Bridging the 21st Century’s North-South Divide
International institutions like the World Bank and the UNFCCC have lost momentum. What will it take to get the global agenda going again?
March 13, 2012
The fact we have entered a new year of the 21st century with a distinct lack of euphoria is hardly surprising. The global mood has not really recovered since the 2008 global recession, 2011 was a quite nasty year, and there has been a general sense that 2012 could be much the same or indeed worse.
Of course, there are still many bright spots and opportunities. The global market is still more open than it has ever been and new technological innovations continue to provide ample avenues for entrepreneurship. This silver lining, however, cannot mask the dark clouds of low economic growth, high unemployment, volatile currency movements, financial imbalances, a foundering multilateral trade system, food and water insecurity, persisting poverty, social unrest, environmental deterioration and global warming, among others.
Whether 2011 witnessed an exacerbation in global agenda setting or simply a standstill is open to debate. What would be impossible to claim is that there has been progress. The institutions of global governance — including the G20, the UN Framework Convention on Climate Change, the World Trade Organization, as well as the World Bank and the IMF — have not only lost momentum, but also legitimacy and credibility.
Where this trust deficit exists most notably, and most destructively, is between North and South. To understand the nature of the divide, one has to focus on historical dynamics. The South has long been subjugated by the North. Though the world is experiencing a profound transformation with more wealth and power being transferred to the South — especially to Asia — the North is still in control. However, the North now recognizes that it cannot properly address global challenges without the support and participation of the South. The South, meanwhile, bears a historical grudge.
The Northerners who hold the levers of power of global governance have very little real experience in the South. They are typically lawyers and economists — not historians, philosophers, writers or others who specialize in understanding cultural sensitivities. Their approach to global economic and climate issues has been to try to bludgeon the South into submissive agreement.
But there can be no progress in moving the global agenda forward without collaboration between North and South. There can be no collaboration between North and South without the North recognizing and addressing the South’s grudge. There is an imperative for a North-South truth-and-reconciliation initiative.
As these issues tend to be easily misinterpreted, let me stress here that by no means is there an attempt to draw a Manichean picture of an “evil” North versus an “innocent” South. However, looking at the history of globalization in the modern era, there can be little doubt that the North exploited the South.
Just consider the “eastern advance of western power.” It resulted in the colonization of much of Southeast Asia, the conquest of India in the 18th century, and culminated in one of the greatest turning points of history — the Opium Wars of the early- to mid-19th century.
On the eve of the First Opium War, China’s share of global GDP was over 30%. A century later it was 4%. (The period is brilliantly captured in the first two volumes of the trilogy by Amitav Ghosh, Sea of Poppies and River of Smoke. The third volume has not yet been published.) On the basis of their own historical experiences, it is difficult to convince Asians and Africans that trade is about peace, prosperity and love, even less that it is not a zero-sum game.
Though the past may be the past, its shadows live on. Westerners were not enslaved by Africans. Nor did Chinese troops enter Paris or London and plunder the Louvre or the British Museum, as Anglo-French troops did in the sacking of the Summer Palace in Beijing in 1860. Indians did not open clubs in the United Kingdom that barred the British from entering except as servants. There are no whites living on reservations in the North American continent. Had there been a case of “Apartheid in reverse” — a large white majority oppressed and humiliated by a small minority of blacks — it is unlikely that the regime would have lasted five decades.
Unlevel playing field
In the post-World War II global economy, the “Northern advantage” has been maintained through an unlevel playing field in areas such as agriculture and labor-intensive industries with tariffs and subsidies that have impeded growth and prosperity in developing countries. Among the most insidious of these measures are tariff peaks and tariff escalation, whereby imports of agriculture and labor-intensive products into the North face higher tariffs the higher the value added (for example, between a raw coffee bean and processed coffee).
Also, whereas for several centuries Westerners strode across the world, both Old and New, as if in their own backyard, increasingly stiff barriers to immigration deny people from the South free movement of labor.
The revolt of the South in seeking to overthrow this protracted period of unfairness and repression intensified in the closing decade of the last century. The launch of the WTO Doha Development Agenda at the beginning of this century, in 2001, gave rise to the expectation — and certainly the hope — that the historical grievance of the South would be recognized, addressed and at least partially rectified.
That hope was rapidly destroyed at the first WTO Ministerial meeting following Doha, at Cancún, in 2003. Instead of approaching the meeting in a spirit of reconciliation and collaboration, the United States and the European Union confronted the South with a spirit of mercantilist intransigence. Especially reprehensible was the unyielding American position on cotton, whereby massive U.S. subsidies cause great and unfair hardship to cotton farmers in developing countries, especially Africa. The Cancún ministerial meeting collapsed in a bitter spirit of recrimination.
The Cancún meeting stands out as the great missed opportunity of the 21st century. Doha has never recovered from its collapse, nor has the world economy. The spirit of trust, conciliation and collaboration that could have been fostered gave rise instead to a spirit of mistrust, recrimination and confrontation, which has been strikingly evident in recent years.
To reduce the trust deficit dramatically, there is no alternative to addressing the South’s historical grudge. Only once this is done, can the page be turned and a new era, the one the world and especially the next generations deserve, arise. That is the biggest priority on the global agenda.
Whether 2011 witnessed an exacerbation in global agenda setting is open to debate. What would be impossible to claim is that there has been progress.
There can be no progress in moving the global agenda forward without the North recognizing and addressing the South's grudge.
It is difficult to convince Asians and Africans that trade is about peace, prosperity and love, even less that it is not a zero-sum game.
Emeritus Professor of International Political Economy at the IMD Business School [Switzerland] Jean-Pierre Lehmann (1946-2017) was an emeritus professor of international political economy at IMD in Lausanne, Switzerland. He also served currently a visiting professor on the Faculty of Business and Economics at Hong Kong University. He was also a Contributing Editor at The Globalist, […]