Significance of economic diplomacy [Archives:2008/1161/Opinion]

May 5 2008

By: Mohammed Abdulwasea
Some consider economic diplomacy to be a fairly recent addition to the work of professional diplomats, who previously tended to concentrate almost exclusively on political tasks. Commercial work, like other functional sectors, consular or cultural, was traditionally viewed with disdain, and represented a secondary career track for high-flying diplomats. However, in a globalised and interconnected world, economics is more important than ever as a determining element in international affairs. It is also a sizable component of relations between states. Thus, economics has moved to center-stage in diplomacy and now extends beyond 'commercial diplomacy'. Aside from foreign trade, it includes external investments, financial flows, aid, bilateral and multilateral economic negotiations and technology exchanges, which all 'brand' countries and contribute to image-building.

Economic diplomacy is an active and interconnected factor in integrated diplomacy, where the lines of division between functional areas are blurred, and each sector influences the other.

In some ways, we have evolved back to the earliest recorded days of relations between kingdoms and principalities, when commerce was an important motivation for reaching out to other foreign entities. It led ancient civilizations to exchange spices, silks and other precious commodities with distant lands, thereby creating the norms and procedures within which the exchanges could be carried out. These were the first 'international' accords and treaties that were not only concerned with conquest and territory, but with mutually beneficial commercial dealings within a legal framework.

The importance of economic diplomacy as a driving force for political development is well known and understood. After all, the reason why policy makers consider globalization to be the most important economic and social trend of our era is because localization and its attendant underdevelopment still reign supreme in large parts of the world.

International trade and other areas of global international economic relations are increasing in importance. As a result, if one considers the internal market in Europe, or the United States, and compares it with the level of economic relations between and within other regions of the world, it is clear that there are large areas for progress, prosperity and dynamism that could result from effective economic diplomacy.

By economic diplomacy, we mean the use of our political influence and relationships to: Promote international trade and investments to improve the functioning of markets, reduce the cost and risks of cross-border transactions, achieve internationally accepted standards, secure private property rights, develop international telecommunications, energy and transport networks, and consolidate the right political climate to facilitate and institute all of these objectives.

This is a great challenge, especially for governments which must contend with the forces of economic nationalism, cultural anxieties, embedded corruption, and resistance to reform.

Conflict prevention:

Economic diplomacy is also of great importance as a long-term instrument for conflict prevention. The most obvious example, and one of the greatest success stories of the past 60 years, is the creation and astounding success of the European Union.

When the Union was first established as the European Coal and Steel Community shortly after the Second World War, its basic idea ? explicitly discussed by its founding fathers ? was the strengthening of the economic ties between member states and nations as an instrument for preventing future wars in Europe.

Indeed, for more than 60 years, Europe enjoyed unprecedented economic growth and political stability. So strong are the mutually beneficial economic bonds and interests that, today, conflict is unthinkable between the member states of the European Union.

However, this success is not the work of Europe alone. The United States played a crucial role, providing within the NATO alliance an immensely important security component. America's long-term commitment, lasting more than 40 years, until the major security threat of the Soviet bloc was eliminated, was essential to Europe's success.

The United States and Europe complemented each other, combining their respective strengths time and again, working together and with other powers and important nations of the international community within the framework of international organizations. That partnership, between Europe and America, is and will remain for the foreseeable future the most important factor for conflict prevention in the world.

But Europe utilized its unique historic experience only partially after communism collapsed and the continent was confronted by the inherent instabilities of emerging democracies and economies in Eastern Europe and the Balkans. Europe did succeed in enlarging the EU to embrace Eastern Europe, but failed to use the same instruments in time in the case of former Yugoslavia.

This partial success can be explained if one considers some of the obvious disadvantages that limit the usefulness of economic diplomacy in conflict prevention ? namely the need for long-term commitment to achieving objectives. Economic diplomacy is necessarily a long-term process. Its results start showing not in mere months or years, but rather after a decade, or even longer. So it cannot be effective by itself when a situation rapidly and unexpectedly deteriorates toward conflict.

Also in recent years, the importance of cultural differences as a fundamental cause for conflicts has influenced policy makers all over the globe. So much so that in some cases policy making has reached the other extreme of the pendulum. It has moved from excessive trust in economic tools and markets to the deterministic belief in cultural schisms. This is a dangerously effective concept, because it can act as a self-fulfilling prophecy. It can make us lose our focus on the fact that all the great achievements of Western civilization, involving human security, technological modernization, economic development and individual freedom, are still desired by billions of people today ? men, women, and children of different cultural backgrounds, but all sharing the same fundamental human needs, the same fundamental human aspirations.

Source: Al-Thawra State-run Daily.