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The crisis of the liberal international order

by Yoichi Funabashi

At the Group of Seven summit in Quebec, Canada, in June, U.S. President Donald Trump opposed a draft of the Group of Seven joint communique that endorsed “a rules-based international trading system,” and then left the summit early. From aboard Air Force One en route to Singapore for his summit with North Korean leader Kim Jong Un, Trump tweeted: “Sorry, we cannot let our friends, or enemies, take advantage of us on Trade anymore. We must put the American worker first!” Trump suggested the U.S. might withdraw from the joint communique, which pledged to “continue to fight protectionism.” He also threatened to “look at Tariffs on automobiles flooding the U.S. Market!”

In Singapore, Trump continued with his ego-driven diplomacy and ended up falling into North Korea’s fake denuclearization trap. Trump’s acknowledgement of North Korea’s status as a de facto nuclear power, and the prospect that the U.S. might engage in disarmament negotiations with North Korea, are developments that could fracture American alliances with South Korea and Japan and destabilize Northeast Asia. The liberal international order (LIO) has finally reached a crisis point.

The LIO refers to an internationalist order based on the principles of the rule of law, multilateralism, human rights and freedom. At the top of the LIO has been the postwar Bretton Woods system, which was developed primarily by the United States and encompassed the General Agreement on Tariffs and Trade (the predecessor of the World Trade Organization), the International Monetary Fund, the World Bank and the G7.

It is also built on the foundation of the U.S.-led system of alliances (NATO, the Japan-U.S. alliance) and an international system characterized by the Westphalian emphasis on national sovereignty (the United Nations, the Paris climate accord).

Every one of these institutions or arrangements has been either ignored, discounted, or viewed with enmity by Trump.

There probably would not have been a Trump presidency without the Iraq war or the Lehman shock. Trump’s rise was propelled by the American public’s outrage at the greed and incompetence of Washington and Wall Street elites.

But it does not end there. The U.S. faces low growth and income stagnation. The gap between rich and poor is growing. Educational inequality is hardening into hereditary economic inequality, revealing the falsehood of the American dream. Americans who feel their social standing has been threatened by immigrants and racial minorities are giving voice to their sense of loss and anti-immigrant sentiment. Efforts for cultural diversity led by women, ethnic minorities and LGBT groups have met with the discomfort and resistance of conservative ranks.

These lie at the roots of the American society, and they are not just passing phenomena.

Trump’s America, however, is not the only threat to the LIO. Russia and China — and in particular China’s geopolitical offensive — are both shaking its foundation. Beijing views the LIO as the product of an era in which China was weak, and a system that perpetuates American hegemony. To be sure, China found the LIO useful enough as it worked to achieve the “Chinese miracle” of the past 30 years. But with China’s rise, the LIO has become more of a hindrance. Establishing the strategic course to “replace the system of alliances with a system of partnerships” at the 19th National Congress of the Chinese Communist Party in 2017 was a reflection of this new reality.

There is another problem with China’s approach to international order. The Harvard historian John K. Fairbank once observed that China has a tendency to handle its relations with the outside world in the same way as its domestic social and political relations. Consequently, its foreign relations are characterized by being hierarchical and non-egalitarian.

One can detect signs of this along the “third silk road” that accompanies the continental and maritime roads of China’s “Belt and Road” initiative (BRI): China’s “digital silk road.” Here the Chinese government hopes to realize a social system in which big data and artificial intelligence are used to implement social surveillance, thought control and the internal guidance of its citizens. This social system would then be spread in accordance with Chinese standards. This would threaten the core of the LIO.

So, which is the principal enemy of the liberal international order — American populism or the Chinese Communist Party?

At present, Trump’s America, with its rush to embrace economic nationalism, appears to be the greater threat. However, at some point the political pendulum will swing in the other direction, and the American system of checks and balances is still functioning. In the long term, the greater threat may well be China, whose social system represents a frontal challenge to the LIO.

The world’s democracies would do well to remember, however, that part of the Chinese threat to the LIO originates close to home. They must work to keep domestic populism in check and, most importantly, address the root causes of the upsurges in populism: The long-term stagnation of working class wages; growing inequality and the concentration of wealth in the hands of a small portion of the population; drastic technological innovations and the diffusion of robotics and artificial intelligence; and employment insecurity and the hollowing out of the working class due to globalization. These are all economic upheavals that demand effective countermeasures.

Meanwhile, both the identity politics of gender, race, ethnicity and lifestyle, and the use of exclusive social networks as barricades by “like-minded” people, threaten to divide societies. Fostering solidarity among citizens — in other words, creating a civic identity — will be essential to overcoming the further division and narrow segmentation of society.

Yoichi Funabashi is chairman of the Asia Pacific Initiative and a former editor-in-chief of the Asahi Shimbun. This is a translation of his column in the monthly Bungei Shunju.