Governance Falls Behind Globalization
08/12/2012 Deja un comentario
(…..) Unfortunately if one were asked to produce anew a diagnosis on state of the global governance today, practically everything opined more than a decade ago would be valid, with two serious complications: First, the gap between the globalization and governance, far from narrowing, has become much wider. Second, the international system basically remains the same, for the various attempts to reform critical aspects since the beginning of the century have failed miserably. The governance gap became brutally patent with the 2008 financial crisis and its aftermath that is still with us. Although some of the root causes of the crisis could be considered the strictly domestic-policy decisions in countries where it erupted, ultimately the crisis happened because the key players in global economy failed to address significant issues stemming from the intensification of globalization, despite the fact those issues had been identified early on as threats to international financial stability. Well before the outbreak of subprime crisis in summer of 2007, there had been voices warning that the global macroeconomic imbalances, massive borrowing by some countries and massive lending by the others, would eventually transform into a serious disturbance to the international financial system and that the only way to prevent this outcome was to fix such imbalances by means of closer cooperation among the deficit and surplus countries. Nor was there a lack of voices stressing urgency of international action to update regulation and supervision of financial institutions in light of deepening financial globalization. The formation of the G20 at the leaders’ level, despite dramatic circumstances triggering it in the fall of 2008, looked promising. It seemed that at last leaders of the world’s largest economies would take up the challenge of filling the governance gap. So far, however, G20 has been incapable of dealing with key issues on the agenda of its own making. Although perhaps too soon to declare G20 a complete failure, it remains far from earning its self-designated title of “premier forum for international cooperation”. Actually, global economy seems to be on a collision course. Recovery in developed countries like United States and Japan is halting, while much of European Union has fallen into a second recession and faces huge sovereign debt burdens, the threat of bank failures and possible collapse of the monetary union. The emerging economies have been doing better, but their growth is weakening and will be seriously at risk if the situation in the developed countries continues to worsen. The G20’s failure to honor its reasonable and indispensable commitments is truly worrisome. Addressing the great crisis of 2008-2009, which is still very much alive, in a cooperative way is the litmus test of whether international community is capable of managing the shift in economic and geopolitical power that is taking place. So far the G20 is flunking that litmus test. Frankly, it is a disgrace that despite the evidence that cooperation is in the national interest of all states, achieving it continues to be elusive. This disgrace is not only about the G20. It is unbelievable how European Monetary Union, and with it entire E.U., has been about to fall off a precipice over the last 2 years, due to the incapacity to close the gap between economic integration and governance. The predicament posed by the coexistence of world integrated by Westphalian sovereign nations and a world with an overwhelming need to achieve deep international coordination to tackle problems of common interest, far from being resolved, has been exacerbated. Paradoxically, because of difficult economic situation, which to be mended requires even more international cooperation, the domestic political obstacles to deliver this cooperation have become more immense, not less difficult, to overcome. This means that political leaders will have to excel within the next few years to adapt their governments and societies to new demands of domestic+international governance to contend with new demands stemming from globalization. The alternative, to forgo the benefits of economic interdependence, would be a much more painful course of action for all.