Davos and the Future of Global Governance

Undeniably, Davos is a talk shop. That perception, however, is not the whole picture, says Alejandro Reyes.
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January 21, 2015
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The world’s governance institutions and mechanisms are inadequate to address today’s more complex and interconnected global challenges. There is ample evidence of the gridlock.

Consider the Doha Round of global trade negotiations under the World Trade Organization, which has been running for over 13 years with no conclusion in sight. The path to the Paris global climate talks in December this year has been fraught with bitter arguments and disconcerting setbacks, making agreement on a post-Kyoto framework far from certain.

The G20’s decision to reform the international financial architecture by giving greater voice to developing economies, particularly China, has stalled, blocked by the United States and other countries reluctant to cede the dominance they have enjoyed since the end of World War II.

There are three key reasons for the weakness of global governance. First, while market democracy, representative politics combined with capitalism, has been the dominant ideology for organizing national governance in a large part of the world, democracies and markets have become less inclusive and, as a result, less effective. In part, this is due to the institutionalization of money politics. Another cause is control of media by corporations in the West that give preferred access to the wealthy and powerful and take a limited Western-centric perspective on most issues.

This has created dysfunctions in public and private governance, including the reliance on short-term thinking and metrics and fixation on a narrow set of values that typically place the most emphasis on prices and poll results. Trust and confidence in leaders have therefore been eroded, and the political will for reform is lacking. In this age of rapid technological change, mounting inequality has resulted in many people feeling excluded and disenfranchised, leading them to seek change through social media rants, street protests or irrational extremist acts of desperation and violence.

Second, regional integration experiments intended to pool competitiveness and market opportunities have run aground or been slowed because of the resistance to political convergence, whether borne out of nationalism or a sense of deprivation. There is a real possibility that members could exit the European Union. In Southeast Asia, the advent of the ASEAN Economic Community (AEC) at the end of this year has failed to capture people’s imaginations or fire up the business community because the implications of the AEC – either the positive or the negative – are not well known and its implementation on the ground is likely to take time. The limits of regionalization without political unity or convergence, not popular options among voters, are apparent.

On top of these developments, the problems countries face have become more complex and interconnected. But because the world remains organized by nation states pursuing their own typically narrow and shortsighted interests, there is a growing gap between the multifaceted cross-border challenges that confront the world and the ability of countries and existing national, regional and global governance institutions and mechanisms to tackle them effectively. There is now more talk about “de-globalization” and the polarization of the international community.

Roadmap to better governance

Restoring faith in democratic capitalism and in public and private governance systems is therefore a major civilizational challenge, especially after the recent global crisis and growing concern about terrorism, cyber security and global warming. The failures in achieving social inclusion and policy effectiveness and the lack of daring and resolve among leaders, even those with strong electoral mandates, must be remedied. Fundamental changes are needed in how problems are tackled and risks confronted at the community, national, regional and global levels.

The primary goal must be to get citizens more engaged in governance processes and mechanisms, especially with the virtual distance between decision-makers and those affected by their choices reduced by social networks. Having a vote and regular elections is no longer sufficient. Marginalized groups and silent majorities – the disaffected and even the disinterested – have to be brought into the equation, whether in the national policymaking process or at the international negotiating table. Developing economies, including those less touched by globalization, should be better represented and have a bigger say at international forums. They should also be recognized as sources of governance innovation and valid models from which developed economies might learn lessons.

All stakeholders must have a voice. Much has been made about soft power and the need since the end of the Cold War to pursue economic, public and multi-track diplomacy. Yet these are concepts and tools that nation states use and organize, even though they may involve non-state actors. The G20 has evolved into the premier forum for managing the global economy, but government leaders are the only ones at the main table, though business has a pipeline through which to pass on their views.

For truly concerted stakeholder inclusion at the global level, the only international institution that is founded on this principle is the World Economic Forum, which is holding its 45th annual meeting in Davos this week. The Forum is unique because it is not organized by nation state, though countries send delegations to Davos and its other meetings.

While the business sector – both established multinationals and emerging enterprises – is well represented, leaders of international organizations, civil society and other non-governmental protagonists, including academia, the cultural sector and faith communities, are also deeply engaged. And among Forum participants are senior leaders with a wealth of experience in their fields, as well as young people who have demonstrated leadership. The youth, after all, will be implementing and be the ones mainly affected by solutions to secure the future.

Davos: inclusive, not elitist

As the global media cover the Forum’s annual meeting, the focus tends to be on the big names – the heads of state or government, well-known personalities and celebrities, the tycoons and business icons and the occasional head of an international organization. This has inevitably led to the impression that the Forum is an elitist organization and that Davos is an exclusive club. While there is a ‘clubiness’ to Davos, enhanced no doubt by the remote Alpine setting in pricey Switzerland, this has more to do with the conviviality and efforts by the Forum to promote an informal atmosphere.

The press of course focuses on what happens in the Congress Centre and the pronouncements by the great and the good – and sometimes the not-so-good. There is a frenzy whenever a leader of note or notoriety takes the Congress Hall stage. The punditocracy, of course, feeds the media pre-packaged messages that can make or break their reputations – whether to promote the idea that the world is doomed or that the world is actually better than we think or that it is steady-as-she-goes for the year. Many of the same messages are repeated every year (e.g. “It’s all about education”).

What gets little if any attention are the many meetings and sessions (both on the public agenda and private) that move forward global, regional and even national initiatives at Davos and beyond, during the Forum’s events in all the major regions of the world and at its offices in Geneva, New York, Beijing and Tokyo. The Forum platform has catalyzed political reconciliation (for example, between Greece and Turkey, between Palestinians and Israelis, and in post-apartheid South Africa) and global action on such issues as economic crisis, water scarcity, food and energy security, public health, and humanitarian response and relief.

Undeniably, Davos is a talk shop. That perception, however, is not the whole picture. In this time of high anxiety and global stress, Winston Churchill’s “jaw-jaw-is-better-than-war-war” principle has never been more essential. But distinct from the jaw-jaw that goes on in many other forums, the World Economic Forum provides possibly the most inclusive global platform for talking that there is. The 2,500-plus participants in Davos this week will include over 40 heads of state or government, as well as business, government and civil society leaders from more than 140 nations.

In the Forum’s 45th year, the perennial question of whether Davos is still relevant is not apt. The real question is when will the world get fully on board with stakeholder inclusion to move forward on the most pressing global problems and create innovative ways to shape effective and legitimate governance mechanisms that legacy institutions simply cannot achieve. The Forum model and the ideals of Davos are not of the past but were ahead of their time and are now the future of diplomacy and global governance.

The author has previously worked for the World Economic Forum as a consultant. He edited the Forum’s history, which was published in 2009, as well as a forthcoming updated second edition.