In his seminal paper entitled “Multilateralism: the Anatomy of an Institution,” John Gerard Ruggie defines multilateralism as an institutional arrangement that facilitates coordination among three or more states based on “generalized” principles of conduct. This coordination is not based on the specific interests of the parties involved or the strategic necessities that may arise in any given situation. Ruggie’s definition of multilateralism consists of three key principles: indivisibility, non-discrimination, and diffuse reciprocity.
Indivisibility is exemplified by collective security arrangements, where an attack on one member is considered an attack on all. Non-discrimination implies that all parties should be treated similarly, as demonstrated in the use of most-favored-nation (MFN) status in trade agreements. Diffuse reciprocity suggests that states should not rely on specific, quid-pro-quo exchanges but on longer-term assurances of balance in their relationships. Quid-pro-quo also has principles of specialized and differential treatment for developing countries and LDCs.
Today, the system of multilateralism, as defined by Ruggie, is in complete disarray. The once robust system now confronts a crisis, as nationalistic interests and short-term gains have overtaken collective action and long-term cooperation. The state of multilateralism reflects a sinking ship, where its foundational principles of indivisibility, non-discrimination, and diffuse reciprocity have given way to protectionism and self-interest. In this context, countries are increasingly becoming inward-looking, with the collective security arrangements that were the backbone of multilateralism being weakened and the most-favored-nation status, which facilitated fair trade, being supplanted by bilateral deals.
The deterioration of multilateralism can be traced back to the Iraq War in 2002, where the United State’s failed efforts to secure authorization for the invasion from permanent members of the UN Security Council, such as France and Russia, resulted in the creation of an ad hoc coalition of willing states. More recently, multilateralism has been criticized for its inability to address the COVID-19 pandemic effectively. The Ukraine-Russia conflict and its far-reaching impact on finance, trade, technical innovation, as well as energy, raw materials, and food markets, appear to have definitively marked the end of the old world order. This development has led to a questioning of the effectiveness of global problem-solving mechanisms.
The capacity and readiness of multilateral institutions to confront global challenges are continually put to the test by shifting global dynamics. The present circumstances, however, may offer an opportunity for a reset, providing a chance for multilateralism to renew its effectiveness. We would like to discuss four key challenges that confront multilateralism today and which need to be addressed to revive multilateralism.
(1) The need for a multilateral structure that accurately reflects the contemporary geopolitical landscape has become increasingly apparent, given the emergence of new and complex challenges. Such challenges include terrorism, radicalism, pandemics, threats from new and emerging technologies, growing asymmetrical threats, the disruptive role of non-state actors, and intensifying geopolitical competition. It is appalling that a body like Security Council does not have any African country as a permanent member. Furthermore, it is equally troubling to realize that India, the world’s largest democracy and soon-to-be the most populous country, does not have a permanent seat at the table. This imbalance raises concerns over the legitimacy and fairness of global governance structures and their ability to address the diverse and complex issues facing the international community.
(2) Since a lot of multilateral institutions are unrepresentative, they have become a façade for a limited number of countries to have their way. Furthermore, The reputation of the United Nations and its various affiliated organizations has been waning due to criticisms of inadequate effectiveness, institutional stagnation, and internal conflicts of beliefs. The World Trade Organization’s efforts to finalize the Doha Agenda, initiated in 2001, have not succeeded, with the resurgence of bilateral and protectionist policies worldwide, causing the organization’s dispute resolution mechanism to stall. The intricate structure of arms control was created after the Cold War, with Russia pulling out of the Strategic Arms Reduction Treaty.
(3) A few countries consistently undermine the multilateral system by resorting to hostile diplomacy and coercive tactics to manipulate international institutions. They employ predatory debt diplomacy to influence other countries to endorse their position or nominees and subsequently exploit these organizations to steer policies that deviate from the collaborative principles on which they were founded. The world should condemn it.
For instance, China has emerged as a major creditor and competitor to the International Monetary Fund (IMF) by providing tens of billions of dollars in secretive “emergency loans” to vulnerable nations. Furthermore, when a country borrows from the IMF and faces difficulty repaying its debt, it may request debt rescheduling, which involves re-negotiating the loan terms to make it more manageable. Unlike the IMF, most of the time, China is not open to debt rescheduling requests.
This has raised concerns about China’s growing influence and the need to reform the IMF to ensure that vulnerable countries are not dependent on China during emergencies. Instead, they should be able to turn to the IMF for assistance in times of crisis, reducing the risks associated with China’s rising dominance in global lending.
(4) The traditional culprits of global discord are flouting the rule-based order, causing a shift from multilateralism to nationalism. In recent years, populism and nationalism have surged in response to the growing social, political, and economic uncertainty. These already-existing divides were exacerbated by the COVID-19 pandemic, which brought global trade to a grinding halt and disrupted supply chains. This has led importing nations to lose faith in the exporting nations and in multilateral organizations that were supposed to ensure the availability of essential goods and equipment during crises.
The present circumstances offer an opportunity for a reset, providing a chance for multilateralism to renew its effectiveness and address the international community’s complex issues. These challenges must be addressed to revive the system of multilateralism.
Bibek Debroy is Chairman, the Economic Advisory Council to the Prime Minister of India (EAC-PM) & Aditya Sinha is Additional Private Secretary (Policy & Research), EAC-PM.