Jim Harrowell’s Speech at the ‘Multilateralism at a Crossroads’ Breakout Session at ISIF 2019

At the 2019 Imperial Springs International Forum, Mr. Jim Harrowell AM, board member of the ACFEA, delivered a speech at the ‘Multilateralism at a Crossroads’ Breakout Session A:

MULTILATERALISM

“What is multilateralism?

The concept of multilateralism has been the subject of discussion and debate by many learned authors and experts but despite this there is no single definition of the concept.

Elements of multilateralism include:

  • Nation states agreeing to work together within a framework for the mutual benefit of the whole rather than simply preferring individual national interests;
  • Seeking to give small and/or undeveloped nations a voice on global issues which can affect them.
  • Nations agreeing to create a rules-based framework in which they will operate which will govern their external relationships and which is support by domestic policies and practices;
  • Individual nations accepting the need to compromise on issues for the sake of the whole rather than putting national interests first; and recognising that nations will have to provide domestic leadership as there will be winners and losers domestically as a result of embracing multilateralism.

A driver for multilateralism, rather than bilateralism or unilateralism, has over the last 200 years often been catastrophic events such as wars because a nation is seeking dominance over other nations or economic factors such as those seen during the global financial crises and more recently as a result of concerns relating to climate change – an issue which clearly must be dealt with in a multilateral framework.

A clear example of where multilateralism was embraced following a catastrophic event was nearly 200 years ago when the Congress of Vienna was held at the end of the Napoleonic Wars to create a framework to secure peace and prosperity in Europe.

The Austrian statesman, Klemens von Metternich had three key goals for the Congress of Vienna, they were:

– to prevent future French aggression by surrounding France with strong countries;

– to restore the balance of power so that no country could be a threat to others;

– the restoration of Europe’s royal families.

There were many challenging issues confronting those who attended the Congress of Vienna, the primary focus was on the impact of the French Revolutionary Wars on the peace and structure of Europe and to ensure an end to nearly 23 years of continuous war throughout Europe.  Much time was taken up in redrawing the map of Europe and settling border disputes, the focus was strongly on national boundaries.

The extraordinary aspect of the Congress of Vienna was that it was the first time that an attempt was made to draw together not only the major powers of the time, being Austria, Great Britain, Russia, Prussia and France, but it also included virtually every other European country and princely state together with city corporations, religious organisations and special interest groups, for example a delegation representing German publishers demanding a copyright law and freedom of the press and every canton in Switzerland had its own delegation.

Whilst the achievements and failures of the Congress of Vienna have been discussed, debated and analysed, it did create a more peaceful and prosperous Europe through to the end of the 19th century than had previously existed.

Sadly, however the peace and prosperity of Europe was shattered with the outbreak of the First World War in 1914, the 100th anniversary of the commencement of the Congress of Vienna.  

The carnage, suffering and economic damage of the First World War saw the creation of the League of Nations nearly 100 years ago in January 1920.  The concept of the League of Nations was not new, the idea was first promoted in 1795 by Immanuel Kant in his paper entitled ‘Perpetual Peace’.  Kant aspired to a framework where no independent states large or small shall come under the dominion of another state.

The Congress of Vienna was based on regional multilateralism setting a framework for Europe.  

The League of Nations was the first attempt at global multilateralism.  There were initially 42 founding members representing nations in every continent of the globe and by 1939 a total of 63 countries had become member states of the League of Nations.  Whilst the diverse membership was evidence of global multilateralism, there were significant gaps for example, there was limited membership in Africa and significantly, in spite of the active role played by US President Woodrow Wilson, the United States never became a member of the League of Nations.

The high aspirations of those involved in creating the League of Nations to secure peace and prosperity on a global basis were sadly dashed less than 20 years after the League of Nations was created with the outbreak of the Second World War in 1939.

As the victors gathered at the end of the Second World War yet again the world reflected on the devastating effects of global warfare and the United Nations was created in the hope of ensuring that the world would never again experience the two World Wars in the 20th century.

The establishment of the United Nations saw a more sophisticated approach to multilateralism which, whilst having a strong focus on security issues and world peace, also saw the creation  of multilateral institutions such as the World Trade Organisation to address the development of the global economy and breaking down economic barriers which might inhibit trading between nations and domestic prosperity for individual nations.

The later part of the 20th century saw a strong focus on multilateralism on a range of issues notwithstanding the existence of the Cold War and the tensions it created.  

Increasingly it was recognised that multilateralism would benefit the development of the global economy and whilst strategic defence alliances were created there was a recognition that ultimately the best way of establishing a secure and peaceful world was to encourage economic growth in a framework where developed economies recognise the importance of assisting poorer nations in their economic development.

There was also acceptance by the wealthy nations that they needed to share some of their wealth in helping poorer nations to develop their economies to create prosperity and improve living standards to help create a stable global political environment and a stable domestic environment within individual nations.

At the end of the 20th century, multilateralism had played a significant role in the development of the global economy as well as the economies of individual nations through increased cross-border trade. Multilateralism also played a key role in ensuring that the Cold War of the 1950s and 60s and into the 1970s did not become a Hot War.

Multilateralism in the 21st century – is it at a crossroads

Whilst multilateralism blossomed on a global basis in the last decades of the 20th century, as a result of several factors, the concept of multilateralism is at a crossroads and under challenge in the second decade of the 21st century.  

One of the aspects of multilateralism, which was at the heart of the Congress of Vienna 200 years ago, was to ensure that no one nation would be in a position of dominance over other nations big and small.

The global political and economic environment in the 21st century is volatile and changing rapidly.

One would think that with the world is more connected than ever before in its history and that this would strongly support frameworks based on multilateralism, but this does not appear to be the case and there are signs that nations are moving towards bilateralism and even possibly unilateralism, but this is not the case multilateralism is at a crossroads.

 

Why is Multilateralism in the 21st century at a crossroads?

Presently there are several “game changers” in the global world order impacting on multilateralism as a framework for managing the global political environment and global prosperity on the 200th anniversary of the Vienna Congress, they include:

  1. The Rise of China

In the post-World War II decades, the world order and to a large extent multilateralism was framed around two superpowers, the United States and the Soviet Union.  

The dissolution of the Soviet Union created a major change in the balance of power between the major nations of the world and created a power vacuum enhancing the position of the United States as the dominant global power. 

The biggest factor which is impacting on the concept of multilateralism in the 21st century is the dramatic rise of China to become the second largest national economy in the world.

The decision by Deng Xiaoping in December 1978 to open China’s door to foreign businesses was a game changer for China, and the world, and is putting the concept of multilateralism under considerable pressure today.  

When the People’s Republic of China was established 70 years ago the leadership of China was very much focused on China controlling its own destiny and a belief that with its large population China could prosper on a standalone basis.  Deng Xiaoping recognised that such a policy was not sustainable in the long term and that China had to re-engage with the global economy to secure a prosperous future for the Chinese people.

It is often forgotten that the concept of an open door policy was not new and that in September 1899 the then US Secretary of State, John Hay, sent an Open Door Note to the major European powers seeking an agreement to keep China open to trade with all countries on an equal basis.  

This policy of course was focused on ensuring that foreign nations did not seek to partition China for their own interests. This was regarded by China as humiliating because China was not consulted or a party to the Open Door Note. The treatment of China by the Western Powers was a driver in Chairman Mao’s determination when establishing the People’s Republic of China to remove foreigners and ensure China was not controlled by foreign nations and no doubt is still a factor today in how China engages with the world.

It was never anticipated that China’s economic rise would be so fast and substantial, or the impact it would have on changing the world order.  Today 150 countries claim China as their biggest trading partner which means China clearly has considerable influence on the global economy and the international political environment with China’s success now being regarded by some as a potential threat to the global world order.

In 1978 Deng Xiaoping was hailed in the west for his open-door policy and he was named by ‘Time’ magazine as the Person of the Year. The business community and the world were excited about the economic prospects for the future.

In 2019, Western media seeks to demonise China for its economic influence and Western nations are seeking to contain China’s influence in the global economy. The Congress of Vienna sought to establish a framework to control territorial ambitions of major nations today the focus is on controlling economic ambitions.

China is a victim of its own incredible economic success and this has put the concept of multilateralism at a crossroads.

The rise of China to become the second largest national economy and a key influence on the global economy is a fact of life, its success is driving the prosperity not only of its trading partners but also the global economy and the nations of the world must work with China.

The United States leadership aspires to “make America great”, the Chinese leadership has similar aspiration, the Chinese Dream ( 中国梦). Multilateralism is a concept that can work with the aspirations of both the US and China and make all nations great.

Whilst China does not have a multiparty system of government the Chinese leaders cannot afford to ignore their people. The Chinese leadership is under considerable pressure to maintain the economic growth and prosperity of the last four decades to ensure “social stability”. The Chinese people are no different from Australians, Americans or the people from any other country in wanting their country to be great, prosperous and secure.

  1. The Rise of Populism

The first two decades of the 21st Century has seen a rise on populism and nationalism in the global political environment as well as the domestic political environment of individual nations.

Populism and nationalism are increasingly important factors in democratic nations in driving both domestic and international policies of individual nations.

The globalisation of the world’s economy, the opening of markets and the removal of trade barriers, are key objectives of the multilateral institutions. Over the last 50 years we have seen major changes in domestic economies and whilst the net result has been positive for the global economy within domestic economies some sectors have declined or disappeared examples include:

  • steel production in the US;
  • the end of automobile manufacturing in Australia;
  • the threat to farmers of foreign imports from markets with lower costs and/or clean and green product which can be moved easily around the world through advances in logistics.

Politicians are under tremendous pressure to protect their voters from the adverse impacts of the rapidly changing global economy. The benefits of multilateralism and open borders for the movements of people, goods and services are hard to explain and sell to voters whose business cannot survive without unilateral protectionist tariffs.

In the United Kingdom it proved impossible to sell the benefits of the United Kingdom remaining in the multilateral European Union. The political debate in the run up to the referendum saw a rise in populist slogans contrasting the benefits of the UK regaining its independence as a standalone nation not subject to the multilateral framework of the European Union.

In the Brexit debate, nationalist concepts not like the “make America great” received a great deal of air play and ultimately the Conservative Government who initiated the referendum was unable to convince the majority of the British people of the benefits of remaining in the multilateral framework of the European Union. 

The United States having long been a leading advocate for opening markets and removing trade barriers introduced/ increased tariffs on imports to protect local industries, these tariffs were not directed only at China. Australia narrowly escaped these tariffs by reminding the US that we had a free trade agreement.

The key architect of the Transpacific Partnership, the United States, had a change of policy and declined to participate. It has become harder to secure agreement in global multilateral economic forum; this has seen an increase in regional multilateral forums and bilateralism by creating free trade agreements.

The rise of nationalism has also been driven by the increased movement of people across borders, as a result of conflicts and economic factors. The rise of nationalism has seen politicians putting forward populist policies to close borders and build walls to protect their borders and their domestic economies, shifting the management of these issues away from multilateral frameworks to a unilateral approach based on self-interest.

In 2017 in Austria, Sebastian Kurz was elected as the youngest head of government in the world having a strong campaign based on populist policies relating to immigration and social politics.

The domestic political environment of many nations has also been disrupted by voters being disenchanted with existing political parties and the emergence of new parties who have succeeded in securing government with populist policies. 

In France the “La République En Marche!” Party did not exist before April 2016 but within 12 months its leader Emmanuel Macron was the youngest President in French history and his party held 308 seats in the National Assembly.

  1. Technology and the globalisation of business

The extraordinary advances in technology have almost instantaneously connected people, nations and businesses and whilst one may think this would support and sustain the concept of multilateralism it also creates domestic pressures. 

The advances in transport and logistics have created new markets. In 2019 it is possible to deliver fresh lobsters from Tasmania within 24 hours of capture.  Goods purchased on the internet from Europe can be delivered in Australia in many cases within days, but despite this there is a downside because domestic markets can be threatened. 

The domestic retail sector is now facing competition from the rise of ecommerce. Their customer base can now sit at home and purchase goods from anywhere in the world. 

The advances in technology have seen a huge increase in population movements throughout the world.  Some of the population movement is driven by a desire to seek a better life in another country because of political instability and/or economic factors in their home country.  These movements of people have and will continue to create tensions and test multilateralism, multiculturalism and put considerable pressure on governments to protect their national interests. 

The advances in technology have not only seen enormous growth in the trade of goods and resources but have also seen the growth of multinational businesses operating in the services sector with the establishment of global legal firms, accounting firms, architectural and engineering firms. This has and is creating competition and threatening jobs in domestic service markets. 

The globalisation of business has seen national domestic economies increasingly linked and dependent upon the broader global economy and domestic budgets heavily impacted by factors outside the control of elected national governments.

  1. Multilateralism what next?

The concept of multilateralism is a fact of life. It is the only concept that can provide security and economic prosperity for individual nations and the world going forward.

Every nation today is dependant, for its security and economic development, on its engagement with other nations. It is impossible to restrict or turn back the cross-border flows of people, trade, capital and business.

The rise of China, as noted above, has created challenges for multilateralism, but the world must engage and work with China as it will continue to be an economic powerhouse. 

India whilst it has not developed as fast and as far as China is also a rising power in the global world order and in its capacity to influence the global economy and India will be inevitably be followed by Nations in Africa. 

Some leaders suggest that liberal democracies are not compatible without a one-party system of government in the global world order. This suggestion, if one looks back to the last decades of the 20th Century, is not sustainable. The two super powers the Soviet Union and the United States not withstanding their very different systems of government were able to engage and work together with this, as noted earlier in this paper, ensuring the Cold War did not become a Hot War.

The concept of multilateralism requires real leadership and courage by National leaders in addition to a long-term vision. Multilateralism is not easy to sell to the voting public and the electoral cycle in democratic nations is not conducive to developing long-term strategies and unilateral world will be a disaster for everyone.

The world cannot turn away from a multilateral framework to manage the global world order and the global economy:

  • All nations big and small and the people of the world are inextricably linked economically.
  • Open borders created economic growth. Since China opened its doors more than 500 million people have been lifted out of poverty.
  • Prosperity creates security and stability within nations and between nations.
  • Prosperity is the best defence against radicalism and terrorism.
  • Climate change, the biggest threat facing the world, can only be managed in a multilateral framework.
  • Nations big and small cannot create a secure and prosperous future for their citizens without engaging with other nations.
  • Dominant nations in the global world order must understand that their position and economic success carries with it a much wider responsibility than just to their own citizens.

The Nations of the world must make multilateralism work for the sake of future generations.”

J.G. Harrowell AM
NSW Special Envoy to China
Partner Hunt & Hunt Lawyers
Sydney 
Australia 
December 2019