Argument

Experts Get Multipolarity All Wrong

Don’t discount the G-20. In a world with no hegemon, coordinating bodies are more important than ever.

IMF Managing Director Christine Lagarde welcomes Japanese Finance Minister Taro Aso, U.S. Treasury Secretary Steven Mnuchin, and others at the G-20 finance ministers and central bank governors meeting in Fukuoka, Japan, on June 9.
IMF Managing Director Christine Lagarde welcomes Japanese Finance Minister Taro Aso, U.S. Treasury Secretary Steven Mnuchin, and others at the G-20 finance ministers and central bank governors meeting in Fukuoka, Japan, on June 9. Toshifumi Kitamura/AFP/Getty Images

In our multipolar era, G-20 meetings have taken on growing importance as a forum to air and negotiate conflicts. Witness the upcoming summit this week among the group of leading rich and developing nations in Osaka, Japan, where deep threats to the existing world order will be addressed head-on: rising tensions between the United States and Iran, a growing trade war between the world’s two largest economies, the state and strength of NATO, unpredictability in the relationship between the world’s top two nuclear powers, and a lack of rules governing increasingly borderless tech companies. At the end of June, the world’s major players could make substantial progress addressing all of them.

If they do, it will fly in the face of punditry dismissing summits as increasingly pointless diplomatic exercises, evidence of a rudderless international system following the decline of Pax Americana. In the “G-Zero” world, according to this line of thinking, power has been spread too wide and thin. And too many competing participants have been invited into too many multilateral decision-making bodies, diluting their impact and importance—to the detriment of the global economy and global markets.

It is certainly true that a more diffuse distribution of power reduces stability, makes anarchy more likely, and undermines the provision of global public goods—indeed, that is effectively an axiom of international relations. But that doesn’t mean that institutions like the G-20 are obsolete. In fact, the more multipolarity accelerates, the more meaningful and relevant multilateral institutions will become.

This is true for two main reasons. First, given the United States’ decreased appetite for providing public goods (including trade regimes, shipping lanes, and security guarantees), other powers such as China, Japan, Russia, and even the European Union are stepping in to fill the void. And even if the body is flawed, the G-20 can provide critical coordination and conflict resolution mechanisms for such efforts.

Second, and relatedly, such forums provide business and markets with critical information about how alliances and power dynamics are shifting in a more fluid international system. That’s true even if global policymaking itself is less efficient.

The upcoming Osaka summit should prove an excellent example. It offers a timely opportunity to gather together every key external player in the Iran imbroglio, for example. Although formal progress toward better U.S.-Iran relations is unlikely, the summit will provide important signals on the potential for war and peace.

In addition, expect host and new G-20 president Japan to coordinate anti-protectionist nations at the summit, exploiting its star role in sustaining the (now sans-United States) Trans-Pacific Partnership and its new EU-Japan trade deal to do so. At the very least, Japanese Prime Minister Shinzo Abe can provide positive atmospherics for a much-anticipated summit meeting between U.S. President Donald Trump and Chinese President Xi Jinping, the outcome of which could determine the fate, at least in the near-to-medium term, of the global economy.

At the same time, Trump and Russian President Vladimir Putin are also scheduled to meet, which is relevant not only in light of the breakdown of U.S.-Russian arms treaties but also in terms of growing conflict over Russia between the White House and the U.S. Congress. Meanwhile, G-20 finance ministers appear to have made significant progress in agreeing to a new digital tax on multinational firms, a major development in the growing conflict between tech companies and the state that will likely be reinforced at the approaching summit.

Recent trends in U.S. and global markets help reinforce these points. First, increasing geopolitical risk has actually accompanied a boom in U.S. and global equity markets, suggesting that declining U.S. hegemony and growing multipolarity is not necessarily bad for business—or at least for stock prices. At the same time, markets have often turned downward around the time of recent G-20 summits. At the very least, this pattern indicates the G-20 events are important to markets, suggesting that developments at G-20 meetings may wake up the market to otherwise discounted or mispriced geopolitical risks.

The importance of the G-20 and bodies like it will only grow in a more multipolar world. As rare but institutionalized gatherings of major global political economies and their leaders, G-20 forums will be the place to understand shifting alliances and power dynamics. They will provide information about major geopolitical and geoeconomic uncertainties. Political and economic deals will be done and undone; conflicts revived and resolved; grievances accelerated and appeased. The result will not be order, per se. But it will certainly be more order—and more information about that order.

In short: something far greater than zero.

Mark Y. Rosenberg is the CEO of Geoquant and an adjunct professor at Columbia’s School of International and Public Affairs and the University of California, Berkeley’s Haas School of Business.

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