Economic Power

Abstract

The use of economic power in support of foreign policy is now usually referred to as ‘economic statecraft’; this is not to be confused with foreign economic policy. In furtherance of a state’s political objectives abroad, economic resources may be used as rewards (promised or delivered) or punishments (threatened or carried out); in short, they may be given, denied, or taken away (see Box 6.1). When rewards are given openly and on a politically significant scale, we tend to speak of ‘foreign aid’. When punishments are meted out in the same way, whether by states in pursuit of their own interests or by international organisations in defence of international norms, we now tend to speak of ‘economic sanctions’. This chapter will consider the requirements of successful economic statecraft (‘the bases of economic power’) and the utility of its most controversial components: foreign aid and economic sanctions.