It sounds like a clean business deal. Out there where investors, politicians and nationalistic emotion mix, however, the results are a little messy. And for those who think American foreign policy is at a particularly low ebb, an overreliance on the power of economic incentives and disincentives is viewed as a reason America seems to enjoy less influence around the world than a sole superpower should.

''There are a few situations, like Indonesia, where it all comes together, where economic action can create political consequences,'' said Richard N. Haass, a national security expert in the Bush Administration. ''But the big lesson of the past decade is that economic incentives and particularly economic sanctions rarely work if their goals are too ambitious.''

Look at India, once the focus of power games with the Soviets and more recently the destination of an endless parade of Clinton Administration trade missions. The Administration bet that by bringing in American capital, building power stations and promoting the rise of the software industry, it would create a new market for American goods and bring India into ''the web of engagement.''

Presumably India's leaders knew the economic cost of conducting five nuclear tests. But they decided that no amount of money outweighed the benefit of demonstrating the country's nuclear muscle to China and Pakistan. The United States immediately slapped huge sanctions on the country, under a law that had left President Clinton virtually no maneuvering room. But when Mr. Clinton looked over his shoulder during the summit meeting of the big industrialized nations last weekend, he saw his allies publicly condemning the nuclear tests while some quietly dusted off their order books, hoping to snap up the deals Washington had left on the table.

The Leverage Gap

Almost simultaneously, the White House backed down from threats of sanctions against European firms for doing business with Iran and Libya. Those threats sounded tough: Any global company doing deals there was put on notice that it would suffer sanctions in America. The strategy backfired. Rather than create an alliance against terrorist states, it created an alliance against the American assumption that Washington can set foreign policy for the world.

''The problem is that sanctions imply a leverage we don't have anymore,'' said David Rothkopf, a former top Commerce Department official. ''In 1946, when half of all world trade went through the U.S., we could impose those kinds of control. Today, when 14 percent goes through the United States, we can't control it.'' Mr. Clinton was lucky to save face with a deal in which allies swore to fight proliferation -- if America waived the sanctions and urged Congress to rewrite the law.

And sometimes the backlash is felt at home. Mr. Clinton's six-year effort to dangle the ultimate economic carrots -- access to American technology -- before China has enmeshed him in a new campaign finance nightmare. To bring China along on everything from non-proliferation to human rights, Mr. Clinton changed rules that had classified satellites as munitions. That shifted the decision about exporting them from the Pentagon to the Commerce Department -- which is more inclined toward exports. It made China happy, and American satellite makers very, very happy.