All Politics Is Global: Explaining International Regulatory Regimes

Preface

Preface AT THE START OF this project, I participated in two events that offered contrasting narratives about the regulation of the global economy. This book has been, in part, an attempt to reconcile these opposing parables. In April 2002, I attended a Salzburg Seminar on global economic institutions . Most of the participants spoke bitterly about economic globalization and its supporting global governance structures. The resentment was genuinely multicultural; heated rhetoric came from a Filipino activist, a Brazilian academic , a Burundian minister, a Russian economist, an American journalist, an Ecuadorian expatriate, and a South African union organizer.1 The common denominator to their complaints was that they saw global governance as a battle between capitalists and democrats—with the capitalists winning. On one side were the transnational corporations capable of buying and selling governments and international economic institutions. On the other side were nongovernmental organizations and local social movements that represented the suffering classes, the people most likely to lose out in a world of untrammeled economic globalization. These activists’ vision of change was an arena for global civil society to engage their corporate antagonists. From their perspective, acting through home governments was pointless, since these governments were bought and paid for by global capital. Walden Bello, director of Focus on the Global South, argued that the protestors’ agenda “can only succeed if it takes place within an alternative system of global economic governance.”2 For these activists the sources of political power were clear; multinational corporations make the rules now, and with a lot of discipline and a little luck, global civil society would be the rule-makers of the future. Governments are either obsolete or a creature of business, and therefore left out of the equation. The UN Global Compact is the epitome of this sort of global governance.3 Thirteen months earlier, I witnessed an entirely different answer to the question of who writes the rules of the global economy. I was sitting in a conference 1 Support for the globalization phenomenon was equally multicultural, coming from a Vietnamese trade official, a Romanian academic, a Taiwanese economist, Italian and Spanish bureaucrats , a Ugandan lecturer, American policy analysts, and a Latvian nonprofit director. 2 Walden Bello, “The Global Conjuncture: Characteristics and Challenges.” Keynote speech at the National Convention against Globalization, New Delhi, India, March 21, 2001. Accessed at http://www.focusweb.org/publications/2001/The%20Global%20Conjuncture.htm, July 1, 2002. 3 Information about the Global Compact can be accessed at its Web site, http://www.unglobalcompact .org. xii • Preface room in the U.S. Treasury Department, a hundred yards from the White House. An interagency team of United States government officials was engaged in rather active consultations with a hemispheric ally. Six months earlier, the United States, European Union, and their allies in the Financial Action Task Force on Money Laundering had threatened multilateral sanctions against this country unless it enacted and enforced laws to stop money laundering in its financial sector. This step was taken because the United States and other great powers were concerned that criminals were exploiting the integration of capital markets to hide their illicit wealth. These governments wanted to reduce the negative externalities of globalization by ratcheting up global regulatory standards designed to combat money laundering. The targeted country responded by passing six pieces of legislation. At the extraordinary session I attended, the Americans and their counterparts were examining the new laws line by line. When a U.S. official pointed out a loophole or a vague passage in the text, the other country’s representatives noted it and promised a legislative amendment to fix the problem. Within six months of the meeting, the ally had complied with all U.S. requests, and the threat of sanctions was removed. In this setting, the answer to the question of who regulates the global economy was equally clear and yet completely different from the first story. States make the rules. In particular, the great powers cajole and coerce those who disagree with them into accepting the same rulebook. Corporations and transnational activist networks do not appear in this story. Indeed, as chapter 5 will demonstrate, they were marginal actors throughout this policy initiative. International governmental organizations played an important but not independent role; they were the agents of states. The disconnect between these two narratives raises some important questions . Does globalization require a transfer of authority from the national to the global level of governance? When will global governance structures effectively...