Context:
- The Indian Prime Minister recently expressed concerns regarding the crisis and failure of global governance in multilateral institutions.
More about the news:
- India recently emphasized the crucial role of the G20 in the reform of multilateral institutions(MI) with a particular focus on the United Nations.
- The climate vulnerable 20 group (V20) emphasized the need for reforms to the world’s international financial architecture to prevent the escalating climate crisis.
- The recently concluded meeting of the G20 working group on trade and investment focused on the important issue of WTO reform.
- The G20 New Delhi Leaders’ Declaration endorsed the G20 Independent Review of multilateral development banks MDBs Capital Adequacy Frameworks (CAFs).
What is a multilateral institution(MI)?
- A multilateral institution (such as the United Nations (UN), International Monetary Fund (IMF), World Bank Group etc) is formed by three or more nations to work on issues of common interest.
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Need of the Multilateral Institutions:
- Challenges of global nature: Most of the challenges nations face today are global in nature and require global solutions.
- Pressing global issues such as conflicts, climate change, migration, macroeconomic instability, and cybersecurity can be solved collectively.
- Pandemic disruptions: Disruptions such as the COVID-19 pandemic have reversed the social and economic progress that the global society made in the past couple of decades.
- In 2020, the pandemic resulted in an additional 97 million people falling into poverty.
Emergence of multilateralism:
- The conclusion of the Cold War in the early 1990s set the stage for a flourishing era of multilateralism.
- European Union: In Europe, there was a swift progression toward extensive regional economic integration and growth, witnessed by the formation of the European Union.
- ASEAN: In Asia, the Association of Southeast Asian Nations played a pivotal role in enhancing regional economic and political collaboration.
Fading Multilateral Order:
- Crisis of multilateralism: The recent East Asia Summit in Jakarta and the G20 summit display the irreversible crises within the established multilateral order.
- It is exemplified by the absence of the Russian President and Chinese President at these summits as well as their escalating conflicts with the rest of the world.
- Rise in Global conflicts: Russia is entangled in a conflict with Western nations regarding Ukraine, while China faces disputes with several Asian countries, including India, Japan, the Philippines, Vietnam, and the United States.
- China angle: China represents a lasting challenge to multilateralism.
- China’s increasing economic strength and military capabilities, to its expansionist actions, steadfast backing of Russia has created significant challenges in Asia and Europe.
Challenges with multilateral institutions(MI):
- Western Dominated : Most international institutions are primarily led and managed by Western countries.
- All presidents in the World Bank Group, from its inception in 1946 to 2023 have been U.S. citizens nominated or selected by the U.S.
- Traditionally, the United States has been a major contributor to the annual budgets of the international or regional organizations.
- Thus, the leadership of these institutions often aligns with the preferences of the US and its Atlantic allies.
- Failure to uphold principles of multilateralism: Developed nations sidestep or even boycott multilateral institutions in which they are either founding members or active participants.
- Thus, multilateralism has not failed, rather it is the governments of nation-states that have fallen short in upholding the principles of multilateral cooperation.
- Non merit based selection of the president of the World Bank: There is no open merit-based transparent selection process to appoint the president.
- The United States selects one of its citizens as the President of the World Bank, while Europe chooses a European to head the International Monetary Fund (IMF).
- Non democratic representation: The United States is the largest single shareholder in the World Bank/IMF, holding 16.5% of voting power. In contrast, India holds a 3.01% share, and China has 5.61%.
- This raises questions about the democratic representation of the Global South in these MDBs, which India claims to represent.
- Nations with greater voting powers are given more weightage in deciding loan amount, grants, policies, projects and direction of the institutions.
- Rise of Protectionist policies: The rise of protectionist policies such as America First, Brexit, etc underscore the threat and crisis of multilateral institutions.
Challenges faced by other MI:
- World Trade Organization(WTO):
- Staffing Crisis: The Appellate Body suffers from blockage of new appointments by certain member countries, specifically the US. This has rendered the body unable to hear new cases.
- Procedural Delays: The Dispute settlement system(DSS) often takes longer than the mandated 90-day period to resolve disputes, affecting timely trade justice.
- Overreaching Mandate: The DSS has been accused of overstepping its mandate by interpreting WTO agreements in a manner not envisioned by the member states, leading to friction.
- UnitedNations Security Council(UNSC):
- UNSC membership not reflecting today’s world: Developing countries are underrepresented and there are no permanent members from either Africa or LatinAmerica.
- Condemning reforms using Veto power: It requires just one negative vote from any permanent member to nullify a resolution, regardless of broad support among the Council.
- Five permanent members enjoy veto power and frequently abuse their privileges.
- A draft resolution condemning Russia’s attempt to annex four regions of Ukraine was struck down by Moscow’s veto.
- Lack of transparency and efficiency in the UNSC decision-making process: Although the Security Council has improved its decision-making, transparency, and efficiency over the past decade, there has been no progress on the enlargement of the Security Council.
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Challenges in reforming multilateral institutions:
- Change in current distribution of power: Any effort to reform multilateral institutions and systems inherently involves a shift in the existing power structure.
- Changing the distribution of global power is a complex and sensitive process that can have significant consequences if not approached carefully.
- Multilateralism against emerging multiplex global order: Multilateralism appears to be in contrast with the emerging multipolar and decentralised global order.
- This environment facilitates the creation of new groups, alliances, and coalitions among like-minded nations, complicating efforts to reform older institutions.
Way Forward:
- Establishment of a clear narrative for multilateral reform: To promote this narrative on the global stage, G-20 should create a dedicated engagement group.
- Current global challenges demand collaborative solutions, but it’s essential to recognize the limitations of traditional multilateral cooperation.
- Multilateral platforms often contend with conflicting interests and the dominance of powerful nations.
- Promotion of minilateral groupings: The G-20 should also promote minilateral groupings as a new approach to multilateralism and work on transforming them into multi-stakeholder partnerships.
- Establishing networks of issue-specific minilaterals, especially concerning the governance of global shared resources, can help prevent the emergence of competitive coalitions leading to a fragmented world order.
- Taking Cue from G-20: To overcome the trust, legitimacy and utility crises of multilateralism, the world requires a model, and the G-20 can be one.
Concerns raised by India against MI:
- Raising the Kashmir issue frequently at the UN General Assembly
- Addressing human rights violations at the UN Human Rights Council with limited success.
- Obstacles in listing terrorists and terrorist organizations in the UN Security Council.
- China’s obstruction of ADB projects and programs in Arunachal Pradesh
- Instances of India feeling marginalized on the global stage regarding multilateralism.
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- The G-20 became a world model for inclusivity and trust by providing membership to the African Union as a permanent member
- Decentralised Globalisation/Reformed multilateralism: More diversified and democratic global order with multiple centers of production.
- The trend of vaccine nationalism, trend of supply chain disruptions with food and other resources moving towards wealthier nations exposes the threats from globalization.
- Developing a multilateral governance framework for plurilateral agreements: It should include key principles of non-discrimination, transparency, and inclusivity in incorporating the results of plurilateral negotiations in the WTO rulebook.
News Source: DTE
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