DEPUTY SECRETARY-GENERAL REVIEWS OPTIONS FOR INSTITUTIONAL CHANGES, TO MEET GROWING CHALLENGE OF GLOBAL GOVERNANCE

8 December 1998

Press Release
DSG/SM/39
ECO/9

DEPUTY SECRETARY-GENERAL REVIEWS OPTIONS FOR INSTITUTIONAL CHANGES, TO MEET GROWING CHALLENGE OF GLOBAL GOVERNANCE

19981208 Address in London Stresses Utility of Existing United Nations Agencies, Properly Used and Adapted to Changing Circumstances

This is the text of an address today by Deputy Secretary-General Louise Fréchette to the Overseas Development Institute in London:

It is a great pleasure for me to come back to the Overseas Development Institute. It is good to be among people who understand that development is, and always has been, a central concern of the United Nations, on a par with international peace and security, and indeed intimately connected with them. More important, it is good to be among people who think seriously about development issues, and about the United Nations, and who do not content themselves with slogans.

Today, I want to get behind the slogans, and particularly behind one which for the last few years has been quite prominent in the international community's vocabulary: the notion of "global governance".

I suppose the standard text on this subject is the report of the Commission on Global Governance, which appeared nearly four years ago. Having defined governance as "the sum of the many ways individuals and institutions, public and private, manage their common affairs", the authors went on to say that, at the global level, it "had been viewed primarily as intergovernmental relationships". But, they added, "it must now be understood as also involving non-governmental organizations, citizens' movements, multinational corporations, and the global capital market", while "interacting with these are global mass media of dramatically enlarged influence".

Perhaps what is most interesting about that formulation is that it describes something that already exists, rather than something the authors proposed to create. Global governance, it seems, is to today's world what speaking prose was to Molière's bourgeois gentilhomme: something we do all the time, even if we do not realize it.

That did not mean, of course, that the members of the Commission were satisfied with the world as they found it. An "adequate" system of governance, they said, "must have the capacity to control and deploy the resources necessary to realize its fundamental objectives", and "must encompass actors who have the power to achieve results". Obviously, they felt that as matters stand we do not have an adequate global system in this sense.

I believe that feeling is widely shared. Why? Because almost all of us today have a strong sense of living in a world that is out of control. In part, that is the result of the end of the cold war and the collapse of the Soviet Union. That may have relieved us of the fear of instant annihilation, but it has also deprived us of a solid and on-the-whole predictable framework within which to handle a variety of issues, from weapons of mass-destruction to movements of national self-determination.

Now, we do not know for sure what has happened to parts of the former Soviet nuclear arsenal, or where all of the scientists and technicians who built it may be working. When leaders of small or medium-sized States break the rules of international behaviour, we can no longer expect their super- Power patrons to call them to heel. And in many parts of the world, but especially in countries formerly ruled by communism, national movements based on ethnicity have redrawn the map, clashing with each other in the process and so causing bloodshed and mass displacement on a scale not seen since the Second World War.

These are not the only ways in which international order appears to be breaking down. Terrorism, organized crime, illegal or irregular migration, the trade in illicit drugs, and also in human beings (especially children and women) -- all these are phenomena which either ignore or actively exploit the existence of international frontiers. National laws and police forces seem barely able to keep them at bay, let alone control them.

The need for some form of global governance in these areas is hardly contested by anyone.

And then there are the threats to human life from the environment, which, in turn (for the most part), derive from human pressure on the environment: desertification, loss of biodiversity, depletion of non-renewable energy sources, climate change resulting from production of greenhouse gases or damage to the ozone layer. A similar challenge is offered by the global spread of infectious diseases, of which AIDS is, at present by far, the most alarming. All these phenomena clearly call for some form of collective self-control by the human species.

Pressure on the environment is increased, of course, by the dizzyingly rapid increase in the earth's human population. But many of these problems,

- 3 - Press Release DSG/SM/39 ECO/9 8 December 1998

as we well know, are caused not so much by sheer numbers as by patterns of consumption and production, both of which at present are very unequally distributed.

Problems of this type cannot be blamed on the end of the cold war. Nor should they be blamed in any simplistic way on the progress of technology. Indeed, I firmly believe that technology, rightly used, can provide us with many of the solutions. But what is certain is that technology, especially information technology, has now left State frontiers far behind.

This has enormously empowered non-State actors at the expense of States. In many contexts, that is an excellent thing. It makes freedom of expression harder to suppress, and enables NGOs to form global coalitions which press for all kinds of worthy causes. But, of course, that freedom, like any freedom, can be abused. The Internet can be used for social and anti-social, civil and uncivil purposes.

Economically, the new technology presents a formidable challenge to all traditional territorially based authorities (otherwise known as States), which are used to regulating and taxing economic activity by placing some kind of barrier at their frontiers. So many transactions, which until quite recently involved the physical movement of goods or persons, or at least of bits of paper, are now carried on electronically. They occur in that mysterious dimension known as cyberspace, which some of us strive in vain to visualize, while others seem to bask in it as if in their native element -- but which no one has yet found a foolproof way to tax or to police.

In the financial sector, these technical changes have coincided with liberalization, meaning a series of decisions by governments -- sometimes negotiated, sometimes unilateral -- to lift administrative controls on economic activity, which they realized were holding back growth. These two phenomena together have encouraged the growth of mega-corporations whose activities literally span the globe, and whose turnover exceeds the GNP of regional giants such as Brazil or South Africa, let alone smaller States. This is a global economy such as the world has never known before.

All of us in this room know that there are losers from this process of "globalization", and that millions of people -- whole countries, if not a whole continent -- have been largely excluded from its benefits, trapped in systemic poverty.

But until about a year ago, if you said or even implied that globalization was not all good, or that something needed to be done about it, you were identifying yourself with the Luddites of the far right and the old left. Only in the last year or so, as the full dimensions of the East Asian crisis have become clear, has that perceptibly changed.

- 4 - Press Release DSG/SM/39 ECO/9 8 December 1998

This crisis has broken the élan of a region which had been seen both as the most promising model of development and as the strongest locomotive of world growth in the decades ahead. It has also had dramatic consequences in the political and social fields -- most notably in Indonesia, where a 30-year old regime was driven from office while millions of families saw their livelihood ruined. By the third quarter of this year, the crisis was seen to be a very serious threat to all emerging economies. It triggered economic collapse and political change in Russia, and even a full-scale, if short- lived, panic on the western stock markets. We are faced with at least a global slowdown, which affects even the most prosperous parts of the world -- as the central banks of Europe have now explicitly recognized.

Investors remain extremely wary of emerging markets -- even those whose "fundamentals" seem impeccable on paper. And the devastating social consequences in much of the third world will be healed only by years of effort.

Two things about this catastrophic series of events are hard for any observer to deny. One is that the crisis, however regional in its origins, became global almost ineluctably by virtue of the global nature of today's economy. The other is that, however much some correction may have been called for by the mistakes and abuses of the boom years in East Asia, the punishment delivered by the markets is extreme and out of all proportion. And those two observations point to a common conclusion. The market left to itself is not a fair or an effective manager of the global economy. A degree of restraint and regulation is necessary, if the swings of investor sentiment between "irrational exuberance" and total risk-averseness are not to destroy much more than they build. Some voices are now raised calling in question the whole process of globalization. Mistakenly, they identify it with economic liberalization, which is only one element in it, and imply that it can and should be reversed, or that individual States or regions can and should opt out of it.

I am convinced those voices are wrong, and I am encouraged to note that so far they do not include those of many people with real political and economic responsibilities, whether in developing countries or elsewhere. The solution lies not in turning one's back on globalization, but in learning how to manage it. In other words, there is a crying need for better global governance in the financial sector, as well as in those I mentioned earlier.

Markets have become global, but governments remain local, and in key respects the capability gap between them is widening. Multilateral institutions must have a critical role to play in filling this gap. But how?

How can we collectively steer our common destiny into safer paths? How much scope do we need, and how much can we obtain, to do what is absolutely necessary? How well are we equipped to act collectively, today and tomorrow?

- 5 - Press Release DSG/SM/39 ECO/9 8 December 1998

How can we avoid future disaster without knowing its precise nature? How can we bring hope and opportunity to the many who have no voice at the tables of abundance that some take for granted? Finally, are our existing structures and institutions equipped to deal with any of these questions?

That last question sounds rhetorical, assuming an answer in the negative. It is tempting indeed to call for new global institutions, given the sheer magnitude and complexity of the challenges we face.

The idea of an "economic security council" continues to do the rounds. As recently as last week, I notice, it was proposed by the Socialist International, which wants it to be "modeled on the G7 but within the framework of the United Nations", and to "address global issues such as stability of international exchange rates and international capital flows". High on its agenda would be "a review of such institutions as the International Monetary Fund (IMF) and World Bank and developing a global recovery programme to promote trade, investment, income and employment".

It sounds good, but I am not convinced it is the right answer. The phrase "economic security council" is presumably meant to conjure up an image of a body of great prestige, authority and even power, by analogy with the Security Council we already have. But I wonder how many Member States, especially among the more powerful, would really be ready for the kind of limitations on their sovereignty that creating such an engine would involve. Are we ready to concede such powers in the management of the world economy to any group of States, however chosen? That would, in effect, be setting up a world government. I know that is something the United Nations is occasionally accused of wishing to do, but I assure you this is a profound misunderstanding. Whatever "global governance" means, I am sure it is not that.

Most advocates of an economic security council, therefore, suggest that it should have "deliberative functions only". But then one wonders how different it would be from the existing Economic and Social Council ("ECOSOC"), which is a "principal organ" of the United Nations, consisting of 54 Member States elected by the General Assembly.

Under the Charter, ECOSOC may call international conferences on matters falling within its competence -- though, in practice, the General Assembly reserves to itself the power to convene such conferences. The ECOSOC is also required to set up commissions in economic and social fields and for the promotion of human rights, "and such other commissions as may be required for the performance of its functions".

These are not negligible powers. In fact, ECOSOC has played a bigger role in setting the norms and defining the terms of debate on important issues

- 6 - Press Release DSG/SM/39 ECO/9 8 December 1998

-- environment, population, human rights (including women's rights) and so on -- than most people realize. It is by no means obvious that an "economic security council" with purely deliberative functions would wield any greater authority.

Problems do not become more soluble just because there is an institution competent to deal with them. If that were so, we should expect to see a much more orderly state of affairs in areas which do fall within the present Security Council's competence. Unhappily, as I indicated earlier, that is far from being the case.

The international community has shown that it is not shy of creating new institutions where there is a clear need for them. In this decade, I would cite the Organization for Security and Cooperation in Europe, the World Trade Organization, the two Tribunals dealing with war crimes in Rwanda and the former Yugoslavia -- and now the International Criminal Court. But recent events in this country (United Kingdom) also show us that international criminal law, like many other aspects of global governance, can be affected by national authorities without waiting for a new institution to come into being. It was after all a Spanish national investigating magistrate, acting on his own initiative, who triggered the current legal imbroglio between this county and Chile.

In short, while it may well be necessary, over time, to realign global institutions into a new "architecture", this must be driven by a clear understanding of what we are trying to achieve and how we hope to achieve it, not by some abstract institutional logic. We must not let ourselves get tied up in institutional arguments at the expense of substance. Better to build on whatever has been shown to work, while remaining ever ready to improvise and innovate, adapting institutions to new tasks which their founders could not have foreseen. I believe both that we have much to build on, and that there are new approaches worth exploring.

I certainly do not pretend to have ready-made answers to all the questions I asked just now. But let me, in conclusion, offer you a rough checklist of principles which I think should guide us in our search.

For global rules to enjoy legitimacy and general respect, they must be the product of a multilateral process. The creation of a rule-based international trading system has been one of the great successes of the last 50 years, and is generally acknowledged to have benefited industrialized and developing countries alike.

This should remind us that multilateral cooperation, the existence of well-functioning global rules, and a level-playing field that protects the weak against the strong are necessary preconditions for spreading benefits

- 7 - Press Release DSG/SM/39 ECO/9 8 December 1998

and reducing risks. The process must be democratic and inclusive. Even the Security Council's authority is gradually eroding because so many people perceive its membership as narrow and unrepresentative. That applies a fortiori to small, self-selected groups of powerful countries like the G7 or G8. There has to be a forum where these issues can be debated openly, and where a variety of actors can feel they have a say. You will not be surprised to hear that, in my view, the United Nations is the institution by far the best qualified to provide that forum.

"International" can no longer be equated with intergovernmental. The private sector, along with the rest of civil society, has to take its share of responsibility for global governance, and not only in the management of financial markets. Businessmen, along with many governments, usually object when attempts are made to link issues such as human rights, labour rights and environmental standards to the rules of international trade. But they must realize that such linkage can be avoided only if they themselves take the lead in implementing international norms in these areas, which are crucial to human well-being.

We must strengthen international law. Tomorrow, we mark the fiftieth anniversary of the Convention on the Prevention and Punishment of the Crime of Genocide, and on Thursday that of the Universal Declaration of Human Rights. Much has been achieved over five decades in establishing a corpus of internationally accepted norms and values. But much remains to be done in bringing those norms and values to bear on the everyday life of people around the world.

Indeed, in all these areas, recent global conferences, convened by the United Nations, have set us a very comprehensive set of goals which, taken together with the Universal Declaration, amount to a road map of socially and ecologically sustainable development. We must now implement these norms.

As Clare Short said at a seminar in Stockholm just over a year ago, "either we are complete hypocrites or we take seriously the values we are all signed up ... and say: These are our values, this has to be delivered through our international system and our national structures. These are the values that should apply to globalization, these are the values that will civilize globalization".

I can think of no better watchword for the international community, as we approach the third millennium. I realize that in this short talk I have only skimmed the surface of the problem of global governance, and in so doing have raised far more questions than I have given answers. But I came here to discuss, not to preach, and I very much want to hear what you have to say. I hope I have left time for comments, as well as questions.

* *** *