Ellen Laipson
President Donald Trump views foreign policy through the narrow lens of economic self-interest. He has reduced the notion of American power and influence to a question of whether the United States is getting a “good deal,” measured only in terms of who is paying for what—say, the cost of basing U.S. troops. Gone are any references to the intangible benefits of international cooperation, let alone the common good. It’s how he has approached relations with NATO and with America’s allies in Asia. In recent days, this economic-centric view of U.S. foreign policy has been on display in Trump’s clumsy and erratic Iran policy, and in the underwhelming rollout of his so-called plan for peace between the Israelis and the Palestinians.
Economic incentives and economic pressures are, of course, legitimate tools of international relations and fall along a continuum from positive inducements and peaceful transactions to coercion and pressure that, if insufficient in achieving their aims, can be precursors to open hostilities and war. Think U.S. oil sanctions against Japan in the run-up to World War II, or, at the other end of the spectrum, the Marshall Plan as an American investment in Europe’s postwar economic recovery that created huge political and security benefits to the U.S. that lasted for decades.
But what Trump and his administration repeatedly miss is that economics alone don’t determine national interest. States and their leaders care about many other attributes of national power and identity. They care about how other countries treat them, and whether their interests have been acknowledged. Respect and dignity are potent values that shape the views of many countries, particularly those that are well aware that they are less powerful than the United States. Diplomats are trained to demonstrate such respect for the inherent rights of their interlocutors; many summits or negotiations succeed or fail over whether the weaker party perceives that they were treated with respect, and their legitimate interests taken into account.
Consider the Trump administration’s two key Middle East policies, on Iran and Palestine. The administration is relying nearly exclusively on sanctions pressure to change the behavior of the Iranian regime, and nearly entirely on economic incentives to drive what it has branded as “peace for prosperity” in the West Bank and Gaza. In both cases, the administration has proven to be tone-deaf on the larger political context and imperatives that could actually lead to political change. Economic instruments, whether used to cajole or coerce, are not the only factor that governments respond to, and in both of these cases, will prove insufficient to achieve the intended political outcomes. Iran will not completely transform its national security policy due to sanctions pressure, and Palestinians will not embrace Jared Kushner’s empty sales pitch as the solution to its long quest for political recognition and statehood.
Even when economic pressures or incentives have some short-term effect, they are rarely the determinant of lasting resolutions to conflicts.The recent escalation of tensions with Iran is playing out on the military front as well, to be sure, and a maritime clash in the Persian Gulf cannot be ruled out, even after Trump called off retaliatory U.S. airstrikes last week. But Trump, perhaps more than his hawkish advisers, still only sees military force as a symbol of power. The real clout, for Trump, derives from either providing or preventing an adversary access to trade and other economic activities. Such coercion has had its punishing effect, as intended, with a nearly complete cutoff of Iranian oil in world markets—India and Europe are complying with U.S. demands, though China is not. Iran’s currency has also collapsed and a potentially catastrophic economic downturn is on the horizon. While imposing even more sanctions this week, Trump clumsily offered to talk and to “make Iran great again.” The Iranians have dismissed the casual overtures, and tensions remain high.
Sanctions in the past have affected Iran’s behavior. In the two years prior to the negotiations that eventually led to the 2015 nuclear agreement, the Obama administration persuaded its allies and the United Nations to increase economic pressure on Iran, out of a shared and growing concern about Iran’s nuclear activities. Facing those multilateral sanctions, Iran’s leaders had to make the hard choice to engage in negotiations. The difference between then and now was that diplomacy was structured to acknowledge Iran’s sovereign rights, while secret talks between Iran and the U.S. to lay the groundwork for the nuclear deal created an improved atmosphere of goodwill that made that negotiation process productive.
This week’s rollout in Bahrain of the Trump administration’s long-awaited Israeli-Palestinian peace plan, if it can really be called that, tells the story of this distorted reliance on economic leverage from the other side of the ledger. For many months, Trump’s son-in-law, Kushner, has been trying to build support in wealthy Gulf Arab capitals for a new campaign to invigorate the Palestinian economy, which remains choked under Israel’s occupation. In this “outside-in” approach, new resources for investment, job creation and entrepreneurship will bring hope to Palestinians for a brighter future. The approach suggests that Kushner and the proposal’s other drafters believe enough economic or financial satisfaction will distract the Palestinians from their political ambitions. But it’s mightily flawed.
First, the absence of any recognition of the legitimate political rights of the Palestinians is a major step backwards. It ignores or tries to deny decades of painstaking work to create international consensus about the unfinished business of earlier U.N. resolutions, going back as far as 1948, that envisioned two national entities side-by-side and a just resolution to the conflict. The Palestinians and the Israelis were not even present at this “economic workshop” in Bahrain, and given the political uncertainty in Israel, with another election looming, the second phase of the plan—with the actual political proposals—has been delayed. On the more practical and immediate economic aspects of the plan, it’s not clear that Kushner has lined up any real commitments. Attendees were mostly from the private sector, and many seemed to have little to no expertise in the region. Gulf governments that Kushner hopes will underwrite pie-in-the-sky initiatives—like a monorail between the West Bank and Gaza, and a 5G wireless network—sent low- to mid-level representatives to the meeting, and are not likely to actually write checks absent some assurances about the most outstanding points that have long hindered peace: Jerusalem, Israel’s settlements, and security and border issues.
The Trump administration’s confidence about its maverick approach to these long-standing foreign policy challenges is misplaced. Even when economic pressures or incentives have some short-term effect, they are rarely the determinant of lasting resolutions to conflicts. A more complex mix of diplomacy, demonstrations of power, respect for the interests of all parties, and resources is required to achieve real breakthroughs in international relations. The overreliance on economic factors will prove woefully inadequate to the tasks at hand.
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