Making Peace With International Organizations

Author Randall Stone

Progressives often associate international organizations with globalization and neoliberal economic policies, and there is truth to this critique.  Right-wing intellectuals associate them with liberal policy initiatives like family planning and environmental regulation, and there is truth to those connections, as well.  What neither the left nor the right seems to realize is how essential international organizations have become. The United Nations, International Monetary Fund, and World Bank are flawed institutions, but they are also powerful tools of increasingly necessary international cooperation.

The scope of most major international problems is too broad for any one country to address.  Global climate change, international financial stability, containing the spread of infectious diseases, preventing disastrous trade wars and providing international security require multilateral cooperation.  In fact, the number of international organizations has proliferated to the point that an organization exists that is designed to cope with almost every issue on the international agenda.  

For most countries, foreign policy is a matter of working through the appropriate institutions to achieve national goals—of finding the piece of international alphabet soup that best corresponds to the problem at hand.  A few countries have the capacity to act independently on some issues, but even the United States finds that policies are more effective and less expensive when they go through multilateral channels and enjoy international support.  When used with diplomacy and finesse, international organizations are the gearbox of American power, multiplying its leverage and extending its reach around the world.

International organizations were an American invention designed to cope with the problem of world order in the aftermath of the two world wars of the Twentieth Century.  Their designers were mainline Protestants; they were created under Democratic presidents; and they were effective or ineffective depending on the degree to which they enjoyed bipartisan support.  Rejecting traditional power politics and secret treaties, the American innovation was to create multilateral organizations that pooled the resources of many nations to tackle common problems. Protestantism has always been concerned with building institutions, and the creation of international institutions proceeded in tandem with the parallel development of the ecumenical movement.  Some of the key architects of the post-war order, including Eleanor Roosevelt and John Foster Dulles, were deeply involved in both.

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[Both the IMF and the World Bank] are engaged in a constant process of internal self-evaluation and reform and have become increasingly receptive to input from civil society stakeholders. In a Protestant framework, contributing to that input or neglecting to do so is an action with moral stakes.
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Their Protestant creators would not be surprised to find that international organizations are in need of reform.  After all, what human institution is not sinful, full of power politics, and responsive to the interests of the rich?  International organizations are limited by two key constraints.  

The first is national interests.  Powerful countries have attractive alternatives when they cannot get their way by acting through institutions, so it is inherently difficult for them to commit to following rules.  Institutional design often accommodates this problem by offering them formal veto powers (as in the UN Security Council) or weighted voting that reflects their capabilities (as in the IMF and World Bank, where the United States enjoys a de facto veto over major changes).  When formal privileges are not sufficient, the United States often finds other ways to achieve its objectives. A law passed in the Reagan administration requires the State Department to use foreign aid to buy votes in the United Nations, and recent research shows that this is effective.[1]  In many cases, informal practices allow powerful countries, and especially the United States, to exert informal influence when their interests are affected.  In the International Monetary Fund (IMF) and the World Bank, other countries defer to the United States, US agents enjoy special access to privileged information, and they participate more closely in decision making.  Research shows that this has tended to undermine the effectiveness of the IMF as a lender of last resort to countries that play important roles in US foreign policy, such as Russia in the 1990s and Argentina in the early 2000s, because the Fund cannot credibly threaten to withhold its support if they refuse to follow its advice.[2] Although informal power helps to credibly bring the United States to the tables of the UN, IMF, WTO, and World Bank, maintaining that influence does make policy objectives more difficult. On the other hand, working through any of these organizations is already a much more balanced decision-making process than unilateral action. 

The second key constraint is the role of multinational corporations (MNCs). MNCs are the largest, most productive firms, which account for the majority of international trade, global manufacturing, and financial services.  As the world’s leading citizens, MNCs exert tremendous influence in their home countries and in the countries where they invest. Foreign direct investment by MNCs is the leading source of development finance, ahead of portfolio investment, bank loans, multilateral official flows, and foreign aid.  By lobbying across their supply chains, MNCs are able to shape public policies, international rules, and international organizations to promote their profits. In particular, US firms are able to influence the global trade and investment rules because the US political system is permeable to lobbying, and the United States plays such a strong role in the international system.  The results are rules for intellectual property rights (TRIPS) and resolution of disputes between investors and states (ISDS) that are skewed in favor of firms. Recent research shows that political contributions drive which disputes the United States pursues in the World Trade Organization (WTO), and lobbying by MNCs often delays the resolution of disputes brought against the United States by other countries for years.[3]Another study shows that the World Bank favors projects that have US MNCs as contractors, disbursing funds in spite of poor performance and inflating project evaluations to hide the evidence.[4]

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Transitioning to a net carbon-neutral global economy will require near-universal participation, the mobilization of unprecedented levels of development finance, and a wrenching reorientation of industry and employment.
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The World Bank, as seen from an upper floor of the IMF.

The flip side of US influence in international organizations is that American citizens have a uniquely powerful channel for reforming them, and the historical record of these reforms is impressive.  The International Monetary Fund (IMF) periodically seeks an expansion of the quotas that members contribute to its capital to allow its resources to catch up with the rapidly expanding size of the world economy, and every quota revision requires a vote by both houses of the US Congress.  Every three years, the International Development Agency (IDA), a branch of the World Bank, has to seek replenishment of its fund to support low-income countries with subsidized loans and grants. This also requires Congressional action. It happens that an IMF quota revision and an IDA replenishment are both scheduled for 2019.  In past cycles, these votes have been used as an opportunity to pass resolutions requiring the US Executive Directors in those institutions to use the US voice and vote to pursue particular policies. IDA replenishment votes led the World Bank to adopt mandates to protect the environment, to compensate indigenous peoples displaced by its projects, to promote women’s empowerment, and to protect labor rights.  Congressional pressure forced the IMF to become more transparent and to abandon a proposal to restrict member countries’ rights to impose capital controls. More broadly, both institutions are engaged in a constant process of internal self-evaluation and reform and have become increasingly receptive to input from civil society stakeholders. 

In a Protestant framework, contributing to that input or neglecting to do so is an action with moral stakes. The most challenging crisis of our time is climate change. Our current path of economic development is unsustainable, and climate change threatens to wipe out much of the biodiversity on which our ecosystem depends. Global food and fresh water supplies will be disrupted, and we face the prospect of vast numbers of climate refugees, whether from famine directly or from resulting civil wars.  The level of CO2 and other greenhouse gasses already in the atmosphere is sufficient to guarantee that global average temperatures continue to rise, and the pace of global carbon emissions continues to increase.  The pace of climate change, in turn, is accelerating.  

Transitioning to a net carbon-neutral global economy will require near-universal participation, the mobilization of unprecedented levels of development finance, and a wrenching reorientation of industry and employment.  Numerous international organizations have been working on this since 1992, when 165 countries signed the UN Framework Convention on Climate Change, but this is a challenge that cannot be met without US leadership and engagement with the full range of multilateral institutions.  Progressive Protestants will have to make their peace with these institutions and engage in creative efforts to reform them.

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[1]Carter, David B., and Randall W. Stone. 2015. “Multilateralism and Democracy: The Case of Vote Buying in the United Nations General Assembly.” International Organization 68 (1): 1-33.
[2]Chapman, Terrence, Songying Fang, Xin Li and Randall W. Stone. 2017. “Mixed Signals: IMF Lending and Capital Markets.” British Journal of Political Science. 47 (2) (April): 329-349.
[3]Ryu, Jeheung, and Randall W. Stone. 2018. “Plaintiffs by Proxy: A Firm-Level Approach to WTO Dispute Resolution.” The Review of International Organizations 13 (2) (June): 273-308.
[4]Malik, Rabia, and Randall W. Stone. 2018. “Corporate Influence in World Bank Lending.” Journal of Politics 80 (1) (January): 103-18.


Author Bio: Randall W. Stone is a Professor of Political Science at the University of Rochester.  His books include Controlling Institutions:   International Organizations and the Global Economy, and Lending Credibility:  The International Monetary Fund and the Post-Communist Transition.  

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