Nicolas Berggruen and Nathan Gardels gave a talk about their book "Intelligent Governance for the 21st Century: A Middle Way Between West and East" while attending the World Economic Forum. Attendees included the presidents of Rwanda and Iceland, journalists John Micklethwait and Thomas Friedman, and many members of the Institute's 21st Century Council and the Council for the Future of Europe.   

 In the photo, George Yeo is speaking as (left to right) Thomas Friedman, Ursula von der Leyen, Paul Kagame and Laura Tyson listen. 

 Below, Nathan Gardels and Nicolas Berggruen (speaking) discuss their book with Michael Elliott (center):

 Afterward, Berggruen and Kagame talk with Kishore Mahbubani:

Rwandan President Paul Kagame, Nicolas Berggruen, and Jendayi Frazer announced the launch of the East Africa Exchange at a press confference in Davos on January 23.

By Nicolas Berggruen

Late last year, Nathan Gardels and I were in Mexico to promote our book "Intelligent Governance for the 21st Century" at the Guadalajara Book Fair and to attend the inauguration of Mexico's new president, Enrique Pena Nieto. The timing was propitious since President Pena Nieto's new administration marks the return of the once autocratic party -- the Institutional Revolutionary Party (PRI) -- that ruled Mexico for 71 years until the year 2000 when open democratic elections ousted it from power.

 The strength of autocracies like China -- or the old PRI -- is their ability to forge consensus and unity of purpose with the institutional capacity to implement long-term policies. But lacking accountability, transparency and free expression they become hidebound and corrupt, giving way to the power of vested interests and eroding what they have been able to accomplish.

 The strength of democracies like the US is that everyone has a voice and can contend for power. But the inability to forge consensus out of cacophony has created gridlock and paralysis. Its adversarial political system has decayed into partisan rancor and divided the public against itself. The short term mentality and special interests have captured the formal accountability mechanism of one person one vote elections.

The central question we pose in our book is how the unity of purpose and long-term institutional capacity usually associated with autocracies can be balanced by transparency and democracy so that governance can both be effective and accountable as well as inclusive.

Mexico today is in the middle of this dilemma of governance. During the PRI rule, the novelist Mario Vargas Llosa once called Mexico the "perfect dictatorship" because it had the trappings of democracy, but was in fact ruled harshly by one party. The challenge of the PRI under Pena Nieto is to perfect democracy -- and still address the daunting challenges the country faces today.

In spite of the bloody drug war that drags on, Mexico is poised to join the ranks of the fastest growing world economies. It grew over 4 per cent last year, and Pena Nieto promises to get it up to 7 per cent. As China's wages rise, the manufacturing the once fled Mexico is coming back. Mexico's average hourly wage is $2.10 while in China it is now $1.63. The costs of fuel and transportation to get goods from China to the United States means that Mexico now has the upper hand in producing for trade with the world's largest market just north of their border.

Mexico also has a strong skill base in engineering, which has led to the establishment and expansion of large manufacturing operations in Mexico from General Electric to Bombardier, creating hundreds of thousands of high-wage jobs. 

While the US has been endlessly debating Obamacare, Mexico, under President Calderon who just left office, has established a model of universal health care -- Seguro Popular -- that covers nearly everyone in the country, whether they have a job or not.

It is no surprise that a recent Economist cover was titled "The Rise of Mexico." American consumers will soon be seeing "Hecho in Mexico" as much as they are used to seeing "Made in China" labels on the goods they purchase.

To take advantage of Mexico's new opportunity, Pena Nieto must make some tough reforms and take on many of the vested interests that have historically been the very pillars of the PRI -- the teacher's union, the state oil company (PEMEX) bureaucracy and the various monopolies in telecommunications and television.

It is surely a good sign that in his inaugural speech, admirable in both its scope and specificity,  the new president frontally raised all these issues -- with the head of the powerful teacher's union and the Mexican monopolists all sitting right there in the audience a few feet away. He appointed Emilio Lozoya, a long term advocate of modernizing PEMEX by opening it up to outside investment as the head of PEMEX itself. The loudest applause Pena Nieto received in his speech was when he said he would end the practices of the teacher's unions that allows them to sell jobs and appoint teachers themselves.

Whether Pena Nieto succeeds or not in taking on his own political base will tell us whether this is the new PRI or the old PRI. He clearly understands that the Mexican president today is not longer all powerful, but only as powerful as his party -- which got only 38 per cent of the vote and holds only that many seats in the Congress. For this reason, the day after his inauguration he announced a "compacto" -- a long list of policy agreements with the other left and right parties in the Congress -- they promise to pursue together. He also announced he would form an independent citizen's commission on corruption.

Such a "consensus building" and transparent approach is precisely what is needed to move toward good governance. Transparency is key to balancing autocratic tendencies; "consensus building" is what is needed to balance the adversarial contention, discord and diversity that democracy inevitably generates.

The Berggruen Institute’s Council for the Future of Europe met in Berlin on October 29 and 30, beginning with private presentations by George Papandreou (who prepared a paper for the occasion) and council members Jean Pisani-Ferry and Jakob Kellenberger. At lunchtime, council member Tony Blair gave a major speech on the future of Europe, including his proposal for a directly elected president of Europe. The speech was very widely covered in the English-language press.

In the afternoon, Mr. Blair, Mr. Papandreou, Peter Sutherland, Gerhard Schroeder and Felipe Gonzales joined in a media roundtable discussion with just over a dozen European editors and reporters, including representatives of Le Monde, El Pais, Bild, Frankfurter Allgemeine Zeitung, Corriere della Sera, Die Zeit, Die Welt, the Financial Times, and the Economist. The discussion ranged from the practical political challenges faced by Chancellor Angela Merkel and President Francois Hollande to the urgency of a European banking union and the need for, as Mr Papandreou put it, a “politics of hope” to replace the “politics of fear” that has been emerging in Europe.

That evening, at a private dinner, former German foreign minister Frank-Walter Steinmeier described a Europe that, lacking a clear sense of direction and purpose, might well be drifting toward disaster. Less prescriptive than analytical, his speech gave a rich sense of Europe’s current predicament.

Europe Beyond the Crisis

The Berggruen Institute’s all-day town hall, “Europe nach der Krise” (Europe beyond the Crisis), began at 9 Tuesday morning. The event was broadcast live at the town hall’s dedicated website, myropa2012.de, an online feed that was embedded also by newspaper sites in Spain, Switzerland and Germany, enabling users of those portals to watch the proceedings there. Portions of the meeting were also uploaded to the myropa site and made available to media outlets for immediate download to their own sites.

http://myropa2012.de

Finally, the town hall was tweeted live and followed on Facebook; by these means, it was possible to watch the entire event online and send comments and questions in real time, which were then relayed to speakers and participants in the meeting room.

http://engage.myropa2012.de

An online community that had grown up at myropa2012 before the town hall – recording hundreds of Wunsche (wishes or desires) for Europe, mostly from younger Germans – participated virtually in the town hall, while more than 300 people, about half of them students, attended the event itself at the Allianz Forum on Pariser Platz. The program was organized as a series of panels moderated by Dunja Hayali and Andreas Korn, along with several speeches.

The town hall began with a speech from Germany’s finance minister, Wolfgang Schauble, followed by a discussion on paths to political union among Schauble, French finance minister Pierre Moscovici, European Parliament president Martin Schulz and World Trade Organisation head Pascal Lamy.

http://myropa2012.de/video/automatisch-gespeicherter-entwurf/

Schauble and Moscovici held a private bilateral meeting after the discussion then held a small press conference on the sidelines of the town hall.

A second panel, on repairing Europe’s democratic deficit, featured George Papandreou, Felipe Gonzalez, Joschka Fischer, Guy Verhofstadt, and German legislator Phillip Missfelder. The morning session was brought to a close by George Soros, who gave his analysis of the tragedy of the euro and announced an initiative to help Greeks and non-Greek refugees in Greece through “solidarity houses.”

Council members heard from Otmar Issing and Jacques Attali at a private luncheon, then joined the town hall audience for an intimate discussion with Helmut Schmidt and Jean-Claude Trichet, moderated by Nicolas Berggruen.

http://myropa2012.de/video/...

This was followed by a vigorous discussion on Europe, jobs and economic growth with German labor minister Ursula von der Leyen, Polish central bank president Marek Belka, and the opposition German Social Democratic Party’s candidate for the chancellery, Peer Steinbruck. Mr Steinbruck gave a speech outlining his vision of Europe following the panel.

After a break, guest moderator Christine Ockrent introduced a discussion on Europe as viewed by investors from outside; the panelists were Pakistan’s former prime minister (and international banker) Shaukat Aziz, Google executive chairman Eric Schmidt, economist Laura Tyson and investor David Bonderman.

http://myropa2012.de/video...

Gerhard Schroeder then gave an address on the necessity of reforms across Europe, similar to the Agenda 2010 reforms that he had pushed as German chancellor and which laid much of the ground for Germany’s relative prosperity.

After some concluding remarks from Nicolas Berggruen and a brief reception, Turkey’s prime minister Recep Tayyip Erdogan arrived and gave a forceful speech on Europe and emerging markets, with special reference to Turkey. He emphasized that Turkey remains eager to shoulder the burden, as he said, of European Union membership. He announced Turkey’s willingness to provide aid for European countries that are suffering in the crisis. He pointed out that the process of integrating Turkey into a European institutional framework had begun nearly fifty years ago and he suggested a final deadline for its completion in 2023.

That evening, some council members gathered for a private closing dinner, where the events of the past two days were discussed and several issues debated, in particular the place of France in the evolution of Europe’s political institutions and its economy.

Themes and Conclusions

Several themes and perceptions dominated the two days of debate. First was a widespread recognition that Europe had to extend its own unity if it were to retain a strong international role. None of its constituent states, on current economic and demographic trends, could hope to play a large global role as an individual nation; therefore unity was a precondition for Europeans to continue carrying international weight.

Second, participants all seemed to accept that Europe’s crisis response had led to the dominance of a few strong economies, above all Germany’s, in terms of shaping Europe’s present and near-term future. This “intergovernmental process” was borne of circumstance rather than intention or democratic policy-making. Some participants believed it nonetheless represented the basis for an evolving European governance, with Germany required to take the lead. Others felt that Europe was drifting away from democracy and toward de facto rule by economic great powers. All agreed that rule by intergovernmental process had become a fact of current European governance and could not be ignored as merely circumstantial.

There was a strong consensus among council members and most panelists that recent measures by the European Central Bank – assurances that it would do whatever was necessary to preserve the euro, and promises of Outright Monetary Transactions as needed to demonstrate to markets the permanence of the euro – were not definitive, but rather gave policymakers a limited amount of time in which to restore the credibility of eurozone and EU decision making. Participants over the two days argued strongly that this respite should not be wasted.

At the same time, most participants argued that structural changes should also be pursued in the relatively near term: the period from now through the 2014 Europarliament elections. There were strong calls – from Schauble, Blair, Papandreou and others – for an elected European executive.

The role of France and the changing balance of Franco-German relations were a constant thread through both days.

Finally, and relatedly, there was continuous discussion of whether the process of European unity was to be shaped principally by economic forces, with politics reacting, or by political decision-making that, through government, could decisively shape the landscape in ways that reflected the democratic will of Europe’s citizens as well as the preferences of markets.

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Governance matters in whether societies move forward -- or backward. That has never been a more true, or more complex, proposition than in today's world. Because of the interdependence wrought by globalization, how we govern ourselves is inextricably linked to to how others govern themselves. Read more

Since the release of the Think Long Committee’s final report, A Blueprint to Renew California, last November, we have proceeded to act long, rolling out our proposed reforms on tax and governance over several election cycles stretching to 2018. The Think Long Committee is working with the legislature and governor, but is also engaging in the initiative process, in which the public votes directly on policies. 

Here are the three areas of immediate action:

1. We have joined with a bipartisan reform group, California Forward, to place the Government Performance and Accountability Act (GPAA) as an initiative on the November 2012 ballot. Our political action arm contributed $1.5 million to help gather the one million signatures necessary to qualify the proposition for a public vote.

As a new experiment in governance, we developed the elements of this initiative through a “deliberative poll” in which 400 citizens, chosen by sampling to represent the population as a whole, gathered to discuss, with the help of experts, what changes might make state government more responsive and effective.

The key elements that emerged include two-year performance-based budgeting, transparency in legislation to prevent back door deals at the last minute, devolution of power to localities by providing more flexibility in how they implement state programs, and greater discretion for the governor to make budget cuts when bipartisan agreement cannot be reached in the legislature.

These elements are all reflected in the GPAA on November’s ballot.

2. We are positioning our bipartisan tax reform for the 2014 general election along with advocating a Rainy Day Fund that would put away budget reserves for cyclical downturns. How we ultimately proceed will depend on the fate of other tax initiatives on the current 2012 ballot.

The Think Long tax plan would raise $10 billion in new revenues annually for paying down debt, education and local infrastructure by extending a sales tax to services (not now taxed in California, although services constitute half of the state’s $2 trillion economy) while reducing income taxes across the board in a way that retains the state’s progressive rate structure.

The need for tax reform remains clear. California’s deficit has ballooned to $17 billion as expected tax collections from capital gains and high-end earners failed to materialize with the depressed price of Facebook and other tech stocks after IPOs this year. Even though more than $1 billion has been cut from the University of California and CalState college budgets since 2008, the state still spends more on prisons than higher education.

3. Along with Laura Tyson – a Think Long and 21st Century Council member who was Bill Clinton’s top economic advisor -- and McKinsey’s Lenny Mendonca, we have been working together with the governor’s office on an infrastructure investment vehicle that can attract large institutional investors – from California’s own Public Employee Retirement System (PERS) to the China Investment Corporation (CIC) – to projects in California. Presently, the state has a $750 billion infrastructure deficit.

As part of this effort, our institute arranged a meeting between Governor Jerry Brown and Gao Xiqing, president of CIC, to explore investment opportunities for China in California.

• Nicolas Sarkozy joined the Berggruen Institute's 21st Century Council.

• Arianna Huffington, at The Huffington Post, launched "What is Working," an initiative dedicated to identifying solutions to America's jobs crisis, along with "JobRaising," a fundraising challenge for employment-boosting nonprofits.

• Raghuram Rajan joined the government of Indian Prime Minister Manmohan Singh as chief economic advisor, and Gordon Brown became the United Nations’ special envoy for global education.

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“Intelligent Governance for the 21st Century: A Middle Way Between East and West,” by Institute President Nicolas Berggruen and senior advisor Nathan Gardels, will begin to be published in October. The formal UK launch (Polity Press) will be in early November, with events at the Oxford Union (Nov 5 & 6) and in London (LSE Nov 7 and RSA Nov 8). The Spanish (Santillana) and Portuguese (Objetiva) editions will be marked by events in Lisbon and Madrid in mid-November, at the Guadalajara Literary Festival on Dec 3, and in Mexico City on Dec 4 & 5. The North American tour will be in February with events in San Francisco, Los Angeles, New York, Washington D.C. and Chicago. The South American tour will be in March. The Chinese publication date (Century) is yet to be determined.

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