G7 must adjust to the reality of a multipolar world

TORONTO—Wrapping up their summit in Hiroshima, Japan, the leaders of the G7—including our own Prime Minister Justin Trudeau—issued a lengthy communiqué, long enough to be an essay and covering almost every important challenge facing the world. Yet it was based on the false assumption that the West, led by the United States, can set the rules for the rest of the world. We do not live in a unipolar world. Rather, we are living through a major change in the distribution of power in what will very much become a multipolar world. That’s one where the Global South—China, India, Indonesia, Brazil, South Africa and Turkey, for example—will expect to have a big say in the priorities and policies that govern the world in the years ahead. In fact, none of the world’s major challenges will be addressed without the participation of the Global South, which includes writing the rules on how the future world will function. It is the failure of the West to recognize the changing dynamics of world power that poses a grave threat to hopes for peace, sustainability and prosperity. The current effort of the West to divide the world between democracies and autocracies is in no one’s real interest. The world has to get along, despite differences, and co-operate to make the world a safer place. In 1995, the United States, the European Union, Japan, and Britain accounted for 74 per cent of the world economy; by 2019, their share had fallen to 50 per cent, and will almost certainly decline further. China is the largest trading partner for a growing number of countries. As a study by the International Monetary Fund (IMF), entitled Geoeconomic Fragmentation and the Future of Multilateralism, warned earlier this year, the current breakdown in international co-operation poses great risks to the world, with “the deeper the fragmentation, the deeper the costs." Instead of a costly and dangerous division of the world into blocs, the study says “the rules-based multilateral system must adapt to the changing world. This includes the international trade and monetary systems,” since “multilateral co-operation remains the best approach to address global challenges." In their sweeping communiqué, the G7 leaders had ambitions to: strengthen disarmament efforts and address nuclear proliferation; reform the world-trading system; make the UN more effective; accelerate the global transition to clean energy; pursue policies on food security, reform multilateral development banks, strengthen the IMF and World Bank; advance global health and pandemic policies, including vaccine manufacturing capacity; address international migration; develop rules of artificial international governance; deal with the debt problems of poor countries; eliminate unabated fossil fuels by 2050; sharply increase foreign aid; and work towards holding the average global temperature increase to 1.5 degrees Celsius. But most of these plans are impossible to achieve without the active engagement of the Global South, and without reform of global institutions, which will require participation by the Global South in writing new rules. The global institutions we have—the UN, the IMF, the World Bank, the World Trade Organization and the World Health Organization—all need serious reform. But the Global South, including China and India, must have a major say in what these reforms will look like if the reforms are to be effective. This will require concessions on all sides, and global systems will have to reflect the values and interests beyond the West. This is not a world based on “friend-shoring” or an insistence that the only values that matter are Western values. In fact, as the IMF has pointed out, friend-shoring could entail significant costs and major disruptions to markets as they become increasingly segmented. The costs include slower social and economic progress for many emerging economies, higher prices for low-income consumers in rich countries such as Canada, lower productivity growth from uncertainty on future investments, curbs on the transfer of technology and slower world economic growth. Climate change is the most critical challenge, but catastrophic climate change cannot be avoided unless the Global South plays a critical role. This will be negotiated through the UN’s International Panel on Climate Change. It’s also not just climate change at issue. We cannot deal with the changing nature of trade and the place of industrial policy in trade without reforms to the World Trade Organization. We cannot deal with future financial crises without an effective IMF. We cannot deal with the debt problems of poor countries without a more representative Paris Club of creditors. We cannot address nuclear proliferation without negotiations and binding treaties. We cannot deal with future pandemics without a reformed World Health Organization. To address world food issues, we need a well-functioning Food and Agriculture Organization. The real challenge for the G7 leaders is to come to terms with the changing realities. “The new realities include the changing nature of trade, an increasingly diverse multi-polar world, a widening trust deficit, and the inability of current multilateral mechanisms to prevent negative global spillovers from unilateral actions,” the IMF study on geoeconomic fragmentation warned. “These new realities require a fundamental rethinking of how to address global existential threats (such as climate change and pandemics) and avoid runaway fragmentation while upgrading multilateral rules to ensure cooperation on global public goods, fair competition, and adequate protection of the most vulnerable.” If, as Canadians, we want to make a serious contribution to a better world, rather than sounding like an echo for U.S. interests, our government could focus much more on working to restore a healthy and forward-looking multilateralism that helps deliver a safer world. The future must put co-operation between different societies, cultures and values as the essential priority, not the dangerous and counterproductive vision of an increasingly splintered world feeding on the false narrative of competition (and the risk of war) between democracies and autocracies as the overriding challenge for the world. There’s only one Earth and we all have to learn to live together. David Crane can be reached at crane@interlog.com. The Hill Times