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National Security & Economic Policy


15-11-2015
English | العربية

Ibrahim Karsany

Former Director, Public Policy Division


Tag: Public Policy Policy Analysis Government Policy economy Research Security UAE United Arab Emirates
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Economic policy has become integral part of the strategy and policy of national security of any country. It has also become one of the most important strategic axes of security. One of best examples of this is the globalization of domestic economies and transformation of goods, services and capitals to global markets. This shift has resulted in emergence of economies that more important than others at the global levels. For example, Asian economies have become larger and more influential on the course of the global economy than European economies. Most countries build their security strategies according to their economic interests in the first place. China's interests in Africa for example, have controlled its positions in the international arena without damaging its interests with the rest of the world. Influence and military power of any country clearly depends on the strength and efficiency of its economy.
Economic policy as a part of strategy and policy of national security both at theoretical and practical levels poses a great challenge for officials and decision-makers all over the world. Most of those countries have strictly separated them and adopted other indicators and criteria to build their security strategies over the past six decades. Economic policy often comes at the end of these indicators and criteria.

Correct and wrong assumptions
There several correct and wrong assumptions which play an effective role in shaping the vision that forms basis of strategy and policy of national security of any country which we will discuss in this study.
The right assumptions
1-globalization of the economy increases elements of both strength and weakness of economy.
It is noted that globalization of economy of any country may necessarily lead its economy to become vulnerable to more unrest in many ways. They are represented in supply and financial crisis in addition to bud that hits the market of its major exports which will have a great impact on the performance of the national economy and thus on its influence at both, regional and international levels.
2- Positive effect of prosperity of the global economy on the national security of countries
It has become known that economic development and global economies overlap is reflected positively on the regional and local stability of most countries. Economic growth will in the long term increase employment and improvement of living standards of people. As a result, citizens' loyalty will increase and the performance of the government will be improved and opportunities of its economic policy success will increase. This will reduce threats to the national security and limits the influence of extremist groups that may target those states later.
3- Wrong economic policy in a globalized economy may adversely affect the national security
Applying any wrong economic policy in the light of globalization of economies may result in many threats to their national security. For example, flow of international investment capital into the countries has succeeded to enable them to fund many strategic and vital projects with little increase in the national savings rates. And thus, consumption rate has increased which in turn resulted in increase in internal and external debt. Pursing this approach without modifying the structural imbalance has increased the threat to national security and economy performance of those countries. Reduction of credit reputation of some of the largest national companies produced by this wrong policy may result in the loss of foreign investors' confidence in the national economy of those countries. So, they may turn towards other rivals economies that considered safer, or reducing size of the investments they already have in those countries. The inevitable result of this scenario is the negative effect on interest rates, consumption and investment rate as well as economic growth. The most important thing is the continuity in borrowing from other countries which will make the national decision of these countries linked to the interests of their creditors rather than linking it to their own supreme national interests.

Wrong assumptions
1-decrease of security threats on states because of the economic development policies of other countries.
It is true that economic prosperity of countries that have close economic ties with any country will increase the demand for key exports of those countries. However, their national security may be exposed to some risks due to this increase. If we take energy sector in UAE as an example, the more increase in the economic growth rate in the countries that have strategic partnership with the state or those export large quantities of its oil, the more size of demand of petroleum products of the state from those countries. This increase may encourage those countries to put more pressure on the state to open its energy sector for considerations and terms of the World Trade Organization in which the state is an active member. This will seriously damage the sector of oil production and national economy. As a result, level income and living will decrease which in turn will lead to domestic instability and affect national security and its international reputation.
2- Weakness of economies because of the current tide of globalization
It is true that economy of any country may be affected by globalization which hit most of economies, especially during the recent financial crisis, but it is also true that the effect of globalization on economy of any country is not isolated from fiscal and monetary policy adopted and implemented by the concerned state. If policies are right, they will positively be affected by globalization, and vice versa.

The main challenges facing UAE
1-startegic merger of economic and national security policies
This challenge depends on the nature of UAE and its structure as the Cabinet is directly responsible of implementation of foreign policy through Ministry of Foreign Affairs. But, economic policy responsibility often falls within the scope of the different Emirates. Therefore, this may result in contradiction between foreign policy and some local economic policies of some Emirates. The clear example of this contradiction lies in the state declared and clear position in various international forums concerning Iran's occupation of the three UAE islands and between the booming trade between Iran and some Emirates as Iran is considered one of the state's major trading partners. If the state is to defend its supreme national interests, such contradiction must be removed because the prosperity of economic and commercial ties with Iran will not be consistent with the state's rejection to Iran's occupation of the UAE islands.
2- Multi-polar global economy: western powers (America and Europe) as well as Japan have absolutely dominated global economy. But with the end of the cold war, the traditional alliance between those countries weakened, especially after emergence of other economic poles at the global level. Therefore, the concept of traditional prevailed hitherto has been changed. The most prominent of these emerging poles are China, India and Brazil. UAE's economic relations with the western camp were strong, so the west had provided it with the necessary assistance to protect its national security. But with the emergence of the new economic poles we believe in the importance of enhancing economic ties with them. It is not only for protecting the state's economic and commercial interests, but also to protect the national security in the long term. This is because the economic weakness of western countries will largely limit their ability to provide their allies in various parts of the world with the military protection.
Proposed mechanisms to implement merger of economic and national security policies.

It has become necessary to take economic policy into consideration when preparing the strategy of the national security as the international economic policy is considered as one of the permanent pillars to maintain national security. However, merger of economic policy within the strategy of the national security requires taking the following elements into consideration:
1-economic interests as the state's supreme interest
Taking economic interests as one of the state's supreme interests can be considered as a fact, but actually we find that economic policy is often considered as minor matter when foreign policy of the state is prepared. National security cannot be protected by sophisticated weapons alone, but by achieving the sustainable development and improvement of welfare for citizens and residents which is one of the major factors for protection of national security.
2- involvement of non-government organization
Implementation of the strategy of national security requires involvement of non-governmental organizations and institutions so that our national security is effectively and comprehensively protected. Workers of non- governmental organization have the ability to closely involve with the public and their daily concerns in order to reflect these concerns to the officials in form of recommendations that can be taken to protect all aspects of the national security. In other words, officials of organizations should be effectively involved in the implementation of the strategy of the national security, if not in some phases of its preparation according to the following:
1-coordination between the relevant authorities to take crucial decisions
It is important to involve the relevant authorities (individuals/institutions) when a certain policy is placed. This will ensure integrity of implementation of the policy especially its economic part. So, it is suggested that an economic expert should help formulating foreign policy of the state in order to protect its supreme economic interests as one of the most important pillars of protection of the national security.
2- taking economic cost into consideration when proposing foreign policy
We believe that it is important for the decision-maker to take into consideration the economic cost drawn by any foreign policy when adopted and implemented. So, it is necessary to make accurate and regular accounts for the cost borne by the national economy due to the international positions of the state. For instance, what is the rate of revenue and loss incurred by the country's economy due to the implementation of economic boycott on Iran?

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