The Challenge of Global Governance

Speaking notes for the Right Honourable Paul Martin P.C., M.P. | The 2007 Donald Gow Lecture | April 27, 2007

Right Hon. Paul Martin (LaSalle—Émard, Lib.): I want to thank Queen’s University for asking me to deliver this year’s Gow Lecture. It is an honour and indeed a pleasure to do so in the context of the subject I’ve been asked to address, the Challenge of Global Governance.

The challenge, I believe, is pretty straightforward. It is, in a world numbed by the inertia of its national capitals, how do we create a new multilateralism, one better suited to the needs of the 21st century? It is, in a world where the major actors and the economic, social, and religious contexts in which they operate, have created an interdependent but increasingly dysfunctional system, how do we make globalization work? In other words, how do we match the vision of those who led the world 60 years ago when the United Nations was created?

And the answer is that you have to start somewhere, and that somewhere I would suggest, as its members gather to meet this June in Germany, is the reform of the G8, that exclusive and venerable club composed of the United Kingdom, France, Italy, Germany, Russia, Japan, USA and Canada. Why the G8 you may ask? The reasons are many.

It is evident that over the last several years much attention has been paid to the need for the reform of most of the great institutions of globalization, but unfortunately success appears elusive. For example, this is true in the case of the International Monetary Fund and the World Health Organization, and it is true in terms of the UN itself where the reform movement of the last couple of years has come up short despite the overwhelming efforts of the Secretary-General.

Interestingly however, little attention has been focused on the G8 despite its role on the world scene. This is not surprising. The G8 rests on no international agreement. Its decisions are simply the individual political decisions of its member states and as such the impetus for reform would have to come from within its national capitals, many of which have shown no wish to rock the boat.

Why then reform the G8? Well, the first reason is that it might provide the impetus for action elsewhere. The fact is the reform of the world’s international institutions will not come about unless it is led, or at least not blocked, by their major member states.

The second and most important reason is that the world has changed. When the G5, soon to become the G7, was formed in the 70’s, its members were the world’s most powerful economies and the problems they sought to address were within their purview. They saw themselves as a global steering committee and indeed for much of their history, they had the capacity to be just that. Well no longer! The world which initially flowed from a recovering Europe and Japan in the 50s and 60s no longer exists, nor does the uni-polar world that followed the demise of the Soviet Union in the 1990’s.

Clearly China and India are making their mark! However, it is not only their rise as major powers that challenges the G8, it is also the nature of the problems we face. You know these as well as I – to name only a few: global terrorism, nuclear proliferation, endemic poverty, Darfur, energy security, and climate change where the debate continues to focus on the costs of action rather than, as Sir Nicolas Stern reminded us, the costs of inaction. There is also the issue, which would, because of the immediate devastation caused by its rapid spread, without doubt tip the balance in terms of a reformed G8 and that is a global pandemic. That the world continues to ignore the level of global co-operation needed now to prevent its happening is beyond comprehension.

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The next question that arises is, if the G8 is to be reformed, how is this to come about? The suggestion I would make to you this evening is to follow the precedent established by the G-7 Finance Ministers when they created a parallel and much larger grouping of Finance Ministers called the G20, all the while leaving the G7 intact and untouched. In other words, I believe a new grouping, - of leaders this time, a Leaders 20 as it were – should be created, all the while leaving the G8 intact.

The G20 Finance Ministers meetings, now a regular fixture on the global governance landscape, came into being as a result of the series of financial shocks which occurred in the latter half of the 1990s, the Asian crisis, the Russian default for example, and with these, the fear of a global meltdown as contagion spread from economy to economy, from continent to continent.

The causes of these shocks were in most cases a lack of financial transparency by governments and inadequate regulation of financial institutions. As a result of this, the G7 Finance Ministers sought to convince the emerging economies to adopt the framework of financial rules and regulations that existed within the G7 countries themselves. We did not succeed. Not that the emerging economies disagreed. The problem was that they simply ignored us.

They did so for two reasons: First, they felt we talked a better game than we played, and second and most importantly, because they were not at the table at the time we came up with our solution. Their criticisms were dead on! Quite simply, too many of them had accepted, at one time or another, IMF (and hence G7) imposed answers to their detriment, such as the unsequenced liberalization of financial markets or a hard edged definition of the Washington Consensus (fiscal solutions with no offsetting social supports). Thus realizing that the world’s financial system had attained a degree of seamlessness that could not be ignored, we came to the conclusion that the emerging economies had to be at the table with us and not just temporarily but on an on-going basis, if we were to deal with today’s financial crises and to prevent tomorrow’s.

In summary, why did the G20 Finance Ministers come into being? The answer was because the world needed a body that could form the consensus required to deal with economic issues that had global repercussions. In short, the time had come where the G7 Finance Ministers could no longer take the world for granted.

And so we come to today’s discussion: Why is a Leaders 20 needed? The answer is much the same - because the world needs a body that can form the consensus required to deal with issues of all kinds, not just economic, that have global repercussions. In short, the time has come where the G8 Leaders can no longer take the world for granted.

And who is the world? First of all it is people, and second it is their governments – governments which despite their vast differences in circumstances are dealing country by country, each in their own way, with many of the same issues.

Even more to the point, the world needs to continuously round off the hard edges of globalization. The world needs to make globalization work and this is every bit as much the responsibility of national governments as it is the responsibility of the UN system. As Princeton’s Anne Marie Slaughter has said, ‘Stop imagining the international system as a system of states…subject to rules created by international institutions that are apart from or above these states. Start thinking about a world of governments...’

The simple fact is, today’s global issues require a level of international coordination that is fundamentally different from any earlier period of history; and while successful international institutions are essential if the world is to work, national governments are the masters of those institutions – not the other way around. Thus, the system of global governance must build on national governments as the ultimate source of authority and when you look at the number of critical issues that are gridlocked today because of the differences in starting points between key players, and between key countries, it becomes clear that those players, those countries must themselves come to the table, accept their responsibilities and deal with their differences.

And what would the Leaders 20 be? It would be exactly that. It would be national governments accepting their responsibilities and acting at the highest level – Chancellors, Presidents and Prime Ministers.

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Let me now deal with some of the questions that arise in the wake of a potential Leaders 20. The first question is: will the L20 be in conflict or in competition with the United Nations? The answer is, no. It will complement the UN as the G20 Finance Ministers complement the IMF and the World Bank. In fact, when I became the first chair of the G20 Finance Ministers, and the UK’s Gordon Brown the first head of the IMF’s new International Monetary and Finance committee, a similar concern existed, but we established a productive working relationship between the two bodies right from the start, a precedent that continues to this day.

Indeed, given its potential to break deadlocks in contentious areas, I believe an L20 would be an invaluable ally of the UN. This was perhaps behind the suggestion of the High Level Panel on the future of the UN, that a new grouping of some 20 nations be formed to provide input into a number of questions including the reform efforts of the UN’s general assembly and the constant deadlock over the Security Council.

The second question is, what should the size of its membership be, and who should be its participants? The answer is it doesn’t necessarily have to be 20 countries. For instance, the Finance Ministers’ 20 consists of only 19 countries.1 When asked about this, my answer always was that no one ever said that Finance Ministers could count. Another answer, reflecting the age old rivalry which exists in every government in the world was suggested to me by a former Canadian Deputy Minister of Foreign Affairs who said: ‘One country – why for a Finance Minister, that’s only a rounding error.’

In any event I would suggest the size be in the range of 15-20 countries. This is not an arbitrary estimate.

At the upper end, the limitation is established by that number of people who can reasonably engage in give and take around a table. For example, the doctrine of The Responsibility to Protect states that national sovereignty should no longer be a barrier to outside intervention when a tragedy such as Darfur occurs. This was one of the few initiatives to survive the 2005 UN reform effort. However, it initially went nowhere when the negotiations began with the full participation of all 192 countries of the general assembly. It continued to go nowhere even though the number of countries involved in the negotiation fell to well below 50, and it only succeeded when the number shrank to 20 and a real exchange of views became possible across the negotiating table.

The smaller number – a minimum of 15 countries - is governed by the following criteria: first, the countries chosen must include the G8 and other leading economies; second, they must possess the requisite social and political stability; and finally, if any consensus arrived at is to hold in the rest of the world, the major regional powers regardless of economic ranking should be included. For instance, the non-inclusion of Egypt and Nigeria in the Finance Ministers 20 should be reviewed.

As Canada’s Andrew Cooper has said: ‘The L20 becomes in essence, a meeting place for the different civilizations of the world, not just taking into account the different histories and development trajectories of the actors at the table, but searching for common ground between them.’

This need for common ground or understanding is important. Most leaders are elected on the age old premise that “all politics are local”, and thus, on international issues they may not be immune to the human tendency of failing to understand where the other side is coming from because of cultural differences - Ships passing in the night as it were.

The only answer to the international misunderstandings that can occur because of this is that leaders meet face to face, putting their differences on the table – and that they take the time to discuss them – no holds barred. An example I can cite where this should have happened but did not, with potentially serious consequences, is an APEC leaders meeting I attended where the Asian countries were asked why they did not engage in the kinds of mass culls the west did when faced with the threat of bird flu.

In the discussion that followed, the western leaders appeared to learn for the first time just how different the market system in Asia is with its myriad of small farmers compared to the west. And the Asian leaders appeared to understand for the first time that different market systems or not, the threat of a pandemic is not an issue that could be put on the back burner. The problem was that, this discussion, this bridge across the cultural divide, occurred just before the mandatory photo op – which in this case, as at so many international meetings meant that all serious discussion came to an end and so it did; and so did the progress we might have made on the issue. Subsequently, incidentally, Canada convened a meeting of ministers and officials from the pertinent countries to follow up on the opening created by this discussion, but lacking the appropriate signals from heads of government on what is an intensely political issue, they could only go so far and no further.

The next question is, whither the G8? Should it fade away by simply expanding its membership into the L20, or should a new parallel organization be created? I’ve already indicated my view that the G8 should be left intact. The G8 has an important role to play on its own, and it would be missed.

Furthermore, the reality is, if forced to choose between the G8 and the L20, (or any kind of an expanded G8) at present the members of the G8 would choose the G8, and it would be a long time, before an expanded grouping would see the light of day. This was made clear to me at the time the Finance 20 was being put together and still appears to be the case. Indeed one of the fears of certain members of the G8 is that the creation of a Leaders 20 would lead to the G8’s demise and their influence would be diluted among the larger group. The fact is no one can guarantee that this would not be the consequence. However, I believe that the G8 has a better chance to survive, as a group of important, somewhat compatible economies if the L20 is created, rather than if things are left to drift.

The reason for this is quite simple. The G8 is no longer capable of breaking global logjams – too many issues have been left hanging for too long and too many of the world’s key players are not at the table. In a word, the time has come to cast a wider net.

Another option for the G8 which has been put forward is the so called outreach alternative. This arises out of the precedent established at the Evian, Sea Island and Gleneagles’ summits, where selected countries were invited to participate in some part of a G8 Summit (usually a lunch). This apparently is to be continued at this June’s Summit in Germany. I don’t believe this works! I also suspect my view was shared by the invitees at those earlier G8 Summits, as they cooled their heels outside the meeting room waiting to be called in.

Inviting leaders for part of a meeting only or as others have suggested on a rotation basis, may work in other fora or it may be good showmanship, but it clearly won’t work when countries are stymied, trying to break logjams that are paralyzing global action. What is needed for successful international dialogue is time for discussion and the kind of familiarity that only comes from people who have met often as a group, who know they will continue to meet in the future and who know the dynamics of the room. That’s what used to happen at the G8, and it’s what should happen at the L20.

An example of the kind of opportunity lost that results when the G8 engages in patchwork solutions took place at the Gleneagles summit in Scotland two years ago when what is now called the Outreach 5 – China, India, South Africa, Mexico, and Brazil were invited for lunch. Probably because the then head of the World Trade Organization was also there, a spontaneous discussion of the dangers of allowing the Doha trade round to fail broke out and I believe some progress could have been made as both sides of the debate engaged forcefully but with an evident desire to advance the file. Unfortunately, while lunch was extended - time pressures eventually brought the discussion to a premature end - the invitees went home, the G8 moved on to other matters and two years later trade officials are no closer to an agreement.

This leads into the next question. What should the operating thesis of the Leaders 20 be, and why would it have a better chance of success than other international meetings where leaders are present?

First of all it should meet not once, but twice a year and as informally as possible. Thus in the preceding examples, avian flu and the Doha round would have been the lead items at the next meeting, and you can rest assured the time in between would have been put to good use respectively by health ministers, by trade ministers and by officials.

Next, there should be no communiqués. They simply suck the air out of a meeting before it even starts. Leaders can speak to the press on their own.

As with the G8, the host country should provide the secretariat. There should not be an independent or permanent secretariat, which would simply get in the way of strong direction from national capitals. The goal is political accountability, not bureaucratic process. And most importantly there should not be a focus on “announceables”. This, I believe, will lead to better give and take and more deliverables in the long run. What’s the difference between an announceable and a deliverable? An announceable is for the press. A deliverable gets things done!

Let me give you an example of what I mean. The Gleneagles summit was a major success because of the United Kingdom’s efforts on the Africa file. Building on the initiatives of the previous summits beginning with Kananaskis, the Blair government moved the yardsticks ahead in a substantive way. Unfortunately the same result did not occur on the climate change file, nor could it have because of the fundamental differences between some of the players at the table. The problem is that these differences were not discussed in any depth. They were papered over with the so called breakthrough announceable – IE: the leaders had agreed that ‘a cause of climate change was human activity.’ Some breakthrough!

The problem with the focus on announceables is that by papering over differences to get the announceable, you make moving forward more difficult. In fact, you actually set the process back. Countries are not going to agree on all issues and progress might be slow. Leaders should admit it - which they would if their meetings were informal and substantive as opposed to summits and show.

For this reason, there should be no set piece speeches at L20 meetings. A leader’s interventions should go with the ebb and flow of debate. Only in this way can leaders transcend gridlocked issues such as climate change.

The problem is that too many of today’s international meetings are not designed to facilitate informal debate; they are designed to accommodate staged, low risk interventions, pre-cooked well in advance. Thus, what the L20 must do, and what most international meetings cannot do, is to allow leaders to break free of the briefing book syndrome, allowing them to think outside of the box. Officials can bridge gaps, but only leaders can jump gaps. Only leaders can take the leap of faith -- the kinds of risks, the breaking of precedent that can lead to real progress. Only leaders can exercise the kinds of peer pressure on one another that will lead to yes! Only leaders can break the silos in which ministers often find themselves trapped at their own meetings (except perhaps for Finance Ministers who believe they run everything anyway).

International institutions are essential if the world is to work. However, the responsibility for good international governance falls ultimately upon the shoulders of the political leaders of the world’s sovereign governments. Thus, the goal of the L20 must be to promote an environment that permits an exchange of views rather than bureaucratic briefs, and an environment that enables leaders to make the leap that is so often required if they’re going to break an historical impasse. In short, photo-ops are no substitute for political will.

One last question: What are the chances of an L20 or an L of some number greater than 8 occurring? The answer, I believe, is very good. What gives me confidence is that over a 6 month period, in individual meetings 2 years ago, I raised the idea with all the G8 leaders and the vast majority of the other G20 leaders. The response was positive; in most cases, strongly so. A couple of countries were ambivalent, including the United States, but even they did not say no.2

The fact is, I believe an L20 in one form or another is inevitable. The thought that a G8 without China, India and the world’s regional powers can continue to deal in splendid isolation from the world’s reality is simply too absurd to be credible. Indeed the fact that the possibility of inviting the so called Outreach 5 as permanent guests to G8 meetings has been mooted about, in itself could be interpreted as the first tentative step to reform. But let’s be clear, this is a long way from the bold action that is really required – for if in-depth reform does not follow, then the danger obviously lies in the possibility that the luncheon invitees, tired of waiting in the corridor will decide to form a G5. And if that happens or if for whatever reason, reform is delayed, the G8 will not only have become the architect of its own decreasing relevance, but global cooperation will have lost out once again to global competition and the international system will fall even further behind the ever evolving reality of the global landscape.

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I was asked to speak to you tonight about the Challenge of Global Governance. In summary then, let me conclude by making two points.

First: Despite the fears of those who worry about international conspiracy, global governance does not mean global government – quite the opposite. In fact, global governance is the reaffirmation of national sovereignty in that it puts in place the institutions that allow national governments to bring about the evolution in attitudes required to solve problems that surpass national borders.

However, as important as international institutions are, the final responsibility of global governance cannot be delegated to them. It must be exercised by national governments who are accountable to their respective populations. In turn, the worlds’ governments require from among themselves a steering committee or caucus which can provide a consensus that the rest of the world can either accept or reject but which at least provides a strong sense of direction. This was how the G8 worked at its best. However, it is now up to its leaders to recognize that it is no longer sufficiently representative to provide the consensus such global direction requires.

The issue of representativeness is crucial. The G8 is a self selected group of countries. The L20 would be no different. That is the way it has to be. The interminable debate over the membership of the Security Council is proof of this.

Thus representativeness will be key to the L20s legitimacy and in turn this is related directly to two inescapable factors:

 

  1. The economic and strategic clout of its member countries, and
  2. The cleavage between North and South, which begins not with the arid projections of economists but with the assessment of a political leader’s immediate priorities, priorities which in the case of the North and the South are rooted in the very different needs of their respective populations. No one who has genuinely engaged in North South dialogue will fail to understand that no international consensus will hold, unless those who are at the table represent both sides of the debate.

 

The question, therefore, is would the Leaders 20 be sufficiently representative for our purpose? The answer is, yes. For instance, the Finance Ministers 20 represents approximately 90% of the world’s economic output, 75% of all trade, 67% of the world’s population and the majority of the world’s poor. And every region of the world is at the table.

Second and final point: The uni-polar world no longer exists and there is only a very short period of time ahead of us to put in place the kind of forum that will allow power to be shared between the mega economies of the 21st century. Unless reform in the way of a new grouping along the lines suggested here takes place within a reasonable period of time, I do not believe that China and India to name only two of the new mega economies sitting out in the corridor will wait to be asked to join in.

They will create new groupings, in fact they already are, and smaller countries like Canada, may well find themselves shut out from a reasonable say in world affairs; and larger countries like the United States will find themselves in some perennial balancing act comparable to that which occurred after the defeat of Napoleon, the stresses and strains of which bedeviled Europe for 100 years.

In short, the creation of the structures that will govern the world of the 21st century has been too long delayed. The longer we wait, the more set in their ways others will become and the more difficult and elusive sound global governance will become. The time to share power is when you have it to share, not when others are in a position to wrest it from your grasp.

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1 In the case of the G20 Finance Ministers, the member countries are: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Korea, Mexico, Russia, Saudi Arabia, South Africa, United Kingdom, the United States and the country representing the EU Presidency.

2 On this point, it is interesting to note that a number of international think tanks have taken it upon themselves to push for G8 reform along the lines suggested here. They are: the Centre for Global Studies in British Columbia, the Centre for International Governance Innovation in Ontario, the Brookings Institution in Washington, and the Development and Peace Foundation in Germany. Furthermore, in the last year, meetings setting out the context for an L20 have been held in Germany, in Canada, in the United States, both in Washington and at Columbia University, in China at the Tsing Hua University, and in France, at the OECD. In short, there is continuing momentum for the proposal. What is required now is for one of the world leaders to pick up the ball and run with it.