American Grand Strategy After 9/11: An Assessment
Page 10
A world of competing regional trade systems would reduce U.S. growth and prosperity relative to an open world economy, and this prospect could be used strategically to manipulate American policy choices or to balance American power. Foreign direct investment and foreign ownership of American debt total trillions of dollars: Japan and China alone now hold over $870 billion in U.S. Treasury Bonds, and almost 40 percent of the American national debt is now held by foreign bond holders.29 Were other great powers to use strategically their position as central underwriters of U.S. Government debt, the result could be important coercive leverage on the United States. The U.S. dollar historically has been the world reserve currency, a status that has afforded the United States major economic advantages; a strategic shift to the Euro could reduce America’s ability to transfer the costs of economic adjustment onto others, and constrain the American economy in the long term.30
Of course, economic coercion imposes costs on both the target and the coercer; none of these balancing options are painless for their users. Yet the costs are rarely equal, and differences in incurred costs offer important leverage for states, both in threatening and in using economic coercion against other states.31 In fact, such strategies are extremely common in the international system: since 1960, for example, not a single day has passed in which the United States has not enforced economic sanctions against some other state; between 1980 and 1997, American sanction targets included Iraq, Libya, Cuba, Haiti, Yugoslavia, El Salvador, Iran, Panama, Poland, and Suriname, among others; sanction threats were used coercively against states as powerful as China and Japan.32 In the past year, a coalition of European powers used economic coercion to pressure the United States into abandoning protections for American steel producers that the administration clearly felt were critical politically.33 The West used trade restrictions imposed over a generation to constrain Soviet economic growth and undermine the long-term economic foundations of Soviet power.34
More broadly, the entire mercantilist school of international political economy centers on the strategic use of trade to advance state power and undermine rivals; there is a long tradition of strategic manipulation of trade relationships in international politics.35 The effectiveness of mercantilist trade manipulation is controversial―but it is widely used, and it can 11 impose serious costs on target states.
Source:
Link:
Internal Link: