Sep 19, 2014, 1:33 AM ETInterview, Fireside Chat, Conference Presentation

Asia Summit 2014 - A Conversation with Robert Zoellick: U.S. Rebalancing Toward Asia

Scottish Independence Referendum: The vote resulted in 58% against and 42% for independence, causing Sterling to rise.
Impact on UK-US Relations: Zellick argued that a Scottish breakup would diminish the United Kingdom, a critical partner for the US, and create internal preoccupation for British officials.
Identity and Insularity: The event highlighted the challenge of maintaining multiple identities (Scottish, British, European, transatlantic); Zellick warned that insular movements could trigger further fragmentation across Europe.
Subsidiarity Principle: Zellick advocated for the UK to adopt a "federalism" or subsidiarity model to balance local, national, and regional authorities.

Breakdown of Old Order: The rise of ISIS signals the collapse of the Sykes-Picot nation-state system, replaced by Shia-Sunni, Persian-Arab, and tribal divisions.
US Military Limitations: Zellick stated the US cannot hold ground with air power alone; effective operations require local ground forces and intelligence integration.
US Public Will: Post-11 years of war and the Great Recession, US domestic sentiment is unlikely to support a significant ground troop deployment or a long-term nation-building effort.
Regional Partnerships: The US must rely on local actors, including Kurds, Sunni tribes, and the Free Syrian Forces, as well as Gulf states willing to train forces.
Regional Fractures: Defeating ISIS risks empowering Iran and Assad in the eyes of Saudi Arabia and Gulf states, creating a new conflict line based on sectarian rivalry.
Global Threat Scope: ISIS poses a direct threat to the US, Europe, and Asia, with confirmed plots in Australia and links to Uyghurs in Indonesia.

Global Interconnectedness: Zellick rejected the idea of focusing on a single region, noting that energy security, nonproliferation, and conflicts in one area impact global stability.
Bush 41 Example: Cited the first Bush administration's ability to manage German unification, the Gulf War, APEC, NAFTA, and the WTO simultaneously as a model for comprehensive leadership.
End of Trilateral System: The post-WWII trilateral system (US, Europe, Japan) is gone; the new order requires sharing duties with rising powers like China, India, and ASEAN.
Domestic Prerequisites: US global leadership is contingent on resolving domestic structural challenges, including tax reform, entitlements, trade, and immigration.
Political Will: Zellick argued the Obama administration's caution reflected a reaction to Bush-era overreach, but effective leadership requires building coalitions rather than expecting the world to equilibrate itself.

Integrationist vs. Tributary Model: Zellick described the US-China relationship as an "integrationist" model (WTO accession) versus a potential "tributary" model preferred by some Chinese leaders.
Strategic Mistrust: The relationship is defined by deep strategic mistrust, with China seeking recognition of its restored national pride and a say in the future order.
Reform Leverage: Zellick suggested using the WTO, bilateral investment treaties, and negative lists to support China's structural reforms, similar to how Zhu Rongji utilized WTO accession in the 1990s.
South China Sea: While advocating for freedom of navigation, Zellick noted that if China seeks a hegemonic or tributary relationship, regional powers like Japan will resist.
Mutual Interest: Common ground exists in energy development, technology transfer, and carbon/pollution issues, which can help manage differences.

Urgency of Closure: Zellick emphasized that political will is required to close TPP and TTIP; delays could cause these agreements to drift without result.
Trade Promotion Authority (TPA): The Obama administration's failure to secure TPA from Harry Reid in early 2013 hindered negotiations; Zellick suggested a Republican Senate victory might actually aid this goal.
Japan's Structural Reform: TPP is critical for Japan's "third arrow" of Abenomics; Prime Minister Abe requires US commitment to take political risks on sensitive issues.
US Market Opening: Zellick criticized the US for setting high standards for others while potentially failing to sufficiently open its own markets.
India's Stance: India's hesitation on the WTO Bali package over food security concerns threatens the multilateral system unless a compromise is reached.

World Bank Adaptation: The World Bank must integrate rising powers (China, Brazil, Russia) and partner with new infrastructure banks rather than viewing them as competitors.
Flexible Multilateralism: Zellick proposed moving away from the 150-country consensus model to "coalitions of the willing" (e.g., 50–100 countries) for specific sectors like services or procurement.
China's Private Sector: Contrary to the "state capitalism" narrative, Zellick cited Nick Lardy's research showing China's private sector drives job creation, exports, and investment.
Xi Jinping's Consolidation: Zellick noted Xi's focus on party purification and anti-corruption creates uncertainty but may be necessary to overcome entrenched interests for future reforms.
Rule of Law: China's economic success ultimately depends on transitioning to a rule-of-law system, with the challenge of defining the Party's role within that framework.

TPP Accession: Zellick argued China should join via building blocks like the ITA or services accord first, suggesting the US work with China to prepare for APEC participation.
G20 Host: He welcomed China hosting the G20, noting China's cooperative role in the past and its responsibility to support global economic stability.
Leadership Selection: Zellick stated that while emerging markets have gained voting power and representation at the World Bank (e.g., Chinese Chief Economist), the US must retain leadership roles to maintain Congressional support for multilateral institutions.
Structural Reforms: Zellick urged the US to help regional leaders (Japan, India, Mexico) with execution and specific reforms, such as expanding the electrical grid to Mexico to leverage natural gas advantages.