After the G8: is it going to be G-Zero or a positive number? | 11 June 2013 at 6.00pm
Chair: Martin Wolf
Speakers: Ian Bremmer, David Miliband and Gideon Rachman
Martin Wolf (MW): So first of all let me welcome you to this debate or discussion, after the G8 is it going to be G-Zero or a positive number? I hope the point of that is already obvious but if not, it will be by the end of this discussion. This is of course, part of the cultural forum 2013: global citizenship. It is very relevant.
Before starting, a few acknowledgements and an apology. Firstly, above all to Zamyn - Sir Mark Moody-Stuart, the chair of Zamyn and Michael Aminian, its founder and I have to say one of the most extraordinary social entrepreneurs I have ever met. Persistent isn’t the word, I told Michael a little while that over the last 3 months he had succeeded in sending me more emails than any other person I know, except my wife. It was a pretty close thing – extraordinary. I would also like to thank on Zamyn’s behalf and ours the Tate, Sir Nicholas Serota, the director, Marko Daniel, the head of programmes and all the partners – Accenture, Africa Progress Panel, Barclays and SOAS, University of London and Tate.
The apology, as you know in the original programme and I was very much involved in persuading him to come Trevor Manuel was going to be here I think that he very much wanted to be here, in fact he had a number of things that he wanted to do here today. But political developments in South Africa, and nothing to do with Mr Mandela, but the President said that all ministers had to be home and when a president of your country tells a minister of that country to come home, he has to do that and that’s the end of it, so unfortunately he couldn’t come and it was last minute. Very happily, my good friend and colleague Gideon Rachman at the end is going to pretend he’s Trevor Manuel. No, not really. It is a great pity, it would have been great to have Trevor Manuel, he’s a good man.
Now, on the topic we are going to be talking about: global governance and more broadly in the context of the G8 meeting in so far as I am concerned, the G8 is a corpse, zombie perhaps better - moves even though it is more or less dead. But there is a question of whether anything replaces it.
To discuss this, apart from Gideon we have Ian Bremmer, who is a good friend of mine and founder and president of Eurasia Group, which is, really is the world’s leading global political risk research consulting firm and he recently wrote a book ‘Every nation for itself. Winners and losers in a G-Zero world’, which I think is clear what that means. And to his right is David Miliband, who was Labour MP from 2001 to this year, he was secretary of state for foreign and commonwealth affairs from 2007-2010, the youngest for 30 years. I suppose David Owen was even younger? Yes, well you are certainly going to go on and do greater things than he did.
David Miliband (DM): The bar isn’t that high I think.
MW: That is indeed the point, I won’t go further on this line. He is currently chair of the global oceans commission and will be president and CEO of the International Rescue Committee from September 2013.
So this is how we are going to proceed, we are going to have a discussion until about 7, and then we are going to be open for questions from the audience. I would be very grateful if you could make them questions or if comments at least quite brief. Really quite brief because there are a lot of people here and I imagine that you are all here because you are extraordinarily opinionated and therefore would like to express them so be polite to one another and resist the urge to speak for 20 minutes telling us all how wrong we can.
What I thought that we would do, let’s conduct this as a discussion. I prefer it if we were sitting facing one another but I will do my best from here. The questions I want to consider are I want to go back to the basics. What does one want global arrangements for? What are they supposed to do and provide? What are the public, global public goods that we want global governance to provide? That’s my first big question.
How far do changes in global relative power reduce or change our capacity to provide or change global governance. It’s obvious to anyone that we are in the midst of huge transformations in the global economy, global relative power, and extremely rapid decline of Western domination. The relatively fast growth, pretty well of all regions of the emerging world, and particularly Asia and that has enormous affects and that is shown I think in the area that I’m going to be covered in my third discussion, the third question, which is the shift during the crisis in late 2008 from the G7/G8 to the G20. Which was I think is a very important indicator of this transformation in relative power then here we had an enormous financial global crisis.
One of the things that one might imagine global governance arrangements are there to deal with and it was found really for the first time that the G7/G8 that the old industrial countries were no longer able to deal with this satisfactorily or at least that was the assumption I think, correctly. So we moved to the G20. But linked to that I think is a broader question, which is in the whole panoply of global governance arrangements. There are immense numbers of formal institutions, there are of course the United Nations, the specialised institutions of the UN, there are regional institutions. These G’s are rather a special sort of thing in that they are essentially informal gatherings of States. Mostly, not all more or less powerful and of course, all completely self selecting. And so the question is what role in the whole global system do this sort of grouping play?
And that gets me to my fourth issue, if we think about these sort of G structure what determines the effectiveness and legitimacy of such groupings, is it important that they be more or even less representative? What is there representative function? Should they be completely transformed as I said, they are all self selecting. The G20 as far as I know was invented by Larry Summers in the late 1990s, you might wonder what on earth, what earthly reason should there be that the United States Secretary of the Treasury 15 - 13 years ago decided on all these countries, and some of them are really quite arbitrary, well perhaps they all are. My fifth question relates to I think something that I think may interest a lot of you and we don’t have to cover all this but these are the issues to be, what about non-state actors? We are talking about states here but what roles do non-state actors play in making global governance work?
There are really a big set of issues here and then finally I hope we get to sum up, well can we and if so how can we make global governance more effective in delivering what we want from it, which is near we are going to start. So I am going to start with Ian and I am going to ask you if you would just say, well when we are talking about global governance arrangements what can we actually reasonably expect these things, we’ll get later to how to structure it if we can, what if anything can these sorts of bodies useful do for us.
Ian Bremmer (IB): Look, I mean we are sitting at the Tate; you have a fissure running down the great hall here. I mean it’s hard to be more symbolic than that. I suppose that I’m meant to be the provocateur in the sense that I coined this term the G-Zero, not because I want a G-Zero or I like a G-Zero or because I think that it’s a good thing for the world because I don’t. But just because I think that global, the G that is meant to stand for global, not just governments, is not really workable in this environment.
You asked what sort of things would be like from our global governance – we probably like global standards, we like a global internet, we like a well regulated free market, we like a global trade regime that gets stronger over time, we like some, I don’t know, certainly some base line global security arrangements, we like global response on climate. Lots of things we like, of course the things that we like aren’t necessarily the kinds of things that other people like, people that aren’t from countries that are industrial and democracies.
You know, I think that these are structural issues. There are too many countries to coordinate well so yes I think that smaller numbers are easier to deal with. A lot of these new countries that Larry and then Paul Martin, more recently with the actual G20, is that a state structure fostered on us are countries that are very different, they’re poor, they have very different priorities, they have different political and economical systems, they are also much less capable – less capable in their experience, less capable in how much lifting they can do in their diplomatic core, all of that. Our allies, America’s allies – the Brits focused a little bit on your relationship with Europe right now, focused overwhelmingly on your domestic economy right now and appropriately so. Japan after 20 years plus of lost decades now finally getting their act together, we think domestically and their economy and appropriately so. The Europeans perhaps not dealing as effectively as we like with their existential crisis, but busy, distracted immensely so and then finally the United States.
The United States, I’m not a declinist, I don’t believe that the US is in decline right now I don’t at all. I certainly don’t believe that the US is in decline compared to the rest of the world and I think that there are lots of things that we can discuss that bear that out but the interest of the United States in playing a global leadership role is dramatically less than it was before and you see this in Europe, you see this with the summit we just had with the Chinese this past weekend, Michelle Obama didn’t show up despite Xi Jinping’s wife showing up but let’s face it if this was about health care or Obama getting re-elected, Michelle would have been there. You know, it just shows priorities it doesn’t mean Obama’s a bad guy, it shows what the Americans want to do and the Middle East, it’s even more obvious right, we see what’s happening on Syria, maybe the United States might have a coordinating role in providing, in actually doing the infrastructure around providing military support, not actually giving them military support to the rebels, maybe. We’ll think about it if chemical weapons are used, systematically but not just once. And if you think that the US doesn’t want to do much in the Middle East right now, wait until the energy revolution really hits. The US hasn’t even begun stopping being interested in the Middle East; we’re really going to get there.
So I think for all of these reasons, it’s not that I think nothing is happening globally and I’m sure that our other panellists will come up with many counter examples that show that global can work but the reality is it’s so much so constrained structurally today from where it was and so we need to be thinking that it’s sub-G’s and it’s non-G’s as opposed to trying to figure out really how we can get our old G back.
MW: Ok, so basically let me turn to you David, it’s completely unworkable given the current changes in the world, people are all inward looking, distracted…
DM: I get the picture. Look, so Ian is basically right. He’s basically right that this is an age of extraordinary interdependence, yet it’s an age of extraordinary under governance at the global level. And he’s basically right; I think to diagnose the shift in the balance of power West and East. You talk much about North South in your article in the Statesman. You talk about the Middle East, you talk about Japan, and you talk about Europe. I’d add Africa and what’s going on in Africa as an important global shift but you’re right to diagnose those shifts in the balance of power as being very significant and explaining why there isn’t a hegemonic global power to keep order, which historically Empires have done.
There isn’t a balance of power yet, because the emerging economies are not yet ready to be ‘superpowers’. Remember the worst thing that you can do in China is to call the Chinese a superpower. They call themselves a developing country. They will have one of the, the 80th highest per capita income in the world when they become the world’s largest economy. It’s a very big change; they are going to be a poor superpower, that’s never happened before. So I think that he is right in his diagnosis but it’s a bit dull if all I do is agree so let me take a slightly different perspective.
If you’re looking for a singular system of global governance then G-Zero is right, but if you look not at a singular system of global governance but at a number, which I’ll come on to briefly describe in a minute, multiple systems of global governance what you see is a messy but in some ways overlapping set of systems. Some of them are regional and some of them are strong, which the EU is relatively strong, the Arab League or Andean is relatively weak but there is in this part of the world a strong regional governance system and in somewhere like Africa, I would predict it’s going to grow in it’s strength.
It’s very interesting to me that in South America: Peru, Chile, Columbia and Mexico are creating something called ‘the pacific alliance’. It’s got a GDP greater than Brazils so it counts as a BRIC, a major emerging economy. They want to have the full freedoms of the EU’s single currency.
So I think that there’s a regional aspect, there’s also functional arrangements that are, it’s important that we don’t forget I’m doing this global oceans commission, the high seas where there’s no national sovereignty involved, they are a terrible example of global under governance, it’s the wild west on the high seas but there is another part of the world where there’s no national sovereignty - Antarctica, which has a very strong treaty base from 1961 and has ensured that Antarctica has remained pretty virgin territory preserved for human kind, without breach.
So you have functional arrangements, you’ve also got some global public goods being protected. I mean the most successful international treaty I think has been the nuclear non-perforation treaty. It’s under a lot of stress but Kennedy when he launched it in the 1960s said by 1980 there will be 20 countries with the wealth and the scientific know how to become nuclear weapon states, they haven’t. I would argue in significant part to the nuclear non-perforation treaty. Though, there is multi-lateralism under the surface.
Final point, which I think is the most interesting and difficult question which is not quite the difference of values or the difference of values between West and East or between democratic and un-democratic countries. There’s another division which I think is more important. And that’s about what are the rules for governing an inter-dependent world. A world of inter-dependent states and peoples rather than independent states and this comes down to whether or not there are rights of the international system within countries when the rights of people are abused or when the rights of the commons are abused. Historically, obviously dating back 350 years the rule was what went on within your own country was your own business. But in an inter-dependent world where there is a global consciousness about human rights or a global concern about the environment or security that principal of national sovereignty isn’t sufficient. And there are people in the West who argue that it’s not sufficient and there are people like me who would say there are circumstances in which it’s, in which what a countries doing to its own people demands an international response. There are circumstances in which what a country is doing globally demands a response. But equally, that’s a very difficult ask, that’s a very difficult message to sell. The US doesn’t want to sign international treaties like the UN convention or the law of the sea even though it follows it but it doesn’t want to have its sovereignty fettered.
Obviously the Chinese are very concerned not to have any external interference in their internal affairs and with the danger of precedent, that’s the principle they apply in Syria at the moment. So I think this question of what are the principles for governing an interdependent world are the most difficult questions to answer because they call into question something very fundamental. I talk about the idea of a responsible sovereignty but we can get into that later. But I think that’s really a hard nut to crack and it underpins the greatest failing which are to protect global public goods, which we all depend on.
MW: that’s very good and helpful and also pleasingly different so thank you. So where do you come out on this Gideon, is there more going on than Ian suggests? Or not?
Gideon Rachman (GR): I thought it was very interesting listening to David because its quite easy, its almost part of the job as a journalist to be a professional sceptic and say look its all falling apart, nothings working and it is good to be reminded that there are organisations that are doing real work and some problems that are actually being addressed and all of that. That said, and I think that Ian’s basic argument that we’re in a period of lack of international governance is correct.
I personally wouldn’t focus too much on the various G’s – the G20s, the G8s and so on. I don’t think that they ever really were the things that provided global order. It seems to me that essentially if you look back even 20 years it was an American leadership that was really crucial, behind the scenes of course the G7 or 8 would meet but the fact that the US was giving the lead was critical I mean for the formation for the big international institutions in the late 1940s, the Breton Woods institutions America clearly forced the pace there, but if you think back to say the 1990s there’s a big economic and political crisis, when Saddam Hussein invades Kuwait it’s America that pulls the coalition together and essentially leads the international effort to reserve that or be with Mrs Thatcher nudging George Bush in the ribs. And then in the financial crisis that hits Russia and Asia in 1997-98 there’s this famous Time magazine cover of our people who tried to fix it called ‘the committee to save the world’ and they’ll all Americans, it’s Summers and Rubin and so on. And now come forward to our present day there was a fairly effective G20 effort to stave off the worst of the financial crisis in 2009 but then with the Euro crisis, although the Americans are kind of trying to prod, to do things that they regard as necessary and so on, in the end it’s kind of Europe on its own with a bit of the IMF. The Americans don’t have the power, or frankly the money anymore to leverage the solution there.
And then the great political crisis of our day was going on in the Middle East, a mixture of the Americans being unwilling and unable to take the lead over Syria. And so you’ve got a sort of absence of leadership, the Chinese certainly aren’t going to do it. I mean, they believe that the Americans made a hideous mistake sapping their own power by getting too involved in the Middle East and they’re determined not to make that mistake again.
And a final word on Syria and I mean David mentioned this idea that one of the things that happened over the last decade is that we’ve had an expanded idea of what global governance might mean and the development of this idea of the responsibility to protect, the idea that sovereignty is not inviolable, there are certain things that a government can’t do to its own people, but I fear that what we’re seeing in Syria is that might have been a very short lived idea because in fact nobodies willing to intervene and stop what is a pretty terrible humanitarian situation so maybe you needed for the responsibility to actually kick in the Americans still to have the power or at least the big stick in the background, well maybe they might come militarily. I think with that idea written off even diplomacy becomes much harder.
MW: I’d like to, before we go into some of these, I’m very interested to tease out some of you think. Turn to you Ian actually first about the role of China in the US, particularly as the rising power on the one hand and the established power on the other. I have to tell you that when I hear an American say ‘I am not a declinist’ I say well of course not. I mean you wouldn’t be allowed back into the country.
IB: Oh there are a lot of declinists in the US right now.
MW: Ok, not many actually and you can probably put them all in a room. But anyway...
IB: Some work for the FT.
MW: Then they are only temporarily in the US.
MW: Let’s start with China, what do you think its role in this context is and is likely to be. And what effects does it clearly its rising weight in the world’s economy have?
IB: So, this brings me back to a little of what David said because of all the pieces that are now moving, G-Zero implies that a lot of geo-politics are in play and the Middle East is exploding and Europe is muddling through. The big piece that’s in play of course, Africa’s becoming extremely interesting and will be much more important in terms of governance not just in terms of growth. But China’s rise is not just the most, by far the most important in fact it doesn’t feel that way in the US right now because the US doesn’t want to deal with it doesn’t make it less true.
Now I thought that it was interesting that David, many of the examples that you gave are places where governance is working are happy examples, the Antarctic is a happy example, we’ve got penguins there, we want governance there. The regional example you gave, right I mean certainly I would add the trans-pacific partnership to that, a happy example. There is governance that’s happening of course that from the Western perspective is less happy and that is a lot of the bilateral coordination you see between the Chinese and other countries around the world. That is going to make some of the Western and regional governance more problematic.
I think one of the things that’s really interesting about China is that they’re not about block building, they’re not about creating a large sort of multi-lateral organisation that they are the hub of, they are really interested in a whole bunch of bi-lateral engagements that were downed certainly to their benefit, hopefully from their perspective both countries benefit. And they’ll be bigger than each other bi-lateral countries that they are engaging with. When Xi Jinping just made his first trip outside to Russia and then to a number of African states he made it very clear – we don’t have any political strings when we invest. We said, he didn’t say what strings they do have, which are very important economic strings but they have bi-lateral economic strings. It’s a very different kind of governance.
I think it’s interesting that China is clearly trying to jettison some of there, even though we’re a poor country, jettisoning some of their non-intervention. You see this with the peace plan, the 2 page peace plan they came up with for Syria. You see this with them offering to engage on Israel Palestinian talks, which is a great place to practice because you can do different things for 10 years and it doesn’t really matter. So I do think there is movement on China but fundamentally if you think that US is focused domestically, the Chinese are much much more so. Foreign policy plays much less of a role in their international focus then just ensuring they have the economic ties that allow them to have the commodities and access to other critical economic pieces that allow their politics to stay stable. And I think as a consequence the willingness of the Chinese to engage in whether you call it responsible sovereignty or responsible stackholdership, the American manifestation of that concept is virtually zero. And the likelihood is that the US China relationship is going to become more troublesome before it becomes less so.
MW: Before we get to that issue and some of the others, I’d be interested David in your perception of China in particular and its likely role, the discussions you presumably had when you were in office. By the way I should say as a small correction the first time I heard China referred to as a superpower was by a senior official of the Chinese embassy in London in 2006 at a lunch, which I’ve never forgotten. I don’t know if you, no Gideon you wouldn’t have been there at the FT. Anyway, and he didn’t refer to China as a superpower he referred to the US as ‘the other superpower’.
MW: I thought that was wonderful. So they’re not as bashful as you think.
DM: Look, there’s a couple of things – first of all the Chinese focus must be internal because they’ve got huge challenges to maintain stability, to develop some kind of balance within their urban and rural, divided urban and rural populations. Ian’s definitely right that there external engagement is instrumentalist, they’re not trying to create more confusion, they’re trying to find partners for the development of their own country. And that leads me to think a couple of things; first of all I think that we’ve got to divide the economic agenda from the wider foreign policy agenda. China has on most foreign policy been more of a veto power than a propositional power. It’s been more likely to line up with the Russians to say no to ideas than it has been to propose them. I think in many areas of foreign policy that will remain the case.
Secondly, precisely because of their economic needs I think it is possible to see that, and we know people in Beijing and China are angling for a more activist, economic engagement and so, one has to divide the economic instrumentalism that drive multi-lateral engagement on the economic front from the foreign policy.
When I was in China two years ago so before the current leadership team were being manoeuvred into position, there was a pretty explicit talk about engaging more proactively on G20 questions because that was a place that they advance economic agenda that was in their own interest. I think the weakness of the G20 has probably disappointed them pretty substantially.
One other point that Gideon and all of you will have thoughts on is more of sort of a psychological question. This generation of Chinese leaders or at least the two people at the top of it are the first generation of Chinese leaders who have lived more than half their lives since China starting reforming and opening up in 1978. I think that he’s 54 Xi Jinping so you can do the maths. And I think that, so the question is does that affect them at all? Does that have any impact on the way they view the world? It seems to me hard to maintain the position that will have no impact on the way they view the world. It’s not that they send their kids to Harvard or that they went to Iowa state university or whatever it was you did in 1984 but I think that a consciousness of the world beyond is hard wired into them in a way that it hasn’t been for previous generations who had to learn about it. And so my instinct is that this will produce a comfort level not just for the kinds of informality that you saw last weekend but eventually for the multilateralism that will speak to Chinese interests and they will do it in a very hard headed way.
But I think if you look across the economic domain I’ve mentioned, climate change – a massive issue in China. I see willingness or an openness to a greater engagement internationally and I think that the psychological aspect of the lack of fear of the outside world will be another way of putting it. I think that this is relevant.
MW: Gideon, on China.
GR: Yeah, I mean I think it would be nice if David is right and this is a more confident and more internationalist generation in China. I mean, I wouldn’t claim to know these people first hand but what I would say is the Americans that I know that are dealing with them recently believe that you know, China as a big country has many schools of thought but the liberal internationalists are actually on the retreat and you’re getting more of a military accent to the people in power in Beijing.
And I think that’s what made the Obama Xi Jinping summit so interesting, because it comes at a very tense moment, a moment when I think both sides are conscious that their in danger of sliding into a much more openly adversarial relationship. In a way it’s an interesting almost theoretical thing, can two leaders who are I believe probably are quite committed to the idea that we better get on because it’s dangerous if we don’t. Are they powerful enough, and if they establish a decent relationship is that enough to counteract the structural forces that might now be pushing China and the US towards a more adversarial relationship. I would like to believe so but I suspect that probably the structural forces will prove more powerful and those are the shift in economic power, which lead to a shifting mood in both capitals. So much so that I think in Washington post financial crisis a lot of the kind of breezy confidence that globalisation will sort of take care of Chinas rise, they’ll sort of, they’ll adjust to the global system and they will be an easier partner, they’ll probably democratise and they’ll all be fine. I think that suddenly America can see well maybe China will become the world’s largest economy at a point where it’s still a one party state. China’s military spending is going up very rapidly, the US is conscious of its own financial constraints so America is more wary of the rise of China.
And conversely I think the Chinese do sense a kind of shift in power and maybe that is why they have been behaving in a more assertive way in their own neighbour, that the old kind of Deng Xiaoping philosophy about bide your time etcetera seems to have given away to something a bit more assertive, vis-à-vis India, vis-à-vis Vietnam vis-à-vis Japan and America then responds to that by trying to build up it’s own network of alliances within Asia so there are these forces that are pushing towards a more adversarial relationship. And the big question really over the next 2 years is can Obama and Xi call a halt to that and establish a more friendly and collaborative relationship.
DM: Can I ask a question outside of the world I know, the world that 3 of you know better which is moving from government to economics and I wonder if there is one structural force pushing the other direction, which is the internationalisation of Chinese entrepreneurs, the internationalisation of the Chinese wealth creating base. I’d just be interested in what you think the implications are of this word global economic integration? Because it is the case that the Chinese economy is much more closely integrated in to the global economy, not just macro-economically but also in the way that it produces goods and services.
IB: I thought that you were going to take my point and you didn’t. Its close though, which is I actually think that there is something significant that is the counterweight to Gideon’s concern. I agree with Gideon’s concerns but I think there is a market counterweight. And that counterweight is that the Chinese are incredibly pragmatic about finding good places to put their money and the private sector absolutely sees that.
Smithfield the 4.7 billion dollar announcement of this takeover which would be, is the largest takeover of an American firm by a Chinese firm in history announced a week before the summit and clearly the timing was coordinated in advance, if its not strategic it’ll not be allowed through by congress and all that. But the reason Smithfield happened wasn’t because Xi Jinping said go do this, it’s because you’ve got folks in the private sector in China that say if I’m going to park 5 billion bucks someplace, having access to a decent American company and their distribution with US demographics doing pretty well and the economy picking up, that looks better than it did a few years ago. They just bought an American movie cinemas – AMC, same thing right, so I think that is a significant counterweight and it helps.
It would be better if the folks in the private sector were more significant than they are presently in the SME’s, they don’t have the price point and that’s important. In response to your question, I think the answer is yes that it a counterweight but unfortunately it’s a small one because if you ask me right now looking at the economy sort of strengths are in China, who is, which one of them, how many of them are actually moving towards true internationalisation and how many are doubling down on using their legal system, using the attractiveness of their market to get trade secrets. Using cyber to pick up as much information as they can, using their state capitalist system to continue to claw advantages that otherwise would not be down to a country that is not innovating well, still doesn’t educate well, and still doesn’t have an entrepreneurship.
I think that in 10 or 20 years time the factor that you mentioned might well be one of the most significant reasons that we could hope that we could move towards a G2 or a G something broader. But I think right now, the fact I don’t think that it is just the fact that Americans are starting to learn that when China becomes the number 1 economy they’ll still be poor. I think it’s a fact. They’ll still be state capitalist, I mean they might be more strongly state capitalist and that for me is one of the biggest dangers.
MW: I would like to turn then, in this part as these clearly are going to be the central players in the world as states, to the US. The US has gone through some really quite extraordinary rapid mood swings in the last 50 years or so. So not very long ago they seemed to be determined to remake the entire Middle East by force, some of us thought was a fairly crazy venture. I don’t know why I put fairly. And now, the US seems to be in fairly complete withdrawal from all such engagements. As we have seen in a number of events recently including of course, Syria. So let’s think about the next 10 years or so Ian, where do you think the US is going to go as a global player? What’s it going to be after?
IB: I worry that the politicisation and demonization of China as it gets larger and doesn’t bend to American will is going to get greater. The Americans are great exceptionalists as you know; we think our values are the right values. You’ve had a lot of experience with that here of course with folks like Tony Blair but nonetheless it is not helpful when you are sort of forcing it down folks throats, I mean let’s face it the US being exceptionalist and then having this NSA issue blow up on them the day before Xi Jinping shows up in California to talk about cyber security is probably really not the best. They thought it could have happened.
MW: I thought it was rather amusing.
IB: Yeah, no it was from an external perspective. From an American perspective that wishes it could get its act together on China it was like, here we are finally doing a meeting and you know. Look, it’s not like the US has given up on international – Obama did spend 3 days in Israel of course. And they have 7 million people, which if you do the math – 1.7 billion in China – that’s like a year in China I mean.
IB: Which is not going to happen. The United States is going to be attractive as a destination for investments, I mean really attractive. Even though the governance, you may think is poor. They are going to do immigration policy, not because Republicans are good guys or because the Democrats are good guys but because demographics have changed and they want to get elected. Their energy policy is pretty promising from a market perspective; trade policy is pretty interesting from an international perspective. There’s a possibility on tax policy as well and we don’t want to get in to that. So lots is moving in the US right now and I think for the next, certainly 5 years I think the focus in the US is going to be much more in that.
They are going to work really really hard not to get stuck in in Afghanistan. The US are going to work really really hard even it has this huge military to ensure the Japanese don’t go nuts vis-à-vis the Chinese engage the US in a proactive way. So I don’t see a lot of sudden shift in borrowing the kind of black swans that we hate worrying about like North Korean drones. And the US and China are on high alert and we don’t trust each other, or that there’s a sudden market implosion in Europe that forces the US, I mean clearly looking into the abyss could bring the G20 together again. Could bring the US and China together again but that’s not the outcome we’re hoping for and I think barring that, the US, you’re going to see a lot more of the US than you presently have then the one you experienced under W for a few years.
MW: How do you see it David? The US as a leader?
DM: On the geo-political front?
MW: Or more broadly, because I want then to get to…on the base of what you say…
DM: I think, look technologically, culturally America is a remarkable machine of innovation and dynamism. The energy equation that’s been mentioned, I think is important. I think the big, the hard, the hardest question for American policy makers and for the rest of us who take our cue from that is about what they are pivoting away from. There’s a famous pivot now to Asia and that means the Middle East because as America is pivoting to Asia, Russia is pivoting in to the Middle East and you can see that in the Syria crisis.
Now what we are seeing in Syria is that while there are massive risks to interventionism or intervention, there are big risks to non-intervention as well. And the humanitarian one is obvious and it’s the world that I’m moving into in September, we’ve got, my new organisation has got people doing amazing work in very difficult circumstances as a result of the Syria crisis. But if you think about the geo-politics, they to any American planner who’s thinking about risks to their own country never mind risks to their own allies, the geo-politics of a crumbling state structure in the Middle East, which is not a fanciful notion now. The Syrian state may not exist as a nation state in any kind of meaningful form at the end of this crisis, the Jordanian and the Lebanese state has had 15% of its population now entered in as refugees, or refugees that equal in number to 15% of the population, Jordan - 20% of the population. Just so we understand that’s like 15 million people arriving in Britain. That’s big convulsion for the geo-political structure in the Middle East.
So the hard question is whether or not it’s possible to maintain a distance from the conflicts in the Middle East when the geo-politics are so significant. I think there will be extreme resistance; there is extreme resistance to get involved because of the lessons of the last few years, last decade. And never mind the economic crunch that America faces. But I think that’s really the hard thing, it’s obvious really that this is a period much more akin to a, to the kind of mandate that Bill Clinton left to George Bush in 2000 and that George Bush said that he wanted. Bill Clinton’s last state of the union said ‘now we focus at home’. And George Bush said before the last election ‘we’re not the world’s policemen’. 9/11 changed that but we’re now reverting in a post 9/11 period back to that kind of sentiment.
The question is whether or not it’s possible, given what’s going on in the Middle East as a result of the rise of the open society and challenges to autocratic regimes etcetera etcetera. Given inter-regional power plays that are massive.
GR: It seems to me that Obama actually came in with quite a coherent response, intellectual response to the post Iraq post financial crisis world. And that he had 3 basic propositions, the first is we are going to do nation building at home, I’m going to be a domestic presence, and I’m going to rebuild the American economy because that’s the source of American strength. It’s also what matters most to American citizens. The second is no more wars in the Middle East – I’m going to get out of Iraq and Afghanistan and I’m not going to get into another war. And the third is, the pivot to Asia which is a counterpart, which is this is where the futures going to be made not the Middle East in so far that we have a foreign policy strategy about Asia, it’s not about the Middle East and those are the 3 points.
The question is whether they can survive events as David said, it’s like Harold Macmillan’s old thing about ‘events, dear boy, events’ well the Middle East happens to have blown up so can he, does he say ok I’m going to stick with the strategy that I came in with it’s still the right idea, or does he say actually we’re in a new world in the way that George W. Bush had to do after 9/11 rip up the old plan and I think at the moment he’s trying to stick with plan A, the question is, can he?
Just a final point, and I think that there might be analogy not only with Clinton and so on but with the 1930s where Roosevelt had a huge domestic economic rebuilding effort to make. And even when he was intellectually convinced of the need to get involved with Europe he faced public opinion which absolutely didn’t want to. And if you look at the opinion polls on Syria, I think it’s on 12% support for intervention so even if Obama was more interventionist I don’t think he could do it.
IB: I mean he does have a foreign policy group that’s different of course this time around. They are the B team compared to the first time around, they’re not as impressive. I mean, Geithner was very much a China guy, Lew secretary of Treasury now is not, much more domestic. Clinton was very much an architect of economic state craft and the pivot to Asia, Carey just pushed back earlier today what was going to be his 8th trip to the Middle East I believe since he’s been nominated Secretary so he could do more meetings on the Middle East. In Washington, that’s a different pivot. You’ve got Tom Donilon who was very much China orientated guy and Susan Rice who’s much more Middle East and Africa. I mean the people in place are less orientated towards that pivot but still overwhelmingly the political people advising Obama are going to be telling him don’t do it, don’t do it, don’t do it. And if you do do it, do it differently. Engage multi-laterally from behind don’t put your name on this stuff, even again if you’re going to provide military support don’t do it yourself but facilitate.
I guess I go back to the question on to David and which is, you know, you say this is going to be hard because it’s going to affect the United States. I don’t see many people even in Washington thinking that even into the third year of civil war now in Syria with the government collapsing and the metastasising to Sunni versus Shiite across many countries, some of which we didn’t mention yet – Iraq and the rest. I don’t see many Americans thinking wow this is a huge problem for us. It’s an embarrassment but a problem? An actual national security problem? I see Kissinger going up this weekend – the ideas old but still going strong-ish, and basically saying can you explain to me what is our, what is the strategy interest of the United States doing anything in Syria. Lou Reed, who’s a pretty balanced guy, who’s like I’m not even going to go here. So you’re not going to wonder, you know.
MW: Before we go to the questions, because we’ve focused rightly on the power balance and the relationship because that’s the reality. But I think that David raised some interesting issues earlier about other groupings, that might play a useful role in governance in this world that is G-Zeroish and I agree that the G20 is more or less moribund, the G8 is in my view basically a joke. And the G7 can occasionally be useful as a Finance Minister group but only in exceptional circumstances. And one of the things, I’d like to turn this to you David what is the role in this vacuum of international cooperation of non-governmental actors? What you do, and I’m not just thinking of groupings like yours and also for better or for worse of course the role of private business?
DM: Yeah, I think that the, you’ve got to recognise that the greatest force of integration is economic and the private sector is playing an absolutely essential role to that so I wouldn’t want to neglect that side of it. I think that the truth is NGOs above all are picking up the pieces at the bottom of the cliff. I mean, we are having to deal with, in the case of organisations dealing with displaced people and refugees. More humanitarian catastrophes even though there are fewer wars. It’s a very odd thing, there’s more fleeing conflict even though there are fewer wars, and certainly fewer inter state wars. And so you’ve got an NGO community that is a growth business in that sense.
Now, there’s also a very big change in that you’ve got new players on the scene. I mean, the biggest provider of humanitarian aid in Syria is Jabhat Nusra, who are the Jihadist group. They are running the social welfare function of a very widespread kind in the rebel areas obviously. And so you’ve got non-state players and you’ve also got Islamic states playing a bigger role, the Chinese are not in the Humanitarian space particularly they do their work through the UN they are still contributors to Western peace keeping. And I think that it’s interesting that if you’re interested at all in conflict prevention, its still the UN system that does that and there are still famous examples of failure but if you look at East Timor, if you look at Sierra Leone there are actually examples of relative success and in the Balkans it’s worth a mention what the EU is doing in the Balkans has done well. What the African Union has done on land in Somalia and what the EU has done on the sea in the Gulf of Aden in terms of piracy, is real. I would say the humanitarian world, the humanitarian agencies; we’re at the bottom of the cliff trying to deal with the victims. The people putting up fences at the top of the cliff are still UN sponsored peace and other organisations.
MW: Can we talk also a bit about this idea of regional multi-lateral endeavours and since the theme of these seminars is very much Africa focused, I think the question of how we will evolve is very interesting. And I’ve been quite impressed, I mean you mentioned Somalia and the AU, Latin America is another interesting case at least at the moment and thank god it’s not actually collapsed Europe is not too impressive. But, I mean if you can’t sort things out globally in many regions there are ways that you can think about doing some things locally with the countries there, governments, NGOs and some support from outside powers. Is that a more fruitful way of looking at the governance?
DM: The logic is absolutely impeccable but the reality is not inspiring, I think. I think would be a diplomatic way of putting it. The AU has just celebrated its 50th birthday and the commentary all over Africa was not 50 years of great achievement. I mean so, but the logic is very strong. I think one more interesting question is why, and we can come to Europe separately, in Africa if you think in Southern Africa, South Africa - focused internally, Kenya, East Africa - focused internally. Nigeria, West Africa – focused internally. The locomotives of stronger regional organisation, sub regional organisation are internally focused at the moment. If that changes then the logic could assert itself, I think the logic is overwhelming and it’s one of the reasons that I have the views that I do about Europe. But I wouldn’t like to say that current practice is the best advertisement for them.
MW: At least one thing I was thinking about the proposition that they haven’t achieved it, that’s very negative and I can see the huge problems with it. But they have avoided a huge questioning of the whole legacy of colonial borders, which was one of the principles they adopted. In the Middle East that seems to me really open to question whether that is going to survive. We start regional shaping all of the national borders of the world we can end up with, what seems to me almost limitless chaos. Africa economically is doing better though with huge problems so that might improve the capacity of governments to provide order.
The other area that I wanted to go to perhaps Ian would consider, you mentioned functional institutional arrangements, which I think would probably be the most successful thing we’ve done. For better or worse, the trade arrangements and so forth. Some of the specialised agencies have been reasonably effective, even though the geo-politics behind them really hasn’t worked very well. Is that not a possible way to deliver some of these global public goods we want? Creating institutions that serve a very specific purpose and there are many many of them. And which are really the pretty important plumbing of the economic and political structure. And we tend to ignore them, what do you think Ian?
IB: I guess when I think about why, so I think the answer is no globally but yes in terms of provision of public goods and many of those public goods will be very important indeed and trade is absolutely one of them. The fact that it isn’t global doesn’t mean that it’s bad, its better, it works. For me the question, when I talk about functionality is what is driving integration. What are the things driving integration, I believe that David your point on getting the logic right in Africa will happen. And I think the reason that it will happen is because the building blocks are being put into place, its not just about commodities, its also about consumption, you’re creating governance that domestically that is clearly picking up educating women, you’re urbanising but you’re also what you really need to bring these things to market is you need infrastructure that goes beyond the individual countries. And absent really strong integrating logic that will tear these countries apart or that will force them in to blocks, there are lots of economic reasons why these countries should start hanging more together as the development continues. I believe in that story.
If you look at the Middle East, there is probably an institution that it going to become stronger and integrate more closely and that is the GCC, which is an organisation of Sunni Arab monarchies. And the Jordanians have signed up and wouldn’t surprise me if over time the Egyptians think that’s where our money is going to come from so maybe we should do that. And it wouldn’t surprise me if as a consequence you do more bigger international or multinational infrastructure stuff in those countries, the problem is that’s a fundamentally devise reason to integrate.
It goes to the initial question you asked, that I thought was really interesting, which is in a world that is economically interdependent how do you do governance? And the answer is that can work if the things that are functionally integrating you aren’t that extraordinarily divisive but sometimes you are extraordinarily divisive. I look at the NSA issue, the Snowden issue and I look at cyber in China and I think that the internet should be a place where I can go and could be incredibly integrative globally and could be focused on public goods, the only problem is the internet is becoming massively politicised. It needs to be, for economic purposes, for political purposes and as a consequence what should be a functional piece of global governance is going to be completely split up, I mean completely split up. I think that your have functioning internets in different parts of the world and I think that’s very bad for global economic growth. But I think that it’s very good, it serves efficient political purposes, sometimes efficient economic purposes and sometimes political purposes are at crossed purposes. And this is one of those places and that’s where I think you do or don’t have interdependence problems.
MW: do you have any last words on this before we go to the floor?
GR: Just a brief thing, it’s quite interesting on China’s attitude to regional organisations because the Americans have typically tried to sponsor European integration and they’ve sponsored the Andean and so on and the Chinese seem to hate facing a coherent block. An instinctive reaction is to try and split it up, the Andean summit when the South East Asian countries tried to form a coherent position on the South China siege, China picked them off by having a special relationship with Cambodia and others and now they seem to be trying to do the same in trade disputes with the EU so not only did the Chinese give the Europeans a lecture about remembering we’re on the slide but also clearly tried to strive a special deal with Germany.
I was talking to a German diplomat who said that every time he goes to Beijing he says he gets what he calls sweet poison poured in to his ear and what he means is he gets the Chinese saying ‘look you’re the only ones who matter in Europe, you’re the only serious players, just forget about those other Europeans, they’re slow, do a deal with us’ and he said he has to remind himself ‘no no mustn’t listen to that, we’re the EU we stick together’.
GR: But, that’s the game and it’s very very different from the way the Americans have tended to play the EU which is to say get your act together we want a single phone number, it’s a bit of a bore having to deal with 27 countries.
MW: I suppose, one conclusion of our discussion is if I’ve understood it is China is rationally realist and one thing a rational realist would like to do is to divide. I’ve always felt that if the Europeans had ever got together and were sufficiently effective to be a challenger to the US, they would have swiftly have shifted their policy to exactly the same one that the Chinese had adopted.
Exactly they did it beautifully when they had to. They just having felt that it was necessary so far. I think that we’ve had a pretty good discussion so far or why global governance is next to impossible and discussed some of the ways in which one might be able to get round it, these problems, at least to some degree.
I would only say that despite these views, nevertheless it moves in the sense that an enormous amount of global governance has happened in quite a large number of areas, particularly economic ones which we haven’t focussed on but I could discuss, even global financial regulation, imperfect though it is.
But anyway, with this introduction I’d be very happy to take questions. Now the only rule is you’re going to have to wait until you get a microphone, say who you are and please if possible ask a question or at least a very brief comment. I’ll take about 3 at a time and then spread them out that way I can be reasonably confident that we are managing our time effectively. So, who would like to ask the first question? There, this gentleman here. If you stand up it’ll be easier for them to see you.
Audience 1: Andrew Ward, Youth Business International. If we all woke up and it was a dream that actually we never had a G8, G7, G20. What would we be missing? If we could have one answer from each of you.
MW: That’s a very nice question. Ok another, this gentleman here.
Audience 2: Good evening, my name is – is this working? My name is William Wong. My question is on digital governance, traditionally we’ve analysed international relations and politics through international actors, states, NGOs and the like. And now of course, in the last 10 years or so we’ve got an added dimension of complexity, which is really people like us. If you look at Prism and so on. So my real question is in this really messy world, everyone is an actor now, everyone has a voice, who is to govern whom? But also in the cyber world, the United States have constantly alleged that they are sponsored state terrorism so states like China and North Korea and the like sponsoring cyber attacks on financial systems, structures and so on. It’s very complex, it’s no longer just nation states and nuclear deterrents are no good in any of this. So the bottom line is who is going to govern whom? And how? Thank you.
MW: A third question somewhere in the back. Yes the gentleman at the back there, can you stand up?
Audience 3: My name is Joe Cooper, I was thinking about the G-Zero and what that actually means in practice. And I was wondering if you could talk a little about the role of the UN. Which should seemingly fill the void and we haven’t heard much about the role of the UN.
MW: Ok, very good questions. I’m going to start with you Gideon actually. Let’s suppose that nobody had ever bothered to create the G5, the G7, the G8, the G20 – we haven’t actually discussed the G77 or any of those, we’ll leave that to the side for a moment. Would we be missing anything?
GR: Not in the normal run of things but I think every now and then they have been important. I mean clearly, the G20 had its hour in 2009 in our post financial crisis. And then it really did matter that if nothing else they sent a signal that there was going to be global economic cooperation in a time that everyone thought we were going to retreat in to protectionism and so on. David can probably talk more eloquently than me about the Millennium Development Goals and what the Blair government and others did around that so that was important. And I think even when they appear to be nothing and to be doing nothing particularly, I would prefer it to be in a world where there’s a date in the diary where all the most important leaders actually do get together and sit around and talk. Better that then they never meet.
And the UN, to address the question about the UN briefly, obviously it has an international legal standing that none of these other international organisations have so it’s incredibly important that way but it’s a very stiff, difficult environment people stand at the podium and make speeches. At least at the G20 there are only 20 of them, I think that they’ve somehow managed to make it 33 but it’s a slightly less formal situation and there’s more opportunity for discussion and even if those discussions lead nowhere, better that we get in to the habit that these people from very different systems, economies meet and talk. I think that is important, almost as a symbol.
MW: Ian the focus on the last question was because particularly the, the implications of a G-Zero world, what does it really mean and where does the UN fit?
IB: Well, if we had had no G20 the world in my view would look a little less G-Zeroish right now so I’d have one less book. So I do think that the actual creation of the G20 and the recognition, and codification and institutionalisation of this regular organisation brings together these 20 largest economies, a whole bunch of emerging markets and not persisting with the G7 plus 1, where the Russians were never really relevant, where it was really a G7 they didn’t show up a couple of times. Would have the emerging, on the down side, would have the emerging markets take longer to get to a point where they feel like they need to start saying things that are internationally substantive and statesman like. But on the other hand it allowed for much quicker abdication on the part of the developed states and more inward focused more quickly.
Now you could argue it’s a good thing you put the G20 in place because you had this shifting in the underlined power balance that was going to break the old US led global order at some point so if you have to do that you might as well do it soon so you can at least start the process of getting through your G-Zero and then creating or whatever it is that’s going to come afterwards then wait until things get really bad and certainly the G20 had a function right after the financial crisis because you needed at the least the Chinese and probably a couple of other players outside the G7 as well to help coordinate and I think that’s relevant and useful, do you need to create a regular G20 to do that, absolutely not.
Does the UN play a particular role in this world it plays a function, it’s an Antarctic role, it’s great. The World Health organisation, look at that, I mean the Chinese have become much more transparent and proactive in their scientist and laboratories working with international standards and trying to understand the latest variant of avian flu in a way that is much much more resilient then what we saw with SARS and that is a UN sponsored organisation that made that happen, thank god they existed. I am not John Bolton saying ‘lets lop 7 floors off that building, we wouldn’t miss it’. But the Security Council and the incredible ineffectualness the security council they should have told us the G20 was a bad idea at state level. And didn’t, we didn’t learn that lesson.
MW: David, on the two questions – the first and third on what would we miss without them and…
DM: I think the shaming of the Western world in the development of the G8 agenda through the meetings of the last 10 years has been a positive factor. And has made a difference to a lot of people’s lives, I think if you were to ask me to give one example I would pick the pursuit of the Millennium Development Goals, the fact that we’re on the track to meet the anti-poverty target early etcetera etcetera and I think that’s been helped by that.
There’s a wider question and that all these institutions you want to ask two points, one is are they powerful, two is are they legitimate. The trouble with the G8 is that it’s neither powerful nor legitimate. And that explains the relative weakness of it.
On the UN I think that in some ways the UN is its own worst enemy and obviously that’s the traditional thing to bash the bureaucracy and that actually the UN is a symptom of what nation states are willing to cede on the international level and do on the international level. So if you just think about peace keeping there are all sorts of weaknesses in UN peace keeping but some of them arise from the fact that no Western countries put their troops into peace keeping, I’m not just talking about the US and UK past Somalia, past in the US case, past Afghanistan and the UK case Germany is the 50th highest contributor to UN peace keeping. And so there’s disengagement and that’s not the UNs fault that’s the nation states fault and I think one has got to look at where the power does lie because the power and legitimacy does still reside at the national level.
I think it’s also worth saying and I don’t have to develop it the UN does a lot more than any of us know. Pascal Lamy’s got this lovely phrase about ‘the house of humanity’ and the house of humanity is protected in all sorts of ways from storms and disease and god knows what else and it’s kept going, it’s foundations are tended to by UN organisations that we don’t need to know about but are actually, we’d be sorry if they weren’t there.
MW: I think that I actually, we got away from this but I do very strongly support the view that these specialised organisations, a whole raft of them have an enormous impact on our lives. We don’t realise how large it is and here’s the IMF trying to save Europe from itself which we perhaps shouldn’t mention. This is because the ECB and the German government trust the IMF and not the European Commission. That is quite an interesting fact, there aren’t too many people in the world who would say they trust the IMF like that but there we are.
I just wanted to add one other thing because f my focus on economics, during the worst of the financial crisis – September, October 2008 – about a year – the G7 first isolated the G20 really did play a huge role and the most important moment was the G7 meeting in the, Minister of Finance level in Washington. Before the G20 meeting, this was in October, in which they all agree, in an extraordinary crisis they were going to save every financial institution in the world. That was a rather extraordinary decision. Now it’s an interesting question whether it was a right decision. But it certainly changed the world because we'd established too big to fail as a fundamental principle. That's governing.
And one other point I would make which is important, I think one of the things that these sorts of institutions do and it builds on a comment I think Gideon made, it forces government bureaucracies to talk to one another. And it forces politicians to talk to one another and over time it means that there know what they are disagreeing about and that’s often very important to know what you're disagreeing about. Now we will now go on to the fascinating question – how do you govern cyberspace? Ian started on this by saying 'well we're going to solve that problem by disintegrating cyberspace' I think that’s what you suggested. I discovered recently that the US actually has a cyber command now as a branch of its armed forces. So the US considers it a region of the world in some sense, which presumably the US intends to govern or defend. Or I don't know what it's going to do. So how do we govern the digital whatever? Mesosphere.
IB: We tend to attack it before we intend to defend it, let's be clear. I mean in Washington you talked to the folks on cyber and they'll tell you it's like a football match, you're in the first period and it's 86 to 43 and fortunately the US is on the 86 side but you know there's a lot of scoring going on in cyber right now, there's not a lot of defending. These are people who are spending an enormous amount of effort and cash to try and figure this stuff out from scratch. And they're having a hard time with it. But you know, it gets intermediated and there's a lot of American corporations that are doing a lot of meetings in China, Facebook, Google and Twitter are not three of them. And when the Chinese, the Iranians go to Huawei and say 'hey can you develop our internet for us' what do you reckon that’s going to do to the Chinese Iranian relationship over time? How much information they're going to have, how much integration they're going to have. How much less the US will have and what that'll mean for Chinese politics in Iran. And they'll need the energy a lot more, and help for the sanctions a lot more and everything else and proliferation then it would with the United States, these things are going to matter.
I think that there is a very big difference between the information revolution, which empowers people – you're question and the data revolution, which does not. It empowers organisations, in the US historically that has been corporations but as we found out over the last weekend increasingly it’s also the state. And certainly in other governments, in China it’s the State.
Now, when we look at the Arab spring there's this sense that oh my god everyone's got cell phones, they're going to bring down governments and that’s because they're very weak governments right. I mean the Egyptian government, you remember Davos, we were having this discussion a couple of years ago and suddenly in the middle of Davos there's demonstrations and the Egyptian government shuts off their internet. Why? Because they don't have the ability, the strength, the money the background to track dissidents, find out what they're saying and arrest them and the people, they're just not that good at it. The Chinese, the Americans, we're really good at it.
IB: So, I would not make the presumption that the state loses the battle versus the inmates alright, in determining where the power is going to lie as the information versus data revolution fight continues.
DM: I have a slightly different view of a couple of aspects of that, one is that I think every government strong or weak lives in coalition with its own people. Every government, autocratic or democratic lives in coalition with its own people. The Chinese government spend a lot of time thinking and finding out what their own people care about. The discipline of popular consent is a strong discipline. A stronger discipline when it was 10 years ago and it is a discipline in part empowered by the ability of people to communicate with one another. Sometimes in the view of the state, but in ways that they could never have communicated before. So I think that that is important, it’s not about technological revolutions or its not about saying that Mubarak was brought down by Twitter, but recognising that technology is facilitating contact between people and that is helping provide a discipline on governments.
The second thing is I know very very much less about and my instinct is the world is never going to be less open than it is today. That the drive towards a more open society globally is irreversible. And you've obviously studied this and you think there is the power to disintegrate what is currently integrated. I'm sceptical about that I think it will never be less open, I think it will never be harder for the vast bulk of people to find out more than they do now. I think that the gap between what is known privately between states and governments and what is known by people, that gap is going to narrow not expand.
IB: Let me throw something out here and see how you respond to it. So think about Chinese internet and Chinese internet 1.0 was all about the great firewall of China. And we're going to stop people having access to stuff and so all of these things that they're looking for; they're not going to be able to look for it. We're going to blacklist and all of the rest. They quickly realised that wasn't going to work. Chinese internet response 2.0 is let's have extraordinary surveillance and let's also populate these micro blogs and chat rooms, the water is already past the dam, we can't do anything about that but while the water is rushing past the dam let's dig and figure where the rivers going to go. And let’s have a whole bunch of filters and nets that are watching and catching these big fish that are in this water. You know, you've got hundreds and thousands of folks being paid by the Chinese government on micro blogs that are actually moving and steering these conversations in ways that are useful for the Chinese government. But much more vulnerable than that environment, talking about billions of dollars that Xi Jinping may be worth from Bloomberg, let's go on a patriotic Bloomberg rant that's much more useful from our perspective. The question is, I agree with you we don't know where this is going to play, but why are you so convinced that we are never going to be more open. I thought it was interesting that 1984...
DM: Never going to be less.
IB: Less open, that 1984 is selling record levels of copies in the United States right now. People are actually concerned that the state is not going to be wholly on the defensive here.
MW: But surely the point is both could be true, and it seems to me that is the case. Since that, the public at large in a whole host of ways and as the spread of the knowledge continues, all over the world no more than ever before I think that that is correct. The access to knowledge generation, I don't believe in linear things so I would never use the word never. Never is a really long time so we're presumably not talking billions of years. But never for us means the next 50 years or 100 years, well actually for me it means even less than that.
MW: So the, never implies to anything that applies after my death. But it seems to me that people have the capacity to know more than ever before. As a result of the development of these technologies and it does seem to be very difficult to imagine that that will stop. In principle you could imagine that anything that’s ever been published being available on the internet. And the communication between people is extraordinary. But for the very same reason governments can and do know more about us by many many orders of magnitude than ever before. And I haven't even mentioned corporations.
I mean basically it seems to me pretty obvious that anyone who uses Google must realise that Google knows everything about you. Just everything. And that’s just a reality. So it seems to me that both are true and that nearly all great technological innovations it’s a double edged sword.
DM: It's definitely a double edged sword but lets be clear. Government knows about a millionth about your likes and dislikes, preferences...
MW: As Google.
DM: As Tesco knows about what you want to buy, as Google knows about what you're interested in etcetera etcetera etcetera. Government might decide in very restricted circumstances to find out an awful lot about Martin Wolf other than by reading him in the Financial Times and his brilliant columns, but they might decide that they need to find an awful lot about you. But as a generality, government knows an absolute piddling fraction of what we think and like and dislike compared to some of
MW: That's because you've not really started working at this, isn't that the point Ian?
DM: No, that's because they can...
MW: They can in government explain everything.
DM: The government direct.org website is not the router for everything.
GR: What we've discovered over the last weekend, is that at least in the US, if they should decide that Martin Wolf is interesting for all sorts of ways we've never realised.
DM: They can find out about you but...
GR: All that information is sitting there, because Google, they have access to Google.
DM: Should they decide, but...
MW: That's the point, they have access to all this corporate stuff and so they're not separate. I should go on to let someone else ask a question, I think.
IB: Fair enough.
MW: By the way, the one question we didn't answer, which is the core question you asked, but by implication was answered. Who will govern, who will provide digital governance? I think the implication of our discussion is there won't be one entity that provides that.
GR: I've got a brief sentence on that,
GR: I think the US are very ambivalent about that, at least in the securities sphere whether they want that, because they think they're ahead. So what was the single greatest act of cyber sort of sabotage was stuxnet which was probably done by the Americans and Israelis, they disabled briefly the Iranian nuclear program so as long as the Americans have an edge then they don't really have an interest in a big international agreement, but I think that they're beginning to realise that their technological sophistication that gives them an edge also makes them incredibly vulnerable because that society is so much more.
MW: Ok, I'm going to move to three more questions. Gentleman here. You next, please.
Audience 4: So my names Thomas Pattison, I guess that I'm an international citizen of being Australian, British and long long term resident of Mexico so one of the things that affects us all living in England is that one of the really powerful moves in European Union and Great Britain was, the United Kingdom rather was the devolution and raising up of powers and one of the really clever things that happened over the last 20 years has been some powers moving down to very local basis and some moving up, and that is one of the interesting questions and what is the function of a G20 or a G8 or a G-Zero is what powers do we want to get up on that level. I mean global epidemiology is a pretty good thing to have at the World Health Organisation level and few would argue with that. And one of the big questions in tax at the moment is arbitrage and using the global organisations using arbitrage for tax purposes so international companies, called trans national, called multi-national can't take advantage of that. I'd be interested in the views of the panellists on what other powers would you want to see on a global governance level, because we can't answer that question its really hard to design organisations for implementing those powers.
MW: Yes, this was actually the first question I asked but they sort of ducked from it so we'll go back to it. Lady there please.
Audience 5: Christina Scalone and my question is the country that we've probably least talked about is the one we're actually sitting in, the UK. And I wonder if that's just a reflection of British modesty or if it signals the current and future role it will play in global politics? And then if I can cheat and add a quick question in for Ian, if you were advising Obama on foreign policy what would you advise him?
MW: On anything?
Audience 5: Generally, yes. What would be the position?
MW: Ok, and gentleman behind you, yes. Please.
Audience 6: My name is Shari Dwivedi. Taking David's point that economic reasons are a greatest force of integration. If you were talking about the same topic 15 years back probably you would have mentioned some of the countries that you mentioned today, be at India, Africa or probably China also. And today, yes, China has a very important plan. But what, that probably means that you assume that these countries, particularly China and any of these important countries. They are on an irreversible growth path that is next 15 years what could actually change this discussion? And second point actually is some of the companies today, be it Shell or ExxonMobil are almost larger than some of the countries in terms of size, what rules could these organisations play in global governance?
MW: Ok, I'm going to start with asking David about British modesty.
MW: You were a famously modest foreign secretary.
DM: As Attlee said 'a modest man with a lot to be modest about.
MW: No, I thought it was Churchill. Churchill said it of Attlee.
DM: Churchill said it of Attlee, that's right. Someone told me the other day that, it wasn't me but someone who I was with said 'you know, we've got to be humble about this'. And someone we were with said 'just remember what Golda Meir said, you've got to be great before you can be humble'.
DM: British modesty, look I think that it actually relates to the first question. You're question, the future is about dynamic and economic entities and those more often than not are metropolitan areas, not countries. My favourite statistic is the 40 largest metropolitan areas in the world 8-10 million people, 18% of housing 85% of GDP 85% of technological innovation. This is not just an urbanising century it’s a century where urban areas are going to become big economic players. I think they are going to become big political players as well. But I don't buy the death of the nation state argument that the nation state is too big for the small problems and too small for the big problems, because the nation state is where political legitimacy resides more than anywhere else and political legitimacy remains key to getting anything done.
The issue for the UK I think is two fold, will it devolve England in the way it has in Scotland and Northern Ireland actually and to Wales. Because the English question is actually a devolution question. How does Manchester become the Boston of Britain, how does Newcastle become the...you can choose your point. But I think there's also the question of whether the UK disconnects itself from its neighbourhood. Because, and therefore the European question. I think if we opt out of Europe it's a very bleak prospect and this is a world that is connecting, not disconnecting. And the idea that we can connect the world by disconnecting the rest of Europe is foolish really. And the connection is political through European Union, but it's also about immigration, the idea that you can reduce the number of foreign students who come and study here is completely perverse and ridiculous and self-defeating. So I worry about a Britain that starts disconnecting, you can't just have this big, be this big nation if you're not willing to be part of the conversation I would argue and it's a pretty fundamental point.
MW: So you've expressed your admiration for our government.
DM: In what aspect?
MW: None that I could hear. Gideon? On British modesty and possibly also this regulatory question in global governance. What do we need up there and what should we actually be pushing down?
GR: On the modesty question, just briefly it relates to the sort of subterranean argument we were going to have about declinism and the end being, because I think the British because they are very conscious of their own decline, we tend to see it in America. And maybe we over interpret so that, I was with a senior British civil servant the other day, he was saying over the course of his career he had seen the reach of Britain really shrink so we look at America and think well guys this is going to happen to you as well and maybe we're getting slightly ahead of ourselves but I think it does account for a lot of British declinists when they look at the United States.
On the question of what's best done at what level, I thought that you came up with a pretty good list, something like epidemiology would obviously have to be done at a global level, climate change has to be done at a global level but we're not terribly good at it. And that's you know, where we may pay the biggest price for the G-Zero world and its inability to get beyond national preoccupations. And as David says a hell of a lot of it comes down to legitimacy because you've got to somehow be this international political who can come back and say 'I've struck a deal, it's going to cause some short term pain but it's fair and so on and nobodies yet been able to do that. So although one can intellectually identify the areas that need to be dealt with at a global level, actually getting national politicians and politicians that derive their power from the nation state to then meet at a global level and come up with a deal and then getting it to stick is the dilemma.
MW: I am going to get to you Ian, you can come back to the others, there was a specific question which I think that you are perfectly positioned to give and if you had 3 minutes with the president, which I'm sure you do regularly, what do you tell him that he should be doing that he isn't doing. Or the other way round.
IB: I guess I'll say two things, one is Jon Huntsman and I wrote a piece in the New York Times last week about what we wanted him to do with the China summit, he did none of it. One of the things that I would have liked him to do was make Jon Huntsman secretary of State, frankly, I mean this is a guy who knows China better than any foreign policy guy who was relevant, he was by-partisan he was Republican who served as Ambassador to China and who did an incredibly coherent job and he also knows business. Ad if you want to talk about the pivot to Asia, the rise of China, the impact of economic state craft, state capitalism, why wouldn't you want that person? No, let's get someone who does the Middle East and Europe. It doesn't make sense.
We need a new communiqué, we need to spend time, the rise of China and the ability, I think it was Gideon that you raised the point before, how do we deal with China, is it possibly that Obama and Xi Jinping will be able to mitigate the structural challenges. I think the answer is maybe, but they only can do it if they care, and they don't. They are willing to put enough effort in to show that on we want to manage it but this is absolutely not a priority for these leaders and in four years time it's going to get so much worse. I think that we just had the last election that you're going to see in the US for decades where China is not a fundamental politicised issue for one or both of the President's running for the Presidency, the impact that is going to have on the relationship is very negative. So I'd try to fix it now while it's not urgent but of course, like climate, you won't do it until it becomes urgent and that is exactly where we are right now.
The big structural thing that I would argue for, which is related is that the United States does not have institutions to deal with the China challenge effectively. We've got, I think, the best state department today in the world, in terms of international diplomacy and capabilities. It used to be Britain; we put a lot more money into it now. Certainly the most effective CIA and state defence department. The US does not have a department that does economic state craft; we have commerce departments, places you don't want your kids to work right. The US needs to have something like MEJ in Japan; they need to be able to have something that's structures by sector, that works with the private sector, that can do this. They need commerce and USTR and energy, they should not be separate. They need to be together and they should work with the private sector, sectors and they need to coordinate internationally with like minded countries. The US is very far from even considering this as an option. And I think that is the most meaningful thing the US can do structurally.
MW: That’s pretty well socialism isn't it?
IB: Like Japan?
MW: Yes, exactly. If I may going to take the chairman’s prerogative of answering the last question, because I think I'm more qualified.
DM: British modesty knows no bounds.
MW: We didn't say anything about the modesty of Britons. I think the question on whether countries are on an irreversible growth paths is a really interesting and deep one. And there are two points I'll make on it because we could go for a long time. Development economist’s talk about something that we call the middle income trap and what they mean by that is there are many countries moved from being low income to middle income. Which then effectively stop growing and it's a complicated question, there are remarkably few countries that have grown rapidly, by rapidly we mean 6/7% or more for more than 25 years or so. Really remarkably few, so we have to be aware that sustaining growth all the way from being really poor to being a developed country is a rare and remarkable achievement. And in the post war period you can't think of many and of that whole period, starting really poor, I mean you've got the republic of Korea, very small countries like Singapore, Hong Kong, Taiwan also. Very small, it’s really a remarkable thing. This said, so that's point one.
So if I was told that one of the countries that had been growing fast stopped when I started on development economics in the 60s, the growth miracle country, this may seem like the big growth country of the 60s and 70s was Brazil. That was just a phenomenal story and it basically stopped. So I wouldn't be surprised if something stopped. China and although on a less growth rate India have managed very fast growth for a generation and it has changed a lot and in Chinas case there's no story that compares with it. Does this lead you to the conclusion that it will continue or it will not? I mean we really don't know, personally I've been making the argument that it is quite easy to believe one on China that it's going to have quite considerable difficulties in the next 10 years. I don't have time to go through why, one and two, nonetheless on balance I think that it is more likely that it will move towards lower development country status than a generation than not, but it really is incredibly difficult to predict these things and it wouldn't be terribly surprising if quite big difficulties arose. Managing this process from where they are now to where they want to be, as they're very well aware is extremely difficult.
So that's all I want to say, I won't go in to the companies bigger than countries thing because I think that it is a little misleading but there are a whole bunch of global governance issues which are affected by the lobbying power of companies and one of them has already been mentioned and that’s the almost collapse of the global corporate tax regime. And that's a pretty big issue that we don't have time to go into further. I can take I think another round of questions. Gentleman right at the back, yes you.
Audience 7: Thanks, my name's Andy Martin. I just wanted to ask this question of failure of institutions or leadership using the MDGs as a bit of a case study. Because although it's a UN process it kind of needed the G8 because the locus of the problem was the donor agenda.
MW: Sorry what was the...
Audience 7: The Millennium Development Goals and whether the G8 was a good place to do that work because it was mostly about the donor agenda. Now in the post 2013 goal it's just a messier problem. And even if the G8 was effective, it would be the wrong place to do that work. Now the question is, is the skill we need the effectiveness of a temporary governance structure fits the problems that we have rather than mourn the ones that don't work anymore.
MW: That's a very good question. Somebody else. Lady there.
Audience 8: I was just wondering about global governance and the financial sector. Let's say commodity trading that's really socially irresponsible, it raises food prices too much or kind of debt bubbles and I was just wondering is there a way to deal with that or is that something we just have to live with.
MW: And, gentleman here.
Audience 9: Ed Davey, what's the optimal global policy that we need to address. Climate change, Apache – Martin's article recently in the Financial Times, Apache, the global oceans committee and the global needs are currently not addressed by existing leaders.
MW: Let's perhaps do this quickly so we can get one or two or more. David – the Millennium Goals and how we go on from this.
DM: Yeah, I think the geography is changing so fast. I think there's one, a World Bank or an IMF statistic that a third of the world's poor by 2030 will be in fragile states. Which are conflict ridden states so I think the whole question of how you get at the most poor, that's more than 1 under 25 a day? I think that your point that the donors have to be broader than the G8 is a good one, if the G20 wanted something to do, throwing itself behind the Millennium Development Goals would be a good way of going about it. And could be the kind of coalition, I mean it’s over dominated by Europeans, 12 Europeans in the G20 but it's still important.
I think Climate that you asked is very very important that Martin do write about it from the economic side because this is the global catastrophe that’s being neglected and has the greatest consequence, the greatest long term consequence. And I've always been a very strong believer in a global deal, but I can't see it happening now. And so that forces you to think about how you take this Copenhagen process, the failed summit in 2009 produced this quote unquote accord that I think 70 or 80 countries have now signed up to. And I think it's going to have to be on a much more patchwork way rather than just going for the global deal which in the end a handful of countries can end up veto-ing.
An interesting question that I don't know if you covered in your column or not Martin is whether or not there isn't scope for China, which is concerned about climate increasingly concerned about climate and the EU which is the single largest global market, whether there isn't more scope for an EU and China cooperation on climate. Whether there isn't enough of a win win on economics and environment that would be a, it wouldn't be the answer to the whole problem but it would set a quite interesting global benchmark, I think if the EU wanted to do anything with China, climate would be high up my list of candidates.
MW: Yeah, like presumably your view from the beginning and subsequently is climate – forget it.
IB: Well don't forget it, just understand who the winners and losers are going to be and makes bets accordingly because clearly it’s continuing to come.
I want to maybe make something, raise a point around this which is maybe a little more provocative, which is a presumption that at the very least it's always good to have these meetings. At the very least it’s good that we get the G20 together, get the security council together and they have the meetings. I could easily make the argument that continually trying to address climate through global summits is actively pernicious. Because it means if you get a coalition of the willing together and they were to meet as opposed to the G20 and they were to say I know that we can't get China on board for x,y and z reasons. This constellations of countries or actors, doesn't have to be all countries feels like we have to do something or else. And we're more responsive, that is the big reasons you could argue for the creation of the G20 in the beginning was a bad idea. Right, because occasionally it allows too many actors to obligate themselves from responsibility but you know what, not it can't do the meeting. We did Rio +20, we did Cancun, we did Durban, we did Copenhagen, let's do it again and still nothing comes. If something is really broken at the global level, let's stop doing global.
MW: This doesn't work very well if it's a global problem.
MW: I mean this is the worst case, I mean there are lots of cases where there are coalitions of the willing, not a phrase I'm very keen on, given its history, but that’s the way to go. Because certain groups of countries can do it and it is true in the case of climate change, 20 countries cover your universe pretty well but you have to have most of them in and if the US for example let's example won't play ball then it's going to be quite difficult to deal with it.
IB: I would like to say that given that we all agree that nothing meaningful is going to be done with the constellation, I mean David Miliband has spoken more eloquently on this than many of us, certainly me, then given that how badly geo engineering might go if its handled in an un-fettered, un-mitigating way. Why would you not want a coalition of the willing who would be able to put some rules of the road together, of how you do want to handle that, how you don't as it starts and what kind of consequences will be placed on folks that do it outside of that regime. Why wouldn't you want a process, an international process that started investing in some of the technologies that look most promising to handle mitigation or adaptation over the long term? You're right that it's a global problem but since we're not going to resolve it globally does that mean that mean that we should keep doing global meetings that fail. I think that the answers no, I think that we should stop that and it's a mistake and we've already lost 5 years of doing global when we knew it wasn't going to work.
GR: Martin, I think I spotted another question you may be more qualified to answer and that is the regulation of global financial institutions, why don't we invite you to comment.
MW: I'm going to be very...
DM: Your last answer was brilliant Martin so please do go on.
MW: You know I'm just going to say something very simple; I have very minimal objectives for global financial regulation which is that we could create a set of agreements that reduce the chances that the financial sector will blow up the world every 10 years significantly. I accept the other objectives, very are very important and they seem to me sort of the minimum objectives and I would say that at the moment I'm not very encouraged. For reasons that are probably clear from things that I and others have written.
GR: Remind us.
MW: The essential reason is that the financial sector has constructed a very very nice system which is based on the proposition that there is no equity in it. Because if there is no equity in it, if anything goes badly wrong the tax payer is going to pick it up. So they can't understand why they should have any equity in it. And what has happened as a result of this incredibly long, tortuous financial regulation discussion is that we've raised the required equity of the financial system, the banks and core banking institutions to approximately 2 to 3% of the balance sheet to over 3%. I'm not joking, I am not joking that's what's happened so I'm afraid that even this minimum requirement has not been achieved. And I'm not even beginning to talk about the sort of regulation that would really shift in any profound way the nature of finance. I'm not going to go into the specific role of the financial and commodity prices and so on. So I think that it's a very depressing story alas because of very well organised interests.
I think in practice I really should stop now. I apologise for all those who had wonderful questions that we didn't get to. I'm not going to summarise this because I think it's impossible but I think that it's been very fascinating and perhaps for at least some of us a little bit depressing. We don't seem to care very much what sort of G there is because we seem to agree; really do seem to agree that none of them is going to do much good. Now the exception to that was when things are really bad, and this reminds me I just had the, I've just done an interview with the outgoing governor of the Bank of England, which will be published of course in the Financial Times on Saturday and he used the phrase, so I am going to attribute it to him and he may have used it before, of the only time he ever saw the G7 do anything useful which was in October 2008 and he describes this as the 'audacity of pessimism'.
MW: Which, I think is brilliant. In other words, if people are frightened enough and what they are frightened of is imminent enough they will do something. The problem with the climate thing is it's so remote that nobody is prepared to do something. So of course the opposite of the audacity of pessimism is the complacency of optimism. And at least for us, for the powerful people, the weight of the world things are ok so why should we do anything much? That's very much where we are. That's the first big point, we tend to act when things are very bad and the second point I would make and I would underline it very strongly is we haven't discussed this very much is an immense amount of governance goes on out there which we don't think about in areas of economics, intellectual property, health and so forth. Some good and some less good - peace keeping I think that's very important and the institutions that can provide that can function even if higher level diplomacy is an extraordinary mess.
And the last point I would stress from this discussion is you will have noticed that I am partly responsible, only partly that there was really no discussion of the role that Europe plays in all this and nobody brought it up. It was very much focussed on the two greatest power and their relationship and clearly what emerged from this that in many respects if you are talking about higher level global governance, the relationship between these two powers – the US and China are going to shape our world. It's very much underlined by Ian and to my mind completely credibly, the incredibly difficult and significant relationship and we have to hope that they manage it without blowing everything up in essence. The very fact that we hope this is important and let us point out that this is the very last point, that I don't want to be very optimistic about this but we are extraordinary dependent on one another, the interdependence point is profound. And at the leader level in China and the US they are very very well aware of that and that's perhaps a good reason for optimism so that will be my last conclusion.
I think the panel has given us a very interesting, provocative, if somewhat bleak view of the world, I suggest somewhat realistic. And I hope that you will thank them in the usual way.