1 Rebalancing World Order
- Changing global equations
- The unstoppable momentum of the G20 vs. the immovable resistance of the G8
- The logic of G reform
- The logic of policy coordination
- Debating the pros and cons
- Conclusion
This chapter builds on the Introduction in looking at the challenges and promises of innovation in global governance. We discussed in the Introduction how the G8 and the United Nations (UN) have functioned as the two paradigmatic institutions of global governance. Although the G8 has been perceived as more efficient than the UN, and the latter is often described as possessing a unique international legitimacy flowing from its universal membership, we also noted how each has suffered legitimacy and efficiency deficits. The twin crises intensified for both institutions with the growing misalignment of global structural reconfigurationsâof economic weight, military power, and diplomatic cloutâwith the distribution of membership and decision-making authority in the institutions of global governance. Such considerations provided some considerable logic for institutional reform, especially in terms of policy coordination at the apex of the system. As this chapter details, however, logic came up against enormous obstacles, both with respect to a defense of the institutional status quo and the âdevil in the detailsâ about what G reform would look like in practice. Before the G20 came into being there had to be a complex debate about the rationale and exercise of reform.
Changing Global Equations
From 1000 AD to 1800 AD, Asia, Africa, and Latin Americaâtodayâs developing worldâaccounted for 65â75 percent of global population and income. Europe rode to world dominance through the industrial revolution, innovations in transport and communications, and the ideology and practice of colonialism, during which the developing countries suffered dramatic relative losses. From 1870 to 1950, Asiaâs per capita income plummeted from one-half to one-10th of West European levels.1 The developing countries, led by Asia, have been bouncing back in economic output, industrialization, and trade. The importance of Brazil, China, and India lies in their future economic potential that already has translated into present political clout.
The early nineteenth century saw the displacement of Asia by Britain as the dominant actor of the times; the early twentieth century, of Britain by the United States. The early twenty-first century may be witnessing the beginning of the end of US and Western influence and the re-emergence of China and India. As part of the shifting global order, US influence and prestige have fallen but it remains the most influential international and the only truly global actor; Japan continues its slow decline; Russia is marking time; Europeâs reach is shorter than its grasp; India is starting to recapture world attention and interest; and the real winner is China with an ascendant economy, growing poise, and expanding soft power assets.
The United States has no peer as a military power but cannot impose Pax Americana. Instead of demonstrating unlimited US power, Iraq and Afghanistan brutally exposed the limits to US power to impose American will on local populations willing to fight back. Paul Kennedyâs thesis of implosion caused by unavoidable overreach on the inexorable logic of imperial rise and fall may yet prove correct,2 but not in the near term. Washington can still veto most international action and no major world problem can be settled by working against it. The United States is still the guarantor of the transatlantic, trans-Pacific, and trans-American security orders. All three regions are caught between the desire to keep the United States fully engaged in the region to underwrite stability and prosperity, and the search for a sharper and autonomous regional identity.
Within the larger paradox of global governanceâof how the world is governed to demonstrate attributes of order, stability, and regularity even in the absence of world governmentâthere is a second paradox of US power. For several decades, the United States has been experiencing a slow but steady erosion of relative primacy. At the same time, as UN Secretary-General Kofi Annanâs High-level Panel had argued, growing interdependence has fostered the realization of mutual vulnerabilities and shared insecurities, and hence a shared responsibility.3 The United States is expected by many to take the lead in managing the systemic and structural challenges, but to refrain from doing so unilaterally. For the exercise of power to be efficient and legitimate, decisions on using it must be shared. This produces what Graeme Herd calls âcoalitional primacyâ as a successor to the primacy of the unipolar moment.4
Beside the United States, the other major world repository of democratic legitimacy, wealth, and power is Europe.5 Where the United States sends soldiers to impose an increasingly fraying Pax Americana, Europe sends inspectors to expand its soft power reach through standards, rules, and regulations. However, this is within the union an inadequate recompense for the lack of material power to shape world events. Europe is less than the sum of its parts. In the Middle East, for example, Europe is the ATM that dispenses 1 billion euros annually without any visible influence over the IsraelâPalestine conflict. In 2010â12 the continent was swept by successive waves of Euro-pessimism as the debt crisis hit one country after another and both internal and international confidence in the eurozone was badly shaken. The crisis brutally exposed the tensions and contradictions of the single European project, in particular the folly of a single currency without full fiscal integration and political union.
The vitality and survival of international organizations depend on two factors: the capacity to change and adapt and the quality of their governance. The center of the multilateral order cannot hold if the power and influence embedded in international institutions is significantly misaligned with the distribution of power in the real world. A global financial, political, and moral rebalancing is currently underway. From 2000 to 2010, the share of global GDP of the worldâs three leading emerging economiesâBrazil, China, and Indiaâdoubled and their share of world trade almost tripled. Their dynamism and optimism is in marked contrast to Euro-pessimism.
Table 1.1 shows the steadily rising share of world product and trade accounted for by the 11 non-G8 members of the G20. Between 1980 and 2008, while the G8 combined gross domestic product (GDP) grew by 470 percent, comprising 54.6 percent of world growth in GDP, that of the G11 grew by 722 percent, accounting for 21.8 percent of total world growth. With respect to trade over the same period, the G8 grew by 621 percent and the G11 by 1,387 percent, accounting for 37.8 and 21.6 percent shares of growth in world trade, respectively.6 In other words, first, the G20 accounted for 76.4 percent of world economic output and 59.4 percent of world trade growth; and second, even though their share of growth is smaller, the G11 have strongly outpaced the G8 both in GDP and trade growth. Moreover, the imbalance of economic performance between the G8 and G11 has grown more marked in the last few years during the global financial crisis.
Table 1.1 Relative shares of world population, economic product and trade, G8 and G11
Notes:
G8: Canada, France, Germany (West Germany in 1976), Italy, Japan, Russia, UK, USA.
G11: Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Saudi Arabia, South Africa, South Korea, Turkey.
The â20thâ member is the European Union, International Monetary Fund (IMF) and World Bank.
*1980 is the earliest available year, where marked; world product is measured in gross domestic product (GDP) using purchasing power parity (PPP) dollars; world trade is measured in total mercantile trade.
Source: World Economic Outlook October 2009: Sustaining the Recovery (Washington, DC: IMF, 2009), www.imf.org/external/pubs/ft/weo/2009/02/pdf/text.pdf; World Trade Organization, âTime Series on International Trade,â Statistics Database (Geneva: WTO), stat.wto.org/StatisticalProgram/WSDBSta tProgramHome.aspx?Language=E.
Reinforcing the core narrative and messages of Table 1.1, Table 1.2 shows the importance of China and India in leading and sustaining the world economy and then recovery. While the outlook for the advanced economies was assessed as âcontinuing, but weak and bumpy, expansion,â with the possibility of the euro area and/or the United States falling back into recession, for emerging market economies âgrowth is expected to remain fairly robust.â7 Unlike previous decades, therefore, the new unity of the global South, led by such contemporary heavyweights as Brazil, China, India, and South Africa, is based on a position of strength, not weakness. The Doha âDevelopmentâ Trade Round, begun in 2001, was meant to be completed in 2005 but has been stuck in a stalemate. It resulted in a new coalition of the global South led by the Big Three of Brazil, China, and India, the rising power and influence of which, interrogating the waning hegemonic ability of the status quo economic powers to write the rules of the game for everyone, has produced several false starts and as many false conclusions.
The Unstoppable Momentum of the G20 vs. the Immovable Resistance of the G8
Looking back at the emergence of a new forum at the leadersâ level, there is an air of inevitability about it. The pressures for moving beyond the established G8 group, with the dual crisis of legitimacy and efficiency, mounted. The logic of bringing in emerging economic powers to the âhigh tableâ of international affairs seemed unassailable. Timothy Garton Ash put it forcefully in 2008: âThe dangers of climate change, nuclear proliferation, disease, and povertyânot to mention the fragile state of globalized capitalismâdemand a more credible and representative cast at the annual intergovernmental summit. As Asia rises, it is ever more absurd that the worldâs unofficial top table has a seat for Italy but not for China.â8
Table 1.2 GDP growth for G8, Brazil, China, India, and Mexico, 2007â12
Sources: World Economic Outlook October 2009: Sustaining the Recovery (Washington, DC: IMF, 2009), 2, www.imf.org/external/pubs/ft/weo/2009/02/pdf/text.pdf; World Economic Outlook September 2011: Slowing Growth, Rising Risks (Washington, DC: IMF, 2011), 2, www.imf.org/external/pubs/ft/weo/2011/02/index.htm.
Moreover, the means of bringing the new forum to life seemed available. Any initiative on UN Security Council (UNSC) reform had to run the gauntlet of a highly formalized and politicized process, with ample space for oppositional forces to mobilize and fight back.9 Changes via the G8 took place in a very different format. As a self-elected forum, with no legal status, the G8 had considerable flexibility to do what it wanted. The original G5 could morph into a G7, and (under pressure especially from President Bill Clinton) the G7 could embrace Russia and become a G8.10
Intellectually, good arguments could be mustered and publicized via the efforts of a number of think tanks, and in Paul Martin, the project of G reform had an outstanding champion akin to ValĂ©ry Giscard dâEstaing and Helmut Schmidt, the leaders of France and Germany who had created the original G5.
Logic and ideas were necessary for G reform to take place. Yet, until there was the necessary shock in the system to induce change, the reform process remained stalled. A subsidiary problem was that the reformers themselves were divided on the detailed elements of G reform. Martin championed the notion of an L20 at the leadersâ level, derived from his experience with G20 Finance from the 1997â98 Asian crisis and its mishandling by the International Monetary Fund (IMF). However, as previously noted, this format was not totally dominant. The alternative ideas of a G13 or G14 remained in play through to the time of the financial crisis.
Without a catalyst, however, the reform project could not overcome the formidable obstacles of embedded interests. The status quo remained more attractive to most of the G7/8 members than a leap into the unknown. The United States, under George W. Bush, was reluctant to share power unless there was a clear and present rationale for doing so. Reinforcing these instincts, there were concerns that such a revamped summit could be used to âgang upâ on the United States. Smaller members of the G8 worried about a possible loss of status.
It is misleading to suggest also that the G20 attracted only enthusiasm from a normative perspective. While the idea of G reform continued to draw devotees, detractors focused on what they considered to be the flaws in the model. For some critics, G reform was marred because of the self-selected nature of any reformed forum. Although expansive, any G continued to have the same defects as the G8. For others, the problem was the explicit bias toward privileging the big members in the global system. Moreover, the G20 has the embedded characteristics of what Michael ZĂŒrn calls âexecutiveâ multilateralism.11 The G20 is a classic expression of elite or top-down multilateralism (or more precisely plurilateralism); it is, after all, âreforming from the top.â12 The composition of the G20 around the old and new âbigsâ is based on exclusionary principles and practices. Instead of precipitating a new form of expanded inclusion, therefore, an embedded form of institutional exclusion with distinctive privileges of membership is promoted, albeit with more legitimacy than that of the G8 process.
The Logic of G Reform
The logic of extended inclusion through the process of G reform adjoined to a variety of other rationales. In terms of membership, the whole premise of G reform is to go beyond the tightly defined limits of the G8, based on an extension of the equality of membership. Operating on the basis of this principle is very different from the concept of âoutreachâ as advocated by the defenders of the concert in place. The eminent G8 watcher and former British diplomat Sir Nicholas Bayne recommended, for example, that leaders should maintain the practice, begun at Okinawa in 2000, of inviting a group of leaders from developing countries to meet them before the summit proper. He argued that the admission of new members to the G8 itself, however, should be approached with caution. The G8âs great merit was the fact that âit is small and compact enough for the leaders to have a direct exchange around the table. This quality would be lost if extra members were added in the interest of making the G8 more widely representative.â13
Another feature that adds weight to the progressive credentials of t...