BY EDWARD J. BARSS AND MONTE R. BULLARD | BOOK REVIEW
In War by Other Means, Robert Blackwill and Jennifer Harris argue that geoeconomic warfare requires a new vision of U.S. statecraft.
Richard V. Spencer, Secretary of the Navy, has been kept up late worrying about China “weaponizing capital.” He would find himself in good company with Blackwill and Harris’ excellent discussion on ‘geoeconomics’ in War by Other Means: Geoeconomics and Statecraft. In the book, the authors provide hundreds of detailed examples of how nations use economic and financial tools to advance their ends. They use these examples to paint a cogent picture of new and dynamic changes in the international arena spurred on by ‘geoeconomics’ that have far reaching consequences for the United States, China, and everyone else in between. From their viewpoint, "the global geoeconomic playing field is now sharply tilting against the United States and unless this is corrected, the price in blood and treasure for the United States will only grow."
Although it may not be essential to coin a new term for an old, well-defined strategy, it may be necessary in this new, emerging era. As Harris and Blackwill argue, U.S. policymakers measure the effects of geoeconomic instruments by judging them on the basis of their economic rather than geopolitical impact. Policymakers should consider “[t]he use of economic instruments to promote and defend national interests and to produce geopolitical results”. This includes the use of trade policy, investment policy, economic sanctions, cyber operations, aid, monetary policy, as well as energy and commodity policy. Up until now, U.S. neglect of geoeconomics may be attributable to the constraints of democracy, the desire to uphold a rules-based international order that favors the U.S., institutional memory, as well as the legacy of Cold War approaches.
Despite the heavy focus on U.S. policy making, the stronger underlying narrative is the shift in the international environment because of Russia and China’s advanced application of geoeconomic strategies and tactics. The authors point out, "Russia, China, and others now routinely look to geoeconomic means, often as a first resort, and often to undermine American power and influence". In fact, the ability of non-democracies with powerful sovereign wealth funds, state run companies, and concentrated rule-making authority allows these countries to use economic policy swiftly and effectively. That does not mean these countries do not recklessly use funds at times, Qatar serves as a strong example of the dangers in geoeconomic misuse, but non-democracies seem generally able to follow through and send strong messages with their money. China for example, not only curtails the import of Japanese cars to signal its disapproval with Japan's security policies but also constrains trade ties with South Korea to signal its disapproval with Seoul’s decision to deploy THAAD to the Korean peninsula; likewise, Russia periodically suspends gas supplies to Europe to foster division among major European countries. Moreover, even the implied threat of geoeconomic policy is powerful, as China’s campaign against those who meet with the Dalai Lama and against corporations that recognize Taiwan and Tibet as countries have shown. As the authors argue this creates a situation where the slow build of economic pressure, alternative funding arrangements, and U.S. inaction has enhanced China’s regional position.
Although the authors do a fine job of enumerating the various attributes of leveraging economic tools to provoke foreign policy consequences, the examples tend to lose their power due to the complexity of the issues. For example, the characterization of China’s use of economic weapons against Taiwan is accurate, but the conclusions are incomplete in part due to the authors ignoring their own assessments on the multidirectional effects of economic policy. They presume that China is winning the cross-strait economic battle decisively, whereas a closer examination might lead us to conclude that Taiwan is winning that battle. For example, over the years China went from a Communist to a Socialist to Socialist with Chinese Characteristics system of government which meant a strong infusion of Capitalism along the way. A considerable amount of that infusion came from Taiwan and Hong Kong. Taiwan particularly gained footholds in businesses in Fujian and Guangdong provinces, which are just opposite Taiwan, as well as around Shanghai, making those areas more dependent on and prone to influence from Taiwan, a trend discussed in detail in Chapter 3 of Strait Talk. Indeed, accurate assessments of the cross-strait economic battle depend on several different variables, such as the time horizon (short-term impacts versus long-term effects) as well as the transformation of the system form over time (socialism / capitalism).
The desire of the authors to try and fit policy objectives into neat categories of political, economic, or military ends fundamentally misses the point that all of these ends and tools are in service of the state, not the ends themselves. Furthermore, by separating geopolitics and geoeconomics by zero-sum and positive-sum, they ignore the fact that both are tools used to change the patterns and exercise of sovereignty at the international level. As the number of players increase in the international system, decisions that are zero-sum for two or three states can create positive effects for four, or positive-sum policies that benefit multiple countries can just as easily create negative effects for many more. Furthermore, an excessive focus on means detracts from what and how they are subordinate. In this case, like many others in international relations, the effect the policy tools have on the exercise of sovereignty through attempts to change the international, domestic, individual, or state-level situation for some beneficial end matters the most. It may be important to define terms or categories, but they need to be defined in ways that are functionally useful.
Overall, War by Other Means: Geoeconomics and Statecraft is an excellent treatment of the uses and pitfalls of economic statecraft. Given the emerging trend in U.S.-China relations as well as China-Taiwan relations, many of the policy prescriptions are timely, though some are vague or untenable (e.g., adopting new rules of engagement with Congress). Some of the books most important observations, in fact, are taking shape in debates today including the reevaluation of economic policy in the context of American foreign policy, such as China’s ‘unfair’ trading practices. However, whether that will be enough to overcome the rapidly changing international arena and advantages that autocracies hold uses geoeconomics remains to be seen. Secretary Spencer may yet need to start taking sleeping pills.