By Modi Umangkumar Champaklal, NLIU, Bangalore
Editor’s Note : International financial Institutions such as the World Bank and the International Monetary Fund are facing varied economical, financial, political, social and environmental issues today. Their role with regards to the administration of global distributive justice, minimising poverty or aiding in the developmental processes is being called into question. In this paper, the author has tried to expose the internal working procedure of these institutions and the effects of their policies which have been debated vigorously as skepticism looms large in the wake of a worsening economic situation and living standards especially in the Developing and Least Developed countries.
The concept of cosmopolitanism and liberal nationalism has made substantial inroads into the sovereignty. The traditional conception that a sovereign is one who can do whatever pleases him does not hold true anymore as developments at the international sphere has curtailed there powers in more than one way. These developments can however also be attributed to the rise of some global institutions starting right from the United Nations Organisation. There is a very contentious argument that freedom of states never means the political freedom because politics does not give anything to the poor or help them feed themselves. It can never be however argued that political freedom can be done away with, but the argument is that economic freedom is also very important and any country can never be said termed free in the real sense of the word as long is not economically free. Juxtaposing this rise of the international institutions more particularly the International Financial Institutions with that of the economic freedom which in turn leads to political freedom, there are quite a few contentious issues that confront us. The rise of these institutions immediately after the Second World War and their steady rise have led to changes in the global power equations. The change in the global scenario in past 70 years can hardly be undermined and thus the working policies of these institutions also required changes in their policy making; whether they have done it again a question that needs to be looked at. The most affected parties of these global economic transactions have been the third world countries; whether these transactions have made them better off or worse off is also a question that beckons answers.A very important and that can also be the most important concern in such a situation is the governing and the subsequent policy making of these institutions. While some of these institutions are a direct offshoot of the United Nations which is a political body, there are other institutions which are in a way insulated from the UNO and thus supposedly out of the political influences but again the question arises if it is really so. The present study is an attempt to understand some of the above mentioned issues and also the relevance of these institutions in the present international scenario which is very much different from the one which led to the formation of these organisations.
The Indoor Management
There can be no ways to explain the fact that globalisation has brought to the fore certain positive events that would not have been possible otherwise. First and foremost it has lessened the feeling of isolation among the countries which are not economically better-off and brought them to terms with the current international realities. It is because of globalisation only that people the life expectancy of people in the west has increased and the people in the east have got increased employment opportunities although the content and effect of these opportunities still remains an issue of intense debate among the staunch believers and the critics of globalisation; in addition the process of globalisation has increased the connectivity throughout the globe.The anti-globalization protests themselves are a result of thisconnectedness. Links between activists in different parts of the world, particularly those links forgedthrough Internet communication, brought about the pressure that resulted in the internationallandmines treaty—despite the opposition of many powerful governments.[i]
The process of globalisation as soon as it started to gain a firm footing brought along certain issues, prime among them being the administration of justice at the global level which as it turned out was much more complicated than it was perceived to be. There are a plenty of issues which demand justice at the global level but the current setup is dealing with only a few of them with enhanced focus and they include poverty at the global level, the issues relating to trade, aid to the developing countries for an enhanced infrastructure and climate change. It is still a debatable issue as to whether the concept of global justice or global distributive justice is having any positive implications on the ground or not. In order to administer this justice various institutions are at the forefront with each one supposedly having its own particular function to perform.
The scope of the study undertaken is however very limited in this regard as its only focus would be the International financial institutions (IFI’s) and their role regarding the administration of global distributive justice. Although there are various financial institution at the international level whose prime function is either to minimise poverty or aiding in the developmental process, most important among these are the International Monetary Fund (IMF) and the World Bank also referred to as the International Bank for Reconstruction and Development (IBRD). The focus of the initial portion of the study would be on the internal management of these global institutions which deal with the reimbursement of a lot of money and the policy of these institutions as these policy matters have far reaching implications with regard to global distributive justice. The effects of these policies have been debated vigorously as scepticism looms large in the wake of the worsening of the economic situation in several countries. Without going into the details of these policies we will be just looking at the procedure of this policymaking and as to the fairness of these policies with respect to the procedure in place. As has been already discussed that we would be focussing on the big two as they can be referred to as i.e. the IMF and the World Bank.
The International Monetary Fund (IMF)
An international organisation that was initiated in 1944 but was formally created after more than three years in 1947 by twenty-nine countries. The membership of the IMF has grown by leaps and bounds to 187 countries which constitute 98% of the world population.[ii]Interestingly it excludes countries like Cuba, Myanmar and North Korea. The IMF has various aims but the important among them being reduction of poverty, helping countries attain financial stability and to promote monetary cooperation. The people in IMF believe that it has played a very critical role in the various financial disturbances since its inception which was almost some seven decades ago, however such rosy picture is in contravention with various grim realities and such facts are widely documented by various .Before the financial turmoil that erupted in 2008, the Fund’s budgetwas in such poor shape that staff cuts were imposed. Not the firsttime that good times had side-lined the IMF to the point that it washandicapped in responding to crisis and to what extent has been the institution been able to minimise the global economic imbalances which are on a rapid surge. [iii]
One of the basic criticisms of the IMF has been that voting procedure in the governing body gives abundant voting rights to the states which are major contributors to its fund. The procedure is based on the Special Drawing Rights (SDR) which is supplementary foreign exchange reserves. It instead represents a claim to currency held by member countries for which they may be exchanged. This means that the decision making power of each country depends on its SDR quota and is clearly against the interests of the poorer countries. Moreover these countries that hold majority are the capitalistic countries and their grip over the decision making is bound to invite criticism and it does invite criticism. Let us take the example of the United States which hold 17% of the total votes in the IMF; the irony is that to take any special decision according to the Articles of agreement out of the total number of votes 85% majority is required which means that the United States has the extraordinary power of effectively vetoing every important policy making decision. This is just one of the many ways in which a group of four –five countries have literally hijacked the working of the IMF. This also implies that such right quite emphatically excludes the majority of the member states in as far as the working procedure is concerned. The pattern of this trend has continued to tilt in favour of the more powerful countries which in turn leaves the poorer countries in a state of utter discontent because they as members and beneficiaries of certain policies are bound by the commitments of this polarised system. What has been very interesting is the increase in the vote share of the certain Asian countries like China and India which has changed the equations of power in the institution but it is also due to the fact that these states are the beneficiaries of the SDR procedure, which means that this should not excite the sceptics anytime soon because the bottom line remains that there is no respite from the fact thatcountries with less economic power and especially the debt-holders remain at the receiving end of what its promoters is a system of “justice”. After all the system was meant to help the less privileged countries and not countries with rapidly thriving economies who in the current state of affairs seem to be the chief benefactors of the existing setup.
The International Monetary Fund (IMF): Members’ Quotas and Voting Power-Table 1.1
Source: IMF Members’ Quotas and Voting Power, and IMF Board of Governors, IMF, July 20, 2011[iv]
To give an insider’s account on the highly politicised affair of things Joseph EStiglitz a former President of the World Bank Group in his book[v]has given a detailed account of his experiences, to quote one of his passages,
After four years in Washington, I had become used to the strange world of bureaucracies and politicians. But it was not until I travelled to Ethiopia, one of the poorest countries in the world, in March 1997, barely a month into the World Bank job, that I became fully immersed in the astonishing world of IMF politics and arithmetic. Ethiopia’s per capita income was $110 a year and the country had suffered from successive droughts and famines that had killed 2 million people. I went to meet Prime Minister MelesZenawi, a man who had led a seventeen-year guerrilla war against the bloodyMarxist regime of Mengistu Haile Mariam. Meles’s forces won in 1991 and then the governmentbegan the hard work of rebuilding the country. A doctor by training, Meles had formally studiedeconomics because he knew that to bring his country out of centuries of poverty would require nothingless than economic transformation, and he demonstrated a knowledge of economics—and indeed a creativity—that would have put him at the head of any of my university classes. He showed a deeper understanding of economic principles—and certainly a greater knowledge of the circumstances in his country—than many of the international economic bureaucrats that I had to deal with in the succeeding three years.
The World Bank Group (WB)
The World Bank group as it exists today is a member of the United Nations Development Programme (UNDP) and consists of:
- International Bank for Reconstruction and Development (IBRD)
- International Development Association (IDA)
- International Finance Corporation (IFC)
- Multilateral Investment Guarantee Agency (MIGA)
- International Centre for Settlement of Investment Disputes (ICSID)
A look at the Articles of Agreement makes it amply clear that the basic function of the Group is the eradication of poverty in addition to the ancillary objects of foreign investment, international trade and the facilitation of capital investment.Its finances are taken care of by the shareholders, investors and the donors and other details as to its functioning have also been laid down in detail.[vi]
The World Bank and Economic Development MDGs: Progress (percentage of countries)[vii]
To its credit the WB has done a commendable job over the years and more particularly in the past two decades in the economic development of the developing countries by emphasising on the transfer of information, expertise and knowledge in addition to money. In recent years, the World Bank has cooperated with manypartner agencies in striving to attain the MillenniumDevelopment Goals (MDGs),[viii]which set specific targets for:
- Reducing poverty
- Advancing educational attainment
- Raising the status of women
- Reducing child mortality
- Improving maternal health
- Combating HIV/ AIDS, malaria and other diseases
- Ensuring environmental sustainability
- Enhancing development cooperation
A graphical representation of the achievements regarding the MDG is given in table 1.2
Although the indoor management in the working of the WB is better than that of IMF there are considerable issues that are in favour of the developed countries but in 2010 the developing countries have given more of the voting share. Again the point arises that the imbursement of money to the needy countries will to large extent depend upon their relations with the developed countries which in turn will lead to them taking decisions not in their national interests but those which will please the countries which effectively play a significant role either as the so called donors or shareholders. The underlying assumption again is the fact that the institution promotes the interests of the developed countries more than anything else whilst it was supposed to be working for the worse-off in the world. The whole process politicises the atmosphere which was never the aim and the irony is that such acts can be even justified by referring to the Articles of Agreement.
The Altruistic and Charity oriented Facade of International Financial Institutions
The Africa Commission in 2005 concluded:
“History has shown us that development cannot and does not work if policies are shaped and forced by outsiders”
“Policy conditionality…is both an infringement on sovereignty and ineffective”
The question which is being asked by African countries after around 45 years of cooperation, with these states and institutions, is where we are exactly and we’ve had to wait 45 years to realize that, despite having everything needed to achieve it the economy has never taken off or developed over time but that we’re bogged down in anti-development. Malnutrition, undernourishment, chronic illiteracy, chronic unemployment and even the total lack of decent living conditions. As we can see, promiscuity reigns. It’s impossible to describe. What does this lead to? The total degeneration of the foundations that represented our society’s key values. To that, we need to add this flood of information we receive that only flows one way. At times, it cancels out all our efforts to try to live as we really are.
Because even within our imaginations, we are being raped. They don’t just take our resources, our work, and our money, they take our minds too. We have reached the last threshold of the human heartbeat. And now, in a totally biased manner, they come to observe this failure. And, on observing it, they say, “No “You must maintain libertarianism “as the development mode for your countries. “In other words, prevent us from creating a payments deficit. That presupposes that all the money we receive must be used to restore and maintain our solvency in relation to our creditor and cannot be used within the national economy. Today, we pay out much more than the true total of our budgets. This framework of action set up by the International Financial Institutions, what effect will it have?
It will smother a fire that will continue to smoulder. It’s simply the fire of imposed destitution. It’s the fire of a terrible form of colonialism. It’s the fire of an unspeakable form of exploitation. It means some countries will disappear. We are barely kept in this international system and take part in it just because we are good little markets and a source of money. Today, we give everything to U.S.A. and we give everything to Europe!
It is stated that the share of our states’ budgets devoted to social services and to the repayment of the debt is set as follows between 1992 and 1997. We have examined a few countries I shall use those examples. In Kenya, when the national budget allocated 12.6% to the basic social services, health, education and infrastructure, 40% of that same budget was devoted to repayment of foreign debt. In Zambia, when 6.7% was spent on basic social services, 40% was again used to pay off the debt. In Cameroon, it’s even worse 4% of the budget was spent on basic social services while 36% was used to pay off the debt. To take a concrete example, of the 200 billion CFA francs in Cameroon’s budget, only 8 billion was spent on basic social services.
The money which is being invested came with a proviso. It forces the hand of 18 countries to make them speed up the structural reforms that benefit the developed countries. But Country like Africa not only fighting for subsidies. But fighting for the possibility for a country like Mali to produce cotton if it wishes or not, but to earn its living. A living to sell what? That’s why this issue goes way beyond Africa. Why should the fate of people depend on their ability to produce and sell abroad? China’s expansion must be integrated into the debate. Your own countries tremble before China. What will Mali do? Besides, with the prices of products that comes from China and copy Africantextiles, “In an inevitably open world, “there must be civilize globalization “and give it a meaning.” What we are thinking of these words? Can progress be made in Africa or not during the globalization process? For example, if the standards enforced by the ILO were made general, would that be good or bad? Or would that merely oppress the Africans even more?
African countries have known 100 years or more of colonizationand, with colonization overthey are struggling to ensure the conditions for their development.And what do they find themselves facing?
Who is guilty here institutions or country. After all, the situation is terrifying.The figures are murderousand the statistics homicidal!We simply need to look backat the last 20 yearsof structural adjustment.These plans have caused destructionand impoverishment.The figures provideeloquent informationon the tragedy taking place.Life expectancy has droppedto the age of 46.The Aids crisis is manipulatedto conceal that mortality ratesare on the risebecause of their linkto the importantand significant fallin average income in Africa.
So the party’s over.The party’s overand the structural adjustment planshave failed wholesale. 50 million African childrenare scheduled to dieover the next five years.Three million are scheduled to dieof malaria next year.In the face of such tragic figures; one can saythat International Financial Institutions have won.We cannot say itand we won’t say it.We shall avoid saying it because structural adjustmenthas clearly placed Africain a vicious circle,an absurd circlethat begins, as we haveclearly seen, with the debt!The debt is a stonearound Africa’s neck,the slave’s sign ofallegiance to his master.
The figures speak for themselves. $220 billion in 2003The latest statistics have shown, even though $4has been paid back per African,$4 remains to be paid. It is clear that this debthas brought Africa to her kneesby depriving herof her financial sovereignty, by dismantling her civil service.It has forced herto sell off her public servicesto serve financial predators.
It has razed some of her hospitalsto the ground.It has privatized her school systemthrough the low wagespaid to civil servants.It has brought Africa to her knees,making her the gloomy mirrorof what the world is becoming:A privatized world.And in this privatized world,the international financial institutions, in theory humane,has become inhumane! The international financial institutions have become inhumane institutions because it is the Trojan horseof financial capitalism. The international financial institutions after bringing Africa to her knees, are now threatening to suspendall public aid to Africabecause corruption is rife here.The circle is complete,confusing causes and consequences.
But these institutions are simply the cornerstone,the centre of gravity ofthis unchained form of capitalism, financial capitalism,predatory capitalism,capitalism ignoring generalinterests to attain its key goals:The production of profitsfor all eternity! This institution occasionally tries to appear more humane. Let’s end this hypocritical dance. Let’s end this cursed predatory dance. Let’s consider the international financial institution’s arguments.
There are accusations being put on the international financial institutions, they are deaf and blind. Infant mortality is on the rise in Africa. Who is responsible for this? Whether international institutions, are seeking this results? Do international financial institutions really responsible life expectancy in regions of Africa to drop and fall below the age of 50 years? People die of diarrhoea in Africa, people die of malaria and we’re not responsible. But they die of those things. Someone has said medicine is in the North and the sick in the South. Even if these institutions are guided by pure self-interest, How could possibly these institutions seek such goals. But that is how things are. Because these institutions are worked in partnership with governments to assess the situation and to decide what needs to be done, All the same, we need to raise an issue that not only concerns Africa but that is particularly detrimental to Africa.
There seems to be a curse on Africa. Europe holds up a terrifying mirror to Africa that pollutes people’s minds and stifles crucial awareness. Is Africa doomed? Is poverty as naturalas tropical genocide,slavery and neo-colonialism? We can also find the fatalityin the ideaof an ignorant Africa. The Africans know nothing about the complexities of this world! Since they know nothing, all criticism is considered unfounded.
So, Can we declare these institutions guilty of abusing the African people? Can we declare these institutions guilty of failure to render assistance? Can we declare these institutions guilty of not respecting its mandate to serve mankind? In doing that, you’ll open the path to the utopia that each one of us has in mind and allows us to imagine a new world beyond the hills. This utopia is, in a way, the African ram that comes to rub against and rip the pants of reasons of state and the market! Utopia, tomorrow, to avoid what is under way in the suburbs of Accra, Abidjan and Cairo where children drunk on deprivation could turn into balls of fire tomorrow.
Can we declare these institutions guilty and force it to become more humane. How far this argument is justified these institutions are guilty of the crimes of inhumanity and cynicism committed over 20 years. civil-society assessment of structural adjustment in 2002, which noted that “Poverty and inequality are now far more intense and pervasive than they were 20 years ago, wealth is more highly concentrated, and opportunities are far fewer for the many who have been left behind by adjustment”
The Africa’s silent majority that has been subject for 25 years to the iron law of adjustment.The law of the strongest that has never been the best. Can these adjustmentsconsider as an evil, an organized and structured evil administered and inoculated to African people. This evil is the cynicism of the debt, the vicious circle of the debt. This debt that has ruined our economies and that has sapped their energy before they have finished paying it. What can be done with the debt’s violence?”The debt which can’t be paid.”it cannot be paid because it is illegitimate. Because it is violent. It cannot be paid simply because it is untenable. On top of the debt’s violence, they witness the selling off their public services, their basic social services. Privatization! The health service has been privatizedbut between June and September 2005, 42,000 people died of cholera, a mediaeval disease that was thought to have been eradicated here. And country is privatizing health, and privatizing education, a universal right. The acquisition of knowledge should be the same for all but two thirds of our children are illiterate and now we’re being asked to pay to acquire knowledge! That’s not all! Water has been privatized. The Joliba, Senegal, Zambezi, Limpopo! Their Rivers privatized! With their stories, legends and traditions buried in the current, rivers and lakes! That’s inadmissible. This people are a widow mourning the death of a husband buried under the ruins of adjustment.
These people are an orphan crying for a mother who died in childbirth. All it asks for is its due: Basic health care. This person is a father, made redundant by the railway, these men you have heard, and these women who have pleaded on your stand. The father who has seen his authority, who has seen his influence and his dignity weakened .and swept away by an unfair redundancy. The peasants who asks, “Why don’t I sow anymore? “When I sow, why don’t I reap? “Why don’t I eat when I reap?” This Africa is asking this with dignity.
Humility and modesty,but with legitimacy, for justice. The International Institutions have, to respect their mandate that they should never have forgotten, with man as the goal of all humane action. And we’re all responsible because it’s our duty as a generation to bring about the advent of that day for the balance of the world and of man’s future is at stake. “My ear to the ground, “I heard tomorrow pass by”[x]
Efficacy of the Surgical Transplant of the International Financial Institutions with New Financial Institutions:[xi]
Why these new institutions are important because of the need for investment in developing countries globally. And existing financial institutions are being short fall in resources so these new institutions are enhancing the new flow of money for very important developments concerns like infrastructure financing and other necessary needs of the poorest countries.
These institutions also bring the viability and dynamics in economy. After establishment and development of international Financial Institutions these are the institution which brings the change in economic and political powers to the BRIC Countries which are far more advancing then other countries due to institutional change in the regional economy. The other international Financial Institutions suffering because of their adamant attitude towards change. In G-20 Summit there were certain recommendations being made to bring change in the functioning of these institutions they strongly put emphasis on revision of policies and other needed changes. There are certain accusations are put on these institutions for not bringing the change in the functioning and policies due to pressure has been built by U.S. Congress and certain allegations are also raised on the issue of democracy where the important question can be asked that in era of globalisation heads of the institutions are being choose by the one country due to quotas and sharing of votes. So where is the democracy?[xii]
If we take example of new Institutions like New Development Bank it has been proposed that it’s going to be headed by an Indian. It will be located in Shanghai. It has a governing structure that will involve all of the BRICS countries. This certainly shows democratic governance of the institutions. This can become learning lessons for the existing International Financial Institutions to bring fundamental change in governance. This certainly doesn’t raise the question of competition with the existing institutions. But by creating new institutions BRICS countries try to bring more resources to the developing countries to fulfilling their needs.
How far the existing regional institutions like in Brazil is contributing towards the creating new financial institutions?
What is the proportion of reserve will be Invest in the New Development Bank?
If we show some data analysis it has been proposed to finance infrastructure and “sustainable development” projects, with $50 billion in capital to start with, and the $100 billion Contingent Reserve Arrangement (CRA), to tide over members in financial difficulties. the CRA is not a fund but a tangle of bilateral promises to make foreign reserves ($41 billion from China, $5 billion from South Africa and $18 billion each from the others) available to BRICS in trouble. Every country will be able to tap a multiple of its contribution.[xiii]
It has been estimated that Brazilian Development Bank (BNDES) is bigger than World Bank. This certainly shows that how single country can create its own regional financial institution. And from time to time BNDES has proven that how effectively development bank can be function without adding conditionality to promoting the development for other least developing and developing countries.
How these new financial institutions will function in comparison with existing financial institutions?
This can be tricky situation because we don’t know how these institutions will perform but if we take look on the agreement which has been sign by the BRICS countries for the institutions avoids the conflict of interest amongst the countries. If we look into jurisdictional aspect there is the possibility of conflict among regarding gaining powers in the institutions. But due to emerging markets in particular countries this conflict can be resolved. This can be considering as the major concern for the existing institutions.
If we answer the question whether the new financial institutions can become the substitute for the existing institutions?
Then answer would be no because this institutions can be proven as the competent and it will be complement for the strengthening the developing countries in development of the financial infrastructure and also to meet with the needs of the developing countries.[xiv]
The Law applicable to the International Financial Institutions
The wholediscussion on the International Financial Institutions, whether regarding its achievements or its drawbacks will be misplaced without mentioning the law applicable to these institutions. The study of the law applicable to these institutions is a vast task to undertake but for the purpose of our understanding of the mentioned relevant issues it is important to briefly discuss the issue as this has a considerable impact on the functioning and policymaking of these institutions.
As we are studying the IFIs and the international law applicable to them, the fundamental question that is to be answered is that whether they are the subjects of international law or not and the same has been put to rest by the International Court of Justice in the Reparations Case where it held that international organisations are a subject of International law just like the states.[xv]The judgement as such is an authority on law applicable to the international organisations and from this judgement only follows the fact that legal rights and obligations of the international organisations is based on constitutive treaties, any other treaties that the organisation may have signed, and applicable customary international legal principles.[xvi]When we look at the Reparations case it seems that the law applicable to the international organisations is well settled but the point is that it is not and what is clear is only the fact that only the jurisdictional fact is clear, that also to some extent only. The point that the law regarding international institutions is less established can be according to Daniel B. Bradlow and David B. Hunterattributed to three main factors:[xvii]
- The first reason according to them is that the status of international organisations as subjects of international law is different from that of the states. While the states are free as regards the exercise of their powers and obligations, the organisations are bound by their constitutive treaties.
- The second reason is that such organisations are created by states to perform functions that suit there own interests. This means that, although such organisations clearly have a legal existence that is independent from their member states, and thus their decision-making, is formally dominated by their member states, or more accurately, their most powerful member states.
- Third reason as per the authors is that the relationship of the organisation with its members, in principle, is conducted at the level of the state. this means that all interactions between the organisations and non-state actors in its member states are expected to be indirect and involve the mediation of the state. Only the state has a direct relationship with the organisation .This suggests that only the state should be able to hold the organisation accountable for its decisions and actions that affect the state and its citizens.
The expansion of the field of operation of the financial institution has raised fresh concerns in certain regards one of them being that it is very difficult for a member to raise his voice due to the highly polarised voting system in these organisation and a pitch is being raised in favour of powerful states giving up a share of their voting rights as such a process will only lead to a more accountable system of affairs.
The bottom line is that the delicate ambiguity in the articles of agreement and the lack of precision in the applicable international legal principles means that the IFIs have no other choice than to interpret these legal requirements and decide how they apply to their operations.[xviii]
It is very important to take into account the fact that the International Financial Institutions are facing varied economic, financial, political, social, and environmental issues and thus the application of the rules of international law become difficult to interpret and gives these institutions control which will ultimately act as a catalyst to the deteriorating standards of the institutions themselves. Thus the response to the issues at hand will go a long way in helping the standards of accountability which are requisites for organisations whose decisions can go a long way in either deteriorating or improving the situation in a pretty large part of the globe.
The essence of the undertaken study was to have a look at the working procedure of the International Financial Institutions and the effects of their subsequent policy making. The study regarding the internal management exposes a huge deficit between the powerful and the economically less privileged which of course has a considerable amount of impact as far as the policy making is concerned. This is precisely the reason that critics argue in favour of a balanced order as regards the financial institutions are concerned but it is easier said than done because of the money these countries who are said to be the power centres’ of the world economic order pump into these institutions. In a way they are justified in holding the power to the extent that they do in the present scenario because of their money, so the view that there powers should be curtailed to a large extent is another extreme of the spectrum. There can be no solutions when we stand at the extremes and thus there needs to be a trade off, but an issue that needs to be looked upon is the lobbying pattern of the countries that have a large chunk of the vote share as they have the capability to block even the minor reform measures in these institutions. The impact of the policy making at the topmost level is having very severe impact at the ground level as has been discussed in the undertaken study. The point is that we cannot attribute the disastrous impact of the economic policies to the indoor management of the global financial institutions, there are a number of other factors prime among which are two; firstly is the incapability of the governments of the least developed countries who for their own selfish motives enter into agreements with the powerful countries which result in the sufferings of their citizens who have in turn no say in the whole process as many of these countries are ruled by despots; second is the accountability of the financial institutions which is not clearly defined with respect to the law applicable to them is concerned and the determination of issues like these is very important to make the prevailing system is a better one. The outcome thus would be that we should adopt a mechanism which is not an extreme one in order to find a workable standard which at the outset may not be effective but a fresh start as such for the changing global situations and we can start from making the existing system a more accountable system rather than a totally different global financial order.
I.C.J Reports 1949, 174
The Reparations case as it is famously referred to as is considered to be a landmark case in international law jurisprudence as before the case came up there was this debate whether only states are the subjects of international law. the whole debate was put to rest when the ICJ in its advisory jurisdiction to the security council held that international organisations were subjects of international law just like the states are and their rights and obligations are as much a part of international law jurisprudence as the state parties. In the current context it is used to draw home the point that the international financial institutions are also come under the international law.
Joseph E. Stieglitz,Globalisation and its discontents, 17-18(W. W. Norton & Company, 2002).
The author in this book has brought about a perspective which is unique in more ways than one as it deals with the burning issues of globalisation. He argues that globalisation is not such a bad thing after all as it is perceived by its critics because better management of the issues at hand can result into a world economic order that is beneficial for one and all and the flaws of the global economic order can be attributed to the information gap that exists. For the purposes of our study he argues that anti-globalisation would not have been there if not for globalisation itself and that the drive against ill effects of the process of globalisation is a result of lack of information.
Daniel D. bradlow ,David B. Hunter, International Financial Institutions and International law, (Kluwer Law International, 2010).
The two authors in the book have tried to suggest measures as regards to the law applicable to the international financial institutions and how much they are the subjects of international law. The authors argue that the law relating to the international organisations is not well settled and that the contours have to be defined in order to make the law applicable to such institutions. In the context of the present study they argue that if such contours are defined various issues related to the accountability of these organisations are taken care of.
Journals and Articles:
Nicholas C. Hope,Why Do We Need International Financial Institutions?Stanford Center for International Development,(2011), available at http://iis-db.stanford.edu/docs/578/CDDRLPres8-10-11Final.pdf last seen on 15/11/2014
Hetty Kovach, Kicking the Habit: How the World Bank and the IMF are till addicted to attaching economic policy conditions to aid, Oxfam Briefing Paper (2006), available at https://oxfam.qc.ca/sites/oxfam.qc.ca/files/2006-12-06_Kicking%20the%20Habit.pdf last seen on 15/11/2014
Dingding Chen, 3 Reasons the BRICS’ New Development Bank Matters,The Diplomat(24 July 2014)available athttp://thediplomat.com/2014/07/3-reasons-the-brics-new-development-bank-matterslast seen on 15/11/2014
S.R., Why China is creating a new “World Bank” for AsiaThe Economist(11 November 2014)available athttp://www.economist.com/blogs/economist-explains/2014/11/economist-explains-6 last seen on 15/11/2014
Stephany Griffith-Jones, A Brics Development Bank: A Dream Coming True?,United Nations Conference on Trade and Development Discussion Papers (2014) available athttp://unctad.org/en/PublicationsLibrary/osgdp20141_en.pdf last seen on 15/11/2014
Websites and Blogs:
Amy Goodman & Juan González ,Nobel Economist Joseph Stiglitz Hails New BRICS Bank Challenging U.S.-Dominated World Bank & IMF available at :
http://www.democracynow.org/2014/7/17/nobel_economist_joseph_stiglitz_hails_new last seen on 17/07/2014
Edited by Kanchi Kaushik
[i]Joseph E. Stieglitz, Globalisation and its discontents, 17-18 (W. W. Norton & Company, 2002).
[ii] http://www.imf.org/external/index.htm last seen on 10/11/2014
[iii] Nicholas C. Hope, Why Do We Need International Financial Institutions?Stanford Centre for International Development, (2011), available at http://iis-db.stanford.edu/docs/578/CDDRLPres8-10-11Final.pdf last seen on 15/11/2014
[iv] http://www.imf.org/external/np/sec/memdir/members.htm last seen on 10/11/2014
[v]Joseph E. Stieglitz, Supra1.
[vi] http://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/ORGANIZATION/BODEXT/ last seen on 11/11/2014
[vii] Nicholas C. Hope, Supra3
[viii] http://www.un.org/millenniumgoals/ last seen on 11/11/2014
[ix]http://www.worldbank.org/ last seen on 11/11/2014
[x]Hetty Kovach, Kicking the Habit: How the World Bank and the IMF are till addicted to attaching economic policy conditions to aid, Oxfam Briefing Paper (2006), availableat https://oxfam.qc.ca/sites/oxfam.qc.ca/files/2006-12-06_Kicking%20the%20Habit.pdf (Last accessed on 15th Nov. 2014)
[xi]Amy Goodman & Juan González ,Nobel Economist Joseph Stiglitz Hails New BRICS Bank Challenging U.S.-Dominated World Bank & IMF availableat http://www.democracynow.org/2014/7/17/nobel_economist_joseph_stiglitz_hails_new last seen on 17/07/2014)
[xii]Dingding Chen, 3 Reasons the BRICS’ New Development Bank Matters,The Diplomat (24 July 2014) available at http://thediplomat.com/2014/07/3-reasons-the-brics-new-development-bank-matterslast seen on 15/11/2014
[xiii] S.R., Why China is creating a new “World Bank” for Asia The Economist(11 November 2014) available athttp://www.economist.com/blogs/economist-explains/2014/11/economist-explains-6last seen on 15/11/2014
[xiv]Stephany Griffith-Jones, A Brics Development Bank: A Dream Coming True?, United Nations Conference on Trade and Development Discussion Papers (2014) availableat http://unctad.org/en/PublicationsLibrary/osgdp20141_en.pdf last seen on 15/11/ 2014.
[xv] I.C.J Reports 1949, 174
[xvi] Reparations Supra , 180
[xvii]Daniel D. bradlow ,David B. Hunter, International Financial Institutions and International law,(Kluwer Law International, 2010).