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Posted on 09/23/2003 5:09:57 PM PDT by ATOMIC_PUNK
THE SECRETARY-GENERAL ADDRESS TO THE GENERAL ASSEMBLY New York, 23 September 2003
I respectfully suggest to you, Excellencies, that in the eyes of your peoples the difficulty of reaching agreement does not excuse your failure to do so. If you want the Councils decisions to command greater respect, particularly in the developing world, you need to address the issue of its composition with greater urgency.
But the Security Council is not the only institution that needs strengthening. As you know, I am doing my best to make the Secretariat more effective and I look to this Assembly to support my efforts.
Indeed, in my report I also suggested that this Assembly itself needs to be strengthened, and that the role of the Economic and Social Council and the role of the United Nations as a whole in economic and social affairs, including its relationship to the Bretton Woods institutions needs to be re-thought and reinvigorated.
The Bretton Woods Project works as a networker, information-provider, media informant and watchdog to scrutinise and influence the World Bank and International Monetary Fund (IMF). Through briefings, reports and the bimonthly digest Bretton Woods Update, it monitors projects, policy reforms and the overall management of the Bretton Woods institutions with special emphasis on environmental and social concerns.
Created as an independent initiative by a group of British non-governmental organisations (NGOs), it works with an extensive network to press for increased transparency and civil society participation in World Bank and IMF policies and interventions. This includes over 7000 non-governmental organisations, policy-makers, journalists, researchers and parliamentarians worldwide.
By encouraging information exchange and debate, it seeks to move the Bretton Woods institutions (World Bank and IMF) away from simplistic approaches to development.
(Excerpt) Read more at un.org ...
The Bretton Woods Institutions are the World Bank, and the International Monetary Fund (IMF). They were set up at a meeting of 43 countries in Bretton Woods, New Hampshire, USA in July 1944. Their aims were to help rebuild the shattered postwar economy and to promote international economic cooperation. The original Bretton Woods agreement also included plans for an International Trade Organisation (ITO) but these lay dormant until the World Trade Organisation (WTO) was created in the early 1990s.
The creation of the World Bank and the IMF came at the end of the Second World War. They were based on the ideas of a trio of key experts - US Treasury Secretary Henry Morganthau, his chief economic advisor Harry Dexter White, and British economist John Maynard Keynes. They wanted to establish a postwar economic order based on notions of consensual decision-making and cooperation in the realm of trade and economic relations. It was felt by leaders of the Allied countries, particularly the US and Britain, that a multilateral framework was needed to overcome the destabilising effects of the previous global economic depression and trade battles.
In his opening speech at the Bretton Woods conference, Henry Morganthau said the "bewilderment and bitterness" resulting from the Depression became "the breeders of fascism, and finally, of war". Proponents of the new institutions felt that global economic interaction was necessary to maintain international peace and security. The institutions would facilitate, in Morganthau's words, "[the] creation of a dynamic world community in which the peoples of every nation will be able to realise their potentialities in peace".
The IMF would create a stable climate for international trade by harmonising its members' monetary policies, and maintaining exchange stability. It would be able to provide temporary financial assistance to countries encountering difficulties with their balance of payments. The World Bank, on the other hand, would serve to improve the capacity of countries to trade by lending money to war-ravaged and impoverished countries for reconstruction and development projects.
The World Bank Group is now made up of five institutions, four of which were created after 1944, but all sharing a similar mandate, of reducing poverty and facilitating economic growth in developing countries. The original institution is the International Bank for Reconstruction and Development (IBRD), often simply known as the World Bank. Since then other institutions have been added: the International Development Association (IDA); the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the International Centre for the Settlement of Investment Disputes (ICSID).
While each of these institutions possess their own governing Articles of Agreement, all of them come under the general administration of the World Bank, sharing a common Board of Governors and Board of Directors and working under the leadership of World Bank president appointed by the US government - currently James Wolfensohn.
The World Bank Group comprises of 183 member countries and is based in Washington DC. All members of the World Bank must be members of the IMF and membership of the IDA, IFC and MIGA are contingent upon membership of the World Bank. The IDA currently has 161 members; the IFC has 174; MIGA has 154; and ICSIID has 133 members.
The World Bank is the largest public development institution in the world, lending around US$ 25 billion a year to developing countries. The main purposes of the Bank, as outlined in Article One of its Articles of Agreement, are: "to assist in the reconstruction and development of territories of members by facilitating the investment of capital for productive purposes" and "to promote the long-range balanced growth of international trade and the maintenance of equilibrium in balances of payments by encouraging international investment ... thereby assisting in raising the productivity, the standard of living and conditions of labour in their territories".
The Bank aims to achieve these goals through the provision of long-term loans to governments for the financing of development projects and economic reform. Voting power on the Bank's board is based on the members' capital subscriptions which means the members with the greatest financial contributions have the greatest say in the Bank's decision-making process. The US government holds 20 percent of the vote and is represented by a single Executive Director. The 47 sub-saharan African countries, in contrast, have two Executive Directors and hold only seven percent of votes between them.
Each member of the Bank contributes two percent of its subscription in gold or US dollars and 18 percent in its national currency. Members pay in 20 percent of the capital while the remaining 80 percent is kept "callable" (to be paid in the event of a default). This guarantee allows the Bank to raise money for its lending purposes on international capital markets by the sale of its bonds.
Interest rates on World Bank loans are revised every six months and typically, the Bank charges borrowers a rate of interest 0.5 percent above its own cost of borrowing on the international market, the proceeds going towards paying the Bank's operating costs and to add to reserves.
Loans were originally supposed to be given only to "specific projects" - usually infrastructural projects, such as the construction of highways, dams, and telecommunications facilities, and social welfare projects, such as those in the health and education sector.
In 1980, the Bank introduced adjustment lending under its structural adjustment programme (SAP) to provide financing to countries experiencing balance of payments problems while stabilisation measures took effect. These loans are provided to countries for social, structural and sectoral reforms, for example for the development of national financial and judicial institutions. The World Bank attaches conditions to its loans with the stated aims of ensuring the country's economy is structured towards loan repayment.
The World Bank mainly lends to governments, although certain Bank facilities can also provide direct support to private businesses and to non-profit organisations. Middle-income countries (usually countries with per capita incomes of between US$1,506 and US$5,445) and poorer countries termed as "creditworthy" borrow from the IBRD, while the poorest countries (with per capita incomes of less than US$885) borrow from the IDA. Loans granted by IDA are interest-free but borrowers are required to pay a fee of less than one percent of the loan to cover administrative costs.
The IFC provides project financing for private sector projects in developing countries through loans and equity finance by mobilising capital in international financial markets. Forty percent of the IFC's investments are in the financial sector.
MIGA provides political risk insurance or guarantees to private investors and lenders to encourage foreign direct investment (FDI) into developing countries.
The IMF was conceived primarily as a supervisory institution to promote international monetary cooperation and facilitate the growth of international trade. This is to be achieved through maintaining monetary exchange stability and assisting member countries who are experiencing balance of payments problems.
Upon membership of the IMF, member countries deposit a sum of money known as a 'quota subscription'. This sum will determine how much money the country can draw from the Fund in times of crisis. Quotas also determine the voting rights of each member country, which means, like the World Bank, decision-making power in the IMF rests with the countries with the highest contribution.
The IMF lends money to member countries faced with balance of payments problems, ie when a country fails to earn sufficient foreign currency - through exports or provision of services - to pay for its imports. In return for financial assistance from the IMF, borrower countries must implement a set of economic reforms aimed at overcoming their balance of payments problems. Loans are disbursed in installments and payment is tied to the countries' compliance with the structural adjustment policies.
The IMF provides various types of loans to member governments. Concessional loans are granted to low-income countries at a concessional interest rate through the Poverty Reduction and Growth Facility (PRGF) while non-concessional loans are provided with a market-based interest rate through five mechanisms: the Stand-By Arrangements (SBA); Extended Fund Facility (EFF); Supplemental Reserve Facility (SRF); Contingent Credit Lines (CCL); and the Compensatory Financing Facility (CCF).
Members facing a balance of payments problem can immediately withdraw up to 25 percent of its quota in gold or convertible currency. If this is insufficient, a member country may borrow up to three times its paid-in quota.
Two frequently used mechanisms for IMF loans are the Standby Arrangements and the Extended Fund Facility. Under the Standby Arrangements, member countries are allowed to borrow over a period of one to two years to support macroeconomic stabilisation programmes and repayments are made within three to five years. Under the Extended Fund Facility, countries borrow for a period of three to four years and repayments are not due until five to ten years down the line.