Conference Power shifts in a changing world order... · 3 Power shifts in a changing world order Foreword The first decade of the 21st century marked the beginning of a new era. Power

world order

Conference Power shiftsin a changing

Power shifts in a changing world order

The role of the European Union and the position of the Netherlands

Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Programme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Opening Address . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

The Allure of the Chinese model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

AddressbyMr.Zhang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Managing Global Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

AddressbyMr.Kupchan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Discussants

AddressbyMr.Brok . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

AddressbyMr.Balkenende . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Session A: Global economic (im)balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

AddressbyMr.Bakker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

Session B: Security and scarcity of resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88

AddressbyMs.Lee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90

Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104

Conclusions and remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121

AddressbyMr.Rosenthal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121

AddressbyMr.DeZwaan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127

List of participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134

AttachedtotheWorld:OntheAnchoringandStrategyofDutchForeignPolicy

ScientificCouncilforGovernmentPolicy(2010)

Position paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139

Powershiftsinachangingworldorder

Footnotes & Colofon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145

Contents

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ForewordThefirstdecadeofthe21stcenturymarkedthebeginningofanewera.

Powershiftsareoccurringworldwide.NeweconomicpowersariseinAsia

andSouthAmericaandnewnon-stateactorsareincreasinglyimportant.

Onaglobalstageweareconfrontedwithnewcrises:climatechange,energy

scarcity,terrorismandsecurityrisks,povertyandexclusion,budgetary

deficits.TheglobaldevelopmentsareachallengefortheEuropeanUnion

andtheNetherlands.

TheagendaoftheDutchSenateischaracterizedbyastrongEuropeanand

internationalorientation.Asa‘chambrederéflexion’theSenateregularly

discusseslongtermdevelopmentsandvisionstothefuture.Inthistradition

ittooktheinitiativetoorganiseaninternationalconferenceonthematter

ofpowershiftsinachangingworldorder.Theinitiativeresultedinaunique

cooperationbetweenfourplayersintheDutcharenaofpolitics,policyand

science.TheDutchSenate,theScientificCouncilforGovernmentPolicy

(WRR),theAdvisoryCouncilonInternationalAffairs(AIV)andtheNetherlands

InstituteofInternationalRelationsClingendaelcombinedtheirdifferent

backgroundsandareasofspecialinteresttoguaranteeaninterdisciplinary

approachtothesubjectofpowershifts.

Theaimofthisconferencewastogetaclearerpictureoftheconsequences

oftheshiftsofpowertakingplaceintheworld.PointsofviewoftheUS

andChinahavebeendiscussed,aswellascurrentissuessuchasglobal

economicimbalancesandscarcityofresources.Welookbackatasuccessful

conferencewithalivelydebateonthetransformationsinaglobalisingworld

andthewayEuropeandtheNetherlandscanbestpositionthemselvesinthis

changingglobalarena.

RenévanderLinden,

President of the Dutch Senate

AndréKnottnerus,

Chair of the Scientific Council for Government Policy (WRR)

FritsKorthalsAltes,

Chair of the Advisory Council on International Affairs (AIV)

JaapdeZwaan,

Director of the Netherlands Institute of International Relations Clingendael

4

Programme

9.30hrs Registration,coffeeandtea

9.50–10.00hrs IntroductionbyRenévanderLinden

10.00–12.15hrs Morning plenary session Chair: RenévanderLinden

Speakers: Wei-WeiZhang

CharlesKupchan

ElmarBrok

JanPeterBalkenende

Discussion

12.15–13.30hrs Lunch

13.30–15.30hrs Afternoon thematic sessions

Session A: Global economic (im)balances Chair: JanRood

Speaker: AgeBakker

Discussant:CarloTrojan

Discussion

Session B: Security and scarcity of resources Chair: AndréKnottnerus

Speaker: BerniceLee

Discussant:FreddeGraaf

Discussion

5


15.30–16.00hrs Coffee/teabreakwithmusicalintermezzo

16.00–16.45hrs Conclusions

Chair: FritsKorthalsAltes

Speakers: UriRosenthal

JaapdeZwaan

16.45hrs Drinks


6

René van der Linden, President of the Senate of the Netherlands

Ladiesandgentlemen,

Itisagreatpleasuretoopenthisconferenceandtowelcomeyouallinthis

plenaryhalloftheSenateoftheNetherlands.Iespeciallywelcomeour

reputedkeynotespeakersandIthanktheminadvanceforcomingtothe

Netherlandstocontributetothisconference.

Iextendmywelcometoallofyoualsoonbehalfofourpartnersinorganising

thisconference:theScientificCouncilforGovernmentPolicy,theAdvisory

CouncilonInternationalAffairsandtheNetherlandsInstituteofInternational

RelationsClingendael.

FortheDutchSenateinitiatingaconferenceofthisnatureislogicalgiven

itsspecialroleintheDutchconstitutionalarena.IntheSenatetheagendais

tightlyinterwovenwithinternationalissues.Wefocusonlong-term

developments;visionstothefutureandacomprehensiveapproachare

importantaspectsofourparliamentarywork.

Thefirstdecadeofthe21stcenturyrecentlycametoanend.Itwascharacterised

byaninternationalfinancialcrisiswithoutprecedentandarapidshiftin

powerrelationsintheworld.Inthe20thcenturythecoreofeconomicpower

wasinWesternEuropeandNorthAmerica.Inrecentyearswehaveseen

aremarkableexpansionofeconomicpowersinAsiaandSouthAmerica.

Themovementsthattakeplacehaveenormousrepercussionstotherestof

theworld,includingEuropeandtheNetherlands.Thesignalsareclear.China

replacedGermanyin2010asthelargestexporterintheworld.Thecombined

budgetsforresearchanddevelopmentofChinaandIndiaexceededthose

ofboththeUnitedStatesandEuropeeach.Thesenseofoptimisminthese

countriesisremarkable,ascomparedtothegeneralfeelinginWesternEurope.

WhilemanyinEuropeareconcernedaboutthesustainabilityofpensions,

thesecountriesinvestheavilyineducation,science,andtechnology.Young

peopleareeagerforknowledge,innovation,andstronglyfuture-driven.Of

course,anutterlynewdevelopmentiswhatishappeningnowinseveralArab

Opening Address

7


countriesnotablyEgypt,whereweseeaverystrongcallformoredemocratic

andsocialreforms.Itishardtoestimatewhattheoutcomeofthishistorical

change-overwillbe.WhatIseriouslymissisaEuropeanpositioninthis

forcefulprocessofreform.

Inaglobalisingworldwecannottakeourpositionforgranted.Globalisation

isanopportunity,achance,achallenge.Theaimofthisconferenceistogeta

clearerpictureoftheconsequencesoftheshiftsofpowertakingplaceinthe

worldforEuropeandtheNetherlands.

AsasmallnationtheNetherlandshasalwaysbeenveryinternationallyoriented

andinfavourofanopeneconomy.MembershipoftheEuropeanUnionwith

theopenbordersandtheinternalmarkethasalwaysbeenverybeneficialto

ourcountry.Nevertheless,inthisagewesharewithothercountriesacertain

hesitationaboutEurope,whiletherecentcrisishasdemonstratedthatweneed

moreEuropeinthefinancialeconomicdomaininsteadoflesstoeffectively

solveit.AtthisverymomenttheEuropeangovernmentleadersmeettocome

toatotalapproachofthedebtcrisis,includingthepossibilityofsanctions

againstmemberstatesthatdonotmeettheircommitments.TheGerman

ChancellorAngelaMerkelspokeofa‘pacttomakeEuropemorecompetitive’.

Withthisconferencewewanttoshedalightonthesituationofrapidchange

inwhichwefindourselves.Infocussingfromtheoutsidetotheinside,we

willstartfromabroadglobalviewpointandzoomintotheEuropeansituation,

withaspecialfocusonthepositionoftheNetherlands.Wewilldothisby

kickingoffourmorningsessionwiththespeechesofProfessorWei-WeiZhang

andProfessorCharlesKupchanoncurrentshiftsinpower,respectivelyfrom

theChinesesituationandthepointofviewfromtheUnitedStates.Ourformer

primeminister,ProfessorJanPeterBalkenende,willthereafterreflecton

theDutchsituationwithinthesepowershiftsintheworldandElmarBrok,

MemberoftheEuropeanParliamentfromGermany,willbrieflycommentfrom

aEuropeanperspective.

Indoingso,wewillfollowanapproachasadvocatedinthereportofthe

ScientificCouncil(WRR),whichwassenttoyoutogetherwiththeinvitation

8

fortoday’sconference.ThereportfromtheWRRcontributestoanew

orientationtowardstheoutsideworldandservesasagoodfoundationfor

thediscussionoftoday’sconference.Iexpectthatwewillhaveaveryfruitful

andthought-provokingconference.Letmenowtointroduceourfirsttwokey

notespeakersoftoday.

Mr.Wei-WeiZhangisProfessorattheGenevaSchoolofDiplomacyand

InternationalRelations,Switzerland,andseniorresearchfellowattheCentre

forAsianStudies,Geneva.HeisalsoguestProfessoratFudanandTsinghua

Universities,andaseniorfellowattheEquinox(Chunqiu)InstituteinChina.

Hewillspeaktouson‘theAnatomyofaMiracle:theChinaModelandits

Implications’.

OursecondkeynotespeakeroftodayisMr.CharlesKupchan.CharlesKupchan

isanAssociateProfessorofInternationalRelationsintheSchoolofForeign

ServiceandGovernmentDepartmentatGeorgetownUniversity.Heisalsoa

SeniorFellowandDirectorofEuropeStudiesattheCouncilonForeignRelations.

Mr.KupchanwasDirectorforEuropeanAffairsontheNationalSecurityCouncil

duringthefirstClintonadministration.

9


Mr.Zhang:Thankyouverymuch,Mr.President!FirstofallIwishtothankyou

forthiskindinvitationandforthisgreathonourtospeakbeforesucha

distinguishedaudienceinthismagnificentplenaryhall.

Asweallknow,ChinaortheriseofChinaremainscontroversialinEuropeor

intheWestingeneral,forallkindsofreasons.Indeed,overthepasttwentyor

soyearstheChinesestatewasoften–andinmanywaysstillis–portrayed

inWesternmediaasadichotomyoftherepressiveregimeclingingtopower

andasocietyledbypro-democracydissidentsborderingonrebellion.Some

Europeans,forinstanceinOslo,stillviewChinaasanenlargedEastGermany

oranotherBelarus,150timesbigger,awaitingthecolouredrevolution.This

perceptionhasledmanyChinawatchersinEuropeandintheUnitedStatesto

haveconfidentlycrystal-balledChina’spessimisticfuture.TheTiananmen

tragedyof1998meanttheregimewouldcollapse.Thedisintegrationofthe

SovietUnion,Chinaweretofollowsuit.DengXiaoping’sdeath,Chinawouldfall

apart.HongKong’sreturntoChina,itsfuturewouldbedoomed.TheAsian

financialcrisis,Chinawouldbethenextvictim.

The Allure of the Chinese model

Address by Professor Wei-Wei Zhang, Professor at Geneva School of Diplomacy and International Relations

Wei-Wei Zhang

10

TheoutbreaksofSARS,China’sChernobyl.This2008financialtsunami,China

wouldbeinchaos.

Yetsurprisingly,alltheseforecaststurnedouttobewrong.ItisnotthatChina

hascollapsed.Rather,allthepessimisticforecastsaboutChina’scollapseto

mymindhavecollapsed.Thisunimpressivetrackrecordofcrystal-balling

Chinaremindsusoftheneedtolookatthishugeandcomplexcountryin

amoreobjectiveway.Perhaps,withanapproachadoptedbythegreat

DutchphilosopherSpinozainthe17thcenturyorhisGermancontemporary

philosopherLeibniz,i.e.weneedtofocusonhowtheChinesedeveloped

whattheycalled‘naturalreligion’or‘naturalapproach’orasecularapplication

ofethicsandpoliticstosocialandeconomicgovernance.Ifwearefreefrom

ideologicalhang-upswemaycometoseewhathashappenedoverthepast

threedecadesinChinaisarguablythegreatesteconomicandsocialrevolution

inhumanhistory.About400millionpeoplehavebeenliftedoutofpoverty

withallitsimplicationswithinChinaandbeyond.

Chinahasinfactperformedbetterthanallotherdevelopingcountries

combinedoverthepastthreedecadesbecause70%oftheworld’spoverty

eradicationhasoccurredinChina.Chinahasperformedbetterthanall

transitionaleconomiescombined,astheChineseeconomyhasincreased

about18-foldoverthepastthreedecades,whileEasternEuropeasawhole

onlyroughlyonefold,albeitfromahigherstartingpoint.

Chinahasalsoperformedbetterthanmanydevelopedcountries.The

“developedregions”ofChina,withroughly300millionpeople–thesizeof

theUSpopulation–todayinmanywayscanmatchthedevelopedcountries

inSouthernEuropeinoverallprosperity.Shanghaihasarguablysurpassed

NewYorkinmanyways,ifImayusetheanalogyofhardwareandsoftware:

intermsofhardware,Shanghaihasbetterairports,subways,bullettrains,

shoppingfacilities,andcityskylinesthanNewYork.Intermsofsoftwarewe

havelongerlifeexpectancyandmuchsaferstreets,andchildmortalityis

lowerthaninNewYork.Ofcourse,Chinahasitsshareoftheproblems,some

ofwhichareveryseriousbutitsoverallsuccessisbeyonddoubt.

Howtoexplainthis?Someclaimthisisduetoforeigndirectinvestments.

ButEasternEuropehasreceivedfarmoreFDIinpercapitatermsthanChina.

SomeclaimitisduetoChina’scheaplabourbutIndiaandmanydeveloping

countriesoffercheaperlabour.Someclaimthatitisduetoanauthoritarian

governmentbutthereareauthoritariangovernmentseverywhere:inAsia,Africa,

LatinAmerica,inEgypt,Tunisia,andAlgeria.Butnoneofthemhave

accomplishedwhatChinahasaccomplished.

11


IfnoneoftheseexplanationscanexplainChina’ssuccessweshouldbe

encouragedtothinkoutsidethebox.Myownhumbleexplanationisthebuzz

word‘model’,ormoreprecisely‘theChinamodel’,whichisalsothetopicI

willaddresstoday.Butfirstofall,Iwouldliketosayafewwordsaboutthe

natureofChinaasastateinordertoprovideacontextforourdiscussions

here.

ChinaisnotanenlargedEastGermanyorBelarus,norisChinaanother

ordinarystate.Tomymind,Chinaisacivilisationalstateandtheworld’sonly

civilisationalstate.Chinaistheonlycountryintheworldwithahistoryof

unifiedstateforover2000years.Itistheonlycountryintheworldwitha

continuouscivilisationlastingover5000years.TheChinesearethe

indigenouspeopletotheirownland.AnexampleofthisistheChinese

language:awelleducatedhigherschoolstudent–notcollegestudent–can

readConfucius’textswritten2500ago,asignofthecontinuityofChinese

culturallineage.

Chinaistheonlycountrywhichis,youmaycall,anamalgamationofan

ancientcivilisationandahugemodelstate.Anotheranalogy,butnotvery

accurate,couldbesomethingliketheancientRomanempirecontinuingto

thisdayasaunifiedmodernstate,withacentralisedgovernment,amodern

economy,time-honouredtraditionsandcultures,andahugepopulation

speakingonelanguagecalledLatin.Thiskindofcountryisboundtobe

differentinseveralsignificantways.China,tomymind,isanamalgamationof

fourfactors,i.e.ifImayusetheadjective‘super’:therearea‘super’large

population,asuper-sizedterritory,a‘super’longhistory,andasuper-rich

culture.

Withthesefour‘supers’China’sriseisboundtoaffectotherpartsoftheworld.

ChinahasapopulationlargerthanthetotalpopulationofEuropeof27,the

UnitedStates,Russia,andJapancombinedandmore.Todayisactuallythe

seconddayofChina’sSpringFestival,theChineseNewYear.Weexpectthere

willbeabout2.5billionpersons’tripsacrossChina’svasttransportation

system,whichmeansthatyoumovetheentirepopulationofEurope,Russia,

Japan,theUnitedStates,andAfricafromoneplacetoanotherwithinone

month!Thisisthescaleofthecountryandthescaleofthechallengesthe

countryisfacedwithandalsothekindofopportunitiesthecountryprovides.

Chinahasasuper-sizedlandscape,acontinentbyitself,withallits

unimaginableregionaldiversities.Chinahas‘super’-entrenchedhistorical

traditionsineverythingyoucanthinkof,oftenofthousandsofyears,ranging

frompoliticalgovernance,statecrafttoeconomics,philosophy,medicine,

militarystrategy,andwayoflifeforordinarypeople.

12

Chinahasasuper-richculture,includingoneoftheworld’smostsophisticated

literaturesandarchitectures.Perhapsthereisnobetterexampletoillustrate

thisrichnessthantheChinesefood:thereareeightmainschoolsofcuisinein

Chinaandcountlesssub-schools.Eachoftheeightmainschoolsisarguably

richerthantheFrenchcuisineintermsofcontentsanddiversities.So,a

civilisationalstateisaproductofhundredsofstatesamalgamatedtogether

overthousandsofyearsofhistory.Thefour‘supers’Ihavejustdescribed

haveshapedandwillcontinuetoshapeChina’sfuturetrajectoryof

development.WiththislargepictureinmindletmenowturntotheChina

model.Forme,thismodelcontainsatleasteightfeatures.

First,itsguidingphilosophyiscalled‘seekingtruthfromfacts’.Thisisan

ancientChineseconceptrevivedbythelateleaderDengXiaopingafterthe

failureoftheutopianCulturalRevolution.DengXiaopingbelievedthatfacts

ratherthanideologicaldogmas,whetherfromtheEastorfromtheWest,

shouldserveastheultimatecriteriaforestablishingtruth.Fromexaminingthe

factsheconcludedthatneithertheSovietcommunistmodelnortheWestern

liberaldemocracymodelreallyworkedforalargedevelopingcountryorfor

developingcountriesingeneralintermsofachievingmodernisation.Hence,

Chinadecidedin1978toexploreitsownpathofdevelopmentandtoadopta

pragmatic‘trialanderror’-basedapproachforitsmassivemodernisation

programme.ThisisthephilosophicalunderpinningfortheChinamodel.

Second,puttingpeople’slivelihoodfirst.Thisisagainaverytraditionalconcept

ofpoliticalgovernanceinChina.InthiscontextDengXiaopingprioritised

povertyeradicationasChina’snumberonetaskandpursuedadowntoearth

strategytowipeoutpoverty.China’sreformsstartedfirstinthecountrysideas

mostChinesethenlivedinthecountryside.Thesuccessoftheruralreformset

theChineseeconomymovingandcreatedapositivechainreactionleadingto

theriseofmillionsofsmallandmedium-sizedenterprises,whichsoon

accountedformorethanhalfofChina’stotalindustrialoutput,thuspavingthe

wayfortherapidexpansionofChina’smanufacturingindustriesandforeign

trade.Chinaisarguablycorrectinganeglectintherangeofhumanrights,

advocatedbytheWest,whichtendstofocusexclusivelyoncivilandpolitical

rights.Thisfeatureofputtingpeople’slivelihoodfirstwill,Ithink,have

long-termimplicationsforhalfoftheworld’spopulationthatstillliveinpoverty.

Third,stabilityasapre-conditionfordevelopment.Asacivilisationalstate,its

ethnic,religious,linguistic,andregionaldiversityisarguablyamongthe

highestintheworld.Hence,thisconditionhasshapedwhatmaybecalled

‘acollectivepsyche’oftheChinesepeople.MostChinesereverestabilityand

fear‘luàn’,theChinesewordforchaos.DengXiaoping’spenchantforstability

derivedinpartfromhisunderstandingofChina’shistory.Ifwecouldhavea

13


quicksummaryofChina’smodernhistory:roughlyfrom1840–whenthe

opiumwarbrokeoutbetweenChinaandBritain–uptothereformera

startingin1978,thelongestperiodofcontinuousstabilityinChinawasno

longerthaneightornineyears.So,China’smodernisingprocesswas

constantlydisruptedbyforeignaggressions,civilwars,peasants’uprisings,

ideologicalfrenzyandotherkindsofchaos.Thepastthreedecadesmark

thefirsttimethattheChinesehaveenjoyedsuchacontinuousstabilityand

theyhavecreatedaneconomicmiracle.Withanothertwoorthreedecades

ofstability,Chinawillcreateperhapsagreatermiracle.

Fourth,gradualreform.GiventhesizeandcomplexityofthecountryDeng

Xiaopingsetoutastrategythatisoftendescribedas‘crossingtheriverby

feelingforsteppingstones’.Heencouragedexperimentsforallmajorreform

initiativesasexemplifiedbyChina’sspecialeconomiczones,wherenewideas

weretestedsuchaslandsale,high-techjointventures,andexport-oriented

economy.Onlywhennewinitiativesareshowntoworktheyareextended

nationwide.Chinahasrejectedshocktherapyandworkedthroughits

imperfectexistinginstitutionswhilegraduallyreformingthemtoserve

modernisation.ThiscautiousapproachhasenabledChinatomaintainamuch

neededpoliticalstabilityandtoavoidparalysingfailures,aswasthecase

withtheformerSovietUnionandex-Yugoslavia.

Fifth,correctsequencingandpriorities.Inlinewiththegradualapproach

China’sreformhasdemonstratedaclearpatternofchange.Ruralreformsfirst,

urbanonessecond,changesincoastalareasfirstandinlandsecond,

economicreformsfirstandpoliticalonessecond,easyreformsfirstandmore

difficultonessecond.UnderpinningthisapproachisChina’sphilosophical

traditionofholisticthinking.IwasthinkingofDengXiaoping.Whenhecame

topowerhisideawastohavea70-yearsstrategy,tillthemiddleofthe21st

century,i.e.by2050,Chinashouldbecomeafullfledgeddevelopedcountry.

ThisstrategyisstillbeingpursuedbytheChinesegovernmenttothisday.

Thiskindofholisticthinkingcontrastssharplywiththepopulistshort-term

politicssoprevalentinmuchoftheworldtodayincluding,unfortunately,

Europe.

Sixth,amixedeconomy.Chinahastriedtocombinethestrengthofthe

invisiblehandofthemarketforcewiththevisiblehandofthestate

intervention,astobetterpreventmarketfailures.China’seconomicsystemis

called‘socialistmarketeconomy’.Whenthemarketforceisreleasedby

China’seconomicchangethestatehasdoneitsutmosttoensureamacro-

stability.Thestatesteeredthecountryoutofharm’sway,inboththeAsian

financialcrisisandthecurrentfinancialtsunami.

14

Seventh,openinguptotheoutsideworld.Withnomessianictraditionof

convertingothersChinarepresentsaverysecularculturewherelearningfrom

othersishighlyvirtuous.Chinahasretaineditslongtraditionofselective

culturalborrowingfromtheoutsideworld,includingdrawingonuseful

elementsfromtheneo-liberalWashingtonconsensussuchasitsemphasison

entrepreneurshipandinternationaltrade.Butwelearnfromitselectively.

Wekeepwhatwecall‘policyspace’,China’sownpolicyspace.Openingupto

internationalcompetitionhasallowedChinatobecomeoneofthemost

competitiveeconomiesintheworld.

Lastbutnotleast,anenlightenedstrongstate.China’schangehasbeenled

byanenlighteneddevelopmentalstate.Thestateiscapableofshaping

nationalconsensusontheneedforreformandmodernisationandensuring

overallstabilityandpursuinghard,strategicobjectivessuchasenforcing

bankingsectorreforms,carryingoutveryhardstate-ownedenterprises

reforms,andstimulatingtheeconomyagainstglobaldownturn.Thisfeature

originatesfromChina’sConfuciantraditionof‘abenevolentstrongstate’,

establishedonthebasisofmeritocracyatalllevels.Afterall,Chinainvented

thecivilservantsexaminationsysteminthefirstcenturyB.C.

IwasjokingwithProfessorKupchan:ifyouwanttobecomeamemberofthe

top9inChinatoday–amemberofthestandingcommitteeofthepolitical

bureau–youhavetobetwiceagovernerofprovince,whichcouldbethesize

ofGermany,andperformreasonablywell.Eachprovincecouldbethesizeof

Germany,soitisbynomeanseasy.Youhavethiskindofmeritocracy.Itold

himwhateverproblemswehavewithoursystemwearenotgoingtochoose

someoneasincompetentasGeorgeW.Bush.No,thatwillnothappen!We

haveaminimumstandardforchoosingleaders.

Chinarejectsthestereotypicaldichotomyofdemocracyversusautocracyas

webelievethatfundamentallyspeakingthequalityofapoliticalsystem,

includingitslegitimacy,hastobedefinedbyitssubstance,thatisgood

governanceandtestedbywhatitcandelivertoitspeopleandbythelevelof

satisfactionthepeoplefeel,ratherthanbymerelyproceduraljustice.China

emphasizessubstanceoverprocedures.Ofcourse,thismaybeuniqueatthis

stageofdevelopmentforChinatoday,becauseChinesebelievethatultimately

substancewillevolverightproceduresinlightofChina’sownnational

conditions.Chinaisnowtheworld’slargestlaboratoryforeconomic,social,

andpoliticalchange.China’ssuccessforeconomicreformmayhaveactually

setapatternforChina’sfuturepoliticalchange:agradual,experimental,and

accumulativeapproachintryingtoassimilatewhateverisgoodinChineseand

foreignideasandpractices.Aftermorethanonecenturyofdevastatingwars

andrevolutions,afterthreedecadesofrelativelysuccessfuleconomicreforms

15


mostChineseseemwillingtocontinuewithitsownimperfectyetefficient

modelofdevelopment.

ThismodelseemstoblendreasonablywellwithChina’sowncivilisationof

severalmillennia,includingtwentyorsodynasties,sevenofwhichlasted

longerthanthewholeUShistory.Chinaisgoingthroughitsownindustrial

andsocialrevolutions.Imperfectionsareabundantandthecountryisstill

facedwithmanychallenges,suchasfightingcorruption,reducingregional

gaps,andreducinggapsbetweenrichandpoor.ButChinaislikelyto

continuetoevolvealongitsownmodelratherthanembracingothermodels.

TheChinamodelmaywellbecomemoreinfluentialinternationally.While

China’sexperienceislargelyindigenousandwillbedifficulttocopybyother

countrieswithdifferentculturaltraditions,certainChineseideasandpractices,

suchasseekingtruthfromfacts,puttingpeople’slivelihoodfirst,agradual

andexperimentalapproach,goodgovernanceversusbadgovernancebeing

moreimportantthan‘democracyversusautocracy’.Theseideasandpractices

maygenerateabroaderinternationalappeal.

AswearediscussingherethepowershiftsinachangingworldorderIthink

theriseofChinaandtheChinamodelmaymeansomethinginthisregard.

TheworldordermaybegraduallyshiftingfromwhatIcalla‘vertical’orderin

whichtheWestisabovetherestintermsofpoliticalsystems,wealthand

ideastosomethingIcallamore‘horizontal’order,inwhichtherewillbe

co-operation,mutuallearningandperhapsbenigncompetitionbetween

differentideasandsystems.Thisisactuallyamoredemocraticorder,atleast

frommypointofview.

BeforeconcludingmyspeechIwouldliketoshareananecdotewithyou,

whichwasrelatedtomebyaEuropeanphilosopher,afriendofmine.Hesaid:

thegreatGermanphilosopherLeibnitzcametoTheHagueonedayinthe

17thcenturytosecretlymeetwiththefamousDutchphilosopherSpinoza,

whohadbeenex-communicatedandverylonely,todiscusssomeheretic

ideas,includingChina’ssecular,non-religiousapproachtopoliticaland

economicgovernance–andthisapproach,tomymind,stillunderpinstoday’s

renaissanceofChina–it’ssaidthatafterthismeetingLeibnitzwrotealetter

tooneofhisfriendsinwhichhesaid:Ishallhavetopostanoticeonmy

door,whichreads‘BureauofinformationforChineseknowledge’.

WiththisanecdoteIdonotadvisetheDutchSenatetosetupaChinese

bureau.Bynomeans,astheNetherlandsarewell-knownforitslongtradition

ofsinologyandChinastudies.ButIdothinkthatwewillneedtocarryon

thespiritoftheEuropeanintellectualgiantsandtheirspiritofintellectual

curiosity,opennessandcourage,whichisalsoverymuchpartofthe

admirableDutchcharacter,tolearnaboutandevenfromothercultures,

16

civilisations,andwaysofpoliticalandeconomicgovernance,however

extraneoustheymayappear.Withthis,Ibelieve,weshallbeabletoavoid

ideology-drivenmisreadingofthishugelyimportantandcomplexcountry

calledChina.Weshallbeabletoenrichourcollectivewisdomintacklingthe

multiplyingglobalchallengesthatwearefacedwithtoday,rangingfrom

eradicatingpovertytocombatingterrorism,tocurbingclimatechange,andto

preventingaclashofcivilisations.WhenChina,theNetherlands,andEurope

asawholecanworktogetherweshallmakeabetterworld.

WiththisIwillstop.Thankyouverymuchforyourattention.

17


Mr.Kupchan:Thankyouverymuch,Mr.President,andthankstoyouand

yourpartnersfortheopportunitytosharesomethoughtswithyouthis

morningandtohaveaconversationabouttheNetherlands,Europeandwhere

theworldisheading.Itthinkitisanextremelyopportunemomenttohave

aconversationsinceI,likemycolleagueandfriendWei-WeiZhang,believe

weareenteringoneofthoserareintersectionsinhistory,inwhichtheworld

ismovingfromoneparticulartypeofordertowardanother.ProfessorZhang

accuratelydescribedthenatureofthattransition,thatwearemovingfroma

worldinwhichtheWesthasenjoyedapositionofideologicalandmaterial

primacyforthebetterpartofatleast50years,ifnotacentury,toaworldin

Managing Global Change

Address by Professor Charles Kupchan, Professor of International Affairs at Georgetown University

Charles Kupchan

18

whichpowerwillbemoreequallydistributedandinwhichtherewillbe

multiplemodelsofpoliticalordercontendinginthemarketplaceofideas.

Iwouldgosofarastosaythattheworldthatweareentering,theworldthat

willemergeasthenexttwoorthreedecadesunfold,willbethefirstworldin

historyinwhichwecombineglobalisationandinterdependencewith

multipolarity.Ifwegobackforexampletothe17thcentury–let’ssayto1700

–welivedinaworldinwhichChinaandIndiacollectivelyrepresentedone

halfofglobalGDP.Atthattime,inEurope,theHolyRomanEmpireorits

constituentmembers,theOttomanempire,theMughalempire,theChinese

empire,theJapaneseempire,wereallcentresofpower,buttheyreallydidnot

interactwitheachother.Theyeachhadtheirdifferentorderingprinciples.

Occasionally,theOttomanworldandtheEuropeanworldinterpenetratedeach

other,buteachmarchedtoitsowndrummer;therewasnoneedtocome

togetherandtrytoarriveatacollectivesetoforderingnormsbecausewe

livedinourownorbits.

Thatisnolongertrue.WearemovingintoaworldinwhichtheBeijing-

consensus,theDelhi-consensus,theBrussels-consensus,theWashington-

consensus,theBrasilia-consensusofnecessityintermixwitheachother

becauseofglobalisation,becauseofsecurityinterdependenceandbecauseof

theflowofcommerceandcapital.So,forthefirsttimeweasaglobal

communitywillhavetofigureoutwhatkindofamalgamoforderingideasand

orderingnormswewillarriveat;otherwisewewillprobablyreverttosome

sortofmorecompetitiveanarchyinwhicheachoftheseorders–aWestern

order,aChineseorder,aMiddleEasternorder,others–willgooffintheir

separatedirections.Thatisamuchmoredangerousworldthanoneinwhich

wetrytoarriveatsomekindofconsensusabouttherulesoftheroad.

TheAmericanandEuropeanpoliticalestablishmentsareawarethatweare

enteringthishistoricalswitchingpoint.IfyoureadtheNationalSecurity

StrategyfromtheObamaadministrationthatcameoutlastyear,ifyouread

thespeechesofBaronessAshtonandotherEuropeanleaders,youwillseea

recognitionthatweareenteringwhatonecouldcalla‘globalturn’.Themove

fromtheG8totheG20is,Ithink,aninstitutionalmanifestationofour

recognitionthatthisturnistakingplace.

However,Idonotbelievethatwehaveupdatedourdiscourseaboutthe

orderingfoundationsofthisturntomatchourrecognitionofthepowershift.

AtleastintheUnitedStatesthedominantnarrativeisstillaboutWestern

hegemonyandtheperpetuationoftheWesternorder.Forexample,someone

likeJohnIkenberry,myfriendandcolleague,believesthateventhough

Westernprimacyisdiminishingthegoalshouldbetobringrisingpowersinto

thetent–toinviteChinatocomethroughthisdoorandtakeitsseatinthis

19


room,todocktheChineseshipofstateintheWesternharbour.Idonotthink

thatwillwork,inpartforthereasonsthatProfessorZhanglaidout.Chinahas

itsownconceptionsoforder;thereisaChinesemodelthatwillnotfollowin

thefootstepsoftheWesternmodel.Chinarepresentsaverydifferent

civilisationanditisnottrackingtheWesternmodelofdevelopment.TheWest

isdefinedbyliberaldemocracy,bysecularnationalism,byindustrialcapitalism.

Thosefundamentalfeaturesofwhowearehaveeverythingtodowiththeway

weevolved.MuchofthatevolutiontookplacerighthereinNorthernEurope,

beginninginthe14th,15thand16thcenturies;theriseofamiddleclassthat

foughtbackagainstthepowerofthenobility,themonarchyandthechurch;

theReformation,whichwastheleadingedgeoffirstreligiousbutalsopolitical

pluralism;theseparationofchurchandstatethatinmanyrespectsdefines

theWesternexperience.Idonotseethatevolutionreplicatingitselfaround

theworld.IseeinChinaacountrythatratherthanpushingbackagainstthe

middleclass–ashappenedinEurope–isco-optingthemiddleclass.Thereis

todayasymbioticrelationshipbetweenthecommunistpartyandtherising

middleclass,inwhicheachscratchestheother’sback.Themiddleclassthat

isrisinginChinaisnotaliberalisingdemocraticforce;itisworkinghand-in-

handwiththecommunistpartyandtheChinesestatetoadvanceprosperity,

nottosecuredemocracy.

IdonotshareasmuchoptimismasProfessorZhangdoesabouttheChinese

model.Itworkswellanditwillcontinuetoworkwell,butithassomeserious

downsides:thecorruptionandtherepression,forstarters.Yes,itisa

meritocracybutthereiscertainlyalotofnepotismintheChinesesystem.

IthinktheChinesebrandofmercantilisminitsforeigneconomicrelationsis

tosomeextentthreateningaliberaleconomicorderandultimately,Iwould

notbesurprisedifEuropeandtheUnitedStatesrespondinkindagainstthat

kindofstate-ledgrowth,inpartbecauseitputstheUnitedStates,Europe,

andotherliberaleconomiesatadisadvantage.Wedonothaveanindustrial

policy.WearenotabletocompetewiththeChineseinBrazil.Wearein

Afghanistanwith100,000troops;Europeanshave50,000troops.Weare

expendingbloodandtreasuretopacifythecountry.Chinaisthere,toobut

whataretheydoing?Mining!Thatisnotnecessarilyaworldwhereweare

allplayingbythesamerules.

IntheMiddleEasttoday,ifyouturnonCNN–Iamnotquitesurewhatthe

Dutchtelevisionstationsaresaying–thereistalkofa‘floweringofthe

democraticforcesintheArabstreet’,‘thisisaturningpointinhistory’,‘the

ArabworldisnowgoingtofollowtheWesternmodel’:don’tbetonit!Ithink

thechancesofwhatishappeninginEgypttodayleadtosomesortofstable

liberaldemocracyinEgyptarelessthanzero.Imayhavemudonmyfacein

sixmonths-butthetwoinstitutionsotherthantherulingpartythatexistin

20

EgyptarethemilitaryandtheMuslimBrotherhood.Thatdoesnotstrikeme

asofferingthepreconditionsforthefloweringofsomekindofliberalstable

democracyinEgypt.NordoIthinkthatwewillwitnessanytimesoona

separationofchurchandstateintheMiddleEastoranIslamicreformation,in

partbecauseIslamhasaverydifferentrelationshiptopoliticsthanChristianity

did.Islamisareligionoflawandfaith;Christianityisareligionoffaithalone.

Whentheemperorandthepopesplit,thestateandreligionsplit.Thatisnot

trueinmostoftheIslamicworld;thereisnodifferencebetweenemperorand

popebecausereligionandpoliticsareoneandsotheideathatsomehowwe

aregoingtoseeanIslamicreformation,orablossomingofseculardemocracy

intheMiddleEaststrikesmeasanicehopebutonethatisunlikelytogo

realised.

Whatthatsaystomeagain,isthatwearemovingnottoaworldinwhichthe

WesternmodelpredominatesbutinoneinwhichtheWesternmodelwillneed

tocompeterespectfullywiththedifferentpoliticalmodelsanddifferent

conceptionsoforderthatareemergingindifferentregionsoftheworld.

ThatbringsmetothesecondissuethatIwantedtoraiseandthatis:what

aboutus,whatabouttheWest?IthinkthattheWesthasbeentheanchorof

theglobalsystemsincethe20thcenturybegan.Inmanyrespectsweneedthe

Westtotrytoanchorthisglobalturn,inpartbecausenooneelseisgoingto

doit.Thatisbecauserisingpowersdonothaveanalternativevision.Ithink

Chinaisprobablytheonerisingpowertohavetheintellectualcapacity,the

thinktanks,theuniversities,thediplomats,tothinkaboutgrandstrategy.But

ifyougotoChinatoday–andIhavedonethatrecently–andyousitdown

withthebestandthebrightestandaskthemwhattheworldshouldlikein

2050,yougetablankstare.Theydonothaveananswertothatquestion.

InIndia,anotherrisingpower,theirentirediplomaticcorpsconsistsofsome

600people.TheUSStateDepartmenthas12,000.Indiaisjustbeginningto

emergeasaplayerthatisthinkingaboutanythingotherthanitsimmediate

neighbourhood.Brazilisinasimilarposition;stillearlyinitsrise;justinthe

lastfewyears,Brasiliahasopened16embassiesinAfricaalone.Itisstill

findingitswayasapowerthathasinfluenceoutsideitsownneighbourhood.

Thatmeansthatifthereisgoingtobeacentreofgravitythatmaybeableto

getusfromthisworldtothenextworlditwillbetheWest.

Areweuptothetask?IamnotsureandIworryaboutitbecauseIthinkthat

atthesametimethatChina,India,Brazil,Turkey,andothershaveanewwind

inthesails,anewspringintheirstep,weintheWestseemtohavecome

uponaperiodinwhichwearepolariseddomesticallyandinwhichour

democraticinstitutionsarenotasnimbleandresponsiveastheyusedtobe.

21


IdonotthinkitisaccidentalthattheUnitedStatesisfacingitsworstperiod

ofpolarisationinoveracenturyatthesametimethatEuropeisfacinga

processofre-nationalisationinitspolitics.Ithinkthisisthereactiontosome

deeperstructuralforcesintheworld,includingglobalisationthatgives

democraticstateslesscontrolovertheirdestinythantheyusedtohave,of

immigrationthatismakingmanypeopleuncomfortablewithopenborders

andopensocieties,oftheeconomiccrisiswhichisleadingtodiscomfortand

dislocationanduncertaintyaboutwhetherourchildrenwillhavebetterlives

thanwedo.Thisisallmakingforadyspepticpolitics,adiscontentwithin

theWesternliberalworld.AsIsaid,itismanifestingitselfdifferentlyonthe

twosidesoftheAtlantic.IntheUnitedStateswearesufferingthroughan

intractablepoliticalpolarisationthatisproducingeithernopolicyorpolicies

thatarethelowestcommondenominator.IapplaudpresidentObamafor

strikingadealwiththeRepublicansonthetaxcutbut,isitreallytacklingany

ofAmerica’smajoreconomicproblems?No,andmeanwhileitisaddingtothe

deficit.Itwastheonlydealhecouldgetandheshouldhavetakenit.Butwe

arepushingourproblemsintothefuture.Wearenotgrapplingwiththem.

OnthissideoftheAtlanticthereismorepoliticalmomentumatthedomestic

level.ButatthelevelofEuropethereisdiminishingpoliticalmomentum.Iam

anAmericanwhohasforthebetterpartofmycareerbeenaEuro-optimist

andastrongsupporterofamorecollectiveEurope.Iamworried;Icometo

Europereasonablyoften–probablyeverytwoorthreemonths–andover

thepastthree,fourorfiveyearseverytimeIcometoEuropeIgohomemore

worriedbecauseIfeelthatpoliticsisbecomingmorenationalandless

European.Idonotseeleaders,othersthanthoseyouwouldexpectlikeVan

RompuyorBarrosoinvestingtheirpoliticalcapitalinEurope.Thedominant

politicalnarrativeisnoweitheranti-EuropeoritisjustsilentonEurope.

IcannotrememberthelastEuropeanelectioninwhichEuropeactually

matteredandinwhichanybodydiscussedEuropeanditsfuture.So,theproblem

thatwefaceisthattheUnitedStatesispolarised,almosttothepointof

paralysis,Europeisturninginwards,andtheprojectofEuropeanintegration

isinmymindmorevulnerabletodaythanithasbeensincetheprocessof

integrationstartedinthe1950s.

Whatdowedoaboutthis?IwillleavetheUSoutofitfornowbutIwould

makeonecommentonwhereweheadingintheUnitedStatesthatIhopewill

tosomeextentserveasawake-upcallinthisroomandforEuropegenerally.

IthinktheUnitedStatesisabouttoenter‘aperiodofstrategicretrenchment’.

Thatistosaytothedegreethatthepolarisationwillleadtosomekindof

newpoliticalequilibrium,thispoliticalequilibriumwillbeoneinwhichtheUS

lightensitsroleintheworld.Thatispartlybecausewearefacingamassive

deficitandbringingthatdeficitdownultimatelymeanscuttingallbudget

22

categories,includingdefenceandentitlements.Whenwegettothatpoint–

andwearealreadygettingtoit–youwillseealotofpressurefortheUnited

Statestorelymoreonothers,togetoutofIraqandAfghanistan,tobringthe

troopshome.Iamnottalkingaboutanisolationistretreat;Iamtalkingabout

amoreselectiveandpacedretrenchment.Thatdebateisnowemergingvery

quicklyintheUnitedStates,inpartbecausetheRepublicanPartyforthefirst

timesinceWorldWarIInowhasaveryclearneo-isolationistwing;itiscalled

theTeaParty.TheTeaPartydoesnotsayverymuchabouttheworld.Tobe

quitehonest,theTeaPartydoesnotknowverymuchabouttheworld;the

movementfocusesondomesticaffairs.Buttothedegreetheyhaveadefault

positiononforeignpolicy,itistheonethathailsbacktotheJacksonian

tradition,thelibertariantradition.Thattraditionsays:Americanengagement

abroadcomesattheexpenseoflibertyandprosperityathome.Notallofthe

TeaPartymembersaregoingtobeneo-isolationists,butenoughofthemwill

betocauseariftandanewdebateintheRepublicanParty.Theywillfind

someverycomfortablebedfellowsintheleftwingoftheDemocraticParty.

ThatisbecausetheDemocraticPartyismovingtotheleft,manyofits

representativescomefrompartsofthecountryonthecoaststhatarequite

liberal,generallypacifist,andanti-defencespending.Thatsaystomethatwe

maywellfindanewalliancebetweenleftandrightfocusedoncuttingthe

defencebudgetandturningtootherstodomoreintheworld.

Iwouldalsopointoutthatinpublicopinionpollsthathavebeencarriedout

overthelastsixtoeightmonthsonthequestionwhethertheUnitedStates

shouldminditsownbusinessandspendmoretimefocusingonitsproblems

ratherthanotherpeople’sproblems,49percentofAmericansresponded‘yes’

tothat.Thehighest‘yes’responsesincethequestionhasbeenasked;before,

thehighest‘yes’responsewas32percentintheearly1970s–abacklash

againsttheVietnamWar.49percentrepresentsamajoruptickinpublic

supportforaturninginward,anditisverymucharesponsetothewarsin

IraqandAfghanistancoupledwiththedeficits,whichmanyAmericansbelieve

areoutofcontrol.

So,thatallsaystomethatmoreresponsibilityisgoingtocometothisside

oftheAtlantic:itisaccordinglyveryimportantatthismomentinhistorythat

Europedoessomethingtoreversethere-nationalisationofpoliticallifethatis

takingplace.Thatispartlybecause–asIsaid–theWestisstillcriticalasan

anchoratthistimeofglobalchangebutalsobecauseifyousimplylookat

theeconomiesofscale,individualEuropeancountriessimplyarenotbig

enoughtomatterontheglobalstage.TheNetherlands,nottomentionsmaller

Europeancountries,butevenGermany,France,theUK,aretoosmalltocuta

figureasglobalplayers.Germanyhasapopulationofabout80million.

CompareittoChina!InthatrespectitseemstomeonlyifEuropeaggregates

23


itsvoice,onlyifEuropeaggregatesitsabilitieswillitbeaglobalplayerand

beabletohelptheUnitedStatesgetusfromtheworldweliveintodayto

theworldthatwewillbeinacoupleofdecades.

Ourhostsaidafewminutesagothatmaybethefinancialcrisisisgoingto

leadtonewlevelsofcollectivegovernanceontheeconomyandonfinance.

Ihopethatistrue,butIwouldaddthatitisnotenough.Wealsoneedtosee

Europeturnthecorneronsecurity,onforeignaffairs,andondefence.Maybe

LisbonanditsnewinstitutionswillprovidethewherewithaltopushEuropein

thatdirectionbutthatwillnothappeninandofitself.Thoseinstitutionswill

bestill-bornunlessEuropeanleaderscomealongandcreatethepolitical

environmentinwhichthoseinstitutionshavethesupportofaverageEuropean

citizensandaverageEuropeanvoters.

MyfinalcommentwouldbethatifIweretoleaveDutchopinionmakersand

Dutchpoliticianswithapieceofadviceitwouldbe:trytoplayaleadingrole

inbreathingnewlifeintoEurope.IftheGermansarenotgoingtodoit–and

IamnotsuretheyaregivenwhereGermanpoliticsisnow–thenmaybeit

behovessmallercountriesandrimland-countriesliketheNetherlandstotry

andfillthatgap,totryandgenerateadiscoursethatreverseswhatIseeas

thisworryingre-nationalisationoflifeinEurope.AsIsaid,IthinktheWestas

acoherentandmeaningfulpoliticalcommunityisperhapsmoreimportant

movingforwardthanithasbeenlookingback.TheUnitedStateshasalot

ofworktodowithgettingthroughthisperiodofpoliticalpolarisation;Ihope

itfindsonthissideoftheAtlanticaEuropethatrecoversalsoitspolitical

equanimityandcanbethepartnerthattheUnitedStateswillbelookingtoas

weenterintowhatIthinkinevitablybeaturbulentperiodinglobalpolitics.

Thankyou!

24

Address by Elmar Brok, Member of the European Parliament

Mr.Brok:Mr.President,ladiesandgentlemen!Iamveryproudtohavecome

tothiswonderfulbuilding,whichisperhapsoneofthemostifnotthemost

beautifulparliamentaryroomsinEurope.AroundthattimethiswasbuiltChina

hadonethirdoftheGDPofthisworld.Thecolonialtimesbecauseofother

reasonshavechanged.Wenowhaveashiftofpowerbutitisnotanewone.

Chinaisonthewaytotakeitspositionbackasnumberoneintheworld,

economicallyandpartlypolitically.So,itisnotanewsituation.Thiswasonly

aninterimsituationbetweenonestrongChinaandanotherstrongChina.Ifwe

lookatthedramaticchangeofthepoliticalandeconomiclandscapewesee

thatEuropeperhapstogetherwiththeAmericanstofinditsroleinthat.With

thefinancialcrisisthebigshiftbecomesclear.AsEuropechangedtheworld

withtheWest-IndianAssociationsandcolonialpowers,nowsovereignfunds

fromAsiaaredoingthesamethingfortherestoftheworld.Wehavetosee

thatthischangewillalsotakeplacebyadramaticdemographicshift.

Chinahasalreadymorethantwiceasmanyinhabitantsorconsumersthanthe

UnitedStatesandtheEuropeanUnioncombined.IfyoutakeIndiaintoaccount

youcanseethisdramaticshiftjustcompletesthedemographicfigures.Atthe

momenttheEuropeanUnionhas8percentoftheworldpopulationand29

percentofGDPofthisworld.Theworldwillnotacceptthat.Thediscussions

Elmar Brok

Jan Peter Balkenende

Wei-Wei Zhang

Charles Kupchan

25


wehaveaboutmigrationovertheMediterraneanorthediscussionaboutthe

borderbetweenTurkeyandGreecearepartofachangingworldandtheworld

doesnotacceptthatthis‘islandEurope’withsofewpeoplehavesuchalarge

shareofthewealthoftheworld.Therefore,wehavetochangeourpolicy

dramaticallybutaswasjustsaid,wediscussre-nationalisationinEuropeand

intergovernmentalproposalsinBrusselsinthesedays.Ifyoulookatthe

figurestheyshowGDPineverystatistic,alsoinEuropebysingle-states.It

looksnowdramaticthatGermanygoesfromplace3toplace4andsoon,

buttheydoonlyshowfiguresaboutGermanyortheNetherlands,orItaly;

onlytheEUfiguresaremissed.IfwedonotonlytakeEuropeanfigures,the

EuropeanUnionisstillthebiggesteconomicpowerinthisworld.Europeis

stillthebiggesttradingpowerinthisworld,byfar.Butwehavenoteven

statisticallystartedtothinkaboutitthattogetherweareapower.Alone,

becausewearesmall,wearenotapower.

TheLuxembourgPrimeMinisterJean-ClaudeJunckeroncesaid:seenfrom

WashingtonallEuropeannationsaresmallbutthesmallerhaveearlier

understoodthanthefewbigoneswhobelievetheirdirectoratescanstillrun

theworld.Thismustchange,moreinGermanythanintheNetherlands,but

everywhere,tounderstandwhereourfuturewillbe.Wealsohavetoseethat

theinternalmarketwith500millionpeopleistobeusedasarealhome

market.IfweseethatthebiggestconsumermarketsareChinaandIndiaa

nationhomemarkethasnochance.Volkswagenisproducingmorecarsin

ChinathaninGermany.Thisshowsusperhapswhattherealsituationis,where

wehavetolookfor.

Icangiveyoualotofotherexamplesandfigures,butIwouldliketosaya

fewwordsaboutwhatwehavetodo.

Europe,Ithink,hastogrowtogetherandhastoacttogether.Otherwise,we

willbecomewhatFareedZakariadescribed,thatweareinapost-American

world.Andthisistoacertainextentrealitysincemanyyears.Butthat

shouldnotbethecaseifIlookattheeconomicfigures.Also,otherswillhave

thatproblem.IdonotagreewithProfessorZhangthatthisisaquestionof

discussionbetweendemocracyorautocracy;itisonlygoodgovernance.

Legitimacycomesfromgoodgovernanceandparticipation.Weseeitinmany

casesinhistoryandalsonowatthemomentinEgyptandotherplaces.Here,

Chinahastochangeitssystem.Itisnotawaythatasystemdeliversto

people;attheendofthedayinafreesocietypeoplewanttoparticipate.

Theywanttotakepartinthedecisionandnotgivenbyphilosopherkingsin

aPlato’ssensesomegoodontheauthorities.Therefore,Chinawillstill

havetochangefromanautocracytoademocracy,orfindanotherwayof

participation.ItmustnotexactlybetheEuro-modelindemocracy.Wewillsee

26

with400millionpoorpeopleinChinahowthiscanwork.Howtheparty

bureaucracyonthelocallevelisabletokeepdownthepeople.Legitimacyis

givenbystability.Everyonewhohadautocracysaid‘meorchaos’,aswesee

thesedaysagaininacertainplacecalledCairo.Thiswillhappeneverywhere

andChinahastofacethisproblem,too.Therefore,sometimesIbelieve

thatinthelongrunitwouldbebettertoinvestinIndia,whichisalreadya

democracy.TheotherdayIheardthatforexampleinIndiaacourthas

decidedthatintellectualpropertycannotbeprotectedifitisagainstnational

interest.

Thatbringsmetomynextpoint.Thisworldwideeconomycanonlyworkif

everyoneacceptstherulesofthesocialmarketeconomy.Ifwehaveaglobal

economywemusthaveglobalrules,aswehavenowseeninthefinancial

crisis.Everyone,emergingoralreadythere,hastoaccepttheserulesifwe

wanttohaveasafeandpositivedevelopmentofoureconomiesandno

politicallymotivatedcrises.Therefore,IthinkitiscrucialthattheAmericans

andtheEuropeansworkcloselytogetherbecausetheystillhaveastrength

thatisnearly60percentoftheGDPofthisworld.Thatwillinfluencethe

settingupofstandardsandrules.Here,Idonotunderstand:theEuropeans

makeagreementsandtreatieswitheveryoneintheworld.TheAmericans

maketreatieswitheveryoneintheworld.Butthereisnotreatybetweenthe

AmericansandtheEuropeans.WehavesetuptheTransatlanticEconomic

Counciltogetatariff-barrierfreemarket.Itmeans3.5percentgrowthrates

forbothsidesand1.5percentgrowthrateworldwide.Whyarewenotgetting

that?Whydowecontrolourpharmacyproductstwice,inAmericaandin

Europe?Thesamehappensintheautomobilesectorandmanyothersectors.

Accountingstandards:whydowenothavecommonstandards?Letusorganise

aTransatlanticmarketontheleveloffreemarketandthesamevalues,which

willstrengthenourselveseconomicallyatatimeofcrisisbutwillbringus

togetherinthischangingworld,aneconomicbasisthatcancompeteinthe

futurewiththeso-calledemergingcountriesbutstilltrytoprotectbehindother

developingcountriesisalsonotthecase.WeshouldnotallowChinaanymore

tobeprotectedbydevelopingcountriesininternationalnegotiation.Inthe

future,Chinaisthesecondbiggesteconomyandshouldnottrytobebehind

Tanzaniainitsdevelopment.Also,weshouldnotacceptthisininternational

organisations.

Ladiesandgentlemen.Wealsohavetochangeourpositioninawaythatwe

havetolookintheforeignpolicycombinedwitheconomicpolicy.Therewe

cometothequestionofrawmaterials.Europeisrichinindustry,richin

innovationandtechnology,butweakinrawmaterials.Whenwetalkabout

humanrightsinDarfurChinamakesagreementswithKhartoumonoil.

Wethereforehaveforexample,despiteourdifferenthistoryintheEuropean

27


UnionwithourEasternnewcountriesapolicy,whichisaconstructivepolicy

withRussiathathasinthelongrunthesameinterestsinthischangingworld

aswehave.WehavethisTransatlanticmarketandaconstantrelationship

totherawmaterialRussia.Wemighthaveachance.Ifwedonotthinkso

strategicallyandeveryonerunsalonetogetitsownpipelinewithown

agreementsandwithownreceptionintheKremlinbutnothaveastrategy

togetherwemightloseorwewilllose.Weareinadifficultsituationwhere

wehavetoact.Icanonlygiveyouafewexamplesinthisshorttimebut

Iwouldliketomakeoneotherremark.Bothspeakershavetalkedaboutit.

Wearefacingglobalchallenges,globalisation,economiccrisis,climatechange,

energy,terrorism,andmanyotherquestions,whereneitherTheHaguenor

Berlinalonecansolveanything.InBerlinorinTheHaguewecandecide

whatwewantbutithaszeroimpact.Ifwemakethisdecisiononsuchfields

likeclimatechangealoneitwillkilloureconomy.ButifweactasEuropeans

togetherwemighthaveachance.Wetalkinnationalcapitalsabout

‘sovereignty’,whichhasnottobegivenaway.Youhaveonlysovereigntyif

youhavethepowertogoforit.Otherwise,itisjustpaper.Butifthe

Europeansdoittogether,ifwepulloursovereigntieswemightensurethe

interestsofourcitizensonaglobalstage.Europemeansnottoempower

Brussels,butEuropemeansmorerightsandmorefutureforourcitizens.If

ournationalgovernmentsavoidthattosaybecauseitisnotpopularathome,

butsaythatEuropeisgoodforthepeopleandwehaveproblemsathometo

hidebehind,thenitdoesnotmatterwhichpoliticalpartywearebecausethen

weareallthesame.Thenwehavenofuture.Therefore,wemusthavebetter

decision-makingproceduresinBrussels.WemustusetheTreatyofLisbonin

aproperwayandwemustgivetheHighRepresentativeachance.Itshould

notbethecasethatduringeightweekstheCouncilisnotabletomakeone

decisionontheCoptskilledinCairobecausethethirdwordinthefifthline

couldnotbeagreedon.Thathappenedthisweek.Ifwedonotchangethis

attitudethenweareinabadsituation.ButIbelievethatcitizensarewiser

thanpoliticians;citizenswillforceustodoso.Ifwearenotabletodothat

therecomesasituationliketheFrenchwriterPaulValérydecadesago

described:EuropewilluniteorwillbecomethetailoftheEurasiancontinent.

28

Address by Jan Peter Balkenende, Former Prime Minister of the Netherlands

Inhisaddress,Mr.Balkenendecomplimentedtheorganisersonarrangingthis

conferenceonpowershiftsinachangingworldorder.Healsothankedthe

previousspeakersforsharingtheirviewsonwhatishappeningintheworld,

addingthatwecanseethesepowershiftstakingplaceeveryday.Lookat

whatisgoingonwithintheUnitedNations,theIMF,andtheWorldBank.

Structuresarechanging.Othercountriesaretakingthelead.Justlookat

eventsinChinaandAsia.

Mr.Balkenendeconcentratedhisremarksinthreemainareas:first,anumberof

generalobservationsonglobalpowershifts;second,theroleofEuropeonthe

worldstage;andfinally,theNetherlands’interestsandthechallengesitfaces.

Mr.Balkenendebeganbystressingthatwhenwespeakofthechangestaking

placeintheworld,itisimportantnottolosesightofthefundamentals.

Hementionedthreekeyelementsinthisrespect.ThefirstconcernsPresident

Jan Peter Balkenende

29


FranklinD.Roosevelt’sfourfreedoms:freedomofexpression,freedomof

religion,freedomfromfearandfreedomfromwant.Thosefreedomsarestill

validtoday.Andwehavetofightforthemeveryday.Thesefourfreedoms

havetodowiththefundamentalnatureofdemocracy.

Thesecondelementisavibrantandactivecivilsociety.Peoplearemorethan

justconsumers,orsubjectsofthestate.Theyarealsomembersofsociety.

WesawthepowerofcivilsocietyinthedemiseofcommunistEurope,for

example.Itwasthevitalityofcivilsocietythatledtothechangeofthe

politico-economicsystem.

Thethirdfundamentalelement,Mr.Balkenendesaid,istheruleoflaw.

Allpowersshouldbebasedondemocraticallyadoptedlawsandmeasures.

Theseparationofpowersiscrucial–asistheneedtorespectbasichuman

rights.HementionedthevisitsthathehadmadetoChinaduringhisterm

inoffice,andhistalkswithChinesepremierWenJiabao.Duringtheirfirst

meeting,aprivatedinner,thetwohadhadalongandfrankdiscussionabout

developmentsinChina.Mr.WenJiabaoexplained,justasProfessorZhanghad

earlier,howChinahadimprovedthequalityoflifeof400millionpeople.

WhileMr.Balkenendeacknowledgedthisachievement,healsohighlightedthe

importanceofrespectingbasichumanandpoliticalrights.

Mr.Balkenendewentontostressthelinksbetweeneconomic,political,social

andculturaldevelopment.Theseareascannotbeseparated,heargued.They

allcallforpluralism,whichisnotcompatiblewitha‘top-downsystem’.Inhis

view,thiswasattheheartofthedifficultiesofthecommunistregimes.Their

insistenceonatop-downapproachledtheentirecommunistsystemtofail.

Mr.Balkenende’sfinalgeneralobservationconcernedthecommonchallenges

weallface:energy,foodsecurity,theMillenniumDevelopmentGoals,theWTO

negotiationsandclimatechange.Wehavetoworktogethertotacklethese

issues,despitethepowershiftsgoingonaroundus.Atcertainmoments,he

said,hehadthefeelingthatmanyotherdecision-makerssharedhisideas;

hereferredtotheoptimismthatpervadedtheG20meetinginLondon,where

therewasaclearimpetusfromtheheadsofgovernmentsofprominentstates

tofinalisetheWTOnegotiations.HerecalledthewordsofPresidentBarack

Obama,whoobservedthatduringthecrisisofthethirtiesittookmorethan

adecadefortheworldleaderstomeet,whilenowtheymeeteveryeightor

ninemonths.Butunfortunately,oneyearon,theWTOnegotiationshavestill

30

notbeenfinalised.What’smore,theclimatechangesummitinCopenhagen

wasnotasuccess.Thereisstillalotofworktobedone.Thatwasalsohis

messagetohisChinesecolleagues.Chinaisnowamajoreconomicpower,

butwithsuchapositioncomesresponsibility.Theresponsibilitytomakea

differenceintacklingclimatechange,aswellasindealingwithNorthKorea,

forexample.Globalproblemsrequireglobalsolutions.

Inthesecondpartofhisspeech,Mr.Balkenendeconsideredtheroleof

Europeontheworldstage.Hecitedtwoauthorswithclearviewsonthe

subject.OneisayoungresearchernamedParagKhannawhoisvery

optimisticaboutEurope’sprospects.Hepredictsthatinabouttenyears’time

Europewillbeamajorglobalplayer.ThenthereisKishoreMahbubani,Dean

oftheLeeKuanYewSchoolofPublicPolicyattheNationalUniversityof

Singapore,whobelievesthatAsiahasthemostpotential.

Nooneknowswhatwillhappeninthefuture.Downthroughhistory,viewson

Europehavealwaysdiffered.Inthe1980s,therewasalotofnegativityabout

Europe.‘Europe1992’changedthat.Thegoalofhavingasinglecommon

marketcreatedalotofpositiveenergy.‘Euroscepticism’turnedto‘europhoria’.

Thesedays,themoodhasswungbackagaintowardsscepticism.Inaway,

saidMr.Balkenende,thatisunderstandable,partlybecauseofwhathas

happenedinGreece.ButhealsostressedtheadvantagesoftheGreek

situation.Now,everyoneagreesthattheStabilityandGrowthPactcriteria

mustbeadheredto.Thereiswiderpublicawarenessthatthingshavegone

wrong,butalsothatthingscanchange.Europeremainstheworld’sbiggest

consumermarket.ButdevelopmentsinAsiaaremovingfast.SoEuropemust

stepup.Wehavethepotential.Europehasagreathistory,agreatculture.

Europeisvalues-basedanditssocialmarketeconomyisasuperbeconomic

model.Betterthanaliberalisedfreemarketeconomy.Betterthanacontrolled

economy.

Inconcludinghisaddress,Mr.Balkenendediscussedthesituationinthe

Netherlands.FromaEuropeanperspective,theNetherlandsisamedium-sized

country.Fromaglobalperspectiveitissmall.Butthefigurestelladifferent

story.Weare16thlargesteconomyintheworld.The8thlargestfinancialsector,

the6thlargestexporterandthe5thlargestcontributortotheUnitedNations.

WeareveryactiveintheWorldBankandtheIMF.Wespend0.7%ofGNIon

developmentcooperationandwearewellknownforthe‘3Dapproach’we

tookinAfghanistan.TheNetherlandsisanactiveinternationalplayerand

mustremainso.Turninginwardwouldbeaveryriskystrategyforacountry

liketheNetherlands.WecannotlivewithoutEurope.OurfutureliesinEurope.

Ourfutureliesabroad.Aglobalapproachistheonlywaywecantacklethe

31


issuesoftoday:climatechange,freetrade,energy,andsoforth.Itistheonly

waywecanaddressdifficultissueslikehumanrights.Andtheonlywaywe

candealwithpowershiftsinachangingworldorder.

Mr.Chairman:Thankyouverymuch,Mr.Balkenende.ElmarBrokhastoleave

ataquartertotwelve.So,ifyouhavequestionsforhimpleaseaskthem

beforethattime.

32

Mr.VanEekelen(AIV):IaskedforthefloorbecauseImissedoneimportant

thingandthatisthequestion‘whatisorder?’Tome,ordermeansarules

basedorganisation.InthatrespectElmarandJanPeterhitthenailon

theheadbysayingthattheEuropeanUnionistheonlyrulesbased

organisation.Therefore,myquestionis–alsoforourChineseProfessor

becauseIenormouslyappreciatedhisspeech–whetherChinaisprepared

tofollowrulesbasedorderintheworld.IsChinapreparedtoparticipatein

internationalaffairsandisitpreparedtotakeresponsibility?Thatisa

commitmentandaresponsibility.IsChinaafree-riderintheworldanda

regionalbully,assomebodydescribedit?Ihopeitisnot.Itistakingmore

responsibilitybutmypointisthattheBRICScountriesareeconomies;

yes,butisRussiaplayingarolepolitically?Itisnotevenamemberofthe

WorldTradeOrganisation.Shouldn’twefocusmuchmoreonorganisations,

whichexpresscommitmentandresponsibility?

Discussion

Wim van Eekelen

33


Mr.VanStaden(AIV):IamamemberoftheAdvisoryCouncilonInternational

Affairs.Ialsowanttopursuethedebateonthegeneralthemeofthis

conference,thechangingworldorder.Ititswidelyrecognisedthatthedaysof

theworldorderrootedinWesternandparticularlyAmericanpredominanceare

over.Itistemptingtomakethecasenowforamorehorizontalorder–as

ProfessorZhangdid–basedonaglobalpowerconcert.Butthequestion

ariseswhointhiskindoforderisgoingtoprovidetheglobalpublicgoods?

ProfessorKupchanspokeaboutthepossibilityofUSstrategicretrenchment–

Iagreewithhisanalysis.RegardingEuropethefutureisopen,andwehave

todoourutmosttoenhanceEurope’sprofileontheworldstage.However,

thereistheriskofEuropemissingtherendezvouswithhistorybecauseofits

internalweaknesses.

AsfarasChinaisconcerned,therehavebeennumerouscallsonChina

recentlytoplaytheroleofresponsiblestakeholder,toborrowRobert

Alfred van Staden

34

Zoellick’sphrase.WedrewfromChinamixedresponsestothosecalls,ifIsee

itcorrectly.Thereistheexcuse–ortheexplanation–ontheChinesesidethat

thecountryisstillverymuchpreoccupiedwithdomesticproblems;afterall

itstillseesitselfasadevelopingcountry.ChineseleaderstellusthatChina

isalreadydoingitspartbyprovidingpeacekeepingtroops,whileitcameto

therescueinthefinancialcrisis.ButasIseeit,Chinaisabitduckingthe

issueonthismatter.Ofcourse,Chinamightargue:youarespeakingabout

stakeholders,whosestakesareinvolved?ArewetalkingaboutWesternstakes

ornot?

Lookingatthefuture,wealmostautomaticallypresumethatorderwillprevail

butProfessorKupchanwasalsoalludingtothepossibilityofcompetitive

anarchy.So,again,whoisgoingtodeliverthemajorpublicgoodsinthe

future?

Mr.Voorhoeve(AIV):Thankyou,Mr.Chairman.ThereisasayingbyConfucius,

whichIlikeasIthinkitisamorepracticalguidancetohowtodealwith

opponentsthan–withallduerespecttotheformerPrimeMinister–acore

sayingintheNewTestament.ThesayingbyConfuciusis‘loveyourenemies

butbeoneblowaheadofthem’.Ithinkthatisawiseguideforlong-term

politics.Ithink–andthisleadstomyquestion–thatthemaindriverof

long-termtrendsisenergy,energyconsumptionpatternsandenergy

production.Theunderlyingquestioniswhichofthemajorpowersweare

discussingisgoingtosolvethecrucialenergyandclimatequestion.Chinahas

anenormousamountofcoal,soitcanescapethefuturescarcityofoiland

gasbuttheconsequencesareofcourseatremendouscarbondioxide

production.So,IaddressmyquestionparticularlytoProfessorZhang.

Mr.Post(TheHaguemunicipality):Thankyou,Mr.Chairman.Gentlemen,just

recentlyareportwaspublishedbyanadvisoryorgan,intheNetherlandsthe

WRR,deWetenschappelijkeRaadvoorhetRegeringsbeleid.Weallknowthat

organisationhereintheNetherlands.Itisaveryimportantreport.Itiscalled

‘AttachedtotheoutsideworldfromaDutchperspective’.Itisnotaliteral

translation,ProfessorKupchan.

HereyouareinTheHague,intheNetherlandsandwehavealotof

internationalinstitutes,judicialandpoliticalinstitutes.HereinTheHagueand

thegreaterTheHaguearea,wehavetheInternationalCriminalCourt,the

YugoslaviaTribunal;Ithinkyouknowthemall.Canyougiveusanadvice

whattheroleofthesespecialisedinstituteswillbeinachangingglobal

order?Maybeallthegentlemenbehindthetablecouldgointoitifwehave

enoughtime,butIspecificallyaskthisquestiontoProfessorKupchan.

35


Mr.Chairman:MayIaskMr.Broktoanswerfirst?Therearemorequestions

forthesecondround.

Mr.Brok:Iwouldliketomakeashortremark,especiallyonwhatMr.Van

Eekelensaidaboutlegalandpracticalcommitments.Anationalmarketdoes

notexistanymore.WehaveaEuropeanoraglobalmarket.Butwearestill

notabletoputthelegalenvironmentforsuchamarketonthesamelevel.

Ithinkthisisacrucialproblem.Insomefieldsitwillbeverydifficulttodo

so.IntheEuropeanCouncilItriedtotalkaboutcommonpensionagesin

acompetitiveEurope.Thisbecomesalreadyverydifficultbecauseofthe

differencesinEurope.So,wehavetoseewhichruleswehavetosetupfor

amechanismtomakethemarketrun.Thequestionofcompetitivenessmust

besolvedbyeveryoneathome,butwehavetorespecttherules.Alsothe

questionisveryimportanthowwecanmakethecommitmentreallybinding.

Youcannotmakethembindingintermsofpowersatstakebecausewe

havetodealwithsovereignstates.Wehavetopushforwardthatsuchlegal

commitmentsbecomeveryprecise,fromintellectualpropertytofinancial

rulesandmanyotherquestionsthathavetobefulfilledtomakesuchan

internationalorderforamarketeconomy.Otherwiseitwillnotwork,because

itwillnotbefreeandfair.Everybodywilllosebythatandnotrespectingit

wouldmeanthateveryoneisaloserattheendoftheday.

Letmegiveyouanexamplewithintellectualpropertywithinourcountry,

wherethisisanimportantquestion.Icomefromaregionwherewehavea

lotofmachinetoolindustry.Thebestdevelopmentfromanengineerina

factoryinmyregionisnothelpingthecompanyanymore.Thismachinecomes

backfromChinaafteroneyear,copiedandforhalftheprice.Butmyhopeis

thattheVietnamesenowproduceafterayeartheChinesemachineforhalf

theprice.So,themoresuchcountrieslikeChinadevelop,themoretheyhave

tounderstandthatitisalsointheirinteresttoaccepttherulesandto

implementthem.Thiswillbeadecisivepointandtherefore,itisalso

importantthatRussiaforexamplejoinstheWTO.Thereisacertainbinding

inthat.ThatisthereasonwhysomeoligarchsinRussiadonotwanttojoin.

Ibelievethatthismustbeoneofthemainaspects.TheG20isamuchmore

importantbodythantheG8forallthesereasonsandmoreover,itcombines

emergingcountries.Herewehavetofindawaythatwhattheyagreewillbe

implementedathomeinlaw.Otherwise,theworldeconomyisatstakeorit

willcometoasituationwithsuchtensionsthatwillevenleadtodangerous

situationslikewars.Therefore,commonrulesinaglobaleconomyarethe

safestwaytomorewealthandpeace.Thishastobeunderstood;otherwise

wewillrunintodifficultsituations.

36

Mr.Zhang:Iwilljustcommentbrieflyonafewquestionsandfirstageneral

question,mentionedbyquiteanumberofpeople.InmyspeechImentioned

thatChinaisnowthelargestlaboratoryforeconomic,social,andpolitical

experiments.Indeed,eveninthefieldofpoliticalreformanddemocracy,we

areexperimentingdifferentinitiatives.IfIhavetocutthelongstoryshort,

IamthinkingofthefamousremarkbyPresidentLincoln‘agovernmentof

thepeople,bythepeopleandforthepeople’.Ithinkitisfairtosaythatat

thisstagethegovernmentofChinaisagovernmentofthepeopleandfor

thepeople.Itisaccountabletothepeople.Letmegiveanexample.Obama

isstillpushinghardhisreformformedicalinsurance.Therearealotof

setbacks.InChina,wehavealreadydonethatwithintenyears.95%ofthe

populationisinsured.So,itismoredirectlyresponsibletopeople’sdemands,

moreefficient.

Howtoachieveagovernmentbythepeople?Thatisnoteasy.Inthe

Netherlands,youhaveestablishedasetofpracticessoyouconsiderthisis

thegovernmentbythepeople.InthecaseofChina,howtoensurea

governmentbythepeoplethesizeof1.3billion?Itisbynomeanseasy.We

arehavingexperiments.Essentially,themostprobabledirectionis‘selection

pluselection’.SelectionisbasedontheChinesesystemofmeritocracyand

electionisamoreWesternapproach.So,wearealreadyexperimentingwith

that.Wealsothinktentativelythatthisapproacheventuallycouldensure

bettergovernancethansimplyholdingelections.

Theotherthingisabouttheeconomicandpoliticalorderoftheworldtoday.

Indeed,Chinaisabeneficiaryofthecurrentinternationalorder.Letmegive

anexample.SinceChina’sentryintotheWTOintheyear2000,China’s

economyhasmorethanquadrupledwithinonedecade.Soobviously,China

hasbenefitedalotfromitsengagementwiththeinternationalsystemand

withitsinternationalpartners.

Butontheotherhand,giventhesizeofChinaandgivenitsowneconomic,

political,andculturaltraditionsChinaisalsoperhapsareformerinthesense

thatweneedtoreformcertainaspectsoftheinternationalsystem.Weare

notrevolutionarytooverthrowthesystem;bynomeans.Butindeed,youcan

findmanyexamplesofthesystemnotworkingproperly.Forinstance,even

Europeanswillagreewhytheworldfinancialsystemisoperatinginsucha

way–somanyspeculationsbutwithoutsupervision–whytheUSrating

agenciescanplaysuchaprominentroleanddictateothers.Thisissomething

thatweshouldthinkaboutintermsofreform,i.e.reformingaspectsofthe

currentinternationalorder.AsforChinaasaresponsiblestakeholders,tobe

honest,wefeel–andIfeelinparticular–thattheUnitedStatesitselfisnota

responsiblestakeholder.Thatistheproblem.Thefinancialcrisisstartedinthe

37


UnitedStates.Howmanytensofmillionsofpeoplehavesufferedfromit,not

tomentiontheIraqiwar?So,differentplayersintheinternationalsystem

shouldallbecomeresponsibleplayers,inparticulartheUnitedStates.Forone

thing,theUnitedStatesshouldbecomemoreresponsiblewithitsdollar-policy,

anditsdevaluationofdollarsisdestructivetomany.Ofcourse,Chinacando

moreintheworldtoday.Indeed,thespeedatwhichChinaisrisingisfaster

thanmostChineseandevenChineseleadersexpected.Perhaps,wearenot

yetfullypreparedforthat.Wehavetohavealearningprocess.Ontheother

hand,Chinawillhavealotofdifficultywithitsownagendabeingdictatedby

others,byothercountries.Thatcouldberisky.TakeforinstanceKorea.China

hasalotoftradewithandaidforNorthKoreabutontheotherhand,North

Koreaisfiercelynationalistic.ItisnotthatChinapressesabuttonandNorth

Koreawilldoit;itisfarmorecomplicatedthanthat.So,incertainareas

Chinacouldperhapstakemoreresponsibilitybutinotherareas,otheractors,

includingEurope,shouldbemoredynamicandmoreactive.

Finally,concerningtheissueofenergyandenvironment:indeed,Chinaisone

ofthelargestandperhapsthelargestpolluterintermsofemissionofCO2,

eitherChinaortheUnitedStates.Yet,ifwelookattherecentstatisticsChina

isactuallyleadingtheworldintermsofsolarenergyindustry,windenergy

andintermsofelectriccars.Chinaisdoingveryefficiently.Atypicalfeature

oftheChinamodelisonceitrealisesthemistakesithasmadethewayto

correctmistakesismoreefficient.IthinkwiththeChinesemodelthereisa

hopeforabetterenvironmentalpolicy.Weissuedtheorderforadopting

Europeanpetrolstandardsacrossthecountry,anditwasdoneovernight.If

weadopttheAmericanmodelIdonotseeanychanceforcurbingclimate

change.

Thankyou.

Mr.Kupchan:Thankyou.Mr.VanEekelenraisedthecriticalquestionandthat

is‘whatisorder’?Ithinkyougavetherightansweranditisarulebased

system.Inmanyrespects,whatallofushavebeendiscussingthismorningis

whatthatrulebasedsystemwilllooklike,whowillwritetherulesand

whetherthemainplayersandtheinternationalsystemwillabidebythose

rules.WearecomingoffofthelongruninwhichtheWesthaswrittenthe

rules.Inmanyrespects,sincethePeaceofWestphalia,theConcertofEurope,

theVersaillesTreaty,theUN,theBrettonWoodssystem,somecombination

ofEuropeanandNorthAmericanpowershavebeencreatingthatrulebased

order.Ithinkwearegettingtothepointwherethatwillnolongerbe

sustainable,simplybecausetherearealotofcountriesoutthere,China

amongthemthatmaynotwanttoplaybyourrules.Thatisgoingtorequire

ustoengageinthediscussionaboutthenextsetofrules.Ithinkitisgoing

38

tobehardtocometoanagreement,inpartbecause–toputitinsoftware

terms–ouroperatingsystemsaredifferent.Iwouldratherseeaimlowand

findasetofrulesthateverybodyplaysbythantoaimhighandseeallof

thembrokenonadailybasis.

ImightdisagreealittlebitwithProfessorZhangabouttheUnitedStates.The

UShasmademistakes;thefinancialcrisis,theIraqwarbutonbalancetheUS

hasbeentheproviderofpublicgoodsthatyouwerereferringto.Thosepublic

goodswillbehardertocomebyanditseemstomethatweneedtothink

aboutwhatnewsetofruleswillgetmoreplayersin.Here,Iwouldrespond

toformerPrimeMinisterBalkenende:Iagreewithyouonavalues’based

approachbutIalsothinkweneedtobecarefulnottode-legitimateother

actorsbyputtingthevalues’issuesintheforefront.Weneedtoworkwiththe

Russias,theChinas,andtheEgyptsoftheworldevenifwedonotlikethe

waytheyruntheircountries.Thatisgoingtobeevenmoretruewhenwesee

thisshiftinthedistributionofpower.Wecannotinanywayneglectthose

valuesbutIwouldtiltinthedirectionofamorerealistapproachwhenone

considersthenatureofthechallengesthatwehavebeforeus.

Onefinalcomment,thefinalquestionaboutsomeofthespecificinstitutions

inTheHague.Ithinkthatpreciselybecauseglobalgovernanceisgoingtobe

hardtocomeby.Thatistosay,consensusontheruleswillbehardtocome

by.Wemaydobettertodropdowntoregionalinstitutions,tofunctional

institutions.WhenyouadduptheICC,ASEAN,theEU,theAfricanUnion,

Mercosur:inmanyrespectstheregionalinstitutionsandthefunctional

institutionsintheyear2040maybethetruedeliverersofalotofthepublic

goodsthatwearetalkingabout,partlybecauseitiseasiertogetconsensus

andactionatthelocallevelwherethereismoreconsensusonrulesand

normsthanatthegloballevelwhere,asIsaid,Ithinkwearegoingtobe

livingforthefirsttimeinhistoryinaworldinwhichyouhaveverydifferent

viewsaboutprinciples,norms,state-societyrelations,values,andhuman

rights.Inmanyrespects,ifwecannotgetconsensusatthegloballevelwe

maybeabletogetitattheregionalandthefunctionallevel.

Mr.Balkenende:Itwasinterestingwhatyouweresayingaboutvalues.Mr.Van

Eekelenstartedthediscussionabouttherulesbasedsystembutarules

basedsystemisalsolinkedtovalues.Youweretalkingabouttheorganisation

ofeconomyandasocialmarketeconomy.Ofcoursethereareregulationsand

rulesbutitisalsobasedonfundamentalvalues.Ithastodowithsolidarity.

Itisalwaysgoodtounderlinethelinkbetweenvaluesandtheorganisational

issues.

Secondly,whenwetalkaboutarulesbasedsystemitisimportanttolearn

somelessonsfromwhathappenedinCopenhagenwhenwetalkedabout

39


climatechange.IthinkEuropeplayedaconstructiveroleinCopenhagen.What

wasthefundamentalproblem?InEuropewesaidweneedarulesbased

system,weneedabindingagreement.Butwhathappened?PresidentObama

showedapersonalcommitmentbuthewastiedtothefactthattheUS

Congressdidnotallowhimtogofurther.Chinawastalkingaboutitsown

responsibility.Itwasaclearcommitment:Chinawantedtodomoreinthe

sphereofenvironmentalissuesbutitwasnotwillingtoacceptabinding

agreementonaglobalscale.AndthatwasnotthemessageofEurope

becausewesaiditisimportanttohavesuchanagreement.IfEuropewould

nothaveactedwewouldnothavehadthefinancingoftheclimatechange

policy.IthinkEuropeplayedagoodroleoverthere.

Thesamehappenedwiththefinancialandeconomiccrisiswhenwetalk

aboutissueslikemoresupervisionandmoreintegrityandtransparency.

IthinkEuropeplayedanimportantroleandaconstructiveone.

Mylastremarkisaboutwhatyousaidaboutelections.Iknowthediscussion

butelectionsarepartofademocraticorientation.Iwouldunderlinethe

importanceofhavingelectionsbutasanexampleofademocraticsituation.

Youcantalkaboutthestructuralaspectsoforganisingelectionsbutitalso

hastodowithademocraticmentality.Ithastodowiththequestionhowyou

cansolveproblems,howyoucanavoidtensionsinsociety,andhowyoucan

preventfights.Thishastodowithademocratictradition.Therefore,I

underlinetheimportanceofhavingelections.

Ofcourse,whenyoutalkaboutelectionsthishastodowiththedevelopment

ofademocratictraditionandthatisnoteverywherethesame.InEurope,it

didnotexistfromonedaytoanother.Ittooksomecenturiesofdevelopment.

Itisimportantthatweareworkingondemocraticdevelopment;otherwiseyou

willgetdifficultiesinthelongrun.

40

41


Second round of questions

Mr.DeZwaan(ClingendaelInstitute):MycommentwasaddressedtoElmar

BrokandMr.Balkenende.NowthatMr.BrokhasleftIwilladdressmy

questiontoMr.Balkenende.Everybodyagreesthatwehavetodoittogether,

soitisabouttheroleofEurope.However,Ithinkalltheissueswearetalking

abouttoday–thethreatsandthechallenges–havetodowiththeremaining

degreeofsovereigntyoftheMemberStates.Today,intheSummitMeetingin

Brussels,themodalitiesofanewTreatyreformwithregardtomonetarypolicy

willbediscussed.Todayalsothepossibleoutlineofacommonenergypolicy

willbediscussedinBrussels.Wearenotyetthere.Now,morespecificallywith

regardtoforeignpolicyanddefenceitismyhumbleopinionthatwedidtoo

littlewhentherewasapossibilitytocreateacommonforeignpolicy,andthat

iswhenwediscussedthecontentsoftheLisbontreaty.So,perhapsImayask

youMr.BalkenendeasformerPrimeMinister:didwedoenoughwhenwe

concludedtheLisbonTreatyonthispoint?Providingforlabelsas‘President

oftheEuropeanCouncil’and‘HighRepresentative’isfine,butisitenoughin

ordertoprovidetheEuropeanUnionandthememberstateswithsufficient

toolstodeveloparealcommonforeignpolicy?

Mr.VanderHoeven(ISSandAIV):Ihaveenjoyedtheexposéofthevarious

socio-economicmodels,somedynamic,andotherssclerotic.Although,as

wasmadeclear,thesemodelsareindeedverydifferent,wenoticeonetrend,

whichtheAmericanmodel,theEuropeanmodel,andtheChinamodelhavein

commonnamelygrowinginequality.IntheUnitedStatesandEuropewehave

seenoverthelast20to30yearsagrowinginequality,asaconsequenceof

globalisation,butwewitnessnowalsoinChinarapidgrowinginequality,

mainlybecauseofthegrowingindustrialisationandtheschismbetweenthe

coastalareasandtheruralareas.So,allthreemodelspresentedthismorning

manifestatrendofgrowinginequality.Myquestionisthereforehowwill

thisgrowinginequalityaffectthebehaviourofthesedifferentsocioeconomic

modelsandwhatimpactonaworldscalewillthishaveontherelations

betweenthesedifferentblocksofcountrieswhichthesemodelspresent?

42

Mr.Knottnerus(WRR):Mr.Chairman.Alothasbeensaidaboutthereportof

theScientificCouncilforGovernmentPolicy,mentionedbythePresidentin

hisintroduction.ThereisonethingIwouldliketoaskthepanelofour

excellentspeakers.Whilewearetalkingalotaboutthegeopolitics,aboutthe

organisationsofstatesandbetweenstateswedidnothearsomuchabout

thenon-governmentalorganisations,thenon-stateorganisationsthathave

crosscuttingworldwidenetworksinallfieldsofenvironment,humanrights,

economicdevelopment,internationalaidandalsonetworkingbetweencitizen

andforexampleindustries.Inourreportwemadesomepleasfordeveloping

newmodelsforcollaborationbetweenstatesandnon-stateactorsbecauseof

theimportanceofthoseothernetworks.Whatdoyouthinkaboutthe

perspectivesofsuchstrategies?

Mr.VanBaar(JournalistHP/DeTijd):Ihavetwoquestions,firsttothe

honourablespeakerfromChina.IlikedhislecturebutIhaveaquestionabout

theofficialpointofviewsincethe1980sthatyourformerchairmanMao

Zedongwas70%rightand30%wrong.Youalsomentionedsomethingabout

morepolicyroom.Isthisstillthecase?Canyouelaborateonthisordoyou

thinkitisprobably50-50today?Iamseen–andprobablyIam–asa

EuroscepticandIwasstruckbytheEuropessimismofProfessorKupchan.

ItseemtomethatatthemomentAngelaMerkelandNicolasSarkozy

seemedtohavefoundeachotherinsavingtheEuro,intryingtofindnew

accommodationsinthat.Don’tyouseeasortofeconomicgovernmentinthis?

Doyoubelieveinthat–Mr.Balkenendeseemstobemoreoptimistic–oris

itthatbadwithEuropethattheoptimismoftodayhastocomefrom

Euroscepticslikeme?

Jaap de Zwaan

43


Mr.Grotenhuis(Cordaid):Oneofthepreviousspeakersreferredtotheroleof

non-governmentalorganisationsandweareoneofthem.Onmytravelling

throughAfrica,Asia,andLatinAmericaIsawanotherfeaturebesidesthe

globalpowershiftwearenoticing,whichismuchmoreonwhatIwouldcall

the‘psycho-social’level:whenyoulookatAsia,Africa,andEuropeIseeand

hearindiscussionswithpartnerorganisationsthatAsiaisacontinentof

confidence,thatAfricaisacontinentofhopedespitepoverty,andthatEurope

isacontinentoffear.Peoplefearforthefutureortheirpensionsystems;

theyarenotsurewhethertheirchildrenwillhaveabetterlifeastheyhad

themselvescomparedtotheirparents’.Itseemstomethatoneofthebiggest

challengesforEuropeistoaddressthisissue.Youcanfeelitthoughyoucan

measureorcountit.Youcanfeelinthemediaandinthepublicdiscussion

thatamoodoffeariscreepingintooursociety.Howinourinternational

relationsandourpositioningourselvesintheworldareweaddressingthese

psycho-socialaspects,ofhowpeoplefeelaboutthewaythepositionof

Europeisthreatenedbythisglobalpowershift?

Mr.Kupchan:Thequestionaboutinequalityisaveryimportantonebecause

itishavingnegativeeffectsonWesternsocietiesandmorepositiveeffectsin

thedevelopingworldinthefollowingsense:alotoftheatmosphericscreated

byincomepatternisaboutexpectations.IntheUnitedStatesforexamplenot

onlyareweseeinggrowinginequalitybutweareseeingloweredexpectations

amongtheworkingclasswherewageshavebeenstagnantforthebetterpart

ofthedecade.Itisthesensethattheeconomicfuturelooksbleakandthat

incomeinequalityisgrowingandthatexplainsinparttheriseoftheTeaParty

André Knottnerus

44

andthepoliticalpolarisationthatexistsintheUnitedStates.Italsofeedsinto

someofthefearandtheconcernthatthelastquestionerwasjustasking.

Theflipsideofitisthatalthoughthereremainsintractableinequalityinsay

BrazilorinChinaexpectationsarerising.400millionhaveleftpovertyin

China.InBraziltheBolsaFamília,theincomeredistributionplan,hasaffected

25%ofthepopulationpositively.So,eventhoughthereisaveryclear

inequalityinChina,Brazil,andsomeotherrisingcountriesexpectationsare

goingupacrosstheboard.Thatiswhyifyoulookatpublicopinionpolls

inChinawhenyouaskwhethertheybelievetheconditionsintheircountry

arefavourable80%ofChinesesay‘yes’.ThePewpollsshowthatthe

correspondingnumberintheUnitedStatesis23%.Thatisabiggapandit

alsoraisessomeinterestingquestionsweweretalkingaboutearlier:howto

measurelegitimacy,towhatextentisitjustaboutprocedurethatistosay

anddemocracyandelectionandtowhatextentshouldperformancealsobe

factoredin.

OnnetworksandNGOs:oneofthefeaturesthatweareheadingtowardis

thatwewillseegovernanceoccurringatmultilevels.Wehavetendedto

speaktodayaboutstatesandintergovernmentalorganisationbutIthink

increasinglyNGOs,socialmovements,networks,chatroomswillbeavery

influentialpartofinternationalpolitics.WeareseeingthattodayinEgypt

whereasfarasweknowthiswasreallyayouthmovementthatwasorganised

oncellphonesandtheinternet.BythetimetheEgyptiangovernmentshut

downthosesystemsitwastoolate;peoplewereinthestreets.Thatisnew.

ItisnotgoingawayandIthinkitisaveryimportantpartoftheworldto

whichweareheading.

IdidnotmeantobeexcessivelyEurosceptic.Invoicingconcernaboutwhat

ishappeninginEurope,ringingthealarmbellmorethanreadinganobituary.

ItseemstomethatmoreandmoreEuropeansarewakinguptothefactthat

thereisadangerousre-nationalisationtakingplaceis.Thatawarenessis

essentialtoreversingit.Iambynomeanssomeonewhobelievesthatthe

Europeanprojectisrunningoutofsteam.Infact,ifIwereforcedtobet

moneyonitIwouldsayitwillrecover.Itwillcontinueatsomepointtomove

forward.ButIdothinkthatthismomentofsetbackorthismomentof

self-doubtismoreseriousthanpreviousround.OnbothsidesoftheAtlantic

weareexperiencinganimportantgenerationalchange.Inmycountry

theWorldWar2generationisgone.TheRichardLugers,theRepublican

internationaliststhatarethemainstaysofourforeignpolicyaregone.Ifyou

lookatyoungermembersoftheRepublicanPartytheyarenotcentrist,they

arenotinternationalists.WeareseeingaturnoverintheUnitedStatesthatis

goingtohavelong-termpoliticalconsequences.Thatispartofthereasonthat

thebi-partisancentreintheUnitedStatesiseffectivelydead;itisgone.Itis

45


populatedbyasmallnumberofRepublicans,afewmoreDemocratsbutthat

foundationforAmericanforeignpolicyfromRooseveltthroughClintonisgone.

ThatmeansthatweenteringanuncertainphaseinAmericanforeignpolicy.

OnthissideoftheAtlanticIsimplyquestion‘isaDutchpersonoftwenty

yearsoldascommittedtotheEuropeanprojectasaDutchpersonwhois

seventy?Yes,Europemattersbutdotheystillattachtoitthehistoric

importanceofsomeonewholivedthroughWorldWar2ortherebuildingof

Europe?IdonotknowtheanswertothatbutIdoknowthatpublicopinion

pollsarestartingtopickupacertainlevelofapathyamongyounger

EuropeanswhenitcomestoEurope.Theyarenotopposedtoitbutitdoes

notanimatethempoliticallyinthesamethatitdidtotheoldergeneration.

Thatsaystomesomepolitician–perhapsonesittingtomyrightorothers–

needstograbthishorsebythereignsandmakesurethatyounger

generationsareascommittedtotheprojectastheoldergeneration.

Mr.Balkenende:LetmegoonwithProfessorKupchan’slastremarkaboutthe

Europeandream.Itiscompletelytruewhatyouaresaying;inthefiftiesthere

wasakindofattitudeinEuropeancountriesof‘nowaragain’;wehaveto

changeitandwehavetoworktogether.TherewasakindofEuropeandream.

Ofcourse,westartedwiththeeconomiccooperation.Today,youcanseemore

andmorethatpeopletakeallthedevelopmentsforgranted.Itseemstobe

anexistingmechanismbutyouhavetobeawareofthefactthatyouhaveto

keepitvitaleveryday.Youhavetoworkforit.Youngpeoplearetravelling

aroundononeeuro,theyarestudyinginothercountries,andtheyworkfor

internationallyactingcompanies.Thatisthestrangething:wearelivingina

Europeanworldbutontheotherhandwearenottalkingabouttheconcept

ofEurope.Thereforeweneedfurtherdiscussionsandawarenessofthefact

thatyouarenotonlyaDutchmanoraGerman,butalsoaEuropean.

Thatbringsmetosovereigntyandyourquestioniscrucial:whathappened

inthepastandwhatshouldbethefuture?Itistruethatmistakeshavebeen

madeinthepast.YouarereferringtomonetaryissuesandIalready

mentionedtheissueoftheStabilityandGrowthPact.Whathappenedduring

thelasttenyears?Itwasakindofabstractformula.WhenItalkedto

PresidentChiracorChancellorSchröderweneverdiscussedthisseriously.

IrememberPresidentChiracsayingitwasnonsense,itwastoostrict.But

suddenly,nowitchangescompletely.Suddenly,wearetalkingaboutarules

basedsystemswithsanctions.Weshouldhavedonethatearlier.Ialways

gavethatwarning:youneedthattypeoffinancingpolicyalsoinordertoget

therightandsoundfinancialpolicyinthelongerrun.Everybodyknowsthat

thepopulationisageing.

46

YousaidwithregardstotheLisbonTreatythatitwasavagueformula.Now

peopleareseeingthatifwearenottakingtherightstepswewillloseit.

Thestrangething–asElmarBrokpointedout–isthatwehaveaverystrong

market.Wehavealotofconsumersbutifwearenottakingtherightsteps

wewilllosethebattle.So,wehavetodoitinanotherway.

Whatyousaidaboutforeignpolicyistrue:Europedoesnotspeakwithone

voice.Sometimesyoucanexplainit.WhenwetalkedaboutthewarinIraq

everybodywasthinkingdifferentlyaboutit.Itwasacomplicateddiscussion.

Ontheotherhandtherearealsotendenciesthatwesaythatwehaveto

speakwithonevoice,forexamplewhenwearetalkingabouttheclimate

changeconferenceinCopenhagen.IthinkEuropedidbetterthere.So,wecan

makeprogress.Iagreedwithyourmessage.Ifyoutalkaboutthefutureof

Europewemustnothavethesevagueformulas.Wehavetoact,wehaveto

beawareoftherisksifwedonottaketherightsteps.Otherwisewecan

forgetit.Iamanoptimist;Icanthinkwecanlearnfromthepastandthat

wasalsoyourmessage.

Mysecondremarkhastodowiththeissueofinequality.Ifullyagreethatif

youarenottakingtherightstepsyouwillhaveenormoussocialconsequences.

ThatalsohappenedinCentralEasternEuropeafterthechangeoftheregime.

Suddenly,alotofpeoplebecameextremelyrichandabout40%endedup

belowthepovertylevel.Thatledtothefactthatpeoplesaidtheycannotuse

theneo-classicaltextbooksbutalsowanttotalkaboutthecivilsociety,

aboutsocialdevelopment.ItisinterestingtoseethatinacountrylikeIndia

youseeamiddleclasscomingup.Thatisextremelyimportant.First,people

aregettingoutofpovertyandthenitisimportanttohaveakindofupward

mobility.Theissueofinequalityisextremelyimportanttotackle.Countries

withamoreequalsystemalsoareperformingbetter.

MylastremarkisaboutNGOs.Ialwaysunderlinedtheimportanceofacivil

society.Youcantalkaboutitinnationaltermsbutalsoonaglobalscale.If

youaretalkingaboutthemanydevelopmentbillsitisnotjustamatterof

government-to-governmentrelations;theyalsohavetodowithprivatesector,

thebusinesssector,andtheNGOs.WhenIwasinIndiaIvisitedthePhilips

company.Philipsiswell-knownforradios,TV’s,bulblightsandsoon.But

theyalreadycompletelychangedtheirpolicyandtheyareveryactiveinhealth

issues.Theydiscoveredthatyoushouldactinanotherwaywhenyoutalk

aboutthehealthofpeopleinacountrylikeIndia.Itisacombinationof

deliveringthetechnicalequipment,whichistheresponsibilityofPhilips,and

trucksformedicalresearchwithasatelliteconnectiontohospitals.The

doctorswereatadistancebuttheywerebusywiththeanalysis.TheNGOs

weretalkingtothepeopleaboutusingthattechnicalequipment.So,itisa

47


combinationofprivateenterprises,NGOsandlocalauthorities.Thisisjust

aconcreteexamplethatyoumustunderlinetheimportanceofNGOs.Ifyou

talkabouttheissuesoftodayandyouwanttospeakabouthowtosolve

thingsyouneedanotherapproach.ImentionedKhannawhosaid:youcan

seetheendofthetraditionofthenationstates.Thereareallkindsofother

combinationsandanNGOisoneofthem.So,youhavetounderlinethis.

IwouldliketothanktheWRRbecauseitisplayinganimportantroleinthis

issue.

Mr.Zhang:Mr.Balkenenderaisedthepointconcerningvalues.Actually,there

aresomeinterestingstudiesonvaluesdonebyChinese,Americanandother

scholars.AllthesevaluesareimportantbutifyoulookattheChineseandthe

Westernperceptionsofvalues,therearedifferencesintermsoforderand

sequenceofvalues:whichvaluesdopeopleattachmostimportanceto?One

studyconductedbyAmericanscholarsshowsthatthenumberonevaluefor

theAmericansisfreedomofspeech,andthenumberonevalueforthe

Chineseissocialorder.So,therearedifferentprioritiesofvalues.Onething

thatcouldbeinterestingwiththeriseofChinaisthatChinamaypushand

advocateitsvaluessuchasharmony,development,peace.Whyispeacenota

universalvalue?Thatisstrange.ItisnottochallengeWesternvalues,butif

universalvaluesareuniversal,theymustbevaluessharedbymostpeoplein

theworldratherthansimplyidentifiedbyacertainculture.Thoseareregional

valuesandnotuniversalvalues.Thisissomethingwecandiscuss,indeed.

onehastoconsidertheorderandsequencesofvaluesindifferentcultures

andtheirrationals.

Wearetalkingabouthumanrights.Nocountrycanachieveallhumanrights

simultaneously.Theremustbepriorities.Chinaidentifiedfightingpovertyas

numberonehumanright.IntheUnitedStatesfightingpovertyisnotahuman

right.InEurope,fightingpovertyisonlyviewedascontributingtoremoving

obstaclestoenjoyinghumanrights,butinChinathisisthenumberone

humanright.Ifyouaretheleaderofaprovinceoracountyandyoucannot

reducepovertyinyourregion,youaregone;youhavenochancetohaveany

promotion.Sometimesweneedabitoftimetoachievebetteranddifferent

typesofhumanrights.

ThegapbetweenrichandpoorhasincreasedsharplyinChinabutitisalso

fairtosaythatinthecaseofChinaeventhepoorhaveimprovedalotover

thepastthreedecadesintermsoflivingstandards.Letmegiveafigurative

example.IfyoudrivefromShanghaiorBeijinginanydirectionsfortwenty

hours,youwillreachtheSino-RussianborderortheSino-Vietnameseborder

ortheinteriorpartofChina.Butyouwillseelesspovertythanyouseein

Mumbaiwhenyoudrivefortwohours.Chinahaslifted400millionpeopleout

48

ofpoverty.IfyoucheckthestatisticsonIndia,itsabsolutenumberofpoverty

stillincreasesbecausepopulationisincreasingfaster.Thisisthescaleofthe

progressChinahasmade.Ifonelooksatthestatistics–andagainIraisea

controversialpoint–China’sTibetisdoingbetterthanIndia.Ifonetalks

abouttheriseofIndiathenTibethasalreadyrisen,intermsoflifeexpectancy,

intermsofeducation,literacy,intermsofwhatwecallhardware–roads,

railways,accesstohighways,televisions–TibetisdoingallbetterthanIndia.

Bytheway,duetohistoricalreasonsTibetisthepoorestprovinceinChina.

So,ChinaisoutperformingIndia.ItisanexampletoshowtheChinamodelis

working.WethinktheIndianmodelhasalotofroomforimprovement,

especiallyinthepoliticalsystem.IhavebeentoIndiamanytimes,butIndia

isstillveryproudthattheyhaveabetterpoliticalsystemandthatitwill

outperformChinaoneday.Itisnoteasy,tobehonest.

AnotherthingisthequestionconcerningNGOsandcivilsociety.Yes,civil

societyisalsorisingupinChina,especiallyinthefieldofenvironmental

protection.AlotofNGOspropupinthefieldofeducationaswell.Whatis

morecontroversialiscivilsocietyinthepoliticalsector.IntheWestitistaken

forgrantedthatcivilsocietyisagoodthing.ButI’vebeentoabout70

developingcountries,andIhavecertainreservationabouttheideathatNGOs

arealwaysgoodbynature.Ifyoulookatthecrisesandthetragediesin

Burundi,inUganda,inex-Yugoslavia,youseethesecountrieshadavery

dynamiccivilsociety.Inmanypoorcountries,certainNGOsaresimplymafia,

tobehonest.Wehavetobefrank,theychangehatseasilyfrommafia

organizationstoNGOs.YoucanfindthemintheslumsinIndia,inMumbai.

So,therealsituationismorecomplicated.IntheWesternconcept,thestate,

especiallyintheAmericanpoliticalculture–isanecessaryevil.So,youhave

acivilsocietythatchecksthestateorisagainstthestate.IntheChinese

culturethestateisalwaysanecessaryvirtue;alltheprosperoustimesin

China’slonghistorywereassociatedwithanenlightenedstrongstate.Perhaps

weshouldcombineourowncultureandcreateourowntypeofcivilsociety,

whichisemerging.Ialwaysremindthosewhohavedoubtsaboutthe

ChineseperceptionofcivilsocietythefamouscommentmadebyProfessor

Huntington:ontheonehandyouhavepoliticalparticipation;ontheother

handyouhavepoliticalinstitutions.Thetwomustbekeptroughlyatthe

samelevel.Ifpoliticalparticipationiswayhigherthanthepolitical

institutionalbuilding,itisascenarioforchaosandevenforwar.So,wehave

tobearthisinmindandtrytokeepbalancebetweenboth,political

participationandpoliticalinstitutionalbuilding.

49


ConcerningChairmanMao,indeedattheendoftheCulturalRevolutionmany

peoplethoughtnegativelyofMao.Butwiththepassageoftime,theybeginto

saythatweshouldbefairwithMao.DengfamouslysaidMaowas70%right

and30%wrong.ThisisaChinesefigurativespeech.Itdoesnotmean

scientifically70%and30%;itjustmeanshewasmoregoodthanbad.With

hindsightofthreedecadesafterhisdeath,Maoremainspopular,especially

withordinarypeople.Maowasastrongnationalistandhewastheadvocate

ofegalitarianismandheispopularintoday’ssocietywheremanyperceive

agrowinggapbetweenrichandpoor.Thissenseofegalitarianismisvery

strongintheChineseculture.WhenwetalkaboutmodernEuropeanstates

ormodernEuropeandemocracies,theyaretheproductsofbourgeois

revolutions.ButifyoulookatChina,weexperiencedsomanyrevolutionsin

thepast;eachandeveryrevolutionwascarriedoutinthenameof

egalitarianism.Onceanewdynastycametopowertherewasredistributionof

landandofproperty.ItisthefirsttimeinChina’slonghistorythatwehave

createdfarmorelibertyandpropertythananytimeinChina’shistory.So,

China’smiddleclassisreallyinawaythemostconservativeclass.Theydo

notwanttheWesternstyledemocracy.Theythinkifthereis‘onemanone

vote’,Chinawillhaveapeasantgovernmentovernight.

ThisisjustabackgroundnoteforyourunderstandingofChina.Ifthereisa

colouredrevolutionitmaywellbered.Itwillbeperhapsusefultobearthis

pictureinmindandinourreflectionsonChina’spoliticalreform.Also,now

peoplethinkbackaboutMao,theythinkoftwomajorcontributionshemade.

Onewaslandreform.WhenwetalkaboutpovertyinChina,it’sthefarmers

whohavethelowestincome,buttheyhavelandandhavetheirownhousing.

Thatismuch,muchbetterthanpeasantsinIndia,tentimesbetter.Maoalso

initiatedwomen’sliberation.IfwelookatthestatusofwomeninChina,

accordingtoarecentstudyonwomenentrepreneurs,fouroutoftenbest

womenentrepreneursintheworldareChinese.So,youhavetotreatMao

morefairlydespitealltheseriousmistakeshemadeduringtheCultural

Revolutionandotherradicalpoliticalmovements.

Mr.Chairman:Thankyouverymuch.Thisbringsustotheendofthemorning

session.MayIthanktheeminentspeakersfortheirexcellentcontributions

fromdifferentangleswithadifferentapproach?Itisreallyworthwhileto

organisethiskindofdiscussion.

Wewillcontinueafterlunchwithtwosessions,oneaboutglobaleconomic

(im)balances,andoneaboutsecurityandscarcityofresources.

50

Mr.Chairman:Averywarmwelcometoallofyoutothisafternoonthematic

session.IamJanRoodandIamHeadofStrategicResearchattheClingendael

Institute,Clingendaeloneoftheco-organisersofthisevent.Ihavethehonour

andprivilegeofchairingthisafternoonsessionandthatisindeedanhonour

andaprivilege!

Session A: Global economic (im)balances

Chair: Prof.Dr.JanRood

HeadofStrategicResearchoftheNetherlandsInstituteof

InternationalRelationsClingendael

Speaker: Prof.Dr.AgeBakker,ExecutiveDirectorattheIMF

Discussant: Mr.CarloTrojan,AdvisoryCouncilonInternationalAffairs

Jan Rood

51


Wewillcontinueourdiscussionofthismorningbylookingmorein-depthat

oneoftheminparticularandthatisthestateoftheglobaleconomy.Aswe

allknowtheglobaleconomyisrecoveringfromoneoftheworsteconomic

crisessincethe1930softhelastcentury,butasyouwillalsohaveseenin

thenews,globalrecoveryisuneven,andinsomepartsoftheworlditis

weak.InEuropeitisstillweak:Ionlymentionthelatestgrowthfiguresofthe

UK,wherenegativegrowthoccurredinthelastquarterandImentiontheUS,

whichisstillsufferingfromhighunemployment.So,economicrecoveryis

unevenandinsomepartsoftheworldveryweak.

Whatthisfinancialeconomiccrisismadeclear–andIthinkthatisvery

relevantforthetopicwewilldiscussthisafternoon–aretwothingsin

particular.First,thatspecificallyintheareaoftheglobalfinancialeconomic

relationsthebalanceofpowerisindeedshiftingquiterapidly.Thepresentation

ofProfessorZhangthismorningonlyunderlinedthat.Thebalanceofpoweris

shiftingandasaresultthepresentsystemofglobaleconomicgovernance

doesnotreflectthisnewandemergingbalanceofpoweranylonger.Thatis

atopicwewillmostcertainlydiscussthisafternoon.Secondly,theexisting

globalgovernancearrangementsthatwehadandthatwestillhavewerenot

abletopreventthefinancialeconomiccrisisandareandwereinurgentneed

ofmodification,bothwithregardtotheireffectivenessaswellastheir

legitimacy.

Thatbringsmetothebasicquestionthatwearegoingtodiscussthis

afternoon:whatkindofglobaleconomicorderisemergingasaresultofthis

shiftinpower?‘Globaleconomicorder’inthiscasenotonlymeanswhowill

beinchargeandwhowillbethemainplayers–thediscussionwehadthis

morninginresponsetothepresentationofMr.Kupchanwhotalkedabout

multi-polarityastheorderthatwillemergeasaresultoftheshiftofpower

–weshouldalsolookatthefundamentalprinciplesandvaluesdefiningthis

order.Ofcourse,weshouldalsodiscuss‘order’intermsofthecapacityofthe

internationalcommunityforglobaleconomicgovernance.Thatis,thequestion

towhatextenttheinternationalcommunityasweknowitnowwillhavethe

institutions,theprocedures,andtherulesthatareneededtoguaranteea

minimumlevelofcooperationinthischanginginternationaleconomicsystem.

Thatisofcoursequiteachallenge.

Whatkindoforderwillwehave?Thatisthesecondissuethatwewilldiscuss.

Weshoulddiscussthekindoforderbutinadditionshouldaskwhatrole

thereistoplayfortheEuropeanUnioninthisemergingglobaleconomic

order?WilltheEUbeabletoplayaroleatall?Thereseemstobesome

pessimismonthisregard.Willitbeabletoplayasignificantrole,anyroleat

all?Willithaveanyimpactonglobaleconomicaffairs?Well,itisquite

52

obviousthattheanswertothatquestiondependsverymuchonthecapacity

oftheEUtosolvethepresentproblemsintheEurozone.Itwillonlybeable

toplayarole,animportantroleonaglobalscale,ifweareabletosortout

ourpresentinternalproblems.Thatisquiteobviousandthatisalso

somethingthatwewillneedtodiscuss.

WhenwespeakabouttheEuropeanUnionwespeakofcourseaboutthe

Netherlands.TheNetherlandsisacountrythatisgettingsmaller–youmight

argue–inabiggerworldandthatbydefinitionhasalargeinterestina

stableandopeninternationaleconomicsystem.Itisvitalforourwelfareand

oursecurity.Whatoptionsdoesithave,lookingatthisshiftinthebalance

ofpowerandlookingatthepresentstateofthemultilateralsystem?What

optionsdoestheNetherlandshavetopromoteitsinterests,inparticularwith

regardtoeconomicissues?

Thisisabriefintroductiontothetopicofthisafternoon,twoveryfundamental

issues:orderandtheroleofEuropeincombinationwiththeroleofthe

Netherlands.

Thetopicofthisafternoonwillbeintroducedbytwoexcellentspeakers.

OurfirstspeakerisAgeBakker.Hewilltacklethisissuefromtheperspective

oftheglobaleconomy,theglobalsystemofmultilateralorganisations,in

particulartheroleofIMFandtheG20,andthecapacityofthesetwobodies

forglobalgovernance.HewillalsodiscussthepositionoftheNetherlandsin

thepresentinternationaleconomicsystem.AgeBakker,asweallknow,isthe

ExecutiveDirectorandassuchmemberoftheBoardoftheIMF.Inthat

capacityherepresentstheNetherlands,butalsoalargegroupofEuropean

andEasternEuropeanstates,statesfromtheBalkansandalsoIsrael.Ifwe

takethatintoaccountIthinkheismostqualifiedtocombineaglobalview

andananalysisofthepositionoftheNetherlands.

AfterhispresentationCarloTrojan,theformerSecretary-Generalofthe

EuropeanCommissionandformerPermanentRepresentativeoftheEuropean

CommissioninGenevaandinparticulartotheWTO,willspeakspecifically

abouttheEU,theinternalproblemsthatwehavetoface,andtheexternal

positionoftheEuropeanUnionintheinternationalsystem.Thatwillnotbea

surprisetothoseofyouwhoknowhim.Imustaddthatweareverygrateful

thatheishere,thathehasacceptedtheinvitationtogiveapresentation,

becausehewasaskedtodosoataverylatemomentasElmarBrokwas

supposedtobethediscussantforthispartoftheday.Mr.Brokcouldnot

makeit,soagain,weareverygratefulforthefactothatCarloTrojanhas

acceptedtheinvitation.Afterthesetwopresentationstherewillbeample

roomfordiscussion.

53


Toward effective global governanceAddress by Age Bakker, Executive Director at the IMF

Mr.Bakker:Mr.Chairman,ladiesandgentlemen.Itisapleasuretobehere

andagreathonourtospeakforthisaudience,alsoafteramorningwhichhas

putthebarquitehigh.Itwasaveryinterestingmorning.Itisapleasuretobe

here,toflyinfromWashington,andtofleefromthevery,verycoldwinterwe

haveintheUS.YoumaythinkitiscoldoutsidebutwhenyouliveintheUS

hereitiswarm.Iwillgiveadifferentperspectiveofaglobalnature,beingthe

representativeattheInternationalMonetaryFund.

WhenItookupmyjobattheIMFinthespringof2007,theinstitutionwasin

disarray.CommentatorshadarguedthatinstitutionsliketheIMFwererelics

ofthepastandhadbecomeirrelevant.Theworldeconomyhadbeenbooming

andemergingeconomieswerequicklycatchingup.Internationalinstitutions

liketheIMF,itwassaid,werenolongerneeded.Financialmarketswouldtake

careofanyadjustmentneededandtheywouldabsorbrisks.

Now,nearlyfouryearslaterweareallalittlesadderandalittlewiser.Itis

clearthattherisksoffinancialinnovationsandglobalimbalanceswere

underestimated.Supervisionandregulationhadnotkeptpace.Risk

managementatfinancialinstitutionsfailed.Thecrisiswasafailureof

governance,onecouldsay.

Thespeedwithwhichproblemsinonecountryimpactedothercountriestook

manybysurprise,includingtheIMF.Thefinancialcrisistrulywasaglobal

eventandithadasevereimpactontherealeconomy.Thechallengeisto

Age Bakker

54

learnfromthiscrisisandmakestructuralchangesthatwillbuildamore

robustinternationalsystem.

Thefinancialcrisishaschangedthewaywethinkaboutglobalgovernance.

TheG20andtheIMFhavebeenatthecentreofeffortstoavoidthatthecrisis

wouldturnintoaGreatDepression.InthisIthinkwehavebeensuccessful,

buttheinternationaleconomyisstillfragile.Ithasbecomeclearthatweneed

strongerglobalgovernancestructurestostrengthentheinternationalsystem

andtoavoidthatwerelapseinoldhabits.

Ispeakherewithtwohats.AsanExecutiveDirectoroftheIMFIwillsayafew

wordsonhowweseeglobalgovernancefromtheviewpointoftheIMF.Atthe

sametimeasarepresentativeoftheNetherlandsinWashington,Iwillgive

youmyviewonhowtheNetherlandsbestcanpositionitselfandhowitcan

contributetomoreeffectiveglobalgovernance.Youwillseethatthesetwo

viewpointswillcometothesameconclusion.

Inthefirstdecadeofthiscenturywehaveseenverysignificantchanges.

Thecrisishasbeenawatershed.Ithassweptawaymuchoftheoldeconomic

order.Ithasalsosweptawaytheconsensusonwhichthiswasbased.The

crisishasimpactedEurope,withthemonetaryunionunderattack.Atthe

sametime,emerginganddevelopingeconomieshavecontinuedtogrow

duringthecrisisandthishasredefinedthebalanceofeconomicpowerinthe

globaleconomyinaveryshortperiodoftime.

AsIsaid,thecrisiswassparkedoffbylacking,failingregulationandafailure

ofsupervision.Whatwasforgottenwasthatderegulationneedstobe

accompaniedbyeffectivesupervision.Therewasamistakenbeliefthat

financialmarketscouldpolicethemselveseffectively.Atthesametimeand

morefundamentally,therewasanunderlyingcauseofthecrisis,where

governmentssimplydidnotfollowcommonsensepolicyrules.Theglobal

economicgrowthmodelreliedtoomuchonexcessiveborrowingbysome

countries,leadingtolargeandunsustainableimbalances.Intheend,the

globalcrisiscanbetracedtoafailureofgovernance,particularlyinadvanced

countries.ThishasunderminedtheauthorityoftheWestandcalledinto

questionthefabricoftheoldgovernancestructures,i.e.theG7ortheG8,

andithascalledintoquestiontheWashingtonconsensusattheIMFandthe

WorldBank.

So,weneedanewglobalgovernancemodel.Aglobalcrisiscallsforaglobal

answer.InajointinitiativeformerPresidentBushandPresidentSarkozy

hadconvenedG20leadersfrommajoradvancedandemergingeconomiesin

2008afterthecrisissparkedofftogivepoliticalbackingtowhathasbeen

averystrongcoordinatedcrisisresponseoflowinterestrateseverywhere,

55


fiscalstimulusinallcountries,andfinancialsectorreform.Thiswasan

unprecedentedglobalresponsetothecrisis.G20countriesalsoagreedona

newsurveillancemodelinwhichmembersofthegroupwouldholdeachother

accountableforimplementingpoliciestoachievebetterglobaloutcomes.The

basicideaisthattherecanbenodomesticsolutionstoproblemsthathave

globalspillovers.

So,wehavetorealisethatwhatcameoutofthecrisisisanewformof

governanceatagloballevel,onemightsayanucleusofglobalgovernance

wheretheIMFprovidestheanalysis,thepolicyrecommendations,andearly

warnings,allbasedonitslong-standingexpertise,andtheG20providesthe

politicalbacking,peerpressurewhichisneededforcoordinatedpolicy

responses,andstrategicguidanceandtimelines.

TheIMFplaysacrucialroleinthisnewgovernancemodel,whichofcourseis

focusedonfinancialeconomicpolicies.Themagnitudeofthecrisisandthe

greaterroleoftheG20broughttheIMFbacktothecentrestage.

TheIMF’sresourceswereenlarged,itslendingtoolkitmodernised,and

conditionsonlendingwerefocusedonsolvingurgentproblemsandnoton

fixingeverythingwrongwithaneconomy.Therehasbeenalotofcriticismin

thepastonconditionalityandtheIMFhaslearnedfromerrorsinthepast.

Therewasmoreattentionforprotectingthepoorwho–asweallknow–

suffermostduringcrisesandperiodsofadjustment.Inadepartureofthe

pastwenowalsohaveprecautionarycreditlines,meantasacrisis-prevention

tool,wherewegivecreditlinestocountrieswithastrongpolicytrackrecord,

likePolandandMexico.

Beyondcrisismanagement,surveillanceneededstrengthening,includingin

theframeworkoftheG20.Wehaveagreedonregularfinancialsector

assessmentsbytheIMFthatweremademandatoryforallsystemically

importantcountries.

AstrongerrolefortheIMFwouldnothavebeenachievedwithoutreforming

itsowngovernance.Untilrecently,theIMFwasseenasstrongholdforrich

countries.Onthisgraphyouseethepresentdaysituationwithontheleftthe

toptenofthecountriesthathavethelargestvotesintheinstitution.Asyou

maygather,therehasbeenalongstandingperceptionofover-representation

ofadvancedcountries,particularlyEuropeancountries.Membercountriescan

formconstituencies.TheNetherlandsarenumber12asfarasvotingpower

isconcerned.TogetherwiththeothercountriesintheDutch-ledConstituency,

werepresentnumber7intheinstitution.Ifyoulookatthetoptenof

constituencies,therearequiteanumberofEuropeansincludingfromsmall

advancedcountrieslikeBelgiumandtheNetherlands.

56

BuiltonanearlierreformattheIMF,wehavejustapprovedashiftofover

6percentofvotingpowertodynamicemergingcountries.Brazil,China,India,

andRussiawillnowbeamongourtoptenshareholders.Ifyoulookattheleft

youseethatthetoptenisnowcomposedoftheUnitedStatesandJapan,

thefourlargestEuropeancountriesandthefourBRIC-countries,Brazil,Russia,

IndiaandChina.Thatisamuchbetterreflectionofthebalanceofeconomic

power.Ofcourse,onecouldargue–professorZhangwouldundoubtedly

agreewithme–thatChinashouldbeinsecondplace,buttimeisonitsside.

ChinawillnottakeverylongbeforeitovertakesJapan.Thesethingstakea

littlebitoftime.ButtheshiftinthesayoftheIMFisreallyawatershed.

WealsoseetheimplicationsfortheNetherlands.Youmayhavenoticedthat

inthepreviousslidewewerenumber12andwewillgodowninthenew

situationtonumber15.WewillbeovertakenbycountrieslikeSpain,Mexico

andBrazil,whichwerebelowus.Ithinkthisisallwellunderstoodand

longoverdue.Butyouwillalsoseethatwewillfalloutofthetoptenof

constituenciesandbecomenumber11insteadofnumber7.So,theseare

sizablepowershifts.IfyoucomparethistotheUNsystemthesearereally

verybigchanges.ItshowsthattheIMFhaslearnedfromthecrisisandisa

learningorganisation.Inmanyrespects,IbelievethereisanewIMF.

Moreover,itwasdecidedtoincreasetherepresentationofemergingmarkets

economiesattheExecutiveBoard.ThisrebalancingofthesayintheIMFhas

largelybeenmadepossiblebyadvancedEuropeancountries.

So,wedohavebettergovernancestructuresinplace,withtheG20atthe

centreandastrongerandmorelegitimateIMFwithbettergovernance

reflectingtheshiftofeconomicpower.Butitistooearlytosaywhetherthis

willbesuccessfulinloweringthechancesoffuturecrises.Wehavenow

enteredapost-crisisenvironment,eventhoughtheeffectsofthecrisisare

notyetover.Countriesfacedifferentchallengesandthetemptationforleaders

tofocusoncemoreontheirowndomesticproblemsisgrowingstronger.

OnecannotruleoutthatafteranenergeticstarttheG20mayfallbackin

irrelevance.Thereisariskofcomplacency.

Ibelievethisisdangerous.Theinternationalsituationisstillfragile.Wehave

atwo-speedrecoverywheresomecountriesaregrowingfast,whileothersare

stillstalled.Wehaveanimbalancedsituationwithadangerouslyhighfiscal

deficitintheUSandanundervaluedexchangerateinChina,withinflation

edgingupinemergingcountriesbecauseofrisingfoodandenergyprices,and

withafragilesituationinEurope.Therearestillmanychallengesoutthere

andIbelievethesecallforcontinuedinternationalcooperation.Ifwedonot

succeedinthis,weriskfallingbackinbeggar-thy-neighbourpoliciesthat

57


lowerglobaleconomicgrowthandaddtofinancialuncertainties.Weallhave

aninteresttoavoidthisandparticularlyanopeneconomyastheNetherlands.

TheNetherlandsisoneofthefoundingfathersofIMFandWorldBank,andof

courseoftheEU.Wehavealwaysstrivedforastrongrepresentationinthese

institutions,becauseasanopeneconomy,dependentoninternationaltrade,

wehaveavitalinterestinastableinternationalsystem.Thisoutward-looking

attitudehasbeenaconstantinthepost-waryears.However–aswasnoticed

thismorning–morerecently,suchanattitudecannolongertakenfor

granted.Commentatorsquestionthecosts,alsofortheNetherlands,oftaking

internationalresponsibility.TheyrightlywanttounderstandwhattheDutch

interestisinretainingastrongrepresentationininternationalinstitutions.

Allthiscallsforastrategicreflectionontheinternationalpositionofthe

Netherlands.Forthis,weneedtohaveaclearpictureofwhattheDutch

interestisinhavingastrongpresence:whatisouraddedvalue?Canwe

rightlyclaimastrongpositionandwhywouldwedothis?Howcanwemost

effectivelypursueourinterests?

TheDutchinterestinawell-functioningandstableinternationalsystem

becomesclearwhenwerealisewheretheNetherlandsowesitsprosperity.The

Netherlandsisamedium-sizedorsmallopeneconomywithinternationally

orientedcompaniesandwehaveamajorfinancialsector.Ourindustryhasto

competeagainstcompetitorswithamuchlargerhomemarketandweare

thereforehighlydependentonexternaldevelopments.Weshouldalsorealise

thattheNetherlandstraditionallyhasabalanceofpaymentssurplusandthus

isastructuralcreditorcountry.

Asatradingnationandasacreditorcountry,asafinancerfortheworld,we

arehighlydependentonahealthyworldeconomy.Therefore,wehavean

interestinthecontributionthatinternationalorganisationscanmaketo

maintainastablesystem.Theglobalfinancialcrisishasshownhowmuchwe

arehitbypolicyfailuresinothercountries.Theyhaveadirectimpactonan

openeconomyliketheNetherlands.So,wehaveaninterestinstrengthening

globalgovernance;wehaveaninterestinstrengtheningthepositionof

internationalinstitutionsliketheIMF.Inshort,wehaveaninterestineffective

globalgovernance,becausethisalignswithitsowngrowthmodel.Italigns

withtheDutchbusinessmodel.

Wealsohaveaninterestintransparentrules.ThiscameupintheQandA

sessionthismorning.Ourfinancialandtradinginterestsinothercountriesare

bestsafeguardedbynon-discrimination,byruleswhichareoverseenbystrong

internationalinstitutions.Intheabsenceofthis,thelargecountrieswill

58

decideamongthemselvesandthisisnotnecessarilyintheinterestofan

openeconomyliketheNetherlands.

Andwehaveastronginterestinmonetaryandfinancialstabilityandtherefore

foradisciplinaryroleoftheIMF,theIMFasa‘badcop’.Wealsohavean

interestininternationalinstitutionsthatpushforstructuralreforms,for

adjustmentandnowpushforsoundfiscalpolicies.WehaveseeninGreece

andIrelandhowmuchthisisneeded.Europeansamongthemselvescouldnot

disciplineeachother.

TheNetherlandsalsohassomethingtooffer.Whatisthenouraddedvalue?

Ibelievewecancrediblyadvocatestrongglobalgovernancebecausewe

ourselvespursuesoundpoliciesandwehavenomajorgeopoliticalinterests.

TheNetherlandshasasuccessfuleconomicmodelandwenurtureanopen

businessclimatethatcantakeadvantageoftheglobalmarket.Thisdiffers

–Icanspeakfromexperience–fromthelargecountries,whichtendtonot

applytherulesforthemselvesandareinclinedtouseinternationalinstitutions

fortheirowndomesticinterestsorasaninstrumentofforeignpolicy.

TherelativelylargeweightoftheNetherlands–aswasmentionedthis

morning–intheIMFreflectsourimportancefromaninternational

perspective.Westandoutinthesheersizeofourcross-borderactivities.In

tradewesharefifthpositionwithFrance,afterChina,Germany,theUSand

Japan.Wearealsonumberfiveinforeigninvestment.Actually,intheUSwe

arethenumberthreeforeigninvestor.Andwearealargefinancialcentre,

aheadofcountrieslikeCanadaandSpain.Andweareaverybigproviderof

developmentassistance.Intermsofgrossdomesticproduct,theNetherlands

isnowinsixteenthplace,justaftertheG7,thefourBRICcountriesandSaudi

Arabia,Korea,Spain,andMexico.

Onthisslideyouseeourfinancialinterconnectedness.Thisisasheetusedby

theManagingDirectorjustafterthefinancialcrisistoshowwherethe

interconnectionswere.OnthebottomleftyouseetheDutchflag;weareone

ofsevenbankingsystemsthathavethemostinternationalconnectionsand

thusareveryvulnerableforinstabilityintheworld.Youmightbesurprised

bythesmallsizeoftheAmericanflag;thatisbecausethegraphshows

interconnectednessthroughbanksandasweallknowtheUSinterestinthe

financialsystemismorethatofshadow-banking.IfIwouldshowthesame

pictureforshadowbankstheUSwouldfigurenumberonebyfarandother

countriesmightcomeup,likeLuxembourg.

Butthispositionisunderpressure.Weshouldalsorealisethatalargepartof

tradeiswithinEurope,withneighbouringcountries.So,theargumentfrom

theothersideofthetablewhenweshowthesefiguresis‘let’sforgetabout

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intra-Europeantrade’.WeshouldnotforgetthattheGDPoftheNetherlandsis

aboutthesamesizeasthatofFlorida.WeusedtobeCalifornia;nowweare

Florida.

Ourpositionisunderpressure.Onemajortrendisthattherelativeeconomic

weightoftheNetherlandswilldecline.Thisisaverysimpleoutcomeof

limitedspaceandpopulation.Forquiteawhilewewillstayinthetoptwenty

asfarasourGDPisconcerned,butinthelongerrunwewillbeovertakenby

morepopulousandmorerapidlygrowingcountrieslikeIndonesia,Poland,

andTurkey.TheseeconomieswillovertaketheNetherlandsinashortperiod

oftime.Weshouldalsorealisethatthedistancefromthetoptenisrapidly

gettinglargeraswearebeingovertakenbymorepopulousemerging

economies.Also,thereisapushintheIMFforbasingourweightsjuston

GDPandnotonmeasuresofopenness.Thiswouldfurthererodetheposition

ofsmalleropenadvancedcountries.So,ourpositionisunderpressure.

IbelievetheNetherlandsiswelladvisednottowaitordefendvested

interests,buttotakeaproactiveandconstructiveattitude,whichreflectsthe

changedreality.Weneedtolookforinnovativewaysofensuringthat

Europeanandglobaldevelopmentsremainwell-alignedwithourownnational

interest.Whatshouldbeourstrategy?Itseemstomethatweshouldfollowa

three-prongedapproach.

First,weshouldnurtureaspecialrelationshipwithGermanyandtheUS.

Second,weshouldpromoteoneEuropeanvoice,andthird,weshouldform

strategicalliancesandpartnershipswithlikemindedcountries.Iwillgo

throughallofthem.

Firstofall,IthinkweshouldretainclosetieswithGermanyandtheUnited

States.GermanyhasaspecialpositionfortheNetherlands.Ofalllarge

countriesitismostsimilartotheNetherlands.Itisaleadingtradingnation;

exportsaspercentofGDParethehighestamongtheG7,soitsharesthe

opennesswiththeNetherlands.Secondly,theirgovernmentdebttoGDP-ratio

amongtheG7isthelowest,soitisthemostfiscallysoundcountry.This

alignswiththeDutchpreferenceforfiscaldiscipline.Also,Germanyhasa

structuralexternalsurplus;theyareacreditorcountryjustlikeus.Amongthe

G7GermanyisbyfarthecountrywhichlooksthesameastheNetherlands,

theNetherlandstimesfourorfive.Moregenerally,Germanyembracesan

economicphilosophy,whichalignswellwiththeDutchcultureoffiscal

discipline–‘dekostgaatvoordebaatuit’–pricestability,fosteringsocial

cohesionthroughfairincomedistribution–thisisalsointheGermanmodel

–andofcourseawillingnesstoshoulderinternationalresponsibility,as

Germanyhasshowntimeandagaininthepost-WaryearstowardsRussia,

towardsEasternEurope.

60

Next,theUnitedStatesisanothernaturalallyforus.Ofcourse,itisamuch

largercountrybutstillweneedtonurturethespecialrelationshipwehave

withverylargefinancialinterestsfrombothsidesinoneanother.TheUSis

thelargestinvestorintheNetherlandsandwearethenumberthreeinvestor

intheUS.Also,ourspecialpositionintheeuroareamakesusaninteresting

partnerfortheUS.Iwillcomebacktothat.

Second,asoneofthemostopencountries,theNetherlandshasamajor

interestinthewell-beingofEuropeandawell-functioningeuroarea.Europe

providesuswiththehomemarketwedonothave.Europeprovidesuswitha

largemarketandithasbroughtusprosperity.Dutchinterestscoincidewith

theEuropeaninterest.Therefore,theNetherlandswouldbehelpedbyEurope

speakingwithonevoiceifwewanttostrengthentheinternationalsystem.

Havingonecurrencymeansweneedtospeakwithonevoiceinthe

internationalmonetarysystem.Thiswouldhelpbalancetheinternational

debate,whichisnowcompletelydominatedbyacrimoniousexchanges

betweenChinaandtheUS.Itwouldalsohelpfurtherglobalgovernanceif

Europewouldspeakwithonevoice.

ThecreationofaeuroareaseatwithintheIMFwouldinitselfhavethe

potentialofbetterreflectingtheroleoftheeurointheinternationalsystem.

Iwouldbeinfavourofthatbutthisisamatteroftime,asitclearlyisnotin

thecardsatthemomentaslongasthelargecountriesareopposedtothis

andasthememberstatesthemselvesfinanceIMFcredit.Moreover,themajor

Europeancountriesarenotatallinterestedingivinguptheirseat.Ipersonally

believethatajointFranco-German–FranceandGermanytogether–seatin

theIMFwouldbeastrongsignal.Itisinterestingtoknowthatwhenour

presentManagingDirector,DominiqueStrauss-Kahn,wasministerofFinance

inFrance,heactuallyhadadvancedgoingtogetherwithGermanyintheIMF

andtheWorldBank.Itwouldbeaverystrongsignalbutitisunlikelyaslong

asthesecountriestakedivergentpositions.That,unfortunately,isthecase.

So,weneedtobepragmaticandfindotherwaysofplayingalarger

internationalrole,whichiscommensuratewithoureconomicweightinthe

internationaldebate.Iseeanagendaofthreeissues.First,weneedasEurope

todevelopclosertieswiththeBRIC-countries.Weshouldnotdothis

bilaterally.AslongasEuropeandiscussionswithmajoremergingeconomies

continuealongbilateralchannels,thediscussionwillremaindominatedbythe

UnitedStates.Andthatisnotinourinterest,norinChina’sinterest.

Second,EuropeshoulddevelopaclearfutureforEasternEurope.Ofcourse,

suchfutureexisted:EasternEuropewouldbecomeamemberoftheEuropean

Unionandwouldthenhavethehorizonofjoiningtheeuroarea.Butnow

politiciansinEasternEuropehavethefeelingEuropeisaclosedshopbecause

61


wedonothaveourhouseinorder.Weshoulddevelopaclearagendafor

EasternEurope;otherwiseothercountrieswillstepintothevoid,likeUkraine,

Russia,andTurkey.Otherthingsmightdevelopthere.

Third,Europeshouldmodernizeitsrelationshipwithdevelopingcountries.

Theoldmodelofgivingalotofdevelopmentaidhasnothelpedincrease

economicgrowththatmuch.WeseethatemergingcountrieslikeChinaand

Braziltakeamorebusiness-mindedapproach.Wearewelladvisednotto

criticisethatbuttoworktogetherandtoseethatourinterestsaregetting

aligned.

ThisisanagendaforEurope.Ofcourse,forthisweneedtoputourown

houseinorder,ashasbeensaid.Ihopewecanachievethat.Weneedto

acceptthatinthesedebatesweneedtodefertoEuropespeakingwithone

voice.WehaveEuropeanleadersandweshouldletthemspeakwithone

voice.

IbelievethattheNetherlandsisinagoodpositiontoplayitsrole.Iagree

verymuchwiththespeakersthismorning:weshouldplayamoreproactive

roleinplottingthewayforwardforEurope.Wedonotdothatbutwecan;we

havetheconfidenceofGermany;wesharewithFrancetheinternational

orientationandwehave,liketheUnitedKingdom,aliberalmarketorientation.

Wehaveallcharacteristicsofanhonestbroker.WesharetheGerman

preferencefordisciplinebutwealsosharetheFrenchpreferenceforusing

internationalinstitutions.So,theNetherlandshasallthecharacteristicsofan

honestbroker.Ibelieveourrole–alsorecently–inworkingontheEuropean

stabilitymechanismtestifiestothis.

Asathirdapproach,nexttomaintainingclosetieswithGermanyandthe

UnitedStates,andnexttobuildingastrongEuropeanvoice,Iwouldpropose

thatweseekcooperationwithlike-mindedmedium-sizedcountriesinasimilar

positionandwithsimilarinterests,withinbutalsooutsideEurope.

MyexperienceintheIMFisthatsmallcountriesgenerallytakeamuch

broaderviewandaremoresupportiveofstrongindependentinternational

institutions.Largecountriesontheotherhandtendtogivepriorityto

domesticinterestsandarelessinclinedtosupportinternationalcooperation.

Seekingstrategicalliancescanbeusefulforspecificpolicyissuesfora

specifiedtimeperiod.Tomentiononeexample,theNetherlandstookavery

strongpositiononbonusesinthefinancialsectorbutwiththebenefitof

hindsightitmighthavebeenwelladvisedtoseekallianceswithlikeminded

countrieswithlargefinancialsectorsinrelationtotheirGDP.

62

InmycapacityasExecutiveDirector,Ihavesoughtseveralstrategicalliances

intheIMFoverthepastyears.Someofthemhavebeenverysuccessful.We

workedtogetherwiththeSouthEastAsianchair–Indonesia,Singapore,and

Malaysia–ongettingastrongerfinancialstabilityrolefortheIMF.Uptillthe

crisiscountrieslikeChinaandtheUShadnotallowedtheIMFtoscrutinise

theirfinancialsystems;nowtheyhaveacceptedthisasmandatory.

Therewasconsiderablereluctanceamonglargershareholdersbutthe

combinedeffectofsmallerindustrialcountriesandoutwardlookingemerging

economiesispowerful.So,IbelieveweshouldlookalsooutsideEuropeand

formallianceswithmodernemergingeconomies,suchasKorea,Malaysia,and

SingaporeinAsia,andChileandPeruinLatinAmerica.

LetmenarrowdownwhatthestrategyshouldbefortheDutchrepresentation

attheIMF.Let’stakealookatourcurrentrepresentationattheIMF.Unlike

theUNsystemwithitsonecountry-onevotesystemthevoiceofcountriesin

theIMFisdeterminedbyabroaddefinitionofeconomicweightthatincludes

alsoexternalactivities.Therankingorderisaveryimportantpolitical

measure.Therefore,itisnotsurprisingthatcountriesattachalotofweightto

wheretheyare.Asamatteroffact,eightcountriestakeasinglechair

althoughtheycouldformaconstituency.

ThespecificelectoralsystemoftheIMFhasprovidedtheopportunityforthe

NetherlandsandothersmallerEuropeancountriestoformaverylargechair.

IrepresenttwelveothercountriesintheIMFandthatmakesusnownumber

7withavoteof4.5to5percent.

Generally,ourconstituencyisconsideredasasuccessfulexampleof

internationalcooperation,becausewecombinecreditoranddebtorcountries.

WenowhavesevenprogramsintheIMF–Ukraine,Romania,Bosnia,

Macedonia,Moldova,Armenia,andGeorgia,allcountriesIrepresentand

countrieswithalargepoliticalweight–andwearebyfarthemostintensive

userofIMFcredit.

However,otherDirectorsaroundthetableseetoomanyEuropeans.Atpresent

onethirdofDirectorsisEuropean.Europehasagreedthatthisneedsto

changeandhasagreedtobringbackthenumberofEuropeanseatsbytwoin

2012,providingroomforemergingeconomies.Ibelievethisisalsointhe

DutchinterestastheIMFwillgainmoreownershipandplayanenhancedrole

whenithasabetterbalancedrepresentation.Butforusthismeansweare

underpressure.

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So,weneedtoseekpartnersintheIMF.Hereweareproactivelyinvestigating

thepossibilitiesforapartnershipintheIMFwithlikemindedcountriesand

socontributetotheconsolidationofEuropeanseatsintheExecutiveBoard.

Itseemstomethatthereisastrongcaseforclosercooperationwithlike-

mindedsmallEuropeancountries,likeAustria,Belgium,Switzerland,andthe

Nordics.Theyareallalsoopeneconomieswithsoundeconomicpolicies,

aprovenwillingnesstoreformandwithaconstructiveattitudetowards

internationalcooperation.Assmallcountriestheyhavealllearnedtoadapt

flexiblytoachangingworld.

InbuildinganewchairIwouldadvocatethatwecontinuetoinvolveEastern

Europeaneconomies.Thesecountriesnowexperienceadifficulttimebutin

thelongtermtheyprovidethebestgrowthprospectsinEurope.Amixed

constituencywouldenhancetheaddedvalueintheBoard.

AconsolidationofEuropeanchairswillmakeEurope’svoicemoreeffective,it

willimprovethefeelingofownershipamongotheremerginganddeveloping

countriesandthusenhancetheroleoftheIMF.Atthesametimewehaveto

berealistic:theIMFitselfdoesnothavethepoliticalleveragetoforcepolicy

coordination.Forthisweneedpoliticalsupportandministerialengagement

becausethereislittleevidencethatlargecountriesarewillingtocreatean

IMFthatwilltellthemwhattodo.

So,thereisamuchwiderinterestinallthis.Aconsolidationofadvanced

EuropeanseatswillenhancethechancestoaligntheG20withthe

compositionoftheExecutiveBoardandtheIMFC.Thiswouldraiseboththe

legitimacyoftheG20becauseitwouldhaveawidermembership,and

strengthentheroleoftheIMF.Itwouldthusfurtherbuildonthenucleusof

globalgovernance,whichwehadseenbornafterthefinancialcrisis.Itwould

alsoprovideforarightbalancebetweeneffectiveness,forwhichthenumber

ofcountriesaroundthetableshouldnotbetoolarge,andlegitimacy.

Letmeconclude.Asanopeneconomythereisnoalternativeforthe

Netherlandsthantakinganoutward-lookingattitudeandadvancing

internationalcooperation.Ourinterestsarewell-alignedwiththoseofthe

internationalinstitutions.

Wehavebeenwillingtoshoulderinternationalresponsibility,financiallyand

otherwise,andtherefore,wehavetherighttobewellrepresented.However,

anindependentstrongpositionfortheNetherlandsisnolongerself-evident,

neitherisiteffective.Therefore,webetterjoinforceswithlikeminded

countries.

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Weneedtoreorientourpoliciesinlightofthechangedworldsituation.The

interestsofsmallercountriesdifferfromthoseofthelargecountries,which

benefitfromlargerhomemarketsandhaveatendencyoffocusingonnational

champions.Wehaverightlylearnedthatitismoreconstructivetonotfocus

onnationalchampionsbuttoleteconomichistorytakesitscourse.

MaybewecanlearnalittlebitfromtheinternationalDutchcorporations,

whichhavealonghistoryofseekingstrategicalliancesacrossborders

dependingondevelopmentsandinseekingpartnerships.Companieslike

KLM,Philips,andUnileverareonaconstantmove.MaybetheNetherlands

governmentshouldtakeasimilarattitudebyseekingstrategicalliances.

Ihavearguedforathree-prongedapproach.First,maintainclosetieswith

GermanyandtheUnitedStates.Second,worktowardsaEuropewhichspeaks

withonevoiceandthird,seekstrategicallianceswithlikemindedmedium-

sizedcountriesinEuropeandoutsideEurope.Ifwetakethisproactive

attitudewecanactuallycontributetotheforgingofstrongerglobal

governance.Wehaveaninterestinthis,evenifitimpliesthatwewillhave

togiveupsomeoftheprivilegeswehaveenjoyedoverthepastdecades.

Thankyouverymuch!

Mr.Chairman:Thankyousomuchforthisveryclearpresentation.Yougavea

wonderfuloverviewofthestateofglobalgovernance,inparticularthenucleus

thatyoudescribedbetweenontheonehandtheIMFandG20asanewway

forwardwithregardtosolvinganumberofinternationalproblems.Ithinkthat

isaveryimportantobservation.Secondly,withoutaskinganythinginreturn

yougavetheDutchgovernmentsomeadviceonhowtohandle,howtodeal

withitsownposition,takingintoaccounttheshiftingbalanceofpowerinthe

worldeconomy.IfhopethatthepeopleoftheForeignOfficeandtheMinistry

ofFinancehavelistenedcarefully,becausenowtheyhavethestrategyforthe

future!Thankyousomuchforthat!

LetmenowgivethefloortoCarloTrojan.

Address by Carlo Trojan, Advisory Council on International Affairs

Mr.Trojan:Thankyou,Mr.Chairman.Firstofall,manythankstoAgeforhis

verythoughtfulandcomprehensivepresentation,whichgivesusaclear

insightinthenewworldofIMFinachangingworldorderandalsoaninsight

ofwhattheDutchperspectivemightbeinthatcontext.

Asyousaid,mymainfocuswillbeontheEuropeanperspective.Nevertheless,

letmeechosomeremarksofAgeontheDutchperspective.Ashasbeensaid,

theDutcheconomyishighlydependentonexportmarkets.Externaltradeand

65


foreigninvestmentsisthelifelineofoureconomy.AnopenEUinternalmarket

andanopenrulesbasedworldtradingsystemareconditionaltoourwelfare.

Exportsofgoodsandservicescorrespondtoover70percentofDutchGDP.

WearesubstantialnetexportersandimportantprovidersofFDI.Some80per

centofDutchexportsgotoEUcountriesandalotofthattoGermany,hence

theimportanceofanopeninternalmarketandastableeuro.Theseareboth

twosidesofthesamecoin.Flirtingwiththebreak-upoftheeurozoneisfrom

aDutchperspectiveplayingwithfire.IamnotsurethatallDutchpoliticians

andthemediaareawareofthis.Euroscepticismandcrisis-speakseemtogo

handinhandwhileignoringthefactthattheeurohasbeenhighlysuccessful.

Intermsofpricestabilitytheeurohasbeenasuccessstory,keepingthe

inflationbeloworaround2percentin11.5years.Ifyoucomparethatwith

thedecenniabeforeitisquiteanunprecedentedsuccessstory.Theeurozone

isthelargestmarketinthedevelopedworld;theeurohasbecometheworld’s

secondmostimportantcurrency.Withouttheeuro–wetendtoforgetthat

–theeffectsofthefinancialcrisisinEuropewouldhavebeenfargreater.

OnecansaythattheeurobynowisattheheartofEuropeanintegration.

PresidentSarkozyinhismoreNapoleonisticwaymadethispointabundantly

clearinhisspeechinDavos.HesaidveryclearlythattheeuroisEurope.

Carlo Trojan

66

JürgenStark,memberoftheGoverningBoardoftheECB,wasquiterightin

statingthatwearenotdealingwithaeurocrisisbutwithasovereigndebt

crisisandwiththeconsequencesofinadequateeconomicreformsinthe

eurozone.Mr.Balkenendealsomadethispointthismorning.Ifwelookat

thebankingside,weseethattheECBplayedanexemplaryroleinlowering

interestratesandcoordinatingandprovidingliquiditiestothebanking

system.Infact,inhindsighttotheperiodofcrisis,weseetheECBhasbeen

themostefficientofallEUinstitutions.

Nodoubttherewereseriousweaknessesinthefinancialsector.Bankswere

severelyhitandthepublicsectorhadtoprovideunprecedentedfinancial

support,overandabovethemassivefiscalstimulitocopewiththeworldwide

recession.TheexposureoftheDutchfinancialsectorwashuge,itsbailout

amongstthemostimportantinEurope.

Butthefinancialcrisishasalsotriggeredanunprecedentedsupervisoryand

regulatoryrepairoftheEUfinancialsystem.WenowhaveamoreefficientEU

macro-andmicroprudentialsupervision,moreandbettercapitalinour

bankingsystem,andwehaveextendedregulationoffinancialservicesto

equity,tohedgefunds,andsoon;highlyambitiousbysomeaccounts,

insufficientbyothersbutbyallmeansunprecedentedbyanystandardsfrom

beforethefinancialcrisis.Whatisforsureisthatdeeperintegrationofthe

financialsystemhasbeentheresultofthecrisis.Wehaveseenthesame

phenomenoninpreviouscrisesintheEuropeanUnion.

Theeffectsofthefinancialcrisisonpublicfinancesarewellknownandat

theheartofthesovereigndebtcrisis.TheEUbudgetdeficitin2010isat

7percent,thepublicsectordebtapproaching80percentofGDP,andGreece

andItalyhavedebtratioswellabove100percent.Debtlevelshaveincreased

by20percentagepointsinthelasttwoyears,whichisquiteabit.

Therootcausesofthepresentsituation–apointmadebyMr.Balkenende

thismorning–gobacktothepoorenforcementandevenweakeningofthe

StabilityandGrowthPactinbettertimesandthelackofarobustmechanism

forfar-reachingbudgetarycoordinationinordertoaddressseriousmacro-

economicimbalances.

TosafeguardthestabilityofsovereigndebtmarketstheEUhascreatedtwo

newlendingfacilitiesforeurozonecountriesindistress.TheEuropean

FinancialStabilityFund(EFSF)of440billioneuro–supplementedbythe

250billioneuroIMFcommitment–andalendingfacilityrunbythe

Commissionof60billioneuro.Theprocessresultinginthesedecisionsand

thesubsequentbailoutofGreeceandIrelandhavebeenprettymessy,sending

67


conflictingmessagestothefinancialmarkets.Highgovernmentofficials

apparentlyhadmoreeyesfortheirdomesticaudiencethanfortheadverse

effectoftheirstatementsonfinancialmarkets.EventuallyitwasuptotheECB

incalmingfinancialmarketsthroughitsunprecedentedmassivebuyingupof

bondsfromperipheraleurozonemembers.

Fortheshorttermmarketswillrequireamorecomprehensiveapproach

combiningamoreeffectiveandpermanentStabilityFundandasignificant

strengtheningoftheEUfiscalsurveillance.Overhaulingthebail-outfundand

apossiblerevampofGreekandIrishbail-outaswellasmoreausterity

measuresandintensifiedeconomiccooperationmaybepartofapackage

whichisbeingdiscussedattheinformalEuropeanCouncilinBrussels.Final

decisionsforsuchapackagecanbeexpectedattheMarchEuropeanCouncil,

whichmayrestoreamorelastingconfidenceinfinancialmarkets.

Forthemediumandlongertermmorefar-reachingdecisionswillberequired.

Thefirepoweroftheeurozonerescuefundmayneedafurtherincrease,more

innovativeideasasdebtrestructuringandcollectiveEurobondsmayneedto

beconsidered,andaboveallaneffectivecoordinationofeconomicpolicies

withthenecessaryintroductionofstructuralreformsshouldbeinstituted.

Thisrequiresfullimplementationoftheinstitutionalarchitectureforthe

coordinationofeconomicandfiscalpoliciesbutpossiblyalsorevisitingsome

ofthekeyprinciplesoftheEMU.ThatmightevenentailfurtherTreaty

revisions.

Thisisatallorder,especiallyincurrentcircumstanceswherepopulismand

euroscepticpoliciesseemtoprevail.Thepriceforsuccessmaybethatwewill

havesmallermarginsinnationalsocio-economicpolicies,andeventhat

countriesliketheNetherlandsandGermanywillbeforcedtopayahigher

interestrateinordertohelptheoveralleconomicstabilisationinEurope.

EventuallyMemberStateswillbeforcedtopaythatpriceinordertosecure

thestabilityoftheeuro,aneffectiveinternalmarket,andanoverallEU

strategyforsustainableeconomicgrowthandjobcreation.Afewyearsago

theveryconceptofeconomicgovernancewaslikeswearinginthechurch.

Today,economicgovernancetopstheagendaandwillbediscussedatthis

verymomentinaspecialinformalEuropeanCouncil.TheEuropeanCommission

tabledacomprehensivestrategydocument–Europe2020–todealwith

policiestoboostcompetitivenessandtheneedformuchstrongereconomic

policycoordinationtogetherwithproposalsonamuchstricterfiscal

surveillance.ItdeservesabetterfatethantheLisbonAgenda.Toooftengrand

designsfailedtobeimplementedinpracticeinthepast.Togettherewill

requireleadershipsimilartotheonewehadintheearlydaysofEMU,thetrio

ofKohl,Mitterrand,andDelors.Butitalsorequiresamoreeffectivedecision-

makingprocess.

68

Incopingwiththefinancialcrisisandthesovereigndebtcrisiswehave

seenbytimesaratherineffectivedecisionmakingprocess,bothincrisis

preventionandincrisismanagement.Wehaveobservedmuchimprovisation

andconfusionbetweenthedifferentinstitutionalactors.Therewehavethe

EuropeanCouncilanditsPermanentPresident,theCommissionandthe

PresidentoftheCommission,theEuroGroupandthePresidentoftheEuro

group,theEcofinCouncilwitharotatingPresidency,recentlytheEFSFand

eventheIMFnowadays.Ontopofthatwehavealeadingroleofthelarger

MemberStates.IthinkthecoupleSarkozy-Merkelbynowconsiderthemselves

tobeaninstitutionintheirownright.Somequestionmarkscanbeputthere.

DuringthecrisisthemainfactorofstabilityhasbeentheactionoftheECB

withtheCommissiontakingabackseatpositionoperatingintheshadows.

WhiletheCommissionremainsinstrumentalintablingthenecessary

legislativeproposalsforstrengtheningthefinancialsystemandtheEUfiscal

surveillance,itisleftoutinthediscussionsonthestrengtheningoftheeuro

bail-outfacilities.Infact,thistakesplaceamongstaselectgroupofofficials

fromthefiveorsixtripleAeurozonemembers.Theintergovernmentalelement

inthedecision-makingprocesshasbecomemoreandmoredominant.Maybe

thisisparttheconsequenceofthefactthatwearedealinginthegreyzone

ofsharedcompetences.Nonetheless,leavingouttheCommissiondoesnot

necessarilycontributetoagreatereffectiveness,butmaybeasaformer

Commission-officialIamsomewhatbiasedinthatrespect.Butmyoverall

impressionisthattheEUisatpainstoputitsfinancialandeconomichouse

inorderandthisdoesnotcontributetostrengthentheEUcredentialsabroad.

Itmaybetrue–asAgesaid–thattheEUwasinstrumentalinthecreation

oftheG20.ItisequallytruethattheEuropeanvoiceatagloballevelisnot

commensuratewithitsfinancialandeconomicpower.TheEUisbyfarthe

greatestproviderofFDIandODA.Itgivesmorethanhalfofthedevelopment

assistanceintheworldanditisoneofthemajortradingpartners.

InforeignandsecuritypolicytheEUasawholedoesnotplayaroleofany

importanceatagloballevelnotwithstandingthecreationofaHigh

RepresentativeandVicePresidentoftheCommissionandanExternalAction

Service(EAS).Sofar,IregrettosaythattheroleofLadyAshtonhasbeen

marginal;thesettingupoftheEAShasbeenacontinuingstoryofinternal

turfbattles.IamafraiditisanillusionthattheEASwilldevelopintoa

genuineandeffectiveEUdiplomaticservice.Theveryconstructionofa

double-hattedEUforeignpolicysupremowasboundtofailfromtheoutset,

atleastinmyview.Foreignandsecuritypolicyareattheheartofnational

sovereigntyandMemberStates,particularlythelargerones,willnotabandon

theirsayinworldaffairs.Thiswasmadeabundantlyclearwiththestatement

byFrance,theUK,andGermanyreactingontheprotestsinEgypt.Lady

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AshtonwasnowhereandthePermanentPresidentoftheEuropeanCouncil,

VanRompuy,wasequallyabsent.WhileitisunlikelythattheEUwilldevelop

intoapoliticalpowerinitsownrightinforeignandsecuritypolicy,theEU

couldplayamuchlargerroleintheinternationaldebateonglobalfinance

andeconomics.

AgeBakkerrightlysaysthatonestrongEuropeanvoicewillhelpbetter

globalfinancialandeconomicgovernance.TheemergenceoftheG20anda

strongerroleofIMFincrisismanagementandpreventionhavecreatedanew

forumofglobalgovernance.Thereisnodoubtthatthefragmentedexternal

representationoftheEU–EurozoneweakenstheUnion’sandtheMember

States’voiceinglobaldecisionmaking.

Tostart,theEUhastoputitsownhouseinorder.Bakkerisabsolutely

rightinunderliningthis.SecondlytheEU-eurozoneshouldhaveaclear

cutcommonpositionanduniform,ifpossiblesingle,representationin

internationalfora,asisthecaseinworldtradetalks.Thisimpliesthat

MemberStates,whichareoverrepresentedbothinG20andIMF,havetotake

astepbacktothebenefitoftheeffectivenessofthesystemasawhole.The

mostlikelyEuropeanvoicewouldbethePresidentoftheEuropeanCouncil

workinghandinhandwiththePresidentoftheCommission.Thelatterisin

anyeventtheexclusiveEUrepresentativeintradematters,aswasalsothe

caseintheG7-G8context.AsingleEuropeanseatinIMFmaynotbeinthe

cardsforthereasonsadvancedbyAgeBakker,butsomerebalancingin

reducingthenumberofEuropeanseatsiscertainlywarranted.WiththeFrench

PresidencyofbothG20andG7-G8weshouldhaveawindowofopportunity

towardsamoreeffectiveEUrepresentationatagloballevel.Itshouldalso

openthewayforamoreproactiveEUroleinrelationtoChinaandother

emergingeconomies.Thepowershiftinglobalfinancialandeconomicaffairs

goeswellbeyondthemerebilateralrelationbetweentheUSandChina.

Indealingwiththeglobal(im)balancesandpowershiftsintheworldone

shouldnotforgettheparamountroleofanopenandrulesbasedworld

tradingsystem.TheDoharoundofWTOtradenegotiationsentersinitstenth

year.Itisimperativetoconcludethisroundduring2011.Arecentpaperby

PeterSutherland–theformerDirectorGeneralofWTO–andofthevery

reputedProfessorBhagwatimakesabundantlyclearwhatisatstakeandwhat

globalbenefitswouldderivefromanagreement.Fromatechnicalpointof

viewnegotiatorsareprettyclosetoanagreement.Theywerealreadypretty

closetoanagreementwhenIwasstillinGenevabutthereisnorelationwith

myleavingthere!Whatislackingissufficientpoliticaldriveatthehighest

leveltogetthere.TheEUshouldtakeadvantageofitsG20Presidencyin

pushingforaspeedyconclusionoftheDoha-round.Moreover,theEUiswell

placedtobrokercompromisesbetweentheUSandemergingeconomies.

70

LetmeconcludewithafewremarksontheDutchperspective.Isharemuch

ofthecommentsmadebyAgeBakker.Asanopeneconomydependenton

internationaltradetheDutchhavetobeoutward-lookingandrelyonEuropean

andinternationalinstitutions.Nodoubtaboutthat.

TheDutchScientificCouncilforGovernmentPolicy–aco-organiserofthis

event–rightlyearmarkstheEUasthedominantareaandappropriatechannel

topursueDutchvitalandextendednationalinterests.Inordertodosoit

mustexertinfluenceandexcelonsubstance.Thatiscertainlythecasein

financialmattersweretheDutchcanrelyonhighlevelexpertiseandefficient

networksinboththeFinanceMinistryandtheDutchCentralBank.Onehas,

however,toacknowledgethatsincethereferendum-andmorerecentlywith

agovernmentcoalition,whichhastorelyonananti-Europeanparty-ourrole

andinfluenceinEuropeanaffairshasbeeneroded.Moreover,theEuropean

Councilhasbecomethecentraldecisionmakinginstitution.BynowEMU-

relatedmattershavebecome‘Chefsache’inmostofourMemberStates.

Thishasconsequencesbothinternallyandexternally.Whatevertheformal

responsibilitiesintheDutchgovernment,thePrimeMinisterhasbecome

theprincipalactorandshouldbeservicedassuchbytheadministrationto

enablehimtoperformeffectivelyattheEuropeanlevel.Italsoentailsamore

proactiveroleofthePrimeMinisterbothinbilateralcontactsandinthe

EuropeanCouncilitself.Toplayaroleatthoselevelsonehastobe

constructive,soundonsubstanceandtobuildalliances.AgeBakkeris

certainlyrightinstressingtheimportanceofGermanyandlikemindedTripleA

countriesintheeurozone.ItisequallyimportanttobuildbridgeswithParis,

somethingratherneglectedinthepast,hence,our‘Anglo-Saxon’reputationin

theSouthoftheEuropeanUnion.WeshouldnotshyawayfromBenelux-

initiatives,whichcouldmakeadifferenceinEU27.BringingintheEuropean

Parliament,whichhasenlargedpowerswiththeLisbonTreaty,mayalsobe

helpfulattimes.ClosetieswiththeUSarecertainlynecessary,notintheleast

inIMF,butultimatelytheoverallEuropeaninteresthastoprevail.

LastbutnotleastweshouldrealizethatEuropeannegotiationsarea‘give

andtake’exerciseinwhichmedium-sizedcountriesliketheNetherlands

cannotgoon‘offeringtoolittleandaskingtoomuch’.Thankyouverymuch!

Mr.Chairman:Carlo,thankyousomuchforthisveryinterestingoverviewof

whatisneededtohavearealstableeurozoneinthelongtermandwiththat

arealstableEuroeconomy.Ihaveoneobservationaboutthepointyoumade

abouthowfastthemoodintheEuropeanUnionischanging.Economic

governancewasawordyouwerenotallowedtouse,certainlyinthiscountry,

oneyearago.Nowitisontopoftheagenda.Thatonlyindicatesthatperhaps

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weshouldnotbetoopessimisticaboutthefutureoftheEuropeanintegration

process,becausethemoodcanchangequiterapidly!

WiththatIwouldliketoopenthefloortodiscussion.Manytopicshavebeen

raised,fromglobalgovernancetointernalcoordinationofEUpolicieswithin

theNetherlandsitself.So,youhavenoexcuseatalltonottakethefloor.

72

Mr.Wijnants(UniversityofAmsterdam):Ithinkthatnooneherewilldisagree

withmewhenIsaythattheeurohasbroughttheNetherlands,theEuropean

Unionandtheglobalcommunitymuchgood.However,itisaunionofstates

whoruntheireconomiesindifferentways.Youcannotargueagainstthe

propositionthattheSouthernstateslikeGreece,ItalyorSpaintreattheir

economiesinadifferentwaythatwedointheNetherlands,Germanyorin

certainScandinavianstates.HowdoestheIMFthinkaboutthepossibilityof

aseparationbetweenanortherneuroandasoutherneuro?

Mr.Chairman:Thisisthedebateaboutatwo-speedeurozone.Wetakethree

orfourquestionsinthefirstroundandthenhaveasecondround.

Mr.DeZwaan(ClingendaelInstitute):IhaveaquestionforAgeBakker.When

positioningtheNetherlandsinthenewlyreformedIMF,youwerehintingat

cooperationwithGermanyandtheUnitedStates,atEuropespeakingwith

onevoice,aswellasatcreatingcoalitionswithlike-mindedothercountries.

However,Iwonder,whereistheEuropeanUnioninyouropinion?IftheEU

couldhaveastrongpositionandisabletoplayanimportantrole,myidea

wouldbethatthereislessroomforanautonomousDutchposition.So,what

isyourviewregardingthepositionoftheEuropeanUnion?Inmyopinionthe

EU-dimensioncould-andshould-beoneofthemaintoolsinthehandsofthe

Netherlands.

And,then,CarloTrojan,yousaidthatLadyAshtonhasaverydifficultroleto

play.Iagree.Iamtemptedtosayherfunctionismorea‘label’thana

guaranteefortheestablishmentofacommonapproach.Nevertheless,the

dilemmasheisin-chairingtheForeignAffairsCouncilandholdingtheVice

PresidencyoftheCommission-couldthatnotbringsomethingpositivetothe

extentthatshealsopossessesthatcoordinatingrole-withintheCommission-

withregardtoallexternalEUpolicies,whichisquiteanimportanttask.

Therefore,ifshewouldbeabletodevelopasortofinterdependence,a

consistency,withtheworkoftheCouncilwithregardtoforeignaffairs,could

thatnothaveapositiveimpact?Iamtalkingthusabouttheimpactthe

‘ordinary’EUpoliciescanhaveonforeignpolicy,andviceversa.

Discussion

73


Mr.Voorhoeve(AIV):IhaveaquestiontoMr.Bakker.Somethingstruckme

inhislistofmostimportantcountriesandvotingrights.Fromaglobal

perspectiveIthinkitislogicaltotryandshiftasmuchresponsibilitytothe

largestcountriesandmakethemco-responsibleforthemaintenanceofthe

internationalmonetarysystem.ItisstrangetohaveItalyattheseventhplace

andIndiaatthetenth.Indiawillbethebiggestcountryintheworldbythe

middleofthiscenturywith1.6billioninhabitants.Ithasagrowthrateof

6-7-8-9percentayear.Wehavefocused–andrightlyso–onthedynamics

inChinabutinourinteresttopromoteastrongerroleforIndia.Itisthe

biggestdemocracy.

Mr.VanBaar(JournalistHP/DeTijd):IhaveaquestiontoMr.Bakker.He

mentionedsomethingabouttheWashingtonconsensus.Sincethefinancial

crisisthereseemstobenoconsensusanymoreabouttheWashington

consensus.ThisiswhatIreadinthepapersaswell,asforinstancethereis

noconsensusabouttheneo-liberalmodelanymore,etcetera.Probablythere

isconsensusaboutthat.ButwhatisthisWashingtonconsensusreallyabout?

Ithoughtthefinancialcrisisinawayconfirmedthatinternationalorglobal

capitalismisstillverystronginthesensethatthereis‘nofreelunch’for

anyone,notevenfortheUS.Inthatrespectoneshouldthinkthatthe

Washingtonconsensuscountsforeveryone.Ihavenotheardanyalternative

forthat.Forthesakeofdiscussionandforthesakeofclarityand

transparencyisitnotbettertosaythattheWashingtonconsensushasproved

itsvitalitybythefinancialcrisisandthatitshowsthateventheUShasto

adaptitseconomytotheglobalfinancialandeconomicsystem?

Mr.Trojan:Tostartwiththetwo-speedeurozone:keepdreaming!Innoway

thatwillhappen.Butyouwererightinstressingthereissomedifferencein

thewaymemberstatesruntheirfinancialdisciplineandthattherearesome

differencesinthecompetitivesituationofmemberstates.Asfarasfiscal

disciplineisconcerned:ifwewouldhaveimplementedtheStabilityand

GrowthPactfromtheoutsetwewouldnothavebeeninthesituationwhere

wearenow.Wearetryingtoremedythatwithmuchstricterfiscalsurveillance

andstrictersanctions.

74

OncompetitivenessthelargeprogrammeoftheEuropeanUnionistopicksix

orsevenpoliciestoincreasecompetitivenessoveralloftheeurozone,

includingthenecessitytocreateacompletelyfreeandopeninternalmarket,

whichisnotyetthecaseinmanyservices,andsoon.

Whatalsowillbenecessary–andthatwillbeverydifficultpolitically–is

whatnowhasbeentablesalsobytheFrenchandtheGermansistohave

harmonisedstructuralreforms.Weneedstructuralreformsinthepension

system,structuralreformsinthelabourmarket,etcetera.Itisaverytallorder

butinmyviewitisunthinkabletobreakuptheeurozone.So,memberstates

areboundtogointothisdirection.Intenyears’timewewillseethatasa

resultofthecrisiswewillhaveamuchdeepereconomicandfinancial

integrationthanisthecaseatpresent.

InresponsetoMr.DeZwaan’squestionIhavetosaythatweareoneyear

nowfromLisbonTreaty.IfIcomparetheeffectivenessofthisoneyearwitha

singleHighRepresentativeannexVicePresidentoftheEuropeanCommission

IcantellyouthatthetandemSolana-Pattonwasfarmoreeffectivethanthe

presentsituation.Theyworkedverywelltogether.Solanaworkedbehindthe

scenesandhehadquitesomeimpactinWashingtonandelsewhere.Iamnot

surethatCathyAshtonhasthesameimpactatthisverymoment.

Second,Isaidthatfromtheoutsettheconstructionwasmeanttobea

failure.IfyoulookonlyattheexternalrepresentationdutiesoftheHigh

Representative:thereabout180treatiesinwhichatthelevelofministersof

foreignaffairsthereareregularcontactsbetweenEUandothercountries.

Obviously,sheisnotabletodoallthat.Moreover,sheisalsochairingthe

ForeignRelationscouncil.Doyouthattimewisesheisinthepositionto

coordinatewithexternaltrade,withenvironment,andsoon?Idonotthink

so.Maybeitwillbebetterinfuture.Ontopofthat,thereisalsothePresident

oftheEuropeanCommission,onesourceofturfbattles.Thereisalsothe

PresidentoftheEuropeanCouncil,anothersourceofturfbattles.

Ihopethatyouarerightandthatthingsarebetter.Haveyoueverlookedfor

instanceattheorganigramofEAS?ThatisreallyaMexicanarmy!Thereisa

largenumberofDirectorGeneralsandDeputyDirectorGenerals.EveryMember

StateandnewMemberStatehastogettheirDirectorGenerals.Itisavery

heavyconstructionwithin-builtturfbattlesandatthemomentnotverymuch

iscomingoutofthat.

Mr.Chairman:Ithinkweshouldbringinthe‘badcop’oftheIMFtodo

somethingaboutthis!

75


Mr.Bakker:Thankyouforasetofverypertinentandverygoodquestions.

ThefirstwasontheIMF’sviewontheEuropeanMonetaryUnion.TheIMFhas

alwaysbeenveryexcitedabouttheEuropeanmonetaryprojectandhasbeen

verymuchinfavourofit.Wearetheretohelpthemembership.Wearea

servinginstitutionandtheIMFhasagreatinterestinpreservingtheunityof

theeuroareaandtohelpthecountriesthere.Itistruethatthebarfor

participantsissomewhathigherthantheparticipantsthemselvesexpected.

Ihavethefeelingthatsomecountrieswereverygoodinstrongpolicies

beforejoiningandthatafterjoiningtheyhadthefeelingthattheywerein

paradise.That,ofcourse,isnottrue.WeknowthisastheNetherlands

becausewehavealwaysfixedourcurrencyandweknowitisalwaysa

struggletokeepupcompetitiveness.Thatlessonhasbeenlearnedinavery

hardway.ItisapitythatEuropehasnotbeenabletopre-emptivelysolve

thisitself.Thesurveillance,theeconomicgovernanceoftheeuroareawas

lacking.Countriesshouldhavebeenwarnedearlier.TheIMFhasbeencalled

inmaybealittlebitonthelatesideasa‘badcop’totryandbringabout

structuralreformstosavetheUnion.IagreewithMr.Trojanthereisno

alternativethere.

Mr.DeZwaanaskedwheretheEuropeanUnionis.Imadethepointthat

EuropeshouldspeakwithoneEuropeanvoice.Ididnotwanttogettoomuch

intoinstitutionalmattersbutletmementionafewpoints.Intheframeworkof

theIMFanobstaclefortheEuropeanUnionseatinthefutureisthatsome

countriesarepartoftheeuroareaandothersarenot.Actually,atthemoment

thisisalsoblockingprogresstowardsaeuroareaseatbecausewhywould

FrancegiveupitspositioniftheUKwouldnot?So,inpracticethisisquitean

obstacleandthatiswhyIpushedtheideaofaeuroareaseatabitmore.

There,Ifeelitisamatteroftime.IdonotknowhowlongitwilltakebutI

thinkitwouldbealogicalconclusion.Butsomecountrieswillhaveto

swallowtheirpridebecauseotherswillthennotbein.Bytheway,the

EuropeanUnioncooperatesalotintheIMF.WehaveaEuropeanUniongroup

–notaeuroareagroup–andwemeetatleasttwiceaweek.Wegive

commonstatements,soinpracticeweworktogetherquitealot.Butyou

knowthatIalsorepresentnon-Europeancountries,sowesometimesadd

viewpointsfromtheothersideaswell.

Mr.VoorhoevethinksitalittlebitunfairthatIndiaisbelowItaly.Letmenot

gointomypersonalopiniononthatbutofcourse,thisisalsoamatterof

time.Indiahasmovedtotheeighthposition,justbehindItaly.Itisonlya

matteroftimebeforeIndiawillovertakeItaly.

QuotasarepartlydeterminedonGDP,whichaccountforabout50percent,

andpartlyonameasurementofopenness.Ofcourse,Italyisaveryopen

76

economy.Itisalargetradingnation.TheyarejustalittleaheadofIndiabut

allthesethingswillmoveovertime.AsIearliermentioned,Chinawill

overtakeJapan.TimeisonthesideofAsia.ThisistheAsiancenturyandall

thesecountrieswilltakealargerseat.Couldwenotmovethisalittlebit

quicker?EmergingcountriesarepushingforGDPbasedonPPP–purchasing

power–andthatwouldbringtheNetherlandsdowntobelow1percentand

wouldpushupChinaalot.ButIthinkitisbetterforChinatoappreciateits

exchangerate,thenitsGDPwillincreasealot.So,ifweonlytakepurchasing

powerformeasuringGDPweputanobstaclethereforChinatoshowgood

exchangeratebehaviour.

Mr.VanBaaraskedaquestionontheWashingtonconsensus.MaybeIshould

nothavementionedthis;italwaystriggersnewquestions.Icompletelyagree

withhimthatitisavague–not‘fake’but‘vague’!–concept.Imentionedit

becauseithasverydifferentconnotations,asMr.VanBaarimpliedwithhis

question.TheWashingtonconsensushasbeenverymuchresentedby

emergingeconomies.Atthesametime,Ifeelthatmanyemergingeconomies

haveappliedtheWashingtonconsensus.Butthesheerfactthatthiscameout

oftheAnglo-Saxonworldhasmadethiswordnolongerfashionable.Itisnot

completelygone,becauseitwaslargelycommon-sensepolicieswhichattimes

arenotappliedbythelargecountries.YoumentionedtheexampleoftheUS

butonecouldalsomentiontheexampleofFranceandGermanywhenthe

StabilityPactappliedtothem.Theyputtheserulesaside.Thisistypically

large-countrybehaviour:yes,thereisconsensusandyes,itisfortherestof

theworld.ProfessorKupchanmentionedthismorningtheagendaofIndia,

China,andotheremergingeconomiestakingalargerseatintheIMF.Ithink

therearetwoelementsintheWashingtonconsensuswheretheyhavean

influenceandwheretheconsensusmaybebeshiftingsomewhat.

Thefirstisonderegulation.PartoftheWashingtonconsensuswasthatit

wouldbebesttoderegulatemarketsasmuchaspossible.Thelacking

elementtherewassupervision,evenimplementationofsupervision.Thatisa

lessonwealllearned.

Thesecondelementiscapitalflows.TheWashingtonconsensusismoreor

lessthatyouarewellservedbyopeningupyourcapitalmarket.Wehave

learnedthatinEuropeweareverywellservedbythis.Withoutanopen

capitalmarkettherewouldnothavebeenamonetaryunion.Weshouldnot

forgetthatinthesixtiesandevenintheseventieswestillhadexchange

controls.InthesixtiestheFrenchhadacaponwhattheycouldspendin

othercountries.So,itisnotsuchalongtimewehadthisourselves.Inthe

globalmarket,withthetremendousincreaseofcapitalflows,theremightbe

somethingtobesaidforanoversightofcapitalflowsatagloballevel.You

77


seeinmyinstitution,theIMF,abitofashiftontheuseofcapitalcontrols

–that,too,isavagueconcept–inthesensethatyouforbidyourcitizensto

investinanothercountry.Thatisnotwhatwearetalkingabout;weare

talkingaboutthesoftsideofcapitalcontrols,whichactuallyarenowapplied

incountrieslikeBrazil,withtheapprovaloftheIMF.Becauseofthevery

ampleliquidityprovisionintheUSandEuropeweseeallthesespeculative

capitalflowscomingin,puttingupwardpressureonexchangerate,and

destabilisingtheeconomies.Emergingeconomieshaverespondedtothisby

establishinghigherreserverequirements.So,manycountrieshavenowa

policywherecapitalcancomein–thereisnocontrol–youcaninvestinfor

instanceBrazilianreals,butthebankwillbeaskedtoput20percent,

40percent–insomecountrieseven80percent–atzerointerestatthe

centralbank.Thatmakesitalotlessattractive.Wearestrugglingwiththis.

EvenbeforethecrisisIhavebeenalargeadvocatethattheIMFtakesa

strongeroversightoninternationalcapitalflows.Thatmaybealittlebitof

anamendmentofthatWashingtonconsensus.

SECOND ROUND OF QUESTIONS

Mr.Chairman:Wetakeallthequestionsandthenconcludewiththeanswers.

Mrs.Okano-Heijmans(ClingendaelInstitute):Ihavetwoquestions.Yes,Iwill

keepitbrief!Myfirstquestionisaboutthe‘oneeuroareaseat’intheIMFor

aEuropeanset,whicheveryouwanttotermit.Whatexactlydoyouseeas

thebenefitsofthis?Bothspeakersindicatedthatitwouldbedesirableeven

thoughespeciallyintheshorttermhighlyunlikelybutwhatexactlydothey

seeasthebenefits?

Perhapsalsotoconvincecertainpartiesthatarenotyetconvincedofthose

benefitswoulditnotalsobeveryimportanttospeakofwhatwearegetting

backiftheeurozonecountriesaretogiveuptheirseveralseatsforoneseat?

Certainvoicesaresayingthatbargainingpowernowisstrongerthanitmay

beinthefuture,whenwemaybeforcedtochangethistooneseat.From

thosetwoperspectives,howwouldyoulookatthis?

MysecondquestionisaboutwhatProfessorKupchanwasreferringtothis

morningastheregionalandfunctionalinstitutionsversustheglobal

institutions.Indeed,theIMFisreformingbutatthesametimeweseea

paralleldevelopmentofotherinstitutionsinotherregionsforcertain

functions.Ifwegobacktothethemeoftoday’sdiscussion–thepowershifts

intheworldorder–alsohereweseeabigchangeongoing.Theroleofthe

IMF,atleastintheeyesofcertaincountries,isdecliningandotherregional

organisationsarebeingestablished.Mostimportantlyperhapswecouldthink

ofthemultilateralisationofChiangMaiinitiative.Thatcomesclosetowhat

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hasbeentermedearlierasanAsianmonetaryfund.Whatdoesthatmeanfor

theroleoftheIMF?

Mr.VanStaden(AIV):IhaveonequestionforAgeBakkerandoneforCarlo

Trojan.Age,youhavepresentedaveryvividaccountoftheresurrectionofthe

IMF,makingallsortsofobituariesratherridiculous.However,therewasone

importantelementImissed:whatistheIMFdoingrightnowtomakesurethat

thereissomedegreeofstabilityontheglobalcurrencymarket?Afterall,itwas

theoriginalmissionoftheIMFtoprovideformonetarystabilityintheglobal

context.Iamawarethatareturntothesystemoffixedexchangeratesisnot

quiterealistic,toputitmildly,butnevertheless,whatwehaveseenarethe

enormouslyharmfuleffectsofthewidegyrationsinthecurrencymarket.So,

givenyouranalysisofIMFnowbeingoneofthepivotsinthesystemofglobal

governance,howdoyouseetheroleoftheIMFonthisimportantmatter?

Carlo,itcannottakeyoubysurprisethatIfullyconcurwithyouranalysisof

thecurrentstateofaffairswithregardtotheeconomicandmonetaryunion.

Ialsoagreewithwhatyouhavesaidaboutideascurrentlyfloatingonhowto

maketheeconomicunion-partoftheconstructionstronger.Youarequiteright

thatallsortsofproposalsandsuggestionsareboilingdowntostrengthening

intergovernmentalarrangements.Itismysensethataslongasthereisno

independentdecision-makingauthorityinanysystemofeconomicunion–of

course,wehavetheECBbutthiscannotdothewholejob–thesystemis

doomed.Ofcourse,Irecognisethatthepresentstateofpoliticalaffairsisnot

veryencouragingtomakethecaseforastrongerpositionoftheEuropean

institutionsbutinthelongertermwehavetopleadindeedforstrengthening

theroleoftheEuropeanCommissionintheofeconomicunion.

Joris Voorhoeve

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Mr.VanderHoeven(ISS,AIV):BeforeIaskmyquestionIhaveoneremarkon

thediscussionjustheldontheWashingtonconsensus.Iwasintheroom

whenJohnWilliamsonframedtheWashingtonconsensusintheearlynineties.

DespitewhatwassaidearlierTheWashingtonconsensusisveryclear;there

aretenrequirementstogovernments.Ofwhattodoandnotto.Theproblem

withtheWashingtonconsensuswasandis,thatitisnotaptforanumberof

developingcountriesbecauseofitswrongonesizefitsalldescriptionandis

absolutelynotaptanymoreforthecurrentsituationofthecrisis.SoIbegto

differthattheWashingtonconsensusisnotclear:itisclear!Butitwasandis

especiallynownotrelevantanymore.Thatisabetterinterpretationofthe

WashingtonConsensus,accordingtome.

Myquestionisthefollowing.Thismorningwealreadytalkedaboutthe

developmentatthenationallevelandtheobservedgrowinginequality.This

afternoonMr.BakkerindicatedthechangesintheIMFandtheglobal

governanceverywell.Ihavetwoobservationsonthat.FirstIwanttostress

thattheoriginofthecrisisisnotonlyfinancialbutalsosocial;Americanpoor

andmiddleincomehouseholdsusedtheirhousesasautomaticteller

machinestogetadditionalmortgagesbecausetheyweresopoorthatthey

couldotherwisenotmakeupadecentliving.So,therewasalsoaverysocial

elementinthecrisis.Thisbringsmetomysecondobservation.

TheconstructofimprovedglobalgovernanceMr.Bakkerdescribedisthatof

aG20withthesupportoftheIMFasthesecretariat.Iwanttoraisethe

questionwhetherwearereallyservedbyaglobalgovernancesystem,

dominatedbyasecretariatwhichleansheavilyonafinancialinstitutionsuch

astheIMF?IDon’tweneedaglobalgovernancesystem,whichincludesalso

socialandpoliticalelementsratherthanhavingaglobalgovernancesystem

withreliessomuchonthesupportoftheIMF?Despitesomechangesbythe

currentmanagingDirectorStraussKahnitremainsafinancialinstitutionand

everybodyknowshowdifficultitistochangethemind-setofaninstitution,

especiallyafinancialinstitution.

Ms.VanDalm(RooseveltAcademy):Ihaveaquestionrelatedtothe

presentationofMr.BakkeroftheIMF.Herightfullymentionedthatthepoor

werethevictimsofthefinancialcrisisandthatbyhavingapro-poorpolicy

theytrytodecreasetheinequality.Butatthesametimeyouseetherich,the

higherincomes,arerecoveringwayfasterfromthefinancialcrisis.So,inthat

sensepovertyistargetedbutnotnecessarilyinequality.Thisgrowing

inequalityestablishesaleadwithaccesstomorethings,tomorecapital,also

inthesenseofknowledge.Iwouldsaythatglobalgovernancealsorequires

globalunderstanding,globalsupport.Forthelargestmajorityofthepeopleto

againbelieveinthefinancialsystemyoualsoneedthisglobalsupport.How

wouldeliminatenotonlypovertybutalsoinequality?

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Mr.Wouters(FlemishForeignAffairsCouncil):Ihaveaquestionregardingthe

pointmadeonputtingEurope’shouseinorder.Infact,wearenowafterthe

LisbonTreatyinratheraparadox;wehaveawholenewarchitecturewithnew

institutions,newplayers,andnewbodiesformakingtheEUamoreeffective

globalactor.Wecouldhavemanyreflectionsabouttheflawsinthe

architecture–Ipersonallythinkthattherearesomeimprovementscompared

tothepastprovidedyouhavetherightpeopleintherightpositions–but

muchdependsonagoodandpropersystemofdeputisation.Thistripleor

quadruplefunctionoftheHighRepresentative/VicePresidentisindeeda

challenge.Butitalldependsonthesystem,thedeputisation,andsoon.Isee

otherflawthathavenotyetbeenmentionedbutthatisnotmypoint.My

pointistheparadoxthatalthoughtheLisbonTreatyisinplaceMemberStates

nowseemmoreconcernedinminimisingtheimplicationsoftheLisbonTreaty

andarefightingsomesortofrearguardbattlewithregardtoanumberof

points.IwillgivethreeexamplesandIwouldlikeyoutocommentonthem.

Firstofall,theroleoftherotatingpresidency.Wethoughtitwouldbegone,

especiallyforexternalaffairs.Itisnotmentionedanymorewithregardto

externalmattersintheLisbonTreatybutwenowseethattheHungariansand

possiblyalsothePolisharetryingtoregainapositionontheworldstage,

intherotatingpresidency.Thereareallkindsofbattlesgoingon.Lastweek

therewasaUN-forumonforestsinNewYorkandyoucannotimaginethe

battlewithinEuropeaboutwhethertheEUshouldberepresentedbya

Commission-delegate,bytheHungarianpresidency,orbyaso-calledEU-team,

andsoon.So,itisabitembarrassingbutweareagainexportingour

Laurie van Dalm

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differences.TheworstexampleuntilnowwastheMercury-caseinStockholm

inJune,lastyear.

Theotherpointis–talkingaboutrearguardbattles–istheEEAS-budgeting.

Yourightlytalkedabouttheorganizationchartbutlet’slookatthebudget.

ThebudgetthatisbeingprovidedfortheEEASshouldbeso-calledbudget-

neutral.Whatdoesthismean?Wehave475millioneurofor2011and3,700

staffmembers,whichisinawayasmuchastheNetherlandshasinitsforeign

servicestaff.TheEUhas136missionsabroadandtheNetherlands137.These

arequiteinterestinganalogies.ButthepointisthattheMemberStatesdo

notyetseemkeentomakethiskindofeconomyofscale,inwhichyoucould

restructurethecurrentnumberofstaff–93,000intotalforallEUMember

Statescombined–anddosomeinterestingeconomiesofscaleinorderto

havetheEUdiplomacyworkingmuchbetter.

WhatisthecurrentattitudeoftheDutchgovernment?Itisnotyetcleartome

howtheNetherlandsassumesitsroleinthepost-Lisbonera,inBrusselsand

abroad.Aretheyfaithfulpro-Europeanplayers?Aretheydoingthatinternally

andexternally?Whatabouttheotherconsequencesofthat?Weheardabout

theIMFbutwhatabouttheG20?IstheNetherlandsstilltryingtobecome

re-invitedtoG20meetings,orareweinthatsensealsoratherrelyingona

Europeanrepresentation?

Mr.Chairman:ImayperhapsremindyouthatCarloisnotarepresentativeof

theDutchgovernment.Butwearelookingforwardtohisanswers.

Mr.Uilenreef(AIV):IhaveaquestiontoMr.AgeBakker.Thismorningwe

discussedthedifferentvaluesthatwehaveinthisnewworldorder.Towhat

extentdoyouthinkthatthisnewbalanceofpowerwithintheIMFwillactually

leadtonewpolicies?Iamparticularlythinkingofthecondition-based

approachandgoodgovernance,whichissometimesattachedtoWestern

democracies.WillthischangeinthenewIMF?

Mrs.Bos-Karczewska(Journalist):Firstofall,Iwouldliketomakeateasing

commenttoMr.Bakker.HowdoyoufeelrepresentingtheNetherlandsinthe

IMFthatBelgiumhasahigherpositionintheIMF-rankingintermsof

constituency?Eveninthenewtermsitisahigher.Thedistancebetweenthe

NetherlandsandBelgiumhasevenincreased.

Mr.Chairman:Itisanalphabeticorder!

Mrs.Bos-Karczewska:So,anewcriterion!Ihaveamoreseriousquestion.Iam

gratefulMr.BakkertalkedaboutEuropespeakingwithonevoicevis-à-visthe

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outsideworld.Hetalkedaboutdesigningorthinkingaboutthecommon

futureofEasternEurope.Iwouldliketoknowwhatkindofthinkingthereis

inWashingtonaboutthefutureofEasternEurope.Whatishethinkingabout

Russia?Irememberthatoneortwoyearsagotherewasaconferencehere

abouttherelationshipbetweentheEuropeanUnionandRussia.Atthattime,

Russiawasabigpower,aresourceofoilbutnowitseemsthattheposition

ofRussiaislesspowerfulthoughitisstillaBRICcountry.

Mr.Chairman:ThathigherpositionofBelgiumisofcoursetherevengefor

whatwedidtotheminNice!

Mr.Trojan:Therewasthequestionwhatistheadvantageofasingleseat.

Theshortansweris‘impact’,impactinglobalaffairs.Inworldtradematters

wehaveonesinglenegotiatorandIhappenedtohavebeeninGenevafor

sixyears.Inworldtradematterswehaveimpact.TheEuropeanUnionis

consideredasbeingatleastonequalfootingwiththeUS.So,impactwith

asingleseatshouldbethebiggestadvantage.

Butwhatismoreimportantisnotthatyouspeakwithonesinglevoicebut

thatyousendoutonesinglemessage.Inthepresentsituationwiththe

ratherfragmentedexternalrepresentationMemberStatesdonotalwayssay

exactlythesamething.Quiteoftentheyevensayconflictingthings.Asa

consequence,wedonothavetheimpactwhichiscommensuratewithour

economicweightinfinancialandeconomicmatters.

WithregardtotheexternalrepresentationitisclearlystatedintheTreaty

ofLisbonwhereyouhaveexclusiveorsharedcompetencetheexternal

representationisdonebytheCommission.Thatisquiteanenlargement

vis-à-visthepreviouspractice.Thereitisthesameaswiththerotating

presidency:MemberStatesarenotyetreadytoaccepttheformal

consequencesofwhattheyhaveapprovedintheLisbonTreaty.Obviously,it

wasnotmeantthattherotatingpresidencyshouldplayanyroleinforeign

andsecuritymatters,exceptwhatinpracticewasagreedupon:ifLadyAshton

–whocannotbepresentateverysinglebilateralmeeting–isnottherethe

ministeroftherotatingpresidencywilltakeover.Butitcouldalsohavebeen

oneofherDirectorGenerals.ShehassixDirectorGenerals,threeSecretary

Generals,andoneChiefOperatingOfficer.So,thereareenoughpeoplefrom

whomshecanchoose.

ItisnotacoincidencethatVanStadenandIareonthesameline.Heismy

chairmanintheAIVandwehavediscussedthissubjectquiteinlengthandin

depth.Wewouldneedanindependentinstitutionalauthoritywithregardto

decisionmaking.ThereareeurozonemembersandthereareEUmembers.

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Ifwelookattheeurozoneforthefiscalsurveillance–thebudgetdeficit–

clearlythelegalcontextisthere,onthebasisofCommissionproposalsand

thedecisionbytheCouncil.Thatwillberevampedintheactualdiscussion.

So,thatisdoneinaninstitutionalframework.

Asfarastherescuefundisconcerneditisoutsideanyinstitutional

framework;itisintergovernmental.TheMemberStateswanttokeepit

intergovernmentalbecauseitistheircash,theirguaranteesandtheydonot

trusttheCommissionwithit.Thatistheactualstateofaffairs.Youcouldalso

dealwiththatinamoreinstitutionalwaybecauseyoucoulddoitinthe

contextofenhancedcooperation.Thisentailstheformalproceduresofthe

Council,eventheEuropeanParliament,etcetera.Youcouldsettlethesethings

intheformofenhancedcooperationbutwearenotyetthere.

Itisfarmorecomplicatedwhenyouareinthegreyzoneofcoordinating

economicpolicies.WhatwehavebeendoinginthecontextoftheLisbon

Treatyispeerpressureandbenchmarking.Isthatenough?No,thatisnot

enough.Idoubtifwecouldgomuchfurtherthanthatwithintheactual

institutionalframework.So,thereisarealproblem.Ifyoulookatthedifferent

proposalstotryandharmonisestructuralreformsyouseewealsotriedthis

inthecontextoftheLisbonagenda.Butwithoutverylegalcommitmentsin

practicenotverymuchiscomingoutofit.So,youarecompletelyrightthat

wehaveabigproblemthere.

Ialsohopethatinpractisetheexternalrepresentationwillgobetterthan

Iamanticipating.Ifyoulookatthenumberofstaffitisnothingexceptional.

TheEuropeanCommissionhadabout140delegations,moreorlessthesame

amountastheDutchgovernment.Butintheseexternaldelegationswehave

decentralisedmuchofthedevelopmentassistance.So,mostofthestaffin

externaldelegationisdealingwithdevelopmentassistanceandfinancial

controlrelatedtodevelopmentassistance,whileinMemberStatesmanyof

thesetasksaredonecentrallyattheministry.So,thenumberofstaffisnot

exceptional;itcouldevenbemorethanthat.WhatIthinkisexceptionalisthe

‘heaviness’oftheMexicanarmyintheorganigram.

Mr.Bakker:Theseareveryinterestingquestions.Iamtoldthatwedonot

havealotoftimebutwewillbearoundduringteaaswell.Letmevery

brieflygetintothis.

First,oneeuroareaseat.Carloalreadymentionedthat.Dowenowhavemore

bargainingpower?Ofcourse,IamsatisfiedifIbookalittlesuccessbuton

thewholeIwouldsaythatEuropecouldpresentitselfmoreeffectively.Thatis

whatIseefromexperience.Europewasverylateinreactingtothefinancial

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crisis.IthadtheideaitwasaUSproblemandonlylateritdaunteditwasa

Europeanproblem.Wehaveseenhowlongittooktoreacttoproblemsin

GreeceandIreland.Italltakesverylong.Wecanbemuchmoreeffective.

Second,shouldweworkmoretogetherwithregionalinstitutions?Yes,thatis

themodelwehave.TheIMFworkstogetherwiththeEuropeanUnion,not

onlyinGreeceandIreland–wealreadydidthatbeforeinRomania,wherethe

programmeispartlyfinancedbytheEUandbytheIMF.Thisistheway

forward.

IsitcompetitionfortheIMF?Idonotthinkso.Asiahasconsideredgoingits

ownway,especiallyaftertheAsia-crisis,inwhichitfeltquitebadly–rightlyor

wrongly–aboutthewayitwashandledbutitisverydifficultforthemto

comeupwithanythingclosetotheEuropeanUnion,partlybecauseofthe

sheersizeofthelargecountriesandbecausetheyarenotonthesamepace.

So,themodelmostofmyAsiancolleaguesarelookingforisbecominga

morepro-activememberoftheIMF.Interestingly,countrieslikeChinaand

IndianowalsofinancetheIMFprogrammes,includingthoseinGreeceandin

Ireland.Chinaismoreandmorebehavingasacreditorcountry.Atthesame

time,itisworkingtogetherthroughtheChiangMai.Idonotthinkone

excludestheother.

Age Bakker

Jan Rood

Carlo Trojan

85


Mr.VanStadenaskedaquestionaboutthegirationsontheexchange

markets.IhavebeenintheUSforfouryears.TheUSdollar–euroexchange

ratehasbeeninacorridorof1.25to1.65,whichIthinkisfine.Actually,the

systemhasworkedquitewell.Thecorporatesectorknowshowtodealwith

exchangeratefluctuations.Theyhedgeandtheymaketheirowndecisions

there.Theexchangesystemhasbeenresilientandithascopedremarkably

wellwiththefinancialcrisis.Thebigfeareverybodyhadwasthatthefinancial

crisismighttriggerforinstanceanunloadingofUSdollars,butthishasnot

happened,whichbythewaypointstothebigvulnerabilityinthesystem.

MaybeMr.VanStadenwasalludingtothat.ThatisthestrangleholdtheUS

andChinahavetogether;basically,ChinaisfinancingUSdeficitsandbuilding

uplargerandlargerreserves.ThisisnotsustainableandthatiswhattheIMF

andtheG20focuson.So,thatisforemostonourminds.Butthesystemhas

copedbetterthanmanymighthaveexpected.

Iwilltakethequestionsonsocialcrisisandinequalitytogether.Itakethe

pointthatinequalityisputtingstrainsonglobalisation.Youalsoseethisin

theopinionpolls.IntheUS,whereInowlive,inanopinionpollglobalisation

wascalledagoodthingbymorethantwothirdsoftheAmericanpopulation

tenyearsago.Inthelastopinionpoll–fromlastweek–thiswaslessthan

onethird.So,thisisnotjustaEuropeanthing.Itispartlyaphenomenon

ofpeoplenotseeingwhatisinitforthem.Myanswerwouldbetodotwo

things.

First,toreformtheUN-system,whichislongoverdue.TheUN-systemhasa

muchbroaderagendathantheIMFandtheWorldBank.Iamchairmanofthe

liaisoncommitteebetweentheIMFandtheUN.IhavetalkedtotheUNa

numberoftimesbecausetheyhavealotofinterestinourconstituency

system.ItmightmaketheUNmuchmoreeffective.Iamnotanexpertonthis

butIthinkthatiswhatweshouldlookfor.TheUNshouldresumeitsmore

globalrole.

Second,Iwouldventureweshouldfocusmoreonjobsthanoninequality.

Thebigdangerisunemployment.Manycountrieshaveveryhighyouth

unemployment,forinstanceEgyptand40%inSpain.Ithinkitisbigger

problematthismomentthaninequality.Theremustbejobcreationandfor

thatweneedstructuralreforms.Thatisbyfarthemostimportantthing

countriesneedtodo.

HasconditionalitychangedthevaluesystemintheIMF?Itisalearning

institutionandownedbythememberstatesandthememberstatesevolveas

well.WehavedrawnquiteanumberoflessonsfromtheAsiacrisis,when

internationalinstitutionshadatendencyoftryingtorepaireverythingwhatis

Age Bakker

Jan Rood

Carlo Trojan

86

wronginaneconomy.Thathasnotbeenhelpful.Wenowfocusonlyonthe

mostimportantthings.Iwitnessthisverycloseby;asIsaid,Irepresent

sevencountriesthatnowhaveaprogramme,includingcountrieslikeUkraine

andRomania.IcouldeasilythinkupamuchlongeragendafortheIMFto

focusoninUkraine.Weallcan,buttheIMFfocusesthereononlyafew

issuesandtriestokeepthecountrytogether.Inthatsense,thereisanew

IMF.

TheIMFalsotakesthepoliciesincountrieswithagoodtrackrecordat

face-value.WehaveprovidedcreditlinestoMexico,Colombia,Poland,and

Macedoniawithoutconditionality.Thisisacompletelynewphenomenon;this

hasnothappenedinthehistoryoftheIMF.

InreplytothequestionfromMrs.BosImustsaythatIdonotatallresent

thattheBelgianConstituencyislargerthantheNetherlands.Ithasavery

complicatedconstituency.ThesecondcountryisTurkey,andthenAustria.They

havegainedinvotesbecauseTurkey,beinganimportanteconomyhasbeen

gainingvotes.

SomeremarksweremadeaboutEasternEurope.IrepresentpartofEastern

Europe.BymanycountriestheIMFisseenasthe‘badcop’andisnotliked

thatmuch.However,thestandingoftheIMFinEasternEuropeismuchbetter,

becauseithasbeenseenastheinstitutionhelpingthetransitiontoamarket

economy.TheIMFisalsoseenasapromoterforanaccountablegovernment

becauseitwillnotprovidecredittocountrieswherethegovernmentaccounts

arenotinorder.ItisnotwithoutreasonthatEasternEuropeancountrieshave

nothesitatedtocometotheIMF.OnedayafterthefallofLehmanBrothers

Ukraine–thecountryIrepresent–askedforanIMFprogramme.Theydidnot

hesitatetocomethere.

DowehaveavisionforEasternEurope?Yes,thatistoalignEasternEuropein

theEuropeanUnion.TheIMFisabigdefenderofallthosecountriesthattry

toputtheirhouseinordersothattheyareacceptedintheeuroarea.Thatis

whyImadetheargumentearlierinmyspeechthatEuropewouldbewell

advisedtoredefineitsagendaforEasternEurope;becauseEasternEurope

hasthefeelingEuropeisbecomingaclosedshop.

Mr.Chairman:Well,wehavecometotheendofthissession.Ihavejustbeen

toldthattheministeriswaitinginthecorridorandthatissomethingthat

shouldnothappen,ofcourse!

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Letmemakeoneobservation.Thiswasnotafakesessionandthiswasnot

avaguesession;itwasamostinterestingsession!Thecreditsgotoourtwo

speakers.Theydeserveapplause!Thecreditsalsogotoyouasparticipants,

comingupwithalltheseinterestingquestions.Now,itistimefortea.

Thankyousomuch!

88

Chair: Prof.Dr.AndréKnottnerus,

ChairmanoftheScientificCouncilforGovernmentPolicy

Speaker: BerniceLeeMSc

ResearchDirectorEnergy,EnvironmentandResource

GovernanceatChathamHouse

Discussant: Mr.FreddeGraaf,

ChairmanoftheForeignAffairsCommitteeoftheDutch

Senate

Mr.Chairman:Dearanddistinguishedguests.Wearehappythatyouarewith

usagain.Let’sgetbacktowork,becausewehaveaveryinterestingissue

thisafternoontocoverinthisthematicsessiononsecurityandscarcityof

resources,whichisobviouslyanenormouslyimportantissue.

Resourcesaretobeseenasreallycriticalfortheeconomicdevelopmentand

thegeneralwellbeingofstatesandnationsandtheworldpopulationand

ofcoursesufficientacquisitionoftheseresourcesisthereforeessential.And

asnaturalresourcesarenotsufficientlyandequallyspreadovertheworldit

isaconstantchallengefortrade,butalsoasourceforinternationaltensions.

Inadditionthissituationisalsoanextramotivationforinnovationandfor

changingresourceconsumingbehavioursthroughout.So,thisisvery

importantinthecontextoftoday,alreadybrieflymentionedthismorning.

Weareveryhappythatforintroducingusinthisthemeandalsoforfurther

elaboratingontheproblemandpossiblestrategiesforsolutionswehavean

excellentspeakerandagreatexpertinthefieldandwehavealsoagreat

commentatoranddiscussantwhowillspeaklater.

Session B: Security and scarcity of resources

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Iwouldfirstliketointroduceourkeynotespeakerforthisafternoon.

Ms.BerniceLeefromtheUK.SheisResearchDirectorEnergy,Environment

andResourceGovernanceatChathamHouse,RoyalInstituteofInternational

Affairsandshehasalsoaverybroadexperienceinmanyotherkeyrolesin

thisarea,inforexample–nottomentioneverything–asHeadoftheEnergy

EnvironmentandDevelopmentProgrammeandalsoasTeamLeaderofthe

EU–ChinaInterdependenciesandEnergyEnvironmentSecurityProgramme.

Bernice,weareveryhappythatyouarehereandIwouldliketogiveyouthe

floor.

90

Ms.Lee:Thankyouverymuch.IamsorrythatIamgoingtositdowntoday

becauseIamtooshortforthepodium,soyouwillnotbeabletoseeme.

NexttimewhenIaminvitedtospeakintheNetherlandsIamgoingtoaddin

mybiography:IamshorterthanaDutchpersonsopleaseadjustthespeaking

podium.

LetmejuststartbythankingtheorganisingorganisationsandtheSenatefor

postingthisveryimportantmeeting.Forone,Imyselffoundthismorning

incrediblystimulatingandIsincerelyhopethatthistypeofdiscussionswillbe

Scarcity and international cooperation. Managing the Interlocking Resources Challenges: risks and opportunities1

Address by Bernice Lee MSc, Research Director Energy, Environment and Resource Governance at Chatham House

Bernice Lee

91


replicatedthroughoutEuropetomakesurethatwearegettingthebestof

whatEuropecanofferinthesekeyareasthatwehavediscussedtoday.

Itisdifficulttodaytoopenthenewspaperwithoutreadinganotherarticle

aboutresources.IcountedtwentyoftheminTheFinancialTimesyesterday,

justinthefrontpartofthepaperandcoveringarangeofissuesfrom

food,energy,minerals,water,andlandinvestments.Itcoveredissues

aroundwhetherornotPresidentSarkozywouldmanagetopushthrougha

mechanismtoseparatethespeculativefromtheinvestingdecisionsinthe

foodmarkets,towhetherornotitispossibleforEuropetodecreaseits

energydependencefromRussia.WealsohavethecurrentcrisisintheMiddle

Easttoremindusthatshearpoliticsoftenliesattheheartofouraccessto

keyresourcesataffordableprices.

Thisshouldnotcomeasasurprise,givenhowmuchofmodernlifeis

dependentonouraccesstotheseresources,includingourimprovedlifestyle,

formuchofthiscentury.Forwehaveindeedtakenforgrantedthatwewill

alwayshaveaccesstocheapaccessibleenergy,food,materialsandotherkey

resources.

Asthespeakersthismorningveryclearlyelucidated:inaworldwhereweare

havingamuchflatterpowerstructure,inaworldwherewearehaving

increasingdemandthatweprobablycannotpossiblymeetintheimmediate

andmid-termgovernancewillonlygetharder.Weare,onthegoodside,

beginningtorealisewhatenvironmentalchangeandresourceconstraintswill

dotothecomplexityofinternationalrelations.

Wearegoingtoseemorebottlenecksinfoodproduction,inenergyproduction

andtheproductionofotherkeynationalresourcesandinfrastructure.These

bottlenecksandpricespikeswillnotjustaffectbusinesses,becauseitisnot

justaquestionofeconomics;itisrejoiningtheboundaryofinternational

cooperationandcompetition.2

Iwillstartbygivingyoumyconclusiontoday:thatdecisionsthatwemake

todaywilldecidewhetherornotwewillfaceacompetitiveworldwherewe

willhavezero-sumcompetitionwiththeemergingpowersonresources,or,

whetherornotwecancreatetherulesofthegamestoensureamore

collaborativefuture.Iwilltalkalittlebitaboutthediffusionoftheproduction

anddemandcentres,totheemergingeconomiesandtomoreandlarger

originalproductioncentres,andhowthatmayormaynotimpactonthe

poweroftheconsumersintheOECDcountriestocontinuesettingtherulesof

theworld.

92

Thereis,Iwouldconclude,agreatwindowofopportunityfortheEuropean

Uniontoplayaproactiveroleinconstructingoramendingourinternational

regimestolock-incollaborativeratherthanzero-sumcompetition,ifweact

today.Wewillhaveproblemsarounddistributionofresourcesinanequitable

fashion,bothwithinnationalboundariesandbetweennationalboundaries.

Wealsoknowthathistoryisnotonourside.Asdiscussedthismorning,all

majorpowersalwaystalkabouthowtheylikerule-basedsystems,butthe

realityisthatalloftheserulesthatweresetupwerebasedonpower-based

hedgingstrategies:wheretherearekeyresourcesyouseeanaircraftcarrier

nearby.Whatwedoknowtodayisthatwealldothesame:tryingtopretend

thatwecareaboutruleswhileweactuallyinvestinhardpower.Wewillseea

muchmoreconvolutedanddifficultworldintheyearstocome.

FirstIwouldtalkaboutwhatIthinkweknowaboutresourcesandwhatI

thinkwestilldonotquiteknowaboutresources.Sothatwasmyconclusion.

WeknowthatwefacemanyresourcechallengesandIamnotgoingtogo

throughthemwithyou.Icanifyouwanttoaskmelateron,butyoumust

haveseensomanyslides,givingyoupicturesarounddemographicchange,

energydemand,waterdemand,waterresourcedepletion,fooddepletion.

IamtellingyouasIwilldonow,thattotalconsumptiononthescale,given

theincreaseinpopulationwillactuallyexceedthetolerancethresholdsofour

ecosystemsandresources,whethercropland,farmland,fisheries,orusable

water.3Weknowthatindividualsinthemiddleandupperclassesincreased

resourceconsumptionbysomethinglike200percentinthelast40years.4

By2050thesestatisticswilltellyouthat75percentofglobalpopulation

couldbefacingfreshwatershortages.5

Wealsohavethepotentialimpactsofclimatechange.Iusetheword

‘potential’becausewedonotknowthescale.Weknowitisgoingtocome

butnonethelesswedonotknowtheextent.Theextenttowhichclimate

changewillimpactonourfuturewilldependonpolicychoicesthatwemake

todayandverysoon.

Anotherthingwedoknowaboutthisisthatmostofitisdrivenbygrowthin

theemergingeconomies-thatis,bytheway,whatpovertyreductionlooks

likewhenitworks.Whenpovertyreductionworksitmeansmoreconsumers,

moreconsumptionandtothatwewillindeedhavetodriveunanticipated

changesinourproductionandproductionsystem.

Thisisalsoaccompaniedbyamajorshiftinbothprocessingpowerand

consumptioninthedevelopingcountries.DeloitteandtheUSCouncilon

Competitivenessrecentlytalkedaboutwhattheycalleda‘newworldorderfor

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manufacturingcompetitiveness’wherethecompetitivenessoftheusual

suspects,China,IndiaandKorea,butalsoBrazil,Russiaandotherswill

consolidateandleadtotheexpansionoffurtherdiversificationofregional

productionnetworks.6Weknowthatthisgrowthfromtheemergingeconomies

hasrejoinedthelandscapeonwater,resources,energyandfood,butwhatwe

donotknowyetisthecombinedeffectofthisgrowthandtheglobalpower

shift.By2030non-OECDcountriescouldaccountforasmuchas57percent

oftheglobalGDPonapurchasingpowerparitybasis.7

IftraditionalOECDimportingcountriesaregoingtodeclineintheirpoweras

aconsumer,whatwillhappentotheirpowertosettherulesininternational

markets?8Willthedominanceofthesenewplayerschangetherulesofthe

gameandthebusinessmodelsandallofouroperationalassumptions,

whetherintermsofforeigninvestmentorintermsofbasicproductionand

trade?

Ifwelookattherecenthistoryfromtheoilandgasmarket,thedevelopments

arenotnecessarilyencouraging.State-backedAsianresourceinvestment

strategiesarealreadychangingthebusinessenvironmentandtheextractive

sectorsandinfrastructuresinthedevelopingcountries.Inoilforexample,itis

clearthatthetraditionalconsumerandproducerblocswillbelessableto

influencethecontroloftheoilpricesoverthemiddleandlong-termandthat

willonlyincreasevolatility.9

Beforenewmodelsofgovernancecanbecrafted,ordeveloped,oradapted,

andrememberingeachofwhichwillhavetheirownassumptionsbasedonthe

kindofcommoditythattheyareanddifferentmarketstructures,perception

ofinsecurityisaslikelytocauseconflictsastherealityofinsecurity.Weoften

doverystupidthings,becausewethinkbadthingswillhappen,notnecessarily

becausebadthingshavehappened.Thismeansthatwemustmonitorand

becarefulinunderstandinghowgovernments,companiesandotheractors

arerespondingtoresourcethreatsatlocallevel,atnationalleveland

internationallevel,becausewearelookingatnewpatternsofrelations

betweenconsumersandproducersoftheworld.

OneoftheexamplesthatweoftenuseistheonethatAmartyaSenwrote

about:theBengalifaminesin1947.Thefaminewasnotcausedbylackof

food;itwas,however,causedbythelackofunderstandingaroundthe

distributionoffoodandtheholdingbehaviour,thatpeoplestartstockpiling

thefoodsothateventhoughtherewasfoodarounditbecametooexpensive.

WhatIamsuggestinghereisthattheworldweareabouttoface,orthatwe

areprobablyfacingalready,insomeofthesekeyresourcescouldbelikethat

world.Aworldwherewehaveenough,butourownhedgingstrategies,our

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fearofinsecuritymayleadtoallsortsofscaremongeringthatcouldbemore

destabilisingintheshort-termthanisnecessary.

Weknowthatthesearchforwater,forexample,isalreadyoneofthedriving

forcesofstatebackedinvestmentsfromtheArabGulfstatestosecureland

productionforagriculture.Sotherulesofthegamesarealreadychanging.

Asiancountries,asImentioned,arealreadylookingattheuse,inthe

long-term,ofbilateralresearchincontractsforoil,gas,andcoalsealedwith

politicalandeconomicsupport.Atthiscriticaljuncture,dowethinkthat

policymakers,companiesandstakeholdersintheWesthaveafirmgraspof

therealitiesofaresource–constrainedworldaccompaniedbyapowershift?

CanweinfactcraftintheWestachangeofparadigmvis–à–visresources

accessandusethatwillenablelong-termcompetitivenessandgrowth,not

justforEurope,butalsofortherestoftheworld.Companiestodayare

alreadycompetingatalocallevelwithothercompetingneedsforresources;

aminingcompanyinChilewillbecompetingwiththeagriculturalsectorand

withotherindustriesforenergyuse.

Theseproblemsdonotonlymanifestthemselvesininterstaterelationsbut

alsoinlocalrelationswhereweseearesurgenceofcompany–government

conflictswhenitcomestooverseasinvestment.

WithalltheseproblemsinmindIwouldliketoofferthreedimensionsthat

Ithinkwecanjointlyworktogetherandthinkthroughtheimplications.

Thefirstishowwecanbetterunderstandthesecurityimpactofthisresource

constrainedworld.Weunderstandnowthattheinterlockingclimatechange

resourcescarcityanddevelopmentissuesareincreasinglyunderstoodasakey

acceleratortonewrisksandvulnerabilitiesintheinternationalsystem.

Especiallyinthedevelopingworld,wateravailability,energysecurityandthe

upwardtrendincostsformanyresourcesarereallybigrisksintheir

developmentprojects.

Eventhoughwedounderstandtheneedtoaddresstheseproblemswerarely

seethecapacityortheintentionofgovernmentsorcompaniestolookat

theseinasystematicmanner.Followingthefinancialcrisisof2008onewould

havethoughtthattheconsequencesofbadpolicychoiceswouldbebetter

understoodandshouldhavedeservedmoreattention,butinthepolitical

systemthatwelivein,where,atleastinademocraticworld,thetimehorizon

isoftenshortasitisbasedontheelectoralcycle,arethererealcapacitiesfor

governmentstothinkthroughthelongterm?Dowehavethecapacityinthe

policyplanningunitsofourforeignministriesforexampletoplanuntil2050?

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IwasamazedwhenProfessorZhangtalkedaboutChina’sshoppingthis

morning,planningfor50toa100yearchange.Thatisaluxurythatmost

democraticsystemssimplydonothave.Andevenifyouhaveit,theurgent

willalwayscrowdouttheimportantaswefindouttimeaftertime.Withthis

shortertimeframe,policyplanningwillalwaysruntheriskofpreservingour

prevailingassumptionsandourownmindsetsintermsofriskmanagement

andwillnothavethecapacitytoplanforcomplexissueswithlongtime

horizons,andpotentiallyhighscientificuncertainty,likeclimatechange.We

alwayshaveatendencytorunawayfromcomplexitiesandreturntoourbasic

assumptions.Oneofthethingsforexamplethathaveamazedme,washow

theresourcescarcityquestionisempoweringtherealistschoolofthinkers

again,becausecompetitionforpowerisinfactthecomfortzoneformany

thinkersininternationalrelations.Perhapsitisabitdifficultsometimesto

lookatthecomplexitiesandseethroughhowwecanusethesystems,

institutionsandtoolsthat,forexample,HedleyBullusedtotalkaboutinthe

Anarchical Societytocreateopportunitiesforcollaborationandatleastfor

hedgingtherisksinamoresystematicfashion.

Atthepolicylevelwenowhaveaprettygoodmachinerythathasaccepted

climateasaseriousanddirtythreatintheimmediatetolong-termifwedo

notdoenoughaboutit.TheNationalIntelligenceCounciloftheUSfor

examplehaveaclassifiedassessmentexploringhowclimatechangecould

threatenUSsecurityinthenext20yearsbycausingpoliticalinstability,

movementsofrefugees,terrorismorconflictsoverwaterandotherresources.10

TheAustralianDefenceForcealsoconcludedthatclimatechangeandrising

sealevelsposedoneofthebiggestthreatstosecurityinthePacific.These

impactsaccordingtotheiranalysesmightalsosparkaglobalconflictover

energyreservesunderthemeltingArcticice.11

Eventhoughweareseeingthebeginningoftheprocessofunderstandingthe

securityimplicationswealsohavenotbuildupourcapacitytorespondto

whatwouldbecalledtheBlack Swanevents.ChathamHousehasrecently

beenconductingananalysisontheimpactoftheashcloudsinAprillastyear,

becausewethoughtitwouldbegoodtostudyabenignBlack Swaneventto

lookatwhetherornotourgovernancesystems,ourresponsemechanisms,

areinplacetorespondtothesesortofthreats.Iwillsendyoutheresults

whenwecompletethestudyinamonthortwo,butasfaraswecouldfigure

out,eventhoughwehadamajorcrisisinEurope,wearenotentirelysure,

basedonalltheinterviewswithbusinessesandstakeholdersandanalyses

thatwedid,thatweareactuallyanybetterpreparediftheIcelandvolcano

decidedtoeruptagain.

96

HurricaneKatrinacosts19percentofUSrefinerycapacity,pipelinedamage,

etc.Shortlyafterthatwesaw,asweallknow,theoilpricerise,whichwas

followedbyafinancialcrisis.ThehotsummerinFrancein2003shutdown17

–Ithink–nuclearpowerstationsbecausetheyhadproblemscoolingthe

powerstationsandEDFlostsomethinglike300million:onehotsummer!

Welookatallthesefactsandyetwedonotseemtohaveawayof

conceptualisingandmanagingtheseinawaythattranslatesintopractical

policyadvice.

Somyfirstrecommendationtoday,ifImay,istosuggestthattheEUinthe

runuptotheRioPlus20processhaveanopportunitytoleadthe

internationalcommunityinunderstandingtheriskofbusiness–as–usual

planningandpracticesaroundresourceuse,accessandmanagement.

Ithinkthatthesecuritycommunityhasalreadyshownusthatusingworst-

casescenariosnotnecessarytoscarepeopleoff,butasaplanningtool,could

potentiallyhelpusunderstandthekindofgeopoliticalandeconomicimpacts

onpolicyfailuresandourfailureofaction.

Therealsoneedtobepracticalmediationmechanisms.Thiscouldbeby

expandingtheuseofcurrentmechanisms,whetherthroughtheinternational

chamberofcommerceforcommercialdisputesorthroughinternationalcourt

settlements,etc.Weprobablyneedtolookattheseoldinstitutionsagainto

decidewhetherornottheyareuptothetaskofmanagingthecrisesofthe

typesthatwearelikelytoseetomorrow.

TheseconddimensionIwanttolookatotherthanthesecurityimpactofa

resourceconstrainedworldisthequestionaroundwhetherornotwewillbe

enteringaworldwherewescramblefortechnologiesratherthanresources.

Itiseasytothinkofenergyaccessasoneofsupplyofliquidfuels,whenin

factalotoftheproblemsandissuescouldbedealtwithbyend-usesolutions

aswellasinnovationanddevelopmentofnewtechnologies.Inordertohave

thebridgetooursustainablefutureitseemstomethatitisasimportantto

ensureaccesstofuturetechnologiesasitisaboutaccesstoresources,but

thesetwoareintractablylinked.Weunderstandtheneedforcleanenergy

systemsandyetweforgetthatevenwithnewenergyoptionswearelooking

atthedemandformaterialsofthesortthatwearealsofacingserious

competitionin.12

ItisnottosolongagowhenjustonesummerofdemandfromGermanyfor

solarPVsleadtotwoyearsofPolysiliconshortagesintheworldandwhich

wasfollowedbyanoversupplyresponse,whichwasfollowedbythefinancial

crisis,whichactuallycreatedthesolarmarketinChina,butthatisforanother

timeifyoulike.

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Butthepointisthatevengreentechnologiesrequirenewmaterialsandwe

arenowseeingthatplayedoutinthediscussiononrareearthmetals.We

alsoknowthatmostoftheenvironmentaltechnologieswillneedveryspecific

rawmaterials.Fuelcellswillneedplatinum,palladiumandrareearthmetals.

Hybridcarsaredependentonnewtypesofbatteries,whichatthemoment

arebasedonanotherrareearthmetal,calledneodymium,whichisahigh

performancemagnet.

Otheralternativeenergiesrequirealltheothersortsthatweknowabout.In

oneofthenewmodelwindturbines,eachoftheturbineswillrequireabout

2tonsofrareearthminerals.Thesematerialsasyouknow,alsohavemilitary

applicationsinguidingmissilesandourlongtermaccesstothesenew

materialswillbringnewrisks.

Bearingthisinmind–andinfactIwonderwhetheryouwantmetotalka

littlebitabouttherareearthmetalsituation,becauseIwasherenotsolong

ago–andwediscusseditquiteabit,notintheSenatebutatClingendael

whereIthink,quitealotofyouwerepresent.

AtthemomentChinaforexampleproduces97percentoftheworld’srare

earthsupply,about100percentoftheassociatedmetalproductionand

80percentoftherareearthmagnets.Chinaimposed,asyouknow,export

restrictionsonarangeofREMsaswecallthem,citingdomesticusefor

economicdevelopmentasareason,whichiscreatingtensionwiththeUSand

theEU.13Theincreasingawarenessovertheserareearthmineralsistriggering

supplyresponses.Sowenowseetherebirthoftherecyclingofmetalsin

Japan.TherearealsoplanstoopennewrareearthminesinSouthAfrica,

Australia,Canada,theUnitedStates,Vietnam,etc.14Ithinkthetypeoftrade

tensionsweseeoverREMsillustratethetypeofconflictthatmayproliferate

inaresourceconstrainedworld.Theincreasingnationalcontrolofresource

governance,asintheoilsector,isplacingrestrictionsontheglobaltradeof

thesematerials.Eventhoughtheymayseemliketheyareonlyaffectingthe

individualmanufactureratatime,theyareimportantconsiderationsfor

policymakers.

WhatcantheEUdo?Atthiscriticaljuncture,policymakersmustcometo

gripswiththestrategicimplicationsoftheresourcesandmaterialsdimensions

ofnewtechnologiesandIwouldproposethattheEUisinauniqueposition

toputtogetherapublic-privatemechanismthatcanhelpmanageresource

security.Thesecouldinvolve,forexample,voluntaryagreementsbetween

companiesinbilateralorinmultilateralsetting,tosharecriticalresources,

potentiallyinexchangeforsomeformofknowledgetransfer.AndIcansee

thatbeingpotentiallyagametoplayinsomemarkets.Becauseonethingwe

knowEuropeisstillverygoodatindeed,isinnovation.

98

ThelastthingIwouldmention,ifIhaveatinybitoftimeleft,ishowwe

makemarketsmoreresponsibleinthecontextofresourceconstraints.Asour

awarenessoverresourceandenvironmentalstressesisgrowing,theotherside

ofthecoinisthatitisagreatopportunityforinnovationandinvestments,

fornewmarketsandnewproducts.Companiesandgovernmentsthatare

movingfastestwilldefinitelybethecompaniesandgovernmentsofthe

future.Waterconstraintsforexampleareenergisingthewatercompanies

throughinnovationandmorewaterefficienttechnologiesandpractices.

Intheraceforgreensolutionsthisisalreadyevidentinthelowcarbon

sectors.Marketsforlowcarbonenergyproductsareassessedtobeatleast

US$500billionperyearby2050accordingtotheSternReview.TheHSBC,

thebank,recentlysuggestedthatthelowcarbonenergymarketwilltripleto

US$2.2trillionby2020.15Thequestioniswith,asIsaidearlier,theshifting

economicpowererodingthepowerofOECDconsumersingreeningthesupply

chain.CanOECDconsumersstillplayaroleingreeningthesupplychains

increatingthesemarkets?AndIhopethatmyanswertothisquestionisa

positiveandoptimistic‘yes’.

TheEUhasledtheway.WhateverhappenedinCopenhagenwasacomplete

PRdisaster,bythewayforboththeEUandChina,butEuropehasbeen

criticalincreatingthegreenmarketsfortheworldanditcancontinuetodo

so,becauseofitseconomicpowers.Itisthelargesteconomyintheworld

andcontinuedaccessintotheEuropeanmarketsisoneofthelargestcarrots

foranyproducerintheworld.Inaworldwhereinstabilitycharacterisesthe

politicsinmuchoftheworld’sregionsandinaworldwherethereareno

obviousstoreofvaluesleft.YoudonotwanttojustputmoneyinUStreasury

bonds.ThatgivesEuropeauniqueopportunityandperhapsarelatively

narrowwindowtousetheremainingconsumerpowerthatitstillhasin

greeningthesupplychain.Thiscouldtaketheformofpilotingand,Ithinkas

wasdiscussedthismorningbriefly,standardsthatwillhelpuslock-inthe

developmentofthemoresustainableoptionsfortheworld.

Inconclusion,ifwearetoaddresstheresourcesecurityquestionwewillneed

togeneratemultiplepublicgoodsfromthesameproductionsystemsand

sectors.Wehaveshowntobeverybadatdoingthat.Unlessincentivesin

internationalmarketsarealignedtowardbothenvironmentalandresource

goals,evenwell-meaninginitiativesandeffortswillnotdeliverthepublic

policyoutcomesthatweknowweneed.

IwouldconcludebyrepeatingonepointthatImadeearlier:perceptionof

insecurityisaslikelytoencouragestrategicdefensiveandpotentially

detrimentalinvestmentsastherealityofinsecurity.Wemustmakesurethat

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wehavetherightinformation,therightknowledgebase,andtransparencyto

avoidmisunderstandingsofthatsort.

TheEUcanalsouseitsmarketpowertostrengthenbilateralrelationsinkey

markets,whethertransatlanticorevenwithChina,tocreatethegreenmarkets

forthefuture.Weoftentalkasifenvironmentisseparatefromthesocial

economicsoftheworld,butinaresourceconstrainedworldthereisno

questionthatsustainabilityistheonlyfuture.This,ifnothingelse,isgoingto

giveEuropeahugecompetitiveadvantagefortheworldinwhichweare

goingtolive.Forifweneedmoreinnovation,weneedanopensociety,which

afterallistheonlysurefiredingredientforinnovation,andEuropestillhas

alottogive.AndwearecountingonEurope,notonlytohelpleadcreating

thesemarkets,butalsotouseitsmarketpowertoinstilthosecollaborative

rulesofthegamethatwillhopefullysafeguardthesustainabilitybutalsothe

longevityofourglobalisedinternationalmarkets.Thankyou.

Mr.Chairman:ThankyouverymuchBerniceLeeforyourverycomprehensive

andinformativeoverviewandalsoforyourgeneralrecommendationstothink

aboutstrategiesforthefuture.

Thankyouverymuch,wewillcomebacktothatinthediscussion,because

wehaveampletimeofdiscussioninthissession,butfirstwewillhavethe

commentsbyourdiscussant,Mr.FreddeGraaffromTheNetherlands.Heis

ChairmanoftheForeignAffairsCommitteeoftheDutchSenateofwhichwe

havealsothePresident,Mr.RenévanderLindenhere.Thankyouverymuch

forparticipatinginthisdiscussion.SoFred,thisisinfactyourhomehouse

andwearealsohappythatyouhavetheroleofmayorofApeldoorn,because

Ithinkthiscombinationbetweenbeinginvolvedinlocalcommunity

developmentsandbeingveryactiveininternationalpoliciesisaveryunique

bindingqualitywereallyneedinthinkingabouttheconnectionsbetween

day–to–daylifeandinternationalpolicies,soitisfascinatingtohaveyouhere

asacommentator,alsointhatrole.

100

Address by Fred de Graaf, Chairman of the Foreign Affairs Committee of the Dutch Senate

Mr.DeGraaf:Ladiesandgentlemen!LetmestartbythankingMs.Lee,forher

excellentspeech.InmycapacityasChairmanoftheForeignAffairsCommittee

oftheSenate,letmesaythattheissueofsecurityandscarcityofresources

isoneofthemostimportantgeopoliticalissuesofmoderntimes.Moreover,

theissuesupersedesparty–politicsinourHouseofParliament.Inessence,

scarcityofresourcesisthebasisofvirtuallyallmajordemographic,economic,

andpoliticalchanges.Itisacomplexissue,withthecomplexcausality

betweenenergy,food,andwatersupplyontheonehand,andgeopolitical

balancesontheotherhand.Onastateleveltheincreasingdemandfor

naturalresourcesandincreasingprices,strengthenstheinfluenceofresource–

richcountrieswherethedistinctionbetweenstateownedenterpriseand

privateenterpriseisnotalwaysclear.WeheardthatthismorningIthink.Let

meputitthisway:Willresource–poorEUbethevictimofaglobalstruggle

forresourcesinatimeof‘resourcenationalism’andprotectionism?Orwillit

leadthewayinatransitiontoamoresustainableworld?Andwhatmightbe

theroleofTheNetherlandsinallofthis,talkingaboutmanagingscarcityand

theroleoftheEUfirst.

Ms.Leehasmadeclearwhattheproblemiswhatsolutionstheremightbe

andthateffectiveinternationalcooperationisnecessary.Weareconfronted

withgreatconcernsaboutthefutureavailability,accessibility,utilityvalue,

anddistributionofresources.Notasinglecountryintheworldiswithout

scarcityissues,beitwater,energy,metals,mineralsorfood,inlesseror

greatermagnitude.Ithasbeencalculatedthatoverthe20thcenturythe

world’spopulationhasmultipliedwithfactor4,yetglobaloutputhas

multipliedby40,fishcatchesby25,waterconsumptionhasincreasedwith

factor9andcarbondioxideproductionby17.So,thequestionishoware

wegoingtomanagescarcityandsecurityofresources?That,Ithink,isthe

mainquestion.

AccordingtoMs.Lee,‘theEUmustproposeatransformativevisionthattakes

intoaccountenvironmentalaswellasequityconcerns’.Andindeed,lastweek,

theEuropeanCommissioncommunicatedthenew‘flagshipinitiative’forthe

EU2020agenda:‘resourceefficiencyasaguidingprincipleofenergy,

transport,fisheries,biodiversity,climate,andregionaldevelopmentpolicies’.

Thememberstatesarediscussingenergysupplysecurityaswespeaktoday

inBrusselsattheEuropeanCouncil,inadditiontoadiscussiononsolutions

forfinancial–economicproblemswithintheeuroarea.WilltheEUbeableto

takealeadingroleintheglobalmanagementofresourcescarcity?Weall

knowitiseasiertoproposeflagshipinitiativesthentohave27memberstates

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agreeontheconcretestepstobetakeninallpolicyareas.Perhapsforthis

reasonitiscalledaflagshipinitiative,aflagshipsailingaheadoftheother

ships.NotwithoutreasondidPresidentHermanvanRompuyrecentlyunderline

thenecessitytoworktogetherasEuropeans,butonlyweEuropeansand

Iquote:‘itisnotjusttheEU27thathastoacttogether–globalcooperation

isrequiredtoo–inanefforttodevelopresponsestotheshortages’.

Inessence,ladiesandgentlemen,thesolutionseemsclear:moreresource

efficiencyandatransitiontowardsamoresustainableeconomyandsociety,

managedonagloballevel.Yet,wecannotignorethetendencyofstatesto

firstsecuretheirowninterests.

WhatcantheroleofTheNetherlandsinallofthisbe?Iwouldliketomention

threeaspectsinwhichTheNetherlandscanplayanactiveandconstructive

roleintheinternationalarenaregardingthisissueathandhereandIwould

liketoinviteMs.Leeandtheaudiencetoshareyourthoughtsonthis.

First,IwouldliketomentionthattheNetherlandsplaysanimportantpartin

thetransportofenergyandothersuppliestotherestofEurope,throughour

transporthubslikeRotterdam.

Secondlyandmaybemoreimportantly,Ms.Leeacknowledgesthat‘water

scarcityislikelytogrowsignificantlyinthefuture’.Thatbringsmetoour

watermanagementexpertise.Letmequotethe2009reporton‘Scarcityand

transition:researchquestionsforfuturepolicy’,publishedbyourministriesof

ForeignAffairsandofEnvironment.Itreadsasfollows:‘Asaconsequenceof

thesharpincreaseindemandforwaterfortheenergyandindustrysector,

combinedwithchangesinrainfallpatternsasaresultofclimatechange,the

physicalwaterscarcityisexpectedtorisefurther’.Indeed,withoutwaterthere

isnolife,nofood,noenergysupplyandasaconsequencenolongterm

economicgrowth.Inwaterrelatedissues,Iseeaparttoplayformycountry.

DutchgovernmentagenciesandDutchprivatecompanieshaveatraditionally

strongexpertiseonwaterissues–bytheway:halfofthiscountryisbelow

sealevelasyouknow–andbuiltonoutstandinginternationalexpertisewith

regardtowatergovernance,rangingfromirrigationtocanalisationand

everythinginbetweenandbeyond.Ourwatermanagementexpertiseis

visible,forexampleintheUniversityofDelftHydraulics,andanumberof

knowledgebasedwaterrelatedinternationalprograms.

Athirdareawherethissmallcountryoperatessuccessfullyonaglobalscale

isagritechnology,forwhichImaymentionWageningenUniversityandof

courseourverysuccessfulagriculturalprivatesector.Wearetheworld’s

secondlargesttraderinagriculturalproductsandthismeanswecarryagreat

102

responsibilityovertheglobalflowofresources.Wetrytoaddressthis

responsibilitybyincorporatingouragriculturalandwatermanagement

expertiseintoourOfficialDevelopmentAidprograms.Personally,Iamastrong

supporterofcombiningtechnologicalknowhowfromtheprivatesectorwith

publicpoliciesaimedtocounterscarcities.Watermanagementand

agritechnologycouldbecometheveryfocusonournationalcontributionto

themanagementofglobalscarcityissues.

Toconclude,goodcooperationbetweennon–governmentalorganisations,

privatecompaniesandthegovernmentis–inmyview–apreconditionto

contributetofoodandenergysecurity.AsTheNetherlandswemusttryto

voiceinallinternationalfore,aclear,short,andconstructivemessage.We

mustbecarefulnottopresentourselvesasa‘guiding’country.Moreeffective

willbetofocusonourareasofexpertiseandbeaconstructivepartnerin

internationalnegotiations.Asasmallcountryweneedtofocusonour

traditionalexpertiseinwatermanagementandagriculturaltechnology.

Secondly,itisineveryone’sbestinteresttoensurethatconflictinginterests

donotescalateintoopenhostilitiesandthatwecontinueourapproach

ofcooperationandthirdly,weneedtotakeintoaccountthepositionof

emergingeconomiesandworktowardsaninterdependentsystem.Ofcourse

wefacethesamedilemmaasothercountries:ontheonehandTheNether-

landsmustbesafeguardedfromtoogreatadependencyonothersforour

supplyofnecessaryresources.Yet,ifwelookcarefullyatoursituation,weare

alreadydependentonotherstoalargedegree,beingasmallcountry.Perhaps

forthisreasonwearelesspronetonationalistprotectionismandmore

focusedoninternationalcooperation.Adaptingandstrengtheningmultilateral

institutionsandthegroundrulesforaction,arethemostimportantconditions

forsustainabledevelopment.TheEUandTheNetherlandsshouldstrivefor

multilateralsolutionsinwhichregionsandcountriesaredependentupon

eachotherasreliablepartners.

Soinconclusion:TheNetherlandscanandshouldplayaleadingroleinwater

governanceandcontinueitssuccessinagribusinessanddevelopmentaid;

alwaysinclosecooperationwiththeEUandmultilateralinstitutions.Thank

youforyourattention.

Mr.Knottnerus:ThankyouMr.DeGraaf,foryourexcellentcommentandyour

perspectivesfromthecommitteeyouarechairingandyourpoliticalanalyses.

Thankyousomuch.Irecognisealsosomeoftherecommendationsofthe

ScientificCouncilforGovernmentPolicy.

Mr.DeGraaf:Wereadthem!

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Mr.Chairman:That’sgreat,butofcoursethereisalsoaverygoodand

importantnextsteptomake.WeheardthataviewpointoftheCabinetonour

reportisforthcoming,sowewillseewhattheywillsayandthediscussion

maycontinue.Itwillcontinuealsothisafternoon,becauseassaid,wehave

ampletimefordiscussion.Weknowthatthereisquitesomeexpertiseinthis

roomonthefieldswearediscussing,sowehopeforyourinputandwe

expectit.Theexpertsarehere,soyoumayputanythingforwardtodiscuss

withthem.

Ifyougettothemicrophone,pleasetrytospeakveryclosetoit,becauseit

isnotonlyimportantthatwehearyou,butthatitcanalsoberecordedfor

thereportthatispreparedofthismeeting.Iwouldliketoinviteyoutomore

orlessstructurethediscussionintwoparts,firstIthink,itwouldbegoodto

spendsometimetotheproblemanalysis,andlatertothesolutions.

Bothspeakershavediscussedtheproblem.Isitwelldefined,dowereally

haveagoodpictureofit,istheresomethingtoaddtotheperspectiveofthe

problemanalysis?Inthesecondpartofthediscussionwewouldliketo

concentrateonthesolutions,thestrategies,thesuggestionsalreadyhaving

beenmadebythespeakerscouldthenbefurtherdiscussedandelaborated.

104

Mr.Manders(NEAA):Ico-authoredthebookletMr.DeGraafwascitingfrom.

Weshouldbeabitmorespecificaboutthequestionswewanttoanswer,

Imeanscarcityisaverycomplexissue,resourcesisavastcollectionofthings

ofcommodity,water,energy,land,soIthinkitiswisetomakeacoupleof

distinctions.Firstinallthiscollectionofresourceswehaveresourceswitha

price,withamarket,likeenergy,minerals,metalsandwehaveresources

withoutaprice,likemostwater,mostland.

Ithinkatleastforthoseresourceswithapricetherearesomeautomatic

feedbackmechanismshelpingussomewhatintherightdirection,sowhen

thereisahighpricewemightbemorewillingtolookforsubstitutes,to

adjustourbehaviour,togoformoreexploration.Theproblemismorespecific

forthoseresourcesthathavenoprice,soisthatthescarcityissueweare

interestedin?

Second,weshoulddistinctabitbetterabouttheimpacts.Inmyopinionmost

impactsarenotsomuchintheOECDcountries,butmuchmoreindeveloping

countries.Imeanwecanlivewithahigholdprice,becauseoursensitivityto

commoditiesisdecliningallthetime,wehaveaveryhighwelfarelevel,so

evenahigholdpriceishurtingussomewhat,butnotfrustratingour

economicgrowth.Muchdifferentindevelopingcountries,wherehighfoot

pricescreatehungerandpovertyandhighenergypricesarecreatingpoverty

andhunger.Sothescarcityissueinmyopinionismuchmoreabout

developingcountriesandevenmuchmoreaboutthoseresourceswithouta

price.Sothatistoaddabittothedebate.

Mr.Evens(FlemishAdvisoryBoardonForeignPolicies):TheFlemishAdvisory

BoardonForeignPolicies,withthecounterpartofIEVhereinTheNetherlands.

IhaveaquestionforMs.Lee.Youreferredtodisputesettlementsandmy

questionisinthiswholeissueofconflictresolutionbecauseofscarcityand

disputesettlement,howdoyoutiethisinintoglobalgovernance,whoshould

playaroleinthere,whicharethepowerswhocoulddealwiththat,isthisa

WTOissueorareotherinstancesmoreinplacetohandlethis?

Discussion

105


Mr.VanderLinden(PresidentoftheDutchSenate):Ifullyagreewiththefirst

speakerthatdevelopingcountriespaythebillifthepricewentup,butfor

thatreasonIhavealwayspromotedtousenuclearpowerintheWestern

world.Developingcountriesarenotallowedtocreatenuclearpowerstations

intheircountries.Thiscanbringpricestoamorestablelevel.Whatisyour

opiniononthat?

Secondly,after1958wecreatedtheCommonAgriculturalPolicy.Themain

targetwasfoodsecuredinEurope.WhatisyouropinionaboutCommon

AgriculturalPolicyinthefutureifyoulookatthefoodpolicyandthefood

supplyworldwide?

Mr.Grotenhuis(Cordaid):Giventhisscarcityofresources,especiallyinthis

limitationthatwearefacing,atthesametheperspectiveofincreasing

population,notonlyintermsofsheernumbers,butalsointermsoftheir

demands.Thequestionisalso,especiallywhenitcomestohowtodividethe

availableamountofresourcesthatisworldwidethere.Intheeconomicsyou

seeadiscussionongrowth,andwhetherthetraditionalgrowthmodelis

sustainableforthefuture,whetherweineconomicsshouldthinkofother

modelsthanthetraditionalgrowthmodel,whethergrowthissortofabasic

assumptionthatshouldbeunderdiscussion,especiallyinourwesternworld

inordertoenableamuchmoredifferentpatternofdemandandconsumption

andabetterdistributionofthescarceresourcesintheworldthatisgrowing

andwhereweareseeingmoreandmoreinhabitants.Sothequestionof

growthandthefundamentalassumptionandthewayitshouldbe,isunder

discussion.

Mr.Chairman:Atthispointitisgoodtoaskspeakerstorespondtothese

questions.Laterwewillgetbacktotheaudienceandyouradditionalquestions.

Ms.Lee:Iwilltakethequestionsintheorderinwhichtheywereasked.

Idisagreewiththesecondremarkofthefirstquestioner.Ithinktheoilprice

crisisin2008showedusthatwearealsoveryvulnerableinthewesttoprice

volatility.Itisnotaboutpovertyreductionhere,itisaboutaccesstofood,

butnonethelessoursystem,aswefoundout,isindeedbasedonacomplex

politicaleconomyofresources.Iwillgiveyouoneexample:BPandMacondo

wellshowedus,andweforgotinfactforalongtime,thateveryonein

sevenBritishPoundSterlingthatgoesintotheUKpensionsystemcomes

throughBP.Itdoesnotmeantheyhavecreatedtheincomebutthatthey

havegeneratedthecash.Oilcompanies’businessmodelsarehugecash

machineriesforourfinancialsystem,whichmeansthateventhoughwemay

nothavegrowthdirectimpact,onphysicalsecurity,wearestilllivingwith

economicsecurityrisksfrompricevolatility.

106

Secondly,Iagreewithyouthatweshouldprobablydistinguishbetween

resourceswithpricesandresourceswithoutprices,especiallyifyouarean

economist.Indeed,Iwouldabsolutelyagreethatweneedtoputrightprices

toresourcesthatarecurrentlynotpricedandofcourseweknowthatwe

arenotpricingevenremotelyenoughinmanyoftheaspectsofthesocial

economiclife.

However,ifyouarelookingat,forexample,anoilproducingGulfstate,the

challengestheyfacetodayareasfollows:theyarelookingatincreasing

domesticconsumptionandtheywanttocontinuetheiraccesstotheexport

earnings.Hence,theyneedtobuildmorenuclearpowerstationsorother

powerstationsinordertomakesurethattheywillsavetheoilexportsfor

exportearnings.Inorderforthemtohavenuclearpowerstationstomeet

domesticdemand,theyneedmorewatersotheyneedtofundsolarpowerfor

desalinationtogetmorewater,sothatthenuclearpowerstationscanbe

cooled.

MeanwhiletheyareinvestinginAfricawheretherearegoingtobe,where

therewillbesome,notmany,climatechangewinnersintermsofwater,like

Tanzaniawherewehopefullywillhaveanetgaininwaterresources.Ifyou

lookatitfromthatperspectiveasapolicymaker,apolicyplanner,itdoesnot

seemtomewhetherornottheresourcesofpricesareimportant.Because

thesedecisionsareoftenmadeinisolationofeachother,sopartofthisis

abouthowdowegetasystematicwayofanalyzingthesecomplex

interactions?

Fred de Graaf

André Knottnerus

Bernice Lee

107


Thesamegoesformyanswertothethirdquestionaboutnuclearpower.

IpersonallyamanuclearagnosticandbythatImean‘notinmybackyard’

butnonethelessperfectlyhappywithit.IgrewupinHongKong,Imovedto

theWestwhenIwassixteen,intheshadowoftheDayaBaypowerstation

inChinaandwewerenotthathappythatwewerequitefarawayfromthe

governanceofthepowerstationandhadnosayinwhetherornotitshould

orshouldnothavebeenthere.

Nuclearpowerinthewesternworldisverydeadatthemoment.Ifyoulookat

theactualnumbers,theincreasehasflattenedforthelast20years.Planning

permissionshavebeenharderandharderandforthesafetystandardsthat

EuropeneedsyoulookattheescalatingcostoftheFinnishstation,etc.Ijust

donotseehowitcouldbenecessarilyefficientanymorefromaneconomic

perspectivewhichmeanswewillhaveahugepowergapifwedonotresolve

thatissue.

WealsolookatChinatoday,whichasfarasIamconcerned–andIamnot

entirelysurewhetherthispartcouldbekeptofftherecord–theBureauof

EnergyStatisticsaregivingyoucrazynumbersaboutthenumberofnuclear

powerstationstheywouldbuild–100GWinthenext10years.

Crazynumbers,crazyenoughtothinkthatallittakesisone,onebadincident

toderailinfactalotofthesupposedlydecarbonisationeffortsinChina.

ButwhattheChinesearedoingispotentiallyshowinghowyoucanscaleup

nuclearenergyinawaythattheFrenchdidintheseventiesandpotentially

inacheaperway.SowedonotknowwhethertheywillsucceedbutIthinkif

thatisthecasewewillsee,whetherwelikeitornot,alotmorenuclear

energyeverywhereintheworld.TheUEAtalkedabouttheKoreanmodel

becausethiswascheaperandobviouslycorrespondinglyitmeansthatitis

lesssafe.SoIthinkthateveninthatarea,whereEuropetraditionallydoes

havecompetitiveadvantage,wewillbefacingcompetitionfromothermodels

too.

Butintermsoftheeffects–Itakeyourpoint–thatifitwereaboutmore

expensivepower,thenIwouldhavethoughtrenewablesarealsoquitegood

examplesinadditiontonuclearasthekindofthingthatcanbringlowcarbon

resourcestoEurope.

Onthequestionsarounddisputesettlements,obviouslytraderelatedones

alreadyhavetheWTOasamechanism.Butoften,especiallywhenitcomesto

resource-relatedquestionsatthenationalorlocallevelbetweenforeign

companiesanddomesticgovernmentsareresolvedelsewhere.AsImentioned

108

thereareinternationalcourtsettlementsforinternationaldisputes,whichby

thewayIthinkinfactwearealsostudyingatChathamHouse:whatsortof

disputesgetreferredtoarbitrationandwhatsortsdonot,betweenforeign

companiesandhostgovernments?Wealsoseenowanincreasingnumberof

thembeingresolvedattheICC(theInternationalChamberofCommerce)aswell.

Aswiththespeakersthismorning,Ithinkthatwewillhavetolookata

hybridsystemwheretherewillberegionalmechanismsformediationtogether

withglobaloneswherethatfailed.Sothiswouldbeagoodpieceofresearch

fortheyoungpeopleintheroomiftheirinterestedintolookingatwhether

ornottherecanbemoreeffectivemechanismsthatdonottake5000years

andlongdisputesettlementpanelsandatthesametimecanbuildtrustand

createthekindofconditionsthatwouldinfactminimiseconflictsinthe

future.SotheWTOwillbepartofit,existingmechanismswillbepartofit,

butwhatIthinkwillbelikelytohappenaremoreregionallybased

mechanisms,onesthatwillreflectthekindofproductionstructuresthatwe

areseeingevolvedtodayandthetypeofrelationshipsthatweareseeing

betweendifferenttypeofstates.

Lastbutcertainlynotleast,canweaffordthecurrentgrowthmodel?AsIsaid

earlier,povertyreductionforthe400millionpeoplethatarelivinginpoverty

inChinalookslikethis,itlookslikeresourceschallenges.Iamnotremotely

wiseenoughtoanswerthatquestion,butwhatIdoknowisthatwehaveto

askourselvessomeofthebasicassumptionsaboutoursocialeconomiclife.

Idonotthinklifestylechangeisaparticularlyeasyway,oraparticularly

goodguidanceforfuturepolicy,soletushopethatatleastontheinnovation

sidetechnologiescanhelpusdosomeofthelifting.Ascouldsavingsand

resourceefficiencyofthesort,forexample,thattheEuropeandirectivethat

wasannouncedlastweekhasmentioned.

Therearesomegoodexamples,however,thatIheardrecently.TheUN

Foundationwastellingmethattheyputtogether,orthattheywerefacilitating

adiscussionbetweenAlcoa,whichisaaluminiumcompany,CocaCola,which

isasoftdrinkcompanyandWalmart,whichsellsalotofsoftdrinksandby

makingthemworktogether,theyfoundawaytoincreaseefficiencymuch

furtherthanwhattheycoulddoindividually,sothesumofthepartsismuch

better.

Sowhatwewouldalsoadvocateontheresource-efficiencysidearemore

strategicinterventionsonsupplychainswheretherearemarketpowersthat

couldinfactbringmuchlargerresourcesavingsthanwethoughtwaspossible

inthepast,whetherintermsofsubstitutionformaterials,refrigerationtime,

transporttime,etcetera.Therearegreatopportunitiesalongthelogistical

chainthatIthinkwearejustbeginningtotap.

109


Mr.DeGraaf:Well,Icannotaddsomuchmoretotheverygoodanswersof

Ms.Lee,butletmetrytotakeitfromthepoliticalperspective.

Iamanoptimistbybirth,butbeingtheChairmanoftheForeignAffairs,

DefenceandDevelopmentCorporation,Iamnotsooptimisticaboutthe

questionwhethertheworldwillbereadyandabletosolvetheproblemswe

areconfrontedwithnow,whereresourcesareconcerned.Whenwelookat

whatwearedoingatthisverymoment,wehavethemillenniumdevelopment

goalsoftheUNandwehavetriedtosetupasystemwithwhichwecan

reducepovertypossiblytoaminimum.Butwhenyouseealltheproblemswe

arefacingtryingtoreachthosegoals,thenyoucouldaskyourselveswhen

theresourcesarebecomingmorescarce,won’titbemuchmoredifficultto

cometosomeagreementtowardsasortofredistributionsystemofresources,

becauseatthismomentitstillisaquestionofmoney.Stoppumpingmoney

–thewesternworld–stoppumpingmoneyintryingtoreachthe

developmentmillenniumgoals,itisaquestionofbuyingmedicine,ofbuying

food,andsoon,butwhentheresourcesaregrowingscarcer,thennational

politicswillaskforcountryfirstandthentheworldIwouldrephraseit.That

willbeourbiggestproblemIthink,inthenationalstatesandcanwethen

cometoaredistributionsystemofresourcesandnotofmoney.Thatwillbe

thebiggestproblemwewillbeconfrontedwithinthefuture.Ican’tgiveyou

thesolutionofthisproblematthismoment.Ifwearenotableanno2011,to

cometogoodsolutionsonthebasisofredistributionofmoney,willwethen

beabletodoitwhenitisnotaquestionofmoneyanymore,butaquestion

oftheamountsofresourcesthatwewillhavetodividebetweenallthe

countries,allthepeopleintheworld.Thatwillbereallytheproblem.

Ithinkindeed,asthismorningsomespeakerssaid,thatnationalinterestswill

beverydominantinthecomingyearsandifwecannotsucceedincoming

overthosenationalinterestsandmakingsomeagreementswithoneanother

thenwewillnotsucceedindividinganddistributingtheresourcesthatwe

have,thatwewillhaveinbigsiloslikeinthetimesofEgyptandthefamine

inPalestine,wewillhavesomesortofrepetitionofhistory.Thefoodwillbe

intheonecountry,theydonotneeditall,buttheywillnotbeabletogive

ittoothercountriestodivideitamongstthepoorestpeopleintheworld.

Ithinkthatwillbethebiggestproblemwearefacing.Ithinkthatisthefirst

thingwewillhavetosolve,willwebeabletobesuccessfulinthisfield.

Mr.Chairman:Thankyou!Beforegoingbacktotheaudience,Iwouldliketo

putoneadditionalquestiontoyouFred,givenyourroleinrelationtothis,

asoneofthemanuscriptsofBerniceLeeIsaw,spokeaboutastrugglefor

resourcesandasyousayTheNetherlandsissostronglyinternationally

involvedbecauseofthenatureandthetypeofeconomythatwehavein

termsofbeingattachedtotheoutsideworld,asWillemPostveryclearly

110

summarisedtoday.DoyouthinkthatTheNetherlands,ormaybeevenbroadly

spokenEurope,couldplayanactiverole,notonlyactinginitsowninterest,

butalsotoplayagoodroleinthisinternationalmanagementof

redistribution?

Mr.DeGraaf:Yes,IthinksoandIthinkthespeakersofthismorningalso

spokethosewords,butthefirst,mostimportantpreconditionforthatisthat

wewillbeabletouniteEuropereally,becausenowalsothismorning,we

heardthatthetendencytolookinwardsratherthanoutwardsisgrowingin

Europe.WealsoseethatinTheNetherlands,twooftheoutcomingpolitical

partiesdonothaveanyfeelingswithEurope,theSocialistParty,andtheParty

forFreedom.Sothatisabigproblem.Theyaregrowing,andifthetendency

continuestolookmoreinwardsthanoutwardswehaveabigprobleminthe

27countriesofEuropebecausewethenturnawayfromtheEuropean

commongoalandthenwewillnotbeabletoplayanyroleatallontheworld

stagewhereresourcesandredistributionisconcerned.Thatisthefirst

problemwehavetotackle.IfwedonotdowhatElmarBrocktoldusthis

morning:getarealfeelingforEuropeandbindtogetherandpositionEurope

asakeyroleplayeratthispointintheworld,thenwewillnotsucceedand

thatisabigproblemIthink.

Mr.Chairman:Wehavesomemorequestionsandwewillcollectthemnow.

Mr.Homan(ClingendaelInstitute):Ihaveaquestiononwater.FirstofallIam

alwaysamazedwhenIreadthatatthismomentwehaveeighttimesmore

freshwaterthanisneededfortheworldpopulation,butwehaveawater

scarcitybecauseitisunequallydistributedintheworld.

IalsohaveaquestiononAsia;morethan40%oftheworldpopulationliving

thereisdependentforthegreaterpartforwateronsixriverswhichare

originatingontheplateauofTibet.Chinaisbuildingdamsandismaking

detoursfromtheseriverstodrierregions.Wealsoseethatfarmersalmostdo

nothavetopayapriceforthewater,sotheyfloodalltheirlandsandIndia

especiallyiscomplainingaboutthisbecausetheyaretheforthegreaterpart

dependentonthiswater.AsfarasIknow,butIamnotsure,theUNhas

concludedaconventiononthedistributionofwateramongtheupstreamand

downstreamcountries.Whatisthestatusofthisconventionatthemoment,

canthatbeasolutionformore,atleastregionalcooperation?

Ireadthatdistillation,i.e.makingfreshwaterisbecomingoneofthe

solutions.Itisbecomingcheaperandcheaperanditisalreadypractisedin

theMiddleEastbutalsoinAustralia,canthatbeinthelongertermalsobe

oneofthesolutionsforcopingwithwaterscarcity?

111


Mr.Kraaijveld(TheArgumentationFactory):Wearestillinthephaseof

problemanalysis?Okay,soIwaswondering,scarcityofresourcesofcourse,

asyouallmentionedandofficiallylinkedtopopulationgrowth,isthatnot

partoftheproblemweshouldlookatandtalkabouthere?

Mr.Wolvekamp(BothEndsFoundation):Imightbetrespassingtheboundary

betweenproblemanalysisandanglingforsolutions,butIhaveaquestionfor

Mr.DeGraaf,reflectingonthismorning’sdiscussion,theNetherlands’and

Europe’sspanofcontrolorspanofinfluence.

Myquestionisontwolevels,atonelevel,whatscopeisthereforThe

Netherlandstostepupnowitstillmomentum,itsinvestmentsingovernance

especiallyinthoseareasfromwhichwederiveourresources.Soitisabout,

asmentionedearlier,likedisputesettlement,sowhenitrelatestocoalor

otheragribusinesscommodity,itdoesnotmatter.Thosetravellinginthe

fieldseethatnotwithstandingallthekindofsupplychaincertification

schemes–thatareveryimportant–butthenittygrittyatgroundlevel-sort

ofinvestmentingovernanceislacking.Forinstanceondisputesettlement,

hugeconflictsecological,social,inareaswherewederiveourresourcesfrom.

WhetheritisfromODEwhichisnowbeingreduced,orfromothersources,

mightbeimmaterial,butitisakeyquestion.

YoumentionedtheNetherlands’smainport,Rotterdam,andthebio-based

economy;weareabigtransitionandprocessingnodeforthepetrochemical

industry,theagribusinessindustry,ironore,coal,etcetera.Areweaneutral

playeror,assomeofourcolleaguessayinBrazilorinKalimantanaresaying

thatourRotterdamorEemshavenis‘eating’intotheAmazon,itiseatinginto

Borneo,becauseyouarenotaneutralplayer;youarefuellingaresource

appetite.Whatkindofambitionsarethereintermsofforeignorforeign

economicpolicytouseyourspanofinfluenceorspanofcontrol?

Mr.VanAcker(Studentpoliticalscience,RadboudUniversity):Asapolitical

sciencestudentIammostlyinterestedinthesecurityquestionsrevolving

aroundthistopic,soIhaveaquestionforMs.Lee.Youbrieflymentionedthe

REMs.andtheirusageinmilitarytechnology,forexampleinmicrochips,Iwas

wonderingwhatthepossibilityisthattheremightbeanewarmsrace

revolvingaroundtheseREMsinthenearfuture,especiallybecausetheyare

sorare,notonlyinwheretheyarelocatedbutalsointheamountofmaterials

thatistobefound.

Ms.Lee:Letmetakethelastquestionfirst.Theyarenotrare,theyarejust

expensive,andtherecouldbesupplyresponses.Ithinkthisisoneofthe

mostimportantthingstoremember;rightnowtheproblemisthatChinahas

112

beenproducingmostofit.AlotofplantshaveshutdowninJapan,partly

forcarbonreasons,partlyforothers,butJapanbeforeChinawasthelargest

producer,becausealotoftheseareby-productsofmetalsprocessing.

Therecouldbetonsandtonsofthestuffouttherebutitisjustmore

expensive.Thequestionhereisaboutaffordableaccessatthispoint.Ifyou

donothaveaffordableaccesstoday,youmaybeleftbehindininnovationfor

someofthenewtechnologies.Theyarecalledrareearthmetals,notbecause

theyarerare.Achemistexplainedtomethatitisbecausetheyarediscovered

later.AsIsaidthefightnowisaboutpriceandaccessandprotectionismin

China.Exportbansandrestrictionsofthatsortareobviouslynotsupposedto

happenunderWTOrules.

DesalinationIhopecanbeoneofthesolutions,butaswithmostnew

technologieswearebeginningtolookattheimpacttheymayhaveon

surroundingseawaterwhenyouputthesaltbackin,andarealreadyseeing,

forexampleintheGulf,areastohaveimpactonthefisheries.Soaswith

mostnewtechnologiesobviouslyweneedtoinvest,waitandseeandmake

sureitisofthesafetystandard.

Iamnotawaterexpert,IsuggestyoutalktoDavidGreyatOxfordUniversity

whoisveryinvolvedintheconventionandwhocangiveyouamuchbetter

answerintermsofhowandwhetherornotitcouldprovidealong-term

governancemeasure.Iamrelyingonhisanalysismyselftounderstandthe

situation.ButwhatIdoknowisthis:intransnationalsettingswateroftenhas

beenasourceforcooperation,sothelegendsays.Butwhathappenedisthat

alotofthesharingagreementsarebasedonvolumeratherthanonactual

share.So,theupstreamordownstreamagreementcouldbeaboutthevolume

ofwaterratherthanwhetherornoteachsidewouldhaveapercentage.

Thismeansthatthosehistoricwateragreementsarefoundedonthepower

relationsofthattime,sowedohaveaquestionaboutwhetherornotthese

transboundarywateragreementsaregoingtoberesilientinchange:resilient

toupstreamchangesandresilienttodownstreamenvironmentalchanges.This

tomeisamajorandimportantissueforthelawyerstolookat.

Mr.DeGraaf:Iwilltrytoanswerthetwoquestionsthatareverydifficult

indeed.ThefirstquestionwaswhethertheNetherlandsshouldinvestmorein

thoseareasandfieldswhereitgetsitsresourcesfromintermsofmediation,

conflictsolution,andsoon.Idonotknowexactlywhattoanswertothat

becausewearealreadytryingtoinfluencethoseareasandfieldsincountries

wearedependingon.Youalsohavetomeettheparticularquestionsthe

countrieswillputforwardtoyou.Doyouhavethepossibilitytoinfluence

conflictsinothercountries?Atleastthecountriesmustbewillingthento

acceptthemediationoftheNetherlands,whichisnotalwaysthecase.Of

113


course,inWesterncountriesIcanimagineitwouldbeeasierthanAfricanor

Asiancountries.

Idonotknowwhethermoreinvestmentsatthistimewouldbepossible

consideringthehugecutbacksinourbudgets.Givingmoneyinother

destinationswouldperhapsbepossiblewithinthebudgetsthatwehaveat

thismoment,forinstancethe0.7million,thepercentageofthegrossnational

incomethatwespendindevelopmentcooperation.Thatcouldbeoneofthe

issuesofthenearfuture.

DidIunderstandyoursecondquestioncorrectlywhenyousaidthatthebigger

Rotterdamgrowsthemoreresourcesweattract,andshouldnotwemoderate

itinsomeway?Wasthatthemeaningofyourquestion?

Mr.Wolvekamp(BothEndsfoundation):Simplyput,likeatransportationhub:

islikethrowinghandsupintheair,orcanyougiveintermsoffiscaltariff

policiesandwhathaveyouapreferentialtreatmenttoadifferentkindof

commoditytransfertofueltheEuropeanenergyfactories?

Mr.DeGraaf:Ithinkjudiciallyandpracticallythatwouldbepossible.You

couldmakesomelossifyouwouldwanttobutIthinkeconomicsare

prevailinghere.Rotterdamismakinghugeplansforoiltransportation.Theoil

sectorisgrowingveryfastinRotterdam;morethan70%ofthenewareais

preparedasoilstorage.So,energyisatthefrontrowoftheeconomics

ofRotterdamharbour.ButtechnicallyandalsojudiciallyIthinkitwouldbe

possible.Youcouldredirectitifyouwantedto.Thatisaquestionof

priorities.WouldtheEuropeanorworldmarketaskRotterdamtomakea

changeintheredistributionofsomegoods?Theeconomicsituationwouldbe

thefirstindicatorforthatandRotterdamwillreactaccordingly.Ifitdoesnot

wanttoyoucoulddosobychanginglawsandmakeitdoitthewaythe

worldeconomyorthescarcityofresourceswoulddemand.

Ms.Lee:Idowanttotacklequicklythepopulationquestion.Ipersonallyfind

itveryhardtofindasolution;Idonotthinkitiseasytochallengeanyone’s

reproductiverights.Secondly,Chinahasalreadycomethrough30yearsof

OneChildPolicy.ThismeanswearegoingtodealwithaChinawithyoung

spoiledpeoplewithoutsiblingsandsoonwithoutcousins.Ifyoudonothave

siblingsandtheoldergenerationisdown,andyouaretalkingaboutabunch

ofyoungsters-–mainlymen–whohaveonlyseengrowthfor30years,Ido

notevenwanttobegintothinkaboutthesocialimplicationsofthatsortof

policy.Ijustfinditveryhardtoknowwhatitwouldmeanifwearedoing

somethingaboutthepopulationandfindawaythatsquarethecircles.

Educationisalwaysthesilverbullet.

114

Mr.DeGraaf:IthinknobodyinChinawouldhavethoughtaboutrestraining

theamountofbirthsthewaytheydidiftheywouldnotbebusytofight

poverty.Infightingpovertyandinagrowingwealthsituationthenatural

selectionsystemends.Whenyouhavemanypoorpeopleandaveryhigh

mortalityrateamongchildren,whenyoulift400millionpeoplefrompoverty

–aswehaveheardthismorning–therearemorechildrenandthenthereis

anotherproblem.Chinareactedasitdid,butasaresultofthatitwillhave

thesocialproblemsofthefuture.InthisrespectIcompletelyagreewith

Bernice;wecannotevenimaginewhatitmeans.Itwillbeaveryegotistic

societyinthenearfuture,becausenobodyhaslearnedtobesocial,being

theonlychildandspoiltbyyourparents.

Mr.Chairman:Thankyouforcomingbacktothatpoint.Ithinkwehave

alreadypassedtheborderbetweenproblemanalysisandsolution.Thatis

good,alsolookingatthetime.Iwouldlikeyoutofocusontheideasfor

strategiesweheardfromthespeakersandpreviousdiscussions,tothinkin

along-termperspectiveandtoconsiderresourceefficiency,technologies,

innovation,andresourcegovernance.Wealsohadsomediscussionabout

moreandlessattractivesolutions.So,Iwouldinviteyoutogiveinputonthat

perspective.Butfirst,letmegetbacktoTonManders.

Mr.Manders:(NEAA):First,letmeaddsomethingtothepopulationissue.

Ofcourse,intheendscarcityisdrivenbypopulationgrowth,economic

growth,andchangesintheeconomicstructurelikedietarychanges.The

worldpopulationwillgrowfrom6billionto9billionby2050.Weareina

demographictransition,sogrowthisslowingdown.Thatisthegoodnews.

Theincreaseineconomicpotentialisactuallymuchhigher.Thepopulation

willincreaseby50%inthenextfourdecades,buttheeconomicoutputwill

growbyfourtofivetimesinthenextfourdecades.Thatismuchhigher

pressurethanthepopulationitself.Evenmoreimportantarethedietary

changes,changingtowardsmoremeat.Thegoodnewsisthatthepopulation

isnotthebigissue,buteconomicgrowthis.

Letmeturntosolutions.Wehaveascarcityproblemandbasicallythereare

twostrategiestocopewithscarcity:increasingsupplyordecreasingdemand.

Forincreasingsupplyyoucouldtrytoexploremoreresources,butintheend

thatisnotawisestrategy;onewayortheotheritislimitedintheend.From

asustainableperspectivethatisnotagoodthingtodo.Youcouldtrytobe

thefirsttohavetheresourcesandthatiswhatisactuallyhappeningnow.We

seethatfromSouthKoreaorChinaisbuyinglandinMadagascarforexample

–landgrabbing–orwhenChinaishavingexportrestrictionsonrareearth

elements.Itistryingtobefirst.Inmyviewthatisnotaverystablestrategy.

115


Ms.Lee:ItwasnotMadagascar,itwasKorea!

Mr.Manders(NEAA):YesKorea,almost50%oftheavailableruralland.

Thethirdstrategycouldberecycling,usingyourmaterialsmoreandmore

overagain.Thereishugepotentialinthat,andthatwouldbeaverywise

strategytofollow.Onthedemandsidetherearesomeoptions,too.Youcould

trytochangebehaviour–thatisaveryhardone,Iwouldsay–forinstance

eatlessmeatforexample,turntochickeninsteadofbeef.Wecouldlookfor

substitutes.Europehasaverystrongpotentialinfindingsubstitutes.

Resourceefficiencyfromanumberofperspectivesisofcourseaverywise

thingtodo.Itwillnotonlyhelpyousolvingthescarcityissuebutalso

climatechangeissuesandbiodiversityloss.Insummary,goforrecycling,

resourceefficiency,andtrytofindsubstitutes.

Fromtheaudience:ThankyouverymuchMissLeeandalsoFreddeGraaffor

yourveryinterestingintroductions.Iwouldliketocomebacktothe

settlementofdisputes.IwasimmediatelythinkingthatweareinTheHague,

thecityofalltheseinternationallegalinstitutions.Havetherebeenany

studiesaboutthis?Whenyoutalkaboutsettlementofdisputesitisabout

securityoraboutscarcity;inwhatformwouldyouputthisphenomenon?Did

youalreadymakeadistinction?Mr.Holmanalreadymentionedthescarcityof

water;lastyeartherewasadisputeaboutTajikistanandUzbekistanaboutthe

waterflowintheriver.Buttherearealsodisputesregardingthetransferof

resourcesandthesehavenotbeenmentioned.Therearealsodisputesabout

thedeliveranceofgasandoilbetweentwo–ormorethantwo–state.How

wouldyouseethisorganisation?Woulditnotbeidealistic–thoughwe

shouldbeidealistic–thatstateswouldjoinoronavoluntarybasisaskfor

settlementofthedispute?Maybeyoudonothavethemeasurefor

implementation.

Mr.Trompert(Studentinternationalrelations,UniversityofGroningen):Weare

talkingaboutinternationalnegotiationstosolvetheseproblemstoday.

Iwouldliketotakethelibertytoconcludethatinternationalnegotiations,

amongnationstatesarenotveryeffective.Irecentlyreadanarticlethatsaid

thatmoreorlessthan70%ofCO2-emissioncomesfromcities.Istherea

possibilitythatforinstancethe27mayorsofthecapitalsoftheEuropean

Unionconferencetofindasolutionfortheseproblems?Arethereany

possibilitiestonegotiatewithdifferentlevelsofgovernmentsthannation

states?IamespeciallyinterestedintheperspectiveofthemayorofApeldoorn

inthisrespect.

116

Mysecondquestionismoreorlessatip:ifyouwanttosolveproblemsinthe

future,youhavetoinvestineducationandinnovation.Iwouldrecommendto

all27memberstatesoftheEUtonotcutbackontheirbudgetsforeducation.

Mr.Manders(NEAA):Justaquickwordondisputesettlement:Ithinkitis

importanttoremindourselvesthatweneednotonlylookatstates.Ifwelook

atlargeresourceflows,companiesandalsosubnationalentitiesareinvolved.

Iamchairingaroundtablesustainablepalmoildisputesettlementfacility

workinggroupandactuallytheprivatesector,localcommunities,andexperts

aredealingwithit,becausecompaniesarebycertificationstandardsrequired

tosolvetheirdisputes.Thatleveragecanbeexpanded.EarlieronIaskeda

questionaboutmakingresourcesavailablebutitisalsolookingcreativelyin

thesearenas,inwhichprivatecompaniesandcivilsocietyorganisationsare

alreadyputtingmoney.So,let’sbecreativewiththearenaswearetalkingabout.

Ms.Prins(Studentpoliticalscience,UniversityofLeiden):Ijustwantedtoadd

thatespeciallythetopicofthisconferenceabouttheroleoftheNetherlands

inallthis.Itisactuallyaverybigproblemthattherearegoingtobecutbacks

inourhighereducation,becausethisisamultidisciplinaryproblem.Asa

politicalscientistIwouldlovetosaylotsofintelligentstuffaboutthis,butI

amjustnoteducatedlikethatuntilnow,soIhadtodoanotherstudy.Thatis

thekeytoinnovation:togetmultidisciplinaryintelligentandhighlyeducated

studentswhocanactuallysaysomethingaboutthecontentsofthese

problems.So,withregardtotheroleoftheNetherlandsIthinkthisiswhywe

aregoingtogodownwardsininnovationinthefuture.

Mr.Chairman:Weagainhaveaveryinterestingbunchofquestionsand

commentsalsofromtheyounggenerationthatwillhaveresponsibilityinthe

nearandprobablylongfuture,andtheirinputalsoconnectstoaverytopical

debateathandaboutinvestmentsineducation,innovationandscience.

PleaseFred,couldyoustartupnow?

Mr.DeGraaf:IwillbutdoyouagreethatIfirsttrytogiveananswertothe

questionsofourstudents,sincetheyaretheyoungestamongtheattendants

today?

Itisaninterestingquestionyouraisedabouttheotherlevelsofgovernment

thatcouldperhapsinfluenceinternationalrelations,internationalpolitics.

Thereareinfactalotofexamplesofit,forinstancethe‘MayorsforPeace’,

originatinginJapan;themayorofHiroshimachairsthegroupandalloverthe

worldmayorsaremembersofthatstillgrowinggroupofgovernors.Imyself

amamemberandwetrytomakesomecontributionsattheinternational

level,especiallytheUNandotherinternationalorganisations,toattributeto

peaceintheworld.Butyouneedaplatformforthat.

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AnotherplatformisintheEU;theregionalauthoritiesareorganisedthereand

alsohaveavoteinEurope.Theyarerepresentedbymayorsandaldermen

fromthe27countriesinEuropeandinfluencetheinternalaffairsofthe

EuropeanUnion.

Anotherexample–andthatisneartomyheart–isthatmanyother

communitieslikeApeldoornareworkingontheinternationallevel,inbilateral

connectionwithothercities.ApeldoorngotintocontactwithBandaAcehone

monthafterthetsunami.Everythingwasgonethere,theonlythingthatwas

stilltherewasthemosque.Theyhadtorebuildeverything.Theylost100,000

peopleamongstwhomalmostallcivilservantsandthemembersofthecity

councilandthemayor.Wefirsttookonasfirstprioritythewastemanagement

programme,becausetherewasalotofrubbishafterthetsunamithreatening

thehealthoftheremainingpeople.So,togetherwiththeRotebfrom

Rotterdamwesucceededtosetupaverymodernsystemofgettingridofthe

garbagewithintwoyears.Sincethen,Bandawontheprizeforthecleanest

cityinIndonesiathreetimesinarow.Itwasagreatsuccess.Afterthatthey

askedushelpandrebuildtheiradministration.Oneofourcivilservantswent

toBandaandworkedtherefortwoyears,paidbyusviatheLOGOSouth

programmeoftheAssociationofNetherlandsMunicipalities(VNG).

AndthereproblemsarisebecausetheParliament,attheothersideofthis

square,isdoubtfulaboutthesuccessandtheopportunityoflower

governmentlevelstoworktogetherinaninternationalfield.Infact,they

wanttoforbidit;itmustend.So,wearenowindiscussionswithDutch

governmentaboutwhetherwearepermittedtogoonwithourworkinthe

internationalfield.Wepayforitourselves;wedonotaskformoneytothe

centralgovernment.Arewepermittedtogoonorareyougoingtorestrictus

legallytodosomethingataninternationallevelbecausewewouldintervene

withtheforeignpolicyoftheNetherlands?Thatdiscussionisgoingonandit

willendhere,intheSenate.YouwillunderstandthatIwillcontributetothat

discussion.

Yourcolleaguetalkedaboutinnovationandtherestrictionsinstudenttime.

Hearingyouaskingthequestion,seeingyou,andnotingthatyouarehere

todaytolistentousandtothespeakersofthismorning,Iamsureyouwill

succeedwithinthesixyearsthatyougetwithouthavingtopayextramoney,

thatyouwillsucceedingettingyourexamsandyourMaster’srightintime!

Thenwehopetoseeyouagaininthepoliticalarenatoparticipateherein

TheHagueinourdebates.Iunderstandyourproblembutweareattheend

ofthediscussion.Youreadthepapersandyouwillhaveseenthatthestate

secretaryhasalreadyputanendtohisschemetohavetheuniversitiespaya

finefortransgressionofthesesixyears.So,itisstilluptothestudentsnow.

Tothathewillholdon:youwillgetfouryearsplustwoandthat’sit.

118

Ms.Lee:Onclimatechangeweneedeverything,soitisverydifficultafter

Copenhagentohavefaithininternationalprocessesbutatleastwhatwegot

outofCopenhagenisanunderstandingthatnationalaction–andperhaps

mayorlevelactionforthatmatter–isafoundationofandnotaresultof

necessarilyinternationalnegotiations.

IalsobelievethatwithoutCopenhagen,wewillnotseetheproliferationof

thelevelofactionsweareseeingnowatasubnationallevelbecausewedo

needtheglobalprocesstosettheambitionandhelpussetatimelineand

remindusoftheurgency.Mygutfeelingisthatweneedboth.Someonewho

justrecentlygotappointedtoaverygoodjobattheUNwastellingme:

YouknowBernice,weallknowthatworkingfortheUN,70%ofthetimeis

painful,bitterbureaucracy,butthe30%whenyoucandosomethingis

absolutelyamazing.Ithinkthatisprobablywhyalotofpeople,despitethe

painofnegotiationswouldstillliketoseesomeresult.Itisnotaneasyhatch

tomakebutwemustbeabletomakethose.Thisrelatestothequestion

aroundincreasingsupplyordecreasingdemand.IabsolutelyagreeandIfeel

stronglythatthesubstitutionagendadoesnotcomehighenoughonthe

globalagendaandcertainlynothighenoughontheEuropeanagenda.

Theresourceefficiencydirectiveprovidesanopportunityforthesubstitution

agendatocomeforthandanopportunityofthesortIwastryingtodescribe

earlierinimprovementsalongthesupplychain.Perhapswecouldhaveevena

structuredwaytolookatthekindofsubstitutionsthatwewantandneed,and

encourageinnovationinthatdirection.Ioftenlaughwhenpeoplefromthe

cementindustrytellmethatitisatechnologythathasbeenoptimisedover

120years.Ijustlookatthemandsay,butyouhavenotchangedmuch,have

you?Itistimeforustolookatallmaterials,whetheritisbuildingmaterials

andotherwise,andmakesurewedohavethekindthatsubstitutionneeds.

IfImayaddtothestudent’svoice,intheUKrecentlywearelookingat

tuitionfeesandregardlessofhowIfeel;Icertainlyfeltthatnoonehadasked

mewhetherIwantedtousemytaxmoneytopayformyeducation.Icertainly

would.Ithinkitisactuallyaterriblygoodinvestmentofourtaxmoney.Iwas

intheUKasaforeignstudentwhenIfirstgotthereandIwasluckytoget

scholarships.ThatwashardandIcannotimaginestudentstodaytryingto

makealifeintheworldparticularlyonthatkindofloans,iftheydonotgo

intoabankingjob.Thisisseriouslyworrying.Iknowthisiswaybeyondmy

competenciestotalkaboutthis.

Mr.Manderswastalkingaboutsustainablepalmoil.Ihavelookedatthatand

Iwasgoingtoaskhimaquestion:howwouldhemediateadisputebetween

astate-backedcompanywithalocalcommunitythatpotentiallyhadseparatist

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tendencies?Ithinkthatwehavealotofinstruments.So,toanswerthelady’s

questionweindeedneedtobecarefulaboutthearena.ImustconfessIam

wayoutofmydepthhere.Iwouldsuggestfirsttolookingatexistingarenas,

lookingwhatthegapscouldbe.Myrecommendationwasoneformediation

andnotjustdisputesettlement.Potentially,thiscouldinvolvealotmore

non-governmentalactors,tooandnotjustformalmediationmechanisms.

Wealsofindin,forexample,thedebatesonillegalloggingthatthelegality

discussionhadbeenhelpfulinhelpingtoframefurtherdiscussionsaround

forestgovernance.TheEUforexamplehadinterestingmechanismsthatare

nowdrivingchangesinanumberofproducingcountries.Perhapsifwestart

thinkingaboutmediationandanticipatingproblemswecancomeupwiththe

kindofmechanismsthatwillstopusfromgoingtomediation.

ButIwouldliketoaskMr.Manderstorespondandtellmewhathappensifa

state-backedcompanygetsintodisputewithalocalcommunity.Whodoeshe

thinkinthecaseofpalmoilshouldbetherightplaceformediation?Should

itbethenationalcourtsorshoulditbeinternationalcourts?Ithinktheseare

difficultquestionstograpplewith.

Mr.Chairman:Thankyouverymuch.Becausewearemovingonintime

Iwouldaskyouifthereisoneburningissueyoumightwanttoaddress.

Youarefreetoask;otherwiseIwouldliketoaskonefinalquestiontothe

speakers,connectingtowhatTonManderssaidthatbehavioralchangeisso

difficult.Iwouldlikeaskbothofyou,canwedowithoutbehavioralchange

orshouldweworkatit?

Ms.Lee:IforcemyselftobuyreallyexpensivethingssothatIdonothaveto

buythemagain.Thatdoesnotseemtobeasolutionforthelesswell-off

people.Re-use,recycling,andrethinkinghowweplanourresourcesevidently

arepartofthethinking.Ijustdonotthinkitiseasytoaskpeopletoroll

backtheirlifestyle.Thatdoesnotmeanweshouldnottry;wejustshould

notcountonitasastrategygoingforward.Again,itdoesnotmeanwe

shouldnottry;itisjusthardtoimaginethatawholegenerationofmiddle

classpeopleinChinawouldwanttogiveuptheircarsandtheirair

conditioninganytimesoon.

Mr.DeGraaf:Doweneedbehavioralchange?Yesplease!Weneedit,

especiallyinpolitics.Imeanthat.Wewillnotbeabletosolveanyproblemsif

wedonotchangewiththechangingworld.Bernicetoldusthatwecannot

solveproblemsofthefuturewhenyousticktoyourpastmethods.Thatis

impossible.Wehavetochangewiththechangesintheworld.Absolutely!But

willwebeabletochange?Thattherearealotofexamplesthatshowthat

peoplecanchangebutyouhavetosetapriceonit,youhavetorewardthem.

120

Icangiveyouanexampleofgarbageagain,withrecycling.InApeldoornwe

gavepeoplethechancetopresentalltheir‘greengarbage’forfree.

Theamountofseparationofthe‘green’garbagewentuptoalmost90%.

Since3years,Apeldoorncanpaybackthepriceforgarbagedisposal.Soyes,

peoplecanchangebutyouhavetorewardthem.Thesamegoesforpolitics,

nationallyaswellasinternationally.Peoplewillalwaysask‘whatisinitfor

me?’Whenyourewardtheminsuchawaythatisgoingalongwiththegoals

youaretryingtoreach,youcanalsochangethepoliticalbehaviorofthe

politiciansintheworld.

Mr.Chairman:Ithinkthesearenicewordstoendthissession.Ithinkwe

haveobservedthattheissueofscarcityofresourcesnotonlyprovokes

discussionfocusedonthisspecificissuebutturnsouttorelatetoall

importantissuesofnationalandinternationalpolicy.Also,theinnovation

issuehasstronglycomeup.

Wehaveheardalot.Itwillberecordedandwillbeputinareport.Anyideas

thathavecomeupwithwillbeatthecentreofthetablealsooftheSenate.

WeheardfromFredtodaythatifwespeakofbehavioralchangethereis

alsoanimportantinvitationandchallengeforpoliticians.Thatisagoodthing

tohearinthisbuilding.Thatimpliestotakeresponsibilitynationally,

internationallyandespeciallytodayintheEuropeanarena.

ThankyouBernice,andthankyouverymuchFred.Thatwasaverygood

performance.

Thankyouverymuchforparticipatingandforsharingthissessionwithus.

Youhavedeservedabreak.Thankyouverymuch.

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Mr.KorthalsAltes(AIV):Ladiesandgentlemen!WelcometotheMinisterof

ForeignAffairs.Forsomeofusthisteapartywasaveryshortone.Probably

agoodideaforotherteaparties,too,nottolasttoolong!

ItisanhonourforusandformetohaveourMinisterofForeignAffairsin

ourmidst.

Address by Mr. Rosenthal, Minister of Foreign Affairs

Thankyou,Frits.HowshouldIstart?ItisahonourtomebecauseIhavebeen

herefortenyearsasasenator,thelastfiveyearssittingleftofthepulpit

andnowonthissideofthehall,butwithverywarmmemoriesofthe

beautifulyearsintheDutchsenate.Iwillnotbeseducedbymakingremarks

howitfeelswhenyouseetheSenatefromadifferentperspectivenorwill

IrevealthesecretsoftheMinisterialCouncil,wherewesometimesalsotalk

aboutSenatewheelingsanddealings.ThatisthesecretoftheTrêveszaal.

Eventoday,theSenatewaspartofourdiscussionsonourregularlegislative

work.So,theconnectionisthere.

Conclusions & Remarks

Uri Rosenthal

122

Theconferenceonpowershiftsinachangingworldorder,theroleofthe

EuropeanUnionandthepositionoftheNetherlandsisasubjectattheheart

oftheportfolioIamworkingon.Ithinkittobebestnowtogetstraightto

business,tothecoreandtheheartofthematter.TheDutchgovernmentinits

foreignpolicyisreallyworkingitswaytostrengthenthepositionofthe

Netherlandsintheworld.Itisaboutvalues,interests,mutualinterestsand

aboutmeetingtoday’schallenges.Inaworldsocompetitiveandunstablein

manywaysandsofragileinmanyregionsyoureallyhavetobestrongin

thefieldofsafetyandsecurityconsiderations,youhavetobestrongonthe

economics’endandalsointhedomainofhumanrights,humanvalues,

individualvaluesandwhathaveyou.Thereyouimmediatelyseethethree

pillarsofDutchforeignpolicyinthisera:itisaboutsafety,security,and

stability,itisaboutpromotingtheeconomicinterestoftheNetherlandsand

abouthumanrights.Theseareintermingled.

NowwhenwelookatthesethreepillarsIamnotashamedatall–some

peopleareashamedaboutit,feelunpleasantorfeelatdisease–tosaythat

oneoftheforemostobjectivesoftheforeignpolicyoftheincumbent

governmentissimplytopromotetheeconomicinterestsoftheNetherlands.

Itisneededtodoso.Wehavetheworld’s16thlargesteconomy,the7thlargest

financialsector,andthe3rdlargestexporterofagriculturalgoods.Idonot

knowwhetherJanPeterBalkenendetalkedaboutitthismorning,butheis

nowatErnst&Young’s,sohislatestglobalisationindexputstheNetherlands

onthe8thplacefortrade,capitalflows,exchangeoftechnology,labour

mobility,andculturalintegration.So,wehavesomethingtodefend,butto

defendsomethingintheworldwearelivingintodayyouneedtobe

offensive,too.Youcannotworkfromadefensivestance.

Westartfromastrongpositionbutcompetitionisfierce.Weshouldrealise

thatinwhatwearedoingandinwhatwearenotdoing.Wehavetobe

selective;wehavetouseourstrength,ourenergy,ourtime,ourattention,

andmoneyinaselectiveway.Wehavetoworkourwaytotheextentthatwe

reallygiveaddedvaluetowhatweareplanninganddoing.Idonottellyou

anysecret–andyouhavealreadydiscussedthis–thattheWestisindebt

whilstothers,likeChina,areholdingthereserves.Ourgrowthratesare

laggingbehindthoseofothercountries,mostnotablyinAsia.ThisweekIwas

inTurkeyanditsgrowthfiguresareformidable.Theyaretheworld’slargest

producersofTVscreens,ofbuses;theyhavethemarketforconstruction,

forbuildingmaterialsandinalargepartoftheregiontheyareactually

monopolists.So,wehavetodosomethingaboutitandwehaveto

understandnewnotonlygeo-politicalbutalso‘geo-economic’realities.

TheyareunfoldingandeconomicdominancemovesinanEastwarddirection.

Wecannotavoidthatobservation.

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Thequestionisnotwhetherwehavetoengageinternationallyandtobe

outwardbound;itisnotamatteroffencingourselvesin.Notatall;thatwould

beveryshort-sighted.Itisnotamatterofwhetherweengageinternationally

butofhowwedoitinordertomaximisetheresultswecanachieve.

Inthatsense,whenwearetalkingaboutengagingintheinternationalarena,

wehavetoworkwithothers.Therearenoprincipalreasonstochooseone

partnershipoveranother.Iwouldsaytotheconnoisseur:therewego.Weare

takingapragmaticapproach,workingwithwhatworksbest.Wewantto

investconstructivelyinpartnershipsthroughouttheworldthathelpuspursue

ourinterestsinthemosteffectiveway.Wecandothatstrategically,tailoring

ouralliancestoourinterestsandvalues.Wewilldosobothbilaterallyand

multilaterally.Andthereindeedwego!

WeareofcourseinvestingintheEuropeanUnion.TheScientificCouncilfor

GovernmentPolicyisrightinitselftoconcludethatEuropeanintegration

andcooperationhavebeenofparamountinterestandimportancetothe

Netherlandswhenitconcernsprosperityandstability.TheDutchgovernment

continuestobeacriticalandatthesametimeveryconstructivememberstate

oftheEuropeanUnion,ifonlybecauseitdirectlyservesourinterests.Three

quartersofourexportgoestoEUMemberStatesandwestandtogainifwe

canfurtherimprovethecommonmarket.Whenitisforinstanceaboutthe

liberalisationoftheservices’sectorwewanttogoforwardandcarryitthrough,

aswasdiscussedashortwhileagobetweenPrimeMinisterMarkRutteand

hisBritishcounterpartDavidCameron.Weareacriticalandconstructive

memberstateoftheEuropeanUnionbecauseitdirectlyservesourinterests.

Wearenotdogmaticbutwedocherishconditionality;whenwesetcriteriafor

enteringtheEUthesecriteriashouldbefollowed,pursued,andrealised.

WithregardtotheEuropeanCommonForeignandSecurityPolicyitmakes

senseforusasasimplematterofscale–letmesaythatexplicitly–tosay

that27countieshavegreaterimpactthananyofthosecountriescan.This

CommonandForeignSecurityPolicyisalsoamatterofefficiency.Weshould

notduplicateinourforeignpolicywhattheEUcandowell.Therearealotof

comments–thisweekforinstance–aboutthestancetheEUtakeswith

regardtoEgypt.Yesterday,inParliament,thePrimeMinister,andtheState

SecretaryforEuropeanAffairsandDevelopmentCooperationandmyselfhada

debatewiththeSecondChamberaboutthestanceonthepartofEuropewith

regardtotheEgyptiansituation.Thereweremanycomplaintsaboutthefact

thattheBigThree,theAdHocFive,andinawaysomeotheradhoccoalition

wereissuingstatementsonthesituationoverthere.Ontopofthatornextto

ittheHighRepresentativeoftheEU,CathyAston,wasalsopresentwith

statements.TheCouncilofMinistersofForeignAffairsalsocameoutwitha

124

statementlastMonday.Whenyoulookatthesestatementsyouseetheyare

similar.Therewasanotherthingthatweshouldreflectupon,whichwas

discussedinParliamentyesterday.Parliamentacceptedit;thesimplefactthat

wearenowoneyearafterLisbonandthatwehavetogetusedtothenew

arrangementsandthatwehaveaHighRepresentativeforourforeignpolicy.

Itisamatterofgettingusedtoit.

Iamnotpessimisticaboutit.ButletmeaddtothestoryabouttheEUasa

wholethatwedonotlimitourselvestoaperspectiveontheEUatlarge.That

wouldbeshort-sighted.WithintheEUtheDutchgovernmentwillseekout

coalitionsthatcanhelpmovethingsinthedirectionwewant,forinstancethe

Benelux.ItlookssmallbutitcandosomethingontheEuropeanend.When

youlookatthesmallercountriesintheEUitcanhelpforinstance,aswetry

todevelop,tohaveregularmeetingswithyourBalticpartners,theVisegrad

Group,ortheNordiccountriesaswearenowplanningtodo.Smallcanbe

beautifulandmid-sizeplussmallcanbebigsize.OutsidetheEUweseekto

participateinbodiesliketheIMF,theWorldBank,andtheG20;bodiesthat

caninfluenceandstrengthenglobaleconomicgovernance,somethingthat

directlyaffectsus.ThatistheEUstance.Butthatisnotenoughanditisnot

theonlythingthatisonthetable.

Transatlanticcooperationremainsequallyimportant.Itisthesecondanchor

ofDutchforeignpolicy.IthasbeenandwillbeacornerstoneofDutchforeign

policy.ItalkabouttheUSandtotheCanadianAmbassador,andIsay

‘Canada,too’.IsayitquiteemphaticallyandyouknowthatImeanit.Ifyou

wouldconsiderthistobeacommonplace–Transatlanticcooperation

remainingequallyimportant–letmesaythatIamstillreadingmybooksand

myliterature;justpickupthelatestForeignAffairsofDecember2010andyou

willbeconvinced.Idonotneedtoaddanythingtothat.

Let’slookatacoupleofexamplesorlet’slimitourselvestoone;let’stakethe

Egyptiansituation.ThereyouseehowimportantAmericanendeavoursindeed

areuptilltoday.WhenyoureadthedeclarationoftheEuropeanCouncil,

whichhasjustbeenissued,youseewhatwecanactuallydo.Whenthe

Americanstakeaposition,wetakeasimilarpositionandwejoin,thenwe

canreallyactuponit.Let’sfaceit,theUSisstillthedominantforcein

theworld,andwearewelladvisedtocontinueworkingcloselywithinthe

Americans,withinNATOaswellasbilaterally,andthroughtheEU.Togive

anotherexample:whenwetalkabouttheMiddleEastpeaceprogressitis

mystrongconvictionthatwhentheNetherlandsortheEUassuchtakes

initiativestheseinitiativeshouldbeconducivetotheUSendeavoursinthe

MiddleEast.Ihavesaidsooverandoveragain.

125


ItisnotonlyamatterofEUandtheTransatlanticAlliance.TheDutch

governmentisalsolookingcarefullyintoourbilateralrelationswiththe

emergingcountries,withthesewonderfulacronymsthataresodifficult

topronounce.Oneispronounceable:BRICS,whichisincludingSouthAfrica.

Butthenewone,theMIKT–Mexico,Indonesia,Korea,andTurkey–isalittle

moredifficult.Buttheyarepowerful.

ThereisalsotheNextEleven,whicharedevelopingattremendouspace.

Thatisthesourceofpartofourfutureprosperity.Wheninthesecountries

governmentsplayamajorroletheDutchgovernmentshouldofcourseputin

itseconomicdiplomacyasafrontrunnerofourforeignpolicy.Asafactof

presentlife–atleasttome–wearebusy,reorientingthenetworkofDutch

embassiesandconsulatesandevenmoreoftheDutchstructuralarrangements

intheinternationalarena.Itisimportanttounderstandthatwearegoingto

faceashiftofresourcesinourforeignpolicy,reflecting–Itakethetitleofthe

seminarseriously–thepowershiftsthataretakingplaceintheworld.Amore

dynamickindofdiplomacyisneededtoserveDutchinterestsinthisquickly

shiftingworld.ItishelpingtoserveDutchinterestsbetter.WhenIamtalking

about‘Dutchinterests’Idonotonlymeaninterestinthenarrow,commercial

sense,althoughtheseareimportantofcourse.Iamalsoreferringheretoour

strategiclong-terminterests.Thereeconomicsjoins,associateswithsecurity

andstability.Tradeandbusinesscanonlyprosperinastableinternational

environment.LookatthelossessufferednowbyHeineken,Unilever,and

AkzoNobel,nowthatunresthasforcedthemtoshutdowntheirproductionin

Egyptforaconsiderabletime.

Economicdiplomacymeansalsomorethanmerelypromotingtradeand

investment.Itisalsoabouttakingintoaccountourgeopoliticalinterestsand

ensuringtheflowofstrategicgoods,energysources,rawmaterials,and

specialcategoryrawmetals,thethingsweneedtokeepoureconomygoing,

tosustainourselves.Wehavereallytodosomethingaboutit.Itisimportant

thattheEU,theEuropeanCommission,presentedarevisionofitsraw

materialsinitiativetwodaysago.Thatisimportant.IfIlookatthissideofthe

medalweareperhapslaggingalittlebitbehindothercountriesintakingthis

‘geo-economic’andgeo-strategicinterestseriously.Wehavetounderstand

strategicgoods,energyresources,rawmaterialsandrareearthmetalsarepart

ofthescarcityoftoday.

Ladiesandgentlemen!Ourforeignpolicyfortheyearstocomeisbuiltupon

threepillars:stability,security,andsafety;one,second,andnowpushed

forwardbytheDutchgovernmenteconomicinterests,economicgrowth,taking

ourshareoftheinternationaleconomicscene.Thesetwojoininmanyways,

asIsaidjustacoupleofminutesagowhentalkingaboutstrategicgoods,

energyconsiderations,rawmaterials.

126

ThethirdpillarofDutchforeignpolicyisofcourseeverythinggoingwith

humanrights.Thesehumanrightsarealsopartofthestory.Threepillarsare

notseparatefromeachother;theyareinterlinked.Stabilityintheworldneeds

theprotectionofhumanrights.Aflourishingeconomyshouldintheend,

atthelongertermbebasedonfollowingtheneedsforadecentlifeofthe

peopleintheworld.Whatourforeignpolicyisinanutshell,isgraspingglobal

opportunitiestoenhanceDutchsecurityandDutchprosperity.Inarapidly

changingworldwehavetobeverykeenontheshiftsofpowerintheyearsto

come.Withregardtotheeconomicsidewehavetounderstandwehaveto

lookEastboundwithregardtosafetyandsecurity,andaWestbound-

orientationwillbetheretostay.

Mr.Chairman:Thankyouverymuchforthisstateoftheforeignpolicyofthe

Netherlands!

Itistimeforsomeconclusionsandremarks.IamgladthatJaapdeZwaanis

preparedtomaketheclosingremarksforthemeetingoftoday.

Frits Korthals Altes

127


Address by Mr. De Zwaan, Director of the Netherlands Institute of International Relations Clingendael

Thankyou,Mr.Chairman.Althoughnotbeingpresentduringourtoday’s

discussionstheMinisterhintedatquiteanumberofissuesthatinfactwere

subjectofourdebates.Mr.Minister,inyouraddressyoufocusedspecifically

onDutchforeignpolicy.Well,IlearnedfromAgeBakkerwithregardto

ourGDPthattheNetherlandsisonthe16thposition,withregardtotrade

relationsonthe6thposition,withregardtoforeigninvestmentstheDutchare

worldwideonthe5thranking,thefinancialsectoronthe7thposition,and

developmentaidonthe6thposition.So,wearesupposedtoreallybea

globalpoweronourown,sotosay.

However,Iwanttoaddanotherdimension.Inourdiscussionswehavepaid

quitealotofattentiontothesubtitleofthisconference,thatistherelationship

betweenourmembershipoftheEUandtheNetherlandsasasovereigncountry.

Inthemorningsessionwehaveenjoyedfourwonderfulinterventions,presented

fromtheUSperspective,theChineseperspective,theEUperspectiveandfrom

aDutchperspective,fromourformerPrimeMinister.Allofthemhintedatthe

roleoftheEuropeanUnionintheworldwidedebate.Whenitcomestopower

shiftsinthechangingworldorderwe,ofcourse,primarilyfocusatthefinancial

andeconomiccrisis,environmentalpolicy,thescarcityissue,food,water,energy,

andsoforthbutalsoforeignpolicyanddefence.Infact,Kupchan,certainly

ElmarBrokandalsoJanPeterBalkenendemadetheargumentthattheEuropean

Unionhastoactandhastoexpressitselfwithasinglevoiceexternally.

Totheoneextent,obviouslyitistruethattheNetherlandsonitsown,hasa

lotofcompetencesandcapacitywithregardtoforeigninvestments.Indeed,

itisstriking;whenyoutravelaroundinEuropeandespeciallyintheEastern

part–thenewmemberstatesoftheEU–youwillnoticethattheNetherlands

iseithernumberoneoratleastinthetopthreeofforeigninvestors.

Thatbeingsaid,weshouldgivemoreattentiontotheroleoftheEuropean

Unionwhenitcomestooursubstantiveinterests;thisistruewithregardto

thelevelofourprosperitybutalsoastoquestionshowtheworldisgoingto

copewithissueslikeclimatechange,environment,energy,combatofterrorism

andforeignpolicy:moreparticularlytheimpactEuropemighthaveatthe

worldscenewithregardtodecisionmakingregardingthesesubjectmatters.

IntheafternoonIwaspresentinthesessionontheglobaleconomic(im)

balances,whichfocusedontheIMF,theglobalgovernancesystemwithregard

tofinancing,aswellastheDutchandEuropeanpositioninthatsystemof

governance.TheotherfocuswasontheroleoftheEuropeanUnion,because

128

oftheexistenceoftheEMU,andweobviouslynotedthattoday–the

discussionsinBrussels–anewprocessofTreatyamendmentwithregardto

thestrengtheningoftheEMU-systemwithregardtosurveillancehasstarted.

Iwasnotpresentintheothersessionbutapparentlyalotofattentionwas

dedicatedtothequestionwhatweunderstandbyscarcity.Hereapparently

alsothewindowofopportunityfortheEuropeanUnionwasdiscussedin

whichcontextreferencewasmadetotheCopenhagenconference,wherethe

EUwasnotabletoputitspositionthroughbutatleastwasabletopresenta

commonpositioninavitalsubjectmatterrelatedtothesubjectmatterofour

today’sconference.

Intoday’sdiscussionwehavededicatedattentiontotheglobalgovernance

system.FromAgeBakkerwelearnedmoreparticularlyabouttheintended

reformsinthecontextoftheIMF.WethensteppeddowntotheEUleveland

perhapswecantakeafewofourfindingsoftodayonboardforthepreparation

ofanextseminar.TheLisbonTreatyhasindeedprovidedtheEuropeanUnion

withresponsibilities,nottosaycompetences,inquiteanumberofpolicy

domainsthatwehavehintedattoday.Environmenthasalreadybeenatypical

EuropeanUnioncompetenceforquiteawhile.Butenergyhasonlyrecently

–LisbonTreaty-beenaddedtothelistofcompetence,ashasclimatechange.

Itleavesuswithforeignpolicyanddefence.Asyourightlysaid,Mr.Rosenthal,

itwasnotthesingleEUvoicewhoexpresseditselfontheproblemofEgypt

andNorthernAfrica.IthinkBundeskanzlerMerkelwentfirst,thenPresident

SarkozyoftheFrenchRepublic,andcertainlyalsoMr.Cameron.Wedidnot

hearanythingspecialfromBaronessAshton.Ipersonallythink–and,again,

that’swhatwemighttakeupasasubjectmatterforanextconference–that

foreignpolicyisavitaltopicfortheroleEuropecanplayontheworldscene.

WhenwediscusstheissueoftheEUasaglobalplayerwediscussofcourse

thenewpersonalities,thePresidentoftheEuropeanCouncilandtheHigh

Representative.However,thequestioniswhetherLisbonhascreatedsuitable

modalitiesinordertoallowustoreallydevelopthiscommonpolicy,which

mayleadtoasituationinwhichEuropereallycanhaveanimpactonthe

discussionworldwide.Thatisperhapssomethingwhatwecantakeupfora

futureversionofthewonderfulconferencethatwasorganisedtodaybyfour

wonderfulentities.Thankyou!

Mr.Chairman:AttheendofthismeetingIwouldliketothankthespeakers

oftoday.ProfessorZhang,revealedthetremendoushistorical,governmental,

andculturalforcesandeventheculinaryattractionsofthesuperpowerChina.

ProfessorKupchanwarnedusforthechangesintheUSinternalandforeign

policy.HemadeusawareofourownEuropeanresponsibility.ElmarBrok,

MemberoftheEuropeanParliament,gavehisEuropeanvision.Iwouldalso

liketothankourformerPrimeMinisterJanPeterBalkenende,whosharedhis

experiencesasaEuropeanleaderwithus.

129


Ithankthosewhoactedthisafternoon:AgeBakkerandCarloTrojan,Bernice

LeeandFreddeGraaf,andalsothechairmenofthisafternoon,JanRoodand

AndréKnottnerus.

IthanktheMinisterofForeignAffairsforhisspeechandJaapdeZwaanfor

hisfinalremarks.

Ofcourse,thepreparationofthisconferencehasrequiredsomeorganisational

work.IthinkthatIcansaythatthefourorganisinginstitutions–theSenate,the

ScientificCouncilforGovernmentPolicy,theAdvisoryCouncilonInternational

Affairs,andtheNetherlandsInstituteofInternationalRelationsClingendael–

haveworkedtogetherveryharmoniouslyinbringingthisconferencetogether.

Idaresaythatthishasproventobeaveryeffectivepartnership,apartnership

formedbythePresidentoftheSenate,RenévanderLinden.Hetookthe

initiative.Wecanbeverygratefultohimforhisinitiative,forhisideatoorganise

thisconference,toinvitespeakersfromabroad,andforthesubjectofthepower

shiftsinachangingworldorder.Thankyou,René!Hedeservesapplause!

OnbehalfofthesteeringgroupIwouldliketothankthoseofourstaffwho

havecontributedtomakingthisconferenceasuccess.Iwouldliketocallone

representativeofeachofthefourpartners.Thesefourpeoplehadparticularly

activerolesandwiththemwethankalltheircolleaguesinvolved.Fromthe

SenatethisisEvaBuitenkamp,fromtheScientificCouncilforGovernment

PolicyitisGeraArts,fromtheAdvisoryCouncilonInternationalAffairsthisis

TiemoOostenbrink,andfromClingendaelJohannesKester.Thankyouverymuch!

Isaidthattheteapartywasaveryshortone.Now,Ihavethehonourtoinvite

youfordrinks,downstairsandforalongertime.Ihopeyouwillbebackin

futureinthismeetinghallasguestsofthethenPresidentoftheSenate.

Thankyouverymuch,René!

René van der Linden

Jaap de Zwaan

Geert Jan Hamilton

Jan Rood

130

W.vanAcker ModelEuropeanParliament

W.AsbeekBrusse ScientificCouncilforGovernmentPolicy

M.vanAsselt ScientificCouncilforGovernmentPolicy

D.J.vanBaar JournalistHP/DeTijd

A.Bakker ExecutiveDirectorattheInternationalMonetaryFund

J.P.Balkenende ProfessorinGovernance,Institutionsand

Internationalisation/ErasmusUniversity

F.D.deBeaufort TeldersFoundation

M.L.Bemelmans-Videc DutchSenate

M.G.Bos SocialandEconomicCouncil

M.Bos-Karczewska JournalistPolonia.nl

B.R.Bot Meines&PartnersConsultancy

E.D.Bötger UniversityofAmsterdam

A.Boxhoorn NetherlandsAtlanticAssociation

H.G.Braafhart AdvisoryCouncilonInternationalAffairs

L.denBreems MinistryofForeignAffairs

T.vandenBrink UtrechtUniversity

L.J.Brinkhorst LeidenUniversity

A.Broekers-Knol DutchSenate

E.Brok MemberoftheEuropeanParliament

A.Bronswijk TheHaguemunicipality

B.M.vanBruggen UniversityofAmsterdam

R.deBruijn ChamberofCommerce

R.R.CanoBlazquez DNB

S.W.L.Couwenberg CivisMundiFoundation

L.E.vanDalm RooseveltAcademy

F.D’Havé CounselorBelgianEmbassy

W.F.vanEekelen EuropeanIntegrationCommitteeoftheAIV

F.Evens FlemishForeignAffairsCouncil

A.FlanaganWhalen CanadianEmbassy

M.S.Gatta RepresentationEuropeanCommissionintheNetherlands

W.J.M.vanGenugten VicechairmanAdvisoryCouncilonInternationalAffairs

P.J.M.deGoede ScientificCouncilforGovernmentPolicy

L.Y.Gonçalves-HoKangYou AdvisoryCouncilonInternationalAffairs

M.A.Goudswaard JournalistofHetFinancieeleDagblad

Participants

131


F.deGraaf ChairmanForeignAffairsCommitteeoftheDutchSenate

C.J.Gradenwitz DutchSenate

A.L.J.Grotenhuis JournalistofBinnenhofTV

R.B.M.Grotenhuis Cordaid

B.terHaar MinistryofInfrastructureandtheEnvironment

J.T.A.vanHaaster HouseofRepresentatives

M.A.Hajer NetherlandsEnvironmentalAssessmentAgency

G.J.A.Hamilton DutchSenate

C.Hegeman JournalistofVPRO

G.vanHeteren DutchEuropeanMovement

R.E.vanderHoeven InstituteofSocialStudies

J.W.Holtslag ScientificCouncilforGovernmentPolicy

C.Homan ClingendaelInstitute

L.V.M.Kistemaker TheHagueInstituteforInternationalisationofLaw

Y.Kleistra UtrechtUniversity

M.H.Klem ScientificCouncilforGovernmentPolicy

J.E.Knotters UniversityofGroningen

A.Knottnerus ChairmanoftheScientificCouncilforGovernmentPolicy

H.E.Koopman LeidenUniversity

A.R.Korteweg TheHagueCentreforStrategicStudies

F.KorthalsAltes ChairmanoftheAdvisoryCouncilonInternationalAffairs

P.Kraan MinistryofForeignAffairs

C.J.Kraaijveld TheArgumentationFactory

M.Kranenburg JournalistofNRCHandelsblad

E.Kuipers NetherlandsGovernmentInformationServices(RVD)

C.Kupchan ProfessorofInternationalAffairsGeorgetownUniversity

M.Lak MinistryofForeignAffairs

J.Lambert CanadianEmbassy

B.Lee ChathamHouse

P.R.H.M.vanderLinden PresidentoftheDutchSenate

A.J.G.Manders NetherlandsEnvironmentalAssessmentAgency

J.Melissen ClingendaelInstitute

E.Molier MinistryofForeignAffairs

E.A.M.Nazarski AmnestyInternational

E.R.Nolan USEmbassy

132

D.E.vanNorren DevelopmentCooperationCommitteeoftheAIV

M.Okano-Heijmans ClingendaelInstitute

H.J.Ormel HouseofRepresentatives

L.Ornstein JournalistofVPRO

A.Passenier MinistryofInfrastructureandtheEnvironment

P.C.Plooij-vanGorsel AdvisoryCouncilonInternationalAffairs

W.Post TheHaguemunicipality

A.Postma MinistryofFinance

A.E.M.Prins LeidenUniversity

W.L.E.Quaedvlieg ConfederationofNetherlandsIndustryandEmployers

J.G.M.Rademaker TheHagueCentreforStrategicStudies

W.K.S.C.Ramsoekh MinistryofForeignAffairs

M.Rem ScientificCouncilforGovernmentPolicy

J.Rood ClingendaelInstitute

U.Rosenthal DutchMinisterofForeignAffairs

P.G.C.vanSchie TeldersFoundation

G.J.C.Schlaghecke JournalistofHetFinancieeleDagblad

H.G.Schokker HouseofRepresentatives

J.A.Schout ClingendaelInstitute

M.L.L.Segers UtrechtUniversity

J.G.Siccama MinistryofDefence

B.J.vanSminia-Meijerink ModelEuropeanParliamenttheNetherlands

A.vanStaden AdvisoryCouncilonInternationalAffairs

R.Swartbol MinistryofForeignAffairs

H.W.Swarttouw MinistryofForeignAffairs

C.G.Trojan AdvisoryCouncilonInternationalAffairs

S.T.P.Trompert GroningenUniversity

L.vanTroost AmnestyInternational

B.M.tenTusscher MinistryofForeignAffairs

A.D.Uilenreef EuropeanIntegrationCommitteeoftheAIV

M.L.M.Urlings AdvisoryCouncilonInternationalAffairs

R.J.vanderVeen MinistryofForeignAffairs

I.L.vanVeldhuizen MinistryofForeignAffairs

J.J.C.Voorhoeve AdvisoryCouncilonInternationalAffairs

K.G.deVries DutchSenate

133


M.W.M.Waanders PeaceandSecurityCommitteeoftheAIV

N.G.Wegter FormermemberEuropeanParliament

J.L.Werner MinistryofForeignAffairs

A.M.C.Wester HumanRightsCommitteeoftheAIV

D.P.B.Wijnants UniversityofAmsterdam

F.IJ.Wolf MaastrichtUniversity

P.S.Wolvekamp BothEnds

J.Wouters FlemishForeignAffairsCouncil

W.Zhang GenevaSchoolofDiplomacyandInternationalRelations

J.W.deZwaan ClingendaelInstitute

Organisation:

G.A.T.M.Arts ScientificCouncilforGovernmentPolicy

R.Bakker WeenaReport

E.L.Buitenkamp DutchSenate

Q.J.Genee AdvisoryCouncilonInternationalAffairs

R.Kamphof DutchSenate

J.Kester ClingendaelInstitute

T.D.J.Oostenbrink AdvisoryCouncilonInternationalAffairs

J.I.Petter DutchSenate

R.Riedeman MinistryofForeignAffairs

H.Westhof WeenaReport

L.Wittkowski DutchSenate

D.Zevulun AdvisoryCouncilonInternationalAffairs

134

TheNetherlandsisattachedtotheworld.Fewothercountriesareasclosely

interwovenpolitically,economicallyandsociallywiththeworldaroundus.

ThatmakesDutchforeignpolicyastrategicaffair.TheDutchgovernmenthas

todeliveranalertresponsetotherisksandopportunitiesofarapidly

changingworld.Today’sworldcanbestbedescribedashybridinnature.

Ontheonehandthereisthefamiliarworldofgeopoliticsandnation-states.

Thatworldiscurrentlygoingthroughashiftinthebalanceofpowertowards

theEast.Ontheotherhandthereisthe‘networkworld’,populatednotonly

bystates,butincreasinglyalsobynon-stateactors.Stateborderspresent

virtuallynoobstacletothesenetworks.Seenfromthisperspective,itisno

longerpossibletospeakoftheforeignpolicyofthestate;itismorecorrect

tothinkintermsofmanydifferentexpressionsofforeignpolicywithina

‘disaggregatedstate’.Increasingly,ministriesandagencieshavetheirown

objectivesininternationalaffairsandparticipateautonomouslyin

internationalnetworks,especiallyinaEuropeancontext.Asaconsequence,

thetraditionaldistinctionbetween‘domestic’and‘foreign’isbecoming

increasinglyblurred.

MostpeopleintheNetherlandsexperiencethisdifferently.Tothem,theDutch

stateremainstheprimaryactorinrelationswiththeoutsideworld.Atthe

sametimetheyareunsurewhatpositiontheNetherlandsoccupiesintoday’s

world.Familiarreferencepointsaredisappearingandglobalpowerrelations

areshiftingfasterthanmostpeoplecouldeverhaveimagined,partlyasa

resultofthefinancialcrisis.Thereisagrowingtensionbetweenthisfeeling

ofbeingthreatenedbytheoutsideworldandtheneedtonurturethe

relationshipwiththatsameworld.Domestictensions,fadingdividinglines

between‘domestic’and‘foreign’andtheopportunitiesandriskspresentedby

ahybridworldcreateaneedforastudyofthechangingconditionsofforeign

policyandofthepossibilitiesandlimitationstheseconditionsoffer.This

reportaimstocontributetoaneworientationtowardstheoutsideworld.It

focusesonthequestionofhowtheNetherlandscandevelopaforeignpolicy

strategythatreflectsboththeshiftsintheglobalpowerbalanceandthe

radicallyalterednatureofinternationalrelations.Ouranswertothisquestion

isthatforeignpolicyneedstoberethought.Weunderpinthisbyexamining

SummaryAttached to the World: On the Anchoring and Strategy of Dutch Foreign Policy Scientific Council for Government Policy (2010)

135


firsthowtheNetherlandscandevelopitsownstrategicforeignpolicy,then

byexplaininghowthispolicycouldbeembeddedinEuropeasthedominant

policyarena,andlastlybypointingouthowsuchastrategicforeignpolicy

couldbeputintopractice.

From fragmentation to strategyTheagendaoftopicsinDutchforeignpolicyhaschangedfundamentally.

Nationalpolicythemeshavebecomeglobalissues,theinternationalagenda

hasexpandedconsiderablyandthefixedorderofpolicythemeshas

disappeared.Inaddition,differentpolicyareashavebecomeinterconnected

andarenolongeraddressedexclusivelyintheinterstatearena(geopolitics),

butalsoinintra-stateandnon-statearenas(networkworld).

TheNetherlandshastraditionallyaspiredtoplayanactiveinternationalrole.

Thegovernment’sresponsetotheturbulentexpansionoftheforeignpolicy

agendaisinlinewiththisaspiration:doingasmuchaspossiblewithasmany

partnersaspossible.AsillustratedbythetraditionalnotionoftheNetherlands

asa‘modelcountry’orbyrecentDutchcontributionstointernationalpeace

missions,Dutchforeignpolicyisstillfirmlygroundedinadeep-seatedneed

toplayarobustroleintheinternationalarena.Thishasproducedaforeign

policythatcouldbelikenedtoadoughnut:abroadspectrumofaspirations,

pointsofviewandactivities,withoutacomprehensivevisionconnectingthe

variouscomponentsandallowingprioritiesandposterioritiestobedetermined.

Strategicforeignpolicyshouldgobeyondthesebroadintentionsthattypify

currentDutchforeignpolicy.Thismeanschoosing,settingprioritiesand

seekingareasinwhichtheNetherlandscanmakeadifference.Thefirststep

towardsachievingthisistobeawareofandacknowledgethatweliveina

hybridworld.OnlywhentheDutchgovernmentrealizesthatitscurrentforeign

policyisinsufficientlygearedtothisrealitycanastrategicforeignpolicybe

formulated.Thesecondstepinvolvesmakingchoicesandsettingpriorities

acrossDutchforeignpolicyasawhole.Theactualchoicesmadearepolitical

innature,butatransparentdeliberationframeworkwouldfacilitatethe

decision-makingprocessandincreasetheaccountabilityofthosechoices–

especiallyintheprevailingsituationoffinancialausterityandcutbacks.

Moreover,aprerequisiteofaconsistentpolicyisthattheDutcharestillable

torecognizethemselvesintheircountry’sforeignpolicy.

Our deliberation framework is based on three questions:1. WhatisimportantfortheNetherlands?

2. Wheredotheinterestsofotheractorslieandwhataretheydoingto

achievethem?

136

3. WherecantheNetherlandsmakeadifference?Basedontheanswersto

thesequestions,foreignpolicycanbedividedintothreecomponents.

Inthefirstplace,foreignpolicyaimstodefendthevitalintereststhatare

irrevocablylinkedtothesurvivaloftheNetherlands,itspeopleandits

territory.Becausethesevitalinterestsareessential,thereisnoneedto

setpriorities.Thisdoesnotapplytothesecondcomponentofforeign

policy,defendingnon-vitalinterests.Thepracticalrealityofcomplex

interdependenceininternationalrelationsgivesrisetoasearchforwhat

thisreportcallsextendednationalinterests,i.e.morespecificareaswhere

Dutchinterestsandglobalissuescoincide.Thatmeanssearchingforpolicy

areasattheinterfaceofglobalissuesandnationalinterests.Thethirdand

finalcomponentofforeignpolicyconsistsof‘niches’:specificareasof

policywheretheNetherlandswishestomakeitspresencefeltinthe

longerterm.Developingthesenichesishighlyrelevant,asthemarketplace

ofinternationalrelationshasbecomefartoocrowdedfortheNetherlands

tohaveapresenceeverywhere.

Europe as a dominant arenaCooperationwithothercountriesandorganizationshasbeenthecornerstone

oftheDutchgovernment’sforeignpolicyformanydecades.Forthe

Netherlands,theEUisthepredominantarenaforthatcooperation.Ifthe

Netherlandswishestoachieveitsforeignpolicygoals,itmustexertinfluence

inthisarenaandexcelhere.Withthisinmind,itishelpfultoapproachthe

EUfromtwocomplementaryperspectives.Ontheonehand,itcanbeseenas

apoliticalarenainwhichlawsandregulationsaredevelopedthatapplytoall

memberstates.Ontheotherhand,theEUisasteppingstonetotheworld,

akindofpowerblocthataimstoexertitsinfluencetodefendfundamental

Europeanvaluesandinterests.AnyoneconsideringtheEUasthedominant

arenawillseeitastheappropriatechannelfortheNetherlandstopursueits

vitalandextendednationalinterests.Themosteffectivestrategyisto

translateDutchinterestsintoEuropeanlegislationorpolicy.Thepressureto

actasonehasincreasedwiththeinstitutionalizationoftheEuropeanCouncil.

Forasuccessfulmemberstatethisoffersopportunitiestoconnectandto

advanceitsreputation.Europeanlegislationandregulationarecreated

throughtheinteractionbetweenEuropeaninstitutionsandvariousstateand

non-stateactors.ThisprocessoffersaperfectopportunitytomakeDutch

policyproductive,offeringinterestingpossibilitiestoinfluenceEuropean

policies.AcceptingEuropeasthecentralpoliticalarenaandasthestepping

stonetointernationalissuescallsforstrategy,makingchoices,planningan

approachandmobilizingnetworks.ThisinturnrequirestheDutchgovernment

todevelopintoanenablingstate,i.e.agovernmentthatenablesotherparties

toconductactivitiesthatareinboththeirowninterestsandthoseofthe

Netherlands.

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Atthesametimethereisacertainbuilt-intensionwithintheEuropean

constructbetweencollectiveaspirationsandjointactionontheonehandand

theneedforindividualityinthememberstatesontheother.Bilateralpolicy-

makingandseekingtoinfluenceopinionsinothermemberstatestherefore

continuetobeimportantinstrumentsthatcanbeusedinparalleltoefforts

attheEuropeanlevel.TheNetherlandscanalsoplayaconstructiverolein

definingtheEuropeanagendaincoalitionswithandwithininfluential

neighbouringmemberstates.Inthisrespectthemostproductiveapproachis

toallowourselvestobeguidedbythefollowingquestions:whatkindof

Europedowewanttolivein,anddowewanttouseourinfluencewhere

possibletohelpshapeit?

Directing and facilitatingAhybridworld,theEU,theproliferationofnon-stateactorsontheinternational

stageandtheimplementationofasuccessfulnichepolicydemandnewways

ofworking.Manyattemptstorestructureor‘decompartmentalize’foreign

policyhavebeenmadebefore.Anewwayofworkingdoesnothowever

requirereorganizationornewlabels.Itisaboveallanewapproach,anew

attitudethatformsanintegralpartoftheambitiontopursueamore

strategicforeignpolicy.Threeelementsrequirefurtherelaborationhere:

interdepartmentaldivisionoflabour;betteruseofexistinginstruments;

andswitchingbetweenstateandnon-statearenas.

Foreignpolicyisnolongerlimitedtoasingleministry.Allministrieshavetheir

owninternationalpoliciesforthoseareasinwhichtheypossessexpertiseand

substantivecompetence.EspeciallywithintheEUitisnowpossibletospeak

of‘Dutchforeignpolicy’toonlyaverylimiteddegree.Inordertooperate

effectivelyinthispredominantarena,itisinmostmemberstatesthecentre

ofthenationalgovernment,embodiedbythepresidentortheprimeminister,

whichcontrolsEuropeanpolicy.Morethaneverbefore,Europehasbecome

ChefsachesincetheentryintoforceoftheLisbonTreaty.Itishowevera

sensitivemattertorefertothisdirectly,despiteitnowbecomingarealityin

theDutchpractice.Yetthetitle‘MinisterofGeneralandEuropeanAffairs’

wouldmoreaccuratelyexpresstheinterconnectednatureofnationaland

Europeanpolicy,aswellasthepersonalresponsibilityoftheprimeminister

forEurope.

Inadditiontothisministry,theMinistryofForeignAffairscontinuestoplayan

importantroleinforeignpolicy;nolongerasacoordinator,butaboveallasa

lineministryresponsibleforthemessuchastheDutchcontributiontothenew

EUCouncilofForeignAffairs,theintegratedstrategicdirectionofourexternal

security(i.e.thecomprehensiveapproachanditscomponentsofdiplomacy,

defenceanddevelopmentcooperation)andissuesrelatingtothemultilateral

architecture.

138

Tomakestrategicchoicesvisibleandengenderstrategicdebatesin

parliament,weneedinstrumentsthatarenolongergroundedintheobsolete

logicofministries.First,weproposetransferringoverallforeignpolicystrategy

fromtheMinistryofForeignAffairstotheCabinet.Second,strategicchoices

andthecorrespondingbudgetsshouldbesetforeachgovernmenttermof

office,withtheCabinettakingadecisioneachyearaboutthespecific

activitiestobeundertakenineachbudgetyear.Thiswouldofferauseful

startingpointforadebatewithparliamentaboutchoicesandpriorities.

ImplementingDutchforeignpolicystrategicallybeyondthenationalborders

alsorequirescloserscrutinyofthebroadnetworkofDutchembassiesand

consulates.ChangesintheintensityandstructureoftheDutchpresence

abroadshouldreflectstrategicchoices,notautomaticreflexes.Alternatives

thatcouldbeconsideredincludenewformsofrepresentationabroad,

cooperationwithothercountriestorepresentDutchinterestslocally,andthe

deploymentofofficialsfromotherlineministries.Inaddition,knowledge

managementshouldbemadeapriorityatalllevelsofpolicy,toensurethat

institutionallearningisnotonlyaresponsibility,butisalsopartofthe

organizationalculture.AnalogoustotheDiplopediaintheus,thosewho

implementforeignpolicyshouldstoretheirknowledge,experienceand

lessonslearnedingovernment-widedatabases.

Lastly,inadditiontoastate-basedfocus,ministers,statesecretariesand

officialsneedtoadoptanapproachthatlinksuptothenetworksociety

populatednotonlybystateactors,butalsobynon-stateactors.Cooperation

withngo’s,transnationalcorporationsandsub-stateactorscallsforawayof

workingthatisnolongerbasedondirecting,butonfacilitatingand

connecting.WithasharpeyeforDutchinterestsbeyonditsterritorialand

immaterialborders,theDutchgovernmentshouldconnectactorsand

networksandfacilitatetheexchangeofgoodsandideasinsuchawaythat

thisbenefitstheNetherlandsanditspeople.Todoso,theNetherlandsshould

beatthecentreofrelevantnetworks:themoreprominentitspositioninthe

network(alargenumberofcontacts,theappreciationofotheractors),the

greateritscapacitytoacquireknowledgeandservicesfromotheractors,to

regulatethetransmissionofinformationandproductswithinthenetwork,and

todetermineagendasandframedebates.Insummary,thisreportisapleafor

theDutchgovernmenttoadoptamorecriticalapproachtoitsstrategicand

substantivechoices,tostriveforexcellencewithintheEuropeanarenaandto

becomeafacilitatingpartnerintheworldofnon-governmentalactors.

139


Position paperPower shifts in a changing world orderThe role of the European Union and the position of the Netherlands

Jan Rood, Head of Strategic Research at Clingendael Institute

Power shifts Theworldoftodayissaidtobewitnesstotwoimportantglobalpowershifts.

Thefirstpowershiftistheemergence(orreturn)ofAsiaintheinternational

arena.BasedontheirimpressiveeconomicgrowththeAsiancountries,

inparticularChinaandIndia,areliftingthemselvesontotheworldstage

–economically,politicallyandmilitarily.Intheirslipstreamcountriesfrom

otherpartsoftheworld–i.e.Brazil,Russia,SouthAfrica,Indonesia,Turkey–

emerge,therebyliterallyshiftingtheglobalbalanceofpower.Thisshiftis

enhancedbyanincreasingdemandfortheworld’snaturalresources,which

strengthenstheinfluenceofresource-richcountries.Withtherisingeconomic

powerofthesecountriescomesastrongercallformoreinfluenceinthe

globalpoliticalarena.TogetherwiththeslowergrowthofWesterneconomies,

this‘riseoftherest’isleadinginparticulartoanincreasingpressuretoadjust

thecurrentinternationalfinancialandeconomicarchitecturetothisnew

realityofinternationalrelations;anarchitecturewhichisstillsaidtofavourits

traditional(Western)members.

Thesecondchallengeisnotashiftofpowerupwardsorsideways,butinstead

adiffusionofpower.Adiffusionawayfromthemainstageandtraditional

players,inparticularnation-states,towardsarisingnumberofinfluential

non-stateactorsandnewtheatresofpowerandinfluence.Asaresultof

globalisationandtechnologicaldevelopments,theinstantcommunication

acrosstheglobeinour,so-called,‘networkworld’enablesagreatvarietyof

non-stateactorstopursuetheirowninterestsandactionsacrossborders.

Thisisnotonlythecaseformultinationalcompaniesbutrefersalsoto

tourists,journalists,pressuregroups,celebrities,policymakers–actually

everybodywithaSIM.Asaconsequence,internationalpublicopinionhas

becomeafactorinitsownrightininternationalpolitics.Whenlocalproblems

canmakeglobalheadlinesinamatterofminutes,one’simageisasimportant

asone’smaterialpower.

140

Thisdualshifthighlightsachangingworldorderwitharelativedeclineofthe

influenceofWesterncountriesandreinforcestheurgencyforathorough

debateontheroleandpositionoftheEuropeanUnionandtheNetherlands

withinthisnewworldorder.

A changing world orderOntheirown,thesepowershiftsarealreadyamajorchallengetothe

internationalsystem.Togethertheybringaboutaconsiderabletransformation

oftheinternationalorder,leavingstateandnon-stateactorswiththechallenge

tofindnewwaystoliveandworktogetherwithintheinternationalarena.

Whilethetwoshiftsaregenerallyacknowledged,theoutcomeofthe

transformationisstilluncertain.Mostdiscussionstendtoremainabstractand

revolvearoundthelikelyeffectsofanemergingmultipolarsystem,oftenviewed

incombinationwithanetworkworld,whereinpowerislesshierarchically

orderedandinwhichanincreasingnumberofactorswantstotakepart.

Inthisglobalsystemnotonlythenumberofactorsisgrowing,butthe

internationalagendaisalsoturningintoanincreasinglycomplexblendof

cross-borderingthemes;e.g.climatechange,financialregulation,pandemics,

etc.Asaresult,theoncepopulardistinctionsininternationalrelations

betweenhigh(e.g.defence)andlow(e.g.environment)politicsaswellas

betweenthenationalandinternationaldomainarefadingaway.Atthesame

time,theissuesnowdominatingtheinternationalagendaunderlinetheneed

forinternationalcooperation.Globalproblemsrequireglobalsolutions.Yet,

thetraditionalmultilateralinstitutionsforglobalgovernance,e.g.theUnited

NationsortheWorldBank,mainlyfoundedshortlyaftertheSecondWorld

War,areunderpressureandseemunabletotacklethese21stcenturychallenges.

Thedebateontheimpactoftheseglobalpowershiftsandoftheemerging

internationalagendahasalreadystartedintheNetherlands.Studieshave

beenpublishedontheneedtorevisethestrategicorientationofDutch

foreignpolicy(WRR2010);onthepotentialeconomicimpacton,andthe

opportunitiesofglobalisationfortheDutcheconomy(SEC2008);andonthe

issueofresourcescarcityanditsimplicationsfortheNetherlandsandtheEU

(ScarcityandTransition2009).Itistime,however,tocombinethesedifferent

aspectsforathoroughdebateontheroleandpositionoftheEUandthe

Netherlandsagainstthebackgroundofachanginginternationalsystem.

Twothemesstandoutinthiscontext:theglobaleconomic(im)balancesand

thescarcityofresources.Togetherthesethemesclearlyshowthecomplexity

andscopeoftheshiftsmentionedandtheneedforinternationalcooperation,

whichmakethemanexcellentstarting-pointforadiscussionaboutthe

effectsofthechangingworldorderontheEUandtheNetherlands.

141


Global economic (im)balancesThefirstthemeconcernstheshiftingeconomicbalanceandtheneedfora

revisionofthefinancialandeconomicarchitecture.Thisbecomesvisiblewhen

onetakesacloserlookatthe,ontheonehand,massivereservesofChina

andtheoilandgasproducingcountries,amassede.g.inSovereignWealth

Funds,andthedebtoftheUSandthefinancialpositionofseveralEU

memberstates,ontheother.Dealingwiththeglobaleconomicbalanceisa

complicatedaffair,notonlybecausedifferentcountrieshavedifferentinterests

andareaffecteddifferently,butalsobecausecountriesarenolonger–ifthey

everwere–theonlyactorsinthissector.Theroleofprivateandstate-owned

(investment)banks,hedgefunds,etc.duringthefinancialcrisisisexemplary

forthecomplexityoftheinternationalfinancialsystemoftoday.

Althoughthereseemstobeagreementontheneedtorevisetheinternational

financialandeconomicarchitecture,thereislessconsensusastowhat

specificchangesshouldbebroughtabout.Notonlythedifferinginterestsand

thegrowingroleof(independent)non-stateactorsareamatterofconcernin

thisregard.TherealsoappearstobeashiftawayfromtheWesternliberal

faithinfreemarketstowardsnewsuccessfulformsofstate-induced

capitalismasfavourede.g.byChinaandRussia.Whereasinafreemarket

thegovernmenthaslimitedcontrolovertheinvestmentdecisionsofits

companies,agovernmentfollowingstatecapitalismtakesamoredirect

interestinthefutureofitseconomy.Henceanimportantissueiswhatthe

effectoftheshiftofpower,andinparticulartheriseofstatecapitalism,will

beontheworldeconomicorder,characterisedasithasbeenforthepast

decadesbyliberalisationandglobalisation.Willthesenewpowersadjust,

integrateorchangetherulesofthegame?

AgainstthisbackgroundtheriseoftheG20asanewsemi-institutionalforum

forglobalconsultationandcoordinationismuchdebated,bothintermsof

itsmembershipandwithregardtoitslegitimacy,effectivenessandimpacton

well-establishedinstitutions,suchastheIMFandWorldBank.Questionsare

alsoposedastotheroleoftheEUinthisnewlyemerginginternational

financialandeconomicsystem.WilltheEUlooseoutintheglobaleconomic

rivalrybetweentheUSandChina?Willitbemarginalisedasaresultofa

deepeningcrisisconcerningtheEuro,itsageingpopulationandthecostsof

maintainingthewelfarestate,letaloneitsinabilitytoreachquickand

decisivedecisions?Orwillitbeabletodealwiththesechallenges,strengthen

itscompetitivenessandclaimaleadingroleontheinternationalscene?

142

Security and scarcity of resourcesThesecondthemeconcernsthepotentialsecurityimplicationsofthescarcity

ofnaturalresources.Besidesfearsforaphysicaldepletionofthesefinite

resources,themaincauseforconcernregardinga‘struggle’fornatural

resourcesrelatestoalackofaccessto,andavailabilityofthesebasic

components,whichareessentialforeveryadvancedanddevelopingeconomy.

Duetotheirimportance,theseresourcesandtheissueofscarcityforman

integralpartoftheoverallpoliticalandeconomicrelationsbetweencountries.

Infact,onedoesnotneedtobeastaunchobservertoseethatthisthemeis

notonlydeeplyentrenchedinthewidergeopoliticalrelations,butalso

containsaneconomic,environmentalandsecuritydimension.Theeconomic

dimensionisevidentinthemarketwherethecommoditiesareboughtand

sold,mostnoticeableintimesofhighpricefluctuationswithitseffectson

economicgrowthandstability.Theenvironmentaldimensionofresource

scarcitycanbeseeninthecallforadecreaseintheecologicalfootprintwhen

usingtheseresources.Withanincreasingworldpopulation,andthusan

increasingdemandforthesescarceresources,thisdimensionisgaining

criticalimportance.

And,lastly,thereisthesecuritydimensionofscarcity,astheseresourcesare

seenascriticalfortheeconomicwellbeingofacountry;aconsideration

whichmayseemtojustifytheacquisitionoftheseresourcesbyanymeans

necessary.Whiletheterm‘astruggleforresources’ismainlyused

metaphorically–scarceresourceshaveneveractedasacausefor,butonlyas

amultiplierbehind(armed)conflict–itissaidthatatpresenttheworldis

witnesstoariseof‘resourcenationalism’.Increasinglyresource-richcountries

feelwrongedandinsufficientlycompensatedandaretemptedtoimpose

tariffsandotherrestrictionsontheexportoftheirenergyandminerals;hence

thenationalisationofresources.Whilethistensionbetweenresource-richand

resource-poorcountriesis‘easily’solvedbyopeningupmarkets,itso

happensthatthistrendisaggravatedbythetwodifferentperspectivesonthe

organizationofasuccessfuleconomy.TheWesternfreemarketcompaniesfind

themselvesmoreandmoredealingandincompetitionwithstatesthatfavour

astate-ledeconomicapproach.Itisamatterofdebatewhetherornotthese

statesaremoresuccessfulinprocuringthenecessaryfundsand/orresources

togeneratelong-termeconomicgrowthasopposedtothosestatesfavouring

afree-marketapproach.Fornow,itseemstheydo.

Thiscomplexity,furtherincreasedbythefactthatthedifferentnatural

resources,suchasfood,water,oil,phosphateorrareearthmetals,are

intimatelylinkedwithoneanother,makesithardtocomeupwith‘easy’fixes.

Inessencethesolutionseemsclear:moreresourceefficiencyandatransition

towardsamoresustainableeconomy.Yet,thisagainrequiresinternational


143

cooperation.Andwhileallcountriesdoagreetosomeextentonwhatthe

world’sproblemsare,theirviewsonhowtosolvetheseproblemsremainvery

divergent.Forexample,whichorganisationshouldtaketheleadinthis

discussion?TheUN,theWTO,theFAOoraneworganisation?Onwhichscale

shouldthesediscussionsandsolutionstakeplace:local,regional,global?And

whatrolewilltheresource-poorEuropeanUnionplay?Willitbecomeavictim

ofaglobal‘struggle’forresources?Orwillitleadthewayinthetransitionto

amoresustainableworld?Andifso,howwillthistransitionrelatetothe

economicpositionandcompetitivenessoftheEUandtheNetherlandsinthe

meantime?

The NetherlandsAsforothercountries,thepositionandroleoftheNetherlandswithinthis

changingworldorderisboundtochange.With70%ofitsearningscoming

frominternationaltransactions(inparticulartradeandtransfer),the

Netherlandsishighlydependentonastableandopeninternationalsystem.

Asithappens,thesamefactorsthatmarktheshiftsintheinternational

balanceofpowerandthetransitiontoamorediffusedandcomplex

internationalsystem,bothintermsofactorsandissues,arealsodecreasing

thetraditionalcapacitiesoftheNetherlandstoinfluencetheinternational

systeminaccordancewithitsowninterests.Thisbecomesevenmoreobvious

whenchangeswithintheNetherlandsitselfaretakenintoaccount:i.e.its

decreasingfinancialresourcestosupportanactiveinternationalpolicyand

theshiftinDutchsocietytowardsamorerestrainedandinward-looking

internationalpolicyorientation.

Atthesametime,thenetworkworldoffersmultipleopportunities,intermsof

instantcommunication,informationsharingandthelegitimacyandknowledge

ofnon-stateactors.EspeciallyforacountryliketheNetherlands,withitslong

historyofactiveinternationalparticipationonalmosteverythemeimaginable

andinalmosteveryorganisationpossible,thecurrentdevelopmentsmight

notbeasthreateningasissometimesassumed.Thatsaid,thesefactorswill

haveconsequencesforthewayinwhichtheNetherlandsanditscitizensand

companiesactintheinternationalarenaandtrytopromotetheirinterests.In

otherwords,whatoptionsdoestheNetherlandshavetopursueitsinterests

intherapidlychanginginternationalsystemoftoday?

144

Literature:• ScarcityandTransitionprojectgroup(2009)Scarcity and Transition:

Research questions for future policy(jointprojectbytheministriesof

ForeignAffairsandHousing,SpatialPlanningandtheEnvironment).

Availableonline:

http://international.vrom.nl/Docs/internationaal/Scarcity_and_transition.pdf

(11-01-11).

• SocialandEconomicCouncil(2008)On Sustainable Globalisation:

A world to be won,TheHague:SER.Availableonline:

http://www.ser.nl/en/Publications/Publications/2008/2008_06.aspx

(11-01-11).

• WetenschappelijkeRaadvoorhetRegeringsbeleid(2010)Aan het buitenland

gehecht: over verankering en strategie van Nederlands buitenlandbeleid,

rapportenvoorderegeringnr.85,Amsterdam:AmsterdamUniversityPress.

Englishsummaryavailable,Englishtranslationforthcoming.See:

http://www.wrr.nl/content.jsp?objectid=5547

(11-01-11).

Footnotes

1 This speech is based on a paper that will be published by the Pardee Centre in a collection entitled Governance for Green Economy, (forthcoming, 2011) as part of the preparation for the Rio Plus 20 process.

2 Lee, B. 2009. Managing the Interlocking climate and resource challenges. International Affairs, 85(6): 1101–1116.

3 Stockholm International Water Institute, International Food Policy Research Institute, World Conservation Union and International Water Management Institute. 2005. Let It Reign: The New Water Paradigm for Global Food Security, Final Report to the Commission on Sustainable Development meeting (CSD-13). Stockholm: Stockholm International Water Institute.

4 Taylor, M. 2008. Economic growth puts global resources under pressure. World Finance, 23 May.

5 Hightower, M. and S. A. Pierce. 2008. The energy challenge. Nature 452: 285–6

6 Hightower, M. and S. A. Pierce. 2008. The energy challenge. Nature 452: 285–6

7 Organisation for Economic Co-operation and Development (OECD). 2010. Perspectives on Global Development 2010: Shifting Wealth, Executive Summary, p. 23

8 Lloyds and Chatham House. 2010. Sustainable Energy Security: Strategic Risks and Opportunities for Businesses, Lloyd’s 360 Report.

9 Lloyds and Chatham House. 2010.

10 National intelligence assessment on the national security implications of global climate change to 2030’, testimony by Dr Fingar to US Congress, 25 June 2008; Center for International Earth Science Information Network, Columbia University. 2008. Press release, ‘Climate change may challenge national security, classified report warns.’ New York, 26 June.

11 Taylor, R. 2009. Climate change threatens Pacific, Arctic conflicts. Reuters, 6 January. See also Borgerson, S.G. 2008. Arctic meltdown. Foreign Affairs, 87(2): 63–77

12 Lloyds and Chatham House. 2010.

13 China has imposed export restriction on Neodymium (Nd), Europium (Eu), Cerium (Ce) and Lathanum (La) to 35,000 tons per year, and to completely stop the export of Thulium (Tm), Terbium (Tb), Dysprosium (Dy), Yttrium (Y) and Lutetium (Lu). See Smith, M. 2010: Written Testimony, Mark A. Smith, Chief Executive Officer, Molycorp Minerals, LLC House Science and Technology Committee, Subcommittee on Investigations and Oversight ‘Rare Earth Minerals and 21st Century Industry’, 16 March.

14 Tabuchi, H. 2010. Japan Recycles Minerals From Used Electronics. The New York Times, 4 October.

15 HSBC Global Research. 2010. Sizing the Low Carbon Economy, September.

Colophon

This is a publication of the Dutch Senate, the Scientific Council for Government Policy (WRR), the Advisory Council on International Affairs (AIV) and the Netherlands Institute of International Relations Clingendael.

Address:P.O. Box 200172500 EA The Hague

Photography: Hans Kouwenhoven

Design: Corps, The Hague

Print: StyleMathôt, Haarlem

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Conference Power shifts in a changing world order

The role of the European Union and the position of the Netherlands

The Hague, 4 February 2011

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