The story never stops. And today those who thought that, with the collapse of the Soviet empire, it would have been child's play for the USA to maintain global leadership must think again. In fact, a quarter of a century after the fall of the Berlin Wall, a multipolar leadership structure. Two events in recent weeks bear witness to this. On the political side, the achievement of theIran nuclear deal it marks a turning point fraught with consequences for the entire swath of the Middle East, North Africa and beyond. On the economic-financial front, the establishment of theAsian Infrastructure Investment Bank (AIIB), a multilateral financial institution which, beyond diplomatic sweetening, is an alternative to both the US-controlled World Bank and the Asian Development Bank, which has always been dominated by Japan. In what follows I will try to explain why and how the AIIB represents a turning point for global balances.
The past few weeks have reserved two important pieces of news about the AIIB, the multilateral institution for financing infrastructure and long-term investment wanted by China. On the one hand, after months of stalemate in which the USA (and Japan) had managed to avoid it, the main European countries (and even Israel) have made themselves available as founding members of the AIIB, which was born on a Chinese initiative. It was the United Kingdom, the US's lifelong ally in Europe, that broke the stalemate promptly followed by Germany, France, Italy, Israel and others. On the other hand, China has accepted the principle that the AIIB statute does not give it the veto right still enjoyed by the US over Washington's international financial institutions (i.e. the International Monetary Fund and the World Bank ).
The involvement of the main European countries as co-founders of the AIIB has two effects. First, the core of the world economy shifts further from the Atlantic to the Pacific. Second, it becomes palpable as the American leadership does not is more monocratic. In other words, what we have been predicting for some time is happening: the world will go through a phase of multipolar leadership. It could have been predicted for years, especially given the explosive growth of China, but it is never easy to predict when pre-existing balances will break. From this point of view, the AIIB case seems to be a watershed. From today it is clear that alongside the USA there is another global power, China. And it was by no means obvious that this would happen, at least so quickly, because it was not said that China wanted to assume a global role and even resistance could last longer. It is difficult to say whether the multilateralization process will stop at two players. Certain the European Union and also the Eurozone remain too abstract entities to be able to propose themselves as protagonists at the table of world leadership. More likely, if its development does not suffer major setbacks, that India will.
Among the many considerations that the new scenario arouses, I will limit myself to formulating three. Firstly, if, as European accessions suggest, the AIIB will be a successful experience, it could also favor the development of the Chinese financial center as a global financial hub and, at the same time, accelerate the internationalization of the renmimbi. This would necessarily reduce the role of international reference currency exercised predominantly by the US dollar and to a lesser extent by the euro. Secondly, the historical experiences of the past cast doubts on whether multipolar leadership arrangements are stable. The two World Wars witnessed the impossibility, in the twentieth century, of peacefully reconciling the German economic rise alongside the British and French empires. Therefore that multipolar phase ended with the affirmation of the US leadership, which maintained the exclusivity over the whole world not subject to the hegemony of the USSR.
The third and final consideration derives from the second. What makes leadership sustainable in the long run? Even before the fall of the Iron Curtain, Paul Kennedy, studying the rise and fall of empires in world history, had identified two essential traits. On the one hand, the exercise of leadership presupposes technological supremacy, which generally also extends to military supremacy. On the other hand, the accounts of the leading country – both public and foreign debt – must be in order. Looking at the USA and China today, we notice a contradiction between the two elements at play. The USA has technological and military supremacy, but their accounts are not in order. The return of American economic growth took place in a context in which the USA continued to accumulate public debt and external debt. The stability of the multipolar leadership structure therefore requires the reduction of American imbalances, especially in external debt.
