Transcript

Transcript -- Economic Forum - Governing Global Finance: The Role of Civil Society

April 5, 2001

P a n e l i s t s

Thomas Dawson, Director, External Relations Department, IMF (moderator)

Albrecht Schnabel, Peace and Governance Program, United Nations University

Jan Aart Scholte, Centre for the Study of Globalisation and Regionalisation, University of Warwick

Kamal Malhotra, Senior Civil Society Advisor, Bureau for Development Policy, United Nations Development Program New York

Nodari Simonia, Director, Institute of International Relations and World Economy (IMEMO) and Presidium Member, Russian Academy of Sciences, Moscow

Alison Van Rooy, Senior Fellow, North-South Institute, Ottawa

Nancy Birdsall, Director of Economic Programs, Carnegie Endowment for International Peace, Washington, and former Executive Vice President, InterAmerican Development Bank

Discussion

MR. DAWSON: We are particularly delighted to host this Economic Forum, "Governing Global Finance: The Role of Civil Society." It presents some of the findings of the Civil Society and Global Finance Project. Albrecht Schnabel, one of the project coordinators, will elaborate on this point later.

From my point of view, the genesis of this was a conference about a year ago at Warwick University that Jan Aart Scholte hosted, where a number of these panelists and a dozen or so others got together to discuss the subject, and we agreed then we would try to organize a session like this in Washington.

The World Bank was involved with us in that session, and I see some World Bank staff here, too. And I think this is a forum that is of interest and relevance not just to the Fund.

In the space of just a few years, the term civil society has entered the international policy vocabulary at all levels. While there's little doubt that a strong civil society is valuable for democracy, there is considerable debate about organizations that claim to represent civil society. Some people are certain that the burgeoning world of civil society groups is a uniquely promising, positive force within and across borders. Other people question the extent to which these organizations represent and are accountable to real constituencies and are actually entitled to speak for them.

The panel that is here today will focus their presentations on the core questions of the project, namely, to assess the benefits and drawbacks of civil society engagement with global finance to date; and to suggest steps to maximize the benefits and minimize the shortcomings of civil society involvement in global finance.

The Civil Society and Global Finance Project has produced wide-ranging and richly detailed papers, including papers from the perspective of the multilateral institutions, the Fund and the Bank in particular. I should also note that all of the speakers have written their papers and participate in this forum in a personal capacity, and their views do not necessarily represent those of the institutions in which they are employed.

Let me now turn to the panelists. Albrecht Schnabel will first say some general words about the project. Then Jan Aart Scholte will note a few general issues on findings. Kamal Malhotra and Nodari Simonia will in turn make some remarks about the Asian and Russian experiences of civil society engagement of global finance. And, finally, Alison Van Rooy and Nancy Birdsall will look to the future and make some general reflections on recommendations.

We will start now with Albrecht Schnabel, who is program officer in the Peace and Governance Program of the UN University in Tokyo and co-director of the Civil Society and Global Finance Project. Albrecht?

MR. SCHNABEL: Thank you very much.

Recent decades have witnessed an unprecedented globalization of finance. This trend has raised major challenges regarding efficiency, stability, equity, and, of course, democracy. Those problems have attracted considerable and increasing attention in civil society over the past decade in particular, from academics to policymakers, to the people that were demonstrating in Seattle, in Washington, Davos, or slightly in Prague.

So what are we to make of these developments? The Civil Society and Global Finance Project has brought together 20 civil society organizers, officials of multilateral institutions, and academic researchers to investigate the role of civil society in the governance of global finance.

Civil society has gained increasing prominence in the recent history of global governance. There are countless civic associations that have undertaken initiatives to change and shape global laws and institutions. In response, most major international governance agencies have established special mechanisms for interaction with those civil society bodies and actors.

This development is certainly a change, if not a shift, in how and who governs in international relations, and it has also been described as enlarged or complex multilateralism.

Within the project, we certainly agree that civil society involvement in global governance is significant. Of course, analysts differ in their assessments of the forms and extent of civil society influence in global governance, but it is definitely clear that in one way or another civil society matters.

The aim of our project is to identify the various ways in which civil society has become involved and can be involved in global financial governance. It assesses the potential benefits and possible limitations of that involvement and then suggests ways in which civil society can contribute to effective, equitable, and democratic operations in global finance.

Through the project, and also through the presentations today, we hope to contribute to building more effective and meaningful collaboration between civil society actors and official bodies in the management of global finance. And we attempt to accomplish that in three ways: first, by describing the kinds of civil society activities that have occurred so far in respect of global finance; second, by assessing the fruits, the unfulfilled potentials, and/or the negative repercussions of civil society engagement with global finance to date; and, thirdly, by describing what steps could help to maximize the benefits and minimize the shortcomings of civil society inputs to the governance of global finance.

Now, as Tom has already mentioned, the project is a collaborative effort by the Centre for the Study of Globalisation and Regionalisation at Warwick University and the Peace and Governance Program of the United Nations University.

Who are the people involved in this project? Our contributors come from civil society and multilateral institutions in Africa, East and South Asia, the Caribbean, Eastern and Western Europe, Latin America, and North America. They come from academic, business, labor, NGO, and official circles. In terms of their personal assessments of civil society involvement in the governance of global finance, the group includes enthusiasts and skeptics, but also agnostics.

The civic groups involved include the Bretton Woods Committee, the Brookings Institution, the Carnegie Endowment for International Peace, the Chinese Academy of Social Sciences, Friends of the Earth USA, Focus on the Global South, the International Confederation of Free Trade Unions, the Latin American Association of Advocacy Organizations, the Russian Academy of Sciences, and the Uganda Debt Network. The multilateral agencies involved include the IMF, the UN Secretariat, the UNDP, and the World Bank.

The project was developed in the summer and autumn of 1999. Then, as Tom mentioned, the project team held an initial meeting at the University of Warwick in March 2000, just about a year ago. And there we presented and critiqued the draft versions of our papers, and those will be published in book form by the end of the year or early next year by United Nations University Press.

The study itself is divided into five main parts.

The first set of contributions assesses general issues concerning civil society activities in respect of the governance of global finance.

The second set of contributions examines experiences from different regions--Latin America, Africa, Asia, and Eastern Europe.

The third set of chapters presents perspectives from multilateral institutions--from the World Bank, the IMF, and the UN.

The discussions then shift to perspectives from civil society actors and present views from trade unions, business associations, the women's movement, and environmental groups.

The last two contributors explore general questions about the future involvement of civil society in the governance of global finance.

We are very excited, and we are very fortunate to have been given the opportunity to be here today and to share our work with some of the communities who could directly benefit from our findings.

Thank you.

MR. DAWSON: Next, Jan Aart Scholte is an associate at the Centre for the Study of Globalisation and Regionalisation at the University of Warwick in the United Kingdom and is co-director of the Civil Society and Global Finance Project.

MR. SCHOLTE: Yes, good afternoon, and thank you for coming, and thank you, Mr. Dawson, for the invitation and welcome to the IMF today and, indeed, for the participation in the project as a whole.

My survey builds on the introductory remarks just made, and the overall message is basically twofold. One is that civil society is an arena of increasing importance in global financial governance, and the second general point is that we should neither romanticize nor demonize that development. The activity is neither inherently good nor inherently bad, and our challenge is really to maximize the benefits and minimize the possible downsides.

As Albrecht already mentioned, the financial sector has shown some of the most far-reaching globalization in recent history. Certain money forms now circulate on a transworld basis. Foreign exchange trading, electronic worldwide bank transfers, transborder lending, transborder securities trading, global financial derivatives business, global insurance business--all of this has expanded in astounding ways to annual volumes of trillions of dollars.

Now, nearly everyone will recognize that a vast global pool of savings and credits has immense potential to bring economic and social good. Equally, however, few will argue that current arrangements for the governance of global finance are adequate in order fully to realize those rich potentials. There are, as Albrecht already mentioned, severe potential problems in respect of efficiency, stability, human security, social justice, and democracy.

Now, our study is in no way trying to offer comprehensive solutions to what are obviously very complex problems. Our particular question is to ask what civil society can contribute to these problems and to good governance of global finance.

To start with a broad definition, which isn't, in fact, one that's necessarily shared across this panel: civil society can be considered a political space where voluntary associations seek deliberately to shape the rules that govern one or other aspects of social life.

Civil society involves all manner of groups--local and global, formal and informal, status quo and radical. The main sectors of civil society that have engaged in questions of global finance and its governance have been business groups, business forums, development NGOs, environmental NGOs, trade unions, policy research institutes, and faith-based groups. So lots of different sectors of civil society are involved, and in different ways.

In terms of the issues that civil society associations have raised in respect of the globalization of finance and its governance, one can think of perhaps five.

First, some of the most high-profile activity has taken place in recent years concerning transborder debt problems of poor countries, and the Jubilee 2000 campaign has been the most outstanding example of that.

The second area, and one from time to time in the public spotlight, has been civil society campaigns on projects of multilateral development banks for dams, pipelines, roads, and so on.

In addition, some civil society mobilization and campaigning has looked at questions of structural adjustment lending, primarily by the IMF and the World Bank. And then there has been some--and I think I would emphasize "some"--attention by civil society groups to commercial global finance and the private global financial markets, and there mainly in respect of proposals for a Tobin tax on foreign exchange transactions and so-called ethical investment.

And then, finally, civil society associations have entered the debate concerning the overall global financial architecture. I don't think we want to exaggerate the scale of these activities, but it's clear that civil society actors have become important participants in the politics of global financial governance. And our question then really is: Should we celebrate or deplore this development? And, in fact, the answer that I already gave out at the outset was to say that we're not actually interested in taking either of those lines, either to celebrate or to denigrate but, rather, to identify positive and negative potentials and then to look at various situations in different regions, through different civil society sectors, and so on, to see how the potential pluses and the potential minuses have worked out in practice to date, and, on the basis of that analysis, then begin to look forward and say where could we go next.

In terms of positive contributions I will set out a framework of possibilities rather than conclusions. In terms of positive contributions, we could see civil society engagement yielding at least seven. One would be public education, where civil society organizations can raise citizens' awareness and understanding of global finance and its governance.

Next in public education, questions of participation: civil society associations can provide a venue for various stakeholders to make inputs to policy processes, and that can be especially important when civil society opens opportunities for affected circles, like the poor and women, who are otherwise excluded from discussions.

The third positive potential concerns debate. Effective governance rests on vigorous and uninhibited discussion of diverse policy options and diverse views that inform those options. Civil society can promote that diversity and spark critical creative policy debate--again, a very positive potential.

On questions of transparency, civil society associations can give a major push to both financial markets and the governance institutions that regulate them to be more open about their operations, and that greater openness can enhance both efficiency and democracy.

Accountability is another positive potential, where civil society associations can push authorities in the area of global financial governance to take public responsibility for their actions.

Welfare enhancement, particularly by NGOs, can be important in those situations where there is economic and social fallout from financial difficulties. And I think through all of those contributions, there's kind of an umbrella value that civil society can bring to global financial governance, and that's to increase its legitimacy. By these various ways--debate, participation, increased transparency, and so on--civil society can enhance the legitimacy of global financial governance. People can feel that they own the process more and that it works in their interest.

So civil society has considerable positive potential to improve the governance of global finance, and in those respects, we want to encourage it. But there are some potential problems that shouldn't be obscured--areas where civil society might actually detract from effective governance of global finance. A few points might be mentioned in that regard.

One is incivility, or uncivil society. Civil society organizations could pursue special privileges rather than public interests while waving a civil society banner; and they could employ harmful means to pursue dubious goals.

There is a potential problem of low quality of input if civil society campaigns on global financial issues are poorly conceived and/or ineptly executed. One can argue exactly what constitutes an able campaign, but there still are possible problems there.

Low quality can also come on the governance side, of course. The governance institutions of global finance can be ill-equipped to have the resources or the procedures or, indeed, the attitudes to take the maximum benefit from civil society inputs. I think the IMF and other global financial institutions have certainly made major advances on these matters in recent years. But shortfalls can still remain.

Another problem can be undemocratic practice by civil society organizations if in their own operations they are insufficiently participatory, insufficiently consultative, transparent, and accountable. And there's a down side of possible unrepresentativeness of the people involved in civil society--in other words, that the involvement in civil society mobilization on global financial issues can be biased, for example, toward the North, to wealthier circles, to men, whites, urban dwellers, and so on.

If we draw these various positive and negative potentials together, can we say anything about the legitimacy of civil society activity vis-a-vis global finance? That's a question that's burning for many people. Do civil society associations have a right to exert an authoritative influence in the politics of global financial governance? " It depends," is the answer, isn't it? It depends on your criteria and it depends on the situation and the particular civil society activity that you're looking at.

To my mind, civil society inputs to global financial governance can be legitimate on one or more of three grounds. The first is one of performance legitimacy, namely, the right of civil society involvement and the influence derived from civil society organizations' information, knowledge, competence, expertise, cost-effectiveness and so on.

But in addition to that performance legitimacy, there are questions about democratic legitimacy--in other words, that civil society involvement in global financial governance can be justified as legitimate on democratic grounds in two ways: one, that civil society organizations may, as I already mentioned, advance the participatory and publicly accountable character of the governance; and also in terms of the democratic criteria of the civil society organizations themselves.

And then there are questions of moral legitimacy, I suppose, as a further ground, in terms of noble objectives and playing the role of a global conscience.

Anyway, there are various reasons that I think one can be enthusiastic about civil society engagement of global finance. There are also some reasons to be cautious, and that's why we need studies. That's why we undertook this project, to identify the situations and the practices where the positive potentials come out the most and the possible pitfalls are minimized.

Having set the scene in that very general way, I'll hand on to people who've done much more careful studies in particular situations. Thanks.

MR. DAWSON: Thank you, Jan Aart.

Kamal Maholtra is senior civil society advisor for the Bureau of Development Policy at the United Nations Development Program. His paper is written on the basis of his experience between 1995 and 1999 as co-director of Focus on the Global South in Bangkok. I must say your timing for that job was impeccable.

MR. MALHOTRA: Thank you.

The overall analysis of this particular paper is situated in the context of current patterns and processes of economic and financial globalization and their now fractured interface with the East Asian miracle. And so that's the context in which the paper was written.

It has five subparts, the first an analysis of how current patterns of globalization contributed to the East Asian crisis.

The second is the history, chronology, causes, and broader systemic implications of the Asian financial crisis, differentiating between Southeast Asia--using the example of Thailand, which is where I was based then--and Northeast Asia, using the very different example of the Republic of Korea.

The third subpart is on civil society responses to the Asian financial crisis, which includes the types of civil society organizations that became involved as well as their transnational linkages and alliances.

A fourth part is an assessment of the role of civil society organizations in the Asian crisis, and a fifth part is reflections on prospects for civil society influence in reform of the global financial architecture.

Given the limited time here and the emphasis of this panel, I'm going to skip the first two parts and focus just on the other parts, which is really more the civil society side of it rather than the analysis of the crisis.

A key argument that runs through the paper it is that civil society organizations were active during the Asian crisis from the local to the global level, both individually and in strategic alliance with other organizations, both South-South as well as South-North. Six key outcomes of the civil society organization (CSO) role are highlighted, ranging from their catalytic role in making links between economic and political democratization issues, to the promotion of alternative development principles and strategies to the mainstream economic orthodoxy.

There is a whole summary of general principles and key proposals advocated by some civil society organizations in the paper, but I won't be going into that today.

A key reflection is that civil society organization mobilization around this crisis has already given significant impetus to subsequent civil society activism around broader globalization issues, as witnessed in Seattle, Washington D.C., Prague, and most recently in Porto Alegre in Brazil.

With that as a very quick summary of the thrust of that paper, I want to just focus on the civil society responses, starting with the local level. There are many examples, and I don't have time to go into all of them, but I will pick out one which I think was particularly interesting in the Thai context. This was the creation of a local currency project in Thailand, where a group of Thai civil society groups and poor communities decided that, given the impact of the crisis, which was linked very closely to the major devaluation of the baht, they should try and delink from the national currency for at least the core needs that they could meet in their own communities, and come up with a local currency system.

There are examples of this around the world, but I just cite this very briefly as one very local response to the crisis in Thailand that continues to this day, and is currently under study by the Central Bank of Thailand as to whether this local currency is a legitimate currency. But there is a whole set of dynamics around this.

At the national level, again, in Thailand, there is the Assembly of the Poor, which is quite an interesting coalition of over 100 different organizations, mainly directly community-based organizations that in many ways have been at the receiving end of aspects of the Thai growth model such as environmental impact and the issue of land.

In the context of the crisis, these groups were very active in not just talking about the social cost of the crisis but also about the broader systemic implications, and making the link between economic and political democratization issues in the Thai context and linking that to the whole constitutional debate in 1997 that led to the adoption of a new constitution in November of 1997.

In South Korea, of course, there were very active roles for trade unions at the national level. My first trip to South Korea after the crisis is one I won't forget because one of the first placards I saw--and I guess sitting here I should maybe not say this, but I will-said the initials "IMF" stood for "I Am Fired."

The labor movement was, of course, particularly concerned about labor market flexibility, but also about the whole set of issues concerning democratization of the chaebols, the large Korean conglomerates.

In the case of Indonesia, there were a range of groups and I will pick out one, WALHI, which was integrally engaged on the issue of the environment and also the food security linkages with the crisis.

And in the Philippines, where there has been a long history of activism on the part of civil society on issues of debt, the crisis was simply a further impetus for the same agenda that many of these groups had been advocating for over a decade, led by groups like the Freedom from Debt Coalition and Action for Economic Reforms.

But, of course, what is also important in the Philippine case is that some of the key activists actually became members of the Cabinet formed at that time and that is now out of government. So in the case of the Philippines, I think it was interesting that some of the civil society activists were in a position to actually direct policy, including in economic and financial areas at that time.

At the regional level, of course, there was a range of other groups from various perspectives. There's Third World Network Malaysia; Focus on the Global South, which has been mentioned; but also human rights groups like Forum-Asia based in Bangkok; and DAWN, Development Alternatives with Women in a New Era, which was particularly concerned about gender implications.

So there was a host of media and other groups. But what I want to focus on very quickly is the fact that there were South-South alliances, South-East alliances, and North-South alliances.

As the crisis spread--particularly to Russia, Brazil, and other countries--there was a lot of alliance work between groups in Brazil and Peru and the Asian groups. In the North, of course, there were alliances as well with the trade unions, but also with other groups, including Oxfam International.

There were academic activist alliances that gained in numbers, and, of course, regional media groups like IPS, the Inter Press Service, The Nation in Bangkok, The Hindu in India--all were very active in carrying stories on the crisis.

I think the alliances facilitated were of quite a different nature from previous situations. The broadest possible range of groups seemed to come together because of the systemic nature of the issues that were raised. So you had alliances between trade unions, academics, human rights networks, development NGOs, people's movements, and gender networks, which are often very, very difficult and remain difficult, but seem to be more possible in this context than before.

You had the Koreans looking south for help from developing countries in Southeast Asia in this context, rather than looking to the OECD. And I think this was quite interesting in itself.

You had a whole range of subsequent actions, in Seattle and elsewhere, which I've mentioned, but which I think were catalyzed to some extent by many of the issues and groups around the Asian crisis.

It's hard to conclusively ascertain what the precise influence of all this activity was. There are many simultaneous variables impacting in terms of policy change, so it's very hard to establish causality with any certainty. But, clearly, CSO impact was felt and continues to be felt.

I want to focus on six key outcomes that I believe have been important for civil society organizations themselves. One is a shift from what I would regard as a politics-centered approach to a political economy perspective. The political democratization issues--which, given the history of dictatorships in Indonesia and Thailand over the previous 20-year period, were the main focus--shifted to a political economy perspective, a more holistic and therefore coherent critique of the economic model in the countries and the interface with globalization.

In addition to that there was an advance of democratic struggles at the country level--Indonesia being the prime example, but I don't think it was limited to Indonesia. Note the consolidation of democracy and new progressive constitution in Thailand, and the progress in that respect even in Malaysia.

Education campaigns on financial and broader economic literacy issues in the entire region have expanded manyfold, I think, as a result of the crisis, and expanded not just in the countries directly affected but in countries like Vietnam, Cambodia, and the Lao People's Democratic Republic. And I believe that this is an important public good that the crisis has actually catalyzed.

The number of links between academics and activists--what I regard as academic activists and activist thinkers--in a sense multiplied in this context. And I think this itself is going to have major implications for the future effectiveness of economic literacy work, because you do need this linkage between academics and activists in future campaigns.

Other outcomes include CSO involvement in monitoring social investment funds and, last but not least, the proposals to promote alternative national development strategies, which I don't have time to go into, but which comprise a whole series of principles and proposals.

The last section, which I'd like to end on, is the issue of prospects. The first point I want to make here is that civil society engagement on issues of global finance did not begin with the Asian crisis, nor is it going to end with any resolution of this crisis. However, I do believe the crisis gave a major boost to the nascent civil society movement and particularly the nascent North-South alliance in civil society on global economic and financial governance issues. I also believe that it has served, as I said, as a catalyst to subsequent civil society mobilizations of the kind that have taken place with increasing frequency in the last two years, and with a much higher profile with the official institutions and with the media than earlier mobilizations in the 1990s and 1980s.

I think the movement is increasingly infused with new young blood and is more genuinely North-South and, therefore, a much more genuine North-South alliance. It will be hard to stop, I believe, unless significant changes are made in the current global economic and financial governance system. And what some people regard as the so-called plumbing changes that have taken place in the global financial architecture are unlikely to stem the tide.

Finally, while it may still be too early to conclude that Seattle was a watershed for civil society influence on economic globalization issues, I believe it clearly reinvigorated many social movements. Nevertheless, the ability of civil society to tangibly influence the future financial architecture will depend not only on bringing people onto the streets, but increasingly and equally on economic literacy and the ability of civil society to offer substantive alternative proposals to the existing economic orthodoxy. And I believe that there is an increasing number of groups, especially in the South, which are very much moving into this territory and this area.

I also believe that their ability to influence will also depend substantially in the future on building strategic alliances with governments or with parts of governments. We've seen this increase particularly in the trade area, but I believe that it's also true in the global finance area. And this is particularly happening between some Southern civil society organizations and Southern governments. And so I think all of this is what will determine the actual influence in the future.

I'll stop there, and I hope I've been on time. Thanks.

MR. DAWSON: We're doing very well on time. Our next speaker, Nodari Simonia, is director of the Institute of International Relations and World Economy and a member of the Presidium of the Russian Academy of Sciences in Moscow.

MR. SIMONIA: Thank you, Mr. Chairman. I think that there is no substantial ground for international financial institutions to believe that civil society in Russia created any difficulties for itself, simply because there is no mature civil society in Russia. For a thousand years there was no democracy in Russia, and some small elements of civil society that emerged by the end of the 19th century were simply stifled by the October Revolution, and since then only during Gorbachev's perestroika did we see a new process of creation of some kind of civil society elements--some new cooperative societies, cultural associations, and independent newspapers. I'm not going to too much talk about this.

But since 1992, after Yeltsin became president of independent Russia, all these creative processes have been declining. Hundreds of so-called NGOs exist, and, if you take some affiliations in different cities and towns in Russia, maybe thousands of them. But they are not true NGOs because practically all of them are directly or indirectly dependent financially on the Russian government, or on some privileges given to them by the government, or on mafia groups, or on financial resources are given by Western organizations. As such, they are considered in Russia as devices of foreign influence inside Russia--organizations that were not born on Russian soil.

So there is no possibility of using these NGOs to influence in any way the activity of international financial organizations.

In preparing my paper, I tried to find any organization that deals with this topic, and I could not find one. So that means nobody cares about the IMF or the World Bank. They simply did not know what these organizations are for. Although there is sometimes discussion in newspapers about problems related to the IMF and the World Bank, it concentrates on only one aspect: whether there is a mission coming to Moscow. Then the newspapers will carry a discussion: Is the mission coming with money, or not? And if with money, how much? That's it.

So our society is practically illiterate on financial problems. But this is a very good reason for the many crimes in Russian society, too, especially in the bureaucracy. Yeltsin was a disaster for my country. I said from the very beginning, when he was not yet president, that if Yeltsin was elected, this populist man could bring disaster to Russia and our economy would be ruined.

Well, it happened: Yeltsin created not just a capitalist economy but a bureaucratic capitalist economy, and not just bureaucratic capitalism, like in South Korea or Taiwan or some other Asian countries, but the worst version-the Indonesian version of bureaucratic capitalism-the most parasitic and most disastrous, which was practically monopolizing the whole economy and the most profitable industries in my country. And because of this they exhausted all our national wealth. They stole all this wealth and put this money in their pockets and transferred it into offshore banks.

Even now they are sending money out of the country. Putin, our new president, said in a speech in our parliament last year that at least $20 billion was illegally transferred from the country.

More important, in my opinion, is not that this money was transferred from the country, but that this monopolistic Russian type of bureaucratic capitalism prevented the creation of middle class in Russia. This is a real disaster because when you have no middle class, you have no civil society. You have no democracy.

Of course, you cannot create a middle class overnight, but they prevented the whole process of creation.

We had from the very beginning only 900,000 small and medium-sized enterprises. After the crisis, this total fell, and still now it has not yet reached precrisis level. So you can see it's miserable for Russia, such a big country; it is simply miserable. Of course, in Poland there are 2.3 million small businesses, and 60 percent of the workforce is engaged in these enterprises in Poland. But in Russia, they are producing only 3 percent of our GDP. It's miserable. And they are not independent producers because they are dominated by mafia, by municipal bureaucratic capitalism, or by bureaucracy. So this is a disaster.

And now my final point is: What was the role of international financial organizations in this? I suppose that the most qualified people are working at the IMF and the World Bank, and they know the situation. Irrespective of this, they were apparently giving money to Yeltsin's regime. That means that they helped to keep Yeltsin in power, to keep this corrupted regime. This was a political decision, and I suppose that it was not the decision of the leadership of these organizations but was taken somewhere else, such as the G-7.

This was the very sad reality. And now a new president has a huge task to fight against bureaucratic capitalism and a parasitic type of capital entrepreneurship. So Putin's aim today is to transform businessmen and to deprive them of the chance to interfere into politics.

Second, he is fighting with governors-the second level of bureaucratic capitalism, because all these governors and presidents of autonomous republics are bureaucratic capitalists, too.

Finally, Putin is trying to put a package of antibureaucratic measures through the Duma, which will allow small and medium business to survive and to breathe. I have no time to go into details of this topic, but it's very important, because if he succeeds in this, it will be a real revolution in Russia and not more capitalism development. And to just emphasize how difficult this task is, I can tell you that Putin started talking about this kind of package of laws in the middle of last year with his prime minister and with some ministers who were engaged in this business. He reminded them three times that it must be done, and they did not obey him--his own government is not obeying him. And in his last speech, he criticized the government, not just bureaucrats but his own government.

So you can see how difficult it is after ten years of Yeltsin's regime, how difficult it is to transform Russia.

Thank you.

MR. DAWSON: Thank you very much.

Our fifth speaker is Alison Van Rooy, who was a senior fellow at the North-South Institute in Ottawa, Canada, when she wrote her contribution for the project. Alison?

MS. VAN ROOY: Thanks very much. You can imagine that we had quite a conversation when there were some 18 people sitting around a table talking about the future of civil society organizations. Both Nancy and I had the infinitely more enjoyable task, I think, of guessing what would happen next, looking forward. And, of course, one of the reasons why that's a more fun part of the project to have is that your burden of proof is a little bit different if you're talking about things that haven't yet happened.

I want to put on the table some seven issues that I think are currently facing civil society organizations involved in international financial issues and where that may take us in the future, and leave you with three possible scenarios for what might happen next.

I know it's unkind to start with seven points in a list. Three or four, I'm told, is the editorial maximum, but our editors have been very generous with our enthusiasms. So let me put some of these seven on the table.

The first issue that I think is affecting all of us in the room--as watchers, as activists, as practitioners in the field--has to do with the implications of the now infamous Washington consensus and its various revisions and modifications.

I think the modified consensus that's now in place accepts a stronger role for the state, and talks about strengthening state institutions, supervision of privatization, bolstering judicial systems, and targeting social spending. And a lot of this revisionary thinking involves local governments; very importantly, NGOs; and other kinds of agencies in encouraging a more participatory kind of governance.

The revision of the Washington consensus has carved a place for other voices. Civil society organizations have taken a more central role in the ambitions of the global lending organizations--in particular, being seen now as part of the solution. Of course, not for everybody and not all of the time, but I think that's one factor that comes into play.

A second issue has to do with questions about UN reform and UN crisis. I think the perpetual project of UN reform also has an influence on how and why civil society organizations are engaging with the international financial institutions. Many global organizations identify very strongly with the normative ethos around the UN, particularly contrasting the high-minded views in the UNDP's Human Development Report with the various sins of the Bretton Woods institutions.

However, the crisis in the UN system is an ongoing concern, and lack of faith in its effectiveness, and its subsequent underfunding, endangers a core ally of many members of the civil movements.

On the other hand, the UN itself may be diverting civil society organizations away from other kinds of issues and other kinds of campaigns. All of the endless conferences may at the end of the day have not very much impact on economic and social justice but absorb a great deal of activist energy. So one of the other issues that are on the table is: Where are people going to align their energies if you feel that your ally is part of the losing side of the battle?

A third issue affecting mobilization today around finance has to do with the international financial market itself rather than the IFIs. How capital moves through the global trade and financial system, and how it's regulated, is a topic of keen concern. Jan Aart mentioned the Tobin tax, which I think is the most publicly visible series of conversations. But there are other ones: activities and activism around foreign direct investment, hedge funds, capital controls, and campaigns around the rules and regulations of the export credit agencies.

I come from Canada and there's a big campaign underway certainly to change what the Canadians are doing. And we've seen a small but growing level of activism around ethical and environmentally responsible investment and shareholder activism. All of this focus on the private side of the international financial system I think is a third issue.

A fourth has to do with the nature of partnerships and alliances within various social movements that are active internationally on finance. It was highlighted in Seattle, but it's an ongoing conversation, particularly the relationship between Northern and Southern organizations active individually, the whole question around partnerships there--who decides the focus of efforts, who sets strategy, who actually is able to come, who pays, full participation and intention. And I think we'll always see these kinds of conflicts and compromises. It's the real world of real politics. And I don't think it can be any other way, given disparities in national cultures but also organizational culture, language, experience, funding, and relationships with grass-roots organizations. But I think one of the issues we'll see particularly as international activism continues to mount is that Southern participation is growing, and growing very steadily.

Kamal gave you some very good examples, I think, around the Asian crisis of where you're seeing phenomenal movements and very interesting movements and alliances taking form.

A fifth issue has to do with growing interest in international trade events, and one of the reasons I think that Seattle was very important was less the theater in the street, which I think was very important for a lot of reasons, but a highlight was that actually 40,000 people would show up at a trade meeting of all things, that the focus on international trade has risen on the international agenda, and that this kind of economic literacy is growing in terms of trade at a phenomenal rate.

One of the practical implications, actually, is it has meant that labor organizations and labor unions that hadn't been deeply involved--certainly in Northern countries--in international activism of this kind, are increasingly prominent.

Indeed, there's a question about whether or not the growing activism and enthusiasm around global trade issues may divert attention away from international finance; that the short form and implications for those in the room who work for the Fund is: you may be let off the hook, as everybody turns their attention to the WTO.

A sixth issue concerns something that a number of people have mentioned so far: the backlash against civil society organizations and activism. Who are these people, anyway, and who do they represent? And there's a very vivid conversation that's affecting politics today.

As organizations are being called to account for their activities and the origin of their infamous voice, they themselves are doing an awful lot of work to interrogate their own legitimacy, to develop voluntary codes of conduct, to become nationally accredited, and to come up with rules so that their own processes are more transparent. They're responding to these kinds of criticisms, which come both from inside and from outside.

But this conversation around legitimacy, of course, has got a very real impact for relationships with the IFIs in particular. Who should be invited to what meeting? Who should pay for whom to come to what meeting or to what process? Who should be given access to what kinds of information? How often? What's the nature of those relationships? What are the criteria for being considered to have the right to participate?

I won't go through a whole list of reasons, but will offer some ways of working around and pulling apart this conversation about legitimacy. We tend to focus very much on "Who do you represent?"--the notion that we somehow replace a governmental system with clear electoral process. We focus on representativity as a criterion for legitimacy, but there's a whole series of other criteria, one of which, for example, is "I don't represent anybody." I work for a nonprofit research institute, but I still get invited to say things. Well, it's on a different kind of a basis that I have some small amount of legitimacy to be able to sit in front of you today.

But as important as I think these conversations about CSO legitimacy are, I think we should have a very large conversation about legitimacy of involvement in international finance and also ask questions about the nature and the governance of the IFIs themselves, of particular members who are member governments, and of major corporations that make decisions about flows of investment. So I think the legitimacy conversations shouldn't be shoved under the rug. If anything, to the converse, we should open it up and see if we can apply those questions to all of the players at the table.

A final issue has to do with the future of CSOs' attention to the IFIs, returning to this point that I think energy is going to be moved over onto the trade side, where movements get their energy for taking forward new issues, particularly when, in a lot of cases, pay or prestige are not very large parts of the compensation package. What brings people to the street? What brings volunteers to spend their energy there?

I think conference fatigue around the UN system has taken a terrible toll. However, demonstrations, particularly in Seattle, and coming up in Quebec in another three weeks for those who are watching that, have been incredible energy boosters for organizations that feel that strategically this is an area where investment of this very scarce resource, strategic energy--a very small and underfunded resource-is where organizations may go.

In my last two minutes, I'll give you an idea of three futures that I see ahead of us. One is a change of target, one is a change of discourse, and a third is a change of institutional mechanism--particularly, again, on finance in a civil society world.

The most likely, I think, is one that I've already hinted to you before: a change of target, that a lot of the attention certainly to the Bretton Woods institutions, which have been kind of bread and butter issues in this town for a long time, may fade away, will move from Washington to Geneva, as economic literacy becomes trade literacy and people strategically make decisions that international trade may be where their best investment of energy may go.

I think for hard-liners within the IFIs this change of targeting will bring a big sigh of relief, but certainly for reformers within those organizations, this will be a real blow, losing external allies at a time when internal institutional change has certainly been possible.

Another very likely scenario would continue to see a move toward a change of vocabulary. It would show up, for example, in rhetorical presentations and policy papers, and in speeches and in organizational charts. Everybody knows that civil society liaison officers have been added to the rosters of most of the organizations we're talking about. I think all of those will continue, but not necessarily without much change of policy direction or behavior.

I do think that changes in language can actually bring changes in practice behind it, but I think this is very much the slow-cooker method. This involves a big investment over a long time.

A third and least probable but most optimistic scenario talks about a change of the institutional mechanisms, the governance of global finance itself, and I end on a more optimistic note so that we can all have a bit of a "rah, rah" at the end. This would see the institutionalization of some kind of civil society oversight mechanism around intergovernmental financial activities. And by oversight, of course, I mean a very small O, some way in which monitoring and watching and reporting back could be pulled into place. And there's a number of examples on the table, including, for example, the UN People's Assembly, which I don't think has very much hope. But I think more promising are some of the proposals that have nothing to do with civil society itself, but looking at the relationship between the UN system and its Bretton Woods cousins that have certainly drifted off over time to have different kinds of governance rules.

If we saw a time where the General Assembly actually had some more control over the work of the international financial institutions, we might have a different kind of conversation with civil society itself.

I think having more UN oversight of finance would actually mean civil society organizations themselves would have a stronger voice, but it would move our conversation about the legitimacy of civil society away from their own idiosyncrasies and strategies and movements and pull it back into the conversation about what our states are doing to appropriately represent us internationally.

That greater oversight indeed might help us to a more equitably governed financial globe, but I wouldn't, however, hold my breath.

MR. DAWSON: Thank you, Alison.

Our final speaker is Nancy Birdsall, director of the Economics Programs at the Carnegie Endowment for International Peace, former Executive Vice President of the InterAmerican Development Bank, and also, I believe, the Deputy Director of Research at the World Bank, or some such title, in a previous incarnation.

Nancy?

MS. BIRDSALL: Thank you very much, Tom.

As Tom's introduction suggests, I still haven't figured out whether I'm an insider or an outsider. And so let me start, if I may, by asking if those in the room who represent civil society would just put up your hands. I'm dying of curiosity. What is the nature of our audience? So it's about 50-50. That's very interesting.

Well, I have, as Alison said, the task today of considering the future. Let me start by saying that I consider impressive the accomplishments of the civil society movement, particularly with respect to the World Bank and the IMF--the emphasis in the last decade more on transparency and on specific issues such as that these institutions do better on environment, that they pay more attention to the effects of adjustment on the poor--issues that you're all familiar with, I'm sure.

But I guess that the idea of the conference that I attended was to go to the subject: What else? What next? And have those efforts that have been so focused on the international institutions had much impact in general on global financial markets?

So although I think the real big challenge is one that Alison mentioned in her presentation, that is, how to move toward finding ways to make private market activities more effective and, thus, more fair--with more stability, there might be more social justice, for example--that's not what I'm going to talk about today. I figured since we're in the hallowed halls of the IMF I would get dressed up in my IMF clothes, sort of, and focus a little bit more on a second issue which I thought about in doing the paper that I did after this conference, and that is the problem of representation in the official international institutions. And in talking about it, I'll be focusing on the ones that I know somewhat better than others, including the IMF, the World Bank, and the regional banks. But I hope that all of you can keep in mind that the issue of representation goes beyond those official institutions to the Basle Committee, the G-20, the G-8 when it talks about international monetary affairs, the Bank for International Settlements, and the Financial Stability Forum.

There are a lot of official institutions that are working on issues of global finance. Most of them are heavily focused, justifiably, on stability. If they were more representative of the world's people, including the people in many emerging markets and poor countries, who are affected in their lives by the decisions made in these institutions, they might also at least consider the implications of their efforts for stability for other dimensions such as fairness, effectiveness, and so on.

So that's what I'll talk about--this representation problem. And what I'll do is first try to describe to you what I mean by the representation problem, and then focus on the issue and the question of what might be an agenda for civil society organizations that are concerned or that ought to be concerned with the representation problem.

Well, I think of the representation problem--or what some people have called the democratic deficit--as taking place at two levels, which are obvious. In a way you'll know them as soon as I say them, if you don't already. One is the lack of accountability in these official institutions or the lack of representation of relatively poor countries, and of the poor within those countries at the official level. After all, as Kamal was suggesting in the case of the Asian crisis, they are the cause of decisions made in the IMF, the World Bank, and so on.

The second level of the democratic deficit is the lack of representation within the countries of people in the governments that sit or who are represented in some form in the international institutions. So it's kind of a double whammy, you could say, for Nodari's middle class or emerging-nation middle class in Russia and for the poor around the world. They tend to be rather badly represented in their own societies, and then their governments are badly represented in the fora where decisions are made at the global level that affect their lives very directly in many cases.

I thought I'd mention two peculiar, ironic symptoms of this representation problem that have to do with civil society. The first one, which I sort of fell upon in preparing this paper--I think it probably came up in the meetings, too--is that in the South--and by the South, I'm using that term very generally to mean transitional economies and developing countries--in the South, often lacking other means to exert pressure, civil society organizations often use international institutions like the World Bank and the IMF--but especially the World Bank, I'd say--as a vehicle to create pressure on their own governments.

In many countries, even those that are democracies, it's more difficult and less effective for civil society groups to lobby their own governments than it is to create pressure on the international institutions. Think of issues like the environmental impact of a World Bank-financed project. A local civil society organization is likely to be on the Internet creating pressure for the World Bank to desist. That sometimes works better than creating pressure on its own government.

Think of the issues like labor standards or allocation of losses among taxpayers and depositors and bank shareholders when there's a commercial bank collapse, or the effects on the poor of budget cuts when a country is doing an IMF program. I don't know if I'm convincing you with this, but this is one, I believe rather interesting, symptom of the democratic deficit within countries: that, ironically, these international institutions are a good vehicle for creating pressure.

Then there are the cases where heads of civil society organizations from Africa and from South Asia are testifying in a U.S. congressional hearing about the behavior of the World Bank. That's the way they're getting their message across.

A second ironic symptom is that the civil society groups in the North, by putting pressure on the World Bank and the IMF, are helping to set an agenda that is sometimes a peculiarly Northern agenda. That doesn't mean it's a bad agenda, that's just the reality. When civil society was so effective in pressing for work on the environment in the 1980s and early 1990s in the World Bank, that was an agenda of the North. I don't think it was as high on the agenda of many civil society groups or of citizens of developing countries.

So the local trade-offs between jobs, growth, and electricity versus environmental impact that a hydroelectric dam represents may be different--it may be different if you're there in that country and if you're poor than it is if you're in a rich country concerned especially with the broader issues of environment and hydroelectric dams. So Joseph Nye, a political scientist, has characterized the pressure of the NGOs and their effectiveness in these institutions as part of what he calls the soft power of the United States; in particular, that the U.S. is not only powerful in the IMF and the World Bank because it has a lot of shares of capital, it's also powerful because its government has all this pressure about an agenda that is fundamentally a Northern agenda.

What can and should the civil society organizations do about this two-headed monster of a representation problem? Now, I'm going to give you two thoughts, and they're blessed by my relative naivete about really what civil society organizations are doing. I was interested to hear Kamal reminding me that there are a lot of these institutions in the Philippines and Thailand and so on, and Nodari reminding me that it's very weak in Russia.

Anyway, two thoughts from a rather superficial understanding of what's going on: the first is that civil society groups in the North, perhaps many of you in the room, who are fundamentally concerned with development and with social justice, could, in my view, more explicitly focus on building civil society in the South as an institution. I'm not talking about affiliates of the World Wildlife Fund or branches of CARE or branches of whatever. I'm talking about the institutionalization of the concept of civil society.

I'm very impressed or influenced by my experience in Latin America where governments remain, after all these years, extremely suspicious of local civil society. There is considerable tension. There is no framework within which most civil society organizations can operate. There is no such thing as a fiscal brake that helps generate philanthropy, which helps generate independent thinking and independent activism.

So what's true in Latin America, in a different form is true in Russia. I think it's true in much of Asia as well.

So the whole concept of voluntary codes of conduct, of self-regulation, of financial responsibility of civil society organizations, their transparency that has been mentioned, and their accountability to their members, the whole idea of a United Way--why don't we have civil society groups that care about development trying to create something like a United Way in more developing countries? That would provide a channel for individuals to give contributions. It creates a framework in which there's accreditation of civil society groups.

I think this is also the case for policy and research. You know, I work in Massachusetts Avenue now: Brookings Institution, Carnegie, Institute for International Economics. I mean, the building I work in is full of nonprofit think tanks. And when I go even to sophisticated countries with a few think tanks, like Chile or Argentina, it's just so different. They struggle. They rely so heavily on government to do their work.

Where are we going to get representation within countries without more of this kind of activity? And why can't you who are experienced in how to build civil society organizations focus on that?

I'm particularly concerned about this because of recent decisions in the World Bank and the IMF, in the context of the Poverty Reduction Strategy program and the HIPC and so on, to encourage participation and to encourage civil society groups to be active in developing and building economic reform processes in developing countries. It worries me. I think it's well meaning, but it's potentially extremely intrusive. I mean, do we really want the World Bank and the IMF judging whether the economic reform program of a government was done and prepared in a democratic way? That seems more intrusive to me than their suggesting or imposing, if that's the case, specific economic conditionality.

I know this is a complicated issue. I just raise it in the context of civil society groups that could play a very active role in "What is participation?" and "How do you build it institutionally in poor countries?"

The second point I wanted to make is about representation of borrower governments in institutions like the World Bank, the IMF, and the regional banks. Is this a hopeless idea? Is that why there's been so little effort to think about it by civil society? Or do civil society groups think maybe it's not such a great idea? Because why would you want to have better representation of these governments that often represent the elite and fail to represent the poor?

Let me make a few remarks about this quickly in my last minute. One is: It's not hopeless. It's a long-term vision that one has to develop, but it's not hopeless. We have now a lot of concern about how the Managing Director of the IMF was chosen. We have the pressure to not only have Michael Moore at the WTO but to have him followed by a Thai, who represents developing countries better. We have the formation of the G-20, which was a U.S. effort to bring big emerging markets into the discussion of financial issues. We have models like the Andean Development Bank and the Nordic Investment Bank, which are borrower-owned financial institutions.

I think it's important to find ways--if it's not more capital shares and higher quotas for the borrowers in these institutions--to increase their sense that they have a stake in setting the agenda. I am, again, influenced by my experience in the InterAmerican Development Bank. It's a completely different kind of conversation that goes on there because the borrowers have 50 percent of the votes and 50 percent--more than 50 percent--of the voice in terms of the number of chairs.

Is it a good idea? I think that's a more complicated issue. Certainly pushing for more representation of borrower governments has to be complemented by pushing for better representation of people within their own countries. But that's what I already talked about.

In the end, I think we have to recognize that the international financial institutions are creatures of governments. They're shareholder clubs. And there are diminishing returns to additional pressure on specific issues on management. What is needed is pressure on the shareholders who fundamentally run these institutions, who make the fundamental decisions about who's represented. Are the institutions accountable to the people whose lives they most affect?

Let me just end with that general point, that if we really care about social justice and about fairness, we can't avoid thinking more about these problems of representation.

Thank you, Tom.

MR. DAWSON: Thank you, Nancy. I think that's been an interesting sort of progression through a discussion of the origins of the project, as well as a little bit of the philosophy on civil society, through some regional as well as country views of what's happened, and then on to some somewhat more institutionally oriented, possibly proposal-implying suggestions by the last couple of speakers.

So I'd like to turn it over to questions now. Hopefully the questioners can keep it short and hopefully the answerers can keep it short so we can have as many as possible.

QUESTIONER: I'm with the Institute for Global Energy Affairs. In the evolution of globalization, world economic progress has been evident, but so has the gap between the rich and the poor. All the previous periods of globalization had very strong and identifiable constituencies. Where are the constituencies to ameliorate, never mind solve, the issue of poverty in this century?

MR. DAWSON: If I might perhaps rephrase that question slightly: Is this process of globalization beyond the ability of governments to control? I was wondering whether any of the panelists might want to address that, which is something of an implication of the question.

MS. BIRDSALL: Well, it's interesting--I find this irony in the following point: Because of the downside of globalization, well-meaning, enlightened champions of social justice are looking for ways to manage the process effectively. Now, what have we got to manage the process? In financial terms, the most benign institutions out there are, ironically, the World Bank, the IMF, and the regional development banks. It doesn't mean that they shouldn't be reformed, that they shouldn't do things differently. But I don't think it's a coincidence that they have been the vehicles--or the recipients--of a lot of the pressure from civil society, because they're full of people with the same objectives who are generally trying to find ways to do the same thing.

So I think the general point is that the world does need places to manage the process, just as governments manage economies. And we don't have the ideal institutions, but we have less than ideal institutions that we have to make work as well as possible.

MR. DAWSON: I would just add that I think one of the reasons people come at us is we are ultimately, if not as quickly as people wish, accountable because there's a process by which we will ultimately have to respond.

QUESTIONER: I'm with Catholic Relief Services. I partly want to add my voice to challenge that assertion about the accountability of institutions, much less the fact that they are supposed to be benign.

I do believe that we have focused on them because they have a lot more power. If there are more benign institutions, I do believe it probably falls in the UN system, but many of us don't spend a lot of time focusing on them because they don't have the power, as Alison referred to. We spend way too much time in these conferences with very little to show at the end, perhaps.

I also feel that many of the people in the streets in Seattle, Prague, and Washington would very much disagree with that assertion. In fact, they think that the institutions are so far from being benign that they want them shut down.

But I'm also equally convinced that the whole initiative needs at least as much effort here in the United States, probably more than the other Northern countries, but in the North as well, to build our own civil societies' awareness and ability to weigh in with our governments on behalf of justice in the world. So it really is a two-pronged approach that needs to be done.

MS. VAN ROOY: Lots of interesting questions. I'll just take my two seconds to respond about the frustrations of campaigns to change rhetoric. I think it's very visible in documentation, and I'm sure there's lots of Ph.D. theses out there that look at the evolution of particular words and phrases appearing in documents and the huge frustration if dollars aren't seen to follow.

I think some of the other stories in the book talk about actually some real changes, when improved participation in particular regions and particular countries actually did change Bank planning and processes, but this is still very much the slow-cooker method--incredibly frustrating--and for people who are thinking strategically where to invest their resources, they may say "Well, maybe this is 20 years with the Bank so far; maybe we need to change our attention."

And what none of us spoke about but what I think is very important, even prior to Seattle, was the perceived enormous success of the intensive campaign around the Multilateral Agreement on Investments (MAI). Whether it did or didn't sink that agreement, people were incredibly vitalized by saying here is where we made a big difference very quickly. And I think that began to turn a lot of the people's attention to the trade side, and the WTO hasn't been around long enough for us to get discouraged about it.

MR. SCHOLTE: On the five areas of concern for global finance that I mentioned, I think on the debt problems: no, the business forums haven't figured; on the particular project of multidevelopment banks: no. But I think when you look at structural adjustment lending: yes, especially at national level, business forums at national level. Trade, industrial groups, chambers of commerce, and so on have often been involved in various ways. But that tends to be at national level rather than the international chamber of commerce or world economic forum or something of that kind.

On the market things, the ethical initiative: yes, but by individual firms rather than business forums.

And then on the last point, on the global financial architecture debates: I think the Institute of International Finance, Japan's Center for International Finance, and others have been contributing to that sort of area.

On the point about focusing on the Bretton Woods institutions, I think there are lots of good strategic, tactical reasons for that. My worry is that people then start assuming that the governance of global finance is the Bretton Woods institutions and that people sort of slip into that kind of thinking when so much of the governance of global finance is in other super-state institutions; in the G-7 and intergovernmental fora; through national treasuries and finance ministers of the G-7 in particular; through private, market-based institutions--the International Accounting Standards Committee and the Derivatives Policy Group--and all kinds of groups and institutions that we never talk about.

So my worry is a little bit that I understand why, but I think it can be a mistake.

MS. BIRDSALL: Just a few quick things. One, I used the term benign. I'm not sure exactly in what way I used it, but I mean it relative to all those other ones that Jan Aart just mentioned, at least in terms of some accountability and transparency.

Second, yes, the IFIs have power, but just as Jan Aart said, it's both the markets that are extremely powerful and, more to the point, I think management of the IFIs is fundamentally implementing decisions made by the member governments. So civil society groups in the U.S. have been very wise to put pressure on the Hill to get change in the World Bank and the IMF, to the extent that those in the U.S. on the Hill can push for change.

The problem is how to do that in the interest not just of what the Congress wants or what is in a Northern agenda, but in the interest of people around the world who are also affected by the decisions.

Finally, I just wanted to make the point that public opinion matters because I didn't want the UN agencies to be written off so quickly. Consider--not so much in global finance--but consider the tremendous effect in the last six months of the publicity about the AIDS problem, or the problem of access to affordable drugs in Africa to deal with AIDS, on the behavior of pharmaceutical firms.

I believe that the UN Conference on Women, for example, in Beijing, set a standard. It may take some years, but it sort of sets a norm or an international standard that can make a difference. Somehow that kind of public opinion, that force, hasn't yet been brought into the more complicated, technical, complex, mysterious world of international finance, but I see that as a challenge for civil society groups, on money laundering and tax havens and corruption and that sort of thing.

MR. DAWSON: Thank you. If I could just add, I certainly would never have used the word benign, because I know I would have gotten in trouble the second it came out. But on the accountability issue, I would refer to Nancy's reference--I think it was Joe Nye's comment about soft power. The work of Jubilee 2000 and the U.S. in particular last year was a classic example--I'm not sure the members of Congress thought it was particularly soft. But it was certainly an example of political pressure being brought to bear that led to the institution in that particular case being able to do something it wanted to do, but I view that as an aspect of accountability. It may not be an approach that some may wish who would like to have a change in representation on the board, but it nonetheless is, I think, a clear example of what I would view as accountability.

And I would also stress the point of markets. I know why you focus on Bretton Woods institutions, the WTO, and so on: because they're institutions that you can find and identify and find the address, circle the building. But the reality is that the markets, whether it's trade or financial markets, are what are dominating, and the ability of governments and international institutions at this point to regulate that process is really rather limited. And I think what I hear from some of the panelists here and I think from many of the questioners is a desire to find some way for those who believe the institutions can be reformed to have the institutions play something of a bigger role.

QUESTIONER: I'm from the Agency for International Development. I'm curious. Mention was made on the panel about the Washington consensus and a revised Washington consensus, and I wonder how really real that is. Is that just to kind of soften the impact of the Washington consensus? Or are we beginning to enter a potential dialogue on the value of that consensus, and should there be a post-consensus period? And a related question to that: to what extent are Southern NGOs lacking in the necessary economic literacy to really engage in that kind of dialogue, and should we be investing more in trying to create that kind of capacity?

MR. DAWSON: I think Nancy wants to respond and I think a couple others do, but when I first heard, the Washington consensus was basically developed in the late 1980s or very early 1990s perhaps. I was at the Fund and the U.S. Treasury at the time, and then I left and I was up at Merrill Lynch. And I started reading about the Washington consensus, and it was written initially in something of a slightly conspiratorial fashion. And I felt really rather offended because I said "Hey, wait a minute, if there was a consensus, I should have been part of it and I should have known about it."

So it is, as I think your question implies, a somewhat amorphous concept, though absolutely real. I mean, there are common ways of thinking. And, therefore, when you talk about revising and a new consensus, it gets even harder to put your handle on. But I think Nancy is going to direct you to the answer to the question. Right?

MS. BIRDSALL: No, no, no. I'm just going to advertise a book. It's called "Washington Contentious: Economic Policies for Social Justice in Latin America." You can get it at the Carnegie Endowment website, www.ceip.org. Or send me an e-mail. I'm a co-author with Augusto de la Torre. It's a great book, and it's about social justice. It's economic policies--ten economic policies for social justice, plus an additional one, which is not a domestic policy but is what the international community should do.

MR. DAWSON: Kamal?

MR. MALHOTRA: Well, there haven't been any questions directly addressed to me, but I will try and address one part of the last gentleman's question about Southern NGOs and whether they are lacking in economic literacy.

I want to make a broader point that relates to this whole issue of Southern and Northern NGOs and who should be strengthening whom. And I think that the issue is not a clear-cut one because I think that there are an increasing number of quite sophisticated Southern NGOs on broader policy issues, and that in many ways there's a lot that Northern groups can learn from them.

Likewise, of course, there's a fair bit that Southern groups can learn from some Northern groups, but it's definitely not a one-way sort of relationship that I think is necessary. And I think that what is possible in the Southern context with Southern governments is only possible for Southern NGOs, and I would want to stress the importance of that kind of alliance building between Southern civil society groups and some Southern governments, which has been happening, as I mentioned, particularly in the trade area but also in the global finance area. And that's an ongoing process, and I think that's something to be encouraged.

QUESTIONER: I'm from Johns Hopkins University, and I had a question more precisely directed to Nancy Birdsall about this paradox of representation and the dilemma it represents, let's say, to the senior management of international financial institutions. I would have better said the somehow schizophrenic position that this management is in, because on the one side there are more pressures for increasing transparency and voices, and at the same time, they are forbidden by the mandate of the institutions and the mandate that the owners put on them to look into the democratic credentials of their own members. So can that dilemma or paradox can be resolved without addressing the question of democracies in member countries of these institutions?

MS. BIRDSALL: Right, I think you put it correctly. So I hope that civil society groups will worry about democracy in developing countries because it's very difficult for the international financial institutions to do that directly. Indeed, as I suggested, it even kind of worries me if they start thinking that they're trying to do it indirectly. It may be more complicated and dangerous. So I think that you put the point very well.

What's interesting about the transparency issue right now, as many of you probably know, is that it's the borrowers who are much more reluctant and who are resisting the disclosure of documents. So that's an example where the management is kind of caught between a rock and a hard place, and it's fortunate that we have independent civil society organizations around the world who hopefully will put pressure on their governments. You see, that's one of my points. It's better to put pressure on Brazil, Mexico, Turkey, Russia, and so on in this instance than to put pressure on the management of the institutions or even on European and U.S. governments, which are in favor of this disclosure, anyway.

QUESTIONER: I am with the Union Institute. My question really relates to two points that Kamal and Alison alluded to: that essentially the genie is out of the bottle, it's not going back in. We're going to have an increased civil society role, and while we've been focusing on representation and accountability, which I think are important, where civil society has its power is information. And what Kamal alluded to was the role of the media, and I think there is a significant issue that cuts across all the papers about what role the media play, the degree to which they are independent and can provide an active, impartial voice, knowing that that's never fully possible, but enabling those decisions to be part of the public discourse.

It seems to me that my counterparts over in the U.S. State Department have always said: "Before you announce it to the press, come to us first, we'd really like the first chance to hear about this." Well, I think that's the same issue that we're facing at the global level. When do groups ultimately pull that informational card and say "Wait a minute, what you're saying and what's actually transpiring at the local level do not jibe, and we need to come to grips with that."?

So I wondered: What does this mean for responsible media? Because right now, what's happening now is they like the controversies, they like to talk about the Lilliputian strategy of people in the street fighting against these faceless bureaucrats and institutions. But is that responsible journalism? And what do we need to be doing in terms of educating the media as we go forward in building an architecture for global governance?

MS. VAN ROOY: We gave a similar presentation at the United Nations a couple of days ago, and one of the questions that came up was on the representativity of civil society organizations. One of my responses, although there were responses all across the panel, was that we don't actually worry very much, for example, about the representativity of a particular reporter who comes to an event and asks questions. We take it for granted that it's important that official statements are compared to what happens on the ground and then that's a crucial role for the media.

It becomes difficult for us somehow when somebody else who's not a reporter for a national newspaper comes and does the same sort of thing. But what do you do when you have bad media? What's the response to bad media? It's actually more media--that you amplify the number of voices and contesting arguments that are available in the public so people make up their own minds.

Similarly, I think it's crucial that for civil society organizations--of whom, of course, there are many, many more than there are ever going to be reporters. One of the big problems in Canada is we've had one person in the whole country in the national media who covers development stories. A country of 30 million, and you have one reporter. It's a crucial role to amplify the kinds of voices that we have available.

MR. MALHOTRA: I didn't have time to go into the role of the media. As you said, I alluded to it. But I think there's a major challenge for economic literacy of the media, and particularly in the Northern media, about problems of development in the South. And that's not only because a lot of Northern media are not contextually aware of the South but yet they write about it, but also because Northern media have much greater access to those in power, and they get much more coverage.

So I think for a variety of reasons this is a huge challenge, and there is also a separate issue of the independence of the Northern media and of media in general, not just Northern media. And I think that what gets coverage on CNN, for example, is often not the kind of thing that many people in the South would like to see in terms of development coverage. And it's a function of many factors, but I just wanted to highlight that.

MR. DAWSON: If I could just add to something Alison said: one thing that has absolutely astonished me in the 21 months I've been back at the Fund is the small number of North reporters who seriously cover the institutions. I have to be careful in saying this since we have one of the few full-time wire reporters who cover the institution sitting right here in the front. So I will exempt the wire services from this. But, actually, if you look at The Wall Street Journal, The Washington Post, The New York Times, you do not have sustained coverage of the institutions, of either institution, by particular reporters. The Financial Times is a major exception in that regard. The Guardian of London is also a significant exception, and The Economist as a magazine. But it is really quite surprising how few reporters on a sustained basis are covering it. They will come in when the crisis exists and may cover it, and some of them do quite a good job of covering it. But, contextually, and including from the view of the South, there is not that sort of coverage. I tend to think of it as in particular an American problem, but it is not just that. But I do think it's ironic, given the globalization of civil society, how the media in some sense of the word are getting more and more parochial.

I think we have time for a couple more questions.

QUESTIONER: I'm from the Institute of International Economic Law, and my question is addressed to you, Ms. Birdsall, because you spoke about representativeness and that you would like to create civil society in what you called Southern countries, if I understood you correctly, giving opportunities that these NGOs would be created in a representative way.

My question then is: Isn't that too much imposing of Northern values toward Southern countries? Or how would you do it in a neutral way? Because I very much agree with your statement that you can only have democracy if you have a civil society. But if you impose it, perhaps they have another kind of model of democracy that they have still to find.

And my second question is: If you create that and then you have these NGOs, in your thinking are these NGOs active on the national or on the international level?

And then a third question to all of you: Has anyone an idea if the offering of possibilities of institutionalized contacts between an international organization and NGOs has actually as a consequence created NGOs or even interest in NGOs? And that obviously is specifically in Southern countries.

Thank you.

MS. BIRDSALL: I'm not sure I got all of your questions, but let me just try to answer one.

You're right. I mean, it's not really a question of the North or Northern money trying to create civil society in the South. In fact, that's part of what's happened up to now, and some of that has worked out pretty well. But I guess my point is more that there is civil society in the South--thousands and thousands of community organizations and local groups-and most are starved for resources, particularly those that are engaged in advocacy of any kind. The ones that provide services often rely on volunteer labor and on in-kind contributions and so on. But I'm talking about the ones that are pressure groups that lobby for certain issues.

Here I think the challenge is to find ways to help them become truly local in their financing, which would then be a market test in a sense of their being local. So I'm not talking about just transferring money. I'm talking about institution building--so it's not helping NGOs do things that they already know how to do in developing countries. It's working with them on things they don't know how to do--at least the advocacy ones, at least in Latin America--which is raise money locally and acquire a certain kind of local financial independence.

MR. SIMONIA: Just three examples: the first is how the European Bank for Reconstruction and Development was doing until the crisis. Now it's a little bit different. It chose two or three so-called, in Russian, banks-or as I described them, bureaucratic capitalist banks--and gave them money to distribute between small and medium-sized businesses, but they never distributed this. It was given to their affiliated institutions and banks. So practically this was not a help to our small businesses.

Only after the crisis, when these three banks collapsed and another four banks cheated the EBRD and paid them by fake check, then some change came in their activity.

A second example about civil society NGOs: we had during Yeltsin's time a very nice, very good, healthy organization called Soldiers' Mothers. This was created spontaneously without any financial help from outside. They got it themselves. They were helped by different kinds of people, ordinary people. But what happened during Yeltsin's time? First, foreigners came. I am not mentioning who, and they started--I know this because one of the activists from the very beginning is working in my institute, and she told me the whole story and complained about this--and they started giving, not to the whole organization but they chose some women, and gave them money. And they guided them.

And so the other mothers were complaining and went to government and asked also to receive money, and since then there has been a quarrel that has practically ruined this NGO, which was created during Gorbachev's time.

MR. SCHOLTE: I just want to reiterate--I think it's an important point--the question about the cultural diversity and cultural representativity of civil society. There is a problem indeed that you can get creation of Western-led, Western-oriented, Western-funded groups that get called civil society and become the easy organizations, the interlocutors for official agencies and international agencies. And sometimes, indeed, agencies can go into a country and say "Oh, there's no civil society" there. Well, it may be because there's a particular definition of civil society being brought into the country.

MR. DAWSON: Kamal? And then we'll go on to the last question.

MR. MALHOTRA: Just to add to that, I think there are perhaps too many examples of international organizations creating or trying to create civil society in the South. And I think there are all kinds of problems, some of which have been alluded to, but one that I would stress is questions of legitimacy.

Many of these organizations are not regarded as legitimate in their own societies, and I think that that's a fundamental, big question mark in terms of any work that they can do effectively.

MR. DAWSON: Last question.

QUESTIONER: I'm from the World Bank. Personally, I think that this type of joint project is excellent, and my specific question is to see whether in the discussions up to now within the project itself there was the issue of actually describing what the problem is. Because it seems to me that when we talk about literacy--we who consider that there is some transfer from us to others that is supposed to happen--there are lots of things that we don't know because they're happening for the first time. And once we go beyond the distinction between the global market and what a small role the financial institutions actually play, I think that personally I don't see that we do understand enough how these work and what the impact is on people. And the fact that a lot of the reaction that we see through civil society is just that the people simply feel that they lose control.

What is your view about how much we understand about the impact of these global things on people and the reaction to that in terms of losing control? And if we don't know, what types of research or studies do you think we could do?

MR. DAWSON: That sounds like a Jan Aart question.

MR. SCHOLTE: Thanks for that, Tom. I mean, that's huge, isn't it?

I think we have a general problem, and this project is one little, tiny corner of a huge problem, and I think you've touched on it. What indeed is globalization in financial markets? But more generally, what sort of social transformation does it involve, to what extent, and in what ways? And how indeed do we then govern that new situation in ways that maximize the ends that we want of human security, of social justice, of democracy and so on?

I think we're just in very early days on even understanding what globalization is about. So far it's more handy as a slogan to rally around than as an analytical concept. And governance has clearly changed. It's away from a state-centric, statist, state-restricted way of regulation of the world, and we now have all kinds of multilayered, different layers of governance, and it's all diffuse and very decentralized. So part of the lack of control is because we don't understand how the governance actually works.

So it's a very complicated problem. I think our particular take here was to say there are major governance deficits, and we need all the help we can get. And there's plenty of help available from civil society circles, and that should be exploited for maximum profit.

MR. DAWSON: I think that should wrap it up. I appreciate the audience's patience and the panelists', and we will make sure you all know where to buy the book when it finally comes out. It might be even available on a reciprocal basis at Carnegie--who knows? Thank you very much.