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Global economic competition has been intensifying for at least a decade, and the dominance the United States once took for granted is eroding. Whether it be disputes over tariffs and global trade, rivalry with China and the rise of developing and emerging economies, or the scramble for critical minerals and protected supply chains, economic issues are driving geopolitics—and they will for the foreseeable future. Across the political spectrum, there is rare agreement that more proactive and assertive efforts to secure U.S. supply chains and advance targeted industrial policy are prerequisites for future prosperity. The central question is how to do these things effectively.
Of all the areas of U.S. economic competition, energy and critical minerals are among the most consequential and contested. The foreign policy debate over clean energy has undergone a fundamental shift. For much of the past two decades, the focus was multilateral, centering on the persuasion of countries to commit to decarbonization targets. That frame no longer captures reality. Across party lines, energy security, industrial competitiveness, and national security are now understood to be intertwined. The countries that lead energy manufacturing, critical mineral supply chains, and technology standards will not only win the competition to build the global and domestic industries of the future, but also shape the geopolitical order of the next generation. Expanding available energy sources beyond fossil fuels is now an economic and energy security imperative, as well as an environmental one. The restrictions to free passage through the Strait of Hormuz, even if temporary, have made this point plain for many governments.
China has placed an early and aggressive bet on diversifying energy sources. Chinese firms now dominate solar panel manufacturing, battery production, and critical mineral processing, controlling the majority of refining capacity for the minerals that underpin every major clean energy technology. This is the result of decades of coordinated state investment, subsidized financing, and strategic positioning across emerging market supply chains. The United States is lagging in upstream and midstream capacity and remains deeply reliant on Chinese-controlled supply chains for materials essential to both the energy transition and national defense. Still, massive commercial opportunities remain for U.S. businesses and private capital, particularly in emerging markets where energy demand is growing fastest and where technology partner choice carries long-term geopolitical significance. If global clean energy investment in developing economies must reach $2.2–2.8 trillion annually by the early 2030s to align with the Paris Agreement—as the International Energy Agency projects—the U.S. private sector, backed by smart government tools, can compete for a significant share.
Across the political spectrum, there is rare agreement that more proactive and assertive efforts to secure U.S. supply chains and advance targeted industrial policy are prerequisites for future prosperity.
Competing effectively requires treating energy policy as industrial policy, and recognizing that the United States cannot win alone. Because the goals of mineral autonomy and technological superiority cannot be achieved unilaterally, close collaboration with allies and partners is essential. Proactive “friend shoring” (i.e., actively supporting allied-nation firms and projects, not just U.S. companies, to build durable supply chains), combined with energy diplomacy aimed at blocking geopolitical competitors, should be core elements of U.S. strategy. The energy transition has not replaced traditional energy security concerns; instead, it has layered new risks—Chinese supply chain dominance, critical mineral chokepoints, and technology standards races—on top of older vulnerabilities such as fossil fuel dependence. Addressing these dynamics simultaneously is one of the defining challenges for U.S. foreign policy.
Economic statecraft is defined as the use of economic tools to advance a country’s foreign policy objectives, whether positive or punitive. On the positive side are inducements: trade agreements, foreign assistance, investments, and loans that strengthen partnerships, advance U.S. commercial interests, and bring countries closer together. On the coercive side are penalties: sanctions, tariffs, export controls, and other restrictions that pressure or shape foreign government behavior. Cutting across both is economic security: the national security imperative of managing risks to the foundation of the domestic economy and helping it thrive. Much of the current policy debate centers on how to deploy the tools of economic statecraft more adeptly, in partnership with the U.S. private sector, without provoking unplanned retaliation, dragging down economic growth, or blunting a specific tool through overuse. Government practitioners also debate how to build the institutions capable of effectively implementing these tools—inducements or penalties—at the speed and scale the moment demands.
Over the past decade, administrations from both parties have attempted to keep pace with a shifting competitive landscape. The CHIPS and Science Act, the transformation of the Overseas Private Investment Corporation into the U.S. International Development Finance Corporation (DFC), the creation of Embassy Deal Teams and energy and critical mineral initiatives, and the repeated restructuring of the Department of State’s economic bureaus all reflect genuine efforts to modernize the tool kit. The current administration has accelerated this trajectory, repositioning the DFC as a central instrument of economic statecraft with a higher portfolio cap, launching Project Vault to establish a strategic critical minerals reserve, and directing the Department of Defense (DOD) to take equity stakes in domestic mining ventures to crowd in private capital and ensure supplies. The tool kit is expanding, but lacks clear coordination or guardrails, an overarching strategy, or an institutional architecture built to manage it.
The period immediately after the terrorist attacks of September 11, 2001, was a moment to reassess the organization, operation, and information sharing of U.S. intelligence and law enforcement agencies. Profound changes were needed, and many were made, including the creation of the Department of Homeland Security and the Office of the Director for National Intelligence. The United States is not physically under attack at present, but the challenge today is no less existential for the health and future prosperity of the country.
This report describes the various tools of U.S. economic statecraft, diagnoses the institutional gaps that prevent the United States from executing economic statecraft at the speed, scale, and impact required, and lays out a concrete agenda for change, focusing on the Department of State. The report draws from over 50 expert interviews with current and former U.S. government officials (career staff and political appointees), congressional staffers, and representatives from think tanks, NGOs, foundations, and the private sector. The report zeroes in on some of the positive tools of economic statecraft and asserts the need for a new strategic architecture, as well as resources for execution and workforce requirements. It focuses on changes needed at the State Department, particularly in light of the new foreign assistance responsibilities State has inherited following the closure of the U.S. Agency for International Development (USAID).
This is a unique moment of flux in U.S. economic statecraft. The disruption caused by agency restructuring, staff reductions, and the remodeling of the public service bureaucracy is both an administrative challenge and a forcing function. It demands a clear-eyed reckoning with what operating model elements are needed to pursue economic statecraft effectively, and which inherited structures are no longer fit for this purpose. Any potential changes to the State Department’s economic statecraft efforts will impact other agencies, and vice versa.
The tools of U.S. economic statecraft fall into four primary categories: trade, assistance, finance and investment, and partnership. They are distributed across a complex web of federal agencies, each with distinct authorities, capabilities, and mandates.
Investment and finance tools leverage direct equity, debt, and risk mitigation tools to de-risk investment and crowd in private sector capital. Key agencies include the DFC, which provides direct investment, concessional loans, and risk mitigation, and the Export-Import Bank of the United States (EXIM), which provides critical debt and lending tools for export credit, supply chain partnerships, and, increasingly, critical minerals stockpiling. The Millennium Challenge Corporation (MCC) contributes large-scale compact grants that help crowd in private investment for hard infrastructure such as ports, energy systems, and transportation networks. The Department of the Treasury oversees fiscal and policy-linked tools such as green bonds and engagement with multilateral development banks. The DOD has taken an increasingly active role in direct investment to protect critical technology manufacturing, and the role of the Department of Energy (DOE) in critical minerals supply chain financing is also growing. USAID filled a vital niche by providing high-risk, low-dollar catalytic grants and first-loss capital to mobilize private investment funds, a capability that currently lacks a clear home.
Export controls, sanctions, tariffs, and trade facilitation are used to secure supply chains and ensure lasting U.S. competitiveness. The Department of Commerce is the lead agency for promoting U.S. exports, conducting commercial advocacy on behalf of U.S. businesses, attracting foreign investment into the United States, imposing select tariffs, implementing trade remedies, and controlling the export of sensitive technologies. Commerce’s role in guiding U.S. companies in overseas markets, investment regulations, and foreign government relationships continues to expand. The Department of the Treasury plays a pivotal role through its management of economic sanctions and asset freezes. The Office of the U.S. Trade Representative (USTR) serves as the chief negotiator for trade agreements and frameworks, while the State Department supports these efforts through diplomatic negotiations and policy coordination on both sanctions and export controls. U.S. Customs and Border Protection (CBP) helps to implement trade policy, administering programs and enforcing trade restrictions. Previously, USAID provided both “retail-level” trade facilitation to connect buyers and suppliers and higher-level work that benefited all companies and stakeholders, such as helping partner governments streamline foreign customs procedures.
Bilateral frameworks and multilateral platforms forge global coalitions, set international market norms, and advance economic partnerships. The State Department sits at the center of these efforts, leading bilateral energy dialogues, multilateral climate platforms, and supply chain initiatives such as the Minerals Security Partnership. The State Department’s primary comparative advantage is its presence in every country and its direct engagement, giving economic statecraft overseas strategic coherence at the ground level. The State Department holds formal coordinating authority over other agencies in the field through its ambassadors, and embassies often convene country-level economic working groups composed of all relevant agencies represented. The Department of Commerce focuses on commercial advocacy and norm setting; other agencies are brought into international partnership work depending on the topic.
“Upstream scaffolding”—the early-stage project preparation, market-enabling activities, and capacity building required to make commercial deals viable in emerging markets and developing economies—and project preparation are essential to creating an enabling environment for commercial deal flow. MCC’s broad bilateral compact agreements with partner governments are linked to performance measures that improve the governance systems surrounding the investment climate. The DOE provides significant technical expertise in governance, infrastructure standards, and joint research and development (R&D), while the U.S. Trade and Development Agency (USTDA) focuses specifically on grant-funded feasibility studies and infrastructure standards support to prepare projects for eventual financing. The Department of Commerce and the State Department also manage specialized programs for human capital and governance, with Treasury providing technical assistance for fiscal policy and financial transparency.
Historically, USAID managed the vast majority of these functions, including governance reform, institution and regulatory strengthening, and direct project implementation, as well as debt and lending, risk mitigation, early-stage grants, first-loss capital in private sector–managed funds, trade facilitation, and direct implementation of energy access programs. Its annual economic development obligations grew from $2.8 billion in fiscal year 2015 to $8.6 billion in FY 2024, including a steady increase in energy programming from $410 million in FY 2015 to $796 million in FY 2024. USAID’s market-enabling work—institutional strengthening, technical assistance to regulatory authorities, sector analysis, and buyer-supplier linkages—was the connective tissue that prepared emerging markets for U.S. commercial participation.
Taken together, the tools held by U.S. departments and agencies represent a formidable arsenal. Yet four structural failures consistently undermine the State Department’s effectiveness in executing U.S. economic statecraft.
In Canada, the United Kingdom, and Australia, merging development agencies into foreign ministries failed to achieve the desired “policy coherence” advocated by proponents, according to independent reviews in the years afterward. For example, five years after Canada’s merger, the Organisation for Economic Co-operation and Development found that coherence between diplomacy, trade, and development had not materially improved. In 2024, the United Kingdom’s National Audit Office found that the Foreign, Commonwealth and Development Office (FCDO) had no system to measure whether promised gains in coherence were realized. In Australia, stakeholder surveys showed persistent cultural resistance within the Department of Foreign Affairs and Trade to development objectives, which undermined the coherence dividend. Moreover, as seen in Canada and the United Kingdom, a loss of experienced in-house staff forced foreign ministries to abandon direct bilateral project execution and shift to writing checks to multilateral “pass-throughs,” such as the World Bank or United Nations, severely degrading the government’s ability to influence projects on the ground.
Solving economic statecraft challenges requires coordinating policy and tools that are spread across nearly 20 agencies with varying and often overlapping domestic and overseas mandates. The result is a fragmented alphabet soup of agencies without a strong coordinating entity. When no single entity owns both the strategy and the resources, coordination becomes advisory and execution becomes voluntary. Numerous think tanks across the political spectrum have sought to address this coordination problem with a centralized, coordinating command center, an economic security center, and an economic statecraft doctrine. All have their merits and exist on a spectrum of the requisite bureaucratic overhaul. While this paper focuses on the State Department, tackling one department’s challenges invites solutions for a government-wide problem that plagues department-level work.
A new U.S. Economic Security Council (ESC) at the White House could serve as this “missing middle” between administration policy guidance and execution across both domestic and international dimensions. The ESC would have a policy-setting function, working closely with the National Economic Council (NEC), the Department of Commerce, and expert agencies to develop industrial policies that harness the growth trajectories and trends of the future (e.g., advanced batteries, geothermal, and carbon capture). It would also have explicit authority to coordinate sectoral or country-level strategies and their detailed execution, providing rapid feedback that quarterly executive-board processes between agencies are too slow and onerous to deliver. It would be convened by a dual-hatted Principal Deputy National Security Advisor, who would have the ability to chair Deputies Committee meetings and balance domestic and foreign policy equities.
The ESC would ideally be codified through legislation or, at minimum, in an executive order, so that it has explicit authority to direct implementation through agencies. Congress should be involved in the design and purpose of the ESC to avoid the structure being easily swept aside in a new administration, and to help define key elements and priorities of U.S. industrial policy. To prevent duplication, the National Economic Council staff and National Security Council (NSC) Intecon positions could be migrated to the ESC. This plussed-up team would add bandwidth so that it could meaningfully engage in agency workflows at the sector and country level. The Trump administration’s new National Energy Dominance Council reflects ongoing experimentation in interagency architecture, though it is too soon to determine whether this will be an effective structure.
The State Department and the Commerce Department might be viewed as possible candidates to play this coordinating role, but a single lead agency is unlikely to overcome many of the pitfalls that have plagued previous whole-of-government economic initiatives: insufficient policy heft, limited ability to steer congressional appropriations, insufficient linkages with domestic industrial policy, and a tendency to become mired in bureaucratic turf wars due to being placed in a specific agency. State is uniquely placed to harmonize U.S. tools and agency contributions overseas given its leadership of U.S. embassies and consulates globally, but it lacks the domestic expertise or regulatory authority needed to lead the government’s overall economic statecraft agenda. Conversely, Commerce’s linkages with the U.S. private sector are unmatched, and its tariff, export control, and export promotion mandates are central, but it lacks the budget and interagency heft to lead an international interagency effort. Moreover, agencies and staff reap no rewards from Congress or in performance evaluations by contributing to the success of other agencies’ work or taking more time to navigate complex domestic and foreign policy equities. Successful economic statecraft should not be left to the force of persuasion at the staff level nor be made subject to the whims of bureaucratic competition between agencies. Successful U.S. economic statecraft, and the execution of industrial and energy policy across the U.S. government, thus requires something different.
Even if an ESC is not the answer, bold new ideas must be imagined in order to break away from the methods and structures that have served good purpose for decades but are now plainly inadequate.
Lessons Learned: A Decade of Interagency Economic Initiatives
Prosper Africa, a two-way trade and investment initiative between 17 U.S. agencies and African countries, provides a ready example of why nesting whole-of-government economic initiatives at a single agency proves problematic. Launched during the first Trump administration in 2019, Prosper Africa was led by a coordinator and staffed by an executive secretariat housed at USAID. Despite its mandate, Prosper Africa had no authority to coordinate interagency members and synchronize efforts, focusing instead on offering services that filled interagency gaps and mobilized private capital.
Power Africa, a 12-agency initiative launched during the Obama administration in 2014 and also housed at USAID, benefited from greater NSC involvement in its initial years, but had a weaker link to U.S. energy policy and focused mainly on development objectives.
The Partnership for Global Infrastructure and Investment, the Biden-era alternative to China’s Belt and Road Initiative, faced no shortage of high-level NSC/NEC support, but controlled no resources and spent significant time and energy pressing other agencies to engage in key corridor projects.
The global economic challenges cited above, combined with fragmented and siloed government agencies and tools, require a fresh rethink of how the State Department organizes itself to support an economic strategy for the future. New ideas are needed to tackle a cascade of problems that, put together, must be addressed comprehensively by reforming structures, resource delivery, and the economic workforce.
Re-Empower the Economic Bureaus and Undersecretary for Economic Affairs
Economic statecraft, due to its global scope, should be the job of all relevant parts of the State Department as a whole—not of a single office, envoy, or initiative. The undersecretary for economic affairs is the right institutional home for the leadership of this mission inside the State Department. Indeed, it already is on paper: a Senate-confirmed, high-level official with direct access to the secretary who can join relevant NSC Deputies Committee meetings. However, the undersecretary—or “E,” as the person is called inside State—needs to be better positioned and authorized to marshal department resources in service of global economic statecraft goals and harmonize State’s actions with broader whole-of-government strategy. The role is not only critical in supporting the secretary of state’s chairmanship of the executive boards of the DFC and MCC and participation as an ex officio member of the EXIM board; the E line of bureaus should also be transformed into stronger entities that can exercise thought leadership and coordination power and be a hub for managing economic statecraft resources.
Avoiding Special Envoys: There is a temptation to demonstrate policy ambition by appointing a special envoy for top priorities, such as clean energy. This is understandable, but it is also self-defeating. Envoys with broad mandates signal to everyone outside their remit that administration priorities are someone else’s job, hollowing out the institutional responsibility that should sit with Senate-confirmed leaders and established bureaus. By empowering the undersecretary of economic affairs, the shifts inside the State Department toward a greater focus on economic statecraft would also be institutionalized, making it harder for them to drift from their original purpose in the future. Where special negotiators at State are genuinely needed—for multilateral climate talks, specific corridor arrangements, or economic partnerships—their mandates should be narrow, time-limited, and explicitly linked to the undersecretary. They should be empowered by E, not positioned above or adjacent to it.
Pull quote: The State Department’s diplomacy can serve as the connective tissue that gives economic statecraft overseas its strategic coherence, so that the tools of DFC financing, EXIM loan guarantees, Commerce export promotion, and bilateral energy partnerships can be made greater than the sum of their parts.
Leading Economic Diplomacy Initiatives: The State Department’s enduring comparative advantages are its presence in every country and its direct relationships with foreign governments, which enable it to lead bilateral frameworks, multilateral platforms, and supply chain partnerships. The State Department’s diplomacy can serve as the connective tissue that gives economic statecraft overseas its strategic coherence, so that the tools of DFC financing, EXIM loan guarantees, Commerce export promotion, and bilateral energy partnerships can be made greater than the sum of their parts. E should lean into this broader role by owning and managing economic diplomacy initiatives. The Minerals Security Partnership—now the Forum on Resource Geostrategic Engagement (FORGE), a group of 55 countries that focuses on pricing and trading critical minerals—is a prime example. The proposed Energy Security Compact model—as referenced in recent draft Senate and House legislation—is another kind of initiative that E should be positioned to lead.
Managing State’s Economic Statecraft Resources: The E Bureaus should assume full responsibility for coordinating and managing State’s economic statecraft programming to advance U.S. economic goals and industrial policy in partnership with allies and the private sector. Consolidating strategic direction over these resources under E, rather than managing them as separate bureau equities spread throughout the department, would give the undersecretary real tools to match the coordinating role the position demands. This critical function has a foundation in the ongoing programmatic work within the E Bureaus but would require significant enhancements to handle greater responsibilities. For example, estimated program levels in FY 2023 included $224 million at the Bureau of Energy Resources, the Bureau of Economic and Business Affairs, and the Bureau of Oceans and International Environmental and Scientific Affairs, collectively. The first two bureaus now compose a single Bureau of Economic, Energy, and Business Affairs.
Anticipating Regional Bureau and Functional Bureau Dilemmas: Because regional bureaus control bilateral and regional policy, E’s ability to advance topline economic goals depends on retaining control of economic statecraft resources. This requires E to strike a careful balance between devolving a portion of resources for field-level execution, building specialized units to manage global contracts and awards, and working in coordination with the Office of Foreign Assistance Oversight (formerly known as the F Bureau) and regional bureaus. Technical offices in the E Bureaus should manage complex, high-dollar, or globally scoped programs that require specialized civil servant expertise. For example, catalytic grants to private funds and endowments demand financial and contractual experience that cannot easily be replicated in regional bureaus or in the field. Similarly, diplomatic and policy partnerships whose advancement requires funding—and in which program design is inseparable from political strategy—should be managed from technical offices within E that can integrate both dimensions.
This does not mean that regional bureaus do not have a vote in how economic statecraft resources are spent. On the contrary, regional bureaus and embassies should concur with program resources that touch their regions and countries, and should be integrated in program design efforts led through E. In many instances, E Bureaus may decide to pass resources directly to regional bureaus or embassies—or even other agencies—for further program design and obligations, but this decision needs to be made consciously as part of a larger strategy with defined goals. See further discussion below on devolving resources to the field to accelerate country-level program execution.
Create a Branded “Global Economic Statecraft Fund”
Congress should establish a distinct pot of foreign assistance resources, branded the “Global Economic Statecraft Fund,” initially scaled at $1–2 billion, to provide the interagency with targeted resources to advance U.S. economic goals, energy resilience, and industrial policies. This fund would be developed in partnership with allied countries and target markets, in both developed and developing countries. It should be broken out from the current $6.8 billion National Security Investment Program, which consolidated the Economic Support Fund, Development Assistance, and Assistance for Europe, Eurasia, and Central Asia accounts in the FY 2026 appropriations, or from the administration’s $5 billion America First Opportunity Fund request in the FY 2027 budget, for better oversight and specific uses. Under the guidance of the Office of Management and Budget and a newly empowered coordinating authority for U.S. economic statecraft efforts (i.e., an ESC or other entity), these foreign assistance resources would be provided to the State Department to implement national economic strategies overseas and create new programs that help solve specific gaps (see Economic Tools below). These resources can (and sometimes should) be passed to other agencies to leverage their unique contributions toward specific outcomes.
In its appropriating language, Congress should specify the principles guiding the fund’s management at the State Department, which could include
Double Down on Useful Economic Tools
With the elimination of USAID, the U.S. government lost a primary source of upstream scaffolding. Although USAID’s most prominent and well-established work involved public health and humanitarian response, the agency’s economic growth programs—which grew from $2.8 billion to $8.6 billion annually over the past 10 years—were squarely focused on private sector development and institutional strengthening that created jobs, expanded markets, and attracted investment opportunities.
Drawing from the Global Economic Statecraft Fund discussed above, these tools should include the following:
USAID filled this gap by partnering with institutional investors and fund managers to provide catalytic grant capital and seed funding in emerging market funds, often with success in leveraging 10–100x the amount of private capital. For example, the Green Guarantee Company, the first privately managed guarantee company dedicated to promoting climate finance through green bonds and loans, was seeded with an initial $8 million grant from USAID and Prosper Africa, $2 million from the State Department, and other investments from the United Kingdom’s FCDO, the Nigeria Sovereign Investment Authority, and Norfund. The fund raised $100 million in initial investments from public and private sources for its 2024 listing on the London Stock Exchange and has the ultimate goal of a $5 billion guarantee capacity for climate finance.
Because State’s primary metric is geopolitical and national security outcomes rather than financial returns, it can justify a higher risk premium than the DFC. State’s grant-making capabilities in this area would be designed to complement the DFC’s debt, equity, and risk guarantee tools. Successful execution, however, requires a genuine cultural shift: a “patient capital” mindset with longer planning horizons, contracting and legal approval processes that correspond to how the tool works, and a willingness to move away from short-term diplomatic announceables toward long-term strategic positioning.
Optimize Embassy Deal Teams for Transactional Focus
Introduced during the first Trump administration and reinforced during the Biden administration, U.S. Embassy Deal Teams are the tip of the spear for U.S. economic statecraft priorities overseas. These interagency working groups—usually chaired by an economic officer or jointly with a foreign commercial service officer—bring together the relevant sections and agencies at an embassy and help U.S. companies do business in their markets. Sectoral expertise and resources often reside in Washington, but these officers offer invaluable firsthand experience and context on specific market opportunities.
Critiques of Deal Teams abound. They tend to become focused on process, incoming visitors, and readouts from government meetings, or are simply gathering data in a shared Excel file. Further, in many mid- and small-sized embassies, officers may lack the expertise or connections to filter or advance viable commercial opportunities. Some might argue that the lack of “game-changing” deals advanced via Deal Teams suggests that little has been gained through this model thus far. The desire for quick wins at the embassy level is strong, but deals can sometimes take years to advance and reach financial close.
Embassy Deal Teams should be distinct in purpose from traditional economic working groups, which might handle the routine business and work processes at embassies; Deal Teams should instead focus on private sector transactions. The most effective Deal Teams have front office leadership and participation. An ambassador or deputy chief of mission routinely meets with private sector partners in the course of their duties, and the White House and Economic Security Council should charge them with specific economic mandates. An ambassador is uniquely positioned to secure time and resources from Washington to give a commercial opportunity full consideration and assist it in moving from one stage of the project life cycle to the next. Ambassador leadership can help prioritize transactions that Deal Team members should work on collectively, and ambassadors should be responsible for their Deal Team efforts. A top 10 list of priority deals with front office visibility could be particularly useful in bringing clarity and focus.
Getting the right mix of participation at Deal Team meetings is as important as the deals under consideration. The inclusion of embassy local staff can help bring institutional experience to bear in the consideration of new opportunities. Regionally based agency representatives, such as Commerce, USTDA, the DFC, and the U.S. Department of Agriculture (USDA), are invaluable participants—even if virtual—during Deal Team meetings. Congress can also help to increase the effectiveness of Deal Teams by expanding Commerce’s Foreign Commercial Service (FCS), which is badly under-resourced and under-staffed for its vital mission overseas. For example, Commerce deploys roughly a dozen FCS officers across all of sub-Saharan Africa—a woefully thin footprint in a region that is poised for enormous market expansion and sits at the center of geostrategic competition with China. Absent the direct participation of FCS officers or USTDA, DFC, and USDA staff, State’s Embassy Deal Team members need to have baseline knowledge of the U.S. government tool kit to make referrals to the appropriate agency, be it in the realm of exports, critical minerals, or energy infrastructure.
Today’s geopolitical competition will be won by professionals who can leverage economic interdependence. The State Department needs to aggressively upskill its workforce and enhance staff expertise and networks both in Washington and in the field. President of the Economic Security and Technology Department at CSIS Navin Girishankar argues that the United States urgently needs a new class of “economic warriors” and that the State Department should take up this call.
Acquire Specialized Expertise in Washington and in the Field
The next era of economic statecraft demands specialized expertise in the fastest-growing sectors of the global economy—energy, AI and digital technologies, infrastructure, critical minerals, and healthcare—as well as fluency in the life cycle of a deal, project finance, and trade and investment issues. The Department of State depends on foreign service officers (FSOs) and foreign affairs officers (civil servants) who were trained as generalists and expected to learn on the job.
The Department of State should not seek to replicate the deep sectoral expertise housed elsewhere in the interagency, but should instead cultivate steady civil servants with sectoral backgrounds and program management skills. In order to better leverage and bring forward expertise from other departments and agencies, the E Bureaus in Washington need baseline fluency in these sectors to help translate between technical agencies, engage foreign governments on complex energy partnerships and ally-shoring objectives, and participate meaningfully in deal origination and project finance considerations. This could include a baseline competency in the commercial and technical life cycle of renewable power and critical minerals. It could also include training on how to interpret power purchase agreements or assessing the viability of carbon capture and hydrogen technologies, ensuring staff are not just aware of energy but can actually facilitate deals. The State Department also needs to attract and cultivate civil servants who can help reinforce its program management capabilities (program design, contracting, legal, financial management, and monitoring and evaluation). Civil servants—long-term staff who are more specialized than FSOs—are the right people to lead the building of this type of consistency and sustained relationship. New hiring mechanisms may also be needed to bring in the right talent and allow experts from the private sector to come in and out of government; new, flexible hiring authorities from Congress should be part of this discussion.
Leveraging Locally Employed Staff (LES): LES can bring irreplaceable institutional knowledge of foreign regulatory environments and established relationships with ministries and regulatory authorities. The challenge of maintaining the right expertise is even more acute in the field. An economic officer may develop meaningful sector-specific knowledge over 2–3 years on an energy, trade, or digital portfolio in a given country, but that institutional knowledge departs when the officer rotates to a new assignment, often seeking a job with a different subject area to broaden experience and improve promotion prospects. The result is a department that is structurally prevented from building depth. The rehiring of USAID local staff in particular, if done at competitive pay scales, will attract a highly skilled and connected local team that can help embassies retain in-country expertise in critical sectors.
Accelerating Country-Level Program Execution: In terms of both speed and impact, this requires bringing program management and sector programming expertise into the field. To give country teams meaningful agency, embassies should be authorized to directly award grants or contracts that clearly fit within specified economic strategies up to a defined threshold—$250,000–$500,000 would be a reasonable starting point. This enables a faster response to time-sensitive opportunities without requiring a lengthy Washington approval process and may also help maintain a healthy balance of program management functions between the E Bureaus, regional bureaus, and embassies. In addition to the designation of more state economic officers and other embassy staff as contracting officer’s representatives for programs managed from Washington, staff based in the field should be empowered to manage the types of programs that require context-specific expertise: technical assistance, market-enabling programming, and transaction advisory services. LES and other specialists in economic growth and energy programs who are well-versed in U.S. government operating principles and in executing complex, market-building agreements with foreign entities should be hired or rehired.
Expand the Scope of the Economic Foreign Service Officer Role
A foreign service economic officer has traditionally played two roles: (1) economic diplomacy (i.e., macroeconomic analysis, reporting, and trade policy) and (2) commercial diplomacy (i.e., using diplomatic tools and government-to-government engagement to advance U.S. business interests and ensure a level playing field). These roles widen at “Partner Posts” where Commerce and State jointly designate an economic officer to play specific Commerce-branded commercial functions in the absence of a U.S. FCS presence. The next era of economic statecraft requires two additional tasks: (1) deploying technical assistance and (2) guiding finance and investment.
Deploying Capacity Building and Technical Assistance: To promote trade and strengthen investment climates—particularly in sectors such as critical minerals and clean energy—the United States should deploy foreign assistance programs that unlock future commercial activity. The upstream, market-enabling activities described above (see tools in the Global Economic Statecraft Fund section) will require input from the field during program design to create impactful interventions. Economic officers will need to gain proficiency in participating in program design processes led by Washington-based experts.
Pull quote: To promote trade and strengthen investment climates—particularly in sectors such as critical minerals and clean energy—the United States should deploy foreign assistance programs that unlock future commercial activity.
Guiding Finance and Investment Tools: As with economics-focused staff in Washington, economic officers need to develop fluency in the broader U.S. government finance and investment tool kit. Officers who master these tools will be able to help bridge the gap between high-level diplomatic announcements and actual commercial execution. As part of their participation and leadership of Deal Teams, economic officers should also be empowered to spend time working on deal origination, vetting referrals, and helping U.S. companies troubleshoot regulatory and other problems in potential deals. Higher levels of expertise in this area will help generate a pipeline of bankable deals that can be handed off to the DFC, EXIM, or private investors. At embassies in energy-rich or resource-critical markets, State should create a specific “energy dealmaker” designation. This would signal that the officer is not just an analyst, but a project facilitator empowered to troubleshoot regulatory hurdles for energy firms—effectively acting as a dedicated project liaison. Equally important, State officers should expand beyond Commerce’s remit, which currently only involves supporting U.S. exporters. Countering China’s market dominance and diversifying critical supply chains requires the United States to actively support allied-nation firms as well, and ought to help U.S. manufacturers source the goods and materials they need to produce in the United States. The Minerals Security Partnership illustrates this point: Effective supply chain strategy can also mean backing Australian, Canadian, and other partnercountry companies, not just U.S. businesses.
This makes for an expansive role for economic officers—one that is unavoidable given the dynamic demands and necessary links between financing, budget, and policy. This could be managed by creating “tracks” within the ranks of economic officers: one track that is focused on analysis and reporting, and another that is more hands-on, focusing on investment, assistance, and dealmaking. Different positions could be designated for these skills or by specific topic, just as previous efforts have been made to create a cadre of environment, science, technology, and health officers within the economic cone, and the Biden administration’s effort to designate climate officers.
Aligning Incentives and Culture: Expanding the role of an economic officer is meaningless if the promotion and recognition system continues to reward traditional diplomatic duties and reporting over economic execution. The State Department should elevate economic statecraft as a recognized competency that leads to career advancement. Concrete steps could include (1) shifting promotion criteria to reward economic depth alongside regional knowledge, (2) establishing new performance metrics tied to economic statecraft outcomes such as deal pipeline development, ally-shoring facilitation, and private capital mobilization; and (3) creating department-level awards for economic statecraft achievement. A 2022 Government Accountability Office report recommended that State explicitly factor Deal Team participation into promotion decisions to encourage FSO engagement. The Office of Personnel Management should also formally define “economic security competencies” applicable across agencies, giving the whole-of-government effort a common professional framework.
Mandate Interagency “Jointness” and Specialized Training
Building a true corps of economic professionals with cross-disciplinary expertise requires sustained commitment from both the executive branch and Congress. Three cultural failures currently undermine U.S. efforts to create economic warriors: (1) a risk-averse institutional culture across State and partner agencies, (2) siloed thinking that struggles to bridge domestic and foreign policy, and (3) insufficient working knowledge of other agencies’ tools, mandates, and authorities.
The most direct fix is structural. Adapting the Goldwater-Nichols model, the U.S. government should mandate—or create strong promotion incentives for—cross-agency rotations of 6–12 months within the first five years of a career. Embedding State foreign service and civil service officers at the DFC, Commerce, Treasury, and other agencies (and vice versa) builds a workforce fluent in the full interagency tool kit and attuned to the distinct mandates, risk tolerances, and strengths of partner agencies. Increased effectiveness in designing and managing economic statecraft foreign assistance funds can also be expected from this training. Critically, these rotations should be treated as core professional development—not leadership programs targeting senior managers—so that jointness becomes a baseline expectation rather than an elite credential. Performance evaluations should also take into account an officer’s ability to successfully inherit or hand off projects in a pipeline or contribute to other agencies’ achievements.
This structural reform should be matched by a training overhaul. A National Economic Security Academy—established as a specialized interagency center within the State Department’s Foreign Service Institute—should replace the current theoretical approach to economic diplomacy with a practical curriculum built around the machinery of government: the tools, authorities, and resources that drive economic statecraft. Officers would also gain technical fluency in the project life cycle from inception to financial close, alongside a working knowledge of priority sectors, key markets, and supply chains. The curriculum should also incorporate economic wargaming and stress tests developed in collaboration with Treasury’s and Commerce’s economic intelligence units, giving practitioners the analytical skills to anticipate the second-order consequences of export controls, sanctions, and other restrictive measures, while identifying “positive” opportunities in foreign markets.
For the academy to function as a true interagency institution rather than a Foreign Service Institute add-on, Congress should authorize and fund it independently, with a governing board that includes Treasury, Commerce, the DFC, and EXIM alongside State. Mandatory attendance—tied to promotion eligibility across participating agencies—would require statutory direction, but doing so would signal serious commitment to building this cadre.
Unify Relationships and Ecosystem Management
The private sector is the ultimate driver of economic growth and U.S. economic power, but the U.S. government cannot mobilize private capital if it cannot coordinate its own outreach. Securing resilient supply chains for critical minerals, semiconductors, and clean energy technologies and countering foreign market manipulation requires the United States to act as a single, coherent entity. It currently does not.
The State Department and other agencies maintain their own contact management systems, cultivate their own business relationships, and guard deal information. This produces a fragmented landscape of U.S. private sector engagement that slows response times, creates duplicative outreach, and leaves the interagency unable to present a unified front to the companies it needs to mobilize. Some agencies have strived for a “no wrong door” approach: Regardless of which agency, office, or website a business first contacts, it should be guided to the right resource or point of contact without having to start the search over from scratch. It is difficult to eliminate the bureaucratic maze that private sector entities often face when trying to engage with the U.S. government. Past efforts at a one-stop-shop model—a single entry point for companies that do not know where to start—have not easily scaled. The fix is a unified customer relationship management (CRM) system, something that is currently used as an essential tool in the private sector but that is not systematically employed at State or across the government. Agencies and staff are understandably cautious about sharing proprietary transaction details or carefully cultivated contacts within a large bureaucracy, and companies are right to worry about sensitive information circulating across government.
A well-designed system addresses this through tiered permissions: A State officer might see that USTDA is engaged with a given company in a given market, even without access to the underlying details. That baseline visibility is enough to eliminate duplicative outreach, enable smart referrals, and provide senior officials with a more complete picture prior to strategic engagements. A unified CRM allows the interagency to capture private sector leads, check the status of referrals, make decisions about providing transaction advisory services, see the full pipeline of deals in a given sector or market, and track closed deal metrics. Without it, coordination depends on personal relationships, email updates reaching the people who need them, and institutional memory—all of which are vulnerable to single points of failure and do not scale.
Imagine a senior official preparing for a meeting with a major U.S. clean energy developer. With a unified CRM, the official could see, in seconds, every instance in which agencies across the U.S. government have provided a guarantee, a technical assistance grant, or an advocacy letter for that company’s global portfolio, allowing for a much more cohesive and strategic conversation. Currently, it would take a formal data call to understand every U.S. touchpoint with major U.S. or multinational companies. Commerce, which already operates a customer management platform and could manage legal and governance issues, is the natural home for such a system, with access extended to State, the DFC, EXIM, and others.
The escalating reality of international economic rivalry—characterized by the race for critical minerals, technological supremacy, and assertive energy and industrial policy—necessitates a comprehensive modernization of the U.S. statecraft tool kit. The inherited institutional framework, currently defined by fragmentation and siloed resources, is ill-equipped for this moment. To restore the nation’s competitive advantage, the United States should pivot from initiative-centered approaches toward a more unified strategic architecture. For the State Department, this requires elevating E’s institutional role in economic statecraft vis-à-vis other bureaus and embassies, restructuring economic programming and delivery mechanisms by doubling down on private sector-focused tools, and cultivating a specialized workforce capable of meeting the transactional and technical rigors of this contested landscape. These integrated reforms, which may accompany other agency-specific reforms and improved interagency coordinating structures, provide a blueprint for a more strategic and impactful U.S. presence at a moment where imagination and determination is required to secure future prosperity.
Allison Lombardo is a senior associate (non-resident) at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Jonathan Gandomi is the former senior adviser for policy and interagency engagement at Prosper Africa.
This report is made possible by general support to CSIS. No direct sponsorship to CSIS contributed to this report.
Please see the PDF for a list of acronyms and abbreviations.