ECONOMIC AND DIPLOMACY

1. In your opinion, why does a country impose an economic sanction as their

economic diplomacy strategy? Given the case of the U.S economic sanction to
Cuba, how does it have affected the global geopolitics situation?
Multinational governments and bodies impose economic sanctions to try to change the
strategic decisions of state and non-state actors that threaten their interests or violate
international norms of behavior. Sanctions can be comprehensive, prohibiting
commercial activity related to entire countries, such as the longstanding US embargo
on Cuba, sanctions can be targeted, blocking transactions by and with group businesses,
as well as certain individuals. In cases where there is some legal authority, such as
Cuba. As of 2019, the United States has a comprehensive sanctions regime against
Cuba, North Korea, Iran, Sudan, and Syria, as well as more than a dozen other programs
targeting individuals and entities related to certain political crises or certain types of
suspected criminal behavior, such as as drug trafficking. OFAC regularly adds (and
removes) entries to its blacklist of more than six thousand individuals, businesses, and
groups (collectively known as specially designated citizens, or SDNs.) Registered
assets are blocked, and US persons, including US businesses and their foreign branches,
are prohibited from transacting with them. Under President Trump, OFAC has
appointed several high-ranking individuals and politically connected companies from
Cuba, Myanmar, Nicaragua and Venezuela. Together with its allies, the US government
is waging an all-out effort to disrupt the financial infrastructure that supports
international terrorists and criminals. fundamentally reshaping the financial regulatory
environment, greatly increasing the risk for banks and other institutions to engage in
suspicious activity, even without realizing it. The centrality of New York and the dollar
to the global financial system means this US policy is felt globally. The penalties for
violating sanctions can be substantial in terms of fines, loss of business, and damage to
reputation. In a record settlement, France's biggest lender, BNP Paribas, pleaded guilty
in 2014 to processing billions of dollars to blacklist Cuban, Iranian and Sudanese
entities. The bank was fined nearly $9 billion—by far the largest penalty in history—
and forfeited the right to convert foreign currency into dollars for certain types of
transactions for one year.
2. Indonesia is currently holding the Presidency of G20. Using the economic
diplomacy framework, in your opinion, what are vital strategies for the
government to achieve its national economic interest by maximizing this
multilateral economic diplomacy platform?
The G20 plays a role in a variety of international issues such as trade, climate change,
and development. Indonesia has been appointed as the G20 Presidency at the 15th G20
Summit in Riyadh, Saudi Arabia, on November 22, 2020. The handover of the
presidency from Italy to Indonesia took place on October 31, 2021, in Rome, Italy.
Officially, Indonesia holds the G20 Presidency from December 1, 2021, up to the end
of year 2022, when the next presidency will be handed over at the G20
Summit. Indonesia has an interest in keeping the G20 effective and credible as a global
player. To that end, there are several main things that need to be continued at the G20

1. Maintaining the G20 as an informal leader-led forum One of the key strengths of the
G20 is the informal form of cooperation at the leader level. Diplomatic rigidities and
deadlocks in other fora can be more easily resolved in an informal setting at the G20.
The G20's simple and non-rigid structure also makes it easy for this group to adapt to
global challenges.
2. Encouraging the implementation of the various commitments that have been made.
The credibility of the G20 is largely determined by how far this group can realize the
various commitments that have been made. The further it is roasted from the fire, of
course it will reduce the credibility of the G20 itself which will ultimately weaken its
ability to influence the world economy.
3. Encouraging the acceptability of the G20 It is recognized that the G20 agreement
does not come from an inclusive multilateral process compared to the 'G193' process at
the United Nations. So it can be understood that the G20 agreement is not fully
acceptable to other countries. For this reason, it is important for the G20 to encourage
the outreach process to accommodate the aspirations of non-member countries. This
acceptability is also demonstrated by positioning the G20 as a complement to, and not
as a substitute for, other multilateral fora. The G20 acts more as a prime mover and not
as taking over various discussions at the global level.
4. Maintaining the proliferation of issues Effective G20 cooperation in overcoming the
2008-2009 global economic crisis has raised hopes that the G20 can also overcome
other global problems. Of course, these expectations need to be managed carefully. For
now, when the global economy is still unstable, G20 cooperation needs to continue to
focus on global economic governance. Do not let the credibility of the G20 actually
decrease because it is overburdened with various other global issues.
3. Please explain the concept of Absolute Advantage as the key trigger factor for
establishing international economic cooperation. What is the barrier created by
the countries to protect their economic interest?

The theory of absolute advantage was put forward by Adam Smith in his book entitled
"Wealth of Nations" published in 1776. This theory is often called the pure theory of
trade. According to Adam Smith, the prosperity of a country is not determined by the
amount of metal it has. The prosperity of a country is determined by the amount of
national income in the form of Gross Domestic Product (GDP) and the contribution of
foreign trade to the formation of GDP. In order for GDP and foreign trade to increase,
the government must reduce interference so as to create free trade. With the existence
of free trade, it will trigger increasingly fierce competition. This absolute advantage
theory has two main concepts, namely, the division of labor in producing types of goods
and specialization and production efficiency. There are a wide variety of trade barriers,
including tariffs and non-tariffs, quotas, embargoes, sanctions, and regulations. some
types of trade barriers are deliberately designed. For example, the government can issue
tariffs – special taxes imposed on imported goods – to limit the inflow of goods from
abroad. Other H such as quotas and voluntary export agreements (Voluntary Export
Restraints or VER), have also increased in general in recent years. Tariff barriers are
taxes levied on imports. Imports are a source of supply in an economy. In an open
economy, to meet domestic needs, there are two sources of goods and services, namely
from domestic and from imports. When domestic production does not meet demand,
the supply shortage is met by imports. When the government imposes tariffs on imports,
prices go up. As prices become more expensive, domestic consumers reduce demand
for imports. Non-tariff barriers involve rules and regulations that make trading more
difficult. For example, licensing, packaging, and labeling requirements; sanitary rules;
domestic standard inspection; and quotas. Quotas are the number of goods that can be
imported into a country for a certain period of time. When quotas are imposed, each
importing company receives an import license, which determines what can be imported.
embargo prohibition is to transact with certain countries. The main reason is usually
political and aims to pressure the government of a country.

REFERENCES
Cuba sanctions. (2021, January 11). United States Department of

State. https://www.state.gov/cuba-sanctions/

Guideline to 2022 G20 Presidency of Indonesia. (n.d.). Indonesia

Baik. https://indonesiabaik.id/public/uploads/post/5579/G20pedia-english.pdf

Hambatan Perdagangan: Konsep, Jenis Dan Tujuan. (2020, September 6).

Cerdasco. https://cerdasco.com/hambatan-perdagangan/

Kompas Cyber Media. (2020, November 11). Teori Keunggulan Mutlak.

KOMPAS.com. https://www.kompas.com/skola/read/2020/11/11/110000669/teori-

keunggulan-mutlak

Masters J. (2015, March 10). What are economic sanctions? Council on Foreign

Relations. https://www.cfr.org/backgrounder/what-are-economic-sanctions

Nahrstedt, J. (n.d.). US economic sanctions on Cuba: An analysis of the reasons for their

maintenance. IPE |. https://www.ipe-berlin.org/fileadmin/institut-

ipe/Dokumente/Working_Papers/ipe_working_paper_162_2.pdf

Nugraha J. (n.d.). Diplomasi Ekonomi Indonesia, G20 dan Tantangan Global Tahun 2013.

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