The Business Times

America is returning to the world

Published Fri, Mar 12, 2021 · 05:50 AM

IN THE weeks prior to US President Joe Biden's inauguration, many believed that a heavy domestic agenda would leave him with little scope to break quickly and cleanly with former president Donald Trump's purely transactional approach to diplomacy and reengage America in international affairs. But, fortunately for the United States and the world, the Biden administration's efforts to date clearly indicate otherwise.

Mr Biden forcefully outlined his strategic principles in a Feb 19 online speech to the Munich Security Conference. Soon afterward, Treasury Secretary Janet Yellen summarised America's new approach to international economic issues in a remarkable letter to G-20 finance ministers. And on March 3, Secretary of State Antony Blinken comprehensively enumerated the administration's foreign-policy priorities.

These pronouncements point to several consistent themes, several of which are already reflected in the new administration's actions. For starters, Mr Biden's approach will be systemic, not transactional, emphasising strategic continuity and coherence. Unlike Mr Trump, Mr Biden will not call Chinese President Xi Jinping a great friend one day and a dangerous enemy the next. Nor will he refer to Europe as a greater threat to the US economy than China and, soon afterward, hail it as an important ally.

In his Munich speech, Mr Biden argued that the world is at an inflection point in the struggle between autocracy and democracy. He stated that America's "galvanising mission" is to help democracy succeed. Because "democracy will and must prevail", human-rights considerations also will be an important part of Mr Biden's overall approach.

But the "galvanising mission" will not imply US support for regime change abroad, which has backfired so badly in the past. America will instead seek to lead by example and work closely with democratic allies, recognising that it cannot achieve desired outcomes on its own.

Under Mr Biden, America will also fully re-engage with the multilateral system and work within, not against, international institutions. For example, the US has rejoined the 2015 Paris climate agreement; and on April 22, Mr Biden will host an international climate summit at which he is expected to announce more ambitious nationally determined contributions under the Paris accord. These will most likely aim to achieve net-zero greenhouse-gas emissions by 2050, and possibly a 50 per cent reduction from their 2005 levels by 2030.

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When necessary, the administration will seek to reform multilateral institutions rather than bypassing or obstructing them. The US has thus also reengaged with the United Nations Human Rights Council and stopped blocking Ngozi Okonjo-Iweala, a former Nigerian finance minister and senior World Bank official, from becoming director-general of the World Trade Organization.

These early examples of Mr Biden's systemic approach in action are to be welcomed. But it is an approach that will face particularly strong challenges in two areas: human rights and China.

The first issue came into focus following the recent release of a US intelligence report clearly implicating Saudi Arabia's de facto ruler, Crown Prince Mohammed bin Salman, known as MBS, in the gruesome 2018 murder of journalist Jamal Khashoggi at the Saudi consulate in Istanbul.

The publication of the report suggests that the Biden administration is distancing itself somewhat from Saudi Arabia, and was followed by US sanctions on members of the Saudi security establishment and officials close to the crown prince. But MBS himself will face no personal sanctions, reflecting Saudi Arabia's strategic importance and the likelihood that he will rule the kingdom for a long time.

Human-rights activists strongly criticised the decision. But Mr Biden struck the right balance between condemning Mr Khashoggi's murder and other human rights abuses in Saudi Arabia - in addition to the limited sanctions, Mr Biden has said he will not talk personally to MBS - and recognising the need to work with the Kingdom on difficult regional problems.

IDEOLOGICAL, ECONOMIC RIVALRY

As for China, it is clear that the Biden administration sees ideological and economic rivalry as the dominant feature of the bilateral relationship. But this will not preclude cooperation whenever possible and useful, notably on international public goods such as climate action and pandemic control.

Because China has the potential to rival American capabilities soon (if not already), the US will have to strike difficult compromises in many domains. Mr Biden will rely on the power of example and highlight the successes of democracies able to deliver for their citizens. He will also negotiate hard with China on technological and economic matters, while not letting clear ideological differences lead to open conflict.

On economic issues, Dr Yellen's letter to her G-20 colleagues marks an emphatic US return to multilateralism. Importantly, it calls on the International Monetary Fund (IMF) to prepare a plan for a new allocation of special drawing rights (SDRs), the IMF's reserve asset, a move that her predecessor, Steven Mnuchin, had blocked.

Following their Feb 26 meeting, G-20 finance ministers and central bank governors asked the IMF to develop such a plan, which - one hopes - will take into account the need to implement a possible US$500 billion SDR allocation in a way that benefits developing countries. This could be the first step towards a major reform of the IMF's financing mechanisms, which are too reliant on ad hoc borrowing.

Dr Yellen's letter also contains a welcome commitment by the US to work with the Organisation for Economic Co-operation and Development (OECD)/G-20 Inclusive Framework on Base Erosion and Profit Shifting. Tax avoidance and aggressive tax minimisation by international corporations, particularly in the digital sector, present a major fiscal and equity challenge for the international economy. Dr Yellen said the US shares the aim of "finding workable solutions in a fair and judicious manner".

Implementing an overall strategy to bolster liberal democracy and rebuild multilateralism will inevitably involve many shades of gray, as reality imposes unanticipated constraints. But the Biden administration's early actions and the sincerity of its declarations suggest that it could become the most internationally transformative US administration in decades.

But whether that happens does depend, crucially, on Mr Biden's domestic success in fostering economic progress for all Americans. Leading by example begins at home. PROJECT SYNDICATE

  • The writer, a former minister of economic affairs of Turkey and administrator for the United Nations Development Programme, is a senior fellow at the Brookings Institution

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