Foreign Economic Policy for the Next President

*Editor's note: This is the first in a series of commissioned essays on foreign policy concerns for the next president.

THE DANGERS OF ROLLBACK

At a time when U.S. foreign policy is dominated by war, terrorism, and weapons of mass destruction, economic concerns are often relegated to the back burner. But in reality, economic policy must be an integral component of any successful foreign policy. Some of its elements, such as the suppression of terrorist financing and support for reconstruction efforts in Iraq and Afghanistan, bear directly on the most central national security concerns. The linkage, however, is much broader, because most countries, rich or poor, large or small, depend heavily on the global economy for their prosperity and their stability. Hence, economics ranks at the top of their list of concerns. To continue to be relevant to the rest of the world, the United States must engage effectively on these issues.

As the sole military superpower, the United States may often be able to undertake unilateral initiatives for the sake of national security. But in economic policy, unilateralism is simply not an option. No government, Washington included, can ignore market forces. The European Union's economy is now as large as that of the United States, and the euro has begun to challenge the dollar for global financial leadership. The United States relies on foreign investors -- including the monetary authorities of competitor Asian economies -- to finance massive external deficits, and it depends on oil imported at prices set by producers in other countries. Cooperation is therefore a necessity in the realm of international economics. Indeed, because of the close connection between economics and other international issues, economic policy often restrains the unilateralist tendencies in U.S. foreign policy as a whole.