Chapter 4

International
Organizations

United Nations (UN)

UN was established in 1945 after the
Second World War.
UN has four bodies:
1) General Assembly
2) Security Council
3) UN Specialized Agencies
4) UN Secretariat

UN General Assembly is the

essential body of the UN.

It is made up of all member states,

each with one vote, regardless of
size, wealth, or power.

UN Security Council is composed of five

permanent members with veto power and
10 chosen (five each year) for two years
terms.
Five permanent members of Security
Council are;
China, Russia, France, England (UK), and
United States of America (USA)

UN Specialized Agencies
UNICEF
WHO
FAO
UNIDO
ILO
UNESCO
UNDP
ICAO
ITU
UPU
WMO
IAEA
IFAD
UNCTAD IMF
IDA
IBRD
IFC
International Court of Justice
UN Economic and Social Council

UN Offices
UNICEF UN International Childrens Emergency Fund
WHO World Health Organization
FAO Food and Agricultural Organization
UNIDO UN Industrial Development Organization
ILO International Labor Organization
UNESCO UN Educational, Scientific and Cultural
Organization
UNDP UN Development Program
ICAO International Civil Aviation Organization
ITU International Telecommunications Union

UN Offices
UPU Universal Postal Union
WMO World Meteorological Organization
IAEA International Atomic Energy Agency
IFAD International Fund for Agricultural Development
UNCTAD UN Conference on Trade and Development
IMF International Monetary Fund
IDA International Development Association
IBRD International Bank for Reconstruction and
Development (World Bank)
IFC International Finance Corporation

UN Secretarait
Headed by by the secretary-general, the
secretariat carries out day-to-day
administrative functions of UN.

Criticism of UN:
1) There are no Muslim countries in the Security
Council.
2) Africa and Latin America do not have
representatives in the Security Council.
3) Economically powerful states like Japan and
Germany are not in the Security Council.
4) Important states like Brazil, Nigeria, and India
want to have a place in the Security Council.
5) Security Council is composed of the victorious
states of the Second World War.

A UN joke
Last month a world survey was conducted by the UN.
The only question asked was:
"Would you please give your honest opinion about solutions to the food
shortage in the rest of the world?"
The survey was a HUGE failure because of the following:
1. In Eastern Europe they didn't know what "honest" meant.
2. In Western Europe they didn't know what "shortage" meant.
3. In Africa they didn't know what "food" meant.
4. In China they didn't know what "opinion" meant
5. In the Middle East they didn't know what "solution" meant
6. In South America they didn't know what "please" meant
7. In the USA they didn't know what "the rest of the world" meant
8. In Australia they hung up as soon as they heard the Indian accent.

Multilateral Banks
African Development Bank is trying to support
private enterprises in Africa.
Asean Development Bank is trying to develop the
most underdeveloped regions in Asia.
Inter-American Development Bank finances
projects in Latin America and Caribbean.
European Bank for Reconstruction and
Development (EBRD) intends to aid East
European transition economies.
International Bank for Reconstruction and
Development (IBRD) is the World Bank.

European Bank for Reconstruction

and Development
It was established in 1991 after the fall of Soviet
Union in 1991. Its aim is to help the Central
and Eastern European ex-Soviet countries to
develop their private sectors in democratic
environment.
EBRD is owned by 60 countries and two
intergovernmental institutions.
It provides project financing for banks, industries,
and businesses, both new ventures and
investments in existing companies. It supports
privatization and restructuring of state-owned
firms and improvement of municipal services.

Islamic Development Bank

It is established in 1395H/1975.
The head office is in Jeddah, Saudi Arabia. IDB
has regional offices in Kuala Lumpur, Malaysia;
Rabat, Moracco; and Almaty Kazakhstan. So it
is a multilateral Bank.
The purpose of the bank is to foster economic
growth and social progress of member
countries and Muslim communities in general
according to principles of Shariah

Islamic Banks Portfolio (IBP)

In 1987, Islamic Development Bank invited leading
Islamic financial institutions to participate in the
establishment of Islamic Banks Portfolio (IBP).
IBP provides short-term trade financing and
medium-term asset-based finance to the firms
in Muslim countries. IBP also promotes Islamic
financial market.

Organization for Petroleum

Exporting Countries (OPEC)
It is established in 1960 in Baghdad by Iran, Iraq,
Kuwait, Saudi Arabia, and Venezuela. Qatar,
Libya, Indonesia, Abu Dhabi, Algeria, Ecuador,
and United Arab Emirates joined later.
Membership is open to any country which is a
substantial net exporter of oil and which shares
the ideals of the organization.

OPEC members collectively;

Supply 40% of the worlds oil output,

Posses more than 75% of the worlds
total crude oil reserves,
Meets 84% of Europes oil needs,
Meets 90% of Japans oil needs.

Organization for Economic

Cooperation and Development
It is established in 1960 to promote economic cooperation
and development.
It has 30 members: Australia, Austria, Belgium, Canada,
Czech Republic, Denmark, Finland, France, Germany,
Greece, Hungary, Iceland, Ireland, Italy, Japan, South
Korea, Luxembourg, Mexico, Netherlands, NZ,
Norway, Poland, Portugal, Slovakia, Spain, Sweden,
Switzerland, Turkey, UK, and US.
Its base is in Paris. It helps governments to respond to
economic, social, and environmental challenges posed
by globalization.

Imortant groupings
G7 US, UK, France, Germany, Japan, Italy, Canada.
G8 US, UK, France, Germany, Japan, Italy, Canada,
Russian Federation.
E7 China, India, Brazil, Russian Federation, Mexico,
Endonesia, Turkey.
BRIC Brazil, Russian Federation, India, China.
T-BRIC Turkey, Brazil, Russian Federation, India,
China.
CIVETS Colombia, Indonesia, Vietnam, Egypt, Turkey,
South Africa.
EAGLES 10 China, India, Turkey, Brazil, Indonesia,
South Korea, Russian Federation, Mexico, Egypt,
Taiwan.

Greenpeace
It is a non-profit organization with a presence in 40
countries. It focuses on the most crucial worldwide
threats to our planets biodiversity and environment.
It campaigns to;

Stop climate change,

Protect ancient forests,

Save the oceans,

Stop whaling,

Say no to genetic engineering,

Stop the nuclear threat,

Eliminate toxic chemicals,

Encourage sustainable trade.

Rainbow Warriors
They call themselves Rainbow Warriors and
argue that; when the last tree is cut, the
last river poisoned, and the last fish
dead, we will discover that we can not
eat money.

General Agreement on Tariffs and

Trade (GATT)
It was established in 1947, Geneva,
Switzerland.
The purpose was to promote free trade by
reducing tariff barriers.

GATT Principles
1) Reciprocity If one country reduces its tariffs
against another, the second country must
likewise lower its tariffs.
2) Nondiscrimination Members must not grant
one country preferential trade treatment over
others. Most-favored-nation rule must apply to
all the members.
3) Transparency Members are expected to
replace non-tariff barriers (whose effects are
hard to measure and detect) with tariffs, which
are open to scrutiny and thus more easily
reduced through further negotiations.

GATT Negotiating Rounds

Geneva Round...............................1947
Annecy Round................................1949
Torquay Round...............................1950
Geneva Round................................1956
Dillion Round...................................1960-61
Kennedy Round...............................1964-67
Tokyo Round...................................1973-79
Uruguay Round...............................1986-92

World Trade Organization (WTO)

It is;
An organization for liberalizing trade,
A forum for govenments to negotiate,
A place for govenments to settle trade
disputes,
An organization operating a system of
trade rules.

Issues to be tackled by the WTO:

1)

2)

3)
4)
5)

Agricultural trade has been excluded from previous negotiations. Removal

of all trade restrictions on farm products will increase the world trade by
$100 billion, yearly.
Textiles and clothing trade had been restricted by multi-fiber arrangement
(MFA). Exporters were mainly LDCs and importers were wealthy
industrialized countries. Expected gains from liberalization is $50 billion.
Intellectual property: Protection against infringement of patents, trademarks
and other intelelctual property is discussed.
Foreign investment: Restrictions on FDI by multinationals are challenged.
Internationally traded services: Developed countries attempt to reduce the
barriers on service imports like financial services, insurance services, etc.

Topics on the agenda of WTO

Restrictions on FDI
Government protection of new technology to
protect domestic industry
Antidumping laws
Environmentalists opposition to increase trade
Trade disputes between countries
Setting ground rules for international
commerce

World Bank (IBRD) is responsible

for economic development of
countries.
It provides two types of loans:

Hard loans
Soft loans

1) Hard loans are made and repayable

in hard, convertible currencies at
market interest rates with normal
market maturities. They are secure
loans not exceeding 25 years.
International Finance Corporation is World Banks
investment department. IFC finances
industries like fertilizers, synthetic fibers,
tourism, and paper and cotton fabric. It
developed capital market in Brazil.

2) Soft loans can be paid back in soft, nonconvertible currencies, carry low or no
interest obligations, are usually long-term up
to 40 years and may have grace periods up
to 10 years during which no payments are
required.
International Development Association (IDA)
provides these loans. Soft loans are given to
countries with per capita income less than
$750 a year. It is to help the poorest LDCs
which need loans to develop, but they can not
carry hard currency burden.

International Monetary Fund (IMF)

It was established to promote international monetary
cooperation in Bretton Woods in 1945.
The Articles of Agreement:
1) Foster orderly foreign exchange arrangements,
2) Foster fixed currencies,
3) Foster shorter duration and lesser degree
Balance of Payments disequilibria.

In 1971, the second clause was

changes as follows:
2) Foster floating exchange rates
And a fourth clause was added as follows:
4) IMF has surveillance powers over the member
states, meaning that IMF can influence or even
dictate fiscal and monetary policies of the
member states.

The world went through many

economic and crises after 1971.
Some solutions to debt crises:
Debt default is when countries can not pay their
debts; debts are turned into bad debts.
Debt rescheduling is when countries cannot pay
their debts on time, debts are rescheduled.

Bank for International Settlements

(BIS)
BIS is the most discrete financial institution in the world.
Major industrial countries meet 10 times a year to
discuss the global financial system in Basel
Switzerland. It was established in 1930.

It is a forum for international monetary cooperation,

It is a center for research,
It is a banker for central banks,
It is an agent for international financial arrangements.

ECONOMIC INTEGRATION
According to Bela Balassa (The Theory of
Economic Integration, 1961), there are
five degrees of economic integration. At
each succeeding state, members
surrender a greater measure of their
national sovereignty.

Five levels of economic integration:

Free trade area: Members agree to remove all barriers to trade within the group
but may continue to pursue their own independent policies with nonmembers.
Customs union: Free movement of goods among member countries but imposes
common system of trade restrictions with outsiders.
Common market: In addition to customs union, there will be unrestricted
movement of capital, labor, and entrepreneurship within the union.
Economic union: In addition to common market, economies of member countries
are integrated through a common central bank, unified monetary and tax
systems, and a common foreign economic policy.
Economic integration: Removal of all barriers to interbloc movement of goods and
factors of production is complete, unification of social and economic policies
achieved, and all members are subject to the binding decisions of a
supranational authority consisting of executive, judicial, and legislative
branches.

European Union (EU)

After a devastating Second World War, European
countries decided to work together to avoid
another war in Europe and to keep coal and
steel industries under control.
Treaty of Rome was signed in 1957 creating
European Economic Community (EEC) and
European Atomic Energy Community
(Euratom).

EU Enlargement
Treaty of Rome was signed by six founding states: W.
Germany, France, Italy, Belgium, Netherlands, and
Luxembourg (Benelux States).
In 1973, United Kingdom, Ireland, and Denmark joined.
Following enlargements: Greece (1981), Spain and
Portugal (1986), Austria, Finland, and Sweden (1995),
Lithuania, Estonia, Latvia, Slovakia, Malta, Cyprus
Greek Republic, Slovenia, Hungary, Check Republic,
and Poland (2004), Romania and Bulgaria (2007).

EU hell or heaven?
Heaven if,
Policemen
Cooks
Beer Brewers
Lovers
Organization

English
French
German
Italian
Swiss

Hell if,
Policemen
Cooks
Beer Brewers
Lovers
Organization

German
English
French
Swiss
Italian

The New Map of EU

With the latest
enlargement,
EU has
become 27
states. It is
the richest
region in the
world.

Altiero Spinelli, an Italian resistence

fighter is the father of the idea of a
united Europe.
In 1944, he argued for a federal Europe with a
written constitution, a supranational
govenment directly responsible to the people
of Europe and not national governments, along
with an army under its control, with no other
military forces being permited.

EU organizational structure
1)
2)

3)
4)

Council of Ministers is the policy setting body of the EU. It is made up of

prime ministers of the member states. They meet periodically at
summits.
European Parliament is the elected body of the EU. The members of the
EP are elected by the citizens of the member countries. The
representation in the EP is according to the population sizes of the
countries.
European Commission is the beurocracy of the EU. There are about
20,000 beurocrats and technocrats working in Brussels.
European Court of Justice is the legal organ of the EU. It is deciding on
issues raised against Treaty of Rome (against Nice Agreement after it is
passed from the parliaments of the member states). Its authority
supersedes the decisions of the courts in the member states.

Maastricht Treaty
It was signed on 1991 by 12 EU member states. It
was a committment to future United States of
Europe. Its goals were monetary and
economic union with European Central Bank
and a single currency replacing national
currencies.

Maastricht Treaty set out five convergence criteria

which member states must satisfy before they can
accede to European Monetary Union (EMU):
1)
2)
3)
4)
5)

Inflation rates should be no more than 1.5% above the

average of the three EU countries with the lowest
interest rates.
Long-term interest rates should be no more than 2%
above the average of the three EU countries with the
lowest interest rates.
National currencies must not have been devalued and
must have remained within the normal (15%) bands of
the EMS for the previous two years.
National budget deficits must be less than 3% of GDP.
National debt must be less than 60% of GDP.

North American Free Trade

Agreement (NAFTA)
NAFTA was established
in 1990 by the USA
and Canada. Mexico
joined later and
NAFTA became the
largest economic area
in the world.
USA alone is accounting
for the 28% of worlds
GDP.

Association of South East Asian

Nations (ASEAN)
It is created in 1967 by Brunei,
Indonesia, Malaysia, the
Philippines, Singapore,
Thailand, Cambodia, Laos,
Myanmar, and Vietnam.
ASEAN is the fastest growing
economic region in the
world. Their GDPs enjoyed
annual growth rates
averaging over 7%.
ASEAN China Free Trade Area
launched on Jan. 1, 2010,
has become the largest
regional emerging market in
the world.

Economic Community of West

African States (ECOWAS)
It was established by Benin, Burkina
Faso, Cape Verde, Gambia,
Ghana, Guinea, GuineaBissau, Ivory Cost, Liberia,
Mali, Niger, Nigeria, Senegal,
Sierra Leone, and Togo.
ECOWAS countries produce and
export mainly agricultural
products (coffee, cacao, palm
oil) and minerals including oil.

Commonwealth of Independent
States (CIS)
After the collapse of Soviet Union in
1991, ex-Soviet Republics
formed CIS as a free trade
area. Russia, Kazakhstan,
Uzbekistan, Turkmenistan,
Tajikistan, Kyrgyzstan,
Azerbaijan, Georgia, Armenia,
Belarus, Ukraine, and
Moldova are members of CIS.
The most important state in CIS is
Russia which is the worlds
largest country (6.5 million
square miles).
CIS is very rich in natural resources,
including gold, oil, natural gas,
minerals, diamonds, and
fertile farmland.