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Kim B. Olsen
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This book is being sent to press in the midst of a defining moment for the European continent. With the first phase of Russia’s military attack on Ukraine still unfolding at the time of writing, we have yet to understand the human, political, economic, and security-related consequences of this blatant assault on a European state’s sovereignty, not to mention the human dignity of its people. These earliest hours of Europe’s first war since the 1990s have not only brought us pictures of human tragedy and moral abyss, but also taught us some preliminary lessons about the European Union’s (EU) response to military warfare, even when it encompasses and potentially threatens its geographical borders. Hesitant of engaging its own armed forces in what could result in a military confrontation between the EU – and ultimately allies of the North Atlantic Treaty Organization (nato) – with another nuclear power, EU governments have agreed to the delivery of lethal and non-lethal military equipment as their only direct interference in the theatre of war. Some EU governments have further promised substantial enhancements of their own defence spending and pledged to deepen the integration of their military capabilities.

Meanwhile, without ruling out further European military support to Ukraine, it is already apparent that the EU’s initial response to Russia’s military invasion has mainly been a geoeconomic one. At an astonishing pace and in close coordination with the United States (US), the United Kingdom (UK), Canada, Japan, Singapore, Switzerland, and other partners and allies, the EU has launched a series of financial and economic sanctions against Russia, and its collaborator Belarus, in a scope, scale, and complexity that are beyond comparison to any previous sanctions regime.

In these early days of the conflict, it has been remarkable to follow how the very announcement of comprehensive sanctions has been enough to cause severe turbulence in the Russian economy and financial sector. Whatever short- and medium-term effects they might have on Vladimir Putin and his inner circle are yet to be seen. What can already be glimpsed through the first fog of military warfare and geoeconomic retaliation is that the sanctions by the EU and others, and the possible Russian counter-sanctions, will not only have immense and dire consequences for the socioeconomic well-being of Russian citizens. Europeans are also discovering that the comprehensive sanctioning of a major trade partner and key fossil fuel energy provider could impact their daily lives in a hitherto unseen – and possibly uncontrollable – manner. We are all learning in real time how the power of economic disruption, once unleashed, can be hard to restrain.

Although this book’s manuscript was finalised before the fateful course of events of early spring of 2022, it explains how governments are reliant on a successful geoeconomic diplomacy to maintain some control over the unpredictable processes that unfold when sanctions and similar instruments unearth deep-rooted market structures and trade relationships. By introducing and describing this particular type of diplomatic activity characterised by distinct processes and actor-networks in the state-market nexus, the book unveils lessons from previous European attempts to implement large-scale sanctions regimes in coherent, efficient, and effective manners. These lessons could be of value to those diplomatic practitioners and foreign policy observers who ponder governments’ abilities to instrumentalise economic means of power in the 21st century’s highly interdependent and multipolar global order.

Indeed, geoeconomics, which is the strategic utilisation of national wealth to obtain geostrategic objectives, has manifested itself as a central and distinctive feature of contemporary foreign and security policy-making, both in and beyond the European context. The world’s major economies have in recent decades ramped up their government-led instrumentalisation of economic power in their conduct of foreign affairs, all while seeking to influence the international rules and frameworks that might enable or limit such geoeconomic behaviour. In this rapidly evolving playing field, dominated by wealthy states such as the United States, China, India, and, at least in terms of energy resources, Russia, the EU has been obliged to also advance the scope and sophistication of its geoeconomic toolbox. Aware of the fact that geoeconomic leverage can best be obtained by acting in concert through its Common Foreign and Security Policy (cfsp) or similar frameworks, the EU’s 27 Member States, the European Commission, and the European External Action Service (eeas) have invested in creating a broad palette of geoeconomic instruments that, besides the use of unilateral economic sanctions to coerce actors or states into behavioural change, also includes the use of targeted economic development assistance to back and support specific individuals, groups, or governments in fragile security environments or armed conflicts; the management of energy resources as a means of supporting or pressuring geostrategic friends or foes; defensive trade or anti-coercion instruments to protect EU policies and market shares against malign trade practices by other major economic powers; and the granting or revoking of trade tariff reductions to countries receiving EU development assistance, just to name a few.

Much of the scholarly and practical understanding of geoeconomics perceives wealthy governments as both capable and willing to steer and control capital, markets, and critical infrastructure according to their political desires. In this book, which builds on my doctoral dissertation defended at the University of Antwerp in November 2020, I challenge this conventional assumption. By diving into the engine room of diplomatic practice in the geoeconomic realm, the book identifies the ‘networked practices’ between governmental and private actors that influence and guide the interplay between states and markets in the European context. This interplay, I argue, is dominated by a paradox. While EU institutions and governments are keen to understanding themselves as influential geoeconomic actors, their ability to exert direct control over the economic means that underpin the use of geoeconomic measures is limited by governance models dictated by liberal market capitalism, where much of states’ wealth rests in the hands of independent private actors. I present the argument that to compensate for this lack of direct control over economic resources in foreign and security policy-making, the EU and its Member States are dependent on the skilful conduct of geoeconomic diplomacy.

To dive deeper into these assumptions and questions about the limits to European geoeconomics, this book will contribute to both academic and practical discussions about the use of economic sanctions, which already before the events of early 2022 had become a leading ‘weapon of choice’ in the EU’s geoeconomic arsenal. In recent years, whenever European geostrategic interests or values were challenged, politicians and public opinion have often responded by threatening to sanction the identified perpetrators. Sanctions – or in EU parlance, ‘restrictive measures’ – are designed to either curb trade and financial relations with another state or restrict the physical or financial access of specific individuals or firms to the EU. This book examines in detail two of the most pertinent cases of the past decade where EU policy-makers adopted sanctions to respond to critical geostrategic developments in their immediate neighbourhood: the EU sanctions regimes against Russia (2014-) and Syria (2011-).

Through a critical examination of the structural obstacles that EU policy-makers and diplomats encounter in their attempts to apply economic sanctions, the book challenges the fervour with which EU politicians and observers often call for the use of such restrictive measures as quick solutions to difficult questions. As was pertinently summarised by US observers of Western uses of sanctions policies, “having such a powerful hammer means all of the world’s challenges can appear as nails” (Mortlock & O’Toole 2018: 2). When it comes to swinging the European sanctions hammer, examples are plentiful. But too often the hammer has been used when pliers may have sufficed. In addition to cases where the EU has responded with sanctions to critical geopolitical developments – such as against Russia (2014-), Syria (2011-), Iran (2007-), North Korea (2006-), and Libya (2011-) as well as against Russia and Belarus (2022-) in the context of the currently unfolding war in Ukraine – EU policy-makers have in recent years contemplated the use of restrictive measures in a variety of cases with different backgrounds and characteristics:

Reacting to the brutal crackdown and repression by security forces against the pro-democratic opposition in Belarus, a disturbing development in its immediate geographical neighbourhood, the EU’s short- and medium-term response centred around the use of economic coercion against the government of president Alexander Lukashenko. Having originally lifted most restrictive measures against Belarus in 2016, on the basis of a generally improving EU-Belarus relationship and the acceptance by Belarussian authorities to release a number of political prisoners, the EU changed its attitude in light of the brutality shown to public protests before, during, and after the 2020 parliamentary elections. Soon after the elections, the EU adopted numerous rounds of restrictive measures, targeting a total of 90 individuals with asset freezes and travel bans. But Minsk would not be deterred. In May 2021, it forced an Athens to Vilnius passenger flight to land in Minsk; six months later, it transported large numbers of mostly Syrian, Iraqi, and Afghani refugees to its border with Poland and Lithuania, triggering further EU sanctions. Besides banning additional individuals and entities, especially those involved in the ‘instrumentalisation of human beings’, the EU imposed an overflight airspace ban and restricted access to its airports on Belarusian airlines as well as trade sanctions against key Belarusian exports such as petroleum and potash.

In comparison to sanctions targeted at actors in its immediate neighbourhood, the EU sanctions regimes against Myanmar and Venezuela represent cases where policy-makers responded with restrictive measures against countries conducting human rights violations far beyond the EU’s borders. After initially acknowledging positive political developments in Myanmar in the wake of its 2012 parliamentary elections, which led to a lifting of all EU restrictive measures bar the arms embargo, relations with the EU once again deteriorated from 2018 onwards. Following grave concerns over human rights abuses in Myanmar’s Rakhine State, particularly against ethnic Rohingyas, EU Member States agreed to reimpose restrictions on exports of dual-use goods, military training and cooperation as well as travel bans and asset freezes for a list that now includes 35 individuals. Similar measures, including the targeting of up to 55 individuals, have been in place against Venezuela since 2017, when the EU imposed such sanctions on the regime of Nicolás Maduro for undermining democracy, the rule of law, and human rights.

Recent moves against Lebanon embody another type of EU sanctions use, in this case to nudge a political non-foe towards faster political and economic reform. In light of the stagnating political situation and rapidly declining Lebanese economy, particularly French policy-makers pushed for the establishment of a targeted EU sanctions regime against Lebanese politicians responsible for the country’s ongoing crisis and widespread corruption. While the legal framework that makes possible such listings was formally adopted by the EU Council in July 2021, specific names were initially not added to the new sanctions regime. This represents a peculiar case where the EU has legally established a legal sanctions framework without putting it into immediate use.

The most ‘innovative’ restrictive measures in recent years have been the EU’s new horizontal sanctions regimes against human rights violations and cyber-attacks, legal frameworks that can be used for targeting individuals without designing sanctions regimes against entire states or (terrorist) groups. In late 2020, the Council of the EU adopted the Global Human Rights Sanctions Regime, enabling the EU to target both state and non-state individuals and entities responsible for or involved in human rights violations and abuses worldwide. Besides asset freezes and travel bans, the measures also include prohibiting EU individuals and entities to make funds available to those targeted with the sanctions. To emphasise the usability of the new tool, by March 2021 the Council was already taking advantage of it to list eleven individuals and four entities accused of involvement in human rights violations such as arbitrary detentions and executions, torture and repression, or forced disappearances in China, North Korea, Libya, Russia, South Sudan, and Eritrea. A similar logic was behind the Council’s adoption in May 2019 of a sanctions modality as part of the EU’s wider ‘cyber diplomacy toolbox’ to respond to cyber-attacks against the interests of the EU and its Member States. Subsequent listings have so far targeted eight individuals and four entities in response to actions such as the cyber-attack against the German Bundestag and the Organisation for the Prohibition of Chemical Weapons (opcw).

These examples only add evidence to the claim that the high volume of the EU’s use of sanctions has in recent years gained width and depth. Still, this book is neither about why the sanctions hammer is being used nor whether it is effective. Such analyses already exist in abundance in academic and policy-oriented literature. While important, they however often lack a coherent understanding of the diplomatic actors and actions that guide governments’ use of economic power and geoeconomic instruments. By developing a conceptual approach of geoeconomic diplomacy, the book focuses on the aptitude of EU actors to apply the sanctions hammer with precision, effectiveness, and care.

Personally, the need for an analytical approach to study geoeconomic instruments as tools of diplomacy and to understand how diplomats can assist in ameliorating their use became apparent to me throughout my experiences as a diplomat working for the Ministry of Foreign Affairs of Denmark. Be it at postings in Germany and France, at the Turkish border of conflict-ridden Syria, in post-revolution Tunisia, or at the United Nations (UN) headquarters in New York – I observed a similar peculiarity: while academic and policy analyses are tremendously interested in the role of the EU’s vast economic resources as a material basis for its engagement in the world, most approaches do not fully capture that economic power is dependent on the conduct of relationships between a variety of state, private, and non-governmental actors influencing the complex state-market nexus. In this nexus, governments are not operating in vacuums, but are required to engage in and steer networks of actors who traditionally do not play key roles in foreign and security policy, but suddenly do so when geoeconomic tools are invoked. To effectively use wealth and market access to their government’s advantage, it is therefore a key task of diplomats to engage with businesses and firms, non-governmental organisations, lobbyists, unions, and many other actors that are relevant to a specific geoeconomic field.

This book is therefore based on my observation that both academics and practitioners lack common conceptual reference points and analytical frameworks for acknowledging the practical complexities and actor-oriented interdependences between the spheres of states and markets in a hyper-globalised economy. As the reader will hopefully see, this book’s study of geoeconomic diplomacy is driven by a number of contentions. Not only does it seek to widen the understanding of geoeconomic practitioners of the processes, practices, actor-relations, and networks that come into play when states seek to instrumentalise economic power to advance their foreign and security policy ambitions. It also sides with the expanding number of practice-oriented scholars who insist on building analytical approaches based on nuanced understandings of the lived realities of diplomatic practitioners. At the same time, the book calls for a greater scholarly engagement with all aspects of diplomatic practice, i.e. to focus less on dynamics and outcomes of diplomatic negotiations, but more on the dynamics that guide how diplomats solve the quest of putting policy decisions into actual practice, which is where the great bulk of diplomatic action takes place.

Finally, the book should be read as a careful reflection on the causes and consequences of the EU’s enhanced use of economic power resources, which should be treated with equal shares of humility, boldness, and caution. Humility, because sanctions are very difficult to implement as intended when sketched and planned in meeting rooms. Boldness, because an informed and coherent approach to geoeconomic diplomacy will enable the EU to make better use of its position as a powerful economic actor on the global stage. And caution, because even small attempts to instrumentalise economic resources and interdependences can affect the lives of millions, no matter how far they are from the given geostrategic context that was targeted on paper.

The early days of Russia’s warfare in Ukraine, and the international community’s sanctions-focused responses hereto, have nothing but emphasised these concerns. As further unforeseeable geoeconomic battlefields might open in the years to come, it is my hope that this book can be of benefit both for those entrusted with geoeconomic decision-making powers and for those eager to engaging in public debates about these pertinent issues on an informed basis. Only by learning from previous lessons will we be able to solve future tasks and navigate the complex geoeconomic realm that will nothing but continue to dominate 21st century foreign and security policy-making.

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