How To Get The Other Half Of Us Economic Statecraft Right 

Excerpt

A recent survey of historians conducted by the Council on Foreign Relations ranked the Marshall Plan—a historic investment that rebuilt Western Europe—as America’s most successful foreign policy decision. But ask most people what American economic statecraft looks like today, and they’ll describe an opposite approach: sanctions, tariffs, and export controls. These punitive tools are indispensable, and Washington should be using them more aggressively and effectively against adversaries. But they are only half of America’s economic arsenal. The other half—positive economic tools that build rather than block—has been comparatively neglected, even though it may be just as consequential a lever of American power. 

Positive economic statecraft is the deployment of investment finance, infrastructure funding, and trade promotion to advance America’s national and economic security objectives abroad. It is distinct from humanitarian and emergency health assistance, which are needs-based. Positive economic statecraft, in contrast, is intended to open markets for US businesses, integrate allies into trusted economic networks, and offer partners a credible alternative to authoritarian coercion and debt diplomacy. 

America has been slow to employ positive tools. Congress, for instance, didn’t modernize US development finance until the 2018 BUILD Act created the International Development Finance Corporation (DFC)—years after China’s Belt and Road Initiative was already reshaping infrastructure finance across the developing world. That hesitation wasn’t irrational. In the decades when capital moved freely in pursuit of efficiency, having the US government back specific industries, partners, or countries felt like picking winners. Negative tools, applied against adversaries, were simply easier to justify. 

China had no such hesitation. While Washington debated, Beijing wrote checks across Asia, Africa, and Latin America—financing ports, power grids, and railways through opaque, corruption-ridden contracts that locked countries into debt and dependency. Many governments would have preferred a higher-standard partner, but they took what was available and seemingly affordable. The damage has been profound.

Elaine Dezenski is senior director and head of the Center on Economic and Financial Power at the Foundation for Defense of Democracies, where Daniel Swift is a senior research analyst.

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