Institutional exhaustion and foreign aid: COVID-19 and the reinvigoration of parallel multilateralism

The multilateral rules-based world order was under threat with the rise of populism, China, and instability in US politics before the COVID-19 pandemic disrupted global diplomacy and brought about far-reaching economic crises. In response, nation-states have adapted to emerging nationalism amid the US-China trade war instigated by former President Donald Trump. Such multifaceted disruption forced nation-states to re-evaluate their traditional security and foreign aid partnerships, resulting in a weakened commitment to existing multilateral institutions. Such institutional exhaustion (the inability of the global rules, routines, and procedures of the past to address the realities of the present), provided opportunities for China and Russia to challenge the existing rules-based world order through coercive foreign aid, assistance, and development programs. The result has been a parallel, albeit novel, world order for developing nations that resembles a competing form of neo-Cold War diplomacy. The foreign relations strategies of the US under Biden have resulted in a fragile balance of competition and cooperation between the major global powers, supported by emboldened leadership in the United Kingdom and Australia and the strategic interests of Japan, with cautious support from Germany, France, and Italy. This chapter examines foreign aid amid changing patterns of geopolitics in response to the COVID-19 pandemic and multilateral institutional exhaustion. In particular, it focuses on the shift in global geopolitics toward a new multipolarity that threatens to undo the apparent success of global capitalism and the rules-based world order upon which such success is presupposed.