US Foreign Policy and the U.N. Crisis

By Guido Montani

In 1941, when the US decided to intervene in World War II, Franklin D. Roosevelt and Winston Churchillsigned theAtlantic Charter, where they indicated the crucial lines of post-war reconstruction. After this agreement, the Bretton Woods Conference came first the creation of the UN, the two fundamental post-war institutions founded on multilateralism. The clash between the two superpowers, the USA and the  USSR, never caused an existential crisis of the UN. Moreover, after the disintegration of the USSR, Russia and China decided to continue to takepart; in particular, China entered first the WTO and then the IMF, with an important role for its currency, included in the basket of SDRs in 2016.

Now, at a stage of international politics characterized by the emergence of new world powers – China, India, Indonesia, Brazil and South Africa – and the arrogant return of Russia, a multipolar system of international relations is being formed.  Unfortunately, relations between the great powers are disrupting the  institutional tracks created in the first post-war period. The Security Council is supposed to guarantee peace between nations, but the US in 2003 unilaterally decided to invade Iraq; Russia unilaterally decided in 2022 to invade Ukraine. The UN is in a serious crisis (see Branco Milanovic). In addition, the frenetic development of new information, genetic and communication technologies is increasingly being exploited for military purposes, thus fuelling a senseless race towards world dominance, as if it were possible to create a world empire

Russia’s invasion of Ukraine has contributed to accentuating international tensions, which were already on the way to an ideological confrontation between democratic and authoritarian countries. Finally, the bipartisan approval of the important industrial plan called IRA (Inflation Reduction Act), amounting to about $370bn of aid dedicated to the ecological restructuring of the economy, through incentives and subsidies, signals a clear reversal of the US trendin environmental and international policy. If the ecological turn, compared to the Trump government, is welcome, the international one is worrying. In a wide-ranging speech at  the Brookings Institution, Jake Sullivan,  National Security Advisor, explained  very clearly the foreign policy aims of the Biden’s Plan, which closely integrates  economic policy and foreign policy. The historical context is described accurately: “After the Second World War, the United States led a fr agmented world to build new international economic order. It lifted hundreds of millions of people out of poverty. It sustained thrilling technological revolutions. And it helped the United States and many other nations around the world achieve new levels of prosperity. … But the last few decades revealed cracks in those foundations. … That’s why the United States, under President Biden, is pursuing a modern industrial and innovation strategy – both at home and with partners around the world”.

The purpose of this paper is not to illustrate the details of the Biden’s Plan: I will limit myself to recalling the main chapters described by Sullivan.  A first chapter concerns industrial, innovation and productivity policy, which cannot be leftto private market forces, as was possible in the era of international liberalism: now the situation has changed. “Economic integration didn’t stop China from expanding its military ambition in the region, or stop Russia from invading its democratic neighbors. Neither country had become more responsible or cooperative”. The new US industrial policy must therefore ensure subsidies forthe most competitive firms at national and international level, to counter those firms which exploit substantial state aid from other governments.

The second and third chapters concern environmental policy, in particular the fight against climate change. President Biden closely links this goal to that of employment. The economy of the new century must be based on clean, renewable and sustainable energies. “America needs a deliberate hands-on investment strategy to pull forward innovation drive down costs, and create good jobs”. Finally, the fourth chapter deals with social inequalities. Aregressive taxation favouring the highest incomes must be put to an end; a policy favouring the American middle classmust be re-established.

Let us now consider the international implications of the new US industrial policy. The first aspect is a strengthening of the role of the state, of public policies, to stimulate growth, productivity and innovation (semiconductors and clean energy). “We’ve estimated – Sullivan says – that the total public capital and private investment from President Biden’s agenda will amount to some $3.5 trillion over the next decade”.  To counter China and other competitors, “it is desirable to build everything domestically. Our objective is not autarky- it’s resilience and security in our supply chain”.

The second step is “working with our partners to ensure they are building capacity, resilience, and inclusiveness, too”. I partners degli USA citati da Sullivan sono: Unione Europea, Giappone, UK, Canada e altri, in sostanza il G7, oltre a Corea e Taiwan.  “The third step in our strategy is moving beyond traditional trade deals … The main international economic project of the 1990s was reduce tariffs … The project of the 2020s and 2030s is different … Enhancing protections for labour and the environment … In today’s world, trade policy needs to be about more than tariff reduction, and trade policy needs to be fully integrated into our economic strategy, at home and abroad”. This approach implies that the WTO must be reformed. “so that the WTO benefits workers, accommodates legitimate national security interests, and confronts pressing issues that aren’t fully embedded in the current WTO framework, like sustainable development and clean-energy transition”.

The fourth step of the strategy is: “mobilizing millions in investment into emerging economies … We’ve lunched a major effort to evolve the multilateral development banks so they are up to the challenges of today … We call it the Partnership for Global Infrastructure and Investment (PGII)”. This initiative will also serve to reduce the external debt burden of emerging countries.  All countries in the world should support this initiative. “That includes China, which has worked to build its influence through massive lending to the emerging world, almost always with strings attached. We share the view of many others that China now needs to step up as a constructive force in assisting debt-stressed countries … President Biden has made clear that the United States and China can and should work together on global challenges like climate, like macroeconomic stability, health security, and food security”.

This summary of the US government’s industrial policy and international relations presents many ambiguities. The proposals seem to call for greater international cooperation, but on condition that the United States dictates the rules of the game between a group of allied countries. Unfortunately, in a situation where a war is going on in Europe caused by Russia’s aggression against Ukraine, the ambiguity seems justifiable. Conflict and cooperation are possible alternatives to the current disorder. However, it should be borne in mind that the proposals to contain Chinese ambitions, including through sanctions on sensitive technologies, leave no doubt that the US intends to maintain a world hegemonic primacy hindering, where possible, China’s economic and military rise.

The rhetoric of confrontation between democratic versus authoritarian countries is a lackluster replica of the ideological contrasts of the Cold War. Democratic countries such as India, Brazil and South Africa (and many other countries in emerging economies) do not, with good reason, intend to enter into a coalition aiming for world political, economic and military supremacy. In this coalition there is a group of countries that are already part of a military alliance, NATO, which was founded for defensive purposes to counter Soviet expansionism in Europe, but which is now being used as a pivot for US world hegemony, as evidenced by the enlargement of NATO to other European countries and the creation of a military coalition (AUKUS) with Australia and the UK in anti-Chinese function in Asia.

This policy of world supremacy is senseless. The contrast between the USA and the  USSR took place within an institutional framework – the Bretton Woods Agreements and the  UN – which allowed dialogue and,  in some cases, episodes of cooperation between the  two superpowers (think of the Suez crisis or the disarmament agreements between Reagan and Gorbachev). The US-China (and Russia)  confrontation is less justifiable. It is true that China has initiated some policies, such as the Belt and Road Initiative (BRI), which can be understood as an attempt to extend its area of influence. In fact, China is an economic giant that can become just as important as the US, both economically, militarily and culturally (as a Civilisation State).

The wisest foreign policy for the US is therefore a peaceful cooperation agreement with China to lead the whole world in the fight against the environmental crisis, a common threat to the future of humanity. An agreement on this front has already begun, as Mr Sullivan pointed out, but it is necessary  to strengthen it by means of a common institutional project. In the post-war period, the United States created institutions for multilateral cooperation (UN), open to all countries in the world. These institutions have ensured stability and economic development for many countries in the last century, although the communist states wanted to create their own economic community (CMEA countries) and the Third World countries, on the margins of both, did not receive sufficient aid for their development. Today, the  US should make the proposal to relaunch the institutions of multilateral cooperation, the UN where all the countries of the planet are already present. The UN is paralyzed by a deep crisis. The Security Council meets only to establish that it is impossible to act jointly to stem armed conflicts. The WTO was blocked by Trump’s decision to stifle the Dispute Settlement Mechanism (DSM), which is essential for settling  international trade disputes. The IMF provides aid under conditions that are often intolerable for the poorest countries.

The industrial and foreign policy proposal presented by Sullivan suggests that it is possible to begin peaceful cooperation with China and other countries, in particular the European Union, on important issues of economic importance, such as environmental policies and sustainable development.  The federalists have drawn up proposals along these lines (see The Global Ventotene No 1): a plan for a Global Green Deal. The starting point for a revival  of the UN is  the reform of the IMF, as happened at Bretton Woods,which preceded the creation of the UN. It is perhaps useful to recall that the process of European unification also took place on the basis of limited cooperation between six countries on the pooling of coal and steel. They were necessary resources to arm themselves and make war. Today, theEuropean Union is an island of peace.  

In the statute ofthe IMF there are the bases for the creation of a world currency:  the Special Drawing Rights (SDRs), a basket composed of five currencies, whose percentages are:  dollar (43.38), euro (29.31), renminbi (12.28), yen (7.59), pound 7.44). The use of a world reserve currency would make it possible to overcome multiple difficulties: the countries of emerging economies could issue public debt at interest rates much lower than those they have to bear today due to issues in a currency (the dollar) that is not theirs; the US would no longer have to fear speculation against the dollar; commercial transactions could take place on the basis of a stable and universally accepted currency;  thanks to  a worldwide price for greenhouse gases (GHGs), all companies could more easily calculate the value of their investments, in particular in environmental technologies; finally, SDRs  could be used, subject to authorisation, by the UN Secretary-General to finance environmental policies, thus solving the difficult problem of the distribution  of funding shares among national governments, which until now have caused the failure of the COPs. Ultimately, an agreement for a Global Green Deal would be an extraordinary incentive for theintegration of the world market, thus creating a climate of mutual trust between all participants (for more details, The Global Ventotene No 1).

Peaceful coexistence between great powers will not be an absolute guarantee of lasting peace. But it will be  the first step of a journey, certainly long and arduous, towards peace objectives today considered unthinkable. It is not true that human nature is structurally violent and hostile to peaceful coexistence. Within nation states this progress  – from barbarism to civilization – has already taken place. It can also happen between great powers.