The narratives we tell ourselves about economic power

The narratives we tell ourselves about economic power

The U.S. has its issues with economic sanctions. As it turns out, so does everyone else.

A road sign for the Nord Stream 2 pipeline in Lubmin, Germany. (Odd Andersen/AFP/Getty Images)

By Daniel W. Drezner

Daniel W. Drezner is a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University and a regular contributor to PostEverything.

Yesterday at 7:00 a.m. EST

Great power competition — so hot right now. There are a lot of ways that China is challenging the United States (*COUGH* nukes *COUGH*), but perhaps the most obvious is in terms of economic leverage. China’s market power is formidable, and it has been more active in wielding it in recent years. Russia seems super-keen on expanding its leverage over energy transit routes via Nord Stream 2.

All three countries are trying to weaponize their interdependence. What is interesting is the cognitive dissonance that emerges between the attempts at economic statecraft and the contrasting narratives about it.

The hard-working staff here at Spoiler Alerts has noted repeatedly this year that the United States is abusing its sanctions tool. I wrote in Foreign Affairs that “sanctions are a specialized instrument best deployed in controlled circumstances, not an all-purpose tool for everyday use. Policymakers should treat them like a scalpel, not a Swiss Army knife.”

Story continues below advertisement

The Biden administration would seem to agree, acknowledging that sanctions had become a policy of first resort all too frequently. The Trump administration never met a sanction it did not like — but even Trump appointees acknowledged that there might be limits to their utility. Steven Mnuchin said in January 2020: “I do seriously think we have a responsibility to use sanctions for important national security issues. But we need to think about the long-term impact on the global currency.”

Contrast this with descriptions of Russian and Chinese economic leverage. There are scads of news stories and op-eds railing against Russia’s economic clout and possible exploitation of Nord Stream 2 and demanding the Biden administration sanction all participants. My Washington Post colleague Josh Rogin, for example, warned last week, “The Biden administration’s hope that Putin won’t weaponize it against several countries, including Germany, is either disingenuous or naive. When Putin gets powerful leverage, the pattern shows he will surely use it.” The obvious, unstated implication here is that Russia’s economic leverage is on the rise.

The same is true about China’s economic statecraft. Think tank report after think tank report after think tank report has traced the rise in China’s economic coercion in recent years. One Australian think tank declared, “The impacts of coercive diplomacy are exacerbated by the growing dependency of foreign governments and companies on the Chinese market.” Four years ago, the Center for Global Development described the Belt and Road Initiative as “debt-trap diplomacy.” Two years ago, Victor Cha and Andy Lim coined the term “predatory liberalism” to describe the ways that Beijing was able to pressure private companies to defer to silence so as not to anger the Chinese Communist Party.

Story continues below advertisement

Here’s the thing, though: There is not much evidence that either China or Russia is any more successful in deploying their economic leverage than the United States. Both countries are using economic pressure more frequently — but their yield has been meager.

On China, for example, even its small neighbors have rapidly moved down the learning curve in resisting Beijing’s influence. The concerns about debt-trap diplomacy have been exaggerated. This year, Audrye Wong noted in Foreign Affairs that China’s track record with economic statecraft had not panned out:

Outside a small subset of countries with little public accountability, China’s long-term strategic influence remains limited. Most of the countries China has targeted have not made major shifts in their geopolitical alignment; at best, they have offered rhetorical and symbolic commitments.

This is a failure of execution; Beijing has often been tone-deaf, leaving it particularly vulnerable to the vicissitudes of domestic politics. In failing to recognize how its strategies might play out in different contexts, China has provoked backlash instead of garnering support.

The same can be said about Russia. As Mikhail Krutikhin detailed in “The Uses and Abuses of Weaponized Interdependence,” President Vladimir Putin’s attempts to weaponize energy pipelines have rarely if ever worked.

Story continues below advertisement

As for Nord Stream 2, an analysis by Bloomberg’s Dina Khrennikova and Anna Shiryaevskaya suggests that while concerns about Ukraine might be warranted, the project will not increase leverage over key European allies. Indeed, when Belarusian President Alexander Lukashenko threatened last week to interrupt gas supplies to Europe over a migrant standoff, Putin immediately dismissed Lukashenko’s threat. Just yesterday, Nord Stream 2 faced another regulatory delay.

My point here is not to minimize the threat posed by Russian and Chinese economic coercion. Their ability to impose costs on others has risen. That is equally true of the United States, however. When the U.S. sanctions more, it invites criticism and scorn. When China and Russia sanction more, it invites fear and concerns about chilling effects.

All the great powers are sanctioning more and succeeding less. The interpretation of what this means for their power trajectories looks quite different, however. That is interesting in and of itself.