By Erkki Tuomioja and - -
HELSINKI, Jun 1 2006 (IPS)

At the Helsinki Conference last September, the need to promote global cooperation in the fight against corruption emerged as a central issue, write Leena Luhtanen, Finland\’s Minister of Justice, and Erkki Tuomioja, Minister for Foreign Affairs. In this article the authors write that in recent years, the globalisation of corruption has spurred the international community to acknowledge the problem and demand action that is not restricted to mere recommendations but aims at creating binding international legislation. Perhaps the best example of this is the UN Convention against Corruption, which has been signed by 140 states and ratified by 52, and which went into force in December 2005. Indeed, implementation and effective oversight are the Achilles\’ heel of the UN Convention against Corruption as well. Recognising that corruption must be met with cross-border cooperation, Finland has developed a Road Map for action which is being realised together with Friends of the Helsinki Process governments — Algeria, Brazil, Canada, Egypt, Hungary, Malaysia, Mexico, South Africa, Spain, Thailand, and the United Kingdom — and in cooperation with other active governments as well as representatives of the private sector and civil society.

Global corruption has become a focus of the Helsinki Process, a joint initiative of the Finnish and Tanzanian governments to advance a multi-stakeholder approach to solving global problems. At the Helsinki Conference last September, which brought together 700 participants from over 60 countries, the need to promote global cooperation in the fight against corruption emerged as a central issue. Corruption is a problem for both developing and developed countries. It threatens economic growth and social development as well as the establishment and consolidation of democracy. It also has a detrimental effect on the building of a fully-functioning nation state and is a major hindrance to eradicating poverty at the global level, reaching long-term economic, political, and social goals, and implementing the rule of law. Corruption is commonly understood as the exploitation of public means and power for private gain. So-called grand corruption is the misuse of public or corporate assets for private purposes — often by high-ranking civil servants, politicians, or businessmen — for example, in connection with the privatisation of state-owned companies or a tender award in competitive bidding. Petty corruption — the lesser and more common type of corruption — often takes the form of small bribes paid to speed up processes that could otherwise take months, such as acquiring a passport or driving license. UN Secretary General Kofi Annan has stated that “corruption hurts the poor disproportionately by diverting funds intended for development, undermining a government’s ability to provide basic services, feeding inequality and injustice, and discouraging foreign investment and aid.” The Helsinki Process is not the only forum where the role of corruption as an obstacle to global development has been raised. In recent years, the globalisation of corruption has spurred the international community to acknowledge the problem and demand action that is not restricted to mere recommendations but aims at creating binding international legislation to support different kinds of anti-corruption activities. Perhaps the best example of this is the United Nations Convention against Corruption, which has been signed by 140 states and ratified by 52, and which went into force in December 2005. The Convention requires countries to implement a wide range of anti-corruption measures affecting their laws, institutions, and practices in order to promote the prevention, detection, and sanctioning of corruption. The Convention is different from other conventions particularly because of its global coverage, the extensiveness of its provisions, and its effort to promote the cooperation of states to combat corruption. In today’s global economy corruption has also become a global phenomenon which must be met with cross-border cooperation, for which the UN Convention against Corruption provides a much needed framework. There are nevertheless numerous examples of good conventions which have not amounted to much due to the lack of political will to implement and abide by them. Indeed, implementation and effective oversight are the Achilles’ heel of the UN Convention against Corruption as well. This concern regarding implementation was also evident in the discussions during the Helsinki Conference, which challenged the Second Phase of the Helsinki Process with promoting the effective implementation of the Convention. In answer to this challenge, Finland has developed a Road Map for action which is being realised together with Friends of the Helsinki Process governments — Algeria, Brazil, Canada, Egypt, Hungary, Malaysia, Mexico, South Africa, Spain, Thailand, and the United Kingdom — and in cooperation with other active governments as well as representatives of the private sector and civil society, such as the International Chamber of Commerce, the World Economic Forum, and Transparency International. How to review the implementation of the Convention is a difficult and politically sensitive question on which different countries have different views, so we must be considerate and inclusive in order not to do a disservice to ourselves. Accordingly, the Road Map facilitated by Finland has sought to launch broad consultations on different ways of organising the review of the implementation of the Convention against Corruption well in advance of the first Conference of States Parties, scheduled for December 2006. Already the first informal consultations meeting, held in Lisbon in March 2006 at the initiative of the Finnish and Portuguese governments, proved the usefulness of this approach. Through these consultations we hope to identify the necessary elements from which a review mechanism could be constructed perhaps already during this first conference, which takes place during the Finnish presidency of the European Union. Finland has repeatedly appeared at the top of the list of least corrupt countries, according to the Perceived Corruption Index compiled by Transparency International, and our anti-corruption efforts have earned us international respect. The Helsinki Process initiative seeks to capitalise on this reputation in order to put into place a global framework for fighting corruption. It is not only in our national interest, but also a necessary step toward fair globalisation, eradicating poverty, and strengthening the rule of law. (END/COPYRIGHT IPS)

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By Erkki Tuomioja and - -
HELSINKI, Nov 1 2004 (IPS)

Finland has, once again, been rated the world\’s most competitive economy, writes Erkki Tuomioja, minister of Foreign Affairs of Finland. The fact that not only Finland but Denmark, Iceland, Norway, and Sweden as well are usually in the top ten raises an obvious question: why have these welfare states defied the judgments pronounced over twenty years ago that they had outlived their purpose and were ripe for dismantling? This success can be attributed to four factors, the author writes in this article: knowledge and education, entrepreneurship, cooperation and solidarity, and the Nordic model of the welfare state. Is this approach sustainable in our globalising world? The success of the Nordic countries, which are all small economies highly dependent on global trade, indicates that it is, the author writes in this analysis. At the end of the day what will decide the future of our welfare states is still our own political will. If this is decided through democratic procedures, there should be no problem. But we are very much aware that well-financed lobbies are hard at work trying to introduce neoliberal policies to the Nordic countries as well.

In October, Finland was, once again, rated the world’s most competitive economy by the Global Competitiveness Report of the World Economic Forum. Such a rating should not be taken too seriously, and we in Finland are certainly aware that we are not perfect in this or any other respect.

On the other hand, given the consistency of such top ratings in recent years, and given our top or upper ranking in similar surveys estimating such quantities as lack of corruption, freedom of the press, state of the environment, educational standards, equality of income distribution, and human security, there may actually be something to learn from Finland.

We face tough competition from such low-tax business paradises as the United States, Singapore, and Hong Kong. But the fact that not only Finland but all of our Nordic neighbours – Denmark, Iceland, Norway, and Sweden – are usually to be found in the top ten raises an obvious question: why have these welfare states defied the judgments pronounced over twenty years ago that they had outlived their purpose and were ripe for dismantling?

Can it be that these generous, high-tax welfare states, with their strong labour unions and old fashioned social-democratic values, have achieved their relative success not in spite of being welfare states but because of it?

This success can be attributed to four factors: knowledge and education, entrepreneurship, cooperation and solidarity, and the Nordic model of the welfare state.

Regarding knowledge and education, Nordic leadership is most conspicuous regarding research and development: Sweden and Finland lead the world in the proportion of GNP devoted to R&D. Equally important, though, is the well-functioning, comprehensive, and free system of universal education up to the university level, without which there would be no high-tech success stories.

Entrepreneurship is not a field where the Nordic countries are recognised leaders, but we still are at the top of the charts for favourable conditions for starting new enterprises. This is essential for meeting the most difficult challenge that Finland faces: restoring full employment. While we certainly hope that Nokia, UPM, and other major multinationals will remain global successes, they are not going to increase the number of jobs in Finland. The new jobs will be created by small-to-medium enterprises.

Being competitive does not require a belief in cut-throat competition or across-the-board deregulation. Almost everyone would subscribe to the view that while we are for a market economy, we do not want a market society. There is clear need to respect non-market spheres of human life and cooperation — including, by the way, competitive co-ops, which are still to be found in the Nordic countries. Non-market does not mean only or even primarily the public sector, but also the so-called third sector: civil society.

Strong labour-market organisations was a central factor in establishing negotiating procedures between the social partners and a wide network of collective agreements — which may cover all wage-earners, including non-union members, but still leave considerable flexibility at the branch, company, and even work-place levels.

The social partners were also fathers of our national pension system, which covers all wage-earners as well as entrepreneurs. They have, moreover, been able to agree on the small continuous adjustments to the system which are needed to ensure its sustainability as our population ages. As a result Finland is about the only European country not threatened with a so-called “pension bomb” in the foreseeable future.

All of the above are central features of the Nordic welfare model, with the result that our countries have a significantly more equal distribution of income and a smaller proportion of people falling below the poverty line than any other country in the world.

In analysing the success of the Nordic systems, it is important to note that despite the use of the term ”welfare state”, it is the local communities which have the main responsibility for providing services. Benefits are established by national legislation, but local authorities have significant freedom in deciding how to provide them.

Although Finland and all the Nordic countries are relatively high-tax societies, this need not be a hindrance to competitiveness. More important than the level of the taxes is how they are imposed. The tax system needs to provide more incentives for creating and finding jobs and more disincentives for activities that are not compatible with sustainable development.

It is equally important that people get real value for the taxes they pay. Politicians promising tax cuts are regarded mostly with suspicion by a population which, according to polls, is actually ready to accept higher taxes provided they are guaranteed to go to financing clearly needed improvements in services.

How sustainable is all this in our globalising world? The success of the Nordic countries, which are all small economies highly dependent on global trade, indicates that it is very sustainable. But there is no room for complacency. Constant adjustments are necessary.

At the end of the day what will decide the future of our welfare states is still our own political will. If this is decided through democratic procedures, there should be no problem. But we are very much aware that well-financed lobbies are hard at work trying to introduce neoliberal policies to the Nordic countries as well. (END/COPYRIGHT IPS)

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By Erkki Tuomioja and - -
HELSINKI, Jan 1 2004 (IPS)

The current process of globalisation is incomplete, unequal, and characterised by a deficit in democratic governance, writes Erkki Tuomioja, foreign minister of Finland. Tuomioja writes in this analysis that as with elections, it is not enough that trade is free: it has be fair as well. In many developing countries the formal economic sector constitutes a tiny part of the society, the majority of which is either left out of the globalisation process or experiences only its negative effects. Most of the world\’s population lacks protection of the law or social security. It is necessary to expand the space for local initiatives and solutions as a way of limiting the negative effects of globalisation. But this can be done effectively only through multilateral support and rules. We need global social and environmental policies. We have to ask how to democratise the global governance and how to redistribute global assets.

At the same time that democracy has spread further in the world than ever before, discontent with democracy is growing. Millions of people are feeling left out of political decision-making, and there is a growing sense that the forces and events shaping our lives are beyond democratic control.

The current process of globalisation is incomplete, unequal, and characterised by a deficit in democratic governance. As with elections, it is not enough that trade is free: it has be fair as well.

Some developing countries have opted for integration into the world economy through manufacturing strategies inspired by the success stories from East Asia. Replication of these is impossible or at least very difficult. Strategies based on cheap labour and free-trade zones offer some jobs, but not much more. Tax revenues are nil, and links to the local economy are rare. Recipes for success stories are not found in text books or dogmatic theories; they are often mixtures of policy measures composed of both orthodoxy and heresy. We should allow space for local tailor-made pragmatic solutions. However, total isolation from the world economy is a sure recipe for poverty.

It is not possible to turn back the clock and return to the local economies of the past, but it is possible to direct market forces in such a way that they produce more desirable outcomes. Only the most ideological fundamentalists do not admit that markets left alone produce harmful social effects.

When we talk about globalisation of the economy, we mean primarily the interaction between formal economic agents: firms, governments, multilateral financial institutions, and so on. Yet the vast majority of people live outside or on the margins of this formal economy. In many developing countries the formal economic sector constitutes a tiny part of the society, the majority of which is either left out of the globalisation process or experiences only its negative effects. Most of the world’s population lacks protection of the law or social security, which are essentially limited to the industrialised countries. According to the International Labour Organisation, (ILO), informal work accounts for more than half of urban employment in most developing countries. If we also consider subsistence agriculture as informal work, the figure becomes even higher. According to the ILO, well over 90% of the agricultural workforce of Mexico and India is informal.

The best way to combat informality, poverty, or child labour is to create decent work, to design pro-growth strategies. But there must be some re-engineering of the global economic system so that less developed countries also have a realistic chance to succeed in the ever intensifying global economic competition.

One aspect of globalisation is the increasing ability of civil society actors around the world to interact with each other. Some civil society organisations (CSOs) are trying to emphasise the right of different communities to preserve their identity and ways of life. The extension of the market economy inevitably threatens the preservation of social, cultural, and economic values of many societies, especially those of indigenous people. Shouldn’t true democracy mean that we have also space in our world for those who wish to live in traditional societies?

We should not romanticise the issue. Many people want to move to the cities and leave their traditional societies and be part of a globalised society. Others wish not to. Democracy should mean that people can influence the changes that are taking place in their immediate sphere of life. It cannot work efficiently if decision-making moves further and further away, denying people the opportunity to influence their own lives.

When we talk about democracy, we should talk not only about civil rights but also of democratic access to resources: education, technology, natural resources, land, and water. If market forces are left uncontrolled, the livelihoods of many will be endangered.

It is necessary to expand the space for local initiatives and solutions as a way of limiting the negative effects of globalisation. But this can be done effectively only through multilateral support and rules. We need global social and environmental policies. We have to ask how to democratise the global governance and how to redistribute global assets. International financial institutions need to be made more transparent and democratic and to recognise the drawbacks and limitations of neoliberalism. Global solutions must be complemented with national efforts towards democracy and more equal distribution of income.

The Helsinki Process on Globalisation and Democracy, initiated by the Tanzanian and Finnish governments, intends to develop a transparent, inclusive, and participatory dialogue of all relevant stakeholders to go deeper into the challenges I have referred to above.

We will try to set old prejudices aside and move ahead. One of our objectives is to get the forces behind the World Social Forum and the World Economic Forum to talk to each other in order to explore any commonality of views on the burning issues before us. At the heart of this dialogue is the question of how to restore and reform democratic governance of the process of globalisation. (END/COPYRIGHT IPS)

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