Multilateral Institutions: A Critical Introduction - Softcover

Bøås, Morten

Softcover

ISBN 10: 0745319203 ISBN 13: 9780745319209

Publisher: Pluto Press, 2003

Synopsis

In recent years, a great deal of public attention has been focussed on multilateral institutions such as the World Bank, IMF and WTO. This book offers students, practitioners and activists a critical guide to these and other major institutions - the Regional Development Banks and UNDP - that make up the multilateral development system. It analyses how they operate with respect to financing and lending, the various roles that they play, and related changes in their policy concerns - such as structural adjustment, sustainable development, and governance. The emphasis is on politics within and also between multilateral institutions, analysing the relations - both competitive and collaborative - between, for example, the World Bank and UNDP. NGOs are also shown to be important actors, and the role they have played in recent years is critically assessed. The book concludes with some emerging trends: the 'privatisation' of the system, regionalisation, and 'the politics of protest'. Bøås and McNeill do not simply take the policies of multilateral institutions at face value, but ask how and why these policies came into existence. They seek to promote critical, but informed, engagement both with the member states of multilateral institutions and the institutions themselves.

About this title

About the Authors

Morten Boas is Research Professor at the Norwegian Institute of International Affairs. He is the co-author of Multilateral Institutions (Pluto, 2003).

Desmond McNeill is Head of Research at the Centre for Development and the Environment, University of Oslo. He is the co-author of Multilateral Institutions (Pluto, 2003).

Excerpt. © Reprinted by permission. All rights reserved.

Multilateral Institutions

A Critical Introduction

By Morten Bøâs, Desmond McNeill

Pluto Press

Copyright © 2003 Morten Bøâs and Desmond McNeill
All rights reserved.

ISBN: 978-0-7453-1920-9

Contents

List of Tables, vii, 
Acknowledgements, viii, 
Abbreviations, ix, 
Multilateral Institutions: A Brief Guide, xi, 
1 Introduction: A 'Critical Engagement' Approach to Multilateral Institutions, 1, 
2 The Structural Design of Multilateral Institutions, 16, 
3 The Changing Priorities of Multilateral Institutions: From Technical Aid to Good Governance, 50, 
4 The Politics of Multilateral Institutions – Unpacking the Black Box, 90, 
5 The Future of Multilateral Institutions, 139, 
Notes, 160, 
Internet Resources, 168, 
Bibliography, 170, 
Index, 179, 

CHAPTER 1

Introduction: A 'Critical Engagement' Approach to Multilateral Institutions

In 1944, as the Second World War neared its end, a conference was convened by the victorious countries in Bretton Woods, in the United States. It was here that the World Bank and the International Monetary Fund were born – in the hope that they would provide the foundations of a peaceful and prosperous future for the world. Fifty years later, these two multilateral institutions occupy a dominant position in the global political economy, but they are the target of powerful attack – both in the streets and in the media. And in the course of these 50 years, they have been joined by a whole range of other multilateral institutions. In the late 1950s and early 1960s, three important regional development banks were established in Latin America, Asia and Africa. In 1965, the United Nations Development Programme was created, supplementing a number of United Nations (UN) specialised agencies some of which had already existed for decades. And in 1995, the World Trade Organisation (WTO) replaced the General Agreement on Tariffs and Trade (GATT), which had been the major framework for global trade negotiations since 1948. This constituted the last of the four pillars of the international system: the International Monetary Fund (IMF), the World Bank, the UN and the WTO – which had originally been conceived at Bretton Woods.

In the course of this period, a great deal had changed. The anniversary of the World Bank and IMF was met with a 'Fifty years is enough' campaign. And the meeting of the WTO in Seattle led to violent clashes in the street, to be followed by the formation of a loosely knit confederation of non-governmental organisations (NGOs) and activists who demonstrated against 'globalisation' in general, and its institutional manifestation (the World Bank, the IMF and the WTO) in particular. While some people see these institutions, and the multilateralism they promote, as playing an important role in the elimination of world poverty, others see them not as the solution, but as part of the problem. There has thus, in recent years, been greatly increased public attention and criticism of the multilateral institutions. Their annual meetings, formerly of little interest to the general public, are now events that hit the headlines of major newspapers all over the world. Many civil society activists view these institutions as part of an undesirable strengthening of market-led globalisation. Mass protest has been organised around World Bank, IMF and WTO meetings, often ending in violent clashes between protesters and huge police forces called out to prevent demonstrators from disturbing the proceedings. The importance of these annual meetings as rallying points for an emerging global anti-globalisation movement, represented by civil society movements such as Association pour une Taxation des Transactions Financièrs pour L'aide aux Citoyens (ATTAC), should not be underestimated.

Entering the new millennium, therefore, the future direction of the multilateral system is one of the most important subjects of public debate. Regrettably, however, this debate is often ill-informed. The views of those who support these institutions and those who argue for their substantial reform or closure are often not based on a well-grounded understanding of the multilateral institutions: how they are financed and organised, and how they interact with client countries, donor countries and each other. This contributes to the failure of effective dialogue between the differing camps. This book is a modest attempt to improve the situation.

This book thus offers students, practitioners and activists a critical introduction to the major institutions that constitute the multilateral development system. The mandate of these institutions defines them as technical and functional organisations. However, we regard them as political organisations whose projects, programmes and policies have a significant impact on domestic policies in the many countries in which they are involved. We will here describe the major institutions that make up the multilateral development financing system: how they operate with respect to financing and lending, and how they are organised. We will assess the various roles that they play, and related changes in their policy concerns, such as structural adjustment, sustainable development, and – more recently – governance. This discussion will be linked to the dominant role played by economics, and how the favoured approach changed over time from a Keynesian one to a neoliberal one. The major multilateral development banks (MDBs) – the World Bank, the three largest regional development banks, the African Development Bank (AfDB), the Asian Development Bank (ADB) and the Inter-American Development Bank (IDB), and the United Nations Development Programme (UNDP) – will be our main concerns, but we will also discuss the role of the IMF and the WTO vis-à-vis these institutions, and the processes and debates around them. These institutions constitute our main reference points, but we do not devote the same attention to each of them. Our main purpose is to facilitate understanding of politics and processes. For instance, in Chapter 4 when we write about the ADB, it is not only because the ADB is important (it is), but also because the political processes in this institution highlight issues of concern also for the larger universe of multilateral institutions.

Another feature of this book which may surprise some readers is the emphasis on NGOs and environmental issues. The reason for this is, however, clear. Over the two last decades NGO interaction with multilateral institutions (both directly and through member states) has been perhaps the single most important cause of reform. This NGO activity is clearly related to environmental issues. Or to phrase our argument in a different manner: it was environmental issues that first offered NGOs and civil society organisations a possibility to access and influence decision-making processes in multilateral institutions. The environment was the first rallying point for NGO activity in the World Bank and later in the regional development banks, the WTO and other multilateral institutions. This is the reason why we devote substantial attention to this particular issue-area of politics in multilateral institutions.

Our emphasis is therefore on politics within and between multilateral institutions. We argue that it is not fruitful to treat multilateral institutions as unitary actors. Just as it is widely recognised in contemporary debate that it is a gross simplification to define the nation-state as a unitary actor, the same should apply to multilateral institutions. Rather than treating each one, such as the World Bank, as a 'black box' we will highlight its internal processes and politics. This discussion will be supplemented by an analysis of the relationships between multilateral institutions, which are both competitive and collaborative. In addition, both member states and NGOs play an important role, as will be demonstrated by reference to a number of examples of the making and testing of policy in practice. The most important of these cases, which marks the emergence of NGOs as a major force in international relations, relates to the Pelosi Amendment in the United States. Other cases we shall refer to include specific projects such as the Arun III Hydro-power project in Nepal and the Samut Prakarn Wastewater Management project in Thailand. These cases will illustrate the complex interplay between member states, multilateral institutions and NGOs in the making of policy.

The approach in this book is critical in the sense that we do not accept the policies and approaches of multilateral institutions at face value, but ask how and why these policies came into existence. However, our criticism is also matched by an argument for engagement. The normative basis of this book is our view that it is important to engage in critical dialogue, both with the member states of multilateral institutions and the institutions themselves, from an independent and informed position. We see a strong need for increased critical engagement – both by researchers and social activists – in order to bring about much needed reform of the approaches and policies of multilateral institutions. When we analyse the politics of multilateral institutions in Chapter 4 and the future of multilateral institutions in Chapter 5, we also discuss what we define as the 'new' opposition to multilateral institutions and the 'politics of protest' around annual meetings (for example Seattle, Washington DC, Prague, Gothenburg and Genoa). Such mass protest has clearly made an impact on multilateral institutions, which are slowly starting to realise that reform is needed. The process of reform will necessarily involve civil society engagement, both through mass protests and targeted and critical dialogue. However, in order to have a positive and lasting impact, both types of civil society involvement must be built on a thorough understanding of the ways in which multilateral institutions actually operate. This is unfortunately not always the case. This book is therefore, we hope, a contribution in this regard.

MULTILATERALISM: A CRITICAL PERSPECTIVE

Since 1945 foreign policy has increasingly come to involve interstate arrangements such as the UN, the MDBs, the European Union (EU), the Group of Seven and a range of other multilateral arrangements. This trend has taken place to such an extent that several researchers within the field of international relations refer to the development of multilateralism (Scholte 2000). Multilateral responses have been generated to many of the challenges – both large and small – with which the world is faced. In this way, multilateralism has contributed to dissolving the distinction between domestic and foreign affairs, between the inside/outside, that is the hallmark of the Westphalian system. There are, however, competing interpretations of what multilateralism is.

Broadly there are two different approaches: the 'rationalist' and the 'critical' (see Krause 2001). The rationalist view understands multilateralism as some sort of extension of self-interested interstate interaction. For authors such as Robert Keohane (1990: 732) and John G. Ruggie (1993: 11) multilateralism is 'an institutional form that co-ordinates relations among three or more states on the basis of generalized principles of conduct'. It is therefore different from bilateralism, a set of relations between two states, but also very different from imperialism, because it does not imply coordination between dominant and subordinate actors. This approach to multilateralism is state-centric and it treats states as autonomous and functionally equal actors operating in an international anarchy on the principles of self-interest. This rationalist view is broadly shared by both neorealists and institutionalists, although they disagree on whether multilateral institutions are merely a reflection of the distribution of power (neorealism) or whether, once established, they can have an independent effect on state behaviour (institutionalism).

A critical approach to multilateralism, on the other hand, which we favour, focuses more on the system rather than the totality of individual states, drawing attention to the underlying structures, forces and processes of world politics. This position has been developed by Robert Cox (1981, 1992 and 1997). Here, the evolution of multilateralism is seen as coexisting in a reciprocal relationship with global structural change. The critical approach therefore directs our attention toward the establishment of social order: a social order which is seen to be embedded in the nexus between material conditions, interests and ideas. A particular order is, under this interpretation, stabilised and perpetuated through 'institutionalisation'. Multilateral institutions thus reflect the power relations prevailing at their point of origin and tend, at least initially, to facilitate worldviews and beliefs (for instance in the merits of neoliberal economics) in accordance with these power relations. This implies that power relations are embedded in all multilateral institutions, even if these are supposedly based on diffuse reciprocity and formal equality among the member countries. Ideas play an important part in such an order, but, from this perspective, they are more than just reflections of the interests of the strongest members. Ideas also serve diverse social purposes and thereby also influence how member states define their interests in multilateral institutions (see Bøås and McNeill 2003). Thus, the multilateral institutions as such matter, and not just their member states. Outcomes are determined not simply by the distribution of power among the members that constitute the institution in question, but also by the multilateral institution itself, which can affect how choices are framed and outcomes reached. All multilateral institutions are also seen as social constructions: the product of particular historical circumstances. The actors involved are political, economic and social actors, operating not just through the state's foreign policy apparatus, but also transnationally. It is this perspective that we see as the most fruitful for what we call the 'critical engagement' approach to multilateral institutions.

Multilateral institutions as socially constructed arenas for the facilitation of international order

Multilateral institutions are social institutions, and social relations make or construct people (ourselves) into the kind of beings we are (see Onuf 1998). As Kratochwil and Ruggie (1986) put it, multilateral institutions are social institutions around which the experiences of actors converge. As such, multilateral institutions possess a clear coercive quality: 'Actors who enter into a social interaction rarely emerge the same' (Johnston 2001: 488). The member states and other actors in the institutions are expected to perform certain roles; the costs to actors who choose not to participate on these terms are uncertain and possibly very high.

All multilateral institutions are originally established in order to solve problems. After the completion of the reconstruction of Europe, the 'problem' was development (or the lack of it). President Truman's inaugural speech on 20 January 1949 is commonly held to mark the beginning of the modern development practice (Nustad 2003). In this speech, scientific and expert knowledge was packaged as the solution to poverty and misery:

We must embark on a bold new program for making the benefits of our scientific advances and industrial progress available for the improvement and growth of underdeveloped areas. More than half of the people of the world are living in conditions approaching misery. Their food is inadequate, they are victims of disease. Their economic life is primitive and stagnant. Their poverty is a handicap and threat both to them and more prosperous areas. For the first time in history, humanity possesses the knowledge and skill to relieve the suffering of these people ... our imponderable resources in the technical knowledge are constantly growing and are inexhaustible ... The old imperialism – exploitation for foreign profit – has no place in our plans ... Greater productivity is the key to prosperity and peace. And the key to greater production is wider and more vigorous application of modern scientific and technical knowledge. (quoted in Porter 1995: 66–7)

The means designed to resolve this problem were therefore the main tools of modernisation: 'scientific and technical knowledge'. The objective – increased prosperity and closer resemblance to Western societies – was the original goal of multilateral institutions, and despite all the new policies and approaches that have emerged subsequently this has remained at the heart of their activities.

What have been changed are the means, not the ends. And the changes that have taken place have been incremental, most often without any attempt to place new objectives in a logical, prioritised order. The process of change that has taken place in multilateral institutions thus resembles what Ernst Haas has called 'change by adaptation' (see Haas 1990). In order to understand these processes it is important to bear in mind that multilateral institutions are intergovernmental organisations dominated by political groups (that is, country constituencies) whose behaviour often is subjected to bounded rationality because these groups also must balance between objectives, means, interests and ideas which are not necessarily coherent. This means that, in comparison to other social units, multilateral institutions confront rather special challenges when faced with, for instance, demands to incorporate new issue-areas. The mission of a multilateral institution is never simple and straightforward because both member states and other actors in their external environment may disagree on the interpretation of the mission (the ends) as well as on the tasks (the means) that need to be done if the mission is to be completed. In social units that function under such circumstances, organisational routines and standard operating procedures will be preferred to substantive change. Multilateral institutions will thus favour one particular way of arranging and routinising their activities. Since they have to satisfy different constituencies (that is, borrowing countries, donor countries and NGOs), multilateral institutions will try to avoid articulating explicitly competing views. Consensus therefore becomes an objective in itself, but the kind of consensus established in multilateral institutions is constructed on the power relationships prevailing in the institution in question. This means that consensus in multilateral institutions is usually artificial.

(Continues...)

Excerpted from Multilateral Institutions by Morten Bøâs, Desmond McNeill. Copyright © 2003 Morten Bøâs and Desmond McNeill. Excerpted by permission of Pluto Press.
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Edition details

• Publisher: Pluto Press
• Publication date: 2003
• Language: English
• ISBN 10: 0745319203
• ISBN 13: 9780745319209
• Binding: Paperback
• Number of pages: 208