New world order is long overdue

by Frank Ching

George Herbert Walker Bush, when he was president of the United States, used to talk a lot about a “new world order” emerging after the collapse of the Soviet Union in 1991. Seventeen years later, that new order is still not in place as the countries that dominated the old order refuse to make way for change.

This is most evident at the United Nations, which has accepted in principle the need for reform, especially of the Security Council. However, despite years of debate and proposals, there is no meaningful change in sight. The five permanent members — the U.S., Britain, France, Russia and China — each with the right of veto, don’t appear too eager to let other countries, such as Japan and Germany, share their lofty heights.

The old order is also very much in evidence in such supposedly global institutions as the World Bank and the International Monetary Fund, with the former always headed by an American and the latter by a European. Although emerging Asian countries, in particular China and India, are increasingly important as economic players, their nationals need not apply for either of the two top jobs.

The recent summit meeting of the Group of Eight — the seven largest developed countries plus Russia — in Hokkaido also reflected the need for structural changes. French President Nicolas Sarkozy openly called for the inclusion of new members, specifically, China, India, Brazil, Mexico and South Africa, which had been invited by the G8 for an “outreach” session to discuss wide-ranging issues, including the world economy, climate change, as well as food and energy security.

Any discussion of expansion of the G8 always begins with China, whose economy is now bigger than at least five of the G8 member countries. China and India are the world’s two most populous nations, and both are on the outside, looking in.

However, within the G8, there was little enthusiasm for inviting new members even though the world is changing before their very eyes. In 1997, those countries accounted for 65 percent of the world economy; today, they account for only 58 percent, and the trend continues.

Significantly, the five developing countries invited to dialogue with the G8 held their own meeting, billing themselves for the first time as the Group of Five, or G-5.

There is little doubt that as the G8 dithers over its own future, the world’s biggest emerging economies are looking for, and finding, their own voice and insisting on being heard in the councils of the world.

The day before meeting with the G8, the G-5 issued a political declaration in which they voiced frustration with the current global setup. “The voice and representation of developing countries in the decision making of international financial institutions should be significantly improved,” the declaration said, “especially at the International Monetary Fund and the World Bank.”

There was a need to enhance policy coordination between advanced and emerging economies, they said, and “the Financial G20 is an appropriate forum for their endeavor.”

That is to say, the G20 — established in 1999 — provides a better forum for decision-making on global financial issues. The G20 includes all G8 member countries as well as many developing economies. The G-5, in its declaration, called on developed countries to “dismantle barriers and distortions, especially agriculture subsidies and domestic support that affect the overall efforts of developing countries.”

A primary dispute between the G8 and G-5 is on the crucial issue of climate change. The developing countries, in their declaration, demanded that developed countries “take the lead in achieving ambitious and absolute greenhouse gas emissions reductions of at least 25-40 percent range for emissions reductions below 1990 levels by 2020, and, by 2050, by between 80 and 95 percent below those levels.”

However, although the G8 members are collectively responsible for about 62 percent of the carbon dioxide in the atmosphere, they are unwilling to commit to taking action unless the developing countries also curb their emissions.

This is a classic standoff: the world’s richest countries versus its biggest emerging economies. For the sake of humanity, the two groups must work together.

It is natural for countries — or groups of countries — to put their own interests first. But both the developed and developing economies are in the same boat, and if they don’t start bailing, the boat is likely to sink.

The epic struggle over climate change is likely to be a defining step in the move toward a new world order.

Frank Ching is a Hong Kong-based journalist and commentator.