HomeDOCUMENTSMission Reports200410-12 MAY 2004 - VISIT TO BERLIN by the ECONOMICS AND SECURITY COMMITTEE
10-12 MAY 2004 - VISIT TO BERLIN by the ECONOMICS AND SECURITY COMMITTEE
I. International Legislation and National Parliaments: Global Governance, Parliamentary Control and Civil Society
1. Mr. Erich Fritz, Chair of the Bundestag Trade Committee, opened the first discussion by asking members to imagine how difficult it would have been for the original members of the EU to implement the acquis within 8 years and explain to the public the various requirements that would have to be implemented and transposed into legislation. Undoubted, this would have generated challenges to the legitimacy of the under taking.
2. Law making in Germany is increasingly 'European' or multilateral. Global governance issues are thus proving a real domestic political challenge. Critics of globalisation suggest that there are no institutions to make this process more democratic. While many refer to the role of governments and Non-governmental organisations (NGOs), the role of parliament is often underestimated. Parliaments thus need to better monitor the decisions shaping globalisation. The question is how to do so.
3. Obviously, the public must be engaged in the discussion. Here the problem is that the public debate about key issues invariably begins too late. Citizens feel that decisions are made over their head. Trade policy-making for example, is leading to depoliticalisation of what are essentially political issues. In response to this, the German Bundestag set up a special committee dealing with the globalisation of international trade challenges and responses. The sub-committee serves as an early warning system so that issues can be discussed at a formative stage rather than when governments have already cobbled together agreements over the heads of legislators.
4. Before treaties are signed, for example, governments should brief parliaments with indications of what changes are needed in national legislation. Only that way can critical multilateral decisions be made transparent. Early information on OECD, ILO, UN and NATO discussions are thus needed. Perhaps even the themes developed during NATO PA trips could be targeted on negotiations. This might well help legislators exert a genuine influence. Legislators must resist the creeping "deparliamentarisation" of decision-making.
5. Dr. Friedemann Müller, Head of Research Unit, Global Issues, German Institute for International Politics and Security, added that there is neither a global parliament nor a genuine international legal order. This has invariably produced a gap in democratic governance; efforts are now needed to define and regulate the global order. One problem is National parliaments derive legitimacy from constituents who are not conversant in many critical global issues and many are not interested in developing international networks. At the end of the day, it is up to parliaments need to get the message to voters that international networking is critical. Greater care is also needed in the way international negotiations are launched. It is essential that parliaments identify precisely those areas in which they should have rule making power.
6. International organisations are also confronting a legitimacy problem. While parliaments operate on a one man-one vote principal, this is not the case for much of the international system. For example, those countries that supply its capital essentially run the International Monetary Fund (IMF).
7. During the discussion several parliamentarians suggested the global order is evolving far more quickly than national structures. As a consequence parliaments need to develop structures that engage other stakeholders in international economic decision-making. It was also pointed out that there are potential democratic deficits arising as a result of economic globalisation and these problems can be exacerbated by the fact that Parliament's authority is often undercut by the power of governments. How to ensure social protection in a global economic context poses one of the more daunting challenges.
Finally, parliamentarians need an early warning system designed to flag critical issues on the international agenda before governments have locked themselves into negotiating positions. Greater clarity is also needed in the division of labour between national parliaments and the European Parliament. One member also suggested that trans-national parties could reinforce efforts to better coordinate national parliamentary agendas with the international economic agenda. However, it is equally critical to ensure better transparency between governments and their respective parliaments.
II. World Economy and Security: The WTO, its impact on the member states and Global Governance
8. Kurt Rossmanith, a German member of parliament, suggested that global security and economic policy are essentially the flip side of the same coin; yet, far greater integration between the two is imperative. Economic cooperation should now be understood as an instrument in the fight against terrorism.
9. Such thinking has certainly inspired the international community's approach to Afghanistan. More efforts are needed to foster deeper international integration for both economic and security reasons. It is not a coincidence that the September 11 attacks prodded WTO member governments to launch the Doha Round. Now that process is under threat, and concessions are needed in the area of agricultural trade, market access for developing countries manufactured products, the Singapore topics, and the development agenda. IMF and World studies suggest that eliminating current barriers to trade would add $250 billion to the global economy. However, to get there, greater negotiating flexibility is needed from both developed and developing countries. In order to forge an agreement in Geneva, therefore, the so-called Singapore issues like public procurement and investment may have to be deferred for later talks.
10. Prof. Dr. Thomas Risse, Professor for International Politics, Center for Transatlantic Foreign and Security Policy, Department of Political and Social Sciences, Free University of Berlin, further explored the trade security link and global governance. He suggested that the assumptions underpinning the traditional interstate system have shifted dramatically in recent years. Economies are no longer "national", they are globally integrated and market rules simply cannot be set by states alone.
11. At the same time terrorist networks are operating across borders. These networks are not hierarchical, and terrorists have built up impressive and redundant capabilities that exploit existing international commercial and financial structures. So-called ''failed states'' pose another set of problems. These entities lack the elementary components of statehood but are posing a real threat to regional and global order. The response to this threat cannot be military; ultimately it must involve a commitment on the part of the West to support state building processes.
12. Another set of problems is raised by authoritarian or totalitarian states dedicated to developing weapons of mass destruction. Here the solution is not state building as much as it is democratisation over the long-term and containment in the near term. Clearly, in all of these cases, non-traditional approaches to security are needed. This is why precise global governance and security issues are increasingly intertwined. Here too there are real challenges as governments are increasingly compelled to work with the private sector and even NGOs on what are now high stake security matters. NGOs and businesses have become important players in the security field, in large measure because the nature of threat has shifted in profound ways.
13. To come to grips with governance in an ever more global age, national parliaments need to adopt new approaches to the legislative agenda that they set for themselves. International structures must also be altered. Parliaments invariably will have a role to play in this process.
III. Multilateralism and Parliamentary Participation: Case studies of NATO and the WTO
14. Ulrike Höfken, MP and Erika Mann, MEP spoke further on the global trade agenda. The Singapore issues will have to be left off the table to ensure a final deal in the Doha round. Parliamentarians must work to advance more balanced views of national stakes in trade negotiations-and those stakes cannot simply reflect the concerns of narrowly focused and well-organised interest groups.
15. In the discussion several participants reinforced the importance of removing the Singapore agenda from the talks. At the same time, organisations like the NATO PA should feel more self confident in the way they assert themselves. The NATO PA has a democratic legitimacy that NGOs, for example, do not have and that alone provides it with a legitimate basis for moving into these areas.
16. Along these lines, Kurt Rossmanith suggested that parliamentarians should project a security consciousness into economic discussions. The security implications of current western agricultural trade policies need to be openly discussed and the ramifications understood. This might help change public and political thinking on these key matters. Parliaments are uniquely placed to do this because of their broad focus and their broad legitimacy.
IV. Global Governance and Civil Society: The role of national and international NGOs
17. Dr. Dirk Messner, Director, German Development Institute, suggested that NGOs have become critical players in international conferences and negotiations. They act internationally and this has led to a shift in power. Policymaking has moved from the hands of states and parliaments to private actors. NGOs are helping to implement agreements on a wide variety of issues from child labour, land mines, war crimes etc. Many of these matters are not peripheral to National Interests particularly if one looks at the role these organisations have played in shaping the global trade debate. NGOs are even taking part in formal government delegations to international negotiations and a number of them, like Transparency International, enjoy stellar reputations among many governments and parliaments. All of this is recasting the networks through which international relations are conducted.
18. But there are also problems. First of all, NGOs are highly selective and are often focused on a narrow set of issues. They do not face the imperative governments confront of counterbalancing or aggregating inherently conflicting interests. NGOs are concentrated and can work fast but unlike parliaments they have little interest in aggregating interests. In a perverse sense, terrorist groups themselves have become something akin to NGOs as they too are recasting the security landscape albeit in a manner that is utterly contrary to the aspirations of democratic societies. Ironically, the larger and broader NGOs become, the more they face the same constraints confronted by parliaments. It is also the case that in societies lacking the rule of law, local NGOs often exist to further the interest of the ruling elite.
19. In the discussion, one member added that initially NGOs covered areas that governments were ignoring. However, they have expanded and become power groups in themselves. In this sense, they have also become a source of concern, and in some instances, may need to be regulated. This is particularly the case when large NGOs receive funding from national governments. They need to be accountable for those funds. There are also potential conflict of interest issues when they are both recipients of funds and advocates of policy change. Another participant noted that some NGOs are simply the creation of the parties looking for vehicles to pressure their rivals. There is also a range of problems associated with a pattern of developed country NGOs allegedly speaking on behalf of the developing world yet advancing policies that are not in the latter's interest.
V. Co-operation with post-war countries: Reconstruction in Iraq and Afghanistan
20. Dr. Michael Hofmann, Federal Ministry for Economic Co-operation and Development, Head of Department 3 "Global and sectorial tasks; European and multilateral development policy; Africa; Middle East" spoke on Germany's role in Afghanistan's reconstruction. He suggested that the mission of his agency has shifted significantly over the past four years. In 2000, its primary focus was poverty alleviation but it now finds itself increasingly consumed by post-conflict development efforts. Achieving the Millennium Development goals by 2015 nonetheless remains a central priority for the agency. Yet the preferred path has been to work with good performers. However, it is the poor performers, which increasingly draw the attention of the development community because many of these are involved in perilous conflicts or are in danger of becoming failed states.
21. In Germany development budgets are already under serious strain, making it virtually impossible both to deal with post-conflict emergencies and long-term development targets tied to the Millennium goals. Germany's Ministry for Economic Co-operation and Development is playing an active role in Afghanistan where the greatest problem for aid workers has been the terrorist threat, civil unrest and the influence of drug traffickers. The Ministry has helped set up elections, advance women's rights protections, and develop state structures. German officials have also set up a micro finance programme for farmers. German Provincial Reconstruction Teams (PRTs) are operating in Kundar and are working to improve general living conditions. Teams are also working to improve water and energy infrastructure. The German government wants a more open approach to fighting the heroin trade and is also dedicated to the task of demobilisation and finding work for former combatants. Germany is the lead nation in trade and investment matters. Overall German assistance for Afghanistan has totalled Euro 320 million.
22. One goal is to initiate pilot programmes that, if successful, can be recreated elsewhere throughout the country. Invariably efforts are made to give the Afghan people ownership of these projects and directly engage them in their development and administration. German officials are also constantly interacting with counterparts in the United Nations, the United Nations High Commissioner for Refugees (UNHCR), the United Nations Population Fund (UNFPA), the World Bank and other countries providing assistance to Afghanistan.
23. A second briefing by Werner Stern, Project leader, Governmental disaster relief organisation of the Federal Republic of Germany, Division E 2 "International Operations" illustrated the role a German agency has played in the physical reconstruction of key Afghan infrastructure.
24. Germany's approach to Iraq is markedly different. Germany is providing humanitarian assistance both bilaterally and through the World Bank. But it is not providing basic development assistance because the government judges the prerequisites have not been in place to do so. Some training programmes for Iraqis are run out of Germany. Indeed there is a long tradition of Germany providing Iraq with vocational training and this is likely to be extended in the future. Mr. Hoffman suggested that Iraq has a relatively well-trained population, but the country has been isolated and war torn and so much work remains. Germany is not likely to play a central role until the security situation has improved and an agreement hammered out on the country's ultimate direction. In the discussion, a number of points were raised including: the possibility that aid flows can overwhelm local economies, the tension between donor and recipient countries over aid priorities, the role of private investments and investment guarantees, the relevance of the decolonisation experience to managing the situations in Afghanistan and Iraq, and the clear need for preventive diplomacy. Members also discussed the controversy over reconstruction contracts in Iraq and particularly over contract bidding procedures.
25. Mr Hofmann responded to several of these points. He noted too much assistance flowing into a developing country could pose absorption problems expressed through inflation and rent seeking behaviour. It can also trigger currency appreciation and penalise exports. Channelling funds so that they can be put to productive use is thus critical. He suggested that one problem with using multilateral instead of bilateral aid is that the former tends to react more slowly to changes on the ground. This has proven a chronic problem for the EU in particular.
VI. World Trade Policy and the State of the World Economy and The German "Reform agenda 2010"
26. Dr Peter Ammon, Head of Economic Affairs and Sustainable Development at the Federal Government's Foreign Office spoke on World Trade Policy and the State of the World Economy and Rolf Schwanitz, MP, Minister of State to the Federal Chancellor spoke on Agenda 2010. A lively debate is unfolding in Germany about the world economy and the country's place in it. Germany has largely missed out in recent global economic growth. Germany's economy last year stood at 1.1% and will likely only increase to 1.8% at best this year. Export growth, however, has been very strong, and this is somewhat surprising given the rising Euro. Tax cuts in Germany could provide some relief over time to the business sector and that sector remains competitive despite high costs and a high Euro.
27. Germany nonetheless needs further change to improve on its competitive position. The government has put together a broad packet of reforms for this purpose. The goal is to limit structural rigidities, reduce red tape and lower secondary costs that have slowed economic growth. This "Agenda 2010" programme will erode some privileges and this is why there is resistance within sectors of certain society.
28. At the same time, global growth is being driven by America's twin deficits and China's impressive expansion, which has pulled Japan out of its decade-long slump. China's boom has spawned ever-rising import demand in that huge country and this has had all manner of spill over effects. It is also driving commodity prices upwards, which has helped a range of emerging economies from Ukraine to Argentina. Investment is pouring into China but also into many developing countries which are experiencing rapid growth. Remittance levels are soaring and have become far more important to developing countries than official development assistance (ODA).
29. One central module of Agenda 2010 is to alter certain features of the German labour market. This is a particularly serious challenge given the country's high rate of unemployment and the fact that talented people are leaving the economy. The government has now toughened rules, which once permitted unemployed people to turn down jobs. The government is also encouraging people to work for themselves while building in greater flexibility on social contributions. Another approach involves unifying the benefits systems in order to pursue integrated approaches to unemployment. The government has introduced incentives to encourage firms to hire more workers. The government needs to reform its social insurance system because of the challenges associated with an aging society. Some generous entitlements and services cannot continue. The "pay as you go" system currently in place is simply unsustainable. Future pension increases are thus highly unlikely.
30. Germany must also increase productivity and the federal government wants to increase spending on innovative technology by 2010 to 3% of Gross Domestic Product (GDP). The private sector and trade unions must be taken on as partners in this endeavour.
VII. ILA 2004 - 2nd International Parliamentarian's Day
31. The Delegation also had an opportunity to attend the Berlin Air Show. A central theme of the discussions involved the effort to galvanise European aerospace and defence industry to meet the challenge of the 21st century and the close relationship between this process and European defence and security cooperation. Industry representatives suggested that the Aerobus model has proven highly successful and could be used in the defence sector. The challenge extends well beyond the defence sector because the industry is seen as critical to the broader European economy. There are 407 thousand workers employed in this sector in Europe, and the work of these firms is integrating a great deal of civilian firm technology. Russian aerospace and defence industries were well represented at this year's air show.
32. There were also extensive discussions on the evolving threat to the environment and its implications for defence transformation in Germany and in Europe as a whole. The great challenge lies in upgrading capabilities and doing so in a financially responsible way. Several speakers stressed that a European framework is essential to any defence reform effort. National procurement strategies, they stressed, should increasingly become European and this is why the new European procurement agency should play an ever more important role in harmonising defence purchasing among EU member governments.
33. The problems are also technological, as fighting terrorism requires the development of highly integrated complex information systems. Net centric systems are the wave of the future and the Americans seem to have internalised this more quickly than their European allies.