ADraft October 13, 2001 GOVERNANCE WITHOUT GOVERNMENTS Gordon Smith The world is changing in fundamental ways.

Increasingly we can have governance in the international arena without the only actors being governments and the international organizations they create. The word governance, of course, has its origins in the Latin and Greek words for to steer, very appropriate in the present context. Sometimes, but very rarely, we can even have governance without governments at all. The management of the Internet is a well known example, although here governments are now becoming more involved. Professional and business associations are increasingly turning their attention to standard setting that is also clearly a form of governance; they dont need governments to do so. More typically, civil society and the private sector are becoming powerful actors alongside states in international negotiations. New forms of governance at the global level are clearly emerging. Issues are being managed in different ways. The distribution of power, while not an exact science, is changing. One measure of power is wealth. Now half of the largest one hundred economic actors are private sector corporations. Civil society is also clearly more powerful in setting and even managing the global agenda. That is not to say that states are in the process of disappearing far from it. States are the key actors in the formal decision making process. They are actors in other ways as well. The power of states was confirmed in the US led response to the attack on it September 11. On the other hand it is significant that, for the first time, a major attack was mounted on a militarily powerful and technologically advanced country by a non-state actor. Indeed this crisis has also confirmed that it is still very much possible to rally a population around the flag; the state certainly matters in the minds of its citizenry. In some areas governments will always dominate the stage, even when responding to challenges posed by the most shadowy of groups, far from the official world. But in most areas states will need to operate in different ways to take into account the power of the private sector and civil society. Rather than disappearing, as Anne-Marie Slaughter observes, states are to a significant degree disaggregating. The constituent parts courts, regulatory agencies, executives and even legislatures are networking with their counterparts abroad, creating a dense web of relations that constitute a new, transgovernmental order.1
1

Anne-Marie Slaughter, Foreign Affairs, Vol.76 No 5, p. 184.

Interdependence on this small planet of ours is significantly increasing. Most people who realize this think first of economic globalization and its consequent greater interdependence amongst nations and peoples. This fall perhaps for most people, at least in North America, the first thing that comes to mind is the global reach of terrorism another form of globalization. In fact, the need to deal on a global basis with the threat of terrorism has been or should have been clear for many years. The United Nations lists a dozen conventions that form the basis for an emerging international regime to deal with terrorism.2 The Security Council has passed a resolution under Chapter Seven that calls for all members of the UN to undertake a series of measures to combat terrorism, many of which will require domestic legislation. Our interdependence has again been underlined. While dependence on trade was high a century ago, there can be no question economic interdependence is now at an all time high. Technology has been an important contributor to this recent increase in interdependence. Technological advance has increased the speed at which information flows, made possible the transfer of large amounts of information and enormously reduced the cost of that transfer. The increase in international investment, with more and more cross-ownership, has been important too, as have been reductions in tariffs. Facts, ideas and money flow at a never before witnessed rate. Mutual interdependence means mutual vulnerability. This was true and evident in the security area with the advent over fifty years ago of nuclear weapons and long range aircraft (then missiles) to deliver them. Mutual vulnerability now is increasingly obvious in the environment and health areas. One need only think of climate change and the spread of infectious disease. Even fortresses with moats filled with the most vicious of alligators cannot keep these problems away. While the technological revolution may not have affected everybody in the world less than half the worlds population has ever made a telephone call HIV/AIDS does and rising water levels will. And as we become more and more dependent on technology, we become vulnerable to viruses and worse. This interdependence requires better management at the global level. The day has passed when states, even the most powerful states, can go it on their own. This is hard for some, and above all it has seemed the United States (September 11 may have changed that), to understand or accept. Even the most exceptional states cannot live behind their moats. Even exceptional states need friends. Maybe even exceptional states need some form of sanction for their activities; international regimes, as they are called, increasingly matter. One can perhaps see this in changing attitudes of the US Administration towards the UN. There is increasing concern about how these international regimes are managed. Governments of states, with the international organizations they create, can no longer manage international issues in an exclusive manner. Indeed the day is passing when
2

http://www.undcp.org/terrorism_conventions.html

governments of individual states can assure their citizens locally of adequate public health or freedom from crime without the active co-operation of other states. Decisions at the international level are having increasing impact on what in the past would have been regarded as national prerogatives. This is true of the World Trade Organization whose rulings can and do have profound effects on domestic policy and society more broadly. It is true of the International Monetary Fund witness the decisions of the IMF during the Asian crisis. Slobodan Milosevic may have thought he governed a sovereign state and consequently could deal as he thought fit with its Albanian minority. NATOs bombing of Yugoslavia decided by NATO alone - during the recent Kosovo crisis demonstrated that the rules have changed. One can be subject to military attack for something you are doing to people in your own sovereign territory. Indeed there is now an International Commission on Intervention and State Sovereignty. The question is when can the international community step in, uninvited by the receiving state. And how is the authority for such action to be given?3 In the case of the WTO it can be argued that states cede sovereignty when they join. In the case of the IMF it can be argued that the act of borrowing someone elses money is a cession of sovereignty. But in the case of the Balkans, there was, in effect, a unilateral decision by a number of governments external to the country involved that something so awful was happening inside a sovereign state that it had to be stopped. So international bodies (and even informal ones like coalitions of the willing and others that are not universal like the North Atlantic Treaty Organization (NATO)) are more powerful than ever before. Questions are being asked about their legitimacy and accountability. Doubts are being expressed about their lack of transparency and limited participation in decision making. These international bodies are created by their member states. They do not, as a general rule, have lives of their own. Some give each state one vote (the United Nations system, with a variant in the Security Council where some have individual votes that trump the majority). Some weight votes according to how much particular states have invested (the Fund and the Bank). The variations are interesting and important, but the point here is that the formal link is always to the constituent member states. Any idea of direct accountability to the global community would be anathema to governments. Accountability is to them the elected (mostly) around the world. There is no such thing as democracy at the global level and nor is there likely to be for a very long time. Unfortunately governments tend not to devote much time to having national public or parliamentary discussions of what is happening in these international bodies. That is true even of ex post facto discussions, and all the more true of
3

http://www.iciss.gc.ca/menu-e.asp

consultations before decisions are taken. International organizations themselves have tended to follow this lead, and at least until recently have treated policy formation as confidential to governments and not something to be exposed to external scrutiny. The result is clear. There appears to many at the present time a dramatic gap in accountability of the key international institutions. Civil society, those outside government and private enterprise, not very surprisingly, is most dissatisfied. The source of the problem is not, however, usually understood. It is rarely a plot by the leaders (or their followers) in international institutions to work in secret. It is much more a consequence of the fact that governments are, at least until recently, content with how things are running. Governments are justifiably proud of their (mostly) freely elected status. They believe (mostly) they are acting in the interests of their citizens. In doing so, they have decided to create and strengthen international organizations which they manage through various boards. But people do not like being left out of decisions that affect them. The fact that they are left out is pretty obvious. The information revolution and the spread of democracy has changed in a major way what people know and their expectations about being heard and listened to. Nor do people like being left behind as the gap between rich (in every sense of the word) and poor seems to increase. That this is in fact occurring can be contested4, but it is perceived the importance again of the information revolution to be true. The gaps are increasingly evident in any case. Some will argue that globalization has increased the gaps. Others will argue the gaps were always there and globalization offers a way of reducing them and providing an exit from poverty. The debate has begun, and the facts are contested. The fact of the gap that some people are very rich and many are very poor is unarguable. One can declaim the injustice of this and one should worry about its sustainability. Acceptance by those who are disadvantaged may have its limits, especially as the gaps become evident to any one watching television. It has always been understood that markets do not provide adequately at the national level for necessary public goods. As the importance of global public goods increases, it is not surprising that markets do not provide, on their own, on a global basis goods such as a clean environment, health and peace. Markets do many things very well, but are not a substitute for governments. The problem is that we do not have a global government and we need a substitute for it global governance.

See, for example, a recent World Bank study by David Dollar and Aart Kraay entitled Growth is Good for the Poor - http://econ.worldbank.org/files/1696_wps2587.pdf

The information revolution is changing everything. This is not an overstatement, although it may sound like one. The information revolution dramatically increases access to the very latest information. It permits global coalitions to be formed. This is key. The common citizen (at least those who are part of the world which is interconnected by the communications infrastructure) is more aware of what is going on and has a greater capacity to work with others who share his or her concerns. This fuels the spread of democratization in the world in the most basic sense being involved in decisions that affect oneself. Consequently civil society has become increasingly powerful politically (and increasingly commercially think about the power of customer boycotts). There are now estimated to be 15,000 international NGOs5. The enormous power of large transnational private sector corporations is another reality, indeed one that much of civil society rails against. While one can argue that this power is exaggerated by those who decry it, the view is strongly held by people in a number of groups. According to Ann Florini, international civil society is bound together more by shared values than by self-interest.6 These values lead to coalitions of a strategic or tactical variety. Even while motivated by values, shared interests still drive coalitions. More specifically, what are NGOs and alliances of NGOs actually doing? What is their impact? (And it is worth noting that NGOs do not always work together; they can also be at cross purposes.) Before answering these questions, we should distinguish amongst various forms of power. States have coercive power as their bottom line. Business has economic power. NGOs have softer instruments of power and rely on moral authority. But this does not make them any the less capable of influencing the development of norms, norms which can in due course find their reflection in legally binding international treaties. A good example of what can be done is the anti-personnel land mines initiative. Canada led, with a group of like-minded countries in support, but augmented by key nongovernmental organizations. The NGOs put the issue on the global agenda; they forced states to do something. There were some 300 organizational members of the International Campaign to Ban Landmines. Despite the fact that the US has not signed, the campaign was a success. The proof is that without it the clean-up of existing mines that has occurred would not have happened and the effective halting of the sowing new minefields would not have occurred either.

According to the Union of International Associations. P. 7 Ann Florini, The Third Force (Washington: Carnegie Endowment for International Peace, 2000).

It is interesting to contrast the experience of landmines with that of the initiative to control small arms; it helps make the point that just because NGOs are committed to work to a worthy end does not mean they will succeed. With small arms, there is no clear focus such as a ban and no one clearly identifiable weapons system - instead a variety of weapons that range from revolvers to anti-aircraft missiles. The campaign has not captured public attention to a significant degree. Progress is very slow. Another example, this time of what not to do (at least from a government point of view) was the process aimed at producing a Multilateral Agreement on Investment (MAI). While there were serious problems internal to the negotiations, many experts from governments thought they had the process reasonably well under control. In fact they were ambushed by a coalition of NGOs. There were more than 600 involved. And it was not as if this was a quiet ambush. It was there for all to observe on the Internet. Together with the divergences amongst those at the negotiating table, the result was to do in the process. Civil society is unquestionably contributing to the global agenda, e.g. by identifying the consequences of globalization that might otherwise be ignored. The highly organized protest movement that one has seen at most major international meetings including and after the Seattle WTO is an obvious case in point. NGOs are playing a major role in the development of values and the establishment of new norms Transparency International being an example. TI has worked very effectively to combat corruption, with public disclosure and shame being its main weapons. Its indices increased awareness of the problem and persuaded development institutions and the IMF to do something. Countries with poor ratings were also penalized by the worlds financial markets. TIs activity demonstrated that key sectors of society supported the development of the OECDs convention on bribery. In 2000 after meeting with TI, eleven of the worlds largest banks agreed to set guidelines for money laundering. Working together, often in transitory coalitions, NGOs are building alliances that traditional power holders cannot ignore. Civil society is also working with international institutions and even the private sector to transform existing institutions or their policies the World Commission on Dams being a case in point. That Commission, established by the World Bank, brought together representatives from the private sector, civil society and governments to develop guidelines for the construction of major dams, an area in which the Bank had been much criticized. NGOs are playing an increasing role in conflict prevention for example, SaintEgidio. This Rome-based religious community has contributed to several peacebuilding initiatives around the world, the best known being its skillful mediation in Mozambique that culminated in the 1992 accord.7 Former Secretary-General Boutros Boutros-Ghali
7

http://www.santegidio.org/archivio/pace/19980703_spectator_EN.htm

expressed his admiration for this model, "for this unique mixture of governmental and non- governmental peace-making activity".8 Finally the expertise in NGOs often exceeds that in governments with the result that not only do they drive the agenda and influence negotiations, but they also ensure follow-up -and in fact do much of the follow-up the Convention on the Rights of the Child being an example. There is an impressive network of NGOs and university professors who really drive the process.9 Thus not only does civil society get issues on the agenda, NGOs influence negotiations, help shape arguments and can monitor results. The process that culminated in the Organization for Security and Co-operation in Europe began with NGOs in the West, empowered NGOs in the East and ultimately made a major contribution to the collapse of the Communist system. The pressure to have human rights respected led to a document (The Helsinki Accord) which, it is safe to say, those signing in Eastern Europe never thought would be used to hold them to account. In fact, it together with severe economic problems, sowed the seeds for their own demise. Governments were increasingly being held responsible, even in what was ostensibly a single party state. The impact of civil society is as clear in the environmental area as it is in that of human rights. The first major UN conference to involve NGOs was that which took place in Stockholm in 1972. Maurice Strong, who chaired the meeting, has made clear just how important a role they played. And this was only the beginning, as the Earth Summit at Rio in 1992 showed. Strong, while managing an intergovernmental process, for each meeting forged effective alliances with NGOs to contribute to a positive outcome.10 In an increasing number of areas NGOs are interacting directly with corporations to achieve their objectives, something executives from Starbucks, Nike and Weyerhauser would confirm. They realize they do not need governments. They have the power to compel major corporations to come to the table to address environmental or childrens rights issues, to cite two major areas. Increasingly, corporations understand this. All this is not to say that there are not certain difficulties in the world of NGOs. There are, in fact, important questions that need asking and answers to be provided about accountability and legitimacy of these bodies. Power outside governments is nothing new. The dense inter-linking of groups around the world is, however, new, or at least is unprecedented in its present dimension. Better global governance is unquestionably needed. Governance must provide needed public goods. But this cannot be the exclusive purview of governments. There are other actors on the scene.
8

"Message from the Secretary-General Boutros Boutros-Ghali to the Seventh International Meeting for Peace of St.t'Egidio Community", Milan, 19-22 December 1993 9 See, for example, the work of the Institute for Child Rights & Development at the Centre for Global Studies at the University of Victoria http://web.uvic.ca/icrd/ 10 Maurice Strong, Where on Earth are We Going? (Toronto: Knopf, 2000).

We live in a world where power is much more diffused than in the past. This is true even though we now have but one superpower the United States which some have even called a hyperpower11. To use one of the concepts of Political Scientist James Rosenau, the state-centric world has been joined by a multi-centric world; they exist together. While much of the world attaches a high value to democracy, it is far from clear what this means or entails at the global level. Unless one believes that global government is just around the corner it isnt, by the way new forms of governance are required. Governments should and indeed must lead this process. Transparency can be increased in a variety of ways. More consultation at an early stage can increase participation. Accountability can also be enhanced, particularly by member states. Governance is not synonymous with governments. There are many more actors involved today in governance. Yet with very few exceptions governments are and will remain present in all areas of global governance. There are new and substantial opportunities for governments and non-state actors who understand and learn to play their roles effectively in this changing world. There are problems ahead for those who dont. Governments need to see non-state actors as groups that have power and legitimacy, albeit a legitimacy different from governments and varying according to organizations and issues. Non-state actors can be powerful allies, or enemies. For its part, civil society needs to understand that, in democracies, elected governments have a legitimacy and authority they can never have. Civil society needs to be prepared to work with governments. NGOs need to do more to increase transparency in their own organizations, make clear whom they represent and to whom the leadership is accountable. We live in a world where state sovereignty has to be understood in practical terms in different ways than in the past. States have diminished autonomy to act, sometimes because they have decided that is the way it should be, and sometimes simply because that is the way it is. We live in a world that is increasingly influenced by a myriad of networks. These networks may well include governments and international institutions, or individuals within them. In conclusion, there are some real possibilities for improving governance that we have been exploring at the Centre for Global Studies at the University of Victoria in association with partners around the world. They include:
11

Hubert Vidrine, French Foreign Minister, on many occasions.

1. Reform G8 and G20 processes. The tradition of closed consultations among the participants is now a liability. More needs to be done to include others in the preparatory process, to change the perception that other views are not listened to. The G20 is seen as having greater legitimacy because of its wider membership. Some proposalsfor example on debtmay have a better chance of winning wider support if they are prepared in the G20 rather than the G7/8. 2. Increase transparency and accountability in the IFIs. There remains great suspicion and unease about the role and policies of the IMF and World Bank. A wide range of proposals have been put forward, even if changes in the existing voting structures are not on the agenda. These include: a) publish Board minutes, letters of intent, country assistance strategies, internal evaluations etc unless there are over-riding market reasons not to. Set up right-toknow procedures with an appeal mechanism; b) increase the number of developing country seats on the Boards, either by introducing seats with half-votes or by repackaging constituencies; c) set up a service networked to think tanks, academics etc to provide independent analysis and advice to the Boards; d) push forward existing moves to reduce the extent of conditionality, focussing on conditions relevant to the ability of the country to repay. 3. Introduce more decentralisation and competition. Push decisions down to local and regional levels. Reward success. Dont try for a monolithic architecturewhich may be tidier on paper, but is inflexible and anyway very hard to achieve. Have subsidiarity as a goal. 4. Reduce some of the perceived unfairness in the world trade regime. The Uruguay Round outcomes on agricultural subsidies and market accessand the way they have been implementedare widely seen as unfair to developing countries, as are some aspects of the Intellectual Property regime. Redressing these is more important than a new comprehensive trade round with new issues and a wide agenda. Increased transparency in WTO negotiations is also vital. 5. Build up developing countries capacity to engage in debates at the IMF, WB, WTO etc. Set up a unit in Washington to help developing countries prepare positions on issues coming to the Boards of the IFIs, and to build up their own policy capacity. Provide more focussed legal help to developing countries in WTO negotiations and disputes. 6. Set up a new regime to deal with country insolvency. The present system, whereby the IMF is both a creditor and an arbiter, is unfair to borrowers. A new regime is needed that can take a more balanced perspective of the interests of creditors and borrowerswith special procedures where systemic issues arise and where the macro-economic costs of delay may be high.

7. Set up an international tax body. This would be charged with collecting statistics from national tax authorities and analysing trends, as well as taking forward international work on tax havens etc. Its remit would need to be carefully drafted to allay concerns in both developed and developing countries about sovereignty. 8. Develop a better mechanism for co-ordinating global competition policy. Competition policy increasingly raises international issues. It is unlikely that countries would wish to surrender sovereignty to a new supra-national body. But closer co-operation between national and regional competition authorities is needed, perhaps with an international appeals or arbitration process. 9. Establish a conflict recovery facility. Conflicts contribute to poverty, the spread of disease, environmental degradation, the plight of refugees. First priorities must go to preventing conflicts. But there is also a need for an authoritative and inclusive public/private mechanism for peace-building and recovery from conflict. 10. Set up a body charged with producing and collecting global environmental sustainability indicators. One by-product of the debates on climate change, biodiversity and other environmental issues is the need to have independently produced indicators of environmental sustainability. Independence from operational responsibility may point to this being set up outside UNEPthough this will depend on the future role and mandate of international environmental bodies (see note 1). 11. Modify TRIPS agreement in relation to pharmaceuticals. The problems of infectious diseases in developing countries are horrendous. Developing countries should be able to issue expeditiously compulsory licences to make or import patented drugs. The definition of medical emergencies in the TRIPS agreement needs modifying. 12. Set up an IPCC-type mechanism for issues on genetics and biotechnology. The International Panel on Climate Change has helped to develop international scientific consensus. This approach should be extended to new issues arising the fields of genetics and biotechnology building on existing discussions in the G7. States, though altered, remain indispensable and powerful actors.12 They should lead in advancing improvements in governance that include more than governments.

12

Gordon Smith and Moises Naim, Altered States: Globalization, Sovereignty and Governance (Ottawa: International Development Research Centre, 2000).

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