2018 Lecture: Bronwen Maddox response

by Emily B

Response to Professor Jean Pisani-Ferry’s Wincott lecture by Bronwen Maddox, Director of the Institute for Government

I agree with Jean’s assessment of the end of the age of global agreements and the rise of what we might call coalitions of the willing. His argument has great appeal on several counts. It is not nostalgic, it is optimistic (in a way), it describes what is actually happening, and it suggests how to build on the new realities we are faced with.

My reservations are all to do with the fundamental optimism of Jean’s thesis. First, I would argue that we probably have “further to fall”, so to speak. There will be further unravelling of key institutions and treaties, and more intemperate rhetoric that undermines the set of values that these institutions reflect, including the basic aim of trying to have a rules-based international order. In particular, the US will continue to view the international institutions with a jaundiced eye, even if it does it more politely than it is doing now. Europe will continue to struggle to assert its rules and values, not least because they are under siege internally, and because it is increasingly difficult to mobilise pan-European action on tough issues, such as migration. I also think Jean understates the effects of China’s actions in trying to subvert US power and its critical role in the existing global order. Finally, while he makes important points about incentives and the role of companies, he leaves out the politics. Politics in leading democratic countries, such as the US and UK, have become polarised, which makes it hard to run a modern democracy. This polarisation is one of the reasons why so many governments – including those of the US and UK – are pulling back from the post-World War II order.

Now, let’s look at these elements more closely.

1. Further to fall

Jean has described the disintegration or stalling of big international agreements, such as those on trade and the environment, and suggested that smaller deals and pacts may fill the vacuum. Yet we are speaking while a considerable portion of the rules-based international order that was created after World War II is still in place. In my view, it is likely to unravel further, so the smaller deals Jean envisages are being created in a peculiarly unstable environment. Among the important agreements that could yet fall are arms treaties. The US recently announced that it is withdrawing from a key Cold War nuclear arms treaty with Russia (the 1987 Intermediate Nuclear Forces treaty). The World Bank is under challenge from China which, of course, was not a party to forming the Bretton Woods architecture, so feels no loyalty to it. The challenge to the World Bank is also part of an intense debate in development economics about “what works”. The UN Security Council is broken, and no one has a formula for improving it. NATO is under existential challenge from the US, and the World Trade Organisation (WTO) is hamstrung by US delays on appointments to its adjudication panel.

Much of this happening because, as Jean said, the US has decided that the obligations of anchoring these institutions outweigh the privileges arising from doing so. And there is no doubt that there is real public and political exhaustion in the US with its role as the world’s policeman. Iraq and Afghanistan have been particularly wearying, leading to a petulant, “We’ve won all these wars for you” attitude. American isolationism has come and gone over the past few decades, but this is new, with the US Administration actively unpicking “deals” that are perceived not to be in the national interest. Instead, the US is focussing on bilateral deals where its overwhelming weight can determine terms e.g. Canada, Mexico …and no doubt, the UK, if trade talks begin after Brexit. Bilateralism is a poor substitute for multilateralism, leading to greater inequality and precedents that can block other deals.

The European Union too is contributing to the unravelling of the old order. The EU’s efforts to retain its appeal among member states are looking increasingly vain. Its attempts to enforce financial discipline on member states (Greece, Italy), to assert collective virtue on migration and to uphold democratic values (Poland, Hungary) are ignored, treated with disdain or sabotaged. ungHAll of this undermines its influence in trying to hold together international rules. One British ambassador lamented recently to me: “It is hard to keep urging countries to stay part of the rules-based international order when the UK is leaving a big part of it.”

All this is to suggest that we’ve got more unravelling to come, and not just of individual deals and institutions. I am not convinced that new multilateral deals and pacts are going to prove adequate compensation, although I entirely agree they may be all we are left with.

2. The China Challenge

Although China plays lip service sometimes to the rules-based international order, it has little respect for it. Its membership of the WTO, for example, has not stopped large-scale theft or forced transfer of technology. Its Belt and Road – initiative – binds together what you might call coalitions of the unwilling and subverts countries’ interests. It is aiming to challenge US acquisition of data. The risk is that it destroys the formation of the multipolar clubs and deals that Jean has envisaged by forging its own network of deals.

3. Politics (and incentives)

Jean makes important points about incentives, including the role of the private sector. We should not forget the energy and excitement of change – notably some big disruptive technological developments and the democratising effects of the internet and social media. But, as we all know, it is a hard time to run a democratic country.

Politicians are grappling with voters’ disappointments…and asking to be elected again. Voters are protesting about, among other things, the effect of globalisation on jobs, wages and their sense of security. This does not create a good climate in which to promote big global deals. People increasingly mistrust big agencies headed by technocrats. Their demands may be misconceived (e.g. on migration), and they may be demanding solutions that will not in fact address the source of the problem. Often, the demands are selfish, as people become less willing than in the past to put national interest above their own…which presents politicians with a problem. As Andy Haldane, Chief Economist of the Bank of England, puts it, economics has a persuasion problem. People just don’t believe it when told that something will make them better off.

Summing up

The unravelling of the rules-based international order is to some extent a consequence of the challenges presented by the rise of developing countries and, in the case of China, the challenge is particularly threatening. However, the main challenge comes from the rise of political opposition in the West to perceived inadequacies in some long-established arrangements. In my view, that negative political force is going to drive what the US and Europe can and will do in the international arena in the next few years. And that suggests that global tensions will likely become worse than they are today.  As we reflect on the 100th anniversary of end of World War I, I can’t help but fear that things could get a lot worse, including hot war, not just trade war. That said, our era is not without excitement, especially with accelerating advances in sciences and technologies. Jean is right not to give in to nostalgia. In terms of trying to organise this new world, he is right too that smaller deals will increasingly take the place of the big ones. As we edge forward in a multipolar world, that is what we should encourage.

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