Ironically, the environmental groups who were angered by the failure of the politicians to settle their differences over global warming were those whooping for joy when mutual loathing and mistrust derailed the world trade talks. But there is a common thread linking Seattle and the Hague - a crisis of multilateralism. The international superstructure that is supposed to enhance global governance - the gatherings of world leaders at conferences held under the auspices of the United Nations, the World Trade Organisation, the International Monetary Fund - is creaking.

Moreover, at a time when the intensification of globalisation has made effective multilateral institutions more important than ever, supra-national bodies have rarely been held in lower esteem. The framework that was established in the aftermath of the second world war no longer seems capable of finding solutions to the problems that an increasingly integrated and connected world throws up.

Why is this? In part it is something to do with the growing power of corporate capital and the dwindling effectiveness of elected politicians. At the birth of the modern international system, business was tainted by memories of the depression and fascism. Statesmen, fresh from running planned wartime economies, were in the ascendancy and were able to set the terms of the debate.

What's more, the institutions that were set up - the UN, the World Bank, the IMF - allowed nation states a large degree of autonomy. The veto for permanent members of the UN security council, for example, meant that the great powers engaged with the UN in ways that they were never prepared to with the League of Nations between the wars. Capital controls meant that countries could enshrine full employment as the prime economic goal; subsidies and controls on trade meant that threats to particularly vulnerable industrial sectors could be mitigated.

Big business and big capital are now in the ascendancy. The intense lobbying in the run-up to Seattle made it abundantly clear that the talks would be driven by what multinationals wanted rather than what the bulk of the WTO's 140 members -poor countries for the most part - needed to hasten development. In the Hague, the big American polluters effectively had a veto on the radical measures needed to reduce carbon emissions. Even worse, the belief system of multinational capital - minimal regulation, a messianic belief in markets, the primacy of low inflation and budget discipline over all other economic variables - has found an echo in the multilateral institutions.

America exemplifies the change. There is no comparison between the generation of Roosevelt, Truman and Marshall and that of Clinton, Bush and Gore. The result is that America's enormous power and potential to make things happen is being squandered or misused.

So what is to be done? One answer is to give up on multilateralism altogether, a natural enough reaction given recent events. The IMF has failed developing countries? Then abolish it. Unesco is unable to show the leadership necessary to deliver global targets for primary education? Scrap it.

But rejecting multilateralism is not really the answer, as most of those campaigning to change the terms of globalisation recognise. Barry Coates, director of the world development movement, says: "WDM is not anti-trade. But we are concerned with who makes the rules and who gets the benefits. We agree that there has to be a rules based system for governing global trade. The alternative is a world of might-is-right protectionism. However we think the aims and the rules of the current system are the wrong ones."

This is a sensible approach. If we want a deal on greenhouse gases, if we want debt relief for the poor, if we want curbs on speculation, then we need effective multilateral institutions. The answer is not to go down the route of unilateralism, which would only leave the weak even more exposed to the naked power of the strong, but to change the goals and working practices of the institutions we have, and to set up new institutions - a world environment organisation with teeth, for example - to deal with new problems.

Perhaps we should hijack the language of the market and impress on our politicians and international bureaucrats that we, the consumers, no longer find the existing product range to our liking. The IMF, the World Bank, the UN, the WTO are not providing what we want. Unless they can diversify, make themselves more relevant and deliver some tangible benefits they face going out of business.

© Guardian Newspapers Limited 2000

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