


There are complex interactions between nations’ economic interests and the foreign policies that they pursue. Benefits to one nation’s own economy are important factors in how it interacts with others. Yet economic advantage is never the only motivation.
Moreover, the converse is actually true: Foreign policies adopted for non-economic reasons come back to influence a nation’s domestic economy, often in ways not anticipated.
It is prudent to keep such cause-and-effect interactions in mind when making and evaluating policies, and to understand how current economic problems have been influenced by decisions made by governments decades earlier.
Consider China. Our economic worries today result directly from decisions President Richard Nixon made a half-century ago. He and his secretary of state, the recently deceased Henry Kissinger, saw better relations with China as a bold move to counter the power of the more dangerous Soviet Union. At the time, China was so poor and its economy so inefficient that trade was barely considered.
Similarly, President Jimmy Carter extended what is now called “normal trade relations” status to China as a reinforcement of Nixon’s USSR-containment strategy. China’s economy then was less than a 20th of what it is now.
Now, we see China as a serious threat to many U.S. economic sectors. Did we make a mistake?
Twenty-five years before Nixon, in 1948, the United States rammed through a U.N. General Assembly resolution authorizing the partition of Palestine into Jewish and Arab states. The region was then a fragment of the defunct Ottoman Empire, broken up by victorious allied powers after World War I, and governed by Great Britain under a neo-colonial “mandate” by the then invalidated League of Nations.
A variety of reasons drove this action by the Truman administration at the newly established U.N. There was horror and guilt about what the Holocaust had done to European Jews, and this validated many of the founding tenets of Zionism established decades before. But also, antisemitism was still rampant in our country. We did not want refugees here. The victors in World War II were moving populations back and forth all over Europe. Creating a new national home for Jewish refugees in a land that they had governed two millennia earlier seemed like not a big deal.
And a nation of Israel never would have much economic or military power, it was thought. As for the Arabs, the U.S. at the time was an oil exporter, Egypt was still a quasi-colony of Britain and surrounding Arab states were of little economic or political importance to us. Now, Israel is a high-income, world technological power while antagonistic nations near it produce a large fraction of global crude oil. Did we make a mistake?
During World War II, as German U-Boats sank U.S. and British ships in the South Atlantic, we gave Brazil a large integrated steel mill to induce that country to add its navy to anti-sub patrols and send 20,000 soldiers to fight Germany under U.S. command in Italy. Now we complain when Brazilian steel competes with U.S. exports in world markets.
In the 1960s, fear of another Fidel Castro motivated large U.S. foreign aid to Brazil, including millions in funding for U.S. land-grant universities to construct replicas of themselves in Brazilian states and to help that nation create a federal agricultural education, research and extension system like ours. Now we agonize when Brazilian soy and corn exports challenge ours. Did we make a mistake?
The fact that nations lie to themselves about foreign policy incentives creates later confusion. U.S. history students are taught about the “opening of Japan,” when U.S. Navy Adm. William Perry threatened bombardment of Japanese cities to force that nation to give U.S. traders free access. But that deep humiliation drove Japanese industrialization and was a factor in its going to war with the U.S. at Pearl Harbor 90 years later. (The U.S. had seized Hawaii for our whaling, missionary, sugar and pineapple interests.)
Our “one-China” policy has always recognized that Taiwan is part of China, but we supported that island’s self-government. And our policy on the South China Sea being fully international waters buttressed the Philippines, Indonesia, Malaysia, Vietnam and Australia. U.S. commitment reassured security for neighboring Japan and South Korea and fostered their democratic and market systems. Today, Japanese and Korean carmakers dominate the U.S. market. Was all that a mistake?
U.S. students are taught that the Monroe Doctrine was a generous act warning Europe to stay out of the affairs of all the Western Hemisphere. In reality, it was an assertion that we would control all the Caribbean, but especially Cuba, which U.S. southerners long coveted as one of six new slave states that would guarantee U.S. slavery forever. After 1865, Cuba would become a refuge for U.S. slaveowners for another quarter-century, and then U.S. ownership of Cuba’s sugar industry motivated our snatching it away from the Cuban people as they were just winning their own independence.
In the same war we seized the Philippines to have a colonial base in Asia and fought a genocidal war against the Philippine people who had been fighting for their own independence. In the same era we seized Panama from Colombia and imposed our ownership of the Canal Zone and quasi-colonial rule of the new nation itself.
In all cases, we generated a backlash of regional resentment of U.S. bullying that still complicates economic relations.
U.S. foreign aid also contributed to the eventual growth of palm oil production in Indonesia and Malaysia. U.S. participation in funding a system of international ag research centers, including that of Minnesotan Norman Borlaug in Mexico, developed plants and technologies that drastically reduced hunger in poor countries worldwide.
Our fear of communist expansion was a primary factor in such aid. But in hindsight, would we have been better off if we had not helped expand world food production?
After the fall of the Soviet Union, President George H.W. Bush gave our guarantee to the territorial integrity of an independent Ukraine in return for its giving up nuclear weapons. We thought a fragmented and largely disarmed former USSR better for our security than a united and armed one. Was that a mistake?
If we now scale back support for Ukraine, how will that affect our other allies, in Asia as well as Europe, and our own economy? Should U.S. military aid to Israel, initiated when that nation had a fraction of the power it has now, continue unabated? Will we always use our anachronistic U.N. veto power to quash any resolution unfavorable to Israel? Should our enmity with Iran determine continued support for a Saudi-fostered war in Yemen that has already resulted in 400,000 civilian deaths?
Balancing foresight against hindsight is always difficult. But we still must realize that unintended consequences always arise, and will continue to do so.
St. Paul economist and writer Edward Lotterman can be reached at stpaul@edlotterman.com.