From Versailles to Davos: Confronting historic perils

From Versailles to Davos: Confronting historic perils

From Versailles to Davos: Confronting historic perils

Inflection Points by Frederick Kempe

A century ago this month, the Treaty of Versailles went into effect, bringing World War I to an end. Yet the dreams that paved its way were already evaporating. Among them was U.S. President Woodrow Wilson’s vision of “a world made safe for democracy” and his hope that the League of Nations would emerge to prevent future conflict.

As world leaders gather in Davos next week at the dawn of the 2020s, they confront a similarly decisive historic moment and a comparable set of dashed hopes. One can hear the haunting echoes from the 1920s: a U.S. isolationist temptation, bitter European disunity, and growing nationalism and populism within democracies amid rising authoritarianism.

As with the end of World War I, the Cold War’s end in 1989 spawned premature declarations of democracy’s triumph. In his 1992 book The End of History and the Last Man, Francis Fukuyama suggested that with Soviet collapse humanity had reached “the end-point of mankind’s ideological evolution and the universalization of Western liberal democracy as the final form of human government.”

What world leaders coming to Davos know is that history’s course is up for grabs again. Major power competition is heating up, inflamed by a systemic contest between democratic and state capitalism. The world is awash with uncertainty about how new technologies and rising environmental threats could remake our world. The international order of rules and institutions that the U.S. and its partners constructed after World War II is faltering and ill-equipped to navigate these challenges.

In the World Economic Forum’s program notes, it writes: “There are 193 sovereign nations, a proliferation of regional centers of power, and one increasingly obvious fact of life – we’re all in this together… We need to move from geopolitics and international competition to a default of consummate global collaboration. Nations are going to have to change.”

But what if, far more likely, they don’t?

“Those who cannot remember the past are condemned to repeat it,” wrote the philosopher George Santayana in 1905. The silver lining of World War II’s devastation was that chastened American and European leaders, having witnessed the mistakes of Versailles, did a far better job than their predecessors in shaping the future. For example, Wilson’s young assistant secretary of the Navy, Franklin Roosevelt, had become President, and isolationist arguments drowned at Pearl Harbor.

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The challenge facing today’s leaders in Davos is they must navigate the world to a better place without personal memories of failed settlements or the world spanning catastrophes that resulted, and can again, from lack of common cause.

Mussolini’s boast in summer of 1932 that “the liberal state is doomed to perish” has its echoes now in Vladimir Putin’s declaration this year, the “so-called liberal idea has outlived its purpose .”

It took a catastrophic war with millions of dead, followed by a half century of ideological competition between liberal democracy and communism, to prove Mussolini wrong.  What will it take this time to answer Putin, and his ilk, following the constitutional change he proposed this week to ensure he can stay in power as long as he may want?

One can only hope that democracies regroup, finding a means of peaceful coexistence and competition with China, Russia and others. Can they agree to rules and remake institutions in a manner that doesn’t surrender fundamental values? Perhaps the best outcome would be an extended contest over time, decided in degrees and not through geopolitical catastrophe.

For those keeping score at this year’s Davos, here are just three questions, among many others, worth asking about this epochal drama.

WHAT IS THE STATE OF U.S-CHINESE RELATIONS FOLLOWING THIS WEEK’S TRADE AGREEMENT?

When President Trump speaks in Davos on Tuesday, even as his Senate impeachment trial begins, he’s likely to make much of his Phase One trade agreement signed this week.

However, despite this “ceasefire,” the two most decisive countries for the global future will continue to grow apart politically, economically and technologically. Though financial markets have been calmed, the more significant story is this decoupling.

A recent Atlantic Council delegation in China found that many Chinese experts and officials welcome the U.S. trade war and technology transfer restrictions as they are spurring China toward greater self-sufficiency.

“Beijing is accelerating its drive for technological ‘autonomy,’” Yuan Yang wrote in a sweeping Financial Times analysis yesterday, “to boost its control over its own supply chain in the face of political risks, such as further US embargoes.

CAN THE UNITED STATES AND EUROPE AVOID NEW TRADE WARS – AND FIND COMMON GROUND REGARDING IRAN?

The good news is that the United States, the European Union and Japan this week proposed new global trade rules for the World Trade Organization, clearly aimed at China, that would curb state subsidies that are distorting the world economy.

The bad news is that the Trump administration continues to consider escalating its trade conflict with Europe when instead it should be forging a new trade and investment agreement.

The transatlantic relationship has been at the core of one of the longest periods of relative peace and prosperity over the past seven decades. It’s time to refocus U.S. and European efforts at recharging those ties.

One good place to start might be Iran. One good outcome from rising U.S.-Iranian tensions could be that Iran’s steps to break out of its nuclear agreement could trigger closer cooperation between Washington and its European partners to constrain those activities and seek new talks.

COULD THE AUSTRALIAN FIRES SHOCK THE GLOBAL COMMUNITY INTO THE SORT OF COMMON CAUSE THAT DAVOS PROMOTES?

“Welcome to a world in which climate change’s economic impact is no longer distant and imperceptible,” writes Greg Ip of the Wall Street Journal. “Climate has muscled to the top of business worries.”

And Davos-regular Laurence Fink, the chairman and CEO of the world’s largest asset manager BlackRock Inc., said this week that climate issues would be a key driver in how he invests more than $7 trillion of his clients’ money.

Yet even as fires burn a patch of Australia the size of Belgium, it’s going to be politicians more than business leaders who have the biggest levers for change. For all the rising climate rhetoric, emissions continue to increase, and heat rises.

A century ago, the failure of global leaders to foresee and head off future risks ended in the flames of WWII and the Holocaust. Once again, the cost of failure will be paid on a global scale.

This article originally appeared on CNBC.com

Frederick Kempe is president and chief executive officer of the Atlantic Council. You can follow him on Twitter @FredKempe.

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