Speech by President of the Republic Tarja Halonen at the Finnish Institute of International Affairs, 30 August 2001

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Democracy and Foreign Policy in a Globalised World



Globalisation is today's catchword. Hardly a newscast goes by without it. People talk about its blessings or its evils. People demonstrate against it in the streets. People agree about the importance of keeping it under control. But don't ask what it is. Although the term appears in all sorts of programmes, from the United Nations to the European Union, as well as research published by the Finnish Institute of International Affairs, you won't find a clear-cut definition in Encyclopaedia Britannica or any of its rivals. Globalisation boggles the mind. It is out there.

On a more serious note, ladies and gentlemen,

Globalisation is a good attempt to describe the path of development in a world where the significance of economic actors' nationality is declining. Enterprises are more clearly international in terms of operations, management and ownership. Today's globalisation was born out of the needs of the market, with technology as its godparent. The dazzling advance of information technology in particular has made this change possible.

Trade has become freer through the lowering of barriers. Markets for goods and services have expanded. International economic competition has increased and grown harder.

Free trade did not come about by itself. The World Trade Organisation was established in 1995, as the successor to the GATT, with the goal of liberalising trade so as to ensure a more prosperous, peaceful and accountable economic world. The WTO has 140 member countries and obviously it will continue growing. For example China and Russia are still outside but eager to join.

The WTO is presently preparing a decision for the start of a new round of trade talks. The European Union's goal is to keep the system in line with development by supplementing agreements in new areas such as investments and trade and environmental issues. It is also looking for a proper balance between free trade and the need to protect cultural and welfare services, for example.

Barriers to investment have also been eliminated and currency markets have been liberalised. The instability of finance markets has been a key issue in the debate on globalisation. One proposal has been the "Tobin tax" on currency transactions, which has received a lot of support among non-governmental organisations. You also know the opposing arguments. The problem exists, all the same and it will continue to appear on the international agenda.

The Finnish Government stated in its own programme that, "Transparency in international organisations must be increased and their ability to respond to the instability arising from the free movement of capital and the challenges of globalisation must be strengthened. In this connection, the introduction of comprehensive international systems aimed at countering disturbances caused by short-term speculative capital movements, for example, should be investigated."

This development - economic globalisation - is said to have increased prosperity around the world, but there is cause for concern because the benefits have not been shared equally. International and national differences are clear. There are signs that international and national gaps in prosperity have actually grown as a result of globalisation. This is what happens in a pure market situation.

An interesting question in my mind is: How can it be that in the past few years a whole bundle of international agreements were worked out to free markets of barriers, but now it doesn't seem possible to work out agreements which would protect people and nature?

There are opinions according to which the dynanism of market forces does not in the long run allow maintaining well-fare society in the way we are used to.

On the other hand there are people who are worried that the growth in consumption resulting from the liberalisation of markets may lead to an insuperable conflict with environmental sustainability.

Nevertheless most of us believe that the market forces can be controlled in a way allowing sustainable development in accord with requirements of the environment and needs of the people. But do we do enough in order to achieve these goals?

I am sure most people are glad the Cold War is over. Dividing the world into friends and enemies was relatively easy, but democracy, human rights and the rule of law did not count for much in geopolitics.

The post-Cold War period has been a triumph for democracy. Never before have such a large portion of the countries in the world had democratically elected governments in charge. Democracy has become a universally approved principle, although there are still gaps in its implementation. The Organisation of African Unity (OAU) has set an excellent example in refusing to admit leaders who have come to power by unconstitutional means to its summits. I can only agree with Secretary-General Kofi Annan's wish that the United Nations would apply the same principle.

The nations of the world thus have greater opportunities to work out common policies. But in a globalised world, political goals cannot be separated from economic goals. Trade and development policies are a more integral part of foreign policy. Governments cannot make political decisions which affect international relations without taking into account their economic effects, and vice versa. Economic development has effects on the welfare of both people and nature.

People are aware of this mutual dependence. Global environmental problems cannot be resolved through national or even regional measures. Multilateral decision-making provides possibilities to seek common solutions to environmental issues.

According to the United Nations Environment Programme, growth in world population, production and consumption have so far cancelled out the environmental benefits of technological development and political solutions. In my opinion international agreements concerning the environment are a key means to prevent and resolve global and globalised environmental problems.

The fate of the Kyoto protocol is important not just because of its content, but also because of the message it sends to support the international agreement system. Faith in governments' ability and will to resolve global problems has already suffered.

Foreign policy has traditionally been viewed as an area which should be left up to an elite circle of "experts". This is no longer true in today's world, however. Foreign ministers have found their rivals, and diplomats too. International activities have spread in different fields of administration. Parliaments monitor governments' activities more closely than before. The number, activeness and self-assurance of non-governmental organisations dealing with international affairs have grown rapidly.

Civic organisations have permanently reshaped international relations. They have in many ways acted as humanity's conscience. Human rights organisations have had a decisive significance in placing human rights on the international agenda. Civic organisations have also played a significant role in criticising globalisation and addressing the problem of third world debt. I believe that the Ottawa convention banning anti-personnel landmines, at the latest, awakened many professional diplomats to the importance of non-governmental organisations in international politics. In this new situation governments must not only put things in order, but must also convince people that they have done a good job in this respect.

Nation-states must, in a way, defend themselves in this new world. In discussion concerning globalisation in recent years, nation-states have been consigned to the scrap heap many times. In my opinion, on closer inspection the new alternatives which have been presented have not even been as impressive or effective from the viewpoint of democracy. But there is certainly room for improvement in modern democracies.

In many established democracies, there has been concern about the low voting rate among young people. In my opinion it is wrong to conclude from this that the parliamentary system or representative democracy has outlived its usefulness. Instead we should analyse the matter in a broader scope. Would it in fact be better to find a number of actors whose combined influence could be better than at present? The inclusion of non-governmental organisations at the earliest possible stage wouldn't hurt.

The use of referendums seems to be increasing. Finland has held two advisory referendums, the first in 1932 on the repeal of prohibition and the second in 1994 on joining the European Union. According to polls, Finns want their elected representatives to make tough decisions along with easy ones, and referendums are not very popular.

Ireland and Denmark, on the other hand, have to hold a referendum whenever constitutional laws must be amended as a result of international agreements, which is quite often in the EU. The voter turnout does not appear to be very high, which emphasises the significance of active citizens or opposing voters. Considerable difficulties may be encountered in distributing information and in reducing matters to a simple Yes or No. On the other hand referendums may increase general interest and involvement in the EU and other political matters.

Freedom of expression and the right to demonstrate are part of democracy. Tomas Hendrik Ilves, the foreign minister of Estonia, said to demonstrators in Seattle in December 1999: "I have a mandate given to me by the people of Estonia. On whose mandate are you acting?" This question no doubt contained a bit of frustration, but it reflects how difficult a situation a democratically elected representative of the people can wind up in. Ilves had a mandate and a responsibility to negotiate and agree on matters, but he could not fulfil the task entrusted to him by his nation at least partly because of the demonstrators. Demonstrations are part of democracy and the right to express one's own views is a key human right. However, demonstrations cannot take the place of representative democracy.

The question is not just whether we can control globalisation using the democratic means at our disposal, but whether we have a legitimate right to do so. I believe that we do.

Here lies globalisation's challenge for democracy. Since everything influences everything else, it is easy for individuals to get the feeling that they have little say over their own affairs even though their actions may have repercussions on the other side of the world.

Even in a globalised world, democracy has a local base - the fact that people have the right to elect their own representatives to decide on common matters. Democratic governments can reach agreements with one another and build global democracy. Globalisation can only be controlled through mutual measures, mutual agreements.

All international agreements have deficiencies and restrict the sovereignty of all those who sign them - in practice large nations a bit more than small nations. But they make the world a fairer place and give people more equal opportunities. International agreements can make globalisation more human.

If that is what we want.