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Divided Nations: Why global governance is failing, and what we can do about it

By Ian Goldin

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Unless we are able to more effectively manage the risks associated with globalization, they will overwhelm us. This is the core challenge of our times.

Global institutions which may have had some success in the 20th century are now unfit for purpose.

Nations are divided and cannot agree a common approach, and within the leading nations there is no consensus or leadership on critical global issues.

We have reached a fork in the road. New solutions must be found.

This necessitates the involvement of ordinary citizens everywhere. For without the engagement and support of us all, reform efforts are bound to fail.

Too often reforms in global governance are equivalent to rearranging the deckchairs on the Titanic. Much bigger threats loom than those that are the focus of these earnest efforts. The world has changed in fundamental ways since the institutions were formed and so it should come as no surprise that they are overwhelmed by new challenges.

For example, even a cursory look at the system with respect to nuclear arms shows how we cannot take much comfort from its relative success in preventing a nuclear war. The establishment of a global institutional arrangement that would facilitate the peaceful and safe use of nuclear energy and all nuclear weapons is urgently required.

Relative to all other national and global surveillance systems, finance was, and remains, the best endowed. Yet this system of governance was found to be totally unfit for 21st-century purpose. They simply did not see the crisis coming. And when it came, they were unable to arrest or, to this day, address its underlying causes.

The financial crisis has demonstrated that even the best equipped of the systems - the elite of global institutions, people, and data - could not keep pace with rapid changes associated with globalization and technical change.

In the case of finance, governance reform remained national and lagged behind technological and other global advances which facilitated a financial boom. The result was a catastrophic financial bust.

Even more worrying than the consequences of systemic risk in finance is the potential impact of pandemics.

There are two major trends driving our increased exposure to lethal global pathogens. First, travel and transport networks allow pathogens to go global in a matter of days. Second, increased proximity through a combination of urbanization and population growth, as well as severely crowded living conditions in a growing number of cities, has the capacity to lead to the same patterns of transmission and mutation witnessed in the trenches.

The acceleration of technical change beyond the evolutionary advance of supervisory authorities is a common feature of both the financial and biological systemic risks. It presents both a significant challenge, but also unprecedented opportunities for global governance.

Parallel to financial and physical connectivity, the Internet carries its own risks.

Networked computers are used to provide public and private services that now permeate all aspects of our lives. Attacks have the potential to grind the entire system of commerce and social engagement as well as crucial public services, such as e-government, water, power, and communication, to a halt.

The problem of cybersecurity is therefore twofold. First, how do we minimize the risk of systemic breakdown due to cyberaggression? Second, how can we limit cybercrime while ensuring that the innovative capabilities of information and communication technology are preserved? These complex cybersecurity issues transcend national boundaries and leave all countries vulnerable. While cybersecurity is emerging as a critical concern in the 21st century, there is currently no central governance agency focused on cybersecurity issues.

We take for granted the ability to use networked computers. Finding global solutions to the growing vulnerability of these new arteries of global and national commerce and public services is essential if they are to continue to be a driving force of globalization and development.

Migration is certainly not a new phenomenon, but the forces that have propelled migration in the past are continuing to intensify, and the sheer pressure of human movement requires that more attention be paid to domestic policy and global migration governance.

The challenge with migration is that despite these extensive and incontrovertible long-term economy-wide gains, host governments and native populations will allow themselves to be swayed by the short-term localized costs.

The danger with migration is not that it will bring something bad, but that governments will not have the foresight to allow it to realize the range of potential benefits.

In a period of intense * globalization, the international laws and institutions governing migration have lagged many decades behind increasing mobility.

We will have to contend with a widening set of escalating and increasingly overlapping challenges over the next century - including terrorism, war, nuclear proliferation, and environmental degradation.

In the area of climate change, the gap between the challenge and action on global governance is particularly stark.

No one country can possibly deal with climate change - it requires concerted action at the global level.

The great challenge of all these global problems is that they are extraordinarily hard to predict.

All these looming challenges require visionary leadership to comprehend and manage.

The speed and scope of these changes requires a fundamental rethink of the way we approach governance.

Increased interconnectivity and economic growth have changed the demands placed on global governance. The challenges of the global commons increasingly render domestic solutions inadequate.

Many of the challenges of global governance are rooted in the tragedy of the commons, in that no one country feels motivated to make sacrifices or circumscribe their behaviour for the common good.

Thousands of international treaties have been created, but too many are barely worth the paper they are written on. Some, like the Kyoto Protocol, are simply ignored by countries that wish to avoid their implications.

Where the implementation of a treaty or international agreement requires legislative or other changes at the national level, it is held hostage to domestic politics.

There are many positive things that could be said about the effectiveness of the global institutions in the post-war era. Whether they can deal with the emergent global challenges is a more open question. The problem lies in the method employed for balancing the competing demands of effectiveness and legitimacy.

The IMF already has some responsibility for global financial stability, shared with the Bank of International Settlements and the Financial Stability Forum. The clear failure of these institutions to protect against the financial crisis should serve as a warning that the traditional multilaterals have little capacity to deal with financial risks.

There is no one institution with responsibility for the governance of the natural environment. A number of countries, particularly developing ones, have long called for the establishment of a ‘world environmental organization’ (WEO) to anchor global efforts for the environment, just as the WHO does for health and the WTO for trade.

This debate, and the climate debate more broadly, has now been overshadowed by economic uncertainty and crisis management. The idea of creating a WEO is likely to remain on the fringe.

The failure in 2012 of Rio+20 (the United Nations Conference on Sustainable Development) is yet another dismal reminder of the impotency at great cost in terms of budgets and lost opportunity of global summitry.

The global response to cybersecurity has also been paltry, both in terms of cybercrime and cyberaggression. Again, there is no central agency focused on this critical issue. No central organization or committed constituency of critical states is pushing for an accord, and the international calls from business and professional networks for this to be addressed are not sufficiently organized or coherent to have an impact.

These complex cybersecurity issues transcend national boundaries and leave all countries vulnerable.

The WHO and international health system have been remarkably successful in the prevention of pandemics. The WHO has been relatively effective as a capacity-building agency, spreading information about outbreaks and promoting best practice. Over 190 countries are signed up to the International Health Regulations (IHR), which require the development of minimum core health capacities and entail an obligation to notify the WHO of emergent public health problems. The main problem arises when the demands of the WHO and IHR clash with the interests of states, as with the SARS epidemic.

A step change in monitoring and surveillance to secure global coverage, together with a global capacity for rapid intervention to isolate potential pandemics at source, is urgently required.

There is no doubt that the global system is overwhelmed.

For certain problems, such as pandemics and climate change, a regional response is not sufficient. They are not a substitute for a more overarching framework of global governance, given the lack of their incentives or capacity to act on a truly global level.

National politicians and electorates understandably have a national and often myopic view of international problems. It is this issue of perspective that is key to addressing the lack of willingness in tackling, and taking responsibility for, global challenges.

Economic, environmental, or other crises are blamed on the current leaders and government of the day, rather than being viewed as truly international systemic issues.

Even where the system functions well, as within the WHO, the capacity of the global institutions to deal with the coming workload is limited. We therefore need to consider whether these systems can be reformed at the scale and pace required, or whether more creative solutions will be necessary.

Without going into specific details for each organization, there are some headline reforms needed across most global governance institutions. If we can radically reshape existing structures with these high-level reforms, existing institutions will be more likely to become useful players in the fight against climate change, financial vulnerability, pandemics, cybersecurity, and beyond. Without such fundamental change to the critical areas examined here, they will remain unfit for 21st-century purpose and become increasingly moribund.

Securing an international system of governance that is legitimate and yet is not paralysed by veto is necessary. *

The world has moved on since the mandates of the IMF, the World Bank, the UN, and other international agencies were defined some sixty years ago.

A renewed effort should be made by governments and their representatives on the boards of the different agencies to force the heads of all major institutions to come together and consider where they fit into the bigger picture of the global framework. There is a need to clarify roles, remove duplication, and define mandates that enable them to better address contemporary global challenges.

Although the various challenges are formidable in different ways, they all share one feature: addressing them requires international cooperation.

If we are to face this century’s challenges we must find a mechanism for more effective international decision making and implementation.

As the most serious of the threats facing a nation state - from the economic to the environmental - grow increasingly global in their roots and in their solutions, it no longer makes sense to see state sovereignty as grounded in its ability to prevent other agents from interfering with its territory. Rather, a state’s power is better measured in its ability to harness the capacities of its global peers to solve those perils whose nature disregards national borders.

The 21st century will be defined by the extent to which we are able to increase the power and effectiveness of global institutions, as connectivity introduces new global challenges and turns domestic issues into global coordination problems.

As individuals, we can harness connectivity to amplify our voice, resulting in a greater ability to communicate with a disparate audience and a greater capacity to coordinate with like-minded activists. With national and global structures failing to grapple with today’s challenges, there is an opportunity and a need for individuals all over the world to cooperate and influence global policy. *

Individuals’ increased power in the age of networks goes further than the ability to disseminate information. It may even present a way to facilitate action on key global challenges, including those that are the focus of this book, that goes beyond the rigid and seemingly antiquated structures of national governments or global institutions.

Yet while connectivity puts us in greater danger by empowering our would-be aggressors, it simultaneously empowers individuals with positive and more benevolent aims. The ease of spreading information, if balanced with the right filtering mechanisms, offers great potential for global coordination and collaboration to solve problems and hold governments and international organizations to account. The harnessing of the positive power of individuals is vital to addressing the challenges of the 21st century.

Nations that jealously guard their narrow sovereign interests, and lumbering multilateral institutions such as the UN, World Bank, and IMF that are captured by out-of-date mandates and governed by divided nations, are not in a position to proactively address our global needs. The current arrangements were reasonably effective in dealing with the major challenges of the second half of the 20th century. However, they are ill-equipped to tackle the rapidly emerging and dynamic 21st-century challenges.

The world has changed structurally, yet our systems for managing global affairs have not adapted. In the past, when the billions of citizens of planet earth lived in separated countries, it was like having an ocean of separate boats. Hence, the post-war order created rules to ensure that the boats did not collide; it created rules for cooperation. Up until now, this arrangement has worked well. World War III did not follow World Wars I and II. But today the world’s seven billion citizens no longer live in separate boats. They live in more than 190 cabins on the same boat. Each cabin has a government to manage its affairs. And the boat as a whole moves along without a captain or a crew. The world is adrift.

Global politics is gridlocked. There can be no doubt that the system needs radical reform. The establishment of a shared system of rules to promote inclusive and sustainable globalization is urgently needed. The question is whether this will be in time to proactively address systemic global crises, or whether reform must emerge from the ashes of a devastating crisis, as has been the historical norm.

Can we overcome the governance deficit before we suffer a succession of crises that would not only reverse the extraordinary achievements of recent decades, but potentially have even more devastating consequences than the disasters that beset humanity in the past century?

Physical and virtual connectivity has led to the most rapid economic and social progress humanity has ever known. It provides unprecedented opportunity to collaborate and innovate. From the crumbling of ideological and economic walls could come a century which, for the first time, is characterized by a world free of poverty and disease, resting on a shared commitment to manage our global commons. Increasing numbers of people also know it could be the most destructive century ever, where we manage to destroy not only the progress of recent centuries, but also the environment that underpins life on our planet.