Delegation of Economic Statecraft to Private Enterprises: Russia, China, and Turkey in Africa

Abstract

The literature on economic statecraft, defined as the use of economic means to achieve strategic ends, deals primarily with direct state instru- ments (sanctions, embargoes, and loans), or delegation to state-owned en- terprises. However, states as principals also frequently delegate to private enterprises, which leads to the puzzling question of why some principals delegate economic statecraft to private enterprises instead of state-owned enterprises. In the classic literature on principal-agent theory, the princi- pal delegates to agents because of the agents' experience, the principal's poor relationship with the target subject, or inability to participate in every step of the process. Arguably, the reasons for the principal's delegation to private enterprises in economic statecraft might differ. The contribution of this article is two-fold. First, it introduces a three-tiered model of the economic statecraft's delegation based on deniability and control. It con- sists of direct state interventions, delegation to the state-owned enterprises, and delegation to the private-owned enterprises. Second, it aims to close the gap in the existing literature by focusing on the principal's preference of the delegation to private instead of state-owned enterprises in the con- text of Russian, Chinese, and Turkish geopolitical goals in Africa.