Book Review: War by Other Means: Geoeconomics and Statecraft.


September 18, 2016

http://www.thestrategybridge.com/the-bridge/2016/8/17/reviewing-war-by-other-means


There isn’t much grand about America’s post-Cold War grand strategy. Such is the consensus among the academic scholars, think-tankers, pundits, and many former national security officials who have chastised U.S. foreign policymakers for lacking strategic sophistication, or worse, failing to craft a coherent grand strategy at all.[1] For the last twenty five years, these critics claim, Washington has sought the wrong goals, under-resourced its efforts, and failed to anticipate the likely second-order effects of its policies.[2] In the main, these critical assessments have understandably focused on the military-security dimension of grand strategy. America’s national security policies since the mid-1990s cost much blood and treasure, degraded regional security environments, and inspired hostile reactions by other powers.[3]

In their well-crafted and important new book, War by Other Means: Geoeconomics and Statecraft, Robert Blackwill and Jennifer Harris join this discussion orthogonally, arguing that the United States has altogether abandoned the economic dimension of grand strategy. Since the mid-1960s, Washington has been gripped by a debilitating neoliberal (or, neoclassical economic) dogma that works as an ideological firewall separating the operation of markets from the pursuit of international political objectives. As a result, America’s substantial and diversified economic resources have been woefully underutilized as tools of grand strategy. At the same time, the United States’ most formidable challengers (China, Russia, and Iran) are all effective practitioners of economic statecraft. To secure its national interest in the years to come, Washington must relearn how to employ economic resources in the service of its geopolitical objectives. To do otherwise would cede the contest to states whose interests and actions will continue to undermine American security and prosperity.

War by Other Means is structured around three main themes. In the first three chapters, Blackwill and Harris examine economic statecraft generally, defining “geoeconomics” as “the use of economic instruments to promote and defend national interests and to produce beneficial geopolitical results; and the effects of other nations’ economic actions on a country’s geopolitical goals.”[4]  The authors argue that rising powers now turn first to economic statecraft because it effectively buttresses their geopolitical objectives while mitigating the risk of armed conflict.  Unlike past eras, state-capitalist challengers to the prevailing liberal order have many more economic instruments at the ready. Due to the expansion of global markets and their structural transformations over time, economic factors now impinge substantially on states’ geopolitical choices. By way of example, the authors note that “the fate of the European Union—perhaps the West’s greatest foreign policy achievement of the twentieth century and the closest U.S. foreign policy partner—for several years rested at least as much in the hands of bond markets as in European political capitals.”[5]  In sum, the current international system entails new economic and financial challenges and opportunities, offering states many powerful geoeconomic assets to employ against targets large and small.

Among the most insightful sections in these early chapters is Blackwill and Harris’s in-depth examination of the geoeconomic instruments available to states, including: trade policy, investment policy, economic sanctions, cyber, foreign aid, monetary policy, and energy and commodity policies. Not content merely to catalog these policy tools, the authors offer a valuable discussion of the interrelations among them—noting where synergies can be found and where tensions may lie. Most important is the authors’ argument pertaining to the sources of geoeconomic effectiveness. Blackwill and Harris maintain that effectiveness is in part a function of four “geoeconomic endowments”: the ability to control outbound investments, the particular features of domestic markets, the influence over commodity and energy flows, and the centrality of the state in the global financial system. Beyond these structural attributes are the contextual features that must factor into a state’s decision making process: the number and types of geoeconomic targets, the goals sought, and the selection of the proper economic tools that can deliver those goals.

China’s geoeconomic approach to statecraft is the second general theme taken up by Blackwill and Harris. The PRC has demonstrated remarkable capacities to employ explicit and implicit economic coercion to orient weaker states’ foreign policies in ways that support Beijing’s geopolitical objectives, to hedge against the actions of other regional competitors (namely, India and Russia), and to mount a challenge to American preeminence in the global economy. Blackwill and Harris maintain that China’s approach is a soft strategy of economic domination through its investment, natural resource extraction, development, and monetary policies. Not only does this approach pose a direct challenge to the U.S., but the indirect economic and security threats are substantial. China has “… locked up significant quantities of global energy resources, grown the coffers of dictators unfriendly to the United States; lent new momentum to domestic proponents of China’s own military buildup, and arguably have increased the odds of resource-based conflict.”[6] All of this while staying out of other states’ wars.

Compounding these challenges to the U.S. are self-imposed constraints on America’s practice of geoeconomics, the subject of the book’s third theme. Despite their overall dissatisfaction with American geoeconomic performance, Blackwill and Harris’s account of America’s dismal track record can be read as cautiously optimistic. The U.S. is, after all, the largest of the world’s economies, centrally positioned in global markets, and of monumental importance, the beneficiary of technological and geological endowments that are spurring a revolution in its energy portfolio (their chapter “The Geoeconomics of North America’s Energy Revolution” is alone worth the book’s sticker price). Moreover, the United States has a rich history of successfully practicing geoeconomics. The purpose of the Marshall Plan, for example, was quintessentially geoeconomic. As George Kennan argued in 1947, American aid to the war-ravaged states in Western Europe should attempt to redress “the economic maladjustment which makes European Society vulnerable to exploitation by any and all totalitarian movements and which Russian communism is now exploiting.”[7] Despite this and many other examples from its past, Blackwill and Harris maintain that the American foreign policy establishment has long since forgotten that the U.S. was once an avid and successful practitioner of geoeconomics.

The authors point to two causes of this strategic amnesia: the presumption that military-security affairs constitutes the most important component of grand strategy, and the “…widely held world view that markets are somehow apolitical, to be kept free from geopolitical encroachments, and in any case not a proper arena for state power politics.”[8] These assumptions, Blackwill and Harris argue, were not held for most of America’s history (becoming prominent only at the time of the Vietnam War), are rejected by the states that are posing the most salient challenges to America’s position in the world, and undermine the United States’ ability to forge an effective grand strategy in response. To properly rebalance its grand strategy, the U.S. must redress a number of challenges: a bipartisan deficit in presidential leadership, the reflexive overuse of economic sanctions, and the transfer of bureaucratic authority of geoeconomic policymaking out of the State Department. Most importantly, the U.S. must cultivate the intellectual capacities within the foreign policy establishment necessary to reincorporate economics into grand strategy.

Robert D. Blackwill and Jennifer M. Harris discuss War by Other Means (Council on Foreign Relations)

Robert D. Blackwill and Jennifer M. Harris discuss War by Other Means (Council on Foreign Relations)

War by Other Means is a well-reasoned and important book that offers useful alternatives to stale nostrums that have long dominated American statecraft. Notwithstanding its strengths, the book’s analysis suffers at times by not engaging fully with the literature it challenges. For example, Blackwill and Harris contend that the economic dimension of statecraft has been largely buried by an overriding focus on military-security considerations since the 1960s. This view is not universally shared, however. According to both Christopher Layne and Andrew Bacevich, American foreign policy has long sought to keep “economic open doors” ajar, a policy objective requiring the conjoined use of military and economic resources to make states and regions amenable to American economic and geopolitical influence.[9] Economic open door logic was evident in America’s Cold War grand strategies and was later manifest in Washington’s response to the crises in the Balkans in the 1990s. Further, as Richard Haass points out, “The U.S. interest in the [Middle East] region’s oil is strategic, one of ensuring American and world access to adequate supplies, not tied in any way to gaining financial advantage.”[10] This strategic imperative informed the first Bush administration’s decision to wage war against Iraq in the Persian Gulf War in 1991. In sum, economic instruments and objectives are seen, in this line of reasoning, as mainstays of U.S. statecraft, working hand in glove with military power.

Further, Blackwill and Harris lament the removal of American economic instruments from its grand strategic toolbox. Not only has this contributed to the winnowing of the range of responses the U.S. can make in response to geopolitical challenges, but the widespread belief that economic logic is fundamentally apolitical has done real strategic damage. The authors are on solid ground in diagnosing the current problems confronting the U.S. Still, a case can be made that by giving markets a freer hand (liberal trade and financial policies), the American economy benefitted both absolutely and relatively vis-à-vis the Soviet Union in Cold War’s final years. In particular, liberal economic policies championed by the U.S. fostered globalized inter- and intra-firm alliances that enhanced the efficiency of supply chains, allowed for greater access to capital, distributed risk, and fostered innovation. The results were profound: a decrepit and uncompetitive Soviet economy forced the Kremlin into retrenchment and strategic reorientation toward the West. As Stephen Brooks and William Wohlforth pithily note, “globalization was not global: it took sides in the Cold War.”[11] Geoeconomics, as Blackwill and Harris understand it, was not explicitly practiced in this case.  But in light of the international economic determinants of Soviet behavior in the late 1980s, it is difficult to argue that a wiser approach was on offer.

However one may quibble with its historical analysis, War by Other Means is fundamentally a book about present challenges and future responses. According to the authors, American policymakers must come to terms with a stark reality, that the “rules-based system… is delivering less and less in the way of strategic returns as rising powers (often through geoeconomic attempts of their own) undercut it.”[12] Furthermore, the present order does little to enhance U.S. strategic interests because it is flimsy and disproportionately advantages a growing China.

G. John Ikenberry on illiberal alternatives to the present order: “…on a global scale, such a system would not advance the interests of any of the major states, including China.”

Yet to effectively make the case that an explicit and assertive brand of geoeconomic statecraft is necessary because the American-led liberal order is failing to deliver, that global architecture needed to be thoroughly analyzed and shown to be wanting. Specifically, Blackwill and Harris needed to tackle the arguments which understand the liberal international order to be both durable and powerful in its socializing effects on rising challengers. According to this view, the order fashioned by the United States and its allies in the aftermath of World War II is loosely rules-based, nondiscriminatory, and densely institutionalized. Within this order, rising powers can gain substantially—but in ways that powerfully shape their interests and limit their revisionist tendencies. In other words, because it has grown within the order, China can neither abandon it without substantial penalty nor induce others join an alternative Sino-centric order. As G. John Ikenberry notes, there is no illiberal alternative to the present order, “…on a global scale, such a system would not advance the interests of any of the major states, including China.”[13] While the terms of ownership of the order may need renegotiation, the underlying logic is stable and mutually beneficial.[14]

Furthermore, the existence of the liberal order adds to China’s current strategic dilemmas.  As Edward Luttwak posited, the PRC’s simultaneous pursuit of economic growth, military expansion, and international political influence, will ultimately be met with a forceful geoeconomic reaction.[15] Should Beijing’s case of “great state autism” not be mitigated over time, other states will find intolerable Beijing’s selectively coercive and discriminatory brand of economic statecraft, and the existing liberal order more attractive. The upshot is that China’s economic statecraft may prove successful, but only for a time. Far better for the U.S. to demonstrate to China’s geoeconomic targets that the prevailing order offers them more benefits and less costs over the long term. The point is not to say that Blackwill and Harris are wrong in their descriptions of how China is using geoeconomics to challenge the U.S. Rather, that there are good reasons to believe that China is hemmed in by broad normative, institutional, and strategic features. In short, a more thorough analysis of the strengths and weaknesses of the prevailing liberal order would have benefited the authors’ arguments in a number of ways.

Spencer Bakich is an Associate Professor of Political Science at the Virginia Military Institute and the author of Success and Failure in Limited War: Information and Strategy in the Korean, Vietnam, Persian Gulf, and Iraq Wars.

NOTES:

[1] For a sampling of the debate, see contributors to “Obama’s World,” Foreign Affairs, vol. 94, no. 5 (September/October 2015), 2-78; contributors to “Obama’s World: Judging His Foreign Policy Record,” H-Diplo/ISSF Forum, no. 14 (2016); Barry R. Posen, Restraint: A New Foundation for U.S. Grand Strategy (Ithaca: Cornell University Press, 2014; and Colin Dueck, The Obama Doctrine: American Grand Strategy Today (New York: Oxford University Press, 2015).

[2] Richard K. Betts, American Force: Dangers, Delusions, and Dilemmas in National Security (New York: Columbia University Press, 2013).; Robert M. Gates, Duty: Memoirs of a Secretary at War (New York: Knopf, 2014); and Vali Nasr, The Dispensable Nation: American Foreign Policy in Retreat(New York: Doubleday, 2013).

[3] Martin Indyk, “The End of the U.S.-Dominated Order in the Middle East,” The Atlantic(March 13, 2016).

[4] Robert D. Blackwill and Jennifer M. Harris, War by Other Means: Geoeconomics and Statecraft(Cambridge: Harvard University Press, 2016), 9.

[5] Ibid., 37-38.

[6] Ibid., 151.

[7] Ibid., 163.

[8] Ibid, 153.

[9] Christopher Layne, The Peace of Illusions: American Grand Strategy from 1940 to the Present(Ithaca: Cornell University Press, 2006); Andrew J. Bacevich, American Empire: The Realities and Consequences of U.S. Diplomacy (Cambridge: Harvard University Press, 2002).

[10] Richard N. Haass, War of Necessity, War of Choice: A Memoir of Two Iraq Wars (New York: Simon and Schuster, 2009), 75.

[11] Stephen G. Brooks and William C. Wohlforth, “Power, Globalization, and the End of the Cold War: Reevaluating a Landmark Case for Ideas,” International Security, vol. 25, no. 3 (Winter, 2000-2001), pp. 5-53.

[12] Blackwill and Harris, 186.

[13] G. John Ikenberry, “The Future of the Liberal World Order: Internationalism After America,”Foreign Affairs, vol. 90, no. 3 (May/June 2011).

[14] G. John Ikenberry, Liberal Leviathan: The Origins, Crisis, and Transformation of the American World Order (Princeton: Princeton University Press, 2011).

[15] Edward N. Luttwak, The Rise of China vs. The Logic of Strategy (Cambridge: Harvard University Press, 2012).

One thought on “Book Review: War by Other Means: Geoeconomics and Statecraft.

  1. Dr Bakich used the word ‘liberal’ too ‘liberally’ again. If the term means China has too much politics in its’ economic interest, it is scary to think Dr Bakich who is teaching in a military school would one day get involved in the economy, just like his counterparts in China, all in the name of national security. It is sad that Dr Bakich who is supposed to have US’s security interest in his profession falls into the same trap of his counterpart of endangering the nation into blanket statement of XYZ is an enemy.

    Premier Xi’s administration is definitely no push-over friend of US’s interest. But that doesn’t necessarily mean it is in US’s interest to name all of China as his enemy, just like it is not prudent to suggest Saudi/Iraq/Iran as his enemy.

    US is winning the soft-power race in influencing the world. Sure hope, US (my new adopted country) would not loose it so unnecessarily for a phoney Emperor Xi. I pray US would not implode before China does.

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