The rising powers and the liberal world order: the GCC in a ‘post-Western’ environment

March 15, 2017
The rising powers and the liberal world order: the GCC in a ‘post-Western’ environment
Richard Woodward
Richard Woodward Non-Resident Fellow - International Economics

The inauguration of Donald Trump as 45th President of the United States has reignited the debate about the future of the liberal international order. Some bullish assessments aside most prognosis are gloomy. In many respects this is nothing new. Anguished accounts foretelling the demise of the liberal order, the loose array of rules, norms, principles and institutions championed by the United States since the 1940s, are almost as old as the order itself. Uniting these narratives was a belief that the international order would be toppled by the passing of American pre-eminence and rising powers exploiting their newfound muscle to advocate alternative ideas and agendas. For a long time Russia (in the 1950s and 1960s) and Japan (in the 1970s and 1980s) were the main bogeymen. Since the turn of the century, however, most observers believe that the biggest challenge to the status quo come emanates from the rising powers of the Global South. Although most attention is usually lavished on the BRICS countries, especially China, during this period the GCC members have also assumed more prominent positions on a host of global governance issues.

Donald Trump’s arrival in the Oval Office has altered the terms of this debate. Rather than withering from without the US inspired international order suddenly looks to be withering from within. Despite the mercurial nature of the President’s rhetoric it is abundantly clear that the foreign policy of his administration will depart sharply from that of its post-war predecessors. This is typified by the administration’s ambivalence towards long-standing alliances such as NATO, its repudiation of free trade and intent to withdraw from the Paris climate agreement. The US government is also re-evaluating the terms of its engagement across a host of less celebrated, but nevertheless crucial, multilateral institutions such as those responsible for global financial stability. The incoming administration is signalling its intent to abdicate its traditional leadership role triggering concerns that the world will regress into the kind of chaos and disorder that characterised previous periods without a global hegemon. Amidst these worries some commentators have rehabilitated the 21st century’s rising powers as potential saviours of the liberal order. These hopes are likely to be dashed.

That the rising powers are being touted as potential protectors of the liberal international order is not as bizarre as it initially appears. As John Ikenberry has argued, the farsighted architects of the liberal international order set out to ensure that its benefits were widely shared. This helped to recruit states to the system and also ensured their loyalty to it. Nothing illustrates this better than the BRICS, whose astonishing advance owes much to the open and rules-based nature of the contemporary global economy. Instead of using their burgeoning power to overthrow the liberal order, the rising powers have sought accommodation within it. Throughout the last decade the contribution of rising powers, including GCC members, in global governance has unquestionably deepened. Outward signs of these changes include Group of 20 (G20) superseding the Group of 8 as the ‘premier forum for international economic cooperation’ or the recalibration of voting shares at the International Monetary Fund. Less conspicuously the rising powers have made important contributions to a host of norms. The GCC countries for instance have perceptibly expanded their involvement in areas including reforms to the international financial architecture, energy governance and climate change. Even in cases where rising powers appear to be treading a more independent path, for instance China’s creation of the Asian Infrastructure Investment Bank (AIIB), a closer examination reveals that they mimic the norms and principles of existing multilateral institutions.

Recent statements from Beijing have amplified optimism that the rising powers might fill the void left by America’s retreat. In his keynote address to the World Economic Forum in January 2017, Chinese President Xi Jinping affirmed China’s commitment to globalisation, denigrated protectionism, defended the Paris climate agreement and called for stronger international cooperation. Shortly afterwards Zhang Jun, head of the Chinese Foreign Ministry’s Office of International Economic Affairs averred that “if it’s necessary for China to play the role of leader, then China must take on this responsibility”. It finally looked as though China was jettisoning its traditional timidity in foreign affairs in favour of a bolder posture.

This Panglossian view of China’s recent pronouncements discounts the pitiless truths of global politics. The rising power’s support for the liberal international order rests upon a simple calculation: that the benefits of belonging to the system exceed the costs. The problem is that this is precisely what angers President Trump and what his policies are determined to change. Starting with the benefits, the abandonment of the Trans-Pacific Partnership has motioned the willingness of the Trump administration to abandon multilateral deals that it perceives allows other countries to profit at America’s expense. Whether Trump follows through on his threats to withdraw some of the leading multilateral institutions such as the World Trade Organisation remains to be seen. Irrespective, reforms to these institutions that ensure the US captures more of the benefits may damage the rising powers’ commitment to them. Simultaneously sustaining the liberal order would also entail additional costs for the rising powers. They would be required to make substantial contributions to the supply of global public goods including providing international security, maintaining freedom of the seas, protecting the environment, ensuring global financial stability and acting as a market of last resort for distress goods.

Regardless of whether the rising powers would be willing to shoulder these burdens, doubts must be cast on their ability to do so. The military spending and capabilities of the rising powers lag far behind those of the US. It is inconceivable that they could substitute for the global security role played by the United States. Likewise, for all their financial firepower it would be absurd to suggest that any of their currencies could usurp the dollar’s position as the international reserve currency. The economic development of these countries has also outpaced political and institutional developments. For instance, India’s ability to play a leading role is hampered by having a diplomatic corps equivalent in size to New Zealand. From this perspective, the emerging states pose a danger to the liberal international order not because they are too powerful but because they states are not powerful enough.

The fantasy of a liberal order led by the rising powers also encounters, to borrow a contemporary euphemism, “alternative facts”.  The rising powers are hardly standard bearers for liberalism.  Widespread state ownership, the exclusion of foreign investment from many sectors, strict capital controls and the protection of strategic industries by mountainous trade barriers speak of economic models considerably at variance to that advocated by the Washington Consensus. China’s development banks, who now disburse more loans than the six biggest multilateral development banks put together, make no pretence of promoting free societies or good governance. In addition to maintaining authoritarian systems at home, China and Russia have gone to considerable lengths to deter and roll back the development of liberal and democratic regimes in their sphere of influence. Any international order dominated by non-Western powers is unlikely to possess a liberal hue.

What does all this mean for the GCC? Given how profoundly the worldview of the Trump administration differs from its forebears it does not seem plausible to argue that the relationship between the US and the GCC “is anchored in mutual interests and stable institutions, and is likely to remain so indefinitely”. Clearly there are aspects of the liberal international order that are of enormous benefit to the GCC countries. Upheld by America’s forward military deployments, norms of sovereignty and free navigation have guaranteed the territorial integrity of GCC countries and the safe passage of their oil exports helping the region to enjoy a level of peace and prosperity that is unsurpassed in the Arab world. With the value of trade exceeding 100% of GDP in three GCC countries (Saudi Arabia at 72% is the lowest), the region would have much to lose from deterioration in global trade rules. As a region likely to become an area of future strategic competition between the US and the rising powers (and amongst the rising powers themselves), the present international order reduces the risk that GCC countries will, literally or figuratively, find themselves in the crossfire.

While many would mourn the passing of the liberal international order, a multipolar world may provide openings for the GCC to influence global governance. The rising powers are likely to be more sympathetic to some of the GCC’s concerns and ideas, for instance reinforcing norms surrounding non-intervention in sovereign affairs. The AIIB maybe China’s first major foray into multilateral institution building but it is unlikely to be the last. Participation in these ventures affords the GCC an opportunity to shape and disseminate the norms of the post-hegemonic world.