Contradiction of Contradictions

24 november 2012

Sergei Karaganov, Doctor of History, is Dean of the School of World Economics and International Relations at the National Research University–Higher School of Economics. He is also Honorary Chairman of the Presidium of the Council on Foreign and Defense Policy.

Resume: A Contradiction Between the Globalization of the World and the Deglobalization of Governance Is Creating a Vacuum of Governability.

In today’s world, woven of contradictions, there is one fundamental contradiction. I would call it a “contradiction of contradictions”. For the first time in history, the world has become one integrated place. The present and the future of countries and nations determine problems that are predominantly global: climate change, fresh water shortages growing almost everywhere, rising food prices, the growing relative shortage of many kinds of raw materials and energy, global financial flows which are out of national and international control, nuclear proliferation, etc. The world economy has become truly global. Investors in declining Europe are watching China with hope and fear. Its decline may finish them off, while its growth may pull them out of the swamp.

All these and many other problems cannot be solved at national or regional levels by definition, as they require global supranational governance. But when societies faced the globalizing world, they resorted to their habitual instrument and support – that is, the nation-state, whose extinction had been predicted shortly before. Partial re-nationalization of world politics began. However, states are already relatively weak and have a reduced ability to influence global and even domestic processes – economic, environmental and informational ones, which are growing increasingly out of control.

The Weakening of Multilateral Organizations

It is becoming increasingly evident that the world needs global governance by a “world government”, the dream of liberal thinkers since the Enlightenment and the bugbear for conservative thinkers who have for centuries been talking of global Jewish, Masonic or American conspiracies and who have been looking for signs of the existence of such a government. But it has never materialized. Worse, most of the institutions of global governance have been weakening during the last two decades. Dreams of American reactionary idealists of the 1990s about the coming of a “unipolar world” after what seemed to be a victory of the “America in the Cold War shrank almost immediately – by the beginning of the next decade.

The “contradiction of contradictions” – between the globalization of the world and the deglobalization of its governance – is creating a vacuum of governability. This vacuum is exacerbated by a relative weakening of governance institutions inherited from the previous era. The UN has long become a body useful for dialogue but of little use for solving major global problems. The UN Security Council is losing legitimacy. In addition, it is often circumvented on its core issue – crisis management and prevention – or the mandates it gives are distorted. The last time it happened was in Libya. The International Monetary Fund, established simultaneously with the United Nations, is trying to adapt to the new conditions and is of limited use. But it too is losing legitimacy and credibility because of the rigid liberal recipes of the Washington Consensus, which it imposed on countries in the 1970s-1990s and which it now pretends not to remember since the economic crisis began. Also, it suffers from under-representation of new economic players in it and from an obvious over-representation of relatively weakened old ones, that is, Europeans. Similar trends are seen in the majority of other organizations that were born after World War II.

But many of relatively new players are weakening, too. The Group of Seven of leading industrialized nations, established in the 1970s following energy and economic crises, played a positive role in the coordination of economic policies. However, by the beginning of the new millennium, just as Russia joined the G7 after nearly a decade of being on the waiting list, the Group of Eight’s influence quickly dwindled.

New leaders emerged, who did not want to wait for long. The organization itself turned into a grandiose PR event, almost devoid of serious discussion.

In the 2000s, new rising economies – Brazil, Russia, India, China and later South Africa – established BRICS. Despite many negative forecasts from Western experts who did not want it to succeed, this organization has been developing – primarily as a political one. It has already begun to coordinate its members’ positions on some issues in other organizations and is increasing their political clout. However, BRICS almost does not yet deal with concrete issues.

Much more hope, in terms of filling the governability vacuum, is pinned on the G20, an informal organization that unites 20 major economies of the world (19 countries plus the European Union, with some other major economies not represented in it). The G20, established in the late 1990s and transformed into the G20 Summit in 2008 in response to a world economic crisis, played a positive role in preventing panic and a collapse of the world economy. The mere fact that the heads of states representing the bulk of the world’s gross domestic product and world trade gathered together and consulted with each other had a calming effect. The G20 has created or legalized some mechanisms facilitating the monitoring and, therefore, soft regulation of financial markets.

But it has never worked out a unified policy. Documents produced by G20 summits abound in mutually exclusive proposals intended to satisfy everyone but not aimed at developing a concrete policy.

There is a feeling that the G20 is following in the footsteps of the G8 – there is more and more noise, but less and less concrete results. In response to accusations of a lack of legitimacy, it has begun to hold many parallel events with representatives (often self-appointed) of society and non-governmental organizations. This only distracts leaders from substantive discussions even more and strengthens the atmosphere of a PR carnival.

Soon there may happen a new legitimacy crisis of the G20, like the one that hit the G8. As was mentioned above, not all major economies are represented in the G20. Its members include the powerful but weakening EU but do not include other, less powerful but strengthening regional groups.

The G20, as the G8, does not have a permanent secretariat and bureaucracy that would be interested in developing the organization and demonstrating its (and their own) efficiency. In other words, the G20 is not becoming a full-fledged international organization. However, institutions cannot survive in today’s rapidly changing world without the weight of bureaucracy. And vice versa, there are many organizations that still exist due to inertia created by their bureaucracies, even though there is no more need for them. One glaring example is NATO, which has survived inventing various functions for itself, some of which are even harmful in terms of international security. The G20 is not yet mature enough to perform useful functions that it might assume – and fill, at least to some extent, the governability vacuum in the economy and finance. But it is already surrounded by skepticism. Only two dozen professionals writing about the organization and therefore interested in its development are combating this skepticism.

The issue of the future of the leading organizations that could fill “governability vacuums”, important in itself, is particularly interesting for Russia. In 2013 and 2014, Moscow will host and chair summits of BRICS, the G8 and the G20.

This will be a unique opportunity to increase the country’s international political clout, at the least, and at best to help fill the deepening “governability vacuum” in the world.

In the outgoing year, Russia hosted and chaired an APEC Leaders’ Meeting in Vladivostok, which has given a boost to the development of the Russian Far East. The summit was organized in a presentable way, but it produced no breakthroughs either on problems of the Pacific, or on a new program for developing the Trans-Baikal region through its – and the whole of Russia’s – economic integration into rising Asia. Moscow should make better use of future summits.

I do not think that a breakthrough is possible at a BRICS summit. This organization is still very young and is largely virtual. It is now important simply to cultivate the habit for dialogue and coordination of positions, which would strengthen the positions of all the countries in the organization.

The G8 is in obvious crisis and may eventually decline. Yet there is a chance of its reanimation – to everyone’s benefit. And Russia is already capable of offering ways to improve its efficiency. The organization was created primarily as a Western club to discuss and coordinate economic policies. For some time now it has been drifting towards discussing geopolitics and security issues. This drift has become particularly evident in recent years as the G20 has begun to increasingly take on financial and economic issues as an organization that is much more representative and legitimate in these fields.

The Old and New Leaders

Perhaps, this geopolitical “specialization” should be consolidated, for example, by focusing discussions, which might be very frank and held in a closed format, on the situation in the Greater Middle East, which may further destabilize or even result in a series of wars. Countries need to reach understanding and coordinate their policies on the situation in Afghanistan and beyond after the inevitable evacuation of all (or the bulk of) NATO troops from the country.

Of course, these and other global issues cannot be discussed without new great powers – China and India. They should be invited to participate in discussions in a full-fledged way and offered membership in the G8 (which would then be G10) without keeping them waiting, as already happened in the past. The delay tactic irritated applicants, at least the Chinese, who began to say that they did not need this membership. But everyone needs it, especially if the G8 (G10) logically starts to specialize in geopolitics. After all, the main “security vacuums” are now being formed in Asia. The most dangerous of them is in the Middle East, and a less dangerous one but tending to deepen is emerging around China. China’s neighbors objectively fear its strengthening. China, growing stronger, justly wants to expand its security sphere, which exacerbates these fears and which in the past two or three years has already provoked a dozen micro conflicts over islands and reefs with unpronounceable names, located along its perimeter.

Also all major potential nuclear proliferators as well as countries, which have already crossed the nuclear threshold – Pakistan, India, North Korea and Israel, are located.

It will also take much effort to develop the G20 or, at least, to prevent its decline. This should be done, for example, by extending its mandate to address the problem of fresh water shortage, which is described as the most acute and conflictogenic economic and even political problem of the future. However, this future has already arrived. Russia is among countries with the largest water resources, so it could take the lead in working out an international strategy to address this problem. Simultaneously, it should start, at last, using its water resources more efficiently, before they are squandered.

But the most important thing in the G20’s modernization would be not to add some important issues to its agenda but to institutionalize the organization. In other words, it should create a permanent secretariat and bureaucracy to replace its present very cumbersome and inefficient system of management.

This idea will not meet with immediate applause.

Old states and their institutions (the Organization for Economic Cooperation and Development, for example, which is an evidently obsolete club of developed nations, or the IMF) will fear that they may quickly lose their status and positions. New leaders, for example China and India, enjoying their full sovereignty regained after centuries of suppression by the West, will fear its limitation.

But the global economy cannot be controlled by individual nations; it is sliding into chaos and requires global and systematic governance in the interests of all.

Otherwise, the “contradiction of contradictions” may blow up the world even without any war – or, at least, derail its development.

| Vedomosti

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