A Foreign Policy with Backbone

There was a previous article in German that focused more on the Swiss perspective.

The US has imposed completely unjustified 39 per cent tariffs on most Swiss goods—similarly arbitrary fantasy numbers are being applied by the US on imports from all countries around the world. How should liberal democracies like Switzerland position themselves in a world where the old leading power has degenerated into a grotesque clown show, breaking its word and violating signed treaties by the dozen?

An incompetent clown as captain for the most consequential restructuring of the international system since the Cold War. Trump as clown captain.

As a starting point, we should note: The US tariffs clearly violate(d) the WTO’s trade rules, which are based on the “Most Favoured Nation” principle, enshrined already in GATT 1947 Art. 1 . The principle states that a country which grants a trade advantage to another country (e.g. a low tariff rate) must grant that advantage to all other countries that are also members of the WTO, too. You cannot pick and choose who gets a good deal, that was the genius of this system. It made the entire world gradually gravitate towards more open trade relations.

Whether the US’ flagrant breach will have any consequences is doubtful. Washington has been trying to paralyse the WTO since October 2018 by blocking the judges for trade disputes in the “Appellate Body”—a policy that, it should be emphasised, was continued by the Democrat Joe Biden. Currently, it is even refusing to pay its contributions to the WTO budget for the years 2024 and 2025. (The EU, China, and many other countries have responded by invoking a sort of clone of the “Appellate Body” at the WTO—called the MPIA—whilst the “Appellate Body” is not functioning.)

Members of MPIA

Any sober observer will thus conclude: The US is no longer a reliable partner for the foreseeable future—and we Europeans cannot influence that. It’s a domestic issue for the US to deal with. We can only assess the new global situation soberly and chart our own path. This is not to downplay the gravity of the situation: The US is not just any state turning away from the liberal world order, but the superpower that largely created, advanced, and defended this order. This particularly benefited Western Europeans—above all, America’s entry into the Second World War that saved us from fascism and communism.

The US Is Losing Its Supremacy

American unreason is sometimes attributed to its relative loss of power. I do not share this assessment, but the declining weight of the US and the West more broadly remains significant for European foreign policy. Let me briefly elaborate:

That the US would lose its economic dominance has been predicted in countless articles for decades. The basic consideration is relatively simple: The economic power of poorer countries tends to grow faster than that of technology leaders—simply because copying is easier than inventing. Therefore, over longer periods one would expect convergence, whereby the relative share of the US and the West generally inevitably declines. And that’s what happened: The US share of the global economy has shrunk—from the war-induced 50% at the end of the world wars to 40% in the 1960s to about 26% today, whilst China has caught up from a few percent to 17%.

Economically, these analyses are certainly accurate. Will the same also occur militarily? Probably. Some thoughts on this:

• Military power depends heavily on economic power, from financing to the development of new weapons systems. However, this relationship depends on a state’s development path: Russia and North Korea, for example, have pitiful economic output, but Putin and Kim Jong-un sacrifice the population’s prosperity to finance disproportionate military power. Europe and Japan, on the other hand, are economic giants but comparatively weak militarily. China is increasingly combining both.¹
• The share of the US military budget in global military spending has declined noticeably. Particularly striking is the development since the Ukraine war in 2014: The US has increased its military spending, but the rest of the world has increased it even more—leading to a relative decline in the US share. This will certainly lead over time to a relative loss of US power, which will probably first manifest in the US only being able to exercise its global reach selectively, for example by withdrawing from certain conflicts or regions.

These macro-developments are by no means surprising. The great question was always how the US would react to this decline. Who will be at the helm when the power is no longer sufficient to conduct the world alone?

In a Stable Order, No Nation Should Be “Indispensable”

The main problem, in my view, lies in the fact that the US has always seen itself as the “indispensable nation”, the “irreplaceable nation”, the saviour of the free world. This ideology expressed itself in the institutions it created—and thereby made them unstable.

Take the Bretton Woods currency system after the Second World War as an example: The US made the mistake of placing itself as an irreplaceable entity at the centre of what was actually a sensible regime. The currency system made the US dollar the only reserve currency directly pegged to gold (35 dollars per ounce), whilst all other currencies were pegged to the dollar.

This created the famous “Triffin Dilemma”: When the system was designed towards the end of the Second World War, the US accounted for an inflated 50% of the world economy due to the war, as explained above. After the war, however, the economies of the devastated countries grew rapidly again. The US consequently had to provide more and more dollars for expanding world trade and guarantee gold convertibility—whilst its relative share of the world economy inevitably shrank. The “Triffin Dilemma” stated that this was a monetary policy impossibility: Either one provided “too many” dollars and undermined confidence in gold backing, or one restricted the dollar supply and strangled world trade. The rest is history: Richard Nixon decided in 1971 to abandon gold convertibility. The US chose the preservation of its monetary policy sovereignty over system stability. (And as a small aside: Every other democracy would have done the same.)

John Maynard Keynes foresaw this kind of problem early on and had already proposed a more elegant solution in 1944: The “Bancor”—a supranational pseudo-currency that would be managed by an international clearing union. In the long term, the Bancor should be based on a basket of the major trading currencies, weighted by trade volume or economic output, and adjusted gradually. No single country would have had structural advantages, and the system would have been more stable. But the US wanted to push through the dollar as the world’s leading currency after the Second World War.

A sort of “Bancor” actually exists, by the way. The Special Drawing Rights (SDR) in the International Monetary Fund (IMF). Their value is based on a currency basket of the dollar, euro, yen, pound, and since 2016 also the renminbi. A Bretton Woods system based on a Bancor or the SDRs would probably not have brought the US into the “Triffin Dilemma” at all. However: Whether there is any state which, with such extreme concentration of power as the US government had after the Second World War, would exercise such enlightened restraint is doubtful. Realists like to quote the Athenian envoy in the Melian Dialogue in Thucydides 5:89 (very freely translated): “Justice is only relevant between equals. Otherwise, the strong do what they will, and the weak suffer what they must.”

Multipolar vs Multilateral

The only alternative to power struggles that demonstrably works

The example of Bretton Woods shows the eternal behaviour of powers in politics, which Jean-Jacques Rousseau described most beautifully:

And so rulers and leading powers have always endeavoured to legitimise and consolidate their supremacy at the centre by creating rules and institutions. And precisely because they place themselves as an irreplaceable entity at the centre, these rules and institutions eventually collapsed.

The only counter-design to power politics that I know of and that has prevailed worldwide in dozens of states where it is successfully practised is the rule of law. It is one of the philosophical achievements of the Enlightenment that the problem of tyranny cannot be solved by “good” tyranny. Instead of seeking supposedly “good” princes, kings, emperors, dictators, philosophers, or presidents and putting them onto a throne, we destroy the throne itself! We subject everyone equally to the law instead of making ourselves dependent on the whims of the powerful. Thanks to this principle, we have been able to create liberal constitutional states, stability, and prosperity.²

Why so and not otherwise? Because power corrupts.

However unwillingly a person who is enthralled by some supposedly great leader may admit the possibility that this leader, too, may be corrupted if given undue power, that person ought to moved at least by the consideration that however good this leader may be, one cannot build a throne for a single person. Thrones tend to outlast the people sitting on them. And even if this one person were absolutely incorruptible—which I reject—no one can guarantee who will sit upon the throne when they’re gone. No principle of succession has ever been proposed that is not either ghastly corrupt to begin with, or easily corruptible by the monarch. In short: Building thrones is never worth the risk.

The separation of powers is a logical extension of this basic principle. For the state must fulfil three fundamental tasks: creating laws, implementing laws, and enforcing laws. Montesquieu recognised that none of these tasks may lie in one hand, otherwise there is no more freedom. The legislature creates the laws, the executive implements them, and the judiciary ensures that both adhere to the laws. Each power controls the others and limits their power. Only in this way can one prevent one power from dominating the others and becoming tyranny.

The logic is strikingly simple: Only power can limit power. If the same ruler could both enact laws and control their application, he would de facto no longer be bound by the laws. He could grant himself immunity, have critics convicted, or interpret laws at will. The separation of powers forces those in power to control each other—not out of goodness, but out of institutional self-interest.

It is precisely this central element that distinguishes today those who advocate for a multilateral world order from those who strive for a multipolar world order.

• Multilateralism is based on the principle of the rule of law and means that states jointly negotiate rules that are enforced by independent legal institutions. The goal is a stable order in which no nation is indispensable. Examples include the UN, the EU, the European Court of Human Rights, the WTO, the International Monetary Fund (IMF), the World Bank, and many other international institutions.
• Multipolarism, on the other hand, is based on transactionalism and means that great powers compete for influence and supremacy. Within their spheres of influence, they enforce their own rules, which may not be challenged by other powers. The goal is the maximisation of one’s own power, often at the expense of others. It is a world of power politics, where the law of the strongest prevails unrestrained, as during the bipolar Cold War.

Finland’s President Alexander Stubb recently described this difference aptly in a speech before the United Nations:

A particularly apt remark by Stubb is that multipolarism cannot solve the world’s problems. Let us assume we lived in a multipolar world order in which the US, China, Russia (and possibly the EU) each enforce their own rules in their zones of influence. Would that bring us closer to solving pressing problems—wars, refugee flows, climate change, pandemics, poverty reduction, AI safety, space exploration, …? Hardly. On the contrary: It would hinder cooperation and exacerbate conflicts.

Switzerland, many European states, and small states generally, have an overwhelming interest in a multilateral world order based on the principle of the rule of law. Safeguarding this order should be a central element of our foreign policy.

Cower or Show Backbone?

Currently, doubts about our own strength predominate in Switzerland: Little Switzerland cannot take on the great US. Such are delusions of grandeur. We must give Trump what he wants and make a good offer.

Against this, I would argue: Brazil’s tariff rate? 50%! India? They also face 50%.  China? Total chaos, but currently around 55% . In other words: Size does not protect against Trump’s folly either. The calculation of these rates is insane, the US approach is embarrassingly incompetent, the justifications are laughable—and none of this is surprising: The fish rots from the head.

We must now somehow come to terms with this reality. We too basically have the choice between multipolarism and multilateralism.

Multipolarism: We see ourselves in the role of a small vassal state in the US sphere of influence. We submit to the whims of the clown captain, who regards us as “his” court. We accept that our sovereignty and dignity are trampled upon by an incompetent clown. We participate in the charade that these are all “negotiations” and pretend we still have a say. We swallow the damage to our economy that Trump has inflicted on us without reason. We swallow his insult to our Federal President. We seek a nicely packaged bribe payment that is large enough for his ego and betray our own identity. (Of course we call it something else, obviously, after all we are Switzerland.)

Multilateralism: We acknowledge that the US has been trampling on international law for some time. We seek allies to maintain and further develop a robustly multilateral order.

We will find them in the European environment: The EU is also struggling with unjustified US tariffs, and many other countries as well. Which countries specifically? Let us orient ourselves by the supporters of the International Criminal Court (ICC)—which, unsurprisingly, is rejected by all major powers.

Wherever necessary, we would weight the integrity, robustness, and sanctioning power of institutions more heavily than inclusivity. Those who trample on human rights have no place in this community. Those who break agreed rules will be sanctioned or excluded. All of this we would do, knowing that binding rules are vital for us as a small country.

We would build on functioning institutions such as the WTO, the ICC, the EFTA Court, the Council of Europe, parts of the UN and the EU… We would strengthen and reform multilateral institutions with teeth. Where necessary, we would create new institutions that meet today’s challenges—such as a long-overdue coordination of asylum and migration policy in Europe, which would end the inhumane chaos at our external borders.

We would help Europe militarily stand up to Russia—above all by supporting Ukraine militarily. Coordination could initially continue through NATO, but would increasingly transform into an independent European defence union as Europe’s strength and self-confidence grow. We would meet China with a values-based foreign policy, rather than with the hope that this dictatorship will not treat us too badly this time.

In short: We would defend our sovereignty and dignity by refusing to be blackmailed by incompetent clowns and autocrats. We defend our enlightened tradition by advocating for a multilateral world order with backbone.

And Neutrality?

Swiss neutrality is an instrument of foreign policy, not an end in itself. Its historical justification was sound: As a small state amidst powerful neighbours who repeatedly warred with each other, neutrality was a rational midwife and survival strategy. When France, Germany, Austria, and Italy fought each other, it made sense for Switzerland not to join any side. Neutrality protected us from being torn apart by the power struggles of our larger neighbours.

But our neighbourhood has changed. Our neighbours today are all members of the EU and NATO. They no longer fight each other—on the contrary, they have created an unprecedented peace order based on the principles of the rule of law and multilateral cooperation. What has protected our security? From 1914 to 1945, I agree, armed neutrality.

But since 1945? Of course the European peace order. The power struggle from which neutrality once protected us no longer exists. Instead, this peace order itself is under threat. Russia is waging a brutal war of aggression against Ukraine. China threatens Taiwan. The US under Trump betrays its own allies. In this new constellation, neutrality no longer serves to protect us from the power struggles of our neighbours. Is neutrality the best way to defend the European peace order that has brought us peace and prosperity?

In my view, there are two good arguments for maintaining neutrality:

1. We have based large parts of our global role on neutrality: Switzerland is a mediator in international conflicts, a haven for diplomacy and humanitarian aid. This role is based on the trust that Switzerland is neutral and does not interfere in the power struggles of other countries. Even if this brings us little benefit, we risk losing this trust and weakening our global role.
2. We cannot take the stability of our neighbourhood for granted: The EU and NATO are strong institutions, but they are not invulnerable. If the EU collapses or NATO is weakened, we could again find ourselves in a situation where we are threatened by the power struggles of our neighbours. Armed neutrality could protect us again in such a horror scenario.

I have not yet formed a fixed opinion on whether these arguments are strong enough to justify neutrality. But I am convinced that we must not regard neutrality as an end in itself. Neutrality is not a licence for moral arbitrariness. It is not a reason to isolate ourselves from the world. And it is not a sacred principle that stands above all others. If neutrality prevents us from standing up for the values that constitute our civilisation—human rights, rule of law, democracy—then it is no longer an instrument for protecting Switzerland, but an obstacle to our moral and political integrity.

Footnotes