Why Foreign Policy Matters More Than Ever: Six Key Reasons

The world is undergoing a seismic shift. Geopolitical fragmentation has become a permanent feature. Globalization is being challenged. Climate change is forcing an unprecedented pace towards a cleaner world. These and other transformative changes are placing increasing pressure on governments' foreign policies, viewed as public policies that bridge external realities with the internal needs and interests of each country. Here are six compelling reasons why foreign policy as a state activity will become an increasingly complex task to design and implement.

1. The Rise of Interconnection

Over the past three decades, the world has witnessed a significant increase in the interconnection between central states (the affluent northern countries) and peripheral states (the so-called global south). This economic and social interconnection is tied to a broader structural shift: the dispersion of power from north to south and east to west. These two intertwined processes are expanding the international society in ways rarely seen in history, resembling a "decolonization 2.0". In this transformed world, we will encounter more players, greater diversity, and a wider array of interests than ever before. Achieving balance between governments will be increasingly difficult. Consequently, foreign policy will become a crucial tool for organizing the necessary coexistence and fostering possible cooperation in a more pluralistic and economically diverse global landscape.

2. The Convergence of Power Politics and Capitalism

The diffusion of power (and the resultant competition, particularly between the United States and China) and the expansion of globalized capitalism will deepen the interconnection between economic, political, and strategic/military sectors. This is reshaping the competitive dynamics among major powers and altering state incentives to enhance their autonomy without destabilizing the overall system. As a result, foreign policy will grow in complexity, necessitating greater collaboration among traditionally siloed agencies like foreign ministries, defense ministries, and economic ministries. In such a world, the complexity, scale, and variety of geopolitical risk will continue to escalate.

3. The Proliferation of Global Issues

In this context of power diffusion and expanded capitalism, the range of international issues—such as health, education, environment, human rights, technology, trade, and migration—will increase the intersections between domestic and foreign policy. This will inevitably change how foreign policy is conducted. Public opinion, social media, and pressure groups will exert more influence on state orientations. Domestic actors will increasingly ask, "what’s in it for me?" when examining their countries' external agendas. Foreign policy will become a two-level game, as Robert Putnam described state negotiations, where leaders must negotiate simultaneously at home and abroad to achieve acceptable balances on both fronts.

4. Political Polarization

Ongoing political polarization in many countries, both north and south, will make foreign policy another battleground for political differences. Foreign policy is becoming more politicized and ideologized than ever before. Polarized societies will impact external agendas, aligning foreign policy with electoral incentives more acutely. In democratic societies, foreign policy will be increasingly tied to electoral cycles and more attuned to the shifting preferences of voters, expressing positions that are difficult to reconcile in polarized countries.

5. The Changing Role of Corporations

The role of the private sector is evolving. Large corporations have always played a strong role in politics, seeking to shape the business climate and public decisions in their favor. However, two additional dynamics are now at play: (1) increasing pressure from organized civil society for companies, even foreign ones, to adhere to better social, legal, and environmental standards; and (2) corporate stances on international public issues that provoke reactions from other governments. Consider when Daryl Morey, General Manager of the Houston Rockets, tweeted in support of Hong Kong freedoms, prompting the Chinese government to ban NBA activities in China. Similarly, when Airbnb refused to list accommodations in Jewish settlements in the West Bank, it faced criticism from Israel and threats from several US states to delist Airbnb from pension fund investment lists. And, of course, Twitter’s permanent suspension of Donald Trump's account in January 2021. Companies now have responsibilities not only to shareholders but also to employees, local communities, and the environment.

6. Increased International Political Risk

The growing interaction between markets and politics at the global and transnational levels is increasing international political risk. Simply put, political risk is the potential for politics to interfere with the market, affecting production, exchange, or consumption. Today, as Nigel Gould-Davies notes, politics interferes with the market by destroying (as in war); capturing (as in expropriation); regulating (whether production or monetization); and blocking (invoking national security to prevent the entry of goods). Unlike the old political risk in "difficult and distant countries", current political risk will appear in both emerging and advanced states. A world with greater political risk will require better-prepared diplomacy to identify turbulent scenarios, whether internal or external.

In summary, we have entered a world with more actors, more diversity, and more complex issues intertwining the economy with security and internal with external matters. All this in a context of heightened international political risk, with more polarized societies and businesses seeking to influence international normative conversations. The result will be an overwhelmed world, unable to process in an orderly manner the numerous demands from many actors and unable to foresee the negative externalities of uncontrolled interaction. As Randall Schweller suggests, such a world will become increasingly entropic. Consequently, actors will have less capacity for long-term thinking and more need for short-term reactions. "If there is one fixed truth about the past three decades—or even longer," observes Nigel Gould-Davies, "it is that the equilibrium of power and ideas that underpins the international order can shift rapidly and unpredictably."

In such a world, having a robust foreign policy will become increasingly essential. This is especially relevant for developing states. Ignoring or continuing foreign policy as if nothing has changed is a luxury they cannot afford. Good foreign policy starts with a consistent diagnosis of the world, evaluates alternatives, and seeks to achieve its goals with the best available partners. It invests in human resources, training, and intelligent information. It expresses the best version of its country and international identity. It articulates internal demands with external incentives. It is accountable to its people and the world. Fundamentally, it asks about the social inclusion it can generate. Saying this is easy, but the real challenge lies in recognizing these needs and putting them into practice before it is too late.