The Two Faces of American Statecraft

Washington must balance its economic and military policies.

Squaring economic and security interests is the core of statecraft in the twenty-first century.

Balancing the relationship between trade and security policy has always been complicated. Since its founding, the U.S. economy has been integrated with the global economy. Because the young republic was so dependent on transatlantic trade, for example, it found itself at war with Barbary Pirates. By the dawn of the twentieth century, America was so embroiled in the transatlantic economy, Washington could not avoid being drawn into the First World War despite its isolationist stance. In 1941, the United States cut economic ties with Japan to punish the regime for its imperial foreign policy—a move that precipitated the attack on Pearl Harbor and the U.S. entry into World War II.

By contrast, the Cold War was simpler for the United States in terms of balancing trade and security policy. The United States mostly traded with its friends and did almost no business with its chief competitors. Foreign policy got made from the perspective that security concerns came first. Trade policy was separate. But recent U.S. trading partners may suggest that American statecraft is rusty after decades of not having to make Manichean choices between trade and security. As a result, Washington is struggling with hard choices.

For example, China represents a new kind of challenge for America. On one hand, complex economic ties bind the two countries. Yet both powers are locked in a vigorous security competition in the Indo-Pacific sphere. The United States is not alone in this precarious situation. South Korea, Japan, Taiwan, Vietnam, the Philippines, Australia and India are in the same boat: nurturing economic links with China while growing increasingly uneasy over Beijing’s hegemonic aspirations. There is nothing to be gained from kowtowing to Beijing’s bad behavior in cyberspace, maritime space, or outer space. Tacitly accepting such misbehavior has only begotten more of it. If China is not pressed now to conform to international norms, there could be much more costly consequences later. Nations that care need to start stepping up and pushing back.

The United States is in a similar bind with Iran. Iran is deepening its economic engagement with the US and Europe, while offering no sign toning down its destabilizing activities. Iranian long-range missile tests sparked a new round of fretting over Tehran’s behavior, even as foreign companies line up to sign new contracts with the regime.

Then there is Russia. The United States will need a more nuanced policy than all-or-nothing relations with Putin. Washington needs to take a harder line on Russian meddling in Europe and the Middle East. But other places—like the Arctic—offer opportunities for both economic and security cooperation.

The pull to restrain security concerns out of fear that antagonizing a trading partner will cause economic pain that isn't worth the gain creates tremendous tension. In a globalized world, big powers have to work on two independent, but related, tracks. The US and its friends and allies must work to make the global economy freer. But that pursuit can’t limit proactive, determined and robust action on the security front.

But subordinating security issues to business interests and leaving them unresolved can lead to big wars that cost far more than a little economic agitation. Before World War I, Britain, France and Germany all did business with one another. That didn't keep them from falling into the maelstrom in 1914. Running a two-track security and foreign economic policy would be even easier if the United States and its friends competed from positions of greater economic strength. There is much the United States could do promote economic freedom worldwide. Liberalizing U.S. energy exports may have been a great first step, but there is much more to be done. Economic freedom continues to wane domestically. Freeing the American economy from excessive spending and regulation is important for us and all free nations. Until that happens, America cannot be the engine of global economic growth it should be.

Washington has run up heavy, unstainable long-term debt, which is crippling the economy. Washington needs more sensible budgets. Our next president will need to lead the charge to get entitlement spending under control before it swallows the entire federal budget and buries the American economy.

The United States needs to be strong abroad and sensible at home. That starts with not hamstringing foreign policy for economic fears. The next president will inherit a long to-do list in foreign relations. As he or she completes those chores, America’s friends and allies will follow that lead more and more.

A Heritage Foundation vice president, James Jay Carafano directs the think tank’s research on defense and foreign policy issues.

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