West has inadequate leaders for ‘crisis of power’, says Allianz government relations head

Europe is going through an economic crisis, and the Western world is in a “crisis of power distribution”, both with leaders ill-equipped to tackle their nations’ problems, says a distinguished former German diplomat.

Wolfgang Ischinger, who was Ambassador for Germany to both the UK (2006-2008) and US (2001-2006) in a diplomatic career spanning almost 40 years, said there was an “overwhelming lack of global governance, which is probably the greatest current challenge to our leaders.”

Ischinger (pictured) is now global head of government relations for German diversified financial group Allianz SE, and also chairman of the Munich Security Conference.

He told delegates at Allianz Global Investors’ recent annual conference in Berlin that an expansion of the focus of power of the G7, to the G20, mattered little if the G20 was just as ineffective in tackling financial, and other, problems.

“We are going from the G7 to the G20 in an era when global governance lacks legitimacy and is badly organised. It is not inappropriate to call it a ‘G-Zero’ situation that we are drifting into.”

He said it quickly became, within a week, that the Lehman Brothers’ collapse in America was a problem for the whole interlinked world, “but our institutions have not kept up with that.

“As a consequence of the beginning of the financial crisis, our leaders decided to go from G7 to the G8 to G20, but that format does not work, nor produce meaningful results adequate to the challenges, nor meaningful resolutions to the systemic crisis we face.”

Ischinger spoke shortly before a G20 meeting in Washington that largely failed to produce the kind of outcomes the world wanted of it.

“We are now in a watershed in history, in a midst of fundamental crisis and change in the way power is distributed in the world,” he said.

“Nobody knows exactly what is coming and how the world will look in years to come. As a former diplomat I strongly believe you can only prepare sensible policies if you know precisely what you are looking at, and understand what you see clearly and interpret it correctly.”

He suggested politicians lacked this ability at present.

He said Europe would finally emerge from its crisis, but would be too preoccupied with itself to be able to play a greater role on the global stage.
The Continent’s global power will fall in relative terms at least, but Ischinger said the US could retain its status, even as China grows in importance.

“It is not a zero sum game, and it is quite possible to imagine the rise of China, Brazil and India could be alongside a decline of Europe, but you may find that the US, because of its military power, may be able to maintain a key role in the system.”

He said a key question was if America would be “capable and mature enough” to share power with China.

Another is whether a more empowered China would behave in the world.
A third was “whether we will be capable of reforming our institutions like the EU and World Bank and IMF to lead to more effective global governance, and less ‘G-Zero’.”

For Europe, a key question is how long its crisis will endure, and whether afterwards the EU will be “capable of creating a real political union speaking in one voice in international politics as one actor, politically, militarily, and financially.”

After noting Russia’s President Vladimir Putin did not even attend the G20’s Washington meeting, Ischinger then asked: “Will we manage to get over the Cold War, 20 years after its end? Most people are not paying attention to that. How could we create a situation between Europe and Russia where we ‘demilitarise’ the way we think about each other? That requires thinking also from the Russian side.”

Ischinger also noted shifts in power were not only occurring between the West and Asia, but also in Asia itself, notable in Beijing.


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