He Yafei: Global Governance Under Siege

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He Yafei: Global Governance Under Siege

2020-06-04

Editor Note's: On Jun. 2, the article on Medium was pubilshed by the Paris Peace Forum with the shared objective of advancing global governance solutions to the greatest challenges facing our world today. And this article was written by He Yafei, Former Vice Minister of Foreign Affairs of the People’s Republic of China, the senior fellow of Chongyang Institute for Financial Studies at Renmin University of China.


Covid-19 has been wreaking havoc with global governance and globalization, upending the world and making it adrift in a sea of changes. Thomas Friedman suggested that the world may be divided into a before and after the watershed Covid-19 pandemic, quite succinctly summing up the huge impact the pandemic has brought to global governance system.


In other words, we are witnessing the emergence of a new world where global governance - in particular public health governance, including crisis management - is in disarray. The major power cooperation and consensus in providing global commons, which areabsolutely necessary to support a world with functionable global governance system, seems to be fading and weakening. The phenomenon was already present before Covid-19, the pandemic has been a catalyst escalating the fragmentation and anarchy of global governance. It is clear that global governance is under siege.


1/ Before we take a closer look at global governance, it is necessary to understand what Covid-19 has done with globalization. It seems that globalization is haulted in its track and even rolled back to the era prior to the current globalization, as countries are locked down and have sealed borders with the pandemic spreading globally for months with no end in sight.


Globalization was under attack before the outbreak of Covid-19, with global trading system ravaged by trade wars, the most damaging of which between the two biggest economies and the World Trade Organization (WTO) collapsing as its Appellate Court lost the required judges.


Covid-19 and the necessary measures taken to combat it have disrupted commerce, trade and free flow of people, breaking global supply chains and bringing the world economy into negative growth, with the International Monetary Fund (IMF) estimating 2020 world economic growth to be -3% or worse. There is, however, a sigh of relief — during the pandemic the global food supply chain remained intact, otherwise we could face hunger in many places. The world in which carefree and unfettered movement of goods, people, capital and information was the order of the day is no more. It is wishful thinking that the end of the pandemic will automatically restore global supply chain as it was before Covid-19.


A Singapore scholar opined that what comes after the pandemic would be “limited globalization,” while Chatham House CEO Robin Niblett predicted that globalization as we know it is coming to an end.


2/ The pandemic and its aftermath has further exacerbated the deteriorating economic and political relations between the US and China as the two most important economies today, whose combined GDP makes up 40% of the world total. Globalization moved into high speed since the 1990s, a good example being China, which has grown to be a power-house of global economy and the world factory. Therefore, the emerging decoupling between the US and China, especially in high-tech and scientific fields, is very much a worrying sign for what could possibly happen to further undermine global governance. It remains uncertain whether this decoupling will become a full reality soon. Based on a survey in April by the American Chamber of Commerce in China and in Shanghai for American big business in China, 44% believe that the US and China will not decouple their economies, a drop from 66% in a survey from last October. The American tariffs imposed against China and other trading partners has reached a historic high since 1993. The US Federal government has lately banned a major federal pension fund from buying stocks based on index, including Chinese companies, and the Department of Commerce put an additional 30+ Chinese firms on the Entity List.


Traditionally, the incumbent and emerging powers often locked horns over who ruled the world and neither one would quit until the other was beaten. The pandemic has seemed to worsen the already simmering geopolitical competition between the two major powers. Nobody wishes to see the two countries fall into full strategic confrontation.


Covid-19 could have served as a good opportunity from the very beginning for the US and China to look towards a much needed system of cooperation in the fight against the virus and in providing leadership to reinforce global public health systems, with the World Health Organization (WHO) at the center, thereby joining efforts to strengthen scientific research and development on vaccines and new anti-virus medicines.


It is a pity that two countries have instead fallen into an ugly blame-game in regard to Covid-19. The US seems bent on pulling China into a destructive geopolitical rivalry no one can win. Take the recent 57th World Health Assembly (WHA) for example, China gave its full support to the WHO and global efforts to strengthen the public health system, including a 2-billion-dollar donation over two years, while President Trump did quite the opposite.


The US is in the midst of an election cycle, which means substantial implications for both domestic politics and foreign policies. Political dynamics will be at the mercy of election politics and become more fluid, with China-bashing a fixture in election year as a tactic for both parties to rally support and get votes. The Sino-US relations will become subjected to the shifting of US domestic politics, not a very optimistic prospect.


3/ The world economy has suffered unprecedented blows with the onset of the pandemic. Global demand plummeted as a great number of medium-and-small businesses went bankrupt, and both blue- and white-collar labor incomes shrank or were lost entirely, particularly in service sectors such as tourism. As Secretary-General of the International Mountain Tourism Alliance, I am fully aware of the damages done by Covid-19 to both international and domestic tourism. A World Travel and Tourism Council (WTTC) forecast shows that 50 million tourism employees lost their jobs due to Covid-19, constituting 12–14% of the total global tourism employment.


European Union officials are calling for “strategic autonomy,” while in the US the Trump Administration coerces and lures American business to move back to the States, in particular from China. The White House Economic Adviser, Kudlow, even promised that the US Government would cover all expenses relating to such relocations.


4/ Multilateralism has been the core principle underpinning the UN-centered global political, economic and financial governance systems. Regrettably, the global governance systems, particularly the global public health system and its crisis management, suffered further blows, becoming entangled in tussles with resurging unilateralism led by the US. Most notably when President Trump threatened the WHO with total withdrawal should the WHO does not succumb to American demands within 30 days.


Multilateralism has fallen victim to the pandemic-induced erosive anarchy of global governance architecture. Governments had no choice but to institute drastic measures against Covid-19 to prevent its quick spread, including lockdowns and sealed borders. There was little consultation and global coordination as to the timing, duration and scale of such measures taken by countries, and the WHO was not fully utilized to perform the role for which it was created.


These unilateral actions or inactions were natural responses or even knee-jerking reactions to Covid-19, which need to be understood contextually. As such reactions continue and develop, the question is what the impact will be on global governance, especially global health governance. Multilateralism as the principle of global governance was very much weakened by Covid-19, changing the way of life and way of production worldwide. The EU, which was once a beacon of global governance, is almost certain to hit further snags in its regionalism, and sovereignty-centered political and economic order will likely prevail over multilateralism.


The outbreak of Covid-19 drew world attention to the WHO, not only as the UN-led focal point to mobilize global resources to fight and control the pandemic, but also as the professional center to both monitor the pandemic and carry out research to identify vaccines and cures.

Most unfortunately, the global public health system represented by the WHO became the center of a blame-game and geopolitical rivalry, thus undermining the concerted efforts to combat the virus. Were such a technical and professional global health governance body to become dysfunctional, the prospect for global governance would indeed be dim if not impossible.


The gradual disintegration of global multilateralism and further fragmentation and anarchy of global governance would be a harbinger of a more anarchic world, where the rules of the jungle would again prevail. President Trump’s proposal to curtail immigration into the US is another symbol of the regressive path that will lead global governance and multilateralism to the brink. Such a world would be a worse place for all countries — interdependence and interconnectivity has bonded us all in globalization and global governance. “United we stand, divided we fall.”


Driven by populism and nationalism, unilteralism was on the rise long before the pandemic. Covid-19 no doubt reinforced its further rise and forward momentum. The current EU crisis, the “America First” and other ultra-nationalistic tendencies in many countries have already dissolved global governance systems to further fragmentation and disorder.


The Eurozone debt crisis deepens further with the European Central Bank (ECB) unleashing unlimited Quantatative easing (QE). The Italian government public debt has reached € 2.4tr, accounting for 135% of its GDP. The German Constitution Court questioned a European Court of Justice (ECJ) ruling for ECB to buy debts in support of the Euro, which brings back the memory of Thomas Jefferson 230 years ago deciding to have US Federal Government assume the debts of its 13 states. It is hard to tell what will prevail, as so many central banks, including ECB and FED, now indulge in zero or negative interest rates and unlimited QEs. Such measures by countries with global reserve currencies may have advantages, with their debts diluted as liquidity swelling in global capital market, but many developing countries will not be so lucky. Capital outflow and capital market turmoil could be lethal to such countries, as witnessed in 1998/99 Asian Financial Crisis and 2007/2008 Global Financial Crisis.


5/ The pandemic gave all countries a shocking wake-up call to the prevalence of non-traditional security threats, such as a global public health crisis and the energy security crisis precipitated by the sudden steep drop of oil prices in the last few months. Non-traditional security threats now top the list of world challenges, overtaking military conflicts and other traditional threats. The outbreak of Covid-19 and its spread to all corners of the world illustrates this point more clearly than ever before. The strategic thinking of countries, in particular that of major powers, has yet to shift accordingly.


Political and economic matters still dominate the global governance agenda, but a wide variety of global challenges have become more pronounced, such as public health, environmental safety, natural disasters caused by extreme weather, and cybersecurity, as globalization and inter-connectivity has made containment of a local or sectorial crisis increasingly difficult.


Shall countries, major powers in particular, continue to pour huge sums into arms race and military hardware? Are there enough funds available for education, public health, climate change, and R&D on new technologies? Sadly, the resources available to combat Covid-19 are in many cases not adequate. Such strategic questions require strategic thinking and responses that should be developed based on the widest possible global consultation. Unfortunately, the world and its governance system has seen further fragmentation and disorder with the pandemic, still proving difficult to fully control and contain it. The international community should reprioritize its efforts to overcome both non-traditional and traditional threats. The sooner this is done, the better the chance we have to survive in the emerging world.


Economic globalization connects the world like never before, and communicable diseases have increasingly become a prominent non-traditional global security threat that confronts the international community. The ongoing Covid-19 outbreak poses severe tests for China, the US, EU countries and the world at large. For the same token, financial and debt crises, energy security, climate change and cyberspace also constitute more urgent and greater challenges for mankind than traditional security threats.


A global governance deficit is regrettably expanding, with the US retreating from the provision of global public goods, and public health is no exception. It is a sad conclusion that a rule-based global governance system with the UN at its center is crumbling. Can it be saved from the downward spiral?


The 2008 global financial crisis left the world with a sobering lesson, that no country is an island able to single-handedly manage any global challenge or crisis. As a Chinese saying goes, water can either lift or capsize boats. A single boat is in no position to float against tidal waves. Synchronized international cooperation, including fiscal and monetary measures, tided the world over during the unprecedented financial and economic meltdown in 2008/2009. The outbreak of Covid-19 has jolted that memory back to life. China, for its part, has been cooperating closely with experts around the world in order to effectively control Covid-19 with effective vaccines and medical treatment. In the same spirit, last year, China worked together with the WHO to provide assistance to Ebola-hit African countries, including dispatching medical teams and sending medical supplies, serving as a strong testament to the importance of global cooperation in public health.


6/ What should be done to remedy the fraying global governance and make the emerging world better and safer? Here are some suggestions:


— Reshape the global governance system and adapt to the new phase of globalization. The international community needs to carefully review the changes brought about by Covid-19 and other global challenges, and on that basis to call on all counties to reaffirm and adhere to a rule-based global governance system, with the United Nations at the center. For the immediate future, WHO and WTO should take priority over others.


— Enhance efforts must be made to balance competition and cooperation among major powers in order to avoid full confrontation. Geopolitical entanglements and difficulties should not be allowed to hijack major power relations and to push competition into a vicious cycle, as this is detrimental to all countries. Competition is normal only when it is based on agreed upon and acceptable rules.


— Strengthen multilateralism to improve global governance and globalization. In a future world where global challenges of Black Swan or Grey Rhino will appear more often, concerted efforts to fight against them cannot coalesce without adherence to the principle of multilateralism. Political negotiation and open dialogue should prevail over unilateral action or coercion in dealing with international affairs and disputes.


Finally, what we have today is the best of the world and the worst of the world. The pandemic serves as a stress test and wake-up call for all countries to reassess the world and make wise decisions to move ahead into a better and safer world.


He Yafei is a senior fellow of Chongyang Institute for Financial Studies at Renmin University of China.