Within a decade, two financial crisis hit the global economic system. In 1998, the ‘rouble collapse’ affected the Russian economy which fell into a debt default. Ten years later, in 2008, a subprime mortgage crisis in the United States (US) triggered the biggest financial shock since the crack of 1929. The global downturn was interpreted in different ways and had different reaches, but unlike the Asian, Russian and Tequila crisis of mid-nineties, the bomb had been detonated at the heart of the post-war liberal international economic order, provoking a whole range of consequences for the US and the European Union, that faced recession and a deep sovereign debt crisis in the Eurozone.
In Latin America, reinforced by the primary commodities cycle which took place between 2002 and 2008, the first signals of recession were perceived late, but the result was not innocent. Having built a new dependency with China, the Latin American region started to suffer the effects of the downturn of the Asian giant in early 2014, when Brazil went into recession for first time in five years.
With the collapse of Bretton Woods system in the 1970s and the first cyclical turbulences of global capitalism in the following years, the post-war international financial and economic structure became more unstable and complex. Although multilateral institutions continued to be the core of the system, —even until the recent crisis of 2008/2009—, the emergence of new actors with power such as emerging markets, lobbies, multinational companies, NGOs and social networks, together with the intensification of globalization, transnationalization and interdependence, showed that the world could not longer be dominated by a minority G of industrialized countries. In this way, the small group of five members (G5) began to expand, going from G7 to G8 —with the incorporation of Russia—, and then to G20, when in 1999 emerging powers and developing countries joined the group with the mission of overcome the economic goal of the G8, adding a political dimension that was concerned with global problems (Carrillo Salcedo, 2010).
However, even though this informal multilateralism is increasingly characterizing world politics, the truth is that almost twenty years after its emergence, little has been achieved. This responds to several factors, among which, the diffusion of power in a transition context is perhaps one of the most important. This means that no one governs, but at the same time, more actors have the power to influence global governance. Following Amitav Acharya, the end of the American World Order had several reasons, including the emergence of other powers such as China and India, and new threats, such as terrorism, ethnic conflicts and climate change. In this sense, Acharya proposes that the liberal hegemony order from the past, should be replaced by a Multiplex World Order.
According to Bernhard Rinke and Ulrich Schneckener (2013), the current global governance tends to be flexible, loose and informal and is the consequence of the crisis of the multilateral system established in 1944. This encompasses what the authors call the second macro-process of world politics, that is, the fragmentation of multilateralism, which has led to three types of informal multilateral governance: a) informal governance through ‘clubs of lobbyist’, b) informal governance through ‘clubs of the willing’ and c) informal governance through ‘clubs of the relevant’. What distinguishes each of them is the place where the new global players with power play. In this sense, whilst some do it within existing regimes and organizations, others do it outside of these. But what place could Latin America occupy in the next global governance?.
Between the end of 2017 and the first months of 2018, the debates for a new world governance will take place in Latin America. The country chosen for both appointments is Argentina, which will preside over the G-20 in 2018 and will host the meeting of the World Trade Organization (WTO) next December.
In the particular case of Argentina, the new foreign policy of President Mauricio Macri, achieved a goal that countries like Brazil as member of BRICS was unable to achieve, that is, gathering in the same developing country the two most important events referred to global multilateralism. In this sense, Argentina has the most tangible opportunity to capitalize leadership and become the ‘voice’ of Latin America.
In regional terms, there are two specific issues. In the one hand, the protectionist policy of the United States represents a chance for Mexico to trade with the rest of Latin America. On the other hand, although Latin America does not have a substantive weight in the G-20 —only three of its countries integrate the group: Argentina, Brazil and Mexico—, the summit represents a good chance to promote the regional agenda of Latin American problems (development, cooperation, infrastructure, trade and poverty). However, the possibility of influencing global issues depends on many factors. One of them is the capability to solve regional structural problems, such as corruption, fiscal discipline and financial instability. Beyond this, Latin America needs to prepare a long-term infrastructure plan aligned with the 2030 Agenda for Sustainable Development. In this sense, according to the ECLAC Fal Bulletin (2016) “the persistence of gaps in infrastructure and other fields in Latin America and the Caribbean obstructs the path towards development based on equality and sustainability”. However, “public infrastructure policy is a constant challenge” (ECLAC Fal Bulletin, 2016: 4).
In this context, it is necessary to remain cautious. Global governance faces a transition period and much more actors have the power to influence on. States are not the only players in the international system and other actors, for instance multinational companies, are also exerting power in political arena and have an immense influence on economic activity, governments and globalization. While the informal Group of 20 (G-20) is the consequence of an increasingly fragmented world, we do not know if it will be able to encourage coordination and cooperation in the near future. In this scenario, Latin American leadership still remains weak and irrelevant.
*The author is grateful to Freddy Alpalá Cuesta (Chair of the IAPSS Student Research Committee on Latin American Politics) for valuable comments.
About the Author
Ludmila Quirós is member of the Student Research Committee on Latin American Politics (IAPSS). She holds a degree in Political Science and International Relations (UADE) and is member of the International Political Science Association (IPSA).