US seeks ‘trade over aid’ diplomacy

New York, Sep 26 (SocialNews.XYZ) The Trump administration wants to shift US economic diplomacy away from traditional foreign assistance and towards private investment, commercial agreements and projects that create lasting economic ties, Deputy Secretary of State Christopher Landau said

Speaking at a “Trade Over Aid Deals Showcase” in New York, Landau said economic and commercial matters had remained secondary in diplomacy for decades.

He described himself as the administration’s “quarterback” for economic diplomacy and said foreign policy should help create prosperity, jobs and economic opportunities.

“Diplomacy is not – that is not different than diplomacy. That is the core of diplomacy,” Landau said.

He argued that commercial projects could outlast governments and establish durable relationships between countries.

Landau drew a distinction between foreign assistance and investment. Aid programmes could keep economies afloat, he said, but could also impose conditions on recipient countries.

“Aid programs can, again, keep things afloat. But ultimately, as you all know, they come with strings,” he said.

“A lot of times they come with conditions that you have to do this or that, which may be contrary to your country’s culture, and you have to be put to a very unpleasant choice.”

Landau said countries should instead identify economic opportunities that create benefits for both foreign investors and local populations.

He rejected the view that accepting foreign investment necessarily meant surrendering national sovereignty.

“Investment is an engine of growth; you’re bringing money into the country,” he said.

Sovereign governments could determine the conditions governing investments, he added. Businesses, however, needed certainty and a framework that allowed them to calculate returns and trust that agreed conditions would be honoured.

Landau said investments could finance infrastructure, generate employment and promote economic growth. Commercial ties could also strengthen political relationships by giving businesses in both countries a stake in preserving them.

“For too long, I think, we have kind of lived on the mirage that the world of aid could go on,” he said.

Landau said recipient and donor countries should recognise that identifying genuine economic possibilities was a preferable model.

The State Department’s role would be to connect the American private sector with opportunities overseas and help companies assess the risks of investing in other countries, he said.

Landau said he frequently heard foreign officials ask why companies from other countries submitted several bids for projects while no American company participated.

“That’s a big problem. I spend most of my sleepless nights when I’m thinking about my job pondering that question,” he said.

The availability of capital was critical, he said, noting that trillions of dollars managed from New York could be invested internationally.

Landau said private investors had also complained that the US government’s system for supporting overseas projects was fragmented. Companies often wanted Washington to participate in projects so that the government had “skin in the game,” particularly when investments faced political risks.

The State Department, Commerce Department, US International Development Finance Corporation and Export-Import Bank have separate roles in supporting international business.

“I think we need to become more of a one-stop shop, and I’m going to work on that,” Landau said.

The US International Development Finance Corporation provides financing, insurance and investment support for development projects in lower- and middle-income countries. The Export-Import Bank helps finance purchases of American goods and services, while the Millennium Challenge Corporation provides time-limited grants to eligible countries.

The “trade over aid” approach reflects a broader use of commercial diplomacy in strategic competition. Washington has increasingly promoted private investment in infrastructure, energy, telecommunications and critical minerals as an alternative to state-backed financing offered by China and other economic competitors.

Source: IANS