DEVELOPMENT: Multilateral System Needs Deep Reforms, Say Experts

By Gustavo Capdevila Reprint | | Print |

Gustavo Capdevila

GENEVA, Oct 16 2002 (IPS) - The United Nations and the principal multilateral institutions require profound reforms if they want to repair their imperfections, including their lack of democracy, says a group of international experts.

Without reform of the existing institutions and the creation of new ones, "it is difficult to see how the international community can face the challenges of the first part of the 21st century," said Indian economist Deepak Nayyar, editor of the book "Governing Globalisation: Issues and Institutions", a series of essays on the future of the multilateral system.

The study proposes changes, in some cases radical reforms, of the UN, the International Monetary Fund (IMF), World Bank, and the World Trade Organisation (WTO).

The initiative is based on the conception that the changes in the world, particularly during the last decade, have eroded the UN’s legitimacy, effectiveness and credibility. The world institution has yet to adapt to the new necessities created by the globalisation process, say the authors.

The book, which is the result of research conducted at the behest of the United Nations University-WIDER Institute, states that as far as maintaining world peace – one of the UN’s principal mandates – the institution failed to meet the challenge of the 1990s.

The UN missions in Bosnia-Herzegovina and in Rwanda "were widely perceived as dismal failures," according to the Nayyar, who added that "the bypassing of the Security Council over Kosovo reinforced the impression that the UN peace and security role was being eclipsed."

The authors of the new book say that the UN’s moral authority has been "seriously undermined" by the fact that the forum’s laws or principles are selectively enforced, tailored to "the interests of the rich and the powerful".

The real problem is that the UN often acts as a guard dog, but without fangs, Nayyar told the press during the presentation of the book.

"The problem is compounded by the fact that there is a democratic deficit in the UN system," said the economist, explaining that this deficiency dates back to the body’s origins, more than a half-century ago, and has not improved over time.

The experts who contributed to "Governing Globalisation" recommend that the UN act democratically in establishing representation and making decisions, through participation, transparency and accountability.

The multilateral forum also "must move towards political independence in relation to the world’s powerful geopolitical actors."

Nayyar stated in this sense that it is "imperative to circumscribe the veto powers of the permanent members of the UN Security Council (Britain, China, France, Russia and United States)."

"The right of veto in the Security Council is explicitly undemocratic," said the eminent economist, who chairs the Board of Governors of the World Institute for Development Economics Research (UNU-WIDER).

The book takes up the possibility that the UN could achieve financial independence, albeit only in part, through a mechanism modeled on the Tobin Tax, the tax on international capital transactions proposed by Nobel Economics laureate, James Tobin, in 1981.

However, one of the essay authors, Yilmaz Akyuz, director of globalisation and development strategies at the UN Conference on Trade and Development (UNCTAD), commented at the book release that the tax would not solve the problems of developing countries.

Pro-development non-governmental organisations, particularly those based in industrialised countries, are demanding the universal application of the Tobin Tax in order to counteract the effects of the increasing flow of speculative capital around the world.

According to the development activists, revenues from this tax would be channelled to social and environmental programmes.

The proposed UN reform plan includes the setting up a voluntary, yet highly effective, peace force to respond quickly to humanitarian problems as they arise around the world.

Another proposal is to create a "global people’s assembly", inspired on the European Parliament, to remedy the democratic deficit that the text attributes to the UN. This new body would operate in parallel to the General Assembly and would become "the voice of global civil society".

The book also suggests that the UN could create an economic security council as a means to govern globalisation. The Asian financial crisis that erupted in 1997 proved, particularly in Indonesia, how economic vulnerability can rapidly spread, causing suffering for large sectors of the population in its wake.

With respect to the IMF, the conclusion of the experts is that "it is no longer able to manage the international financial system."

This Bretton Woods institution, according to the book, "has been increasingly marginalized in managing capital flows and exchange rates, even as they become more and more volatile."

The IMF must redefine its role, and dedicate its efforts not only to crisis management but also to crisis prevention. The system of votes within the Fund, based on each member state’s portion of capital in the institution, is greatly imbalanced, leading the researchers to propose a restructuring of voting rights.

They also state that the IMF should revise its requirement policies in granting loans and its positions related to macroeconomics and trade liberalisation.

The World Bank, originally conceived as a body to provide financing for reconstruction and development projects, has gradually changed objectives, as has the IMF, notes the text.

As for the WTO, the study indicates that the institution should perform its institutional role in a broader context aimed at development. The experts convened by the WIDER Institute criticise what they see as decision-making conducted by restricted groups within the multilateral trade institution.

The WTO protagonists make decisions behind closed doors and then present their conclusions to the rest of the members as a done deal, according to "Governing Globalisation".

DEVELOPMENT: Multilateral System Needs Deep Reforms, Say Experts

By Gustavo Capdevila Reprint | | Print |

Gustavo Capdevila

GENEVA, Oct 16 2002 (IPS) - The United Nations and the principal multilateral institutions require profound reforms if they want to repair their imperfections, including their lack of democracy, says a group of international experts.
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