Wielding the Tools of Economic Statecraft

Wielding the Tools of Economic Statecraft
Brent J. McIntosh*
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
I. YESTERDAY: ASSEMBLING THE TOOLKIT . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
II. TODAY: MAINTAINING THE TOOLKIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
III. TOMORROW: ADAPTING THE TOOLKIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
INTRODUCTION
These days, when the United States undertakes to coerce a foreign actor to halt
an undesirable activity, the tool of f‌irst resort is rarely kinetic action or an overt
show of force. Nor is the most likely option a censorious UN resolution. Often, the
primary U.S. tool is some form of economic coercion, the most prominent of
which is imposition of economic sanctions. In the post-9/11 security environment,
the United States has deployed sanctions and other tools of economic statecraft
against a wide range of adversaries, from Putin cronies to the Iranian Revolutionary
Guard Corps, from government off‌icials in Xinjiang to Venezuelan kleptocrats. In a
world interconnected by massive f‌inancial f‌lows and international trade, in which
the U.S. dollar is the world’s reserve currency and the unit of account in which
much cross-border trade is invoiced, the power available to the United States to con-
duct coercive economic statecraft is unparalleled. Yet deploying the tools of eco-
nomic statecraft effectively and responsibly, and safeguarding their eff‌icacy for
future generations, requires care and prudence.
Although sanctions are the best-known tools of U.S. economic statecraft, there
are many others. The measures the United States has championed to track and
thwart money laundering and terrorist f‌inancing (widely known as “AML/CFT”),
now adopted in many countries the world over, are vital to deterring and punish-
ing misuse of the f‌inancial system. The U.S. foreign investment screening regime,
the Committee on Foreign Investment in the United States, or CFIUS, preempts
foreign investment that would undermine U.S. national security. Export controls
and entity listings prevent adversarial foreign actors from acquiring goods, tech-
nologies, and other U.S. support. Even tariffs, quotas, and other trade-related
sanctions can be used to adjust trade f‌lows to the detriment of competitor
* Adjunct Senior Fellow for International Economics and Finance, the Council on Foreign Relations;
Board of Directors, the Alexander Hamilton Society. The author served as Under Secretary for
International Affairs at the U.S. Department of the Treasury during 2019-2021 and as Treasury’s
General Counsel during 2017-19. During the George W. Bush Administration, he served in the White
House as Deputy Assistant to the President and Deputy Staff Secretary and before that as Associate
Counsel to the President, as well as at the U.S. Department of Justice as a Deputy Assistant Attorney
General. At both the White House Counsel’s Off‌ice and the Justice Department, his work focused on
national security and intelligence reform. © 2021, Brent J. McIntosh.
101

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