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Matters Of National Interests And Security Politics Essay


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In a very generic sense, national interests are "that which is deemed by a particular state to be a . . . desirable goal. The attainment of this goal is something that the identifying state believes will have a positive impact on itself. Realization of the interest could enhance the political, economic, security, environmental, and/or moral well-being of a populace and the state or national enterprise to which they belong. [2] This holds true within the territory of the state, as well as in any external relations that the state may undertake outside of the administrative control of that state. [3] 

Interests serve as the foundation and guiding direction for the formulation of policy. For a nation-state, there is more often than not a direct correlation between the nation's interests and foreign policy. In most cases, "statesmen think and act in terms of interest." [4] Those interests believed to be the most significant for the attainment of a policy objective (the state's wants and needs) [5] will earn the greatest amount of emphasis during the policy formulation process. They should be designed to tell the policymaker why and how much he should care about an issue. Interests help determine what kind and how much attention should be given to both challenges or threats and opportunities. They also assist the policymaker in identifying key issues during the policy formulation process.

Some political scientists, like Hans Morgenthau, believe that national interests are permanent features of the international system. Regardless of what government is in power, the interests of a nation-state remain fixed components of the policymaking process. They are "unaffected by the circumstances of time and place." [6] 

Morgenthau, himself, indicates that the key concept of interest is not to be defined "with a meaning that is fixed once and for all." [7] Morgenthau believed the generic concept of interest was unchanging in terms of its importance to the international system. But this did not mean that individual interests could not be adjusted or newly created in order to take into account changes in the international system.

Other theorists have argued that interests are likely to be "a diverse, pluralistic set of subjective preferences that change periodically, both in response to the domestic political process itself and in response to shifts in the international environment. The national interest therefore is more likely to be what the policymakers say it is at any particular time." [8] The underlying three basic interests are:-

Security: "Protection of the people (both home and abroad), territory, and institutions of the State against potential foreign dangers." [9] This has always included defense of the homeland. Domestically, it also includes protection of critical infrastructure such as energy, banking and finance, telecommunications, transportation, water systems, and cyber networks. [10] 

Economic Well-Being: "Promotion of international trade and investment, including protection of a State's private economic interests in foreign countries." [11] 

Democratic Values: Until the 20th century, this core interest was confined to ensuring that the domestic democratic process and associated values framed the traditional tenets of "life, liberty, and the pursuit of happiness." Some states may include the promotion of democracy and human rights abroad. [12] 

Just as the development of national interests is complex, so is the actual application of interests in the policy and strategy formulation process. The importance of national interests to the process is significant, as described by Lord Palmerston, the British foreign minister in 1856: "When people ask me . . . for what is called a policy, the only answer is that we mean to do what may seem to be best, upon each occasion as it arises, making the interests of our country one's guiding principle." [13] 

The policy framer participating in the development of interests must take the following issues into account: How flexible can the interest of the moment be in relation to the state's core interests of the period? Must the interest be based on either realism or morality, or rather; can it be some combination of the two? Where does the interest fit in terms of how it is to be categorized with what degree of intensity?

Perhaps the most complicating factor that the policy framer must take into account will be the influence of domestic politics on the interest formulation process. The concept that resource allocation by type and quantity will be impacted by the identification of the interest designed to guide a policy creates a critical linkage between the two. The connection is key because, in a democracy, it is the government of a state actor that will have to sustain the investment of resources required to attain the interest. Interests with greater fidelity and less ambiguity are easier for governments and populations to support because they have a clearer idea of why it is they are being asked to do something, like allocate money or military forces. [14] At the same time, such a detailed understanding could lead to a lack of support on the part of either the government, the people, or parts thereof, if the interest is assessed to be too low on the scale of intensity.

If they are to develop relevant and executable 21st century interests, a most important understanding for those participating in the interest development process must be that they are endowed with a degree of flexibility allowing them to discern the limits of domestic politics in terms of what types of interests are likely to be supportable. This must entail the provision of the maximum amount of data available for the development and resulting identification of the interests at hand. The greater the fidelity and degree of consensus on categorisation and level of intensity, the greater the possibility that the public will support actions to protect or advance the interest.


At this juncture it would be worthwhile to look at some definitions, to get a complete perspective in to national interests,power and security.

National interests

The national interest, often referred to by the French term raison d'État, is a country's goals and ambitions whether economic, military, or cultural. The notion is an important one in international relations where pursuit of the national interest is the foundation of the realist school. It has 5 major dimensions namely; Geo - Political, Economic, Military, Socio-cultural, and Science & Technology. National Interests therefore stem from the evolving National goals in each of these dimensions and is also a reflection of the relative National Strengths with regard to these dimensions.


In the context of international relations and diplomacy, power (sometimes clarified as international power, national power, or state power) is the ability of one state to influence or control other states. States with this ability are called powers,


The art and science of developing, applying, and coordinating the instruments of national power (diplomatic, economic, military, and informational) to achieve objectives that contribute to national security. Also called national strategy or grand strategy.


1. National security is the requirement to maintain the survival of the nation-state through the use of economic, military and political power and the exercise of diplomacy.

2. National security can be defined as "a collective term encompassing both national defence and foreign relations." [15] "In general, it is the study of the security problems faced by [actors], of the policies and programs by which these problems are addressed, and also of the government processes through which the policies and programs are decided upon and carried out." [16] It relates both externally and internally to the actor-the foreign and domestic components of national security.

3. In the context of USA it is a collective term encompassing both national defense and foreign relations of the United States. Specifically, the condition provided by:

(a) a military or defense advantage over any foreign nation or group of nations;

(b) a favorable foreign relations position; or

(c) a defense posture capable of successfully resisting hostile or destructive action from within or without, overt or covert.

4. National security is thus a multi-dimensional view and response towards protecting National Interests against internal and external threats. It is dynamic and evolving as a derivative of National Interests which in itself is an evolving derivative of National Strength. It Underpins and guarantees the pursuit of National Objectives in a competing international arena. Further any issue that has the potential to directly impact the pursuit of National Goals can be classified as an area of National Interest, and it can thus be brought under the ambit of national security.


Modern conflict, from conventional warfare to diplomatic disputes, has increasingly involved economics in some form. Nations use economic tools to pursue objectives, seek economic resources as national goals, or are affected by economic events that influence their national security. Both state and non-state actors use economic power to wage war and to influence events regionally or globally. Economic considerations range from simple access to resources like water or raw materials through transforming resources into finished products or services to providing financial resources. The ability to gather, transform, and use resources is a key component to national security. Many human activities, including those involving national security, can be either severely limited or dramatically enhanced by economic factors. Military operations and other national security actions frequently depend on the results of economic capability. Without the capacity to produce, finance, or support key national security activities, a nation would have a limited ability to protect its domestic and international interests.

Economic power has spread widely and gained importance in recent years. Globalisation, the reliance on economics, and the diffusion of economic power from a few industrial states to many developing ones has radically changed the world. Global economic success has also conferred power on a large group of sovereign governments and even corporations. The threat or actual action by a government, organization, or cartel can create enormous economic impact. Markets are extremely sensitive to news that would affect potential financial or economic activity. Oil prices can rise rapidly if tensions increase in the Persian Gulf or if a natural disaster occurs. Single events with little obvious international significance could ignite a sell off by investors in overseas and domestic stock markets. Global communications can spread panic and exacerbate the condition.

The changing environment has altered the emphasis on national elements of power so that military power is not necessarily the primary coercive tool in international relations, and economic power has gained increased importance [17] . During the age of total war that spanned World Wars I and II, military power was the coin of the realm in foreign affairs. Economic power played a role in those wars, but the fight for national survival overrode the impact of domestic and international macroeconomic stability or growth. Economics served primarily as a provider of resources to the military element of power. In an era of increased consumer demand, technological growth, changes in society, and the evolving nature of conflict, the importance of economic considerations rose. During the Cold War, national survival was still at stake, but even then economic considerations became just as important as nuclear parity with the Soviet Union. President Dwight D. Eisenhower warned of military expenditures impeding future economic growth the net result of which would degrade security for the nation. Nuclear sufficiency became acceptable rather than superiority with the associated costly numbers of intercontinental ballistic missiles, strategic bombers, and submarines. "Guns versus butter" questions also arose as the challenges of an undeclared Cold War against Moscow pitted social spending against defence resources.

Today, economic issues play a pivotal role in conflict. Advanced technology, contractors on the battlefield, volunteer militaries (that tend to be more expensive than conscript armies), reconstruction of battle ravaged nations, and other considerations make war and conflict expensive. Countries do not have inexhaustible resources to conduct long wars even if there is a direct and desperate threat to national survival. Questions of national treasury, consumer demand, labour constraints, finance, and other economic considerations can sway public sentiment against a conflict. If one nation wages war or takes other actions to isolate another state, investors around the world become nervous. Stock and commodity markets could affect financial conditions and create unforeseen reactions. These reactions may create adverse conditions that could force a change in strategy by the nation trying to influence a rival's behavior [18] .

As economic issues affect national security capabilities and activities, so might efforts that involve national security create global economic impacts. War or political disruption in an oil producing region will initiate tremors in the international energy sector. Although a nation might not be directly affected by the initial problem, the populace can suffer from increased prices from petroleum products that could result in greater unemployment, inflation, credit issues, and foreign exchange problems. Demands for added military expenditures could translate to increased taxes that discourage consumer spending and business investment or reductions in other governmental activities that can directly shape the economic landscape. Competition for limited resources to meet national security policy objectives could also hamper private or other governmental activities. Nations can increase borrowing, raise taxes, spend surpluses, confiscate resources, or monetize debt. All of these options have unique economic effects on a nation.

Economics is an element of national power. Normally, one of a nation's key national interests is maintaining a viable economy to ensure a certain standard of living for its citizenry. States can use economic power to deter, compel, coerce, fight, and even rebuild a former opponent to meet a particular need. Economics becomes a vital component of the ends, ways, and means of security. Perhaps uniquely among the traditional elements of national power, economics might be any of the three aspects of strategy-the objective of a nation's strategy might be economic; economics might provide the means to achieve the end; or a nation might pursue its ends using economics as the primary way to exert power. Whether economics is a way or a means to achieve a national interest or if it is a cause or motivation to take an action, national leaders must pay attention to this increasingly significant security factor.


States and non-state actors have historically fought over economic issues. Wars about open access to resources, trade routes, competition, profit, and other economic issues are common in military and diplomatic history. A keen competition for resources among governments, individuals, corporations, and other actors has created a complex web of economic dependencies and rivalries that was not as important in the past. Similarly, economic conditions can create an environment that fosters demands for change that could create a civil war, a fight for access to markets or resources, or other forms of economic competition. Countries with weak or failing economies may resort to actions that they might not have considered had their economies been stronger.

One specific area which deserves a brief discussion is oil as a cause or objective of war. Reliable access to oil at reasonable rates is a vital national security interest for every developed and many of the more developing nations. Governments or international organizations that control oil production or pricing can effectively disrupt global economic conditions-whether purposefully or accidentally. A monopoly or oligopoly that controls a strategic asset, capability, or raw material has great potential to disrupt economies and create political instability, although few commodities have the same potential impact as oil. Major perceived or actual disruptions in the oil market are serious events that easily can trigger hostile responses from concerned governments. Today, oil is the best example of a resource that is both scarce and vital; however, other resources like water are also likely sources of conflict. We can expect economic issues-particularly access to raw materials and resources-to remain one of the significant objectives of international relations and causes of conflict.

Economic intervention in or withdrawal from the economy of a foreign nation-as opposed to supporting its debt-can have tremendous impact on the financial well being of a region or country. Governments do not usually participate directly in the economy of another nation. However, direct participation in the economy of another nation through private companies is widespread. Depending on the business and political climate of firm's home state, such participation may provide some degree of power for that home state [19] . Regardless of the degree of external governmental control, decisions by private firms and multinational corporations to invest or do business in a country can influence national policies. Such decisions are independent and can be contrary to a host nation's interests. In an age of globalized financial markets, almost any corporation, organization, or individual can transfer capital into a country or take it out. This transfer generally can occur by using national or international stock, bond, commodity markets, or through direct investment into business ventures. Rapid inflow of capital can provide a needed boast to growth while rapid outflow can sink a nation into recession.

Governments can use their economic power through other means. For example, rather than lending money by bond purchases, they can provide direct support to another nation through a variety of programs that essentially provide money or services. Foreign aid, loan guarantees, technical aid and services, and other assistance can provide a number of flexible tools to support national interests.

The transfer of wealth from developed to developing countries that sell raw materials or manufacture low-cost products can create economic problems. Governments worried about the outflow of capital, goods, services, industries, and jobs might erect barriers to restrict or stop trade. Such actions rarely go unchallenged, and a counter tariff barrier or legal challenge is a likely response. Conversely, governments willing to accept what are hopefully temporary trade imbalances for potential future benefits may allow the transfer of wealth and even industries and jobs to continue. Such is the political and economic theory behind the whole free trade movement-the North Atlantic Free Trade Agreement (NAFTA) being a visible example. Transfer of key technologies, processes, equipment, or skills can also enable foreign governments and private firms-granting in some cases access to capabilities that would have taken years and many resources to acquire independently.

Economic power normally involves the trade of finished goods or raw materials. Few countries can claim to produce all of the goods and services that their citizens use. Many nations require energy imports to subsist. Conversely, nations that may have oil, natural gas, or other energy sources might need food imports or other foreign services like skilled labour. Nations can work within international trade agreements, or they may take unilateral action to expand or restrict trade. A country might try to limit trade to hurt a rival.

Economic power could also prevent or limit actions taken by a rival. Suppose a country requires a scarce raw material. If an adversary has sufficient funds, influence, or credit, it could purchase and withhold that raw material from its foe. The nation could also coerce sellers to prevent sale of that raw material to the opponent. States could put pressure indirectly on an opponent's allies to force a nation to take certain actions. After the 1973 Yom Kippur War, Arab oil-producing countries refused to sell oil to the United States and other nations that supported Israel. This embargo boosted oil prices and shifted international power from the developed nations to ones that relied primarily on oil extraction. Political and economic power was redistributed when these actions were combined with the nationalization of private, foreign-owned petroleum companies in these oil exporting nations. [20] 


Although not generally controlled by governments, disregarding currency manipulations designed to offset them, commercial balance of payments are another form of debt that can have foreign policy implications.

Fears of a pending financial disaster could cause lenders to pull capital out of the market and further exacerbate the situation. Unfortunately, globalized communications can now spread fears among global investors almost instantaneously. The result is that economic issues that might have been localized events only decades ago can now turn into global issues. Additionally, since private investors may act contrary to government desires, governmental and even international efforts to stem economic crises may be ineffective. Some nations fear excessive foreign investment due to a perceived influence or concern over precipitous withdrawal; others accept the risk and welcome foreign investment as a reasonably available source of funds. Although some nations find these actions helpful, critics argue that this capability can also be used to stifle competition, protect national interests, or create "geopolitical troublemaking." [21] Foreign funds do provide a needed economic boast, but they can also disappear quickly should confidence fail

Multinational corporations and firms typically have the resources and ability to get access to once closed markets. Governments might offer subsidies or grant special benefits to attract business to their country. Once established, the multinational corporation could exert a powerful influence on the government since its affairs affect the nation's economy. Similarly, in highly contested markets, a multinational corporation could offer restricted technologies, move production of key subcomponents, offer bribes, expand production beyond the initial plan, or provide other incentives to gain access to the market. Companies can lobby their home country's government (assuming it favours the move into the other nation's market) for help lifting trade restrictions or access to technology or influencing the host nation's foreign policy.

In the most basic sense, economic power is an entity's ability to acquire, produce, and use raw materials, goods, and services. A nation cannot engage in conflict over an extended period without an adjustment to its economy. In many cases, countries must devote goods or services to prepare for or fight a war or even to conduct other activities that affect the national interest. Humanitarian aid, defence expenditures, diplomacy, alliance membership, and other vital actions depend on a country's ability to raise and spend tax revenues, borrow funds, use surpluses, or finance these measures. Economic power allows players to conduct actions by providing the personnel, equipment, operating materials, infrastructure, and short or long term sustainment of that capability

Governments purchase commodities and equipment like a business, obtain labour (military, government civilian, and contractor), maintain physical infrastructure, conduct research and development, and in some cases also produce unique goods and services peculiar to national security.

Resource decisions mold the creation of force structure to include investments in weapons, recruitment and retention of military and civilian personnel, decisions to fund military or non-military government programs, and a host of other concerns that affect national security policy. Further, economic conditions, once the exclusive concern of financial institutions, investors, and businesses, now affect military decisions that range from recruitment to government borrowing that directly influences a power's ability to provide military capability. Arms sales, transfers of key military technologies or technologies related to weapons of mass destruction, contracting for goods and services by individuals and firms, and other economic activities can influence the national security environment.

Nations that have sufficient resources can upgrade their military forces with more and better capabilities. Military forces that lack personnel or equipment could rely on contracted services or purchase advanced weaponry from other nations. If the state has limited forces, it can change the composition of its military forces by hiring specialized services that would have taken years to develop or that they only need for a limited time. Contractors on the battlefield are not new phenomena. The U.S. Government has used contractors in several wars. Other nations have hired military pilots and aircraft, logistics, and combat forces to expand and enhance their limited capabilities. Today, governments can lease satellite communications, photographic imagery, multi-spectral analysis, and navigational systems that were once the province of superpowers that had exclusive use of space systems. Individuals, firms, and governments can use these functions-for a price. This capability can change a balance of power at critical times during a conflict.

Oil profits have allowed the Russian government to finance a larger military budget that has given Moscow the ability to build a new intercontinental ballistic missile, aircraft, and other weapons to revitalize its national security and foreign policies. Other countries, like Iran and Venezuela, also fuel their defense and security programs by oil sales. Nations building advanced technology consumer goods like information systems could use similar technologies to improve their military forces.

While national leaders consider and adapt economics as an element of national power, these same leaders are also affected by economic events that may limit their policies options. Economic considerations can have very influential impacts on the conduct of military operations and diplomatic actions. Globalisation has allowed nations to conduct business with allies, former enemies, and potential rivals. New relationships between citizens and governments that highlight cost reductions, profits, and long range business activities can impact national security measures in a host of ways.

Current economic conditions also have a large impact on military operations. Inflation contributes to reduced purchasing power by a government. This includes activities from purchasing fuel, paying for contracted work, demands for greater pay for military and civilian workers, and other acquisition activities [22] . Similarly, a recession-a sustained downturn in economic activities-reduces tax revenues and encourages moves by politicians to stimulate the economy or support the unemployed or struggling citizens. These policies can significantly reduce the amount of defence spending for a nation. However, some of these conditions might provide relief to the government. Unemployment may ease recruitment and retention problems in the military. Increased competition for fewer government contracts might reduce the cost of operations. Tools to fight economic problems may also create unforeseen issues. A central bank could raise or lower interest rates. These actions can affect the availability of investors to purchase government debt and the cost of borrowing for contractors to build the latest fighter aircraft.


Expanding trade can provide several benefits to nations. It can create better efficiencies in production by seeking the lowest cost, most effective producers. This situation could lead to greater economic growth and improved standards of living around the world. However, not all nations find an economic niche that allows economic growth. Cheaper outsourced services and imported goods may destroy domestic industries. Large numbers of unemployed workers could create domestic problems for a government. Further, reliance on foreign imports could impoverish the state and complicate its financial and credit situation. If nations rely on foreign goods, then any problem that hinders trade could cause issues globally. A natural disaster, potential conflict, trade dispute, or other problem could restrict the flow of needed products.


In the future, security conflict among nations may change from predominately military contests to ones primarily featuring other elements of national power. That option is also open to non-state actors. While there has always been economic competition, the conscious, planned, coercive use of economic power as the main tool to achieve national security objectives has been largely uncommon in American history. Moving to the use of non-military instruments of power to accomplish national security goals will take greater integration, coordination, planning, vision, time, and patience.

Using economics as an element of power will require consideration of a host of issues and unintended effects. National leaders will find numerous challenges from domestic and international camps that will complicate and constrain policy options. If the nation uses a trade sanction to force another country to change its behavior, it may be targeted with its own set of counter-sanctions. Suppose that Washington applies trade restrictions against a country. That country could seize assets of American-owned firms, organize a boycott of American-made goods and services, ban the sale of critical raw materials, or undertake other retaliatory acts. That does not even consider the opportunity cost of lost potential trade with the target country. Many or most American citizens could suffer from higher prices, less choice, unemployment, or other economic disruption. The resulting political pressure could influence national decision making.

National security issues involving economics will only expand in the future. Global economic growth has introduced new powerhouses like China and India that complicate American national security and foreign policy decisions. Economic tools, once the province of a few developed countries, are now available to many developing and smaller powers. If these states can cause economic disruption, they can influence the behaviour of not only regional rivals but of nations around the world. Small states, non-state actors, or even super-empowered individuals that have the economic ability to turn a local action into a global one must be expected to use that power to their advantage. In the past, such actors might have constrained their foreign policy due to a lack of military power or in the case of non-state and individual actors been incapable of exerting effective influence. Today, economic power or leverage could allow those entities to become more proactive and willing to flex their muscles in the belief their economic power will deter an opponent's military power. Globalized markets and the dependence of nations on one another have made them vulnerable to many new threats; economic ones will find a greater place on the world stage in the future.


The global financial crisis of 2008-09 should have dispelled doubts any student of national strategy might have had about the linkage between economics and national security. From tiny Iceland-that went from a poster child of sound fiscal and monetary policy to a beggar knocking on the doors of the International Monetary Fund (IMF), European Union (EU) and even the Russians for relief-to U.S's less dramatic, but nonetheless severe, economic problems-it is clear that economics is at the heart of a nation's ability to project power. The liberal, market-based economic strategy of U.S has come under question as a model for other countries. In an internationally integrated economy, economic strength is not only the enabler of national power, but also the objective for the use of other instruments of power. A very important, time and labour-consuming task of a nation's foreign policy is advancing its economic agenda. In the terms of a country's national security strategy studies, economics is a way, means and an end of strategy [23] .

The British economist and diplomat, Nicholas Bayne, one of the leading writers on the subject, defines economic diplomacy as the "method by which states conduct their external economic relations. It embraces how they make decisions domestically, how they negotiate internationally and how the two processes interact." [24] 

The cast of players in economic diplomacy comprise an interagency process that is every bit as competitive and contentious as that of the national security strategy, but is not limited to governmental entities.

Beyond these traditional players, regulatory agencies in a country and its trading partners heavily influence its export potential, attractiveness as an investment recipient and its position in international trade negotiations. As a negotiation stance, states seek to lessen the impact of safety, labour and environmental standards on its competitiveness.

For years, the U.S. and EU governments together with business have been working on enhancing transparency of regulations on both sides of the Atlantic. One of the more well-known cases where U.S not been successful in narrowing the gap regards genetically modified organisms (GMOs) where the European concerns are not (in the U.S. view) consistent with available scientific information. If regulations or standards are considered to inhibit trade purposely and therefore constitute a non-tariff barrier, the complaining country can bring a case to the World Trade Organization (WTO).

Business groups play bit parts in traditional diplomacy; in economic diplomacy they are the star attraction. At the end of the day, economics in a free market is about private business. Business frequently drives the agenda by providing the bulk of relevant information

Industry support or lack thereof is critical in the passage of free trade agreements. At times business also takes an enlightened view in working with government to pursue common interests, such as providing training in developing countries on intellectual property or customs protection. For eg, Given the huge volume of mutual trade and investment, cooperation among EU and U.S. firms is critical to improving the economic relationship. In recognition of the powerful force of international business, in 1995 the late Secretary of Commerce Ron Brown proposed the Trans-Atlantic Business Dialogue (TABD) to bring public and civil society together to strengthen EU-U.S. commercial relations. [25] 

NGOs often push against business interests-sometimes successfully. Despite the abundance of unexploited hydrocarbon resources, U.S. non-governmental opponents to the Burmese (Myanmar) regime persuaded many American companies to abandon their economic interests and were instrumental in Congressional passage of an investment ban in the country in 1997.

Epistemic communities-virtual communities of experts across national borders-can have a powerful influence on international economic (and other) policies. In this concept, groups of experts define issues and push policies that differ from, or are ahead of, those of their national governments. Climate change is a striking example where scientists irrespective of their nationality were able to set the agenda by virtue of their expertise rather than their power base. [26] 

The architecture of economic diplomacy is not unlike that of other forms of diplomacy. Bilateral and international agreements provide the struts for the institutions and arrangements. Diplomats labour within these structures, employing the tools of soft power to influence and cajole other actors into accepting their country's views. The range of acronyms and organizations in the economic realm is bountiful and often highly technical: from the International Telecommunications Union (ITU), the International Labour Organization (ILO) to the World Intellectual Property Organization (WIPO)

Diplomats are always busy in delegations, or convincing governments in capitals, of the rightness of their government's approach to proposed changes. A perennial and vital concern is to influence the choice of leadership in these organizations. Missions employ the full scope of public diplomacy techniques to influence governments and publics. High ranking government officials write editorials and deliver speeches; notable experts in the field are invited to speak and conduct roundtables with host country counterparts; decision makers are sent on USG funded International Visitor Programs (IVP) for on-site exposure to the U.S. experience with the issue. The State Department together with USTR and USDA used these devices in a full court press to influence sceptical European and Asian audiences on the goodness of U.S. biotechnology.

Coalition building is a key element in the economic diplomacy tool kit. Coalitions can be comprised of like-minded countries, such as the so-called Cairns group of 17 agricultural exporting countries (excluding the United States) that advocated for freer trade in agricultural goods. Government and private sector cooperation is a growing phenomenon as governments realize they have neither the power nor the resources to accomplish their objectives. The American Chamber of Commerce (AMCHAM) is a force multiplier for USG efforts to convince governments to adopt economic policies amenable to the U.S.

Multilateral trade agreements can be the most powerful of all instruments to liberalize trade due to their scope and number of countries and volume of trade involved. The first such negotiations were launched in the mid-1940s, resulting in the General Agreement on Trade and Tariffs (GATT) signed by 23 countries.

Regional trade agreements (RTA), involving two or more countries, not necessarily geographically adjacent are an increasingly common method for countries to achieve both economic and political objectives. The WTO reports that approximately 400 RTAs will be in force by 2010. Ninety-percent of these are free trade agreements or partial scope agreements; the rest are the more comprehensive customs union (with common tariffs for non-members).

Financial diplomacy is not as well developed as trade and investment, in part because countries are more reluctant to subordinate their monetary and fiscal policies to outside interests. It is chiefly practiced by central bankers, whose independence from the political process and penchant for secrecy make financial diplomacy much less visible than its trade counterpart.

The scope of the 2008-09 crisis, however, has called into question whether the existing international financial coordinating mechanisms are adequate. The IMF is being called on to play a larger role in resolving the international credit crunch.

While economic diplomacy shares much in common with traditional, political diplomacy, many peculiarities of economics complicates the work of the economic diplomat. The most significant difference is that foreign relations are still largely in the domain of governments, but economic relations are formed by the interactions of the (largely) private sectors. As noted above, governments negotiate the international operating rules and regulations; how those rules are interpreted or whether they are followed in the real economy is beyond the scope of government officials. Another complication in economic diplomacy is the tension between economic and political priorities. An economic desire to exploit a potential market calls for bringing out all the tools available to the USG for trade promotion, but the country's record on human rights violations, trafficking-in-persons, support to terrorists, or neglect of democratic norms creates dilemma for policy makers. On the other side of the coin, policy makers are often hesitant to punish violators of our economic and business interests if the subsequent damage to the bilateral relationship is considered to be of more serious consequence to national security.

Two global trends that heavily influence the conduct of foreign relations-globalization and the "rise of the rest"-are largely economic phenomena and therefore profoundly change the nature of economic diplomacy. The real internationalization of companies and production poses some serious dilemmas for trade officials seeking to promote a state's business. Should one lobby on behalf of a state based company if the production takes places outside the state? Or for a foreign company, whose production is largely in the state? Or for a company that is not state based, but with its citizens as the majority of stockholders?

Military Trends

Increasing use of RMA and integrated theatres

Capability to fight multi-theatre wars with non-state and para state entities

Nuclear backdrop and Nuclear blackmail

Increasing sophistication of internal threats

Need for power projection over larger areas

Military use of space

Dependence on foreign supply of arms

Military Responses

Increased induction of "Force Multipliers" in the Indian Armed Forces

Integration of Services along theatres of operation format

Development of Triad, Development of "Cold Start" doctrines to counter nuclear threats

Need for raising more state level internal security forces has been recognised

Increased joint operations across spheres of influence to enable power projections

Creation of Aerospace commands, creation of assets

Privatization enabled to increase indeginisation


Economic Trends

Increasing use of economic warfare through control of markets

Use of economic levers to influence policy

Denial of comparative advantages through control of economic arrangements

Creation of economic dependency through control of capital and investments

Increasing Urbanization and pressure on Agriculture

Pressure on access to markets and global trade

Economic Responses

Building resilience through calibrated engagement to global structures

Balance need for capital and control of economic national assets

Proactively defend interest in multilateral forums

Create conditions for counter dependency by improving capability to take over assets abroad

No clear answer to pressure on agriculture and increasing urbanization

Getting involved in multilateral forums and key groupings





4th Edition

J. Boone Bartholomees, Jr.


July 2010

ISBN 1-58487-451-1



Alan G. Stolberg

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