The EU’s role in global governance

european_flag1.jpg [Reuters]

A growing number of international institutions and agreements are attempting to tackle the world's major challenges: economic, environmental or security. What is the EU's role in this emerging world order?

At a time of growing interdependence between countries and of a changing balance of power between them, notably with the economic rise of China and other emerging countries, the EU is trying to find its own role to play in global governance.

While 'global governance' is a relatively new term, it refers to a very old issue: cooperation between sovereign states on shared challenges. These, which were initially largely limited to peace and security, have significantly expanded in recent years.

They now include trade negotiations on tariff reductions, agriculture and intellectual property rights, responses to economic and financial crises, environmental issues such as climate change and biodiversity, counter-terrorism, nuclear proliferation, migration, drug and human trafficking, and health risks such as pandemics.

In practice, cooperation on these issues develops through formal institutions – such as the United Nations, the World Trade Organisation and even the EU itself – and through more informal summits, such as the G8-G20 and the intergovernmental conferences on climate change and biodiversity.

A joint report by the US National Intelligence Council and the EU Institute for Security Studies defines global governance more broadly as "all the institutions, regimes, processes, partnerships, and networks that contribute to collective action and problem solving at the international level."

Recent years have brought to the fore diverging national interests, difficulties with the practical implementation of agreements and lack of trust among negotiating parties in several areas.  Some leaders have warned of a decline in the will to implement effective multilateral cooperation.

One major problem is the phenomenon of 'free-riding', by which some countries bear the burden of acting on some issues, while the benefits of such initiative are spread out among others. A good example of this is climate change, where the economic costs of reducing CO2 emissions are national, but the potential benefits are shared across the globe.

The institutions and fora to foster international cooperation are still emerging. A key issue has been reforming representation in these settings – many of which were founded following the Second World War – so as to reflect 21st Century realities, and in particular the growing economic power of emerging countries such as China, India and Brazil.

These developments include the expansion of the G8 into the G20, changes at the WTO and IMF, and perpetual calls to reform the United Nations and the UN Security Council.

All this is occurring in a context where, since the entry into force of the Lisbon Treaty, the EU has set high ambitions for itself to become a strong and cohesive force in international affairs, notably with the creation of the European External Action Service.

Significant issues here include the ability of European governments to coordinate their positions and the upgrade of the EU's formal representation in various institutions and fora.

It is uncertain whether the EU will be able to meet the challenge of defining the rules for the next century and not find itself marginalised on the world stage by the United States, China and other emerging countries.

The European External Action Service

The EU's foreign policy ambitions were boosted by the entry into force of the Lisbon Treaty in December 2009. Among its innovations are the creation of the post of EU High Representative for Foreign Affairs and Security Policy – held by Baroness Catherine Ashton - the upgrade of the European Commission's foreign representations into fully fledged EU embassies, and the establishment of the European External Action Service (EEAS).

Since then, however, the results have been mixed. Time and again the EU struggles to find a single voice and often seems to find itself marginalised by other countries.

After it failed to secure full representation in the UN General Assembly in September 2010, a vote in the 192-nation assembly in May 2011 saw 180 countries vote in favour of granting the EU 'super observer' status, which does not give the bloc voting rights but will allow Ashton to speak on behalf of the European Union.

Nevertheless, European countries have seen their representation reduced at the IMF and the World Bank to make room for emerging countries.

To some extent this is an inevitable reflection of the relative decline in Europe's demographic and economic weight in the world. At the same time, few would argue that the EU's influence abroad is proportional to its foreign expenditure or the size of its diplomatic corps.

The EEAS and EU member states' diplomatic services together cost an estimated €8 billion per year, while the US spends €8.4 billion. In addition, while the member states' diplomatic services employ some 55,400 national staff and 38,400 local staff, the US has only 21,800 national staff and 6,000 local staff.

The EU also provides more than €53 billion in development aid, of which €12.1 billion is European Commission aid with the rest coming from EU member states. The United States spends about half that.

While it is to be expected that EU member states have some difficulty in coordinating their foreign policies, scholars at the Centre for European Policy Studies have identified what they call "continued inter-institutional disagreements over the details" and "some signs of back-tracking by member states over an effective implementation of the Lisbon Treaty in the external domain".

Ashton's leadership itself has also often been criticised for alleged passivity. Co-President of the Greens/European Free Alliance group in the European Parliament Daniel Cohn-Bendit has voiced harsh criticism, saying "she can't just give us her agenda and tell us about the people she has met: that is not enough". German elder statesmen have also criticised the EU for its divided and timid diplomacy.

These problems recall comments revealed by WikiLeaks that Chris Patten, then-EU commissioner for external affairs, made to a US diplomat in 2004. Patten apparently said that the EU could not be a "real power" because there would always be a member state who favours a more cautious, if not passive, approach and so prevent EU action.

In the 2011 Libyan crisis, in which European nations France and Britain played leading roles, the EU has not been prominent. France initially overshadowed and even contradicted Ashton. Other member states, notably Germany and Italy, have been far less keen on intervention.

These developments do not augur well for the EU's ability to represent itself abroad, including in international institutions and forums. However, some note that it has been only two years since the entry into force of the Lisbon Treaty and just over one year since the launch of EEAS.

Pierre Vimont, the new secretary-general of the EEAS, recently called for patience, noting that European integration is a slow but steady process.

Reshaping Europe's role starts with representation

The problem of European representation has been a recurring one in various international forums. On one hand, EU member states tend to be overrepresented for historic reasons and emerging nations have pushed for more representation for themselves.

Former World Bank head Robert Zoellick, for example, has said that many emerging nations find it "a little odd that of those 25, 26 [people at the G20], about nine are European".

On the other hand, the EU itself is often not fully represented or finds its voice diluted by the multiplicity of member states present.

EU member states are heavily overrepresented in the United Nations Security Council. France and the United Kingdom, as victors following the Second World War, hold two of its five permanent seats and hold veto powers (along with the US, China and Russia). EU countries are also represented as rotating non-permanent members of the Security Council. Being present in both the 'Eastern Europe' and 'Western Europe and Other' regional blocs, the EU typically has three non-permanent members at any one time.

This means the EU, which is responsible for about a quarter of the global economy and comprises less than 7% of the world's population, often holds a full third of the Security Council's seats, including two with veto powers.

Attempts to reform the UN Security Council have gone nowhere. India, Brazil, Japan and Germany have often been put forward as potential new permanent members.

The EU itself, however, is not a full member of the UN General Assembly. An attempt to get enhanced participation and full speaking rights for the EU in that body failed to pass in September 2010, when a majority of developing countries unexpectedly voted against the move.

EU members are overrepresented at the IMF and the World Bank. The EU currently holds a massive 32% of voting rights at the IMF and eight of 24 seats on the body's executive board.

Last October, the G20 agreed to shift six percentage points of voting weight and two executive board seats from EU members to emerging countries. These reforms will take effect in 2012 and a further review is planned for 2020.

In April 2010, the World Bank similarly reformed its voting system, albeit much less dramatically, with EU members' total voting weight falling from 28.54% to 26.32%.

Here too, the EU as a body is poorly represented. The European Central Bank has observer status at the IMF and there is no EU representation at the World Bank.

Given that monetary affairs are an exclusive EU competency for countries using the euro, numerous observers and actors, including the president of the European Council Herman Van Rompuy, have called for full eurozone representation at the IMF.

Economic governance: Trade liberalisation and crisis management

The importance of international trade, foreign direct investment and relatively stable exchange rates to the global economy have led to significant interdependence between world's economies. International cooperation to manage this interdependence is long-standing.

In terms of institutions, it can be traced to the creation after the Second World War of the World Bank, the International Monetary Fund and the General Agreement on Tariffs and Trade (GATT; the forerunner of the World Trade Organisation).

These institutions have continued to work, often controversially, to eliminate tariffs and trade barriers, liberalise capital flows, expand the application of intellectual property rights, and so on.

Regular summits of the world's major economies date back to 1975, when the G6 summit met following the 1973 oil crisis and the prospect of prolonged economic 'stagflation' (low growth and inflation).

Initially attended only by the world's wealthiest countries, these summits have gradually been expanded to include the G20 of the world's largest economies, including rapidly growing emerging countries such as China, India, Brazil and Russia (the so-called 'BRICs').

The summits attempt to promote trust and economic coordination despite economic difficulties and the selfish, mercantilist tendencies these tend to entail.

International economic interdependence was confirmed during the 2007 financial crisis and ensuing recession which, while starting in the US, proved to have lasting global repercussions.

Global economic governance today has focused on mitigating the effects of this crisis. Governments have been concerned about numerous issues, including:

  • Protectionism: At the first G20 summit of heads of state and government in November 2008, a heavy emphasis was placed on preventing protectionist moves.
  • Currency wars: Governments are naturally inclined to boost their country's exports by undervaluing their currency, thus making their products more competitive. Both the United States and the European Union have been particularly concerned about the current valuation of the Chinese yuan.
  • World reserve currencies: The overwhelming majority of foreign currency reserves are held in US dollars, which has raised questions as to advantages the US derives from this and the world economy's vulnerability to fluctuations in the US economy. The EU, China and other countries have been active in promoting alternative currencies or a basket of currencies to rival the US dollar.
  • Stimulus coordination: Many countries, notably the US, have used low interest rates, increased public spending and 'quantitative easing' (the purchase of government bonds) to stimulate demand and thus encourage growth despite the recession. This has led to tensions with trading partners over concerns that this destabilises their economies by encouraging inflationary pressures and artificially undervaluing the currency.
  • Financial regulation: The 2007 financial crisis was the immediate cause of the recession in the late 2000s. Among the roots of the crisis itself are easy credit conditions, deregulation, the housing bubble, overleveraging of banks and overly complex, opaque derivatives. The EU and the international community have since been involved in regulating the financial sector to avoid a repeat (see articles in 'Euro & Finance' section). Numerous responses are possible, including new supervisory rules, taxing financial transactions and increasing the transparency of derivatives and credit rating agencies.
  • Commodity prices: The economic recovery has been accompanied by rising food and energy prices as well as price volatility. This threatens both continued economic growth and the purchasing power of consumers. It has been a crucial factor in recent unrest in the Arab World and other countries. Some nations, notably France, have cited speculation as a cause and have sought international cooperation to mitigate the problem.

Economic governance has also been at the core of the EU's internal agenda, particularly following Greek and Irish debt crises.

To support the euro, European leaders have responded to economic woes at home by bailing out indebted countries, creating a €440 billion rescue mechanism and establishing a 'competitiveness pact'. At the time of writing, the final outcome of these and other measures is unknown (see EURACTIV LinksDossier on financial regulation).

Environmental governance: Growing ambitions but limited implementation?

Global environmental cooperation is much more recent and less developed than that taking place in the economic or security spheres. However, over the past decade, environmental conventions have multiplied and public agencies and departments have mushroomed at all levels, leading to a patchwork of agreements and regulations. Businesses have created their own environmental departments, and many new research and academic institutions have also been established.

The number of 'green' institutions has grown at a rapid rate in recent years to tackle a very broad range of issues including climate change, biodiversity, soil deterioration, water scarcity, desertification and genetically modified organisms (GMOs), among others.

International efforts were largely developed following the June 1992 'Earth Summit' in Rio de Janeiro, following which major conventions on climate change and biodiversity were adopted. At global level the two main institutions currently involved are the United Nations Environment Programme (UNEP), established in 1972, and the UN Commission on Sustainable Development (CSD), created in 1992.

In June 2012 a new 'Earth Summit' will be held in the same city (see EURACTIV's LinksDossier on Rio+20). The summit will try to look at policy instruments to boost the green economy, including removing subsidies and imposing taxes on activities that harm the environment.

Perhaps the most prominent effort concerns rising greenhouse gas emissions and climate change. Since 1995 global summits have been held in the context of the United Nations Framework Convention on Climate Change (UNFCCC), in a bid to create collective agreements to reduce greenhouse gas emissions and mitigate the effects of climate change.

In December 1997, the Kyoto Protocol was adopted in Japan, setting binding targets to reduce the greenhouse gas emissions of industrialised countries. The United States, the world's second biggest carbon emitter, refused to ratify the agreement. The protocol expires in 2012 and it is uncertain whether it will form the basis for future UN agreements on emissions reduction. Countries such as Japan, Russia and Canada have opposed an extension of Kyoto.

The most recent negotiating efforts have been focused on the now yearly UNFCCC summits. The December 2009 Copenhagen conference was widely considered a failure. It was felt the EU had been excluded from negotiations to draw up the final non-binding accord, which was largely negotiated bilaterally by the United States and China.

In 2010, the UNFCCC conference in Cancún led to a relatively modest agreement which formalised the Copenhagen Accord as part of the UN process, created a Green Fund and provided for North-South technology transfers. Policymakers and stakeholders felt trust between the parties involved had improved in Cancún, particularly between developing and developed nations, and saw encouraging prospects for forging a more ambitious agreement at the next summit in Durban, South Africa at the end of the year.

So far the EU has made limited progress in persuading other countries to reduce their carbon emissions. Possible bargaining chips include increasing the EU's 2020 reduction target to 30% and the imposition of carbon tariffs at Europe's borders.

Other somewhat more successful agreements have included the adoption by 190 countries of the Nagoya Protocol on biodiversity, establishing a target to earmark 17% of the world's land area as nature reserves by 2020.

Europe leads by example on continental governance

The EU has been keen to export its model of regional integration to other parts of the world. Ashton has called regional organisations the "building blocks for global governance".

Regional integration efforts, sometimes explicitly modelled on the EU, are common across the world but they have never reached the same degree of integration and supranational decision-making as in Europe.

In East and South-East Asia, regional integration efforts are hampered by stronger cultural differences, starkly different political systems and incomplete post-war reconciliation.

Some of the organisations have achieved a limited degree of integration, in particular in the economic sphere. They include the Association of South-East Asian Nations (ASEAN), the North American Free Trade Area (NAFTA), Mercosur in South America, the Gulf Cooperation Council and the South African Development Community.

There are also pan-regional bodies who generally have achieved very limited integration, notably the African Union, the Union of South American Nations (Unasur) and the Arab League.

The EU has encouraged regional integration efforts, largely through the specific allocation of development aid.

For the 2007-2013 period EuropeAid, the EU's directorate-general for development and cooperation abroad, assigned €775 million to Asia for regional assistance. It has similarly supported the African Union fund its peace efforts by providing over €740 million to the African Peace Facility for projects to promote regional dialogue and peacekeeping operations in Somalia, Darfur and the Central African Republic.

Smaller sums totalling approximately €175 million have been allocated for the regional integration efforts in Latin America, notably for Central America, the Andean Community and Mercosur.

Peacekeeping efforts

From its creation, the European Union has engaged in crisis management and conflict prevention. Conceived as a means to end war in Europe through institutional integration and a voluntary pooling of sovereignty, the EU continues to strive for peace, security, and prosperity across the European continent and beyond.

The EU has sent peacekeeping missions to several of the world’s troubled spots and is involved in anti-pirate patrols off the coast of Somalia. A necessary element in today’s conflict management operations, traditional peacekeeping focuses primarily on monitoring cease-fires.

In August 2008, the EU brokered a ceasefire between Georgia and Russia, deployed EU observers to monitor the situation, and provided humanitarian aid to people displaced by the fighting.

Two years after the conflict, Switzerland acted as a mediator for an agreement between Russia and Georgia on the supervision of customs controls. The agreement also settled differences between Georgia and Russia over Russian membership of the WTO.

Switzerland’s neutrality has been internationally recognized since 1815, and has allowed the country to act as a mediator throughout the world. Today, Switzerland contributes to both international and European peacekeeping missions throughout the world with civil as well as military staff.

Within the EU’s CSDP, Switzerland is involved in two main deployments in Bosnia-Herzegovina and Kosovo.

However, the Swiss Federal Department of Foreign Affairs states that “Switzerland decides independently whether, when, where and to what extent it will participate in a given CSDP mission.”

In a speech upon taking office in November 2009, European Council President Herman Van Rompuy called 2009 "the first year of global governance" due to "the establishment of the G20 in the middle of the financial crisis". He added that "[the] climate conference in Copenhagen is another step towards the global management of our planet. Our mission is one of hope, supported by acts and action".

In a speech to the United Nations in February, EU High Representative Catherine Ashton defended regional integration as a step towards global governance, saying "we have a long-standing commitment to effective multilateralism with a strong UN at the core. Regional organisations are building blocks for global governance, with a dual responsibility. First, a responsibility to enhance security, development and human rights in their own region. And second, to support UN efforts to promote these goals around the world".

French President Nicolas Sarkozy called for international organisations to be reformed to better represent the world's economic and political powers in an October 2010 speech to the International Francophony Organisation. After the changes made in the World Bank and the IMF, he asked "what is stopping us from bringing together, before the General Assembly, the indispensable reform of the United Nations to adapt the organisation to the realities of the 21st Century? We have changed century. Can we think about a change of governance?"

He cited numerous countries and regions that should be entitled to better representation in the UN Security Council, including Africa, India, South America, Germany and Japan. "Is it normal that there is no permanent member of the Security Council from Africa? One billion inhabitants, in thirty years two billion inhabitants, with no permanent representation. It's a scandal," he said.

Reflecting on new global governance models in light of the financial and economic crises, Joseph Deiss, the Swiss president of the UN General Assembly, stressed that that the G20 was instrumental in rapidly dealing with the situation in a concerted and coordinated manner. "But efficiency does not mean legitimacy," he said.

The G20 cannot be standard practice, Deiss continued. "I believe that the rise of the G20 on the international stage gave a healthy wake-up call: we definitely need global governance to address global challenges, but this system has to be efficient and representative. It must combine leadership, legitimacy and expertise," he said.

If the G20 can claim a comparative advantage as regards leadership, legitimacy lies with the United Nations and its General Assembly, noted the Swiss.

At a recent panel discussion, the director of the World Trade Organisation, Pascal Lamy, stated that "the G20, contrary to many public perceptions, is not a government of the world. It's one important, necessary piece of a very complex system that has many other bits, but that the G20 can energise, can trigger."

Belgian MEP and leader of the European Parliament's liberal ALDE group Guy Verhofstadt has argued that regional organisations need to be better represented internationally.

"If we are to adjust global governance accordingly, these regional powerhouses need to be represented in the UN Security Council and at the IMF, the World Bank and the WTO. Only in this way will we build a global system that is prepared to take decisive action on the political, economic, financial, commercial and environmental challenges facing our planet," he said.

Writer and president of the Foundation on Economic Trends Jeremy Rifkin has argued that "the fact that we're going from G20 to G8 and G2, it's the last promise of the nation state as the primary unit. Nation states won't disappear, cities won't disappear, regions won't disappear, but they're going to be nestled in more lateral network governing, which is the continental model".

"So the EU has an enormous opportunity to be the flagship for a new model of governance. At the same time that it can integrate its own continental space and its partnership regions and create a seamless post-carbon energy and communication network, its political governance can be a model for creating similar kinds of arrangements with other unions," he added.

A joint report by the US National Intelligence Council and the EU Institute for Security Studies defines global governance as "the collective management of common problems at the international level". It argues that global governance has reached "a critical juncture" and although its institutions "have racked up many successes many successes since they were developed after the Second World War, the growing number of issues on the international agenda, and their complexity, is outpacing the ability of international organisations and national governments to cope".

Policy fellow at the European Council on Foreign Relations Richard Gowan argues that "President Sarkozy should open up debate on questions including whether the G20 could develop a role in security issues (a popular topic in Washington) and how it relates to the UN system (which makes many developing countries extremely uneasy)." If this is not done, he predicts, the world will see "more ad hoc cooperation between the US and the rising powers - with the EU a marginalised player, and more often than not a big loser".

Piotr Kaczy?ski, research fellow at the Centre for European Policy Studies (CEPS), has argued that "the G20 in its current form over-stretches its decision-making capacity and runs the risk of being divided into different coalitions. The danger of this is that it could eventually lead to a situation where the most important decisions would be negotiated bilaterally between the USA and China".

  • 24 Oct. 1945: Entry into force of the Charter of the United Nations.
  • Oct. 1947: Signature of the General Agreement on Tariffs and Trade (GATT).
  • 15-17 Nov. 1975: First summit of the G6 heads of state and government in Rambouillet, France.
  • 3-14 June 1992: First Earth Summit in Rio de Janeiro.
  • 1 Jan. 1995: Establishment of the World Trade Organisation (WTO).
  • 20-22 June 1997: Russia first joins the G7, forming the G8.
  • 11 Dec. 1997: Adoption of the Kyoto Protocol to reduce greenhouse gas emissions.
  • 15-15 Dec. 1999: First summit of the G20 finance ministers and central bank governors.
  • 14-15 Nov. 2008: First summit of the heads of state and government of the G20 countries for a common response to the global economic and financial crisis ("new" G20).
  • 7-18 Dec. 2009: COP 15 United Nations climate change conference in Copenhagen.
  • 1 Dec. 2010: Launch of the European External Action Service, one year following the entry into force of the Lisbon Treaty.
  • 29 Nov.-10 Dec. 2010: COP 16 United Nations climate change conference in Cancún, Mexico.
  • 3-4 Nov. 2011: G20 summit in Cannes, France.
  • 28 Nov.-9 Dec. 2011: COP 17 United Nations climate change conference in Durban, South Africa.
  • 4-6 June 2012: 'Rio+20' United Nations Conference on Sustainable Development (third 'Earth Summit').

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