A crisis of multilateralism and Asia’s rising stake in it

Synopsis: This article explains the challenges in Multilateralism and suggests ways to improve it.

Introduction

Multilateralism is facing a crisis at present. Global collaboration is needed to revive multilateralism.

What is Multilateralism?

Multilateralism is also called as a rule-based international order. Its roots lie in the Treaty of Munster-Westphalia, signed in 1648. The treaty asked to avoid wars of attrition between militarily matched states that arose after the Roman Empire’s breakup. Over time, it led to the inviolability of international borders and non-interference in the internal affairs of others.

How has Multilateralism evolved so far?

There have been two major phases of multilateral cooperation.

Firstly, It was dominated by Westphalia, followed by the Concert of Europe.

Secondly, Domination of Economic cooperation: The reconstruction of war-ravaged economies in Europe and Japan after the World War created this phase. This generally centred on the Bretton Woods system (World Bank and IMF). At this phase, multilateralism expanded to incorporate newly-decolonized developing countries.

Economic cooperation paid rich dividends through global prosperity. Global growth that averaged 2% per annum between 1870 and 1950 doubled to 4% between 1950 and 2000. But the growth acceleration was heavily skewed in favour of emerging and developing economies (EMDEs). They are also altering the relative economic weights of advanced economies (AEs), with emerging Asia at the heart of it.

What are the threats faced by Multilateralism at present?

Former colonies, initially wary of globalization, now started defending it. This is due to the role of non-governmental organizations and transnational companies (TNCs) on the EMDEs growth. But now Multilateralism has few challenges. Such as,

Firstly, advanced economies (AEs), once the advocate of Multilateralism, is now disenchanting globalization. For example, Brexit has weakened multilateralism in Europe. 

Secondly, the failure of the Bretton Woods system to adjust to shifting weights made it lose its legitimacy.

Thirdly, Trade-and-geopolitical rivalry between the US and China has now taken centre stage.

Fourthly, focus is shifting to bilateral and regional collaboration: Plurilateralism has beaten Multilateralism through arrangements such as the CPA-TPP, TTIP and RCEP.

Overall, average annual economic growth has declined after 2010 to 3.5% in tandem with a trade decline. The growth differential between AEs and EMDEs has also shrunk.

All the present developments led to the emergence of alternative institutions from EMDEs that tried to mimic institutions of the AEs. For example, G7 with BRICS, IMF with CMIM and the World Bank with NDB, AIIB, BRI.

How to revive Multilateralism?

Asia, closely tied to China through supply chains, but dependent on the West for export markets and security. So, Asia can provide a golden opportunity to revive Multilateralism. Apart from that, Multilateralism can be revived in the following ways,

First, the accommodation of China in global governance, via either the G-20 or a similar body.

Second, bridging basic ideological divides between several rising powers like China, India, Russia and Brazil.

Third, reworking the Westphalian notion of sovereignty: As this will address dangerous externalities such as climate change, migration on failing states alone.

Fourth, including non-state players (including TNCs) in a new multi-stakeholder paradigm of multilateralism.

Source: This post is based on the article “A crisis of multilateralism and Asia’s rising stake in it” published in The Livemint on 29^th Sep 2021.