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BIPR | Global Discord: Values and Power in a Fractured World Order
Global Discord: Values and Power in a Fractured World Order

December 18, 2023 - 18:30

Paul Tucker - Tito Cordella - Alessandro Merli - Justin Frosini

Event Recap

December 18, 2023, Sir Paul Tucker discussed his book Global Discord: Values and Power in a Fractured World Order at Johns Hopkins' SAIS Europe. The seminar, chaired by Justin Frosini and featuring Tito Cordella and Alessandro Merli as discussants, revolved around the state of international politics and future scenarios for diplomacy in key policy areas such as economic development, security cooperation and climate change. Sir Paul Tucker's main argument was that the China-US dynamic nowadays is deeply ideological and set to run for decades, and he explained what he believes this means for global politics.

A fascinating, yet not well-known example of this ideological dichotomy is Document Nine. This leaked (or purposefully released) 2013 policy paper from the Central Committee of the Chinese Communist Party, which was drafted just after Xi's coming to power, is an overt ideological statement. Designed around seven No's, it is basically an instruction to the Chinese society not to strive towards any kind of liberal Western values such as the rule of law and freedom of press. Another important example of the discordance between China and the US was the WTO's case concerned state-owned enterprises. Beijing used these to subsidize exports, and therefore Washington threatened to retaliate under WTO terms. In response, Beijing initiated a dispute against the US' claim, which led to a ruling in favor of China by the Appellate Board. This challenge to the US domination within the WTO resulted in Washington's refusal to appointment new members to the Appellate Board. As this is a key body for the WTO to function properly, this threatened to marginalize the organization.

This showcases how disagreements between China and the US are often not settled through informal bargaining structures, which has serious implications for moves towards any kind of new world order. According to Tucker, this order is probably going to be structured around concentric circles of cooperation. The outer one will be one of more or less peaceful coexistence, with some outliers such as Russia being outside even that. However, moving further inside, the blocks will become smaller and relationships stronger. Such a structure means that the West should rethink its current relations with China. Too much integration should not be expected. Rather de-risking through decoupling to avoid serious vulnerabilities will become the new norm. Dependency for critical goods and services must be avoided. Security and currency policies interlink.

This will affect the international monetary system. Countries with which one has a security relationship are more likely to interact or even use one's currency. The initial development of the post-commodity linked dollar order exemplify this: there was a reason why the US State Department and Treasury went to Saudi Arabia to commit to its security backing if the House of Saud would in turn keep invoicing its oil and energy in dollars. In the same manner, invoicing in renminbi matters today.

Professor Cordella focused his discussion on the importance of the historical background the book provides, as well as the thorough philosophical discussion. He wondered whether Tucker's four scenarios of a lingering status quo, a superpower struggle, a new cold war, and a (truly) reshaped world order, are mutually exclusive (perhaps in the form of multiple equilibria) or they may coexist in some form. Also, this made him raise the question of whether the analysis is, at its core, positive or normative (both, Tucker responded). Discussing how the different scenarios applied to the international political economic space Cordella suggested Tucker might have overemphasized the role of the Bank for International Settlement but underestimated the importance of the challenges international financial architecture namely the current struggle between Washington based institutions and the Global South. Professor Merli underlined the importance of the governance aspect in the new world order. He wondered what role there would be for international fora such as the G7 and the G20, which are still featuring rather prominently in world politics. Moreover, he brought up the topic of Europe's role, as well as that of the Global South. Tucker responded by claiming that while such informal fora might not be actual policymaking venues, yet they play an important role for the opportunity they provide for leaders to meet without the paraphernalia and publicity of a bilateral summit. Furthermore, he explained how Europe should consider what it would mean to be a hard power again, and underlined the importance of not treating the Global South as a monolith.

In short, the discussion provided an overview of the current international world order and its way forward, with a specific focus on an economic and financial perspective and its interlinkages with security cooperation.



Global Discord: Values and Power in a Fractured World Order

hosted by Professor Justin O. Frosini

Paul Tucker
Former Deputy Governor of the Bank of England; Harvard University
Tito Cordella
Discussant - Johns Hopkins University SAIS Europe
Alessandro Merli
Discussant - Johns Hopkins University SAIS Europe
Justin Frosini
Chair - Johns Hopkins University SAIS Europe; Bocconi University

Sir Paul Tucker is a British political economist, author, and former central banker. A research fellow at the Harvard Kennedy School's Mossavar-Rahmani Center for Business and Government.

He is the author of two books at the junction of political economy and political theory: Global Discord: Values and Power in a Fractured World Order (Princeton University Press, 2022) and Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State (Princeton University Press, 2018).

His other activities include being president of the UK's National Institute for Economic and Social Research, a visiting professor of practice at the LSE, a member of the advisory board of the Yale Program on Financial Stability, a governor of the Ditchley Foundation, and a director at Swiss Re. He chaired the transatlantic Systemic Risk Council from December 2015 to August 2021.

For over thirty years until late-2013 he was a central banker, including as Deputy Governor of the Bank of England (2009-2013), sitting on its monetary policy, financial stability, and prudential policy committees. Internationally, he was a member of the G20 Financial Stability Board, chairing its group on resolving too-big-to-fail groups; and a director of the Bank for International Settlements, chairing its Committee on Payment and Settlement Systems.
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