Globalization & Governance 2018

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How McKinsey Has Helped Raise the Stature of Authoritarian Governments
(NYT) This year’s McKinsey & Company retreat in China was one to remember.
About four miles from where the McKinsey consultants discussed their work, which includes advising some of China’s most important state-owned companies, a sprawling internment camp had sprung up to hold thousands of ethnic Uighurs — part of a vast archipelago of indoctrination camps where the Chinese government has locked up as many as one million people.
One week before the McKinsey event, a United Nations committee had denounced the mass detentions and urged China to stop.
… For a quarter-century, the company has joined many American corporations in helping stoke China’s transition from an economic laggard to the world’s second-largest economy. But as China’s growth presents a muscular challenge to American dominance, Washington has become increasingly critical of some of Beijing’s signature policies, including the ones McKinsey has helped advance.
One of McKinsey’s state-owned clients has even helped build China’s artificial islands in the South China Sea, a major point of military tension with the United States.
… While the United States pulls back from international cooperation and adopts a more nationalist stance, major companies like McKinsey are pursuing business in countries with little regard for human rights — sometimes advancing, rather than curbing, the contentious tactics of America’s biggest rivals.
“It is more likely they enable these regimes and likely become complicit,” said David J. Kramer, a former assistant secretary of state. “They don’t want to alienate regimes, or they would lose business.”

5 November
Klaus Schwab: Grappling With Globalization 4.0
The world is experiencing an economic and political upheaval that will not cease any time soon. The forces of the Fourth Industrial Revolution have ushered in a new economy and a new form of globalization, both of which demand new forms of governance to safeguard the public good.
(Project Syndicate) Owing to the slow and uneven recovery in the decade since the global financial crisis, a substantial part of society has become disaffected and embittered, not only with politics and politicians, but also with globalization and the entire economic system it underpins. In an era of widespread insecurity and frustration, populism has become increasingly attractive as an alternative to the status quo.
But populist discourse elides – and often confounds – the substantive distinctions between two concepts: globalization and globalism. Globalization is a phenomenon driven by technology and the movement of ideas, people, and goods. Globalism is an ideology that prioritizes the neoliberal global order over national interests. Nobody can deny that we are living in a globalized world. But whether all of our policies should be “globalist” is highly debatable.
After all, this moment of crisis has raised important questions about our global-governance architecture. With more and more voters demanding to “take back control” from “global forces,” the challenge is to restore sovereignty in a world that requires cooperation. Rather than closing off economies through protectionism and nationalist politics, we must forge a new social compact between citizens and their leaders, so that everyone feels secure enough at home to remain open to the world at large. Failing that, the ongoing disintegration of our social fabric could ultimately lead to the collapse of democracy.

9 August
The local cost of globalization. As the world’s population and interconnections increase, gaps are widening between those in power and the people impacted by their decisions. What results, Thomas Hylland Eriksen argues in Sapiens, is a “democratic deficit” that only stands to get more dangerous.
How Globalization Has Broken the Chain of Responsibility
In today’s accelerating and overheating world, the gap between the people affected by change in local environments and the people in charge is growing ever wider.

27 June
Does International Cooperation Require Shared Values?
By Ngaire Woods, Founding Dean of the Blavatnik School of Government at the University of Oxford.
The common norms on which international cooperation has been based for seven decades are increasingly being challenged not only by rising powers, but also by the countries that once promoted them. Does that mean that countries have no choice but to steel themselves for a coming age of dysfunctional alliances, proxy conflicts, or even war?
(Project Syndicate) Between escalating trade disputes and the divisions at the G7’s summit this month, the breakdown of global governance has become starkly apparent. The United States can no longer be counted on to uphold, much less enforce, existing rules, and countries more broadly cannot be assumed to agree on, much less adhere to, a common set of norms. Does this mean the rules-based world order is doomed?

15 June
Chitrapu Uday Bhaskar: Surfeit of summits amid global disorder and dismay
(Al Arabiya) Juxtaposed between the G-7 and Singapore was a more sedate SCO summit in China which brought together the leaders of China, Russia and India along with four Central Asian states and Pakistan. While the focus was counter-terrorism and combating radical, religious extremism, the anomalous sub-text was the consensus that prevailed with the Chinese President extolling the virtues of globalization and free trade.

21 April
Cleo Paskal: India can learn from UK’s low cost, high impact geopolitics
(Sunday Guardian, India) At last week’s Commonwealth Heads of Government meeting in London, the United Kingdom announced it was opening up diplomatic representation in nine countries: Lesotho, Swaziland, the Bahamas, Antigua and Barbuda, Grenada, St Vincent and the Grenadines, Samoa, Tonga and Vanuatu.
It is one of the first concrete pre-Brexit indications of how the UK is looking to position itself globally.
The choice of countries is telling. While the nine are relatively small in terms of population, they are strategically located in the Caribbean, Africa and Oceania—all areas that are becoming geopolitically more complex. All have strong historic ties to the UK, have large English-speaking populations and are members of the Commonwealth.
As a result, with the West’s primary focus elsewhere, China has very quickly set down deep roots in a wide range of countries across the world, giving it strategic depth and positioning, “low cost” votes in international fora, and ironically (given this was the rational for the UK and others to pull out in the first place), economic advantage.
In this context, the UK’s choice of countries to re-engage with is very interesting indeed. In most of the cases, the nations concerned have complex relations with their major Western regional partner and are drifting towards China, almost by default. The UK offers a third choice—perhaps not economically as yet, but strategically.
Let’s see what this might mean in the Pacific. In the case of Tonga, Samoa and Vanuatu, the main Western partners are Australia and New Zealand. There have been serious problems with the relationships. In one recent example, Australia and New Zealand have been threatening to withhold work visas for people from Vanuatu unless it signs on to a trade deal that has the potential to destabilise its economy.
That sort of short-term narrow economic bullying undermines regional stability and long-term growth and inevitably benefits China. In Vanuatu, as elsewhere, the relationships with China have deepened through loans, immigration, infrastructure project, scholarships, etc. Earlier this month there were (now discounted) reports that China wanted a naval base in Vanuatu.
With the UK in Vanuatu, another set of (Five) eyes joins the fray.

2 April
Chris Patten: A Dangerous Trump Spring
(Project Syndicate) Donald Trump’s disregard for liberal democratic values is weakening the institutional pillars of the world order that the US itself had long championed. Only if the world’s other liberal democracies cooperate to push back against the US can the international community hope to hold on until more responsible American leadership returns.

For starters, these countries must move urgently to defend free trade and open markets. Working with the World Trade Organization, they should mount a coordinated effort to push back against abuses by both China and the US. Moreover, these countries should work to fortify the international rule of law – a concept that makes Bolton reach for his gun – by committing to strengthen the United Nations, the World Bank, and the International Monetary Fund. This means upholding the principles that have helped to support peace and prosperity since the 1950s, including by backing the Iran nuclear deal, as long as the country continues to hold up its end up the bargain, and pursuing a peaceful resolution to the North Korea crisis.

In the Middle East, Israel has threatened military action against Syria and Iran. Saudi Arabia is also challenging Iran, in an attempt to curb the country’s growing influence in the region. In Egypt, President Abdel Fattah el-Sisi has been tightening his grip on power, including by using the military to crack down on political opponents, and has just secured a bogus electoral victory. (Will Arab soldiers never learn that dictatorship increases Islamist fundamentalism and promotes instability?)
But this trend is far from limited to the Middle East. President Vladimir Putin has just sailed to his own guaranteed electoral victory, thanks partly to his use of the security services and their friends in the Russian mafia to eliminate any potential threat to his regime. But the Kremlin is not satisfied with damaging Russia’s own polity with plutocratic gangsterism; it is also working to undermine democratic processes elsewhere.
Then there is China, where President Xi Jinping has muscled his way to becoming the most dominant leader since Mao Zedong. Now that the presidential term limits introduced by Deng Xiaoping to insulate the country against another one-man dictatorship have been eliminated, the future of the Communist dynasty rests on the shoulders of one supreme leader.
Even the United States, the country that we used to associate with leadership of the free world, is now facing bleak prospects. Under leaders like Harry Truman, Dwight Eisenhower, George H.W. Bush, John F. Kennedy, and Barack Obama, the country shaped the international system for the better. Now, Donald Trump – ignorant, prejudiced, deceitful, mendacious, and amoral as he is – is destroying that legacy.

The Global Risks Report 2018, 13th Edition Executive Summary
(World Economic Forum WEF) Last year’s Global Risks Report was published at a time of heightened global uncertainty and strengthening popular discontent with the existing political and economic order. The report called for “fundamental reforms to market capitalism” and a rebuilding of solidarity within and between countries. One year on, a global economic recovery is under way, offering new opportunities for progress that should not be squandered: the urgency of facing up to systemic challenges has, if anything, intensified amid proliferating indications of uncertainty, instability and fragility.
Humanity has become remarkably adept at understanding how to mitigate conventional risks that can be relatively easily isolated and managed with standard riskmanagement approaches. But we are much less competent when it comes to dealing with complex risks in the interconnected systems that underpin our world, such as organizations, economies, societies and the environment. There are signs of strain in many of these systems: our accelerating pace of change is testing the absorptive capacities of institutions, communities and individuals. When risk cascades through a complex system, the danger is not of incremental damage but of “runaway collapse” or an abrupt transition to a new, suboptimal status quo.
Full Report (17 January)

20 January
(Quartz) … the Davos echo chamber will feature one of its most ideologically diverse slates of leaders ever. Take the first and last major mainstage presentations. First is Indian prime minister Narendra Modi, who heads a less-and-less secular democracy developing “profoundly illiberal traits.”
The last will be Donald Trump, who has completely ruptured the Davos ideal of what global leadership means. His “Make America Great Again” ideology and fealty-at-all-costs management style has helped create a nation so deeply divided that basic functions of governance have broken down. In the president’s “America First” view, economic gains by definition come at the expense other countries; this won’t go over well with the multilateral-minded Davos crowd.
Sandwiched between the populists is German chancellor Angela Merkel, the longest-serving head of a G7 government and “leader of the free world.” Also appearing mid-week are Canadian prime minister Justin Trudeau and French president Emmanuel Macron—young, centrist, pro-globalization, self-declared feminists tailor-made for the traditional Davos set. They are all likely to call for more global co-operation on trade, governance, and climate change; for most in the crowd, it will be a welcome return to traditional Davos talking points.
Even as Modi and Trump poke holes in the liberal bubble, it remains the case that the forum is an ultra-exclusive, unrepresentative gathering. Davos attendees are overwhelmingly rich, white, and male—women comprise just 21% of delegates, although organizers have filled the program with sessions on gender equality and tapped an all-female set of co-chairs. The bubble may be a bit more boisterous than before, but don’t bet on it bursting anytime soon.—Heather Timmons and Eshe Nelson

19 January
Trump to tout U.S. economy, urge fair trade at elite Davos forum
(Reuters) – U.S. President Donald Trump will be entering something of a lion’s den when he visits the elitist enclave of Davos next week, rubbing shoulders with the same “globalists” that he campaigned against in winning the 2016 election.
“Globalization has made the financial elite who donate to politicians very wealthy. But it has left millions of our workers with nothing but poverty and heartache,” he said on June 28, 2016, in Pennsylvania.
Trump retains the same anti-globalist beliefs but has struggled to rewrite trade deals that he sees as benefiting other countries.
Trump will be speaking two days after German Chancellor Angela Merkel and French President Emmanuel Macron take the stage in Davos.
Both ardent defenders of multilateralism and liberal democratic values, they are expected to lay out the counter-argument to Trump’s “America First” policies.

16 January
Democracy in Crisis
Democracy faced its most serious crisis in decades in 2017 as its basic tenets—including guarantees of free and fair elections, the rights of minorities, freedom of the press, and the rule of law—came under attack around the world.
Seventy-one countries suffered net declines in political rights and civil liberties, with only 35 registering gains. This marked the 12th consecutive year of decline in global freedom.
The United States retreated from its traditional role as both a champion and an exemplar of democracy amid an accelerating decline in American political rights and civil liberties.
By Michael J. Abramowitz, President
(Freedom House) Political rights and civil liberties around the world deteriorated to their lowest point in more than a decade in 2017, extending a period characterized by emboldened autocrats, beleaguered democracies, and the United States’ withdrawal from its leadership role in the global struggle for human freedom.
Today, it is democracy that finds itself battered and weakened. For the 12th consecutive year, according to Freedom in the World, countries that suffered democratic setbacks outnumbered those that registered gains. States that a decade ago seemed like promising success stories—Turkey and Hungary, for example—are sliding into authoritarian rule. The military in Myanmar, which began a limited democratic opening in 2010, executed a shocking campaign of ethnic cleansing in 2017 and rebuffed international criticism of its actions. Meanwhile, the world’s most powerful democracies are mired in seemingly intractable problems at home, including social and economic disparities, partisan fragmentation, terrorist attacks, and an influx of refugees that has strained alliances and increased fears of the “other.”


World Order 2.0
Richard N. Haass
Since the Peace of Westphalia in 1648 ended the Thirty Years’ War in Europe, the concept of sovereignty – the right of countries to an independent existence and autonomy – has formed the core of the international order. But, in a globalized world, an order based solely [on] sovereign rights has become increasingly inadequate.
(Project Syndicate) … in a globalized world, a global operating system premised solely on respect for sovereignty – call it World Order 1.0 – has become increasingly inadequate. Little stays local anymore. Just about anyone and anything, from tourists, terrorists, and refugees to e-mails, diseases, dollars, and greenhouse gases, can reach almost anywhere. The result is that what goes on inside a country can no longer be the concern of that country alone. Today’s realities call for an updated operating system—World Order 2.0 – based on “sovereign obligation,” the notion that sovereign states have not just rights but also obligations to others.
A new international order will also require an expanded set of norms and arrangements, beginning with an agreed-upon basis for statehood. Existing governments would agree to consider bids for statehood only in cases where there was a historical justification, a compelling rationale, and popular support, and where the proposed new entity is viable.
World Order 2.0 must also include prohibitions on carrying out or in any way supporting terrorism. More controversially, it must include strengthened norms proscribing the spread or use of weapons of mass destruction. As it stands, while the world tends to agree on constraining proliferation by limiting countries’ access to the relevant technology and material, the consensus often breaks down once proliferation has occurred. This should become a topic of discussion at bilateral and multilateral meetings, not because it would lead to a formal agreement, but because it would focus attention on applying stringent sanctions or undertaking military action, which could then reduce the odds of proliferation.
Another essential element of a new international order is cooperation on climate change, which may be the quintessential manifestation of globalization, because all countries are exposed to its effects, regardless of their contribution to it. The 2015 Paris climate agreement – in which governments agreed to limit their emissions and to provide resources to help poorer countries adapt – was a step in the right direction. Progress on this front must continue. [emphasis added]
Cyberspace is the newest domain of international activity characterized by both cooperation and conflict. The goal in this area should be to create international arrangements that encourage benign uses of cyberspace and discourage malign uses. Governments would have to act consistently within this regime as part of their sovereign obligations – or face sanctions or retaliation.
Global health presents a different set of challenges. Fortunately, the notion of sovereign obligation is already advanced in this sphere: countries are responsible for trying to detect infectious disease outbreaks, responding appropriately, and notifying others around the world.
refugees, there is no substitute for effective local action aimed at preventing situations that generate large refugee flows in the first place. In principle, this is an argument for humanitarian intervention in selective situations. But translating this principle into practice will remain difficult, given divergent political agendas and the high costs of effective intervention. Even without a consensus, however, there is a strong case for increasing funding for refugees, ensuring their humane treatment, and setting fair quotas for their resettlement.
Trade agreements are, by definition, pacts of reciprocal sovereign obligations regarding tariff and non-tariff barriers. When a party believes that obligations are not being met, it has recourse to arbitration through the World Trade Organization. But things are less clear when it comes to government subsidies or currency manipulation. The challenge, therefore, is to define appropriate sovereign obligations in these areas in future trade pacts, and to create mechanisms to hold governments accountable.
Establishing the concept of sovereign obligations as a pillar of the international order will take decades of consultations and negotiations – and even then, its acceptance and impact will be uneven. Progress will come only voluntarily, from countries themselves, rather than from any top-down edict. Realistically, it will be difficult to forge agreement on what specific sovereign obligations states have and how they should be enforced. (Jan 24, 2017)

14 November
Democracy Beyond the Nation-State
According to the Harvard economist Dani Rodrik, it is impossible to have full national sovereignty, democracy, and globalization simultaneously. The concept of a “political trilemma of the world economy” is useful, but it becomes less binding when one takes into account levels of government above and especially below the nation-state.
By Kemal Derviş, former Minister of Economic Affairs of Turkey and former Administrator for UNDP
(Project Syndicate) According to the Harvard economist Dani Rodrik, it is impossible to have full national sovereignty, democracy, and globalization simultaneously. The concept of a “political trilemma of the world economy,” which Javier Solana also , is useful, but incomplete.
… Rodrik does not portray this trilemma as a hard-and-fast rule. Rather, his goal is to highlight the challenges associated with fostering or maintaining these three institutional arrangements, partly or fully. But, to get the most out of Rodrik’s concept, it is necessary to account for another dimension: the many levels of governance that exist in today’s world.
The nation-state, managed by national government, remains the fundamental building block of the international order. But below the nation-state are states (or provinces), cities, and regions, which may have their own governance structures. Above, there are supranational blocs like the European Union and global institutions like the United Nations. Any discussion of the trilemma must take into account these various levels of governance. …the tension between democracy and globalization seems to be less acute at, say, the municipal level. It helps that subnational governments tend to be focused on more local-level concerns – such as infrastructure, education, and housing – that are not perceived as being strongly influenced by globalization.
what if we adopted a new approach, in which local-level democracy and sovereignty were strengthened instead? In many countries, if not most, cities are the centers of innovation and progress, as the promise of agglomeration, economies of scale, and positive spillovers attract high-performing firms. Citizens feel close to their municipal governments and proud of their cities, but their pride in their identity does not have the damaging qualities of nationalism. As the nation-state cedes some of its power to regional, state, or municipal governments, the trilemma weakens. Both democracy, with its concomitant sense of belonging, and globalization, driven by cosmopolitan cities open to the world, can thrive, without causing any country to lose sovereignty.

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