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world order
Conference Power shiftsin a changing
Power shifts in a changing world order
The role of the European Union and the position of the Netherlands
Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Programme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Opening Address . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Allure of the Chinese model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
AddressbyMr.Zhang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Managing Global Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
AddressbyMr.Kupchan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Discussants
AddressbyMr.Brok . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
AddressbyMr.Balkenende . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Session A: Global economic (im)balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
AddressbyMr.Bakker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Session B: Security and scarcity of resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
AddressbyMs.Lee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Conclusions and remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
AddressbyMr.Rosenthal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
AddressbyMr.DeZwaan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
List of participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
AttachedtotheWorld:OntheAnchoringandStrategyofDutchForeignPolicy
ScientificCouncilforGovernmentPolicy(2010)
Position paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
Powershiftsinachangingworldorder
Footnotes & Colofon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
Contents
3
Power shifts in a changing world order
ForewordThefirstdecadeofthe21stcenturymarkedthebeginningofanewera.
Powershiftsareoccurringworldwide.NeweconomicpowersariseinAsia
andSouthAmericaandnewnon-stateactorsareincreasinglyimportant.
Onaglobalstageweareconfrontedwithnewcrises:climatechange,energy
scarcity,terrorismandsecurityrisks,povertyandexclusion,budgetary
deficits.TheglobaldevelopmentsareachallengefortheEuropeanUnion
andtheNetherlands.
TheagendaoftheDutchSenateischaracterizedbyastrongEuropeanand
internationalorientation.Asa‘chambrederéflexion’theSenateregularly
discusseslongtermdevelopmentsandvisionstothefuture.Inthistradition
ittooktheinitiativetoorganiseaninternationalconferenceonthematter
ofpowershiftsinachangingworldorder.Theinitiativeresultedinaunique
cooperationbetweenfourplayersintheDutcharenaofpolitics,policyand
science.TheDutchSenate,theScientificCouncilforGovernmentPolicy
(WRR),theAdvisoryCouncilonInternationalAffairs(AIV)andtheNetherlands
InstituteofInternationalRelationsClingendaelcombinedtheirdifferent
backgroundsandareasofspecialinteresttoguaranteeaninterdisciplinary
approachtothesubjectofpowershifts.
Theaimofthisconferencewastogetaclearerpictureoftheconsequences
oftheshiftsofpowertakingplaceintheworld.PointsofviewoftheUS
andChinahavebeendiscussed,aswellascurrentissuessuchasglobal
economicimbalancesandscarcityofresources.Welookbackatasuccessful
conferencewithalivelydebateonthetransformationsinaglobalisingworld
andthewayEuropeandtheNetherlandscanbestpositionthemselvesinthis
changingglobalarena.
RenévanderLinden,
President of the Dutch Senate
AndréKnottnerus,
Chair of the Scientific Council for Government Policy (WRR)
FritsKorthalsAltes,
Chair of the Advisory Council on International Affairs (AIV)
JaapdeZwaan,
Director of the Netherlands Institute of International Relations Clingendael
4
Programme
9.30hrs Registration,coffeeandtea
9.50–10.00hrs IntroductionbyRenévanderLinden
10.00–12.15hrs Morning plenary session Chair: RenévanderLinden
Speakers: Wei-WeiZhang
CharlesKupchan
ElmarBrok
JanPeterBalkenende
Discussion
12.15–13.30hrs Lunch
13.30–15.30hrs Afternoon thematic sessions
Session A: Global economic (im)balances Chair: JanRood
Speaker: AgeBakker
Discussant:CarloTrojan
Discussion
Session B: Security and scarcity of resources Chair: AndréKnottnerus
Speaker: BerniceLee
Discussant:FreddeGraaf
Discussion
5
Power shifts in a changing world order
15.30–16.00hrs Coffee/teabreakwithmusicalintermezzo
16.00–16.45hrs Conclusions
Chair: FritsKorthalsAltes
Speakers: UriRosenthal
JaapdeZwaan
16.45hrs Drinks
Power shifts in a changing world order
6
René van der Linden, President of the Senate of the Netherlands
Ladiesandgentlemen,
Itisagreatpleasuretoopenthisconferenceandtowelcomeyouallinthis
plenaryhalloftheSenateoftheNetherlands.Iespeciallywelcomeour
reputedkeynotespeakersandIthanktheminadvanceforcomingtothe
Netherlandstocontributetothisconference.
Iextendmywelcometoallofyoualsoonbehalfofourpartnersinorganising
thisconference:theScientificCouncilforGovernmentPolicy,theAdvisory
CouncilonInternationalAffairsandtheNetherlandsInstituteofInternational
RelationsClingendael.
FortheDutchSenateinitiatingaconferenceofthisnatureislogicalgiven
itsspecialroleintheDutchconstitutionalarena.IntheSenatetheagendais
tightlyinterwovenwithinternationalissues.Wefocusonlong-term
developments;visionstothefutureandacomprehensiveapproachare
importantaspectsofourparliamentarywork.
Thefirstdecadeofthe21stcenturyrecentlycametoanend.Itwascharacterised
byaninternationalfinancialcrisiswithoutprecedentandarapidshiftin
powerrelationsintheworld.Inthe20thcenturythecoreofeconomicpower
wasinWesternEuropeandNorthAmerica.Inrecentyearswehaveseen
aremarkableexpansionofeconomicpowersinAsiaandSouthAmerica.
Themovementsthattakeplacehaveenormousrepercussionstotherestof
theworld,includingEuropeandtheNetherlands.Thesignalsareclear.China
replacedGermanyin2010asthelargestexporterintheworld.Thecombined
budgetsforresearchanddevelopmentofChinaandIndiaexceededthose
ofboththeUnitedStatesandEuropeeach.Thesenseofoptimisminthese
countriesisremarkable,ascomparedtothegeneralfeelinginWesternEurope.
WhilemanyinEuropeareconcernedaboutthesustainabilityofpensions,
thesecountriesinvestheavilyineducation,science,andtechnology.Young
peopleareeagerforknowledge,innovation,andstronglyfuture-driven.Of
course,anutterlynewdevelopmentiswhatishappeningnowinseveralArab
Opening Address
7
Power shifts in a changing world order
countriesnotablyEgypt,whereweseeaverystrongcallformoredemocratic
andsocialreforms.Itishardtoestimatewhattheoutcomeofthishistorical
change-overwillbe.WhatIseriouslymissisaEuropeanpositioninthis
forcefulprocessofreform.
Inaglobalisingworldwecannottakeourpositionforgranted.Globalisation
isanopportunity,achance,achallenge.Theaimofthisconferenceistogeta
clearerpictureoftheconsequencesoftheshiftsofpowertakingplaceinthe
worldforEuropeandtheNetherlands.
AsasmallnationtheNetherlandshasalwaysbeenveryinternationallyoriented
andinfavourofanopeneconomy.MembershipoftheEuropeanUnionwith
theopenbordersandtheinternalmarkethasalwaysbeenverybeneficialto
ourcountry.Nevertheless,inthisagewesharewithothercountriesacertain
hesitationaboutEurope,whiletherecentcrisishasdemonstratedthatweneed
moreEuropeinthefinancialeconomicdomaininsteadoflesstoeffectively
solveit.AtthisverymomenttheEuropeangovernmentleadersmeettocome
toatotalapproachofthedebtcrisis,includingthepossibilityofsanctions
againstmemberstatesthatdonotmeettheircommitments.TheGerman
ChancellorAngelaMerkelspokeofa‘pacttomakeEuropemorecompetitive’.
Withthisconferencewewanttoshedalightonthesituationofrapidchange
inwhichwefindourselves.Infocussingfromtheoutsidetotheinside,we
willstartfromabroadglobalviewpointandzoomintotheEuropeansituation,
withaspecialfocusonthepositionoftheNetherlands.Wewilldothisby
kickingoffourmorningsessionwiththespeechesofProfessorWei-WeiZhang
andProfessorCharlesKupchanoncurrentshiftsinpower,respectivelyfrom
theChinesesituationandthepointofviewfromtheUnitedStates.Ourformer
primeminister,ProfessorJanPeterBalkenende,willthereafterreflecton
theDutchsituationwithinthesepowershiftsintheworldandElmarBrok,
MemberoftheEuropeanParliamentfromGermany,willbrieflycommentfrom
aEuropeanperspective.
Indoingso,wewillfollowanapproachasadvocatedinthereportofthe
ScientificCouncil(WRR),whichwassenttoyoutogetherwiththeinvitation
8
fortoday’sconference.ThereportfromtheWRRcontributestoanew
orientationtowardstheoutsideworldandservesasagoodfoundationfor
thediscussionoftoday’sconference.Iexpectthatwewillhaveaveryfruitful
andthought-provokingconference.Letmenowtointroduceourfirsttwokey
notespeakersoftoday.
Mr.Wei-WeiZhangisProfessorattheGenevaSchoolofDiplomacyand
InternationalRelations,Switzerland,andseniorresearchfellowattheCentre
forAsianStudies,Geneva.HeisalsoguestProfessoratFudanandTsinghua
Universities,andaseniorfellowattheEquinox(Chunqiu)InstituteinChina.
Hewillspeaktouson‘theAnatomyofaMiracle:theChinaModelandits
Implications’.
OursecondkeynotespeakeroftodayisMr.CharlesKupchan.CharlesKupchan
isanAssociateProfessorofInternationalRelationsintheSchoolofForeign
ServiceandGovernmentDepartmentatGeorgetownUniversity.Heisalsoa
SeniorFellowandDirectorofEuropeStudiesattheCouncilonForeignRelations.
Mr.KupchanwasDirectorforEuropeanAffairsontheNationalSecurityCouncil
duringthefirstClintonadministration.
9
Power shifts in a changing world order
Mr.Zhang:Thankyouverymuch,Mr.President!FirstofallIwishtothankyou
forthiskindinvitationandforthisgreathonourtospeakbeforesucha
distinguishedaudienceinthismagnificentplenaryhall.
Asweallknow,ChinaortheriseofChinaremainscontroversialinEuropeor
intheWestingeneral,forallkindsofreasons.Indeed,overthepasttwentyor
soyearstheChinesestatewasoften–andinmanywaysstillis–portrayed
inWesternmediaasadichotomyoftherepressiveregimeclingingtopower
andasocietyledbypro-democracydissidentsborderingonrebellion.Some
Europeans,forinstanceinOslo,stillviewChinaasanenlargedEastGermany
oranotherBelarus,150timesbigger,awaitingthecolouredrevolution.This
perceptionhasledmanyChinawatchersinEuropeandintheUnitedStatesto
haveconfidentlycrystal-balledChina’spessimisticfuture.TheTiananmen
tragedyof1998meanttheregimewouldcollapse.Thedisintegrationofthe
SovietUnion,Chinaweretofollowsuit.DengXiaoping’sdeath,Chinawouldfall
apart.HongKong’sreturntoChina,itsfuturewouldbedoomed.TheAsian
financialcrisis,Chinawouldbethenextvictim.
The Allure of the Chinese model
Address by Professor Wei-Wei Zhang, Professor at Geneva School of Diplomacy and International Relations
Wei-Wei Zhang
10
TheoutbreaksofSARS,China’sChernobyl.This2008financialtsunami,China
wouldbeinchaos.
Yetsurprisingly,alltheseforecaststurnedouttobewrong.ItisnotthatChina
hascollapsed.Rather,allthepessimisticforecastsaboutChina’scollapseto
mymindhavecollapsed.Thisunimpressivetrackrecordofcrystal-balling
Chinaremindsusoftheneedtolookatthishugeandcomplexcountryin
amoreobjectiveway.Perhaps,withanapproachadoptedbythegreat
DutchphilosopherSpinozainthe17thcenturyorhisGermancontemporary
philosopherLeibniz,i.e.weneedtofocusonhowtheChinesedeveloped
whattheycalled‘naturalreligion’or‘naturalapproach’orasecularapplication
ofethicsandpoliticstosocialandeconomicgovernance.Ifwearefreefrom
ideologicalhang-upswemaycometoseewhathashappenedoverthepast
threedecadesinChinaisarguablythegreatesteconomicandsocialrevolution
inhumanhistory.About400millionpeoplehavebeenliftedoutofpoverty
withallitsimplicationswithinChinaandbeyond.
Chinahasinfactperformedbetterthanallotherdevelopingcountries
combinedoverthepastthreedecadesbecause70%oftheworld’spoverty
eradicationhasoccurredinChina.Chinahasperformedbetterthanall
transitionaleconomiescombined,astheChineseeconomyhasincreased
about18-foldoverthepastthreedecades,whileEasternEuropeasawhole
onlyroughlyonefold,albeitfromahigherstartingpoint.
Chinahasalsoperformedbetterthanmanydevelopedcountries.The
“developedregions”ofChina,withroughly300millionpeople–thesizeof
theUSpopulation–todayinmanywayscanmatchthedevelopedcountries
inSouthernEuropeinoverallprosperity.Shanghaihasarguablysurpassed
NewYorkinmanyways,ifImayusetheanalogyofhardwareandsoftware:
intermsofhardware,Shanghaihasbetterairports,subways,bullettrains,
shoppingfacilities,andcityskylinesthanNewYork.Intermsofsoftwarewe
havelongerlifeexpectancyandmuchsaferstreets,andchildmortalityis
lowerthaninNewYork.Ofcourse,Chinahasitsshareoftheproblems,some
ofwhichareveryseriousbutitsoverallsuccessisbeyonddoubt.
Howtoexplainthis?Someclaimthisisduetoforeigndirectinvestments.
ButEasternEuropehasreceivedfarmoreFDIinpercapitatermsthanChina.
SomeclaimitisduetoChina’scheaplabourbutIndiaandmanydeveloping
countriesoffercheaperlabour.Someclaimthatitisduetoanauthoritarian
governmentbutthereareauthoritariangovernmentseverywhere:inAsia,Africa,
LatinAmerica,inEgypt,Tunisia,andAlgeria.Butnoneofthemhave
accomplishedwhatChinahasaccomplished.
11
Power shifts in a changing world order
IfnoneoftheseexplanationscanexplainChina’ssuccessweshouldbe
encouragedtothinkoutsidethebox.Myownhumbleexplanationisthebuzz
word‘model’,ormoreprecisely‘theChinamodel’,whichisalsothetopicI
willaddresstoday.Butfirstofall,Iwouldliketosayafewwordsaboutthe
natureofChinaasastateinordertoprovideacontextforourdiscussions
here.
ChinaisnotanenlargedEastGermanyorBelarus,norisChinaanother
ordinarystate.Tomymind,Chinaisacivilisationalstateandtheworld’sonly
civilisationalstate.Chinaistheonlycountryintheworldwithahistoryof
unifiedstateforover2000years.Itistheonlycountryintheworldwitha
continuouscivilisationlastingover5000years.TheChinesearethe
indigenouspeopletotheirownland.AnexampleofthisistheChinese
language:awelleducatedhigherschoolstudent–notcollegestudent–can
readConfucius’textswritten2500ago,asignofthecontinuityofChinese
culturallineage.
Chinaistheonlycountrywhichis,youmaycall,anamalgamationofan
ancientcivilisationandahugemodelstate.Anotheranalogy,butnotvery
accurate,couldbesomethingliketheancientRomanempirecontinuingto
thisdayasaunifiedmodernstate,withacentralisedgovernment,amodern
economy,time-honouredtraditionsandcultures,andahugepopulation
speakingonelanguagecalledLatin.Thiskindofcountryisboundtobe
differentinseveralsignificantways.China,tomymind,isanamalgamationof
fourfactors,i.e.ifImayusetheadjective‘super’:therearea‘super’large
population,asuper-sizedterritory,a‘super’longhistory,andasuper-rich
culture.
Withthesefour‘supers’China’sriseisboundtoaffectotherpartsoftheworld.
ChinahasapopulationlargerthanthetotalpopulationofEuropeof27,the
UnitedStates,Russia,andJapancombinedandmore.Todayisactuallythe
seconddayofChina’sSpringFestival,theChineseNewYear.Weexpectthere
willbeabout2.5billionpersons’tripsacrossChina’svasttransportation
system,whichmeansthatyoumovetheentirepopulationofEurope,Russia,
Japan,theUnitedStates,andAfricafromoneplacetoanotherwithinone
month!Thisisthescaleofthecountryandthescaleofthechallengesthe
countryisfacedwithandalsothekindofopportunitiesthecountryprovides.
Chinahasasuper-sizedlandscape,acontinentbyitself,withallits
unimaginableregionaldiversities.Chinahas‘super’-entrenchedhistorical
traditionsineverythingyoucanthinkof,oftenofthousandsofyears,ranging
frompoliticalgovernance,statecrafttoeconomics,philosophy,medicine,
militarystrategy,andwayoflifeforordinarypeople.
12
Chinahasasuper-richculture,includingoneoftheworld’smostsophisticated
literaturesandarchitectures.Perhapsthereisnobetterexampletoillustrate
thisrichnessthantheChinesefood:thereareeightmainschoolsofcuisinein
Chinaandcountlesssub-schools.Eachoftheeightmainschoolsisarguably
richerthantheFrenchcuisineintermsofcontentsanddiversities.So,a
civilisationalstateisaproductofhundredsofstatesamalgamatedtogether
overthousandsofyearsofhistory.Thefour‘supers’Ihavejustdescribed
haveshapedandwillcontinuetoshapeChina’sfuturetrajectoryof
development.WiththislargepictureinmindletmenowturntotheChina
model.Forme,thismodelcontainsatleasteightfeatures.
First,itsguidingphilosophyiscalled‘seekingtruthfromfacts’.Thisisan
ancientChineseconceptrevivedbythelateleaderDengXiaopingafterthe
failureoftheutopianCulturalRevolution.DengXiaopingbelievedthatfacts
ratherthanideologicaldogmas,whetherfromtheEastorfromtheWest,
shouldserveastheultimatecriteriaforestablishingtruth.Fromexaminingthe
factsheconcludedthatneithertheSovietcommunistmodelnortheWestern
liberaldemocracymodelreallyworkedforalargedevelopingcountryorfor
developingcountriesingeneralintermsofachievingmodernisation.Hence,
Chinadecidedin1978toexploreitsownpathofdevelopmentandtoadopta
pragmatic‘trialanderror’-basedapproachforitsmassivemodernisation
programme.ThisisthephilosophicalunderpinningfortheChinamodel.
Second,puttingpeople’slivelihoodfirst.Thisisagainaverytraditionalconcept
ofpoliticalgovernanceinChina.InthiscontextDengXiaopingprioritised
povertyeradicationasChina’snumberonetaskandpursuedadowntoearth
strategytowipeoutpoverty.China’sreformsstartedfirstinthecountrysideas
mostChinesethenlivedinthecountryside.Thesuccessoftheruralreformset
theChineseeconomymovingandcreatedapositivechainreactionleadingto
theriseofmillionsofsmallandmedium-sizedenterprises,whichsoon
accountedformorethanhalfofChina’stotalindustrialoutput,thuspavingthe
wayfortherapidexpansionofChina’smanufacturingindustriesandforeign
trade.Chinaisarguablycorrectinganeglectintherangeofhumanrights,
advocatedbytheWest,whichtendstofocusexclusivelyoncivilandpolitical
rights.Thisfeatureofputtingpeople’slivelihoodfirstwill,Ithink,have
long-termimplicationsforhalfoftheworld’spopulationthatstillliveinpoverty.
Third,stabilityasapre-conditionfordevelopment.Asacivilisationalstate,its
ethnic,religious,linguistic,andregionaldiversityisarguablyamongthe
highestintheworld.Hence,thisconditionhasshapedwhatmaybecalled
‘acollectivepsyche’oftheChinesepeople.MostChinesereverestabilityand
fear‘luàn’,theChinesewordforchaos.DengXiaoping’spenchantforstability
derivedinpartfromhisunderstandingofChina’shistory.Ifwecouldhavea
13
Power shifts in a changing world order
quicksummaryofChina’smodernhistory:roughlyfrom1840–whenthe
opiumwarbrokeoutbetweenChinaandBritain–uptothereformera
startingin1978,thelongestperiodofcontinuousstabilityinChinawasno
longerthaneightornineyears.So,China’smodernisingprocesswas
constantlydisruptedbyforeignaggressions,civilwars,peasants’uprisings,
ideologicalfrenzyandotherkindsofchaos.Thepastthreedecadesmark
thefirsttimethattheChinesehaveenjoyedsuchacontinuousstabilityand
theyhavecreatedaneconomicmiracle.Withanothertwoorthreedecades
ofstability,Chinawillcreateperhapsagreatermiracle.
Fourth,gradualreform.GiventhesizeandcomplexityofthecountryDeng
Xiaopingsetoutastrategythatisoftendescribedas‘crossingtheriverby
feelingforsteppingstones’.Heencouragedexperimentsforallmajorreform
initiativesasexemplifiedbyChina’sspecialeconomiczones,wherenewideas
weretestedsuchaslandsale,high-techjointventures,andexport-oriented
economy.Onlywhennewinitiativesareshowntoworktheyareextended
nationwide.Chinahasrejectedshocktherapyandworkedthroughits
imperfectexistinginstitutionswhilegraduallyreformingthemtoserve
modernisation.ThiscautiousapproachhasenabledChinatomaintainamuch
neededpoliticalstabilityandtoavoidparalysingfailures,aswasthecase
withtheformerSovietUnionandex-Yugoslavia.
Fifth,correctsequencingandpriorities.Inlinewiththegradualapproach
China’sreformhasdemonstratedaclearpatternofchange.Ruralreformsfirst,
urbanonessecond,changesincoastalareasfirstandinlandsecond,
economicreformsfirstandpoliticalonessecond,easyreformsfirstandmore
difficultonessecond.UnderpinningthisapproachisChina’sphilosophical
traditionofholisticthinking.IwasthinkingofDengXiaoping.Whenhecame
topowerhisideawastohavea70-yearsstrategy,tillthemiddleofthe21st
century,i.e.by2050,Chinashouldbecomeafullfledgeddevelopedcountry.
ThisstrategyisstillbeingpursuedbytheChinesegovernmenttothisday.
Thiskindofholisticthinkingcontrastssharplywiththepopulistshort-term
politicssoprevalentinmuchoftheworldtodayincluding,unfortunately,
Europe.
Sixth,amixedeconomy.Chinahastriedtocombinethestrengthofthe
invisiblehandofthemarketforcewiththevisiblehandofthestate
intervention,astobetterpreventmarketfailures.China’seconomicsystemis
called‘socialistmarketeconomy’.Whenthemarketforceisreleasedby
China’seconomicchangethestatehasdoneitsutmosttoensureamacro-
stability.Thestatesteeredthecountryoutofharm’sway,inboththeAsian
financialcrisisandthecurrentfinancialtsunami.
14
Seventh,openinguptotheoutsideworld.Withnomessianictraditionof
convertingothersChinarepresentsaverysecularculturewherelearningfrom
othersishighlyvirtuous.Chinahasretaineditslongtraditionofselective
culturalborrowingfromtheoutsideworld,includingdrawingonuseful
elementsfromtheneo-liberalWashingtonconsensussuchasitsemphasison
entrepreneurshipandinternationaltrade.Butwelearnfromitselectively.
Wekeepwhatwecall‘policyspace’,China’sownpolicyspace.Openingupto
internationalcompetitionhasallowedChinatobecomeoneofthemost
competitiveeconomiesintheworld.
Lastbutnotleast,anenlightenedstrongstate.China’schangehasbeenled
byanenlighteneddevelopmentalstate.Thestateiscapableofshaping
nationalconsensusontheneedforreformandmodernisationandensuring
overallstabilityandpursuinghard,strategicobjectivessuchasenforcing
bankingsectorreforms,carryingoutveryhardstate-ownedenterprises
reforms,andstimulatingtheeconomyagainstglobaldownturn.Thisfeature
originatesfromChina’sConfuciantraditionof‘abenevolentstrongstate’,
establishedonthebasisofmeritocracyatalllevels.Afterall,Chinainvented
thecivilservantsexaminationsysteminthefirstcenturyB.C.
IwasjokingwithProfessorKupchan:ifyouwanttobecomeamemberofthe
top9inChinatoday–amemberofthestandingcommitteeofthepolitical
bureau–youhavetobetwiceagovernerofprovince,whichcouldbethesize
ofGermany,andperformreasonablywell.Eachprovincecouldbethesizeof
Germany,soitisbynomeanseasy.Youhavethiskindofmeritocracy.Itold
himwhateverproblemswehavewithoursystemwearenotgoingtochoose
someoneasincompetentasGeorgeW.Bush.No,thatwillnothappen!We
haveaminimumstandardforchoosingleaders.
Chinarejectsthestereotypicaldichotomyofdemocracyversusautocracyas
webelievethatfundamentallyspeakingthequalityofapoliticalsystem,
includingitslegitimacy,hastobedefinedbyitssubstance,thatisgood
governanceandtestedbywhatitcandelivertoitspeopleandbythelevelof
satisfactionthepeoplefeel,ratherthanbymerelyproceduraljustice.China
emphasizessubstanceoverprocedures.Ofcourse,thismaybeuniqueatthis
stageofdevelopmentforChinatoday,becauseChinesebelievethatultimately
substancewillevolverightproceduresinlightofChina’sownnational
conditions.Chinaisnowtheworld’slargestlaboratoryforeconomic,social,
andpoliticalchange.China’ssuccessforeconomicreformmayhaveactually
setapatternforChina’sfuturepoliticalchange:agradual,experimental,and
accumulativeapproachintryingtoassimilatewhateverisgoodinChineseand
foreignideasandpractices.Aftermorethanonecenturyofdevastatingwars
andrevolutions,afterthreedecadesofrelativelysuccessfuleconomicreforms
15
Power shifts in a changing world order
mostChineseseemwillingtocontinuewithitsownimperfectyetefficient
modelofdevelopment.
ThismodelseemstoblendreasonablywellwithChina’sowncivilisationof
severalmillennia,includingtwentyorsodynasties,sevenofwhichlasted
longerthanthewholeUShistory.Chinaisgoingthroughitsownindustrial
andsocialrevolutions.Imperfectionsareabundantandthecountryisstill
facedwithmanychallenges,suchasfightingcorruption,reducingregional
gaps,andreducinggapsbetweenrichandpoor.ButChinaislikelyto
continuetoevolvealongitsownmodelratherthanembracingothermodels.
TheChinamodelmaywellbecomemoreinfluentialinternationally.While
China’sexperienceislargelyindigenousandwillbedifficulttocopybyother
countrieswithdifferentculturaltraditions,certainChineseideasandpractices,
suchasseekingtruthfromfacts,puttingpeople’slivelihoodfirst,agradual
andexperimentalapproach,goodgovernanceversusbadgovernancebeing
moreimportantthan‘democracyversusautocracy’.Theseideasandpractices
maygenerateabroaderinternationalappeal.
AswearediscussingherethepowershiftsinachangingworldorderIthink
theriseofChinaandtheChinamodelmaymeansomethinginthisregard.
TheworldordermaybegraduallyshiftingfromwhatIcalla‘vertical’orderin
whichtheWestisabovetherestintermsofpoliticalsystems,wealthand
ideastosomethingIcallamore‘horizontal’order,inwhichtherewillbe
co-operation,mutuallearningandperhapsbenigncompetitionbetween
differentideasandsystems.Thisisactuallyamoredemocraticorder,atleast
frommypointofview.
BeforeconcludingmyspeechIwouldliketoshareananecdotewithyou,
whichwasrelatedtomebyaEuropeanphilosopher,afriendofmine.Hesaid:
thegreatGermanphilosopherLeibnitzcametoTheHagueonedayinthe
17thcenturytosecretlymeetwiththefamousDutchphilosopherSpinoza,
whohadbeenex-communicatedandverylonely,todiscusssomeheretic
ideas,includingChina’ssecular,non-religiousapproachtopoliticaland
economicgovernance–andthisapproach,tomymind,stillunderpinstoday’s
renaissanceofChina–it’ssaidthatafterthismeetingLeibnitzwrotealetter
tooneofhisfriendsinwhichhesaid:Ishallhavetopostanoticeonmy
door,whichreads‘BureauofinformationforChineseknowledge’.
WiththisanecdoteIdonotadvisetheDutchSenatetosetupaChinese
bureau.Bynomeans,astheNetherlandsarewell-knownforitslongtradition
ofsinologyandChinastudies.ButIdothinkthatwewillneedtocarryon
thespiritoftheEuropeanintellectualgiantsandtheirspiritofintellectual
curiosity,opennessandcourage,whichisalsoverymuchpartofthe
admirableDutchcharacter,tolearnaboutandevenfromothercultures,
16
civilisations,andwaysofpoliticalandeconomicgovernance,however
extraneoustheymayappear.Withthis,Ibelieve,weshallbeabletoavoid
ideology-drivenmisreadingofthishugelyimportantandcomplexcountry
calledChina.Weshallbeabletoenrichourcollectivewisdomintacklingthe
multiplyingglobalchallengesthatwearefacedwithtoday,rangingfrom
eradicatingpovertytocombatingterrorism,tocurbingclimatechange,andto
preventingaclashofcivilisations.WhenChina,theNetherlands,andEurope
asawholecanworktogetherweshallmakeabetterworld.
WiththisIwillstop.Thankyouverymuchforyourattention.
17
Power shifts in a changing world order
Mr.Kupchan:Thankyouverymuch,Mr.President,andthankstoyouand
yourpartnersfortheopportunitytosharesomethoughtswithyouthis
morningandtohaveaconversationabouttheNetherlands,Europeandwhere
theworldisheading.Itthinkitisanextremelyopportunemomenttohave
aconversationsinceI,likemycolleagueandfriendWei-WeiZhang,believe
weareenteringoneofthoserareintersectionsinhistory,inwhichtheworld
ismovingfromoneparticulartypeofordertowardanother.ProfessorZhang
accuratelydescribedthenatureofthattransition,thatwearemovingfroma
worldinwhichtheWesthasenjoyedapositionofideologicalandmaterial
primacyforthebetterpartofatleast50years,ifnotacentury,toaworldin
Managing Global Change
Address by Professor Charles Kupchan, Professor of International Affairs at Georgetown University
Charles Kupchan
18
whichpowerwillbemoreequallydistributedandinwhichtherewillbe
multiplemodelsofpoliticalordercontendinginthemarketplaceofideas.
Iwouldgosofarastosaythattheworldthatweareentering,theworldthat
willemergeasthenexttwoorthreedecadesunfold,willbethefirstworldin
historyinwhichwecombineglobalisationandinterdependencewith
multipolarity.Ifwegobackforexampletothe17thcentury–let’ssayto1700
–welivedinaworldinwhichChinaandIndiacollectivelyrepresentedone
halfofglobalGDP.Atthattime,inEurope,theHolyRomanEmpireorits
constituentmembers,theOttomanempire,theMughalempire,theChinese
empire,theJapaneseempire,wereallcentresofpower,buttheyreallydidnot
interactwitheachother.Theyeachhadtheirdifferentorderingprinciples.
Occasionally,theOttomanworldandtheEuropeanworldinterpenetratedeach
other,buteachmarchedtoitsowndrummer;therewasnoneedtocome
togetherandtrytoarriveatacollectivesetoforderingnormsbecausewe
livedinourownorbits.
Thatisnolongertrue.WearemovingintoaworldinwhichtheBeijing-
consensus,theDelhi-consensus,theBrussels-consensus,theWashington-
consensus,theBrasilia-consensusofnecessityintermixwitheachother
becauseofglobalisation,becauseofsecurityinterdependenceandbecauseof
theflowofcommerceandcapital.So,forthefirsttimeweasaglobal
communitywillhavetofigureoutwhatkindofamalgamoforderingideasand
orderingnormswewillarriveat;otherwisewewillprobablyreverttosome
sortofmorecompetitiveanarchyinwhicheachoftheseorders–aWestern
order,aChineseorder,aMiddleEasternorder,others–willgooffintheir
separatedirections.Thatisamuchmoredangerousworldthanoneinwhich
wetrytoarriveatsomekindofconsensusabouttherulesoftheroad.
TheAmericanandEuropeanpoliticalestablishmentsareawarethatweare
enteringthishistoricalswitchingpoint.IfyoureadtheNationalSecurity
StrategyfromtheObamaadministrationthatcameoutlastyear,ifyouread
thespeechesofBaronessAshtonandotherEuropeanleaders,youwillseea
recognitionthatweareenteringwhatonecouldcalla‘globalturn’.Themove
fromtheG8totheG20is,Ithink,aninstitutionalmanifestationofour
recognitionthatthisturnistakingplace.
However,Idonotbelievethatwehaveupdatedourdiscourseaboutthe
orderingfoundationsofthisturntomatchourrecognitionofthepowershift.
AtleastintheUnitedStatesthedominantnarrativeisstillaboutWestern
hegemonyandtheperpetuationoftheWesternorder.Forexample,someone
likeJohnIkenberry,myfriendandcolleague,believesthateventhough
Westernprimacyisdiminishingthegoalshouldbetobringrisingpowersinto
thetent–toinviteChinatocomethroughthisdoorandtakeitsseatinthis
19
Power shifts in a changing world order
room,todocktheChineseshipofstateintheWesternharbour.Idonotthink
thatwillwork,inpartforthereasonsthatProfessorZhanglaidout.Chinahas
itsownconceptionsoforder;thereisaChinesemodelthatwillnotfollowin
thefootstepsoftheWesternmodel.Chinarepresentsaverydifferent
civilisationanditisnottrackingtheWesternmodelofdevelopment.TheWest
isdefinedbyliberaldemocracy,bysecularnationalism,byindustrialcapitalism.
Thosefundamentalfeaturesofwhowearehaveeverythingtodowiththeway
weevolved.MuchofthatevolutiontookplacerighthereinNorthernEurope,
beginninginthe14th,15thand16thcenturies;theriseofamiddleclassthat
foughtbackagainstthepowerofthenobility,themonarchyandthechurch;
theReformation,whichwastheleadingedgeoffirstreligiousbutalsopolitical
pluralism;theseparationofchurchandstatethatinmanyrespectsdefines
theWesternexperience.Idonotseethatevolutionreplicatingitselfaround
theworld.IseeinChinaacountrythatratherthanpushingbackagainstthe
middleclass–ashappenedinEurope–isco-optingthemiddleclass.Thereis
todayasymbioticrelationshipbetweenthecommunistpartyandtherising
middleclass,inwhicheachscratchestheother’sback.Themiddleclassthat
isrisinginChinaisnotaliberalisingdemocraticforce;itisworkinghand-in-
handwiththecommunistpartyandtheChinesestatetoadvanceprosperity,
nottosecuredemocracy.
IdonotshareasmuchoptimismasProfessorZhangdoesabouttheChinese
model.Itworkswellanditwillcontinuetoworkwell,butithassomeserious
downsides:thecorruptionandtherepression,forstarters.Yes,itisa
meritocracybutthereiscertainlyalotofnepotismintheChinesesystem.
IthinktheChinesebrandofmercantilisminitsforeigneconomicrelationsis
tosomeextentthreateningaliberaleconomicorderandultimately,Iwould
notbesurprisedifEuropeandtheUnitedStatesrespondinkindagainstthat
kindofstate-ledgrowth,inpartbecauseitputstheUnitedStates,Europe,
andotherliberaleconomiesatadisadvantage.Wedonothaveanindustrial
policy.WearenotabletocompetewiththeChineseinBrazil.Wearein
Afghanistanwith100,000troops;Europeanshave50,000troops.Weare
expendingbloodandtreasuretopacifythecountry.Chinaisthere,toobut
whataretheydoing?Mining!Thatisnotnecessarilyaworldwhereweare
allplayingbythesamerules.
IntheMiddleEasttoday,ifyouturnonCNN–Iamnotquitesurewhatthe
Dutchtelevisionstationsaresaying–thereistalkofa‘floweringofthe
democraticforcesintheArabstreet’,‘thisisaturningpointinhistory’,‘the
ArabworldisnowgoingtofollowtheWesternmodel’:don’tbetonit!Ithink
thechancesofwhatishappeninginEgypttodayleadtosomesortofstable
liberaldemocracyinEgyptarelessthanzero.Imayhavemudonmyfacein
sixmonths-butthetwoinstitutionsotherthantherulingpartythatexistin
20
EgyptarethemilitaryandtheMuslimBrotherhood.Thatdoesnotstrikeme
asofferingthepreconditionsforthefloweringofsomekindofliberalstable
democracyinEgypt.NordoIthinkthatwewillwitnessanytimesoona
separationofchurchandstateintheMiddleEastoranIslamicreformation,in
partbecauseIslamhasaverydifferentrelationshiptopoliticsthanChristianity
did.Islamisareligionoflawandfaith;Christianityisareligionoffaithalone.
Whentheemperorandthepopesplit,thestateandreligionsplit.Thatisnot
trueinmostoftheIslamicworld;thereisnodifferencebetweenemperorand
popebecausereligionandpoliticsareoneandsotheideathatsomehowwe
aregoingtoseeanIslamicreformation,orablossomingofseculardemocracy
intheMiddleEaststrikesmeasanicehopebutonethatisunlikelytogo
realised.
Whatthatsaystomeagain,isthatwearemovingnottoaworldinwhichthe
WesternmodelpredominatesbutinoneinwhichtheWesternmodelwillneed
tocompeterespectfullywiththedifferentpoliticalmodelsanddifferent
conceptionsoforderthatareemergingindifferentregionsoftheworld.
ThatbringsmetothesecondissuethatIwantedtoraiseandthatis:what
aboutus,whatabouttheWest?IthinkthattheWesthasbeentheanchorof
theglobalsystemsincethe20thcenturybegan.Inmanyrespectsweneedthe
Westtotrytoanchorthisglobalturn,inpartbecausenooneelseisgoingto
doit.Thatisbecauserisingpowersdonothaveanalternativevision.Ithink
Chinaisprobablytheonerisingpowertohavetheintellectualcapacity,the
thinktanks,theuniversities,thediplomats,tothinkaboutgrandstrategy.But
ifyougotoChinatoday–andIhavedonethatrecently–andyousitdown
withthebestandthebrightestandaskthemwhattheworldshouldlikein
2050,yougetablankstare.Theydonothaveananswertothatquestion.
InIndia,anotherrisingpower,theirentirediplomaticcorpsconsistsofsome
600people.TheUSStateDepartmenthas12,000.Indiaisjustbeginningto
emergeasaplayerthatisthinkingaboutanythingotherthanitsimmediate
neighbourhood.Brazilisinasimilarposition;stillearlyinitsrise;justinthe
lastfewyears,Brasiliahasopened16embassiesinAfricaalone.Itisstill
findingitswayasapowerthathasinfluenceoutsideitsownneighbourhood.
Thatmeansthatifthereisgoingtobeacentreofgravitythatmaybeableto
getusfromthisworldtothenextworlditwillbetheWest.
Areweuptothetask?IamnotsureandIworryaboutitbecauseIthinkthat
atthesametimethatChina,India,Brazil,Turkey,andothershaveanewwind
inthesails,anewspringintheirstep,weintheWestseemtohavecome
uponaperiodinwhichwearepolariseddomesticallyandinwhichour
democraticinstitutionsarenotasnimbleandresponsiveastheyusedtobe.
21
Power shifts in a changing world order
IdonotthinkitisaccidentalthattheUnitedStatesisfacingitsworstperiod
ofpolarisationinoveracenturyatthesametimethatEuropeisfacinga
processofre-nationalisationinitspolitics.Ithinkthisisthereactiontosome
deeperstructuralforcesintheworld,includingglobalisationthatgives
democraticstateslesscontrolovertheirdestinythantheyusedtohave,of
immigrationthatismakingmanypeopleuncomfortablewithopenborders
andopensocieties,oftheeconomiccrisiswhichisleadingtodiscomfortand
dislocationanduncertaintyaboutwhetherourchildrenwillhavebetterlives
thanwedo.Thisisallmakingforadyspepticpolitics,adiscontentwithin
theWesternliberalworld.AsIsaid,itismanifestingitselfdifferentlyonthe
twosidesoftheAtlantic.IntheUnitedStateswearesufferingthroughan
intractablepoliticalpolarisationthatisproducingeithernopolicyorpolicies
thatarethelowestcommondenominator.IapplaudpresidentObamafor
strikingadealwiththeRepublicansonthetaxcutbut,isitreallytacklingany
ofAmerica’smajoreconomicproblems?No,andmeanwhileitisaddingtothe
deficit.Itwastheonlydealhecouldgetandheshouldhavetakenit.Butwe
arepushingourproblemsintothefuture.Wearenotgrapplingwiththem.
OnthissideoftheAtlanticthereismorepoliticalmomentumatthedomestic
level.ButatthelevelofEuropethereisdiminishingpoliticalmomentum.Iam
anAmericanwhohasforthebetterpartofmycareerbeenaEuro-optimist
andastrongsupporterofamorecollectiveEurope.Iamworried;Icometo
Europereasonablyoften–probablyeverytwoorthreemonths–andover
thepastthree,fourorfiveyearseverytimeIcometoEuropeIgohomemore
worriedbecauseIfeelthatpoliticsisbecomingmorenationalandless
European.Idonotseeleaders,othersthanthoseyouwouldexpectlikeVan
RompuyorBarrosoinvestingtheirpoliticalcapitalinEurope.Thedominant
politicalnarrativeisnoweitheranti-EuropeoritisjustsilentonEurope.
IcannotrememberthelastEuropeanelectioninwhichEuropeactually
matteredandinwhichanybodydiscussedEuropeanditsfuture.So,theproblem
thatwefaceisthattheUnitedStatesispolarised,almosttothepointof
paralysis,Europeisturninginwards,andtheprojectofEuropeanintegration
isinmymindmorevulnerabletodaythanithasbeensincetheprocessof
integrationstartedinthe1950s.
Whatdowedoaboutthis?IwillleavetheUSoutofitfornowbutIwould
makeonecommentonwhereweheadingintheUnitedStatesthatIhopewill
tosomeextentserveasawake-upcallinthisroomandforEuropegenerally.
IthinktheUnitedStatesisabouttoenter‘aperiodofstrategicretrenchment’.
Thatistosaytothedegreethatthepolarisationwillleadtosomekindof
newpoliticalequilibrium,thispoliticalequilibriumwillbeoneinwhichtheUS
lightensitsroleintheworld.Thatispartlybecausewearefacingamassive
deficitandbringingthatdeficitdownultimatelymeanscuttingallbudget
22
categories,includingdefenceandentitlements.Whenwegettothatpoint–
andwearealreadygettingtoit–youwillseealotofpressurefortheUnited
Statestorelymoreonothers,togetoutofIraqandAfghanistan,tobringthe
troopshome.Iamnottalkingaboutanisolationistretreat;Iamtalkingabout
amoreselectiveandpacedretrenchment.Thatdebateisnowemergingvery
quicklyintheUnitedStates,inpartbecausetheRepublicanPartyforthefirst
timesinceWorldWarIInowhasaveryclearneo-isolationistwing;itiscalled
theTeaParty.TheTeaPartydoesnotsayverymuchabouttheworld.Tobe
quitehonest,theTeaPartydoesnotknowverymuchabouttheworld;the
movementfocusesondomesticaffairs.Buttothedegreetheyhaveadefault
positiononforeignpolicy,itistheonethathailsbacktotheJacksonian
tradition,thelibertariantradition.Thattraditionsays:Americanengagement
abroadcomesattheexpenseoflibertyandprosperityathome.Notallofthe
TeaPartymembersaregoingtobeneo-isolationists,butenoughofthemwill
betocauseariftandanewdebateintheRepublicanParty.Theywillfind
someverycomfortablebedfellowsintheleftwingoftheDemocraticParty.
ThatisbecausetheDemocraticPartyismovingtotheleft,manyofits
representativescomefrompartsofthecountryonthecoaststhatarequite
liberal,generallypacifist,andanti-defencespending.Thatsaystomethatwe
maywellfindanewalliancebetweenleftandrightfocusedoncuttingthe
defencebudgetandturningtootherstodomoreintheworld.
Iwouldalsopointoutthatinpublicopinionpollsthathavebeencarriedout
overthelastsixtoeightmonthsonthequestionwhethertheUnitedStates
shouldminditsownbusinessandspendmoretimefocusingonitsproblems
ratherthanotherpeople’sproblems,49percentofAmericansresponded‘yes’
tothat.Thehighest‘yes’responsesincethequestionhasbeenasked;before,
thehighest‘yes’responsewas32percentintheearly1970s–abacklash
againsttheVietnamWar.49percentrepresentsamajoruptickinpublic
supportforaturninginward,anditisverymucharesponsetothewarsin
IraqandAfghanistancoupledwiththedeficits,whichmanyAmericansbelieve
areoutofcontrol.
So,thatallsaystomethatmoreresponsibilityisgoingtocometothisside
oftheAtlantic:itisaccordinglyveryimportantatthismomentinhistorythat
Europedoessomethingtoreversethere-nationalisationofpoliticallifethatis
takingplace.Thatispartlybecause–asIsaid–theWestisstillcriticalasan
anchoratthistimeofglobalchangebutalsobecauseifyousimplylookat
theeconomiesofscale,individualEuropeancountriessimplyarenotbig
enoughtomatterontheglobalstage.TheNetherlands,nottomentionsmaller
Europeancountries,butevenGermany,France,theUK,aretoosmalltocuta
figureasglobalplayers.Germanyhasapopulationofabout80million.
CompareittoChina!InthatrespectitseemstomeonlyifEuropeaggregates
23
Power shifts in a changing world order
itsvoice,onlyifEuropeaggregatesitsabilitieswillitbeaglobalplayerand
beabletohelptheUnitedStatesgetusfromtheworldweliveintodayto
theworldthatwewillbeinacoupleofdecades.
Ourhostsaidafewminutesagothatmaybethefinancialcrisisisgoingto
leadtonewlevelsofcollectivegovernanceontheeconomyandonfinance.
Ihopethatistrue,butIwouldaddthatitisnotenough.Wealsoneedtosee
Europeturnthecorneronsecurity,onforeignaffairs,andondefence.Maybe
LisbonanditsnewinstitutionswillprovidethewherewithaltopushEuropein
thatdirectionbutthatwillnothappeninandofitself.Thoseinstitutionswill
bestill-bornunlessEuropeanleaderscomealongandcreatethepolitical
environmentinwhichthoseinstitutionshavethesupportofaverageEuropean
citizensandaverageEuropeanvoters.
MyfinalcommentwouldbethatifIweretoleaveDutchopinionmakersand
Dutchpoliticianswithapieceofadviceitwouldbe:trytoplayaleadingrole
inbreathingnewlifeintoEurope.IftheGermansarenotgoingtodoit–and
IamnotsuretheyaregivenwhereGermanpoliticsisnow–thenmaybeit
behovessmallercountriesandrimland-countriesliketheNetherlandstotry
andfillthatgap,totryandgenerateadiscoursethatreverseswhatIseeas
thisworryingre-nationalisationoflifeinEurope.AsIsaid,IthinktheWestas
acoherentandmeaningfulpoliticalcommunityisperhapsmoreimportant
movingforwardthanithasbeenlookingback.TheUnitedStateshasalot
ofworktodowithgettingthroughthisperiodofpoliticalpolarisation;Ihope
itfindsonthissideoftheAtlanticaEuropethatrecoversalsoitspolitical
equanimityandcanbethepartnerthattheUnitedStateswillbelookingtoas
weenterintowhatIthinkinevitablybeaturbulentperiodinglobalpolitics.
Thankyou!
24
Address by Elmar Brok, Member of the European Parliament
Mr.Brok:Mr.President,ladiesandgentlemen!Iamveryproudtohavecome
tothiswonderfulbuilding,whichisperhapsoneofthemostifnotthemost
beautifulparliamentaryroomsinEurope.AroundthattimethiswasbuiltChina
hadonethirdoftheGDPofthisworld.Thecolonialtimesbecauseofother
reasonshavechanged.Wenowhaveashiftofpowerbutitisnotanewone.
Chinaisonthewaytotakeitspositionbackasnumberoneintheworld,
economicallyandpartlypolitically.So,itisnotanewsituation.Thiswasonly
aninterimsituationbetweenonestrongChinaandanotherstrongChina.Ifwe
lookatthedramaticchangeofthepoliticalandeconomiclandscapewesee
thatEuropeperhapstogetherwiththeAmericanstofinditsroleinthat.With
thefinancialcrisisthebigshiftbecomesclear.AsEuropechangedtheworld
withtheWest-IndianAssociationsandcolonialpowers,nowsovereignfunds
fromAsiaaredoingthesamethingfortherestoftheworld.Wehavetosee
thatthischangewillalsotakeplacebyadramaticdemographicshift.
Chinahasalreadymorethantwiceasmanyinhabitantsorconsumersthanthe
UnitedStatesandtheEuropeanUnioncombined.IfyoutakeIndiaintoaccount
youcanseethisdramaticshiftjustcompletesthedemographicfigures.Atthe
momenttheEuropeanUnionhas8percentoftheworldpopulationand29
percentofGDPofthisworld.Theworldwillnotacceptthat.Thediscussions
Elmar Brok
Jan Peter Balkenende
Wei-Wei Zhang
Charles Kupchan
25
Power shifts in a changing world order
wehaveaboutmigrationovertheMediterraneanorthediscussionaboutthe
borderbetweenTurkeyandGreecearepartofachangingworldandtheworld
doesnotacceptthatthis‘islandEurope’withsofewpeoplehavesuchalarge
shareofthewealthoftheworld.Therefore,wehavetochangeourpolicy
dramaticallybutaswasjustsaid,wediscussre-nationalisationinEuropeand
intergovernmentalproposalsinBrusselsinthesedays.Ifyoulookatthe
figurestheyshowGDPineverystatistic,alsoinEuropebysingle-states.It
looksnowdramaticthatGermanygoesfromplace3toplace4andsoon,
buttheydoonlyshowfiguresaboutGermanyortheNetherlands,orItaly;
onlytheEUfiguresaremissed.IfwedonotonlytakeEuropeanfigures,the
EuropeanUnionisstillthebiggesteconomicpowerinthisworld.Europeis
stillthebiggesttradingpowerinthisworld,byfar.Butwehavenoteven
statisticallystartedtothinkaboutitthattogetherweareapower.Alone,
becausewearesmall,wearenotapower.
TheLuxembourgPrimeMinisterJean-ClaudeJunckeroncesaid:seenfrom
WashingtonallEuropeannationsaresmallbutthesmallerhaveearlier
understoodthanthefewbigoneswhobelievetheirdirectoratescanstillrun
theworld.Thismustchange,moreinGermanythanintheNetherlands,but
everywhere,tounderstandwhereourfuturewillbe.Wealsohavetoseethat
theinternalmarketwith500millionpeopleistobeusedasarealhome
market.IfweseethatthebiggestconsumermarketsareChinaandIndiaa
nationhomemarkethasnochance.Volkswagenisproducingmorecarsin
ChinathaninGermany.Thisshowsusperhapswhattherealsituationis,where
wehavetolookfor.
Icangiveyoualotofotherexamplesandfigures,butIwouldliketosaya
fewwordsaboutwhatwehavetodo.
Europe,Ithink,hastogrowtogetherandhastoacttogether.Otherwise,we
willbecomewhatFareedZakariadescribed,thatweareinapost-American
world.Andthisistoacertainextentrealitysincemanyyears.Butthat
shouldnotbethecaseifIlookattheeconomicfigures.Also,otherswillhave
thatproblem.IdonotagreewithProfessorZhangthatthisisaquestionof
discussionbetweendemocracyorautocracy;itisonlygoodgovernance.
Legitimacycomesfromgoodgovernanceandparticipation.Weseeitinmany
casesinhistoryandalsonowatthemomentinEgyptandotherplaces.Here,
Chinahastochangeitssystem.Itisnotawaythatasystemdeliversto
people;attheendofthedayinafreesocietypeoplewanttoparticipate.
Theywanttotakepartinthedecisionandnotgivenbyphilosopherkingsin
aPlato’ssensesomegoodontheauthorities.Therefore,Chinawillstill
havetochangefromanautocracytoademocracy,orfindanotherwayof
participation.ItmustnotexactlybetheEuro-modelindemocracy.Wewillsee
26
with400millionpoorpeopleinChinahowthiscanwork.Howtheparty
bureaucracyonthelocallevelisabletokeepdownthepeople.Legitimacyis
givenbystability.Everyonewhohadautocracysaid‘meorchaos’,aswesee
thesedaysagaininacertainplacecalledCairo.Thiswillhappeneverywhere
andChinahastofacethisproblem,too.Therefore,sometimesIbelieve
thatinthelongrunitwouldbebettertoinvestinIndia,whichisalreadya
democracy.TheotherdayIheardthatforexampleinIndiaacourthas
decidedthatintellectualpropertycannotbeprotectedifitisagainstnational
interest.
Thatbringsmetomynextpoint.Thisworldwideeconomycanonlyworkif
everyoneacceptstherulesofthesocialmarketeconomy.Ifwehaveaglobal
economywemusthaveglobalrules,aswehavenowseeninthefinancial
crisis.Everyone,emergingoralreadythere,hastoaccepttheserulesifwe
wanttohaveasafeandpositivedevelopmentofoureconomiesandno
politicallymotivatedcrises.Therefore,IthinkitiscrucialthattheAmericans
andtheEuropeansworkcloselytogetherbecausetheystillhaveastrength
thatisnearly60percentoftheGDPofthisworld.Thatwillinfluencethe
settingupofstandardsandrules.Here,Idonotunderstand:theEuropeans
makeagreementsandtreatieswitheveryoneintheworld.TheAmericans
maketreatieswitheveryoneintheworld.Butthereisnotreatybetweenthe
AmericansandtheEuropeans.WehavesetuptheTransatlanticEconomic
Counciltogetatariff-barrierfreemarket.Itmeans3.5percentgrowthrates
forbothsidesand1.5percentgrowthrateworldwide.Whyarewenotgetting
that?Whydowecontrolourpharmacyproductstwice,inAmericaandin
Europe?Thesamehappensintheautomobilesectorandmanyothersectors.
Accountingstandards:whydowenothavecommonstandards?Letusorganise
aTransatlanticmarketontheleveloffreemarketandthesamevalues,which
willstrengthenourselveseconomicallyatatimeofcrisisbutwillbringus
togetherinthischangingworld,aneconomicbasisthatcancompeteinthe
futurewiththeso-calledemergingcountriesbutstilltrytoprotectbehindother
developingcountriesisalsonotthecase.WeshouldnotallowChinaanymore
tobeprotectedbydevelopingcountriesininternationalnegotiation.Inthe
future,Chinaisthesecondbiggesteconomyandshouldnottrytobebehind
Tanzaniainitsdevelopment.Also,weshouldnotacceptthisininternational
organisations.
Ladiesandgentlemen.Wealsohavetochangeourpositioninawaythatwe
havetolookintheforeignpolicycombinedwitheconomicpolicy.Therewe
cometothequestionofrawmaterials.Europeisrichinindustry,richin
innovationandtechnology,butweakinrawmaterials.Whenwetalkabout
humanrightsinDarfurChinamakesagreementswithKhartoumonoil.
Wethereforehaveforexample,despiteourdifferenthistoryintheEuropean
27
Power shifts in a changing world order
UnionwithourEasternnewcountriesapolicy,whichisaconstructivepolicy
withRussiathathasinthelongrunthesameinterestsinthischangingworld
aswehave.WehavethisTransatlanticmarketandaconstantrelationship
totherawmaterialRussia.Wemighthaveachance.Ifwedonotthinkso
strategicallyandeveryonerunsalonetogetitsownpipelinewithown
agreementsandwithownreceptionintheKremlinbutnothaveastrategy
togetherwemightloseorwewilllose.Weareinadifficultsituationwhere
wehavetoact.Icanonlygiveyouafewexamplesinthisshorttimebut
Iwouldliketomakeoneotherremark.Bothspeakershavetalkedaboutit.
Wearefacingglobalchallenges,globalisation,economiccrisis,climatechange,
energy,terrorism,andmanyotherquestions,whereneitherTheHaguenor
Berlinalonecansolveanything.InBerlinorinTheHaguewecandecide
whatwewantbutithaszeroimpact.Ifwemakethisdecisiononsuchfields
likeclimatechangealoneitwillkilloureconomy.ButifweactasEuropeans
togetherwemighthaveachance.Wetalkinnationalcapitalsabout
‘sovereignty’,whichhasnottobegivenaway.Youhaveonlysovereigntyif
youhavethepowertogoforit.Otherwise,itisjustpaper.Butifthe
Europeansdoittogether,ifwepulloursovereigntieswemightensurethe
interestsofourcitizensonaglobalstage.Europemeansnottoempower
Brussels,butEuropemeansmorerightsandmorefutureforourcitizens.If
ournationalgovernmentsavoidthattosaybecauseitisnotpopularathome,
butsaythatEuropeisgoodforthepeopleandwehaveproblemsathometo
hidebehind,thenitdoesnotmatterwhichpoliticalpartywearebecausethen
weareallthesame.Thenwehavenofuture.Therefore,wemusthavebetter
decision-makingproceduresinBrussels.WemustusetheTreatyofLisbonin
aproperwayandwemustgivetheHighRepresentativeachance.Itshould
notbethecasethatduringeightweekstheCouncilisnotabletomakeone
decisionontheCoptskilledinCairobecausethethirdwordinthefifthline
couldnotbeagreedon.Thathappenedthisweek.Ifwedonotchangethis
attitudethenweareinabadsituation.ButIbelievethatcitizensarewiser
thanpoliticians;citizenswillforceustodoso.Ifwearenotabletodothat
therecomesasituationliketheFrenchwriterPaulValérydecadesago
described:EuropewilluniteorwillbecomethetailoftheEurasiancontinent.
28
Address by Jan Peter Balkenende, Former Prime Minister of the Netherlands
Inhisaddress,Mr.Balkenendecomplimentedtheorganisersonarrangingthis
conferenceonpowershiftsinachangingworldorder.Healsothankedthe
previousspeakersforsharingtheirviewsonwhatishappeningintheworld,
addingthatwecanseethesepowershiftstakingplaceeveryday.Lookat
whatisgoingonwithintheUnitedNations,theIMF,andtheWorldBank.
Structuresarechanging.Othercountriesaretakingthelead.Justlookat
eventsinChinaandAsia.
Mr.Balkenendeconcentratedhisremarksinthreemainareas:first,anumberof
generalobservationsonglobalpowershifts;second,theroleofEuropeonthe
worldstage;andfinally,theNetherlands’interestsandthechallengesitfaces.
Mr.Balkenendebeganbystressingthatwhenwespeakofthechangestaking
placeintheworld,itisimportantnottolosesightofthefundamentals.
Hementionedthreekeyelementsinthisrespect.ThefirstconcernsPresident
Jan Peter Balkenende
29
Power shifts in a changing world order
FranklinD.Roosevelt’sfourfreedoms:freedomofexpression,freedomof
religion,freedomfromfearandfreedomfromwant.Thosefreedomsarestill
validtoday.Andwehavetofightforthemeveryday.Thesefourfreedoms
havetodowiththefundamentalnatureofdemocracy.
Thesecondelementisavibrantandactivecivilsociety.Peoplearemorethan
justconsumers,orsubjectsofthestate.Theyarealsomembersofsociety.
WesawthepowerofcivilsocietyinthedemiseofcommunistEurope,for
example.Itwasthevitalityofcivilsocietythatledtothechangeofthe
politico-economicsystem.
Thethirdfundamentalelement,Mr.Balkenendesaid,istheruleoflaw.
Allpowersshouldbebasedondemocraticallyadoptedlawsandmeasures.
Theseparationofpowersiscrucial–asistheneedtorespectbasichuman
rights.HementionedthevisitsthathehadmadetoChinaduringhisterm
inoffice,andhistalkswithChinesepremierWenJiabao.Duringtheirfirst
meeting,aprivatedinner,thetwohadhadalongandfrankdiscussionabout
developmentsinChina.Mr.WenJiabaoexplained,justasProfessorZhanghad
earlier,howChinahadimprovedthequalityoflifeof400millionpeople.
WhileMr.Balkenendeacknowledgedthisachievement,healsohighlightedthe
importanceofrespectingbasichumanandpoliticalrights.
Mr.Balkenendewentontostressthelinksbetweeneconomic,political,social
andculturaldevelopment.Theseareascannotbeseparated,heargued.They
allcallforpluralism,whichisnotcompatiblewitha‘top-downsystem’.Inhis
view,thiswasattheheartofthedifficultiesofthecommunistregimes.Their
insistenceonatop-downapproachledtheentirecommunistsystemtofail.
Mr.Balkenende’sfinalgeneralobservationconcernedthecommonchallenges
weallface:energy,foodsecurity,theMillenniumDevelopmentGoals,theWTO
negotiationsandclimatechange.Wehavetoworktogethertotacklethese
issues,despitethepowershiftsgoingonaroundus.Atcertainmoments,he
said,hehadthefeelingthatmanyotherdecision-makerssharedhisideas;
hereferredtotheoptimismthatpervadedtheG20meetinginLondon,where
therewasaclearimpetusfromtheheadsofgovernmentsofprominentstates
tofinalisetheWTOnegotiations.HerecalledthewordsofPresidentBarack
Obama,whoobservedthatduringthecrisisofthethirtiesittookmorethan
adecadefortheworldleaderstomeet,whilenowtheymeeteveryeightor
ninemonths.Butunfortunately,oneyearon,theWTOnegotiationshavestill
30
notbeenfinalised.What’smore,theclimatechangesummitinCopenhagen
wasnotasuccess.Thereisstillalotofworktobedone.Thatwasalsohis
messagetohisChinesecolleagues.Chinaisnowamajoreconomicpower,
butwithsuchapositioncomesresponsibility.Theresponsibilitytomakea
differenceintacklingclimatechange,aswellasindealingwithNorthKorea,
forexample.Globalproblemsrequireglobalsolutions.
Inthesecondpartofhisspeech,Mr.Balkenendeconsideredtheroleof
Europeontheworldstage.Hecitedtwoauthorswithclearviewsonthe
subject.OneisayoungresearchernamedParagKhannawhoisvery
optimisticaboutEurope’sprospects.Hepredictsthatinabouttenyears’time
Europewillbeamajorglobalplayer.ThenthereisKishoreMahbubani,Dean
oftheLeeKuanYewSchoolofPublicPolicyattheNationalUniversityof
Singapore,whobelievesthatAsiahasthemostpotential.
Nooneknowswhatwillhappeninthefuture.Downthroughhistory,viewson
Europehavealwaysdiffered.Inthe1980s,therewasalotofnegativityabout
Europe.‘Europe1992’changedthat.Thegoalofhavingasinglecommon
marketcreatedalotofpositiveenergy.‘Euroscepticism’turnedto‘europhoria’.
Thesedays,themoodhasswungbackagaintowardsscepticism.Inaway,
saidMr.Balkenende,thatisunderstandable,partlybecauseofwhathas
happenedinGreece.ButhealsostressedtheadvantagesoftheGreek
situation.Now,everyoneagreesthattheStabilityandGrowthPactcriteria
mustbeadheredto.Thereiswiderpublicawarenessthatthingshavegone
wrong,butalsothatthingscanchange.Europeremainstheworld’sbiggest
consumermarket.ButdevelopmentsinAsiaaremovingfast.SoEuropemust
stepup.Wehavethepotential.Europehasagreathistory,agreatculture.
Europeisvalues-basedanditssocialmarketeconomyisasuperbeconomic
model.Betterthanaliberalisedfreemarketeconomy.Betterthanacontrolled
economy.
Inconcludinghisaddress,Mr.Balkenendediscussedthesituationinthe
Netherlands.FromaEuropeanperspective,theNetherlandsisamedium-sized
country.Fromaglobalperspectiveitissmall.Butthefigurestelladifferent
story.Weare16thlargesteconomyintheworld.The8thlargestfinancialsector,
the6thlargestexporterandthe5thlargestcontributortotheUnitedNations.
WeareveryactiveintheWorldBankandtheIMF.Wespend0.7%ofGNIon
developmentcooperationandwearewellknownforthe‘3Dapproach’we
tookinAfghanistan.TheNetherlandsisanactiveinternationalplayerand
mustremainso.Turninginwardwouldbeaveryriskystrategyforacountry
liketheNetherlands.WecannotlivewithoutEurope.OurfutureliesinEurope.
Ourfutureliesabroad.Aglobalapproachistheonlywaywecantacklethe
31
Power shifts in a changing world order
issuesoftoday:climatechange,freetrade,energy,andsoforth.Itistheonly
waywecanaddressdifficultissueslikehumanrights.Andtheonlywaywe
candealwithpowershiftsinachangingworldorder.
Mr.Chairman:Thankyouverymuch,Mr.Balkenende.ElmarBrokhastoleave
ataquartertotwelve.So,ifyouhavequestionsforhimpleaseaskthem
beforethattime.
32
Mr.VanEekelen(AIV):IaskedforthefloorbecauseImissedoneimportant
thingandthatisthequestion‘whatisorder?’Tome,ordermeansarules
basedorganisation.InthatrespectElmarandJanPeterhitthenailon
theheadbysayingthattheEuropeanUnionistheonlyrulesbased
organisation.Therefore,myquestionis–alsoforourChineseProfessor
becauseIenormouslyappreciatedhisspeech–whetherChinaisprepared
tofollowrulesbasedorderintheworld.IsChinapreparedtoparticipatein
internationalaffairsandisitpreparedtotakeresponsibility?Thatisa
commitmentandaresponsibility.IsChinaafree-riderintheworldanda
regionalbully,assomebodydescribedit?Ihopeitisnot.Itistakingmore
responsibilitybutmypointisthattheBRICScountriesareeconomies;
yes,butisRussiaplayingarolepolitically?Itisnotevenamemberofthe
WorldTradeOrganisation.Shouldn’twefocusmuchmoreonorganisations,
whichexpresscommitmentandresponsibility?
Discussion
Wim van Eekelen
33
Power shifts in a changing world order
Mr.VanStaden(AIV):IamamemberoftheAdvisoryCouncilonInternational
Affairs.Ialsowanttopursuethedebateonthegeneralthemeofthis
conference,thechangingworldorder.Ititswidelyrecognisedthatthedaysof
theworldorderrootedinWesternandparticularlyAmericanpredominanceare
over.Itistemptingtomakethecasenowforamorehorizontalorder–as
ProfessorZhangdid–basedonaglobalpowerconcert.Butthequestion
ariseswhointhiskindoforderisgoingtoprovidetheglobalpublicgoods?
ProfessorKupchanspokeaboutthepossibilityofUSstrategicretrenchment–
Iagreewithhisanalysis.RegardingEuropethefutureisopen,andwehave
todoourutmosttoenhanceEurope’sprofileontheworldstage.However,
thereistheriskofEuropemissingtherendezvouswithhistorybecauseofits
internalweaknesses.
AsfarasChinaisconcerned,therehavebeennumerouscallsonChina
recentlytoplaytheroleofresponsiblestakeholder,toborrowRobert
Alfred van Staden
34
Zoellick’sphrase.WedrewfromChinamixedresponsestothosecalls,ifIsee
itcorrectly.Thereistheexcuse–ortheexplanation–ontheChinesesidethat
thecountryisstillverymuchpreoccupiedwithdomesticproblems;afterall
itstillseesitselfasadevelopingcountry.ChineseleaderstellusthatChina
isalreadydoingitspartbyprovidingpeacekeepingtroops,whileitcameto
therescueinthefinancialcrisis.ButasIseeit,Chinaisabitduckingthe
issueonthismatter.Ofcourse,Chinamightargue:youarespeakingabout
stakeholders,whosestakesareinvolved?ArewetalkingaboutWesternstakes
ornot?
Lookingatthefuture,wealmostautomaticallypresumethatorderwillprevail
butProfessorKupchanwasalsoalludingtothepossibilityofcompetitive
anarchy.So,again,whoisgoingtodeliverthemajorpublicgoodsinthe
future?
Mr.Voorhoeve(AIV):Thankyou,Mr.Chairman.ThereisasayingbyConfucius,
whichIlikeasIthinkitisamorepracticalguidancetohowtodealwith
opponentsthan–withallduerespecttotheformerPrimeMinister–acore
sayingintheNewTestament.ThesayingbyConfuciusis‘loveyourenemies
butbeoneblowaheadofthem’.Ithinkthatisawiseguideforlong-term
politics.Ithink–andthisleadstomyquestion–thatthemaindriverof
long-termtrendsisenergy,energyconsumptionpatternsandenergy
production.Theunderlyingquestioniswhichofthemajorpowersweare
discussingisgoingtosolvethecrucialenergyandclimatequestion.Chinahas
anenormousamountofcoal,soitcanescapethefuturescarcityofoiland
gasbuttheconsequencesareofcourseatremendouscarbondioxide
production.So,IaddressmyquestionparticularlytoProfessorZhang.
Mr.Post(TheHaguemunicipality):Thankyou,Mr.Chairman.Gentlemen,just
recentlyareportwaspublishedbyanadvisoryorgan,intheNetherlandsthe
WRR,deWetenschappelijkeRaadvoorhetRegeringsbeleid.Weallknowthat
organisationhereintheNetherlands.Itisaveryimportantreport.Itiscalled
‘AttachedtotheoutsideworldfromaDutchperspective’.Itisnotaliteral
translation,ProfessorKupchan.
HereyouareinTheHague,intheNetherlandsandwehavealotof
internationalinstitutes,judicialandpoliticalinstitutes.HereinTheHagueand
thegreaterTheHaguearea,wehavetheInternationalCriminalCourt,the
YugoslaviaTribunal;Ithinkyouknowthemall.Canyougiveusanadvice
whattheroleofthesespecialisedinstituteswillbeinachangingglobal
order?Maybeallthegentlemenbehindthetablecouldgointoitifwehave
enoughtime,butIspecificallyaskthisquestiontoProfessorKupchan.
35
Power shifts in a changing world order
Mr.Chairman:MayIaskMr.Broktoanswerfirst?Therearemorequestions
forthesecondround.
Mr.Brok:Iwouldliketomakeashortremark,especiallyonwhatMr.Van
Eekelensaidaboutlegalandpracticalcommitments.Anationalmarketdoes
notexistanymore.WehaveaEuropeanoraglobalmarket.Butwearestill
notabletoputthelegalenvironmentforsuchamarketonthesamelevel.
Ithinkthisisacrucialproblem.Insomefieldsitwillbeverydifficulttodo
so.IntheEuropeanCouncilItriedtotalkaboutcommonpensionagesin
acompetitiveEurope.Thisbecomesalreadyverydifficultbecauseofthe
differencesinEurope.So,wehavetoseewhichruleswehavetosetupfor
amechanismtomakethemarketrun.Thequestionofcompetitivenessmust
besolvedbyeveryoneathome,butwehavetorespecttherules.Alsothe
questionisveryimportanthowwecanmakethecommitmentreallybinding.
Youcannotmakethembindingintermsofpowersatstakebecausewe
havetodealwithsovereignstates.Wehavetopushforwardthatsuchlegal
commitmentsbecomeveryprecise,fromintellectualpropertytofinancial
rulesandmanyotherquestionsthathavetobefulfilledtomakesuchan
internationalorderforamarketeconomy.Otherwiseitwillnotwork,because
itwillnotbefreeandfair.Everybodywilllosebythatandnotrespectingit
wouldmeanthateveryoneisaloserattheendoftheday.
Letmegiveyouanexamplewithintellectualpropertywithinourcountry,
wherethisisanimportantquestion.Icomefromaregionwherewehavea
lotofmachinetoolindustry.Thebestdevelopmentfromanengineerina
factoryinmyregionisnothelpingthecompanyanymore.Thismachinecomes
backfromChinaafteroneyear,copiedandforhalftheprice.Butmyhopeis
thattheVietnamesenowproduceafterayeartheChinesemachineforhalf
theprice.So,themoresuchcountrieslikeChinadevelop,themoretheyhave
tounderstandthatitisalsointheirinteresttoaccepttherulesandto
implementthem.Thiswillbeadecisivepointandtherefore,itisalso
importantthatRussiaforexamplejoinstheWTO.Thereisacertainbinding
inthat.ThatisthereasonwhysomeoligarchsinRussiadonotwanttojoin.
Ibelievethatthismustbeoneofthemainaspects.TheG20isamuchmore
importantbodythantheG8forallthesereasonsandmoreover,itcombines
emergingcountries.Herewehavetofindawaythatwhattheyagreewillbe
implementedathomeinlaw.Otherwise,theworldeconomyisatstakeorit
willcometoasituationwithsuchtensionsthatwillevenleadtodangerous
situationslikewars.Therefore,commonrulesinaglobaleconomyarethe
safestwaytomorewealthandpeace.Thishastobeunderstood;otherwise
wewillrunintodifficultsituations.
36
Mr.Zhang:Iwilljustcommentbrieflyonafewquestionsandfirstageneral
question,mentionedbyquiteanumberofpeople.InmyspeechImentioned
thatChinaisnowthelargestlaboratoryforeconomic,social,andpolitical
experiments.Indeed,eveninthefieldofpoliticalreformanddemocracy,we
areexperimentingdifferentinitiatives.IfIhavetocutthelongstoryshort,
IamthinkingofthefamousremarkbyPresidentLincoln‘agovernmentof
thepeople,bythepeopleandforthepeople’.Ithinkitisfairtosaythatat
thisstagethegovernmentofChinaisagovernmentofthepeopleandfor
thepeople.Itisaccountabletothepeople.Letmegiveanexample.Obama
isstillpushinghardhisreformformedicalinsurance.Therearealotof
setbacks.InChina,wehavealreadydonethatwithintenyears.95%ofthe
populationisinsured.So,itismoredirectlyresponsibletopeople’sdemands,
moreefficient.
Howtoachieveagovernmentbythepeople?Thatisnoteasy.Inthe
Netherlands,youhaveestablishedasetofpracticessoyouconsiderthisis
thegovernmentbythepeople.InthecaseofChina,howtoensurea
governmentbythepeoplethesizeof1.3billion?Itisbynomeanseasy.We
arehavingexperiments.Essentially,themostprobabledirectionis‘selection
pluselection’.SelectionisbasedontheChinesesystemofmeritocracyand
electionisamoreWesternapproach.So,wearealreadyexperimentingwith
that.Wealsothinktentativelythatthisapproacheventuallycouldensure
bettergovernancethansimplyholdingelections.
Theotherthingisabouttheeconomicandpoliticalorderoftheworldtoday.
Indeed,Chinaisabeneficiaryofthecurrentinternationalorder.Letmegive
anexample.SinceChina’sentryintotheWTOintheyear2000,China’s
economyhasmorethanquadrupledwithinonedecade.Soobviously,China
hasbenefitedalotfromitsengagementwiththeinternationalsystemand
withitsinternationalpartners.
Butontheotherhand,giventhesizeofChinaandgivenitsowneconomic,
political,andculturaltraditionsChinaisalsoperhapsareformerinthesense
thatweneedtoreformcertainaspectsoftheinternationalsystem.Weare
notrevolutionarytooverthrowthesystem;bynomeans.Butindeed,youcan
findmanyexamplesofthesystemnotworkingproperly.Forinstance,even
Europeanswillagreewhytheworldfinancialsystemisoperatinginsucha
way–somanyspeculationsbutwithoutsupervision–whytheUSrating
agenciescanplaysuchaprominentroleanddictateothers.Thisissomething
thatweshouldthinkaboutintermsofreform,i.e.reformingaspectsofthe
currentinternationalorder.AsforChinaasaresponsiblestakeholders,tobe
honest,wefeel–andIfeelinparticular–thattheUnitedStatesitselfisnota
responsiblestakeholder.Thatistheproblem.Thefinancialcrisisstartedinthe
37
Power shifts in a changing world order
UnitedStates.Howmanytensofmillionsofpeoplehavesufferedfromit,not
tomentiontheIraqiwar?So,differentplayersintheinternationalsystem
shouldallbecomeresponsibleplayers,inparticulartheUnitedStates.Forone
thing,theUnitedStatesshouldbecomemoreresponsiblewithitsdollar-policy,
anditsdevaluationofdollarsisdestructivetomany.Ofcourse,Chinacando
moreintheworldtoday.Indeed,thespeedatwhichChinaisrisingisfaster
thanmostChineseandevenChineseleadersexpected.Perhaps,wearenot
yetfullypreparedforthat.Wehavetohavealearningprocess.Ontheother
hand,Chinawillhavealotofdifficultywithitsownagendabeingdictatedby
others,byothercountries.Thatcouldberisky.TakeforinstanceKorea.China
hasalotoftradewithandaidforNorthKoreabutontheotherhand,North
Koreaisfiercelynationalistic.ItisnotthatChinapressesabuttonandNorth
Koreawilldoit;itisfarmorecomplicatedthanthat.So,incertainareas
Chinacouldperhapstakemoreresponsibilitybutinotherareas,otheractors,
includingEurope,shouldbemoredynamicandmoreactive.
Finally,concerningtheissueofenergyandenvironment:indeed,Chinaisone
ofthelargestandperhapsthelargestpolluterintermsofemissionofCO2,
eitherChinaortheUnitedStates.Yet,ifwelookattherecentstatisticsChina
isactuallyleadingtheworldintermsofsolarenergyindustry,windenergy
andintermsofelectriccars.Chinaisdoingveryefficiently.Atypicalfeature
oftheChinamodelisonceitrealisesthemistakesithasmadethewayto
correctmistakesismoreefficient.IthinkwiththeChinesemodelthereisa
hopeforabetterenvironmentalpolicy.Weissuedtheorderforadopting
Europeanpetrolstandardsacrossthecountry,anditwasdoneovernight.If
weadopttheAmericanmodelIdonotseeanychanceforcurbingclimate
change.
Thankyou.
Mr.Kupchan:Thankyou.Mr.VanEekelenraisedthecriticalquestionandthat
is‘whatisorder’?Ithinkyougavetherightansweranditisarulebased
system.Inmanyrespects,whatallofushavebeendiscussingthismorningis
whatthatrulebasedsystemwilllooklike,whowillwritetherulesand
whetherthemainplayersandtheinternationalsystemwillabidebythose
rules.WearecomingoffofthelongruninwhichtheWesthaswrittenthe
rules.Inmanyrespects,sincethePeaceofWestphalia,theConcertofEurope,
theVersaillesTreaty,theUN,theBrettonWoodssystem,somecombination
ofEuropeanandNorthAmericanpowershavebeencreatingthatrulebased
order.Ithinkwearegettingtothepointwherethatwillnolongerbe
sustainable,simplybecausetherearealotofcountriesoutthere,China
amongthemthatmaynotwanttoplaybyourrules.Thatisgoingtorequire
ustoengageinthediscussionaboutthenextsetofrules.Ithinkitisgoing
38
tobehardtocometoanagreement,inpartbecause–toputitinsoftware
terms–ouroperatingsystemsaredifferent.Iwouldratherseeaimlowand
findasetofrulesthateverybodyplaysbythantoaimhighandseeallof
thembrokenonadailybasis.
ImightdisagreealittlebitwithProfessorZhangabouttheUnitedStates.The
UShasmademistakes;thefinancialcrisis,theIraqwarbutonbalancetheUS
hasbeentheproviderofpublicgoodsthatyouwerereferringto.Thosepublic
goodswillbehardertocomebyanditseemstomethatweneedtothink
aboutwhatnewsetofruleswillgetmoreplayersin.Here,Iwouldrespond
toformerPrimeMinisterBalkenende:Iagreewithyouonavalues’based
approachbutIalsothinkweneedtobecarefulnottode-legitimateother
actorsbyputtingthevalues’issuesintheforefront.Weneedtoworkwiththe
Russias,theChinas,andtheEgyptsoftheworldevenifwedonotlikethe
waytheyruntheircountries.Thatisgoingtobeevenmoretruewhenwesee
thisshiftinthedistributionofpower.Wecannotinanywayneglectthose
valuesbutIwouldtiltinthedirectionofamorerealistapproachwhenone
considersthenatureofthechallengesthatwehavebeforeus.
Onefinalcomment,thefinalquestionaboutsomeofthespecificinstitutions
inTheHague.Ithinkthatpreciselybecauseglobalgovernanceisgoingtobe
hardtocomeby.Thatistosay,consensusontheruleswillbehardtocome
by.Wemaydobettertodropdowntoregionalinstitutions,tofunctional
institutions.WhenyouadduptheICC,ASEAN,theEU,theAfricanUnion,
Mercosur:inmanyrespectstheregionalinstitutionsandthefunctional
institutionsintheyear2040maybethetruedeliverersofalotofthepublic
goodsthatwearetalkingabout,partlybecauseitiseasiertogetconsensus
andactionatthelocallevelwherethereismoreconsensusonrulesand
normsthanatthegloballevelwhere,asIsaid,Ithinkwearegoingtobe
livingforthefirsttimeinhistoryinaworldinwhichyouhaveverydifferent
viewsaboutprinciples,norms,state-societyrelations,values,andhuman
rights.Inmanyrespects,ifwecannotgetconsensusatthegloballevelwe
maybeabletogetitattheregionalandthefunctionallevel.
Mr.Balkenende:Itwasinterestingwhatyouweresayingaboutvalues.Mr.Van
Eekelenstartedthediscussionabouttherulesbasedsystembutarules
basedsystemisalsolinkedtovalues.Youweretalkingabouttheorganisation
ofeconomyandasocialmarketeconomy.Ofcoursethereareregulationsand
rulesbutitisalsobasedonfundamentalvalues.Ithastodowithsolidarity.
Itisalwaysgoodtounderlinethelinkbetweenvaluesandtheorganisational
issues.
Secondly,whenwetalkaboutarulesbasedsystemitisimportanttolearn
somelessonsfromwhathappenedinCopenhagenwhenwetalkedabout
39
Power shifts in a changing world order
climatechange.IthinkEuropeplayedaconstructiveroleinCopenhagen.What
wasthefundamentalproblem?InEuropewesaidweneedarulesbased
system,weneedabindingagreement.Butwhathappened?PresidentObama
showedapersonalcommitmentbuthewastiedtothefactthattheUS
Congressdidnotallowhimtogofurther.Chinawastalkingaboutitsown
responsibility.Itwasaclearcommitment:Chinawantedtodomoreinthe
sphereofenvironmentalissuesbutitwasnotwillingtoacceptabinding
agreementonaglobalscale.AndthatwasnotthemessageofEurope
becausewesaiditisimportanttohavesuchanagreement.IfEuropewould
nothaveactedwewouldnothavehadthefinancingoftheclimatechange
policy.IthinkEuropeplayedagoodroleoverthere.
Thesamehappenedwiththefinancialandeconomiccrisiswhenwetalk
aboutissueslikemoresupervisionandmoreintegrityandtransparency.
IthinkEuropeplayedanimportantroleandaconstructiveone.
Mylastremarkisaboutwhatyousaidaboutelections.Iknowthediscussion
butelectionsarepartofademocraticorientation.Iwouldunderlinethe
importanceofhavingelectionsbutasanexampleofademocraticsituation.
Youcantalkaboutthestructuralaspectsoforganisingelectionsbutitalso
hastodowithademocraticmentality.Ithastodowiththequestionhowyou
cansolveproblems,howyoucanavoidtensionsinsociety,andhowyoucan
preventfights.Thishastodowithademocratictradition.Therefore,I
underlinetheimportanceofhavingelections.
Ofcourse,whenyoutalkaboutelectionsthishastodowiththedevelopment
ofademocratictraditionandthatisnoteverywherethesame.InEurope,it
didnotexistfromonedaytoanother.Ittooksomecenturiesofdevelopment.
Itisimportantthatweareworkingondemocraticdevelopment;otherwiseyou
willgetdifficultiesinthelongrun.
40
41
Power shifts in a changing world order
Second round of questions
Mr.DeZwaan(ClingendaelInstitute):MycommentwasaddressedtoElmar
BrokandMr.Balkenende.NowthatMr.BrokhasleftIwilladdressmy
questiontoMr.Balkenende.Everybodyagreesthatwehavetodoittogether,
soitisabouttheroleofEurope.However,Ithinkalltheissueswearetalking
abouttoday–thethreatsandthechallenges–havetodowiththeremaining
degreeofsovereigntyoftheMemberStates.Today,intheSummitMeetingin
Brussels,themodalitiesofanewTreatyreformwithregardtomonetarypolicy
willbediscussed.Todayalsothepossibleoutlineofacommonenergypolicy
willbediscussedinBrussels.Wearenotyetthere.Now,morespecificallywith
regardtoforeignpolicyanddefenceitismyhumbleopinionthatwedidtoo
littlewhentherewasapossibilitytocreateacommonforeignpolicy,andthat
iswhenwediscussedthecontentsoftheLisbontreaty.So,perhapsImayask
youMr.BalkenendeasformerPrimeMinister:didwedoenoughwhenwe
concludedtheLisbonTreatyonthispoint?Providingforlabelsas‘President
oftheEuropeanCouncil’and‘HighRepresentative’isfine,butisitenoughin
ordertoprovidetheEuropeanUnionandthememberstateswithsufficient
toolstodeveloparealcommonforeignpolicy?
Mr.VanderHoeven(ISSandAIV):Ihaveenjoyedtheexposéofthevarious
socio-economicmodels,somedynamic,andotherssclerotic.Although,as
wasmadeclear,thesemodelsareindeedverydifferent,wenoticeonetrend,
whichtheAmericanmodel,theEuropeanmodel,andtheChinamodelhavein
commonnamelygrowinginequality.IntheUnitedStatesandEuropewehave
seenoverthelast20to30yearsagrowinginequality,asaconsequenceof
globalisation,butwewitnessnowalsoinChinarapidgrowinginequality,
mainlybecauseofthegrowingindustrialisationandtheschismbetweenthe
coastalareasandtheruralareas.So,allthreemodelspresentedthismorning
manifestatrendofgrowinginequality.Myquestionisthereforehowwill
thisgrowinginequalityaffectthebehaviourofthesedifferentsocioeconomic
modelsandwhatimpactonaworldscalewillthishaveontherelations
betweenthesedifferentblocksofcountrieswhichthesemodelspresent?
42
Mr.Knottnerus(WRR):Mr.Chairman.Alothasbeensaidaboutthereportof
theScientificCouncilforGovernmentPolicy,mentionedbythePresidentin
hisintroduction.ThereisonethingIwouldliketoaskthepanelofour
excellentspeakers.Whilewearetalkingalotaboutthegeopolitics,aboutthe
organisationsofstatesandbetweenstateswedidnothearsomuchabout
thenon-governmentalorganisations,thenon-stateorganisationsthathave
crosscuttingworldwidenetworksinallfieldsofenvironment,humanrights,
economicdevelopment,internationalaidandalsonetworkingbetweencitizen
andforexampleindustries.Inourreportwemadesomepleasfordeveloping
newmodelsforcollaborationbetweenstatesandnon-stateactorsbecauseof
theimportanceofthoseothernetworks.Whatdoyouthinkaboutthe
perspectivesofsuchstrategies?
Mr.VanBaar(JournalistHP/DeTijd):Ihavetwoquestions,firsttothe
honourablespeakerfromChina.IlikedhislecturebutIhaveaquestionabout
theofficialpointofviewsincethe1980sthatyourformerchairmanMao
Zedongwas70%rightand30%wrong.Youalsomentionedsomethingabout
morepolicyroom.Isthisstillthecase?Canyouelaborateonthisordoyou
thinkitisprobably50-50today?Iamseen–andprobablyIam–asa
EuroscepticandIwasstruckbytheEuropessimismofProfessorKupchan.
ItseemtomethatatthemomentAngelaMerkelandNicolasSarkozy
seemedtohavefoundeachotherinsavingtheEuro,intryingtofindnew
accommodationsinthat.Don’tyouseeasortofeconomicgovernmentinthis?
Doyoubelieveinthat–Mr.Balkenendeseemstobemoreoptimistic–oris
itthatbadwithEuropethattheoptimismoftodayhastocomefrom
Euroscepticslikeme?
Jaap de Zwaan
43
Power shifts in a changing world order
Mr.Grotenhuis(Cordaid):Oneofthepreviousspeakersreferredtotheroleof
non-governmentalorganisationsandweareoneofthem.Onmytravelling
throughAfrica,Asia,andLatinAmericaIsawanotherfeaturebesidesthe
globalpowershiftwearenoticing,whichismuchmoreonwhatIwouldcall
the‘psycho-social’level:whenyoulookatAsia,Africa,andEuropeIseeand
hearindiscussionswithpartnerorganisationsthatAsiaisacontinentof
confidence,thatAfricaisacontinentofhopedespitepoverty,andthatEurope
isacontinentoffear.Peoplefearforthefutureortheirpensionsystems;
theyarenotsurewhethertheirchildrenwillhaveabetterlifeastheyhad
themselvescomparedtotheirparents’.Itseemstomethatoneofthebiggest
challengesforEuropeistoaddressthisissue.Youcanfeelitthoughyoucan
measureorcountit.Youcanfeelinthemediaandinthepublicdiscussion
thatamoodoffeariscreepingintooursociety.Howinourinternational
relationsandourpositioningourselvesintheworldareweaddressingthese
psycho-socialaspects,ofhowpeoplefeelaboutthewaythepositionof
Europeisthreatenedbythisglobalpowershift?
Mr.Kupchan:Thequestionaboutinequalityisaveryimportantonebecause
itishavingnegativeeffectsonWesternsocietiesandmorepositiveeffectsin
thedevelopingworldinthefollowingsense:alotoftheatmosphericscreated
byincomepatternisaboutexpectations.IntheUnitedStatesforexamplenot
onlyareweseeinggrowinginequalitybutweareseeingloweredexpectations
amongtheworkingclasswherewageshavebeenstagnantforthebetterpart
ofthedecade.Itisthesensethattheeconomicfuturelooksbleakandthat
incomeinequalityisgrowingandthatexplainsinparttheriseoftheTeaParty
André Knottnerus
44
andthepoliticalpolarisationthatexistsintheUnitedStates.Italsofeedsinto
someofthefearandtheconcernthatthelastquestionerwasjustasking.
Theflipsideofitisthatalthoughthereremainsintractableinequalityinsay
BrazilorinChinaexpectationsarerising.400millionhaveleftpovertyin
China.InBraziltheBolsaFamília,theincomeredistributionplan,hasaffected
25%ofthepopulationpositively.So,eventhoughthereisaveryclear
inequalityinChina,Brazil,andsomeotherrisingcountriesexpectationsare
goingupacrosstheboard.Thatiswhyifyoulookatpublicopinionpolls
inChinawhenyouaskwhethertheybelievetheconditionsintheircountry
arefavourable80%ofChinesesay‘yes’.ThePewpollsshowthatthe
correspondingnumberintheUnitedStatesis23%.Thatisabiggapandit
alsoraisessomeinterestingquestionsweweretalkingaboutearlier:howto
measurelegitimacy,towhatextentisitjustaboutprocedurethatistosay
anddemocracyandelectionandtowhatextentshouldperformancealsobe
factoredin.
OnnetworksandNGOs:oneofthefeaturesthatweareheadingtowardis
thatwewillseegovernanceoccurringatmultilevels.Wehavetendedto
speaktodayaboutstatesandintergovernmentalorganisationbutIthink
increasinglyNGOs,socialmovements,networks,chatroomswillbeavery
influentialpartofinternationalpolitics.WeareseeingthattodayinEgypt
whereasfarasweknowthiswasreallyayouthmovementthatwasorganised
oncellphonesandtheinternet.BythetimetheEgyptiangovernmentshut
downthosesystemsitwastoolate;peoplewereinthestreets.Thatisnew.
ItisnotgoingawayandIthinkitisaveryimportantpartoftheworldto
whichweareheading.
IdidnotmeantobeexcessivelyEurosceptic.Invoicingconcernaboutwhat
ishappeninginEurope,ringingthealarmbellmorethanreadinganobituary.
ItseemstomethatmoreandmoreEuropeansarewakinguptothefactthat
thereisadangerousre-nationalisationtakingplaceis.Thatawarenessis
essentialtoreversingit.Iambynomeanssomeonewhobelievesthatthe
Europeanprojectisrunningoutofsteam.Infact,ifIwereforcedtobet
moneyonitIwouldsayitwillrecover.Itwillcontinueatsomepointtomove
forward.ButIdothinkthatthismomentofsetbackorthismomentof
self-doubtismoreseriousthanpreviousround.OnbothsidesoftheAtlantic
weareexperiencinganimportantgenerationalchange.Inmycountry
theWorldWar2generationisgone.TheRichardLugers,theRepublican
internationaliststhatarethemainstaysofourforeignpolicyaregone.Ifyou
lookatyoungermembersoftheRepublicanPartytheyarenotcentrist,they
arenotinternationalists.WeareseeingaturnoverintheUnitedStatesthatis
goingtohavelong-termpoliticalconsequences.Thatispartofthereasonthat
thebi-partisancentreintheUnitedStatesiseffectivelydead;itisgone.Itis
45
Power shifts in a changing world order
populatedbyasmallnumberofRepublicans,afewmoreDemocratsbutthat
foundationforAmericanforeignpolicyfromRooseveltthroughClintonisgone.
ThatmeansthatweenteringanuncertainphaseinAmericanforeignpolicy.
OnthissideoftheAtlanticIsimplyquestion‘isaDutchpersonoftwenty
yearsoldascommittedtotheEuropeanprojectasaDutchpersonwhois
seventy?Yes,Europemattersbutdotheystillattachtoitthehistoric
importanceofsomeonewholivedthroughWorldWar2ortherebuildingof
Europe?IdonotknowtheanswertothatbutIdoknowthatpublicopinion
pollsarestartingtopickupacertainlevelofapathyamongyounger
EuropeanswhenitcomestoEurope.Theyarenotopposedtoitbutitdoes
notanimatethempoliticallyinthesamethatitdidtotheoldergeneration.
Thatsaystomesomepolitician–perhapsonesittingtomyrightorothers–
needstograbthishorsebythereignsandmakesurethatyounger
generationsareascommittedtotheprojectastheoldergeneration.
Mr.Balkenende:LetmegoonwithProfessorKupchan’slastremarkaboutthe
Europeandream.Itiscompletelytruewhatyouaresaying;inthefiftiesthere
wasakindofattitudeinEuropeancountriesof‘nowaragain’;wehaveto
changeitandwehavetoworktogether.TherewasakindofEuropeandream.
Ofcourse,westartedwiththeeconomiccooperation.Today,youcanseemore
andmorethatpeopletakeallthedevelopmentsforgranted.Itseemstobe
anexistingmechanismbutyouhavetobeawareofthefactthatyouhaveto
keepitvitaleveryday.Youhavetoworkforit.Youngpeoplearetravelling
aroundononeeuro,theyarestudyinginothercountries,andtheyworkfor
internationallyactingcompanies.Thatisthestrangething:wearelivingina
Europeanworldbutontheotherhandwearenottalkingabouttheconcept
ofEurope.Thereforeweneedfurtherdiscussionsandawarenessofthefact
thatyouarenotonlyaDutchmanoraGerman,butalsoaEuropean.
Thatbringsmetosovereigntyandyourquestioniscrucial:whathappened
inthepastandwhatshouldbethefuture?Itistruethatmistakeshavebeen
madeinthepast.YouarereferringtomonetaryissuesandIalready
mentionedtheissueoftheStabilityandGrowthPact.Whathappenedduring
thelasttenyears?Itwasakindofabstractformula.WhenItalkedto
PresidentChiracorChancellorSchröderweneverdiscussedthisseriously.
IrememberPresidentChiracsayingitwasnonsense,itwastoostrict.But
suddenly,nowitchangescompletely.Suddenly,wearetalkingaboutarules
basedsystemswithsanctions.Weshouldhavedonethatearlier.Ialways
gavethatwarning:youneedthattypeoffinancingpolicyalsoinordertoget
therightandsoundfinancialpolicyinthelongerrun.Everybodyknowsthat
thepopulationisageing.
46
YousaidwithregardstotheLisbonTreatythatitwasavagueformula.Now
peopleareseeingthatifwearenottakingtherightstepswewillloseit.
Thestrangething–asElmarBrokpointedout–isthatwehaveaverystrong
market.Wehavealotofconsumersbutifwearenottakingtherightsteps
wewilllosethebattle.So,wehavetodoitinanotherway.
Whatyousaidaboutforeignpolicyistrue:Europedoesnotspeakwithone
voice.Sometimesyoucanexplainit.WhenwetalkedaboutthewarinIraq
everybodywasthinkingdifferentlyaboutit.Itwasacomplicateddiscussion.
Ontheotherhandtherearealsotendenciesthatwesaythatwehaveto
speakwithonevoice,forexamplewhenwearetalkingabouttheclimate
changeconferenceinCopenhagen.IthinkEuropedidbetterthere.So,wecan
makeprogress.Iagreedwithyourmessage.Ifyoutalkaboutthefutureof
Europewemustnothavethesevagueformulas.Wehavetoact,wehaveto
beawareoftherisksifwedonottaketherightsteps.Otherwisewecan
forgetit.Iamanoptimist;Icanthinkwecanlearnfromthepastandthat
wasalsoyourmessage.
Mysecondremarkhastodowiththeissueofinequality.Ifullyagreethatif
youarenottakingtherightstepsyouwillhaveenormoussocialconsequences.
ThatalsohappenedinCentralEasternEuropeafterthechangeoftheregime.
Suddenly,alotofpeoplebecameextremelyrichandabout40%endedup
belowthepovertylevel.Thatledtothefactthatpeoplesaidtheycannotuse
theneo-classicaltextbooksbutalsowanttotalkaboutthecivilsociety,
aboutsocialdevelopment.ItisinterestingtoseethatinacountrylikeIndia
youseeamiddleclasscomingup.Thatisextremelyimportant.First,people
aregettingoutofpovertyandthenitisimportanttohaveakindofupward
mobility.Theissueofinequalityisextremelyimportanttotackle.Countries
withamoreequalsystemalsoareperformingbetter.
MylastremarkisaboutNGOs.Ialwaysunderlinedtheimportanceofacivil
society.Youcantalkaboutitinnationaltermsbutalsoonaglobalscale.If
youaretalkingaboutthemanydevelopmentbillsitisnotjustamatterof
government-to-governmentrelations;theyalsohavetodowithprivatesector,
thebusinesssector,andtheNGOs.WhenIwasinIndiaIvisitedthePhilips
company.Philipsiswell-knownforradios,TV’s,bulblightsandsoon.But
theyalreadycompletelychangedtheirpolicyandtheyareveryactiveinhealth
issues.Theydiscoveredthatyoushouldactinanotherwaywhenyoutalk
aboutthehealthofpeopleinacountrylikeIndia.Itisacombinationof
deliveringthetechnicalequipment,whichistheresponsibilityofPhilips,and
trucksformedicalresearchwithasatelliteconnectiontohospitals.The
doctorswereatadistancebuttheywerebusywiththeanalysis.TheNGOs
weretalkingtothepeopleaboutusingthattechnicalequipment.So,itisa
47
Power shifts in a changing world order
combinationofprivateenterprises,NGOsandlocalauthorities.Thisisjust
aconcreteexamplethatyoumustunderlinetheimportanceofNGOs.Ifyou
talkabouttheissuesoftodayandyouwanttospeakabouthowtosolve
thingsyouneedanotherapproach.ImentionedKhannawhosaid:youcan
seetheendofthetraditionofthenationstates.Thereareallkindsofother
combinationsandanNGOisoneofthem.So,youhavetounderlinethis.
IwouldliketothanktheWRRbecauseitisplayinganimportantroleinthis
issue.
Mr.Zhang:Mr.Balkenenderaisedthepointconcerningvalues.Actually,there
aresomeinterestingstudiesonvaluesdonebyChinese,Americanandother
scholars.AllthesevaluesareimportantbutifyoulookattheChineseandthe
Westernperceptionsofvalues,therearedifferencesintermsoforderand
sequenceofvalues:whichvaluesdopeopleattachmostimportanceto?One
studyconductedbyAmericanscholarsshowsthatthenumberonevaluefor
theAmericansisfreedomofspeech,andthenumberonevalueforthe
Chineseissocialorder.So,therearedifferentprioritiesofvalues.Onething
thatcouldbeinterestingwiththeriseofChinaisthatChinamaypushand
advocateitsvaluessuchasharmony,development,peace.Whyispeacenota
universalvalue?Thatisstrange.ItisnottochallengeWesternvalues,butif
universalvaluesareuniversal,theymustbevaluessharedbymostpeoplein
theworldratherthansimplyidentifiedbyacertainculture.Thoseareregional
valuesandnotuniversalvalues.Thisissomethingwecandiscuss,indeed.
onehastoconsidertheorderandsequencesofvaluesindifferentcultures
andtheirrationals.
Wearetalkingabouthumanrights.Nocountrycanachieveallhumanrights
simultaneously.Theremustbepriorities.Chinaidentifiedfightingpovertyas
numberonehumanright.IntheUnitedStatesfightingpovertyisnotahuman
right.InEurope,fightingpovertyisonlyviewedascontributingtoremoving
obstaclestoenjoyinghumanrights,butinChinathisisthenumberone
humanright.Ifyouaretheleaderofaprovinceoracountyandyoucannot
reducepovertyinyourregion,youaregone;youhavenochancetohaveany
promotion.Sometimesweneedabitoftimetoachievebetteranddifferent
typesofhumanrights.
ThegapbetweenrichandpoorhasincreasedsharplyinChinabutitisalso
fairtosaythatinthecaseofChinaeventhepoorhaveimprovedalotover
thepastthreedecadesintermsoflivingstandards.Letmegiveafigurative
example.IfyoudrivefromShanghaiorBeijinginanydirectionsfortwenty
hours,youwillreachtheSino-RussianborderortheSino-Vietnameseborder
ortheinteriorpartofChina.Butyouwillseelesspovertythanyouseein
Mumbaiwhenyoudrivefortwohours.Chinahaslifted400millionpeopleout
48
ofpoverty.IfyoucheckthestatisticsonIndia,itsabsolutenumberofpoverty
stillincreasesbecausepopulationisincreasingfaster.Thisisthescaleofthe
progressChinahasmade.Ifonelooksatthestatistics–andagainIraisea
controversialpoint–China’sTibetisdoingbetterthanIndia.Ifonetalks
abouttheriseofIndiathenTibethasalreadyrisen,intermsoflifeexpectancy,
intermsofeducation,literacy,intermsofwhatwecallhardware–roads,
railways,accesstohighways,televisions–TibetisdoingallbetterthanIndia.
Bytheway,duetohistoricalreasonsTibetisthepoorestprovinceinChina.
So,ChinaisoutperformingIndia.ItisanexampletoshowtheChinamodelis
working.WethinktheIndianmodelhasalotofroomforimprovement,
especiallyinthepoliticalsystem.IhavebeentoIndiamanytimes,butIndia
isstillveryproudthattheyhaveabetterpoliticalsystemandthatitwill
outperformChinaoneday.Itisnoteasy,tobehonest.
AnotherthingisthequestionconcerningNGOsandcivilsociety.Yes,civil
societyisalsorisingupinChina,especiallyinthefieldofenvironmental
protection.AlotofNGOspropupinthefieldofeducationaswell.Whatis
morecontroversialiscivilsocietyinthepoliticalsector.IntheWestitistaken
forgrantedthatcivilsocietyisagoodthing.ButI’vebeentoabout70
developingcountries,andIhavecertainreservationabouttheideathatNGOs
arealwaysgoodbynature.Ifyoulookatthecrisesandthetragediesin
Burundi,inUganda,inex-Yugoslavia,youseethesecountrieshadavery
dynamiccivilsociety.Inmanypoorcountries,certainNGOsaresimplymafia,
tobehonest.Wehavetobefrank,theychangehatseasilyfrommafia
organizationstoNGOs.YoucanfindthemintheslumsinIndia,inMumbai.
So,therealsituationismorecomplicated.IntheWesternconcept,thestate,
especiallyintheAmericanpoliticalculture–isanecessaryevil.So,youhave
acivilsocietythatchecksthestateorisagainstthestate.IntheChinese
culturethestateisalwaysanecessaryvirtue;alltheprosperoustimesin
China’slonghistorywereassociatedwithanenlightenedstrongstate.Perhaps
weshouldcombineourowncultureandcreateourowntypeofcivilsociety,
whichisemerging.Ialwaysremindthosewhohavedoubtsaboutthe
ChineseperceptionofcivilsocietythefamouscommentmadebyProfessor
Huntington:ontheonehandyouhavepoliticalparticipation;ontheother
handyouhavepoliticalinstitutions.Thetwomustbekeptroughlyatthe
samelevel.Ifpoliticalparticipationiswayhigherthanthepolitical
institutionalbuilding,itisascenarioforchaosandevenforwar.So,wehave
tobearthisinmindandtrytokeepbalancebetweenboth,political
participationandpoliticalinstitutionalbuilding.
49
Power shifts in a changing world order
ConcerningChairmanMao,indeedattheendoftheCulturalRevolutionmany
peoplethoughtnegativelyofMao.Butwiththepassageoftime,theybeginto
saythatweshouldbefairwithMao.DengfamouslysaidMaowas70%right
and30%wrong.ThisisaChinesefigurativespeech.Itdoesnotmean
scientifically70%and30%;itjustmeanshewasmoregoodthanbad.With
hindsightofthreedecadesafterhisdeath,Maoremainspopular,especially
withordinarypeople.Maowasastrongnationalistandhewastheadvocate
ofegalitarianismandheispopularintoday’ssocietywheremanyperceive
agrowinggapbetweenrichandpoor.Thissenseofegalitarianismisvery
strongintheChineseculture.WhenwetalkaboutmodernEuropeanstates
ormodernEuropeandemocracies,theyaretheproductsofbourgeois
revolutions.ButifyoulookatChina,weexperiencedsomanyrevolutionsin
thepast;eachandeveryrevolutionwascarriedoutinthenameof
egalitarianism.Onceanewdynastycametopowertherewasredistributionof
landandofproperty.ItisthefirsttimeinChina’slonghistorythatwehave
createdfarmorelibertyandpropertythananytimeinChina’shistory.So,
China’smiddleclassisreallyinawaythemostconservativeclass.Theydo
notwanttheWesternstyledemocracy.Theythinkifthereis‘onemanone
vote’,Chinawillhaveapeasantgovernmentovernight.
ThisisjustabackgroundnoteforyourunderstandingofChina.Ifthereisa
colouredrevolutionitmaywellbered.Itwillbeperhapsusefultobearthis
pictureinmindandinourreflectionsonChina’spoliticalreform.Also,now
peoplethinkbackaboutMao,theythinkoftwomajorcontributionshemade.
Onewaslandreform.WhenwetalkaboutpovertyinChina,it’sthefarmers
whohavethelowestincome,buttheyhavelandandhavetheirownhousing.
Thatismuch,muchbetterthanpeasantsinIndia,tentimesbetter.Maoalso
initiatedwomen’sliberation.IfwelookatthestatusofwomeninChina,
accordingtoarecentstudyonwomenentrepreneurs,fouroutoftenbest
womenentrepreneursintheworldareChinese.So,youhavetotreatMao
morefairlydespitealltheseriousmistakeshemadeduringtheCultural
Revolutionandotherradicalpoliticalmovements.
Mr.Chairman:Thankyouverymuch.Thisbringsustotheendofthemorning
session.MayIthanktheeminentspeakersfortheirexcellentcontributions
fromdifferentangleswithadifferentapproach?Itisreallyworthwhileto
organisethiskindofdiscussion.
Wewillcontinueafterlunchwithtwosessions,oneaboutglobaleconomic
(im)balances,andoneaboutsecurityandscarcityofresources.
50
Mr.Chairman:Averywarmwelcometoallofyoutothisafternoonthematic
session.IamJanRoodandIamHeadofStrategicResearchattheClingendael
Institute,Clingendaeloneoftheco-organisersofthisevent.Ihavethehonour
andprivilegeofchairingthisafternoonsessionandthatisindeedanhonour
andaprivilege!
Session A: Global economic (im)balances
Chair: Prof.Dr.JanRood
HeadofStrategicResearchoftheNetherlandsInstituteof
InternationalRelationsClingendael
Speaker: Prof.Dr.AgeBakker,ExecutiveDirectorattheIMF
Discussant: Mr.CarloTrojan,AdvisoryCouncilonInternationalAffairs
Jan Rood
51
Power shifts in a changing world order
Wewillcontinueourdiscussionofthismorningbylookingmorein-depthat
oneoftheminparticularandthatisthestateoftheglobaleconomy.Aswe
allknowtheglobaleconomyisrecoveringfromoneoftheworsteconomic
crisessincethe1930softhelastcentury,butasyouwillalsohaveseenin
thenews,globalrecoveryisuneven,andinsomepartsoftheworlditis
weak.InEuropeitisstillweak:Ionlymentionthelatestgrowthfiguresofthe
UK,wherenegativegrowthoccurredinthelastquarterandImentiontheUS,
whichisstillsufferingfromhighunemployment.So,economicrecoveryis
unevenandinsomepartsoftheworldveryweak.
Whatthisfinancialeconomiccrisismadeclear–andIthinkthatisvery
relevantforthetopicwewilldiscussthisafternoon–aretwothingsin
particular.First,thatspecificallyintheareaoftheglobalfinancialeconomic
relationsthebalanceofpowerisindeedshiftingquiterapidly.Thepresentation
ofProfessorZhangthismorningonlyunderlinedthat.Thebalanceofpoweris
shiftingandasaresultthepresentsystemofglobaleconomicgovernance
doesnotreflectthisnewandemergingbalanceofpoweranylonger.Thatis
atopicwewillmostcertainlydiscussthisafternoon.Secondly,theexisting
globalgovernancearrangementsthatwehadandthatwestillhavewerenot
abletopreventthefinancialeconomiccrisisandareandwereinurgentneed
ofmodification,bothwithregardtotheireffectivenessaswellastheir
legitimacy.
Thatbringsmetothebasicquestionthatwearegoingtodiscussthis
afternoon:whatkindofglobaleconomicorderisemergingasaresultofthis
shiftinpower?‘Globaleconomicorder’inthiscasenotonlymeanswhowill
beinchargeandwhowillbethemainplayers–thediscussionwehadthis
morninginresponsetothepresentationofMr.Kupchanwhotalkedabout
multi-polarityastheorderthatwillemergeasaresultoftheshiftofpower
–weshouldalsolookatthefundamentalprinciplesandvaluesdefiningthis
order.Ofcourse,weshouldalsodiscuss‘order’intermsofthecapacityofthe
internationalcommunityforglobaleconomicgovernance.Thatis,thequestion
towhatextenttheinternationalcommunityasweknowitnowwillhavethe
institutions,theprocedures,andtherulesthatareneededtoguaranteea
minimumlevelofcooperationinthischanginginternationaleconomicsystem.
Thatisofcoursequiteachallenge.
Whatkindoforderwillwehave?Thatisthesecondissuethatwewilldiscuss.
Weshoulddiscussthekindoforderbutinadditionshouldaskwhatrole
thereistoplayfortheEuropeanUnioninthisemergingglobaleconomic
order?WilltheEUbeabletoplayaroleatall?Thereseemstobesome
pessimismonthisregard.Willitbeabletoplayasignificantrole,anyroleat
all?Willithaveanyimpactonglobaleconomicaffairs?Well,itisquite
52
obviousthattheanswertothatquestiondependsverymuchonthecapacity
oftheEUtosolvethepresentproblemsintheEurozone.Itwillonlybeable
toplayarole,animportantroleonaglobalscale,ifweareabletosortout
ourpresentinternalproblems.Thatisquiteobviousandthatisalso
somethingthatwewillneedtodiscuss.
WhenwespeakabouttheEuropeanUnionwespeakofcourseaboutthe
Netherlands.TheNetherlandsisacountrythatisgettingsmaller–youmight
argue–inabiggerworldandthatbydefinitionhasalargeinterestina
stableandopeninternationaleconomicsystem.Itisvitalforourwelfareand
oursecurity.Whatoptionsdoesithave,lookingatthisshiftinthebalance
ofpowerandlookingatthepresentstateofthemultilateralsystem?What
optionsdoestheNetherlandshavetopromoteitsinterests,inparticularwith
regardtoeconomicissues?
Thisisabriefintroductiontothetopicofthisafternoon,twoveryfundamental
issues:orderandtheroleofEuropeincombinationwiththeroleofthe
Netherlands.
Thetopicofthisafternoonwillbeintroducedbytwoexcellentspeakers.
OurfirstspeakerisAgeBakker.Hewilltacklethisissuefromtheperspective
oftheglobaleconomy,theglobalsystemofmultilateralorganisations,in
particulartheroleofIMFandtheG20,andthecapacityofthesetwobodies
forglobalgovernance.HewillalsodiscussthepositionoftheNetherlandsin
thepresentinternationaleconomicsystem.AgeBakker,asweallknow,isthe
ExecutiveDirectorandassuchmemberoftheBoardoftheIMF.Inthat
capacityherepresentstheNetherlands,butalsoalargegroupofEuropean
andEasternEuropeanstates,statesfromtheBalkansandalsoIsrael.Ifwe
takethatintoaccountIthinkheismostqualifiedtocombineaglobalview
andananalysisofthepositionoftheNetherlands.
AfterhispresentationCarloTrojan,theformerSecretary-Generalofthe
EuropeanCommissionandformerPermanentRepresentativeoftheEuropean
CommissioninGenevaandinparticulartotheWTO,willspeakspecifically
abouttheEU,theinternalproblemsthatwehavetoface,andtheexternal
positionoftheEuropeanUnionintheinternationalsystem.Thatwillnotbea
surprisetothoseofyouwhoknowhim.Imustaddthatweareverygrateful
thatheishere,thathehasacceptedtheinvitationtogiveapresentation,
becausehewasaskedtodosoataverylatemomentasElmarBrokwas
supposedtobethediscussantforthispartoftheday.Mr.Brokcouldnot
makeit,soagain,weareverygratefulforthefactothatCarloTrojanhas
acceptedtheinvitation.Afterthesetwopresentationstherewillbeample
roomfordiscussion.
53
Power shifts in a changing world order
Toward effective global governanceAddress by Age Bakker, Executive Director at the IMF
Mr.Bakker:Mr.Chairman,ladiesandgentlemen.Itisapleasuretobehere
andagreathonourtospeakforthisaudience,alsoafteramorningwhichhas
putthebarquitehigh.Itwasaveryinterestingmorning.Itisapleasuretobe
here,toflyinfromWashington,andtofleefromthevery,verycoldwinterwe
haveintheUS.YoumaythinkitiscoldoutsidebutwhenyouliveintheUS
hereitiswarm.Iwillgiveadifferentperspectiveofaglobalnature,beingthe
representativeattheInternationalMonetaryFund.
WhenItookupmyjobattheIMFinthespringof2007,theinstitutionwasin
disarray.CommentatorshadarguedthatinstitutionsliketheIMFwererelics
ofthepastandhadbecomeirrelevant.Theworldeconomyhadbeenbooming
andemergingeconomieswerequicklycatchingup.Internationalinstitutions
liketheIMF,itwassaid,werenolongerneeded.Financialmarketswouldtake
careofanyadjustmentneededandtheywouldabsorbrisks.
Now,nearlyfouryearslaterweareallalittlesadderandalittlewiser.Itis
clearthattherisksoffinancialinnovationsandglobalimbalanceswere
underestimated.Supervisionandregulationhadnotkeptpace.Risk
managementatfinancialinstitutionsfailed.Thecrisiswasafailureof
governance,onecouldsay.
Thespeedwithwhichproblemsinonecountryimpactedothercountriestook
manybysurprise,includingtheIMF.Thefinancialcrisistrulywasaglobal
eventandithadasevereimpactontherealeconomy.Thechallengeisto
Age Bakker
54
learnfromthiscrisisandmakestructuralchangesthatwillbuildamore
robustinternationalsystem.
Thefinancialcrisishaschangedthewaywethinkaboutglobalgovernance.
TheG20andtheIMFhavebeenatthecentreofeffortstoavoidthatthecrisis
wouldturnintoaGreatDepression.InthisIthinkwehavebeensuccessful,
buttheinternationaleconomyisstillfragile.Ithasbecomeclearthatweneed
strongerglobalgovernancestructurestostrengthentheinternationalsystem
andtoavoidthatwerelapseinoldhabits.
Ispeakherewithtwohats.AsanExecutiveDirectoroftheIMFIwillsayafew
wordsonhowweseeglobalgovernancefromtheviewpointoftheIMF.Atthe
sametimeasarepresentativeoftheNetherlandsinWashington,Iwillgive
youmyviewonhowtheNetherlandsbestcanpositionitselfandhowitcan
contributetomoreeffectiveglobalgovernance.Youwillseethatthesetwo
viewpointswillcometothesameconclusion.
Inthefirstdecadeofthiscenturywehaveseenverysignificantchanges.
Thecrisishasbeenawatershed.Ithassweptawaymuchoftheoldeconomic
order.Ithasalsosweptawaytheconsensusonwhichthiswasbased.The
crisishasimpactedEurope,withthemonetaryunionunderattack.Atthe
sametime,emerginganddevelopingeconomieshavecontinuedtogrow
duringthecrisisandthishasredefinedthebalanceofeconomicpowerinthe
globaleconomyinaveryshortperiodoftime.
AsIsaid,thecrisiswassparkedoffbylacking,failingregulationandafailure
ofsupervision.Whatwasforgottenwasthatderegulationneedstobe
accompaniedbyeffectivesupervision.Therewasamistakenbeliefthat
financialmarketscouldpolicethemselveseffectively.Atthesametimeand
morefundamentally,therewasanunderlyingcauseofthecrisis,where
governmentssimplydidnotfollowcommonsensepolicyrules.Theglobal
economicgrowthmodelreliedtoomuchonexcessiveborrowingbysome
countries,leadingtolargeandunsustainableimbalances.Intheend,the
globalcrisiscanbetracedtoafailureofgovernance,particularlyinadvanced
countries.ThishasunderminedtheauthorityoftheWestandcalledinto
questionthefabricoftheoldgovernancestructures,i.e.theG7ortheG8,
andithascalledintoquestiontheWashingtonconsensusattheIMFandthe
WorldBank.
So,weneedanewglobalgovernancemodel.Aglobalcrisiscallsforaglobal
answer.InajointinitiativeformerPresidentBushandPresidentSarkozy
hadconvenedG20leadersfrommajoradvancedandemergingeconomiesin
2008afterthecrisissparkedofftogivepoliticalbackingtowhathasbeen
averystrongcoordinatedcrisisresponseoflowinterestrateseverywhere,
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Power shifts in a changing world order
fiscalstimulusinallcountries,andfinancialsectorreform.Thiswasan
unprecedentedglobalresponsetothecrisis.G20countriesalsoagreedona
newsurveillancemodelinwhichmembersofthegroupwouldholdeachother
accountableforimplementingpoliciestoachievebetterglobaloutcomes.The
basicideaisthattherecanbenodomesticsolutionstoproblemsthathave
globalspillovers.
So,wehavetorealisethatwhatcameoutofthecrisisisanewformof
governanceatagloballevel,onemightsayanucleusofglobalgovernance
wheretheIMFprovidestheanalysis,thepolicyrecommendations,andearly
warnings,allbasedonitslong-standingexpertise,andtheG20providesthe
politicalbacking,peerpressurewhichisneededforcoordinatedpolicy
responses,andstrategicguidanceandtimelines.
TheIMFplaysacrucialroleinthisnewgovernancemodel,whichofcourseis
focusedonfinancialeconomicpolicies.Themagnitudeofthecrisisandthe
greaterroleoftheG20broughttheIMFbacktothecentrestage.
TheIMF’sresourceswereenlarged,itslendingtoolkitmodernised,and
conditionsonlendingwerefocusedonsolvingurgentproblemsandnoton
fixingeverythingwrongwithaneconomy.Therehasbeenalotofcriticismin
thepastonconditionalityandtheIMFhaslearnedfromerrorsinthepast.
Therewasmoreattentionforprotectingthepoorwho–asweallknow–
suffermostduringcrisesandperiodsofadjustment.Inadepartureofthe
pastwenowalsohaveprecautionarycreditlines,meantasacrisis-prevention
tool,wherewegivecreditlinestocountrieswithastrongpolicytrackrecord,
likePolandandMexico.
Beyondcrisismanagement,surveillanceneededstrengthening,includingin
theframeworkoftheG20.Wehaveagreedonregularfinancialsector
assessmentsbytheIMFthatweremademandatoryforallsystemically
importantcountries.
AstrongerrolefortheIMFwouldnothavebeenachievedwithoutreforming
itsowngovernance.Untilrecently,theIMFwasseenasstrongholdforrich
countries.Onthisgraphyouseethepresentdaysituationwithontheleftthe
toptenofthecountriesthathavethelargestvotesintheinstitution.Asyou
maygather,therehasbeenalongstandingperceptionofover-representation
ofadvancedcountries,particularlyEuropeancountries.Membercountriescan
formconstituencies.TheNetherlandsarenumber12asfarasvotingpower
isconcerned.TogetherwiththeothercountriesintheDutch-ledConstituency,
werepresentnumber7intheinstitution.Ifyoulookatthetoptenof
constituencies,therearequiteanumberofEuropeansincludingfromsmall
advancedcountrieslikeBelgiumandtheNetherlands.
56
BuiltonanearlierreformattheIMF,wehavejustapprovedashiftofover
6percentofvotingpowertodynamicemergingcountries.Brazil,China,India,
andRussiawillnowbeamongourtoptenshareholders.Ifyoulookattheleft
youseethatthetoptenisnowcomposedoftheUnitedStatesandJapan,
thefourlargestEuropeancountriesandthefourBRIC-countries,Brazil,Russia,
IndiaandChina.Thatisamuchbetterreflectionofthebalanceofeconomic
power.Ofcourse,onecouldargue–professorZhangwouldundoubtedly
agreewithme–thatChinashouldbeinsecondplace,buttimeisonitsside.
ChinawillnottakeverylongbeforeitovertakesJapan.Thesethingstakea
littlebitoftime.ButtheshiftinthesayoftheIMFisreallyawatershed.
WealsoseetheimplicationsfortheNetherlands.Youmayhavenoticedthat
inthepreviousslidewewerenumber12andwewillgodowninthenew
situationtonumber15.WewillbeovertakenbycountrieslikeSpain,Mexico
andBrazil,whichwerebelowus.Ithinkthisisallwellunderstoodand
longoverdue.Butyouwillalsoseethatwewillfalloutofthetoptenof
constituenciesandbecomenumber11insteadofnumber7.So,theseare
sizablepowershifts.IfyoucomparethistotheUNsystemthesearereally
verybigchanges.ItshowsthattheIMFhaslearnedfromthecrisisandisa
learningorganisation.Inmanyrespects,IbelievethereisanewIMF.
Moreover,itwasdecidedtoincreasetherepresentationofemergingmarkets
economiesattheExecutiveBoard.ThisrebalancingofthesayintheIMFhas
largelybeenmadepossiblebyadvancedEuropeancountries.
So,wedohavebettergovernancestructuresinplace,withtheG20atthe
centreandastrongerandmorelegitimateIMFwithbettergovernance
reflectingtheshiftofeconomicpower.Butitistooearlytosaywhetherthis
willbesuccessfulinloweringthechancesoffuturecrises.Wehavenow
enteredapost-crisisenvironment,eventhoughtheeffectsofthecrisisare
notyetover.Countriesfacedifferentchallengesandthetemptationforleaders
tofocusoncemoreontheirowndomesticproblemsisgrowingstronger.
OnecannotruleoutthatafteranenergeticstarttheG20mayfallbackin
irrelevance.Thereisariskofcomplacency.
Ibelievethisisdangerous.Theinternationalsituationisstillfragile.Wehave
atwo-speedrecoverywheresomecountriesaregrowingfast,whileothersare
stillstalled.Wehaveanimbalancedsituationwithadangerouslyhighfiscal
deficitintheUSandanundervaluedexchangerateinChina,withinflation
edgingupinemergingcountriesbecauseofrisingfoodandenergyprices,and
withafragilesituationinEurope.Therearestillmanychallengesoutthere
andIbelievethesecallforcontinuedinternationalcooperation.Ifwedonot
succeedinthis,weriskfallingbackinbeggar-thy-neighbourpoliciesthat
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Power shifts in a changing world order
lowerglobaleconomicgrowthandaddtofinancialuncertainties.Weallhave
aninteresttoavoidthisandparticularlyanopeneconomyastheNetherlands.
TheNetherlandsisoneofthefoundingfathersofIMFandWorldBank,andof
courseoftheEU.Wehavealwaysstrivedforastrongrepresentationinthese
institutions,becauseasanopeneconomy,dependentoninternationaltrade,
wehaveavitalinterestinastableinternationalsystem.Thisoutward-looking
attitudehasbeenaconstantinthepost-waryears.However–aswasnoticed
thismorning–morerecently,suchanattitudecannolongertakenfor
granted.Commentatorsquestionthecosts,alsofortheNetherlands,oftaking
internationalresponsibility.TheyrightlywanttounderstandwhattheDutch
interestisinretainingastrongrepresentationininternationalinstitutions.
Allthiscallsforastrategicreflectionontheinternationalpositionofthe
Netherlands.Forthis,weneedtohaveaclearpictureofwhattheDutch
interestisinhavingastrongpresence:whatisouraddedvalue?Canwe
rightlyclaimastrongpositionandwhywouldwedothis?Howcanwemost
effectivelypursueourinterests?
TheDutchinterestinawell-functioningandstableinternationalsystem
becomesclearwhenwerealisewheretheNetherlandsowesitsprosperity.The
Netherlandsisamedium-sizedorsmallopeneconomywithinternationally
orientedcompaniesandwehaveamajorfinancialsector.Ourindustryhasto
competeagainstcompetitorswithamuchlargerhomemarketandweare
thereforehighlydependentonexternaldevelopments.Weshouldalsorealise
thattheNetherlandstraditionallyhasabalanceofpaymentssurplusandthus
isastructuralcreditorcountry.
Asatradingnationandasacreditorcountry,asafinancerfortheworld,we
arehighlydependentonahealthyworldeconomy.Therefore,wehavean
interestinthecontributionthatinternationalorganisationscanmaketo
maintainastablesystem.Theglobalfinancialcrisishasshownhowmuchwe
arehitbypolicyfailuresinothercountries.Theyhaveadirectimpactonan
openeconomyliketheNetherlands.So,wehaveaninterestinstrengthening
globalgovernance;wehaveaninterestinstrengtheningthepositionof
internationalinstitutionsliketheIMF.Inshort,wehaveaninterestineffective
globalgovernance,becausethisalignswithitsowngrowthmodel.Italigns
withtheDutchbusinessmodel.
Wealsohaveaninterestintransparentrules.ThiscameupintheQandA
sessionthismorning.Ourfinancialandtradinginterestsinothercountriesare
bestsafeguardedbynon-discrimination,byruleswhichareoverseenbystrong
internationalinstitutions.Intheabsenceofthis,thelargecountrieswill
58
decideamongthemselvesandthisisnotnecessarilyintheinterestofan
openeconomyliketheNetherlands.
Andwehaveastronginterestinmonetaryandfinancialstabilityandtherefore
foradisciplinaryroleoftheIMF,theIMFasa‘badcop’.Wealsohavean
interestininternationalinstitutionsthatpushforstructuralreforms,for
adjustmentandnowpushforsoundfiscalpolicies.WehaveseeninGreece
andIrelandhowmuchthisisneeded.Europeansamongthemselvescouldnot
disciplineeachother.
TheNetherlandsalsohassomethingtooffer.Whatisthenouraddedvalue?
Ibelievewecancrediblyadvocatestrongglobalgovernancebecausewe
ourselvespursuesoundpoliciesandwehavenomajorgeopoliticalinterests.
TheNetherlandshasasuccessfuleconomicmodelandwenurtureanopen
businessclimatethatcantakeadvantageoftheglobalmarket.Thisdiffers
–Icanspeakfromexperience–fromthelargecountries,whichtendtonot
applytherulesforthemselvesandareinclinedtouseinternationalinstitutions
fortheirowndomesticinterestsorasaninstrumentofforeignpolicy.
TherelativelylargeweightoftheNetherlands–aswasmentionedthis
morning–intheIMFreflectsourimportancefromaninternational
perspective.Westandoutinthesheersizeofourcross-borderactivities.In
tradewesharefifthpositionwithFrance,afterChina,Germany,theUSand
Japan.Wearealsonumberfiveinforeigninvestment.Actually,intheUSwe
arethenumberthreeforeigninvestor.Andwearealargefinancialcentre,
aheadofcountrieslikeCanadaandSpain.Andweareaverybigproviderof
developmentassistance.Intermsofgrossdomesticproduct,theNetherlands
isnowinsixteenthplace,justaftertheG7,thefourBRICcountriesandSaudi
Arabia,Korea,Spain,andMexico.
Onthisslideyouseeourfinancialinterconnectedness.Thisisasheetusedby
theManagingDirectorjustafterthefinancialcrisistoshowwherethe
interconnectionswere.OnthebottomleftyouseetheDutchflag;weareone
ofsevenbankingsystemsthathavethemostinternationalconnectionsand
thusareveryvulnerableforinstabilityintheworld.Youmightbesurprised
bythesmallsizeoftheAmericanflag;thatisbecausethegraphshows
interconnectednessthroughbanksandasweallknowtheUSinterestinthe
financialsystemismorethatofshadow-banking.IfIwouldshowthesame
pictureforshadowbankstheUSwouldfigurenumberonebyfarandother
countriesmightcomeup,likeLuxembourg.
Butthispositionisunderpressure.Weshouldalsorealisethatalargepartof
tradeiswithinEurope,withneighbouringcountries.So,theargumentfrom
theothersideofthetablewhenweshowthesefiguresis‘let’sforgetabout
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Power shifts in a changing world order
intra-Europeantrade’.WeshouldnotforgetthattheGDPoftheNetherlandsis
aboutthesamesizeasthatofFlorida.WeusedtobeCalifornia;nowweare
Florida.
Ourpositionisunderpressure.Onemajortrendisthattherelativeeconomic
weightoftheNetherlandswilldecline.Thisisaverysimpleoutcomeof
limitedspaceandpopulation.Forquiteawhilewewillstayinthetoptwenty
asfarasourGDPisconcerned,butinthelongerrunwewillbeovertakenby
morepopulousandmorerapidlygrowingcountrieslikeIndonesia,Poland,
andTurkey.TheseeconomieswillovertaketheNetherlandsinashortperiod
oftime.Weshouldalsorealisethatthedistancefromthetoptenisrapidly
gettinglargeraswearebeingovertakenbymorepopulousemerging
economies.Also,thereisapushintheIMFforbasingourweightsjuston
GDPandnotonmeasuresofopenness.Thiswouldfurthererodetheposition
ofsmalleropenadvancedcountries.So,ourpositionisunderpressure.
IbelievetheNetherlandsiswelladvisednottowaitordefendvested
interests,buttotakeaproactiveandconstructiveattitude,whichreflectsthe
changedreality.Weneedtolookforinnovativewaysofensuringthat
Europeanandglobaldevelopmentsremainwell-alignedwithourownnational
interest.Whatshouldbeourstrategy?Itseemstomethatweshouldfollowa
three-prongedapproach.
First,weshouldnurtureaspecialrelationshipwithGermanyandtheUS.
Second,weshouldpromoteoneEuropeanvoice,andthird,weshouldform
strategicalliancesandpartnershipswithlikemindedcountries.Iwillgo
throughallofthem.
Firstofall,IthinkweshouldretainclosetieswithGermanyandtheUnited
States.GermanyhasaspecialpositionfortheNetherlands.Ofalllarge
countriesitismostsimilartotheNetherlands.Itisaleadingtradingnation;
exportsaspercentofGDParethehighestamongtheG7,soitsharesthe
opennesswiththeNetherlands.Secondly,theirgovernmentdebttoGDP-ratio
amongtheG7isthelowest,soitisthemostfiscallysoundcountry.This
alignswiththeDutchpreferenceforfiscaldiscipline.Also,Germanyhasa
structuralexternalsurplus;theyareacreditorcountryjustlikeus.Amongthe
G7GermanyisbyfarthecountrywhichlooksthesameastheNetherlands,
theNetherlandstimesfourorfive.Moregenerally,Germanyembracesan
economicphilosophy,whichalignswellwiththeDutchcultureoffiscal
discipline–‘dekostgaatvoordebaatuit’–pricestability,fosteringsocial
cohesionthroughfairincomedistribution–thisisalsointheGermanmodel
–andofcourseawillingnesstoshoulderinternationalresponsibility,as
Germanyhasshowntimeandagaininthepost-WaryearstowardsRussia,
towardsEasternEurope.
60
Next,theUnitedStatesisanothernaturalallyforus.Ofcourse,itisamuch
largercountrybutstillweneedtonurturethespecialrelationshipwehave
withverylargefinancialinterestsfrombothsidesinoneanother.TheUSis
thelargestinvestorintheNetherlandsandwearethenumberthreeinvestor
intheUS.Also,ourspecialpositionintheeuroareamakesusaninteresting
partnerfortheUS.Iwillcomebacktothat.
Second,asoneofthemostopencountries,theNetherlandshasamajor
interestinthewell-beingofEuropeandawell-functioningeuroarea.Europe
providesuswiththehomemarketwedonothave.Europeprovidesuswitha
largemarketandithasbroughtusprosperity.Dutchinterestscoincidewith
theEuropeaninterest.Therefore,theNetherlandswouldbehelpedbyEurope
speakingwithonevoiceifwewanttostrengthentheinternationalsystem.
Havingonecurrencymeansweneedtospeakwithonevoiceinthe
internationalmonetarysystem.Thiswouldhelpbalancetheinternational
debate,whichisnowcompletelydominatedbyacrimoniousexchanges
betweenChinaandtheUS.Itwouldalsohelpfurtherglobalgovernanceif
Europewouldspeakwithonevoice.
ThecreationofaeuroareaseatwithintheIMFwouldinitselfhavethe
potentialofbetterreflectingtheroleoftheeurointheinternationalsystem.
Iwouldbeinfavourofthatbutthisisamatteroftime,asitclearlyisnotin
thecardsatthemomentaslongasthelargecountriesareopposedtothis
andasthememberstatesthemselvesfinanceIMFcredit.Moreover,themajor
Europeancountriesarenotatallinterestedingivinguptheirseat.Ipersonally
believethatajointFranco-German–FranceandGermanytogether–seatin
theIMFwouldbeastrongsignal.Itisinterestingtoknowthatwhenour
presentManagingDirector,DominiqueStrauss-Kahn,wasministerofFinance
inFrance,heactuallyhadadvancedgoingtogetherwithGermanyintheIMF
andtheWorldBank.Itwouldbeaverystrongsignalbutitisunlikelyaslong
asthesecountriestakedivergentpositions.That,unfortunately,isthecase.
So,weneedtobepragmaticandfindotherwaysofplayingalarger
internationalrole,whichiscommensuratewithoureconomicweightinthe
internationaldebate.Iseeanagendaofthreeissues.First,weneedasEurope
todevelopclosertieswiththeBRIC-countries.Weshouldnotdothis
bilaterally.AslongasEuropeandiscussionswithmajoremergingeconomies
continuealongbilateralchannels,thediscussionwillremaindominatedbythe
UnitedStates.Andthatisnotinourinterest,norinChina’sinterest.
Second,EuropeshoulddevelopaclearfutureforEasternEurope.Ofcourse,
suchfutureexisted:EasternEuropewouldbecomeamemberoftheEuropean
Unionandwouldthenhavethehorizonofjoiningtheeuroarea.Butnow
politiciansinEasternEuropehavethefeelingEuropeisaclosedshopbecause
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Power shifts in a changing world order
wedonothaveourhouseinorder.Weshoulddevelopaclearagendafor
EasternEurope;otherwiseothercountrieswillstepintothevoid,likeUkraine,
Russia,andTurkey.Otherthingsmightdevelopthere.
Third,Europeshouldmodernizeitsrelationshipwithdevelopingcountries.
Theoldmodelofgivingalotofdevelopmentaidhasnothelpedincrease
economicgrowththatmuch.WeseethatemergingcountrieslikeChinaand
Braziltakeamorebusiness-mindedapproach.Wearewelladvisednotto
criticisethatbuttoworktogetherandtoseethatourinterestsaregetting
aligned.
ThisisanagendaforEurope.Ofcourse,forthisweneedtoputourown
houseinorder,ashasbeensaid.Ihopewecanachievethat.Weneedto
acceptthatinthesedebatesweneedtodefertoEuropespeakingwithone
voice.WehaveEuropeanleadersandweshouldletthemspeakwithone
voice.
IbelievethattheNetherlandsisinagoodpositiontoplayitsrole.Iagree
verymuchwiththespeakersthismorning:weshouldplayamoreproactive
roleinplottingthewayforwardforEurope.Wedonotdothatbutwecan;we
havetheconfidenceofGermany;wesharewithFrancetheinternational
orientationandwehave,liketheUnitedKingdom,aliberalmarketorientation.
Wehaveallcharacteristicsofanhonestbroker.WesharetheGerman
preferencefordisciplinebutwealsosharetheFrenchpreferenceforusing
internationalinstitutions.So,theNetherlandshasallthecharacteristicsofan
honestbroker.Ibelieveourrole–alsorecently–inworkingontheEuropean
stabilitymechanismtestifiestothis.
Asathirdapproach,nexttomaintainingclosetieswithGermanyandthe
UnitedStates,andnexttobuildingastrongEuropeanvoice,Iwouldpropose
thatweseekcooperationwithlike-mindedmedium-sizedcountriesinasimilar
positionandwithsimilarinterests,withinbutalsooutsideEurope.
MyexperienceintheIMFisthatsmallcountriesgenerallytakeamuch
broaderviewandaremoresupportiveofstrongindependentinternational
institutions.Largecountriesontheotherhandtendtogivepriorityto
domesticinterestsandarelessinclinedtosupportinternationalcooperation.
Seekingstrategicalliancescanbeusefulforspecificpolicyissuesfora
specifiedtimeperiod.Tomentiononeexample,theNetherlandstookavery
strongpositiononbonusesinthefinancialsectorbutwiththebenefitof
hindsightitmighthavebeenwelladvisedtoseekallianceswithlikeminded
countrieswithlargefinancialsectorsinrelationtotheirGDP.
62
InmycapacityasExecutiveDirector,Ihavesoughtseveralstrategicalliances
intheIMFoverthepastyears.Someofthemhavebeenverysuccessful.We
workedtogetherwiththeSouthEastAsianchair–Indonesia,Singapore,and
Malaysia–ongettingastrongerfinancialstabilityrolefortheIMF.Uptillthe
crisiscountrieslikeChinaandtheUShadnotallowedtheIMFtoscrutinise
theirfinancialsystems;nowtheyhaveacceptedthisasmandatory.
Therewasconsiderablereluctanceamonglargershareholdersbutthe
combinedeffectofsmallerindustrialcountriesandoutwardlookingemerging
economiesispowerful.So,IbelieveweshouldlookalsooutsideEuropeand
formallianceswithmodernemergingeconomies,suchasKorea,Malaysia,and
SingaporeinAsia,andChileandPeruinLatinAmerica.
LetmenarrowdownwhatthestrategyshouldbefortheDutchrepresentation
attheIMF.Let’stakealookatourcurrentrepresentationattheIMF.Unlike
theUNsystemwithitsonecountry-onevotesystemthevoiceofcountriesin
theIMFisdeterminedbyabroaddefinitionofeconomicweightthatincludes
alsoexternalactivities.Therankingorderisaveryimportantpolitical
measure.Therefore,itisnotsurprisingthatcountriesattachalotofweightto
wheretheyare.Asamatteroffact,eightcountriestakeasinglechair
althoughtheycouldformaconstituency.
ThespecificelectoralsystemoftheIMFhasprovidedtheopportunityforthe
NetherlandsandothersmallerEuropeancountriestoformaverylargechair.
IrepresenttwelveothercountriesintheIMFandthatmakesusnownumber
7withavoteof4.5to5percent.
Generally,ourconstituencyisconsideredasasuccessfulexampleof
internationalcooperation,becausewecombinecreditoranddebtorcountries.
WenowhavesevenprogramsintheIMF–Ukraine,Romania,Bosnia,
Macedonia,Moldova,Armenia,andGeorgia,allcountriesIrepresentand
countrieswithalargepoliticalweight–andwearebyfarthemostintensive
userofIMFcredit.
However,otherDirectorsaroundthetableseetoomanyEuropeans.Atpresent
onethirdofDirectorsisEuropean.Europehasagreedthatthisneedsto
changeandhasagreedtobringbackthenumberofEuropeanseatsbytwoin
2012,providingroomforemergingeconomies.Ibelievethisisalsointhe
DutchinterestastheIMFwillgainmoreownershipandplayanenhancedrole
whenithasabetterbalancedrepresentation.Butforusthismeansweare
underpressure.
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Power shifts in a changing world order
So,weneedtoseekpartnersintheIMF.Hereweareproactivelyinvestigating
thepossibilitiesforapartnershipintheIMFwithlikemindedcountriesand
socontributetotheconsolidationofEuropeanseatsintheExecutiveBoard.
Itseemstomethatthereisastrongcaseforclosercooperationwithlike-
mindedsmallEuropeancountries,likeAustria,Belgium,Switzerland,andthe
Nordics.Theyareallalsoopeneconomieswithsoundeconomicpolicies,
aprovenwillingnesstoreformandwithaconstructiveattitudetowards
internationalcooperation.Assmallcountriestheyhavealllearnedtoadapt
flexiblytoachangingworld.
InbuildinganewchairIwouldadvocatethatwecontinuetoinvolveEastern
Europeaneconomies.Thesecountriesnowexperienceadifficulttimebutin
thelongtermtheyprovidethebestgrowthprospectsinEurope.Amixed
constituencywouldenhancetheaddedvalueintheBoard.
AconsolidationofEuropeanchairswillmakeEurope’svoicemoreeffective,it
willimprovethefeelingofownershipamongotheremerginganddeveloping
countriesandthusenhancetheroleoftheIMF.Atthesametimewehaveto
berealistic:theIMFitselfdoesnothavethepoliticalleveragetoforcepolicy
coordination.Forthisweneedpoliticalsupportandministerialengagement
becausethereislittleevidencethatlargecountriesarewillingtocreatean
IMFthatwilltellthemwhattodo.
So,thereisamuchwiderinterestinallthis.Aconsolidationofadvanced
EuropeanseatswillenhancethechancestoaligntheG20withthe
compositionoftheExecutiveBoardandtheIMFC.Thiswouldraiseboththe
legitimacyoftheG20becauseitwouldhaveawidermembership,and
strengthentheroleoftheIMF.Itwouldthusfurtherbuildonthenucleusof
globalgovernance,whichwehadseenbornafterthefinancialcrisis.Itwould
alsoprovideforarightbalancebetweeneffectiveness,forwhichthenumber
ofcountriesaroundthetableshouldnotbetoolarge,andlegitimacy.
Letmeconclude.Asanopeneconomythereisnoalternativeforthe
Netherlandsthantakinganoutward-lookingattitudeandadvancing
internationalcooperation.Ourinterestsarewell-alignedwiththoseofthe
internationalinstitutions.
Wehavebeenwillingtoshoulderinternationalresponsibility,financiallyand
otherwise,andtherefore,wehavetherighttobewellrepresented.However,
anindependentstrongpositionfortheNetherlandsisnolongerself-evident,
neitherisiteffective.Therefore,webetterjoinforceswithlikeminded
countries.
64
Weneedtoreorientourpoliciesinlightofthechangedworldsituation.The
interestsofsmallercountriesdifferfromthoseofthelargecountries,which
benefitfromlargerhomemarketsandhaveatendencyoffocusingonnational
champions.Wehaverightlylearnedthatitismoreconstructivetonotfocus
onnationalchampionsbuttoleteconomichistorytakesitscourse.
MaybewecanlearnalittlebitfromtheinternationalDutchcorporations,
whichhavealonghistoryofseekingstrategicalliancesacrossborders
dependingondevelopmentsandinseekingpartnerships.Companieslike
KLM,Philips,andUnileverareonaconstantmove.MaybetheNetherlands
governmentshouldtakeasimilarattitudebyseekingstrategicalliances.
Ihavearguedforathree-prongedapproach.First,maintainclosetieswith
GermanyandtheUnitedStates.Second,worktowardsaEuropewhichspeaks
withonevoiceandthird,seekstrategicallianceswithlikemindedmedium-
sizedcountriesinEuropeandoutsideEurope.Ifwetakethisproactive
attitudewecanactuallycontributetotheforgingofstrongerglobal
governance.Wehaveaninterestinthis,evenifitimpliesthatwewillhave
togiveupsomeoftheprivilegeswehaveenjoyedoverthepastdecades.
Thankyouverymuch!
Mr.Chairman:Thankyousomuchforthisveryclearpresentation.Yougavea
wonderfuloverviewofthestateofglobalgovernance,inparticularthenucleus
thatyoudescribedbetweenontheonehandtheIMFandG20asanewway
forwardwithregardtosolvinganumberofinternationalproblems.Ithinkthat
isaveryimportantobservation.Secondly,withoutaskinganythinginreturn
yougavetheDutchgovernmentsomeadviceonhowtohandle,howtodeal
withitsownposition,takingintoaccounttheshiftingbalanceofpowerinthe
worldeconomy.IfhopethatthepeopleoftheForeignOfficeandtheMinistry
ofFinancehavelistenedcarefully,becausenowtheyhavethestrategyforthe
future!Thankyousomuchforthat!
LetmenowgivethefloortoCarloTrojan.
Address by Carlo Trojan, Advisory Council on International Affairs
Mr.Trojan:Thankyou,Mr.Chairman.Firstofall,manythankstoAgeforhis
verythoughtfulandcomprehensivepresentation,whichgivesusaclear
insightinthenewworldofIMFinachangingworldorderandalsoaninsight
ofwhattheDutchperspectivemightbeinthatcontext.
Asyousaid,mymainfocuswillbeontheEuropeanperspective.Nevertheless,
letmeechosomeremarksofAgeontheDutchperspective.Ashasbeensaid,
theDutcheconomyishighlydependentonexportmarkets.Externaltradeand
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Power shifts in a changing world order
foreigninvestmentsisthelifelineofoureconomy.AnopenEUinternalmarket
andanopenrulesbasedworldtradingsystemareconditionaltoourwelfare.
Exportsofgoodsandservicescorrespondtoover70percentofDutchGDP.
WearesubstantialnetexportersandimportantprovidersofFDI.Some80per
centofDutchexportsgotoEUcountriesandalotofthattoGermany,hence
theimportanceofanopeninternalmarketandastableeuro.Theseareboth
twosidesofthesamecoin.Flirtingwiththebreak-upoftheeurozoneisfrom
aDutchperspectiveplayingwithfire.IamnotsurethatallDutchpoliticians
andthemediaareawareofthis.Euroscepticismandcrisis-speakseemtogo
handinhandwhileignoringthefactthattheeurohasbeenhighlysuccessful.
Intermsofpricestabilitytheeurohasbeenasuccessstory,keepingthe
inflationbeloworaround2percentin11.5years.Ifyoucomparethatwith
thedecenniabeforeitisquiteanunprecedentedsuccessstory.Theeurozone
isthelargestmarketinthedevelopedworld;theeurohasbecometheworld’s
secondmostimportantcurrency.Withouttheeuro–wetendtoforgetthat
–theeffectsofthefinancialcrisisinEuropewouldhavebeenfargreater.
OnecansaythattheeurobynowisattheheartofEuropeanintegration.
PresidentSarkozyinhismoreNapoleonisticwaymadethispointabundantly
clearinhisspeechinDavos.HesaidveryclearlythattheeuroisEurope.
Carlo Trojan
66
JürgenStark,memberoftheGoverningBoardoftheECB,wasquiterightin
statingthatwearenotdealingwithaeurocrisisbutwithasovereigndebt
crisisandwiththeconsequencesofinadequateeconomicreformsinthe
eurozone.Mr.Balkenendealsomadethispointthismorning.Ifwelookat
thebankingside,weseethattheECBplayedanexemplaryroleinlowering
interestratesandcoordinatingandprovidingliquiditiestothebanking
system.Infact,inhindsighttotheperiodofcrisis,weseetheECBhasbeen
themostefficientofallEUinstitutions.
Nodoubttherewereseriousweaknessesinthefinancialsector.Bankswere
severelyhitandthepublicsectorhadtoprovideunprecedentedfinancial
support,overandabovethemassivefiscalstimulitocopewiththeworldwide
recession.TheexposureoftheDutchfinancialsectorwashuge,itsbailout
amongstthemostimportantinEurope.
Butthefinancialcrisishasalsotriggeredanunprecedentedsupervisoryand
regulatoryrepairoftheEUfinancialsystem.WenowhaveamoreefficientEU
macro-andmicroprudentialsupervision,moreandbettercapitalinour
bankingsystem,andwehaveextendedregulationoffinancialservicesto
equity,tohedgefunds,andsoon;highlyambitiousbysomeaccounts,
insufficientbyothersbutbyallmeansunprecedentedbyanystandardsfrom
beforethefinancialcrisis.Whatisforsureisthatdeeperintegrationofthe
financialsystemhasbeentheresultofthecrisis.Wehaveseenthesame
phenomenoninpreviouscrisesintheEuropeanUnion.
Theeffectsofthefinancialcrisisonpublicfinancesarewellknownandat
theheartofthesovereigndebtcrisis.TheEUbudgetdeficitin2010isat
7percent,thepublicsectordebtapproaching80percentofGDP,andGreece
andItalyhavedebtratioswellabove100percent.Debtlevelshaveincreased
by20percentagepointsinthelasttwoyears,whichisquiteabit.
Therootcausesofthepresentsituation–apointmadebyMr.Balkenende
thismorning–gobacktothepoorenforcementandevenweakeningofthe
StabilityandGrowthPactinbettertimesandthelackofarobustmechanism
forfar-reachingbudgetarycoordinationinordertoaddressseriousmacro-
economicimbalances.
TosafeguardthestabilityofsovereigndebtmarketstheEUhascreatedtwo
newlendingfacilitiesforeurozonecountriesindistress.TheEuropean
FinancialStabilityFund(EFSF)of440billioneuro–supplementedbythe
250billioneuroIMFcommitment–andalendingfacilityrunbythe
Commissionof60billioneuro.Theprocessresultinginthesedecisionsand
thesubsequentbailoutofGreeceandIrelandhavebeenprettymessy,sending
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Power shifts in a changing world order
conflictingmessagestothefinancialmarkets.Highgovernmentofficials
apparentlyhadmoreeyesfortheirdomesticaudiencethanfortheadverse
effectoftheirstatementsonfinancialmarkets.EventuallyitwasuptotheECB
incalmingfinancialmarketsthroughitsunprecedentedmassivebuyingupof
bondsfromperipheraleurozonemembers.
Fortheshorttermmarketswillrequireamorecomprehensiveapproach
combiningamoreeffectiveandpermanentStabilityFundandasignificant
strengtheningoftheEUfiscalsurveillance.Overhaulingthebail-outfundand
apossiblerevampofGreekandIrishbail-outaswellasmoreausterity
measuresandintensifiedeconomiccooperationmaybepartofapackage
whichisbeingdiscussedattheinformalEuropeanCouncilinBrussels.Final
decisionsforsuchapackagecanbeexpectedattheMarchEuropeanCouncil,
whichmayrestoreamorelastingconfidenceinfinancialmarkets.
Forthemediumandlongertermmorefar-reachingdecisionswillberequired.
Thefirepoweroftheeurozonerescuefundmayneedafurtherincrease,more
innovativeideasasdebtrestructuringandcollectiveEurobondsmayneedto
beconsidered,andaboveallaneffectivecoordinationofeconomicpolicies
withthenecessaryintroductionofstructuralreformsshouldbeinstituted.
Thisrequiresfullimplementationoftheinstitutionalarchitectureforthe
coordinationofeconomicandfiscalpoliciesbutpossiblyalsorevisitingsome
ofthekeyprinciplesoftheEMU.ThatmightevenentailfurtherTreaty
revisions.
Thisisatallorder,especiallyincurrentcircumstanceswherepopulismand
euroscepticpoliciesseemtoprevail.Thepriceforsuccessmaybethatwewill
havesmallermarginsinnationalsocio-economicpolicies,andeventhat
countriesliketheNetherlandsandGermanywillbeforcedtopayahigher
interestrateinordertohelptheoveralleconomicstabilisationinEurope.
EventuallyMemberStateswillbeforcedtopaythatpriceinordertosecure
thestabilityoftheeuro,aneffectiveinternalmarket,andanoverallEU
strategyforsustainableeconomicgrowthandjobcreation.Afewyearsago
theveryconceptofeconomicgovernancewaslikeswearinginthechurch.
Today,economicgovernancetopstheagendaandwillbediscussedatthis
verymomentinaspecialinformalEuropeanCouncil.TheEuropeanCommission
tabledacomprehensivestrategydocument–Europe2020–todealwith
policiestoboostcompetitivenessandtheneedformuchstrongereconomic
policycoordinationtogetherwithproposalsonamuchstricterfiscal
surveillance.ItdeservesabetterfatethantheLisbonAgenda.Toooftengrand
designsfailedtobeimplementedinpracticeinthepast.Togettherewill
requireleadershipsimilartotheonewehadintheearlydaysofEMU,thetrio
ofKohl,Mitterrand,andDelors.Butitalsorequiresamoreeffectivedecision-
makingprocess.
68
Incopingwiththefinancialcrisisandthesovereigndebtcrisiswehave
seenbytimesaratherineffectivedecisionmakingprocess,bothincrisis
preventionandincrisismanagement.Wehaveobservedmuchimprovisation
andconfusionbetweenthedifferentinstitutionalactors.Therewehavethe
EuropeanCouncilanditsPermanentPresident,theCommissionandthe
PresidentoftheCommission,theEuroGroupandthePresidentoftheEuro
group,theEcofinCouncilwitharotatingPresidency,recentlytheEFSFand
eventheIMFnowadays.Ontopofthatwehavealeadingroleofthelarger
MemberStates.IthinkthecoupleSarkozy-Merkelbynowconsiderthemselves
tobeaninstitutionintheirownright.Somequestionmarkscanbeputthere.
DuringthecrisisthemainfactorofstabilityhasbeentheactionoftheECB
withtheCommissiontakingabackseatpositionoperatingintheshadows.
WhiletheCommissionremainsinstrumentalintablingthenecessary
legislativeproposalsforstrengtheningthefinancialsystemandtheEUfiscal
surveillance,itisleftoutinthediscussionsonthestrengtheningoftheeuro
bail-outfacilities.Infact,thistakesplaceamongstaselectgroupofofficials
fromthefiveorsixtripleAeurozonemembers.Theintergovernmentalelement
inthedecision-makingprocesshasbecomemoreandmoredominant.Maybe
thisisparttheconsequenceofthefactthatwearedealinginthegreyzone
ofsharedcompetences.Nonetheless,leavingouttheCommissiondoesnot
necessarilycontributetoagreatereffectiveness,butmaybeasaformer
Commission-officialIamsomewhatbiasedinthatrespect.Butmyoverall
impressionisthattheEUisatpainstoputitsfinancialandeconomichouse
inorderandthisdoesnotcontributetostrengthentheEUcredentialsabroad.
Itmaybetrue–asAgesaid–thattheEUwasinstrumentalinthecreation
oftheG20.ItisequallytruethattheEuropeanvoiceatagloballevelisnot
commensuratewithitsfinancialandeconomicpower.TheEUisbyfarthe
greatestproviderofFDIandODA.Itgivesmorethanhalfofthedevelopment
assistanceintheworldanditisoneofthemajortradingpartners.
InforeignandsecuritypolicytheEUasawholedoesnotplayaroleofany
importanceatagloballevelnotwithstandingthecreationofaHigh
RepresentativeandVicePresidentoftheCommissionandanExternalAction
Service(EAS).Sofar,IregrettosaythattheroleofLadyAshtonhasbeen
marginal;thesettingupoftheEAShasbeenacontinuingstoryofinternal
turfbattles.IamafraiditisanillusionthattheEASwilldevelopintoa
genuineandeffectiveEUdiplomaticservice.Theveryconstructionofa
double-hattedEUforeignpolicysupremowasboundtofailfromtheoutset,
atleastinmyview.Foreignandsecuritypolicyareattheheartofnational
sovereigntyandMemberStates,particularlythelargerones,willnotabandon
theirsayinworldaffairs.Thiswasmadeabundantlyclearwiththestatement
byFrance,theUK,andGermanyreactingontheprotestsinEgypt.Lady
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Power shifts in a changing world order
AshtonwasnowhereandthePermanentPresidentoftheEuropeanCouncil,
VanRompuy,wasequallyabsent.WhileitisunlikelythattheEUwilldevelop
intoapoliticalpowerinitsownrightinforeignandsecuritypolicy,theEU
couldplayamuchlargerroleintheinternationaldebateonglobalfinance
andeconomics.
AgeBakkerrightlysaysthatonestrongEuropeanvoicewillhelpbetter
globalfinancialandeconomicgovernance.TheemergenceoftheG20anda
strongerroleofIMFincrisismanagementandpreventionhavecreatedanew
forumofglobalgovernance.Thereisnodoubtthatthefragmentedexternal
representationoftheEU–EurozoneweakenstheUnion’sandtheMember
States’voiceinglobaldecisionmaking.
Tostart,theEUhastoputitsownhouseinorder.Bakkerisabsolutely
rightinunderliningthis.SecondlytheEU-eurozoneshouldhaveaclear
cutcommonpositionanduniform,ifpossiblesingle,representationin
internationalfora,asisthecaseinworldtradetalks.Thisimpliesthat
MemberStates,whichareoverrepresentedbothinG20andIMF,havetotake
astepbacktothebenefitoftheeffectivenessofthesystemasawhole.The
mostlikelyEuropeanvoicewouldbethePresidentoftheEuropeanCouncil
workinghandinhandwiththePresidentoftheCommission.Thelatterisin
anyeventtheexclusiveEUrepresentativeintradematters,aswasalsothe
caseintheG7-G8context.AsingleEuropeanseatinIMFmaynotbeinthe
cardsforthereasonsadvancedbyAgeBakker,butsomerebalancingin
reducingthenumberofEuropeanseatsiscertainlywarranted.WiththeFrench
PresidencyofbothG20andG7-G8weshouldhaveawindowofopportunity
towardsamoreeffectiveEUrepresentationatagloballevel.Itshouldalso
openthewayforamoreproactiveEUroleinrelationtoChinaandother
emergingeconomies.Thepowershiftinglobalfinancialandeconomicaffairs
goeswellbeyondthemerebilateralrelationbetweentheUSandChina.
Indealingwiththeglobal(im)balancesandpowershiftsintheworldone
shouldnotforgettheparamountroleofanopenandrulesbasedworld
tradingsystem.TheDoharoundofWTOtradenegotiationsentersinitstenth
year.Itisimperativetoconcludethisroundduring2011.Arecentpaperby
PeterSutherland–theformerDirectorGeneralofWTO–andofthevery
reputedProfessorBhagwatimakesabundantlyclearwhatisatstakeandwhat
globalbenefitswouldderivefromanagreement.Fromatechnicalpointof
viewnegotiatorsareprettyclosetoanagreement.Theywerealreadypretty
closetoanagreementwhenIwasstillinGenevabutthereisnorelationwith
myleavingthere!Whatislackingissufficientpoliticaldriveatthehighest
leveltogetthere.TheEUshouldtakeadvantageofitsG20Presidencyin
pushingforaspeedyconclusionoftheDoha-round.Moreover,theEUiswell
placedtobrokercompromisesbetweentheUSandemergingeconomies.
70
LetmeconcludewithafewremarksontheDutchperspective.Isharemuch
ofthecommentsmadebyAgeBakker.Asanopeneconomydependenton
internationaltradetheDutchhavetobeoutward-lookingandrelyonEuropean
andinternationalinstitutions.Nodoubtaboutthat.
TheDutchScientificCouncilforGovernmentPolicy–aco-organiserofthis
event–rightlyearmarkstheEUasthedominantareaandappropriatechannel
topursueDutchvitalandextendednationalinterests.Inordertodosoit
mustexertinfluenceandexcelonsubstance.Thatiscertainlythecasein
financialmattersweretheDutchcanrelyonhighlevelexpertiseandefficient
networksinboththeFinanceMinistryandtheDutchCentralBank.Onehas,
however,toacknowledgethatsincethereferendum-andmorerecentlywith
agovernmentcoalition,whichhastorelyonananti-Europeanparty-ourrole
andinfluenceinEuropeanaffairshasbeeneroded.Moreover,theEuropean
Councilhasbecomethecentraldecisionmakinginstitution.BynowEMU-
relatedmattershavebecome‘Chefsache’inmostofourMemberStates.
Thishasconsequencesbothinternallyandexternally.Whatevertheformal
responsibilitiesintheDutchgovernment,thePrimeMinisterhasbecome
theprincipalactorandshouldbeservicedassuchbytheadministrationto
enablehimtoperformeffectivelyattheEuropeanlevel.Italsoentailsamore
proactiveroleofthePrimeMinisterbothinbilateralcontactsandinthe
EuropeanCouncilitself.Toplayaroleatthoselevelsonehastobe
constructive,soundonsubstanceandtobuildalliances.AgeBakkeris
certainlyrightinstressingtheimportanceofGermanyandlikemindedTripleA
countriesintheeurozone.ItisequallyimportanttobuildbridgeswithParis,
somethingratherneglectedinthepast,hence,our‘Anglo-Saxon’reputationin
theSouthoftheEuropeanUnion.WeshouldnotshyawayfromBenelux-
initiatives,whichcouldmakeadifferenceinEU27.BringingintheEuropean
Parliament,whichhasenlargedpowerswiththeLisbonTreaty,mayalsobe
helpfulattimes.ClosetieswiththeUSarecertainlynecessary,notintheleast
inIMF,butultimatelytheoverallEuropeaninteresthastoprevail.
LastbutnotleastweshouldrealizethatEuropeannegotiationsarea‘give
andtake’exerciseinwhichmedium-sizedcountriesliketheNetherlands
cannotgoon‘offeringtoolittleandaskingtoomuch’.Thankyouverymuch!
Mr.Chairman:Carlo,thankyousomuchforthisveryinterestingoverviewof
whatisneededtohavearealstableeurozoneinthelongtermandwiththat
arealstableEuroeconomy.Ihaveoneobservationaboutthepointyoumade
abouthowfastthemoodintheEuropeanUnionischanging.Economic
governancewasawordyouwerenotallowedtouse,certainlyinthiscountry,
oneyearago.Nowitisontopoftheagenda.Thatonlyindicatesthatperhaps
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Power shifts in a changing world order
weshouldnotbetoopessimisticaboutthefutureoftheEuropeanintegration
process,becausethemoodcanchangequiterapidly!
WiththatIwouldliketoopenthefloortodiscussion.Manytopicshavebeen
raised,fromglobalgovernancetointernalcoordinationofEUpolicieswithin
theNetherlandsitself.So,youhavenoexcuseatalltonottakethefloor.
72
Mr.Wijnants(UniversityofAmsterdam):Ithinkthatnooneherewilldisagree
withmewhenIsaythattheeurohasbroughttheNetherlands,theEuropean
Unionandtheglobalcommunitymuchgood.However,itisaunionofstates
whoruntheireconomiesindifferentways.Youcannotargueagainstthe
propositionthattheSouthernstateslikeGreece,ItalyorSpaintreattheir
economiesinadifferentwaythatwedointheNetherlands,Germanyorin
certainScandinavianstates.HowdoestheIMFthinkaboutthepossibilityof
aseparationbetweenanortherneuroandasoutherneuro?
Mr.Chairman:Thisisthedebateaboutatwo-speedeurozone.Wetakethree
orfourquestionsinthefirstroundandthenhaveasecondround.
Mr.DeZwaan(ClingendaelInstitute):IhaveaquestionforAgeBakker.When
positioningtheNetherlandsinthenewlyreformedIMF,youwerehintingat
cooperationwithGermanyandtheUnitedStates,atEuropespeakingwith
onevoice,aswellasatcreatingcoalitionswithlike-mindedothercountries.
However,Iwonder,whereistheEuropeanUnioninyouropinion?IftheEU
couldhaveastrongpositionandisabletoplayanimportantrole,myidea
wouldbethatthereislessroomforanautonomousDutchposition.So,what
isyourviewregardingthepositionoftheEuropeanUnion?Inmyopinionthe
EU-dimensioncould-andshould-beoneofthemaintoolsinthehandsofthe
Netherlands.
And,then,CarloTrojan,yousaidthatLadyAshtonhasaverydifficultroleto
play.Iagree.Iamtemptedtosayherfunctionismorea‘label’thana
guaranteefortheestablishmentofacommonapproach.Nevertheless,the
dilemmasheisin-chairingtheForeignAffairsCouncilandholdingtheVice
PresidencyoftheCommission-couldthatnotbringsomethingpositivetothe
extentthatshealsopossessesthatcoordinatingrole-withintheCommission-
withregardtoallexternalEUpolicies,whichisquiteanimportanttask.
Therefore,ifshewouldbeabletodevelopasortofinterdependence,a
consistency,withtheworkoftheCouncilwithregardtoforeignaffairs,could
thatnothaveapositiveimpact?Iamtalkingthusabouttheimpactthe
‘ordinary’EUpoliciescanhaveonforeignpolicy,andviceversa.
Discussion
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Power shifts in a changing world order
Mr.Voorhoeve(AIV):IhaveaquestiontoMr.Bakker.Somethingstruckme
inhislistofmostimportantcountriesandvotingrights.Fromaglobal
perspectiveIthinkitislogicaltotryandshiftasmuchresponsibilitytothe
largestcountriesandmakethemco-responsibleforthemaintenanceofthe
internationalmonetarysystem.ItisstrangetohaveItalyattheseventhplace
andIndiaatthetenth.Indiawillbethebiggestcountryintheworldbythe
middleofthiscenturywith1.6billioninhabitants.Ithasagrowthrateof
6-7-8-9percentayear.Wehavefocused–andrightlyso–onthedynamics
inChinabutinourinteresttopromoteastrongerroleforIndia.Itisthe
biggestdemocracy.
Mr.VanBaar(JournalistHP/DeTijd):IhaveaquestiontoMr.Bakker.He
mentionedsomethingabouttheWashingtonconsensus.Sincethefinancial
crisisthereseemstobenoconsensusanymoreabouttheWashington
consensus.ThisiswhatIreadinthepapersaswell,asforinstancethereis
noconsensusabouttheneo-liberalmodelanymore,etcetera.Probablythere
isconsensusaboutthat.ButwhatisthisWashingtonconsensusreallyabout?
Ithoughtthefinancialcrisisinawayconfirmedthatinternationalorglobal
capitalismisstillverystronginthesensethatthereis‘nofreelunch’for
anyone,notevenfortheUS.Inthatrespectoneshouldthinkthatthe
Washingtonconsensuscountsforeveryone.Ihavenotheardanyalternative
forthat.Forthesakeofdiscussionandforthesakeofclarityand
transparencyisitnotbettertosaythattheWashingtonconsensushasproved
itsvitalitybythefinancialcrisisandthatitshowsthateventheUShasto
adaptitseconomytotheglobalfinancialandeconomicsystem?
Mr.Trojan:Tostartwiththetwo-speedeurozone:keepdreaming!Innoway
thatwillhappen.Butyouwererightinstressingthereissomedifferencein
thewaymemberstatesruntheirfinancialdisciplineandthattherearesome
differencesinthecompetitivesituationofmemberstates.Asfarasfiscal
disciplineisconcerned:ifwewouldhaveimplementedtheStabilityand
GrowthPactfromtheoutsetwewouldnothavebeeninthesituationwhere
wearenow.Wearetryingtoremedythatwithmuchstricterfiscalsurveillance
andstrictersanctions.
74
OncompetitivenessthelargeprogrammeoftheEuropeanUnionistopicksix
orsevenpoliciestoincreasecompetitivenessoveralloftheeurozone,
includingthenecessitytocreateacompletelyfreeandopeninternalmarket,
whichisnotyetthecaseinmanyservices,andsoon.
Whatalsowillbenecessary–andthatwillbeverydifficultpolitically–is
whatnowhasbeentablesalsobytheFrenchandtheGermansistohave
harmonisedstructuralreforms.Weneedstructuralreformsinthepension
system,structuralreformsinthelabourmarket,etcetera.Itisaverytallorder
butinmyviewitisunthinkabletobreakuptheeurozone.So,memberstates
areboundtogointothisdirection.Intenyears’timewewillseethatasa
resultofthecrisiswewillhaveamuchdeepereconomicandfinancial
integrationthanisthecaseatpresent.
InresponsetoMr.DeZwaan’squestionIhavetosaythatweareoneyear
nowfromLisbonTreaty.IfIcomparetheeffectivenessofthisoneyearwitha
singleHighRepresentativeannexVicePresidentoftheEuropeanCommission
IcantellyouthatthetandemSolana-Pattonwasfarmoreeffectivethanthe
presentsituation.Theyworkedverywelltogether.Solanaworkedbehindthe
scenesandhehadquitesomeimpactinWashingtonandelsewhere.Iamnot
surethatCathyAshtonhasthesameimpactatthisverymoment.
Second,Isaidthatfromtheoutsettheconstructionwasmeanttobea
failure.IfyoulookonlyattheexternalrepresentationdutiesoftheHigh
Representative:thereabout180treatiesinwhichatthelevelofministersof
foreignaffairsthereareregularcontactsbetweenEUandothercountries.
Obviously,sheisnotabletodoallthat.Moreover,sheisalsochairingthe
ForeignRelationscouncil.Doyouthattimewisesheisinthepositionto
coordinatewithexternaltrade,withenvironment,andsoon?Idonotthink
so.Maybeitwillbebetterinfuture.Ontopofthat,thereisalsothePresident
oftheEuropeanCommission,onesourceofturfbattles.Thereisalsothe
PresidentoftheEuropeanCouncil,anothersourceofturfbattles.
Ihopethatyouarerightandthatthingsarebetter.Haveyoueverlookedfor
instanceattheorganigramofEAS?ThatisreallyaMexicanarmy!Thereisa
largenumberofDirectorGeneralsandDeputyDirectorGenerals.EveryMember
StateandnewMemberStatehastogettheirDirectorGenerals.Itisavery
heavyconstructionwithin-builtturfbattlesandatthemomentnotverymuch
iscomingoutofthat.
Mr.Chairman:Ithinkweshouldbringinthe‘badcop’oftheIMFtodo
somethingaboutthis!
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Power shifts in a changing world order
Mr.Bakker:Thankyouforasetofverypertinentandverygoodquestions.
ThefirstwasontheIMF’sviewontheEuropeanMonetaryUnion.TheIMFhas
alwaysbeenveryexcitedabouttheEuropeanmonetaryprojectandhasbeen
verymuchinfavourofit.Wearetheretohelpthemembership.Wearea
servinginstitutionandtheIMFhasagreatinterestinpreservingtheunityof
theeuroareaandtohelpthecountriesthere.Itistruethatthebarfor
participantsissomewhathigherthantheparticipantsthemselvesexpected.
Ihavethefeelingthatsomecountrieswereverygoodinstrongpolicies
beforejoiningandthatafterjoiningtheyhadthefeelingthattheywerein
paradise.That,ofcourse,isnottrue.WeknowthisastheNetherlands
becausewehavealwaysfixedourcurrencyandweknowitisalwaysa
struggletokeepupcompetitiveness.Thatlessonhasbeenlearnedinavery
hardway.ItisapitythatEuropehasnotbeenabletopre-emptivelysolve
thisitself.Thesurveillance,theeconomicgovernanceoftheeuroareawas
lacking.Countriesshouldhavebeenwarnedearlier.TheIMFhasbeencalled
inmaybealittlebitonthelatesideasa‘badcop’totryandbringabout
structuralreformstosavetheUnion.IagreewithMr.Trojanthereisno
alternativethere.
Mr.DeZwaanaskedwheretheEuropeanUnionis.Imadethepointthat
EuropeshouldspeakwithoneEuropeanvoice.Ididnotwanttogettoomuch
intoinstitutionalmattersbutletmementionafewpoints.Intheframeworkof
theIMFanobstaclefortheEuropeanUnionseatinthefutureisthatsome
countriesarepartoftheeuroareaandothersarenot.Actually,atthemoment
thisisalsoblockingprogresstowardsaeuroareaseatbecausewhywould
FrancegiveupitspositioniftheUKwouldnot?So,inpracticethisisquitean
obstacleandthatiswhyIpushedtheideaofaeuroareaseatabitmore.
There,Ifeelitisamatteroftime.IdonotknowhowlongitwilltakebutI
thinkitwouldbealogicalconclusion.Butsomecountrieswillhaveto
swallowtheirpridebecauseotherswillthennotbein.Bytheway,the
EuropeanUnioncooperatesalotintheIMF.WehaveaEuropeanUniongroup
–notaeuroareagroup–andwemeetatleasttwiceaweek.Wegive
commonstatements,soinpracticeweworktogetherquitealot.Butyou
knowthatIalsorepresentnon-Europeancountries,sowesometimesadd
viewpointsfromtheothersideaswell.
Mr.VoorhoevethinksitalittlebitunfairthatIndiaisbelowItaly.Letmenot
gointomypersonalopiniononthatbutofcourse,thisisalsoamatterof
time.Indiahasmovedtotheeighthposition,justbehindItaly.Itisonlya
matteroftimebeforeIndiawillovertakeItaly.
QuotasarepartlydeterminedonGDP,whichaccountforabout50percent,
andpartlyonameasurementofopenness.Ofcourse,Italyisaveryopen
76
economy.Itisalargetradingnation.TheyarejustalittleaheadofIndiabut
allthesethingswillmoveovertime.AsIearliermentioned,Chinawill
overtakeJapan.TimeisonthesideofAsia.ThisistheAsiancenturyandall
thesecountrieswilltakealargerseat.Couldwenotmovethisalittlebit
quicker?EmergingcountriesarepushingforGDPbasedonPPP–purchasing
power–andthatwouldbringtheNetherlandsdowntobelow1percentand
wouldpushupChinaalot.ButIthinkitisbetterforChinatoappreciateits
exchangerate,thenitsGDPwillincreasealot.So,ifweonlytakepurchasing
powerformeasuringGDPweputanobstaclethereforChinatoshowgood
exchangeratebehaviour.
Mr.VanBaaraskedaquestionontheWashingtonconsensus.MaybeIshould
nothavementionedthis;italwaystriggersnewquestions.Icompletelyagree
withhimthatitisavague–not‘fake’but‘vague’!–concept.Imentionedit
becauseithasverydifferentconnotations,asMr.VanBaarimpliedwithhis
question.TheWashingtonconsensushasbeenverymuchresentedby
emergingeconomies.Atthesametime,Ifeelthatmanyemergingeconomies
haveappliedtheWashingtonconsensus.Butthesheerfactthatthiscameout
oftheAnglo-Saxonworldhasmadethiswordnolongerfashionable.Itisnot
completelygone,becauseitwaslargelycommon-sensepolicieswhichattimes
arenotappliedbythelargecountries.YoumentionedtheexampleoftheUS
butonecouldalsomentiontheexampleofFranceandGermanywhenthe
StabilityPactappliedtothem.Theyputtheserulesaside.Thisistypically
large-countrybehaviour:yes,thereisconsensusandyes,itisfortherestof
theworld.ProfessorKupchanmentionedthismorningtheagendaofIndia,
China,andotheremergingeconomiestakingalargerseatintheIMF.Ithink
therearetwoelementsintheWashingtonconsensuswheretheyhavean
influenceandwheretheconsensusmaybebeshiftingsomewhat.
Thefirstisonderegulation.PartoftheWashingtonconsensuswasthatit
wouldbebesttoderegulatemarketsasmuchaspossible.Thelacking
elementtherewassupervision,evenimplementationofsupervision.Thatisa
lessonwealllearned.
Thesecondelementiscapitalflows.TheWashingtonconsensusismoreor
lessthatyouarewellservedbyopeningupyourcapitalmarket.Wehave
learnedthatinEuropeweareverywellservedbythis.Withoutanopen
capitalmarkettherewouldnothavebeenamonetaryunion.Weshouldnot
forgetthatinthesixtiesandevenintheseventieswestillhadexchange
controls.InthesixtiestheFrenchhadacaponwhattheycouldspendin
othercountries.So,itisnotsuchalongtimewehadthisourselves.Inthe
globalmarket,withthetremendousincreaseofcapitalflows,theremightbe
somethingtobesaidforanoversightofcapitalflowsatagloballevel.You
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Power shifts in a changing world order
seeinmyinstitution,theIMF,abitofashiftontheuseofcapitalcontrols
–that,too,isavagueconcept–inthesensethatyouforbidyourcitizensto
investinanothercountry.Thatisnotwhatwearetalkingabout;weare
talkingaboutthesoftsideofcapitalcontrols,whichactuallyarenowapplied
incountrieslikeBrazil,withtheapprovaloftheIMF.Becauseofthevery
ampleliquidityprovisionintheUSandEuropeweseeallthesespeculative
capitalflowscomingin,puttingupwardpressureonexchangerate,and
destabilisingtheeconomies.Emergingeconomieshaverespondedtothisby
establishinghigherreserverequirements.So,manycountrieshavenowa
policywherecapitalcancomein–thereisnocontrol–youcaninvestinfor
instanceBrazilianreals,butthebankwillbeaskedtoput20percent,
40percent–insomecountrieseven80percent–atzerointerestatthe
centralbank.Thatmakesitalotlessattractive.Wearestrugglingwiththis.
EvenbeforethecrisisIhavebeenalargeadvocatethattheIMFtakesa
strongeroversightoninternationalcapitalflows.Thatmaybealittlebitof
anamendmentofthatWashingtonconsensus.
SECOND ROUND OF QUESTIONS
Mr.Chairman:Wetakeallthequestionsandthenconcludewiththeanswers.
Mrs.Okano-Heijmans(ClingendaelInstitute):Ihavetwoquestions.Yes,Iwill
keepitbrief!Myfirstquestionisaboutthe‘oneeuroareaseat’intheIMFor
aEuropeanset,whicheveryouwanttotermit.Whatexactlydoyouseeas
thebenefitsofthis?Bothspeakersindicatedthatitwouldbedesirableeven
thoughespeciallyintheshorttermhighlyunlikelybutwhatexactlydothey
seeasthebenefits?
Perhapsalsotoconvincecertainpartiesthatarenotyetconvincedofthose
benefitswoulditnotalsobeveryimportanttospeakofwhatwearegetting
backiftheeurozonecountriesaretogiveuptheirseveralseatsforoneseat?
Certainvoicesaresayingthatbargainingpowernowisstrongerthanitmay
beinthefuture,whenwemaybeforcedtochangethistooneseat.From
thosetwoperspectives,howwouldyoulookatthis?
MysecondquestionisaboutwhatProfessorKupchanwasreferringtothis
morningastheregionalandfunctionalinstitutionsversustheglobal
institutions.Indeed,theIMFisreformingbutatthesametimeweseea
paralleldevelopmentofotherinstitutionsinotherregionsforcertain
functions.Ifwegobacktothethemeoftoday’sdiscussion–thepowershifts
intheworldorder–alsohereweseeabigchangeongoing.Theroleofthe
IMF,atleastintheeyesofcertaincountries,isdecliningandotherregional
organisationsarebeingestablished.Mostimportantlyperhapswecouldthink
ofthemultilateralisationofChiangMaiinitiative.Thatcomesclosetowhat
78
hasbeentermedearlierasanAsianmonetaryfund.Whatdoesthatmeanfor
theroleoftheIMF?
Mr.VanStaden(AIV):IhaveonequestionforAgeBakkerandoneforCarlo
Trojan.Age,youhavepresentedaveryvividaccountoftheresurrectionofthe
IMF,makingallsortsofobituariesratherridiculous.However,therewasone
importantelementImissed:whatistheIMFdoingrightnowtomakesurethat
thereissomedegreeofstabilityontheglobalcurrencymarket?Afterall,itwas
theoriginalmissionoftheIMFtoprovideformonetarystabilityintheglobal
context.Iamawarethatareturntothesystemoffixedexchangeratesisnot
quiterealistic,toputitmildly,butnevertheless,whatwehaveseenarethe
enormouslyharmfuleffectsofthewidegyrationsinthecurrencymarket.So,
givenyouranalysisofIMFnowbeingoneofthepivotsinthesystemofglobal
governance,howdoyouseetheroleoftheIMFonthisimportantmatter?
Carlo,itcannottakeyoubysurprisethatIfullyconcurwithyouranalysisof
thecurrentstateofaffairswithregardtotheeconomicandmonetaryunion.
Ialsoagreewithwhatyouhavesaidaboutideascurrentlyfloatingonhowto
maketheeconomicunion-partoftheconstructionstronger.Youarequiteright
thatallsortsofproposalsandsuggestionsareboilingdowntostrengthening
intergovernmentalarrangements.Itismysensethataslongasthereisno
independentdecision-makingauthorityinanysystemofeconomicunion–of
course,wehavetheECBbutthiscannotdothewholejob–thesystemis
doomed.Ofcourse,Irecognisethatthepresentstateofpoliticalaffairsisnot
veryencouragingtomakethecaseforastrongerpositionoftheEuropean
institutionsbutinthelongertermwehavetopleadindeedforstrengthening
theroleoftheEuropeanCommissionintheofeconomicunion.
Joris Voorhoeve
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Power shifts in a changing world order
Mr.VanderHoeven(ISS,AIV):BeforeIaskmyquestionIhaveoneremarkon
thediscussionjustheldontheWashingtonconsensus.Iwasintheroom
whenJohnWilliamsonframedtheWashingtonconsensusintheearlynineties.
DespitewhatwassaidearlierTheWashingtonconsensusisveryclear;there
aretenrequirementstogovernments.Ofwhattodoandnotto.Theproblem
withtheWashingtonconsensuswasandis,thatitisnotaptforanumberof
developingcountriesbecauseofitswrongonesizefitsalldescriptionandis
absolutelynotaptanymoreforthecurrentsituationofthecrisis.SoIbegto
differthattheWashingtonconsensusisnotclear:itisclear!Butitwasandis
especiallynownotrelevantanymore.Thatisabetterinterpretationofthe
WashingtonConsensus,accordingtome.
Myquestionisthefollowing.Thismorningwealreadytalkedaboutthe
developmentatthenationallevelandtheobservedgrowinginequality.This
afternoonMr.BakkerindicatedthechangesintheIMFandtheglobal
governanceverywell.Ihavetwoobservationsonthat.FirstIwanttostress
thattheoriginofthecrisisisnotonlyfinancialbutalsosocial;Americanpoor
andmiddleincomehouseholdsusedtheirhousesasautomaticteller
machinestogetadditionalmortgagesbecausetheyweresopoorthatthey
couldotherwisenotmakeupadecentliving.So,therewasalsoaverysocial
elementinthecrisis.Thisbringsmetomysecondobservation.
TheconstructofimprovedglobalgovernanceMr.Bakkerdescribedisthatof
aG20withthesupportoftheIMFasthesecretariat.Iwanttoraisethe
questionwhetherwearereallyservedbyaglobalgovernancesystem,
dominatedbyasecretariatwhichleansheavilyonafinancialinstitutionsuch
astheIMF?IDon’tweneedaglobalgovernancesystem,whichincludesalso
socialandpoliticalelementsratherthanhavingaglobalgovernancesystem
withreliessomuchonthesupportoftheIMF?Despitesomechangesbythe
currentmanagingDirectorStraussKahnitremainsafinancialinstitutionand
everybodyknowshowdifficultitistochangethemind-setofaninstitution,
especiallyafinancialinstitution.
Ms.VanDalm(RooseveltAcademy):Ihaveaquestionrelatedtothe
presentationofMr.BakkeroftheIMF.Herightfullymentionedthatthepoor
werethevictimsofthefinancialcrisisandthatbyhavingapro-poorpolicy
theytrytodecreasetheinequality.Butatthesametimeyouseetherich,the
higherincomes,arerecoveringwayfasterfromthefinancialcrisis.So,inthat
sensepovertyistargetedbutnotnecessarilyinequality.Thisgrowing
inequalityestablishesaleadwithaccesstomorethings,tomorecapital,also
inthesenseofknowledge.Iwouldsaythatglobalgovernancealsorequires
globalunderstanding,globalsupport.Forthelargestmajorityofthepeopleto
againbelieveinthefinancialsystemyoualsoneedthisglobalsupport.How
wouldeliminatenotonlypovertybutalsoinequality?
80
Mr.Wouters(FlemishForeignAffairsCouncil):Ihaveaquestionregardingthe
pointmadeonputtingEurope’shouseinorder.Infact,wearenowafterthe
LisbonTreatyinratheraparadox;wehaveawholenewarchitecturewithnew
institutions,newplayers,andnewbodiesformakingtheEUamoreeffective
globalactor.Wecouldhavemanyreflectionsabouttheflawsinthe
architecture–Ipersonallythinkthattherearesomeimprovementscompared
tothepastprovidedyouhavetherightpeopleintherightpositions–but
muchdependsonagoodandpropersystemofdeputisation.Thistripleor
quadruplefunctionoftheHighRepresentative/VicePresidentisindeeda
challenge.Butitalldependsonthesystem,thedeputisation,andsoon.Isee
otherflawthathavenotyetbeenmentionedbutthatisnotmypoint.My
pointistheparadoxthatalthoughtheLisbonTreatyisinplaceMemberStates
nowseemmoreconcernedinminimisingtheimplicationsoftheLisbonTreaty
andarefightingsomesortofrearguardbattlewithregardtoanumberof
points.IwillgivethreeexamplesandIwouldlikeyoutocommentonthem.
Firstofall,theroleoftherotatingpresidency.Wethoughtitwouldbegone,
especiallyforexternalaffairs.Itisnotmentionedanymorewithregardto
externalmattersintheLisbonTreatybutwenowseethattheHungariansand
possiblyalsothePolisharetryingtoregainapositionontheworldstage,
intherotatingpresidency.Thereareallkindsofbattlesgoingon.Lastweek
therewasaUN-forumonforestsinNewYorkandyoucannotimaginethe
battlewithinEuropeaboutwhethertheEUshouldberepresentedbya
Commission-delegate,bytheHungarianpresidency,orbyaso-calledEU-team,
andsoon.So,itisabitembarrassingbutweareagainexportingour
Laurie van Dalm
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Power shifts in a changing world order
differences.TheworstexampleuntilnowwastheMercury-caseinStockholm
inJune,lastyear.
Theotherpointis–talkingaboutrearguardbattles–istheEEAS-budgeting.
Yourightlytalkedabouttheorganizationchartbutlet’slookatthebudget.
ThebudgetthatisbeingprovidedfortheEEASshouldbeso-calledbudget-
neutral.Whatdoesthismean?Wehave475millioneurofor2011and3,700
staffmembers,whichisinawayasmuchastheNetherlandshasinitsforeign
servicestaff.TheEUhas136missionsabroadandtheNetherlands137.These
arequiteinterestinganalogies.ButthepointisthattheMemberStatesdo
notyetseemkeentomakethiskindofeconomyofscale,inwhichyoucould
restructurethecurrentnumberofstaff–93,000intotalforallEUMember
Statescombined–anddosomeinterestingeconomiesofscaleinorderto
havetheEUdiplomacyworkingmuchbetter.
WhatisthecurrentattitudeoftheDutchgovernment?Itisnotyetcleartome
howtheNetherlandsassumesitsroleinthepost-Lisbonera,inBrusselsand
abroad.Aretheyfaithfulpro-Europeanplayers?Aretheydoingthatinternally
andexternally?Whatabouttheotherconsequencesofthat?Weheardabout
theIMFbutwhatabouttheG20?IstheNetherlandsstilltryingtobecome
re-invitedtoG20meetings,orareweinthatsensealsoratherrelyingona
Europeanrepresentation?
Mr.Chairman:ImayperhapsremindyouthatCarloisnotarepresentativeof
theDutchgovernment.Butwearelookingforwardtohisanswers.
Mr.Uilenreef(AIV):IhaveaquestiontoMr.AgeBakker.Thismorningwe
discussedthedifferentvaluesthatwehaveinthisnewworldorder.Towhat
extentdoyouthinkthatthisnewbalanceofpowerwithintheIMFwillactually
leadtonewpolicies?Iamparticularlythinkingofthecondition-based
approachandgoodgovernance,whichissometimesattachedtoWestern
democracies.WillthischangeinthenewIMF?
Mrs.Bos-Karczewska(Journalist):Firstofall,Iwouldliketomakeateasing
commenttoMr.Bakker.HowdoyoufeelrepresentingtheNetherlandsinthe
IMFthatBelgiumhasahigherpositionintheIMF-rankingintermsof
constituency?Eveninthenewtermsitisahigher.Thedistancebetweenthe
NetherlandsandBelgiumhasevenincreased.
Mr.Chairman:Itisanalphabeticorder!
Mrs.Bos-Karczewska:So,anewcriterion!Ihaveamoreseriousquestion.Iam
gratefulMr.BakkertalkedaboutEuropespeakingwithonevoicevis-à-visthe
82
outsideworld.Hetalkedaboutdesigningorthinkingaboutthecommon
futureofEasternEurope.Iwouldliketoknowwhatkindofthinkingthereis
inWashingtonaboutthefutureofEasternEurope.Whatishethinkingabout
Russia?Irememberthatoneortwoyearsagotherewasaconferencehere
abouttherelationshipbetweentheEuropeanUnionandRussia.Atthattime,
Russiawasabigpower,aresourceofoilbutnowitseemsthattheposition
ofRussiaislesspowerfulthoughitisstillaBRICcountry.
Mr.Chairman:ThathigherpositionofBelgiumisofcoursetherevengefor
whatwedidtotheminNice!
Mr.Trojan:Therewasthequestionwhatistheadvantageofasingleseat.
Theshortansweris‘impact’,impactinglobalaffairs.Inworldtradematters
wehaveonesinglenegotiatorandIhappenedtohavebeeninGenevafor
sixyears.Inworldtradematterswehaveimpact.TheEuropeanUnionis
consideredasbeingatleastonequalfootingwiththeUS.So,impactwith
asingleseatshouldbethebiggestadvantage.
Butwhatismoreimportantisnotthatyouspeakwithonesinglevoicebut
thatyousendoutonesinglemessage.Inthepresentsituationwiththe
ratherfragmentedexternalrepresentationMemberStatesdonotalwayssay
exactlythesamething.Quiteoftentheyevensayconflictingthings.Asa
consequence,wedonothavetheimpactwhichiscommensuratewithour
economicweightinfinancialandeconomicmatters.
WithregardtotheexternalrepresentationitisclearlystatedintheTreaty
ofLisbonwhereyouhaveexclusiveorsharedcompetencetheexternal
representationisdonebytheCommission.Thatisquiteanenlargement
vis-à-visthepreviouspractice.Thereitisthesameaswiththerotating
presidency:MemberStatesarenotyetreadytoaccepttheformal
consequencesofwhattheyhaveapprovedintheLisbonTreaty.Obviously,it
wasnotmeantthattherotatingpresidencyshouldplayanyroleinforeign
andsecuritymatters,exceptwhatinpracticewasagreedupon:ifLadyAshton
–whocannotbepresentateverysinglebilateralmeeting–isnottherethe
ministeroftherotatingpresidencywilltakeover.Butitcouldalsohavebeen
oneofherDirectorGenerals.ShehassixDirectorGenerals,threeSecretary
Generals,andoneChiefOperatingOfficer.So,thereareenoughpeoplefrom
whomshecanchoose.
ItisnotacoincidencethatVanStadenandIareonthesameline.Heismy
chairmanintheAIVandwehavediscussedthissubjectquiteinlengthandin
depth.Wewouldneedanindependentinstitutionalauthoritywithregardto
decisionmaking.ThereareeurozonemembersandthereareEUmembers.
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Power shifts in a changing world order
Ifwelookattheeurozoneforthefiscalsurveillance–thebudgetdeficit–
clearlythelegalcontextisthere,onthebasisofCommissionproposalsand
thedecisionbytheCouncil.Thatwillberevampedintheactualdiscussion.
So,thatisdoneinaninstitutionalframework.
Asfarastherescuefundisconcerneditisoutsideanyinstitutional
framework;itisintergovernmental.TheMemberStateswanttokeepit
intergovernmentalbecauseitistheircash,theirguaranteesandtheydonot
trusttheCommissionwithit.Thatistheactualstateofaffairs.Youcouldalso
dealwiththatinamoreinstitutionalwaybecauseyoucoulddoitinthe
contextofenhancedcooperation.Thisentailstheformalproceduresofthe
Council,eventheEuropeanParliament,etcetera.Youcouldsettlethesethings
intheformofenhancedcooperationbutwearenotyetthere.
Itisfarmorecomplicatedwhenyouareinthegreyzoneofcoordinating
economicpolicies.WhatwehavebeendoinginthecontextoftheLisbon
Treatyispeerpressureandbenchmarking.Isthatenough?No,thatisnot
enough.Idoubtifwecouldgomuchfurtherthanthatwithintheactual
institutionalframework.So,thereisarealproblem.Ifyoulookatthedifferent
proposalstotryandharmonisestructuralreformsyouseewealsotriedthis
inthecontextoftheLisbonagenda.Butwithoutverylegalcommitmentsin
practicenotverymuchiscomingoutofit.So,youarecompletelyrightthat
wehaveabigproblemthere.
Ialsohopethatinpractisetheexternalrepresentationwillgobetterthan
Iamanticipating.Ifyoulookatthenumberofstaffitisnothingexceptional.
TheEuropeanCommissionhadabout140delegations,moreorlessthesame
amountastheDutchgovernment.Butintheseexternaldelegationswehave
decentralisedmuchofthedevelopmentassistance.So,mostofthestaffin
externaldelegationisdealingwithdevelopmentassistanceandfinancial
controlrelatedtodevelopmentassistance,whileinMemberStatesmanyof
thesetasksaredonecentrallyattheministry.So,thenumberofstaffisnot
exceptional;itcouldevenbemorethanthat.WhatIthinkisexceptionalisthe
‘heaviness’oftheMexicanarmyintheorganigram.
Mr.Bakker:Theseareveryinterestingquestions.Iamtoldthatwedonot
havealotoftimebutwewillbearoundduringteaaswell.Letmevery
brieflygetintothis.
First,oneeuroareaseat.Carloalreadymentionedthat.Dowenowhavemore
bargainingpower?Ofcourse,IamsatisfiedifIbookalittlesuccessbuton
thewholeIwouldsaythatEuropecouldpresentitselfmoreeffectively.Thatis
whatIseefromexperience.Europewasverylateinreactingtothefinancial
84
crisis.IthadtheideaitwasaUSproblemandonlylateritdaunteditwasa
Europeanproblem.Wehaveseenhowlongittooktoreacttoproblemsin
GreeceandIreland.Italltakesverylong.Wecanbemuchmoreeffective.
Second,shouldweworkmoretogetherwithregionalinstitutions?Yes,thatis
themodelwehave.TheIMFworkstogetherwiththeEuropeanUnion,not
onlyinGreeceandIreland–wealreadydidthatbeforeinRomania,wherethe
programmeispartlyfinancedbytheEUandbytheIMF.Thisistheway
forward.
IsitcompetitionfortheIMF?Idonotthinkso.Asiahasconsideredgoingits
ownway,especiallyaftertheAsia-crisis,inwhichitfeltquitebadly–rightlyor
wrongly–aboutthewayitwashandledbutitisverydifficultforthemto
comeupwithanythingclosetotheEuropeanUnion,partlybecauseofthe
sheersizeofthelargecountriesandbecausetheyarenotonthesamepace.
So,themodelmostofmyAsiancolleaguesarelookingforisbecominga
morepro-activememberoftheIMF.Interestingly,countrieslikeChinaand
IndianowalsofinancetheIMFprogrammes,includingthoseinGreeceandin
Ireland.Chinaismoreandmorebehavingasacreditorcountry.Atthesame
time,itisworkingtogetherthroughtheChiangMai.Idonotthinkone
excludestheother.
Age Bakker
Jan Rood
Carlo Trojan
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Power shifts in a changing world order
Mr.VanStadenaskedaquestionaboutthegirationsontheexchange
markets.IhavebeenintheUSforfouryears.TheUSdollar–euroexchange
ratehasbeeninacorridorof1.25to1.65,whichIthinkisfine.Actually,the
systemhasworkedquitewell.Thecorporatesectorknowshowtodealwith
exchangeratefluctuations.Theyhedgeandtheymaketheirowndecisions
there.Theexchangesystemhasbeenresilientandithascopedremarkably
wellwiththefinancialcrisis.Thebigfeareverybodyhadwasthatthefinancial
crisismighttriggerforinstanceanunloadingofUSdollars,butthishasnot
happened,whichbythewaypointstothebigvulnerabilityinthesystem.
MaybeMr.VanStadenwasalludingtothat.ThatisthestrangleholdtheUS
andChinahavetogether;basically,ChinaisfinancingUSdeficitsandbuilding
uplargerandlargerreserves.ThisisnotsustainableandthatiswhattheIMF
andtheG20focuson.So,thatisforemostonourminds.Butthesystemhas
copedbetterthanmanymighthaveexpected.
Iwilltakethequestionsonsocialcrisisandinequalitytogether.Itakethe
pointthatinequalityisputtingstrainsonglobalisation.Youalsoseethisin
theopinionpolls.IntheUS,whereInowlive,inanopinionpollglobalisation
wascalledagoodthingbymorethantwothirdsoftheAmericanpopulation
tenyearsago.Inthelastopinionpoll–fromlastweek–thiswaslessthan
onethird.So,thisisnotjustaEuropeanthing.Itispartlyaphenomenon
ofpeoplenotseeingwhatisinitforthem.Myanswerwouldbetodotwo
things.
First,toreformtheUN-system,whichislongoverdue.TheUN-systemhasa
muchbroaderagendathantheIMFandtheWorldBank.Iamchairmanofthe
liaisoncommitteebetweentheIMFandtheUN.IhavetalkedtotheUNa
numberoftimesbecausetheyhavealotofinterestinourconstituency
system.ItmightmaketheUNmuchmoreeffective.Iamnotanexpertonthis
butIthinkthatiswhatweshouldlookfor.TheUNshouldresumeitsmore
globalrole.
Second,Iwouldventureweshouldfocusmoreonjobsthanoninequality.
Thebigdangerisunemployment.Manycountrieshaveveryhighyouth
unemployment,forinstanceEgyptand40%inSpain.Ithinkitisbigger
problematthismomentthaninequality.Theremustbejobcreationandfor
thatweneedstructuralreforms.Thatisbyfarthemostimportantthing
countriesneedtodo.
HasconditionalitychangedthevaluesystemintheIMF?Itisalearning
institutionandownedbythememberstatesandthememberstatesevolveas
well.WehavedrawnquiteanumberoflessonsfromtheAsiacrisis,when
internationalinstitutionshadatendencyoftryingtorepaireverythingwhatis
Age Bakker
Jan Rood
Carlo Trojan
86
wronginaneconomy.Thathasnotbeenhelpful.Wenowfocusonlyonthe
mostimportantthings.Iwitnessthisverycloseby;asIsaid,Irepresent
sevencountriesthatnowhaveaprogramme,includingcountrieslikeUkraine
andRomania.IcouldeasilythinkupamuchlongeragendafortheIMFto
focusoninUkraine.Weallcan,buttheIMFfocusesthereononlyafew
issuesandtriestokeepthecountrytogether.Inthatsense,thereisanew
IMF.
TheIMFalsotakesthepoliciesincountrieswithagoodtrackrecordat
face-value.WehaveprovidedcreditlinestoMexico,Colombia,Poland,and
Macedoniawithoutconditionality.Thisisacompletelynewphenomenon;this
hasnothappenedinthehistoryoftheIMF.
InreplytothequestionfromMrs.BosImustsaythatIdonotatallresent
thattheBelgianConstituencyislargerthantheNetherlands.Ithasavery
complicatedconstituency.ThesecondcountryisTurkey,andthenAustria.They
havegainedinvotesbecauseTurkey,beinganimportanteconomyhasbeen
gainingvotes.
SomeremarksweremadeaboutEasternEurope.IrepresentpartofEastern
Europe.BymanycountriestheIMFisseenasthe‘badcop’andisnotliked
thatmuch.However,thestandingoftheIMFinEasternEuropeismuchbetter,
becauseithasbeenseenastheinstitutionhelpingthetransitiontoamarket
economy.TheIMFisalsoseenasapromoterforanaccountablegovernment
becauseitwillnotprovidecredittocountrieswherethegovernmentaccounts
arenotinorder.ItisnotwithoutreasonthatEasternEuropeancountrieshave
nothesitatedtocometotheIMF.OnedayafterthefallofLehmanBrothers
Ukraine–thecountryIrepresent–askedforanIMFprogramme.Theydidnot
hesitatetocomethere.
DowehaveavisionforEasternEurope?Yes,thatistoalignEasternEuropein
theEuropeanUnion.TheIMFisabigdefenderofallthosecountriesthattry
toputtheirhouseinordersothattheyareacceptedintheeuroarea.Thatis
whyImadetheargumentearlierinmyspeechthatEuropewouldbewell
advisedtoredefineitsagendaforEasternEurope;becauseEasternEurope
hasthefeelingEuropeisbecomingaclosedshop.
Mr.Chairman:Well,wehavecometotheendofthissession.Ihavejustbeen
toldthattheministeriswaitinginthecorridorandthatissomethingthat
shouldnothappen,ofcourse!
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Power shifts in a changing world order
Letmemakeoneobservation.Thiswasnotafakesessionandthiswasnot
avaguesession;itwasamostinterestingsession!Thecreditsgotoourtwo
speakers.Theydeserveapplause!Thecreditsalsogotoyouasparticipants,
comingupwithalltheseinterestingquestions.Now,itistimefortea.
Thankyousomuch!
88
Chair: Prof.Dr.AndréKnottnerus,
ChairmanoftheScientificCouncilforGovernmentPolicy
Speaker: BerniceLeeMSc
ResearchDirectorEnergy,EnvironmentandResource
GovernanceatChathamHouse
Discussant: Mr.FreddeGraaf,
ChairmanoftheForeignAffairsCommitteeoftheDutch
Senate
Mr.Chairman:Dearanddistinguishedguests.Wearehappythatyouarewith
usagain.Let’sgetbacktowork,becausewehaveaveryinterestingissue
thisafternoontocoverinthisthematicsessiononsecurityandscarcityof
resources,whichisobviouslyanenormouslyimportantissue.
Resourcesaretobeseenasreallycriticalfortheeconomicdevelopmentand
thegeneralwellbeingofstatesandnationsandtheworldpopulationand
ofcoursesufficientacquisitionoftheseresourcesisthereforeessential.And
asnaturalresourcesarenotsufficientlyandequallyspreadovertheworldit
isaconstantchallengefortrade,butalsoasourceforinternationaltensions.
Inadditionthissituationisalsoanextramotivationforinnovationandfor
changingresourceconsumingbehavioursthroughout.So,thisisvery
importantinthecontextoftoday,alreadybrieflymentionedthismorning.
Weareveryhappythatforintroducingusinthisthemeandalsoforfurther
elaboratingontheproblemandpossiblestrategiesforsolutionswehavean
excellentspeakerandagreatexpertinthefieldandwehavealsoagreat
commentatoranddiscussantwhowillspeaklater.
Session B: Security and scarcity of resources
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Power shifts in a changing world order
Iwouldfirstliketointroduceourkeynotespeakerforthisafternoon.
Ms.BerniceLeefromtheUK.SheisResearchDirectorEnergy,Environment
andResourceGovernanceatChathamHouse,RoyalInstituteofInternational
Affairsandshehasalsoaverybroadexperienceinmanyotherkeyrolesin
thisarea,inforexample–nottomentioneverything–asHeadoftheEnergy
EnvironmentandDevelopmentProgrammeandalsoasTeamLeaderofthe
EU–ChinaInterdependenciesandEnergyEnvironmentSecurityProgramme.
Bernice,weareveryhappythatyouarehereandIwouldliketogiveyouthe
floor.
90
Ms.Lee:Thankyouverymuch.IamsorrythatIamgoingtositdowntoday
becauseIamtooshortforthepodium,soyouwillnotbeabletoseeme.
NexttimewhenIaminvitedtospeakintheNetherlandsIamgoingtoaddin
mybiography:IamshorterthanaDutchpersonsopleaseadjustthespeaking
podium.
LetmejuststartbythankingtheorganisingorganisationsandtheSenatefor
postingthisveryimportantmeeting.Forone,Imyselffoundthismorning
incrediblystimulatingandIsincerelyhopethatthistypeofdiscussionswillbe
Scarcity and international cooperation. Managing the Interlocking Resources Challenges: risks and opportunities1
Address by Bernice Lee MSc, Research Director Energy, Environment and Resource Governance at Chatham House
Bernice Lee
91
Power shifts in a changing world order
replicatedthroughoutEuropetomakesurethatwearegettingthebestof
whatEuropecanofferinthesekeyareasthatwehavediscussedtoday.
Itisdifficulttodaytoopenthenewspaperwithoutreadinganotherarticle
aboutresources.IcountedtwentyoftheminTheFinancialTimesyesterday,
justinthefrontpartofthepaperandcoveringarangeofissuesfrom
food,energy,minerals,water,andlandinvestments.Itcoveredissues
aroundwhetherornotPresidentSarkozywouldmanagetopushthrougha
mechanismtoseparatethespeculativefromtheinvestingdecisionsinthe
foodmarkets,towhetherornotitispossibleforEuropetodecreaseits
energydependencefromRussia.WealsohavethecurrentcrisisintheMiddle
Easttoremindusthatshearpoliticsoftenliesattheheartofouraccessto
keyresourcesataffordableprices.
Thisshouldnotcomeasasurprise,givenhowmuchofmodernlifeis
dependentonouraccesstotheseresources,includingourimprovedlifestyle,
formuchofthiscentury.Forwehaveindeedtakenforgrantedthatwewill
alwayshaveaccesstocheapaccessibleenergy,food,materialsandotherkey
resources.
Asthespeakersthismorningveryclearlyelucidated:inaworldwhereweare
havingamuchflatterpowerstructure,inaworldwherewearehaving
increasingdemandthatweprobablycannotpossiblymeetintheimmediate
andmid-termgovernancewillonlygetharder.Weare,onthegoodside,
beginningtorealisewhatenvironmentalchangeandresourceconstraintswill
dotothecomplexityofinternationalrelations.
Wearegoingtoseemorebottlenecksinfoodproduction,inenergyproduction
andtheproductionofotherkeynationalresourcesandinfrastructure.These
bottlenecksandpricespikeswillnotjustaffectbusinesses,becauseitisnot
justaquestionofeconomics;itisrejoiningtheboundaryofinternational
cooperationandcompetition.2
Iwillstartbygivingyoumyconclusiontoday:thatdecisionsthatwemake
todaywilldecidewhetherornotwewillfaceacompetitiveworldwherewe
willhavezero-sumcompetitionwiththeemergingpowersonresources,or,
whetherornotwecancreatetherulesofthegamestoensureamore
collaborativefuture.Iwilltalkalittlebitaboutthediffusionoftheproduction
anddemandcentres,totheemergingeconomiesandtomoreandlarger
originalproductioncentres,andhowthatmayormaynotimpactonthe
poweroftheconsumersintheOECDcountriestocontinuesettingtherulesof
theworld.
92
Thereis,Iwouldconclude,agreatwindowofopportunityfortheEuropean
Uniontoplayaproactiveroleinconstructingoramendingourinternational
regimestolock-incollaborativeratherthanzero-sumcompetition,ifweact
today.Wewillhaveproblemsarounddistributionofresourcesinanequitable
fashion,bothwithinnationalboundariesandbetweennationalboundaries.
Wealsoknowthathistoryisnotonourside.Asdiscussedthismorning,all
majorpowersalwaystalkabouthowtheylikerule-basedsystems,butthe
realityisthatalloftheserulesthatweresetupwerebasedonpower-based
hedgingstrategies:wheretherearekeyresourcesyouseeanaircraftcarrier
nearby.Whatwedoknowtodayisthatwealldothesame:tryingtopretend
thatwecareaboutruleswhileweactuallyinvestinhardpower.Wewillseea
muchmoreconvolutedanddifficultworldintheyearstocome.
FirstIwouldtalkaboutwhatIthinkweknowaboutresourcesandwhatI
thinkwestilldonotquiteknowaboutresources.Sothatwasmyconclusion.
WeknowthatwefacemanyresourcechallengesandIamnotgoingtogo
throughthemwithyou.Icanifyouwanttoaskmelateron,butyoumust
haveseensomanyslides,givingyoupicturesarounddemographicchange,
energydemand,waterdemand,waterresourcedepletion,fooddepletion.
IamtellingyouasIwilldonow,thattotalconsumptiononthescale,given
theincreaseinpopulationwillactuallyexceedthetolerancethresholdsofour
ecosystemsandresources,whethercropland,farmland,fisheries,orusable
water.3Weknowthatindividualsinthemiddleandupperclassesincreased
resourceconsumptionbysomethinglike200percentinthelast40years.4
By2050thesestatisticswilltellyouthat75percentofglobalpopulation
couldbefacingfreshwatershortages.5
Wealsohavethepotentialimpactsofclimatechange.Iusetheword
‘potential’becausewedonotknowthescale.Weknowitisgoingtocome
butnonethelesswedonotknowtheextent.Theextenttowhichclimate
changewillimpactonourfuturewilldependonpolicychoicesthatwemake
todayandverysoon.
Anotherthingwedoknowaboutthisisthatmostofitisdrivenbygrowthin
theemergingeconomies-thatis,bytheway,whatpovertyreductionlooks
likewhenitworks.Whenpovertyreductionworksitmeansmoreconsumers,
moreconsumptionandtothatwewillindeedhavetodriveunanticipated
changesinourproductionandproductionsystem.
Thisisalsoaccompaniedbyamajorshiftinbothprocessingpowerand
consumptioninthedevelopingcountries.DeloitteandtheUSCouncilon
Competitivenessrecentlytalkedaboutwhattheycalleda‘newworldorderfor
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Power shifts in a changing world order
manufacturingcompetitiveness’wherethecompetitivenessoftheusual
suspects,China,IndiaandKorea,butalsoBrazil,Russiaandotherswill
consolidateandleadtotheexpansionoffurtherdiversificationofregional
productionnetworks.6Weknowthatthisgrowthfromtheemergingeconomies
hasrejoinedthelandscapeonwater,resources,energyandfood,butwhatwe
donotknowyetisthecombinedeffectofthisgrowthandtheglobalpower
shift.By2030non-OECDcountriescouldaccountforasmuchas57percent
oftheglobalGDPonapurchasingpowerparitybasis.7
IftraditionalOECDimportingcountriesaregoingtodeclineintheirpoweras
aconsumer,whatwillhappentotheirpowertosettherulesininternational
markets?8Willthedominanceofthesenewplayerschangetherulesofthe
gameandthebusinessmodelsandallofouroperationalassumptions,
whetherintermsofforeigninvestmentorintermsofbasicproductionand
trade?
Ifwelookattherecenthistoryfromtheoilandgasmarket,thedevelopments
arenotnecessarilyencouraging.State-backedAsianresourceinvestment
strategiesarealreadychangingthebusinessenvironmentandtheextractive
sectorsandinfrastructuresinthedevelopingcountries.Inoilforexample,itis
clearthatthetraditionalconsumerandproducerblocswillbelessableto
influencethecontroloftheoilpricesoverthemiddleandlong-termandthat
willonlyincreasevolatility.9
Beforenewmodelsofgovernancecanbecrafted,ordeveloped,oradapted,
andrememberingeachofwhichwillhavetheirownassumptionsbasedonthe
kindofcommoditythattheyareanddifferentmarketstructures,perception
ofinsecurityisaslikelytocauseconflictsastherealityofinsecurity.Weoften
doverystupidthings,becausewethinkbadthingswillhappen,notnecessarily
becausebadthingshavehappened.Thismeansthatwemustmonitorand
becarefulinunderstandinghowgovernments,companiesandotheractors
arerespondingtoresourcethreatsatlocallevel,atnationalleveland
internationallevel,becausewearelookingatnewpatternsofrelations
betweenconsumersandproducersoftheworld.
OneoftheexamplesthatweoftenuseistheonethatAmartyaSenwrote
about:theBengalifaminesin1947.Thefaminewasnotcausedbylackof
food;itwas,however,causedbythelackofunderstandingaroundthe
distributionoffoodandtheholdingbehaviour,thatpeoplestartstockpiling
thefoodsothateventhoughtherewasfoodarounditbecametooexpensive.
WhatIamsuggestinghereisthattheworldweareabouttoface,orthatwe
areprobablyfacingalready,insomeofthesekeyresourcescouldbelikethat
world.Aworldwherewehaveenough,butourownhedgingstrategies,our
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fearofinsecuritymayleadtoallsortsofscaremongeringthatcouldbemore
destabilisingintheshort-termthanisnecessary.
Weknowthatthesearchforwater,forexample,isalreadyoneofthedriving
forcesofstatebackedinvestmentsfromtheArabGulfstatestosecureland
productionforagriculture.Sotherulesofthegamesarealreadychanging.
Asiancountries,asImentioned,arealreadylookingattheuse,inthe
long-term,ofbilateralresearchincontractsforoil,gas,andcoalsealedwith
politicalandeconomicsupport.Atthiscriticaljuncture,dowethinkthat
policymakers,companiesandstakeholdersintheWesthaveafirmgraspof
therealitiesofaresource–constrainedworldaccompaniedbyapowershift?
CanweinfactcraftintheWestachangeofparadigmvis–à–visresources
accessandusethatwillenablelong-termcompetitivenessandgrowth,not
justforEurope,butalsofortherestoftheworld.Companiestodayare
alreadycompetingatalocallevelwithothercompetingneedsforresources;
aminingcompanyinChilewillbecompetingwiththeagriculturalsectorand
withotherindustriesforenergyuse.
Theseproblemsdonotonlymanifestthemselvesininterstaterelationsbut
alsoinlocalrelationswhereweseearesurgenceofcompany–government
conflictswhenitcomestooverseasinvestment.
WithalltheseproblemsinmindIwouldliketoofferthreedimensionsthat
Ithinkwecanjointlyworktogetherandthinkthroughtheimplications.
Thefirstishowwecanbetterunderstandthesecurityimpactofthisresource
constrainedworld.Weunderstandnowthattheinterlockingclimatechange
resourcescarcityanddevelopmentissuesareincreasinglyunderstoodasakey
acceleratortonewrisksandvulnerabilitiesintheinternationalsystem.
Especiallyinthedevelopingworld,wateravailability,energysecurityandthe
upwardtrendincostsformanyresourcesarereallybigrisksintheir
developmentprojects.
Eventhoughwedounderstandtheneedtoaddresstheseproblemswerarely
seethecapacityortheintentionofgovernmentsorcompaniestolookat
theseinasystematicmanner.Followingthefinancialcrisisof2008onewould
havethoughtthattheconsequencesofbadpolicychoiceswouldbebetter
understoodandshouldhavedeservedmoreattention,butinthepolitical
systemthatwelivein,where,atleastinademocraticworld,thetimehorizon
isoftenshortasitisbasedontheelectoralcycle,arethererealcapacitiesfor
governmentstothinkthroughthelongterm?Dowehavethecapacityinthe
policyplanningunitsofourforeignministriesforexampletoplanuntil2050?
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Power shifts in a changing world order
IwasamazedwhenProfessorZhangtalkedaboutChina’sshoppingthis
morning,planningfor50toa100yearchange.Thatisaluxurythatmost
democraticsystemssimplydonothave.Andevenifyouhaveit,theurgent
willalwayscrowdouttheimportantaswefindouttimeaftertime.Withthis
shortertimeframe,policyplanningwillalwaysruntheriskofpreservingour
prevailingassumptionsandourownmindsetsintermsofriskmanagement
andwillnothavethecapacitytoplanforcomplexissueswithlongtime
horizons,andpotentiallyhighscientificuncertainty,likeclimatechange.We
alwayshaveatendencytorunawayfromcomplexitiesandreturntoourbasic
assumptions.Oneofthethingsforexamplethathaveamazedme,washow
theresourcescarcityquestionisempoweringtherealistschoolofthinkers
again,becausecompetitionforpowerisinfactthecomfortzoneformany
thinkersininternationalrelations.Perhapsitisabitdifficultsometimesto
lookatthecomplexitiesandseethroughhowwecanusethesystems,
institutionsandtoolsthat,forexample,HedleyBullusedtotalkaboutinthe
Anarchical Societytocreateopportunitiesforcollaborationandatleastfor
hedgingtherisksinamoresystematicfashion.
Atthepolicylevelwenowhaveaprettygoodmachinerythathasaccepted
climateasaseriousanddirtythreatintheimmediatetolong-termifwedo
notdoenoughaboutit.TheNationalIntelligenceCounciloftheUSfor
examplehaveaclassifiedassessmentexploringhowclimatechangecould
threatenUSsecurityinthenext20yearsbycausingpoliticalinstability,
movementsofrefugees,terrorismorconflictsoverwaterandotherresources.10
TheAustralianDefenceForcealsoconcludedthatclimatechangeandrising
sealevelsposedoneofthebiggestthreatstosecurityinthePacific.These
impactsaccordingtotheiranalysesmightalsosparkaglobalconflictover
energyreservesunderthemeltingArcticice.11
Eventhoughweareseeingthebeginningoftheprocessofunderstandingthe
securityimplicationswealsohavenotbuildupourcapacitytorespondto
whatwouldbecalledtheBlack Swanevents.ChathamHousehasrecently
beenconductingananalysisontheimpactoftheashcloudsinAprillastyear,
becausewethoughtitwouldbegoodtostudyabenignBlack Swaneventto
lookatwhetherornotourgovernancesystems,ourresponsemechanisms,
areinplacetorespondtothesesortofthreats.Iwillsendyoutheresults
whenwecompletethestudyinamonthortwo,butasfaraswecouldfigure
out,eventhoughwehadamajorcrisisinEurope,wearenotentirelysure,
basedonalltheinterviewswithbusinessesandstakeholdersandanalyses
thatwedid,thatweareactuallyanybetterpreparediftheIcelandvolcano
decidedtoeruptagain.
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HurricaneKatrinacosts19percentofUSrefinerycapacity,pipelinedamage,
etc.Shortlyafterthatwesaw,asweallknow,theoilpricerise,whichwas
followedbyafinancialcrisis.ThehotsummerinFrancein2003shutdown17
–Ithink–nuclearpowerstationsbecausetheyhadproblemscoolingthe
powerstationsandEDFlostsomethinglike300million:onehotsummer!
Welookatallthesefactsandyetwedonotseemtohaveawayof
conceptualisingandmanagingtheseinawaythattranslatesintopractical
policyadvice.
Somyfirstrecommendationtoday,ifImay,istosuggestthattheEUinthe
runuptotheRioPlus20processhaveanopportunitytoleadthe
internationalcommunityinunderstandingtheriskofbusiness–as–usual
planningandpracticesaroundresourceuse,accessandmanagement.
Ithinkthatthesecuritycommunityhasalreadyshownusthatusingworst-
casescenariosnotnecessarytoscarepeopleoff,butasaplanningtool,could
potentiallyhelpusunderstandthekindofgeopoliticalandeconomicimpacts
onpolicyfailuresandourfailureofaction.
Therealsoneedtobepracticalmediationmechanisms.Thiscouldbeby
expandingtheuseofcurrentmechanisms,whetherthroughtheinternational
chamberofcommerceforcommercialdisputesorthroughinternationalcourt
settlements,etc.Weprobablyneedtolookattheseoldinstitutionsagainto
decidewhetherornottheyareuptothetaskofmanagingthecrisesofthe
typesthatwearelikelytoseetomorrow.
TheseconddimensionIwanttolookatotherthanthesecurityimpactofa
resourceconstrainedworldisthequestionaroundwhetherornotwewillbe
enteringaworldwherewescramblefortechnologiesratherthanresources.
Itiseasytothinkofenergyaccessasoneofsupplyofliquidfuels,whenin
factalotoftheproblemsandissuescouldbedealtwithbyend-usesolutions
aswellasinnovationanddevelopmentofnewtechnologies.Inordertohave
thebridgetooursustainablefutureitseemstomethatitisasimportantto
ensureaccesstofuturetechnologiesasitisaboutaccesstoresources,but
thesetwoareintractablylinked.Weunderstandtheneedforcleanenergy
systemsandyetweforgetthatevenwithnewenergyoptionswearelooking
atthedemandformaterialsofthesortthatwearealsofacingserious
competitionin.12
ItisnottosolongagowhenjustonesummerofdemandfromGermanyfor
solarPVsleadtotwoyearsofPolysiliconshortagesintheworldandwhich
wasfollowedbyanoversupplyresponse,whichwasfollowedbythefinancial
crisis,whichactuallycreatedthesolarmarketinChina,butthatisforanother
timeifyoulike.
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Power shifts in a changing world order
Butthepointisthatevengreentechnologiesrequirenewmaterialsandwe
arenowseeingthatplayedoutinthediscussiononrareearthmetals.We
alsoknowthatmostoftheenvironmentaltechnologieswillneedveryspecific
rawmaterials.Fuelcellswillneedplatinum,palladiumandrareearthmetals.
Hybridcarsaredependentonnewtypesofbatteries,whichatthemoment
arebasedonanotherrareearthmetal,calledneodymium,whichisahigh
performancemagnet.
Otheralternativeenergiesrequirealltheothersortsthatweknowabout.In
oneofthenewmodelwindturbines,eachoftheturbineswillrequireabout
2tonsofrareearthminerals.Thesematerialsasyouknow,alsohavemilitary
applicationsinguidingmissilesandourlongtermaccesstothesenew
materialswillbringnewrisks.
Bearingthisinmind–andinfactIwonderwhetheryouwantmetotalka
littlebitabouttherareearthmetalsituation,becauseIwasherenotsolong
ago–andwediscusseditquiteabit,notintheSenatebutatClingendael
whereIthink,quitealotofyouwerepresent.
AtthemomentChinaforexampleproduces97percentoftheworld’srare
earthsupply,about100percentoftheassociatedmetalproductionand
80percentoftherareearthmagnets.Chinaimposed,asyouknow,export
restrictionsonarangeofREMsaswecallthem,citingdomesticusefor
economicdevelopmentasareason,whichiscreatingtensionwiththeUSand
theEU.13Theincreasingawarenessovertheserareearthmineralsistriggering
supplyresponses.Sowenowseetherebirthoftherecyclingofmetalsin
Japan.TherearealsoplanstoopennewrareearthminesinSouthAfrica,
Australia,Canada,theUnitedStates,Vietnam,etc.14Ithinkthetypeoftrade
tensionsweseeoverREMsillustratethetypeofconflictthatmayproliferate
inaresourceconstrainedworld.Theincreasingnationalcontrolofresource
governance,asintheoilsector,isplacingrestrictionsontheglobaltradeof
thesematerials.Eventhoughtheymayseemliketheyareonlyaffectingthe
individualmanufactureratatime,theyareimportantconsiderationsfor
policymakers.
WhatcantheEUdo?Atthiscriticaljuncture,policymakersmustcometo
gripswiththestrategicimplicationsoftheresourcesandmaterialsdimensions
ofnewtechnologiesandIwouldproposethattheEUisinauniqueposition
toputtogetherapublic-privatemechanismthatcanhelpmanageresource
security.Thesecouldinvolve,forexample,voluntaryagreementsbetween
companiesinbilateralorinmultilateralsetting,tosharecriticalresources,
potentiallyinexchangeforsomeformofknowledgetransfer.AndIcansee
thatbeingpotentiallyagametoplayinsomemarkets.Becauseonethingwe
knowEuropeisstillverygoodatindeed,isinnovation.
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ThelastthingIwouldmention,ifIhaveatinybitoftimeleft,ishowwe
makemarketsmoreresponsibleinthecontextofresourceconstraints.Asour
awarenessoverresourceandenvironmentalstressesisgrowing,theotherside
ofthecoinisthatitisagreatopportunityforinnovationandinvestments,
fornewmarketsandnewproducts.Companiesandgovernmentsthatare
movingfastestwilldefinitelybethecompaniesandgovernmentsofthe
future.Waterconstraintsforexampleareenergisingthewatercompanies
throughinnovationandmorewaterefficienttechnologiesandpractices.
Intheraceforgreensolutionsthisisalreadyevidentinthelowcarbon
sectors.Marketsforlowcarbonenergyproductsareassessedtobeatleast
US$500billionperyearby2050accordingtotheSternReview.TheHSBC,
thebank,recentlysuggestedthatthelowcarbonenergymarketwilltripleto
US$2.2trillionby2020.15Thequestioniswith,asIsaidearlier,theshifting
economicpowererodingthepowerofOECDconsumersingreeningthesupply
chain.CanOECDconsumersstillplayaroleingreeningthesupplychains
increatingthesemarkets?AndIhopethatmyanswertothisquestionisa
positiveandoptimistic‘yes’.
TheEUhasledtheway.WhateverhappenedinCopenhagenwasacomplete
PRdisaster,bythewayforboththeEUandChina,butEuropehasbeen
criticalincreatingthegreenmarketsfortheworldanditcancontinuetodo
so,becauseofitseconomicpowers.Itisthelargesteconomyintheworld
andcontinuedaccessintotheEuropeanmarketsisoneofthelargestcarrots
foranyproducerintheworld.Inaworldwhereinstabilitycharacterisesthe
politicsinmuchoftheworld’sregionsandinaworldwherethereareno
obviousstoreofvaluesleft.YoudonotwanttojustputmoneyinUStreasury
bonds.ThatgivesEuropeauniqueopportunityandperhapsarelatively
narrowwindowtousetheremainingconsumerpowerthatitstillhasin
greeningthesupplychain.Thiscouldtaketheformofpilotingand,Ithinkas
wasdiscussedthismorningbriefly,standardsthatwillhelpuslock-inthe
developmentofthemoresustainableoptionsfortheworld.
Inconclusion,ifwearetoaddresstheresourcesecurityquestionwewillneed
togeneratemultiplepublicgoodsfromthesameproductionsystemsand
sectors.Wehaveshowntobeverybadatdoingthat.Unlessincentivesin
internationalmarketsarealignedtowardbothenvironmentalandresource
goals,evenwell-meaninginitiativesandeffortswillnotdeliverthepublic
policyoutcomesthatweknowweneed.
IwouldconcludebyrepeatingonepointthatImadeearlier:perceptionof
insecurityisaslikelytoencouragestrategicdefensiveandpotentially
detrimentalinvestmentsastherealityofinsecurity.Wemustmakesurethat
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Power shifts in a changing world order
wehavetherightinformation,therightknowledgebase,andtransparencyto
avoidmisunderstandingsofthatsort.
TheEUcanalsouseitsmarketpowertostrengthenbilateralrelationsinkey
markets,whethertransatlanticorevenwithChina,tocreatethegreenmarkets
forthefuture.Weoftentalkasifenvironmentisseparatefromthesocial
economicsoftheworld,butinaresourceconstrainedworldthereisno
questionthatsustainabilityistheonlyfuture.This,ifnothingelse,isgoingto
giveEuropeahugecompetitiveadvantagefortheworldinwhichweare
goingtolive.Forifweneedmoreinnovation,weneedanopensociety,which
afterallistheonlysurefiredingredientforinnovation,andEuropestillhas
alottogive.AndwearecountingonEurope,notonlytohelpleadcreating
thesemarkets,butalsotouseitsmarketpowertoinstilthosecollaborative
rulesofthegamethatwillhopefullysafeguardthesustainabilitybutalsothe
longevityofourglobalisedinternationalmarkets.Thankyou.
Mr.Chairman:ThankyouverymuchBerniceLeeforyourverycomprehensive
andinformativeoverviewandalsoforyourgeneralrecommendationstothink
aboutstrategiesforthefuture.
Thankyouverymuch,wewillcomebacktothatinthediscussion,because
wehaveampletimeofdiscussioninthissession,butfirstwewillhavethe
commentsbyourdiscussant,Mr.FreddeGraaffromTheNetherlands.Heis
ChairmanoftheForeignAffairsCommitteeoftheDutchSenateofwhichwe
havealsothePresident,Mr.RenévanderLindenhere.Thankyouverymuch
forparticipatinginthisdiscussion.SoFred,thisisinfactyourhomehouse
andwearealsohappythatyouhavetheroleofmayorofApeldoorn,because
Ithinkthiscombinationbetweenbeinginvolvedinlocalcommunity
developmentsandbeingveryactiveininternationalpoliciesisaveryunique
bindingqualitywereallyneedinthinkingabouttheconnectionsbetween
day–to–daylifeandinternationalpolicies,soitisfascinatingtohaveyouhere
asacommentator,alsointhatrole.
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Address by Fred de Graaf, Chairman of the Foreign Affairs Committee of the Dutch Senate
Mr.DeGraaf:Ladiesandgentlemen!LetmestartbythankingMs.Lee,forher
excellentspeech.InmycapacityasChairmanoftheForeignAffairsCommittee
oftheSenate,letmesaythattheissueofsecurityandscarcityofresources
isoneofthemostimportantgeopoliticalissuesofmoderntimes.Moreover,
theissuesupersedesparty–politicsinourHouseofParliament.Inessence,
scarcityofresourcesisthebasisofvirtuallyallmajordemographic,economic,
andpoliticalchanges.Itisacomplexissue,withthecomplexcausality
betweenenergy,food,andwatersupplyontheonehand,andgeopolitical
balancesontheotherhand.Onastateleveltheincreasingdemandfor
naturalresourcesandincreasingprices,strengthenstheinfluenceofresource–
richcountrieswherethedistinctionbetweenstateownedenterpriseand
privateenterpriseisnotalwaysclear.WeheardthatthismorningIthink.Let
meputitthisway:Willresource–poorEUbethevictimofaglobalstruggle
forresourcesinatimeof‘resourcenationalism’andprotectionism?Orwillit
leadthewayinatransitiontoamoresustainableworld?Andwhatmightbe
theroleofTheNetherlandsinallofthis,talkingaboutmanagingscarcityand
theroleoftheEUfirst.
Ms.Leehasmadeclearwhattheproblemiswhatsolutionstheremightbe
andthateffectiveinternationalcooperationisnecessary.Weareconfronted
withgreatconcernsaboutthefutureavailability,accessibility,utilityvalue,
anddistributionofresources.Notasinglecountryintheworldiswithout
scarcityissues,beitwater,energy,metals,mineralsorfood,inlesseror
greatermagnitude.Ithasbeencalculatedthatoverthe20thcenturythe
world’spopulationhasmultipliedwithfactor4,yetglobaloutputhas
multipliedby40,fishcatchesby25,waterconsumptionhasincreasedwith
factor9andcarbondioxideproductionby17.So,thequestionishoware
wegoingtomanagescarcityandsecurityofresources?That,Ithink,isthe
mainquestion.
AccordingtoMs.Lee,‘theEUmustproposeatransformativevisionthattakes
intoaccountenvironmentalaswellasequityconcerns’.Andindeed,lastweek,
theEuropeanCommissioncommunicatedthenew‘flagshipinitiative’forthe
EU2020agenda:‘resourceefficiencyasaguidingprincipleofenergy,
transport,fisheries,biodiversity,climate,andregionaldevelopmentpolicies’.
Thememberstatesarediscussingenergysupplysecurityaswespeaktoday
inBrusselsattheEuropeanCouncil,inadditiontoadiscussiononsolutions
forfinancial–economicproblemswithintheeuroarea.WilltheEUbeableto
takealeadingroleintheglobalmanagementofresourcescarcity?Weall
knowitiseasiertoproposeflagshipinitiativesthentohave27memberstates
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Power shifts in a changing world order
agreeontheconcretestepstobetakeninallpolicyareas.Perhapsforthis
reasonitiscalledaflagshipinitiative,aflagshipsailingaheadoftheother
ships.NotwithoutreasondidPresidentHermanvanRompuyrecentlyunderline
thenecessitytoworktogetherasEuropeans,butonlyweEuropeansand
Iquote:‘itisnotjusttheEU27thathastoacttogether–globalcooperation
isrequiredtoo–inanefforttodevelopresponsestotheshortages’.
Inessence,ladiesandgentlemen,thesolutionseemsclear:moreresource
efficiencyandatransitiontowardsamoresustainableeconomyandsociety,
managedonagloballevel.Yet,wecannotignorethetendencyofstatesto
firstsecuretheirowninterests.
WhatcantheroleofTheNetherlandsinallofthisbe?Iwouldliketomention
threeaspectsinwhichTheNetherlandscanplayanactiveandconstructive
roleintheinternationalarenaregardingthisissueathandhereandIwould
liketoinviteMs.Leeandtheaudiencetoshareyourthoughtsonthis.
First,IwouldliketomentionthattheNetherlandsplaysanimportantpartin
thetransportofenergyandothersuppliestotherestofEurope,throughour
transporthubslikeRotterdam.
Secondlyandmaybemoreimportantly,Ms.Leeacknowledgesthat‘water
scarcityislikelytogrowsignificantlyinthefuture’.Thatbringsmetoour
watermanagementexpertise.Letmequotethe2009reporton‘Scarcityand
transition:researchquestionsforfuturepolicy’,publishedbyourministriesof
ForeignAffairsandofEnvironment.Itreadsasfollows:‘Asaconsequenceof
thesharpincreaseindemandforwaterfortheenergyandindustrysector,
combinedwithchangesinrainfallpatternsasaresultofclimatechange,the
physicalwaterscarcityisexpectedtorisefurther’.Indeed,withoutwaterthere
isnolife,nofood,noenergysupplyandasaconsequencenolongterm
economicgrowth.Inwaterrelatedissues,Iseeaparttoplayformycountry.
DutchgovernmentagenciesandDutchprivatecompanieshaveatraditionally
strongexpertiseonwaterissues–bytheway:halfofthiscountryisbelow
sealevelasyouknow–andbuiltonoutstandinginternationalexpertisewith
regardtowatergovernance,rangingfromirrigationtocanalisationand
everythinginbetweenandbeyond.Ourwatermanagementexpertiseis
visible,forexampleintheUniversityofDelftHydraulics,andanumberof
knowledgebasedwaterrelatedinternationalprograms.
Athirdareawherethissmallcountryoperatessuccessfullyonaglobalscale
isagritechnology,forwhichImaymentionWageningenUniversityandof
courseourverysuccessfulagriculturalprivatesector.Wearetheworld’s
secondlargesttraderinagriculturalproductsandthismeanswecarryagreat
102
responsibilityovertheglobalflowofresources.Wetrytoaddressthis
responsibilitybyincorporatingouragriculturalandwatermanagement
expertiseintoourOfficialDevelopmentAidprograms.Personally,Iamastrong
supporterofcombiningtechnologicalknowhowfromtheprivatesectorwith
publicpoliciesaimedtocounterscarcities.Watermanagementand
agritechnologycouldbecometheveryfocusonournationalcontributionto
themanagementofglobalscarcityissues.
Toconclude,goodcooperationbetweennon–governmentalorganisations,
privatecompaniesandthegovernmentis–inmyview–apreconditionto
contributetofoodandenergysecurity.AsTheNetherlandswemusttryto
voiceinallinternationalfore,aclear,short,andconstructivemessage.We
mustbecarefulnottopresentourselvesasa‘guiding’country.Moreeffective
willbetofocusonourareasofexpertiseandbeaconstructivepartnerin
internationalnegotiations.Asasmallcountryweneedtofocusonour
traditionalexpertiseinwatermanagementandagriculturaltechnology.
Secondly,itisineveryone’sbestinteresttoensurethatconflictinginterests
donotescalateintoopenhostilitiesandthatwecontinueourapproach
ofcooperationandthirdly,weneedtotakeintoaccountthepositionof
emergingeconomiesandworktowardsaninterdependentsystem.Ofcourse
wefacethesamedilemmaasothercountries:ontheonehandTheNether-
landsmustbesafeguardedfromtoogreatadependencyonothersforour
supplyofnecessaryresources.Yet,ifwelookcarefullyatoursituation,weare
alreadydependentonotherstoalargedegree,beingasmallcountry.Perhaps
forthisreasonwearelesspronetonationalistprotectionismandmore
focusedoninternationalcooperation.Adaptingandstrengtheningmultilateral
institutionsandthegroundrulesforaction,arethemostimportantconditions
forsustainabledevelopment.TheEUandTheNetherlandsshouldstrivefor
multilateralsolutionsinwhichregionsandcountriesaredependentupon
eachotherasreliablepartners.
Soinconclusion:TheNetherlandscanandshouldplayaleadingroleinwater
governanceandcontinueitssuccessinagribusinessanddevelopmentaid;
alwaysinclosecooperationwiththeEUandmultilateralinstitutions.Thank
youforyourattention.
Mr.Knottnerus:ThankyouMr.DeGraaf,foryourexcellentcommentandyour
perspectivesfromthecommitteeyouarechairingandyourpoliticalanalyses.
Thankyousomuch.Irecognisealsosomeoftherecommendationsofthe
ScientificCouncilforGovernmentPolicy.
Mr.DeGraaf:Wereadthem!
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Power shifts in a changing world order
Mr.Chairman:That’sgreat,butofcoursethereisalsoaverygoodand
importantnextsteptomake.WeheardthataviewpointoftheCabinetonour
reportisforthcoming,sowewillseewhattheywillsayandthediscussion
maycontinue.Itwillcontinuealsothisafternoon,becauseassaid,wehave
ampletimefordiscussion.Weknowthatthereisquitesomeexpertiseinthis
roomonthefieldswearediscussing,sowehopeforyourinputandwe
expectit.Theexpertsarehere,soyoumayputanythingforwardtodiscuss
withthem.
Ifyougettothemicrophone,pleasetrytospeakveryclosetoit,becauseit
isnotonlyimportantthatwehearyou,butthatitcanalsoberecordedfor
thereportthatispreparedofthismeeting.Iwouldliketoinviteyoutomore
orlessstructurethediscussionintwoparts,firstIthink,itwouldbegoodto
spendsometimetotheproblemanalysis,andlatertothesolutions.
Bothspeakershavediscussedtheproblem.Isitwelldefined,dowereally
haveagoodpictureofit,istheresomethingtoaddtotheperspectiveofthe
problemanalysis?Inthesecondpartofthediscussionwewouldliketo
concentrateonthesolutions,thestrategies,thesuggestionsalreadyhaving
beenmadebythespeakerscouldthenbefurtherdiscussedandelaborated.
104
Mr.Manders(NEAA):Ico-authoredthebookletMr.DeGraafwascitingfrom.
Weshouldbeabitmorespecificaboutthequestionswewanttoanswer,
Imeanscarcityisaverycomplexissue,resourcesisavastcollectionofthings
ofcommodity,water,energy,land,soIthinkitiswisetomakeacoupleof
distinctions.Firstinallthiscollectionofresourceswehaveresourceswitha
price,withamarket,likeenergy,minerals,metalsandwehaveresources
withoutaprice,likemostwater,mostland.
Ithinkatleastforthoseresourceswithapricetherearesomeautomatic
feedbackmechanismshelpingussomewhatintherightdirection,sowhen
thereisahighpricewemightbemorewillingtolookforsubstitutes,to
adjustourbehaviour,togoformoreexploration.Theproblemismorespecific
forthoseresourcesthathavenoprice,soisthatthescarcityissueweare
interestedin?
Second,weshoulddistinctabitbetterabouttheimpacts.Inmyopinionmost
impactsarenotsomuchintheOECDcountries,butmuchmoreindeveloping
countries.Imeanwecanlivewithahigholdprice,becauseoursensitivityto
commoditiesisdecliningallthetime,wehaveaveryhighwelfarelevel,so
evenahigholdpriceishurtingussomewhat,butnotfrustratingour
economicgrowth.Muchdifferentindevelopingcountries,wherehighfoot
pricescreatehungerandpovertyandhighenergypricesarecreatingpoverty
andhunger.Sothescarcityissueinmyopinionismuchmoreabout
developingcountriesandevenmuchmoreaboutthoseresourceswithouta
price.Sothatistoaddabittothedebate.
Mr.Evens(FlemishAdvisoryBoardonForeignPolicies):TheFlemishAdvisory
BoardonForeignPolicies,withthecounterpartofIEVhereinTheNetherlands.
IhaveaquestionforMs.Lee.Youreferredtodisputesettlementsandmy
questionisinthiswholeissueofconflictresolutionbecauseofscarcityand
disputesettlement,howdoyoutiethisinintoglobalgovernance,whoshould
playaroleinthere,whicharethepowerswhocoulddealwiththat,isthisa
WTOissueorareotherinstancesmoreinplacetohandlethis?
Discussion
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Power shifts in a changing world order
Mr.VanderLinden(PresidentoftheDutchSenate):Ifullyagreewiththefirst
speakerthatdevelopingcountriespaythebillifthepricewentup,butfor
thatreasonIhavealwayspromotedtousenuclearpowerintheWestern
world.Developingcountriesarenotallowedtocreatenuclearpowerstations
intheircountries.Thiscanbringpricestoamorestablelevel.Whatisyour
opiniononthat?
Secondly,after1958wecreatedtheCommonAgriculturalPolicy.Themain
targetwasfoodsecuredinEurope.WhatisyouropinionaboutCommon
AgriculturalPolicyinthefutureifyoulookatthefoodpolicyandthefood
supplyworldwide?
Mr.Grotenhuis(Cordaid):Giventhisscarcityofresources,especiallyinthis
limitationthatwearefacing,atthesametheperspectiveofincreasing
population,notonlyintermsofsheernumbers,butalsointermsoftheir
demands.Thequestionisalso,especiallywhenitcomestohowtodividethe
availableamountofresourcesthatisworldwidethere.Intheeconomicsyou
seeadiscussionongrowth,andwhetherthetraditionalgrowthmodelis
sustainableforthefuture,whetherweineconomicsshouldthinkofother
modelsthanthetraditionalgrowthmodel,whethergrowthissortofabasic
assumptionthatshouldbeunderdiscussion,especiallyinourwesternworld
inordertoenableamuchmoredifferentpatternofdemandandconsumption
andabetterdistributionofthescarceresourcesintheworldthatisgrowing
andwhereweareseeingmoreandmoreinhabitants.Sothequestionof
growthandthefundamentalassumptionandthewayitshouldbe,isunder
discussion.
Mr.Chairman:Atthispointitisgoodtoaskspeakerstorespondtothese
questions.Laterwewillgetbacktotheaudienceandyouradditionalquestions.
Ms.Lee:Iwilltakethequestionsintheorderinwhichtheywereasked.
Idisagreewiththesecondremarkofthefirstquestioner.Ithinktheoilprice
crisisin2008showedusthatwearealsoveryvulnerableinthewesttoprice
volatility.Itisnotaboutpovertyreductionhere,itisaboutaccesstofood,
butnonethelessoursystem,aswefoundout,isindeedbasedonacomplex
politicaleconomyofresources.Iwillgiveyouoneexample:BPandMacondo
wellshowedus,andweforgotinfactforalongtime,thateveryonein
sevenBritishPoundSterlingthatgoesintotheUKpensionsystemcomes
throughBP.Itdoesnotmeantheyhavecreatedtheincomebutthatthey
havegeneratedthecash.Oilcompanies’businessmodelsarehugecash
machineriesforourfinancialsystem,whichmeansthateventhoughwemay
nothavegrowthdirectimpact,onphysicalsecurity,wearestilllivingwith
economicsecurityrisksfrompricevolatility.
106
Secondly,Iagreewithyouthatweshouldprobablydistinguishbetween
resourceswithpricesandresourceswithoutprices,especiallyifyouarean
economist.Indeed,Iwouldabsolutelyagreethatweneedtoputrightprices
toresourcesthatarecurrentlynotpricedandofcourseweknowthatwe
arenotpricingevenremotelyenoughinmanyoftheaspectsofthesocial
economiclife.
However,ifyouarelookingat,forexample,anoilproducingGulfstate,the
challengestheyfacetodayareasfollows:theyarelookingatincreasing
domesticconsumptionandtheywanttocontinuetheiraccesstotheexport
earnings.Hence,theyneedtobuildmorenuclearpowerstationsorother
powerstationsinordertomakesurethattheywillsavetheoilexportsfor
exportearnings.Inorderforthemtohavenuclearpowerstationstomeet
domesticdemand,theyneedmorewatersotheyneedtofundsolarpowerfor
desalinationtogetmorewater,sothatthenuclearpowerstationscanbe
cooled.
MeanwhiletheyareinvestinginAfricawheretherearegoingtobe,where
therewillbesome,notmany,climatechangewinnersintermsofwater,like
Tanzaniawherewehopefullywillhaveanetgaininwaterresources.Ifyou
lookatitfromthatperspectiveasapolicymaker,apolicyplanner,itdoesnot
seemtomewhetherornottheresourcesofpricesareimportant.Because
thesedecisionsareoftenmadeinisolationofeachother,sopartofthisis
abouthowdowegetasystematicwayofanalyzingthesecomplex
interactions?
Fred de Graaf
André Knottnerus
Bernice Lee
107
Power shifts in a changing world order
Thesamegoesformyanswertothethirdquestionaboutnuclearpower.
IpersonallyamanuclearagnosticandbythatImean‘notinmybackyard’
butnonethelessperfectlyhappywithit.IgrewupinHongKong,Imovedto
theWestwhenIwassixteen,intheshadowoftheDayaBaypowerstation
inChinaandwewerenotthathappythatwewerequitefarawayfromthe
governanceofthepowerstationandhadnosayinwhetherornotitshould
orshouldnothavebeenthere.
Nuclearpowerinthewesternworldisverydeadatthemoment.Ifyoulookat
theactualnumbers,theincreasehasflattenedforthelast20years.Planning
permissionshavebeenharderandharderandforthesafetystandardsthat
EuropeneedsyoulookattheescalatingcostoftheFinnishstation,etc.Ijust
donotseehowitcouldbenecessarilyefficientanymorefromaneconomic
perspectivewhichmeanswewillhaveahugepowergapifwedonotresolve
thatissue.
WealsolookatChinatoday,whichasfarasIamconcerned–andIamnot
entirelysurewhetherthispartcouldbekeptofftherecord–theBureauof
EnergyStatisticsaregivingyoucrazynumbersaboutthenumberofnuclear
powerstationstheywouldbuild–100GWinthenext10years.
Crazynumbers,crazyenoughtothinkthatallittakesisone,onebadincident
toderailinfactalotofthesupposedlydecarbonisationeffortsinChina.
ButwhattheChinesearedoingispotentiallyshowinghowyoucanscaleup
nuclearenergyinawaythattheFrenchdidintheseventiesandpotentially
inacheaperway.SowedonotknowwhethertheywillsucceedbutIthinkif
thatisthecasewewillsee,whetherwelikeitornot,alotmorenuclear
energyeverywhereintheworld.TheUEAtalkedabouttheKoreanmodel
becausethiswascheaperandobviouslycorrespondinglyitmeansthatitis
lesssafe.SoIthinkthateveninthatarea,whereEuropetraditionallydoes
havecompetitiveadvantage,wewillbefacingcompetitionfromothermodels
too.
Butintermsoftheeffects–Itakeyourpoint–thatifitwereaboutmore
expensivepower,thenIwouldhavethoughtrenewablesarealsoquitegood
examplesinadditiontonuclearasthekindofthingthatcanbringlowcarbon
resourcestoEurope.
Onthequestionsarounddisputesettlements,obviouslytraderelatedones
alreadyhavetheWTOasamechanism.Butoften,especiallywhenitcomesto
resource-relatedquestionsatthenationalorlocallevelbetweenforeign
companiesanddomesticgovernmentsareresolvedelsewhere.AsImentioned
108
thereareinternationalcourtsettlementsforinternationaldisputes,whichby
thewayIthinkinfactwearealsostudyingatChathamHouse:whatsortof
disputesgetreferredtoarbitrationandwhatsortsdonot,betweenforeign
companiesandhostgovernments?Wealsoseenowanincreasingnumberof
thembeingresolvedattheICC(theInternationalChamberofCommerce)aswell.
Aswiththespeakersthismorning,Ithinkthatwewillhavetolookata
hybridsystemwheretherewillberegionalmechanismsformediationtogether
withglobaloneswherethatfailed.Sothiswouldbeagoodpieceofresearch
fortheyoungpeopleintheroomiftheirinterestedintolookingatwhether
ornottherecanbemoreeffectivemechanismsthatdonottake5000years
andlongdisputesettlementpanelsandatthesametimecanbuildtrustand
createthekindofconditionsthatwouldinfactminimiseconflictsinthe
future.SotheWTOwillbepartofit,existingmechanismswillbepartofit,
butwhatIthinkwillbelikelytohappenaremoreregionallybased
mechanisms,onesthatwillreflectthekindofproductionstructuresthatwe
areseeingevolvedtodayandthetypeofrelationshipsthatweareseeing
betweendifferenttypeofstates.
Lastbutcertainlynotleast,canweaffordthecurrentgrowthmodel?AsIsaid
earlier,povertyreductionforthe400millionpeoplethatarelivinginpoverty
inChinalookslikethis,itlookslikeresourceschallenges.Iamnotremotely
wiseenoughtoanswerthatquestion,butwhatIdoknowisthatwehaveto
askourselvessomeofthebasicassumptionsaboutoursocialeconomiclife.
Idonotthinklifestylechangeisaparticularlyeasyway,oraparticularly
goodguidanceforfuturepolicy,soletushopethatatleastontheinnovation
sidetechnologiescanhelpusdosomeofthelifting.Ascouldsavingsand
resourceefficiencyofthesort,forexample,thattheEuropeandirectivethat
wasannouncedlastweekhasmentioned.
Therearesomegoodexamples,however,thatIheardrecently.TheUN
Foundationwastellingmethattheyputtogether,orthattheywerefacilitating
adiscussionbetweenAlcoa,whichisaaluminiumcompany,CocaCola,which
isasoftdrinkcompanyandWalmart,whichsellsalotofsoftdrinksandby
makingthemworktogether,theyfoundawaytoincreaseefficiencymuch
furtherthanwhattheycoulddoindividually,sothesumofthepartsismuch
better.
Sowhatwewouldalsoadvocateontheresource-efficiencysidearemore
strategicinterventionsonsupplychainswheretherearemarketpowersthat
couldinfactbringmuchlargerresourcesavingsthanwethoughtwaspossible
inthepast,whetherintermsofsubstitutionformaterials,refrigerationtime,
transporttime,etcetera.Therearegreatopportunitiesalongthelogistical
chainthatIthinkwearejustbeginningtotap.
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Power shifts in a changing world order
Mr.DeGraaf:Well,Icannotaddsomuchmoretotheverygoodanswersof
Ms.Lee,butletmetrytotakeitfromthepoliticalperspective.
Iamanoptimistbybirth,butbeingtheChairmanoftheForeignAffairs,
DefenceandDevelopmentCorporation,Iamnotsooptimisticaboutthe
questionwhethertheworldwillbereadyandabletosolvetheproblemswe
areconfrontedwithnow,whereresourcesareconcerned.Whenwelookat
whatwearedoingatthisverymoment,wehavethemillenniumdevelopment
goalsoftheUNandwehavetriedtosetupasystemwithwhichwecan
reducepovertypossiblytoaminimum.Butwhenyouseealltheproblemswe
arefacingtryingtoreachthosegoals,thenyoucouldaskyourselveswhen
theresourcesarebecomingmorescarce,won’titbemuchmoredifficultto
cometosomeagreementtowardsasortofredistributionsystemofresources,
becauseatthismomentitstillisaquestionofmoney.Stoppumpingmoney
–thewesternworld–stoppumpingmoneyintryingtoreachthe
developmentmillenniumgoals,itisaquestionofbuyingmedicine,ofbuying
food,andsoon,butwhentheresourcesaregrowingscarcer,thennational
politicswillaskforcountryfirstandthentheworldIwouldrephraseit.That
willbeourbiggestproblemIthink,inthenationalstatesandcanwethen
cometoaredistributionsystemofresourcesandnotofmoney.Thatwillbe
thebiggestproblemwewillbeconfrontedwithinthefuture.Ican’tgiveyou
thesolutionofthisproblematthismoment.Ifwearenotableanno2011,to
cometogoodsolutionsonthebasisofredistributionofmoney,willwethen
beabletodoitwhenitisnotaquestionofmoneyanymore,butaquestion
oftheamountsofresourcesthatwewillhavetodividebetweenallthe
countries,allthepeopleintheworld.Thatwillbereallytheproblem.
Ithinkindeed,asthismorningsomespeakerssaid,thatnationalinterestswill
beverydominantinthecomingyearsandifwecannotsucceedincoming
overthosenationalinterestsandmakingsomeagreementswithoneanother
thenwewillnotsucceedindividinganddistributingtheresourcesthatwe
have,thatwewillhaveinbigsiloslikeinthetimesofEgyptandthefamine
inPalestine,wewillhavesomesortofrepetitionofhistory.Thefoodwillbe
intheonecountry,theydonotneeditall,buttheywillnotbeabletogive
ittoothercountriestodivideitamongstthepoorestpeopleintheworld.
Ithinkthatwillbethebiggestproblemwearefacing.Ithinkthatisthefirst
thingwewillhavetosolve,willwebeabletobesuccessfulinthisfield.
Mr.Chairman:Thankyou!Beforegoingbacktotheaudience,Iwouldliketo
putoneadditionalquestiontoyouFred,givenyourroleinrelationtothis,
asoneofthemanuscriptsofBerniceLeeIsaw,spokeaboutastrugglefor
resourcesandasyousayTheNetherlandsissostronglyinternationally
involvedbecauseofthenatureandthetypeofeconomythatwehavein
termsofbeingattachedtotheoutsideworld,asWillemPostveryclearly
110
summarisedtoday.DoyouthinkthatTheNetherlands,ormaybeevenbroadly
spokenEurope,couldplayanactiverole,notonlyactinginitsowninterest,
butalsotoplayagoodroleinthisinternationalmanagementof
redistribution?
Mr.DeGraaf:Yes,IthinksoandIthinkthespeakersofthismorningalso
spokethosewords,butthefirst,mostimportantpreconditionforthatisthat
wewillbeabletouniteEuropereally,becausenowalsothismorning,we
heardthatthetendencytolookinwardsratherthanoutwardsisgrowingin
Europe.WealsoseethatinTheNetherlands,twooftheoutcomingpolitical
partiesdonothaveanyfeelingswithEurope,theSocialistParty,andtheParty
forFreedom.Sothatisabigproblem.Theyaregrowing,andifthetendency
continuestolookmoreinwardsthanoutwardswehaveabigprobleminthe
27countriesofEuropebecausewethenturnawayfromtheEuropean
commongoalandthenwewillnotbeabletoplayanyroleatallontheworld
stagewhereresourcesandredistributionisconcerned.Thatisthefirst
problemwehavetotackle.IfwedonotdowhatElmarBrocktoldusthis
morning:getarealfeelingforEuropeandbindtogetherandpositionEurope
asakeyroleplayeratthispointintheworld,thenwewillnotsucceedand
thatisabigproblemIthink.
Mr.Chairman:Wehavesomemorequestionsandwewillcollectthemnow.
Mr.Homan(ClingendaelInstitute):Ihaveaquestiononwater.FirstofallIam
alwaysamazedwhenIreadthatatthismomentwehaveeighttimesmore
freshwaterthanisneededfortheworldpopulation,butwehaveawater
scarcitybecauseitisunequallydistributedintheworld.
IalsohaveaquestiononAsia;morethan40%oftheworldpopulationliving
thereisdependentforthegreaterpartforwateronsixriverswhichare
originatingontheplateauofTibet.Chinaisbuildingdamsandismaking
detoursfromtheseriverstodrierregions.Wealsoseethatfarmersalmostdo
nothavetopayapriceforthewater,sotheyfloodalltheirlandsandIndia
especiallyiscomplainingaboutthisbecausetheyaretheforthegreaterpart
dependentonthiswater.AsfarasIknow,butIamnotsure,theUNhas
concludedaconventiononthedistributionofwateramongtheupstreamand
downstreamcountries.Whatisthestatusofthisconventionatthemoment,
canthatbeasolutionformore,atleastregionalcooperation?
Ireadthatdistillation,i.e.makingfreshwaterisbecomingoneofthe
solutions.Itisbecomingcheaperandcheaperanditisalreadypractisedin
theMiddleEastbutalsoinAustralia,canthatbeinthelongertermalsobe
oneofthesolutionsforcopingwithwaterscarcity?
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Power shifts in a changing world order
Mr.Kraaijveld(TheArgumentationFactory):Wearestillinthephaseof
problemanalysis?Okay,soIwaswondering,scarcityofresourcesofcourse,
asyouallmentionedandofficiallylinkedtopopulationgrowth,isthatnot
partoftheproblemweshouldlookatandtalkabouthere?
Mr.Wolvekamp(BothEndsFoundation):Imightbetrespassingtheboundary
betweenproblemanalysisandanglingforsolutions,butIhaveaquestionfor
Mr.DeGraaf,reflectingonthismorning’sdiscussion,theNetherlands’and
Europe’sspanofcontrolorspanofinfluence.
Myquestionisontwolevels,atonelevel,whatscopeisthereforThe
Netherlandstostepupnowitstillmomentum,itsinvestmentsingovernance
especiallyinthoseareasfromwhichwederiveourresources.Soitisabout,
asmentionedearlier,likedisputesettlement,sowhenitrelatestocoalor
otheragribusinesscommodity,itdoesnotmatter.Thosetravellinginthe
fieldseethatnotwithstandingallthekindofsupplychaincertification
schemes–thatareveryimportant–butthenittygrittyatgroundlevel-sort
ofinvestmentingovernanceislacking.Forinstanceondisputesettlement,
hugeconflictsecological,social,inareaswherewederiveourresourcesfrom.
WhetheritisfromODEwhichisnowbeingreduced,orfromothersources,
mightbeimmaterial,butitisakeyquestion.
YoumentionedtheNetherlands’smainport,Rotterdam,andthebio-based
economy;weareabigtransitionandprocessingnodeforthepetrochemical
industry,theagribusinessindustry,ironore,coal,etcetera.Areweaneutral
playeror,assomeofourcolleaguessayinBrazilorinKalimantanaresaying
thatourRotterdamorEemshavenis‘eating’intotheAmazon,itiseatinginto
Borneo,becauseyouarenotaneutralplayer;youarefuellingaresource
appetite.Whatkindofambitionsarethereintermsofforeignorforeign
economicpolicytouseyourspanofinfluenceorspanofcontrol?
Mr.VanAcker(Studentpoliticalscience,RadboudUniversity):Asapolitical
sciencestudentIammostlyinterestedinthesecurityquestionsrevolving
aroundthistopic,soIhaveaquestionforMs.Lee.Youbrieflymentionedthe
REMs.andtheirusageinmilitarytechnology,forexampleinmicrochips,Iwas
wonderingwhatthepossibilityisthattheremightbeanewarmsrace
revolvingaroundtheseREMsinthenearfuture,especiallybecausetheyare
sorare,notonlyinwheretheyarelocatedbutalsointheamountofmaterials
thatistobefound.
Ms.Lee:Letmetakethelastquestionfirst.Theyarenotrare,theyarejust
expensive,andtherecouldbesupplyresponses.Ithinkthisisoneofthe
mostimportantthingstoremember;rightnowtheproblemisthatChinahas
112
beenproducingmostofit.AlotofplantshaveshutdowninJapan,partly
forcarbonreasons,partlyforothers,butJapanbeforeChinawasthelargest
producer,becausealotoftheseareby-productsofmetalsprocessing.
Therecouldbetonsandtonsofthestuffouttherebutitisjustmore
expensive.Thequestionhereisaboutaffordableaccessatthispoint.Ifyou
donothaveaffordableaccesstoday,youmaybeleftbehindininnovationfor
someofthenewtechnologies.Theyarecalledrareearthmetals,notbecause
theyarerare.Achemistexplainedtomethatitisbecausetheyarediscovered
later.AsIsaidthefightnowisaboutpriceandaccessandprotectionismin
China.Exportbansandrestrictionsofthatsortareobviouslynotsupposedto
happenunderWTOrules.
DesalinationIhopecanbeoneofthesolutions,butaswithmostnew
technologieswearebeginningtolookattheimpacttheymayhaveon
surroundingseawaterwhenyouputthesaltbackin,andarealreadyseeing,
forexampleintheGulf,areastohaveimpactonthefisheries.Soaswith
mostnewtechnologiesobviouslyweneedtoinvest,waitandseeandmake
sureitisofthesafetystandard.
Iamnotawaterexpert,IsuggestyoutalktoDavidGreyatOxfordUniversity
whoisveryinvolvedintheconventionandwhocangiveyouamuchbetter
answerintermsofhowandwhetherornotitcouldprovidealong-term
governancemeasure.Iamrelyingonhisanalysismyselftounderstandthe
situation.ButwhatIdoknowisthis:intransnationalsettingswateroftenhas
beenasourceforcooperation,sothelegendsays.Butwhathappenedisthat
alotofthesharingagreementsarebasedonvolumeratherthanonactual
share.So,theupstreamordownstreamagreementcouldbeaboutthevolume
ofwaterratherthanwhetherornoteachsidewouldhaveapercentage.
Thismeansthatthosehistoricwateragreementsarefoundedonthepower
relationsofthattime,sowedohaveaquestionaboutwhetherornotthese
transboundarywateragreementsaregoingtoberesilientinchange:resilient
toupstreamchangesandresilienttodownstreamenvironmentalchanges.This
tomeisamajorandimportantissueforthelawyerstolookat.
Mr.DeGraaf:Iwilltrytoanswerthetwoquestionsthatareverydifficult
indeed.ThefirstquestionwaswhethertheNetherlandsshouldinvestmorein
thoseareasandfieldswhereitgetsitsresourcesfromintermsofmediation,
conflictsolution,andsoon.Idonotknowexactlywhattoanswertothat
becausewearealreadytryingtoinfluencethoseareasandfieldsincountries
wearedependingon.Youalsohavetomeettheparticularquestionsthe
countrieswillputforwardtoyou.Doyouhavethepossibilitytoinfluence
conflictsinothercountries?Atleastthecountriesmustbewillingthento
acceptthemediationoftheNetherlands,whichisnotalwaysthecase.Of
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Power shifts in a changing world order
course,inWesterncountriesIcanimagineitwouldbeeasierthanAfricanor
Asiancountries.
Idonotknowwhethermoreinvestmentsatthistimewouldbepossible
consideringthehugecutbacksinourbudgets.Givingmoneyinother
destinationswouldperhapsbepossiblewithinthebudgetsthatwehaveat
thismoment,forinstancethe0.7million,thepercentageofthegrossnational
incomethatwespendindevelopmentcooperation.Thatcouldbeoneofthe
issuesofthenearfuture.
DidIunderstandyoursecondquestioncorrectlywhenyousaidthatthebigger
Rotterdamgrowsthemoreresourcesweattract,andshouldnotwemoderate
itinsomeway?Wasthatthemeaningofyourquestion?
Mr.Wolvekamp(BothEndsfoundation):Simplyput,likeatransportationhub:
islikethrowinghandsupintheair,orcanyougiveintermsoffiscaltariff
policiesandwhathaveyouapreferentialtreatmenttoadifferentkindof
commoditytransfertofueltheEuropeanenergyfactories?
Mr.DeGraaf:Ithinkjudiciallyandpracticallythatwouldbepossible.You
couldmakesomelossifyouwouldwanttobutIthinkeconomicsare
prevailinghere.Rotterdamismakinghugeplansforoiltransportation.Theoil
sectorisgrowingveryfastinRotterdam;morethan70%ofthenewareais
preparedasoilstorage.So,energyisatthefrontrowoftheeconomics
ofRotterdamharbour.ButtechnicallyandalsojudiciallyIthinkitwouldbe
possible.Youcouldredirectitifyouwantedto.Thatisaquestionof
priorities.WouldtheEuropeanorworldmarketaskRotterdamtomakea
changeintheredistributionofsomegoods?Theeconomicsituationwouldbe
thefirstindicatorforthatandRotterdamwillreactaccordingly.Ifitdoesnot
wanttoyoucoulddosobychanginglawsandmakeitdoitthewaythe
worldeconomyorthescarcityofresourceswoulddemand.
Ms.Lee:Idowanttotacklequicklythepopulationquestion.Ipersonallyfind
itveryhardtofindasolution;Idonotthinkitiseasytochallengeanyone’s
reproductiverights.Secondly,Chinahasalreadycomethrough30yearsof
OneChildPolicy.ThismeanswearegoingtodealwithaChinawithyoung
spoiledpeoplewithoutsiblingsandsoonwithoutcousins.Ifyoudonothave
siblingsandtheoldergenerationisdown,andyouaretalkingaboutabunch
ofyoungsters-–mainlymen–whohaveonlyseengrowthfor30years,Ido
notevenwanttobegintothinkaboutthesocialimplicationsofthatsortof
policy.Ijustfinditveryhardtoknowwhatitwouldmeanifwearedoing
somethingaboutthepopulationandfindawaythatsquarethecircles.
Educationisalwaysthesilverbullet.
114
Mr.DeGraaf:IthinknobodyinChinawouldhavethoughtaboutrestraining
theamountofbirthsthewaytheydidiftheywouldnotbebusytofight
poverty.Infightingpovertyandinagrowingwealthsituationthenatural
selectionsystemends.Whenyouhavemanypoorpeopleandaveryhigh
mortalityrateamongchildren,whenyoulift400millionpeoplefrompoverty
–aswehaveheardthismorning–therearemorechildrenandthenthereis
anotherproblem.Chinareactedasitdid,butasaresultofthatitwillhave
thesocialproblemsofthefuture.InthisrespectIcompletelyagreewith
Bernice;wecannotevenimaginewhatitmeans.Itwillbeaveryegotistic
societyinthenearfuture,becausenobodyhaslearnedtobesocial,being
theonlychildandspoiltbyyourparents.
Mr.Chairman:Thankyouforcomingbacktothatpoint.Ithinkwehave
alreadypassedtheborderbetweenproblemanalysisandsolution.Thatis
good,alsolookingatthetime.Iwouldlikeyoutofocusontheideasfor
strategiesweheardfromthespeakersandpreviousdiscussions,tothinkin
along-termperspectiveandtoconsiderresourceefficiency,technologies,
innovation,andresourcegovernance.Wealsohadsomediscussionabout
moreandlessattractivesolutions.So,Iwouldinviteyoutogiveinputonthat
perspective.Butfirst,letmegetbacktoTonManders.
Mr.Manders:(NEAA):First,letmeaddsomethingtothepopulationissue.
Ofcourse,intheendscarcityisdrivenbypopulationgrowth,economic
growth,andchangesintheeconomicstructurelikedietarychanges.The
worldpopulationwillgrowfrom6billionto9billionby2050.Weareina
demographictransition,sogrowthisslowingdown.Thatisthegoodnews.
Theincreaseineconomicpotentialisactuallymuchhigher.Thepopulation
willincreaseby50%inthenextfourdecades,buttheeconomicoutputwill
growbyfourtofivetimesinthenextfourdecades.Thatismuchhigher
pressurethanthepopulationitself.Evenmoreimportantarethedietary
changes,changingtowardsmoremeat.Thegoodnewsisthatthepopulation
isnotthebigissue,buteconomicgrowthis.
Letmeturntosolutions.Wehaveascarcityproblemandbasicallythereare
twostrategiestocopewithscarcity:increasingsupplyordecreasingdemand.
Forincreasingsupplyyoucouldtrytoexploremoreresources,butintheend
thatisnotawisestrategy;onewayortheotheritislimitedintheend.From
asustainableperspectivethatisnotagoodthingtodo.Youcouldtrytobe
thefirsttohavetheresourcesandthatiswhatisactuallyhappeningnow.We
seethatfromSouthKoreaorChinaisbuyinglandinMadagascarforexample
–landgrabbing–orwhenChinaishavingexportrestrictionsonrareearth
elements.Itistryingtobefirst.Inmyviewthatisnotaverystablestrategy.
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Power shifts in a changing world order
Ms.Lee:ItwasnotMadagascar,itwasKorea!
Mr.Manders(NEAA):YesKorea,almost50%oftheavailableruralland.
Thethirdstrategycouldberecycling,usingyourmaterialsmoreandmore
overagain.Thereishugepotentialinthat,andthatwouldbeaverywise
strategytofollow.Onthedemandsidetherearesomeoptions,too.Youcould
trytochangebehaviour–thatisaveryhardone,Iwouldsay–forinstance
eatlessmeatforexample,turntochickeninsteadofbeef.Wecouldlookfor
substitutes.Europehasaverystrongpotentialinfindingsubstitutes.
Resourceefficiencyfromanumberofperspectivesisofcourseaverywise
thingtodo.Itwillnotonlyhelpyousolvingthescarcityissuebutalso
climatechangeissuesandbiodiversityloss.Insummary,goforrecycling,
resourceefficiency,andtrytofindsubstitutes.
Fromtheaudience:ThankyouverymuchMissLeeandalsoFreddeGraaffor
yourveryinterestingintroductions.Iwouldliketocomebacktothe
settlementofdisputes.IwasimmediatelythinkingthatweareinTheHague,
thecityofalltheseinternationallegalinstitutions.Havetherebeenany
studiesaboutthis?Whenyoutalkaboutsettlementofdisputesitisabout
securityoraboutscarcity;inwhatformwouldyouputthisphenomenon?Did
youalreadymakeadistinction?Mr.Holmanalreadymentionedthescarcityof
water;lastyeartherewasadisputeaboutTajikistanandUzbekistanaboutthe
waterflowintheriver.Buttherearealsodisputesregardingthetransferof
resourcesandthesehavenotbeenmentioned.Therearealsodisputesabout
thedeliveranceofgasandoilbetweentwo–ormorethantwo–state.How
wouldyouseethisorganisation?Woulditnotbeidealistic–thoughwe
shouldbeidealistic–thatstateswouldjoinoronavoluntarybasisaskfor
settlementofthedispute?Maybeyoudonothavethemeasurefor
implementation.
Mr.Trompert(Studentinternationalrelations,UniversityofGroningen):Weare
talkingaboutinternationalnegotiationstosolvetheseproblemstoday.
Iwouldliketotakethelibertytoconcludethatinternationalnegotiations,
amongnationstatesarenotveryeffective.Irecentlyreadanarticlethatsaid
thatmoreorlessthan70%ofCO2-emissioncomesfromcities.Istherea
possibilitythatforinstancethe27mayorsofthecapitalsoftheEuropean
Unionconferencetofindasolutionfortheseproblems?Arethereany
possibilitiestonegotiatewithdifferentlevelsofgovernmentsthannation
states?IamespeciallyinterestedintheperspectiveofthemayorofApeldoorn
inthisrespect.
116
Mysecondquestionismoreorlessatip:ifyouwanttosolveproblemsinthe
future,youhavetoinvestineducationandinnovation.Iwouldrecommendto
all27memberstatesoftheEUtonotcutbackontheirbudgetsforeducation.
Mr.Manders(NEAA):Justaquickwordondisputesettlement:Ithinkitis
importanttoremindourselvesthatweneednotonlylookatstates.Ifwelook
atlargeresourceflows,companiesandalsosubnationalentitiesareinvolved.
Iamchairingaroundtablesustainablepalmoildisputesettlementfacility
workinggroupandactuallytheprivatesector,localcommunities,andexperts
aredealingwithit,becausecompaniesarebycertificationstandardsrequired
tosolvetheirdisputes.Thatleveragecanbeexpanded.EarlieronIaskeda
questionaboutmakingresourcesavailablebutitisalsolookingcreativelyin
thesearenas,inwhichprivatecompaniesandcivilsocietyorganisationsare
alreadyputtingmoney.So,let’sbecreativewiththearenaswearetalkingabout.
Ms.Prins(Studentpoliticalscience,UniversityofLeiden):Ijustwantedtoadd
thatespeciallythetopicofthisconferenceabouttheroleoftheNetherlands
inallthis.Itisactuallyaverybigproblemthattherearegoingtobecutbacks
inourhighereducation,becausethisisamultidisciplinaryproblem.Asa
politicalscientistIwouldlovetosaylotsofintelligentstuffaboutthis,butI
amjustnoteducatedlikethatuntilnow,soIhadtodoanotherstudy.Thatis
thekeytoinnovation:togetmultidisciplinaryintelligentandhighlyeducated
studentswhocanactuallysaysomethingaboutthecontentsofthese
problems.So,withregardtotheroleoftheNetherlandsIthinkthisiswhywe
aregoingtogodownwardsininnovationinthefuture.
Mr.Chairman:Weagainhaveaveryinterestingbunchofquestionsand
commentsalsofromtheyounggenerationthatwillhaveresponsibilityinthe
nearandprobablylongfuture,andtheirinputalsoconnectstoaverytopical
debateathandaboutinvestmentsineducation,innovationandscience.
PleaseFred,couldyoustartupnow?
Mr.DeGraaf:IwillbutdoyouagreethatIfirsttrytogiveananswertothe
questionsofourstudents,sincetheyaretheyoungestamongtheattendants
today?
Itisaninterestingquestionyouraisedabouttheotherlevelsofgovernment
thatcouldperhapsinfluenceinternationalrelations,internationalpolitics.
Thereareinfactalotofexamplesofit,forinstancethe‘MayorsforPeace’,
originatinginJapan;themayorofHiroshimachairsthegroupandalloverthe
worldmayorsaremembersofthatstillgrowinggroupofgovernors.Imyself
amamemberandwetrytomakesomecontributionsattheinternational
level,especiallytheUNandotherinternationalorganisations,toattributeto
peaceintheworld.Butyouneedaplatformforthat.
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Power shifts in a changing world order
AnotherplatformisintheEU;theregionalauthoritiesareorganisedthereand
alsohaveavoteinEurope.Theyarerepresentedbymayorsandaldermen
fromthe27countriesinEuropeandinfluencetheinternalaffairsofthe
EuropeanUnion.
Anotherexample–andthatisneartomyheart–isthatmanyother
communitieslikeApeldoornareworkingontheinternationallevel,inbilateral
connectionwithothercities.ApeldoorngotintocontactwithBandaAcehone
monthafterthetsunami.Everythingwasgonethere,theonlythingthatwas
stilltherewasthemosque.Theyhadtorebuildeverything.Theylost100,000
peopleamongstwhomalmostallcivilservantsandthemembersofthecity
councilandthemayor.Wefirsttookonasfirstprioritythewastemanagement
programme,becausetherewasalotofrubbishafterthetsunamithreatening
thehealthoftheremainingpeople.So,togetherwiththeRotebfrom
Rotterdamwesucceededtosetupaverymodernsystemofgettingridofthe
garbagewithintwoyears.Sincethen,Bandawontheprizeforthecleanest
cityinIndonesiathreetimesinarow.Itwasagreatsuccess.Afterthatthey
askedushelpandrebuildtheiradministration.Oneofourcivilservantswent
toBandaandworkedtherefortwoyears,paidbyusviatheLOGOSouth
programmeoftheAssociationofNetherlandsMunicipalities(VNG).
AndthereproblemsarisebecausetheParliament,attheothersideofthis
square,isdoubtfulaboutthesuccessandtheopportunityoflower
governmentlevelstoworktogetherinaninternationalfield.Infact,they
wanttoforbidit;itmustend.So,wearenowindiscussionswithDutch
governmentaboutwhetherwearepermittedtogoonwithourworkinthe
internationalfield.Wepayforitourselves;wedonotaskformoneytothe
centralgovernment.Arewepermittedtogoonorareyougoingtorestrictus
legallytodosomethingataninternationallevelbecausewewouldintervene
withtheforeignpolicyoftheNetherlands?Thatdiscussionisgoingonandit
willendhere,intheSenate.YouwillunderstandthatIwillcontributetothat
discussion.
Yourcolleaguetalkedaboutinnovationandtherestrictionsinstudenttime.
Hearingyouaskingthequestion,seeingyou,andnotingthatyouarehere
todaytolistentousandtothespeakersofthismorning,Iamsureyouwill
succeedwithinthesixyearsthatyougetwithouthavingtopayextramoney,
thatyouwillsucceedingettingyourexamsandyourMaster’srightintime!
Thenwehopetoseeyouagaininthepoliticalarenatoparticipateherein
TheHagueinourdebates.Iunderstandyourproblembutweareattheend
ofthediscussion.Youreadthepapersandyouwillhaveseenthatthestate
secretaryhasalreadyputanendtohisschemetohavetheuniversitiespaya
finefortransgressionofthesesixyears.So,itisstilluptothestudentsnow.
Tothathewillholdon:youwillgetfouryearsplustwoandthat’sit.
118
Ms.Lee:Onclimatechangeweneedeverything,soitisverydifficultafter
Copenhagentohavefaithininternationalprocessesbutatleastwhatwegot
outofCopenhagenisanunderstandingthatnationalaction–andperhaps
mayorlevelactionforthatmatter–isafoundationofandnotaresultof
necessarilyinternationalnegotiations.
IalsobelievethatwithoutCopenhagen,wewillnotseetheproliferationof
thelevelofactionsweareseeingnowatasubnationallevelbecausewedo
needtheglobalprocesstosettheambitionandhelpussetatimelineand
remindusoftheurgency.Mygutfeelingisthatweneedboth.Someonewho
justrecentlygotappointedtoaverygoodjobattheUNwastellingme:
YouknowBernice,weallknowthatworkingfortheUN,70%ofthetimeis
painful,bitterbureaucracy,butthe30%whenyoucandosomethingis
absolutelyamazing.Ithinkthatisprobablywhyalotofpeople,despitethe
painofnegotiationswouldstillliketoseesomeresult.Itisnotaneasyhatch
tomakebutwemustbeabletomakethose.Thisrelatestothequestion
aroundincreasingsupplyordecreasingdemand.IabsolutelyagreeandIfeel
stronglythatthesubstitutionagendadoesnotcomehighenoughonthe
globalagendaandcertainlynothighenoughontheEuropeanagenda.
Theresourceefficiencydirectiveprovidesanopportunityforthesubstitution
agendatocomeforthandanopportunityofthesortIwastryingtodescribe
earlierinimprovementsalongthesupplychain.Perhapswecouldhaveevena
structuredwaytolookatthekindofsubstitutionsthatwewantandneed,and
encourageinnovationinthatdirection.Ioftenlaughwhenpeoplefromthe
cementindustrytellmethatitisatechnologythathasbeenoptimisedover
120years.Ijustlookatthemandsay,butyouhavenotchangedmuch,have
you?Itistimeforustolookatallmaterials,whetheritisbuildingmaterials
andotherwise,andmakesurewedohavethekindthatsubstitutionneeds.
IfImayaddtothestudent’svoice,intheUKrecentlywearelookingat
tuitionfeesandregardlessofhowIfeel;Icertainlyfeltthatnoonehadasked
mewhetherIwantedtousemytaxmoneytopayformyeducation.Icertainly
would.Ithinkitisactuallyaterriblygoodinvestmentofourtaxmoney.Iwas
intheUKasaforeignstudentwhenIfirstgotthereandIwasluckytoget
scholarships.ThatwashardandIcannotimaginestudentstodaytryingto
makealifeintheworldparticularlyonthatkindofloans,iftheydonotgo
intoabankingjob.Thisisseriouslyworrying.Iknowthisiswaybeyondmy
competenciestotalkaboutthis.
Mr.Manderswastalkingaboutsustainablepalmoil.Ihavelookedatthatand
Iwasgoingtoaskhimaquestion:howwouldhemediateadisputebetween
astate-backedcompanywithalocalcommunitythatpotentiallyhadseparatist
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Power shifts in a changing world order
tendencies?Ithinkthatwehavealotofinstruments.So,toanswerthelady’s
questionweindeedneedtobecarefulaboutthearena.ImustconfessIam
wayoutofmydepthhere.Iwouldsuggestfirsttolookingatexistingarenas,
lookingwhatthegapscouldbe.Myrecommendationwasoneformediation
andnotjustdisputesettlement.Potentially,thiscouldinvolvealotmore
non-governmentalactors,tooandnotjustformalmediationmechanisms.
Wealsofindin,forexample,thedebatesonillegalloggingthatthelegality
discussionhadbeenhelpfulinhelpingtoframefurtherdiscussionsaround
forestgovernance.TheEUforexamplehadinterestingmechanismsthatare
nowdrivingchangesinanumberofproducingcountries.Perhapsifwestart
thinkingaboutmediationandanticipatingproblemswecancomeupwiththe
kindofmechanismsthatwillstopusfromgoingtomediation.
ButIwouldliketoaskMr.Manderstorespondandtellmewhathappensifa
state-backedcompanygetsintodisputewithalocalcommunity.Whodoeshe
thinkinthecaseofpalmoilshouldbetherightplaceformediation?Should
itbethenationalcourtsorshoulditbeinternationalcourts?Ithinktheseare
difficultquestionstograpplewith.
Mr.Chairman:Thankyouverymuch.Becausewearemovingonintime
Iwouldaskyouifthereisoneburningissueyoumightwanttoaddress.
Youarefreetoask;otherwiseIwouldliketoaskonefinalquestiontothe
speakers,connectingtowhatTonManderssaidthatbehavioralchangeisso
difficult.Iwouldlikeaskbothofyou,canwedowithoutbehavioralchange
orshouldweworkatit?
Ms.Lee:IforcemyselftobuyreallyexpensivethingssothatIdonothaveto
buythemagain.Thatdoesnotseemtobeasolutionforthelesswell-off
people.Re-use,recycling,andrethinkinghowweplanourresourcesevidently
arepartofthethinking.Ijustdonotthinkitiseasytoaskpeopletoroll
backtheirlifestyle.Thatdoesnotmeanweshouldnottry;wejustshould
notcountonitasastrategygoingforward.Again,itdoesnotmeanwe
shouldnottry;itisjusthardtoimaginethatawholegenerationofmiddle
classpeopleinChinawouldwanttogiveuptheircarsandtheirair
conditioninganytimesoon.
Mr.DeGraaf:Doweneedbehavioralchange?Yesplease!Weneedit,
especiallyinpolitics.Imeanthat.Wewillnotbeabletosolveanyproblemsif
wedonotchangewiththechangingworld.Bernicetoldusthatwecannot
solveproblemsofthefuturewhenyousticktoyourpastmethods.Thatis
impossible.Wehavetochangewiththechangesintheworld.Absolutely!But
willwebeabletochange?Thattherearealotofexamplesthatshowthat
peoplecanchangebutyouhavetosetapriceonit,youhavetorewardthem.
120
Icangiveyouanexampleofgarbageagain,withrecycling.InApeldoornwe
gavepeoplethechancetopresentalltheir‘greengarbage’forfree.
Theamountofseparationofthe‘green’garbagewentuptoalmost90%.
Since3years,Apeldoorncanpaybackthepriceforgarbagedisposal.Soyes,
peoplecanchangebutyouhavetorewardthem.Thesamegoesforpolitics,
nationallyaswellasinternationally.Peoplewillalwaysask‘whatisinitfor
me?’Whenyourewardtheminsuchawaythatisgoingalongwiththegoals
youaretryingtoreach,youcanalsochangethepoliticalbehaviorofthe
politiciansintheworld.
Mr.Chairman:Ithinkthesearenicewordstoendthissession.Ithinkwe
haveobservedthattheissueofscarcityofresourcesnotonlyprovokes
discussionfocusedonthisspecificissuebutturnsouttorelatetoall
importantissuesofnationalandinternationalpolicy.Also,theinnovation
issuehasstronglycomeup.
Wehaveheardalot.Itwillberecordedandwillbeputinareport.Anyideas
thathavecomeupwithwillbeatthecentreofthetablealsooftheSenate.
WeheardfromFredtodaythatifwespeakofbehavioralchangethereis
alsoanimportantinvitationandchallengeforpoliticians.Thatisagoodthing
tohearinthisbuilding.Thatimpliestotakeresponsibilitynationally,
internationallyandespeciallytodayintheEuropeanarena.
ThankyouBernice,andthankyouverymuchFred.Thatwasaverygood
performance.
Thankyouverymuchforparticipatingandforsharingthissessionwithus.
Youhavedeservedabreak.Thankyouverymuch.
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Power shifts in a changing world order
Mr.KorthalsAltes(AIV):Ladiesandgentlemen!WelcometotheMinisterof
ForeignAffairs.Forsomeofusthisteapartywasaveryshortone.Probably
agoodideaforotherteaparties,too,nottolasttoolong!
ItisanhonourforusandformetohaveourMinisterofForeignAffairsin
ourmidst.
Address by Mr. Rosenthal, Minister of Foreign Affairs
Thankyou,Frits.HowshouldIstart?ItisahonourtomebecauseIhavebeen
herefortenyearsasasenator,thelastfiveyearssittingleftofthepulpit
andnowonthissideofthehall,butwithverywarmmemoriesofthe
beautifulyearsintheDutchsenate.Iwillnotbeseducedbymakingremarks
howitfeelswhenyouseetheSenatefromadifferentperspectivenorwill
IrevealthesecretsoftheMinisterialCouncil,wherewesometimesalsotalk
aboutSenatewheelingsanddealings.ThatisthesecretoftheTrêveszaal.
Eventoday,theSenatewaspartofourdiscussionsonourregularlegislative
work.So,theconnectionisthere.
Conclusions & Remarks
Uri Rosenthal
122
Theconferenceonpowershiftsinachangingworldorder,theroleofthe
EuropeanUnionandthepositionoftheNetherlandsisasubjectattheheart
oftheportfolioIamworkingon.Ithinkittobebestnowtogetstraightto
business,tothecoreandtheheartofthematter.TheDutchgovernmentinits
foreignpolicyisreallyworkingitswaytostrengthenthepositionofthe
Netherlandsintheworld.Itisaboutvalues,interests,mutualinterestsand
aboutmeetingtoday’schallenges.Inaworldsocompetitiveandunstablein
manywaysandsofragileinmanyregionsyoureallyhavetobestrongin
thefieldofsafetyandsecurityconsiderations,youhavetobestrongonthe
economics’endandalsointhedomainofhumanrights,humanvalues,
individualvaluesandwhathaveyou.Thereyouimmediatelyseethethree
pillarsofDutchforeignpolicyinthisera:itisaboutsafety,security,and
stability,itisaboutpromotingtheeconomicinterestoftheNetherlandsand
abouthumanrights.Theseareintermingled.
NowwhenwelookatthesethreepillarsIamnotashamedatall–some
peopleareashamedaboutit,feelunpleasantorfeelatdisease–tosaythat
oneoftheforemostobjectivesoftheforeignpolicyoftheincumbent
governmentissimplytopromotetheeconomicinterestsoftheNetherlands.
Itisneededtodoso.Wehavetheworld’s16thlargesteconomy,the7thlargest
financialsector,andthe3rdlargestexporterofagriculturalgoods.Idonot
knowwhetherJanPeterBalkenendetalkedaboutitthismorning,butheis
nowatErnst&Young’s,sohislatestglobalisationindexputstheNetherlands
onthe8thplacefortrade,capitalflows,exchangeoftechnology,labour
mobility,andculturalintegration.So,wehavesomethingtodefend,butto
defendsomethingintheworldwearelivingintodayyouneedtobe
offensive,too.Youcannotworkfromadefensivestance.
Westartfromastrongpositionbutcompetitionisfierce.Weshouldrealise
thatinwhatwearedoingandinwhatwearenotdoing.Wehavetobe
selective;wehavetouseourstrength,ourenergy,ourtime,ourattention,
andmoneyinaselectiveway.Wehavetoworkourwaytotheextentthatwe
reallygiveaddedvaluetowhatweareplanninganddoing.Idonottellyou
anysecret–andyouhavealreadydiscussedthis–thattheWestisindebt
whilstothers,likeChina,areholdingthereserves.Ourgrowthratesare
laggingbehindthoseofothercountries,mostnotablyinAsia.ThisweekIwas
inTurkeyanditsgrowthfiguresareformidable.Theyaretheworld’slargest
producersofTVscreens,ofbuses;theyhavethemarketforconstruction,
forbuildingmaterialsandinalargepartoftheregiontheyareactually
monopolists.So,wehavetodosomethingaboutitandwehaveto
understandnewnotonlygeo-politicalbutalso‘geo-economic’realities.
TheyareunfoldingandeconomicdominancemovesinanEastwarddirection.
Wecannotavoidthatobservation.
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Power shifts in a changing world order
Thequestionisnotwhetherwehavetoengageinternationallyandtobe
outwardbound;itisnotamatteroffencingourselvesin.Notatall;thatwould
beveryshort-sighted.Itisnotamatterofwhetherweengageinternationally
butofhowwedoitinordertomaximisetheresultswecanachieve.
Inthatsense,whenwearetalkingaboutengagingintheinternationalarena,
wehavetoworkwithothers.Therearenoprincipalreasonstochooseone
partnershipoveranother.Iwouldsaytotheconnoisseur:therewego.Weare
takingapragmaticapproach,workingwithwhatworksbest.Wewantto
investconstructivelyinpartnershipsthroughouttheworldthathelpuspursue
ourinterestsinthemosteffectiveway.Wecandothatstrategically,tailoring
ouralliancestoourinterestsandvalues.Wewilldosobothbilaterallyand
multilaterally.Andthereindeedwego!
WeareofcourseinvestingintheEuropeanUnion.TheScientificCouncilfor
GovernmentPolicyisrightinitselftoconcludethatEuropeanintegration
andcooperationhavebeenofparamountinterestandimportancetothe
Netherlandswhenitconcernsprosperityandstability.TheDutchgovernment
continuestobeacriticalandatthesametimeveryconstructivememberstate
oftheEuropeanUnion,ifonlybecauseitdirectlyservesourinterests.Three
quartersofourexportgoestoEUMemberStatesandwestandtogainifwe
canfurtherimprovethecommonmarket.Whenitisforinstanceaboutthe
liberalisationoftheservices’sectorwewanttogoforwardandcarryitthrough,
aswasdiscussedashortwhileagobetweenPrimeMinisterMarkRutteand
hisBritishcounterpartDavidCameron.Weareacriticalandconstructive
memberstateoftheEuropeanUnionbecauseitdirectlyservesourinterests.
Wearenotdogmaticbutwedocherishconditionality;whenwesetcriteriafor
enteringtheEUthesecriteriashouldbefollowed,pursued,andrealised.
WithregardtotheEuropeanCommonForeignandSecurityPolicyitmakes
senseforusasasimplematterofscale–letmesaythatexplicitly–tosay
that27countieshavegreaterimpactthananyofthosecountriescan.This
CommonandForeignSecurityPolicyisalsoamatterofefficiency.Weshould
notduplicateinourforeignpolicywhattheEUcandowell.Therearealotof
comments–thisweekforinstance–aboutthestancetheEUtakeswith
regardtoEgypt.Yesterday,inParliament,thePrimeMinister,andtheState
SecretaryforEuropeanAffairsandDevelopmentCooperationandmyselfhada
debatewiththeSecondChamberaboutthestanceonthepartofEuropewith
regardtotheEgyptiansituation.Thereweremanycomplaintsaboutthefact
thattheBigThree,theAdHocFive,andinawaysomeotheradhoccoalition
wereissuingstatementsonthesituationoverthere.Ontopofthatornextto
ittheHighRepresentativeoftheEU,CathyAston,wasalsopresentwith
statements.TheCouncilofMinistersofForeignAffairsalsocameoutwitha
124
statementlastMonday.Whenyoulookatthesestatementsyouseetheyare
similar.Therewasanotherthingthatweshouldreflectupon,whichwas
discussedinParliamentyesterday.Parliamentacceptedit;thesimplefactthat
wearenowoneyearafterLisbonandthatwehavetogetusedtothenew
arrangementsandthatwehaveaHighRepresentativeforourforeignpolicy.
Itisamatterofgettingusedtoit.
Iamnotpessimisticaboutit.ButletmeaddtothestoryabouttheEUasa
wholethatwedonotlimitourselvestoaperspectiveontheEUatlarge.That
wouldbeshort-sighted.WithintheEUtheDutchgovernmentwillseekout
coalitionsthatcanhelpmovethingsinthedirectionwewant,forinstancethe
Benelux.ItlookssmallbutitcandosomethingontheEuropeanend.When
youlookatthesmallercountriesintheEUitcanhelpforinstance,aswetry
todevelop,tohaveregularmeetingswithyourBalticpartners,theVisegrad
Group,ortheNordiccountriesaswearenowplanningtodo.Smallcanbe
beautifulandmid-sizeplussmallcanbebigsize.OutsidetheEUweseekto
participateinbodiesliketheIMF,theWorldBank,andtheG20;bodiesthat
caninfluenceandstrengthenglobaleconomicgovernance,somethingthat
directlyaffectsus.ThatistheEUstance.Butthatisnotenoughanditisnot
theonlythingthatisonthetable.
Transatlanticcooperationremainsequallyimportant.Itisthesecondanchor
ofDutchforeignpolicy.IthasbeenandwillbeacornerstoneofDutchforeign
policy.ItalkabouttheUSandtotheCanadianAmbassador,andIsay
‘Canada,too’.IsayitquiteemphaticallyandyouknowthatImeanit.Ifyou
wouldconsiderthistobeacommonplace–Transatlanticcooperation
remainingequallyimportant–letmesaythatIamstillreadingmybooksand
myliterature;justpickupthelatestForeignAffairsofDecember2010andyou
willbeconvinced.Idonotneedtoaddanythingtothat.
Let’slookatacoupleofexamplesorlet’slimitourselvestoone;let’stakethe
Egyptiansituation.ThereyouseehowimportantAmericanendeavoursindeed
areuptilltoday.WhenyoureadthedeclarationoftheEuropeanCouncil,
whichhasjustbeenissued,youseewhatwecanactuallydo.Whenthe
Americanstakeaposition,wetakeasimilarpositionandwejoin,thenwe
canreallyactuponit.Let’sfaceit,theUSisstillthedominantforcein
theworld,andwearewelladvisedtocontinueworkingcloselywithinthe
Americans,withinNATOaswellasbilaterally,andthroughtheEU.Togive
anotherexample:whenwetalkabouttheMiddleEastpeaceprogressitis
mystrongconvictionthatwhentheNetherlandsortheEUassuchtakes
initiativestheseinitiativeshouldbeconducivetotheUSendeavoursinthe
MiddleEast.Ihavesaidsooverandoveragain.
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Power shifts in a changing world order
ItisnotonlyamatterofEUandtheTransatlanticAlliance.TheDutch
governmentisalsolookingcarefullyintoourbilateralrelationswiththe
emergingcountries,withthesewonderfulacronymsthataresodifficult
topronounce.Oneispronounceable:BRICS,whichisincludingSouthAfrica.
Butthenewone,theMIKT–Mexico,Indonesia,Korea,andTurkey–isalittle
moredifficult.Buttheyarepowerful.
ThereisalsotheNextEleven,whicharedevelopingattremendouspace.
Thatisthesourceofpartofourfutureprosperity.Wheninthesecountries
governmentsplayamajorroletheDutchgovernmentshouldofcourseputin
itseconomicdiplomacyasafrontrunnerofourforeignpolicy.Asafactof
presentlife–atleasttome–wearebusy,reorientingthenetworkofDutch
embassiesandconsulatesandevenmoreoftheDutchstructuralarrangements
intheinternationalarena.Itisimportanttounderstandthatwearegoingto
faceashiftofresourcesinourforeignpolicy,reflecting–Itakethetitleofthe
seminarseriously–thepowershiftsthataretakingplaceintheworld.Amore
dynamickindofdiplomacyisneededtoserveDutchinterestsinthisquickly
shiftingworld.ItishelpingtoserveDutchinterestsbetter.WhenIamtalking
about‘Dutchinterests’Idonotonlymeaninterestinthenarrow,commercial
sense,althoughtheseareimportantofcourse.Iamalsoreferringheretoour
strategiclong-terminterests.Thereeconomicsjoins,associateswithsecurity
andstability.Tradeandbusinesscanonlyprosperinastableinternational
environment.LookatthelossessufferednowbyHeineken,Unilever,and
AkzoNobel,nowthatunresthasforcedthemtoshutdowntheirproductionin
Egyptforaconsiderabletime.
Economicdiplomacymeansalsomorethanmerelypromotingtradeand
investment.Itisalsoabouttakingintoaccountourgeopoliticalinterestsand
ensuringtheflowofstrategicgoods,energysources,rawmaterials,and
specialcategoryrawmetals,thethingsweneedtokeepoureconomygoing,
tosustainourselves.Wehavereallytodosomethingaboutit.Itisimportant
thattheEU,theEuropeanCommission,presentedarevisionofitsraw
materialsinitiativetwodaysago.Thatisimportant.IfIlookatthissideofthe
medalweareperhapslaggingalittlebitbehindothercountriesintakingthis
‘geo-economic’andgeo-strategicinterestseriously.Wehavetounderstand
strategicgoods,energyresources,rawmaterialsandrareearthmetalsarepart
ofthescarcityoftoday.
Ladiesandgentlemen!Ourforeignpolicyfortheyearstocomeisbuiltupon
threepillars:stability,security,andsafety;one,second,andnowpushed
forwardbytheDutchgovernmenteconomicinterests,economicgrowth,taking
ourshareoftheinternationaleconomicscene.Thesetwojoininmanyways,
asIsaidjustacoupleofminutesagowhentalkingaboutstrategicgoods,
energyconsiderations,rawmaterials.
126
ThethirdpillarofDutchforeignpolicyisofcourseeverythinggoingwith
humanrights.Thesehumanrightsarealsopartofthestory.Threepillarsare
notseparatefromeachother;theyareinterlinked.Stabilityintheworldneeds
theprotectionofhumanrights.Aflourishingeconomyshouldintheend,
atthelongertermbebasedonfollowingtheneedsforadecentlifeofthe
peopleintheworld.Whatourforeignpolicyisinanutshell,isgraspingglobal
opportunitiestoenhanceDutchsecurityandDutchprosperity.Inarapidly
changingworldwehavetobeverykeenontheshiftsofpowerintheyearsto
come.Withregardtotheeconomicsidewehavetounderstandwehaveto
lookEastboundwithregardtosafetyandsecurity,andaWestbound-
orientationwillbetheretostay.
Mr.Chairman:Thankyouverymuchforthisstateoftheforeignpolicyofthe
Netherlands!
Itistimeforsomeconclusionsandremarks.IamgladthatJaapdeZwaanis
preparedtomaketheclosingremarksforthemeetingoftoday.
Frits Korthals Altes
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Power shifts in a changing world order
Address by Mr. De Zwaan, Director of the Netherlands Institute of International Relations Clingendael
Thankyou,Mr.Chairman.Althoughnotbeingpresentduringourtoday’s
discussionstheMinisterhintedatquiteanumberofissuesthatinfactwere
subjectofourdebates.Mr.Minister,inyouraddressyoufocusedspecifically
onDutchforeignpolicy.Well,IlearnedfromAgeBakkerwithregardto
ourGDPthattheNetherlandsisonthe16thposition,withregardtotrade
relationsonthe6thposition,withregardtoforeigninvestmentstheDutchare
worldwideonthe5thranking,thefinancialsectoronthe7thposition,and
developmentaidonthe6thposition.So,wearesupposedtoreallybea
globalpoweronourown,sotosay.
However,Iwanttoaddanotherdimension.Inourdiscussionswehavepaid
quitealotofattentiontothesubtitleofthisconference,thatistherelationship
betweenourmembershipoftheEUandtheNetherlandsasasovereigncountry.
Inthemorningsessionwehaveenjoyedfourwonderfulinterventions,presented
fromtheUSperspective,theChineseperspective,theEUperspectiveandfrom
aDutchperspective,fromourformerPrimeMinister.Allofthemhintedatthe
roleoftheEuropeanUnionintheworldwidedebate.Whenitcomestopower
shiftsinthechangingworldorderwe,ofcourse,primarilyfocusatthefinancial
andeconomiccrisis,environmentalpolicy,thescarcityissue,food,water,energy,
andsoforthbutalsoforeignpolicyanddefence.Infact,Kupchan,certainly
ElmarBrokandalsoJanPeterBalkenendemadetheargumentthattheEuropean
Unionhastoactandhastoexpressitselfwithasinglevoiceexternally.
Totheoneextent,obviouslyitistruethattheNetherlandsonitsown,hasa
lotofcompetencesandcapacitywithregardtoforeigninvestments.Indeed,
itisstriking;whenyoutravelaroundinEuropeandespeciallyintheEastern
part–thenewmemberstatesoftheEU–youwillnoticethattheNetherlands
iseithernumberoneoratleastinthetopthreeofforeigninvestors.
Thatbeingsaid,weshouldgivemoreattentiontotheroleoftheEuropean
Unionwhenitcomestooursubstantiveinterests;thisistruewithregardto
thelevelofourprosperitybutalsoastoquestionshowtheworldisgoingto
copewithissueslikeclimatechange,environment,energy,combatofterrorism
andforeignpolicy:moreparticularlytheimpactEuropemighthaveatthe
worldscenewithregardtodecisionmakingregardingthesesubjectmatters.
IntheafternoonIwaspresentinthesessionontheglobaleconomic(im)
balances,whichfocusedontheIMF,theglobalgovernancesystemwithregard
tofinancing,aswellastheDutchandEuropeanpositioninthatsystemof
governance.TheotherfocuswasontheroleoftheEuropeanUnion,because
128
oftheexistenceoftheEMU,andweobviouslynotedthattoday–the
discussionsinBrussels–anewprocessofTreatyamendmentwithregardto
thestrengtheningoftheEMU-systemwithregardtosurveillancehasstarted.
Iwasnotpresentintheothersessionbutapparentlyalotofattentionwas
dedicatedtothequestionwhatweunderstandbyscarcity.Hereapparently
alsothewindowofopportunityfortheEuropeanUnionwasdiscussedin
whichcontextreferencewasmadetotheCopenhagenconference,wherethe
EUwasnotabletoputitspositionthroughbutatleastwasabletopresenta
commonpositioninavitalsubjectmatterrelatedtothesubjectmatterofour
today’sconference.
Intoday’sdiscussionwehavededicatedattentiontotheglobalgovernance
system.FromAgeBakkerwelearnedmoreparticularlyabouttheintended
reformsinthecontextoftheIMF.WethensteppeddowntotheEUleveland
perhapswecantakeafewofourfindingsoftodayonboardforthepreparation
ofanextseminar.TheLisbonTreatyhasindeedprovidedtheEuropeanUnion
withresponsibilities,nottosaycompetences,inquiteanumberofpolicy
domainsthatwehavehintedattoday.Environmenthasalreadybeenatypical
EuropeanUnioncompetenceforquiteawhile.Butenergyhasonlyrecently
–LisbonTreaty-beenaddedtothelistofcompetence,ashasclimatechange.
Itleavesuswithforeignpolicyanddefence.Asyourightlysaid,Mr.Rosenthal,
itwasnotthesingleEUvoicewhoexpresseditselfontheproblemofEgypt
andNorthernAfrica.IthinkBundeskanzlerMerkelwentfirst,thenPresident
SarkozyoftheFrenchRepublic,andcertainlyalsoMr.Cameron.Wedidnot
hearanythingspecialfromBaronessAshton.Ipersonallythink–and,again,
that’swhatwemighttakeupasasubjectmatterforanextconference–that
foreignpolicyisavitaltopicfortheroleEuropecanplayontheworldscene.
WhenwediscusstheissueoftheEUasaglobalplayerwediscussofcourse
thenewpersonalities,thePresidentoftheEuropeanCouncilandtheHigh
Representative.However,thequestioniswhetherLisbonhascreatedsuitable
modalitiesinordertoallowustoreallydevelopthiscommonpolicy,which
mayleadtoasituationinwhichEuropereallycanhaveanimpactonthe
discussionworldwide.Thatisperhapssomethingwhatwecantakeupfora
futureversionofthewonderfulconferencethatwasorganisedtodaybyfour
wonderfulentities.Thankyou!
Mr.Chairman:AttheendofthismeetingIwouldliketothankthespeakers
oftoday.ProfessorZhang,revealedthetremendoushistorical,governmental,
andculturalforcesandeventheculinaryattractionsofthesuperpowerChina.
ProfessorKupchanwarnedusforthechangesintheUSinternalandforeign
policy.HemadeusawareofourownEuropeanresponsibility.ElmarBrok,
MemberoftheEuropeanParliament,gavehisEuropeanvision.Iwouldalso
liketothankourformerPrimeMinisterJanPeterBalkenende,whosharedhis
experiencesasaEuropeanleaderwithus.
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Power shifts in a changing world order
Ithankthosewhoactedthisafternoon:AgeBakkerandCarloTrojan,Bernice
LeeandFreddeGraaf,andalsothechairmenofthisafternoon,JanRoodand
AndréKnottnerus.
IthanktheMinisterofForeignAffairsforhisspeechandJaapdeZwaanfor
hisfinalremarks.
Ofcourse,thepreparationofthisconferencehasrequiredsomeorganisational
work.IthinkthatIcansaythatthefourorganisinginstitutions–theSenate,the
ScientificCouncilforGovernmentPolicy,theAdvisoryCouncilonInternational
Affairs,andtheNetherlandsInstituteofInternationalRelationsClingendael–
haveworkedtogetherveryharmoniouslyinbringingthisconferencetogether.
Idaresaythatthishasproventobeaveryeffectivepartnership,apartnership
formedbythePresidentoftheSenate,RenévanderLinden.Hetookthe
initiative.Wecanbeverygratefultohimforhisinitiative,forhisideatoorganise
thisconference,toinvitespeakersfromabroad,andforthesubjectofthepower
shiftsinachangingworldorder.Thankyou,René!Hedeservesapplause!
OnbehalfofthesteeringgroupIwouldliketothankthoseofourstaffwho
havecontributedtomakingthisconferenceasuccess.Iwouldliketocallone
representativeofeachofthefourpartners.Thesefourpeoplehadparticularly
activerolesandwiththemwethankalltheircolleaguesinvolved.Fromthe
SenatethisisEvaBuitenkamp,fromtheScientificCouncilforGovernment
PolicyitisGeraArts,fromtheAdvisoryCouncilonInternationalAffairsthisis
TiemoOostenbrink,andfromClingendaelJohannesKester.Thankyouverymuch!
Isaidthattheteapartywasaveryshortone.Now,Ihavethehonourtoinvite
youfordrinks,downstairsandforalongertime.Ihopeyouwillbebackin
futureinthismeetinghallasguestsofthethenPresidentoftheSenate.
Thankyouverymuch,René!
René van der Linden
Jaap de Zwaan
Geert Jan Hamilton
Jan Rood
130
W.vanAcker ModelEuropeanParliament
W.AsbeekBrusse ScientificCouncilforGovernmentPolicy
M.vanAsselt ScientificCouncilforGovernmentPolicy
D.J.vanBaar JournalistHP/DeTijd
A.Bakker ExecutiveDirectorattheInternationalMonetaryFund
J.P.Balkenende ProfessorinGovernance,Institutionsand
Internationalisation/ErasmusUniversity
F.D.deBeaufort TeldersFoundation
M.L.Bemelmans-Videc DutchSenate
M.G.Bos SocialandEconomicCouncil
M.Bos-Karczewska JournalistPolonia.nl
B.R.Bot Meines&PartnersConsultancy
E.D.Bötger UniversityofAmsterdam
A.Boxhoorn NetherlandsAtlanticAssociation
H.G.Braafhart AdvisoryCouncilonInternationalAffairs
L.denBreems MinistryofForeignAffairs
T.vandenBrink UtrechtUniversity
L.J.Brinkhorst LeidenUniversity
A.Broekers-Knol DutchSenate
E.Brok MemberoftheEuropeanParliament
A.Bronswijk TheHaguemunicipality
B.M.vanBruggen UniversityofAmsterdam
R.deBruijn ChamberofCommerce
R.R.CanoBlazquez DNB
S.W.L.Couwenberg CivisMundiFoundation
L.E.vanDalm RooseveltAcademy
F.D’Havé CounselorBelgianEmbassy
W.F.vanEekelen EuropeanIntegrationCommitteeoftheAIV
F.Evens FlemishForeignAffairsCouncil
A.FlanaganWhalen CanadianEmbassy
M.S.Gatta RepresentationEuropeanCommissionintheNetherlands
W.J.M.vanGenugten VicechairmanAdvisoryCouncilonInternationalAffairs
P.J.M.deGoede ScientificCouncilforGovernmentPolicy
L.Y.Gonçalves-HoKangYou AdvisoryCouncilonInternationalAffairs
M.A.Goudswaard JournalistofHetFinancieeleDagblad
Participants
131
Power shifts in a changing world order
F.deGraaf ChairmanForeignAffairsCommitteeoftheDutchSenate
C.J.Gradenwitz DutchSenate
A.L.J.Grotenhuis JournalistofBinnenhofTV
R.B.M.Grotenhuis Cordaid
B.terHaar MinistryofInfrastructureandtheEnvironment
J.T.A.vanHaaster HouseofRepresentatives
M.A.Hajer NetherlandsEnvironmentalAssessmentAgency
G.J.A.Hamilton DutchSenate
C.Hegeman JournalistofVPRO
G.vanHeteren DutchEuropeanMovement
R.E.vanderHoeven InstituteofSocialStudies
J.W.Holtslag ScientificCouncilforGovernmentPolicy
C.Homan ClingendaelInstitute
L.V.M.Kistemaker TheHagueInstituteforInternationalisationofLaw
Y.Kleistra UtrechtUniversity
M.H.Klem ScientificCouncilforGovernmentPolicy
J.E.Knotters UniversityofGroningen
A.Knottnerus ChairmanoftheScientificCouncilforGovernmentPolicy
H.E.Koopman LeidenUniversity
A.R.Korteweg TheHagueCentreforStrategicStudies
F.KorthalsAltes ChairmanoftheAdvisoryCouncilonInternationalAffairs
P.Kraan MinistryofForeignAffairs
C.J.Kraaijveld TheArgumentationFactory
M.Kranenburg JournalistofNRCHandelsblad
E.Kuipers NetherlandsGovernmentInformationServices(RVD)
C.Kupchan ProfessorofInternationalAffairsGeorgetownUniversity
M.Lak MinistryofForeignAffairs
J.Lambert CanadianEmbassy
B.Lee ChathamHouse
P.R.H.M.vanderLinden PresidentoftheDutchSenate
A.J.G.Manders NetherlandsEnvironmentalAssessmentAgency
J.Melissen ClingendaelInstitute
E.Molier MinistryofForeignAffairs
E.A.M.Nazarski AmnestyInternational
E.R.Nolan USEmbassy
132
D.E.vanNorren DevelopmentCooperationCommitteeoftheAIV
M.Okano-Heijmans ClingendaelInstitute
H.J.Ormel HouseofRepresentatives
L.Ornstein JournalistofVPRO
A.Passenier MinistryofInfrastructureandtheEnvironment
P.C.Plooij-vanGorsel AdvisoryCouncilonInternationalAffairs
W.Post TheHaguemunicipality
A.Postma MinistryofFinance
A.E.M.Prins LeidenUniversity
W.L.E.Quaedvlieg ConfederationofNetherlandsIndustryandEmployers
J.G.M.Rademaker TheHagueCentreforStrategicStudies
W.K.S.C.Ramsoekh MinistryofForeignAffairs
M.Rem ScientificCouncilforGovernmentPolicy
J.Rood ClingendaelInstitute
U.Rosenthal DutchMinisterofForeignAffairs
P.G.C.vanSchie TeldersFoundation
G.J.C.Schlaghecke JournalistofHetFinancieeleDagblad
H.G.Schokker HouseofRepresentatives
J.A.Schout ClingendaelInstitute
M.L.L.Segers UtrechtUniversity
J.G.Siccama MinistryofDefence
B.J.vanSminia-Meijerink ModelEuropeanParliamenttheNetherlands
A.vanStaden AdvisoryCouncilonInternationalAffairs
R.Swartbol MinistryofForeignAffairs
H.W.Swarttouw MinistryofForeignAffairs
C.G.Trojan AdvisoryCouncilonInternationalAffairs
S.T.P.Trompert GroningenUniversity
L.vanTroost AmnestyInternational
B.M.tenTusscher MinistryofForeignAffairs
A.D.Uilenreef EuropeanIntegrationCommitteeoftheAIV
M.L.M.Urlings AdvisoryCouncilonInternationalAffairs
R.J.vanderVeen MinistryofForeignAffairs
I.L.vanVeldhuizen MinistryofForeignAffairs
J.J.C.Voorhoeve AdvisoryCouncilonInternationalAffairs
K.G.deVries DutchSenate
133
Power shifts in a changing world order
M.W.M.Waanders PeaceandSecurityCommitteeoftheAIV
N.G.Wegter FormermemberEuropeanParliament
J.L.Werner MinistryofForeignAffairs
A.M.C.Wester HumanRightsCommitteeoftheAIV
D.P.B.Wijnants UniversityofAmsterdam
F.IJ.Wolf MaastrichtUniversity
P.S.Wolvekamp BothEnds
J.Wouters FlemishForeignAffairsCouncil
W.Zhang GenevaSchoolofDiplomacyandInternationalRelations
J.W.deZwaan ClingendaelInstitute
Organisation:
G.A.T.M.Arts ScientificCouncilforGovernmentPolicy
R.Bakker WeenaReport
E.L.Buitenkamp DutchSenate
Q.J.Genee AdvisoryCouncilonInternationalAffairs
R.Kamphof DutchSenate
J.Kester ClingendaelInstitute
T.D.J.Oostenbrink AdvisoryCouncilonInternationalAffairs
J.I.Petter DutchSenate
R.Riedeman MinistryofForeignAffairs
H.Westhof WeenaReport
L.Wittkowski DutchSenate
D.Zevulun AdvisoryCouncilonInternationalAffairs
134
TheNetherlandsisattachedtotheworld.Fewothercountriesareasclosely
interwovenpolitically,economicallyandsociallywiththeworldaroundus.
ThatmakesDutchforeignpolicyastrategicaffair.TheDutchgovernmenthas
todeliveranalertresponsetotherisksandopportunitiesofarapidly
changingworld.Today’sworldcanbestbedescribedashybridinnature.
Ontheonehandthereisthefamiliarworldofgeopoliticsandnation-states.
Thatworldiscurrentlygoingthroughashiftinthebalanceofpowertowards
theEast.Ontheotherhandthereisthe‘networkworld’,populatednotonly
bystates,butincreasinglyalsobynon-stateactors.Stateborderspresent
virtuallynoobstacletothesenetworks.Seenfromthisperspective,itisno
longerpossibletospeakoftheforeignpolicyofthestate;itismorecorrect
tothinkintermsofmanydifferentexpressionsofforeignpolicywithina
‘disaggregatedstate’.Increasingly,ministriesandagencieshavetheirown
objectivesininternationalaffairsandparticipateautonomouslyin
internationalnetworks,especiallyinaEuropeancontext.Asaconsequence,
thetraditionaldistinctionbetween‘domestic’and‘foreign’isbecoming
increasinglyblurred.
MostpeopleintheNetherlandsexperiencethisdifferently.Tothem,theDutch
stateremainstheprimaryactorinrelationswiththeoutsideworld.Atthe
sametimetheyareunsurewhatpositiontheNetherlandsoccupiesintoday’s
world.Familiarreferencepointsaredisappearingandglobalpowerrelations
areshiftingfasterthanmostpeoplecouldeverhaveimagined,partlyasa
resultofthefinancialcrisis.Thereisagrowingtensionbetweenthisfeeling
ofbeingthreatenedbytheoutsideworldandtheneedtonurturethe
relationshipwiththatsameworld.Domestictensions,fadingdividinglines
between‘domestic’and‘foreign’andtheopportunitiesandriskspresentedby
ahybridworldcreateaneedforastudyofthechangingconditionsofforeign
policyandofthepossibilitiesandlimitationstheseconditionsoffer.This
reportaimstocontributetoaneworientationtowardstheoutsideworld.It
focusesonthequestionofhowtheNetherlandscandevelopaforeignpolicy
strategythatreflectsboththeshiftsintheglobalpowerbalanceandthe
radicallyalterednatureofinternationalrelations.Ouranswertothisquestion
isthatforeignpolicyneedstoberethought.Weunderpinthisbyexamining
SummaryAttached to the World: On the Anchoring and Strategy of Dutch Foreign Policy Scientific Council for Government Policy (2010)
135
Power shifts in a changing world order
firsthowtheNetherlandscandevelopitsownstrategicforeignpolicy,then
byexplaininghowthispolicycouldbeembeddedinEuropeasthedominant
policyarena,andlastlybypointingouthowsuchastrategicforeignpolicy
couldbeputintopractice.
From fragmentation to strategyTheagendaoftopicsinDutchforeignpolicyhaschangedfundamentally.
Nationalpolicythemeshavebecomeglobalissues,theinternationalagenda
hasexpandedconsiderablyandthefixedorderofpolicythemeshas
disappeared.Inaddition,differentpolicyareashavebecomeinterconnected
andarenolongeraddressedexclusivelyintheinterstatearena(geopolitics),
butalsoinintra-stateandnon-statearenas(networkworld).
TheNetherlandshastraditionallyaspiredtoplayanactiveinternationalrole.
Thegovernment’sresponsetotheturbulentexpansionoftheforeignpolicy
agendaisinlinewiththisaspiration:doingasmuchaspossiblewithasmany
partnersaspossible.AsillustratedbythetraditionalnotionoftheNetherlands
asa‘modelcountry’orbyrecentDutchcontributionstointernationalpeace
missions,Dutchforeignpolicyisstillfirmlygroundedinadeep-seatedneed
toplayarobustroleintheinternationalarena.Thishasproducedaforeign
policythatcouldbelikenedtoadoughnut:abroadspectrumofaspirations,
pointsofviewandactivities,withoutacomprehensivevisionconnectingthe
variouscomponentsandallowingprioritiesandposterioritiestobedetermined.
Strategicforeignpolicyshouldgobeyondthesebroadintentionsthattypify
currentDutchforeignpolicy.Thismeanschoosing,settingprioritiesand
seekingareasinwhichtheNetherlandscanmakeadifference.Thefirststep
towardsachievingthisistobeawareofandacknowledgethatweliveina
hybridworld.OnlywhentheDutchgovernmentrealizesthatitscurrentforeign
policyisinsufficientlygearedtothisrealitycanastrategicforeignpolicybe
formulated.Thesecondstepinvolvesmakingchoicesandsettingpriorities
acrossDutchforeignpolicyasawhole.Theactualchoicesmadearepolitical
innature,butatransparentdeliberationframeworkwouldfacilitatethe
decision-makingprocessandincreasetheaccountabilityofthosechoices–
especiallyintheprevailingsituationoffinancialausterityandcutbacks.
Moreover,aprerequisiteofaconsistentpolicyisthattheDutcharestillable
torecognizethemselvesintheircountry’sforeignpolicy.
Our deliberation framework is based on three questions:1. WhatisimportantfortheNetherlands?
2. Wheredotheinterestsofotheractorslieandwhataretheydoingto
achievethem?
136
3. WherecantheNetherlandsmakeadifference?Basedontheanswersto
thesequestions,foreignpolicycanbedividedintothreecomponents.
Inthefirstplace,foreignpolicyaimstodefendthevitalintereststhatare
irrevocablylinkedtothesurvivaloftheNetherlands,itspeopleandits
territory.Becausethesevitalinterestsareessential,thereisnoneedto
setpriorities.Thisdoesnotapplytothesecondcomponentofforeign
policy,defendingnon-vitalinterests.Thepracticalrealityofcomplex
interdependenceininternationalrelationsgivesrisetoasearchforwhat
thisreportcallsextendednationalinterests,i.e.morespecificareaswhere
Dutchinterestsandglobalissuescoincide.Thatmeanssearchingforpolicy
areasattheinterfaceofglobalissuesandnationalinterests.Thethirdand
finalcomponentofforeignpolicyconsistsof‘niches’:specificareasof
policywheretheNetherlandswishestomakeitspresencefeltinthe
longerterm.Developingthesenichesishighlyrelevant,asthemarketplace
ofinternationalrelationshasbecomefartoocrowdedfortheNetherlands
tohaveapresenceeverywhere.
Europe as a dominant arenaCooperationwithothercountriesandorganizationshasbeenthecornerstone
oftheDutchgovernment’sforeignpolicyformanydecades.Forthe
Netherlands,theEUisthepredominantarenaforthatcooperation.Ifthe
Netherlandswishestoachieveitsforeignpolicygoals,itmustexertinfluence
inthisarenaandexcelhere.Withthisinmind,itishelpfultoapproachthe
EUfromtwocomplementaryperspectives.Ontheonehand,itcanbeseenas
apoliticalarenainwhichlawsandregulationsaredevelopedthatapplytoall
memberstates.Ontheotherhand,theEUisasteppingstonetotheworld,
akindofpowerblocthataimstoexertitsinfluencetodefendfundamental
Europeanvaluesandinterests.AnyoneconsideringtheEUasthedominant
arenawillseeitastheappropriatechannelfortheNetherlandstopursueits
vitalandextendednationalinterests.Themosteffectivestrategyisto
translateDutchinterestsintoEuropeanlegislationorpolicy.Thepressureto
actasonehasincreasedwiththeinstitutionalizationoftheEuropeanCouncil.
Forasuccessfulmemberstatethisoffersopportunitiestoconnectandto
advanceitsreputation.Europeanlegislationandregulationarecreated
throughtheinteractionbetweenEuropeaninstitutionsandvariousstateand
non-stateactors.ThisprocessoffersaperfectopportunitytomakeDutch
policyproductive,offeringinterestingpossibilitiestoinfluenceEuropean
policies.AcceptingEuropeasthecentralpoliticalarenaandasthestepping
stonetointernationalissuescallsforstrategy,makingchoices,planningan
approachandmobilizingnetworks.ThisinturnrequirestheDutchgovernment
todevelopintoanenablingstate,i.e.agovernmentthatenablesotherparties
toconductactivitiesthatareinboththeirowninterestsandthoseofthe
Netherlands.
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Power shifts in a changing world order
Atthesametimethereisacertainbuilt-intensionwithintheEuropean
constructbetweencollectiveaspirationsandjointactionontheonehandand
theneedforindividualityinthememberstatesontheother.Bilateralpolicy-
makingandseekingtoinfluenceopinionsinothermemberstatestherefore
continuetobeimportantinstrumentsthatcanbeusedinparalleltoefforts
attheEuropeanlevel.TheNetherlandscanalsoplayaconstructiverolein
definingtheEuropeanagendaincoalitionswithandwithininfluential
neighbouringmemberstates.Inthisrespectthemostproductiveapproachis
toallowourselvestobeguidedbythefollowingquestions:whatkindof
Europedowewanttolivein,anddowewanttouseourinfluencewhere
possibletohelpshapeit?
Directing and facilitatingAhybridworld,theEU,theproliferationofnon-stateactorsontheinternational
stageandtheimplementationofasuccessfulnichepolicydemandnewways
ofworking.Manyattemptstorestructureor‘decompartmentalize’foreign
policyhavebeenmadebefore.Anewwayofworkingdoesnothowever
requirereorganizationornewlabels.Itisaboveallanewapproach,anew
attitudethatformsanintegralpartoftheambitiontopursueamore
strategicforeignpolicy.Threeelementsrequirefurtherelaborationhere:
interdepartmentaldivisionoflabour;betteruseofexistinginstruments;
andswitchingbetweenstateandnon-statearenas.
Foreignpolicyisnolongerlimitedtoasingleministry.Allministrieshavetheir
owninternationalpoliciesforthoseareasinwhichtheypossessexpertiseand
substantivecompetence.EspeciallywithintheEUitisnowpossibletospeak
of‘Dutchforeignpolicy’toonlyaverylimiteddegree.Inordertooperate
effectivelyinthispredominantarena,itisinmostmemberstatesthecentre
ofthenationalgovernment,embodiedbythepresidentortheprimeminister,
whichcontrolsEuropeanpolicy.Morethaneverbefore,Europehasbecome
ChefsachesincetheentryintoforceoftheLisbonTreaty.Itishowevera
sensitivemattertorefertothisdirectly,despiteitnowbecomingarealityin
theDutchpractice.Yetthetitle‘MinisterofGeneralandEuropeanAffairs’
wouldmoreaccuratelyexpresstheinterconnectednatureofnationaland
Europeanpolicy,aswellasthepersonalresponsibilityoftheprimeminister
forEurope.
Inadditiontothisministry,theMinistryofForeignAffairscontinuestoplayan
importantroleinforeignpolicy;nolongerasacoordinator,butaboveallasa
lineministryresponsibleforthemessuchastheDutchcontributiontothenew
EUCouncilofForeignAffairs,theintegratedstrategicdirectionofourexternal
security(i.e.thecomprehensiveapproachanditscomponentsofdiplomacy,
defenceanddevelopmentcooperation)andissuesrelatingtothemultilateral
architecture.
138
Tomakestrategicchoicesvisibleandengenderstrategicdebatesin
parliament,weneedinstrumentsthatarenolongergroundedintheobsolete
logicofministries.First,weproposetransferringoverallforeignpolicystrategy
fromtheMinistryofForeignAffairstotheCabinet.Second,strategicchoices
andthecorrespondingbudgetsshouldbesetforeachgovernmenttermof
office,withtheCabinettakingadecisioneachyearaboutthespecific
activitiestobeundertakenineachbudgetyear.Thiswouldofferauseful
startingpointforadebatewithparliamentaboutchoicesandpriorities.
ImplementingDutchforeignpolicystrategicallybeyondthenationalborders
alsorequirescloserscrutinyofthebroadnetworkofDutchembassiesand
consulates.ChangesintheintensityandstructureoftheDutchpresence
abroadshouldreflectstrategicchoices,notautomaticreflexes.Alternatives
thatcouldbeconsideredincludenewformsofrepresentationabroad,
cooperationwithothercountriestorepresentDutchinterestslocally,andthe
deploymentofofficialsfromotherlineministries.Inaddition,knowledge
managementshouldbemadeapriorityatalllevelsofpolicy,toensurethat
institutionallearningisnotonlyaresponsibility,butisalsopartofthe
organizationalculture.AnalogoustotheDiplopediaintheus,thosewho
implementforeignpolicyshouldstoretheirknowledge,experienceand
lessonslearnedingovernment-widedatabases.
Lastly,inadditiontoastate-basedfocus,ministers,statesecretariesand
officialsneedtoadoptanapproachthatlinksuptothenetworksociety
populatednotonlybystateactors,butalsobynon-stateactors.Cooperation
withngo’s,transnationalcorporationsandsub-stateactorscallsforawayof
workingthatisnolongerbasedondirecting,butonfacilitatingand
connecting.WithasharpeyeforDutchinterestsbeyonditsterritorialand
immaterialborders,theDutchgovernmentshouldconnectactorsand
networksandfacilitatetheexchangeofgoodsandideasinsuchawaythat
thisbenefitstheNetherlandsanditspeople.Todoso,theNetherlandsshould
beatthecentreofrelevantnetworks:themoreprominentitspositioninthe
network(alargenumberofcontacts,theappreciationofotheractors),the
greateritscapacitytoacquireknowledgeandservicesfromotheractors,to
regulatethetransmissionofinformationandproductswithinthenetwork,and
todetermineagendasandframedebates.Insummary,thisreportisapleafor
theDutchgovernmenttoadoptamorecriticalapproachtoitsstrategicand
substantivechoices,tostriveforexcellencewithintheEuropeanarenaandto
becomeafacilitatingpartnerintheworldofnon-governmentalactors.
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Power shifts in a changing world order
Position paperPower shifts in a changing world orderThe role of the European Union and the position of the Netherlands
Jan Rood, Head of Strategic Research at Clingendael Institute
Power shifts Theworldoftodayissaidtobewitnesstotwoimportantglobalpowershifts.
Thefirstpowershiftistheemergence(orreturn)ofAsiaintheinternational
arena.BasedontheirimpressiveeconomicgrowththeAsiancountries,
inparticularChinaandIndia,areliftingthemselvesontotheworldstage
–economically,politicallyandmilitarily.Intheirslipstreamcountriesfrom
otherpartsoftheworld–i.e.Brazil,Russia,SouthAfrica,Indonesia,Turkey–
emerge,therebyliterallyshiftingtheglobalbalanceofpower.Thisshiftis
enhancedbyanincreasingdemandfortheworld’snaturalresources,which
strengthenstheinfluenceofresource-richcountries.Withtherisingeconomic
powerofthesecountriescomesastrongercallformoreinfluenceinthe
globalpoliticalarena.TogetherwiththeslowergrowthofWesterneconomies,
this‘riseoftherest’isleadinginparticulartoanincreasingpressuretoadjust
thecurrentinternationalfinancialandeconomicarchitecturetothisnew
realityofinternationalrelations;anarchitecturewhichisstillsaidtofavourits
traditional(Western)members.
Thesecondchallengeisnotashiftofpowerupwardsorsideways,butinstead
adiffusionofpower.Adiffusionawayfromthemainstageandtraditional
players,inparticularnation-states,towardsarisingnumberofinfluential
non-stateactorsandnewtheatresofpowerandinfluence.Asaresultof
globalisationandtechnologicaldevelopments,theinstantcommunication
acrosstheglobeinour,so-called,‘networkworld’enablesagreatvarietyof
non-stateactorstopursuetheirowninterestsandactionsacrossborders.
Thisisnotonlythecaseformultinationalcompaniesbutrefersalsoto
tourists,journalists,pressuregroups,celebrities,policymakers–actually
everybodywithaSIM.Asaconsequence,internationalpublicopinionhas
becomeafactorinitsownrightininternationalpolitics.Whenlocalproblems
canmakeglobalheadlinesinamatterofminutes,one’simageisasimportant
asone’smaterialpower.
140
Thisdualshifthighlightsachangingworldorderwitharelativedeclineofthe
influenceofWesterncountriesandreinforcestheurgencyforathorough
debateontheroleandpositionoftheEuropeanUnionandtheNetherlands
withinthisnewworldorder.
A changing world orderOntheirown,thesepowershiftsarealreadyamajorchallengetothe
internationalsystem.Togethertheybringaboutaconsiderabletransformation
oftheinternationalorder,leavingstateandnon-stateactorswiththechallenge
tofindnewwaystoliveandworktogetherwithintheinternationalarena.
Whilethetwoshiftsaregenerallyacknowledged,theoutcomeofthe
transformationisstilluncertain.Mostdiscussionstendtoremainabstractand
revolvearoundthelikelyeffectsofanemergingmultipolarsystem,oftenviewed
incombinationwithanetworkworld,whereinpowerislesshierarchically
orderedandinwhichanincreasingnumberofactorswantstotakepart.
Inthisglobalsystemnotonlythenumberofactorsisgrowing,butthe
internationalagendaisalsoturningintoanincreasinglycomplexblendof
cross-borderingthemes;e.g.climatechange,financialregulation,pandemics,
etc.Asaresult,theoncepopulardistinctionsininternationalrelations
betweenhigh(e.g.defence)andlow(e.g.environment)politicsaswellas
betweenthenationalandinternationaldomainarefadingaway.Atthesame
time,theissuesnowdominatingtheinternationalagendaunderlinetheneed
forinternationalcooperation.Globalproblemsrequireglobalsolutions.Yet,
thetraditionalmultilateralinstitutionsforglobalgovernance,e.g.theUnited
NationsortheWorldBank,mainlyfoundedshortlyaftertheSecondWorld
War,areunderpressureandseemunabletotacklethese21stcenturychallenges.
Thedebateontheimpactoftheseglobalpowershiftsandoftheemerging
internationalagendahasalreadystartedintheNetherlands.Studieshave
beenpublishedontheneedtorevisethestrategicorientationofDutch
foreignpolicy(WRR2010);onthepotentialeconomicimpacton,andthe
opportunitiesofglobalisationfortheDutcheconomy(SEC2008);andonthe
issueofresourcescarcityanditsimplicationsfortheNetherlandsandtheEU
(ScarcityandTransition2009).Itistime,however,tocombinethesedifferent
aspectsforathoroughdebateontheroleandpositionoftheEUandthe
Netherlandsagainstthebackgroundofachanginginternationalsystem.
Twothemesstandoutinthiscontext:theglobaleconomic(im)balancesand
thescarcityofresources.Togetherthesethemesclearlyshowthecomplexity
andscopeoftheshiftsmentionedandtheneedforinternationalcooperation,
whichmakethemanexcellentstarting-pointforadiscussionaboutthe
effectsofthechangingworldorderontheEUandtheNetherlands.
141
Power shifts in a changing world order
Global economic (im)balancesThefirstthemeconcernstheshiftingeconomicbalanceandtheneedfora
revisionofthefinancialandeconomicarchitecture.Thisbecomesvisiblewhen
onetakesacloserlookatthe,ontheonehand,massivereservesofChina
andtheoilandgasproducingcountries,amassede.g.inSovereignWealth
Funds,andthedebtoftheUSandthefinancialpositionofseveralEU
memberstates,ontheother.Dealingwiththeglobaleconomicbalanceisa
complicatedaffair,notonlybecausedifferentcountrieshavedifferentinterests
andareaffecteddifferently,butalsobecausecountriesarenolonger–ifthey
everwere–theonlyactorsinthissector.Theroleofprivateandstate-owned
(investment)banks,hedgefunds,etc.duringthefinancialcrisisisexemplary
forthecomplexityoftheinternationalfinancialsystemoftoday.
Althoughthereseemstobeagreementontheneedtorevisetheinternational
financialandeconomicarchitecture,thereislessconsensusastowhat
specificchangesshouldbebroughtabout.Notonlythedifferinginterestsand
thegrowingroleof(independent)non-stateactorsareamatterofconcernin
thisregard.TherealsoappearstobeashiftawayfromtheWesternliberal
faithinfreemarketstowardsnewsuccessfulformsofstate-induced
capitalismasfavourede.g.byChinaandRussia.Whereasinafreemarket
thegovernmenthaslimitedcontrolovertheinvestmentdecisionsofits
companies,agovernmentfollowingstatecapitalismtakesamoredirect
interestinthefutureofitseconomy.Henceanimportantissueiswhatthe
effectoftheshiftofpower,andinparticulartheriseofstatecapitalism,will
beontheworldeconomicorder,characterisedasithasbeenforthepast
decadesbyliberalisationandglobalisation.Willthesenewpowersadjust,
integrateorchangetherulesofthegame?
AgainstthisbackgroundtheriseoftheG20asanewsemi-institutionalforum
forglobalconsultationandcoordinationismuchdebated,bothintermsof
itsmembershipandwithregardtoitslegitimacy,effectivenessandimpacton
well-establishedinstitutions,suchastheIMFandWorldBank.Questionsare
alsoposedastotheroleoftheEUinthisnewlyemerginginternational
financialandeconomicsystem.WilltheEUlooseoutintheglobaleconomic
rivalrybetweentheUSandChina?Willitbemarginalisedasaresultofa
deepeningcrisisconcerningtheEuro,itsageingpopulationandthecostsof
maintainingthewelfarestate,letaloneitsinabilitytoreachquickand
decisivedecisions?Orwillitbeabletodealwiththesechallenges,strengthen
itscompetitivenessandclaimaleadingroleontheinternationalscene?
142
Security and scarcity of resourcesThesecondthemeconcernsthepotentialsecurityimplicationsofthescarcity
ofnaturalresources.Besidesfearsforaphysicaldepletionofthesefinite
resources,themaincauseforconcernregardinga‘struggle’fornatural
resourcesrelatestoalackofaccessto,andavailabilityofthesebasic
components,whichareessentialforeveryadvancedanddevelopingeconomy.
Duetotheirimportance,theseresourcesandtheissueofscarcityforman
integralpartoftheoverallpoliticalandeconomicrelationsbetweencountries.
Infact,onedoesnotneedtobeastaunchobservertoseethatthisthemeis
notonlydeeplyentrenchedinthewidergeopoliticalrelations,butalso
containsaneconomic,environmentalandsecuritydimension.Theeconomic
dimensionisevidentinthemarketwherethecommoditiesareboughtand
sold,mostnoticeableintimesofhighpricefluctuationswithitseffectson
economicgrowthandstability.Theenvironmentaldimensionofresource
scarcitycanbeseeninthecallforadecreaseintheecologicalfootprintwhen
usingtheseresources.Withanincreasingworldpopulation,andthusan
increasingdemandforthesescarceresources,thisdimensionisgaining
criticalimportance.
And,lastly,thereisthesecuritydimensionofscarcity,astheseresourcesare
seenascriticalfortheeconomicwellbeingofacountry;aconsideration
whichmayseemtojustifytheacquisitionoftheseresourcesbyanymeans
necessary.Whiletheterm‘astruggleforresources’ismainlyused
metaphorically–scarceresourceshaveneveractedasacausefor,butonlyas
amultiplierbehind(armed)conflict–itissaidthatatpresenttheworldis
witnesstoariseof‘resourcenationalism’.Increasinglyresource-richcountries
feelwrongedandinsufficientlycompensatedandaretemptedtoimpose
tariffsandotherrestrictionsontheexportoftheirenergyandminerals;hence
thenationalisationofresources.Whilethistensionbetweenresource-richand
resource-poorcountriesis‘easily’solvedbyopeningupmarkets,itso
happensthatthistrendisaggravatedbythetwodifferentperspectivesonthe
organizationofasuccessfuleconomy.TheWesternfreemarketcompaniesfind
themselvesmoreandmoredealingandincompetitionwithstatesthatfavour
astate-ledeconomicapproach.Itisamatterofdebatewhetherornotthese
statesaremoresuccessfulinprocuringthenecessaryfundsand/orresources
togeneratelong-termeconomicgrowthasopposedtothosestatesfavouring
afree-marketapproach.Fornow,itseemstheydo.
Thiscomplexity,furtherincreasedbythefactthatthedifferentnatural
resources,suchasfood,water,oil,phosphateorrareearthmetals,are
intimatelylinkedwithoneanother,makesithardtocomeupwith‘easy’fixes.
Inessencethesolutionseemsclear:moreresourceefficiencyandatransition
towardsamoresustainableeconomy.Yet,thisagainrequiresinternational
Power shifts in a changing world order
143
cooperation.Andwhileallcountriesdoagreetosomeextentonwhatthe
world’sproblemsare,theirviewsonhowtosolvetheseproblemsremainvery
divergent.Forexample,whichorganisationshouldtaketheleadinthis
discussion?TheUN,theWTO,theFAOoraneworganisation?Onwhichscale
shouldthesediscussionsandsolutionstakeplace:local,regional,global?And
whatrolewilltheresource-poorEuropeanUnionplay?Willitbecomeavictim
ofaglobal‘struggle’forresources?Orwillitleadthewayinthetransitionto
amoresustainableworld?Andifso,howwillthistransitionrelatetothe
economicpositionandcompetitivenessoftheEUandtheNetherlandsinthe
meantime?
The NetherlandsAsforothercountries,thepositionandroleoftheNetherlandswithinthis
changingworldorderisboundtochange.With70%ofitsearningscoming
frominternationaltransactions(inparticulartradeandtransfer),the
Netherlandsishighlydependentonastableandopeninternationalsystem.
Asithappens,thesamefactorsthatmarktheshiftsintheinternational
balanceofpowerandthetransitiontoamorediffusedandcomplex
internationalsystem,bothintermsofactorsandissues,arealsodecreasing
thetraditionalcapacitiesoftheNetherlandstoinfluencetheinternational
systeminaccordancewithitsowninterests.Thisbecomesevenmoreobvious
whenchangeswithintheNetherlandsitselfaretakenintoaccount:i.e.its
decreasingfinancialresourcestosupportanactiveinternationalpolicyand
theshiftinDutchsocietytowardsamorerestrainedandinward-looking
internationalpolicyorientation.
Atthesametime,thenetworkworldoffersmultipleopportunities,intermsof
instantcommunication,informationsharingandthelegitimacyandknowledge
ofnon-stateactors.EspeciallyforacountryliketheNetherlands,withitslong
historyofactiveinternationalparticipationonalmosteverythemeimaginable
andinalmosteveryorganisationpossible,thecurrentdevelopmentsmight
notbeasthreateningasissometimesassumed.Thatsaid,thesefactorswill
haveconsequencesforthewayinwhichtheNetherlandsanditscitizensand
companiesactintheinternationalarenaandtrytopromotetheirinterests.In
otherwords,whatoptionsdoestheNetherlandshavetopursueitsinterests
intherapidlychanginginternationalsystemoftoday?
144
Literature:• ScarcityandTransitionprojectgroup(2009)Scarcity and Transition:
Research questions for future policy(jointprojectbytheministriesof
ForeignAffairsandHousing,SpatialPlanningandtheEnvironment).
Availableonline:
http://international.vrom.nl/Docs/internationaal/Scarcity_and_transition.pdf
(11-01-11).
• SocialandEconomicCouncil(2008)On Sustainable Globalisation:
A world to be won,TheHague:SER.Availableonline:
http://www.ser.nl/en/Publications/Publications/2008/2008_06.aspx
(11-01-11).
• WetenschappelijkeRaadvoorhetRegeringsbeleid(2010)Aan het buitenland
gehecht: over verankering en strategie van Nederlands buitenlandbeleid,
rapportenvoorderegeringnr.85,Amsterdam:AmsterdamUniversityPress.
Englishsummaryavailable,Englishtranslationforthcoming.See:
http://www.wrr.nl/content.jsp?objectid=5547
(11-01-11).
Footnotes
1 This speech is based on a paper that will be published by the Pardee Centre in a collection entitled Governance for Green Economy, (forthcoming, 2011) as part of the preparation for the Rio Plus 20 process.
2 Lee, B. 2009. Managing the Interlocking climate and resource challenges. International Affairs, 85(6): 1101–1116.
3 Stockholm International Water Institute, International Food Policy Research Institute, World Conservation Union and International Water Management Institute. 2005. Let It Reign: The New Water Paradigm for Global Food Security, Final Report to the Commission on Sustainable Development meeting (CSD-13). Stockholm: Stockholm International Water Institute.
4 Taylor, M. 2008. Economic growth puts global resources under pressure. World Finance, 23 May.
5 Hightower, M. and S. A. Pierce. 2008. The energy challenge. Nature 452: 285–6
6 Hightower, M. and S. A. Pierce. 2008. The energy challenge. Nature 452: 285–6
7 Organisation for Economic Co-operation and Development (OECD). 2010. Perspectives on Global Development 2010: Shifting Wealth, Executive Summary, p. 23
8 Lloyds and Chatham House. 2010. Sustainable Energy Security: Strategic Risks and Opportunities for Businesses, Lloyd’s 360 Report.
9 Lloyds and Chatham House. 2010.
10 National intelligence assessment on the national security implications of global climate change to 2030’, testimony by Dr Fingar to US Congress, 25 June 2008; Center for International Earth Science Information Network, Columbia University. 2008. Press release, ‘Climate change may challenge national security, classified report warns.’ New York, 26 June.
11 Taylor, R. 2009. Climate change threatens Pacific, Arctic conflicts. Reuters, 6 January. See also Borgerson, S.G. 2008. Arctic meltdown. Foreign Affairs, 87(2): 63–77
12 Lloyds and Chatham House. 2010.
13 China has imposed export restriction on Neodymium (Nd), Europium (Eu), Cerium (Ce) and Lathanum (La) to 35,000 tons per year, and to completely stop the export of Thulium (Tm), Terbium (Tb), Dysprosium (Dy), Yttrium (Y) and Lutetium (Lu). See Smith, M. 2010: Written Testimony, Mark A. Smith, Chief Executive Officer, Molycorp Minerals, LLC House Science and Technology Committee, Subcommittee on Investigations and Oversight ‘Rare Earth Minerals and 21st Century Industry’, 16 March.
14 Tabuchi, H. 2010. Japan Recycles Minerals From Used Electronics. The New York Times, 4 October.
15 HSBC Global Research. 2010. Sizing the Low Carbon Economy, September.
Colophon
This is a publication of the Dutch Senate, the Scientific Council for Government Policy (WRR), the Advisory Council on International Affairs (AIV) and the Netherlands Institute of International Relations Clingendael.
Address:P.O. Box 200172500 EA The Hague
Photography: Hans Kouwenhoven
Design: Corps, The Hague
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Conference Power shifts in a changing world order
The role of the European Union and the position of the Netherlands
The Hague, 4 February 2011