WASHINGTON – Today, U.S. Senator Bob Menendez (D-N.J.), Chairman of the Senate Foreign Relations Committee, delivered the following remarks at the Committee’s hearing, “U.S. Economic Security: Addressing Economic Coercion and Increasing Competitiveness.” The witnesses for the hearing were the Honorable Jose Fernandez, Under Secretary for Economic Growth, Energy, and the Environment at the Department of State, and the Honorable Jay Shambaugh, Under Secretary for International Affairs at the United States Department of the Treasury.
WATCH THE CHAIRMAN’S OPENING REMARKS HERE
A copy of the Chairman’s prepared remarks have been provided below.
“In today’s world—when it comes to defending national sovereignty against rivals and adversaries—a country’s economic resilience is as important as its military might.
Which is why the United States stands unrivaled.
Despite the unprecedented global challenges in recent years, the United States economy is once again thriving.
Inflation is easing. Wages are up. Unemployment is down.
And yet, while we are an economic powerhouse with the creativity and innovation to drive peace and prosperity worldwide.
We are too often on the sidelines in bolstering American investment and helping to strengthen economies in Africa, Asia, and the Western Hemisphere.
Last April, I met with the former foreign minister of Panama—a nation that is no stranger to the threat of economic coercion from the People’s Republic of China.
She told me, “No one doubts that the United States has the economic tools to punish its adversaries who violate the international, rules-based order. But where are your tools for an affirmative global economic agenda that supports democratic governments?”
It’s a great question.
Our nation has risen to the occasion in the past. We built the foundations of global economic integration and the Bretton Woods institutions. We led the Marshall Plan to rebuild Western Europe after World War Two, one of the most expansive and successful development projects ever.
Our efforts lift people up and support the growth of strong middle classes, which form the backbone of stable, market-oriented democracies.
Today, certain nations seek to use economic tools to exploit nations to further their own autocratic ambitions.
We have to show our citizens—and people all over the world—that economic investment, diplomacy, and engagement can deliver real improvements in their daily lives. A stark contrast to authoritarian governments who use their economic power to punish and bully those who don’t do their bidding. We must reimagine our diplomatic toolbox to fully harness our economic might. And at the same time, we need to secure vulnerable supply chains and counter the threats of economic coercion.
Now, what makes economic coercion so insidious?
In my view, it is not only the financial losses stemming, for example, from Beijing’s retaliation against Taiwan’s pineapple farmers or Norwegian salmon fishermen or Australian winemakers or Lithuanian chipmakers or Canadian canola farmers.
And it’s not only the predatory lending that can burden governments with poor quality infrastructure at high cost—whether it’s Sri Lanka’s port contracts, Pakistan’s electricity generation, or dams in Ecuador.
The threat of economic coercion also has a destructive unseen cost—self-censorship.
Nations, businesses and individuals see how Beijing has punished other countries and industries, and they say to themselves, “I better not step out of line. I better do what Beijing wants, otherwise they will come for me.”
So, how do we confront this?
I appreciate the efforts of the Treasury Department and the State Department, but we have to find a way to do more with the tools we have at our disposal and where we need new tools, we should seek them.
Whether it’s export controls and sanctions, or leveraging the power of international institutions to step up with financial support when our allies are under economic attack.
Or making our International Development Finance Corporation more focused and strategic. Or funding initiatives like the Partnership for Global Infrastructure and Investment.
Each of these efforts pack more of a punch when employed also in coordination with our allies and partners.
Because of our economic interconnectedness, coercion against one nation has repercussions across the world, and that’s why a coordinated response is so essential.
In the wake of Putin’s invasion of Ukraine, his attempt to blackmail Europe into submission with energy exports failed because we came together in a united, collective effort.
But more needs to be done.
We need a comprehensive strategy, rather than trying to tackle these issues in a piecemeal fashion. We need to formalize our economic alliances, and we need mandatory appropriations for everything from building strategic infrastructure around the world to funding our Indo-Pacific Strategy.
And in my view, above all, we need a whole-of-government approach to thinking about economic statecraft.
It’s not just State Department’s job, not just Treasury’s job. It’s all of our financial institutions, all of the other agencies.
Because the bottom line is, we need to start putting our money where our mouth is. So I look forward to hearing from our witnesses on how they think we can go about this task.
And with that, let me turn to my dear friend, the Ranking Member, Senator Risch for his comments."
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