Virtual Visibility

Networks are the organizational charts of choice for the information age. Corporations have been transforming themselves from vertical hierarchies into horizontal networks for a decade; networks of nongovernmental organizations (NGOs) helped bring us an international treaty banning land mines and a permanent International Criminal Court. Not to be outdone, national governments are networking as well, linking with their regulatory counterparts across the globe to tackle thorny transnational issues such as money laundering, securities fraud, and drug trafficking. Unfortunately, they are doing so in ways that raise serious concerns about accountability. How can we regulate the regulators? The answer may lie in the mother of all networks — the Internet.

The rigid trappings of state-to-state diplomacy are giving way to new and informal interaction among governments. Regulators are leading the charge: Central bankers, securities and insurance commissioners, antitrust officials, and justice ministers are networking to consider common problems requiring coordinated action. They meet through organizations such as the Basle Committee on Banking Supervision and the International Organization of Securities Commissions (IOSCO). They come together on a bilateral or regional basis, from regular meetings between U.S. and European antitrust regulators to gatherings of environmental authorities from Canada, Mexico, and the United States. Members exchange information about the individuals and organizations they regulate as well as suggestions for performing their supervisory functions more effectively. In short, networks engage in global governance without global government.

Government networks are fast, flexible, cheap, and effective. They are also decentralized, thus avoiding the creation of more bureaucracy on top of already bloated national structures. They are informal; the rules or policies they adopt or endorse are typically voluntary and nonbinding. Their impressive results include the creation of a global code of best practices for securities regulators and the development of capital-adequacy requirements by the central bankers of the world’s 10 largest economies.

For many observers, however, these new groups are troubling. Government networks portend the rise of a shadowy and insubstantial global technocracy. The very concept of a "network" connotes power that answers only to a coterie of insiders. As former Basle Committee Chairman Huib J. Muller once observed, "We don’t like publicity. We prefer, I might say, our hidden secret world of the supervisory continent." But participants in government networks don’t think of themselves as engaging in a new kind of 21st-century diplomacy. To them, networking with colleagues around the world is simply part of the job.

The U.S. Securities and Exchange Commission has negotiated scores of "memoranda of understanding" (MOUs) with foreign regulators, creating frameworks for cooperation against insider trading and other forms of fraud. Justice ministries favor MOUs for issues such as terrorism and organized crime. These agreements often supplant traditional legal-assistance treaties, which usually must be formally negotiated and ratified by national legislatures. Regulators crafting such arrangements typically insist that they have not formulated policy but have merely established mechanisms for exchanging information. However, access and control over information has become a crucial component of government power.

How can the individuals and organizations subject to regulation rein in the regulators? Domestic efforts to address this question have resulted in requirements for open hearings and public notice-and-comment periods before new regulations take effect. But transnational regulatory networks trigger even greater anxieties. They wield more power than domestic agencies because they can develop rules on a global scale. Some worry that, since their activities are harder to track, international networks of government officials are more susceptible than national agencies to capture by corporate interests. Watchdog groups that cover governments often lack the resources to expand their monitoring activity across borders.

Once hailed (and decried) as a haven for anarchy and anonymity, the Internet may offer the best antidote to this lack of accountability. When government networks "go virtual," they also become more real. A Web site identifies the members of a network and links them in the public eye. For network members, a common Web site serves as a clearinghouse for the dissemination of information and the coordination of activities; for those outside the network, the Web site creates a public face. For instance, the private companies participating in the Global Compact — a United Nations-led network of 50 corporations and 12 labor and environmental organizations that promotes core labor standards and environmental protection — have pledged to post progress reports on a U.N. Web site. Somewhat skeptical of the initiative, groups like Amnesty International have promised to scrutinize the postings.

The more institutionalized networks like the Basle Committee and IOSCO already have Web sites geared toward members as well as the public. To the extent that they identify members and spell out goals and agendas, these Web sites provide instant transparency. A virtual presence also creates opportunities for individuals, the private sector, NGOs, and other governments to participate in initiatives such as the Year 2000 Project — a meganetwork created by the Basle Committee, IOSCO, and the International Association of Insurance Supervisors to develop strategies for addressing Y2K problems. Similarly, the Web sites of the Organisation for Economic Co-operation and Development and the World Trade Organization offer resources so NGOs can access information and comment on official activities.

As virtual visibility expands, Web sites are likely to become the focus of additional efforts to improve accountability. Transparency requirements will be foremost on the agenda: Sites may eventually include records of meetings held and issues discussed and decided, as well as calendars of upcoming projects. If network participants are engaged in actual policymaking, national legislators or even global public opinion can push them to adopt the notice-and-comment procedures required by U.S. law. And as domestic governments experiment with "e-government" by creating portals through which citizens can access government services, offer feedback, and even vote, the electronic monitoring of transnational government activity will become increasingly feasible.

Journalist Thomas Friedman has argued that the defining characteristic of the Internet is that "we are all connected, but no one is in charge." The Web sites of government networks allow those who would be in charge — voters, legislatures, regulated entities — to begin asserting control. They need not be silent observers or passive consumers of information; rather, they can become active participants in the formulation and implementation of global governance.