As China continues its rise on the world stage, it is exhibiting hard and soft power capabilities that both rival一and in some ways surpass一that of the United States. Through Beijing’s hypersonic missile program which will render America’s missile defense systems moot and increased economic, military, and cultural investments abroad, it is becoming more apparent that China has the capacity to seriously exert its influence not only in the Indo-Pacific, but in the rest of the world. In response, Washington is attempting to confront Beijing’s complex foreign policy with a simple pushback一economic sanctions. Washington’s reliance on economic sanctions has garnered minimal benefits, which has prompted the Biden Administration to move away from coercive measures and instead engage diplomatically through AUKUS, the new security alliance between Australia, the United Kingdom, and the United States. AUKUS as a multilateral partnership and a defense pact meets the requirement for a robust response to Chinese aggression in the Indo-Pacific.
Economic Sanctions Don’t Work
U.S. economic foreign policy has always been presumptuous一time and time again, presidents have employed economic sanctions in order to coerce favorable behavior from both allies and adversaries. While this policy has yielded some benefits, including one of the most memorable successes being the Obama Administration’s handling of the 2015 Iran Nuclear Deal, data tells us that economic sanctions only work to change a target nation’s behavior half the time, at best, and a third of the time, at worst.
Why then does Washington continue to employ a policy which does not work consistently? For one, economic sanctions tend to be politically expedient; the president can unilaterally send his sanction recommendations to the State Department. In addition, they do not require military deployment, and therefore apply pressure on the intended target without unnecessary use of force.
One of the most compelling explanations for the failure of modern economic sanctions is given by Daniel Drezner, who states that American success in imposing trade embargos has waned in recent years due to weakening in two arenas: military power and diplomatic influence. This decline can partially be attributed to the abuse of sanctions, which sow distrust in Washington’s allies and further alienates adversaries. Now, some worry that the dollar standard, once called an “exorbitant privilege” held by the United States, is in jeopardy. For example, America’s European allies have already begun to search for ways to evade trading in U.S. dollars in order to facilitate economic exchange with Iran with the Instrument in Support of Trade Exchanges, a European-based clearinghouse. It is now crucial to the future of America’s influence in the global economy to stop the wide use of economic sanctions in favor of tactics that signal America’s willingness to cooperate with, not alienate, other nations.
Consequently, the key to the effective use of economic sanctions requires a more nuanced and flexible approach. George Washington University’s Jill Jermano argues that successful coercion through sanctions requires that they target specific actors, as research demonstrates that sanctions result in unintended consequences such as fomenting corruption or cultivating a shadow market in some nations. Furthermore, American legislation such as the 2016 Global Magnitsky Human Rights Accountability exacerbates this issue. The act calls corruption a “sanctionable activity” and therefore imposes sanctions in an attempt to discourage such behavior. However, the act fails to address the reality of the issue, which shows that sanctions are a tool that instead fosters corruption. Here, Jermano recommends a continuous refinement of sanctions, as “regular monitoring and assessment can help identify how sanctions evasion and other countermeasures evolve over time”. This recommended policy change thus addresses the need to make sanctions amenable based on what each specific situation requires. Nonetheless, while this proposed solution could enhance the leveraging power of sanctions, it notably lacks the appropriate scope required to deter Chinese aggression in the Indo-Pacific.
The Future of the Indo-Pacific
Already, the Biden Administration is deploying new tactics to target foreign adversaries. In order to hedge Chinese dominance in the Indo-Pacific, the Biden Administration has made agreements with the United Kingdom and Australia on a new security alliance called AUKUS, which is aimed at building nuclear-powered submarines for Australia. However, enhancing Australia’s naval arsenal is just one of many initiatives being undertaken by this new alliance.
The most crucial part of AUKUS is its signaling of a shift in international security norms. Other countries have come to expect economic sanctions from the United States as a form of deterrence, leading to them searching for ways to circumvent the U.S. in economic exchange. Through AUKUS, all three participating countries pledge to share information in artificial intelligence, cybersecurity and underwater defense. This new security alliance signifies a continued commitment to the promises laid out in the Five Eyes Alliance, meant to facilitate the exchange of information, intelligence, and military capabilities between the United States, the United Kingdom, Canada, Australia and New Zealand. In addition, it indicates a willingness to foster trust and social capital through the creation of an institution meant to facilitate transnational interactions and exchanges. Then, AUKUS is a continuation of classical security alliances meant to strengthen the preparedness of U.S. allies in order to more effectively respond to China. Ultimately, this two-pronged approach of military strength and strategic communications by AUKUS directly addresses the gap of U.S. foreign policy in the Indo-Pacific by setting up a new security apparatus and signaling a renewed commitment to American allies in the region.
To reiterate, AUKUS, as a security pact, is a targeted approach that addresses strategic gaps in the American response to Chinese encroachment in the Indo-Pacific, as it achieves the deterrence that sanctions fail to address. For one, China will have a more difficult time expanding its naval power and derail communication in some areas. This alliance between Australia, the United Kingdom and the United States is not only a demonstration of their continued pact but also a not-so-subtle response to China’s increasingly aggressive behavior in the region, which includes the construction of military and industrial outposts on artificial islands built in the disputed waters of the South China Sea. Thus, AUKUS serves as both a watchdog and bulwark to the Chinese push for regional dominance.
However, not everyone in the West or the Indo-Pacific is happy with AUKUS. The French Government considers it a blatant case of betrayal, as it lost out on a nuclear proliferation contract with Australia, prompting Paris to pull its ambassador to the United States from the country. Indonesia and Malaysia have also announced their displeasure with the deal, raising concerns that further militarizing the Indo-Pacific would bring the region closer to a hot conflict. In addition, some nations worry that AUKUS sidelines the leadership of ASEAN which is the Indo-Pacific’s premier regional alliance. In response, Australia has sent diplomats to Jakarta to assure President Widodo that the alliance would simply maintain a “strategic balance” in the area. To assuage these fears, some policy analysts have suggested that the next step for AUKUS would be to include countries like France, Indonesia, Malaysia, and the Philippines into the continuing security dialogue in the region. Despite these concerns, however, the new alliance is already demonstrating its strength.
For one thing, AUKUS gives Australia the ability to better project its power in the region. The new nuclear-powered submarines will give Australia the capacity to enhance its participation in another security alliance, the Quadrilateral Security Dialogue, which includes Japan, India and the United States. As such, Australia, and by extension, the United States and the United Kingdom, are positioning themselves as serious challengers to Chinese hegemony in the Indo-Pacific. Ultimately, sanctions against China have not worked to deter Beijing´s behavior in the region because they failed to present a tangible threat to China’s attempts at territorial expansion. In addition, China has been able to evade the effects of American sanctions due to its ability to channel its own resources to regions in the country that need it through mechanisms like the National Xinjiang Counterpart Support.
It is time to leave economic sanctions as a tool of coercion behind. Today, AUKUS represents not only an allied interest in combating Chinese aggression in the Indo-Pacific but also marks a needed shift in American foreign policy in the region. In his inaugural speech, President Biden stated that “America is back”. He is demonstrating his commitment to this statement through AUKUS, an alliance that signifies America’s return to the world stage.