SOCIAL SCIENCE RESEARCH COUNCIL  /  AFTER SEPT. 11

Governance Hotspots: Challenges We Must Confront in the Post-September 11 World
Saskia Sassen, Professor of Sociology, University of Chicago

Travelling around the world since September 11, I have found one theme becoming louder and louder in many places outside the US, both in the global north and global south, by critics of the attacks who share our horror and do not want to see such attacks ever again anywhere in the world. The theme is, in a nutshell, that the attacks on the US and the war against organized terrorism should not keep us from seeing and remembering all the other struggles going on and the larger landscape of rage and hopelessness engulfing more and more people.¹ This theme is either not welcome in the US, starting with the government, or is seen as being a chance to re-run old slogans. And yet, what one hears and reads outside the US should be attended to and positioned as a "de-centered" view, not quite a view from the outside, but one that does not have the US suffering and interests at its center. As social scientists we should be able to do this, even at a time when this is not politically correct. In my research about globalization, I have come to see that de-centering the production of knowledge about globalization is crucial for a better analysis.

Moving on after September 11 will require more than just eliminating organized terrorist networks and providing humanitarian aid, crucial as these two interventions are. There is a much larger set of issues that needs to be addressed -- by world and country leaders, by the supra-national system, by NGOs, by global civil society, by corporate economic actors. Many of these issues are specific to each country and inevitably centered in the internal dynamics and struggles of each, as Seyla Benhabib and Riva Kastoryano remind us in their pieces.² Others concern the further development of global governance institutions, discussed on this site by Held; and yet others deal with the globalization of informal violence, as in Robert Keohane's essay.³

Here I address what have emerged as two difficult governance hotspots in this larger context of challenge. Examining them is a way of dissecting the nature of the challenge and identifying specific governance deficits. The two issues are 1) the debt trap in which a growing number of governments are caught and which leads to among other consequences a sharp growth in illegal trafficking of people, and 2), immigration, a process caught in a whole series of new contradictions.⁴ Both of these will require innovations in our conceptions of governance. Both show that as the world is more interconnected, we will need more multilateralism and internationalism, but that these will have to consist of multiple and often highly specialized cross-border governance regimes and that simply relying on overarching institutions will not do. While I confine myself here to the role of governments it is clear that new forms of collaboration with civil society and supranational institutions are part of this effort.

I examine these two governance hotspots from the perspective of the countries of the global north and their self-interest rather than broader issues of social justice and humanitarian concern. The latter are crucial, yet utilitarian arguments might be more persuasive to many. It is probably also the case that the notion of addressing the debt and immigration is in the self-interest of the global north, rather than simply a matter of social justice, is the more difficult argument to make. Indeed such an argument has not quite been developed and I do not claim to succeed at it here.⁵ What follows are some elements towards the development of such an argument.⁶ It is important to emphasize that one's positionality does make a difference. If I were to produce an account from the perspective of a country in the global south, the issues would not be exactly the same. At the same time, examining these particular issues as part of a larger discussion about September 11 and its meaning is one way of de-centering the discussion in that it is not exclusively centered in the suffering and losses experienced by the US.

Interdependence

Among the many issues that September 11 brought to the fore is the fact that globalization has not only facilitated the global flows of capital, goods, information and business people, as was the intent of its "framers." It has also facilitated a variety of other entanglements. The list is long, and what follows are just some of the more dramatic instances. Global trade, tourism, and migration have enabled diseases and pests present in many parts of the global south to come North: tuberculosis is back in the US and typhoid fever in the UK, the encephalitis producing Nile mosquito has made its first appearance in the global north and so have a growing number of others. As governments become poorer they depend more and more on the remittances of immigrants in the global north and hence have little interest in the management of emigration and illegal trafficking of people. The pressures to be competitive make governments in poor countries cut their health, education and social budgets, thereby further delaying development and stimulating emigration and trafficking. Finally, powerful states cannot fully escape "bricolage" terrorism nor global organized terrorism. In brief, the interdependencies are many and they are multiplying.

Terrorism is a distinct and extreme act which requires a specific ingredient, and is hence fed by much more than socio-economic devastation. The globally organized and coordinated terrorism of September 11 is an even more extreme act than much of the more localized and more available forms of terrorism we see around the world today. The added ingredient for terrorism can take shape in many different ways. Further, terrorism may not always be as purposeful as in the case of its main forms today, whether September 11, the earlier IRA actions in Northern Ireland, or the ongoing acts by Hamas and Islamic Jihad in Israel.

Against this context, socio-economic devastation cannot be seen as a cause for terrorism, but it can be seen as a breeding ground for extreme responses, including illegal trafficking in people and successful recruitment of young people for terrorist activity, both random and organized. An example of extreme response was what we now know was the case with the militarized gangs in the aftermath of the Bosnian conflict: there were no jobs and no hope for these young men, so the most exciting option was continuing warfare. This is also the case with some of the gangs in devastated inner cities in the U.S. (though not all gangs, since now we also know that many inner-city gangs are actually contributing to social order and making life more manageable in devastated neighborhoods). In the global South, the growth of poverty and inequality and the overwhelming indebtedness of governments which then can put fewer and fewer resources into development, are all part of the broader landscape within which rage and hopelessness thrive. If history is an indication, it is only miniscule numbers who will resort to terrorism, even as rage and hopelessness may engulf billions. But the growth of debt, unemployment, and the decline of traditional economic sectors is feeding multiple forms of extreme reactions, such as, e.g., an exploding illegal trade in people, largely directed to the rich countries

The Need for New Specialized Multilateralisms

After a decade of believing that markets could take care of more and more social domains, we must now accept that markets cannot take care of everything. For instance, use by organized terrorist networks of the financial system comes on top of previous recognition that money laundering, the black net, tax evasions... all have benefited from the liberalization and globalization of financial markets. These abuses of the system signal the limits of liberalization and private governance, and call for a re-insertion of governments in the global financial system.

But this reinsertion of governments is of a very different sort from the earlier state-centered and largely domestic types. Today it calls for multilateral and internationalist measures. A good case in point is the recent announcement by the US, Britain, and the EU of legislative and regulatory measures aimed at the financial transactions of terrorists.⁷ They will use the Financial Action Task Force (FATF), the world's main anti-money laundering body, to seek agreement from its 31 member countries to join the effort to make a new set of rules binding on members and the rest of the world.⁸

This convention has gained new importance. Governments are asked to take on legal powers to freeze terrorists assets, and to include in this effort not only mainstream banking but also money-service businesses, such as the "hawala" system, which is Islam's version of the correspondent banking of medieval Europe's Lombards.

Part of the challenge is to recognize the interconnectedness of forms of violence that we do not always recognize as being connected or for that matter, as being forms of violence. For instance, the debt trap is far more significant than many in the global north recognize. The focus tends to be on the size of these debts, and these are indeed a small fraction of the overall global capital market estimated in 2000 at about 68 trillion dollars (the value of internationally traded derivatives, the leading financial instrument in the global capital market). There are at least two utilitarian reasons why rich countries should worry. Since these debts do not simply concern a firm, but a developing country's government, eventually they will entrap rich countries: i) indirectly via the decay of basic infrastructure and services in these countries which in turn lead to poverty, stalled development, the re-emergence of diseases we had thought were under control, and the further devastation of our increasingly fragile eco-system, and ii) directly via the explosion in illegal trafficking in people, in drugs, in arms that results partly from the shrinking opportunities for survival associated with the above conditions. Secondly, the debt trap is entangling more and more countries and now has reached middle income countries, those with the best hopes for genuine development.

Generally, it is becoming evident that even as we experienced a "decade of unprecedented peace and prosperity" in the language of our leaders, a growing number of countries in the global south experienced accelerated indebtedness, unemployment, decay of health and social services, and of infrastructure. While the spread of misery will largely not touch rich countries directly and hence, from a narrow utilitarian logic, can be seen as of little concern to the global north, it can lead to extreme acts, albeit by a minority of people and organizations in these countries. It is these extreme acts that may have direct or indirect impacts on the global North. And they may have these impacts partly because enabled by the infrastructure for globalization largely developed by the global north. An example is illegal trafficking; another example is the greater willingness of people to become open to the language of terrorism.

Perhaps one of the clearest indications of a direct effect in the last few years is the exploding illegal trade in people, largely directed to the rich countries. The United Nations estimates that 4 million people were trafficked in 1998, producing a profit of US$7 billion for criminal groups.⁹ As the global north has put increasing pressures on governments in the global south to open up their economies to foreign firms, these countries have become poorer even as certain sectors within them have gotten very rich. Governments and large sectors of the population in many of these countries have come to depend more and more on the remittances of immigrants in the global north, which overall are estimated at an annual US$70 billion dollars over each of the last few years. This has also meant that these governments have little interest in the management of emigration and illegal trafficking. Further, the pressures to be competitive make governments in poor countries cut their health, education and social budgets, thereby hampering development and stimulating emigration and trafficking.

A second governance hotspot concerns immigration. It will grow partly because of the conditions described above. The growth of debt, poverty , unemployment, closing of traditional economic sectors, has fed an exploding illegal trade in people as well as created whole new migrations. As the rich economies become richer they become more desirable and as they raise their walls to keep immigrants and refugees out, they feed the illegal trade in people. But migrations will also grow partly because of some of the infrastructure that enables globalization enables and indeed may induce migration. This mix of conditions produces major challenges for how to regulate immigration.

The Debt Trap: Breeding Despair

There are now about 50 countries recognized as hyper-indebted and unable to redress the situation. It is no longer a matter of loan repayment but a fundamental new structural condition which will require innovations in order to get these countries going. One consequence is that the debt cycle for poor countries has changed and that debt relief is not enough to address the situation. One of the few ways out, perhaps the only one, is for the governments of the rich countries to take a far more active and innovative role.

It is always difficult to accept that an effort that mobilized enormous institutional and financial resources does not work. But we now know that what has been done thus far for government debt in the global south will not solve the problem. Even full cancellation of the debt will not necessarily put these countries onto a sustainable development path. Had the Jubilee campaign to cancel all existing debt of poor countries succeeded, it would not necessarily solve the basic structural trap. There is enough evidence now to suggest that a new structural condition has evolved from the combined effect of massive transformations in the global capital market and so-called economic "liberalization" related to globalization. Middle-income countries are also susceptible, as the financial crises of 1997 and 1998 indicated.

If key features of the global capital market can have severe impacts on what are some of the richest economies in the world, such as South Korea, Brazil or Mexico, one can imagine the impact on poor countries. While all countries, including the U.S. and the UK, have in fact implemented some version of structural adjustment programs to lower expenditures by states on the social agenda, the impact on poor countries has been devastating. The bundle of new policies imposed on states to accommodate new conditions associated with globalization includes: Structural Adjustment Programs, the opening up of economies to foreign firms, the elimination of multiple state subsidies, and, it would seem almost inevitably, financial crises and the prevailing types of programmatic solutions put forth by the IMF. It is now clear that in most of the countries involved, whether Mexico and South Korea or the US and the UK, these conditions have created enormous costs for certain sectors of the economy and of the population. In the poor countries these costs have been overwhelming and have not fundamentally reduced government debt but rather entrapped these countries in a syndrome of growing debt.

In the 1990s we have seen a whole new set of countries become deeply indebted. In addition, most countries which became deeply indebted in the 1980s have not been able to overcome that debt. Over these two decades many innovations were launched, most importantly by the IMF and the World Bank through their Structural Adjustment Programs and Structural Adjustment Loans, respectively. SAPs became a new norm for the World Bank and the IMF on grounds that they were one promising way to secure long-term growth and sound government policy. The purpose of much of this effort was and is to make states more "competitive," which sounds fine. But it typically means sharp cuts in various social programs in countries where these programs are already inadequate in their coverage.

The actual structure of these debts, their servicing and how they fit into debtor countries economies, suggest that most of these countries will not be able to pay this debt in full under current conditions. According to some estimates, from 1982 to 1998 indebted countries paid four times their original debts, and at the same time their debt stocks went up by four times.10 Debt service ratios to GNP in many of the HIPC countries exceed sustainable limits. Many of these countries pay over 50% of their government revenues toward debt service or 20 to 25% of their export earnings. Africa's debt service payments reached $5 b in 1998, which means that for every 1$ in aid, African countries paid 1.4$ in debt service in 1998. What is often overlooked or little known is that many of these ratios are far more extreme than what were considered unmanageable levels in the Latin American debt crisis of the 1980s. Debt to GNP ratios are especially high in Africa, where they stand at 123%, compared with 42% in Latin America and 28% in Asia. The IMF asks HIPCs to pay 20 to 25% of their export earnings toward debt service. In contrast, in 1953 the Allies cancelled 80% of Germany's war debt and only insisted on 3 to 5% of export earnings debt service. These are also the terms asked from Central Europe after Communism.

There is considerable research showing the detrimental effects of such debt on government programs for women and children, notably education and health care --clearly investments necessary to ensure a better future. Further, the increased unemployment typically associated with the austerity and adjustment programs implemented by international agencies to address government debt have also been found to have adverse effects on women. Unemployment, both of women themselves but also more generally of the men in their households, has added to the pressure on women to find ways to ensure household survival. Subsistence food production, informal work, emigration, prostitution, have all grown as survival options for women.

What can be done to pull these countries out of the debt trap?

Poor countries need to import goods for basic needs and for development. Most are heavily dependent on imports of oil, food, and manufactured goods. Few poor countries can avoid trade deficits -- of 93 low and moderate income countries, only 11 had trade surpluses in 2000. These countries would like to export more, as is evidenced by the setting up recently of a new African Trade Insurance Agency supporting exports to, from and within Africa. Such specialized and focused efforts hold promise.

They need loans for these imports. Most exporters, especially from the global north, will only accept payment in dollars or other high value currencies. This further renders native currencies valueless. Once they have debts, interest payments and other debt servicing costs escalate rapidly and their currencies are likely to devaluate further. Borrowing in the leading foreign currencies is for these countries a debt trap. Their position is radically different from that of the rich countries, e.g., the US has a 300 billion dollar trade deficit and no problem getting loans at good rates, but foreign lenders are unlikely to want to hold loans denominated in LDC currencies. Further, lenders will ask for much higher interest rates from poor countries. This produces a debt trap that continues to reproduce itself.

What is necessary is not a lender of last resort to bail out rich investors but a lender of first resort to help the global south pay for needed, development-linked imports, in their own currencies if at all possible or through reasonable loans. The logic is that this would make poor governments less dependent on private lenders who demand leading currencies, and even then charge these governments a premium.

The government debts of poor countries, and perhaps increasingly of middle income countries as well, need to be taken out of the global capital markets and placed in the domain of the interstate system. Keynes already proposed this in the 1940s when the IMF was created. And the IMF has recently gone in this direction with its plan to provide early financing before a crisis, rather than bailouts of rich countries investors.

Immigration: Unsustainable Contradictions

Immigration is at the intersection of a number of key dynamics that have gained strength over the last decade and in some cases after September 11. Among the most prominent are the conditions described above which are likely to function as inducements for emigration and trafficking in people, much of it directed to the global north. A second set of conditions is the demographic deficit forecast for much of the global north. A third is the increasingly restrictive regulation of immigration in the global North, to which we must now add new restrictions after September 11.

What I want to extricate from this bundle of issues is the existence of some serious tensions among these different conditions. Let me focus on the increasingly restrictive immigration policies in much of the global north along with a) the sharpening demographic deficit in these same countries, and b) the growing military, economic and political interdependencies worldwide which will tend to produce new migrations and refugee flows as well as facilitating them.

Even as the rich countries try harder and harder to keep would-be immigrants and refugees out, they face a growing demographic deficit and rapidly aging populations. According to a major study (Austrian Institute of Demography 2001), at the end of the current century, population size in Western Europe will have shrunk by 75 million (under current fertility and immigration patterns) and almost 50 percent will be over 60 years old -- a first in its history. Where will they get the new young workers they need to support the growing elderly population and to do the unattractive jobs whose numbers are growing, some of which will involve home and institutional care for old people? Export of older people and of economic activities is one option being considered now. But there is a limit to how many old people and low wage jobs you can export. It looks like immigration will be part of the solution.

Yet the way the countries in the global north are proceeding is not preparing them to handle this. They are building walls to keep would-be immigrants out, thereby feeding illegal trafficking. At a time of growing refugee flows, the UN High Commissioner for Refugees faces an even greater shortage of funds than usual. This will also feed illegal trafficking of people. And anything that involves development of infrastructures for illegal trafficking will easily bring about an expansion and diversifying of illegal trafficking of all sorts, not just people, but also arms and drugs. The aftermath of September 11 has further sharpened the will to control immigration and resident immigrants, especially in the US but also in several European countries. The reduction in civil liberties will not help us learn how to accommodate more immigration to respond to the future demographic turn.

Economic and politico-military globalization bring with them an additional set of factors for immigration policy. They intensify, multiply and diversify these interaction effects. If we accept that immigration flows are partly embedded in these larger dynamics, then we may eventually confront the necessity of a radical rethinking of what it means to govern and regulate immigration flows. Such a radical policy rethinking has been worked out with trade through the Uruguay round of GATT and the creation of WTO. Such a policy rethinking is also becoming evident in military operations, with the growing weight of international cooperation, United Nations consent, and multi-lateral interventions. And it is being done for telecommunications policy and other areas that require compatible standards across the world. But there has been little innovation in immigration policy, a fact often explained by invoking the complexity and intractability of the issues.

In this context it is important to emphasize that many of the policy areas that have seen enormous innovation are also extremely complex, that policy re-formulation could not have been foreseen even a decade ago, and, perhaps most importantly, that the actual changes on the ground (e.g., globalization) in each of these domains forced the policy changes. From where I look at the immigration reality -- with the freedom of the scholar rather than the day to day constraints of immigration policy makers and analysts -- the changes brought about by the growing interdependencies in the world will sooner or later force a radical re-thinking of how we handle immigration. Taking seriously the evidence about immigration produced by vast numbers of scholars and researchers all over the world could actually help because it tends to show us that these flows are bounded in size, time and space, and are conditioned on other processes; they are not mass invasions or indiscriminate flows from poverty to wealth.

We will need regionally focused multilateral approaches involving the governments of both emigration and immigration countries, as well as a range of non-governmental actors, to develop the capacity to manage migration flows. This means recognizing that migration flows are part of how an interconnected world functions. The challenge that lies ahead will demand that all countries involved move beyond current conceptions of immigration policy in the receiving countries and that the governments of sending countries, notorious for their lack of involvement and indifference, join in this effort.

There are elements of innovation in some specific policies. Beyond the crucial objective of effective socio-economic development that makes it possible for people to stay in their countries, there are specific migration-linked issues. For instance, a very particular and utilitarian beginning that might motivate rich countries concerns precisely the emerging demographic and labor force asymmetries. We have recognized the emergence of a global labor market for high-tech, financial and legal experts, and to that end we have set up multilateral systems and institutional protections and guarantees for these workers (e.g., in NAFTA and in the GATT). Now it is time to recognize that there is an emerging global labor market for low-wage workers as well (e.g., maids, nannies, and nurses) and that they deserve the institutional protections and guarantees given to professional workers.

The events of September 11 have produced a new set of constraints and opportunities. Governments have had to re-enter domains from which they had withdrawn. Forms of openness that had come to be considered crucial for a global economy -- such as enabling international business travel -- are now subject to new restrictions which may hamper economic globalization. We are seeing a re-nationalizing of government efforts to control their territory after a decade of liberalization. But we are also seeing new types of cross-border government coalitions, especially the effort to fight global terrorism and the legal, police and war actions deployed.

The two cases I briefly examined here bring to the fore the need for specialized multilateral collaboration among specific sets of countries. In an era of privatization and market rule we are facing the fact that governments will have to govern a bit more. But it cannot be a return to old forms -- countries surrounding themselves with protective walls. It will take genuine multilateralism and internationalism and some radical innovations.

The world today faces new governance challenges. Growing interconnectedness has given new meaning to old asymmetries as well as creating new ones. The rising debt, poverty, and disease in the global south are beginning to reach deep into the rich countries. Many of these conditions need to be addressed through fairly specialized and focused multilateral efforts. National governments will have to get involved along with non-governmental actors and supranational organizations.

Saskia Sassen is the Ralph Lewis Professor of Sociology at the University of Chicago. Her latest book is a new updated edition of The Global City (Princeton University Press 2001).

Footnotes

¹ For a wide selection of newspaper articles from around the world see the Global Policy Forum Website: http://www.globalpolicy.org/.

² See on this website "The Reach of Transnationalism" by Riva Kastoryano and "Unholy Politics" by Seyla Benhabib.

³ See on this website "Violence, Law and Justice in a Global Age" by David Held and "The Globalization of Informal Violence, Theories of World Politics, and 'the Liberalism of Fear'" by Robert O. Keohane.

⁴ Some of these contradictions are described in A. Zolberg's piece on this website, "Guarding the Gates."

⁵ There are two important qualifications, impossible to develop in this type of piece. One is that there are moral arguments which could be read as demonstrating the utility of the more moral policy decision (see e.g., the work by Joseph Carens), and even some elements in the Jubilee campaign for debt cancellation. I see this as a different type of logic from what I try to present here. Secondly, there is a large literature that shows the advantages of immigration for highly developed economies (e.g., Portes and Rumbaut, Immigrant America, Berkeley, Ca: University of California Press 2000). I distinguish this from the broader argument I present here about the utility of developing specialized multilateral and internationalist forms of governing cross-border migration flows and of handling the growing indebtedness of the global south.

⁶ I have developed some of this at greater length in Guests and Aliens (New York: New Press 1999).

⁷ Other ways in which governments are now expected to intervene where they had been pushed out or asked to exit, are particular types of subsidies, such as those to the airlines, Keynesian-style fiscal and monetary policies, and taking over sensitive private sectors, such as airport security screening.

8 The UN passed a convention in 1999 aimed at suppressing and criminalizing the financing of terrorism and at the sharing of pertinent information after September 11.

⁹ These funds include remittances from prostitutes' earnings and payments to organizers and facilitators in these countries.

¹⁰ Toussaint, Your Money or Your Life: The Tyranny of Global Finance (Pluto Press 1999:1). According to Susan George, the South has paid back the equivalent of six Marshall Plans to the North (see Bandarage, Women, Population and Global Crisis, Zed Books 1997).