Foreign policy and economic issues
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We live in a globalized environment where speedy communications have multiplied international trade and investments. Jobs are often outsourced to take advantage of cheaper labor markets. Investments and greater market access are often used by developed countries to seek the political support of developing nations. Conversely, economic sanctions are used to correct the behavior of certain nations thought to be delinquent. Trade and investment promotion are now some of the essential functions of diplomatic missions. Financial institutions created at Bretton Woods, in the wake of the Second World War, keep regular contact with developing countries.
Post second world war, the global economic environment was a sea change from the previous period. The United States emerged as the most eminent economic and military power. It launched an ambitious Marshall Plan for the reconstruction of Europe. The World Bank and the International Monetary Fund (IMF) were established with a view to providing economic assistance and balance of payments support to needy countries. Economic co-operation was the new international buzz word. The Generalized Trade and Tariff Agreement (GATT) was negotiated after protracted talks that lasted for years. The idea was to bring down tariff walls with a view to facilitate international trade.
GATT culminated in the establishment of the World Trade Organization (WTO) in 1995, with its headquarters in Geneva. It is an international trade regulatory body with membership of 165 nations. Its foremost aim is to bring down tariff walls with a view to enhancing international trade volumes. It is generally believed that international trade promotes peace as trading nations have an incentive to settle their disputes amicably. This is, however, only partially true. We have lately seen trade competition and resultant issues re-emerge between the US and China as the latter has made impressive economic and technological strides.
It is generally believed that international trade promotes peace as trading nations have an incentive to settle their disputes amicably. This is, however, only partially true.
Javed Hafeez
US government sanctions imposed on Huawei Chinese company is a case in point. This company was allegedly spying on US technology and dealing with certain sanctioned nations. This clearly shows that a new cut-throat technology competition is no longer confined to a race between private companies but has engulfed governments as well. WTO should play an effective role in resolving these emerging economic issues. Exports create jobs and bring prosperity in their wake. We have witnessed a loss of jobs internationally as a result of Covid-19’s impact on international trade.
Terror financing and money laundering have emerged as important issues post 9/11. A new international task force called FATF was established in 1989 by the G-7 nations, to combat these vices. Combating terror financing and money laundering are desirable objectives but there is a growing feeling in the effected nations that influential nations have their political agendas in FATF as well. This impression, only if partially correct, ought to be allayed. These maladies could best be tackled in a professional and objective manner.
It is often said that the United Nations has become a grand debating club and has failed to address some important and protracted security issues. However, it is in the field of international economic cooperation that the UN has fared better. It gave direction to the international economy by clearly defining its millennium development goals. These include lofty objectives like the eradication of poverty globally through sustainable economic development. United Nations Development Programme (UNDP) has a global presence in member nations to pursue its economic goals.
Diplomatic missions today pursue their economic and commercial goals with full vigor. When Turkey and India opted to buy the Russian missile defence system, the United States opposed it. Pakistan became part of the European Union system of generalized trade preferences in 2014, after concerted diplomatic efforts. The facility was extended to compensate for the negative impact of the war on terror, on Pakistan’s economy. This meant that tariffs on many of its export items were significantly reduced. Pakistani exports to EU-- textiles in particular, have benefitted a lot from this facility. Diplomatic efforts are now on to have this concession renewed.
The goal of every nation, developing countries in particular, is to promote its economic development through foreign policy initiatives. Bilateral financial assistance, which remained in vogue during the cold war era, is no more favored now. So diplomatic missions now make more efforts for conducting trade exhibitions and organizing road shows to attract investments.
The substance and style of diplomacy are changing. Gone are the days when diplomats used to focus mainly on political information gathering. Today much of that information is available on print and electronic media. There was a time when it was speculated that resident envoys were a luxury that could be dispensed with. That did not prove to be true. Political goals of yesterday have been replaced by economic objectives. Envoys today also play a role in protecting the interests of their citizens abroad for they remit vital foreign exchange back home. Economic diplomacy is here to stay.
— Javed Hafeez is a former Pakistani diplomat with much experience of the Middle East. He writes weekly columns in Pakistani and Gulf newspapers and appears regularly on satellite TV channels as a defense and political analyst.
Twitter: @JavedHafiz8
