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DEVELOPMENT: Democracy Comes to World Institutions, Slowly

Analysis by John Vandaele*

AMSTERDAM, Oct 27 2008 (IPS) - Power and democracy don't go together well in global governance. The most powerful global institutions are the least democratic, but things are changing. Slowly.

Can a global institution be democratic if countries such as Belgium or the Netherlands with 10 or 16 million inhabitants have more power inside that institution than, say India with 1.1 billion? Can a global institution be democratic if the elected representatives of states are barely able to control what is being said in their name in that institution? These are pivotal questions to determine the legitimacy of international institutions.

My research has shown that the most powerful international institutions tend to have the worst democratic credentials: the power distribution among countries is more unequal, and the transparency, and hence democratic control, is worse.

Powerful institutions not only produce rules (laws), but are also able to force countries to respect those rules. The Security Council, the strongest organ of the United Nations, has the power to take economic and even military sanctions if a country does not respect its rules, its resolutions. So the council wields really hard power, but the rule-making process and the enforcement of those rules is skewed because of the veto power of the five countries that are a permanent member of the council.

The U.S., Russia, Britain, France and China received the power to block any rule they don't like. It means 30 percent of the world population runs the show at the council. And because the U.S. produced 13 of 16 vetoes of the last 15 years, you could say that 5 percent of the world population has a disproportionate influence in this most powerful of UN organs.

The World Trade Organisation (WTO) too is a powerful organisation. First, because it produces a lot of rules. The big world trade agreement of 1994 contained 26,000 pages of rules, mainly about how open or closed countries have to be towards each others' products and services.

Not only do the WTO rules cover a vast territory of subjects, all WTO members have to accept more or less the whole body of WTO rules. What is more, if a WTO member does not respect those rules, and for instance applies higher tariffs than allowed, another country can file a complaint against the perpetrator and a kind of WTO court will judge the matter.

This dispute settlement body settles cases in about two years. The winner of the case receives the right to punish the country that transgressed the rules through a commercial sanction – usually an import tariff – that hurts the perpetrator as much as the victim was hurt. All in all, through this dispute settlement mechanism, the WTO is able to make countries comply with its rules.

This is quite exceptional among international institutions. So, the WTO is powerful, but is it also undemocratic? Well, the power distribution is quite democratic. It's 'one country, one vote' and in the real world that's not such a bad thing. Of course, it's not very democratic that tiny Luxemburg has as much power as China. In principle it would be best if votes are based on population figures – should not all people have the same political weight? But that would mean that China and India carry 40 percent of the votes in all institutions. I believe the world is not yet ready for that.

For the time being, 'one country, one vote' is not so bad because in practice big countries have all kinds of means to make sure that their vote carries more weight than that of smaller countries. With 'one country, one vote', the developing countries have a clear majority in the WTO. Until the last world trade agreement of 1994 though, the Quad – the EU, the U.S., Japan and Canada – were able to dominate negotiations because they are very technical and have very opaque procedures. Since 2003 this is changing.

The World Bank and the International Monetary Fund (IMF) have power over the countries that need their money. Rich countries can lend money on the private market or from their own citizens. But for a long time most developing countries in need of money had no choice but to turn to these Bretton Woods Institutions (BWIs). In return for their loans, IMF and the World Bank enforced their rules: their prescriptions of what constitutes good policy. If countries did not comply, they didn't receive money.

That's quite a stick. Power distribution among countries is unequal. The rich countries, with one-sixth of the world population, had 60 percent of the votes while they don't need the BWIs. The developing countries had to do with barely 40 percent of the vote. Last April, 3 percent of the votes shifted from rich to developing countries.

The situation is different in the international organisations that produce the world's social and ecological rules. Ecological governance consists of a series of Multilateral Environmental Agreements (MEAs).

Social governance happens through the labour conventions of the International Labour Organisation (ILO) and the human rights conventions. Contrary to the WTO where members have to stomach all the rules, countries can decide which MEA, labour or human rights convention they ratify or not. Even if they ratify an agreement, there are no sanctions if they do not comply with it. So the global social and ecological rules tend to be very soft. But the organisations that produce and try to enforce them function quite democratically.

In the conferences of the parties that rule each MEA, each country has one vote. The same is true at the human rights council. At the ILO, each country has four votes: two for the government, one each for the country's trade unions and employers organisations. Indeed, since its inception in 1919, the ILO has worked with social partners. That is one reason why it is rather transparent. With the social partners so involved, it is almost impossible to hide things. Almost all ILO meetings are open to the public. So for elected representatives or for the public, it is easy to know what their representatives in the ILO are saying.

The same is true for the MEAs and the human rights council. As a matter of fact, several officials told me the ILO and the human rights conventions depend on the help of civil society for their implementation.

On the other hand, IMF and the World Bank have always been more secretive: the minutes of their board meetings remain secret for 10 years. The WTO too is quite opaque: it's not so easy to know who says what. Its procedures are informal. The Security Council is different: everybody can know the position of the different members on each of the votes; just check the UN website. But generally the most powerful institutions are the least democratic.

*This is one of a set of four articles on the global institutions by John Vandaele, journalist with the Belgian magazine Mo*, and author of several books on globalisation, most recently 'The Silent Death of Neoliberalism, 2007.