Multilateralism is failing to address emerging challenges---resolving global inequality and economic issues is key.

The multilateral system has never been more needed. Conflict, pandemics, and international economic coordination were all concerns of the founders of the post-World War II multilateral system – and climate change is a classic global public good that they would have recognised as needing collective action. The UN and some other international organisations continue to garner quite high levels of trust around the world. Yet the multilateral system is failing to act. Why?

First, public opinion in different regions trends in the same direction on some challenges, but varies greatly on others: similar patterns on climate, quite different on the war on Ukraine. This affects how people see the problems the multilateral system should resolve. As a Western diplomat at the UN put it to me: “We say to developing countries that Ukraine is a global problem; but when they put issues of debt or food security on the table, we say that these are national problems.”

Second, double standards are undermining multilateralism. Many developing countries see hypocrisy in the West’s approach to the Ukraine crisis, on human rights and refugees. Developing countries were deeply disappointed by “vaccine nationalism” during COVID-19 when Western countries broke ranks and competed to hoard vaccines. They also see double standards in climate change, for example, entreaties to abandon coal, when Western countries have slowed their own plans to do so.

Third, diverging national interests require a greater compromise than major powers seem willing to give. COVID-19 spending, inflation and rising interest rates are sending more countries into debt distress, which limits their ability to spend on climate mitigation and adaptation, stimulus programs, social protection, and services. Low-income countries could spend only 2 per cent of GDP on COVID-19 response and middle-income countries 6 per cent, while high-income countries spent 24 per cent. The impasse between borrowing countries, China, the West, and large private sector actors in resolving the rising debt crisis represents a failure to put long-term interests over short-term advantages.

Fourth, state capture and divisive political narratives are on the rise. Recently we have seen institutions undermined in many countries, from the US to Brazil to South Africa (which to its credit established a commission to act upon it). This phenomenon, called “state capture” to distinguish it from outright corruption, has almost certainly affected why it is so difficult to adopt multilateral policies that favour climate change or address inequality (such as a broader international corporate tax agreement, building on the basis established by the OECD in October 2021). Divisive political narratives have also been used by many political leaders to distract attention from rising economic inequality.

What can be done?

The solutions at a multilateral level are political rather than technical.

First, we need to address rising inequality within countries in order to address rising inequality and tensions between countries. The Global South is puzzled why “rich countries” do not put more financing on the table for global public goods. Yet the reality is that most people in “rich countries” do not feel rich: working and lower middle-class people (often the majority of voters) have seen their real incomes decline. Countries in the Global North need to address domestic inequalities in order to foster more cohesive international responses, just as countries in the Global South need to ensure that their own elites contribute their fair share.

Second, developing countries need to put stronger joint demands in multilateral fora, striking a hard bargain for their contribution to reducing global instability, which they had little role in making. In turn, Western countries, China, and the Gulf Cooperation Council (GCC) need to agree on urgent action to provide grant-based financing, recapitalise the multilateral development banks, address rising debt distress, and meet climate financing targets. Instructions to ministries in the various multilateral institutions need to be coordinated from Heads of State and Government offices, in this period when the economic is so political and the political so economic. G20 political leaders need the courage to lead in explaining to their own populations why this is in their long-term interest.

Third, the multilateral system needs some “guardrails” to minimise the degree to which rising geopolitical contestation causes economic and social harms. The contestation is inevitable, as it has been in other periods in history which went through significant reordering of major powers. The problem is that many of these periods led to major conflicts and the development of rival trading blocs which beggared all the actors involved. Modern guardrails are needed to keep communication flowing between countries that are at odds politically in order to avoid this turning into geo-economic fragmentation—on knowledge, technology, and trade.