The Pivot to Economics

The State Department is hard at work integrating economics into U.S. foreign policy.

In his excellent Foreign Policy essay, "The Currency of Power," Robert Zoellick gives voice to a critical mission for 21st-century American foreign policy. His call to integrate economics into our national security framework resonates on both sides of the political divide, and we applaud his argument.

He says it all, with one major oversight: We're already doing it. 

Reintegrating economics into American foreign policy is a top priority in the Obama administration's National Security Strategy ("[a]t the center of our efforts is a commitment to renew our economy, which serves as the wellspring of American power," the document notes) and for the State Department in particular. 

In fact, a cornerstone of Secretary of State Hillary Clinton's tenure has been the full embrace and implementation of the very agenda Zoellick describes -- one she has outlined in a series of major speeches on what she calls "Economic Statecraft." Secretary Clinton recognizes that "America's economic strength and global leadership are a package deal" -- that just as the drivers and tools of global power evolve to emphasize economics, so must America's foreign policy.

As Secretary Clinton put it, "We have to position ourselves to lead in a world where security is shaped in boardrooms and on trading floors as well as on battlefields." To realize these goals, she launched and championed a wholesale reintegration and reprioritization of economics, investment, and markets in the State Department and its missions around the world. 

This commitment has produced a number of initiatives, including my own office, the Office of the Chief Economist, which is staffed by individuals with deep macroeconomic, microeconomic, and financial experience who are tasked with making sure our diplomacy deals in what Zoellick calls "the currency of power." We operate in both the economic and foreign-policy realms, connecting the dots when economic issues influence our diplomacy and vice versa. We also provide a strategic view of long-term economic drivers of political change and frame recommendations to the secretary through that prism.

The State Department's Economic Statecraft agenda has two overarching objectives. The first is to fuse strategic thinking about political and economic power while adding economic tools to our diplomatic kit. Trade and capital flows are continuing to rise, and emerging nations are composing an ever-greater share of the world economy. As economic links between countries expand, it is just as likely for foreign-policy disagreements to be expressed by restricting trade in critical minerals or shutting out foreign companies from government procurement as by military force. In this climate, we are updating America's diplomatic arsenal and our very perception of U.S. interests.

In the process, we're getting better at tapping market solutions to solve strategic problems, partnering with the private sector to achieve shared goals, and laying out rules of the road for the global economy. We're recognizing that many of the issues we traditionally characterize as first-order security objectives -- from the success of democratic transitions in the Middle East to territorial disputes in the South China Sea -- hinge on important economic dimensions.

Our second objective is to use the State Department's diplomatic "boots on the ground" around the world to support the U.S. economy. We recognize that our domestic economic strength will determine our ability to project power in the future, and we are convinced that U.S. foreign policy can and should be a force for economic renewal at home. From three free trade agreements to the cutting-edge Trans-Pacific Partnership, this administration has committed to a foreign policy that drives our economic recovery in the United States. Recognizing that there is no such thing as a purely domestic recovery, we've turned embassies and consulates into platforms for the president's National Export Initiative and drivers of foreign direct investment in the United States. Our economic and commercial officers are fighting to give American companies a fair chance to compete in markets around the world.

In this work, we are focused on opportunities as well as threats. We cannot expect U.S. firms to compete on their own when governments steal intellectual property as a matter of national policy, state-owned and "national champion" competitors enjoy subsidized financing, and entire industries remain off-limits to imports and investment. The men and women who serve in our embassies understand that these systemic distortions aren't just business problems but also political and economic problems.

I agree with Zoellick that we have a lot more work to do to reintegrate economics into our diplomacy. Internally, we are changing how we do business -- our priorities, our tools, our interests, and even how we hire, train, and promote our own Foreign Service Officers -- to ensure that our capacity for Economic Statecraft only grows in the years ahead. 

I also agree with Zoellick that we have a lot to learn from history. When dictators fell during the Arab Spring, we turned for inspiration to the policies that had proved effective after the fall of the Berlin Wall, when we needed to encourage grassroots entrepreneurship in Central and Eastern Europe. In the Middle East, we're launching enterprise funds, extending credit to small- and medium-sized businesses, and establishing programs such as the Overseas Private Investment Corporation's franchising facility in Tunisia to support innovation and investment. We're bringing U.S. businesses to the region -- most recently in September, when the State Department led the largest U.S. business delegation ever to Egypt to discuss jobs, investment, and the reforms that both require. And we're promoting enhanced engagement with multilateral development banks, something I am certain Zoellick supports.

Zoellick begins and ends his article by expressing concern about the United States getting its act together economically. I would respond: We realize the importance of understanding and harnessing global economic forces to support the U.S. economic recovery and furthering our national interests in the increasingly competitive global arena, and we recognize that our response has to play to our inherent strengths.

Zoellick offers a terrific lesson on the origins of America's political economy, from the Boston Tea Party through the Cold War. But he could strengthen his message about the overlap between economics and diplomacy by paying equal attention to the exciting developments taking place at the State Department today. I thank Zoellick for so eloquently elevating the issue, but one must give credit where credit is due.

STR/AFP/Getty Images

National Security

Of Myths and Missiles

What Les Gelb gets wrong about the Cuban missile crisis.

For more on the Cuban missile crisis, follow Michael Dobbs as he live tweets the 13 days here

Is there a better measure of an international crisis than how long we keep arguing about it? This month, umpteen retrospectives will remind us that it has been 50 years since the United States and the Soviet Union were "eyeball to eyeball" over nuclear weapons in Cuba. The basic facts have been known for a long time, yet the arguments about this legendary confrontation go on and on.

The latest entrant in the wars over the Cuban missile crisis is Leslie Gelb, whose article "The Myth That Screwed Up 50 Years of U.S. Foreign Policy" appears in Foreign Policy's November 2012 issue. Gelb is one of the most stimulating and provocative interpreters of American diplomacy, and he has an interesting story to tell. John F. Kennedy and his advisors, he says, falsely claimed to have given nothing away in getting Soviet leader Nikita Khrushchev to back down in Cuba. By keeping secret their promise to withdraw Jupiter missiles from Turkey, they made "toughness and risky dueling with bad guys" the default mode of U.S. foreign policy.

"American leaders don't like to compromise," Gelb explains, "and a lingering misunderstanding of those 13 days in October 1962 has a lot to do with it." For him, what we really need to remember about the missile crisis is that the key to resolving it was flexibility, not rigidity. The same flexibility, he suggests, might enable the United States to make headway with Tehran, the Taliban, and others.

A bold reading like this shows how much new juice can be squeezed out of events half a century in the past. But there are two problems with it. First, Kennedy actually did make a public compromise offer to Khrushchev to resolve the crisis, pledging (as Gelb himself notes) not to invade Cuba if the missiles were withdrawn. Both leaders, moreover, pointed to this formula as proof of success. Khrushchev claimed -- not totally convincingly -- that it was only the risk of a U.S. invasion that had led him to deploy the missiles in the first place. As for Kennedy, his boosters have always treated the non-invasion offer as one crucial part of a masterful diplomatic performance.

The second problem with Gelb's reading is more important. American concessions were simply not the key to resolving the crisis. It's obviously inconvenient for anyone who favors a calm, compromising approach to the conduct of U.S. foreign policy, but the truth is that what softened Khrushchev up -- unhinged him, really -- was the threat of U.S. military action. From the messages the Soviet leader sent Kennedy at the peak of the crisis, Maxwell Taylor, then the chairman of the Joint Chiefs of Staff, concluded that he was "half drunk, or distraught, or both." As Gelb acknowledges, we now know that Khrushchev told his colleagues he was going to back down before he heard about the secret Turkish missile offer.

His reason was simple and statesmanlike: He wanted to avoid blowing up the world. If humiliating retreat was necessary to prevent calamitous defeat, so be it. American strategists had long wondered whether a threat by one superpower to attack the other side's military forces could be credible, given the horrible consequences likely to ensue. Yet Khrushchev clearly believed Kennedy would act. Publicly, the U.S. president conveyed grim determination throughout the crisis. As much as Gelb may lament the lessons that have been drawn from Kennedy's resolve, there is no denying his achievement. In the most dangerous showdown of the Cold War, he got the other guy to blink.

Had Khrushchev been privy to discussions inside the White House, of course, he would have found out how divided the Americans were. The president and a small group of advisors known as the "ExComm" (for executive committee) deliberated around the clock, bouncing from one position to another. They changed their minds from one day to the next, many of them more than once. Even when they agreed on what to do, their reasons often differed.

Yet Khrushchev would also have learned that most ExComm members agreed on one big thing -- that the crisis was unlikely to be resolved by negotiation. Foremost in this camp, at least at the beginning, was Kennedy himself. He repeatedly overruled advisors who favored diplomatic give-and-take. When he found that Ted Sorensen, his speechwriter, had drafted a speech inviting Khrushchev to an emergency summit, he personally vetoed the idea. Such a proposal, the president thought, would suggest that the U.S. government was in a "state of panic."

Kennedy also overrode his secretaries of state and defense, both of whom thought Moscow was more likely to yield if the United States were a little less rigid. For Defense Secretary Robert McNamara, insisting that all the missiles be removed increased the chance that the United States would have to invade. Secretary of State Dean Rusk also tried to chip away at his boss's resolve, suggesting that the Soviets might more easily agree to freeze construction of their bases in Cuba than to dismantle them outright. Kennedy disagreed with both men. America, he believed, had to get the missiles out -- quickly. Khrushchev should hear no hint that compromise was acceptable.

So how did this bellicose Kennedy become the one who secretly promised to withdraw American missiles from Turkey? As the confrontation mounted, the president came to the conclusion that Khrushchev could not be pushed any further. The Soviet leader had made his demand about the Turkish missiles in a public letter, rolling back his earlier suggestion that the crisis would be over if the United States promised not to invade. Kennedy believed that Khrushchev would not be able to walk away from this public stance. Even when his advisors suggested a clever way around the problem -- just ignore the tough new letter, they said, and accept the more reasonable earlier one -- the president said their gambit wouldn't work. "We might as well realize that," he told them.

At the most decisive moment of the entire crisis, then, one man -- John F. Kennedy, virtually alone -- thought the United States was driving too hard a bargain. To get the missiles out of Cuba, he predicted, "We're going to have to take our weapons out of Turkey." It did not matter to him that the other members of the ExComm disagreed. Llewellyn Thompson, the senior Soviet expert present and the American who knew Khrushchev best, argued that the non-invasion pledge offered the Soviet leader the precise face-saving concession he had asked for. There was no need to go further. Even Robert Kennedy, the attorney general, cautioned his brother. The American position was a good one, he said. "I don't think we should abandon it."

None of this convinced the president. Khrushchev would reject the deal, he said -- "I'm certain." Out of his certainty came a concession that was almost surely unnecessary to end the crisis.

Kennedy assumed Khrushchev was as boxed in by his public statements as a U.S. politician would have been. But there was more to his miscalculation than this. He had been so sure military force would be needed to remove the Soviet missiles from Cuba that when muscular diplomacy began to do the job instead, he was unable -- unwilling, it seemed -- to recognize his own success. He was convinced that a satisfactory resolution of the crisis could be achieved only at a higher price and insisted on paying it even when others told him he was wrong.

This -- not the pure machismo that Gelb excoriates -- was the Kennedy administration's diplomatic signature. It combined sustained activism and protracted indecision, public threats and private backtracking, blustery overcommitment and quiet scrutiny of available exit routes. McNamara later offered a famous summary of the lessons that he and his colleagues drew from the crisis: "There is no longer any such thing as strategy, only crisis management." The United States, he suggested, was so strong that it didn't have to have clear and consistent doctrines. Improvisational fine-tuning would do.

In the Cuban missile crisis, it proved to be enough. But the victory had its cost. The president and his advisors had kept the peace, while confusing themselves as to the reason why. They played down the sheer bellicosity of American policy and played up their own skillful manipulation of the other side. They grew confident that they could bend adversaries to their will through the careful application of pressures and inducements. The next test of this idea was, of course, Vietnam. Even without an anniversary to remind us, we know how that turned out.

STF/AFP/Getty Images