April 28, 2025
Modernizing the tools of economic statecraft to meet the challenges of today
Over the last decade, economic statecraft has evolved to become an oft used but ill-defined catchall for the levers of economic and financial policy that advance American national security interests. The implicit assumption often articulated is that US economic and foreign policy strength is best served by unifying “sticks and carrots,” relying not just on the reach of US enforcement but also on the strength of the dollar and the centricity of US financial institutions in the global financial system. While the goals have evolved, the institutions and processes have not kept pace. Stovepiped decision-making within the executive branch and an overreliance on a subset of tools—particularly sanctions—have left the Department of the Treasury, and by default the American financial sector, carrying out only half of the Treasury’s national security mission to combat threats and promote US economic interests at home and abroad.
America’s adversaries are not standing idly by. Their expertise and sophistication are growing at an unparalleled rate, whether through the creation of economies of scale for sanctions evasion; alternative non-US dollar, non-SWIFT settlement systems; or the faster-than-government adoption of emerging technology.
As the current administration revisits the functions and mechanics of government, near-term steps can be taken, under existing statutory authorities, to modernize how the United States uses its economic strength to combat national security threats and promote American interests. This function falls neatly within the Treasury’s remit as the steward of the US economy and financial sector.
Read the full commentary from the Atlantic Council.
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