We need an economics-based foreign policy

By Chrystia Freeland
December 3, 2010

It is impossible not to be fascinated by the WikiLeaks release of U.S. State Department cables this week. It is a story that has everything, ranging from insight into the U.S.-Russia relationship, to salacious tidbits like Ghaddafi’s predilection for buxom Ukrainian nurses, to raising the meaty issues of free speech, the internet and a government’s need for privacy.

But the most significant revelation isn’t what is in the documents—it is what is missing from them. The financial crisis of 2008, and its agonizing aftermath, changed the world profoundly. We now know it didn’t change the State Department. The most important take-away from the WikiLeaks data dump is that America needs a new foreign policy paradigm to deal with the post-crisis world.

The starting point for that paradigm must be to put the economy at the heart of foreign policy. Some of America’s savviest wise men are already making that point, most notably in the latest issue of Foreign Affairs, with two seminal essays on the importance of the economy for statecraft.

But these pieces, which argued that America’s troubled fiscal position is a major constraint on its ability to act in the world and that growing GDP should be a central goal of U.S .foreign policy, are just a start. The U.S. needs to reframe its foreign policy from the bottom up, and build its new approach around both national and international economic issues.

America needs a new paradigm not just because it has run out of money to be the world’s policeman, or because the recession at home requires everyone—including diplomats—to pitch in to put the country back to work. The country needs a new way of thinking about its foreign policy goals because national security and international relations—the classic concerns of diplomacy—are now largely driven by economic concerns.

For much of the last century, the Cold War determined the framework for U.S. foreign policy. Containing communism, and ultimately helping to defeat it, were, rightly, the defining goals of America’s engagement with the world. In the triumphal aftermath of the end of the Cold War, both left and right in the United States were tempted by the idea of shaping American foreign policy around an agenda of bringing freedom or democracy or free markets or some combination of all three to the rest of the world.

President George W. Bush’s reaction to the terrorist attacks of Sept. 11, 2001, was to add teeth and a more traditional national security justification to that campaign: In an echo of the Cold War, the battle against Islamic extremists, both those who ruled states and those who did not, emerged as the defining purpose of U.S. foreign policy. Nearly a decade later, this threat seems less all-encompassing, and the responses—wars in Iraq and Afghanistan—imperfect, even in the view of many of their supporters.

Meanwhile, a new defining international issue—for both America and for everyone else—has emerged: how to organize the world economy. This has been a rising concern since the collapse of communism and the subsequent adoption of some version of capitalism by almost all of the world (pace North Korea, Cuba and Zimbabwe).

But it was the meltdown of 2008 which moved the global economy from Wall Street to the State Department and foreign ministries around the world. The financial crisis showed us all that globalization is not only an engine for international economic growth, but a source of grave, and international, risks. Healing the global economy is now the world’s most urgent priority — and it is a job which can’t be done only at the national level.

Nuclear weapons—both their deployment, and treaties limiting it—were the dominant concern of the Cold War era of U.S. foreign policy. Fighting actual wars was the dominant concern of the post-9/11 era. Today, the most important mission of America in the world is figuring out how to rebalance the world economy and to fight the protectionist impulses which are an inevitable reaction to recession. Here’s hoping that the next time WikiLeaks tells the State Department’s secrets, most of them are about reserve currencies, raising domestic consumption in emerging markets and free trade deals.

13 comments

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Former Sen. and Treasury Secretary Bentsen during Clinton I understood trade. Put Japan in hole for 10 years. Income growth is dependent on trade. Obama promised to tackle the trade and has not. All we have learned from economists, including Larry Summers, is “not quite” right. See my reseach done 14 years ago. Lots of track record. To be statistically significant I need just 2-3 more years to to. See it at http://knol.google.com/k/savings-and-gro wth#

Posted by cwucnspt | Report as abusive

If the US had an economics-based foreign policy in 19th century slavery would not have been abolished. Had the policy Ms. Freeland suggests continued into the 20th century the US would not have entered World War I, World War II, the Korean War or the Vietnam War. In the 21st century we would not be facing a showdown North Korea government whose weapons exist because it make good economic sense to sell the regime light water reactors. Ideas that free trade is the basis of good foreign policy is fundamentally incorrect, stemming from the popular — but incorrect — notion that nations that trade with each other don’t fight with each other. Before Hitler turned his army on Stali, Russian and Germany were each others largest trading partners. The shrapnel that struck Marines storming Pacific island had been “recycled” American steel. Oil continues to fuel our struggles in Iraq and Afghanistan. A foreign policy based on economics alone is a blueprint for a future of endless wars that eventually ends in a new dark age.

Posted by JimInNevada | Report as abusive

If anything, the revelations of the documents released by Wikileaks shows that American foreign policy has always been economics based. It has never had anything to do with “freedom” or “spreading democracy” or any of the many other buzzwords used by American leaders over the years.

Posted by GetpIaning | Report as abusive

How naive is this reporter. American foreign policy has ALWAYS been concentrated around their economic interests.

Posted by diddums | Report as abusive

WHAT IS THE ECONOMIC POLICY REGARDING THE USE OF NUCLEAR WEAPONS IN MIDDLE EAST?

Iran walks and talks like a state with nuclear weapons. Under this scenario, Iran acquired the weapons years ago and now seeks home grown technology and legitimacy. Obviously Israel ought to take this scenario into account.

Like the Queen in the hands of a chess master, nuclear weapons are used to support pawns and other players, but come out last. America apparently brought out nuclear weapons against Japan at the end of the war, after Tokyo was destroyed and the emperor was seeking surrender. Under this scenario a conventional war may reach a tipping point, and then the nuclear weapons are brought out. Apparently this scenario required America to supply Israel is “73, I believe.

In this game, President Obama is too complex to figure out in some ways, but I recall his name means “lightening” and he does represent the United States of America’s perceived economic interests. Again the calculation is complex but it is consistent that the USA perceives the economic interest of siding with the Gulf Arabs in providing them with nuclear technology and 100 billion dollars in advanced arms and missiles which can be pointed east or north. The question of what the USA will do, is correlated with their perceived economic interests.

Although the math in the book of Revelation appears to be wrong, the scenario of the convergence of all calamities known to mankind, could be approximated with nuclear war with Iran. At least from Israel’s perspective, the prospective of being bunched together within range of weapons of mass destruction, is an Armageddon scenario.

The prophet Jacob well understood this scenario on Genesis 34:30: “And Jacob said to Simeon and Levi, Ye have troubled me to make me to stink among the inhabitants of the land, among the Canaanites and the Perizzites: and I being few in number, they shall gather themselves together against me, and slay me; and I shall be destroyed, I and my house.” The sons of Jacob actually created this scenario by one their first slaughters of a village of Palestinians.

On the other hand, under MAD, nuclear weapons were never deployed, but came very, very close.

The probability of the above scenarios appears to be unknown, but the economic consequences are so serious that they should be considered.

Posted by PANTONY | Report as abusive

Yes, we need a new foreign policy. And we need a new domestic policy. We need to put the interests of ALL of the American people first, and the interests of tiny special interest groups last. Bot abroad and at home.

We need whatever Government we have to be answerable to the people. That means free and open elections with candidates with significantly different ideas. And that means election reform, outlawing gerrymandered political districts and the failed, so-called “two party” system. Also outlawing donations to more than a single candidate in any election. Freedom of speech and freedom to choose do not imply the freedom to buy all the candidates running.

This would result in a very different looking American Government.

Posted by txgadfly | Report as abusive

The American military-industrial complex is comprised of corporations of all shapes and sizes, in intimate contact with military officers of all levels, in Army, Navy, and Air Force.

The careers of 100,000 military officers advance most quickly in wartime. What person doesn’t care about his career?

The careers of typical corporate officers ascend mightily on securing even a single military contract. The profits come roaring in like a gusher.

The coolest thing about it is that any citizen who questions it is automatically labeled as unpatriotic, soft, cowardly.

The military-industrial complex is a giant squid, fastened onto the face of America.

Or am I missing something?

Posted by AdamSmith | Report as abusive

Dear Chrystia Freeland
Your article so clearly demonstrates that you have an insightful background .. it is the CORRECT AND ADEQUATE REACTION to all what occurs right now … for the USA …
… so very well highlighted by the extreemely NECCESARY WIKILEAKS … Necesary as a WAKE-UP CALL for all that and those who represent anything positive in the United States of America … to take on all those cynical , useless individuals ,organistaions and politicians in high POWER within the USA who out of egoistic motives threaten to lead the USA into oblivion … It is my sincere HOPE … that there still are capable people in the USA who can look through the charades and DISINFORMATION as well as recognize the reckless misuse of power in persecution of institutions who point out a much needed truth for the people to see.. and as You and I know .. that is the real reason for the anger of the rascals.. they dont give a damn about the external relations.. what they are scared about .. is for their electorate to realize .. WHICH KIND OF DESPICABLE TYPES THEY HAVE EMPOWERED ..BY THEIR VOTE

Posted by Tannehof | Report as abusive

The economy can be saved by a simple equation in the same principles that Antoine Lavoisier created Modern Chemistry erasing Phlogiston for good:

Investment = Investment + Profit

Investors are supposed to get their money back plus something else that the production can reward them and not speculation that is based on missing trust that let greed/fears mars simple basic laws of offer/demand.

Americans need to learn to protect simple principles of human existence adopting healthy lifestyles with appropriate food and fitness;

Body weight = input – output

Respecting science is very important at USPTO avoiding inventions be reinvented.

Posted by Dr.Tubarc | Report as abusive

The US has never been the world’s policeman. They were and are simple opportunists and had the advantage of being bullies for awhile when the world was not connected.

Now that the USA is far overstretched military wise – it’s home front is decaying very fast with debt.

Ego and ignorance will continue to drive foreign policy with the false understanding the USA will be the big player for the next 100 years.

There is no real super power anymore. The connected world allows mega corps to manipulate and drive economies to their advantage.

It will take awhile, however some groups will arise and fight the new imperialism. Thank God for hackers, torrents and WikiLeaks that are undermining the new imperialism economy that is already global.

Posted by Butch_from_PA | Report as abusive

@Adam Smith

I agree with you.

But you would be very lucky to be labeled as unpatriotic, soft, cowardly.

What happened to JFK when he tried to pull out of Vietnam?

It was like shutting down a giant gold mine for all those involved.

Posted by doctorjay317 | Report as abusive

The single biggest change needed in US foreign policy is to start to tell the truth. The US continues to lie and to misrepresent facts. It lies about Iran continuously. It has been known for years that Iran’s nuclear program is completely peaceful, yet the US constantly claims that Iran has the “intention” to build nuclear weapons. It is foreign policy based on the crystal ball. The US also claims that it is an impartial arbiter between Israel and the Palestinians when everyone known that the US is subservient to Israel. There is no hope for progress until the US starts to tell the truth.

One more change that would be useful would be to stop completely the use of sanctions as a tool of foreign policy. Fifty years of sanctions against have created only misery for the people of Cuba and billions of lost revenues for American businesses. Sanctions against Iran have been totally useless since Iran has plenty of resources and an educated population. The main results have been the strengthening of the Iranian industrial base and again billions of losses for American businesses.

Posted by Logical123 | Report as abusive

No. Basing national policy based on economics and “getting and spending” fails. Other commentators to this piece tell it.

Posted by gramps | Report as abusive