A Future Perfect: The Challenge and Promise of Globalization

by John Micklethwait

  On the economic side, the ad hoc nature of institutional change has had mind-boggling effects. Once the system of fixed exchange rates broke down in the 1970s, the IMF was technically without a job. An official Committee of Twenty debated whether to construct “a new Bretton Woods.” Instead, the p. 165 oil shocks and then the Latin American debt crisis gave the IMF a pretext to expand one of its subsidiary roles—providing temporary resources to deal with countries’ balance-of-payments problems—into a new identity as an international lender of last resort for poorer countries. In so doing, it assumed a role for which it lacked the most important qualification—the ability to print money—and relied on lending limited amounts of money. But the driving force behind the IMF’s “mission creep” was not just job preservation. Most national finance ministers liked the idea of a halfway house that could provide some help to countries in need but that would also have to rely on them to bail it out.

  Since then, the fiddling has continued. The UN, for instance, has added the World Court. The IMF now sees itself as a kind of financial overlord. The GATT has become the WTO. And new multilateral institutions have sprung up, such as the G5 (now the G8), the Basel Capital Accord (which sets minimum standards for banking health), and the International Accounting Standards Committee. But the growth of multinational organizations has been most pronounced in the private sector, with the multiplication of both multinational companies and NGOs. In 1990, the Yearbook of International Organizations had six thousand international NGOs; by the end of the decade the figure was twenty-six thousand. And that does not include the far wider universe of local groups. The WorldWatch Institute, itself an NGO, reckons there are two million NGOs in the United States alone and one million in India. Visit any of the big, old-fashioned multilateral organizations and you will find that it is surrounded by NGOs (there are 1,700 clustered around the UN in Geneva); that an increasing amount of its work is being done by them (more than half the World Bank’s projects in 1998 involved NGOs); and that its agenda is often being set by them: Witness the way that NGOs, through a mixture of passion, technology, and downright media savvy, took control of the WTO’s disastrous meeting in Seattle in 1999.

  The Multilateral Paradox

  Three easy answers to the multilateral muddle immediately present themselves. The easiest is to call for the abolition of multilateral organizations and to rely on the self-interests of states and companies to solve things. Get rid of the IMF, we are told, and borrowers and lenders will begin to watch their steps. Dismiss the UN, and the money will be put to better use by Save the Children.

  Unfortunately, obliteration is simply not practicable. No sooner had you p. 166 pushed the IMF out of Washington than finance ministers would begin to talk about the need to have some body to oversee the world’s financial system. Dismiss the United Nations and the foreign ministers of America, Russia, and China would soon suggest annual meetings. Within years, there would be permanent committees, followed fairly soon by an institution similar to the UN’s Security Council. Interdependence is a reality even for big countries. In the United States, polls show that three quarters of the population want to share power internationally; under 15 percent want America to throw its weight around as the sole superpower.[3] This reality requires some sort of institutional framework.

  The second answer—“the new bright, shining city argument”—is a little more practical but still unachievable and thus appeals to national politicians the world over. It accepts the need for some layer of multilateral institutions but argues that the current set of organizations is out-of-date. What is needed is a completely new system, comprehensive, modern, and high-tech. George W. Bush and Tony Blair, for example, have taken to calling for “a new architecture of global finance” (though their fondness for architectural metaphors does not extend to providing detailed building plans). Some of their proposals make sense, but their arguments remain disingenuous for two reasons.

  The first is that existing institutions cannot be simply wished away. It is more than a little dishonest for politicians who have made little headway in modernizing their own national bureaucracies to call for instantaneous revolutions at bodies over which they have even less control. The second is that all the splendid blueprints tend to provide national politicians with excuses for ignoring what is arguably the most important thing about global governance: There is no perfect system. There will always be a tension between national sovereignty and international responsibility, and national sovereignty will generally prevail.

  Examine any multilateral institution, and you will soon find that it is caught in some kind of global catch-22. American politicians want an efficient, impartial global political body to take problems, such as peacekeeping and refugees, off their hands; but they also want to control it, overrule it, and even use it to spy on their enemies. The French periodically talk about building up multilateral institutions as a bulwark against American power, but then they perform unilateral nuclear tests. Asian countries want the World Bank to be their champion in the West but resent it when it tries to apply the same standards to them. Everybody believes in the WTO when it is prying open foreign markets but not when it is prying open domestic ones.

  This is all the more depressing because, as a rule, the easiest place to p. 167 make changes is at the national level. The best way to prevent another Thailand or Brazil collapse is not to redesign the IMF; it is to redesign Thailand and Brazil. The outside world has spent more than one billion dollars over the past decade trying to alleviate the suffering of the Sudanese people, with some success. But the only thing that will stop the suffering is if the country’s leaders agree to a lasting truce. Even in medieval chaos, the best solution is better national government, not global government.

  From this perspective, multilateralism begins to seem like a cruel joke. The world needs multilateral institutions yet also dooms them to be failures. Such a conclusion, unfortunately, leads to the third easy solution, which is to do nothing at all. “It is an impossible job, but somebody has to do it” could be the grumpy motto of almost any multilateral worker. Yet even if you accept the limitations of a world where nation-states still rule the roost, there are still plenty of ways to make global institutions better. If world government had only two purposes, they would be the prevention of financial meltdowns and unnecessary bloodshed. Yet as we start a new century, both seem as likely as ever.

  A journey through all the multilateral institutions would make a subject that already seems to fall into the “important but dull” category even less negotiable. We have thus decided to concentrate on the two institutions that should sit at the heart of any new world order: the UN and the IMF.

  Back to the Drawing Board

  Sit and watch the East River from Kofi Annan’s glorious office at UN Plaza and you can feel both at the center of the world and at its extreme. The slight Ghanaian, who succeeded Boutros-Ghali as secretary-general, returns to the subject of globalization frequently and adamantly, as if it were a religion. Indeed, the papal image suits Annan much better than it did his bombastic predecessor. He often holds his hands together as if in prayer. A man with an almost priestly calm, he rarely raises his voice, except to laugh; some critics claim his laugh is the last African thing left in an impeccably cosmopolitan man. Educated in America, married to a Swedish artist, Annan has spent most of his life serving in the curia of the UN bureaucracy.

  Indeed, listening to Annan, you begin to wonder whether his unabashed globalism is just a case of a man ascribing his own qualities to the world. The UN is usually involved in the world’s most momentous debates: What should be done in Iraq, East Timor, and Afghanistan? Should peacekeepers also be peacemakers? But the world seldom returns the compliment and discusses the future of the UN. National governments make policies that relate to indip. 168vidual parts of the UN system: Their health ministers talk to its health agencies; their foreign ministries complain about the composition of the Security Council or the policy on Israel. But—with
the exception of a few Republicans who want to abolish the whole thing—nobody has a UN policy. And there is no debate about whether the world needs a new global political architecture to match its financial equivalent. There should be.

  The UN is an enormous organization that, among other things, buys half the world’s children’s vaccines, protects twenty million refugees, hosts 7,500 meetings a year in Geneva alone, and is the world’s biggest purchaser of condoms. At times—wandering around the tunnels under the UN’s offices in Geneva, for instance, or navigating the escalators in its New York headquarters—you can feel as if stuck on the set of a 1960s futurist film. It also boasts a structure that bewilders even its own staff. It is fairly easy, for instance, to find officials in Geneva who believe that the WTO is part of the UN. (It is not, though its staff participates in the pension plan.)

  There are at least five big UN centers—New York, Geneva, Vienna, Rome, and Nairobi—and countless smaller ones. The operational side of the UN is a mess of competing funds, programs, and specialized agencies, stretching from the United Nations Children’s Fund (UNICEF) to the IMF, the World Bank, the World Health Organization, and the World Meteorological Organization. Most of the subsidiaries raise nearly all their money from outside sources, have their own governing bodies, and regard their membership in the UN as accidental. They all meet twice a year at something called the Administrative Committee on Coordination (ACC), at which, as one member points out, “discussing issues like the security of UN personnel in war zones is a little lost on the man from the World Intellectual Property Organization.”

  Kofi Annan has done more to streamline this structure than any of his predecessors. He has introduced cabinet-style government at the top of the UN and set up UN houses in various countries to bring together numerous agencies and programs, Boutros-Ghali never appointed a deputy for fear that he (never mind she) would elbow him out of his job; Annan appointed a woman, Louise Frechette, to the job. And he has begun the slow task of introducing the United Nations to the private sector, bringing in business leaders, such as Percy Barnevik, to secret summits at the Rockefeller estate near New York City. He has also persuaded some notable capitalists to give the UN money: It is hard to imagine Ted Turner pledging one billion dollars to any of Annan’s predecessors. Add in Annan’s occasional diplomatic coups—notably his success in averting a second war in Iraq in 1997—and it is not p. 169 hard to see why he has been hailed as the most successful secretary-general since Dag Hammarskjöld, the Swede who was perhaps the only outstanding leader the UN has had.

  While Annan’s achievements are real enough, so are his limitations. His curia dispatch his encyclicals, and leaders come to genuflect, but the UN feels like a sideshow: Even when it comes to an issue like Iraq, the real decisions are still made by national politicians, particularly in Washington. The UN remains a place where a senior official can compare the bureaucracy unfavorably with that of the old Soviet Union; where discord between “the South” (as less-developed nations are known) and “the North” paralyzes decision making; where America can decide unilaterally to cancel several hundred million dollars in dues; where a combination of budget cuts and jobs-for-life has created a gerontocracy, with an average age in the Secretariat of nearly fifty; where the 1998 budget was agreed to only after a demeaning haggling session in which favored Secretariat posts were auctioned off by a moderator using a can of potato chips as a gavel.[4]

  Annan’s reforms have only really affected the thin sliver of the organization that he actually runs. Worse, he has not always been successful. The General Assembly scotched a proposal by Annan to set sunset dates for new committees.

  Look around the whole UN, and you find a haze of duplication among the manifold funds, programs, and agencies. Even when set alongside national governments, it seems bloated: Its aid budget is ten times that of Britain’s Department for International Development, but it employs thirty times as many people. In the field, the agencies remain choosy about which UN projects and UN houses they join and how much money they devote to them. The fact that the half-dozen agencies that deal with AIDS in one African country finally have fairly regular meetings is an achievement, but as one participant admits, “They all go their separate ways once they leave the door—and take their money with them.”

  This is not always pure bloody-mindedness. The agencies in question have usually raised money for specific purposes: Why should they let other people spend it? UNICEF insists that one of its strengths is its esprit de corps, and its workers thus resent being bundled in with other, less effective bodies, such as UNESCO. But the plain fact is that much of the UN’s work is duplicated if not triplicated. Why should Rome play host to no fewer than three separate food agencies? Why should both the World Bank and the UN have a development program when the two do increasingly the same thing? The UN is a 196os-styIe governmental organization that devotes most of its time and p. 170 around three quarters of its money to development, when, in the real world, development is driven more and more by the private and voluntary sectors. Usually leaner and more dynamic, NGOs not only compete for dollars that might otherwise go to the UN but often assume its role. It was NGOs, not the UN, that pushed the recent treaty to ban antipersonnel land mines.

  Annan’s staff talks about such things in whispered tones, when in fact the questions should be asked openly. Rather than fighting (unsuccessfully, as it turned out) to transfer the decolonization unit from the prestigious political department to services, reformers should have asked whether the UN still needs a decolonization unit. A bit like a struggling country, the UN often makes the mistake of measuring reforms by its own historical standards rather than against those of the world outside its walls. Over the past two decades, almost every large business organization—and, at least in the Anglo-Saxon world, almost every big government one, too—has been forced to answer the question “What can I do that other people cannot?” The result has been takeovers and layoffs in the corporate sector and privatization in the public. Despite several committees on reform, nothing structural has really changed at the UN since the war. It has simply added new committees and spread itself ever thinner.

  UN-bearable

  Almost all disinterested observers believe that the UN should become a narrower, deeper organization, focusing on the truly global problems that nobody else can tackle. The UN’s core political activities pass this test fairly easily: Only the UN can reasonably take responsibility for refugees and peacekeeping. It is also a natural forum for debates on global problems, from collisions with asteroids to drug trafficking. In some social and economic fields, the UN plays an important role as a coordinator (as it did initially with the environment), but much of its development work is duplicating work that others do better.

  A narrower, deeper UN would not necessarily be a weaker one: It might well include a small standing army, for example. Had the UN been able to deploy peacekeeping troops rapidly in Bosnia and the Congo, it might well have been able to nip disasters in the bud. Instead, it had to stand idly by while national governments deliberated. A tighter structure would also offer a way to tidy up the agencies, funds, and programs. Those organizations that wanted to stay within the UN would have to accept Annan’s writ.

  p. 171 So why has this not been done already? The answer is interesting not just because it reveals a lot about the UN but because similar problems plague almost all multilateral organizations. Even if most national governments would gladly swap a revised UN for the existing one, potential reforms open four fault lines. The deepest is the one between the North and the South. Any sensible reconfiguration of the UN would shift its emphasis from economic and social projects to political ones, but it is the former that three quarters of its members hold most dear.

  The three other fault lines all run off the major one. The first lies in the particular problem of the United States and its nonpayment of dues in the 1990s. In 1999, Congress announced arrogantly that it would pay one billion dollars—around two thirds of
the money it owed—and the UN should be grateful. The deal came with various conditions, imposed unilaterally by the United States. It is difficult to overstate the disgust with the United States at the UN, even among its allies. “They have poisoned the well [of reform],” says one senior ambassador, citing not just the unpaid bills but the way that Washington used the UN’s inspectors to spy on Iraq. Many doubt that George W. Bush really wants to see a more efficient UN—just a smaller one.

  The next fault line concerns the anachronistic composition of the Security Council and the relentless politicking that this generates. There is a strong case for widening the permanent membership of the Security Council, but India’s membership would infuriate Pakistan, Germany’s would infuriate Italy, and Brazil’s would infuriate Argentina.

  The final fault line has to do with the UN’s budget. Ten countries pay for more than three quarters of the current $1.3 billion budget. Although nobody begrudges the fact that the world’s poorest nations contribute only thirteen thousand dollars each, many fairly prosperous countries escape lightly. China, which pays less than Belgium, is understandably no great proponent of reform.

  If the UN does eventually bicker itself into oblivion, the blame will lie with its members rather than its secretary-general. Even those governments that support reform have no clear policy toward the UN, and so no one is taking the lead. Even so, the excuse that Annan is purely the club secretary does not wash. As Dag Hammarskjöld stressed repeatedly, the post is not just about fulfilling mandates but also about representing the world’s broader interests, which surely include a healthy UN. Put another way, if he wants to change the UN, the diplomatic Annan will have to try to force his club members to accept changes that most of them do not want. There were hopes that some sort of “big bang” solution would emerge from the UN’s special millenp. 172nial assembly in 2000. Without leadership from Annan and cooperation from the United States, that prospect ebbed away.