Renewal or Irrelevance: With Asia's Rise, Global Governance Must Be Reformed

REUTERS

The Bombay Stock Exchange in Mumbai, India: Asia must emerge in a manner compatible with the existing global system.

The rapid rise of Asia in recent years has presented the world with serious challenges and substantial opportunities. Even compared with previous phases of East Asia's development, current economic expansion in the region is extraordinary. The states involved in this most recent round of growth represent the interests of more than 3.5 billion people. The GDPs of China and India, both already economic superpowers, are expected to maintain high annual growth rates for the foreseeable future, eventually surpassing Japan to become the second and third largest economies in the world by 2015 and 2032, respectively. This expansion heralds a gradual shift in the global balance of power from the West to the East.

Postwar Japan and Germany

A brief examination of contrasts with Japan and Germany's experiences in the postwar period may prove instructive for thinking about how to best address the unprecedented challenges presented by Asia. Japan and Germany emerged from World War II defeated and economically devastated. However, with substantial assistance from the Western powers, principally the United States, both states reconstructed their economies, built on past experiences with democracy to develop liberal political systems, and eventually regained the trust of the international community.

Because both states were enmeshed in security alliances with the United States from an early stage -- Japan through a 1951 security treaty and West Germany with its 1955 accession to NATO -- the threat posed by their reemergence as political and military powers was minimal. US security guarantees also allowed both states to avoid constructing costly and potentially destabilizing independent conventional military deterrents, in addition to ensuring that neither would develop nuclear weapons. Relations were not without friction, however. Japan's economic rise fomented fears in the United States during the 1980s about its declining global influence and led to frequent and often contentious bilateral confrontations. Nevertheless, it is worth noting that such tensions were strictly economic; Washington at no time saw Japan as a challenge to either its preeminent position in global political and security affairs or the Western system as a whole.

There are three main reasons why Japan and Germany's postwar rise had few if any negative ramifications for regional or global stability. First, both nations were enmeshed in the US-led Western order -- active participants in an assortment of multilateral institutions that placed mutually agreeable limits on state action. Second, prior to emerging as global powers Japan and Germany succeeded in developing open and democratic political systems compatible with those of other Western powers. Third, particularly during the Cold War, the states of the West shared more or less identical threat perceptions.

How Asia is Different

Although lessons can certainly be drawn from the West's experience managing Japan and Germany, Asia's rise presents a number of unique challenges:

• Size: Whereas the combined populations of Japan and Germany represented merely six percent of the global population in 1950, the populations of the states involved in this "third wave" of Asian growth account for more than 53 percent of humanity.

• Stage of development: Despite impressive annual economic growth rates in recent years, the majority of states in Asia remain at a relatively early stage of development. The primary driver of recent growth has been the foreign investment of profit-minded firms rather than state-sponsored development assistance.

• Income inequality and domestic unrest: Wealth created in Asia's recent expansion is concentrated in the hands of a relatively small group of urban elites. Rapidly growing income gaps have given rise to domestic unrest in many states.

• Cultural and political diversity: While Asia's diversity may be one of its most treasured attributes, the absence of unifying cultural and political values has complicated efforts to strengthen intraregional ties. The legacy of history looms large and the political relationship between China and Japan is at times characterized more by mistrust and suspicion than anything approaching common values.

• Security circumstances: While in postwar Europe war between states in the region has become all but unimaginable, circumstances in Asia are vastly different. China, for example, spends billions of dollars each year defending the land borders it shares with 14 states, none of which is a military ally. Furthermore, the two largest states in Asia, China and India, are not only conventional military superpowers with vastly different threat perceptions, they are also both unaligned states with large stockpiles of nuclear weapons.

In sum, the postwar rise of Japan and Germany as global powers deeply embedded in a web of multilateral and rule-based Western institutions contrasts sharply with current realities in Asia. In order to ensure that Asia's rise does not have negative ramifications for global peace and stability, the West must make sure that Asia emerges in a manner compatible with the existing global system. Achieving this objective will not only require the active involvement and support of all countries with interests in the region but a wholesale rethinking of the institutions that comprise global governance.

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• Part 1: With Asia's Rise, Global Governance Must Be Reformed
• Part 2: Restructuring International Institutions