Global Organizations and Nation States - Essay Example

Global Organizations and Nation States Introduction This paper is an attempt to explore briefly the impact of global organizations such as IMF and World Bank on the domestic policies of countries of its affiliation. The paper will achieve the same by presenting examples, theory and some facts. Discussion Important here to understand is that IMF and World Bank use an extremely effective tool and that is “debt”. Debt allows the lender to get hold of the debtor’s resources, raw materials, infrastructure, and others on the cheapest possible terms. Furthermore, both these institutions attach many preconditions on the receiving nations for borrowing money. These are mainly part of the neo liberal economic ideology, which force these countries to follow free market policies, reduce government intervention, privatization and decreasing the size of the public sector, liberalization, reducing trade barriers, elimination of subsidies, reduced protection of the domestic industries, currency devaluation and others (Karns & Mingst, pp. 98-99). Despite the fact that these policies have appeared to be working for many developed countries, evidence shows that it has been disastrous for the poor and third world countries, which actually seek loan from IMF and World Bank (Pease, pp. 254-259). Critics of these international organizations believe that these organizations are actually Washington controlled and headed by the developed countries of the world. Important here to note is that United States and other European countries ran out of their resources decades ago. Furthermore, their domestic markets are past the point of saturation and low population growth rates mean that their dream for aggressive growth cannot be fulfilled (Jawara & Kwa, pp. 75-78). The only possible way in which they could sustain or even continue their growth is by trying to exploit the resources of the third world countries, which are rich in natural resources but do not have the tools and the expertise to make use of them. International organizations such as International Monetary Fund, World Bank and World Trade Organization was the clear answer (Hurd, pp. 41-45). These organizations, headed and controlled by a few developed countries, allow them to force the third world and underdeveloped countries of the world to open their markets, deprotect their industries, and reduce the government intervention. Important here to note is that in case of majority of the African and South Asian countries, these policies have never worked (Stone, pp. 52-58). The only beneficiary in these cases are developed countries which get to access the resources of these countries, buy them at the cheapest possible prices in the name of competition and lack of value addition, dictate their own social, economic and other domestic policies. In short, these organizations have created a new face of neo colonialism where they control the policies of the borrower countries in name of “conditions”, “policies”, and “rules” (Pease, pp. 254-259). World Trade Organization is another tool for the powerful nations to influence trade mechanisms and directions. Important here to note is that despite the fact that WTO advocates free trade and lifting of trade barriers, many North American and European countries still continue to protect their domestic sector such as agriculture, beef, farm and other industries. Furthermore, at the same time, poorer countries are forced to lift all possible barriers on trade so that the developed countries could get access to their markets for exploitation. Underdeveloped countries, which have less influence, power and say in these organizations have no other choice but to accept these conditions so that they could little foreign exchange and generate little employment in their countries but again the cost remains high. The recent case of South Korea is another example of how WTO influences the domestic and trade policies of countries. It was during 2003 when South Korea decided to stop all possible imports of beef from United States because of the mad cow disease. However, the US kept on pressurizing the South Korean administration with threats of halting trade of other items with United States and some of the member countries of WTO (Jawara & Kwa, pp. 75-78). United States presented reports that its beef is free of any signs of mad cow disease and thus it should be allowed access in the South Korean market. Despite of the massive protests by public and civil society on the streets of South Korea, the South Korean administration has no choice but to give up to the pressures of WTO and United States in order to save its trade-based economy by allowing the US beef imports in the market (Karns & Mingst, pp. 98-99). Consider the example of India, which manifests that how, loans from IMF and World Bank hamper the ability of any country to construct its own social policy. It was in 1991 when India was faced with the problem of balance of payments and there was a need for an urgent solution. The country referred to IMF and to which it sold 67 tons of gold and brought 1.8 billion US dollars. In return, IMF demanded urgent reforms of liberalization and free market mentioned earlier in the paper. Due to its large market and potential, the country quickly progressed to become the tenth largest economy in the world in terms of GDP and the fourth largest economy of the world in terms of PPP (Stone, pp. 52-58). However, the country has to halt its socialist policies and hope that the trickle down effect will play its part. 20 years down the road, the country’s social condition is disastrous. More than 75 percent of the population in the country lives on less than two dollars a day and 70 million people in Mumbai alone live in slumps. High unemployment, malnutrition, sanitation and water issues and other social issues still haunt the majority of the country’s population. IMF, World Bank, WTO, G-20, and other international organizations collectively and continuously influence India domestic and social policy to remain capitalistic and keep on waiting for the trickle down effect to play its part (Hurd, pp. 41-45). Pakistan is another example of a country, which is paying the price of its affiliation with IMF, World Bank and WTO. The country looked towards IMF for loans during the tenure of late Benazir Bhutto in 1988, which forced the country to undergo an aggressive structural adjustment program. Since then, the country has not appeared to recover from the downfall. Poverty, illiteracy, health and education situation in the country have become worse. More importantly, during this tenure, majority of the finance ministers of the country were former employees of IMF and World Bank (Jawara & Kwa, pp. 75-78). For the past two decades, the country has appeared to be taking the role a puppet for the western masters. With the exception of for the nuclear tests that the country did in the year 1998, IMF has dictated every other policy in the country. Decision to support the United States in 2001 for War on Terror, withdrawing from Kargil war, privatization of tons of state owned enterprises, silence on the drone attacks and others are a clear manifestation of how these organizations force the borrowing countries to construct policies which are in favor of a few powerful countries in the world (Woods, pp. 36-39). Works Cited Hurd, Ian. International Organizations: Politics, Law, Practice. Cambridge University Press, 2010. Jawara, Fatoumata, & Kwa, Aileen. Behind the scenes at the WTO: the real world of international trade negotiations: lessons of Cancun. Zed Books, 2004. Karns, Margaret P., & Mingst, Karen A. International organizations: the politics and processes of global governance. Lynne Rienner Publishers, 2009. Pease, Kelly-Kate S. International Organizations. Pearson Education, Limited, 2011. Stone, Randall W. Controlling Institutions: International Organizations and the Global Economy. Cambridge University Press, 2011. Woods, Ngaire. The globalizers: the IMF, the World Bank, and their borrowers. Cornell University Press, 2006. Read More