Whither Nigeria’s economic diplomacy (Part 1)
Following the recent debacle with regard to Nigeria’s inability to sign up to the African Continental Free Trade Area (ACFTA) Agreement in Kigali, I have had this general feeling that our economic diplomacy is faring poorly. Why did we have to leave things to this very late hour before realising we could not sign up to the agreement? Does it mean we were not part of the entire process in the first place? Did we do the requisite homework? Did we exercise the leadership expected of Africa’s leading economy? What went wrong? Why did we appear in the manner of spectators in the matter of a treaty of such historic importance for the future of our continent?
The question that immediately comes to mind is: Do we really have, in the first place, anything that might be referred to as an “economic diplomacy”? And if we do, what does it consist of and to what intents and purposes is it being pursued, if at all? What are the goals and tools of economic diplomacy in general and what are its critical success factors, especially in the context of a developing, monocultural dependent oil economy such as ours? What is the way forward for Nigeria in a globalised and rapidly changing, intensively competitive global economic environment?
As I understand it, economic diplomacy is a subset of diplomacy in general – diplomacy here being understood as the pursuit of national interests through cultivation of friends and exerting influence abroad in the pursuit of national power and wealth. Diplomacy is, of course, the opposite of war, which the great German military thinker and strategist Carl von Clausewitz famously defined as “the continuation of politics by other means”. Diplomacy ends where war begins.
In this context, economic diplomacy refers to the entire panoply of decision-making, policy-making, negotiation and exertion of influence in the pursuit of national economic and business interests — often requiring the application of intelligence information gathering and technical analysis to understand how economic processes in other countries shape the welfare and the political and military fortunes of a particular country, including the risks and opportunities they open up.
Closely related to economic diplomacy is what is today known as geo-economics – defined as “the use of economic tools to advance geopolitical objectives”. It involves the interplay between international economics, geopolitics and strategy. Geo-economics grew into prominence after 1990 with the work of the American strategist Edward Luttwark who argued that with the ending of the Cold War the salience of military power in international politics was giving way to the role of geo-economic power. Those who work in the area of geo-economics are often interested in the spatial, temporal and political aspects of national economies and the control of strategic natural resources and raw materials. The economist Nicholas Firzli, for example, has underlined what he terms “the laws of geo-economic gravity” embracing financial self-sufficiency and availability of advanced, diversified transportation infrastructure as essential elements in maintaining the sovereignty of a state.
In these days of specialisation, experts in economic diplomacy have to be more than mere generalists. They need to be well-grounded and highly qualified people with grasp of technical economics and international political economy.
The post-war Bretton Woods international economic order led to the creation of influential multilateral institutions such as the World Bank, the International Monetary Fund (IMF) and the General Agreement on Tariffs and Trade (GATT) which was later transformed into the World Trade Organisation (WTO). They have been crucial in the rule-setting and coordination of international economic management. Economic diplomats not only have to master how these institutions work but also how to engage with them in furthering their own national ambitions. Today, economic diplomats also have to deal with such complex issues as multilateral trade negotiations, climate change, debt restructuring and international financial coordination. As one scholar explains:
Economic diplomats play a catalytic role in managing the actors and linkages and institutions underpinning economic interdependence. They are also involved in framing the market rules, regulations and norms of international economic relations. Governments also rely on them to help promoting and implementing economic policies.
The tools deployed by diplomats are traditionally associated with what political scientists call “economic statecraft”. Economic statecraft entails the use of economic policy tools for achieving foreign policy goals. It involves the use of tools such as foreign aid, trade policy, embargoes, sanctions, expropriation subsidies, tariffs and other such instruments. The foreign policy goals that such tools are deployed in service of include: the promotion of democracy, punishment for human rights violators, assistance to allies, promotion of economic development, aiding or preventing regime change, or undermining potential economic rivals and political foes.
Economic and commercial diplomacy are often used interchangeably, but they are not synonymous. While economic diplomacy is linked to the use of the tools of economic statecraft, commercial diplomacy focuses on building networks of diplomats and business groups based in overseas missions to promote trade and investment as well as business advocacy. For many developing countries, commercial diplomacy also includes tourism promotion as a primary activity. Diplomatic networks provide commercial intelligence, tourism marketing, business links and partner searches, as well as provision of business assistance. Economic and commercial diplomacy complement each other and work to advance the power and wealth of the country in line with its national goals and foreign policy.
Globalisation has influenced the nature of diplomacy and economic statecraft as we have known it. By globalisation we refer to the integration and liberalisation of global markets. The internationalisation of production, capital and markets has been one of the profound structural developments of the post-war international economic order. The United States and the Bretton Woods international financial institutions have been key catalysts in the globalisation of the world economy. While it has opened up new vistas of wealth and economic opportunity, globalisation has also generated new forms vulnerability as well as impoverishment. While the centres of world capitalism have generated unprecedented wealth, some of the nations of the global periphery have experienced deepening poverty and inequality.
The brilliant young French economist Thomas Pikkety has recently acquired world fame as an intellectual through his opus on the dynamics of wealth and inequality in the dawn of our twenty-first century. In the developing world, countries that have hooked on to the global knowledge economy while undertaking the necessary institutional reforms have catapulted themselves to the ranks of the advanced industrial economies. Those that have failed to seize such opportunities have experienced a spiral of secular economic decline and dwindling life-chances for their populace. Among the great economic successes of recent times are emerging economies like China, India, Brazil, Singapore, Malaysia, UAE and Vietnam. Part of their success derives from the capacity to deploy economic diplomacy as a critical element in their statecraft and in their quest for national competitiveness.
We in Nigeria haven’t even begun a conversation on these issues. We have become highly insular in our thinking and mindset. The Economic Recovery and Growth Plan (ERGP) which aims to reposition and diversify our economy, for example, makes no mention whatsoever about the role of economic diplomacy. When the Kingdom of Morocco made its bid to join ECOWAS, our foreign ministry went into what looked like a stampede. We were not even present at the Monrovia Summit where the Moroccan King first made an appearance. Our diplomacy has sadly deteriorated into an incoherent mumbo-jumbo conversation in a theatre orchestrated by lesser minds. We no longer have the kind of high-calibre scholar-diplomats that we once had; experts who could think deeply about such matters and offer guidance to our political leaders on how to pursue the goals of national power, wealth and prosperity.
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