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The major barriers to effective global governance

 10 min read / 

Global governance refers to the way governance and international cooperation is achieved in the international system at a global scale. It illustrates the regulation and centralization of states’ governance in the absence of world government. Different analytical approaches present different ideas about what effective global governance entails and the barriers to it being carried out effectively. Global governance can be analysed through different nalytical lenses such as comparative advantage which points to possible cooperation although its critics call attention to some of the unrealistic assumptions it makes. Similarly, game theory expresses the potential of cooperation if certain criteria are met but provides a fairly pessimistic picture of the prospect for cooperation if states are left to themselves. Ultimately, liberal institutionalism holds a more positive view by claiming that international institutions can enforce effective global governance and are increasingly demonstrating this in the United States and China relationship.

The United States and China’s interdependent relationship is based on two important economic factors. On one hand, the United States imports far more goods and services from China than vice-versa. On the other hand, China is the biggest foreign lender to the United States. China’s rapid economic expansion is seen by some to confirm that free trade is a positive-sum game. Others see it as possibly leading to more direct confrontation with other countries. According to comparative advantage, countries benefit from specialisation and trade. If a country specialises in an activity, it can sell the surplus to finance imports of other goods which leave it better off than if it tried to carry out the activity itself. The theory exemplifies a possibility and an incentive for cooperation in global trade as countries become better off by specializing in what they are comparatively best at. However, it relies on a series of assumptions and conditions that are not always readily and realistically applicable to the real world. For example, it is a model of world trade based on only two countries and two products. Additionally, some argue that China’s productivity is much lower than that of the United States because it lacks many of the advancements that the latter possesses. If China were to increase efficiency in making products that the United States specialises in, comparative advantage would disappear. Productivity gains made by China for example can result in outsourcing by the United States so that it benefits from lower production costs. The debate thus provides an example as to why lower productivity countries might want to enter free trade and attempt to specialise despite the vulnerability it can bring. Furthermore, the difficulty in agreeing the WTO’s Doha Round trade deal illustrates the fear certain states can have of being left out. Finally, although the comparative advantage model points to potential cooperation at a first glance, global economic governance is more complex and depends of a variety of other factors such as states preferences.

Economic imbalances between the United States and China have increased foreign policy relationships that reveal both mutual interests and frictions. Policy makers face uncertainty about the intentions and future actions of the other country. There are three important scenarios that englobe possible outcomes. Firstly, both states would cooperate if they knew that the other side would not cheat on them. The fear of being caught out may lead both sides to not cooperate. Economic theory claims that the United States and China would both gain by cooperating. However, by deciding trade strategies simultaneously they can both miss out on a cooperative solution. Secondly, great powers ‘need’ to think alike. The idea is to ensure that both parties make the right and same choice in order to avoid the negative outcomes caused by making different choices. A failure in coordination in this situation can undermine long-term economic gains to both sides. Thirdly, countries can risk mutual harm if they both stick to the same conflicting strategy. Comparative advantage for example is lost if both sides specialise in producing one product. These scenarios highlights both possibilities and barriers to cooperation and effective global governance.

The scenarios can be modelled as a game between two states and can be analysed through a political game theory approach. In situations of interdependency, one side’s expectations and preferred actions depend on the actions available to the other sides’, and what is known about their preferences. Game theory assumes that there are only two players that know each other’s preferences and available actions at the outset of the game in order to calculate the outcomes from each combination of strategies, along with the gains or losses they’ll receive from these. Trade games can portray the prisoners’ dilemma, where players would do better by cooperating but the threat of losing out if another player does not cooperate means that both play the non-cooperative strategy. It is only if both states cooperate that cooperation produces all-round gains. However, they can choose not to cooperate to avoid being the one who is punished by cooperating while the other doesn’t.

In practice, however, both China and the United States have moved towards free trade despite the games’ prediction of non-cooperation. Both states have joined the WTO and settled various agreements that commit them to setting low tariffs. This allows the United States to set low tariffs knowing that China will also do so or can be obliged to do so. The trade game, unlike the prisoners’ dilemma, is repeated which allow states to try out different strategies and adapt to create the best possible outcomes for themselves. Altering payoffs so that non-cooperation is no longer a dominant strategy is another way of ensuring cooperation. The WTO for example tries to enforce cooperative outcomes by enforcing low tariffs, monitoring countries trade policies as well as allowing them to be contested and imposing penalties if cheating occurs. The severity of punishment can cause situations in which it is rational for all players to set low tariffs, even in a one-shot version of the game.

The problem of global governance in the International System is that most situations involve more than two players. The more players there are, the harder it is to reach a mutually beneficial solution through negotiation or repeated play. Finally, game theory is based upon strong assumptions that ignore a lot of constraints on decision making. They assume that states operate as ‘human calculators’ and separate actors from their environment which provides a static view of the world. Conversely, if conditions are made more realistic, game theory loses much of its explanatory power. Despite this, it provides a useful understanding of real life events and can help establish the scope for international institutions to improve the outcomes of engagement between states. Game theory views global governance as dependent of a series of conditions which can be greater transparency, predictability, trust and less uncertainty on regards to the outcome of states’ actions.

The United States and China economic relations can also be viewed through aliberal institutionalism. Liberal institutionalism is partly rooted in the liberal tradition’s focus on international rule making and the possibility of progress. In his book ‘After Hegemony’, leading liberal scholar Robert Keohane, accepted that the international realm was anarchic and that states were key actors. However, he focused on the role of international institutions such as the WTO and how they intervene to alter the outcomes of world politics. He went on to claim that ‘only in the context of institutions could international relations be understood’. Liberal institutionalists also argue that institutions have autonomy from the states that make them. Arguably, although the United States’ hegemonic power has eroded to give place to China, free trade still dominates world trade and states have learnt to cooperate within frameworks established by institutions such as the WTO. In relation to game theory, liberal institutionalists argue that states would cooperate if they knew that absolute gains are available and they were such that fellow states do not cheat. A positive outcome can be met as institutions can provide information, reduce uncertainty and tackle the need for states of pursuing individual strategies resulting in lower collective benefits.

Similarly to game theory, unfair outcomes can be assessed and lessened with the help of institutions that can offset losses and even them out over the long term. In ‘The Promise of institutionalist theory’ Robert Keohane and Lisa Martin set out some important points. They distinguish two barriers to global governance that states face when they attempt to cooperate. Firstly, they worry about the potential for others to cheat. And secondly, they face the problem of coordinating their actions on a particular cooperative outcome. As multiple cooperative outcomes usually exist with different distributional implications, this can lead states to disagreement. This example is the principal barrier to cooperation in coordination games. Cooperation does not equal harmony and that it is not necessarily good from a moral point of view. Harmony, can be defined as common interests whereas cooperation as what is done to deal with clashing interests. Three main situational dimensions affect the likelihood of actors to cooperate: mutuality of interest, the shadow of the future and the number of actors. Institutions make the difference, not by making rules that states have to follow but by changing the contexts within which states make decisions based on self-interest’.

Finally, liberal institutionalism holds the view that rational and instrumentalist calculations of self-interest are what drive states’ behaviour. For the case of the United States and China’s economic relationship, although both states might have diverging interests and preferences, their relation is based on the pursuit of long term interests. International institutions are instruments that aid effective global governance by strongly regulating state behaviour and helping them avoid the uncertainties, hesitations, and search of self-interest that certain game theory scenarios can entail.

In a sense, institutions help states to get around some of the limiting assumptions that game theoretic analysis sees as central: they can help to create higher evels of trust between states and help states to give more credible commitments. They also provide forums in which interactions between multiple states can be managed in a beneficial way. The three analytical approaches used to analyse the case study have different understandings of the underlying dynamics of the international system. Comparative advantage focuses on the benefits states can reap by specialising in the production of certain products. It sees non-specialisation as the major barrier to effective governance. However, it can be criticised for unrealistically representing world economic trade. Game theory brings down governance to a game where states make decisions in relation to each other actions or predicted actions. It views effective global governance as tainted by uncertainty and recognises the need of external factors such as institutions to reach stability and situations of cooperation. In association to this, liberal institutionalism claims that international institutions such as the WTO in matters of trade, are essential in achieving instances of mutual cooperation within the increasingly complex and unpredictable field of world trade. It is important to note that different theoretical models can be validated or discredited and that they remain parsimonious analytical frameworks.

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Global Affairs

BP and Iraq Sign Development Deal for Kirkuk Oil Fields

 2 min read / 

BP Kirkuk deal

Iraqi Government and British energy giant BP have signed an agreement for the future development of the Kirkuk oil fields in Northern Iraq.

A statement on the Iraqi Oil Ministry’s website said the “memorandum of understanding” between the government and the London-based oil company would enable further development of the oil fields as well as “to open a new page of work” for the North Oil Company, a subsidiary of the Oil Ministry, on “solid foundations”.

BP Director, Michael Townsend, said the company would conduct the necessary surveys and prepare the required statistics.  He claims the company will increase production by 750,000 barrels of oil a day.

The Kirkuk Oil Field, discovered in 1927, is one of the largest oil fields in the world, producing half of Iraq’s oil exports, a reported million barrels a day. However, it has also been a wellspring for local instability: the fields had been seized in 2014 by the Kurdistan Regional Government, who piped oil across the Turkish border, a few hundred kilometres to the north. The fields were only retaken by government forces in October 2017.

Baghdad is attempting to reassert its authority throughout its provinces and according to Iraq’s Minister for Oil, Jahbar Ali al-Allaibi, Thursday’s announcement will “speed up the rehabilitation process”.

During the Saddam Hussein era, the fields suffered irrecoverable damage due to poor management. Excess production was reinjected back into the ground making Kirkuk’s oil thicker and therefore harder to extract.

On Wednesday al-Allaibi met with Britain’s ambassador, John Wilkes, where according to the ministry’s website, they talked about joint cooperation between the two countries in the oil and gas industry.

Keep reading |  2 min read


Trump’s Presidency and Russian Relationship: The Future

 4 min read / 

Trump Russia

Much has been said about Donald J. Trump’s love affair with Russia. Questions deserve a thorough and honest investigation. As distasteful and risky it may be, the best outcome of the enquiry is accusations continue to swirl, Trump limps through three more years, and in 2020, he is crushed at the ballot box. The world moves on. If removed from office, odds are Trump whips his base into a frenzy. Only the height and duration of civil unrest is in question. A worse case is that Trump emerges emboldened, eager to settle Putin’s longstanding challenge.

Putin Mocks Trump

The competition is real. Putin’s economic and political dominance gnaws Trump. Putin knows this. So, he taunts the President and dares Trump to employ the same ruthless tactics he exploited to consolidate power and possibly become the world’s richest man. Since Trump only sees green, he took the bait. The race is on to be the world’s first trillionaire.

Russia’s population is 142 million. Its $3.86trn translates into a measly $26,900 per capita GDP. In contrast, the 326 million people of the United States generate $18.62trn in GDP, nearly five times Russia’s total. The US per capita GDP of $57,600 more than doubles Russia’s. Despite Russia’s meek economy and reports  that Putin has embezzled up to $200bn in assets, Putin remains incredibly popular in Russia.

The apathy regarding this unparalleled heist makes Trump and Putin salivate over what they could jointly pilfer from the world economy. To advance their contest, the pair will identify a common threat. US-Russia relations will warm. Under the guise of “Peace through strength,” Russian sanctions will be lifted, and the Magnitsky Act repealed.

The administrative state in retreat, animal spirits will run wild. Trump’s name will be emblazoned across the globe. Countries desperate for jobs will be compelled to forge deals sponsored by Putin and Trump. Ethics be damned, the race to the bottom of the $120trn global economy will prompt a wave of corruption never seen before. Every facet of human decency will be compromised: environmental regulations, free and fair-trade by-laws, intellectual property, and human rights protections. The collusion is real.

In time, complicity will turn to double-crossing. It’s the Trump-Putin way. Makeshift “me-first” trade deals will collapse. Boycotts, divestitures and sanctions will be commonplace. Cooperation will evaporate. New political boundaries will be drawn with little world condemnation.

It doesn’t have to happen this way. Patience is a virtue. The checks and balances of the three branches of government are powerful mechanisms to thwart overt corruption.

Yet, for the impatient who seek Trump’s impeachment or removal via the 25th Amendment, be careful what you wish for. Only Trump can tame his army. To assume Trump will plead mercy at the feet of the administrative state contradicts Trump’s lifelong persona. He will relentlessly counterpunch and encourage his followers to do likewise. The short and long-term political and social risks are astronomical.

If Trump stems the tide, consolidates power and aggressively partakes in Putin’s race for two terms, the risks outstrip his forced removal. The consequences will be multi-generational.

Rope-a-Dope Is the Key to Containing Trump

The only path that possibly prevents extensive collateral damage is to check Trump into policy oblivion. Legislators must play rope-a-dope for as long as it takes, even three years if necessary. If Democrats take back both houses in 2018, the tactic will not set up Trump and his base for a final knock-out punch in 2020. For that to occur, numerous members of the GOP must join the effort. They too must throw periodic jabs at Trump then absorb a barrage Trump’s counterpunches.

With foes in every corner, even Trump – the self-proclaimed greatest counterpuncher in history—and his base will wear themselves out well before 2020. Then the decisive knockout punch can be delivered at the ballot box—without collateral damage.

Trump is severely wounded. If he gracefully and peacefully surrenders the Presidency, great. But don’t expect it. Rope-a-dope deployed by both parties is the countries best hope for a peaceful end to the Trump Presidency. Any other scenario risks the once unthinkable; an ‘American Spring’.

Keep reading |  4 min read


May Meets Macron

May Macron

The UK prime minister agreed to pay £44.5m towards tighter border security at Calais.

Editor’s Remarks: The French president arrived in the UK for the Anglo-French summit amid widespread complaints from the Tory party about just why Britain is paying another £44.5m for tighter security in France. One Tory MP pointed out that this addition brings the total figure the UK has paid to France in recent years up to £170m. France, meanwhile, says that the amount is necessary because the migrants in Calais are trying to get to the UK, who must, therefore, contribute towards their costs. The talks were also consumed by the imminent task of reaching consensus over the UK’s trade deal with the UK after Brexit goes through.

Read more on Europe:

Keep reading |  1 min read


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