Leaders of the BRICS nations, from left, Russia’s President Vladimir Putin, India’s Prime Minister Narendra Modi, Brazil’s President Dilma Rousseff, China’s President Xi Jinping and South Africa’s President Jacob Zuma, celebrate the creation of a new development bank. (Silvia Izquierdo/AP)
“Welcome to the World without the West” is the title of a new provocative article by Naazneen Barma, Ely Ratner and Steven Weber in the National Interest. The piece is a follow-up from their similarly titled article seven years ago:
Now, seven years later, the World Without the West has come into full view. The biggest story in international politics today is not whether Beijing will be seduced, incentivized, or even compelled to sign onto or buy into the existing international system. Nor is it about how the United States and China are headed into a downward spiral toward World War III — although, as areas of competition intensify, the traditional (assimilate vs. challenge) mindset forces analysts, wrongly, to see conflict as the only and likely alternative. What is happening instead is a concerted effort by the emerging powers to construct parallel multilateral architectures that route around the liberal order and will likely reshape international politics and economics in fundamental ways.
It is of course true that China is creating multilateral institutions that pursue similar objectives as existing institutions with closer ties to the United States. What is less clear is that these parallel institutions really fundamentally challenge the existing order or have profound implications for China’s ties to global multilateral institutions. Other powerful states, including the Europeans and the Japanese, have long done the same thing: they created their own institutions to pursue their own political objectives while remaining firmly tied into the global institutional architecture.
The example highlighted in the article is the Asian Infrastructure Investment Bank (AIIB), which aims to provide financing for infrastructure development projects in Asia, something which the World Bank and the Asian Development Bank also do. The new BRICS bank could also be used as an example.
Yet, there are already dozens of multilateral development banks in all regions of the world. They all have slightly different though partially overlapping memberships and purposes. There is also lots of evidence that states use these regional development banks to achieve political ends. Who these bank lend to and for what purpose depends on the political preferences of the states that primarily fund these banks. If you can’t get what you want through one bank you can go to another or, if you can, simply create a new one.
The AIIB will be no different. China is expected to pony up half of the initial 50 billion dollar endowment. It is a safe bet that its interests will find a way into the projects the bank finances.
The same is true in other issue areas. States are agreeing to lots of new regional and bilateral trade agreements, which sometimes pose thorny challenges for the World Trade Organization (WTO). Yet, while smaller agreements can do some things very well, they simply can’t substitute fully for the global market access the WTO provides. So, the WTO remains the core institutional arrangement through which China and other states ensure access to world markets.
The same is true in finance. The Chiang Mai swap agreement ostensibly circumvents the U.S. and the International Monetary Fund. Yet, when crises emerged the West was still needed. Countries like South Korea and Indonesia turned to the United States and the global institutions for help.
So yes, China and other countries will create institutions that form partial alternatives to global institutions. And yes, political reasons and dissatisfaction with existing arrangements play a big role in this process. The fact that China is doing these things may eventually have different geopolitical implications than when the European countries, Japan, or the Gulf states are doing the same things. China is a very large country that espouses an ideology that is more distinct from the United States. To date, however, the impact of these alternate institutions is marginal at best and falls far short of the rather dramatic conclusion that we live in a “world without the West.”