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Dollar Diplomacy Revisited

October 29, 2010

Ken Wiesbrode in Diplomatic Courier:

Commercial diplomacy is as old as diplomacy itself. Some of the first treaties dealt with trade; some of the first “overseas” settlements were trading entryports; some of the greatest empires began as commercial enterprises.

It is customary to consider commercial diplomacy as subordinate to “great power” relations, and to grand narratives of war and peace. But throughout most of human history, commerce was the normal interaction among people from different places. The interpenetration of goods, markets and the whole variety of commercial activity is a long standing historical fact.

Today’s global economy, like its predecessors, is not self-governing. Norms, institutions, laws and treaties give it structure and standards. This has been true to such an extent that some optimists have argued on occasion—since the 18th century, in fact—that commerce can buttress peace. Trade is usually said to follow the flag, but it also happens the other way around. So too with peace.

American proponents of this theory at the turn of the last century coined the phrase “dollar diplomacy” to describe it. This was distinct from the diplomacy of the dollar—that is, the international role of the US economy. [More]

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