International Organizations

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Chapter 4

• International Organizations

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United Nations (UN)

• UN was established in 1945 after the Second World
  War.
• UN has four bodies
• General Assembly
• Security Council
• UN Specialized Agencies
• UN Secretariat

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UN General Assembly is the essential body of the
UN.

• It is made up of all member states, each with one
  vote, regardless of size, wealth, or power.

4
UN Security Council is composed of five permanent
members with veto power and 10 chosen (five each
year) for two years terms.

• Five permanent members of Security Council are
• China, Russia, France, England (UK), and United
  States of America (USA)

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UN Specialized Agencies

• UNICEF WHO FAO
• UNIDO ILO UNESCO
• UNDP ICAO ITU
• UPU WMO IAEA
• IFAD UNCTAD IMF
• IDA IBRD IFC
• International Court of Justice
• UN Economic and Social Council

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UN Offices

• UNICEF UN International Childrens Emergency
  Fund
• WHO World Health Organization
• FAO Food and Agricultural Organization
• UNIDO UN Industrial Development Organization
• ILO International Labor Organization
• UNESCO UN Educational, Scientific and Cultural
  Organization
• UNDP UN Development Program
• ICAO International Civil Aviation Organization
• ITU International Telecommunications Union

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UN Offices

• UPU Universal Postal Union
• WMO World Meteorological Organization
• IAEA International Atomic Energy Agency
• IFAD International Fund for Agricultural
  Development
• UNCTAD UN Conference on Trade and Development
• IMF International Monetary Fund
• IDA International Development Association
• IBRD International Bank for Reconstruction and
  Development (World Bank)
• IFC International Finance Corporation

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UN Secretarait

• Headed by by the secretary-general, the
  secretariat carries out day-to-day administrative
  functions of UN.

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Criticism of UN

1. There are no Muslim countries in the Security
   Council.
2. Africa and Latin America do not have
   representatives in the Security Council.
3. Economically powerful states like Japan and
   Germany are not in the Security Council.
4. Important states like Brazil, Nigeria, and India
   want to have a place in the Security Council.
5. Security Council is composed of the victorious
   states of the Second World War.

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A UN joke

• Last month a world survey was conducted by the
  UN.
• The only question asked was
• "Would you please give your honest opinion about
  solutions to the food shortage in the rest of the
  world?"The survey was a HUGE failure because of
  the following1. In Eastern Europe they didn't
  know what "honest" meant.2. In Western Europe
  they didn't know what "shortage" meant.3. In
  Africa they didn't know what "food" meant.4. In
  China they didn't know what "opinion" meant5. In
  the Middle East they didn't know what "solution"
  meant6. In South America they didn't know what
  "please" meant7. In the USA they didn't know
  what "the rest of the world" meant8. In
  Australia they hung up as soon as they heard the
  Indian accent.

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Multilateral Banks

• African Development Bank is trying to support
  private enterprises in Africa.
• Asean Development Bank is trying to develop the
  most underdeveloped regions in Asia.
• Inter-American Development Bank finances projects
  in Latin America and Caribbean.
• European Bank for Reconstruction and Development
  (EBRD) intends to aid East European transition
  economies.
• International Bank for Reconstruction and
  Development (IBRD) is the World Bank.

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European Bank for Reconstruction and Development

• It was established in 1991 after the fall of
  Soviet Union in 1991. Its aim is to help the
  Central and Eastern European ex-Soviet countries
  to develop their private sectors in democratic
  environment.
• EBRD is owned by 60 countries and two
  intergovernmental institutions.
• It provides project financing for banks,
  industries, and businesses, both new ventures and
  investments in existing companies. It supports
  privatization and restructuring of state-owned
  firms and improvement of municipal services.

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Islamic Development Bank

• It is established in 1395H/1975.
• The head office is in Jeddah, Saudi Arabia. IDB
  has regional offices in Kuala Lumpur, Malaysia
  Rabat, Moracco and Almaty Kazakhstan. So it is a
  multilateral Bank.
• The purpose of the bank is to foster economic
  growth and social progress of member countries
  and Muslim communities in general according to
  principles of Shariah

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Islamic Banks Portfolio (IBP)

• In 1987, Islamic Development Bank invited leading
  Islamic financial institutions to participate in
  the establishment of Islamic Banks Portfolio
  (IBP).
• IBP provides short-term trade financing and
  medium-term asset-based finance to the firms in
  Muslim countries. IBP also promotes Islamic
  financial market.

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Organization for Petroleum Exporting Countries
(OPEC)

• It is established in 1960 in Baghdad by Iran,
  Iraq, Kuwait, Saudi Arabia, and Venezuela. Qatar,
  Libya, Indonesia, Abu Dhabi, Algeria, Ecuador,
  and United Arab Emirates joined later.
• Membership is open to any country which is a
  substantial net exporter of oil and which shares
  the ideals of the organization.

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OPEC members collectively

• Supply 40 of the worlds oil output,
• Posses more than 75 of the worlds total crude
  oil reserves,
• Meets 84 of Europes oil needs,
• Meets 90 of Japans oil needs.

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Organization for Economic Cooperation and
Development

• It is established in 1960 to promote economic
  cooperation and development.
• It has 30 members Australia, Austria, Belgium,
  Canada, Czech Republic, Denmark, Finland, France,
  Germany, Greece, Hungary, Iceland, Ireland,
  Italy, Japan, South Korea, Luxembourg, Mexico,
  Netherlands, NZ, Norway, Poland, Portugal,
  Slovakia, Spain, Sweden, Switzerland, Turkey, UK,
  and US.
• Its base is in Paris. It helps governments to
  respond to economic, social, and environmental
  challenges posed by globalization.

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Imortant groupings

• G7 US, UK, France, Germany, Japan, Italy,
  Canada.
• G8 US, UK, France, Germany, Japan, Italy,
  Canada, Russian Federation.
• E7 China, India, Brazil, Russian Federation,
  Mexico, Endonesia, Turkey.
• BRIC Brazil, Russian Federation, India, China.
• T-BRIC Turkey, Brazil, Russian Federation,
  India, China.
• CIVETS Colombia, Indonesia, Vietnam, Egypt,
  Turkey, South Africa.
• EAGLES 10 China, India, Turkey, Brazil,
  Indonesia, South Korea, Russian Federation,
  Mexico, Egypt, Taiwan.

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Greenpeace

• It is a non-profit organization with a presence
  in 40 countries. It focuses on the most crucial
  worldwide threats to our planets biodiversity
  and environment.
• It campaigns to
• Stop climate change,
• Protect ancient forests,
• Save the oceans,
• Stop whaling,
• Say no to genetic engineering,
• Stop the nuclear threat,
• Eliminate toxic chemicals,
• Encourage sustainable trade.

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Rainbow Warriors

• They call themselves Rainbow Warriors and argue
  that when the last tree is cut, the last river
  poisoned, and the last fish dead, we will
  discover that we can not eat money.

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General Agreement on Tariffs and Trade (GATT)

• It was established in 1947, Geneva, Switzerland.
• The purpose was to promote free trade by reducing
  tariff barriers.

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GATT Principles

1. Reciprocity If one country reduces its tariffs
   against another, the second country must likewise
   lower its tariffs.
2. Nondiscrimination Members must not grant one
   country preferential trade treatment over others.
   Most-favored-nation rule must apply to all the
   members.
3. Transparency Members are expected to replace
   non-tariff barriers (whose effects are hard to
   measure and detect) with tariffs, which are open
   to scrutiny and thus more easily reduced through
   further negotiations.

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GATT Negotiating Rounds

• Geneva Round...............................1947
• Annecy Round................................1949
• Torquay Round...............................1950
• Geneva Round................................1956
• Dillion Round...................................19
  60-61
• Kennedy Round...............................1964-6
  7
• Tokyo Round...................................1973
  -79
• Uruguay Round...............................1986-9
  2

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World Trade Organization (WTO)

• It is
• An organization for liberalizing trade,
• A forum for govenments to negotiate,
• A place for govenments to settle trade disputes,
• An organization operating a system of trade
  rules.

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Issues to be tackled by the WTO

• Agricultural trade has been excluded from
  previous negotiations. Removal of all trade
  restrictions on farm products will increase the
  world trade by 100 billion, yearly.
• Textiles and clothing trade had been restricted
  by multi-fiber arrangement (MFA). Exporters were
  mainly LDCs and importers were wealthy
  industrialized countries. Expected gains from
  liberalization is 50 billion.
• Intellectual property Protection against
  infringement of patents, trademarks and other
  intelelctual property is discussed.
• Foreign investment Restrictions on FDI by
  multinationals are challenged.
• Internationally traded services Developed
  countries attempt to reduce the barriers on
  service imports like financial services,
  insurance services, etc.

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Topics on the agenda of WTO

• Restrictions on FDI
• Government protection of new technology to
  protect domestic industry
• Antidumping laws
• Environmentalists opposition to increase trade
• Trade disputes between countries
• Setting ground rules for international commerce

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World Bank (IBRD) is responsible for economic
development of countries.

• It provides two types of loans
• Hard loans
• Soft loans

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1) Hard loans are made and repayable in hard,
convertible currencies at market interest rates
with normal market maturities. They are secure
loans not exceeding 25 years.

• International Finance Corporation is World Banks
  investment department. IFC finances industries
  like fertilizers, synthetic fibers, tourism, and
  paper and cotton fabric. It developed capital
  market in Brazil.

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2) Soft loans can be paid back in soft,
non-convertible currencies, carry low or no
interest obligations, are usually long-term up to
40 years and may have grace periods up to 10
years during which no payments are required.

• International Development Association (IDA)
  provides these loans. Soft loans are given to
  countries with per capita income less than 750 a
  year. It is to help the poorest LDCs which need
  loans to develop, but they can not carry hard
  currency burden.

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International Monetary Fund (IMF)

• It was established to promote international
  monetary cooperation in Bretton Woods in 1945.
• The Articles of Agreement
• Foster orderly foreign exchange arrangements,
• Foster fixed currencies,
• Foster shorter duration and lesser degree Balance
  of Payments disequilibria.

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In 1971, the second clause was changes as follows

• 2) Foster floating exchange rates
• And a fourth clause was added as follows
• 4) IMF has surveillance powers over the member
  states, meaning that IMF can influence or even
  dictate fiscal and monetary policies of the
  member states.

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The world went through many economic and crises
after 1971.

• Some solutions to debt crises
• Debt default is when countries can not pay their
  debts debts are turned into bad debts.
• Debt rescheduling is when countries cannot pay
  their debts on time, debts are rescheduled.

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Bank for International Settlements (BIS)

• BIS is the most discrete financial institution in
  the world. Major industrial countries meet 10
  times a year to discuss the global financial
  system in Basel Switzerland. It was established
  in 1930.
• It is a forum for international monetary
  cooperation,
• It is a center for research,
• It is a banker for central banks,
• It is an agent for international financial
  arrangements.

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ECONOMIC INTEGRATION

• According to Bela Balassa (The Theory of Economic
  Integration, 1961), there are five degrees of
  economic integration. At each succeeding state,
  members surrender a greater measure of their
  national sovereignty.

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Five levels of economic integration

• Free trade area Members agree to remove all
  barriers to trade within the group but may
  continue to pursue their own independent policies
  with non-members.
• Customs union Free movement of goods among
  member countries but imposes common system of
  trade restrictions with outsiders.
• Common market In addition to customs union,
  there will be unrestricted movement of capital,
  labor, and entrepreneurship within the union.
• Economic union In addition to common market,
  economies of member countries are integrated
  through a common central bank, unified monetary
  and tax systems, and a common foreign economic
  policy.
• Economic integration Removal of all barriers to
  interbloc movement of goods and factors of
  production is complete, unification of social and
  economic policies achieved, and all members are
  subject to the binding decisions of a
  supranational authority consisting of executive,
  judicial, and legislative branches.

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European Union (EU)

• After a devastating Second World War, European
  countries decided to work together to avoid
  another war in Europe and to keep coal and steel
  industries under control.
• Treaty of Rome was signed in 1957 creating
  European Economic Community (EEC) and European
  Atomic Energy Community (Euratom).

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EU Enlargement

• Treaty of Rome was signed by six founding states
  W. Germany, France, Italy, Belgium, Netherlands,
  and Luxembourg (Benelux States).
• In 1973, United Kingdom, Ireland, and Denmark
  joined.
• Following enlargements Greece (1981), Spain and
  Portugal (1986), Austria, Finland, and Sweden
  (1995), Lithuania, Estonia, Latvia, Slovakia,
  Malta, Cyprus Greek Republic, Slovenia, Hungary,
  Check Republic, and Poland (2004), Romania and
  Bulgaria (2007).

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EU hell or heaven?

• Heaven if,
• Policemen English
• Cooks French
• Beer Brewers German
• Lovers Italian
• Organization Swiss
• Hell if,
• Policemen German
• Cooks English
• Beer Brewers French
• Lovers Swiss
• Organization Italian

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The New Map of EU

           

    

• With the latest enlargement, EU has become 27
  states. It is the richest region in the world.

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Altiero Spinelli, an Italian resistence fighter
is the father of the idea of a united Europe.

• In 1944, he argued for a federal Europe with a
  written constitution, a supranational govenment
  directly responsible to the people of Europe and
  not national governments, along with an army
  under its control, with no other military forces
  being permited.

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EU organizational structure

• Council of Ministers is the policy setting body
  of the EU. It is made up of prime ministers of
  the member states. They meet periodically at
  summits.
• European Parliament is the elected body of the
  EU. The members of the EP are elected by the
  citizens of the member countries. The
  representation in the EP is according to the
  population sizes of the countries.
• European Commission is the beurocracy of the EU.
  There are about 20,000 beurocrats and technocrats
  working in Brussels.
• European Court of Justice is the legal organ of
  the EU. It is deciding on issues raised against
  Treaty of Rome (against Nice Agreement after it
  is passed from the parliaments of the member
  states). Its authority supersedes the decisions
  of the courts in the member states.

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Maastricht Treaty

• It was signed on 1991 by 12 EU member states. It
  was a committment to future United States of
  Europe. Its goals were monetary and economic
  union with European Central Bank and a single
  currency replacing national currencies.

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Maastricht Treaty set out five convergence
criteria which member states must satisfy before
they can accede to European Monetary Union (EMU)

• Inflation rates should be no more than 1.5 above
  the average of the three EU countries with the
  lowest interest rates.
• Long-term interest rates should be no more than
  2 above the average of the three EU countries
  with the lowest interest rates.
• National currencies must not have been devalued
  and must have remained within the normal (15)
  bands of the EMS for the previous two years.
• National budget deficits must be less than 3 of
  GDP.
• National debt must be less than 60 of GDP.

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North American Free Trade Agreement (NAFTA)

• NAFTA was established in 1990 by the USA and
  Canada. Mexico joined later and NAFTA became the
  largest economic area in the world.
• USA alone is accounting for the 28 of worlds
  GDP.

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Association of South East Asian Nations (ASEAN)

• It is created in 1967 by Brunei, Indonesia,
  Malaysia, the Philippines, Singapore, Thailand,
  Cambodia, Laos, Myanmar, and Vietnam.
• ASEAN is the fastest growing economic region in
  the world. Their GDPs enjoyed annual growth rates
  averaging over 7.
• ASEAN China Free Trade Area launched on Jan. 1,
  2010, has become the largest regional emerging
  market in the world.

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Economic Community of West African States (ECOWAS)

• It was established by Benin, Burkina Faso, Cape
  Verde, Gambia, Ghana, Guinea, Guinea-Bissau,
  Ivory Cost, Liberia, Mali, Niger, Nigeria,
  Senegal, Sierra Leone, and Togo.
• ECOWAS countries produce and export mainly
  agricultural products (coffee, cacao, palm oil)
  and minerals including oil.

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Commonwealth of Independent States (CIS)

• After the collapse of Soviet Union in 1991,
  ex-Soviet Republics formed CIS as a free trade
  area. Russia, Kazakhstan, Uzbekistan,
  Turkmenistan, Tajikistan, Kyrgyzstan, Azerbaijan,
  Georgia, Armenia, Belarus, Ukraine, and Moldova
  are members of CIS.
• The most important state in CIS is Russia which
  is the worlds largest country (6.5 million
  square miles).
• CIS is very rich in natural resources, including
  gold, oil, natural gas, minerals, diamonds, and
  fertile farmland.