“Creeping Urgency” Still

Posted on by
Reply

 

 

The New York Times article today, “Leaders Say the They Expect Agreement on Aid for Spanish Banks This Year.” called leaders decision-making as “creeping urgency”.  So where are European Leaders?  Well kinda where they were months ago.   Leaders have agreed to set up a Eurozone bank supervisor, among other things, but the current agreement leaves unclear when the new bank supervisor will be fully in place.  That is critically important because without the bank supervisor in place, European Stability Mechanism (ESM) funds will not be available to struggling banks, especially in Spain.  So while the EU leaders will seek to “spin” the agreement as success, the lack of clarity around the regulatory startup is trouble.

And why is the date for the start of this new banking supervisor still so unclear?  Well, the problem is a German election in 2013 where German Chancellor Merkel doesn’t want to have to defend the use of ESM funds directly to the sagging banking sector in Spain.  So while the European Commission urged that the banking supervisor be up and operating by the start of the year – January 2013, it is pretty evident that European politics will not permit that.  So some of Europe’s most fragile banks are unlikely to be under this new European supervisor.  In fact Germany has insisted that the extension of regulation of Eurozone banks be done in stages.    That too appears to be a product of national politics.  The German local and state banks are not eager to be regulated by this new ECB bank supervisor.

And the determination to bring Greece into line in a austerity program that is well off track appears to have made no progress either.   And there other supervisory and budgetary issues that EU leaders have been unable to resolve.

Notwithstanding the “comforting” words of leaders in the Eurozone, the bank supervisory issue – that was generally perceived by officials and observers to be reasonably straightforward – is being delayed.   Leaders have to be assuming – at least hoping – that global markets will not render their own judgment on the failure of Eurozone leaders to resolve the continuing sovereign and banking debt issues.  That kind of gamble well may not pay off.

The only good thing that may arise from this lack of collective political will is that there is no immediate prospect of a G20 Leaders meeting.  Att least at the moment G20 leaders are not to gather until September 2013 though finance ministers and central bankers will gather well before this.  If such a summit were planned we could once again witness an agenda largely hijacked by Europe’s apparent determination not to take the necessary action to resolve the debt issues stalking at least Europe.

Meanwhile watch global markets!

Image Credit:  CNNMoney.com

 

So it is a Tentative “Thumbs Up”

Posted on by
Reply

 

With our colleague Dan Drezner about to descend on the mighty University of Toronto, Dan was kind enough to alert me to a a recent Council on Foreign Relations Working Paper he’d just completed.  Entitled, “The Irony of Global Economic Governance: The System Worked” Dan, so he suggested to me, would be using this paper as the basis of his remarks here in Toronto.

On title alone I commented to him that he’d finally become an “advocate for global governance”. While Dan was unwilling to sign onto my admittedly rather exuberant characterization, he was willing to concede that he was more positive now than he’d been in the past.  Ah – at least some progress.

So let’s start with the conclusion.  Dan writes:

None of this is to deny that global economic governance was useful and stabilizing at various points after 1945.  Rather, it is to observe that even during the heyday of American hegemony, the ability of global economic governance to solve ongoing global economic problems was limited.  The original point of Kindleberger’s analysis of the Great Depression [The World in Depression] was to discuss what needed to be done during a global economic crisis.  By that standard, the post-2008 performance of vital institutions has been far better than extant commentary suggests.  Expecting more that an effective response might be unrealistic. …  The evidence suggests that global governance structures adapted and responded to the 2008 financial crisis in a robust fashion.  They passed the stress test.  The picture presented here is at odds with prevailing conventional wisdom on this subject.

Well amen to this last line of thought.  And although Dan reflects that effectiveness to date is no guarantee of the future, he suggests that it is at least as likely that a renewed crisis could foster a greater policy coordination effort, which seem to have waned in the immediate post crisis period.  As Dan concludes at the end of the Working Paper:

The post-2008 economic order has remained open, entrenching these interests even more across the globe.  Despite uncertain times, the open economic system that has been in operation since 1945 does not appear to be closing anytime soon.

Amen.

But it is hard slogging, as Dan freely admits.  Dan opens his analysis with the general critique that has accompanied the global governance efforts since 2008.  They generally recognize three items that reflect the failure global economic governance – though I would just refer to this as global governance period.  Critics, according to Dan,  have focused on the collapse of the Doha trade round, the breakdown of the macroeconomic policy consensus – this at the Toronto summit 2010 – and the escalation of the sovereign debt crisis as clear signs of the failure of global governance.  In examining each Dan identifies the rebound in fact of the global economy contrasting the Great Depression with the 2008 global financial crisis.  And in general Dan shows that the global economy has rebounded much better than was the case in the 1930s.

On trade – and as Dan belatedly suggests, the Doha Round was a spent deal well before the crisis; it had little to do with the global financial crisis.  But the trade institution world is probably not as healthy as Dan suggests.  That is because Dan kinda combines the growth of trade – the market, the trade regime and the trade institution, the WTO into one.   Trade flows have been growing and are robust.  The market remains largely vibrant.  The success can be laid at the doorstep of the global market and the trade regime – the GATT now the WTO and the explosion of the plurilateral regimes – yes the preferential trade agreements that have flourished since the Doha Round.  An open trading system, equal trade treatment and the willingness to accept trade liberalization remain the rockbed of the global trade regime.  This is the accepted set of norms.  While protectionism rose with the economic crisis – especially among the major developed states – it rose to a far less damaging levels that many feared. So whether a large emerging market economy or a traditional economy the open trading system remains a foundation for the the global economy.

But the institution of the WTO is not particularly healthy.  To the extent it is designed to promote trade negotiation – it abjectly is a failure.  It is evident that absence of a real operating institution is at the heart of the problem not just with respect to trade negotiations but with the operating of the market.  Now the judicial side is robust compared to any other international judicial institution, but the legislative and executive functions were inadequately addressed at the conclusion of the Uruguay Round – and it now costs this global governance institution mightily.  The universal decision rule structure is, as with most such universal representation structures – largely incapable of effective decision-making – ergo the Doha Round.

On the multilateral investment front, Dan correctly points out, there isn’t one.  Instead there is a myriad of bilateral and plurilateral investment protections regimes.  According to Dan the data shows that there is a marked slow down in the generation of these bilateral investment treaties.  That might be – though a number of interesting new agreements have been signed recently including a China-Japan-Korea agreement and a China-Canada one – but if you examine the number of ICSID or UNCITRAL investor-sate cases, – in the interests of transparency I should point out that have been involved in such cases for several decades – there has been an explosion of cases for the breach of investment protection.  The system is doing what was intended.  Also many free trade agreements incorporate investment protections into the comprehensive arrangements that are being concluded.

Where there is trouble is that a number of states – Venezuela in particular – have repudiated recent awards and the treaties of protection themselves.  Furthermore, states such as Australia have insisted that their courts are adequate to hear foreign investor cases and refused to sign new investor-state agreements.   Other states have created new model investment agreements that significantly narrow the scope of investor protection That does spell trouble.

On the macroeconomic and imbalances front, I do agree with his general conclusion that that the response was more robust than generally conceded by many journalists and experts.  But I am not sure this should be laid at the doorstep of the United States.  First many of the referenced statutes are purely national (that is not strange) but fail to really incorporate a wider collaborative standard.  Dodd -Frank which of course isn’t even fully implemented – and could largely be repealed if Romney replace Obama – hardly takes into account the concerns of other key financial centers.  As for Basel III there is was a much more collaborative effort of the G7 and G20 in its creation.

Some of Dan’s analysis suffers from a too narrow architectural framing as well.  Dan and I have drawn “swords” over the definition of global summitry and derivatively global governance because Dan sees summits as stand alone leadership settings – G20, etc.  Favoring an “iceberg theory” of global summitry, I see the structure of global summitry and governance as a galaxy or package of institutions – the leaders summit, ministerial meetings, transgovernmental regulatory networks of public and private institutions – all linked.  Many of the advances in such esoteric organizations such the FSB, the BCBS, IOSCO, etc., let alone the more formal Bretton Woods institutions such as the World Bank and the IMF are being tasked to produce surveillance and evaluative reports, and international standards at the direction of the G20 leaders/ministerial gatherings.  The architecture is a very decentralized structure but a linked one of  institutions and organizations.

Finally, and briefly the Eurozone crisis is not at its heart a global matter, though it has likely huge global consequences.  In fact in such a tightly wound interdependent world, it is hardly a surprise.  But the heart of the action has to be with the eurozone and the EU.  And it is the failure of will by key players, especially Germany and France, that have left the crisis on the front burner of global governance.

Now I think I will go off and hear Dan speak.

 

 

Between Hegemony and Balance of Power – The US in Asia

Posted on by
Reply

 

Defining a contemporary grand strategy for the United States that is no longer hegemony but is not mere traditional balance of power, strategists have turned their attention to: “offshore balancing”.  Bizarrely this grand strategy has attracted a variety of strategists from across the ideological spectrum –  from neo-conservatives through offensive realists and realists all the way to liberals.  So what is this grand strategy that has become increasingly offered up for the United States – and why has it become attractive to such a variety of strategists?

One of the longtime proponents of  offshore balancing is Christopher Layne currently at Texas A&M.  Layne poses  this grand strategy (see: “Offshore Balancing Revisited” The Washington Quarterly Vol.25, N0.2 (Spring, 2002) as an alternative to hegemony.  As he suggests:

Offshore balancing is predicated on the assumption that attempting to maintain US hegemony is self-defeating …  Offshore balancing is a grand strategy based on burden shifting, not burden sharing.  It would transfer to others the task of maintaining regional power balances; checking the rise of potential global regional hegemony; stabilizing Europe, East Asia, and the Persian Gulf/Middle East.  In other words, other states would have to become responsible for providing their own security and for the security of the regions in which they live (and contiguous ones), rather than looking at the United States to do it for them.

Peter Beinart at the Daily Beast has proposed that offshore balancing emerges “when the money and bravado have run out.”  And realist Stephen Walt from Harvard makes the same point:

The bottom line is clear and unavoidable: the United States simply won’t have the resources to devote to international affairs that it had in the past.  … The era when the United States could create and lead a political, economic and security order in virtually every part of the world is coming to an end.

So if I can put it indelicately, what offshore balancing is really is, is “hegemony on the cheap”.  Thus Walt argues in “The End of the American Era” articles:

Instead of seeking to dominate these regions directly, however, our first recourse should be to have local allies uphold the balance of power, out of their own self-interest.  Rather than letting then free ride on us, we should free ride on them as much as we can, intervening with ground and air forces only when a single power threatens to dominate some critical region.  For an offshore balancer, the greatest success lies in getting somebody else to handle some pesky problem, not eagerly shouldering that burden oneself.

So whether it is from the right or the left the attraction is there – to maintaining stability but without the US shouldering the burden.  The strategy certainly has been advocated for the United States in the Middle East and in East Asia.

Walt has provided a short list of core principles (see “Rethinking US Grand Strategy: The Case for ‘Offshore Balancing'” PowerPoint Lecture August 2009):

  • US remains only great power in the Western Hemisphere (“regional hegemony) – more on that principle for another day;
  • US helps maintain balance of power in Europe, Asia, and the Persian Gulf;
  • US relies as much as possible on regional allies and “passes the buck” to them whenever possible;
  • Key: US deploys significant air/ground forces only when balance of power is in jeopardy;
  • US does not pursue regime change, nation-building, or other forms of social engineering;
  • US does not disengage: Offshore is neither isolationism nor a strategy for radical disarmament.

So there we are.  Now historically we’ve seen offshore balancing employed particularly by the British in Europe – more on this in the near future.  But it is evident that strategists are contemplating employing this strategy vìs a vìs especially Rising China in East Asia.

But how realistic is the strategy?  On first review this does not seem an advantageous approach notwithstanding the promise of less cost – highly attractive in age of austerity.

First, while shifting the burden to allies may seem attractive, it creates for lack of a better term a principal-agent problem.  Simply, it is much more difficult to try and influence others to do the balancing that otherwise you’d be doing yourself.  Allies may not do it leading you to have act – possibly catch up.  Or allies may prove to be too aggressive raising prematurely the real possibility of conflict that might draw you in, notwithstanding your desire to lower the temperature in the region and avoid conflict.

Secondly, and this is evidently the case in East Asia, your allies may have frictions with each other rendering it extremely difficult to obtain the united push back against the rising power that you’d like.  In East Asia the United States has security relations with both Korea and Japan.  But we find that the two are at loggerheads over the Liancourt Rocks – the Dokdo’s in Korea and Takeshima in Japanese.  In the South China Sea the United States is relying largely on Vietnam and the Philippines.  Here there are significant questions around the military capabilities of these “allies” in the contest with China.

So what appears to be beneficial theoretically, may not prove to be in practical diplomacy/security terms.  More on this soon.

Image Credit: Clker.com

‘Take A Deep Breath’ But ….

Posted on by
Reply

This past week Asia-Pacific leaders gathered in Russia’s east – at Vladivostok in fact – for the annual meeting of APEC.  Though President Obama was absent – the demands of the election season upon him – Secretary of State Hillary Clinton was there representing the United States.  Hillary in fact had been doing the rounds prior to the meeting visiting several ASEAN countries before meeting the Chinese leadership in Beijing.  It is evident from those meetings and other conversations that the US and China reside in quite different places when it comes, for example, to resolving the island disputes in the South and East China Seas.  As noted by various media sources there seemed to be little compromise on the part of the two great powers concerning these disputes.  Indeed China’s Foreign Minister Yang Jiechi asserted once again that there was “plentiful historical and jurisprudential evidence” for China’s claims to sovereignty over much of the South China Seas.

In some respects the island disputes represent the leading edge of current tension between the two and indeed in the region.  So, let me go back to examining the grand strategies of the US-China.  In my previous post I looked at the article by Aaron Friedberg in “Bucking Beijing:  An Alternative US China Policy”.  If I can summarize his position it is:  significant hedging and a serious commitment to balancing.  The strategy entails “push back” relying on a balance against China by the US with key allies and a military buildup accompanied by a firm and continuing US commitment.

So there we are:  a traditional grand strategy of balance.  So let me turn to the other article in the September/October issue of Foreign Affairs.  This article “How China Sees America: The Sum of Beijing’s Fears” is by Andrew Nathan of Columbia and Andrew Scobell of Rand. On its face this article – and the grand strategy that accompanies it – appears to tone down US strategy and to rely more on diplomacy.  It recommends this on the basis that China is not a revisionist state.  Implicitly they seem to suggest neither is the United States.  As the authors argue:

But widespread perceptions of China as an aggressive, expansionist power are off base. Although China’s relative power has grown significantly in recent decades, the main tasks of with Chinese foreign policy are defensive and have not changed much since the Cold War era: to blunt destabilizing influences from abroad, to avoid territorial losses, to reduce its neighbors’ suspicions, and to sustain economic growth. What has changed in the past two decades is that China is now so deeply integrated into the world economic system that its internal and regional priorities have become part of a larger quest: to define a global role that serves Chinese interests but also wins acceptance from other powers.

On the interdependence conflict continuum, China is much further along the interdependence/cooperation continuum.  As the authors suggest some international relations specialists in China see at least some compatibility of interests:

A small group of mostly younger Chinese who have closely studied the United States argues that Chinese and American interests are not totally at odds.  In their view, the two countries are sufficiently remote from each other that their core security interests need not clash.  They can gain mutual benefit from trade and other common interests.

But the authors also admit that these scholars are outnumbered by strategists – from the military, from the security services – and I suspect the Party who believe that the US remains committed to hegemony and containment of China and these folk “… believe that China must stand up to the United States militarily and that it can win a conflict, should one occur, buy outpacing US military technology and taking advantage of what they believe to be superior morale within China’s armed forces.”

Well if the view is dominant, then it would appear that rising confrontation is inevitable. Here however the authors return to interdependence and the belief that the mutual interdependence even vulnerability “carries the best medium-term hope for cooperation.  Fear of each other keeps alive the imperative to work together.  In the longer term the authors urge the two to create a new equilibrium of power that maintains stability but does so by admitting China to a larger role in the global system.

How can the United States do this – push and cajole China and the United States to this new place.  Well here are some of the elements:

  • The US has to draw clear policy lines without threatening China – pushing back where necessary to establish these lines of division.  This must be done with professionalism and not rhetorical belligerence;
  • The US should push for a Taiwan resolution that Taiwan’s citizens will accept;
  • The US must insist on freedom of navigation in the seas surrounding China;
  • The US must press for an open world economy and defend human rights;
  • The US must maintain its military predominance in the western Pacific, including the South and East China Seas;
  • The US must upgrade its military capabilities, maintain its regional defense alliances, and respond confidently to challenges; and
  • The US must seek a balance of common interests and avoid threatening China and do so by upgrading the mechanisms of collaborative management.

So sans possibly the rhetoric and the threatening behavior, this looks a lot like Aaron Friedberg’s US grand strategy.  In other words hedging and balance.  Well maybe there is no alternative.  But I think not.

Traditional grand strategy seems to suggest two poles – hegemony by the United States or balancing by the United States.  But there is another strategy – that interestingly enough – some realists and now some liberals and even some neoconservatives – suggest is the grand strategy in Asia – “offshore balancing”.  So let’s turn to that approach in the next post.

Image Credit: Official logo of ASEAN

The Fear of the “Boogey Man” And Other Thoughts – China as a Great Power

Posted on by
Reply

I suppose it is partly due to US electoral season but the “China Threat School” has been rather busy in the last while.  Stephen Walt blogger  at foreignpolicy.com and professor of international relations at Harvard has noticed it as well.  In a recent blog post “Inflating the China Threat” he chronicles stories  from several mainstream media where the talk is all about China raising its nuclear deterrent capability.  As Walt argues:

The discussion is all pretty Strangelovian, of course, but nuclear strategists get paid to think about all sorts of elaborate and far-fetched scenarios.  In sum, those fiendish Chinese are doing precisely what any sensible power would do: they are trying to preserve their own second-strike deterrent by modernizing their force, to include the development of multiple-warheads missiles that would be able to overcome any defenses the United States might choose to build.

I won’t dwell in the ‘ghoulish world’ of counterforce, countervalue, first strike and second strike capabilities, but international relations’ experts remain dogged in their efforts to describe the Grand Strategies for the United States and China and to establish a path for both to avoid the rivalry, competition and even conflict that historically has occurred in great power relations with so-called power transitions.

It is that vein that I recommend back-to-back pieces by two American experts writing in the September/October issue of Foreign Affairs.  First there is the piece by Aaron Freiberg a professor of the Woodrow Wilson School of Princeton University who previously served in the George W. Bush Administration as the Deputy Assistant of National Security Affairs in the Office of the Vice-President – yes, the Darth Vader of the Bush Administration.  The article is “Bucking Beijing: An Alternative U.S. China Policy”. The other perspective is tackled by well known China expert Andrew J. Nathan of Columbia University and his co-author Andrew Scobell at the Rand Corporation – their article “How China Sees America: The Sum of Beijings Fears”.

It is now common to describe the China-US relationship as the most important relationship of the 21st century.  In this instance this common declaration is in fact – right.  But then how each should engage the other remains opaque. It is particularly difficult when when it comes to China.  The fact is China experts or others are unable to see into the “blackbox” of Chinese decision-making.  Most critically, we  have little idea of how the Chinese military influences China’s Grand Strategy.

But then we don’t really  have a good handle on what China’s Grand Strategy is, anyway.  Think how we’ve been speculating in the last few years on what China’s core interests are? Whether China since 2010 has exhibited a “new assertiveness”? Or what military modernization strategy China is following – and to what end?

Into that opaque environment the China Threat School wades in with relative ease.  For realistically in the face of such uncertainty a “hedging strategy” is not unreasonably a favorable option.

Now Aaron Freiberg’s analysis provides a sophisticated two-headed US hedging strategy. This strategy is two-headed because it requires the US to both balance China’s growing power and to seek economic engagement as well. As he declares:

Developing and funding a credible strategy for countering China’s [military] buildup and adopting a tougher approach to economic engagement will both be important. So, too, will be continuing to stand firm on issues of principle. … What China’s current leaders ultimately want—regional hegemony—is not something their counterparts in Washington are willing to give.  …  Short of Beijing’s genuine democratic transition, however, Washington will not willingly abandon its policy of balancing and withdraw from the region.

Freiberg then underscores the vital nature of  firm US actions in this region:

The stakes could hardly be higher. Since the mid-1990s, China has been piecing together what Pentagon planners describe as asymmetric “anti-access/area-denial” (A2/AD) capabilities. … Absent a strong U.S. response, Chinese planners might eventually come to believe that their growing A2/AD capabilities are sufficiently impressive to scare the United States off from intervening or provoking a confrontation in the region. Worse still, they might convince themselves that if the United States were to intervene, they could cripple its conventional forces in the western Pacific, leaving it with few options other than the threat of nuclear escalation. Maintaining stability requires reducing the likelihood that China’s leaders could ever see initiating such an attack as being in their interest.  A direct U.S.-Chinese military confrontation is, of course, extremely unlikely. But the aim of the balancing half of U.S. strategy must be to ensure that it remains so, even as China’s power grows.

It is a get tough/stay tough kind of policy – with effective military pushback from the United States and a credible commitment to allies in the region and avoid any incipient appeasement by these allies toward China:

In the absence of strong signals of continuing commitment and resolve from the United States, its friends may grow fearful of abandonment, perhaps eventually losing heart and succumbing to the temptations of appeasement.  …  When it comes to Asia, the United States does not have the option of what The New Yorker first described as the Obama administration’s penchant for “leading from behind.

So a renewed firmness – apparently that has slide in the recent Obama years. But suggests Freiberg there is the need to promote engagement with China as well.  But this economic engagement needs to be “righted”.  Freiberg declares:

Rather than treating engagement as desirable for its own sake, the United States needs to take a more clear-eyed and results-oriented approach. The place to start is trade. The bilateral economic relation- ship still provides benefits to both sides, but it has recently grown increasingly lopsided. Beijing uses its currency policy and subsidies of various kinds to boost its exports.

Here it is then – strong on defense, strong on balancing against the rise of China, and a tough but fair economic policy.

So let’s look across the divide to the piece by Nathan and Scobell.  Shortly.

Image Credit: WWE – the Boogeyman

 

 

 

 

 

Still Looking for an Apt Description – G20 and Global Summitry

Posted on by
Reply

As I was catching up on my global governance reading – yes, this is what I do at the beach – I came across a study by by two Brookings scholars – Homi Kharas and Domenico Lombardi on the G20 Leaders Summit.  Homi Kharas is a senior fellow and the deputy director for the Global Economy and Development Program at Brookings and Domenico Lombardi is a senior fellow and in the same Brookings program.  The piece “The Group of Twenty: Origins, Prospects Challenges for Global Governance” is worth reading and provides excellent detail on the work of previous G20 ministerials and the the more current G20 leader summits.   The study appears to have emerged in August though it also seems to have been written prior to the Los Cabos G20 Leaders Summit.  No matter.

What remains interesting are the conclusions the two authors draw on this relatively new “high table” of global governance   The fact is experts continue to struggle to comprehend fully the influence of this new global summitry institution and to determine moreover its effectiveness.  It would seem that the two authors see the G20 as more “effective” than the predecessor G8 but they continue to dwell on its shortcomings especially with respect to representation and legitimacy.   I would also suggest that the authors still struggle to understand where the G20 has most effectively moved the yardsticks of global governance.

So how do they see this new global summitry “beast”:

As we look back, however, there is a sense that, although the G-20 was quite effective as a crisis manager, its effectiveness as an enduring facilitating framework for international cooperation has proved mixed at best. … The G-20 does not operate on the basis of setting specific goals, financial commitments or timelines in the same fashion as the G-8. That is because it has organized itself as a process-oriented forum [emphasis added] for first helping to build a consensus and then providing the required political momentum to ensure implementation. … In fact, those decisions are being made through an engagement with other forums and treaty-based institutions where there are established governance procedures for representation and voice.  … For the time being, the G-20 appears to be the “best available option” for global economic governance. It is not designed to achieve institutional legitimacy per se, and thus it has chosen to work with other bodies that have a more inclusive and universal representation. It is not an implementing body, but it encourages others to rise to the challenge of addressing the issues that its agenda advances.  … Leaders who now participate in it are finding ways to demonstrate to their own electorates that they are making a difference in the conduct of global affairs through the stance they take at its summit meetings.  This link between global and domestic dialogues, and the building of popular support to address global challenges, may yet become the greatest value that the G-20 adds.

I see their first point as significant.  Most observers would argue that no matter what else one says about the G20, the early coordinated success of leaders’ efforts to avoid a complete global financial meltdown marks a highpoint in the effectiveness of the organization.

So the G20 is an effective crisis manager.  But it may not be true at all.  While the G20 effectively steered the global economy away from the abyss, thereafter it has proven itself to be a rather feeble crisis manager.  In fact the insistent intrusion of the eurozone crisis has significantly distracted and sapped the Leaders Summit.  Ambiguity surrounding its role in the crisis and the German determination to enforce austerity has motivated the eurozone and then the G20 to “kick the can down the road” as many experts have commented on.  G20 Leaders have found themselves unable to “move the yardsticks”  on this crisis but  – and more importantly – the Leaders have found themselves unable to redirect the agenda firmly toward to big item crisis prevention matters.  Both the French and Mexican agendas have largely been jettisoned.  So the G20 is has foundered between the Scylla of crisis management and the Charybdis of crisis prevention.  And it appears that is where we sit today.

As for the debate over institutionalization.  Well as I have pointed out in the past – I am not attracted to to the formal treaty-based structural forms of global governance. And even if I was – it ain’t going to happen.  But for experts and officials closer in to the reality of the Bretton Woods and UN system of institutions, the allure is just too great.  And that is certainly where the authors are, looking for integration with a reformed IMF, etc., etc.  But even though irresistibly drawn to formal institutions they go part way by pointing to the engagement with these formal treaty bound institutions.  But in fact the tasking by the G20 with the Bretton Woods institutions such as the IMF and the transgovernmental regulatory networks – FSB, IOSCO, BCBS, etc., is not only engagement but creation of a new structural architecture of formal and informal institutions.  It is all of one piece gents as I’ve argued in the “Iceberg Theory” of global governance.

Messy but effective possibly – as long as the G20 shifts from crisis to prevention.  And on that score we are not there yet.  So put your measuring instruments aside.

Image Credit:  TrendingAddict.com – Washington G20 Leaders Summit 2008

 

 

Measuring Success – The G20 and Food Security

Posted on by
Reply

There continues to be a raging debate – all right so in global governance and global summitry there is hardly likely to be a raging anything – but there continues to be a serious difference of opinion among officials and experts over the success of the G20 Leaders Summit.  Some have argued that the G20 proved effective, at least in the immediate context of the financial crisis in 2008 – especially after the turbulence from the Lehman Brothers’s bankruptcy.  Others, while admitting the immediate success have suggested that as this critical crisis receded, so did the effectiveness of the G20.  Thus, the G20 Leaders has become unwilling to accept the economic and financial coordination identified by various international organizations and regulatory bodies.

Well I suspect there is no immediate way to resolve the debate – to determine definitively – the overarching success or failure – the final measure of effectiveness for global governance –   of the G20 Leaders Summit.

But I think there is a possibility of some assessment in the near future.  The possible metric that we may use to gauge the G20 Leaders capability to coordinate action and to avoid, or at least ameliorate a possible crisis comes in the area of food prices.   The assessment available is, or will be, the G20 action(s)/or not, to avoid a recurrence of food price spikes that led in 2008 to riots in a number of developing countries.

Since that time global summitry has been busy addressing – at least rhetorically – the question of food price volatility.  Former President Sarkozy was particularly engaged in food security though he leaned toward the influence of derivatives on commodity prices as much or more of a direct factor on food supply and demand.

First at the Seoul Summit the G20 Leaders identified a food security pillar in the Seoul Consensus.  Then the ministers of Agriculture gathered in June 2011 in Paris and produced an “Action Plan on Food Price Volatility and Agriculture”.  And even more recently at the Los Cabos Summit the agriculture vice-ministers annexed a Report (Report May 18, 2012) to the Los Cabos Declaration (see paragraphs 55 through 62) describing the progress made on previous food security commitments.

Now comes the drought in North America that poses an immediate threat to the supply of commodities and the real prospect of significant prices increases. Apparently it would seem that Mexican, French and US officials are urging their colleagues to hold a conference call in the week of August 27th to discuss the possibility of calling a meeting of the Rapid Response Forum (RRF).  The RRF is a creature of AMIS or the Agricultural Market Information System  (AMIS) that was launched in September 2011.  The main objective of AMIS is to encourage major players on agri-food markets to share data and enhance information systems.  That would seem more than reasonable but a number of nations particularly China have been unwilling to do so and private agri-business – major players in the food distribution chain – are reluctant to play as well.

Now the RRF is a body designed to “promote early discussion among decision-level officials about abnormal international market conditions.”  What could this body discuss?  Well it might well encourage producing states to avoid placing food export bans on key commodities.  It was the Russian embargo that exacerbated prices in the already volatile commodity markets in 2008.  And major producers – the US for instance that uses approximately 40 percent of the corn crop to make biofuels – could consider lifting the mandates on bio-fuel production.

Well you’ll not be surprised that a number of experts have already “pooh poohed” the likelihood of action by G20 countries.  As trade expert Simon Evenett was quoted as saying:

Beyond words, expect little from the G20 on rising food prices. … With a string of broken promises on protectionism, no serious enforcement, monitoring well after the horse has bolted, and a tendency to pull their punches, any G20 promises on food trade won’t be taken seriously – by the G20 themselves or by anyone else.

Well here is a useful test of the G20s capacity to coordinate action in the face of what appears to be a real prospect of price increase in such critical commodities as corn, wheat and soybeans.

 

Image Credit: OMAFRA report authored by John Chippa July 13, 2012

It Takes Two to Tango

Posted on by
Reply

As I mentioned in the previous post, “‘Pivots’ and Great Powers – Both Sides Now” I thought I should dwell a bit on former Australian Prime Minister and Foreign Minister Kevin Rudd’s speech/article called “The West Isn’t Ready for the Rise of China” (for the article grab it at the NewStatesman.com).  The fact is Rudd – prime minister or not, or foreign minister or not – is one of the smartest foreign policy dudes, especially when it comes to China, in all of the Asia-Pacific.

So what did Rudd say and what did he write?  Now the title comes from a quote in the article “It Takes Two to Tango.” It was Rudd himself who drew attention to the quote.  It was Rudd’s assertion in his recent Munk School of Global Affairs speech – that closely tracked the New Statesman article – that the quote comes from Mae West.  My exploration suggests – “it ain’t so”. Of all the quotes attributed to the famous Mae West no list seems to include that quote.  But the quote itself is a reminder of the impact the powers have on each other.  More on that below.

So what is Rudd’s basic point?  Well it comes from the sub-title.  China’s rise to dominance in the international system is, as Rudd suggests, “imminent”.  In fact what he actually says is, “… the west is completely unprepared for China’s imminent global dominance”.   More pointedly Rudd then poses the key question: we seem unable to determine whether China is prepared to accept the international order the west created over the last 50 years or not.  Will China, as Rudd says, “accept the culture, norms and structure of the postwar order?  Or will China seek to change it?”:

Importantly, some might say disturbingly, the matter remains unresolved among the Chinese political elite themselves.  … At present, there is no centrally agreed grand design.  In other words, on this great question of our age, the jury is still out.

While there are some elites in China that favor the continuation of the liberal economic order – obviously those in particular that have benefited from reform and opening – there are political forces in China – conservative political forces and the military – that do not.  It is not that they haven’t benefitted from the dramatic sustained economic growth but they certainly are resistant to greater domestic political reform.  Moreover, the military – like militaries everywhere adopts hedging and worst case scenario strategies – which raise countermeasures and mistrust in the region and heightens rivalry and competition. The most evident arena of tension recently is the South China Sea but there is tension between China and Japan in the East China Sea.  Nevertheless, it remains possible for the west (this is the term Rudd uses but the inclusion of Korea and Japan etc., make this an odd reference) and others, according to Rudd, to have an impact on China’s views and to help China’s leaders to accept a continuation of the current international political order:

Moreover, the rest of the world’s ability to shape the contours of China’s future global role constructively represents a limited window of opportunity, while China’s international debate is still fluid, while Chinese influence continues to be contested, and well before final strategic settings become entrenched.

So Rudd carries a relatively positive message – though clearly not a starry-eyed one.  And as he argues, effective engagement with China that retains the liberal order will only come with concerted and collective effort:

But it will require collective intellectual effort, diplomatic co-ordination, sustained political will and, most critically, continued, open and candid engagement with the Chinese political elite.

Rudd has outlined a number of steps for the strategic engagement of China and its elites.  But before we get there let me comment on a number of aspects of this analysis that seem to me to raise questions over Rudd’s policy roadmap.  First, Rudd’s approach suffers from what I call, “Time Travel”.  Though it may be a helpful rhetorical device, I think the notion of China’s imminent global dominance is just wholly exaggerated.  Here I am focused on the “imminent”.   While China’s dominance in the international political order may come – it is no time soon.  There well may be a long period of rivalry and competition but given strategic-military deployments the China “dominance” will for the immediate future remain regional.  Which doesn’t mean that engagement of China is not required but it leaves global leadership and influences more fluid and less likely to be dominated by China.

The same “Time Travel” dilemma seems to me to be evident when he examines the emergence of China as the largest economy.  Now Rudd admits that it is likely to occur sometime over the next two decades – though he believes that it likely to come sooner rather than later. Fine, but we are still talking some significant time in the future – let’s be optimistic – ten to 12 years. That impacts then on the framing and immediacy of change to the political order and the character of the engagement called for in the global setting.  More critically is the reality that real economic power derives from GDP per capita and not just the absolute size of an economy.  And China is somewhere in the neighborhood of 100th in GDP per capita.  And beyond the low per capita GDP, we should be hesitant to predict China’s economic trajectory from past growth.  So while China’s growth has been phenomenal and sustained over thirty years there is still a significant distance to go.  And again that impacts on China’s position in the global political order.

On the policy roadmap Rudd believes that the fashioning of China’s engagement necessarily occurs in the Asia-Pacific and where Rudd suggests, “ … the new regional institution underpinned by shared international values will be needed to craft principles and practices of common security and common property for the future.”  Now Rudd, to his credit, has consistently over the years urged the need for a broad Asia-Pacific security community.  While Prime Minister Rudd promoted the Asia Pacific Community, now he believes that the East Asia Summit (EAS)  – from his perspective the successor to the APc – is the appropriate critical setting arraying together all the major powers of the region, including now India, Russia, the US and China, around a single table with, as he describes it, “an open mandate on political, economic and security issues.”

The security dimensions of the EAS and other multilateral settings, however, are contested by China.  In the recent ASEAN Ministerials and the ARF meetings China strongly resisted the discussion of the South China Sea territorial disputes, which China has insisted should only be handled bilaterally.  The EAS – the summit leaders forum – is just as likely to find China arguing that these disputes should not be included on the leaders’ agenda.  Rudd’s comments in Q&A at the Munk School argued that these territorial matters were taken up in any case.  Well, they were but at the cost of no communiqué and the discussions at the ministerials say little about the likelihood of placing it on the leaders agenda.  It is not the smooth path implied by Rudd.

Multilateral discussions are critical.  Engaging China is necessary.  But several conclusions can be drawn from contemporary events and behaviors.  First, the asymmetry of power with many ASEAN members make the inclusion of most of these states open to division, especially in the context of consensus.   Collective effort is important but the critical relationship is the bilateral US-China one.  The Australias, Indonesias, Japans and Koreas are significant and can assist in supporting the liberalizing elements within the Chinese system, but it is the engagement of the US that remains critical.  If the US-China relationship cannot maintain engagement and a collaborative spirit, I am doubtful the rest can ensure success

Image Credit: Wikipedia – Kevin Rudd

 

 

 

“Pivots” and Great Powers – Both Sides Now

Posted on by
Reply

 

 

 

 

I could not resist – and a big thanks to Joni Mitchell and Judy Collins for the reference to their famous tune.  I f you recognize the reference – well you know …

In 2009 I think  – the draft of this book chapter was done in 2008 – Zhang Yunling of CASS – “Mr. APEC” in China –  and myself wrote a chapter on the regional dimension in the US-China relationship in an edited volume by Gu Guoliang and Richard Rosecrance called Power and Restraint: A Shared Vision for the US-China Relationship.   Zhang Yunling and I tried to capture the US-China relationship this way at the time:

China’s strategy is based on three principles: first, China recognizes the United States as a superpower; indeed the current sole superpower; second , China will cooperate with the United States in as many areas as possible; and third it would seem China will continue to increase its strength, including military strength, and raise its status both regionally and globally.  From China’s perspective, as long as the United States recognizes and takes into account China’s interests, China is unlikely to challenge the overall US leadership. In the final analysis, the most significant question for China is, how can it balance its support for democracy, domestically and externally, with the defense of sovereignty whether Taiwan, Central Asia or the Asia-Pacific generally?

Well, that was then and this is now!  It would not appear to me that these constitute the bedrock “rules” that define this most important bilateral relationship.  But let’s take a look at the rules and where the relationship is today.

The context has changed a great deal since the full onset of the global financial crisis of 2008.  It appears that the “Chinese foreign policy elite” – I am not sure exactly who these people are – but there is a view from western experts – I know these folks far better – that there is a from Beijing the view that the US is in decline and that it is losing its hegemonic status.  Furthermore, and more ominously, as a result in  part of the US Administration’s “Asian pivot”, these same China experts have a heightened suspicion that the US is unwilling to adjust to its relative decline and China’s rise.  As Brooking’s Kenneth Lieberthal recently described it at ForeignPolicy.com:

In Chinese eyes, the United States has always been concerned primarily with protecting its own global dominance – which perforce means doing everything it can to retard or disrupt China’s rise.  That America lost its stride in the global financial crisis and the weak recovery since then while China in 2010 became the world’s second-largest economy has only increased Beijing’s concerns about Washington’s determination postpone the day when China inevitably surpasses the United States to become the world’s most powerful country.

So it would seem that China has drawn back from the view that the US is the only superpower. Instead many China experts now suggest that China is a global power as presumably is the United States.  Quite honestly I haven’t s clue what a “global power” is – and I suspect it is simply a way for Chinese experts to assert that China is a superpower – without having to actually proclaim it.  There is little question that both states are great powers – lord knows no one would question each being in the G20 etc., but then including India also makes sense. Clearly India is not yet a “global power”.  It seems to me to be disingenuous to manufacture this new category – especially if you compare the two by military or economic metrics – it ain’t so.  I think too many experts distort time lines.  It more than a decade, possibly two, before China’s economy will match the US so let’s not conflate that future with the present.  And as for the military and strategic partnerships – not even close.

Though it is true that the US and China have sought to cooperate in a number of critical areas – especially in the global economy, notably China’s leaders urging collective effort to resolve the eurozone crisis and to avoid grater turbulence – in other areas there is no collaborative spirit.  Most puzzling is China’s determination to support Russia to the bitter end on Syria.  It is unnecessary and with little that would suggest that there is a Chinese interest in playing “poodle to Putin”.

More contentious are the growing demands and “police” encounters in the South China Sea between China a number of Asian countries.  China has asserted a broad territorial claim that encompasses much of the South China Sea.  In addition there are territorial clashes between China and the Japan in the East China Sea. Many in Washington have declared a new China assertiveness threatening regional stability.  The US has meanwhile – without declaring sides on the territorial claims, has insisted on freedom of navigation and a multilateral approach to resolving the territorial demands.  China has in turn rejected this approach – and at least for now has insisted that these territorial claims should be settled by the contending parties only – bilaterally in other words.

The new assertiveness has enabled many in Washington to focus on the growing military modernization in China’s armed services and calls to meet such military challenges.  The point here is that the so-called new assertiveness has drawn close attention to China’s military threats and the consequences of the growing military modernization.

Where then do the two great powers need to go? Here are some actions that the two can adopt that are likely to lower the temperature on the competition, lead to a new set of rules and can be accomplished largely without the other:

  • Both take a deep breath and limit the degree of hedging each proposes for the other.  Hedging focuses on worst case and frequently results in outcomes  each is concerned to hedge against;
  • The US de-emphasize rhetorically the Asian pivot; work more quietly with ASEAN allies to generate a Code of Conduct acceptable to both sides;
  • China turn down the volume on the South and East China Seas and at least in the case of the South China Seas propose concretely joint development agreements with the parties – Vietnam, Philippines, and others.  These agreements enable the parties to side step the territorial claims for the present; and
  • China needs to rethink its Syria position in the UN and consider abstention as opposed to veto.

I was fortunate enough early in the week to hear former Australian Prime Minister and Foreign Minister speak on the Rise of China.  If you take a look at the NewStatesman.com the article entitled “The West Isn’t Ready for the Rise of China”, the piece fairly reflects his remarks at the Munk School of Global Affairs.  I thought I’d just provide a quick sense of the approach that Rudd brings to this critical relationship:

So, what then is to be done?  Is it possible for the west (and, for that matter, the rest) to embrace a central organizing principle as we engage China over the future of the international order?  I believe it is.  But it will require collective intellectual effort, diplomatic co-ordination, sustained political will and most critically, continued, open and candid engagement with the Chinese political elite.  So, what might the core elements of such an engagement look lie?

I will turn to Rudd’s perspective.  This should allow me to describe the new rules of collaboration required for the US-China relationship.

For this particular “thought exercise”, I will try and describe what are the rules of behavior that can ensure that the competitiveness and rivalry can be contained – that rivalry and competition do not escalate to heightened and sustained rivalry – and then even to conflict.

 

Image Credit: abc.net.au

“Pivots” and Great Powers – From the Other Side

Posted on by
Reply

 

 

 

In my earlier post – of close to the same name – I mentioned that it was Minghao Zhao’s earlier NYT op-ed, dated July 12th, “The Predicaments of Chinese Power,” that got me thinking again about the US-China relationship.

Now as I pointed out in this earlier blog post,  Zhao is currently a research fellow at the China Center for Contemporary World Studies, the think tank for the International Department of the Central Committee of the CPC.  I learned subsequently from my colleagues in China that he graduated from Peking University (Beida) with an MA and is also the Executive Editor of the China International Strategy Review a publication from the School of International Studies (SIS) at Beida.

Okay what did Minghao Zhao have to say?  Well like any good international relations specialist, Zhao focuses a lot on power and the various forms it takes in the global governance system.  Summarizing Zhao,  he suggests the following:

  • It remains a controversial issue as to what China’s grand strategy is, or should be;
  • When we measure China’s power we find that it is powerful on some measures – population, global trade, gross domestic product but is woefully inadequate on per capita GDP and near the bottom on the human development index;
  • Looking at the employment of power and influence, China has a long way to go, say in comparison to the US, whether it is hard power or especially “soft power”;
  • China is, as described by Zhao, “

… still unfamiliar with these new power games. The complex web of national security threats facing China underscores  the need for greater efforts to integrate the strategic tools of diplomacy, defense and development.  What is more, China has not yet found a way to utilize “civil power” in achieving sustainable diplomatic successes.

  • China still has a way to go to find a strategy that will reassure other countries – read that as its near neighbors – especially in the South China Sea and also the greater powers – Japan, Korea and especially the United States.  China has also not learned – here I am not sure China is the only great power that suffers from this, read that as the United States – to practice multilateralism where the powers share responsibility in deciding and acting.  Indeed Zhao summarizes well this gap between between its power and its intentions:

While the Chinese truly believe in their declared peaceful intentions, they have yet to convince others especially the United States  and Asian neighbors.  China needs to boost its participation in multilateral forums and readjust its approach to stress the sincerity of its commitment to peaceful development.

  • Finally – and here I suspect Zhao draws his conclusion from having observed the United States over the past few decades – China needs to restrain itself.  If I can summarize here the world needs to take a “deep breath” and avoid adopting a pose of exaggerated fear given China’s rise and the growing power China has, and is acquiring.  At the same time China’s leaders need to restrain themselves when it comes to the territorial disputes that now plague China on its maritime borders and to constrain the nationalist impulses that pulse through the China blogosphere and presumably more broadly in Chinese society.

As our colleague describes it:

An exaggerated fear of China’s capacities and intentions can itself become a couse of conflict and lead to tragic results.  China’s entry into the world must be accompanied by a new dynamic of mutual accommodation with that world.

For  a number of years many China observers asserted that Chinese policy followed Deng Xiaoping’s historical dictum: 韬光养晦 – taoguang yanghui – concealing one’s capabilities; biding one’s time to have an achievement.  Though the phrase is not free of controversy over its meaning, most agree that at least in terms of strategic policy that China shouldn’t be overtly aggressive and take a forward and assertive policy stance.

Now there has been a Washington view since about 2010 that China’s restrained policy stance – or what I would suggest as a junior partner role – has come to end.  Because China is a global power – this is a phrase that Minghao Zhao adopts and is expressed by many experts though I think it is a highly problematic description of China currently – and there is a strong current of opinion in China that the United States is in decline, and in fact that China has been too defensive – that China could, and should, now be more assertive. Indeed because of this perceived new Chinese assertiveness, at least in the region, that US policymakers have articulated this Pacific or Asia pivot, as described in the earlier post.

So it seems we are now witnessing an emerging gyre of “action and push back” by the United States and China.  Is this the best way in fact to characterize the US-China interaction.  Well I don’t think we have reached this point but it is difficult to both assess China strategic policy – indeed almost everyone agrees that is near impossible to describe China’s grand strategy – and therefore to determine if the US-China is in some growing tit-for-tat strategic framework.  Certainly leaders from both countries assure each other – and the global public –  that the relationship is not of that sort and that their strategic policy continues to count on maintaining a positive engagement and collaborative policy.

So let’s examine more closely the relationship in the next few days.

Image Credit:  news.xinhuanet.com – The Central Committee of CPC