Latest post on Left Futures

Tectonic plates shifting in world power structure are signs of a new world order

Something has just happened which got hardly any attention in the media, but which is very important. The recent setting up by China of the Asian Infrastructure Investment Bank may not seem likely to excite the passions, but it should. For this is clearly an intention by the big Asian powers to challenge the World Bank and the IMF which have been the cornerstone of Western (for which read US) domination of the global economy since Bretton Woods in 1944 and the main deliverers of the so-called ‘Washington consensus’. It is equally significant that several of Washington’s European allies, led by Britain, have signed up to become founding members of the new bank, despite vigorous US lobbying to stop them joining. France, Germany and Italy have also now joined up, and Australia and South Korea are also now thought likely to join. This unprecedented desertion of the US approach by its key allies has left Washington scrambling to recover from a major setback. But the immediate signs are that it’s not succeeding.

Jack Lew, the US Treasury secretary, has been forced to go to Congress to plead with the Republican majority to drop their opposition to IMF reforms which would give China and other emerging powers a greater voice in the Fund. He stated that if the reforms were not accepted when “our international credibility and influence are being threatened”, there will be “a loss of US influence and our ability to shape international norms and practices”. Republican intransigence may well block the Obama team’s initiative.

So why did the UK, which usually kowtows to all US demands and was recently described by a Beijing thinktank as “America’s thug for hire”, step out of line? Following Lew’s line that the US is concerned that the new bank will not live up to the ‘highest global standards’, Osborne said the UK was joining up to ensure that the bank was ethical, transparent and efficient (!). How he has the gall to utter such platitudes in the light of a decade of monstrous corruption by Britain’s Big 4 banks is beyond satire. But of course such weasel declarations have nothing to do with the truth. The most obvious reason is that Osborne wanted to make the City of London a prime offshore financial centre for China and the renminbi. Whether Osborne succeeds in the light of still raw Chinese memories of the opium wars, the history of gunboat diplomacy and the legacy of Britain’s ‘unequal treaties’ and colonial subjugation in China, is another matter.

There are good reasons for the proposed World Bank reforms. Presently China has just 3.8% of voting rights though it control 16% of global output. The rules and norms that have governed international relations since the 1940s were made in Washington’s image , and unsurprisingly China objects to norms made then which still allow the US to police Asian waters vital to China’s interests. Even if reform is blocked in the US Congress for the present, in the medium term it is inevitable. A recognition of the real reasons for that by the West, as opposed to empty platitudes, would be helpful and the best way to ensure that this major transition in world affairs is carried through with least disadvantage to the old US-UK powers.

One Comment

  1. Barry Ewart says:

    Very interesting Michael.
    Perhaps the US is what some like Ralph Miliband would have called a ‘Bourgeois Democracy’ (really rule for big business interests and corporations) and they fear losing their global capitalist economic dominance.
    They are worried about the rise of what some would call ‘Bourgeois Socialist China’ (top down, undemocratic, elite central committees, secret police etc.).
    (According to The New Left Review China’s elite exploits 220m rural workers, 87% of soft drinks in China are provided by Cocal Cola and Pepsi, and three quarters of Chinese exports are made by foreign owned companies).
    So perhaps we need to be promoting globally a grassroots, bottom up, participatory, peaceful, democratic type of socialism.
    Perhaps we also need leaders who are faciltators who keep the power with working people (what socialism was meant to be?).
    But tragically the early leaders (USSR) and later (China) and others took the power for themselves.
    So perhaps we need working people in every country in the World to be pursuing radical democratic socialist peaceful policies at the same time.
    Perhaps its also time for a US Labour, and a China Labour.
    Yours in hope & international solidarity!

© 2024 Left Futures | Powered by WordPress | theme originated from PrimePress by Ravi Varma