Together, recession and climate change mark the end of an era

It’s not globalisation that is threatened by the economic crisis, says Dirk Messner of the German Development Institute, but the age of industrialisation that dates back 200 years. He sets out ideas for a new approach to global policymaking

n era is drawing to a close with the interests, Europe now needs to define its global economic crisis – but not, as own role as a global player. Amany critics of globalisation may think, the age of globalisation. What we now The first lesson to be learned from the see going down is the international order financial crisis is that the principles of in which Western societies were the centre self-interest and self-regulated markets and the measure of all things. The age of are no longer sufficient to organise either industrialisation was based on the delusion national or global economies. Instead, we of infinite natural resources and the world’s have to embed the global economy in a new infinite capacity to absorb greenhouse gas institutional framework – a Bretton Woods emissions and the illusion that despite MK II. What is at stake is a sustainable accelerating globalisation, the nation-state regulatory basis for the global economy could somehow just muddle on. that does justice to the diversity of market economies, now that the Wall Street model Now our concern must be to create a truly has self-destructed before our eyes. It will viable and sustainable form of globalisation be interesting to learn what new ideas more suited to the challenges of the 21st China, India, Brazil, South Africa and the century. Today’s worldwide economic new U.S. administration have in mind while debacle is opening a window of opportunity for the EU it will be key to develop a for us to put these central challenges at joint project of a mixed global economy the top of international political agendas that includes social and environmental with four major trends at the heart of dimensions. It is a huge challenge, and if global transformation. But to have a hand our efforts fail we risk seeing a fragile or a in shaping these changes and protecting its fragmented global economy that will give

130 | Europe’s World Autumn 2009 rise to serious political tensions and a wave global redistribution, but no new regulatory of protectionism around the world. pattern has yet emerged.

The second global dynamic is that we Meanwhile, the debate on the world need to abandon the idea that globalisation economic order is ushering in an end to is Westernisation. China is already an the age of the classic nation-state. The indispensable actor in the world economy new rules governing the world economy and its politics; it is the third-largest must be based on something like a “charter economy, and holds the biggest currency of global interdependencies.” But if global reserves of $1.8 trillion, while governance is becoming a also developing a high level The global economic key concept of international of innovative dynamism. crisis means that politics, the EU needs to be And if India continues on its aid flows must be realistic because it will only present economic path, the play a relevant role in this two Asian giants will within not just sustained new world if it speaks with 20 years have profoundly but increased. At a common voice. Otherwise altered the structure of the present, despite the G20 will probably be global economy. We are ambitious promises, driven by a G2 of the U.S. already witnessing tectonic and China. power shifts as the winners actual delivery is of globalisation are Asian and 30% below the 2010 The third global imperative the global crisis is accelerating target is that an ever-more closely this process. Brazil, South networked world economy Africa, and some Arab countries are also is incompatible with a situation in which on the rise, so the G8 as the all-powerful two billion people live on less than two governance centre of the world economy is dollars a day. This is not just a normative or a thing of the past as we are moving into a humanitarian statement; from a sustainable G20-plus era. globalisation perspective the main message has to be that there will be no way to end The first discernible feature of the state failures and international terrorism until new multipolar order is crisis of western we have “globalisation with a human face”. leadership. The Obama Administration has This simple truth must not be obscured by to clean up the huge collateral damage of the the global recession. In the future we are financial crisis and of America’s loss of soft going to have to get our priorities right. Now power during the Bush years. As to Europe, the illusion is over that financial capital can although it is the world’s most interesting be multiplied infinitely, the time has come to laboratory for regional co-operation and invest in the social capital of world society. integration, it still lacks global clout. OECD countries as a whole are going to have to Europe has a special role as the learn to accept yesterday’s "have-nots" as developing countries’ largest trading partner, genuine partners. Power is a process of the largest provider of development aid,

Autumn 2009 Europe’s World | 131 with cultural and political networks in all investments, innovation initiatives and eco- developing regions. The EU should play efficiency oriented business models. Most of a far more visible role in the multilateral the current stimulus packages of European development agencies, and should take the governments are, however, disappointing lead by presenting a development policy because they do not link public investment action plan. The global economic crisis and growth policies with a clear, long-term means that aid flows must be not just perspective on the coming non-fossil era. sustained but increased. At present, despite ambitious promises, actual delivery is 30% We need to recognise that these reform below the 2010 target. And now the talk is initiatives are not purely technocratic; our of cutting aid not increasing it. Although mentality needs to change. The narrow the UK so far is holding firm, and Germany shareholder should be replaced by ideas that is working hard towards its target, Italy has are more compatible with the challenges of proposed cuts of up to 56%. the 21st century. This means: • Investing in the regeneration of social and The fourth global reality is that the natural capital as the foundations of real climate crisis is an energy, food, and security wealth. crisis, and poses far greater challenges than • Accelerating social innovation by nurturing the deep crisis in our economic system. The cultural diversity. process of global change needed to meet • Increasing economic efficiency by this challenge is huge, and the pressure to revolutionising resource and energy act is growing by the day. To avoid dangerous efficiency. climate change from 2015 onwards, global • Balancing the interests of nation states emissions must start to decline worldwide. with global governance initiatives By 2050, the OECD countries must reduce characterised by fairness, co-operation, their greenhouse gas emissions by 80%. mutual trust and recognition. What is at stake is the transition to a non- • Recognising that dialogue on an equal fossil fuel world economy – a truly millennial footing in a globally interconnected world task in the wake of 200 years of natural is only possible if we can begin to resource-driven growth. understand that our national interests are not an over-riding factor. Yet now the recession has led some in the EU business community and even some governments to question the EU’s climate targets. Europe must nevertheless retain its pioneering role, with concrete proposals for a Green New Deal. Although the forces in support of maintaining the status quo are considerable, we need to Dirk Messner is Director of the German Development fight the impact of economic recession and Institute (DIE) and Chair of the German Advisory climate change with significant low carbon Council of Global Change. [email protected]

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