Quotations from the book appear in italics. Below is my highlights from the book.
The opening of the book is a look at the definition of Geoeconomics. The term of Geoeconomics is used extensively in US foreign policy circles. Scholars aren't in agreement concerning a precise definition of Geoeconomics. On page 20 the authors urge the following definition: The use of economic instruments to promote and defend national interests, and to produce beneficial geopolitical results; and the effects of other nations' economic actions on a country's geopolitical goals.
The remainder of the chapter 1 is devoted to how there hasn't been a great deal of debate among scholarly circles around Geoeconomics. As far back as 1970 Susan Strange recognised in the studies of international economic relations were focused on politics and not economics.
Nation states as varied as China and Qatar have seen Geoeconomics take a resurgent path in international relations. I will come back to China a fair bit in this review. My take from current events/opening of the book is Russia's actions in the Ukraine is representative of the resurgence of Geoeconomics as a tool of foreign policy.
I feel the point or discussion around Geoeconomics not being a Zero Sum ( Winners and losers) game could have received more attention from the authors. Put another way the outcome of a Nation State use of Geoeconomics isn't always Black and White. The use of military action to achieve a objective can be said to be successful or failure.
The Iraq War is widely regarded has having been a gross miscalculation . Viewed from the standpoint of achieving the objective of turning Iraq into a democracy , the war was a failure. I believe a historical parallel to the Vietnam War. The political and public fall out from the Vietnam War is akin to what has occurred in the wake of the Iraq War. As the reader all of this sprung to mind. As such the fall out is for another discussion.
Historical examples of the successful use of Geoeconomics by the US have been forgotten. Chapter 6 is entitled US Foreign Policy And Geoeconomics in Historical Context. I will leave Chapter 6 and much of the other content to the reader. For the purpose of this review I will touch upon the role State Owned Enterprises (hereafter SOE's) have in Geoeconomics. SOE's can be used as a tool of State Craft in the Geoeconomics Chess Board.
Geoeconomics is distinct from foreign (or international) or economic policy, mercantilism and liberal economic thought.
Early on I was struck by how relevant this passage of the book is to New Zealand. In the manner of Academia the authors argue Geoeconomics is confused with a reinvented form of Mercantilism . Others mix up Geoeconomics with the liberal (Market orientated) economic school of thought. Adam Smith a noted liberal economic thinker understood the limits of economic logic: what was/is mutually beneficial in economic terms might not be so in political terms. According to Smith , “the wealth of a neighbouring country “ might be dangerous in war and politics. “
From page 37: The emergence of new generation of state capitalists- significantly larger , wealthier, more global, less democratic and more sophisticated than their predecessors – raises important questions for US Foreign Policy.
And from page 54: Twenty years ago state owned enterprises (SOE's) were little more than domestic employment vehicles. Ten years ago there was wide spread scepticism about whether these firms, saddled with bad debt debt and inexperienced leadership, could succeeded beyond home markets. Today they include some of the world's biggest companies , backed by some of the globes largest pools of capital and can claim over half the world's top ten IPO's over the last six years.
In the present day state backed firms account for 30% of foreign direct investment ( hereafter FDI) in emerging markets. SOE's remain grossly inefficient in comparison to their private sector counterparts. Efficiency and operating on a for profit basis is in no way the aim.
Now I can turn to the thread of SOE's. In April of 2011. President of Brazil Dilma Rousseff made Beijing her first overseas trip. Strengthening ties with Brazil was on the mind of Chinese President Hu Jintao and SOE airlines were his means of doing so. The stated owned Chinese airlines placed orders for 30 Brazilian Embraer planes plus options for option for 5 more with 3 airlines.
The above example is only mentioned briefly in the book. I feel the brief mention is never the less very illustrative of how the Chinese make use of Geoeconomics in foreign policy circles. Could the Kiwi reader ever imagen their government exercising the same Geoeconomics lever via Air New Zealand?!
For the second thread I will move away from SOE's. In China's arsenal the use of SOE's isn't the most brazen lever they employ from their Geoeconomics tool box. The Chinese government understands only the use of military force to resolve territorial disputes will invoke the US – Japan Alliance. China's relationship with Japan is described as “Politically cold and economically cool. “ China Geoeconomics aims are to back up their claims to the Diaoyu/SenKaKu Islands and weaken the US – Japan Alliance.
Economic retaliation is the name of the Chinese game. In 2001 China reduced the import quota for imported Japanese Cars by 40 to 60%. Specifically China was objecting to Prime Minster Junichiro paying his respects in the Yasukuni Shine. Testimony concerning Japan's Gem Warfare experiments in WW2 had also taken place at this time.
The Kiwi reader will find the references to the Trans Pacific Partnership (hereafter TPP) to be very topical. The TPP is covered in the chapter entitled America's Geoeconomic Potential. To summarise: the TPP was conceived to revive a dying round of Doya talks at the World Trade Organisation. Using the TPP to combat China's use of Geoeconomics was never a consideration.
The original name for the TPP was Trans Pacific Economic Partnership. The newly minted Obama Administration changed the agreement name to what it is known as today. In changing the name the Obama Administration signaled to China and the rest of the globe the TPP wasn't a foreign policy objective.
The book covers how from the time of Nixon admiration to the present Geoeconomics slipped away from the American Foreign Policy establishment/Policy Makers minds. I feel the reader is best served taking in this when they read this and the other material in the book. The book will succeed in reaching the planned target audience and as such the authors will have achieved their aims.
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