Put two events together, and you can see the shape of diplomacy of the future. The first is the market euphoria when Greece issued more bonds – and the issue was nearly four times oversubscribed, even though the country was offering to pay investors less than 5 per cent a year. Crisis over? Hardly – but a tribute to the belief that Germany’s support will underpin the eurozone for now.
The second is the recent warning by the Director-General of the World Trade Organisation (WTO) that the group had only eight months left to reach a deal – and show that it still had a reason to exist. Talking of a ‘cycle of failures’ which had dogged the WTO for 13 years, Robert Azevado said that he could understand why the US and EU governments were pursuing bilateral deals, but that a global deal should still be possible.
We are in an age when regional deals or ones between just a pair of governments – ‘coalitions of the willing’ – are the core of diplomacy. Ambitious global deals, of the kind which shaped the world after the World War II, look like constructions of the past. The next 12 months – which will bring not just the climax, or failure, of the WTO’s ill-fated Doha Round of trade talks, but also a new attempt to reach a climate change agreement before the Paris 2015 summit – will show whether that is true.
If so, and it is likely to be so, it will be a blow to those attempts to boost prosperity and development through world trade and to pursue environmental goals.
The question then is what kind of regional deals might do most good.
Most of the successful diplomacy of the past five or six years has been between small, not large groups of countries. Start six years ago, with the financial crisis. You might say that the response marked a triumph of intergovernmental cooperation. But in retrospect, it looks like a coincidental success brought about by similar policies adopted by key countries at once. President Barack Obama’s bailout of the banks was one of his first actions, devised even before he formally took office, which remains one of his most successful. So, too, it seems, has been quantitative easing – the injection of large amounts of money into the economy.
Its success was helped by the decision of the UK to adopt similar policies. Meanwhile, the German-led rescue of the eurozone propped up struggling banks across that region. But you could not call this economic coordination across much of the developed world a deal – more a simultaneous scramble to get out of crisis, with each government looking over its shoulder at the others. Certainly, the US’s attitude towards the eurozone crisis has been ‘you sort out your problems – we won’t, and can’t afford to do so, anyway.’
What about the coordinated pressure on Iran to suspend its controversial nuclear programme? That makes better claim to be called a grand-scale deal. It brought UN backing for sanctions. The US simultaneously devised its own sanctions, as did the EU. The result appears to have succeeded both in persuading Iran’s Supreme Leader to allow Hasan Rouhani, a moderate candidate – at least, someone who is prepared to do a deal on the nuclear front – to be elected as president, and then for those negotiations to make progress.
However, in practice, this was a deal led by the US, the UK and France, and the constraints on it show the limits on future deals. For a start, the US Congress may yet undermine the recent deal struck by Obama’s team – a lifting of sanctions in return for freezing the most controversial nuclear work. That is a good illustration of the consequences of the deep divisions in American government. If the world’s most powerful country, which led the deals after World War II that created the World Bank, the International Monetary Fund and significant arms control treaties, cannot deliver on the commitments of its president, there is even less chance for deals.
The other obstacles are even more obvious: the opposition of China and Russia within the UN Security Council, and the rise of stronger voices among the governments of the developing world.
China and Russia have together prevented any deal to force President Bashar Assad from power in Syria. That was, too, before Russia had occupied Crimea and launched itself on a path of clear antagonism against the US and Europe. Now, its opposition on almost every front can be assumed.
The prospects for the big global deals of the next year look poor. The Doha Round has been struggling for 13 years to achieve any significant agreement. But insuperable clashes between India, China, Brazil and the US, with help from the EU, have largely scuppered that. Its future depends on finding some way to bridge the chasm between developed and developing countries, which has made progress seem out of reach. At the end of last year, there was a small breakthrough in Bali – a deal to simplify customs red tape. While not nothing, that is insignificant compared with the economic benefit of a reduction in tariffs. For those concerned with promoting development of poor countries, this is bad news.
The outlook for a climate change deal is arguably worse. The UN convention on climate change is working to devise a replacement for the now-expired Kyoto Round. This would consist of binding targets for carbon emissions. Two factors help, marginally, in overcoming past stumbling blocks. The first is the US’s discovery of shale gas, which by replacing coal, is helping curb its emissions. The second is the slowdown in China’s growth, and the government’s rising concern about air pollution in the face of public protests.
Even so, those look insufficient to bridge the gulf that has impeded previous talks. The fundamental argument is that emerging economies do not see why they should hold back their economies with more expensive, if cleaner, energy to help address a problem that is largely caused by the energy use of the already developed world.
That the world would be better-off if countries could reach global agreements is, broadly, true. But those now look inaccessible. Critics of bilateral deals point out that they can be damaging, by, say, shutting poor countries out of trade and by becoming a form of protectionism. However, diplomacy on a smaller scale, if that is all that is available, can still do considerable good.
For Europe, given the crisis to its east, two immediate targets present themselves. One is to develop alternatives to Russian supply of gas, in a way that it has neglected to do over the past decade. That includes helping Poland develop alternatives; it has been left particularly exposed by Germany’s unilateral deals with Russia to secure gas. Indeed, the entire crisis will be a test of whether Germany’s commitment to the EU is greater than the national interest it believes it has pursued with those deals. At the same time, the EU needs to help Ukraine financially and in trade links. This falls short of the ambitions of the great global deals of the past. It is a useful way, all the same, to promote stability and European values within the European continent.