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U.S. Department of State

Diplomacy in Action

Economic Statecraft and Foreign Policy Priorities

Jake Sullivan
Director of Policy Planning 

New York, NY
October 14, 2011

12:30 P.M. EDT


MR. SULLIVAN: Thanks, Ben and good afternoon, everybody. I just wanted to take a minute at the top to orient people to the main themes of the speech today and connect it up to the larger agenda of foreign policy and national security that Secretary Clinton and the Obama Administration are pursuing. And then I’d be happy to take questions on the speech, on related issues, and indeed on other things that may be on your mind.

As many of you have probably seen, the Secretary gave a major address on what she called economic statecraft, which has two parts: first, using the forces of global economics to advance more effective diplomacy abroad; and second, using our diplomacy abroad effectively to shore up the sources of strength and American economic recovery at home.

And the Secretary comes to this speech as the fourth in a line of speeches on the topic of economic statecraft and as part of a larger agenda in this area that is driven in part by her observation that in today’s world, power and influence are measured and exercised in economic terms increasingly, that other countries gain influence and exercise that influence not so much because of the size of their armies, though military remains important, but because of the size of their economies. And it is on that landscape that she is trying to chart a course for American foreign policy in the decades ahead.

The speech covered a broad range of ways in which the U.S. has been adapting and will continue to adapt to a changing global landscape beginning with the idea that the United States’ priorities have to evolve. And that’s true on the regional side with a strategic pivot to the Asia Pacific, and a renewed emphasis on our economic connections in Latin America. It’s true on the functional side as she spoke to the centrality of an energy diplomacy agenda, to our broader economic statecraft initiative, and to effective driving of any kind of national security strategy.

Second, she talked about the increasing sophistication and importance of economic tools to drive strategic priorities. Whether it is the intersection of the economic and the political, in responding to the transitions taking place across the Middle East and North Africa, or the intersection of the economic and the political and strategic as we move through a transition in Afghanistan and look to a vision of regional economic integration across South and Central Asia, or to the role of sanctions, or for that matter to the role of carrots like the United States’ capacity to support and promote entrepreneurship around the world.

The third area she talked about was modernizing our agenda for trade, investment, and commercial diplomacy. And here, her central theme was supporting a system of free, open, transparent, and fair competition, where the rules are known to everyone and apply to everyone in all cases, and where, under such a level playing field, the United States, its workers, its businesses, and its consumers, can thrive, and at the same time, workers, consumers, and businesses from all across the world can thrive as well.

There were many dimensions to that which I’m happy to get into greater detail on but the broad premise of modernizing and energizing our trade, commercial diplomacy, and investment agenda is driven by that kind of fundamental insight about the nature of the rules-based system, and the importance of using diplomatic tools to help shape the system, guide it forward, work with other countries who share these values and want to see them embraced by all to the benefit of all.

The fourth area which is connected is her observation about the growing amount of wealth that is ending up in the hands of states, and how this wealth is used for economic purposes, yes, but also for strategic purposes, and the need for the United States and other countries to adjust their foreign policy and their strategic approaches to take account of this trend, and in particular to come together around a set of rules related to transparency, related to competitive neutrality and other principles, to ensure that state wealth is used for positive purposes and not for malign purposes, and to promote a system in which that free, open, transparent, and fair set of principles I was talking about earlier applied to this new and changing landscape where state wealth plays such a central role.

And finally, the Secretary made it very clear both in her speech and in her comments after the speech that ultimately a lot of this rests on the United States shoring up its enduring sources of strength at home, that there is a domestic policy component to this as well as a foreign policy component, that collectively makes up the national security strategy that President Obama has articulated and is advancing, and that combined relates to the overall strategic project of the Secretary and of this Administration, which is securing and sustaining American leadership in the 21st century where we often have to lead in new ways in a new landscape, but lead nonetheless, just as we have led in driving global security and prosperity and the spread of universal human values over the course of the past decades.

And so, this economic statecraft speech should be seen as part of a larger set of speeches but also as part of a larger project, a project related to American leadership and to contributing to global prosperity, growth, and security over time.

And with that, I’m happy to open it up to questions.

MODERATOR: Do you have any questions from the floor today?

PARTICIPANT: Please state your name and your organization.

QUESTION: Maurizio Molinari from La Stampa. This morning, the French newspaper La Figaro published a report, according to which there is a new document coming out from the atomic agency that will be released at the beginning of November. And this report affirms that the nuclear program of Iran has a military aim. Are you aware of these documents and do you have any comments on its contents?

MR. SULLIVAN: I don’t want to speak specifically to the report in Figaro or to reports of the IAEA that have not yet been published, but I will say that the United States has consistently expressed our concern about the nature and purposes of the Iranian nuclear program, to include its continued enrichment at 20 percent, to include its inability and unwillingness to come clean on potential military uses of the program, and to include a general lack of seriousness in engaging with the international community to respond to our concerns about the nature of that program, about the purposes of that program, and about the future of that program.

And so what Cathy Ashton and the P-5+1 have made clear, including the United States, is that if and when Iran gets serious about engaging with the international community, we stand ready to do so. In the meantime, we’ll continue to apply pressure to try to change the calculus for Iran and to make them see that there is wisdom in moving off of their current course, which is a dangerous course for the region and for the world.

QUESTION: I’m with People’s Daily. I have two questions. The first question is: How will the Secretary of State’s speech this morning affect the U.S. agenda at the coming APEC summit? The other question is: You mentioned in your presentation that there’s a sophistication of the economic and commercial tools, so could you elaborate how sophisticated it becomes?

MR. SULLIVAN: Yeah. As far as the first question is concerned, the Secretary actually spoke to APEC, the Asia Pacific Economic Cooperation Forum that President Obama will chair next month in Hawaii in her remarks. And what the United States would like to do is use APEC, both the upcoming summit and the work streams that come out of it as we move forward to push the envelope on the elements of the fair, open, free, and transparent system that we’re talking about.

And there is a range of different ways in which that can prove useful, from regulatory standardization to greater transparency in the practices of the member states of APEC to people buying into a set of principles that work to the benefit of all. So the underlying elements of the Secretary’s speech today will be very much live and present in the conversations in Honolulu, and the agenda that both goes into and comes out of Honolulu will contain many of the dimensions that she was talking about today.

As far as the question of sophistication goes, the key point here is that economic tools have always been a part of every nation’s foreign policy, and that is natural, and it is to the good when they are deployed for positive purposes. And what is different today is that the complexity of global markets, the nature of economic integration and interconnectedness, and the types of tools that we have available create a form of sophistication in a lot of our efforts on political and strategic ends that mean we need a new literacy and a new capacity to understand these economic tools.

Let me give you a couple examples. With respect to Egypt and Tunisia, the President has made clear that our response cannot merely be a diplomatic or political response; it also has to be an economic response. But it can’t just be aid. It can’t just be handing over chunks of cash. We need instead a carefully calibrated effort in partnership with the Tunisians and the Egyptians, the Libyans, others to promote regional economic integration, to promote trade, to open those economies, which historically had existed for the benefit of the elite and the autocrats and not for the people, and to use tools like debt swaps and OPIC facilities and enterprise funds that can help unlock entrepreneurship in small and medium-sized enterprises, and drive economic growth that is sustainable over time.

So the set of tools that come together to achieve an economic end, yes, which is economic growth that is broadly inclusive and shared by all the people of the region, but also political objectives, which is helping democracy take root and thrive in those countries, is something that requires a greater degree of literacy and sophistication not just in our Treasury Department and in our Trade Representative’s department, but in our State Department as well.

Another example would be the work that the Secretary is doing on the New Silk Road vision in Afghanistan and Pakistan. She has been a leader in articulating a vision for a political solution, and she is twinning that with the need for an economic approach that involves a positive vision for regional economic integration and growth that starts with the immediate stabilization of the Afghan economy as the troops – the ISAF troops, both American and coalition forces – draw down over time.

So those are a couple of examples of what we’re talking about when we mean that the tools that have to be brought to bear in a strategic and diplomatic context that are economic in character are growing more sophisticated, are growing more complex, and require a greater deal of attention from people like a Secretary of State and not merely a Secretary of the Treasury. That’s what we mean when we talk about these things.

MODERATOR: Sir, in the back.

QUESTION: Thank you. My name is Olaolu Akande. I write for the Empowered Newswire and The Guardian from Nigeria. Going through the Secretary’s preview interviews ahead of a speech this morning, she said that the United States is investing quite a lot in Nigeria. And I wanted to ask specifically, though, what is the United States doing in relationship to Nigeria in terms of beefing up the anticorruption campaign effort, which seems to have lost steam. The American ambassador has made comments recently to say that the fight against corruption has basically become compromised. So I want to know what is the U.S. Government trying to do, because if the U.S. is going to be investing a lot in Nigeria and engaging the government, the issue of corruption and the issue of rising concern about terrorism, what are the specific things that the U.S. is trying to engage with the Nigerian Government to deal with this issue so that this idea of economic statecraft with Nigeria can be mutually beneficial?

MR. SULLIVAN: The Secretary met with President Jonathan in New York at the end of September on the margins of the UN General Assembly and had the opportunity to speak at length not just with him but with several ministers of the government about an economic agenda for Nigeria that the United States could serve as a partner and supporter of. Ultimately the decisions rest with the people of Nigeria and the Government of Nigeria, but the United States is eager to play a role as a partner.

And let me give you a couple examples. The Secretary talked to President Jonathan about investments that we could make in sectors like agriculture to be able to help create jobs and spur growth in regions of Nigeria that have been particularly hard hit in recent years. Now, that is an economic exercise, but there is also a political dimension to it because governance and land use and questions of regulatory structures and so forth are all bound up in an effective agricultural program.

Similarly, the United States has, for the past two years, and will continue over time, invested quite a bit in an energy governance and transparency initiative and a capacity building initiative with the Nigerian Government and with the Nigerian people on how to translate the enormous resource wealth of Nigeria into benefits for the Nigerian people. How do you manage those resources effectively? How do you ensure that the funds that are derived from those resources are invested back into the economy and the people of Nigeria? And how do you add value-added elements to the chain so that it is not just the export of oil, but that Nigeria over time can develop refining capacity, can take other steps to add value to the oil that is coming out of the ground, and can similarly take all of that natural resource wealth and plow it into an effective electricity grid, which is a key backbone of any effective economy and effective economic growth?

So those are some of the areas in which the United States, through a combination of assistance, technical capacity building, advice, and sort of daily partnership and work with the Nigerian Government and the Nigerian people are trying to unlock economic growth and deal with the problems of lack of transparency and corruption and insufficient governance that the president and other leaders of Nigeria would acknowledge, but are working to address, and we are working to help them.

QUESTION: Hello. Gina Di Meo for ANSA, the Italian wire. I have two questions. I have two questions. Can you comment about the plot to kill the Saudi Arabian ambassador? And also, Secretary Clinton said that we should look east – sorry – to Asia for an economic growth. So do you think that the European model has failed?

MR. SULLIVAN: Okay. On the first question, I don’t have much to add beyond what the President said yesterday, what the Secretary has said, what Attorney General Holder and others said. I think any conversation on this has to start with applauding the elements of our government that worked in close partnership with the Mexican Government and others to foil this plot. We view it as a dangerous escalation of Iran’s tactics of sponsoring destabilizing activities beyond its borders. We have very solid and credible evidence that this plot was supported, financed, directed by elements of the Iranian Government, and we have registered our concern and engaged in intensive consultations with all of our international partners to talk about the various ways in which Iran can be held accountable. In addition, we have taken some immediate measures ourselves as well as talking to others about measures they can take related to identifying certain individuals for sanction. And obviously at the core of this is the criminal complaint against both the person we have in custody and the person who remains at large.

So this is a matter that we are taking with the utmost seriousness, and we are grateful to all of our partners around the world who are taking it with the same degree of seriousness, and we look forward to continuing to work with them to try to produce a result where Iran no longer engages in this type of behavior and recognizes that it is unacceptable, it is against international law, it is against any standard of how a country – a responsible country – should act.

On the question of looking east, the important point --

PARTICIPANT: (Off-mike.)

MR. SULLIVAN: Right – to Asia. The important point here is that the United States worked together with Europe to build a thick web of transatlantic institutions and partnerships and relationships over the past 50 years that have paid off enormously – economically, strategically, and so on, for both Europe and the United States. And they continue to pay off today, and they’ll pay off decades from now. That work has resulted in so much progress for our peoples on both sides of the Atlantic and for the world as a whole. And what the Secretary is saying is not we prefer one place over another place. What she’s saying is we need to build that same thick network of institutions and relationships and partnerships across the Pacific because, for our peoples on both sides of the Pacific and for the world, that also will provide a huge net benefit.

So it is not a commentary on the European model in any way. And the United States continues to look to Europe as a key partner on strategic and security cooperation and, as she said in the speech today, on economic cooperation. And that is a part of our relationship that we need to revitalize. The United States and Europe need to reclaim joint economic leadership to drive the values we share and to create the new rules of the road for the 21st century that will benefit both of us and benefit global prosperity.

QUESTION: Paolo Mastrolilli, La Stampa. Are you worried about the division that still exists in Europe concerning the euro crisis, or do you think that with the Franco-German leadership, the continent is finally moving in the right direction on this issue?

MR. SULLIVAN: The United States has continuously believed from the beginning of this that the Europeans have the capacity, collectively, to devise a solution that could work for the benefit of the euro zone and for a broader benefit, and we continue to believe that. And what we have heard from Chancellor Merkel and President Sarkozy just over the weekend suggests an effort, a very serious effort by those two in partnership with the rest of the leaders of the euro zone, to finally arrive at a comprehensive solution.

Our view is that this is ultimately a matter of political will, that Europeans have in the past and can again today muster that political will to solve this challenge, and we stand ready to support in any we can, but ultimately it rests with the leadership and people of Europe to arrive at a workable solution. I would say more broadly that a strong, thriving Europe that takes steps to resolve the current crisis and to get on a sustainable pathway forward is in the most vital interests of the United States as such a critical partner on economic matters, on political matters, and on strategic matters around the world.

QUESTION: My name is Vladimir Kikilo. I’m with the Russian news agency ITAR-TASS. Would you please tell me to what extent the United States could facilitate Russia in its quest for joining World Trade Organization? And to what extent do you think Georgia special position could be the impediment to this process, and what the United States could do to resolve this problem?

MR. SULLIVAN: Well, as the Secretary said today, the United States very much supports Russia’s accession to the WTO. And we’ve been engaged in intensive bilateral discussions with the Russian Government for many months on this issue, most recently with a senior representative of the Russian Government coming to the United States to speak with the Vice President and others. Ultimately, we support the effort in Geneva to try to arrive at an outcome as respects the Russians and Georgians that paves the way for accession by Russia into the WTO. We believe that this is an outcome that is in the interest of the United States and is in the interest of all the countries in the WTO, and we believe that this is an outcome that is very possible if all of the stakeholders take the necessary steps. So we’ll look to support the efforts to do that and to produce the final result of Russian accession into the WTO.

MODERATOR: Any last questions? All right. Mr. Sullivan, thanks very much. Thank you, everyone.

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