Global Trends by Martin Khor

Monday 11 January 2010

2010 to decide how the world is governed

Will decisions on global issues like the economic crisis and climate change be made by small exclusive groups or by the multilateral and democratic processes of the United Nations?  The year 2010 will be crucial on determining the terms of global governance.


Will discussions and decisions on global issues like the economic crisis and climate change be made in a globally democratic way or through small groups of countries, which traditionally have been dominated by the rich nations?

This question on “global governance” has been debated for years. But 2010 will be a crucial year in defining the answers.

After the Second World War, the United Nations emerged as the premier international organisation for bringing up and addressing global issues, including peace and security, development, finance, trade, health, food and the environment.

By and large the issues were discussed rather transparently, with participation open to all members of the UN, the majority of which are developing countries.

Within the UN system, security was an exception, with an undemocratic Security Council in which five major powers have permanent membership and veto rights, and a few other countries are also members on a rotating basis.  With the veto power, a single country can reject actions agreed to by all others.         

There has been a tussle in the division of powers between the UN General Assembly, where all UN member states are grouped and where decisions are taken according to majority vote but which has little implementing power, and the Security Council which is an exclusive group but has the power to impose sanctions and authorise military action.

On economic matters, the UN used to wield a lot more influence.  UN staff used to be the main providers of economic advice to developing countries, and global finance and trade issues were mainly debated in the UN, which had well respected staff in the Secretariat and agencies like UNCTAD.

Starting from the 1980s, however, the authority of the UN over economic issues declined as the developed countries led a move to “reform” the UN by downgrading its Secretariat functions, while tremendously upgrading the resources and authority of the IMF and World Bank.

These two Bretton Woods institutions used their leverage to impose unpopular and often inappropriate policies on a large number of indebted developing countries.  They replaced the UN as the main global economic actors.

Meanwhile, the major developed countries formed their own institutions, especially the OECD think-tank and then the Group of 7 whose annual meetings became the focus of decision-making.   The G7, which later became the G8 when Russia was included, became the most powerful economic bloc.

When the world financial crisis erupted in 2008, President George Bush of the United States convened the G20 at summit level, with a first meeting in Washington.  More G20 Summits have been held, in London and Pittsburgh in 2009, and they made decisions on several issues related to the global economic crisis.

Big developing countries including China, India, Brazil, Indonesia, South Africa, are included in the G20, and there was speculation after the Pittsburgh meeting that the G20 would replace the G7 and evolve into the forum where the “major” countries, developed and developing, would discuss and decide on issues, starting with finance. 

This, however, has not gone down well with the majority of developing countries, since they are not in the G20, and neither has the mandate or membership of the G20 been agreed to by all countries. 

The UN General Assembly President, Miguel Descoto of Nicaragua, took the initiative to convene a UN Conference on the Financial and Economic Crisis in June 2009, with the aim of getting what he called the G192 (since the UN has 192 member states) involved in discussing and acting on the crisis, especially on how developing countries are affected.

The meetings preparing the Conference also discussed how to strengthen the UN in global economic issues.  Many developing countries argued that the G20 does not have the legitimacy to make decisions that affect all countries, and that only the UN with its universal membership can be a democratic discussion and decision-making forum.

Ideas were proposed to form a Global Economic Council inside the the United Nations, that include  a small group of countries appointed by the UN membership, on a rotational basis, representing various regions.  

Such a council, whose mandate, agenda and membership are derived from the UN members, can best discuss and decide on issues in an inclusive way where developing countries' interests are represented, and would have the legitimacy that the G20 does not.

This year, the working group tasked with following up on the UN's economic conference will have the opportunity to discuss not only global economic issues but a strengthened role for the UN and the possibility of a UN economic council.

In climate change, the venue for international action has been the UN Framework Convention on Climate Change, which has over 190 member states.  It was the UNFCCC that organised the 2007 Bali conference and the 2009 Copenhagen conference.

President Bush, who was not fond of the UNFCCC although the US is a member, organised his own process, the Major Economies Forum or MEF, which only included 15 to 20 countries with the most emissions in absolute amounts.

The developing countries (including many of those in the MEF) have been unhappy that the MEF constitutes an alternative venue to the UNFCCC, and have constantly asserted that the UNFCCC is the sole legitimate multilateral negotiating forum on climate change.

With the messy conclusion of the Copenhagen conference last December, when a document arising from a meeting convened of political leaders of 26 countries was not adopted by the Conference plenary, some developed countries are now considering shifting the main negotiations away from the UN and into smaller groups like the G20.

On 8 January, a meeting of leading European Union officials (including the new EU President, the European Commission chief) reportedly discussed a new negotiating strategy, including pursuing a climate deal through the G-20, rather than the United Nations. "There is an awareness that after Copenhagen things have changed. The balance of power has shifted," one of the EU leaders was quoted as saying.

This report indicates that the developed countries are tempted, if not already planning, to move away from the democratic UNFCCC in which all countries and interest blocs have a say, into an exclusive group which is easier for the developed countries to influence because they have a disproportionate ratio of the members of this small group and they also shape the agenda.

Moving from the UNFCCC into a small exclusive group would be a major setback for the UN and for multilateralism.  It is also counter-productive because climate change is a global problem that requires the cooperative actions of all countries, big or small.

Even though it apparently takes a longer time for a big group to make decisions, in the end it saves time because the decisions made by a small self-selected group would in the end have to be discussed by the larger group, and the delegates will divert a lot of precious time into disputes over procedures and principles of the process, rather than the substance of how to act on climate change.  

Thus on the crucial climate issue, we can expect a battle on process and venues, which actually are issues on global governance.

Of course the majority of countries can be expected to be on the side of the UN because it provides the best chance for an inclusive and participatory decision-making process in which all nations can be involved.