THE EUROPEAN UNION

I have always considered the European Union the embodiment of the open society idea. It has been brought into existence by piecemeal social engineering—Popper’s favored method for improving the world—based on the recognition that perfection is unattainable. Each step was designed to achieve a limited goal within a limited timeframe, fully understanding that the new arrangement will prove inadequate and necessitate a further step forward. That is how the European Union was constructed, one step at a time.

The result is an association of states that have agreed to a limited delegation of sovereignty. The degree of delegation takes a variety of forms, and memberships of various institutions like the European Central Bank and the Schengen Zone overlap. There is no grand design. The European Union is a collection of nationalities in which no nationality has a majority. These are the features that make the European Union the prototype of an open society. But it is still a work in progress, and in its unfinished state the European Union suffers from several deficiencies: It is too unwieldy for the size of its membership, it is opaque and bureaucratic, and the democratic influence is too indirect, so that people feel alienated. The dissatisfaction found expression in the recent rejection of the European Constitution by French and Dutch voters.

The construction of the European Union has now missed a step. The political will moving the process forward has run out of steam. Admittedly, conditions have changed since the Cold War. The Communist threat has dissipated, and globalization has become the dominant influence in the world. Globalization has rendered the welfare state, established in the aftermath of the Second World War, unsustainable in its original form. European attitudes towards globalization are sharply divided. Some want to use the European Union to preserve the achievements of the welfare state by creating a fortress Europe; others want to use it to force European economies to become more competitive. Yet others see the European Union as globalization writ small and therefore a threat to the welfare state they want to protect.

It is not only the movement of capital that has created problems but also the movement of people. The proverbial Polish plumber taking your job, the prospect of Turkish membership, and the growth of Muslim, African, and Asian immigrant communities all contributed to the resentment that led to the rejection of the Constitution. But the current crisis also raises questions about the viability of the open society concept. The European Union is proving less alluring as a fact than it was as an aspiration. That is a characteristic of open societies in general.

The crisis is not terminal. The European Union will be sustained by what has been considered one of its deficiencies: bureaucratic inertia. Decisions require consensus; in the absence of consensus, past decisions remain in force. That will keep the European Union going for a while. Instead of crisis, it may be more appropriate to speak of stasis. But in a fastchanging world, organizations that cannot make decisions cannot survive indefinitely. Therefore, the European Union must be revived if it is to survive.

One thing is certain: The process that has carried the European Union forward so far cannot be revived in the same form as before. It was driven by an elite, and the population at large has felt left out. This cannot continue, if for no other reason than on account of the referenda that are used with increasing frequency. Referenda express the people’s will in a raw, capricious form without the intermediation of an elite. Therefore, if the European Union is to revive, it has to be by popular demand. That demand is missing, and an abstract idea such as the open society cannot generate it. Open society can serve as a political goal in a repressive society, but not in an open one. The abstract idea has to be filled with concrete content, and when it comes to content, the people of Europe are sharply divided. They have not even decided whether or not the European Union should be a military power. And they are at loggerheads in their attitudes towards globalization.

The absence of the European Union as a military power compounds the disarray in the prevailing world order. That already nebulous entity, the West, has become even more nebulous. In the absence of a cohesive international community, there is no legitimate authority to exercise the responsibility to protect. As a result, tyrants reign with impunity in other parts of the world and the victims of repressive regimes and failed states remain unprotected.

Herein lies an idea that might propel the European Union forward: the idea of a global open society that needs the European Union as its prototype. The European Union has a mission: the spread of peace, freedom, and democracy. Not unlike the Bush agenda but hopefully better founded, the European Union has been more successful in carrying out that mission than most people realize. The prospect of membership has been the most powerful tool in turning candidate countries into open societies. Therefore, the European Union must, in principle, remain open to new members if it is to fulfill its mission.

Is this idea strong enough to serve as a unifying force driving the European Union forward? It is certainly strong enough for me. Although I am not a European citizen, I consider myself a European patriot, and I have a network of foundations, inside and outside the European Union, that regard membership in the European Union as their main objective. Could this be the basis of a popular movement?

The answer has to be no. As I have already mentioned, open society is too abstract an idea to generate popular support. The masses are concerned with prosperity and security, not with foreign policy. But Europe as the prototype of a global open society could fire the imagination of a minority whose engagement might counteract the influence of those motivated by nationalist and racist sentiments. The advantage of activating a pro-open-society minority is that they would not have to agree on other issues currently dividing Europe. Social democrats, Christian democrats, and liberal democrats could all unite behind the foreign policy mission of the European Union.

The European Union is facing a test, namely, the membership negotiations with Turkey. Is the abstract idea of an open society stronger than the prejudices against a Muslim country that once threatened to conquer Christian Europe? The current outlook is not encouraging: Extremists on both sides are aggravating prejudices. When the famous Turkish novelist Orhan Pamuk was put on trial in Turkey, it was not the government that was responsible but rather recalcitrant elements within the Turkish state structures who wanted to embarrass the government. When a Danish newspaper recently published caricatures of the Prophet it may have been an innocent prank, but the domestic Moslem minority took it as a provocation. The Danish prime minister, Anders Fogh Rasmussen, catering to his own constituency, refused to meet the ambassadors of Arab countries who sought to warn him of impending trouble. Syria and Iran had their own reasons for promoting angry reactions. Subsequently, riots spread through most of the Moslem world. Unfortunately, when extremists play off each other, the general public becomes polarized. I saw it happen in the Balkans and later in the war on terror. Now it is happening in Europe with the clash of Moslem and anti-Moslem sensibilities.

In theory, it should not be too difficult to keep the negotiations with Turkey alive. Turkey is not meant to become a member of the European Union right away; the process will probably take at least ten years. But strong political forces are seeking to terminate the process by making the position of the Turkish government untenable. Cyprus is the pretext. The island has been divided for decades, and the Greek side recently became a member of the European Union. It is now using its membership to obstruct the reunification plan that has been devised by the United Nations and agreed to by the Turkish side. Cyprus is aided and abetted by European politicians such as Nicholas Sarkozy in France and the foreign minister of Austria, Ursula Plassnik, who would like the negotiations to break down. The European Union is now demanding one-sided concessions from a Turkish government that is under countervailing pressure from domestic forces opposed to European membership. The European Union wants Turkey to admit ships from Cyprus; Turkey wants the European Union to open trade with Turkish Northern Cyprus which Cyprus, as a member of the European Union is able to block. Unless the other members put sufficient pressure on Cyprus, the accession process is liable to break down. The consequences could be far-reaching. If the prospect of membership is removed, the incipient civil war in Iraq could also destabilize Turkey. Already a splinter group of Kurdish nationalists is fomenting trouble in Eastern Turkey.

If negotiations with Turkey are suspended, the future of Europe may be decided sooner than we think and it may be decided without the general public realizing what the stakes are. What is worse, even if the public were aware of the issues, they may not line up behind the idea of Europe as an open society. The idea has not been given sufficient content to excite people’s enthusiasm. Instead of looking forward towards an uncertain, confusing and threatening future, people are looking backwards and seeking solace in their national or local identities. But the past history of Europe is full of wars and the wars have a tendency to become ever more devastating. That is not an alluring prospect. It is better to face forward even if the future is full of uncertainties. The task is to clarify the confusion. Recognizing our fallibility is not enough; we must also find a way to assure the survival of our civilization. Speaking in very general terms, it is clear that the world needs a greater degree of cooperation than the United States is currently willing to foster. That is the mission for a stronger and more cohesive European Union.

European countries have a different attitude towards cooperation than the United States. Robert Kagan wrote in his book Of Paradise and Power that Europeans are from Venus, Americans from Mars.²⁶ His argument was neo-Marxist in the sense that he derived the ideological superstructure from the different material conditions that prevail in the United States and Europe. The United States is the sole remaining superpower, but Europe has not even decided whether to become a military power. Europeans dislike the use of military force, while the United States under the Bush administration revels in it. Europeans are aware of the common needs of humanity, and they are willing to make some sacrifices for it. They devote a much larger portion of their national income to foreign aid than the United States, and they have subscribed to the Kyoto Protocol against global warming.²⁷

The attitude of the Bush administration has had disastrous consequences; the world needs an alternative and the European Union can provide it. To capture people’s imagination, the mission must be spelled out in greater detail. Some of the major controversies that currently divide opinion need to be resolved. Should the European Union be a power or an association of powers? How does the European Union relate to globalization? Should the European Union be open to additional membership? Should it be open to immigration?

It is not for me as an outsider to resolve these questions. But as a believer in the open society, I see the direction that Europe ought to take quite clearly: It ought to become the prototype of a global open society. That means recognizing that we belong to a global society and that our common interests ought to hold us together. It also means recognizing that globalization as it is practiced now is a lopsided, distorted version of a global open society. We need global institutions to match global markets. We need to resist the penetration of market values into areas of activity where they do not belong. At the same time, we must exclude governments from a direct role in managing the economy. The role of governments and international institutions is to set the rules, and it is the role of economic agents to compete within those rules. The rules ought to serve the common interest; competitors ought to pursue their own interests; but the competitors ought not to be allowed to bend the rules to suit their own interests. This is, of course, an impossible goal, similar to the Marxist ideal of everybody contributing according to his ability and receiving according to his needs. How close we can come to the ideal depends on our values and attitudes.

America has cultivated competition and carried it to unsustainable extremes. Europe comes from a tradition of cooperation. The influence of the community was at times so overwhelming that individuals sought to escape from it; that is one reason so many emigrated to America. Nevertheless, Europe has a tradition worth cultivating. People still believe in social justice on the Continent and in fair play in England. That is a good base to build on.

How do these noble sentiments translate into practical policies? The European Union needs to be competitive, but it can try to make the rules more equitable. To this end, it must be a power in a world of sovereign states, not just an association of powers. With an aging population, immigration is an economic necessity. As the prototype of a global open society, Europe needs to be open to immigration and to membership, but not without constraints. Sequencing is important. The issues of governance need to be settled before further enlargement, but for the sake of maintaining peace in the neighborhood, the principle of enlargement cannot be abandoned. That applies to Turkey in particular. Negotiations must continue, but, as I mentioned earlier, they will last a long time. That leaves time to settle the issues of governance. That is about as far as the general principles of open society can carry me. The rest is up to the Europeans. Let the debate begin! As I shall explain in greater detail in the next chapter, Europe’s dependence on Russian gas might be a good opening topic. The countries of Europe need to cooperate to ensure their energy security.

The European Union that will emerge from the discussions is liable to be somewhat antagonistic towards the United States, at least under its current leadership; but if it is successful, it is likely to influence the direction that the United States and other democracies take. That would help reconstitute the international community that the world so badly needs.

Can the people of Europe be inspired by this mission? The auguries are ambiguous. European countries have become feel-good societies, and in this respect they are just like the United States. There is not that much difference between them as far as consumerism and a lack of intrinsic values is concerned. On the other hand, creating a prototype for a global open society could make you feel really good. It is worth trying.

THE COMMUNITY OF DEMOCRACIES

A community of democracies that would exercise the responsibility to protect is an attractive idea in theory, but it has been disappointing in practice. The idea was launched in the waning days of the Clinton administration, in the summer of 2000, at a conference held in Warsaw. From the outset, the initiative suffered because it was a product of the foreign ministries and lacked support from the ministries of finance. As a result, the Warsaw Declaration has remained an empty gesture; it would not even have made it into the newspapers if France had not refused to sign it because it had been sponsored by the United States.

The Warsaw Declaration calls for biannual conferences to review progress. I have attended two of them so far, but I found them frustrating. In theory, the format is very attractive because it brings the governmental and nongovernmental sides together. In practice, nothing happens. The discussion revolves around a new declaration that is equally inconsequential but whose text is fought over by diplomats as if it mattered. The last meeting, in Chile in April 2005, was especially frustrating because the community of democracies could not agree about endorsing the proposed Human Rights Council. Many developing democracies were suspicious that the United States would use the Human Rights Council to further its imperial goals. This confirmed my contention that the United States has lost its ability to lead the world. Subsequently, the General Assembly of the United Nations approved the Human Rights Council against the almost solitary opposition of the United States. This event offers an opportunity for the community of democracies to take on real significance by ensuring that only democracies are elected to the Council. That is easier said than done because UN elections are the outcome of intricate bargaining, and individual countries have many interests other than their membership in the Community of Democracies. For instance, it would be next to impossible to keep Cuba off the Council. Nevertheless, the Community of Democracies could exert real influence not only on which countries are elected but also on how the Council functions. The foundation’s support of the Community of Democracies could finally begin to pay off.

If the United States changed its attitude, the Community of Democracies could become an influential factor both within the United Nations and beyond. At present, sponsorship by the United States would practically assure resistance by other democracies, particularly among the developing countries. Another administration could take on the leadership position but it would have to recognize that there are just too many divergent interests between the developing and developed democracies for them to be united into a single organization. It would be better if each had its own association, the two cooperating when their interests coincided. This is partly reflected in the current global architecture with a Group of Seven (G–7) and a Group of Twenty (G–20). The developing democracies already started forming their own association when the representatives of twenty-one developing countries met in Cancun in September 2003 to protect their interests in connection with the World Trade Organization negotiations.

The clash between the developed and developing worlds has derailed the Doha Round of trade talks. The United States, under a different president, could demonstrate its change of heart by encouraging the formation of a community of developing democracies, to which the United States and the members of the European Union would not belong. This could replace the Group of 77 (G–77) nonaligned nations that currently operate as a faction within the United Nations. Nonaligned with whom? The G–77 has outlived its usefulness. A community of developing democracies in alliance with the United States and Europe would then constitute a governing majority within the United Nations, but they would not necessarily agree on all issues.

At present, the developed countries condescend to the developing ones. For instance, the Group of 8 (G–8) heads of state invite heads of state from the developing world to attend some of their meetings. It would be desirable for the heads of state of developing countries to establish their own summit. There could be, for instance, a D–6 consisting of six developing democracies: Brazil, Mexico, India, Indonesia, Nigeria, and South Africa. The D–6 could then meet with the G–8 as equals, at least in appearance. This would be a first step toward reducing the disparity between center and periphery and establishing a more balanced world order.

The most important developing country is China. It is not a democracy, but it cannot be left out of any configuration that links together the developing world. The main obstacle to forming a D–6 is that the countries concerned do not want to offend China. China, in turn, has a real interest in making itself acceptable to the rest of the world. China is fast developing into a world power—and the longer it can continue developing without challenging other powers the better it is for its development. This strategy has been turned into a doctrine by the current leadership, which speaks of peaceful and harmonious development. At the same time, the power vacuum created by America’s weakness is making China too powerful too fast for its own good. In its pursuit of energy supplies, it has become embroiled in a conflict with Japan, and it has become a rogue customer in Africa (e.g., Sudan) and Central Asia (e.g., Uzbekistan). It is important to link China closely into any emerging global architecture. That would help reinforce the doctrine of harmonious development and steer China in a constructive direction. China could be considered for membership in the G–8. In light of the recent autocratic tendencies in Russia, the G–8 can no longer be considered a group of democratic countries. If China were admitted, it would not mind being excluded from the D–6. The D–6, in turn, could cooperate more closely with the G–7 in promoting democracy, while meeting with the G–9 on economic issues.

INTERNATIONAL CIVIL SOCIETY

I believe there is great scope for civil society and NGOs to fill the leadership vacuum left by the disarray in the international community. Civil society cannot usurp the place occupied by sovereign states in a world order based on the principle of sovereignty, but democratic governments have to pay heed to the wishes of the people. Civil society can be effective by exerting influence on governments or, on specific issues, by working in association with governments.

Civil society has played an increasingly vociferous role in global affairs in recent years. The manifestations that captured the television screens involved riots directed against international organizations. It started with the Seattle riots in 1999 and continued at every gathering of the World Trade Organization, the World Bank and the International Monetary Fund, and the G–8. I consider these efforts sadly misdirected because they seek to gain publicity by creating unrest and by going after the wrong targets. The international institutions largely reflect the policies of the member states; it is the member states that have to be held responsible. Most of the misery and poverty in the world can be attributed to the policies of sovereign states; yet, they were not the targets of the demonstrations.

With less television coverage, civil society gave rise to two powerful forces, the human rights and environmental movements. They made both issues permanent features in national and international affairs. The Landmines Treaty and the ratification of the International Criminal Court were largely the work of international NGOs. More recently, a new movement is emerging that is directed against corruption in general and the resource curse in particular. It has the support of NGOs active in both movements, environmental and human rights. The corruption perception index published by Transparency International since 1995 has become well-known; the fight against the resource curse is more recent and has not yet entered into the awareness of the general public. Since I am intimately involved in it, I should like to draw attention to it.

THE RESOURCE CURSE

Developing countries that are rich in natural resources tend to be just as poor as countries that are less well-endowed; what distinguishes them is that they usually have more repressive and corrupt governments and they are often wracked by armed conflicts. This has come to be known as the resource curse. The tale of the anti-resource curse movement is instructive because it is illustrative of what I call a fertile fallacy.

It all started with a campaign launched in early 2002 called Publish What You Pay. It was supported by a number of international NGOs, including Global Witness, which is grounded in the environmental movement and receives funding from my foundation.²⁸ The aim of the campaign was to persuade oil and mining companies to disclose all the payments they make to individual countries. The amounts could then be added together to establish how much each country receives. This would allow the citizens of those countries to hold their governments accountable for where the money goes. The name of the campaign was chosen by a publicity agent, and it turned out to be quite catchy. The campaign plugged into the prevailing sentiment against multinational corporations in the Western world, and it took off. The line of reasoning that led to the campaign, however, did not survive closer examination. (That is why I call it a fertile fallacy). Companies listed on the major stock exchanges could not be legally compelled to publish country-by-country accounts. When I discussed the matter with various supervisory authorities, they told me that special legislation would be needed. The United States Congress with a Republican majority, for one, would never approve such legislation. And even if all publicly traded companies responded to public pressure, some important state owned and privately owned companies that do not raise funds on the major exchanges would remain exempt; as a result, the total amounts received by governments could not be accurately calculated. Consequently, I was eager to switch the attention of the movement from the companies to the governments.

Fortunately the British government, prompted by British NGOs, took the lead. The World Bank and the International Monetary Fund were also very supportive. With their help, the Extractive Industries Transparency Initiative (EITI) was born in late 2002. Corporations, governments, and civil society were brought together to develop disclosure standards for companies and governments in oil-, gas-, and miningdependent countries. EITI is not a catchy title, but with the backing of the British government and the Bretton Woods institutions it is gaining increasing international standing and support; more and more countries are expressing an interest in adhering to its transparency standards. Civil society provides the impetus to keep the initiative going. My foundation network is deeply involved. We have set up Revenue Watch groups in several countries to track payments to governments.

EITI works on a voluntary basis, but civil society continues to press for a compulsory approach. This keeps up the pressure on the oil and mining companies. British Petroleum did not need to be pushed. Its president, Lord John Browne, genuinely believes that greater transparency is in the interest of the shareholders, and he detailed British Petroleum’s disbursements in Angola. The government of Angola threatened to cancel the company’s concession on the grounds that it had violated the confidentiality clause which is a standard feature of international oil and gas contracts. British Petroleum had to back down in that case but, along with Shell, has announced that it will publish its payments in countries where the government allows it. Nigeria has waived the confidentiality clause and asked companies to report their payments individually. Other EITI adherents, including Azerbaijan, do not allow individual reporting, but ask all operating companies to pool their payment data for public reporting purposes. The civil society movement will continue to press for individual company disclosure, which offers greater transparency and accountability. Azerbaijan, where British Petroleum is the lead operator, has established an oil fund on the Norwegian model and adopted EITI principles. Kazakhstan has also set up an oil fund and has signed on to EITI. A dozen other countries have expressed an intention to adhere to EITI transparency principles.

The most dramatic advances were made in Nigeria, long a showcase for the resource curse, and its tiny neighbor Sao Tomé. President Olusegun Obasanjo had been associated with Transparency International before he returned to Nigeria and became president. After his reelection in 2003, with UNDP’s financial support he brought back Ngozi Okonjo-Iweala from the World Bank and, assisted by a strong team of reformers, embarked on far-reaching fiscal, monetary, and banking reforms. Nigeria is a country in which practically everything has been tried but nothing ever worked; however, Ngozi, Oby Ezekwesili (the minister for solid minerals and driver of the Nigerian EITI process), Charles Soludo (governor of the Central Bank), and others have made major advances on institutional reform and transparency. The first independent forensic audits of oil revenues, production and management processes were recently published, pointing the way to further reforms in the oil and gas sector. With the help of my local foundation, the federal government also published its disbursements to the various state and local authorities. This led to some high-profile corruption prosecutions. Civil society, which had been very suspicious and hostile, began to believe in the process. The fiscal reforms also began to show results in the macroeconomic indicators. These developments helped Nigeria obtain substantial debt forgiveness as well as its first international credit rating.

The progress made in Nigeria is far from irreversible. Some of the richest and most powerful people feel endangered. People in the oil-producing regions see no benefits from the reforms so far. The efforts to halt corruption, piracy, and the stealing of oil have brought about a virtual insurrection in the Niger Delta. Presidential elections are due in 2007. There is no obvious successor to Obasanjo, and various regions are vying for the succession. Obasanjo is flirting with the idea of changing the country’s constitution and standing for a third term. Until the succession is settled, the achievements of the last few years are at risk.

Sao Tomé is a small and impoverished island close to the coast of Nigeria whose off-shore oil fields are being developed in partnership with Nigeria. A group of lawyers acting pro bono provided technical assistance to help Sao Tomé adopt far-reaching transparency rules for its future oil and gas production. Advances are being made in many other parts of the world.

I am willing to back many initiatives, but I will keep backing them only if they generate their own momentum. The anti-resource curse initiative has stronger legs than most and that has made me very enthusiastic. In cooperation with the Hewlett foundation and other donors, we have decided to set up an independent organization, the Revenue Watch Institute, that will devise strategies, act as a theoretical and practical resource center, and provide technical assistance to those who ask for it. It is early days, but the outlook is promising. It is much easier to put existing resources to better use than to develop resources where they do not exist. As I like to put it, we have hit pay dirt.

The effort to cure the resource curse is a good example of what private foundations working with NGOs can accomplish. As I mentioned at the beginning of this section, civil society cannot replace sovereign states but it can influence how they, and other actors, such as multinational corporations, behave.

The main obstacle to further progress on the resource curse is China, and, to a lesser extent, India. In its quest for energy and other raw material supplies, China is fast becoming the sponsor of rogue regimes. It is the main trading partner and protector of the military dictatorship in Myanmar. It feted President Islam Karimov of Uzbekistan immediately after the massacre at Andijan, and it conferred an honorary degree on President Robert Mugabe of Zimbabwe. It is the main buyer of Sudan’s oil, and it hindered the work of the United Nations in dealing with ethnic cleansing in Darfur. It extended a large credit to Angola when Angola failed to meet the conditions imposed by the International Monetary Fund. China’s behavior poses an obstacle that civil society cannot overcome on its own. Civil society can exert pressure on the multinationals, but not on China or India. The energy policy pursued by these countries will require the attention of governments. I shall elaborate this point in the next chapter.