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Over the last thirty years, economic integration and globalisation have been the main poles on which policy has been built. Ironically, these global developments have been characterised by a steep rise in inequality among nations. Trade liberalisation was supposed to decrease the gap between the developed and the developing, but international inequality is arguably more deeply rooted in today’s world. Global organisations and structures are full of systemic, fundamental flaws, and reform is the need of the hour if we wish to achieve equality among nations truly.

The (Not–so) United Nations “The United Nations, whose membership comprises almost all the States in the world, is founded on the principle of the equal worth of every human being.” Kofi Annan, Former UN Secretary-General

The United Nations has always been the most important global organisation. It commands massive influence in all aspects of global co-operation and policymaking. The UN is composed of more than twenty specialised bodies and operates through several entities. All 193 member nations of the UN contribute to its budget each year, paying what is called an assessed contribution.

The United States contributes about 20% of the total budget of the United Nations, which accounts for more than $9 billion of the total UN budget of about $50 billion. Several times in the last few years, UN actions have been criticised as elitist measures, and there is some truth to those accusations. It certainly is not wrong to say that there have been many instances where UN actions have put the interests of the United States and allies ahead of the interests of others.

The Oil-for-Food Programme, for example, was set up by the UN with the objective of letting a very heavily – sanctioned Iraq sell oil to the world markets in exchange for necessities for its citizens. While the programme resulted in almost no tangible benefits for Iraqis, it was a channel for the developed world to extort oil worth $53 billion from Iraq. Events like these are worrisome and highlight how the UN can have misplaced priorities at times when threatened by budget cuts. The problem is that UN costs are, of course, hefty to bear – and without funding, the UN cannot be effective. The United States has already announced historic budget cuts to the UN in the last five years, claiming that it bears an unfair share of burgeoning costs required to keep the United Nations functional. A couple of UN agencies are already operating on the verge of bankruptcy. How is massive, undue influence to be combatted in the United Nations, if it cannot sustain itself with budget cuts? Will the most powerful contributors always play the bully and threaten the UN with a financial crunch?

The harsh truth is that a small group of nations has concerning levels of traction at the UN, and the consequent vicious cycle of dependency is a massive threat to equity in global development.

Invoking the name of its holy objectives of world peace and global development, the UN has often gambled on the resources of powerless nations to serve a few. Arbitrary decisions taken by the Security Council (the UN’s most powerful organ) highlight the real disparities in the UN. The ‘veto’ is a perpetual problem. The UN has been effective and quick to act when the P – 5 (Permanent) members of the Security Council have stuck together. However, in other instances ranging from the US-led invasion of several countries in the Persian Gulf to the present-day conflict in Syria, the UN has helplessly looked on as countries have carelessly exercised their veto power. The US and UK have enabled their own invasions, while Russia and China have helped prolong conflict in Syria. France introduced a resolution that proposed absolving veto powers in 2015, and the proposal was laughed at. The veto gives the UN an undemocratic character, wipes away the efforts of all other member nations, and is the primary cause of the UN’s inability to act decisively when it needs to.

Problems related to veto power and funding have undermined the true character of the United Nations. The UN remains our most important forum globally, but it no longer exemplifies the democratic spirit it was built upon. The spectrum of international co-operation at the UN today is used to justify oligarchic actions that are far out of the phrase’s jurisdiction or meaning. The UN must be stopped from becoming a cartel.

The International Monetary Fund (IMF) and the World Bank The IMF lends to underdeveloped nations, nations that face a balance of payments crisis, and monitors global financial markets. It is among the most important international financial institutions, with 190 member nations. The IMF gets its money primarily from contributions by members called quotas; then through bilateral and multilateral borrowing agreements. These foreign currency reserves maintained by the IMF are known as SDRs – Special Drawing Rights. These are composed mainly of the US Dollar and the Euro. The IMF currently has reserves of about 980 Billion SDR, out of which it can lend up to a maximum of 690-700 Billion SDR. Every member nation gets votes depending on the amounts they contribute to the IMF in the form of quotas, leading to a problematic split of votes. For instance, the United States controls around 18% of the total votes; China has around 7%, while India has just about 0.6% of the total votes. While higher contributions to the IMF certainly cannot be overlooked, is it acceptable for the world’s largest financial institution set up to further economic co-operation, to be run like a corporation with the largest shareholder pulling the most weight? The voting mechanism in the IMF has also resulted in narrower perspectives that it adopts. Whenever the IMF has stepped in to provide aid to nations undergoing a balance of payments crisis, it has sanctioned conditional loans. While conditions differ slightly from country to country, the broad framework the IMF demands in return for its loans is the reduction of expenditure, privatisation, and removal of trade regulations. India’s conditional bailout in 1991 may be termed a considerable success, but the loans given to Malaysia and Indonesia under the same conditions had disastrous consequences, leading to massive unemployment.

Instances like these raise one simple question – is the IMF around to provide genuine, substantial economic aid; or is it just a platform for the financially strong to assert ideology and influence? The same can be asked of the World Bank, which is an equally important financial institution. The two lending wings of the World Bank – International Bank for Reconstruction and Development (IBRD), and International Development Association (IDA), provide development aid to underdeveloped and developing nations.

In recent years, the World Bank has come under fire for providing conditional loans that force austerity on African governments. While austerity is certainly necessary for keeping deficits in check, it withholds purchasing power from the poor people of these nations. The World Bank, up to 2016, used to lend to governments in underdeveloped nations for building power plants and developing access to electricity. These plants were primarily thermal, coal-based plants. After the shift in focus to renewable energy due to climate change, the World Bank plainly refuses to fund such projects anymore. While it is accepted that climate change is most definitely a reality, can a country in the infant stages of development be expected to come up with sustainable power solutions? Ironically, the World Bank thinks it should. Negotiations with Nigeria for diesel power plants were shut down in 2017, and the government was told that investment would come to them only for renewable energy. Across the African continent, there are more than a billion people who do not have access to electricity.

Hence, when the World Bank pushes the agenda of sustainable energy over and above its original agenda of poverty alleviation, it makes one wonder if the World Bank is even truly concerned about real problems in the sub–Saharan African region. Forcing policies of environmental sustenance on nations that do not have basic economic strength is essentially ensuring that they remain poor forever. This is concerning and pitiful because it is essentially economic imperialism that the World Bank is propagating. Sub–Saharan Africa is almost like a group of lab rats.

The Path Forward What can be done to make our global economic structures more equal? The veto at the UN must go, and resolutions must be voted upon upholding the principle of ‘one person, one vote’. If the UN was truly built to be the ideal forum for global co-operation, then there is no need for anyone to have veto power. The statement of the Puerto Rican ambassador ought to have the same weight as the statement of the ambassador from the United States. This utopia is very easy to state here, but it is out of the question when it comes to implementing it. The whole nearly impossible procedure of absolving veto powers aside, the only possible way for the UN to cover up for the funding it will lose is to take larger assessed contributions from the rest of the world – which will prove to be extremely tricky and tedious. The Paris Climate Change Agreement, without US support, is doing considerably well, however. Perhaps this is one of many steps required in the future that will gradually corrode undue influence in the world’s largest parliament.

Reform in the IMF and World Bank faces the same difficulty. They are on their way to becoming instruments of western propaganda. Voting powers at the IMF need to be revised, and the World Bank needs to revisit its goal. An encouraging development in this regard is that the IMF has announced its intentions to increase voting powers of developing nations.

In the end, it all boils down to belief, and belief in these institutions is eroding. The success of all global institutions depends on whether all member nations see them as unbiased, impartial, and competent. This is an important truth that must not be forgotten.

By Parth Kulkarni


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