Saturday, 20 October 2012

The Pivot to Economics - The State Department is hard at work integrating economics into U.S. foreign policy.


Obama
In his excellent Foreign Policy essay, "The Currency of Power," Robert Zoellick gives voice to a critical mission for 21st-century American foreign policy. His call to integrate economics into our national security framework resonates on both sides of the political divide, and we applaud his argument.
He says it all, with one major oversight: We're already doing it. 
Reintegrating economics into American foreign policy is a top priority in the Obama administration's National Security Strategy ("[a]t the center of our efforts is a commitment to renew our economy, which serves as the wellspring of American power," the document notes) and for the State Department in particular. 
In fact, a cornerstone of Secretary of State Hillary Clinton's tenure has been the full embrace and implementation of the very agenda Zoellick describes -- one she has outlined in a series of major speeches on what she calls "Economic Statecraft." Secretary Clinton recognizes that "America's economic strength and global leadership are a package deal" -- that just as the drivers and tools of global power evolve to emphasize economics, so must America's foreign policy.
As Secretary Clinton put it, "We have to position ourselves to lead in a world where security is shaped in boardrooms and on trading floors as well as on battlefields." To realize these goals, she launched and championed a wholesale reintegration and reprioritization of economics, investment, and markets in the State Department and its missions around the world. 
This commitment has produced a number of initiatives, including my own office, the Office of the Chief Economist, which is staffed by individuals with deep macroeconomic, microeconomic, and financial experience who are tasked with making sure our diplomacy deals in what Zoellick calls "the currency of power." We operate in both the economic and foreign-policy realms, connecting the dots when economic issues influence our diplomacy and vice versa. We also provide a strategic view of long-term economic drivers of political change and frame recommendations to the secretary through that prism.
The State Department's Economic Statecraft agenda has two overarching objectives. The first is to fuse strategic thinking about political and economic power while adding economic tools to our diplomatic kit. Trade and capital flows are continuing to rise, and emerging nations are composing an ever-greater share of the world economy. As economic links between countries expand, it is just as likely for foreign-policy disagreements to be expressed by restricting trade in critical minerals or shutting out foreign companies from government procurement as by military force. In this climate, we are updating America's diplomatic arsenal and our very perception of U.S. interests.
In the process, we're getting better at tapping market solutions to solve strategic problems, partnering with the private sector to achieve shared goals, and laying out rules of the road for the global economy. We're recognizing that many of the issues we traditionally characterize as first-order security objectives -- from the success of democratic transitions in the Middle East to territorial disputes in the South China Sea -- hinge on important economic dimensions.

Read the full story here.

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