Woods, Ngaire. 2023. “Multilateralism in the Twenty-First Century.

” Global Perspectives 4
(1). https://doi.org/10.1525/gp.2023.68310.

Political Economy, Markets, and Institutions

Multilateralism in the Twenty-First Century

a
Ngaire Woods 1
1 Blavatnik School of Government, University of Oxford, Oxford, UK
Keywords: multilateralism, international cooperation, strategic rivalry, global leadership, global public goods
https://doi.org/10.1525/gp.2023.68310

Global Perspectives
Vol. 4, Issue 1, 2023

The rise of geostrategic rivalry between the United States and China is changing
international cooperation. As China seeks new influence and the United States seeks to

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contain China and to reduce its own international obligations, three dimensions of
multilateralism are becoming particularly important. The first is the management of the
superpower rivalry, through formal treaties, informal arrangements among states, and
international institutions. The second is the capacity of the leadership of any
international institution to foster cooperation beyond the immediate preferences of one
or another of the most powerful member states. The third dimension is the legitimacy on
which the authority of international institutions rests. The evolution of these three
elements will shape the future of multilateralism, by which I refer to the arrangements
created and agreed by states which facilitate cooperation by enshrining commitments to
diffuse reciprocity and peaceful dispute settlement.
The analysis of history and of variations in current practice in international cooperation
underscores several ways in which international cooperation could be sustained even as
the US-China rivalry strengthens. Global agencies can play a crucial role finding and
highlighting areas where cooperation and competition can coexist, and where their own
capacities to pool information, to reduce transactions costs, and to broker and monitor
agreements can assist. This, in turn, requires high-quality leadership by people who can
effectively broker agreements among countries, persuade countries to pool resources, and
attract and organize an effective and highly motivated staff. Such leadership requires
positive ongoing action by member states, to define what is required for effective
leadership of the institutions they collectively create, to seek proven competence in each
domain before appointing leaders, and to monitor ongoing performance. Finally,
international institutions can buttress their legitimacy by finding better ways to ensure
the participation of all stakeholders, and to respond rapidly and effectively to global
crises and to provide global public goods.

World order has long relied upon rules and norms to seeks to contain China, some argue that the future of mul-
manage flows of people, goods, and investment and to reg- tilateralism is bleak (Mearsheimer 2021). Even strong ad-
ulate the use of force among countries. Far more challeng- vocates of multilateralism have been pointing out for the
ing has been to build and sustain multilateral processes last decade that “global cooperation is failing when we
and institutions to support these rules. Russia’s invasion need it most” (Hale, Held, and Young 2013) and that fewer
of Ukraine in 2022 was a clear breach of the UN Charter, multilateral treaties are being signed and ratified, the im-
yet many governments did not join in resolutions or actions plementation of existing treaties is poor, and states are
against Russia. Their reactions highlight complex and increasingly rejecting oversight of treaty obligations and
changing relations between Russia, China, the United monitoring of compliance by multilateral organizations
States, and the European Union and countries across Eu- (MOs) (Eilstrup-Sangiovanni 2016). But multilateralism is
rope, Africa, Latin America, and Asia. not dead.
The US-China geostrategic rivalry sits at the center of This article argues that multilateralism, including formal
changes in international relations. As China seeks to treaties and institutions as well as informal arrangements,
strengthen its global influence, and as the United States can play an important role. International institutions can

a [email protected]
https://www.bsg.ox.ac.uk/people/ngaire-woods
 Multilateralism in the Twenty-First Century

help to manage the geostrategic rivalry, even as China General Assembly became forums for set-piece debates and
and the United States vie for influence, where institutions votes that entrenched the East/West divide and rivalry.
effectively identify areas for cooperation, pool information, The demise of the Soviet Union saw the end of the Cold
reduce transactions costs, and broker and monitor agree- War and the beginning of what some called a “unipolar”
ments. But to do these things effectively requires high- world with the United States at its center. The dominance
quality leadership appointed and monitored with proper of the United States is now challenged by China, which
oversight by member states. Finally, as the world divides has rapidly built up its international investments in other
and fragments, it will be tempting for powerful states to use countries, seeking pacts with countries that deliver benefits
coalitions of the willing to attempt to set global rules and from geopolitical security to trade and access to raw ma-
standards, but the legitimacy deficit will hamper that ap- terials. Equally, China has stepped onto the world stage,
proach, highlighting their interest in multilateralism. seeking more influence in multilateral institutions through
leadership positions, funding, and activities.
1. MANAGING THE GEOSTRATEGIC RIVALRY China’s relations with countries across the world have
deepened and broadened with astonishing speed. China’s

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Geopolitics has always shaped the institutions and al- Regional Comprehensive Economic Partnership (RCEP) en-
1
liances that either make international cooperation possible compassing the ten members of ASEAN plus Australia,
or thwart it. When Russia invaded Ukraine, the UN Security Japan, New Zealand, and South Korea was launched in re-
Council was paralyzed by Russia’s position as a permanent sponse to the failed US bid to create a Trans-Pacific Part-
member. For some this is proof of what John Mearsheimer nership (TPP) in 2010 that would encompass twelve coun-
calls the false promise of international institutions tries in the Pacific (Australia, Brunei, Canada, Chile, Japan,
(Mearsheimer 1994). But history also highlights conditions Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam,
under which institutions can provide governments with a and China). More broadly, China has developed its Belt and
forum in which they share information, mutually agree Road Initiative (BRI), which was launched in 2013 by Pres-
rules and standards, and subject themselves to monitoring ident Xi Jinping to create an infrastructure linking part-
so as to give each other assurance about compliance. In ners to the west of China (the former Soviet republics),
the words of two leading scholars of multilateralism, these to the south (India, Pakistan, Southeast Asia), and else-
arrangements can facilitate cooperation by enshrining where. Huge investments have poured into railways, energy
commitments to diffuse reciprocity and peaceful dispute pipelines, highways, efficient border crossings, special eco-
settlement (Keohane 1990; Ruggie 1992). Clearly, they do nomic zones, and other strategic investments. New fora
not always succeed in so doing. have been created to underpin these new relationships such
Beyond Russia’s invasion of Ukraine, the risk for mul- as the Shanghai Co-operation Organisation, an eight-mem-
tilateral institutions today is that China and the United ber group that includes Russia and Central Asian countries
States create spheres of influence and use international in- as well as India and Pakistan.
stitutions as pawns in their superpower rivalry, entrenching More recently, China announced in April 2022 that it had
cooperation within their respective rival alliances. We have signed a pact with the Solomon Islands, and Chinese for-
seen elements of this before. From the outset of the Cold eign minister Wang Yi traveled to eight Pacific Island na-
War after 1945, the US-Soviet rivalry was rapidly projected tions with the goal of signing bilateral agreements and per-
into multilateral arrangements. The Soviet Union joined haps a regional pact. This propelled the United States into
neither the International Monetary Fund (IMF), nor the action, launching a counterdiplomacy aimed at protecting
World Bank, nor the new trade arrangements set out in the the US Indo-Pacific strategy, which relies on free access to
GATT. It developed the Warsaw Treaty Organization and the Pacific Islands.
the Council for Mutual Economic Aid (COMECON). Mean- In Europe, China has also greatly expanded its invest-
while, the United States opted to shape reconstruction in ments. Where in 2008 annual Chinese outbound foreign di-
Europe through the Marshall Plan and in Japan through the rect investment into the twenty-eight EU economies was
Supreme Command of Allied Powers (SCAP), creating NATO EUR 700 million, by 2016 it had grown to EUR 35 billion
and the Organisation for Economic Co-operation and De- (Hanemann and Huotari 2018). The eurozone crisis acceler-
velopment (OECD). Equally, the United States expanded its ated China’s investments in infrastructure—in the ports of
influence and control over the IMF and the World Bank, Piraeus, Zeebrugge, and Valencia, for instance—and in the
whose lending patterns and conditionality closely reflected gas and electricity grid of Portugal. In 2019 Italy became a
US geostrategic interests (Harrigan, Wang, and El-Said formal partner in China’s BRI. Similarly, in Latin America
2006; Clark and Dolan 2021; Woods 2006). Likewise, the and across Africa, China’s influence has grown extraordi-
GATT became a “club” for members with similar political narily fast.
views (Davis and Wilf 2017). The UN Security Council and As mentioned above, the rise of China could lead to a
bipolar system in which multilateral institutions become

1 Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam

Global Perspectives 2
 Multilateralism in the Twenty-First Century

pawns in a new superpower rivalry. There are already some quires costly time-consuming preparation, technical
signs of this. For example, after China first announced the knowledge, and information. The five most active users
creation of the Asia Infrastructure Investment Bank in are five of the largest economies in the world: the United
2013, the United States began lobbying its allies not to join. States, the European Union, China, Canada, and India. In
It was unsuccessful. Today the bank has more than one recent years, a wrangling between the United States and
hundred members and is lending to both developing and China has emerged as China has begun to use the WTO sys-
developed countries. However, it is still seen by the United tem more, and as the United States has sought to push re-
States as a direct extension of China’s policies abroad (Eu­ forms on other members. China has become the third most
ropean Parliament 2021). active country in the dispute settlement process (having
In another development lending bank, the InterAmeri- mostly been a third party in disputes until 2006). By the end
can Development Bank, tensions have also surfaced. The US of 2019, China had been involved in sixty-five disputes and
holds 30 percent of votes, and China only 0.004 percent. had generally agreed to abide by WTO rulings on disputes,
The bank decided to hold its annual meeting in Chengdu, albeit more slowly and with less effect than complainants
China, in 2019. The United States intervened behind the would like (CSIS 2020).

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scenes, and six days before the event, the venue was can- Over this period, the United States has been trying to
celed (Wroughton and Rampton 2019). The meeting, which push reforms through the WTO, and one tactic deployed to
was celebrating the bank’s sixtieth anniversary with all of further these reforms has been to block any appointments
its forty-eight members, was relocated to Guayaquil, of new judges to the appellate body of the WTO. The ef-
Ecuador. Subsequently, the United States imposed a US fect has been to render the adjudication mechanism inop-
candidate on the presidency of the bank, causing sixteen of erative since 11 December 2019, since it does not have the
the bank’s forty-eight governors to abstain from the vote requisite minimum of three judges to hear a case. It bears
(Welsh 2020). noting that China’s response has been to circulate a reform
The most universal of all development banks is the proposal underscoring the importance of global trade rules
World Bank, and in November 2019 it tabled its latest five- and criticizing those blocking appointments to the Appel-
year lending plan for China (World Bank 2019b). US officials late Body (WTO 2019).
objected loudly (as well as formally) (Rappeport 2019). A final example of the strategic rivalry spilling into mul-
Their objections, voiced by Senator Charles Grassley, in- tilateral institutions is the World Health Organization
cluded that “China has been lending development money (WHO), from which President Trump announced in 2020
outside its borders to extend its influence for years while that the United States would cut funding and then with-
taking in U.S. taxpayer dollars via World Bank loans” draw, because of the organization’s relationship with China
(Grassley 2021). As a result, a group of Senate Republicans (Gostin et al. 2020). China responded to the US announce-
have brought forward the World Bank Integrity Preserva- ment by pledging $2 billion over two years at the WHO’s an-
tion Act of 2021, which would direct the US executive direc- nual meeting in May 2020 to help fight the pandemic. Sub-
tor at the World Bank to vote against and use their best ef- sequently, after President Biden was elected in the United
forts to deny any project in a country that has reached the States, the US decision to withdraw from the organization
graduation threshold and is listed as a Tier 1 country or is was reversed in January 2021, but the questioning of
on the special watch list for religious freedom abuses under whether the WHO has too close a relationship with China
the International Religious Freedom Act (Grassley 2021). continues.
In fact, it is incorrect to say that the World Bank uses Despite geostrategic rivalry in all these instances, in-
US taxpayers’ money to lend to China. The World Bank ternational institutions have nevertheless been facilitating
earns money by lending to China since China is in a cate- important cooperation. Early in the COVID-19 pandemic,
gory of borrowers who pay up to 1.9 percent over LIBOR, even as China-US tensions ran high, the IMF and the World
and in 2019 the bank reported an increase in its income, Bank urged China, the United States, and other members
due in part to an increase in loan spread revenue (World of the G20 to create the Debt Service Suspension Initiative,
Bank 2019a, 2022). China’s borrowing from the World Bank established in May 2020, permitting the poorest countries
generates both revenue for the bank and learning and the to request a suspension of debt-service payments to official
sharing of practice across members. It is worth noting that bilateral creditors. On top of this, they also agreed to scale
the bank’s lending aims in China include advancing market up financial support, including a record IMF emergency
and fiscal reforms to encourage private sector development; lending and a $650 billion allocation of special drawing
promoting greener growth by reducing pollution and reduc- rights (SDRs) in the IMF. Cooperation here reflected the
ing carbon emissions; and increasing Chinese citizens’ ac- shared interests of China and the United States (and others)
cess to health and social services. It is not clear to which of in ensuring that the poorest countries would not collapse.
these the United States objects. But this does not prevent Another example was in March 2022: even as China and
the strategy rivalry spilling into it. the United States took different positions on UN votes in
The strategic rivalry is also present in the World Trade response to Russia’s invasion of Ukraine, the Chinese-led
Organization (WTO). This organization exists to facilitate Asia Infrastructure Investment Bank stopped all its activ-
trade negotiations, to monitor compliance with existing ities in Russia. Cooperation on development financing for
rules, and to provide a dispute settlement mechanism. climate, for infrastructure that enhances development, is
Powerful countries use the dispute mechanism, which re- another shared interest of the United States and China.

Global Perspectives 3
 Multilateralism in the Twenty-First Century

Yet more recently, on 17 June 2022, the WTO reached countries have begun to push back against China’s influ-
agreement for the first time in a decade, concluding the ence (Sirohi 2017).
12th Ministerial Conference with a multilateral deal. The The United States has sought to ensure that China-
“Geneva package” is the first-ever agreement to put envi- backed candidates do not win the headships of any more in-
ronmental issues at its core. Both the United States and ternational organizations. In 2019 the United States failed
China concurred in this package, albeit with some very deli- with respect to the Food and Agriculture Organization
cate drafting, such as on the TRIPS waiver, which China has (FAO), an organization conceived and born in the United
in essence agreed not to use (Balino 2022). The agreement States (its first headquarters was in Washington, DC). The
underlines the reliance of both China and the United States United States is one of the largest contributors to the FAO’s
on a functioning global trading system. budget and a key resource partner. In 2019 all member
Most multilateral organizations are now acutely aware countries participated in the election of a new head, and
of the strategic rivalry and its reverberations within their the United States was determined to beat the Chinese can-
corridors. Central to how international agencies fare will be didate. However, the Trump administration miscalculated
the quality of leadership within them, even as China and in its refusal to support the EU-backed French candidate,

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the United States compete to ensure that their own pre- splitting the vote and leaving the way clear for the Chinese
ferred candidates become leaders. vice-minister Qu Dongyu to be elected (Lynch 2020). The
United States did better in early 2020 when China cam-
2. LEADERSHIP WITHIN INTERNATIONAL paigned for a Chinese candidate to be appointed head of
the World Intellectual Property Organization. The United
ORGANIZATIONS
States threw its support behind a candidate from Singa-
pore, who beat off the challenge from China (Magnier
Scholars of international relations have long sidelined the
2020).
issue of leadership in international institutions on the
These examples highlight that headships matter to the
grounds that heads of organizations must navigate among
great powers, and for good reason. There are several ways
powerful rival governments who establish, design, use,
a powerful, effective head of an international organization
change, and finance them (Graham 2015; Jupille, Mattli,
can increase the scope for multilateral action (Hall and
and Snidal 2013). But the leadership and management of
Woods 2017). First, they can broker agreements among
international organizations has become an important locus
member states, facilitating coalitions of countries to chal-
of the strategic rivalry as China has focused more on en-
lenge the most powerful state, or in support of a new man-
hancing its position and role in key organizations.
date. For example, in the period 1953–61, Dag Ham-
In the IMF, China is now the third most powerful mem-
marskjöld was secretary-general of the United Nations,
ber state with 6.08 percent of the voting power (Japan has
during which time he seized the opportunity presented by
6.15 percent, Germany has 5.32 percent, the United States
the 1956 Suez Canal crisis, which did not directly involve
has 16.51 percent); it is also one of the few states with its
the superpowers (Israel, France, and Britain were using
own seat on the executive board. Since 2011 a succession
force to respond to Egypt’s President Nasser’s nationalizing
of senior Chinese officials have held the position of deputy
the canal), to create a peacekeeping mandate under the
managing director of the organization. Similarly, in the
control of the secretary-general rather than the great pow-
World Bank, China is now the third-largest vote holder, and
ers on the Security Council. This created a new mandate for
a senior Chinese official is the managing director and World
a greater autonomy for action by the United Nations.
Bank group chief administrative officer.
A second important way heads can make a difference is
In the United Nations, China is now the second-largest
by lobbying for resources, increasing the core funding and
contributor to the general budget as well as the peacekeep-
capacity of the organization. For example, Robert McNa-
ing budget. Chinese officials head up four of the fifteen UN
mara as president of the World Bank (1968–81) transformed
specialized agencies: the International Civil Aviation Orga-
its membership and finances. He personally undertook to
nization, the International Telecommunication Union, the
ensure that negotiations brought China into the bank in
Food and Agriculture Organization, and the UN Industrial
1980. He increased the bank’s resources severalfold, includ-
Development Organization.
ing an increase in the bank’s concessional lending arm (the
China has used its engagement with UN agencies to craft
IDA) from $400 million to $4 billion per year. In short, he
programs that complement and reinforce its Belt and Road
massively increased the organization’s financial and tech-
Initiative; these agencies include UNICEF and UNHCR
nical power.
(UNICEF 2018; UNHCR 2019). In 2016 China pledged $200
Finally, the head of a global agency can make a differ-
million to create a new UN Peace and Development Trust
ence by leading it in a way that attracts, develops, and
Fund (UNPDTF), which is administered by a steering com-
retains an effective, highly motivated staff working in a
mittee of five, four of whom are senior Chinese officials. In
culture of performance and integrity. These examples high-
2019 the UNPDTF’s projects were heavily focused on “en-
light the importance of good leadership and management
hancing the complementarities and synergies between the
for multilateralism in the future.
Agenda and the Belt and Road Initiative” and “strengthen-
The difficulties faced by the leadership of international
ing capacities of developing countries participating in the
organizations are obvious. They face legal and political
Belt and Road Initiative” (UNPDTF 2022). That said, other
constraints on what they can do and where, from their

Global Perspectives 4
 Multilateralism in the Twenty-First Century

mandate and governance. They face resource constraints. power in the Security Council, and weighted voting power
They face bureaucratic constraints. They must engage with in the IMF and the World Bank).
a wide range of other stakeholders including staff, civil so- Powerful countries, however, have to accept some con-
ciety, and beneficiaries. But strong leaders have shown that straints in order to persuade and co-opt other countries to
they can navigate and push back on each of these con- participate in institutions in which the powerful have a par-
straints and in so doing shape the setting of agendas, the ticular voice. And even from their own point of view, inter-
gathering of information, and the resolving of states’ col- national organizations only have value-added to the extent
lective action problems, which makes international cooper- that they are distinct from unilateral or bilateral means. In
ation possible (Abbott and Snidal 1998). This will be ever cases where the United States has publicly sought unilat-
more important as the geostrategic rivalry strengthens. erally to push an international organization to do its bid-
Until now, leadership races have been exercises in com- ding, the case has been made that it best advances its own
peting to see whose national “wins” the leadership. Subse- interests by enabling the international institution, as elo-
quently, governments have paid far too little attention to quently laid out with respect to the IMF by Randall Hen-
how the performance of the leadership is appraised and on ning (Henning 2009). In another example, in the China-led

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what basis reappointment decisions are made. This is im- Asian Infrastructure Investment Bank, an “accountability
portant. As highlighted in a survey exercise of international framework” has been carefully crafted to balance the con-
organizations, at the very least, international organizations trol by management (to whom some loan decisions are del-
should have seven elements in place to facilitate good lead- egated) with the oversight of the board, on which sit repre-
ership (WEF 2015). In most multilaterals, at least some of sentatives of the countries who are members (who evaluate
these are missing. the performance of the president).
The likelihood of effective leadership would be improved Rigorous governance arrangements are the most obvious
if governments collectively ensured that leaders of interna- way the “multilateral” character of an agency is en-
tional organizations are trenched. Member countries can hold the institution and its
1. selected and reappointed on their proven experience management to account through their formal representa-
to excel in the core elements required of the role (as tion on the board, through rules about staffing and funding,
above); and through decision-making processes that give all mem-
2. subjected to a multilateral performance review that bers a voice. Unsurprisingly, the process of decision-making
involves all countries in the organization; in multilateral institutions is often laborious and lengthy.
3. held to ethical standards that are clear, monitored, Avoiding laborious institutional processes is tempting
and enforced; for powerful states who often opt to use smaller coalitions
4. reviewed for how effectively their organization at- of the powerful instead. Sometimes this has positive re-
tracts, develops, and retains talent in the organiza- sults. Historically, it’s worth recalling that in the early nine-
tion; teenth century, a Concert of Great Powers—Austria, Great
5. setting strategic priorities, and held to their perfor- Britain, Prussia, Russia, and France—convened extensive
mance with respect to those priorities; multilateral consultations through which they settled rival-
6. engaging with a wide range of stakeholders; ries and agreed, for example, on the neutrality of Belgium
7. evaluated independently and effectively. and Greece.
Informal negotiations and summits were important dur-
Without effective leadership, it is difficult for an orga- ing the Cold War for containing the superpower rivalry.
nization to set and achieve its goals. The future of multi- For example, the July 1955 summit that brought the heads
lateral institutions will demand a very high quality of lead- of government of the Soviet Union, the United States, the
ership in international organizations. This, in turn, will United Kingdom, and France together in Geneva to discuss
require all countries to engage through an appropriate gov- European security, disarmament, and East-West relations
ernance framework and rules. did not result in any formal agreement, but did lead to what
was described as a “Geneva spirit” of willingness to engage
3. LEGITIMACY IN A CHANGING WORLD in a limited way. The resolution of the Cuban Missile Crisis
and the 1977–78 US-USSR agreement that the USSR would
A third and final force shaping multilateralism is the del- limit its engagement in Somalia offer further examples of
icate balance between power and consent that underpins structured informal talks.
multilateral cooperation in a world of sovereign states. The Bilateral agreements were also useful, including at times
participation of powerful states has historically been se- of high tension. For example, the Soviet Union and the
cured (or not) by giving them special rights. For example, Western occupying powers (the United States, France, and
although the United States stayed out of the League of Na- the United Kingdom) agreed on the Austrian Independence
tions in the 1920s, a reluctant United States was persuaded Treaty and Austria’s neutrality in 1955. In 1962 the Soviet
to join the United Nations, the IMF, and the World Bank af- Union and the United States signed the International
ter the Second World War, not least because it was given a Agreement on the Neutrality of Laos. Later in the Cold War
say over leadership, the hosting of their headquarters, and (signaling what would be called the détente), the superpow-
a special voice and influence in decision-making (the “veto” ers agreed treaties that included arms restraints, including
the Anti-Ballistic Missile Treaty (ABM), in force 1972–2002;

Global Perspectives 5
 Multilateralism in the Twenty-First Century

the Strategic Arms Limitation Agreement, signed in 1972; countries to buy in and feel ownership of a rule or an
the Accidents at Sea Agreement of 1972; and the Berlin action. This is precisely what makes multilateralism oner-
Quadripartite Agreement of 1971. Less effective were ef- ous, but ultimately more effective. The costs of not engag-
forts to engineer broad-based agreements, such as Nixon ing a wider group of countries can be high. For example,
and Brezhnev’s Basic Principles Agreement of 1972. actions to condemn and punish Russia for its invasion of
The limitations of small group governance, however, are Ukraine were initially undertaken by the United States and
manifold, particularly when the small group attempts to set a small group of allies. The results have been a sanctions
binding rules for all other countries. Consider the follow- regime applied by too few countries to be effective, and the
ing three challenges to the legitimacy and efficacy of small previously mentioned eighty-two countries that abstained
group governance. or voted against the resolution against Russia in the United
First, small groups often fail adequately to balance the Nations (Woods 2022). Another example is the G7, which
different interests of countries whom international stan- was created in the 1970s as a forum to coordinate the poli-
dards will affect. For example, the Basel Committee was cies of major economies in the wake of the US departure
formed in 1974 to formulate global standards for the pru- from the Bretton Woods system. By the late 1990s, the G7

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dential regulation of banks. It is a small grouping of the membership (United States, Japan, Germany, United King-
governors of Belgium, Canada, France, Germany, Italy, dom, France, Canada, and Italy) failed to include countries
Japan, the Netherlands, Sweden, the United Kingdom, and whose crises were affecting the G7 and whose cooperation
the United States, with Switzerland playing a hosting role. and resources were required to address the crises. After the
They are “like-minded countries,” and they have in com- 1997 East Asian financial crisis, a more inclusive G20 meet-
mon the fact that they are the jurisdictions of the world’s ing of finance ministers was formed. A couple of decades
major financial services companies. Yet these two features later, during the COVID-19 pandemic, the G20 was itself
increase the risk that the group will be blindsided by risks criticized for its lack of representativeness and legitimacy.
that would be more apparent if a wider range of countries Advocates of a UN-wide approach to health threats argued
(with different interests) were at the table. And indeed, in that a small group of wealthy countries within the G20
2008 the financial crisis exposed that their banking sectors had commandeered most available vaccines during the
had “too much leverage and inadequate liquidity buffers…. COVID-19 pandemic, and had failed to support the COVAX
poor governance and risk management, as well as inappro- mechanism they themselves created to ensure that at least
priate incentive structures. The dangerous combination of frontline health workers across the world could be vacci-
these factors was demonstrated by the mispricing of credit nated.
and liquidity risks, and excess credit growth” (Bank for In­ Smaller groups such as the G7 and the G20 have usefully
ternational Settlements 2022). functioned as “crisis committees” for consultation at speed
A second drawback of small group governance is that in a crisis. The limitations of these groups, and other ad
it too often excludes information about how standards or hoc coalitions of the willing, come to the fore when they
rules will affect all countries. Continuing the Bank for In- attempt to define actions or rules for other countries who
ternational Settlements (BIS) example from above, evi- have neither been consulted nor had their interests prop-
dence from developing countries highlights that the stan- erly considered and taken into account.
dards created by the BIS have significant impact on Multilateralism gives a structured form to negotiations,
countries not included in their deliberations, and not figur- decision-making, implementation, and enforcement, which
ing in their analysis or attention (Jones 2020). A different assists in navigating between the sheer power of great pow-
example is the global tax deal pushed by the G7, brokered ers and their need to co-opt other states.
by the OECD, and formally agreed by the G20 leaders in Oc-
tober 2021. The deal seeks to curb tax avoidance by large CONCLUSIONS
multinational enterprises (MNE) and introduces new taxing
rights irrespective of an MNE’s physical location, and a new The strategic rivalry between China and the United States is
global minimum corporate income tax of 15 percent on the a rivalry between nations who both depend on global mar-
largest MNEs. The problem, as expressed by countries such kets, global finance, global innovation, and the co-option
as Kenya, Nigeria, Pakistan, and Sri Lanka who refused to of other countries and regions of the world to sustain their
sign the agreement, is that these rules have been designed own success. For this reason, we are likely to see multilat-
with little attention to their effect on countries other than eralism adapt and persist.
the small group of wealthy countries who drove the process. Some cooperation will take place within alliances and
The failure more fully to analyze and balance the conse- coalitions dominated by China and by the United States.
quences for other countries has resulted in a deal that will Their rivalry will not just shape cooperation within each of
disadvantage the countries who suffer most, and dispropor- their own alliances. It will also shape cooperation in inter-
tionately, from tax avoidance (McCarthy 2022). Developing national organizations—in part directly, in part indirectly,
countries may find that the global minimum tax could ac- through the leadership and management of international
tually lead to tax revenue being lost to other jurisdictions organizations. There will be some splitting off where the
(Lassourd 2022). great powers prefer to deal within their own alliances. On
A final limitation to coalitions of the willing is that they other issues, international organizations will remain the
short-circuit the process of getting a larger number of preferred forum for collaboration but also for competition.

Global Perspectives 6
 Multilateralism in the Twenty-First Century

For international institutions, the lessons are threefold. AUTHOR BIOGRAPHY

First, they will need yet more adeptly than before to nav-
igate the strategic rivalry, finding and highlighting areas Professor Ngaire Woods is the founding Dean of the Blavat-
where cooperation and competition can coexist, and where nik School of Government and Professor of Global Eco-
their own capacities to pool information, to reduce transac- nomic Governance at Oxford University. Her research fo-
tions costs, and to broker and monitor agreements can as- cuses on how to enhance the governance of organizations,
sist. This will require high-quality leadership. the challenges of globalization, global development, and
Multilateral institutions will need heads who can effec- the role of international institutions and global economic
tively broker agreements among countries, persuade coun- governance.
tries to pool resources, and attract and organize an effective She founded the Global Economic Governance Pro-
and highly motivated staff. Proven experience in these do- gramme at Oxford University, and co-founded (with Robert
mains should be a sine qua non for any country’s candi- O. Keohane) the Oxford-Princeton Global Leaders Fellow-
dates for leadership. Equally, the countries who belong to ship program. She led the creation of the Blavatnik School
multilateral organizations need to ensure that they are col- of Government.

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lectively reviewing the performance of leaders, setting and Ngaire Woods serves as a member of the Asian Infra-
holding them to ethical standards, ensuring that they hire structure Investment Bank’s International Advisory Panel
and promote talented people, that they set and achieve and as a Non-Executive Director at Rio Tinto. She is a
strategic priorities, engage with a wide range of stakehold- trustee of the Mo Ibrahim Foundation, the Stephen A.
ers, and are regularly reviewed. In too many existing multi- Schwarzman Education Foundation, and the Van Leer
lateral organizations, some of these elements are missing. Foundation. She is a member of the Conseil d’administra-
International institutions will change as the strategic ri- tion of the Institut National Du Service Public. She sits
valry deepens. The United States and China are likely to use on the advisory boards of the Centre for Global Develop-
multilateral institutions in a competitive way to cement re- ment, the Hoffmann Global Institute for Business & Soci-
lations with selected allies, such as in development financ- ety, the African Leadership Institute, the School of Manage-
ing, as well as in a cooperative way to ensure global coop- ment and Public Policy at Tsinghua University, the Nelson
eration, such as on climate change. Mandela School of Public Policy at Cape Town University,
Not all forums for international cooperation will be uni- and the International Business and Diplomatic Exchange
versal. Ad hoc and exclusive processes could be useful, par- (IBDE). She is Vice-Chair of the Alfred Landecker Founda-
ticularly in containing the strategic rivalry. Equally, they tion’s Governing Council and a member of the UK Depart-
will usefully corral powerful countries to act in a crisis. ment for International Trade’s Trade and Economy Panel.
However, their legitimacy will be strained when they at-
tempt to set standards for all countries. Equally, their ef-
fectiveness is likely to be stymied where their membership
ACKNOWLEDGMENTS
is narrow. Multilateral governance creates a framework to
With deepest thanks to Shantayanan Devarajan for his early
bring more countries into a negotiation. Crucially, this of-
stage comments on this draft.
fers a way to countervail a concentration of narrow inter-
ests, as well as to provide more information, and more po-
tential buy-in from countries. These elements are crucial to COMPETING INTERESTS
a future multilateralism that is both legitimate and effec-
tive. I have received honoraria from the World Bank and from
the Independent Office of Evaluation of the IMF for re-
search and lectures on this topic.

Submitted: January 15, 2022 PST, Accepted: October 26, 2022

PST

Global Perspectives 7
 Multilateralism in the Twenty-First Century

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