The effect of foreign policy on terrorism is an important area of research that bridges work on international relations and intrastate conflict by highlighting how an outside country can influence attacks from a nonstate actor in another country. Research in this area is important for understanding how countries like the United States can best deal with the threat of international terrorism. Research has generally demonstrated that states with active foreign policies are more likely to experience international terrorism, particularly democracies and the United States. This has been hypothesized to occur because active foreign policies create blowback, or negative feelings toward a state, leading to greater acts of terrorism against that state. Beyond the effects of a state’s general foreign policy, others have looked at more specific policies, such as military occupation and intervention. This body of research argues that international terrorism is often a response to perceived occupation of an area. Groups see terrorism as a method to dislodge the occupying force. This argument has been refined by other scholars, who have presented conditions or extensions of this argument. Others have focused on military intervention, arguing that the presence of troops, the negative sentiment that they evoke, and their effect on strengthening the government all create incentives for groups to attack the foreign power that has deployed troops. Foreign aid has been seen as a policy that can address the threat of terrorism. Aid has been argued to be able to improve local conditions and incentivize and reward local states for engaging in counterterrorism. Others have presented conditions under which aid is more or less likely to be effective, including the idea that military aid might actually increase the amount of terrorism, for reasons similar to military intervention, and create an incentive for states to maintain a terrorist threat. Other foreign policy approaches have focused on legal attempts to stop terrorists from financing their organizations. These policies have been driven by the United Nations, coalitions of states, and individual states. This article also focuses on the methodological issues that all these studies face, as well as future research directions.
The majority of countries around the world are engaged in the foreign aid process, as donors, recipients, or, oftentimes, both. States use foreign aid as a means of pursuing foreign policy objectives. Aid can be withdrawn to create economic hardship or to destabilize an unfriendly or ideologically antagonistic regime. Or, conversely, aid can be provided to bolster and reward a friendly or compliant regime. Although foreign aid serves several purposes, and not least among them the wish to increase human welfare, the primary reason for aid allocations or aid restrictions is to pursue foreign policy goals. Strategic and commercial interests of donor countries are the driving force behind many aid programs. Not only do target countries respond to the granting of bilateral and multilateral aid as an incentive, but also the threat of aid termination serves as an effective deterrent. Both the granting and the denial of foreign assistance can be a valuable mechanism designed to modify a recipient state’s behavior. Donors decide which countries will receive aid, the amount of aid provided, the time frame in which aid is given, and the channel of aid delivery. The donor’s intentions and the recipient’s level of governance determine the type or sector of foreign aid. States can choose between bilateral or multilateral methods of disbursing foreign assistance in order to pursue their interests. Although bilateral disbursements allow the donor state to have complete control over the aid donation, the use of multilateral forums has its advantages. Multilateral aid is cheaper, it disperses accountability, and it is often viewed as less politically biased. Foreign aid, once the exclusive foreign policy instrument of rich powerful states, is now being provided by middle-income countries, too. The motivation for foreign aid allocations by nontraditional donors parallels the motives of traditional Development Assistance Committee (DAC) donors. A main difference between traditional and nontraditional aid donors is that nontraditional aid donors generally do not place conditionalities on their loans. The issue of fungibility can obstruct the donor government’s purpose behind the allocation of foreign aid. If the preferences of the recipient government are different from those of the donor, the recipient can often divert the aid and use it for other purposes. A recipient government may reallocate its budget after it determines how much aid it is slated to receive. The recipient government will redirect its resources to areas it deems a priority that cannot be funded externally, for example the military or prestige projects.
David Ryan and Liam O'Brien
Democracy promotion has been a key aspect of U.S. identity and foreign policy, though Washington also has a long history of supporting non-democratic forms of governance; it has both consolidated democratic regimes and intervened to overthrow democratically elected governments. Democracy promotion is a broad term encompassing different activities, undertaken as part of a nation’s foreign policy, which intend to initiate and foster democratic governance abroad. Democracy promotion efforts may include, among other strategies, “traditional” diplomacy, targeted foreign aid and assistance, and both covert and overt military intervention. While democracy promotion has now become an accepted foreign policy norm among many nations, numerous issues and debates continue to surround its deployment, ranging from granular questions concerning how to best distribute foreign aid up to larger, more fundamental disputes centered on the effectiveness and legitimacy of democracy promotion. Such issues have a particular relevance to the history of U.S. foreign policy: the meta-narrative of U.S. foreign policy and its grand strategy is axiomatically associated with democracy and with democracy promotion. Indeed, given its self-characterization as a shining “city on a hill,” charges of inconsistency and double-standards frequently attend U.S. efforts at democracy promotion. Certainly, despite the rhetorical positions of many presidents, democracy promotion has never been the driving factor behind U.S. foreign policy but rather one component of a wider picture. The United States has frequently supported authoritarian regimes, undermined democracy, or supported a form of “low-intensity” or limited veneer of democratic practice. That said, the institutionalization of U.S. democracy promotion has not only set it more firmly on the agenda but also made it a more visible feature of U.S. policy. The democracy promotion efforts that served the Reagan administration’s goals in Latin America—mainly funding quasi-governmental groups that sought to foster opposition to unfriendly governments and strengthen civic society in target countries more generally—have provided a model for the basis of a large democracy promotion industry, providing a genuine substance to U.S. democracy promotion rhetoric in the process. The “industrialization” of democracy promotion, however, has created its own issues; namely an uncritical environment in which the promotion of a relatively shallow form of U.S.–style democracy has been presumed to be best, no matter the individual circumstances and nuances of target countries. The problems formed by such biases, along with a host of other challenges, will likely ensure that U.S. democracy promotion remains a contentious issue for some time to come.
Hitoshi Suzuki, Yu Suzuki, and Yoshimi Igawa
Japan and the European Union have historically developed relations, from trade conflicts to mutual cooperation between global actors. Japan’s prewar attitude and postwar rapid reconstruction caused misunderstandings and frictions, but these were gradually overcome thanks to the efforts made by Japan, the European Commission and member state governments. After the Cold War ended, policy fields of cooperation expanded from “mutual” market liberalization to foreign direct investments, aid, security, and environment. Japan and the EU jointly aided the newly liberalized countries in Central Eastern Europe, while the EU sought to strengthen its relations with countries in the Asia-Pacific. The Japan–EU Economic Partnership Agreement and the Strategic Partnership Agreement of 2018 were signed on the 50th anniversary of the customs union. The Agreements are jointly aimed by both parties to foster global free trade and shared values. For the first time in postwar history, Japan and the EU had reached an agreement before achieving one with the United States. Japan–EU relations are the strongest they have been since 1959 when the Japanese Mission to the European Communities and the European Commission Delegation to Japan were established. But the security threats in the Pacific indicate that bilateral relations between Japan and member states—the United Kingdom and France at the forefront—are still in play. The impact of Brexit, estimated to be felt more on the Japanese side, is also an issue requiring close study.
Leslie Elliott Armijo
Finance is frequently, but incorrectly, judged a technical matter best left to experts. Equally mistaken is the exasperated conclusion encapsulated in the phrase “people, not profits,” which holds that capitalism, private investors, and markets are simply evil. Finance is necessary for economic development, but also has profound, and often unexamined, implications for social and political spheres. Channels for financial intermediation may be public or private, and national or foreign, implying tradeoffs among organizational forms. Public banks typically are superior in providing public goods and implementing national strategic plans, but private banks and capital markets normally are more efficient, assuming competitive markets. Savings may be sought within the national economy or from abroad, with domestic savings implying a smaller pool yet less subsequent international vulnerability, and foreign inflows offering potential abundance at the cost of external dependence. This framing yields four ideal-types of long-term finance (LTF): national public finance from state development banks; national private finance from domestic private banks and capital markets; foreign public finance via bilateral or multilateral aid or state investment (including from non-traditional lenders, such as China); and foreign private finance sourced from global investors seeking returns. Both national public and foreign public finance dominated long-term investment in Latin America in the early postwar decades of import-substituting industrialization. In the 1970s through the 1990s, they were succeeded by foreign private bank loans, followed by crisis and retrenchment. In the 21st century global political and market conditions brought a resurgence of foreign capital, including from both global private investors and non-Western public sources. Worries about problems arising from Chinese public finance to Latin America are likely overblown, as the quantity remains small, except in some Bolivarian Alliance countries. However, private foreign inflows, strongly promoted by Western-led multilateral actors, from the Organisation for Economic Co-operation and Development (OECD) to the World Bank, during the 2010s, may be more problematic. Excessive dependence on private securities markets funded by globally mobile capital often undercuts achievement of other valued societal goals such as reducing inequality and ensuring democratic accountability. Notwithstanding their predictable flaws, it may be time for a reemphasis on national, and possibly regional, public development banks.