Why we need to change international institutions before China and India change them for us

A new world order has been in the making since the 80s. International institutions do not cater to the reality and needs of international society anymore and they should be reformed before they fail. Or more cynically, the existing structures should be reformed so that they are not challenged by newcomers. It is a game of gatopardism by which we change things so that everything stays the same.

The Society of Nations and later on, the United Nations, were once established seeking to build a system that in theory considered all countries equal. One may seek the roots of many of today’s malaises in the decisions that gradually broke down this system. The abandonment of the Bretton Woods setup and the universalization of the American dollar as the de facto world reserve currency, paired with the astonishing rise of a country -the USA- that gathered resources and immigration while escaping the devastation of war meant a fatal blow had been delivered to a scheme that had barely just been born.

Evolution of nominal GDP for the USA, Japan and Russia

It was during this time that America concentrated an amount of influence that was proportional to its power and wealth, but not to its share of the global population or even land mass. Thus, the World Bank, the United Nations, the IMF and other institutions were either based in the USA or heavily participated by it. Britain, Japan — both without an empire anymore- and other American allies supported this trend.

The decade is the 80s, and the unthinkable happens. Japan’s economy goes bust while other “Asian tigers” take its lead. Britain struggles to replace its disappearing industrial base and other “Western bloc” nations fight dictators from Chile to the Philippines. Nations in Africa not only became independent, but they gain influence by their dominion of natural resources. And most remarkably to the reader of 2015, the communist countries awaken from their economic slumber, changing the lists of most important ports, universities, companies, armies and others year by year.

Flash forward to 2015 and you shall see that China’s economy is already larger than Britain’s, France’s, Germany’s and Italy’s combined. So is its population. Brazil is also larger economically and demographically than any other of those countries taken separately. Italy has fallen and Russia has risen. South Korea and Singapore have gone from poverty and crime to competing with Norway and Switzerland in wealth and wellbeing. Yet somehow international instances remain the same.

China is about to end the creation of the Asian Infrastructure Investment Bank to compete with the World Bank, where America has stubbornly refused to negotiate the weight of its stakeholders. The main European nations, as well as Korea, Japan and Australia all look set to join as founding members, while rumors about American pressure for them not to join abound.

Many now question why Britain retains its seat in the UN Security Council, and they will begin to do the same with France if it remains in its secular reverie without growth or reforms.

GDP growth rate for France and Germany. France consistently underperforms against her old foe.

The truth is that the world is no longer an Euro-American one. That is, of course, not bad in and by itself. But if the old Western nations want to remain relevant in the new world order, one of their main tasks is to open up the institutions that they created to accommodate others as equal. Mr Ban-Ki Moon, Mr. Obama, Mrs. Merkel and others are in the place to push for these changes before the institution they lead or participate in have to compete against others where the interest of all the relevant stakeholders is truly respected.

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