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Europe is failing to shape the global governance debate, by Pedro Solbes & Richard Youngs (europesworld.org)
The EU’s enthusiasm for reshaping global governance has dwindled, and now looks more like indifference. Pedro Solbes and Richard Youngs warn that the EU not only risks the debate being shaped elsewhere but may even find itself left out of the discussion altogether.
The reform of global economic governance is still firmly on policymakers’ radar screens, but there is little evidence that since
London’s G20 Summit in April last year the EU has developed a forward-looking or coherent approach to the new forms of global governance that G20 leaders had committed to.
Several strands of the current European debate are ostensibly joined together by a shared commitment to multi-lateralism. In
devising rescue plans for the EU’s financial sector, its drawing up of the new ‘2020 strategy’ and the fashioning of a new EU diplomatic identity, the principle of enhanced multi-lateralism has
taken centre stage. And yet the way in which the EU is currently positioning itself on global governance belies its self-declared status as the world’s ‘good multi-lateralist’.
The G20 pledged that multi-lateral co-operation and interdependence would guide the world out of crisis. Most European policies,
however, do not sit well with the spirit of such commitments. The EU may not have imposed sweeping quotas and tariffs, but powerful ‘behind the border’ protectionism has emerged in the form of
subsidies, bailouts, ‘buy national’ injunctions and new restrictions on foreign direct investment (FDI). Global Trade Alert, an independent monitor, has identified more than 300 new protectionist
measures introduced by G20 members.
Since the G20’s promise last year to move towards concluding the Doha Round, the EU has done nothing in practical terms to
achieve this goal. It has declined to introduce measures aimed at improving OECD rules to free up investment flows, and the new Commission led by José Manuel Barroso comprises fewer pro-market
members than during his first term. Most in the Commission now seem to advocate more laxity in state-aid rules to fund investment in R&D, so even if we have not witnessed an open dismantling
of the Single Market, it is certainly not moving forward anymore.
The G20 forum is in many senses an advance, but it is not a panacea. European governments have used the G20 in a highly
instrumental fashion, with the largest share of the bail-out funds agreed under the G20 rubric having gone to middle-income states in or around Europe. Not only is Europe over-represented in the
G20, it also seems to have used the forum as an expedient means of tapping into emergency funds pertinent to the EU’s own interests, rather than as a step towards broader and more balanced
multi-lateral co-operation.
The comparatively large number of European countries in the G20 serves little purpose in the absence of systematic co-ordination
of member state and Commission positions within it. The EU has had little to say, for instance, on what kind of governance rules and standards should guide debates over the much-needed
rebalancing between surplus and deficit states. Instead, each member state has grabbed whatever measure of flexibility assists its own immediate economic recovery. Growth will no longer be
generated from the West on the back of emerging economy surpluses, but will need to come from within the emerging world itself, which should be nudged away from purely export-oriented economic
policies. But EU influence over Chinese revaluation has been zero. This must change, as in the midst of crisis the EU can no longer live so easily with a strong euro.
There also appears to be little deep reflection over what should be the desirable long-term global role of the IMF. This body
still lacks legitimacy, yet is being mandated with powerful new surveillance functions by the G20. Under these new rules, will the EU member states subject themselves to the same degree of
oversight that the IMF has long visited upon developing countries? And how will such a general surveillance role for the IMF relate to the functions of the putative European Monetary Fund? All
this remains to be seen.
European support for the upgrading of the G20 has earned the EU the opprobrium of some of its long-standing partners that have
been excluded from the forum. The G20 has done little to soften the impact of the crisis in developing countries and has, if anything, downgraded the focus on issues of good governance. Its
rhetoric on the need for international co-operation and openness across a broad range of issues has not stopped European governments dramatically tightening up immigration rules in the wake of
the financial crisis.
Taken together, all these measures cast serious doubt on the EU’s claim to be leading the debate over a fundamental reshaping of
global economic governance. European governments repeat the mantra of ‘effective multi-lateralism’ but seem to have no comprehensive strategy for turning this into coherent policy
guidelines.
When Europeans think about reformed global governance they limit themselves to the issue of seat numbers and voting weights in
international bodies. European governments are now only reluctantly accepting the need to scale back their over-representation in multi-lateral bodies. They accept that this over-representation
undermines rather than enhances the EU’s overall influence – to the extent that it pushes other powers into separate arrangements.
But while deliberation is taking place on the question of how much Europe should row back on its historical domination of
multi-lateral bodies, there is little vision beyond this. For example, the financial crisis has not forced member states to converge their national systems of financial regulation, an omission
which militates against a common European vision for re-modelled global financial co-operation.
In the wake of the crisis, the EU has instead decided to prioritise key bi-lateral relations. It has launched strategic
partnerships with Brazil, Canada, China, India, Japan, Mexico, Russia, South Africa, the U.S., the African Union and NATO. Most of these partnerships have little geopolitical content and their
sheer number debases their importance in the eyes of partners. A raft of new bi-lateral trade agreements is also being negotiated. But the EU has merely used this plethora of new partnerships as
short-term expedient substitutes for the pursuit of deeper multi-lateralism. The same is true of its much-vaunted region-to-region diplomacy, which reveals the extent to which the EU is drawn to
ad-hoc ‘mini-lateralism.’
The rush to bi-lateral agreements is perhaps understandable in the quest for rapid results and a greater sense of control over
international trends. But the costs are high, insofar as the approach undercuts the very multi-lateralism that in general serves the EU well. How can the EU expect to see effective multi-lateral
principles employed by other powers, when it ignores the same tenets?
The rest of the world increasingly sees the EU’s multi-lateralism as a means of legitimising European involvement in the affairs
of weaker states and excluding the involvement of rising powers in European affairs. European powers have been just as mercurial in their alliance-building as any supposedly less principled
powers.
As the dust settles from the shock waves of the financial crisis, Europe is clearly in a more defensive frame of mind as trends
point towards the U.S.-China axis as the key shaper of the global economy. The Obama Administration has, ironically, in some ways proved a more difficult partner for Europe than the Bush team.
The current U.S. Administration has begun to map out its vision of global governance, within which emerging powers have attained heightened importance and the EU a diminished status. European
governments have been left to play catch-up. Far from shaping the contours of a new balanced structure of global governance, the EU has been reduced to taking a series of rear-guard positions
aimed at tempering its own loss of stature.
Societal values are accorded little room in the incipient scramble to fashion new alliances. The EU’s recent effort to engage
with the Shanghai Co-operation Organisation might be necessary in some form, but without any focus on human rights-related issues, how can we say that such engagement contributes to a progressive
form of multi-lateral governance? The fact that the newly empowered High Representative has a foot in the college of Commissioners does not automatically create coherence between politics and
economics.
Most traumatic of all, European leaders were excluded from the final haggling between the U.S., China, Brazil and India at the
Copenhagen climate change summit. But this is a myopic reason to fret about the changing world order. More important than the forums at which Europe is or not represented is the vision it
articulates of the future. Rather than complaining when it is shut out of discussions, the EU would do well to invest more effort in mapping a clearer and more enlightened long-term design for
global governance.
The EU appears to have decided that the world will be one of great power rivalry, and that this requires a power politics
approach to global governance. In fact, many different dynamics co-exist and are still in flux ; the EU still has the chance to shape the emerging post-Western world order, rather than accepting
its parameters with passive resignation. It risks being too servile in its courting of new alliances, fixated as it is on short-term gain. It is bereft of any clear idea of how such alliances fit
with the kinds of values it believes should guide revised global governance. The G20 must move quickly to redress these shortcomings.
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