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The rapid disintegration of the whole of the current international system

September 2010 (GEAB N°47)

This process is already underway. The failure of the Copenhagen summit on global warming in late 2009 has highlighted several aspects of the rapid disintegration of the current international system: the ineffective politic of the UN, lack of a common Western position in a context of division between Americans and Europeans, blocking capacity of BRICs and China in particular, the obsolescence of Anglo-American approach to marketing mixing “politics of fear” and spinning news, indifferent public opinion in the face of the economic and social consequences of the crisis and the loss of credibility of public institutions and the media[1].

THE UN

The UN is totally overwhelmed by the current crisis. Neither the Security Council nor the various special agencies seem to have the slightest ability to influence unfolding events and even less on the implementation of solutions. The absence of the UN on all key issues of current geopolitics (Korea, Iran, Middle East, etc.) attests to its rapid obliteration. Moreover, the alarmist attitude of the WHO over Swine fever has only contributed to increasing doubts in public opinion on even the credibility of the analyses published by these international agencies.

THE WTO

The WTO, as we mentioned earlier, only has authority insofar as its most influential members agree to apply its rules and decisions. The trend that has currently asserted itself, behind the official rhetoric, is totally the opposite.

The United States, China, the EU (at least certain member states like France or the United Kingdom) seem reluctant to do anything else than let the attitude  of « every man for himself » take hold in world trade. This same global trade is in freefall and its weakening, of course, negatively affects the WTO’s ability to influence. This final creation of the period of accelerated globalization that we have experienced over the last twenty years is in a deadlock. The Doha Round, its current major project, will not reach a successful conclusion, whatever one or the other officially says. The stalemate is gradually worsening each year due to lack of leadership to bring it to a successful conclusion and because the key players are hereinon turning to the rationale of regional integration and / or trading blocs. As a matter of fact, it is probably the WTO’s sole way out in this new decade: try to move from an institution based on States to one based on large regional commercial entities in order to prevent free trade areas from becoming trade blocs in direct conflict with one another, as it will happen if no regulation system is adopted at global scale.

THE OECD

The OECD, which basically has never been anything other than a kind of institutional think tank intended to promote the Western dominated agenda is absolutely not equipped to be anything other than a vague circle of proposals, totally lacking in the tools and human resources to act in a global crisis and even less on the reorganization of global governance that it involves. To do this, it would need a strong political legitimacy, considerable financial resources and particularly daring leaders, all of which are an antithesis to the venerable Château de la Muette[2].

 

THE IMF

The IMF is not able, either, to have a significant impact on the crisis. In the best case, it can still play the role of “broom wagon” and provide emergency support to States on the verge of bankruptcy (it was the sole purpose of the G20 decision for a capital increase decided, ironically, by overindebted Western states). However, the increasing number of States affected as well as the size of their respective economies will pose a capacity problem. Finally, the IMF essentially remains the finance arm of the United States and its Western allies, with a decision structure that will no longer match the financial balance of power on our planet in the coming decade. The majority of the countries providing the largest global financial reserves are marginalized. In other words they will not provide any “gift” to the IMF without having any real influence on how their money would be used. We see here how much should have been done, at least ten years ago, to reform the IMF and adapt its decision-making structure to the world of the early XXIst century instead of letting it congeal in the post- Second World War world.

It is also very significant of the current international blockage that the reform of the IMF, giving the  BRIC a seat which corresponds to their new economic size, has still not been implemented. Don’t give up anything as long as events don’t compel you to seems to be the watchword of Americans and Europeans. This is hardly surprising from Washington, even if it is a shortsighted view. For Europeans, it is absurd. Not being the masters of the game today, they have everything to gain by actively participating in the redefinition of the rules. But on this occasion, instead of proposing bold reform (reducing their votes, uniting it under one common European umbrella and in the same breath demanding a corresponding reduction in the US vote), they are on the defensive and seem to be those responsible for the lack of significant development, which is really the last straw since the first of these increasingly glaring inconsistencies of the IMF is the excessive influence of the United States. A rapid pace of change must also be imposed on the IMF. The new voting arrangements should become fully operational between now and 2013/2014 at the latest to eventually enable the IMF to act as a gyroscope, a stabilizer of the world economic and financial system of the second half of the decade. Otherwise, far from stabilizing anything, it will become another bone of contention, then clashes, between different global players, ultimately to end in having the least importance. It is, in fact, this institution which could give birth without too much difficulty, if the political will is there, to the future global benchmark reserve currency which will allow the dollar era to be left behind for good without suffering « widespread chaos ».

THE G7 and THE G20

The G7 (or G8) has only ever been an elitist club gathering around the United States and the major Western economies to give the appearance of a vague collegiate management of the world. Barack Obama has already signed its death certificate in 2009, a sign of the end of twenty years of Western planetary hegemony.

Then we come to the G20, the youngest in the series, which can claim the credit for finally combining the emerging powers of the XXIst century (China, India, Brazil, etc.) with the old powers of the XXth century. It is, for now, its only claim to fame because its first three summits (November 2008, April and September 2009) have, in fact, produced nothing tangible on basic problems such as the replacement of the US dollar as the international reserve currency. Our Western leaders, principally Gordon Brown and Nicolas Sarkozy, have entertained the gallery with their thundering declarations on tax havens and bankers’ bonuses. The most important tax havens (clustered round the City, like the Channel Islands and round Wall Street, such as Delaware) are not affected. As regards the others they sign “transparency” agreements with one another to have their names removed from the black or grey list. Bankers’ bonuses have already been bypassed by a whole host of processes including payment for consulting services for deserving traders …

The major weakness of the current G20 is that it remains fundamentally dominated by leaders coming from the world that is collapsing before our eyes. Nearly two-thirds of them belong to the Western bloc or are leaders who depend on it to stay in power. This situation is not really conducive to questioning the very foundations of this crisis that affects the functioning of the Western model of these last few decades. The EU, or rather the Eurozone, would be the only one able to tip the balance of power between the  « world before » and « the world after » but for the moment, as its leaders are totally subservient to Washington, it  blindly follows the United States and prevents any fundamental questioning within the G20. However, there is a simple option which enables Europeans to get global governance out of the impasse in which it currently finds itself, namely to actively participate in one of the upcoming BRIC summits of which the first was held in June 2009 at Yekaterinburg in Russia. The Western press has been remarkably discreet on an event nonetheless decisive on the world geopolitical landscape not so much for the decisions taken because there were none, but for the fact that it managed to take place despite fierce opposition from Washington who couldn’t even send an observer.

Indeed the loss of power in a group is measured by the inability of the leader to prevent the other members meeting and discussing things that do not favour him. Nobody doubts that if these four countries met, it was not to help the United States maintain its global influence or to extend the Dollar’s global reign. In any event, the mere proposal from the EU, the Eurozone, or even just France and Germany together, to participate in one of the BRIC summits between now and 2014 would constitute such a swing gauge of the world order that it would immediately become a factor for change in itself, a messenger of a new direction of world affairs. And it is really guidance that the world needs when all the familiar landmarks disappear. This step is inherently simple, but it can only be decided upon by skilled leaders[3] with an historic vision of their responsibilities. In other words, it is unlikely we shall see such a thing happen with the current European leadership.


Notes

[1] The contemporaneous fiasco of the so-called terrible Swine fever epidemic has only contributed to the growing conviction of the  use of collective fear to promote hidden financial, political or security agendas.

 

[2] OECD headquarters in Paris

[3] Because the pitfalls are numerous, especially in the EU where the UK will do everything to ensure that this initiative fails or is diluted in a « Western », « Transatlantic » context, which would deprive it of any added value to help transform global governance. Not to mention that it would especially make European participation in a BRIC summit impossible.