Why multilateralism is in such a mess and how we can fix it

This article is part of the World Economic Forum's Geostrategy platform

Ups and downs in the lives of individual international institutions are not new, but the malaise that now afflicts multilateralism is unprecedented in range and depth. It transcends issue-areas, and occurs at a time when the need for sensible rules of international cooperation has greater urgency than ever before.

Even as trade wars rage outside, the Dispute Settlement Body of the World Trade Organization (WTO) finds itself paralysed due to the blocked appointments/re-appointments of judges in its Appellate Body. Public awareness of climate change as a global emergency may have increased, but the United States has at the same time delivered a serious blow to the mitigation regime by moving to withdraw from the Paris Agreement.

In his remarkable interview with The Economist in November this year, French President Macron declared the “brain-death” of the NATO and pointed to the fragility of Europe. Impending Brexit is one thorn in the side of the European project; the rise of the Alternative for Deutschland (AfD) party in Germany is another. Multilateralism, in both its universal and non-universal versions, and across economic and security issues, is under severe strain.

It is commonplace — especially by those with liberal and/or centrist inclinations in politics — to attribute the crisis of multilateralism to two factors. First, many observers point the finger at President Trump and his “America first” agenda. Is it surprising then, they ask, that others follow suit when the world’s largest economy behaves with such great irresponsibility and chooses to turn its back on the very system that it had once led the way in creating?

Second, some see Trump’s politics as part of a broader phenomenon involving the rise of strongmen leaders with populist inclinations who fan nationalist sentiment, framing the rights and interests of local populations as pitted against those of a “global elite.”

Both explanations, however, are deeply misguided. Nor is the wrong-headedness of such applications purely an academic matter. Rather, the knee-jerk solutions that they result in are likely to worsen the malaise of multilateralism. Reacting to Trump’s message of “Make America great again,” Macron countered with “Make our planet great again.” This was not a bad response per se, especially given the crudeness of Trump’s pledge. Yet, the Yellow Vests protests showed that Macron’s (probably well-meant) moral high-horsiness did not find many takers.

WTO Dissatisfaction

Take the case of trade multilateralism. True, Trump may have called the WTO “the single worst deal ever made” and severely dented the system by launching his supposedly “good, and easy to win” trade wars. But amidst this drama, it is too often forgotten that dissatisfaction with WTO functioning has been brewing for years. The recurrence of deadlocks in the Doha Round for over the last 15 years is a clear sign of discontent from multiple stakeholders (and not just the US). Similarly, it is worth recalling that although many blame the Trump administration for the wreckage that is the WTO’s Appellate Body today, the practice of actually blocking appointments and re-appointments of judges in fact goes back to the Obama administration (although admittedly not on the same scale as practiced by the current US administration).

It was also under President Obama that the US dabbled in the rhetoric of protecting American workers, showed great reluctance to make concessions during Doha negotiations. And again, it was the Obama administration that precipitated a turn away from the multilateralism of WTO and towards the (mega-) regionalism of the Transatlantic Trade and Investment Partnership and Trans-Pacific Partnership. Trump’s angry and public pronouncements against various multilateral institutions, or the rhetoric of some populist movements against the global order, have certainly multiplied the problems facing multilateralism. But they are not the root cause.

Why multilateralism is in such a mess today boils down to three reasons: disillusionment with globalisation, lacklustre narratives in support of multilateralism, and the inadequacy of existing multilateral rules to meet new challenges.

First, backing Trump’s narrative of “America First” or the Brexiters’ slogan of “Take back control” is the fact that significant proportions of the electorates of these countries believe that the gains of globalisation have passed them by.

They attribute increasing inequality within their society, and the job losses and declining wages that they personally endure, to the costs of international trade. The hardships that these groups suffer have several causes, which range from technological change to inadequate welfare mechanisms that could allow for better wealth distribution. But trade is often the easy scapegoat, especially as blame can be all too conveniently attributed to international deal-making.

The current US administration is an example of a government that has effectively harnessed this discontent — perhaps even stirred it further by building a narrative that links domestic inequalities and poverty within the US to multilateral governance. But this disillusionment with the system is a real and potent force, which will survive irrespective of what happens in the upcoming US elections.

Second, a solid and convincing counter-narrative has been missing. Telling the malcontents and the disillusioned — especially if they face personal economic hardships amidst increasing inequality — that they should think about the planet first will not reassure them. If anything, such narratives will only exacerbate the backlash against those increasingly seen as part of a “global elite” and the values of internationalism that they represent. The takeaway for many parts of the electorate (in different countries) from such cavalier attitudes will likely be along the lines of ‘only Mr Trump understands my pain, only the AfD is willing to stand up for my rights.’

Third, the liberal fixation on Trump as the root cause for the decline of multilateralism diverts attention from another equally serious cause: the rise of an increasingly assertive China. One reason for this blind spot may be that China itself has been doing an impressive job — at least until recently — in presenting itself as a guardian of globalization and multilateralism. Declarations of support for the system, for example at the World Economic Forum by President Xi, stand out in stark contrast to the havoc wreaked on the system via President Trump’s angry tweets and trade wars. But recent scholarship by Henry Farrell and Abe Newman on “weaponized interdependence” has begun to highlight the use of global economic networks for geostrategic purposes.

The rise of China

Combine these insights with China’s meteoric rise and controversial expansionism in its region and beyond (e.g., via the Belt and Road Initiative), and it is clear that the underlying premises of the postwar multilateral system are being put into question. Much of the post-war order was built on an assumption of the virtues of economic interdependence, which were supposed to bring nations together and promote peace. But if multilateral rules to promote economic interdependence have been used — or could be used in the future — by “systemic rivals” to gain geo-economic advantage, then a backlash against these rules is bound to come sooner or later. While the US has voiced these concerns most vociferously, others too have been raising them in different settings as they argue in favour of institutional reform and updating.

Finding solutions

To fix the malaise of multilateralism, technical solutions — for example, improving the WTO’s Dispute Settlement Mechanism — will of course be important. But given the deep-rooted nature of the challenge, a purely technocratic response will not suffice. Four sets of additional measures will be crucial.

1) Reconsidering past trade-offs – The only way that we will be able to bring the discontented many on board (and bring them on board we must, if we are to restore trust in the system) is by taking their concerns seriously. This means reconsidering past trade-offs and developing a new bargain on globalisation with better distributive mechanisms, both domestically and internationally. Trump-bashing — and its equivalent in other countries — on its own and ridiculing populist supporters will only exacerbate polarisation.

2) Multilateralism will need a brand new narrative – This narrative will have to convey clearly why reformed multilateralism is of direct benefit to citizens across the board, and not only tomorrow but also today. Appealing to global public goods and the welfare of future generations are likely to prove insufficient as rationales, especially to those who feel shortchanged and are enduring economic hardships. This new narrative will need to have individual and group appeal. It will also need to work across different levels of politics — local, regional, national, and global.

3) A fundamental renegotiation of multilateral institutions is essential – To do this effectively, it would be wise to tap into ongoing efforts of the global South (e.g., UN Security Council reform). Additionally, however, given the risks that weaponised interdependence and economic statecraft pose today, multilateral rules will have to be updated to prevent their misuse and abuse. A reformed system may still be able to include China. But frankly, it is difficult to see how we can return towards robust multilateralism — universal and far-reaching in ambition — without seeing some clear signals that direct competitors and rivals are also willing to rein in their own power.

4) Agreeing values – Finally, and especially if multilateral institutions are unable to build in sufficient safeguards to prevent their misuse for geostrategic ends, policymakers will have no choice but to get into the contentious and difficult question of values. Narrow interpretations have taken countries like Germany and Canada into the direction of labour and environmental standards. But this is quite shortsighted. Amidst the great power competition currently underway, fractures are emerging over first-order values, such as democracy, pluralism, embedded liberalism, and rule of law.

The time is coming when it will not be possible to brush away fundamental differences under a carpet of trite declarations about shared material interests and a love of globalisation. Insofar as support for multilateralism represents an inherently normative agenda, it will be vital that Europe, India, Japan, and other key players work together. Alliances with partners that share first-order values will be key to making multilateralism meaningful again.

The malaise of multilateralism and how to manage it, Amrita Narlikar, the Observer Research Foundation