Monday, August 24, 2009

The Post-World War 2 Order is Tottering

Several key international institutions will have their paths charted over the next few years. The likely outcome is that they will be greatly diminished in importance and power, while possibilities also exist for outright collapse.

The next round of G20 talks will be held in Pittsburgh during late September. One of the more important items on the agenda is the reform of the IMF. Theoretically this would mean greater voting rights, and financial contributions, from the emerging powers and states with large reserves. But serious shifts in voting rights are not yet being proposed by the current Western dominated leadership. Instead, the IMF has decided to raise cash by selling bonds and its gold reserves.

In December, Copenhagen hosts the United Nations climate change conference. The original point of the conference was to adopt a new and more stringent form of the Kyoto agreement. Again, this has bogged down in conflicts between emerging and developed industrial powers, as well as disputes between the E.U. and the United States. It's likely the talks will end in something that makes for a good headline, but produce little in substantial cuts in greenhouse gas emissions. Certainly not enough to prevent a rise in global temperature of over 2 degrees Celsius, based upon current forecasts of how emissions effect climate change.

Lastly are attempts to revive the WTO-supervised Doha trade negotiations. They stalled in 2008 because of arguments around agriculture subsidies in the United States, and the ability of developing nations to enact tariffs if trade resulted in the collapse of a domestic industry. Most especially, India wants to prevent a repeat what happened to Mexican agriculture when it opened trade to the United States after NAFTA.

At the heart of all these arguments is the inability of the United States to impose a system-wide solution. This is due to its significant economic decline over the last decade. Given that this a world of nation states, and political power is driven by domestic concerns, it's unlikely that a group of 'equal' nations can come to agreements on international economic matters. If continuing trajectories of economic growth hold, there will be a reemergence of trade blocs and spheres of influence - similar to those which ended up being so destabilizing to the pre-World War order.

1 Gloomy Negotiators End Bonn Climate Talks - NY Times
2 U.S. warns "imbalance" in Doha talks needs fixing - Reuters
3 IMF Voting Shares; No Plans for Significant Changes - Mark Weisbrot and Jake Johnston
4 IMF Acting on Several Fronts to Ramp Up Its Financing - IMF
5 Reforming the IMF - Blended Purple
6 Pittsburgh G20 Home Page
7 United Nations Climate Change Conference


8 "The World Bank Is Running Low on Cash" - Blended Purple

No comments: