US' unilateral moves have rendered global multilateralism toothless

As the US sidelines institutions like the IMF, UN, and WTO, the post-War global order faces its most serious crisis yet

Does the multilateral system still have something to offer the world? For all its holes and inefficiencies, till relatively recently it still remained the mechanism through which major issues of global significance could be addressed. But holes were created in the system by the United States (US) breaking norms during the decades in which it remained unchallenged, and the problems were further expanded by the rise of China as a disruptive power. Now that, during the second administration of President Donald Trump, the US has actively turned against the notion of multilateralism, it seems that major outstanding issues — from macroeconomic stability to trade management to security disputes — are no longer being dealt with through the multilateral system.

 

On macroeconomic stability, for example, the post-War system has depended upon the International Monetary Fund (IMF). It is the IMF that has bailed out Argentina multiple times in the past decades. The Latin American country has, alongside Pakistan, been one of the most frequent recipients of the IMF’s support. It is once again facing a crisis, born of incomplete reforms and political instability. But on this occasion, the US treasury has stepped in on its own to protect the country’s stability. Last week, US Treasury Secretary Scott Bessent said that America and Argentina were in talks for a $20 billion package. The peso rallied in consequence. Mr Bessent has subsequently said the US will do “whatever it takes” to keep Argentina from crisis. The fact is that the IMF has the capacity to build such a lending programme and to identify the accountability mechanisms that could keep it from going off the rails. The US treasury does not; but it has political heft, which the IMF fails to bring.

 

Mr Trump has repeatedly claimed an ability to end wars, and has named several conflicts that his mediation has brought to an end. Even last week, he issued a new peace plan for the Gaza war. Whether or not Mr Trump is correct in all his claims is not the issue. The point is that he has sought to do this himself, using the power of the US and his claimed personal deal-making abilities. The United Nations, including the Security Council, has no role in the process. Nor is that the only multilateral organisation that his actions have rendered useless. He has also focused on new trade deals, many of which are designed to give an exceptional role in nations’ trade and tariff policies for the US. This violates the fundamental principle of the most favoured nation, or MFN, upon which the World Trade Organization (WTO) is based. The WTO has been already defanged as a location for dispute settlement. Now its very foundation, that all members should be treated similarly in trade policy, has been brought to an end.

 

The post-War multilateral order was meant to constrain power as far as possible. In the bipolar world of the Cold War, it had some utility, particularly in giving voice to new and decolonised nations. In the decades of unipolarity, it served to constrain at least some of the US actions. But now that the US has taken a disruptive path, it is very clear that the system has no power of its own. It always had just as much power as the superpower was willing to lend it. Now that the White House thinks it can solve problems on its own, the multilateral system has nothing much left to do.