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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

Its not easy to define what economic


diplomacy is
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)

Could be first look at the term of diplomacy


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)
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

Okano-Heijmans - Strands of Economic Diplomacy


power play end
**stability**

primary goal: political

sanctions w
inducements
w

financial diplomacy

tool: political

tool: economic
w trade diplomacy
w commercial diplomacy

business end
**prosperity**

primary goal: economic

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

Items of Five Strands of Economic Diplomacy


Commercial
diplomacy
Trade promotion
Investment
promotion
Business
advocacy
Tourism
promotion
Promotion of
socially
responsible
investing

Trade diplomacy
Bilateral: FTAs,
EPAs
Multilateral: WTO
(anti dumping)
Tariffs
Export or import
licenses
Import or export
quotas
Trade and
investment barriers

Financial
diplomacy
Currency swap
agreements

Inducements
Bilateral aids:
grants, loans,
debt relief

Exchange-rate
policy

Humanitarian aid

Buying/selling of
government bonds

Granting access
to technology

Freezing assets

Granting
membership of
international
organization

Withholding dues
or payments

Sanctions
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