Michael J Multi Polar FINAL

8/8/2019 Michael J Multi Polar FINAL

http://slidepdf.com/reader/full/michael-j-multi-polar-final 1/15

1

The Rise of theMulti-polar world

International Assignment

Done by : Michiel Jonker

Banner ID: 000630159

University of Greenwich



2 | P a g e

The world has recognized the need for multiple hubs of economic power and that

may be a reason why the multi-polar world has become a reality in the present

globalized world. The North and South, East and West are now turning to a fast

evolving multi-polar world that will bring more stability and balance to the world¶s

economy. Developed and developing countries such as Russia, China, India,

France, the EU and the United Arab Emirates realized the imbalance of the world¶s

economy and called for multiple financial centres, reserve currencies and ultimately

a lower dependence on the US Dollar.

Charles Krauthammer (1990) in an article ³The Uni -polar Moment,´ in which the

neoconservative columnist hailed the post-Soviet era as one in which the United

States alone would reign supreme, declared that uni-polarity has reached the end of

the road and multi-polarity will come in the near future.

The uni-polar world will be something of the past and a multi -polar one will be the

future where countries form alliances with each other to solve global issues such as

climate change, energy transition and management of rare natural resources and

security threats that faces the world. These global issues will be solved easier as

multi-laterism improves effectiveness and efficiency when countries co-ordinate

economic, foreign or defence policies in the international community.

Globalization is a strong driver for the multi-polar world as it can be seen as theinteraction and integration among the people, companies and governm ents of

different nations. Multi -polar is the sharing of world super powers to solve global

issues and to secure the world¶s economy. Globalization and multi -polarism walks

hand in hand and both these concepts are process driven by international trade and

investment aided by information technology.

Multinational organizations are finding themselves operating in a world where

economic power and possibilities are increasingly diffused across geographic

borders, especially to emerging markets. Information technology is becoming more

affordable, available and multinational organizations realizes that IT makes the world

smaller and flatter and trade between countries are becoming easier and more cost

effective through the internet. There is currently 1, 6 billi on internet users and the

internet has a growing rate of 18% per year ( One billion internet users 2009). The

internet instantly link suppliers with billions of customers all around the world.



3 | P a g e

The President of the United States (the dominating uni -polar country) Barack Obama

says that ³the country he inherits will no longer be able to call the shots alone, as its

power over an increasingly Multi-polar world begins to wane´ (2025: The End of US

dominance 2008).

The world will have to develop a multi-polar world where powers are balanced as

emerging markets will only become bigger and have a greater impact on global

growth. China is a developing country with an economy estimated at $7.199 trillion

and a population of 1, 2 billion people there is the possibility they would want more

power in the world being the biggest exporter in the world accounting for 10 % of

world exports (China to be top world exporter 2009).

India is a South Asian country that is the seventh largest in area and has the second

largest population in the world. The land covers an area of 3,287,240 square km and

the population stands at 1,2 billion. India¶s economy is one of the fastest growing

economies and is the 12 th largest economy in terms of the market exchange rate at

$1,242 billion. In terms of purchasing power the Indian economy ranks the fourth

largest in the world (Indian Economy Overview 2009). India¶s major concern is

poverty as well as the disparity of income. The country¶s growth rate has averaged

around 7% since 1997 and India was able to keep its economy growing at a healthy

rate even during the 2007-2009 recession, managing a 5.355% rate in 2009 ( India

GDP Growth). The biggest boom to the economy has come as being a recipient of

adopting outsourced functions from developed countries. Its English speaking

population has been instrumental in making India a preferred destination for

information technology products as well as business process outsourcing (Indian

Economy Overview 2009).

Brazil is a large and well-developed agricultural, mining, manufacturing, and service

sector. Brazil's economy outweighs that of all other South American countries and it

is expanding its presence in world markets (An Economy Overview 2009). Brazil¶spopulation is estimated at 196 million people and is rated at number 5 in the world in

population size (Largest Countries 2009). Brazil has a free market and export-

oriented economy and is currently the ninth largest economy in the world and the

largest in Latin America. The city of São Paulo is also the financial centre of South

America.



4 | P a g e

In the multi-polar world Brazil, Russia, India and China (BRIC) will play a major role

and have an impact on global growth and the world¶s economy. In the coming

decade the most important factor of BRIC will be the rise in their middle -class.

During last decade the number of people with incomes greater than $6000 and less

than $30 000 has grown by the hundreds of millions and this number is expected to

rise even further in the following 10 years ( I s this the BR I C¶s decade 2010). These

developing countries account for 15% of the world¶s economy, 40% of the world¶s

population and 42% of the world¶s curren cy. The Economist states that ³if the BRICs

were to set aside one-sixth of their reserves, they could create a fund the size of the

IMF´ (The Trillion Dollar club 2010). BRICs have the potential and ability to form their

own alliances between each other as all four of them are in a position to supply raw

material. China has been aware the time has arrived to build their economy even

further and this could ultimately lead them to become a world power. China wants to

be part of the multi-polar world as they have the second largest economy in the

world and a population almost four times the size of the United States.

China and Russia agreed to expand the use of the Rouble and Yuan in bilateral

trade to lesson dependence on the US dollar after they took part in the summits of

the BRIC countries. Russia is the world¶s biggest energy supplier and endeavours to

start selling oil to China in Roubles. At the BRIC summit, Deputy Prime Minister Igor

Sechin who is also the chairman of Russia¶s biggest oil company OAO Ro sneft said³energy sales in Roubles are a strategic issue for Russia and oil exports to China

over the next 20 years will surpass $100 billion´.

BRIC agreed to push for more clout in global financial institutions during their summit

in the city of Yekaterinburg. China and Russia have called for a more diversified

financial system to give emerging economies a bigger say in those affairs, including

the creation of alternatives to the US dollar as a reserve currency. The whole world

including BRIC wants a lower dependence on the US dollar, this will bring more

financial stability as powers would be shared and re-balanced cutting out one single

dominating power.

A multi-polar world will be of benefit to all as it will bring financial stability by

counteracting a possible collapse of the dollar and counter act a downward spiral

with a domino effect of the rest of the world and drag everybody in wake of this



5 | P a g e

devastating economic tsunami. The previous economic crisis that affected the world

was not caused by developing countries; however, they can play a crucial role for the

solution and the future of the world¶s economy. The future of the world will look

different in the years to come and unreasonable demands will not be initiated only by

the US but there will be participation and sharing by countries around the world.

World Bank President Robert Zoellick says ³giving developing countries more say in

the world affairs isn¶t a courtesy, it¶s a necessity as countries like China and India

increasingly provide the engine for global growth´ (W orld Bank President : Multi-polar

W orld Requires Co-operation 2010).

The world does not want to eliminate the US as a super power because they took

the initiative after the 2nd World War and provided guidance to correct the balance s

of many economies. Conservative thinkers accept that a multi-polar world is

emerging but the ultimate leader will be the USA. The uni -polar world has taken the

last curtain call for the US and they will have to adapt to a multi -polar world whereby

they will be a minor leader in a newly architecture theatre where they share power

with the new economic actors. The whole world would have to co -operate while there

will only be a few super powers that provides financial systems, reserve currencies

and international trade currencies which will re-balance the world¶s scales of

progress. In the present globalize world no single nation can become dominant and

drag the other players down to share in their misery. The world will become more

stable in a multi-polar world and ³war for survival´ will become extinct because

countries will work together to solve global issues. A multi -polar world will be more

balanced which will ultimately lead to global economic stability. The key issues that

that call for collective action in the present world will have to be dealt with and

countries all around the world would have to work together to solve these global

issues. The world governments must work together in solving global issues as one or

two super powers will not be able to solve it alone. The major issues that face the

world are climate change, trade and finance, energy transition, management of rare

natural resources (water and commodities) and security threats.

The world leaders came together in Copenhagen to discuss climate global issues

and to find ways to deal and solve the underlying causes. Climate change is a major

concern that faces the world in the 21 st century. Leaders and super powers looked at



6 | P a g e

how they could transform modes of transport, energy, food, shelter and other basic

needs for the population of this planet (Global collective action is the key to solving

climate change 2010).

According to the World Bank the Economics of Adaptation to Climate Change(EACC) study estimates that it will cost $75 - $100 billion each year to adapt to

climate change from 2010 to 2050. The world carbon emissions report state d China

is the largest producer of carbon emissions with an astonishing 21.5 % of the globe¶s

total, the US is at 20.2 % not far behind China, The European Union at 13.8 % and

Russia and India under 6% of the globe¶s total.

China sees climate-change diplomacy as a way of boosting its soft power and as

part of its bilateral relationship with the US. China does not want to break with the

rest of the developing world¶s climate issues, co -ordination with other emerging

polluters helps it so success on all these fronts (The Trillion Dollar club 2010). These

carbon emission results show that the dominating countries in the world are the

biggest producers of carbon dioxide emissions. The so called BRIC countries

accounts for almost 30% of the globe¶s emissions outputs, these developing

countries would have to work together to lower their carbon dioxide outputs. The

BRIC summit should start looking at climate change and not only trade agreements.

Global climate will be unlike any other international agreement and the world needs

a radical transformation, climate change is not just another agreement that can be

achieved with lobbying or mass mobilisation. The world generally needs to be shown

that the transition to a low-carbon economy can really happen and world super

powers, politicians, leaders and every individual needs to understand climate change

and the transformation needed to turn the world¶s environment into a green

environment.

Transformation from dominant to sharing emerged again after the 2 nd World War

when international trade was restored after the devastation of Europe and Japan by

the µwar lords¶. Various measured were introduced to regulate and encourage fair

trade between all the producing countries. Trade and finance agreements started

with the General Agreement on Tariff s and Trade (GATT). GATT created prosperous

multi-polar trading systems from the uni-polar system that emerged from World War

II. A result of international free trade globalization came to the fore and encouraged



7 | P a g e

trading different commodities. Some countries have rich coal and iron deposits, oil

supplies where other countries have gold and, platinum reserves and natural gas.

These countries need to participate in an international trade equation to acquire

those commodities that are absent from their landscapes. International trade is

important for the development of poor countries and being integration into the global

economy. Rich governments promote these ideals and this has led them to develop

an array of new trade agreements such as the Free Trade Ar ea of the Americas and

Central America Free Trade agreement. These bilateral, multilateral and regional

agreements strongly affect people at all levels of the economy.

The early decades of the GATT could be seen as the age of US enlightened self -

interest in which the US deployed, inter alia, generous development aid in tandem

with extensive liberalization of trade barriers protecting the US market to help rebuild

the war-torn economies of Western Europe and thus provide a stable economic base

for democratic governance and reliable buffer against Soviet expansionism (Schott

2009:2). The (GATT) was dominated by the US and today there is a new world trade

order called the World Trade Organization (WTO) in which developing countries

began to play a more important role, especially in the current Doha Round of

multilateral trade negotiations. The (WTO) is the only global international

organization dealing with the rules of trade between nations. At its heart are the

WTO agreements, negotiated and signed by the bulk of the world¶s trading nationsand ratified in their parliaments. The goal is to assist producers of goods and

services, exporters, and importers conduct their business (W hat is the W TO 2008).

Regional Trade Agreements (RTA¶s) can be seen as an economic trade agreement

to reduce tariffs and restrictions on trade between two or more nations within a

certain region. A total of 300 RTAs have been reported to the World Trade

Organization. Examples of RTAs are the North American Free Trade Agreement

(NAFTA), European Free Trade Association (EFTA) and Association of Southeast

Asian Nations (ASEAN).

The purpose of these trade agreements was to allow fair exchange of commodities

and products and the exchange of services between the two countries. The

agreements will enhance the effectiveness of the countries conducting business with

each other. Developed countries maintain protections of their own exports while



8 | P a g e

competitors in poor countries agree to open their markets. This leads to a ³race to

the bottom´ in which the only priority is cost effective production at the expense of

workers, resources and sustainability. The trading system of the 21 st century must be

re-engineered. The World Trade Organization would have to co-operate more

effectively with other international economic organizations. The biggest challenge

would be working with the International Monetary Fund (IMF) and the World Bank on

interrelated trade, finance, exchange rates and development issues.

In the multi-polar world countries will work together to solve global issues and these

countries can co-operate with the WTO, IMF and the World Bank to re -structure the

international trade agreements and include developing countries as they will p lay a

bigger role in the years to come. These global organization need to understand the

importance of developing countries as they provide economic global growth.

Developing countries such as China, Brazil, India and Russia (BRIC) are rich in

natural resources and with the rapid growing population of the world the demand for

commodities are becoming bigger and natural resources such as water and oil are

under threats. The world¶s population is expected to grow at 1.3 % each year and

demand will become bigger and being able to supply the world with commodities will

become harder because there is only a limited amount of natural resources. The

world needs oil and the biggest concern is, how long will oil last in the years to come.

The latest measurements confirm that the world¶s oil and natural gas supplies are

running out to fast. At some time between 2010 and 2020 the world¶s supply of oil

and gas will fall below the level required to meet international demand. Britain in the

last few years moved away from being a net exporter to a net importer of energy. Oil

and gas are needed for transport such as cars, trucks, ships, aircrafts and electrical

power. Dr James McKenzie, senior member of the climate change programme at

the World Resources Institute in Washington says that ³in the years to come, wars

will be fought over oil and fuel as the oil -dependant super powers struggle to vein to

preserve our unsuitable way of life. We are entering a period of great change and

there will be difficult times ahead´ (Wor ld¶s oil will run out in 10 years 2009)

The world will have to look at other sources of energy before it is too late a major

problem is that oil companies will not allow it. The oil in the Far East brings wealth

and power to those who control it. The wealt h and power coming from the countries



9 | P a g e

controlling the oil supplies is accompanied by corruption. Governments should not

think of the short term wealth these oil companies provide but rather how they would

be able to create alternative sources of energy and ultimately turning the world¶s

environment into a green and safe environment. As demand for resources increases

within the present turbulent global markets, supply chain vulnerability is becoming a

significant issue. Global sourcing has formed more complex and increasingly risky

supply chains. Severe energy security has serious implications for social,

environmental and economic well-being

In the multi-polar world the biggest concern is that the dominating super power the

US and the second in line China fo rms a G2. When these two dominant powers form

alliances with each other they would be able to dominate the world to the advantage

of the rest as they have the biggest population and the strongest economies in the

world. China and the US already buy commodities from developing countries all

around the world to produce and manufacture their own products and then sell the

final products back to the developing countries. China is also seen as a developing

country but with their buying power they are able to bu y the commodities and

manufacture their own products and then sell the final products back to the country

of origin.

According to a study commissioned in 2000 by the National Intelligence Council, the

US expects by 2015 to be in a position to take advantage of at least 25% of the

petroleum coming from Africa (Graziani 2009). The search for and control of sources

of energy in Africa corresponds to two needs according to priorities by Washington

and by petroleum groups. The US is aware of the need for oil and with their

exploration expertise they will find oil in Africa and export it back to Africa, leaving

the poor developing countries in an even worse state. The countries with the

commodities ultimately pay a high price for the final products they usually do not

have the technology or infrastructure for manufacturing (Graziani 2009). The multi -

polar world should encourage poor and developing countries to mine and

manufacture their own commodities to create wealth for their own countries. The two

dominating super powers saw the need to invest in Africa and buy their commodities

as Africa are not developed but rich in natural resources. Africa needs to understand

the importance of policies and agreements and implement agreements that will

protect their natural resources. Governments in African countries should strategise



10 | P a g e

how they can create a better country for their citizens and not how they can enrich

their own pockets by accepting bribes. The only way Africa can be protected against

super powers taking advantage of their natural resources is by implementing policies

and restrictions that would only allow foreign companies to invest in this continent by

using the local labour, factories and infrastructure.

In the present globalized world it is no longer possible to solve international issues

without developing countries buying into the proposal. BRIC has become too

profound to be excluded in the world¶s economy as they play a major role.

Copenhagen revealed how complicated it will be to share mutual benefits and

responsibilities between developed and developing countries. The world has come to

a stage where they understand and realize the importance of countries sharing

power and the exclusion of one dominating power. The world has become flat

through globalization and trade between any country, company or individual can be

as easy as working through the internet which connects a manager with billions of

suppliers and in turn billions of customers.

Globalization which made the world flat, also made the world more vulnerable to

terrorism and global warming. The Al Qaeda uses the shrinking of the globe together

with internet and other technology to plan attacks all around the world. Secrecy has

been eliminated from the vocabulary and enabled Al Qaeda to browse US military

bases and plan attacks by sitting in the Far East in front of a computer. Globalization

poses an increase in terrorism because it is becoming easier for terrorist groups to

plan and complete attacks all around the world.

Alongside all the global issues such as climate change, economic and political power

around the globe has been shifted and new economic and political world actors has

created a multi-polar balance of powers that has been embraced by developing

countries (BRIC).

The multi-polar world will bring many challenges to the entire world countries will

have to work together in solving terrorism. The world together will achieve more than

one or two super powers operating on their own and making profound decisions that

in many instances have caused the death of millions of innocent citizens. Multi -polar

will bring about in the future many changes where developing countries will become

bigger and more powerful; developed countries need to understand the importance



11 | P a g e

in including these emerging economies. The BRIC countries must become part of

the world and not placed in a position where they are against the dominating power

of the US. The globe is faced with enormous global issues that will only be solved by

co-operation between countries.

In the multi-polar world where powers will be balanced and shared trade currencies

will also be shared. The dominating trade currency the US dollar will not be the only

one, the euro and the Yen can be seen as viable options. The euro is the second

largest reserve currency as well as the second most traded currency in the world

after the US dollar. In 1998 Cuba announced that it would replace the US dollar with

the euro as its official currency for the purposes of international trade. On the 1 st of

December 2002 North Korea did the same and in 2006 Syria announced they will

use the euro as their international trade currency.

As of October 2009, with more than ¼790 billion in circulation, the euro is the

currency with the highest combined value of banknotes and c oins in circulation in the

world, having surpassed the U.S. dollar . The euro can be seen as a viable option for

international trade amongst countries. The eur o can be part of the multi-polar

trading currencies that will definitely bring more stability in the world¶s economy.

With China¶s strong economy the Yuan could certainly become a trade currency. In

the Canton Fair in south China¶s Guangdong province buyers and sellers are nolonger restricted to use the US dollar to settle their deals. The state Council gave the

green light to five major trade cities such as Shanghai, Guangzhou, Shenzhen,

Zhuhai and Dongguan to use the Yuan as an option to settle intern ational trade

deals (Yuan edges into place as international trade currency 2009). China has also

been arranging currency swaps with trading partners to bypass the US dollar in trade

settlements. Since mid-December 2009 the Chinese mainland has signed currency

swap contracts worth 650 billion Yuan with central banks in Hong Kong, the Republic

of Korea, Malaysia, Belarus, Indonesia and Argentina (Yuan edges into place asinternational trade currency 2009). These swaps China allows other overseas central

banks to sell Yuan to local importers who want to buy Chinese goods. China

believes that these swaps will benefit manufacturers and traders at home and

abroad by reducing their exposure to exchange-rate volatility.



12 | P a g e

There are many countries who want to change at least some of their reserve

holdings from US dollars to Euros or any other alternatives but they know if they sell

a significant share of their dollar reserves it would weaken the dollar¶s value. When

the dollar weakens it would probably hurt their own trade competitiveness and push

down the value of their remaining dollar res erves. An example would be China who

holds $2 trillion in dollar assets and reserve currencies accumulated through years of

exports to America. When the dollar weakens China¶s economy would take a big hit

and they will lose millions of dollars. When the d ollar weakens by 30% it¶s estimated

that China will lose $450 billion or 10% of its economy.

The world is still highly dependant on the US dollar as countries around the world

trade in dollar and they also have big reserve currencies in the form of dolla rs. The

present situation calls for collective actions at world level were all the leaders in the

world should work together in order to ensure a prosperous future for the world as

whole.

The uni-polar world is something of the past and one single dominat ing power will

have to share and re-balance powers with other emerging powers. If peace, security

and a measure of prosperity are the aims of a world order then a uni -polar world can

be effective. If the dominating rulers are only concerned with their own self-interest

then such a world order is inherently unstable and unjust.

The United States of America, China and the European Union will have to work

together in a multi-polar world. Global governance and multilateralism will enable

world super powers and other countries to work together to solve global issues and

ultimately create a better future for the world. Many countries around the world are in

favour of a multi-polar system because they understand the un-balanced world

where one single power dominates the rest of the world. The multi-polar world has

been embraced by Russia, China, Brazil, India and the United Arab Emirates, all

these countries play a big part of the growth of the global economy and it is time toinclude these countries in global challenges and decisions.

Global governance and multilateralism will be strengthened by multi -polarism

because there will not be one single dominating power but there will be a balance of

powers in the world. Countries will share thoughts, visions, strategi es, agreements

and policies before final decisions are made, this will give different perspectives on



13 | P a g e

global subjects at world conferences like the G20. The G20 is a start for global

governance, multilateralism and ultimately mutli -polarism because all countries are

part of the world and they should be and are able to give their input on decisions and

actions. A mult-ipolar world will bring more stability to this planet and it is time for all

the players on the stage to work together and create a more sustainable

environment.



14 | P a g e

Reference List:

The End of US dominance 2008

http://www.guardian.co.uk/world/2008/nov/20/barack -obama-president-intelligence-

agency, [accessed on 15/06/2010]

China to be top world exporter (2009). http://www.china.org.cn/business/2010-03/30/content_19716344.htm, [accessed on 15/06/2010]

I s this the BR I C¶s decade 2010 http:// www 2.goldmansachs.com / ideas / brics / brics-

decade-doc . pdf , [accessed on 15/06/2010]

The Trillion Dollar club 2010).

http://www.economist.com/world/international/displaystory.cfm?story_id=15912964 ,

[accessed on 15/06/2010]

One billion internet users 2009, http://www.useit.com/alertbox/internet_growth.html ,


W orld Bank President : Multi-polar W orld Requires Co-operation 2010,

http://online.wsj.com/article/BT -CO-20100414-707533.html, [accessed on

28/05/2010]

(Indian Economy Overview 2009),

http://www.economywatch.com/indianeconomy/,[accessed on 28/05/2010]

An economy overview 2009, http://www.propertyfrontiers.com/research/country-

guides/americas/brazil/country-economic-overview.aspx , [accessed on 21/05/2010]

Largest Countries 2009,http://geography.about.com/cs/worldpopulation/a/mostpopulous.htm , [accessed on

21/05/2010]

Global collective action is the key to solving climate change 2010http://www.guardian.co.uk/commentisfree/2010/feb/16/climate -change-global-solution-greenpeace

Schott, J. (2009) ³The future of the multilateral tradingsystem in a multi-polar world´ , Discussion Paper / Deutsches I nstitut für

Entwicklungspolitik, (4)

What is the WTO 2008, http://www.wto.org/english/thewto_e/whatis_e/whatis_e.htm ,


Graziani, T. (2009). Africa in a multi-polar system.

http://www.wpfdc.org/en/analytical-materials/221-africa-in-the-multipolar-system,




15 | P a g e

(World¶s oil will run out in 10 years 2009)

http://www.theinsider.org/news/article.asp?id=0423 , [accessed on 21/05/2010]

(Yuan edges into place as international trade currency 2009).,

http://www.chinadaily.com.cn/bizchina/2009-04/16/content_7684554.htm, [accessed

on 21/05/2010]

.

Documents

Michael J Multi Polar FINAL