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The test of practice: global progress in a world of sovereignty

Maria Livanos Cattaui
18 July 2004

For the openDemocracy debate on David Held’s argument for a new global covenant, go to our Globalisation – visions and reflections theme page

openDemocracy: What is your view of David Held’s argument for a social democratic consensus and a human security agenda to replace the Washington consensus?

Maria Cattaui: I see nothing new in it. It argues on much the same lines as critics of globalisation such as Dani Rodrik or Joseph Stiglitz who are trying to look positive but in reality are rather scared of how economic progress is made. Proposals of this kind are really pie–in–the–sky. Who would govern what David Held calls a “global covenant”? Global governance would encounter the same problems as national sovereignty, only more so – that is, accountability, responsibility and building up human capacity to act effectively.

In the case of the global covenant, the challenge would be even greater – because it’s unclear who can set themselves up to oversee it. How could they be effective at this level if they cannot, in Held’s view, be effective at a national or regional level? I am a sceptic when it comes to any proposal that proposes another international organisation as the answer!

As for the issue of security and the linkage between lack of economic progress on the one hand and violence on the other, well, it is pretty obvious. All you have to do is to read Moises Naim’s Foreign Policy to see the arguments.

We’re all very much aware that there are millions of young people who are unemployed, particularly in high–risk countries across the world, who form the majority of the population, and haven’t got a remote chance of ever getting a job.

I work on these issues with the Youth Employment Network of the United Nations. We know that one of the things that must be done urgently is to remove the economic, legal and regulatory impediments that many governments and societies impose on their own young people.

Angry young people without opportunities are good candidates for extremist and simplistic arguments. The challenge is not only Islamic terrorism. It’s also a concern in regions like Latin America. Populism and simplistic solutions can be a real danger.

So, yes, we have to be careful; and I agree with David Held on some of the particular criticisms and recommendations he makes. Of course, I agree that the so–called Washington consensus is inadequate when taken as a simple recipe. As he says, individually, its policies can have merit, but not when applied wholesale. Human beings and economies don’t fit into one simple equation. Where I strongly disagree is that there are monolithic answers, or that we need a single alternative approach.

I also want to stress that I don’t think that the individual parts of the Washington consensus should be as easily disposed of as Held suggests.

For example, the transfer of assets from the public to the private sector is complex. As I often stress, the transfer of a public monopoly to a private monopoly does not a market economy make! But appropriate and well–prepared transfers of assets can achieve a better, more efficient allocation of capital with hugely beneficial results.

Each of the elements of the Washington consensus can be seen as a complex subset that different countries adopt at different rates. For example, tax reform is an extraordinarily powerful instrument to raise revenue if it is implemented correctly.

This is particularly important when trade opens up opportunities. Many governments don’t take advantage of the benefits that arise by taxing effectively, allocating revenues, creating social support systems and education, or building the infrastructure that’s needed (whether “hard” infrastructure like roads and power systems or “soft” infrastructure like governmental and regulatory capacity). As I said in my 2001 openDemocracy interview, countries need strong governments if they are to benefit from globalisation.

The global compact

openDemocracy: Recently you went to New York to attend meetings on the global compact and the Economic and Social Council (Ecosoc). How do initiatives like these make a difference?

The Global Compact: ten key principles

Human Rights

  • Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights, and
  • Principle 2: make sure that businesses are not complicit in human rights abuses

Labour Standards

  • Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining, and
  • Principle 4: the elimination of all forms of forced and compulsory labour
  • Principle 5: the effective abolition of child labour
  • Principle 6: the elimination of discrimination in respect of employment and occupation

Environment

  • Principle 7: Businesses should support a precautionary approach to environmental challenges, and
  • Principle 8: undertake initiatives to promote greater environmental responsibility
  • Principle 9: encourage the development and diffusion of environmentally friendly technologies

Anti–Corruption

  • Principle 10: Businesses should work against all forms of corruption, including extortion and bribery.

Maria Cattaui: The global compact reflects universal principles that are already agreed by governments. It offers a framework for encouraging practical progress by business and its partners. The compact challenges companies to keep improving their performance in upholding agreed basic principles in their operations around the world, particularly where these are not always properly enforced.

This is where we get down to practical details. The International Chamber of Commerce (ICC) and UNCTAD have set up something called the Investment Advisory Council, an instrument for working with the least developed countries to remove some of the obstacles to investment – not only foreign direct investment (FDI) but, much more important, their own domestic investment.

We’re looking at what can be done and in which countries. The steps are not always the same. For example, how do you create business consultative mechanisms, both systemic and systematic, inside of some of the new ASEAN countries? What are the impediments to setting up new companies? Each has particular problems and there are no universal solutions. Certainly, no big multinational will come in and create 100,000 jobs overnight. It doesn’t happen like that.

A good example is Thailand – although it is not actually one of the least developed countries. There, the business community worked with the government for a decade on specific legal framework issues – commercial law, changes of the regulatory regime. It took ten years to foster a climate of good governance and accountability that is more friendly towards new business creation. Now we’re trying to do the same elsewhere. It’s essential to be patient. Real progress – continuous, broad–based steps – can only really be achieved where countries do these things for themselves rather than have them imposed.

Also by Maria Livanos Cattaui in openDemocracy on issues of global governance:

The realist route to progress

openDemocracy: You seem to be saying that international organisations and agreements like the global compact are necessary to drive through changes, but that they are not themselves international organisations of governance?

Maria Cattaui: Yes, I see them more as networks for change. Business groups in each country work with governments. They gain and share experience through the approval of entities like the global compact, which provide a process for international consultation and discussion. Implementation needs a wide range of different mechanisms, some ad hoc or experimental. Sometimes a summit is what’s needed; or one or two United Nations organisations working on a specific issue; at other times, a regional organisation like ASEAN.

openDemocracy: But don’t we also need new global initiatives? Take, for example, the contrast between what the rich western countries spend on military security and their enormous defence industries, as against the huge shortfall in funds to invest in the most basic issues of human security in many developing countries – clean water, education and health. David Held stresses this point, and it was further discussed at a recent conference on the UN High–Level panel. Some people ask if, for example, Ecosoc could be used to strengthen the voice and opinion of the developing world.

Maria Cattaui: I don’t think any one organisation is the answer. I am for specificity rather than greater inclusiveness in terms of each agenda. Inclusiveness in terms of geographies, yes; a single overarching agenda, no. It is one of the problems in UN organisations to start meandering, and then duplicate work. Specificity is much better!

On the question of spending on security, I’m a realist. There is no question that military security issues are going to continue to be a concern for many countries. If they are ready to pay large sums in developed countries, that is up to them. That’s the decision of the voters in those countries. Most of them are highly sophisticated democracies and it’s not my place to comment or tell a country what to do.

The important question is: does military expenditure prevent the rich countries from allocating funds for development? I say it doesn’t. I agree that the flows from rich countries to poor countries are highly insufficient. But even if they were increased this would nevertheless not be the answer.

There are other things that the rich western countries should be doing. Martin Wolf is 100% right in his response to David Held. There has to be progress in the Doha round of world trade talks. We have got to stop this obscene and absurd over–subsidising and protection of agriculture in rich countries. It doesn’t help the consumers in the rich countries. It doesn’t help the countries in the global south. It prevents exactly what they need.

The alternative to multilateral negotiations is the bilateral route, where one powerful economy makes a deal with a less powerful one. But these bilaterals will never cover the issues which are of highest interest to the weaker country. They are always discriminatory and will never look seriously at the agricultural problems because the European Union and the United States and Japan will not solve their agricultural conundrum outside of the World Trade Organisation (WTO). I am a huge believer in multilateral approaches to such challenges.

openDemocracy: Peter Sutherland made a similar argument in his January 2004 interview with us. But now he seems to think that the Doha round may be on the brink of failure.

Maria Cattaui: It may indeed. And we should all be very, very worried. Rich countries must continue to improve their offers – but I am afraid that developing countries need to exert leadership and courage to banish rhetoric and also make also some better proposals.

Plural solutions in a world of sovereignty

openDemocracy: Is a more open, civil society needed here too? In another openDemocracy interview, Mary Robinson argues that the world is entering a new era of “citizen’s politics” in which people can demand that their national governments implement in practice the principles they have formally agreed to at the international level. Politics still composes three traditional elements – the citizen, the state and the international – but Mary Robinson sees a shift in the relationship between the elements, with more citizen power. Do you agree?

Maria Cattaui: I look at matters slightly differently than Mary Robinson. The example of China is an illustration. China’s joining of the World Trade Organisation in December 2001 means that the more progressive components of the Chinese government are able to force the necessary reforms to governance and other structures which WTO membership mandates. This can even be a form of protection, if you wish, to force the pace of domestic reforms.

openDemocracy: But hasn’t China been able to win some key concessions to WTO agreements that serve the ends of the ruling communist party but not the people of China? For example, hasn’t it insisted on derogations regarding labour rights?

Maria Cattaui: The experience of most countries is that the growth of economic capacities internally spurs the very phenomenon that Mary Robinson emphasises: the rise of citizen demands and citizen responsibility. We see this already taking place in China, albeit in limited ways.

A further example, one that could be in China or India alike, is that rapid economic growth facilitates the appearance of a significant middle class with purchasing power, and with time to articulate social concerns and demands. “Despite our economic gains”, they say, “I don’t like to walk outside my front door and not be able to breathe the air. I don’t like the fact that today I haven’t got a social security system that will take care of me in old age or when I’m sick”.

This kind of citizen voice is becoming vocal and notable around the world. Remember: gains stretch. As people reach the economic level that (for example) enables them to take out a mortgage on an apartment, they demand steps that improve overall quality of life. When these demands increase, they can engender a paradox – namely, that the very government that makes improvements in response to them becomes the object of further criticism. But this is the proper, natural process of events: one process pushes another, things don’t happen in a linear or purely sequential fashion.

openDemocracy: So would you say, in contrast to David Held, that you see economic citizenship as the basis for political citizenship?

Maria Cattaui: No. It’s misleading to say one should come before the other. You need both, often at the same time. But they do reinforce each other. Political or social demands may precede or follow economic progress; but whatever the case, the important thing is to work on the two together.

It is also important to remember that the concept of democracy and its applications in different countries is wildly different. It is not the role of outsiders to say that there is only one kind of citizens’ organisation, or indeed one kind of economic arrangement. But as progress and accountability enter government, citizens in the countries affected start to make their own kinds of demands on the wider economy, polity and society.

This can be a slow or sudden process; it’s never linear. But the more the world opens its markets and stops fearing the displacements and difficulties that can follow, the better. We must take care of the costs of change when we can; but we must stop being afraid of change itself.

My biggest concern is for those countries which are too small, too narrow in their economic base, disadvantaged by geographic location, or surrounded by enemies if they’re landlocked or neighbours they don’t get on with. There you’re dealing with problems that are really intractable.

Sub–Saharan Africa and the Middle East are regions with some of the highest and nastiest barriers to trade amongst themselves. We have to start right there, on a regional basis, to increase their low levels of trade. ASEAN is an example of how these barriers can be overcome, and we have made progress with Mercosur, which at one stage looked as if it would fall behind.

Existing international organisations can do a lot to help here, in terms of knowledge–sharing and technical help. There are also facilities to aid reforms in areas like standardisation, customs, and transport. Use them! Let’s use what is available now, before we invent new organisations. We’re not yet fully using our existing financial or structural capacity to help countries overcome impediments that are not always of their own making.

So let us multiply the kinds of partnerships that we know already work, and experiment with practical kinds of implementation. We don’t need to “monolithilise” single ideas like David Held’s global covenant. For good or ill, we’re still working on the basis of sovereignty, with countries and localities wanting as much say as possible in their own destinies. We have to build on this in practical and realistic ways.

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