Arancha GonzalezArancha Gonzalez (7)

Arancha González, Executive Director of the International Trade Centre (ITC), addressed the MIR class on Thursday 16 October. Ms. González gave an insightful lecture on “Global Governance, International Trade Trends and Geopolitics” that was followed by Q&A from the audience and a lively discussion with the participation of Mr. Guillermo de la Dehesa, Chairman of the International Advisory Board of IE Business School.

Since the Peace of Westphalia Treaties of 1648, the notion of sovereignty and the idea that governance should be placed in the hands of Nations States have shaped most of the History of International Relations. This basic agreement is based on the understanding that if States behave coherently at the national level, they will do the same at the international level.

However, this is not always the case. States can act both coherently and incoherently to resolve international disputes, and in fact States have the monopoly of incoherence when it comes to international affairs. By building bridges through international organizations though, a system of global governance has been established as a way to overcome States’ tendency to behave incoherently.

A Triangle of global governance

According to Ms. González, experience has taught us that there are three principles that define global governance: leadership, legitimacy and efficiency. But how do you safeguard these principles, and who has the right to do so?

At the regional level, the European Union (EU) has been the only supranational body that has answered these questions satisfactorily. Within the EU the three elements (leadership, legitimacy and efficiency) have been constructed together in a way that resembles a supranational system that has leadership, is effective and is somehow legitimate.

In contrast, an effective combination of these principles was not really seen at the global level until the financial crisis started in 2008. At that point, as explained by Ms. Gonzalez, we saw big changes in how global governance issues were addressed, with the emergence of a so-called “triangle of coherence” (see diagram below).

When it comes to global leadership, the G20 has played a crucial role in addressing the crisis collectively. More legitimate and representative than the G8 and the G7, the G20 comprises the world’s largest advanced and emerging economies, representing about two-thirds of the world’s population, 85 per cent of global gross domestic product and over 75 per cent of global trade. At the peak of the financial crisis, the G20 positioned itself at the vertex of the triangle to ensure the stability of the system. Having said that, the G20 still falls short on several dimensions: It has only one African (South Africa) and two South American members (Argentina and Brazil), and –it could be argued- too many European ones.

Global Governance Triangle2

Regarding the principle of legitimacy, the United Nations appears to be more inclusive and legitimate than other international organizations, at least when addressing global issues and crises. Take, for example, the case of the UN Millennium Development Goals (MDGs). In 2000, 100 heads of state and 47 heads of government met in New York for the UN Millennium Summit, the largest meeting of world leaders in history.      

As for the necessary efficiency of the system, specialized international organizations and agencies (World Trade Organization, World Health Organization, International Telecommunication Union, among others) that deal globally with specific policies have a good record managing and regulating complex issues, particularly in recent times.

But for this system to work, one can again learn important lessons from the experience of the European Union. The success of the EU derives from a combination of shared values, a common objective (“an ever closer union among the Peoples of Europe”) and an institutional set up that fits that purpose. Unfortunately, we cannot find this type of virtuous combination at the global level yet, and it is unlikely we will find it in the near future

As Ms. González recalled, what the EU model teaches us is that under some circumstances we should rather go for ‘regional integration’. At the beginning (i.e., Westphalia) it was all about globalizing local problems, but maybe the time has come to proceed the other way around, pushing for localizing global problems.


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