BLOCK 4

INTERNATIONAL ORGANISATIONS
International Organisations
BLOCK 4 INTERNATIONAL
ORGANISATIONS

Block 4 titled International Organizations has three units. Unit 12 highlights the
role and functions of the United Nations. The UN may not have achieved all of
its objectives since its formation in 1945 but it has also not allowed the outbreak
of a third world war. Unit 13 on International Economic Organizations discusses
Bretton Woods institutions of International Monetary Fund (IMF) and the World
Bank. It also highlights the European Union and major economic crises that
have struck the world. Unit 14 is about regionalism and new regionalism.
International economic relations are a dominant feature of the post-Cold War
international relations. Free trade agreements, preferential trade agreements and
other types of trade and economic arrangements are being conceived and designed
among countries which are located in distant geographical regions

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 Role and Functions of the
UNIT 12 ROLE AND FUNCTIONS OF THE United Nations

UNITED NATIONS*

Structure
12.0 Objectives
12.1 Introduction
12.2 Objectives, Principles and Organs of the United Nations
12.3 Role of the UN System in Achieving Peace and Socio-economic
Development
12.4 Achievements and Failures of the United Nations
12.5 Reforming or Restructuring the UN System
12.6 Let Us Sum Up
12.7 References
12.8 Answers to Check Your Progress Exercises

12.0 OBJECTIVES
In this Unit, you will be studying about the United Nations. This Unit would
enable you to understand:
The objectives/ purposes, principles and the principal organs of the UN
Role of the UN in international politics
Its major achievements and failures
Need for democratization of UN System through reforms and
Future prospects of the UN

12.1 INTRODUCTION
The United Nations (UN) was established on 24 October 1945. It is the only
truly universal and global intergovernmental organization created to date. It was
founded with 51 nations; UN now consists of 193 states as its members. The UN
continues to be the only global international organization and actor that has an
agenda encompassing the broadest range of governance issues. As the world’s
only truly global organization, the UN has become the foremost forum to address
issues that transcend national boundaries; and, which cannot be resolved by any
one country acting alone – no matter, how mighty. It is a complex system that
serves as the central site for multilateral diplomacy, with the UN’s General
Assembly as the center stage. Three weeks of general debate at the opening of
each annual session of General Assembly in the month of September draws foreign
ministers and heads of state and government from small and large states to take
advantage of the opportunity to address the nations of the world and to engage in
intensive diplomacy. All these years, the UN has played a significant role in
world affairs. Without it, the world we live in today would have been totally
different. It has prevented breakout of another major war after the 2nd World War.

Prof. Abdulrahim P. Vijapur, Deptt. of Political Science, Aligarh Muslim University, Aligarh
*

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International Organisations Its role may not be highly satisfactory to every person in maintaining international
peace and security, but its active role succeeded in cooling off tensions between
Super Powers and other major Powers in the world, particularly during the period
of Cold War. However, its role in creating human rights norms, undertaking
humanitarian activities and tackling refugee problems, to name only few, are
laudatory. It is not like a world government expected to solve all major problems
in the world, and with power to enforce its orders. However, it does provide the
means to help resolve international conflicts and formulate policies on matters
affecting humanity. The UN is a forum where all countries meet to discuss,
elaborate and extend international law in areas such as as human rights,
international trade, freedom of navigation and uses of the seas, and the fight
against terrorism.

12.2 OBJECTIVES, PRINCIPLES, AND ORGANS

OF THE UNITED NATIONS
As set forth in its Charter, the UN has four purposes:
To maintain international peace and security
To develop friendly relations among nations based on respect for the principle
of equal rights and self-determination of peoples
To cooperate in solving international economic, social, cultural and
humanitarian problems and in promoting respect for human rights and
fundamental freedoms and
To be a centre for harmonizing the actions of nations in attaining these
common ends
In other words, the UN is mandated to safeguard peace and security; “to save
succeeding generations from the scourge of war”; to reaffirm faith in fundamental
human rights; to uphold respect for international law; and to promote social
progress and better standards of life. UN’s original vision was built on four pillars;
the first three – peace, development and human rights – have become increasingly
intertwined and support a consistent and integrated framework of national and
international priorities. The UN’s fourth founding pillar – sovereign independence
– although largely achieved during the UN’s first two decades through
decolonization, is now under scrutiny because of a concern for ‘reasonable limits’
on state sovereignty. The United Nations acts, to pursue its objectives, in
accordance with the following principles.
It is based on the sovereign equality of all its members
All members are to fulfill in good faith their Charter obligations
They are to settle their international disputes by peaceful means and without
endangering international peace and security and justice
They are to refrain from the threat or use of force against any other state
Neither they nor any member or the UN should interfere in domestic matters
of any State
To enable the UN to achieve its stated purposes and objectives the organization
has been equipped with following six main organs.

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12.2.1 General Assembly Role and Functions of the
United Nations

The GeneralAssembly, perhaps the closest approximation of a world parliament,

is the main deliberative and legislative body. It is designed to utilize the time-
honoured technique of resolving problems by free and frank discussions and as
per the provisions of the customary international law. It is to function as the
world’s permanent forum and a meeting place. It is created on the assumption
that “war of words” is better than war fought with bombs and weapons. All the
UN Members are represented in it; and each has one vote on the basis of sovereign
equality. Decisions on ordinary matters are taken by simple majority. Important
questions require two third of the votes. The Assembly has the right to discuss
and make recommendations on all matters within the scope of the UN Charter.
Its decisions are not binding on member States, but they carry the weight of law,
ethics and world public opinion. Thus, it does not legislate like national parliament.
But in the meeting rooms and corridors of the UN, representatives of almost all
countries of the world – large and small, rich and poor, from diverse political and
social systems – have a voice and vote in shaping the policies of the international
community.

12.2.2 Security Council

The Security Council is the organ to which the Charter gives primary responsibility
for maintaining international peace and security. It can be convened at any time,
even at midnight when peace is threatened. Member States are obligated to carry
out its decisions. It has 15 members. Five of these – China, France, the Russian
Federation, the UK, and the US – are permanent members, known as P5; they
are also the nuclear weapons states. The other 10 are elected by the Assembly for
a two year term. A decision cannot be taken if there is “no” or negative vote by a
permanent member (known as “veto”) on substantive questions. In common
parlance, veto is known in the UN Charter as “Great Power unanimity” rule.
When a threat to peace is brought before the Council, it usually first asks the
parties to reach agreement by peaceful means. The Council may undertake
mediation or set forth principles for settlement. It may request the Secretary
General to investigate and report on a situation. If fighting breaks out, the Council
tries to secure a ceasefire. It may send peace-keeping units (observers or troops)
to troubled areas, with the consent of the parties involved, to reduce tension and
keep opposing forces apart. Unlike the General Assembly resolutions, its decisions
are binding and it has the power to enforce its decisions by imposing economic
sanctions and by ordering military action under the principle of “collective
security”.

12.2.3 Economic and Social Council

Absence or prevention of war does not automatically ensure a peaceful
international system. To diminish the underlying causes of future conflicts that
might lead to such threats to the peace or breach of peace, the founding fathers of
the UN also provided mechanisms for economic and social progress and
development and to promote higher standards of living. This job has been assigned
to the Economic and Social Council (ECOSOC) - third main organ of UN. The
ECOSOC has 54 members. It usually holds two-month long session each year. It
coordinates the economic and social work of the UN and other specialized
agencies and institutions – together known as the UN Family or simply as the
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International Organisations UN System. It recommends and directs activities aimed at, among others,
promoting economic growth of developing countries, administering development
and humanitarian assistance projects, promoting the observance of human rights,
ending discrimination against minorities, spreading the benefits of science and
technology, and fostering world cooperation in areas such as better housing,
family planning and crime prevention.
Let us elaborate what constitutes the UN System. It consists of the UN, its 15
Specialized Agencies, and its various programmes. Following Specialized
Agencies are part of the UN System: ILO (International Labour Organization),
FAO (Food and Agriculture Organization), UNESCO (United Nations
Educational, Scientific and Cultural Organization,) WHO (World Health
Organization), IBRD (International Bank Reconstruction and Development –
the World Bank), IMF (International Monetary Fund), ICAO (International Civil
Aviation Organization), IMO (International Maritime Organization), ITU
(International Telecommunication Union), UPU (Universal Postal Union)WMO
(World Meteorological Organization), WIPO (World Intellectual Property
Organization), IFAD (International Fundfor Agricultural Development), UNIDO
(United Nations Industrial Development Organization), UNWTO (World Tourism
Organization).
UN Programmes and Funds include, UNCTAD (United Nations Conference on
Trade and Development), ITC (International Trade Centre), UNDP (United
Nations Development Programme), UNCDF (United Nations Capital
Development Fund), UNV (United Nations Volunteers), UNEP (United Nations
Environment Programme), UNFPA (United Nations Population Fund) UN-
HABITAT (United Nations Human Settlements Programme), UNHCR (Office
of the United Nations High Commissioner for Refugees), UNICEF (United
Nations Children’s Fund), UNODC (United Nations Office on Drugs and Crime),
UNRWA (United Nations Relief and Works Agency for Palestine Refugees in
the Near East) UN-Women (United Nations Entity for Gender Equality, and the
Empowerment of Women), and WFP World Food Programme.
It must be noted that the Specialized Agencies and UN Programmes and Funds
work under ECOSOC and report to it.

12.2.4 The Trusteeship Council

The Trusteeship Council was created to supervise the administration of 11 Trust
Territories and to ensure that Governments responsible for their administration
take adequate steps to prepare them for self-government and independence. It is
gratifying to note that all these territories had attained independence by the end
of 1994 and now this body has little work.

12.2.5 The International Court of Justice

The International Court of Justice consists of 15 judges who are elected
concurrently by the General Assembly and the Security Council. It resolves legal
issues and interprets international treaties.

12.2.6 The Secretariat

The Secretariat is the sixth main organ of the UN. It consists of a Secretary-
General and other staff and personnel who run the UN administration and carry
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out day-to-day work of the UN. Staff members are drawn from 193 members of Role and Functions of the
United Nations
UN. As international civil servants, they work for the UN as a whole, and pledge
not to take or seek instructions from any government or outside authority. Calling
upon some 41,000 staff members worldwide, the Secretariat services the other
principal organs of the UN and administers the programmes and policies
established by them. At its head is the Secretary-General, who is appointed by
the General Assembly on the recommendation of the Security Council. Till now
the office of the Secretary-General has been occupied by nine incumbents: Trygve
Lie (Norway), Dag Hammarskjold (Sweden), U. Thant (Myanmar), Kurt
Waldheim (Austria), Javier Perez de Cuellar (Peru), Boutros Boutros Ghali
(Egypt), Kofi Annan (Ghana), Ban Ki-moon (Republic of Korea) and Antonio
Guterres (Greece).
Check Your Progress Exercise 1
Note: i) Use the space given below for your answer.
ii) See the end of the unit for tips for your answer.
1) Why the United Nations has been established by the international
community?
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12.3 ROLE OF THE UN SYSTEM IN ACHIEVING

PEACE AND SOCIO-ECONOMIC
DEVELOPMENT
In spite of the careful framing of the UN Charter, the UN was unable to solve
many problems of the world due to the Cold War between the US and the former
USSR. On the other hand, it played an important role in a number of international
crises by arranging ceasefires and negotiations, and by providing peacekeeping
forces. Its successes in non-political work care of refugees, protection of human
rights, economic planning and attempts to deal with problems of world health,
population and famine have been enormous. The Security Council of the UN is
its principal organ to maintain international peace and security. The Council
works on the principle of “collective security”. This concept treats the aggression
of one state against the other States as an attack on all member States of the UN.
It allows the Security Council to take action against the aggressor only when
five of its permanent members (which are great Powers) the US, USSR, France,
China and Britain are unanimous on such action. Any negative vote (veto) will
prevent such action. Any veto will kill the concept of collective security. The
Council was paralyzed many times by use of veto during the Cold War (1945-
1991). In order to secure some action in case of a veto by one of the P5 countries,
the General Assembly (GA) (at the time of the Korean War in 1950) introduced
the “Uniting for Peace” Resolution. This resolution stated that if the Security
Council’s proposals were vetoed, the GA could meet within 24 hours and decide
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International Organisations what action to take, even military intervention if necessary. In cases like this, a
decision by the Assembly would only need a two-thirds majority. Again this new
rule was not incorporated in the UN Charter, and the USSR, which exercised
more vetoes than any P5 states, always maintained that a Security Council veto
should take precedence over a GA decision. Nevertheless, the Assembly acted in
this way many times, ignoring Russian protests.

How successful has been the UN as a peacekeeping organization? Although it

has had mixed success, it is probably fair to say that the UN has been more
successful than the League of Nations in its peacekeeping efforts, especially in
crises which did not directly involve the interests of the great powers, such as the
civil war in the Congo (1960-64). On the other hand, it has often been ineffective
like the League in situations where the interests of one of the great powers –
were involved (e.g., the 1956 Hungarian crisis and the 1968 Czech crisis). The
best way to illustrate the UN’s varying degrees of success is to examine some of
the major disputes (both during the Cold War and post-Cold War) in which it has
been involved.

A) Palestine (1947 – Till Present): The dispute between Jews and the Arabs
in Palestine was brought before the UN in 1947. After an investigation, the
UN decided to divide Palestine, setting up the Jewish state of Israel. This
was one of the most controversial UN decisions, and it was not accepted
the Arab states. The UN was unable to prevent three Arab-Israeli wars (1948-
49, 1967 and 1973) over the question of Palestine. However, it did useful
work arranging ceasefires and providing supervisory forces, and caring for
the Arab refugees. Due to strong US support to Israel and the disunity among
Arab states, the UN has not been able to resolve the Palestine issue till date.

B) The Korean War (1950-53): This was the only occasion on which the UN
was able to take decisive action in a crisis directly involving the interests of
one of the superpowers. When South Korea was invaded by communist
North Korea in June 1950, the Security Council immediately passed a
resolution condemning North Korea, and called on UN members to send
help to South Korea. However, this was possible because the USSR was
boycotting UNSC meeting in protest at the failure of allow PRC to join the
UN. Although the Russian delegates returned soon (to cast its veto), it was
too late for them to prevent action going ahead. Troops of 16 countries
were able to repel the invasion and preserve the borders between the two
Koreas along the 38th parallel. Though this was claimed by the West as a
great success, it was in fact very much the American operation the vast
majority of troops and the Commander-in-Chief, General MacArthur, were
American, and the US government had already decided to intervene with
force the day before the Security Council vote was taken. Only the absence
of the Russians enabled the USA to turn it into a UN operation. When the
USSR started vetoing further resolutions against North Korea, the General
Assembly passed its famous resolution, “Uniting for Peace”, as discussed
above.

C) The Suez Crisis (1956): On the sudden nationalization of Suez Canal by

President Nasser of Egypt in 1956, Egypt was attacked by Britain and France
(which owned shares in Suez Canal Company) and Israel. When the Security
Council resolution condemning use of force by Britain and France was
166 vetoed, the General Assembly under “Uniting for Peace” resolution not
 only condemned the invasion (by majority of 64 to 5) but also called for a Role and Functions of the
United Nations
withdrawal of troops. In view of the weight of opinion against them, the
aggressors agreed to withdraw, provided the UN ensured a reasonable
settlement over the Canal and kept away the Arabs and Israelis from
slaughtering each other. The UN General Assembly sent UN Peace Keeping
forces (5000 peacekeeping soldiers) to Egypt to supervise ceasefire
agreement. The Canadian diplomat, Lester Pearson, had invented the idea
of Peacekeeping. He received Nobel Peace Prize later for his contribution
to world peace. The UN was quite successful in maintaining peace in the
region, though Russian and American pressure was also important in bringing
about ceasefire. However, the UN was not so successful in the 1967 Arab-
Israeli conflict.

D) The Iran-Iraq War (1980-88): The UN was successful in bringing an end

to the long-drawn-out war between Iran and Iraq. After years of attempting
to mediate, the UN at last negotiated a ceasefire, though admittedly they
were helped by the fact that both sides were close to exhaustion.

E) The 1991 Gulf War: UN action on the war was impressive. When Saddam
Hussain of Iraq sent his troops to invade and capture the tiny, but extremely
rich, neighbouring state of Kuwait (August 1990), the UNSC wanted him
to withdraw or face the consequences. When he refused, a large UN force
was sent to Kuwait. In a short decisive campaign, Iraqi troops were driven
out, suffering heavy losses, and Kuwait was liberated. However, the critics
of the UN complained that Kuwait had received help only because the West
needed her oil supplies. Other small states, like East Timor (which was
taken over by Indonesia in 1975) did not receive help.

Why the UN is not so successful in enforcing peace in the world? There are five
reasons, given below.
The lack of a permanent UN army
Lack of unanimity among P5
Veto power of P5
Shortage of funds and
Non-cooperation of member states
Economic and Social Development
Although most people associate the United Nations with the issues of peace and
security, the vast majority of the organization’s resources are in fact devoted to
advancing the Charter’spledge to “promote higher standards of living, full
employment, and conditions of economic and social progress and development”.
United Nations development efforts have profoundly affected the lives and well-
being of millions of people throughout the world. Guiding the UN endeavours is
the conviction that lasting international peace and security are possible only if
the economic and social well-being of people everywhere is assured. Many of
the economic and social transformations that have taken place globally since
1945 have been significantly affected in their direction and shape by the work of
the United Nations. As the global centre for consensus-building, the UN has set
priorities and goals for international cooperation to assist countries in their
development efforts and to foster a supportive global economic environment.
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International Organisations The UN has provided a platform for formulating and promoting key new
developmental objectives on the international agenda through a series of global
conferences. It has articulated the need for incorporating issues such as the
advancement of women, human rights, sustainable development, environmental
protection and good governance into the development paradigm. Over the years,
the world view of development has changed. Today, countries agree that
‘sustainable development’ – development that promotes prosperity and economic
opportunity, greater social wellbeing, and protection of environment – offers the
best path forward for improving the lives of people everywhere.

At their Millennium Summit in 2000, member states adopted the Millennium

Declaration, which contained a set of wide-ranging goals for the future course
of the UN. The Declaration was translated into a roadmap that included eight
time-boundand measurable goals to be reached by 2015, known as the Millennium
Development Goals (MDGs). The MDGs aim to eradicate extreme poverty and
hunger; achieve universal primary education; promote gender equality and the
empowerment of women; reduce child mortality; improve maternal health; combat
HIV/AIDS, malaria and other diseases; ensure environmental sustainability; and
develop a global partnership for development. In September 2015, world leaders
adopted the 17 Sustainable Development Goals (SDGs) of the ‘2030 Agenda for
Sustainable Development’. The 2030 Agenda officially came into force on 1
January 2016, marking a new course for the UN towards ending poverty,
protecting the planet and ensuring prosperity for all by 2030. Three other accords
adopted in 2015 play critical roles in the global development agenda: the Addis
Ababa Action Agenda on financing for development, the Paris Agreement on
climate change and the Sendai Framework on disaster risk reduction.
Check Your Progress Exercise 2
Note: i) Use the space given below for your answer.
ii) See the end of the unit for tips for your answer.
1) Why the UN has been less successful in promoting international peace?
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12.4 ACHIEVEMENTS AND FAILURES OF THE

UN
The United Nations was created to save succeeding generations from the scourge
of war, protect human rights, maintain international peace and security, and uphold
international law. It history is marked with many successes, but also
disappointments. We need to look at both sides so that we can make the UN
more effective in the future. This section lists some of its achievements and
failures.
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12.4.1 Achievements of the UN Role and Functions of the
United Nations

A) One of the greatest achievements of the UN is its role in the field of

decolonization. It gave inspiration to millions of Africans and Asians, who
were under colonial rule, to claim the right of self-determination and
independence. When the UN was founded in 1945, 80 of the present UN
members were colonies. The UN helped many of them, having 750 million
people, to achieve independence. With this development the International
Relations have been democratized.

B) The UN has an impressive record of resolving many international conflicts.

U.N. peacekeepers have, since 1945, undertaken over 60 field missions and
negotiated 172 peaceful settlements that ended regional conflicts. Right
now, peacekeepers are in 20 hot spots around the world trying to save lives
and avert wars.

C) One of the most significant achievements of the UN is the creation of a

comprehensive body of human rights law – a universal and internationally
protected code to which all nations can subscribe and all people aspire. It
has defined a broad range of internationally accepted rights, including civil,
political, economic, cultural and social rights. It has International Bill of
Human Rights (consisting of the Universal Declaration of Human Rights,
1948, and the two International Covenants on civil and political, economic,
social and cultural rights, 1966). Besides the International Bill of Rights, it
has adopted nearly 80 human rights treaties or declarations. It has also
established mechanisms to promote and protect these rights and to assist
states in carrying out their responsibilities.

D) More international law has been created through the UN in last seven decades
than in the entire previous history of humankind. It has made major
contributions towards expanding the rule of law among nations through the
codification of international law.

E) Today the UN provides food and assistance to 80 million people in 80

countries, supplies vaccine to millions of children and helps save 3 million
lives a year, and assists and protects 67.7 million people fleeing war, famine
and persecution. It fights extreme poverty, helping improve the lives of
more than one billion people. It supports maternal health, helping over 1
million women a month overcome pregnancy risks.
F) It works with 195 nations to keep the global temperature rise below 2°C/
3.6 F.
G) UN keeps peace with 104, 000 peacekeepers in 14 operations around the
world.
H) It tackles the global water crisis affecting over 2 billion people worldwide.
I) It coordinates US $24.7 billion appeal for the humanitarian needs of 145
million people.
J) It uses diplomacy to prevent conflict; assists some 50 countries a year with
their elections.
K) UN’s success can be gauged from the fact that 12 Nobel Peace Prize have
been awarded to it, its specialized agencies, programmes and staff. This
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International Organisations included an award in 1988 to the UN Peacekeeping Forces in 2001 to the
UN and its secretary-general, Kofi Annan. In 2020, Nobel Peace Prize was
awarded to World Food Program, a UN special agency that fights hunger
around the world.

L) The UN has made progress with its eight Millennium Development Goals,
which has been followed by 17 Sustainable Development Goals to enhance
social, environmental and economic progress by 2030.

M) Along similar lines, the UN’s International Court of Justice has resolved
major international disputes, but the UN’s veto powers have limited its
effectiveness at critical times.

12.4.2 Shortcomings of the UN

The UN is not without shortcomings. Following UN failures should be noted.

A) In 1970, when the Nuclear Non-Proliferation Treaty (NPT) was signed by

190 nations, all five superpowers owned nuclear weapons. Later, despite
the NPT and Partial Test Ban Treaty, several countries – North Korea, Israel,
Pakistan, and India – developed nuclear weapons. This revealed the UN’s
inability to enforce regulations on offending nations as well as promote the
goal of universal nuclear disarmament.

B) The International Criminal Court, established in 2002, has prosecuted several

war criminals – but it has been criticized for prosecuting only African leaders
while Western powers too have committed war crimes.

C) Dag Hammarskjold, Secretary-General from 1953-1961, said that the “UN

was not created to take mankind to heaven, but to save humanity from hell.”
The UN has solved many violent conflicts, prevented wars, and saved
millions of lives but it also faced disappointments.

D) In Rwanda, over 800,000 were massacred in 100 days. In 1995, Bosnian

Serb forces overran the “safe zone” of Srebrenica and massacred 8,000
Muslim men and boys. In Darfur, an estimated 300,000 Sudanese civilians
were killed. In Nigeria, Boko Haram has killed over 13,000 people.

E) A recent report by “Body Count” revealed that “in addition to one million
deaths in Iraq, an estimated 220,000 people have been killed in Afghanistan
and 80,000 in Pakistan as a result of US foreign policy”.

F) In recent years, Israel attacked homes, schools, hospitals, and U.N. shelters
in Gaza killing 2,200 Palestinians. Condemning that action, Navi Pillay,
former UN High Commissioner for Human Rights, said that “Israel was
deliberately defying international law in its military offensive in Gaza and
that world powers should hold it accountable for possible war crimes.” The
UN Security Council (SC) has failed as the United States vetoes any action
against Israel.

G) The Arab Spring in the Middle East caused thousands of deaths and regime
changes in Tunisia, Egypt, Libya and Yemen. Libya is devastated with over
40,000 deaths, and the civil war in Syria has killed over 220,000 people.
These wars have displaced over 50 million people. Now, ISIS has infiltrated
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 these countries causing gruesome killings, human rights abuses, and war Role and Functions of the
United Nations
crimes, at an unprecedented rate. These catastrophic events might have been
prevented if the Member States of the UN had the ability to resolutely act in
a timely manner. But the UN is not a world government, and it does not
have a standing army of peace-keepers ready for deployment. And, it is the
Member States that make decisions at the UN. These setbacks clearly reflect
the shortcomings of the UN Security Council, and its veto powers that allow
some members’ own interests to be placed ahead of the need to end a raging
conflict. Navi Pillay, addressing the Security Council, said that “short-term
geopolitical considerations and national interest, narrowly defined, have
repeatedly taken precedence over intolerable human suffering and grave
breaches of – and long-term threats to – international peace and security.”

H) During the last 75 years, geopolitics has changed drastically that call for
reform of the UN – to meet global needs and challenges of the 21st century.

I) Member States accuse the Security Council of being arrogant, secretive

and undemocratic but the veto powers resist change. Meanwhile, violations
of the UN Charter by powerful countries continue to erode the effectiveness
of the United Nations.

12.5 REFORMING OR RESTRUCTURING THE UN

SYSTEM
Since the meeting of the Heads of Government of the Security Council on 31
January 1992, a global debate on the restructuring of the UN System has begun.
Many proposals have been made in this regard. The main objective of such reform
proposals is to make the UN, specially its Security Council, more democratic,
efficient and adaptable to the changing international milieu. Since the UN
responsibilities and concerns are world-wide and are now expanding to virtually
every conceivable area of human activity, it is imperative to re-design the UN
structure so that it can meet the challenges of the 21st century. One of the
suggestions included that the Security Council should be expanded from 15 to
23 or 25, out of which 5 should be additional permanent members – two
industrialized countries (Japan and Germany), and three large developing
countries (Brazil, India and Nigeria). Names of South Africa, Egypt are also
discussed for permanent membership of the Council. More than 25 years have
passed since the debate of expanding Security Council began but no consensus
has emerged among P5 nations to come to any conclusion. However, some
administrative reforms were carried out by trimming the Secretariat during the
tenures of Kofi Annan and Ban Ki-moon.

It has been argued that the UN Security Council should be reformed so that it
becomes truly democratic. At the moment, only five veto power countries decide
the matters related to world politics. These five countries have their own
differences due to which they are not able to decide important matters. If the
UNSC has to be democratic, there should be more members in it from different
parts of the world. The UNSC reflects the reality of 1940s geopolitics when the
Second World War was being fought. The UNSC should reflect the contemporary
geopolitics in which new powers like India, Japan and Germany have risen and
play an important part in international relations. India is part of the G-4 grouping
along with Japan, Germany and Brazil which support each other as permanent
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International Organisations members of the UNSC. This group seeks UNSC reform to make it more
democratic and representative. India’s claim to the permanent membership of
the UNSC is based on following.
Ancient Civilization with the philosophy of Vasudhaiva Kutumbakam
(Whole World is a Family)
Pluralist Democracy
Status Quoist power
Responsible nuclear power
Economic Strength
One fifth of world’s population lives in India. To make the UNSC truly
democratic, India cannot be kept out of global decision making institutions.

Check Your Progress Exercise 3

Note: i) Use the space given below for your answer.
ii) See the end of the unit for tips for your answer.
1) List some important achievements of the the UN.
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12.6 LET US SUM UP

History has proved that the UN has become an irreplaceable part of international
relations and international community. It has been playing a significant, sometimes
historic, role in world politics. Its modest achievements listed in the Unit are
testimony to it. It is a fact that, as mandated by its Charter, the UN has prevented
another World War. The UN has made impressive and unprecedented progress in
all aspects of human development, bringing great benefits to millions of people
around the world. Our convoluted world needs the UN. The Security Council
must be reformed and strengthened to enable the UN as a whole to confront and
resolve complex challenges of our world. Former US President Obama has said,
the UN is imperfect, but it is also indispensable. UN’s contribution to ideas,
analysis, and policy making in the economic and social arena is one of its most
important achievements. UN’s thinking and ideas in these arenas have had a
major positive impact in many countries. Success and failures of the UN reflect
the strengths and weaknesses of commitment and support from both the member
states of the UN and the staff members. Let us conclude our discussion by quoting
Jussi M Hanhimaki (The United Nations: A Very Short Introduction) who wrote:
In the end, the UN cannot and should not be expected to offer solutions to all of
the world’s ills. It does much good humanitarian work and often provides ways
of easing tension and solving crises. It often enables people stuck in poverty to
improve their lot. The UN is hardly perfect. But it remains an indispensable
organization even as its behavior and effectiveness – much like that of individual
172 countries – is in constant need of improvement.
 Role and Functions of the
12.7 REFERENCES United Nations

Bailey, Sydney D. (1989). The United Nations: A Short Political Guide, 2nd edition.
London: Macmillan.
Baehr, Peter R. and Gordenker, Leon. (2005). The United Nations: Reality and
Ideal, 4th edition. London: Palgrave Macmillan.
Hanhimaki, Jussi M. (2008). The United Nations — A Very Short Introduction.
New Delhi: Oxford University Press.
Karns, Margret, Mingst, Karen A. & Kendell, W. Stiles. (2016). International
Organizations: The Politics and Process of Global Governance, 3rd edition. New
Delhi: Viva Books.
Mingst, Karen A., Karns, Margret. (2012). The United Nations in the 21st Century,
4th edition. Boulder, Col.: Westview Press.
Moore, John Allphin & Pubantz, Jerry. (2006). The New United Nations –
International Organization in the twenty-First Century. New Delhi: Pearson
Education.
Roberts Adam and Kingslay, Benedict (eds.). (1988). United Nations, Divided
World: The UN’s Roles in International Relations. Oxford: Clarendon Press.
Thakur, Ramesh (ed.). (1998). Past Imperfect, Future Uncertain: The United
Nations at Fifty. London: Macmillan.
“The United Nations at 70”, Special Issue, UN Chronicle, 2015, available at:
[Link]
United Nations.(2017). Basic Facts about the United Nations, 42nd edition. New
York: United Nations Department of Public Information.
—————, The Essential UN (New York: United Nations Department of Public
Information, 2018), available for read only at: [Link]/en/essential-un/ ; //
[Link]
—————, The United Nations Today (New York: United Nations Department
of Public Information, 2008), Available for free download at: [Link]
ar/geninfo/pdf/[Link]
—————. (1996). The Blue Helmets: A Review of UN Peacekeeping, 3rd
edition. New York: United Nation.
Vijapur, Abdulrahim P. (1995). The United Nations at Fifty: Studies in Human
Rights. New Delhi: South Asian Publishers.
Weiss, Thomas & Ramesh Thakur. (2010). Global Governance and the United
Nations: An Unfinished Journey. Bloomington: Indiana University Press.

12.8 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES
Check Your Progress Exercise 1
1) Your answer should highlight the following points
173
International Organisations The UN has prevented another World War
Active role in cooling off tensions between Super Powers and other
major Powers
Exemplary role in creating human rights norms, undertaking
humanitarian activities and tackling refugee problems
The UN is a forum where all countries meet to discuss issues important
for the world
Check Your Progress Exercise 2
1) Your answer should highlight the following points
The lack of a permanent UN army
Lack of unanimity among P5
Veto power of P5
Shortage of funds and
Non-cooperation of member states
Check Your Progress Exercise 3
1) Highlight the following
UN’s role in decolonization
Peacekeeping efforts and mission
Creation of Human Rights Law
Role in fighting hunger and poverty

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 Role and Functions of the
UNIT 13 INTERNATIONAL ECONOMIC United Nations

ORGANIZATIONS*

Structure
13.0 Objectives
13.1 Introduction
13.2 International Monetary Fund
13.2.1 Functions and Role of IMF
13.2.2 Operations of IMF and Its Shortcomings
13.3 World Bank
13.3.1 Organisation
13.3.2 Role of IBRD
13.3.3 Differences between IMF and World Bank
13.3.4 World Bank Operations
13.3.5 Globalization, World Bank and IMF
13.4 World Trade Organisation
13.4.1 Working of WTO
13.5 European Union
13.5.1 Organisational Setup
13.5.2 Brexit and Impact on EU
13.6 India and International Economic Organisations
13.7 Major Economic Crises after the Second World War
13.8 Let Us Sum Up
13.9 References
13.10 Answers to Check Your Progress Exercises

13.0 OBJECTIVES
In this Unit, you will be reading about international economic organisations and
financial institutions. After going through this Unit, you would be able to
understand:
Roles performed by IMF, World Bank and WTO in global financial,
developmental and trade matters
Importance of Regional Economic Organisations like the European Union
and
Major world economic crises and

13.1 INTRODUCTION
We begin with an easy question: What is economics? A simple answer is that
economics is the study of the production and distribution of goods and wealth.
How did the world organize itself in terms of finance? The earliest markets were

Prof. Satish Kumar, Dept. of Political Science, Central University of Haryana

*
175
International Organisations areas where people came together to simply exchange goods – primarily food or
financial items. From roughly the fifteenth century, Europeans built upon
inventions and developments elsewhere to move from decentralised system of
agricultural production to state-centric and technologically enhanced forms of
capitalist industrialisation. Centralising European states promoted capitalist
arrangements that favoured the accumulation of wealth by a minority, whose
decision making power shaped the choices of and resources available to the
majority. Eventually, capitalist markets spread and extended worldwide. Capitalist
industrialisation, starting late 18th century, generated an unprecedented abundance,
but at considerable human and environmental cost.

Globalisation has been the buzzword for the past few decades. We know that
globalisation is powerfully affecting how life is lived and work is done throughout
the world. This becomes important to weigh how the world economy is organised?
Who are the actual winners and losers in this game? And what are the long term
consequences of this game? Immanuel Wallerstein had proposed the World System
Analysis. According to this theory, a modern world is made up of countries in
the ‘core’ (rich, developed nations of the north), the ‘periphery’ (underdeveloped
countries of the Third World or global south and the ‘semi-periphery’. The ‘semi-
periphery’ covered the communist bloc countries of Europe. Since 1970s, a
fundamental shift took place, especially after the end of ideology and history
thesis. With the end of the Cold War, the capitalist structure became victorious.
The neoliberal theory argues for the international organisations to shape the world
economy. Therefore, this Unit deliberates upon the leading financial international
organisations which shape the world and frame the rules. It is imperative to
study the different international organisations and their structures. It is equally
important to see whether the changes brought by these financial institutions are
in the larger interests of the world or not? What are the major shortcomings?
What distinguish contemporary capitalism are its unprecedented global reach,
and its ability to shape. The IMF, World Bank along with WTO shapes the contours
of world economy and finance. These are made to facilitate the flow of goods
smoothly and create a balanced system. But does it happen? These fundamental
questions need to be explored.

13.2 INTERNATIONAL MONETARY FUND

In an effort to rebuild the international economic system in the wake of World
War II, delegates from Allied nations established the International Monetary Fund
(IMF) and World Bank with the Bretton Woods Agreement, in 1945. Some
730 delegates from all 44 Allied nations gathered at the Mount Washington Hotel
in Bretton Woods, New Hampshire, to determine how to regulate the international
monetary and financial order after World War II. The delegates at Bretton Woods
largely subscribed to theidea proposed by the US President Woodrow Wilson
back in 1918 that free trade promoted global prosperity and peace. They were
convinced that the policies adopted to combat the Great Depression in the 1930s
and early 1940s—high tariffs, currency devaluations, discriminatory trading
blocs—resulted in a precarious international environment. The determination,
then, was that economic cooperation was the only way to achieve peace and
prosperity. The International Monetary Fund is a global organisation. Its primary
aim is to help stabilise exchange rates and provide loans to countries in need.
Nearly all members of the United Nations are members of the IMF with a few
exceptions such as Cuba, Lichtenstein and Andorra.
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13.2.1 Functions and Role of IMF International Economic
Organisations

IMF performs the following functions.

i) International monetary cooperation
ii) To promote exchange rate stability
iii) To help deal with balance of payments adjustment and
iv) To help deal with economic crisis by providing international coordination –
loans, plus advice.
In practice, IMF does the followings:
i) Economic surveillance and monitoring: IMF produces reports on member
countries’ economies and suggests areas of weakness / possible danger e.g.
unbalanced economies with large current account deficit/excess debt levels.
The idea is to work on ‘crisis prevention’ by highlighting areas of economic
imbalance.
ii) Loans to countries with a financial crisis: The IMF has $300 billion of
loanable funds. This comes from member-countries who deposit a certain
amount at the time of joining the Fund. In times of financial/economic crisis,
the IMF may be willing to make available loans as part of a financial
readjustment. The IMF has arranged more than US $180 billion in ‘bailout’
packages since 1997.
iii) Conditional loans/structural adjustment:. When giving loans, the IMF
usually insists on certain criteria to be met, these can include policies to
reduce inflation (tightening of monetary policy). These are called
‘conditionalities’.
iv) Technical assistance and economic training: The IMF produces many
reports and publications. They can also offer support for local economies.

13.2.2 Operations of IMF and Its Shortcomings

How is the IMF financed? The IMF is financed by member countries who
contribute funds on joining. They can also increase this throughout their
membership. The IMF can also ask its member countries for more money. IMF
financial resources have risen from about $50 billion in 1950 to nearly $300
billion till 2018, sourced from contributions from its 183 members. This initial
amount depends on the size of the country’s economy, for ex, the US deposited
the largest amount with the IMF. The US currently has 16 per cent of voting
rights at the IMF, a reflection of its quotas deposited with IMF. The UK has 4 per
cent of IMF voting rights. IMF has weighted voting [Link] about IMF
operations? The IMF has gone through two distinct phases in its history. During
the first phase, ending in 1973, the IMF oversaw the adoption of general
convertibility among the major currencies, supervised a system of fixed exchange
rates tied to the value of gold, and provided short-term financing to countries in
need of a quick infusion of foreign exchange to keep their currencies at par value
or to adjust to changing economic circumstances. Difficulties encountered in
maintaining a system of fixed exchange rates gave rise to unstable monetary and
financial conditions throughout the world and led the international community
to reconsider how the IMF could most effectively function in a regime of flexible
177
International Organisations exchange rates. After five years of analysis and negotiation (1973-78), the IMF’s
second phase began with the amendment of its constitution in 1978, broadening
its functions to enable it to grapple with the challenges that have arisen since the
collapse of the par value system. These functions are three.

First, the IMF continues to urge its members to allow their national currencies to
be exchanged without restriction for the currencies of other member countries.
Second, in place of monitoring members’ compliance with their obligations in a
fixed exchange system, the IMF supervises economic policies that influence
their balance of payments in the presently legalized flexible exchange rate
environment. This supervision provides opportunities for an early warning of
any exchange rate or balance of payments problem. In this, the IMF’s role is
principally advisory. Third, the IMF continues to provide short- and medium-
term financial assistance to member nations that run into temporary balance of
payments difficulties.

Shortcomings of IMF: Three shortcomings are notable.

A) The Fund provides short term finance to its members to tackle Balance of
Payments (BoP) disequilibrium. For this purpose, it adopted an adjustable
peg system in the first phase of its life. But it failed to establish a stable
exchange rate.

B) Secondly, the Fund imposes conditions on the poor countries while

sanctioning loans. Now, it is ignoring its central concern—exchange rate
management and BoP problems. It is now championing the issue of ‘market
principle’. It suggests poor developing countries to cut expenditure-
borrowing-subsidy, raise prices of state enterprises, privatisation of state-
owned enterprises, etc. If such measures, most popularly known as structural
adjustment programmes, are adopted only then IMF credit would follow.
Most of these measures are anti-people in character. It is said that Third
World debt crisis is due to the Fund’s policies and working.

C) Thirdly, the Fund has failed to eliminate foreign exchange restrictions

imposed by its members that hamper the growth of trade.

Structural Adjustment Programme

A key component of neoliberal globalisation is a reliance on Structural

Adjustment Programme, the package of economic measures sponsored by
the International Monetary Fund (IMF) and the World Bank to tackle the
problem of poverty and underdevelopment in debt-striken countries..
Typically, these measures consist of fiscal discipline and the tightening of
monetary policy, combined with an expansion of trade liberalisation and
privatisation of the domestic economy. Within the neoliberal framework,
debt-relief is linked to Structural Adjustment Programmes: the greater the
compliance, the greater the support from the international donor community.
In practice, Structural Adjustment Programmes have invariably hurt the more
vulnerable sections of the society as they reward those who have better
capability to profit from opportunities presented by the market. The poor are
on a weaker footing to compete, and hence more likely to suffer from welfare
retrenchment, which is often the operational effect of Structural Adjustment
Programmes.
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Check Your Progress Exercise 1 International Economic
Organisations
Note: i) Use the space given below for your answers.
ii) See the end of Unit for tips for your answer.
1) Explain in brief the role of IMF.
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13.3 WORLD BANK

13.3.1 Organization
Founded in 1944, the World Bank Group works with international institutions,
regional banks and national governments for developmental tasks. The
organization covers a wide range of sectors, from poverty reduction,
developmental finance and education to climate change. Over the past 70 years,
it has helped people in more than 100 developing countries. The role of the
World Bank is to address failures in international markets and end poverty. It
offers grants, zero interest credits and low-interest loans or investments as well
as advice and training. Currently, it has over 10,000 employees and is comprised
of five institutions, including the International Finance Corporation (IFC) and
the International Bank for Reconstruction and Development (IBRD). The
organization has been involved in more than 12,000 development projects since
its inception. Currently, its primary goal is to reduce the global extreme poverty
rate by 2030. Another function of the World Bank is to promote environmental
sustainability and green growth. Furthermore, its members sponsor and participate
in conferences and other events that tackle the world’s development challenges.

13.3.2 Role of IBRD

The World Bank offers loans, grants and other financial products through the
International Bank of Reconstruction and Development (IBRD) and the
International Development Association. The function of the IBRD is to promote
financial growth in middle- and low-income countries. In addition to loans, this
institution provides advisory services, risk management and technical support at
each stage of a project. Middle-income countries, such as Thailand and Indonesia,
have a lot of potential for growth and development. They attract foreign investment
and receive a large share of exports. Yet, they’re home to some of the world’s
poorest people. The role of the World Bank and the IBRD is to invest in these
countries and provide them with the best global expertise so they can grow and
overcome challenges.

13.3.3 Differences between IMF and the World Bank

The IMF is small (about 2,300 staff members) and, unlike the World Bank, has
no affiliates or subsidiaries. Most of its staff members work at headquarters in
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International Organisations Washington, D.C., although three small offices are maintained in Paris, Geneva,
and at the United Nations in New York. Its professional staff members are for the
most part economists and financial experts. The structure of the Bank is somewhat
more complex. The World Bank itself comprises of two major organizations: the
International Bank for Reconstruction and Development (IBRD) and the
International Development Association (IDA). Moreover, associated with, but
legally and financially separate from the World Bank are the International Finance
Corporation (IFC), which mobilizes funding for private enterprises in developing
countries, the International Centre for Settlement of Investment Disputes, and
the Multilateral Guarantee Agency. With over 7,000 staff members, the World
Bank Group is about three times as large as the IMF, and maintains about 40
offices throughout the world, although 95 percent of their staff works at its
Washington, D.C.

The World Bank mainly has a developmental function which aims to reduce
poverty and increase prosperity in developing and least developed countries.
The IMF monitors currencies and makes efforts to stabilize international monetary
system.

13.3.4 World Bank Operations

The World Bank exists to encourage poor countries to develop by providing
them with technical assistance and funding for projects and policies that will
realize the countries’ economic potential. The Bank views development as a
long-term, integrated endeavour. During the first two decades of its existence,
two thirds of the assistance provided by the Bank went to electric power and
transportation projects. Although these so-called infrastructure projects remain
important, the Bank has diversified its activities in recent years as it has gained
experience with and acquired new insights into the development [Link]
Bank gives particular attention to projects that can directly benefit the poorest
people in developing countries. The direct involvement of the poorest in economic
activity is being promoted through lending for agriculture and rural development,
small-scale enterprises, and urban development. The Bank is helping the poor to
be more productive and to gain access to such necessities as safe water and
waste-disposal facilities, health care, family-planning assistance, nutrition,
education, and housing. Within infrastructure projects there have also been
changes. In transportation projects, greater attention is given to constructing farm-
to-market roads. The Bank provides most of its financial and technical assistance
to developing countries by supporting specific projects. Although IBRD loans
and IDA credits are made on different financial terms, the two institutions use
the same standards in assessing the soundness of projects. The decision whether
a project will receive IBRD or IDA financing depends on the economic condition
of the country and not on the characteristics of the project.

13.3.5 Globalization, World Bank and IMF

Globalization—the process through which an increasingly free flow of ideas,
people, goods, services, and capital leads to the integration of economies and
societies—is often viewed as an irreversible force, which is being imposed upon
the world by some countries and institutions such as the IMF and the World
Bank. However, that is not so: globalization represents a political choice in favour
of international economic integration, which for the most part has gone hand-in-
180
hand with the consolidation of democracy. Precisely because it is a choice, it International Economic
Organisations
may be challenged, and even reversed – but only at great cost to humanity. The
IMF believes that globalization has great potential to contribute to the growth
that is essential to achieve a sustained reduction of global poverty. The Bretton
Woods Institutions—the IMF and World Bank—have an important role to play
in making globalization work better. They were created in 1944 to help restore
and sustain the benefits of global integration, by promoting international economic
cooperation. Today, they pursue, within their respective mandates, the common
objective of broadly-shared prosperity. The World Bank concentrates on long-
term investment projects, institution-building, and on social, environmental, and
poverty issues. The IMF focuses on the functioning of the international monetary
system, and on promoting sound macroeconomic policies as a precondition for
sustained economic growth.

The greatest asset that the Bretton Woods Institutions have in fulfilling these
objectives is their culture of consensus-building, which is based on trust and
mutual respect among the more than 180 countries—and their governments—
that make up their membership. However, both institutions also recognize the
need for change and internal reform. The IMF has implemented many reforms in
recent years, designed to strengthen its cooperative nature and improve its ability
to serve its membership. Many countries are still in the earliest stages of
integrating with the global economy. Even so, they must still shoulder the main
responsibility for making globalization work to their advantage.
Check Your Progress Exercise 2
Note: i) Use the space given below for answers.
ii) See the end of Unit for tips for your answer.
1) Explain the role of World Bank.
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13.4 WORLD TRADE ORGANISATION

The World Trade Organization (WTO) came into being in 1995. One of the
youngest of the international organizations, the WTO is the successor to the
General Agreement on Tariffs and Trade (GATT) established in 1947. The
proposal of an International Trade Organization (ITO) to promote trade and reduce
or eliminate trade barriers did not succeed in 1947. GATT was an interim
agreement and it had several rounds of trade negotiations until the formation of
WTO in 1995. So while the WTO is relatively young, the multilateral trading
system that was originally set up under the GATT is over 70 years old. The
negotiations did not end there. In 1997, an agreement was reached on
telecommunications services, with 69 governments agreeing to wide-ranging
liberalization measures that went beyond those agreed in the Uruguay Round. In
the same year, 40 governments successfully concluded negotiations for tariff-
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International Organisations free trade in information technology products, and 70 members concluded a
financial services deal covering more than 95 per cent of trade in banking,
insurance, securities and financial information. In 2000, new talks started on
agriculture and services. These were incorporated into a broader work programme,
the Doha Development Agenda, launched at the fourth WTO Ministerial
Conference in Doha, Qatar, in November 2001. At the 9th Ministerial Conference
in Bali in 2013, WTO members struck the Agreement on Trade Facilitation,
which aims to reduce border delays by slashing red tape. The World Trade
Organization is a global organization made up of 164 member countries that deals
with the rules of trade between nations. Its goal is to ensure that trade flows as
smoothly and predictably as possible. As part of his broader attempts to
renegotiate the United States’ global trade deals, President Donald Trump has
threatened to withdraw from the WTO, calling it a “disaster”. If the US were to
withdraw, trillions of dollars in global trade would be disrupted.

13.4.1 Working of WTO

Decisions are made by consensus, (though a majority vote may also rule). Based
in Geneva, Switzerland, the Ministerial Committee, which holds meetings at
least every two years, makes the top decisions. There is also a Goods Council,
Services Council, and Intellectual Property Rights Council, which all report to
the General Council of the WTO. Finally, there are many working groups and
committees. If a trade dispute occurs, the WTO works to resolve it. If for example,
a country erects a trade barrier in the form of a customs duty against a particular
country or a particular good, the WTO may issue trade sanctions against the
violating country. The WTO also works to resolve the conflict through
negotiations. As most investment flows from the developed and economically
powerful countries into the developing and less-influential economies, there is,
however, a tendency for the system to give the investor an advantage. Regulations
that facilitate the investment process are in the investor’s interest because these
regulations help foreign investors maintain an edge over local competition. In
2017, as several countries, including the United States strengthened their
protectionist stance on trade, the future of the World Trade Organization remains
complex. The Doha Round began in 2000. It focused on improving trade
in agriculture and services and expanded to include emerging markets, including
countries at the fourth WTO Ministerial Conference in Doha, Qatar, in
November 2001.

13.5 EUROPEAN UNION

What is the European Union (EU)? European Union’s purpose is to promote
peace, and establish a unified economic and monetary system. Its mandate is
also to promote inclusion and combat discrimination; break down of barriers to
trade and borders; to encourage technological and scientific developments;
champion environmental protection; and, among others, to promote goals like a
competitive global market and social progress. So, put simply, the European
Union is a coalition of 27 European countries, designed to tear down trade,
economic and social barriers and promote prosperity and development in these
areas. Established in 1993, the European Union’s headquarters are currently
located in Brussels, Belgium. In the post-World War II world, the European Union
sought to bolster the individual and collective economic and social well-being
of the countries involved, as well as establish a cohesive global marketplace that
182
promotes trade and other social values. Still, the European Union functions by a International Economic
Organisations
three-pronged governing system including a Council, a Parliament, and a
Commission, and uses a common currency called the ‘Euro’.

Despite not being officially formed until 1993, the European Union’s foundations
actually reach further back to 1957, when the European Economic Community
was established. The EEC was formed out of a previous group called the European
Coal and Steel Community - which had its own start in 1951. Among other things,
the EEC was designed to help break down trade barriers between countries in
Europe, protect from private trade agreements that could diminish competition,
and establish common agricultural and trade agreements and standards. The
countries that comprised the EEC included Ireland, the United Kingdom,
Denmark, the Netherlands, Belgium, Luxembourg, France, West Germany (and
later East), Italy, Portugal, Spain and Greece. However, it wasn’t until 1993 that
the EEC morphed into the European Union following the new Maastricht Treaty
(also known as the Treaty on European Union).

European Union vs. Euro Zone: Still, the European Union is not the same
thing as Euro Zone which was created in 2005, is simply the collection of all the
countries that use the Euro as a currency. But despite the common pledge of EU
members to eventually switch over to using Euros, only 19 of the current 27 EU
countries use the Euro.

13.5.1 Organisational Setup

As mentioned earlier, the European Union is governed by three main bodies -
the EU Council, the EU Parliament and the EU Commission. The Council’s
main job is to create and propose new policies and legislation for the European
Union. It operates under a different EU president every six months. The
Parliament then debates and passes the laws proposed by the Council, electing
members once every five years. Finally, the Commission enforces and operates
the laws for the European Union. Euro is reportedly the second most-used currency
in the world. Once established, the Euro has replaced many of Europe’s leading
currencies, including French and Italian currencies like the Franc and Lira, to
name a few.

13.5.2 Brexit and Impact on EU

England has voted to exit from the European Union and leave it - infamously
coining the term “Brexit” for the British exit from the EU. Although Brexit may
prove to be more harmful to Britain than the European Union, there have still
been rippling impacts on the EU in the post-Brexit world. Certain countries in
the EU could face huge economic losses, including Ireland and Germany, who
both could stand to lose over 10 per cent and 5 per cent of GDP, respectively.
Check Your Progress Exercise 3
Note: i) Use the space given below for your answers.
ii) See the end of Unit for tips for your answer.
1) Explain the role of European Union.
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International Organisations
13.6 INDIA AND INTERNATIIONAL FINANCIAL
OGANISATIONS
The first prime minister of India, Jawaharlal Nehru observed that the foreign
policy is the outcome of economic policy. The background of Indian economy
had a solid base. In the year 1700, India accounted for 32.9 percent of total world
GDP. India’s largest exports being cotton and textiles, spices, precious stones,
rice and silk. India’s decline after 1700 has been variously attributed to the waning
of the Mughal Empire, India’s de-industrialisation, British colonialism and the
rise of the United States as an economic power. From the 1950s to the 1980s,
GDP growth had averaged 4 per cent per year, which the noted economist Raj
Krishna derided as the ‘Hindu rate of growth’. Till 1991 India had a closed
economy. In June, 1991 India had only limited foreign exchange reserves to pay
for three more weeks of imports. Under the new government of Narasimha Rao,
a stabilisation package led by then Finance Minister Manmohan Singh was
introduced to increase competitiveness, efficiency and productivity in the Indian
economy. Through the New Industrial Policy Statement of 1991, the government
monopolies ended on power, oil, hydrocarbons, air transport and
telecommunication. Licence requisition was abolished in the key 15 sectors. The
Indian government’s three year plan of structural reforms of fiscal, monetary,
industrial and agricultural policies continued to gain ground in the early years of
the post-Cold War. Having a market-led, globalising economy was projected by
India’s leaders as part of a new development paradigm, aimed at alleviating
poverty, illiteracy and unemployment. Therefore, India joined the World Trade
Organisation (WTO) on 1 January 1995 and became more active in the 1MF (of
which it was one of the original members in 1945). Global economic engagement
has therefore become indispensible for Indian foreign policy in terms of the
benefits of interaction, interdependence and synergy. Former Indian Prime
Minister Manmohan Singh categorically said,” if we do not increase the pace of
the country’s economic growth it must certainly affect our national security.”
The focus of India was on trade diplomacy. India’s trading power can be converted
into political power via commercial diplomacy. In this regard, at the IMF, India
now commands a 2.34 per cent share of the overall vote, while in the World
Bank it is 2.91 per cent. Indian economist Kaushik Basu was also appointed as
the World Bank’s chief economist in October, 2012.

As far as India is concerned, it believes in centrality of WTO in global trade.

There have been efforts to move towards regional trade blocs but India believes
that WTO should remain the central platform for global trade. India also wants
reform of World Bank and IMF so that voices of developing economies are
reflected in their governance and management. The delay in their reforms was
the main reason why India proposed setting up of the BRICS Bank. All the
members in this bank have equal voting rights. .

13.7 MAJOR WORLD ECONOMIC CRISES AFTER

THE SECOND WORLD WAR
A) The International Debt Crisis lasted from 1981 to 1989. It covered nearly
20 countries around the world encompassing 30 different episodes. The 3
major East European countries affected were Poland, Romania and Hungary
184 and the 3 major Latin American countries affected were Brazil, Chile and
 Mexico. Each one faced serious debt problems but each one had unique International Economic
Organisations
problems in origin and implications. Long-term growth in most heavily
indebted countries required innovation and broader strategy. The Baker Plan
was formulated to strengthen growth prospects of indebted countries and
was followed by the Brady Plan in the 1980s. Structural Adjustment
Programmes (SAPs) were introduced in Latin American countries with
disastrous results. SAPs caused lots of social dislocation and loss of
economic productive structures. By early 1990s, the economic development
strategy had shifted from import substitution model of development to
neoliberal economic growth strategy all over Latin America.

B) A major economic crisis struck many East Asian economies in 1997. The
East Asian economies, which were witnessing rapid growth and
improvement in living standards, got embroiled in a severe financial crisis.
The social costs of the IMF programmes in Indonesia, Thailand and Korea
were severe. Sharp price rises were witnessed in all 3 countries as a result
of large exchange rate depreciations and massive job losses were seen. Food
prices went up by 35 percent. Unemployment levels reached 12 percent in
Indonesia, 9 percent in Korea and 8 percent in Thailand.
C) In the mid 1990s, Russia was coming out of post-Soviet period to a market
economy. There was massive social dislocation, fall in living standards,
inflation in excess of 300 percent. Many Russians did not have savings for
basic necessities of life. Barter was prevalent in several parts of the economy
and the concept of debt repayment or legal enforcement was yet to be
established. The source of inflation lay in a lack of fiscal discipline –
Government ran huge budget deficits financed by the Central Bank of Russia.
There was large scale tax evasion and huge capital flight.
D) In 2008 severe recession unfolded in the United States and Europe which
was the deepest slump in the world economy since 1930 and first annual
contraction since the post-War period. The financial crisis which erupted in
2007 with the US sub-prime crisis deepened and entered a tumultuous phase
by 2008. The impact was felt across the global financial system including
in emerging markets. The 2008 deterioration of global economic performance
followed years of sustained expansion built on the increasing integration of
emerging and developing economies into the global economy.

13.8 LET US SUM UP

The world economic institutions have not brought the desired results. Poverty
remains a durable feature of world politics. Intergenerational economic inequality
has only deepend further. It has many reasons. The major reasons are self
dominated Western interests in running the institutions. The basic problem lies
in neoliberal prescriptions under the guidance of the above-mentioned institutions.
Now the politics along with economics have been changing. The Asia has become
the epic centres of economic centre. The China and India are emerging powers.
The natural resources are also found in Asia and Africa. The headquarters of all
the multilateral economic and financial institutions of the world are located in
the West. People working in higher echelons are also Americans or Europeans.
The structures and policies need to be modified. The IMF believes that economic
growth is the only way to improve living standards in developing countries, and
that this is best achieved through globalization.
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International Organisations
13.9 REFERENCES
Colomer, Josep M. (2014). How Global Institutions Rule the World. New York:
Palgrave MacMillan.
Jenny Edkins and Maja Zehfuss. (2012). Global Politics: A New Introduction.
London: Routledge.
Lessambo, Felix. (2015). International Financial Institutionsand Their
Challenges. United States: Palgrave.
Patrick Weller & Xu Chong. (2015). Politics of International Organisations:
Views from Insider. New York: Routledge.

13.10 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES
Check Your Progress Exercise 1
1) Your answer should highlight the following points
International monetary cooperation
to promote exchange rate stability
to help deal with balance of payments adjustment and
to help deal with economic crisis by providing international coordination
– loans, plus advice
Check Your Progress Exercise 2
1) Your answer should highlight the following points
Provides developmental assistance to poor countries
Sees development as a long-term, integrated endeavour
Check Your Progress Exercise 3
1) Your answer should highlight the following points
In the post-World War II world, the European Union sought to bolster
the individual and collective economic and social well-being of the
countries involved, as well as establish a cohesive global market place
that promotes trade and other social values
European Union functions by a three-pronged governing system
including a Council, a Parliament, and a Commission, and uses a
common currency called the ‘Euro’

186
 International Economic
UNIT 14 REGIONALISM AND NEW Organisations

REGIONALISM*

Structure
14.0 Objectives
14.1 Introduction
14.2 The Evolution of Regionalism
14.3 Factors Responsible for Regionalism
14.4 Features of Regionalism
14.5 New Regionalism
14.6 Critical Appraisal
14.7 Let Us Sum Up
14.8 References
14.9 Answers to Check Your Progress Exercises

14.0 OBJECTIVES
In this Unit, you will be reading about regionalism and new regionalism. After
going through the Unit, you would be able to understand the following.
The importance of regionalism in international relations
The circumstances and factors responsible for its evolution
Features of regional arrangements
New regionalism and its altered context, content and contours and
A critical appraisal of the regionalism and new regionalism and its relevance
in today’s international system

14.1 INTRODUCTION
The first important point to consider here is to delineate regionalism as a concept.
Regionalism in world politics refers to an attempt by countries in a geographical
region to seek greater cooperation and support in different areas of state activity
such as military, political, economic, and social-cultural interactions. At times,
the need for such cooperation gradually manifests itself in the form of demand
for establishing regional organizations. This phenomenon is also known as
regional integration. Thus, regionalism often leads to regional integration and
cooperation among the states in a particular region. Almost all the regions in the
world have experienced this phenomenon and its development has seen increased
emphasis since the 1990s. The next important point to ponder in this context is
whether regionalism is a ‘process’ or a ‘condition’. In a way, regionalism denotes
both a process and a condition. It is a condition in the realm of ideas and sentiments
when countries belonging to a region share a sense of affinity and belonging on
the basis of such shared attributes as historical experiences (such as colonialism
in Asia and Africa), economic conditions (economic underdevelopment in Latin

Prof. Savitri Kadloor, Dept of Political Science, Jamia Millia Islamia, New Delhi
*
187
International Organisations America), geographical contiguity, cultural similitude (tribal or linguistic affinity)
or shared perception of threat from a dominant power. These are some of the
conditions that encourage regional affinity and sentiment leading to formation
of a regional organization. Regionalism is also understood as a process when
certain efforts in a region are driven at tapping and consolidating the latent
affinities among the members to further the cause of closer cooperation and
integration, the process of drawing up a blue print of regional organization. The
import substitution industrialization (ISI) model of development followed in Latin
America in the 1950s convinced all the countries to go for closer economic
integration. Hence, regionalism as a phenomenon denotes both a condition and
process, both leading to bonds of cooperation and belonging.

14.2 EVOLUTION OF REGIONALISM

It is interesting to note that regional cooperation based on a sentiment of belonging
to the neighbourhood is not new. We see instances of regionalism ever since the
formation of organized political life. However, its most prominent avatar has
been visible only in the twentieth century, more importantly, after the end of the
First World War.

Conceptually speaking, a blueprint for cooperation was presented by David

Mitrany in his book, A Working Peace System published in 1943 in which he
proposed cooperation in technical areas of interdependence (he calls them
‘functional’ areas) so as to encourage greater interaction and closer relations
among member states. He believed that such interaction would eventually result
in habits of cooperation and deeper understanding among participating states
leading to a system interdependencies and linkages in other areas as well. This,
he thought, would lay the foundation for a peaceful working of the state system.
His approach to peace came to be known as the functionalist approach. It means
that one of the main factors responsible for the evolution of regionalism and
regional cooperation is the emergence and existence of growing interdependence
in technical and trade related interactions among the states. Gradually, when
member states find it beneficial to cooperate in some ‘functional’ areas, they
extend it to other areas of cooperation. This is known as the spillover effect. The
functionalist approach received most traction in Europe after the Second World
War since the European continent was witnessing the challenge of post-War
reconstruction and need for economic cooperation. What began as cooperation
in functional areas gained greater subscription and utility within the region of
Europe to transform into a regional organization. It started with the formation of
European Coal and Steel Community culminating in the regional European
Economic Community. During the 1960s, there was a vigorous attempt to mould
the functionalist approach to the specific needs of Europe by weaving political
cooperation into the economic and trade matrix. A cluster of regionalists led by
Ernst B Haas articulated the revised programme of functional cooperation
envisioned by Mitrany. Their approach came to be known as neofunctionalism
that underscored the inevitability of political element in the regional scheme of
cooperation if it were to result in regional integration.

Besides the functionalists and neofunctionalists, those subscribing to federalist

approach too supported regionalism as a viable programme. The federalists
attributed different reasons for their argument in favour of regionalism. To them,
regionalism and regional cooperation fulfilled the twin need for integration and
188
decentralization. The European Federalists in particular talked of pooled Regionalism and New
Regionalism
sovereignty (investing a slice of sovereignty in building and sustaining the regional
institutions) to pave the way for a larger federal entity and closer union modelled,
again, on the European Economic Community. Therefore, regionalism as an idea
and project received support and legitimacy from three important theoretical
approaches of the era, namely, the functionalist, the neofunctionalist and the
federalist approaches.

However, the European Economic Community (EEC) that gave wings to the
idea of European regionalism, and later brought to life that idea in concrete terms,
was largely limited to economic and trade issues for the first thirty years before
embarking on a more ambitious journey towards single currency and
harmonization of policies in such areas as travel and immigration (Schengen
visa) accompanied by a change in nomenclature from EEC to European Union.
Alongside the process of economic and trade cooperation through EEC, another
important development unfolded in Europe that had greater implications for
regionalism. The Council of Europe as a regional organization for political
cooperation was founded in 1949. It soon acquired status of being forerunner in
establishing common rights and standards for people of Europe irrespective of
their nationality. It was the first regional organization that established a regional
human rights system by adopting the first legally binding European Convention
on Human Rights in 1950 to protect civil and political rights of individuals in
addition to The European Social Charter in 1961. Thus, Council of Europe directed
its efforts towards upholding human rights, democracy and rule of law in Europe.
Rising competition between the West and the East in the context of Cold War
meant that the emergence of organizations for security cooperation was not far
behind or a distant goal; they arrived in the form of NATO and Warsaw Pact.
They remained the broad framework within which security cooperation and
protection of Europe evolved. The developments in Europe in terms of regional
organizations in economic, political and security areas provided the template for
similar organizations representing oneness and common goals to mushroom in
other regions of the world. However, the process of emulating European regional
cooperation in other regions of the world has been very uneven both in terms of
close (harmonizing policies and enacting commonly agreed enforceable laws)
and broader (extending to large number of issues and areas) cooperation. There
are many reasons responsible for this divergence. Regions other than Europe
that do not share the same level of uniformity in economic development,
ideological commitment or cultural and religious traditions have found it difficult
to replicate Europe’s level of success in regional cooperation and integration.
Also, all regions in the world are not geographically small and compact like
Europe. That is why we see sub-continental, sub-regional, smaller organizations
in large continents like Asia, Africa and Latin America. However, leaving aside
the unevenness and dissimilarity, there are regional organizations in every part
of the world that have symbolized regional aspirations and upheld the shared
goal of regionalism. Examples of cooperation can be ASEAN, SAARC, Arab
League, GCC, NAFTA and APEC etc. This brief description evidently shows
that while regionalism is prevalent in every part of the world in political, economic
and strategic areas, it also differs in its extent and depth of cooperation from one
region to another.
One more aspect related to the development of regionalism is that its ascendency
reached its zenith during the decade of 1960s and early 1970s. There was a period
189
International Organisations of lull after that until about early 1990s when we witness a renewed emphasis on
regional cooperation in economic and trade areas so much so that they are
emerging in the form of trade blocs based on exclusive membership and
preferential rules of trade. It is causing some concern and resentment among
countries that are excluded from trade blocs. This type of regionalism is known
as ‘new regionalism’. We will discuss more about this later.
Check Your Progress Exercise 1
Note: i) Use the space given below for your answer.
ii) See the end of the Unit for tips for your answer.
1) Trace the evolution of regionalism and regional organizations.
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14.3 FACTORS RESPONSIBLE FOR

RERGIONALISM
The obvious question that arises in one’s mind is why regionalism? What prompts
the emergence of regionalism as an inevitable development? Based on the above
mentioned description of its evolution, we can now deduce reasons for the growth
of regionalism and factors that encourage this development. If David Mitrany
proposed a blueprint for cooperation in technical and functional areas, it is fairly
obvious to infer that growing interdependence in technical and trade relations
among member states has been a major driving force of regionalism. The evolution
of public international unions in the 19th Century is a testimony to increasing
interactions leading to common concerns and need for harmonious laws that
needed to be addressed at the intergovernmental level. Examples of Universal
Postal Union and International Bureau of Weights and Measures are relevant
here. This process has been further galvanized by globalisation wherein it is
impossible to conceive of member states as isolated, independent entities
characterised by self-sufficiency. Secondly, regional level acts as an intermediary
between national and global levels of economic and political activity. Oftentimes,
issues of regional concern get lost in the melee of global problems and concerns.
Universal intergovernmental organizations tend to be remote in terms of access
and diffused in terms of focus and attention when dealing with specific problems
of a region. Hence, regionalism fits the bill perfectly while dealing with
transnational issues that are of particular relevance to a region and not of global
concern. Thirdly, regional cooperation checks the authoritarian tendencies of a
dominant, stronger actor within a region. It acts as a bulwark against oppressive,
totalitarian behaviour towards smaller states by protecting their interest through
collective endeavour as also by putting to rest their fears and anxieties. Fourthly,
in a broader global context, regionalism provides visibility and voice to regional
aspirations and common shared attributes such as language, culture, history, and
orchestrated ideas based on those attributes. African Union has for long given
190 voice to the idea of African nationalism and African brotherhood that encapsulated
the common history of colonialism and the need to shape a common destiny in Regionalism and New
Regionalism
future. It promotes regional solutions to problems of conflict by referring to
regional challenges and the need to give cooperation a chance. After all, shared
destiny is a reality that cannot be reversed by many states. Hence, regionalism
helps in preventing conflicts through cooperation. Lastly, harmony and
homogeneity of interests coupled with regional socio-cultural attributes galvanizes
the creation of regional aspirations and their articulation. Scholars like Amitai
Etzioni emphasize on the cultural and social aspects (non-political) of regionalism
seen as community for its continued strength and relevance in the long run.
Regionalism eventually leads to what Karl Deutsch called as security community
wherein members of a regional organization are held together through enmesh
of cooperation, interdependence and integration. He further believed that the
level of integration in a region can be measured by looking at transactions among
member states. Etzioni’s non-political interactions leading to a community of
people or Deutsch’s security community or spillover effect of Ernst B Haas are
pointers to the utility of regionalism for peace and stability of a region.
Check Your Progress Exercise 2
Note: i) Use the space given below for your answer.
ii) See the end of the Unit for tips for your answer.
1) What are the factors responsible for regionalism?
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14.4 FEATURES OF REGIONALISM

Regionalism as a concept and as a process shares certain features which help us
in identifying the trend. Firstly, regional organizations are not always exclusive
in nature; they might be overlapping to let a country be part of multiple
organizations or yet again, include a country that is geographically not part of a
region. Andrew Heywood states that regional organizations may be continental,
sub-continental or transcontinental in their membership. While Council of Europe
represents continental organization, SAARC is an example of sub-continental
entity and Asia-Pacific Economic Cooperation (APEC) or BRICS are
transcontinental in nature. Mexico is a good example of a state having overlapping,
multiple shared interests with the North American continent (member of NAFTA),
with the Asia-Pacific region (member of APEC), and the linguistic, cultural and
historical affinity with Latin America (member of LAIA). Therefore, regions
are often politically and socially constructed “imagined communities”, they
are ideas that are not always limited to one region. This reading of a region as an
idea of a political, cultural or social construct makes it extremely fluid, open to
myriad possibilities of configuration and/of cooperation. In fact, some have
suggested that there are no ‘natural’ or ‘given’ regions. What appears as a ‘region’
in economic and cultural terms may not be appealing in political or security
terms; e.g. SAARC. The political elites of a region are, therefore, required to
191
International Organisations articulate regional political aspirations to align with its strides in economic
cooperation.

Secondly, there are many dimensions of regionalism depending on the primary

purpose and objective which determines its emergence. We can identify at least
three main forms of regionalism, which are, economic, political, and strategic.
Economic regionalism in the form of free trade area or common market is one of
the earliest forms of cooperation that evolved in Europe in the immediate aftermath
of the Second World War. Political regionalism seeks to protect and consolidate
shared political values such as democratic government, individual freedom, liberal
outlook, etc in order to develop a harmonious collective image and exert greater
political influence both within and outside the region. Strategic cooperation gained
recognition and ascendency to address the needs of collective self-defence and
protection from more powerful neighbours. This form of regionalism may also
be driven by ideology and commitment to a certain political value system
irrespective of geographical location of its members. North Atlantic Treaty
Organization and Warsaw Pact are the most prominent examples of strategic
(some call it military or security regionalism) regionalism.

Thirdly, regionalism in the traditional sense followed a familiar path of incremental

progress in economic field from free trade area to common market to economic
community to economic union. For a long time, this path of incremental progress
witnessed in Europe seemed to be inevitable and was replicated in similar fashion
elsewhere. Political and strategic communities/organizations formed separate,
parallel projects. In the area of security regionalism, international organizations
like UN largely determined tasks undertaken at the regional level. However,
with the advent of new regionalism in recent decades, regional organizations
have acquired a status of their own quite distinct from international organizations
like the United Nations. They ‘have transformed from objects into subjects,
making their relationship to the UN much more complex...’ (Hettne and
Söderbaum: 2006, 228). The regional approach no longer strictly adheres to state-
centric model of international organizations; rather, they have transcended the
inevitable centrality of state apparatus to achieve regional goals.
Check Your Progress Exercise 3
Note: i) Use the space given below for your answer.
ii) See the end of the Unit for tips for your answer.
1) Briefly explain different forms of regionalism.
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14.5 NEW REGIONALISM

The decade of 1990s witnessed resurgence of regionalism and mushrooming of
several regional organizations “ a development that is considered as ‘the second
192 coming’ (Andrew Heywood) of regionalism. After a relatively less active decade
from mid-1970s to mid-1980s, there has been a renewed interest in regional Regionalism and New
Regionalism
groupings. In this section, we look at the features and nature of new regionalism
from the stand point of its changed context, content and contours as it has
emerged in 1990s.

First and foremost, in terms of context, new regionalism is an offspring of

globalization. Hence, there is an unmistakable emphasis on economic and trade
issues at the regional and global level. Regional organizations became active
agents rather than passive objects of international policy processes promoting
neoliberalism. In this sense, new regionalism rejected over-determination of
international organizations in world affairs. Until then, regional organizations
were seen to be representing intermediary levels of cooperation. However, ‘new
regionalism’ redefined the kernel of their identity to signify their emergence as
‘potentially competing structures’ (Hettne and Söderbaum: 2006, p. 227) in an
increasingly globalized world. The underlining factor of changed context in the
form of accelerated globalization led to rebooting their logics and functioning. It
meant that new regionalism as a phenomenon was a result of twin processes –
regions intersecting with economic globalization at the international level
alongside creating protectionist trade blocs at the regional or sub-regional level
“ that produced multiple, interlinking, complex relationships between regions
and multilateral actors and within the regional groupings themselves. There was
also tendency to develop several micro regions and trade blocs within a broad
macro region. Thus, new regionalism is undoubtedly economic in character
leading to formation of multiple trade blocs and complex web of relationships
undercutting the old ones and forming new trajectories of cooperation. J N
Bhagwati calls this complex web of relationships as ‘spaghetti bowl’ system
(cited in Heywood: 2014, 496) wherein it is difficult to trace clearly a particular
state’s path within the web of complex, multiple, overlapping, regional trade
agreements.
New regionalism, insofar as its content is concerned, is associated with several
structural transformations in international system such as: the end of Cold War;
transition from bipolar to multipolar power structure; and post-Westphalian nation-
state system where state has been relegated to a non-dominant position in regional
and international affairs. Further, state has been to an extent replaced by
transnational economic-social-political interdependencies unleashed by
globalization leading to newer patterns of interactions between state and non-
state actors. The decade of 1990s is also symptomatic of changed attitude towards
economic development and political system in the developing countries as
evidenced in weakening of Third World solidarity and Non-Aligned Movement
in favour of neoliberal economic development. Hettne and Söderbaum refer to
multipolar power structure of post-Cold War era as New International Division
of Power (NIDP) and globalisation of ‘finance, trade, production and technology’
as New International Division of Labour (NIDL). Insofar as the sentiment of
new regionalism is concerned, it is an extension of nationalism at a different,
higher level; it supplements in areas where national states are incapable of
protecting national interests in a globalised context. This is known as ‘pooling
sovereignty’ (Andrew Heywood: 2014, p. 491; Hettne and Söderbaum: 1998, p.
4). Therefore, the resurgence of regionalism is here to stay but its content and
contours have shifted dramatically in its second coming.
Regarding the contours of new regionalism, it needs to be mentioned here that
the new regional organizations are comprehensive, multidimensional in their
193
International Organisations structure as opposed to simple structures in the common market era. The
multidimensionality of regional organizations is also reflected in the convergence
of culture, economic interests, security arrangement and political regime that
emerge spontaneously from within a region in the form of sub-regional aspirations
to create trade blocs to protect economic/trade interests. Since we have defined
regionalism as both a condition and a process, we must underscore here that
‘new regionalism’ is a complex process of change operating at such various levels.
as global system’s level. These processes display dynamic interactions at various
levels to produce different forms of cooperation depending on their relative
importance, which differs from one region to the other.

One intriguing contemporary debate has emerged surrounding the relationship

between regionalism and globalization – is it complementary, supporting each
other along the way or is it contradictory, giving rise to conflict and friction? In
other words, whether regionalizaiton is a building block or a stumbling block for
globalization? One finds support for both these positions in academic writings.
Arvind Panagariya, Louise Fawcett and Andrew Hurrell believe that globalization
and ‘new regionalism’ share a symbiotic relationship reinforcing each other in
the process. There are others (Hettne, Inatoi and Sunkel cited in Hettne and
Söderbaum: 1998) who suggest that the relationship is not linear and smooth,
rather, it is dialectic in nature occasioned by friction and tension until a
rearrangement is negotiated among all the stakeholders.

14.6 CRITICAL APPRAISAL

Having discussed the features and nature of regionalism and new regionalism, it
is now imperative to take stock of these concepts from a critical perspective. If
regionalism has supporters among functionalists, neofunctionalists and federalists,
does it mean that it is a panacea for all problems in international system? There
have been claims and counter claims as to the desirability of regionalism. The
universalists question the relevance and utility of regional organizations while
placing their faith in global international organizations to address and solve
problems of both regional and international nature.

Critics also contend that excessive emphasis on regionalism leads to inward-

looking, closed organizations that foster greater domination by big powers within
the region. Hence, the assumption that smaller states come together to protect
themselves against bigger, dominant powers within or outside the region is an
oversimplified assumption. The empirical evidence of regional groupings so far
suggests that in security arena, bigger and stronger powers acquire an additional
forum for influence and domination leading to greater concentration of power
than ever before.

There are others who contend that regional organizations have failed to seize the
initiative to resolve regional conflicts and restore peace owing to competing
ambitions of regional powers to steer the peace process in a way as to determine
its outcome to their advantage or to suit their national interests. For instance, the
Chinese government did not allow external actors to broker peace in Cambodia
fearing a dilution of its own role and strategic interest. Stronger powers in a
region accept conflict resolution mechanisms mostly when the conflict has become
intractable or strategically insignificant or still, financially burdensome without
serving any diplomatic purpose.
194
Regionalism may foment inter-regional or ethno-national conflict leading to Regionalism and New
Regionalism
disintegration when cultural difference within a state receives outside support
from groups with cultural affinity. It impacts intraregional dynamics on political
questions. For example, India and Bangladesh share linguistic affinity or Sri
Lanka and India have Tamil groups as common variable between them. This in
itself could lead to tensions and strife within a state.

An economic argument against new regionalism has been deployed by those

who support free trade and dismantling of trade barriers. It is alleged that regional
trade blocs resort to protectionism and favour trade within the bloc to create a
fortress and foreclose adverse impact of global competitiveness and volatile
market on their economies. But, such protectionism undermines the principles
of free trade and open borders envisaged in a globalised world. J N Bhagwati
questioned the position of regional blocs on free trade as ‘building blocks’ or
‘stumbling blocks’ within the global system. Regional systems have been short
of stumbling blocks but they have given rise to a tangle of regional trade
agreements, “complex and overlapping bilateral and regional arrangements, each
with conflicting and contradictory provisions....” (Heywood: 2014, p. 496)

In spite of the above criticisms, regionalism and new regionalism have found
many takers who suggest that the criticisms and fears are overstated propositions.
One aspect in favour of new regionalism arrangements is that they are rarely
imposed from above; most such arrangements are a result of bottom-up approach
orchestrated by a clutch of national and regional interest groups striving to protect
their sectoral interests. Green political parties across Europe have sought to
harmonize their respective positions to put forth a common agenda for the
protection of their interests and insulate their communities and consumer interests
from ill effects of unbridled globalization. Viewed from this perspective,
regionalism and new regionalism are indeed ‘building blocks’ in protecting
sectional, national, and regional interests.

14.7 LET US SUM UP

In this Unit we have looked at regionalism and new regionalism as important
developments within the international system. Regionalism can be understood
both as a condition and a process. Regionalism found many takers in the
immediate aftermath of the Second World War owing to specific, unique
circumstances prevailing in Europe. Most regional systems then emulated the
pattern of European model moving from free trade area to common market to
economic community to economic union. However, the results of such efforts
have been uneven. Regionalism received conceptual support in functionalist,
neofunctionalist and federalist thought. Features of old regionalism have been
non-exclusive nature of membership based instead largely on shared attributes
and values. As for the evolution of regionalism in Europe and elsewhere, it has
manifested in three areas, namely, economic, political and strategic. Regionalism
witnessed ascendency from 1950s to mid- 1970s. After a period of relatively
dormant action, it has seen renewed growth and acknowledgement in 1990s in
the form of new regionalism.

New regionalism is a baby of globalization. Unquestionably, advent of

globalization propelled regionalism to reinvent itself in a new avatar. We have
discussed the context, content and contours of new regionalism to suggest its
195
International Organisations features and differences with old regionalism. One distinguishing feature of new
regionalism is the emergence of multiple trade blocs sometimes within the same
region challenging the macro regional template. They have also been accused of
resorting to protectionism and in the process disrupting the principles of free
trade and open markets orchestrated as the mantra of globalization. Yet, it is also
generally agreed that new regionalism has promoted communication and
interrelationships among various interest groups across region resulting in
meaningful cross breeding and convergence of policies and ideas.

14.8 REFERENCES
Baylis, John, Smith, Steve and Owens, Patricia. (2017). The Globalization of
World Politics: An Introduction to International Relations. Oxford University
Press

Hettne and Soderbaum.(1998). The New Regionalism Approach” Pre-publication

manuscript for Politeia, [Link]. 3, pp. 1-18.

Hettne and Soderbaum. (2006). The UN and Regional Organizations in Global

Security: Competing or Complementary Logics?”,Global Governance, vol. 12,
pp. 227-232.

Heywood, Andrew. (2014). Global Politics. Second edition. Palgrave Macmillan.

14.9 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES
Check Your Progress Exercise 1
1) Your answer should highlight following points
Concept of functional areas by David Mitrany
Spillover effect
Beginning of regional cooperation in Europe after the 2nd World War
Check Your Progress Exercise 2
1) Your answer should highlight following points
Evolution of public international unions in the 19th Century
Regional cooperation checks the authoritarian tendencies
Provides visibility and voice to regional aspirations and common shared
attributes
Harmony and homogeneity of interests coupled with regional socio-
cultural attributes galvanizes the creation of regional aspirations and
their articulation
Check Your Progress Exercise 3.
1) Your answer should highlight following points
Your answer should highlight economic, political, and strategic features
of regionalism

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 Regionalism and New
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