Lecture 1: Overview and Instruments
( The economic instruments are in the readings below!)
Working definitions
→ Geo-economics is War and commerce are but two different means of arriving at the same aim, which is to
possess what is desired
→ The use of economic instruments to promote and defend national interests and produce beneficial geopolitical
results. And the effects of other nations’ economic actions on a country’s geopolitical goals.
● Both a method of analysis and a form of statecraft
Geoeconomics is different from geopolitics
● Both terms are invoked loosely
● Geopolitics is a set of assumption how a state exercises power over territory
● Geopolitics is zero-sum game as power is inherently limited
● Economics or wealth is a positive-sum game, everyone can be a winner
● State department/ ministries of foreign affairs are only able to integrate foreign policy and economic
strategy IF there is an in-depth knowledge available of macro-economics, private sector developments
and capital markets
Effective geo-economic initiatives examples
● World Bank and IMF, Bretton Woods Conference, 1944
● Marshall plan, European Recovery plan, 1948
● Suez crisis, 1956
● GSM, 1987
○ Global System for Mobile Communications by the EU Telecommunications Standards Institute
○ Improved intercontinental communication
○ Made that Europe had to lead in this arena because of their economic advantage
● Establishment of the EBRD, 1991
○ European Bank for Reconstruction and Development
○ Instated after the fall of the Iron Curtain
● Introduction of the euro, 1999
○ Strengthened the position of Europe, and kept EU together during the financial crises
● Nord Stream 1, and 2
● Belt and Road Initiative, 2013
● Next Generation EU, 2020
○ EU needs a coordinated central initiative to stabilize the impact of covid
○ Strengthened the center of Europe, the first time that strings were attached to programs. The
rule of law needed to be strong and economic reforms were necessary
Suez crisis - 1956
The Suex crisis began on October 2, 1956, when Israeli armed forces pushed into Egypt toward the Suez Canal
after Egyptian president Gamal Abdel Nasser nationalized the canal, a valuable waterway that controlled
two-thirds of the oil used by Europe. The Israelis were soon joined by French and British forces, which nearly
brought the SU into the conflict and damaged their relationships with the US. In the end, Egypt emerged
victorious, and the British, French, and Israeli governments withdrew their troops in late 1956.
Eisenhower one week before its election. He only used economic instruments
Unless we are careful, the Muslim solidarity could array the world from Dakar to the Philippines against us. So he
used sanctions to make sure that he could stop the Israeli attack. By this use of economic instruments,
Eisenhower could stop the war.
Economics shaping geopolitical outcomes - B&H
● The Rise of China was one of the most profound geopolitical effects since WWII
● The Belt and Road Initiative is one of the most profound and strategic geo-economic initiatives
● Despite ample attention to historical, tropical, and country-specific issues, there has been far less in the
way of conceptual thinking about economic and financial tools of statecraft p.22)
● Can we come up with general studies of international economic relations, with the political analysis
predominating over the economic analysis?
● 2014 Ukraine crisis fed pumping fewer dollars in the markets
, ● Trade and multilateralism research tends to avoid political analyses
● 2008 financial crisis: was there a geopolitical agenda in the different economic policies responses
● Covid-19: is there a geopolitical agenda in the different responses, economically and vaccines
● Energy transition and geo-economics
Geo-economics: the what vs. the how
To focus on the use of economic instruments to advance geopolitical ends is to say nothing about the nature of
the ends themselves. Whether the ends of foreign policy are also changing, stands as a separate question.
● States can and often do design geo-economic policies that simultaneously advance multiple interests.
○ What in the geo-economic toolbox
○ How and when to use these tools
○ What do we want to build
Geo-economics: not one size fits all
→ Geo-economics attempts at power projection can take many forms (B&H)
Just as not all states are created equal in their capacity to project geopolitical power, certain structural features
dictate how effective a country is likely to be in the use of geo-economic tools:
● No consensus as to the range of geo-economic tools that presently exist, or to the set of factors that
make states to wield the effectively
● Are non-democratic states better suited? Double standards?
● With no conceptual blueprint, the policymakers prefer to analyze geopolitical terms instead of
geo-economic terms.
Geo-economics: distinct from economic theory
→ Geo-economics is distinct from foreign economic policy, mercantilism, and liberal economic thought
● Mercantilists emphasize heavy state intervention in economic life
● Liberal economists emphasize limited state involvement in private markets
○ Both can be concerned with state interests but differ in tactics
● For early liberal policy makers today, free trade is the surest route to achieving both economic welfare
and national security
● The real divide between mercantilism and liberalism concern how best to pursue geo-economics
● To be an effective geo-economics and an effective geopolitician, one needs to understand economics
● Economists are often reluctant to use their toolbox for geopolitics
Chapter 3: Blackwill and Harris
Seven economic tools with geopolitical applications:
1. Trade policy
2. Investment policy
3. Economic and Financial sanctions
4. Cyber
5. Aid
6. Financial and monetary policy
7. Energy and commodities
This overview:
Negative example: tied aids do provide help, but are
not the best way to help the country because of the
ties attached to it. So, because of it not being the best
option it is in the negative category.
,Week 1: Readings
From geopolitics to geo-economics: logic of conflict, the grammar of commerce
The text discusses the transition from geopolitics to geo-economics and the diminishing role of military power in
international affairs.
→ The author argues that economic entities, such as labor sellers, entrepreneurs, and corporations, are
becoming more influential than military power.
● The waning of the Cold War is identified as a key factor in reducing the importance of military power.
● Geo-economics according to the article: economic interactions and competition between nations play a
central role.
● The logic of conflict is shifting from military to economic dimensions.
● Emphasizes the increasing significance of commerce, economic competition, and global
interdependence in shaping world affairs.
Key Terms:
● Geo-economics: The use of economic instruments and relationships as instruments of power to achieve
political objectives.
● Logic of Conflict: The author refers to the adversarial, zero-sum, and paradoxical nature of conflict
where actions unfold in the presence of an adversary.
● World Politics: The traditional geopolitical interactions among nations, are now contrasted with the
emerging concept of geo-economics.
● Military Power: The capacity of a nation to use its military forces to achieve strategic objectives.
● Commerce: The exchange of goods and services, especially on a large scale involving different
countries or societies.
The Symphony of Power
(1) Military
The article traces the historical evolution of the United States' approach to military power. It highlights the shift
from an initially weak military power, focusing on economic and ideological influence, to a period of significant
military engagement during the Civil War, Spanish-American War, and both world wars. The post-World War II
era saw a reliance on nonmilitary means, such as nuclear deterrence, containment strategies, and international
alliances, to counter Soviet communism. The limitations of all-out wars became evident during the Korean and
Vietnam conflicts, and subsequent engagements in Afghanistan and Iraq faced challenges due to politically
imposed constraints and unrealistic nation-building goals. The article underscores the importance of aligning
military forces with future challenges and emphasizes the need for communication between leaders.
→ Despite the wishes of many, military power remains the most formidable asset available for a larger state to
impose its will on a smaller one. Two lessons can be learned from the past:
1. Since we rarely know where and when we will next use military force, our military must be trained across
the broadest possible spectrum of conflict
2. Close the gap between civilian and military leaders
Key terms:
● Bretton Woods: A conference in 1944 that established the International Monetary Fund (IMF) and the
World Bank to promote global economic stability.
● Containment: A Cold War strategy to prevent the spread of communism by containing its influence,
primarily associated with the United States' policy toward the Soviet Union.
● Article V of the NATO charter: NATO's collective defense clause, stating that an attack on one member
is an attack on all members, triggering a collective response.
● String of Pearls: Refers to China's strategy of establishing a network of military and commercial facilities
in the Indian Ocean region to secure maritime routes.
(2) Diplomacy
Emphasizes the importance of diplomacy and economic power as essential instruments of national power,
alongside military strength. It argues that diplomacy plays a crucial role in preventing and resolving conflicts,
establishing alliances, and addressing various global challenges. Despite being consistently underfunded,
diplomacy is deemed essential for the effective use of other instruments of power. The overall message suggests
a need for the U.S. to recognize and strategically leverage its economic power in the context of global dynamics.
→ Diplomats are key operators of the geopolitical toolbox (like plumbers). They prevent and end wars, help new
foreign leaders, and manage alliances via trade agreements and sanctions.
, Key aspects:
● Diplomacy: The practice of conducting negotiations and maintaining relationships between nations to
promote international cooperation and resolve conflicts.
● Economic Power: The ability of a state to leverage its economic resources and measures for geopolitical
and geostrategic purposes. Economic power is positioned as the second most influential tool after
military power.
● Economic Sanctions: There is a mixed effectiveness of economic sanctions. Between broad restrictions
and targeted measures.
● Use of Economic Power: The article discusses the historical use of American economic power for
political purposes, including the creation of international institutions like the IMF and World Bank. It
notes a shift in U.S. policy, viewing economic power more as a punitive tool rather than a means to
promote geopolitical interests.
● China's Belt and Road Initiative: A major Chinese development program focused on infrastructure
projects in multiple countries, aiming to enhance economic and geopolitical influence. The article
questions whether the U.S. can regain its strategic advantage in the economic arena, especially in
competition with authoritarian state capitalism.
(3) Economic leverage
The article underscores the significance of economic power as a key instrument for achieving a state's goals,
ranking second only to military power. It traces historical instances of measures taken to weaken the domestic
economy of adversaries, citing the extensive economic pressure applied by the United States against the Soviet
Union during the Cold War. The article discusses China's strategic acquisition of technologies and equipment,
surpassing the USSR in its predatory approach. It examines the effectiveness of economic sanctions, highlighting
their mixed record and their varying impact on ordinary people versus regime elites. The piece also delves into
positive economic policies, such as international economic cooperation and free trade, that strengthened
America's influence and encouraged the success of allied governments.
→ it has both a negative and a positive side.
Negative: various measures have been employed to apply pressure on an adversary. Overall, the record of
economic sanctions is mixed, too often a political gesture, They mainly fall on ordinary people.
Positive: Bretton Woods, Marshall Plan, Loans, Trade Agreements.
Key terms:
● Marshall Plan: Post-World War II initiative (1947) aimed at economically aiding Europe to prevent
communist influence.
● Geo-Economic Power: The use of economic instruments to promote and defend national interests and
achieve political goals.
● Trans-Pacific Partnership (TPP): A trade agreement aimed at economic integration in the Asia-Pacific
region, abandoned by the U.S. in 2017.
● Authoritarian State Capitalism: Economic system where the state has significant control over industries
and businesses, often associated with authoritarian political systems.
(4) Cyber capabilities
The article discusses various instruments of national power, including diplomacy, economic leverage, cyber
capabilities, and development assistance. It emphasizes the significance of each instrument in achieving national
objectives and highlights the changing landscape of power dynamics. The article underscores the importance of
strategic communication in promoting the positive impact of humanitarian assistance and disaster relief efforts
conducted by the United States.
→ Cyber warfare is the most powerful weapon to destabilize or paralyze an opponent. Soldiers can be
recognized, but cyber-attacks are more likely to be used because the origin is more difficult to prove.
Key Terms:
● Economic Leverage: The use of economic power to achieve national goals, including sanctions, trade
restrictions, and financial measures.
● Cyber Warfare: The use of cyber capabilities to attack or defend against other nations, involving actions
such as hacking, information warfare, and infrastructure disruption.
● Development Assistance: The provision of aid and support to developing countries to promote economic
growth, stability, and humanitarian relief.
