The price of a fractured architecture

The CNBC report tells us something modest on its face: President Xi has urged BRICS nations to work toward peace in the Middle East, even as China remains Iran's largest trading partner and a principal customer for Tehran's energy exports. One can admire the audacity, if not the consistency, of the position. A nation that underwrites a belligerent's revenues while calling for regional peace is not quite a mediator — it is a stakeholder in the conflict's economics who would prefer the conflict itself to remain manageable.

But I do not wish to be merely sardonic. The deeper matter here is structural, and it is one I recognise from my own long arguments at Bretton Woods and before: the international order is not a natural condition. It is an artefact — a designed thing, requiring the deliberate cooperation of nations who must each subordinate some short-run advantage to the longer-run architecture that serves them all. When I sat across from Harry Dexter White in 1944, we disagreed sharply on the balance of creditor and debtor obligations; but we agreed, fundamentally, that the alternative to a designed system was not a neutral vacuum — it was rival blocs, competitive devaluations, and the kind of economic nationalism that had already helped destroy a generation.

What BRICS represents — and I mark this as inference from the direction of events, not recollection of them — is the hardening of an alternative bloc: not yet a rival monetary system, but an aspiration toward one, animated partly by genuine grievances about dollar dominance and partly by the preferences of states that find multilateral rules inconvenient. Xi's call for BRICS solidarity on the Middle East is of a piece with that project. It is geopolitics dressed in the language of peace, and the CNBC report is right to note China's commercial entanglement as the context in which that language must be read.

The danger I would name — and it is one that any student of the interwar period ought to feel viscerally — is that when the international architecture fragments into competing blocs, the cost is not borne by the great powers alone. It is borne by smaller economies caught between them, by trade and capital flows that grow uncertain, and ultimately by the workers and households whose employment depends on a stable international monetary environment. The paradox of a multi-polar world managed by competing blocs is that each bloc justifies its own consolidation by pointing to the other's — and the spiral produces less cooperation than any single participant wanted or intended.

The durable lesson of Bretton Woods — imperfect as that settlement was, and weighted as it was toward American creditor interests in ways I protested at the time — is that explicit design beats implicit competition. Nations sitting around a table, arguing openly about rules, produce better outcomes than nations maneuvering through regional forums whose purposes are as much exclusionary as cooperative. I would not pretend that the dollar-centred system of the post-war decades was without its own distortions; it plainly was. But the answer to a flawed architecture is a better-designed one, negotiated openly, not a proliferation of rival blocs each claiming the mantle of peace while consolidating their own sphere.

If there is a policy that is actually buildable in the present moment, it is this: the major economies — including China, the United States, and the European Union — should resist the temptation to treat every multilateral forum as a vehicle for bloc consolidation, and instead invest genuine political capital in reforming the institutions that already exist: the IMF, the mechanisms of sovereign debt restructuring, the rules governing reserve currencies. That is harder than a summit communiqué. It requires conceding something. But the history of international monetary disorder — and I lived through enough of it — teaches that the cost of not designing the system is always paid, eventually, by those least able to afford it.