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'Frustrated and powerless': Diplomacy is America's biggest weakness in the fight with China for global influence

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weakest diplomatic muscle

The US Embassy in Panama has trade-focused diplomats, which is not surprising given the canal’s importance to global trade. (By significant measures, the US is the canal’s top user, with China second. The canal is so important to Washington that even though the US handed over control of the transit to Panama more than two decades ago, it retains the right to purchase the canal military to secure it if necessary. operation – an arrangement well known to Beijing.)

Still, US diplomats in Panama and beyond say if any part of America’s diplomatic infrastructure needs help, it’s the US and the Foreign Trade Service.

The Commercial Service is part of the Department of Commerce, not the State. His responsibilities include helping boost US exports and breaking trade barriers to level the playing field for US companies that must comply with US laws such as the Foreign Corrupt Practices Act. It has US diplomatic missions in approximately 78 countries, including Panama. That’s less than half of the world’s countries, but Business Service emphasizes that this is where they account for the majority of U.S. exports.

In 2014, Commercial Service had approximately 1,750 employees. Since then, it has lost hundreds of employees due to attrition, stagnant budgets and other reasons. With some fluctuations, the number of staff has dwindled to 1,430, of which 250 are Foreign Service officers. Under Biden, he’s trying to make up for those losses, according to a Commerce Department official who gave POLITICO the figures.

The Biden team is looking for other ways to emphasize this kind of diplomacy; As part of the State Department’s modernization plans, Blinken has pledged to increase the number of diplomats who focus on issues such as trade, including “economy officers” whose responsibilities include reporting on business and related activities in other countries.

During his tenure as Assistant Secretary of State for African Affairs in the Trump administration, Tibor Nagy scoured embassies in his jurisdiction to find out the number of diplomats focused on business matters. “Tell me, how many positions does the Chinese embassy have to have to promote trade and investment as opposed to the US embassy?” I said. And overwhelmingly, for the Chinese it was like three or four positions for an American,” recalls Nagy. “And then, we have some embassies in Africa … they are so understaffed that they have, say, someone in charge of business advocacy, business diplomacy, but they get visas in the morning. It was absolutely ridiculous.”

Wei quickly admits that while US diplomats focus on promoting issues such as good governance, democracy and human rights, Chinese envoys are more keen on improving economic ties. “A good business relationship is one of the foundations or one of the most important foundations of a bilateral relationship,” Wei said. He marveled at how often US private sector firms missed out on bidding opportunities in Panama – “They’re not interested,” Wei said. “They never come.”

Private businesses in the US consider many factors when evaluating overseas projects. Corruption is among them, but it is a worldwide problem, not just in Panama. The FCPA prohibits such firms from giving bribes abroad. In a sense, the law offers companies a protective cover when approached for such schemes, but it can also frustrate US efforts to compete with firms from places where such rules do not exist.

Other factors include the size of the market, whether the project is large enough to generate a profit, and labor costs. Many countries, especially in Latin America, are struggling to prove they are worth the risk and time compared to more populous countries in Asia, where labor costs may be lower.

“Especially in smaller countries, true, even in some form of Peru and Ecuador, but particularly in the Caribbean and Central America, countless government officials have told us that we have no interest in American companies,” said Roberta Jacobson. A former State Department official who deals with Latin America and is the US ambassador to Mexico. Jacobson added that even when US firms are interested, they run the risk of getting low bids by Chinese or other companies whose governments subsidize their work.

Feeley said construction and engineering giant Bechtel is among the US-based companies that it says is close to bidding for the construction of the “fourth bridge” in Panama. A Bechtel spokesperson said in passing the fourth bridge project, “we need to prioritize priority resources and places where we are more likely to win and execute successfully.” The spokesperson also suggested that in the long run, Bechtel served US interests abroad by doing high-quality work.

“Bechtel competes for big projects abroad and often wins – but the competition to win, including government-sponsored businesses in other countries, is intense and the risks can be significant,” the spokesperson said in a statement.

Some foreign diplomats say the US should offer more incentives for private firms to undertake projects in regions such as Latin America or Africa. But sometimes US diplomats and American analysts say the best approach is not to trust the US private sector. Instead, it’s better to nudge a foreign government to turn to companies from American allies like Japan or South Korea, or any number of European countries, rather than China. This is one reason why the Biden administration, which has worked hard to repair relations with allied nations that have been frayed by Trump, has encouraged multilateral economic initiatives like the PGII. But such efforts also require a greater US diplomatic focus on trade.