Transcript: Economic Security in an Era of Global Disruption: The Shifting Dynamics of Global Power - Key Moments
[Title Card: Economic Security in an Era of Global Disruption: The Shifting Dynamics of Global Power – Key Moments]
On March 22nd, 2023, the Canada School of Public Service launched the Economic Security in an Era of Global Disruption event series. The inaugural event, titled "The Shifting Dynamics of Global Power", explored how geopolitics, technology, and climate change are shifting the balance of international economic power. Speakers Yves Tiberghien, Olivia Lazard, and Malcolm Brown spoke to how nation states are increasingly weaponizing trade, acquiring new technology and intellectual property, seeking dominance in the emerging green economy, and altering and eroding international governance structures.
[Title Card: Global Disruptions and its Impact on Economic Security]
[A title card slides in reading: Yves Tiberghien, Professor, University of British Columbia]
We are living through great change. Since 2008-2009 and especially since 2016-17, we have entered a period of structural disruptions and major contestation for the future of the liberal international order or the rules of international order as we call it in Canada.
[A title card slides in reading: Several major changes or disruptions are occurring at the same time]
Several major changes or disruptions are occurring at the same time. The net result is all actors in a global system are going through major adjustments and jockeying for influence and the rules of global order are up for grabs. For a country like Canada it's essential to respond to these shocks.
[A title card slides in reading: Humans have a bias to think things will be the same today as last year]
One of the key cognitive biases for humans is the assumption that tomorrow will be the same as today and next year the same as last year. It's particularly important to overcome this bias in a period of powerful disruptions and intensified geopolitics. We are going through not one but two great industrial revolutions. The digital AI revolution and the green technology revolution. These two revolutions also change the economy fundamentally within the next two decades so by the late 2030s, the future economic prosperity of nations, including Canada, and the ranking of countries will change. It's basically up for grabs based on who does what in those two industrial revolutions.
[A title card slides in reading: Industrial revolutions reset winners and losers.]
Industrial revolutions reset the economy and reset the winners and losers. Essentially, we have separated economies and security since 1945 and we have built a liberal economic order and the idea where trade is out of security with -- we try to avoid what was done in the 19th century trade was used for security purposes for imperialism and to build a public good oriented system. And then security is a tough game, it's always a zero-sum game and we treat that separately. What we discover is in the period of disruption where we are and geopolitical change and competition and confrontation,
[A title card slides in reading: National economic security = geopolitical change + economic change]
elements of the economy are now being securitized. So, they enter under the field of security and that intersection of the two fields is national economic security and it requires -- and it' difficult to do because in a way we don't want the whole global economic system to crash like the 1930s. In a way, this is the end of a stable rules-based order.
[A title card slides in reading: This is the end of predictable behaviour and institutions]
This is the end of linear thinking and predictable behaviour and institutions. The global order is partially up for grabs. And so, we can expect that day after day, months after months, we will see major changes, major shocks, major crisis that will come at us faster than we are used to, that requires resetting our assumptions and our models and institutions.
[Title Card: Future of the Rules-Based International Order]
So, we tend to expect a lot of the U.N. but the U.N.'s effectiveness is a function of the degree of agreement among the five veto powers of the U.N. security council. In other words,
[A title card slides in reading: When dominant states don't agree, institutions don't work]
when the dominant states who we call systemically important states don't agree, global institutions can't work very well. I'm struck when I talk to students from Africa or southeast Asia that the Global South have powerful voice now and they want to regain voices, very proud voices lost in a colonial era. They think this is the end of a purely G7 club. They want to be part of the table and you have to pay attention to the new thinking and behaviour of those global south elite beyond China.
[A title card slides in reading: We have to think about China but also the Global South for the next 30 years]
[A title card slides in reading: Olivia Lazard, Fellow, Carnegie Europe]
Actually I think China will be a big problem for two or three decades but beyond that we will have many other major Global South players and we will also need to have a system that works with them.Actors in the global south as Yves was saying are now the agents of change. They are the agents of change because they are the arbiters of systems rivalry and transition issues. They do not align with any sense of ideology. The notion of democracy versus authoritarianism does not resonate at all.
[A title card slides in reading: They pursue their self-empowerment on their own terms]
They pursue their self-empowerment on their own terms. This is about acknowledging essentially that we are now in an era of polycentric distribution of power which is interestingly something a Russia has very well identified in its national documents already ten years ago and that it wants to generate -- it wants to generate the polycentric distribution of power but the key thing about
[A title card slides in reading: Actors in the Global South are norms challengers]
actors in the global south which are incredibly diverse is they are not norm takers but norms challengers to the right that norms have failed their own interests in terms of economic development and in terms of stabilization and in terms of breaking free from debt burdens and trying -- essentially, reaping the costs of an international rules based order that has been filled with inconsistencies that have built up over time.
[Yves Tiberghien] Canada must stop assuming it can always rely on institutions of the rules-based international order when large powers stop following the rules and they act strategically. Some sectors have become more strategic, and some actors stopped assuming they can rely on self-regulating markets like critical minerals, lithium, semi-conductor, digital AI, green tech increasingly are not functioning like markets anymore. They become strategic sectors. The speed of conversion of various sectors varies but there is a wave of industrial policy tools deployed. Canada and others have mistakenly taken the stability of the system but must
[A title card slides in reading: We must push back and secure a better position for Canada]
identify areas that have become weaponized and learn to push back as well as identify areas where industrial policy tools can secure a better position for Canada. The question becomes where to defend the order with like-minded partners and allies and where to secure national interest to ensure a key position for Canada in the global value chain.
[Title Card: China, Russia, and the weaponization of interdependence]
[Olivia Lazard] So, the model of interdependency isn't just weaponnized within systems rivals but also weaponnized -- it's being weakened not weaponnized within old alliances as a result of the rivalry pushing in different directions. And the difficulty in that is obviously that the system's rivals, particularly in that case we are talking about
[A title card slides in reading: Russia and China will press on fragilities of old alliances]
Russia and China, are intent on making sure that they press on the fragilities inside old alliances. They are trying to essentially weaken this arc of alliances that in their view constrain their power, their forms of political and economic organizations and the way they organize themselves in terms of societies.
[A title card slides in reading: They tap into disruption and sow the seeds for more fragility]
So, they tap into disruption that is pre-exist in terms of fragility at home and also sow the seeds of more and more fragility. And they are intent in doing so on showing how hollow open societies and democracies are even if it means they are using this information and disinformation to try to sew a lot of doubt about the credibility, the integrity and legitimacy of democratic systems, transparent and accountable systems. If we look, for example at Russia and China, they are currently showing an image of being profound, ideologically-aligned partners but it's actually a partnership of convenience. What's interesting about this and it tells you something about the long-term view of China
[A title card slides in reading: China has stomached costs for decades and now is turning tables on the west]
and its ability to stomach costs is that it has been able to turn what the west considered as economic externalities in terms of social, environment and economic costs - it has been able to stomach those for decades until it could turn the tables around and instrumentalize the west's blind spots. It was able to take in sunken costs in terms of its own political economy and when you look for example at the fundamental ecological damages where rare earths have been extracted it shows that you
[A title card slides in reading: China can accept a lot of disruption]
China is able to accept a fairly strong level of disruption or costs in order to rise to power.
[A title card slides in reading: China's ability to absorb costs helps it generate its own political power]
So, this willingness to accept sunken costs on the way to the generation of power and the reproduction of power is a pattern at the heart of how China projects its own political form of power.
[Title Card: Canada's Role as a Middle Power]
[Yves Tiberghien] Well it's actually a great time for middle powers. Middle powers are the critical engine, innovation catalysts, convenors, arbitrators, et cetera that we need in this time of great uncertainty, and we saw Indonesia chair the G20 in a brilliant way. So, I think this is time for being super entrepreneurial and having Canada really wake up to that role. But it's going to be a complex role because it's -- it's doing different things at the same time.
[A title card slides in reading: Our security in Canada is a relational security, we don't do it on our own]
So, we have to be more flexible, more pragmatic and invest in some remaining global pillars that are critical for the planet's survival and maintaining global economic survival. We need to work on security with allies and as part of that together with allies because our -- our security in Canada is a relational security, we don't do it on our own. Canada will probably need to step up in certain domains more so that's one component. We need to work on new pillars that are critical in the green space, the digital space, AI space, and that will require going beyond G7 partners. We can't just stay with the small piece there.
[A title card slides in reading: We will need to build relationships with India, Indonesia, Ethiopia, Chile, and Brazil]
We will have to work with rising global partners and that requires having great working relationships with India, Indonesia, after the war with Ethiopia, a rising country for ten years and so on, right and Chile and now Brazil. So, we need to be much more innovative and engage those new players and any proposal coming from a country like Canada with a great reputation or Indonesia or India, will have much more resonance than just a proposal coming out of Canada and Australia for example so we need -- and I agree with what Olivia said earlier,
[A title card slides in reading: Canada must learn to work within a polycentric world]
part of affirming the national interest of Canada and maintaining rules based order is to work in a polycentric world and to counter the space that has been left to China and Russia in a way that's helpful to the global south countries, treating them as partners but creating things with them and there is so much more to do there.
[Malcolm Brown] I think there is a risk of people thinking that Canada can play its traditional role, the role it like to think it played in the post-world where we were aligned with the emerging Breton woods order. We had the benefit of alignment with the U.S. But we played a constructive role internationally. The power -- the middle power role that we like to brag about as a country in our mythology. I would posit that the environment will be much more challenging, it's not just simply reprising that role and that's mythology. We actually need to realize we have to make choices. Choices that is are much more difficult than Canada choosing not to support the war in Vietnam. But a much more challenging environment and look at how we struggled with Huawei as an example.
[A title card slides in reading: Malcolm Brown, Former Deputy Minister, Public Safety]
So I posit to you that you have been quite positive about the role Canada can play middle powers but it will be a much more challenging environment.
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