Today’s episode is one of the craziest I’ve ever looked into. It made me feel sick, a feeling I haven’t had since my days as a cop investigating similar cases, though never on this scale. The details are overwhelming.

We’re talking about a young girl named Virginia Giuffre. I might be pronouncing it wrong, so I’ll just call her Virginia. She filed a lawsuit against Ms Maxwell for her involvement in Virginia’s sex trafficking when she was a young girl, starting at 16. Throughout this deposition, the attorney tries to catch her in minor discrepancies from events dating back to 1999 and 2000. Originally, Virginia said these events occurred in 1999, but it turned out to be in 2000, information she likely got from her attorneys during another deposition. However, this doesn’t negate her statements.

Before diving into the individuals involved, like Bill Clinton, Prince Andrew, senators, and people from the Obama and Bush administrations, it’s crucial to understand Virginia’s background. At 16, she was a runaway with family issues, living with her boyfriend, trying to make money and get her GED. She was working as a receptionist at a massage parlour when Ms Maxwell approached her. Maxwell offered her a job with Mr Epstein, which seemed like a great opportunity for Virginia to get her life together. Her parents were supportive of her becoming a certified massage therapist, so she eagerly accepted the offer.

Through this document, details emerge that are too intricate to cover fully here, but the key points involve Maxwell directing Virginia to engage in various activities. The attorney questions her about specific names, like Thomas Pritzker, an American millionaire and businessman. Born in 1950, he would have been 50 years old in 2000. He is still alive and is known for being the executive chairman of Hyatt Hotels Corporation.

Moving to page 189 of the document, the attorney asks Virginia to name people Ms Maxwell directed her to have sex with. She names Prince Andrew and others, like Glenn Dubin, an American billionaire hedge fund manager. Dubin was born in 1957 and is involved with Highbridge Capital Management and the Robin Hood Foundation.

The document also mentions Jean-Luc Brunel, a French model scout who led an international modelling agency. In a misquoted article, Virginia clarified that while she wasn’t on a helicopter with Clinton, Maxwell and Epstein often bragged about knowing prominent figures, including Clinton.

There are even pictures of Clinton receiving a massage from one of Epstein’s victims. He claimed to have a stiff neck during a layover en route to Africa for a humanitarian trip with Epstein and his entourage.

Before we continue, a word from our sponsor, Shopify. Many of you have asked for merch, and it’s finally here, built on Shopify. Shopify is the global commerce platform that helps you sell at every stage of your business. Whether you’re starting an online shop or expanding to physical stores, Shopify is there to help you grow. It powers 10% of all e-commerce in the United States and supports entrepreneurs worldwide. Sign up for a $1 per month trial at shopify.com/speakthetruth to grow your business. The link is in the description, along with our new merch store.

Now, let’s return to the story. Virginia was 16, estranged from her parents, living with her boyfriend, and trying to get her GED. She was approached by Maxwell and ended up entangled with Epstein and others. Her statements are detailed and shocking, revealing the depth of Epstein and Maxwell’s network.

Every American and global citizen should demand a deeper investigation into these events. I’m out of time for today, but thank you for joining the Speak the Truth podcast. I’m your host, Matt Tardio. We’ll dive deeper into these allegations in future episodes. Check out our Shopify account. Peace, love, happiness, and God bless. I’m out.

 Thanks, Speak The Truth

The post Unraveling the Shocking Jeffrey Epstein Scandal: Unveiling the Truth appeared first on Singapore News, Free Credit, Gaming, Finance & Tech.

This type of fraud has became popular in August 2023 and is still ongoing, and it’s very hard to make a complaint.

Complaint registered with the Financial Superintendence of Colombia

After registering Bancolomias crime, They replied with a canned email full with erroneous information.

Bancolombia oficina principal, el mas probable lugar donde roban plata de sus cuentas.

¡Hola!,

Estamos trabajando para ti, y te contamos que tenemos nuevas herramientas que permiten agilizar el proceso de gestión de documentos de tu queja o reclamo radicado, por ello, requerimos que los soportes que enviaste los adjuntes a través de nuestra página web. Si tu caso es diferente a una queja o reclamo, puedes comunicarte con nuestro equipo de asesores:

1. Entra a www.bancolombia.com
2. Da clic en Solicita Documentos
3. Busca la opción Gestiona tu información documental <- Doesn’t exist on the current website
4. Selecciona la opción “Adjuntar documento a una queja o reclamo, y ¡Listo!

Si lo prefieres, haz este proceso desde la App Bancolombia por el menú trámites y solicitudes, opción “Adjuntar documento a una queja o reclamo”. <- Doesn’t exist in the app either

¿Un plan C? Si no puedes realizarlo como te lo indicamos, tienes la opción de acercarte con tus documentos a nuestras sucursales físicas. Ten a la mano tu número de identificación y el número de radicado. <- I tried going to the office several times but I never got any help.

Este es un mensaje automático, por favor no lo respondas.
Darte la respuesta que mereces, es nuestro compromiso… Siempre cerca de ti.

Saludos,

Ese numero de Bancolombia para quejas 6053618888 tampoco funciona. A veces tiene senal de estar ocupada, a veces nunca contesta o desconecta, a veces contesta con un mensaje diciendo que todos los sucursales son ocupados. <- Hasta ahora no funciona, sometimes it gives a busy signal, sometimes there is a voice saying all asesores are busy, I have never managed to speak to an actual person by calling the number.

What you have to do in order to file a complaint

Register your complaint with Superintendencia Financiera de Colombia and
Defensor del Consumidor Financiero. You can also try Casa of Consumers in Barranquilla at Calle 38 No 45 – 53 and the Defensor de Consumidor.

Bancolombia is making it hard to file a complaint on purpose

A victim that lost 14 millones sin recibir notificaciones de las transferencias explains: They refused to help in the office, they just lied and told me to call Nequi and that didn’t work. There is no solution and so far I have not even been able to get a bank statement that shows whre my money was sent. I believe Bancolombia is a criminal and corrupt organisation. I also agree with the author of that article that the best you can do is to first make a complaint with all the government branches mentioned above. Since Bancolombia is a reguated bank, they are required to supply correct information. They have only lied, stalled and claimed they can’t help me. This is also something that I will report to the Superintendencia Financiera de Colombia.

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As I’m sure you’ve seen by now the Biden administration just created a new disinformation governance board inside the department of homeland security and that’s like the worst idea I’ve ever heard. Its very existence seems like an obvious first amendment violation. No one should ever be okay with the government deciding what is true or false and the head of the new Agencynina Jankowitz is a perfect example of why. If you look back at her public statements over the years you’ll see that she has a lot of trouble recognizing fact from fiction herself. She asserted that the hunter Biden laptop story was a Russian hoax. It’s not. She praised the Steele dossier which has now been thoroughly debunked and was built around hilariously unreliable sources. Jankowitz has repeatedly demonstrated that she doesn’t trust individuals with free speech or personal freedom in general. We simply can’t trust her to be an infallible arbiter of truth. We can’t trust anyone to do that. Shut it down. Shut it down deal breaker.

Video and transcript by Foundation for Economic Education (https://fee.org/)

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Fear and admiration – this is how much of the world has reacted to China’s phenomenal economic growth of the past 15 years. Such has been the response to all economic behemoths throughout history. In China’s case, the admiration is certainly well deserved – for halving its extreme poverty between 1990 and 2001, if for no other reason. In the long run, however, the fear – which is quite naturally focused on competition – may be exaggerated. What is good for China is likely to prove good for the rest of the region, if not the world. China is keeping the world economy afloat, and the point is not to put a brake on its momentum, but to nudge demand in Europe and Japan, lifting all boats.

Inside and out

China’s national income has been growing at the unprecedented rate of almost 10% a year since the mid-1980s. There are compelling internal factors for this growth: fast-rising domestic demand for consumption; high domestic investment and savings rates; low labour costs, aligned with high productivity; prudent macroeconomic management; and expanded manufacturing capacity. External factors include the country’s growing export markets, its greater integration into international production chains and its increasing international competitiveness. One of the most striking external factors is the astounding rise in foreign direct investment (FDI) since the country started opening up: China was the number two recipient of FDI in 2004. These phenomenal inflows have supported China’s export success through technology transfer and managerial learning.

China’s rapid ascendance as an economic power started in its own back yard, thanks to its interconnections with the economies in south-east Asia. Since the early 1980s, they have been an important destination for its exports, and their investment helped both to lay the groundwork for China’s integration into the world economy and to bridge an external financing gap.

Initially, the main foreign investors were overseas Chinese from Hong Kong, Malaysia, Singapore and Taiwan. Even today, the bulk of China’s inward FDI still comes from inside Asia. Geographic proximity, shared cultural traits and extensive overseas Chinese networks have minimized the transaction costs, while the sheer size of the domestic market and the competitive costs of labour and infrastructure have long made the country a magnet for investors.

Intra-industry trade, generated by multinational corporations (MNCs), has been a central feature of south-east Asian regional production networks and supply chains, especially in the information technology industry.

This trade – primarily in intermediate inputs, spare parts and semi-finished products and services – is the result of the great complementarity between China and other economies in the region. (China’s imports from the region have been growing at almost 18% a year since 1995 and its exports to the region at almost 14%.) The next step for many of these MNCs was simply to relocate their production to China. The country, therefore, plays an increasingly important role in the region’s production and supply networks.

Through its growing imports, the dynamic Chinese economy has provided a significant macroeconomic growth stimulus to the south-east Asian region and beyond. China is an increasingly-important source of demand for capital goods, intermediate products and consumer goods from elsewhere in Asia.

On balance, most Asian countries appear to gain from China’s success, although these benefits differ considerably from one country to another. The region’s more-advanced economies have gained more from China’s dramatic growth than some of the less-advanced. The former enjoy significant trade surpluses with China by exporting machinery, equipment and intermediary products, while the latter sometimes compete with China head-on over consumer goods in some third markets.

Triangular trade

The new opportunities this has created are being enjoyed not just by countries in the region but also by many other developing countries around the globe. South-south trade is burgeoning: more than 40% of developing countries’ exports are to other developing countries, and trade among them is increasing at the rate of 11% a year. Chinese exports, in particular, have grown rapidly worldwide, including to developed countries, especially the US. In 2004, America was China’s largest export market, accounting for about one-third of all its exports.

Given the combination of strong regional production links and China’s integration into the world economy, intra-regional trade is frequently only an intermediate phase. China serves as the final stage for many goods emerging from international production chains that, at earlier stages of production, involve other economies of the region. As a result, Chinese exports to the rest of the world, particularly to America and western Europe, have a considerably higher content of imports from other Asian countries, a phenomenon known as “triangular trade”.

One result of China’s export success has been an increase in America’s bilateral trade deficit with that country, which amounted to $12 billion in 2004 alone – hence the American call for China to allow the renminbi to appreciate. However, in light of the triangular trade relations within Asia, the bilateral trade disequilibrium between the US and China should not be viewed in isolation from the overall global trade imbalances. China is not only a powerful exporter, but a dynamic importer as well, stimulating economic activity worldwide.

Between 1995 and 2004, China’s exports grew much faster than world trade, at more than 15% annually. Much of its export earnings went to finance imports, including raw materials from developing countries. Imports grew even faster than exports, at more than 17% a year. Iron ore imports rose tenfold between 1990 and 2003 alone, making China the world’s largest importer of that commodity. It holds the same status for natural rubber, tropical sawn wood, pulp and paper, and soybeans. Its petroleum imports account for more than 30% of the incremental global demand for oil, and the country’s import bill for primary commodities climbed almost $50 billion in 2004, up 60% over the previous year. Nor was this hunger limited geographically: imports from sub-Saharan Africa soared by 30% a year between 1995 and 2004.

China’s American surplus

Dominating the story of China’s trade success is its surplus vis-à-vis the US, largely because China accounts for most of the recent rise in the American current account deficit. The question arises: is this imbalance sustainable or will it trigger a global crisis? Some perspective is in order here. The American trade deficit with all Asian developing countries, including China, accounts for just over a third of the total American trade deficit. The lion’s share of that deficit originates elsewhere, with the European Union (EU) representing some 17% of the total; its North American neighbours, roughly the same percentage; and Japan, almost 12%.

Leaving aside the role that should be performed by other major players in the world economy, it would be misplaced to ask China to slow its growth. On the one hand, China desperately needs to reduce poverty, absorb the workforce moving inexorably out of the rural areas, narrow the income gap and ensure a more equitable share in rising prosperity. It also needs to improve its human capital, environmental sustainability and the efficiency of its bureaucracy.

On the other hand, the rest of the world stands to benefit greatly from China’s continuing growth, expected to remain at about 7% to 8% a year over the next five years. The consumer market there is now the world’s seventh-largest and will go on generating tremendous demand for capital goods, primary commodities, consumer goods and intermediary inputs.

At current growth rates, Chinese consumer spending will make the country the world’s second largest market in terms of household consumption by 2014, according to recent forecasts by Credit Suisse First Boston, an investment bank.

In my view, the solution lies in stimulating the currently sluggish or even stagnant demand growth in major developed economies, particularly Japan and the EU – neither of which, unfortunately, seems to be following this path. A strong EU and Japan will enable China to continue its current growth pattern and lift all boats for the world economy as a whole. The world needs a strong China as much as China needs the world.

CV Supachai Panitchpakdi

Supachai Panitchpakdi, a former deputy prime minister of Thailand, is secretary-general of the United Nations Conference on Trade and Development. He was director-general of the World Trade Organization from 2002 to 2005.

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More than 50 years ago, a positive vision of world peace and prosperity prevailed among the postwar architects of the global governance system. The United Nations and the Bretton Woods institutions were created in the belief that lasting international peace and economic progress could be built only on solid foundations of international cooperation. Trade and investment were recognized as crucial factors in promoting political and social freedoms and in raising standards of living.

But the postwar economic order that emerged did not just endorse the “magic of the marketplace”. It was also based on a broad consensus that social safety nets and balanced development were every bit as important for stability within and among nations.

Much has changed since then, of course. In 1945 the nation-state was the principal actor in the international arena. Today transnational corporations and civil society organizations have assumed an important role.

Technological revolutions have transformed global communications and transport. Networks of production and finance now span the globe. The boundaries of national economies have been blurred. This openness has come to be known by a single word – “globalization”.

While the expansion of trade and investment has benefited the world economy and helped to alleviate poverty, globalization remains a fragile and incomplete experiment. States feel their sovereignty encroached upon, as so many decisions must take global concerns into account.

Most importantly, billions of people remain excluded from the opportunities of the global marketplace, as half the world’s population must eke out a living on less than $2 a day. Our challenge is to make openness work – to adapt the international system to today’s realities, and to ensure that all people and all countries feel that they have a stake in the system’s success.

The private sector is the primary engine and beneficiary of globalization. Its investment decisions can mean the difference between growth and decline. And its production methods can make the difference between progress and pollution.

Such power cannot be separated from responsibility. The choice is simple: corporations can do more to help reconcile markets with the wider needs of society – they can resolve to be better global corporate citizens – or they can be perceived as part of the problem, with all that this entails.

The Global Compact initiative that I launched in 1999 offers one possible vehicle for responding to this challenge. It asks business to embrace nine universal principles in the areas of human rights, labour standards and the environment, and to enact these principles within their spheres of influence.

I picked these areas because I was worried by a severe imbalance in global rule-making: while there are extensive and enforceable rules for economic priorities such as intellectual property rights, there are few strong measures for these other concerns, which have such a direct impact on human welfare.

Originally intended as a call to action, today the compact involves not only business but also labour federations and nongovernmental organizations.

They are finding it a useful platform for building consensus on important social and environmental issues, for initiating joint projects on the ground, and for bringing universal principles into boardrooms.

Business leaders have already shown that there is much they can do within their spheres of influence, on their own or with the compact in mind. Here are some examples.

HIV/Aids
Volkswagen in Brazil and DaimlerChrysler in South Africa have introduced expanded “AIDS Care” programmes.

Corporate culture
Companies such as Novartis, Pearson and Spedpol have incorporated the compact’s principles into employees’ job responsibilities and criteria of success throughout their worldwide operations.

Labour relations
Statoil, Telefónica and other companies have used the compact’s principles to reach global framework agreements that assure their workers fundamental rights and principles at work.

Tolerance
Volvo and five other companies are combating discrimination and promoting diversity with a joint report and awareness campaign, “Discrimination is Everybody’s Business”.
Environment

BP has set a new standard with its internal emissions trading system, reducing greenhouse gases, and STMicroelectronics is well along the path of developing environmentally friendly products.

These and other company-led initiatives and projects are more than micro solutions. They set new examples and, by inspiring others to do likewise, they can bring about systemic change. But many issues can be tackled only if different actors join forces. Through its learning and dialogue forums, the compact offers a platform for this as follows.

Poverty
The compact has led to dozens of partnership projects in developing countries, addressing issues such as access to water and energy, health care, education and job training.

Transparency
Companies, trade unions and NGOs have developed a platform for action to break the cycle of corruption and to foster transparency and good governance.

Conflict zones
Companies and NGOs have developed guides, now being field-tested, which aim to ensure that business activities do not aggravate conflict but support efforts towards peace and reconciliation.

Least developed countries
More than 30 companies, labour and civil society organizations have teamed up to promote investment, overcoming economic and social barriers that might have prevented it.

None of this is meant as a substitute for action by governments, or as a regulatory framework or code of conduct. Rather, the compact is a voluntary initiative, a platform for showing how markets can be made to serve the needs of society as a whole.

Businesses might ask why they should go down this path, especially if it involves taking steps that their competitors might not.

The answer is that, sometimes, doing what is right – for example, through eco-efficiency or creating decent workplace conditions – is in the immediate interest of business. Sometimes we must do what is right simply because not to do so would be wrong. And sometimes we do what is right to help usher in a new day of new norms and new behaviours.

The compact’s work for responsible global corporate citizenship is but one response to the challenge of making openness work. Together, we can and must move from value to values, from shareholders to stakeholders, and from balance sheets to balanced development.

Only then will we fill the voids and gaps in global governance. And only then will we shape globalization so that its benefits are more widely shared, and place development on a more sustainable footing.

For that we shall need leadership. For that we must all be willing to take global cooperation to a new level.

Kofi Annan is secretary-general of the United Nations. He was awarded the Nobel Peace Prize in 2001.

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The major players on both sides of the war on terror appear to be making the same value proposition to the world: that force, and not law, should govern international relations.

But force has always been used to determine relations between states. The terrorist attacks on 9/11 and the subsequent war on terror have simply reaffirmed the place of force in international relations, in the guise of yet another rivalry between two belief systems.

Although the forms of competing belief systems have changed, the game continues in much the same way as before. At the turn of the previous millennium the Crusaders annihilated not only Muslims, but also Jews in Jerusalem and Christians in Byzantine. Shortly thereafter, Christians fought among themselves from Catholic and Protestant camps, while Sunni and Shia Muslims turned on each other, as did Turks, Persians and Arabs.

Even though the Treaty of Westphalia may have encouraged the separation of power between church and state, the same pattern of conflict nevertheless emerged through subsequent rivalries between fascism and liberalism, colonialism and liberation, and communism and capitalism.

Underlying the rivalries between belief systems is a tension between power and principles. It is in the nature of states to expand their power and reach. It is also in the nature of human beings to co-exist with one another on the basis of formal or informal principles.

When rulers, who are entrusted with managing human affairs on behalf of society, maintain a balance between power and principles, there is by and large relative stability. But when this basic balance is disturbed, with power superseding principles, human nature tends to react – and the result is generally explosive.

International agreements and institutions, most notably the United Nations, embody an attempt to maintain this basic balance. Even though international law often fails to regulate force in practice, it at least provides a theoretical basis for the conduct of international relations.

However, the use of illegal force in the name of Islam, for example, by a small but effective fringe, is dangerous not only for its human toll but also because it seeks to undermine state sovereignty.

Extremist Islamic groups do not recognize sovereignty of states; they seek to establish divine sovereignty. They do not accept compromise or negotiation, but believe they will only realize their absolutist visions through force.

By a similar token, while the United States claims to use force to promote freedom and democracy, in reality it tends to deploy such force only against those with whom it has a vast asymmetry of power.

For instance, it attacks a relatively weak Afghanistan and Iraq, whereas it cajoles Pakistan and North Korea as they own weapons of mass destruction, and Saudi Arabia on account of its vast oil reserves.

So, in combating states that are weak, while on the other hand attempting to negotiate with those states with a degree of strength, the United States has pursued ground rules whereby superiority of force decides the basis of international relations.

Changing nature of terror

While extreme Islamist groups justify terror in the name of God, their real intention is to consolidate power. Violence often originates from a genuine desire to redress local grievances, but it can also be motivated by greed.

Terrorists and their sympathizers might advocate a society based on religion because only in such a society can they become the governing elite, a role which the modern technocratic society cannot afford them.

Terrorists spurn democracy because they want to govern without accountability. Even when they galvanize people against repression and corruption of those in power, the underlying objective is to change the social and political order so that the terrorists themselves can become the governing elite.

In their effort to expand power, religious zealots employ alienated and unemployed youths as low cost soldiers. Currently, there are 10 million jobless young men between the ages of 15 and 35 in the five countries of the “arc of instability” – Afghanistan, Iraq, Iran, Saudi Arabia and Pakistan.

In addition, there are signs of extremist versions of Islam gaining popularity in parts of southeast Asia and Africa, where between 10 million and 20 million young men are underemployed or unemployed. Thus, a massive force of competent, educated, jobless and alienated young men is available to extremist groups.

As the first step for establishing divine sovereignty, extremist Islamic groups have sought to take over the states in which they were based. Their ambition was initially confined to the local environment.

Eventually, however, the Muslim World League and the Council of Islamic Coordination, financed by petro-dollars, paved the way for transnational terrorism. Islamic extremists also received support from the United States, which was eager to thwart communism and nationalism.

While the Muslim World League propagated Saudi Wahabi Islam, Iran exported Shia extremism after its 1979 revolution. The earlier organizational vehicles were created under direct state sponsorship. Then, in the 1990s, Osama bin Laden brought together non-state actors in his International Islamic Front for Jihad against Crusaders and Jews, albeit with indirect support from a few states.

In the first two years of the war on terror, Osama bin Laden’s al-Qaeda has been weakened through the killing or capture of 3,100 of its estimated 4,000 members. But the Islamic International Front is still alive and thriving, and al-Qaeda, having refined its role, is now mainly providing strategic advice, skills and funds. The 30 affiliates of the International Islamic Front now carry out operational tasks.

The latter executed attacks on various international targets in October 2002 and May 2003. As the network spreads worldwide, its ability to use force at will increases substantially.

A larger threat comes from the terrorist groups that can mobilize the masses – groups that are more menacing than secret and small organizations like al-Qaeda. For instance, Hamas in Gaza, Hizbollah in Lebanon, and Lashker-e-Taiba in Pakistan effectively run mass factories of terror.

Moreover, they combine militancy with social work, assuming business activities and entering politics, thus ensuring an almost limitless supply of funds and manpower. They run mosques, hospitals, schools, clinics, refugee camps, and small businesses, and blend into the societies in which they operate. Lashker-e-Taiba, for one, has a 190-acre campus, 150 schools and over 100,000 workers at its disposal.

Weapons of mass destruction The greatest danger of terrorism, however, arises from weapons of mass destruction – a threat compounded by possible collaboration between state and non-state actors.

Some still hold that such collaboration is unlikely, arguing that it is not in the interest of states to do so for fear of blackmail. Moreover, they say, there is no evidence of any terrorist group possessing a nuclear bomb. Furthermore, nuclear weapons require sophisticated delivery vehicles, which are extremely difficult to obtain without collaboration.

The evidence suggests a disquieting story: the International Atomic Energy Agency has reported 18 incidents of the smuggling of enriched uranium or plutonium in the decade from 1993 to 2003.

A large quantity of weapons-grade fissile material is not properly guarded, especially in the former Soviet Union. The worry is more acute, given the large number of poorly paid or unemployed nuclear experts around the world.

There are two kinds of threats associated with nuclear weapons. First, terrorists can either directly or indirectly take over a state having nuclear weapons.

This is particularly conceivable in a military regime. Typically, the military or its intelligence agency may use terrorist groups to serve its end. As the reliance of the military on the terrorist groups grows, the latter expand their support base in the ranks of the former.

Furthermore, if the terrorist groups are allowed to create a popular base among people, they can tighten their grip on the military. Over a period of time the military, or some of its factions, can become a tool of the terrorist groups in a reversal of roles.

Second, supporters of terrorism in a nuclear state can covertly help terrorists to acquire fissile material. The terrorists might not be able to use it to manufacture a sophisticated warhead but they can make dirty bombs.

If they coordinate an international attack of dirty bombs on several urban targets simultaneously, the physical impact of such acts may be limited in terms of area, but it would almost certainly terrorize society at large.

Finally, there is a risk of a terrorist group developing a biological weapon, which would be much easier to deploy than nuclear arms.

Constructing peace, deconstructing terror

In order to respond to the threat of force by non-state actors, the game needs new rules. As a first step, a comprehensive international action plan should be developed, featuring the following elements:

First, an international expert group should be established to prepare a composite index of terrorism, with benchmarks to designate terror groups on a regular basis.

It should also prepare a simultaneous listing of states that allow their intelligence agencies and other structures to provide inputs to terrorist groups in the form of bases, training, funds, arms, advice and organizational vehicles as host countries. The international community should be empowered to take action against such terrorist groups, their affiliates, leaders and host countries.

Second, a new treaty should be introduced, to complement the nuclear non-proliferation treaty (NPT), to monitor illegal transfers of technology or raw material required for weapons of mass destruction by states to non-state organizations.

All states, within or outside the NPT, which are suspected to have acquired technology or parts of warheads or delivery systems through smuggling or criminal activities, should be placed on a watch list.

Third, an International Shura of Islamic Scholars should be set up, to determine the issue of religious sanction for violence. Such a body, to be created at the initiative of the leaders of Islamic countries, should be comprised of independent scholars representing different streams of Islam, and not government officials.

Fourth, global conflict-resolution initiatives should be based on the four South Tyrol principles, according to which: violence is terminated by all parties; the territorial jurisdiction of the state from which a minority is seeking separation is honoured; in return the state guarantees the protection of rights by conferring special status on the minority concerned; and the two countries which may claim the conflict zone agree to forge a positive relationship based on the legalising of existing territorial control, trust and interaction.

Fifth, the international community should follow procedures under the UN Security Council to protect people affected by genocide as per the recommendations of the International Commission on Intervention and State Sovereignty.

The international community should endeavour to promote a judicious combination of hard and soft power to bring about a positive change.

Sixth, a multi-billion dollar Global Transformation Fund should be launched to transform the economies of developing countries, narrow the digital and skills divide, and enable youth to acquire education and capacity to deal with demands of the modern economy.

Seventh, a fair and open trading system should be agreed in the new round of trade talks, where agricultural produce and labour intensive products from developing countries find access to industrialized markets. This would create employment opportunities and therefore act as a disincentive to crime, conflict and terrorism.

Superforce, not superpower

While it is crucial to curb terror on the one hand, it is also necessary to develop the architecture of global security in such a way that the United States, or any one state or group of states, cannot use force at their discretion.

This is possible if the international community firmly commits to a multilateral approach and evolves proper norms, which standardize the basis for intervention and counter-terrorism action.

The United States, for example, has shown a preference for unilateral and bilateral approaches. In response other countries can withdraw cooperation or offer selective cooperation to urge the United States to agree to multilateral approaches.

The United States can ignore the international community in one instance, as in the case of the Iraq war, but not indefinitely. There are limits to its power, which is most graphically illustrated by its failure to browbeat slumlords in Baghdad and its inclination to compromise with warlords in Afghanistan.

The United States is better described as a “superforce”, and not the superpower it is often claimed to be. Whereas power has both physical and non-physical dimensions, force has only a physical dimension; the same applies to the United Sates’ might.

The United States accounts for 40% to 50% of global military expenditure, but most of it is spent on hardware and technology. The strength of the American armed forces is 1.4 million, out of which roughly half is army and marines and half is navy and air force. A decisive victory in the war on terror needs a competent and large army, while the navy and air force are useful in the early stages. However, the strength of the US army has proved to be inadequate to fight two enemies simultaneously.

With the changing nature of terror, the United States simply does not have adequate human resources to counter 30-odd groups at a time.

Furthermore, when groups adopting mass mobilization strategies take over states and societies, the United States will have to deal with huge human structures, far outstripping its army, marines and reservists.

The conclusive defeat of terror is only possible, if the United States seeks support from other countries, which have specialized know-how and skilled military personnel to respond to threats posed by various members of the terrorist network.

Besides manpower and specialized know-how, the United States also needs financial resources. It has proved incapable of meeting the security and reconstruction needs of Afghanistan and Iraq on its own. Its predicament will be very difficult if the fire of terror spreads to many parts of the world. It is not enough to be the largest economy with one third of the global GDP.

The rate of return of the United States in its war on terror is declining. The US-led efforts to freeze terrorist finances succeeded in blocking $100 million from October to December 2001, $25 million in 2002 and $11 million in 2003.

At the end of two years of its intervention in Afghanistan, the Taliban had resurfaced and, at the end of six months of its intervention in Iraq, US casualties were still mounting.

Still, it is important to note the distinction between any particular US administration and the American nation. The United States was founded on values of freedom, justice and trust. From time to time, particular administrations have deviated from America’s core national values in the pursuit of power.

In a particular situation, it may be possible for the administration to mobilize public opinion, by appealing to patriotism and through public relations, but this cannot last forever. A vibrant democracy will curb the aspirations of its leaders when they seek to expand power at the cost of principle.

Initiative for change

It would be naïve to expect the United States, or indeed several Islamic countries, to subscribe straight away to an international framework based on new rules. The initiative will need to come from other progressive countries, particularly those in Europe and Asia, who do not want to see the world degenerate into a devastating confrontation. Enlightened citizens from the United States and Islamic countries can create a domestic constituency for change.

Initiatives can be launched through dialogue between the United States and Europe, liberal and conservative Islamic countries, and between the West and Islamic nations. Other regional powers such as Russia, India, Brazil and South Africa can also play vital roles.

The process need not wait for the first step by governments. Yalta and Bretton Woods were conceived at a time when states occupied almost all of the political space. In the last 50 years, global civil society has gone through a kind of democratization. It is now feasible for thinkers, political parties, business corporations and non-governmental organizations to come together to create new intellectual architecture.

Ultimately, states will have to adopt and implement this. Although it would be unrealistic for civil society to ignore the role of states, it is not essential for citizens to wait for an inter-state discourse to set off the new rules of the game.

If global civil society does not take the future in its own hands, non-state actors with destructive potential will set the agenda instead. The events of 9/11 and other acts of terror demonstrate that terrorist groups are no longer willing to be mere tools of states; they want to shape the world order on their own terms.

They have ruffled the economy, freedom and alliances of the world’s only superforce. The consequences of similar, repeated damage would be immense.

Law, contracts and institutions cannot by themselves contain the use of force by dominant states or by terrorist groups alike, since either one can simply disavow such concepts.

The examples of Afghanistan and Iraq also expose the limit of force as a tool against terror. Rather, the best weapon is to weaken the capacity of terrorist groups to inflict damage, and to undermine their perceived legitimacy in their local constituencies. At the same time there must also be a firm commitment by states worldwide to the multilateral approach, to constrain superstates intent on unilateral action.

But this will require new rules of the game, to sustain a basic balance between power and principles. The old rules that permit power to triumph over principles have trapped the world in a cycle of conflicts. The greatest challenge before us is to conceive new ways of thinking to break the vicious cycle.

Sundeep Waslekar
Sundeep Waslekar is the founder of the International Centre for Peace Initiatives and the president of Strategic Foresight Group, an independent think-tank based in Mumbai, India.

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Atiny, windswept pass through the mighty Himalayas will be central to commerce between the world’s two most populous nations – and could serve as a gateway between south and east Asia – if India and China succeed in their recent efforts at rapprochement. The Nathula Pass – situated at a height of 4,300 metres in the former kingdom of Sikkim and right on the Indo-China border – was formerly a key point on the silk route connecting Asia to Europe.

It is again part of a grand scheme – this time to improve relations along the India-China axis. Trade as a form of shadow politics is the means of accomplishing the realpolitik that both sides of this geopolitical divide are hoping to realize.

India is seeking assurances that the economic behemoth to the north will not turn into a menacing regional power. China wants a separate set of assurances, including better diplomatic ties in the event that India’s improving relationship with the United States (aside from the Iraq intervention) should end up posing any kind of threat to Beijing.

Both want – and need – time, resources and a degree of cross-border peace and quiet to attend to their respective and considerable priorities at home, and to keep pace with today’s rapidly globalizing marketplace.

If friendly relations between these two giants succeed, then each will have greater latitude to concentrate on its respective economy. India grew at a projected rate of nearly 6% in 2003. China’s economy boomed into the double digits after it recovered from the Sars epidemic last spring.

Both desperately need to maintain the pace of their economic reform and restructuring programme as well as to find ways to deal with the seemingly intractable global challenges of Aids, terrorism and environmental degradation.

It was a visit by India’s prime minister to China in June 2003 – reciprocating a visit in early 2002 by then Chinese premier Zhu Rongji – that planted the most recent seed for the rapprochement we are now seeing. Atal Behari Vajpayee became the fourth Indian prime minister to visit China and the first since Narasimha Rao in 1993.

Joined by a phalanx of Indian business representatives, Vajpayee arrived in Beijing intending to identify mutual and complementary commercial interests. During his six-day visit, he and the Chinese leadership set in motion a framework for a two-fold increase (or more) in bilateral trade and for resolving deeply ingrained diplomatic differences. They claimed initial success, backed by a slew of agreements and a joint declaration that favoured improving relations.

Beijing agreed to loosen visa regulations that have complicated efforts by Indian citizens to do business in China. China also offered

to cough up $500 million to help India’s infrastructure in the areas of water and energy development.

Each side appointed an envoy and then put the duo in charge of resolving the 14-year-long impasse that is central to their core dispute – the precise location of the 3,500-km border that separates them.

Since the 1980s, more than a dozen rounds of talks have failed to produce even an approximation of a mutually acceptable solution to the border issue of where Tibet meets India in the snow-capped Himalayas.

During his visit, Vajpayee formally recognized the Tibet Autonomous Region as part of mainland China and reiterated New Delhi’s stand against allowing Tibetans to engage in anti-Chinese activities inside India.

(India’s nod toward Beijing’s claim on Tibet so far seems not to affect the status of the Dalai Lama, who with 100,000 followers fled Tibet in 1959 and received sanctuary in India.)

China, in turn, agreed to reopen the old silk route into Tibet via the Nathula Pass, and, in the process, implicitly acknowledged India’s 1975 annexation of the former Himalayan kingdom of Sikkim.

The trade aspect of the Indian delegation visit highlighted at least two arenas for prospective economic cooperation. One is India’s sophisticated computer software industry being a prospective complement to China’s growing international profile as a manufacturer of IT hardware. The other is the supply of steel to help meet the demands of China’s dynamic growth.

“In combination, rather than in competition, India’s and China’s IT industries can be potent forces,” Vajpayee told his Chinese hosts at a gathering of business representatives in Shanghai toward the end of the visit.

His sentiments echoed those expressed by Zhu during his own earlier groundbreaking visit to India in 2002. “You are the first in software, and we are the first in hardware. When we put these two together, we can become the world’s number one,” Zhu exclaimed at the time.

Vajpayee’s message was as clear as Zhu’s. India’s information technology sector has been a cornerstone of the country’s economic growth for the past several years. China wants and needs both software and technology know-how in virtually every sector of its ultra-dynamic economy.

Beijing also seems intent on steering its industrial policy toward filling a gap in its economic food chain – first by learning from, partnering with and/or imitating the technological know-how of others, and then, ultimately, by developing Chinese expertise. According to International Data Corp (IDC), China intends to spend $9.4 billion each year between now and 2006 on the kind of technology services that Indian software companies are selling worldwide. That figure is almost triple the $3.74 billion spent in 2002.

From India’s perspective, Delhi remains receptive to domestic pressures to find additional ways to benefit the country’s dynamic IT sector and to help find new markets for its IT services. The Indian IT sector is today a $50 billion industry – having risen dramatically from relatively paltry beginnings as a $4 billion industry in 1999.

As of mid 2003, India’s IT export to China accounted for 0.05% of the sector’s total export, according to the Delhi-based National Association of Software and Service Companies (NASSCOM).

S Ramadorai, CEO of Tata Consultancy Services (TCS) in India, was asked recently why he thought having a presence in China was important to India’s largest information technology services company and whether TCS would end up competing with the Chinese for the same business. TCS opened India’s first development centre in China some 18 months ago.

Ramadorai replied: “There’s an enormous demand inside China that will far outstrip what they can do outside. As for the India model – we saw looking outward as our only way of survival.”

In addition to TCS’s facility in the eastern city of Hangzhou, the Indian software services giant recently completed work on the IT architecture for Shenzhen Development Bank, a second-tier commercial bank in the economically vibrant region that lies north of Hong Kong.

NITT, a software training company with operations in China dating back to 1998, also has plans to expand its training facilities inside China. “More and more Indian businessmen and firms are turning from Europe and America to the huge market that is nearby,” said NIIT executive Prakash Menon.

A recent study by the Confederation of Indian Industry (CII) identifies twin sets of opportunities that can flow from the agreements reached last June in Beijing.

First, there is the opportunity for Indian software companies to supply products and services to China’s growing number of small- and medium-size businesses.

Second, there is the potential for servicing Japan and other regional markets, including those represented by the Association of Southeast Asian Nations from a platform inside China.

Another Indian software superstar is Satyam Computer Services, which is listed on the New York Stock Exchange and is intent on doing business in China. The IT powerhouse recently set up shop in an industrial park in Pudong, just across the Hwang-po River from Shanghai. With 9,500 employees in 45 countries, Satyam views China as one of its two global software-development bases.

Also by locating in China, Satyam – which ranks as one of the world’s top five outsourcing firms – can exploit the needs of the Japanese market while reducing its dependency on the North American market. (North America accounted for 75% of Satyam’s $414 million in revenues in 2002. By contrast, the Asia Pacific region represented 6%-7%.)

According to the CII study, other opportunities include: tenders related to the Olympic Games, which will be held in 2008 in Beijing; telecommunications equipment (China has the fastest growing telecom sector in the world); energy; medical equipment; automobile components; plastics; and packaging equipment. There is also potential in the biotech and pharmaceutical fields, and in exporting more steel to China.

India is the world’s cheapest producer of steel, having successfully restructured its steel-production capacity. By riding into China on the prime minister’s coat tails, India’s steel interests intended to gain a wider entry into the Chinese market, especially in the arena of supplying steel for China’s massive infrastructure projects.

The opportunities for improving trade relations between the two countries are real. At the same time, the fact that they are neighbours, competitors and global giants all at the same time invites comparisons that suggest competition in the future for dominance in Asia. Economic diplomacy can sometimes fall short of bridging important qualitative distinctions between nations. For example, India is a democracy – however raucous – while China continues to evolve its governance in the direction of authoritative pluralism. Both undertook economic reforms at roughly the same point in the latter half of the 20th century, but both have arrived at the present point with divergent identities and needs.

India, with per capita annual income of $2,540, has one of the highest poverty rates in the world. China, by contrast, has eradicated poverty for all but about 4% of its population. Its per capita income is $4,400.

India has been successful in building an industrial and financial services infrastructure that includes transportation links and stock markets. The country supports nearly two dozen exchanges with 7,000 listed companies. China, by contrast, has two stock exchanges with about 1,200 listed companies and is trying to overcome a reputation in the past for “casino capitalism”.

China’s four largest banks have an estimated 40% of their assets in non-performing loans. They face the Herculean task of throwing off archaic approaches to credit analysis, banking services and lending practices that favour cronyism and alignment with government policy. Meanwhile, the majority of the economy continues to labour under state controls.

The collective mindset of China’s central and provincial leadership has yet to embrace fully a commitment to unleash the economy and allow the marketplace to operate based on a true supply and demand basis.

But the potential of the China market is reflected in the foreign direct investment flows, which topped $52 billion and exceeded foreign investment even into the United States in 2002.

As a recent World Bank development model pointed out, India’s challenge is to establish a market that is based on competition before it is able to realize its economic potential. China, on the other hand, must establish the right institutions and guarantee the right economic fundamentals to maintain its current rate of progress.

And even if trade doubles from the $5 billion in goods and services that were exchanged in 2002, this is still a drop in the global ocean of trade – which totalled $6.424 trillion in 2002. A total of $10 billion in bilateral trade is also dwarfed by China’s trade with Japan ($101.9 billion in 2002); with the US ($97.2 billion); and with Europe ($86.8 billion).

So even as the Nathula Pass opens up and trade resumes through the snowy Himalayas, it may be helpful to recall just how these two ancient and complex Asian cultures – each with its own brand of national pride – tend to look at foreign policy.

The Indians have a saying: “A strong neighbour is a natural enemy.” Or, as the Chinese like to say: “One mountain cannot accommodate two tigers.”

Marsha Vande Berg
Marsha Vande Berg is an Asia analyst based in San Francisco and a member of the Council on Foreign Relations. She is also editor of The World Report.

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Pension system reforms are near the top of the policy agenda in most developed countries. Immigration as a solution to Europe’s demographic change is extensively debated, but is not a sustainable solution according to mathematicians and statisticians, according to Adair Turner.

But the policy debate still fails to reflect the scale and the global nature of demographic change. During the coming century, the whole world will probably have to come to terms with an ageing but also stable population.

In many ways that is wonderful: it means longer lives and a limit to environmental damage. But it poses huge problems for traditional economic and social models, eventually across the whole world.

Once the global nature of the challenge is understood, many proposed solutions to pension crises turn out to be effective only in the short term.

Around the world people are living longer. Tragically in many poorer countries progress has been interrupted by Aids. But in all successful economies life expectancy at birth, and also at 65, is increasing relentlessly – by something like one and a half years each decade.

This trend will continue for many decades and possibly for centuries. Whether eventually there is a limit to life we do not know. But there is certainly no indication of it in recent figures, which reveal an accelerating fall in mortality rates among older people in many rich countries.

Birth rates are falling across the world, and have fallen to or below replacement levels in all successful economies. They are below the replacement level of about 2.05 children per woman in every European country, east and west, except Albania.

Italy and Spain are the lowest at 1.2, but even France and Iceland, the highest apart from Albania, have below-replacement rates of 1.89 and 1.95 respectively. But this phenomenon is not confined to “old Europe”.

The recent increases in US birth rates from 1.8 in the early 1980s to 2.05 in the late 1990s are sometimes hailed as signs of American social optimism. But break the American figures down by ethnic group, and we find that whites and Asian-Pacific immigrants have birth rates of 1.85 (which are not rising), that black fertility rates have fallen dramatically in the past 10 years, and indeed that fertility rates have fallen in every ethnic group.

The rise in the average has occurred only because the fall in Hispanic fertility (both in the US and in the countries of origin) has recently been offset by the rising Hispanic proportion of the total population. As Hispanic birth rates fall further, the American average will fall back below replacement level.

In Asia, meanwhile, fertility rates have fallen dramatically wherever there is economic success. South Korea, Singapore and Japan all have fertility rates below average European levels. Hong Kong’s rate, at 1.0, is below that of Italy.

China’s rate of 1.85 reflects in part the state’s one child policy, but the behaviour of overseas Chinese communities suggests that the fall would have occurred naturally, though later, in response to rising prosperity.

And Catholic Brazil, Sunni Muslim Turkey and Shiite Iran are all on course, according to the United Nations medium variant projection, to go below replacement fertility within 15 years.

We sometimes talk of deep cultural divides, and are wary of asserting universal sociological laws, but the evidence suggests that we face one here. Wherever there is economic prosperity, high female literacy and a supply of contraceptives that is legal and reasonably cheap, women choose birth rates at or below replacement levels.

Increased life expectancy and lower birth rates transform demographic structures. From the industrial revolution until the past few decades, population age structures were predominantly pyramid-shaped – both because each successive generation was larger than the one before, and because many people died in childhood and middle age as well as in old age.

Increasingly these shapes are and will be columns with small pyramids on top – with each generation the same size as the one before and most people living to at least 60 or so, before dying off over 30 to 40 years thereafter. Some – such as those of Italy, Russia or Japan – will be columns that narrow toward the base. As a result, for any given retirement age, the ratio of workers to retirees will plummet.

Italy’s ratio of 20-to-64-year-olds to over-65-year-olds is forecast to fall from 3.4 to 1.4 between now and 2050; South Korea’s from 9.0 to 1.7; Britain’s from 3.7 to 2.1; even Iran’s from 10.5 to 3.4. And if eventually the whole world can achieve economic success, this will happen across the whole world.

These changing ratios challenge existing pension systems. The problem is often described as one of ageing, but increased longevity is actually the less important and more tractable of the two challenges.

If fertility rates had not fallen, an increase in retirement ages proportional to the increase in longevity would be a sufficient response to preserve the solvency of any pension system – leaving contribution and benefit levels unchanged.

And, as people live longer, retirement ages can and should rise. Given sensible lifestyle decisions and well-designed health care, ageing can mean more years of healthy active life, not more years of disability. Many aspects of public policy and business practice need to evolve to support a rise in retirement ages. But in principle it is feasible and essential.

But a proportionate rise in retirement ages is not sufficient to deal with pension crises if fertility rates have also fallen. For the mathematics of the pension systems put in place in the 20th century – the relationship of contribution levels to benefit levels – were only sustainable on the assumption that each generation was larger than the one before.

Twentieth century populations structures were pyramids, and the pension schemes designed in the early and mid-20th century were to a degree pyramid schemes (such as Ponzi schemes or chain letters) – where the benefits to any one generation in the chain are vitally dependent on there being more participants in the next generation.

The pyramid scheme is coming to an end. Some mix of poorer pensioners, higher worker contributions or retirement ages rising even more than proportionately with life expectancy is unavoidable.

That is true whether pension systems are unfunded public pay-as-you-go (PAYG) schemes, or funded private schemes. In any pension system the retirees, who consume but do not produce, are dependent on a transfer of resources from the workers, who produce but sacrifice or defer some consumption via either taxes or savings.

In PAYG schemes the resources are transferred via taxes or contributions. In funded schemes, they are transferred via profits and dividends to pension funds. But the underlying economics are the same. There are no clever technical fixes to the fundamental demographic challenge.

There are, however, transitional approaches – such as foreign investment and immigration – which exploit differences in demographic structure among countries.

Investing pension savings overseas allows future retirees in developed countries to receive resource transfers from future workers in countries with still growing populations.

Immigration can rebuild the base of American and European demographic pyramids by importing workers from poorer countries where birth rates have not yet collapsed.

For the next several decades, and for already rich countries, these responses are at least feasible. But neither solution is possible in the long term and on a global scale.

China’s ratio of 20-to-64-year-olds to 65-plus-year-olds will likely fall from 8.8 today to somewhere around 2.4 in 2050. Workers in Europe cannot plan to retire on the basis of resource transfers from future Chinese workers except at the expense of future Chinese retirees.

Faced with its collapsing support ratio, China should plan to become a net investor overseas, not a capital importer. But all countries cannot be capital exporters at the same time.

Adair Turner continues: The limits are similar with immigration. The decline in the US’s support ratio is likely to be significantly offset not by greater American fertility, but by large-scale immigration.

With still rapidly growing populations in western Asia and Africa, Europe could choose the same strategy. But immigration can only permanently offset support ratio declines if it is both permanent and growing.

Europe would need to expand its population by about 50% over the next 50 years and another 50% in the subsequent 50 years, and so on ever thereafter, in order to stabilize present support ratios – even if it also achieved proportionate rises in retirement ages. Many Europeans might consider that unattractive for environmental reasons. In the long run it will also become impossible as population stabilization spreads. If the world population stabilizes, we cannot solve a global pension crisis by encouraging immigration from the moon.

Global population stabilization is, of course, many decades away. Some countries, such as Pakistan and much of Africa, still face the alternative challenge of rapidly growing populations, imposing huge economic and environmental costs.

But wherever there is economic prosperity, populations stabilize and age. And we should want economic prosperity for the whole world, both for the direct benefits of prosperity and because the resultant population stability is needed to limit environmental destruction.

To propose overseas investment or immigration as permanent rather than transitional solutions to demographic change is therefore to assume or wish that at least some countries remain sufficiently poor to keep producing excess workers to support rich country retirees.

The challenge will only gradually become global. But eventually we will have to design human economies and societies that can deal with column-shaped demographics.

We must ensure that we enjoy the benefits of longer life and population stabilization – but with radically changed attitudes to the whole idea of retirement, and with a radical redesign of the inter-generational compacts that were put in place in a different demographic era.

Adair Turner
Adair Turner is chairman of the UK Pension Commission and vice-chairman of Merrill Lynch Europe.

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To look back on the regulatory and corporate governance debate of the past two years is to see a landscape transformed. Corporate calamities have prompted legislative change of unprecedented depth and breadth.

Today, more than at any time in our history, boardroom discussion is focused on issues of governance, accountability and disclosure; the voice of shareholder activism has never been louder and the focus of regulators and legislators perhaps never as intense. And, of course, media scrutiny remains sharp.

The questionable events of recent years have been a huge wake-up call for key players in the financial sector – including corporations, investment bankers, investors, governments, regulators, and the accounting and auditing profession. Speaking for Ernst & Young, these changes have had a profound effect on the way we do business.

We have clearly acknowledged the need for our profession to respond to these corporate collapses decisively and forcefully, as a means of contributing to the restoration of investor confidence.

We have elevated the role of quality and risk management to the global board. We have substantially increased technical and fraud training for our people, and added significant technical resources to work with our client-facing teams.

We have also tightened client acceptance and continuance criteria. We are actively managing the rotation of our audit partners and teams. And, in some instances, in response to the marketplace, we are limiting the scope of services we provide beyond levels required by the regulators.

While our firm has made considerable progress, our work is not done, and these issues will remain a focus in the future. There is work to be done in other areas as well. The case for the closer integration of capital markets in the global business environment of the 21st century is well documented.

However, the effective integration of capital markets remains hampered by legal, political and regulatory barriers, as well as the absence of a common financial reporting language.

Progress is being made in the convergence of accounting standards – and their auditing standards counterparts – and further convergence continues to be a priority of the standard setters. But, securities regulators and other lawmakers still need to make a concerted effort to harmonize regulatory frameworks before we see the effective integration of capital markets.

Regulators have been commendably swift and thorough in their response to the challenges of the recent past and are now making accommodations in the interests of global commonality. The US Securities and Exchange Commission has recognized the needs of corporations operating across borders in allowing some non-US businesses to abide by the spirit of the Sarbanes-Oxley Act without disrupting existing practices.

The US regulators have further stated their intent to partner with their counterparts outside the US to develop an effective, efficient and cooperative regulatory process.

In the UK, the Financial Reporting Council has refreshed its Combined Code, and, while its “comply or explain” regime is in contrast with the “comply or else… ” nature of the US provisions, there is common ground with Sarbanes-Oxley in the critical areas of internal controls and directors’ responsibilities to report publicly on their effectiveness.

These are positive developments, and we would encourage further cooperation among more regulatory agencies.

However it is also important to focus on the role corporate governance can play in restoring investor confidence. My colleagues and I have discussions and interactions with thousands of business leaders around the globe on a regular basis, where we are seeing a clear desire for the development of a more uniform global corporate governance model as a necessary means of restoring investor confidence.

It is tempting to argue that the need for global convergence around corporate governance is a direct result of the global nature of the various corporate failures we have witnessed in recent years.

While it is certainly true that the US corporate sector accounted for too many of the most notorious collapses, it is equally true that this was not just a US problem, and that, in fact, the spate of corporate collapses was an international phenomenon.

But this is only part of the story, because the argument for globally consistent governance platforms is based not so much on what has happened in the past, as important as that is, but on what is happening in the present.

This is in the context of the increasingly global nature of business and capital in the 21st century. In a world where scores of individual corporations boast revenue figures that exceed the GDP of whole nations, there is a clear need for global businesses to be able to operate across borders with consistency of practice. Equally, investors in these global businesses require certainty that their interests will be safeguarded regardless of where the activity occurs.

While legislation and regulation are one way of securing a commonality of practice, another – potentially more powerful – means of achieving change is through the day-to-day actions of the individuals involved.

And here the recent behaviour of board members provides an interesting pointer to how strong governance can be spread somewhat independently of government and authority: this is the demonstration of the “tone at the top” which commentators, shareholders and regulators are seeking.

Corporate governance experts report that many European companies are taking action themselves to strengthen governance practices. Management is improving internal controls and reporting. Directors are taking responsibility for the integrity of financial data. The need for the separate existence of board audit committees is being recognized. There is growing emphasis on the role of non-executive directors in monitoring executives. New disclosure committees are reviewing information released to financial markets, while management is taking formal written responsibility. And boards are becoming more aggressive in curbing executive pay packages that are considered excessive or potentially counter to good governance.

In our own experience in working with the boards and senior management of many significant global businesses, the board of directors is becoming a much more potent force in the corporate organization – taking steps from requiring increased accountability from management to reviewing company filings and media releases before distribution and certifying internal control processes. Boards are also meeting more frequently and in longer sessions, and they are renewing their responsibility to uphold investor interests. They are also becoming an independent arbiter between management and auditor.

So where might we start in a bid to deliver some convergence of corporate governance provisions? In conjunction with the independent group Tapestry, we recently established an Audit Committee Leadership Network to provide a forum for discussion of these matters.

The Network is made up of audit committee chairpersons representing leading global businesses. It has identified several key issues that are of particular concern to audit committees and which would therefore be of value if addressed consistently across global markets:

• What is the role of the audit committee in setting the tone at the top?
• When is the audit committee justified in crossing the so-called bright line into operational matters?
• What is the appropriate balance between the cost of internal controls reporting and its value to stakeholders?
• How can the board’s relationship with external auditors be strengthened?
• What changes are needed in the roles and capabilities of internal audit?

It will come as no surprise that as head of a professional services firm I single out the important issue of audit committees. Strong, independent, highly qualified audit committees are a lynchpin of a robust governance approach.

In highly complex global organizations they play an even more critical role in providing the necessary oversight and scrutiny required to ensure investor confidence.

The globalization of corporate governance is a challenge that will be best met with the combined will of directors, executives, governments, regulatory bodies, investors and professional advisers taking a positive and careful multi-jurisdictional view.

What we do not need is legislation for the sake of it; nor do we need a “winner takes all” approach where one system supersedes all others. Equally unsatisfactory would be a multiplicity of governance regimes in which global businesses are stifled by conflicting requirements wherever they operate. Rather what we need is a common sense consensus that brings together the “best of the best” in the interests of investor confidence and appropriate corporate behaviour.

Such reform is the next logical step in the continuing evolution of business practice. The time for unilateral action at the country level is behind us. Ahead is the challenge of developing a mode of corporate governance that allows executives and management to do their job – under the guidance and scrutiny of strong, independent and accountable boards – while giving investors the certainty and confidence they need.

James Turley
James Turley is chairman and chief executive officer of Ernst & Young.

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At a session of the World Economic Forum in Davos in January 2003 I addressed a question to Tom Friedman, who was chairing one of the panels on democracy and Islam.

My question was whether Friedman considered the election of president George W Bush, without a majority, to be democratic or not. He answered that Bush had been elected by a majority of the electoral college.

I persisted in asking him if he considered that the electoral college was a democratic way to elect a president. Friedman became heated and asked me if we in Saudi Arabia had any democracy at all. I said no, and that was why I was asking. He replied that the electoral college was democratic because that was done by the consent of the American people.

A few days later I arrived in London to take up my post as Ambassador of Saudi Arabia to the United Kingdom and Northern Ireland. At the time, the issue of whether the UK’s House of Lords would be an elected body was being decided by the House of Commons. The Commons decided that they would rather keep their noble peers as an appointed lot, and I asked many of my British friends whether it was democratic to deny the people of Britain the right to elect the members of the Upper House.

Many of my friends answered with an explanation that the Commons did not want the Upper House to gain equal sovereignty with them, fearing that that sovereignty would allow the Lords to ask for more power and authority.

I asked if that was democratic, and the answer I received was that the Commons represented the will of the people – and, therefore, that their action was democratic.

A couple of months later, more than a million and a half people marched in the streets of London, expressing their opposition to the war in Iraq. All the opinion polls at the time indicated that more than 75% of the British public opposed the war. And yet, the government of Tony Blair declared war on Iraq, regardless of the people’s opposition.

Again I asked whether the Blair government had acted democratically or not. The answer that I received was that the British people could express their will at the next election, and that prime minister Blair would discover the consequences of his actions then. In all of these examples of democracy, procedure, sovereignty and policy, the overriding factor that gave them the democratic stamp of approval was that they were done with the consent or by the will of the people.

In Islam, God’s will is supreme. God set for mankind a list of dos and don’ts – halal and haram – that we have to follow. What is not proscribed is halal – in other words, doable.

No system of government was prescribed by God. But he set standards of conduct for us that can lead us to select a system that best suits us. The major standard for Muslims is consultation – that “their affairs are decided between them by mutual consideration”. When the Prophet Muhammad (Peace Be Upon Him) died, His followers consulted between themselves and chose a group among them, an electoral college, to select a leader, who then received the Baya’ah which is a contractual agreement based on two pillars: offer and acceptance.

The offer is made by the people of Ahal ulhal Walaqd (those who untie the knot and tie it), who are the electoral college. It is obligatory upon the candidate for leadership to declare his acceptance.

All the people came to Abu Bakr, the successor to the Prophet, and said to him: “We give you the Baya’ah, according to the Book of God (the Quran) and the Sunnah (Example and Path) of the Prophet.”

This contract is defined clearly in Islam. The ruler is responsible for the application of God’s Law (the Shariah) and the well-being of the people. The people are responsible for following the leader in everything except in what clearly contradicts God’s commandments.

If the people withdraw the Baya’ah from the leader, he is removed, and another leader, who is given the Baya’ah, succeeds him. For a leader to be selected, he must possess certain qualities that are equally well defined. He must be faithful to God, just, courageous and of sound body and mind.

The electoral college – the Ahal ulhal Walaqd, representing the recognised leaders of society – is also clearly defined. Their qualifications are fairness, good education, to be accepted and respected by the people, and to be prominent leaders in the community, each according to his skill and profession.

Another major characteristic of a Muslim state is tolerance – which can be seen clearly in the relationship between Muslims and non-Muslims. There are many sayings that reflect this. For instance: “the truth is from your Lord; let him who will, believe; and let him who will, reject”.

“There is no compulsion in religion” is another. Or the following: “O mankind, we have created you from man and woman, and we have made you into communities and tribes so that you may know each other. Those to whom God is generous are the pious ones among you.” In a Muslim state, non-Muslims can practice their religion freely. Examples of this are countless in the history of Islam.

Justice is the third major standard that God set for us. God describes himself as “The Just” in many verses of the Quran, and he enjoined the Prophet Muhammad to be just in many other verses of the Quran.

“Justice is the core of governance” is a saying of the Prophet. The judiciary is independent in an Islamic state, and to be a judge is one of the most prestigious and honoured positions in Muslim society. It requires the most stringent of qualifications. Chief among these are fairness, vast knowledge of the Quran and Haddith (sayings of the Prophet), and independence.

Throughout Muslim history there have been many successful efforts to systemize government. The Khilafah, or succession to the Prophet as an institution, was systemized and defined, and it lasted for more than 1,400 years.

Ministerial departments and regional governorships were equally systemized and institutionalized, as were the judiciary, the armed forces, the police and municipal authorities.

Where we Muslims have failed is in systemizing and institutionalizing the process of the Baya’ah and how it is given and withdrawn. We have also failed to institutionalize and systemize an instrument of checks and balances between the ruler, the people and the judiciary.

We need to make sure that the ruler is accountable to the people and the judiciary, that the judiciary is accountable to the people and the ruler, and that the people are accountable to the judiciary and the ruler.

In the Kingdom of Saudi Arabia, we started reforming our government system in 1993. We issued the Basic Law, which systemizes the following areas of government: the Line of Succession, the Shura Council (Consultative Assembly), the rights of each citizen and the form of government (Islamic).

In September 2003, the Council of Ministers, acting upon the decision of the Consultative Assembly, issued a decree that set in motion the elections for the municipalities of the Kingdom in a year’s time.

Half of the members of each municipality will be elected. The other half will be appointed. Elections to the other councils, the provincial assemblies and the Consultative Council will follow.

This electoral process is looked upon as the process through which the Kingdom will have institutionalized and systemized the expression of the people’s will. The suffrage is universal, and the checks and balances will follow when the people have expressed their will.

In 1964, the Kingdom went through the crisis of replacing one king with another. The Islamic system worked smoothly. Ahal ulhal Walaqd – who were the Royal Family, the religious scholars, the Council of Ministers, the notables of the towns and the tribal chiefs – came to a consensus that the Baya’ah that they had given to the reigning king would be withdrawn from him and given to the Crown Prince.

The system worked because our leaders, including the Ahal ulhal Walaqd, were driven by an overriding belief: the belief that their responsibility is not simply to themselves and to the people.

They firmly believed that they had a higher responsibility: a responsibility to God. They had to uphold the teachings of God and follow in the Prophet Muhammad’s way in order to make sure that God’s will is supreme.

All systems of government, democracy included, are tools by which man can achieve harmony, prosperity and progress. Each society has basic responsibilities, not only to maintain stability within its ranks. It must also act to allow for its own evolution and development. In the Muslim world that evolution and development must come from within, not from without.

HRH Prince Turki Al Faisal
HRH Prince Turki Al Faisal is the Ambassador of the Kingdom of Saudi Arabia to the United Kingdom and chairman of the King Faisal Center for Research and Islamic Studies.

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