New world order: days of crises past

" We are a long way from the crisis moment of 2008 which brought the world together in mutual efforts to prevent an unravelling."

A new US administration’s antagonism to the North American Free Trade Agreement and its threats in recent days to impose punitive tariffs on steel imports from China and South Korea will focus attention on risks to world trade more generally.

Any day now the US administration is set to receive a report on the importation – read dumping – of low-cost steel into the American market.

The presence in Hamburg of leaders of the five regional countries of greatest importance to Australia – China, India, Japan, Indonesia and South Korea – invests such a gathering with special importance from an Australian perspective.

Usefully, Singapore has been invited to Hamburg as an observer.

Asia-Pacific security may not be one of the agenda items but Australian Prime Minister Malcolm Turnbull will no doubt avail himself of the opportunity to engage his regional counterparts on security threats.

This includes legitimate worries about China’s base-construction activities in the disputed waters of the South China Sea.

Contempt

In Sydney last month for talks with Australian officials, US defence Secretary James Mattis denounced such activity, saying it showed a “disregard for international law’’ and “contempt for other nations’ interests”.

In June the Washington-based Centre for Strategic and International Studies released satellite imagery showing China building what appeared to be missile silos on disputed reefs in the Spratly Islands.

More broadly, discussions between world leaders on the margins of these events serve a more useful purpose than windy contributions in plenary sessions.

From a global security standpoint, there will be no more significant event at this G20 than a proposed meeting – the first such encounter since Donald Trump assumed the US presidency – between Trump and Russia’s Vladimir Putin.

One of the advantages of the G20 is it enables such engagement free of expectations which might accompany a full-blown summit and thus commentary about success or failure.

Discussion about the Middle East and options in Syria where Russia is supporting the Damascus regime against US-backed Syrian rebels will be an important component of these discussions.

In an environment unusually fraught for all sorts of reasons, not least a new US administration’s teething troubles, this G20 under the guidance of Germany’s Angela Merkel would serve a useful purpose if it calms the waters more generally.

This might be an unreasonable expectation in the circumstances given the complexities of issues which will confront world leaders - and the differences of opinion which exist.

Merkel herself in a feisty speech to the Bundestag lower house of parliament late last week indicated she would not back away from such differences on issues like climate change and trade protectionism.

“These will not be easy talks. The differences are obvious and it would be wrong to pretend they aren’t there. I simply won’t do this,’’ she said.

Germany’s chancellor took particular aim at the Trump administration’s protectionist impulses, saying bluntly those who think the problems of this world “can be solved with isolationism or protectionism are terribly wrong”.

As a scientist herself Merkel is particularly annoyed by Trump’s pushback against remedies to deal with climate change. 

US withdrawal from the Paris Agreement on climate has dismayed the Europeans. Perhaps at no time in the post- World War II - going back to the construction of a new world economic order via Bretton Woods and the establishment of the World Bank and the International Monetary Fund - has American global leadership been under such strain.

It may be premature to declare the end of an era of pax Americana – after all, America remains the world’s dominant military power - but it is certainly not unreasonable to question the country’s ability to assert itself as before.

Meteoric

China’s meteoric rise has contradicted comfortable assumptions about American dominance which accompanied the fall of the Berlin Wall and the subsequent implosion of the Soviet Union.

Talk of a unipolar world proved fleeting.    

In the relatively brief history of the G20 we would have to go back to the crisis summit in Washington in November, 2008 as the world teetered on the brink of a financial meltdown for a reference point for this latest event.

No-one is suggesting 2017 resembles a crisis-ridden 2008 but strains in the western alliance and tensions between the US and important players, including principally, China, are manifest in the lead-up to Hamburg.

This latter was underscored last week by the effusive welcome accorded India’s Prime Minister Narendra Modi in Washington.

The Trump-Modi bear-hug was the most public manifestation of what was clearly designed by Washington as a signal to Beijing that US hedging policy in the Indo-Pacific includes an enhanced relationship with India.

In their joint communique, the two leaders could hardly have been more pointed in reference to India’s misgivings about China’s One Belt and One Road Initiative.

This is Chinese Xi Jinping’s framework for Beijing’s economic, political and cultural assertiveness over its neighborhood very broadly defined.

In their joint communique Trump and Modi said the following, in an obvious riposte to Xi’s ambitious plan, in which they pledged to support “bolstering regional economic connectivity through the transparent development of infrastructure and the use of responsible debt financing practices, while ensuring respect for sovereignty and territorial integrity, the rule of law, and the environment; and call on other nations in the region to adhere to these principles.”

The “other nations’’ reference was clearly aimed at China.

Hard on the heels of the Trump-Modi meeting Beijing was obliged to digest two further irritations.

In late June the State Department approved the sale or more than $A1 billion in arms to Taiwan.

That was followed quickly by the announcement US sanctions would be applied to China’s Dandong Bank which facilitates commerce with North Korea.

In Washington China’s ambassador Cui Tiankai wasted no time in responding.

“All these actions,” the response said. “Sanctions against Chinese companies, especially arms sales to Taiwan – will certainly undermine the mutual confidence of the two sides.

This response and strong criticism of the US in China’s official media has prompted the observation a honeymoon between the Trump administration and China has been short-lived.

That judgement might be premature, if indeed there was ever a honeymoon as such. Inevitably, a more nationalistic ‘America First’ posture in Washington will cause friction. The question is whether these frictions can be contained.

In the meantime, groupings like the G20 can – and do – provide something of a safety valve for an extraordinary range of issues to be canvassed among countries representing 80 per cent of global GDP, 75 per cent of world trade and two-thirds of the world’s population.

On this occasion however the risks are differences wherever you look on trade, climate, refugees, security, will overwhelm a fragile consensus, if there was ever real prospect of consensus in the first place.

We are a long way from the crisis moment of 2008 which brought the world together in mutual efforts to prevent an unravelling.

Tony Walker is an author and former Washington correspondent, international editor, Middle East editor and senior political editor at The Australian Financial Review and The Financial Times.