Strategic Hedging as Rational Diplomacy

Marcus Vinicius de Freitas

No 2644, Policy briefs on Economic Trends and Policies from Policy Center for the New South

Abstract: Strategic hedging is rational when it preserves a worthwhile choice at a tolerable cost while respecting existing commitments. Drawing on the literature on hedging and Latin American autonomy, this Policy Brief examines contrasting illustrations of that proposition. It distinguishes ambiguity about future alignment from uncertainty about existing obligations and explains how clearly bounded commitments can reconcile autonomy with credibility. The cases reveal different vulnerabilities across energy, security, technology, export concentration and regulatory discretion. Policy recommendations link diplomatic options to productive capabilities, institutional safeguards, and the administrative resources required to implement them. Hedging succeeds when governments can exercise the alternatives they retain and recognise when maintaining them no longer serves a defensible purpose.

Date: 2026-10
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