Bremmer and Roubini Explain Why a “G-Zero World” Means Conflict, Protectionism, and Trade Wars
Pre-release from the March/April 2011 Issue of Foreign Affairs:
Much of the talk at this year’s World Economic forum at Davos was about the “G-Zero”—which the New York Times has already called “this year’s buzziest buzzword.” Ian Bremmer, president of Eurasia Group, and Nouriel Roubini, professor at New York University, previewed their lead article from the forthcoming issue of Foreign Affairs, “A G-Zero World”— a world in which “no single country or bloc of countries has the political and economic leverage—or the will—to drive a truly international agenda.” In the past, the United States has been able to use its military and economic power to force global cooperation, but today it “lacks the resources to continue as the primary provider of global public goods,” write Bremmer and Roubini. And other powers, such as China, have “no interest in accepting the burdens that come with international leadership.” Such a vacuum will likely accelerate the rise of currency wars and increase the risk of another global economic meltdown, they warn.
Asked at Davos about the notion that in a G-Zero world, the recently created G-20 was already obsolete, Laurence Parisot, head of France’s MEDEF business lobby, went so far as to accuse the proponents of G-Zero of calling for “economic war.” Il Sakong, chairman of the South Korean presidential committee for the G-20 summit in Seoul, attacked the authors because he said they did not propose a solution to the problems they described. Bremmer’s response? “The G-Zero isn’t aspirational, it’s analytic. Unfortunately, it’s also where we are.”
An advance look of “A G-Zero World” is now available on ForeignAffairs.com. The following are some excerpts:
“[T]he divergence of economic interests in the wake of the financial crisis has undermined global economic cooperation, throwing a wrench into the gears of globalization. In the past, the global economy has relied on a hegemon—the United Kingdom in the eighteenth and nineteenth centuries and the United States in the twentieth century—to create the security framework necessary for free markets, free trade, and capital mobility.”
“For the past 20 years, whatever their differences on security issues, governments of the world’s major developed and developing states have had common economic goals. …But for the next 20 years, negotiations on economic and trade issues are likely to be driven by competition just as much as recent debates over nuclear nonproliferation and climate change have.”
“Conflicts over trade liberalization have recently pitted the United States, the European Union, Brazil, China, India, and other emerging economies against one another as each government looks to protect its own workers and industries, often at the expense of outsiders. Officials in many European countries have complained that Ireland’s corporate tax rate is too low and last year pushed the Irish government to accept a bailout it needed but did not want. German voters are grousing about the need to bail out poorer European countries, and the citizens of southern European nations are attacking their governments’ unwillingness to continue spending beyond their means.”
“From 1945 until 1990, the global balance of power was defined primarily by relative differences in military capability.It was not market-moving innovation or cultural dynamism that bolstered the Soviet bloc’s prominence within a bipolar international system. It was raw military power. Today, it is the centrality of China and other emerging powers to the future of the global economy, not the numbers of their citizens under arms or the weapons at their disposal, that make their choices crucial for the United States’ future.”
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