WASHINGTON – U.S. Senator Bob Menendez (D-N.J.), Chairman of the Senate Foreign Relations Committee, today delivered the following opening remarks at this morning’s full Committee hearing entitled “U.S. National Security and Economic Statecraft: Ensuring U.S. Global Leadership for the 21st Century.” Testifying before the Committee were Under Secretary of State for Economic Growth, Energy, and the Environment Jose W. Fernandez, U.S. Trade and Development Agency Director Enoh T. Ebong, and U.S. Department of Treasury Acting Under Secretary for International Affairs Andy Baukol.
“In the twenty-first century, geo-political power increasingly rests on geo-economic foundations,” Chairman Menendez said. “In this new era of strategic competition, is critical that the United States government respond to these challenges. We have to ensure we are competitive, not just confrontational. We have to invest in American workers and our own economic prosperity here at home. … American leadership is vital to a peaceful and prosperous world order.”
Today’s hearing follows Chairman Menendez’s extensive efforts to bolster U.S. leadership in the global economy and at international financial institutions to advance global economic security, including through his recent introduction of the Economic Statecraft for the Twenty-First Century Act and International Finance Institutions Mobilization Act of 2022.
Find a copy of Chairman Menendez’s remarks as delivered below.
“This hearing of the Senate Foreign Relations Committee will come to order.
Let me thank Under Secretary of State for Economic Growth Fernandez, United States Trade and Development Agency Director Ebong, and Acting Under Secretary of the Treasury for International Affairs Baukol for being here today to discuss an incredibly important topic, one that has been an increasing focus of mine over the past several years—how the United States can best use our economic, trade, and development tools to promote our foreign policy objectives and improve the lives of Americans and others abroad beyond traditional government-to-government tools.
In the twenty-first century, geo-political power increasingly rests on geo-economic foundations.
With a powerful bully pulpit, China uses its economic might to spread its preferred authoritarian governing method around the world and pressure the developing world to choose between our system and values of self-determination, respect for human rights, and openness or their system and their values of autocracy, repression and censorship.
We must not lose sight of the fact that democratic values and good governance also include economic transparency and competitiveness.
While the United States is almost always the security and diplomatic partner of choice for countries all around the world, we are not always their economic partner of choice.
That’s often because China’s most effective power is its international economic toolkit, using its own form of economic statecraft to punish, coerce, and undermine the sovereignty of other nations.
Or because Russia will offer energy supplies far below market value in exchange for political support.
Take for example the case of Lithuania.
After opening a Taiwanese Representative Office in Vilnius, Beijing reacted by immediately downgrading diplomatic relations with Vilnius and preventing Lithuanian goods from entering China—effectively creating a trade barrier.
They also denied them critical supplies necessary for the production of their products.
This is economic warfare.
This is a test for the West and the international community. We must stand with Lithuania.
I look forward to hearing from our witnesses how the Administration has pushed back against China’s and others’ economic coercion.
In this new era of strategic competition, is critical that the United States government respond to these challenges.
We have to ensure we are competitive, not just confrontational.
We have to invest in American workers and our own economic prosperity here at home.
And we have to channel and focus our economic statecraft programs that are fragmented across the entire United States government.
That’s why earlier this year, I introduced my Economic Statecraft for the Twenty-First Century Act.
It provides a comprehensive plan to confront the anti-competitive and predatory nature of China’s international economic policies.
And it will allow us to lead through our values by strengthening our supply chains with re-shoring and nearshoring strategies, by achieving our energy-related sustainability goals, by fostering cooperation in in multilateral institutions, and by building global resiliency.
However, this legislation is not meant to be the end of this economic statecraft initiative—it is to be the start.
I know the Ranking Member just introduced his own economic statecraft bill.
And I look forward to working with him on further developing this agenda, and passing the critical legislation we need in the coming months and years.
As part of our multilateral strategy, one of the best tools we have to counter China’s predatory economic practices is to leverage our influence at international financial institutions.
Yesterday, I introduced the International Financial Institutions Mobilization Act, which uses the United States’ votes and leverage at international financial institutions to build resiliency and growth.
It works to prevent future debt shocks in emerging markets and developing countries that are facing increased economic instability.
And it includes an increase of resources in our own hemisphere at the Inter-American Development Bank.
In recent years, Latin America and the Caribbean have seen devastating impacts from COVID, an alarming erosion of democratic governance, rising poverty and massive forced migration.
With so much at stake, it is critical that we expand the resources available to the Inter-American Development Bank.
That is why I’ve worked continuously over the last two years to advance a capital increase for the IDB.
And I have welcomed growing cooperation with the Treasury Department on this crucial issue.
Let me just say as an aside – I won’t name the country but – one of our hemispheric neighbors who very much wants to be aligned with us, is facing – as many others in the hemisphere are – rising energy costs almost to the point that it can create an explosive situation, including rising food costs. Meanwhile, they have been meeting their IMF obligations with no help from us. At the same time China is willing to give them nearly 600 million dollars with virtually no strings attached – at least no economic strings, maybe there will be other strings attached. In the face of that, if I am governing and taking care of the people of my country, and I am going to have social unrest because people cannot afford gas to get to their job, or the food prices cannot be afforded to achieve the goal of feeding my family, as much as I want to be with the United States, I’m going to go ahead and probably make that decision.
We need to come together and think about how we help – particularly through these international financial institutions, including the IDB, but also the IMF. WE should be talking to the IMF not about anybody relieving debt burdens, but certainly about transitioning it during a time of pandemic food prices and rising energy prices. That is a toxic, explosive mix.
Today, we are at an inflection point.
From emerging technologies to securing supply chains.
From the threat of economic coercion to global infrastructure gaps.
From the transition to a zero-carbon economy to development finance and economic leadership at the G20 and the international financial institutions.
American leadership is vital to a peaceful and prosperous world order.
And so I look forward to hearing from the witnesses and their thoughts on this legislation and agenda. I am happy to hear what they like, what they don’t like, and how our toolkit can be improved.
With that let me turn to the Ranking Member for his remarks.”
*These delivered remarks were lightly edited for clarity purposes.