How to help reform multilateral institutions: an eight-step program for more effective collective action.

Maxwell, Simon

Dissension over Iraq in 2003 challenged the legitimacy and effectiveness of the UN. It also highlighted long-standing problems that previous UN institutional reform efforts had failed to resolve. Kofi Annan has been a reforming secretary-general, but even he acknowledged in September 2003 that the core UN institutions needed "radical reform." (1) The High-Level Panel on Threats, Challenges and Change was the response: (2) wide-ranging, certainly; radical, up to a point; and with at least some of its core recommendations regarding peacebuilding and protection likely implemented at the UN summit in September 2005.

However, other recommendations of the High-Level Panel have proved to be problematical. These include key ideas about the composition of the Security Council and about the reform of other UN bodies. This is not surprising. The key question on UN reform has always been not "why" or "what" but "how." (3)

Indeed, there have been many previous reports and recommendations, by outside bodies and by the secretary-general. (4) The high principles and values are well established. They include peace, justice, freedom, equity, sustainability, and solidarity. Earlier reports have also made many specific proposals--for example, about membership of the Security Council, the need for stronger institutions to manage the world economy, and voting rights for developing countries on the boards of the World Bank and the International Monetary Fund (IMF).

Actual reform has often been slow, however, especially where changes to the core institutions are required. For example, Kofi Annan made wide-ranging recommendations when he first came to office, in a document called "Renewing the UN: A Programme for Reform." (5) Some of the ideas, described in the document as Track 1 changes, could be pursued internally and included setting up cabinet-style decisionmaking and creating a UN Development Group of Funds and Programs. Others, described as Track 2, dealt with governance arrangements, such as relations with the UN specialized agencies, and made far less progress. (6)

Why should this be? Research on collective action offers not only an explanation of why countries might or might not collaborate in particular reforms, but also a way of thinking about actions and processes that might provide a greater incentive for collaboration on UN reform. In fact, an eight-step program can be proposed.

We need to start with the theory. (7) At the heart of this is the idea that successful cooperation happens only when certain conditions are met. Researchers in different disciplines have discussed the conditions and have studied cases as varied as villages in India, business associations in New York, and communities of guppy fish. There is also a tradition of analysis using game theory. Sometimes, in these various pieces of research, the actors are all equal--villagers, for example, cooperating in the management of shared forest or grazing land. More often, and more usefully, because of the parallels in the real world, there are disparities in power: there may be one rich landowner, acting as a local superpower, or a shark in the tank with the guppy fish.

Some of the research conclusions are unsurprising. Trust turns out to be central--the medium within which exchange takes place, the key ingredient of social capital, and the means by which transaction costs are kept as low as possible. For example, among diamond traders in New York, social networks are so dense that legal contracts are simply unnecessary. There is an important corollary, however: the group has to be small enough that knowledge can be shared. Trust is harder to achieve in large groups and is more likely to require formal institutions for dispute settlement.

More generally, the likelihood of cooperation increases when the prevailing culture provides strong reinforcement: noncooperators are simply frozen out. Why, for example, do people not steal the tea bags provided in the office kitchen? The answer is that the shame of being caught acts as a deterrent. Only the boss has the power to escape punitive social sanction. Coleman calls this "network closure." (8)

Cooperation is also very much a matter of self-interest. Cooperation is more likely to ensue when all the actors (including the richest and most powerful) gain. It is more likely, too, when defection entails significant costs. Villagers can successfully manage mountain meadows, irrigation systems, or communal forests--but only when everyone in the village values the resource. (9)

In addition, certain benefits accrue when cooperation is broad and long-lasting, as well as deep. It is easier to sustain community organizations if they perform more than one function: for example, managing grazing lands or providing social insurance and access to credit. In such cases, the transaction costs are minimized. By the same token, incentives to cooperate are greater if cooperation is likely to be long-lasting. One of the insights of game theory is that cooperation builds over time, resulting in fewer defections.

Thus, it can be concluded that cooperation requires a combination of an enabling social environment and a rational exercise of ruthless self-interest: a mutually reinforcing mix of culture and calculus. But the great problem with multilateral cooperation is that that specific mix is often missing. Recent failures of multilateral cooperation are instructive in this respect.

Take, for example, the unwillingness of the United States to sign the Kyoto agreement on global warming. At one level, this is an example of a country free riding on an agreement that others reached, since the impact of global warming on the United States will be less than had there been no such agreement. At the same time, there are no sanctions on the United States for its refusal to participate in the common endeavor. It is not enough simply to say that the United States is addicted to cheap fuel; the incentives to break the addiction appear to be insufficient.

Another example is the unexpected breakdown of multilateral trade talks in Cancun on 14 September 2003. The sharks in that particular fish pond, notably the United States and the European Union (EU), were not punished for their failure to help conclude the talks. In fact, the opposite has been the case: the United States, specifically, has signed a number of bilateral trade agreements that have provided it with the benefit of greater access to other countries' markets, without it having to bear the cost of opening up its own agricultural market to the rest of the world. Developing countries have been left to take on the United States through the World Trade Organization (WTO) dispute settlement procedure, as Brazil has done successfully in the case of cotton. But this legal process is expensive and slow.

These examples can easily be multiplied. The United States has refused to endorse the International Criminal Court (ICC). Similarly, it is yet to ratify the Convention on the Rights of the Child. Many of these examples are cases in which the United States, the big fish in the pond, has failed to cooperate fully, perhaps because it does not see sufficient gains from these specific instances of cooperation. (10) The United States is, however, not the only culprit.

An easy answer to failures of collective action is to use the language of selective incentives and jump straight to sanctions. One country won't play? Punish it. That is a tempting solution, but an incomplete one--the last resort offered as the first. It is reminiscent of the spirit of confrontation that characterized much of the debate about the New International Economic Order (NIEO) in the 1970s.

A better way to avoid failures of collective action is to start with the easy things and to build cooperation brick by brick, drawing on the lessons of collective action theory. This can be accomplished in eight steps.

First, keep the core group small. This may be challenging, given the fuss that is made about the exclusive nature of the Security Council and the regular complaints about who is in and out of the Green Room at WTO ministerials. Most observers argue for greater participation and democratization, not less. Democratization, however, does not necessarily imply physical presence of all stakeholders. After all, we in the UK allow ourselves to be represented in the House of Commons in a ratio of many tens of thousands to one--and the 659 members of Parliament do not expect to be all in the room every time a decision is made. Expand the Security Council, therefore--but not by too many seats.

Second, develop trust-building measures from the beginning. This can be done by providing opportunities for informal interaction and for formal negotiation. The walk around the park or the trip to the pub is not a trivial aspect of international meetings: it helps to build a shared vision and to foment basic interpersonal chemistry between participants. As a way to build trust, large and complex agreements can be broken down into smaller, more manageable and sequential steps, which again build trust and thereby momentum. Think, for example, of Senator George Mitchell's careful choreography of detente and peacemaking in Northern Ireland. Shouldn't we have sent Senator Mitchell to talk to Saddam Hussein prior to the U.S. and UK coercive intervention?

Third, use the same core group for as many issues as possible, in order to keep transaction costs down and to benefit from what economists call "economies of scope." Application of this principle could explain the increasing use of the North Atlantic Treaty Organization (NATO) in "out of theater" operations, as in Afghanistan and perhaps Darfur. In this case, we have a small group of (sometimes) like-minded nations, used to working together and with established ways of doing business. It is far better to use this group for multiple purposes than to establish a new one.

Fourth, encourage network closure. Make it awkward or embarrassing for those who refuse to cooperate. Leaders themselves can do this, but civil society can also play an important role. A well-attended demonstration at a G8 annual meeting, perhaps in favor of debt relief or fairer trade rules, is very effective at focusing minds and shifting the political context. Leaders can then claim: "You know, I'd like to steal the tea bags, but I just can't; the political consequences would be too severe."

Fifth, choose the right issues. These are the ones from which all the players, including both sharks and guppy fish, have something to gain and something to lose. Genuine global public goods look like a particularly good bet: rules everyone needs, or new knowledge, or investments that benefit all. Examples of this might be trade rules, or new vaccines, or Internet protocols.

Sixth, now start to think about positive incentives. This is the territory of rational choice theory, but rational choice with a human face. If the scales do not quite balance, then add a penny, a ha'penny, a farthing until they do. Sometimes the balancing can be done within a single negotiation and can follow the negotiators' old maxim that "nothing is agreed until everything is agreed." Such an approach is much in evidence during trade negotiations. At other times, it may be more helpful to seek trade-offs against the whole range of bilateral and multilateral relationships: look, for example, at the U.S. aid packages offered to countries prepared to back action on Iraq.

Seventh, and perhaps as a last resort, is the lesson that collective action is often most successful when the costs of defection are high. More aid may be a carrot, less aid a less palatable but equally effective stick. Expulsion or suspension from international bodies like the Commonwealth works in this way, to provide a strong negative signal that discourages defection. By the same token, what is it that big players--the sharks--really value that might be denied to them? Beware, however: sharks have big teeth and the guppy fish need to work together if they are to succeed in this strategy.

Finally, establish the institutions that will manage these interactions and relationships. In the natural world, biology plays a part, as in the cooperation between algae and fungi in lichen. Instinct is also important and may explain how guppy fish work together to test the mood of the predator fish and collaborate with each other to minimize losses. In our world, it is not unreasonable to expect trade, climate change, or disarmament negotiators to have both the genetic programming of a fungus and the protective instincts of a fish, but we can probably help them by having the right spaces with the right rules and the right procedures. That is why the WTO is more valuable than its critics allow: the problem is not with the instrument so much as with how it is used.

The application of the above eight principles to the current global governance agenda may enable us to manage the reform process more effectively. Take three practical examples.

First, how to break the deadlock on Security Council reform? How to balance the call for broader representation against the fear that the United States and other big powers will walk away from a body that is entirely dominated by sometimes hostile developing countries? The issue goes to the heart of the power and potency of the UN. The High-Level Panel, of which Lord David Hannay, former British ambassador to the UN, was a member, was charged with solving this problem. He emphasized the importance of building consensus on Security Council reform (see "trust" and "vision" above), but also the need to engage constructively with the United States. He was wary of confrontation and skeptical of an approach that might attempt to punish the United States. He described this as a "Gulliver Strategy," with consequences for the world similar to those suffered by the Lilliputians when they tried to tie Gulliver down (see above: "sharks have big teeth"). (11)

Applying the logic of collective action suggests that there is a general need to build better understanding with U.S. leaders and their publics; more people need to follow the lead of Mary Robinson, who has deliberately stationed herself in the United States in order to reach U.S. public opinion with messages about human rights and ethical globalization. (12) Within the UN, new opportunities for dialogue have been created, such as regular meetings between the presidents of the General Assembly and the Security Council (and, no, apparently they did not do this before--see above: "doing the easy things first").

More assertive action is needed, however. A modest increase in the size of the Security Council appears warranted and would be consistent with keeping the size of the core group relatively small--current proposals are for an increase from sixteen to twenty-four, with different options for a combination of permanent and temporary members. (13) Developing countries find it difficult to agree which of them should be represented on an enlarged Security Council, and this itself is a problem of collective action. Perhaps there needs to be a more thorough application of the eight-step program: more trust building, more civil society pressure to agree, and more voice for those countries excluded from the Security Council.

This links to the question of Security Council accountability to the collective, in the shape of the General Assembly or a body more genuinely representative of the world's 6 billion people. Again, the collective action response is to build the right institutions. There needs to be a role for more direct representation, perhaps through the medium of a parliamentary assembly or through a network of national parliaments. An example of the latter is provided by the Inter-Parliamentary Union (IPU), which currently links over 140 national parliaments and regional parliamentary assemblies. (14)

As important as Security Council reform is to ensure that economic and financial issues are tackled at a similarly global and strategic level, it would be interesting to link the Security Council discussion with a parallel debate, led by the Canadians, about the enlargement of the G8 to form a new G-20, involving large developing countries whose economic and financial power are quickly growing. (15) A single body that merged the enlarged Security Council and the reformed G8, responsible for global leadership across the board, would keep transaction costs low (see "community organizations" above). It would also have the great advantage of short-circuiting the long-standing discussion about how to make the Economic and Social Council (ECOSOC) more effective: that body would simply become a subsidiary body of the new, unified leadership group. (16) The president of the General Assembly in 2003-2004, Julian Hunte, made an interesting additional point about global decision-making, that the emphasis on consensus effectively provides even smaller countries with a kind of veto. (17) This is also true in the case of the WTO, which sometimes gives the impression of being paralyzed by the search for consensus.

The WTO is our second example. It is plausible to argue that the difficult search for consensus is an illustration not of the weakness of collective action, but of its strength. In the past, and particularly during the Uruguay Round, developing countries were ill equipped to negotiate on the very wide range of issues on the trade agenda. In the latest round of talks, the so-called Development Round, launched at Doha in 2001, those countries have learned how to work together and target key issues, like agricultural subsidies. Especially interesting was the emergence of the developing country G-20, a slightly flexible group sometimes called the G-20 something, but including countries as diverse as Brazil, China, Egypt, India, Indonesia, Nigeria, and South Africa. This version of the G-20 took a strong position opposing U.S. and EU proposals on agriculture and made it difficult to reach agreement. Cancun, however, was not the end of the negotiations. With luck and careful strategy, this example of collective action by developing countries may achieve movement on subsidies that has not been possible before.

Then again, it may not. The EU and the United States may decide that the gains in other areas are not worth the political cost of reducing subsidies. That would be a standard calculation in any negotiation, with the parties looking constantly to their best alternative to a negotiated agreement (BATNA). It would then be up to the G-20 to manipulate the incentives by increasing the number of sweeteners or ratcheting up the cost.

What the G-20 needs to avoid is a divide and rule response, which is exactly what happens when a quick and relatively straightforward bilateral deal is offered as an alternative to the multilateral process. Collective action fails when players, whoever they are, defect.

Another point is worth bearing in mind here. It is one emphasized by Shimon Peres, the current vice prime minister (and the former prime minister) of Israel and another experienced international negotiator. Negotiations need to be successful, but also fair, otherwise the negotiated agreement may not hold. (18) That is worth remembering next time trade negotiators meet--indeed, the next time the Israeli cabinet meets.

Finally, an issue central to current debates about the effectiveness of development aid, and one that Gordon Brown will have to face if his proposed International Finance Facility is to avoid the trap of simply becoming another source of funding for the World Bank: what to do about the uneven, often poor, performance of UN development agencies. Here we have a sprawling "family" that consists of dozens of specialized agencies, special funds, programs, and initiatives that are at least thirty-five in total, many of which have independent mandates and are hobbled by poor leadership and inadequate funding. Rich countries have looked at this highly political mess with despair and have largely retreated from wholesale reform. Instead, they have funded agencies they like, such as the UN Children's Fund (UNICEF), and have withdrawn or cut funding to those they do not, such as the UN Educational, Scientific, and Cultural Organization (UNESCO) or the UN Industrial Development Organization (UNIDO). Even for those agencies that continue to be supported, the rich countries have tended to cherry-pick projects they like rather than fund the totality of budgets, which in the process undermines the sensible management of budgets and programs.

A collective action approach to this problem requires action to build trust and shared vision. The Helsinki Process, led by the foreign ministers of Finland and Tanzania, is a forum of stakeholders from different constituencies that might achieve this trust and vision. (19) More immediately, however, there is a responsibility on some of the major players to think more strategically about how to change the incentive structure. In the frame here are the major funders of the UN--the United States and the Japanese--but also the Scandinavians and other like-minded donors in Europe, including the UK. In this instance, the Europeans should take the lead. They should set out a vision of a unified and efficient UN development system that is large enough and competent enough to provide a realistic alternative to the Bretton Woods system--and then they should offer to fund it. The best way to do this would be to set up a single funding mechanism that runs through the office of the secretary-general, or through a proxy like the UN Development Programme (UNDP), with the muscle to bring to heel the diverse barons who rule the system.

These three examples are illustrative of current challenges to collective action in the arena. Their shared characteristic--the application of collective action theory and of the eight-step program--not only throws light on the causes of difficulty, but also lays out practical action that diplomats and others can take.

Of course, there is no guarantee that more attention to the eight-step program of collective action set out above will guarantee successful outcomes, however well-briefed and competent the diplomats may be. In particular, power and wealth asymmetries in the world system mean that it is difficult to manipulate the incentive structure or to manage international negotiations in such a way that all feel they have gained. To be blunt, it is hard to persuade the United States, and some other large powers, to do things they do not want to do. But that is why the eight-step program gives first place to measures that build trust, and high priority to creating a social and political climate in which more cooperation is seen as the right thing to do, for its own sake as well as for purely instrumental reasons. The notion of community is deeply embedded in the national psyche of many countries. Surely we need to start by redefining the boundaries of our communities and recognizing their new global dimensions. Perhaps the most important reminder from collective action theory is the importance of creating the right climate of opinion--that is, a culture in which lack of progress is unacceptable. There is an important job here not just for diplomats, but also for civil society.

Notes

Simon Maxwell is director of the Overseas Development Institute (ODI), London. The author takes sole responsibility for the contents of this article, an earlier version of which appeared as an ODI Opinion entitled "UN Reform. How?"

1. See, www.un.org/News/Press/docs/2003/sgsm8855.doc.htm (accessed 8 September 2003).

2. High-Level Panel on Threats, Challenges and Change, A More Secure World: Our Shared Responsibility (New York: United Nations, 2004).

3. ODI organized a series of pubic meetings on this topic in the summer of 1994. For summaries, see www.odi.org.uk/speeches/un2004/index.html.

4. See, for example, from a long list, "Our Global Neighbourhood," Report of the Commission on Global Governance (Oxford: Oxford University Press, 1995); Kofi Annan, "We the Peoples: The Role of the United Nations in the 21st Century" (New York: United Nations, 2000); "Human Security Now," Report of the Commission on Human Security (New York: United Nations, 2003); and "A Fair Globalization: Creating Opportunities for All," Report of the World Commission on the Social Dimension of Globalization (Geneva: International Labour Organization, 2004).

5. Kofi Annan, "Renewing the United Nations: A Programme for Reform," Report by the Secretary General (New York: United Nations, July 1996).

6. See ODI, "Global Governance: An Agenda for the Renewal of the United Nations?" Briefing Paper 1999 (2), London, July 1999.

7. For an excellent and readable review, see Sarah Gillinson, "Why Cooperate? A Multi-disciplinary Study of Collective Action," ODI Working Paper 234, London, 2004.

8. James Coleman, Foundations of Social Theory (Cambridge: Harvard University Press, 1990).

9. Elinor Ostrom has provided pioneering analysis in this field. See Elinor Ostrom, Governing the Commons: The Evolution of Institutions for Collective Action (New York: Cambridge University Press, 1990).

10. Robert Kagan has made the argument that the United States does not favor multilateralism, because it is powerful and does not need the protection of rules and institutions, whereas Europe, being less powerful, takes the opposite view. See Robert Kagan, Of Paradise and Power: America and Europe in the New World Order (New York: Knopf, 2003).

11. Lord Hannay spoke at a public meeting in the UK parliament in May 2004; available online at www.odi.org.uk/speeches/un2004/meeting.3.html.

12. For information about the Ethical Globalisation Initiative, see www.eginitiative.org.

13. United Nations, "In Larger Freedom: Towards Development, Security and Human Rights for All," Report of the Secretary-General for Decision by Heads of State and Government (New York: United Nations, 2005).

14. See www.ipu.org/english/home.htm.

15. See www.g20.org/index.htm.

16. The current proposals, summarized in "In Larger Freedom," envisage ECOSOC as a kind of overarching body responsible for discussion and coordination.

17. Personal communication.

18. Personal communication.

19. See www.helsinkiprocess.fi.