According to Baldwin, economic diplomacy is defined as the use of economic means by a state to achieve its interests and goals (Baldwin, 1985:8). The European Union, rather than relying on military might, believe strongly in civilian power and partake in economic diplomacy to enhance its position internationally. Various tenets of economic diplomacy include, but are not limited to areas like trade policy instruments, development aid, sanctions, financial diplomacy, commercial diplomacy and investment policies.
In response to this question, I argue that the success of EU’s economic diplomacy corresponds with an asymmetrical relationship of dependence between the EU and the lesser powers. I assume that major powers enjoy a symmetrical relationship with the EU, while lesser powers generally enjoy an asymmetrical relationship. In the case of the former, both the EU and major powers are highly dependent on each other. In the latter case, the lesser powers are highly dependent on the EU but not vice-versa. The EU’s bargaining power is therefore higher with lesser powers than with major powers. As such, I focus on the lesser powers in determining the success of EU’s economic diplomacy. Specifically, I examine issue areas such as trade policy instruments, development aid and sanctions to determine if EU’s economic diplomacy is successful as a whole. By considering these various forms of economic diplomacy, I am able to generalize that EU’s economic diplomacy as a whole is successful when there is an asymmetrical relationship between the EU and the lesser powers.
Trade Policy Instruments
In terms of trade policy instruments, I define power in terms of market size (Snorrason, 2012:35). I argue that the success of EU’s economic diplomacy corresponds with the trade dependence of the lesser power on the EU. The EU’s bargaining influence is higher when there is asymmetrical trade dependence with the lesser power. My example on the Latin America banana exporters show EU’s economic diplomacy is successful with lesser powers who are extremely dependent on them: Latin American countries are highly dependent on the EU’s market size for their banana exports, whereas the EU doesn’t depend on them, making them more powerful in using economic diplomacy to force compliance from the weaker countries.
To further prove my point that success of EU’s economic diplomacy is dependent on the asymmetrical relationship with lesser powers, I compare the effect that the US has on the EU with the effect that the Latin American countries have on the EU. Prior to US involvement, the Latin American countries had succeeded in only garnering partial concessions from the EU. This is because the EU wanted to protect its domestic markets and the ACP producers. Despite the Latin American countries repeatedly requesting for consultations, EU simply chose not to adopt the recommendations given.
This is because the relationship is asymmetrical. The Latin American countries are lesser powers economically, being poor countries that exported bananas mostly to the EU (Petersmann and Pollack, 2003:123). This makes them highly dependent on EU’s market. On the other hand, the Latin American countries are not the major trading partners of the EU (Refer to Diagram 2). As such, there is asymmetrical trade dependence with the Latin American countries as compared to the United Sates.
Looking at development aid, I define power in terms of a country’s gross domestic product. I argue that the success of EU’s economic diplomacy varies with the aid dependence of the lesser power on the EU. I look at the case of Togo to postulate that when a country has low GDP, they are more dependent on EU for development aid. However, these countries have nothing to offer the EU. Therefore, the EU is not dependent on them. As such, this asymmetrical relationship provides the EU with greater bargaining power and hence the success of EU’s economic diplomacy.
EU signed the Cotonou Agreement with 79 ACP countries in 2000, replacing the Lome Convention. The Cotonou Agreement was based on two key ideas of development and democratization, exchanging development aid in return for the democratization of ACP countries. A breach of the Agreement would thus likely result in repercussions. Togo, being classified as a Least Developed Country by the United Nations Economic and Social Council as well as the OECD, relies heavily on the EU for development aid (OECD, 2005). However, it had aid suspended from the EU several times due to the continuous inability to fully transit to a democracy. As a least developed country with a GDP per capita of US$344, the suspension of development aid was detrimental to the debilitated economy of Togo (World Bank, 2014). Subsequently however, Togo pledged to administer free and fair elections, prompting the resumption of development cooperation and the flow of aid.
EU’s economic diplomacy was successful in this case. The bargaining power that the EU had over Togo was immense; Togo needed the development assistance and was extremely dependent on the EU. However, Togo had nothing to offer the EU. Hence, EU is not dependent on Togo. This asymmetrical relationship of dependence between the EU and the lesser power thus lends itself to the fulfillment of the EU’s goals and hence the success of EU’s economic diplomacy.
For the part on sanctions, I define lesser powers in terms of GDP as well. I argue that the success of EU’s economic diplomacy is dependent upon the asymmetrical relationship between the EU and lesser power, and examine the success of EU’s use of sanctions against Zimbabwe. Some authors have shown that sanctions imposed by the EU on Zimbabwe were unsuccessful in modifying the “political behavior and conduct” despite Zimbabwe clearly being a lesser power (Rupiya, 2013:6; Erikssen, 2011:228).
I however, argue that the unsuccessful EU economic diplomacy is to be expected – even within lesser powers, the relationship has to be asymmetrical in order for the EU economic diplomacy to succeed. Therefore, despite Zimbabwe being a lesser power, it is less dependent on the EU insofar as it is able to ignore effects of the sanctions by turning to neighbouring countries. Similar to Togo, Zimbabwe has little to offer the EU, hence resulting in EU not being dependent on Zimbabwe. As a consequence of the comparatively symmetrical relationship where both sides are not dependent on each other, EU’s bargaining power is thus weak relative to Zimbabwe. This leads to EU’s economic diplomacy being unsuccessful.
Zimbabwe was covered under the 2000 ACP-EU Cotonou Agreement as well. However the Mugabe regime has long been accused of being an oppressive regime responsible for gross violations of human rights resulting in the EU choosing to adopt sanctions against Zimbabwe. Yet, the regime continued to resist the EU, conducting more human right violations in the years after. This is because Mugabe has relied heavily on the support of the countries around him that helps to back Mugabe against the EU. This relatively symmetrical relationship drastically reduces the bargaining power that the EU enjoys against lesser powers in forcing them to accept EU’s conditions, since the effect of the sanctions has been negated. I reiterate my stance that the success of EU’s sanction is contingent upon the asymmetrical relationship of dependence between the EU and the lesser power. In this example, Zimbabwe clearly did not experience an asymmetrical relationship despite being a lesser power because it had alternatives. Zimbabwe was therefore unresponsive to EU’s unsuccessful sanctions.
In conclusion, I argue that EU’s economic diplomacy is successful when there is an asymmetrical relationship of dependence with the lesser powers. Having examined three different aspects of EU’s economic diplomacy, I demonstrated that the success of EU’s economic diplomacy rests upon the argument of whether an asymmetrical relationship of dependence exists between the EU and lesser powers. Lesser powers are thus more likely to suffer from an asymmetrical relationship with the EU. However, I argue that even within lesser powers, there must exist an asymmetrical relationship of dependence between the EU and the lesser powers in order for EU economic diplomacy to succeed.