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Asian Devpt Bank Presidency: Guardian

Asian Development Bank Presidency: looking beyond Japan

The ADB board could be missing the opportunity to create a more inclusive leadership by avoiding open elections

John Sinclair
Guardian Professional, Monday 22 April 2013 17.53 BST

Haruhiko Kuroda, former president of Asian Development Bank has been recalled by Tokyo to head Japan’s central bank. Photograph: Toshifumi Kitamura/AFP/Getty Images

When Japan recalled president of the Asian Development Bank, Haruhiko Kuroda, to head up its central bank, it seems to have missed an opportunity to promote openness. The Japanese and the ADB’s board seem to have ignored the emerging international consensus favouring competition in electing the heads of multilateral banks.

Just last summer the board of the World Bank, representatives of most world governments, decided it would be good practice to finally have a competition for their new president. There had been a little reluctance at first in Washington, but later the US felt it would be too embarrassing to refuse an open election for the World Bank presidency, though the man for the job happened to be another American.

The same arguments should have worked for the ADB. Competitive elections have become the practice in the other regional development banks, with recent examples being the African (AfDB) and European banks. The same western governments represent a key voting bloc on the ADB board, so why not the same practice there? Japan is an important but far from dominant member, contributing 12.8% the bank’s capital. Several other developing Asian countries could have provided strong candidates for president of Asia’s core multilateral financial institution.

The ADB’s board has been slow to modernise. Members, both western and regional have missed the opportunity to create a more inclusive leadership and align the with the

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emerging global powers in Asia. In contrast, the western heads of state are flocking to China, India, Indonesia and other Asian countries to promote trade and investment. But even that doesn’t seem to have impressed the ADB board.

There are Asian countries with strong leadership candidates waiting in the wings. One is China, which in recent years passed Japan to become the world’s second-largest economy. Another is India, closing in fast economically on Japan and full of world-class expertise in the ADB’s core business of development and poverty reduction. Even Thailand and Vietnam are not lacking talented leaders. It is not clear why none of them pressed for the open election which the bank’s rule-book formally permits.

So what has happened in the meanwhile? Japan almost immediately announced its candidate, Takehiko Nakao, an experienced finance ministry official specialising in currency issues, hardly the core developmental challenges for today’s ADB. By the closing date for nominations no other candidate had been proposed. Other member countries were seemingly too polite or politically hesitant to create a real competition, leaving the process as a ritual confirmatory vote, a Japanese coronation.

In stark contrast, the World Bank presidential election last year saw three strong candidates, two from developing countries. Formal board interviews and their informal campaigns focused on which of them would be best skilled at understanding the development challenges linked to poverty and then having the managerial experience to deliver programmes in areas such as health, job creation and infrastructure.

Did Japan miss a leadership opportunity? As a leading voice in the ADB, it had a great opportunity to promote it (and themselves) as modernising forces in a rapidly changing Asia. Taking the initiative to propose an open selection process would have gained it respect and prestige in the region at a time when it is looking increasingly to its Asian neighbours, countries such as China and India, for markets and business partners. There are few if any direct financial benefits to lose. Japan would still have had major influence through its nationals in the many key ADB positions, and there would be important political gains.

Developing Asia seems to have been equally hesitant. Was their inaction strategic or simply an inability to compromise on a single candidate? They have complained bitterly at their lack of an equitable voice in the World Bank and the IMF boards but in their own backyard they chose to sit on their hands. In practical terms to defeat a Japanese candidate, likely to be supported by most western board members, they would have needed to agree on a single candidate.

There would be important gains from an open ADB election. While the president is not a dictator, a developing Asia face at the top would likely change the tone and some important priorities in the institution. The need for both infrastructure and social services would not fundamentally change, but poverty reduction would likely be more central to its agenda.

New faces might appear in senior operational and policy positions, bringing new ideas and experience into the bank’s operations. Commitments to country leadership would likely be stronger, with programming more directly shaped by the bank’s borrowing partners, as opposed to its financiers. Most democracies find important merit in simply changing the face at the top to open up their power structures to new ideas. The same would be true for the ADB.

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There is another possible factor at play. Is the developing south in the ADB, explicitly or

not, saying something more fundamental? Are they deliberately exploring another path, one not so closely shared with the west? They are clearly aware of the steps among Latin Americans towards creating their own development bank, despite already controlling the Inter-American Development Bank. By coincidence just days after the ADB closing date for nominations was past, the Brics, the obvious rival to the old G7, met in South Africa for their fifth summit and took the first practical steps to creating a new development bank. Such new approaches point to a possible developing Asian preference for finding their own solutions rather than depending on institutions heavily influenced by western economies. A competitive ADB election would not necessarily change that preference for parallelism over better partnership. But it could help.

What of the immediate future? The formal election to confirm the new ADB president is due by 24 April. The bank will again have a president from Japan. It might be a timely gesture for the board and/or Japan to simultaneously announce that the rules for the next election would require at least two candidates to be presented, including at least one from a developing Asian member country.

John Sinclair is a former official of the World Bank and Cida. He is an associate of the North-South institute and a member of the development advocacy, The McLeod Group.

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A divided world: G19 + 1

HillTimes.  July 12, 2017. Oped by John Sinclair

A divided world: G19 + 1

The U.S. retreat from leadership of the west’s liberal multilateralism could open policy space for a new global rulebook.

Normally dull and technical G20, chaired this year by German Chancellor Angela Merkel, rolled out in Hamburg Friday to the familiar noise of smoke grenades and water cannons at a major anti-globalization street protest.

Chancellor Merkel found herself the reluctant de facto leader of the western world, given the continuing flawed performance of United States President Donald Trump. His White House staff were so scatty that they even forgot his hotel bookings!

The G20 debating style was calmer perhaps reflecting exhaustion from the recent very stormy G7 meeting. Participants were more focused, recognising a new consensus on topics like climate change and trade liberalization was out of sight. This still left the G20 sherpas working through the night to cobble together an unusually short communiqué that reflected Merkel’s ambitions for a forward-looking text on the key issues of climate change, trade liberalization, and migration for the Nineteen, plus a separate paragraph for the U.S. to reiterate its negatives, notably its quitting of the Paris climate change agreement. In true G20 style, the actual communiqué text was full of familiar promises and unimplemented plans on topics such as banking reform and measures to reduce tax evasion.

Outside, the protesters were so busy shouting that they (and maybe some G20 members) missed a game-changing transition. Hamburg saw a G20 that broke the traditional G7 exclusivity on geopolitical debate. Even if the challenges are the same, G20 perspectives are intrinsically more inclusive, bridging North and South. Voices such as those of China and India clearly counted more now than those of the United Kingdom, Italy, or Canada. More basically the U.S. under ‘America First’ was seen as isolating itself from its nominal friends, treating them as competitors not allies.

Future G20 meetings could well operate at several levels. Traditional finance-minister roles would continue on topics like global financial systems, notably the International Monetary Fund and too-big-to-fail megabanks. But developing countries as the effective majority in the G20 are now demanding an equal voice in an overdue debate on more inclusive and fair (to the poorest) global financial and trading systems. The U.S. retreat from leadership of the West’s liberal multilateralism will probably open policy space for a new global rulebook. This has been long blocked by U.S. and allied delegations, not just at the G20, but also the IMF and World Trade Organisation.

Most of the action in this G20 took place in private bilaterals, side-meetings between leaders. The showpiece was Trump’s meeting with Russian President Vladimir Putin. Nobody, maybe not even the principals, knew how the chemistry would evolve. While the secret bromance has been widely discussed, they had never met, and both say phone calls cannot convey nuances. The event was billed to last 30 minutes, but ran for more than two hours, even though Melania Trump barged in midway to effectively say ‘time boys’. The hottest topic was whether Putin had really influenced the U.S. election. It was certainly discussed and Trump said he, even if not most Americans, now believed Putin’s denial. They both said they wanted to move on—but to where? New joint peace deals for Ukraine and Syria?

Much more discreet and tense, also unmentioned in the official communiqué, were side discussions between Trump and Chinese President Xi Jinping on North Korea. To most outsiders, a dangerous game of potentially nuclear chicken is being played, with the populations of Seoul and several Japanese cities as involuntary road-kill. Trump, having talked of sharing hamburgers with Kim Jong-un in Washington, is instead now trying to pass the ball to China. But Trump and his advisors know the next move is actually theirs. A hard one to swallow, it involves offering peace to the North Korean leader, rather than showing off who has the biggest bomb. Few in the G20, North or South, supports a dry run at World War III.

Unlike the G7, the G20 is not a cozy forum. With its many special guests, we are talking of maybe 40- plus leaders around the table. Networking skills, a strength of Prime Minister Justin Trudeau, were premium assets. Trudeau proved a useful friend to a harried Merkel, as well as gaining a buddy earlier in his European trip in the new Irish prime minister (but they are our rivals for a next UN Security Council seat). Overall, he had a substantive but not superstar conference role, even earning a Trump ‘shout-out indicating they were close friends ( for now!)

John Sinclair is a Cambridge- educated economist, formerly with the Canadian International Development Agency and the World Bank. As Senior Fellow at the University of Ottawa and a McLeod Group member, he teaches and comments on global issues and international development.

Disruptor at G7 table

HillTimes Oped. May 24th 2017

Trudeau and the Disruptor at the G7 Table

If Canada’s PM finds the right G7 allies, he could emerge in a room of wary leaders as the timely conciliator between Trump and the others.

John Sinclair

The G7 struggles to retain influence given the ascendency of the G20. Its traditional plus has been its solidarity and collegiality. However, in Taormina, Italy this weekend, there will be a disruptor at the G7 table. This summit has the potential for high drama and controversy, even if the final outcome disappoints.

The last year or two has seen the G7 focused on an agenda of rebuilding dynamism and sustainability across the global economy, whether in Europe or the Global South. However, today’s core G7 concern, not formally on the agenda but filling the corridors, will be uncertainties in global power politics. New actors mean many opportunities for conflict and flux. Italy as the weak host faces an almost impossible task in herding the cats.

United States President Donald Trump, superstar and disruptor, will be in unknown territory, somewhat alone with his bag of old tweets. Much is uncertain, even if he has dropped any idea of Russian President Vladimir Putin rejoining the G7. He will be wary, unsure who around the table is a true ally. None are natural soulmates, even if he seems to have found new Arab friends. The other G7 participants will be just as wary, worrying which tweet will be his opening card, and which of them will draw the short straw and have to shoot his ideas down, pleading for predictability and consistency in his policy messaging. However, to isolate him would be a political disaster.

Several G7 heavyweights face fragile politics back home. Happiest will be France’s shiny new president, Emmanuel Macron, but even he faces an immediate struggle to win a majority in legislative elections. British Prime Minister Theresa May will be the most likely to cozy up to Trump. Even if she is looking forward to a big majority in her June 8 election, Brexit is losing her many traditional friends. Japan will be extra silent, worrying about North Korean missiles and now a new peacenik president in South Korea.

The G7’s grand dame is Germany’s chancellor, Angela Merkel. However, the vibes at her first meeting with Trump were not good, with Germany’s much-praised economic successes bluntly called unfair trading and euro-currency manipulation. She faces her own elections in September but her prospects here now look good. She also chairs the upcoming (July 7-8) G20 summit, a very different, more inclusive meeting with all the major emerging economies assertively at the table—notably China, the absent elephant at the G7.

Far from last, there will be Prime Minister Justin Trudeau, who will also be being wary. He is already feeling Trump’s menace, including a potentially massive rewrite of NAFTA. However, if the going gets rough he could end up with a key role as bridge-maker, along with Angela Merkel. Intriguingly, he might find a potential new longer-term ally in France’s also youthful new leader, whose just-appointed first cabinet is also half-female.

Of course, while the high drama continues around the G7 table, the hard-working sherpas, high-level public servants, will be searching draft proposals, many pre-negotiated a month or so ago, for some reportable successes. The main points in a somewhat thinner than usual communiqué will likely be well-worn, but unresolved calls to fight inequality, and promote inclusive growth and loophole-free global tax rules. As is increasingly the norm, the tougher topics will be passed to the G20 summit in July.

Tellingly, facing an unyielding Trump, this G7 will have no formal pledge to avoid protectionism, or joint commitment on climate change. On the latter, Trump’s best offer is that he will wait until he gets home to announce whether he plans to quit the Paris global climate agreement.

The North Korea situation will be another cloud over the G7, but serious debate needs China and South Korea at the table.

And Monday night’s attack in Britain at a pop concert will put a new focus on fighting terrorism, a topic where perhaps it will be easier to find common ground, but maybe not viable solutions. Italy’s prime minister has said work is underway so that the summit can produce a stronger anti-terrorism commitment.

Hotter than usual will be cyber security. How can the G7 respond to this threat, implemented by unknown cyber-bandits holding us all, including our hospitals, to ransom?

For Trudeau, there is a bright side. If he finds the right G7 allies, he could emerge in a room of wary leaders, as the timely conciliator, a semi-hero, including by helping ease Merkel’s path to a more productive G20 meeting in July.

John Sinclair is a Cambridge-educated economist, formerly with the Canadian International Development Agency and the World Bank. As a senior fellow at the University of Ottawa and a McLeod Group member he teaches and comments on global issues and international development.

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/

Global nightmare, false alarm, or new geopolitical order

It is likely we will see a fundamental shake-up in the global pecking order in the aftermath of the US election.

We have had a month now to calm our jangling nerves. President-elect Donald Trump sat down and had a civilized conversation with President Barack Obama. He promised to keep a couple of popular features of Obamacare and said he understood global warming was partly man-made. But he clearly plans to be an almost omnipotent president. One has only to look at the military men he is recruiting to his cabinet. He will probably control both Congress and Senate for four years and, maybe worse for Americans, shape the Supreme Court for another decade. What can Canada expect and can we find a safe path forward in the geopolitical confusion that is likely to come?

Is it the end of the world as we know it? It is likely we are seeing a fundamental shake-up in the global pecking order. The United States, under a weakened Obama, was already fading. Europe is too weak and divided to be a stand-in. Whatever else, this seems like the end of the US as the all-purpose global leader. The world, shaped by the US, has experienced a decade of mismanaged domestic economic policies that has led to the continuing global financial crisis. This has been combined with a series of misjudged and costly military interventions across Asia and the Middle East, including in Iraq, Syria and Afghanistan. The US is no longer everybody’s favourite model. China and Russia, with their complementary aspirations for regional and global spheres of influence, are likely to become more substantial military powers in the next decade or two, especially if their present partnership holds. Somewhat bizarrely, the Trump of “America First” talks as if, as long as the US is not directly challenged, he is prepared to tolerate their aspirations. Bye-bye Ukraine and South China Sea.

China is expected to regain its global leadership in overall economic performance in the next few years. As it completes a politically driven shift of focus to a pro-poor, internal consumption approach, its economic growth will likely stabilize at a healthy 7 percent per year, on the way to surpassing the US’s gross national income (GNI) by roughly 2025. Especially with the Trans Pacific Partnership (TPP) trade deal dead in the water, China will again become the driver of many global resource markets. It will be dominant in shaping Asian markets, both as a consumer and seller. Geopolitically, it could start to fill the vacated US shoes. Somewhat perversely, the present Chinese approach of boosting domestic consumption to provide jobs for otherwise uncompetitive workers might emerge as a sensible strategy for Trump to use in meeting his own promises to rust-belt voters, those “left behind” poor white male Americans.

However, we should have no illusions that Trump might emerge as a closet liberal, even if he is wriggling back from a few extreme positions on Obamacare and that wall along the Mexican border. As Paul Krugman notes, a Trump-inspired Keynesian push, even one that includes substantial tax cuts for the rich, could temporarily be better than a few more years of global financial crisis. Indeed, for some in the international development community, Trump’s policy message resonates with the UN’s global Agenda 2030, with its signature “no one left behind” policy.

There is no such semi-silver-lining for the Paris agreement on climate change. Last month’s COP22 meeting in Morocco to formalize the treaty put in place a legalistic trick designed to undermine the immediate Trump threat. The treaty now forbids any signatory to withdraw for the next four years. This is mandatory solidarity! Of course, Trump and his emerging team of climate deniers can do a lot of damage inside the US itself, although a couple of European leaders have suggested that they might promote new global trade rules that would apply a special tariff penalty to any country (that is, the US) that fails to meet its carbon reduction target. The Trump threat could also have an inhibiting effect on Canada’s new plan for a universal, slowly escalating carbon tax. We will have to grit our teeth and hope that the benefits of the green technology people are hoping for turn out to be real. (Who knows, in extremis, California, which already co-ordinates some green policies with us, might one day ponder joining Canada!)

Trump’s international policy stances, especially his seeming admiration of Russia’s Vladimir Putin and his hesitation over confronting China, could lead to a whole new set of partnerships. For example, in the UN Security Council, a new alignment of power could sometimes find the US on the side of Russia and/or China, shirking the traditional positions of the G7/OECD block of liberal votes on human rights or international development. Canada could find itself on the losing side of important debates. The situation could be worsened by a division in the voting of members of a diminished European Union and a post-Brexit United Kingdom.

It is hard to define what will be the future path of the other two Asian giants, India and Japan. They certainly have no inclination to kowtow to China, but they desperately need market access and partnerships to sustain their own economic growth. They, probably along with Indonesia, Thailand and even Vietnam, will want to opt into any new China-led agreement that replaces the failed US-led TPP. With political support from a more inward-looking Trump-led USA uncertain, fence-sitting may not be a very easy option. The choices will be even more painful for OECD-linked Japan, South Korea and Australia.

Independent of Trump’s plans, Japan, similar to much of Europe in its current anti-immigrant hysteria, will need to seek out substantial immigration to counter the shrinking of its population. It is increasingly essential for Japan, although it might be culturally painful, to have more person-power to sustain a strong economy. It will need to sign a formal trade deal with China, as well as signing up for China’s Asia Infrastructure Bank. If it does not, its global competitiveness will slowly decline.

India’s situation is more optimistic. It is now, after all, the world’s largest country, in population terms, and the fastest growing economically. But that growth rate is an aberration, the result of China’s transition to a new inward-looking policy, which has temporarily lowered China’s growth rate to closer to 6 percent. Also, because of its long history of intraregional tensions with Pakistan and other countries, India cannot lead its own economic bloc in South Asia. It will therefore need to find an accommodation with China. This should not be impossible, since there is a complementarity in their mindsets and management skills — one the world’s largest democracy, the other the world’s strongest economy (after the US), and both very education/skills-focused societies. They could overcome past tensions and form a great partnership. If that fails, India will likely end up aligning with the US, but only after Trump.

Under Trump, the US might seek once again to be the hegemon for the Americas. This will likely fail. Why would Brazil, Argentina and Mexico, Latin America’s dominant economies, give up their independence when they have their own, albeit more modest, regional partnerships? They will wait for Trump to go, and hope, as will many others, that the US will quickly regain its place as a constructive world leader (hopefully a chastened one), a neighbourly quasi-social democracy just like Canada.

Africa, which has the biggest concentration of the world’s poorest, must find the political will to move to a more inclusive, more equitable and liberal-minded political model. Over the very long term it has untapped potential from its natural resources, land and minerals, but in order to access these it needs a more highly skilled population, and it has to control that population’s growth. It is starting on these journeys, but slowly and erratically. Aid to Africa is a significant part of the US’s assistance program, and it will be be a major setback for Africa if it loses that aid under a President Trump. If this happens, it will also open up even more space for China, whose aggressive aid and investment presence is already by many counts the biggest among all the donors, even the major multilaterals. The impact on Africa of global warming-induced droughts is a new threat to the continent’s progress. This threat will only be compounded if the Trump government stays offside in the global struggle to combat climate change.

The Middle East will require a lot of healing to recover from its multiple wars, many of which the US triggered as a result of its post 9/11 paranoia. The countries most affected are Afghanistan, Iraq, Iran, Syria and Palestine. The US remains an active player in this region, but more as an ambiguous peacemaker than as an active warmonger. The uncomfortable accommodation between Russia and the US as both fight ISIS may even deepen under President Trump, who seems to want to avoid further costly US entanglement in the region’s destructive conflicts. He seems to have lost his bombing blitz urges, as long as there is no direct threat to the USA. This is a possible “plus” point for Trump’s impact (Hillary Clinton was the more eager hawk), but the region’s physical and political rehabilitation will take longer than Trump’s term. The Sunni-Shia/hence Saudi-Iranian competition is deep-rooted, and there is no resolution in sight, unless an even more drastic fall in oil prices makes that competition totally unaffordable for both!

This complex framework of changing power relations points to many challenges for Canada. The US political elite has just had a deafening wake-up call from those citizens who are left behind economically and ignored politically. Canada cannot expect to escape significant collateral damage, living as we do next to this seriously wounded and bitter giant.

We need to be part of the diplomatic effort to get Trump and his administration to recognize the folly of not confronting the existential threat of global warming. Over the medium term, we need to take measured steps to move beyond our historical economic linkages with the now weakened EU and UK, recognizing they alone can no longer be sufficient for our economic future, even our global security. Those steps involve understanding and responding proactively to the major shifts of power and global leadership in Asia. As Australia has already been doing for a decade or more, we need to connect to the emerging networks of Asian partnerships, notably (but not exclusively) those centred on China and India. Less critically, we could bypass the US to link more strongly to Latin America. These networks are not sitting waiting for us; we will need to seek them out and earn their trust. This effort will be part of our commitment to a better global future, including implementing the UN’s Agenda 2030 on sustainable development, as a donor and as a global citizen.

Today’s multi-ethnic Canada is well placed to succeed in these efforts. We should seize this unplanned opportunity for bold changes, to think outside the box. The President Trump crisis facing our southern neighbours should serve as the trigger for a decade of Canadian outreach to the new emerging centres of power in an increasingly multipolar world.

 

URL: http://policyoptions.irpp.org/fr/magazines/decembre-2016/global-nightmare-false-alarm-or-new-geopolitical-order/

Global nightmare, false alarm or new geopolitical order?

We have had a month now to calm our jangling nerves. President-elect Donald Trump sat down and had a civilized conversation with President Barack Obama. He promised to keep a couple of popular features of Obamacare and said he understood global warming was partly man-made. But he clearly plans to be an almost omnipotent president. One has only to look at the military men he is recruiting to his cabinet. He will probably control both Congress and Senate for four years and, maybe worse for Americans, shape the Supreme Court for another decade. What can Canada expect and can we find a safe path forward in the geopolitical confusion that is likely to come?

Is it the end of the world as we know it? It is likely we are seeing a fundamental shake-up in the global pecking order. The United States, under a weakened Obama, was already fading. Europe is too weak and divided to be a stand-in. Whatever else, this seems like the end of the US as the all-purpose global leader. The world, shaped by the US, has experienced a decade of mismanaged domestic economic policies that has led to the continuing global financial crisis. This has been combined with a series of misjudged and costly military interventions across Asia and the Middle East, including in Iraq, Syria and Afghanistan. The US is no longer everybody’s favourite model. China and Russia, with their complementary aspirations for regional and global spheres of influence, are likely to become more substantial military powers in the next decade or two, especially if their present partnership holds. Somewhat bizarrely, the Trump of “America First” talks as if, as long as the US is not directly challenged, he is prepared to tolerate their aspirations. Bye-bye Ukraine and South China Sea.

China is expected to regain its global leadership in overall economic performance in the next few years. As it completes a politically driven shift of focus to a pro-poor, internal consumption approach, its economic growth will likely stabilize at a healthy 7 percent per year, on the way to surpassing the US’s gross national income (GNI) by roughly 2025. Especially with the Trans Pacific Partnership (TPP) trade deal dead in the water, China will again become the driver of many global resource markets. It will be dominant in shaping Asian markets, both as a consumer and seller. Geopolitically, it could start to fill the vacated US shoes. Somewhat perversely, the present Chinese approach of boosting domestic consumption to provide jobs for otherwise uncompetitive workers might emerge as a sensible strategy for Trump to use in meeting his own promises to rust-belt voters, those “left behind” poor white male Americans.

However, we should have no illusions that Trump might emerge as a closet liberal, even if he is wriggling back from a few extreme positions on Obamacare and that wall along the Mexican border. As Paul Krugman notes, a Trump-inspired Keynesian push, even one that includes substantial tax cuts for the rich, could temporarily be better than a few more years of global financial crisis. Indeed, for some in the international development community, Trump’s policy message resonates with the UN’s global Agenda 2030, with its signature “no one left behind” policy.

There is no such semi-silver-lining for the Paris agreement on climate change. Last month’s COP22 meeting in Morocco to formalize the treaty put in place a legalistic trick designed to undermine the immediate Trump threat. The treaty now forbids any signatory to withdraw for the next four years. This is mandatory solidarity! Of course, Trump and his emerging team of climate deniers can do a lot of damage inside the US itself, although a couple of European leaders have suggested that they might promote new global trade rules that would apply a special tariff penalty to any country (that is, the US) that fails to meet its carbon reduction target. The Trump threat could also have an inhibiting effect on Canada’s new plan for a universal, slowly escalating carbon tax. We will have to grit our teeth and hope that the benefits of the green technology people are hoping for turn out to be real. (Who knows, in extremis, California, which already co-ordinates some green policies with us, might one day ponder joining Canada!)

Trump’s international policy stances, especially his seeming admiration of Russia’s Vladimir Putin and his hesitation over confronting China, could lead to a whole new set of partnerships. For example, in the UN Security Council, a new alignment of power could sometimes find the US on the side of Russia and/or China, shirking the traditional positions of the G7/OECD block of liberal votes on human rights or international development. Canada could find itself on the losing side of important debates. The situation could be worsened by a division in the voting of members of a diminished European Union and a post-Brexit United Kingdom.

It is hard to define what will be the future path of the other two Asian giants, India and Japan. They certainly have no inclination to kowtow to China, but they desperately need market access and partnerships to sustain their own economic growth. They, probably along with Indonesia, Thailand and even Vietnam, will want to opt into any new China-led agreement that replaces the failed US-led TPP. With political support from a more inward-looking Trump-led USA uncertain, fence-sitting may not be a very easy option. The choices will be even more painful for OECD-linked Japan, South Korea and Australia.

Independent of Trump’s plans, Japan, similar to much of Europe in its current anti-immigrant hysteria, will need to seek out substantial immigration to counter the shrinking of its population. It is increasingly essential for Japan, although it might be culturally painful, to have more person-power to sustain a strong economy. It will need to sign a formal trade deal with China, as well as signing up for China’s Asia Infrastructure Bank. If it does not, its global competitiveness will slowly decline.

India’s situation is more optimistic. It is now, after all, the world’s largest country, in population terms, and the fastest growing economically. But that growth rate is an aberration, the result of China’s transition to a new inward-looking policy, which has temporarily lowered China’s growth rate to closer to 6 percent. Also, because of its long history of intraregional tensions with Pakistan and other countries, India cannot lead its own economic bloc in South Asia. It will therefore need to find an accommodation with China. This should not be impossible, since there is a complementarity in their mindsets and management skills — one the world’s largest democracy, the other the world’s strongest economy (after the US), and both very education/skills-focused societies. They could overcome past tensions and form a great partnership. If that fails, India will likely end up aligning with the US, but only after Trump.

Under Trump, the US might seek once again to be the hegemon for the Americas. This will likely fail. Why would Brazil, Argentina and Mexico, Latin America’s dominant economies, give up their independence when they have their own, albeit more modest, regional partnerships? They will wait for Trump to go, and hope, as will many others, that the US will quickly regain its place as a constructive world leader (hopefully a chastened one), a neighbourly quasi-social democracy just like Canada.

Africa, which has the biggest concentration of the world’s poorest, must find the political will to move to a more inclusive, more equitable and liberal-minded political model. Over the very long term it has untapped potential from its natural resources, land and minerals, but in order to access these it needs a more highly skilled population, and it has to control that population’s growth. It is starting on these journeys, but slowly and erratically. Aid to Africa is a significant part of the US’s assistance program, and it will be be a major setback for Africa if it loses that aid under a President Trump. If this happens, it will also open up even more space for China, whose aggressive aid and investment presence is already by many counts the biggest among all the donors, even the major multilaterals. The impact on Africa of global warming-induced droughts is a new threat to the continent’s progress. This threat will only be compounded if the Trump government stays offside in the global struggle to combat climate change.

The Middle East will require a lot of healing to recover from its multiple wars, many of which the US triggered as a result of its post 9/11 paranoia. The countries most affected are Afghanistan, Iraq, Iran, Syria and Palestine. The US remains an active player in this region, but more as an ambiguous peacemaker than as an active warmonger. The uncomfortable accommodation between Russia and the US as both fight ISIS may even deepen under President Trump, who seems to want to avoid further costly US entanglement in the region’s destructive conflicts. He seems to have lost his bombing blitz urges, as long as there is no direct threat to the USA. This is a possible “plus” point for Trump’s impact (Hillary Clinton was the more eager hawk), but the region’s physical and political rehabilitation will take longer than Trump’s term. The Sunni-Shia/hence Saudi-Iranian competition is deep-rooted, and there is no resolution in sight, unless an even more drastic fall in oil prices makes that competition totally unaffordable for both!

This complex framework of changing power relations points to many challenges for Canada. The US political elite has just had a deafening wake-up call from those citizens who are left behind economically and ignored politically. Canada cannot expect to escape significant collateral damage, living as we do next to this seriously wounded and bitter giant.

We need to be part of the diplomatic effort to get Trump and his administration to recognize the folly of not confronting the existential threat of global warming. Over the medium term, we need to take measured steps to move beyond our historical economic linkages with the now weakened EU and UK, recognizing they alone can no longer be sufficient for our economic future, even our global security. Those steps involve understanding and responding proactively to the major shifts of power and global leadership in Asia. As Australia has already been doing for a decade or more, we need to connect to the emerging networks of Asian partnerships, notably (but not exclusively) those centred on China and India. Less critically, we could bypass the US to link more strongly to Latin America. These networks are not sitting waiting for us; we will need to seek them out and earn their trust. This effort will be part of our commitment to a better global future, including implementing the UN’s Agenda 2030 on sustainable development, as a donor and as a global citizen.

Today’s multi-ethnic Canada is well placed to succeed in these efforts. We should seize this unplanned opportunity for bold changes, to think outside the box. The President Trump crisis facing our southern neighbours should serve as the trigger for a decade of Canadian outreach to the new emerging centres of power in an increasingly multipolar world.