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Role of International Institutions

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JNU, JaipurFirst Edition 2013

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Index

ContentI. ...................................................................... II

List of FigureII. ...........................................................VI

List of TablesIII. ......................................................... VII

AbbreviationsIV. ......................................................VIII

Case StudyV. .............................................................. 141

BibliographyVI. ......................................................... 146

Self Assessment AnswersVII. ................................... 149

Book at a Glance

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Contents

Chapter I ....................................................................................................................................................... 1IMF, IBRD, IDA and WTO ......................................................................................................................... 1Aim ................................................................................................................................................................ 1Objectives ...................................................................................................................................................... 1Learning outcome .......................................................................................................................................... 11.1 Introduction .............................................................................................................................................. 21.2 International Monetary Fund ................................................................................................................... 2 1.2.1 Objectives of the IMF .............................................................................................................. 2 1.2.2 Structure of the IMF ................................................................................................................ 2 1.2.3 Member’s Quota in IMF .......................................................................................................... 3 1.2.4 Use of Resources ..................................................................................................................... 3 1.2.5 Exchange Rate Policy .............................................................................................................. 3 1.2.6 Special Drawing Rights ........................................................................................................... 4 1.2.7 India and the IMF .................................................................................................................... 41.3 The World Bank ....................................................................................................................................... 51.4 International Bank For Reconstruction And Development (IBRD) ........................................................ 5 1.4.1 Functions and Resources of the Bank ...................................................................................... 6 1.4.2 India and the Bank ................................................................................................................... 61.5 International Development Association ................................................................................................... 7 1.5.1 India and the IDA ..................................................................................................................... 71.6 International Finance Corporation ........................................................................................................... 8 1.6.1 Functions of the IFC ................................................................................................................ 81.7 Asian Development Bank ........................................................................................................................ 8 1.7.1 Functions of the ADB .............................................................................................................. 8 1.7.2 India and the ADB ................................................................................................................... 91.8 World Trade Organisation (WTO) ........................................................................................................... 9 1.8.1 Functions of the WTO ............................................................................................................. 9 1.8.2 Objectives of the WTO .......................................................................................................... 10 1.8.3 WTO Agreements .................................................................................................................. 10 1.8.4 Evaluation of the WTO ...........................................................................................................11 1.8.5 Criticisms ................................................................................................................................11 1.8.6 India and the WTO ................................................................................................................. 12 1.8.7 Let Us Sum Up ...................................................................................................................... 121.9 Key Words .............................................................................................................................................. 12Summary ..................................................................................................................................................... 13References ................................................................................................................................................... 13Recommended Reading ............................................................................................................................. 14Self Assessment ........................................................................................................................................... 15

Chapter II ................................................................................................................................................... 17Globalisation of the Economy:IBRD, IMF and WTO ............................................................................ 17Aim .............................................................................................................................................................. 17Objectives .................................................................................................................................................... 17Learning outcome ........................................................................................................................................ 172.1 Introduction ............................................................................................................................................ 182.2 Globalisation: Its Meaning and Structures ............................................................................................. 18 2.2.1 Historical Background ........................................................................................................... 18 2.2.2 Bretton Woods System ........................................................................................................... 19 2.2.3 IMF: Objectives and Functions .............................................................................................. 19 2.2.4 Structure ................................................................................................................................. 20 2.2.5 International Bank for Reconstruction and Development .................................................... 20 2.2.6 General Agreement on Tariffs and Trade ............................................................................... 22 2.2.7 Uruguay Round and World Trade Organisation .................................................................... 22

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2.2.8 World Trade Organisation ...................................................................................................... 222.3 Post Bretton Woods Developments ........................................................................................................ 23 2.3.1 Globalisation and the Third World ......................................................................................... 24 2.3.2 Impact of Globalisation ......................................................................................................... 242.4 Let Us Sum Up....................................................................................................................................... 252.5 Key Words .............................................................................................................................................. 25Summary ..................................................................................................................................................... 26References ................................................................................................................................................... 26Recommended Reading ............................................................................................................................. 27Self Assessment ........................................................................................................................................... 28

Chapter III .................................................................................................................................................. 30India and United Nations .......................................................................................................................... 30Aim .............................................................................................................................................................. 30Objectives .................................................................................................................................................... 30Learning outcome ........................................................................................................................................ 303.1 Introduction ............................................................................................................................................ 313.2 Members of United Nations ................................................................................................................... 313.3 India and United Nations ....................................................................................................................... 323.4 India’s Position on Development ........................................................................................................... 333.5 India’s Position on Peace Building and Peacekeeping .......................................................................... 333.6 India’s Position on Counter-Terrorism ................................................................................................... 343.7 India’s Position on Disarmament ........................................................................................................... 353.8 India’s Position on Environment ............................................................................................................ 363.9 India’s Position on Human Rights ......................................................................................................... 373.10 India’s Struggle against Colonialism ................................................................................................... 393.11 India’s Position on UN Reform ............................................................................................................ 39Summary ..................................................................................................................................................... 41References ................................................................................................................................................... 42Recommended Reading ............................................................................................................................. 42Self Assessment ........................................................................................................................................... 43

Chapter IV .................................................................................................................................................. 45International Governmental Organisation .............................................................................................. 45Aim .............................................................................................................................................................. 45Objectives .................................................................................................................................................... 45Learning outcome ........................................................................................................................................ 454.1 Introduction ............................................................................................................................................ 464.2 Formal Intergovernmental Organisations .............................................................................................. 46 4.2.1 General Issues ........................................................................................................................ 46 4.2.2 United Nations ....................................................................................................................... 46 4.2.3 Peace-building Missions ........................................................................................................ 474.3 Informal Intergovernmental Organisations ............................................................................................ 47 4.3.1 Relation of Informal Intergovernmental Organisations with Other Institutional Concepts... 504.4 The Spectrum of Intergovernmental Arrangements ............................................................................... 52 4.4.1 An Empirical Overview of Informal Intergovernmental Organisations ................................ 534.5 IIGOs as Complements to FIGOs .......................................................................................................... 55 4.5.1 Centralised Coordination ....................................................................................................... 55 4.5.2 Agenda Setting ....................................................................................................................... 564.6 IIGOs as Substitutes to FIGOs ............................................................................................................... 564.7 The Role of Regional Organisations ...................................................................................................... 59Summary ..................................................................................................................................................... 61References ................................................................................................................................................... 61Recommended Reading ............................................................................................................................. 62Self Assessment ........................................................................................................................................... 63

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Chapter V .................................................................................................................................................... 65The Role of the International Organisations and Foreign Non-Government Organisations during Emergency Response ..................................................................................................................... 65Aim .............................................................................................................................................................. 65Objectives .................................................................................................................................................... 65Learning outcome ........................................................................................................................................ 655.1 Introduction ............................................................................................................................................ 665.2 Legal Basis ............................................................................................................................................. 665.3 Definitions .............................................................................................................................................. 675.4 Principles ................................................................................................................................................ 705.5 Initiation of the International Assistance ............................................................................................... 70 5.5.1 Management of the International Assistance ......................................................................... 72 5.5.2 Type of Assistance ................................................................................................................. 73 5.5.3 Permit ..................................................................................................................................... 735.6 Management of International Assistance ............................................................................................... 765.7 Sanctions ................................................................................................................................................ 775.8 Termination of International Assistance ................................................................................................ 775.9 Closing ................................................................................................................................................... 78Summary ..................................................................................................................................................... 79References ................................................................................................................................................... 79Recommended Reading ............................................................................................................................. 80Self Assessment ........................................................................................................................................... 81

Chapter VI .................................................................................................................................................. 83India and the World Trade ........................................................................................................................ 83Aim .............................................................................................................................................................. 83Objectives .................................................................................................................................................... 83Learning outcome ........................................................................................................................................ 836.1 Introduction ............................................................................................................................................ 846.2 India’s Schizophrenic Rise ..................................................................................................................... 846.3 From the Margins of the GATT to the Core of the WTO ...................................................................... 856.4 The Political Economy of Rising Influence ........................................................................................... 86 6.4.1 The Lure of the Market .......................................................................................................... 86 6.4.2 The Role of Ideas: Norms of Liberalisation .......................................................................... 86 6.4.3 Domestic Politics ................................................................................................................... 876.5 Institution-Specific Explanations: Learning to Negotiate Successfully ................................................ 88 6.5.1 Coalitions ............................................................................................................................... 88 6.5.2 Choice of Negotiation Strategy .............................................................................................. 89 6.5.3 Framing .................................................................................................................................. 906.6 The Burden of Rising Power .................................................................................................................. 916.7 Let Us Sum Up....................................................................................................................................... 926.8 Key points .............................................................................................................................................. 93Summary ..................................................................................................................................................... 94References ................................................................................................................................................... 94Recommended Reading ............................................................................................................................. 95Self Assessment ........................................................................................................................................... 96

Chapter VII ................................................................................................................................................ 98International Nongovernmental Organisations ...................................................................................... 98Aim .............................................................................................................................................................. 98Objectives .................................................................................................................................................... 98Learning outcome ........................................................................................................................................ 987.1 Introduction ............................................................................................................................................ 997.2 Types of NGO ........................................................................................................................................ 997.3 Range of NGO activities ...................................................................................................................... 100

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7.4 The Growing Role and Importance Of NGOs ..................................................................................... 1017.5 NGOs and The Extractive Sector ......................................................................................................... 1037.6 Key Types of Engagement ................................................................................................................... 1047.7 Key NGO Players ................................................................................................................................ 1067.8 Key Issues ............................................................................................................................................ 1077.9 NGO Accountability .............................................................................................................................111 7.9.1 Accountability Issues for NGOs ...........................................................................................111 7.9.2 Frameworks For Analysing Ngo Accountability ..................................................................1127.10 The Keystone Capabilities Profiler .....................................................................................................112 7.10.1 Building Strategic Accountability Systems ........................................................................1127.11 Risk Mapping Tool For NGO Boards .................................................................................................1137.12 Mechanisms For Achieving NGO Accountability ..............................................................................114 7.12.1 Legal Accountability Mechanisms ......................................................................................114 7.12.2 Civic accountability mechanisms ......................................................................................115 7.12.3 Self-Regulatory or Voluntary Mechanisms .........................................................................1167.13 Strategies For Effective NGO-Business Cooperation .........................................................................116 7.13.1 Evaluating and Improving Project And Industry Performance ...........................................117 7.13.2 Mobilising Joint Resources To Solve Specific Development Or

Operational Challenges ......................................................................................................119 7.13.3 Jointly Strengthen Public Sector Governance, Capacity and Institutions ..........................119Summary ................................................................................................................................................... 121References ................................................................................................................................................. 121Recommended Reading ........................................................................................................................... 122Self Assessment ......................................................................................................................................... 123

Chapter VIII ............................................................................................................................................. 125International Organisations .................................................................................................................... 125Aim ............................................................................................................................................................ 125Objectives .................................................................................................................................................. 125Learning outcome ...................................................................................................................................... 1258.1 Introduction .......................................................................................................................................... 1268.2 A Brief History of International Organisation...................................................................................... 126 8.2.1 Westphalia to Vienna ........................................................................................................... 126 8.2.2 Vienna and the Nineteenth Century ..................................................................................... 126 8.2.3 Versailles and the League of Nations ................................................................................... 127 8.2.4 Post-World War II International Organisation ..................................................................... 1288.3 Recent Trends in IO ............................................................................................................................. 1298.4 Conceptual Approaches to IO .............................................................................................................. 129 8.4.1 IO as Formal Organisation ................................................................................................... 129 8.4.2 IO as Ordering Principle ...................................................................................................... 131 8.4.3 Self-Help in Anarchy ........................................................................................................... 131 8.4.4 IO as Regime ....................................................................................................................... 1328.5 Contemporary Theoretical Approaches to IO ...................................................................................... 133 8.5.1 Rationalist Regime Theory .................................................................................................. 133 8.5.2 New Institutionalism ............................................................................................................ 134 8.5.3 Micro-Design ....................................................................................................................... 1358.6 Critiques ............................................................................................................................................... 135 8.6.1 The Realist Critique ............................................................................................................. 135 8.6.2 Globalisation ........................................................................................................................ 135 8.6.3 Constructivism ..................................................................................................................... 136 8.6.4 Let Us Sum Up .................................................................................................................... 136Summary ................................................................................................................................................... 137References ................................................................................................................................................. 137Recommended Reading ........................................................................................................................... 138Self Assessment ......................................................................................................................................... 139

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List of Figure

Fig. 7.1 Risk mapping tool for NGO Boards ..............................................................................................113

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List of Tables

Table 1.1 India’s transactions with the IMF ($ million) ................................................................................ 5Table 1.2 World Bank assistance to India ($ billion) ..................................................................................... 7Table 1.3 IDA assistance to India ($ million) ................................................................................................ 8Table 1.4 ADB assistance to India ($ million) ............................................................................................... 9Table 3.1 Organs of United Nations ............................................................................................................. 31Table 3.2 Specialised agencies ..................................................................................................................... 32Table 4.1 Formal and informal IGO ideal types .......................................................................................... 48Table 4.2 The Formal-Informal Spectrum of Intergovernmental Arrangements ......................................... 53Table 7.1 The four broad modes of engagement ........................................................................................ 106Table 7.2 Key extractive sector issues of common interest to NGOs and companies ............................... 109

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Abbreviations

AOSIN - Alliance of Small Island NationsAOSIS - Alliance of Small Island StatesAPELL - Awareness and Preparedness for Emergencies at the Local LevelASEAN - Agreement on Disaster Management and Emergency ResponseBRIC - Brazil, Russia, India, and ChinaBWC - Biological Weapons ConventionCCIT - Comprehensive Convention on International TerrorismCHR - Commission on Human RightsCIL - Customary International LawCSP2 - Center for Science in Public ParticipationCWC - Chemical Weapons ConventionDDI - Diamond Development InitiativeDDT - Dunkel Draft TextEBI - The Energy and Biodiversity InitiativeEITI - The Extractive Industry Transparency InitiativeFAO - Food and Agriculture Organisation of the United NationsFIGO - Formal Intergovernmental OrganisationGATS - General Agreement on Trade in ServicesGATT - General Agreement on Tariffs and TradeGSTP - General Scheme for Trade PreferencesHRC - Human Rights CouncilIBRD - International Bank for Reconstruction and DevelopmentICAO - International Civil Aviation OrganisationICMM - International Council of Mining and MetalsICSID - International Centre for the Settlement of Investment DisputesIDA - International Development AssociationIFAD - International Fund for Agricultural DevelopmentIFC - International Finance CorporationIFC - International Finance CorporationIGO - Intergovernmental OrganisationsIIGO - Informal Intergovernmental OrganisationILO - International Labour OrganisationIMF - International Monetary FundIMO - International Maritime OrganisationITA - Information Technology AgreementITO - International Trade OrganisationITU - International Telecommunication UnionKPCS - Kimberley Process Certification SchemeLDC - Less Developed CountriesMAI - Multilateral Agreement on InvestmentsMFA - Multi-Fibre AgreementMFN - Most Favoured NationMIGA - Multilateral Investment Guarantee AgencyMNC - Multi-National CorporationsMOC - Ministry of CommerceNBCFDC - National Backward Classes Finance and Development CorporationNHRC - National Commission for Human RightsNIEO - New International Economic OrderODA - Overseas Development AgencyOECD - Organisation for Economic Co-operation and DevelopmentSAP - Structural Adjustment ProgrammesSCM - Subsidies and Counter-veiling MeasuresSDR - Special Drawing Right

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TNC - Transnational corporationsTRIMS - Trade Related Investment MeasuresTRIPS - Trade Related Intellectual Property RightsUN - United NationsUNCTAD - United Nations Conference on Trade and DevelopmentUNEP - United Nations Environment ProgrammeUNESCO - United Nations Educational, Scientific & Cultural OrganisationUNIDO - United Nations Industrial Development OrganisationUPU - Universal Postal UnionWB - World Bank GroupWHO - World Health OrganisationWIPO - World Intellectual Property OrganisationWMO - World Meteorological OrganisationWTO - World Tourism OrganisationWTO - World Trade Organisation

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Chapter I

IMF, IBRD, IDA and WTO

Aim

The aim of this chapter is to:

introduce significance of different international organisations in the current phase of globalisation•

elucidate the difference between the roles of the different organisations•

explain the working of different international institutions•

Objectives

The objectives of this chapter are to:

recognise the significance of the different international organisations for India•

describe the IMF institutions•

elucidate the member quota in IMF•

Learning outcome

At the end of this chapter, you will be able to:

understand exchange rate policy•

identify the functions of IMF, IBRD and WTO•

understand IDA•


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1.1 IntroductionThe International Monetary Fund (IMF), the World Bank and the International Trade Organisation were conceived at the Bretton Woods Conference in July, 1944 as institutions to strengthen international economic cooperation and to help create a more stable and prosperous global economy. While the IMF and the World Bank came into existence and started functioning from 1946, the International Trade Organisation could not be set up. Instead, the General Agreement on Tariffs and Trade (GATT) was set up in 1947. Through successive rounds of negotiations, the GATT got transformed into what has come to be known as the World Trade Organisation (WTO) that started functioning from January 1, 1995. The various institutions have been set up to govern international economic relations.

While all the institutions work in close coordination with each other, each of these institutions has its own specific area of responsibilities. The IMF promotes international monetary cooperation and provides member countries with policy advice, temporary loans, and technical assistance so they can establish and maintain financial stability and external viability and build and maintain strong economies. The World Bank promotes long-term economic development and poverty reduction by providing technical and financial support. The WTO seeks to achieve the same objective by providing a trade environment in which goods and services may move between the nations, unrestrained by any restrictions or barriers. On a little regional level also international organisations have been set up. Among these, the most important for us has been the Asian Development Bank.

1.2 International Monetary FundInternational Monetary Fund (IMF) is one of the two institutions that were established as a result of the Bretton Woods Conference in 1944, the other institution was the International Bank for Reconstruction and Development (IBRD), also known as the World Bank. IMF aims at promoting international monetary cooperation with a view to achieve certain mutually agreed international economic goals. It is also a lender of short-term funds to member-countries, mainly to adjust balance of payments deficits.

1.2.1 Objectives of the IMFThe Articles of Agreement of the IMF set out the following as the objectives of the Fund:

To promote international monetary cooperation through a permanent institution, which provides the machinery • for consultation and collaboration on international monetary problems?To facilitate the expansion and balanced growth of international trade and to contribute thereby to the promotion • and maintenance of high levels of employment and real income and to the development of the productive resources of all members as primary objectives of economic policy.To promote exchange stability, to maintain orderly exchange arrangements among members, and to avoid • competitive exchange depreciation.To assist in the establishment of a multilateral system of payments in respect of current transactions between • members and in the elimination of exchange restrictions, which hamper the growth of world trade.To give confidence to members by making the general resources of the Fund temporarily available to them • under adequate safeguards, thus, providing them with an opportunity to correct maladjustments in their balance of payments without resorting to measures destructive of national or international prosperity.In accordance with the above, to shorten the duration and lessen the degree of disequilibrium in the international • balance of payments of members.

1.2.2 Structure of the IMFThe Central office of the IMF is in Washington DC, USA. It has 184 members. It is affiliated to the UNO. The highest authority of the IMF is the Board of Governors in which each member country is represented by a Governor and alternate Governor. The Board of Governors is the policymaking body. The day-to-day functions of the IMF are the responsibility of the Managing Director who is selected by the Board of Executives.

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1.2.3 Member’s Quota in IMFQuota represents the subscription by a member country to the capital fund of the IMF. Quotas are fixed for each country, taking into account such factors as the country’s national income, reserves, export variability and the ratio of exports to national income.

Apart from representing the subscription of a country to the IMF, the quota also forms the basis for determining its drawing rights from the IMF, its voting power and share in the allocation of Special Drawing Rights (SDRs). Twenty five per cent of a country’s quota is to be contributed in the form of SDRs or foreign exchange and 75 per cent in the country’s own currency. Quotas are reviewed by the IMF at periods of not more than five years. Since its inception, with initial size of quotas placed of about $7.5 billion for 40 member-countries, including India, the total quota of the Fund presently stands at SDRs 212.6 billion (about $310 billion). The largest share of 17.5 per cent belongs to the USA, while the smallest share belongs to Palau (0.001 per cent).

Each country’s voting power is the sum of its “basic votes” and its quota based votes. Each IMF member has 250 basic votes plus one additional vote for each SDR 1, 00,000 of quota.

Each member’s quota is the most fundamental element in its financial relationship with the MF. It determines the amount of financing it can receive from the IMF and its share in SDR allocations.

1.2.4 Use of ResourcesIMF provides temporary assistance to member-countries to tide over balance of payments deficits. When the country requires foreign exchange, it tenders its own currency to the IMF and gets the foreign exchange. This is known as ‘drawing’ from the Fund. When the BOP situation of the country improves, it should ‘repurchase’ its currency from the IMF and repay the foreign exchange.

Ordinarily, for a member-country, a first borrowing or drawing is virtually automatic and without strings. A country simply calls for the return of its original 25 per cent share (called the “reserve tranche”) paid in hard currency.

After that, it may borrow the “first credit tranche”, another 25 per cent with virtually no strings. Three further credit tranches may be borrowed in each of three subsequent years, and each amounting to 25 per cent of the original quota. At the end of the 5 years, the upper limit of 125 per cent is reached.

In addition, a member can borrow a further 90 per cent of quota annually for three years under the “enlarged access” policy. With the enlarged access policy, further loans from 270 to 330 per cent of quota can be obtained in a three-year period, in addition to the normal lending. But all this is subject to a cumulative upper limit of 400 to 440 per cent of quota.

While borrowing under earlier credit tranches does not involve any obligation to adopt IMF directed policy changes, borrowing under higher tranches and extended access facility does involve such obligations.

Typically, the IMF will require as prerequisites for borrowing cutbacks in budget deficit including subsidies to various sectors of the economy, reduction in the rate of monetary expansion, measures to restrain wages and prices, devaluation of an overvalued exchange rate, and some action to make the price system reflect costs more accurately and some turn towards the encouragement of exports. These are known as conditionalities that are imposed on the borrowers who want to make use of IMF facilities.

1.2.5 Exchange Rate PolicyAfter the second amendment to the Articles of Agreement of IMF which came into effect on April 1, 1978, every member is free to choose its own exchange rate arrangements. After this amendment, SDR has become the international reserve asset and unit of account of the IMF. Some of the countries have pegged their currencies to SDR, some others to currencies of other countries.


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Many others have adopted any of the variants of the fixed exchange rate systems. The members are free to adopt any system. But the IMF is required to exercise surveillance over the exchange rate policies of members and is free to express its opinion on the policies of the member. Each member is required to see that its foreign exchange policies:

Endeavour to direct its economic and financial policies toward the objective of fostering orderly economic • growth with reasonable price stability, with due regard to its circumstancesSeek to promote stability by fostering orderly underlying economic and financial conditions and a monetary • system that does not tend to produce erratic disruptions andAvoid manipulation of exchange rates or the international monetary system in order to prevent effective bop • adjustment or to gain an unfair competitive advantage over the other members.

In order to enable member-countries to frame their respective economic policies within the parameters defined above, the Fund provides them with “finance” to meet their BOP deficits and pursue adjustment programmes.

1.2.6 Special Drawing RightsThe late 1960s witnessed that the growth in world resources did not keep pace with the growth in international trade. The slackness in the growth of resources was mainly due to the dependence on the accretion of gold to monetary reserves. It was foreboding that the slow growth of monetary resources would result in hampering the growth of international trade and in serious BOP difficulties to many countries. The need to increase the international liquidity, i.e., resources for settlement of international debts, was felt and after much thought on the subject; it resulted in the introduction of Special Drawing Rights (SDRs) in 1970.

SDRs are entitlements granted to member-countries enabling them to draw from the IMF apart from their quota. It is similar to a bank granting a credit limit to the customer. When SDRs are allocated the country’s Special Drawing Account with the IMF is credited with the amount of the allotment. Originally, SDRs were to be utilised only for meeting BOP difficulties. But as a consequence of endeavours to make it an international unit of account, the use of SDRs has been liberalised. Now SDRs can be used directly among the members without the approval of the IMF. A country may swap SDRs with another country to acquire a currency it desires. SDRs may be utilised to pay charges to IMF. SDR has gained importance both as a reserve asset and as a unit of settlement of international transactions. Some international banks accept time deposits designated in SDRs. Some countries have pegged their currencies to SDRs.

1.2.7 India and the IMFAs founder member of the IMF, India was initially assigned a quota of $400 million or about 5.2 per cent of the total. Being the fifth largest quota holder, India was also given a seat on the IMF’s Executive Board. With successive reviews, however, India’s quota share has dwindled. India’s present quota is SDRs 4.1582 billion (1.96 per cent of the total, rank 13).

As a member of the Fund, India has derived following benefits:Foreign exchange for meeting bop deficits: The country has made use of the Fund’s facilities a number of times • to meet her BOP requirements. Such drawings of foreign exchange have enabled the country to tide over the acute foreign exchange crisis and to maintain the imports of essentials goods.Oil facility from the IMF: India resorted to drawals from the IMF under the Oil Facility created in June, 1974 • to meet larger outlays for the import of petroleum crude.Assistance under SDRs: The SDRs provide unconditional liquidity since the participants have access to foreign • exchange resources at will.Aid from the World Bank: The country’s membership of the IMF has entitled it to become a member of the • World Bank; as a member of the Bank, India has received large technical and financial assistance for the various development projects.

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Assistance under the extended credit facility: Loan under this facility is contracted at softer terms but there is • a serious conditionality clause attached to it.Preparation of valuable reports: The country has availed the services of the specialists in the Fund for the • purpose of assessing the state of the Indian economy and for preparing valuable reports on various aspects of the economy. In short, the membership of the Fund has been instrumental in implementing various schemes under the developmental plans.

However, India has been highly selective in approaching the Fund. It is more than a decade now that India took resort to financial help from the IMF. It was in early 1990s that it became necessary for India to approach the IMF for a massive assistance to restore a sense of viability to her foreign exchange position. With the aid of concessional loan from the IMF in 1991 and subsequent adoption of stabilisation and adjustment programme, India successfully overcame the BOP crisis. It prepaid this loan and has since then became a net repurchaser from the Fund that is it has been paying back its loans to the Fund, as would be seen from Table 1.1.

Year Purchases Repurchases Net

1990-91 1850 644 1214

1997-98 618 -618

1998-99 393 -393

1999-00 260 -260

2000-01 26 -26

Table 1.1 India’s transactions with the IMF ($ million)

It would be seen that India has all squared up its borrowings from the IMF.

1.3 The World BankThe World Bank is another of the ‘Bretton Woods Twin Sisters’. The World Bank, as it obtains presently, is an umbrella organisation, under which five different institutions operate. These five institutions are as follows:

International bank for reconstruction and development (IBRD); founded in 1944, is the single largest provider • of development loans.International development association (IDA); founded in 1960, assists the poorest countries.• International finance corporation (IFC); supports private enterprise in developing countries.• Multilateral investment guarantee agency (MIGA); offers investors insurance against non-commercial risk and • help developing country governments attract foreign investment.International centre for the settlement of investment disputes (ICSID); encourages the flow of foreign investment • to developing countries through arbitration and conciliation facilities. Of the five institutions described above, we will take up for detailed discussion the first three institutions.

1.4 International Bank For Reconstruction And Development (IBRD)The main function of the IBRD is of long-term capital assistance to its member-countries for their reconstruction and development.


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The IMF and the World Bank Work in tandemWorld Bank BOP support is not available without a Fund programme, while a Fund programme cannot be finalised without the prior negotiation of BOP support from the World Bank and from bilateral donors to fill the programmed ‘resource gap’. The bilateral do not commit funds until negotiations with the World Bank have been concluded. Whereas the Fund sets the macroeconomic guidelines and targets of a programme, the World Bank imposes a long list of neo-liberal micro-economic policy reforms on the borrowing country.

1.4.1 Functions and Resources of the BankThe main functions of the Bank are as follows:

To assist in reconstruction and development of the territories of it member governments by facilitating investment • of capital for productive purposesTo promote foreign private investment by guarantees or through participations in loans and other investments • of capital for productive purposesWhere private capital is not available on reasonable terms, to make loans for productive purposes out of its • owned resources or out of the funds borrowed by it; andTo promote the long-range growth of international trade and the maintenance of equilibrium in the balance of • payments of members by encouraging international investment for the productive resources of members.

Resources of the Bank consist of the capital and borrowings. The capital of the Bank is contributed by its 184 member-countries. The five largest shareholders of the Bank are: (i) USA, (ii) Japan, (iii) Germany, (iv) Great Britain and (v) France. India is the sixth largest contributor. The management of the Bank is on the same lines as that of the IMF.

Before granting or guaranteeing a loan, the Bank considers the following matters:The project for which the loan is asked has been carefully examined by a competent committee as regards the • merit of the proposal.The borrower has reasonable prospect for repayment.• The loan is meant for productive purposes.• The loan is meant to finance foreign exchange requirements of specific projects of reconstruction and • development.

The rate of interest on Bank loans is determined by adding a spread of ½ of 1 per cent atop the “pool rate” of outstanding borrowing of the Bank.

1.4.2 India and the BankIndia is the founder-banker of the Bank. For India, the Bank means many things. The Bank has not been merely a lending institution to India but has also served as a worthy counsel whom India has approached for advice in difficulties.

India has been the single largest borrower of the Bank. The Bank has extended generous assistance to India in executing a number of development projects in different sectors like manufacturing, industry, transportation – railways, ports, roads and aircrafts – electrical power, agriculture and so on. The Bank has also been instrumental in the establishment of the India Development Forum, a consortium of donor nations to India. The massive financial assistance pledged by the consortium members has been the largest aid commitment and is a landmark in the history of development aid from developed countries to developing countries.

But in line with the general changes in the environment, India’s growing preference for equity capital rather loans has resulted in a marked fall in the inflow of assistance from the Bank to India, as would be seen from Table 1.2 below.

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Year Grants Loans Total

1980-81 175.5 175.5

1990-91 1217.5 1217.5

1997-98 8.0 581.9 589.9

1998-99 3.0 575.1 578.1

1999-00 5.1 646.6 651.7

2000-01 5.4 706.8 712.2

2001-02 1.5 772.8 774.3

2002-03 10.4 657.3 667.7

2003-04 13.2 902.3 915.4

Table 1.2 World Bank assistance to India ($ billion)

India’s total outstanding debt from the Bank stands at about $5 billion presently.• Bank aid to India, however, has been subject to a number of criticisms.• The Bank has granted loans for specific purposes and projects rather than for general development purposes.• The Bank exercises excessive control over the expenditure on the proposed projects.• The rate of interest charged by the Bank is very high.• An increasingly large share of the Bank’s assistance is linked to the “conditionality”, that is to effect the changes • in the economic policies as desired by the Bank.

1.5 International Development AssociationInternational Development Association (IDA) is an affiliate of the IBRD. It was established in 1960 to provide “soft loans” to economically sound projects, which create ‘social capital’ such as the construction of roads and bridges, slum clearance and urban development. The IDA provides loans for such projects interest-free and for longer periods. Therefore, it is often referred to as the ‘soft loan window’ of the Bank. Only the poorest of the poor member countries (with per capita income below $895 at 1995 prices) are eligible for assistance.

1.5.1 India and the IDAIndia has immensely benefited from the IDA. It has received a series of loans, almost continuously. Most of the assistance has gone to the high development priority projects which could not get finance from other sources.

However, as with the IBRD, there has not been much change in the IDA assistance to India in recent years, as would be seen from Table 1.3.

Year Grants Loans Total

1980-81 24.0 000.1 175.5

1990-91 773.9 773.9

1997-98 2.3 825.8 828.1

1998-99 3.7 867.4 871.1

1999-00 7.0 840.1 847.1

2000-01 3.2 1063.4 1065.6


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2001-02 7.3 1177.3 1184.6

2002-03 5.4 900.4 905.8

2003-04 5.9 928.8 934.7

Table 1.3 IDA assistance to India ($ million)

IDA assistance has also been criticised for the excessive control exercised by the IDA.

1.6 International Finance CorporationThe IBRD loans are available only to member-country governments or with the guarantee of member-country governments. Further, IBRD can only make a loan but it cannot participate in the equity of the financed project. IFC was established in 1956 with the specific purpose of financing private enterprises. It is an affiliate of the IBRD. The Board of Governors of the IBRD also constitute the Board of Governors of the IFC. But it is a separate entity with funds kept separate from those of the IBRD.

1.6.1 Functions of the IFCThe purpose of the IFC is to further economic development by encouraging growth of private enterprise in member-countries. The IFC, therefore:

Invests in private enterprise in member-countries in association with private investors and without Government • guarantee, in cases where sufficient private capital is not available on reasonable termsSeeks to bring together investment opportunities, private capital of both foreign and domestic origin, and • experienced management; and stimulates conditions conducive to the flow of private capital – domestic and foreign – into productive investments in member-countries.

The IFC investment normally does not exceed 40 per cent of the total investment of the enterprise. In case of its investment by equity participation, it does not exceed 25 per cent of the share capital. The interest charged on advances varies depending upon the proposal and status of the borrower. India has also received substantial assistance from the IFC.

1.7 Asian Development BankIn addition to the World Bank family, there are three other international lending agencies operating only in specific geographical area, but run on lines similar to the World Bank. These are:

The Inter-American Development Bank, founded in 1959• The Asian Development Bank, founded in 1964, and• The African Development Bank, founded in 1966. Each borrows on world capital markets and lends mostly on • near-commercial terms.

ADB is a development bank under the aegis of ESCAP (Economic and Social Commission for Asia and Pacific). Its membership consists of countries from Asian region as well as from other regions.

1.7.1 Functions of the ADBADB finances principally specific projects in the region. It may make loans to or invest in the projects concerned. It may also guarantee loans granted to the projects. Most of the loans granted are hard loans or tied loans. However, loans from special funds set aside by the ADB up to 10 per cent of its paid-up capital are granted under soft loan term for which purpose it has set up a separate window known as the Asian Development Fund (ADF). Soft loans are normally granted to projects of high development priority requiring longer periods of repayment with lower rates of interest. ADB normally finances foreign exchange cost of the project and the loan is repayable in the currency in which it is made.

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1.7.2 India and the ADBIndia has been eligible for assistance both under the ADB and its soft loan window, ADF. But India has stayed away from the ADF. However, it has been getting large assistance under the ADB. But as would be seen from Table 1.4, India does not seem to be too enthusiastic to get loans in recent years.

Year Amount

1980-81 212.4

1990-91 601.1

1997-98 613.9

1998-99 610.5

1999-00 470.9

2000-01 329.3

2001-02 544.7

2002-03 613.8

Table 1.4 ADB assistance to India ($ million)

1.8 World Trade Organisation (WTO)The International Trade Organisation (ITO), originally, was proposed to be set up along with the World Bank and the IMF on the recommendations of the Bretton Woods Conference, 1944. But as the ITO could not be set up, the US, UK and a few other countries set up in 1947 an interim organisation about trade named GATT (General Agreement on Tariff and Trade). The GATT was biased in favour of the developed countries and was called informally as the “rich men’s club”. The developing countries insisted on setting up of the ITO; the move came to be opposed by the US. To solve the issue – the UN appointed a Committee in 1963. The Committee recommended as a possible alternative a via media, UNCTAD (United Nations Conference on Trade and Development). The UNCTAD was set up in 1964 on the basis of this alternative. The UNCTAD could manage to get some concessions for the developing countries, more important among which was the GSTP (General Scheme for Trade Preferences). GATT was also made progressively more liberal.

The Uruguay Round of GATT sought to expand the scope of the organisation by including, services, investment and intellectual property rights. The Uruguay Round proposals were accepted by all the members of GATT in December, 1993. The agreements were ratified by the legislatures of 85 member-countries by year-end 1994. On such rectification, the WTO started functioning from January 1, 1995.

1.8.1 Functions of the WTOThe WTO performs the following functions:

It administers through various councils and committees the 29 agreements contained in the final act of the • Uruguay Round of world trade talks, plus a number of plurilateral agreements, including those on Government procurement.It oversees implementation of the significant tariff cuts and reduction of non-tariff barriers agreed to in the trade • negotiations.It is a watchdox of international trade, regularly examining the trade regimes or individual members.• Members are required to notify in detail various trade measures and statistics, which are maintained by the • WTO in a large database.It provides conciliation mechanisms for arriving at an amicable solution to trade conflicts among members.•


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Trade disputes that cannot be solved through bilateral talks are adjudicated under the WTO dispute settlement • “court”.Panels of independent experts are established to examine disputes in the light of WTO rules and provide rulings. • The tougher, streamlined procedure ensures equal treatment for all trading partners and encourages members to abide by their obligations.The WTO is a management consultant for world trade. Its economists keep a close watch on the pulse of the • global economy and provide studies on the main issues of the day.The WTO secretariat assists developing countries in implementing Uruguay Round results through a newly • established development division and a strengthened technical cooperation and training division.The WTO is a forum where countries continuously negotiate the exchange of trade concessions to trade restrictions • all over the world. The WTO already has a substantial agenda of further negotiations in many areas, notably certain services sectors.

1.8.2 Objectives of the WTOThe agreement establishing the WTO reiterates the following objectives of the WTO:

Raising standards of living and incomes, ensuring full employment, expanding production and trade, optimal use • of world’s resources, at the same time extending the objectives to services and making them more precise.Introduces the idea of sustainable development in relation to the optimal use of world’s resources, and the need • to protect and preserve the environment in a manner consistent with the various levels of national economic development.Recognises the need for positive efforts designed to ensure that developing countries, especially the least • developed ones, secure a better share of growth in international trade.

The WTO continues the decision-making practice followed under the GATT decisions will be taken by a majority of votes cast on the basis of one country, one vote.

1.8.3 WTO AgreementsThe WTO administers 29 agreements; these cover different areas like trade in goods and services, investment measures, intellectual property rights and so on. Some of the important WTO agreements are as follows:

GATT 1994: The cornerstone of trade relations is the area of goods. Differential and more favourable treatment • to developing countries is permitted under the 1979 Enabling Clause with respect to tariffs in the context of the Generalised Scheme of Preferences and Non-tariff measures, notwithstanding the Most Favoured Nation Clause, and with respect to regional or global arrangements concluded by the developing countries.Agreements integrating practices otherwise on the margin of GATT rules include TRIMS (Trade Related • Investment Measures): GATT inconsistent TRIMS are required to be notified and eliminated within a transition period of two years (developed countries), five years (developing countries) or seven years (least-developed countries). A further extension may be requested by developing and least-developed countries. The Agreement on Safeguards prohibits the use of “grey-area measures”, such as voluntary restraints or orderly marketing arrangements; such measures are to be notified and eliminated.Agreement on textiles and clothing: It provides for the eventual elimination of the Multi-Fibre Agreement (MFA) • after a ten-year transition period on 1-1-2005. Under the MFA, the exporters were subjected to bilaterally agree quantitative restraints or unilaterally sponsored restraints on imports. These applied typically at the product level but in some cases to various aggregates as well.Agreement on services: The General Agreement on Trade in Services (GATS) is the first multilateral agreement • on trade that has its objective the progressive liberalisation of trade in services. The Agreement covers trade in all services sectors and the supply of service in all forms.

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TRIPS (Trade Related Intellectual Property Rights): The main features of the TRIPS agreement are as • follows:

Minimum standards of protection to be provided by each member. �Domestic procedures and remedies for the enforcement of IPRs. �Dispute settlement between the WTO members. �

TRIPs agreements cover the following areas:Copyright and related rights, trademarks including service marks, geographical indications including appellations of origin, industrial designs, patents including the protection of new varieties of plants, the lay-out designs of integrated circuits and undisclosed knowledge including trade secrets and test date.

Agreement on Subsidies and Counter-veiling Measures (SCM): The SCM applies to non-agricultural products. • It follows the traffic lights approach and classifies subsidies in three categories:Red: Subsidies with high trade-distorting effects, such as export subsidies, and those that favour the use of • domestic over imported goods are prohibited.Green: Subsidies that are not specific to an enterprise or industry or a group of enterprises or industries are • non-actionable.Amber: Subsidies that are neither red nor green belong to the amber category. They are actionable by the trading • partners if their interests are adversely hit. The affected country can seek remedy through the dispute-settlement procedures or go for counter-veiling duties.Other issues: The WTO reached on an Information Technology Agreement (ITA) in December, 1996. It sought • to eliminate tariffs to zero level in computer-related products. Other issues on which the deliberations are being carried out at WTO are:

Multilateral Agreement on Investments (MAI); the MAI aims to give MNCs the right to establish any �business in any country without being discriminated against by virtue of being foreign MNCs.Trade and environment. �Government procurement policies and so on. �

1.8.4 Evaluation of the WTOThe WTO is different from and an improvement over the GATT in the following respects:

The WTO is more global in its membership.• The WTO has introduced commercial activities into the multilateral trading system.• While the GATT had ‘contracting parties’. WTO has ‘members’ and is a legal organisation.• GATT provisions in case of disputes were time-consuming. GATT could levy penalties only through unanimous • decisions, which were virtually impossible. Under WTO, unanimous are no longer desired; all disputes are to be settled within 18 months.WTO has one-country one-vote principle, unlike in the World Bank and IMF where the economic strength of • rich countries translates into a voting majority.Even if developing countries differ on specific issues, they can make a difference if even a few of them stand • firm.Both big and small developing countries no longer accept decisions taken behind closed door by a group of • select countries.

1.8.5 CriticismsThere are critics too of the WTO. It is believed that the WTO will emerge out destructive of biodiversity and people’s livelihoods by encouraging overexploitation of natural resources, creating pollution through increasing transportation, habitat loss by infrastructure development, and so on by forcing countries to:

Relax export rules that prohibit or restrict the exploitation of forests, fisheries and minerals• Encourage export policies that spread monoculture•


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Relax import rules that control the unhindered dumping of all kinds of products, including polluting and • hazardous wastesAdapt intellectual property rights regimes• Accept with few conditionalities, investment in several sectors by foreign firms and industrialists with little • regard for its ecological and social impacts.

To sum up, WTO has been in action for a little over decade now. During this time, the WTO has proved that it is very different from its predecessor, GATT. GATT was toothless whereas WTO has teeth – its disputes settlement mechanism has been an outstanding success and has brought to book even mighty US in several cases.

1.8.6 India and the WTOIndia is a founder-member of the WTO. India has contributed significantly to the evolution of the concept of the WTO. In turn, India is already reaping in a big way various benefits that can be directly or indirectly associated with the WTO.

India is experiencing an unprecedented boom in exports, as are the world exports. India is soon to reach the • export target of $100 billion, up from only $33.22 billion in 1998-99. This can be attributed, in a large measure to the WTO-induced lowering of the trade barriers.India has immensely benefited from the multilateral dispute settlement system that has been set up under the • WTO. Action has been initiated against such powerful economies as the USA on disputes involving India.Adoption of international standards in Intellectual Property Rights protection would enhance flow of foreign • investment and technology.Indian laboratories engaged in research in plant varieties and seeds for tropical regions would benefit.•

Trade in textiles and agricultural products, in particular, would get a boost. In short, the WTO has opened up new vistas in international economic relations for all the countries of the world. In the opened up world, the stakes of all the countries have multiplied, and so has the degree of rivalry and competitiveness. India, like any other country, would be on guard to save its interests and promote them in a world which is swamped with multi-fold opportunities.

1.8.7 Let Us Sum UpA set of different international economic organisations has been set up to ensure orderly international economic cooperation and smooth economic relations between the nations of the world. While the IMF and the World Bank were set up when the world was caught in the turmoil of the World War, the WTO has been set up when the wave of globalisation and liberalisation was sweeping across the globe. Both the situations called for a need to set up mutually-agreed organisation, which would only prove a win-win situation for all the contracting parties. While there may be some short-term pains for a few, due to need for structural adjustment during the phase of transition, long-term prospects for economic development only serve to attract more adherents to this doctrine. Even China, which has been in the forefront to maintain its relative isolation in the world of nations, finally chose to get a membership of the WTO, and subject itself to the various agreements, rules and regulations framed by it. Open trade in goods and services, if carried out in true spirit, can only promote welfare, globally and for each constituent individual nation.

1.9 Key WordsTariff Barriers: Restrictions placed in the form of high import duties. • Non-tariff Barriers: Various types of quantitative restrictions, quotas, permits and so on.• Conditionalities: Various obligations placed on a borrower-nation by the IMF.• Facilities: The various types of assistance programmes formulated and implemented by the IMF.• Tranche: Equals 25 per cent of the quota of a member in the IMF.• Quota: The share of capital allotted to a member in the total capital of the Fund.•

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SummaryThe International Monetary Fund (IMF), the World Bank and the International Trade Organisation were conceived • at the Brettonwoods Conference in July, 1944.General Agreement on Tariffs and Trade (GATT) was set up in 1947.• The Central office of the IMF is in Washington DC, USA. It has 184 members.• Quota represents the subscription by a member country to the capital fund of the IMF.• Quotas are fixed for each country, taking into account such factors as the country’s national income, reserves, • export variability and the ratio of exports to national income.Quotas are reviewed by the IMF at periods of not more than five years.• Each country’s voting power is the sum of its “basic votes” and its quota based votes.• IMF provides temporary assistance to member-countries to tide over balance of payments deficits.• SDR has become the international reserve asset and unit of account of the IMF.• SDRs are entitlements granted to member-countries enabling them to draw from the IMF apart from their • quota.SDRs are allocated the country’s Special Drawing Account with the IMF is credited with the amount of the • allotment.World Bank BOP support is not available without a Fund programme, while a Fund programme cannot be • finalised without the prior negotiation of BOP support from the World Bank and from bilateral donors to fill the programmed ‘resource gap’.Resources of the Bank consist of the capital and borrowings.• The capital of the Bank is contributed by its 184 member-countries.• The Bank has granted loans for specific purposes and projects rather than for general development purposes.• International Development Association (IDA) is an affiliate of the IBRD. It was established in 1960 to provide • “soft loans” to economically sound projects which create ‘social capital’ such as the construction of roads and bridges, slum clearance and urban development.The IBRD loans are available only to member-country governments or with the guarantee of member-country • governments.The purpose of the IFC is to further economic development by encouraging growth of private enterprise in • member-countries.ADB is a development bank under the aegis of ESCAP (Economic and Social Commission for Asia and • Pacific).The WTO secretariat assists developing countries in implementing Uruguay Round results through a newly • established development division and a strengthened technical cooperation and training division.The WTO is a management consultant for world trade.• The SCM applies to non-agricultural products.• Open trade in goods and services, if carried out in true spirit, can only promote welfare, globally and for each • constituent individual nation.

ReferencesInternational Monetary Fund, 2000. • About the IMF [Online] Available at: <http://www.imf.org/external/about.htm> [Accessed 10 May 2012].United Nations Economic and Social Commission for Asia and Pacific. • Introduction to the WTO [pdf] Available at: <http://www.unescap.org/tid/projects/accesswto_bhu1_wto.pdf> [Accessed 10 May 20 12].University of Shed. • The World Bank (WB) & The International Monetary Fund (IMF) [Video Online] Available at: <http://www.youtube.com/watch?v=Jamj-cIfOrg> [Last Accessed 10 May 2012].


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sdhettige, • World Trade Organization [Video Online] Available at: <http://www.youtube.com/watch?v=vFGI7MKn3Sw> [Accessed 10 May 2012].Thakur, A.K. and Indian Economic Association, 2007. • WTO and India. Deep and Deep Publications.Stern, R.M. and Mattoo, A., 2003. • India and the WTO. World Bank Publications.

Recommended ReadingSalda, A. C. M., 1992. • International Monetary Fund. 4th ed., Transaction Publishers.International Monetary Fund. • International Monetary Fund. International Monetary Fund.Vaish, 2006. • International Economics. 8th ed., Oxford and IBH Publishing.

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Self AssessmentWhen was IMF conceived?1.

July 1945a. June 1944b. July 1944c. June 1945d.

When was GATT set up?2. 1945a. 1947b. 1948c. 1946d.

What is IBRD also known as?3. WTOa. IMFb. World Bankc. BOPd.

_________ aims at promoting international monetary cooperation with a view to achieve certain mutually 4. agreed international economic goals.

IMFa. IBRDb. GATTc. SDRd.

Which is the highest authority of IMF?5. USa. Indiab. Board of Governorsc. Managing Directord.

____________ represents the subscription by a member country to the capital fund of the IMF.6. Quotaa. Agreementb. Membershipc. Subscriptiond.

______________ are entitlements granted to member-countries enabling them to draw from the IMF apart 7. from their quota.

BOPsa. SDRsb. IDAsc. IFCsd.


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Which of the following is not one of the major stakeholders of World Banks?8. Germanya. Japanb. Chinac. Franced.

International Development Association (IDA) is an affiliate of the ____________.9. IBRDa. IFCb. IMFc. MIGAd.

Who has contributed significantly to the evolution of the concept of the WTO?10. Indiaa. Chinab. Pakistanc. Bangladeshd.

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Chapter II

Globalisation of the Economy:IBRD, IMF and WTO

Aim


introduce the term globalisation•

elucidate the structure and meaning of globalisation•

explain the background of globalisation•

Objectives


recognise bretton woods system•

describe the functions of IMF•

elucidate structure of IMF•

Learning outcome


understand the functions and objectives of IBRD•

identify the post bretton woods developments•

understand gene• ral agreement on tariffs and trade


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2.1 IntroductionThe word globalisation has now become familiar to most of us. The idea suggests that the world is undergoing an increasing process of international interdependence so that national economies as distinct entities with supreme authority within their territorial jurisdiction are becoming increasingly irrelevant. This does not mean the creation of a world or global community based on equality. Historically, the international economic system has developed on, the basis of nation-states. Revolution in transport and communication, highly sophisticated industrial production technologies in the post-war period created a capitalist world market. The Bretton Woods System heated in the post-war period that laid down the rules for international trade and commerce, collapsed in the seventies. The nineties have seen the emergence of the process of globalisation. New institutions and rules to government world trade have come into existence in the form, of WTO - World Trade Organisation.

2.2 Globalisation: Its Meaning and StructuresWe must recognise the conceptual distinction between the international economy and globalised economy. International economy refers to the collective is one in which process and outcome of the various national economies at the international plane. “International economy is an aggregate of nationally located functions”. A wide range of international economic interactions such as financial markets and trade in manufactured goods tend to function as opportunities or constraints for nationally determined economic actions. As markets and production in a global economy become global and interdependent, domestic policies (whether of private corporations or sovereign states); have to be taken into account with the predominantly supranational determinants for their spheres of operation.

The state has to construct national policies to cope with increasing inter-connectedness of production, markets, at the global plane. As factors of production become international particularly finance, and market forces extend to the global plane, the role of the sovereign state becomes subordinate to the crates of global markets. Another major consequence of the notion of globalisation is the transformation of Multi-National Corporations - MNCs, into Transnational corporations - TNC’s, as the major players in the world economy. TNC’s capital has no specific national identification and with an internationalised management, it is willing to locate and relocate anywhere in the globe to obtain either the most secure or the highest returns.

In a truly globalised economy, this would be wholly dictated by market forces, without reference to national monetary policies. A TNC can produce and market at the global level as strategy and opportunities dictated. A TNC’s production-base is not restricted within one predominant national location (as with the multinational corporation), but it services global markets through global operations. Thus, the TNC, unlike the MNC, is not controlled or even constrained by the policies of particular national states. This process tends to undermine the traditional notion of state -sovereignty.

2.2.1 Historical BackgroundThe post-second world war period of international trade was governed by, what has come to be known as the Bretton Woods System. The great depression of the 30s and the collapse of the international monetary system were attributed to economic nationalism, competitive exchange rate, devaluations, formation of competing monetary blocs and absence of international cooperation. In July 1994, as the Allied forces were moving across France, representatives of forty four nations met at Bretton Woods, New Hampshire, to create a new international monetary order. A consensus emerged, which underscored that, the previous monetary systems, which had relied primarily on market forces had proved inadequate. Henceforth, governments acting together would have assumed the responsibility of managing le international monetary system. United States of America, as the dominant economic and military power in this phase, assumed the primary responsibility for establishing a post – war economic order that was designed to prevent economic nationalism and encouraging free aid, along with increased international interaction. A liberal economic system, with international cooperation, was assumed to promote lasting peace. The United States and the United Kingdom drew up a plan for new system of international monetary management.

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The Anglo-American plan, approved at Bretton Woods, became the first collective international monetary order that provided a basis for growing international trade, economic growth and political harmony among the developed market economies. Twenty seven years later, on August 15, 1971, President Nixon appeared on television to announce to the world the end of the Bretton Woods System, and that, the US would no longer abide by the rules andprocedures of the International Monetary Order. The successive oil crises, the growing instability in the market economies, fall in the growth rates of the industrialised countries, have contributed to the increasing trend towards, what is now termed, ‘globalisation’ in the nineties. Before we go on to explain ‘globalisation’ let us turn back to the Bretton Woods system and the institutions established under it, particularly the International Monetary Fund (IMF) and International Bank for Reconstruction and Development (IBRD) known as the World Bank.

2.2.2 Bretton Woods SystemUnder the system, it was agreed that fixed exchange rates was the most conducive to trade and economic stability. Thus, all countries agreed to establish the parity of their currencies in terms of gold and to maintain exchange rates within one per cent, plus or minus, of parity.

The rules further sought to encourage an open system by committing members to the convertibility of their respective currencies into other currencies and to free trade. The IMF was to be the enforcing authority of the rules and the main instrument of public international management.

To facilitate post-war, the IBRD or World Bank was created with a capitalisation of 10 billion and was expected to make loans of its own funds and to issue securities to raise new funds. However, the economic destruction of Europe was far too heavy and it was clear by 1947, that only the US contribution of $570 million were actually available for IBRD lending and the credit facilities of the IMF were clearly insufficient to deal with Europe’s huge deficits. In 1947, the United States stepped into fill the economic gap left by Bretton Woods and in the next two years a new international monetary system - the dollar standard (replacing gold standard) based on unilateral American Management Development from 1947 to 1958. The US deliberately encouraged the outflow of dollars (as it had huge balance-of trade surpluses) through various American Aid Programmes - the Marshall plan for European recovery, the Truman plan for aid to Greece and Turkey and so on. Another source of dollar liquidity for the international monetary system grew out of the Cold War that isthe American aid to its military allies and US troop deployment across the world. The Cold War required significant military expenditures, overwhelming by the United States. Thus, the dollar became the world’s currency and the United States became the world’s central banker, issuing dollars for the international monetary system.

The Bretton Woods Conference established:The International Monetary Fund (IMF) to alleviate the problems of international liquidity that is to help the • member countries to meet their balance of payment deficit and international monetary instability.The International Bank for Reconstruction and Development (IBRD) to help the reconstruction and development • of various national economies by providing long -term capital assistance.The International Trade Organisation (ITO) to work towards the liberalisation of trade.•

The IMF and IBRD, known as the Bretton Wood Twins were established in 1946. The proposed IT0 did not materialise. In its place came the General Agreement on Tariffs and Trade (GAIT). The World Trade Organisation (WTO) of 1995 was the culmination of prolonged GATT negotiations in the earlier era within the framework of the GATT.

2.2.3 IMF: Objectives and FunctionsThe IMF is an organisation that seeks to promote international monetary cooperation and to facilitate the expansion of trade, and thus, to contribute increased employment and improved economic conditions. Its membership consists of 153 countries, which today account for over 80% of world trade. Membership of the IMF is a prerequisite to membership in the World Bank. There exists a close relationship between the two organisations as well between the IMF and GATT. The IMF is a specialised agency within the United Nations system.


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The important functions of the IMF are:To facilitate the expansion and balanced growth of international trade and to contribute thereby to the promotion • and maintenance of high levels of employment and real income.To promote exchange stability, to maintain orderly exchange arrangements among members and to avoid • competitive exchange depreciation.To eliminate foreign exchange restrictions, which hamper the growth of world trade. The fund also provides loans • to members to correct maladjustments in their balance of payments, without resorting to measures detrimental to national or international prosperity. The IMF thus, combines three major functions: Regulatory, Financial and Consultative.

The Fund maintains a large pool of financial resources that it makes available to members temporarily and subject to conditions to enable them to carry out programmes to remedy their payment deficits. The policy adjustments that countries make in connection with the use of the Furid resources are geared to improve support credit-worthiness with other official sources and private financial markets. The Fund also helps members to coordinate their national economic policies internationally as the focus of the fund is not only on the problems of individual countries but also on the structure of the international monetary system. Sometimes, such problems at the two levels of concern for the IMF are in conflict with one another, which tend to be to this disadvantage of the weaker national economics of the world.

2.2.4 StructureThe work of the IMF is carried by the Board of Governors, an Executive Board, a Managing Director and the staff. Each member country is represented by a Governor, on the Board of Governors, which is the Fund’s highest authority, and which meets annually. A member country voting power is related to its contribution to the Fund’s financial resources, which in turn is related to its relative size in the world economy. The Board of Governors delegates most of its powers to the Executive Board, which is responsible for conducting its business. The Executive Board is chaired by the Managing Director.

The resources of IMF come from subscription by members and borrowings. Every member is required to subscribe to the Fund an amount equivalent to its quota. Each member is assigned a quota expressed in Special Drawing Rights (SDRs). Quotas are used to determine the voting power of members, their contribution to the Fund’s resources, their power to determine these resources and their share in the allocation of SDRs. A member% quota reflects its economic size in relation to the total membership of the Fund. The MF is also authorised to supplement its resources by borrowing to forestall any threat to the strength of the international monetary system. The eleven highly developed industrial countries of the world have undertaken to lend to the IMF, if necessary.

The states can borrow from the IMF to meet their balance of payments needs, under various policies and facilities. Those who borrow from the Fund are required to follow an economic policy programme aimed at achieving a viable balance of payments position over an appropriate period of time. This is known as conditionality and reflects that financing and adjustment must go hand in hand. IMF conditionality and its adjustment programmes (Structural Adjustment or SAP) are the subject of much debate in the developing countries. These conditionalities and structural adjustment programs/ policies that have been imposed on the developing countries include withdrawal of subsidies, devaluation of currencies, privatisation of economy and so on that have resulted in unemployment and have directly adversely the poorer sections of the society and the current debate in India on the economic policies of liberalisation.

2.2.5 International Bank for Reconstruction and Development The International Bank for Reconstruction and Development (IBRD) was established in 1945. It has two other affiliated institutions:

The International Finance Corporation (IFC) established in1956• and the International Development Association (IDA) established in 1960•

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Membership of the IMF is the principal condition for membership of the Bank.

ObjectivesThe objectives of the Bank as laid down in the Articles of Agreement are:

To assist in the reconstruction and development of the member states, by Wlitatin capital investments for • productive purposes, including the restoration of economies destroyed or disrupted by war, the reconversion of productive facilities to peace-time needs, and the encouraging of the development of productive facilities and resources in less developed countries (LDCs).To promote foreign investment by means of guarantees or participation in loans and other investments made by • private investors, and when private capital is not available on reasonable terms, to supplement private investment by providing, or suitable conditions, finance for productive purposes out of its own capital funds, raised by it and its other resources.

To promote long-age balanced growth of international trade and the maintenance of equilibrium in the balance of payments, by encouraging international investment of the productive resources of members in order to raise productivity, the standard of living and conditions of labour in the various countries of the world needing such help.

FunctionsThe IBRD, whose capital is subscribed by its member countries, finances its lending operations primarily from its own borrowings in the world capital markets. The Bank’s loans have a grace period of five years and are repayable over twenty years or less. They are directed towards developing countries at a relatively advanced stage of economic and social growth.

The Board of Governors, on which each member country is represented by one Governor exercising all power vested in the Bank. The Governors of the Bank have delegated their powers to a Board of Executive Directors, which perform its duties on a full time basis. There are Executive Directors who are appointed by the five members having the largest number of shares of capital stock and the rest are elected by Governors representing the other member countries.

The Bank assesses the repayment prospects of its loans, and for this purpose, takes into account the availability of natural resources, the country’s past debt record etc. The bank lends only for specific projects, which are economically and technically sound and of a high priority in the context of its larger objectives. As a matter of general policy, it lends for projects, which are designed to contribute directly to economic productivity, and normally does not finance projects of primarily social character, such as education and housing. Most bank loans have been made for provision of basic utilities, such as power and transport which are prerequisites for economic development. The Bank encourages the borrowers to procure machinery and goods for Bank-financed projects in the cheapest possible market consistent with satisfactory performance. Finally, the Bank indirectly encourages promotion of local private enterprise.

In recent years the Bank has stepped up its lending for energy development, which now forms the largest part of the Bank’s lending programme. Gas and oil development have also shown increasing attention in Bank lending. As economic conditions deteriorated in the third world countries in the 1980’s, the bank inaugurated a program of structural adjustment lending. This lending supports programmes of specific policy changes and institutional reforms in less developed countries designed to achieve a more efficient use of resources. In 1983, the bank initiated its special action programme (SAP) for a two-year period designed to increase assistance to countries trying to cope with exceptionally difficult economic environment due to global recession. This comprised financial measures combined with policy advice, needed to restore credit worthiness and growth.


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2.2.6 General Agreement on Tariffs and TradeAn attempt to create an international organisation to look after matters of trade and commercial policy were made as early as 1947. Although a charter for an International Trade Organisation was at the Havana Conference it was never ratified due to differences between those who wanted a free multilateral trading system and those who placed emphasis on full employment policies on a nation,basis. However, the American proposal for a general agreement on tariffs and trade was agreed upon, and many nations signed and thus emerged the General Agreement of Tariffs and Trade with no formal organisation and no elaborate secretariat. It is though increasing liberalisation of world trade and through GATT negotiations that the world Trade Organisation emerged in 1995.

The two outstanding features of GATT were the principle of non discrimination and the principle of reciprocity with the purpose of promoting fair and free international trade among members. To ensure non-discrimination the members of GATT agreed to apply the principle of MFN (Most Favoured Nation) to-all import and export duties. This meant that each nation shall be treated as well as the most favoured nation. However, GATT did not prohibit economic integration such as the formation of free trade areas or customs unions, provided that the purpose of such integration was to facilitate trade between constituent territories and not to raise barriers to the trade of other parties.

Several rounds of GATT negotiations aimed at reduction of tries and non tariff barriers to trade led to the lowering of duties on trade, involving more than two-third of the world’s States.

2.2.7 Uruguay Round and World Trade OrganisationThe last round of multilateral trade negotiations known as the Uruguay Round (held in Punte del este in Uruguay), which was the eighth round, centred around three main issues:

Trade Related Intellectual Property Rights (TRIPS)• Trade Related Investment Measures (TRIMS) • Trade in Agricultural Commodities•

The Third World countries have been by and large dissatisfied with GATT negotiations. Liberalisation of trade related intellectual property rights would mean that the less developed countries would have to compete with the advanced countries or the transnational companies. TRIPS covering copyrights, patents and trademarks are likely to harm the indigenous technology and nascent industries particularly pharmaceutical and drug industry, GATT covers the service sector as well under TRIMS. This is likely to affect the employment conditl.0n.s in the developing countries as they will be swamped by professionals from the advanced industrial countries. Agriculture is another contentious issue under GATT. While the US insisted on free trade in agriculture, withdrawal of state subsidies, EEC countries particularly France, which heavily subsidise their agriculture objected. The US threatened to use a law called super 301, under which punitive action is taken against countries which do not follow a free trade regime.

2.2.8 World Trade OrganisationThe Uruguay Round was scheduled to be completed by 1990 that is, within four years after its commencement. However, as the negotiations reached a deadlock over several contentious issues, the Director General of GATT - Arthur Dunkel intervened and proposed a draft that is known as the Dunkel Draft also decisively called DDT (Dunkel Draft Text). The Dunkel proposals called for reduction in domestic and export subsidies, and replacement of non-tariff barriers, like quotas and quantitative restrictions by tariffs. Then proposals also called for require longer enforcement of copy rights and trade marks in case of India. Such a provision requires a change in India legislation on patents to conform to the Paris Convention.

The multilateral trading system sanctioned by GATT and the Dunkel proposal maintain the predominance of the advanced industrial countries of the West in the international economy. The GATT, the Uruguay Round, and the Dunkel Draft did not take into account the role of MNCs in exploiting the countries of the third world and widening the gap between the rich and the poor in such countries as well as with in the global system.

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The Dunkel Draft was signed by member nations of December 15, 1993. After seven years of intensive negotiations, the new GATT agreements of Uruguay Round were ratified in December 1994 by the Indian Cabinet. The significant aspect of the GATT agreement is the establishment of the World Trade Organisation (WTO) that supersedes the GATT. The 500 page agreement setting up the WTO ushers in a new era of multi lateralisation of world trade. The WTO has become operational since 1st January, 1995 and has a status similar to the World Bank and the IMF. The treaty is binding on all its 117 member countries, two thirds of which are less developed counties (LDCs). The Organisation is expected to be the arbiter between the trading parties and generally ensure that the rules of the game are being followed. A dispute settlement mechanism is also to be established under the WTO. As to how the LDCs (including India with its vast market) fare in the competition with powerful, industrialised counties of the west is yet to be seen.

2.3 Post Bretton Woods DevelopmentsTwo significant development in the global economy since 1950 are the growth of regional economic subsystems, and the growth of multinational corporations (MNCs), which operate across national boundaries. While MNCs contribute to globalisation they can also pose a threat to national economic autonomy. Within the core of the capitalist industrialised world, regional economic activity emerged in the of west European Economy leading from a common market to European Union in the 90s; in the Pacific and South East Asia regional subsystems emerged. The emergence of a financial and securities market centred in New York, Tokyo and London is symptom of regionalisation and globalisation through interregional linkage.

The growth of MNCs is both the cause and consequence of globalisation. The emergence of world markets, and an international economic regime, provided the environment favourable to the growth of transnational firms. Initially such companies were predominantly If$-based and sometimes dominated a whole sector of the global economy, imposing standards on it. The classic example is the IBM which at one time accounted for more than 80 per cent of the World Market in computers and was able to use this dominant position to define standards to maintain or increase its share of market and/or competitive advantage. In the post war period, the number, range and diversity of MNCs increased along with a changing balance between them in banking, oil, car manufacture and so on. Thus, growth in the MNCs produced more complex interdependence in the global economy. It also posed difficult problems for national economies in areas of investment, capital movement and control of technology. A new managerial class - the class of corporate managers – emerged moving between companies and countries.

The post-war economy clearly indicates three features - the hegemonic position and role of the US in the world economy; the decline of the less developed (or developing) countries share of world exports from 1960-70; the relative isolation of the centrally planned economies (or socialist countries) in terms of their share of world trade. These countries (that is the socialist economies) did not receive Marshall Aid nor join the Bretton Woods system.

Their post-war recovery was followed by world wide recession, with increasing energy prices, as the oil-producing countries of the Gulf hiked oil prices. In 1971, the US suspended fixed dollar convertibility to gold, and world trade and finance moved to a system of flexible exchange rates rather than fixed parities and regulated adjustment mechanisms that had been planned originally. The end of the Bretton Woods system led to the intervention of the Central Banks of major economies in the money market to keep exchange rate fluctuations within limits and reintroduce some stability into the international system.

Over the last twenty years or so the dominance of the US in the world economy has declined. However, the dollar has retained its role as the principal international currency, and this has helped it to stay at the centre of both monetary and trade regimes. The US still remains committed to the institutions of international economic order and to multilateralism and trade liberalism. But the emergence of Western Europe, particularly West Germany, and Japan as major economic powers has to some extent altered the distribution of economic power in the post-cold war era.


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2.3.1 Globalisation and the Third WorldThe expansion of industrial capitalism to the ‘periphery’ of the international economy -South Korea, Taiwan, Singapore and the neighbouring newly industrialising countries - ‘South East Asian Tiger ‘ as they are referred to - is also another feature of the 80s . But, these countries are inhabited by less then 2 per cent of the Third World population. Throughout the 80s the gap between the rich and poor countries of the world widened and has continues to do so. The hope for a new international economic order (NIEO) through the North-South dialogue, have not resulted in any improvement in the conditions of the people of the South. The belief, following neoclassical economies, that unrestricted international trade would allow the poor countries to come closer to the level of the rich, has been belied by historical experience. On the contrary, the lending policies of the World Bank & IMF, the conditionalities and structural adjustment programmes imposed on the countries of the third World - Africa particularly - have resulted in food riots, unemployment and increasing poverty in these countries. It must also be noted that international mechanisms of free trade led to inflation and recession, the deterioration of terms of trade for many European countries.

2.3.2 Impact of GlobalisationThe technological advances of the last two decades have brought’ about a revolution in communications and transportation eroding the boundaries between markets and nation states. Thus, economic process have become increasingly internationalised in a number of key spheres, like communications, production, trade, finance. New technology has also radically increased the mobility of economic units and the sensitivity of markets, and societies to one another, thus globalising economies of the world. This has paved the way for the ideal of global free trade to be achieved through the World Trade Organisation (WTO).

Globalisation has brought about radical changes in the production process, shifting industry from its old centres in the rich countries with high labour costs to countries of abundant cheap labour. While, earlier, labour remained a major factor of production, technology continued to render human labour redundant thus, increasing unemployment and underemployment.

Historically such pressures have been met by state interventions, like protectionism. However, globalisation with a free market ideology removed or weakened the possibilities of state intervention - whether in the form of subsidies or protection of their internal markets.

While the labour in the developed countries fear losing jobs, the third world countries hope to see increasing employment opportunities. But, when commitment to free market ideology compels governments of the west, and more particularly the third world to reduce the costs of social security and public welfare, mass reduction of employment and marginalisation of large sections of the society is inevitably taking place. Such social and political consequences of globalisation are likely to be world-wide, with its relatively greater impact with in the countries of the Third World.

An important consequence of globalisation is labour migration. As labour migrates to the industrialised countries of the West, or the oil-producing countries of the Gulf, in search of jobs social conflicts are on the increase. Racism in Germany and other western countries, resentment against immigrants in the Gulf by the local people are examples of this. Revolution in communications has undoubtedly brought the different parts of the World closer. Yet, that in itself is not sufficient to build a global community. An important consequence of globalisation of economies is also fragmentation of societies, rise of movements of identities - ethnic, nationalist and religious. Free trade and WTO do not automatically halIU0niSe the interest of the states. This is quite evident from the conflicts between the US and European countries over questions of telecommunications and satellite T.V programme, electronic industries etc. Economic globalisation should not be equated with the emergence of a Global community as a Nation. States (even after if their sovereignty has been undermined) continue to assert their priorities and interests over global interests. These conflicts tend to produce global insecurity and inter-state tensions.

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2.4 Let Us Sum UpGlobalisation is a process of intensifying economic interconnectedness and interdependence of the national economies of the World. This tends to curtail the powers of the state to regulate their economies. Globalisation has been a historical process. The post-war period has seen the establishment of institutions that attempted to regulate the international monetary and trade relations. These institutions are the W, the World Bank and the GATT. The system was known as the Bretton-Woods system. However, this system under the hegemony of the United States of America collapsed in the 70s because the United States unilaterally, refused to abide by its rules and procedures. The subsequent oil crisis followed by the revolution in industrial production through highly sophisticated computerised methods brought about radical changes in the international economic order. The Western countries need for resources, the economic crisis and stagnation in these countries, eventually led to globalisation under American hegemony. The process of globalisation has neither promoted equality among the national-states nor necessarily development for the third world countries. The transnational corporations and the industrialised countries continue to exploit and enjoy a dominant position in the global economy. The World Trade Organisation has been set up following the Uruguay Round of GATT.

2.5 Key WordsAllied forces: The World War I1 was fought between two power blocs, known as Allied forces and Axis forces. • The forces were led by the UK, USA, France and the erstwhile USSR.Dunkel draft: In order to break the deadlock in the Uruguay Round negotiations, The Director General of GATT, • Mr. Arthur Dunkel prepared certain proposals. They have come to be known as dankel draft.Service sector: There are two sectors in any Country’s economy, namely, primary sector and secondary sector. • Primary sector is directly involved in production of goods and services. Secondary sector offers services to the people, it is, therefore, known as service sector.


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SummaryRevolution in transport and communication, highly sophisticated industrial production technologies in the post-• war period created a capitalist world market.New institutions and rules to government world trade have come into existence in the form, of WTO - World • Trade Organisation.International economy is an aggregate of nationally located functions.• One of the major consequences of the notion of globalisation is the transformation of Multi-National Corporations • - MNCs, into Transnational corporations - TNC’s, as the major players in the world economy.A TNC can produce and market at the global level as strategy and opportunities dictated.• The Anglo-American plan, approved at Bretton Woods, became the first collective international monetary • order that provided a basis for growing international trade, economic growth and political harmony among the developed market economies.To facilitate post-war, the IBRD or World Bank was created with a capitalisation of 10 billion and was expected • to make loans of its own funds and to issue securities to raise new funds.The IMF and IBRD, known as the Bretton Wood Twins were established in 1946.• A member country voting power is related to its contribution to the Fund’s financial resources, which in turn is • related to its relative size in the world economy.The International Bank for Reconstruction and Development was established in 1945.• Membership of the IMF is the principal condition for membership of the Bank.• In 1983, the bank initiated its Special Action Programme (SAP) for a two-year period designed to increase • assistance to countries trying to cope with exceptionally difficult economic environment due to global recession.The two outstanding features of GATT were the principle of non discrimination and the principle of reciprocity • with the purpose of promoting fair and free international trade among members.The multilateral trading system sanctioned by GATT and the Dunkel proposal maintain the predominance of • the advanced industrial countries of the West in the international economy.Two significant development in the global economy since 1950 are the growth of regional economic subsystems, • and the growth of multinational corporations (MNCs), which operate across national boundaries.An important consequence of globalisation is labour migration.• The World War I1 was fought between two power blocks, known as Allied forces and Axis forces.•

ReferencesEgyankosh. • Globalisation of the Economy-IBRD, IMF and WTO [Online] Available at: <http://www.egyankosh.ac.in> [Accessed 11 May 2012].The L- Curve. • Globalisation of the Economy-IBRD, IMF And WTO [Online] Available at: <http://www.lcurve.org/writings/WTO-IMF-IBRD.htm> [Accessed 11 May 2012].tarfin. • A short introduction to the Bretton Woods System. [Video Online] Available at: <http://www.youtube.com/watch?v=LlMHevIw9HU> [Accessed 11 May 2012].5iF3R. • John Perkins on Globalisation. [Video Online] Available at: <http://www.youtube.com/watch?v=LlMHevIw9HU> [Accessed 11 May 2012].Ratnesh, K., 1999. • WTO (World Trade Organisation): Structure, Functions, Tasks and Challenges. Deep and Deep Publications.Ramlogan, P., Krockow, B. F., 2007. • International Monetary Fund Handbook: Its Functions, Policies, and Operations, International Monetary Fund.

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Recommended ReadingMiller, F. P, Vandome, A. F. and McBrewster, J., 2010. • Bretton Woods System, VDM Verlag Dr. Mueller e.K.Peet, R., 2003. • Unholy Trinity: The IMF, World Bank and WTO, 2nd ed., Zed Books.Kirton, J. J., Larionova, M., and Savona, P., 2010. • Making Global Economic Governance Effective: Hard and Soft Law Institutions in a Crowded World. Ashgate Publishing Ltd.


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Self Assessment________________ refers to the collective is one in which process and outcome of the various national economies 1. at the international plane.

WTOa. IMFb. IBRDc. International economyd.

_____________ has no specific national identification and with an internationalised management, it is willing 2. to locate and relocate anywhere in the globe to obtain either the most secure or the highest returns.

New industriesa. MNCsb. TNC’s capitalc. New world tradesd.

The IMF and IBRD, known as the Bretton Wood Twins were established in __________.3. 1946a. 1948b. 1945c. 1949d.

How many members are associated with IMF?4. 150a. 284b. 153c. 183d.

Each member in IMF is assigned a quota expressed in _____________.5. WTOa. IBRDb. SDRc. TNCd.

The International Bank for Reconstruction and Development was established in ______.6. 1946a. 1948b. 1945c. 1949d.

Which program was initiated by IBRD in 1983?7. Special Actiona. MNC to TNCb. Energy Developmentc. Natural Resourcesd.

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Which of the following was the last round of multilateral trade negotiations?8. MFN rounda. Uruguay roundb. Capital roundc. EEC roundd.

Which of the following is not one of the main issues of Uruguay round in multi trade negotiations?9. Natural Commoditiesa. TRIPSb. TRIMSc. Agricultural Commoditiesd.

The Dunkel Draft was signed by member nations of December 15, __________.10. 1990a. 1992b. 1991c. 1993d.


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Chapter III

India and United Nations

Aim


introduce the members of United Nations•

elucidate the relationship between India and United Nations•

explain India’s position on development•

Objectives


recognise India’s peace building efforts•

describe the India’s role in countering terrorism•

elucidate India’s position on disarmament•

Learning outcome


understand India’s position on environment•

identify the India’s position on human rights•

understand I• ndia’s struggle against colonialism

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3.1 IntroductionThe United Nations system of organisations covers a wide variety of organisational units (centres, agencies, organisations, commissions, programmes and so on) with different institutional and functional structures. The principal organs and subsidiary bodies of the United Nations Secretariat are included under the regular budget of the United Nations, as authorised by the General Assembly. Other agencies of the UN system, however, have their own regular budgets or are financed solely from voluntary contributions. These latter two categories, moreover, possess a certain degree of autonomy.

The organisations within the United Nations system also vary considerably both in size and as regards their activities. Most organisations were established about the time when the United Nations itself came into being, but some are considerably older. For example, the International Telecommunication Union, as a direct continuation of the International Telegraph Union, dates back to 1865 and the Universal Postal Union was first established in 1874.

3.2 Members of United NationsMember organs of the United Nations reporting annually to the General Assembly and, as appropriate, through the Security Council or the Economic and Social Council, include:

UN Secretariat United Nations Secretariat

UNICEF United Nations Children’s Fund

UNCTAD United Nations Conference on Trade and Development

UNDP United Nations Development Programme

UNEP United Nations Environment Programme

UNFPA United Nations Population Fund

UNRWA United Nations Relief and Works Agency for Palestine

UNU United Nations University

WFP World Food Programme

UNHCR United Nations High Commissioner for Refugees

UNCHS (Habitat) United Nations Centre for Human Settlements

OCHA Office for the Coordination of Humanitarian Affairs

Table 3.1 Organs of United Nations

The specialised agencies, a term first used in the United Nations Charter, which provides for international action to promote economic and social progress, report to the Economic and Social Council. These specialised agencies work in the economic, social, scientific and technical fields and possess their own legislative and executive bodies, their own secretariats and their own budgets. These include:

ILO International Labour Organisation

FAO Food and Agriculture Organisation of the United Nations

UNESCO United Nations Educational, Scientific & Cultural Organisation

ICAO International Civil Aviation Organisation

WHO World Health Organisation

WB World Bank Group


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IMF International Monetary Fund

UPU Universal Postal Union

ITU International Telecommunication Union

WMO World Meteorological Organisation

IMO International Maritime Organisation

WIPO World Intellectual Property Organisation

IFAD International Fund for Agricultural Development

UNIDO United Nations Industrial Development Organisation

WTO World Tourism Organisation

Table 3.2 Specialised agencies

3.3 India and United NationsIndia was among the original members of the United Nations that signed the Declaration by United Nations at Washington on 1 January 1942 and also participated in the historic UN Conference of International Organisation at San Francisco from 25 April to 26 June 1945. Independent India viewed its membership at the United Nations as an important guarantee for maintaining international peace and security at the height of the Cold War especially by working towards eliminating the causes of war and conflict. UN membership has also served as an opportunity for leadership in world affairs. India stood at the forefront during the UN’s tumultuous years of struggle against colonialism and apartheid, its struggle towards global disarmament and the ending of the arms race, and towards the creation of a more equitable international economic order. The end of the Cold War coupled with the rapid integration of the global society with its implications for the international system has evolved into the principal challenges for the United Nations in the twenty-first century. India has been undertaking sincere steps to understand as well as to find ways for adapting to these challenges. An integral part of such efforts is collective action and adoption of multilateral approaches in resolving transnational issues under the auspices of the United Nations. In doing so, India and the United Nations are rediscovering each other. India believes that the United Nations must undertake reforms that will make it truly representative while enhancing its credibility and effectiveness. In particular, the composition of the Security Council needs to change thereby reflecting contemporary realities. The United Nations must play an active role in ensuring inclusive growth within nations, and inclusive globalisation across nations. This calls for, in the short-term a new international initiative to bring structural reform in the world’s financial system with more effective regulation and stronger systems of multilateral consultations and surveillance as well as a collaborative and cooperative global effort for successfully overcoming climate change that leads to an outcome that is fair and equitable while recognising the principle that each citizen of the world has equal entitlement to the global atmospheric space. India also believes that the UN should play an active role in ensuring genuine global counter-terrorism cooperation, in particular, the conclusion of the continuing negotiations on a Comprehensive Convention on International Terrorism. As the United Nations strives to find solutions to these issues, India pledges to work, with abiding faith and hope, towards UN’s success, and to assume greater responsibilities that the world community expects from it.

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3.4 India’s Position on DevelopmentThe UN cannot avoid its development responsibilities. Much needs to be done-the international community has to go a long way in meeting the ODA target of 0.7 percentpercent of GDP agreed nearly a quarter century ago. According to the report of the Development Assistance Committee of the Organisation for Economic co-operation and Development, overseas aid from 21 richest OECD countries fell from 0.25 percentpercent of combined national income in 1996 to 0.22 percentpercent in 1997. According to the same report, development aid has fallen by 20 percentpercent in real terms since 1992.

India is one of the largest contributors to the core resources of UNDP and a significant contributor to those of UNFPA and UNICEF. India is also a major contributor to the core resources of and the World Food Programme. India’s contribution to these funds is higher than that of many OECD countries. We hope that the developed countries will also increase their contributions to untied and apolitical resources for development.

India has contributed US $ 100,000 to the UNCTAD Trust Fund for the least developed countries. It has also been contributing US $ 50,000 per annum to the ITC Global Trust Fund since its inception in 1996. It also makes substantial voluntary contributions to UNEP, Habitat, UN Drug Control Programme, UNRWA, UNIFEM UN Volunteers and so on.

3.5 India’s Position on Peace Building and PeacekeepingIndia stands solidly committed to assist the UN in the maintenance of international peace and security. We have a proud history of UN peacekeeping dating back to its inception in the 1950s. We have contributed nearly 100,000 troops, and participated in more than 40 missions. India has also provided and continues to provide eminent Force Commanders for UN Missions. We salute the 118 Indian peacekeepers, as well as those from other countries, who have made the supreme sacrifice and laid down their lives while serving in UN missions. India has considerable experience in demining activities and has made significant contributions to the de-mining work in various peacekeeping missions. India has also provided opportunities for training to military officers from different countries. The United Services Institute of India has also earned a name for itself in the area of thematic training for personnel of peacekeeping operations. India feels that the international community must grasp the rapid changes that are underway in the nature and role of contemporary peacekeeping operations. The Security Council’s mandates to UN peacekeeping operations are too broad and have very little correlation with the ability of the organisation to deliver. The Security Council should invite non-Council members to participate in the decisions of the Security Council concerning the employment of contingents of that Member’s armed forces. This means that troops contributing countries should be fully involved at all stages and in all aspects of mission planning.

Secondly, Field Support needs far greater attention. It is our view, based on the experience of supporting the large contingents that we currently have under deployment, that the Department of Field Support needs far greater internal coordination and client-orientation. It has also been our view that the Department of Field Support needs to function as a military support operation with a lean command structure. We feel that there is a need for far greater engagement of Member States on functioning of the DFS. Finally, India is forward looking in terms of the approach towards management of troops in the different areas of operation. India fully supports implementation of a policy of zero tolerance with regard to conduct and discipline of troops including, sexual exploitation and abuse. The real challenge before the UN is to strengthen peacekeeping without regionalising it. India favours the induction of more female peacekeepers and encourages DPKO to be more proactive in this process. India’s unique combination of being the largest democracy in the world with a strong tradition of respect for rule of law and the successful experience in post-colonial nation-state building makes it particularly relevant in the context of twenty-first century peace building. India believes that there are two levels of intervention in support of a peace process-intervention at the national and local levels-and that both processes must move in lockstep. While doing so, there is an imperative need to ensure that the supporting external interventions focus on delivering a peace dividend, expanding national capacity and ensuring the expansion of basic economic capacity so that surplus labour especially the youth—can be gainfully employed. Further, India believes that coordination and consultation within


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the UN (the important strands of relationships among the Peace building Commission, the Security Council, the General Assembly and the ECOSOC), between the UN and the international financial institutions, especially the World Bank, must also be expanded.

3.6 India’s Position on Counter-TerrorismThe 13 major UN instruments relating to specific terrorist activities remain fundamental tools in the fight against terrorism. India is a Party to all the 13 major legal instruments. We also attach utmost importance to the fulfilment of obligations under the relevant counter terrorism resolutions of the United Nations, namely Resolutions 1267, 1373 and 1540 of the UN Security Council. We have filed five National Reports with the Counter Terrorism Committee, giving a comprehensive picture of steps taken by India to counter terrorism.

In 1996, India presented a draft of a comprehensive convention on international terrorism (CCIT) to the Ad Hoc Committee of the UN General Assembly on International Terrorism. It is intended that the CCIT, when concluded, would provide the international community with a legal framework that can supplement the existing Conventions to comprehensively deal with terrorism. India acknowledges the concerns of the member states in regard to outstanding issues, namely the importance of the need not to affect the exercise of the right of peoples to self-determination; the need to capture concerns relating to “State terrorism”; resolution of matters concerning potential impunity of military forces; and the need to delineate activities to be covered by the scope of the convention and those covered by humanitarian instruments. At the same time, India is also of the view that such issues have to be sorted out at the earliest and that the CCIT cannot be held hostage to definitions while terrorists continue to take innocent lives.

India welcomed the adoption in 2006 of the UN Global Counter Terrorism Strategy that recognises the need to express solidarity with innocent victims of this scourge and specifically addresses victims of terrorism. We believe that the primary responsibility for implementing the Strategy rests on Member States and hope that the Strategy would provide the impetus to unite them in the fight against terrorism via practical measures that facilitate cooperation by way of extradition, prosecution, information exchange, and capacity building.

The Unlawful Activities (Prevention) Act incorporates provisions that deal with all aspects of terrorism including incitement. The Act also criminalises raising of funds for terrorist activities, holding of proceeds of terrorism, harbouring of terrorists, unauthorised possession of any bomb, dynamite or hazardous explosive substance or other lethal weapon or substance capable of mass destruction or biological or chemical substance of warfare. The necessary legal, regulatory and administrative framework for combating money laundering and financing of terrorism is also in place. The specific legislations to prevent financing of terrorism include:

Foreign Exchange Management Act, 1999• Narcotic Drugs and Psychotropic Substances Act, 2003• Prevention of Money Laundering Act, 2003 of 1967 as amended in 2004•

A Financial Intelligence Unit-India is already in operation and is the nodal agency responsible for receiving, processing, analysing and disseminating information relating to suspect financial transactions to intelligence and enforcement agencies.

India has not only adhered to the existing regulatory framework governing controls over weapons of mass destruction and their means of delivery but has proceeded to strengthen these obligations by enacting an overarching and integrated legislation prohibiting unlawful activities in relation to weapons of mass destruction and their delivery systems (The Weapons of Mass Destruction and their Delivery System (Prohibition of Unlawful Activities Act, in 2005).

Laws such as The Explosive Substances Act, 1908; The Narcotic Drugs and Psychotropic Substances Act, 1985; The Environment Protection Act, 1986; The Atomic Energy Act, 1962; The Foreign Trade (Development and Regulation) Act, 1992; The Customs Act, 1962 form the legal basis of India’s system of export Controls. Various agencies of the Government are empowered to enforce the provisions of these laws.

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India is Party to the International Convention on Mutual Administrative Assistance in Customs Matters (Johannesburg Convention), aimed at enhancing cooperation among Customs Administration of various countries to ensure supply chain security; and the International Convention on the Simplification and Harmonisation of Customs Procedures (the Kyoto Convention) and has in place legislation and procedures to cover these Standards.

India is a Party to the SAARC Regional Convention on Suppression of Terrorism. It provides for extradition of persons accused of terrorist activities within the SAARC member countries. To facilitate extradition in the absence of a bilateral agreement, the Indian Extradition Act, 1962 has provisions for treating an international convention as an extradition treaty to which India and a foreign State concerned are parties in respect of the offences dealt under that convention. In addition India has entered into bilateral extradition agreements with several countries.

India has a well developed law on mutual assistance in criminal matters, which enables it to seek from and extend cooperation to foreign States in respect of mutual legal assistance in criminal matters. India has concluded Mutual Legal Assistance Treaties with 26 countries and 5 more Treaties are under negotiation. To ensure a greater sense of security within the South Asian region, recently at the Fifteenth Summit of the SAARC, a Convention on Mutual Legal Assistance in Criminal Matters was adopted which allows Member States to provide each other the greatest measure of mutual assistance in criminal matters.

India has been working with its international partners and regional organisations to prevent and combat international terrorism. We have constituted Joint Working Groups with 25 States, and regional organisations like the EU and BIMSTEC, for coordinating and cooperating in counter-terrorism efforts. These Groups meet regularly, and have proved useful in providing a forum for exchange of information and experiences.

3.7 India’s Position on DisarmamentIndia has a long-standing commitment to the goal of general and complete disarmament. As early as 1948, India called for limiting the use of atomic energy for peaceful purposes only and the elimination of atomic weapons from national armaments. India was the first country to call to an end to all nuclear testing in 1954. This was followed up in subsequent decades by many other initiatives, for example, on the Partial Test Ban Treaty, and the call for international negotiations on nuclear non-proliferation. In 1978, India proposed negotiations for an international convention that would prohibit the use or threat of use of nuclear weapons. This was followed by another initiative in 1982 calling for a “nuclear freeze” that is prohibition on the production of fissile material for weapons, on production of nuclear weapons, and related delivery systems. The centre-piece of India’s policy on nuclear disarmament is the “Action Plan for Ushering in a Nuclear-weapon free and Non-Violent World Order” proposed by Prime Minister Rajiv Gandhi to the Third Special Session on Disarmament of the General Assembly in June 1988. The heart of the Action Plan was the elimination of all nuclear weapons, in three stages by 2010 and placed emphasis on nuclear disarmament that is global, universal and non-discriminatory in nature. The essential features of this Action Plan were:

First, there should be a binding commitment by all nations to eliminating nuclear weapons in stages, by the • year 2010 at the latest.Second, all nuclear weapon States must participate in the process of nuclear disarmament. All other countries • must also be part of the process.Third, to demonstrate good faith and build the required confidence, there must be tangible progress at each • stage towards the common goal.Fourth, changes are required in doctrines, policies and institutions to sustain a world free of nuclear weapons. • Negotiations should be undertaken to establish a Comprehensive Global Security System under the aegis of the United Nations.


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Most presciently, the Action Plan noted, “Beyond a point, nuclear disarmament itself would depend upon progress in the reduction of conventional armaments and forces. Therefore, a key task before the international community is to ensure security at lower levels of conventional defence. Reductions must, of course, begin in areas where the bulk of the world’s conventional arms and forces are concentrated. However, other countries should also join the process without much delay. This requires a basic restructuring of armed forces to serve defensive purposes only. Our objective should be nothing less than a general reduction of conventional arms across the globe to levels dictated by minimum needs of defence. The process would require a substantial reduction in offensive military capabilities as well as confidence building measures to preclude surprise attacks. The United Nations needs to evolve by consensus a new strategic doctrine of non-provocative defence.” India was compelled by considerations of national security to establish and adopt a policy of keeping its nuclear option open while it continued to work for global nuclear disarmament. India’s nuclear capability was demonstrated in 1974. India exercised an unparalleled restraint in not weaponising its nuclear capability. It is relevant to recall, that during this period, when we voluntarily and totally desisted from testing, over 35,000 nuclear weapons were developed through a series of tests by states possessing nuclear weapons. India was obliged to stand apart on the CTBT in 1996 after having been actively engaged in the negotiations for two and a half years precisely because the issues of non-proliferation, global disarmament and India’s concerns about her security and strategic autonomy were ignored. India’s continued commitment to nuclear disarmament and non-proliferation is clear from the voluntary measures announced by India after undertaking a limited series of underground nuclear tests in 1998. India remains committed to converting its voluntary moratorium into de jure obligation accordance with our long held positions disarmament. India has declared that it will maintain minimum credible nuclear deterrent and will not engage in an arms race. India has declared a no-first-use doctrine. We are willing to strengthen this commitment by undertaking bilateral agreements as well as by engaging in discussions for a global no-first-use agreement. India believes that a global no-first-use agreement would be the first step towards the delegitimisation of nuclear weapons. India has also called for a Nuclear Weapons Convention to ban and eliminate nuclear weapons just as the Biological Weapons Convention (BWC) and the Chemical Weapons Convention (CWC) have banned the other two categories of weapons of destruction. Further, India has an impeccable record on non-proliferation, which is ensured through a stringent and effective system of export controls. Global recognition of this record was evident in the near complete lack of opposition to opening of international civil nuclear cooperation with India in 2008. India believes that the indefinite and unconditional extension of the NPT has only served to legitimise nuclear arsenals of the NPT states possessing nuclear weapons into perpetuity, thus posing a major obstacle to the goal of global nuclear disarmament. India welcomes the recent efforts by some heavily armed nuclear states to take steps in good faith for nuclear disarmament with the aim of eventually fulfilling obligations under Article VI of the Nuclear Non-Proliferation Treaty.

India supports the negotiation in the CD of an FMCT that is universal, non-discriminatory and verifiable. We support international efforts to strengthen the present international legal framework to ensure the safety and security of space assets and to prevent the placement of weapons in the outer-space. While noting that there is no legal regime governing the possession and use of missiles, we believe that any initiative to address these concerns in a sustainable and comprehensive manner should be through an inclusive process based on the principle of equal and legitimate security. India has contributed actively to UN efforts to strengthen regulation of small arms and light weapons as we believe that it is necessary to break the nexus between small arms proliferation and terrorism and organised crime. We remain strongly committed to the CCW process, which offers the only forum of a universal character that brings to together all the main producers and users of major conventional weapons, thus ensuring that the instruments that emerge have a greater prospect of making a meaningful impact on the ground.

3.8 India’s Position on EnvironmentIndia is among the top 12 mega centres of the world in terms of its genetic diversity. It has a wide range of geo-climatic conditions and a rich and varied flora and fauna, as well as a long standing tradition of environmental sensibility and concern that goes to the very roots of its millennia-old culture. Harmony with nature has been an integral part of the ethos of Indian society.

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The then Prime Minister of India, Mrs. Indira Gandhi, was the sole foreign head of state or government to participate in the United Nations Conference on Human Environment held in Stockholm in June 1972, at a time when international concern over environmental issues was yet to fully crystallise. At that session she emphasised that the environmental concerns cannot be viewed in isolation from developmental imperatives.

India considers environmental and developmental issues to be closely intertwined. It fully supports international cooperation in the field of the environment so as to effectively deal with global environmental problems. It is committed to a global partnership that simultaneously seeks to protect the environment while addressing the development requirements and aspirations of the developing countries.

India has consistently played an important role in the evolution of an international consensus to tackle major global environmental issues. It was an active participant in the process leading up to and culminating in the convening of the United Nations Conference on Environment and Development in Rio de Janeiro in June, 1992. The Rio Conference affirmed the importance of sustainable development, which encompasses both development and environmental protection. Agenda 21, adopted by the Rio meet, provides a blueprint on how to make development socially, economically sustainable.

Despite constraints, India has initiated several activities and programmes in the context of Agenda 21, which are consistent with its national goals and objectives. India is a party to numerous multilateral environmental conventions which contribute to the protection of the environment and to sustainable development. These include the Framework Convention on Climate Change, the Convention on Biological Diversity, the Vienna Convention on the Protection of the Ozone Layer, the Montreal Protocol on Substances that Deplete the Ozone Layer, the Ramsar Convention on Wetlands of International importance, the Basel Convention on the Trans boundary Movement of Hazardous Wastes, the Convention on Combating Desertification, and the Convention on the International Trade in Endangered Species of Wild Flora and Fauna. India is also an active member of the Commission on Sustainable Development that was set up after the Rio Conference to monitor the implementation of Agenda 21.

India is among the leading countries in the vanguard of efforts directed at environmental protection. It has in position an elaborate framework of environmental legislation for the conservation of forests, preservation of wildlife and the control of water, air and soil pollution. It has a network of protected areas converting 84 national parks and 447 wildlife sanctuaries. India has also introduced the Eco-Mark label for environment-friendly products, requires the undertaking of Environment Impact Assessment before commencing major industrial projects, and has in 2position functioning Environmental Tribunals as well as an effective system of Environmental Audit.

At the Special Session of the UN General Assembly held in June 1997 to review the progress made five years after the Rio meet, India expressed its disappointment over the lack of fulfilment at the international level of commitments voluntarily undertaken by the industrialised countries at Rio. On its part, India reiterated its commitment to the global partnership established at Rio de Janeiro.

3.9 India’s Position on Human RightsIn India the concept of human rights emphasising pivotal position of individual citizen stretches back to the first millennia. Human rights have been an inherent component of various philosophies that have flourished in India. The leaders of the Indian National Movement stressed the primacy of human rights in the future constitutional set-up. The Indian Constitution, as a result, stands as one of the most comprehensive and self-contained documents on human rights.

India took active part in drafting of the Universal Declaration on Human Rights. Dr. (Mrs) Hansa Mehta, a Gandhian political activist and social worker who led the Indian delegation, had made important contributions in drafting of the Declaration, especially highlighting the need for reflecting gender equality. India is fully committed to the rights proclaimed in the Universal Declaration. India is a signatory to the six core human rights covenants, and also the two Optional Protocols to the Convention of the Rights of the Child.


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India has been advocating a holistic and integrated approach that gives equal emphasis to all human rights, based on their inter-dependence, inter-relatedness, indivisibility and universality, and reinforces the inter-relationship between democracy, development, human rights and international cooperation for development. India had played an active role as member of the Commission on Human Rights (CHR) since its creation in 1947. India was elected in 2006 as a member of the newly established Human Rights Council (HRC), which replaced the CHR, by securing the highest number of votes among the contested seats. India was re-elected again as a member in 2007 by securing the highest votes by polling 185 votes out of 190 votes cast. India attaches great importance to the Human Rights Council and is committed to make the Council a strong, effective and efficient body capable of promoting and protecting human rights and fundamental freedoms for all. The National Commission for Human Rights (NHRC), established in India in 1993, serves as an independent and autonomous body for protection of human rights in the country. The Commission is now very much part of the life of the nation and, increasingly, of consequence to the quality of its governance. Awareness of the rights guaranteed by the Constitution, and included in the international instruments to which India is a State party, has increased dramatically in the country. The enactment by the Indian Parliament in August, 2005 of a Rural Employment Guarantee Act, providing for 100 days of assured employment in a year to every rural household, is a step in the direction of ensuring justifiability of economic and social rights. The Right to Information Act passed by the Indian Parliament in 2005 is a testimony to India’s commitment for providing access to information to the citizens. India is fully committed to the implementation of the Beijing Platform for Action. India adopted a rights-based approach to promoting equality of women and evolved a multifaceted strategy aimed at their empowerment through awareness-raising, political participation, economic independence, education, health, and legal standards. The objective is to enable women to overcome disadvantages that they face and to enable them to play an effective and equal role in society. Among the most important of these measures include reservation of one-third seats in local and village-level bodies, and formulation of National Policy for the Empowerment of Women in 2001, provision for immediate and emergency relief to women in situations of domestic violence, amendment to the Hindu Succession Act to give daughters and widows equal right in ancestral property including agricultural land, dowry prohibition and prevention of immoral trafficking. India adopted a National Charter for Children in 2003 to reiterate its commitment to the cause of the child in order to see that no child remains hungry, illiterate or sick. The right to free and compulsory education for all children, in the age group of 6 to 14 years, has been made a fundamental right in 2002 by an amendment to the Constitution. India has a proactive stand on the issue of child protection and in creating a protective environment for children. Towards this end, India has undertaken several initiatives, notably a National Commission for Protection of Child’s Rights has been set up in February 2007 to provide speedy trial of offence against children or of violation of child’s rights, thus ensuring effective implementation of laws and programmes relating to children. Eradication of child labour in all occupations and industries is one of the most important priorities of the Government of India. The National Human Rights Commission and the civil society, including non-Governmental organisations, have been supplementing Government’s efforts in eradication of child labour in the country. The rights of vulnerable groups have received special mention in India ever since independence and the Constitution itself contains extensive provisions for the promotion and protection of the rights of all minorities, including some special groups of people unique to Indian society known as Scheduled Castes and Scheduled Tribes. These measures have been further strengthened through a recent amendment of the Constitution granting the Scheduled Tribes local self-government and a high degree of autonomy in the management of their day-to-day affairs, control over natural resources, and other development activities in the areas where they live. Independent institutions such as National Commission for the Scheduled Castes and Scheduled Tribes and National Commission for Minorities are effectively promoting and protecting the rights of these vulnerable groups. Further, National Minorities Development and Financial Corporation and National Backward Classes Finance and Development Corporation (NBCFDC) have been set up to promote economic and development activities of minorities and Other Backward Classes.

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India became seventh country to ratify the UN Convention on the Rights of Persons with Disabilities. India had participated actively in the deliberations of the Ad Hoc Committee of the UN General Assembly on finalisation of a Convention on the Rights of the Persons with Disabilities. The enactment in India of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act in 1995 marked a significant step towards providing equal opportunities for people with disabilities and their full participation in the nation building. The Government had also set up National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities in 2001 and a National Handicapped Finance and Development Corporation in 1997 to promote economic development activities, including self-employment programmes, for the benefit of persons with disabilities.

3.10 India’s Struggle against ColonialismThe purposes of the UN Charter include promoting and encouraging respect for human rights and for fundamental freedoms for all without distinction as to race, sex, language, or religion. This was by no means an easy quest. In 1945, when the UN Charter was signed, more than 750 million people lived in colonies. A half century later, the number is only about 1.3 million. India was in the forefront of the struggle against colonialism, apartheid and racial discrimination - a struggle that has transformed the lives of millions of people in Africa and Asia.

The Charter provisions on Non-Self Governing Territories were given a new thrust when the UN adopted the landmark 1960 Declaration on the Granting of Independence to Colonial Countries and Peoples. India was a co-sponsor of the Declaration. The Declaration solemnly proclaimed the necessity of bringing to a speedy and unconditional end, colonialism in all its forms and manifestations.

The following year, the Special Committee on the Implementation of the Declaration on Decolonisation was established to study, investigate and recommend action to bring an end to colonialism. India was elected the first Chairman of the Decolonisation Committee. As a member of the Committee of 24, as it came to be called, India has ceaselessly struggled for an end to colonialism. India also took up the decolonisation issue in the Trusteeship Committee, the Special Committee on Non-self Governing Territories and the Fourth Committee.India supported numerous resolutions in the UN fora on decolonisation. India has also raised the issue in NAM and Commonwealth fora. For coming generations, colonialism may be a part of history: new challenges of tomorrow have to be faced. However, it was the struggle against colonialism, successfully waged in solidarity by the Afro-Asian countries that has brought them to a stage where they can set the goals of economic and social development for their societies.

3.11 India’s Position on UN ReformAs an organisation, the United Nations must evolve and adapt itself to a rapidly changing environment, the better to serve the core needs of the world community. As a country which places very great store on the UN s capacity to contribute to international peace and security, and to development, the two crucial priorities before the world community, India, like others, has a vital interest in a UN that continually makes itself more responsive to the needs of its member states, and prepares itself to serve them better. At the 2005 World Summit, the member-states pledged themselves to an agenda for early and meaningful reform of the United Nations. India is of the view that the international community needs to make more determined efforts to revitalise the General Assembly to enable it to fulfil its rightful role as the principal deliberative organ of the United Nations. Further, the relationship between the General Assembly and Security Council should be such that it embodies contemporary reality. The annual reporting by the Security Council should be improved. The issues of working methods reform, particularly access by non-members to documentation and the work of the UNSC; genuine consultations with the troop contributing countries; and the right of participation of non-members with a special interest, are also crucial to improving relationship between the UNSC and the UNGA. The composition of the Security Council needs to change to reflect contemporary realities of the twenty-first century. This implies, in the first instance, increase in the membership of the Security Council in both the permanent and non-permanent categories. Second, new permanent members should have the same responsibilities and obligations as the current permanent members.


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Third, veto should be extended to new permanent members. This is predicated on the logical and principled position that there can be no discrimination within the same category of members of the Security Council. India announced at the UNGA in 1994 that it is prepared to accept the responsibilities of permanent membership. The following attributes, India believes, would serve the international community well if India were made a permanent member:

India is the largest democracy in the world, with ancient civilisation values and attainments, and a world-view based on a Universalist inspiration, participative governance, respect for diversity and pluralism, as well as readiness for constructive engagement in the world’s affairs. India has been actively involved in the affairs of the United Nations since 1945. It has played an important role in shaping the Cold War and post-Cold War international system.

India is one of the leading economies in the world and has the potential to play an increasingly important role in the evolving international economic and financial architecture.

India’s long-standing participation in UN peacekeeping operations testifies not only to the dedication and professionalism of the Indian soldiers but also the political will of the government to actively contribute to these operations. Support for India’s candidature has been rapidly growing. We are grateful to the countries that have reposed faith in our ability to play our rightful role at the Security Council as a permanent member. We would continue to count on this support and will work hard with other like-minded countries, especially in Africa towards this end.

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SummaryThe principal organs and subsidiary bodies of the United Nations Secretariat are included under the regular • budget of the United Nations, as authorised by the General Assembly.The specialised agencies, a term first used in the United Nations Charter, which provides for international action • to promote economic and social progress, report to the Economic and Social Council.Independent India viewed its membership at the United Nations as an important guarantee for maintaining • international peace and security at the height of the Cold War especially by working towards eliminating the causes of war and conflict.The United Nations must play an active role in ensuring inclusive growth within nations, and inclusive • globalisation across nations.India is one of the largest contributors to the core resources of UNDP and a significant contributor to those of • UNFPA and UNICEF.India has contributed US $ 100,000 to the UNCTAD Trust Fund for the least developed countries.• India has also provided and continues to provide eminent Force Commanders for UN Missions.• India is forward looking in terms of the approach towards management of troops in the different areas of • operation.India welcomed the adoption in 2006 of the UN Global Counter Terrorism Strategy that recognises the need to • express solidarity with innocent victims of this scourge and specifically addresses victims of terrorism.The specific legislations to prevent financing of terrorism include: (a) Foreign Exchange Management Act, • 1999, (b) Narcotic Drugs and Psychotropic Substances Act, 2003; and (c) Prevention of Money Laundering Act, 2003 of 1967 as amended in 2004.India is a Party to the SAARC Regional Convention on Suppression of Terrorism.• India was the first country to call to an end to all nuclear testing in 1954.• The United Nations needs to evolve by consensus a new strategic doctrine of non-provocative defence.• India has an impeccable record on non-proliferation, which is ensured through a stringent and effective system • of export controls.India has contributed actively to UN efforts to strengthen regulation of small arms and light weapons as we believe • that it is necessary to break the nexus between small arms proliferation and terrorism and organised crimeThe Rio Conference affirmed the importance of sustainable development, which encompasses both development • and environmental protection.India is among the leading countries in the vanguard of efforts directed at environmental protection.• India is a signatory to the six core human rights covenants, and also the two Optional Protocols to the Convention • of the Rights of the Child.India had played an active role as member of the Commission on Human Rights (CHR) since its creation in • 1947.The National Commission for Human Rights (NHRC), established in India in 1993, serves as an independent • and autonomous body for protection of human rights in the country.India adopted a rights-based approach to promoting equality of women and evolved a multifaceted strategy aimed • at their empowerment through awareness-raising, political participation, economic independence, education, health, and legal standards.India became seventh country to ratify the UN Convention on the Rights of Persons with Disabilities.• India is a signatory to the six core human rights covenants, and also the two Optional Protocols to the Convention • of the Rights of the Child.India is one of the leading economies in the world and has the potential to play an increasingly important role • in the evolving international economic and financial architecture.


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ReferencesUnited Nations Global Marketplace. • United Nations System [pdf] Available at: <https://www.ungm.org/Publications/Documents/gbg_master.pdf> [Accessed 12 May 2012].delegate. • India and United Nations. [Online] Available at: <http://www.un.int/india/india_un.html> [Accessed 12 May 2012].Indian Council of World Affairs, 1985. • United Nations and India. Indian Council of World Affairs.Patnaik, S. K., Baral, J. K. and Sharma, J.P., 2004. • United Nations, India and the New World Order, Mittal Publications.LearnMediaOfAmerica. • United Nations, History and Functions [Video Online] Available at: <http://www.youtube.com/watch?v=tNnGirxI3zM> [Accessed 12 May 2012].matheona. • UN / United Nations Organization [Video Online] Available at: <http://www.youtube.com/watch?v=sdlSlHCcOMc> [Accessed 12 May 2012].

Recommended ReadingMody, N. B., Mehrish, B. N. and United Nations, 1995. • India’s Role in the United Nations, Allied Publishers.Hephaestus Books, 2011. • Articles on India and the United Nations, Hephaestus Books.Reddy, T. R., 1968. • India’s Policy in the United Nations, Fairleigh Dickinson Univ Press.

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Self AssessmentWhich of the following statements is false?1.

The principal organs and subsidiary bodies of the United Nations Secretariat are included under the regular a. budget of the United Nations.The Universal Postal Union was first established in 1824.b. Member organs of the United Nations reporting annually to the General Assembly.c. India was among the original members of the United Nations that signed the Declaration by United Nations d. at Washington on 1 January 1942.

The ______ major UN instruments relating to specific terrorist activities remain fundamental tools in the fight 2. against terrorism.

13a. 12b. 10c. 9d.

When was UN Global Counter Terrorism Strategy adopted in India?3. 2000a. 2003b. 2006c. 2005d.

Which of the following is not one of the specific legislations used to prevent financing of terrorism?4. Foreign Exchange Management Act, 1999a. Unlawful Activities Act, in 2005b. Narcotic Drugs and Psychotropic Substances Act, 2003c. Prevention of Money Laundering Act, 2003 of 1967 as amended in 2004d.

The __________________ has provisions for treating an international convention as an extradition treaty to 5. which India and a foreign State concerned are parties in respect of the offences dealt under that convention.

Foreign Exchange Management Act, 1999a. Unlawful Activities Act, in 2005b. Narcotic Drugs and Psychotropic Substances Act, 2003c. Indian Extradition Act, 1962d.

India was the first country to call to an end to all nuclear testing in __________.6. 1982a. 1948b. 1978c. 1954d.

The ____________ affirmed the importance of sustainable development, which encompasses both development 7. and environmental protection.

Rio Conferencea. Agenda 21b. United Nations Conferencec. FMCTd.


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India had played an active role as a member of the Commission on Human Rights (CHR) since _________.8. 1954a. 1960b. 1947c. 1940d.

When was National Commission for Human Rights established?9. 1990a. 1992b. 1993c. 1991d.

Which of the following statements is false?10. India is among the top 12 mega centres of the world in terms of its genetic diversity.a. India’s continued commitment to nuclear disarmament and non-proliferation is clear from the voluntary b. measures announced by India after undertaking a limited series of underground nuclear tests in 1998.In 1978, India proposed negotiations for an international convention that would prohibit the use or threat c. of use of nuclear weapons.India was among the original members of the United Nations that signed the Declaration by United Nations d. at Washington on 1 January 1954.

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Chapter IV

International Governmental Organisation

Aim


introduce intergovernmental organisations•

elucidate the types of intergovernmental organisations•

explain the difference between formal and informal IGOs•

Objectives


recognise general issues faced by IGO•

describe the peace building missions•

elucidate informal intergovernmental organisations•

Learning outcome


understand the spectrum of intergovernmental arrangements•

identify the role of regional organisations•

understand fo• rmal intergovernmental organisations


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4.1 IntroductionIntergovernmental organisations (IGOs) have become increasingly prominent both in facilitating conflict resolution between states, but also in dealing with intractable conflicts within states. They serve a number of basic functions that enhance the possibility of cooperation. Intergovernmental organisations are further if two types:

Formal Intergovernmental Organisation (FIGO)• Informal Intergovernmental Organisation (IIGO)•

4.2 Formal Intergovernmental OrganisationsInternational relations scholarship has increasingly focused on the role of intergovernmental organisations (IGOs) in wide-ranging questions about interstate cooperation and conflict. Attention has been focused almost exclusively on formal IGOs (FIGOs) official interstate arrangements legalised through a charter or international treaty and coordinated by a permanent secretariat, staff, or headquarters.

Thus, Formal Intergovernmental Organisation is defined as a formal entity (formed by an internationally recognised treaty) with three or more states as members and a permanent secretariat or other significant institutionalisation such as a headquarters and/or permanent staff.

Created after World War I, the League of Nations was an early attempt to systematise third party mediation in international conflict. However, it proved too weak because important states did not join, which limited its ability to function. After World War II, the United Nations was created and, although it worked better than the League of Nations, the Cold War impeded its effectiveness for many years. Following the end of the Cold War, the UN has taken on new roles, and regional organisations around the world have also become more active. Growing activism from these organisations, however, does not mean that they operate flawlessly. This essay will briefly review the general purpose of IGOs in minimising interstate conflict and then proceed to discuss their expanded roles in dealing with the internal conflicts of sovereign states.

4.2.1 General IssuesIntergovernmental organisations are constructed by states to facilitate cooperation. The primary utility of IGOs lies in providing states with a forum, which they can use to negotiate conflicts. IGOs are also useful to states in a number of additional ways.

First, by providing a forum for discussion, they make it less costly for states to discuss issues with one • another.Second, IGOs often serve as information providers. The enhanced transparency helps to minimise • misperceptions.Third, IGOs help to facilitate issue linkages, which may facilitate cooperation.• Fourth, IGOs help allow states to take a long-term perspective, which makes them less concerned about • immediate payoffs.Fifth, the multilateral nature of IGOs lends an air of impartiality that enhances their effectiveness.•

4.2.2 United NationsClearly, the most prominent IGO involved in conflict resolution is the United Nations (UN). The UN became the primary venue for diffusing international conflict in the post-World War II period. The growing role of the United Nations is internal, rather than international, conflict in the 1990s resulted from a curious interpretation of its own charter, which has exposed internal contradictions within the charter itself. Central to the UN contradiction is the contrast between the UN’s support for national sovereignty and self-determination, and its involvement in the internal conflicts of other nations.

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After the UN’s experiences in the early 1990s, it became apparent that the traditional mode of UN peacekeeping was not effective in new contexts. The nature of these more recent missions was that UN troops were being inserted into conflicts where fighting was still underway. To prevent conflicts from spreading further, some have advocated the creation of a rapid reaction force, but these complex multifunctional forces suffer from several shortcomings. They are often poorly planned, a factor that is more crucial as missions become more complex. Organisational structure is often weak because conflicting interests exist within the force. In addition, civil and military roles are not clearly linked. The UN also remains significantly dependent upon the resources and expertise of Member States. All of these problems are compounded by the fact that missions are fundamentally dependent upon the goodwill of locals as well as Member States.

4.2.3 Peace-building MissionsPeace-building missions in the 1990s are broad and varied in content. Generally speaking, some or all of the following may be incorporated into a particular peace-building mission: disarming parties and restoring order, destroying weapons, repatriating refugees, training police, monitoring elections, enhancing efforts to protect human rights, improving and expanding political participation, and strengthening and reforming government institutions. These operations, however, have been criticised on a number of fronts.

First, it is important to identify which services are better targeted to national elites versus local leaders, a step • that is sometimes neglected.Second, there is disagreement as to whether economic or psychological and social factors should have more • emphasis in UN missions.Third, it is argued that missions would be more effective if they were extended for a much longer time frame.• Fourth, it has been said that greater care must be taken in determining who the intervening actor should be.• Fifth, some argue that peace building is a Western concept and question the applicability of these efforts in • non-Western contexts.Sixth, and finally, is the debate as to what role, if any, force can and should play in UN missions.•

4.3 Informal Intergovernmental OrganisationsIIGOs fall under the more general concept of informal organisations which is not specific to international politics. We use the word organisation deliberately rather than alternatives such as institution, arrangement, or group, in part to emphasise that organisation do not have to be formal to be useful to states or other actors. International organisations can be ―organisations or ―organisations —a spectrum of types exists—but the IR literature has come to think of IGOs only as formal entities. Ironically, this was a reaction to the ―regimes‖ literature which usefully broadened the understanding of international organisations by moving away from an exclusive emphasis on formal organisations viewed as traditional forms of centralised governance. In doing however, we lost sight of formal organisations. The IR field corrected this by developing a new understanding of how formal organisations can be effective through relatively weak means such as reducing transactions costs, supplying focal points, and changing information. The move back to focusing on formal IGOs, however, has not been accompanied by a careful theorisation of how informal IGOs coexist and operate with FIGOs.

Informal organisations exist in familiar settings, outside of international politics. Consider a neighbourhood club as a familiar example of an informal organisation at the local level: several people decide to come together on a regular basis to share information or discuss whether they should engage in joint action—but they may not need or want to formalise their relationship. There exists a wide variety of motivations for local clubs: for example, forming parent-teacher relations, coordinating subdivision activities, or organising sports. Clubs remain casual, but the group remains united around a common set of norms and beliefs about who will get together and what they will try to accomplish. Informal clubs can also entail rules that guide behaviour and, more importantly, at least implicit rules about making rules.

Informal organisations sometimes become more formal over time—when participants become hard to organise or if the group needs central coordination of rules. The (British) Football Association (FA) of 1863 is an excellent example.


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For centuries, there were no universally accepted rules for playing football—instead, local conditions and communities defined rules for school games. However, when schoolboys graduated to University, games were chaotic with no unified set of rules. Thirteen London football clubs therefore came together in 1862 to agree to a common set of rules. Although agreeing on a common set of rules could presumably be accomplished in a single or small number of meetings (and such a set of rules were codified by 1863), the London Association and the Sheffield Football Association continued to wrangle after these meetings. It meant that a more formal body, the FA, had to be created to put an end to the arguments (and the need was further heightened with the introduction of the Football Association Cup in 1871 and a sudden boom in spectators). Since 1863, the FA has met to manage the explosion of the game and incrementally adjust the rules over time. It became a Limited Company in 1903, joined FIFA after the Second World War, and has greatly added to its activities over the years.

This example shows that informal organisations might be stepping stones to more formalised entities. But there is nothing teleological about our argument. Informal organisations are also important in their own right and not just as a ―phasein the development of formal organisations. Indeed, attempts to formalise may only undermine the effectiveness of the informal arrangements (and thus should never be attempted). Alternatively, some actors may use informal organisations as a means to block the formation of more formal organisations that would produce outcomes they do not desire. Thus some informal organisations will remain just that for their entire life span.

IIGOs are defined as shared expectation, rather than a binding agreement, about purpose among a group of states, participating in regularised meetings with no independent secretariat or other significant institutionalisation such as a headquarters and/or permanent staff.

Because the two differentiating characteristics:The organising principle and• The degree of organisational structure between FIGOs and IIGOs are fairly continuous•

There is in fact no bright line between FIGOs and IIGOs; our purpose is to develop a spectrum of international organisations and highlight IIGOs within this multidimensional spectrum to make these differences clear. Table 1 summarises the key differences, which we then elaborate below.

Formal IGO Informal IGO

Organising Principle Formal treaty Shared expectations about purpose

Membership 3 or more member states Group of member states

Interaction Organisational Structure

Regularised Meetings Independent Secretariat

Regularised Meetings No Independent Secretariat

Table 4.1 Formal and informal IGO ideal types

We treat IIGO’s as a theoretical construct or ―ideal type. Many informal organisations are less institutionalised (example, they have imperfectly defined expectations or membership) while others are more institutionalised (example, they have a rudimentary secretariat) than an IIGO while still not meeting the criteria of a FIGO. Our point is to use the ideal type to explore the variation in levels of formalisation (as compared to the ideal type of FIGOs) and to better understand why less formal organisations are sometimes used by states. The G8 is a good example, for instance, of an IIGO that fall at the most institutionalised end of the IIGO category, without meeting the criteria of a FIGO: summit meetings comprise well-choreographed routines including photo opportunities and press releases, and Sherpa’s follow rigorous norms in their coordination amongst parties. Still, no legal agreement dictates procedures nor binds member states to decisions made during organisational interactions.

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Shared expectations about purpose: Members of an IIGO share an expectation about the purpose of coming • together. They do not need to have an explicit agreement; an understanding, even if not made explicit, would suffice to form a shared expectation about purpose. Of course expectations may be made explicit, as in a diplomatic communiqué, but this shared expectation about the purpose of the organisation is not created by or codified in international law. For example, the Basel Committee, an IIGO, ―does not possess any formal supranational supervisory authority, and its conclusions do not, and were never intended to, have legal force. Rather, it formulates broad supervisory standards and guidelines and recommends statements of best practice in the expectation that individual authorities will take steps to implement them through detailed arrangements - statutory or otherwise - which are best suited to their own national systems. Importantly, member states share a common goal for collective action, although they might be motivated to participate in the group based on divergent interests. In the Basel Committee, for example, member states share an overall desire to cooperate on banking supervision, but individual states have different interests in this overall purpose: Saudi Arabia’s interests are likely focused on advancing the perspectives of oil exporters, while Switzerland’s interests focus on the large amount of international banking conducted within its borders.Group of member states: IIGOs are by definition intergovernmental and so the key members of IIGOs are states. • This does not preclude the inclusion of some non state members—such as other IGOs or non-governmental organisations (NGOs) as observers—but it does mean that states must play the predominant role. IIGOs can have a range of formality in membership – some IIGOs might have tight requirements including criteria for becoming a member of the organisation whereas other IIGOs might have expansive or loose membership criteria. Membership of some IIGOs might be defined by geographical region whereas other IIGOs might be defined by substantive area. The Paris Club is an example of an IIGO with permanent members focused on a substantive area. It is an informal group of official creditors who help debtor countries with payment difficulties by rescheduling or reducing debt service obligations. The Alliance of Small Island Nations (AOSIN) is an IIGO whose members come together primarily for geographic reasons. Members are low-lying coast and small island countries whose try to consolidate their voices to address global warming issues.Regularised meetings but no Independent Secretariat: Member states of IIGOs conduct regularised meetings—• relatively informal get-togethers for the purpose of discussing common concerns, sharing information, building consensus, and the possibility of agreeing on some form of joint action. This joint action could be a policy outcome such as agreeing to act in concert on a specific issue, agreeing on an informal rule to guide future conduct, or deciding that no joint action is currently necessary. IIGO meetings are distinguished from other interactions that are not political in nature as well as from FIGO meetings that are more institutionalised through a permanent Secretariat. Most FIGO meetings also include ongoing sessions at the Secretariat between annual meetings—they are much ―denser‖ than the annual meetings of IIGOs. Some IIGOs will meet at alternating locations determined by a rotating Chairman but because of their informal nature, IIGOs will not have permanent, independent Secretariats.

Regularised does not imply that meetings must occur on a fixed schedule; regularised meetings might mean sessions whose timing is driven by demand. The point is that the group expects to interact on the particular subject in the future—it is not a one-off occurrence. For example, the Nuclear Suppliers Group seeks to contribute to the non-proliferation of nuclear weapons through the implementation of Guidelines for nuclear exports and nuclear related exports. The 46 member states meet annually in a plenary session but also more frequently in intercessional meetings at the Consultative Group and Information Exchange Meeting levels depending on specific needs.23 IIGO member states can indeed create formal rules, but as they do so, they move along the spectrum closer to formal entities. IIGOs as ideal types are far more likely to create informal rules. Importantly, FIGOs can create both informal and formal rules.

Meetings are important to both IIGOs and FIGOs, but one of the central purposes of some IIGOs is to sponsor ―summit meetings‖ attended by heads of government or state (HOGS) (whereas the bulk of FIGO meetings includes lower level technical meetings). Recurring IIGO summit meetings between high-level officials can be instrumental in improving communication between member states (Dunn 1996, Haftel 2011.) IIGO summits can provide HOGS an opportunity to discuss outstanding issues informally and to offer and extract promises of cooperation.


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These face-to-face high level meetings might in turn widen the bargaining range and improve the prospects of compromise exactly because they are not tied down in overly formal procedures or protocols. Recurrent face-to-face meetings can also help establish longer term equilibriums because they can foster inter-personal familiarity, trust, and mutual confidence which might be particularly important in subsequent crisis situations or unchartered issue areas.

IIGOs might have no centralised secretariat or they might rely on a minimal secretariat, but one that does not operate independently. In fact, one way for states to ensure that a secretariat does not have independence is to make sure that secretariats are not given permanence; it is impossible for the secretariat to operate autonomously if it has not been delegated minimal authority. For example, several IIGOs lean on the institutional structure of other IGOs to form the organisational backbone for their entity. The Alliance of Small Island States (AOSIS), for example, uses the UN offices of the Chairman’s mission at that particular point in time. Of course, the independence of IGO secretariats varies. All IGO secretariats have a limited form of independence, for example to make small budgetary decisions or call meetings. At the higher end of independence, the secretariats of some FIGOs have significant independence as autonomous, permanent bodies. But the FIGO is very much an ideal type — few secretariats have true independence and states typically retain an element of control.

We emphasise that IIGOs and FIGOs are conceptual points on a multidimensional institutional spectrum. Actual intergovernmental institutions range between and beyond these ideal types that we have provided. The IIGO-FIGO spectrum varies across multiple dimensions (example, the extent of bureaucratisation; the importance of decisions made), so we are cautious to create a sharp order amongst them.

4.3.1 Relation of Informal Intergovernmental Organisations with Other Institutional ConceptsWe are explicitly focusing on IIGOs because they have been overlooked in IR scholarship due to the focus on formal IGOs. However, we emphasise that IIGOs are not simply a residual category but are one point on a spectrum that includes institutions both above (example, FIGOs) and below (example, norms) in terms of their level of formal institutionalisation. While seeking to explore a more inclusive definition of IGOs, we simultaneously put a lower bound on what we mean by IIGOs to avoid the potential for any and all diplomatic meetings to be included in what we term an IIGO. We illustrate several concepts below that are closely related to the concept of IIGOs.

RegimesInformal intergovernmental organisation is not simply a new label for regime. The literature on international regimes was a major advance in IR scholarship because it focused attention on institutions without being constrained by the emphasis on formal centralised organisations that aimed for ―government at the international level. But the literature on regimes also served to frustrate the IR field because the generality of the concept meant that almost all entities in international politics could be considered regimes. The IR field responded by more closely focusing on the crisp concept of formal organisations. We seek not to return to the language of regimes but to broaden the investigation of IGOs to also include the theoretical concept of informal IGOs.

Customary international law: IIGOs can be usefully distinguished form customary international law (CIL) • which consists of rules of law derived from the consistent conduct of States acting out of the belief that the law required them to act that way. CIL is indicated by consensus among states and shown through widespread conduct and a discernible sense of obligation. The key difference between CIL and IIGOs is that while rules of behaviour have been generalised to all states in CIL, this shared belief has not been operationalised into an organisation that shares information or oversees the rules in some sense. CIL has no sense of club membership or regularised meetings between states.Soft law: The emphasis on organisation,which differentiates IIGOs from customary international law—is also • important in understanding how IIGOs relate to soft law (Abbott et al, 2000). Abbott et al delineate a range of hard to soft international legalisation which is based on three characteristics: obligation, precision, and delegation. IIGOs do not neatly fall into one of Abbott et al’s eight categories which comprise high and low levels of these characteristics. IIGOs fall toward the bottom of the soft law spectrum (where obligation is low, precision is low, and delegation is low to moderate) because they aren’t legalised. But IIGOs entail some organisation, which is why delegation is considered moderate, though it importantly remains informal. We therefore see

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IIGOs as corresponding to some forms of soft international law that have heretofore been paid scant attention. All IIGOs are based on soft law, but not all soft law is IIGOs. For example, Agenda 21, the Forest Principles, and other hortatory instruments adopted at the 1992 Rio Conference on Environment and Development are precise agreements, but not legally binding (they are soft law) but there is no sense of an organisation attached to these instruments.Trans governmental networks: IIGOs share many similarities with Slaughter’s (2004) notion of trans-governmental • networks. Trans governmental networks are defined as ―networks of officials—police investigators, financial regulators, even judges and legislators—who exchange information with their international counterparts and coordinate activity to address common problems on a global scale. Slaughter highlights the increased scope and substance of these networks. Importantly, her concept can include sub-national connections whereas IIGOs are strictly statist by definition (interactions occur at the ministerial or executive level). IIGOs are similar to trans governmental networks in that they are not formed by international treaty and their functions are compatible: ―government networks can offer a flexible and relatively fast way to conduct the business of global governance, coordinating and even harmonising national government action. IIGOs therefore share many of the same institutional examples as Slaughter, but the terms are not interchangeable. Of slaughter’s state-level examples, IIGOs are a subset. Our point is to further conceptualise and define some of the concepts that Slaughter hints at. Furthermore, Slaughter’s scholarship is normative: she argues that trans governmental networks provide a vision of good governance. We argue instead that IIGOs (or trans governmental networks) are not better or worse than FIGOs but that states will choose different levels of formality based on a given situation.Informal governance: IIGOs are stand-alone institutions and can therefore be different from the informal • mechanisms that states use to operate more effectively within FIGOs. An emerging literature on informal governance focuses on the informal mechanisms, procedures, and spheres of activities that exist within FIGOs. This literature recognises that the policy outcomes of IGOs are more than a summation of formal voting criteria or detailed meeting rules but depend also on informal properties or modes of governance that can be used as alternatives in formal IGOs. Stone, for example, uses the IMF as a case study to show that states can adopt informal governance structures in international organisations—such as exercising exit options or pressing the IGO to make exceptions to strict rules—to accommodate their interests. In related work on informal governance, Hawes (2004) points out that states use informal governance structures within FIGOs such as re-contracting, withdrawing, acquiescing, or log-rolling to balance formal governance structures. Stone and Hawes do not recognise that informal governance does not just happen within existing FIGOs, but that states can also form stand-alone informal organisations.

IIGOs within FIGOs: Ad hoc committees, 29 working groups, and informal groups within IGOs can be classified as IIGOs within FIGOs. IIGOs within FIGOs are different than the preceding category of informal governance because the level of organisation is higher (group membership is clear, meetings might occur regularly, etc.) but these IIGOs within FIGOs are still not legalised. IR scholars argue that these IIGOs within FIGOs have proliferated as a mechanism to handle emerging challenges as intergovernmental organisations grow in size and mandate. They offer organisational supplements to the larger bureaucracy. Prantl (2005, 2006), for example, has paid explicit attention to informal groups in the UN Security Council (UNSC) such as contact groups—the soft alliances between like-minded states who tend to vote together on UNSC resolutions. He argues that they are exclusive clubs meant to promote political cooperation amongst members and to extract political concessions from non-members of the informal group. Further examples of IIGOs within FIGOs include entities such as the NATO Quaint group, UNSC core groups, and the EU3+3 groups.

Overlapping institutions and regime complexesThe international relations literature on overlapping institutions and regime complex is also relevant for understanding IIGOs because we see states choosing to use both FIGOs and IIGOs within the same issue area. Alter and Meunier (2006) define overlapping regimes when ―multiple institutions have authority over an issue. They emphasise that most functional areas in international politics are represented by multiple international organisations. Overlapping institutions can be beneficial to states because they may reinforce each other, provide ways to avoid deadlock and paralysis, and through redundancy, they can carefully calibrate a system of risk management (Kelley 2007). Overlapping institutions can also be costly to states.


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First, organisations who share purposes can quickly turn into organisations that cross purposes by contradicting each other (forum shopping). Second, overlapping regimes may lead to intra-organisational politics. We see these same themes revealed when considering the universe of FIGOs and IIGOs that exist in a given issue area.

Raustiala and Victor (2004) and Keohane and Victor (2011) introduce the related concept of ―regime complexes – the existence of a collective of partially overlapping and non-hierarchical regimes. These scholars note that with the increasing density of international institutions, it is becoming difficult to isolate and decompose individual institutions from one another. Discrete organisations do not solely operate individual international regimes; instead, institutional ―interplay is more the norm (even though existing scholarship focuses on individual organisational entities as units of analysis). The idea of regime complex is in line with the concept of IIGOs acting as both complements and substitutes (at different points in time or according to different actors) to FIGOs. While the overlapping institution and regime complex literatures highlight that states might sometimes choose to use different institutional forums for related end goals, our objective is to specifically address when different types of institutions—IIGOS and FIGOs—are sometimes better suited to work together or separately.

4.4 The Spectrum of Intergovernmental ArrangementsStates have a wide range of institutional arrangements to choose from when they form intergovernmental organisations, with IIGOs and FIGOs being two options in the spectrum. States often make the deliberate choice to engage with the non-legal status of IIGOs and in some cases this is superior to codifying their expectations in international law. At other times, the loose structure of an IIGO may not be beneficial and thus states do choose to formalise their arrangements. The rational design literature (Koremenos et al, 2001) shows that the design features of international organisations are intentional and focused. States purposefully choose how they will engage with one another in a way that best suits the particular area. We similarly argue that IIGOs are just one choice in a menu of institutional options.

IIGOs may (or may not) develop into FIGOs over time as the nature of the issue area or cooperation challenge develops and demands more commitment or complexity. In other words, the choice that states make between using IIGOs and FIGOs does not just exist at one point in time, but instead exists at many points in time and over the complicated course of the development of an institution.

Table 4.2 gives us a better understanding of the full spectrum of organisational formality. Each row indicates the sources of expectations, members, contact, structure, rules and examples of each type of intergovernmental arrangement. As we move down the table, we move from the least formal to the most formal intergovernmental arrangements, though we emphasise that the ordering is somewhat imprecise because informality/formality is not a single dimension. By delineating the full spectrum, we can better understand what the tradeoffs are—and why states might (not) want to formalise in some settings.

We have shaded the institutional categories to emphasise increasing degrees of formality across a number of dimensions and to show the relation of different institutional alternatives to each other. We have also highlighted the IIGO and FIGO rows as special categories along the broader spectrum. Theoretically, IIGOs and FIGOs exist as ideal types, but empirically, there is much variation and very few ―pure‖ or perfect candidates. Instead, there are many empirical examples that tend to fall along the full institutional spectrum. The table highlights the fact that formalisation is too rough a category by itself—as the literature has recognised, it entails a number of different elements that need to be considered. While we have characterised FIGOs together in one group, there still exists varying degrees of formality within this larger set of entities

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Arrangement Organizing Principle Members Interaction

and Structure Rules Example

More informal

More formal

No organization Anarchy All or none Spontaneous interactions Self help Hobbesian/

theoretical world Norms/ Tacit

understanding Unspoken

understanding Implicit Spontaneous order

Spontaneous rules emerge

CIL Expired treaty

Explicit agreement Oral

Agreement, Communiqué

Parties to the conference

No independent secretariat

Verbal understanding

Louvre Accord Plaza Communiqué

Formal consultations

Shared goal to work toward

formal agreement

Parties to the conference

Limited meetings No independent

secretariat

Diplomatic Protocol

Six party talks START

negotiations

Conference Series Agreed agenda Shared goal of

dialogue

Invited guests for duration

Limited meetings Borrowed secretariat

Attempting to form systematic

rules

Earth Summit Copenhagen

Climate Change Conference

Informal IGOs (IIGO)

Shared expectations

about practice

States are members

Regularized meetings

No independent secretariat

Implicit rules G8 G20

Concert of Europe

Ad Hoc Formal Agreement

International treaty

States are members

Meetings for limited duration

Potentially a secretariat

Codified rules

Convention Against Torture

International Tribunal (Rwanda)

IIGOs within FIGOs

Soft coalition

Sub-groups of FIGO members

Ad hoc meetings based on demand No independent

secretariat

Uncodified rules NATO Quint group UNSC Core group

EU3+3

Formal Committee or Working group

within a FIGO

Shared focus on specialized

issue area

Sub-groups of FIGO members

Meetings for limited duration Report to formal

Secretariat

Codified rules borrowed from

FIGO

WHO H groups UN working

groups

Formal IGOs (FIGO)

International Treaty

States are members

Regularized meetings

Independent secretariat

Codified rules about rules

WTO Arab League

NATO

Autonomous Intergovernmental

Organization

International Treaty

Creating the IGO

States are members

Regularized legislative meetings

Independent secretariat

Institutionalized arrangements to

make rules Centralized rule

enforcement

European Union

Table 4.2 The Formal-Informal Spectrum of Intergovernmental Arrangements

4.4.1 An Empirical Overview of Informal Intergovernmental OrganisationsHow do we know an informal intergovernmental organisation when we see one? Our definition of IIGOs entails three components:

A shared expectation—rather than a binding agreement—about purpose• among a group of states • Participating in regularised meetings•

Why do states work through Informal Intergovernmental Organisations?

Table 4.2 shows the spectrum of alternative intergovernmental cooperative arrangements from which states can choose to manage their relations. By contrast, the literature on IOs has thus far focused mainly on the ends of the spectrum and on why states would choose to form FIGOs rather than operate purely through norms and tacit arrangements. By filling in the spectrum in terms of levels of formalisation, we move towards a more nuanced understanding of the benefits and costs of different levels of formalisation.


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We now canvass the conditions under which states might choose to work through IIGOs instead of or in addition to FIGOs. We emphasise that once states have decided that some form of international organisation (small o) is beneficial (as opposed to no organisational structure or a norm), they can also choose whether an informal or formal level of organisational structure is the most beneficial. We first establish the general advantages of working through IIGOs. We then note that states will sometimes use IIGOs in addition to FIGOs and sometimes instead of FIGOs. In other words, IIGOs can be both complements and substitutes to FIGOs—but at different points in time, for different actors, and for different purposes.

States face tradeoffs when trying to achieve their international goals: they seek to maximise the benefits of collective action while minimising sovereignty and transactions costs. This fundamental trade off means that IIGOs will sometimes be more advantageous than FIGOs in striking this balance. Specifically, IIGOs have the advantages of:

Lower sovereignty costs: States sacrifice less autonomy with informal arrangements.• Greater flexibility/ avoid binding commitment: States sometimes prefer an institutional arrangement that binds • them less strictly, even if other states are also less tightly constrained. This gives states greater leeway to adjust to unanticipated outcomes as circumstances evolve.More control over information and access: The informal nature of IIGOs allows states to better regulate the flow • of information to outside parties. Sometimes, states will use IIGOs to tightly control information—when states do not have to formalise transparency mechanisms, they can circumvent outside limitations on their arrangements and maintain secrecy. On the other hand, states can use IIGOs as a mechanism to provide more information and access that is as a forum for transparency. Because of the informal nature of IIGOs, they might be much more porous or permeable than their formal counterparts, with non-state and sub-state (example, diplomats and regulators) actors working side-by-side with government representatives.Lower costs of negotiations: When arrangements are flexible, do not create binding commitments, and are • secret from possible opposition, negotiation costs may be lower. States can also exchange information easier and quicker—especially in crisis settings—when rigid organisational structure does not present a bureaucratic burden.

Given the lower costs of IIGOs, states will sometimes choose to use IIGOs to organise their interactions. Sometimes they use IIGO as substitutes to FIGOs and other times they use them as complements in addition to FIGOs. But whether an IIGO serves as a substitute or complement often depends on the perspective and participation of individual states. On the one hand, an IIGO can be considered as a complement to a FIGO by a symmetric group of states who all participate equally in both institutions. Here, the choice of which institution to use is a matter of deciding which one benefit states in general for that particular issue. On the other hand, among an asymmetric group of states, an IIGO can be considered a complement by states that participate in both institutional arrangements but as substitutes by states which are members of the corresponding FIGO but not members of the IIGO. For example, the G8 is a complementary organisation from the perspective of its eight member states trying to build consensus on financial matters in advance of IMF or World Bank meetings. But for those states not included in the G8 but still affected by the information shared at these gatherings or the focal point decisions made, the G8 is seen as a substitute organisation, a place where the great powers go to exercise unilateral decision making and present their consensus to the IMF, for example, as a fait accompli. At any one point in time, an IIGO acts solely as a complement or substitute from the perspective of a particular state; however, at different points in time, the same IIGO can serve different purposes. We first look at whether IIGOs will serve as complements or substitutes when we have a symmetric group of states and we later address the role of power and asymmetric states in relation to institutional formality.

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4.5 IIGOs as Complements to FIGOsIIGOs are complements when action in the IIGO is supportive of action in a FIGO (or vice versa). There is no definitive sequence; states can use an IIGO first and then support that action in a FIGO, or states can operate the other way around. IIGOs can be complements either at a point in time or over time. At a point in time (in the short term, for example), IIGOs can complement the capacities of a FIGO by being the site of activities that are too costly or difficult to organise through the formal structure. Over time—or in the long run—IIGOs can allow members to adapt to their relations in ways that formal rules might not allow. It is important to emphasise that the short and long run roles of the IIGO may differ; an IIGO may be a substitute in the short run, used to sidestep arduous processes in a FIGO, but still be a complement in the long run by supporting the overall goals of the FIGO. IIGOs can be explicitly tied to FIGOs in a complementary relationship outside the FIGO as the EUROGROUP of finance ministers is to the EU. More commonly, an IIGO exists independently or implicitly as a complement to the FIGO, such as the G8 or G20 and the IMF. As noted above, the complementary relationship could exist for the FIGO as a whole, or instead for some subgroup of actors who are working against the goals of other members of the group.

To foreshadow our argument, IIGOs will act as complements to FIGOs for: Centralised coordination • Agenda-setting•

When states face high uncertainty regarding other states’ preferences and/or the state of the world, IIGOs offer a low risk forum for creating focal point solutions that can be implemented in FIGOs or through independent state action.

4.5.1 Centralised CoordinationAbbott and Snidal (1998) argue that FIGOs are effective because they provide states with centralisation and independence. By contrast, IIGOs can provide some of the benefits of centralisation but not independence. Of the five kinds of centralisation that FIGOs can provide to statessupport for state interactions, managing substantive operations, joint production, pooling, and norm elaboration and coordination-IIGOs can provide joint production, pooling and norm coordination for states. For instance, IIGOs allow states to combine information and coordinate on focal points where common interests dominate incentives to defect—the most recent G8 meeting included states brainstorming about the emerging issues of cyber security, for example. But when enforcement issues dominate shared information or coordination goals, IIGOs cannot provide an effective centralised mechanism for monitoring and prosecution.

Why are IIGOs sometimes needed then in addition to FIGOs (if can both can provide certain elements of centralisation)? The Rational Design literature treats centralisation as a binary ―on-off variable whereas we highlight the variety within the types of centralisation that states need at different junctures. Specifically, IIGOs provide a flexible alternative for centralisation. Achieving cooperative solutions through FIGOs can be difficult when states face high uncertainty (about the preferences of other states or about the state of the world) for a number of reasons. In these situations, some states can benefit from a low cost, outside forum where they can pre-establish common understandings and coordinate on positions in advance or sometimes even instead of a vote. In terms of the four advantages of IIGOs—lower sovereignty costs, increased flexibility/ avoidance of binding commitments, more control over information and access, and lower costs of negotiation—states benefit most from control over information and lower costs of negotiation when they want IIGOs to act as complements to FIGOs.

The Basel Committee on Banking Supervision is an excellent example of an IIGO that provides a mechanism of centralised coordination with lower sovereignty and transactions costs: the Committee encourages convergence towards common approaches and common standards without attempting detailed harmonisation of member countries’ supervisory techniques. Similarly,the G-8 summit is not the place to flesh out the details of any difficult or controversial policy issue in the context of a three-day event. Rather, the meeting is to bring a range of complex and sometimes inter-related issues. The G8 summit brings leaders together not so they can dream up quick fixes, but to talk and think about them together‖ (Feldman 2008). In other words, IIGOs complement FIGOs when they allow states to centralise coordination efforts.


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4.5.2 Agenda SettingThe second way that IIGOs complement FIGOs is by centralising agenda setting outside the FIGO structure. Often FIGOs embrace a wide range of issues so that it can be difficult for states to agree on an agenda especially when particular states lack formal agenda-setting powers. States can use IIGOs to build coalitions whom agree on a set of topics that should be given priority on the international stage. This agenda can then be presented as a fait accompli to other states in the FIGO. IIGO coalitions can therefore help states manage the FIGO’s agenda-setting process. The G-11 structure is exemplary in this regard. The G-11 website specifies that the G-11 is a loose working relationship that will function in parallel with other existing multilateral structures and is intended to strengthen partnerships amongst us and build stronger bridges with other partners. We emphasise, however, that when we speak of IIGOs and FIGOs acting as complements, we do not mean to imply that there will always be a one-to-one mapping between one IIGO and one FIGO: for example, one IIGO can serve as a complement to two or three different FIGOs the G8’s relationship with both the World Bank and IMF is exemplary.

Crises provide particularly important situations in which IIGOs act as complements to FIGOs. Crises present unique conditions when leaders must act quickly and in a unified manner, often making it difficult for states to quickly secure collective agreement through the regular procedures of more bureaucratic FIGOs. During crises, states often need an option that bypasses formal rules but still allows for collective information sharing or joint action. States may therefore use an IIGO to build consensus and coordinate and set the agenda for how issues will be handled in the FIGO. Both the G8 and G20 played this role during the recent 2008 Global Financial Crisis. More recently, the South Korean government reported that in early August 2011, a conference call was held among the G20 states to discuss the most recent drop in the financial markets and further predicted instability. The conference call was not officially announced to the public, and no formal agenda or minutes were published, giving the HOGS the flexibility to brainstorm and work through the crisis in secret. When there are multiple forums from which to choose, more powerful actors are advantaged in choosing amongst different IIGOs according to how the crisis affects them (and which agenda-setting forum will produce the best solution for them). For example, the leading state may want an inclusive FIGO to provide a general structure for an issue but then use a more exclusive IIGO to set the agenda and achieve prior agreement among key participants.

4.6 IIGOs as Substitutes to FIGOsIIGOs act as substitutes to FIGOs when action in the IIGO undermines or opposes what could be accomplished in a FIGO. We assume that states will always prefer weaker institutions, ceteris paribus, and they will thus look for opportunities to accomplish their substantive goals while avoiding the sovereignty and other higher costs of FIGOs. To foreshadow our argument, we argue that IIGOs serve as substitutes for formal IGOs when states need (1) weaker enforcement mechanisms or (2) increased flexibility, speed, or ambiguity.

Less need for independence and enforcement: States go through FIGOs when centralisation and independence • are necessary to achieve some common goal. IIGOs can also provide some centralisation (as explained in the complements section) but without creating independence: IIGOs cannot provide independent because they are not based on legally binding agreements, they do not have permanent secretariats, and they lack monitoring and oversight bodies.

IIGOs will therefore act as substitutes for FIGOs when independence is not a necessary component or enforcement issues are not central to the issue at hand. Ceteris paribus, states prefer not to create independent agencies unless they have to, and thus IIGOs will be superior choices in these situations. Weak demand for enforcement might arise when the nature of the issue area does not lend itself to cheating, when reneging does not produce externalities, or because states are unwilling to accept the high sovereignty costs in a sensitive area by putting themselves under the scrutiny of an outside observer. With a weaker ability to enforce cheating, IIGOs lower the political costs of noncompliance versus their formal counterparts (cf. Lipson’s 1991 observation that informal agreements act the same way vis-à-vis treaties.) Likewise, states will substitute to FIGOs when they need independence or a stronger enforcement mechanism. This logic is also in line with arguments about hard versus soft law: international actors choose softer forms of legalised governance when the potential for opportunism and its costs are low (Abbott and Snidal 2000).

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Increased flexibility, speed, and ambiguity: The second way that IIGOs might act as substitutes for FIGOs is • when states need increased flexibility, speed, and ambiguity. Aust (1986) and Lipson’s (1991) work on informal international agreements also helps in this area.42 Lipson points out that informality in international arrangements is a device for minimising the impediments to cooperation. It is no secret that intergovernmental cooperation is difficult43; states will thus try to ease the burdens of cooperation. IIGOs can substitute for FIGOs when they lower the costs of cooperation.

First, informal intergovernmental arrangements are more flexible than their formal counterparts they are willows, not oaks (Lipson pp. 500). States negotiating informal arrangements do not have to predict all future states of the world and systematically account for them, and they don’t have to worry about elaborate final clauses or formalities. Koremenos et al (2001) emphasise that some organisations are purposefully made to be more flexible—when there is high uncertainty about the state of the world and severe distribution problems. Furthermore, Abbott and Snidal (2000) elaborate that states will produce more flexible, softer law (informal arrangements) when they do not need or want high precision—that is

Amongst states who have a difficult time committing to more stringent IGOs or • In club groupings where the need for an ex ante sorting device on commitment is not needed•

The Intergovernmental Forum on Chemical Safety, an IIGO is case in point. It plays a unique multi-faceted role as a flexible, open and transparent brainstorming and bridge-building forum for Governments. Finally, states might use IIGOs as substitutes to FIGOs to maintain an exit option or to provide cover when they begin to feel overly constrained by a FIGO. In other words, choosing between IIGOs and FIGOs does not just happen at the design stage, but continuously throughout an institution’s life cycle.

Second, informal arrangements can remain less public which helps avoid outside opposition. Without onerous reporting or transparency rules, proceedings can also remain confidential. For example, the secret Club de Berne is an informal intergovernmental organisation that was founded in Berne in 1971, supposedly to enable the exchange of classified information particularly on terrorism and subversion between the Intelligence and Security Services of Western, originally EU only, states. Today, this exclusive club unites the intelligence services of some 19 countries including Germany, Italy, Belgium, Luxembourg, Holland, Denmark, Britain, Switzerland, France and the USA. While member countries presumably work together on these topics, its true activities, leadership and legal basis remain “top secret.”

Third, informal arrangements can be concluded and implemented quickly because they don’t face the same bureaucratic hurdles, domestic politics, or entail strong binding commitments. This advantage exists both when an IIGO acts as a substitute as well as a complement. The Cartegena Group, a collection of 27 countries seeking ambitious outcomes from the United Nations Framework Convention on Climate Change is a good example of why states might choose an IIGO to circumvent domestic politics. Member states in this IIGO have specifically stated the need to address lower domestic carbon outputs. Because these topics could become contentious in any ratification process at home, member states of the Cartegena Group have agreed to meet regularly to promote dialogue in an informal arrangement.

IIGOs are not always chosen as complements or substitutes for FIGOs. As Lipson (1991) points out, flexibility means that informal arrangements can more easily be abandoned; the lack of a domestic ratification process can ruin the potential for garnering domestic public support; and the absence of public debate demolishes a potential force of accountability. In other words, the very things that make informal arrangements so appealing can also be their biggest weakness. These cautions remind us that even though IIGOs can have lower contracting costs, lower sovereignty costs, and a greater ability to deal with uncertainty, at times, states will sometimes find it more beneficial to accept these costs to get the benefits available in FIGOs Different issue areas—because of the nature of their different collective action problems—tend toward different levels of institutional formality. For example, international trade is an issue with high sovereignty costs and, at early stages of cooperation, relatively high uncertainty. The GATT was therefore established as a minimally formal organisation with no secretariat, but was strengthened over time as members learned the benefits of cooperation and demanded a higher need for enforcement.


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International monetary issues also have high sovereignty costs and states demand a high degree of flexibility. Powerful states tend to use IIGOs (such as the G8) as forums for establishing focal point solutions in macroeconomic policy that can be implemented within FIGOs (that is the IMF). Strong formalisation exists where weak countries have high demand and these FIGOs help strengthen the dominant position of powerful states.

Power and IIGOs: The previous discussion has often treated states as being in symmetric relations and asked • when they would choose IIGOs over FIGOs (or some other/ no institutional arrangement). However it is also important to consider the important case where states are differently positioned and ask when they might prefer informal intergovernmental organisations to formal entities. This taps into several larger questions: When do informal institutions benefit powerful states and when do informal institutions benefit the weak? Is there a clear power-formality nexus that explains how and when different kinds of states choose to form binding commitments versus off-the-record customs that guide behaviour?

Most international relations literature views institutions as not being related to power (Keohane 1984) or under the realist critique that institutions are epiphenomenal and simply serve the interests of the powerful (Grieco 1988, Krasner 1985, Krasner 1991, Gruber 2000, Mearsheimer 1995). Ikenberry (2003, 2001) addresses power and institutions by showing that the world’s hegemon can achieve many of its goals without having to go through multilateral institutions, but it will often champion IGOs in order to lock other states into a stable and predictable policy orientation, reducing the need to use (potentially costlier) coercion later.

The literature to date tells us little about how power intersects with the level of formality in international institutions—but Stone (2011) is one of the first to do so. He argues that FIGOs reflect the preferences of weak states out of proportion to their resources. Powerful states thus use informal rules within FIGOs to gain exceptional access to decision making during extraordinary times, or when their core interests are affected most. In other words, the formal rules of FIGOs benefit the weak, but informal rules benefit the powerful. It is important to recognise that Stone’s argument focuses on the internal governance mechanisms that states can employ in international organisations, whereas IIGOs focus on the external mechanisms that states can utilise.

Nonetheless, Stone’s argument falls short in several ways. First, powerful states create formal institutions when informal institutions are not satisfactory for their particular purpose. In other words, FIGOs must at times benefit the powerful and do not always benefit the weak. For example, rules on TRIPs in the WTO are favourable to advanced countries such as the US and Europe. Issue areas like agriculture are excluded from these rules, severely undermining weaker developing states. To be sure, the WTO constrains the US at times, but it also offers the US many benefits. Furthermore, the formal rules of war are an example showing how formality often benefits the powerful: powerful states can employ such controversial tactics as firing from drones, but guerilla groups are prohibited from fighting if they do not wear uniforms.

Second, formal rules within an IGO often favour the powerful even when some voting rules appear ―even. Powerful countries often formalise veto or override procedures to tip outcomes in their favour. The Inter-American Development Bank (IDB)—where the US has a veto on constitutional decisions that require a ¾ majority or 2/3 majority of regional members—and the International Fund for Agriculture and Development (IFAD)—where voting rules changed in 1997 to reflect contributions to the fund rather than equality between states—serve as excellent examples.

Third, Stone’s argument falls short because weak states sometimes employ informal governance—it is not only the powerful states or hegemons who balance formal structure with informal mechanisms to their own benefit. Several empirical examples of IIGOs offer evidence: the BRIC nations (Brazil, Russia, India, and China) include four rising, developing nations whose economic and population growth give them increased bargaining power at various international forums. Additionally, the G77 caucus group (IIGO) of developing nations has held up votes at UNCTAD until their demands have been met.

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We argue that FIGOs are compromises between powerful states and weaker states. Powerful states get weaker states to accept their authority (through rules within the FIGO) and arrangements that serve the interests of the powerful in return for regularity and security from caprice as well as arrangements that are sufficient to induce participation by the weak. In other words, international organisations serve both efficiency and power goals. FIGOs are self-enforcing agreements where the gains from the arrangement are divided according to some bargaining model that also gives each party incentive to adhere. But commitments (like contracts) are never complete. IIGOs sometimes provide states with a way around their formal commitments and a mechanism for dealing with other countries on an ad hoc basis. The formal rules in international organisations can benefit the strong and also protect the weak from the vagaries of power.

IIGOs can therefore act as both building blocks and stumbling blocks to other forms of international cooperation. States can employ IIGOs as building blocks when all states use them—for example, in a new issue area where a FIGO has yet to be created. States can importantly use IIGOs to learn about the advantages of formal organisation for a particular topic. When IIGOs act as building blocks, they can progress all the way to FIGOs, or states may remain satisfied with an IIGO, depending on the various tradeoffs of the arrangement and their goals. Alternatively, IIGOs can act as stumbling blocks to broader forms of international cooperation—states might use IIGOs to pursue outcomes to their own advantage while preventing the development of FIGOs that might be more beneficial to a larger audience.

International politics is a fluid affair: issue areas can change, states can ebb and flow in terms of power, and crises can create extraordinary times for states when the formal structures they have signed on to no longer make sense. During these periods of flux, the original FIGO may become less attractive for some or all of its members, and thus states will look for alternative options to complement or supplement FIGOs (either internally, externally, or both). When the distribution of power shifts or uncertainty about the state of the world arises, powerful states are not the only ones who will try to adapt to the new situation; weak states can also use internal and external informal institutions to adjust to new realities. They can help provide states a way out of being ―stuck in institutions that no longer makes sense, or provide viable alternatives to forming FIGOs when the costs of revising the FIGO or forming new binding commitments are too high.

Our notion that weak states might opt to use IIGOs more when the balance of power is shifting aligns with ideas from hegemonic stability theory. When hegemony or the strength of the stabilising state in the international system wanes, the stability of the system may be at risk too. This is when we might see an uptick in weaker states utilising internal or external informal mechanisms. Our argument is not as stark as Ikenberry’s: the old order does not have to fully break down, as in after a period of Great War and a clear hegemon does not have to emerge. Instead, informal governance mechanisms and IIGOs might be used when states are not 100 percent clear who the new powers are; the declining hegemon may want to stick with the status quo ante of formal rules in a FIGO but they know this is impossible. At the same time, it is also not clear who the new powers are, so no state is completely willing to lock into a new order yet. Informal governance structures and IIGOs can provide both strong and weak states an alternative mechanism for satisfying their preferences during these circumstances.

4.7 The Role of Regional OrganisationsRecognising that the UN lacked resources and local expertise to fully deal with new types of missions, Boutros-Ghali led an effort to give primacy to regional organisations in dealing with many conflicts. During the Cold War, regional organisations served as a substitute for the UN when superpower conflict hampered the functioning of the Security Council. The current trend appears to be that the UN seems willing to hand over responsibility for peace and security to any form of “coalition of the willing.” The UN itself reached this conclusion in a recent report, saying:


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Under present conditions, ad hoc Member States coalitions of the willing offer the most effective deterrent to aggression or to the escalation or spread of an ongoing conflict. The Organisation still lacks the capacity to implement rapidly and effectively decisions of the Security Council calling for the dispatch of peacekeeping operations in crisis situations. Troops for peacekeeping missions are in some cases not made available by Member States or made available under conditions that constrain effective response. Peacemaking and human rights operations, as well as peacekeeping operations, also lack a secure financial footing, which has a serious impact on the viability of such operations.

We may be seeing a division of labour emerging where police services become the domain of UN peace operations, while military operations are left largely to regional organisations or ad hoc arrangements. This fact is unlikely to alleviate concerns that missions often lack a sense of unity. It does seem necessary for IGOs to take collective responsibility, as the advantage of the UN is that it is a truly global voice and possesses a highly comprehensive set of institutions. At the same time, however, the developing world would like a clearer say in UN decision-making, and coordinating with regional organisations may be the most effective way for them to gain such influence. Additionally, regional organisations are superior in being more familiar with local conditions, culture, and actors. They benefit from lower costs and faster response. Some argue that regional action often proves less objectionable because it is less likely the action will be seen as setting a precedent. At the regional level, however, politics can lead to favouring one side over another. This perception often creates reluctance on the part of combatants to accept outside intrusion. Regional hegemony is also better able to manipulate more localised organisations. What is more, most regional organisations are even more resource poor than the UN is, and the political willpower to act often is missing. It may be true that regional organisations are most useful on the civilian side of peace operations, providing, for example, election or human monitors, in cooperation with the UN. However, the ability of different regional organisations to respond to conflict varies a great deal.

Regional organisations have both expanded in number and, because many often overlap in a given territory, have increasingly begun to coordinate their activities. And, since the end of the Cold War, examples abound of regional organisations expanding their capacity to take on a mediation role:

The Organisation of African Unity (OAU) - now the African Union (AU) - added a section to its Secretariat to • aid in conflict resolutionThe Association of South East Asian Nations (ASEAN) has established a new mediation role• Within Africa, the Inter-Governmental Agency on Drought and Development (IGADD) in the Horn of Africa• The Southern African Development Community (SADC)• The Economic Community of West African States (ECOWAS)• The West African Economic Community (CEAO) has all mediated disputes within their respective regions.• NATO and ECOMOG (ECOWAS Peace Monitoring Group) are two groups that have engaged in peace • enforcement

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SummaryIntergovernmental organisations (IGOs) have become increasingly prominent both in facilitating conflict • resolution between states, but also in dealing with intractable conflicts within states.Intergovernmental organisations are constructed by states to facilitate cooperation. • The primary utility of IGOs lies in providing states with a forum, which they can use to negotiate conflicts.• Clearly, the most prominent IGO involved in conflict resolution is the United Nations.• The UN became the primary venue for diffusing international conflict in the post-World War II period.• Informal organisations exist in familiar settings, outside of international politics.• Informal organisations sometimes become more formal over time—when participants become hard to organise • or if the group needs central coordination of rules.IIGOs are defined as shared expectation, rather than a binding agreement, about purpose among a group of states, • participating in regularised meetings with no independent secretariat or other significant institutionalisation such as a headquarters and/or permanent staff.An IIGO does not possess any formal supranational supervisory authority, and its conclusions do not, and were • never intended to, have legal force.Membership of some IIGOs might be defined by geographical region whereas other IIGOs might be defined • by substantive area.The Paris Club is an example of an IIGO with permanent members focused on a substantive area. IIGOs and • FIGOs are conceptual points on a multidimensional institutional spectrum.IIGOs can be usefully distinguished form customary international law (CIL), which consists of rules of law • derived from the consistent conduct of States acting out of the belief that the law required them to act that way. CIL has no sense of club membership or regularised meetings between states.Trans governmental networks are defined as ―networks of officials—police investigators, financial regulators, • even judges and legislators—who exchange information with their international counterparts and coordinate activity to address common problems on a global scale.IIGOs are stand-alone institutions and can therefore be different from the informal mechanisms that states use • to operate more effectively within FIGOs.The idea of regime complex is in line with the concept of IIGOs acting as both complements and substitutes • to FIGOsThe informal nature of IIGOs allows states to better regulate the flow of information to outside parties.• IIGOs are complements when action in the IIGO is supportive of action in a FIGO.• IIGOs offer a low risk forum for creating focal point solutions that can be implemented in FIGOs or through • independent state action.IIGOs are important institutional forms of international governance.• The extent of institutional formalisation is one of the most important dimensions of such institutional choice.•

ReferencesUniversity of Chicago. • Informal Intergovernmental Organisations (IIGOs) [pdf] Available at: <http://147.142.190.246/joomla/peio/files2012/papers/Vabulas%2029.09.11.pdf> [Accessed 12 May 2012].Beyond Intractability. • Intergovernmental Organisations (IGOs) [Online] Available at: <http://beyondintractability.colorado.edu/essay/role_igo/?nid=1328> [Accessed 12 May 2012].Salmon, T. C., 2000. • Issues in International Relations. Routledge.Jacques, L. L., and Korman, J. S. American Association of Law Libraries. • Introduction to International organisations. Oceana Publications.LearnMediaOfAmerica.• Introduction to United Nations Organisation [Online] Available at: <http://www.youtube.com/watch?v=71nlOssPqEs> [Accessed 14 May 2012].


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ProtectINTERNET• . Introduction to United Nations Organisation [Online] Available at: <http://www.youtube.com/watch?v=tNnGirxI3zM> [Accessed 14 May 2012].

Recommended ReadingInternational Governmental Organisations. • Brill Archive.Thompson, A. and Duncan Snidal, D., 1999• . International Organization. University of Chicago.Peaslee, A.J., 1976. • International Governmental Organisations: Communications, transport, travel. 3rd ed., BRILL.

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Self AssessmentWhich of the following is one of the types of IGO?1.

FIGOa. IMGOb. NGOc. INGOd.

___________ is defined as a formal entity with three or more states as members and a permanent secretariat 2. or other significant institutionalisation such as a headquarters and/or permanent staff.

FIGOa. IMGOb. NGOc. INGOd.

Which of the following is the primary utility of IGOs?3. Providing a forum for discussiona. Serve as information providersb. Providing states with a forum which they can use to negotiate conflictsc. Allow states to take a long-term perspectived.

_________ are defined as shared expectation, rather than a binding agreement, about purpose among a 4. group of states, participating in regularised meetings with no independent secretariat or other significant institutionalisation.

FIGOa. INGOb. NGOc. IIGOd.

Which of the following is an organising principle of formal IGO?5. Shared expectation about purposea. Formal treatyb. Group of member statesc. No independent secretariatd.

___________ consists of rules of law derived from the consistent conduct of States acting out of the belief that 6. the law required them to act that way.

Regimea. Soft lawb. Trans governmental networksc. CILd.

Which of the following laws lay emphasis on organisation,which differentiates IIGOs from customary 7. international law?

Regimea. Soft lawb. Trans governmental networksc. CILd.


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Which of the following is not one of the advantages of IIGOs?8. Higher cost of negotiationa. Lower sovereignty costsb. Greater flexibility/ avoid binding commitmentc. More control over information and accessd.

The second way that ______ complement FIGOs is by centralising agenda setting outside the FIGO 9. structure.

statesa. secretariatsb. IIGOsc. membersd.

Which of the following statement is false?10. IIGOs act as substitutes to FIGOs when action in the IIGO supports what could be accomplished in a a. FIGO.IIGOs cannot provide independent because they are not based on legally binding agreements, they do not b. have permanent secretariats, and they lack monitoring and oversight bodies.One IIGO can serve as a complement to two or three different FIGOs—the G8’s relationship with both the c. World Bank and IMF is exemplary.IIGOs cannot provide an effective centralised mechanism for monitoring and prosecution.d.

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Chapter V

The Role of the International Organisations and Foreign Non-Government Organisations during Emergency Response

Aim


introduce role of IOs during emergency response•

elucidate the legal basis for assistance in emergency cases•

explain the principles used at the time of emergency response•

Objectives


recognise the types of assistance•

describe the initiation of the international assistance•

elucidate the management of the international assistance•

Learning outcome


understand the goods distribution during the emergency situation•

identify the laws and regulations•

understand the pr• otection and security during international assistance


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5.1 IntroductionSince the past decade, natural disasters at various scales continue to increase. Experience has shown that local government and holders with their capacity have proved their ability to handle small and medium scale emergency response. For large scale and mega scale disaster mitigation beyond the capacity of the local stakeholders as demonstrated in the Aceh tsunami (2004), Nias earthquake (2005), and West Sumatera (2009), it was realised that the efforts from the Government and other stakeholders including the community so far still require the support and assistance of international organisations and foreign nongovernment organisations.

The occurrence of disasters in Indonesia as well as other countries has drawn the attention as well as support and assistance from the international community. As part of commitment towards partnership and local as well as global cooperation, especially if the disaster involves the loss of many lives and is beyond the capacity of the affected country, no country may refuse to accept the international assistance without due reason. The role and contribution of the international organisations and foreign non-government organisations whether from the UN Agencies, Red Cross and Red Crescent Society, foreign government, and nongovernment international organisations has been supporting the enrichment and strengthening disaster mitigation efforts, reduce disaster hazards and risks, reduce the suffering of affected people and accelerate community recovery.

The law Number 24 Year 2007 on Disaster Management provides opportunity for various stakeholders to actively participate in disaster management including the international organisations and foreign non-government organisations. The role of the international organisations and non government organisations regulated distinctly in Chapter III Article 7 Item 1 sub-item 2 and Chapter VI Article 30 Law No.24/2007, and Government Regulation No. 21 and 23/2008 on Participation of International Organisations and Foreign non-government Organisations in Disaster Management.

The international organisations and foreign non-government organisations may be allowed to take their role on disaster management in case that the Government of Indonesia announces the needs and/or accept the offer of assistance in line with the regulation and needs in the affected area.

In order to manage such assistances and facilitate reception for speedy and appropriate use for the maximum benefit of the affected communities while complying with prevailing regulations, specific regulations are needed to guide the implementation of international humanitarian assistance in the form of Guideline on the Role of the International Organisations and Foreign non government Organisations during Emergency Response. This Guideline was a result of coordinated efforts of relevant government institutional or agencies regulating the assistance of goods and personnel from the international organisations and foreign non-government organisations.

5.2 Legal Basis1945 Basic Constitution• Law Number 6 Year 1962 on Epidemics• Law Number 7 Year 1983 on Income Tax• Law Number 8 Year 1983 on Value Added Tax and Goods and Services Sales• Tax on Luxury Goods• Law Number 9 Year 1992 on Immigration• Law Number 16 Year 1992 on Quarantine• Law Number 10 Year 1995 as revised by Law Number 17 Year 2006 on Revised Law • Number 10 Year 1995 on Customs• Law Number 11 Year 1995 on Import Duties as revised by Law Number 39 Year 2007 on Revised Law Number • 11 Year 1995 on Import Duties/TaxLaw Number 7 Year 1996 on Food• Law Number 20 Year 1997 on Non Tax Government Revenue•

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Law Number 37 Year 1999 on External Relations• Law Number 24 Year 2000 on International Agreements• Law Number 2 Year 2002 on the Indonesian National Police• Law Number 3 Year 2002 on National Defence• Law Number 17 Year 2003 on State Financing• Law Number 1 Year 2004 on State General Treasurer• Law Number 29 Year 2004 on Medical Practices• Law Number 32 Year 2004 on District Governments• Law Number 33 Year 2004 on Balanced Funding of Central and DistrictGovernments• Law Number 34 Year 2004 on The Indonesian National Army• Law Number 24 Year 2007 on Disaster Management• Law Number 17 Year 2008 on Shipping• Law Number 1 Year 2009 on Aviation• Law Number 22 Year 2009 on Road Traffic and Transportation• Law Number 36 Year 2009 on Health• Presidential Decree Number 8 Year 2008 on the National Disaster Management Agency.• Presidential Decree Number 32 Year 2008 on Ratification of the ASEAN (Agreement on Disaster Management • and Emergency Response)Presidential Decree Number 18 Year 2003 on Visa Exemption for Short Visits• Presidential Instruction Number 5 Year 2002 on Intelligence Coordination •

5.3 DefinitionsTransportation vehiclesTransportation vehicles refer to the carriers (road, sea, air) that function to carry personnel, logistics and assistance equipments. These transportation vehicles include carriers from donor countries to point of disembarkation in donor recipient country, including the Supporting Post and from the Supporting Post to disaster area.

DisasterDisaster refers to the event or series of events that threatens and disrupts lives and livelihoods caused either by natural and/or non-natural and man-made factors to claim toll, environmental damage, loss of assets, and psychological impact.

Disaster emergency assistanceDisaster emergency assistance refers to the efforts to provide assistance to meet basic needs during emergency situations.

GoodsGoods refer to the items which consist of logistics and equipments that are to be donated to the affected communities, and operational equipments used by the international organisations/foreign non-government organisations to carry out disaster response during the emergency.

LogisticsLogistics refer to all physical items that are used to meet the basic needs of people which include clothing, food and shelter or its derivatives. Included under logistics are consumable goods that is Sembako (nine basic needs), medicine, clothing and accessories, water, tents, pyjamas and so on. Medicine refers to materials or combination of materials, including biologic products used to influence or investigate physiologic systems or pathologic conditions in view of determining the diagnosis, prevention, cure, rehabilitation, health improvement and contraception of human beings.


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EquipmentsEquipments refer to all forms of tools and equipments that could be used to assist the rescue and evacuation of affected communities, meet the basic needs and immediate rehabilitation of vital facilities and infrastructures. Included under this category are:

Medical supplies, which refer to all materials and equipments needed to carry out medical services.• Medical equipments, which refer to the instruments, apparatus, machines and/or implants not containing • medicines used to prevent, diagnose, cure and lessen disease, care of patients, restore people’s health, and/or develop structure and improve body function.Motor vehicles, which refer to the road, sea and air vehicles, imported by international organisations and • foreign nongovernment organisations for humanitarian assistance during emergency response and operations of agencies providing assistance.Also inflatable rafts/boats, rescue tactical vehicles, field kitchen vehicles, water trucks, tents, pumps, medical • equipments, communication equipment and heavy equipment.

Grant and in-kind donationGrant and in-kind donation refer to contributions received by the Central Government from international organisations/agencies or individuals, foreign governments, foreign organisation/agencies, international organisation/agencies in the form of foreign currency, rupiah or in kind, including expert staff and trainings that do not require reimbursement by the government.

InitiationInitiation refers to the moment when the government declares the needs for international assistance during emergency response and/or when the Government accepts the offer from the international community to provide their assistance.

International organisations International organisations refer to the international organisations within the organisational structure of United Nations or which undertakes tasks representing United Nations or other international organisations.

International non government organisationsInternational non government organisations refer to foreign nongovernment organisations, which are organised functionally free of and non representative of government of certain stake or international organisations, which are formed separately from certain state where the organisation is set up.

Non proselytisation Non proselytisation refers to the provision of assistance basic needs that are not made to propagate a particular religion or belief.

Providers of assistanceProviders of assistance refer to the international institutions and nongovernmental international organisations providing humanitarian assistance to the Government of Indonesia during the emergency response.

StakeholdersStakeholders refer to persons, groups, or organisations that have direct or indirect interest in humanitarian activities during emergency response and can influence or be influenced by the organisation’s actions, objectives and policies.

Central GovernmentCentral Government, here and so forth is called as the Government, refers to the President of the Republic of Indonesia holding the authority of the governing the Republic of Indonesia as stipulated in the 1945 Constitution of the Republic of Indonesia.

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Local governmentLocal government refers to the governor, head of district/mayor, or local government apparatus having to govern the respective level of local government.

Cluster approachCluster approach refers to a model of coordination by grouping the clusters based on the work of humanitarian actors for a more definitive provision of better emergency response by determining the ‘leaders’ of group/cluster. Cluster leaders together with government sectors build coordination in the planning as well as execution. The cluster approach aims to provide more coordinated emergency response among actors from both government and non-government institutions. The cluster approach is implemented on a large scale disaster or in case the government needs the international assistance in multi-sector response with broad participation of international humanitarian actors.

Management of assistanceManagement of assistance refers to a series of efforts to handle the assistance from the international organisations and foreign non-government organisations covering the area of work on receiving, recording, distribution and monitoring.

Direct beneficiaryDirect beneficiary refers to a person or groups of people who receive direct assistance from the international institutions and non-governmental international organisations to meet their needs during emergency.

Indirect beneficiaryIndirect beneficiary refers to the Government of Indonesia through the National Disaster Management Agency (BNPB).

Emergency response personnelEmergency response personnel refer to the staff and volunteers from international organisations and or foreign non-government organisations, which provide emergency response assistance.

Emergency response command postEmergency response command post refers to the centre for coordination, controlling, monitoring, and evaluation the emergency response activities with the authority to provide data and information on disaster emergency response.

Field command postField command post refers to a similar emergency response command post handling a certain administrative area smaller than the emergency response command post.

Supporting post Supporting post refers to a command post supporting the emergency response command posts as entry points for personnel, logistics and equipment where the administration and permits from relevant institutions are processed, and act as coordination venue for relevant institutions/ministries coordinated by BNPB.

Emergency response period Emergency response period refer to the period when the Government declares the emergency response phase until the expiry of it which is formally expressed through the statement of the Government.

Termination Termination refers to the moment when the Government declares the end of the international assistance at the end of the emergency response period.


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ExpertsExperts refer to personnel possessing specific expertise with the standard criteria set by authorised government institution or agency needed during emergency response.

5.4 PrinciplesTo ensure alignment, effectiveness and efficiency in the implementation of humanitarian assistance activities of international institutions and foreign nongovernment organisations, there is a need to have the following operating principles agreed by the Aid providers and aid recipients to be applied at the initial stage of the emergency response until the termination of international assistance:

Provision of humanitarian assistance must respect the sovereignty of the Republic of Indonesia.• Equal partnership and coordination• Distributed through coordination and cooperation between local and international actors under the command of • BNPB and coordination of BPBD adhering to the principles of accountability and transparencyImplemented to impart positive impact on the economy, market and local environment.• Assistance is provided through effective communications between the Government of Indonesia, international • organisations and foreign nongovernment organisations with benefit recipients to ensure that assistance is provided according to needs.Whenever possible, such assistance as motor vehicles, medicine, consumable goods, medical equipments should • use Indonesian products unless unavailable in Indonesia.Assistance given must be qualified and able to support the rehabilitation and reconstruction process.• International organisations and non-governmental international organisations that provide assistance should be • independent in providing and distributing aid without creating difficulties to the aid recipients.International organisations and non-governmental international organisations that provide assistance should • appoint a representing institution in Indonesia who is also responsible for their emergency assistance.All parties involved in the emergency response activity in Indonesia must work together to prevent transfer of, • abuse of or counterfeit of disaster management materials, equipment or illegal resources and conduct actions according to regulations.Provided in accordance with national laws and international laws, including the UN General Assembly resolutions • related and relevant guideline. Implemented according to the relevant skills of personnel involved and organisation capacity.• Non-proselytisation• Distributed with due consideration of the different needs of men and women according to local cultures• Allocated according to needs and based on assessment of needs• Compatible with local value and culture, supports independence, adequately meets the needs of affected • communities and according to existing national and international standards of quality.Respect and protect the dignity and rights of affected persons, including meeting the needs of vulnerable groups • which consist of babies, infants, children, pregnant and lactating women, diffable and the elderly.

5.5 Initiation of the International AssistanceThe initiation or commencement of international assistance during emergency response includes triggers for the entry of international assistance, mechanisms, and permits for the entry of international assistance that is, permit for organisations and personnel as well as for goods.

Triggers for the entry of the international assistanceHumanitarian assistance from international organisations and foreign nongovernment organisations may be accepted by the following triggers:

The magnitude of the disaster exceeds the government’s ability to overcome thereby requires the assistance of • international organisations and foreign non-government organisations

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Statement from the government to accept the offer from the international organisations and foreign non-• government organisations in compliance with the needs of the affected area.

Mechanism for the entry of the international assistanceThe entry of international aid begins with formal statement from the Government on the acceptance of international assistance.

The type and amount of international aid is based on the results of a rapid assessment coordinated by BNPB • and/or BPBD.The National Disaster Management Agency (BNPB) will send a circular letter of the initiation of international • aid to international institutions and foreign non-government organisations using Forms 1 and 2 containing:

Summary report on the disaster �Length of emergency response period �Information on urgent need for logistics and equipment (based on reports from District Disaster Management �Agencies (BPBD) and Rapid Assessment Team)Information on the professional personnel needed �

To handle emergency response in a certain area, BNPB in cooperation with relevant government institutions/ministries at the national level, relevant offices of local government at provincial level or district/city to establish the Emergency Response Command Post (or Main Command Post).

To facilitate the entry of international assistance, BNPB in cooperation with relevant government at national and local levels of province or district/city will:

Determine the military base, airport and seaport as entry point for international assistance (entry point)• Establish the Supporting Post at each military base, airport and seaport already set up as the entry point for • international assistance which consists of representatives from:

The National Disaster Management Agency (BNPB) �Ministry of Defence �Ministry of Health �Ministry of Agriculture (Quarantine Division) �Ministry of Law and Human Rights (Directorate General of Immigration) �Ministry of Finance (Directorate General of Duties and Excises) �Ministry of Foreign Affairs �The National Police of the Republic of Indonesia (POLRI) �Ministry of Trade (Director General of Foreign Trade) �Ministry of Transportation �National Intelligence Agency (BIN) �Food and Drugs Surveillance Agency �Local Governments/Local Agency for Disaster Management �

Functions of the supporting post include:Registration centreRegistration of international agencies and foreign non-government organisations is done at the Supporting post by filling up Form 3. Registration is done with the support of local governments in coordination with the Indonesian National Military Force (TNI), National Police (POLRI) and the National Intelligence Agency (BIN) who will organise placements and activities as well as empower communities to monitor foreign personnel during the emergency response.


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Registration for exit of foreign personnel from disaster-affected area.• Registration of goods to be re-exported to the assisting country.•

Place for handling the issues of permit and monitoring, immigration, excise, security clearance personnel �and equipment as well as quarantine.Place for issuance of Identity Card (ID – Form 4) �Centre for logistics and equipment prior to distribution to disaster affected people. �

The supporting post will be equipped with at least communication tools, ID making machine, facsimile and administrative equipment. The supporting post will provide routine report to the Emergency Response Command Post.

5.5.1 Management of the International AssistanceInternational assistance should be intended to help disaster management authorities during the emergency response period covering rapid assessment, rescue and evacuation, provision basic needs, protecting vulnerable groups, and immediate rehabilitation of vital facilities and infrastructure.

Conduct rapid and accurate assessments on the location, damages and resources availableInternational organisations and foreign non-government organisations need to know the results of such • assessments and information available at the BNPB and district government before deciding to conduct individual assessments.International organisations and foreign non-government organisations need to coordinate with Rapid Assessment • Team of BNPB/BPBD in carrying their assessment to avoid burdening the community with too much questions/surveys.International organisations and foreign non-government organisations must report their assessment result to • BNPB/BPBD as the input for rapid assessment of BNPB/BPBD in accordance with their authority.

Rescue and evacuationIn general, international assistance for rescuing disaster affected people causing a number of victims.• International aid for rescuing disaster affected people terminates with the issuance of statement from the • government.

Provision of basic needsProvision of basic needs includes shelters/temporary accommodation/shelter, food, non food items, clothing, • water and sanitation and medical services.Standard basic needs refer to Head of BNPB Regulation Number 7 Year 2008 on Procedures for the Provision • of Basic Needs Assistance.

Protecting vulnerable groupsThe vulnerable group includes infants, under five, children, pregnant and lactating mothers, invalids and the • elderly.The categorisation of vulnerable group as mentioned in Article B.4.a. may be added to field reality and in • accordance with the applicable rules and regulations.

Immediate rehabilitation of vital facilities and infrastructureThese activities are, among others, clearing rubble, garbage, sludge, damaged and toxic material, and repair of urgent facilities and infrastructure.

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5.5.2 Type of AssistanceThe type of assistance from the international organisations and foreign nongovernment organisations may be in the form of funding and grant, goods, as well as experts.

Funding and grant assistanceIn the case that international organisations and foreign non-government organisations provide humanitarian support in the form of funds, such funds may be donated directly to BNPB (Form 5). Such assistance will be recorded according to the governing regulations.

On grants, the management shall be done through the mechanisms for grant management within BNPB and recorded according to the prevailing Ministry of Finance Grant Accounting System (SIKUBAH) in Indonesia. International organisations and foreign non-government organisations are not allowed to conduct fundraising activities in Indonesia.

GoodsThe following are main points for international organisations and foreign nongovernment organisations to take into consideration:

Goods have to be packed, categories, and marked with clear address for distribution according to needs.• When selecting beneficiaries with certain criteria, such selection should be coordinated with the local government • up to the grass root levels. Whenever possible, communities should be involved in determining the criteria and distribution of in kind assistance.Distribution of in-kind assistance should not provoke/heighten conflict between members of the community.•

ExpertThe international support in terms of experts has to meet the required qualifications set by the government through related technical ministries. Whenever possible, technical experts should be accompanied by Indonesian counterparts to allow capacity development.

5.5.3 PermitAll international aid must obtain permission from the government. Permits can be processed by the Government appointed Supporting Posts. In terms of international aid come after the emergency response period, permissions process will be done in accordance with the applicable rules and regulations.

General provisionsDuring the emergency response phase, international agencies or foreign non-government organisations may • provide their assistance directly without applying procedure of submission of proposal, MOUs or work plans.Foreign assistance in the form of foreign personnel, equipment or logistics will be provided easy access and • processing in immigration, excise and quarantine.The government has the authority to accept or refuse entry of personnel from countries.• Personnel from countries having no diplomatic relations may not carry out humanitarian assistance in • Indonesia.The providers of assistance may carry foreign and rupiah currencies to and from Indonesia according to monetary • regulations and obtain legal exchange value in accordance with the disaster emergency operations.Should foreign personnel need to open personal bank accounts for operational needs in carrying out their • humanitarian activities, coordination with their respective embassies in Indonesia should be confirmed.To facilitate provision of humanitarian assistance from international organisations and foreign non-government • organisations, the relevant government ministries and institutions may provide services beyond the normal working hours.Legal domestic facility may be granted for international aids for their activities related to humanitarian • assistance.


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The state providing assistance who would like to bring in military assistance must obtain Security Clearance • issued by the Indonesian Military Forces Headquarters (Mabes TNI).Equipment to be used by the assisting state, in the form of plane or ship, must have Security Clearance issued • by the Indonesian Military Forces Headquarters (Mabes TNI).During emergency, administration process could be done manually (non electronic).•

ProcessThe permits for organisations, personnel, and logistics are granted by the Supporting Post with the following process:

Organisation and personnelAid providers submit the list of personnel and operational support facilities before, during, or just after the • assistance arrive in Indonesia.Incoming personnel has to meet required qualifications according to government needs as mentioned in the • initiation letter for foreign assistance, among others: health, SAR, construction, communications, water experts, liaison officer, and any other expert as needed.The international organisations and foreign non-government organisations must register their organisations by • submitting the list and expertise of their personnel/specific professionals as well as location of activities (Form 6), and attaching photocopy of passport, visa, complete with 2( two) exemplars colourful photograph 4 x 6 cm for each of their personnel to be deployed in Indonesia.Foreign personnel must be based on assignments and recommendation of the country of origin and the • international organisation or foreign non-government organisation assigning them.Foreign personnel who carry out their activities for emergency response in Indonesia as mentioned in point 2 • will be given easy access on immigration matters in the form of visa handling and processing, entry permits, limited stay permits, and exit permits.The state providing assistance who would like to bring in military assistance must obtain approval from • the Ministry of Defence by submitting written request to the Ministry of Defence and the National Army in coordination with the BNPB. The request letter has to be completed with the list of personnel, logistics or funds (Forms 5 and 6).Based on the list of personnel, BNPB in coordination with relevant institution shall give its approval in compliance • with the need of emergency response.Visa, entry permits, limited stay permits, and exit permits for the personnel of international organisations and • foreign non-government organisations are granted upon recommendation of BNPB through the Supporting Post.Limited stay permit is granted within a period of time in accordance with the emergency response period.• The Supporting Post will equip foreign personnel with Identity Card (ID card) to be taken during their stay in • disaster affected areas and returned to the Supporting Post upon completion of their tasks.The permit is only valid during emergency period.•

GoodsInternational organisations and foreign non-government organisations must register their organisations by • submitting a list of types and amount of goods as well as location of activity (Form 6).Based on the above list and amount of goods as mentioned in point 1, BNPB shall give its approval in compliance • with the need of emergency response.In executing the regulations as stipulated in point 2, BNPB will coordinate with the relevant institution/• agencies.Specifically for foreign military asset, entry permit will refer to the applicable regulation at the TNI Headquarters • (Mabes TNI).

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Request for entry permit of goods should be equipped with certificate for supplies assistance and quarantine • documents.In the case of goods for emergency response imported by international organisations and foreign non-government • organisations, the following facilities may be given:

Exemption or waiver for import duties and excise according to prevailing regulations for customs and �excise.Exemption of import tax (PDRI – Pajak dalam Rangka Impor) according to prevailing tax law. �Facility for permit procedure on imported good restriction �Facility on import and export procedures. �

Submit a request to BNPB to obtain the facilities.• In the case where imported goods are damaged, unused and/or no longer needed, as well as not meet the • requirements, the Government of Indonesia will permit the re-export of those imported goods.To obtain facilities as mentioned in point 6, in each consignment the aid providers must:•

Clearly appoint the recipient of the goods as the responsible party in Indonesia (taking the role of the �importer)Follow the agreed international standards �Pack the goods according to terms and conditions of the goods to be sent �Categorise and mark all the goods �

Include:Manifests• Invoice• Airway bill or Bill of Lading• Grant letter (gift certificate or certificate of donation)• Certificate of Analysis (specifically for medical supplies and equipments)• Certificate of Analysis, Health Certificate, Certificate of Free Sale (specifically for food items)• Certificate of Type Testing from originating country (specifically for motor vehicles).• In the event that goods will be re-exported, aid provider has to include letter of statement indicating that the • goods will be re-exported within a certain period of time.The government may provide permits to international organisations and foreign non-government organisations • regarding the temporary use of road, sea and air transport during the emergency response period within the disaster affected areas.Aid providers must guarantee that the quality, compatibility and safety of imported foods, medicines/drugs, • and consumable medical supplies and equipment, and specifically guarantee the foods and drugs bequeathed to have:

Expiry period of at least 2 years for drugs/medicines, and a minimum of 6 months for foods at time of �deliverylabels in English if not available in Bahasa Indonesia/Melayu �Check, consign, protect and guarantee good conditions to maintain its safety and quality. �

As part of the permit process, inspections will be conducted on all goods to ensure the quality and compatibility • with the needs of affected communities, and in line with national and international legal standards.On the issue of quarantine:•

Any carrier of plant and animal disease or plant infecting organisms should meet quarantine criteria. �Shipments that meet quarantine criteria should follow the following requirement: �


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Completed by health certificate from country of origin and transit country for animals, substances –derived from animal, product derived from animal, plant and other part of plants, except carrier which are categorised as other objects.Pass through predetermined entry and exit points in compliance on the applicable rules and –regulations.Reported and submitted to quarantine officials at points of entry for quarantine treatment. –

Re-export will be done based on the applicable rules and regulation in Indonesia as well as in the origin • country.

Goods distributionDistribution of goods is the responsibility of Local Government and may be carried out in three approaches:

Handed over to the Government or Local Government, once relief goods arrive and permission granted.• Work together with partners from the Indonesian.• Direct distribution to direct beneficiaries through the activities of aid by international institutions and foreign • non-governmental organisations with individual coordination with the Supporting Post. Organisations may work together with other international organisations and non-governmental foreign institutions to meet the needs of the affected communities as a whole at a disaster site.

5.6 Management of International AssistanceCoordinationIn order to coordinate the activities of international organisations and foreign nongovernment organisations providing assistance during the emergency response phase, mechanisms for coordination must be followed through:

BNPB coordinates rapid assessment with related institutions including the international organisations supported • by an international agency having the coordination function for the international community (Form 8). The Commander of Emergency Response Command prepares the operational plan together with related • institutions including the international organisations and foreign non-government organisations.Routine cluster coordination meetings to report the activities o humanitarian operation from each cluster referring • to the operational plan set by the government and evaluation result which can be done at national, provincial or field levels to discuss progress of assistance done by the international community under the coordination of BNPB and authorised departments/institutions.Each cluster lead is encouraged to share information through possible information management facility (mailing • list, website) or manually for dissemination of report.

Protection and SecurityTo ensure the international assistance are accepted by the direct beneficiaries and in line with their needs, thus:

Personnel of the international organisation and foreign non-government organisations conducting disaster • emergency activities are protected for security purpose by the government in compliance with rules and regulations.Movement of goods (storing and distribution) of the international organisations and foreign non-government • organisations participating in the emergency response activities are protected for security purpose in compliance with rules and regulations.International organisations and foreign non-government organisations participating in disaster management are • prohibited from conducting political or security breaching activitiesIn the case of violation to regulation as mentioned in point 3, BNPB is obligated to coordinate with intelligence • and security agencies.International organisations and foreign non-government organisations participating in emergency response • activities must consider and respect the social, cultural and religious background of the local communities and help maintain its security.

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CostsCosts for the provision of emergency response assistance, ground handling for logistics personnel and equipment, packaging operations, labelling, distribution of assistance, and destruction of non compliant materials shall be borne by the respective aid provider.

ImmunityThe Government of Indonesia shall not be held responsible for any loss suffered by international organisations and foreign non-government organisations resulting from acts of violation or neglect during the implementation of humanitarian activities in Indonesia.

Monitoring, Reporting and EvaluationMonitoring, reporting, and evaluation of the international assistance is to be done together by the government and community.

Brief reports on the implementation of emergency response activities is compiled and submitted by international organisations and foreign non-government organisations to BNPB and local government regularly in writing (Form 9) routinely in coordination meetings to evaluate progress of activities. Reports to be submitted to the BNPB and local government are:

Periodic reports• Final reports• Incidental reports requested by BNPB for government purposes•

Each cluster has the obligation to routinely evaluate their activities involving related institutions and community including beneficiary. BNPB will report to the public the assistance from the international organisations and foreign non-government organisations.

Mechanism of monitoring and reporting is in line with the applicable rules and regulations.

5.7 SanctionsTo ensure that the humanitarian response activity are running well and can be properly conducted with the applicable rules and regulation, in the event that international organisations and foreign non-government organisations do not meet existing regulations, the sanction will be given in compliance with the existing rules and regulation.

In case of any violation committed by international organisations or foreign nongovernment institutions against the working principles, the settlement of the problem will be discussed in the coordination meeting to agree on actions to be applied.

5.8 Termination of International AssistanceThe termination of assistance from the international organisations and foreign nongovernment organisations is arranged as follows:

At the time when the Government issues the statement on the termination of emergency response phase.• Before the deadline set at the initiation of the international assistance for the emergency. The Government may • decide to terminate the international assistance differently with the termination date set at the initiation by observing the development at disaster affected area as well as the national situation.

Upon completion of the emergency response phase ends, BNPB shall issue a circulation letter terminating international assistance during the emergency response period (Form 10), which contains:

A summary report of latest situation and condition.• Progress of emergency response conducted by the Indonesian government and international organisations and • foreign non-government organisations.


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Fixed date signifying the end of the emergency response phase and decision to end international humanitarian • assistance.Letter of appreciation for the international organisations and foreign nongovernment organisations.•

The brief report will serve as the input for BNPB’s evaluation on international assistance during emergency to decide future international assistance needs, if necessary.

5.9 ClosingEvery effort to support and assist the emergency response activities done by international organisations and foreign non-government organisations and coming from their ongoing humanitarian programs on disaster management, must conform to all provisions of these guideline.

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SummaryThe role and contribution of the international organisations and foreign non-government organisations has been • supporting the enrichment and strengthening disaster mitigation efforts, reduce disaster hazards and risks, reduce the suffering of affected people and accelerate community recovery.The law Number 24 Year 2007 on Disaster Management provides opportunity for various stakeholders to actively • participate in disaster management.Transportation vehicles refer to the carriers (road, sea, air) that function to carry personnel, logistics and • assistance equipments.Non proselytisation refers to the provision of assistance basic needs that are not made to propagate a particular • religion or belief.Cluster Approach refers to a model of coordination by grouping the clusters based on the work of humanitarian • actors for a more definitive provision of better emergency response by determining the ‘leaders’ of group/cluster.The initiation or commencement of international assistance during emergency response includes triggers for • the entry of international assistance, mechanisms, and permits for the entry of international assistance, that is, permit for organisations and personnel as well as for goods.The permits for organisations, personnel, and logistics are granted by the Supporting Post.• International organisations and foreign non-government organisations participating in disaster management are • prohibited from conducting political or security breaching activities.Every effort to support and assist the emergency response activities done by international organisations and • foreign non-government organisations and coming from their ongoing humanitarian programs on disaster management, must conform to all provisions of these guideline.BNPB coordinates rapid assessment with related institutions including the international organisations supported • by an international agency having the coordination function for the international community.The Commander of Emergency Response Command prepares the operational plan together with related • institutions including the international organisations and foreign non-government organisations.Distribution of goods is the responsibility of Local Government and may be carried out in three approaches.• Legal domestic facility may be granted for international aids for their activities related to humanitarian • assistance.Provision of basic needs includes shelters/temporary accommodation/shelter, food, non food items, clothing, • water and sanitation and medical services.International organisations and non-governmental international organisations that provide assistance should be • independent in providing and distributing aid without creating difficulties to the aid recipients.

ReferencesUNDPMontenegro• . National Platform on Disaster Risk Reduction, MNE April 2011.mpg. [Video Online] Available at: <http://www.youtube.com/watch?v=9d_YN8ETpYk> [Accessed 14 May 2012].ifrc• . The Cluster approach. [Video Online] Available at: http://www.youtube.com/watch?v=bwZZbPgOaWA> [Accessed 14 May 2012].International Federation of Red Cross and Red Crescent Societies. Guideline on the Role of the International •Organizations and Foreign Non-Government Organizations during Emergency Response. [pdf] Available at: <http://www.ifrc.org/Docs/idrl/877EN.pdf> [Accessed 14 May 2012].The MIT Press. • The United Nations Emergency Force [Online] Available at: <http://www.jstor.org/discover/10.2307/2704897?uid=3738256&uid=2129&uid=2&uid=70&uid=4&sid=47698997842547> [Accessed 14 May 2012].Rosner, G., 1963. • The United Nations Emergency Force. Columbia University Press.


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Lauterpacht, E. and British Institute of International and Comparative Law. • The United Nations Emergency Force: basic documents. Stevens, 1960.

Recommended ReadingWortley, B. A., 1957. • The United Nations: The First Ten Years. Manchester University Press.Surhone, L. M., Tennoe, M. T. and Henssonow, S. F., 2010. • United Nations Emergency Force. VDM Verlag Dr. Mueller AG & Company Kg.Hanhimäki, J. M., 2008. • The United Nations: A Very Short Introduction. Oxford University Press.

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Self Assessment_____________ refers to all physical items that are used to meet the basic needs of people which include 1. clothing, food and shelter or its derivatives.

Logisticsa. Equipmentsb. Disasterc. Transportation vehicled.

Which of the following is not included in equipments?2. Medical suppliesa. Motor vehiclesb. Inflatable raftsc. Sembako medicinesd.

___________ refers to the moment when the government declares the needs for international assistance during 3. emergency response.

Grand and in- kind donationa. Providers of assistanceb. Initiationc. Disasterd.

____________ refers to the provision of assistance basic needs that are not made to propagate a particular 4. religion or belief.

Initiationa. Non proselytisationb. Disasterc. Cluster approachd.

_______________ refers to a model of coordination by grouping the clusters based on the work of humanitarian 5. actors for a more definitive provision of better emergency response by determining the ‘leaders’ of group/cluster.

Cluster Approacha. Management of approachb. Direct beneficiaryc. Indirect beneficiaryd.

___________ personnel refer to the staff and volunteers from international organisations and or foreign non-6. government organisations which provide emergency response assistance.

Emergency responsea. Direct beneficiaryb. Indirect beneficiaryc. Field command postd.


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Which of the following statements is false?7. The initiation or commencement of international assistance during emergency response includes triggers for a. the entry of international assistance, mechanisms, and permits for the entry of international assistance.Registration of international agencies and foreign non-government organisations is done at the security b. council of organisations.International assistance should be intended to help disaster management authorities during the emergency c. response period covering rapid assessment, rescue and evacuation.International organisations and foreign non-government organisations need to coordinate with Rapid d. Assessment Team of BNPB/BPBD in carrying their assessment to avoid burdening the community with too much questions/surveys.

Which of the following is not a type of assistance?8. Rehabilitation a. Goodsb. Expertc. Fundingd.

Which of the following statements is false?9. The permits for organisations, personnel, and logistics are granted by the Supporting Post.a. Aid providers submit the list of personnel and operational support facilities.b. The international organisations and foreign non-government organisations must register their organisations by c. submitting the list and expertise of their personnel/specific professionals as well as location of activitiesUnlimited stay permit is granted within a period of time in accordance with the emergency response d. period.

Which of the following is not included in management of international assistance?10. Coordinationa. Protection and assistanceb. Costsc. Goodsd.

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Chapter VI

India and the World Trade

Aim


introduce the reason for Indian rise from a struggling developing country•

elucidate India’s schizophrenic rise •

explain the journey of India from GATT to the core of WTO•

Objectives


recognise the political economy of rising influence of India•

describe the lure of the market•

elucidate the norms of liberalisation•

Learning outcome


understand domestic politics •

identify the difference between coalition and framing•

understand the burden of • rising power of India


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6.1 IntroductionIndia’s rise from a struggling developing country to an acclaimed ‘BRIC’, emerging economy (Brazil, Russia, India, and China) has been meteoric. This is reflected partly in India’s soaring growth rates: its growth rate of eight per cent makes it amongst the fastest-growing economies in the world. A Goldman Sachs study on the BRICs has predicted that in thirty years’ time, the Indian economy could be the largest in the world after the US and China. India has further demonstrated its military prowess via its nuclear tests in 1998. The economic and military indicators of India’s rise have been accompanied by its emergence as a seasoned, proactive, and institutionally engaged player across international regimes.

It has not only averted the risk of being branded a pariah state because of its acquisition of nuclear weapons; through successful diplomacy, it has actually managed to legitimise its status as a nuclear weapons state by signing a bilateral deal with the US.

It is a regular invitee to G8 summits. In the World Trade Organisation (WTO), it has proven its ability to block the negotiation process until its demands are met; in meeting after meeting, negotiators from the developed world have reiterated that no deal would be possible without the Indians on board.

In this chapter, the focus is on investigation of India’s emergence as a core player in the World Trade Organisation. This chapter is important for two reasons. First, it illustrates that the foreign policy of India (or other emerging powers for that matter) cannot be fully understood without a close analysis of the international institutional context within which it plays out. As this chapter goes on to argue, India’s rise in the WTO is a product of decades of learning to negotiate within the specific multilateral rules of the organisation (as well as its predecessor, the General Agreement on Tariffs and Trade, GATT). Second, the case study illustrates that even after certain structural conditions are met, such as large market size and rapid economic growth, the rise of a country to a recognised great power is not automatic. Rather, the process whereby a state’s rise is negotiated matters, both in terms of recognition by other parties as well as the outcomes that the state is able to generate.

6.2 India’s Schizophrenic RiseIndia’s rise is not institution-specific. Besides its invitations to G8 summits and key, small-group meetings in the WTO, India is seen as one of the most serious contenders for a permanent seat in the UN Security Council. Its diplomacy to establish itself as a legitimate nuclear weapons state has been successful. But the processes whereby this rise is negotiated vary fundamentally across regimes. A brief examination of India’s foreign policy on nuclear issues versus trade issues in recent times illustrates the differences —even contradictions —across issue areas.

In its role in the World Trade Organisation, India has adhered to and further developed its long-established tactics of building coalitions with developing countries, standing up to the developed world, and saying no even when it incurs costs as a result. Recall that these tactics of engaging with and speaking up for the Third World are not qualitatively new; India, after all, was a founding member of the Non-Aligned Movement, which had its first meeting in Bandung in 1955. It was an active and leading member of the G77—a group of developing countries that came together at the first meeting of the United Nations Conference on Trade and Development in 1964—and participated subsequently in the call for a fairer economic system via the demand for a New International Economic Order. In the first nearly forty-five years of its independence, such demands fitted well with its domestic programmes for economic development based on import substituting industrialisation. But even after the launch of its programme of economic liberalisation in 1991, India did not abandon these positions. As will be argued, India has continued to be a tough negotiator in the WTO. It still acts as a leader of coalitions involving developing countries, makes concessions to smaller members, tolerates free-riding, and fights for causes of global justice and fairness. India, whilst rising in the WTO, retains at least some of its old ideals. But this is not the only face of Indian foreign policy.

India’s Janus-faced foreign policy is evident when we compare elements of its traditional, Third World positions in the WTO against its pragmatic bilateralism on nuclear weapons. The US–India deal on civilian nuclear cooperation was approved by the US Congress in December 2006, which effectively welcomes India into the club of legitimate nuclear weapons states (despite the fact that India is not a signatory to the Non Proliferation Treaty). Far from pursue idealistic Third World causes, the new nuclear India now seeks a freezing of the regime which prevents acquisition of

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nuclear weapons by other countries, and which is actively policed by ‘responsible’ nuclear powers including India. This strategy was borne out in 2005 in India’s unprecedented support in favour of an IAEA (International Atomic Energy Agency) resolution against Iran’s nuclear activities; India ended siding with the US camp, and several leaps away from its traditional adherence to positions of non-alignment. When asked about the implications of India’s move closer to the US on its Third World allies, a senior official in the Ministry of External Affairs responded, ‘My heart bleeds for them!’.

The two sets of negotiating positions —one that represents India as ‘the voice of the voiceless’ (interview with Indian trade diplomat, October 2003), and the other that represents India as the forward looking, pragmatic, powerful strategist —do not quite add up. These contradictions are partly a function of bureaucratic politics within India: the drive for closer relations with the US has come from the Ministry of External Affairs, whereas the Ministry of Commerce is in charge of India’s negotiations in the WTO. But as the third section of this chapter argues, underlying both bureaucracies is India’s common political culture, which is rooted in an old anti-colonial view that resents Western powers. To understand the different faces of India’s rising power, we must locate them within the specific international institutional contexts. India’s pathway to power in the WTO, given the rules of the institution and its experiences within it, differs fundamentally from the pathway to power into the club of legitimate nuclear powers. In the following pages, we will trace and analyse India’s negotiation strategy within the WTO, and will return to the question of its inconsistencies with other regimes in the conclusion.

6.3 From the Margins of the GATT to the Core of the WTOThree sets of indicators point to India’s rising power in the WTO: participation in the negotiation processes, effective use of the Dispute Settlement Mechanism (DSM), and proven ability to block the negotiations until certain demands are met.

First, it has become a regular invitee and active member of all the small-group decision-making meetings in the WTO where consensus for the plenary meetings is shaped. This is true for meetings at all levels in the WTO: ministerial meetings, heads of delegations meetings, and expert-level meetings. Such meetings usually bring together all those parties which must be on board for an agreement to be reached. One example is the Group of Five Interested Parties in 2004, which included Australia, Brazil, the EU, India, and the US, was instrumental in breaking a preceding stalemate in the negotiations process via the ‘July Package’. More recently, in 2006, India was party to the G6 consultations (which included Australia, Brazil, EU, India, Japan, and the US), which attempted to break the deadlock on agriculture. Participation in these meetings is no small sign of recognition.

The second indicator of India’s rising influence in the WTO is its active and growing participation in the Dispute Settlement Mechanism (DSM) of the organisation. In the entire history of the GATT that is from 1947 to 1994, only one panel report was adopted involving India. Today, it has brought seventeen cases as complainant to the DSM, and is respondent in nineteen cases. Next only to Brazil’s use of the DSM, these figures are not only the highest amongst developing countries, but also compare favourably to developed countries (other than the EU and the US). This rise in India’s use of the DSM is partly a function of the greater stakes that it has in the multilateral trading system. But equally importantly, these figures reveal a qualitative jump in India’s familiarity and skill in using the system.

Third, and perhaps an even more convincing indicator, is India’s emergence as a power in the WTO, which has now successfully blocked the negotiations process. Theoretically, by virtue of the ‘consensus’ principle, all members of the organisation can block a negotiation. In practice, however, few developing countries have exercised such a veto effectively. This is because developing countries have fewer alternatives available to them in comparison to developed countries, and their threats to block are unlikely to be believed. Narlikar and Odell (2006) cite an ambassador from a small developing country on why developing countries find it difficult to block: ‘The US can block a consensus but not [my country].


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If you block, the entire weight of the organisation comes down on you. The problem is that on other issues I need others to be flexible. If I block on this issue, I am in trouble on the other issue.’ Indeed, India had attempted in the past to hold up the negotiations, as leader of the G10 coalition in the run-up to the launch of the Uruguay Round, and as leader of the Like-Minded Group in the run-up to the Doha Development Agenda. In both cases, however, members of the coalitions were gradually bought off with carrots and sticks. As the coalition collapsed, India found itself isolated in the endgame and ended up having to give in with few returns (see Narlikar and Odell, 2006; also refer to Box 15.3 on coalitions that India has been involved in). And it is this ability of India to now block the negotiations that has changed.

India, together with Brazil, was a leader of a coalition of developing countries —the G20—at the Cancun Ministerial Conference in 2003, which refused to succumb to pressures from the EU and the US until the demands of its members were met. Unlike former coalitions, this coalition did not collapse on the last ministerial conference, and the proceedings ended in stalemate. Since then, India’s presence is seen as crucial to any agreement, evidenced in its presence in all critical small-group consultations with developed countries. Not only does India see itself as having the ability to block negotiations and broker compromise, but it is also seen in this capacity by other countries: in speech after speech, the US and EU have acknowledged that a Doha deal will be impossible to achieve without India (with its ally, Brazil) on board. India’s dramatic move, from the margins of the GATT and early WTO to its core processes, needs explanation.

6.4 The Political Economy of Rising InfluenceInternational political economy offers us several useful insights into how India has managed to acquire influence in the WTO. The three mainstream explanations are explained as below —market size, the role of ideas, and domestic interest groups—before offering an alternative explanation in the next section.

6.4.1 The Lure of the Market The first explanation for India’s rising power in the WTO is simply in terms of market power. Several studies suggest a ‘global power shift in the making’ which is driven by the rapid economic growth (Hodge, 2004; also see Wilson and Purushothaman, 2003). And grown India has, at the rate of 7.5% from 2002 to 2006. In 1991, foreign direct investment (FDI) into India was less than US $2 billion; in 2004, FDI stock in India was near $39 billion (Chakraborty and Nunnenkamp, 2006). Based on such figures, India is projected to be the third largest economy in thirty years, preceded only by the US and China. India’s growing power in the WTO may well be seen as simply, or at least primarily, a function of this economic growth.

This is a plausible explanation, but an insufficient one. On closer inspection, one finds that India’s shares in world trade are still small: it ranked twentieth among world exporters in 2004, and fifteenth among world importers of goods, thereby occupying only 1.1% and 1.4% share of world merchandise exports and imports respectively. Its shares in services are higher—it is the eighth largest exporter of services —but even here, it’s actual market shares are limited to 2.6%, in contrast to the EU which 27.8% of the world’s markets in services exporters or US shares amounting to 20.7%. If the primary explanation of India’s rising status in the WTO were trade shares and economic weight, more serious contenders to similar status would be China, Mexico, and the East Asian newly industrialised countries (NICs). That India, along with Brazil, has come to acquire such a special position in WTO negotiations, must have an alternative explanation.

6.4.2 The Role of Ideas: Norms of LiberalisationAccording to this argument, past Indian failures in the WTO was simply a product of self-imposed and misguided preferences for protectionism. Guided either by the intrinsic rationality of economic and political liberalisation (e.g. Kahler, 1997) or driven by hegemonic imposition (e.g. Cox, 1994), all developing countries today—including India—show an increasing policy convergence across issue areas. This policy convergence also translates into a more proactive and effective participation in the WTO. We find a similar set of arguments with respect to India’s recent foreign policy successes in other issue areas as well.

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According to C. Raja Mohan, “In other words, India is doing better in the WTO because its negotiators and people have finally embraced processes of liberalisation, and this is reflected in more rational and conciliatory strategies within the WTO.”

A closer examination reveals that such arguments are flawed for two sets of reasons. First, far from abandoning its ‘prickly’ negotiation style in the WTO, India continues to be a very tough negotiator in multilateral trade. In fact, even though its negotiation strategies have evolved over the years, there remain some unmistakable continuity in negotiating style and substance. These are reflected in the continued and even more effective use of hard line negotiation strategies, commitment to coalitions involving developing countries, and even allowing considerable free-riding within such coalitions.

Second, even though India has a reasonably successful programme of economic liberalisation under way, this programme differs from the Latin American one in terms of its gradualism and restraint (Kohli, 2004; Jenkins, 1999). Further, normative commitment to this agenda is at best cautious at the government level and highly contested at the popular level. These reservations are reflected even in the negotiation positions adopted by the Congress government under Dr Manmohan Singh as Prime Minister and transcend party politics. It could be argued that this restraint is a result of the fact that the current government is a coalition government involving parties from the left. But over time, governments from the left to the extreme right have adopted very similar positions in the WTO.

Interviews with senior bureaucrats in the national capital and Geneva reveal that the government’s caution in trade negotiation reflects the popular suspicions of its populace. One mentioned India’s ‘strong colonial mindset’ (interview, Geneva, May 2003) where ‘the spirit of liberalisation has simply not seeped in’ (interview, New Delhi, April 2004). A trade diplomat’s eloquent statement captures the spirit of India’s domestic political culture nicely: ‘It is easier for our minister to come back home empty-handed as a wounded hero, rather than to come back with something after having had to make a compromise’ (interview, Geneva, May 2003). Could it however be argued that India’s successful emergence in the WTO is a product of neither a deep ideological conversion nor solely market size, but domestic pressure groups?

6.4.3 Domestic PoliticsAs per this set of explanations —again, well-rooted in international political economy—the persistence of caution in certain aspects of India’s trade policy, as well as occasional bursts of liberalisation in other issue areas, can be explained by examining the domestic political economy of particular interests. But this set of explanations, like the former two, finds only limited empirical support.

Decision-making on matters of trade policy in India takes places as a result of frequent consultation between the Indian mission to the WTO in Geneva and the Ministry of Commerce (MOC). The MOC in turn consults with various stakeholders, and receives inputs from the apex-level organisations such as the Federation of Indian Chambers of Commerce and Confederation of Indian Industry, as well as sector-specific organisations. The influence of business groups in trade policy making and trade negotiations is evident in certain niche sectors such as computing services. But all in all, particularly when compared against the role of interest groups in developed countries, the Indian state remains a remarkably effective gatekeeper for societal interests.

Evidence of the dominance of the state executive, particularly the Ministry of Commerce in the trade case, as the central agenda setter can be found in the stakeholder consultation process: the MOC decides whom to consult, when, and over what. Whilst maintaining links with relevant ministries over particular issue areas (such as the Ministry of Health over health services), it remains one of the most powerful bureaucracies in the country. India’s federal system further encourages disjointed decision-making, and thereby reinforces the dominance of the MOC. Parliamentary oversight exists, but remains limited (Sen, 2003). Theories of domestic political economy thus provide only minimal insights into explaining the successes or failures of India’s trade diplomacy.


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6.5 Institution-Specific Explanations: Learning to Negotiate SuccessfullyThe previous section illustrates that economic size/market potential provides only a necessary but insufficient condition for India’s rise in the WTO; meanwhile, theories of domestic political economy and the role of ideas have only limited value. In this section, I propose an alternative explanation using negotiation analysis: having met the minimal condition of economic size, India’s rise in the WTO can be best explained by analysing its negotiation process. Through decades of institutional learning and adaptation, India has successfully developed a set of negotiation processes that are particularly well suited to the WTO. We can operationalise the concept of negotiation process through several concrete variables. In this section, the focus is on the three: bargaining coalitions, negotiation strategies, and framing. Without having experimented with these aspects of negotiation process in the past, it is doubtful if India would have managed to become an indispensable member of the key negotiation and decision-making small groups within the organisation. It is also unlikely that it would have acquired the power to block in the organisation, and thereby emerged as one of a small group of countries that must be on board for any deal to go through.

6.5.1 CoalitionsAdmittedly, India’s participation and leadership of coalitions involving developing countries is not new; the fact that it was one of the few developing countries present in the Green Room meetings of the GATT was a product of this leadership. But neither this leadership, nor the entry that it facilitated into Green Room meetings, translated automatically into greater influence in the WTO. It is only much more recently that India has learnt to form effective coalitions that have overcome problems affecting the old coalition types. The new coalitions, often led by India, are hybrid coalitions, which combine features of two different sets of coalitions of the past —issue-based and block type—and also diverge from their predecessors.

Traditional bloc-type coalitions brought together a group of countries with a very diverse set of interests under the roof of a shared ideology or identity. Interests of members were log-rolled to constitute the collective agenda. Such coalitions proved especially prone to fragmentation, partly because outside parties were able to buy off members by appealing to their specific interests. The risk that the coalition might unravel if any concessions were made also led leaders to pursue a strict distributive strategy, show no flexibility in the negotiation process, and then collapse in the run-up to the endgame as individual members began to defect. The G10 coalition was a perfect example of this coalition type.

In contrast, coalitions involving India in recent times have often used a specific issue area around which to converge. At Cancun, for instance, and in subsequent DDA negotiations, the G20 coalition—with Brazil and India at its helm—has focused on agriculture.

It is not surprising that most of these coalitions have had a reasonably coherent agenda, particularly when compared with the bloc-type diplomacy of the 1980s.

Note however that recent coalitions also diverge considerably from their issue-based predecessors of the Uruguay Round. In the Uruguay Round, following the failures of the G10, and the successes of the Cafe au Lait and the Cairns Group, developing countries had shown a conversion (almost en masse with the exception of India) to so-called issue-based coalitions that transcended North-South boundaries. Many of these coalitions were formed on some highly specific subsectors, such as air transport services or the Friends of Services and the Food Importers Group (Narlikar, 2003). Coalitions dealing with specific subsectors often ended up facing the problem of limited collective weight. Other issue specific ones, however, also showed problems of sustainability. Particularly when they brought together countries with large, diversified economies, they also ended up becoming increasingly vulnerable to fragmentation. Recent coalitions of developing countries, including those in which India continues to act as leader, have overcome these problems by incorporating some ideational features as an additional cementing mechanism. As such, they combine features of the traditional bloc-type and issue-based coalitions. Even while focusing on a particular issue area and putting forth concrete proposals on it, they are often limited in membership to a subset of developing countries.

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The G20 provides one instance of such a coalition of developing countries focused on a specific issue: formed under Brazilian and Indian initiative on agriculture, the first proposal was signed by twenty members: Argentina, Bolivia, Brazil, Chile, China, Colombia, Costa Rica, Cuba, Ecuador, El Salvador, Guatemala, India, Mexico, Pakistan, Paraguay, Peru, Philippines, South Africa, Thailand, and Venezuela. Unlike the old bloc-type coalitions, the G20 was not simply a blocking coalition but one with a proactive agenda. Unlike the short-term issue-based coalitions of the Uruguay Round, however, it did not suffer from the problem of inadequate collective weight. It brought together most emerging powers—powers that we would expect to matter—with Brazil, China, India, Argentina, and South Africa as part of the core group. Further, by focusing on agriculture, it brought together countries with a shared understanding of the importance of this issue. As a result, the G20 has proven to be much more long-lasting than the issue-based coalitions of the Uruguay Round.

Based on its many and often difficult years of learning in the WTO, India now knows that when building coalitions, careful selection of membership and a coherent agenda are key steps towards avoiding future fragmentation. Additionally, if the collective agenda is built around an issue of considerable importance to all parties, it can provide an important method of offsetting bilateral deals that outside negotiating partners can offer. India recognises that if the weakest members of the group are provided some assistance from the leaders, the risk of their defection decreases. The G20 certainly attempts such strategies towards building cohesion, for instance by framing the agenda of the coalition so as to appeal to most of the members. Particularly Brazil and India showed their willingness to bear the costs of coalition formation, and to conduct research initiatives, but also to allow preferential market access to exports from the LDCs.

6.5.2 Choice of Negotiation StrategyThe choice of negotiation strategy depends at least as much on domestic political culture as well as the coalitions that the country might be involved in, as it does on the individual negotiators. In the Indian case, negotiators have used what is known as a strict distributive negotiation strategy, i.e. a strategy in which the actor has very high opening demands and refuses to make any concessions, and issued threats to the opponents. This strategy is not one that automatically generates successes. Coalitions that use such a strategy tend to attract divide-and-rule tactics from the outside party. Rather than giving in to the high demands of the coalition, the opponent prefers to buy off individual members of the coalition with bilateral deals. Should most coalition members defect in response to bilateral carrots and sticks, isolated members who continue to adhere to the hard line end up with few gains and only losses in the endgame (Narlikar and Odell, 2006). The G10 provides an instance of all these at work in an inflexible, bloc-type coalition, which collapsed in the endgame.

Interestingly, however, despite the risks involved, India has never quite abandoned its reliance on a strict distributive strategy; even more interestingly, the use of this distributive strategy has now begun to yield some pay-offs, including new allies within the developing world and rising power in the WTO. What explains the different outcomes resulting from the same negotiation strategy?

Even though India had relied on a ‘just say no’ strategy (Cohen, 2001), recent years have given considerably greater bite to this strategy. The answer lies in the growing coherence of the coalitions that these countries have led, as discussed in the previous subsection. Constituting coalitions that combine features of issue-based and bloc-type coalitions, and further preserving the loyalty of smaller members that might otherwise defect through intra-coalition deals, India led coalitions (such as the G20) but also others such as the G33, Africa Group, and LDC (Least Developed Countries) group show greater levels of stability. Coalitions that use a strict distributive strategy but collapse in the endgame end up with nothing, but coalitions that use a similar strategy while retaining their coherence have more possibilities before them. Depending on the nature of their demands, they can end up with the jackpot or deadlock in the negotiation.

For simplification, assume that the negotiation proceeds in two stages (e.g. a key Ministerial meeting could be seen as Stage One, and the negotiations following the meeting as Stage Two, as was the case at Cancun and thereafter). In Stage One, the coalition credibly demonstrates that all its members are committed to the collective agenda; through some of the mechanisms discussed in the previous subsection, such as defections in favour of smaller side-deals, are prevented. Following this demonstration at a Ministerial meeting, we come to Stage Two of the negotiation. If


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the outside party perceives the costs of meeting the unified demands of the coalition to be small in comparison to the costs of deadlock, the coalition ends up with a deal that is highly favourable to itself. In contrast, however, if the coalition’s demands are so high that meeting them will outweigh the costs of deadlock, then the negotiations end in impasse. This is especially the case if the coalition comprises developing countries, and is dealing with significantly powerful opponents, such as the EC or the US, which have valuable batnas (Best Alternative to Negotiated Agreement) that they can rely on should the multilateral negotiations fail. In either instance, however, if the coalition uses a strict distributive strategy in Stage One and does not collapse through defections from members, members cannot be easily ignored (Narlikar and van Houten, 2006).

India, along with Brazil and other developing countries, made some important progress in Stage One on the use of the strict distributive which is represented by the Cancun Ministerial. Since then, alone and via the coalition of the G20, it has stood firm in its refusal to cave in to the demands of the EU and the US on agriculture. Having demonstrated a credible commitment to its position on agriculture, it is now seen (along with Brazil) as a veto-player—a Doha deal would be impossible without India on board.

Interestingly, even after having made it into the informal great power club within the WTO, India has retained a big part of its traditional, Third World agenda rather than display socialisation into a conformist agenda in line with that of the developed world. For instance, following the Mini-Ministerial in November 2005, Minister Kamal Nath stated: ‘We have to ensure that whatever deal is re-calibrated to come up in Hong Kong meets the stated objectives of this Round. The test of this Round is whether it benefits those who earn a dollar a day or $5,000 a month’.

6.5.3 FramingBesides learning to build strong and long-lasting coalitions, and using negotiation strategies more effectively, the third explanation to rising Indian influence in the WTO lies at the ideational level. India, through participation in the organisation over time, has learnt to frame its demands in terms that appeal to particular constituencies (including other negotiators, particular constituencies within the opposing states), fit well within the institutional context, and also exploit the international context to its advantage. Such framing can be as strategic as it might be driven by ethical concerns. Amongst methods used to legitimise the trade discourse, the most commonly used one is that of fairness.

In the first, almost forty, years of its dealings with the WTO, India led developing countries in espousing a notion of fairness that emphasised the importance of equity rather than legitimacy, and outcomes rather than process (Franck, 1996; Narlikar, 2006). In fact, behind the refusal of developing countries to engage on a reciprocal basis within the GATT was a firm commitment to an equity-based notion of fairness; until the existing inequalities (some of which were seen to be reinforced by the institution of the GATT) were corrected, they could not be expected to make concessions to developed countries. This idea was borne out most clearly in the 1954 statement of Sir N. Raghavan Pillai, the Indian delegate to the GATT: ‘Equality of treatment is equitable only among equals. A weakling cannot carry the same load as a giant’ (cited in Kock, 1969: 289). Concretely, these demands for greater equity in the GATT were borne out in the call for special and differential treatment for developing countries that exempted them from the rules of liberalisation that underlay the GATT system. Whether the logic behind such framing tactics was strategic, or a genuine ethical commitment to greater equity, is difficult to determine given that we see such a perfect correspondence between demands for GATT exemptions and the interests of developing countries who pushed for this agenda. They generated only limited successes.

Following the launch of the Uruguay Round, many developing countries continued to appeal to fairness in the GATT, but now placed greater emphasis on fairness of process and legitimacy rather than equity. This change may have been partly a result of institutional learning within the GATT (and the failures of old Third World coalitions and distributive strategies) or a result of changes at home where governments, under the brunt of the debt crisis or through a genuine enlightenment, began increasingly to give up old protectionist models of growth in favour of liberal economic models. Underlying this new ideological frame was a greater willingness to engage in reciprocal trade liberalisation. But the gains from this pursuit of fairness in terms of legitimacy of process rather than distributive justice were few.

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In contrast, India’s unbroken suspicion of reciprocal liberalisation was vindicated, and a fairness discourse emphasising issues of equity returned to prominence with the formation of the WTO and the recognition that the promises of the Uruguay Round had remained unfulfilled for developing countries.

After the formation of the WTO, when all the costs and limited benefits of implementing the Uruguay Round Agreements came to the fore, many developing countries recognised that even participating in the GATT in accordance with its own norms of liberalisation, and having adopted notions of fairness framed as equal participation and process-based legitimacy, had yielded few gains. They updated their frames accordingly. For many developing countries, including the larger ones among them, this revision was a reversal from their discourse in the late 1980s and early 1990s; for India however it was a logical continuation.

The new frame of fairness now focused on both the process and the substance of the negotiations. First, at the Seattle Ministerial Conference, the African Group of countries and a group of Latin American and Caribbean countries issued statements denouncing the process of negotiation from which most developing countries had been systematically excluded. The India-led Like Minded Group took up these issues as part of an agenda for institutional reform of the WTO that included greater transparency of meetings, and open invitations to which members could self-select participation (interviews, Geneva, May 2003).

Second, in terms of substance, the Like Minded Group also became one of the first coalitions to bring equity back onto the agenda (Narlikar and Odell, 2006). It focused on the so-called implementation issues and argued that there was no question of launching a new round until the imbalances of the Uruguay Round were corrected. It brought back the demand for expanded Special and Differentiated Treatment (SDT) arrangements that were of special relevance for its LDC members, and was accompanied in this call by the LDC grouping. While making these demands, negotiators from the group repeatedly referred to how they had kept their end of the Uruguay Round bargain, but the developed countries had not (interviews, Geneva, summer 2003). Whilst appealing to these notions of fairness, a Third World tenor was evident in Indian claims. In subsequent negotiations, India has continued to adhere to framing its demands with reference to fairer treatment for all developing countries.

Some developing countries had protested against certain SDT provisions for the LDCs at Hong Kong; India negotiators pointed out in private interviews that irrespective of costs to country, India’s longstanding position as a leader of the developing world would make it impossible for them to present any opposition to such proposals (interviews, New Delhi, January 2006). Besides coordinating positions across coalitions around ministerial conferences, and also supporting demands for PTAs by LDCs (as discussed in the previous subsections), India has provided technical assistance and preferential market access to LDCs in the run-up to the Hong Kong Ministerial and thereafter.

India’s willingness to adhere to a discourse of fairness, and even bear costs for its weaker allies provides an interesting contrast against India’s willingness to engage with the US at the cost of other Third World allies on nuclear matters. However, this schizophrenia becomes less of a puzzle when we recall that India’s rise in the WTO has come on the strength of its claim to leadership of several developing countries over time. Were India to abandon this informal constituency, its place in the various small-group meetings would become much more suspect. In contrast, India has developed its nuclear programme indigenously, and its nuclear diplomacy, particularly after the 1998 tests, has had little support from other developing countries. Its nuclear deal with the US is not a result of its leadership of the NAM, but a product of its effective diplomacy despite isolation from the North and South. As a result, the India that pays such homage to questions of fairness and traditional Third World alliances in the WTO is also the India that goes it alone when negotiating with the US on nuclear technology.

6.6 The Burden of Rising PowerIndia is now in an indisputable position of central importance in the negotiation process. But at this point, an important caveat is in order. The power to block whilst an important step towards reaching one’s foreign policy goals, does not necessarily translate into an ability to reach one’s preferred outcomes.


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In terms of actual outcomes, India’s power to say no has not produced the desired effects. Negotiations were ‘suspended’ in July 2006—an unexpected event for most negotiators and observers who had predicted a compromise in the form of a ‘Doha-lite’ — and one that has postponed any gains that developing countries (including India) would have derived from the negotiation, besides undermining the credibility of the multilateral trading system. The deadlock was at least partly a result of the refusal of India to make any concessions even at this late stage of the negotiation.

The Indians did not deny these accusations, suggesting that the deadlock was a result of missing concessions rather than just misperceptions of each others’ offers. Minister Kamal Nath is reported to have said at a press conference on 27 July: ‘If the developed countries want to view this round as a market access round for themselves, which is going to impinge upon the livelihood of our farmers and is going to hurt our industry, then we made very clear there is and can be no further movement in these negotiations.

Negotiations were resumed in early 2007, but an agreement has been elusive so far. It is further worth noting that though India has claimed to speak on behalf of the developing world (referring in press conferences to not just the G20 but the bigger set of developing countries), it now risks being seen as the part of the G6 that failed to reach agreement and imposed the costs of failure on the poorest of the world.

For instance, the Third World Network reports: ‘In the corridors, some developing countries were wondering how six WTO members could decide for the whole membership that the entire set of Doha talks should be suspended’ (Third World Network, 25 July 2006).

The important lesson that emerges from these recent experiences is that the use of a strict distributive strategy, when accompanied by strong coalitions and smart framing devices, can get developing countries a critical role in the process. This is no small achievement. But to use this position effectively to achieve outcomes, a strict distributive strategy must be accompanied by some integrative negotiation strategy in the second stage. Resistance through strong coalitions is crucial in establishing the credibility of the leadership of a country/group of countries. But effective leadership—defined as success in achieving outcomes favourable for one’s self and one’s coalition—requires a willingness to make at least some compromise after having proven one’s credibility as a powerful force. The pathway to real power— the power that goes beyond the power to block and actually facilitates outcomes that go in one’s favour— lies in being able to use both these strategies with equal skill.

It is also worth recalling the schizophrenia in India’s foreign policy. In the light of India’s WTO encounters, its continued proclivity to ‘just say no’ became clearer. India has come to develop the potential of reformed bloc-type coalitions in the WTO after years of learning and adaptation within the institution. In contrast, the limitations of the NPT have driven home a difference lesson to India, where the solution lies in bypassing the regime and developing parallel initiatives at a bilateral level. Admittedly, this is a tough balancing act to keep up for the diplomat. But for analytic purposes, the important point to note here is that India’s instrumentality has been very institution and regime-specific. Rather than act consistently as a status-quo or a revisionist power, a challenger of the system or a conformer, India acts differently across regimes (Narlikar and Hurrell, work in progress).

6.7 Let Us Sum UpThree sets of conclusions offered after studying the rise of India in WTO is:

First, we find that India’s rise in the WTO is a product of negotiating behaviour learnt by engaging with the • institution. Economic size provides a necessary but insufficient condition; other traditional explanations for India’s rise in the WTO including the role of domestic interests and ideational change were found to be limited.Second, pathways to power tend to be regime specific; in fact, our case has emphasised the importance of • behaviours that India has learnt by operating within the very specific institutional context of the WTO. As such, there is no reason to assume that its coalitions, negotiation strategies, or framing tactics in the WTO would translate automatically into other issue areas; indeed it is unsurprising that India’s foreign policy is schizophrenic given that pathways to power vary across institutions. Placed against this light, a general categorisation of rising powers into BRICs and other such groupings becomes less meaningful; a more useful understanding would be provided by an examination of rising powers in different regimes and institutions.

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Third, this chapter has analysed the process whereby India has managed to acquire its current influence in • the WTO. However, we have also seen in this chapter that the power to say no does not necessarily transform into the power to achieve one’s preferred outcomes. India now finds itself in a position where it has credibly established itself as a major player in the WTO; even the most powerful members of the organisation recognise that without India on board, no agreement will be possible. It is still, however, to use this power to more positive ends whereby it might achieve outcomes that go in its favour. By proposing a sequence of negotiation strategies, this chapter has suggested a way out of this dilemma.

6.8 Key pointsIndia’s emergence as a major player in the WTO is reflected in its participation in the negotiation processes • of the organisation, its use of the Dispute Settlement Mechanism, and above all its proven ability to block the negotiations.Theories of domestic interest groups and ideational change do not explain India’s rise in the WTO. Economic • size provides a necessary and minimal condition for acquiring veto-player status, not a sufficient one.India’s effective use of the negotiation process, learnt after decades of participation within the GATT and the • WTO, provides the central explanation for India’s influence in this multilateral forum.Negotiation process’ has been operationalised in this chapter using three variables: bargaining coalitions, • negotiation strategies, and framing.284 Amrita NarlikarThis learning is institution-specific, which also explains the apparent schizophrenia in Indian foreign policy • when we compare the issue areas of multilateral trade versus nuclear policy.The question of which kinds of coalitions, strategies, and framing mechanisms have facilitated India’s rise, and • thereby suggest processes that other rising powers can adopt, can be generalised as follows:Hybrid coalitions, which combine features of bloc-type and issue-based coalitions show greater stability and • effectiveness.A strict distributive strategy can improve the credibility of the coalition if and only if the coalition does not • collapse in the endgame.Framing the issue to fit the culture of the organisation (e.g. fairness conceptualised as legitimacy of process as • well as outcomes) can assist the state in legitimising its demands.The power to block does not automatically translate into the power to achieve one’s preferred outcomes. In fact, • some of the strategies used to achieve veto-player status, such as a strict distributive strategy in the first phase of the negotiation, can result in deadlock and thereby pareto-inferior outcomes. To achieve an agreement in one’s favour, the veto-player must learn to use an integrative strategy in the second stage of the negotiation.


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SummaryThe economic and military indicators of India’s rise have been accompanied by its emergence as a seasoned, • proactive, and institutionally engaged player across international regimes.India is seen as one of the most serious contenders for a permanent seat in the UN Security Council.• The US–India deal on civilian nuclear cooperation was approved by the US Congress in December 2006• The rise in India’s use of the DSM is partly a function of the greater stakes that it has in the multilateral trading • system.International political economy offers us several useful insights into how India has managed to acquire influence • in the WTO.The first explanation for India’s rising power in the WTO is simply in terms of market power.• Decision-making on matters of trade policy in India takes places as a result of frequent consultation between • the Indian mission to the WTO in Geneva and the Ministry of Commerce (MOC).India’s federal system encourages disjointed decision-making, and thereby reinforces the dominance of the • MOC.Traditional bloc-type coalitions brought together a group of countries with a very diverse set of interests under • the roof of a shared ideology or identity.Even while focusing on a particular issue area and putting forth concrete proposals on it, they are often limited • in membership to a subset of developing countries.In the Indian case, negotiators have used what is known as a strict distributive negotiation strategy, i.e. a strategy • in which the actor has very high opening demands and refuses to make any concessions, and issued threats to the opponents.India led coalitions (such as the G20) but also others such as the G33, Africa Group, and LDC (Least Developed • Countries) group show greater levels of stability.If the outside party perceives the costs of meeting the unified demands of the coalition to be small in comparison • to the costs of deadlock, the coalition ends up with a deal that is highly favourable to itself.Some developing countries had protested against certain SDT provisions for the LDCs at Hong Kong.• India’s willingness to adhere to a discourse of fairness, and even bear costs for its weaker allies provides an • interesting contrast against India’s willingness to engage with the US at the cost of other Third World allies on nuclear matters.India’s emergence as a major player in the WTO is reflected in its participation in the negotiation processes • of the organisation, its use of the Dispute Settlement Mechanism, and above all its proven ability to block the negotiations.A strict distributive strategy can improve the credibility of the coalition if and only if the coalition does not • collapse in the endgame.The power to block does not automatically translate into the power to achieve one’s preferred outcomes.•

ReferencesNarlikar, A, 2012. India and the World Trade Organization• [pdf] Available at: <http://www.oup.com/uk/orc/bin/9780199215294/smith_ch15.pdf> [Accessed 14 May 2012].SAAG. • World Trade Organization (WTO) & India [Online] Available at: <http://www.southasiaanalysis.org/%5Cpapers19%5Cpaper1879.html> [Accessed 14 May 2012].WarwickCommission• . The future of the WTO from an Indian perspective [Video online] Available at: < http://www.youtube.com/watch?v=HZFt4DeoKv4> [Accessed 14 May 2012].IntlOrgProject. • World Trade Organization (WTO) [Video Online] Available at: <http://www.youtube.com/watch?v=X-ptS6Ln_ss> [Accessed 14 May 2012].Gupta, K.R., 1994. • GATT Accord and India: A Critical Analysis of Results of the Uruguay Round of Multilateral Trade Negotiations and Their Implications for India. Atlantic Publishers & Dist.

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Macrory, P.F.J., Appleton, A.E., and Plummer, M.G., 2005. • The World Trade Organization: Legal, Economic and Political Analysis. Springer.

Recommended ReadingVasudeva, P.K., 2000. • India and World Trade Organisation: Planning and Development, APH Publishing.Thakur, A. K., and Indian Economic Association, 2007. • WTO and India, Deep and Deep Publications.Dr. Nigam, R. L., 2006. • WTO and India. Max Ford Books.


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Self AssessmentWhich of the following countries is one of the strong contenders for a permanent seat in the UN Security 1. Council?

Brazila. Chinab. Russiac. Indiad.

India was a founding member of the ___________ movement.2. Aligneda. G77b. G10c. Non-alignedd.

When was the first meeting of Non Aligned movement scheduled?3. 1950a. 1955b. 1960c. 1965d.

When was the programme of economic liberalisation launched?4. 1991a. 1990b. 1992c. 1995d.

Which of the following is not one of the three sets of indicators pointing to India’s rising power in the WTO?5. Participation in the negotiation processesa. Effective use of the dispute settlement mechanismb. International institutional contextsc. Proven ability to block the negotiations until certain demands are metd.

Which of the following is not one of the mainstream explanations of the rising influence of India?6. Market sizea. The role of ideasb. Market technologyc. Domestic interest groupsd.

Which of the following is not one of the variables to understand negotiation process?7. Coalitiona. Framingb. Formalisingc. Choice of negotiation strategyd.

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A strict __________ can improve the credibility of the coalition if and only if the coalition does not collapse 8. in the endgame.

distributive strategya. coalitionb. framingc. negotiation strategyd.

India is now in an indisputable position of central importance in the __________ process.9. framinga. marketb. formalisingc. negotiationd.

_____________ is defined as success in achieving outcomes favourable for one’s self and one’s coalition.10. Effective leadershipa. Coalitionb. Distributive strategyc. Formalisingd.


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Chapter VII

International Nongovernmental Organisations

Aim


introduce non governmental organisation•

elucidate the types of NGO•

explain the range of NGO activities•

Objectives


recognise role of NGO•

describe the importance of NGO•

elucidate NGO and extractive sector•

Learning outcome


understand types of engagement of NGO with companies•

identify the key NGO player•

understand NGO accountability•

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7.1 IntroductionThe term, ‘non-governmental organisation’ or NGO, came into use in 1945 because of the need for the UN to differentiate in its Charter between participation rights for intergovernmental specialised agencies and those for international private organisations. At the UN, virtually all types of private bodies can be recognised as NGOs. They only have to be independent from government control, not seeking to challenge governments either as a political party or by a narrow focus on human rights, non-profit-making and non-criminal. As of 2003, there were reportedly over 20,000 NGOs active in Iran. The majority of these organisations are charity organisations, and thus would not fall under the category of development-oriented NGOs. In this document the term NGO is primarily used for organisations other than charitable organisations. The structures of NGOs vary considerably. With the improvement in communications, more locally-based groups, referred to as grass-roots organisations or community based organisations, have become active at the national or even the global level. Increasingly this occurs through the formation of coalitions with other NGOs for particular goals, such as was the case in the case of the Bam earthquake for example.

A civil society is composed of three sectors: government, the private sector and civil society, excluding businesses. NGOs are components of social movements within a civil society. In the case of Iran, where civil society is not yet mature, NGOs can have an important role in strengthening the foundations of an emergent civil society. The issue of independence is an important one in the credibility of an NGO. It is hard for NGOs not to come under any governmental influence. Individual governments do at times try to influence the NGO community in a particular field, by establishing NGOs that promote their policies. This has been recognised by quite common use of the acronym GONGO, to label a government-organised NGO. Also, in more authoritarian societies, NGOs may find it very difficult to act independently and they may not receive acknowledgment from other political actors even when they are acting independently. On the other hand, development and humanitarian relief NGOs need substantial resources, to run their operational programs, so most of them readily accept official funds. It is thus important for the NGO to have transparency in its operations and goals so that its relationship.

7.2 Types of NGONGOs can be distinguished into two groups: Operational and advocacy NGOs. This may be interpreted as the choice between small-scale change achieved directly through projects and large-scale change promoted indirectly through influence on the political system. Operational NGOs have to mobilise resources, in the form of financial donations, materials or volunteer labour, in order to sustain their projects and programs. This process may require quite complex organisation. Finance obtained from grants or contracts, from governments, foundations or companies require time and expertise spent on planning, preparing applications, budgeting, accounting and reporting. Major fund-raising events require skills in advertising, media relations and motivating supporters. Thus, operational NGOs need to possess an efficient headquarters bureaucracy, in addition to the operational staff in the field.

Advocacy NGOs will carry out much the same functions, but with a different balance between them. Fund-raising is still necessary, but on a smaller scale and it can serve the symbolic function of strengthening the donors’ identification with the cause. Persuading people to donate their time is necessary, but, in addition to a small number of people giving a great deal of time, it is also necessary to be able to mobilise large numbers for brief periods. External donors may not impose onerous administrative burdens, but supporters still have to be supplied with information on an efficient regular basis. Major events will aim to attract favourable publicity rather than raise funds. Therefore, despite their differences, both operational and advocacy NGOs need to engage in fund-raising, mobilisation of work by supporters, organising special events, cultivating the media and administering a headquarters. Only the defining activities – implementing projects or holding demonstrations – serve to differentiate them. In reality, the distinctions are not as sharp as the labels suggest. Operational NGOs often move into advocacy when projects regularly face similar problems and the impact of the projects seems to be insufficient. All the large development and environment operational NGOs now run some regular campaigns, at least by supporting campaigning networks. Similarly, advocacy NGOs often feels they cannot ignore the immediate practical problems of people in their policy domain. Human rights NGOs and women’s NGOs end up having programs to assist the victims of discrimination and injustice.


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7.3 Range of NGO activitiesIn the case of Iran, NGOs can have an active role in the following areas:

Community health promotion and educationContraception and intimacy education• General hygiene• Waste disposal• Water usage• Vaccinations• Youth counselling services•

Emerging health crisesHIV/AIDS education and support• Hepatitis B education• Drug Addiction recovery•

Community social problemsJuvenile crimes• Runaway girls• Street Children• Prostitution•

EnvironmentalSustainable water and energy consumption education• Keeping mountains and forests clean•

EconomicMicroenterprises and Micro-loans• Skill training (Computers, technician training, catering services, clothing and textile, and so on.)• Product promotion and distribution (Bazaars)• Cooperative creation• Financial consulting• Career services and job search assistance• Development• School construction• Infrastructure construction• Cultural centre construction and operation• Agriculture and Aquaculture expert assistance•

Women’s issuesWomen and Children’s Rights• Battered women assistance centre• Group therapy for sexually abused women• Counselling hotlines (telephone-based counselling services for women)•

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Legal assistance to women• Literacy drives•

7.4 The Growing Role and Importance Of NGOsOver the past two decades the processes of democratisation, economic liberalisation and technological transformation have led to a dramatic growth in the number, diversity, reach and influence of civil society organisations and networks. These range from transnational coalitions, international non-governmental organisations and global trade unions, to millions of community-based initiatives, supported by unprecedented communications capacity via the Internet and global media. They include social and political movements, indigenous peoples’ groups, youth organisations, women’s groups, environmental, human rights and development organisations, consumer groups, faith based initiatives, professional associations, trade and industry organisations, chambers of commerce, philanthropic foundations, universities, policy think-tanks, and scientific and research institutes. They operate individually and collectively at all levels of society and have an impact on many aspects of peoples’ lives, ranging from their political and civil rights and obligations, to economic, social and cultural rights and opportunities.

Dr Lester M. Salamon, Director of the Centre for Civil Society Studies at Johns Hopkins University has argued that, “We seem to be in the midst of a ‘global associational revolution’ - a massive upsurge of organised voluntary private activity, of structured citizen action outside the boundaries of the market and the state, that I am convinced will prove to be as momentous a feature of the late 20th Century as the rise of the nation-state was of the late 19th Century.

The growing reach and scale of civil society organisations, referred to as NGOs undertake a wide variety of activities at the community, national, regional and global level. These activities include the following:

Advocacy, Analysis and Awareness Raising – acting as a voice for people both on a representative and self-• appointed basis; researching, analysing and informing the public about issues; mobilising citizen action through media campaigns and other forms of activism; and lobbying business leaders and policymakers. Brokerage – acting as an intermediary between different sectors and groups.• Conflict resolution – acting as a mediator and facilitator.• Capacity Building – providing education, training and information.• Delivery of services – operational delivery of essential humanitarian, development and/or social services.• Evaluation and Monitoring - serving as a ‘watchdog’ or third party / independent ‘auditor’’, invited and uninvited, • of government and corporate performance, accountability and transparency.

As the Carnegie Commission on the Prevention of Deadly Conflict pointed out in its 1997 report, “Non-governmental organisations at their best provide a vast array of human services unmatched by either government or the market, and they are self-designated advocates for action on virtually all matters of public concern.

Although there is great variation between different types of industry sector, company and country, as well as different types of NGO, in a growing number of cases the activities of NGOs are starting to influence corporate reputation, risk management, costs, revenues and social licence to operate. NGOs are also influencing the emergence of new business models, new corporate accountability mechanisms and institutional structures, non-traditional cross-sector alliances, and changes in the public policy environments or framework conditions under which certain industries operate.

Campaigning NGOs and trade unions, in particular, have played an important role in changing societal expectations of business by influencing the views and choices of consumers, employees, investors, regulators, students, and the general public. Although public campaigns focused on corporations have been a longstanding feature of democratic and open civil societies, in the past decade they have grown markedly in scope, number and impact as a result of factors such as the increased reach of the global media and Internet, growing public awareness of issues beyond peoples’ own immediate community or country, and the growing reach, influence and power, both real and perceived, of business itself.


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As a result of these changing societal expectations of business, many companies are facing increased pressure from different stakeholder groups to demonstrate good performance not only in terms of their financial results, market growth and competitiveness, but also in terms of their corporate governance, and their ethical, social and environmental performance. In response to this pressure, the concepts of corporate responsibility and corporate citizenship are moving beyond the boundaries of legal compliance, public relations and ‘nice-to-do’ philanthropy, to become more central to corporate strategy, risk management and accountability.

From the perspective of corporate accountability - at least for companies operating in open, democratic societies - business is increasingly held to account not only in the courts of law, but also in the court of public opinion. A ‘court’ that is fundamentally shaped by the media and NGOs, ranging from sophisticated global campaigns to grassroots activism. There are a growing number of examples in industry sectors ranging from oil and mining to food and pharmaceuticals, in which companies have faced media campaigns or litigation in which their operations in question have been in compliance with relevant national or international law, but they have been unable to gain sufficient trust or legitimacy from the general public or key stakeholder groups to sustain these operations in an effective and profitable manner.

Cause célèbre examples where supportive legal opinion or scientific evidence has beeninsufficient to sway public opinion in favour of a particular company’s or industry’ actions include: the Greenpeace campaign in 1995 against the planned disposal of Shell’s Brent Spar oil platform; the consumer and environmental campaign against Monsanto’s introduction of genetically modified products in Europe in the 1990s; and the HIV/AIDs activists campaign against a group of pharmaceutical companies that initiated a court action against the South African government in 2001 on issues relating to intellectual property rights and the importation of generic HIV/AIDs medicines. As Professor John Ruggie and Beth Kytle said, Corporate Social Responsibility as Risk Management, “Even where companies break no local laws, they may stand in violation of their own self-proclaimed standards or be accused of breaching international community norms.

The ‘trust premium’ enjoyed by NGOs has also been a key factor in shaping public expectations of the private sector in recent years. In many public opinion surveys NGOs are ranked as the most trusted institutions in society and they usually dominate issues such as human rights, health and the environment in terms of trust. The 2006 Edelman Trust Barometer, for example, which tracks the attitudes of nearly 2,000 opinion leaders in 11 countries around the world, concluded that, “Trust in non-governmental organisations (NGOs), which have consistently been the most-trusted institution in Europe during the six years that the survey has been conducted, has steadily increased in the U.S. (up from 36% in 2001 to 54% in 2006); and increased significantly in the last 12 months in Canada and Japan. NGOs are now the most-trusted institution in every market except Japan and Brazil. The widespread rise in trust of NGOs has now extended to Asia, especially in China, where ratings went from 36% to 60% in the last 12 months.

During the same period, trust in government and business has either decreased or remained low in many countries, clearly not helped by a variety of corporate governance crises, growing public suspicion of the power of ‘big business’, and a series of high profile public and private corruption and ethics scandals. In January 2003, for example, the World Economic Forum and Environics released a global public opinion survey that asked 34,000 people across 46 countries to rank the trustworthiness of 17 different types of institutions, to “operate in the best interests of our society.

While an average 59% of respondents ranked NGOs highly, business and government were among the least trusted, and showed a significant and widespread decline in trust compared to previous surveys.

In summary, over the past two decades NGOs have become a force to be reckoned with. Although there has been a severe government backlash against civil society organisations and civic activism in a number of countries, ranging from Russia to Zimbabwe, there can be little doubt that overall these organisations have an increasingly substantial impact around the globe, with increasingly large amounts of resources at their disposal, and increasingly high levels of trust among the public.

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At the same time, NGOs face growing scrutiny and pressure from the media, regulators, companies and each other, to better account for both the impact and integrity of their own activities.

Accountability, a leading international non profit institute working with business, civil society and the public sector to promote new tools and approaches for ensuring that organisations in all sectors are held to account for their impacts on people and the planet, state, “Civil society organisations are growing in number and influence. From volunteers in poor communities to professional multinational aid agencies, they provide services, raise awareness and influence public policy. As with any organisation, better accountability means better performance – good intentions do not make NGOs immune from the need to understand and learn from their stakeholders.

James McGann and Mary Johnstone at the Foreign Policy Research Institute describe the issue as follows, “the increasing power of NGOs has prompted scholars, governments, and the media to raise questions about the roles and responsibilities of these new global, non-state actors. Fundamental questions include: how many NGOs actually exist, and what are their agendas? Who runs these groups? Who funds them? And, perhaps most significantly, to whom are NGOs accountable, and how and what influence do they actually have on world politics?”

7.5 NGOs and The Extractive SectorOne of the most interesting institutional developments and social trends over the past decade has been the evolving relationship between NGOs and the corporate sector. Nowhere has this evolution been more multidimensional, intense and strategic than in the natural resource sector, particularly in the case of non-renewable resource extraction: oil, gas and mining. Broad reasons for this include the following:

Large ‘footprint’ playersRegardless of where they operate, be it in the United States or developing economies, energy and mining operations have a large ‘footprint’ in terms of the extent and intensity of their physical, social, economic, environmental and often political impacts. For NGOs – be they operational or campaigning NGOs – companies with major impacts on society and the environment present an obvious target for either campaigning against or working with, in order to effectively address difficult socio-economic and/or environmental challenges. As Mining Watch Canada describes it, “Mining is an extremely high stakes game for public policy, finance markets and most importantly communities and ecosystems.

Complex and problematic operating environmentsSince they need to go where the resources are, energy and mining companies often operate in situations that would not normally attract private or foreign investment - situations characterised by highly complex and problematic governance and/or physical conditions, and all too often high levels of poverty and/or inequality. While some of these conditions are within the control or influence of the company and its business partners, many of them are not. In either case the companies, especially publicly quoted ones, still represent an important lever for NGOs focused on addressing such conditions.

Generation of large public revenuesSuccessful oil, gas and mining projects generate large public revenue flows in some cases in a relatively short period of time. Even in industrialised, democratic countries, the use and allocation of these revenues is an issue of contestation between different levels and parts of government, and can also lead to economic ‘boom and bust’ conditions, which can harm local livelihoods and communities. In areas of weak governance the situation is even more challenging. These revenues can at best overwhelm the capacity of governments to efficiently and responsibly allocate them to sound development purposes, and at worst may be blatantly used for purposes that are directly inimical to the best interests of the country’s citizens – and even directly against the human rights of these citizens.

As a 2006 study, Managing Mineral Resources through Public-Private Partnerships, by the Woodrow Wilson School of Public and International Affairs concluded, “Evidence across many developing countries, particularly those in sub-Saharan Africa, shoes that high dependence on mineral and other natural resource endowments is correlated with an increased incidence of poor governance, underdevelopment, human rights abuse and violent conflict – a phenomenon otherwise known as the “Resource Curse.


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Much has been researched and written about the so-called ‘Resource Curse’ and “Dutch Disease’ (the distortion of national economies or decline in manufacturing resulting from heavy dependence on natural resources, sharp surges in natural resource prices or large financial inflows). Yet, not enough has been done in a practical sense to prevent it happening and to find viable solutions on-the-ground. Once again, NGOs with an interest in tackling poverty, corruption and bad governance look to major energy and mining companies both as protagonists and potential partners.

NGO ability to access and influence major publicly-quoted companiesLinked to all of the above, depending on the situation in question, NGOs aiming to bring about change or operate effectively in difficult governance and physical environments, often find senior corporate decision-makers easier to gain access to and influence than government ministers, even in many democracies, let alone less-democratic countries. This is especially the case with large publicly quoted companies that have public reputations and shareholder pressures to worry about.

The power of the major energy and mining companies relative to their state owned counterparts (which are much harder for NGOs to gain access to) is often perceived to be greater than it actually is. An August 2006 article in the Economist magazine lists the world’s largest oil and gas firms by proven reserves – Exxon Mobil the largest non-state controlled company ranks only 14 on the list.

Despite this reality, large, publicly-quoted energy and mining companies are still very influential in shaping industry trends and behaviours, especially on a collective basis. As such, working either with or against such companies, and sometimes doing both simultaneously, is an effective strategy for many campaigning and operational NGOs.

7.6 Key Types of EngagementNGO engagement with the extractive sector ranges from the instigation of major lawsuits, shareholder activism and media campaigns targeted against specific enterprises or the sector-at-large, to community-level partnerships and traditional philanthropic arrangements, to the emergence of sector-wide accountability mechanisms and cooperative agreements.

At the risk of over-simplifying a highly varied and complex set of relationships it is possible to identify four major categories of engagement between NGOs and extractive sector companies:

Confrontation• Communication• Consultation• Cooperation•

These different categories are not mutually exclusive and often the same NGO and same company will be engaged with each other in several different ways. Equally, there can be enormous variation within each category in terms of the degree, intensity and operational implications of the engagement. Confrontational modes of engagement, for example, can range from major lawsuits to a local media campaign, or from a labour strike or community conflict that slows down operations to one that closes operations. Likewise, cooperation can range from working together on a specific project in a specific community to a global industry-wide alliance addressing a complex and strategic issue such as revenue transparency, corruption, biodiversity or climate change.

All four modes of engagement can be relevant at the local project or community-level, the national level or internationally, and they can be relevant for individual NGO engagement with an individual company, or collective types of engagement involving groups of NGOs and/or companies. Notwithstanding these caveats, the four broad modes of engagement are summarised in Table 7.1.

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Mode of engagement Types of activity Examples

ConfrontationAntagonistic relationships

Lawsuits, litigation and other legally-driven or supported actions; Media and other campaigns targeted at the reputational or moral liability of companies; Shareholder resolutions or campaigns targeted at major investors or bankers to disinvest from specific projects and/or companies

Alien Tort Claims Act – i.e. cases against Shell, ExxonMobil, Shell, RioTinto, Chevron etc. No Dirty Gold; Publish What You Pay; Blood Diamond campaigns; Global Mining Campaign network Growing number of case

CommunicationOne way information flows

Regular reporting and/or information availability from the companies or from specific projects. Site visits for NGOs and community leaders. Research studies by NGOs on extractive sector orspecific projects

Corporate sustainability reporting processes Increasingly commonplace Oxfam ‘Mining Ombudsman Project’; Over 65 NGO research reports on extractive sector projects

ConsultationTwo-way dialogue and processes to listen to and incorporate different views and feedback into organisational decision-making and policy making

Community or project- level consultation structures Strategic, industry-wide or national consultation mechanisms

Many energy and mining projects The Mining Minerals and Sustainable Development review; the World Bank’s Extractive Industries Review; the ICMM Resource Endowment Initiative; Peru’s Mining Roundtable; the Canadian Roundtables on the Extractive Industries; South Africa’s Mining Charter; Framework for Responsible Mining project


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Co-operationFormal agreements to work together in a mutually supportive manner

Strategic philanthropy and community investment initiatives that harnesses core corporate competencies and aligns with core business interests i.e. enterprise, science and technology education; environmental education; health etc. Joint research projects, tools development, capacity building or training Global Trade Union Framework Agreements Collaboration on more strategic issues, industry standards and public policy at a national, regional or industry-wide level

Many extractive companies and NGOs are creating strategic alliances – often with a focus on local economic development; education and training and environmental issues. ICMM’s Resource Endowment project; UN Global Compact Policy Dialogues; International Alert’s Conflict Impact Assessment Tool; NGO capacity building programs Over 10 ICEM agreements Extractive Industries Transparency Initiative; Kimberley Process; Voluntary Principles; International Cyanide Management Code.

Table 7.1 The four broad modes of engagement

7.7 Key NGO PlayersThere are probably a greater variety and number of NGOs working with and/or campaigning against the extractive sector than any other industry sector. Some of these have been created with a dedicated focus on the extractive sector, or elements of the sector – including NGOs that have been established to target one commodity or even one company. They range from grassroots, community-based initiatives operating around only one project, to national advocacy NGOs, research institutes and think tanks, to international development, human rights and environmental NGOs and trade unions.

Well-known examples of NGOs or networks of NGOs that focus their activities exclusively on the mining and/or energy sectors include: Earthworks; Mining Watch Canada; Mineral Policy Institute, Australia; Canadian Arctic Resources Committee; Mining Policy Research Initiative; Mineral Policy Center; Center for Science in Public Participation (CSP2); Mining and Communities website; Mining News website; Partizans; Mines, Minerals and People, India; Minewatch Asia Pacific, Philippines; Westerners for Responsible Mining in North America; and the Global Mining Campaign network.

Examples of NGOs or NGO networks that have broader agendas, but key programs of activity focused on or involving the extractive sector include: Oxfam, in particular Oxfam America and Oxfam Community Aid Abroad in Australia and its Mining Industry Ombudsman program; Human Rights Watch; Business and Human Rights Resource Center; Amnesty International; Human Rights First; International Commission on Human Rights and Administrative Justice; International Alert; Worldwide Fund for Nature; Conservation International; Friends of the Earth; International Institute for Sustainable Development; International Institute for Environment and Development; Global Witness; Transparency International; the Center for Public Interest Law; Environmental Law Institute; the Canadian Network on Corporate Accountability; CARE International; Third World Network; the Halifax Initiative; Corp Watch; and the International Center for Corporate Accountability.

Over the past two decades, these NGOs have played a major role in shaping public expectations of the extractive sector and influencing both corporate and government actions through all four modes of engagement, with some adopting more confrontational approaches and others more cooperative means, and many a combination of all four modes.

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They have established public advocacy campaigns, facilitated lawsuits, supported local community organisations and indigenous peoples’ groups by providing them with training, funds and networks, and engaged in governmental and inter-governmental consultation processes. They have worked constructively with energy and mining companies on-the-ground in a variety of national and community-based projects and more strategically in establishing mechanisms such as the Voluntary Principles on Human Rights and Security, the Kimberley Process, the Extractive Industries Transparency Initiative, and the International Cyanide Management Code. Some of these NGOs have also carried out research and monitoring activities of specific commodities, companies and extractive projects. In his interim report to the Commission on Human Rights, the UN’s Special Representative on Business and Human Rights, Professor John Ruggie, surveyed 65 recent reports by NGOs on business and human rights issues – two thirds of the total related to oil, gas and mining activities.13 Such reports include studies of extractive sector projects in countries such as Angola, Azerbaijan, Burma, Chad-Cameroon, Colombia, Democratic Republic of the Congo, Ecuador, Indonesia, Nigeria, Papua New Guinea, the Philippines, and Sudan. The International Federation of Chemical, Energy, Mine and General Workers Unions (ICEM), is the major trade union network working in and with the extractive sector, representing more than 20 million workers through 379 industrial trade unions in 123 countries in 2006.

In addition to active engagement in the UN Global Compact and a number of major sector initiatives such as the World Bank’s Extractive Industries Review, ICEM has played an important role in recent years in spearheading the development of negotiated Global Framework Agreements with selected companies. The aim of these agreements are to put in place a set of principles and standards, together with a regular review mechanism for corporate executives and trade union leaders, relating to trade union rights, health, safety, environmental practices and quality of work in all operations of a multinational regardless of whether or not these standards exist in an individual country’s statutes. As of mid 2006, ICEM had negotiated such global agreements with Lafarge, Rhodia, Electricit de France (EDF), SCA, Eni, Anglogold, Norske Skog, Endesa, Freudenberg, and Statoil.

In reviewing the key NGOs active in the extractive sector it is important to also note those examples of NGOs that have been created, funded and/or led by the extractive sector itself. In addition to more traditional trade and industry associations that represent the sector, such as Chambers of Mines and Petroleum Associations, there are also a number of industry-supported NGO’s that have a focus on addressing broader social, economic and environmental issues relevant to the sector. These include: the International Council of Mining and Metals (ICMM); the International Petroleum Industry Environmental Conservation Association (IPIECA); and the Rocky Mountain Mineral Law Foundation (RMMLF).

In addition, a number of multi-industry NGOs that focus on these broader issues also have many oil, gas and mining members and programs that actively engage this sector. Examples include the World Business Council for Sustainable Development; the World Economic Forum and its energy and mining governors groups; the International Business Leaders Forum; the Business Leaders Initiative on Human Rights, and Business for Social Responsibility.

In summary, there are a large number and diversity of NGOs operating in ways that both influence and are influenced by the policies and practices of the extractive sector.

7.8 Key IssuesDespite the wide variety of views and approaches to addressing oil, gas and mining issues, both within and between the NGO sector and the extractive sector, there is a surprisingly strong commonality in terms of identifying what these key issues are. Table 2 summarises the key issues identified by the World Bank’s Extractive Industries Review; the Mining, Minerals and Sustainable Development project; the NGO-led Framework for Responsible Mining; individual energy and mining companies, and joint research undertaken by Amnesty International and the International Business Leaders Forum. Those issues highlighted are the most commonly cited in almost all the studies and reports reviewed.


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Set of issues Examples

Access to and sustainability of natural resources

Land use and access issues- ‘No go’ zones/ Protected Areas/ biodiversity/ destruction of natural habitat Waste management, tailings disposal, use of toxic substances, hazardous emissions Water use, contamination and pollution.

Legacy issues – degraded lands and water, reclamation, remediation Greenhouse gas emissions Independent environmental impact assessments and monitoring/oversight

Social and economic development

Resettlement/relocation and compensation• Access to sustainable alternative livelihoods �Local economic development and value-added �Small-scale and artisanal mining issues �Occupational safety and fatal risks �Public health impacts in surrounding communities – HIV/AIDs �and other communicable diseasesEmergency prevention and response �Education, training, schools �Impact of ‘boom and bust’ development patterns �

Macroeconomic impacts of major revenues and fluctuating commodity • prices

Integrated mine closure planning, costs and remediation �Impact on poverty reduction �Socio-economic impact assessments and monitoring �

Conflict and security Extractive projects creating, exacerbating, contributing to or• benefiting from resource-based conflicts• Use of public and private security forces – deployment, conduct, • training

Conflict impact assessments and monitoring �

Human rights Indigenous peoples’ rights• Land and property rights• Forcible relocation• Labour rights – including forced and bonded labour, freedom of • association

Minority and women’s rights �Harassment of human rights activists and defenders �Disappearance, extra-judicial killing �Cultural and religious rights �

Complicity in human rights abuses• Corporate spheres of influence for human rights �Human rights impact assessment and independent monitoring �

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Governance and participation

Revenue distribution and allocation• Transparency of revenue flows•

Disclosure of other project documents, contracts and compacts �Anti-corruption measures �Adequacy and fairness of the tax regime for mining �Energy and mining policy reform and effective regulatory and �legal frameworks

Community consent processes – prior and informed consent • –community access to information, participation and influence

Independent grievance mechanisms �Clarity of local, regional and national government roles, revenues �and responsibilities

Strengthening governance capacity and public institutions• Multi-stakeholder accountability mechanisms �

Table 7.2 Key extractive sector issues of common interest to NGOs and companies

In summary, apart from those NGOs that have the goal of stopping all oil, gas and mining activities, there is growing commonality between many NGOs and companies on the key issues and challenges facing the extractive sector. Whether it is managing the social, economic and environmental impacts of extractive sector activities; protecting and promoting human rights; or ensuring good governance, accountability and public participation in connection with such activities, there is growing agreement that the role and responsibility of extractive companies should be:

First, ‘do no harm’ by identifying, minimising and where possible mitigating or preventing the negative impacts • and risks resulting from their activities, andSecond, ‘proactively do good’ by optimising the positive development impacts, local value creation and • multipliers from these activities.

As Oxfam stated in its 2004 Mining Ombdusman annual report, “Oxfam Community Aid Abroad believes that private sector investment [in mining] can be a driver of economic growth and poverty reduction, provided appropriate regulations and controls exist.

However without adherence to human rights standards, mining can cause the loss of livelihoods, degradation of land and waterways, and increased violence and conflict.”15 Having said this, differences – and often, strong levels of disagreement – persist on the following points:

Who is primarily responsible (business, government, donors, others) for addressing these challenges?• What are the most appropriate approaches and solutions to adopt?• What are the priorities when socio-economic and environmental trade-offs need to be made?• What are the most appropriate frameworks and mechanisms (voluntary, market-driven, mandatory, regulatory) • for holding companies accountable?

Differences and disagreements also persist on the means and terms employed by some of the advocacy NGOs in their efforts to evaluate and raise public awareness of socioeconomic, environmental and human rights conditions in oil, gas and mining projects.


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There is no doubt that abuses and negative impacts in all these areas have occurred in the past, and continue to occur, despite increased efforts by a growing number of companies and governments to prevent them. As outlined previously, NGOs have often played a crucial role in ‘shining the spotlight’ on some of the most egregious of these cases, and in agitating, demonstrating and in some cases litigating for improved corporate behaviour and/or more rigorous government oversight and regulation. Some of the world’s most respected corporate brands – in the extractive sector among others – have been the target of such NGO action, in many cases deservedly so, but not always.

The ‘watchdog’ role of NGOs will continue to be important, especially in zones of weak governance. Yet this raises the question of who watches the watchdogs? Who adjudicates the scientific evidence when companies and NGOs differ on levels of water pollution or toxic chemicals? Who determines corporate spheres of influence and corporate complicity in human rights abuses? Who legitimately speaks for the poor or for local communities, especially when such communities are characterised by ethnic, religious or socio- economic divisions? Who determines the fair level of compensation for resettlement or lost livelihoods? Who defines the boundaries of biologically sensitive ‘no-go’ areas? Who monitors who, and with what level of legitimacy, authority and accountability for statements made in the public domain?

Even in democratic societies such questions remain highly complex and contested, as the ongoing public debate about energy exploration and development in Alaska’s Arctic National Wildlife Refuge (ANWR) demonstrates. These questions are even more challenging in developing countries, where extractive sector projects are often operated by a mix of foreign publicly quoted and state-owned companies and national state-owned enterprises, with differing levels of public accountability and vulnerability to NGO campaigns. And where NGO activism itself is often a mix of local grassroots organisations supported and influenced by international NGOs, and in certain countries strategically influenced by diverse political interests and sometimes warring factions.

Just as there will always be companies, especially in weak governance zones, which consistently and intentionally operate in destructive, illicit or illegal ways that create, exacerbate or benefit from conflict and human suffering, there will be certain NGOs that act illegally or as fronts for ‘uncivil’ purposes such as laundering drug money, funding violence and terrorism, or consistently and intentionally using unethical and dishonest means to achieve their ends. Our focus here is not on such entities, but on those companies and NGOs that have the intention to ‘do no harm’ and to ‘do the right thing’ in terms of their impact on the public good. Even in these cases, irresponsible behaviour and lack of accountability occurs on both sides – both intentional and unintentional.

Much has been written about such behaviour and accountability deficits on the corporate side, and rightly so given the power and influence of major corporations. But as the power and influence of major NGOs continues to grow, their own behaviour and accountability is coming under greater scrutiny – not only from donors, regulators, companies and the media, but also from NGO leaders themselves.

Michael Edwards, Director of Governance and Civil Society at the Ford Foundation, argues the case for NGO accountability as follows: “Accountability is the price we pay for the freedom to exercise power and authority in a democratic society. NGO power may be ‘soft’ and our authority ‘informal’, but we are increasingly influential actors and so must take our responsibilities as seriously as our rights.”

Edwards’ call to action is echoed by a growing number of other leaders in the NGO community. Kumi Naidoo, Secretary-General and CEO of CIVICUS, the World Alliance for Citizen Participation, with over 1000 members in some 100 countries, comments, “The debate over civil society accountability is gaining momentum, and more and more civil society actors are entering the discussion and engaging with accountability challenges head-on. While negative criticism from external actors has helped to fuel the debate, it’s important not to underestimate the internally generated drive toward accountability on behalf of many in civil society.”

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7.9 NGO AccountabilityThese include:

7.9.1 Accountability Issues for NGOsThe growing interest in NGO accountability is coming from a variety of sources and focusing on a range of issues.

Lisa Jordan of the Ford Foundation argues that NGOs are being asked to address three types of accountability questions by a wide variety of actors – effectiveness questions, questions of organisational reliability and legitimacy questions. She cites donors, governments, political opponents, sector associations, partners and academics as some of the key groups asking such questions.

Kumi Naidoo of CIVICUS lists three key levels of accountability that need to be considered: upward accountability, to funders and meeting the formal requirements of regulatory provisions where they exist; downward accountability, to the people who are being served or the constituency in whose name the rationale for existence is achieved in the first place; and horisontal accountability or peer accountability, failure of which can lead to unnecessary duplication, failure to forge the appropriate synergies, and the wastage of resources.

A key NGO accountability issue from the perspective of companies and other organisations that are the subject of NGO advocacy campaigns is the veracity, accuracy and authority with which public statements about the company or companies in question are made - and the lack of standards against which these statements can be assessed and the NGOs in question held accountable. Common criticisms include public statements that are either factually incorrect, highly selective in terms of all the available evidence and information, or focused on a specific incident without providing the broader context in which the incident occurred – both the broader corporate context and socio-economic/ political or situational context.

Brown, Moore and Honan make the point that, “International NGOs (INGOs) who use values-based appeals are particularly vulnerable to charges that they do not live up to their own values. INGOs who have ‘named and shamed’ business and government actors for deviations from good practice can be seriously harmed by questions about their own credibility and accountability. When targets of policy influence campaigns can show that INGOs do not in fact speak for grassroots groups they claim to represent, the credibility of the INGOs can be impaired with the larger publics as well.”

In a communication to the Mining Ombudsman of Oxfam Community Aid Abroad, in response to their 2004 report, Paul Mitchell, the former director of CARE Australia and now CEO of the International Council of Mining and Metals argues, “For any complaints review process to be credible and effective it needs to satisfy a number of tests. In its assessments it should be objective and reasonable; balanced and complete in its consideration of relevant materials; and factual and technically correct.”

Despite a variety of different approaches and definitions, most comprehensive assessments of NGO accountability cover the following issues:

Governance of the organisation• Financial integrity – sources of funds, methods of fundraising, bookkeeping and auditing systems, use of funds • etc.Organisational reliability and capacity (policies, process, and management systems)• Performance effectiveness (level of benefits and types of impacts experienced either by members, targeted • beneficiaries or the general public)Voice / advocacy credibility (veracity, accuracy, authority, fairness and representative nature of public statements • and advocacy campaigns)Access by stakeholders to information about the organisation• The organisation’s responsiveness to complaints.•


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7.9.2 Frameworks For Analysing Ngo AccountabilityA key question arising from this summary of issues is how can the stakeholders of NGOs and NGOs themselves, best evaluate, monitor and improve their accountability? Four useful frameworks, from both academic and practitioner perspectives, are summarised below: the Global Accountability Project framework; the Keystone Capabilities Profiler; a framework for Building Strategic Accountability Systems for international NGOs developed by faculty at the Hauser Center for Non-profit Organisations at Harvard; and a Risk Mapping Tool for boards of NGOs developed by SustainAbility Inc.

Global Accountability Project (GAP)GAP is a program of the One World Trust, itself an NGO. Based in the United Kingdom, the One World Trust “promotes education and research into the changes required within global organisations in order to achieve the eradication of poverty, injustice and war. It conducts research on practical ways to make global organisations more responsive to the people they affect, and on how the rule of law can be applied equally to all.

This framework is particularly noteworthy as it is used by the GAP, the first project of its kind, to compare the accountability of inter-governmental organisations, transnational corporations, and international non-governmental organisations. In a pilot report produced in 2003, the framework was used to assess and compare the accountability of 18 such organisations.

7.10 The Keystone Capabilities ProfilerThe Keystone initiative is housed by Accountability in the UK and focuses on developing new approaches to civil society accountability that incorporate processes of stakeholder engagement and transparent public reporting, including accurate reporting of stakeholder views. It promotes the practice of accountability as a dynamic and interactive process and a potential driver of social change and organisational learning and performance, rather than the more traditional compliance-driven approach where accountability is seen as a constraint on organisations and their ability to innovate.

Keystone has developed a tool that enables civil society organisations and their stakeholders to assess their performance against three sets of capabilities that it considers to be essential if these organisations are to make a effective contribution to meaningful and lasting social development. It summarises the three capabilities as follows:

Accountability – How do we empower and balance stakeholder voices so that they participate actively in the • high level deliberations around strategy, planning and how we measure success?Strategy – How do we understand our role within ecology of social change actors and plan for collaborative • action that will enhance solutions to the problems we face?Operational integrity – How efficiently and transparently do we manage our resources and honour the • commitments that we make? The tool provides a set of 12 core questions backed by 60 indicators that NGOs and their stakeholders can ask in order to rank their performance on a scale of 1(incapable) to 5 (extremely capable – beyond expectation).

7.10.1 Building Strategic Accountability SystemsDavid Brown, Mark Moore, and James Honan at the Hauser Center for Non-profit Organisations suggest a useful framework for international NGOs interested in building strategic accountability systems, which is relevant for most large NGOs even if they are not international. 26 They define accountability systems as: “organisational arrangements for recognising, negotiating and responding to obligations to various stakeholders.” And they identify the following four tasks or steps as being required to build effective accountability systems:

Assessing accountabilities – mapping stakeholders; defining value creation processes; and prioritising • accountabilities across stakeholders. Brown, Moore and Honan put NGO missions and strategies at the center of assessing and defining accountabilities and use what they call the ‘strategic triangle’ to focus attention on three fundamental issues: the value the NGO seeks to create; the legitimacy and support it needs to survive; and the operational capacity it requires to accomplish its mission.

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Negotiating expectations with stakeholders – although a potentially enormous undertaking for NGOs with many • stakeholders, developing some mechanism for engaging with stakeholders can be crucial in clarifying their claims and interests, reducing misunderstanding and setting realistic expectations.Creating performance management systems – while recognising the challenges, Brown, Moore and Honan • argue that it is possible to develop performance measurement indicators for INGOs drawing on areas such as, “organisational processes (program activities, accounting procedures), organisational outputs (training delivered, policy campaigns mounted), client outcomes (changed behaviours, satisfaction), and social impacts or results (increased incomes, reduced child mortality).Enabling sanctions for performance – the fourth step recommended by Brown, Moore and Honan is the • establishment of communications systems (project, program or organisational reports, evaluations, newsletters etc.) to provide stakeholders with information about the NGO’s performance and the creation of recognition, rewards, incentives and sanctions to provide, “positive and negative consequences for good and bad results that encourage performance improvement.

7.11 Risk Mapping Tool For NGO BoardsIn their 2003 report, 21st Century NGO, the consultancy and think-tank Sustainability provide a useful ‘risk-mapping’ tool for NGO boards, which can also be used by NGO stakeholders to assess their level of accountability, transparency, funding and standards.

This tool is summarised in the following diagram.

Risk Mapping Tool for NGO Boards Accountability Stakeholder issues Constituency issues ‘Responsible’ campaigning Competitive positioning Brand exploitation Corporate co-option

Transparency Financial & ethical disclosures Director & staff compensation Promotion policies & practices Triple bottom line reporting Triple bottom line assurance

mechanisms

Funding Adequate for current needs Adequate for future needs Sources of funding Fundraising methods % allocation to ‘cause’

Standards Professional standard & targets Position on CSR frameworks

e.g. GRI, AA1000 Stakeholder benchmarks Stakeholder satisfaction TBL standards required of

suppliers & partners

Accountability Transparency

Funding Standards

Performance

Governance

Risks

Fig. 7.1 Risk mapping tool for NGO Boards(Source: http://www.hks.harvard.edu/m-rcbg/CSRI/publications/workingpaper_34_nelson.pdf)


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7.12 Mechanisms For Achieving NGO AccountabilityThe examples of four different frameworks have been developed to provide NGOs and their stakeholders with tools and/or processes to help them to think about, assess, monitor and improve their performance against a variety of accountability goals and indicators. These frameworks also offer a useful basis to explore different types of mechanisms that can be used to actually hold NGOs to account for their governance and performance in these different areas.

In his paper, ‘Accountability in Practice: Mechanisms for NGOs’, Alnoor Ebrahim, identifies five categories of accountability mechanisms used by NGOs: reports and disclosure statements; performance assessments and evaluations; participation; self-regulations; and social audits.28 He distinguishes each mechanism as either a ‘tool’ or a ‘process’ and analyses them along three dimensions of accountability: upward-downward, internal external, and functional-strategic. He concludes that upward, external and short-term functional approaches, focused on accountability to donors and funders rather than beneficiaries, have dominated much of the practice to-date, and argues for a more balanced approach that addresses all these dimensions.

Building on this and other work, there are three broad and at times overlapping categories of mechanism that can be applied by different stakeholders and by NGOs themselves to hold NGOs to account for their performance and governance:

Legal or regulatory mechanisms (driven by government)• Civic’ mechanisms (driven by external stakeholders)• Self-regulatory or voluntary mechanisms (driven by NGOs themselves, either individually or through NGO • networks or professional/ membership associations)

These divisions are not rigid – regulations may require that NGOs of a certain size and/or capitalisation have an independent board, for example, but the quality and rigour of the board may be determined by how seriously the NGO itself takes the selection and independence of its board members. Certification by an independent scheme may not be a mandatory legal requirement, but may be a requirement for NGOs to get access to government funding or tax benefits. Public disclosure statements and reports may be mandated by national law, but may be vague in terms of what has to be reported or weak in terms of monitoring compliance. Nor are the categories mutually exclusive – indeed, they should be viewed as an ‘ecosystem’ or spectrum of accountability mechanisms within which NGOs, especially large NGOs, operate.

7.12.1 Legal Accountability MechanismsThe most comprehensive and useful work that has been done on the legal mechanisms that are needed to create a supportive enabling environment for NGOs and to ensure that such NGOs are held accountable has been undertaken by Dr. Lester Salamon and his colleagues at the Center for Civil Society Studies, Johns Hopkins University, and by the International Center for Not-for-Profit Law. The key legal and regulatory mechanisms identified by their work include the following:

The basic legal standing of civil society organisations• Establishment and registration procedures• Capital, asset and/or membership requirements• Tax treatment and benefits• Disclosure and public reporting requirements•

There is a balance that must be struck in ensuring that the legal and regulatory framework under which NGOs operate both enables them and holds them to account – both protects their rights and ensures their responsibilities. Recent legal developments in countries such as Russia and Zimbabwe illustrate how draconian restrictions and requirements can have a severe impact not only on specific NGOs, but on the openness and vitality of civil society more generally. Ultimately this is not to anyone’s benefit – not even the companies that are targets of NGO campaigns. A memo by the Heritage Foundation comments, “Russian rights organisations are unanimous in their belief that the worst

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expectations of this new law are justified. If an NGO cannot be banned directly, the red tape, all-out control, endless checkups, and a stepped-up financial burden could smother it. …Russian NGOs and foreign NGO representatives in Russia remain the stronghold of nascent civil society and freedom in Russia. The work of these organisations cannot be strangled by the intrusions of the Russian government.

7.12.2 Civic accountability mechanismsThere are a growing number of what Simon Zadek of Accountability and others have termed ‘civic’ or external stakeholder mechanisms that are emerging with a focus on encouraging, enabling and/or calling for better NGO performance and accountability. These include independent watchdog organisations, rankings and information providers – usually NGOs themselves – and the media. They can also include participatory and consultative mechanisms through which NGOs are either required or encouraged to include key stakeholders in different aspects of their operations, governance, monitoring, evaluation and reporting processes.

Information provision and/or ranking and watchdog initiatives focused on evaluating the performance, transparency and/or accountability of NGOs in the United States include:

Guide Star - established in 1994 with the aim of creating a more transparent and accountable non-profit community, • this provides data on more than 1.5 million non-profit organisations and claims that its information is accessed by about 20,000 people a day.Charity Navigator – which has a database of some 5,000 charity rankings, based on a set of 7 indicators relating • to organisational efficiency and organisational capacity.Charity Watch – managed by the American Institute of Philanthropy, which provides grades for about 500 • charities.Foreign AID Ratings LLC – which uses a 5-point patented NGO Star Evaluation system for rating development • NGOs based on their socio-economic impact; transparency; self-monitoring and evaluation; institutional development; and financial efficiency and growth.NGO Watch – established in 2003 by the Federalist Society for Law and Public Policy Studies and the American • Enterprise Institute, which states its mission as, “Highlighting issues of transparency and accountability in the operations of nongovernmental organisations and international organisations” and maintains a database on some 150 NGOs.

The Global Accountability Index is another example of an independent NGO focused on increasing the accountability of international organisations generally – including inter-governmental bodies and corporations, as well as international NGOs – and using a ranking approach to highlight both good and bad practice in 60 of these global actors. In its 2003 pilot report, the initiative concluded that some highly regarded NGOs such as Oxfam, CARE International and the Worldwide Fund for Nature (WWF) ranked lower on certain aspects of its accountability index than heavily criticised bodies such as the World Trade Organisation (WTO) and corporations such as Rio Tinto, Shell and GlaxoSmithKline.

Former President of the Rockefeller Foundation, Peter Goldmark, has observed, “[NGOs] enjoy relative immunity from the three chastising disciplines of American life – the bottom line, the ballot box and having the press walk up and down your back everyday.”

In the past five years, however, the mainstream media has also increased its coverage on the topic of NGO accountability. Julian Lee of CASIN (the Centre for Applied Studies in International Negotiations), P. Shiras and others point to leading examples such as the New York Times, Wall Street Journal, Washington Post, Financial Times, and Economist.


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7.12.3 Self-Regulatory or Voluntary MechanismsThe third broad category of accountability mechanisms can be summarised as both individual and collective mechanisms established by NGOs themselves, usually on a voluntary or self-regulatory basis. These include mechanisms such as: voluntary certification or accreditation schemes; peer review and learning networks; and both individual and collective codes of conduct and accountability charters.

At a project level, impact assessments and evaluations are often carried out as part of the requirements for receiving donor funding from the public sector. As more government agencies fund NGOs to deliver services and carry out research and advocacy campaigns, this level of project or program-based evaluation will increase. Relatively few NGOs, however, have started to carry out the comprehensive organisation-wide social, economic and environmental auditing and public reporting that they are calling for from companies.

Robert Lloyd and Lucy de Las Casas of the One World Trust identify three categories of self-regulatory initiatives, each with greater levels of specificity and sanction:34

Aspirational codes or principles or ethics that signatories strive to achieve• Codes of conduct in which more defined standards are set• Certification schemes where compliance with clear standards is verified by a third party•

They argue that although many of these initiatives are ‘voluntary’ in nature, and face the obvious challenges of lack of enforcement mechanisms, they are increasingly being used by both private and public sector funders as a requirement for funds or fiscal incentives.

NGO peer learning networks such as the Humanitarian Accountability Partnership and the UK NGO Accountability Forum, both established in 2003, offer good examples of increased efforts on the part of the NGO community to, “…collectively better understand, articulate, and ultimately, strengthen NGO accountability.

Three of the most interesting collective NGO-led initiatives aimed at defining either principles or standards for NGO accountability are:

The code of conduct for the international Red Cross and Red Crescent movement and NGOs in disaster • relief: This code aims to guard standards of behaviour rather than provide operational details. Signed by over 350 organisations, it offers 10 Principle Commitments, as well as recommendations to governments and intergovernmental organisations.Interaction’s Private Voluntary Organisation Standards: These aim to promote responsible standards in the areas • of governance, finance, communications with the US public, management practice, human resources, program and public policy. Compliance is a requirement for admission to Interaction, which constitutes the largest alliance of U.S.-based international development and humanitarian nongovernmental organisations, over 160, with operations in all developing countries.International Non Governmental Organisations Accountability Charter: In June 2006, a group of eleven • international non-government organisations signed a ground-breaking charter based on 9 core principles and aimed at enhancing accountability and transparency, encouraging stakeholder communication, and improving organisational performance and effectiveness. What is particularly interesting about this new initiative is that it is the first ever set of international and cross-sector guidelines for the NGO sector, encompassing human rights, environmental and international development NGOs.

7.13 Strategies For Effective NGO-Business CooperationNGO accountability is becoming an increasingly central issue for those stakeholders that regulate and fund NGOs, as well as for those that are the beneficiaries of NGO activities or the targets of NGO advocacy campaigns, and also for NGOs themselves, both individually and collectively.

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Readers who are working in corporations and/or familiar with the parallel debate and practice on corporate accountability will have noted some striking similarities in terms of different types of accountability issues faced by NGOs, different frameworks for analysing NGO accountability and different mechanisms – be they tools or processes, voluntary or mandatory - for achieving NGO accountability.

While there are obvious and important differences, there are also common themes, trends, challenges and learning opportunities between the NGO and corporate sector when it comes to ensuring individual and collective accountability.

Both sectors are facing growing demands to implement similar types of accountability tools, processes and institutional mechanisms – for example, policy commitments, management systems, impact assessments, disclosure strategies, and stakeholder engagement mechanisms.

The leaders in both sectors are also recognising that a serious commitment to greater accountability can not only improve compliance and risk management, but can also improve overall organisational performance, facilitate organisational learning, inspire innovation, and improve relationships, legitimacy and reputation with key internal and external stakeholders.

At the same time, these NGO and corporate leaders are also beginning to identify opportunities for working more proactively and constructively together to enhance each others’ learning and performance, explore innovative and shared solutions to complex socio-economic or environmental challenges, and to strengthen public sector governance, capacity and institutions – especially in the weak governance zones and developing economies where many of the world’s oil, gas and mineral resources are found.

A 2006 publication by IPIECA, for example, Partnerships in the Oil and Gas Industry, identifies some 40 examples of strategic partnerships between companies, NGOs and in some cases governments – some of them global in scope, some of them national and others local – addressing a range of issues such as biodiversity, capacity building, climate change, community development, fuels and transportation, health, human rights, oil spill response and emergency preparedness, and revenue transparency.

Confrontation will not disappear nor should it. Both groups must continue to hold each other to account for their respective performance, governance and transparency – albeit being willing to recognise, communicate and reward each other’s good practice as well as criticize bad practice. At the same time, there is growing opportunity to consult and cooperate more proactively with each other in the following three areas of action.

7.13.1 Evaluating and Improving Project And Industry PerformanceNGOs and extractive companies can work together in the following three key ways to evaluate, manage and improve the social, economic and environmental performance of specific projects or the broader development impacts and contribution of the industry more generally:

Joint participation in multi-stakeholder advisory and consultation structures - aimed at improving the quality and diversity of advice, dialogue and feedback between the company or industry and its key stakeholders, these structures may be established at the project, national, regional or global level, and by the company, or an NGO or independent third party. A growing number of extractive sector projects have such structures at the project or community level. An example at the corporate level is BHP Billiton’s Forum on Corporate Responsibility. National and regional examples include the Canadian Corporate Accountability roundtables and the Dialogue Table in Peru. The following is a global, industry-wide example of such an approach:

ICMM’s Resource Endowment Initiative, which it is undertaking in collaboration with UNCTAD and the World Bank, is a first-of-its-kind, industry impact analysis. It is aimed at better understanding and improving the overall development impact of the mining industry at both the macroeconomic and microeconomic levels, and from both a project-level perspective and a systemic perspective. It consists of a three-stage process involving the development of a broad analytical framework and toolkit, four detailed country case studies of Chile, Peru, Tanzania and Ghana,


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and in-country pilot projects. A multi stakeholder approach is embedded throughout the process of research, as well as in the project’s governance and funding structure. In addition to external advisors and technical peer reviews, consultations have been held with NGOs, trade unions and others in a number of countries.

Joint project evaluation, measurement, tools development and research projects – NGOs and companies can • work together on projects specifically aimed at analysing or researching the impacts of a specific project or industry and/or NGOs can form part of the assurance process for such evaluations and reports, or they can work with companies to develop tools.An example of the latter is the International Alert Conflict Sensitive Business Practices (CSBP) Tool. Published • in 2005, the purpose of this tool is to help extractive sector companies assess and mitigate the macro- and project level conflict risks associated with doing business in unstable countries, in the interests of the long-term stability of those societies at local and national levels. Based on extensive consultations and field research with companies, the first iteration of the tool focuses on Guidelines for Extractive Industries, and International Alert is now working on a similar approach for project financiers.Multi-stakeholder accountability and governance structures – most challenging, but potentially far-reaching, • NGOs, companies and governments can establish and jointly govern formal structures to improve either industry-wide or sector-wide accountability systems or processes. These can range from the creation of certification schemes, to rigorous codes and standards, to more aspirational principles. Three examples in the extractive sector are summarised below.The Kimberley process – Launched in 2002, the Kimberley Process Certification Scheme (KPCS) aims to certify • diamonds in order to limit the trade in conflict diamonds, which has been used to fund conflicts and horrific human rights abuses in Africa. It brings together over 40 diamond producing and processing countries, the European Union, the diamond industry and NGOs and now accounts for some 90% of the global production of rough diamonds. Exploratory discussions are underway to see if this type of multi-stakeholder mechanism can be used to certify the source and integrity of other commodities such as gold.The International Cyanide Management Code – Another multi-stakeholder initiative, this is an example of an • accountability framework targeted not only at a single commodity - gold - but exclusively at a single problem within the production of this commodity - the safe production, transport, use and disposal of cyanide used in gold mining. The code was developed through a transparent and lengthy process of engagement between the producers and users of cyanide, manufacturing and mining companies, NGOs, academics, labor and governments from different geographies, facilitated by the United Nations Environment Programme (UNEP) and the International Council of Mining and Metals (ICMM). Now established as an independent body, the International Cyanide Management Institute, the code will be implemented by its signatories through a comprehensive and independently monitored process.The voluntary principles on security and human rights - Adopted in 2000, as part of a multi-stakeholder process • consisting of extractive companies, human rights NGOs and government officials from the United States and United Kingdom, these provide practical guidance to companies on three sets of issues: risk assessment, including the potential for violence; identification of the potential human rights vulnerabilities that firms face as a result of their relationship with public security providers, both military and police, as well as recommendations for how to deal with them; and the same for private security forces. Currently focused on the extractive sector, the VPs serve as a potential model for similar initiatives in other sectors, including humanitarian agencies. In a small number of cases, they have also been integrated into Host Government Agreements and project contracts illustrating how such initiatives can achieve scale over time through integration into public policy frameworks.

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7.13.2 Mobilising Joint Resources To Solve Specific Development Or Operational ChallengesOne of the best longer-term investments that companies and NGOs can make in the countries and communities where they operate is to support more equitable, pro-poor development. They can do this through a wide variety of initiatives that provide low income communities with access to economic opportunity, affordable and decent health services, education, housing, water and sanitation, energy, financial services, or appropriate technology. They can also build the capacity of local NGOs and community leaders in all of these areas, as well as environmental management, and improve local preparedness for emergencies and natural disasters.

There has been a burgeoning of innovation in this area over the past five years driven in large part by new types of partnership between companies, NGOs, and donors, both public and private. The dramatic growth in microfinance programs, health partnerships focused on diseases such as HIV/AIDs and malaria, biodiversity management projects, disaster preparedness alliances, and local enterprise development initiatives are all examples of this trend. Just three of the many examples include:

The Diamond Development Initiative (DDI) - Initiated by a coalition of two NGOs, Global Witness and • Partnership Africa Canada, and two companies, De Beers and the Rapaport Group, and supported by the World Bank, DDI focuses on understanding and addressing the challenges faced by artisanal diamond mining communities, which are usually extremely poor, marginalised and prone to conflict situations. The Sierra Leone Peace Diamonds Alliance focuses on similar communities and brings together similar partners, as well as USAID and the UK’s Department for International Development.The Energy and Biodiversity Initiative (EBI) – Created in 2001 as a partnership between four major energy • companies and five environmental NGOs and managed by Conservation International, this alliance involved the development of guidelines, processes and local projects to improve biodiversity conservation in oil and gas operations. Apart from improving the performance of and relationships between the core partners, the EBI has also catalysed follow-up initiatives and new alliances in other business networks and companies. Awareness and Preparedness for Emergencies at the Local Level (APELL) process - Initiated in 1986 by UNEP • in response to a series of chemical and industrial accidents, the APELL process now includes planning for natural disasters and aims to reduce threats to public health, safety and the environment. It has been implemented in over 30 countries and engages hundreds of companies, community groups, NGOs and local authorities. A key strategy used by the UN system has been to work through industry associations. In November 2005, for example, ICMM and UNDP jointly launched a toolkit to help the mining industry work more effectively with local communities in developing and implementing emergency plans.

7.13.3 Jointly Strengthen Public Sector Governance, Capacity and InstitutionsMany of the social, environmental and human rights challenges associated with major extractive sector projects would not be as problematic and difficult to solve if host governments themselves were more effective in implementing the international agreements and treaties they have actually signed up to. As the UN Secretary-General’s Special Representative on business and human rights has commented in his interim report, “The debate about business and human rights would be far less pressing if all Governments faithfully executed their own laws and fulfilled their international obligations.

What, if anything, can companies and NGOs do to address some of the public sector problems that lie at the heart of much insecurity, instability and poverty? Most notably, what can be done to tackle weak governance on the part of local, regional or national governments? The OECD defines a weak governance zone as an environment where, “the government is not working – public officials are unable or unable to assume their roles in protecting rights, providing basic public services and ensuring that public sector management is efficient and effective. These ‘government failures’ lead to broader failures in political, economic and civic institutions that, in turn, create the conditions for endemic violence, crime and corruption and that block economic and social development.” 38 It estimates that about 900 million people, or approximately 15% of the world’s population, live in such weak governance zones.


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Two key and inter-related areas that require concerted and joint action by both companies and NGOs are efforts to tackle corruption and to improve the transparency and management of resource revenues. A number of encouraging initiatives have been established over the past decade that bring together extractive sector and other companies, NGOs and in some cases governments to improve both public and private sector accountability and transparency in these areas. Notable examples include the following:

Integrity Pacts – These are country-based mechanisms or tools piloted by Transparency International aimed at • preventing corruption in public procurement. They are based on an agreement between a government institution and all bidders for a public sector contract outlining a set of operational, bidding and disclosure standards that all parties agree to adhere to in the bidding process, along with sanctions for non-compliance. Although still limited in coverage, Integrity pacts have been demonstrated to work in a number of legal and political settings.Resource Revenue Management Mechanisms – A growing number of resource rich countries are establishing • national, regional or local revenue management mechanisms, usually in cooperation with major corporate partners, financial institutions, donors, and in some cases NGOs. These mechanisms potentially serve a dual purpose of increasing the transparency of resource revenues and also providing a more participatory and accountable process for disbursing these revenues to different.The Extractive Industry Transparency Initiative (EITI) – Established in September 2002, EITI aims to improve • the transparency of revenues generated by extractive projects and to stimulate wider dialogue within developing countries about public expenditure priorities. Partners include donor and developing country governments, the World Bank, oil, gas and mining companies and civil society organisations. Increasing transparency will empower citizens and institutions to hold governments to account and make mismanagement or diversion of funds away from development purposes more difficult. It should also help to improve the business environment, and attract more foreign direct investment. Such an initiative has relevance for other industries where large amounts of resources are exchanged between the public and private sector.

Much remains to be done in all of the above areas. The challenges of ensuring that oil, gas and mining projects cause minimum harm and damage, and create maximum local value and opportunity in host countries and communities are immense – especially in those areas faced with weak or bad governance. Yet, the partnerships that have started to emerge over the past decade between extractive companies, NGOs and governments give cause for optimism. While there will continue to be differences and disagreements between these groups in terms of motives, methods and mechanisms, there is much that they can learn from each other, and much that they can achieve by working more effectively together. Confrontation will never disappear, and at times it plays an important role in pushing the boundaries of responsible and accountable performance. At the same time, there is potential to improve communication, consultation and cooperation between companies, NGOs and governments, with the overall goal of ensuring that the development of natural resources results in a measurable improvement in peoples’ lives and opportunities.

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SummaryThe term, ‘non-governmental organisation’ or NGO, came into use in 1945.• A civil society is composed of three sectors: government, the private sector and civil society, excluding • businesses.NGOs can be distinguished into two groups: Operational and advocacy NGOs.• Operational NGOs have to mobilise resources, in the form of financial donations, materials or volunteer labour, • in order to sustain their projects and programs.Both operational and advocacy NGOs need to engage in fund-raising, mobilisation of work by supporters, • organising special events, cultivating the media and administering a headquarters.Operational NGOs often move into advocacy when projects regularly face similar problems and the impact of • the projects seems to be insufficient.Non-governmental organisations at their best provide a vast array of human services unmatched by either • government or the market, and they are self-designated advocates for action on virtually all matters of public concern.Campaigning NGOs and trade unions, in particular, have played an important role in changing societal • expectations of business by influencing the views and choices of consumers, employees, investors, regulators, students, and the general public.The ‘trust premium’ enjoyed by NGOs has also been a key factor in shaping public expectations of the private • sector in recent years.NGOs are now the most-trusted institution in every market except Japan and Brazil.• NGO engagement with the extractive sector ranges from the instigation of major lawsuits, shareholder activism • and media campaigns targeted against specific enterprises or the sector-at-large, to community-level partnerships and traditional philanthropic arrangements, to the emergence of sector-wide accountability mechanisms and cooperative agreements.Over the past two decades, NGOs have played a major role in shaping public expectations of the extractive • sector and influencing both corporate and government actions through all four modes of engagement.ICEM has played an important role in recent years in spearheading the development of negotiated Global • Framework Agreements with selected companies.There are a large number and diversity of NGOs operating in ways that both influence and are influenced by • the policies and practices of the extractive sector.A key NGO accountability issue from the perspective of companies and other organisations that are the subject • of NGO advocacy campaigns is the veracity, accuracy and authority with which public statements about the company or companies in question are made - and the lack of standards against which these statements can be assessed and the NGOs in question held accountable.GAP is a program of the One World Trust, itself an NGO. Based in the United Kingdom, the One World Trust • “promotes education and research into the changes required within global organisations in order to achieve the eradication of poverty, injustice and war.The keystone initiative promotes the practice of accountability as a dynamic and interactive process and a • potential driver of social change and organisational learning and performance, rather than the more traditional compliance-driven approach where accountability is seen as a constraint on organisations and their ability to innovate.

ReferencesMassachusetts Institute of Technology,• An Introduction to Non-Governmental Organizations (NGO) Management [pdf] Available at: <http://web.mit.edu/isg/NGOManagement.pdf>[Accessed 14 May 2012].Nelson, J.,• The Operation of Non-Governmental Organisations (NGO) in a World of Corporate and Other codes of conduct [pdf] Available at: <http://www.hks.harvard.edu/m-rcbg/CSRI/publications/workingpaper_34_nelson.pdf>[Accessed 14 May 2012].


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reyty2• . Non-Governmental Organization NGOs -- Rey Ty [Video Online] Available at: <http://www.youtube.com/watch?v=U0z0SsKPqec> [Accessed 14 May 2012].eugadproject• . Julian Parr - Importance of NGOs, their Challenges and Limitations. [Video Online] Available at: <http://www.youtube.com/watch?v=RI4irXxUW0A> [Accessed 14 May 2012].Miller, F. P., Vandome, A. F. and McBrewster, J., 2010. • Non-Governmental Organizations. VDM Verlag Dr. Mueller E. K.Lewis, D. and Kanji, N., 2009. • Non-Governmental Organizations and Development. Taylor & Francis.

Recommended ReadingOrganisation for Economic Co-operation and Development. Development Centre, 1983. • The Role of Non-Governmental Organisations in Development Co-Operation. OECD Publishing.Welna, C.J., 2008. • Explaining non-governmental organizations (NGOs): human rights NGOs and institutions of justice in Mexico. Duke University.Sooryamoorthy, R., and Gangrade, K.D., 2001. • NGOs in India: A Cross-Sectional Study. 2nd ed., Greenwood Publishing Group, 2001.

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Self AssessmentWhich of the following is one of the sectors of civil society?1.

Business sectora. Civil societyb. Government sectorc. Private sectord.

NGOs can be distinguished into two groups: operational and ___________ NGOs.2. government aideda. advocacyb. businessc. organisationald.

_________ NGOs have to mobilise resources, in the form of financial donations, materials or volunteer labour, 3. in order to sustain their projects and programs.

Operationala. Advocacyb. Businessc. Government aidedd.

Which of the following is not one of the activities undertaken by civil society organisation?4. Advocacy raisinga. Brokerageb. Conflict resolutionc. Stock reportingd.

NGOs are influencing the emergence of new business models, new corporate accountability mechanisms and 5. institutional structures.

Extractionsa. Autocracyb. NGOc. Brokeraged.

Which of the following is not one of the reasons for the multidimensional, intense and strategic evolution of 6. natural resource sector?

Large footprint playersa. Small foot print playersb. Complex and problematic operating environmentsc. Generation of large public revenuesd.

Which of the following is not one of the key types of engagements?7. Confrontationa. Communicationb. Confirmationc. Consultationd.


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___________ is a program of the One World Trust, itself an NGO.8. INGOa. CIVICUSb. IPECAc. GAPd.

Which of the following is not one of the capabilities on which the tool of keystone is used to assess the 9. performance?

Accountabilitya. Autocracyb. Strategyc. Operational integrityd.

Which of the following is not one of the key legal and regulatory mechanisms?10. Capital, asset and membership requirementa. Tax treatment and benefitb. Disclosure and public reporting requirementsc. Discounts and mobility benefitsd.

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Chapter VIII

International Organisations

Aim


introduce international organisations•

elucidate the term IGOs and INGOs•

explain the history of international organisation•

Objectives


recognise scenario of post world war II international organisations•

describe the recent trends in IO•

elucidate conceptual approaches to IO•

Learning outcome


understand theoretical approaches to IO•

identify the micro-design of IOs•

understand• new institutionalism


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8.1 IntroductionThe modern history of international organisation (IO) reflects an uneven development of both the practice and concept that go under that name. The term is used in differing ways and we apply it to both IO conceived as formal institutional organisations and in a more general sense of order creation. Furthermore, international organisation includes not only interstate arrangements but, increasingly, arrangements among non-governmental and transnational actors. Thus, the landscape of international organisations (IOs) includes both inter-governmental organisations (IGOs) and international non-governmental organisations (INGOs). International organisation is clearly a very broad concept, which has evolved with the practice of various forms of international governance. Our main task here is to chart the theoretical development of understanding about IO. We emphasise approaches that are most relevant to international law and economics, while noting important contributions and challenges posed by alternative perspectives.

After a descriptive summary of the history and evolution of IOs, we discuss three general conceptions of IO as formal organisation, as international ordering principle and as international regime. Cooperation theory then provides a theoretical bridge from the realist ordering principle of anarchy to the neoliberal argument regarding the role of regimes. In turn, elaboration of regime analysis has laid the ground for a reintegration of international law and international relations (IR), an incorporation of various forms of new institutional analysis, a closer concern for specific institutional design principles and, finally, to a new appreciation of the role of formal institutions which had long ago been abandoned in theory if not in practice. Finally, we note the challenges posed by other traditions of international organisation and indicate promising future directions for productive theorising.

8.2 A Brief History of International OrganisationI.O carries with itself a long history which helped IO to emerge as a strong and influential organisation. It is as follows:

8.2.1 Westphalia to ViennaThe signing of the Peace of Westphalia in 1648, reinforced by the Treaty of Utrecht in 1713, established the principle of national sovereignty, thereby placing the states of Europe on equal legal footing. This notion of sovereign equality - endowing each state with territorial integrity and the right to conduct domestic and foreign affairs without outside intervention - represents the first real ordering principle among states. After Westphalia, ‘decentralised control by sovereign states’ (Falk, 1969, p. 69) provided the basis for a horizontal international order critical to the subsequent development of international organisation.

However, it was not until the nineteenth century that actual international organisations began to appear in significant numbers. Though the advent of states as sovereign political units was an important step, preconditions for the creation of IOs were not met during the seventeenth and eighteenth centuries. For example, there was insufficient contact between states, there was little recognition of problems arising from interdependence among states, and there was no perceived need for institutionalised mechanisms to manage international relations.

8.2.2 Vienna and the Nineteenth CenturyThe first serious attempt at formal international organisation arose with the Congress of Vienna (1814-1815), which established diplomatic foundations for a new European security order following the devastation of the Napoleonic Wars. Some credit the resulting ‘Congress system’ as a fundamental turning point in the conduct and organisation of international relations. It created a more systematic and institutionalised approach to managing issues of war and peace in the international system. The principal innovation at Vienna was that representatives of states should meet at regular intervals - not just in the wake of war - to discuss diplomatic issues.

Accordingly, four major peacetime conferences were held between 1815 and 1822. After this period, the aspirations of the Congress system gave way to a more informal regime. As characterised by one historian, ‘A looser association of the Great Powers continued in existence - an attenuated Congress system limited to dealing with problems as they arose, not seeking to anticipate them or to iron them out of existence’. This ‘Concert of Europe’ featured sporadic gatherings throughout the century, mostly in response to wars: Paris in 1856, Vienna in 1864, Prague in 1866, Frankfurt in 1871, Berlin in 1878, Berlin in 1884-1885, and The Hague in 1899 and 1907. These last two conferences went

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so far as to establish panels of arbitrators to settle international disputes and produced a Convention for the Pacific Settlement of International Disputes. These are the earliest examples of formal IOs designed to manage security issues. The result of the Concert was, indeed, quite a long period of relatively peaceful interstate relations among the great powers of Europe.

Many of the most dramatic developments in international organisation during the nineteenth century were not related to the goal of averting war but to an emerging mismatch between the geographic scopes of problems versus the scope of state authority. The technological changes brought on by the Industrial Revolution - especially in communication (telegraph) and transportation (steamship and railroad) - created an interdependence among states that required more stable forms of cooperation. A new set of IOs was created to manage international economic transactions which were an increasingly important aspect of interstate relations but were difficult for national governments to manage on a unilateral basis. To facilitate shipping and international trade and to regulate traffic, the littoral states of the Rhine established the Central Commission for the Navigation of the Rhine in 1815 at Vienna. Similar commissions were established for the Danube (1856) and Elbe (1821) rivers. The Zollverein, a customs union of Germanic states established 1834, was the first effort at international economic integration and governance in Europe.

A related set of IOs, the Public International Unions, was also a response to technological change. These were concerned primarily with non political, technical matters, and included the International Telegraphic Union (1865), the General (later Universal) Postal Union (1874), the International Union of Railway Freight Transportation (1890), and the International Bureau of Weights and Measures (1875). Some of these organisations had elaborate institutional frameworks, including permanent bureaus that represented forerunners of secretariats (Archer, 1983, p. 12). The ultimate purpose of these IOs was to facilitate international trade by establishing market rules and standardisation. It should be noted that the improved technology that increased the need for coordination among states also made communicating and convening easier, thus facilitating the process of organisation.

8.2.3 Versailles and the League of NationsThe periods following the two World Wars saw the greatest proliferation of institutions. Heads of state and diplomats met in 1919 at the Versailles Peace Conference to create a global security IO in the League of Nations. This was the first attempt at collective security - that is, an institution operating on the notion of all against one. Under Article 16 of the League Covenant, all member states were required to come to the aid of a member that was the victim of military aggression. The League was overwhelmingly concerned with fostering peace, though economic and social issues did receive secondary attention. The Covenant further established the Permanent Court of International Justice, the first attempt to create a global forum of justice and predecessor to today’s International Court of Justice. All members participated in the General Assembly, while a separate League Council - consisting of five permanent members (the United States, Britain, France, Japan, and Italy) and several rotating members - guided the operation of the organisation.

Versailles also represented the first instance of widespread participation by national and transnational private interest groups in a large interstate conference. Though the nineteenth century saw the formation of a number of INGOs - concerned with humanitarian, religious, economic, educational, scientific, political, and other matters - it was rare for private organisations to sit at the table next to governments. Two products of this non-governmental participation at Versailles were the establishment of the International Labour Organisation and a more formal partnership between member states and the Red Cross.

Though President Woodrow Wilson was its chief proponent, the United States never joined the League. Due largely to the lack of US participation, the organisation never lived up to its promise. It successfully resolved some small military conflicts, but the Covenant was frequently violated and other of course, the League was not able to avert World War II. Nevertheless, the League of Nations is an important marker in the history of international organisation as an attempt to forge a new international order based on a formal institution with universal membership.


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8.2.4 Post-World War II International OrganisationThe architects of the post war system set out to establish an extraordinarily ambitious framework of positive international law and institutions. Though the number of formal IOs increased from about 50 to 80 during the interwar period, in the enthusiasm of the early post war period they were created on a wide scale until they numbered over 600 by 1980. The most important was the United Nations, whose basic structure was decided by the US, the United Kingdom, the Soviet Union and China at the Dumbarton Oaks meeting of 1944 and the 1945 Yalta Summit. The drafters of the Charter, signed at the San Francisco conference of founding members in June 1945, were conscious of the limits inherent in the idealism of the League of Nations. Rather than count on collective security, ‘the UN was to be primarily a peace and security organisation based on the concept of the Four Policemen, that is, the USA, USSR, the United Kingdom and China as protectors against a recurrence of Axis aggression’.

Abstinence from unilateral use of force remained the main driving principle, however, and the Security Council was entrusted with primary responsibility for authorising and overseeing military action. The reality of the Cold War dashed these expectations and rendered the UN ineffective, though not irrelevant, in global security affairs. But demand for an expanded range of UN security services has re-emerged in the post-Cold War era and, despite some failures in recent years, the UN is playing an increasingly important security role, though the General Assembly is clearly ‘first among them’. Of the other five, the Secretariat, the Trusteeship Council and the Economic and Social Council report to the General Assembly. The Security Council and International Court of Justice have limited mandates, the former dealing only with situations related to the outbreak or potential outbreak of war, and the latter ruling on legal questions brought to it by member states or other UN bodies. These central components of the UN are surrounded by a cluster of functional agencies, including the International Labour Organisation, the UN Educational, Scientific and Cultural Organisation, the World Health Organisation and the Food and Agricultural Organisation. Over the years, there has been a steady proliferation of specialised and affiliated agencies, many designed to deal with development issues.

Another set of organisations was created during and following World War II, for the purpose of avoiding economic conflict by, especially, maintaining currency stability and free trade. The Bretton Woods monetary system established the US dollar as the central currency; other currencies would be valued according to the dollar, which in turn was pegged to gold. Two formal IOs were created as part of this system: the International Monetary Fund was charged with monitoring balance of payments while the World Bank supervised economic development and post war reconstruction. The General Agreement on Tariffs and Trade (GATT) was established in 1947 to maintain open trade based on the principle of non-discrimination. It was replaced in 1995 by the more encompassing and centralised - for instance, it contains strengthened dispute settlement procedures - World Trade Organisation.

These economic organisations were established as universal in principle but, in fact, began as closely held institutions of the Western powers. Their universality was overshadowed by the Cold War and, to a lesser extent, by North-South distributive conflicts. These institutions have become more inclusive over time, but effective control - both formal and informal - remains in Western hands. A further striking development in international organisation in the post war period has been the rise of regional IOs. Some perform a range of functions within a given geographical area (the Organisation of American States, the Organisation of Central American States, the Arab League, the Organisation of African Unity, and the Association of South East Asian Nations). Others are specifically security-related, such as the North Atlantic Treaty Organisation, the Organisation for Security and Cooperation in Europe, and the now defunct Warsaw Treaty Organisation. The largest numbers are economic, including the European Free Trade Association, the North American Free Trade Agreement, the Southern Cone Common Market, the Council for Economic Assistance (formerly the Council for Mutual Economic Assistance), the Andean Common Market, and the Asian-Pacific Economic Cooperation. Of this last category, the European Union (formerly the European Community) has the most developed set of institutions in terms of economics, law.

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8.3 Recent Trends in IODespite the frequent assumption that IGOs rarely die once created, fully one-third of the organisations that existed in 1981 were defunct by 1992. Many of those that became inactive were in the former Eastern bloc or were regional development organisations in the developing world. In the 1981-1992 period there was also a ‘growing polarisation between powerful countries – dominated by the literate, wealthy, and democratic - that establish and control IGOs and countries whose populations and governments are badly off and increasingly disengaged from international organisations’.

Parallel to the growth in governmental organisations has been a rapid proliferation of international non-governmental organisations. The growth in private international associations matched that of public international unions in the second half of the nineteenth century, and has surpassed it in the twentieth century. Indeed, since the late nineteenth century there have been more INGOs than NGOs in existence. From 176 in 1909, there were 1,255 INGOs in 1960 and are now more than 5,500. Although these organisations cover countless functional areas, the most important categories are commerce and industry, technology, science, and health and medicine, and human rights. In terms of geographical distribution, almost half were founded in Europe; Africa and Asia account for the greatest number in the developing world.

Today, IOs range in size from small consultative organisations such as the Northwest Atlantic Fisheries Organisation to very substantial bureaucracies like the World Bank or European Union with elaborate administrative structures, large budgets, many employees and extensive operational capacities. There has also been a striking, though uneven, development of international judicial bodies, most recently reflected in war tribunals for the former Yugoslavia and Rwanda and in the creation of an International Criminal Court.

As this historical summary makes clear, international organisation has generally been a response to or manifestation of deeper changes in international relations, not a driver of these changes.

8.4 Conceptual Approaches to IOThe theory and practice of IO have developed together in the modern era, and especially in the post-World War II period. One consequence of this progressive development is substantial ambiguity in what we mean by ‘international organisation’ since the practice and concept have co-evolved over time. A compensating virtue is that we have developed richness in terms of different possibilities for organising international behaviour and in terms of different ways of thinking about it. It is useful to distinguish three different conceptions of the term.

8.4.1 IO as Formal OrganisationThe most familiar and straightforward definition of international organisation is as formal organisations, usually among states or with states selecting representatives. As noted above, the Congress of Vienna (1815) established the Rhine Commission as the first formal IO, but not until the last third of the nineteenth century did IGOs begin to proliferate rapidly to facilitate expanding commercial and other forms of interdependence among European states. In the current period, formal IOs are exemplified by the United Nations and its agencies, as well as a host of functional and regional organisations.

While early discussions can be found in the writings of Dante Alighieri ([1314] 1957), Henri de Saint-Simon ([1825] 1952), Jeremy Bentham ([1786-89] 1927) and Immanuel Kant, the study of formal organisations took off in the early twentieth century, especially as the debacle of World War I led to the creation of the League of Nations. The interwar analysis was heavily descriptive and normative and focused on the legal and organisational structure of emerging or proposed institutions. It suffered from a relative neglect of the actual incentives of states, including their reluctance to transfer sovereignty to federal or supranational organisations. This led to its being labelled as ‘idealistic’ in distinction to the ‘realist’ account of international life as being fundamentally driven by the harsh realities of power politics. Realism continues to view power, not institutions, as the key organising principle of international affairs, and is sceptical of any significant role for formal organisations.


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Despite the failure of the League, the concern for international organisations carried through World War II, although it was significantly changed by David Mitrany’s ‘functionalist’ theory. Technological advancements and the desire to promote welfare concerns were seen as creating a need for interstate cooperation that required both international governmental organisations and non-governmental organisations to manage the necessary technical cooperation. The theory further emphasised the important role of professionals within those formal organisations in effecting international cooperation. ‘Neo functionalism’ extended this argument by suggesting that successful collaboration in one area would increase the benefits of cooperation in related areas, and generate joint pressure from domestic interest groups and international officials to extend the realm of cooperation. This ‘spill-over’ would then provide the motor for broad international, and especially regional, integration, as exemplified by the development of the European Community. Although this body of literature never took off, it represented an important move away from description towards a theoretical analysis whose ideas continue to be echoed in contemporary discussions.

While these theories argued that formal IOs could perform functions that would lead them to acquire authority, subsequent theory focused on how increasing interdependence was eroding state sovereignty. This trend has not been monotonic, as illustrated by high levels of pre-World War I economic interdependence that declined precipitously in the interwar period and were only surpassed well after World War II. Nevertheless, long-term and increasing interactions among states in all fields of activity - including health, technology, security, environment, culture and economics - mean that even the most powerful states are sensitive to occurrences elsewhere and cannot always achieve their goals by themselves. Small states that are dependent on larger states have even stronger reasons to seek support from such organisations.

Moreover, this interdependence takes increasingly complex forms, including the increase in the number of significant transnational actors such as multinational corporations and environmental groups. These changes have increased opportunities for formal international organisations but have not necessarily increased the willingness of states to transfer political authority to them.

Indeed, formal international organisations had come to be viewed unfavourably from both practical and theoretical standpoints until quite recently. From a practical perspective, IOs have not always lived up to the high expectations they have raised. This was true with the League of Nations in the 1930s and with the United Nations by the 1970s when the General Assembly and various UN agencies seemed to have become little more than forums for ideological debate (between North and South and between East and West). In the 1980s the UN system faced open hostility from the United States, its most powerful member. Similarly, the high expectations for the European Community appeared to have stalled in this period - both within Europe itself and with regard to transferring the regional community model elsewhere.

In fact, many formal IOs continued to play an important role throughout this period. Economic organisations were instrumental in the performance of the global economy, while NATO was the most institutionalised, and probably the most successful, alliance.

In the post-Cold War years, formal organisations have experienced somewhat of a renewal. There has been an effort to make better use of existing organisations as the United States did with the United Nations during the Gulf War, to change organisations such as NATO to address a different set of problems, and to expand the venue of organisations such as the World Bank to address new issues, including the environment. Skepticism regarding the effectiveness of formal IOs is neither over nor unwarranted, but there is new interest in pursuing the possibilities of IOs ranging from the European Union to the World Trade Organisation.

The theoretical literature is experiencing a similar sharp turnaround from the preceding decades where, in the words of one commentator, there ‘has been the steady disengagement of international organisation scholars from the study of [formal] organisations, to the point that today one must question whether such a field even exists any longer except in name’. This new attention to IOs should not be understood as a continuation of the earlier tradition, however, but as a reconstitution of a substantive interest, now on stronger theoretical footings. On the one hand, the new literature is decidedly non-idealist and questions of enforcement of agreements and incentives to obey institutions are key concerns of its proponents. On the other hand, the literature is theoretical as it seeks to move well beyond

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the institutional-descriptive accounts that dominated much of the earlier literature. Indeed, if anything, it can be criticised for being too abstract such that it has lost sight of many of the real institutional variations, including formal IOs that it should seek to explain.

Legal scholarship, especially the doctrinal analysis of the rules and outputs of formal IOs, has continued to provide a rich description of the institutional forms and details of IOs. Although largely non-theoretical, its implicit emphasis on problem-solving states is highly amenable to rationalist theoretical development. This work examines how similar problems are addressed under different IO arrangements (Amerasinghe, 1996; Dupuy, 1988; Kirgis, 1993) and the best is comparative (Schermers and Blokker, 1995). An especially promising recent development discussed below is the reuniting of the legal concern with detailed arrangements and more theoretical developments in economics and international relations.

Finally, the emphasis on formal IOs represents a very narrow view of the forms of, and possibilities for, international governance. Indeed, the failure of the ‘classic’ IO model to live up to an exaggerated promise of managing international affairs in a relatively depoliticised and expert manner has led to its disrepute in many quarters. Improved understandings of governance suggest that formal organisations are only one among numerous institutional possibilities.

8.4.2 IO as Ordering PrincipleIf formal organisation provides a narrow view of international organisation, the most expansive definitions of international organisation are framed in terms of broad ordering principles of the international system. We focus on two here: the realist conception of self-help in anarchy and the English school view of ‘society’. We do not consider other ordering principles such as Marxist theories of imperialism or of a ‘world capitalist system’, although the economic logic they describe certainly constitutes an alternative international ordering principle. The two we do consider play a central role in debates regarding the nature of international organisation and pose major alternatives to regime theory which we consider below.

8.4.3 Self-Help in AnarchyThe traditional realist view centres on sovereign territorial states in a state of anarchy, with Thomas Hobbes as the relevant intellectual hero. Anarchy is defined primarily in terms of the absence of central authority, not necessarily in terms of war (Milner, 1991, offers a valuable discussion of different meanings of anarchy). However, the realist view does imply that international politics is inherently competitive and conflictual, that survival is the primary goal of states, and that relative power is of central importance. Waltz, the most influential contemporary realist commentator on anarchy, emphasises that the fundamental difference between domestic and international politics is that the former is hierarchic while the latter is irreducibly anarchic.

This creates some irony with respect to realist reliance on Hobbes as their intellectual forebear since they part ways with him on his central conclusion that actors in a dire state of anarchy would choose a Leviathan, and thus transform anarchy into hierarchy. The best explanation for states’ failure to do so is that international anarchy is not as brutish as Hobbes’ vision of domestic anarchy.

Nevertheless, given the absence of central authority, the key realist ordering principle is self-help: states must take care of themselves. Security is seen as the overwhelmingly central problem and balance of power provides the unique source of international order. Thus a central focus of realist theory is the relation between the distribution of power and international outcomes, including but not restricted to war - although there are sharp debates over the precise impact of different power distributions. Power and security considerations are further seen as the deep source of states’ attitudes towards, and arrangements for, other (secondary) issues such as economics, human rights or environment. Thus lower-order institutions - including formal organisations and regimes - are seen as largely epiphenomenal, with the organisation of the system explained largely by the balancing of power among states (Mearsheimer, 1994/95; Wight, 1973).


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A very different tradition in the international relations field, inspired by Hugo Grotius, focuses on the system of states as an ‘international society’ that contains persistent elements of order. According to Bull, the most prominent member of this English school, ‘states form a society in the sense that they conceive themselves to be bound by a common set of rules in their relations with one another, and share in the working of common institutions’. This framework of rules and institutions guides state behaviour in patterned ways. Similarly, Finnemore stresses the notion of ‘norms as social structure’. States, embedded in a dense network of social relations that shape their judgments, define their interests according to ‘internationally shared norms and values that structure and give meaning to international political life’. The simple notion of anarchy thus cannot capture the richness and order of the international system. Even in settings of intense security competition such as the Cold War, mutual understandings and ‘rules of the game’ can provide considerable stability.

Members of this school have used its insights to critique the rationalist underpinnings of regime theory (next) for failing to capture many of the dynamics of international cooperation and organisation. States abide by rules and norms, even when it is not in their material interest, because they have a long-term interest in the maintenance of a ‘law-impregnated international community’ and share a sense of ‘moral community’. This work, however, has generally attempted to integrate regime theory into the study of international society, arguing, for example, that functional theories of regimes are largely accurate but that international society is a precondition for their development (Buzan, 1993). Hurrell (1993) suggests that the field of international law can provide a bridge for understanding the interaction between normative structure and self-interested cooperation. This recognition that regime theory and the notion of a norm-laden international society are not mutually exclusive offers a promising path for future work in the study of IO and cooperation more generally.

8.4.4 IO as RegimeBetween the narrow understanding of formal organisations and the extremely broad understanding of ordering principles lies the concept of ‘international regime’, which has become the most widely used approach to international organisation. Regime theory is premised on the twin observations that international politics is highly interdependent, thus implying mutual interests in cooperation, and that ‘international behavior is institutionalised’ in a variety of ways. There is agreement over these empirical phenomena, but the approach includes a diverse set of theoretical and methodological orientations. While there is no theoretical consensus, there has been wide adherence to a ‘standard’ definition of regimes as ‘sets of implicit or explicit principles, norms, rules and decision-making procedures around which actors’ expectations converge in a given area of international relations’ (Krasner, 1983, p. 2). This very broad conception of regimes includes the endpoints as well as the vast middle ground between formal organisations and broader ordering principles in international relations.

The definition of regime has been criticized as being expansive to the point of vagueness. An unfortunate consequence is that an inordinate amount of effort has been expended in arguing about whether or not there is an effective regime in a particular area. The corresponding virtue is that this broad definition allows for a broader view of governance possibilities than is suggested by the narrower concern with formal institutions. The various categories in the definition also point towards a greater level of specificity than is often achieved by more ethereal discussions of ordering principles. Finally, the breadth of the definition leaves room for a plurality of approaches – liberal as well as realist, rationalist as well as constructivist. This has provided some unity to the field despite the diversity of approaches sometimes employed. Regime ‘theory’ is confusing insofar as it refers to a body of literature including a wide range of different approaches and theories. Nevertheless, the most substantial vein of regime theory relies on rational choice understandings of state behaviour, where states are viewed as unified, self-interested actors. We emphasise rationalist approaches for this reason and because they are closest to the law and economics tradition.

Rational regime theory was a natural outgrowth of the increasing propensity among IR scholars, beginning in the 1970s, to theorise international cooperation problems as analogous to ‘market failure’. They used a public choice approach to problems such as public goods provision and externalities at the international level and applied Coase’s theory of property rights to the process of international organisation. But the most important move in the literature emerged from the ‘folk theorem’ of economics and its result that decentralised cooperation can be an equilibrium outcome when a circumstance is repeated through time. This provided a response to the realist claim that the lack of centralised authority in anarchy prevents international cooperation. Indeed, by taking a Hobbesian specification of

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anarchy as akin to a prisoner’s dilemma (Taylor, 1976), international relations theorists began to develop a theoretical argument that cooperation was not only possible in realist anarchy, it was in some sense likely (Axelrod, 1984). Thus the title of Kenneth Oye’s (1986) Cooperation under Anarchy reflected the emerging synthesis in the literature that international order did not require centralised institutions. The articles in Keohane and Ostrom (1995) provide a recent elaboration of this perspective.

Cooperation theory has been challenged in several important ways, especially by disputing whether its underlying assumptions truly apply in international relations. Possibly states, or their leaders, are not properly characterised as rational agents with the capacities or inclinations necessary to maintain decentralised cooperation. An alternative, more realist critique is that states as rational actors seek goals such as power that are different from the goals of economic actors who seek wealth. This latter position has been formalised as the claim that because states seek ‘relative gains’, cooperation is limited in international affairs, but this argument has been countered by analyses demonstrating that these limits are not great. An alternative and more telling criticism of rational cooperation as a theory of international organisation is that it has at best a very thin view of institutions. Thus cooperation theory provides a substitute for the need for international organisation as centralised enforcement, but it does not provide an account of why any substantial international organisation is needed at all.

8.5 Contemporary Theoretical Approaches to IOThese include:

8.5.1 Rationalist Regime TheoryThe seminal work for the study of rationalist regime theory is Robert Keohane’s After Hegemony (1984). The book explains the continued existence and increasing strength of international institutions in the wake of declining American hegemony. Drawing on rational choice logic and microeconomic theories, Keohane offers a functional theory of international regimes - in other words, the anticipated benefits to states explain the persistence of the regime and compliance with its rules. ‘Political market failure’ is a central notion in Keohane’s analysis: ‘Like imperfect markets, world politics is characterised by institutional deficiencies that inhibit mutually advantageous cooperation’. While bargaining could in principle correct these failures, Keohane argues that the underlying conditions for Coasean logic to operate - well-defined property rights (that is, a legal framework), perfect information, and zero transactions costs - do not naturally exist in the international system. Regimes, then, serve to fill in these gaps to facilitate cooperation among states on a decentralised basis.

Moreover, by clustering issues together in the same forums over a long period of time, they [regimes] help to bring governments into continuing interaction with one another, reducing incentives to cheat and enhancing the value of reputation. By establishing legitimate standards of behaviour for states to follow and by providing ways to monitor compliance, they create the basis for decentralised enforcement founded on the principle of reciprocity’. In short, states find it much more efficient to operate within multilateral institutions than to generate cooperation through countless bilateral agreements. And since the cost of dealing with an additional issue is much less within a regime, this may explain why they strengthen and expand in scope over time. Much of the early regimes literature focused on explaining why states create international regimes and demonstrating that they ‘matter’, that is, that they influence state behaviour in a meaningful way. From the beginning, however, regime theorists were addressing issues such as why regimes change or evolve and how to measure a regime’s effectiveness.

They are also concerned with why regimes take particular forms, such as bilateral, trilateral or multilateral. In addition, the application of regime theory has been expanded to a wide variety of issue-areas, including international security, trade, finance, human rights, telecommunications, and the environment. International legal scholars have increasingly used regime theory to better understand issues such as international trade law, arms control agreements, and the law of treaties.


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Scholars in the regime tradition have also used alternative terminology, including institutions, multilateralism, and governance systems, to describe phenomena of international organisation that exist between formal organisations and broader elements of order in the international system. Works centered around the construct of ‘international institutions’ are closely tied to regime theory and tend to either subsume the concept of a ‘regime’ or employ a definition that is virtually synonymous with the earlier Krasner definition.

Multilateralism has been described as an institutional form that orders state behaviour on the basis of generalised principles of conduct. However, there is a distinct body of work that relies on the notion of ‘governance without government’. ‘Governance’ is distinct from ‘government’ in that rules are obeyed not because they are backed by the threat of force; rather, it is the perceived legitimacy of rules that leads to compliance. Actors in the international system recognise certain norms and rules of conduct and feel compelled to oblige by them. Governance, then, is ‘order with intentionality’. This normative theory of international organisation is thus different from earlier, interest-based theories of international regimes, though their predictions about order are similar.

8.5.2 New InstitutionalismA subsequent wave of scholarship studies international organisation through the lens of the ‘new institutionalism’ within several social science fields, including economics, sociology, and political science. Important works, for example, have attempted to apply the sociology of organisations to IOs, describing them as ‘live collectivities interacting with their environments’ that ‘tend to become infused with value’. Armstrong and Bullmer (1998) use historical institutionalism to explain the development of the Single European Market in terms of the interaction between law and politics. The largest body of literature has begun to integrate the ‘new economics of organisation’ (NEO) - also referred to as ‘new institutional economics’ or ‘transaction costs economics’ - into the study of international organisation. In the early 1990s, economists began to notice ‘striking parallels between the central questions of NEO and those of international relations’. Both literatures focus on the need to establish institutions to facilitate cooperation when independent actions would produce sub-optimal outcomes. Oliver Williamson, for example, stresses the ‘feasibility of crafting superior ex ante incentive structures’ to promote cooperative behaviour. Thus, firms arise as a form of private, hierarchic ordering within a market that lacks formal organisation or authority.

The emphasis is on non-governmental forms of managing such problems as the provision of public goods and the guarantee of property rights. An important aspect of this NEO wave is an attempt to theorise about the organisational design of international institutions rather than treating them as black boxes. The assumption is that states do not simply follow the dictates of formal organisations - rather, they create institutions with specific design features intended to be the most effective and focus on the variety of institutional forms that result. In their study of international trade liberalisation over time, Yarbrough and Yarbrough show that ‘Institutional variety reflects the efficacy of alternate governance structures for different types of trade transactions in different political and economic environments’.

Lake (1996) presents a theory of contracting whereby organisational choice in security relations - which varies on a continuum from anarchic alliances to hierarchic empires - is determined by considerations of transaction costs and the expected costs of opportunism. International lawyers have similarly applied transaction costs economics to explain various governance structures in the international system. Even the existence of sovereign territorial states themselves, as a form of international institutionalisation, has been explained through this lens.

Though NEO writers tend to focus on formal IOs, this approach is far more theoretical in its objectives than the earlier legal-descriptive tradition in the field of international law. Formal rules are only one aspect of IOs according to the NEO school and they are not the most important determinant of state behaviour: ‘From the NEO perspective, concentration on formal legal structures may prove not only incomplete but also misleading, since the effective enforcement of rules assumed by the formal approach is often missing, particularly in international relations’. Informal institutions and behavioral norms play a prominent role. Much like regime theory, then, NEO applications to IO suggest that the stark dichotomy presented by some IR scholars between a hierarchic and ordered domestic arena and an anarchic international order is misleading.

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8.5.3 Micro-DesignIn much the same spirit as NEO, other international relations and legal scholars have focused on what might be called the micro-design of IOs and international treaties. These writers go beyond explaining the general demand for international regimes and focus on the demand and effectiveness of particular regime design features. Though they typically concentrate on formal IOs, they use the detailed study of these organisations to draw broad theoretical implications about international cooperation in a manner that is consistent with the goals of regime theory.

One important vein of this scholarship begins with the assumption that compliance with international agreements is generally high, and that violations are the result of legal ambiguities, inadvertence, or the incapacity of states to comply rather than calculated, self-interested ‘cheating’. Moreover, the incidence of this non-compliance is largely a function of how international treaties and regimes are designed, and thus regime effectiveness can be improved when certain institutional features are present. The resulting theories are thus prescriptive as well as descriptive.

A related literature explains why particular design features or levels of institutionalisation are chosen through consideration of the relative bargaining power of states, of domestic factors influencing institutional design, and of the specific features of the international problems that states face.

Downs and Rocke argue that uncertainty about future demands from domestic interest groups leads policymakers to design institutions with ‘sanctions for noncompliance that are low enough to allow politicians to break the agreement when interest group benefits are great, but high enough to encourage states to obey the agreement most of the time and thereby prevent trade wars’. So while these institutions may seem inefficient in that noncompliance is not severely punished, they are in fact an optimal outcome in light of the domestic uncertainty that exists. Finally, other micro-design theorists revert to simple functionalism to explain certain designed features. Garrett and Weingast (1993), for example, argue that the design of the European Union’s legal order is accepted by governments because it serves to mitigate various ambiguities that make cooperation difficult, namely, incomplete contracting and monitoring problems.

8.6 CritiquesThese include:

8.6.1 The Realist CritiqueFrom its inception, regime theory and its successors have been criticised by ‘realist’ theorists of international relations arguing that international institutions simply do not ‘matter’ in any meaningful way. According to the conventional structural critique, regimes have little or no independent effect on state behavior, especially when it comes to important economic and power relationships. Regimes, and international cooperation more generally, are readily upset by the logic of security competition because states have an overwhelming concern with power and survival. As a result, regimes are epiphenomenal to international politics: sustained cooperation can only exist when it is consistent with power politics considerations. This logic does not preclude the establishment of cooperative institutions, including military alliances, to satisfy short-term interests, but such forms of organisation are merely ‘temporary marriages of convenience’. Not all realists are so pessimistic. Glaser (1994/95) begins with the basic assumptions of structural realism and shows that discord is not the logical consequence under a wide variety of conditions. Institutions that provide information and reduce transaction costs, in particular, are not inconsistent with the exigencies of security competition, though in the end cooperation will normally be based on ad hoc agreements rather than more formal organisation.

8.6.2 GlobalisationBuilding from past work on ‘transnational relations’ the literature on globalisation stresses the large and growing number of non-state actors in the international system, such as firms, private associations, and religious groups. The fact that economic and other transactions increasingly take place without regard to national boundaries has important implications for international politics. One conclusion drawn by globalisation theorists is that the traditional state has become structurally inappropriate as a political unit, leading some to consider whether globalisation has gone too far. In terms of international organisation, Philip Cerny argues that the ‘residual state’ will no longer be the


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most important entity driving collective action in the international system and will not be able to provide global public goods, such as the regulation of the world market. The result may be increased reliance on private sources of governance that are more flexible and appropriate, such as inter firm alliances and international non-governmental organisations. 8.6.3 ConstructivismA major limitation of rational regime theory is that it takes both states as unitary actors and their interests as unproblematic. Some ‘bottom-up’ efforts rectify this situation by incorporating a richer rationalist view of the domestic constraints that states face, notably the ‘two-level games’ of Putnam (1988) and Milner (1997). Nevertheless, constructivism and other knowledge-based theories argue that the identities and interests of the actors, and how these are determined by the nature of the international community and its institutions, need to be explained rather than assumed. Some of these approaches can be readily accommodated by rational regime theory insofar as they provide a complementary analysis of why states have particular goals and beliefs, or of how particular outcomes become focal points.

Other approaches are more sharply contradictory to rational approaches. In part, this is because many constructivists reject the typically positivistic premises of rational regime theory, but fundamentally it is because they reject its individualism. They want to explain international arrangements from a ‘top-down’ perspective that examines the broader normative structures that constitute international ordering principles. The broadness of regime theory will allow it to incorporate some of these ideas; the rationalist stream of the theory will rework some of them in terms of its own conceptions of beliefs and information, though surely not to the full satisfaction of constructivist critics. While no agreed synthesis will emerge, the tension between the two approaches is likely to be mutually improving.

8.6.4 Let Us Sum UpTheorists and practitioners have employed a number of differing conceptions of ‘international organisation’. These conceptions can usefully be thought of as falling into three categories: IO as formal organisation, IO as ordering principle in the international system, and IO as regime. The last of these categories has received the most attention recently and has involved a high degree of fruitful theorising about IO and international cooperation more generally.

Political scientists who study IO have begun in recent years to return to the study of formal organisations, though this time they have done so with explicitly theoretical intentions. At the same time, international legal scholars have sought to meet IR theorists halfway. The result is a self-conscious effort from both sides to integrate the two fields. In his treatment of the negotiations on dispute resolution in the Uruguay Round of GATT, for example, Abbott recognises that ‘meaningful analysis of matters like these requires a theoretical framework’. Burley offers an historical account of the interaction of the law and IR literatures and suggests some ‘components of an institutionalist interdisciplinary dialogue’. This ‘dual agenda’ includes the study of organisational design, compliance, and international ethics. The overlap between this agenda and much of the NEO agenda is obvious, and this suggests that the future of IO scholarship will be more interdisciplinary than ever before.

Indeed, common concerns and methodology among political scientists, legal scholars and economists increasingly characterise the IO literature. More than ever before, international legal scholars are using modes of analysis drawn from political science and economics to understand international organisations and law. This interdisciplinary movement is clearly evident in substantive work on compliance with international rules and on dispute settlement. Scholars from various traditions have come together to understand why nations comply with international law and institutional rules.

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SummaryThe landscape of international organisations (IOs) includes both inter-governmental organisations (IGOs) and • international non-governmental organisations (INGOs).Elaboration of regime analysis has laid the ground for a reintegration of international law and international • relations (IR), an incorporation of various forms of new institutional analysis, a closer concern for specific institutional design principles.The signing of the Peace of Westphalia in 1648, reinforced by the Treaty of Utrecht in 1713, established the • principle of national sovereignty, thereby placing the states of Europe on equal legal footing.The United Nations is divided into six principal organs.• The Congress of Vienna (1815) established the Rhine Commission as the first formal IO.• If formal organisation provides a narrow view of international organisation, the most expansive definitions of • international organisation are framed in terms of broad ordering principles of the international system.Anarchy is defined primarily in terms of the absence of central authority, not necessarily in terms of war.• Regime theory is premised on the twin observations that international politics is highly interdependent, thus • implying mutual interests in cooperation, and that ‘international behaviour is institutionalised’ in a variety of ways.Cooperation theory has been challenged in several important ways, especially by disputing whether its underlying • assumptions truly apply in international relations.The title of Kenneth Oye’s (1986) Cooperation under Anarchy reflected the emerging synthesis in the literature • that international order did not require centralised institutions.Scholars in the regime tradition have also used alternative terminology, including institutions, multilateralism, and • governance systems, to describe phenomena of international organisation that exist between formal organisations and broader elements of order in the international system.Multilateralism has been described as an institutional form that orders state behaviour on the basis of generalised • principles of conduct.A major limitation of rational regime theory is that it takes both states as unitary actors and their interests as • unproblematic.The broadness of regime theory will allow it to incorporate some of these ideas; the rationalist stream of the • theory will rework some of them in terms of its own conceptions of beliefs and information, though surely not to the full satisfaction of constructivist critics.Burley offers an historical account of the interaction of the law and IR literatures and suggests some ‘components • of an institutionalist interdisciplinary dialogue’.

ReferencesMercatusCenter. • Lessons of New Institutional Economics for Development [Video Online] Available at: <http://www.youtube.com/watch?v=bPv8PliBPcQ&feature=results_main&playnext=1&list=PLD1CCE25195051433> [Accessed 15 May 2012].SuperAbdullah2009. • Floods in Sindh: Role of International organisations and community? [Video Online] Available at: <http://www.youtube.com/watch?v=bh17V4Q8OI4> [Accessed 15 May 2012].Encyclopedia of Law & Economics, 1999. • International Organization [pdf] Available at: <http://encyclo.findlaw.com/9800book.pdf> [Accessed 15 May 2012].Asia-Pacific Economic Corperation, 2008. • Introduction to International Organizations and Their Roles in Facilitating International Trade [pdf] Available at: <http://encyclo.findlaw.com/9800book.pdf> [Accessed 15 May 2012].Jackson, R. H. and Sorensen, G., 2007. • Introduction to International Relations: Theories And Approaches. 3rd ed., Oxford University Press.


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Jacques, L. L., Korman, J. S. and American Association of Law Libraries, 1996. • Introduction to international organizations. Oceana Publications.

Recommended ReadingArcher, C., 2001. • International Organizations. 3rd ed., Routledge.Hurd, I., 2010. • International Organizations: Politics, Law, Practice. Cambridge University Press.Barkin, J. S., 2006. • International Organization: Theories And Institutions. Palgrave MacMillan.

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Self AssessmentIt was not until the __________ century that actual international organisations began to appear in significant 1. numbers.

18tha. 17thb. 19thc. 16thd.

Which of the following arose the first serious attempt at formal international organisation?2. Peace of Westphaliaa. Congress of Viennab. Treaty of Utrechtc. Concert of Europed.

The United Nations is divided into ___________ principal organs.3. sixa. twob. sevenc. fived.

Which of the following is not one of the conceptual approaches to IO?4. IO as formal organisationa. IO as ordering principleb. IO as a regimec. IO as a security principled.

The seminal work for the study of rationalist regime theory is ________.5. Robert Keohanea. Keohaneb. Ostromc. Kenneth Oyed.

In the early 1990s, economists began to notice ‘striking parallels between the central questions of _________ 6. and those of international relations’.

IOa. NEOb. NATOc. INGOd.

Which of the following was established as the first formal IO by Congress of Vienna?7. Rhine Commissiona. Atlantic Fisheries Organisationb. INGOc. NGOd.


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___________ theory further emphasised the important role of professionals within those formal organisations 8. in effecting international cooperation.

Regimea. Rationalistb. New institutional c. Functionald.

_______________ has been described as an institutional form that orders state behaviour on the basis of 9. generalised principles of conduct.

Bilateralisma. Multilateralismb. Unilateralismc. Institutionalismd.

Which of the following is not one f the field where criticism is faced by IO?10. Regime theorya. Globalisationb. Constructivismc. Informationd.

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Case Study I

India: Evolution of Gender Mainstreaming in Human Resource Policy of BAIF Development Research Foundation, Pune

ChallengesPrior to 2002, the Bharatiya Agro Industries Foundation (BAIF) had only one gender-based policy- a 60 day maternity leave for both birth and adoptive mothers. Apart from this there were no other gender based benefits. The evolution of human resources policies in the last few years and a gradual change in how the organisation looked at equity issues led to the evolution and formulation of a gender mainstreaming policy. While many of the related policies came into effect in 2002, the gender policy as a whole was officially adopted in April 2004 and a committee was formed to tackle different issues related to the new policy. The challenge the organisation faced was how to actually implement their new gender mainstreaming policy.

Programme/projectsBAIF Development Research Foundation is a voluntary organisation established by a disciple of Mahatma Gandhi, the late Dr. Manibhai Desai of Urlikanchan near Pune. BAIF has implemented multidisciplinary rural development programmes throughout the 11 states of India for the last three decades. Its basic programme objectives are to provide gainful self-employment and sustainable livelihoods to the rural and tribal poor. The organisation has a strong in-house research base and over the last few years has been able to consolidate its ongoing programmes through the use of improved technology and more efficient systems, including the integration of gender equality measures.

In this study, BAIF embarked on a gender policy to sensitise office staff, as well as the participants and stakeholders in their programmes. The Foundation established policy procedures, including committees drawn from all staff levels, to facilitate the implementation and administration of its gender policy. These include a Complaints Committee which must be headed by a woman, with equal male and female membership drawn from different departments as well as, if possible, a third party representative from an NGO, conversant with sexual harassment. Within the communities, BAIF instituted a policy that women must be a part of the decision-making process regarding water source management. It also implemented programmes to build women’s capacity in decision-making, as well as their participation in programme planning, operation, monitoring and evaluation.

OutcomesImpacts of gender mainstreaming at the employee level:

Creation of a paternity and adoption leave system• Increased availability of paid leave for mothers• Increased recognition of paternal responsibilities and family needs• Increased gender sensitisation among staff related to evolving gender policy and gender integrated • programmesFreer environment for women to participate in organisation level decision-making•

Impacts of gender mainstreaming at the community level:Installation of women-friendly equipment for agricultural operations• Increased access to dependable source of clean water through installation of non-reversible hand pumps circulating • water in all the required areasParticipation of women in Village Meetings for local governance and influencing policy-making in water and • sanitationAdoption of community needs assessment process that focuses on women’s water and sanitation and health • needs as a major input for policy decisions at the local levelInitiation of use of sex-disaggregated data and indicators in BAIF’s monitoring and evaluation processes•


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Key Factors for SuccessSelf Help Groups: BAIF realised the important role of Self Help Groups in improving community access to • water and sanitation, while addressing the need to involve women integrally in this process. To this end, its programmes encourage women’s groups to initiate various community development activities and give them an opportunity to display their latent talents.BAIFs gender policies: Gender mainstreaming policies were introduced in both project and field offices • simultaneously, in order to highlight BAIF’s commitment to improve gender equality.Implementation at the field level: BAIF’s policy aims to ensure that all of its development activities are gender-• sensitive at the planning and implementation stages and that woman’s concerns and contributions are addressed and recognised so that the benefits of development reach them adequately.

(Source: India: Evolution of Gender Mainstreaming in Human Resource Policy of BAIF Development Research Foundation, Pune [pdf] Available at: <http://www.un.org/esa/sustdev/sdissues/water/casestudies_bestpractices.pdf> Accessed 15 May 2012])

QuestionsWhat were the situations and challenges face by BAIF?1. AnswerThe various challenges faced by BAIF were as follows:

Bharatiya Agro Industries Foundation (BAIF) had only one gender-based policy- a 60 day maternity leave a. for both birth and adoptive mothers.There were no other gender based benefits.b.

What were the projects introduced by the NGO? 2. AnswerBAIF embarked on a gender policy to sensitise office staff, as well as the participants and stakeholders in their programmes. The Foundation established policy procedures, including committees drawn from all staff levels, to facilitate the implementation and administration of its gender policy. These include a Complaints Committee which must be headed by a woman, with equal male and female membership drawn from different departments as well as, if possible, a third party representative from an NGO, conversant with sexual harassment. Within the communities, BAIF instituted a policy that women must be a part of the decision-making process regarding water source management. It also implemented programmes to build women’s capacity in decision-making, as well as their participation in programme planning, operation, monitoring and evaluation.

What were the key factors of success of the project?3. AnswerThe key factors leading to success are as follows:

Self Help Groups: BAIF realised the important role of Self Help Groups in improving community access • to water and sanitation, while addressing the need to involve women integrally in this process. To this end, its programmes encourage women’s groups to initiate various community development activities and give them an opportunity to display their latent talents.BAIF’s gender policies: Gender mainstreaming policies were introduced in both project and field offices • simultaneously, in order to highlight BAIF’s commitment to improve gender equality.Implementation at the field level. BAIF’s policy aims to ensure that all of its development activities are • gender-sensitive at the planning and implementation stages and that woman’s concerns and contributions are addressed and recognised so that the benefits of development reach them adequately.

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Case Study II

India: From Alienation to an Empowered Community - Applying a Gender Mainstreaming Approach to a Sanitation Project, Tamil Nadu

ChallengesIn India, only 43 per cent of the urban population has access to basic sanitation. In the low-income slum settlements, 15 per cent of the households have their own toilets and another 21 per cent have access to community toilets. This case study documents a community sanitation project in eight slums in the Tiruchirapalli district of Tamil Nadu State, in southern India. The slums in the study had six community dry latrines in which the human waste fell into an open pit and was collected manually and two latrines with septic tanks constructed by the municipal corporation. However, the structures had all became unserviceable due to the poor maintenance of any municipal infrastructures created before April 1999.

The women in Viragupettai reported that the non-maintenance of the latrines caused faecal worms to generate and reproduce, and they could be found nearby the water taps, and even inside the walls of their houses. Poor sanitation and contaminated water affected all families with disease, increasing their medical expenses.

Male community leaders did not take any steps to provide improved facilities. Requests to the government for better services were of no avail until the people joined forces with Gramalaya, an NGO that works with communities on water and sanitation projects.

To address this situation, in 2000 the state authorities for urban affairs in the Tiruchirapalli district proposed involving NGOs to encourage people’s participation and empower women under the Namakku Name Thittam (We for Ourselves) programme. Gramalaya and two other NGOs formulated the project with funding fromWater Aid. The funding enabled the project to serve a total of 25 local slums in various communities, with guidance from the district collector and the Commissioner of the City Corporation. In Gramalaya, 8 slums in total benefited from the project.

Gramalaya had prior experience in water, sanitation and hygiene projects in rural areas, and in working with women’s groups as the focal point for dissemination and change. The project design called for the installation of drinking water facilities and individual toilets, as well as community mobilization with a focus on gender mainstreaming. Water Aid covered the equipment and installation costs, while Gramalaya covered the capacity building and community mobilization components. The government provided the land sites, electricity, water supply, and loans to community members.

OutcomesWomen’s empowerment• Men’s involvement• Income from pay and use toilets;• Community development by women• Vermicomposting - sanitation and income• Creation of innovative child-friendly toilet (CFT) complex for children• Improved sanitation facilities• Changes in key hygiene behaviour•


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Key factors for successThe key reasons for this integrated water and sanitation project’s success were:

The project’s focus on women’s empowerment, including the formation of women’s self-help groups and the • related savings and credit scheme run by the womenOpen discussions with male community members regarding the benefits to themselves, their families and the • community of women’s empowermentCapacity-building of the women’s groups in the areas of accounting, and accessing government services• Provision of family counselling on domestic violence and communal problems• Development of communal sanitation facilities managed by the community• Adoption of a pay and use system that supported both facility maintenance and community development • activitiesCollaboration between the government, NGOs and the community•

(Source: India: From Alienation to an Empowered Community - Applying a Gender Mainstreaming Approach to a Sanitation Project, Tamil Nadu [pdf] Available at: <http://www.un.org/esa/sustdev/sdissues/water/casestudies_bestpractices.pdf> Accessed 15 May 2012])

QuestionsWhat were the sanitary situations prior joining hands with Gramalya?1. What were the projects introduced by the NGO? 2. What were the outcomes of the project carried?3.

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Case Study III

Ecuador

The efforts of the National Association of Entrepreneurs (ANDE), a voluntary private business association in Ecuador, illustrate this approach to reducing corruption. To address widespread corruption and the need for legal reform in Ecuador, ANDE identified and proposed the elimination of duplicative and conflicting commercial laws. Importantly, ANDE’s focus was not to blame past corruption on anyone particular group, as is often done, but rather to initiate reforms that would change the direction of business and institute clean practices.

To identify the roots of corruption, ANDE reviewed the country’s commercial laws, particularly those concerning production, foreign trade, the establishment of official prices in the private sector and technology transfers. ANDE’s studies showed that since the founding of Republic of Ecuador more than 150 years ago, some 92,250 legal norms have been created, of which 52,774 were in force in 1997.

The sheer number of overlapping, unclear and contradictory laws had created an environment of legal chaos and had left the application and enforcement of laws to the discretion of bureaucrats. ANDE obtained the support of chambers of commerce, industry, agricultural entities, labour unions, ministries and NGOs and presented its legal reform proposals to the Government, which implemented 25 per cent of all proposed legislative changes in the first year alone.

The experience of ANDE and other think tanks and associations suggests that they play a key role in legal simplification. Governments are often compelled to make decisions and execute “top-down” reforms once problems get out of hand. Yet input from the private sector is the key to the formulation of legal and regulatory reform. The private sector knows first-hand the inconsistencies that hamper business growth and present opportunities for corruption for both business and Government officials. Such a grassroots approach to reform is more effective in reducing opportunities for corruption than a top-down method.

(Source: Educador [pdf] Available at: <http://www.unglobalcompact.org/docs/issues_doc/7.7/BACbookFINAL.pdf> [Accessed 15 May 2012])

QuestionsWhat was the approach adopted by ANDE for reducing corruption?1. How did ANDE succeeded in reducing corruption?2. What were the consequences of the approach adopted by ANDE?3.


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Self Assessment Answers

Chapter Ic1. b2. c3. a4. d5. a6. b7. c8. a9. a10.

Chapter IId1. c2. a3. c4. c5. c6. a7. b8. a9. d10.

Chapter IIIb1. a2. c3. b4. d5. d6. a7. c8. c9. d10.

Chapter IVa1. a2. c3. d4. b5. d6. b7. a8. c9. a10.


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Chapter Va1. d2. c3. b4. a5. a6. b7. a8. d9. d10.

Chapter VId1. d2. b3. a4. c5. c6. c7. a8. d9. a10.

Chapter VIIa1. b2. a3. d4. c5. a6. c7. d8. b9. d10.

Chapter VIIIc1. b2. a3. d4. a5. b6. a7. d8. b9. d10.

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