Geopolitical policy challenges on a new Canadian path

Geopolitical policy challenges on a new Canadian path.

Canada needs to move beyond a policy perspective largely shaped by relations with the US and EU and create partnerships with the Global South.

Published by Policy Options.  May 1, 2017.  Written by John Sinclair

The future is always hard to predict, but we already know that there is a new human disrupter at work on Planet Earth. Unfortunately for Canada, he lives just to our south. Any optimistic dreams that he might sober up after a few months on the job have been dispelled. He shows no signs of pulling back even as he is politically humiliated by his failure to end Obamacare or by finding that his Islamophobia is not widely shared by the US judicial system.

Applauded by his team of loyalist advisers, Trump makes macho claims of “taking care of” semi-nuclear North Korea if China won’t. Tough news for Seoul, in easy missile reach just across the border in South Korea, with its 10 million people; the city is at obvious risk of immediate collateral damage, even a gas attack that could kill maybe a million children. As major storms and floods intensify across the planet, President Trump remains a committed denier on climate change, issuing a directive ending President Obama’s restrictions on burning coal. These are not the actions that Canada wants to see from its neighbour.

Meanwhile there are other changes in the global sphere that are shaping the world and Canadians’ path within it. Some are relatively benign, such as advances in technology and access to knowledge. Some are new uncertainties, notably a stumbling Europe adjusting to social change as populations age and new immigration disturbs social conservatives. If the EU starts to lose its cohesion because of Trump-like politics, then our brand new trade deal with Europe, the Comprehensive Economic and Trade Agreement, could be at risk. A major uncertainty has been created by the Brexit folly. Just under 52 percent of the UK population, mainly the older generation, chose the “Leave” path, which is strewn with likely major economic costs for themselves and even more so for their own children, who voted “Remain” by a large margin.

The most radical change that Canada’s world view needs to take into account is the emergence of the global South as a major driver, probably soon the most powerful, of global economic development. Many countries of the South are also significant military powers as well as beneficial sources of social and cultural diversity. Some, notably India and China, were global trading leaders as well as military and seafaring powers a millennium ago, at a time when Europe was just finding its feudal feet.

This global transformation, a new geopolitical order, is getting under way slowly and unevenly. It will likely take many years to come to fruition. But in a resource-scarce world, one driven by new communication modes and marketing-induced consumption “needs,” the South will not want to replicate the features of a North besotted by consumption and enthralled by globalization. Canadian geopolitical strategies will need to be shaped around the new players in the global South as producers, customers and investors, as well as future major markets for our raw materials and industrial products.

Of course, not everyone will benefit. Trump’s electoral upset, rooted in the fears of displaced white male industrial workers, shows that even in the nominally richest of nations, inequality and exclusion remain widespread. For the global South, even with its macro-success stories like China and India, poverty in all its dimensions will remain a harsh reality.

Ending persistent extreme poverty is the central goal of the UN’s Agenda 2030, and Canada subscribed fully to this initiative in 2015. However, that commitment has not translated well into public policy so far. Recent years have indeed seen a declining share of our budget and GDP devoted to “development cooperation” (the new partnership-spirit term for foreign aid), first under Stephen Harper and now, seemingly still, under a smiling, “We are back” Trudeau government.

The new global order will shape 2030 — and 2067, Canada’s next big milestone. It was triggered by the global financial crisis of 2008-09, rooted in bankers’ greed and failed financial regulation in New York and London. The South, in the shape of China and what we call the emerging economies, substantially saved that day by keeping its economies rolling, as both producers and consumers. The mechanism used, massive coordinated financial stimulus, was implemented by global leaders from both North and South, working within the leaders’ G20, an enhanced and enlarged version of the G7. As we know, to our regret, the crisis action may have saved the day but has still left millions jobless.

Many observers regard the continuing impact of the financial crisis as proof that the old economic order, what we call globalization, is no longer adequate, either economically or politically. It is leaving political leaders insecure. Populations, both those Trump-supporting white males and the refugee waves crossing into Europe for the past two years, remain angry and desperate.

The countries of the South, at least the leading members, are now setting their own global policy agendas. The recent mini-summit of President Trump and China’s President Xi Jinping may be the first of many G2-type events, but these are not meetings of minds; rather, they are a forum for tough manoeuvring for power. So far it is Trump who is blinking first.

It remains unclear if China wants to take on the global leader role as the US slips away from automatic supremacy. The BRICS countries (Brazil, Russia, India, China and South Africa), the G7’s mirror in the South, are creating new financial instruments that will match and compete with the IMF and the World Bank. Most visible of these is the new Asia Infrastructure Investment Bank(AIIB), with $100 billion in capital and a membership embracing most of the OECD and the G20; the US and Japan are now the only significant holdouts. Canada needs to be an active collaborator in these new partnerships. Unfortunately, we allowed ourselves to be bullied by the US into initially staying out of the AIIB. Now, belatedly, somewhat cap in hand, we have asked to join, ending up with a small voting share as a junior member.

Canadian public policy could constructively support further enhancements to the G20: a broader mandate and more inclusive membership, as well as a more collegial relationship with the UN.

The BRICS network, having started out as a means of defence against an assertive G7, saw up close during the 2008-09 financial crisis the vulnerability of the West, in its inability to manage growth equitably and sustainably. The G20 is becoming the BRICS countries’ chosen vehicle for rebalancing global rules of finance and trade created over decades that privilege Western OECD/G7 interests. Canadian public policy could constructively support further enhancements to the G20: a broader mandate and more inclusive membership, as well as a more collegial relationship with the UN.

For G7 countries, especially middle powers like Canada, the dilemma now is whether to hold on to familiar privileges or move to a more open approach. We need these new partnerships for political and commercial reasons, but do not quite know how to let go of the past. The North largely kept its privileged voting shares in the IMF and World Bank, and then feigned surprise at the creation of several new BRICS clones. Canada could opt to be a leader in building those alliances. Historically we have no colonial baggage, but all too often we hesitate to be the bold voice of change internationally.

Another dimension with potential for major new conflicts, including some that can seriously affect Canada, is changing leadership in world trade. To demonstrate his omnipotence and protectionist mindset, President Trump, days after his swearing-in, pulled the plug on the almost fully negotiated Trans-Pacific Partnership (TPP), a deal originally designed, in part, to exclude China from the benefits of freer trade. With the rug pulled from underneath them, the rump of TPP members may now fall into the hands of China, as it becomes the new leader on global trading arrangements, even on globalization. The US and its followers — even Canada, which joined late and missed influencing the negotiations — lost the opportunity to make an eventual TPP more inclusive, more sensitive to the needs of poorer developing countries and less favourable to the multinationals.

Clearly a multitude of public policy challenges face Canada and many of its middle-tier OECD peers in the coming decades. Do we move with a tide of change, supporting an approach that engages the global South as an increasingly viable, indeed attractive partner in political, investment and trade ventures? For now, Canada seems to favour more conservative policy options. We will instead buy a few dozen jet fighters from the US, ready for a hypothetical nuclear war with Russia or China, and let aid flows stagnate. We are chasing a Security Council seat but overlooking the immediate need to strengthen our relations with the voting majority of UN countries, which are in the Global South.

Canada should advance a different set of interests: we should be peace builders, rather than bomb droppers. We should support inclusive approaches, not hold on to shaky privilege. We gain from global systems and should favour multilateral approaches. We should avoid playing the bully, like a junior Trump, in developing ties with the Global South.

We still have a few decades to get it all right, but we have to change our public policy mindset now, perhaps taking advantage of the confusion, even conflict, our southern neighbour is creating in the global arena. Sooner, rather than too late, we need to create new partnerships of our own with key nations of the global South. Today’s uncertainty should make it clearer than ever why we need to move beyond a global perspective largely shaped by relations with the US and EU.

This article is part of the Public Policy ‘toward 2067 special feature.

URL: http://policyoptions.irpp.org/magazines/may-2017/geopolitical-policy-challenges-on-a-new-canadian-path/

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