COMMENT Can Europe prevent Asia's
rise? By Barry Desker
Attending conferences in Europe and the
United States over the past three years, I have
been struck by the increasing Western
preoccupation with Asia's rise, the growing
influence of the rising powers of Asia, and the
challenge they pose to Western values and norms
governing international institutions. There is
resistance to the idea that the rise of these
powers will lead to changes in the decision-making
practices of institutions such as the United
Nations Security Council, the International
Monetary Fund, the World Bank, and the World Trade
Organization.
Although it is recognized
that China, for example, should have a greater
stake in international decision-making, the
approach has
been to ask whether China
will abide by the rules set by the US and Europe
after World War II. Europeans are particularly
concerned about the decline of their influence and
the norms and values that are espoused by them in
global diplomacy as Asian powers seek a larger
role in global affairs and assert their values.
Rearguard action Europe has
therefore been mounting a rearguard action to
delay the redistribution of power in major
international organizations. The European Union
(EU) is no doubt gratified that it has won the
Nobel Peace Prize this year in recognition of its
success in building a unified and peaceful
continent over the past 60 years. But the award
commemorates Europe's past achievements and is not
a guide to Europe's influence over future global
trends.
Given the relative decline of
Europe in the global power balance, the issue
which should be raised is whether there should
just be a single seat for the EU in the Security
Council, now that the EU has a common security and
foreign policy. However, the United Kingdom and
France value their Security Council membership and
exclusive veto rights and are reluctant to support
German aspirations for a permanent seat in the
Council. The desire to protect existing privileges
is not unique to the Europeans. China, which is a
permanent member of the Security Council, supports
the status quo and has not been in favor of
permanent seats for Japan and India - even without
a veto.
On the other hand, at the IMF,
China seeks an expanded voting share commensurate
with its emergence as the second-largest global
economy. Germany, the UK, and France each have
larger voting shares than China, as do the
Netherlands and Belgium combined. With a voting
share (or quota) of 16.75%, the US retains an
effective veto over important IMF decisions, which
require 85% support. With its 32% combined voting
share, the EU has a similar veto.
Need
for rebalancing In the years ahead, Asian
states will push for a change to the current
practice where a European is elected as the
managing director of the IMF while an American is
elected as president of the World Bank. But the
next battle at the IMF is likely to be a debate
over reallocation of seats on the IMF executive
board, currently dominated by Europe with nine
seats out of 24. The slow process of adjustment
reflects the unwillingness of states long dominant
in global affairs to accept the need for
rebalancing in major institutions of global
governance as there is a shift in global power
away from Europe to Asia.
While lip
service is paid to the principle of representation
the rules are bent when they are deemed to
undermine existing influence. Smaller states with
lower quotas like the Benelux and Nordic countries
are likely to resist the loss of executive board
membership and with it the right to shape the
policies of the IMF.
Although there has
been a shift in the global balance of economic
power the IMF and other global institutions do not
reflect this change. The US is now the world's
largest debtor, the eurozone is mired in financial
and economic crises while China holds the largest
foreign reserves. These developments should have
led to the restructuring of institutions like the
IMF and the World Bank but progress has been slow.
Asia and Latin America feel that the IMF,
which played the role of global financial
policeman during crises affecting their regions,
will take a soft approach in dealing with the risk
of defaults by Greece, Portugal, and Spain. The
question arises whether a European can lead the
IMF when it is European policy errors that have
led to the current crisis, just as Asian and Latin
American policy errors led to the Asian and Latin
American financial crises more than a decade ago.
It is inconceivable that we will see a
reprise in Europe of the January 1998 scene when
President Suharto of Indonesia signed the
memorandum of agreement between Indonesia and the
IMF accepting the IMF's structural adjustments
package, with the IMF Managing Director Michel
Camdessus peering down at him with folded arms!
Future Asian image The trend
toward European over-representation and protection
of its existing position is seen even in the WTO.
Since its inception in 1994, two Europeans have
headed it, one Asian, and no American. Because
trade policy is handled by the European
Commission, it has effectively pushed broader
European interests. Similarly, the launch of a new
round of WTO negotiations in the 1990s was delayed
by EU inclusion of 'new' issues such as
investment, competition policy, the environment,
and core labor standards, for which there was no
appetite amongst most members, especially Asia's
rising powers.
The EU placed this and
other 'new' issues on the WTO negotiating agenda
to deflect attention away from agriculture, which
was originally intended to be the centerpiece of
the next round of trade negotiations. The delay
was critical as it became impossible to conclude
binding agreements. The failure to conclude the
Doha Round has given rise in the last decade to
negotiations for a spate of free trade agreements
(FTAs).
While there is at present a
stronger commitment to global institutions in
Europe compared to Asia, as these institutions
slowly change to accommodate the emergence of new
powers, European voters are likely to turn away
from them. Europe will not be able to slow Asia's
rise. When Asian states become more influential,
these institutions will be molded in an Asian
image, just as the past century had seen a strong
European and American influence when international
rules were created.
As a trading nation
positioned in the center of the Asia-Pacific, it
is in Singapore's interest to have an
international trading and financial system that is
equitable and open and which reflects the
contemporary balance in the globalized world.
Barry Desker
(d-rsis@ntu.edu.sg) is Dean of the S.
Rajaratnam School of International Studies (RSIS),
Nanyang Technological University. A version of
this article appeared in The Straits Times on
October 20, 2012. The views expressed are
solely those of the author.
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