Do We Need an International Organization for Risk Management?
I had the pleasure, a couple of weeks ago, to discuss this topic with two distinguished colleagues: prof. Fabio Bassan (University Roma Tre, Italy), prof. Larry Catà Baker (Penn State University, US).
It was an occasion to reflect on a topic whose importance cannot be missed, as crises are more and more on the global agenda.
The unprecedented interconnectedness of states, populations, markets, is increasingly contributing to generate global crises. The risk of contagion of financial crises, of diseases, but also of social and political phenomena as terrorism – even the risk of spreading fake news threatening democracy – makes the world a global village. Issues which 50 years ago would have been national become now easily global. The International organizations were not created to manage the global village, but for the need to coordinate states i.e. compartmentalized national markets and national communities. The current state of the world was unpredictable when most of the international organizations were created after World War II, so – not surprisingly – they are not equipped with proper competences and tools. They are built on rigid founding treaties which cannot be easily modified.
Some global issues, as rising temperatures, water scarcity, deforestation, generate more issues, as extreme weather events, migrations, conflicts, extreme poverty. Crises are often interrelated, multifactorial, cross-sectoral. The current pandemic crisis is also a major economic crisis and it is generating increasing inequality.
Yet, in international law, we see a fragmentation of roles and functions, as most of the international organizations are sectoral, with a specific focus and field of interest (WFP, UNCCC, UNHCR etc…). Yet, there is a need to deal with the big picture as issues are often interconnected.
There are a few coordination fora, such as the G20 or the UN (and namely the Assembly and the Economic and Social Committee), yet the first lacks legitimacy being a group of self- selected states (just like all the Gs), the second lacks effectiveness, as it does not have legal tools for the enforcement of coordination.
Finally, there is an increasing demand for legitimacy and accountability. We assist in a multiplication of participation tools in the global public sphere – petitions, transnational political movements, structured dialogues of international organizations with civil society. Debates on the improvement of international organizations or the creation of a new international organization cannot avoid taking in these democratic expectations to some extent. The latter cannot be but multilateral as well as multi-stakeholders.
The solution proposed by prof. Fabio Bassan builds on a set of organizing premises. These include, first, that States consider systemic crises a challenge and an opportunity to be seized, in a ruthless competition not only between companies and markets but also between legal systems and between States, which in the dynamic of international relations now devoted to market power, have the effect of transforming the latter into political supremacy. Second, the fact that the marginal benefit thus acquired by one State entails a significant sacrifice for one or more other States and therefore entails a sub-optimal balance, constitutes a secondary but not irrelevant aspect. Given these premises, solutions ought to be guided by a principle of proportionality, among those that minimize the costs for the States in terms of transfer of sovereignty and reduction of competition between legal systems and between States in dealing with the crisis, but at the same time allow to coordinate the reaction to systemic crises.
In this context, IOs must be reconstituted to be able to perform coordination functions of
national actions in the immediacy of the crisis, in its management, and in overcoming the crisis.
In that reconstitution, IOs should be equipped with internal and operational rules suitable for managing and early warning functions and with a coherent power to direct and coordinate the actions of the States that are part of it. This organization should have legitimacy, at the highest level. The decisions would consist of coordinating the actions of national governments. The decisions should consist of identifying ways and forms of coordinated reaction to critical events.
These methods could integrate the use of existing economic institutions. And lastly, an
institutionalized form of connection and cooperation of this organization with the International Organizations responsible for economic, financial, health, climatic matters could also be envisaged, in order to acquire practices, protocols, information necessary for the adoption of decisions.
I entirely agree with the need to fill this gap in the current system of the international organization.
A valid alternative to a new organization is the revision of the existing system of IOs to increase legitimacy and accountability, to create (or upgrade) existing bodies equipping them with the necessary competences and tools, to provide them with data and practices already developed and spread in different organizations, to set transmission chains for information and coordination.
There is a long record of proposals to create a UN Economic Security Council. In this line, an interesting one has been put forward by J. Ocampo and J. Stiglitz: the creation of the Global Economic Coordination Council (GECC). Even if this body, inside the UN institutional system would not be focused on crisis management, yet it would complement and complete the organization flanking the Security Council. It would meet at leaders’ level (Heads of States) and its representation would be based on the constituencies mechanism (a restricted yet elected body). The option for multilateralism is clear as well as for a more legitimate and representative system. The new body would be in charge of coordinating all branches of the UN that operate in the economic, social, and environmental fields, including the Bretton Woods institutions, so encompassing the ECOSOC competence. Even the WTO, would be brought into the UN system by appropriate agreements.
Another way to manage (economic) crises would be the upgrade of the Ministerial Councils inside the Bretton Woods institutions– now just advisory bodies -to entrust them with a role of political guidance similar to the one currently played by the G20. The IMF has been created to deal with conjunctural crises and it could play a much bigger role in such occurrences, yet it can just manage national crises, not really systemic, transnational, and global ones. This is due, in our opinion, to its governance: a Board of Governors made up of 189 members representing governments of all member states (usually at ministerial level) and an Executive Board of 24, each representing a single country or groups of countries appointed for two years and full-time officials. So, the political body is just too big to make decisions (which are taken instead in G20, as previously in the G7), the body in charge for the administration lacks political legitimacy and the competence to take the most important decisions. The Ministerial Councils, instead, would represent not just themselves, but the whole membership of the organization through the constituencies’ mechanism. I have described this proposal in detail here.
In more general terms, the eminently technocratic management of many IOs has proved often inadequate, when it gets necessary to move to politically sensitive decision-making (hence the fortune of the Gs) so, the need for a political dimension in the global sphere appears evident. The two problems which need to be solved are the deficit of politics and the crisis of multilateralism (due also to its lack of effectiveness). Action can be taken on both fronts giving to a high-profile, adequately legitimized political body the competence to build strategies, inside a genuine, multilateral organization.
Multilateralism itself could be improved, as we see emerging actors such as the global civil society or companies having now a systemic impact on transnational public opinion and lifestyle, as the “Big Five” (Google, Amazon, Facebook, Apple, and Microsoft). So, multilateralism could now evolve towards multi-stakeholders’ platforms, something we have already seen, for instance, in the internet governance, in some environmental bodies (as UNEA) or in the Committee on World Food Security. Nothing would prevent to give, right now, a small but significant role to civil society. For instance, it could play an advisory role, by commenting and contributing to the first drafts of policy and strategy documents of IOs posted online. No reforms are needed to spread such best practices already tested.
Coming back to the proposal by the colleague Fabio Bassan, it seems to respond to these needs as well as to fill a real gap, nowadays increasingly important, as the management of cross-sectoral crises. Of course, it fits in the European Solution as described in the video by professor Catà Baker – i.e. grounded on common institutions and shared values- and I suppose my comments and additions fit in the same box. It is maybe more than a cultural tribute, our European forma mentis.
I know both solutions are difficult to imagine in the current political agenda of many countries, and especially of some key actors, such as US, China, Russia, or Brasil. European Union, at the moment, is focused inward, on its own upgrade. Yet, as you know, it is not in the spirit of this blog to skip reasoning on something only because it looks unlikely at the moment. Let’s keep reasoning!