Strengthening Governance


The Copenhagen commitments

     The Copenhagen Summit agreed that there should be greater international cooperation in the development and implementation of economic and social policies. It also agreed that economic and social policies should not be considered in isolation from each other. The Summit leaders emphasised, in particular, that social issues should be given full and informed consideration in the development of economic policies, as should the special needs of developing countries.

     The Summit reaffirmed the central coordinating role which the United Nations system, especially the Economic and Social Council (ECOSOC), should play in pursuing these goals. That role was specified more than fifty years ago in the United Nations Charter. The Summit emphasised that the structures, resources and processes of the ECOSOC system need to be strengthened substantially, and that the World Bank, International Monetary Fund (IMF), World Trade Organisation (WTO) and International Labour Organisation (ILO) should cooperate with it more closely.

     The Copenhagen agreements also referred to the importance of strengthening cooperation at regional and sub-regional levels, including within the ECOSOC system. The references to this level of international activity, however, tended to be neither prominent nor specific.

A little progress

     Some progress has been made in the directions which were agreed in Copenhagen, especially since the financial crises of 1997 and 1998. The World Bank and the IMF have engaged a little more closely with ECOSOC and made more frequent references to the importance of social issues, especially poverty reduction. Sometimes, at least with the Bank, the new words have been accompanied by improved practices. The Financial Stability Forum and the Group of 20 (G20) have been established to strengthen international coordination on some aspects of financial regulation. As with the World Trade Organisation, however, they are outside the UN system and lack adequate mechanisms for giving due weight to the interests of less powerful countries and of social development.

     ECOSOC has sought to strengthen its involvement in international consideration of macro-economic issues. There have been some improvements, albeit minor, in its internal processes and those of its commissions, such as the Commission for Social Development. In general, however, the Council continues to have very little influence on major issues of economic policy. Its impact on social policy is somewhat greater, especially as it has ultimate oversight of a wide range of major international agencies, but it continues to focus more on process than substance. Even amongst those who work on issues within ECOSOC’s ambit, very few people around the world are aware of its existence.

ECOSOC and Seattle

     The need for a strong and effective ECOSOC was starkly demonstrated by the failure of the WTO meeting in Seattle in 1999. A central debate was whether the WTO, ILO or some combination of the two should be responsible for resolving possible conflicts between trade rules and labour standards. Concerns were also vigorously expressed, especially by civil society groups, about the need for environmental and health considerations to be taken into account, as well as the impact on the poorest people. The breadth of these concerns merely reflected what should be self-evident, namely that most areas of public policy can be substantially affected by trade policy. Unsurprisingly, a meeting of the WTO proved to be an inappropriate and ineffective forum for determining the mechanisms by which conflicts between its own policies and those of intergovernmental organisations in other areas should be resolved.

     At the national level, these kinds of cross-portfolio conflict, whether or not they involve trade policy, are usually resolved by the legislature, head of government, cabinet or some other mechanism authorised by one of them. This “whole of government” framework increases the likelihood that competing policy considerations, and the interests of all citizens, will be appropriately identified and balanced. At the global level, only the United Nations system has the breadth of responsibilities and membership to provide a comparably comprehensive and balanced framework. Within that system, it is ECOSOC which has the most appropriate mandate and composition to play the central role by, for example, being the forum for deciding which new or existing mechanisms should resolve cross-portfolio conflicts of the kind debated in Seattle and then overseeing their operation.

A wider role

     But ECOSOC’s responsibilities extend beyond that crucially important and demanding role. It needs to become more closely and centrally involved in key issues such as financial market regulation, tax policy and administration, corporate regulation and other aspects of economic policy of global importance. This was recognised to some extent at the Copenhagen Summit and has become even more crucial as globalisation and the interdependence of nations has continued to develop. Policies and practices in this area have suffered severely from the dominance of narrow economic perspectives, and of the wealthiest countries, in key organisations such as the IMF, World Bank and WTO. Their failures have not only retarded social development but also, as can be seen in the recent financial crises, hindered longer-term economic development.

     In principle, ECOSOC should be less prone to the weaknesses of these other organisations. Most of its members are from developing countries and its mandate covers a very wide range of both economic and social issues. It should, therefore, be able to arrive at relatively broad-based and balanced assessments, especially with the assistance of the wide range of agencies within its system. In practice, however, these potential strengths have been major causes of ECOSOC’s ineffectiveness. Its breadth of representation has been obtained at the price of becoming too large for the kind of detailed, frank and informal negotiations which are often essential for resolution of the most important and contentious issues. The wealthiest countries have not wished ECOSOC to play a major role on key economic issues as they do not have the majority control (and, in the case of the United States, veto power) which they enjoy in bodies such as the World Bank and IMF. The breadth of ECOSOC’s responsibilities, coupled with its size and inadequate procedures, has also contributed to its lack of focus, expertise and momentum on major policy issues, especially in the economic sphere.

A new structure

     Three key structural reforms could substantially reduce these problems. First, the current ECOSOC membership (which has grown from 18 to 54 countries) could be halved to about 25 countries. This would make it about the same size as is widely agreed to be appropriate for the Security Council where a similar balance between representativeness and efficiency needs to be struck. It is also similar to the size proposed by the independent Commission on Global Governance as being appropriate for the Economic Security Council which it suggested should replace ECOSOC, and by various proponents of establishing a new international economic authority drawn from members of the key committees of the World Bank and IMF.

     Second, the wealthiest countries (say, the Group of 8) and a similar number of the most populous countries (China, India, Brazil, Indonesia, Nigeria etc) could be made standing members, comprising about two-thirds of the Council. Five of the G8 countries have been elected members of ECOSOC throughout the last 20 years and each of the other three countries has been an elected member for 16 or more of those years. In this sense, their acquisition of standing membership without need for election would not greatly increase their influence but, by providing guaranteed membership, should reduce some of their resistance to ECOSOC playing a greater role on major issues. ECOSOC would remain substantially more equitably representative than currently dominant bodies such as the World Bank, IMF, G8, OECD and the new G20. Indeed, the proposed recognition of the most populous countries means that, if measured by reference to people rather than states, ECOSOC would become more equitably representative than it is now.

     Third, the remaining one-third or so of ECOSOC members could be elected by all the other countries on a regional basis. At present, five regions are used for ECOSOC elections. But, for example, there is much to be said for creating additional regions out of the current “continental” regions of Asia and Africa. This approach would enable regions to be defined in ways which more accurately reflect relatively close affinities. It also would reflect the growing significance of regional groupings such as the Southern African Development Community (SADC) and the Association of South East Asian Nations (ASEAN). A further step could be for representation to be in the name of a regional organisation itself, thus providing a stronger ongoing structure for selection, support and accountability of representatives. This is the approach which has been adopted recently in the G20, where the largest European countries are represented individually but others are represented by the European Union.

     As mentioned, the proposed new ECOSOC closely resembles the size and composition of the Economic Security Council proposed by the Commission on Global Governance. Some developing countries fear that such proposals would reduce their influence. It is important to note, however, that developing countries would continue to have the same two-thirds majority of members. Far from losing influence, they would gain from remaining so substantially represented on a body which itself becomes more influential. The proposals reflect the need for a Council which is small enough to be effective, provides a reasonably fair balance of representation, and gives sufficient but not excessive recognition to the realities of international power.

Closer interaction with other key bodies

     Whether or not its composition is changed, ECOSOC should substantially strengthen its interaction with several key intergovernmental organisations which are not, or do not regard themselves as being, fully within the UN system. As mentioned, some progress has been made recently in relation to the World Bank, IMF and, to a lesser extent, the WTO. But it remains very limited and precarious. The quality and impact of ECOSOC’s engagement with these bodies would be strengthened considerably if it made greater use of Ministerial Working Groups and independent Expert Advisory Panels to develop and advocate its views, especially on key economic issues. It will also be desirable for ECOSOC to meet more frequently and to focus more on detailed discussion of key policy issues rather than ritualised consideration of operational reports from its constituent organisations.

     Closer engagement by ECOSOC with key regional groupings such as the European Union, Mercosur, ASEAN, SADC and others is also essential. These groupings are more significant to government leaders, and more reflective of appropriate regional boundaries, than some of ECOSOC’s regional commissions. ECOSOC’s profile and impact as a global body could be strengthened substantially by convening an Annual Regional Consultation involving not only its own regional commissions but also the other, non-UN groupings. It has been suggested earlier that at least some of these groupings might also serve as a basis for representation on ECOSOC; some are already acting increasingly as negotiating groups within ECOSOC processes and, for example, played influential roles at the WTO meeting in Seattle. Developments of these kinds can be seen as consistent with a concept of international governance which might be called “constructive regionalism”.

Constructive regionalism

     The proposed concept is “constructive” in the sense of encouraging regions to be positive in their engagement with other parts of the world rather than merely defensive and exclusive. It is also “constructive” in the sense of developing regional structures which will be building blocks for a global framework of cooperation that strikes an appropriate balance between globalisation and local autonomy. Amongst other things, it can help to maximise the benefits of internationalisation in economic and other fields while also helping to minimise the dangers. It also can be an important way of strengthening South-South cooperation, as recognised by developing countries in their 1998 Bali Declaration and reiterated at the recent South Summit in Havana.

     The European Union has already established substantial power and influence within its own region and the world. Its development constitutes a recognition by some of the most powerful countries in the world that they must join in such a grouping if they are adequately to develop their capabilities and protect their interests. The need for such realism and regional cooperation is surely even greater for developing countries. The EU is already very active in developing bi-regional interaction and, as regional groupings develop further in significance, so will bi-regional and multi-regional processes. It is essential, however, that this occurs in an appropriate global framework, rather than in a way which heightens tension and inequity. Hence the emphasis above on encouraging new regional groupings to interact more closely with, and operate as negotiating groups within, the ECOSOC system as already occurs with the EU.

The way ahead

     The proposed changes in ECOSOC’s composition would require modification of Article 61 of the UN Charter (which has already been amended twice to increase the size of ECOSOC). Unless changes of this kind are made, however, it is difficult to see much prospect of the United Nations substantially strengthening its influence on international economic policy-making. The principal victims of that outcome would be the developing countries, except perhaps to some extent the most populous of those countries which may achieve substantial representation in their own right on major non-UN bodies (as applies to the new G20).

     The forthcoming Millennium Session of the UN General Assembly would be a highly appropriate occasion for the necessary amendment of the UN Charter. But even without such a structural change, useful progress could be made by establishing an ECOSOC Working Group on Economic Cooperation which reflects the composition proposed above for ECOSOC itself. Amongst other roles, this group could be principally responsible for developing close, high-level interaction with other bodies such as the Bretton Woods institutions and key regional groupings. The procedural changes which have been suggested above could be made without changing the UN Charter and, perhaps, without great controversy. They could be considered at the next ECOSOC meeting.

     Recent systemic failures by bodies such as the IMF and WTO have given the UN its best opportunity for several decades, perhaps ever, to demonstrate the need for it to play the major role in international economic policy-making which it was intended to play from its inception in 1945. Its fulfilment of that role is essential in the interests of sustainable and equitable development around the world. But the opportunity will be lost, and may not recur, unless major reforms of the ECOSOC system are made without substantial delay. An alternative approach, of course, is to replace ECOSOC with a new body such as an Economic Security Council. That would tend, however, to increase rather than reduce the linkage between economic and social policy-making and would involve changes in the Charter which might well be even more difficult to achieve than those required for reforming ECOSOC itself.