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The Geneva Scenarios on Global Economic Governance 2020
The Geneva Scenarios on
Global
Economic
Governance
Impressum
ISBN 978-3-86872-092-1
2020
Editor:
Dr. Winfried Veit
Assistant Editors:
Steffen Grammling
Yvonne Theemann
Proof Reading:
Julia Federico
Publisher:
Friedrich-Ebert-Stiftung
Geneva Office
6bis, Chemin du Point du Jour
1202 Geneva
Switzerland
Design and Illustrations:
Shantala Fels
© Photos: Shantala Fels,
FES Geneva Office
Printed by: roco-Druck
Printed in Germany
Copyright© 2009
Contents
4 Preface
Introduction
9 Why Scenarios?
10 The Need for a New Reform Approach
12 Executive Summary of the Geneva Scenarios
The Geneva Scenarios
17 Decaying National Park – business as usual
21 March of the Elephants – competing regional blocs
25 Law of the Jungle – towards the abyss
29 Harmonious Nature Reserve – true multilateralism
Background to the Geneva Scenarios
34 The Pathway towards the Scenarios
38 Selected Stories from the Scenario Team
50 Results of the Working Groups on Regionalism and Multilateralism
Annex
68 The Scenario Team
70 Acknowledgements
72 Bibliography
75 Abbreviations
3
Global Economic Governance 2020 · Contents
Preface
In the ancient days of old there once up the oracle’s answer with his own nuities that could radically change I would like to especially thank the
existed a powerful kingdom called wishful thinking. things, which in the scenario lan- assistant editors of the publica-
Lydia under King Croesus, whose guage are called “critical uncer- tion, Steffen Grammling and Yvonne
name is till today synonymous with The Geneva Scenarios on „Global tainties”. My own experience with Theemann, for their dedicated work
immense fortune. At the eastern Economic Governance 2020“ are scenarios in South Africa (the influ- throughout the yearlong exercise. It
border of Lydia was the emerging meant to prevent such a mistake. As ential “Mont Fleur” Scenarios) and in is their coordinating role, research,
power of Persia under King Cyrus. the present global crisis demonstrat- Israel had convinced me that scenar- writing and technical editing that
Croesus wanted to attack Persia es, wishful thinking is still a major ios are a useful tool when it comes made this project possible. Grati-
before it became stronger than his weakness of responsible leader- to preparing the future. This might tude is also due to Shantala Fels for
own empire. But following the age ship. Almost none, if any political be more complicated in a global her invaluable work in illustrating
old tradition, he first sent messen- or economic leader, was prepared and multilateral context than in a and designing this publication.
gers to the famous oracle of Delphi, for the financial crisis, which un- national or regional one, but I think
asking it, wether or not he should folded in 2008 and turned into our “Geneva Scenarios on Global The publication remains under the
attack Persia. The answer of the the worst economic crisis since the Economic Governance 2020” offer sole responsibility of the editor.
oracle was: „If you attack Persia, Great Depression of the 1930s. One enough proof that this is possible
you will destroy a great kingdom“. of the few economists, who predict- and worthwhile. We are aware of
Croesus then attacked Persia, but ed the crisis, Nouriel Roubini, said: the fact, that we are not the only Winfried Veit
lost and his own empire was de- “We have to accept, that econom- ones dealing with these questions.
stroyed. ic models just extrapolate the de- I hope we are able to make a specif-
velopments, but cannot predict ic contribution to a very critical and
Like the ancient oracles, scenarios the turning points. And people in complex issue.
do not give certain predictions of general believe, that things will
the future but rather offer different continue as they are until now, only This project was only possible
pictures of possible futures, there- because they have been like that for through the joint efforts of a very
by enabling decision-makers and a long time. The result is a collective committed scenario team consisting
stakeholders to adapt their strat- self-delusion” (translated out of of 25 people, coming from different
egies in order to reach or avoid a French). backgrounds and from 17 different
certain scenario. Had Croesus bet- countries. The team members have
ter reflected the oracle’s answer, he To overcome this self-delusion, we participated in the scenario building
might not have attacked Persia but need to open the eyes for things in their personal capacity. The sce-
instead first measured the military that we might not want to happen, narios necessarily are a compromise
powers of the two empires and then but which could happen. We should and reflect a consensus of the whole
looked for allies to ensure his supe- think the unthinkable and prepare scenario team.
riority. His main mistake was to mix for disturbing events or disconti-
4 5
Global Economic Governance 2020 · Preface Global Economic Governance 2020 · PrefaceIntroduction
Why Scenarios?
“We simply do not know.” This was choose to reach. Scenario skeptics
John Maynard Keynes’ famous com- might criticize that a specific trend
ment on the future – and the main is exaggerated or the influence of
motivation for building scenarios. certain factors is overestimated.
Human beings have been trying for Scenario advocates might accentu-
centuries to forecast the future, in ate that scenarios can be used as a
former times by consulting the ora- mirror, showing reality in an unpol-
cle in Delphi, in present times by ished way.
sophisticated trend extrapolation
techniques. Military strategists, in How are scenarios built? A scenario
particular, have always been keen exercise starts by analyzing what is
in designing scenarios to be pre- already known, i.e. the present situ-
pared for different situations. Later, ation. Current key issues in a specific
the scenario technique was adapted area are agreed upon, dynamics that
and made operational for business may play a crucial role in future are
as well. identified, and external events that
could lead to fundamental changes
Uncertainties complicate the sce- are taken into account. Scenarios
nario building process. As the should be built by a heterogeneous
future is completely unknown, eve- team with different backgrounds
rything is thinkable even though and varying perspectives. Scenarios
one might consider it improbable. are not aimed at building consensus,
Peter Schwartz got to the point by quite the contrary; they need cont-
stating: Scenarios are a tool to help roversial debates to paint different
us "make choices today with an un- and nuanced pictures of the future.
derstanding of how they might turn Scenarios should be consistent and
out” (Schwartz 1991: 4). plausible even though “some par-
ties to the [scenario] exercise may
How do scenarios work? They do regard certain scenarios as exceed-
not spell out the only possible ingly unlikely and undesirable, but
future, but delineate different no one should be able to prove
futures. It is then up to decision- any scenario impossible” (Lempert/
makers to decide upon which future Popper/ Bankes 2003: 30).
they prefer and which strategy they
9
Global Economic Governance 2020 · Why Scenarios?The Need for a
New Reform Approach
When we started our scenario build - ed Nations (UN). History showed There is the need for an approach architecture. The Geneva Scenarios
ing in April 2008, we were not even that even this is difficult, as existing that is neither limited by narrow on ”Global Economic Governance
close to imagine what would hap- institutions tend to seclude them- institutional thinking, nor utopi- 2020” combine both elements and
pen months later. The food crisis selves from each other to justify an visions. This new approach, i.e. thereby seek to make a contribu-
was already unfolding, soon fol- their right to exist. A second ap- the scenario approach, allows one tion to the ongoing reform debate.
lowed by the energy crisis. In au- proach proposed reforms of the to overcome these shortcomings
tumn of that year, the financial respective institutional frameworks by creating a space for free, unbi-
crisis started and shortly after began and decision-making processes. ased and non-ideological thinking.
biting into the real economy, result- However, it seems to be easier to The growing popularity of this ap-
ing in the worst recession since the create new institutions than to proach is not surprising, given the
1930s. We then knew, that one of reform existing ones. Striking ex- aggravating global problems: In
the dynamics that we had identified amples are the cautious attempts to 2007, the European Ideas Network
as major “critical uncertainty” (i.e. implement some of the recommen- published a comprehensive study
“world depression”) had already dations of the “Sutherland Report” on “The World in 2025”, analyzing
turned into reality. These calamities (2004) or the “Report of the First future global developments from
influenced the scenario project and Warwick Commission” (2007), con- an EU perspective. In 2008, French
showed the difficulty, but at the cerning reforms of the WTO. The scientist Joël de Rosnay published a
same time, the increased necessity, same is true for most of the pro- fascinating book entitled “2020. Les
of a scenario process. The political posals concerning the institutional Scénarios du futur”. It deals with
reactions to the crises illustrated reform of the Bretton Woods Insti- the future of technology, a factor
that the debate on the reform of tutions (IMF and World Bank) and that plays an important role in our
the Global Economic Governance the UN system. The G20 Summit on scenarios as both a major “driving
(GEG) system was reopened again 2 April 2009 in London made clear force” and “critical uncertainty”. In
and moved to the centre of all major that it seems more convenient to in- 2008, the American National Intelli-
international meetings. filtrate more money into an existing gence Council released the “Global
system (even if it is widely consid- Scenarios to 2025” and in early 2009,
But what should the new global ered as deficient) than to reform its the World Economic Forum present-
architecture look like? A first mod- structure. A third, radical approach ed the timely study on “The Future
est approach called for improved suggests the abolishment of the of the Global Financial System”.
coordination between the existing Bretton Woods Institutions, but
international organizations, i.e. the failed to put forth alternative pro- These publications illustrate the
World Trade Organization (WTO), posals. increased importance of the scenar-
the International Monetary Fund io technique as well as the need for
(IMF), the World Bank and the Unit- a fundamental reform of the global
10 11
Global Economic Governance 2020 · The Need for a New Reform Approach Global Economic Governance 2020 · The Need for a New Reform ApproachExecutive Summary of the
Geneva Scenarios
The FES Geneva Scenarios on “Global not come closer to finding solutions It is not intended that the reader
Economic Governance 2020” offer to pressing global problems. agrees to all scenarios, much less to
four different scenarios on how the all details in the scenarios. Contra-
GEG system could look in the year March of the Elephants: ry, they aim to trigger a dialogue
2020. Their aim is to sensitize poli- In the year 2020, regional in- on the different pictures of the fu-
cy-makers to possible consequences tegration is the main focus for ture and on the means of avoiding
of their decisions, whether they be policy-making, while international negative possible outcomes and
actions or non-actions. They are organizations have been bypassed. achieving positive outcomes. This
intentionally exaggerated, but not Regionalism advances development naturally depends on the reader’s
implausible. The scenarios seek to in the countries involved, but it judgement and values.
further provoke the existing debate proved ineffective in solving global
on the reform of the GEG system by problems. The world is in a situation
taking a fresh unorthodox look. of uncertainty and unsustainable
stability.
In order to facilitate cross-scenario
comparison, all scenarios are struc- Law of the Jungle:
tured along the same lines. They In the year 2020, the world is on
have the following common star- the descent into the abyss. Multi-
ting point, looking back through lateralism is dead and there is no
time from the year 2020, starting international rule of law. The world
with the food, energy and finan- is run by changing coalitions, main-
cial crises in 2008. ly confronting each other instead of
looking for solutions to the grow-
Each scenario then develops its ing global problems.
unique dynamic, which leads to
different results. A synopsis of Harmonious Nature Reserve:
the proposed possible outcomes In the year 2020, an efficient and
follows. transparent multilateral system
with forceful legal mechanisms
Decaying National Park: exists. It is based on the principles
In the year 2020, the world is domi- of global partnerships and shared
nated by contradictory regulations power. Social welfare, sustainability
governed by international institu- and equality are finally within our
tions and nation states. This impedes grasp.
coherent policies and the world has
12 13
Global Economic Governance 2020 · Executive Summary of the Geneva Scenarios Global Economic Governance 2020 · Executive Summary of the Geneva ScenariosThe Geneva Scenarios
Decaying National Park
business as usual
In the year 2020, the world resembles a run-down national
park where poachers get away unpunished. Park rangers
depend on a dilapidated infrastructure and preservation
goals are further out of reach.
En el año 2020, el mundo está dominado por normativas
contradictorias, determinadas por instituciones internaci-
onales y Estados nacionales. Esto impide elaborar políticas
coherentes, por lo que aún se está lejos de encontrar solu-
ciones a los acuciantes problemas globales.
17
Global Economic Governance 2020 · Decaying National ParkThe food, energy and financial crises follow-up meetings resulted in low remain excluded from decision- importance. It does not take into
that had been unfolding since 2008 commitments and could not rever- making. Transnational corporations account sufficiently the different
made overwhelmingly clear that se the dangerous trends induced by reinforced their influence in the economic and social structures of
the Global Economic Governance climate change. The world economy world economy by ripping off the its partner countries. The Bank’s
(GEG) system was unable to cope remained dependent on fossil fuels; system in favor of their interests. strategy fails in supporting govern-
with these challenges adequate- pollution, natural disasters and International regulations are too ments to prepare for the necessary
ly. Global decision-makers failed to desertification increased. In 2015, weak to restrain their corporate be- restructuring in light of new global
implement fundamental reforms of the UN General Assembly had to havior, which is dominated by profit challenges.
the global system, muchless to rec- acknowledge that the Millennium seeking.
ognize the need to do so. Development Goals (MDGs) were The world system lacks coordination
out of reach. The income and ine- WTO rules do not adjust to the par- and coherence at multilateral, re-
Little has changed on the way to quality gap widened within as well ticular requirements of the current gional and national levels. Govern-
2020. The worst economic crisis as between developed and devel- challenges. This is most noticea- ments and international organiza-
since the 1930s wiped out the de- oping countries. ble by the contradiction between tions pass the buck to each other
velopmental achievements of the the recognition of core labor stan- for this deficiency, referring to its
past decade and led to tremend- In the year 2020, the basic struc- dards and their frequent disregard limited mandates. Global policies
ous social problems. In 2012, after ture of international organizations in export processing zones. Such are formulated incoherently and
the long depression, the world remains the same. Brazil, China, grey areas result in an increase of implemented by contradictory re-
economy started to recover slow- India and other emerging countries trade disputes that endangers the gulations. Global challenges are not
ly with a moderate growth of are on an equal footing with major operability of the Dispute Settle- tackled and global problems are not
gross domestic product, trade and Western countries in the WTO, IMF ment Mechanism. The “Most Fa- solved, but protracted once again.
financial flows. WTO’s Doha “De- and World Bank. No decisions can vored Nation” principle is seriously
velopment” Round concluded with be taken without the consent of undermined by the growing number
an agreement on a least common these powers that resist far-reaching of bilateral and regional Free Trade
denominator, which failed to rebal- changes in the decision-making Agreements. In order to deal with
ance the multilateral trade rules in process. The exclusive G20 has re- these grievances, several sectoral
favor of developing countries. The placed the former G8 and claims the negotiation rounds are launched.
IMF only gained importance in the leadership for setting the guide-
immediate aftermath of the finan- lines for global policies. The UN still The Bretton Woods Institutions
cial crisis by lending mainly to struggles with implementing its am- stick to their ideological roots and
Central and Eastern European bitious reform agenda “Delivering principles. The role of the IMF is
countries. Wall Street and London as One”. Civil society organizations questioned as most states have
retained their global financial roles, seek to fulfill their monitoring repaid their debts or successfully
together with Dubai, Singapore and advocacy role, although the graduated and only few countries
and Hong Kong. The 2009 UN Cli- transparency of international orga- apply for new IMF credit facilities.
mate Change Conference and the nizations has not improved. They The World Bank lost most of its
18 19
Global Economic Governance 2020 · Decaying National Park Global Economic Governance 2020 · Decaying National ParkMarch of the Elephants
competing regional blocs
In the year 2020, the world resembles a savannah, where
packs of elephants cut their own paths, irrespective of
their impact on the greater environment. Occasionally,
clashes between groups occur.
In the year 2020, regional integration is the main focus
for policy-making, while international organizations have
been bypassed. Regionalism advances development in the
countries involved, but it proved ineffective in solving glo-
bal problems. The world is in a situation of uncertainty and
unsustainable stability.
21
Global Economic Governance 2020 · March of the ElephantsThe food, energy and financial crises spoke” system. At the same time, cil of Regions” (WCR). The WCR internationally has become more
that had been unfolding since 2008 countries withdrew from multila- provides the platform for ad-hoc burdensome and costly.
made overwhelmingly clear that the teral processes. By 2018, problems dialogue and facilitates pragmatic
Global Economic Governance (GEG) deepened and a global struggle solutions for global problems. The Intraregional trade dominates and
system was unable to cope with over scarce natural resources star- regional blocs compete for scarce trade barriers within most regions
these challenges adequately. The ted, which led to (even violent) resources, such as water, food, fossil have been gradually lifted. The main
need for fundamental change of clashes between the main economic fuels and minerals. When diplomat- economic powers are investing heav-
the global architecture was wide- powers. Later that year, the “World ic tensions or conflicts occur, most ily in regional infrastructure, which
ly acknowledged, especially in the Council of Regions“ was established of them are settled through bilat- facilitates stronger regional trade
perspective of even greater – exis- as an exclusive forum for world lea- eral meetings. However, even vio- and production networks. Loca-
tential – crises. ders to deal with global problems. lent conflicts happen sporadically. lized and regionalized water, food
and energy systems are in place,
Governments could not agree on a In 2020, the WTO continues to exist. There are different kinds of “block- although they are not always suf-
common basis to reform the GEG However, in practice, it has become less” states. Some of them, such as ficient to wholly meet the demand
system in a way that would have irrelevant given the dominance of Australia, Japan or (the unified) of the region. Interregional trade
lived up to their respective inter- bilateral and regional trade agree- Korea, are strong enough to ne- occurs if there is not enough ca-
ests. This reinforced the frustration ments and a general disregard for gotiate mutually beneficial trade pacity for these exchanges in the
about the ineffectiveness of tradi- WTO’s dispute settlement rulings. and financial agreements. Others respective regions themselves.
tional international organizations The IMF and World Bank have lost remain independent due to their
(WTO, IMF, World Bank, UN). The importance and their functions strategic and geopolitical position Some regions have achieved mo-
economic situation exacerbated, were taken over by regional devel- (e.g. Egypt, South Africa) or due netary integration with regional
evidenced by high unemployment opment banks. The UN continues to to their wealth in energy resources institutions acting as lenders of
rates, wage deflation and decreas- operate, but governments do not (e.g. Iran, Saudi Arabia). Smaller last resort and managing exter-
ing consumption. This triggered attach importance to its existent and poorer countries with little eco- nal currency fluctuations. In other
social unrest and sometimes even conventions and do not engage in nomic and political power, such as regions, smaller countries have a-
political turmoil. Major economies’ creating new ones. The following most African countries, are subject dopted the lead currency or pegged
governments shifted priorities and seven blocs dominate the scene: the to frequent infringements by main their exchange rates to it. While
relied on their national strengths. enlarged European Union; the US/ economic powers if they possess de- exchange rates within each region
They advanced economic integ- North and Central American bloc; cisive raw materials. are thus mostly fixed, currencies be-
ration of their region by forming the China bloc; the India/South tween the regional blocs fluctuate.
strong “centers of gravity”. Smaller Asian bloc; the Brazil/South Ame- Transnational corporations adapted Sometimes, competitive currency
countries with different levels of rican bloc; the Russia/Central Asian to the new structures and built re- devaluations occur. The WCR deci-
economic and social development bloc; and ASEAN. gional production networks during sions are not sufficient to effectively
saw no other way out than to fasten a process of demergers and new address global problems, especially
onto the main economic power in The main economic powers meet mergers. However, doing business concerning climate change; even if
their neighborhood by a “hub and occasionally at the “World Coun- minimal cooperation exists.
22 23
Global Economic Governance 2020 · March of the Elephants Global Economic Governance 2020 · March of the ElephantsLaw of the Jungle
towards the abyss
In the year 2020, the world resembles a jun-
gle, where might makes right and where
each animal or pack is looking after them-
selves fighting each other for shrinking
resources.
In the year 2020, the world is on the descent into the abyss.
Multilateralism is dead and there is no international rule of
law. The world is run by changing coalitions, mainly con-
fronting each other instead of looking for solutions to the
growing global problems.
25
Global Economic Governance 2020 · Law of the JungleThe food, energy and financial crises employment in developed countries ments. Instead, changing coalitions China and Iran are confronting each
that had been unfolding since 2008 tripled by 2012. Various develop- are trying to take advantage of other over the energy resources in
made overwhelming clear that the ing country governments defaulted the vacuum at international and Central Asia. A new “scramble for
Global Economic Governance (GEG) on their foreign bonds and loans multilateral levels. Bilateral trade Africa” has started between China,
system was unable to cope with from the multilateral and regional agreements dominate and invest- the US and the bigger European sta-
these challenges adequately. But banks. Many countries that once li- ment and monetary policies follow tes in the attempt to secure access
the opportunity for fundamental beralized the flow of foreign funds narrowly national interests. Some to Africa’s raw materials. Around
change of the global architecture in and out of their countries erected European countries left the Euro 40 countries claim the right to
was missed; with dire consequen- barriers against credits and invest- zone and went back to their old explore the natural resources in Ant-
ces. ments. Populist movements and currencies. In many countries, popu- arctica, whose ice-shield is melting
nationalization campaigns made list and extremist movements come dramatically. But the big players
In the wake of the global eco- prominent foreign firms retreat to power, undermining democ- themselves are threatened by the
nomic crisis that brought high levels from developed and developing racy, erecting protectionist walls extreme nationalism prevailing in
of unemployment and increasing countries alike. Domestic and inter- and pursuing an aggressive foreign their own sphere: the EU is on the
poverty, many countries adopted national finance lived in fear and and sometimes neocolonial policy, brink of collapse, and strong au-
mercantilist strategies in an attempt lent only to the least risky clients, especially in weaker resource-rich tonomist and even secessionist
to resolve the crisis by pursuing which, despite its triggering crisis, developing countries. The situation movements have come into being
beggar-thy-neighbor policies. Coun- still included the US government. resembles those in the thirties of within other big powers like China,
tries around the world, including The US and other major economies the last century. India and the US, threatening their
major economies such as the US, left the WTO; Russia never joined. capability to act on a global level
the EU, China and India embarked Global problems like climate change, and thereby adding to the weakness
on the path of protectionism by In the year 2020, multilateralism is food and energy security have ex- of the international system.
increasing tariffs again, limiting im- dead. States pursue economic dip- acerbated because they were not
ports and increasing trade barriers lomacy on a bilateral basis or with dealt with in an effective way. Con-
for goods and services. This further varying coalitions. WTO does not flicts or even wars over resources
sharpened the economic downturn. exist anymore, nor the IMF and the have become more frequent. In
Stimulus packages were handed to World Bank, whose resources had coastal areas, heavy flooding has
the various financial and economic been drying out, as most countries become a regular phenomenon and
sectors to save them from wholesale stopped supporting them finan- arable land scarce. In the Middle
insolvency. The recession bit glo- cially. The UN has lost almost all its East, for instance, armed conflicts
bally, even affecting high growth importance, focusing narrowly on have already taken place over water
rate poles, such as China and India, climate change without success. The between Israel and its Arab neigh-
whose GDPs started contracting by G8 has been enlarged to include bors as well as between Turkey
2010. The fiscal deficits in the US, Brazil, China, India and others in and Iraq; there is the impending
EU and Japan skyrocked, especially 2010, but the annual meetings danger of nuclear war in the re-
as a share of a declining GDP. Un- are empty of any policy commit- gion, as well as in South Asia. Russia,
26 27
Global Economic Governance 2020 · Law of the Jungle Global Economic Governance 2020 · Law of the JungleHarmonious Nature Reserve
true multilateralism
In the year 2020, the world resembles a well-managed
nature reserve. Animals live in a protected environment
which is responsive to their special needs.
In the year 2020, an efficient and transparent multi-
lateral system with forceful legal mechanisms exists.
It is based on the principals of global partnerships and
shared power. Social welfare, sustainability and equality
are finally within our grasp.
29
Global Economic Governance 2020 · Harmonious Nature ReserveThe food, energy and financial crises for responsible global leadership. adjustment process takes place be- given to stimulate business without
that had been unfolding since 2008 Finally, governments felt impelled tween the five Global Organizations neglecting the needs of small- and
made overwhelmingly clear that the to enable real changes and, at this (Global Investment Bank, Global medium-sized enterprises and to
Global Economic Governance (GEG) constitutional moment in 2016, met Trade Organization, Global Labor provide aid to the most vulnerable.
system was unable to cope with with trade unions, business and Organization, Global Finance Or- The latest crises bequeathed a world
these challenges adequately. How- NGOs to shape a New Multilateral ganization and Global Environmen- calling for a redefinition of the rela-
ever, it took a few more years and System. tal Organization) and between tionship between state and market.
new crises for major actors to realize these organizations and states, Today’s decision-makers in govern-
the need for fundamental change In 2020, the multilateral system has trade unions, business and NGOs. ment, business and civil society
of the global architecture. changed radically. Neither the Unit- Strategies and programs of the Glob- believe in strong public-private rela-
ed Nations nor the Bretton Woods al Organizations are coordinated tionships, in which a perfect market
At the end of the year 2009, people Institutions and the WTO exist any- closely. is not formed by an invisible hand
did not speak about a crisis anymore more. Exclusive clubs like the G8/ but by these visible stakeholders.
but about a global calamity. Confi- G20 have disappeared. The aim in The New Multilateral System can-
dence in financial institutions was creating the New Multilateral Sys- not be blocked by vetoes. Decisions This concept has already put in
lost. The stumbling global economy tem was to make clear cut changes are generally taken by a dual voting place measures to expedite fairer
finally tumbled by mid-2010. Re- and to take the opportunity to start system, which demands a specified trade, to set clearer financial regu-
ports of increasing unemployment anew. States are no longer the only majority of the number of stake- lations including a world currency,
rates all over the world hit the decision-making power at the inter- holders voting and a specified with special focus on ameliorating
headlines. Politicians jumped from national level. Trade unions, business majority of votes weighted accor- access to financial services for peop-
one summit meeting to the other, and NGOs have the right to vote. The ding to economic significance. This le living in developing countries and
without tackling fundamental is- backbone of the new system is the voting system ensures that smaller credit access for small and medium-
sues. The world economy started Global Governance Assembly (GGA) stakeholders count, but the great- sized economies. The price structure
to recover slightly by 2014. By then, where states, trade unions, business er importance of more influential has changed. It now reflects the real
states had poured trillions of dol- and NGOs are equally represented. stakeholders is also adequately re- costs by internalizing environmental
lars into the financial and economic The GGA determines the general flected as they have to pay more of costs and expenditures necessary to
system without seriously addressing principals of the multilateral system. the bill. The main sources of funding guarantee decent work conditions.
the need for more regulation and A Global Tribunal has been estab- for the New Multilateral System are Simply spoken, shareholder value
surveillance. Governmental decision- lished to provide the system with provided by states and business and is replaced by sustainable value.
makers did not confront the real “teeth”. Cases can be brought to the to a smaller amount by trade unions Especially the internalization of en-
challenges. Thus, other speculation Global Tribunal by all stakeholders, and NGOs. An independent Evalu- vironmental costs has already led
bubbles in the energy, food, raw even individuals, after exhaustion ation and Audit Office and policy to stimulation in technological in-
materials and biotechnology mar- of domestic remedies. Besides the review mechanisms within each novation which has created a large
kets hit the world by 2015. Any hope Global Tribunal, dispute settlement organization were put in place to number of qualified jobs. States are
for economic recovery was squashed mechanisms have been set up in ensure the efficiency of the New investing tremendously in education
immediately. Henceforward, a broad each Global Organization. A Global Multilateral System. systems to ensure that their citizens
social movement brought millions Council was created in order to deal are capable of working in qualified
of people to the streets. Their mes- with sudden emergencies, such as The world is still struggling with jobs.
sage was simple but unmistakable: the increasing number of climate cleaning up the pile of shards from
“Enough is enough”! Powerful coa- catastrophes and their accompany- the last decade’s crises. The inequal-
litions of trade unions, business and ing human disasters. To guarantee a ity gap between rich and poor is
NGOs from North and South called high degree of complementarity, an decreasing and further priority is
30 31
Global Economic Governance 2020 · Harmonious Nature Reserve Global Economic Governance 2020 · Harmonious Nature ReserveBackground to the Geneva Scenarios
The Pathway towards
the Scenarios
The FES Geneva scenario project 1. Orientation Step two:
on “Global Economic Governance Analyzing the present system
2020” lasted from April 2008 to April Step one:
2009. It applied the methodological Narrowing down the theme After having defined the theme,
framework of the Shell scenarios the orientation workshop focused
(Shell International 2003). They We intentionally gave the scenar- on analyzing the disadvantages and
comprise four phases, i.e. research, io exercise the broad title “Global advantages of the GEG system. For
scenario building, application and Economic Governance 2020”. This the two brainstorming sessions, the
dissemination. The scenario build- allowed us to take a comprehen- metaplan© technique was applied.
ing phase consists of three pillars, sive view on the issue, but forced During the “Wailing Wall” session,
which are orientation, building and us at the same time to clearly de- the scenario team identified the
affirmation. fine the topic, select institutions disadvantages of the current GEG
and identify actors. After intensive system.
The FES Geneva scenario project was discussions with the entire scenar-
led by the director and his coordina- io team, we specified the scenario
tors. They managed the process and theme. We agreed to focus on the
guided the scenario team, which topics of trade, finance and mone-
consisted of two groups. The core tary issues, taking into account other The orientation workshop showed
team, composed of nine Geneva- areas, such as labor, environment or that the current global system is
based experts, formed the backbone investment, insofar they might in- not good enough to tackle present
of the project. It provided techni- fluence the scenarios. With regard problems and future challenges.
cal inputs and shaped the exercise. to institutions, we primarily looked
The entire scenario team encom- at the WTO, IMF and the World Step three:
passed the core team and 13 other Bank. We also included relevant UN Identifying driving forces
experts from various countries. This organizations, such as the Interna-
team came together for two work- tional Labour Organization (ILO) and Driving forces are external factors
shops at a seminar center outside of the United Nations Conference on that have the potential to push a
Geneva, the Château de Bossey. Trade and Development (UNCTAD). system into different directions.
The role of international fora, such They “are the elements that move
In the following, the scenario build- as G8 and G20, as well as non-state the plot of a scenario, that deter-
ing phase of the “Global Economic actors, like NGOs, trade unions and mine the story’s outcome” (Schwartz
Governance 2020” project is de- transnational corporations, were During the “Sunshine” session, the 1991: 101).
scribed in greater detail. also taken into consideration. scenario team identified the advan-
tages of the GEG system.
34 35
Global Economic Governance 2020 · The Pathway towards the Scenarios Global Economic Governance 2020 · The Pathway towards the ScenariosThe scenario team identified the shape of the GEG system: the second workshop. For each of
following seven driving forces that these categories, one selected story
were considered decisive for the fu- - Hot war between “centers of is reproduced in the following sect-
ture shape of the Global Economic gravity”; ion.
Governance system: - Nuclear war in the Middle East;
- World depression; Step six: Building the scenarios
- Regionalism and bilateralism; - Technological revolution;
- Emerging powers; - Collapse of the European Union; During the building workshop three
- Consequences of climate change; - Implosion of China; groups sketched out draft scenarios
- Food and energy security; - New ideology. along the same lines. First, elements
- Financial instability; of the relevant stories were filtered
- Technology; The critical uncertainty world de- out along the criteria polity (struc-
- Private sector interests. pression showed quite plainly how ture), politics (process) and policy
radically such factors could change (content). Second, the groups delin-
The driving forces regionalism and scenario building. All four scenarios eated draft scenarios. Third, these
emerging powers directly influ- took into account as far as possible draft scenarios were presented to
enced the building of the “March the potential consequences of the and discussed with the entire sce-
of the Elephants“ scenario. The con- critical uncertainties mentioned. nario team.
sequences of climate change, food With the new ideology we meant
and energy security as well as finan- a fundamental change in economic
cial instability implicitly affected the thinking and consumption behavior. 3. Affirmation
shaping of all scenarios. The driving
force technology showed exempla- Step seven:
ry the way, in which such a factor 2. Building Writing and testing the scenarios
could lead to different directions:
While innovations in certain food, Step five: Telling stories Based on the results of the building
climate, and energy technologies workshop, four draft scenarios were
could “save the world”, nano- and The scenario team members wrote written. The scenario team and ex-
nuclear technologies have the po- individual stories on what the GEG ternal experts continuously tested
tential to “destroy the world”. system could look like in 2020. These the scenarios against their plausi-
stories were clustered into four dif- bility, consistency, differentiation,
Step four: ferent categories. Stories in the first comparability, clearness and trans-
Identifying critical uncertainties category depicted a multilateral parency.
system of substantially reformed in-
Critical uncertainties are disturbing ternational organizations; stories in
events or discontinuities that could the second category described to a
lead to a radically changed environ- large extent the status quo; stories
ment. They cannot be predicted, in the third category focused on a
but they might happen. regionalized world; and stories in
The scenario team identified the the fourth category emphasized
following seven critical uncertain- protectionist tendencies. The clus-
ties that could influence the future tered stories formed the basis for
36 37
Global Economic Governance 2020 · The Pathway towards the Scenarios Global Economic Governance 2020 · The Pathway towards the ScenariosSelected Stories from the Scenario Team
A Multi-Hub Architecture
In the year 2020, the world is strug- developed and developing countries
gling to cope with the developmen- scramble to secure their sources of
tal, economic, environmental, social supply (especially with respect to
and political challenges posed by cli- energy sources, arable land and
mate change and global population marine resources). An increasing-
growth and their respective associ- ly dense web of bilateral, region- Multiple Hubs by 2020
ated impacts. As a means to adapt al, and plurilateral North-South
to climate change, developing coun- agreements to govern economic economies (especially in terms of Elsewhere in the world, Russia’s clos-
tries are increasingly employing relationships and access to natural technology, finance and labor), but er economic and natural resources
cleaner and renewable energy re- resources develops, while countries still retain strong interlinkages with ties to its “near-abroad” neighbours
sources as main components of their continue to struggle with issues the latter (especially in terms of enable it to develop its own de
energy infrastructure – leapfrog- relating to the implementation of trading and finance relationships). facto regional economic sphere. Eu-
ging over the use of fossil fuels. existing multilateral agreements Multiple hubs of regional integra- rope continues to be busy absorbing
Developed countries are retooling (such as those in the WTO, UNFCCC tion arise or are in the process of new members from the Balkans into
their own energy infrastructure to and other MEAs) primarily along forming by 2020. its political and economic infra-
lessen dependence on fossil fuels North-South lines. Issues relating to structure while seeking to retain
and reduce their greenhouse gas sustainable development continue In 2020, for example, ASEAN, its influence in Africa (while Africa
emissions. Population growth that to form the backdrop for North- Mercosur, SADC and the other sub- increasingly seeks to determine its
takes place mostly in developing South global interaction in 2020. regional mechanisms in Africa have own destiny); the United States has
countries poses additional social gone much further down the road strengthened its economic ties to
and economic pressures on develop- Struggles and dense towards making their regions as Mexico and Central American coun-
ing country governments to find web of agreements truly integrated regional economies tries; and Korea, Japan, Australia
ways to provide decent standards of marked by integrated production, and New Zealand increasingly look
living and economic opportunities To address sustainable development technology, finance, labor move- towards India, China and ASEAN as
– with some turning to labor mi- constraints arising from climate ment, and trade regimes. These their primary economic partners.
gration strategies while others focus change, population growth, and southern regional integration mech-
on improving domestic employment natural resource access, many devel- anisms – also linked in many ways International institutions
generation through rapid agro-in- oping countries – especially those to the economies of China, India, have changed
dustrial development. in southeast Asia, Latin America, Brazil and South Africa – provide
and southern Africa – have started much needed balance to the global The institutions for Global Econom-
A global struggle over natural re- developing stronger geographically economy in terms of diversifying ic Governance – i.e. the United
sources – in some cases hot, in other -based regional integration mech- the basis of global production and Nations, the World Bank, the IMF,
cases cold – has also taken place in anisms that to some extent are output and lessening global depend- the WTO, and even institutions
the years running up to 2020, as both delinked from developed country ence on the developed North. such as the Bank of International
38 39
Global Economic Governance 2020 · Selected Stories Global Economic Governance 2020 · Selected StoriesSettlements (BIS) – are wearing Global Economic Governance, includ- supply-side capacity development, started insisting on being represent-
new clothes or doing new things in ing recommendations on bringing agro-industrial diversification, and ed by developing country Board
2020 as compared to their original in these institutions as specialized services sector development start- members rather than developed
mandates. As developing countries agencies of the UN. ed paying off in the form of country Board members. Another
continued to assert their growing stronger domestic and regional significant change came in 2015
collective political strength and The WTO competitiveness and more diversi- when for the first time, a non-
economic status in these different fied and climate-adapted economic European national was appointed
institutions, governance structures, The collapse of the Doha Round of infrastructures. as IMF Managing Director.
decision-making processes, and in- WTO negotiations in 2008, and the
stitutional mandates started making attempt to restart it in 2010, failed THE IMF The World Bank
incremental shifts. due to continuing differences be-
tween developed and developing After the downsizing of the IMF The World Bank, in turn, as fewer
The UN countries with respect to the devel- in 2008 and 2009 due to revenue and fewer developing countries
opment content and outcome of shortfalls arising from the departure wanted to become World Bank bor-
By 2020, changes in the membership the talks. Subsequently, the WTO of developing country borrowers, rowers, also started to downsize
of the UN Security Council and in the started focusing instead on looking and as a result of pressure from in 2010 and to reduce its policy-
roles and functions of the UN Gen- at the technical implementation of developing country members, the based lending programs. The influx
eral Assembly and the UN Economic Uruguay Round commitments and IMF moved away from policy-based of climate-related funding from
and Social Council (and their sub- WTO members started maximizing lending to focus on multilateral sur- developed countries in 2009 and
sidiary bodies) are well underway the use of the WTO dispute settle- veillance of national financial and 2010, despite opposition from de-
to more adequately represent the ment system. Groups of developing monetary policies, including those veloping countries, gave the World
developing world’s presence and countries pooled resources to initi- of developed countries. The financi- Bank a new lease on life as a con-
concerns. Furthermore, the 2008 UN ate dispute settlement proceedings al crisis that first erupted in the US duit for voluntary and ODA-based
International Review Conference on against developed countries impos- in 2008 and 2009 prompted count- financing for technology transfer
Financing for Development gave im- ing WTO-inconsistent measures ries to push for stronger domestic to and climate mitigation actions
petus to a process launched in 2009 against developing country exports. regulatory mechanisms over their in developing countries. However,
that led to a major international con- At the same time, the group-based financial sectors, and IMF members in this area, the World Bank faces
ference in 2013 to look at issues and negotiating vehicles used by devel- pushed the IMF to work with the UN stiff competition from increasing
possibilities for the development of oping countries during the failed to undertake more rigorous surveil- levels of South-South cooperation
a new global economic institutional Doha Round evolved to become lance of financial policy and stability. with respect to climate change
architecture (e.g. a Bretton Woods semi-permanent, though informal, Furthermore, between 2009 and actions (in both mitigation and ad-
II conference). Though this inter- features of the WTO’s governance 2015, increasing developing country aptation) as developing countries
national review conference was mechanisms. As more and more pressure in the IMF for changes to continue to experience difficulties
initiated within the International developing countries focused their the IMF’s voting shares and formu- with, and refuse to accept, the con-
Monetary and Finance Committee efforts to build stronger regional la saw more incremental changes ditionalities imposed by the World
(IMFC) of the IMF, it later was sub- integration mechanisms, innova- being made, although by 2020, de- Bank and its donors with respect to
sumed as a process within the UN tion among developing countries veloped countries continue to hold such financing. Internally, following
General Assembly. It came out with flourished both at the national and the majority of such voting shares. the footsteps of the IMF, develop-
concrete recommendations regard- regional level since 2010. As a re- Furthermore, changes were also ing country pressure in the World
ing the role and functions of the sult, trade and development policies effected beginning in 2012 with Bank for changes in both voting
UN, the IMF, the World Bank, the were used as a medium to promote respect to representation on the shares and formula resulted in an
WTO, and the BIS with respect to low-carbon domestic and regional IMF Board, as developing countries incremental increase of chairs for
40 41
Global Economic Governance 2020 · Selected Stories Global Economic Governance 2020 · Selected Storiesdeveloping country groups in the Beginning in late 2008, international and through their groups or region- providing for sufficient economic
World Bank Board. There were also discussions relating to development al integration mechanisms playing opportunities for their growing pop-
changes in the representation pat- aid and aid effectiveness became stronger and more influential roles ulations.
terns on the Board, as developing more and more focused on ending both formally and informally. While
countries came to be more and more aid dependence, as developing developed country economies con- The multi-hub world of 2020, born
represented by developing count- countries sought long-term chang- tinue to be major drivers of the out of the challenges and crises of
ry Board members. Finally, in 2018, es to the quality and quantity of global economy, developing coun- the early years of the 21st century,
a non-US national became World development aid in order to sup- try economies – clustered in many depicts a world where developing
Bank President. port domestic development rather cases around regional or country countries are able to chart their own
than continued aid dependence. hubs such as India, China, ASEAN, development paths, and rely on
Bank of International By 2016, the international aid com- Mercosur, SADC – are also major themselves and their regional neigh-
Settlements munity officially declared that the drivers with their own momentum bours to improve their development
goal of development aid should be within their regions and in the glob- prospects, and have more influence
The Bank of International Settle- to support an aid exit strategy – i.e. al arena. in shaping global economic policy.
ments, for so long a bastion of de- supporting the creation of develop- The international institutions that
veloped countries’ central banks, ment conditions that would allow existed in 2008 have started ad-
by 2012 started opening itself up to for recipient countries to no longer justing to the greater weight and
developing country participation as require development aid. presence of developing countries
the impact of the financial crisis of in the global political and econom-
2008-2009 led to increasing calls for All the while, the rhetoric of pro- ic system, and responding more
domestic and multilateral regulation moting South-South cooperation in positively in many ways to the de-
of cross-border financial flows. The various areas of development policy velopment concerns expressed by
2004 Basel II accords of the BIS on increasingly was matched by action. developing countries.
capital adequacy of banks began in Bigger countries such as India,
2007; on developing country finan- Brazil, China and South Africa boost- In the context of addressing the
cial flows, domestic banking sector ed their South-South cooperation global challenges of climate change
capitalization and stability, and do- budgets and tried to the maximum and population growth, by 2020
mestic financial regulatory capacity. extent possible to support collec- the regional hubs have started
The impact of their implementation tive developing country action and playing key roles in shaping both
led to greater pressure from devel- positions in different international national and regional responses to
oping countries for the BIS to be forums. Smaller developing coun- these challenges as contributions to
more transparent and to involve tries continued to work together global actions. The increased num-
non-BIS member central banks in its through either their regional groups ber of resources made available
discussions. By 2015, sufficient pres- or issue-based groups. at the regional level due to more
sure had built up for the G10 group thorough regional integration im-
of developed countries in the BIS to The world in 2020: proved the ability of developing
agree to further expand its mem- A multi-hub model countries to undertake important
bership to include more developing shifts in their energy infrastruc-
countries, and for the BIS to under- By 2020, Global Economic Govern- tures and development paths. This
take a more active regulatory role ance is being undertaken on the ultimately promoted lower carbon
with respect to cross-border capital basis of a multi-hub model, with de- intensive production and consump-
holdings and movements. veloping countries both individually tion patterns while at the same time
42 43
Global Economic Governance 2020 · Selected Stories Global Economic Governance 2020 · Selected StoriesSelected Stories from the Scenario Team
A Dream Comes True
Our world is a different world in Bottom-up approach, global institutions are supported by
2020. For sure, it continues to have effective institutions and... regional arrangements of a similar
instances of inequality, poverty, nature.
and violence – as we continue to be The Global Economic Governance in
human beings with all our strengths this scenario has two guiding princi- The resulting world is not necessarily
and weaknesses. But important ples. One, the distribution of power a wealthier world and it is certainly
lessons have been learnt with broad among the layers follows a bottom- not a world organized from the top.
agreement among all on the key up approach. All power rests at the But it is a world less prone to trade
priorities: pursuit of peace, empha- local level and is ceded upwards exploitation, financial and mone-
sis on improving the quality of life (i.e. to national, then regional, and tary crisis, widening inequality and
for present and future generations, then global levels) where needed. poverty, and increasing violence.
and endeavours to provide the op- After the power is ceded in this
portunities and resources for the manner, the regional and global in-
realization of basic human rights. stitutions for economic governance
Economic objectives are subservient have the full authority to take ac-
to these priorities. Hence, the focus is tion in these areas. Hence, there are
on investments in education, health, perhaps fewer areas where global
and clean technologies. Interna- institutions/structures are created
tional trade and finance are pursued but these institutions/structures are
when they contribute to these. The far more effective than the previous
world is more integrated through ones.
exchange of information, ideas and
knowledge (with universal access …fair trade
to information and communication
networks) and less through flows WTO is one such institution, though
of trade and finance. While nation with a much more focused mandate.
states retain an important position, Its primary objective is to establish
the structure of global governance, and enforce rules for fair trade and
including global economic govern- not the pursuit of free trade. Simi-
ance, is multi-layered, with local, larly, there is a global institution to
national, regional and international deal with finance and monetary is-
dimensions. sues, whose primary objectives are
to ensure global financial and mo-
netary balances respectively. These
44 45
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