soft in nature. Since hard and soft power, distinguished by coercive and less or non-coercive policy means, respectively. Then it becomes clear that economic power can be used in both coercive and non-coercive ways. Economic statecraft involves the use of economic power and assets to achieve US foreign policy objectives. When I ask students in a previous session to consider whether soft power can exist without being built on the bedrock of hard power. This question may have been understood intuitively in military terms as if hard power means the threat or use of military force. But it's clear that dividing hard power this way ignores the symbiotic relationship between economic and military power. That is the lifeblood of any global power. America has been wise or providentially fortunate enough to build institutions that encouraged a felicitous combination.

Personal Liberty, commerce, and military power. Lacking a protector state to subsidize our economic viability and regime survival, the United States has had to exploit its full range of power with hard and soft assets. The range of possibilities to use economic power is extensive. Trade occurs and diverse arrangements with important qualifications. Global free trade is the nation's largest asset. And while many US critics can test the claim that the global free trade regime fostered by the US after World War II is actually a level playing field. It has sometimes been nonetheless benefited. Many nations large and small, developed and developing. Other arrangements include bilateral and regional trade agreements with nations or regions meant to exploit mutual interests and other conditions specific to their special relationship. In part because some American critics believe that protectionist and monetary policies of nations like Japan and China, among others, have put American industry and trade at a disadvantage. Us foreign policy advisors have called for more strategic trade intended to target such abuses. In more recent times, those watching President Trump's first term have witnessed several announcements of us terrorists imposed on China, Canada, and the EU, for example. Time will tell if this trade strategy is actually implemented fully. Is an old or modified significantly, if seriously implemented, whether the US is in a better position afterwards. We're finally if implemented, whether it encourages a bandwagon responsive opposition on the part of those nations targeted. In more recent years, the US has seen monetary strategy as a means of competing with nations like China. The currency manipulations have created a massive trade imbalance with the United States, along with becoming the largest holder of American debt. Post-World War Two institutions like the WTO, WTO, the IMF, and the World Bank at one time clearly favorite the US and still do in many respects. But the IMF in particular has not been successful at regulating China's currency and manipulations and their effects on American trade in US debt. In general, the verdict is out in terms of using tariffs as a means of rectifying US trade imbalances and the negative effect of currency manipulation. The n US monetary strategy is likely to remain as complex as it is uncertain an instrument of US foreign policy.

Finally, there are two additional areas of economic policy meant to punish and persuade respectively. The first is the use of economic sanctions against nations considered a threat to US national security or in violation of international norms are human rights. There's much debate on whether sanctions work or not, and conditions under which they can achieve their intended goals, and the conditions of enforcing compliance among international actors, unwilling to cooperate with sanctions regime. And finally, the morality of imposing sanctions on civilian populations in order to punish a particular ruling elite. Despite these challenges, there's evidence in the last two decades that economic sanctions can in fact produce pressure on targeted regimes to change. Especially when key members of the international community cooperate to sustain the sanctions regime and punish the cheaters. A second way of ECAN upper gnomic persuasion is us for an a, it has both soft and hard power dimensions. It has a long history in US foreign policy, though it's greatest successes, arguably the Marshall Plan to rebuild Europe after World War II. Many Americans have long forgotten the objections to the Marshall Plan when it was first proposed in 940 a, since it was not self-evident to many Americans that the equivalent of $110 billion in today's US currency was either warranted or deserved by Europeans. In retrospect, few question its strategic value. Since then, the Marshall Plan has served as a benchmark for what American a could do to improve lives, livelihoods, health, education, and security of human beings in developing nations. Three trends and foreign aid are worth mentioning in this project area. One is the importance of remittances from the US. Currently the largest source of capital for developing nations, with China, in India and Mexico, the largest countries benefiting.

The next trend is a growing division between traditional and nontraditional sources of aid. With traditional a distributed by the State Department's arm known as USAID, and non-traditional aid coming from other government agencies. But even these trends obscured the diversity of foreign aid discussed here in order of amounts dispersed. Economic aid for us political and security objectives is the largest amount. Military assistance for, mostly proposed for stability rather than war fighting is second largest. And here there are moral issues surrounding the degree to which sets eight could be seen as sustaining the longevity of authoritarian allies. Third is bilateral development assistance administered by USA, intended to strengthen the political and economic sustainability of developing nations. The fourth largest category is humanitarian assistance meant for short-term emergency purposes. While the fifth is multilateral development assistance distributed to international development institutions like UNICEF, the UN Development Program, and the World Bank. Finally, non-emergency food aid from the Food for Peace Program, or PL for 80, seeks to provide food assistance to countries in need. This program in particular has been criticized for its focus on helping sustain US allies instead of targeting food poverty relief. So, change may be coming here. In the end, students will decide whether and to what degree SAP, such types of aid achieve their respective US foreign policy goals. And further, whether those goals actually reflect genuine US foreign policy priorities. Finally, note the over the horizon issues in the chapter and have a great week.