Global institutions should be nurtured not undermined
The world is ablaze with geopolitical tensions, extreme climate events like floods, wildfires and intense hurricanes, and, last but not least, trade wars. Never have we needed multilateral mechanisms to manage these crises more than today. Solutions cannot be found on a bilateral level because these issues all span either the globe or whole regions.
The case for trade is self-evident. While the US administration may have had a point in raising certain structural issues in its trade relationship with China, the bilateral trade war brought into question global supply chains that took about a generation to build. The ripple effects can be felt throughout the globe, especially in open trading economies such as Germany, Japan or South Korea.
Indeed, both the World Bank and the International Monetary Fund (IMF) have revised their economic growth projections downward several times since the start of the US-China trade war. IMF Managing Director Kristalina Georgieva voiced fears over the generational economic impact of the unraveling of trading relationships and global supply chains.
The US has found an accommodation of sorts and will conclude phase one of its US China trade deal this month. This does not conclude the issue though because the Pandora’s box has now been opened and we will have to contend with the ripple effects for some time to come.
Never before would it have been more important to have a functioning World Trade Organization (WTO) than now, but alas the unfolding of several bilateral trade fronts — like the US and China or Brexit and the EU — has undermined the already faltering institution, which had been encumbered by its inability to conclude the Doha Round. The fact that Donald Trump refused to confirm judges for the WTO’s court of arbitration means that its most important function has come to a virtual standstill (the irony is that, in the history of the WTO, no nation has benefited more from its arbitration judgements than the US).
Climate change is an obvious example — nothing is more global than this issue. While the UN Framework Conference for Climate Change has a commendable agenda, it lacks teeth. This was proven at last year’s COP25 summit in Madrid, where nations could not agree on a worldwide framework for carbon pricing. When it comes to the price of carbon, nothing but a global solution will do.
The UN is chronically underfunded and, at times, paralyzed by the veto power of the permanent five members of the Security Council.
It was a huge setback when the US decided to leave the Paris Agreement on climate change, which was agreed in 2015 at COP21 and which stipulates that the global temperature should not be allowed to rise more than 2 degrees Celsius above pre-industrial levels. Not even the smallest goals can be achieved without the world’s largest economy on board. Well-meaning regional or national attempts like the EU or the UK’s goal to render their emissions carbon neutral by 2050 cannot make up for the lack of a functioning multilateral framework.
The same can be said for the UN and especially its Security Council, which is an important arbiter when geopolitical tensions are on the rise. It is undeniable that the institution needs to reform its sprawling bureaucracy, yet it is the only mechanism that can address wars and humanitarian crises on a global level. It is chronically underfunded and, at times, paralyzed by the veto power of the permanent five members of the Security Council. As dysfunctional as the UN may be, it is still the only framework we have got.
In other words, the world faces a myriad of issues that can only be resolved at the global level. We should take care of and not undermine the multilateral institutions that have the capability to address the planet’s burning issues.
- Cornelia Meyer is a business consultant, macroeconomist and energy expert. Twitter: @MeyerResources