Tag Archive for: international organisations

Fulfilling the promise of international summits

The world leaders who gathered in Paris last week for the Summit for a New Global Financing Pact have vowed to mobilise resources to support developing countries grappling with debt crises and to empower them to assume a larger role in global governance. While these are worthy goals, such high-profile summits often yield little more than group photographs and empty pledges.

Even so, the Paris meeting is significant because it set the stage for a series of leaders’ summits in September: the G20 meeting in New Delhi, the Finance in Common gathering in Colombia, and the United Nations’ SDG Summit in New York.

The efficacy of these summits becomes even more important given what is at stake. The increase in extreme poverty over the past three years, together with the growing frequency of humanitarian and natural disasters, many of them caused by climate change, underscores countries’ need to build resilience.

But international cooperation is declining just when we need it most. Developing countries feel excluded from a decision-making process that puts wealthy countries’ needs first, whether in the context of the Covid-19 pandemic or by prioritising Ukraine’s security over theirs. Clearly, catalysing effective cooperation requires a more concerted effort.

This is not to say that international summitry cannot lead to meaningful change. The G20 summits held in Washington in November 2008 and in London in April 2009, for example, averted a global economic meltdown and reshaped the financial system. And the 1944 UN Monetary and Financial Conference in Bretton Woods, New Hampshire, which began and concluded with one-day leaders’ summits, laid the foundations for international economic governance as we know it.

There are, however, several core elements that are crucial to the success of international summits. The balance of power in the room—specifically, the alignment between what attendees can actually implement and what they can agree on—is critical.

Another important element is participation. The leaders of many developing countries attended the Paris meeting, including Niger, Egypt, South Africa, Colombia, Tunisia, Sri Lanka, Nigeria, Barbados, Saudi Arabia and Pakistan. The heads of multilateral institutions such as the International Monetary Fund, the World Bank, the African Development Bank, the Inter-American Development Bank and major non-government organisations also participated. Many G20 leaders, however, were notably absent.

For developing-country leaders, the Paris summit was a unique opportunity to communicate their needs to their wealthier-country counterparts and the heads of international organisations. The World Bank, for example, could accelerate the implementation of its plan to increase lending capacity by US$50 billion over the next decade. The IMF could propose more ambitious ways to increase the funds available to developing countries. It could also advocate improved methods of restructuring or forgiving sovereign debt, building on its own efforts and those of others to suspend repayments in the event of a climate disaster or a pandemic. Moreover, by improving efficiency and fostering cooperation, multilateral institutions could maximise their impact.

But to increase multilateral lenders’ resources and tools, or to implement innovative financing ideas such as an international tax on carbon emissions from shipping, G20 countries must forge a consensus. Imposing a shipping tax, for example, requires reaching an agreement on its implementation and the allocation of expected revenues. Currently, there are several competing claims.

The problem is that the heads of some major shareholding governments are missing. US President Joe Biden and Indian Prime Minister Narendra Modi, for example, didn’t attend the Paris summit, meeting in Washington instead. With the United States approaching an election year and Republicans decrying international institutions’ anti-fossil-fuel stance, the Biden administration is focused on other issues. Modi is also focused on an election next year and has already leveraged India’s G20 presidency to launch the Global Sovereign Debt Roundtable with the IMF and the World Bank, as well as an expert group on strengthening multilateral development banks.

More broadly, prime ministers and presidents jostle among each other for center stage when it comes to global cooperation. We saw a bit of that last week as the United Kingdom and Ukraine competed for participants in their Ukraine Recovery Conference, which overlapped with the Paris summit.

In addition to the absence of G20 leaders, the Paris summit and other gatherings have lacked adequate preparation, which reduces the likelihood of reaching viable agreements on goals and policies. As the political scientist Robert Putnam famously observed in his groundbreaking study of the 1978 G7 meeting in Bonn, preparation can make or break a summit. A dynamic preparation process can help political leaders marshal support for international agreements by broadening the range of policies that domestic interest groups would find acceptable (their ‘win-set’).

During the 1978 G7 summit, for example, the German government faced pressure from the Bundesbank, the finance ministry, the business and banking communities, and the Free Democratic Party, a key member of the governing coalition, to oppose a global economic stimulus package. Only a small group of officials from the chancellor’s office and economy ministry, together with the Social Democrats and trade unions, advocated a more expansionary economic policy. But the G7 negotiations created an opportunity for the expansionists to make their case and, ultimately, secure a modest victory.

Upcoming summits must lay the groundwork for future global cooperation. Without actively building public support in participating countries for the commitments made by their leaders, the emergence of overlapping and potentially transformative win-sets is highly unlikely.

A satirical cartoon once depicted a G7 summit, with one leader saying, ‘If we don’t have to do what we promise, let’s agree to eradicate all poverty.’ Such cynicism is a luxury we can no longer afford. In today’s rapidly fragmenting world, leaders must meet, engage in meaningful discussion and take decisive action to foster effective cooperation. Thoroughly prepared, well-attended summits would be a good place to start.

Who will rule the rules-based order?

Will the West remain committed to the rules-based international order when it is no longer the one making the rules? That will be one of the most intriguing questions of the next two decades. If there’s one principle that has united electorates, policymakers, politicians and media across the West, it’s that rules matter for just about everything else. Disrespect of common rules has long been met with intense anger and a forceful response.

Consider the United Kingdom, where Prime Minister Boris Johnson’s raw charisma enabled him to win and hold on to power, effectively redrawing the country’s political map in the process. Until recently, his public approval had withstood florid displays of incompetence, a rising pandemic death toll and an economic recession. But Johnson is now finally haemorrhaging support for one simple reason: he and his government went too far in disregarding the rules. The revelation that there was a party at 10 Downing Street while the rest of the country was in lockdown has hurt Johnson’s reputation more than any of his other scandals or transgressions.

At the international level, Western governments routinely condemn others for rule-breaking. Russia, for example, has been rebuked for its annexation of Crimea, repeated cyberattacks on other countries and physical attacks on Russian dissidents abroad. China, too, has been condemned as a major transgressor. US President Joe Biden may not agree with much that his predecessor said or did, but he has maintained a striking continuity with the Trump administration’s characterisation of China as a global menace that steals intellectual property, maintains illegal subsidies, permits rampant corruption and is carrying out genocide.

And yet, in the coming decades, the biggest global threat will not be China the rule-breaker, but China the rule-maker. China’s growing influence over international norms, standards and conventions is a game-changer. For centuries, Western powers have taken it for granted that they are the world’s norm-setters, massively influencing other countries’ policies through the ‘Washington Consensus’, the ‘Brussels effect’ and other channels.

A term coined in 1989 by the economist John Williamson, the Washington Consensus now broadly refers to market-based economic policies and a limited role for the state. For decades, this Western liberal approach underpinned the work of the International Monetary Fund, the World Bank and the World Trade Organization, because it was seen as a universal recipe for good governance and prosperity.

The Brussels effect is a newer coinage, popularised by legal scholar Anu Bradford to describe the global impact of the European Union’s regulatory policies. The EU’s standards governing data privacy, product safety, genetically modified organisms, sexual rights and other issues tend to be adopted as a matter of course by multinational corporations and other countries seeking access to Europe’s massive single market.

Over the past decade, however, the free-market Washington Consensus has been challenged by a ‘Beijing consensus’ of managed globalisation, industrial policy and state capitalism, while the Brussels effect has run up against a potential ‘Beijing effect’: China’s export of technology standards through its ‘Digital Silk Road’.

Many global rule-setting bodies that once underpinned European and American predominance now have Chinese leaders. These include (or have included) the International Telecommunication Union, the International Organization for Standardization, and the International Electrotechnical Commission. China is poised to set the standards for rapidly developing technologies such as artificial intelligence and robotics, and Chinese companies’ technological infrastructure—built to Chinese standards—has spread to numerous countries.

As Bradford notes, while the Beijing effect operates differently than the Brussels effect, it still has far-reaching consequences. And as China becomes a bigger trade partner to more countries, its global influence will continue to increase.

Whether the Western commitment to rules will endure has therefore become an urgent question. What if that commitment was always more about the power it conferred than about the underlying principles it upheld? Would Europeans and Americans respect a global rules-based order that followed ‘Xi Jinping thought’ instead of Western Enlightenment thinkers? Many in China, Russia and other countries assume that we would not, taking that as proof that our commitment is merely a means to our own ends.

To stay ahead of the curve, some Western governments have begun to rethink the shape of the rules-based order. There’s talk of departing from universal, global institutions in favour of a new arrangement based on rules set within like-minded clubs. The EU, for example, is now holding a debate about ‘strategic sovereignty’, recognising that if it operates as a single bloc, it could have the clout to preserve the rules-based liberal order for itself and other willing participants. The alternative is to submit to illiberal challenges from Xi, Russian President Vladimir Putin or a return of Trumpism in the US.

A similar shift is visible across the Atlantic, where the Biden administration has gone from supporting global institutions to imagining a new kind of rules-based order comprising the world’s democracies. The White House’s recent Summit for Democracy could be understood as an archetype for how this new order would function.

It remains to be seen how smaller powers would navigate the changing landscape. One striking clue can be found in the Johnson government’s March 2021 integrated review of security, defence, development and foreign policy. Concluding that, ‘A defence of the status quo is no longer sufficient for the decade ahead’, it advocates a more dynamic approach than merely ‘preserving the post-Cold War “rules-based international system”’.

The defining fights of the 21st century will be about who has the power to make the rules. It’s currently anyone’s game.

Is multilateralism a fig leaf?

International organisations are currently plagued by allegations of powerful states wielding undue influence over outcomes. These include recent revelations about Australia, Japan, Saudi Arabia and other countries pushing back against the United Nations on climate change, suggestions that senior World Bank officials intervened to boost China’s ranking in the bank’s Doing Business Index, and suspicions that China influenced the World Health Organization’s approach to the Covid-19 pandemic.

Underlying all these controversies is the simple reality that powerful countries exert great influence over multilateral organisations. But their clout does not render multilateralism impossible. Rather, it is a force that must be actively managed and counterbalanced.

The undue influence of some countries in multilateral institutions is of course not new, but the shifting global balance of power has brought it back into focus. For example, the recent Doing Business fracas prompted arguments implying that otherwise technocratic and evidence-based institutions such as the International National Monetary Fund and the World Bank were at risk of being led by managers too attentive to China’s concerns. As Anne Krueger writes, ‘Like Caesar’s wife, IMF and World Bank leaders must be well above suspicion in overseeing these institutions’ work and safeguarding the integrity of the data on which that work relies.’

But history tells a different story. The United States has long dominated the World Bank, in both its formal and informal governance. In the 1960s, it was said that the US hardly needed to exercise its formal powers over the organisation, because its staff worked with one eye constantly trained on the preferences of the US government, a few blocks away in the centre of Washington DC. As the historian Catherine Gwin noted, ‘The result was a strong and enduring American imprint on all aspects of the Bank, including its structure, general policy direction, and the manner of granting loans.’

The US government has typically channelled its preferences through the World Bank’s senior management. In 2006, an independent panel commissioned by the bank to evaluate its research criticised the way in which ‘research was used to proselytize on behalf of Bank policy, often without taking a balanced view of the evidence, and without expressing appropriate skepticism’. Moreover, ‘Internal research that was favorable to Bank positions was given great prominence, and unfavorable research ignored.’ The panel lamented that, ‘when the Bank leadership selectively appeals to relatively new and untested research as hard evidence that its preferred policies work, it lends unwarranted confidence to the Bank’s prescriptions’.

Other powerful countries also exercise influence over international organisations’ senior management and staff. In the IMF’s 2014 surveillance review, for example, staff noted the ‘additional internal pressure and scrutiny associated with surveillance of systemic economies’. And in a background paper on evenhandedness for the review, nearly 60% of IMF mission-chief respondents who worked on advanced economies acknowledged ‘pressure to dilute the candor of staff reports in order to avoid upsetting the country authorities’.

But international organisations need the backing of powerful countries in order to be effective, and they have historically secured that backing by giving these countries special rights. For example, whereas the US stayed out of the League of Nations in the 1920s, it was persuaded to join the UN, the IMF and the World Bank after World War II. This was not least because the US gained a say over these organisations’ leadership, hosted their headquarters and had outsize decision-making power (a veto in the UN Security Council and weighted voting power in the IMF and World Bank). China’s leading position in the Asian Infrastructure Investment Bank today reflects similar considerations.

At the same time, powerful countries must accept some constraints in order to persuade and co-opt others to participate in multilateral institutions. For this reason, strong states create organisations that give votes to other states, with formal decision-making arrangements that (however weakly) limit their power to decide unilaterally what the institution does.

The result is a constant constructive tension between the interests of the most powerful and those of everyone else. Three factors are crucial to managing the inevitable strains.

First, leadership is vital. The role of any multilateral institution’s leader includes not only ‘speaking truth to power’, but also mobilising smaller countries to ensure their voices are heard in counteracting the influence of the powerful. Yet, such offsetting influence will be muted as long as powerful states control the appointment and reappointment of organisations’ senior leadership—as the US and the European Union (and increasingly China) do at the World Bank and the IMF. As matters stand, the heads of these institutions are implicitly accountable to the leading powers.

Second, in principle, formal governance arrangements guaranteeing the representation of all members, rules about staffing and funding, and decision-making processes permit all member states to hold an institution to account. But the effective operation of such mechanisms requires attention, information and experience. Currently, too many countries are represented in multilateral institutions by officials who serve brief terms and have little access to information. This makes them easy to outmanoeuvre. Less powerful countries need to train and equip their representatives appropriately to serve on the boards of international organisations, so that they can hold their own and constrain the undue influence of the more powerful.

Last, transparency is crucial. The trend towards open evaluations conducted by independent evaluation offices, and the increased publicity surrounding efforts by some countries to influence international organisations, are uncomfortable for all participants, but they are vital in the pursuit of effective cooperation.

Given today’s heightened geopolitical tensions, complaints about some countries’ supposedly excessive sway in multilateral institutions may become more frequent. More accountable leadership, effective representation and transparency are the best tools for counteracting, detecting and mitigating it.

International institutions still matter to the US

Donald Trump may have despised international institutions, but his presidency has reminded the world of the importance of effective and resilient ones. In the 2016 election, Trump campaigned on the argument that the post-1945 multilateral institutions had let other countries benefit at American expense. His populist appeal rested on far more than foreign policy, of course, but Trump successfully linked domestic resentments to foreign policy by blaming economic problems on ‘bad’ trade deals with countries like Mexico and China and on immigrants competing for jobs. The post-1945 liberal international order was cast as a villain.

As I show in my book Do morals matter? Presidents and foreign policy from FDR to Trump, American presidents were never perfect institutional liberals. Dwight Eisenhower’s support of covert action in Iran and Guatemala, and John F. Kennedy’s in Cuba, were inconsistent with a strict reading of the UN Charter. Richard Nixon broke the rules of the Bretton Woods economic institutions and levied tariffs against US allies in 1971. Ronald Reagan ignored an International Court of Justice ruling that found his administration’s mining of Nicaraguan harbours illegal. Bill Clinton bombed Serbia without a security council resolution.

Nonetheless, prior to 2016, American presidents in most instances supported international institutions and sought their extension, whether it was the Non-Proliferation Treaty under Lyndon Johnson; arms control agreements under Nixon; the Rio de Janeiro agreement on climate change under George H.W. Bush; the World Trade Organization and the Missile Technology Control Regime under Clinton; or the Paris climate agreement under Barack Obama.

It was not until Trump that an administration became broadly critical of multilateral institutions as a matter of policy. In 2018, Secretary of State Mike Pompeo proclaimed that since the end of the Cold War three decades ago, the international order has failed the United States, and ‘multilateralism has become viewed as an end unto itself. The more treaties we sign, the safer we supposedly are. The more bureaucrats we have, the better the job gets done.’ The Trump administration took a narrow transactional approach to institutions and withdrew from the Paris climate accord and the World Health Organization.

Institutions are not magic, but they do create valuable patterns of behaviour. Multilateral institutions are more than formal organisations, which sometimes ossify and need to be reformed or discarded. Even more important is the whole regime of rules, norms, networks and expectations that create social roles, which entail moral obligations. A family, for example, is not an organisation, but it is a social institution that assigns to parents a role that entails moral obligations toward the long-term interests of their children.

Realists argue that international politics is anarchic and thus zero-sum: my gain is your loss and vice versa. In the 1980s, however, political scientist Robert Axelrod used computer tournaments to show that games in which there is a rational incentive to cheat if you play once can be transformed when there is an expectation of a continuing relationship. Reciprocity and tit-for-tat proved the best long-term strategy. By enhancing what Axelrod called ‘the long shadow of the future’, international regimes and institutions encourage cooperation with policy consequences that go beyond any single transaction.

Of course, institutions can sometimes lose their value and become illegitimate. The Trump administration claimed that institutions such as the WTO had ‘Gulliverized’ the US: Lilliputians were using multilateral institutional threads to constrain the American giant from using the power it would have in any bilateral negotiation. By renegotiating various trade agreements in a manner that damaged the WTO and US alliances, the Trump administration showed that the US, as the world’s most powerful country, can break these threads and maximise its short-term bargaining power.

But the US can also use such institutions to bind others to support global public goods that are in its own and others’ long-term interests. Whereas Reagan’s secretary of state, George Shultz, likened US foreign policy to the work of a patient gardener, Trump’s conception of policy rested on a very different conception of how power should be exercised. To use a different metaphor, Trump complained about free riders, but the US gets to steer the bus.

In this century of transnational interdependence, isolation is not an option and nationalism versus globalisation is a false choice. A virus or a carbon atom has no respect for political frontiers. We must learn to combine a strong national identity and global concern. As historian Yuval Harari has put it, ‘Like it or not, humankind today faces three common problems that make a mockery of all national borders, and that can be solved only through global cooperation. These are nuclear war, climate change and technological disruption.’

The US needs a network of multilayered partnerships with others. Foreign partners help when they want to, and their willingness is affected not just by America’s hard military and economic power but also by its soft power of attraction, based on an open and inclusive culture, liberal democratic values, and policies that are widely perceived as legitimate. A Jeffersonian ‘decent respect for the opinions of [human]kind’ and the use of institutions that encourage reciprocity by bringing to bear ‘the long shadow of the future’ will be crucial to the success of US foreign policy. As Henry Kissinger rightly said, world order depends on the ability of a leading state to combine power and legitimacy. Institutions are indispensable to that end.

Now, with less preponderance and facing a more complex world, the US must cooperate with others, and use its soft power to attract their cooperation. America will need to exercise power with as well as power over others. The success of president-elect Joe Biden’s foreign policy will depend on how quickly we can relearn these institutional lessons.

Multilateralism will survive the great fracture

At the opening of the United Nations General Assembly last week, UN Secretary-General Antonio Guterres warned that the United States and China could ‘split the globe’ into separate trade and financial blocs with diverging internet and artificial-intelligence capacities. Moreover, he said, such a ‘great fracture’ between the world’s two largest economies could become a geostrategic and military divide.

The emerging Sino-American tensions in international organisations are indeed alarming. US President Donald Trump’s administration, having previously accused the World Health Organization of cosying up to China, has announced its intention to withdraw the US from the agency and is withholding funding, thus depriving the WHO of its largest single financial contributor. The US has also stalled the World Trade Organization’s dispute-settlement system by vetoing the appointment of new judges to its appellate body.

Fortunately, however, three strands of multilateralism will contain the risk of a great superpower fracture.

First, multilateral organisations are changing, not collapsing. China is not seeking to destroy the international institutions that America established and led in the aftermath of World War II. On the contrary, China is seeking to increase its influence within these organisations, not least because it is thriving within the system they uphold.

After the US announced that it was withdrawing from the WHO, China pledged to give it US$2 billion over two years to help it fight the Covid-19 pandemic. And after the US sought to prevent the WTO’s appellate body from functioning, China circulated a reform proposal aimed at strengthening the organisation.

In the UN, China is now the second-largest contributor to the general budget and to the peacekeeping budget. Chinese officials now head four of the UN’s 15 specialised agencies. And in the International Monetary Fund and the World Bank, China is now the third most powerful member state, with its own seat on the executive board and a Chinese official in the senior management team.

We are thus witnessing two economic superpowers competing for positions within agencies that set and monitor global rules. Whereas China, the newcomer, is using carrots to advance its position, the US (not for the first time) is using sticks—threats of disengagement and defunding—to get its way.

The key for other countries will be the quality of these international organisations’ leadership—as was the case during the Cold War, when the US dominated such institutions. In that era, for example, UN Secretary-General Dag Hammarskjold neatly sidestepped the US–Soviet stalemate by introducing international peacekeeping overseen by the UN, while World Bank President Robert McNamara used his authority and mandate to expand the bank’s membership and activities.

Countering the great fracture will require leaders who can mobilise coalitions of countries other than China or the US to counter a dominant member’s view, and who can maximise the impact of their organisations’ resources, staff and policies. Without such leaders, rival superpowers’ vetoes are almost certain to paralyse or marginalise international organisations. These considerations will be vital in the upcoming choice of a new WTO director-general to succeed Roberto Azevedo, who recently stepped down a year before his term was due to end.

A second reason to think multilateralism will survive is that, like the US and the Soviet Union during the Cold War, both China and America are using multilateral arrangements to cement relations with their respective allies. Each superpower uses institutions that it dominates, such as the Washington-based Inter-American Development Bank (in which the US has 30% of the voting power and China has 0.004%), and the Beijing-based Asian Infrastructure Investment Bank (in which China has 29% of the voting power and the US is not a member).

Classical realists would argue that such balance-of-power politics necessarily sacrifices the sovereignty of small states, as superpowers strong-arm them into joining their alliances to fight the existential threat posed by their rival. But the history of the Cold War shows that formal institutions within each side’s alliance can give smaller states some influence over the rules, which can in turn moderate superpower competition.

For example, America’s traditional dominance of the IMF resulted in lending practices and policies that were tightly aligned with US national security priorities. But formal and informal agenda-setting and decision-making power within the IMF in the 1980s offered opportunities for European and other states to influence the rules. Likewise, multilateralism within today’s US and China-led alliances could moderate the current superpower rivalry.

The third strand of multilateralism that mitigates the risks posed by the Sino-American rivalry recalls the early 19th-century Concert of Europe, whereby the great powers of the time sought to resolve matters of mutual interest through multilateral consultations. The effectiveness of this arrangement lay in its members’ shared interest in preserving the status quo.

Today, the leaders of the world’s largest economies have a similar common interest in preventing either the pandemic or a global financial crisis from disrupting the international status quo. At this April’s summit of G20 leaders—principally a crisis-management committee—they pledged collectively not only to use formal international institutions to tackle the Covid-19 crisis, but also to coordinate some of their own fiscal and monetary policy responses, and to work to resolve trade disputes. G20 leaders will meet again in November to consider further possible steps.

Although China and the US are strategic rivals, each depends on global markets, finance and innovation, and needs to co-opt other countries and regions in order to sustain its own power. For this reason, both will use multilateralism, formal and informal, to protect the system within which they have flourished and to solidify the alliances with which they intend to chart their future course.