Transatlantic Traffic Jams
When the hundreds of government officials and international organization leaders make their way to Washington for the Spring Meetings of the IMF and the World Bank Group, an explosion of traffic jams around the city follows. But there is another traffic jam emerging among the network of institutions, and their leaders seem to be having trouble mapping the ways around and through the difficult challenges ahead.
As the experts, elected officials, and assorted other elites rushed around their meetings over the past three days in Washington, the signals sent out from the commanding heights of international finance and economic policy represent primarily a temperature-taking exercise of the global economy. It was—as is often the case—cautious at best.
During recent years, the IMF verdict has usually been framed by worry and even anxiety. The concerns in Europe over the economic weakness of Greece, the slowdown in overall growth in China, the drastic drop in oil prices, and the continuing ripple effect of the 2008 financial meltdown have all been agenda items at these meetings for years. The agenda has grown to include the unexpected events of an epidemic in Africa, terrorist attacks and political instability in Europe, the poisonous cauldron boiling in and around Syria and elsewhere in the Middle East, and rising tensions in East Asia.
The fact that the Spring Meetings usually take place in the city in which the IMF and the World Bank were created in 1944 underscores both the similarity and the difference in the challenges both institutions face today. As the catastrophic path of World War II was coming to its end over seven decades ago, these institutions were founded in the United States to help rebuild a world devastated by horror and destruction. Given the enormous strength and position of power the United States enjoyed after World War II, it was the only location where such initiatives could be taken. And over the following decades, the United States became the host of the many other organizations that have emerged from the ashes of the war.
Today the world does not look like it did in 1945, nor do the institutions that evolved over these past years reflect the same asymmetric equations of power. More countries desire a voice in policy directions. China decided to create a new organization—the Asian International Investment Bank (AIIB)—to compete with the World Bank. Today, the role of the G20—with so many players involved—is a reflection of the diffusion and distribution of power and influence in the twenty-first century.
There are also signals that many of the sources of the cataclysmic events of the twentieth century are reappearing. The centrifugal forces of nationalism, protectionist policies, and ethnic and racial animosity are evidence that the fabric of the European Union may be fraying. The same forces are infiltrating the domestic debate in the U.S. Confrontations over policy choices are increasing in Brussels, whether it be over immigration, sanctions policy toward Russia, or the objectives of European integration. And as Americans prepare to make a choice for their 45th president in November, the choices being presented to them also represent a profound divergence in perspectives and priorities, which can have a serious impact not only on transatlantic relations, but on the global arena.
That arena now involves the expansion of China’s military presence in the South China Sea, North Korea’s military posturing, and Vladimir Putin’s efforts to show off his military capabilities in Syria, Ukraine, or the Baltic, and there is worry and anxiety that the U.S. is less willing or interested in engaging with these challenges to the degree it has done in earlier years. At the same time, there are voices in the U.S. who are critical of allies in Europe with their constant demands on the U.S.: “Free riders aggravate me,” President Obama said recently. It is an old transatlantic argument that is now heated up in domestic politics on both sides of the ocean.
Last week’s meetings echo the continued central role the U.S. plays on the global economic stage. But there are changing degrees of leverage within this framework. And that has as much to do with domestic politics as with the negotiations among the multi-national stake-holders themselves. In the U.S., for example, the challenge of forging a consensus between Congress and the White House on trade policy has become increasingly difficult, particularly in today’s partisan environment. In similar fashion, generating a consensus within the EU framework of twenty-eight nations is equally challenging and difficult. A poster child for this dilemma is the Transatlantic Trade and Investment Partnership (TTIP), which is causing continuing conflicts among competing stake-holders.
In the wake of these Spring Meetings, President Obama will depart next week for a trip to Europe, including a visit to London. One of the main themes in Washington was the looming referendum in late June over the so-called “Brexit.” Despite the best arguments by the elites in Washington against a British departure from the EU, it is a toss-up as to how that vote will go. And President Obama will have to tread carefully in London when he expresses his opinion there—without appearing to insert himself into the heated British debate
From London the president crosses the Channel to Germany, where he will meet with Chancellor Merkel at the Hannover Messe, the world’s largest industrial trade fair. Obama will deliver support for TTIP. But Chancellor Merkel is also caught up in her own domestic turmoil over the refugee crisis and a groundswell of opposition to the trade deal. Again, Obama will have to be careful as he steers through the traffic jams of domestic politics.
It seems there is no detour for the political gridlock on both sides of the Atlantic.