A world in transition

By Dr Maleeha Lodhi
November 20, 2012

Terrorism no longer figured among the top concerns of the international community at the World Economic Forum’s annual summit in Dubai last week. Instead, other issues dominated – global financial instability, power shifts and China’s rise, resource scarcity, inadequacy of global governance institutions, climate change and extreme weather, large-scale youth unemployment, cyber security and vulnerabilities created by new technologies.
Billed as the world’s largest brainstorming event, the Dubai summit, now in its fifth year, brought together a thousand decision-makers, experts and thought leaders from eighty countries. Their deliberations on cross cutting issues aimed at shaping global, regional and industry agendas and serve as intellectual input for the WEF’s flagship event at Davos in January 2013.
If there was a core theme that connected the diverse issues discussed at Dubai, it was of a world in profound but uncertain transition, where the possibilities were as numerous as the risks and challenges. The Global Agenda Survey conducted ahead of the summit identified what WEF members saw as the most important trends that will likely impact the world in the next 18 months. Among the top fifteen were the possible collapse of the Eurozone, unstable international economic outlook, digital communications revolution, lack of global leadership, social unrest and global inter-dependency. Another poll conducted by the WEF, from among a thousand members, showed that just over half of the respondents lacked confidence in the global economy with more in North America worried about an economic shock than those in Asia.
The weakness of global governance institutions to meet contemporary challenges emerged as a key concern at the Dubai Summit. The plenary saw a spirited discussion inaugurated by Klaus Schwab, the WEF’s founder and executive chairman. He cited a number of failings of the present multilateral system: its ‘non multi-stakeholder’ character (being state-based), its fragmented, non-inclusive and crisis driven approach, and eroding legitimacy because of its lack of effectiveness.
Former British Prime Minister Gordon Brown agreed, pointing to the lack of international coordination in the ongoing financial crisis and on rules and standards of the global financial architecture. But Pascal Lamy, head of the World Trade Organisation, injected another dimension to the debate. Disagreeing that the multilateral system was not functioning, he argued that what worked was the system that delivered “things” (food, medicine, development finance). He cited the World Bank and UNDP as examples.
What did not work was the system dealing with “rules” – on trade, climate change and financial issues. This was in poor shape. Not because the machinery or engine was not there, he said. But because the global fuel to run that engine was missing. That fuel, according to Lamy, came from the political energy of governments. But as countries hit by financial crisis and social stress were drained of energy, the world was in for a period of “low international energy”. To compensate, this energy had to be sought in non-government sectors, business, industry and civil society.
Joining this debate, UN Deputy Secretary General Jan Eliasson lamented the decline in internationalism and called for global formulas and solutions that countries could regard to be in their national interest. The only way to produce global governance for common purpose was when that purpose was construed to be in the ‘national interest’.
Many in the audience felt the speakers overemphasised structures when it was global leadership that was missing. The lack of ‘political energy’, said one, was due to the absence of leadership. But a more significant omission was in the panel’s own composition. Discussing an issue in a context transformed by the shift in global power from the West to the rest, the all male, all-white, and all-European panel of speakers was hardly representative of the changed world that was being analysed. The irony was not lost when in a later session, a former Australian prime minister described Europe as becoming irrelevant to Asia, consumed as Europe was with its economic troubles, which had sapped its “international energy and external confidence.”
By far the liveliest discussion was in the ‘Geopolitical Outlook’ session. This featured leading Chinese academic Wu Xinbo, Ian Bremmer, the American author who coined the term ‘G-Zero world’, Australian MP Kevin Rudd and Secretary General of the Arab Maghreb Union Habib Yahia. The US ‘pivot’ to Asia and the rise of China dominated this discussion. Xinbo set the tone by saying that the US ‘rebalancing’ to Asia was driven by the aim to counter or contain China’s rise. This was stoking instability, encouraging some regional countries to press their own agendas.
Bremmer described the greatest risk in Asia as broadly revolving around China’s rise. Rudd interjected to say this was a challenge, not a risk. It was left to Xinbo to reframe the debate by arguing that the so-called ‘risk’ to stability will be determined by how other countries react to China’s rise.
Discussion of what China’s ascent meant for the global order saw spirited exchanges. Bremmer declared that there are “no BRICs” only China, whose rise had “upset the global applecart”. He reasoned that as the post-World War II international order was created by the US and its western allies, China did not feel obliged to play by rules it did not set. This evoked an instructive response from Xinbo. It was true, he said, that China was not involved in establishing the present international order, but this did not mean it opposed it, especially as it had benefited from it. “China”, he explained, “doesn’t want to overthrow the order but to reform it”. To Bremmer’s call for China to become a “responsible stakeholder”, Xinbo’s response was sharp. “If you want China to be a stakeholder it has to be given more stakes” in the system.
From Habib Yahia came an interesting intervention. There were, he said, 50,000 Chinese experts in North Africa, “fully integrated” into local society, and who were appreciated by the people in the region for their role in building large infrastructure projects.
Other risks were also highlighted during this largely-attended session: shrinking natural resources and rise of resource nationalism, volatile weather, youth unemployment, growing tension between nationalism and globalism, and new technologies empowering a new generation but also making it anti-authority and contributing to a more volatile world. All the panellists agreed that geopolitical risks were outpacing the international community’s capacity to respond to them.
The session on “Global Shifts and Regional Flashpoints’ was also insightful for identifying the challenges ahead. In sounding a warning of much consequence for our region, UN Under-Secretary General Valerie Amos referred to the danger of a flare up of a humanitarian crisis in Afghanistan as the Nato withdrawal gathered pace.
The statistics she cited about last year’s natural and man-made disasters made for a grim picture. There were, she said, 332 natural disasters in 2012, which claimed 30,000 lives and produced losses of over $366 billion, with Asia affected the most, followed by the Americas. Conflicts in the world increased by 20 percent, although most were within and not between states. They led to the forcible displacement of 42.5 million people worldwide.
What about the outlook for the Arab spring countries? This also figured on the Dubai agenda with consensus forming around ‘the iron law of transitions’: Things get worse before they can improve. Political instability will continue in many countries, said several speakers. There was still no clear political road map and even less prospect of economic stability, especially with youth unemployment remaining an explosive problem.
The three-day conference, hosted by the UAE government, certainly lived up to its reputation of being the world’s foremost gathering of thinkers, academics, business and government leaders debating and seeking solutions to the world’s interconnected problems. No longer can these problems be addressed by individual states or governments alone without the involvement of the rest of society that the WEF advocates as a multi-stakeholder approach.

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