*{Legitimacy at Risk [http://www.weforum.org/site/knowledgenavigator.nsf/Content/Legitimacy%20at%20Risk?open&topic_id=300250000&theme_id=300]

            26.01.2001

            Annual Meeting 2001}

            The World Economic Forum had provided an early warning system about a "tide of rising popular fear" about the perceived inequalities inherent in the global system, noted moderator James F. Hoge, Editor, Foreign Affairs Magazine, Council on Foreign Relations, USA. The issue, he said, is: to whom are decision-makers really responsible in this globalized world? And is the increase of civil society organizations, such as NGOs and partnerships between the UN and business, enough to broaden decision-making on global issues?

            Trevor Manuel, Minister of Finance of South Africa, suggested there should be a hierarchy of representation. Sovereign national governments should be at the top, provided they had been freely and fairly elected. He drew a distinction between NGOs, which could be very active but were un-elected and by whom "we should not be cowed", and community groups which act on a popular mandate. He regretted that the "one nation one vote" system of representation at the UN is not mirrored by the World Bank and the IMF, describing it as "fundamentally wrong" that financial muscle decided who had most say in these institutions. He was also critical that the most powerful economic forces - the European Union, the United States and Japan - do not always follow the same trade rules as the rest of the world.

            Martin Khor, Director, Third World Network, Malaysia, agreed that the quota system of representation in the World Bank and the IMF is unjust, and said that the credibility of the IMF in particular had been undermined by the perception that it is being dictated to by Wall Street and the US Treasury. Khor also warned that national governments risk losing legitimacy when they are unable to intervene on behalf of citizens because they have signed international agreements on free trade that are loaded against the interests of weaker nations. He believes local companies whose profits are being squeezed by deregulation are increasingly pressuring governments to relax worker protection regulations.

            Juan Somavia, Director-General of the International Labour Organization (ILO), Geneva, declared that legitimacy stems from what is right, fair, possible, acceptable and needed. It also depends on whether promises are delivered. International organizations face major problems, including mandates that are too broad and inadequately resourced, and the lack of modern management systems. He suggested that they should focus on reaching specific goals, and forging the necessary partnerships to achieve them. He observed that recent initiatives on gender, the environment and human rights had been taken by NGOs. Traditional institutions should learn from these examples that broadly based partnerships are indispensable.

            Martin Wolf, Chief Economics Commentator, Financial Times, United Kingdom, said that some tension between political democracy, state sovereignty and the global market system is inevitable. The challenge is to tame and manage it. He agreed with other panellists that governments have to be strong but political protests are also a proper part of the political process. Wolf said corporate interest groups are too powerful and a threat to the democratic process because they have the funds to make their voices heard in international decision-making bodies more easily than many governments and civil society groups. Khor said that this unfair advantage could only be redressed if the citizens in the North put pressure on their governments to stand up to these special interest groups.

            Summarizing, Hoge said there is no real feeling that a new global regulatory institution is needed to tackle imbalances and that the current institutions would continue to evolve, but with the risk that their legitimacy could be undermined by tensions between the market and national sovereignty.                      

                  *{Contributors:       Hoge James F.
                  Khor Martin
                  Manuel Trevor
                  Somavia Juan
                  Wolf Martin}