US Government Needs Economic Statecraft Revamp, House Panel Hears
The U.S. government could improve its ability to wield its economic statecraft tools, including sanctions, export controls and investment screening, by making several organizational changes, such as creating an interagency coordinating body co-led by a new high-ranking official at the State Department, a researcher told the House Foreign Affairs Subcommittee on East Asia and the Pacific May 14.
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Elaine Dezenski, senior director and head of the Center on Economic and Financial Power at the Foundation for Defense of Democracies, testified that she would consolidate the State Department's "vast economic security bureaucracy" under a new deputy secretary of state for economic security. A new “vanguard” within the department would recruit and train economic statecraft specialists.
Dezenski also would form an Interagency Economic Command Center, chaired by the proposed deputy secretary of state and the deputy national security adviser for international economics, to coordinate economic statecraft among various agencies, including the Bureau of Industry and Security, the Committee on Foreign Investment in the U.S., the Financial Crimes Enforcement Network and the Office of Foreign Assets Control. New Joint Economic Operations Centers would play a similar role with key allies.
Dezenski said American economic statecraft is currently fragmented across many agencies, which caused the U.S. to be unprepared to respond to recent crises across the globe, such as Russia’s war against the Republic of Georgia in 2008 and its invasion of Ukraine in 2014 and 2022.
“In each case, our economic power was either underutilized or disregarded,” she said. “Sanctions, when they came, were ad hoc, incremental and did more to push the war into a stalemate than to bring peace. Poorly enforced export controls led to blatant evasion, and leaky oil caps gave rise to a shadow fleet flotilla.”
Dezenski’s recommendations could influence the State Department authorization bill that the Foreign Affairs Committee plans to take up this year (see 2501240048). Secretary of State Marco Rubio will have a chance to weigh in on the legislation when he testifies before the committee May 21.