SUPRANATIONAL ORGANISATIONS ARE

DETRIMENTAL TO ECONOMIC GROWTH AND

DEVELOPMENT Presented By Imran BanatSandip PatilManpreet Kaur Matharu

What is a Supranational Organization?

A supranational organization is an association composed of different countries where the member-countries voluntarily surrender some decision making prerogatives for the sake of the collective good of their citizens.

Regardless of political affiliation, policy makers worldwide must make choices that will please a certain group while being opposed by another.

From the capitalist reforms in Russia to the latest tax reforms proposed in the USA, political, social and economical decisions are always controversial.

What is good for the community or the system is often not so for the individual or at least that is how it is usually perceived by him. Individuals, as part of a system (whether it is biological, political, social, etc) make choices based on their experience, beliefs, needs, or desires, and tend to be short sighted, prejudiced and narrow minded.

While collaboration among different countries has been frequent throughout history (in the form of alliances, pacts and agreements), it is not until recently that SOs have come to symbolize the birth of a new era: Globalization.

Let’s look into the EU’s case. Born out of pure economic interest, it soon needed a political branch, so the European Tribunals, European Commissions, and a European Parliament were created. Having become a de facto political union, the EU started the difficult task of finding a common interest course and trying to make every state member follow.

Silently the EU (with a flag and an anthem of its own) has become a political force much stronger than most of its members would like to recognize. While most of the EU rulings affect all or most its state members, its citizens are most aware of it when those rulings affect their country or way of life directly. Per example, development funds are distributed all over the Union, according to an agreed system of distribution. While these funds are extremely large, it is the rulings on prohibiting the United Kingdom to export beef due to an outbreak of bovine spongiform encephalopathy (a.k.a. mad cow’s disease) or the quota proposed for next year’s milk production what really gets to every member state’s news casts.

E.U. -European Union

C.I.D.A.(Canadian International Development Agency)

Formed in 1968 by the Canadian government.

Administers foreign aid programs in developing countries, and operates in partnership with other Canadian organizations in the public and private sectors as well as other international organizations.

Its mandate is to "support sustainable development in developing countries in order to reduce poverty and contribute to a more secure, equitable, and

prosperous world.”.

C.I.D.A. Controversies

BT Cotton › Genetically Modified Crop to used to boost yields & reduce

use of pesticides› This project was opposed by many as these crops does not

generate new seeds of Cotton & would have made the soil Unfertile.

BT Brinjal› Genetically Modified Crop used to boost yields while reducing

dependence on pesticides.› Some Scientists have been opposing it, arguing that the genes

were toxic and would affect the health of the consumers

WORLD TRADE ORGANISATION

Does the World Trade Organization do enough to promote sustainable development and protect the environment? The WTO claims to be “the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business.” Further, the WTO claims that these six tasks are its core functions:

(1) Administering WTO trade agreements, (2) Forum for trade negotiations, (3) Handling trade disputes, (4) Monitoring national trade policies, (5) Technical assistance and training for developing countries,

and (6) Cooperation with other international organizations.

These functions are specifically vague, and nowhere does the issue of sustainability arise. If the WTO’s mission is simply to help producers of goods and services, exporters, and importers conduct their business and leave issues of social, environmental and economic sustainability to the nations participating in trade, how can the WTO be put under the microscope regarding sustainability? Because, to the questions, “Is it a dictatorial tool of the rich and powerful?”, “Does it destroy jobs?”, and “Does it ignore the concerns of health, the environment and development?” the WTO’s answer is “Emphatically no”. Further, it claims that criticisms of the WTO are often based on fundamental misunderstandings of the way the WTO works. Since the WTO is defensive against accusations that it promotes trade to the benefit of private interests and wealthy nations, and at the expense of the environment and sustainability, its behavior regarding sustainability must be examined.

Greenpeace, which has long been a critic of the WTO, argues: The WTO is secretive, non-transparent and undemocratic. Meetings are

by invitation only, are hidden from public view and are closed to direct public input.

The WTO puts trade on the highest pedestal – before our health and the environment.

This is because the WTO is driven by narrow corporate interests, like genetic engineering companies and the agri-business.

These companies are behind the US attempt to use the WTO as a tool to force feed the world genetically engineered (GE) food.

The WTO threatens crucial environmental agreements, like the first legally binding global agreement that allows countries to reject genetically modified organisms, the Biosafety Protocol.

So-called “free” trade is speeding up the use of natural resources such as water, forests, fisheries, and minerals, much faster than they can be regenerated.

In essence, the WTO is a tool of rich and powerful countries. Poorer countries are losing out to the interests of the industrialized world.

Further, Greenpeace argues that “environmental, social and developmental concerns are distant priorities, and tend to be a corporate focus only when they bring commercial advantage. Given this narrow agenda, the trend of powerful business lobbies influencing government positions at the WTO is worrying.”

First, the “WTO is only competent to deal with trade. In other words, in environmental issues its only task is to study questions that arise when environmental policies have a significant impact on trade. The WTO is not an environmental agency. Its members do not want it to intervene in national or international environmental policies or to set environmental standards. Other agencies that specialize in environmental issues are better qualified to undertake those tasks.”

Second, “if the committee does identify problems, its solutions must continue to uphold the principles of the WTO trading system.” These principles are outlined below:

Trade without discrimination Most-favored nation (MFN): treating other people equally National treatment: treating foreigners and locals equally Freer trade: gradually, through negotiation Predictability: through binding and transparency Promoting fair competition Encouraging development and economic reform Beyond these principles, “WTO members are convinced that an open,

equitable and non-discriminatory multilateral trading system has a key contribution to make to national and international efforts to better protect and conserve environmental resources and promote sustainable trade

International Monetary Fund

The IMF's stated goal is to assist its member countries with Exchange rates, monetary and fiscal policies. Structural policies of member countries such as their international

trade relations, labor issues, public sector reforms, etc. Assessing the strengths and weaknesses of the financial sectors

of member countries. Addressing institutional issues such as the independence of the

Central Bank, financial sector regulation, corporate governance, accountability and transparency in government economic policies, etc.

Assessment of risks and vulnerabilities stemming from large and volatile capital flows.

Lending in case of financial crisis. Lessening the degree of disequilibria in the international balance

of payments of members.

Criticisms on IMFOver time, the IMF has been subject to a range of criticisms, generally focused on the conditions of its loans. The IMF has also been criticized for its lack of accountability and

willingness to lend to country's with bad human rights record.

1.Conditions on Loan:In giving loans to countries, the IMF make the loan conditional on the implementation of certain economic policies. These policies tend to involve:* Reducing government borrowing - Higher taxes and lower spending* Higher interest rates to stabilize the currency.* Allow failing firms to go bankrupt.* Structural adjustment. Privatization, deregulation, reducing corruption and bureaucracy.

The problem is that these policies of structural adjustment and macro economic intervention often make the situation worse.* For example, in the Asian crisis of 1997, many countries such as Indonesia, Malaysia and Thailand were required by IMF to pursue tight monetary policy (higher interest rates) and tight fiscal policy to reduce the budget deficit and strengthen exchange rates. However, these policies caused a minor slowdown to turn into a serious recession with higher unemployment. In 2001, Argentina was forced into a similar policy of fiscal restraint. This led to a decline in investment in public services which arguably damaged the economy.

Criticisms on IMF2. Exchange Rate Reforms. When the IMF intervened in Kenya in the 1990s, they made the Central bank remove controls over the flows of capital. The consensus was that this decision made it easier for corrupt politicians to transfer money out of the economy (known as the Goldman scandal). Critics argue this is another example of how the IMF failed to understand the dynamics of the country that they were dealing with by insisting on blanket reforms.The economists have criticized the more monetarist approach of the IMF in recent years it is failing to take the best policy to improve the welfare of developing countries saying the IMF "was not participating in a conspiracy, but it was reflecting the interests and ideology of the Western financial community.“

3. United States influenceUnited States’ transition to neoliberalism and global capitalism also led to a change in the identity and functions of international institutions like the IMF. Because of the high involvement and voting power of the United States, the global economic ideology could effectively be transformed to match the US's. Another criticism is that allies of the United States are able to receive bigger loans with fewer conditions

4. Neo Liberal Criticisms There is also criticism of neo liberal policies such as privatization. These free market policies were not always suitable for the situation of the country. For example, privatization can create private monopolies who exploit consumers.

Criticisms on IMF 6. Free Market Criticisms of IMF

As well as being criticized for implementing 'free market reforms' Other criticize the IMF for being too interventionist. Believers in free markets argue that it is better to let capital markets operate without attempts at intervention. They argue attempts to influence exchange rates only make things worse - it is better to allow currencies to reach their market level,

7. Large debt creates moral hazard There is also a criticism that bailout countries with large debt creates moral hazard. Because of the possibility of getting bailed out it encourages people to borrow more.

8. Lack of Transparency and involvementThe IMF have been criticized for imposing policy with little or no consultation with affected

countries. In Korea the IMF insisted that all presidential candidates immediately "endorse" an agreement which they had no part in drafting or negotiating, and no time to understand. The situation is out of hand...It defies logic to believe the small group of 1,000 economists on 19th Street in Washington should dictate the economic conditions of life to 75 developing countries with around 1.4 billion people

United NationsThe purposes of the UN, as set forth in its Charter, are:

to maintain international peace and security;

to develop friendly relations among nations;

to cooperate in solving international economic, social, cultural and humanitarian problems in promoting respect for human rights and fundamental freedoms; and

to be a center for harmonizing the actions of nations in attaining these ends.

Criticisms on UN 1. Debates surrounding population control and abortion

The United Nations Population Fund has been accused by different groups of providing support for government programs which have promoted forced-abortions.

2. Role of elite nationsThere has been criticism that the five permanent members of the United Nations Security Council (China, France, Russia, the United Kingdom and the United States), who are all nuclear powers, have created an exclusive nuclear club whose powers are unchecked. Unlike the General Assembly, the United Nations Security Council does not have true international representation. This has led to accusations that the UNSC only addresses the strategic interests and political motives of the permanent members, especially in humanitarian interventions: for example, protecting the oil-rich Kuwaitis in 1991 but poorly protecting resource-poor Rwandans in 1994.Similarly, UN was quick to take a military action through NATO against Libya in 2011 against repressive regime, but as of November 2012 it still hasn't taken any decision on whether to take any action against Syria.

3. Inability to prevent conflicts* Failed to bring peace between Israel and Palestine* Failed to resolve the Kashmir issue between India and Pakistan* Failed to intervene and stop genocide in Rwanda and ethnic cleansing in Bosnia -Herzegovina and Kosovo (in former Yugoslavia) * Failed to stop US invasion of Iraq in 2003* Failed to stop civil war in Sri Lanka

Criticisms on UN4. Veto power (the power to unilaterally stop an official action)

Another criticism of the Security Council involves the veto power of the five permanent nations. As it stands, a veto from any of the permanent members can halt any possible action the Council may take. One nation's objection, rather than the opinions of a majority of nations, may cripple any possible UN armed or diplomatic response to a crisis. For instance, John J. Mearsheimer claimed that "since 1982, the US has vetoed 32 Security Council resolutions critical of Israel, more than the total number of vetoes cast by all the other Security Council members."[10] Since candidates for the Security Council are proposed by regional blocs, the Arab League and its allies are usually included but Israel, which joined the UN in 1949, has never been elected to the Security Council. The Council has repeatedly condemned Israel. On the other hand, critics contend that, while Israel has the United States to rely on to veto any pertinent legislation against it, the Palestinians lack any such power. This was best exemplified during the recent Palestinian statehood bid, which was modeled after Israel's unilateral declaration of statehood, only to be shot down by the United States.

5. Fait accompli (Decision that is unlikely to be reversed)The practice of the permanent members meeting privately and then presenting their resolutions to the full council as a fait accompli has also drawn fire; according to Erskine Childers, "the vast majority of members – North as well as South – have made very clear...their distaste for the way three Western powers behave in the Council, like a private club of hereditary elite-members who secretly come to decisions and then emerge to tell the grubby elected members that they may now rubber-stamp those decisions.

A Typical Example:Andre is the Poor Country While the rich states are Indicated by the SupraNational Institutions

Example (HIPC Program)Heavily indebted poor countries

Cameroon’s annual debt payment will be reduced by 40% over the next 5 years. But Cameroon will still pay on average $280 Million per year during this period. The projected payment exceeds the amount the country will spend annually on education($239) and Health care ($87). The relief amount is $2 Billion spread over 20 -25 years. It is inadequate in light of extreme high level of poverty with 1/3rd children being malnourished and 60% population lack access to clean water

World Bank

The World Bank (WB) is an international financial institution that provides loans to developing countries for capital programs.

It was formed to› To reduce poverty› To promote foreign investment› To Promote International trade, and facilitate

capital investment

Criticisms on World Bank

1. Promoting the Washington Consensus.Like the IMF, the World Bank has been criticized for its part in promotingthe Washington Consensus through its close participation with the IMF inlending only to programs that were heavily conditioned.

2. Environment Impact & Social Impact ignored.The World Bank is often accused of ignoring the environmental and social impact of projects it supports. For example, The World Bank funded a dam-building project in India that resulted in the forced resettlement of people the Narmada River Valley between 1978 and 1993. As dams were built on the river, territories that have been populated since pre-historic times were lost to man-made reservoirs, causing resentment and social turmoil, for which the World Bank was blamed

3. High Debt among developing Countries.Another major complaint about the World Bank is its role in causing high debt among developing countries. Although the World Bank’s loans are intended to help countries, they also cause those countries to take on debt that they must pay interest on and remain under the conditions of the institution.

A TALE OF TWO REGIONS Asia and Latin America. In 1950, Latin America had significantly higher levels

of economic development and lower levels of poverty than were seen in Asia, but today, the positions have reversed.

What were the factors that allowed Asian economies to lessen poverty and what factors slowed progress in Latin America?

There were three major factors found holding up improvements in the lives of the improvised in Latin America that were different from the factors that had evolved in Asia. These factors were macroeconomic instability, lack of integration with the global economy and the low quality found in public institutions within Latin America.

These results suggest that governments, international organizations and private industry all have a role to play in poverty reduction. Macro-economic stability requires the efforts of national governments; but also regional organizations such as NAFTA, the EU and ASEAN, and supranational organizations such as the UN, World Bank and IMF can play constructive roles. In addition, private for-profit companies have a supporting role to play in macroeconomic stability by focusing on long-term direct investments into developing nations while reframing from more speculative and potentially disruptive investments. Additionally, NGOs and other organizations can assist by supplying monitoring and education in support of macroeconomic stability.

The primary responsibility for improving the quality of public institutions lies with the national governments. However, private profit-making enterprises can do their part by refusing to pay bribes and lobbying for efficient and transparent public institutions, and there is substantial research that indicates the presence of foreign companies in developing economies has a positive influence on lessening the amount of corruption tolerated of government officials. Furthermore, international organizations can assist in the training and monitoring roles in order to lessen the influence of corruption emanating from public institutions in developing economies.

Primary Responsibility for Improvement lies with National Governments

E.g. Grameen Bank

An example of a very effective grass roots program is the Grameen Bank founded by the most recent Noble Peace Prize winner, Muhammad Yunus. The bank has improved the lives of thousands of those that used to be living in extreme poverty in Bangladesh through micro-credit lending programs. The Grameen Bank has been an extremely cost effective way to allow people to raise themselves out of despair. Important lessons learned from the Grameen Bank include the concept that ideas and implementing the ideas are equally if not more important, than money in developing sustainable poverty reduction programs; and furthermore, not all of these ideas will originate from individuals from developed countries. 

Conclusion

Given the overall views and experience, it is essential the balance the involvement / intervention of the supranational organization for maximizing the benefits and minimizing the risk of being influenced by developed countries.

Presented By Imran Banat Sandip Patil Manpreet Kaur Matharu

Thank You