Could an “economic Article 5” stop authoritarian coercion?


In June of this year, Anders Fogh Rasmussen and Ivo Daalder of the Alliance of Democracies Foundation and the Chicago Council on Global Affairs, respectively, issued a memo to “leaders of the free world”, calling for the creation of a ” economic item 5”. Rasmussen is a former Danish Prime Minister and also served as Secretary General of NATO between 2001 and 2009. Daalder served as US Ambassador to NATO from 2009 to 2013.

The reference to “article 5” is an invocation of the promise made by NATO members in the NATO treaty to consider an attack on one of them as an attack on all. It has only been invoked once, following the September 11 terrorist attacks on the United States.

It’s time to tell the bullies that if they poke one of us in the eye, we’ll all poke back

The purpose of an “economic Article 5” is to protect the political sovereignty and economic well-being of democracies from authoritarian threats, applying the same principle in the economic sphere. He calls on democracies to pledge to respond together to the “economic coercion” of authoritarians.

What is economic coercion?

The note gives two recent examples of what it means by “economic coercion”: Lithuania and Australia.

In November 2021, the Lithuanian government allowed Taiwan to open a “representative office” in Vilnius – a step towards recognizing Taiwan as an independent country, rather than part of China. China responded by blocking imports from and exports to Lithuania, as well as (according to the memo) pressuring companies in other EU countries to sever ties with Lithuanian companies. Measures which, according to the central bank of Lithuania, could have measurable impacts on the economic growth of this country until 2023. The note goes on to say that the EU has lodged a complaint on this subject with the World Organization of trade and was supported by members of the G7 “demonstrating an embryonic democratic front”. But notes that “the WTO procedures are long and that no agreement has yet been reached”.

Australia, the report continues, has faced a series of new tariffs on ‘barley, beef, coal, copper, wine and other products’ following calls from the Australian government for an investigation. on the origins of the Covid-19 pandemic, originating from the Chinese city of Wuhan. Australia has largely been able to find new markets for its products, reducing the effectiveness of these measures – largely due to trade deals with the EU, UK and India – all democracies. Australia, like Lithuania, has taken the issue to the WTO. Like Lithuania, it is still waiting for the dossier to progress.

What about existing institutions?

The note is somewhat critical of the WTO and acknowledges that their proposal goes against the idea of ​​non-preferential treatment, which is at the heart of the WTO system.

But the WTO is already at a crossroads. Lengthy dispute settlement proceedings, lack of interim measures for complainants in WTO cases, and costly resolutions that ignore past infringements have all contributed to the diminished role of the WTO in during the last decades. The organization’s failure to include binding countermeasures against economic coercion adds to the weakness of the WTO as cases of targeted economic coercion by authoritarian states continue to emerge.

Rasmussen and Daalder cite an “anti-coercion instrument” proposed by the European Commission as a model and rely on the EC’s determination that such a mechanism does not violate international law. It also identifies several organizational nuclei, from which an “Alliance of Democracies” with an “Economic Article 5” could develop. These include the G7, the OECD and the Democracy Summit, initiated by President Joe Biden in 2021.

They go on to suggest that such an alliance could be a “step towards a democratic common market”. and suggest that the “nations sitting on the fence”, all from the global south (which, for example, did not join in condemning the Russian invasion of Ukraine) might be tempted to choose the democratic side in the future conflicts, by the promise of access to this common market – which would comprise the lion’s share of the world economy.

Rating and criticism

It is encouraging to see a call from within the foreign policy establishment for economic and trade policy informed by political and moral questions, but it seems that the authors are very selective about what issues to consider.

Ignoring human rights is hardly an inspiring call to moral action

There is no mention of promote democracy as such, merely protecting the interests and sovereignty of existing democracies. There is no mention of cutting the considerable military, diplomatic and financial aid that democracies provide to allied authoritarian regimes, such as Egypt or Saudi Arabia. As long as you don’t bite one of us in the eye it suggests, you can do whatever you want to your own citizens. We don’t care that China, for example, uses Uyghur concentration camps as a source of cheap labor. That’s fine, as long as they don’t impose tariffs on Australian winemakers. This is hardly an inspiring call to moral action.

He also displays a blind spot on the misdeeds of democratic powers which he describes as the “free world”. It assumes that the enemies of the developed democratic countries are the “bullies” and that the US, EU, Australia, etc. are always the good guys. Given the history of Western aggression – including economic, military and political actions against nascent democracies in the developing world – this can only be interpreted as willful ignorance and an example of Western chauvinism that undermines democracy promotion efforts by allowing authoritarian regimes like in China and Russia to pose as anti-imperialist and counter-hegemonic alternatives to a greedy global empire.

This situation is aggravated by the confusion that organizations like the Alliance of Democracies Foundation make between free societies and free markets (see further discussion in the video bibliography below). In reality, the practice of democracy often leads to regulated markets and social protections, and authoritarian regimes are often favored by global capital because they can effectively crush worker dissent and override environmental protections, among other things. Consider the massive outsourcing of manufacturing to China in previous decades as an obvious example.

Finally, the proposed mechanism is entirely reactive and depends on a collection of national governments to respond to each (perceived) act of “coercion” on an ad hoc basis, which is unlikely to produce consistent responses or results in the long term. term.

A better mechanism might be an independent calculation commercial desirability index, that would take into account human rights and environmental considerations, as well as degrees of democratization, in determining access to the lucrative markets of the world’s democracies. Such a system could apply constant, proactive pressure and reliable incentives for good global citizenship, rather than waiting to be pricked in the eye and then pricked back.

We believe in transparency. You can see how this item was searched for in the video bibliography below!


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