<html><body>We're Not from the Government, but We're Here to Help June 11, 2003 Transcript prepared from tape recording <TABLE width="100%" border=0> <TBODY> <TR> <TD vAlign=top align=left width="25%"> 9:15 a.m.</TD> <TD vAlign=top align=left width="75%" colSpan=2> Registration</TD></TR> <TR> <TD vAlign=top align=left width="25%"> 9:30</TD> <TD vAlign=top align=left width="75%" colSpan=2> Welcome and Introduction</TD></TR> <TR> <TD vAlign=top align=left width="25%"> 9:45</TD> <TD vAlign=top align=left width="25%"> Session I</TD> <TD vAlign=top align=left width="50%">  </TD></TR> <TR> <TD vAlign=top align=left width="25%">  </TD> <TD vAlign=top align=left width="25%"> Moderator:</TD> <TD vAlign=top align=left width="50%"> John Fonte, Hudson Institute</TD></TR> <TR> <TD vAlign=top align=left width="25%">  </TD> <TD vAlign=top align=left width="25%"> Paper 1:</TD> <TD vAlign=top align=left width="50%"> "The NGO Challenge: Whose Democracy Is It Anyway?"</TD></TR> <TR> <TD vAlign=top align=left width="25%">  </TD> <TD vAlign=top align=left width="25%">  </TD> <TD vAlign=top align=left width="50%"> Gary Johns, Institute of Public Affairs, Australia</TD></TR> <TR> <TD vAlign=top align=left width="25%">  </TD> <TD vAlign=top align=left width="25%"> Paper 2:</TD> <TD vAlign=top align=left width="50%"> "International NGO Organization: Why the Left Are Winning"</TD></TR> <TR> <TD vAlign=top align=left width="25%">  </TD> <TD vAlign=top align=left width="25%">  </TD> <TD vAlign=top align=left width="50%"> Jeremy Rabkin, Cornell University</TD></TR> <TR> <TD vAlign=top align=left width="25%"> 11:05</TD> <TD vAlign=top align=left width="25%"> Session II</TD> <TD vAlign=top align=left width="50%">  </TD></TR> <TR> <TD vAlign=top align=left width="25%">  </TD> <TD vAlign=top align=left width="25%"> Moderator:</TD> <TD vAlign=top align=left width="50%"> Roger Bate, International Policy Network</TD></TR> <TR> <TD vAlign=top align=left width="25%">  </TD> <TD vAlign=top align=left width="25%"> Paper 1:</TD> <TD vAlign=top align=left width="50%"> "Biz-War: Origins, Structure, and Strategy of Foundation-NGO Network Warfare on Corporations in the United States"</TD></TR> <TR> <TD vAlign=top align=left width="25%">  </TD> <TD vAlign=top align=left width="25%">  </TD> <TD vAlign=top align=left width="50%"> Jarol Manheim, George Washington University</TD></TR> <TR> <TD vAlign=top align=left width="25%"> </TD> <TD vAlign=top align=left width="25%">Paper 2:</TD> <TD vAlign=top align=left width="50%">"Increasing NGO Openness and Accountability"</TD></TR> <TR> <TD vAlign=top align=left width="25%"> </TD> <TD vAlign=top align=left width="25%"> </TD> <TD vAlign=top align=left width="50%">David Riggs, Capital Research Center</TD></TR> <TR> <TD vAlign=top align=left width="25%">12:30 p.m.</TD> <TD vAlign=top align=left width="38%">Luncheon Keynote Address</TD> <TD vAlign=top align=left width="37%">Kenneth Anderson, American University Law School</TD></TR> <TR> <TD vAlign=top align=left width="25%">1:55</TD> <TD vAlign=top align=left width="25%">Session III</TD> <TD vAlign=top align=left width="50%"> </TD></TR> <TR> <TD vAlign=top align=left width="25%"> </TD> <TD vAlign=top align=left width="25%">Moderator:</TD> <TD vAlign=top align=left width="50%">Brian Hook, Hogan and Hartson, LLP</TD></TR> <TR> <TD vAlign=top align=left width="25%"> </TD> <TD vAlign=top align=left width="25%">Paper 1:</TD> <TD vAlign=top align=left width="50%">"NGOs and Foreign Aid: A Case Study in Institutional Capture"</TD></TR> <TR> <TD vAlign=top align=left width="25%"> </TD> <TD vAlign=top align=left width="25%"> </TD> <TD vAlign=top align=left width="50%">Mike Nahan, Institute of Public Affairs, Australia</TD></TR> <TR> <TD vAlign=top align=left width="25%"> </TD> <TD vAlign=top align=left width="25%">Paper 2:</TD> <TD vAlign=top align=left width="50%">"Northern NGOs in the South: Health, Wealth, and the Environment"</TD></TR> <TR> <TD vAlign=top align=left width="25%"> </TD> <TD vAlign=top align=left width="25%"> </TD> <TD vAlign=top align=left width="50%">Roger Bate, International Policy Network</TD></TR> <TR> <TD vAlign=top align=left width="25%">3:15</TD> <TD vAlign=top align=left width="25%">Session IV</TD> <TD vAlign=top align=left width="50%"> </TD></TR> <TR> <TD vAlign=top align=left width="25%"> </TD> <TD vAlign=top align=left width="25%">Moderator:</TD> <TD vAlign=top align=left width="50%">Fred Smith, Competitive Enterprise Institute</TD></TR> <TR> <TD vAlign=top align=left width="25%"> </TD> <TD vAlign=top align=left width="25%">Paper 1:</TD> <TD vAlign=top align=left width="50%">"The Corporate Social Responsibility Policy of the European Union: A European Implementation of Globalist Goals"</TD></TR> <TR> <TD vAlign=top align=left width="25%"> </TD> <TD vAlign=top align=left width="25%"> </TD> <TD vAlign=top align=left width="50%">Marguerite Peeters, Institute for Intercultural Dialogue Dynamics, Brussels</TD></TR> <TR> <TD vAlign=top align=left width="25%"> </TD> <TD vAlign=top align=left width="25%">Paper 2:</TD> <TD vAlign=top align=left width="50%">"Why NGO-Stakeholder Dialogue Can Endanger Corporate Social Responsibility"</TD></TR> <TR> <TD vAlign=top align=left width="25%"> </TD> <TD vAlign=top align=left width="25%"> </TD> <TD vAlign=top align=left width="50%">Jon Entine, AEI and Miami University of Ohio</TD></TR> <TR> <TD vAlign=top align=left width="25%"> 4:30</TD> <TD vAlign=top align=left width="75%" colSpan=2> Adjournment  </TD></TR></TBODY></TABLE> Proceedings: MS. PLETKA: Welcome. I'm Danielle Pletka, the vice president for foreign and defense policy studies of the American Enterprise Institute. We are very, very pleased to host this conference today with the Institute of Public Affairs, Australia. I have just a few short words of welcome. About a year ago, maybe a little less, this man on a Fulbright, this rather energetic Australian man, kept coming and knocking on our doors talking about nongovernmental organizations and how we need to pay attention to this. And I have to give full credit to Gary Johns, the aforementioned Fulbright Scholar who's sitting here to our right, for a lot of the inspiration for this conference and many of the fine ideas that go in, along with all of our other participants. There are some people--I hope not too many in the audience and a certain number outside our front door who are less well-dressed than some in our audience--who believe that this is an assault on nongovernmental organizations, and I would like to refute that right at the very beginning. There is absolutely no intention of assault or anything else. We--and I think I can speak safely for everybody--have enormous admiration for the voluntary work that people do, for the fine work that a lot of nongovernmental organizations do in a whole variety of areas--legal, humanitarian. And so I really want to make absolutely clear that nobody here today is interested in knocking down the principle that underlies the work of nongovernmental organizations. But. But as governments rethink their assistance programs overseas and they rethink the idea of giving money to foreign governments, they have started working a great deal more with nongovernmental organizations. A lot more foreign assistance is flowing through nongovernmental organizations. In addition, with the growth of supernational institutions like the World Trade Organization, like the International Criminal Court, and others, nongovernmental organizations, through the process of accreditation and other processes, are attaining a great deal more power on the world stage--some to the good, some to the bad. It raises the question, and it's a fairly simple question: Who are they, what do they do? I think it's a legitimate question, and that is one of the things we're going to be looking at today. I want to make two final notes. There will be papers that will be available as a result of this conference in a few weeks, I hope. And in addition, at lunchtime today, after our lunch speaker gives his talk, we will be--AEI together with the Federalist Society will be rolling out our new website, NGOWatch.org. So I hope everybody will take the opportunity to look at what are the opening stages of that website outside on the computer. But we will talk a little bit more about that at lunchtime. And now I would like to introduce my colleague, Mike Nahan, who is the executive director for the Institute of Public Affairs in Australia. And thank you very much. Mike? MR. NAHAN: Thanks. First, I would like to thank the American Enterprise Institute for helping us and co-hosting this. When the IPA over in Australia tried to set up a unit to debate and look at issues of the growth and accountability and other factors related to the NGOs, it became very obvious to us some time ago that the central place that this debate needs to take place is here. The policies, the organizations, the issues often flow from here and affect us from afar. And my colleague Gary, who was here on a Fulbright, spent most of his time searching for a partner, and AEI was very graceful and helped us do this. Hopefully, things will flow on. Just from our own perspective, the reason why we got into this issue is quite the opposite of our friends' downstairs, and that is, quite clearly, the NGO sector has grown in importance and influence. In fact, most of us, I think--well, speakers anyway--work for nongovernmental organizations--they might be called think tanks, but they function in a similar manner--and have worked for voluntary organizations. But with influence, size, power and whatnot come questions of accountability, transparency, and their roles. And in society, we're increasingly having debates about government accountability--which I've spent most of my life working as an economist--and corporations'. The third sector also needs it. And that's what we're striving to do here. I might add just in the handouts, we put out an NGO Watch which focuses on the Asia Pacific region, but there are links elsewhere. That's available on our website. Please look for it. We're always looking for people to participate, debates and criticism. There are a whole range of other groups doing this. After this session here in D.C., similar conferences will be held around the world, particularly one in Asia later this year. And if anybody wants to participate in this debate, we in particular, and I'm sure the AEI, will encourage it. Thanks. SESSION IMR. NAHAN: The first session will include Jeremy Rabkin and Gary Johns, and its rapporteur is John Fonte, who most of you will know. He's a senior fellow at the Hudson Institute, published on a wide range of social, cultural, and educational issues, and actually has written a very fascinating paper that we republished in our journal, The IPA Review, on the issue of transnational progressives and when it tries to come to grips with a lot of the ideology that's permeating NGOs. John Fonte. MR. FONTE: Thank you. Actually, I think you're going to hear many divergent views today, some more critical of NGOs, such as myself. I just want to make a comment before we introduce them. Nearly a year before the September 11th attacks, wire service stories gave us a preview of the transnational politics of the future. It was reported October 24, 2000, that in preparation for the U.N. Conference Against Racism, about 50 NGOs, American NGOs, sent a formal letter to the U.N. human rights commissioner, Mary Robinson, calling on the United Nations to "hold the United States accountable for the intractable and persistent problems of discrimination that men and women of color face at the hands of the U.S. criminal justice system." This NGO letter was signed by leading American NGOs--Amnesty International USA, Human Rights Watch, the Arab American Institute, National Council of Churches, American Friends Services Committee, National Association for the Advancement of Colored People, American Civil Liberties Union, Mexican American Legal Defense Fund, and so on. Their spokesman, Wade Henderson of the Leadership Conference on Civil Rights said, quote, that they had repeatedly raised these issues with federal and state officials, with the Congress of the United States and so on, but to little effect. So he said, "In frustration, we now turn to the United Nations." In other words, what he was in effect saying, that he was unable to enact the policies that he favored through the normal process of American constitutional democracy, through the Executive Branch, the Congress, even the court system, either federal or state. And he had to appeal to authority beyond American democracy, beyond the Constitution. The NGOs at the Durban Conference exemplify the new challenge to liberal democracy and its traditional home, the liberal democratic nation state. Now, this challenge is not simply to the American liberal democracy, but to liberal democracy in Australia, in Britain, in Israel, in Poland, and yes, in France and Germany. The fact that the very idea of a liberal democratic nation state and its principles are contested in the West today suggests we have not reached the end of history in the ideological sense, as delineated by Francis Fukuyama in his ground-breaking essay in 1989. Now, the organizing spirit of this conference I will introduce, and that is Gary Johns. He is a senior fellow at the Institute of Public Affairs in Australia, where he heads the IPA's nongovernmental organization projects. He was elected by the people of Brisbane to the House of Representatives, where he served from 1987 to 1996. He is a 30-year member of the Labour Party. He also served as special minister of state in the Labour administrations of Prime Minister Hawke and Keating. In 2002, he won the Fulbright Professional Award in Australia and U.S. alliance studies, and in March of '03, he was appointed associate commissioner for the Commonwealth Productivity Commission for inquiring into workers compensation and occupational health and safety. Mr. Johns was recently awarded a Centenary Federation Medal for "service to Australian society through advancement of economics, social, and political issues." Gary Johns. [Applause.] MR. JOHNS: Thanks, John, for your kind introduction. And special thanks to Danielle Pletka and Molly McKew from AEI, and AEI for its support for this conference today. And to my boss, Mike Nahan, from the IPA. And also to the American-Australian Fulbright Commission, who were kind enough to let me visit Washington for a few months last year. In particular, the chairs of each of these sessions, because these were the people who came together for the first time and thought it might be a nice idea to hold such a conference. And to those other people today, friends who will be giving papers. Now, we, that is the IPA, started out on this issue of nongovernmental organizations and where they fit within society about three years ago. And my experience is quite particular. I come from the parliamentary system. So, okay, it's a bias towards that sort of conceptualization of democracy as an institutional form. And obviously that gives me an experience and a reflection that does two things. One, I've seen NGOs from inside government, and their ability to influence government. And that's fine. And I've seen NGOs from the outside, having worked for a number of them over a number of years. But also the IPA is an NGO. So our first paper in the NGO project was in a sense a policy paper for ourselves. The Institute of Public Affairs had to think about itself, its own legitimacy, if you like, its own place in the world. So we wrote a paper about political accountability. And you always do this, you make sure your conclusion is hitting in the right direction. We thought at the outset we can't end this by saying we need somehow to control the system, for more regulation. That would be the wrong answer. We're not seeking the regulation of NGOs, we're seeking to know how they make their input. Because we don't want the IPA to be regulated. We want everyone who's a member of a free association to speak freely in a liberal democracy. So that was the conclusion, if you like. However, the fact that, to me, politics is now coursing through an enormous array of different streams and venues; it's not just a two-party system anymore--in our country, Liberal and Labour--it's far more complex. It doesn't revolve around a simple division between capital and labor. So parliaments, the old fuddy-duddies like me, have to take into account that politics is much dispersed, there's less loyalty along that one major division of capital and labor. So this we understand also. Now, if NGOs raising money for themselves and organizing politically for their own purposes want to do what they want to do, that's their business. That's an important conclusion. However, where NGOs seek access to government, and especially to government resources, that becomes a question for the whole of the people. So we focused our question, really, about the relationship between the constitutional institutional form of representative democracy and democracy as participation. Now, politics to me has always been a contest between organized interests and unorganized interests. And most people have unorganized interests. They get on about their business. And they prefer to get on about their business and to have rules written by the parliament that allow them to get on about their business. Others of us were so keen on politics, we wanted to spend all of our lives in it. And this is what NGO activists do. But we have to remember the name of the game is that everyone doesn't live their life as a political act-up--there is another life out there--and that we should as much as possible leave them alone, leave them to their own devices. So the question is, what are NGOs asking of the people, what are they asking of their resources, and when they have an input into government policy and seek to use taxpayers' money, public resources, then governments have a right to know. So in our second paper, we made sure that we looked at the relationship between, the formal relationship between governments and NGOs who want to use government resources. Because when an NGO steps into a minister's office, he/she is replacing/displacing the elector. Now, that's okay because politicians don't want to see 10,000 electors in their office every morning. They prefer to see a representative group on, you know, the environment or human rights or social security matters or whatever, because it would be impossible to have a conversation with the whole of the electorate. So NGOs do good work in terms of collecting opinion. But governments sometimes forget to ask, Who are you? Who do you represent? What is your expertise? And we are now undertaking a project for the Commonwealth of Australia government of that very nature, to maybe end up with some legislation that you have in the U.S. That is, the governments should ask that the credentials of NGOs who want access and who want money and resources be tested--like in a court of law, that their standing be tested; and, probably most important, that when these measures of standing are made apparent to the government, they're shared with the electorate--they're put on the website and everyone knows who's dealing with the government for what purposes. And then I think it just opens the game out so that the unorganized feel a bit more comfortable with that debate in formal politics, which is really about organized interest groups. Now, and in the third paper we started to think about the effect of NGOs who operate directly on corporations; that is, NGOs who, after 100 years or more of being regulated by governments, were still apparently playing up and not doing the right thing, according to some people, so a lot of NGOs want to in fact regulate corporations directly. Now this is a concern, because I would call this nonconsensual regulation. This is pressure and rules that NGOs would like to apply to corporations, which doesn't end up in hard law, but nevertheless seeks to change the behavior of corporations in particular ways. But it's nonconsensual; no one reached that opinion, and very often it's a particular group's conception of the good and what a good corporation should be. These papers have received a reasonable amount of feedback, I might say. But one of the--I think the most telling criticism of our work has been a very simple observation by someone who said, Look, I don't think the NGO phenomenon is going to endure. It's a flash in the pan. That person may be right. I think, though, that the NGO phenomenon will last and it will grow. I'm not simply projecting its growth from the past and the fact that they are now tens of thousands of NGOs in each nation and tens of thousands of international NGOs. Rather, there are good reasons why they'll grow. So I have a sort of a checklist of a half a dozen reasons, and you may be able to think of more. First, the NGO [inaudible] themselves participation, not the settlement of competing interests. So it's a much more expressive form of political activity. And I know from experience that a lot of young people prefer to now do their politics in NGOs and not within the political parties. Second, the amount of spare cash and time for political purposes is rising. The money that will come from--well, the money that will transfer between generations the next 10, 20, 30 years will be the greatest inter-generational transfer of wealth in our history. Some of that will filter into political works. People will want to do good with their money. So we're going to look at a considerable rise in the energy which people will devote, and the money which people will devote to politics. That's not always a good thing, but as long as we're aware of it, it's okay. Another one, too--this may sound a bit strange--is that I think politics will be intellectualized. Most people play their politics as loyalists to one group or the other, the major political parties. But I think we will probably find that our new retirees and younger political activists will all be educated and they'll want to theorize what it is that makes the world go round and round. So we won't be talking about so much of that work of NGOs which is to help the poor, the direct work; it will be can we prevent poverty--in other words, change the system? It feels much better when you want to change the system and change the world than it is to directly help someone who lives across the street. So I think we'll get more of the intellectualizing, the theorizing. Politics has been freed from the crude ideological division of class, to some extent. And I think there is now running through--a myriad coursing through a myriad of organizations, including through the corporation and into the community and courts as well as the parliament and so on. The fifth one is that we of course have built a very large number of international inter-government organizations--the U.N. system and so on--and that they, having--while their bosses are governments, they are seeking a constituency. So they love the language of civil society, that there is a world out there that needs to be cuddled up to. So the U.N. and its senior people want to engage with civil society. Well, that's fine. But we then need to ask the question, With whom are you engaging, on what basis? What resources are being transferred? Who do these people represent? I mean, it just generates a lot of questions, but that in itself will generate new activity among NGOs. And the sixth one, of course, is what I call the universe of contestability of ideas as being massively expanded, so public debate reaches all aspects of life, including inside families and all the rest of it, much more so than has ever been the case. There are few matters today that are left for private deliberation. Almost everything is part of public debate. Therefore almost everything will create and draw around itself people who are active in a particular proposition. Now, in addition to this--I think; I'm predicting that the NGO phenomenon will be an enduring one--we have to ask the question, Is the NGO challenge, which is based on participative democracy, a difficult thing for institutional democratic practice? Institutional democratic practice--a constitution, a parliament, and so on--is based on the notion of democratic elitism. It is not everyone gets to play politics, thank goodness. But the fact is that if more and more participated--people really are keen on the notion of participative democracy--then of course the activists will win. So my question is who loses in the participative democracy? It may well be all those who don't want to participate. So you have to be very careful of the interests of those who don't want to live their lives as political activists. Now, in addition to the sort of political challenge and challenge to certain conceptions of democracy, there's also a second element of democracy that's always intrigued me, and that's the one that pits the masses, the voter, the mob, the electorate, "my fellow Americans," and all that sort of group against the intellectuals. And that's okay, too. Politics is really about an elite who make decisions but who are regularly inquired of by the unelected. And it seems to me that in our political science and even in our science faculties of the past few decades, social science and science used to be about explanation. More so, it's now about advocacy. I just don't have time to sort of work that theme up, but it seems to me that we have a lot of people entering the game of politics who would formerly seek to simply explain the way of the world, even in hard science. But they now more and more seek to advocate particular positions. This is a difficulty in a liberal democracy, where everyone's allowed to say whatever they want, because it's becoming more difficult to rely on, if you like, elements of truth. Things which you can rely on as being fact or not are being undone. So some of the mooring, some of the underpinnings of our system are starting to move somewhat. There's a lovely little story which I want to share with you as an illustration of this. There was a doctorate awarded just last month and the University of Queensland, of which I am a graduate, which found that Jesus was gay. This may come as a surprise to some of you. The thesis was about homosexual spirituality, and the author was gay. Now, as well as the revelation about Christ, the student also reached the conclusion that three or possibly four of the Jesus' disciples was also gay. Now, he came to that conclusion by looking at Jesus' astrological chart and to clues in the scriptures, to which, he argued, the churches had been blind for some 2000 years. He said that the starting point is the matter of John, who always referred to himself as Jesus' beloved disciple. And so it went--I mean, that he was awarded this doctorate. Again, he is entitled to his opinion, but clearly the person appeared to be reaching his conclusion based on who he was. So the whole politics of identity, we know, has been a very powerful element of politics in the last couple of years. I think I might write to this fellow and suggest that in his post-doctoral work he look at the sexuality of Muhammad and see if the response is as liberal as he gets from Christians. It might not be. So we are somewhat open to criticism in the liberal democracy. When all things go, it's very hard to find a defense sometimes, or an attack, even. Let me jump, then, because--John, we have a couple of minutes? MR. FONTE: Yeah, you can [inaudible]. MR. JOHNS: Thank you. This question of, I think, NGOs and their place in politics is reasonably well handled inside nation states. It becomes more difficult at an inter-government, international level. There's a lovely phrase which I picked up from a book by Gregory Jusdanis, "The Necessary Nation." The problem of the power of the political activists and the likelihood that they do not reflect widely held opinion is solved within the nation state by a regular and responsive forum for all interests. Jusdanis says the nation is "a daily plebescite." I like that. A daily plebescite. So that the distance between the unorganized and their representatives is not too great, and it just chews through all these debates day in, day out. So there's a sense in which there's a lot of feedback. Now, I think we can easily argue that despite the appeals to international citizenship and the wonders of e-mail and the apparent ease of international travel, the daily plebescite is not available in international forums. And it's international forums, I think, where we may encounter some of our greatest difficulties. So let me quote from Mike Moore--this is the former New Zealand prime minister and not the--I've seen the movie, too. But Mike Moore, the former prime minister of New Zealand and director general of the World Trade Organization for 1999 to 2000. Now, Mike, he published a book just earlier this year. "All the U.N. agency heads meet once a year under the chairmanship of Kofi Annan. At one meeting, an agency head shocked me by stating, We're in a post-parliamentary, post-democratic age. Nation states can't function anymore, politicians are despised, and people can't even be bothered to vote anymore. He went on to assert that the future of governance was with international organizations in partnership with NGOs representing civil society by passing politicians. And of course," Mike says, "many NGOs subscribe to and push this theory. It gives the power, status, and resources." Now that, I think, is a significant observation and insight and we're all beginning to think about how we might, having formalized and understood and worked on the relationship and the disclosure between governments and NGOs inside nation states--or in some of them, I might say--I think the task will be even more important in inter-governmental and international--the international issues. Let me finish on one last illustration. This is also a difficulty that corporations have. Corporations by and large have been, yes, in a deal with governments over many years about how their activities will be regulated. But NGOs are beginning to buy into that game. There was published in the last three years in Australia a corporate reputation index of Australia's top 100 companies. Now, we've analyzed all three, but the last one was intriguing. About 20 NGOs ranging across environmental and human rights and labor issues and so on and so forth measure the performance of corporates. And some are right at the top, number 1, and some are rated at the bottom, number 100. And I thought, well, that's intriguing. So someone who scores just 100 could be said to be a bad corporation, not socially responsible. So we had a little bit how they arrived at this. And it was pretty simple, really. If you filled out the form in 2002--sorry. We looked at those who had moved a great deal in rankings between 2002 and 2003. And I asked the question, did the performance of these corporations with respect to corporate social responsibility change? So we analyzed it, and we found that the top one-half-dozen big movers-up had not filled out the questionnaire, i.e., refused to participate with the NGOs in 2002, but did fill it out in 2003. They were rewarded with good marks. Those who filled it out in 2002 but were jack of it by 2003 and refused to participate, were punished. And they dropped. None of those corporations changed a thing. It was whether or not they played the game of filling out the form and ticking the boxes that said, according to NGOs, this is the correct conception of corporate social responsibility. If you played the game, you were rewarded with a better reputation, and if you didn't play the game, you were punished with a worse reputation. Now, fortunately, maybe because of our work, maybe because of others, that index will probably never see the light of day again. But it will pop up in another form, believe you me, because NGOs want to be players. They want to be regulators. My only problem is they do it in at least a reasonably scientific manner and that they appreciate that theirs is not a consensual position. It's just their view of what's good. It has no more meaning than that. We can only share views about what is good in a formal sense when we run it through some of our formal institutions and have them tested. That's where we've reached at this point, and we look forward to doing a lot more work on NGOs. Thank you. [Applause.] MR. FONTE: Thanks, Gary. The next speaker is Professor Jeremy Rabkin, who is professor in the Department of Government at Cornell. Professor Rabkin is one of the foremost thinkers on the whole question of democratic sovereignty. He wrote a book--I think the best book, actually, on explaining democratic sovereignty called "Why Sovereignty Matters." I asked him right before--it's available here at AEI, but apparently it's been sold out, so you have to wait for the next book, which is coming out in a couple of months, which is called, "Safeguarding Sovereignty." Professor Rabkin is a professor of American constitutional law, international law, and the history of political thought. He's also a member of the AEI Council of Academic Advisors. And he published a monograph with the Competitive Enterprise Institute on U.N. supervision of public parks in American territory, and has presented congressional testimony on behalf of the American Land Sovereignty Act. He also co-edited the AEI volume, "The Fettered Presidency: Legal Constraints on the Executive Branch," 1989. Professor Rabkin. MR. RABKIN: Thank you. Are these protesters outside? MS. PLETKA: They're gone. MR. RABKIN: Oh, they're gone? So AEI is championing racism, war, and the spread of global capitalism. The racism thing didn't sound right to me. [Laughter.] MR. RABKIN: But let me start with the war point. Irving Kristol, one of the great figures of American intellectual life and of the American Enterprise Institute, was in a debate in the mid-1980s, and somebody said to him, "It's really important for the Reagan administration to make clear that it is in favor of peace, because otherwise you cede the peace issue to people on the left." And Irving Kristol scoffed at this and he said, "Peace? Peace is a Stalinist concept." I don't know if he won the debate with that. But I would start by saying nongovernmental organization is a Stalinist concept. It's literally true. The origin of that expression, you can find it in the U.N. Charter, 1945. They mentioned that the Economic and Social Council can seek advice from nongovernmental organizations. Now, where did that term come from in 1945? Why did they express it that way? What exactly did they mean? There's a history to this, and it's pretty well-documented and agreed. During the 1930s, during the period of the Popular Front foreign policy in the Soviet Union, the Soviet Union joined the International Labor Organization and it sent--the International Labor Organization required a delegation representing government and business--whatever that was in the Soviet Union--and labor, whatever that was. And since the ILO was very interested in unions, there were people there who said, Wait a minute, these are not real labor unions that you're claiming to send us delegates from; this is just a communist government organization and they can't be recognized as true representatives of labor in the way that representatives of American labor unions or Australian unions are. And the Soviet Union said, No, they are a nongovernmental organization. That's the origin of the phrase. And if you think of it, it's a very odd phrase because it implies--I mean, the normal way we talk of this is "private." AEI is an NGO, Cornell University is an NGO, General Motors is an NGO, the First Presbyterian Church in Ithaca is an NGO. They all should be NGOs. And of course that is not how people hear the word. They hear it as, It's nongovernmental but somehow very engaged in politics. And at U.N. forums, they're very insistent this is not business organizations, this is not religious organizations, this is not academic organizations, it's nongovernmental organizations. It is somehow you're involved in political advocacy, but you're not governmental and therefore you don't have to stand for election. And not meaning to be sarcastic about this, I mean, that is a little bit--well, let's say it's reminiscent of Stalinist politics, this idea of you should have this authority but you shouldn't be accountable for it. And I think it is not a surprise that the real explosive growth of NGOs, just as a matter of who's registered at the U.N.--if you go back to the 1950s, about two dozen organizations that were recognized by the Economic and Social Council of the U.N. as nongovernmental organizations that could give testimony and participate in some activities there, or at least listen, be present; and there are now over 500. Most of that growth is in the '80s and '90s. And during the '80s and '90s, they didn't just proliferate. I mean, they had slogans and they had energy. And one of their great slogans, "Global Governance," I think sums up what at least the advocacy organizations think they are doing. So I want to just pause to say, if you think about it, of course this is a left-wing program which is going to appeal to people who have left-wing sensibilities. Now, I'm not saying they were all bolsheviks, they're all totalitarian--I'm not saying that. But just if you divide up the spectrum between, let's say, parties of the right and parties of the left, the whole enterprise of global governance of course is going to appeal much more to, let's say, parties of the left, people whose viewpoint is more toward the left. To start with, the obvious meaning of "governance" is blurring the distinction between "private," as in private property, as in private firm, and "government," as in it's the public authority that therefore needs to be accountable and elected. Governance is already something in between private and public. It's not government, it's just governance. And that slogan is deliberately meant to appeal to the idea that, well, there's a lot of stakeholders in how an economy is run and we can't just say that things are private, everyone is part of the discussion, but the government is not something unique, it's just another part of the discussion. That whole outlook is, of course, more appealing to people who believe in controls than people who believe in private rights and markets. Once you say "global," of course, you are appealing to people who have very cosmopolitan views and you're not appealing to people who say, No, wait, we in our country want to just do what we do in our country. If it is global, it is anti-national. So you've dropped off another important constituency of conservative politics or parties on the right. Finally, if you speak about global, there is something almost millenarian about this, almost spiritual about this. And it's quite explicit in a lot of rhetoric of NGOs, they are saving the Earth. Of course, they were saving the whales and they're saving other animals, they're saving endangered this and endangered that, but in the end they're saving the Earth. And this rhetoric of "saving," what does that remind you of? Well, it's more or less explicit that it's a kind of replacement for religion. Michael Ignatieff, who's by no means a man of the right, devoted the past 10 years to advocacy on behalf of international human rights causes, wrote a book just a year or two ago in which he talks about the idolatry of human rights thinking. And he says this is really troublesome, people are talking about human rights like a replacement religion, and this has really gone too far, and people have expectations for the international human rights movement as if it were something delivered by, you know, prophets, something that is a religion unto itself. And of course he's right about this. And he wasn't even saying it as "I'm indignant." He was saying it as "Come on, guys"--speaking to his people in this movement--"we are getting carried away with this." I mention this, again, just to say there's another constituency of politics on the right which is not going to be attracted to global governance. So you exclude people who are concerned about private property and markets, you can exclude people who are concerned about, let's say, national identity, you exclude people who are connected with traditional religions, and you get a, let's say an outlook which is not across--doesn't represent the same spectrum that you have in national politics in many countries. I'm not saying this indignantly, I'm not saying it's an outrage, I just call your attention--what this is inherently is a project that is tilted to the left. In domestic politics, even in Europe, you know, there are contending constituencies. In particular, people don't like taxes, and if you have advocacy groups on the left saying let's fix [change tape] --your economy begins to suffer and voters rebel, the unorganized voters that Gary was talking about. If you look at the European Union, which is a great sponsor of NGOs--and it's a great sponsor of NGOs, I think, for exactly the reason that Gary mentioned, which is it doesn't have real citizens, European Unionites. The European Union is mostly bureaucracies which are hard to penetrate. Nobody knows the name of his elected member of the European Parliament. I mean, it's such a strange organization. So you want to give the impression that there's a lot of life in the European Union, there's a lot of activity, there's a lot of enthusiasm. And that's very hard to do when you're a tedious bureaucrat. So you want to have NGOs out there who are champing and demonstrating and getting excited and doing things. And quite a lot of money goes into funding environmental advocacy groups in Europe and human rights advocacy groups and other kinds of advocacy groups. The thing I just want to call to your attention is they get quite a lot of money because they collect the tariff, the common tariff of the EU member states--so that's quite a lot of money. But compared to a modern state with full taxing power, the EU is actually starved of revenue. They have something like 5 or 6 percent of total GNP of the member states, which--oh, that was the good old days, when government only took 5 or 6 percent. And the national states, of course, are multiples beyond that of their own GNP. NGO politics goes with the kind of governance that can't reach directly into your pocket. The EU, everyone says, oh, well, it has a sort of democratic deficit. They have a democratic deficit, and that has a lot to do with why people don't trust it to directly tax them--that's the point at which people would rebel--but it has tremendous regulatory reach. The Economist recently did a survey--these things are very hard to measure, but they just--they obviously went and asked people in national capitals in members states, How much of the law that you are enforcing--and EU law is also enforced by national governments, I mean all of it has to be enforced by national governments. They don't have police. They're parasitic on the governments. They said, How much of the law you are enforcing is made in Brussels? And most of them said about half. Some felt more than half, some felt a little less than half. So you can have quite a lot of regulatory reach without full governmental authority. And I go on about the EU not only because it's a big sponsor of this--it is in a way a model of this, which is how much can you do even without basic taxing power; how much can you do even without other attributes of what we think of as government? And the EU shows you, well, quite a lot. Once you organize a forum for NGOs--I mean, in the European case, I want to mention one other thing that's just very striking to me, which is the commission in Brussels seems to be much more to the left than national politics in most of the member states. And I think the reason for that is, right, it's very hard for religious groups who have some influence in some of the countries to cooperate across national boundaries. It's possible for business groups to do that, but they get shunted into different forums. It's hard, of course, for nationalist groups in different countries to cooperate across borders. That's the problem of being a nationalist group. So you see a model of this already in the EU, that it gets tilted to the left. And if you think about this internationally, I think it is, and is bound to be, tilted much more to the left. And here I just want to go through a few quick advantages that these groups have had in creating forums that are favorable to them. They're very media-genic. And one of the great advantages they have is that, unlike diplomats, NGOs don't have to be diplomatic. Diplomats cannot dress up in costumes and stage protests and do other things that are fun to show on the news. They are very good, NGOs, at creating a sense of their being a whole international community that is excited and involved. They're very good at being additive; that is, saying, Oh, that cause, yes, that's also part of this. I'll give you an example. If you look at the Stockholm Declaration, which is one of the sort of early events in mobilizing interest in international environmental regulation in 1972, it's really worth looking at. It talks about we're running out of resources and we need to conserve not only energy but resources and limit growth. It's a document of '70s environmental ideology. And half-way through it there's And we're all opposed to racism, colonialism, apartheid, and Zionism. And you think, oh, what's that doing there? Well, obviously what that's doing there is you have Third World countries who were not interested in the rest of it, but were willing to be recruited if you would put that in there, their favorite slogans. If you compare that with the Rio Declaration, it's become, 20 years later, much more expansive. There are a lot more groups that are being appealed to, there's more rhetoric about women, about indigenous peoples, about minorities. You've made environmentalism into a human right, and human rights into an environmental cause and claims of consumers and people who feel that the economy does not serve them, and you're able to aggregate all of these things. Let me come now to my punch line and then I'll stop. I think what is true in Europe, which is that people have been willing to allow a lot of power to gravitate to Brussels on the understanding that, yeah, yeah, but it's not real power, I mean it's not taxing authority, it's not armies, it's not police, it's not criminal court; it's just a power to make half of our law. And that's very important to it, the sense that it's not threatening because it is weak. It is in some ways more true of NGO advocacy on an international scale, which, to be sure, is very much weaker. I mean, it doesn't have any of the direct powers of the European Union. But it, I think, plays on this same syndrome of weakness is a kind of strength. It seems unthreatening. Well, we have these forums, everybody gets up and makes speeches, it isn't really law, it isn't really binding--well, it might be, it might enter into customary international law, but that's down the road, it's sort of vague, it's not clear, it's--don't worry. NGOs, I think, play this game of you don't have to hold us accountable and you don't have to be afraid of us because it's just--we're just talking. And I think the key to all of this--I'm all in favor of, you know, more transparency, it would be good to know more about particular groups. But I think, really, the key to all this is to hold governments accountable, to say to the governments, They held a conference, they passed resolutions, they made a lot of noise; that doesn't matter. You are accountable to your own electorate. I have quite a bit of optimism that this can be done in the United States, where NGOs have actually had the least success in getting courts to adopt their agendas as customary international law, the least success in intimidating legislators, the least success even in intimidating the State Department, the foreign ministry. The downside to this, of course, is every time the United States says no, we are not bullied by this, this is--you weren't elected to anything, these were just conferences, it's very nice, you were talking but that's not us. Every time the United States does that, the response is, America is a dangerous, unilateralist power. It does, of course, play into people who want to say America is a bully because it's not giving way to international advocacy movements and their agendas. And I think the only answer to that is this is not just something that we demand of our government, it's something that our government has to demand of other governments, which is, That's very nice, people went to a conference, there was a lot of talk, but the United States government demands this from other governments. And I'm actually on the whole, I think, somewhat more optimistic than Gary that you can make a big difference by saying to governments, These are things that we accept and these are things we do not accept. I think it's been very helpful in the last few weeks to make clear to Belgium we don't care that advocacy groups think that the Belgian criminal court system is a kind of forum for prosecuting anyone who is bad, that we won't accept that in the United States, don't try to prosecute an American that way; we don't care how many NGOs are enthused about it. I think we were rather successful at the Johannesburg conference in which the American delegation said forthrightly these European proposals that everyone should limit their use of fossil fuels, we don't think they're a good idea and governments of less-developed countries, don't you agree? Well, Iran stood up and was a big champion of our viewpoint on this. Good. Fine. There's a lot of governments which can be more susceptible to more reasonable policies if you put it to them as governments and if you are fairly clear about, okay, what is one government going to do with another. That requires a certain amount of courage, particularly on the part of the United States, but I think it's entirely feasible, and I look for more hope from that direction. Thank you. [Applause.] MR. FONTE: Okay. I'm sure we have a few questions, so this gentleman right here. Please give your name and your affiliation. And wait for the microphone. Three things: Wait for the microphone, name, and affiliation. QUESTION: Thanks. Steve Charnovitz [ph], I'm at Wilmer Cutler & Pickering. I wanted to press Professor Rabkin a bit on his history. He had said that the term--I wasn't sure if it was the term or the concept of nongovernmental organizations was Stalinist and left-wing. And I wonder how he squares that with Toqueville's discussion of associations of the United States in 1830, the widespread use of the term "NGO" by political scientists, or "nongovernmental interests," also by political scientists in the 1920s looking at NGO activity in Geneva. And then second, where he said that NGOs were excluding groups or religious concerns and private interests, how he squares that with the active work of the Quakers in the 18th century and the 19th century to eliminate slavery, the Christian trade unions, the Jewish groups working on human rights in the 1920s and '30s, and the creation of the International Chamber of Commerce in 1920, which has been one of the most active international NGOs throughout the 20th century, promoting capitalism and private property interests. MR. RABKIN: The term is all I meant, the term "nongovernmental organizations." I was not saying that before the Bolsheviks started spreading their propaganda, we used to have only two things, business and government. I mean, it would have been a horrible world if that were true. Of course it wasn't true. You're perfectly right. I don't think it needs saying that just, if you think about any free country, there's quite a lot of things that go on that don't fit into the category either of business or government, and that's fine. That's more than fine. That's excellent. It's admirable. The term literally is an odd term. Let's start with that. And I believe that is the genesis of the term. That's first. But the second thing is, apart from the term, the understanding of what does that term imply for us. It is just understood. I mean, NGO forums, if you want to participate at an NGO forum at an international conference, and you say, Hi, I'm here from General Motors and I'm nongovernmental, they won't say, Oh, sit down, great, good to have you. I mean, their understanding is that it doesn't include business. I take your point. I mean, they have--there are quite a number of advocacy groups which are explicitly religious and are sponsored by religious organizations. The Vatican, somewhat to my regret is very active in a lot of international forums. I'll come back to that in a minute, why I regret that, because it's worth mentioning. But I think it is true that in the nature of what this is, just in the same--speaking now about international forums. I'm not speaking about advocacy groups, I'm speaking about international forums. I think in the nature of what this is, just as it is not very hospitable--these are not hospitable forums and this is not a hospitable movement to nationalist groups. Because if you say, Hi, I'm a Croatian nationalist, is there anybody else who wants to join with me in enthusiasm for Croatian nationalism, you're not going to get a lot of people outside Croatia. You might do great within Croatia; you're not going to do so good outside Croatia. And this is not all-or-nothing, and I do understand in the European Parliament there are, you know--there's a kind of conservative parties that are somewhat nationalist at home. But it's hard. It's very hard. And I think that is so also with regard to regard to religion, that if you have not just religious sponsorship of what is basically a socialist agenda but actually a religious agenda, such as you want to do missionary activity, and you really want to convert people, and you go to an international forum and you say, Hi, all those who want to support our Christian missionary activity, couldn't we be a--I don't think they would let you sit down. I mean, that's just not what that forum is about. And permit me to say one more quick thing about--come back to this point about the Vatican. We're going to hear more about this, I hope. But I find it astonishing, and to me it confirms this point, which is that the Vatican does not have the self-confidence to be more in opposition to things which in fact it opposes. I mean, the pope is out there saying, Oh, the European Union, great, yes, Poland ought to be part of it. Why ought Poland to be part of it? What is Christian about the European Union? What exactly do you like about the European Union? Well, it's European. And I think, I mean, apart from whatever his views on Poland are, there's this sense in the Vatican that, well, this is the trend of the world and we don't want to be opposing it. And at every international conference they say, oh, yes, oh, well, yes, a new standard, a new--yes, okay, we're for this. I just tell you this anecdote, that somebody called me, fourth level down in whatever is the equivalent of the foreign ministry there in Vatican City, and he said, Well, they want to endorse some international environmental conventions because they just feel that they should, because, I mean, well, I mean, they should, right? And so they finally decided the one they're going to endorse is the Biodiversity Convention, and you've written about this and would this be okay? And I said, Well, I suppose it would be okay if you don't mind increasing levels of starvation in Africa; I don't know, does that bother them in the Vatican? Because what this is really about is preventing access to genetically modified foods and--why is that good for people in Africa? Many of whom are Christians, actually; maybe you'd be concerned about that. And he said, oh, yes, well. So I said, well, why are you even getting into this? Why do you have to take a stand on this? He said, Oh, well, because we feel that we need to be part of an international movement. You don't have credibility in raising your own concerns unless you're part of an international movement. Well, that to me says that's in a way the exception that proves the rule. I mean, here's this--can I call it an organization?--authority which has, clearly, a very religious agenda, and they feel that they cannot even sort of get a hearing for the things that they want to talk about unless they sign on to all these other things. I mean, if you understand that that's the logic of this forum, then I think you say this is not a good forum for people who actually have religious concerns as opposed to, you know, this agenda. MR. FONTE: Just a word on Toqueville before we go on. Toqueville was talking, of course, about associations within the American nation state, within the American union. When he went over to English-speaking Canada, he found no associations there. He wasn't talking about international associations, he was talking about associations within the American nation state. QUESTION: Hi, Jim Lobe from InterPress Service. Following up on the last question, I just wanted to ask could we get a specific definition of nongovernmental organization from the panelists at the outset? Because you're placing it in a specific context that it could be argued is quite tendentious. You're talking about in a global--like global or international NGOs. And I would just point out in the description that the AEI gave talking about development projects, I mean, many of those are religiously based organizations. MR. FONTE: Okay, let's move on. There are a lot of people who have questions. We want to get to as many people as we can. Gary-- QUESTION: It's not a hostile question. MR. FONTE: Yeah, I know. We're trying to answer. Gary, go ahead. MR. JOHNS: It's impossible to start to make a divide about who's in and who's out, who will be an NGO and who will not. But the people we observed claimed to be NGOs, and that's fine by us. They're NGOs. Someone criticized us by saying, Look, NGOs are different to civil society. And I said, yeah, well, I suppose that's right, but if NGOs say they represent civil society and use the language, then that's okay by me. This only arises, as far as I'm concerned, in the relationship between mainly private organizations and government. So it's the relationship between the two. So I'm not that concerned about who's in and who's out. But if they self-identify and they have this relationship with a formal institution named government and they want in some ways to change public rules or use public resources, then they come within our purview. QUESTION: Michael Allen. I'm a visiting fellow with the National Endowment for Democracy, just around the corner. Until recently I worked for a what you might call consortium of NGOs, corporates--and the World Bank was another partner. And the truth is that although a great deal has been said about the movement and EU's sponsorship and support for NGOs, many NGOs--in fact, an increasing number--derive substantial sums of monies and resources from corporates themselves. And what we're seeing more recently is the emergence of so-called multi-stakeholder partnerships, huge global firms committing huge amounts of resources to these partnerships and NGOs. And when you ask corporates' executives and managers why they do it, their argument is that usually that NGOs have something that corporates don't have--social capital, legitimacy, expertise, call it what you will. How do you explain, given the analysis that we've heard from the front of the room so far, which is [inaudible] political, why so much corporate support? Is it a form of a shakedown, or are their legitimate reasons here? MR. FONTE: I think we're going to hear a lot about that in the next sessions, but we'll just have a brief answer from someone here. MR. RABKIN: I want to focus on the word you used, "legitimacy." Corporations think that by giving money to NGOs or cooperating with NGOs, they're getting legitimacy. Now, why are NGOs in a position to confer legitimacy? To go to the question previously, what are NGOs, can we give a definition? Evidently it is included in the definition that they're not corporates, they're not business, they're not therefore merely private. Whoever heard of a private organization conferring legitimacy? What does it mean, conferring legitimacy? I think what it means is you say a corporation is merely selfish, whereas NGOs are engaged in public activity, altruistic activity, global activity, and so therefore they are able to confer legitimacy. And, look, I can't tell people what to think if that's how they think. I mean, okay, that's what they think. But I do want to draw a very, very bright line and say this is all just stuff that you people are doing in private. Some people are consulting mystics, some people are consulting, you know, people who read palms and tell the future, and now you do whatever you want. Some people are buying organic foods which they think will cure cancer. I mean, whatever you do, that's fine. But let's be very, very clear, this isn't law. This is not something which anyone is bound by. And I'm not optimistic that you can go to corporations and do standing up to this. I think a lot of this is a kind of protection racket in which these NGOs say cooperate with us or we'll call you names. But I at least want to say this doesn't go beyond the calling of names. This is PR on both sides, and good luck to you all. But it's rather important to us to be able to say actual--actual--coercive authority goes through constitutional states and back to voters, and it doesn't go through NGOs at any point. Never. MR. JOHNS: Just briefly--and I agree entirely with what Jeremy's saying--I despair of CEOs who think that they can somehow buy legitimacy like that. They haven't lost legitimacy. I just wanted to tell the shareholders, if you're going to do a deal with WWF to save X or Y, tell your shareholders that that was the price of the deal, if it was $100,000, and let them be aware that that was the best deal you could get. Because it was a deal, since for some reason you were spending that money. And I think if we spoke in more explicit terms like that, we might find that the owners of the corporations say, No, I don't like the deal. I also despair of corporations getting into public policy. You can help the poor directly by giving some money. If you want to eliminate poverty, you're talking about very difficult issues. Governments and NGOs and lots of people have been at it for a while now, and we haven't quite worked out the solution. But corporations think they can buy whatever--whatever it is they're seeking to buy by getting into these immensely complex public issues. And they're crazy to do it. QUESTION: Fred Smith, Competitive Enterprise Institute. The biases, or the inclination of NGOs to create a statist bias, legal statist bias is, of course, also applicable to domestic public interests groups, as we call our NGOs. And we understand that as politics becomes a more and more important forum, more and more [inaudible] will be attracted and you'll get these unholy coalitions of big NGOs, big government, and big business. But the United States at least has some barriers to that. It doesn't seem to be as metastasized in the United States, partly because we do not require that before you can become a public interest group in America you have to swear allegiance to the statist agenda of the United States government. And secondarily, we have rules, observed to some extent, that mandate that no government agency can fund an NGO to explicitly lobby for the expansion of that governmental program--obviously, observed in the breach sometimes. But do those two filters make a difference? Or why hasn't the United States gone as berserk in these areas as the EU or the United Nations? MR. FONTE: Jeremy? MR. RABKIN: That's a terrific question. That was really the question I was trying to answer, and I'm not saying you weren't paying attention because I gave a completely adequate answer. That's, I think, a very useful way of thinking about this. I mean, we have all kinds of advocacy groups in domestic politics. But in domestic politics you've got a lot of advocacy groups of the right as well as of the left. And if you are a Republican congressman, or a centrist Democrat, you get pressure from both sides. And you can, if you are not somebody who's making his career with constituencies of the left, you can feel that you've got some troops behind you. You'll have some people who will applaud when you say no, let's not do this, let's do the opposite. And you don't see an international counterpart to that at these, you know, jamborees that the U.N. hosts. That's a very interesting question. You don't see a counterpart to that in Brussels. That's really what I was focusing on. And I don't believe it is what you said, which is just the formality of in order to show up at this conference you have to fill out these forms and say that you support the U.N. program, because I think, as you well know, people could be not-- Yeah, people could be not entirely sincere in saying they sort of at some level of abstraction support the U.N. principles, and get in there. But I think people don't have the incentive to do--they just think, bluh, what's that, I don't want to be part of that. Right? And if you're a business firm, you think, oh, why should I fight this? Why don't I just buy it off and then focus on the WTO? I don't want to go to these big, you know, forums about the environment and human rights and population because it's just--it's all a downside from the point of view of a business. Which it doesn't think when it's thinking about the Congress. I mean, it allows some issues to go off to the sidelines, but every business firm sees that the Congress matters, as do a lot of other constituencies that wouldn't be attracted to international things. So I think that's--if I have not explained it, I say again, I mean, I think that's something that people should keep in mind. I would say one last thing, which is, you know, this is one of the few themes of American political science--what should I call it?--reporting, writing over the past 80 years that has had some real, reliable validation of people, you know, testing it and saying yes, it's so; which is that if you change the forum, you change the politics. That, you know, people want to push things out of the state capital into the national capital because in a different arena you get different coalition partners, different dynamics. People engaged in politics are extremely well-aware that it matters at what level or in what forum, in what arena you press your cause. And I think the people who are dominating now in these international forums, the NGO forums, it's not by chance. I mean, those are forums that they like. Those are forums that they have helped to build up because it works for them. And it just doesn't work for people like you. QUESTION: Christian Borge [ph] with the United Press International. I wonder if you can address the issue--a two-parter, really. You talked a little bit about the corporate involvement, but there are--for instance, the Chamber of Commerce in the United States has a nonprofit offshoots. They get money from USAID to do work in their agenda overseas. What do you think is the specific availability or at least specific characteristics of those organizations that will enable them to act as some kind of counter-balance? Is there a potential for that, number one? And number two, what do you make of the arguments that come from the NGO, the more liberal NGO arena that they're essentially working to counter-balance the inherent access to government that corporations have? MR. JOHNS: I think what Jeremy and I are both saying is that inside nations there's plenty of room--there are plenty of advocates for both sides, it's a robust sort of debate. Internationally there are reasons why it might tilt one way or the other. So it's up to the players to get organized. That's not my business. I'll tell you one thing I object to, though, it's when a minister of a government attends an international forum and takes NGOs with him. That's a massive confusion of responsibility. So the minister, if you like, steps down from his role of being the representative of the broad opinion of the people and the government, et cetera, et cetera, and says, well, look, I'll take the National Farmers Federation and the WWF along and they can participate, too. Why? You've done the deal, you've done the business, and it's literally, figuratively, legally in the hands of the minister to do the negotiation. So one of our views, of course, is to, you know, look for transparency amongst NGOs and so on and so forth. But Jeremy, I'm with you. At the end of the day, governments have to reassert their legitimacy. The only game in town is that they've got the only measurable vote that's around. And they're certainly the only people who represent the unorganized. So sure, let all the groups gather around internationally. I mean, there's enough [inaudible] around; they're not going to stop doing it. But we need to remind governments that they carry the weight and that when they meet, they should meet alone. I don't care what happens outside the door. MR. RABKIN: Just two quick responses to this. Right, NGOs are now saying business has all this access. And they're not just talking about domestic access. They're saying business has these forums and the one that they're really lusting after is the WTO. So all these big decisions are being made on behalf of business at the WTO. Well, okay, that's--I understand that people are upset about that, and that's an issue and we can talk about that. It's not actually true that businesses are lobbying at the WTO. Businesses are lobbying back home. And if you want to influence your government's trade policy, you can do it back home. But of course that isn't what they want, because back home they're competing with a lot of other groups. They want an international forum in which they can predominate. To say that because there are trade negotiations in an international forum--which, after all, trade is about exchange, you know, across borders--to say that because we have this for trade, we have to have it for the environment, for human rights, for health, for indigenous peoples, for everything else, I think is a complete non sequitur, but it's the way they argue these things. And just a few years ago they were saying security, why are we constantly having international conferences to talk about arms control? We should be having international conferences to be talking about diseases, to be talking about health, to be talking about other threats to-- Well, okay, I mean, but what that's really saying is, Nobody else, no--governments cannot simply have meetings to talk about things in which governments are exchanging. The governments shouldn't be allowed to do that on their own. If the governments are going to do it, then our movements should have to do it. And their movements are conceived in such a way that a lot of governments are intimidated. I have just one quick point about which governments bring people with them. I was just at the Pentagon yesterday and someone said to me, you know, it's really annoying. We go to these meetings and some of the countries bring--to talk about military things--bring NGOs. Who does it? Australia. Australia's one of two countries that do it. Who's the other one? Canada. And why do they do that? I think the reason is--and maybe you have a better explanation that goes deeper into Australian, you know, folk culture, but I think the explanation is it's a little bit scary--or at least it's a little bit unsettling when you are a smaller country talking to this vast power, the United States, and you want to say, well, we have potentially in the background a whole international movement. And if you guys in the Pentagon don't listen to us, there's going to be people handing out leaflets saying that you're for war and the global spread of capitalism. I mean, that makes you feel like you're, ah yes, more of a contender. But I think it's not really in the end going to work too well for Australia and I don't think it's--I mean, I don't think it's a good thing even for the smaller countries in the long run to get themselves tangled up with international movements that aren't accountable to their own people. QUESTION: Thank you very much. I'm Patricia Forner with World Vision. Now there's a whole new identity crisis. I think they call us faith-based organizations instead of nongovernmental organizations, but I'm not sure where the differences lie. I'm very interested in your commentary about parliamentarians--or congressional representatives in our case, in this country--taking NGOs along to help them have legitimacy, maybe, at this table with the Department of Defense or--I find that extraordinary. I don't think it's correct at all, and I quite agree that, you know, we belong, like other people do, just going and lobbying our--or advocating with our congressmen and representatives. But my question is in the case of international trade, and you have in this country a preponderance of market access out there and it really--a lot of it happens in the negotiations between corporations and Congress, I find that it's a slightly different slant than what an NGO would have or what an NGO would accomplish, that it does have international implications. We have, I think, over 64 percent of market--not access, but--control, I guess, in the international spectrum. NGOs don't have anything like that. So I myself don't think that NGOs are much of a threat to corporations. I know that they talk a lot about keeping corporations honest and so forth, but I think the OECD has a policy now about corporate responsibility, if I'm not mistaken, and do you think that that's because the NGOs had anything to do with this or it's--because I don't see even--each individual country in Europe doesn't really feel like it has to be bound by what the OECD has decided. MR. JOHNS: I think we're talking about a language and a conversation that's building, that says we're passing laws now to govern the behavior of our corporates. And we do it not because we think they're bad, but someone says we can make them good--gooder, if you like. And you pass laws. What normally happens is that we get things through the House of Representatives, it gets into the Senate, the government doesn't have a majority, and some minority, some very small parties say, well, we'll let it through but you've got to write these words in. And these words are to the effect that we will love the environment and respect human rights, et cetera, et cetera, et cetera. So nice ideas become law without a great deal of debate. So we're beginning to load up, under the corporate agenda, an enormous amount of regulation that, I think at the end of the day, will probably leave us with more poor people. I mean, that's my fear. So it's a dialogue. It's not just physically who gets to the forums and so on. I like Jeremy's remark that if you shift the forum, you do shift the politics. There's no doubt about that. But to me it's also on that extra thing, building dialogue, we're all going to do good. So you write down long lists of good things and then judges see them and then they interpret what goodness is and away you go. Before long, you have a degree of regulation that no one thought was possible. And I think we all will rue the day. QUESTION: My question concerns one of the tenets of conservative philosophy here in the United States is that the private sector does things better than the government, and it's led to government contracting out of services or things like the president's faith-based initiative. I just wonder what the inter-relationship of this may be with the comments here on NGOs. Is the problem with NGOs partly when they get so much money from the government they really cease to be, in effect, private organizations anymore. My experience with USIA was they had contract agencies which 70-80 percent of their funds came from government contracts, and therefore very little of their role was private anymore. MR. RABKIN: You know, it may be true that contracting out for services in many circumstances can be more efficient than having the government do it itself. And there's all kinds of plausible reasons why that would be so--the government has more red tape, and so on and so on and so on. But I think it's a real mistake to say, ah, the private sector does things better, therefore the government should just hand over its governing responsibility to private-- No. I mean, the most--the reason why the private sector does things better fundamentally is that consumers are choosing. The consumers say, no, we don't like this product, no, we don't like this price. And they're choosing in a market. That's the fundamental thing. What AID is doing, that's not a market at all. I mean, that's just the government saying, okay, we want money to be spent on this, and so then they hand over the money. And maybe it's worthwhile to hand over the money and maybe it isn't, but this is not a market. The ultimate beneficiaries are not choosing. It isn't their money. And I think that makes it extremely easy to have boondoggles. And again, I'm not saying this as, you know, a devastating critique, but just to remind ourselves, just like "NGO" is in a way a phony expression, which is, oh, they're not the government so you can just trust them. There's something phony about the idea that if you have a private organization doing it, therefore it's being done well, in the end somebody's making a decision about what to do. And it isn't the beneficiary, because the beneficiary is not paying for it. So it is the governments. If the government's making the decision, we want to know more about it than just isn't it nice, it went through Oxfam. I don't know if that's nice. And I myself, just anecdotally, think that quite a number of these organizations are invested in delivering services and therefore do become rather politicized, because they're always looking for, oh, where's the next contract coming from. So you lose some of the benefit of their ostensible private independence. MR. JOHNS: I agree with Jeremy entirely. Now, it's not a market, so I don't care that much who delivers aid as long as they do it well. But it's whether or not there's a missionary perspective here. What do you get with your aid? And I understand the USAID budget has been expanded so that we can sell something like democracy and build civil society. And I bet if someone sitting in a Third World country greets an American at the door with a big bag of money who says I'm here to build civil associations, the person receiving the money will say, Yup, I'll be in that; yup, I'll help build your civil association. And it will last as long as the money lasts. So it's what comes with the aid. It's the message behind it that worries me. But I don't have any difficulty about who delivers it, because I presume that whether it's privately or other delivered is another matter. MR. FONTE: Okay, one final question, then. QUESTION: David Rothbard, CFAC Committee for a Constructive Tomorrow. The panelists have made the point that the answer to this, or part of the answer, might be holding governments accountable, to hold NGOs accountable. And that clearly would take a large step toward helping to solve a part of this problem--more accountability. But should another part of the strategy be that as long as NGOs are having this kind of access and influence, to encourage those who support property rights, who support national sovereignty, who support liberal democracies to also take a place at the NGO table, to encourage them to get involved at these international gatherings and other things so that the NGO forum isn't left only to those who oppose these kinds of things? What do you think is the potential and the opportunity for NGOs that are perhaps a bit more like-minded to participate? MR. RABKIN: I'm not optimistic. I mean, there are people here who've had experience with this, and I'm looking forward to hearing from them. And I certainly think it is useful to have them be there, if only someone's paying attention who is not part of that same group-think. But I think that these forums are set up to be forums for people who have somewhat similar left-wing vision, leftist vision. So I'm not at all optimistic that, oh, well, but other groups could go in there and talk about property rights. I don't think so. But one other thing quick, you said, well, the government needs to hold these groups accountable. No, no, no. The government does not need to hold these groups accountable. I'm not in favor of that, I don't think it's feasible, and I don't think it's right. I mean, these groups are talking and that's fine. Let them talk. All I'm saying is the government itself needs to be accountable for what the government chooses to do. And the government cannot say NGOs made us. They cannot say, oh, well, it's now become an international norm because NGOs said so. No, no, no. The government has to make its own decisions. And if it happens to agree with NGOs, that's fine, but anything NGOs say is not an excuse--it is certainly not a justification--for what the government does. That's what we should be clear on. And that, I am somewhat--considerably more optimistic about that, that we can say in our own domestic debates, wait a minute, that's not an argument; we don't care what they said in Durban. That's something we ought to be able to do. And it maybe will be helpful that people like Austin Roussin [ph] know exactly what they said in Durban because he was there and can chime in. MR. FONTE: Thank you very much. [Applause.] SESSION IIMS. PLETKA: We're going to move on to our second panel, and the moderator is Roger Bate. Normally I only do a little line from the biography, but I got to the last line and I have to read all the way through. Roger Bate is the director of health advocacy group Africa Fighting Malaria and a fellow at the International Policy Network. He is a frequent author on global international policy, especially on the topics of malaria, water, and trade. He's advised the South African government and is highly involved with all of these environmental and food policy issues. He's also currently working on two books, one on global water markets and one on the DDT debate, as well as--and this is what I was really waiting for, because you're going to have to go into this--as well as a monograph on the Cayman Turtle Farm. So I know that we will all enjoy hearing a little bit more about the Cayman Turtle Farm. And if you will be kind enough to start. Thank you. MR. BATE: Thank you very much, Danielle, and thank you very much, AEI, for inviting me to this event here today, chairing this session. You'll hear more from me this afternoon when I speak on NGOs and their activities in the south, in particular in Africa. To respond to Danielle's point, actually it links very well into today's meeting. The Cayman Turtle Farm is the only turtle farm in the world that works to commercially rear turtles. It would have been a successful model for environmental conservation around the world were it not to have been shut down by Governor Jerry Brown of California back in 1973--which is a long history in its own right and one that I'm writing about in the monograph. So you'll have to buy it, and I'll make sure that I get the mailing list to bother you all with that. And actually, very recently on that topic, the Costa Rican government was represented by several environmental NGO representatives at the Convention on International Trade in Endangered Species, which is a major U.N. convention, and stopped the Cayman Turtle Farm from being seen as a captive breeding center, which would have allowed it to open up into international trade. So it was actually a representative from an NGO acting for the Costa Rican government which caused problems and landed to an EU bloc vote. I'm not going to talk about that this afternoon, so I thought I'd throw that out now since it was raised. I'm really looking forward to this panel, and I'm delighted to be chairing it. We have two great speakers. First Jerry Manheim's going to be speaking, and then David Riggs. Professor Manheim is professor of media and public affairs and professor of political science at George Washington University. He has numerous accolades which are all listed out in the biographies attached. I think most interestingly, both for today and also the book that I'm going to read--I haven't read yet--includes "The Death of a Thousand Cuts: Corporate Campaigns and the Attack on the Corporation." And today, Jerry is going to talk about the strategy of NGOs against business. MR. MANHEIM: Thank you. I thought we had the PowerPoints set up and then suddenly discovered that we didn't. But we're good now. The paper that I've prepared for this conference is the 25-cent version of the book that I've been working on and am nearly finished with for the last year looking at the phenomenon of biz-war, and the presentation that I'm going to give you this morning is the 25-cent version of the paper. So I think I have two chances of giving a two-bit presentation. My paper is strictly about U.S. domestic politics, but I think has some parallels and broader applications. I'm making an argument in this paper about what we now know as the progressive left in the U.S., the latest incarnation of the left, which I think has been designed rather purposefully, if not wholly systematically, to replace the pre-Reagan-Bush liberal left, and which I think is the product of a series of strategic experiments and strategic decisions that have been made by labor and a variety of other activists over a period of 25 or more years. In making those decisions, I think that they have been guided by two things: an antipathy to the business community, and also an understanding of the forces that came together to raise the Reagan-Bush right and drive them from power and influence lo those many, now, years ago. I'd like to make an argument that's in five parts, and I'll just list the parts and then go through very briefly and give you a little bit of each one, and then they're developed a little bit more thoroughly in the paper itself. The best way to think of this might be to picture a puzzle with five parts. And if the parts come together, then the puzzle makes a picture. And you need to have the right parts, you need to have them in the right place, they need to go in the right order. But you can end up with a picture. And the objective here, I think, is to create such a picture. And I think there are five pieces in this puzzle. The first is a guiding empirical theory of social, political, and economic organization. I think that the left has come to a relatively common--never totally common, but a relatively common view of how power works in the U.S., and that that view has guided much of the decision making and experimentation that I'm referring to. Then you have to have language that implements your theory. And there's a very clear nomenclature here that constructs the political self for the progressive left--the notion of progressive is where I'll go with that--and constructs an enemy: the corporation. Then the third piece is to build an institutional counter-structure. If you've lost power and you want to regain it, and you have an understanding of how the world works, then you want to put that understanding into motion by creating a counter-structure. Then you have to have a strategy to make the counter-structure politically effective. And finally, borrowing a term from the Rand Corporation, some studies that they've done for the Pentagon, they've developed a notion of social net war, which is a combination of Internet collaboration, but--for my interests, more importantly--social collaboration, social networks put together to achieve particular purposes--in this case, the reacquisition of influence and eventually power. Collectively, I think that these five pieces coming together create a new and pervasive conflict, a new form of conflict between labor and other activist groups on the left and the corporate establishment. And it's that phenomenon that I've labeled "biz-war." Let's start with the intellectual grounding. And I'm just going to trip through this pretty briefly. A lot of the thinking about the relationship between corporations and power traces to the work of C. Wright Mills, political sociologist, and to others who followed in some of his thinking. Mills argued that there were economic, political, and military elites that controlled country, and they were facilitated by wealth and the control of wealth and by organizational position, but that they operated beneath a facade or veneer of apparent democracy and pretty much got their way through elitist action. Mills didn't live very long after writing those sentiments, but they attracted a great deal of attention elsewhere. And in particular I point to one sociologist and one political scientist who picked up on that theme. The sociologist is Bill Domhoff, who extended Mills by increasing the emphasis on social class, and he argued that there's a ruling class that is literally class-based and controls the power elite. Dye was more interested--less interested in class, as was Mills. But Dye was more interested in the organizational structure and in organizational power relationships. So the influence here intellectually, for example, during the '60s, '70s, into the '80s, I think, in political science, there was something called the elitism-pluralism, or elitist-pluralist, debate that had to do with whether the apparent institutions of democratic politics and governance really had much influence or whether there were in fact other forces that were more influential, and what the precise roles were. The activists--we know that Tom Hayden and the folks in the Students for Democratic Society, who were very influential as the beginnings of an intellectual movement in some ways that we can just touch on today. We know that they read Mills. In fact SDS, when it was in its infancy and basically a kind of think tank, actually had a bibliography of things that all members were required to read before they could participate. And we also know that there were a great many students who were exposed to these ideas because the Domhoff book in sociology and Dye's work in political science were both very widely assigned, not only in advanced courses but in introductory courses. So there were a lot of people who were exposed to this set of ideas. All of which I take to mean that in the 1970s and the 1980s, the crucial period here for direction setting--especially the 1980s--the idea that there was some interlocked network behind the scenes operating to control the country was a prominent idea. And if the left were to adopt that idea--which I'm going to argue they have done--was really a short step for them to do it. It wasn't a giant leap to come to that. Which gets us to the theory, and I couldn't hope to do justice to all of that, but I thought I'd show you the summary model that Tom Dye produced and that Bill Domhoff has also made reference to in his work. Dye believed that power was controlled by wealthy individuals and corporations that used their money and their position through a series of intermediary institutions to achieve influence. Foundations like the Ford Foundation, for example, university centers, research centers, and faculty members with agendas of compatible research and the like, think tanks, like AEI, were all part of that model. Commissions were a bigger thing in the '70s, when we were doing Social Security commissions and things. That's not so much around anymore, but the news media played a role. What the arrows represent here is the flow of money, the flow of personnel, interlocking directorates, things that tie together these institutions and provide for direct or indirect means of control. And the argument wasn't that this was a perfectly controlling system, but that it was a significantly influential component of political decision-making that, at the end of the day, produced an agenda of choice, a menu of choices that the--what Dye called the proximate policy makers, the people in Congress and the White House, and in the courts and in the regulatory agencies, could choose among as having been tested,legitimized, fundamentally researched and presented as viable options. So it was a form of agenda control. And you notice I've got a little box down here in the lower right that says Parties, Elections, Opinion, and Interests. Those are the mainstays of pluralist democratic theory. I put that box there, but Tom Dye didn't. He just didn't think that was part of the explanatory framework. So that was the sort of democratic veneer. What we think of as electoral democracy and its trappings was a democratic veneer in the elitist model. The second piece of my argument--once we have a theory which says that there's something you can do behind the scenes structurally--the second piece of my argument has to do with language. The thing that eventually defeated the liberal left was the outlawing of the L word. Quite literally, the label was taken away. Well, part of the reconstruction of the liberal left--it can't call itself liberal anymore and it may not be the same combination of interests--was the need for a new word. And progressive was the word that they settled on. Now, this quote actually is from 1905. According to historian Edmund Morris, this was the first time that the word "progressive" was used to describe a political movement, rather than simply as an adjective. I'm not sure if that's accurate or not, but it captures the essence of the value of "progressive." Progressive connotes high-mindedness, forward-looking. It captures the agenda of the left but it doesn't constrain that agenda, because it's an ambiguous kind of word. We've heard some reference to that previously. Americans tend not to be ideological people. Progressive is a word that masks ideology as pragmatism or problem-solving. So it made it more palatable. It's also a word that resonates with populist feeling, and in fact you'll see in some quarters that instead of the progressive left you'll see references to progressive populism. It's deeply rooted--100 years in American history. It also has one other advantage: it creates a natural enemy, and that's clear in this quote as well. The natural enemy is the corporation. It's an enemy with which the progressive left is quite comfortable. It's the natural enemy that they perceive. So it all fits together into a nice verbal package. So then the task is to construct the out-of-power elite. If the power elite's got you down, then you want to have an out-of-power elite. Now, I'm not suggesting, I'm not suggesting that there was a cabal where five people with left arms only sat down and decided how all this was going to happen. It think there's been an evolution, an historical process that has pointed in the directions that we're talking about now. But there is evidence at certain critical junctures of conscious decision-making and knowledgeable, purposeful, informed decision-making. So how do you go about constructing the out-of-power elite? And this is really a short list. There's more to this. One thing is you get rich people who want to give to progressive causes and you take their money. And that was an early-on approach; it's still in use. In fact, there's now a group called Responsible Wealth, one of whose main functions is to recruit newly rich people and teach them how to be progressive donors. So this is an institutionalized function. It produces probably tens of millions of dollars a year, but it's not a massive infusion of capital. And ultimately there has to be a massive infusion of capital if you're going to accomplish this end. So you need to do some more. One thing that you can do in addition is to pool wealth and channel it through activist foundations. And the classic example here is the Tides Foundation, which has a large number of programs for pooling small bits of individual wealth and then applying them to policy agendas. Another piece of this, which isn't really mentioned up there, is to redirect wealth. The Pew Charitable Trusts, for example, were actually created by some of the most prominent conservative Republicans of the New Deal era, but that money has now been redirected to causes that those founders probably wouldn't be very comfortable with. And you know that the people at Pew realize it, and they're a little uneasy with it. If you read their half-century--the recent history that they produced, I don't remember the exact period it covers, but in 44 pages there are something like 41 references to maintaining the desires of the founders. Then you need to have some think tanks--working through the Dye model, with some modification--you need to have some think tanks and legitimizing rubric. The Institute for Policy Studies has been around for a long time, and it's certainly a focal point of some of this organizing activity. The Economic Policy Institute is an example from the labor side. One of the probably less significant but more interesting--in one way--groups is the Campaign for America's Future, which brings together labor and some traditional liberals, some of the somewhat harder-line IPS types. And it's interesting because of the hundred--there were 100 founders who came together to form the Campaign for America's Future in the mid-'90s, and one of them was Bill Domhoff. So we know that he was there, fully enlightened about the power elite theory and how one might use that. Then you get into what I've labeled here pseudo-democratic activism. There have been other references to this kind of activity, and I'm sure we'll hear some more going through the day. This is protest as democracy. These are not for the most part electorally active or influential groups. They're working outside of the electoral process in large measure, with the notable exception of the unions. But protest and demonstration as expression is a way of interpreting democratic values and, in a way, provides a veneer or facade for the out-of-power elite in much the way that interest groups and public opinion might have under the power elite theory. Then we get to the issue of redirecting corporate power, and that's what I want to talk about for the remaining few minutes. One of the really significant initiatives that we've seen in the U.S. in recent years is the rise of proxy voting for social policies and corporate governance--issues which are not the same thing for the most part, although they're closely related. The problem that at the end of the day the new progressive left confronted a few years ago was that when they get all this foundation money and when they redirect the old foundations that they can do that with, and when they pool their funds, the problem is, at the end of the day, foundation money is static. There's a body of money, they can spend a part of it each year--the government says you have to spend 5 percent. On the other side is corporate money, and corporate money is dynamic. Corporations don't live on their accumulated wealth; they live on cash flow. And that's an altogether different kind of money, and there's a lot more of it. If you added up all the foundation money that the progressive left has influence over--and it's really a fairly large number--it pales by comparison available to what they regard as the other side. So they need to find ways of controlling that money if they want to eventually succeed in regaining power. And I think that's what a lot of the economic democracy and proxy voting activity is about. Governance issues and social policy issues are two pieces of that. SEC Rule 14a-8 is just a regulation that tells corporations how flexible they have to be in letting ballot measures come before their shareholders. And in 1998 that rule, under great pressure from the domestic NGO community, that rule was broadened to include social issues. So corporations could no longer automatically exclude social policy issues in their operations from shareholder consideration. And that has led to a much greater flow of activism among shareholders. And then you get to a group called Institutional Shareholder Services, which was actually featured in the Wall Street Journal last week. Their role in this is to be the quote-unquote independent arbiter that tells corporations it's okay--or tells, I'm sorry, large institutional shareholders who control corporations, in many instances, through their votes that they really ought to be backing this agenda of governance and, in some measure, the social policy issues. And now there's a new rating service, Corporate Library, which has come out with its own separate ratings, except that Corporate Library and ISS are really sort of the same family. The piece that makes this work is that it's part of a larger effort to pressure corporations. The proxy voting and shareholder activity is really only one part of what I have called in previous work corporate campaigns, when I've been looking at their use by organized labor, but in this instance I think of them as anti-corporate campaigns because they have somewhat different content. They all have the same idea, which is that--it's called power structure analysis. It was developed in part by a guy named Ray Rogers about 30 years ago, but also by others. It comes out of Saul Alinsky's thinking as well. The idea is that if you think about a corporation, it has a variety of stakeholder relationships on which it's dependent. And some of those stakeholder relationships may be vulnerable to pressure. If you can pressure the stakeholders to pressure the corporation, then it's better than doing it directly yourself, because it's people who they care about, that they have to care about, who are bringing the pressure. Now, this gets much more elaborate. An earlier book actually assigned roles to these various players and talked about how they fit in with various communications strategy. But the idea is that by researching, studying all these stakeholder relationships, finding the vulnerabilities, matching them--if you're an environmental group find the ones that you think will be most interested in the environment--it's not that you ever persuade any of these groups to do something that's not in their interest; it's that you persuade them to identify their range of interests, and from that range to select out the subset that come closet to your interests as the antagonist to the corporation, and get them to act on that. So you don't have to persuade somebody to do something they don't believe. You have to persuade them to act selectively on what they do believe--which is a much easier task. And that--there have been--labor unions have done probably more than 220 or 230 of these campaigns over the years, and non-labor organizations have been involved in a growing number of them. If I had to guess, I'd say 30 or 40 at this point, but the number's growing very rapidly, and that may be the wrong number. So this is the attack strategy that is the engine driving the change. Then you throw in this concept that the Rand folks had developed, called social net war, which is--the case study that they looked at was the Zapatista movement in Mexico, which became prominent and accomplished some of its objectives when it was supported visibly by a variety of activist NGOs from the U.S. and elsewhere. So the idea here is that social networks that legitimize and highlight and bring into the agenda policy positions can be effective, and my argument in the paper is that they are effective in undermining confidence in corporations and pressuring them as a way of building up their own movement. And just to give you an idea of that, this is--since we were talking about proxy battles--this is a part of the network that has to do with domestic influences on shareholder voting. You can see over on the right, there's the AFL-CIO and the various unions. Down on the bottom right you have a number of major pension funds, some of them union pension funds, others not. Institutional Shareholder Services, which has some influence on institutional voting in shareholder meetings is out there in the middle. Up on the upper left are what you might think of as corporate NGOs, although we've been told those are different things. But these are companies that are in the business of being activist investors. They start shareholder resolutions, they mobilize individual investors to engage in precisely the same agenda as the activist groups in the U.S. because they all belong to the same associations and came from the same places, things like the Social Venture Network. And then there's the Inter-faith Center on Corporate Responsibility in the middle, which is a way of investing the activist agenda with the legitimacy of organized religion. And it just sort of all forms a network which produces a variety of pressures on corporations. And that's it. [Applause.] MR. BATE: Thank you very much, Jerry. A fascinating chart there at the end. That's quite a diagram. MR. MANHEIM: That's simplified. MR. BATE: Yeah, that explains a lot about some of the international meetings I've been at wondering why corporations are acting in the way that they do. We'll take questions for Jerry. After David has spoken, we'll take questions for everybody. And then we'll have about half an hour. David Riggs, Dr. Riggs, is executive director of Greenwatch.org at the Capital Research Center, which is a Washington, D.C.-based public interest group. I remember talking to David a few years ago about his Ph.D. research on water and water policies, an issue that I share an interest in and one that is heavily dominated by NGO opinion. Today he'll be talking about transparency and accountability of NGOs. David, take it away. MR. RIGGS: Thank you very much, Roger. As Roger just mentioned, I'm with the Capital Research Center. Briefly a little bit about who we are. Capital Research Center, our mission is to examine the leadership, the activities, and the funding of the nonprofit sector. We focus mostly on the nonprofit sector here within the United States. I head up the Greenwatch project at Capital Research Center, and it focuses on environmental nonprofits. You can find a lot of that work at www.greenwatch.org--just a quick plug. Our research relies heavily on a variety of publicly available sources of foundation and government funding. Our mission and purpose naturally lead to our interest in examining nongovernmental organizations, which is, of course, what I'm here to talk about today. With the collapse of the Soviet Union and the liberation of Iraq, most Americans have concluded that the U.S. model of individual freedom, representative democracy, and a free market economy has triumphed. Only literature professors now believe in a socialist revolution and centrally planned economies. Tyrannies and terrorists remain in parts of the globe, but they will be swept away by the promise of freedom and prosperity--or so we would like to think. But around the world there are prosperous and educated people who do not admire the United States. They see the U.S. as the supplier of what they call globalism, that is, free markets, free trade, and economic development. And they don't hesitate to denounce the U.S. and other governments that fail to embrace the ideals that they prefer--that being environmentalism, multiculturalism, and wealth redistribution. At one time such people would have organized national political parties to compete for power. But these days, many organize themselves as nongovernmental organizations, or NGOs. NGOs claim to represent civil society worldwide and see themselves as in the vanguard of a civil society movement. Almost without notice, NGOs have become a force in world politics. They operate in the international arena. During the 1990s they played an increasing in United Nations conferences, as many have already been mentioned, the 1992 Earth Summit, the 1994 Cairo conference, the '97 Kyoto conference, and the 2001 South African conference. That last conference was attended by 2,300 delegates who represented 163 U.N. member states. But the U.N. also registered 17,000 participants who were the accredited representatives of some 3,400 NGOs. In 1996 the U.N. set up formal procedures that gave NGOs official consultative status. NGOs that apply for and receive this recognition are allowed to attend U.N. conferences and meetings, they can circulate written statements, they're allowed to participate in planning sessions and propose agenda items for consideration. Voting is about the only thing U.N. member states can do that NGOs cannot do. The U.N. has always worked with NGOs. Many of these have already been mentioned today, but groups like Catholic Relief Services, the Salvation Army, Amnesty International have worked with U.N. agencies in member states for decades on disaster relief, refugee and human rights cases, and other social and economic problems. In 1968 there were about 260 NGOs with some type of U.N. recognition. But today there are 3,000 NGOs that have consultative status with various U.N. bodies. For example, the National Organization of Women and Feminist Majority Foundation have consultative status with the U.N. So does the American Association of Retired Persons, George Soros Open Society, Greenpeace International, the Natural Resources Defense Council, the ACLU, and on and on and on. The decision to open up U.N. policy-making processes to more and more NGOs is dramatically reshaping the U.N. It is becoming an international organization composed of mainly constituent bodies and stakeholders, not just member states. It's little-known NGOs that are the real driving forces behind U.N. efforts to develop institutions and policies of--a terms that the previous panel talked about--global governance. NGOs are behind the International Criminal Court, the landmines treaty, the global warming treaty, and a host of other binding agreements and international covenants. If NGOs get their way, they will be in a position to implement and enforce the very policies they are proposing under U.N. auspices. And if the U.S. agrees to be bound by these agreements, they will be complying with policies promoted by NGOs. Some of these will be 501(c)(3) nonprofits based in the U.S. and recipients of U.S. taxpayer funding. Others will be overseas groups that receive grants or assistance from U.S. nonprofits and foundations. By definition, NGOs are supposed to be nongovernmental. Since 1996, any NGO that applies for U.N. consultative status is supposed to submit its charter and bylaws, financial statements, annual reports, and sample publications to the U.N.'s NGO section. It also must explain how its activities contribute to the goals of the U.N. To keep its status, the NGO is required to submit a report on its accomplishments. The report must not exceed four pages double-spaced. And here's the real kicker: It must be submitted once every four years. So much for quality control. This is a new process--again, it started in 1996--but already it has produced some interesting results. For instance, the General Federation of Iraqi Women, a Baath Party organization, received NGO consultative status in 1999. The U.S. alone opposed the offer of this status by the U.N. Economic and Social Council. It lost by a vote of 15-1. The U.S. was also defeated when it tried to deny consultative status to a center for youth studies. The center's headquartered in Havana, Cuba. Clearly, the U.S. and the U.N. have differing ideas about what is a legitimate nongovernmental organization. Were nongovernmental organizations simply providers of direct services to people in need, such as disaster relief, refugee assistance, et cetera, occasional political differences might not be too important. But NGOs are becoming more numerous and vocal. They are growing more assertive in claiming to represent aspirations of all people in civil society and they are receiving more funding from foreign governments, foundation grant makers, and from the U.S. government. The collapse of communism and other oppressive tyrannies have liberated millions of people around the world who are creating real civil societies. They are organizing private, voluntary, and charitable organizations that are doing valuable work. The independence of these groups must be recognized, and their freedom to make decisions and raise funds deserves legal protection. But many NGOs are using their freedom to undermine individual freedom. They're promoting new international arrangements that are indifferent to the U.S. Constitution, which safeguards our liberties and guarantees our national sovereignty. And they're advocating labor and environmental policies that will harm the citizens of less-developed countries that desperately need capital investment and economic development. If NGOs really want more global governance, they will need to accept more rules for themselves. International NGOs need to make their operations more transparent and their actions more accountable. The question is, what is the right formula that can protect both NGO independence, but leave it open to public scrutiny? I'll briefly present a few suggestions to that question, using the U.S. as a model. The United States has a profound tradition of nongovernmental charitable and voluntary activity, and it enjoys the world's most extensive, well-financed, and best-governed nonprofit sector. That sector has many problems which, at the Capital Research Center, we analyze and criticize all the time. But it possesses many strengths as well. The first recommendation is to separate charitable from political activity; that is, separate the NGOs that engage in programs like disaster relief, refugee assistance from those that engage in lobbying and political activism. We do this in the U.S. by authorizing the IRS to separate nonprofits into 501(c)(3) and 501(c)(4) categories. A 501(c)(3) organization, a nonprofit that's designated as a 501(c)(3), is essentially a charity, and educational institution, or a foundation that engages in charitable activities, public education, and very limited lobbying activities. And (c)(3) cannot have a substantial portion of its activities by lobbying in nature. Contributions to (c)(3) organizations are, of course, tax deductible. A (c)(4), on the other hand, contributions to it are not tax deductible, and a (c)(4) organization, according to the standard sort of IRS rules, is a social welfare-type organization and other lobbying and/or issue advocacy-type organization. Again, the 501(c)(4) organization engages in direct lobbying activities. Both (c)(3) and (c)(4) organizations must submit an annual Form 990 that details their expenses, among other things. The Form 990 helps to verify whether or not the organization remained in compliance with the (c)(3) and/or (c)(4) guidelines. One could argue that many nonprofit organizations muddle the line between (c)(3) and (c)(4) status, and one could further argue that more and better oversight and enforcement of the nonprofit sector is needed--an argument that is made quite frequently by us at the Capital Research Center. Nevertheless, separating charitable nonprofits from politically activist organizations is a valuable distinction that leads to a healthier, more traditionally charitable nonprofit sector. Moreover, having the nonprofits submit annual reports provides a mechanism for consistent accountability. The second recommendation is to fully disclose all government funding of NGOs. Here again, the U.S. example is far from perfect, but it does provide a useful model. The U.S. approaches disclosure of government funding from both sides of the ledger. The U.S. government essentially makes the nonprofits themselves that receive government funding submit an annual audit detailing the grants that they received from the government. The rule as it stands right now is if you receive $300,000 or more and you are a nonprofit, you must fill out this audit form, and this audit form is collected by the Census Bureau and it's what's known as the Federal Audit Clearinghouse or Single Audit Database, and this is available online at--I believe it's harvest.census.gov, and you can find it from there. Importantly, with this particular aspect of the U.S. government funding the nonprofits [change tape] --fill out a four-page audit, and the audit itself details the agency that is the grantmaker, or the subagency within the agency that is the actual grantmaker, the general purpose of the grant, and of course the dollar amount of the grant itself. For example, if you were to go to that website that I mentioned, the Federal Audit Clearinghouse, you could find the federal grants that the Worldwide Fund for Nature--formerly known as the World Wildlife Fund--received. For example, what that shows is WWF received $19 million in federal grants in 2001, $16 million in 2000, $14 million in 1999, and $19 million in 1998. Substantial sums of money that the federal government is making to just this one organization that also has NGO status. The Census Bureau has essentially another database that looks at the other side of the ledger. Rather than have the nonprofits fill out, comply with some basic rules on the government funding that they receive, there's also--you can attack it from the other way and say, okay, the government agencies, the grantmakers themselves, they must adhere to just some very basic rules and disclose the grants that they are making. And this is essentially housed in one very large database that's known as the Federal Assistance Awards Data System, or FAADS for short. FAADS is a repository for data on many different types of government payments. You can find anything from Social Security payments to veterans benefits to EPA grants within FAADS. It is a massive database. FAADS provides the basis of a system that can be refined to provide online quality information about taxpayer-funded grants to the nonprofit sector. FAADS is far from being a perfect tool for really disclosing what the government provides in grants to the nonprofit sector, but it is a very useful tool and one that it is my understanding that the Census Bureau is improving upon. Government agencies and nonprofit organizations should be held accountable to a uniform and truthful disclosure of government awards they grant and receive. Transparency in government funding will make charities more open and effective and give taxpayers the information they deserve. The third and final recommendation is to make the annual financial reports of NGOs publicly available over the Internet. We live in an information economy where the cost of transmitting grows cheaper each day. If the annual reports of nonprofits are made accessible, then through the use of the Internet the private marketplace will then make these reports publicly available. What I mean is, making the basic information about NGOs publicly available will empower private market participants to make NGOs more accountable. In other words, it will create a market in itself. Implementing these recommendations will not achieve a perfect NGO system, but if governments and international agencies were to adopt these model disclosure policies and provide better, organized information databases that are Internet-accessible, then private organizations could do a better job independently monitoring publicly funded NGO activities. Thank you. [Applause.] MR. BATE: Thank you very much, David. Well, without further ado, let's throw it out to the floor. You've got about 25 minutes for questions and comments. Please use the microphone, give your name and affiliation, keep comments brief and questions brief because I'm sure we've got lots. QUESTION: My name is Brian Schlady [ph], citizen, consumer, and taxpayer. A question for the last speaker. In these databases, are there any data on money that flows from government agencies to contractors and then to the NGOs? For example, the Department of Energy funnels significant amounts of money through the national laboratories that then gets handed off to NGOs. Is that money accounted for in either of these databases? MR. RIGGS: The short answer is it may be. The FAADS database is the database where you would find that information and, again, that's the Federal Assistance Award Data System. What you can find in there are grants made by the agencies themselves to various organizations. You know, very often, yes, these are fee-for-service types of grants. And you may be able to find some of that. The problem is the Census Bureau itself admits that this database should not be used for accounting purposes. In other words, it's not really very reliable information. If a corporation were to keep its books like the government keeps its books on the grants that it is doling out, let me just say that Bernie Ebers and--I can't recall his name, the CFO of Enron--they would look like good corporate stewards of shareholder money. The system needs to be improved tremendously. They're working on that. One of the things that the Office of Management and Budget is essentially moving forward with--which is a very encouraging factor which will allow us to essentially answer your question a little bit better, because I really don't know. You may be able to find, again, some of what you're looking for there. But OMB is moving forward with essentially a new rule. And the new rule will attach what's known as a unique identifier to the actual grant recipient. So if, for example, you want to track WWF funding, if you go into the FAADS database right now, WWF could be essentially displayed under a whole host of different needs. It could be WWF, it could be World WF, it could be its new name, the Worldwide Fund for Nature, it could be its acronym, it could be a whole different way, and it's almost impossible to really comprehensively document what the group has actually received. OMB is moving forward with this unique identifier where you'll be able to go in and actually search the database using that unique identifier. And what we're hoping is that at the same time, they will attach unique identifiers to the grantmakers themselves, the agencies. So you'll be able to go in there and actually track the grants made by whatever agency you happen to be interested in. And that will, hopefully, make that system much better. The downside to what OMB is doing--I mentioned earlier that $300,000 threshold for the Federal Audit Clearinghouse, that if you're an organization and you receive $300,000 or more, you must essentially fill out this brief audit. Well, OMB is simultaneously--even though they're moving forward with the unique identifier, they're increasing that threshold from 300 to 500. We would argue that that threshold ought to be zero. But for paperwork purposes, at least that's the Census Bureau's argument, for paperwork purposes they're increasing it to $500,000. I hope that answers your question. MR. BATE: While we're waiting for the microphone, I just wondered if the World Wrestling Federation is a 501(c)(3). Probably not. MR. RIGGS: Well, WWF and the World Wrestling Federation, which is now the World Wrestling Entertainment, they're currently doing battle in legal courts over that acronym. MR. BATE: Oh, I didn't know that. MR. RIGGS: Yes, a $90 million lawsuit, actually, that WWF launched against the wrestlers. QUESTION: I'm Sherry Neeler [ph] with the National Council for International Visitors. I wanted to ask Dr. Manheim if you would give us some specific examples of biz-war, a couple that you think were particularly effective, and then why. MR. MANHEIM: Well, I think biz-war is the overarching phenomenon that captures a full collection of campaigns against individual businesses, the unifying theme of which is that business is illegitimate--as an interest is at least suspect and perhaps illegitimate. It's sort of a corporate outlaw theme. And it plays to a willing perception in U.S. public opinion, a distrust of corporations. When you get into the individual campaigns, probably one of the best examples is Nike. Nike was moving lot of its purchasing--it doesn't really do manufacturing, it purchases from contractors and then markets shoes and clothing. And in the 1980s they were moving a lot of their contracting offshore, which was reducing the number of jobs for textile workers and people who made shoes in U.S. factories. It was part of an industry-wide trend. It was actually fairly well advanced by that time, but Nike was the industry leader, the most prominent target there. So the AFL-CIO sent a representative by the name of Jeff Ballinger [ph] over to Indonesia, where the production had shifted by the time that we're looking at. And he went to Nike, also went to Reebok, which has production there, and I think Adidas also, but they were in a different marketing situation with what they were doing with their Indonesian production--and basically said, You really shouldn't be doing this. And got two different reactions--and this is sort of reading between the lines, because you never know exactly what happened in these meetings. But Reebok said, oh, you know, we probably shouldn't. Why don't we create a human rights award and why don't we begin making contributions and providing the leadership for some public-regarding organizations? Nike said, Go to hell. And the result was that Nike became the target for a wide-ranging campaign that organized labor in the U.S. initiated, but that then took on a lot of much more substantial non-labor trappings as well. It became a human rights cause celebre. You had the chairman of Nike going into the National Press Club a few years ago and saying he really didn't mean to be employing slaves and he was sorry and he didn't really do it. You know, that's a fairly substantial embarrassment. You also get into a whole series of games in the Nike campaign with codes of conduct for corporations, where the NGO community led by Global Exchange and labor, among others, pressed the Clinton administration, which in turn pressed Nike to agree to join something called the Fair Labor Association, which had a code of conduct. And the important part of that code of conduct was the compliance monitoring. And the procedure under the FLA code was that the company could participate in the monitoring and help to decide how good a job it had done. And Nike, under great pressure, accepted that. And as soon as they did, the NGOs backed away and said, well, you know, we're not sure that's the best way to go. Why don't we create this other one called the Workers Rights Consortium and now you have to join that. And the difference at that point in time was basically that in the WRC, the companies that were subscribers to the code did not have a seat at the table to determine how well they were complying with it. And from that you've gotten into a whole series of things--the Stop Sweatshops campaign on college campuses spins out of that campaign. Codes of conduct have become more generalized, and the whole development of an industry whose function is to not be NGOs, even though they're sort of NGOs, but to monitor compliance and provide legitimizing reports and also controls on corporate behaviors. So you've had from a small start a burgeoning attack, underlying which is this assumption that Nike's a big corporation and that makes them vulnerable. Now, Reebok's the interesting story here. If you go to a group called the Campaign for Labor Rights, which has played a role in this, and you read what they say about Reebok, from time to time they actually say Reebok is just as bad as Nike. But they never do anything about it because Reebok took a different route. So there's an example, I think. QUESTION: Is the process of a net war changing the culture of firms, or is it just a process of standoffs and payoffs and hoping they go away? Is it having a longer-term indelible impact on the way corporates are acting? MR. MANHEIM: The question is whether the net war against corporations is having any impact on their behavior and whether they're internalizing the lesson. The reason that in the paper--it wasn't clear, I know, from my presentation and I apologize for that--the reason that I spend a good bit of this particular paper focusing on proxy wars and on institutional shareholder services and that whole set of actors is that this is the one that's brought it home. I have occasions to talk with a variety of people who are corporate decision-makers and, you know, they've always been able to deal with these things as PR problems or as HR problems or some little compartment of the company. But these are the big shareholders. And they are now getting mobilized, and they're getting embarrassed to be associated with the companies. And people in the corporate senior management suites are scared to death of them. I was at one meeting of another association where they were discussing doing something about it. And these were, not CEOs, but fairly senior people in Fortune 200 companies. And they all were concerned about the phenomenon, but they were so scared of it that they declined to have that association take any action because the fact that they were members might become known and it might come back to haunt them. ISS might find out. So I think this is one particular piece of the anti-corporate campaign or biz-war that is really becoming very effective very quickly. And there's a lot more infrastructure behind it than what we were able to talk about today. MR. BATE: If I can just add one comment to that. I did a brief paper on some changes that have taken place in the business environment in Sweden. And Sweden is actually an interesting country for anybody who's interested in this kind of issue to be looking at, and shows actually the transnational nature of the way that corporations are having to act. Sweden is probably the most risk-averse country in the world when it comes to regulatory policy on chemicals. And there you find a lot of the Swedish industry self-selecting away from products that they know are already part of campaigns within Sweden--which you can understand, it's a question of being bought off or however you want to phrase it--but the reality is that those same companies [inaudible] chemicals anywhere else in the world. So what is actually Swedish environmental policy or Swedish environmental pressure ends up affecting what you can buy in this country from Swedish companies or American companies that have to do business in Sweden. It can have widespread effect in that respect. Next question. QUESTION: Jerry, one of the questions that I think is--you mention the sort of U.S.-developing world perspective and your forces operating in this biz-war-type phenomenon. But of course this is all, in a sense, a form of disguised protectionism--at least it can be packaged that way. Why haven't the voices from companies that are disadvantaged by that and, more importantly, the voices of developing-world people, George Yao from Singapore and others, spoken out more fiercely against the campaigns? I mean, Nike is giving way to moral forces, arguing on behalf of--people are arguing that they're speaking to the Indonesian peoples, but the Indonesian peoples could arguably speak more clearly through their own governments and their own economic [inaudible]. MR. MANHEIM: I'm not really the person to answer the last part of that question, because I simply haven't looked at it. The first part of the question, why aren't the corporations speaking out, Nike spoke out. And there's a very important case right now before the Supreme Court that has to do with whether their defending themselves against these charges constitutes First Amendment protected speech or whether it's more limited-protection commercial speech. And every company in the United States has a stake in the outcome of that litigation. It's actually not even the substance of the case that's being tried yet, it's whether the case can have standing before the courts in California. Companies, in my limited experience, companies think like companies; they don't think like the business community. And for each company, if it's a target of a campaign, it has a problem it has to solve; if it's not a target of a campaign, that's not an issue. If the relationship between labor and management or between labor and capital is shifting, but it doesn't impact directly on their bottom line, it's not an issue. So they have a very narrow view. They're also not staffed to deal with this kind of issue. They're not trained to deal with this kind of issue, their trained to make widgets and, hopefully, sell them and make some money at it. And widget-makers are not policy experts, let alone experts on great social movement. So I think they're just not equipped to do it. QUESTION: Jeff Gainer, with American [inaudible]. My question is for David Riggs, and that concerns the magnitude of the forms going in to the federal government. You talked about, I guess, raising the threshold on those reporting money they received from government from $300,000 to $500,000. Do you have any idea how many forms are currently going in to the government and what they actually do with them? How many of the audits, for example, they receive from NGOs does the government then audit? Or do they just mostly take whatever data they have and the post it on -- this information is unavailable to the public, but they really never seriously review it themselves. Do you have any idea how many people are involved in that process? MR. RIGGS: I think the Census Bureau has five people working on this. And the nonprofit sector is just absolutely enormous in terms of--I think the IRS recognizes over 4,000 nonprofits in the U.S. that are environmentally related. That's enormous. Now admittedly, about 70-80 percent of the assets of that environmental nonprofit sector are housed in about 100 or so environmental groups. But the Census Bureau, or whatever government agency really sort of wants to oversee this, can and should greatly improve the process. All it amounts to right now is, again, just a four-page audit. It would literally take, I would assume, a staff at a nonprofit maybe a day to actually fill out the form to actually detail, again, the grantmaking agency, the one-sentence purpose of the grant, and the dollar amount. In terms of the number of audits that, again, this Federal Audit Clearinghouse database, that it actually receives, I don't know that figure off the top of my head. But I would put it at tens of thousands annually. Again, the Census Bureau can do a far better job and the nonprofits themselves don't really incur much, I don't know, cost, I suppose. It's a minor rule to essentially comply with. And what that then generates is just a very simple system to sort of check and balance where the money's going, where the American tax dollar is--who's being funneled that money and for what purpose. I think the taxpayers--just as a shareholder of a corporation would like to know where its retained earnings are going, I think the taxpayers of the United States ought to know where its retained earnings are also going. And the Census Bureau, again, argues that for the volumes of information that they can't handle, the number of grants that would essentially explode under that $500,000 threshold. Well, with the information economy and the advent of sort of the digital age that we're now in, and you can get 700 megabytes onto a nice round little CD, you know, you can get all that information quite easily and the costs of obtaining it are not substantial at all. And I think that that threshold can and should be zero rather than 500. QUESTION: I'm Gordon Green, I'm research director over at Independent Sector. Before that I was chief of the Governments Division at the Census Bureau, so I had oversight over the program. And if my memory serves me correctly, in the Federal Audit Clearinghouse I think they have about 30,000 forms a year and I believe that roughly half of them are nonprofits and half are government, although for the funds distributed, the overwhelming majority's going from the federal government to the state and local governments. And the forms that you referred to--I believe it's called the SF-SAC, the abbreviation, it's a four-page form-- MR. RIGGS: Single audit database, yes. QUESTION: Single audit database. It's a summary of the information on the basic audit. The audits themselves have not been digitized. They go to the [inaudible] of agencies. But the Census Bureau has this summary form which has a wealth of information, a very user-friendly system. I mean, you can get right on your computer right from your desktop and access this--nice little search engine--and find exactly what you're looking for. Find out, you know, grants coming from different federal agencies and how much, and they have the Catalog of Federal Domestic Assistance. And as you mentioned, they're working on that unique identifier. And just one last thing I would add, on the FAADS, the Federal Assistance Awards Data System, one of the last things I did when I was chief of the division there, I said, you know, you guys have to make this user-friendly like the Federal Audit Clearinghouse, because it--as you were saying, it comes out on a CD-ROM, you know, it's very difficult to deal with, you have to get into [inaudible] if you want to work with the data. But the Census Bureau is working on a user-friendly system for accessing to FAADS. And so when they get that done and you combine that with Federal Clearinghouse, then you'll have that full spectrum of amounts and, hopefully, all these databases will be easier to search when they reach that point. So I've got my fingers crossed. We're looking at the data, too. In fact, we're doing a paper for the upcoming ARNOVA research process audit. So I'm as anxious as everyone else. MR. RIGGS: And the last time that I spoke with the Census folks was actually at your organization, at the Independent Sector, and, right, they informed me that their plan is to put the FAADS database online, which will be a huge step forward. So I do applaud their efforts. QUESTION: I'm Amy Rax [ph]. I'm at the University of Pennsylvania Law School, and I have a question for Professor Manheim. In your book and in your description of the biz-wars, do you mean to advance any kind of normative theory about the proper scope of proxy voting, shareholder activism, or general NGO pressure on corporations; or are you just disagreeing with the particular substance of the agenda being advanced, or perhaps just describing a phenomenon? MR. MANHEIM: That's easy: No to both. What I'm trying to do is simply to characterize the mechanisms and the strategies by which the progressive movement has re-emerged. And if you think it's good, great; if you think it's bad, great. I don't have that agenda in the book. QUESTION: I'm Fran Smith of Consumer Alert. It's a question for either or both of the speakers. Increasingly we're seeing some monitoring of funds disbursed, as you indicated, David, by federal government, national governments, and others through nonprofits, NGOs. And I know [inaudible] corporate funding of nonprofit organizations. However, we're seeing more and more, as some speakers alluded to, the partnership between NGOs and corporations, where they're serving as consultant contractors for the corporations, coming in and telling them how to set up a good environmental program, a good corporate responsibility program, et cetera. That would be a business expense, and those are becoming enormous in terms of consultative agreements with corporates and NGOs. Do you know any way to track those sources of funds, in those partnerships? MR. MANHEIM: I just have a quick-- I don't have any way to track it, but I suggest to you it's even a little more complicated. For example, two--at least two major international public relations firms, Edelman and Burson-Marsteller, have hired former senior Greenpeace people and formed groups around them to deal with providing advice on issues when corporations deal with NGOs. And they tell the corps that these people no longer really believe in what they used to believe in; they just want to help you understand the people that you're dealing with. But I don't believe that. And my guess is that that's a more widespread phenomenon. So there's a blurring of all of these boundary lines that I think makes it very difficult to track through. MR. RIGGS: And just a short answer, the only thing I know how to track is--or that we track it at--we have a program at Capital Research Center called Patterns in Corporate Philanthropy, which is an annual study that we do on essentially the top Fortune 250 corporations. The only way that we can really track it is to ask for it. We just simply ask the corporations to provide to whom they're sending their dollars both in terms of directly from the corporation itself in terms of its expenses, as well as from its foundation, which--corporate foundation, obviously, it's easier to track that money. We of course strongly are in favor of voluntary free association. If a corporation wants to spend its money, its retained earnings on funding nonprofits, it has every right to do so and is not obliged to divulge that information to the general public. If, however, you're a shareholder, I would want to know that information. I would want to know how, when, and where a corporation is disbursing its retained earnings. And sort of my short answer to how to get to that is kind of a long-run answer, unfortunately, and that is more vigorous competition in the market for corporate governance. As many very well known economists, law and economics professors, Henry Mann, et cetera, have written about, I think that that is really where we'll ultimately see better accountability on corporate funding of the nonprofit sector by essentially making those executives, the managers of the corporations more accountable, and the way that you do that is by increasing the competition, make them--they're a little more threatened in their job, then they're more likely to behave in the true interest of their shareholders. MR. BATE: Thank you very much. I'm going to hand back to Danielle now to give us information about this afternoon. But before I do that, I'd just like to ask the audience to thank our panelists very much. [Applause.] LUNCHEON KEYNOTE ADDRESSMS. PLETKA: Thank you, all. I'm really sorry to interrupt your lively conversations and I'm thrilled you're having a good time. But tough. We're going to move on to our luncheon keynote address, and I would like to introduce our speaker, Professor Kenneth Anderson. We're really pleased and grateful to him for coming to join us today to speak on--and here I'm going to be summarizing because we don't have proper title--but to speak on nongovernmental organizations and international institutions, and nongovernmental organizations during times of war. Fair enough, Ken? Yes? I think it will be awfully interesting and particularly timely for us, given what's going on in the news every day. Kenneth is a professor of law at the American University Washington College of Law and a fellow at the Hoover Institution. His areas of specialization include business and finance, international business, international human rights, humanitarian law, and nonprofits. He's on the board of advisors for Human Rights Watch Arms Division and the landmines project of the Open Society Institute. He's also special counsel to the Open Society Institute Soros foundations. He was previously the Guatemala representative--Guatemala representative?--for the International Human Rights Law Group--you're going to have to explain that, Ken--and a lecturer at Harvard Law School. Among his many publications, we have "After Seattle: Public International Organizations, Nongovernmental Organizations, and Democratic Sovereignty in an Era of Globalization," an essay on contested legitimacy; and also, "Crimes of War: What the Public Should Know," from 1999. So with that very brief introduction, thank you very much, Ken, for coming. [Applause.] MR. ANDERSON: Well, I am delighted to be here, and I also apologize for interrupting what I imagine are fascinating conversations. I come from a--I guess I should explain the resume a little bit. I come from a very mixed background, as somebody who has been both an international tax lawyer and business law person as well as somebody that's spent a lot of time in the human rights movement. And as you can imagine, I'm someone who's fairly unusual in the human rights movement for being a Republican and a conservative. And that, I think, has led me to want to focus a lot of my academic work, a lot of my research work on the human rights movement and, more broadly, on international NGOs, the international NGO movement precisely because I think that it's so important in all the ways that have been raised earlier today. Many of these issues come to the fore in times of war, in times of conflict, in times of international stress, as we see now. And I think that we need to take the time to understand the role that international nongovernmental organizations play in this in particular. In many respects, what we're seeing at the moment in international relations is a movement away from the traditional argument between realists and idealists, between those people that tend to treat things as a matter of power and power relations and what had been the kind of idealist move to want to see the world in some way of law-governed and rule-bound and all those kinds of things. And that, I think, is becoming less the debate, and that instead, what is arising is fundamentally a debate between two different kinds of idealisms themselves. On the one hand, you have what we could loosely describe as liberal internationalism, some sense that there's to be an international legal order which ultimately becomes over time the supreme federal law for the planet, if not precisely moving toward a sort of wild one-worldism, then something in which the rule of law is planetary in some way, that it covers the whole globe. That is contrasted with the other idealism that is now, I would say, becoming much more ascendant, certainly in this country, an idealism that I would describe as democratic sovereignty--the reassertion after, I think, a long time as an idealistic point of view, that democratic sovereigns are not only the force in the world, not only the repository of power, but that they are morally, ethically, and politically that which ought to be the center of the international system. Now, the reason I raise this is because nongovernmental organizations and other kinds of transnational actors--it includes corporations, it includes many different kinds of transnational actors, but, significantly, it includes international NGOs--these organizations are having to locate themselves within the context of this argument between two different forms of idealism, of what should the world system, insofar as it is a system, look like? Should it be something which is fundamentally about the sovereignty of democratic states in which the legitimacy of that system rests on the fact that they're democratically responsive to their constituents or, on the other hand, should it be seen as something in which the ascendant ideal is one of liberal internationalism in which gradually the sovereign states are losing their attributes of sovereignty and merging it into some larger planetary structure? Transnational organizations of all kinds are having to locate themselves in relation to that debate, and NGOs are not different in that. The international NGOs that I want to focus on in this discussion are having to decide where they stand in relation to that. It is very significant that, by and large, the transnational NGOs have settled in favor of some form of liberal internationalism. And strikingly, many of them have settled in favor of some form of liberal internationalism, sort of betting themselves on a certain form of an international system that is federal in nature--even, in some respects, at the expense of their own substantive agendas. Now, the human rights movement is somewhat of a case in point, that there are instances in the human rights movement where there are things that you think might be criticized in various countries on the basis of their behaviors and the rest, but to do so you would have to align yourself with the United States and United States foreign policy in some way in ways that might not be congenial to your larger agenda of supporting internationalism for its own sake. A very good concrete example of this would be in the laws of war area that we'll be turning to in a moment, where you have Additional Protocol 1 of 1977 that looked to sort of restate and extend parts of the Geneva Conventions in various ways. One of the features of that 1977 Protocol 1 treaty is a feature which winds up granting very special status to guerrilla fighters. It says in effect that guerrilla fighters are allowed to carry their arms concealed and not reveal themselves as combatants until shortly before the moment at which an attack is launched. That's Article 44 of Additional Protocol 1. This is a measure which winds up enormously empowering guerrilla combatants at the expense of civilians, simply because the nature is that if you were allowed to attack from within a civilian group, then you're going to wind up endangering those civilians because you'll have people shooting around them. That represents a step backwards for what has been the traditional law of war. Strikingly, however, it is a measure which is part of a treaty which has been overwhelmingly supported by human rights organizations around the world as they've looked at human rights and laws of war treaties. And I think that the only fair explanation for why the support to that is given is a belief that it's more important to have an internationalized system in some way than to have something which in every respect substantively winds up protecting the folks who are at the center of international laws of war, the civilians themselves. So I give that as an example of ways in which international NGOs, as they look to locate themselves in relation to this debate over liberal internationalism versus some form of democratic sovereignty, find that under certain circumstances, if they're forced to choose, then they actually wind up preferring to tie themselves or lash themselves to the mast of liberal internationalism. Now, I want to turn and discuss this in relation to the other area that arose this morning, and that's the question of NGOs and democracy, of international NGOs and democracy. International NGOs have a very difficult relationship with democracy. And the reason fundamentally is that, I'm sure Jeremy has said in context here, that the desire is to, in effect, go around democratic processes in actual democratic countries for many, many different kinds of agendas, some of which may be heroic and noble and really a terrific idea substantively but which nonetheless are designed to sort of move around democratic processes. In this process, the NGOs themselves wind up having to answer the question, What about democracy in all of this? And the answer which is given from the NGOs typically is, well, we have another set of values here which are at least, if not more, important than the value of democracy. It is human rights. So there's sort of a list of human rights values which are seen by the NGO community as being even above democracy as a value in some way. And that is appealed to as being, in effect, a sort of alternative source of legitimacy both for the NGOs, but even more strikingly, for the international organizations through which they try to work. Now, the net effect of this is to wind up producing an international system in which we have a set of international organizations--the U.N. system and various kinds of creatures attached to it--which is looking itself for legitimacy. It doesn't have legitimacy for a basic reason--that it doesn't have democracy attached to it. It's looking for international legitimacy in some way for an ever-increasing range of tasks that various people would like to assign to it or call upon it to do, and it finds that it lacks legitimacy in order to go forward on that. And in that process, it winds up looking and saying, What alternative source of legitimacy can we find to sort of back up the moral authority of our actions, if you can't look to democracy? And the answer winds up being, Let us look to international NGOs. Let us look to international NGOs and their values of human rights as being, in effect, a substitute for democracy which we international organizations are not going to be able to acquire easily, if ever. Now, this, I think pretty accurately captures the relationship and the very special and sort of burgeoning relationship between public international organizations on the one hand and the international NGO community on the other. They're in effect locked in a sort of romantic embrace. Each is looking to the other to provide a certain kind of legitimacy that the other lacks. The international NGOs want access. They want the legitimacy of being the players with whom the international organizations work, the folks that they look to for approval. For the international organizations' part, they're in desperate need of some form of legitimacy that they don't have because they're not democratic institutions and they're not likely ever to become democratic institutions. And in that process, they turn and they say who can be a plausible substitute for democratic institutions in this process, and the answer is the international NGOs will wave their hands in the air answer say, We can do it for you. This is laid out in the series of speeches that Kofi Annan has given, really, since the late 1990s, particularly the Millennium Summit of NGO groups, where Annan said to the assembled groups, You are the peoples of the world. You are the people, you are the representatives of the people. You could not get closer to sort of a substitution for saying, I'm going to use you as a stand-in for the democratic populace of the world which I can't actually go out and ask to vote on anything. So there's this sort of rhetorical sort of move which is being made to look at the NGOs and say, look, even if we can't sort of have a raise of hands across the planet in a democratic fashion, we can come up with a plausible set of representatives of the world, and guess what? You guys are it. From the standpoint of the international NGOs, I can tell you as somebody that's worked as part of these things, who used to do a huge amount of work with NGOs, we are very happy to take on that responsibility. We're very happy to raise our hands and say, yes, we will be happy to represent the peoples of the planet. That's us. This is a very, very troubling move, I find, this move to wind up elevating the status of NGOs beyond being advocacy groups, but to move them into another whole category. And the question is how does this come about? Now, in order to understand this, I want to move into the question of the laws of war once again. I want to go back in particular to the history of the landmines campaign, the Ottawa convention on landmines, that actually was really probably the most illustrative of this, or at least the opening of this. Now, I should say, actually, that I am in substantive agreement with the landmines campaign and with the move to ban landmines. I do think that they're an indiscriminate weapon. But I want to walk back through the procedural history of how this happened and the role of NGO involvement in this. The landmines campaign takes off because the surgeons of the ICRC, the International Committee of the Red Cross, revolt against their own lawyers--surprising--and say, We're getting tired of doing amputations for landmine victims in places like Cambodia, Afghanistan, lots of other conflicts, and we think that this is getting out of control. This is back in the mid-1980s. The ICRC then moves to begin conducting its own campaign. It is, with all due respect to the ICRC, one of the least persuasive campaigns ever launched by an NGO. It's not persuasive, it doesn't get to people, it simply doesn't go anywhere. A coalition of NGOs comes together around this issue. And it's quite striking that there are large debates among these NGOs about whether their mandates would actually cover the issue at hand. And one of the striking things is the elasticity of mandates within NGOs when they see an issue they want to grab onto, the ways in which you can kind of--you turn the lawyers loose on it and you kind of reinterpret your mandates in order to sort of bring the issue within whatever it is you're working on. That mobilization of NGOs was fantastically successful. But the question is, in what way? Now, if you go to the literature which has come out in the last couple of years talking about the success of the landmines campaign, it will generally tell you that it was coalition of international NGOs working together with sympathetic governments, the like-minded states that produced this treaty which then kind of galvanized ratifications of the treaty. That's not actually quite right. And the reason it's not right is a very important one for understanding the role and the success of NGOs in all of this, that the NGOs initially went out to their own country governments. So that the success of the NGO campaign around landmines in the first place was fundamentally about going and getting your government to ban landmines--to ban their use or their stockpiling or some element of this. And the United States was actually remarkably--or the movement within the United States was actually remarkably successfully in getting that to happen. There had been in effect a sort of de facto ban on the use of landmines and more production of landmines defined in various kinds of ways in the United States, which gradually crept across Europe and various places as well. So the success of this movement actually rested in the first place on the ability of internal NGOs, right, internal NGOs within a particular country to mobilize their own governments around that issue. Persuaded their own governments, and to a large extent persuaded their own populations, or at least elites within that population, of the importance of this issue. And only then did it wind up turning to become a broader international question at that point, a question of an international campaign. Now, I emphasize that because that's not how one would sort of perceive it reading the histories that came afterwards. The histories that came afterwards have been, I think, to a large extent written by the Canadians and they tend to glorify the role of the Canadian foreign ministry in bringing this about. Which was an enormous role, but it actually came fairly late in a campaign that by that point had already convinced national governments. Transnational NGOs, in other words, found themselves most successful when they built on the work of advocacy NGOs inside democracies that were working within democratic processes. Now, this campaign, then, takes off and becomes a combination of public international organizations, U.N. organizations working together with sympathetic governments working together with the international campaign to ban landmines. Now we can turn and ask what ultimately did this massive campaign accomplish? Now, the fact is, quite a lot. I mean, the fact is, is that trade in landmines in the world is a minuscule fraction of what it was, say, in 1990. The use of landmines is in fact a minuscule fraction of what it was in 1985 or 1990. There has been in fact a stigmatization of this weapon, which would not have taken place otherwise. I think anybody objectively looking at that would have to acknowledge that. At the same time, however, we see the contours of what sympathetic governments and NGOs are able to accomplish in this kind of effort, which is that fundamentally, by a refusal to countenance any compromise whatsoever over minefields in Korea, between the two Koreas, it was guaranteed that the U.S. could not come on board, could not even contemplate coming on board. And a strategic decision taken by the campaign not to try and find a way in which the U.S. would sort of de facto come on board without actually signing it, but instead saying, We're going to brand the United States as a rogue government, it's no better than any of the other folks that won't sign, it's no better than Sudan, it's no better than other places, pretty much guaranteed that, I would say, not within any conceivable future that I can see over the course of the next decade is there any possibility that the U.S. is going to see movement on this particular issue--one in which I think very much there ought to be movement. But a refusal to compromise in any way whatsoever with what one could pretty accurately describe as the obligations of the superpower led to the United States both not being involved in the final treaty and being sort of pushed aside rhetorically into the category of sort of rogue status. At the same time, the final breakdown of the treaty is, yeah, lots and lots of countries have ratified. They include Costa Rica, they include Canada. They do not include any country at all which seriously contemplates having to fight a war, with the possible exception of Britain. In other words, the final breakdown of who's on and who's off reflects, very naturally, those countries which seriously contemplate having to fight wars, for good reasons or bad reasons--India, Pakistan, China, Russia, the United States. So in other words, the list of countries that contemplate fighting wars have not signed on and the countries which don't imagine that they will ever really have to fight anything other than send some peacekeepers someplace are all on board. Now, this campaign had the effect, then, of elevating the status of international campaigns, international NGOs into the idea that we represent the peoples of the world. This was in fact the campaign that raised this issue. It has now, I would say within kind of intellectual circles, become something largely solidified. There's a new book out by, for example, the political scientist John Keane in London, called "Global Civil Society." Oxford University Press produces a very interesting yearbook on global called "Global Civil Society"--you know, about 400 pages long. It comes out every year kind of reviewing the activities of global civil society. And central to that is this claim which arose out of this history of the landmines campaign of saying, These organizations represent the world. You have to listen to them because they are the substitute for democracy. Now, I think this conference has been skeptical of those claims, but it's enormously important to understand the reach they have, the impact they have. Because it means that international and trans-national NGOs no longer walk into situations saying, You should talk to us because we A) either we're the people that go out there and do the work on the ground, we're the people that are feeding the refugees in this place, we're running the camp here, we're doing whatever it is that we do that's a good thing. Or alternatively, we are the experts. We know about this area, we have the expertise in this particular thing. Those are the traditional two bases on which international NGOs would go to governments, international organizations and kind of approach these things. All of a sudden, things have been ratcheted up enormously to say, It isn't a question of whether you do all this stuff and it isn't a question of whether you're the experts, it's simply a question of whether you represent the peoples of the world. And since you are defined to represent the peoples of the world, then we have to be listened to. Tremendously antidemocratic in its implications. Now, I want to turn and talk about two issues before I close. One is the attitude of the Bush administration in dealing with international NGOs in areas in which I think that that could be improved, if it understood better what the dynamic actually is. And then I want to close by talking a little bit about what I think will be the new campaign in the context of wartime to raise these kinds of questions again. Now, the Bush administration, even prior to September 11th, tended to have an attitude towards NGOs which is natural in some ways, to say, okay, international NGOs, well, yeah, they're kind of like national NGOs, they're kind of like domestic NGOs. And we like domestic NGOs. We think they're the voluntary sector, voluntary sector is good, these guys are the international voluntary sector--good. Okay, sure, we'll disagree with them about particular issues, we'll fight with them over the ICC, but fundamentally we'll look at them as the kind of movers and shakers and the people that we should be off-loading the responsibilities of feeding people and doing things that the NGOs can do better. So generally there's been an attitude, at least in areas that are not ideologically riven, of reaching out and saying, sure, let's work with you guys. That's all to the good. I mean, sure, you've got to have international NGOs around. I mean, you have to have them doing all sorts of stuff, they need to be doing more stuff. The question is whether you wind up blessing this extra claim--this extra claim about being international, global, civil society, the representatives of the people. The question is whether you can have the functions that NGOs provide while sort of cutting them off from this extra ideological claim about who they are. What I think that the Bush administration as well as other administrations need to recognize is that this is a culture. This is a culture of people who live and work and make their careers--not just make their careers, but marry, inter-marry, produce children, right. In other words, it's a culture, a people that spend their lives as I have spent my life, and probably there are people here that do exactly the same thing, where you are part of sort of a shifting transnational elite which, you know--I mean my closest friends are in London and Hong Kong. They're not here even in Washington. And I know lots and lots of people who are in that position, and so do all of you, people for whom their fundamental frame of reference is to a much more horizontally based group of elites that tends to be fairly global and fairly transnational in its outlook. And none of that is a bad thing until this group sort of says to itself, and guess what, we must be the representatives of the peoples of the world, the international global civil society claim. It is out of that shifting set of elites, which includes lots of folks who work for transnational corporations and it includes people that work for NGOs, you know, so there's a whole range in there. There are the rich elites among that elite, and the poor elites--the ones that make a lot of money working for certain kinds of, you know, corporations and other organizations and the folks that work for the little NGOs that kind of work cross-border. But it is a culture. And it is a culture out of which there is this move to wind up wanting effectively to constrain the United States in many, many different kinds of ways, including in the war on terror, including in lots of other things--things which are not in fact congenial to the agenda of this administration and I would say more broadly are not congenial to the agenda of the United States. The question is how do you wind up influencing that? And the answer, I would say, and one which I believe has been largely missed by the Bush administration, is you have to understand that as a culture. And if you're going to wind up understanding NGO culture as a culture, then you have to understand that you cannot work with that culture by saying at every moment we will wind up looking at the short-term issues and try to find common ground with the NGOs on this thing or that thing or this thing or that thing. Because we want to work with NGOs, and we don't want to get them mad at us, and we don't want to have nasty things in the New York Times said about us, so we'll always try to find some way to sort of compromise on the issues and find some common ground, paper over differences, and constantly move forward on that basis. That, I think, actually leads to a big mess, and that mess is encapsulated in the ICC disaster. Because what the ICC disaster came down to was an endless amount of flirtation by the United States with this treaty. It played the tease through and through and through, and it is no surprise that the European proponents at the ICC turned around and wanted to sue for loss of affection. Because that's more or less what happened. I mean, the United States flirted and flirted and flirted, made many, many demands, yet at the same time it should have been possible at the beginning of that process to have looked down the road and to have said there is no possible way we are going where this is going, and it's better not to start flirting now than to wind up flirting and then breaking everybody's hearts at the end of the process. That is what happens when you have administrations successively that want to be in the position of forever finding a compromise, forever papering over the difference, and then at the end of the day having to break hearts because they can't go where everybody thought they were going to go. Better not to go there in the first place, and better to say so up front. But you can only do that if you are willing to change a culture in which the NGOs, which are the engines of this process internationally--even more than the governments, the NGOs are the cultural engine of this process--if you're willing to draw clear lines procedurally about what you're willing to do with NGOs and what you're not. You're willing to give them money and say go engage in that humanitarian activity over there, but we are not having you at the table negotiating the treaty--as, for example, I did with the landmines treaty. And I did a great job, I'd like to tell you, a spectacularly good job. But I should not have been there. I should not have been there in something that should have been a meeting of governments. The U.S. has got to be much more straightforward about drawing those procedural lines and in being tough on symbolic issues about the culture of NGOs precisely in order to change that culture, and to shift that culture in the long term rather than saying we will avoid any fight over a symbolic issue in order to try and find common ground, and, so to speak, save our ammunition for the ones that matter. It is more important over the long term to change the culture, to shift it in a direction that says democratic sovereignty is what matters. Now, let me close by saying one thing about where this is going next. Following 9/11 there was a move by various parties, including the Swiss government and various folks, that said, you know--and it began as saying we're actually very sympathetic to the problems the United States is finding in combatting terrorism. And one of the things that seems difficult is that the current laws of war do not seem to accurately reflect, for one thing, what it means to be a terrorist, what kinds of activities are engaged in. Maybe we should have a meeting and discuss possible revisions to this laws of war in order to find ways that, frankly, at the beginning of this process were discussed as being accommodative to the United States in combatting terror. Now, the United States, the U.S. government was approached by this in various ways, and in some respects gave some positive feelers to that. So meetings have taken place. Now, what's interesting is that I now have four meetings on my agenda, one that I attended and another couple coming up just in the next couple of weeks, in which the people who are putting together those meetings have said we have got momentum going. and I said, Momentum for what? Well, to revise the laws of war in order to wind up giving narrower definitions of terrorism in order to effectively constrain the United States and what it would intend to do and how it would intend to fight. And we think that we could sort of cook up a treaty on this and we could get going an international NGO campaign that would be--and then I'm hearing the landmines and ICC going off in the back of my head. And the question that I have for the Bush administration in this is, is it sending the right signals here? Because the fact of the matter is, I can't see any possible way in which it would ever be in the United States' interest to go after a treaty shaped by NGOs and shaped by the countries of the rest of the world that would not wind up constraining the U.S.'s ability to fight from what exists in the law as it stands already. And I can't see any way in which a treaty like this would not amount, at least in some circumstances, to a get-out-of-jail-free card for terrorists. So I can't see the U.S. going there. And so the question I have is why is it not possible to announce, We are not in favor of this and we're not going where you're going. And we'll be happy to send people to come to these meetings and tell you that. We're not going to sit down and discuss compromises, we're not going to discuss various arrangements in this. Why is it not possible to take a hand in looking to shift the culture of NGOs and the culture of sort of international law-making in this way? It seems to me that in the context of the war on terror that that's an enormously important message to send, that at least in the context of international terror, a vacuum in international security, that the nation state is back and the democratic sovereign is back not only as a sort of locus of power, but as the ideal to which ordinary people ordinarily aspire, and that's the thing which ought to be supported. Let me close there and take questions. Thank you. [Applause.] QUESTION: You mentioned the landmine treaty was signed by nations not likely to wage war, and that argues for a somewhat larger point. At least in that case, it appears that the national self-interest is still not inconsistently served--they're not going to wage war, it allows them to be symbolic. But we've been focusing more on MEAs, multilateral environmental agreements, and there another problem emerges, kind of the fact that the nation state isn't an entity, it's a set of warring bureaucracies. There's a whole set of multilateral environmental treaties, among which is something called Basel Treaty, which effectively now is making it very difficult to have transshipments in scrap materials, or scrap copper. Chile signed that, a major dealer in international copper. But of course Chile didn't sign it, it was the health ministry. And that debate in that forum and that signature all took place off-stage in an area that the trade ministry and the mining ministry didn't even know about. Then they signed it and a few years later the implementation came through. To what extent are the NGO movements being able to pick off nation states by working with sub-elements within the nation state to create coalitions against the national interest, but we don't know it until it's signed and delivered and so on? And why don't nations back out in that case, which is what I don't understand. MR. ANDERSON: I guess I would say that there are differences in how this happens with different kinds of areas. And if you're talking about security, national security/defense kinds of issues, there tends to be more sort of coherence, even within the bureaucratic structures. I'd say that in these areas, the environmental area is the one which is most prone to fragmentation among bureaucratic areas, partly because of the technicality of it both on the legal side and oftentimes on the technical and scientific and engineering side. I think that the NGOs specifically are oftentimes not--there's not a large number of NGOs which are sophisticated enough to engage in the kind of strategy that you're talking about. So where you're talking about it, you're talking about the ones that have got large, large budgets with the ability to have experts and people that are specialized and able to sort of carry through the process of monitoring that. But I would say that environmental areas are the ones which are most prone to that, and the groups that are--the only groups that are able really to engage in it are the ones that have got very serious specialists, oftentimes having come from those bureaucracies themselves. QUESTION: Hi. I'm Claude Barfield [ph] with the American Enterprise Institute. Two points. One, you set up a kind of coalition of a combination between international organizations on the one hand and NGOs on the other and made the point that they need each other for legitimacy. It seems to me that there's a third force moving to which they are both increasingly turning, and that is the role of public international law. MR. ANDERSON: Mm-hm. Yes. QUESTION: Jeremy dismissed this morning--saying, you know, these guys can get together at the U.N., they can make all these statements and say anything they want, but nobody's paying any attention. But that's not really true. Because increasingly, if you take the WTO, for instance, the key decision, the shrimp-turtle decision of the mid-1990s, was basically--though they danced around it--was basically on the basis of their reading, Powell's reading of public international law, and they cited specifically the Rio agreement and other agreements. And so this is seeping in. So I think there is a third force, to which both are looking for legitimacy. That leads me to a question, to a more difficult issue, it seems to me. I think you made an excellent point about the landmine treaty and what we shouldn't have done there, or this whole question about changing the rules of war. But what about something like the World Trade Organization, where the situation is much more ambiguous? We're in it, its goals are free trade, which are goals of the United States. And yet increasingly we see there, I think, and will see, two things happening. NGOs will be more and more an influence--and I don't want to overdo that, but that is the way it is going. And secondly, as you had with the new WTO legal system, you're beginning to get decisions--and we could fight over individual cases--that increasingly encroach upon democratic sovereignty. And it could be that the United States was a partner to this early, but down the road aren't we going to have the same kinds of decisions to make about that organization? MR. ANDERSON: I'm very glad you asked that question. I haven't mentioned trade. And it would be wrong not to, actually, in this context. Because I think the conservatives have a problem of consistency when it comes to trade and international organizations and these kinds of structures. And you're quite right to raise public international law as being sort of a source of--I sort of wrapped it in as between those two, but you're quite right, it's actually a sort of a third force of legitimacy to which people are reaching. I think that there is a problem with trade for conservatives, or free trade for conservatives, because just as people that I describe as liberal internationalists are willing to reach sort of a set of issues which are seen as being too important for democracy, sort of sacred in a way that democratic processes can't touch, there is a tendency on the part of conservatives as well to sometimes privilege free trade in that way and to be willing to excuse--sometimes in this country, but also in terms of other countries' political processes--to excuse things that, I think, if one were to look at them with the steely eye of someone committed to democracy, one would have to say, hmm, these do not really comport with democratic legitimacy within a particular nation state. And I think that that is a question of consistency of principle for conservatives. Are conservatives willing to apply the same kind of standard to trade as properly they wind up demanding on, say, something like the Convention on the Rights of the Child, with its statements that say, you know, the kid has to be able to express itself--are we willing to be consistent in that way, and I think that we have not. And it is leading precisely in the direction that you were talking about, namely that by having made trade a special case, we have signed on to an agenda which will wind up eroding sovereignty unless checked in some fashion, and--much more important--will wind up eroding democratic sovereignty in various ways that I don't think anybody thought they were signing on to. So I think this is a problem. And I think that signing on to mechanisms which commit us to adjudication processes that look as though they were purely private in nature, we have to recognize that they oftentimes have large public results. And I think that it's actually a very big problem for the United States. I'm not sure if that answers your question. QUESTION: John Fonte, Hudson Institute. Let me ask you a political philosophy question. The Fukuyama thesis, we've reached the end of history, the only legitimacy is liberal democracy, as you described and I agree, this transnational progressive ideology is really something quite different from liberal democracy, therefore in a sense Fukuyama is wrong. Would you comment on these things? MR. ANDERSON: I think that if I could answer that by complicating the picture that I presented of two idealisms in competition with each other. I think it's actually a more complicated picture than that, that we have at this moment a range of idealistic positions that run from pure sovereignty for its own sake, sovereignty as its own value; and next over would be something like democratic sovereignty of nation states; and next over would be kind of a soft multilateralism which is compatible with nation-state sovereignty but is also pretty comfortable with anything kind of more multilateral about it; and then one moves into varieties of liberal internationalism, which range from things saying, well, when it comes to the use of force, then you have to have international permission, but not for some of these other things; until finally you get over to, say, someone like Falk on the other end, a sort of pure I'm-just-calling-for-world-government-as-such. Now, what's interesting about the debate between these positions is that the positions that I've described are the two interior positions; that is, democracy and democratic sovereignty versus a form of liberal internationalism in which, say, I would put myself in the one camp and say probably somebody like Ann-Marie Slaughter in the other. And there is still something to address as between us. What's striking to me is the way that the war in Iraq has reshaped the discussion over sovereignty as its own value. Because prior to the war in Iraq, I would have said that the purest example of somebody who was willing to assert sovereignty for its own sake independent of democracy as its own value would have been Jeremy Rabkin. But Jeremy, I must tell you that you have been eclipsed on the left by people willing to argue in the course of the run up to the Iraq war that the sovereignty of Iraq meant that one could not, you know, fight this war. So there has been a sharp, sudden movement on the left towards embracing the value of sovereignty purely for its own sake, which I would not have bet on earlier. I think that the problem with liberal internationalism is fundamentally a deep one but ultimately still practical. And it is that you cannot have, I think, democracy on a planetary level. The problem with democracy is that it is something which works best with smaller numbers of people rather than larger, and what we call democracy in the United States actually represents a deep historic compromise between the efficiencies and the blessings of an ever-expanding common market--just like a network effect, it gets better the bigger it gets--and democracy, which I think actually works better on some smaller scale and which cannot be infinitely scaled up. So you can't just keep on scaling up democracy and still have it be democracy at the end of the day. And the problem for liberal internationalism is insofar as it thinks democracy is important, it's not going to be able to get it on a planetary level, at least for the kinds of tasks that it wants to assign to international bodies. That's how I think I'd respond to the sort of the political philosophy point. The problem with liberal internationalism is it can't be democratic. QUESTION: I'm Fran Smith at Consumer Alert. You mentioned several times the elite on the NGOs and so on, and that has been a theme. The elites among the NGOs are anti-corporate, in many cases anti-technology, anti-trade -- and in many cases, those are the very things that can bring about developing countries merging into the future, economic growth, development, et cetera. It's been asked, I think, once before, but since NGOs from the north, from developed countries are mainly putting money in developing NGOs in the southern countries, how is there ever going to be a voice developed that will represent the poor people of the world, the non-elites of the world who are going to be hurt by these policies? MR. ANDERSON: The question of NGOs in the poor countries in the south is fundamentally a cultural one. And I mean it in this sense, which is that if you are someone who works for, say, an environmental NGO in Peru, for example, someplace I was a few months ago and spending a lot of time with NGOs there. The people that work for environmental NGOs fundamentally in Peru are people who are either the bourgeoisie of Peru or people who are aspiring to become that. And this sounds esoteric, but I mean it in a very concrete way--which is that the desire to become part of NGOs in the south is almost always, in my experience, by people who have some kind of abiding interest in whatever the issue is. But it is also a question of personal identity about who it is that they are identifying with culturally and socially. And they stand in this very difficult position, mediating between the people below--all right, I mean between the poor people that are out there--and their desire to be the only correct in this is, really, bourgeois actors within this sort of larger world. They want to be respectable among people like you and me. They want to go to international conferences, they want to have visitors come from abroad and meet them to talk about this and that and human rights here and how many were massacred there. But it's fundamentally a question of wanting to be this sort of point between these sort of large numbers of often, almost always, very poor people at the bottom and intermediating with this world outside. I don't think that there's a more difficult position to be in, actually. Because you're being asked to essentially live in two worlds--the world of kind of the jet-setters that hop in and hop out, leave their card that says, you know, Greenpeace or Human Rights Watch or--the organizations that I work for. I mean, it's me. And I'm going to be in Moscow in another couple of weeks and I'm going to go look at some of the projects that I'm working on there with various people, and then I'll be gone, right? I mean, I'll come back and I'll meet with our international board and we'll talk about what good stuff we're doing. And we are. We're doing great stuff. But the people who are there on the ground are in this culturally very difficult situation of having to sort of operate between two worlds, in some way. And if one wants to actually wind up doing good for the people below them, then they have to understand very clearly the double role they're being asked to play. Now, that's only partly in answer to your question, because you're also asking the question how can you teach these people in large part enough economics to know that when the people who are coming in that hand them a set of policies that are as crazy as what the NGOs handed to Sandanista in Nicaragua, that they'll take it and say, You've got to be kidding. And there's no good answer to that, because these folks are not--I mean, their connection to the north is through these organizations. [Tape change] --sent them up here and you've got to give them training in universities that are going to teach them Econ 101. Apart from that, I don't think that there's any possibility of mediating that. QUESTION: [Inaudible] International Policy Network, one of the few organizations that are trying to help organizations in poor countries to explain to their societies and to the wider world that the institutions of a free society are what they way, property rights and the rule of law. I think, actually, just to comment on Fran, that the main problem is money. We have a very small budget, less than a million dollars. The only other organization that's working international on this, the Atlas Foundation, has a budget of about $3 million. And that's about it. Not a lot of money is flowing from good organizations in the rich world to good organizations in the poor world. We've just got to increase the financial flow to a large extent. But a question for you as well. In your schemata, you delineated sort of ideological differences in relation to whether people favor sovereignty or whether people favor liberal internationalism. And yet my perception is--and this follows on from your point that in relation to certain activities, in relation to, for example, the war in Iraq, people are willing to promote sovereignty as a goal even though perhaps those same people might have been promoting liberal internationalism in another context. MR. ANDERSON: Yes. QUESTION: I've seen that in other areas. And actually, the shrimp-turtle case is a classic example of that. In that case, the environmentalists in the U.S. were trying to impose a domestic environmental law, Section 601 of the Endangered Species Act, on a number of Southeast Asian countries and trying to foster that, regardless of the democratic sovereignty of those countries, in the context of an international rule in WTO. But their justification for much of that was the sovereignty of the U.S. in being able to impose restrictions on imports from those countries. So they--I mean I get the sense that they're inconsistent, actually, in their conceptual framework, and most likely they're driven by an ultimate aim, which I think as Fran said, which is we don't want this people to be doing this because we think that it's bad. And there's nothing more ideological about it than that. MR. ANDERSON: I think you're right, particularly in the case, I'd say, of environmental organizations that are driven, I'd say, more by ultimate aims than almost any of the other sort of folks in this sector. I think a lot of the other ones are much more conflicted about that question. But I must say, I was taken by surprise in the war in Iraq by the willingness of people to suddenly reach to the sacred sovereignty of Iraq in ways that, at least for me, took me by surprise. But I think in particular in the environmental organizations, I think that there is a tendency to be driven by ultimate aims. I think we're done. Well, thank you very much. [Applause.] WEBSITE PROJECTMR. HOOK: [In progress] -- In this category here, we're going to have, like on the far right-hand side, people are going to be monitoring developments with this NGO on an almost daily basis. And when something comes up, it's going to be on the website, and you can click here and it will link you to the story. You click on to that and then it takes you right to this and then will give you a thing on it. So it's actually a good way to stay current on NGO activity as well. All right, I think that covers the NGOs section. Next we have treaties and international organizations. And with the Federalist Society, we started this project of commissioning a series of white papers addressing international organizations and specific treaties and conventions. And you'll see here, during lunch there was talk about the Ottawa Landmines Convention. If you scroll down, we had somebody from the State Department who wrote a paper, Burrus Carnahan. There is a rather extensive paper in PDF version on that convention. And it's a terrific resource to get smart in an issue in virtually no time--PDFs being what they are, i.e., slow. But what we have is you've got like Lee Casey wrote something on the Rome statute for the ICC. We had Chris Horner from the Competitive Enterprise Institute contribute, I think it was, a 64-page paper on Kyoto. There's the Burrus Carnahan paper. You can print it up and then just read it at your leisure. We also have international organizations that we've profiled--WTO, International Criminal Court, European Court of Human Rights. This is going to be updated regularly. We've got more papers in the pipeline, on every tree and international organization you can think of. We also have a section just on international law and sovereignty--dear to our heart at the Federalist Society--where we go through different things on family law, the use of force, international law in the case against Iraq. It will be very topical, very timely, and I would encourage you to check that. All right, I'm about finished. Going back to--okay, then we have Corporate Citizenship. And Dani knows more about that than I do, because that's more AEI's piece of this. MS. PLETKA: Right. And again, I don't want to take up too much of anybody's time. This is really the aspect that I talked about. What we're interested in is seeing how large multinationals and other corporations are responding to campaigns, interacting with NGOs. We were talking to the head of Trader Joe's, for example, who was very angry about a greenmail campaign going on, I think, on bioengineering. And these are the kinds of things that are topical, very interesting, and are a source of enormous funding for NGOs, because corporations are very interested in trying to buy into this process rather than having grassroots fund-raising used against them. And so we're going to try and shine a spotlight on that--which we haven't yet. As you can see, some of this is under construction. But we really wanted to take the opportunity of having you all here to show it off. We're going to be looking forward to getting a lot of advice about improvement and changes and input. Anyway, that's what that section is going to be about. MR. HOOK: And the last one, at least on the scroll bar, is a media guide, which is a great resource for the press. It's scholars from AEI, it is experts at the Federalist Society, with phone numbers, e-mails, areas of expertise, articles they've written--very exhaustive, very concise. It will be a great resource, we hope, for the press so that they can then start hearing the other side on a lot of these issues and they can start raising the profile of a lot of the issues that we're discussing today. The other thing, we've got a scroll bar at the top that's going to have, you know, very current, daily kind of news. Then we also have, going back to the Home section, we're going to have a calendar of events which you can click on, information about the Federalist Society, information about AEI. And then one of the more important things in the Search function which, talking to other people who've done websites of a similar nature, people just want to go right to it, type in Greenpeace, up comes the information. And when they do that, they're going to get a link to--if they type in Greenpeace, there you have all the vital stats on it, but then also, like if they were to type in Landmines, they would get NGOs that are involved in that and they'd also get a link to the paper and also a link to people who are experts in the field. So it's sort of one-stop shopping with our search function, which we'll continue to refine. We have--in the Federalist Society we have our practice groups that have been tasked with monitoring this, all the developments in their particular field. We have scholars at AEI who are going to be following it, and they're going to be contributing information. We encourage everybody here, if you have information, papers, you know, stuff that you think would be of interest to us, please go to the website. Jessie is our aide de camp on this, and she's a very good point of contact. It's a work in progress, but we're very happy with the work we've accomplished so far. MS. PLETKA: Thank you. One last note is that we'd like to also make sure that we have a robust group of links. So anyone who's interested, if you would please make sure to let us know, then we can link up to other people on all sides of the issue for points of interest. Okay, we're done. We can go to our panel now. Thank you. SESSION IIIMS. PLETKA: Thank you all for your patience. We're going to go now to Session III, a couple of minutes late. And I do apologize again. Our moderator is the late, great Brian Hook who you just saw speaking. Brian, let me open up your bio. Brian was until recently an associate at Hogan and Hartson. And he's now going to be joining the Department of Justice and, I hope, not spending less time with all of us as a result. He has been deputy legislative liaison in the office of Governor Terry Branstad of Iowa, and a vice president of Magellan Productions, where he directed and co-wrote the four-part documentary "Culture Shock." And Brian is, as I also said earlier--and I have to get the title right again--the head of the International Law and American Sovereignty Project for the Federalist Society, in which capacity he joins us. With that, won't you please move on to introducing your colleagues. Thank you. MR. HOOK: I've been directing a project for the Federalist Society called the International Law and American Sovereignty Project. So let me just say a few words about the Federalist Society's role in all of this, particularly with the NGO issues we've been discussing today. For most of its 20-year history, the Federalist Society has focused its resources on examining domestic law and regulation. And one of the society's principal objectives has been the preservation of American sovereignty. We care very much about sovereignty at the Federalist Society. In the last few years, the society has turned its attention to examining the potential effects of international law on American sovereignty. Specifically, we've dealt with international law issues a little more narrowly than others. We deal with these issues as they affect the role of courts. And you might say our lodestar is protecting the primacy of American legal principles. Many of us, spurred by Jeremy Rabkin's terrific work, "Why Sovereignty Matters," began to question whether the principle of American sovereignty is being threatened by efforts to use international law and customary international law as in indirect and unaccountable means of securing a legal policy agenda here at home that otherwise could not be achieved. The efforts to use international law in such a way has been undertaken by many in the NGO community. And what concerns us is the role that these special interest groups play in the development of international rules that could ultimately bind the United States. So from a legal perspective, our risk of being bound in that way--our concern is the risk of the incorporation of customary international law into the American legal system. And by that I mean legal standards that were not adopted by the Congress or enshrined in the Constitution enter through the back door of courtrooms with the adoption of norms promoted by the rather nebulous international community. Another concern, and it happens to be the focus of our panel this afternoon, is how NGOs shape foreign aid and the role they play on the ground in these countries. As you all know, aid agencies act in concert with NGOs, and it's important to ask what are we getting for our money. So we have two distinguished panelists with us today. I think we'll just lead off with Roger Bate, who will answer the question of what NGOs are doing on the ground in South Africa. MR. BATE: Well, thank you very much. I was going to sit down and talk, but I think--I'm dozing off after eating so many AEI cookies that I think I'll stand up. Whether you slip off to sleep is another matter. Well, good afternoon. You heard from me very briefly earlier, and I'm delighted to be here. Thank you very much, AEI, and also Gary, for having kind of inspired this in the first place. I am going to talk about NGOs in the south, and in particular in Africa. As we all know here, African countries suffer from the world's highest level of poverty, the lowest life expectancy, and have the worst cases of disease and the lowest economic growth., According to the United Nations, the 27 countries with the lowest human development are all African. In response, some nongovernmental organizations, regardless of how their defined, and aid agencies are providing much-needed services on the ground--health care, drug distribution, water supplies and sanitation in some instances. NGOs, who I may be criticizing later, but organizations such as Doctors Without Borders, Oxfam, Christian Aid, and many national aid agencies often do a useful job in this regard. However, when it comes to the more political level, as we have heard already today, some NGOs have been undermining democratic processes and, at the very least, advocate policies--and sometimes policies that can be extremely dangers, exacerbating poverty, increasing death and disease. In general, it's difficult, I think, to know how to try to weigh up the balance of whether an NGO is doing a good or a bad job. I think in Africa it's absolutely impossible. But I suppose the one point that I would mention today, that I hope that you could take home with you, from my experiences in Southern Africa, is that NGOs definitely provide benefit in the short run; but, I would argue, in the long run their influence is nearly always malign, either through their own political acts directly or via aid agencies. I'm going to discuss three examples today of that longer-term harm. I want you to keep in mind that I think they do do good work in the short run, but I think it's the longer term that is certainly a problem for Africa, and I think is the main area of concern to a lot of people here today. Those examples will deal with malaria, AIDS policy, and the recent famine and food problems in some parts of Africa. Though these examples are specific, most of the groups generally campaign against free trade and resist the adoption of new technologies. They, as has been mentioned already today, educate or infiltrate aid agencies in government departments, and in some instances they even, I would say, poison the atmosphere for agencies in corporations that actually want to do the right things--although different aid agencies act much in concert with the NGOs and, as has been described before, they are co-conspirators in a common cause. Now, there's a lot of exchange of staff between NGOs and government departments, and this creates the kind of problems that we see in the business community, where you get gamekeepers becoming poachers, regulators becoming executive directors of companies they previously regulated. And expanding their expertise, whether it's from NGOs to government or the other way around, is not a bad thing; it's a good thing expanding people's experience. After all, where would the Bush administration be without many members of AEI, formerly employed at AEI. But I think that what ends up happening is it becomes a homogenization of what is a status marker of opinion, in the jargon, as to what is acceptable in the international community. Frequently groups will claim to represent the poor but, at least on the issues that I've been working on, most of them seem to represent more of an elitist northern constituency. Niger Innis from the Congress on Racial Equality calls them "a powerful elite of First World activists whose hardcore agenda puts people last." And the result is that funds are often diverted from things that could actually do good into pushing misguided campaigns. Now, when it comes to Africa, I think that, without doubt, policy mistakes can be costly not only in economic terms but in terms of life. And that is because, as mentioned already, Africa is the poorest continent and has the least--for example, in one sphere--the least-trained medical staff. Western countries on the whole will have somewhere between 300 and 400 physicians per 100,000 people, which is a reasonable measurement of medical sophistication. South Africa has the most in Africa, and that's 54, and it goes down to seven and even five in some countries. The problems that that causes, mixed with what is a lethal mix of poverty, poor health infrastructure, unsafe water, and negligence, sometimes very corrupt governments--some governments actually doing things to harm their own citizenry--means that live expectancy in some African countries is incredibly short. Malawi, it's about 36 years at the moment. Norway, for example, is about 79. Now, you'd expect places like Mozambique and Angola to have significant problems. They've just come out from, relatively recently, from massive civil conflicts, civil wars. But even in the relatively stable countries like Kenya and South Africa, life expectancy is extremely bad. It is below 50 years. And of course, as would not come as a surprise given where we are today, a lot of the reasons for this is because many of the economies are so repressive. And it is obviously clear that those economies that afford their citizenry greater economic freedom and individual liberty have high standards of living, longer life expectancy, and better economic growth. And I think that you can see that from the--that is irrefutable. Yet despite the clear benefits that most of society gain in the short run from open trade, and everybody over time, most of the NGOs I'm going to talk about today act against that. Some of them, even though funded by governments, have what I consider to be incredible aims of condemning science, technology, and most Western institutions. The Heinrich Boll Foundation, for example, which is funded very heavily by the German government, at the Johannesburg World Summit on Sustainable Development wanted, and I quote, poverty alleviation--in other words, cannot be separated from wealth alleviation. They want to lower the roof, not raise the floor. And this is, as I say, from a group that is heavily supported by the German government. So to the examples that I want to mention today. Probably the best example, certainly, that I've worked on, and I think it's probably the best example there is of NGO influence on the ground in Africa causing significant harm--and it's probably the best example of eco-imperialism--relates to the restrictions on the chemical DDT. Now, DDT has changed the way that a disease--well, several diseases, but in particular malaria--has been perceived internationally. You go back 40, 50 years, it was not a tropical disease, it was a global disease, at least in many parts. Oliver Cromwell died from malaria, and Shakespeare wrote about it in eight of his plays. I think he called it the ague, but it is still malaria because the symptoms were identical. And Britain, from whence I come, has all of those species that can spread malaria. It's just because of wealth and the use of DDT, we do not have malaria as a problem. So it is no longer a global problem, it is a tropical problem. Of course, it was first used in the Second World War and provided great advantages for America and Britain and the allies in theaters of war in Asia and elsewhere, in Africa, lowering instances of malaria, typhus, and other diseases. And immediately after the war, within a few years, DDT had eradicated malaria from numerous locations--Sri Lanka, South America, Southern Africa. It had been reduced, as I mentioned, and in some places totally eradicated. One example, India. Seventy-five million cases down to a few hundred thousand in the space of--75 million cases per annum, down to a few hundred thousand. Of course, DDT was widely used in agriculture and sparked a long and concerted anti-DDT campaign by environmental organizations. To cut a very, very long story short, which I have bored probably some in this audience before on DDT, the U.S. government banned it in 1972, using what I would argue was the flimsiest of evidence to have it banned--even its use in agriculture. But I'm not going to get into that, because I don't think it should be used in agriculture and it probably was correct that it was discontinued as use there, although I don't think the evidence of causing the levels of harm was substantial. But the most important point to realize is that if you're using DDT and you're spraying a cotton field in the 1950s, you could use enough DDT to save hundreds of thousands of lives, all the at-risks kinds in a country like Malawi. So the dose, as is often said, makes the poison, and the amount of DDT that would be used in malaria control is tiny by comparison to what would be needed to be used in agriculture. And conflation of those two points is something that environmental organizations have made on purpose. The best example, I think, recently of the use of DDT is in South Africa, where, under pressure from environmental organizations--the World Wildlife Fund, Greenpeace, and others--South Africa stopped using DDT in 1996. And it switched to an alternative pesticide where it's just sprayed on the inside of walls and acts as a deterrent mainly, but also kills the mosquito. Malaria rates soared by 1000 percent, death rates soared by 1200 percent, admittedly from relatively low levels. In 2000, in desperation, the South African government started using DDT again and malaria rates have fallen, lo and behold, by 80 percent in the first year. Fortunately for South Africans, their government can fund DDT spraying from their own treasury. That is not the incidence in most African countries, and they rely very heavily on aid. The Swedish international donor agency claims it can't fund the use of DDT in poor countries because it's illegal in Sweden. I bet if 3 percent of Swedish babies were dying every year, that opinion would change rapidly in Sweden and in Europe. And the argument that West Africans or Africans anywhere shouldn't use technologies that are not acceptable in the West, I would argue, is simply dressing up a callous disregard for human life and a politically correct egalitarian camouflage. Donor agencies such as the U.S. Agency for International Development, which initially did an amazingly good job in funding malaria eradication and reduction, says it can't use DDT unless there's an emergency. Well, I don't know what they would consider an emergency, but one child dying from malaria every 20 seconds I would consider something of an emergency. How many children should die every minute before USAID can consider it an emergency? Until that emergency occurs, USAID will only fund the use of insecticide-treated bed nets. Now, there's nothing wrong with bed nets, but they have a limited use, as does indoor residual spraying. What is needed is a holistic approach using whatever is best in the particular environment. But we have this homogenized approach that it has to be bed nets, bed nets, and maybe some drugs. And residual spraying of insecticides is out of vogue. Green groups campaigned against DDT in the 1960s and '70s and continue to demand the phase-out of the chemical. In 1998 there was an attempt at a U.N. convention, the Stockholm Convention on Persistent Organic Pollutants--an attempt to phase out the use of DDT. And it's worth noting that at final negotiating meetings there were four times as many members of NGOs as there were from African governments. Many groups such as Greenpeace and the World--WWF, whether it's the wrestling federation or the World Wildlife Fund, I'll just stick with the acronym, began the negotiations demanding a complete phase-out of the chemical by 2007. However, because of the fortunate disaster that occurred in South Africa--meaning that the South African government realized they needed to use DDT and the last meeting was held in Johannesburg--they were able--the South African government took a strong position. And what happened when they took a strong position? The environmental organizations backed down somewhat. And when it was portrayed in the media that they were trading off millions of brown babies' lives against hypothetical risks in the environment, they became somewhat sheepish and disappeared with their tails between their legs. But they're coming back, because every three years this treaty has to be reexamined. And the exemption which DDT has will continue to be looked at. One thing which I think is a particular problem and has already been touched on by other people is that some of the people working, as I do, on these issues, we're much more generalist, unfortunately. We don't have the budgets to have specialists. And the head of the U.S. delegation, whose name is Brooks Yeager--a very nice man--the U.S. delegation to this convention, is now working for the World Wildlife Fund. So you have a situation where the best U.S. insider on this issue is now working for what I consider the enemy on this topic. We do not have that level of expertise and I wouldn't be surprised if at some stage the DDT--the exemption that it's still allowed to be used will be overturned even while it's being used and saving thousands of lives a year. That's example number one. I think it's the most important, but I've got a couple of others I want to touch on briefly. Unlike DDT, campaigners fighting for lower drugs prices for AIDS drugs, I think, have had some very good short-run effects. And at the recent Evian G8 meeting and at the upcoming Cancun meeting, WTO, access to drugs is going to be--if not at the top of the agenda, it will be certainly one of the major debating points. And the campaigns to lower drug prices by groups like Medecins Sans Frontieres and some of the other groups--Health GAP, for example--have been extremely successful. But as drug prices have come down dramatically, access hasn't really changed very much. And of course the reason for that is that the price of drugs is just one factor, and a relatively small factor, in access to AIDS drugs. The fixation with it, though, in some of these incredibly good on-the-ground health groups with a kind of left-leaning agenda at the political level, though, has caused, I think, massive problems in terms of getting greater understanding of what are actually the real problems. Also, occasionally they do things which I think are bordering on the crazy. We all know the problems in Zimbabwe, the Zimbabwean leader, although he didn't really win the last election, Robert Mugabe, is more concerned with arresting journalists, torturing the political opposition, and fixing elections than delivering drugs. But we find that this pariah state got support from Medecins Sans Frontieres and other health groups who endorsed Zimbabwe's attack on patents and high drug prices. According to my colleague [inaudible], who is a South African, Medecins Sans Frontieres even undermined what the locals Zimbabwean drug activists wanted, because they wanted to continue to focus on Mugabe's corruption and lack of attention to health care. By allying itself with one of Africa's worst tyrants, Medecins Sans Frontieres undermined enormously the important work that they do on the ground. More worrying, perhaps still, than all of that impact, at least in the short run--given that I think I'm concerned about the long run in many of these campaigns--is that we are seeing reduction, unfortunately, in the future drug development for AIDS because of the attacks that have taken place in some of these countries. Now, over the past five years, when global AIDS numbers have gone from about 9 million to about 42 million, there's been a 33 percent reduction in AIDS drugs in development. Over the same time, there's been a consistent increase in other areas of infectious disease and communicable disease research--antivirals, antifungals, vaccines have all gone up significantly. And it's only a contributory factor. There are others as well. But as a contributory factor, the pressure on patents and prices for Western drug companies has led to a partial decline in research. Now, it's not the big drug companies, it's not the GSKs, the Glaxo--that is Glaxo--the Bristol-Myers, the Mercks, but it's the smaller companies--the biotech startups, those that are considering going into areas of research which people think they should be. But over the same time period, five years, 27 percent fewer companies are working in this area. I mean, ask yourself the question: If you are a biotech, the CEO of a new biotech company, or perhaps more importantly, the venture capital backer of that, where would you invest your money--in AIDS research, where your clients may become famous, but you're not going to become rich; or in [inaudible] where you know that the market is secure. And the market is speaking. And people are not working so hard in that area. And that is a particularly worrying trend, since, as President Bush's AIDS initiative takes hold at some stage over the next year or so and in trying to increase treatment, you're going to find that there's going to be a massive buildup of resistance to existing drugs. And it's kind of a double whammy. At one end you may have fewer drugs in production; at the other end you're going to see those drugs that are out there becoming less effective. The third and final example I want to give is the problem of the recent food emergency in Southern Africa. While we all know the differences between the United States and Europe on genetically modified foods, the European policy in that conflict between the U.S. and Europe is causing significant problems in Africa. Thirty-second background: The '91-'92 drought in Southern Africa and other parts of Africa was a far greater concern in terms of famine than the current drought. Yields have only dropped 7 percent, or yields up until a few months ago had only dropped 7 percent. But in key countries like Zambia, they were down by a third. And aid agencies were becoming concerned about how they actually provided aid, and I think on the whole donor response has been less generous. Based into a situation where you have a bad but not disastrous drought and famine, you have the situation last August, where Zambia decided to ban the importation of genetically modified food, including especially corn being offered as aid from the United States, even though it had been using this GM food aid for the previous six years, it decided under advice from European NGOs, European governments, to not take the GM food aid. And assessment provided by Dr. Lewanika, who is a senior Zambian biochemist, said that he was not certain that GM food was safe and, invoking the precautionary principle, said that Zambians shouldn't consume the product. Local farmers, who might have been able to plant GM crops--and this is probably the only legitimate argument I would say that the Zambian government had, was that they were concerned that they wouldn't be able to export their crops to Europe if they grew GM crop. Of course, the president of Zambia, Levy Mwanawasa, was famously quoted as saying that he thought the crops were toxic. Now, facing famine, I think two or three months after that, the Zambian president appeared to want to change his mind. But he had been receiving--he had sent some of scientists to Europe and America to look at genetically modified crop testing sites. And he still had Dr. Lewanika in charge of the program. They were taking advice from Friends of the Earth Netherlands, from British Action Aid, who are groups that are strenuously opposed to biotechnology, and the report that he gave to his own government maintained the anti-GM stance. Even then the Zambian president appeared as though he wanted to overturn and actually take GM food. But the opposition leader, Michael Sata, came out in favor of the GM food aid, and that put him in a difficult position, since he couldn't be seen to be taking a political stance that would seem to change his mind and go against what had been set in place by the opposition. So I think that there's no doubt that the Zambian leader and other leaders in African countries that originally--and then eventually caved in, but originally just didn't want to take GM food aid bear some responsibility for this, bear considerable responsibility for the problem. But the invocation of the precautionary principle, the Cartagena Protocol on Biosafety, and all manner of European NGO-driven regulation against GM food continues to kill Africans. And as I say, while the African leaders in this instance deserve most of the blame, the NGOs in Europe cannot escape their share. There's a meeting that starts today, the World Economic Forum meeting in Durban, and foods, drugs, and malaria--and maybe DDT, I don't know--will be on the discussion there. So just to wrap up, I think that, as I have tried to give you in three examples, I think that whether it's Medecins Sans Frontieres, whoever it is on the ground providing immediate relief for the starving or sick or providing drugs or helping with drugs or pushing for lower prices can have significant benefits. But I think that there's no doubt that, at least on the issues that I work on, the medium- and definitely long-term impact of imposing their particular vision of where we need to be going is harmful. Their direct influence, either through the media, aid agencies, and governments is significant. And, as I said, in the topics in which I work--malaria control, GM food, or long-term AIDS policy--I think the effects of these NGOs is particularly damaging. Thank you very much. [Applause.] MR. HOOK: The duties of a moderator are not many, but I'm already in dereliction of one by not giving Roger a formal introduction. But his excellent talk may make his bio more memorable to you. He is a director of the health advocacy group Africa Fighting Malaria, and he is a fellow at the International Policy Network. He has written frequently on global international policy issues, especially on the topics, as you may guess, of malaria, water, and trade. He has advised the South African government on water policy and has written or edited 10 books on climate change, water policy, food policy, risk, and environmental policy. He is currently working on two books, one on global water markets and one on the DDT debate, which you had a glimpse of this afternoon. I will not fail Mike in an introduction. Mike Nahan joins us all the way from Australia. He is the executive director of the prominent Institution of Public Affairs. He is an experienced commentator on resource economics, economic development, state finances, and intergovernmental relations. He writes a bi-monthly column for Melbourne's Herald Sun, and he has a weekly spot on radio in Melbourne. Before joining the IPA, he was director of policy for the Western Australian Ministry of Economic Development. He's also a businessman. He's owned and run a small trucking company in the United States and worked and traveled in Asia for several years. He holds degrees in economics and zoology. Mike Nahan. MR. NAHAN: What I'd like to do today is draw a mud map. It has to be that because the data path is very weak -- trying to understand and analyze the role between foreign aid and NGOs in developing countries. Two things, two examples that bring out that all is not what it appears are, first, our earlier colleague from the Capital Research Institute raised an interesting figure; that is, somehow, 17,000 people from developing country NGOs, claiming often to be representative grassroots movements, could spend two weeks in Johannesburg at the WSSD, World Sustainable Development conference. Not only that, they spent many other meetings running up to that. In fact, one that I was around, in Bali, 8,000 showed up. Just rough estimates, this cost between $150 to $200 million. How do people from Benin, Bangladesh, Barbados get $250 million to arrive in Johannesburg? Something strange here. Another issue is the Zambia issue. I won't go through it in great detail, but basically the story is this, that the Zambian government was put under pressure by groups to allow its people to starve rather than eat food that Americans are getting fat on for the last eight years. What's going on? And who pushed it? Well, if you look around, as Bates just mentioned, many of them, in fact the most vociferous, were aid agencies--Action Aid, Oxfam. And a whole range of new groups were coming in there. He mentioned Friends of the Earth, Greenpeace. Are they aid agencies? Yes. Action Aid? Yes. Another group that was very active in this is called Consumers International. Where did that come from? That's a [inaudible] body of a Western consumer organization. It's become an aid agency. Another one that came through that was very vocal, in fact the most vociferous about starve rather than eat the food, was a group called Third World Network. They're based out of Malaysia, but also with headquarters in Zimbabwe, South America, and Switzerland. An aid agency. What is going on? Why are groups who claim to be humanitarian in focus saying people should starve rather than eat this food, especially since they also have a motto of helping the poor, and this is the poorest of the poor? What's going on? Let me trace a bit of history. First, aid NGOs have been in the game for a long, long time. Historically, I suppose, most of them had a Christian base or a humanitarian base. As time went by, aid agencies thought, and quite correctly, that they would be ideal contractors for delivery of official aid. They're cheap, they bring money with them, so--aid agency, you can get more bang for their bucks--they also believe in the issue. And they're flexible. They will go where no aid agencies go, like working with Eritrean Marxist rebels in the '80s. No aid agency wanted to get near that, but these guys were willing and loved to do it. So they contracted out increasing amounts of aid projects, particularly in the humanitarian relief over the years. And this led to the growth of some very large organizations--World Vision, CARE, Oxfam, a whole range of them. But then in the '70s and into the '80s, at least in the English-speaking countries, but longer in Europe, there came a new vogue. You know, economic development comes in cycles. When one collapses, it falls, and another one comes up. A new one came up. It's called capacity-building approach to economic development. And the rationale is general and sounds reasonable. In fact, I think most of us would agree with it in a gut feel. And that is, the idea is that you have business and you have government out there, and it's a kind of a de Toquevillean approach--we have to develop civil society in developing countries. So the capacity-building approach is let's give money to grassroots local NGOs to have develop civil society. And then theorists thought, well, everything's going wrong with these big projects and a large amount of structural adjustment money is being squandered in Switzerland by crook governments, we've got to get around them. So how to get around them? Well, let's go around by giving to NGOs who would link directly with the poor. They're part of civil society, they're part of international civil society, and so the theory goes that they could get to the poor, they could develop grassroots organizations, particularly after the fall of the Wall, where governments did not need or feel the pressure to bolster corrupt governments any longer--as was the strong impression. They also decided that rule of law, governance, participation of the disenfranchised and poor were an essential element of economic growth. And I think it is. So capacity-building became an increasing project both targeted specifically for capacity-building, and it became a mainstream aspect to most projects. And the idea was to give it to NGOs and to build up capacity-building of the local NGOs. The target was southern NGOs. Now, at this time certain questions weren't asked. What does democracy mean? Are these people actually part of civil society? How do we find out? How do you know who the civil society is in West Papua--125 different languages, many different groups. Very difficult. But anyway, it got a head of steam, and every aid agency in the world is into this in a big way. And I estimate, using rough data, that aid NGOs get at least $10 billion a year from official aid agencies, both multilateral and bilateral. Ten billion dollars, of which approximately $3.5 million is specifically for capacity-building exercises. That doesn't sound big in Washington, especially after your budget deficit's bigger than that. But it's a hell of a lot of money in the Third World, a huge amount. And it is having impact. If you look at--the Europeans have been in this game quite awhile. The Dutch give 10 percent of their aid budget to four Dutch NGOs, who then hand it out. The Germans are doing it. EU gives $700 million out a year in capacity-building, and a lot more in projects. The USAID, last I saw in 1999, gave $637 million out. They're all into the game. The U.N.? I'm not sure what money they have. I think most of that kind of comes from other sources, but they do hand it out. Their role is largely an integrative and a policy-development one. World Bank, which initially resisted this strongly--they didn't like the idea, the thought it was politicization, they told the international NGOs to nick off, they wanted to get in touch with the grassroots. But then the NGOs put a campaign on this. It's all written up in a book in CEI by James Sheehan. And Wolfensohn came in and gave in. Now the World Bank is the largest proponent of capacity-building and funding of it. How much, we don't really know, but they have set up 60 funds in 37 countries handing out $4 billion. They've set up the GEF, which is the Global Environment Fund. It's to fund a large number of U.N. conferences. That's been allocated $8.75 billion--these are U.S. dollars, real dollars--over the last 10 years. Huge money. Not monitored, but large. This doesn't tell the total. There's large amounts of endowment funds, there's U.S. foundations give about $2.5 billion to overseas NGOs for activities in aid, and international corporations are into the game. Now, what happened? Well, what you would expect--a huge supply response. There has been a huge growth in the number of international aid agencies. The World Book of NGOs put out by Oxford University estimates that international NGOs increased by 25 percent over the '90s. But more importantly, the budget bloomed, many pushing a billion dollars each. Huge organizations. Most of the industry is still centered in Europe for one reason--Europe gives the most aid and has the closest relationship to them. But there's been a huge increase in the number of international NGOs outside Europe--80 percent increase in Latin America, 50 percent increase in Asia and the Pacific, large increase in South Asia. Interestingly, the U.S., North America hasn't seen a big increase. And many, of course, the major large aid agencies or NGOs in the U.S. are branch offices of European outfits. Okay, what else happened? Well, there has been growth in NGOs in the Third World, but we don't have very good data on that. But some incidental--the USAID has done a study of growth of trends in Eastern Europe, large double-digit growth of these organizations. In Indonesia there are now 100,000 NGOs. In Philippines, 95,000 NGOs. Huge proliferation of these organizations. Another trend has been agencies, as in the Zambia example, from outside the traditional aid agency have come in. Friends of the Earth, Consumers International, Greenpeace--it doesn't get it directly, but it gets indirectly. All the environment, labor rights, consumer rights people have jumped onto the aid game plan--and for, I think, one reason. Two reasons, really. One, a lot of money involved; and two, many of the issues that they deal with--environmentalism, consumer rights--they saturated the West and are looking for new grounds, new grounds to propose and new grounds fight old enemies. And I'll give you some examples of that later on. Okay, so we had the predictable supply response. Large growth. What was the result of this? One problem with this is that, as I mentioned earlier, no one sat down, that I can find out--when we started down this approach--define some simple issues. What do we mean by democracy? How do we identify [inaudible]? How do you [inaudible]? But more importantly, there's basically no monitoring of what is going on, no monitoring whatsoever. And when you pump $3.5 billion into a whole range of NGOs, you're going to get a response. You should be able to identify what it is very hard. But some of the things that I glean--one is, the process was, I think very predictably, captured by the international NGOs. They were the ones who were contracting out to aid agencies initially, they have links to the aid agencies and developed a close relationship, they're the ones that advised the World Bank. If you look at the World Bank's advisory committee, it's all those. WWF is on there four different times, Greenpeace is on there three different times--different branch offices. And the aid agencies have--earlier the organizations like the--as I mentioned, the World Bank tried to resist it, but the international aid agencies were fleet of foot. What they did was start branch offices all through developing countries. WWF opened up an Indonesian branch. Friends of the Earth did likewise. So branch offices--and these branch offices had the same value set and priorities of the head office, just like McDonald's does. They also saw it coming and they set up networks. Oxfam has set up a network of 3,000 developing-country NGOs with which it works. And one characteristic is they share the Oxfam viewpoint on the world. Now, these branch offices, Third World Network is one of those. It was set up and very closely tied with Consumers International. It also has very close ties with Friends of the Earth. Now, what these branch offices and networks do is, one, it allows the international NGOs to put themselves up by acting global and local at the same time, of course, but it also says We're also a local agency, we're an Indonesian agency, we're a Filipino. And even if you don't have real close ties with it, they can say we have these--Oxfam says we have these very close links with developing-nation NGOs, and it poured through them. What it also has done, when you go around to development discussions of NGOs in the Third World, it leads to the growth of carpetbaggers. This is not, I don't think, a derogatory term. If you pump hundreds of millions of dollars into a place like Indonesia, where jobs are tough, especially now, people are going to respond. And they're going to see the money and say, I want a job. In fact, the joke going around Indonesia now is NGO is just another name for a job. People quite the bureaucracy, they're the elites. They want to--they have the same mindset as international NGOs. They need a job, they put themselves up, and we have a growth of what they call these intermediate national NGOs. What's their mindset? Who pays them the money. That's the mindset. The question is, is this getting out to the grassroots, which is the whole aim. Well, very few studies. The World Bank is very comfortable with--at least Wolfensohn is, but what he's really saying is, We set up all these organizations to give us feedback on our projects. And they're probably getting feedback on their projects, and the feedback they wish. Well, they're paying them, aren't they. So anyway. Whether they're independent or not, I don't know. But the only really good study was one done independent. I mean, looking this issue is like swimming in oatmeal--sticky, sweet, and very turgid. It's hard to find anything. This is hard. Okay, one thing, there was a study done in India of the long-term Dutch program to develop the capacity of Indian NGOs. It was done by an Indian academic from the New Delhi School of Economics. He was part of them, but he was a good objective person. A long, lengthy study. And what he found [change tape] -- NGOs in India, and virtually none of these NGOs had links to their claimed target group--poverty, displaced farmers, and whatnot. No links. This was an elite organization. And the money stayed with them. Second, the money that went into the capacity-building was building up the capacity of the national organization of the elites, not the others. Third issue it said is that in terms of the market, the market was either not mentioned--and this is all responding to globalization, markets--was not mentioned, but most commonly seen as the problem to be overcome. That is, the market was seen as the devil to be overcome, not [inaudible]. And finally, the overwhelming report was two other factors. One is that these organizations would crumble as soon as the money tap got turned off. They're not self-sustaining. So as soon as the tap--these guys went off. And three, they spend most of their time going around in conferences rather than linking with it. Now, that one sample does not tell the whole story. Other types of evidence indicate that a similar factor is under way. Now, one of the things that was never discussed here, and it's essential--because why do we contract out to NGOs? In part--and what are NGOs? NGOs are separate independent organizations that are supposed to be separate from government and business and have an ideological set independent of both of those. And they often do. They are independent. And therefore, if you're going to contract out, the first thing you would do is assess their values and views and see if it's aligned with you. And if it's not aligned with you, put them on quite close performance indicators. Agreed objective, at the least. But that was not done. And basically, the result is the capacity-building process has been perverted terribly. When they came up with capacity-building, it was meant to buttress the Washington consensus approach to development, that market-led, trade, privatization, and private investment was the way to go but you had to get around problems by buttressing civil society and getting through to the poor through NGOs. But if you read the literature, NGOs do not see this this way. Capacity-building is an alternative to the Washington consensus. It's a--in fact, they perceive, if you read Oxfam's literature, which is very extensive on this, as many of them are--is that they see it as not just an alternative, but a response from. The market is seen as chronically failing the poor in developing countries, particularly the poor in the poor countries, that economic development of the nature that has been pursued in the West for decades is bad for the environment--in other words, they take their views from the West that environment is going on the road to hell and say that, by God, we don't want this to happen in the developing countries. And they also have adopted an approach that de-emphasizes growth, economic growth, and emphasizes what they call empowerment, participation in activities. So instead of capacity-building buttressing, the Washington consensus is undermined. Let me come up with a couple of case studies on this. One, the Zambian one mentioned earlier. Another one is one that I've been involved in for some time, and that is mining. Most of the organizations see mining as a terrible entity. And it can be very destructive. It's very large; if property rights aren't assigned properly, it can lead to all sorts of troubles with the local community; and importantly, it's a big pot of money that people can [inaudible] and destroy local communities. So it has to be done well--something that Canada, the U.S., Australia have done very well. And the Pacific Rim areas are very prospective, particularly Indonesia, Papua New Guinea. Papua New Guinea has very little other going for it, except logging. And in the 1990s, encouraged by the same agencies that fund the NGOs, there was a large movement of the mining industries into Indonesia and Papua New Guinea. And Indonesia became one of the most prospective and heavily invested areas in the world, as did Papua New Guinea. As soon as the Australian firms went in, the aid agencies launched into a very large campaign against every mine that had Australian multinational investment in it--funded to a large extent by aid agencies. The most characteristic one was WAHLI, which is a Friends of the Earth Indonesia, which was funded to a very great extent by WWF and the World Bank, to the tune of over $100 million. And it's also funded by every aid agency, including AUSAID, USAID, World Bank, Asian Development, the whole lot of them. Obviously, they were encouraging mining companies to come in, funding infrastructure projects to help particularly port and other transfer -- and they were funding NGOs through capacity-building to undermine this process. As a result, investment in mining in Indonesia has gone from $2 billion to $200 million. There's other factors involved, mainly government factors. In New Guinea, mines are just closing down. New Guinea is on the road to bankruptcy, thanks to this stuff. Another campaign that was mentioned earlier by Jarol was the sweatshop one. The same groups, for a variety of reasons--my own view is they take the problems of where the money comes from and where they do and start participating in the anti-sweatshop against Nike and Indonesia. Oxfam, the little agency in Australia which is an aid agency called Apheda, or Union Aid Abroad, have campaigned regularly, consistently for the closure of Nike's operations in Indonesia while claiming to be a humanist organization. The result is Nike's left. Nike's gone to Vietnam and China--where the NGOs have a more difficult time to get ahold of them--and 7,000 largely young village girls are unemployed. And these guys claim to be humanists. Finally, another example of these trends is that, as John Fonte has pointed out, one of the perspectives, mindsets of these organizations is that not only do they not believe in representative democracy or some sort of participative democracy, they also see democracy as a war between groups, ethnic groups, geographic groups; and they see democracy as getting special rights for these groups. In other words, they see democracy as some kind of balkanization process. And when you look at West Papua, where they have 125 different languages and ethnic groups in a small province, it's chaos. But anyway, what this leads to is all the NGOs following this route, being very persuaded by everybody who puts up their hand for independence or autonomy. And therefore they got into East Timor, West Papua, Malukulos [ph], Atjeh [ph], and a whole range of other ones, supporting independence of areas that are simply not sustainable and are fighting amongst themselves. Now, what does this do, all this process? Many of the countries in the undeveloped world are undeveloped because of poor governance. There is absolutely no question about that. And therefore some of the reasons, perhaps, the motivations were sound. But what this does is that, if governments like Indonesia, who's trying to meander from dictatorship in a chaotic manner, are seeing aid NGOs funded by U.S. and other organizations undermining their often feeble but nonetheless -- attempt to have some sort of governance, to have some sort of economic development. It's undermining governance rather than supporting it. And it's being destructive. As a result, many Asian countries are saying what do we do with these things? They're often more powerful than us. Like Zambia. Why is Zambia under the suasion of these organizations? Because it's the most aid-dependent country on earth. And those organizations not only are friends of theirs, but also control purse strings. And they have to be listened to. And we're seeing in Asia in particular, and I assume other places where I'm not as knowledgeable, countries, governments trying to deal with this issue, trying to get back some sort of representative democracy. But how can they do it when, by doing it, they're perceived to be cracking down on international civil society, or they're seen to be tight-handed with an organization they support? So you're seeing some kind of reaction. One is going on entirely [inaudible]. Okay, where is this leading? I think it was another dumb idea of the economic foreign aid industry. They thought of something, it sounded [inaudible], couched in good words, and it's backfired on them just like everyone else has done. But this one is really serious because it is destroying civil society in many of these countries. Indonesia had a flourishing civil society--probably still does, hopefully--but it was in the Islamic groups largely, was in the religions. They're being left out of this. It's destroying much of civil society, it's undermining governments, it's undermining good governance, and it's leading to holding back developing countries from enjoying the same quality of life that we do. It's backfired. It's also funding the major source of funding for the international, let's say, progressive transnational NGO movement overall. And by the way, none of us--people who promote economic freedom--agree with it anywhere near this game. When you go to these organizations--which I don't a lot, but have done a few times--there's none of us; we're not there. We're not even in the game. We're not even on the World Bank's advisory lists. It used to be that we shared their values. Thank you. [Applause.] MR. HOOK: We have about 10 minutes before we have to make room for Fred's panel. If you have any questions for Roger or Mike, please just stand up and speak loudly. QUESTION: Thanks for your presentation. I just am wondering--right now the World Bank and IMF are engaged in the PRGF and the PRSP process in which it's important that civil society plays a role in the consultation process regarding their countries' development policy. What we've seen up till now is the minister of finance pretty much makes all the deals with IMF and the World Bank. And so now we're looking at not an NGO, but people on the ground. It might be professional associations such as doctors, teachers, and so on and so forth in-country, trying to get their foot in the door. So I think what you've presented is very one-sided. I think there's another side to this, that it's new, it's nascent, but I think it's just beginning to take off. It hasn't bloomed yet, but I think it will. I mean, I come from World Vision, which is one of the NGOs that you mentioned, or FBOs that you mentioned. And I really look at the prospects for civil society participation actually happening not undermining democracy but actually, now, giving it space. I think up till now, there hasn't been a heck of a lot of political space for civil society to act in Latin America. If you did, you got your knees shot off. So that's changing. And I think there's been a lot of dialogue between elites in our country and elites in developing countries shaping policy. So I'm looking now at this new millennium as a period in our history where civil society will actually take hold in developing countries and have a voice--not my voice, not your voice, not a white face. World Vision, for example, doesn't have white faces, in Africa particularly, running their operations. They're Kenyans, they're Zambians, they're whatever. And they're running it. I think the major problem in those countries is that NGOs like ours probably can pay their professional and technical people more than their own governments. That is a severe problem. MR. HOOK: Mike, do you want to take a minute or two and deal with that? MR. NAHAN: Yes. I don't share your optimism. I do not think the aim of civil society is to have elites-to-elites. Yes, elites are important, particularly on feedback of technical nature on projects. There's no doubt about that. It's very important. But I don't think the international NGOs are the appropriate vehicle for that. They have--it is natural with large multinational organizations, what World Vision and Oxfam are, hundreds of billions of dollars, even if they're operated in a federalist manner-- QUESTION: [Off microphone, inaudible.] MR. NAHAN: No, no, hundreds of millions. You do. --have a certain culture and perspective that they do transmit to their local operations. It is important to build civil society in many of these countries. I don't know Africa, but in fact in Indonesia, there is one. Those capacities were there. But their voices are being shouted out by the large amounts of money flowing in to create new civil society groups. And just another thing is when you look at some of the activities, particularly in the biotechnology area, they sing with one voice--or they don't complain--about banning biotechnology in places like Indonesia, which is just an essential element for agriculture in that country. And there's no dissenting voice. MR. HOOK: Roger, further thoughts on that? MR. BATE: Just very briefly. I think there's one thing that I can add to this, because I think Mike has answered that pretty well--is that from my knowledge of some of the groups, like Medecins Sans Frontieres, World Wildlife Fund, and one or two of the other groups, is that there is a huge discrepancy between some of the really good work that they do on the ground and their political campaigning that occurs back here. And even to the extent that I get on very well with WWF offices in Zimbabwe--or did when I was in Harare last--and some of the Medecins Sans Frontieres doctors in other parts of Africa, I would like those people to be involved in decision making at the local ground. But what actually happens at the international meetings, which then sets the tone, at least from the things that I've seen, is that it's all the fund-raisers from New York, London, Geneva, Brussels that actually control the voices at those types of meetings. We have people that I work with who are, you know--that are Kenyans, Nigerians, South Africans. The point is that the groups that I oppose at an international level I can support very much at a domestic level, but unfortunately it's not the domestic people who are setting that international policy and influencing the kind of international base. At least that's my intake on that. MR. HOOK: Miss, one or two more questions before we get back to you. Any other questions? If you have a follow-up, feel free. Well, we'll make room, then, for Fred's panel. We'd like to thank Mike and Roger for their presentations. On to the next panel. Thank you. [Applause.] SESSION IVMS. PLETKA: This is our final panel. I'm pleased to see that so many people are still here. It is going to be moderated by our good friend Fred Smith, who is the founder and president of the Competitive Enterprise Institution. He comments frequently on regulatory initiatives--not least of which, this day--and he's a columnist for Regulation and a contributing editor to Liberty. And Fred, I'm going to turn to you to introduce your panel and go ahead. Thank you very much. MR. SMITH: Thank you very much, Dani, and like the others, I'm very pleased this conference is happening. This is an extremely important issue and it's one that is well overdue for attention by the free-market conservative classical liberal tradition. You know, the argument that Americans need to be involved abroad, that somehow NGOs are good ideas, I'm sure my experience as a child replicate many of yours. I grew up in rural Louisiana. One of our family friends was in the oil-field industry and he worked down in Colombia and Venezuela. And he was back one time visiting with the family, and he was discussing--he got in trouble down there. And I said, What happened? He said, Well, you know, we're Americans, and when I went down there we, you know, we sort of looked at the various welders, the American welders and the Colombian welders, and we paid everybody what they were worth. And that wasn't the way you did it back then. There was a pay scale for Americans and there was another pay scale for Venezuelans or Colombians. And that, I think, is something that is exactly what we mean when we say American operating abroad. We bring our values abroad and we try to imbue the meritocracy there. That, of course, is not the kind of NGO movement we've been hearing about today, largely. We've been hearing about a bureaucratization and not a privatization of America abroad, but essentially an extension of the political face abroad. Some of you know CEI. I guess we should put in our plug for organization, too. We are an NGO, and we were at Rio and Kyoto and Johannesburg and Singapore, and we'll be at Cancun in September--hazardous duty, if you can live with it. But the role, and those of you who have been to any of these international fora know something about the loneliness of a free-market conservative group at these international bacchanalia-type of events. It's bit like Jesse Helms at a Jesse Jackson rally, I think. There are important issue, though, that we have to, I think, in some sense engage in. We'll never be able to match them one-for-one, but our ideas have quality, and even one candle in the very dark rooms that these international fora represent can often shed much, much light. And we do have allies in the hopes of the peoples of the world, which I think comes through today. Trade and environment, alien tort issues, the whole set of multilateral environmental agreements, all important. And then, of course, you all have heard on the NGO website, Chris Horner, a CEI fellow, has just done a piece on Alien Tort Act. And since you don't know much about that, most of you--thank God--you ought to read it just to realize that as bad as things are, they will get worse in the future. Our two speakers today are going to be wrapping the sessions today. They're going to be giving us slightly different perspectives on some of the issues--it's sort of hard being the last person on this list, I know, because some of your lines have been stolen before, and so on. But Marguerite Peeters is going to be giving us a perspective on how the EU is interacting with these NGO-type issues, and then her paper also includes some stuff on corporate and social responsibility. But in the interest of time, she will probably be neglecting most of that and going directly to how all this looks from an EU perspective. We haven't heard the European perspective as much today. And Jon Entine will be discussing sort of another element that has not been fully displayed, the way in which unholy alliances and linkages occur between the corporate world and the NGO movement, and how industry's sometimes better instincts of rushing out and trying to work with these problems can sometimes create some major difficulties for it down the stream. And they're not always--sometimes malicious corporate activities, but sometimes just naivete in this area. The two speakers--you have the bios there, but let me just briefly introduce both of them. Marguerite Peeters, I guess we met some years ago at one of the various international fora that our type of NGOs go to. She's at the group, the Intercultural Dialogue Dynamics, which is a nice title. We'll have to go into that a bit. But she's looking at the concepts, values, and mechanisms that have emerged in Europe, and trying to explain to us what is different about Europe and how that does give us a--how we better understand why Europe is coming across as it is if we're going to ever restore the Atlantic dialogue that we're missing now. And I should point out she has a publication that is on the website here at AEI--and if I can get it out of my briefcase. MS. PLETKA: Here. I have it here. MR. SMITH: Ah, you have another copy. Okay. "Hijacking Democracy: The Power Shift to the Unelected." This is a manuscript that I think I first came across--I wasn't aware that AEI was doing anything in this area, and then as you're surfing the Web, it pops up and then you realize, My God, they've been working in this area, too. And now we're on the panel together. And I'll introduce Jon when his talk comes up. Marguerite, I think you're first, so give us a talk on Europe. MS. PEETERS: Good afternoon. I'm absolutely delighted to be here. Even if I don't sound it, I'm American. I'm a U.S. citizen, and I'm proud to be American. I love America. I lived in Europe most of my life, and I also love Europe. I'm deeply convinced that as the world now faces a new threat--the threat that we have been attempting to describe today--there is an urgent need to restore the Atlantic spirit, Atlantic friendship, bilateral friendships between the U.S. and European nations. Let me say a few words about my history and how I came to be interested in these issues. I'm a journalist, and I lived in Ukraine between '91 and '93, where I was able to witness two things. The first one is that at the end of the Cold War, the world universally aspired to peace, prosperity, and liberty. And the second thing that I witnessed, of course, was the anthropological disaster that people underwent under communism. I came back to the West in '93, and at that time there were preparations for the Cairo conference and I became aware of the new threat. We thought that the world was getting ready for peace and prosperity, and we were not aware that there was an attempt to hijack these universal human aspirations. I started as a journalist attending all these joint conferences. I went to Copenhagen, the whole list--you know, there was a series of conferences covering all aspects of society--human rights, human development, and so on. And as I was interviewing these U.N. experts who were working on the new paradigm, new global consensus, I started discovering that there was an attempt to build a new system of values, an integrated system. These conferences were not sectoral, but they were an attempt to build a system. And the system is called the new global consensus on sustainable on sustainable development. Now, as I am supposed to speak about the EU, I realized as I was preparing for this paper the great parallel that exists between the U.N. cultural revolution of the 1990s and the search for identities, for European identity and integration by the European Union of the globalist goals of the United Nations. As you know, the Convention on the Future of Europe, which is to be concluded next week at the council's meeting in Salonica, worked on a blueprint for a European constitution which is supposed to become the founding treaty of the new Europe and be ratified by heads of states and governments at an inter-governmental conference next year. American policy makers must be clear that they might soon be confronted with an entirely new reality, putting an end to, or challenging, bilateral relations between the U.S. and its traditional allies, and that the thrust of EU reform will mean a total geopolitical perspectives for two reasons. The first reason is the institutional consolidation of the European project, and the second reason is the content and identity of this project, where new forms of governance and global values coexist with constitutional democracy and universal values. There was consensual--you know that the convention process was a consensual process. There were 108 members in the convention--people coming from national parliaments, national governments, the European Parliament, and the commission--and these people were supposed to work to build consensus on the constitution. There was no vote. So this is the first similarity with the U.N. process. It's a consensus-building exercise. And there were all these members coming from the Socialist Party--different political tendencies agreed on one thing, which was the institutional strengthening of Europe and giving Europe a greater visibility in the world. And this objective, of course, is not unrelated to the rising European anti-Americanism. It has been quite plain in European policy documents of the past decade that Europe seeks to position itself as a global leader in sustainable development--the U.N. consensus and its values--in participatory democracy, the social market, corporate social responsibility, and global governance. Europe is trying to position itself as a leader, and I want to stress that this goal relates to European anti-Americanism. These goals also directly connect the European Union with the U.N. There is institutional competition, so to speak, between the European Union and the U.N., but ideologically they're pretty much on the same line. And the Brussels-based NGOs are pushing for this agenda and also for the consolidation of the European institutions. I just would like to read to you a few quotes from the draft constitution that stress my point. Among the Union's objectives, as they are stated in Article 1.3, is that of working for a "Europe of sustainable development based on balanced economic growth with a social market economy aiming at full employment and social progress and for a high level of protection and improvement of the quality of the environment." As I was doing my interviews, as I was interviewing people from, you know, the green NGOs and so on, this formulation comes directly from the green lobby and also from the Socialist Party. Another objective of the Union is the "strict observance and development of international law, including respect for the principles of the United Nations Charter." So this is included in the draft constitution of the European Union. Also the Unions values are "pluralism, tolerance, justice, equality, solidarity, and nondiscrimination." And these values were introduced by the Socialist Party, the members of the convention who come from the Socialist Party. But what I'm going to talk to you about today is the constitution's inclusion of the principle of participatory democracy as one of the three principles on which the democratic life of the Union is founded. Article 1.44 of the draft constitution states that the life of the Union rests on the principle of democratic equality, number one; secondly, on the principle of representative democracy; and the third one is the principle of participatory democracy. So how and why did the participatory democracy make it in the European constitution? The first two principles appear self-evident, except that the principle of democratic equality can very well be interpreted in a radically egalitarian, socialist way, as we know. As concerns the principle of democratic representation, for the EU it means that European citizens are directly represented in the EU Parliament, and that member states are represented in the European Council and in the council by their governments. The principle of democratic representation refers to each citizen's right to participate in the democratic life of the Union. So this article integrates citizens' participation in a representative democracy, as it traditionally does in a constitutional democracy. So why did we need to have a third principle, the principle of participatory democracy? The draft constitution does not clarify the relationship between participatory democracy and representative democracy. The run in parallel. It is not clear in the constitution whether and how representative democracy will control the influence of participatory democracy on policy and decision making and how participation will interfere with a normal representative process. This juxtaposition is unhealthy, and it reveals the Union's ambiguous stand vis-a-vis the role of governments, that of citizens and of NGOs, and the EU's deep malaise concerning the nature of constitutional democracy and the meaning of democratic representation--and this precisely at the time when it's drafting its own constitution. Fred tells me that half my time is gone already and I'm only on-- MR. SMITH: We're keeping to a tight schedule. MS. PEETERS: Let me give you elements of the history of the partnership between the EU and NGOs. As you know, the NGO involvement in policy making at the U.N. turned into a principle at the Istanbul conference in 1996. And following that same pattern, the EU partnership with NGOs turned into the principle of democracy building on a long practice of cooperation. The second reason why this principle made it into the constitution is that in recent years NGOs have become much more organized at the level of the European Union. They organize themselves in powerful consortia, as I will explain later. And a third reason is that the president of the Commission, Romano Prodi, deliberately decided to strengthen the partnership after his nomination in 1999 as part of his good governance strategy to reform the institutions and give them alleged accountability. There is an EU policy document that describes the rationale for the EU collaboration with NGOs, and there are five main reasons. The first goal is explicitly to foster participatory democracy. The EU wants to foster participatory democracy as a value, as a principle within the Union and beyond. So the EU wants to be the leader in the world, the great promoter of this NGO movement. The second objective of the partnership is, according to the policy document, "to represent the views of specific groups of citizens to the European institutions, especially those of minorities and special interest groups." Here we see that the EU assumes that NGOs are representative The third goal is that the EU relies on external expertise for policy making. You know that there are about 7,000 EU bureaucrats who come from a legal or political science background and who have no expertise on many of the areas of EU competency, and they rely entirely on external expertise to formulate their legislation. So policy making is one of the reasons for the EU-NGO partnership. The fourth reason is that the EU regards as "vital"--I'm quoting--"NGO contribution to managing and evaluation projects financed by the EU." The EU has no staff to implement any of its policies, and it relies entirely on non-state actors to implement its policies. And the last reason is specific to the European context. The partnership aims at contributing to European integration. You know that the EU project is a largely artificial project. It's a construct. It doesn't come from the people, it's a top-down project. And therefore there's what they call a democratic deficit, and they are relying on NGOs to try and Europeanize civil society. So I have to skip--Fred is telling me that I have five more minutes. So let me get to perhaps the main point of my presentation, which is Europe leading the global left. I realized that the Socialist Party, which is very strong in Europe, the Socialist International, the NGO movement, the NGO consortia in Brussels, the anti-globalization movement, the anti-war movement were more and more coming together. And actually, just this May, a document laying down the platform of the European Socialist Party came out. It's called "Europe and a New Global Order." The Socialist Party would like to forge a global alliance between all these partners I just mentioned and also with U.S. Democrats. And they're organizing a conference in Brussels in November as a first attempt to forge that alliance. And they're just waiting for a new administration in America to strengthen the U.N. As you know, the U.N. has been undergoing a reform process. Just after the global conference process in '97, when Kofi Annan arrived, there was a first wave of reform, and now, last November, at the General Assembly, they launched a second wave of reform. And this reform is not being monitored; it's very quiet. It's very much in the direction of global governance and partnerships with NGOs and all these players which are getting more and more organized. So this report was written by the former prime minister of Denmark, a socialist, and the Global Progressive Forum, which will take place in Brussels in November, will not appear as anti-globalization. They have a new strategy--but as progressive. They use the word "progressive." The idea is to have Europe, at the request of the global left, to quietly start showing leftist leadership and prepare the ground for more favorable times when there will be a Democrat administration in the U.S., which will make it possible to change things on the global level. Well, according to an advisor to the Parliamentary Group of the European Socialist Party that I spoke to, a convergence of factors conducted to this Global Progressive Forum. The first factor is the rapprochement between the NGOs and the Social Democratic parties in Europe, especially in countries [change tape] --overcome certain obstacles without the participation of the political class. And the Socialist Party, which is very strong in Europe, is the only one that can carry their claims forward. The second factor is the rapprochement between the anti-globalization movement, which rejects any formal status--is not engaged in a dialogue but is just against--and leftist NGOs. As you know, in Porto Alegre last January, for the first time you had the presence of the big NGOs. So the anti-globalization movement is opening itself to NGOs, and the NGOs, the leftist NGOs, are willing to become an intermediary between the anti-globalization movement and the Socialist Party. The Global Progressive Forum is also conceived to be a global meeting place between Porto Alegre and Davos, the Davos World Economic Forum. Under the pressure of the global left, the language established has already changed this year and it has become more politically correct. But the left wants more. It wants real changes in the boardroom decisions and believes that it will get it through a patient consensus-building effort between itself and willing businesses. And then let me do my last point. The final and paramount goal of the forum is to try and better structure the dialogue between European socialists and some leading American Democrats. This partnership, which is to be prudently constructed and perceived as very fragile at this stage, would be decisive to make global policies move forward. The first informal meeting will take place in the autumn. The European socialist leaders, working under Global Progressive Forum initiative, want a close and regular dialogue with Democrats to recreate a partnership with the U.S., but a progressive one. It's really too bad that the left is taking leadership in restoring a relationship between America and Europe. The goal of the partnership is to build a new world order in which Europe would have an essential role to play. I had much more to say, but I have to end now, I guess. MR. SMITH: Thank you very much, Marguerite. [Applause.] MR. SMITH: Marguerite has a lot more to say. I've had a chance to review her paper. But the general theme there of the extent to which the NGO movement-- Marguerite has laid out many things, but her paper has many more things. But the extent to which an NGO movement is aligning itself explicitly with party organizations--socialists in Europe, potentially liberal organizations in the United States--illustrates a growing alliance between one set of forces that has a vision of one side of globalization--a world of harmonized consensus-building and so forth. Of course, the traditional America view is that globalization should have been, or could have been, a world of strengthened competitive forces disciplining both markets--ensuring that corporations serve the public interest through competition--but also disciplining governments. Because in an open world economy, the governments that exploit their citizenry start losing them and lose their capital to others. And that alternative vision of an open world economy based on competition rather than consensus in a sense is what the debate is about. And as Marguerite writes about, most of the NGOs are on the consensus side right now. But there's another kind of alliance, and Jon's going to talk to us about that. It's the alliance--unholy in this case also--that is evolving between NGO movements and corporations, or at least some corporations. And I'm most intrigued about the aspect of his career, that he is involved in television, because, as you all know, a picture is worth a thousand words. And since television produces, what, a picture every 1/32nd of a second, we're going to hear an awful lot of words in the next few minutes, because he's going to actually be including some video shorts in his presentation. You've got his bio. Jon, why don't you take off now? MR. ENTINE: Thank you very much, Fred. You're a tough taskmaster. I'll try to keep to time here. It always difficult being the last in a procession here, and I hope I can do justice to it. It's been great conference, and I want to thank Danielle for putting this together. You did mention that I have a kind of diverse background, which I think will be reflected a little bit in this talk. Actually, I was a television producer for 20 years. I was Tom Brokaw's producer at NBC and then only about 10 years ago began writing, spurred in part--and you'll see this as it comes up--an article that I did about 10 years ago on the Body Shop cosmetic company, which at the time was viewed as an icon of socially responsible investing and is, I think, a paragon for exactly what's wrong with the social responsibility--corporate/social responsibility movement and is one of the more illiberal companies, as head of a very illiberal movement, which is kind of some of what I'll be talking about today. And I now write about these issues and also teach at Miami University. But as you mention, I'm going to talk about what I call the fuel, the ideological and financial fuel that has led to the explosion of an influence of NGOs over the past few years. I think one of the key elements of that is the role of what's called the social investing movement. Perhaps you've heard about it. It gets some press in the major newspapers--the New York Time, the Washington Post--but I think it's underappreciated, not necessarily because of its financial footprint, which is somewhat more modest than I think the claims out there are about it--and I'll discuss that--but because it is a source of such media attention that it ends up putting a lot of public pressure, reputation, management pressure, on companies to conform to an agenda in which NGOs and the social investment community are very much in alignment. In fact, I was attending a social investment conference not too long ago in Boston, when a debate erupted over the issue of corporate stakeholder responsibility. And just as a little background, for those of you not familiar with social investing--it's also known as socially responsible investing or ethical investing--and its central tenet is that investors can follow their hearts and political whims and make a killing in the stock market at the same time. In the words of the umbrella group for the liberal wing of the social investing movement, the Social Investment Forum, "clients can invest for their own futures and a better world at the same time" by buying stock in companies that pass social screens, such as companies that are not involved--very negatively oriented--not involved in military production, tobacco, nuclear energy, nuclear production, animal testing of any kind, causing any kind of environmental damage--problems, in other words, that are the favorite issues of NGOs--and avoiding investments in companies that are involved in these activities. The so-called good companies, the argument goes, perform better financially and on the stock exchanges. Now, as my paper makes clear, and as you mention, it will be available--I can only give you a headline here: Although social investing maybe balm the conscience of ideological investors, there's little evidence that it encourages either corporate responsibility or social reforms. In fact, I think it does just the opposite. In effect, it's what I call guilt-free investing. It's the ultimate politically correct two-for-one sale. Buy shampoo that's not been tested on animals, made from Brazil nuts, harvested by Amazon Indians, and get social justice for free. Despite its limited efficacy, social investing is a growing phenomenon that its advocates claim represents nearly one out of eight dollars under professional management in the United States and similar percentages in Britain and Australia. If that's true, that would be over $2 trillion in the marketplace, which, again, my article deconstructs an outrageously wildly exaggerated claim. But nonetheless, there are over 230 so-called SRI mutual funds with over $150 billion. So even if the $2 trillion figure is not accurate, it is not without some impact. And mostly, I think, because of the media interest in it. Who are the good-guy companies, the white hats, according to the social investment community? Again, this shows the kind of counter-culture '60s roots. They're mostly smaller companies that make commodity products like toothpaste, yogurt, ice cream, shampoo, usually at over-premium, inflated prices, companies like Tom's of Maine in the United States, Stonyfield Farms, Ben & Jerry's, and the Body Shop. And set against the white hats, the good guys, is essentially the rest of the business world. They call it corporate America. In the United States they use that phrase as an epithet. Multinationals are led by executive desperados--I'm using colorful language here, but this is the language used by these groups--and they're ascribed the most selfish of motivations, which is a desire to grow their companies by selling desirable products or services, and as such, they're dismissed as capitalists. And that's a characterization that to this group is like being labeled a pro-life activist at a NOW convention. According to consensus, the black hat corporations manufacture weapons--I mention that kind that helped topple Saddam Hussein and the Taliban; develop energy of any kind--that's for transportation industry, electricity for the second homes of a lot of these elites in Nantucket and Aspen; or, the worst of all offenses, develop consumer products or medicines, even, using ingredients tested on animals according to international standards to ensure safety and efficacy. I haven't heard such Marxist gibberish since college. Sure, these money managers hold their collective nose. They fill their portfolios with large corporations--these are mostly high-tech and financial stocks that were devastated when the bubble burst. But the crown jewels of their portfolio are not led by Lou Gerstner or Jack Welch, but Ben Cohen and Anita Roddick. These are the stars of the era of what I call rainforest chic and vocal leaders of a dangerous alliance that has emerged between social investors and NGO. The social investment movement elevates a very narrow and exclusive agenda that draws on notions of liberal propriety that date to the 1960s. Its actual ideological roots to some degree are in conservative religious principles dating to the 18th century and Quakers, so it's this kind of conflation of 18th century conservative social principles and kind of new-age faddish liberal principles from the '60s. Truisms of social responsibility groups and NGOs--because they overlap--include the embrace of a romantic anti-science wing of environmentalism, rigid pacifism, animal rights on a par with human rights, and a vague notion of social justice that are well beyond the influence of corporations. You've heard these issues referred to previously. Making profits, growing a company that supports jobs and communities, spreading the wealth--the very reasons behind the success of the capitalist countries of the West--is portrayed as a sacrilege. The United States and other Western countries are often targets of reflexive criticism. If you think I'm exaggerating in the way I'm presenting this, I just came across just a week ago an open letter to the social investment community that was published in a magazine that I actually published my expose of the Body Shop in, Business Ethics magazine. This letter's been posted in almost every social investment website and carried concurrently in NGOs. Just to give you an idea of the language and the demonization that goes on: "An open letter to the social investment community." In big, bold letters--"We are running out of time. Global corporations are ravaging the natural environment, destroying democratic societies, and widening the gap between the rich and the poor. Because corporate mergers have consolidated control of the media, agriculture, energy, financial services, and other sectors of our economy, competition and fair trade are becoming extinct." Interestingly, they're adopting the fair trade issue as their own--very anti-fair trade organizations. "Because corporate-paid lobbyists and corporate campaign contributions control politicians, U.S. corporations are free to sell their technology and weapons to authoritarian governments and at-home privacy and civil rights are being eroded by corporate control of information technology." And there's the link with NGOs. "Corporate governance reform, voluntary codes, and watered-down SEC regulations are placebos. It is time that we in the socially responsible investment community join together with environmentalist, anti-war, labor, and human rights activists, public interest lawyers, and social investors to coordinate corporate campaigns to serious challenge corporate management. We need targeted shareholder resolutions, litigation, mass mailings, demonstrations, legislation, boycotts, citizen referendums, and coordinated political action to save our global community." It's quite a bouillabaisse of activist ideas. But interestingly, there is money here. This is what we have to come to understand. There is money behind this alliance that, although the NGOs have traditionally been somewhat well-funded, more so in recent years, I think the alignment of the social investment community with some backing behind it gives added fuel to some of these very, I think, illiberal activities. According to the prevailing social investment zeitgeist, as you can see, corporations are greedy, control freaks out to squeeze society. This is, you know, the ideology of corporation-as-enemy, which is the central ideology of NGOs to some degree--not in all cases, as I think some of the panelists have explained. It's very paranoic, it's very demagogic. These are--Peter Kinder, who's the head of Kinder Lydenberg Domini, which the premier research organization that has come up with principles, so-called objective ratings of companies that is widely used by academia. I have a critique in my report of this absolutely bizarre rating system that pretty much has held sway in the academic community and has become a favorite of Wall Street, even adapted by some mainstream mutual funds that see this as a niche investment. He writes, "We expect corporations to act irresponsibly. Why? Because corporations have as their explicit purpose the insulation of management and employees and shareholders from responsibility for their actions." This is the ideology behind the leading social researcher in the movement. Despite its dedicated anti-business ideology, the social investment movement and self-proclaimed socially responsible businesses are widely portrayed by the media, and as a result viewed by much of the public, as not only benign, but beneficial, honest brokers of stakeholder dialogue and a force for corporate reform. Perhaps because many reporters come from the same ideological and social milieu, the reporters by and large give social investing a free pass, or worse, they echo the anti-free-market biases of many social investment leaders. Reasonable people should be concerned about the growing influence of the social investment community and its emerging partnership with NGOs, most of which share this knee-jerk demonization of corporations and the free market. The SI community and NGOs are part of what I call a money network funded by foundations, often started by corporations, interestingly enough. Many of them you're familiar with--Ben & Jerry's and Body Shop--but others are well known corporations--the Ford Foundation, the Gap Foundation, Henry Luce Foundation, Patagonia, Pew Trust, Rockefeller Foundation, W.K. Kellogg. All these have put huge amounts of money into social investment campaigns, essentially funding, I think, against the very interests that these corporations represented, against the interests, I think, of progressive policies. I really think that this is in certain ways--social investment is what I call capitalism's Trojan horse. Although they purport to support free markets and in fact attempt to make money playing the world stock markets, they're anti-business and interventionist by conceit. While they purport to want to soften the edges of capitalism, their actions are really designed to undermine it. To give you one recent example of how the synergy works in practice, the Rainforest Action Network, a San Francisco-based environmental group, initiated a campaign against Citigroup about three years ago, blaming the bank for rainforest destruction, climate change, and the disruption of the lives of indigenous people. The NGO launched a worldwide campaign accusing citigroup of banking on global warming and forest destruction. It teamed with social investment groups like KLD and Calvert, which have Citigroup on its taboo list of investments as a result of such controversies, and introduced stakeholder resolutions. Clearly an issue like this will not bring a multi-faceted company such as Citigroup to its knees, but it is also more than just a mere annoyance. It's reputation-management hell, and in a commoditized market, world reputation is very key. Moreover, the collective attacks on corporations in general, I believe, are feeding a growing anti-American, anti-West sentiment, so it really feeds into some of the, I think, echoes of what's coming out as the criticism after the war in Iraq. On the defensive and prior to its 2003 annual meeting, Citigroup opened a dialogue with Rainforest Action Network. Last week, Citibank was among 10 banks from seven countries that announced their adoption of the Equator Principles, a voluntary set of guidelines for promoting social and environmental responsibility and financing development projects, especially in emerging markets. There are plenty of other examples about this. Tomorrow--this is a little advertisement--I'm organizing a conference here at AEI on biotech issues, which will reprise some of the issues raised today, and you can really see this illiberal alliance of NGOs and social investing and their intimidation of government and companies in that area. So more and more, companies are engaging or being snookered into embracing, or at least publicly tolerating, fundamentalist critics. I brought along two short videos to illustrate this trend. We can roll the first one. This is about Anita Roddick. This is a tape made by the Body Shop, who does, actually, promotional tapes for Greenpeace. [Video played.] MR. ENTINE: The point of this--it's clearly a commercial for Body Shop and Greenpeace, but what it really does is attempt to demonize growth, in lots of ways, with the very power of video, and do it in such a way that you're also celebrating and iconizing the very, again, illiberal activities of organizations like Greenpeace. And the important thing, I think, the point I'm trying to make is that resonates with the media and this resonates, I think, in college campuses and elsewhere, where a lot of opinions are being shaped on something like this. And to a large degree, I think if this war is going to be won, it has to be won at the emotive level as well as the intellectual level. I just want to play you one more video before I wrap up, and that is also from the Body Shop. What I think is interesting about this is that this was a commercial done by the Body Shop, and ironically, as you will see, it's a company that is often a subject of attacks by NGOs--made it for the Body Shop, for free as part of a cross-promotion, which I think just indicates how willing corporations are to sell their soul out for what they perceive are green ideas, even though when they're not in the their best interest. And I think it's the danger of the marketing phenomenon as companies, in trying to kind of play it both ways, are really, I think, selling out ideals that not only are not in their best interest but also don't necessarily help the economy or the environment. If we can roll the second tape. [Video plays.] MR. ENTINE: When I did my investigation of the Body Shop in 1993, the Body Shop's fair trade commitment was .16 percent. It was less than Chevron, less than Exxon, less than almost any company that you could name. When I checked its contributions to charity, they were less than one-half of 1 percent of its profits, far less than any other company. But again, it's riding on these principles, and what we see is a pattern, more or less, of companies willing not only in their social marketing campaigns, but in their boardrooms, inviting people who represent the kind of ideology that you see so markedly exploited by the Body Shop. Another minute and I'll wrap it up. While social investment advocates claim that social investors are consciously working to build a more just and sustainable economy, there is an unbridgeable gap between rhetoric and reality. As with most NGOs, perception and anti-corporate ideology, not corporate reform, drive the movement. The rating systems that have evolved are based on superficial litmus screens, judging social propriety and social conventions. They lack a coherent moral, ethical perspective. They confuse social liberalism with ethical behavior. They systematically underplay key aspects of corporate behavior, including corporate governance and transparency, and overplay facile moral notions. They reflect the personal ideologies of those who conceive the ratings and collect the data. Social investing remains trapped in an anachronistic paradigm. Social investing principles and databases are hopelessly flawed proxies of corporate social responsibility, which is a real concern of mine. Although social investing has demonstrated that it can be an effective brand marketing strategy, it does not fulfill its stated rationale of promoting systematic investment in good companies and effecting positive social change to do good. Moreover, by implicitly encouraging the belief that the intentions of a business can be judged distinct from the economic impact of a company, social investing may promote, and does promote, corporate behavior that is neither socially progressive nor ethical and may result in adverse consequences to stakeholders. To date, social investing has drawn modest but increasing interest from institutions and mutual funds that view it as a potential brand with appeal to niche investors. Nonetheless, it continues to draw outsized and consistently positive media coverage, is increasingly being characterized and often perceived as a proxy for good corporate citizenship. It's influence and potential for mischief dramatically exceeds its small financial footprint. The liberal wing of the social investment community is forging an increasingly close alliance with NGOs. I believe this alliance, because of the dollar amounts in play--hundreds of billions of dollars, if not more--are a key factor in the rise in influence of NGOs. By and large, under the guise of corporate reform, this unholy alliance is out to destabilize free markets in the name of promoting their agenda. In many cases, naive corporate reformers within corporations and in government are welcoming them. This is an unsettling trend. Social investing is a mutant iteration of the NGO octopus, and perhaps the most insidious going forward. Thank you. [Applause.] MR. SMITH: All right, we've got some time for questions. Let me start, because it's sort of my prerogative. Marguerite, you have made a point about the European Union. I think all of us, at one time, at least, were excited about the possibility of a new federal society, a new federal continent joining the United States. And yet, as you pointed out, the EU seems to be following more the U.N. model of less transparency and bureaucracy and so on. Do you have any idea why they rejected a federalist model along U.S. lines and to what extent the forces you've indicated might have led that? MS. PEETERS: Well, first of all, I don't think it's too late. There's a threat that the Socialist Party and the leftist forces take over the process of European integration. And as Jeremy Rabkin mentioned, the Commission is more leftist than the EU member states. But I think it's never too late to try and restore this Atlantic friendship. I do believe that now is a time of choice. It's a crucial time. And before this whole global agenda, you know, really takes shape through, for example, the U.N. strengthening--well, I believe that the U.S. has to do everything it can to try and restore the relationship with the Europeans. MR. SMITH: The challenge, I think, is partly what we're addressing here, and your visit here obviously has something to do with that. Jon, let me ask you a question. You've obviously shown what corporate apologists can look like. And the one thing I'm always amazed about is the quality of their advertising. I have never--well, I've only rarely seen any ads on our side of that quality. What can we do to get beyond the corporate apologists and get to the media people who could help us put out things like that for free a market economy? MR. ENTINE: The media people, I guess. Well, I think that they recognized long ago that these issues are not won in the mind, they're won in the heart. And so they--you know, television, by its very definition, is a very visceral medium and I think that they recognize the importance of imagery and symbolism. And everyone I know in the social investment community, in the activist community have always teamed with television from very early on. I think it really means--I think as the conservative NGOs in this country have adopted in recent years--being more aggressive in that area, recognizing that you can't just win the intellectual argument, and if you're going to win the argument on other levels, you have to compete with the tools that the others use and have perfected. And that means a commitment to media and not being afraid to be emotional on issues. I think there's a reluctance sometimes, because you feel responsibility to only say what you mean, and obviously I think the constraints of NGOs are not nearly as tight, and the exaggeration that they engage in, the hyperbole really aids their cause. QUESTION: I just had a couple of-- MR. SMITH: Give your name and-- QUESTION: My name? It's Elizabeth Wood. I'm from Essential Information. And I just had a question about you seemed to--this is for Marguerite. In your talk you focused a lot on participatory democracy and how you see it as conflicting with the established representative democracy. And I don't really see those two things as being mutually exclusive. So I thought if maybe you could explain a little bit more about how you--what you have against participatory democracy. MS. PEETERS: What I have against, you know, the draft constitution, it's the separation of participation from representation. I don't see any reason why participation should not be integrated in representative democracy, as it is in America, for example. America is the most participatory democracy in the whole world. Anybody can participate, express his or her views, but it's within the framework of representative democracy. In the EU draft constitution, these principles run in parallel and they're not integrated, which means that NGOs and anybody who belongs to a participatory democracy can do his business uncontrolled by the elected. There's a lot of informality in the way the EU interacts with NGOs. Everything happens in an informal way. The NGO takes the initiative of getting in touch with an EU bureaucrat and expresses, you know, their position, and the EU bureaucrat would integrate that into his policy making and nobody would know it. And it's not controlled by the elected, by the European Parliament. Of course, the legislation formulated by the Commission has to go through the approval of the European Parliament, but the policy making process is not transparent. I don't know if you understand what I'm saying. This is my main problem. MR. SMITH: Remember, our luncheon speaker mentioned the landmine issue, and there were groups who participated in that by lobbying their home governments. They went through representative government institutions that were participating, but in a channeled way rather than in a totally parallel way. QUESTION: Jon, on the ethical investment or--it comes in different names--I think we have to be a bit more positive on this. There was a big push in Australia on this. We got involved in it quite extensively. And they've been knocked back because the returns started plummeting. They were in dot-coms, they shifted around a lot. They've led--in fact some of them, their trajectory looked like that of a rocket--zoom, and then straight down. And they are struggling now. A whole range of the ethical funds pulled out. It might have been just limited to Australia. But in the end, the hope is that returns, when the baby boomers get old, they look at their losses, they're going to get serious and they're going to start questioning some of this stuff. MR. ENTINE: Well, I hope so. If you look at--the paper that's included as part of this is just that analysis, that a lot of it was serendipity on their part, that the industries that the social investment community focused on happened to be industries that happened to do particularly well during a very narrow period of time, and all those academic studies that justify the so-called success of these are based on, again, an unrepresentative sample of how the market performs. Nonetheless, the concept of so-called incorporating social factors--independent of financial factors, not linked to, which is what's disturbing to me--social factors in decision making about what companies you might invest in is spreading as a concept. Despite the problematic nature of many mutual funds in the United States and Australia, the overall-dollars, because of pension funds beginning to adapt social factors, is still on the up-rise. So I'm hoping it's a fad which has peaked and is on the way down. But, you know, again, like the NGOs, there's some synergy here on issues that makes me think that this is an area, just like NGO watch, we need social investment watch. QUESTION: Ian Murray with CEI. I have an observation and a question for Marguerite. The first is the observation that although Article 1 of the European constitution which you focused on is evidently dangerous, there are two whole more chapters to the European constitution, bringing it up to, in draft form, to around 200 pages. This includes Chapter 2--or Article 2, the Charter of Fundamental Rights, which includes such fundamental human rights as the right to strike. And then there's Article 3, which talks about the Europeans' competences and the policies that the European Union will follow in those competences. Which includes--only actually it just reads to me like an NGO wish-list. You have things like, in Article 3.125, if you can believe it, you have the precautionary principle, and the polluter-pays principles, for instance, are written into the European environment law forever as a result of that. And that brings me on to my question, which was I don't think this is very much just a question of the Sixth Socialist International or anything like that. All these items passed through the constitutional convention without much deliberation. Now, when we look at European governments, we see that there's theoretically conservative governments in France, in Spain, in Italy, in the Netherlands, in Denmark, and I'm sure there are in others. But regularly it was only the supposedly politically correct Blair government that was actually objecting to any of these principles. It seems to me that conservative parties on the continent of Europe seem to have sold out to the NGO agenda. I'd like to know what your views are on that problem. MS. PEETERS: No, I agree with you. First of all, I had 20 minutes and I didn't read but one-fourth of my paper. I agree with you that, you know, the Charter on Fundamental Rights used globally oriented human rights discourse; and Chapter 3 the same. I mentioned the European Socialist Party because I believe that they are leading the process, which doesn't mean that, you know, the other parties and the conservative governments do not subscribe to the general agenda. But they're not leading. I believe that the conservative governments are just following the leadership. And this is what has been happening at the global level with the concepts of sustainable development. It was Mrs. Brantlund [ph], who belonged to the Socialist International, who coined the phrase and had it adopted at the U.N. and made it a global consensus. So she was leading, the socialists were leading, and then the whole world adopted the consensus. I think that we are presently in a situation which is not only unhealthy, but dangerous. Because we live in a world of co-existence within one global consensus, there are different interpretations, but the issue is who has the power and who has the most influence in the interpretation. And as I was interviewing these NGOs and I saw the influence that they had on the drafting of the constitution, I realized that, you know, they were in fact inspiring and leading. So it's the left, again, that is leading. But I agree that in Europe especially the divide between the left and the right is much more blurred than it is in America, for example. QUESTION: John Fonte. This is just sort of a throwaway. I was visualizing a really aggressive campaign, particularly with what Mike was saying about people in Africa starving. Why not some negative films--people starving in Africa, and who's responsible for this? And then name the NGOs and EU and the people that are preventing genetic food getting to starving Africans. QUESTION: This question is for Jim. I recently had the pleasure of going to an Exxon Mobil shareholders meeting, where many of these NGOs were well represented. And what they do now is, you know, they buy shares of stock in a company. They might buy one share of stock, and that entitles them to introduce shareholder resolutions. And I agree with you that our side has to start fighting fire with fire--produce our own ads, for example, with emotive images. But one thing I'd like to get your reaction to is what about people like us buying a share of stock and introducing shareholder resolutions which present a pro-market view and have a whole set of whereas clauses and findings exposing the fraudulence of these NGOs, and then asking the company to decide to reject these social responsibility proposals--something like that? MR. ENTINE: I think it intuitively sounds good, but I think there's a fundamental problem to that. And I think the Democrats, in trying to fund a liberal radio network, have faced some of the same problems from the opposite--is that conservative radio is so interesting because it is hyperbolic. Whether you agree with the issues or not, there's heat behind that. And it's entertaining, it's interesting. And when the liberals get on, it's boring. It's just not interesting. They may or may not be right on many of these issues, but they're not compelling. And I think that the issue here is heat. What you're talking about is bringing reason to the debate. I'm not saying it shouldn't be brought, and the companies will bring that, but I'm not sure it will achieve the goals. And again, I'm not saying you should abandon it, but I don't think it offers quite the opportunity that--I think that companies just need to stay the course. And I think that there's been a theme throughout this conference, which is that you don't have to capitulate. The sense that governments and corporations have to engage in stakeholder dialogue I think is a dangerous conceit. It sounds good on the surface, but is more than just a slippery slope, it's insidious in some ways because it essentially abandons the responsibilities of corporations to their stakeholders--and by that I don't just mean shareholders. I mean the real stakeholders, even their own employees in the communities in which the operate. And I think if they really take that seriously, they frankly are open to suits from some other stakeholders for engaging in dialogue with NGOs who have no reason to be brought into the boardroom or even engaged, necessarily, in some of these meetings. MR. SMITH: Well, this is coming to the end of this panel. What I'd like to do is, you know, point out I think this whole day, certainly this panel, has given us a flavor of NGOs and the tools they use. Business ethics, corporate social responsibility, social investment have become a massive force in the world, and mostly that it's come about by their ability, largely unchallenged until groups like this start getting more effective, to assume the moral mantle of not only humanity, but the Planet Earth itself. Most of us, I think, believe that when this is all put to rest, we'll see once again that these are the same old socialist wines in new NGO globalist bottles--with a makeover, as it were. But those are the competing visions we have today. And the visions are important ones. This starts today. Gary and Dani are going to be giving us a final wrap-up here, but I think that what has happened--what started here today is the beginning of something very, very important. Exactly what tools we pick, whether there are asymmetries in the type of tactics we can use versus the left is a question to be addressed in further forums. But the challenge of doing something is critical, and this is a start. Let me ask that you thank our panelists for their part. [Applause.] MR. SMITH: And now, Gary and Dani. MS. PLETKA: I'm just going to take a quick second to say thank you and then turn it over to Gary. So with that announcement, thank you, all, but especially all of our wonderful panelists for their very, very hard work; Gary and Mike for their just fantastic and disproportionate contribution to this entire event; Molly McKew, who's not here but who did so much work; and all of our interns who are taking notes for our summaries. There will be a full transcript on our website as well and, I'm sure, probably on IPA's as well. I thought it was super, fascinating, and the beginning of what I hope will be many, many good shared events. With that, I'm going to turn it over to Gary and have him wrap up properly. MR. JOHNS: Thank you, Danielle. Really, to thank the AEI and all of those good people who assisted today to make this a very pleasant and robust conference, to all of those who chaired and have been speakers. There will be a book coming out of this, and I'd like to have--it would be good to have Kenneth Anderson's magnificent speech at lunch incorporated into that. Well, let's hope we all meet again at some stage in the future. But any of those who want to continue the conversation, meet me down at the Topaz Bar after this. Thank you. [Whereupon, the conference was concluded.]</body></html>