home > by publication type > articles > Building Global Jurisdiction, Systems and Capacity To Build Global Security – or Even a Superpower Needs Friends
Email
| Author: | Jonathan Winer |
|---|
March 4, 2003
Council on Foreign Relations
Old Rules, New Threats
Council on Foreign Relations/American Society of International Law
The dark side of globalization takes advantage of the same infrastructure for the movement of goods, people, funds, and information as do licit goods, people, funds and information. Governments have been bound by notions of sovereignty that stopped at the physical border of the country. This left no one responsible for regulating cross-border activity, or enforcing legal regimes applying to cross-border activity. There is a growing panoply of international initiatives targeting terrorism, international crime, drug trafficking, intellectual property theft, smuggling of people, and kleptocratic corruption. These include embargoes, certification programs, disclosure regimes, anti-corruption, drug trafficking, money laundering or terrorist standards, private sector “seal” initiatives, and name and shame exercises. These initiatives, while helpful, have yet to address three simultaneous constraints on effective governance to deal with transborder threats to physical, political, and economic security.
The first constraint is that of capacity: few governments have any capacity beyond their borders, diplomats and intelligence agencies. Capacity limitations exist at both the national and international level. Many national regulatory and law enforcement agencies deal poorly with money laundering and the smuggling of goods that are clearly illicit, such as narcotics. International organizations responsible for developing harmonized standards to combat such smuggling have tiny secretariats and limited resources. Regional law enforcement agencies remain in their infancy. Many natural resources abused in connection with conflict, including oil and gas, timber, coltan and tanzanite, are not subject to internationally agreed upon standards. Technologies that the U.S. considers to be munitions or dual-use items requiring license are routinely bought and sold by other countries in full compliance with their own domestic laws.
Notably, most governments can barely meet their domestic obligations to engage in regulation and enforce laws. Many face overwhelming impediments to domestic regulation and enforcement due to low salaries, poor training, too few personnel, and endemic corruption. Under such circumstances, transborder regulation and enforcement is wildly impractical: many governments cannot afford airfare to transport their officials to where evidence may be, let alone to maintain liaison relationships on a global basis.
The second constraint is technical: there is no system that today integrates and harmonizes information systems among governments in a comprehensive fashion. Information exchange remains largely bilateral, ad hoc, and sectoral. The problems we have seen with sharing of information within the FBI, between the FBI and the CIA, and among the FBI and all other U.S. government agencies, have been replicated in other countries internally. Generally, other countries interagency process and interagency information sharing is like ours – only worse.
The third constraint is jurisdictional: there is no consensus as to the extent to which a government has the right to treat as domestic activity transactions that occur in whole or in part elsewhere, undertaken by persons who may never have been in the country that is the target and victim of illicit behavior. Enforcement by countries of one another’s claims of jurisdiction remains pretty limited. When it comes to extradition, for example, most countries still require dual criminality and refuse to deliver their own nationals up for trial. While the U.S may sometimes be in a position to grab malefactors with the cooperation of other countries, there are few rules that today govern this territory. And those that do apply may need to be ignored in practice to avoid their precluding the rendition.
Under the Bush Administration, the U.S. has been at best skeptical of the value of multilateral legal frameworks and systems to deal with cross-border problems, whether of a security, economic, legal, or environmental nature. We have disdained at various times the authority of the United Nations, the continued vitality of major arms control agreements, such as the ABM Treaty and the Comprehensive Test Ban Treaty, the creation of an International Criminal Court, and the accord on climate change obligations contained in the Kyoto Agreement. We also unilaterally walked away from the core implementing mechanism of the Biological Weapons Convention.
The problem with this approach is that to deal with cross border threats, a country needs to have defense in depth. The concept of defense in depth is one in which security is not protected only at the border, but at some distance beyond the border, as well as within the border. To defend in depth, the U.S. must integrate its capacities internally across sectors – as the new Department of Homeland Security is supposed to be doing. It must also create an integrated capacity between its own governmental operations and those of other countries who necessarily must retain primary sovereignty over their national territory.
In order to deny safe haven to transnational threats, including terrorism, we need in principle to be able to penetrate every nook and cranny of every country on this earth. To do this without defense in depth is patently impossible. To achieve defense in depth, we need allies, everywhere, in the Middle East, South Asia, Latin America, and Africa, not just Canada, Europe and Japan. We also need common rules, as in their absence, the only principle that remains is the principle of power, a principle that is not likely to appeal to the other countries whose cooperation the U.S. will need on a recurrent basis to deal with transnational threats.
Together with harmonized rules that cross borders, we need a common regulatory and enforcement infrastructure. Neither Interpol, nor the World Customs Organization, nor the Egmont Group of financial intelligence units, nor the World Trade Organization, nor the World Intellectual Property Organization, nor the Financial Action Task Force or NATO nor even the United Nations itself provides a good model for such a common infrastructure. Europe is closer than anyone else to building one, with a Europol for cross-border policing, a Eurojust for cross border prosecutions and Schengen Agreement for immigration and asylum. These apply today to 15 countries and will soon apply to 23 countries or even more, as Euro-enlargement continues. These arrangements include both common rules and common systems. By bringing both together, they begin to create common capacity, one that will bring together what Secretary Rumsfeld calls “old Europe” with “new Europe,” to create operational functionality that the U.S. does not have with any of them, despite our many military, intelligence, law enforcement and regulatory liaisons
Yes, even a superpower needs friends. Although the U.S. may today be able to grab a Sheikh Khalid Mohammed in Pakistan and whisk him away to an undisclosed location, force should not be the only tool available to the U.S. in protecting our security, nor will it be sufficient to help other countries maintain theirs. We need both common rules and common systems to create transborder regulatory and enforcement capacities for governments to deal with multi-sectoral cross-border threats. Such rules and systems are today partial and incipient. The U.S. should make it a national priority to build them and make them comprehensive.
To take the gaps identified in this paper in reverse, one could begin with the jurisdictional gap. This might be filled by the creation of an international legal framework to cover information exchanges among regulators and law enforcement. Such a framework would focus on establishing common tracking and disclosure mechanisms applicable to goods, people, information relevant to law enforcement, and money. None exists today for goods other than a few basic rules on Customs documentation. None exists today for people whatsoever. Law enforcement information today moves on the basis of bilateral and multilateral arrangements, including conventions, and mutual legal assistance agreements. But a comprehensive common approach has yet to provide a complete framework for exchange and use of the information. The Egmont Group, the Bureau for International Settlements, the International Organization of Securities Commissions, and other organizations have begun to work out regulatory exchanges: but this information largely still cannot be made available to law enforcement. The jurisdictional gap needs to be filled so that all relevant sectors in all cooperating countries are operating from a common set of rules that enable information to flow in cases involving cross-border threats.
The systems gap also needs to be filled. The Egmont Group only enables information sharing among financial intelligence units. Interpol only addresses police sharing, and on an ad hoc basis. No mechanism for multilateral Customs sharing of information has yet been created. Bank regulators share with bank regulators, but have a more difficult time sharing with securities regulators, and no standard system for sharing has yet been created. We should build one. Interpol could be the foundation for it, or Interpol plus Egmont, or we could start from scratch. But a common platform for sharing is essential.
Finally, there is the capacity gap. Many governments simply do not, cannot and will not have the means of helping the U.S. protect itself. Whether corrupt, incompetent, under-resourced or all three and more, they do not have the means to protect their own people. To deal with the capacity gap, we need to turn to the private sector.
We have previously required bankers to become deputy sheriffs for governments when we amended the Bank Secrecy Act to require them to report suspicious transactions. We have now intensified these obligations with the enactment in 2001 of the USA-PATRIOT Act, which requires them to sniff out high-risk transactions and relationships, and to either not take such business or to investigate it and report it. We have applied these rules within the US, to financial institutions, domestic and foreign, based in the U.S. The model is one we need to extend to financial institutions around the world, and ultimately, to other sectors as well.
U.S. Customs has experimented with a program in which importers are given preferential treatment in getting goods into the U.S. in return for adopting a set of special security and documentation procedures to ensure that the goods are safe. Rather than object to this approach, major importing firms from around the world are clamoring to participate. The approach could be extended globally if U.S. Customs were to secure agreement by the World Customs Organization to make the U.S. program a model.
The positive “carrot” approach of the Customs initiative is very significant. To date, in dealing with transnational financial services, we have adopted an approach that is purely punitive in nature. To date, we have undertaken name and shame initiatives attacking poorly regulated jurisdictions as unfair tax competitors and as non-cooperative countries against money laundering. We have threatened them with loss of market access. And the result has been that the regimes are changing to more resemble ours, even in such historically non-transparent areas as the Middle East and in such historically non-transparent sectors as alternative remittance houses. But the practices in many of these countries have not changed – because of the capacity problem.
Here, the work of the Wolfsberg Group provides a possible model for action. The Wolfsberg Group has identified a set of standards for its member institutions to apply to all of their businesses and all of their business around the world. Thus, if Zimbabwe or Indonesia is unable to enforce money laundering and transparency laws within those countries, the members of the Wolfsberg Group will do so as a matter of internal compliance with their own policies and procedures.
Governments could work with the private sector to develop “seal” initiatives, whereby private sector entities agree to apply certain standards on a global basis to insure that documents are created covering all elements of an activity, that the documents are retained, that the documents are shared with governments for regulatory and enforcement activity, and that dirty business will be turned away. Seal initiatives could in turn lead to “white lists,” whereby those participating in the seal program are rewarded with business. Were the World Bank, for example, and the U.S. and the EU to agree only to place their deposits in banks adhering to the Wolfsberg Group’s standards on a global basis, those standards would become a global norm at near lightening speed. Shareholders would demand the standards. Managers would insist on them. Compliance officers would become a profit center, rather than a drain on wealth.
This approach can readily be applied to manufacturers of real goods, not just those handling electronic digits. At every supermarket in America, each product is given a bar-code. We can barcode every single item that crosses a border, giving ourselves a trail from producer to end user and every transit point along the way, if we decide to do it. Provide government procurement procedures that mandate such barcoding in order for the government to buy, and you’ll see barcodes ubiquitous. This could create an enormous market opportunity for whomever becomes Tags R Us. It would also make the planet safer, by permitting governments to track back when things go wrong.
In short, in order for governments to create a race to the top in the development of cross-border security, regulatory and enforcement capacity, they will need to turn to the entities that already have the greatest experience in cross-border activity, and which house the bright side of trade, as well as the dark. We could begin with banks and exporters and bit-by-bit build a regime in which governments and the private sector worked hand-in-hand to combat the threats threatening the stability of both.
In The Closing of the American Border, Edward Alden goes behind the scenes to tell the story of the Bush administration’s struggle to balance security and openness in the wake of the September 11, 2001, terrorist attacks.
In Termites in the Trading System, Jagdish Bhagwati reveals how the rapid spread of preferential trade agreements endangers the world trading system.
America Between the Wars explores how the decisions and debates of the years between the fall of the Berlin Wall and the collapse of the Twin Towers shaped the events, arguments, and politics of the world we live in today.
Complete list of CFR Books.
Copyright 2008 by the Council on Foreign Relations. All Rights Reserved.
Global Economy 