The vision of a rules-based order

Though Russia’s brutal attack on Ukraine in February 2022 clearly breached the UN principle of respect for national borders, the UN is unable to enforce that principle. The reason is that Russia is a permanent member of the Security Council (SC) and can veto decisions in this crucial body. The SC is supposed to rule on the legitimate use of armed forces, but regarding the war in Ukraine, it is toothless.  

The rules of the multilateral system are plainly not strong enough to bind all countries. Some are above the rules.

Leaders from North America and the EU find it bewildering that some of their counterparts in Latin America, Africa and Asia do not see the Ukraine war in the same light as they do. The background is that Russia is not the only country that has made use of its veto power. The USA has a long history of doing so too. The Iraq war was never permitted by the SC.  

On our platform, Kai Ambos and Imme Scholz have spelled out why western rhetoric emphasising “the” rules-based order often remains unconvincing. High-income nations’ failure to live up to pledges regarding official development assistance (ODA) and climate action has added to the ambivalence, as André de Mello e Souza elaborated.  

Why care about WTO rules?

Western leaders would also do well to remember that, during the Corvid-19 pandemic, partners in developing countries were deeply disappointed because they were cut off from vaccines. That was so in spite of a compromise struck at the summit of the World Trade Organization (WTO) in Doha in 2001 according to which intellectual property rights should not stand in the way of providing necessary public health services. It is most welcome that Germany’s Federal Ministry for Economic Cooperation and Development (BMZ) is now promoting efforts to launch vaccine production in Africa. However, this sensible policy is being implemented too late. When vaccines were needed most, they were not available in many countries and people have not forgotten.

It is similarly striking that US president Joe Biden’s approach to climate action is not in line with WTO rules. To protect the climate, he is resorting to protectionism. His policy thus entrenches the doubts that leaders from low and middle-income countries have regarding whether they can rely on multilateral rules. In most cases, there simply is no enforcement mechanism they could use when those rules are disregarded by powerful countries. 

The examples listed above show that a reliable rules-based world order remains an aspiration. It is yet to be established. Unless Western leaders acknowledge that, they will find it very difficult to convince their counterparts from less advantaged nations.

No coherent system for sovereign default

Western leaders would also do well to acknowledge that there are huge gaps in the multilateral system. For example, the international community lacks a coherent system for dealing with sovereign default. The reason is not that sovereign default only happens very rarely and needs no regulation. The problems actually recur regularly. However, powerful creditor nations so far had little interest in establishing binding rules for this kind of crisis. Germany’s current federal government deserves praise for speaking out in favour of such rules, but international partners of course remember that previous German governments did not do so – not even during the euro crisis, when sovereign debt problems were affecting the EU itself.

It is promising that the G20 has begun to tackle the problem. Its Common Framework on Debt Treatment is a good start, but it needs to evolve further. Multilateral rules only evolve slowly, not least bebecause there is some disagreement within the G20. In particular, China tends to disagree with the USA and EU. The good news is that some progress is being made, but it is actually quite slow in view of many economies struggling with serious sovereign-debt problems.  

International media coverage has largely focused on China’s role in related debates. Indeed, D+C/E+Z has done so too. The reason is that China’s consent to debt restructuring is needed to facilitate badly needed IMF bailouts.

EU and USA must bear some blame for debt drama

It is true that Chinese lending has contributed to the debt problems and that its role has attracted much attention. However, North America and Europe bear some blame too. After the financial crisis of 2008, their very low interest rates made private-sector investors look for higher profits in developing countries. This is the reason why African governments’ bonds found buyers. Those bonds now contribute to the debt burdens. In the meantime, rising interest rates in high-income countries, moreover, are making debt servicing even harder.  

The current debt crises did not simply originate in China. Nor are high-income countries at fault alone. The governments that piled up excessive debts, moreover, obviously did not fulfil their responsibilities diligently. The current international debt drama is an excellent example of global challenges being complex. They have many causes, but no simple solutions. Nation states cannot solve them on their own, so we need global cooperation. A full-fledged rules-based global order would include institutions capable of delivering the needed results. We evidently lack that kind of global-governance system.

It is somewhat ironic, moreover, that the most important setting for multilateral decision-making is currently the G20. It is the informal group of the world’s 19 largest economies plus the EU. Unlike the UN, it does not operate according to formally defined rules. Nor does it have a mandate from all nations to make global rules. Nonetheless, we should appreciate that the G20 is playing a useful role. It can help to bring about the kind of coherent global governance humanity’s common future depends on. And if western leaders want to win more support in Asia, Africa and Latin America they should do their best to facilitate sensible rules – and then follow them.   

Hans Dembowski is the editor-in-chief of D+C/E+Z.
euz.editor@dandc.eu