The Round Table - Conferences 1998

Conference Report

The Commonwealth After Edinburgh: New Directions, New Priorities?

Cumberland Lodge, 21-22 January 1998

Session I: The Edinburgh Declaration

Chair: Tim Slack, LVO

Speaker: The Hon. Sir Humphrey Maud, KCMG (Deputy Secretary-General, Commonwealth Secretariat)

The opening speaker, Sir Humphrey Maud, took as his text the Edinburgh Commonwealth Economic Declaration, "Promoting Shared Prosperity". In describing the context and content of the declaration, he drew on his experience as chair of the CHOGM Committee of the Whole which had helped draft the declaration. He prefaced his remarks by noting that, despite 1997 being the UK Year of the Commonwealth, and Britain having hosted the CHOGM for the first time in many years, the British media had shown a singular lack of interest in the Commonwealth in their retrospective reviews of the year 1997.

The Edinburgh Declaration had its origins in a suggestion made by the Prime Minister of Singapore at the Auckland CHOGM. The Commonwealth Secretariat was instructed to draw up a theme paper, and the Secretary-General commissioned a background paper by two leading economists, Professors Cassen and Greenaway, whose terms of reference were drawn up in consultation with the Commonwealth High Commissioners and the FCO. Not all Heads of Government were happy with the idea that the Commonwealth had something distinctive to say on economic matters. Some pointed out that the system of Commonwealth preferences had ended long ago, and that trade liberalisation was best pursued through the WTO. The Edinburgh CHOGM's mandate did not include a specific commitment to produce an economic declaration, but the British and other governments made clear their desire to see such a declaration emerge.

A short issues paper was put to the Commonwealth Finance Ministers' Meeting in Mauritius, in September 1997, and the draft economic declaration was then put together over September and October 1997. This combined two strands: first, the idea of collective Commonwealth action in global fora, and secondly the notion of intra-Commonwealth action to help manage global change. There was extensive consultation between the Secretariat and the High Commissioners, but the draft declaration was not circulated to High Commissioners at this stage for fear that it would become "set in stone". Meanwhile, the Caribbean and African High Commissioners produced their own draft declaration of principles, some of which was incorporated in the final text. The draft was finally tabled at the opening of the CHOGM Committee of the Whole, revised in the course of the discussion there, discussed by the Heads of Government on the Friday afternoon and Saturday morning of CHOGM, and then revised again by the Committee of the Whole in time for the Heads of Government plenary on the Saturday afternoon.

The text of the declaration combined both principles and specific commitments. The alternative Caribbean/African draft put forward only principles, but it was clear from the discussion between the Secretary-General and Heads of Government that the majority of the latter wanted the declaration also to contain specifics.

One major point of conflict which arose in the discussions was on the question of whether the Commonwealth should flag its desire for a new round of trade liberalisation negotiations in 1999 or 2000. Free trading nations such as Canada, Singapore and the UK argued that it should, but India and the Caribbean countries insisted that the most recent round of tariff adjustments needed to be digested first. Paragraph 4 of the declaration, dealing with trade, was therefore a compromise. Considering the difficulties of getting agreement within such a short space of time between 54 governments, the Edinburgh Declaration was a significant achievement. It was not just a set of fine words, but a practical programme of steps for global and Commonwealth action. Amongst the points covered by the declaration were: the need for effective participation in economic decision-making by developing as well as developed nations; encouragement of partnerships between governments and the private sector; agreement on maintaining the momentum towards freer trade; the creation of a Trade and Investment Access Facility under the Commonwealth umbrella; the establishment of a Commonwealth Business Council (following on from the Commonwealth Business Forum organised by the Commonwealth Secretariat); the need to encourage investment flows by ensuring open and transparent investment regimes; the necessity of protecting countries from the destabilising effects of market volatility; the importance of reaching a comprehensive solution of the debt problem, as part of the overall aim of tackling the problem of extreme poverty; the need for a World Bank task force to look at the specific problems of small states; the importance of good governance and the elimination of corruption; and the need for agreement on realistic and achievable goals at the Kyoto Conference on Climate Change. The CHOGM and the Economic Declaration had already resulted in a number of practical steps, and pointed the way forward for further important initiatives. In presenting the declaration, Tony Blair described it as a fitting complement to the Harare Declaration. He stressed in particular the last sentence of paragraph 1, "Globalisation … needs to be carefully managed". This point was also taken up in much of the press coverage - although not in Britain, where the reaction of the press was superficial and disappointing.

In discussion, some members of the audience criticised the Secretariat for not responding sufficiently to the views of the Caribbean and African High Commissioners. In particular, it was argued that the rationale for treating principles and specifics separately - that the specifics and therefore the whole declaration would quickly become dated - was sound. The speaker emphasised that the Secretariat had been working to a tight schedule, and was under an obligation to reflect a wide range of views. The declaration did in fact incorporate a number of points put forward in the alternative draft. Nevertheless, there had been pressure from other countries for "specifics" as well as "principles". There was a danger that the Commonwealth's ethos of mutual help would be damaged by an over-vigorous pursuit of regional interests.
There was also criticism of the briefness of CHOGM, which meant that some of the smaller states in particular had not been given an adequate opportunity to express their views. The speaker agreed that a longer meeting would have been welcome, but pointed out that 3½ days was now quite long for a major international gathering.
A number of those present referred to the almost-forgotten economic aspects of the Harare Declaration. It was suggested that the Edinburgh CHOGM might have proceeded in a different way, by creating an Action Plan building practical steps on the basis of the principles set out at Harare. · There was wide agreement that the Business Forum had been an extremely valuable innovation.
Similarly, many of those present agreed that the Edinburgh Declaration was an important step forward, and expressed the hope that the Commonwealth would undertake coordinated action in pursuit of its aims in other global fora.
A dissenting view was put forward, that there was an insurmountable contradiction between the declaration's espousal of free market principles and its commitment to tackling underdevelopment. The speaker expressed his complete disagreement, citing Tanzania and Uganda as countries where the adoption of free market principles had led to economic success.
A number of those present criticised the WTO, and in particular the effect of recent rulings on the interests of Caribbean countries. Others argued that the dispute settlement mechanism would in time prove a protection for the weaker states.
The speaker was asked whether there had been any discussion of a monitoring mechanism similar to CMAG. There had not. Several members of the audience felt that there should have been.

Session II: Globalisation: Can the Commonwealth Help to Manage Change?

Chair: Alexandra Jones

Speakers:
Prof. Bishnodat Persaud (University of the West Indies)
H.E. J.Y. Pillay (High Commissioner for Singapore)

Professor Bishnodat Persaud began by emphasising that "globalisation" was a controversial subject. Those countries uncomfortable with market economics were less enthusiastic about globalisation, and this had been reflected in the run-up to the Edinburgh Declaration in differences over the acceptable pace of change. On the whole, however, the declaration reflected a positive attitude towards globalisation.

In terms of economic theory, the benefits of globalisation were easy to see: increasing specialisation, better use of resources, greater competition, and improved opportunities in terms of markets, capital and technologies. Market disciplines were essential in securing efficiency and competitiveness. Globalisation was a "positive-sum game". This was not a case in which one country had to lose in order for another to gain. In theory, all should benefit. In practice, however, it was clear that the gains were unequal, and that some countries appeared not to gain at all. But this had to do with their structural and capacity problems rather than with globalisation. It was important to ask, "what is the alternative?". The emphasis had to be on developing the capacity to profit from globalisation. If some countries cut themselves off from the process of globalisation, they would be even worse off. Long transition periods would merely accentuate the eventual problems of adjustment. As in the case of Mexico a few years previously, or more recently in the case of the Far East, the problem was often not globalisation itself but mismanagement, or mistaken policies pursued by governments. On the other hand, there was a need for mechanisms which attempted to reduce the levels of instability in the global economic system, and which ensured that systemic problems of inequality were tackled.

How could countries prepare themselves in order to benefit from globalisation? In answering this question, it was important not to take a narrowly economic view. Development was increasingly about human resource development, and ensuring good governance and creative capacity. Political factors were vital: democratisation, dissipating the power of the central state, increasing the powers and roles of local government, NGOs and the private sector, and developing knowledge and intellectual capital. In short, it was necessary to emphasise "capacity-building".

The Commonwealth had an important role to play in helping to manage the impact of globalisation, especially as the G77 was no longer as powerful as it once was. The Commonwealth was an organisation in which the voice of developing countries was strong, and where weight was given to their opinions. This was particularly important in the light of the inadequate democratisation and accountability of the major international financial institutions. The Commonwealth had an expanded role to play in ensuring balanced international negotiating agendas and processes, e.g. in the WTO. The Commonwealth was already playing an important role in connection with the problem of debt, the vulnerability of small states, and assisting financial flows. More could be done, such as the provision of technical support to enable small states to participate in international negotiations, or the encouragement of venture capital funds. A vital area for emphasis by the CFTC in future would be capacity building. The Commonwealth could not hope to solve all the problems of global inequality, but there were a number of areas in which it could make an impact. It was good to see from the Edinburgh Declaration that its economic role was being intensified.

The second speaker, His Excellency J.Y. Pillay, shifted the focus to a small state "success story", that of the Republic of Singapore. In doing so, he sought to highlight the reasons for Singapore's success, and the key factors which had helped it to turn globalisation to its advantage. He recognised that Singapore's experience was in many respects unique, and not easily replicated elsewhere. Nevertheless, he argued that there were many lessons to be learnt from Singapore's experience which were more generally applicable to the management of development.

Singapore was a territory of some 650 km², expanding at the rate of 2-3km² p.a. through reclamation. Latest figures showed that it had a population of some 3 million, with a further ½million resident foreign workers. Its per capita income in 1995 was $26,700. Geographical factors were important in Singapore's success: on the one hand its compactness, and on the other its position in a region of high economic growth. Historical and political factors were also important. Singapore originated as a trading colony. In the 1950s it experienced a period of great political turbulence, but since 1959 it had been governed by the same political party, and consequently enjoyed the fruits of political stability and the possibility of long-term planning. Singapore's separation from Malaysia in 1965, and the announcement in 1967 of the withdrawal of Britain's naval base (which at the time provided some 18% of GDP), ensured that the development of Singapore's traditional trading role, and in particular the development of a key regional role in financial services, was a priority. Import substitution would have been no solution. This was still the case. Two-thirds of Singapore's manufactured goods were exported, and a similar proportion of domestic consumption was accounted for by imports.

The Singapore government had consistently pursued conservative monetary policies, ensuring exchange rate stability. At the same time, it had made a priority of building a good physical infrastructure, and an excellent educational and social support system. Public housing now accounted for 85% of total housing stock. The superannuation fund had played a crucial role in financing Singapore's development. Priorities for the future included the expansion of R&D, and the encouragement of greater risk-taking by Singapore companies.

For Singapore, the best way to cooperate through the Commonwealth was by the provision of training and consultancy services in areas in which Singapore excelled. One of the Commonwealth's most important functions was its role in facilitating the sharing of experience between countries, helped by the similarity of administrative and legal systems. The advantages of Commonwealth membership in this field could not yet be said to have been fully utilised.

In discussion, a number of those present supported the thesis that the Commonwealth had a more important role to play in facilitating technical cooperation and the provision of training and advice.
It was pointed out that a number of countries, including Botswana, Malta, Mauritius and Trinidad, appeared to be looking to Singapore for a model.
Some members of the audience took issue with Prof. Persaud's views on the drawbacks of transitional mechanisms. If there could be two speeds for Europe, why not for globalisation? Moreover, rather than risk costly mistakes, was it not natural for vulnerable states to make risk-management a priority? In reply, Prof. Persaud re-emphasised his view that prolonged transitional mechanisms merely made the eventual process of participation more difficult. Transitional arrangements should concentrate on building capacity to participate and compete. The emphasis should be on assisting adjustment. The competition introduced by exposure to globalisation was the most effective spur to development. The Caribbean in particular risked prolonged dependence on outdated and rapidly disappearing preferential systems.
Mr. Pillay was asked whether it was not true that in Singapore the role of the state (not of the private sector) was fundamental. He agreed that the state had played a crucial role initially, but there was now less justification for the government taking such a leading role, and its role had in fact significantly diminished.
A problem was identified in the extent to which flows of capital often lagged behind changes in policy (such as in the case of Uganda), thus making the process of transition more difficult than it need be. It was agreed that the Commonwealth Private Investment Initiative could play an important role in helping to circumvent such market failures.
The Commonwealth Secretariat's success in organising skills development programmes, in encouraging private sector investment, and in promoting measures to help manage global economic change, was noted. The Commonwealth had perhaps been less successful in influencing broader international negotiations.
There was some discussion of the South-East Asian financial crisis. Mr. Pillay believed that the principles on which the region's response to globalisation had been based would not be jeopardised. Some countries had not taken sufficient steps to protect themselves from market volatility, and would take a number of years to recover. Nevertheless, economic growth would undoubtedly resume, but on a more cautious and therefore a more stable basis. Prof. Persaud expressed the view that crises could have beneficial long-term effects in improving domestic economic management in the countries in which they originated, and in international economic management.

Session III: The Commonwealth After Edinburgh

Chair: Tim Slack, LVO

Speaker: H.E. Ronald Sanders, CMG (High Commissioner for Antigua and Barbuda)

Before addressing the theme of his talk, "The Commonwealth After Edinburgh", His Excellency Ronald Sanders gave a brief overview of the Commonwealth before Edinburgh. The last few years had seen a refreshing change in attitude towards the Commonwealth on the part of the British government. In 1988 Dennis Austin had recorded, accurately, that the Commonwealth was on "the margins of British interests". Mrs. Thatcher had often appeared to regard the Commonwealth as a nuisance. With the end of both the Cold War and apartheid, Britain appeared more comfortable with the Commonwealth, and its role as the "odd man out" had ended. Responding in particular to a Chatham House discussion paper of 1995, which highlighted the positive ways in which Commonwealth membership brought benefits to Britain, the Foreign Affairs Committee of the House of Commons declared in 1996 that the Commonwealth was acquiring a "new significance in a rapidly transforming world". In the run up to the May 1997 election, both John Major and Tony Blair stressed their commitment to the Commonwealth, a theme reiterated by the Labour government in office. Nevertheless, it was not yet clear to what extent the change in the British government's tone on the Commonwealth indicated a real change in substance.

In 1996 the Secretary-General advised Commonwealth member-states that the British government had proposed that trade and investment should be the theme of the next CHOGM. There was considerable support for this, although a number of states made clear their wish to see development given equal prominence with trade and investment. Moreover, the developing states were understandably concerned about the content of any statement. In particular, they were wary of endorsing any statement which glorified the WTO and which ignored the continuing problems of the less developed states. These worries were increased by the lack of consultation by the Commonwealth Secretariat during the run up to CHOGM. This led the developing states to produce their own draft declaration, which highlighted the need for imaginative thinking to enable the developing and disadvantaged states to respond positively to new circumstances. The developing states were aware of the problem of the credibility of the Commonwealth in the light of the standards set by the Harare Declaration. The developing states were also worried that the Edinburgh CHOGM might rush through another round of premature enlargement. This ran the danger of using up precious resources, embroiling the Commonwealth in regional issues best handled through the UN, and diluting the character of the association. Meanwhile, the British press continued to treat the Commonwealth as of no great significance, other than as reflecting a deep interest and commitment on the part of the Queen (a factor which had indeed been significant in keeping the Commonwealth in existence).

The Edinburgh CHOGM itself suffered greatly from its abbreviation. Much important work was done in the Committee of the Whole. Nevertheless, an opportunity for greater dialogue by the Heads themselves was undoubtedly lost.

The Edinburgh Declaration did represent an important move forward on the economic front. It recognised that not all benefited equally from globalisation, and that globalisation needed to be "carefully managed". Moreover, it acknowledged that world peace, security and stability could not be achieved in conditions of growing poverty and inequality. Nevertheless, there were clearly severe limitations on the Commonwealth's ability to play a significant role. Some member states were part of other economic groupings, and the inevitable tendency was to pull them towards the centre of the joint interests of these groupings. The Edinburgh CHOGM committed the Secretary-General to report by 1999 on ways in which trade between members of the Commonwealth could be improved, consistent with the principles of the WTO. This was almost a contradiction in terms. This was not to say that the Commonwealth did not have any role to play in economic affairs. Special advantages did exist: a common language, the similarity of legal systems and business practices, and a wide range of contacts. Nevertheless, it was important to limit the Commonwealth's objectives to what was realistic, and to build on existing achievements. The Harare Declaration contained extensive references to the Commonwealth's role in the economic and sustainable development fields. CMAG's report to the Edinburgh CHOGM favoured a similar overseeing mechanism to look at the implementation of the Harare economic principles. Such a mechanism would still be valuable.

On the question of the credibility of the Commonwealth, the Edinburgh CHOGM succeeded only in postponing judgment until 1 October 1998, the date when Nigeria's expulsion would be "considered". The debate on this at Edinburgh was woefully short. The events in Guyana in December 1997 underlined the need for the Commonwealth to develop an effective role in conflict resolution.

After Edinburgh, the Commonwealth was undoubtedly stronger and more cohesive than it had been before. Nevertheless, much remained to be done on the political front, while on the economic front the Edinburgh Declaration would only strengthen the Commonwealth if real progress were actually made.

Asked whether he thought that the Commonwealth had lost its "club" atmosphere, Mr. Sanders suggested that Commonwealth meetings had always been full of tension, and necessarily so, because they represented primarily an opportunity for each country to pursue a foreign policy in its own national interests. He was supported by a member of the audience, who recalled that the Commonwealth meetings of Bevin's day (when there were at first five, then nine, Commonwealth members) were often far from friendly. Nevertheless, the same participant argued that enlargement had reached the point where it was necessary to consider institutional changes, and in particular the increasing use of selective committees and fora.
There was some disagreement over the value of Edinburgh's economic theme, and its origin. Mr. Sanders asserted that most countries only went along with the economic declaration because the British government made clear it wanted one, and he repeated his view that the discussion of the theme had been inadequate. Moreover, it was important for CHOGM not to be tied to "themes", but to set its own agenda, reflecting the real issues of the moment.
Mr. Sanders was questioned as to the practicability of any mechanism to oversee the implementation of the Harare economic principles. It would be very difficult to agree on common standards, and almost impossible to monitor them. Mr. Sanders recognised the difficulties, but argued that setting in train the machinery would force member-states at least to work towards implementing the principles.
It was suggested that the speaker had painted rather too bleak a picture of the effects of globalisation on small states. While vulnerable to marginalisation, they were also well placed to take advantage of the new technologies and the new international economic dispensation. In the twenty-first century, small and closely-knit societies might even possess distinct advantages over larger societies.
A number of participants took issue with the speaker's characterisation of the last round of enlargement as over-hasty. Mozambique's admission was explicitly an exception, but Cameroon's application had lain on the table for six years prior to its admission. Membership of the Commonwealth was far more of a hurdle than, say, membership of La Francophonie.
There was considerable support for the speaker's assertion that the Edinburgh CHOGM had merely postponed the question of the credibility of the Commonwealth.

Session IV: The Commonwealth From a Business Perspective

Chair: Derek Ingram

Speaker: Algy Cluff (Chairman, Cluff Mining and The Spectator)

Algy Cluff drew on his long experience working as an entrepeneur in both Commonwealth and non-Commonwealth countries to assess the role of the Commonwealth from a business perspective. To him, it was clear that operating in Commonwealth countries benefited from significant advantages: a shared language, similar legal systems (especially in the fields of contract and company law), similar standards and structures in public administration, and a set of shared cultural values and attitudes - including pragmatism, empiricism, respect for the rule of law, and a presumption in favour of decision-making being orderly and transparent rather than ad hoc and secretive - which had grown rather than diminished in importance after decolonisation and independence. These advantages enabled entrepeneurs from one Commonwealth country operating in another to "hit the ground running".

Recent years had seen a more competitive atmosphere, and thus a distinct improvement in the business environment. Businessmen were kept on their toes, bidders were more effectively scrutinised, and the relevant authorities were generally more competent and well-informed. This could only benefit business. Another important development was the intrusion of wider considerations than simple cost-benefit analysis. Environmental concerns were no longer voiced only by western pressure groups, and there was a growing demand that economic development should deliver real benefits to local communities (in the form of healthcare, education and sustainable development). These developments were to be welcomed.

Businessmen were prepared to take risks, but they needed reasonable assurances. They therefore found it much easier to operate in countries whose systems of government inspired confidence. Security of ownership was an important issue, and one which recent events in Zimbabwe had brought to the fore. Business would be discouraged from investing where this security was threatened. Transparency in decision-making was also essential. The businessman needed to know who the key players were, that there would be no unfair discrimination between corporate entities, and that he was not disadvantaging himself by playing by the book. The elimination of corruption was a key concern. Corruption favoured the unscrupulous, eroded credibility, damaged legal sources of revenue and undermined the local economy. Corruption was every bit as much the responsibility of the corrupter as of the corrupt. Legal sanctions should be enforced to prevent western companies from perpetrating corruption. Happily, though, corruption was rare in Commonwealth countries. Where it existed it was a major problem, but its incidence had often been exaggerated.

On the whole, it was far safer and easier for business to invest in Commonwealth countries than, for instance, in eastern Europe. But there was still a great deal of scope for specific initiatives to assist economic development. One way in which new technology could be harnessed to do this was by the compilation of an electronic database of commercial opportunities in Commonwealth countries, available via the internet. Such a service could provide a place to advertise business opportunities, a noticeboard for invitations to tender, and a guide to local markets, investment codes, tax regimes and infrastructural facilities. Moves to create such a service were already underway. This would be a practical initiative to maximise the Commonwealth's potential, in line with the declared aim of the Edinburgh Declaration.

At the request of the Chairman, Kent Durr explained the work of the Commonwealth Investment Guarantee Agency, of which he was Executive Chairman. CIGA existed in order to provide risk cover for investments in developing Commonwealth countries. Previously, investment insurance had been available only in limited quantities, and had been severely limited by eligibility criteria and other factors. Many insurers would not provide risk cover for small (e.g. $10-$20 million) investors, and many would not cover existing investments. CIGA brought together the institutional and private markets, and encouraged host governments to be directly involved in decision-making. There had been considerable support for the initiative from the Commonwealth Secretariat and national governments. CIGA already had some $400 million worth of projects under consideration, and would undoubtedly perform a useful function in creating new capacity to promote and accelerate investment flows.
There was extensive discussion of the problem of corruption, and considerable support for the speaker's insistence that the real offenders were those western businessmen who initiated corruption. There was agreement on the need for tougher sanctions.
The speaker was asked how foreign investment might be channelled in such a way as to help develop entrepeneurial capacities within the host countries themselves. Mr. Cluff agreed that this was a real problem, and that unless it were tackled there would inevitably be more and more demands for the patriation of foreign interests, as had been the case in Zimbabwe. One way forward was through the development of local stock markets, to ensure that venture capital was available to local entrepeneurs. Another was through greater publicity, to enable western investors to get into direct touch with entrepeneurs.
There was some discussion of the role of the press, both international and especially local, in promoting good governance. The speaker emphasised that the major problem faced by the local press in many African countries was a lack of investment.
Mr. Cluff's own company was praised for its work in sponsoring schemes for social development. Nevertheless, it was pointed out that only a minority of western companies took their responsibilities seriously. Mr. Cluff suggested that the successors of many of the colonial companies were amongst the worst culprits. Part of the answer was to encourage investment by those companies which had never invested in developing countries before.
The speaker was questioned as to whether non-British companies took the same view of the advantages of the Commonwealth connection. Mr. Cluff believed that they did. It was not unusual for, say, a Canadian or a Malaysian company to base its headquarters in a Commonwealth country even when the majority of its investments in a particular region were in non-Commonwealth countries.
A number of those present referred to research recently carried out at the University of Reading, which identified a "Commonwealth effect" in trade which was especially beneficial to the poorer countries. The lack of publicity afforded the research was deplored.
Asked how the Commonwealth might be "marketed" in Britain, the speaker lamented the general decline in the coverage of foreign news by the British press, leading to an extremely introverted view. Those who knew and thought about the Commonwealth were a small minority. It was important for DfID, Commonwealth groups, etc., to preach to the unconverted rather than to the converted.
The diversion of overseas aid from the traditional recipients towards eastern Europe and the former Soviet Union was noted. It was suggested that there was now a need for a "know-how" fund for the developing Commonwealth states. The British government's declared aim of expanding overseas aid after 2-3 years provided the incentive and the opportunity for Commonwealth groups to start working.

Session V: Good Governance and Good Business

Chair: Sir Robert Wade-Gery, KCMG

Speakers:
Lt.-Col. Geoffrey Bowes (Chief Executive designate, Commonwealth Association for Corporate Governance)
Sir Michael McWilliam, KCMG (Chairman, Royal Commonwealth Society)

Lt.-Col. Geoffrey Bowes took as his theme "Corporate Governance: A New Zealand Perspective". He recognised that the New Zealand model was not applicable universally. Nevertheless, in New Zealand governance was of a particularly high standard, and many lessons could be learned from the New Zealand experience.

The purpose of business was "wealth creation for all the interested parties". Wealth creation was not just about making money, however. There were other interested parties than shareholders, including employees, customers and the government. These were all "stakeholders". The secret of good corporate governance was getting the right interaction between board and management in pursuit of sustainable wealth creation, to benefit all stakeholders. In New Zealand, there was a firm belief in the separation of power. Non-executive directors predominated on most boards, and the role of the non-executive chairman was often crucial. It was found that on 90% of boards which collapsed, the chairman was also chief executive. Boards were not there simply to massage management's egos. Nor were they there to do management's job. They were there to "add value".

Ideally, a board should review annually its own functions in relation to those of management, as these were likely to need to change to suit different conditions. Nevertheless, certain key functions could be identified: setting the mission and vision; agreeing the strategic plan, the next year's operating plan and its associated budget; ensuring adequate resources to achieve the agreed objectives, and monitoring progress towards them; guiding, monitoring and evaluating the Chief Executive Officer; ensuring conformance to statutory requirements; and communicating with stakeholders. Each of these functions involved multiple activities over an extended time-scale. It was important therefore for boards to produce a work plan giving adequate time for each of these activities.

It was increasingly the norm in New Zealand for boards not only to evaluate the performance of Chief Executive Officers (which was arguably a legal responsibility) but to evaluate the performance of individual directors, and to submit themselves to an evaluation of the performance of the board as a whole, often with the help of an outside facilitator. It was important for these evaluations to have a positive outcome. The purpose, after all, was to improve performance.

New Zealand Post provided a case study in successful corporate governance. In 1987 it was corporatised, with its telecommunications and banking subsidiaries hived off as Telecom and PostBank. At this stage, trading losses were normal, service standards were poor, and fixed costs were excessive. Within a few years, productivity had massively increased, and New Zealand Post had actually succeeded in reducing the cost of postage. From a corporate governance perspective, the key factor was that the board drew a clear line between governance and managerial issues, and focused on the strategic development of the business. While the board added value through its strategic direction, it allowed management to get on with running the business. This clearly had lessons for corporatisations and privatisations elsewhere in the world.

Sir Michael McWilliam prefaced his remarks by noting that corporate governance issues had recently been prominent in discussions of the Commonwealth's economic role. The Commonwealth Business Forum had recommended that the promotion of best practice in corporate governance should be one of four priority areas for the Commonwealth. Paragraph 9 of the Edinburgh Declaration had similarly stressed the importance of good governance, transparency, accountability and the rule of law, and an expert group had been established to work on these issues. It was unfortunately not difficult to find examples where the principles of good governance were transgressed, leading to such evils as corruption, cronyism, and environmental destruction.

Nevertheless, it was too readily assumed that good governance and good business went hand in hand. In the real world, this was clearly not the case. Good governance and good business were often to be found on opposite sides. One example from Sir Michael's own experience related to Standard Chartered bank, which in the 1970s adopted an enlightened notion of corporate federalism, involving the delegation of substantial power and authority to local groupings. This proved very liberating for overseas managers, enabling them to take various initiatives to foster local entrepeneurs and to promote corporate good citizenship, and significantly enhanced the bank's standing in local communities. It caused enormous problems with the City, however, which disliked any weakening of central control and any compromising of the bank's ability to impose the interests of its shareholders. The result was a costly takeover battle. The lesson which could be drawn from this episode was that it was important to get a business into good shape before it was possible to devote time to good governance issues. The short-term priority of enhancing shareholder value was an ever-present necessity.

A second example of conflict between good governance and good business related to the work of the Commonwealth Development Corporation in Malawi in the 1990s. By 1992 there was serious international concern at the human rights record of the Banda regime, which led the government to withhold its approval for a £15 million CDC loan for a hydro-electric scheme. The CDC protested, worried about the effects on existing projects and its own credibility, but was overruled. Again, there was a clear conflict between the priorities of good business and those of good governance, although in this case it was good governance which won out.

The question really was, what could be done to make the two worlds of good governance and good business connect more reliably? Here, the answer appeared to lie in articulating clear sets of rules and laws (such as the Cadbury code and its successors, and the OECD proposals on legislation against corruption) which would change the framework of business, making good governance a more basic part of business culture. It was necessary for good governance to be underpinned by clear rules and codes. Moreover, at corporate as well as at national levels, good governance was a question of constant surveillance and monitoring, not just of setting the legal framework. The prioritising of good governance thus necessitated monitoring mechanisms and a willingness to have showdowns whenever necessary.

Again there was considerable discussion of the problem of corruption. It was suggested that the American Corruption of Foreigners Act had not stopped Americans corrupting foreigners. Any similar legislation would run into the same difficulties. Both speakers dissented from this view. The criminalisation of corruption meant that auditors, for instance, would be sensitive to the risks to themselves were they not to perform their legal duties. Sufficient resources were certainly needed for the enforcement authorities, but it was important also to consider the effect of peer pressure. In some countries, clearly, it was necessary also to address the over-concentration of power, in order to reduce the opportunities for corruption.
In discussion of the South-East Asian financial crisis, it was noted that the crisis stemmed largely from a failure of corporate governance in some of the region's financial service institutions. Asked whether he thought that the Commonwealth might be able to help prevent a similar catastrophe, Sir Michael suggested that the Commonwealth could indeed play an important role in facilitating the exchange of technical training and information, which might help prevent the failures of perception and information which had caused the crisis.
On the wider question of a Commonwealth role in promoting good corporate governance, Lt.-Col. Bowes outlined the plans of the Commonwealth Association for Corporate Governance, which included the provision of technical assistance to local bodies, and the development of a generic code of practice which could be tailored to suit the needs of any particular country.
Sir Michael was asked whether he saw any particular lessons for ownership structures in developing countries, and in particular whether family-owned companies might be more able to give greater scope to issues of good governance than quoted companies. In his view, the difference in ownership structures was less important than the question of timing: whether the company was able to take a long-term view, or was required to respond to the short-term pressure of shareholder value.
Several speakers drew an analogy between the board/management relationship and that between national governments and the Commonwealth Secretariat. It was generally agreed that the Commonwealth "board" had performed its duties deplorably, in particular by loading the "management" with assignments while denying it the means to fulfil them. It was further agreed that it would be naïve to expect the board suddenly to improve its performance by providing those means.

Participants

Lt.-Col. Geoffrey Bowes, Chief Executive designate of the Commonwealth Association for Corporate Governance. He lectures for the Otago University MBA programme on corporate governance and works with a number of New Zealand companies on improving board performance

Algy Cluff has been Chairman and Chief Executive of Cluff Mining since 1996, having founded Cluff Oil (subsequently Cluff Resources) in 1971. He is also Chairman (and former Proprietor) of The Spectator, a Trustee of the Anglo-Hong Kong Trust, a Governor of the Commonwealth Institute, and a Director of the Centre for Policy Studies.

Sir Michael McWilliam joined Standard Bank (subsequently Standard Chartered Bank) in 1966, and was Group Managing Director from 1983 to 1988. He was Director of the School of Oriental and African Studies, University of London, from 1989 to 1996. He is Chairman of the Royal Commonwealth Society and of the Royal African Society, and a Board Member of the Commonwealth Development Corporation.

Sir Humphrey Maud has been Commonwealth Deputy Secretary-General (Economic and Social Affairs) since September 1993. He joined the Diplomatic Service in 1959 and served in Madrid, Havana and Paris as well as in the Cabinet Office. He was Ambassador to Luxembourg from 1982 to 1985, Assistant Under-Secretary of State (Economic and Commercial Affairs) in the FCO from 1985 to 1988, High Commissioner to Cyprus from 1988 to 1990, and Ambassador to Argentina from 1990 to 1993. He is also a member of the Round Table.

Prof. Bishnodat Persaud was formerly Director of the Economic Affairs Division of the Commonwealth Secretariat and Chief Technical Coordinator of International Economic Negotiations for the Caribbean Community (CARICOM). He is a Professor at the University of the West Indies, a member of the UN Secretary-General's Committee for Development Planning, Co-Chairman of the UN Expert Group on the Vulnerability of Small States, and a member of the Advisory Panel of the UNDP's Human Development Report. He is also a director of various charitable organisations, including the Commonwealth Partnership for Technology Management, World Aware and the Jamaica Conservation and Development Trust.

HE J Y Pillay was appointed High Commissioner for the Republic of Singapore in March 1996. He joined the Singapore Civil Service in 1961, becoming Permanent Secretary in the Ministry of Finance (Revenue) from 1972 to 1985, Managing Director of the Monetary Authority of Singapore and of the Government of Singapore Investment Corporation from 1985 to 1989, and Permanent Secretary in the Ministry of National Development from 1989 to 1995. He has served as non-executive director of several government-linked companies, including the Development Bank of Singapore, Singapore Technologies Holding Pte, and Singapore Airlines.

HE Ronald Sanders was appointed High Commissioner for Antigua and Barbuda for the second time in 1995. He is also non-resident Ambassador to Germany and France, Ambassador to UNESCO, International Relations Adviser to the Prime Minister of Antigua and Barbuda, and Consultant to the West Indian Commission (appointed by the Caribbean Heads of Government to produce a report on actions to prepare the Caribbean for the 21st century). His previous experience includes company directorships, international relations consultancy and freelance broadcasting, as well as extensive diplomatic service for Antigua and Barbuda. He has published widely on Caribbean and Commonwealth matters.

CUMBERLAND LODGE

Dr. John Cook has been Principal of St. Catharine's (Cumberland Lodge) since 1995. A graduate of King's College, London, he lectured in physics at Guy's Hospital Medical School before spending 27 years as a schoolmaster, including two decades as a Headmaster, first of Christ College, Brecon, and then of Epsom College. He was Director of The Inner Cities Young People's Project for three years before taking up his present post.

Dr. Geoffrey Williams is Director of Studies at St. Catharine's. He was previously Professor of Geography at the University of Zambia, from 1974 to 1987, and before that taught at universities in Nigeria and Sierra Leone, and at the University College of Swansea.

Sandra Willson is Conference Coordinator at Cumberland Lodge. A graduate of the University of Sydney, she is studying for an MA at the Roehampton Institute. Before coming to England she researched and wrote government publications on comparative education.

ROUND TABLE

Richard Bourne is Chair of the Trustee Committee for the Commonwealth Human Rights Initiative, Co-Director of the Commonwealth Values in Education Project at the Institute of Education, University of London, and Editor of Commonwealth.

Stephen Cox has been Executive Secretary of the Royal Society since 1997. Previously he worked for the British Council in Eastern Europe, Ghana and the USA. He was Assistant Secretary at the Royal Society, from 1985 to 1991, and Director-General of the Commonwealth Institute, from 1991 to 1997.

Meredith Hooper is a Visiting Research Fellow in the History of Science at the Royal Institution, London. She is a writer of general information books and of books for children.

Derek Ingram is consultant editor with Gemini News Service, providers of news and information on the Commonwealth. He was founding editor with Gemini from its inception in 1967 until 1993. Prior to that he was a journalist with the Daily Sketch, Daily Express and Daily Mail. He has served on a number of Commonwealth Observer Groups.

Alexandra Jones is Chief Executive of the Westminster Foundation for Democracy. She was previously Deputy Director of the Commonwealth Foundation, and has worked with several UN development agencies. She serves on the Board of the Institute of Commonwealth Studies, University of London, and holds Masters degrees from Oxford, Harvard and London Universities.

Dr. Alex May is a Research Fellow at the European Institute, South Bank University, teaches history at London Guildhall University, and has been Hon. Secretary/Treasurer of the Round Table since July 1997. His DPhil thesis was a history of the Round Table, from 1910 to 1966.

Prof. James Mayall has taught at the London School of Economics, where he is currently Professor of International Relations, since 1966. He will be taking up a new post as Patrick Sheehy Professor of International Relations at the University of Cambridge in April. He has published widely on the impact of nationalism on international order, and on the theory of international society.

James Porter was Director-General of the Commonwealth Institute from 1978 to 1991. Prior to that he was Principal of Bulmershe College of Higher Education. He is currently a Visiting Research Fellow at the Institute of Education, University of London, and director of various charities working in the fields of education and development.

Mark Robinson was appointed Director of the Commonwealth Press Union in 1997. Before then he was a Conservative MP, and served as a Minister at the Welsh Office and as Parliamentary Private Secretary to Lord Hurd and to Baroness Chalker at the FCO. From 1972 to 1983 he was an international civil servant at the UN and the Commonwealth Secretariat.

Nicholas Sims is a Senior Lecturer in International Relations at the London School of Economics, University of London, specialising in disarmament diplomacy and international organisation (the Commonwealth and UN). He is Book Reviews Editor of The Round Table.

Tim Slack is Chairman of the Round Table, and was Principal of St. Catharine's (Cumberland Lodge) from 1985 to 1995. He was headmaster of a British Council school in Burma and of Bedales School in Hampshire, before serving from 1975 to 1983 as Director of Wiston House, the Foreign and Commonwealth Office conference centre in Sussex. He has been a LibDem parliamentary candidate four times.

Sir Robert Wade-Gery has been Vice-Chairman of BZW since 1994, and an Executive Director since 1987. He joined the Diplomatic Service in 1951, and served in Bonn, Tel Aviv, Saigon, Madrid and Moscow, as well as in London. He was Deputy Secretary of the Cabinet from 1979 to 1982, and High Commissioner to India from 1982 to 1987. He has been Chairman of the Governors, School of Oriental and African Studies, University of London, since 1990, and is Hon. Treasurer of the IISS and Chairman of the Anglo-Spanish Society.

COMMONWEALTH SECRETARIAT

Dr. Indrajit Coomaraswamy is currently Deputy-Director of the Secretary-General's Private Office at the Commonwealth Secretariat. Previously he worked for the Central Bank of Sri Lanka, from 1974 to 1989. He was seconded to the Sri Lankan Ministry of Finance and Planning from 1982 to 1989.

Rumman Faruqi is currently Director of the Economic Affairs Division at the Commonwealth Secretariat. Previously he held various senior positions in the World Bank and IFC (Washington), UNCTAD (Geneva) and the UN Department of Economic and Social Affairs (New York).

Dr. Mohan Kaul joined the Commonwealth Secretariat in 1985, and is currently Director of the Management and Training Services Division. He has been responsible, inter alia, for the implementation of the Commonwealth Initiative on Public Service Reforms, and for organising the Commonwealth Business Forum held in London in October 1997. He is a Director of various charities and the author of numerous publications on public administration.

Stuart Mole has been Director of the Secretary-General's Private Office at the Commonwealth Secretariat since 1991. A former college lecturer, parliamentary press officer, charity director and parliamentary candidate, he served as Personal Assistant and Head of Office to David Steel before joining the Commonwealth Secretariat in 1984 as Special Assistant to the then Secretary-General, Sonny Ramphal. He is also a member of the Round Table.

Mrs. Judith Pestaina has been an Assistant Director in the Political Affairs Division, Commonwealth Secretariat, since June 1997. She joined the Dominican Ministry of External Affairs in 1979 and became Permanent Secretary in 1982. From 1987 to 1992 she was Chair of International Management Associates Network, and from 1992 to 1994 was a Board Member of the National Development Corporation.

GUESTS

Thomas Abraham has been UK correspondent for The Hindu for two years. Previously he was foreign correspondent in Sri Lanka and at the UN in Geneva, covering ethnic conflicts, the UN and the Commonwealth. He graduated in economics at Madras University and holds an MA in international relations from Jawaharlal Nehru University, Delhi.

HE Dr. Ursula Barrow has been High Commissioner for Belize since 1993. Previously she served at the UN and with the Commonwealth Secretariat. She holds an MA and a PhD in economic geography and an LLM in international law from the University of Cambridge.

Sir Nicholas Bayne joined the Diplomatic Service in 1961, and served as Economic Director, Foreign and Commonwealth Office, from 1988 to 1992, and High Commissioner to Canada from 1992 to 1996. He is at present a Visiting Fellow at the London School of Economics, Chair of the Liberalisation of Trade in Services Committee, British Invisibles, Hon. President of the British Committee of the Canada-UK Colloquia, and author of various articles on international economic subjects ('Globalisation and the Commonwealth', in the October 1997 Round Table).

Shyan Bhatia has been with The Observer since 1977, and is now Diplomatic Editor. He mainly covered Africa and the Commonwealth before serving as Middle East correspondent, from 1987 to 1997. He is the author of Nuclear Rivals in the Middle East.

Robert Davies is Chief Executive of The Prince of Wales Business Leaders Forum.

Kent Durr is Executive Chairman of the Commonwealth Investment Guarantee Agency (CIGA), and a director of a number of companies with Commonwealth connections. From 1991 to 1995 he was South African Ambassador and High Commissioner to the UK, after which he was Chairman and Chief Executive of Fuel-Tech NV (NASDAQ) and a Director of Clean Diesel Technologies, Inc.

David French has been Director-General of the Commonwealth Institute since July 1997. His previous experience has been in UK charities, most recently as Chief Executive of Relate, from 1987 to 1995.

Martin Hatfull has been Head of the Commonwealth Coordination Department at the Foreign and Commonwealth Office since November 1996, in which post he has been responsible for planning and for following up the Edinburgh Heads of Government Meeting. He joined the Diplomatic Service in 1980, and his previous postings have included Tokyo and Brussels (at the UK Representation to the EU).

Dirk Hazell is Chairman of the Foreign Affairs Forum of the Conservative Party, a member of the National Executive of the Society of Conservative Lawyers, and a Fellow of the 21st Century Trust. Previously he worked as Chief Executive Officer of the International Capital Markets Trade Association and General Counsel of a major investment bank.

Patricia Jamieson is Divisional Director, Raw Sugar and EU, Tate and Lyle Sugars. Between 1970 and 1975 she worked for the UK Ministry of Agriculture and was directly involved in the negotiation of special arrangements for Commonwealth sugar at the time of Britain's entry to the EU. In 1975 she joined Tate and Lyle, and is responsible for negotiations with the British Government, the EU and WTO.

Peter Luff is current Director-General of the Royal Commonwealth Society.

HE Roy MacLaren was appointed High Commissioner for Canada in 1996. He joined the Canadian diplomatic service in 1957, and served in Hanoi, Saigon, Prague, Geneva and at the UN before entering business in 1969. From 1977 to 1993 he was Chairman of Canadian Business Media Ltd. He became a Canadian Member of Parliament in 1979, and served as Minister of State (Finance), Minister of National Revenue and, from 1993 to 1996, Minister for International Trade.

Sir Peter Marshall has been Chairman of the Joint Commonwealth Societies Council since 1993. He joined the Diplomatic Service in 1949, and served in Washington, Baghdad, Bangkok, Paris and Geneva, as well as in London. From 1983 to 1988 he was Commonwealth Deputy Secretary-General (Economic), and from 1988 to 1992 he was Chairman of the Royal Commonwealth Society. He was President of Queen Elizabeth House, Oxford, from 1990 to 1994, and has been a Trustee of Cumberland Lodge since 1987.

Lord Moore of Wolvercote was Private Secretary to the Queen from 1977 to 1986, and has been a Lord-in-Waiting to the Queen since 1990. He is a former Chairman of Trustees of St. Catharine's (Cumberland Lodge). After war service with the RAF he joined the civil service in 1950. He served as Deputy UK Commissioner to Singapore from 1961 to 1963, and Deputy High Commissioner from 1963 to 1965. He became Assistant Private Secretary to the Queen in 1966 and Deputy Private Secretary in 1972.

Jonathan Richardson has been Counsellor at the Australian High Commission since 1994, dealing with the Commonwealth, arms control and Eastern European issues. From 1992 to 1994 he was Chargé d'Affaires at the Australian Embassy in Belgrade, having previously worked in Moscow and on the UN and Soviet Union desks.

James Roberts lived in Zimbabwe from 1981 to 1989, working first as a teacher then as a journalist for The Herald. He joined The Independent's foreign desk on his return to England, and is now Deputy Foreign Editor. He has reported from Malawi, Mozambique, Somalia and Kenya, as well as from Zimbabwe.

Tracy Roberts has been with Carfax Publishing (publishers of The Round Table) for a number of years. At present she is Marketing Coordinator. She will soon be assuming responsibility for Carfax's Politics and International Relations journals as Managing Editor.

Elizabeth Smith is Secretary-General of the Commonwealth Broadcasting Association. She is a former Controller of English Programmes for the BBC World Service, from 1987 to 1994. Before that she was Head of World Service in English Current Affairs, and earlier a TV and radio news and current affairs producer.

Lord Thurlow joined the civil service in 1935, moving to the Dominions Office in 1937. He served with the UK delegation at the Paris peace conference in 1946, and became Assistant Under-Secretary of State at the Commonwealth Relations Office in 1958. He was High Commissioner to New Zealand from 1959 to 1963, High Commissioner to Nigeria from 1964 to 1967, and Governor and Commander-in-Chief of the Bahamas from 1968 to 1972.

Trish Williams is a media gender consultant with the Commonwealth Broadcasting Association, and is Chair of the UK branch of the Commonwealth Journalists' Association. She also serves on the Council of World Aware and on the Committee of the International Institute for Democracy and Electoral Assistance. Previously she worked as a journalist for BBC World Service Current Affairs.