ECONOMIC DIPLOMACY

Why Economic Diplomacy?

Economic diplomacy has shaped the construction of Indonesias foreign policy, particularly since the economic and financial turmoil in 1997 and 2007 global crisis

Direction of President SBY: we must step up our economic diplomacy instructed all Foreign Service Officers to bolster efforts in pursuing Indonesias economic interests

What are the challenges ?

Economic diplomacy in a narrow sense ? It should be in the broadest sense

The need to develop a clear reference of what exactly economic diplomacy is

How to manage economic diplomacy effectively in an integrated, coherence manner?

THE CONCEPT OF ECONOMIC DIPLOMACY

in some respects, economic diplomacy is like sex: easier to describe if you have practised it yourself..

(Nicholas Bayne & Stephen Woolcock, The New Economic Diplomacy)

Its not easy to define what economic diplomacy is

Diplomacy is the conduct of relations between states and other entities with standing in world politics by official agents and by peaceful means .. (Bull, H., 1995)

Could be first look at the term of diplomacy

Diplomacy is concerned with the management of relations between states and between states and other actors (Barston, R.P., 2006)

Some features of economic diplomacy

is concerned with international economic issues and of domestic interests

Mainly concerned with what governments do, in the broadest definition

It uses variety of instruments it embraces the whole spectrum of measures

It is sensitive to market developments

primary goal: political

sanctions w

inducements w w financial diplomacy w

tool: political tool: economic

w trade diplomacy

w commercial diplomacy

primary goal: economic

Source: Okano-Heijmans, The Hague Journal of Diplomacy, 6 (2011)

power play end **stability**

business end **prosperity**

Okano-Heijmans - Strands of Economic Diplomacy

Items of Five Strands of Economic Diplomacy

Commercial diplomacy

Trade diplomacy Financial diplomacy

Inducements Sanctions

Trade promotion

Investment

promotion

Business advocacy

Tourism

promotion

Promotion of socially

responsible investing

Bilateral: FTAs,

EPAs Multilateral: WTO

(anti dumping)

Tariffs

Export or import licenses

Import or export

quotas

Trade and investment barriers

Currency swap

agreements

Exchange-rate policy

Buying/selling of

government bonds

Freezing assets

Withholding dues or payments

Bilateral aids:

grants, loans, debt relief

Humanitarian aid

Granting access

to technology

Granting membership of

international organization

Embargo

(exports; states)

Boycott (imports;

individuals)

Aid suspension

Capital control

Blacklist

ECONOMIC DIPLOMACY

Economic Diplomacy is the use of political means as leverage in international negotiations with the aim of enhancing national economic prosperity, and the use of economic leverage to increase the political stability of the nation

Notes :

Economic diplomacy should be understood in the broadest sense there are five strands of economic diplomacy; it should functions at multiple levels: bilateral, regional, multilateral

It is of importance that economic diplomacy should be carried out in a coherent, coordinated manner

It is needed to formulate a general direction on economic diplomacy

It is crucial to develop synergy and coherence in conducting economic diplomacy