Will Europe Be the World’s Biggest Loser?
Russia’s war against Ukraine, the Sino-American rivalry, and the rise of new middle powers is spurring a profound reorganization of the international order that will leave Europe at a distinct disadvantage. To thrive in a world dominated by large states with growing military budgets, Europe has no choice but to become a real power, writes Joschka Fischer, Germany’s foreign minister and vice chancellor from 1998 to 2005, was a leader of the German Green Party for almost 20 years.
The post-1945 era of global stability is over and gone. From the bipolar world of the Cold War to the American-dominated unipolar world that replaced it, we have long benefited from a sense of strategic order. Though there were many smaller wars (and even some larger ones), from Korea and Vietnam to the Middle East and Afghanistan, the international system remained generally stable and intact.
Since the beginning of the new millennium, however, this stability has increasingly given way to a renewed rivalry between major powers, chief among them the United States and China. Moreover, it has long been clear that India, Brazil, Indonesia, South Africa, Saudi Arabia, Iran, and other emerging economies’ political and strategic influence will increase, as will their role within the global system. In the context of a deepening conflict between China and the US, these rising powers will have many opportunities to play one of the twenty-first century’s two superpowers off against the other. Indeed, many of these opportunities seem too good to miss.
Under President Vladimir Putin, Russian policy has increasingly been aimed at reversing the legacy of the immediate post-Cold War era. But the broader danger for the international system stems not from the war in Ukraine, but from the deterioration of US-China relations…
Some of the biggest losers in this confrontation are likely to be Japan and Europe. Chinese firms have built massive production capacities in the automobile industry – especially in electric vehicles (EVs) – and are now poised to outcompete the European and Japanese automakers that have long been globally dominant.
Making matters worse, America’s own response to Chinese competition is to pursue an industrial policy that will come at European and Japanese manufacturers’ expense. Recent legislation such as the Inflation Reduction Act, for example, provides large subsidies for cars produced in the US. From the US perspective, such policies kill two birds with one stone: protecting large domestic manufacturers and providing them with incentives to pursue EV development.
Not only must Europe take great pains to preserve its economic model during this reorganization of the global economy. It also must manage high energy costs, the growing digital technology gap vis-à-vis the two superpowers, and the urgent need for increased defense spending to counter the new threat from Russia. All these priorities will grow even more urgent as the next US presidential election approaches, given the distinct possibility that Donald Trump could return to the White House.
Europe thus finds itself especially disadvantaged. It resides in an increasingly dangerous region, yet it remains a confederation of sovereign nation-states that have never mustered the will to achieve true integration – even after two world wars and the decades-long Cold War. In a world dominated by large states with growing military budgets, Europe still is not a real power.
Whether that remains the case is up to Europeans. The world will not wait for Europe to grow up. If Europe is going to confront today’s global reordering, it had better start soon – or, preferably, yesterday.
NEW HAVEN – Now that the falsehoods and obfuscation of climate denialism have finally been silenced, addressing climate change has become the world’s top priority. But time is running out, and the International Monetary Fund warns that any further delays on implementing policies to mitigate global warming will only add to the economic cost of the transition to a low-emissions economy. Worse, we still lack a concrete, pragmatic strategy for tackling the problem. Although economists have made a robust case for why carbon taxes are the best solution, this option has proven politically infeasible, at least in those countries that account for some of the highest emissions (namely, the United States).
Commentators have also stressed that climate change is a shared problem involving important cross-border externalities that must be addressed through a multilateral approach to global coordination. But, as with carbon taxes, this argument has fallen on deaf ears. And, given the current geopolitical climate and the increasing fragmentation of the global economy, there is little hope that the message will get through anytime soon.
Having committed to assisting developing economies as they confront climate change, the World Bank finds itself limited by the country-based model underlying its financing operations. It is earnestly weighing its options and considering how it could coordinate climate-related financing across borders. But while such efforts are well meaning and consistent with the spirit of multilateralism, they inevitably will delay concrete action. World Bank financing would have to be completely restructured, and coordinating action across multiple countries that have limited financial resources and often conflicting interests seems an impossible task. For example, while some developing economies are rich in fossil fuels, others are starved for energy sources.
Given these limitations, pragmatism dictates focusing on the biggest polluters. Global carbon dioxide emissions are concentrated among only a handful of countries and regions. China, the US, the European Union, Japan, and Russia collectively account for 63% of the total, and none of these top polluters is a low-income country anymore. China, the poorest of the group, represents around 30% of all emissions, making it by far the world’s largest current polluter in absolute terms. But its government is taking steps to accelerate the transition to green energy – a winning strategy, given the country’s abundance of rare earth metals.
India, the third-largest emitter, currently accounts for approximately 7% of global CO2 emissions, and its size and growth trajectory imply that it could easily surpass China as the leading polluter, barring stronger climate policies. In fact, when it comes to helping developing countries decarbonize, considerable progress could be made simply by targeting India alone. The big advantage of this strategy is that it would avoid the paralysis associated with attempts to adopt a multilateral approach in an increasingly fragmented world.
This does not mean that we should eschew projects aimed at climate mitigation or adaptation in other countries. But we would not need to wait until everyone is on board before doing anything. Those insisting on a multilateral approach should learn from the experience of the ultimate multilateral institution: the World Trade Organization. Its requirement that every single provision in every multilateral agreement gain unanimous support has left it increasingly paralyzed, prompting demands for institutional reform.
Of course, India is not low-hanging fruit. It is rich in coal and has little incentive (beyond the health of its citizens) to hasten the transition to green energy. In focusing on India, we would need to employ the carrot, not the stick.
Since the stick generally takes the form of pressure to implement carbon taxation, it is a non-starter. A tax would be ineffective, because it would incite massive domestic opposition (as has been the case in the US). It would also be morally objectionable, because it is unfair to ask a lower-middle-income country to bear the burden of reducing CO2 emissions when rich countries (like the US) have failed to do the same. Moreover, even if China and India are now two of the world’s biggest polluters, they bear little responsibility for the past, cumulative emissions that led to the current climate crisis.
That leaves the carrot, which would come in the form of tax incentives or subsidies to support green energy. When paired with other policies, these can ease firms into adapting to higher environmental standards (such as those associated with a cap-and-trade program). But such policies are expensive, which means that tackling climate change will require richer countries to help finance them. Whether or not India becomes the new China, it is still in our power to ensure that it does not become the new outsize polluter.
https://www.project-syndicate.org/commentary/climate-change-prioritize-top-emitters-over-multilateralism-by-pinelopi-koujianou-goldberg-2023-05