What is beyond dispute is that China’s global influence has expanded rapidly under the banner of the Belt and Road Initiative, with economic tentacles moving across South Asia, into Africa, and beyond. While many analysts have rebuked Beijing for implementing an exploitive strategy which mostly ignores governance, human rights, and rule of law issues, others – including this author – have noted that you can’t beat something with nothing. And in recent years it seems Washington has lacked a cohesive strategy for dealing with new geopolitical realities.
However, last August President Joe Biden signed the Inflation Reduction Act (IRA) into law. The massive bill, which includes a $369 billion investment in energy security and climate change provisions, was hailed as a major domestic legislative accomplishment, indeed a priority for the Administration. The IRA represents the largest investment ever in climate change, conservation, green energy, and retooling America’s manufacturing base. With all the goodies tucked into IRA, the United States is on track to cut greenhouse gas emissions by more than 50% from 2005 by 2030. At the same time, the bill aims to create millions of new jobs in the clean energy and tech sectors; it has already reportedly created 100,000.
“The business of America is business.” President Calvin Coolidge’s famous quote has proved quite durable. Business and the economic strength have long been the foundation of U.S. global influence: agriculture and food stuffs, automobiles, appliances, energy, pharmaceuticals, computers and technology, even commercialized pop culture and fast food restaurants. Years ago, stepping off a Ford bus near China’s Great Wall, I was greeted not by an eager historian but by a large billboard featuring Colonel Sanders, arguably America’s most well-traveled diplomat. KFC aside, the point remains that business has been the harbinger of American influence abroad.
“If you build it, they will come.” Although not advertised as a foreign policy bill, the IRA is already having enormous international implications. Indeed, if the IRA achieves even half of its expected deliverables, the newer, greener, more sustainable business model constructed by Washington will have more global impact than any policy decision implemented in decades. This was part of the message delivered to UCF students and faculty recently by Dr. Frances Colón, who is a member of the President’s Council of Advisers on Science and Technology. Colón is also the Senior Director of Climate Policy at Washington’s Center for American Progress.
Colón and other proponents note that while the IRA makes massive government investments, what it really does is provide the necessary incentives for private-sector industry to transform America’s industrial base, and in so doing forcing global competitor to react similarly lest they risk being left in history’s dustbin. This will have enormous impact on industrial processes and products, the labor market, and global trade. It could very well have more long-term impact on climate change and the environment than any climate agreement.
The point being that while American citizens will certainly benefit from jobs and tax credits, reduced greenhouse gases, a cleaner more sustainable energy mix, and a healthier environment, the IRA is transforming global industry and economics. Europe and Asia are debating how to respond to the IRA, and others, trade partners and competitors alike, will be forced to move swiftly and boldly to keep pace with the United States.
From Russia, without love. The IRA’s timing also comes as Russia finds itself locked in an increasingly deadly and draining war in Ukraine. What was supposed to be an easy Russian victory has turned into a costly quagmire. Moscow’s invasion brought a renewed sense of unity and purpose to NATO. Vladimir Putin’s attempt to use the EU’s reliance on Russian natural gas as a weapon to undermine the West caused short-term harm. But counterintuitively, it created a path for Europe to wean itself off Moscow’s fossil fuels. It has strengthened and sped up the EU’s shift to renewable energy. To be certain, Russia will remain a major international player, economic and otherwise, after the Ukrainian conflict is resolved. But it will be forced to adjust to new economic realities due to its own short-term decision-making. This includes the drive to cleaner energy and new supply chains, as well as implications of the IRA and the inevitable policy changes other nations will implement in response to it.
Global Perspectives & International Initiatives has facilitated dialog, research, partnerships, lectures, and other activities looking at the water-energy-food nexus, and its implications on geopolitics. Geopolitics are never static. With the IRA, Washington has implemented a new global strategy, not just an important domestic policy.