Global Policy, November 2016

What is Next? …for World Order and Global Governance

Gregory T. Chin and Carla P. Freeman Emerging Global Governance

The assumption in international policy circles henceforth has only added further has long been that the rules and the momentum to the world economic shifts. institutional arrangements that have held largely since the end of the Second World However, change has not occurred only in the War were “the” global norms. In the structure of the world economy. The shift scholarly world, the most influential afoot in international politics and a growing scholarship in International Relations, range of transnational issues, as well as the International Organization and International governance of world affairs, is also now very Political Economy has largely reflected the clear. proposition that “exogenous conditions” can be assumed to be stable and largely The international system is buffeted by the unchanging, and the chief intellectual goal rise of state powers whose aspirations recall has been mapping how the actors in the international relations of earlier eras—from a system would adapt to, and internalize, the Westphalian definition of sovereignty to established norms and rules. There was spheres of influence. At the same time, the really no need to debate fundamentals or scope of issues that demand attention at the first principles. Or so it was thought. But as global level is expanding. Health pandemics the world has entered a period of dynamic that ignore national borders require change, it is increasingly apparent that responses to thwart their spread that are both another perspective is required – one that national and international. Global energy, can grapple seriously with both change and climate change and environmental problems continuity. need solutions that involve suppliers, producers, and consumers who operate and Structural shifts in the world economy were live in different regions of the world. The the first to reflect these changes. Since the flows of refugees globally are placing early 2000s, a rebalance in world economic enormous stress on national institutions, power and capabilities has been underway. while highlighting the limited capacity of This shift has continued unabated, despite the existing regional bodies to effectively respond slowdown in the fastest growing economies in to the crisis. the system over the last two decades. Indeed, the great financial crisis of 2008-09, and the Nor have traditional global security concerns, continuing global economic downturn including nuclear proliferation, small arms trade, and inter-state territorial disputes,

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gone away in the post-Cold War era; instead, Amid the global flux, the rules and norms that they have grown more acute. The rise of have held for much of the post-World War II violent extremism and other non-traditional period, especially under the leadership of the security threats related to the impact of liberal West, can no longer be assumed to human activity present new urgent risks and remain uncontested in the future. threats that demand new global collective action to resolve. The situation calls for a return to the fundamental questions in the study of world The Emerging World Order order: what are the main trends and patterns of global change and power moving forward, Amid these challenges, more actors— both how do the shifts in power relate to the nature states and non-state agents—have responded of international authority and legitimacy in by joining in processes of international the emerging world order, who are the main policymaking and international governance. drivers of change, who is formulating the The growing diversity of actors in global policy substance of unifying principles in the has gone hand in hand with intensifying emerging order, who are the forces of contestation over priorities and agenda opposition, who are the winners and losers, setting, as well as over organizational norms, how are interests being changed in the rules and organizing principles. process of global change, what is coming next, what ought to be next, are there critical issues Dissatisfaction with the effectiveness of policy that we are ignoring or underestimating at our responses from established diplomatic own peril? corridors and incumbent institutions, as well as growing discontent among the so-called Some observers have begun talking about a rising powers and developing countries with “post-American world order.” But the fact the distribution of representation in decision- that the relative preponderance of power making, is fueling the creation of new resources remains in the hands of the United international institutions, and the search for States suggests that such talk is premature. innovative solutions to global challenges. The US retains the advantage of superior power across all dimensions of national power A more complex global scenario involving a (material, ideational, soft, hard, high politics, complicated and diverse mix of institutions is low politics). American power is also reflected the result. Some observers see the increased in the robust network of alliances and treaties diversity as problematic, reflecting an it maintains around the world, and its relative increasingly leaderless international system. ability to mobilize coalitions of international Others see hope in the growing diversity, allies and partners to take international including the potential for greater resiliency— collective action in the security arena. as well as more policy space, for smaller and Nonetheless, signs indicate that we have weaker actors in the system. There is some transitioned into a period where universal evidence that a more multi-tiered, multi- global action is likely to be the exception layered system – with a greater mix of rather than the norm. The order we observe regional, global and bilateral arrangements – is a more negotiated order, where a greater could produce a more sustainable global degree of bargaining and negotiation is the scenario over the longer run. norm in global politics and global problem- solving.

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Reaching consensus in the emerging world points to the need for international leadership order will be more of a challenge than in the and authority, which can translate capabilities past, likely requiring more give-and-take, into collective action through new especially between the great powers, as well instruments. as among various alignments and coalitions. Collective Action & International Leadership Finding common ground on global norms moving forward will be a greater challenge if In addressing collective action in the emerging we consider global societal conditions. Parts world order, one is confronted immediately of the world are increasingly divided and with a lack of policy consensus, shortfalls in angry. Among the marginalized and international leadership, authority and dispossessed, certain segments have been legitimacy, and the short-termism of drawn to religious extremism, with some politicians and some corporate actors. Many taking to armed violence. Other parts of the are questioning the global integration and world remain, on balance, optimistic about openness agenda of the last three decades, or the future. It is not coincidental that these are calling for a reversal. Even where support for the parts of the world for which the gains of global integration remains strong, there is a global economic integration have outpaced sense that some modification and recasting of the losses in recent decades. However, even the integration agenda is needed. in places with higher growth, the dark side of economic globalization has also been in In the main, the Group of Twenty (G20) operation, most obviously expressed in summits – the new global organizational national Gini coefficients, or where the framework that has been forged to deal with environment has been sacrificed for growth. the global economy – lacks consensus to guide One response among recently industrialized collective action. For example, the ‘leading and emerging economies has been to devise economies’ that assembled as a global crisis new international cooperation arrangements management committee to put a basement or new institutions, focused on the global under the free fall of the global financial South. Among the advanced economies, system in 2008-09, have failed to deliver as growing economic inequities are expressed the steering committee for the world along racial and ethnic fault lines, increasing economy. The G20 have never truly reached social tensions. Political divisions within the consensus on the main causes of the financial advanced democracies are more and more crisis of 2008-09, nor on the main lessons of acutely divided over the future direction, the crisis. Nor, despite joint “declarations” goals and contours of their societies, about consensus and “actions plans“ have suggesting the breakdown of the social G20 countries found common ground on the contracts that have held for much of the post- essential remedies for putting the world Second World War period. Conflicts in some economy on the path of sustainable, stable, zones of the world are flowing into other and strong growth. The deeper reality is that zones, destabilizing conditions further and the degree of ideational and policy consensus catalyzing further existential debate. on global problem-solving and collective action in the world of the G20 is a far cry from Forging consensus on shared agendas, and the consensus that was struck, for example, clear sets of priorities, for taking collective for the Plaza Accord agreement of 1985 action and global problem-solving will be between the G5 nations (although Plaza daunting in this emerging world order. This

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turned out to be a flawed solution, and was important platform for action by soon followed by the Louvre Accord). nongovernmental organizations in some global policy arenas, such as climate change. Despite the limitations of the G20, we are not It is telling, moreover, that, even as the rising lamenting the loss of the G5 world, nor states allocate resources to form new rallying behind reinvigorating a G7. The G7 international institutions, they also continue has also proven itself less than capable of to support the UN. providing global economic leadership during the last decade, and it is highly questionable At the same time, the UN has also received whether it can provide global security commendation as a source of promising leadership moving forward given its international action on the climate change estrangement from Russia, not to mention and environment front. The UN and other China’s absence at the table. Our point is that existing institutions have also emerged as the G20 is showing that governance ‘by a sources of innovation on the global energy committee of 20 nations’ is not working well governance front (please see the upcoming today. There has been an inability to strike commentary in this Series by Anne Florini). consensus across the divide that runs through the middle of the G20 between the G7 caucus New Alignments and the advanced economies, on the one hand, and the BRICS nations and the major Whereas geo-strategic alliances were the core developing countries, on the other, with feature of the last century, this century, so far, regard to a number of the key working areas appears to be more about pragmatic context of the G20. In some instances, there is a lack and specific alignments. New alignments of of consensus within the G7 grouping itself. state interests and corporate power characterize the emerging world order. These The United Nations is also the object of coexist alongside established alliances and growing criticism. Much of the opprobrium is partnerships that are carryovers from the Cold directed toward the Security Council and the War order. unwieldy General Assembly. Ultimately, however, there is no alternative forum to One of the defining patterns of the emerging replace the Security Council as the final arbiter order involves the rising powers and on the most pressing global security matters. developing countries so-called “routing- The UN will likely remain a key setting for around” the incumbent powers and the rethinking and new collective action on the established principles and institutions contemporary refugee crisis and international (evoking what Barma, Ratner, and Weber migration challenges moving forward, provocatively called a “world without the especially as these concerns converge with West”) to create new bilateral, regional and the international security agenda, and non- global arrangements. Whether these new conventional and non-traditional security arrangements will reshape international threats. Regional solutions alone are proving politics and economics in fundamental ways is themselves to be inadequate. the key question.

For smaller or less prominent nations in the This routing-around started before the 2008- system, moreover, the UN remains the only 2009 crisis: China, India and Russia met first real option for voicing their concerns and trilaterally (starting in 2001), and then interests. In addition, it has served as an bilaterally, with state visits by the Chinese

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president to Brasilia in 2004, the Brazilian It was disappointing for the emerging President to Moscow and Beijing in 2005 and economies and the major developing 2006, and Chinese and Russian presidential countries when their efforts to direct more visits to Brasilia and New Delhi in 2007 and attention to their concerns on the G20 agenda 2008. These visits took place in tandem with failed, largely because they were stifled by the the growth of investment, financial, G7. This was a factor in their initiation of new monetary, tourist and academic ties between institutions, namely the New Development these economies. Bank and the Asian Infrastructure Investment Bank. Only after the emerging economies The same leaders also made regular visits to took matters into their own hands did the G20 countries in Africa during the same period, address their infrastructure and sustainable and their governments opened more and growth concerns in a more serious way. more diplomatic offices throughout the continent. They engaged with African states Ironically, despite the lack of tangible results not through the framework of aid or of from the G20 agenda, the summits have been assuming the “burden” of aiding a poor useful as a venue for the national leaders in continent. Rather, they approached the the new alignments to meet bilaterally. These continent in terms of “opportunity and bilateral “side-meetings” have yielded managed risk”, and “partnership and shared concrete deliverables. For example, although benefits”. The rhetorical shift alone was the recent G20 Hangzhou Summit delivered appreciated in African capitals and, some noteworthy announcements on climate importantly, was accompanied by multi-year change, green finance, rhetorical support for purchase agreements for African exporters, industrialization in Africa, for South Africa, the major financial resources, waves of most important agreements were likely those infrastructure investment, and technical between President Jacob Zuma and Chinese cooperation. (In 2011, South Africa became a President Xi Jinping on Chinese support for the member of the “BRICS” club.) South African economy, including the agreement for the China Development Bank After the financial crisis hit, the emerging (CDB) to provide a US$500 million credit economies relied on their own national facility to Eskom, South Africa’s electric public development banks and state export-import utility. The agreed upon borrowing banks to weather the storm (please see the arrangement will help to stabilize Eksom’s upcoming commentary in this series by liquidity position, especially for the 2016 to Kristen Hopewell). They found that their 2017 financial year; it will also help to finance accumulation of large foreign currency the power utility’s capital expenditure reserve holdings and the domestication of programs over the medium-term, including their debt provided key insulation during what the government’s nuclear power program. became the most severe financial crisis since According to the Eksom CEO, the “gesture the Great Depression of the 1930s. They were from CDB to make available US$500 million” is able to draw on their reserves to provide trade important for the South African public utility finance to their trading partners, to finance because it signals that Eksom can “still raise their national champions to expand overseas, capital in international capital markets,” and and to fund their domestic infrastructure that being able to draw funding from other development. BRICS nations means the public utility is not being “held hostage” by large institutional investors and asset management firms.

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What the above trends and patterns tell us Aside from the great powers and the major about the study of global governance is that emerging economies, “middle powers” are we should focus not only on international also trying to exercise their collective coordination at the apex of the global system, influence in global affairs. The South Koreans i.e. from the top down. The incremental shifts have led the effort to explore the collective emerging at various levels of the system-- diplomatic potential of the “MIKTA” countries including from the bottom up-- also bear (Mexico, Indonesia, Korea, Turkey, and monitoring and assessment. Australia). The Australian government adds that, “MIKTA countries are significant The points above tell us that we should not economic powers and play pivotal strategic focus excessively on global summitry. Due roles in our regions. MIKTA countries are the attention must be given to structural change, 11th, 13th, 15th, 16th and 18th largest i.e. how international politics and economics economies in the world. We share important are changing, and how, when, where and why fundamental values and interests, including the balance of forces is shifting in commitment to open economies, human fundamental ways. Our discussion also sets rights and democracy, and it matters to us all into relief the interrelation between structural that international governance structures changes and formal institutional effectively address the problems we face.” arrangements, especially the rise of new The Australians write, “our consultative forum institutions and their relations with existing can play a constructive role internationally,” institutions, and the role of informal and that MIKTA’s “diversity will enable us to organization and networks. The shifts in the build consensus to advance the common balance of structural forces include both state interests.” and non-state actors.

Through a self-named “3G coalition”, small It is no longer news that the BRICS and Asian states in the UN system are working together nations have initiated their own new to leverage their collective voice, to influence institutions to remedy what they perceive as global priorities and reshape the global the policy and institutional shortcomings of agenda. Their exertions include pushing the the current global architecture. The creation G20 nations to be more inclusive and to of the New Development Bank (NDB) and the connect more with existing international Asian Infrastructure Investment Bank (AIIB), institutions, especially within the UN system and the launch of a China-led “One Belt, One where the 3G nations have official status and Road” initiative have caused a stir. At the voice. The 3G coalition is trying to ensure that inauguration of the AIIB and the NDB, Chinese the concerns and interests of small states are Finance Minister Lou Jiwei (who is also the on the global agenda. Their efforts highlight newly appointed Chair of the AIIB’s Board of the interconnection between Governors) said that the new banks would representational legitimacy (the need for complement the existing multilateral broader consensus-building) and development banks—but that, in addition to organizational effectiveness in responding to this, the new banks would aim to improve the global problems. existing governance arrangements, standards and business models. He also challenged the The Global Architecture— Old and New notion that there were already set ‘best practices.’

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These and other new international initiatives potential of the idea of “green GDP.” This deserve closer and more detailed study. They innovation would face many obstacles to are likely to be core elements of the multi- implementation inside China. However, tiered and multi-centered global governance Chinese authorities were also discouraged system that appears to be emerging. Closer from pursuing the development of this idea attention needs to be given to whether the when they sought support in doing so from new institutions are interacting with existing the established global financial institutions. institutions— and, if so, how they are doing With the creation of the new multilaterals, it so. We also need to better understand the will be worth tracking whether new resources deeper logics and or other push-factors are directed to green GDP or other innovative driving the emergence of new institutional ways to measure and strive for sustainable initiatives. Systematic research and analysis is growth. needed on the scale and extent of change that is emerging in this increasingly “negotiated” Although we expect that some of the new order to understand who the drivers, the solutions will be generated in the emerging winners and losers of the transformation we world and in the new institutions, the are witnessing. The lag in academic research incumbent powers and established – especially within the elite academies – is institutions remain as the holders of key noticeable. It is arguably a decade behind the experience and many lessons-learned. Their emerging reality. adaptation to today’s changing international conditions, including their response to Multi-Dimensional Perspectives competitive pressure from the newer institutions and rising actors, will provide The new institutions emerging are providing another source of innovation. Ultimately, the spaces to rethink fundamentals: what is key dynamic in developing new global meant by “sustainable growth” and how is this solutions will center on the relations between concept best operationalized in today’s the rising actors, rising institutions, and the changing global environment, for example? traditional powers and incumbent Global Policy is the optimal partner to initiate institutions. this line of inquiry. Recently, for example, the journal published the comments of Lorenzo Working in partnership with Global Policy, this Fioramonti (University of Pretoria in South Series will highlight innovation and evidence- Africa), that reflect on how the convergence based research that provides new of socioeconomic, environmental and energy perspectives and creative solutions that crises has led many experts and policymakers address the “what is next” in global policy and to question “GDP” and “GDP maximization” as global governance, and how we may get the basic metrics of economic success. there. We aim to give space to what can be Fiaromonti suggests that non-G7 nations may called new multi-dimensional, or “new three- emerge as “global leaders in well-being, dimensional thinking,” for lack of better prosperity, and sustainable development,” terminology—i.e. perspectives that giving rise to “more equitable and reconsider the fundamentals, and lessons- sustainable” regionalism and globalism. learned, best practices and models along “South-South, South-North and North-South“ As an example of this potential leadership, for dimensions. As we explore new directions in more than a decade now, Chinese officials global problem-solving, we will aim to connect have been interested in the transformative with the lexicon of global sustainability, global

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risk and crisis management, while giving focus Freeman, a joint initiative with the journal to evidence-based research, breakthroughs in Global Policy. When visiting Johns Hopkins research questions and methodologies, and SAIS (Washington DC), he will also conduct the identification of innovative solutions to research on China’s evolving relations with the critical challenges. global multilateral institutions. We hope to support the search for what the Dr. Carla Freeman previously served as grand strategist, Henry Kissinger, has referred program officer for civil society and to as the “new concepts” and “coherent strategy” that will allow the great powers and community development with a focus on regional orders (and the multiplicity of states sustainability at The Johnson Foundation; was and non-state actors that make up a lead political risk analyst for China, Japan, contemporary global governance) to relate to Korea, Taiwan and Vietnam; has held various each other, to “work in parallel,” if not in academic positions, including Chair of the tandem, rather than exist at logger-heads, in Program in Global Studies and International response to global challenges. In this way, this endeavor is an effort to find the “unity of Affairs at Alverno College in Milwaukee, things” that “lies beneath the surface,” and visiting scholar at the University of Wisconsin- that “depends upon a balanced reaction Milwaukee, Harvard University's Fairbank between opposites.” Center for Chinese Studies, and the Institute of American Studies of the Chinese Academy Social Sciences. Dr. Freeman conducts research on Chinese foreign and domestic Dr. Gregory Chin is Associate Professor of policy with a current focus on regional Political Economy at York University, Canada. dynamics, environmental politics and security, As a Non-Resident Senior Fellow of FPI, he is and China's role in international co-leading the Project on “Emerging Global organizations; PhD, International relations Governance” with FPI Executive Director Carla and China studies, Johns Hopkins SAIS.

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