Europe and global governance
in a world of multiple transformations.
(Only the version actually delivered is authentic)
I. Complexity and interconnectivity.
We are living today in the midst of a process of rapid and multiple transformations in the world, which are affecting the structure of the international system. Not long ago Internet users were few. Today they reached 1.2 billion worldwide; innovation has transformed the financial sector with new, often dangerous and not transparent forms of investments such as hedge funds, private equities, sovereign wealth funds and many different securitization tools. Many questions surround this process: international trade and finance as well as the highs and lows in oil and commodities’ prices have caused a redistribution of wealth at the global level. While it is difficult among these multiple ongoing transformations to detect a clear sense of direction, it seems to me that two trends are today particularly relevant.
The first is the multi-directional complexity brought about by the diffusion of power in the international system. The concept of multi-polarity does not reflect the scale of such complexity. The latter means the existence of a limited number of powerful states or distinct poles in the international system. What we are witnessing today, however, is much more than multi-polarity. The emergence of the ‘BRICs’ is only the tip of the iceberg. Numerous other new powers have appeared or consolidated on the world scene, including regional and sub-regional organizations and aggregates in Asia, Africa, Latin America, the Middle East and the Gulf. The Sovereign Wealth Funds that now total some $3 trillion will amount to $12 trillion in 2015. Richard Haass spoke of a ‘non-polar world’, meaning by that that the international system is today characterized by “numerous centers with meaningful power”. There is no doubt that the United States remains and will remain, for a while, the predominant power. And Western influence is far from declining as the doomsayers predict. After all, it was not a coincidence that the recent G20 Summit - a Euro-American initiative - took place in Washington.
However, alongside the main poles of power, there now exists a “second world” – namely a large group of countries and emerging markets with great potential, whose behavior can affect the global balance of power. True, economic power in relative terms is shifting away from the West and the current financial crisis has probably further accelerated this process. But it is also true that power is not going only in one direction: it is actually spreading everywhere. Nor are we witnessing a transition of power from one state or superpower to another, similar to the one we saw in the early XXth century from Great Britain to the United States.
The second trend I am talking about is interconnectivity. Globalization is making the destinies of all countries increasingly interdependent. This is, in fact, what we are seeing with the current financial crisis, which started in the United States, but rapidly spilled over to the rest of the world: humanity today shares “a common fate on a crowded planet” as Jeffrey Sachs recently stated.
Furthermore, security, foreign policy and economic wealth are increasingly linked. The financial crisis affects the real economy and this in turn affects in the short-medium term our capacity to sustain ambitious policies on climate change; at the same time, climate change and energy security issues are closely linked and may present not only challenges but also opportunities; the economic crisis is on one hand impacting on the developing world and might weaken the stability of the least developed countries, bringing forth new conflicts and even favoring terrorist extremist activities; at the same time, probably, the new emerging economies may contribute to reduce the global impact of the financial crisis and this may lead those countries to claim more power in the political arena.
Exactly because of such interconnectivity we should not forget Africa.
Let me dwell on this point which I believe is essential one while debating the fall-out of the financial crisis and the possible remedies to it, we should not forget what is and should remain a central concern in our global agenda, i.e. Africa.
African poorer countries have so far been left out of the debate on the financial crisis. With the exception of South -Africa they are not represented in the G20. We have not sufficiently discussed and assessed how the economic and financial crisis will impact on our aid and development policies toward Africa.
My message, therefore, is two-fold:
a) we should not erect new walls between the developed countries and the emerging economies, on the one side; and the developing world and Africa, on the other. For that reason Italy, under its G8 Presidency, is planning to make and extra effort to closely engage African countries: in particular, we will keep Africa high on our G8 agenda and organize an outreach initiative with African countries and in this respect I would not exclude to invite the African Union in an outreach exercise;
b) we need to keep and reiterate our engagement and commitment to help African countries to find an exit from the negative spiral of underdevelopment, political and ethnic instability( from Zimbabwe, to Congo and Somalia). We have a special responsibility to help the ‘bottom billion’, i.e. that billion of people - mostly in Africa- who have been left out of the global economy.
II. ‘Axis of responsibility’ and ‘comprehensive’ governance.
What are the implications of these two trends - multi-directional complexity and interconnectivity?
The main consequence is that international stability and security have become much more difficult to achieve. Global politics is always a mixture of “anarchy” and “society”. Our main goal today is to make sure that the balance does not tilt in favor of “anarchy”. We should first of all avoid the risk that national governments seek exit strategies from the current economic downturn and global uncertainties via protectionism, via restrictions, trade controls and similar policies that would not only be illusory but also detrimental to world stability. This should be our first priority: with all the complexities that we face, we need to keep our global society ‘open’, ‘rule-based’ and ‘multilateral’.
Today’s multiple challenges need a global and multilateral response. An effective response can only come through a better functioning system of global governance. After all, our current difficulties come down to a problem of ‘governance deficit’: we have created a global world but we have failed to adopt the instruments needed to make it functioning properly.
How can we fix today’s governance deficit? We need to follow in my view two main guiding principles.
First, we need to integrate the emerging powers and relevant stakeholders - including non-state actors - into a new system of governance. At the same time, all emerging powers and all new actors should be ready to share the costs and responsibilities for the functioning of a ‘rule-based’ international system. Our main goal should be to create the broadest “axis of responsibility” which should inject stability and predictability into the international system.
Second, we need a ‘comprehensive’ approach to global governance and to the reform of global institutions. Interconnectivity does not allow us to tackle the different challenges in isolation, nor can we succumb to the ‘tyranny of the urgent’. We constantly need to keep a broader view of the global agenda. A comprehensive approach requires that we uphold the global institutions by providing them with the best means and tools - including decision-making mechanisms - as well as the best expertise and ‘human capital’ that are needed to address global problems. “Widening and deepening” of global institutions should go hand in hand.
III. Europe as a model and global actor
Let me address another point. What kind of contribution can Europe make to the construction of a more effective system of global governance? Italy believes that Europe today has more than ever a crucial role to play. This is true in many ways. Let me point out at least four good reasons.
First, as a model of multilateralism, the European Union provides an example for tackling today’s global challenges. It requires not only coordination and close cooperation among national governments but also the acknowledgement of common interests and of a common future. We are better off if we go in the same direction, even better if we play as a team. The current financial crisis has been an important test for Europe. It has demonstrated the ability of the European Governments – the euro-zone and the UK as well- to act together effectively and in a coordinated manner. Europe has developed a ‘software’ that can be applied or adapted elsewhere to tackle global or regional problems.
Second good reason, Europe - as an expanded area of security and prosperity comprising more than 500 million people - provides per se a great contribution to global stability. Let’s not forget that, until sixty years ago, Europe’s conflicts were the main source of the world’s instability. Both integration and enlargement have made Europe today no more the problem but, on the contrary, part of the ‘solution‘, though these processes have not yet been completed. The enlargement should continue as soon as possible with the long overdue inclusion of the Western Balkans into the EU, while keeping the door open to Turkey and Ukraine as well. At the same time, the current financial crisis has made us appreciate the often underestimated benefits of the Euro, which has rapidly emerged as one of the leading world currencies and has protected the continent from the vagaries of monetary instabilities and competitive devaluations. It is not by chance that some European partners outside the euro-zone are having second thoughts about the euro. It is probably too early to pass judgments over this very sensitive issue, because retaining at national level the control of interest rates may bring now some advantages. This is a serious tactical consideration but in my view, in the long run, strategically, the growing strength of a common European currency is probably gaining momentum. On the other hand, it has become evident that a better coordination of macro-economic policies is necessary to sustain the Euro. At the same time, the crisis has exposed the existing flaws in the EU regulatory system and underscored the need for tighter rules. Incidentally, it has also confirmed the need for the Lisbon Treaty to come into force: to face this type of prolonged crises we need at least a strong and stable EU Presidency.
Third, Europe contributes more than others to global governance as a norm-setter. Through its multilateral convergence of interests and values, the EU has emerged as the most powerful normative agent in all areas of governance, from trade and competition to environment, human rights and rule of law. We are not imposing anything to the outside world, we are basically offering best practices, participatory processes, a widespread spirit of partnership and, above all, sensible standards to be replicated or adapted elsewhere.
Fourth, and most important reason, Europe is contributing and can further contribute to an effective global governance by taking on an ever increasing share of global responsibilities. A global Europe is becoming also a pre-condition for a renewed transatlantic relationship, which - I’m convinced - remains absolutely crucial for the construction of a fair and stable global order. Europeans have very strong expectations about the new US administration. These expectations revolve around the hope that the US can strengthen its multilateral approach. But the best way to help America to reengage multilaterally is for Europe to become itself a committed and pro-active global political actor.
IV. Europe as a global actor. The key challenges.
As a global actor and active contributor to global governance, Europe faces a number of challenges, of different nature. Some are horizontal: the reform of the financial architecture, non-proliferation, climate change, fight against terrorism. Some other have a specific geographical focus: the stabilization of the ‘arc of instability’ from the Middle East to Afghanistan, relations with Russia Federation and, finally, a new relationship with China.
Let me share some thoughts on each of these challenges.
a) First Europe should take the lead in the debate and action over the reform of the so-called Bretton Woods institutions. That means to improve the surveillance and stabilizing powers of the IMF. It also requires the improvement of the capacity of the World Bank to provide ‘global public goods’ and to channel resources to help the so-called “bottom billion” in Africa and elsewhere, who have been left out of the global economy. We know that the emerging economies feel themselves under-represented within these institutions. And so while asking for more representation, these countries will have however to commit themselves to the principles of multilateralism and shared responsibility. Therefore, it will be necessary to accompany the reform of the Bretton Woods institutions with a shared understanding, between the old and new global powers, about the prerequisites and the inherent logic of an effective and fair multilateral governance. Europe should be at the forefront of this process. Needless to say, to keep their influence within the reformed institutions of global economic governance, European countries should learn to speak as much as possible with only one voice. This will not be the expression of a European Super Power, coercing national identities, but will be, on the contrary, the pragmatic convergence of common interests and responsibilities.
b) On climate change, Europe has been a key ‘norm-setter’ and I would say a player. We should remain ambitious as far as our long-term vision and objectives are concerned, especially if the forthcoming US Administration should confirm a shift of policy on climate change. At the same time we should assess what is realistically achievable under the present circumstances. On one hand, the economic crisis will seriously affect the affordability and the real impact of some measures envisaged for the next twelve years at European level. On the other hand, the transition to a low-carbon economy will disclose very important new opportunities of investment and may act as a catalyst for innovation and economic growth. These two sets of factors will have to be assessed very carefully in the run up to the 2009 Copenhagen summit. I do not think that Europe should be the only one to make sacrifices in the area of curbing greenhouse gases emissions. But, if our “leading by example” can contribute to enhance our market position in one of the most promising business of the future, it would certainly be wise to bet on it now, before others. We should of course negotiate a fair and inclusive deal with other key stakeholders, as well as, with emerging economies, since global issues require global burden sharing arrangements. The critical element is however to find the way to accelerate a widespread acknowledgment of the common interest of all - developed, emerging and developing countries – to tackle now climate change. We are confident that the French EU Presidency will pave the way to a satisfactory outcome of the 2020 package, at the next European Council. We will be ready, immediately afterwards, as incoming G8 Presidency, to keep the momentum in the dialogue with Washington and the other partners, including those involved in the outreach exercises.
c) Thirdly we need a more robust approach to non-proliferation, in order to strengthen the multilateral regime. We cannot continue to deal with the challenge of proliferation on a case-by-case basis.
The NPT Conference Review (2010) could provide an opportunity to make some significant breakthrough to this regard. In the run up to the Conference the European Union should play an active role by updating the 2003 EU strategy and the 2005 EU common position. We intend to give crucial importance to non-proliferation in its G8 agenda next year. I am confident that we will be able to count on the strong commitment of the US on this issue, starting from the ratification of the CTBT. We should not forget the sort of linkage art. VI of the NPT Treaty established between non-proliferation and disarmament. Any effort to strengthen the non-proliferation regime would therefore greatly benefit from the existing nuclear powers’ commitment to reduce and gradually dismantle their nuclear arsenals.
Let me now turn to Europe’s main geographic challenges.
a) The main threats to international stability over the last twenty years have come from the area stretching from the Middle East to the Gulf up to Afghanistan. Europe needs to continue to devote a great deal of its foreign policy energies to this area. I believe we should keep our focus on the Middle East Peace Process, which remains the main source of resentment in the region. We should encourage the new US administration to get engaged on the MEPP from the very start of its mandate; we should also be ready - as Europeans - to offer security assistance in the context of a successful settlement and continue to sustain the economy and institution-building of the future Palestinian state. At the same time, we should further deepen EU relations with Israel. Moreover we will have to encourage key regional actors, such as Egypt, Turkey and Saudi Arabia, to continue to actively support dialogue and reconciliation and to lay down the basis of a sustainable comprehensive peace, ‘owned’ by the regional actors. In this framework, it will be important to make every effort to persuade Syria to play a more constructive role in the area, shifting from being part of the problem to being part of the solution. Some encouraging signals need an adequate follow up.
On Iran, I am confident that good news may surface in the near future if only Teheran starts to behave more responsibly on the nuclear file. We cannot expect the new US Administration to adopt a different approach until some real goodwill is detected. Meanwhile, we have no alternative other than to stick to the present policy of carrots and sticks. Italy will continue to play its part in such balanced policy and we expect other partners to fully appreciate its constructive contribution.
On Afghanistan, we also should promote as Europeans more “comprehensive” approach to win the peace: failure is not an option. The EU and NATO should work closely together to develop further a comprehensive strategy that may effectively combine all available tools (diplomatic, economic and military). The European Union also needs to develop a more effective policy on Pakistan as well as a regional strategy to better engage the neighboring countries in our common efforts to stabilize Afghanistan. As G8 Presidency, Italy will launch a ministerial initiative of outreach in order to develop the ‘regional dimension’ of a international strategy on Afghanistan.
b) Relations with Russia will be a critical test of our capacity to consolidate what I have called the ‘axis of responsibility’. We need a responsible Russia to address a variety of regional and global challenges, ranging from Iran, to North Korea, non proliferation and Afghanistan. Europe is a crucial link in such attempts to turn Russia into a ‘responsible stakeholder’ globally. Why and how? Russia depends economically and technologically on Europe no less than we depend on Russia energetically. We are naturally interdependent. We should therefore consolidate this interdependence through a “new energy partnership” which should be based on a principle of reciprocity and by supporting Russia’s accession to global economic institutions such as the WTO. A Russia interconnected with Europe and with the global economy will be a more responsible actor and a more cooperative partner in addressing international challenges.
Tensions with Moscow over the common neighborhood interfere with our project of making Russia a global responsible actor. For that reason Europe should be pro-active in trying to defuse these tensions, obviously without renouncing to our democratic principles or weakening our Euro-Atlantic institutions. I believe that we are probably at the beginning of a new phase in the interaction among the EU, the US and Russia. We should aim at restoring the proper conditions to overcome reciprocal reservations and to help build lasting mutual trust. It is possible and certainly in the common interest to restore again a “win-win” situation, like in 2002 with the NATO-Russia Summit in Rome. The security gains thus achieved will positively reverberate on everybody in Europe and in the common neighborhood.
c) Final point I would like to briefly touch upon is China. For too long we have tended to see China mostly as a market. But with China becoming a global power, the European Union should enhance its political and strategic relationship with Beijing with the goal of helping it to develop as responsible global stakeholder, committed to multilateralism. We have here an important role to play. At the same time, we should also actively promote a transatlantic strategic dialogue about China on a broader array of issues ranging from trade and currency to non proliferation, climate change and energy security - in order to avoid the risk of having Europe marginalized by a new ‘trans-Pacific axis’ which seems to be emerging now.
V. Conclusions. Italy and the G8
So far, I have focused my remarks on what Europe should do in the near future. Let me conclude therefore by saying a few words on Italy’s upcoming G8 Presidency, since it is our sincere hope that these two paths will progress in parallel and will be mutually reinforcing.
All the key points I have just listed in my presentation - the new complexity of the international system and the issues’ interconnectivity, the need to create a broader ‘axis of responsibility’ to sustain an open and multilateral order and the key role of Europe to this regard - will somehow come together in the agenda of our G8 Presidency.
The G8 agenda cannot but reflect the complexity of the challenges facing us today. The financial crisis and the reform of the global economic governance will undoubtedly be our number one priority: at the same time, we cannot ignore that we have a broader agenda out there that cannot wait, from non proliferation to Afghanistan, the stabilization of regional crisis in the world in particular Africa. Our approach to global governance has to remain ‘comprehensive’ and the G8 is a key forum to pursue it. Other formats may emerge, starting from the G20. Italy and UK, as incumbent Presidencies of these two fora, will closely cooperate in 2009 to foster common objectives and avoid undue duplications. We are committed to use the G8 as a platform to engage evermore closely the emerging powers in order to build up a new and broader ‘axis of responsibility’. The more the G8 reaches out to new non-Western powers the more it turns into a key opportunity also for Europe to show its identity as a global player. It is an opportunity we should seize for a better world, open and based on common rules.