07 May, 2020
10 Min Read
The coronavirus pandemic have reminded us of the value of multilateralism and the necessity to preserve it. To reduce the further spread of the virus, to develop effective medical treatments, and to curtail the worst effects of the inevitable recession that is already in the offing, cooperation among nations will be necessary.
But there is a problem: multilateralism is possibly at its weakest today, when the need for it is more dire than ever before.
With the United States facing multiple internal challenges including the prospects of a deeply divisive Presidential election in November and at a time when China is facing a global crises of credibility, New Delhi (together with like-minded partners even beyond the usual suspects) could assume leadership in strengthening constructive transnational cooperation.
Deepened by the pandemic
The paralysis of all three functions of the World Trade Organization (WTO) — negotiation, dispute settlement, and transparency — was one sign of that deep-rooted malaise; the severely dented credibility of the World Health Organization (WHO) is just another more recent indicator.
The pandemic has heightened the crisis of multilateralism, not created it.
And amidst the many cracks in the system, it has deepened one especially dangerous fault-line: multilateralism, in its current form, is incapable of dealing with misuse by “systemic rivals”.
The underpinning assumption of the post-war multilateral system was that peace and prosperity went hand in hand.
Countries with fundamentally different domestic systems of governance did not form a part of this multilateral order, as was the case with the Soviet bloc in the Cold War years. None of our multilateral institutions was built for a world where the ties of interdependence — which were supposed to enhance the well-being of all — could themselves be “weaponized” for nationalistic gain, at the expense of other players.
The misuse of existing rules by several countries, especially by China (e.g. via forced technology requirements, intellectual property rights violations, and subsidies), to gain an unfair advantage in trade relations was already attracting critique in the last years. But the pandemic has provided us with some even more alarming illustrations of how damaging the weaponisation of global supply chains can be.
As death tolls rose (in some cases, to catastrophic proportions) many countries responded with export restrictions on critical medical supplies.
Recognising the shortages that countries were facing — masks, personal protective equipment, ventilators and more — to deal with COVID-19, China offered to sell these products to countries in need.
For instance, when the European Union (EU) put up export restrictions, China stepped in at Serbia’s request. But China’s coronavirus diplomacy did not stop there. When India complained that test kits imported from China were faulty, China slammed it for “irresponsible” behaviour.
When Australia indicated that it would conduct an independent investigation of China’s early handling of the epidemic, China threatened it with economic consequences.
Add to this the dangers of using faulty equipment on critical patients, plus the risks that several actors, including the EU and India, see of predatory takeovers of their companies by China.
The pandemic is teaching countries, through bitter experience, that weaponised interdependence is not just a theory but a practice that is rapidly evolving. And it can have life and death consequences.
To argue for a multilateral rules-based system will never suffice on its own; one must always address the issue of the goals and values that underpin the rules.
The remedies are obvious.
1.The need for reassurance and policies that reflect a renewed commitment to the raison d’étre of multilateralism. A “retreating” United States must, of course, demonstrate in word and deed that autarchy is not the way forward (of this global crises) and that it remains committed to strengthening global supply chains which are based on the promise of ensuring global stability and the attendant promise of peace and prosperity.
2.Irrespective of the above, there is an urgent need for some strategic decoupling, handled smartly in cooperation with other like-minded countries. And it will undoubtedly cause considerable disruption to existing global value chains. This in turn, will result in a shrinking of the global economic pie. We will be less prosperous. But we will also be more secure.
What is Decoupling?
Markets and economies that once moved together can also be decoupled. The financial crisis of 2008 that started in the US economy eventually spread to most markets in the world, leading to a global recession. Since the markets are "coupled" with the US economic growth, any market that moves opposite to the global trajectory is known as a decoupled market or economy.
In the aftermath of the recession, the concept that the world's emerging markets no longer need to depend on U.S. demand to drive economic growth is an example of economic decoupling. Whereas emerging markets at one point relied on the U.S. economy, many analysts now argue that some emerging markets, such as China, India, Russia, and Brazil, have become sizable markets on their own for goods and services.
3. Flowing from the above, a multilateralism that recognises the need for decoupling will necessitate closer cooperation with some and distancing from others.
Membership of such renewed multilateral institutions would not be universal; rather, one would limit deep integration to countries with which one shares first-order values — such as pluralism, democracy, liberalism, animal welfare rights, and more.
A role for India
The current crisis in multilateralism could be a remarkable opportunity for India, a country whose pluralism, democracy, and liberalism have often been underestimated by the West.
As some constituencies in the West seek a gradual decoupling from China, they would be well served to look toward India.
To make use of the opportunities, for itself and for the provision of certain global public goods, India’s cooperation with like-minded actors will be key.
Here, India could work closely with the Alliance for Multilateralism (an initiative launched by Germany and France) to shape both the alliance itself and the reform agenda at large. Working together with a group of countries from the developed and developing countries could further amplify India’s voice.
But beyond these immediate gains could be a greater role for India. Not since Chernobyl has global public opinion lost as much faith in the competence and integrity of a great power as it has in China because of COVID-19 and the apparent malfeasance and the opaqueness with which it has dealt with the crises.
While China may recover faster than most economically, and its military might remains intact, its image as a reliable partner has suffered a huge dent.
Neither aid diplomacy nor the unleashing of Chinese soft power can easily recover the trust deficit that exists today between China and much of the rest of the world.
Instead, India could lead a coalition to bridge this deficit of trust through a regime of incentives and sanctions .
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