Robin Niblett, the Director of Chatham House, is one of Europe’s premier authorities on the European Union and the world economy. The Council on Foreign Relations picked him as an expert voice for an end-of-year piece entitled ‘Challenges for Global Governance in 2013’. His contribution is featured below.
“Decision-makers around the world will face a complex international environment in 2013. The following will be among the top global governance challenges:
Avoiding a Lost Decade in Europe
Europe’s leaders took important decisions in 2012 to create a banking union and financial back stops for deficit counties. While a euro collapse is even less likely in 2013 than it was in 2012, European leaders now confront the deeper challenge of closing the competitiveness gap between creditor and debtor countries. Although structural reforms are under way, reintegrating EU financial markets to provide the necessary pools of credit for future growth remains a major concern.
Responding to this challenge is vital to global governance for the simple reason that international stability today depends upon the proper functioning of a multipolar global economy. Europe, China, and the United States have emerged as the three critical hubs of economic growth. If European leaders fail to implement structural reform and drift into a lost economic decade, then the pressure on Chinese and U.S. leaders to succeed in their own economic and fiscal reforms will increase commensurately.
Troubled Transitions in the Middle East and North Africa (MENA)
The sequencing between political and economic reform will do much to determine whether the uprisings across the MENA region will develop along positive or negative trajectories in 2013. Egypt’s President Morsi has gambled that by forcing through rapid constitutional reform so that his Islamist government can now concentrate on delivering economic growth. In contrast, the secular-Islamist coalition government in Tunisia has decided to focus its efforts on building consensus on broad political reform as the prerequisite for stable economic growth.
Both approaches carry significant risks, and Europe, the United States, the IMF, and World Bank will need to support these precarious transitions more actively during 2013 with financial assistance, market opening incentives, and support for foreign direct investment.
Multilateral Security in East Asia
Last year ended with Japan and China in a diplomatic standoff over the Senkaku/Diaoyu islands that is likely to persist into 2013. The Chinese leadership appears unwilling to countenance a return to the “status quo ante” of Japanese sovereign control of the islands. At the same time, the new Japanese Prime Minister Shinzo Abe has campaigned on taking a hard line toward China’s new demands.
China’s approach to the islands reflects a deeper strategic decision to strengthen the lines of communication in and out of the Chinese coastline for its ever-growing energy needs and robust maritime trade. These developments underscore the need for an inclusive, multilateral security architecture in East Asia. How to create such an architecture in a region that is in the midst of a fundamental rebalancing of economic and political power deserves to be at the heart of thinking about global governance in 2013.”
To read the piece in full, click here.