Sanjeev Ahluwalia | Global trust deficit: Where have all the leaders gone?
Like spy thrillers, which rarely focus on trust as the central plot, global politics is increasingly based on trust deficit. Could the lacklustre global leadership since the end of the Cold War in the early 1990s be the reason? Compared to the aftermath of the Second World War, political achievements in the new millennium seem puny and overwhelmingly self-serving, albeit more so for individual leaders, than their countries. The ongoing Ukraine-Russia conflict, Israel’s military adventurism in the Gaza Strip and now the Golan Heights, China’s braggadocio on the border with India, the antagonism in the South China Sea and intimidation of Taiwan are all instances, where conflict -- a convenient distraction from domestic shortcomings -- breeds distrust.
Tangential, least-cost mechanisms to punish transgressors of the peace spawn new systemic risks. Consider, that economic sanctions on the purchase of Russian energy, devised as a rap for its Ukraine adventure, created a new security risk by incentivizing options to the dollar-dominated system for the settlement of international payments. In turn, US President-elect Donald Trump has threatened countries exploring dollar alternatives for global settlements with trade sanctions!
Global disarray is inherent to the unravelling of the consensus on climate action in Glasgow in 2021. Gone is the desire to comply with the Kyoto 1990 principle of the “common but differentiated responsibilities” which front-loads climate action for developed economies, making them squarely responsible for consuming more than their per capita share of the historical carbon emissions budget. Not only have the agreed finances ($100 billion per year) not been provided to the developing countries, but the European Union has gone one step further by scheduling a carbon tax, effective from 2026, on imports exceeding a specified carbon intensity. Ostensibly designed to preserve the competitiveness of domestic EU producers against “dirty” imports, it conveniently fast-forwards and imposes developed world obligations for climate mitigation action on all exporting developing countries, in defiance of the Kyoto mandate.
Some of this backsliding could be because three decades on, several developing economies have quickly become less poor. Consider that 48 per cent of the growth in global GDP was driven by the United States and its European allies during 1960-1980. During 2000-2023 they were down to just a 28 per cent share. In contrast, China grew from contributing a two per cent share in global GDP, in the earlier period, to 11 per cent over the latter period. India’s contribution grew slower, but it also increased from one per cent to five per cent. The change in relative economic muscle and the spectacular rise of China raises the question whether a rearrangement of global responsibilities is also not necessary.
This conversation has long been stymied by the reluctance of the entrenched order to smell the coffee and initiate a more equitable sharing of the levers of global power in the United Nations and other multilateral bodies.
The consequence of ignoring shifts in global economic power are most visible in the growing trend for a brazen transactional approach to global relations. China’s wolf warrior diplomacy, its opaque bilateral infrastructure financing initiatives and military stridency in the South China Sea are examples. Even the United States, till recently an advocate of an open global economic order, still the mightiest military power and the most dynamic developed economy, growing faster than the global economy is now turning mercantilist, building trade walls and adopting industrial protection policies more suitable for poor, developing economies with nascent economies. This flags a complete breakdown in global economic consensus.
It was not always so. Mahatma Gandhi built trust and solidarity across castes and communities in India (1920-1947) at a time when the very concept of nationality in India was nascent or colonial at best. To give this “big tent’ a political structure, India chose democracy, modelling itself on countries like the UK -- at the time, one sixth its population, and the US, half its population, France and Ireland -- all significantly richer and well-endowed with infrastructure. Dismissed by colonial rulers at the time, as an unlikely fit for India, democracy remains its bedrock even as it works to become the third largest economy.
Margaret Thatcher drew as many bouquets as brickbats for disrupting the economic order in the UK. But her 1980s drive to privatise government and bolster business set the tone for more than four decades of global governance and efficiency reform in the developing world. Compare that with the political theatrics around Brexit which reduced the UK’s influence to the moat around its shores.
Nelson Mandella’s long, principled struggle against apartheid, touched hearts and minds globally. After the end of apartheid in 1994, his inclusiveness consolidated South Africa’s role in African economic development by preserving the integrity of the inherited institutional architecture.
In the US, Henry Ford set the tone in 1912 by creating a motorized car, the Model T, for common use, as did Karl Benz in Germany. Around these cars grew a globally replicable ecosystem of manufacturing-led development which spawned a large, well-paid middle class powering the economy with domestic consumption. A century later this model is increasingly broken. Manufacturing productivity has improved
vastly with digital design, automation, and robotics but the supply of “good” jobs has fallen behind population growth, reducing the net benefits for workers and increasing benefits for those with capital invested in such enterprises. Productivity gains, concentrated at the top, do nothing for providing gainful and satisfying work at scale, beyond “burger flipping,” for a workforce surging on the back of degenderized occupations, better medical care, and immigration.
In China, after the ideological purification of the Long March, Mao Zedong in 1949 curated the transformation of an ancient monarchy into an equitable but inefficient Asian version of Communism, five times more populous than the Soviet Union. By the 1980s, with the material gains from centralized production and statism stagnating, Deng Xiaoping boldly encouraged economic reform. Import of foreign investment, technology, and access to foreign education rapidly retrofitted China, making it a hub for global supply chains, enhancing the availability of domestic jobs, reducing poverty, and providing public resources for new infrastructure.
In contrast, contemporary global leadership appears blind to inclusive goals which can cement social cohesion. It seems unmindful of the economic paradigm that inefficiency bleeds national wealth and is uninterested in the proposition that the best policy options come with personal and political risk. Clinging to the wheel is human but surely not at the expense of sinking the ship unless an escape route exists, to a second home on Mars.