by Katinka Barysch

Angela Merkel can be content with the outcome of the G8 summit in Heiligendamm which she chaired with her by now characteristic mix of modesty, determination and pragmatism. Many people had predicted that the meeting would end in acrimony because of US-European disagreements on climate change and because of mounting tensions between Russia and the West. Instead, Merkel brokered a couple of impressive-looking headline agreements. Moreover, the meeting has proved those people wrong who say that the G8 is an irrelevant talking shop. Heiligendamm showed it is an important tool for global governance.

This meeting will be mainly be remembered for the US U-turn on climate change. In the run-up to the summit, the US officials had said that there was no chance that the Bush administration would sign up to ambitious numerical targets, such as those endorsed by the EU summit in March 2007 (also headed by Merkel). But at Heiligendamm, George W Bush backed, at least in principle, the objective of cutting greenhouse gas emission by 50 per cent by 2050. The US still insists that binding targets will need to involve China, India and other emerging powers. But it is nevertheless significant that he agreed to the start negotiations on a post-Kyoto regime in the framework of the United Nations.

The G8 countries also reconfirmed their aid commitments made at the Gleneagles summit in 2005, namely to write off multilateral debt worth $60 billion, to raise annual overseas development assistance to $50 billion (of which half should go to African countries) and to provide universal access to HIV treatment by 2010. But NGOs said this ‘recommitment’ did not amount to much, given that the G8 countries are already falling behind on their objectives and still oppose annual spending targets. Similarly, although the G8 leaders promised to spend $60 billion over coming years on fighting HIV, malaria and other diseases in developing countries, they did not add a timetable.

The summit agreements are big steps towards longer-term goals, but they leave the most controversial questions to be resolved at a later point in time. Neither was there much progress on other issues on the G8 agenda, such as the Doha trade round, Kosovo, Iran and the regulation of hedge funds.

What the summit did do, however, is provide a very useful snapshot of global politics at a time of leadership changes in many of the key countries.

Well done Angela!
Merkel has cemented her role as Europe’s leading political figure, and she has now added a global dimension. Previous achievements had already earned her a reputation as a skilled mediator and negotiator. Her tireless pre-summit diplomacy on climate change appears to have paid off. Her strategy was also smart. Knowing that failure to reach a climate deal would be blamed on the US (and not damage her popularity at home), she was in a strong position. She had played down expectations of a deal ahead of the summit while still leaning heavily on President Bush. Although the G8 agreements owe much to Merkel’s political skills and convictions, they are also evidence of a longer-term trend towards a more self-confident Germany which is not afraid to shoulder global responsibilities.

The new George W
Bush’s apparent U-turn on CO2 targets was partly motivated by the fear to antagonise or embarrass Merkel – a sign that she has successfully mended US-German relations after the falling-out over Iraq. Bush also wants good ties with Merkel as part of his broader efforts to strengthen US-EU relations. Some observers spotted a belated turn towards multilateralism. Having long been dismissive of multilateral organisations, Bush has now agreed that the UN should be the framework for post-Kyoto negotiations. On other issues too, Heiligendamm saw a more co-operative and conciliatory US president. He was friendly to Vladimir Putin, despite the latter’s aggressive hectoring ahead of the summit. He also promised that the US would cough up half of the $60 billion committed to healthcare initiatives in Africa.

Russia is back
Putin’s belligerence in the run-up to the G8 had fuelled fears that Heiligendamm would be the chilliest East-West encounter since Russia officially joined the G8 in 1998. Putin had threatened to re-direct Russian nuclear missiles towards Europe if the US went ahead with stationing parts of its missile defence system in the Czech Republic and Poland. Having failed to drive a wedge between the US and the Europeans, Putin then suggested that the US should station missile defences at Gabalan, a Russian-operated base in Azerbaijan. Security experts say that the proposal, first muted in 2004, is unattractive to the US not only because it implies shared control over a key US military installation, but also because Gabala is too close to Iran to intercept a potential attack from there. If Putin knew that the US answer would be No, his prime aim must have been to set the agenda – to first raise tensions and subsequently defuse them. Such behaviour is becoming typical of a resurgent Russia. Putin’s shrewd mixture of harsh statements followed by statesman-like conciliation is also meant for home consumption, ahead of the parliamentary election in December and the presidential changeover in early 2008.

Bye bye Blair
Heiligendamm was Blair’s last international summit but one (he will still attend the European Council on June 21st and 22nd). It should have been a grand finale for him, given that it made progress on climate change and poverty alleviation, his two top foreign policy priorities. But any sense of triumph Blair may have felt must have been dampened by the absence of public recognition. Blair has always argued that his decisions to send troops to Iraq and not criticise Bush in public were paying off in terms of the private influence in Washington. Diplomats say that Blair worked hard to mediate between Merkel and Bush before and during Heiligendamm. But in the end it was Merkel who received the credit for having persuaded Bush. At least Blair’s imminent departure from the political scene allowed him to talk openly about differences with Putin.

Welcome Sarkozy
For Nicolas Sarkozy the G8 meeting was the first opportunity to mingle with the leaders of the world’s biggest countries as French president. With parliamentary elections imminent, Heiligendamm was the perfect opportunity for Sarkozy to show his skills as statesman. He did so by putting forward a compromise proposal for the final status of Kosovo (rejected by Putin) and by calling for more international attention to Darfur (vaguely accepted). Sarkozy’s conciliatory language after a long private meeting with Putin raised concerns that he would follow Jacques Chirac’s uncritical stance on Russia. But Sarkozy made big efforts to distance himself from his polished predecessor by talking very openly, by not trying to steal Merkel’s show and by being nice to Bush.

A bigger club
The other G8 members – Italy, Canada and Japan – played a more marginal role, whereas some non-G8 countries got a lot of attention. Leaders from emerging Asia, Africa and South America have long taken part as observers in G8 meetings. It is now clear that the eight current members cannot fix any global priorities – whether climate change, Doha, global imbalances, terrorism or poverty – without the co-operation of other emerging powers. China’s economy is already much bigger than those of Italy and Canada, and China is also on course to overtake the US as the world’s number-one emitter of greenhouse gases. Both China and India have more than twice as many people as the US or all the European G8 members together. And the legitimacy of many G8 initiatives will depend on African or Latin American countries having a say.

Nevertheless, the Heiligendamm meeting decided against broadening the club’s membership. Instead, a new ‘Heiligendamm process’ will regularly bring together ministers from the G8 and the five ‘outreach countries’ (China, India, Brazil, Mexico and South-Africa), to discuss issues ranging from energy to intellectual property rights.

Some say that taking in China would destroy the democratic credentials of the G8 (although that argument is a lot less potent given Russia’s slide towards authoritarianism). Others fear for the club’s effectiveness. Merkel said, for example, that if the poorer nations had already been part of the G8, a compromise on climate change would have been impossible. But neither are the newcomers in a hurry to become full members. India and China – while keen to make their voices heard – insist that their status as developing countries does not allow them to shoulder the same global responsibilities as the current G8 countries.

Heiligendamm showed that the G8 is not just a talking shop as some of its critics have alleged. There was real drama as the sherpas haggled over the final communiqué until the last minute. And the results are important milestones in long-term fights against climate change and poverty. But the meeting also showed clearly that to remain relevant in the future, the G8 will eventually have to include China, India and other emerging powers.

Katinka Barysch is chief economist at the Centre for European Reform.

The world in 2020
by Mark Leonard

By 2020, according to the Economist Intelligence Unit, the Chinese economy could overtake the US to become the largest in the world, at least when measured using purchasing power parity (PPP) exchange rates. India is expected to grow rapidly to become the third biggest economy. Alongside these Asian giants, a series of smaller powers – such as Iran and Russia – will increasingly be able to exploit their nuclear weapons and energy to increase their say in world affairs.

This shift in economic power could be all the more significant, as it is overlaid with an ideological struggle over the shape of world order. Many of the new poles of 2020 will not simply be great powers pursuing their national interest, but networks of countries united by ideas about how the world should be run. In the 1990s it seemed prophetic to talk of the ‘end of history’. Francis Fukuyama’s famous thesis was not that power struggles or even wars would end (in fact, he thought they would continue), but that the great ideological battles of the 20th century would end with “the universalisation of western liberal-democracy”. However, although the differences between major powers are less stark today than during the Cold War, the big story in international relations seems to be history’s dramatic return.

By 2020 we will most likely not see a new world order, but at least four. Already the contours of a new ideological map are emerging that splits the world across two axes. One is domestic: between democracy and autocracy. The other is about philosophies of global order: between those who want to see the world governed by law and international institutions and those who want to see it governed by power. These divisions could give rise to a quadripolar world.

To Europe’s west, the most powerful bloc will continue to be the American World, underpinned by the dollar, popular culture, and the prevalence of the Washington consensus. The goal of US foreign policy is to build a ‘balance of power that favours democracy’. Instead of seeing international institutions as the ultimate foundation of a liberal order, US foreign policy will increasingly seek to maintain US primacy, and the power of key democratic allies such as Japan and India in East Asia.

To Europe’s East, Russia and China. Although they will continue to be suspicious of each other, they are united by their autocratic systems of government, and they will increasingly use international law and institutions to protect the sovereignty of states from western interference. Together, China and Russia could turn the Shanghai Co-operation Organisation into an anti-NATO of countries that are repressive. They will also use their seats in multilateral institutions such as the United Nations to contain the United States.

To Europe’s south will be a stateless world of faith – defined neither by democracy nor the rule of law. While some countries in the Middle East – Lebanon, Palestine, and Turkey – may develop a new strain of ‘Muslim Democracy’, many won’t manage to change their politics quickly enough to keep up with social demands.

And that leaves the fourth zone. An expanded EU will share a belief in democracy with the Americans – but be alienated from them because of its belief in multilateralism and international law. Around its core, the ‘Eurosphere’ will include another 70 countries that are deeply dependent on the Eurosphere for trade, aid, investment. These will gradually be drawn into the European way of doing things, through the European neighbourhood policy that links market access to compliance with European standards on human rights, the rule of law, migration and proliferation.

Not all countries will fit neatly into one sphere or another. This will lead to a global battle to co-opt ‘swing countries’ in South-East Asia, Central Asia, the Caucasus and the Middle East. The biggest swing-state will be India.

The shift from a unipolar to a multipolar world could be almost as significant for global politics as the end of the Cold War. Like the events of 1989, it will force European strategists to change their mental maps of the world, and develop relations with countries that were outside the EU’s sphere of influence.

So what should European leaders do?
Their most urgent challenge should be to prove my predictions wrong. By pursuing a ‘disaggregation strategy’ of engaging the relevant forces in each of the other blocs, they could prevent the ‘quadripolar world’ from coming into being. For example, there are strong forces in favour of the international rule of law and international co-operation at a federal and state level in the United States, that the EU could engage with on climate change and international trade. Russia and China have major differences on energy and proliferation that could be exploited, in order to prevent these great powers from becoming a cohesive force. And in the Middle East, the EU should do all it can to play off the differences between Iran and Syria, and Hamas and Hizbollah, through policies of conditional engagement. The alternative to breaking down these emerging blocs could be a permanent sense of frustration, and a gradual shrinking of European influence in the world.

Mark Leonard was director of foreign policy at the Centre for European Reform until November 2006. In early 2007 he will set up and direct a new pan-European initiative of the Soros foundations network, to promote the EU as a model for an open society.