A facilitator rather than an executor – Opinion

Statecraft allows countries to resolve their disputes not through military force, but through negotiation in which the conflicting parties become part of the solution through consensus.

In a transforming world order, the roles of major countries are evolving to reflect the times. Being a facilitator rather than an implementer highlights the difference between the role of a major power in a unipolar world and that in a developing multinodal configuration.

For much of the last five centuries, the global configuration has been anchored in economic relations between major nations and those on the periphery of the global economic system. With each successive wave of economic expansion, we have also seen new centers emerge as old ones give way. From the time when the city-state economies of Venice and Florence fueled European colonial expansion through periods of Spanish, Dutch, English and more recently US-led globalization, the major economic powers of the era were also military powers, allowing market access and the ability to extract resources from subordinate peoples and places.

The world wars of the first half of the 20th century saw the emergence of two transnational institutions aimed at creating a framework through which the world order could be governed, with in theory less risk of war than was the case in previous eras . The League of Nations was established by the victors of World War I on January 10, 1920, but failed in its apparent mission to prevent further wars and further suffering. The Second World War proved its ineffectiveness. The League was officially dissolved on April 19, 1946, and its powers and functions transferred to the fledgling United Nations.

Alongside the UN, for the non-Soviet bloc, global economic and financial coordination was orchestrated by a myriad of intertwined institutions associated with what became known as the Bretton Woods system, formalized in 1944, with initially 44 participating nations. It established an international financial order, with countries guaranteeing the convertibility of their currencies into US dollars at a fixed rate, with the dollar convertible into gold bars. To mitigate the risk of countries engaging in competitive devaluations, the International Monetary Fund was created to monitor exchange rates and act as a lender of last resort to countries with balance of payments deficits. At the same time, the International Bank for Reconstruction and Development was created.

Convertibility of the US dollar to gold ended in August 1971, when the United States withdrew from gold, but the IMF and IBRD – now known as the World Bank – continue to play a role central in the global economic landscape. However, while these two institutions were ostensibly responsible for enabling global economic development and addressing systemic imbalances, the realities of uneven development and exchange rates continued to dominate the global economic system after World War II.

The IMF’s role as lender of last resort has contributed to the persistent indebtedness of developing countries, with debts denominated in US dollars. IMF loans have never delivered on their promises to reduce poverty. For example, a recent study of loans to 81 developing countries from 1986 to 2016 by American researchers Glen Biglaiser and Ronald J. McGauvran concluded that “IMF loan agreements containing structural reforms contribute to a greater number of people find themselves trapped in the cycle of poverty…”

Rather than allowing countries to develop, the IMF imposed conditions that stunted economic development, reinforcing the unequal trade that has been at the heart of the global economic system for centuries. Indeed, as Gaston Nievas and Alice Sodano of the World Inequality Lab have pointed out, since the expansion of financial integration and capital liberalization in the 1990s, “the richest 20 percent of countries capture more than 90 percent of total foreign wealth” and these inequalities pose “constraints on the poorest countries”. For them, the excess return generated by foreign capital is a privilege for the developed world, but for example, for the “BRICS countries, the negative return differential constitutes an annual burden of between 2 and 3% of their GDP”.

Global inequality has never gone away, but it has emerged with renewed enthusiasm since the breakup of the Soviet Union in 1991 and the ideological and institutional domination of world affairs by what became known as the “Consensus of Washington.” The economic dominance of the United States and the West has been reinforced by intensifying American military interventions, as Monica Duffy Toft and Sidita Kushi demonstrated in their 2023 book Dying by the Sword: The Militarization of US Foreign Policy, in what observers have described as the period of American unipolarity.

But the unipolar moment is now coming to an end. Global economic dynamics, notably due to the rise of China over the past four decades, have transformed the configuration of a situation in which the United States and the West served as a fulcrum for expropriation , imposed by the force of the American army and the omnipotence of the American dollar. , to an emerging multi-nodal configuration.

Declining relative economic strength, coupled with diluted military preponderance, has undermined the ability of the United States and its Western allies to act as global actors – either through military interventions or through monetized sanctions and various prohibitions. The failure of sanctions and the general militarization of the dollar system in recent years clearly indicate the changes that are brewing.

In this context, the challenge for all nations – and especially the largest and most influential – is to define their conduct by drawing on the lessons of the last century. Primacy and unilateral authority no longer exist. The ability of a small number of countries to expropriate the wealth of others is diminishing, as developing countries now have choices in markets and technologies. No nation can project itself as a global player on its own, through military capabilities. And neither should it be.

As enablers, major nations must activate the tools of multi-nodal governance rather than military-backed law enforcement. Statecraft aims to enable countries to find their own development paths through collaboration, resolves disputes not through military force, but by enabling negotiations in which conflicting parties are part of the solution via consensus, and commits to the symbiotic relationship between security and prosperity.

The author is an Assistant Professor at the Queensland University of Technology and a Senior Research Fellow at the Taihe Institute. The author contributed this article to China Watch, a think tank powered by China Daily.

These views do not necessarily reflect those of China Daily.

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