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Obama’s Neoliberal Foreign Policy in a Neoliberal World
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By Carlos Ramirez

With the Iran nuclear negotiations having come to their conclusion in July, many pundits and experts in foreign policy remain befuddled by the philosophy informing President Obama’s actions on the global stage. To some, he is firmly within the Realist camp of foreign policy while to others there seems to be neither rhyme nor reason to some of his judgments.[i] Those who discern confusion in his policy-making cite his policy on Iran as the prime example. On one hand, he is negotiating quite flexibly with the regime in Tehran on their development of nuclear weapons. But, on the other hand, in regards to Yemen, Obama has been admonishing the Iranian leadership and treating it as a de facto enemy by supporting the Saudi’s aggressive bombing of the Iranian backed-Houthi rebels. So, which is it? Is Iran friend or foe:  a reliable negotiating partner or a terrorist regime not to be trusted?

To answer this question and to wrap our minds around these seemingly contradictory positions, we need to understand the overarching principles that inspire President Obama’s foreign policies. Neoliberal theory is the best explanatory lens through which to do this. Neoliberalism should be distinguished from Neoliberal economic thinking and from Neoliberalism’s main philosophical competitor in foreign policy circles, Realism. Neoliberal economics are the ideas associated with laissez-faire capitalism, which espouses free trade and small governments. Realism in foreign policy views the world as in a state of anarchy. Self-help solutions are viewed as the sole viable approach to survival. Self help is defined by Realists almost exclusively in security terms – the bigger your army, the more likely you are to influence another country’s behavior and therefore to survive this dog eat dog world.

President Obama’s policies are neither of these two. While the origins of Neoliberal economics and Neoliberal foreign policy are the same – they are both rooted in 18th century enlightenment thought - their current focus is very different. Neoliberalism in international relations is less concerned with free markets and the size of government and more interested in how governments and other actors in global affairs interact or co-operate. In other words, the contrast between the two philosophies can be distilled to the study of self-interest (Neoliberal economics) vs. the study of mutual interest (Neoliberalism).

In contrast to Realism, Neoliberals agree that anarchy is a fact of global affairs, but they believe it can be tamed through the establishment of relationships among public and private actors. The norms and codes of conduct that develop as a product of these relationships can be formalized into rules, laws and treaties - to be overseen and regulated by international institutions. In sum, Neoliberalism believes in building relationships that are later to be managed by international organizations. Academics like to use the fancy term engagement or, the even more magniloquent, interdependence to describe these relationships.

Establishing relationships, then, is important for Neoliberals For once they are established, dependencies arises among the parties involved. The partners in these relationships can be equally dependent or, conversely, the dependency can be unequal with one partner more reliant on the other. For example, a country with few natural resources may establish a relationship with an oil producing country to satisfy its energy needs. It is likely that the importing country will be in a weaker position than the exporter. To reduce dependence, the importing country may want to diversify its sources. Neoliberals use the concept of interdependence as a tool in policy making to check or influence other countries or, inversely, to reduce one’s own dependence. In the end, however, Neoliberals believe that countries value the benefits, especially economic benefits, accrued from relationships with other states. Countries are very wary to lose these benefits through conflict or diplomatic disputes and will invariably opt for co-operation over conflict whenever possible.[ii]

Neoliberals have also embraced the concept of smart power originally conceived by Harvard professor Joseph Nye.[iii] For Nye, smart power is the combination of hard and soft power. Hard power is the use of military might to obtain outcomes. Soft power refers to the use of persuasion to modify another’s behavior through consent rather than coercion. Nye contends that smart power can be identified with both Neoliberalism and Realism. However, smart power is more akin to Neoliberalism. Of the two, Nye emphasizes soft power over hard power. This is because Nye is a firm believer in interdependence as both a concept to explain modern international relations and as tool of foreign policy.

Interdependence is mainly observed in non-security fields such as economics, the environment, information technology and humanitarian issues. Likewise, soft power is a tool best used in these areas as it will not be of much use against incoming mortar rounds. Yet, their impact on the security field is not insignificant. Neoliberals do not argue that all conflicts or challenges in global affairs can be solved with soft power and interdependence. Indeed, they recognize the utility of hard power. However, most Neoliberals would agree that when hard power is used, it should be within a framework that includes soft power, institutions and interdependence as strategies to resolve the conflict. The use of hard power in conflict resolution should aim to reinforce soft power. It should also lead to the creation interdependence and to the establishment of some institutionalization of the conflict via formal organizations or informal alliances.

Neoliberal tendencies permeate President Obama’s foreign policy in both his pronouncements and in his actions. From the beginning of his presidency, Obama proclaimed that America “will extend a hand if you are willing to unclench your fist.”[iv] In May 2014, at West Point, he explained that “Just because we have the best hammer does not mean that every problem is a nail."[v] The President reasoned that America must always lead on the world stage... “but U.S. military action cannot be the only—or even primary—component of our leadership in every instance.”[vi] He went on to elaborate that partnerships, international institutions and engagement should be fundamental elements of American foreign policy.

In the so-called pivot to Asia, Obama has balanced a policy of engagement and interdependence with China together with more aggressive security movements including the firming up of alliances with Japan, South Korea and the Philippines. Yet, in the background to these policy actions, the ultimate goal has been to wrap China into a web of international relationships and obligations through institutions such as the World Trade Organization or ASEAN. In the end, China will recognize the benefits, economic and otherwise, from these relationships and will support international norms and rules if it is given the respect commensurate with its size and importance in the global system.[vii] The latter is something the US will need to come to grips with. The President fumbled the ball with the formation of the AIIB when America declined to become a member and discouraged others from membership as well. China immediately saw this as another instance of the US not recognizing China’s legitimate claim to some form of power sharing in the Asia region. Indeed, from China’s perspective, it looked more like a clenched fist than an outstretched hand, that is, containment over strategic partnership.

Neoliberalism is seen at work most clearly in the Middle East. In this region, President Obama has declined to indulge in the use of hard power if it is not duly wrapped in Neoliberal principles. In both Libya and Syria, President Obama insisted on the formation of informal alliances or coalitions before resorting to hard power for reasons other than the obvious costs - financial and human - of fighting alone. First, an alliance, like an institution, creates rights and responsibilities for its members. Such an agreement induces those involved to conform to behavior and strategies mainly proposed by the largest power – in these cases, the United States. Second, forming a coalition with other countries has legitimized the use of hard power. President Obama has sought to augment America’s soft power by acting multilaterally with the use of military force. By voluntarily renouncing unilateral force, the United States has gained the consent and support of other countries for the use of multilateral military action. This has enhanced America’s image and strengthened its foreign policy.

The best example of the use of hard power within a larger Neoliberal framework was the strategy to expel ISIS from northern Iraq. President Obama refused over the vociferous objections of Senator McCain and other hawks to assist the Iraq government until President Maliki was removed from power. The Shia leaning government of Mr. Maliki was clearly discriminatory against the Sunni’s in northern Iraq. For this reason, the Sunni-inspired ISIS was able to gain a foothold there. President Obama understood that a more impartial government catering to the needs of all Iraqis was necessary before beginning a military campaign against ISIS. In other words, President Obama implemented a soft power strategy of winning hearts and minds of the Sunnis in Iraq in order to neutralize their support for ISIS before engaging in the use of hard power.

In the long run, Iraqi Sunni acquiescence and their participation in a national political agreement will be necessary for both the defeat of ISIS and for the return of stability to Iraq. This cannot happen without fully recognizing and resolving the legitimate grievances of the Sunni community.[viii] These examples are emblematic of President Obama’s inclination to use the application of hard power for the purposes of a higher neoliberal end.

Since the end of the Second World War, the world order has been inspired by American principles such as democracy, free trade and the rule of law.[ix] The United States underwrote the resulting system through security guarantees and trade agreements that engendered unprecedented economic growth in the Western world.  The division caused by the Cold War froze much of the world out of the system, but after the fall of the Berlin Wall, this order expanded throughout the world. This expansion, however, caused major changes to the old order.[x]

First there was the diffusion of power from states to other actors including the rise in power of the individual thanks to the internet.  Hand in hand with this came the birth of unsavory organizations such as Al Qaeda and ISIS. The second main break with the past was the rise of non-Western powers especially in the Asia Pacific region, namely China.

The result of these power shifts has been an expansion of global interdependence. To describe this expansion, Professor Nye has famously remarked that power in the international system evolved in such a way as to evoke the image of a three dimensional chessboard.[xi] On the top board, military power is dominant. On the middle board, economic power is the main force with numerous rising states taking their rightful place as influential players on the board. The bottom board is characterized by transnational relations that are conducted outside the domain of governments. Here, international organizations, multinational corporations, non-governmental organizations, terrorist groups and individuals take primacy interacting with governments or with each other. On this board power is diffuse.

The metaphor of the three chessboards to describe our world is pertinent. Given the salience of soft power, institutions and interdependence in the Neoliberal world, it is fair to say that the chessboard is shaped as a pyramid with the top board, military power relations, taking on a smaller role in world affairs. The two bottom boards, larger in size and growing, is a reflection of the vast and deepening number of interconnections that take place among a variety of actors on a regular basis. They include issues as diverse as currency trading between large financial conglomerates to people exchanging chat messages over social media, or larger issues involving NGO’s and institutions about climate change and health issues. It is on these two bottom boards that we can observe not only the “rise of the rest” (i.e., in their numbers) but also the rising “power of the rest”.

Accordingly, President Obama’s foreign policy conforms to the image of world power structures as pyramid. From his relations with Russia, war in the Middle East to America’s ties with China, President Obama has relied heavily on Neoliberal principles to guide his actions. In the case of Iran, Obama’s eclectic policy is representative of his Neoliberal disposition. He is attempting to engage the Iranians by binding them into a nuclear agreement with the hope of also affecting the conduct of Iranian foreign policy. Moreover, on display to the Iranians, are the clear economic incentives of its reinsertion into the international community. At the same time, he is giving assurances to old allies such as Saudi Arabia that the United States has not abandoned them. Yet, the half hearted support of the Saudi bombing campaign in Yemen should be a clear indication that the US does not believe this approach will work without a full-fledged exit strategy. In the long term, the strategy will need to include the principles of regional rapprochement, interdependence and a movement towards democratic change throughout the region.

So, is Iran friend or foe? Viewed through a Neoliberal lens, labels are less important than a nation’s stance towards the Neoliberal world order. Those that stand in compliance with the norms and behaviors embodied in international treaties and are willing to play by the rules of democracy and human rights will reap the benefits of global interdependence. Those who break the rules must be ready to endure the wrath of economic vulnerability or, even worse, smart power’s other rough edged, lethal component – hard power. Neoliberals such as President Obama like to layout the alternatives clearly through engagement first. This way each country can make an informed choice and then be held responsible for it.

Carlos Ramirez is a full time Lecturer in the Department of Applied Sociology, Kindai University, Osaka, Japan where he teaches courses on international relations, development and communications. He holds an M.A. from the Norman Paterson School of International Affairs at Carleton University, Ottawa, Canada.



[i] For an example of those who see Obama in the Realist camp see, M. Yglesias, “Yes, Obama is a Realist. And he’s good at it, too.” Vox, December 19, 2014, http://www.vox.com/2014/8/8/5981543/obamas-foreign-policy-isnt-very-exciting

For those mystified by the President’s policies see, for example, D. Remnick, “Going the Distance: On and Off the Road with Barak Obama,” The New Yorker, January 27, 2014, http://www.newyorker.com/magazine/2014/01/27/going-the-distance-2

[ii] For a full treatment on interdependence, vulnerability and sensitivity among nations see the classic, R. Keohane and J. Nye, Power and Interdependence, Longman, Boston 2011.

[iii] J. Nye, The Future of Power, Public Affairs, New York, 2011.

[iv] President Barak Obama’s Inaugural Address, January 21, 2009,


[v] Remarks by the President at the United States Military Academy Commencement Ceremony, May 28th, 2014, https://www.whitehouse.gov/the-press-office/2014/05/28/remarks-president-united-states-military-academy-commencement-ceremony

[vi] Ibid.

[vii] M.S. Indyk, K.G. Lieberthal, & M.E. O'Hanlon, “Scoring Obama's Foreign Policy: A Progressive Pragmatist tries to Bend History,” Foreign Affairs 91, no. 3 (May/June 2012): 29-43.

[viii] A final solution may, in fact, be a partitioning of Iraq. The administration has not ruled this out. See, “Is the Partition of Iraq and Syria still Avoidable?”, Middle East Briefing, issue 87, vol. 2, July 24th, 2015. http://mebriefing.com/?p=1773

[ix] G.J. Ikenberry, “The Illusion of Geopolitics: The Enduring Power of the Liberal Order,” Foreign Affairs 93, no. 3 (May/June 2014): 80-90.

[x] For a good description of the changes in the new order and their impact on international relations including the two mentioned in this article see F. Zakaria, The Post-American World: Release 2.0., Norton, New York, 2011.

[xi] J. Nye, The Future of Power.

Comments in Chronological order (3 total comments)

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Fri, August 14, 2015 08:56 PM (about 65426 hours ago)
Thank you for a thought-provoking, insightful, and informative article.
Wed, September 02, 2015 01:21 PM (about 64978 hours ago)
This is a reasonable account of Obama's policy.l
Mon, October 17, 2016 05:38 AM (about 55121 hours ago)
This is a fantastic article. I have been using it with my IB Global Politics students at my International School in Shanghai, China. The article is ac
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