The Importance of Economic Diplomacy


The following was written by The Honorable Fred P. Hochberg, Chair of Governance and Nominating Committee and member of the Meridian Board of Trustees. This feature can be found in our recently launched Corporate Systemic Responsibility Report which was the first outcome of our new Responsible Business Diplomacy initiative. To download the report and read other testimonies, click here.

Harry Truman said, “Our relations, foreign and economic, are indivisible.” At the end of WWII, Truman understood that if America wanted to lead the post-war world, we had to do so on several fronts: militarily, diplomatically, and economically. We had to rebuild Europe and Asia, allies and foes alike.

While cementing our leadership role in the world, we also had to create jobs and prosperity here at home. For that to happen, foreign policy, economic policy, and domestic policy went hand in hand.

That’s where the Marshall Plan came in. In fact, the U.S. Export-Import Bank (EXIM), an agency I led decades later, was fundamental to this effort, issuing long-term loans to foreign buyers purchasing goods and services made in America. We had to create jobs here at home for returning service members, and demand in war-torn countries was virtually limitless. Exports were an important driver of good-paying American jobs.

The linking of trade and diplomacy was also a cornerstone of President Kennedy’s administration, in part, to contain the Soviet block. Later President Reagan, fearing the competition of a united Europe, initiated what became the North American Free Trade Agreement or NAFTA, which is still with us, recently re-branded as the United StatesMexico-Canada Agreement or USMCA.

This intersection of business, foreign policy, and government engagement continued under President Clinton as well. Commerce Secretary Ron Brown, traveled the globe advocating for what he dubbed “commercial diplomacy.”

Under President Obama, Secretary of State Hillary Clinton labeled similar efforts “economic statecraft.” The Secretary stated in a speech to the Economic Club of New York in 2013, “Economic statecraft has two parts: first, how we harness the forces and use the tools of global economics to strengthen our diplomacy and presence abroad; and second, how we put that diplomacy and presence to work to strengthen our economy at home.”

As Chairman of EXIM under President Obama, I was part of an all-of-government approach of increased engagement by U.S. government officials advocating for American economic interests.

But what now?

Other countries have caught on — be it the Belt and Road initiative that China is pursuing or the race to provide vaccines for COVID-19 to the developing world, to name just two. The rest of the world knows well that diplomacy, economics, health, climate, and foreign policy succeed or fail together.

Time and again, I saw how other countries knew this too well. By and large, other major economies are far less hesitant than the United States to advocate for the commercial interests of their private sector companies.

It is critical that we take to heart what President Truman advocated; we need to link our diplomatic efforts with our global economic interests. We should strengthen our ties to the rest of the world, not weaken them. For when we build things together, we create stronger ties and bonds and many more jobs here at home.