Tectonic plates keep shifting


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The global tectonic plates keep shifting. Recently, the Japanese government called for Japan to be included in the Five Eyes security arrangements. This was greeted by a number of Conservative MPs such as Foreign Affairs Select Committee Chair, Tom Tugendhat MP, with great interest. Inclusion of Japan in this alliance would represent a move from the classical, typically western anglophone nations who form the bedrock of security arrangements.

But something else is happening which is equally important. The world is fragmenting into those countries that are governed by commitments to open trade, competition, property rights protection, and private sector led economic growth models, and those that embrace illiberal economic orders, and state-led economic development.  China, Russia, Iran, North Korea are the most extreme examples of the latter category.  The US, UK, Canada, New Zealand, Australia and Japan are in the former category. 

Typically, a commitment to free markets and free trade has been found primarily in western economies or those whose legal and economic systems have historical roots in these economies. 

While there are certainly significant western influences on post-war Japan (especially US influences on its modern constitution and so on), Japanese culture has proved very resilient, and there would certainly be cultural differences between Japan and the other Five Eyes members (just as there are differences among them).  However, it is an important point of principle that including Japan would be a recognition that the it is possible for other countries who do not come from a Western tradition can nevertheless have a commitment to competition, open trade, property rights and good governance, and that the West does not have a monopoly on these things: they are in fact universal human values to which any country in the world is capable of aspiring.

In this fragmenting world, countries achieve relevance in three principal ways. First, by having an economic system that is generating wealth at optimum levels so they have economically dynamic and vibrant markets.  Second, by connecting to other similar markets. Third, by integrating their economic values into their foreign and security policy, and thence integrating all with other similar actors.  Under these tests, there are a number of other countries that could also join Japan as a candidate for the type of organisation which the Five Eyes represents. 

These countries could form an axis to supplement the Five Eyes powers with a commitment to the kind of liberal economic democracy characterised by free markets and free trade.  As capitalism breaks into the two camps of free market capitalism and crony or state-led capitalism which is the great global struggle of the 21st century, the countries that support the former will need to work together in a host of different fora.  This will include not only in economic institutions like the WTO and OECD, but generally in a range of other foreign, trade, development and security bodies.  Some of these are already included in trade arrangements like the CPTPP, others through arrangements like the Pacific Alliance.  More of these networks are likely to form to counterbalance those state -led economies and their proxies.

The UK sits in a very powerful network or alignment of nations – the Commonwealth which includes countries that are among the most successful in the world (UK, Canada, Australia and New Zealand) all the way down to microstates. They all share one characteristic which is they outcompete their peers because of a shared commitment to commercially sound practices and the rule of law, and for the most part, the English common law as the basis for their legal systems. The successful states of the future are those that are part of networks of like-minded peers who have a demonstratable track record and commitment to growth-creating policies that lift their people out of poverty.  The battle lines are being drawn for the economic and security battles of the twenty-first century. The question is on which side of the field countries will be located.  But they will certainly have to choose – no-man’s land will be a very uncomfortable place.

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