The term ‘diplomacy’ originates from the ancient Greek word diplōma, meaning “an object folded in two,” referring to a document granting travel or special privileges to diplomats. Statecraft is defined as the art of governing state affairs, encompassing diplomacy, economic statecraft, military strategy, and intelligence. Economic statecraft is defined as “the use of economic means to pursue foreign policy goals,” including foreign aid, trade, sanctions, tariffs, and investment to achieve foreign policy goals. While diplomacy relies on negotiation and alliances to further foreign policy, economic statecraft, on the other hand, relies on economic power to achieve foreign policy objectives.

In early human history, relations between groups were often conflictual, with armed confrontation serving as the primary means for achieving strategic advantage. Yet, even in antiquity, diplomacy emerged as a vital tool for negotiation and conflict resolution. The rivalry between the United States and China, unlike ancient rivalries, did not evolve solely due to military power; rather, it is a hybrid of trade, investment, alliances, and military strength.

China has rooted its diplomacy in trade and economics, stretching its relationships from Asia to Africa and reviving the old Silk Road that was once a symbol of China’s economic dominance. By using economic diplomacy as its foreign policy tool, China can open new markets and build alliances. Elsewhere in the Western Hemisphere, China is becoming the most important trade partner, with the likes of Argentina, Brazil, and Colombia now shifting towards China despite being traditional allies of the United States.

The United States’ current diplomacy is evolving in the use of economic statecraft as well, through sanctions, tariffs, and foreign investment based on coercion and compliance. If that can be successful in achieving the U.S. foreign policy objective and the interest of the U.S. national security, it is apparent that the strategy is limited, as it does not have global reach. While states may comply with the U.S. policy based on fear of retaliation, success from this method can be limited; as in international relations, states can balance or bandwagon. By analyzing the global politics of small states in the south, the U.S. economic statecraft and boat diplomacy may push them towards balancing towards China.

Robert J. Art and Robert Jervis, in International Politics: Enduring Concepts and Contemporary Issues, argue that “force can be used to take or to bargain. If you can take what you want, you do not need your adversary’s cooperation and do not have to bargain with him. A country may use force to seize disputed territory just as a robber may kill you to get your wallet. Most of the things people and nations want, however, cannot be taken in this way. A nation may want others to stop menacing it; it may even want others to adopt its values. Brute force alone cannot achieve these goals.”

Coercion has been a tool of U.S. economic statecraft in foreign policy for a long time. However, history shows that it has clear limitations, especially in great power rivalry. In the U.S.-Japan rivalry leading to World War II, Japan achieved early military successes, but its overextension and limited industrial base prevented long-term strategic victory. Rather than deterring Japan, U.S. sanctions intensified its aggression, illustrating again that economic pressure can provoke escalation rather than prevent it. Coercive tools such as economic sanctions and tariffs, while a game-changer, cannot alone secure a strategic victory.

For deterrent purposes, economic sanctions historically have not prevented rogue states from changing their behavior. It did not prevent North Korea from developing long-range ballistic missiles, just as it was not successful in changing Iran’s human rights behavior and nuclear ambitions. Rather than punitive deterrence, what ultimately works in Iran is deterrence by denial, as initial punitive measures did not suffice highlighting the limitations of economic statecraft in power competition. Punitive deterrence will not prevent a new power from rising, as described by Alison in Thucydides’ Trap, nor will it prevent weaker states from balancing against strong ones. It did not prevent the rise of China, and it will not prevent the rise of other future powers. What has and will make deterrence effective is the innovation of the U.S. nuclear triad, extended deterrence, and international cooperation through diplomacy.

Contemporary politics reflects the same pattern. Russia’s military power has not secured a decisive victory in Ukraine, and economic sanctions, either targeted or sectoral, have not changed Russia’s posture. As noted by the Council on Foreign Relations, “The United States began its 2022 barrage of sanctions by freezing $5 billion of the Russian central bank’s U.S. assets, an unprecedented move to prevent Moscow from using its foreign reserves to prop up the Russian ruble.” While sanctions in other sectors, such defense and energy, have been seriously targeted, the war is still ongoing. In the same vein, the U.S.–China competition and tariffs imposed on Beijing have failed to change China’s behavior as described by Global Trade Magazine, “China’s annual trade surplus passed $1 trillion, a record high, with a GDP growth remained steady at around 5%.”

It is paramount that the United States develop a hybrid strategy, combining diplomacy and other tools of statecraft to keep its leadership on the global stage, as opposed to relying on power.

While coercion and deterrence are important in great power rivalries, the current global landscape does not favor such a posture. There is a need to consider economic diplomacy as the main tool of U.S. foreign policy and economic statecraft as a second, as a future war will not be determined by military strength but by the mixture of both economic and military might.

Hafiz Ibrahim is a Ph.D. student at Virginia Tech’s School of Public and International Affairs, specializing in political economy, global security, and African-U.S. affairs. His professional experience includes serving as a Defense Trade Analyst government contractor at the U.S. Department of State, as well as working previously at Deloitte Consulting as a Sanctions Analyst. Views expressed in this article are the author’s own. 

Diplomacy in Great Power Competition and the Limits of Economic Statecraft was originally published on Global Security Review.

A Network of Powerful Allies

One of the strongest indicators of America’s continued leadership is its robust network of alliances. Over 50 nations are directly allied with the US, forming a global coalition that includes some of the world’s most powerful economies. Countries like Japan, the United Kingdom, France, and Australia consistently align themselves with American leadership, not just in military terms but also economically and diplomatically. Even in regions like the Middle East, traditional allies such as Saudi Arabia and emerging partnerships are fortifying the US’s global standing.

Contrast this with the coalition of China, Russia, North Korea, and Iran. While this quartet may represent a serious challenge, it pales in comparison to the extensive alliances that the US leads. Most crucially, while Russia and China may appear aligned in the short term, they are not close allies in any deep or historical sense. The two powers have a long and fraught history, marked by strategic rivalry and suspicion. Their partnership today is one of convenience rather than genuine alignment. In the end, history tells us that such partnerships are prone to fracture, especially when national interests clash.

The reality of America’s network of allies compared to the alliance of China, Russia, North Korea, and Iran is stark. This balancing coalition does not even come close to the strength of the band wagoning coalition the US possesses. For instance, the North Atlantic Treaty Organization (NATO), with its 31 member states, represents not only the most powerful military alliance in history but also an economic powerhouse, accounting for over 30 percent of global gross domestic product (GDP).

In contrast, China and Russia are economic competitors more than collaborators, and their combined GDP does not come close to rivaling the economic output of the US and its allies. Furthermore, China’s partnerships with nations like Iran and North Korea are limited by geography, sanctions, and divergent interests. North Korea is a heavily sanctioned and isolated state with little economic or strategic leverage beyond its nuclear capabilities, while Iran is mired in regional conflicts that prevent it from playing a major global role.

In essence, while China, Russia, North Korea, and Iran may occasionally coordinate to challenge the West, their relationships lack the cohesion, shared values, and the long-term strategic alignment of the American-led alliance system. This coalition cannot hope to rival the strength, stability, and global reach of America’s network of alliances. For all the talk of a multipolar world, the US remains at the center of the most powerful and united coalition of nations in modern history, a fact that ensures its continued dominance on the global stage.

The Strategic Advantage of Geography

Another underappreciated advantage is geography. The United States enjoys a position of unmatched security, largely thanks to what scholars like John Mearsheimer call the “stopping power of water.” Unlike any other global power, the United States benefits from being bordered by two vast oceans. These natural barriers serve as formidable buffers against potential adversaries, significantly reducing the likelihood of direct invasion or immediate military threats to the mainland.

This geographic advantage has profound implications for national security and global influence. Unlike Russia, which shares extensive borders with Europe and Central Asia, and China, which borders several regional rivals including India, Japan, and Vietnam, the US is largely insulated from the chaos of regional disputes.

Moreover, this geographic separation means that the US can maintain a relatively smaller standing army compared to continental powers—focusing instead on advanced naval and air forces capable of projecting power far from its shores. American military bases, fleets, and alliances stretch across the world, but the mainland remains safely beyond the reach of conventional military threats.

This position gives the US a level of strategic flexibility that few nations can match. That is not to say the US Navy does not have issues facing its future, especially with shipyards and defense procurement. However, it is still considered the greatest Navy in the world as of 2024.

The Monroe Doctrine

Part of what makes the US so unique is its role as the uncontested regional hegemon in the Western Hemisphere. The Monroe Doctrine has long established the principle that no foreign power should interfere in the affairs of the Americas, solidifying U.S. dominance in its own region. No other nation on Earth holds this level of regional control.

This unrivaled regional hegemony allows the US to focus on maintaining global stability and leading from a position of strength. As long as the Western Hemisphere remains secure, the US can project power abroad with confidence, knowing that its backyard is free from external threats.

The Interconnected Economies of the U.S. and China

Finally, the specter of the so-called Thucydides Trap—the idea that a rising power (China) will inevitably clash with an established one (the US)—is not as likely as it may seem. While it is true that China’s economic and military rise is a concern, the interconnectedness of the two economies makes a full-blown conflict far less probable. The US and China are not just rivals; they are deeply intertwined economically. From trade to investment to the global supply chain, the economic fates of both nations are linked in ways that make large-scale conflict costly for either side.

This economic entanglement offers a powerful deterrent against conflict. Both nations have a vested interest in maintaining peace and stability, knowing that any war would be mutually destructive. This interdependence, in many ways, acts as a stabilizing force, reducing the likelihood that the US and China will fall into the trap of inevitable conflict. However, it is worth noting that much of the same was said about the European powers just before World War I.

Conclusion: A Future of Optimism, Not Decline

Despite the challenges posed by emerging powers and the uncertainties of the global political landscape, the US remains in a position of unparalleled strength. Its vast network of powerful allies, its strategic geographic advantage, the stability of the Monroe Doctrine, and the economic interdependence with China all suggest that the US’s role as the world’s leading hegemon is secure for the foreseeable future.

Rather than succumbing to the doom and gloom of some political pundits, it is time to recognize the many reasons for optimism. The US has the tools, alliances, and strategic advantages to maintain its leadership and continue shaping a peaceful, prosperous global order.

Aaron Holland is a PhD candidate at the University of Utah and an Analyst at the National Institute for Deterrence Studies. All views expressed here are the author’s own.

The Resilient Hegemon: Why America’s Global Leadership Endures was originally published on Global Security Review.