Rules-based International Order

Lord Tugendhat Excerpts

Thursday 16th January 2025 Lords Chamber

[Lord Tugendhat (Con)]

My Lords, I congratulate the noble Lord, Lord Hannay, on sticking to the seven-minute speaking limit; he is the first person to have done so. This is a very broad, wide-ranging and complex subject and I will concentrate on its economic, international trade and financial aspects—or some of them, at any rate—and try to answer the question posed by my noble friend Lord Howell as to why.

As with the other aspects of the international rules-based order, the principles and institutional structures were set up by the United States, with some assistance from us, in the immediate post-war years. Therein lies one of the problems: the world has changed out of all recognition since then, and this has led to efforts by China and others to adjust the system to reflect more closely their rise in the world. That, in turn, has led to practices that challenge the systems and bring them under stress. But the real nub of the problem is the fact that the international order no longer reflects very closely the international realities, and until that is put right, we will continue to have major problems, with people breaking the rules and seeking to undermine them.

The main challenge, as has already been made clear by a number of speakers, now comes from the United States. That is not just because of the rise of Trump; it is the culmination of a number of factors. For most of its existence, the rules-based international economic order worked not just in the overall interests of the United States but, broadly speaking, to the benefit of most sections of its society. The great majority of people shared in the fruits of an expanding economy, enhanced wealth and widening opportunities. Of course, that was also true of other industrialised countries and countries that were not industrialised at the beginning but found ways of taking advantage of the opportunities that were open to them.

But in recent years, the system has increasingly worked in another direction. Those with the right education and skills, in the right part of the country, have continued to do very well—indeed, in some cases, exceptionally so—but as new industries have arisen and prospered, others have gone into decline, often terminally. Those who were dependent on these industries, such as steel, motor manufacturing and textiles, have seen their livelihoods disappear and with it their status in society. Wealth inequalities have widened enormously and social tensions have increased. These factors have fuelled the rise of the MAGA movement in the United States and the rise of Donald Trump as its spokesman. He reflects the frustrations, disappointments and anxieties of a very large segment of American society.

In addition, we have had two further problems: one, of course, is the resentment caused by immigration, and the other is the resentment caused by the strong sense in many parts of the United States that a number of their closest allies, who benefited considerably from trading with America, have freeloaded in defence. I am afraid that we, like other Europeans, stand guilty under that head.

Trump has been elected in large part to put all this right, from the point of view of his supporters. We do not know what exactly he will do, nor how he will prioritise among the incompatibilities of a number of his objectives, but we do know that we have arrived at a point where the leader of the country that was the principal founder of the international rules-based order is going to approach this problem on the basis of transactional, unilateral negotiations without regard to the rule books or to the views of multilateral institutions that might shackle or inhibit American power. This is a novel and very worrying situation, and one where the Government will need great wisdom and support if they are to carry the British ship of state through these turbulent waters.