What is Economic Statecraft?

Economic statecraft is the use of financial, regulatory, and economic tools to achieve foreign policy objectives. In the 21st century, many countries have proven less likely to use military force and instead rely on financial measures such as sanctions to influence other actors’ behavior. This trend deviates from traditional military and diplomatic ways of conducting foreign policy and marks an era where regulation and its implementation take center stage. 

Financial and economic measures may seem less costly than military engagement but can still create inefficiencies in the global economy and threaten economic growth. The key challenge is to design effective policies that minimize fallout for ourselves and our partners, and do not invite asymmetric retaliation.

The Economic Statecraft Initiative at the Atlantic Council will address this challenge – by acting as a convener for policymakers and private sector representatives, conducting in-depth research and analysis at the intersection of economics and foreign policy, and leveraging deep industry expertise. 

Programmatic structure

Sanctions and illicit finance: Our goal is to clarify the role sanctions can (and cannot) play in advancing policy objectives, harness the power of our allies, and promote options that minimize consequences for the private sector. On the illicit finance side, the health and soundness of our financial infrastructure can be as important as military deterrence, and that protecting our financial system from abuse by illicit financial actors goes hand in hand with prudential supervision.

Transatlantic trade and regulation: Our program with check assumptions that transatlantic trade “should be easy” when two equal sized market powers with two equally viable regulatory frameworks stand their ground. We will also analyze the potential reshoring of foreign direct investment in light of COVID and attempts on both sides of the Atlantic to secure supply chains and also bolster domestic competitiveness in research and development, technology, and high-end manufacturing.

Tariffs, investment screening, and export controls: By bringing together stakeholders from economic, regulatory, military, foreign policy, and business communities, we will take an objective look at how restrictions on the movement of capital have emerged as a national security tool. By surveying D10 governments, private sector participants, business associations and academia, we will drive consensus among allies on what sectors of our economies deserve government interference, and which do not. 

Featured work

China Economic Spotlight

China Economic Spotlight provides deep insight and analysis into the China policy – how the US and its partners are tackling critical issues ranging from markets and statecraft to technology and manufacturing.

Global Sanctions Dashboard

The Global Sanctions Dashboard provides a global overview of various sanctions regimes and lists. Each month you will find an update on the most recent listings and delistings and insights into the motivations behind them. This is the only sanctions resource where global sanctions list data are aggregated in one place.

Analysis and in-depth research

Report

Nov 30, 2021

Transatlantic tools: Harmonizing US and EU approaches to China

By Noah Barkin and Agatha Kratz

Cooperation between the US and the EU is essential if they are to develop effective responses to the challenges presented by China. However, there has been a lack of coordination in recent years. Nevertheless, this paper argues there is now an opportunity under the Biden Administration for the United States and Europe to learn from each other and harmonize some of their China-related efforts. 

China Economic Sanctions

Report

Nov 30, 2021

Economic statecraft: Finance and money

By Dr. Carla Norrlöf

Using economics to achieve non-economic foreign policy objectives has become a dominant strategy for great powers in the post 9/11 world. The economic statecraft kit now includes a wide range of practices such as financial sanctions, coercive policies and inducements to defensive policies.

Australia China

Upcoming events

Leadership

Experts

Content

Econographics

Jan 10, 2022

Is the US going to screen outbound investment?

By Sarah Bauerle-Danzman

There is a growing consensus in Washington that the U.S. government needs more tools to prevent the People’s Republic of China (PRC) from using U.S. capital markets to amass military capabilities and control supply chain chokepoints.

China Economy & Business

In the News

Jan 6, 2022

Friedlander was quoted in Politico discussing EU-US response to Russia’s aggression in Ukraine

By GeoEconomics Center

Read the full article here

Economic Sanctions Economy & Business

EconoGraphics

Dec 16, 2021

Global Sanctions Dashboard: Holiday Edition

By Julia Friedlander, Michael Albanese, Maia Nikoladze and Castellum.AI

The Global Sanctions Dashboard aims to inform economic statecraft policies by analyzing sanctions globally and identifying trends across lists in partnership with Castellum.AI.

Africa Belarus

Report

Nov 30, 2021

Economic statecraft: Finance and money

By Dr. Carla Norrlöf

Using economics to achieve non-economic foreign policy objectives has become a dominant strategy for great powers in the post 9/11 world. The economic statecraft kit now includes a wide range of practices such as financial sanctions, coercive policies and inducements to defensive policies.

Australia China

Report

Nov 30, 2021

Transatlantic tools: Harmonizing US and EU approaches to China

By Noah Barkin and Agatha Kratz

Cooperation between the US and the EU is essential if they are to develop effective responses to the challenges presented by China. However, there has been a lack of coordination in recent years. Nevertheless, this paper argues there is now an opportunity under the Biden Administration for the United States and Europe to learn from each other and harmonize some of their China-related efforts. 

China Economic Sanctions

Timely Commentary & Analysis

Nov 19, 2021

AC GeoEcon Explores the Sanctions Response to the Belarus-Poland Border Face-Off

By Daniel Fried, Hagar Hajjar Chemali

Distinguished Fellow and former State Dept. Sanctions Coordinator Ambassador Daniel Fried participated in a discussion with Hagar Chemali, Senior Fellow and host of Oh My World, about the state of sanctions from the US & EU toward Belarus in light of the migrant crisis on Poland’s border

Economic Sanctions European Union

EconoGraphics

Nov 2, 2021

Goodbye for now, 232: Breaking down the G20 US-EU agreement on steel and aluminum

By Julia Friedlander, Clete R. Willems

During the G20 summit the US and EU announced an agreement over steel and aluminum tariffs. Julia Friedlander and Non-resident senior fellow Clete Williams react to its implications.

European Union Eurozone

EconoGraphics

Oct 22, 2021

Global Sanctions Dashboard: Halloween Edition

By Julia Friedlander, Michael Albanese and Castellum.AI

The Global Sanctions Dashboard aims to inform economic statecraft policies by analyzing sanctions globally and identifying trends across lists in partnership with Castellum.AI.

Belarus China

New Atlanticist

Oct 20, 2021

US leaders laid down solid and sensible sanctions policy. Now they need to follow through.

By Daniel Fried, Brian O’Toole

The review is smart in addressing the true root causes of sanctions misuse without indulging in clichés such as that sanctions are overused or never work.

Economic Sanctions Economy & Business

Blog Post

Oct 6, 2021

Geopolitical change and the emergence of Chinese banking

By Elmar Hellendoorn

Although China's "Big 4" state banks remain focused on supporting domestic Chinese growth and consumption for now, they are also increasingly active across international borders. Their global expansion could seriously challenge the primacy of Western banks and may thus have geopolitical reverberations.

China Economy & Business