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2. Immaterial Competition: Rethinking the Roles of Economics and Technology in the US-China Rivalry
- Author:
- Arthur Tellis
- Publication Date:
- 05-2022
- Content Type:
- Special Report
- Institution:
- Hudson Institute
- Abstract:
- The US-China rivalry is likely to be the fulcrum around which international affairs are structured in the twenty-first century, akin to the Cold War from 1947 to 1991. This rivalry, like its predecessor, emerges from divergent geopolitical interests and imperatives. While the Chinese Communist Party’s aims are many, various, and subject to change, they include its continued control of the Chinese State; economic and technological modernization and leadership; internal order; complete union with Taiwan on Beijing’s terms; certain territorial concessions from its neighbors; and the disestablishment of security arrangements across the Indo-Pacific that it views as threatening and trammeling. The latter three are in direct conflict with US interests and imperatives in the Indo-Pacific: prohibiting China’s unilateral modification of the status quo vis-à-vis Taiwan; preserving the sovereignty and territorial integrity of its allies and partners; and maintaining its military partnerships and presence in the region. These antithetical interests animate a larger struggle for hegemony in the Indo-Pacific and serve as the terms on which this contest will be decided. Explanations of the rivalry as an ideological contest or a competition born from competing economic interests are less compelling by comparison. The United States and China are motivated to an extent by ideological imperatives, but these do not appear to propel or serve as the central stakes for the rivalry as much as they affect each’s disposition toward the other. Long-standing trade, investment, and commercial disputes and competition, meanwhile, are not so substantial that they motivate the rivalry. While these issues are impactful to niche communities and conspicuous to national policymakers, they are not particularly consequential for national prosperity. The logic of competition, trade, and globalization, in fact, suggests that the US-China commercial relationship is mutually beneficial, notwithstanding each’s concerns with the other’s economic statecraft and market-leading firms. In their geopolitical rivalry, there are a few key forces or contests of interest: path dependence, regime continuity, prudent strategy, third-party alignments, and the balance of military forces in the Indo-Pacific. Each affects the United States’ and China’s ability to achieve their ends and shapes their rivalry. Economic and technological statecraft, by contrast, is largely peripheral to these ends as it does not effectively advance political objectives relevant to territory, borders, security architectures, and national defense. That is not to suggest that economic and technological factors are irrelevant, however; they shape, constrain, and advantage the United States and China across their rivalry’s key forces and contests of interests. Particularly noteworthy are economic and technological factors’ impact on the military balance. Tradition and intuition hold that nations with bigger and more advanced economies are better postured to resource, procure, and manufacture military equipment and can therefore generate greater military power. In the case of the US-China military competition, however, total military power is less relevant than the specific military balance in the Indo-Pacific, in which the distribution and strength of forces in the theater, the capability and reliability of key materiel inputs of outsized importance, and the operational concepts and tactics with which each’s military fights are more important. Total military power—and in particular greater military equipment—matters on the margin, of course, if only because the party with the greater mass and quality of materiel will be able to retain more forces in the Indo-Pacific, maintain more of these key materiel inputs, and develop novel operational concepts and tactics tailored to their superior materiel. Neither the United States’ nor China’s total economic production, public balance sheet, high-technology commercial firms, and scientific production are likely to provide a decisive or lasting advantage on this count. Each country’s economy can support substantially greater military spending, limiting the extent to which one can derive an advantage from the other’s more binding constraints. The capacity and maturity of each country’s defense industrial base is of greater relevance, but these are flexible quotients that investment can improve. This elasticity of defense production suggests that microeconomic endowments may be binding in the short run but variable in the longer run, meaning that policy choices—rather than existing economic endowments—constrain military production. Technological endowments, informing each country’s capacity for broad innovation, are of similarly bounded importance because military technology is somewhat narrow and other factors, such as military procurement processes and inflexibility in concepts of operation, limit the extent to which superior technology translates into military advantage. The fundamental result of this argument is that the concerns that propel the emerging US-China economic and technological competition are ultimately not all that relevant to the matters at the core to their rivalry and to the instruments of national power most relevant to these issues. The US should therefore be wary of policies ostensibly demanded by economic and technological competition and may find its interests better served by limiting its rivalry with China to military competition driven by its core geopolitical interests.
- Topic:
- Economics, Science and Technology, Strategic Competition, and Rivalry
- Political Geography:
- China, Asia, North America, and United States of America
3. Understanding and Countering China's Approach to Economic Decoupling from the United States
- Author:
- John Lee
- Publication Date:
- 08-2022
- Content Type:
- Special Report
- Institution:
- Hudson Institute
- Abstract:
- Many experts have highlighted American efforts to partially decouple from China. Yet China began pursuing a far more ambitious and comprehensive decoupling strategy vis-à-vis the United States long before Donald Trump entered the White House. This monograph examines China’s evolving approach to economic decoupling from the US. It makes the following arguments and conclusions. First, on the back of a preexisting mercantilist political economic structure, China has been explicitly pursuing economic decoupling from US and allied economies on Chinese terms for at least a decade. Second, while the US seeks to decouple some aspects of its economic activity from China, the latter seeks to dominate vast segments of the Asian economy and to decouple these segments from the US. This is the Chinese strategy and threat that the US vastly underappreciates. Third, the most important segments are the high-tech and high-value sectors. These sectors are where competition is the most consequential and where decoupling on US terms needs to occur. Fourth, China faces increasingly serious problems and obstacles regarding its decoupling strategy. Many of these arise out of structural weaknesses inherent in its political economy. The monograph is written to assist the Biden administration and those who follow it to possess a deeper understanding of: China’s actions and the motives behind them; China’s strengths, weaknesses, and vulnerabilities; and How the US and its allies can craft an evolving approach that better plays to their individual and collective strengths and advantages. China hopes the US and its allies will adopt a cautious, gradualist, and ineffective approach to countering Beijing’s strategy and objectives. The Chinese Communist Party knows the US and other advanced economies still have immense advantages despite clever Chinese messaging to the contrary. The US and its allies continue to enjoy considerable leverage and remain well placed to partially decouple from China on their preferred terms, but they need to act quickly, collectively, and decisively.
- Topic:
- International Relations, Foreign Policy, Defense Policy, Economics, and National Security
- Political Geography:
- China, Asia, North America, and United States of America
4. State Right-to-Repair Laws Need to Respect Federal Copyright Laws: A Constitutional, Legal, and Policy Assessment
- Author:
- Devlin Hartline and Adam Mossoff
- Publication Date:
- 08-2022
- Content Type:
- Special Report
- Institution:
- Hudson Institute
- Abstract:
- Various states are considering laws that would mandate that producers of electronic devices provide consumers and repair shops with all the tools and know-how necessary to repair these devices. Proponents of these “right-to-repair laws” argue that consumers should be able to do whatever they want with their devices, whether a smartphone, a smart TV, or a gaming console. Right-to-repair advocates, however, ignore inconvenient facts. These state laws conflict with federal copyright law and are unconstitutional, and they are bad policy as well. First, as a simple legal matter, the proposed right-to-repair laws are unconstitutional. These laws mandate the disclosure and distribution of the code in the computer programs that make our devices work, such as operating systems, apps, and the “digital locks” that protect these computer programs from unauthorized access and copying. Federal copyright law protects all these computer programs and “preempts” any conflicting state laws under the Constitution. Second, state right-to-repair laws are wrong as a matter of policy. These laws upset the long-standing balance of rights implemented by federal copyright law. For over 200 years, Congress has enacted copyright laws to secure to authors and innovators the fruits of their creative labors. These laws have properly balanced the rights of creators, the rights of companies that produce and distribute their copyrighted works, and the rights of consumers and the public. As a result, federal copyright law has been a launching pad for the economic and cultural revolutions in books, movies, music, and now digital games and the internet of things. Everyone values their electronic devices because copyright law provides the legal foundation for today’s thriving digital marketplace. Consumers have access to an incredible selection of movies, music, games, and many other previously unimagined digital goods and services. The same is true for products that consumers have long used and that have become “smart” today, such as phones, TVs, automobiles, and other devices. Overbroad right-to-repair laws fail to acknowledge the legal rights and the underlying policies in federal copyright law that have made all this possible.
- Topic:
- Economics, Science and Technology, Intellectual Property/Copyright, and Innovation
- Political Geography:
- North America and United States of America
5. A Rotten Money Regime is Responsible for Pandemic and War Inflation
- Author:
- Brendan Brown
- Publication Date:
- 10-2022
- Content Type:
- Special Report
- Institution:
- Hudson Institute
- Abstract:
- Who is responsible for the Great Pandemic and War Inflation of 2021–22? Is it Federal Reserve Chair Jay Powell, former President Donald Trump, President Joe Biden, or President Vladimir Putin? The answer is that the buck stops at a rotten monetary regime—the so-called “2-percent-inflation standard.” Trying to blame particular individuals may help those who gain from the present monetary status quo. Yet blaming them absolves the monetary regime, which is trampling upon the green shoots whose growth is essential for the renaissance of competitive free-market capitalism. If the United States had a good money regime when first the pandemic and then the Russian war struck the economy, the great monetary inflation that these shocks spawned would not have occurred. The current money regime might well have done better with more capable leadership and good luck—but the regime’s deep flaws prevented the possibility of an overall good outcome. Furthermore, even if the pandemic and war had not struck, the bad money regime was producing bad outcomes—including economic sclerosis with sluggish growth rates for productivity and living standards while advancing monopoly capitalism. These outcomes could well have gotten a lot worse.. This policy memo focuses on the shocks of the pandemic and war rather than what could have happened without them. However, it does venture into the counterfactual of how a good money regime would have responded to those shocks, while helping demonstrate what has gone wrong. Demonstrating the links between the rottenness of the monetary system and the high inflation during the pandemic and Russian war requires sharing with the reader a preview of the differences between good and bad money regimes. A broader analysis of these should follow in subsequent policy memos
- Topic:
- Economics, Inflation, Fiscal Policy, and COVID-19
- Political Geography:
- North America and United States of America
6. US Needs to Play Larger Role as Swing Producer of Oil and Gas in the Current Crisis
- Author:
- Thomas J. Duesterberg
- Publication Date:
- 11-2022
- Content Type:
- Special Report
- Institution:
- Hudson Institute
- Abstract:
- In response to Russian aggression in Ukraine, European nations have drastically reduced imports of crude oil, refined petroleum products, and natural gas from Russia. The 2021 levels of these energy imports were around 2.2 million barrels per day (mbd) of crude oil, 1.2 mbd of refined products, and 155 billion cubic meters (bcm) of natural gas on an annual basis.In addition to extreme difficulties in obtaining new sources of natural gas and to a lesser extent oil, the price increases throughout Europe since the onset of the war have been of historic proportions. In the days following the invasion, natural gas prices shot up by 62 percent, and UK energy prices were up by 150 percent. The full impact of the war, along with the related need to rein in the highest inflation numbers in over 40 years, has pushed Europe into a recession that threatens households and small businesses as well as European manufacturers’ ability to remain competitive. As a result, if the region cannot quickly assemble alternative supplies, the European commitment to assist in containing Russian aggression may weaken.
- Topic:
- Economics, Oil, Gas, Crisis Management, Supply Chains, Energy, and Russia-Ukraine War
- Political Geography:
- Europe, North America, and United States of America
7. US Reengagement with Pakistan: Ideas for Reviving an Important Relationship
- Author:
- Husain Haqqani
- Publication Date:
- 11-2022
- Content Type:
- Special Report
- Institution:
- Hudson Institute
- Abstract:
- The US-Pakistan relationship has gone through many changes. The relationship had a high point when President Dwight Eisenhower described Pakistan as the ‘‘most allied ally of the United States,” and another high point occurred when President Ronald Reagan said that “the American people support close ties with Pakistan and look forward to expanding them.” The relationship has also had low points, such as when in January 2018 President Donald Trump said, “The United States has foolishly given Pakistan more than $33 billion in aid over the last 15 years, and they have given us nothing but lies and deceit, thinking of our leaders as fools. They give safe haven to the terrorists we hunt in Afghanistan, with little help. No more!” US administrations going back to President Eisenhower have pinned great hopes on their alliance with Pakistan only to be disappointed and frustrated. For policymakers in both countries, some of the most important recent issues have been Pakistan’s poorly veiled support for the Taliban insurgency in Afghanistan, its backing for jihadi groups targeting Kashmir, its close embrace of China, and its expanding nuclear arsenal. Successive American administrations have assumed that with the right kind of incentives—economic and military—Pakistan would finally change how its policy diverges from US interests. However, neither the award of military and civilian aid nor the cutoff of aid has been able to change Pakistan’s existing national security paradigm and the policies framed by its security establishment. Pakistan, for its part, has been upset as it believes it has offered a fair exchange to the US for its aid by abetting US strategic plans: containment of communism in the 1950s and 1960s, military assistance against the Soviets in Afghanistan in the 1980s, and post-2001 logistical and political support for the American military mission. Pakistan complains that Washington does not respect its contribution or fully appreciate its security threats, regional concerns, and aspirations.
- Topic:
- Foreign Policy, Economics, Bilateral Relations, and Strategic Engagement
- Political Geography:
- Pakistan, South Asia, North America, and United States of America
8. Estados Unidos y África. Historia de una no-política
- Author:
- Pablo Rey-García and Pedro Rivas Nieto
- Publication Date:
- 10-2022
- Content Type:
- Journal Article
- Journal:
- Revista UNISCI/UNISCI Journal
- Institution:
- Unidad de investigación sobre seguridad y cooperación (UNISCI)
- Abstract:
- En este artículo se estudian las relaciones entre Estados Unidos y África, desde los puntos de vista económico, político y de seguridad. Son, estos tres campos, interdependientes, pero a la vez enormemente dinámicos, tanto por la inercia política estadounidense, como por los condicionantes propios de África (déficit en desarrollo, pobreza, inseguridad o inestabilidad política) como por el contexto internacional. En este último aspecto, cobra especial relevancia la invasión rusa de Ucrania o la emergencia de la ambición militar China, pues ambos países compiten con Estados Unidos por tener una mejor posición en el continente africano.
- Topic:
- International Relations, Development, Economics, National Security, and Terrorism
- Political Geography:
- Africa, Russia, China, Asia, North America, Sahel, United States of America, and Horn of Africa
9. Economic Equidistance is Not an Option: Germany and the US-Chinese Geo-Economic Conflict
- Author:
- Markus Jaeger
- Publication Date:
- 01-2022
- Content Type:
- Policy Brief
- Institution:
- German Council on Foreign Relations (DGAP)
- Abstract:
- Intensifying US-Chinese rivalry will increase pressure on Germany to support a more hawkish US geo-economic policy. The new German government should give Washington support in as far as US policies seek to create an economic level playing field vis-à-vis China. Given its dependence on international trade and investment, Germany should seek to resist a broader politicization of international economic relations.
- Topic:
- Economics, International Trade and Finance, Geopolitics, and Rivalry
- Political Geography:
- China, Germany, and United States of America
10. Promoting the Euro – Countering Secondary Sanctions: Germany Should Push to Complete Monetary Union
- Author:
- Markus Jaeger
- Publication Date:
- 02-2022
- Content Type:
- Policy Brief
- Institution:
- German Council on Foreign Relations (DGAP)
- Abstract:
- US-Chinese rivalry will increasingly play out in the geo-economic realm. The use of secondary sanctions – especially secondary dollar sanctions – negatively affects German economic interests. The new German government should therefore intensify efforts to promote the euro as an international currency coequal to the dollar in addition to lending its qualified support to EU anti-coercion policies.
- Topic:
- Economics, Sanctions, European Union, Rivalry, and Geoeconomics
- Political Geography:
- China, Asia, and United States of America
11. US Southeast Asia Policy: Towards A Balance of Commitment Approach
- Author:
- Prashanth Parameswaran
- Publication Date:
- 03-2022
- Content Type:
- Special Report
- Institution:
- East-West Center
- Abstract:
- Dr. Prashanth Parameswaran, a Fellow at the Woodrow Wilson International Center for Scholars and a Senior Columnist at The Diplomat Magazine, explains that "A balance of commitment approach in U.S. Southeast Asia policy can help policymakers be attentive to both the interrelationships between power, threats and resources shaping decisions in the U.S. domestic political system and the careful calibration of components in commitment level and distribution in the Southeast Asia required to sustain an expanded, balanced approach that serves U.S. interests and meets regional needs."
- Topic:
- Security, Foreign Policy, Economics, Domestic Politics, and Strategic Interests
- Political Geography:
- North America, Southeast Asia, and United States of America
12. 75 Years of Philippines-US Relations: From Strategic Partnership to Multifaceted Relationship
- Author:
- Maria Elissa J. Lao and Severo Madrona Jr.
- Publication Date:
- 06-2022
- Content Type:
- Special Report
- Institution:
- East-West Center
- Abstract:
- Maria Elissa J. Lao, Assistant Professor, Department of Political Science, Ateneo de Manila University, and Severo Madrona Jr., Lecturer, Department of History, Ateneo de Manila University, explain how US-Philippine Relations evolved "from a strategic military and economic partnership into a multifaceted relationship encompassing cultural, social, and governance cooperation."
- Topic:
- Economics, Bilateral Relations, Partnerships, Strategic Interests, and Military
- Political Geography:
- Philippines, North America, Asia-Pacific, and United States of America
13. Philippine-United States Trade Relations: Looking Back and a Way Forward
- Author:
- Marissa Maricosa A. Paderon
- Publication Date:
- 06-2022
- Content Type:
- Special Report
- Institution:
- East-West Center
- Abstract:
- Dr. Marissa Maricosa A. Paderon, Associate Professor of the Department of Economics at the Ateneo de Manila University and current Commissioner at the Philippine Tariff Commission, explains how the two nations have forged relationships across many sectors of trade, especially electronics and agriculture, and discusses the importance of the Trade and Investment Framework Agreement (TIFA) and US Generalized System of Preferences (GSP) in Philippine-US economic relations.
- Topic:
- International Relations, Agriculture, Economics, and Trade
- Political Geography:
- Philippines, North America, Asia-Pacific, and United States of America
14. No Time to Lose: Renew the Compacts of Free Association
- Author:
- Emil Friberg
- Publication Date:
- 06-2022
- Content Type:
- Special Report
- Institution:
- East-West Center
- Abstract:
- Emil Friberg, PhD., Adjunct Professor at Georgetown University, former Assistant Director/Senior Economist at US GAO, explains that "[a]nnual US Compact assistance is a strategic bilateral connection at a time of mounting security concerns."
- Topic:
- Security, Economics, Bilateral Relations, and Foreign Assistance
- Political Geography:
- North America, Asia-Pacific, United States of America, and Micronesia
15. Strategic Competition in the Financial Gray Zone
- Author:
- Heather A Conley, James Andrew Lewis, Eugenia Lostri, and Donatienne Ruy
- Publication Date:
- 04-2022
- Content Type:
- Special Report
- Institution:
- Center for Strategic and International Studies
- Abstract:
- Over the past 10 years, the U.S. government has slowly reoriented its foreign and security policy from the fight against global terrorism toward strategic competition with Russia and China. This reorientation has been accompanied by a new examination of how strategic competition will impact the integrity and future stability of the U.S. economy and financial system. One of the most important elements of strategic competition is sub-threshold warfare (also called asymmetric, hybrid, or gray zone warfare), wherein strategic competitors seek to shape the geostrategic environment in their favor, from information operations to economic warfare—which includes such tools as illicit finance and strategic corruption. Strategic competitors present a clear economic and financial threat to the United States when they operate in the emerging financial gray zone, in which malign actors can take advantage of the U.S. financial system to further their aims and disarm the country internally. The U.S. government, along with its allies, has only begun to acknowledge the sweeping nature of the financial gray zone and to reposition itself to compete within it. Because adversaries exploit the seams between the internal and external policies and authorities, Washington must have greater insights into a complex operating system and better integrate data across the many relevant agencies—in a way, connecting the financial dots. As it develops this comprehensive picture, the U.S. government should develop stronger defensive and offensive policy tools to counter this emerging threat.
- Topic:
- Economics, Finance, Strategic Competition, and Rivalry
- Political Geography:
- China, Asia, North America, and United States of America
16. Regional Perspectives on the Indo-Pacific Economic Framework
- Author:
- Matthew Goodman and Aidan Arasasingham
- Publication Date:
- 04-2022
- Content Type:
- Policy Brief
- Institution:
- Center for Strategic and International Studies
- Abstract:
- The proposed Indo-Pacific Economic Framework (IPEF) is the Biden administration’s answer to questions about the United States’ economic commitment to the vital Indo-Pacific region. For this initiative to succeed, it must address concerns among regional partners about the framework’s form, function, benefits, inclusivity, and durability. Based on conversations with representatives from over a dozen regional governments, this brief summarizes Indo-Pacific perspectives on the IPEF.
- Topic:
- Economics, International Trade and Finance, Regional Cooperation, and Regionalism
- Political Geography:
- North America, United States of America, and Indo-Pacific
17. Trump ended WTO dispute settlement. Trade remedies are needed to fix it.
- Author:
- Chad P. Bown
- Publication Date:
- 01-2022
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- Unhappy with the rulings of the WTO dispute settlement system, which disproportionately targeted US use of trade remedies, the United States ended the entire system in 2019. There are multiple hurdles to agreeing to new terms of trade remedy use and thus potentially restoring some form of binding dispute settlement. First, a change would affect access to policy flexibility by the now large number of users of trade remedies. Second, although China’s exports are the overwhelming target of trade remedies, exporters in other countries increasingly find themselves caught up in trade remedy actions linked to China. Third, critical differences posed by China’s economic model may call for new rules for trade remedies, but no consensus on those rules has emerged. Even some of the most promising reforms have practical limitations, create additional challenges, or may be politically unviable.
- Topic:
- Economics, Trade, Donald Trump, and WTO
- Political Geography:
- China and United States of America
18. Public responses to foreign protectionism: Evidence from the US-China trade war
- Author:
- David Steinberg and Yeling Tan
- Publication Date:
- 06-2022
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- America's recent turn toward protectionism has raised concerns about the future viability of the liberal international trading system. This study examines how and why public attitudes toward international trade change when one's country is targeted by protectionist measures from abroad. To address this question, the authors fielded three original survey experiments in the country most affected by US protectionism: China. First, they find consistent evidence that US protectionism reduces Chinese citizens' support for trade. This finding is replicated in parallel experiments on technology cooperation, and further validated outside of the China context with a survey experiment in Argentina. Second, they show that responses to US protectionism reflect both a "direct reciprocity" logic—citizens want to retaliate against the United States specifically—and a "generalized reciprocity" logic that reduces support for trade on a broader, systemic basis.
- Topic:
- Economics, Political Economy, Public Opinion, Trade, and Protectionism
- Political Geography:
- China, Asia, North America, and United States of America
19. South Korea's Critical Moment in Digital Currency Policymaking: Between Regulating Cryptocurrencies and Launching a Central Bank Digital Currency (CBDC)
- Author:
- June Park
- Publication Date:
- 03-2022
- Content Type:
- Working Paper
- Institution:
- Korea Economic Institute of America (KEI)
- Abstract:
- Why is South Korea pilot-testing its Central Bank Digital Currency (CBDC), and what made it shift from non-issuance to consideration? This paper investigates the Bank of Korea (BOK)’s CBDC-related developments amid the geopolitical contest between the U.S. and China. It examines the Moon Jae-in administration’s defiance of decentralized finance (DeFi) and the BOK’s sudden shift from non-issuance to potential issuance, which led to expedited research, development, and pilot-testing of CBDCs. As in the case of the digital yuan, the BOK envisions a hybrid architecture for the digital won, wherein central banks and associated partner institutions are CBDC distributors, though they are distinguished by placing the digital won on distributed ledger technology rather than by centrally controlling it. However, South Korea’s previously rash decision to forego DeFi under an undemocratic process has deprived the country of the time and opportunity to develop new innovations as a leading country in the digital frontier. By sticking only to digitalizing centralized finance, the country now aims to be in “standby” mode for its CBDC launch if and when required, so as not to fall behind in digital financial architecture. This paper scrutinizes the South Korean government’s moves on crypto and CBDCs and argues that 1) the Moon administration has shown incapability in addressing DeFi amid the crypto boom and bust, and 2) the BOK’s shift from non-issuance to potential issuance of the digital won is driven by its interest to uphold central bank independence amid swaying geopolitics between the U.S. and China and an unpredictable upcoming presidential election in South Korea.
- Topic:
- Economics, Elections, Finance, Cryptocurrencies, and Digital Currency
- Political Geography:
- China, Asia, South Korea, North America, and United States of America
20. Sanctions, Economic Statecraft, and Venezuela’s Crisis
- Author:
- César Rodríguez
- Publication Date:
- 01-2022
- Content Type:
- Special Report
- Institution:
- Fourth Freedom Forum
- Abstract:
- This case study summarizes the evidence on the effect on Venezuela’s economic and social conditions of economic sanctions and other actions of economic statecraft taken by the United States and its allies in response to the country’s political crisis. The preponderance of evidence indicates that sanctions and other statecraft measures—including the formal recognition of a government with no de facto control over the territory—have had a strong and significant negative effect on the Venezuelan economy. These actions have made a sizable contribution to declining oil production, exacerbating the country’s fiscal crisis, and contributing to one of the largest documented peacetime economic contractions in modern history. Many arguments commonly voiced to dispute the effects of sanctions, such as those that appeal to temporal precedence of other causes of the country’s crisis, are either factually incorrect or premised on fallacious logic. Reforming the sanctions regime will be a complex task, given the interaction with other statecraft measures and a broader toxification of the country’s economic relations. Reform attempts should include the introduction of an oil-for-essentials program, support for political humanitarian agreements, issuance of clearer compliance guidelines, introducing an explicit differentiation between strategic and nonstrategic sanctions, and seeking multilateral alignment with international actors on key strategic issues including that of government recognition.
- Topic:
- Security, Diplomacy, Economics, Sanctions, and Humanitarian Crisis
- Political Geography:
- South America, Venezuela, and United States of America