A world in tran­si­tion

The Pak Banker - - Front Page -

TER­ROR­ISM no longer fig­ured among the top con­cerns of the in­ter­na­tional community at the World Eco­nomic Forum’s an­nual sum­mit in Dubai last week. In­stead, other is­sues dom­i­nated – global fi­nan­cial in­sta­bil­ity, power shifts and China’s rise, re­source scarcity, in­ad­e­quacy of global gov­er­nance in­sti­tu­tions, cli­mate change and ex­treme weather, large-scale youth un­em­ploy­ment, cy­ber se­cu­rity and vul­ner­a­bil­i­ties cre­ated by new tech­nolo­gies.

Billed as the world’s largest brain­storm­ing event, the Dubai sum­mit, now in its fifth year, brought to­gether a thou­sand de­ci­sion-mak­ers, ex­perts and thought lead­ers from eighty coun­tries. Their de­lib­er­a­tions on cross cut­ting is­sues aimed at shap­ing global, re­gional and in­dus­try agen­das and serve as in­tel­lec­tual in­put for the WEF’s flag­ship event at Davos in Jan­uary 2013.

If there was a core theme that con­nected the di­verse is­sues dis­cussed at Dubai, it was of a world in pro­found but un­cer­tain tran­si­tion, where the pos­si­bil­i­ties were as nu­mer­ous as the risks and chal­lenges. The Global Agenda Sur­vey con­ducted ahead of the sum­mit iden­ti­fied what WEF mem­bers saw as the most im­por­tant trends that will likely im­pact the world in the next 18 months. Among the top fif­teen were the pos­si­ble col­lapse of the Eu­ro­zone, un­sta­ble in­ter­na­tional eco­nomic out­look, dig­i­tal com­mu­ni­ca­tions rev­o­lu­tion, lack of global lead­er­ship, so­cial un­rest and global in­ter-de­pen­dency. An­other poll con­ducted by the WEF, from among a thou­sand mem­bers, showed that just over half of the re­spon­dents lacked con­fi­dence in the global econ­omy with more in North Amer­ica wor­ried about an eco­nomic shock than those in Asia.

The weak­ness of global gov­er­nance in­sti­tu­tions to meet con­tem­po­rary chal­lenges emerged as a key con­cern at the Dubai Sum­mit. The ple­nary saw a spir­ited dis­cus­sion in­au­gu­rated by Klaus Sch­wab, the WEF’s founder and ex­ec­u­tive chair­man. He cited a num­ber of fail­ings of the present mul­ti­lat­eral sys­tem: its ‘non multi-stake­holder’ char­ac­ter (be­ing state-based), its frag­mented, non-in­clu­sive and cri­sis driven ap­proach, and erod­ing le­git­i­macy be­cause of its lack of ef­fec­tive­ness.

For­mer British Prime Min­is­ter Gor­don Brown agreed, point­ing to the lack of in­ter­na­tional co­or­di­na­tion in the on­go­ing fi­nan­cial cri­sis and on rules and stan­dards of the global fi­nan­cial ar­chi­tec­ture. But Pas­cal Lamy, head of the World Trade Or­gan­i­sa­tion, in­jected an­other di­men­sion to the de­bate. Dis­agree­ing that the mul­ti­lat­eral sys­tem was not func- tion­ing, he ar­gued that what worked was the sys­tem that de­liv­ered “things” (food, medicine, de­vel­op­ment fi­nance). He cited the World Bank and UNDP as ex­am­ples.

What did not work was the sys­tem deal­ing with “rules” – on trade, cli­mate change and fi­nan­cial is­sues. This was in poor shape. Not be­cause the ma­chin­ery or engine was not there, he said. But be­cause the global fuel to run that engine was miss­ing. That fuel, ac­cord­ing to Lamy, came from the po­lit­i­cal en­ergy of gov­ern­ments. But as coun­tries hit by fi­nan­cial cri­sis and so­cial stress were drained of en­ergy, the world was in for a pe­riod of “low in­ter­na­tional en­ergy”. To com­pen­sate, this en­ergy had to be sought in non­govern­ment sec­tors, busi­ness, in­dus­try and civil so­ci­ety.

Join­ing this de­bate, UN Deputy Sec­re­tary Gen­eral Jan Elias­son lamented the de­cline in in­ter­na­tion­al­ism and called for global for­mu­las and so­lu­tions that coun­tries could re­gard to be in their na­tional in­ter­est. The only way to pro­duce global gov­er­nance for com­mon pur­pose was when that pur­pose was con­strued to be in the ‘na­tional in­ter­est’.

Many in the au­di­ence felt the speak­ers overem­pha­sised struc­tures when it was global lead­er­ship that was miss­ing. The lack of ‘po­lit­i­cal en­ergy’, said one, was due to the ab­sence of lead­er­ship. But a more sig­nif­i­cant omis­sion was in the panel’s own com­po­si­tion. Dis­cussing an is­sue in a con­text trans­formed by the shift in global power from the West to the rest, the all male, all-white, and all-Euro­pean panel of speak­ers was hardly rep­re­sen­ta­tive of the changed world that was be­ing an­a­lysed. The irony was not lost when in a later ses­sion, a for­mer Aus­tralian prime min­is­ter de­scribed Europe as be­com­ing ir­rel­e­vant to Asia, con­sumed as Europe was with its eco­nomic troubles, which had sapped its “in­ter­na­tional en­ergy and ex­ter­nal con­fi­dence.”

By far the liveli­est dis­cus­sion was in the ‘Geopo­lit­i­cal Out­look’ ses­sion. This fea­tured lead­ing Chi­nese aca­demic Wu Xinbo, Ian Brem­mer, the Amer­i­can au­thor who coined the term ‘G-Zero world’, Aus­tralian MP Kevin Rudd and Sec­re­tary Gen­eral of the Arab Maghreb Union Habib Yahia. The US ‘pivot’ to Asia and the rise of China dom­i­nated this dis­cus­sion. Xinbo set the tone by say­ing that the US ‘re­bal­anc­ing’ to Asia was driven by the aim to counter or con­tain China’s rise. This was stok­ing in­sta­bil­ity, en­cour­ag­ing some re­gional coun­tries to press their own agen­das.

Brem­mer de­scribed the great­est risk in Asia as broadly re­volv­ing around China’s rise. Rudd in­ter­jected to say this was a chal­lenge, not a risk. It was left to Xinbo to re­frame the de­bate by ar­gu­ing that the so-called ‘risk’ to sta­bil­ity will be de­ter­mined by how other coun­tries re­act to China’s rise.

Dis­cus­sion of what China’s as­cent meant for the global or­der saw spir­ited ex­changes. Brem­mer de­clared that there are “no BRICs” only China, whose rise had “up­set the global ap­ple­cart”. He rea­soned that as the post-World War II in­ter­na­tional or­der was cre­ated by the US and its western al­lies, China did not feel obliged to play by rules it did not set. This evoked an in­struc­tive re­sponse from Xinbo. It was true, he said, that China was not in­volved in es­tab­lish­ing the present in­ter­na­tional or­der, but this did not mean it op­posed it, es­pe­cially as it had ben­e­fited from it. “China”, he ex­plained, “doesn’t want to over­throw the or­der but to re­form it”. To Brem­mer’s call for China to be­come a “re­spon­si­ble stake­holder”, Xinbo’s re­sponse was sharp. “If you want China to be a stake­holder it has to be given more stakes” in the sys­tem.

From Habib Yahia came an in­ter­est­ing in­ter­ven­tion. There were, he said, 50,000 Chi­nese ex­perts in North Africa, “fully in­te­grated” into lo­cal so­ci­ety, and who were ap­pre­ci­ated by the peo­ple in the re­gion for their role in build­ing large in­fra­struc­ture projects.

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