Financial Statecraft : The Role of Financial Markets in American Foreign Policy

by Benn Steil and Robert E. Litan

• ISBN13: 9780300109757
• ISBN10: 030010975X
• Format: Trade Book
• Copyright: 2006-01-31
• Publisher: Yale University Press

Summary

As trade flows expanded and trade agreements proliferated after World War II, governmentsmost notably the United Statescame increasingly to use their power over imports and exports to influence the behavior of other countries. But trade is not the only way in which nations interact economically. Over the past two decades, another form of economic exchange has risen to a level of vastly greater significance and political concern: the purchase and sale of financial assets across borders. Nearly $2 trillion worth of currency now moves cross-border every day, roughly 90 percent of which is accounted for by financial flows unrelated to trade in goods and servicesa stunning inversion of the figures in 1970. The time is ripe to ask fundamental questions about what Benn Steil and Robert Litan have coined as "financial statecraft," or those aspects of economic statecraft directed at influencing international capital flows. How precisely has the American government practiced financial statecraft? How effective have these efforts been? And how can they be made more effective? The authors provide penetrating and incisive answers in this timely and stimulating book.

Author Biography

BENN STEIL is senior fellow in international economics at the Council on Foreign Relations and the editor of International Finance. ROBERT E . LITAN is vice president of research and policy at the Kauffman Foundation and senior fellow in the Economic Studies Program at the Brookings Institution.

Table of Contents

Acknowledgments	ix
What Is Financial Statecraft?	1	(10)
Part I. Of Banks and Bombs
Banking and Foreign Policy	11	(20)
Finance and the ``War on Terror''	31	(17)
Capital Markets Sanctions	48	(33)
Part II. Of Currencies and Crises
The Security Dimensions of Currency Crises	81	(17)
The Economics of Financial Crises	98	(36)
Global Capital Flows and U.S. Foreign Policy	134	(25)
The Future of Financial Statecraft	159	(8)
Notes	167	(16)
References	183	(14)
Index	197