Major rethink of world institutions long overdue, commentator says

The novel coronavirus pandemic could lead to a breakup of the Bretton Woods world order, according to a leading academic and journalist.

Martin Jacques, author of When China Rules the World: The End of the Western World and the Birth of a New Global Order, said the existing world order is dependent on US leadership, and the pandemic has shown that Washington is no longer capable of providing it.

"America is patently no longer able to provide global leadership. It has effectively abandoned multilateralism. I mean, who follows America today?" he asked.

Jacques, 74, an influential Marxist thinker, said the response to the pandemic has highlighted this, with China and other Asian countries such as South Korea and Singapore, along with European nations like Germany, coming up with effective responses at a time when the US is coping with a rising death toll from the coronavirus.

"The US cannot lead itself, never mind the world. The country is deeply polarised and convulsed by COVID-19. You have the American Right against the controls, with other states being more cautious about ending lockdowns," he said.

"The very integrity of the United States as a nation state we've become familiar with is just beginning to move in the direction of serious division－and that is a problem for us all."

Jacques said a major rethink of global institutions is long overdue, with the developing world, including China, set to comprise 60 percent of global GDP by 2030. At the time of the Bretton Woods Agreement in 1944, the US was clearly the dominant nation, making up half of global GDP, compared with 18 percent now.

"Global governance has to become representative of the world as it is, not the world as it was," he said.

"You cannot continue with the boss of the World Bank always being an American and that of the IMF being a European. This is yesteryear."

Jacques believes the pandemic could result in the sort of change to the Bretton Woods system brought by the global financial crisis of 2008 to other aspects of global infrastructure. It saw the emergence of the G20, which includes developing countries such as China, India, Indonesia and South Africa, as well as Western nations, as the main economic grouping.

The G7, formed in 1975, comprises the seven largest developed nations and is now seen as a less important body.

"This was because the G7 could not possibly represent what the global economy had become. So we need some revised version of the IMF or the World Bank. There has to be change because what we now regard as the developing world will comprise 80 percent of global GDP within 20 years, as the West is in such decline," Jacques said.

Born in 1945 in Coventry, England, Jacques became one of the youngestever executive members of the Communist Party of Great Britain at age 22.

He came to prominence in the 1970s and '80s as the editor of Marxism Today, an influential political magazine in the United Kingdom. In the mid-'90s, he edited the The Independent, a national newspaper based in London.

After publication of his influential When China Rules the World in 2009, one of Jacques' main focuses has been China, where he has held a number of academic positions and lectured extensively.

He believes General Secretary Xi Jinping's launch of China's New Era at the Communist Party of China's 19th National Congress in October 2017 was a defining moment in world history, as it marked the nation's emergence as a global power.

Jacques believes Xi is one of the few modern statesmen who could make a major contribution to reshaping the global order, which would go beyond the remit of the Bretton Woods institutions.

"He has the ability to think big about these kind of problems. His approach is very different, and it is very deep-rooted in Chinese history and that China is a civilization rather than just a nation state," he said.

Xi proposed the Belt and Road Initiative in 2013 to foster greater global connectivity and to forge infrastructural and other links between countries.

His concept of a "community with a shared future for mankind" has also been a constant and consistent message in keynote addresses such as that at the Boao Forum for Asia in 2015 and at the World Economic Forum in Davos, Switzerland, in January 2017.

"It is a powerful idea and I think this (health) crisis has showed it is now of its time. The sense of common destiny and the ideas behind it is very different from the Western way of thinking," Jacques said.

Working on a new book about what China will be like as a great power, Jacques believes the BRI could be incorporated in a new global governance order.

"The existing forms of global governance prioritize and represent the interests of the rich world. In contrast, the Belt and Road represents the needs of the developing world, the importance of connectivity and the fundamental importance of state investment and infrastructure in delivering economic growth," he said.

However, he believes it would be extremely difficult to build any sort of new order while the US rejects multilateralism.

"It is actually the US that is rejecting the Bretton Woods consensus, except where it's useful for it. It seems to want to return to the pre-Roosevelt era, where apart from a brief period under Woodrow Wilson (US President 1913-21) it saw itself in splendid isolation," he said.

"If you don't have the United States on board for any new consensus, then it's only going to be a regional solution and not a global one."

The Bretton Woods system was based on the primacy of the US dollar, but Jacques believes that with countries such as China supporting cryptocurrencies, which could become global reserve currencies of the future, the dollar's days may be numbered.

"With the changing economic power balance in the world, the dollar has only been sustainable because there has been no alternative," he said.

"There are now new possibilities. Digital or cryptocurrencies could lead to a much more pluralistic global financial system. I'd be very surprised if, in 20 years' time, the dollar will have anything like the position it has now."

Jacques despairs that the US has withdrawn its financial support for the World Health Organization during the pandemic, and said health will have to be given greater priority in any new order.

"The pandemic has demonstrated that the WHO's time has come.... and far from those who decry it, I think it's done a very good job," he said.