Bernatkova 1 How To Survive the 21
Bernatkova 1 How To Survive the 21st Century: Multi-Stakeholder Policy Networks in Tackling the 21st Century Threats Lucie Bernatkova Professor David Martin-McCormick, Advisor University Honors in International Studies American University, School of International Service Spring 2012 1 Bernatkova 2 Abstract The technological progress that drove the recent wave of globalization has constructed a completely new setting that has allowed for connectivity among individuals, firms, and governments. Barriers to trade have decreased as well as the private transaction costs of transportation and information, facilitating the proliferation of numerous new actors, new power structures, and new security threats in the global context. The Capstone recommends the most effective arrangement for global governance – the multistakeholder policy networks. Following an analysis of globalization and its implications on the security context, the paper explores the characteristics of four global threats environmental problems, nuclear proliferation, illegal drugs, and terrorism – and, based on it, makes a case for transformation of governance away from state-centric approaches. It concludes that, multi-stakeholder policy networks represent a system flexible enough to adapt to new challenges and realities as authority and sovereignty are being dispersed up and down to multiple agencies in global system. 2 Bernatkova 3 How To Survive the 21st Century: Multi-Stakeholder Policy Networks in Tackling the 21st Century Threats Outline: • Globalization and its implications • Governing the new context • The four global threats § Environmental Threats § Proliferation of WMD § Terrorism § Illegal drugs • The Future of Governance: Multi-stakeholder Networks o Main Actors § MNCs § Civil Society § Intergovernmental Informal Organizations o Critique of the Multi-stakeholder Networks The technological progress that drove the recent wave of globalization has constructed a completely new setting that has allowed for connectivity among individuals, firms, and governments. Barriers to trade have decreased as well as the private transaction costs of transportation and information facilitating the proliferation of numerous new actors, new power structures, and new issues in the global context. The New World order emerging after the Cold War was thought to be able to lay foundation for global economic prosperity and global peace leading to proclamations such as the Fukuyama’s ‘The End of the History’. Nonetheless, the world is far from that. The emergence of new security threats driven by globalization led to slipping away of this maxim of post-history. The ultimate goal of the policy paper is to recommend the most effective arrangement for global security that would be able to mitigate or eliminate transnational threats. The paper tackles this by (1) providing analysis of globalization and its 3 Bernatkova 4 implications, with special attention on the characteristics of the new context; (2) making a case for a transformation of governance away from state-centric approaches; (3) describing the characteristics of environmental problems, nuclear proliferation, illegal drugs, and terrorism; and finally (4) outlining the framework of multi-stakeholder policy networks – the system that is flexible enough to adapt to new challenges and realities and provides the largest promise in ensuring collective security. GLOBALIZATION AND ITS IMPLICATIONS • • Globalization: process accelerated after the End of the Cold War Implications: o The Retreat of the State; globalization created a governance vacuum o New Security Context § Emergence of new threats: § globalization as double-edged sword – it gives individuals and communities modernizing options but also facilitates the emergence of series of new security challenges Retreat of the State and Traditional Notions of Sovereignty Globalization represents a gradual and advancing growth of interaction activities, forms of organization, and forms of cooperation outside the traditional spaces defined by sovereignty. “Activity takes place in a less localized, less insulated way as transcontinental and interregional patterns criss-cross and overlap one another” (Cha, 2000, pp. 392). As such, globalization challenges the autonomy of individuals and communities to self-govern themselves and thereby leads to erosion of state and its power. 4 Bernatkova 5 Retreat of the State The formation of the world as we know it today and its capitalist features have been based upon the construction of territorially limited entities ‘capable of regulating social and political life and of monopolizing means of coercion and violence (Arrighi, 1999, p. 58)’. The emergence of these entities, states, is linked to their potency to protect “The powers of most states have further declined to the point that their authority over the people and their activities inside the territorial boundaries has weakened” and the multinationals “as non state authorities … have impinged more and more on the people and their activities” -Strange, 1996, pp.xi the commons and the ability to provide public goods within territorial boundaries (Khagram and Waddell, 2007). This served as a basis for sovereignty and represents the underpinning of today’s multilateral institutions. Nonetheless, the present wave of globalization undermines and constrains sovereignty. The standard tale argues that a series of constraints that economic openness places on the ‘viability and effectiveness of particular national policies – macroeconomic, fiscal, social and industrial’ (Weiss, 2003, p. 3) has made the state incapable of solving ‘the control of the financial system, the act to protect the environment and the failure to preserve the balance between the rich and the powerful and the poor and the weak’ (Strange, 1999, pp. 345). Globalization is as such seen to be intrinsically constraining because economic ‘openness involves the fall of national barriers to trade, investment and financial flows, exposure to increasing capital mobility, and also conformity with intergovernmental agreements requiring, for example, that governments open their markets to foreign trade’ (Weiss, 2003, pp. 3). 5 Bernatkova 6 Openness, as a consequence of globalization, is therefore seen as a severely constraining factor in relation to government action as it places demands and puts limits to what governments can do across a wide range of policy areas. This would seem to imply ‘an ever-expanding universe of economic interdependency and integration between national economies (Hirst and Thompson, 2002, pp. 256) will eventually lead to the fall of national boundaries and as such the overarching conclusion is that it is not just the state’s policymaking capacities but moreover the state itself as an institution that is being transformed, ‘downsizing its powers and capacities, and distributing authority to other political and economic actors at local, national and international level’ (Weiss, 2003, pp.8). Authority and sovereignty are being dispersed up and down to multiple agencies in global system. The growth in the authority of non-state actors, such as transnational firms, has led to the diffusion of authority downwards from states to smaller entities, erosion of power based on territory, and an increase in non-territorially based power in economy, technology, and communication. Not only that power is shifting away from the state by global systemic pressures but also, as Strange (1996) alleges, the retreat of the state can be attributed to the erosion of confidence in political leadership. Politicians are seen as impotent, incompetent, and corrupt by “The threats to peace and security in the 21st century include not just international war and conflict, but terrorism, weapons of mass destruction, organized crime and civil violence. They also include poverty, deadly infectious disease and environmental degradation, since these can have equally catastrophic consequences. All of these threats can cause death or lessen life chances on a large scale. All of them can undermine States as the basic unit of the international system.” - Kofi Annan (2005) 6 Bernatkova 7 publics and thus unable to deal with the issues, such as unemployment, declining quality of public services, security. Altogether this implies that the policy-making and regulation authority have shifted out of control of the state. The Security Implications of Globalization The most important security-related effect of globalization is the way it changed the concept of ‘threat’ both in terms of agency and scope (Cha, 2000). The processes that create globalization accelerate some dangerous phenomena, such as climate change, or give power to certain groups, such as organized crime groups or terrorist groups, in an unprecedented way. Collective Threats Although there are multiple global threats and risks that were created or acerbated by globalization, as Annan states, addressing each of them is beyond the scope of this work. This work addresses four collective security threats – the environmental problems, proliferation of WMDs, Terrorism, and Illicit Drugs. The main two challenges - the only truly global ones – that we face are the existence of WMDs and the man-made climate change (Cerruti, 2007). These are called global challenges as they represent the ‘make-or-brake’ threats in the system we live in. They able to overturn the structure of policy making, as known nowadays, and make global governance absolutely essential while, at the same time, making it more unlikely to transpire as it would precondition a transformation in the fundamental political calculus. It would require the political actors to replace national self-interest (and maximization of self-utility) for responsibility for future generations as the driving factor 7 Bernatkova 8 behind behavior (Cerruti, 2007). The other threats – terrorism and illicit drugs - are conceived as ‘risks’ rather than full-fledged global challenges, using Cerruti’s abovedescribed interpretation. Their progression does not have the capacity to destroy the world for the future generations to come. GOVERNING THE NEW CONTEXT • The need for concerted efforts across national borders to address the current challenges and threats is needed given the contemporary context of increasing interdependence across nations • Global problems cannot be solved by any one nation-state alone in the increasingly interconnected world • The challenges are beyond the scope of single nation • The case for transformation of governance o Erosion of state o New threats • Multilateral order is no longer inadequate • Role of state in the new context The rise of new security threats coupled with the erosion of the state as the sole governing unit, requires a new form of governance. Clearly, the systems that were created in the 20th century fail to manage or mitigate the 21st century treats and risks. The Case for Transformation of Governance By shifting the power away form the state, globalization processes are begetting a transformation of governance. This is further compounded by the need for addressing an increasing portfolio of transnational problems. In fact, in the upcoming decade intense transformative forces of systemic importance will continue to affect the lives of people. Driven by globalization, these forces, which are characterized by speed, abundance, and interconnectivity, will continue to gather to engulf not only countries but also companies, 8 Bernatkova 9 cultures, and other communities. These threats to global stability have been proliferating and will become more acute. The gravest threats of these, the ones that, as defined above, can are true global challenges, could create a context in which the world system as we know it could break down (Cerruti, 2012). Finding solution to them requires a collective and collaborative action – something that the states in the multilateral system do not have a strong record of doing, as seen by the apparent failure to create an effective regime to tackle climate change There are inherent limits to supra-nationality and the principles that reinforce it are unsuitable vis-à-vis the current global challenges. These limits imposed by the national interest-centered political calculus that underpins the multilateral system and the inherent tensions between universal values and state sovereignty built into the system, combined, combined with increasing interdependence and proliferation of non-state actors, have resulted in the calls for new forms of governance. The transformation to a new form needs to go beyond a simple reform of the multilateral system that was created postWWII. As Khanna (2011, p. 3) says, it’s the technology and money, not sovereignty, that resolves who the main decision makers are and who holds the authority. States are no longer able to restrain the movement of information and technology in the post-sovereign space (Roseanu 1996). MNCs are. Nonetheless, it is important to note that states remain an important actor in the decision-making. Contrary to the past, they are not, however, the only ones running the show. Their consent is vital to all the efforts in global decision-making. The main 9 Bernatkova 10 problem with this is that they remain to choose self-serving actions, the actions that correspond to their narrowly defined national interests. THE FOUR GLOBAL THREATS The following section of the policy brief is divided into four parts along the lines of four global threats the challenge of which was intensified by (1) environmental problems; (2) proliferation of WMD; (3) terrorism, and (4) illicit drugs. Each of the parts includes an analysis of the treat, considers its impact on international security, lists what it takes to tackle the issue, and comments on the relevance of state in the solution to the threat. The ultimate recommendation for the solution of the threats is outlined in the next section of the paper, titled ‘The Future of Global Governance: Multi-Stakeholder Networks and Public-Private Partnerships. ENVIRONMENTAL PROBLEMS This section focuses on the impact of environmental problems, especially climate change, on international security and considers the appropriate responses under the framework of multi-stakeholder governance. Background & Characteristics of the Threat What is Climate Change? Climate change represents one of the greatest, if not the greatest one, challenges facing the humanity and necessitates urgent policy action. This threat is unique given that this threat is quite unlikely to turn extremely critical in the upcoming couple years and but requires immediate action if there is to be any chance of preventing or mitigating it is 10 Bernatkova 11 thus is beyond the scope of regular political process. Climate change, defined as a phenomenon causing the average global temperatures to increase and leading to increased frequency in extreme weather. The increased concentration of greenhouse gasses (GHGs) in the atmosphere, which has grown by more than a third since pre-industrial level, has generated an enhanced greenhouse effect, trapping heat and increasing temperatures at the earth’s surface (IPCC, 2007). In the short term will ensue in significant international problems, ranging from lack of fresh water resources to climate change refugees to. Eventually, this might lead to the ceasing of the life as we know it. As the repercussions of the climate change have become more visible, a growing number of people have understood that the more protracted the reaching of the agreement, the higher cost the humanity will bear. Many, like James E. Hansen, have pointed out Governments cannot wait for neither economic better times nor continue what seems to be the current strategy to deal with economic problems – polluting our way out of it. The Fourth Assessment Report by IPCC (2007) sets out that, “Warming of the climate system is unequivocal, as is now from observations of increases in global average air and ocean temperatures, widespread melting of snow and ice and rising global average sea level.” The consequences of non-action will lead to grave consequences that include extreme weather, rise of the sea level, and climate change refugees. The rising emissions of GHGs into atmosphere by anthropogenic activities will continue to lead to rise in global temperatures. According to the latest projections the average temperature will increase by about 2oC by 2100 (IPCC, 2007). This will likely translate into more variability and instability of day-to-day weather in all regions of world. In fact, most recently, the IPCC (2011) has released a report that claims that the 11 Bernatkova 12 growth in heat waves in “virtually certain” and that extreme weather, such as floods, droughts, hurricanes, will be more intense in the next century. Alarmingly, the impacts of climate change will transpire amidst the prevailing stresses like poverty, weak infrastructure, and high population density (IPCC, 2001). As Farhana and Depledge (2004, p. 22) point out, the adverse trends in weather will affect the poor countries and those with limited access to resources to adapt in a disproportionate manner. Additionally, the existing pressures in natural ecosystems, like pollution and destruction of habitat, will be intensified by climate change. According to the WMO (2010), some extremely susceptible natural systems like coral reefs might be incapable to adjust to the new environment and undergo irreparable damage. Some of the effects of climate change include: reduction of arable land, shortage of water, shrinking food and fish stocks, increased flooding, prolonged droughts, change in rainfall patters. The combination of these might lead, among others, to the following significant threats to stability of nations and whole regions: a) Resource conflicts A decrease in agricultural productivity will lead to food supply security and also economic pressure will drive the price up. The change in rainfall patterns could further decrease the available freshwater by as much as 20 to 30 percent in certain regions). All these will have grave consequences in places that experience demographic pressures. Combination of these factors can lead to civil unrest or open conflict over depleting resources, as Schwartz and Randall (2003) of the US Department of Defense say, essentially creating ‘conflict hotspots’ (cause by shortages). “Desertification could cause 12 Bernatkova 13 a vicious circle of migration, degradation, and conflicts over territory and borders threatening the socio-political stability of regions and countries.” Another facet of resource conflicts is the potential for conflicts based on competition over access to and/or control over energy resources – the hydrocarbons. The demand for food, water and energy resources has been increasing by double digits recently driven by the emergence of countries like china and India. The ensuing shortages will Case Study: The Conflict Over Water in the Middle East (adopted from Gleick, 1994) “Water systems in the Middle East are already under intense stress. Roughly two-thirds of the Arab world depends on sources outside their borders for water. The Jordan and Yarmuk rivers are expected to see considerable reduction in their flows affecting Israel, the Palestinian territories and Jordan. Existing tensions over access to water are almost certain to intensify in this region leading to further political instability with detrimental implications for Europe's energy security and other interests. Water supply in Israel might fall by 60% over this century. Consequently, a significant drop in crop yields is projected for an area that is already largely arid or semi-arid. Significant decreases are expected to hit Turkey, Iraq, Syria and Saudi Arabia and thus affect stability in a very strategic region for many Western nations.” create more tensions between the social groups, nations and industries that seek them. Moreover, as the Polar Regions turn more exploitable following the melting of the ice, potential conflict might ensue. b) Politics of Resentment The inability of the fragile governments to meet the needs of their citizens & provide protection in face of the climate change could instigate hardship that, in turn, might trigger frustration, tensions between different ethnic and religious groups. Moreover, this can fuel politics of resentment between those causing it and those affected by it, eventually causing political radicalization. Increased fragility associated with this might destabilize countries and whole regions. 13 Bernatkova 14 c) Climate Change caused migration According to some estimates, 25 million people were already displaced in the 1990’s. The number of these ‘environmental refugees’ could affect at minimum 200 million people by 2050 (Myers and Kent, 1995). Climate change will amplify or trigger migration within and between countries. This might lead to growth in conflicts in transit and destination regions. Many of the developed nations can expect significant migratory pressures. Solution to the Problem Why nation state-based solutions inappropriate? The international diplomatic stalemate on climate policy has led to an abyss-wide gap between what is being done and what needs to be done on the problem. In fact, the current multilateral political deadlock that transpired in the Cancun and Copenhagen Conference of Parties (COP) does not offer much hope for reaching a binding agreement in Durban. The slow progress in decreasing the GHG emissions by developed nations, a relatively small financial assistance for adaptation, and lack of technology transfer has augmented the gap between the north/south divide in the UN system (Farhana & Depledge, 2004). This dynamics keeps on eroding the unity in tackling the common challenge and has led some to conclude, “the negotiations have taken on an increasingly unreal air” (Soros). While the US, as the world leading power and emitter of GHGs, makes its commitment contingent upon the pledges of the emerging nations, they remain firmly opposed to accepting a binding mitigation agreement if the US does precede. 14 Bernatkova 15 The countries have abstained from agreeing on legally binding commitments on mitigation and continue to be vague about funding of adaptation measures to developing countries, as illustrated in both the Copenhagen and Cancun Accords. Although the two previous conferences have achieved to save the UN process, they have “failed to save the planet from climate change” (Khor, 2010). This highlights the main problem with formal bureaucratic institutions – the emphasis on process over results and the inherent limits of national interest in solution of collective problems While the scientific community has made it clear that an urgent action needs to be taken, the political leadership has not been able to act constructively in response to this. Given that none of that has been achieved in the past 13 years and in many respects the previous couple years have seen an actual setback to multilateral negotiation, it is hard to see anything along these lines happen. To be able to tackle the climate change effectively, it is vital to rebalance the relative influence of science and politics in environmentaldecision making. PROLIFERATION OF WMDs Background & Characteristics of the Threat Globalization and WMD Proliferation WMD, as defined by the UN, are ‘weapons capable of mass destruction’ – “… atomic explosive weapons, lethal chemical and biological weapons, and any weapons developed in the future which have characteristics comparable in the destructive effect to those of the atomic bomb or other weapons mentioned above” (in Carus, 2012). WMDs currently include nuclear, biological, and chemical weapons. 15 Bernatkova 16 Following 9/11 and the recognition of the emergence of what Freidman calls ‘super-empowered individuals’, the US National Strategy to Combat Weapons of Mass Destruction states, “For [terrorists] these are not weapons of last resort, but militarily useful weapons of choice.” Thus, terrorist networks gaining access to the technologies to develop WMDs or acquiring them from a state has become a major threat and national security preoccupation of the US. The rise in interconnectedness, the volume of global trade, and the associated diffusion of technology make it harder to discover the illicit directions or technology and materials instrumental for development of WMDs (Allison, 2010). This, according to Allison (2010) made nuclear terrorism a matter of ‘when’, not anymore a matter of ‘if.’ Nonetheless, most of the proliferation experts point to the WMD threat from nonstate actors as exaggerated. Firstly, WMD continues to be under the scope of influence of nation states. Secondly, producing or acquiring WMD would incur huge costs to the organization. Thirdly, states are unlikely to either sell or not have their WMD stocks unsecured as the retaliation by the international community would be destructive. The Real Threat of Proliferation The real threat of the WMD proliferation comes from the rogue states in the international system. The likelihood that rogue states would utilize WMDs to attack other states or start performing the function of a prime supplier to hostile non-state actors is extremely low. The real threat goes beyond the sole capacity of it being used. As Sagan (2002) argues, proliferation (on its own) increases the chance of preventive wars, crisis instability, and accidental detonation. Also, for instance, the manufacturing of nuclear weapon by Iran as a deterrent towards its external enemies, primarily the US and its ally 16 Bernatkova 17 Israel, for conventional military coercion, and a way to boost up its hegemony (Bahgat 2006) might trigger a regional domino effect, in which countries like Egypt, Saudi Arabia, and Turkey might seek the same (Kinzelbach 2010). Nuclear proliferation in this region might bring about the end of the non-proliferation regime. The nuclear nonproliferation regime, centered around the 1968 Nuclear Nonproliferation Treaty, has led to 184 countries, including around 40 that posses the technical knowledge and capacity to build a weapon, has renounced nuclear weapons and/or discontinued steps towards building capacities (Allison, 2010). This illustrates the extremely high value of the regime and the necessity to keep it. Solution The appropriateness of using state-based solutions Given that WMDs continue to be under the purview of nation-states, the solution to the problem needs to be rooted through multilateral networks. In the case of WMD proliferation, G-20, as a global forum that reflects the realities of the 21st century, namely including the rapidly transitioning countries into decision-making, is the actor that should be at the forefront of tackling the issue. The most efficient initiatives in preventing or stopping countries from getting WMD capabilities have been constructive engagement of the international community, advances in national democracy, and improvement in the regional security environments. The Case of Iran Faced with the evolution of the Iranian program, the US decision makers have opted to continue pursuing the path of isolation, containment, and imposition of increasingly tougher sanctions. Although this strategy certainly increases the cost of 17 Bernatkova 18 developing a weapon for Iran, the new wave of stringent punitive measures might, in fact, provide a deeper incentive to Iran to acquire a weapon. This becomes an unavoidable response to its security situation - the threat to the existence of the regime itself. Given the US relatively stringent views on the Iranian regime and the problem of not being able to influence the Iranian domestic debate, the US faces a significant challenge in changing Iran’s behavior, preventing it from weaponization. This, however, can be effectively met neither by the current policy nor by the other options on the table. Clearly, the policy the US has pursued has not only been failing to accomplish its goals. Full involvement of international community is necessary. Enticing the Iranian regime to pledge cessation of the nuclear enrichment program cannot be met by a policy of one state. Proliferation of WMDs is an issue that transcends borders and might potentially adversely affect each person in the word and thus needs to be solved by utilizing approaches that recognize this. ILLICIT DRUGS Background & Characteristics of the Threat Scope Illicit Drugs is a form of transnational crime and one of ‘the Five Wars of Globalization' (Naim, 2003). This form of illicit activity adversely affects the countries of origin, transition, and destination, thereby making it a concern for all the countries in the world. Although there is no consent on the exact value of the drug flows, it is believed that out of all the illicit flows, it is the most significant one. UNODC's World Drug Report estimated the value of the drug trade at in 2005 at $320 billion. The more recent Drug 18 Bernatkova 19 Reports do not address the value of the world trade but publish the estimates for the trade in cocaine and opiates. The global retail value cocaine is $88 billion and the ones of opiates is $65billion. Why care? One of the adverse effects of drug trade is that the criminal networks gain financially. It transfers economic proceeds to groups that usually participate in multitude of other illicit activities, such as human trafficking, significant tax evasion, health, safety, and environment rules violation, and even terrorism. The main implication of criminal funding is that it perpetuates and advances criminal activities, thereby establishing a vicious cycle of organized criminal activity that parasites on societies. This is especially true in countries characterized by an endemic weakness. For instance, of the African countries have been historically subject to social, economic, and political turmoil that has led to their current fragility and vulnerability. The degree of this condition, level of state weakness, facilitates the entry and thriving of illicit activities. In countries with weak governance local smugglers create an interdependent relationship with state officials based on corruption. This translates into an inherently corrupting influence on the political process and facilitates the proliferation of ungoverned spaces. The impact it has through both direct and indirect associations has a potential not only to destabilize debilitate economies and societies but also to trigger geopolitical conflicts. Link between Organized Crime and Money Laundering In fact, criminals use bribery and corruption not only as a way to facilitate and reduce risks in the counterfeiting enterprise but also as a part of the laundering process of profits from the enterprise (Reuter and Truman, 2004). Laundering represents an activity in 19 Bernatkova 20 which criminal incomes are converted into assets that cannot be tracked down to the primary crime. This process has three phases. Firstly, bribed bank officials and accountants facilitate the entry of the proceeds to international financial system – the placement stage. The money is then passed through multiple institutions and jurisdictions in order to conceal their origin – they layering stage. Finally, in the integration stage the originally illegitimate funds are completely absorbed into the overall economy. The quantification of the scope of this activity is hard due to the lack of data available and the opacity of the international financial system. Although there is a lack of comprehensive credible data on the scope of money laundering and the spread across activities and territories, Money laundering that can be classified as derived from all forms of illicit activities, accounts for around 2-5 percent of global GDP, based on IMF’s widely cited statistics on the scope of money laundering. A recent study by UNODC (2011) confirms this figure. Based on its meta-analysis criminal proceeds represent roughly 3.6 percent of global GDP. According to the UNODC (2005) report cited earlier, the yield from drug trade amounts to 320 billion dollars. Some of this money is reinvested and the rest is laundered. This represents as much as 70 percent of the income (IMF, 2001) - the equivalent of 224 billion dollars using the UNODC’s figure. Baker (2005) provides a more ‘conservative’ estimate of the cross-border flows of ‘dirty money’ derived from trade in drugs. According to him, these amount to between 120 to 200 dollars, making it the most significant form of illicit cross-border flow. Production and trafficking of drugs for money laundering creates opportunities for money laundering. Money laundering based on drug trade is not different than the one based on other forms of illicit activities. Presumably, criminals use the financial system 20 Bernatkova 21 to launder the proceeds in the same way. As such, the use electronic payments, cash payments, and bank transfers is preferred to cash money transfers Solution Why nation state-based solutions inappropriate? The governments are ill-equipped to tackle this form of a networked problem. According to Naim (2003), the inherent rigidity of and the limits imposed by fiscal austerity on government bureaucracies puts the flexible complex web of criminal networks on the winning side of the duel. In his opinion, to defeat transnational criminals, “governments must recruit and deploy more spies, soldiers, diplomats, and economists who understand how to use incentives and regulations to steer markets away from bad social outcomes." The solution to the problem entails getting rid of the current strategies and interfering with the incentive systems of the criminals. Most of the contemporary strategies focus on the seizures of them and on the interception at shipment as a way to tackle the crime. However, to address the problem effectively, it is necessary to move beyond the prevalent approach of using the supply side as the main target. To confront the problem of counterfeiting the authorities need to follow the money and prevent it either from entering into the global financial system or make the international financial system more transparent. This would prevent criminals from being able to use their profits efficiently and thereby significantly interfere with their incentive system. The lack of effective money-laundering action across the world essentially provides incentives to organized crime groups to continue on with their activities. The financial system represents the main policy pressure point to address the problem of illicit trade. 21 Bernatkova 22 TERRORISM Background & Characteristics of the Threat Following 9/11, terrorism has gained the global stage as the most serious threat. Terrorism has taken the place of communism as the main adversary of the West. Demonstrably, the occurrence of cross-border terrorist actions has increased, to name just few, the attacks in Mumbai in 2008 and the Moscow airport bombing in 2011 exhibit this trend. Allegedly, the suicide bombers who were trained in Al-Qaeda’s strongholds in Pakistan carried out these attacks (Osborn, 2011). This shows that the ‘flattening of the world’ brought the endemically weak areas and the threats they harbor from the peripheries of the system to every state’s neighborhood. Globalization has significantly enhanced the ability of terrorist groups to organize transnationally, communicate virtually, as well as utilize their tactics. Motivations Behind Terrorism Terrorists long for a romanticized version of the past they allege they want to recreate, utilize scapegoats to explain the shortcomings of their present efforts, and exhibit willingness to use extreme form of violence to reach their desired objectives. What they desire through their actions is what Richardson (2006) points to as the 3Rs: revenge for perceived injustices; renown by getting the attention of the world; and reaction that would be disproportionate enough to sustain prolonged moral outrage. Solution Clearly, using overwhelming military force to confront terrorism like it was done in the US invasion of Afghanistan in 2001 does not represent the solution to the problem of terrorism. And neither does confronting terrorists by measures that infringe on civil 22 Bernatkova 23 liberty and involve abandoning of the law. Promotion and continued respect for human rights as well as trust in the law (Foot, 2007). As the Norwegian Prime Minister said following Breivik’s terrorist attack in 2011: “Our response is more democracy, more openness and more humanity.” Given Richardson’s 3Rs and the fact that this form of crime is largely driven by exploitation of young adults, who are frustrated by socio-economic, economic, and political inequalities, advancing social cohesion might represent a potential solution. Currently most of the counter-terrorism efforts involve two parties – the governments and the terrorist. Polluting the policy dialogue platform with more actors would be instrumental. The Future of Global Governance: Multi-Stakeholder Networks and Public-Private Partnerships • characterized as public-private partnerships with coalition of public, private, civil society and inter-governmental entities • five characteristics: o global in nature o focused on public issue o inter-organizational o promote more effective cooperation between multiple stakeholders o are systemic change actors • Main actors: o MNCs, o civil society, o Inter-governmental informal organizations So far managing of global problems has been done by voluntary and ad hoc cooperation by a diverse range of actors. As problems become more transnational, public 23 Bernatkova 24 and private actors enter the governance vacuum created by globalization. In turn, we now have a global policy sphere that crowded with multiple formal and informal institutions and policy networks, both formal and informal. None of these seem able to manage or mitigate these problems. A new form or networked systems to address global threats is necessary. The threats can only be tackled effectively if action strategies are designed and implemented on all levels of political and social organization – local, regional, national and global. Multi-Stakeholder Networks and Public-Private Partnerships Finding solutions to the transnational challenges necessitates a collaborative action by different stakeholders on a coherent, strategic global process. This necessitates engagement from all the pillars of global society - including private sector, government, and civil society to leverage the finances and increase the capacity to develop and foster efficient partnerships down the road. The relevant representatives can create coalitions of willing – multi-stakeholder networks – (Khanna, 2011, p.28). These groups can mobilize resources globally and tackle both local and global problems. Background Five main characteristics define these networks: a) they are global; 2) they focus on public good issue; 3) they are inter-organizational; 4) they bridge agents among diverse organizations; and they focus on systemic change (Khagram and Waddell, 2007) Although the real emergence of these networks started after the Cold War, some of what can be considered predecessor organizations were established long before that. For instance, the International Committee of the Red Cross, now an NGO, was established as inter-organization network in 1863. 24 Bernatkova 25 The Main Actors in Multi-Stakeholder Policy Networks • • • • The role of MNC in globalization Economic power of MNCs The global position enables it to exert influence over political process Economic leverage that serves them as instrument for limiting authority of the government in the policy-making MNC & The Rise in Private Authority The transnational corporation has been at the epicenter of globalization. Some scholars claim that the rise of the private sector and its economic power led to restructuring of the state functions and authority transfer from public to private sector (Strange 1996, Sassen 1996). On the contrary some allege that the authority over the policy-making and the productive resources is still in the hands of the state. The multinationals require strong institutions that provide policy stability to devise strategic plans instrumental of longterm profitability. Due to this the states ‘hold more cards in their hands’ and still manage the rules of the game. It is, however, undisputable that the systems of power have operated in a way that strengthens big corporate transnational firms. Owing to the rapid technological development and the consequent falling transaction costs, the corporations have grown and dispersed with strikingly rapid progress and amassed vast economic power. From the 1950’s to the year 2000 the cost of sea freight has declined from around 60 to 40 dollars per tone (OECD, 2007, pp. 187) at the same time as the information revolution tore down the constraints of time zones as well as distance by enabling access the world market via computer. The astonishing speed of the integration of the markets is illustrated on the flows of Foreign Direct Investment. In the 25 Bernatkova 26 1980’s the value of inward and outward FDI stock of all economies was 11.5 percent of the world GDP. By the mid-2000 this figure has raised to almost 50 percent (UNCTAD). Their role of the main driver of globalization and the embodiment of the simultaneous transnational transfer of capital, highly skilled labor, technology, and final and intermediate products (OECD 2010, pp. 156) has made it a major profit-driven stakeholder and shareholder in the global system. The multinationals’ position of facilitator of the international exchange and its positioning in the domestic markets have logically translated into increased political influence it can exert on the governments of the host countries. National borders represent little impediment to the TNCs operations. The intra-firm trade flows that illustrate the reach of the production channels reveal that these transactions account for expanding portion of total trade of some countries. For example, in the United States the portion of intra-firm exports in total manufacturing exports of all the manufacturing affiliates under foreign control has for the past 10 years held steady at 50 percent (OECD 2010, p. 183). The big scope of operations with affiliates located all over the world suggests that the TNCs are capable of flexibly shifting the production within the multinational networks based on cost, demand, and economic policy conditions. This flexibility juxtaposed with the entrenchment of the companies in the individual countries’ market structures, through labor markets and R&D investment, inherently implies a possible source of tension between a host state and a TNC. It is in a country’s own interest to pursue policies to maintain them inside to sustain an inflow of R&D initiatives and stable employment conditions. In other words the TNCs hold an economic leverage 26 Bernatkova 27 that serves them as an instrument for limiting the authority of the government over the policy-making as well as leverage they hold over governments. Civil Society – The Third Sector • Definition of civil society • Example of successful civil society campaigns as a case for their incorporation • The existence of the communities of overlapping destiny makes it essential to empower civil society Civil society, defined as “the realm of social activity and organizations falling outside the spheres of government and business; or defined as all sectors and activities falling outside the public sector, and thus embracing the work of business, voluntary and community organizations, trade unions, faiths, professional bodies and consumer organizations” (World Humanity Action Trust, 2000, p. 35). The range of actors that fall under this, is very wide. It includes, individuals, campaigns, and events. As the successful civil society campaigns, such as Human Rights Watch and its activism on getting rid of child labor, Turkish consumers’ campaign against the maltreatment of workers at Burger King restaurants; the boomerang effect generated by the Chinese NGOs with regard to forcing women to wear metal shoes; show civil society actors can have an important influence in affecting outcomes of governance and in shaping public opinion. Globalization has created overlapping communities of common destiny and loyalty, making individuals not only inhabitants of their immediate political communities but also of global networks, thereby possibly reconfiguring their loyalties and alliances. 27 Bernatkova 28 Civil society actors thus needs to be elevated in status, empowered, to become active participants in all the parts of governance. Intergovernmental Organizations: G-20 • • • the government leaders and political elite still have an important role and are currently irreplaceable the case for informal intergovernmental structures G-20 State is Not Dead: The Continued Relevance of States in Global Governance: Although the integration of the markets certainly empowered many actors and allowed them to exert significant amount of influence over national economies and policies, it did not erode the preeminence of the advanced nations in the international system. Majority of the policy-making authority still lies within the state. Although the increase in private authority has transformed the state sovereignty and the state itself, the state cannot be proclaimed as ‘dead’ because it continuously actively participates in this transformation by, among others, choosing venues it chooses to channel its power (Sassenm 1996). Thus relevance of state cannot be totally discounted. The ideal place for state would be through informal governmental mechanisms. Informal intergovernmental mechanisms are more likely to take place than a comprehensive reform of formal organizations or creation of new institutions. G-20 - a leadership club summitry – could play an important role. The case for G-20 28 Bernatkova 29 G-20 represents a high-level informal forum of representatives of the global major economic powers. Mirroring the current political and economic distribution of power the forum includes the heads of government of G-8 (Canada, France, Germany, Italy, Japan, Russia, the United Kingdom, the United States) plus South Africa, Mexico, Argentina, Brazil China, Japan, South Korea, India, Indonesia, Saudi Arabia, Turkey, Australia, and the EU. In addition, the heads of IMF and WB – the important global organizations participate of important global forums and organizations – IMF, WB. G-20 - a leadership club summitry - plays an important role by the means of which nation states can overcome collective action problems and can generate political will by: a) making the politically sensitive shifts in their governments’ policy stances, b) setting new normative guidelines and frameworks, c) and providing impetus for those moves to be carried forward in other multilateral settings (Hajnal, 2007). The main strength, although it could be interpreted as a weakness, of G-20 is that it does not have neither a secretariat nor permanent staff. Moreover, its agreements are not binding. This dynamic, loose, and not bureaucracy constrained given that it is not a formal organization structure but rather a dynamic, loose, not bureaucracy constrained, entity, it does not focus on process over results is less pronounced. Unlike the UN in which the emphasis on process hinders progress. As a flexible organization, G-20 was able to absorb the upcoming countries mirroring the shifts in the world economy towards the east and the south. The involvement of these countries will ensure functional and legitimate global policy. 29 Bernatkova 30 Reinventing the forum Clearly the G-20 model needs to be upgraded to the point that it would facilitate policy moves considered hard within domestic contexts but are essential for the global common good. G-20 could reinvent itself to tackle the challenges of today and become responsible for collective security. Multi-stakeholder Networks: A solution to the 4 Global Challenges? Multi-Stakeholder Networks in Global Environmental Governance Due to over politicization of many issues falling under the climate change it is quite impractical to try to work through the national government channel. Advancing innovations and/or policy reforms through inclusion of private sector will be more appropriate. The proposed plan for dealing with environmental problems, especially the climate chance follows: • The ultimate goal: the transformation towards carbon neutral systems by the means of green industrial revolution o Given the scale of the issue, the plan towards this transformation needs to be conducted by a policy network that has a balanced representation of representatives from MNCs and civil society as well as the governments of G-20 o The main target areas of this policy network should be: § Put price on carbon § Improvement in energy efficiency § Accelerated investment in and deployment of low-carbon 30 Bernatkova 31 innovations and technologies, such as carbon sequestration § Abstaining from deforestation Multi-Stakeholder Networks and non-proliferation Regime Due to the characteristics of this challenge and the fact that the WMDs remain under the purview of nation states, states, as represented by G-20 in the multi-stakeholder governance world, should have the strongest say in the non-proliferation multistakeholder network. Nonetheless, as an advancement to what is currently the established practice – states should invite coalitions of the willing from civil society and global firms to the table. In case of proliferation by a rouge state, such as North Korea or Iran, the participation of multiple global stakeholders could create different sets of incentives and demonstrate to the ‘proliferator’ that in case of the abandonment of the WMD development efforts the international community will enable the state’s integration to the international system. For instance, private firms might offer FDI as a reward for abandoning the program. • The ultimate goal: preserve integrity of NPT and prevent proliferation of WMDs Multi-Stakeholder Networks and Illicit Drugs: Creation Transparent Financial System A significant reform of the currently opaque and non-transparent financial system would enable untangling the money laundering schemes and tracking the funds that are being channeled through the economy, thereby removing the incentive to engage in the illicit business at the first place. Preventing the ability to freely move and use the proceeds from the criminal activities might lead to decline in the global illicit trade as one of the main 31 Bernatkova 32 motivations to stay in the business is removed. The current rules that govern the international financial system are created by a relatively small group of nations and institutions. This rule-setting system prevents participation from wider number of communities and individuals who are directly affected by it. Application of the multi-stakeholder from of governance would make global financial systems more transparent and effective by involving various actors to in development of reforms Enhancing the disclosure on transactions as well as promotion of information sharing among institutions. • The ultimate goal: transparent financial system Multi-Stakeholder Networks and Combating Terrorism The integrative, inclusive nature of multi-stakeholder networks that address the treatment of the global commons and issues would create an environment in which less injustice would be made and more people could realize the benefits of globalization, thereby removing one of the motivations for terrorism. With regards to policy countering terrorism, the effort of the participants in the multiple-stakeholder network should be centered on creating and encouraging extensive intelligence sharing. The Drawbacks of the Multi-Stakeholder Networks The Critiques of Multi-stakeholder Networks While the potential of the multi-stakeholder networks and process is large, as outlined above, some allege that networked governance raises important unresolved 32 Bernatkova 33 concerns of effectiveness, accountability, and legitimacy (Backstrand, 2006). The rather non-hierarchical approach to addressing the issues creates the issue of accountability. 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