Posted by: gppn | 13/11/2009

Good Governance as Institutional Stability

Speaker: Dr. Surin Pitsuwan, Secretary General of ASEAN

Problem

The need to build a coherent global governance structure that reconciles hegemony of nation states with global constitutions (regulation and coordination) based upon resilient states and effective global organizations such as the World Bank. This equilibrium includes promoting a balanced relationship between states and international multinational corporations (MNCs).

  1. An inadequate public power constellation at the international level – lack of a strong institutional setup that can balance the interest of the hegemony and that of global constitutions.
  2. A lack of social contract with the role of the state at the nucleus [illustrated with Haiti as example – issues of human rights, lack of focus on women’s development (more than 50% of population), repeated UN peacekeeping missions, etc]. Fragile state is related to the low institutional capacity of the government whereas the failed state has no institutional capacity at all to deliver public goods.
  3. Lack of relevance, legitimacy & effectiveness of the World Bank as an important international actor. There is a current aid fragmentation internationally with too many actors involved.
  4. Lack of clarity in roles/relationship between state and large MNCs (e.g. ExxonMobil) for sustainable development – issues of equity, self-interest, power dynamics, etc.

Analysis

Tension within the current structure

  • Inter-, intra- and international levels: hegemony (within a scale from coercion, i.e. “imperialism” to consensus, i.e. “leadership”) and constitutionalism
  • The right of a global constitution to override the power of a national state and its national sovereignty BUT there is also the possibility of mutual interdependent and counter-influencing effects between hegemony and constitutionalism – potential convengence for the future (hegelian dynamics)
  • Political actor (who is the hegemon?) and the global norms. The powerful decides the norms. How do we find the delicate balance between hegemony and constitutionalism?
  • Political actors, potential for political manipulation and increasing demand for services
  • Provision of basic public services (institutional capacity of government), political actors (interests & strategies) and impact on households (demographics & socioeconomic conditions)
  • Decreasing world aid from various sources (public and private) with increasing need for aid (both arising from the global economic crisis)
  • State and large MNCs’ viewpoints: State (as owner of resource) and large MNCs (as service providers) VS large MNCs as owners of assets

Growing need to reform World Bank to increase accountability and flexibility (institutional weaknesses). The World Bank can be a valuable instrument to mitigate the impact of decreasing aid from various sources (“affordable” means to channel aid) and future crises on the developing world while ensuring the sustainability and predictability of aid flows. However, G20 is the key to reforms. They need to have the necessary motivation to carry out the necessary reforms of the World Bank. And in failing to do so, the World Bank runs the risk of becoming irrelevant in the post-crisis.

Solutions and Strategies

To create an institutional framework that reconciliate hegemony of nations with global constitution with the following core features:

  • A global community structured around an agglomeration of power (beyond mere national state level) repsenting the bearer of universal values such as solidarity, dynamic development, equality and pluralism.
  • A global legal order to further integration and interaction with institutions conceived on regional principle.
  • Balance can only be implemented on a case by case basis because different hegemonies has different power dynamices with the global constituions.

To implement the framework for the social contract with the following core features:

  • Coordinate aid among the donors so as to lessen the burden on the state.
  • The state should be the main provider of basic services with its state legitimacy established through regulations.
  • Reforms to overcome fragile states have to be wider than security; it needs to include improvement of socio-economic conditions, distribution of political power and stronger institutional capacity of the government.

To reform the World Bank with the following core features:

  • First critical thing is to change the structure of G20; the countries involved will change the dynamics in order to deliver better aid effectiveness.
  • A reinforced and refined poverty-alleviation mandate, including a clarity on global public goods
  • A broad and deep reform of the Bank’s governance structure, including the board size, function, accountability and voice, and human resources matters to include greater diversity, accountability and breadth of knowledge/competency of staff
  • An improvement in the World Bank’s traditional business model to respond to the current crisis and the changing needs of its shareholders

To understand the dynamics of power between state and large MNCs

  • Prisoners’ dilemma illustrates the payoff and the relationship, in this case, profits = power. Hence, there is a need to balance out the power between the state and the MNCs as owners of resources into a mutually dependent and beneficial relationship through an external mechanism of enforcement. They need to be “taught” to choose the cooperative option.
Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Categories

%d bloggers like this: