A Clear Agenda for Reform in 2010

03/18/2010 05:12 am ET | Updated May 25, 2011

When the Asian Crisis sent shockwaves around the world's economies in the late 1990s, I made proposals for a reshaping of our international institutions for new times.

We are now at the end of the first decade of a troubled new century where we have witnessed deep global economic, environmental and security crises.

And it is clearer than ever that without effective decision making at a global level, we cannot possibly meet the great global challenges: protectionism, economic instability, climate change, and threats from terrorism and nuclear proliferation.

A better international framework for cooperation is no longer just desirable in one arena: it is essential in every one.

One of the frustrations of the Copenhagen Climate Change Conference was that outdated attitudes -- and a fear of change -- prevented the binding treaty most of the world wants.

That is not to detract from some significant achievements. In substantive terms the Copenhagen Accord is stronger than most commentary has acknowledged.

It sets for the first time in a United Nations context a global goal of no more than 2° Celsius of warming. For the first time, it requires all developed countries to adopt emissions caps at the same time as requiring the largest developing countries -- including China, India and Brazil -- to set out and to stand behind their emissions reduction plans.

It creates a system of transparent reporting and analysis of actions taken. And it includes funding to help developing countries tackle climate change, rising from $10 billion a year in 2012 to $100 billion by 2020.

Most importantly of all, when countries submit their final emissions reductions targets and plans, the Copenhagen Accord can and must put in place a high level of collective ambition which puts the world on a low carbon pathway consistent with the 2° objective.

But, of course, we did not get agreement to cement all this in a legally binding treaty -- and this must be our goal in the next few months.

The elusiveness of that aim reflects both the way this new world does business on environmental and other issues, and the risks this creates for the world economy.

The UN has never had the environmental, economic and social clout that should accompany its high ideals and grand aspirations -- and not just on climate change.

While peacemaking and humanitarian help has improved, the necessary capacity to prevent and resolve conflicts -- through stabilisation and reconstruction -- is developing too slowly.

Meanwhile, the International Monetary Fund was built around national states with protected economies; and the World Bank around the reconstruction of war-ravaged economies.

But today's economies are no longer sheltered and local but interwoven and global; not even the biggest can be insulated from instability without wider international cooperation.

And development now also entails funding adaptation to -- and mitigation of -- climate change; as well as new ways to fight poverty, such as through trade and economic development.

So a new level of global cooperation for sustainable prosperity and peace is the only way to take millions out of unemployment and poverty, to prevent millions more being abandoned to climate change catastrophe, and to protect us all from the threats of terrorism and nuclear proliferation.

Our collective failure so far to match global action to these global needs is all the more disappointing because a shared global ethic is emerging.

The universal response to the banking crisis has been a call for fairness and responsibility. The crisis of climate change has at the same time evoked calls for us to recognize our dependence upon each other.

In every one of the world's many religious faiths there is a common thread of compassion: a recognition that we should do to others as we would be done by.

And as global communications networks bring more and more people together, we are finding that the values they share are a greater inspiration to action than those which divide them.

The world has accepted shared responsibility for the environment, yet we have no adequate institutional means to turn that responsibility into reality.

We see the need for better management for the global economy to enable strong, sustained and balanced growth but have not given the G20 or the IMF the tools to achieve it.

We have accepted the responsibility for global financial supervision but have not yet given the Financial Stability Board sufficient strength to organize it.

We have publicly taken on responsibility for the Millennium Development Goals -- but no one body has the responsibility for ensuring they are delivered.

And we have even accepted 'the responsibility to protect' -- our duty to save civilians from genocide and war crimes -- but have seldom implemented it in practice.

So our global ethic lacks conviction without better ways to make decisions as one world.

Far-seeing people will tell us that the first years of the coming decade are probably the only times when fundamental change is possible and if we do not take it we will not be able to maintain the benefits of an open global economy and harness globalization to achieve a better, more prosperous world.

For as the balance of economic power changes over the next two decades, new and stronger power-brokers may be less willing to embrace change.

My fear is that, by that time, a new kind of environmental, economic and social protectionism will be our fate; threatening prosperity, our environment and ultimately global stability.

To avoid this race to the bottom, I propose that we discuss five inclusive reforms in the way the world seeks global solutions for global problems.

On climate change, I propose that we strengthen the UN environmental institutions, providing for clearer decision-making powers, a stronger role in ensuring the transparency of actions, and a clearer role in ensuring flows of climate finance.

Building on the Copenhagen Accord, it is particularly important that the UN has a proper system of transparency from all its members.

This would help remove one of the stumbling blocks to the legally-binding climate change treaty that Europe and most of the rest of the world desires and supports. It is clearly important that the world knows what its collective effort against climate change is achieving.

Second, I propose that the G20 -- now charged as the premier global economic forum -- finds better ways of recognizing the needs of all continents and ensuring outreach to, and representation for, all 192 countries.

Third, the world needs better rules and procedures for addressing economic instability; so alongside the G20 I propose that the IMF -- working with a greatly strengthened FSB -- becomes akin to an independent bank, responsible for independent surveillance to ensure early warning for, and the prevention of, crises.

This should be the basis for the G20's work.

Fourth, the World Bank, IMF and regional banks -- often through more representative trust funds -- must be reformed with the expanded financial power they need to help tackle climate change, instability and poverty.

Fifth, as I have said before, we need to address the challenge of rebuilding failed states and post-conflict countries with better mechanisms for stabilization and reconstruction.

These major changes in the way the world works are, I believe, the first steps towards a truly global society.

All require countries to reconsider entrenched positions, but each should be discussed and refined and we should then make this our clear agenda for reform in 2010.