June 4, 2009 - Winnipeg Free Press, Nicholas Hirst, Op-ed --

A projection by Jim O'Neill, head of Global Economics Research for Goldman Sachs International in London, shows that by 2050, China's economy will be more than twice as large as that of the United States.

He stresses that the international American-based bank is not saying that's how the world will be, but it could be. Predictions are notoriously unreliable and the further forward the predictions are, the less reliable they are.

What is undeniable, however, are the shifts in world economic power that have happened already. Eight years ago, O'Neill gained fame in economic circles for coining the acronym "BRIC". It stands for Brazil, Russia, India and China. O'Neill suggested that these four countries were the powerhouses of the future.

In some ways, they already are. In a presentation to the Vancouver branch of the Canadian International Council last week, O'Neill suggested that within four years the economies of the four BRIC countries together would exceed that of the United States and that it was those countries that were leading the world out of recession.

The world economic order is changing very quickly. At the same conference, Debra Steger, a law professor at the University of Ottawa, said the economic world was "at a really transformational point in history." World financial institutions, however, The World Bank, The International Monetary Fund, summit meetings of rich nations, are all constructed on what used to be: a world economic order ruled by the United States, Europe and Japan with Canada as a minor, but still significant player.

According to the Goldman Sachs 2050 projections, Canada will rank 16th in world economic output: still important, but less so than today.

Economic power and diplomatic influence, however, are not the same thing. Canada has traditionally pulled above its weight in world affairs. The concern of ex-diplomats, former politicians and some academics now is that as the world changes, Canada is less engaged than it used to be and is losing influence at a crucial time.

Jeremy Kinsman, one of Canada's foremost diplomats, former ambassador to Russia and high commissioner in London, spoke to the Vancouver conference of Canada's international record of "objectivity and helpfulness."

No longer. "No one in Ottawa is trying," he said. "There are virtually no relationships."

The Harper government has increased military spending, but reduced spending on foreign affairs and aid. "Why the double standard?" asked former Progressive Conservative prime minister Joe Clark. "Why are we prepared to accept more of our share of the military burden than we are of the diplomatic and development burdens?"

At times at the two-day conference, it felt as though many academics, former politicians and diplomats were acting like a foreign service in exile, despairing of a government that with the exception of Arctic sovereignty and Afghanistan has turned inward.

Clark and Kinsman both spoke of how Canada was losing what had become a precious national asset: its outgoing foreign affairs policies. Kinsman complained that the reduction in money for arts groups to travel abroad was spoiling Canada's image; Clark of a failure to lead the kind of initiatives against land-mines and blood diamonds this country had pursued in the past.

Others spoke of Canada's dismal performance on cutting greenhouse gases; and how its failure to live up to the Kyoto protocol had damaged our credibility.

All of this cannot be laid at the door of the Harper government. What the former politicians, diplomats and academics are saying is that the lack of international engagement of the present government has reduced rather than improved our standing.

Canada is emerging from the present economic crisis far stronger than most. Our banking system is the envy of the world, but our influence in bringing about change to the world financial regulatory system and to world economic institutions is not nearly as strong as it could be.

In the World Trade Organization, where Canada had for years been a voice or calm and reason, Canada's place has been taken by Australia.

As the world economic summits have moved from the influence of the old group of rich countries, the G8, to the broader G20 group, which includes the BRIC countries, Canada's influence has waned.

Is Canada's decline on the world stage inevitable? Probably not. As the new economic order emerges, Canada's record on regulation and sound banking practices put this country in unique position to influence the way that world financial institutions are structured for the future.

But to have that influence, the Harper government needs to make international diplomacy a priority. Not to do so is to risk losing our diplomatic standing in the world and the opportunity to forge new ties with the emerging BRIC powers. The risk is that reduced influence leads to reduced opportunities for trade and investment. As the world changes, Canada, as a gradually smaller player in the world economy, needs all the opportunity it can get.

Nicholas Hirst is CEO of Winnipeg-based television and film producer Original Pictures Inc.