Crisis of multilateralism intensifies

The crisis of multilateralism has worsened due to the United States' unilateral actions during the Trump administration, raising concerns about the future of global economic governance. This issue has been growing since the early 2000s, as major emerging countries have challenged existing forums and institutions, feeling underrepresented in global decision-making.

Multilateralism under strain

Global economic and financial cooperation relies on rules, institutions, and multilateral dialogue. However, these rules are increasingly broken, and the legitimacy of institutions is being questioned. The Trump administration's actions, such as the U.S. withdrawal from the Paris Climate Agreement in 2017, marked a significant blow to multilateral efforts and highlighted a shift toward a more transactional and power-based approach.

Roots of the crisis

The crisis of multilateral economic governance predates Trump's presidency and cannot be resolved solely by his departure. His administration accelerated the collapse of a global order already in precarious balance. This revealed the weaknesses of institutions created in the post-war era, which have not kept pace with the economic shift toward the global South.

Emerging economies challenge institutions

Major emerging countries question the representativeness and legitimacy of institutions established at the Bretton Woods conference in 1944. For instance, China’s share in the International Monetary Fund (IMF) is significantly lower than that of the United States and the European Union. This has led to the creation of alternative financial institutions, such as the Asian Infrastructure Investment Bank and the New Development Bank.

G7 and G20 roles in global governance

The G7, representing nearly 44% of global GDP but less than 10% of the world’s population, still holds influence but faces criticism for not addressing key global issues. The G20, established to include emerging economies, has lost some of its initial momentum and now often reflects the priorities of rotating presidencies.

BRICS expansion and global competition

The expansion of the BRICS group in 2023 to include new members from the Middle East and Africa signals a challenge to global governance dominated by advanced countries. BRICS now represents a significant portion of the global economy and population, positioning itself as a counterpart to the G7 for emerging economies.

International monetary system in flux

The collapse of the Bretton Woods system in 1970 marked the end of the dollar as the central currency, though it remains dominant. The Trump administration has avoided responsibility for managing the international monetary system, promoting dollar-backed cryptocurrencies and increasing reliance on the dollar’s role as a diplomatic tool.

Future of international cooperation

The return to a universal multilateral cooperation regime seems unlikely. Instead, a "polycentrism" involving various actors is being considered. Reforming existing institutions, particularly the Bretton Woods institutions, to reflect current economic realities is crucial. The G20 may still be the most relevant forum for global cooperation, despite its challenges.