Blame the Economists?


November 7, 2018

Blame the Economists?

by
economists

Ever since the 2008 financial crash and subsequent recession, economists have been pilloried for failing to foresee the crisis, and for not convincing policymakers of what needed to be done to address it. But the upheavals of the past decade were more a product of historical contingency than technocratic failure.

 

BERKELEY – Now that we are witnessing what looks like the historic decline of the West, it is worth asking what role economists might have played in the disasters of the past decade.

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From the end of World War II until 2007, Western political leaders at least acted as if they were interested in achieving full employment, price stability, an acceptably fair distribution of income and wealth, and an open international order in which all countries would benefit from trade and finance. True, these goals were always in tension, such that we sometimes put growth incentives before income equality, and openness before the interests of specific workers or industries. Nevertheless, the general thrust of policymaking was toward all four objectives.

Then came 2008, when everything changed. The goal of full employment dropped off Western leaders’ radar, even though there was neither a threat of inflation nor additional benefits to be gained from increased openness. Likewise, the goal of creating an international order that serves everyone was summarily abandoned. Both objectives were sacrificed in the interest of restoring the fortunes of the super-rich, perhaps with a distant hope that the wealth would “trickle down” someday.

At the macro level, the story of the post-2008 decade is almost always understood as a failure of economic analysis and communication. We economists supposedly failed to convey to politicians and bureaucrats what needed to be done, because we hadn’t analyzed the situation fully and properly in real time.

Some economists, like Carmen M. Reinhart and Kenneth Rogoff of Harvard University, saw the dangers of the financial crisis, but greatly exaggerated the risks of public spending to boost employment in its aftermath. Others, like me, understood that expansionary monetary policies would not be enough; but, because we had looked at global imbalances the wrong way, we missed the principal source of risk – US financial mis-regulation.

Still others, like then-US Federal Reserve Chairman Ben Bernanke, understood the importance of keeping interest rates low, but overestimated the effectiveness of additional monetary-policy tools such as quantitative easing. The moral of the story is that if only we economists had spoken up sooner, been more convincing on the issues where we were right, and recognized where we were wrong, the situation today would be considerably better.

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The fact that Obama failed to take aggressive action, despite having recognized the need for it beforehand, is a testament to Tooze’s central argument. Professional economists could not convince those in power of what needed to be done, because those in power were operating in a context of political breakdown and lost American credibility. With policy making having been subjected to the malign influence of a rising plutocracy, economists calling for “bold persistent experimentation” were swimming against the tide – even though well-founded economic theories justified precisely that course of action.—

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The Columbia University historian Adam Tooze has little use for this narrative. In his new history of the post-2007 era, Crashed: How a Decade of Financial Crises Changed the World, he shows that the economic history of the past ten years has been driven more by deep historical currents than by technocrats’ errors of analysis and communication.

Specifically, in the years before the crisis, financial deregulation and tax cuts for the rich had been driving government deficits and debt ever higher, while further increasing inequality. Making matters worse, George W. Bush’s administration decided to wage an ill-advised war against Iraq, effectively squandering America’s credibility to lead the North Atlantic through the crisis years.

It was also during this time that the Republican Party began to suffer a nervous breakdown. As if Bush’s lack of qualifications and former Vice President Dick Cheney’s war-mongering weren’t bad enough, the party doubled down on its cynicism. In 2008, Republicans rallied behind the late Senator John McCain’s running mate, Sarah Palin, a folksy demagogue who was even less suited for office than Bush or Cheney; and in 2010, the party was essentially hijacked by the populist Tea Party.

After the 2008 crash and the so-called Great Recession, years of tepid growth laid the groundwork for a political upheaval in 2016. While Republicans embraced a brutish, race-baiting reality-TV star, many Democrats swooned for a self-declared socialist senator with scarcely any legislative achievements to his name. “This denouement,” Tooze writes, “might have seemed a little cartoonish,” as if life was imitating the art of the HBO series “Veep.”

Of course, we have yet to mention a key figure. Between the financial crisis of 2008 and the political crisis of 2016 came the presidency of Barack Obama. In 2004, when he was still a rising star in the Senate, Obama had warned that failing to build a “purple America” that supports the working and middle classes would lead to nativism and political breakdown.

Yet, after the crash, the Obama administration had little stomach for the medicine that former President Franklin D. Roosevelt had prescribed to address problems of such magnitude. “The country needs…bold persistent experimentation,” Roosevelt said in 1932, at the height of the Great Depression. “It is common sense to take a method and try it; if it fails, admit it frankly and try another. But above all, try something.”

The fact that Obama failed to take aggressive action, despite having recognized the need for it beforehand, is a testament to Tooze’s central argument. Professional economists could not convince those in power of what needed to be done, because those in power were operating in a context of political breakdown and lost American credibility. With policymaking having been subjected to the malign influence of a rising plutocracy, economists calling for “bold persistent experimentation” were swimming against the tide – even though well-founded economic theories justified precisely that course of action.

Still, I do not find Tooze’s arguments to be as strong as he thinks they are. We economists and our theories did make a big difference. With the exception of Greece, advanced economies experienced nothing like a rerun of the Great Depression, which was a very real possibility at the height of the crisis. Had we been smarter, more articulate, and less divided and distracted by red herrings, we might have made a bigger difference. But that doesn’t mean we made no difference at all.

J. Bradford DeLong is Professor of Economics at the University of California at Berkeley and a research associate at the National Bureau of Economic Research. He was Deputy Assistant US Treasury Secretary during the Clinton Administration, where he was heavily involved in budget and trade negotiations. His role in designing the bailout of Mexico during the 1994 peso crisis placed him at the forefront of Latin America’s transformation into a region of open economies, and cemented his stature as a leading voice in economic-policy debates.

China’s Foreign Policy under Xi Jinping


October 24, 2018

China’s Foreign Policy under Xi Jinping

by Neil Thomas, University of Chicago

http://www.eastasiaforum.org/2018/10/21/chinese-foreign-policy-under-xi-jinping/

  …”contrary to some recent commentary, it seems unlikely that ‘world power’ or ‘world domination’ are China’s priorities. The CCP observed the Soviet errors of external overreach and antagonism toward the US-led system during the Cold War. China now interacts with the international order like other major states: it complies with the order because to do so serves its interests and tries to influence this order where it does not”.–Neil Thomas

There is a risk of a ‘new Cold War’ between the United States and China. After decades of bilateral engagement and multilateral collaboration, the Trump administration’s first National Security Strategy (NSS) branded China a ‘revisionist power’ that seeks to ‘displace the United States in the Indo-Pacific region’ and ‘shape a world antithetical to [US] values and interests’ in an age of renewed ‘great power competition’.

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Rising powers like China rattle ruling powers like the United States because their ascendance creates tension within existing structures of global power. US power lies in its unmatched military capabilities and the ‘international order’ of multilateral institutions, interstate rules and global norms that promote economic openness and rules-based dispute resolution. The charges of ‘revisionism’ levelled in the NSS show that the Trump administration fears that China will replace the United States as global hegemon and threaten the basic tenets of international order.

China has indeed become a more active participant in global affairs under the leadership of Xi Jinping, who took office in November 2012. Signs of China’s rising power, though, are a natural result of its growth. More important is what China intends to do with its newfound capabilities. Does Xi want to revolutionise Chinese foreign policy? Stop opening China’s economy? Overturn the international order?

International policymakers must study Xi’s words because he, as the Chinese Communist Party’s (CCP) General-Secretary and head of the Central Foreign Affairs Commission, is pivotal in setting the overarching orientations and strategies of China’s foreign policy. The most authoritative articulation of Xi’s policy agenda is his ‘Report’ to the 19th CCP National Congress in October 2017.

An analysis of Xi’s foreign policy discourse suggests that there may exist more continuity than often assumed between the strategies of Xi and his predecessors. This intersection between past and present is captured neatly in the foreign policy section of Xi’s Report: ‘Following a path of peaceful development and working to build a community of common destiny for humankind’.

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What’s new is that Xi stamped his authority on CCP foreign policy under his signature formulation of ‘building a community of common destiny for humankind’ — although Hu Jintao had used the phrase previously. The ‘community of common destiny’ is basically an international system in which deeper economic integration and political dialogue eases conflict and bolsters security. Xi is proactively ‘building’ this future through an intense focus on the Belt and Road Initiative (BRI) and global governance.

What’s not new is that Xi retains the ‘peaceful development’ strategy articulated by Hu in the mid-2000s, which derives from the CCP’s ‘basic line’ of ‘peace and development’ in international relations that Deng Xiaoping introduced in 1985. In the Report, Xi framed the foreign policy achievements of his first five-year term, including the BRI and the Asian Infrastructure Investment Bank, as ‘new contributions to global peace and development’. He has told Party leaders that the ‘peace and development’ strategy is ‘aligned with the fundamental interest of the country’ and is a ‘fundamental foreign policy goal’.

This ‘peace and development’ strategy reflects the belief that China’s economic development requires a peaceful external environment and cooperative relations with major powers. It replaced the Maoist creed of inevitable conflict between the capitalist and socialist worlds as the CCP’s official ‘assessment of the international situation’. Deng believed this strategy would help China ‘exert a much greater influence’ in a global system that the CCP perceived as dominated by Western powers.

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Xi’s policy statements imply that the overarching concern of China’s foreign policy remains the creation of a ‘more enabling international environment’ for China’s continued development. As China’s interests continue to expand, so too does its desire to participate in global affairs.

But contrary to some recent commentary, it seems unlikely that ‘world power’ or ‘world domination’ are China’s priorities. The CCP observed the Soviet errors of external overreach and antagonism toward the US-led system during the Cold War. China now interacts with the international order like other major states: it complies with the order because to do so serves its interests and tries to influence this order where it does not.

Xi’s Report also reaffirmed Deng’s ‘opening to the outside world’ as a ‘basic national policy’. ‘Opening’ for Deng meant China would integrate into the global economy, enter international institutions and improve living standards in a manner that sustained CCP control.

Xi has insisted that China ‘absolutely must not waver’ from ‘reform and opening’ because it is the ‘propelling force’ behind China’s ‘international status’. He even framed his signature economic policy — a ‘new normal’ focused on consumption, services and markets — as a ‘new structure’ of reform and opening that ‘improves its quality and level’.

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Xi’s continuation of key strategies like ‘peace and development’ and ‘reform and opening’ suggest he may not have changed China’s objectives so much as the means by which the CCP pursues them. Xi’s China is ‘revisionist’ in the narrow sense of hoping for changes that reflect new realities but not in the existential sense of wanting to supplant the current order or global hegemon.

Until recently, White House views on China were quite consistent: the United States would ‘welcome the rise of a stable, peaceful, and prosperous China’ and ‘reject the inevitability’ of ‘confrontation’ if China acted within the international order. But the latest NSS said the ‘engagement’ strategy had ‘failed’.

The endurance of ‘reform and opening’ and of ‘peace and development’ in Xi’s foreign policy discourse imply that engagement is not such a failure. The continuance of these two key foreign policy concepts intimate that, while Xi’s CCP does want to project China’s power, it is still constrained by a belief in the benefit to China of global order and stability.

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US relative power in global affairs is declining, but this trend is mostly the result of other countries’ embrace of the international order built by the United States, which nonetheless retains significant advantages in military, diplomatic, commercial, technological and cultural power. It would best advance its national interests by accepting but proactively managing China’s rise within an improved iteration of this order. We should avoid a ‘new Cold War’.

Neil Thomas is Research Associate in the Think Tank of The Paulson Institute at the University of Chicago.

This article appeared in the most recent edition of East Asia Forum Quarterly, ‘Asian crisis, ready or not’.

Brexit–David Cameron led us to this calamity.


October 23, 2018

 

“David Cameron is a former PM. He not only has the right to offer his solution but a duty. If he is to earn the right to a hearing, however, he must first find not only self-knowledge and courage, but an un-English seriousness of purpose he has evaded all his life.”–Nick Cohen

John Major, Tony Blair and Gordon Brown have warned of the dangers of Brexit. But where is the former Prime Minister who called the referendum that will blight Britain for as far ahead as anyone can see? Whatever happened to that likely lad? David Cameron doesn’t want to talk about it, one of his friends tells me. “He doesn’t defend the referendum, but won’t say he made a mistake either. Europe is like a family scandal. We know what’s happened but we don’t say a word: it’s his no-go zone.”

At a personal level, the consequences swirl around him. I may be exhausting your capacity for compassion but the smallest of the casualties of Brexit has been the good fellowship of the Chipping Norton set. Naturally, the Cotswolds’ wealthy Leavers are grateful. But Cameron must resent them. He must know that he has been the useful idiot who succumbed to the demands of Rupert Murdoch’s Rebekah Brooks, a member of the local nouveau gentry by virtue of her converted barn, in the crashingly stupid belief that no harm would come from his surrender.

Invitations to “kitchen suppers” from Remainers, however, can only include Samantha Cameron’s name – if, they are extended at all. Tania Rotherwick invited the Camerons to her pool at the magnificent Cornbury Park estate before she split from her husband and Cameron split Britain from Europe. She is now particularly contemptuous, I hear.

Cameron’s memoirs were meant to be published this month but have been delayed until next year. The early signs are ominous. A book has to be coherent if it is to find a readership: its opening must prefigure its conclusion. As described in the publishing press, Cameron’s effort will have no consistency. He will tell the story of the formation of the coalition, his contributions to economic, welfare and foreign policy, his surprise victory in the 2015 election and then – as if from nowhere – the conventional memoir will end with the author carelessly deciding he will settle the European question, without planning a campaign or preparing an argument and, instead, launching a crisis that will last for decades. Nothing will make sense. Nothing will hang together. It’s as if a romcom were to conclude with serial killers murdering the cooing lovers or Hilary Mantel were to have aliens invade Tudor England on the last page of her Thomas Cromwell trilogy.

The book Cameron cannot write would accept that his political battles and achievements were as nothing when set against his decision to appeal to the worst of the Tory party. It would begin with Cameron honouring the decision that won him the Conservative leadership in 2005. He would confess that he should have known better than to pull the Conservatives out of the centre-right group in the European parliament and align them with Law and Justice, the know-nothing Polish nationalists who are reducing their country to an ill-governed autocracy. The manoeuvre was pure Cameron: tactics above strategy; appeasement instead of confrontation.

The pattern continued throughout his premiership. He thought he could buy off the right by refusing to explain the benefits of EU membership to the voters. At one point in 2014 he threatened to leave the EU. He then turned around in 2016 and asked the public to believe that leaving would be a disaster and was surprised when 17.4 million men and women he had never treated as adults worthy of inclusion in a serious conversation ignored him.

If he were being honest, Cameron would admit too that Brexit ought to bring an end to a British or, to be specific, English, style that is by no means confined to the upper class, but was everywhere present among the public-school boys who ruled us.

‘One Etonian led the Remain campaign and another led the Leave campaign, and the English couldn’t see why that was wrong.’
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‘One Etonian led the Remain campaign and another led the Leave campaign, and the English couldn’t see why that was wrong.’ Photograph: Frantzesco Kangaris for the Guardian

I mean the ironic style that gives us our famously impenetrable sense of humour (which we will need now the rest of the world is laughing at us). The perfidious style that allows us to hide behind masks and has made England superb at producing brilliant actors for the West End but hopeless at producing practical politicians for Westminster. The teasing style of speaking in codes that benighted foreigners can never understand, however well they speak English. The cliquey style that treats England as a club, not a country, and allowed Jeremy Corbyn to say that Jews cannot “understand English irony”, however long their ancestors have lived here.

 

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The deferential style that allowed one Etonian to lead the Remain campaign and another to lead the Leave campaign and for the English to not even see why that was wrong. The life’s-a-game-you-shouldn’t-take-too-seriously style that inspired Cameron to say he holds “no grudges” against Boris Johnson now the match is over and the covers back on the pitch.

The gentleman amateur style that convinced Cameron he could treat a momentous decision like an Oxford essay crisis and charm the electorate into agreeing with him in a couple of weeks, as if voters were a sherry-soaked don who could be won round with a few clever asides. The effortlessly superior style that never makes the effort to ask what the hell the English have to feel superior about. The gutless, dilettantish and fatally flippant style that has dominated England for so long and failed it so completely. The time for its funeral has long passed.

A politician who bumped into Cameron said he thinks the referendum result must be respected, but that Britain should protect living standards by going for the softest Brexit imaginable and staying in the single market. This is a compromise well to the “left” of Theresa May and Corbyn’s plans and is worth discussing. Whatever his critics say, David Cameron is a former PM. He not only has the right to offer his solution but a duty. If he is to earn the right to a hearing, however, he must first find not only self-knowledge and courage, but an un-English seriousness of purpose he has evaded all his life.

Nick Cohen is an Observer columnist

Trump’s Unilateralism, US Dollar and Its Discontents


October 12, 2018

Trump’s Unilateralism, US Dollar and Its Discontents

by Barry Eichengreen

https://www.project-syndicate.org/commentary/dollar-could-lose-global-hegemony-by-barry-eichengreen-2018-10

Having unilaterally reimposed sanctions on Iran, US President Donald Trump’s administration is threatening to penalize companies doing business with the Islamic Republic by denying them access to US banks. But that could hasten the dollar’s demise as the main global currency.

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Trump is squandering US leverage

BRUSSELS – US President Donald Trump’s unilateralism is reshaping the world in profound and irreversible ways. He is undermining the working of multilateral institutions. Other countries, for their part, no longer regard the United States as a reliable alliance partner and feel impelled to develop their own geopolitical capabilities.

Now the Trump Administration is eroding the dollar’s global role. Having unilaterally reimposed sanctions on Iran, it is threatening to penalize companies doing business with the Islamic Republic by denying them access to US banks.

The threat is serious because US banks are the main source of dollars used in cross-border transactions. According to the Society for Worldwide Interbank Financial Telecommunication (SWIFT), dollars are used in nearly half of all cross-border payments, a share far greater than the weight of the US in the world economy.

In response to the Trump administration’s stance, Germany, France, and Britain, together with Russia and China, have announced plans to circumvent the dollar, US banks, and US government scrutiny. “Plans” may be a bit strong, given that few details have been provided. But the three countries have described in general terms the creation of a stand-alone financial entity, owned and organized by the governments in question, to facilitate transactions between Iran and foreign companies.

Those companies will presumably settle their claims in euros, not dollars, freeing them from dependence on US banks. And insofar as the Europeans’ special-purpose financial vehicle also bypasses SWIFT, it will be hard for the US to track transactions between Iran and foreign companies and impose penalties.

Is this scheme viable? While there is no purely technical obstacle to creating an alternative payments channel, doing so is certain to enrage Trump, who will presumably respond with another round of tariffs against the offending countries. Such, unfortunately, is the price of political independence, at least for now.

Having learned a painful lesson about dependence on the dollar, will other countries move away from it more generally? The fact that the dollar is used so widely makes doing so difficult. Banks and companies prefer using dollars because so many other banks and companies use dollars and expect their counter parties to do likewise. Shifting to another currency would require coordinated action. But with the governments of three large European countries having announced just such coordination, such a scenario can no longer be excluded.

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It is worth recalling how the dollar gained international prominence in the first place. Before 1914, it played essentially no international role. But a geopolitical shock, together with an institutional change, transformed the dollar’s status.

The geopolitical shock was World War I, which made it hard for neutral countries to transact with British banks and settle their accounts using sterling. The institutional change was the Federal Reserve Act, which created an entity that enhanced the liquidity of markets in dollar-denominated credits and allowed US banks to operate abroad for the first time. By the early 1920s the dollar had matched and, on some dimensions, surpassed sterling as the principal vehicle for international transactions.

This precedent suggests that 5-10 years is a plausible time frame over which the US could lose what Valéry Giscard d’Estaing, then France’s Finance Minister, famously called the “exorbitant privilege” afforded it by issuing the world’s main international currency. This doesn’t mean that foreign banks and companies will shun the dollar entirely. US financial markets are large and liquid and are likely to remain so. US banks operate globally. In particular, foreign companies will continue to use dollars in transactions with the US itself.

But in an era of US unilateralism, they will want to hedge their bets. If the geopolitical shock of Trump’s unilateralism spurs an institutional innovation that makes it easier for European banks and companies to make payments in euros, then the transformation could be swift (as it were). If Iran receives euros rather than dollars for its oil exports, it will use those euros to pay for merchandise imports. With companies elsewhere earning euros rather than dollars, there will be less reason for central banks to hold dollars in order to intervene in the foreign exchange market and stabilize the local currency against the greenback. At this point, there would be no going back.

One motivation for establishing the euro was to free Europe from excessive dependence on the dollar. This is likewise one of China’s motivations for seeking to internationalize the renminbi. So far, the success of both efforts has been mixed, at best. In threatening to punish Europe and China, Trump is, ironically, helping them to achieve their goals.

Moreover, Trump is squandering US leverage. Working with the Europeans and the Chinese, he could have threatened Iran, and companies doing business there, with comprehensive and effective sanctions had there been evidence that the country was failing to live up to its denuclearization obligations. But working together to ensure Iran’s compliance was, of course, precisely what the Joint Comprehensive Plan of Action, renounced by the Trump administration earlier this year, was established to do.

 

 

Cambodia’s Foreign Policy: to secure Cambodia’s place in a peaceful multilateral and interdependent world.


October 1, 2018

Cambodia’s Foreign Policy in a complex global geo-political landscape.

https://www.khmertimeskh.com/50537969/cambodias-worldview-2018/

Cambodia’s foreign policy has been robustly reformed after a leadership change in 2016. Over the past two years, Foreign Minister Prak Sokhon and his team have taken concrete measures to enhance institutional capacity as well as to improve work-flow through the adoption and promotion of meritocracy, in which qualified officials have been spotted and promoted.

Although a foreign policy strategy is being articulated, Cambodia has at least been realistic and straight forward in its worldview and positions taken on some international issues. As a small state, Cambodia has taken a safe and smart approach towards sensitive geo-political issues to avoid being perceived as taking sides. But sometimes it also adopts a bold approach when core national interests are at stake.

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Win-Win  Policy for Peace at Home and Smart Partnerships Abroad for Prosperity in a multilateral and interdependent world.

Last week, Prime Minister Hun Sen walked the extra mile to explain Cambodia’s bold position on domestic and international issues at the 73rd United Nations General Assembly in New York. The statement highlighted core principles and objectives of Cambodia’s foreign policy amidst rising complexity and uncertainties in the global geopolitical landscape.

Firstly, Cambodia has been consistent in demanding that major powers respect the sovereignty and independence of weaker states by strictly adhering to the non-interference principle. Cambodian ruling elites are of the view that the “first-class” superpower – with obvious reference to the United States – has asserted its interventionist policy under the guise of universal values such as political freedom, democracy and human rights.

Prime Minister Hun Sen stated human rights is being used as “a mission to impose civilisation” upon other weaker states under the pretext of “the protection of political rights”. This is the strongest statement so far by a Cambodian leader at the UNGA concerning foreign intervention. It clearly shows that Cambodia will not be submissive to foreign pressure when it comes to the human rights agenda.

In well-crafted  remarks, he added, “big countries should not attempt to install their administrative system on other small countries, because those small countries also possess sovereignty and legitimate aspiration to maintain their own identities”.

It is historically proven that interventionism by superpowers cause conflicts and human suffering in different parts of the world. Small and weak states have been victims of the ambitions of major powers to build an unfair system to serve their selfish interests. The behaviour of some irresponsible major powers could be understood as in the Khmer proverb, “Burning other people’s houses just to boil their own eggs”. Learning the lessons from its own turbulent history, Cambodia now understands the consequences if it lets down its guard.

Other than being wary of foreign intervention, Cambodia is also against unilateralism and protectionism. US foreign policy has shifted from a dual track diplomacy of bilateralism and multilateralism towards unilateralism and bilateralism. Transactional international politics and protectionism being exercised by President Donald Trump and his team are triggering a full-fledged trade war, jeopardising international peace and development. If there is a Cold War 2.0 or World War III, the US would be held most accountable. Perhaps, it will lead to the end of the American century.

Unilateralism is the tool of superpowers to impose their views on other states in order to achieve their power projection agenda. “The imposition of unilateral sanctions has become a popular weapon of powerful nations in managing their international politics, which is completely driven by geopolitical agendas,” said Prime Minister Hun Sen, when addressing the UN.

 

Cambodia also called upon the international community to work together to oppose interventionism, unilateralism, and protectionism in order to save multilateralism and global governance. Small states must be bolder to stand up against the major powers and be counted. Cambodia for its part has taken a proactive approach in building a fair and just international system that serves the interests of both big and small countries.

Complex interdependence, from the Cambodian perspective, is the foundation of international peace and stability. Nation states must work together to deepen international cooperation and partnerships in order to effectively implement sustainable development goals as well as to resolve emerging global issues such as climate change, natural disasters, international terrorism, poverty, and armed conflicts.

Cambodia has grown rapidly because of good economic policies, combined with the return of peace after a tumultuous civil war, a conducive neighbourhood effect within ASEAN and the Greater Mekong Subregion and large inflows of foreign capital. As the country is integrated into the global economy, it has a strong interest in promoting a rules-based international order, which is something new for Cambodia’s foreign policy.

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Cambodian troops take an oath of allegiance in Phnom Penh, Cambodia, Jan. 18, 2018. Cambodia sent the eighth batch of 184 peacekeepers to Lebanon to replace the seventh group, whose one-year United Nations peacekeeping mission in that country had come to an end. (Xinhua/Sovannara)

Cambodia has stressed the importance of international law and the “legitimacy of international legal order” although has not elaborated on what constitutes rules-based order and what Cambodia needs to do more to strengthen the order as such.

“Cambodia, as a small economy, believes in the interests of a rules-based international cooperation,” said Prime Minister Hun Sen.

There is an increasing concern that without the respect of international law and norms, global institutions such as the United Nations and World Trade Organization will become less relevant in promoting peaceful settlement of disputes between countries. The US, which had led the international liberal order since the end of World War II, is now disrupting globalization and marginalizing global institutions.

Within the context of a zigzag trajectory of world politics, Cambodia’s foreign policy strategy will focus on the promotion of multilateralism, interdependence, rules-based international order, and a fair and just global governance system.